ANNUAL REPORT 2013 - listed companykingsmen.listedcompany.com/misc/ar2013.pdf · Cruise Collection...

ANNUAL REPORT 2013

We constantly seek opportunities to enhance our clients’ brand experience through innovative design and solutions. Our suite of complementary services enable us to work closely with our clients and partners to establish experiential solutions for their marketing needs. In the ever-changing landscape of design and communication, we recognise the challenge of adopting a multi-channel strategy for greater connectivity. It is with this attitude of embracing change that has been the driving force behind Kingsmen. Creative Solutions, Staying Relevant.

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Executive Chairman’s MessageBoard of DirectorsSenior ManagementFinancial HighlightsExhibitions & MuseumsRetail & Corporate InteriorsAlternative MarketingResearch & DesignCorporate InformationCorporate Governance ReportFinancial ReportStatistics of ShareholdingsNotice of Annual General MeetingProxy Form

0204060812141618202130

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Design-led, quality and service-driven

Vision

To maintain our position as one of the leaders in Asia Pacific

To be an active global player and be recognized as one of the elite marketing communication houses globally

To provide exciting and fulfilling career opportunities for all members through continual expansion and continuous learning

Mission

ExperiencingKingsmen

KINGSMEN CREATIVES LTD ANNUAL REPORT 2013

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ExecutiveChairman’sMessage

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Cruise Collection show outside of Europe at the Loewen Cluster in Singapore, as well as events and projects for their key accounts.

Moving forward, the Group expects 2014 to be another good year, given its strong market position and the exciting line-up of planned developments in the region. As at 26th February 2014, the Group has secured contracts of approximately S$138 million.

On the business front, our Exhibitions & Museums division is confident about its prospects, as the region continues to power ahead with its economic growth. Attention has thus shifted to Asia with businesses and brands choosing Asian locations to host lifestyle events to engage their customers. The museums and thematic business is also expected to sustain a strong showing, due to various projects already in the works, and several others in the pipeline.

Our Retail & Corporate Interiors division expects to maintain its momentum, given the numerous new malls emerging across the region, and as brands introduce new ways of engaging their customers through brand revival and extension programmes. This coupled with the entry of new international brands into the region and the expansion of established brands into newer markets like travel retail, bode well for the growth potential of the division’s business.

We envision that this year will also be an exciting one for our Alternative Marketing division, as brands continue to seek unconventional ways of engaging their customers, and foresee this sector continuing to power ahead.

In appreciation of the support from our loyal shareholders, the Board is pleased to propose a final dividend of 2.5 cents per ordinary share. Combined with the interim dividend of 1.5 cents declared in August 2013, the Group would have paid out a combined dividend of 4.0 cents per share in FY2013.

In conclusion, I would like to extend my heartfelt appreciation to all members of the Kingsmen group who have dedicated their best efforts towards our success. I would also like to express my gratitude to the Board of Directors for their wise counsel and support throughout the year. Last but not least, I would like to thank our business associates, clients and shareholders for their continued support and trust in us.

Through strong partnerships and an unwavering commitment to raising the bar, I am certain that we can achieve greater heights for Kingsmen.

Dear Shareholders,

By staying focused and constantly improving, we bring greater value to clients…2013 was a year where the Group took steps to bolster its existing capabilities to strengthen its foundation for the future. We enhanced our internal controls and processes and continued to increase our human resource capabilities through the hiring of more professionals and constant upgrading of skills and knowledge. We also formulated a risk assurance framework to enable us to identify possible gaps, tightened controls, and implemented measures to align our support functions and processes with our business growth.

Our manufacturing facility in Kunshan, China, has now been operational for a year and we are beginning to derive better economies of scale. Besides the constant enhancement to our existing businesses, we continue to explore ways to expand our service offerings to clients. In February 2013, we incorporated ThinkFarm Pte Ltd, a custom publisher and content specialist to extend our suite of complementary services for our clients.

On the financial front, our business continues to grow and in FY2013, Group revenue increased 2.1% to S$296.3 million, while net profit increased 4.9% to S$17.7 million. This good performance was fuelled by continued demand for our integrated range of services and the improved management of project costs and overheads.

The Group’s Exhibitions and Museums division recorded revenues of S$103.4 million, a decrease of 5.0% over FY2012, mainly due to the completion of fewer large scale projects last year. We expect some of these projects to be completed this year and thus improve contribution from the division. Key projects completed during the year include Art Stage Singapore, Changi Airport’s Enchanted Garden at Terminal 2, CommunicAsia and Broadcast Asia, Formula One Singapore Grand Prix, Gillman Barracks, Hong Kong Disneyland’s Mystic Point, and Tax Free Asia Pacific.

Our Retail & Corporate Interiors division continued to do well, realising a 5.1% increase in revenue to S$166.6 million. This was achieved through strong revenue contribution from key accounts such as Abercrombie & Fitch, Aldo, Dickson Group, Dior, Fendi, Ralph Lauren, Robinsons, Tiffany & Co., Uniqlo and Victoria’s Secret.

The Research and Design division’s revenue grew 11.6% to S$11.4 million, due to the undertaking of design services for brand names such as Abercrombie & Fitch, BMW, Burberry, Gucci, Lotte Group, Robinsons and SKII.

Our Alternative Marketing division continued to power ahead, posting a 17.5% rise in revenue to S$14.8 million. This was primarily contributed by Chanel’s biggest

Benedict SohExecutive Chairman


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Left to right: Anthony Chong, Sebastian Tan, Benedict Soh, Prabhakaran N. Nair, Simon Ong, Wong Ah Long

Board of Directors

Benedict SohExecutive Chairman

Simon Ong spearheads the Group’s strategic planning, creative standards and its day-to-day management. He is one of our founders and has contributed significantly to the growth of the Group. He is currently Chairman of the design cluster in the Manpower, Skills & Training Council of WDA, Design Committee of Singapore Furniture Industry Council and Presidential Advisory Commission of Design Business Chamber Singapore. Mr. Ong is also an IDP member of the Singapore Design Council and a former board member of the Association of Retail Environments (USA). A keen advocate of education, he was the former Chairman of the School Advisory Board for Cedar Girls Secondary School, and once served as a member of the Advisory Board for Temasek Polytechnic’s School of Design. Mr. Ong also served as President of the Interior Designers Association (Singapore) and Vice-Chairman of the Potong Pasir CC Management Committee. He was awarded a Master of Business Administration from the University of South Australia and a Masters in Design from the University of New South Wales.

Simon OngGroup Managing Director

Anthony Chong directs the strategic management and day-to-day operations of the Group’s Exhibitions, Museums and Theme Parks division. He has more than 30 years of experience in marketing and project management of different disciplines that encompass tradeshows, retail interiors and large-scale events. Mr. Chong joined the Group in 1981, was appointed Project Director in 1989, Executive Director in 1999 and became Managing Director in 2011. He was awarded a Master of Business Administration from the Victoria University of Technology in Australia.

Anthony ChongManaging Director, Exhibitions & Museums

Sebastian Tan was appointed Independent Director of the Company in April 2013. In May 2000, he co-founded Boardroom Limited, a company listed on the Singapore Exchange (SGX). He was the Managing/Finance Director of Boardroom Limited from May 2000 to March 2013. Having retired from Boardroom Limited, he continues to be a non-executive director and an advisor. Prior to May 2000, he was with Ernst & Young Singapore and its affiliates since September 1973. Mr. Tan is currently an Independent Director of Vibrant Group Ltd and Wilton Resources Corporation Ltd, a director of D.S. Lee Foundation and a trustee of Kwan Im Thong Hood Cho Temple. He is a Fellow of the Association of Chartered Certified Accountants of the United Kingdom and a member of the Institute of Singapore Chartered Accountants. He was awarded the Public Service Medal in 1996.

Sebastian TanIndependent Director

Prabhakaran N. Nair was appointed Independent Director of the Company in August 2003. He began practicing law in 1974 and is an Advocate and Solicitor of Singapore. Mr. Nair is currently a partner of law firm, Messrs Derrick Wong & Lim BC LLP. He obtained a degree in law from the University of Singapore and is a litigation lawyer specialising in Commercial Litigation, Arbitration and Estates and Trusts matters.

Prabhakaran N. NairIndependent Director

Mr. Wong Ah Long was appointed Independent Director of the Company in April 2008. He is currently the Chairman of Utraco Pte Ltd, Executive Director of Utraco Greentech Pte Ltd and Honorary Chairman of Lucrum Pte Ltd. Mr. Wong also serves as Deputy Chairman of the Institute of South East Asian Studies (ISEAS) Board of Trustees and was a member of NUS Board of Trustees (2000-2008). He served as Chief Executive Officer of Suntec City Development Pte Ltd (1996-2005) and Chairman of Pacific Star China Pte Ltd (2005-2007). Mr. Wong graduated with a Master of Business Administration from the University of Singapore.

Wong Ah LongIndependent Director

Benedict Soh spearheads the strategic planning and business development of the Group. One of the founders of the Group, he has contributed significantly to its growth and has over 40 years of experience in the design and production of interiors and exhibits. Mr. Soh serves as Co-Chairman of the Special Technical Committee on Tourism and Exhibition Services and is also Chairman of Tourism & Hospitality Programmes and a member of the Academic Advisory Board at MDIS. He continues to serve as a board member of the Irish Chamber of Commerce Singapore and is a member of the School Advisory Council of Northbrooks Secondary School. Mr. Soh is also actively involved as a member of the Investment Panel of Spring Seeds Capital and the International Action Crucible of IE Singapore. In 2012, the Singapore Tourism Board accorded Mr. Soh the Lifetime Achievement for Outstanding Contribution to Tourism. He was also the former President of the Rotary Club of Pandan Valley and was awarded a Master of Business Administration from the University of Hull in the UK.


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Alex Wee is the Managing Director of Kingsmen Projects Pte Ltd. He is responsible for the business development, project management and operations of the interiors division. Alex graduated with a Bachelor’s (Honours) degree in Construction Management from University of Newcastle, Australia.

Alex WeeManaging Director

Gerald Tay is the Executive Director and Creative Director of Kingsmen Design Pte Ltd. Apart from looking after its daily operations, he also provides creative direction and ensures that design specifications are met up till the realization of the project. Gerald is a member of the Interior Design Confederation (Singapore) and Design & Media Academic Advisory Committee of the Institute of Technical Education. He received the Industrial Technician Certificate in Interior Design by the Vocation and Industrial Training Board in Singapore.

Gerald TayExecutive Director / Creative Director

Francis Yee is the Executive Director of Kingsmen Projects Pte Ltd. He is responsible for the day-to-day operations, sales development and project management of the company. Francis studied Furniture Design and Production at the Baharuddin Vocation Institute and was awarded a certificate by the Industrial Training Board.

Francis YeeExecutive Director

Roy Ong is the Executive Director and Creative Director of Kingsmen Design Pte Ltd. He is responsible for charting the creative direction and developing its design capabilities, ensuring that all designs meet the aesthetic, functional and budgetary requirements of our clients. Roy is a member of the Interior Design Confederation (Singapore). He received a Master of Design from the University of New South Wales.

Roy OngExecutive Director / Creative Director

Senior Management

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Francis Chang is the Managing Director of PT Kingsmen Indonesia. He oversees the daily operations of our Indonesia office from design and project management to fabrication. Francis has more than 20 years of experience in interiors, exhibitions and events and six years in architectural construction and management.

Francis ChangManaging Director

Cheong Chai Keng is the Managing Director of our Malaysia operations. He is responsible for the overall management of the company including sales and marketing, operations and finance. He obtained a diploma in Mechanical Engineering from the Federal Institute Technology.

Cheong Chai KengManaging Director

Stephen Lim is the General Director of Kingsmen Indochina Pte Ltd. He is responsible for the day-to-day operations, sales, marketing and management of our Vietnam offices. Stephen has more than 30 years of experience in operations and project management of exhibitions, events and retail interiors.

Stephen LimGeneral Director

Judith Low is our Financial Controller and is responsible for the overall management of our Group’s financial reporting, internal control and accounting processes. Before joining the Group, she was the Financial Controller of another listed company in Singapore and an Auditor with Ernst and Young. Judith obtained her Bachelor’s of Accountancy (Honours) degree from Nanyang Technological University and is a member of the Institute of Singapore Chartered Accountants.

Judith LowFinancial Controller

Andrew Cheng is our Group General Manager. He is responsible for the Group’s corporate affairs and business development. Andrew has a Bachelor of Economics degree from the University of Tasmania, Australia and is a committee member of the Securities Investors Association Singapore (SIAS).

Andrew ChengGroup General Manager

Krez Peok has over 25 years of practical experience in museums, visitor centres, exhibitions, events & interiors and is responsible for the overall management of all six Greater China offices. Krez joined the group in 1997 as Executive Director (Greater China) and became Managing Director of our Greater China operations in 2011.

Krez PeokManaging Director


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# Share capital excluding treasury shares.

Financial Highlights

After taxation

Earnings - basicEarnings - dilutedDividendsNet assets

Total assetsTotal LiabilitiesShare capital#

Shareholders’ fundsMinority interestsShort and long-term borrowingsTotal funds investedDebt-equity ratio (%)Excluding minority interestsIncluding minority interests

RevenueGross profitGross profit margin

Net profit before taxationNet profit for the year attributableto owners of parent

Results for the Year

31.5%

7.877.873.50

27.39

138,15683,28521,41651,876

2,9951,291

56,162

2.5%2.4%

241,43158,93724.4%

18,92714,900

FY2009

S$’000

25.3%

7.177.174.00

29.25

144,11986,17521,69755,600

2,3445,290

63,234

9.5%9.1%

233,63162,42126.7%

18,25613,610

FY2010

S$’000

27.0%

8.568.564.00

34.25

165,64697,63422,03165,418

2,5945,205

73,217

8.0%7.7%

260,98866,66525.5%

19,80716,327

FY2011

S$’000

24.3%

8.848.844.00

38.53

179,639102,811

22,28873,848

2,9804,645

81,473

6.3%6.0%

290,19072,38824.9%

21,55416,914

FY2012

S$’000

22.3%

9.219.214.00

44.24

209,498120,226

22,93285,525

3,7474,562

93,834

5.3%5.1%

296,25175,97225.6%

22,00517,744

FY2013

S$’000

At Year-end

Per Share (Cents)

Return of Average Shareholders’ Equity

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Turnover By Geography

Turnover By Activities

Exhibitions & MuseumsInteriorsResearch & DesignAlternative MarketingTotal Turnover

103,440166,604

11,38914,818

296,251

108,896158,472

10,20812,614

290,190

35.056.2

3.85.0

100.0

37.654.6

3.54.3

100.0

Year Ended 31 Dec 13Year Ended 31 Dec 12

Results for the Year %% S$’000S$’000

SingaporeGreater ChinaMalaysiaVietnamEuropeRest of AsiaUS & CanadaIndonesiaMiddle EastOthersTotal Turnover

111,010100,240

20,99616,09212,02312,316

6,13215,029

6041,809

296,251

37.433.8

7.15.44.14.22.15.10.20.6

100.0

Year Ended 31 Dec 13

121,74663,12528,44417,45417,10314,99411,65410,660

3,3331,677

290,190

41.921.8

9.86.05.95.24.03.71.10.6

100.0

Year Ended 31 Dec 12

Revenue S$’000 % S$’000 S$’000

Research & Design

3.8%

Alternative Marketing

5.0%

Exhibitions & Museums

35.0%Interiors

56.2%

Singapore

Greater China

Malaysia

Vietnam

Indonesia

Rest of Asia

Europe

US & Canada

Others

Middle East

37.4%

33.8%

7.1%

5.4%

5.1%

4.2%

4.1%

2.1%

0.6%

0.2%


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RevenueExhibitions & MuseumsInteriorsResearch & DesignAlternative Marketing

Profit before taxIncome tax expense

22,005(3,623)

21,554(4,131)

2.1(12.3)

103,440166,604

11,38914,818

108,896158,472

10,20812,614

(5.0)5.1

11.617.5

Year Ended 31 Dec 13Year Ended 31 Dec 12

Group

+/-

Gross profitOther items of income

75,97272,388 5.0

Interest incomeOther income

3945,012

2404,405

64.213.8

Consolidated Income Statement

S$’000 S$’000 %

Total RevenueCost of sales

Profit attributable toOwners of the CompanyNon-controlling interests

17,744638

16,914509

4.925.3

296,251(220,279)

290,190(217,802)

2.11.1

Other items of income

Depreciation of property, plant and equipmentStaff salaries and related expensesOther expensesInterest expense

Share of results of associates

Profit net of tax

(1,629)(45,902)(12,386)

(276)820

(1,614)(41,168)(13,727)

(252)1,282

0.911.5(9.8)

9.5(36.0)

18,38217,423 5.5

18,38217,423 5.5

Financial Highlights

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FINANCIAL HIGHLIGHTS

The Group recorded a revenue of S$296.3 million for financial year ended 31 December 2013 (“FY2013”), a 2.1% increase from $290.2 million recorded in the corresponding year in 2012 (“FY2012”). While the Exhibitions & Museums division and Retail & Corporate Interiors division continued to be the core business segments for the Group, the Research and Design division and Alternative Marketing division have recorded significant growth in revenue as compared to FY2012.

The Exhibitions & Museums division’s FY2013 revenue was S$103.4 million, a decrease of S$5.5 million or 5.0% over FY2012. The decrease in revenue was due to fewer large scale projects completed in FY2013 as some sizeable thematic projects that the division is currently working on are still incomplete as at year-to-date. Projects completed in FY2013 include Art Stage Singapore, Changi Airport’s Enchanted Garden at Terminal 2, CommunicAsia and Broadcast Asia, Formula One Singapore Grand Prix, Gillman Barracks, Hong Kong Disneyland’s Mystic Point, and Tax Free Asia Pacific.

The Retail & Corporate Interiors division recorded revenues of S$166.6 million in FY2013. This represents an increase of 5.1% from S$158.5 million recorded in FY2012. Key contributors to the division’s revenue included customers and brand names such as Abercrombie & Fitch, Aldo, Dickson Group, Dior, Fendi, Ralph Lauren, Robinsons, Tiffany & Co., Uniqlo and Victoria’s Secret.

The Research & Design division’s FY2013 revenue was S$11.4 million, increased by 11.6% from S$10.2 million recorded in FY2012. Key accounts which contributed to the revenue include customers and brand names such as Abercrombie & Fitch, BMW Burberry, Gucci, Lotte Group, Robinsons and SKII.

FY2013 revenue recorded from Alternative Marketing division increased by S$2.2 million or 17.5% to S$14.8 million. The increase was mainly contributed by Chanel’s Cruise Collection Show at Loewen Cluster completed in the first half of the year.

Revenue

FY2013 operating expenses increased from S$56.8 million in FY2012 to S$60.2 million. The increase was mainly due to higher staff salaries and additional headcount.

Other Items of Expenses

FY2013 gross profit increased by S$3.6 million or 5.0% to S$76.0 million. Overall gross profit margin increased from 24.9% in FY2012 to 25.6%.

Gross Profit

FY2013 share of results of associates decreased by 36.0% from S$1.3 million in FY2012 to S$820,000. The decrease was mainly due to lower contribution from some of the associates.

Share of Resultsof Associates

Interest income relates mainly to interest income derived from fixed deposits and bank balances with the banks.

Other income comprises of corporate fees income, dividend income, rental income, other services income and other miscellaneous income.

Other Items of Income

FY2013 profit attributable to owners of the Company increased by 4.9% from S$16.9 million in FY2012 to S$17.7 million.

Profit attributable toOwners of the Company


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EXHIBITIONS& MUSEUMS

Titans of the Past – Dinosaurs & Ice Age Mammals, Singapore

Chimelong Ocean Kingdom, China

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The Group’s Exhibitions and Museums division recorded revenues of S$103.4 million, a decrease of 5.0% over FY12. This was mainly attributed to the completion of fewer large scale projects in FY13. Key projects accomplished during the year include the AmorePacific Story Garden, Art Stage Singapore, Changi Airport’s Enchanted Garden, Doosan at The Open Championship, Evergrande Group Exhibition Centre, Formula One Singapore Grand Prix, Hong Kong Maritime Museum, and Hong Kong Disneyland’s Mystic Point. The division expects 2014 to be a good year, as the region continues to gain traction with its economic growth, and as business and lifestyle events assume a more influential role in how brands and corporates engage their customers. The museums and thematic business is also expected to do well, given the various projects already underway, and several more in the pipeline.

Art Stage Singapore 2013, Singapore

Murex at SIBOS 2013, U.A.E.

(Design: WY-TO Architects)


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RETAIL & CORPORATEINTERIORS

Karl Lagerfeld, China

Loewe, Hong Kong

(Design: Plajer & Franz Studio)

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Ladurée, Singapore

Lotte FITIN, South Korea

The Retail & Corporate Interiors division sustained its good performance, realising a 5.1% increase in revenue to S$166.6 million in FY13. This was attained through strong revenue contribution from key accounts such as Abercrombie & Fitch, Aldo, Dickson Group, Dior, Fendi, Ralph Lauren, Robinsons, Tiffany & Co., and Uniqlo. The division is expected to maintain its momentum, as new malls emerge across the region, and as brands introduce new ways of engaging their customers through brand revival and brand extension programmes. Coupled with the continued entry of international brands into the region and the expansion of established brands in newer markets like travel retail, continuing business for the division is ensured.


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Enchanted Garden at Singapore Changi AirportMerit award winner for the Singapore Landscape Architecture Awards 2013

Being Together: Family & Portraits – Photographing with John Clang Singapore ‘Design of the Year’, President’s Design Award 2013

RESEARCH & DESIGN

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CGV Daihan, South Korea

Robinsons at JEM, Singapore

The Research and Design division’s revenue grew 11.6% to S$11.4 million in FY13, due to the undertaking of design services for brand names such as Abercrombie & Fitch, BMW, Burberry, Gucci, Lotte Group, Robinsons and SKII. Increased demand for the division’s design consultancy services and creative design capabilities channelled this growth, prompting it to enhance its team of experienced design professionals to support international clients in their retail expansion efforts.


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Asia Pacific Breweries Singapore at Beerfest Asia 2013, Singapore

BMW i Showcase, Singapore

ALTERNATIVEMARKETING

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MINI Not Normal Carnival, Thailand

Tiger Street Football, Singapore

Our Alternative Marketing division continued to power ahead, posting a 17.5% rise in revenue to S$14.8 million in FY13. This was primarily contributed by Chanel’s biggest Cruise Collection show outside of Europe at the Loewen Cluster in Singapore, as well as events and projects for their key accounts. In 2013, the division was appointed the activation agency on record for BMW Asia once again, managing a string of events from the BMW i Showcase at ION Orchard to the BMW 3 Series GT Launch. As the official marketing & sponsorship representative for Singapore’s LionsXII team, the division secured more sponsorship deals by engaging corporates with the “Friends of LionsXII” programme. *SCAPE Co. Ltd also selected the division to be its official marketing partner and manage their outdoor LED screens. The division also saw revenue contributions from clients such as Asia Pacific Breweries Singapore, Health Promotion Board, OCBC Bank, and Singapore River One.


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Nominating CommitteeWong Ah Long Chairman

Prabhakaran Narayanan Nair

Sebestian Tan

Benedict Soh Siak Poh

Simon Ong Chin Sim

Remuneration CommitteeSebastian Tan Chairman

Wong Ah Long

Prabhakaran Narayanan Nair

DirectorsBenedict Soh Siak Poh Executive Chairman

Simon Ong Chin Sim Group Managing Director

Anthony Chong Siew Ling Managing Director, Exhibitions & Museums

Prabhakaran Narayanan Nair Independent Director Wong Ah Long Independent Director

Sebastian Tan Independent Director

Audit CommitteePrabhakaran Narayanan Nair Chairman

Wong Ah Long

Sebestian Tan

Company SecretariesJudith Low Chu Li

Loo Shan Shan Victoria @ Loo Ming Wei

Corporate Information

AuditorsErnst & Young LLP Public Accountants and Chartered Accountants 1 Raffles Quay #18-01 North Tower Singapore 048583

Partner-in-charge: Philip Ng Weng Kwai(Appointed since the financial year ended31 December 2012)

BankersUnited Overseas Bank Limited

The Hongkong and Shanghai Banking Corporate Ltd

Development Bank of Singapore Ltd

Share RegistrarBoardroom Corporate& Advisory Services Pte. Ltd.50 Raffles Place, #32-01Singapore Land TowerSingapore 048623

Registered OfficeKingsmen Creative Centre3 Changi South LaneSingapore 486118Tel (65) 688 000 88Fax (65) 688 000 38

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21CORPORATE GOVERNANCE REPORT

Kingsmen Creatives Ltd. (the Company) and its subsidiaries (the Group) is committed to achieving a high standard of corporate governance, and to complying with the Code of Corporate Governance 2012 (the Code). The Company believes that good corporate governance provides the framework for an ethical and accountable corporate environment, which will safeguard the interests of shareholders. The Company is pleased to confirm that throughout the financial year ended 31 December 2013 (FY2013), the Group has adhered to the principles and guidelines of the Code.

1. BOARD MATTERSThe Board’s Conduct of Affairs

Principle 1: Every company should be headed by an effective Board to lead and control the company. The Board is collectively responsible for the long-term success of the company. The Board works with management to achieve this objective and management remains accountable to the Board.

The principal role of the Board is to:

• set and direct the long-term vision and strategic direction of the Group;• review the performance of management;• establish a proper risk management system to ensure that key potential risks faced by the Group are properly identified and managed;• conduct periodic reviews of the Group’s internal controls, financial performance, compliance practices and resource allocation;• approve annual budgets, proposals for acquisitions, investments and disposals;• review corporate governance practices; and• set the Company’s values and standards, and ensure that obligations to shareholders and other stakeholders are understood and met.

Delegation by the Board

Board committees, namely the Nominating Committee (NC), Remuneration Committee (RC) and Audit Committee (AC) have been constituted to assist the Board in the discharge of specific responsibilities. The duties, authority and accountabilities of each committee are set out in their respective terms of reference. Further information on the roles and responsibilities of the NC, RC and AC are set out in the sections relating to principles 4, 7 to 9, 11 and 12 of this Report respectively.

Board Approval

Matters which specifically require the Board’s decision or approval are:

• corporate strategy and business plans;• major funding proposals and investments including the Group’s commitment in terms of capital and other resources;• the appointment and remuneration packages of the directors and management;• the Group’s quarterly and full-year financial results and annual report for each financial year; • material acquisitions and disposals of assets;• share issuances, interim dividends and other returns to shareholders; and• matters involving a conflict of interest for a substantial shareholder or a director.

While matters relating to the Group’s strategies and policies require the Board’s direction and approval, management is responsible for the day-to-day operations and administration of the Group.

Board Meetings

The schedule of all Board and Board committees meetings and the Annual General Meeting (AGM) for each financial year is planned well in advance, in consultation with the directors. The Board meets at least four times a year at regular intervals and on an ad hoc basis, as and when circumstances require. Tele-conferencing at Board meetings is allowed under the Company’s Articles of Association.

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The number of Board and Board committee meetings held in FY2013 and the attendance of our directors at these meetings are as follows:

Board of Directors Audit Committee NominatingCommittee

RemunerationCommittee

Name of Director No. of Meetings Held

No. of Meetings Attended

No. of Meetings Held






Benedict Soh Siak Poh 4 4 4 4# 2 2 2 2#

Simon Ong Chin Sim 4 4 4 4# 2 2 2 2#

Anthony Chong Siew Ling 4 4 4 4# 2 2# 2 2#

Prabhakaran Narayanan Nair 4 4 4 4 2 2 2 2

Wong Ah Long 4 4 4 4 2 2 2 2

Sebastian Tan Cher Liang(1) 3 3 3 3 - - 1 1

Lee Hock Lye(2) 1 1 1 1 2 1 1 1# By invitation

(1) Appointed on 30 April 2013

(2) Retired by rotation at the Annual General Meeting held on 30 April 2013 and did not seek for re-election

Board Orientation and Training

A formal letter of appointment is provided to every new director, setting out his duties and obligations. A new director will also receive an orientation package which includes materials to familiarise new directors with the Group’s business, structure and governance practices relating to, inter alia, disclosure of interests in the Company’s securities, prohibition on dealings in the Company’s securities and restrictions on the disclosure of price-sensitive information.

The directors are also provided with briefings and updates in areas such as corporate governance, changes to laws and/or regulations pertaining to the Group’s business, and changes in financial reporting standards, so as to enable them to properly discharge their duties as Board or Board committee members.

Further, in order to provide our independent directors with a better understanding of the Group’s business, the Company conducts visits to the Group’s operational facilities. Directors can also request further briefings or information on any aspect of the Group’s operations or business from management.

Board Composition and Guidance

Principle 2: There should be a strong and independent element on the Board, which is able to exercise objective judgment on corporate affairs independently, in particular, from management and 10% shareholders1. No individual or small group of individuals should be allowed to dominate the Board’s decision making.

Board Composition

Currently, the Board comprises six directors, three of whom are independent. The Board is constituted as follows:

Executive Directors Mr Benedict Soh Siak Poh, Executive Chairman Mr Simon Ong Chin Sim, Group Managing Director and Chief Executive Officer Mr Anthony Chong Siew Ling, Managing Director, Exhibitions & Museums

Independent Directors Mr Prabhakaran Narayanan Nair Mr Wong Ah Long Mr Sebastian Tan Cher Liang

Each year, the Board reviews its size and composition, taking into account, inter alia, the scope and nature of the Group’s business and operations. The Board believes that its current composition and size provides an appropriate balance of skills, experience and knowledge of the Group, which facilitates effective decision-making. The directors provide core competencies such as legal and finance expertise, business or management experience, industry knowledge and strategic planning experience.

Board Independence

The independence of each director is reviewed by the NC on an annual basis. In determining whether a director is independent, the NC has adopted the definition in the Code of what constitutes an independent director. Following its review, the Board and NC are of the view that Mr Prabhakaran Narayanan Nair, Mr Wong Ah Long and Mr Sebastian Tan Cher Liang are independent.

CORPORATE GOVERNANCE REPORT

1 The term “10% shareholder” shall refer to a person who has an interest or interests in one or more voting shares in the company and the total votes attached to that share, or those shares, is not less than 10% of the total votes attached to all the voting shares in the company. “Voting shares” exclude treasury shares.


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The independent directors contribute finance knowledge, legal expertise and business management experience to the Group, and provide the executive directors and management with diverse and objective perspectives of issues that are brought before the Board. The independent directors also aid in developing the Group’s strategic process, monitoring the performance of management and operating as an appropriate check and balance.

Chairman and Chief Executive Officer

Principle 3: There should be a clear division of responsibilities between the leadership of the Board and the executives responsible for managing the company’s business. No one individual should represent a considerable concentration of power.

Mr Benedict Soh Siak Poh is the Executive Chairman, and Mr Simon Ong Chin Sim is the Chief Executive Officer (CEO) of the Company. This ensures that there is an appropriate balance of power, increased accountability and enhances the Board’s capacity for independent decision-making.

At the operational level, the CEO is responsible for the Group’s overall management and development of the Group’s local and overseas operations, as well as exploring strategic business opportunities. He is also responsible for the overall strategy and policies of the Group’s creative directions and standards. The Executive Chairman oversees the Group’s strategic development and sets the overall strategy and politicies. He is also responsible for explorin strategic business opportunities.

The Executive Chairman promotes high standards of corporate governance and leads the Board to ensure its effectiveness on all aspects of its role. As part of his administrative duties, the Executive Chairman sets the Board meeting agenda in consultation with the Financial Controller of the Company (FC) and ensures that the directors receive complete, adequate and timely information. He also encourages constructive relations within the Board and between the Board and management and facilitates effective contribution of the independent directors. In addition, the Executive Chairman is responsible for ensuring effective communication with shareholders.

The roles of the Executive Chairman and the CEO are separated and each of the Board committees is chaired by an independent director. Although the Executive Chairman is part of the management team, the Board is of the view that there is an appropriate balance of power and accountability that enhances the Board’s capacity for independent decision-making and at present, it would not be necessary to appoint a lead independent director.

Board Membership

Principle 4: There should be a formal and transparent process for the appointment and re-appointment of directors to the Board.

Nominating Committee

The NC is chaired by Mr Wong Ah Long and comprises Mr Prabhakaran Narayanan Nair, Mr Sebastian Tan Cher Liang, Mr Simon Ong Chin Sim and Mr Benedict Soh Siak Poh. The majority of the NC members, including the Chairman, are independent directors.

The principal functions of the NC in accordance with its terms of reference are as follows:

• to make recommendations on matters relating to the appointment and re-appointment of directors, Board succession plans for directors, evaluation of the Board’s performance and training programmes for the Board;• to determine on an annual basis whether or not a director is independent; • to decide whether a director is able to and has been adequately carrying out his duties as a director of the Company;• to ensure that all directors submit themselves for re-nomination and re-election at regular intervals and at least once every three years; and• to assess the effectiveness of the Board as a whole, its Board committees and the contribution by each director to the effectiveness of the Board.

The date of initial appointment and last re-appointment of each director is set out below. For key information on the directors, please refer to the section entitled “Board of directors” of this Annual Report. In addition, information on each director’s shareholding in the Company, if any, is set out in the section entitled “Report of the Directors” of this Annual Report.

Name Position Date of Initial Appointment

Date of Last Re-appointment

Executive Directors

Benedict Soh Siak Poh Executive Chairman 16 December 2002 27 April 2011

Simon Ong Chin Sim Group Managing Director and Chief Executive Officer

16 December 2002 30 April 2013

Anthony Chong Siew Ling Managing Director, Exhibitions & Museums 12 August 2003 29 April 2012

Independent Directors

Prabhakaran Narayanan Nair Independent Director 12 August 2003 27 April 2011

Wong Ah Long Independent Director 28 April 2008 29 April 2012

Sebastian Tan Cher Liang Independent Director 30 April 2013 NA


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Directors’ Commitments

The NC considers whether a director is able to and has been adequately carrying out his duties as a director of the Company, taking into consideration, inter alia, the director’s number of listed company board representations and other principal commitments2 .

In addition, the NC will also take into consideration, inter alia, a qualitative assessment of each director’s contributions as well as any other relevant time commitments. The Board is of the view that at present, it would not be meaningful to prescribe a maximum number of listed company board representations which any director may hold. Each director has confirmed that notwithstanding his other listed company board representations (if any) and principal commitments, he is able to devote sufficient time and attention to the affairs of the Company.

Process for Nomination and Selection of New Directors

The Company adopts a comprehensive and detailed process in the selection of new directors. Candidates are first sourced through an extensive network of contacts and identified based on, inter alia, the needs of the Group and the relevant expertise required. In selecting suitable candidates, the Board, in consultation with the NC, would also consider the Group’s strategic goals, business direction and medium-term needs. The NC then conducts interviews with the candidates and nominates the most suitable candidate for appointment to the Board.

Board Performance

Principle 5: There should be a formal annual assessment of the effectiveness of the Board as a whole and its Board committees and the contribution by each director to the effectiveness of the Board.

Board Evaluation Process

The NC will assess and discuss the performance of the Board as a whole and its Board committees on an annual basis. This process includes a questionnaire prepared by the NC Chairman, the results of which are presented to the NC for review. Following its review, the NC identifies key areas for improvement and requisite follow-up actions, and provides feedback to the Board.

Each director will evaluate the performance of the Board taking into account, inter alia, quantitative financial indicators such as the Company’s share price performance over a five-year period vis-à-vis the Singapore Straits Times Index and a benchmark of its industry peers, and achievement of financial targets. The Board is of the view that this performance criteria allows for appropriate comparison and addresses how the directors have enhanced long-term shareholders’ value.

Individual Director Evaluation

There is an individual assessment of each director’s contribution conducted annually and on an informed basis by each director to the effectiveness of the Board, numerous factors are taken into consideration, including attendance and participation in meetings and commitment of time to director’s duties. The NC also considers other contributions by a director such as providing objective perspectives of issues, facilitating business opportunities and strategic relationships, and accessibility to management outside of formal Board and/or Board committee meetings. The performance of each director is taken into account in his re-appointment or re-election.

Access to Information

Principle 6: In order to fulfil their responsibilities, directors should be provided with complete, adequate and timely information prior to Board meetings and on an on-going basis so as to enable them to make informed decisions to discharge their duties and responsibilities.

The Company makes available to all directors its quarterly management accounts and other financial statements, budgets and forecasts, together with all other relevant information. Detailed board papers are provided to the directors before the scheduled meetings so as to enable them to make informed decisions. In respect of budgets, any material variance between the projections and the actual results is reviewed by the Board and disclosed and explained by management, where required by the Board.

The directors have also been provided with the contact details of the Company’s senior management and company secretaries to facilitate separate and independent access. At least one company secretary is in attendance at all Board meetings. Together with management, the company secretaries are responsible for ensuring that appropriate board procedures are followed and that the requirements of the Companies Act, Chapter 50, of Singapore and the provisions in the Listing Manual of the Singapore Exchange Securities Trading Limited (Listing Manual) are complied with. The appointment and removal of each company secretary is subject to the Board’s approval.

The directors may, in furtherance of their duties, take independent professional advice, if necessary, at the Company’s expense.

2 The term “principal commitments” includes all commitments which involve significant time commitment such as full-time occupation, consultancy work, committee work, non-listed company board representations and directorships and involvement in non-profit organisations.



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2. REMUNERATION MATTERS Principle 7: There should be a formal and transparent procedure for developing policy on executive remuneration and for fixing the remuneration packages of individual directors. No director should be involved in deciding his own remuneration.

Principle 8: The level and structure of remuneration should be aligned with the long-term interest and risk policies of the company, and should be appropriate to attract, retain and motivate (a) the directors to provide good stewardship of the company, and (b) key management personnel to successfully manage the company. However, companies should avoid paying more than is necessary for this purpose.

Principle 9: Every company should provide clear disclosure of its remuneration policies, level and mix of remuneration, and the procedure for setting remuneration. It should provide disclosure in relation to its remuneration policies to enable investors to understand the link between remuneration paid to directors and key management personnel, and performance.

Remuneration Committee

The RC is chaired by Mr Sebastian Tan Cher Liang and comprises Mr Prabhakaran Narayanan Nair and Mr Wong Ah Long. All the RC members, including the Chairman, are independent directors. The principal function of the RC, in accordance with its terms of reference, is to set the remuneration guidelines and policies of the Group. The RC also administers the Kingsmen Performance Share Scheme (the Scheme). Details of the Scheme are contained in the section entitled ‘‘Report of the Directors’’ of this Annual Report.

The Board considers that the members of the RC, who each have years of experience in senior management positions and/or on the boards of various listed companies, collectively have strong management experience and expertise on remuneration issues. If necessary, the RC members may seek expert advice inside and/or outside the Company on remuneration of all directors.

Procedure for Setting Remuneration

The Company has implemented a formal and transparent procedure for developing policy on executive remuneration and for fixing the remuneration packages of individual directors. The RC reviews and recommends to the Board a general framework of remuneration and specific remuneration packages for the Board and management, covering all aspects of remuneration including directors’ fees, salaries, allowances, bonuses, options, share-based incentives and awards, and benefits-in-kind. Each RC member does not participate in discussions, and abstains from decision-making, relating to any remuneration, compensation, options or any form of benefits to be granted to him.

The RC also reviews the Company’s obligations, if any, arising in the event of termination of the executive directors’ and/or management’s contracts of service, to ensure that the termination clauses of such contracts of service are fair and reasonable.

Remuneration Policies

In order to maximise shareholders’ value and promote the long-term success of the Company, the Company seeks to attract, retain and motivate senior management and employees by offering competitive remuneration packages. The remuneration of our senior management and employees is set based on, inter alia, the relevant scope and extent of responsibilities, prevailing market conditions, and comparable industry benchmarks. The Company rewards senior management and employees based on achievement of individual performance objectives and the Company’s financial performance. The Board is of the view that this will motivate our management personnel and employees to achieve superior performance and promote the long term growth of the Group.

Executive Directors’ Remuneration

In accordance with the terms of their service agreements, each of our executive directors is entitled to, inter alia, performance-related incentives which are linked to the financial performance of the Group and the individual performance of each executive director. The terms of our executive directors’ service agreements and their remuneration packages are subject to review by the RC. There are no excessive or onerous removal clauses in these service agreements.

Independent Directors’ Remuneration

The independent directors have not entered into service agreements with the Company. Each independent director receives a fixed fee, which is determined by the Board, taking into account the effort, time spent and responsibilities of the director. Such fees are subject to approval of the shareholders at each AGM.

Level and Mix of Remuneration

The remuneration of the Company’s directors and key executives for FY2013 is set out below. No termination, retirement or post-employment benefits have been granted to the Company’s directors and key executives.


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(a) Directors

FY2013 Fees Salary Bonus/ Incentives

Benefits Share Award Total

% % % % % % $’000

Executive Directors

Benedict Soh Siak Poh 10.4% 27.3% 56.4% 1.1% 4.8% 100% 1,333

Simon Ong Chin Sim 9.6% 27.6% 56.9% 1.1% 4.8% 100% 1,321

Anthony Chong Siew Ling 7.8% 38.8% 51.2% 2.2% - 100% 641

Independent Directors

Prabhakaran Narayanan Nair 100.0% - - - - 100% 50

Wong Ah Long 100.0% - - - - 100% 43

Sebastian Tan Cher Liang 100.0% - - - - 100% 43

(b) Key Executives

FY2013 Fees Salary Bonus/ Incentives

Benefits Share Award Total

% % % % % %

Remuneration of top 5 Key Executives (who are not directors of Kingsmen Creatives Ltd)

$750,000 to $999,999

Alex Wee Huat Seng 1.6% 22.3% 52.8% 1.5% 21.8% 100.0%

$500,000 to $749,999

Francis Yee Chee Kong 3.9% 30.9% 57.9% 2.1% 5.2% 100.0%

Roy Ong Chin Kwan 2.6% 36.7% 50.4% 2.5% 7.8% 100.0%

Krez Peok Chong Eng 5.5% 51.9% 42.6% 0.0% 0.0% 100.0%

Andrew Cheng Oon Teck 0.0% 39.7% 53.8% 2.9% 3.6% 100.0%

The aggregate amount of the total remuneration paid to the Company’s top 5 key executives (who are not directors or CEO) is S$3,264, 000.

Mr Roy Ong Chin Kwan is an immediate family member of Mr Simon Ong Chin Sim, our Group Managing Director and CEO. Save as disclosed above, there is no other employee who is related to a director, whose remuneration exceeds S$50,000.

Employee Share Schemes

No options were granted to the directors or employees pursuant to the Kingsmen Share Option Scheme during FY2013.

Pursuant to the Kingsmen Performance Share Scheme, an aggregate of 1,670,850 fully-paid shares, constituting approximately 0.9% of the total number of issued shares of the Company (excluding treasury shares), were awarded to and accepted by employees of the Group in FY2013. Since the commencement of the Kingsmen Performance Share Scheme, an aggregate of 3,935,800 fully-paid shares, constituting approximately 2.0% of the total number of issued shares of the Company (excluding treasury shares), have been awarded and issued.

No shares have been issued to the directors, controlling shareholders of the Company or their associates under the Kingsmen Performance Share Scheme, and no participants have been awarded 5.0% or more of the total number of shares available under the Kingsmen Performance Share Scheme. Further details of the Schemes are set out in the section entitled ‘‘Report of the Directors’’ of this Annual Report.



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3. ACCOUNTABLILITY AND AUDITAccountability

Principle 10: The Board should present a balanced and understandable assessment of the company’s performance, position and prospects.

In line with the Company’s disclosure obligations under the Listing Manual, the Board’s policy is that shareholders shall be informed of all major developments relating to the Company. Information is communicated to shareholders on a timely basis through SGXNet and the press. The Board also provides shareholders with a detailed explanation of the Company’s performance, position and prospects on a quarterly basis.

Management makes available to all directors its quarterly management accounts and other financial statements, together with all other relevant information of the Group’s performance, position and prospects.

Risk Management and Internal Controls

Principle 11: The Board is responsible for the governance of risk. The Board should ensure that management maintains a sound system of risk management and internal controls to safeguard shareholders’ interests and the company’s assets, and should determine the nature and extent of the significant risks which the Board is willing to take in achieving its strategic objectives.

The AC and management are responsible for overseeing the Group’s risk management framework and policies, including reviewing the Group’s business and operational activities to identify areas of significant business risks, and recommending to the Board the appropriate strategy and resources required for managing risks that are consistent with the Group’s risk appetite.

Material transactions are subject to risk analysis by management and the AC, and safeguard measures against significant risks are established prior to undertaking new projects. The Board, together with management, will continue to enhance and improve the existing risk management and internal control systems.

The FC and internal auditors also assist in the risk management process by identifying certain areas of concern that are uncovered through financial/audit checks. The key risks facing the Group have been identified and appropriate measures are in place to mitigate such risks.

The Board has received assurance from the Executive Chairman and the CEO on the Group’s financial records and regarding the adequacy and effectiveness of the Group’s risk management and internal control systems. The Board has also received assurance from the CEO and the FC that the financial records have been properly maintained and the financial statements give a true and fair view of the Group’s operations and finances.

Based on the internal controls (including financial, operational, compliance and information technology controls) established and maintained by the Group, work performed by the internal and external auditors, a board risk and assurance framework developed with the assistance of an external consultant, and reviews performed by the AC and the Board, the AC and the Board are of the opinion that the Group’s internal controls, addressing financial, operational and compliance risks, and risk management systems are adequate as at the date of this Annual Report.

The system of internal controls and risk management established by the Group provides reasonable, but not absolute, assurance that the Group will not be adversely affected by any event that can be reasonably foreseen as it strives to achieve its business objectives. The Board also notes that no system of internal controls and risk management can provide absolute assurance in this regard, or absolute assurance against the occurrence of material errors, poor judgment in decision-making, human error, losses, fraud or other irregularities.

Audit Committee

Principle 12: The Board is responsible for the governance of risk. The Board should ensure that management maintains a sound system of risk management and internal controls to safeguard shareholders’ interests and the company’s assets, and should determine the nature and extent of the significant risks which the Board is willing to take in achieving its strategic objectives.

The AC is chaired by Mr Prabhakaran Narayanan Nair and comprises Mr Wong Ah Long and Mr Sebastian Tan Cher Liang. All the AC members, including the Chairman, are independent directors.


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The AC holds at least four meetings in each financial year. The principal functions of the AC in accordance with its terms of reference are as follows:

• reviewing the Group’s financial statements, and significant financial reporting issues and judgments so as to ensure the integrity of the financial statements and any formal announcements relating to financial performance;• reviewing the audit plans and reports of the external auditors and to consider the effectiveness of the actions taken by management on the auditors’ recommendations;• ensuring that management provides assistance and co-operation to the external auditors;• making recommendations to the Board on the appointment, re-appointment and removal of external auditors and approving the remuneration and terms of engagement of the external auditors; • reviewing the effectiveness of the Group’s internal audit function;• evaluating the adequacy and effectiveness of the Group’s internal controls by, inter alia, reviewing the reports of the internal and external auditors, and management’s responses and actions to correct any deficiencies; and • reviewing interested person transactions (as defined in the Listing Manual).

In addition, the AC is tasked to commission independent investigations of any suspected fraud or irregularity, which has or is likely to have a material impact on the Company’s operating results or financial position, and to review the findings of such investigations. The AC has reasonable resources to enable it to discharge its responsibilities properly. It has full access to, and the co-operation of, management and full discretion to invite any director or key executive to attend its meetings.

The AC also meets with the external auditors and internal auditors without management, at least annually and whenever necessary to review the adequacy of audit arrangements, with emphasis on the scope and quality of audit and the independence and objectivity of the auditors.

The AC receives briefings and updates on changes to accounting standards and other issues which may have a direct impact on financial statements.

External auditors

The AC reviews the independence of the Group’s external auditors annually. The AC has undertaken a review of all non-audit services provided by the external auditors, Ernst & Young LLP, and is of the view that such services would not affect the independence of the external auditors.

The partner in charge of auditing the Group, Mr Philip Ng, was appointed from the financial year ended 31 December 2012. The AC is satisfied with the independence and objectivity of the external auditors, Ernst & Young LLP.

The fees payable to our external auditor, Ernst & Young LLP, for FY2013 are as follows:

Fees payable to external auditor for FY2013 $’000

Audit 240

Non-audit -

Total 240

The Company has complied with Rules 712 and 715 of the Listing Manual in the appointment of its auditor.

Whistle-blowing Policy

The Company implemented a whistle-blowing policy in 2010, which provides the Group’s employees and any other persons with well-defined and accessible channels through which they may, in confidence, raise concerns about possible improprieties in matters of financial reporting or other matters. The AC reviews such policy to ensure that arrangements are in place for independent investigation of such matters and for appropriate follow-up action.

The Company will protect the identity and interest of all whistle-blowers, and treat all information received confidentially. Anonymous reports will also be accepted.

Internal Audit

Principle 13: The company should establish an effective internal audit function that is adequately resourced and independent of the activities it audits.

We have engaged Nexia TS Public Accounting Corporation (Nexia) as our internal auditor. Nexia is a certified public accounting firm and a member of the Institute of Internal Auditors (IIA). In performing the internal audit, Nexia applied the Standards for the Professional Practice of Internal Auditing set by IIA.

The Board recognises that it is responsible for maintaining a sound system of internal controls to safeguard shareholders’ investments and the Group’s business and assets. The internal auditors report primarily to the Chairman of the AC. The audit plan is submitted to the AC for approval prior to commencement of the internal audit.

The AC reviews the adequacy and effectiveness of the internal audit function at least annually to, inter alia, ensure that (i) the internal audit function is adequately resourced and has appropriate standing within the Company; and (ii) the recommendations of the internal auditors are properly implemented.



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4. COMMUNICATION WITH SHAREHOLDERSPrinciple 14: Companies should treat all shareholders fairly and equitably, and should recognise, protect and facilitate the exercise of shareholders’ rights, and continually review and update such governance arrangements.

Principle 15: Companies should actively engage their shareholders and put in place an investor relations policy to promote regular, effective and fair communication with shareholders.

Principle 16: Companies should encourage greater shareholder participation at general meetings of shareholders, and allow shareholders the opportunity to communicate their views on various matters affecting the company.

The Board is mindful of the obligation to provide regular, effective and fair communication with shareholders. Information is communicated to the shareholders on a timely basis. The Company does not practise selective disclosure. Price sensitive information is first publicly released via SGXNET before the Company meets with any group of investors or analysts. The Company’s financial results and annual reports are announced or issued within the period specified under the Listing Manual, and are also made available to the public via the Company’s website.

The Board welcomes the views of shareholders on matters affecting the Company, whether at shareholders’ meetings or on an ad-hoc basis. Shareholders are informed of shareholders’ meetings through notices published in the newspapers, reports and/or circulars provided to all shareholders. Each item of special business included in the notices of shareholders’ meetings is accompanied, where appropriate, by an explanation for the proposed resolution. Separate resolutions are proposed for substantially separate issues at shareholders’ meetings. The chair persons of the AC, RC and NC are typically available at shareholders’ meetings to answer queries relating to the duties of these committees. The external auditors are also present at the AGM to assist the directors in addressing any relevant queries by shareholders regarding the conduct of audit and the preparation and content of the auditors’ report. The AGM is the principal forum for dialogue with shareholders. In addition, the Company also holds briefings to present half-year and full-year results for the media and analysts.

The minutes of general meetings, which include substantial comments or queries from shareholders and responses from the Board and management, are available to shareholders upon written request.

5. DEALINGS IN SECURITIES The Company has adopted an internal policy on dealings in the Company’s securities, which is in line with the requirements of the Listing Manual and notified to all directors and employees of the Group. The Company and all directors and employees of the Group are prohibited from dealing in the Company’s securities during the period commencing two (2) weeks before the announcement of the Group’s quarterly financial results, and the period commencing one (1) month before the announcement of its full-year results.

All directors, officers and employees are expected to observe insider trading laws at all times. In particular, they are aware that dealing in the Company’s securities, when they are in possession of unpublished material price-sensitive information in relation to those securities, is an offence. Our directors and employees are also discouraged from dealing in the Company’s securities on short-term considerations.

6. INTERESTED PERSON TRANSACTIONSThe Group has not entered into any interested person transactions during FY2013 (excluding transactions less than S$100,000), and does not have a Shareholders’ Mandate pursuant to Rule 920 of the Listing Manual.

In the event that a potential conflict of interest arises, the director concerned will not participate in discussions, abstain from decision-making, and refrain from exercising any influence over other members of the Board.

To ensure compliance with Chapter 9 of the Listing Manual, the Board and the AC review, on a quarterly basis, interested person transactions entered into by the Group (if any).


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FINANCIAL REPORT

DEFINITIONS

LETTER TO SHAREHOLDERS

1. INTRODUCTION

2. THE KINGSMEN PERFORMANCE SHARE SCHEME

3. PROPOSED AWARDS

4. DIRECTORS’ AND SUBSTANTIAL SHAREHOLDERS INTEREST

5. DIRECTORS’ RECOMMENDATION

6. SHAREHOLDERS WHO WILL ABSTAIN FROM VOTING

7. ACTION TO BE TAKEN BY SHAREHOLDERS

8. DIRECTOR’S RESPONSIBILITY STATEMENT

9. DOCUMENTS AVAILABLE FOR INSPECTION

SCHEDULE A: RULES OF THE KINGSMEN PERFORMANCE SHARE SCHEME

2

4

4

4

5

8

9

9

9

9

9

10


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The directors are pleased to present their report to the members together with the audited consolidated financial statements of Kingsmen Creatives Ltd. (the “Company”) and its subsidiaries (collectively, the “Group”) and the balance sheet and statement of changes in equity of the Company for the financial year ended 31 December 2013.

Directors

The directors of the Company in office at the date of this report are:

Benedict Soh Siak Poh (Executive Chairman) Simon Ong Chin Sim (Group Managing Director) Anthony Chong Siew Ling (Managing Director, ‘Exhibitions & Museums’) Prabhakaran Narayanan Nair (Independent Director) Wong Ah Long (Independent Director) Sebastian Tan Cher Liang (Independent Director)

In accordance with Article 107 of the Company’s Articles of Association, Benedict Soh Siak Poh and Prabhakaran Narayanan Nair retire, and being eligible, offer themselves for re-election as directors.

Arrangements to enable directors to acquire shares and debentures

Except as disclosed below, neither at the end of nor at any time during the financial year was the Company a party to any arrangement whose objects are, or one of whose object was, to enable the directors of the Company to acquire benefits by means of the acquisition of shares or debentures of the Company or any other body corporate.

Directors’ interests in shares and debentures

The following directors, who held office at the end of the financial year, had, according to the register of directors’ shareholdings required to be kept under Section 164 of the Singapore Companies Act, Cap. 50, an interest in shares of the Company, as stated below:

Direct interest Deemed interest

Name of director

At the beginning of financial year/date

of appointment, whichever earlier

At the end of financial year

At 21.1.2014

At the beginning of financial year/date

of appointment, whichever earlier

At the end of financial year

At 21.1.2014

Ordinary shares of the Company

Benedict Soh Siak Poh 7,734,439 7,917,269 7,917,269 37,993,060 37,993,060 37,993,060

Simon Ong Chin Sim 7,734,420 7,917,250 7,917,250 37,993,060 37,993,060 37,993,060

Anthony Chong Siew Ling 3,634,761 3,634,761 3,634,761 – – –

Wong Ah Long – – – 36,000 36,000 36,000

Prabhakaran Narayanan Nair 100,000 – – – – –

Sebastian Tan Cher Liang – – – – – –

By virtue of Section 7 of the Singapore Companies Act, Cap. 50, Benedict Soh Siak Poh and Simon Ong Chin Sim are deemed to have interests in shares of all the subsidiaries held by the Company.

Except as disclosed in this report, no other director who held office as at the end of the financial year had interests in shares, share options, warrants or debentures of the Company, or of related corporations, either at the beginning of or date of appointment, or at the end of the financial year, or on 21 January 2014.

REPORT OF THE DIRECTORS

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Directors’ contractual benefits

Except as disclosed in the financial statements, since the end of the previous financial year, no director of the Company has received or become entitled to receive a benefit by reason of a contract made by the Company or a related corporation with the director, or with a firm of which the director is a member, or with a company in which the director has a substantial financial interest.

Share options

The Kingsmen Share Option Scheme (the “ESOS”) was approved by the members of the Company at an Extraordinary General Meeting (“EGM”) held on 11 August 2003. On 26 April 2004, the members of the Company approved the grant of incentive options at a maximum discount not exceeding 20% of the market price under the ESOS. The rules of the ESOS were amended and approved at an EGM held by the Company on 29 April 2009 by members of the Company.

Under the rules of the amended ESOS, all directors (including non-executive and independent directors) and employees of the Company and its subsidiaries are eligible to participate in the ESOS. Controlling shareholders are not eligible to participate in the ESOS. All participants of the ESOS are allowed to exercise the options within the exercise period only if they remain under the employment of the Company. The options do not carry any rights to participate in the share issues of the subsidiaries of the Company.

The ESOS is administered by the Remuneration Committee, comprising 3 Board directors, all of whom are Independent Directors. The Remuneration Committee is charged with the administration of the ESOS in accordance with the rules of the ESOS. The members of the Remuneration Committee are:

Sebastian Tan Cher Liang (Chairman) Wong Ah Long Prabhakaran Narayanan Nair

The ESOS has 2 categories of options, being the market price option and the incentive option. The exercise price for each share of which an option is exercisable shall be determined by the Remuneration Committee at its absolute discretion and fixed by the Remuneration Committee.

There were no outstanding options to subscribe for ordinary shares of the Company pursuant to the ESOS as at 31 December 2013 (2012: Nil).

There were no options to take up unissued shares of the Company or its subsidiaries which were granted during the financial period under review. No other options to take up unissued shares of the Company or its subsidiaries were outstanding as at the end of the financial year. No shares were issued by way of the exercise of the options during the financial year under review.



33REPORT OF THE DIRECTORS

Kingsmen Performance Share Scheme

The Kingsmen Performance Share Scheme (the “KPSS”) was approved and adopted by the members of the Company at an EGM of the Company held on 29 April 2009. The implementation of the KPSS is to complement the existing ESOS and allows for participation by (a) Group employees, (b) Group Executive Directors (which refers to directors of the Company and/or any of its subsidiaries, as the case may be, who performs an executive function within the Group), (c) Non-Executive Directors (which refers to independent directors of the Company or directors of the Company and/or any of its subsidiaries, as the case may be, other than a Group Executive Director) and (d) associated company employees. Persons eligible to participate in the KPSS who are also controlling shareholders or associates of a controlling shareholder would be eligible to participate in the KPSS subject to the rules of the Listing Manual of the Singapore Exchange Securities Trading Limited (“Listing Manual”). Under the KPSS, an award of fully paid shares of the Company may only be vested and consequently any shares comprised in such awards shall only be delivered upon (i) the committee administering the KPSS (“KPSS Committee”) being satisfied that the participant has achieved the pre-determined performance targets and/or due recognition should be given for good work performance and/or significant contribution to the Company and/or (ii) the Company decides to pay a pre-determined percentage of a Group employee’s annual cash bonus payment in the form of shares. The pre-determined performance targets for each participant and the pre-determined percentage of a Group employee’s annual cash bonus payment in the form of shares shall be determined by the KPSS Committee in its absolute discretion.

The KPSS Committee consists of the directors of the Company (being the three Executive Directors, Mr Benedict Soh Siak Poh, Mr Simon Ong Chin Sim and Mr Anthony Chong Siew Ling, and the three Independent Directors, Mr Sebastian Tan Cher Liang, Mr Prabhakaran Narayanan Nair and Mr Wong Ah Long). The quorum for any KPSS Committee meeting shall be three (3) directors, of which two (2) of the directors shall be Independent Directors. The KPSS shall be administered by the KPSS Committee in its absolute discretion with such powers and duties as are conferred on it by the Board, except that in compliance with the requirements of the Listing Manual, no member of the KPSS Committee shall participate in any deliberation or decision in respect of share awards granted or to be granted to him.

The KPSS shall continue in force at the discretion of the KPSS Committee, subject to a maximum period of ten (10) years commencing on the date the KPSS is adopted by the Company in general meeting, provided always that the KPSS may continue beyond the above stipulated period with the approval of shareholders of the Company by ordinary resolution in general meeting and of any relevant authorities which may then be required. The KPSS may be terminated at any time by the KPSS Committee or by resolution of the Company in general meeting subject to all relevant approvals, which may be required, and if the KPSS is terminated, no further awards shall be vested by the Company.

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Kingsmen Performance Share Scheme (cont’d)

During the financial year under review, an aggregate of 1,670,850 (2012: 666,900) performance shares were awarded to and accepted by 53 (2012: 50) employees of the Company and its subsidiaries.

At the end of the financial year under review, details of the performance shares awarded under the Kingsmen Performance Share Plan are as follows:

Balance as at 1.1.2013

Share awards granted

during the financial year

Share awards vested

during the financial year

Balance as at 31.12.2013

Aggregate ordinary shares

awarded to participants

since commencement

of KPSS to end of financial year

under review

Detail of Participant (a) (b) (a) + (b)

Group Key Management Personnel 360,070 792,570 792,570 1,152,640 1,152,640

Employees 1,868,050 828,380 828,380 2,696,430 2,696,430

Associate of the Company’s controlling shareholders

Ong Chin Kwan 36,830 49,900 49,900 86,730 86,730

2,264,950 1,670,850 1,670,850 3,935,800 3,935,800

No performance shares have been granted to the directors or controlling shareholders of the Company and no participants under the Kingsmen Performance Share Scheme have been awarded 5.0% or more of the total number of performance shares which may be issued by the Kingsmen Performance Share Scheme since the commencement of the Kingsmen Performance Share Scheme.

Subsequent to the balance sheet date up to 21 January 2014, there has been no change in the conditional awards granted, vested and/or cancelled under the Kingsmen Performance Share Scheme.

The aggregate number of shares issued and issuable pursuant to the ESOS, the KPSS and any other share based incentive schemes of the Company shall not exceed fifteen per cent (15%) of the total number of issued shares (excluding treasury shares) in the capital of the Company from time to time.


35REPORT OF THE DIRECTORS

Audit Committee

The Audit Committee (“AC”) comprises three (3) Board directors, all of whom are Independent Directors. All of the members of the AC are independent. The members of the AC at the date of this report are:

Prabhakaran Narayanan Nair (Chairman) Wong Ah Long Sebastian Tan Cher Liang

During the financial year, the AC held five meetings and carried out its functions in accordance with Section 201B(5) of the Singapore Companies Act, Cap. 50, which include the following:

• Reviewing the quarterly and annual financial statements and the auditors’ report on the annual financial statements of the Company before their submission to the Board of directors;

• Reviewing the audit plans of the internal and external auditors of the Company and ensuring the adequacy of the Company’s system of accounting controls and the co-operation given by the Company’s management to the internal and external auditors;

• Reviewing the effectiveness of the Company’s material internal controls, including financial, operational and compliance controls and risk management via reviews carried out by the internal auditors;

• Meeting with the internal and/or external auditors, other committees, and management in separate executive sessions to discuss any matters that these groups believe should be discussed privately with the AC;

• Reviewing legal and regulatory matters that may have a material impact on the financial statements, related compliance policies and programmes and any reports received from regulators;

• Reviewing the cost effectiveness and the independence and objectivity of the external auditors;

• Reviewing the nature and extent of non-audit services provided by the external auditors;

• Recommending to the Board of directors the nomination of the external auditors, approving the compensation of the external auditors, and reviewing the scope and results of the audit;

• Reporting actions and minutes of the AC to the Board of directors with such recommendations as the AC considers appropriate; and

• Reviewing interested person transactions in accordance with the requirements of the Listing Manual of the Singapore Exchange Securities Trading Limited.

Apart from the functions above, the AC will commission and review the findings of internal investigations into matters where there is suspicion of fraud or irregularity, or failure of internal controls or infringement of any Singapore Law, rule or regulation, which has or is likely to have a material impact on the Group’s operating results and/or financial position.

The AC, having reviewed all non-audit services provided by the external auditors to the Group, is satisfied that the nature and extent of such services would not affect the independence and objectivity of the external auditors. The AC has also conducted a review of interested person transactions.

The AC has also met with the internal and external auditors, without the presence of the Company’s management, at least once a year.

Further details regarding the AC are disclosed in the Corporate Governance Report of the Company’s Annual Report for the financial year ended 31 December 2013.

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Audit Committee (cont’d)

The Company appoints different auditors for its subsidiaries or significant associated companies (as defined in the Listing Manual of the Singapore Exchange Securities Trading Limited). The Board and the AC, having reviewed such appointment(s), are satisfied that the appointment(s) would not compromise the standard and effectiveness of the audit of the consolidated financial statements of the Group. The details of the auditors for the Company’s subsidiaries and significant associated companies are disclosed on pages 80 and 83 of the Company’s Annual Report for the financial year ended 31 December 2013.

On behalf of the Board of directors:

Benedict Soh Siak Poh Director

Simon Ong Chin Sim Director

Singapore 2 April 2014



37

We, Benedict Soh Siak Poh and Simon Ong Chin Sim, being two of the directors of Kingsmen Creatives Ltd. (the “Company”), do hereby state that, in the opinion of the directors,

(i) the accompanying balance sheets, consolidated income statement, consolidated statement of comprehensive income, statements of changes in equity, and consolidated cash flow statement, together with the notes thereto, are drawn up so as to give a true and fair view of the state of affairs of the Group and of the Company as at 31 December 2013 and the results of the business, changes in equity and cash flows of the Group and changes in equity of the Company for the financial year ended on that date; and

(ii) at the date of this statement, there are reasonable grounds to believe that the Company will be able to pay its debts as and when they fall due.

On behalf of the Board of directors:

Benedict Soh Siak Poh Director

Simon Ong Chin Sim Director


STATEMENT BY DIRECTORS

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INDEPENDENT AUDITOR’S REPORTFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2013

TO THE MEMBERS OF KINGMEN CREATVES LTD

Report on the financial statements

We have audited the accompanying consolidated financial statements of Kingsmen Creatives Ltd. (the “Company”) and its subsidiaries (collectively, the “Group”) set out on pages 40 to 112, which comprise the balance sheets of the Group and the Company as at 31 December 2013, the statements of changes in equity of the Group and the Company and the consolidated income statement, consolidated statement of comprehensive income and consolidated cash flow statement of the Group for the financial year then ended, and a summary of significant accounting policies and other explanatory information.

Management’s responsibility for the financial statements

Management is responsible for the preparation of financial statements that give a true and fair view in accordance with the provisions of the Singapore Companies Act, Chapter 50 (the “Act”) and Singapore Financial Reporting Standards, and for devising and maintaining a system of internal accounting controls sufficient to provide a reasonable assurance that assets are safeguarded against loss from unauthorised use or disposition; and transactions are properly authorised and that they are recorded as necessary to permit the preparation of true and fair profit and loss accounts and balance sheets and to maintain accountability of assets.

Auditor’s responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Singapore Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation of financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.


39

Opinion

In our opinion, the consolidated financial statements of the Group and the balance sheet and statement of changes in equity of the Company are properly drawn up in accordance with the provisions of the Act and Singapore Financial Reporting Standards so as to give a true and fair view of the state of affairs of the Group and of the Company as at 31 December 2013 and of the results, changes in equity and cash flows of the Group and the changes in equity of the Company for the year ended on that date.

Emphasis of matter

We draw reference to Note 36 to the financial statements, which describes the circumstances surrounding the Settlement Agreement executed between a subcontractor and its business affiliates and a subsidiary of the Company. As we have included in our Independent Auditor’s Report for the financial year ended 31 December 2012, the Audit Committee of the Company lodged a police report with the Commercial Affairs Department (“CAD”) on this matter. As at the date of this report, the Company is unable to ascertain the progress and/or the outcome of the investigation by the CAD and whether any findings that may arise from such investigation would result in any impact on the financial statements of the Company or its subsidiary. Our opinion is not qualified in respect of this matter.

Report on other legal and regulatory requirements

In our opinion, the accounting and other records required by the Act to be kept by the Company and by those subsidiaries incorporated in Singapore of which we are the auditors have been properly kept in accordance with the provisions of the Act.

Ernst & Young LLP

Public Accountants and Chartered Accountants


INDEPENDENT AUDITOR’S REPORT

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CONSOLIDATED INCOME STATEMENTFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2013

Note 2013 2012

$’000 $’000

Revenue 4 296,251 290,190

Cost of sales (220,279) (217,802)

Gross profit 75,972 72,388

Other items of income

Interest income 5 394 240

Other income 6 5,012 4,405

5,406 4,645

Other items of expense

Depreciation of property, plant and equipment 12 (1,629) (1,614)

Staff salaries and related expenses 7 (45,902) (41,168)

Other expenses (12,386) (13,727)

Interest expense 8 (276) (252)

Share of results of associates 15 820 1,282

Profit before tax 9 22,005 21,554

Income tax expense 10 (3,623) (4,131)

Profit net of tax 18,382 17,423

Profit attributable to:

Owners of the Company 17,744 16,914

Non-controlling interests 638 509

18,382 17,423

Earnings per share attributable to owners of the Company (cents per share)

Basic 11 9.21 8.84

Diluted 11 9.21 8.84

The accompanying accounting policies and explanatory notes form an integral part of the financial statements.


41CONSOLIDATED STATEMENT OF

COMPREHENSIVE INCOMEFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2013

2013 2012

$’000 $’000

Profit net of tax 18,382 17,423

Other comprehensive income:

Item that may be reclassified subsequently to profit or loss

Foreign currency translation 258 (1,349)

Other comprehensive income for the financial year, net of tax 258 (1,349)

Total comprehensive income for the financial year 18.640 16,074

Total comprehensive income attributable to:

Owners of the Company 18,035 15,674

Non-controlling interests 605 400

18,640 16,074


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Group CompanyNote 2013 2012 2013 2012

$’000 $’000 $’000 $’000ASSETSNon-current assetsProperty, plant and equipment 12 11,311 9,206 237 217Intangible assets 13 4,939 4,823 – –Investments in subsidiaries 14 – – 19,859 20,002Investments in associates 15 9,415 8,271 6,067 5,364Other investments 16 1,635 543 1,635 543Other receivables 19 343 68 – –Deferred tax assets 25 338 535 – –

27,981 23,446 27,798 26,126Current assetsInventories 17 1,561 21 – –Gross amount due from customers for contract work-in-progress

18 18,586 17,698 – –

Trade and other receivables 19 95,561 83,264 3,600 3,065Income tax recoverable 512 223 – –Amount due from subsidiaries 20 – – 531 3,029Amount due from associates 20 772 915 469 915Prepaid operating expenses 803 991 29 57Cash and short-term deposits 21 63,722 53,081 5,454 2,403

181,517 156,193 10,083 9,469Total assets 209,498 179,639 37,881 35,595

EQUITY AND LIABILITIESCurrent liabilitiesGross amount due to customers for contract work-in-progress

18 6,229 1,180 – –

Trade and other payables 22 98,041 84,026 1,528 1,536Deferred income 23 2,870 5,231 – –Amounts due to associates 20 1,081 11 – -Loans and borrowings 24 2,800 2,761 – –Income tax payable 6,833 7,430 231 537

117,924 100,639 1,759 2,073NET CURRENT ASSETS 63,593 55,554 8,324 7,396Non-current liabilitiesOther payables 22 119 116 – –Loans and borrowings 24 1,762 1,884 – –Deferred tax liabilities 25 421 172 28 27

2,302 2,172 28 27Total liabilities 120,226 102,811 1,787 2,100Net assets 89,272 76,828 36,094 33,495Equity attributable to owners of the CompanyShare capital 26(a) 23,266 23,266 23,266 23,266Treasury shares 26(b) (334) (978) (334) (978)Retained earnings 65,601 55,582 11,808 10,689Other reserves 27 (3,008) (4,022) 1,354 518

85,525 73,848 36,094 33,495Non-controlling interests 3,747 2,980 – –Total equity 89,272 76,828 36,094 33,495Total equity and liabilities 209,498 179,639 37,881 35,595

BALANCE SHEETSAS AT 31 DECEMBER 2013



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Attributable to owners of the Company

NoteShare

capitalTreasury

sharesRetained earnings

Other reserves

Equity attributable

to owners of the

Company, total

Non-controlling

interestsEquity,

total$’000 $’000 $’000 $’000 $’000 $’000 $’000

2013 Group

(Note 26(a)) (Note 26(b)) (Note 27)

Opening balance at 1 January 2013

23,266 (978) 55,582 (4,022) 73,848 2,980 76,828

Profit for the year – – 17,744 – 17,744 638 18,382

Other comprehensive income

Foreign currency translation – – – 291 291 (33) 258

Other comprehensive income for the year, net of tax

– – – 291 291 (33) 258

Total comprehensive income for the year

– – 17,744 291 18,035 605 18,640

Contribution by and distributions to owners

Dividends on ordinary shares 28 – – (7,725) – (7,725) – (7,725)

Treasury shares reissued pursuant to performance share scheme

– 644 – 836 1,480 – 1,480

Total contribution by and distributions to owners

– 644 (7,725) 836 (6,245) – (6,245)

Changes in ownership interests in subsidiaries

Dividends paid to non-controlling interests

– – – – – (99) (99)

Capital contribution by non- controlling interests in a newly set-up subsidiary

– – – – – 90 90

Contribution into a newly incorporated subsidiary by a non wholly-owned subsidiary attributable to non-controlling interests

– – – – – 58 58

Dilution of interest in subsidiary – – – (113) (113) 113 –

Total changes in ownership interests in subsidiaries

– – – (113) (113) 162 49

Total transactions with owners in their capacity as owners

– 644 (7,725) 723 (6,358) 162 (6,196)

Closing balance at 31 December 2013

23,266 (334) 65,601 (3,008) 85,525 3,747 89,272

STATEMENTS OF CHANGE IN EQUITYFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2013

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NoteShare

capitalTreasury

sharesRetained earnings

Other reserves

Equity attributable

to owners of the

Company, total

Non-controlling

interestsEquity,

total$’000 $’000 $’000 $’000 $’000 $’000 $’000

2012 Group

(Note 26(a)) (Note 26(b)) (Note 27)

Opening balance at 1 January 2012, as restated

23,266 (1,235) 46,844 (3,457) 65,418 2,594 68,012

Profit for the year – – 16,914 – 16,914 509 17,423

Other comprehensive incomeForeign currency translation – – – (1,240) (1,240) (109) (1,349)Other comprehensive income for

the year, net of tax– – – (1,240) (1,240) (109) (1,349)

Total comprehensive income for the year – – 16,914 (1,240) 15,674 400 16,074

Contribution by and distributions to owners

Dividends on ordinary shares 28 – – (7,664) – (7,664) – (7,664)Treasury shares reissued pursuant

to performance share scheme– 257 – 193 450 – 450

Transfer to statutory reserve fund – – (512) 512 – – –Total contribution by and

distributions to owners– 257 (8,176) 705 (7,214) – (7,214)

Changes in ownership interests in subsidiaries Dividends paid to non-controlling interests – – – – – (79) (79)

Change in interest in subsidiary 14 – – – (30) (30) 65 35Total changes in ownership interests in subsidiaries

– – – (30) (30) (14) (44)

Total transactions with owners in their capacity as owners

– 257 (8,176) 675 (7,244) (14) (7,258)

Closing balance at 31 December 2012 23,266 (978) 55,582 (4,022) 73,848 2,980 76,828

STATEMENTS OF CHANGES IN EQUITYFOR THE FINANCIAL YEAR ENDED 31 DECEMBR 2013



45STATEMENTS OF CHANGES IN EQUITYFOR THE FINANCIAL YEAR ENDED 31 DECEMBR 2013


NoteShare

capitalTreasury

sharesOther

reservesRetained earnings

Equity, total

$’000 $’000 $’000 $’000 $’000Company (Note 26(a)) (Note 26(b)) (Note 27)

Opening balance at 1 January 2013 23,266 (978) 518 10,689 33,495Profit for the year – – – 8,844 8,844Other comprehensive income for the year, net of tax – – – – –

Total comprehensive income for the year – – – 8,844 8,844

Contributions by and distribution to ownersTreasury shares reissued pursuant to performance share scheme – 644 836 – 1,480Dividends on ordinary shares 28 – – – (7,725) (7,725)

Total transactions with owners in their capacity as owners – 644 836 (7,725) (6,245)

Closing balance at 31 December 2013 23,266 (334) 1,354 11,808 36,094

Opening balance at 1 January 2012 23,266 (1,235) 325 7,701 30,057Profit for the year – – – 10,652 10,652Other comprehensive income for the year, net of tax – – – – –

Total comprehensive income for the year – – – 10,652 10,652

Contributions by and distribution to owners

Treasury shares reissued pursuant to performance share scheme – 257 193 – 450Dividends on ordinary shares 28 – – – (7,664) (7,664)

Total transactions with owners in their capacity as owners – 257 193 (7,664) (7,214)

Closing balance at 31 December 2012 23,266 (978) 518 10,689 33,495


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Group

Note 2013 2012

$’000 $’000

Cash flows from operating activities

Profit before tax 22,005 21,554

Adjustments for:

Depreciation of property, plant and equipment 12 2,017 3,505

Net (gain)/loss on disposal of property, plant and equipment 6 (83) 9

Property, plant and equipment written off 9 16 7

Provision for Performance Share Scheme 476 567

Bad trade debts written off 19 128 36

Net allowance for doubtful trade debts (written back)/provided 19 (389) 742

Amortisation of intangible assets 13 – 202

Interest income 5 (394) (240)

Interest expense 8 276 252

Dividend income from available-for-sale investment 6 (297) (49)

Impairment loss on investment in associates 15 – 580

Share of results of associates (820) (1,282)

Currency realignment (532) (194)

Total adjustments 398 4,135

Operating cash flows before changes in working capital 22,403 25,689

Changes in working capital:

Increase in gross amount due from customers for contract work-in-progress (888) (6,352)

(Increase)/decrease in gross amount due from customers for contract work-in-progress

5,118 (1,241)

(Decrease)/increase in deferred income (2,361) 154

(Increase)/decrease in trade and other receivables (11,979) 10,073

Increase in trade and other payables 16,093 5,884

(Increase)/decrease in inventories (1,540) 41

Cash flows from operations 26,846 34,248

Interest paid (276) (252)

Interest received 394 240

Income taxes paid (4,047) (3,875)

Net cash flows from operating activities 22,917 30,361

CONSOLIDATED CASH FLOW STATEMENTFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2013


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Group

Note 2013 2012

$’000 $’000

Cash flows from investing activities

Purchase of property, plant and equipment 12 (4,550) (2,075)

Proceeds from disposal of property, plant and equipment 330 293

Acquisition of additional shares in associates (703) –

Acquisition of other investments (1,093) –

Capital contribution by non-controlling interests in newly set-up subsidiary 90 –

Proceeds from sale of partial ownership interest in a subsidiary – 35

Dividend income from available-for-sale investment 297 49

Dividends received from associates 15 497 160

Net cash flows used in investing activities (5,132) (1,538)

Cash flows from financing activities

Increase in amount pledged to banks for banking facilities (57) (4)

Dividends paid on ordinary shares 28 (7,725) (7,664)

Dividends paid to non-controlling interests (99) (79)

Proceeds from draw down of loans and borrowings 2,197 2,786

Repayment of finance lease obligations (71) (110)

Repayment of long-term bank borrowings (2,101) (2,982)

Net cash used in financing activities (7,856) (8,053)

Net increase in cash and cash equivalents 9,929 20,770

Effect of exchange rate changes on cash and cash equivalents 653 (787)

Cash and cash equivalents at 1 January 51,578 31,595

Cash and cash equivalents at 31 December 21 62,160 51,578

CONSOLIDATED CASH FLOW STATEMENTFOR THE FINANCIAL YEAR ENDED 31 DECEMBR 2013


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1. CORPORATE INFORMATIONKingsmen Creatives Ltd. (the “Company”) is a limited liability company incorporated in the Republic of Singapore and is listed on the Singapore Exchange Security Trading Limited (“SGX-ST”). The registered office and principal place of business of the Company is located at Kingsmen Creative Centre, 3 Changi South Lane, Singapore 486118.

The principal activity of the Company is investment holding, and the provision of corporate marketing and other related services. There have been no significant changes in the nature of this activity during the financial year.

The principal activities of the subsidiaries are disclosed in Note 14 to the financial statements. There have been no significant changes in the nature of these activities during the financial year.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES2.1 Basis of preparation

The consolidated financial statements of the Group and the balance sheet and statement of changes in equity of the Company have been prepared in accordance with Singapore Financial Reporting Standards (“FRS”).

The financial statements have been prepared on a historical cost basis except as disclosed in the accounting policies below.

The financial statements are presented in Singapore Dollars (SGD or S$) and all values in the table are rounded to the nearest thousand ($’000) as indicated.

2.2 Changes in accounting policies

The accounting policies adopted are consistent with those of the previous financial year except in the current financial year, the Group has adopted all the new and revised standards which are effective for annual financial periods beginning on or after 1 January 2013. The adoption of these standards did not have any effect on the financial performance or position of the Group and the Company.

Accordingly to the transition provisions of FRS 113 Fair Value Measurement, FRS 113 has been applied prospectively by the Group on 1 January 2013.

NOTES TO THE FINANCIAL STATEMENTS31 DECEMBER 2013


49

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)2.3 Standards issued but not yet effective

The Group has not adopted the following standards that have been issued but not yet effective:

Description Effective for annual periods beginning on or after

Revised FRS 27 Separate Financial Statements 1 January 2014Revised FRS 28 Investments in Associates and Joint Ventures 1 January 2014FRS 110 Consolidated Financial Statements 1 January 2014FRS 111 Joint Arrangements 1 January 2014FRS 112 Disclosure of Interests in Other Entities 1 January 2014Amendments to FRS 32 Offsetting Financial Assets and Financial Liabilities 1 January 2014Amendments to the transition guidance of FRS 110 Consolidated Financial Statements, FRS 111 Joint Arrangements and FRS 112 Disclosure of Interests in Other Entities

1 January 2014

Amendments to FRS 110, FRS 112 and FRS 27 Investment Entities 1 January 2014Amendments to FRS 36 Recoverable Amount Disclosures for Non-financial Assets 1 January 2014Amendments to FRS 39 Novation of Derivatives and Continuation of Hedge Accounting 1 January 2014Improvements to FRS (January 2014) 1 July 2014Amendments to FRS 19 Defined Benefit Plans: Employee Contribution 1 July 2014Improvements to FRS (February 2014) 1 July 2014

Except for FRS 110, FRS 111, Revised FRS 28 and FRS 112, the directors expect that the adoption of the other standards above will have no material impact on the financial statements in the period of initial application. The nature of the impending changes in accounting policy on adoption of FRS 111, Revised FRS 28 and FRS 112 are described below.

FRS 110 Consolidated Financial Statements

FRS 110 establishes a single control model that applies to all entities including special purpose entities. The changes introduced by FRS 110 will require management to exercise significant judgment to determine which entities are controlled, and therefore are required to be consolidated by the Group, compared with the requirements that were in FRS 27. Therefore, FRS 110 may change which entities are consolidated within a group. The Revised FRS 27 was amended to address accounting for subsidiaries, jointly controlled entities and associates in separate financial statements.

The Group is currently determining the impact of the changes to the concept of control.

FRS 111 Joint Arrangements and Revised FRS 28 Investments in Associates and Joint Ventures

FRS 111 Joint Arrangements and Revised FRS 28 Investments in Associates and Joint Ventures are effective for financial periods beginning on or after 1 January 2014.

FRS 111 classifies joint arrangements either as joint operations or joint ventures. Joint operation is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the assets and obligations for the liabilities of the arrangement whereas joint venture is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the net assets of the arrangement.

FRS 111 requires the determination of joint arrangement’s classification to be based on the parties’ rights and obligations under the arrangement, with the existence of a separate legal vehicle no longer being the key factor. FRS 111 disallows proportionate consolidation and requires joint ventures to be accounted for using the equity method. The revised FRS 28 was amended to describe the application of equity method to investments in joint ventures in addition to associates.

FRS 112 Disclosure of Interests in Other Entities

FRS 112 Disclosure of Interests in Other Entities is effective for financial periods beginning on or after 1 January 2014.

FRS 112 is a new and comprehensive standard on disclosure requirements for all forms of interests in other entities, including joint arrangements, associates, special purpose vehicles and other off balance sheet vehicles. FRS 112 requires an entity to disclose information that helps users of its financial statements to evaluate the nature and risks associated with its interests in other entities and the effects of those interests on its financial statements. As this is a disclosure standard, it will have no impact to the financial position and financial performance of the Group when applied in 2014.

NOTES TO THE FINANCIAL STATEMENTS31 DECEMBR 2013

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2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)2.4 Basis of consolidation and business combinations

(a) Basis of consolidation

Business combinations from 1 January 2010

The consolidated financial statements comprise the financial statements of the Company and its subsidiaries as at the end of the reporting period. The financial statements of the subsidiaries used in the preparation of the consolidated financial statements are prepared for the same reporting date as the Company. Consistent accounting policies are applied to like transactions and events in similar circumstances.

All intra-group balances, income and expenses and unrealised gains and losses resulting from intra-group transactions and dividends are eliminated in full.

Subsidiaries are consolidated from the date of acquisition, being the date on which the Group obtains control, and continue to be consolidated until the date that such control ceases.

Losses within a subsidiary are attributed to the non-controlling interest even if that results in a deficit balance.

A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity transaction. If the Group loses control over a subsidiary, it:

- De-recognises the assets (including goodwill) and liabilities of the subsidiary at their carrying amounts at the date when control is lost;

- De-recognises the carrying amount of any non-controlling interest;

- De-recognises the cumulative translation differences recorded in equity;

- Recognises the fair value of the consideration received;

- Recognises the fair value of any investment retained;

- Recognises any surplus or deficit in profit or loss;

- Re-classifies the Group’s share of components previously recognised in other comprehensive income to profit or loss or retained earnings, as appropriate.

Basis of consolidation prior to 1 January 2010

Certain of the above-mentioned requirements were applied on a prospective basis. The following differences, however, are carried forward in certain instances from the previous basis of consolidation:

- Acquisition of non-controlling interests, prior to 1 January 2010, was accounted for using the parent entity extension method, whereby, the difference between the consideration and the book value of the share of the net assets acquired were recognised in goodwill.

- Losses incurred by the Group were attributed to the non-controlling interest until the balance was reduced to nil. Any further losses were attributed to the Group, unless the non-controlling interest had a binding obligation to cover these. Losses prior to 1 January 2010 were not reallocated between non-controlling interest and the owners of the Company.

- Upon loss of control, the Group accounted for the investment retained at its proportionate share of net asset value at the date control was lost. The carrying value of such investments as at 1 January 2010 has not been restated.



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2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)2.4 Basis of consolidation and business combinations (cont’d)

(b) Business combinations

Business combinations from 1 January 2010

Business combinations are accounted for by applying the acquisition method. Identifiable assets acquired and liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. Acquisition-related costs are recognised as expenses in the periods in which the costs are incurred and the services are received.

When the Group acquires a business, it assesses the financial assets and liabilities assumed for appropriate classification and designation in accordance with the contractual terms, economic circumstances and pertinent conditions as at the acquisition date. This includes the separation of embedded derivatives in host contracts by the acquiree.

Any contingent consideration to be transferred by the acquirer will be recognised at fair value at the acquisition date. Subsequent changes to the fair value of the contingent consideration which is deemed to be an asset or liability, will be recognised in accordance with FRS 39 either in profit or loss or as a change to other comprehensive income. If the contingent consideration is classified as equity, it is not remeasured until it is finally settled within equity.

In business combinations achieved in stages, previously held equity interests in the acquiree are remeasured to fair value at the acquisition date and any corresponding gain or loss is recognised in profit or loss.

The Group elects for each individual business combination, whether non-controlling interest in the acquiree (if any), that are present ownership interests and entitle their hlders to a proportionate share of the net assets in the event of liquidation, is recognised on the acquisition date at fair value, or at the non-controlling interest’s proportionate share of the acquiree’s identifiable net assets. Other components of non-controlling interests are measured at their acquisition date fair value, unless another measurement basis is required by another FRS.

Any excess of the sum of the fair value of the consideration transferred in the business combination, the amount of non-controlling interest in the acquiree (if any), and the fair value of the Group’s previously held equity interest in the acquiree (if any), over the net fair value of the acquiree’s identifiable assets and liabilities is recorded as goodwill. The accounting policy for goodwill is set out in Note 2.8(a). In instances where the latter amount exceeds the former, the excess is recognised as gain on bargain purchase in profit or loss on the acquisition date.

Business combinations prior to 1 January 2010

In comparison to the above mentioned requirements, the following differences applied:

Business combinations are accounted for by applying the purchase method. Transaction costs directly attributable to the acquisition formed part of the acquisition costs. The non-controlling interest (formerly known as minority interest) was measured at the proportionate share of the acquiree’s identifiable net assets.

Business combinations achieved in stages were accounted for as separate steps. Adjustments to those fair values relating to previously held interests are treated as a revaluation and recognised in equity. Any additional acquired share of interest did not affect previously recognised goodwill.

When the Group acquired a business, embedded derivatives separated from the host contract by the acquiree were not reassessed on acquisition unless the business combination resulted in a change in the terms of the contract that significantly modified the cash flows that otherwise would have been required under the contract.

Contingent consideration was recognised if, and only if, the Group had a present obligation, the economic outflow was more likely than not and a reliable estimate was determinable. Subsequent adjustments to the contingent consideration were recognised as part of goodwill.


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2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)2.5 Transactions with non-controlling interests

Non-controlling interest represents the equity in subsidiaries not attributable, directly or indirectly, to owners of the Company, and are presented separately in the consolidated statement of comprehensive income and within equity in the consolidated balance sheet, separately from equity attributable to owners of the Company.

Changes in the Company’s ownership interest in a subsidiary that do not result in a loss of control are accounted for as equity transactions. In such circumstances, the carrying amounts of the controlling and non-controlling interests are adjusted to reflect the changes in their relative interests in the subsidiary. Any difference between the amount by which the non-controlling interest is adjusted and the fair value of the consideration paid or received is recognised directly in equity and attributed to owners of the Company.

2.6 Foreign currency

The financial statements are presented in Singapore Dollars, which is also the Company’s functional currency. Each entity in the Group determines its own functional currency and items included in the financial statements of each entity are measured using that functional currency.

(a) Transactions and balances

Transactions in foreign currencies are measured in the respective functional currencies of the Company and its subsidiaries 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 the end of the reporting period. 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 measured.

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

(b) Consolidated financial statements

For consolidation purpose, the assets and liabilities of foreign operations are translated into SGD at the rate of exchange ruling at the end of the reporting period 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 recognised in 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. For partial disposals of associates or jointly controlled entities that are foreign operations, the proportionate share of the accumulated exchange differences is reclassified to profit or loss.



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2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)2.7 Property, plant and equipment

All items of property, plant and equipment are initially recorded at cost. Subsequent to recognition, property, plant and equipment other than freehold land and buildings are measured at cost less accumulated depreciation and accumulated impairment losses. The cost includes the cost of replacing part of the property, plant and equipment and borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying property, plant and equipment. The accounting policy for borrowing costs is set out in Note 2.20. The cost of an item of property, plant and equipment 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 are required to be replaced in intervals, the Group recognises such parts as individual assets with specific useful 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 costs are recognised in profit or loss as incurred.

Freehold land has an unlimited useful life and therefore is not depreciated. Depreciation of property, plant and equipment begins when it is available for use and is computed on a straight-line basis over the estimated useful lives of the asset as follows:

Freehold buildings - 2% Machinery and exhibition equipment - 14% - 36% Office equipment, computers and software - 10% - 40% Motor vehicles, furniture and fittings, and renovations - 8% - 40%

Assets under construction included in property, plant and equipment are not depreciated as these assets are not available for use.

The carrying values of property, plant and equipment are reviewed for impairment when events or changes in circumstances indicate that the carrying value may not be recoverable.

The residual value, useful life and depreciation method are reviewed at each financial year-end, and adjusted prospectively, if appropriate.

An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss on derecognition of the asset is included in the profit or loss in the year the asset is derecognised.

2.8 Intangible assets

(a) Goodwill

Goodwill is initially measured at cost. Following initial recognition, goodwill is measured at cost less accumulated impairment losses.

For the purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated to the Group’s cash-generating units that are expected to benefit from the synergies of the combination, irrespective of whether other assets or liabilities of the acquiree are assigned to those units.

The cash-generating units to which goodwill have been allocated is tested for impairment annually and whenever there is an indication that the cash-generating unit may be impaired. Impairment is determined for goodwill by assessing the recoverable amount of each cash-generating unit (or group of cash-generating units) to which the goodwill relates. Where the recoverable amount of the cash-generating unit is less than the carrying amount, an impairment loss is recognised in profit or loss. Impairment losses recognised for goodwill are not reversed in subsequent periods.

Where goodwill forms part of a cash-generating unit and part of the operation within that cash-generating unit is disposed of, the goodwill associated with the operation disposed of is included in the carrying amount of the operation when determining the gain or loss on disposal of the operation. Goodwill disposed of in this circumstance is measured based on the relative fair values of the operations disposed of and the portion of the cash-generating unit retained.

Goodwill and fair value adjustments arising on the acquisition of foreign operations on or after 1 January 2005 are treated as assets and liabilities of the foreign operations and are recorded in the functional currency of the foreign operations and translated in accordance with the accounting policy set out in Note 2.6.

Goodwill and fair value adjustments which arose on acquisitions of foreign operations before 1 January 2005 are deemed to be assets and liabilities of the Company and are recorded in SGD at the exchange rates prevailing at the date of acquisition.


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2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)2.8 Intangible assets (cont’d)

(b) Other intangible assets

Intangible assets acquired separately are measured initially at cost. The cost of intangible assets acquired in a business combination is their fair value as at the date of acquisition. Following initial acquisition, intangible assets are measured at cost less any accumulated amortisation and accumulated impairment losses.

The useful lives of intangible assets are assessed as either finite or indefinite.

Intangible assets with finite useful lives are amortised over the estimated useful lives and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortisation period and the amortisation method are reviewed at least at each financial year-end. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset is accounted for by changing the amortisation period or method, as appropriate, and are treated as changes in accounting estimates. The amortisation expense on intangible assets with finite useful lives is recognised in profit or loss in the expense category consistent with the function of the intangible asset.

Intangible assets with indefinite useful lives or not yet available for use are tested for impairment annually or more frequently if the events and circumstances indicate that the carrying value may be impaired either individually or at the cash-generating unit level. Such intangible assets are not amortised. The useful life of an intangible asset with an indefinite useful life is reviewed annually to determine whether the useful life assessment continues to be supportable. If not, the change in useful life from indefinite to finite is made on a prospective basis.

Gains or losses arising from de-recognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognised in profit or loss when the asset is derecognised.

Customer relationship

The customer relationship was acquired in business combinations and are amortised on a straight line basis over their finite useful life of 5 years.

2.9 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 annual impairment assessment for an asset is required, the Group makes an estimate of the asset’s recoverable amount.

An asset’s recoverable amount is the higher of an asset’s or cash-generating unit’s fair value less costs of disposal and its value in use and is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or group of 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 of disposal, 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, quoted share prices for publicly traded subsidiaries or other available fair value indicators.

The Group bases its impairment calculation on detailed budgets and forecast calculations which are prepared separately for each of the Group’s cash-generating units to which the individual assets are allocated. These budgets and forecast calculations are generally covering a period of five years. For longer periods, a long-term growth rate is calculated and applied to project future cash flows after the fifth year.

Impairment losses of continuing operations are recognised in profit or loss, 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.

For assets excluding goodwill, 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 asset’s recoverable amount since the last impairment loss was recognised. If that is the case, the carrying amount of the asset is increased to its recoverable amount. That 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 profit or loss unless the asset is measured at revalued amount, in which case the reversal is treated as a revaluation increase.



55NOTES TO THE FINANCIAL STATEMENTS31 DECEMBR 2013

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)2.10 Subsidiaries

A subsidiary is an entity over which the Group has the power to govern the financial and operating policies so as to obtain benefits from its activities.

In the Company’s separate financial statements, investments in subsidiaries are accounted for at cost less impairment losses.

2.11 Associates

An associate is an entity, not being a subsidiary or a joint venture, in which the Group has significant influence. The associate is equity accounted for from the date the Group obtains significant influence until the date the Group ceases to have significant influence over the associate.

The Group’s investments in associates are accounted for using the equity method. Under the equity method, the investment in associates is carried in the balance sheet at cost plus post-acquisition changes in the Group’s share of net assets of the associates. Goodwill relating to associates is included in the carrying amount of the investment and is neither amortised nor tested individually for impairment. Any excess of the Group’s share of the net fair value of the associate’s identifiable asset, liabilities and contingent liabilities over the cost of the investment is included as income in the determination of the Group’s share of results of the associate in the period in which the investment is acquired.

The profit or loss reflects the share of the results of operations of the associates. Where there has been a change recognised in other comprehensive income by the associates, the Group recognises its share of such changes in other comprehensive income. Unrealised gains and losses resulting from transactions between the Group and the associate are eliminated to the extent of the interest in the associates.

The Group’s share of the profit or loss of its associates is the profit attributable to equity holders of the associate and, therefore is the profit or loss after tax and non-controlling interests in the subsidiaries of associates.

When the Group’s share of losses in an associate equals or exceeds its interest in the associate, the Group does not recognise further losses, unless it has incurred obligations or made payments on behalf of the associate.

After application of the equity method, the Group determines whether it is necessary to recognise an additional impairment loss on the Group’s investment in its associates. The Group determines at the end of each reporting period whether there is any objective evidence that the investment in the associate is impaired. If this is the case, the Group calculates the amount of impairment as the difference between the recoverable amount of the associate and its carrying value and recognises the amount in profit or loss.

The financial statements of the associate are prepared as of the same reporting date as the Company. Where necessary, adjustments are made to bring the accounting policies in line with those of the Group.

Upon loss of significant influence over the associate, the Group measures and recognises any retained investment at its fair value. Any difference between the carrying amount of the associate upon loss of significant influence and the fair value of the aggregate of the retained investment and proceeds from disposal is recognised in profit or loss.

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2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)2.12 Financial assets

Initial recognition and measurement

Financial assets 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 assets at initial recognition.

When financial assets are recognised initially, they are measured at fair value, plus, in the case of financial assets not at fair value through profit or loss, directly attributable transaction costs.

Subsequent measurement

The subsequent measurement of financial assets depends on their classification as follows:

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

Financial assets at fair value through profit or loss include financial assets held for trading Financial assets are classified as held for trading if they are acquired for the purpose of selling or repurchasing in the near 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 FRS 39. Derivatives, including separated embedded derivatives are also classified as held for trading unless they are designated as effective hedging instruments.

The Group has not designated any financial assets upon initial recognition at fair value through profit or loss.

Subsequent to initial recognition, financial assets at fair value through profit or loss are measured at fair value. Any gains or 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 measured at fair value with changes in fair value recognised in 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.

(b) Loans and receivables

Non-derivative financial assets with fixed or determinable payments that are not quoted in an active market are classified as loans and receivables. Subsequent to initial recognition, loans and receivables are measured at amortised cost using the effective interest method less impairment. Gains and losses are recognised in the profit or loss when the loans and receivables are derecognised or impaired, and through the amortisation process.

(c) Available-for-sale financial assets

Available-for-sale financial assets comprise equity securities. Equity investments classified as available-for sale are those, which are neither classified as held for trading nor designated at fair value through profit or loss.

After initial recognition, available-for-sale financial assets are measured at fair value. Any gains or losses from changes in fair value of the financial asset are recognised in other comprehensive income, except that impairment losses, foreign exchange gains and losses on monetary instruments and interest calculated using the effective interest method are recognised in the profit or loss. The cumulative gain or loss previously recognised in other comprehensive income is reclassified from equity to the profit or loss as a reclassification adjustment when the financial asset is derecognised.

Investments in equity instruments whose fair value cannot be reliably measured are measured at cost less impairment loss.



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2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)2.12 Financial assets (cont’d)

(c) Available-for-sale financial assets (cont’d)

Derecognition

A financial asset is derecognised where the contractual right to receive cash flows from the asset has expired. 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.

Regular way purchase or sale of a financial asset

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 assets within the period generally established by regulation or convention in the marketplace concerned.

2.13 Impairment of financial assets

The Group and the Company assesses at the end of reporting period whether there is any objective evidence that a financial asset is impaired.

(a) 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.

If there is objective evidence that an impairment loss on financial assets carried at amortised cost has been incurred, the amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows 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 profit or loss.

When the asset becomes uncollectible, the carrying amount of impaired financial asset 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.

(b) 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.


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2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)2.13 Impairment of financial assets (cont’d)

(c) Available-for-sale financial assets

In the case of equity investments classified as available-for-sale, objective evidence of impairment include (i) significant financial difficulty of the issuer or obligor, (ii) information about significant changes with an adverse effect that have taken place in the technological, market, economic or legal environment in which the issuer operates, and indicates that the cost of the investment in equity instrument may not be recovered; and (iii) a significant or prolonged decline in the fair value of the investment below its costs. ‘Significant’ is to be evaluated against the original cost of the investment and ‘prolonged’ against the period in which the fair value has been below its original cost.

If an available-for-sale financial asset is impaired, an amount comprising the difference between its acquisition cost (net of any principal repayment and amortisation) and its current fair value, less any impairment loss previously recognised in profit or loss, is transferred from other comprehensive income and recognised in profit or loss. Reversals of impairment losses in respect of equity instruments are not recognised in profit or loss; increase in their fair value after impairment are recognised directly in other comprehensive income.

2.14 Cash and cash equivalents

Cash and cash equivalents comprise cash at bank and on hand, demand deposits, and short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. These also include bank overdrafts that form an integral part of the Group’s cash management.

2.15 Construction contracts

The Group principally operates fixed price contracts. Contract revenue and contract costs are recognised as revenue and expenses respectively by reference to the stage of completion of the contract activity at the end of the reporting period (the percentage of completion method), when the outcome of a construction contract can be estimated reliably.

The outcome of a construction contract can be estimated reliably when: (i) total contract revenue can be measured reliably; (ii) it is probable that the economic benefits associated with the contract will flow to the entity; (iii) the costs to complete the contract and the stage of completion can be measured reliably; and (iv) the contract costs attributable to the contract can be clearly identified and measured reliably so that actual contract costs incurred can be compared with prior estimates.

When the outcome of a construction contract cannot be estimated reliably (principally during early stages of a contract), contract revenue is recognised only to the extent of contract costs incurred that are likely to be recoverable and contract costs are recognised as expense in the period in which they are incurred.

An expected loss on the construction contract is recognised as an expense immediately when it is probable that total contract costs will exceed total contract revenue.

In applying the percentage of completion method, revenue recognised corresponds to the total contract revenue (as defined below) multiplied by the actual completion rate based on the proportion of total contract costs (as defined below) incurred to date and the estimated costs to complete.

Contract revenue – Contract revenue corresponds to the initial amount of revenue agreed in the contract and any variations in contract work, claims and incentive payments to the extent that it is probable that they will result in revenue; and they can be reliably measured.

Contract costs – Contract costs include costs that relate directly to the specific contract and costs that are attributable to contract activity in general and can be allocated to the contract.




2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)2.15 Construction contracts (cont’d)

The Group’s contracts are typically negotiated for the construction of a single asset or a group of assets which are closely interrelated or interdependent in terms of their design, technology and function. In certain circumstances, the percentage of completion method is applied to the separately identifiable components of a single contract or to a group of contracts together in order to reflect the substance of a contract or a group of contracts.

Assets covered by a single contract are treated separately when:

- Separate proposals have been submitted for each asset

- Each asset has been subject to separate negotiation and the contractor and customer have been able to accept or reject that part of the contract relating to each asset - The costs and revenues of each asset can be identified

A group of contracts are treated as a single construction contract when:

- The group of contracts are negotiated as a single package; the contracts are so closely interrelated that they are, in effect, part of a single project with an overall profit margin

- The contracts are performed concurrently or in a continuous sequence

2.16 Inventories

Inventories consist of finished goods and materials, comprising project materials. Inventories are stated at the lower of cost and net realisable value. Cost is determined on a weighted average basis and includes the cost of purchases and all incidental costs incurred in bringing the inventories to their present location and condition.

Where necessary, allowance is provided for damaged, obsolete and slow moving items to adjust the carrying value of inventories to the lower of cost and net realisable value.

Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs necessary to make the sale.

2.17 Provisions

Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and the amount of the obligation can be estimated reliably.

Provisions are reviewed at the end of each reporting period 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. If 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.

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2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)2.18 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.

All financial liabilities are recognised initially at fair value plus in the case of other financial liabilities not at fair value through profit or loss, directly attributable transaction costs.

Subsequent measurement

The measurement of financial liabilities depends on their classification as follows:

(a) Financial liabilities at fair value through profit or loss

Financial liabilities at fair value through profit or loss includes financial liabilities held for trading. Financial liabilities are classified as held for trading if they are acquired for the purpose of selling in the near term. This category includes derivative financial instruments entered into by the Group that are not designated as hedging instruments in hedge relationships. Separated embedded derivatives are also classified as held for trading unless they are designated as effective hedging instruments.

Subsequent to initial recognition, financial liabilities at fair value through profit or loss are measured at fair value. Any gains or losses arising from changes in fair value of the financial liabilities are recognised in profit or loss.

The Group has not designated any financial liabilities upon initial recognition at fair value through profit or loss.

(b) Financial liabilities at amortised cost

After initial recognition, financial liabilities that are not carried at fair value through profit or loss are subsequently measured at amortised cost using the effective interest method. Gains and losses are recognised in profit or loss when the liabilities are derecognised, and through the amortisation process.

Derecognition

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

Offsetting of financial instruments

Financial assets and liabilities are offset and the net amount is presented in the balance sheets, when and only when, there is a currently enforceable legal right to set off the recognised amounts and there is an intention to settle on a net basis, or to realise the assets and settle the liabilities simultaneously.




2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)2.19 Financial guarantee

A financial guarantee contract is a contract that requires the issuer to make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payment when due in accordance with the terms of a debt instrument.

Financial guarantees are recognised initially as a liability at fair value, adjusted for transaction costs that are directly attributable to the issuance of the guarantee. Subsequent to initial recognition, financial guarantees are recognised as income in profit or loss over the period of the guarantee. If it is probable that the liability will be higher than the amount initially recognised less amortisation, the liability is recorded at the higher amount with the difference charged to profit or loss.

2.20 Borrowing costs

Borrowing costs are capitalised as part of the cost of a qualifying asset if they are directly attributable to the acquisition, construction or production of that asset. Capitalisation of borrowing costs commences when the activities to prepare the asset for its intended use or sale are in progress and the expenditures and borrowing costs are incurred. Borrowing costs are capitalised until the assets are substantially completed for their intended use or sale. All other borrowing costs are expensed in the period they occur. Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds.

2.21 Employee benefits

(a) Defined contribution plans

The Group participates in the national pension schemes as defined by the laws of the countries in which it has operations. In particular, the Singapore companies in the Group make contributions to the Central Provident Fund scheme in Singapore, a defined contribution pension scheme. Contributions to defined contribution pension schemes are recognised as an expense in the period in which the related service is performed.

(b) Employee leave entitlements

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

(c) Post employment benefits

The Group provides for employee service entitlements in order to meet the minimum benefits to be paid to qualified employees, as required under the Indonesian Labour Law No.13/2003 (the “Labour Law”).

(d) Employee share option scheme

The directors of the Company (including non-executive and independent directors) and employees of the Group may receive remuneration in the form of share options as consideration for services rendered.

The cost of these equity-settled transactions with employees is measured by reference to the fair value of the options at the date on which the options are granted. This cost is recognised in the profit or loss, with a corresponding increase in the employee share option reserve, over the vesting period. The cumulative expense recognised at each reporting date until the vesting date reflects the extent to which the vesting period has expired and the Group’s best estimate of the number of options that will ultimately vest. The charge or credit to the profit or loss for a period represents the movement in cumulative expense recognised as at the beginning and end of that period.

No expense is recognised for options that do not ultimately vest, except for options where vesting is conditional upon a market condition, which are treated as vested irrespective of whether or not the market condition is satisfied, provided that all other performance and/or service conditions are satisfied. The employee share option reserve is transferred to retained earnings upon expiry of the share options. When the options are exercised, the employee share option reserve is transferred to share capital if new shares are issued, or to treasury shares if the options are satisfied by the reissuance of treasury shares.

(e) Employee Performance Share Scheme

The directors of the Company (including non-executive and independent directors) and employees of the Group may receive awards for good work performance or annual cash bonus payment in the form of shares.

The cost of these equity-settled transactions is measured by reference to the fair value of the awards or annual cash bonus payment at the date of the grant. The cost is recognised in the profit or loss over the expected vesting period.

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2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)2.22 Leases

The determination of whether an arrangement is, or contains a lease is based on the substance of the arrangement at inception date: whether fulfilment of the arrangement is dependent on the use of a specific asset or assets or the arrangement conveys a right to use the asset even, if that right is not explicitly specified in an arrangement.

For arrangements entered into prior to 1 January 2005, the date of inception is deemed to be 1 January 2005 in accordance with the transitional requirements of INT FRS 104.

(a) As lessee

Finance leases

Finance leases, which transfer to the Group substantially all the risks and rewards incidental to ownership of the leased item, are capitalised at the inception of the lease at the fair value of the leased asset or, if lower, at the present value of the minimum lease payments. Any initial direct costs are also added to the amount capitalised. Lease payments are apportioned between the finance charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are charged to the profit or loss. Contingent rents, if any, are charged as expenses in the periods in which they are incurred.

Capitalised leased assets are depreciated over the shorter of the estimated useful life of the asset and the lease term, if there is no reasonable certainty that the Group will obtain ownership by the end of the lease term.

Operating leases

Operating lease payments are recognised as an expense in the profit or loss on a straight-line basis over the lease term. The aggregate benefit of incentives provided by the lessor is recognised as a reduction of rental expense over the lease term on a straight-line basis.

(b) 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 Note 2.23.

2.23 Revenue

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 consideration received or receivable. Revenue is measured at the fair value of consideration received or receivable, taking into account contractually defined terms of payment and excluding 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:

(a) Contract revenue

When the contract outcome can be reliably measured:

• Revenue is recognised by reference to the percentage of completion of the contract activity at the end of the reporting period where the outcome of a construction contract can be estimated reliably. Percentage of completion is measured by reference to the percentage of costs incurred to-date to the total estimated costs for each contract. Changes in job performance, job conditions and estimated profitability, including those arising from final contract settlements, may result in revisions to revenue and costs, and are recognised in the period in which the revisions are determined.

When the contract cannot be reliably measured:

• Revenue is recognised only to the extent of the expenses recognised, which are recoverable.

• When it is probable that total contract costs will exceed total contract revenue, the expected loss is recognised as an expense immediately. When the outcome of a contract cannot be estimated reliably, contract costs are recognised as an expense in the period in which they are incurred.




2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)2.23 Revenue (cont’d)

(b) Sale of goods

Revenue from sale of goods is recognised upon the transfer of significant risk and rewards of ownership of the goods to the customer, usually on delivery of goods. Revenue is not recognised to the extent where there are significant uncertainties regarding recovery of the consideration due, associated costs or the possible return of goods.

(c) Labour services income, administrative income and corporate fee income

Revenue is recognised when the services are rendered.

(d) Rental income

Rental income is accounted for on a straight-line basis over the lease terms. The aggregate costs of incentives provided to lessees are recognised as a reduction of rental income over the lease terms on a straight-line basis.

(e) Interest income

Interest income is recognised using the effective interest rate method.

(f) Dividend income

Dividend income is recognised when the Group’s right to receive payment is established.

2.24 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 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 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.

(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. If the Company is itself such a plan, the sponsoring employers are also 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).

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TNOTES TO THE FINANCIAL STATEMENTS

31 DECEMBR 2013

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)2.25 Taxes

(a) Current income tax

Current income tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted at the end of the reporting period, 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.

(b) Deferred tax

Deferred tax is provided using the liability method on temporary differences at the end of the reporting period between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.

Deferred tax liabilities are recognised for all temporary differences, except:

• Where the deferred tax liability arises from the initial recognition of goodwill or of an asset or liability in a transaction that is not a business combination and, at the time of the transaction affects neither accounting profit nor taxable profit or loss; and

• In respect of temporary differences associated with investments in subsidiaries and associates, where the timing of the reversal of the temporary differences can be controlled by the Group and it is probable that the temporary differences will not reverse in the foreseeable future.

Deferred tax assets are recognised for all deductible temporary differences, carry forward of unused tax credits and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilised except:

• Where the deferred tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither accounting profit nor taxable profit or loss; and

• In respect of deductible temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, deferred tax assets are recognised only to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilised.

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

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realised or the liability is settled, based on tax rates and tax laws that have been enacted or substantively enacted at the end of each reporting period.

Deferred tax relating to items recognised outside profit or loss is recognised outside profit or loss. Deferred tax items are recognised in correlation to the underlying transaction either in other comprehensive income or directly in equity and deferred tax arising from a business combination is adjusted against goodwill on acquisition.

Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set off current tax assets against current income tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority.

Tax benefits acquired as part of a business combination, but not satisfying the criteria for separate recognition at that date, would be recognised subsequently if new information about facts and circumstances changed. The adjustment would either be treated as a reduction to goodwill (as long as it does not exceed goodwill) if it is incurred during the measurement period or in profit or loss.



2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)2.25 Taxes (cont’d)

(c) Sales tax

Revenues, expenses and assets are recognised net of the amount of sales tax except:

• Where the sales tax incurred on a purchase of assets or services is not recoverable from the taxation authority, in which case the sales tax is recognised as part of the cost of acquisition of the asset or as part of the expense item as applicable; and

• Receivables and payables that are stated with the amount of sales tax included.

The net amount of sales tax recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the balance sheet.

2.26 Segment reporting

For management purposes, the Group is organised into operating segments based on their products and services which are independently managed by the respective segment managers responsible for the performance of the respective segments under their charge. The segment managers report directly to the management who regularly review the segment results in order to allocate resources to the segments and to assess the segment performance. Additional disclosures on each of these segments are shown in Note 32, including the factors used to identify the reportable segments and the measurement basis of segment information.

2.27 Share capital and share issue expenses

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

2.28 Treasury shares

The Group’s own equity instruments, which are reacquired (treasury shares) are recognised at cost and deducted from equity. No gain or loss is recognised in profit or loss on the purchase, sale, issue or cancellation of the Group’s own equity instruments. Any difference between the carrying amount of treasury shares and the consideration received, if reissued, is recognised directly in equity. Voting rights related to treasury shares are nullified for the Group and no dividends are allocated to them.

2.29 Contingencies

A contingent liability is:

(a) a possible obligation that arises from past events and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Group; or

(b) a present obligation that arises from past events but is not recognised because:

(i) It is not probable that an outflow of resources embodying economic benefits will be required to settle the obligation; or

(ii) The amount of the obligation cannot be measured with sufficient reliability.

A contingent asset is a possible asset that arises from past events and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Group.

Contingent liabilities and assets are not recognised on the balance sheet of the Group, except for contingent liabilities assumed in a business combination that are present obligations and which the fair values can be reliably determined.

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31 DECEMBR 2013

3. SIGNIFICANT ACCOUNTING JUDGEMENTS AND ESTIMATESThe preparation of the Group’s financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the disclosure of contingent liabilities at the reporting date. However, uncertainty about these assumptions and estimates could result in outcomes that could require a material adjustment to the carrying amount of the asset or liability affected in the future periods.

3.1 Judgements made in applying accounting policies

In the process of applying the Group’s accounting policies, management has made the following judgements, apart from those involving estimations, which has the most significant effect on the amounts recognised in the consolidated financial statements:

Income taxes

The Group has exposure to income taxes in numerous jurisdictions. Significant judgement is involved in determining the Group-wide provision for income taxes. There are certain transactions and computations for which the ultimate tax determination is uncertain during the ordinary course of business. The Group recognises liabilities for expected tax issues based on estimates of whether additional taxes will be due. Where the final tax outcome of these matters is different from the amounts that were initially recognised, such differences will impact the income tax and deferred tax provisions in the period in which such determination is made. The carrying amounts of the Group’s and the Company’s income tax payable and the Group’s income tax recoverable as at 31 December 2013 were $6,833,000 (2012: $7,430,000), $231,000 (2012: $537,000) and $512,000 (2012: $223,000), respectively. The carrying amounts of the Group’s deferred tax assets and deferred tax liabilities as at 31 December 2013 were $338,000 (2012: $535,000) and $421,000 (2012: $172,000) respectively and the Company’s deferred tax liabilities as at 31 December 2013 were $28,000 (2012: $27,000).

3.2 Key sources of estimation uncertainty

The key assumptions concerning the future and other key sources of estimation uncertainty at the end of the reporting period are discussed below. The Group based its assumptions and estimates on parameters available when the financial statements were prepared. Existing circumstances and assumptions about future developments, however, may change due to market changes or circumstances arising beyond the control of the Group. Such changes are reflected in the assumptions when they occur.

(a) Useful lives of property, plant and equipment

The cost of property, plant and equipment is depreciated on a straight-line basis over their estimated useful lives. Management estimates the useful lives of these assets to be within 2.5 to 50 years. The carrying amounts of the Group and the Company’s property, plant and equipment at the end of each reporting period is disclosed in Note 12 to the financial statements. Changes in the expected level of usage and technological developments could impact the economic useful lives and the residual values of these assets, therefore future depreciation charges could be revised. The carrying amount of the Group’s property, plant and equipment at the end of each reporting period is disclosed in Note 12 to the financial statements. A 10% difference in the expected useful lives of these assets from management’s estimates would result in approximately 1% (2012: 2%) variance in the Group’s profit before tax.

(b) Impairment of goodwill

Goodwill is tested for impairment annually and at other times when such indicators exist.

As disclosed in Note 13 to the financial statements, the recoverable amounts of the cash generating units which goodwill has been allocated to have been determined based on value in use calculations. The value in use calculations are based on a discounted cash flow model. The recoverable amount is most sensitive to the discount rate used for the discounted cash flow model as well as the expected future cash inflows and the growth rate used for extrapolation purposes. The key assumptions applied in the determination of the value in use including a sensitivity analysis, are disclosed and further explained in Note 13 to the financial statements.

(c) Impairment of loans and receivables

The Group assesses at the end of each reporting period whether there is any objective evidence that a financial asset is impaired. To determine whether there is objective evidence of impairment, the Group considers factors such as the probability of insolvency or significant financial difficulties of the debtor and default or significant delay in payments.

Where there is objective evidence of impairment, the amount and timing of future cash flows are estimated based on historical loss experience for assets with similar credit risk characteristics. The carrying amount of the Group’s loans and receivables at the end of the reporting period is disclosed in Note 19 to the financial statements. If the present value of estimated future cash flows of receivables that are past due but not impaired varies by 5% from management’s estimates, the Group’s allowance for impairment will increase by $682,000 (2012: increase by $803,000).



3. SIGNIFICANT ACCOUNTING JUDGEMENTS AND ESTIMATES (CONT’D)3.2 Key sources of estimation uncertainty (cont’d)

(d) Construction contracts

The Group recognises contract revenue by reference to the stage of completion of the contract activity at the end of each reporting period, when the outcome of a construction contract can be estimated reliably. The stage of completion is measured by reference to the proportion that contract costs incurred for work performed to date bear to the estimated total contract costs. Significant assumptions are required to estimate the total contract costs and the recoverable variation works that will affect the stage of completion. The estimates are made based on past experience and the work of specialists. The carrying amounts of assets and liabilities arising from construction contracts at the end of each reporting period are disclosed in Note 18 to the financial statements.

4. REVENUEGroup

2013 2012$’000 $’000

Contract revenue 292,385 287,100

Sale of goods 3,587 2,661

Rental of equipment 279 429

296,251 290,190

5. INTEREST INCOMEGroup

2013 2012$’000 $’000

Interest income from loans and receivables:- Short term deposits and bank balances 378 211

- Amounts due from associates 6 28- Others 10 1

394 240

6. OTHER INCOMEGroup

2013 2012$’000 $’000

Corporate fee income 430 436Dividend income from available-for-sale investment 297 49Gain/(loss) on disposal of property, plant and equipment 83 (9)Gain on disposal of associates 35 –Net foreign exchange gain 92 –Other services income 1,628 1,805Miscellaneous income 506 743Rental income 1,468 1,381Write-back of allowance for doubtful trade debts 473 –

5,012 4,405

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7. STAFF SALARIES AND RELATED EXPENSESGroup

2013 2012

$’000 $’000

Salaries and employee benefits (including directors):

Salaries, wages and bonuses 40,280 36,359

Contributions to defined contribution plans 3,635 3,096

Provision for unutilised leave 123 15

Directors’ fees 641 626

Other employee benefits 1,223 1,072

45,902 41,168

Kingsmen Performance Share Scheme

The Kingsmen Performance Share Scheme (the “KPSS”) was approved and adopted by the members of the Company at an EGM of the Company held on 29 April 2009. The implementation of the KPSS is to complement the existing ESOS and allows for participation by (a) Group employees, (b) Group Executive Directors (which refers to directors of the Company and/or any of its subsidiaries, as the case may be, who performs an executive function within the Group), (c) Non-Executive Directors (which refers to independent directors of the Company or directors of the Company and/or any of its subsidiaries, as the case may be, other than a Group Executive Director) and (d) associated company employees. Persons eligible to participate in the KPSS who are also controlling shareholders or associates of a controlling shareholder would be eligible to participate in the KPSS subject to the rules of the Listing Manual of the Singapore Exchange Securities Trading Limited (“Listing Manual”). Under the KPSS, an award of fully paid shares of the Company may only be vested and consequently any shares comprised in such awards shall only be delivered upon (i) the committee administering the KPSS (“KPSS Committee”) being satisfied that the participant has achieved the pre-determined performance targets and/or due recognition should be given for good work performance and/or significant contribution to the Company and/or (ii) the Company decides to pay a pre-determined percentage of a Group employee’s annual cash bonus payment in the form of shares. The pre-determined performance targets for each participant and the pre-determined percentage of a Group employee’s annual cash bonus payment in the form of shares shall be determined by the KPSS Committee in its absolute discretion.

Included in salaries, wages and bonuses is an amount of $476,000 (2012: $567,000) which pertains to bonus provisions which would be settled in subsequent years through performance shares.

During the financial year, an aggregate of 1,670,850 (2012: 666,900) performance shares were awarded to employees of the Company and its subsidiaries. This includes 792,570 (2012: 101,700) performance shares that were awarded to key management personnel.

The fair value of the shares awarded under KPSS is determined using the average of market prices up to the allotment date. The fair value of each share awarded under the KPSS during the financial year was $0.884 (2012: $0.675).

Kingsmen Share Option Scheme

The Kingsmen Share Option Scheme (the “Scheme”) was approved by the members of the Company at an Extraordinary General Meeting held on 11 August 2003 to enable all directors (including non-executive and independent directors) and employees of the Group to participate in the Scheme.

On 26 April 2004, the members of the Company approved the grant of incentive options at a maximum discount not exceeding 20% of the market price under the Scheme. All participants are allowed to exercise the options within the exercise period only if they remain under the employment of the Company. The exercise price for each share in respect of which an option is exercisable shall be determined and fixed by the Remuneration Committee. There are no cash settlement alternatives.

There are no outstanding share options as at 31 December 2013. As there were no options granted during the financial years ended 31 December 2013 and 2012, no share option expense was recorded.




8. INTEREST EXPENSEGroup

2013 2012

$’000 $’000

Interest expense on:

- Obligations under finance leases 7 13

- Bank loans and trust receipts 267 234

- Bank overdrafts 2 5

276 252

9. PROFIT BEFORE TAXIn addition to items in Note 4 to Note 8, the following items have been included in arriving at profit before tax:

Group

2013 2012

$’000 $’000

Inventories recognised as an expense in cost of sales (Note 17) 1,434 125

Directors’ remuneration (including fees) :

- Directors of the Company 3,430 3,113

- Directors of the subsidiaries (Note 31) 5,709 5,523

Included in other operating expenses are the following:

Audit fees paid to:

- Auditors of the Company 240 300

- Other auditors 226 150

Non-audit fees paid to:

- Auditors of the Company – 259

- Other auditors – 38

Amortisation of intangible assets (Note 13) – 202

Bad trade debts written off (Note 19) 128 36

Allowance for doubtful trade debts (Note 19) 84 742

Impairment loss on investment in associates (Note 15) – 580

Property, plant and equipment written off 16 7

Operating lease expenses (Note 29(b)) 3,712 3,311

Net foreign exchange loss – 375

Travelling and telecommunication expenses 2,374 2,442

Selling and distribution expenses 1,251 783

Upkeep and maintenance 605 588

Utilities 589 658

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31 DECEMBR 2013

10. INCOME TAX EXPENSE(a) Major components of income tax expense

The major components of income tax expense for the financial years ended 31 December 2013 and 2012 are:

Group

2013 2012

$’000 $’000

Current income tax

- Current income taxation 3,785 5,065

- (Over)/under provision in respect of previous years (624) 177

3,161 5,242

Deferred income tax (Note 25)

- Origination and reversal of temporary differences 462 (1,111)

462 (1,111)

Income tax expense recognised in the consolidated income statement 3,623 4,131

There is no deferred tax relating to other comprehensive income for the financial years ended 31 December 2013 and 2012.

(b) Relationship between tax expenses and profit before tax

The reconciliation between tax expense and the product of profit before tax multiplied by the applicable corporate tax rate for the financial years ended 31 December 2013 and 2012 are as follows:

Group

2013 2012

$’000 $’000

Profit before tax 22,005 21,554

Tax at the domestic income tax rate of 17% (2012: 17%) 3,741 3,664

Non-deductible expenses 310 417

Benefits from previously unrecognised tax losses (54) (31)

Partial tax exemption & tax relief (448) (327)

(Over)/under provision in respect of previous years (624) 177

Differences in tax rates of overseas subsidiaries 823 361

Share of results of associates (139) (218)

Others 14 88

Income tax expense recognised in the consolidated income statement 3,623 4,131



10. INCOME TAX EXPENSE (CONT’D)(b) Relationship between tax expenses and profit before tax (cont’d)

The corporate income tax rate applicable to Singapore companies of the Group is 17% (2012: 17%). The corporate income tax rates applicable to Hong Kong and the People’s Republic of China (“PRC”) companies of the Group are 16.5% (2012: 16.5%) and 25% (2012: 25%) respectively. The corporate income tax rate applicable to Malaysian companies of the Group is 25% (2012: 25%).

A loss-transfer system of group relief (group relief system) for companies was introduced in Singapore with effect from the year of assessment 2003. Under the group relief system, a company belonging to a group may transfer its current year unabsorbed capital allowances, current year unabsorbed trade losses and current year unabsorbed donations (loss items) to another company belonging to the same group, to be deducted against the assessable income of the latter company.

During the financial year, there were no tax losses (2012: $Nil) transferred within the Company and subsidiary companies under the group relief system. Current year tax expense of the Company is net of the tax effect of the unabsorbed capital allowances and trade losses transferred.

The above reconciliation is prepared by aggregating separate reconciliations for each national jurisdiction.

11. EARNINGS PER SHAREBasic earnings per share amounts are calculated by dividing profit for the financial year attributable to owners of the Company, net of tax, by the weighted average number of ordinary shares outstanding during the financial year.

Diluted earnings per share amounts is calculated by dividing profit for the financial year attributable to owners of the Company, net of tax, by the weighted average number of ordinary shares outstanding during the financial year plus the weighted average number of ordinary shares that would be issued on the conversion of all the dilutive potential ordinary shares into ordinary shares.

The following tables reflect the profit and loss and share data used in the computation of basic and diluted earnings per share for the financial years ended 31 December:

Group

2013 2012

$’000 $’000

Profit net of tax attributable to owners of the Company used in the computation of basic and diluted earnings per share 17,744 16,914

No. of shares

No. of shares

’000 ’000

Weighted average number of ordinary shares for basic and diluted earnings per share computation * 192,648 191,434

* The weighted average numbers take into account the weighted average effect of changes in treasury share transactions during the year.

Diluted earnings per share is similar to basic earnings per share as there are no dilutive potential ordinary shares as at 31 December 2013 and 2012.

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12. PROPERTY, PLANT AND EQUIPMENT

GroupFreehold

landFreehold

buildings

Machinery and

exhibition equipment

Office equipment, computers

and software

Motor vehicles

Furniture and

fittings Renovations

Assets under

construction Total

$’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000

Cost:

At 1 January 2012 2,108 2,226 16,074 2,966 1,203 425 2,600 – 27,602

Additions – – 326 469 44 78 743 415 2,075

Reclassification – – – 4 – – (4) – –

Disposals/write-offs – – (35) (186) (104) (36) (596) – (957)

Exchange differences (49) (51) (32) (55) (43) (11) (107) – (348)

At 31 December 2012 and 1 January 2013

2,059 2,175 16,333 3,198 1,100 456 2,636 415 28,372

Additions – – 2,511 664 174 194 775 279 4,597

Reclassification – 141 (141) – – – – – –

Disposals/write-offs – – (9,136) (569) (119) (91) (49) – (9,964)

Exchange differences (75) (85) (11) (36) (16) (8) 70 – (161)

At 31 December 2013 1,984 2,231 9,556 3,257 1,139 551 3,432 694 22,844

Accumulated depreciation:

At 1 January 2012 – 22 12,784 1,654 581 201 1,179 – 16,421

Reclassification – – – (2) – – 2 – –

Charge for the financial year

– 44 2,357 434 172 67 431 – 3,505

Disposals/write-offs – – (24) (184) (68) (35) (337) – (648)

Exchange differences – – (14) (20) (24) (5) (49) – (112)

At 31 December 2012 and 1 January 2013

– 66 15,103 1,882 661 228 1,226 – 19,166

Charge for the financial year

– 46 755 536 150 51 479 – 2,017

Disposals/write-offs – – (8,894) (560) (115) (83) (49) – (9,701)

Exchange differences – (5) (7) (13) (13) (21) 110 – 51

At 31 December 2013 – 107 6,957 1,845 683 175 1,766 – 11,533

Net carrying amount:

At 31 December 2012 2,059 2,109 1,230 1,316 439 228 1,410 415 9,206

At 31 December 2013 1,984 2,124 2,599 1,412 456 376 1,666 694 11,311



12. PROPERTY, PLANT AND EQUIPMENT (CONT’D)

Company

Office equipment and

computers Motor vehiclesFurniture and

fittings Renovations Total

$’000 $’000 $’000 $’000 $’000

Cost:

At 1 January 2012 329 13 11 163 516

Additions 23 – 32 44 99

Disposals/write-offs (30) (6) – – (36)

At 31 December 2012 and

1 January 2013 322 7 43 207 579

Additions 101 – 2 18 121

Disposals/write-offs (3) – – – (3)

At 31 December 2013 420 7 45 225 697

Accumulated depreciation:

At 1 January 2012 197 7 10 101 315

Charge for the financial year 54 1 1 27 83

Disposals/write-offs (30) (6) – – (36)

At 31 December 2012 and

1 January 2013 221 2 11 128 362

Charge for the financial year 51 1 5 44 101

Disposals/write-offs (3) – – – (3)

At 31 December 2013 269 3 16 172 460


At 31 December 2012 101 5 32 79 217

At 31 December 2012 151 4 29 53 237

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12. PROPERTY, PLANT AND EQUIPMENT (CONT’D)(a) Depreciation charge for the year is analysed as follows:

Group

2013 2012

$’000 $’000

Charge to cost of sales 388 1,891

Charge to operating expenses 1,629 1,614

Total depreciation 2,017 3,505

(b) Assets held under finance leases

During the financial year, the Group acquired plant and equipment with an aggregate fair value of $75,000 (2012: $Nil) by means of finance leases. The cash outflow on acquisition of property, plant and equipment amounted to $4,550,000 (2012: $2,075,000), including the initial deposit paid on acquisition of assets under finance lease amounting to $28,000 (2012: $Nil).

Leased assets are pledged as security for the related finance lease liabilities.

Net carrying amounts of assets under finance leases are as follows:

Group

2013 2012

$’000 $’000

Machinery and exhibition equipment – 74

Office equipment and computers – 16

Motor vehicles 125 113

125 203

(c) Impairment of assets

The carrying values of property, plant and equipment are reviewed for impairment by management and it was concluded that no impairment loss is required to be recognised.

(d) Assets pledged as security

In addition to assets held under finance leases, the Group’s freehold land and building with a carrying amount of $4,108,000 (2012: $4,168,000) are mortgaged to secure the Group’s bank loans (Note 24).

(e) Title to asset

As at 31 December 2013, the title deed in respect of the above freehold land and building with a carrying amount of $4,108,000 (2012: $4,168,000) has not been received. The Group is in the process of arranging for the title to be transferred from the seller. The purchase consideration for the freehold land and building has been fully paid for.



13. INTANGIBLE ASSETSGroup

GoodwillCustomer

relationship Total

$’000 $’000 $’000

Cost:

At 1 January 2012 6,067 1,579 7,646

Exchange differences (244) (88) (332)

At 31 December 2012 and 1 January 2013 5,823 1,491 7,314

Exchange differences 116 48 164

At 31 December 2013 5,939 1,539 7,478

Accumulated amortisation and impairment:

At 1 January 2012 1,000 1,368 2,368

Amortisation (Note 9) – 202 202

Exchange differences – (79) (79)

At 31 December 2012 and 1 January 2013 1,000 1,491 2,491

Exchange differences – 48 48

At 31 December 2013 1,000 1,539 2,539


At 31 December 2012 4,823 – 4,823

At 31 December 2013 4,939 – 4,939

Goodwill

Goodwill arose from the acquisition of Kingsmen (North Asia) Limited (“KNA”) and Kingsmen Indochina Pte Ltd (“KIndo”) in 2007.

Customer relationship

The customer relationship was recognised upon the acquisition of Kingsmen (North Asia) Limited in Year 2007 and was amortised over a period of 5 years from the date of acquisition. The customer relationship was fully amortised in the financial year ended 31 December 2012.

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13. INTANGIBLE ASSETS (CONT’D)Impairment testing of goodwill

The carrying values and recoverable amounts of goodwill allocated to the respective subsidiaries are as follows:

2013 2012

$’000 $’000

Carrying value of goodwill:

- KNA 4,250 4,134

- KIndo 689 689

4,939 4,823

To assess impairment of the above goodwill, the Group estimated the value-in-use of the respective subsidiaries, being the lowest cash generating unit (“CGU”) to which the goodwill and intangible assets are allocated. Estimating the value-in-use requires the Group to make an estimate of the expected future cash flows from each subsidiary, based on the financial budgets approved by management covering a 3-year period.

Key assumptions used in the value in use calculations

The calculations of value in use for the CGUs are most sensitive to the following assumptions:

- Budgeted gross margins – gross margins are based on average values achieved in the 5 years preceding the start of the budget period. These are increased over the budget period for anticipated improvements in performance.

- The pre-tax discount rate applied to the cash flow projections and the forecasted growth rates used to extrapolate cash flows beyond the three-year period was 12.0% (2012: 12.0%) per annum and 1% (2012: 1%) respectively. The discount rates reflect management’s estimate of the risks specific to the subsidiaries and approximates the weighted average cost of capital for the subsidiaries. The annual growth rates used are based on management’s best estimate of the long-term average growth rate relevant to the business activities of the CGUs.

Sensitivity to changes in assumptions

With regards to the assessment of value in use for goodwill, management believes that no reasonably possible changes in any of the above key assumptions would cause the carrying value of the CGUs to materially exceed its recoverable amount.

Impairment loss recognised

During the financial year ended 31 December 2013, no impairment loss was recognised to write-down the carrying amount of goodwill attributable to the subsidiaries as the value in use was estimated to be higher than the carrying amounts.



14. INVESTMENTS IN SUBSIDIARIESCompany

2013 2012

$’000 $’000

Unquoted equity shares, at cost 20,409 20,552

Impairment loss (550) (550)

Net carrying amount 19,859 20,002

Details of subsidiaries as at 31 December are as follows:

Name of Company (Country of incorporation and business) Principal activities

Effective equity interest held by

the Group Cost

2013 2012 2013 2012

% % $’000 $’000

Held by the Company:

Kingsmen Exhibits Pte Ltd (a) (Singapore)

Advertising contractors and agents; design and production of exhibitions, decorations and museums

100 100 1,562 1,562

Kingsmen Projects Pte Ltd (a) (Singapore)

Design and production of architectural interiors, decorations and museums

100 100 2,121 2,121

Kingsmen Design Pte Ltd (a) (Singapore)

Design consultancy, and planning management

100 100 839 839

Kingsmen Ooh-media Pte Ltd (a) (Singapore) ***

Advertising services, consultancy event management and marketing communications

65 65 188 188

Hi-Light Electrical Pte Ltd (a) (Singapore)

Electrical engineering 80 80 301 301

I-Promo Pte Ltd (a) (Singapore) *

Design consultancy, project and events management, and provision of special design and construction facilities to exhibitors

– 100 – 353

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14. INVESTMENTS IN SUBSIDIARIES (CONT’D)Name of Company (Country of incorporation and business) Principal activities

Effective equity interest held by the Group Cost

2013 2012 2013 2012

% % $’000 $’000

Held by the Company:

Kingsmen Indochina Pte Ltd (a) (Singapore)


90 90 2,158 2,158

Kingsmen Sdn Bhd (b) (Malaysia)

Investment holding and advertising contractors

71 71 797 797

PT Kingsmen Indonesia (c) (Indonesia)

Design and production of interiors, exhibitions, decorations and museums

95 95 235 235

Kingsmen (North Asia) Limited (d) (Hong Kong)

Investment holding 92.2 92.2 11,998 11,998

Thinkfarm Pte Ltd (a) (Singapore)

Custom publishing, media sales and events marketing

70 – 210 –

20,409 20,552


Effective equity interest held by the Group

2013 2012

% %

Held through Kingsmen Exhibits Pte Ltd

Kingsmen Environmental Graphics Pte Ltd (a) (Singapore)

Graphic design and production 80 80

Held through Kingsmen Projects Pte Ltd

K-Fix Production Sdn Bhd (e) (Malaysia)

Manufacturer, wholesale and trader of interiors and exhibitions furniture, fixtures and displays

100 100

K-Fix (Kunshan) Co Ltd. (m) (People’s Republic of China) **


97.7 –

Held through Kingsmen Ooh Pte Ltd

I-Promo Pte Ltd (a) (Singapore) *

Design consultancy, project and events management, and provision of special design and construction facilities to exhibitors

65 –

Held through Kingsmen Indochina Pte Ltd

Kingsmen Vietnam Co., Ltd (f) (Vietnam)


90 90



14. INVESTMENTS IN SUBSIDIARIES (CONT’D)



2013 2012

% %

Held through Kingsmen Sdn Bhd

Kingsmen Designers & Producers Sdn Bhd (b) (Malaysia)


71 71

Kingsmen-Keb Systems Sdn Bhd (b) (Malaysia)


71 71

Kingsmen Environmental Graphics Sdn Bhd (b) (Malaysia)


56.8 56.8

Held through Kingsmen (North Asia) Limited

Kingsmen Hong Kong Limited (d) (Hong Kong)


88.5 88.5

Kingsmen Beijing Co., Limited (h)(g) (People’s Republic of China)


92.2 92.2

Kingsmen Shanghai Co., Limited (i)(g) (People’s Republic of China)


92.2 92.2

Kingsmen Taiwan International Co. Limited (j)(g) (Taiwan)


85.7 85.7

Kingsmen Macau Limited (k)(g) (Macau)


92.2 92.2

K-Fix (Kunshan) Co Ltd. (m) (People’s Republic of China) **


97.7 –

Held through Kingsmen Hong Kong Limited

Kingsmen (Shenzhen) Co Ltd. (l)(g) (People’s Republic of China)


88.5 88.5

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14. INVESTMENTS IN SUBSIDIARIES (CONT’D)(a) Audited by Ernst & Young LLP, Singapore.

(b) Audited by Ernst & Young, Malaysia.

(c) Audited by Eddy Prakarsa Permana & Siddharta, Indonesia.

(d) Audited by Ernst & Young, Hong Kong.

(e) Audited by ABD Halim & Co., Malaysia.

(f) Audited by Auditing and Consulting Joint Stock Company, Vietnam.

(g) For the purposes of the preparation of the Group’s financial statements to comply with Singapore Financial Reporting Standards, these subsidiaries are audited by Ernst & Young, Hong Kong.

(h) Audited by Beijing Dongshen Dingli International Certified Public Accountants Co. Ltd., People’s Republic of China.

(i) Audited by Shanghai Jiu Zhou Certified Public Accountants, People’s Republic of China.

(j) Audited by Sun Home CPF Firm, Taiwan.

(k) Not required to be audited by the laws in its country of incorporation.

(l) Audited by Shenzhen Tongde Certified Public Accountants, People’s Republic of China.

(m) Audited by Suzhou Xin Ta Hua Accounting Services Co., Ltd., People’s Republic of China.

In accordance with Rule 716 of SGX-ST Listing Rules, the Audit Committee and Board of Directors of the Company confirmed that they are satisfied that the appointment of different auditors for its subsidiaries would not compromise the standard and effectiveness of the audit of the Company.

* During the financial year, the Company has transferred its wholly-owned subsidiary, I-Promo Pte Ltd, to Kingsmen Ooh-Media Pte Ltd, which resulted in a dilution of 35% interest in I-Promo Pte Ltd.

** The Group holds an effective interest of 97.7% in K-Fix (Kunshan) Co Ltd, of which 70% is held through Kingsmen Projects Pte Ltd and 27.7% is held through Kingsmen North Asia (Limited).

*** During the financial year ended 31 December 2012, the Company disposed of a 5% equity interest in Kingsmen Ooh-Media Pte Ltd (“KOM”) to its non-controlling interests for a cash consideration of $35,000. This resulted in a decrease in the Company’s equity interest in KOM from 70% to 65%. The difference of $30,000 between the consideration and the carrying value of the additional interest disposed of has been recognised in “Premium paid on acquisition of non-controlling interests” within equity.

$’000

Consideration received for disposal of non-controlling interests 35

Increase in equity attributable to non-controlling interests (65)

Decrease in equity attributable to owners of the Company 30

Impairment testing of investments in subsidiaries

Management has assessed the recoverable amounts of investments in subsidiaries where impairment indicators existed. No impairment loss (2012: $Nil) was recognised for the year ended 31 December 2013 as the recoverable value was in excess of the carrying amounts.




15. INVESTMENTS IN ASSOCIATESGroup Company

2013 2012 2013 2012

$’000 $’000 $’000 $’000

Unquoted equity shares, at cost 5,803 5,680 5,803 5,680

Acquisition of unquoted preference shares, at cost

264 264 264 264

6,067 5,944 6,067 5,944

Impairment loss – (580) – (580)

Exchange differences (174) (292) – –

Share of post-acquisition reserves:

At beginning of year 3,199 2,077 – –

Share of post-acquisition profits (net of tax)

820 1,282 – –

Dividend declared (497) (160) – –

At end of year 3,522 3,199 – –

Carrying amount of associates 9,415 8,271 6,067 5,364

Impairment of investment in associates

During the financial year ended 31 December 2012, an impairment loss of $580,000 was recognised to write-down the carrying value of the Group’s investment in Kingsmen Fairtech International Pvt. Ltd as the associated company has been loss-making and the recoverable amount was lower than the carrying amount. The allowance for impairment recognised in the “Exhibitions and Museums” and “Interiors” segment amounted to $290,000 and $290,000, respectively and was recorded in “Other expenses” line item of the profit or loss for the financial year ended 31 December 2012. The recoverable amount of the investment in associate was based on its value in use and the pre-tax discount rate used was 12%. The investment was subsequently disposed of during the financial year ended 31 December 2013.

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15. INVESTMENTS IN ASSOCIATES (CONT’D)Details of associates as at 31 December are as follows:


Effective equity interest held by

the GroupCost of

investment

2013 2012 2013 2012

% % $’000 $’000

Ascend Com Pte. Ltd. (i) (Singapore)

Renting and selling audio-visual, computer and peripheral equipment

40 40 367 367

Kingsmen Korea Limited (ii) (Korea) #


38 32.1 1,720 1,017

Kingsmen Nikko Limited (iii) (Japan)

Advertising contractors and agents; design and production of exhibitions, decorations and museums

30 30 563 563

Kingsmen Middle East LLC (iv) (UAE)


25 25 2,637 2,637

Enterprise Sports Group Pte Ltd (v) (Singapore)

Sports event marketing, public relations and organising

30 30 780 780

Kingsmen Fairtech International Pvt. Ltd (vi) (India)##


– 35 – 580

6,067 5,944

# During the financial year, the Company acquired additional 5.9% interest in Kingsmen Korea Limited (KKL) from an existing shareholder of KKL. Upon completion of the above acquisition, the Company’s effective shareholding in KKL increased from 32.1% to 38.0%.

## During the financial year, the Company disposed of 35% interest in Kingsmen Fairtech International Pvt Ltd.



83

15. INVESTMENTS IN ASSOCIATES (CONT’D)



2013 2012

% %

Held through Ascend Com Pte. Ltd.

Crescendo Media Pte Ltd (i) (Singapore)

Media production and event planning 16 16

Held through Kingsmen Korea Ltd.

Kingsmen Busan Ltd (ii) (Korea)

Design and production of architectural interiors and decorations for museums & commercial interiors and alternative marketing

38.0 32.1

Held through Kingsmen Nikko Limited

Kingsmen Project Japan Limited (iii) (Japan)

Advertising contractors and agents, design and production of exhibitions, decorations and museums

24 24

Kingsmen Architects and Design Limited (iii) (Japan)

Design consultancy and planning management 24 21

Held through Enterprise Sports Group Pte Ltd

ESG Endurance Sports Pte Ltd (v) (Singapore)

Sports event organising 30 30

ESG Timing Pte Ltd (v) (Singapore)

Sale, rental and provision of services for timing equipment

30 30

Enterprise Sports Singapore Pte Ltd (v) (Singapore)

Sports event marketing 30 30

(i) Audited by C Y Ng & Co, Singapore.

(ii) Audited by Dyne Accounting Corporation, Korea.

(iii) Not required to be audited by the laws in its country of incorporation.

(iv) Audited by Puthran Chartered Accountants, United Arab Emirates.

(v) Audited by VC Assurance PAC, Singapore.

(vi) Audited by Gupta Garg & Agrawal Chartered Accountants, India.

In accordance with Rule 716 of SGX-ST Listing Rules, the Audit Committee and Board of Directors of the Company confirmed that they are satisfied that the appointment of different auditors for its associates would not compromise the standard and effectiveness of the audit of the Company.


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15. INVESTMENTS IN ASSOCIATES (CONT’D)The summarised financial information of the associates, not adjusted for the proportion of ownership interest held by the Group, is as follows:

Group

2013 2012

$’000 $’000

Assets and liabilities:

Current assets 36,489 31,934

Non-current assets 7,109 5,369

Total assets 43,598 37,303

Current liabilities 25,962 20,473

Non-current liabilities 2,256 2,269

Total liabilities 28,218 22,742

Results:

Revenue for the year 123,328 112,908

Profit for the year 2,417 4,541

16. OTHER INVESTMENTSGroup Company

2013 2012 2013 2012

$’000 $’000 $’000 $’000

Available-for-sale financial assets:

Unquoted equity shares, at cost 580 543 580 543

Held-to-maturity investment:

4% p.a. US bonds due 23 October 2017 (quoted)

1,055 – 1,055 –

1,635 543 1,635 543

Fair value information has not been disclosed for the Group’s investment in equity shares that are carried at cost because fair value cannot be measured reliably. The group does not intend to dispose of these investments in the foreseeable future.




17. INVENTORIESGroup

2013 2012

$’000 $’000

Balance sheet:

Project materials, at cost 1,561 21

Consolidated income statement:

Inventories recognised as an expense in cost of sales (Note 9) 1,434 125

18. GROSS AMOUNT DUE FROM/(TO) CUSTOMERS FOR CONTRACT WORK-IN-PROGRESS

Group

2013 2012

$’000 $’000

Aggregate amount of costs incurred and recognised profits (less recognised losses) to date

26,927 40,301

Less: Progress billings (14,640) (23,783)

12,287 16,518

Presented as:

Gross amount due from customers for contract work 18,586 17,698

Gross amount due to customers for contract work (6,299) (1,180)

12,287 16,518

Included in gross amount due from customers for contract work for the financial year ended 31 December 2013 is an amount of $800,000 (2012: $1,007,000) which is related to a debtor who is a party to a legal dispute. No impairment was made on this amount as the Group has assessed that it does not affect the recoverability of this amount.

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19. TRADE AND OTHER RECEIVABLESGroup Company

2013 2012 2013 2012

$’000 $’000 $’000 $’000

Trade and other receivables (current):

Subsidiaries – – 859 991

Related parties 1,492 513 148 51

Associates 740 1,787 390 835

External parties 88,663 72,516 – –

Total trade receivables 90,895 74,816 1,397 1,877

Allowance for doubtful debts (771) (1,223) – –

Carrying amounts of trade receivables 90,124 73,593 1,397 1,877

Other receivables 4,085 7,951 2,203 1,184

Staff advances and loans 481 633 – 3

Refundable deposits 871 1,087 – 1

95,561 83,264 3,600 3,065

Other receivables (non-current):

Other receivables 315 48 – –

Staff loans 28 20 – –

343 68 – –

Total trade and other receivables (current and non-current) 95,904 83,332 3,600 3,065

The above is stated after charging or crediting the following:

Group Company

2013 2012 2013 2012

$’000 $’000 $’000 $’000

Bad trade debts written off (Note 9) 128 36 – –

Allowance for doubtful trade debts (Note 9) 84 742 – –

Write-back of allowance for doubtful debts (Note 9) (473) – – –




19. TRADE AND OTHER RECEIVABLES (CONT’D)Trade receivables

Trade receivables are non-interest bearing and are generally on 60 to 90 days’ terms. They are recognised at their original invoice amounts which represent their fair values on initial recognition. At 31 December 2013, included in trade receivables is an amount of $3,922,000 (2012: $4,301,000), which relates to retention sums and advance billings.

Included in trade receivables is an amount of $143,000 due from a debtor (2012: $51,000) who is a party to a legal dispute. No impairment was made on this amount as the Group has assessed that it does not affect the creditworthiness of the debtor.

The amounts due from subsidiaries, related parties and associates are unsecured, non-interest and repayable within normal trade terms. These amounts arose from normal business activities of the Group.

Trade receivables denominated in currencies other than the functional currencies of the respective entities within the Group at 31 December are as follows:

Group Company

2013 2012 2013 2012

$’000 $’000 $’000 $’000

United States Dollar 3,290 4,724 445 392

Malaysian Ringgit 6,211 12,245 100 259

Renminbi 21,379 8,443 – –

Vietnam Dong 5,865 3,157 – –

Hong Kong Dollar 4,282 1,320 – –

Receivables that are past due but not impaired

The Group has trade receivables amounting to $13,755,000 (2012: $16,058,000) that are past due at the end of the reporting period but not impaired. These receivables are unsecured and the analysis of their aging at the end of the reporting period is as follows:

Group

2013 2012

$’000 $’000

Trade receivables past due but not impaired:

Lesser than 30 days 2,347 4,244

30 to 60 days 1,575 1,089

61 to 90 days 818 1,187

More than 90 days 9,015 9,538

13,755 16,058

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19. TRADE AND OTHER RECEIVABLES (CONT’D)Receivables that are impaired

The Group’s trade receivables that are impaired at the end of the reporting period and the movement of the allowance accounts used to record the impairment are as follows:

Group

2013 2012

$’000 $’000

Trade receivables – nominal amounts 771 1,223

Less: Allowance for impairment (771) (1,223)

– –

Movement in allowance account:

At 1 January 1,223 760

Charge for the year (Note 9) 84 742

Written back (Note 6) (473) –

Written off (45) (263)

Exchange differences (18) (16)

At 31 December 771 1,223

Trade receivables that are individually determined to be impaired at the end of the reporting period relate to debtors that are in significant financial difficulties and have defaulted on payments. These receivables are not secured by any collateral or credit enhancements.

Other receivables

Staff advances and loans are unsecured, non-interest bearing and are repayable in cash. The non-current portion of staff loans has an average maturity of 1 year (2012: 1.5 years).

Included in other receivables of the Company are amounts due from subsidiaries, associates and related parties amounting to $612,000 (2012: $504,000), $208,000 (2012: $220,000) and $35,000 (2012: $23,000) respectively. These amounts are unsecured, non-interest bearing and repayable on demand in cash.

Included in other receivables of the Group are amounts due from associates and related parties of $208,000 (2012: $223,000) and $35,000 (2012: $23,000) respectively. These amounts are unsecured, non-interest bearing and repayable on demand in cash.



20. AMOUNTS DUE FROM/(TO) SUBSIDIARIES/ASSOCIATESCompany

The amounts due from/(to) subsidiaries are non-trade in nature, unsecured, bear interest at 2.14% to 2.17% (2012: 2.09% to 2.17%) per annum and are repayable on demand in cash. These balances relate to advances made to/received from subsidiaries for working capital purposes.

Group and Company

The amounts due from/(to) associates relate to loans which are non-trade in nature, unsecured and are repayable on demand in cash.

For the financial year ended 31 December 2013, amounts due from associates are non-interest bearing. For the financial year ended 31 December 2012, there is an amount of $384,000 included in amount due from associates which bears interest at 6% per annum.

Included in amount due to associates is an amount of $1,013,000 (2012: $Nil) which bears interest at 9% (2012: Nil) per annum.

21. CASH AND CASH EQUIVALENTS

Group Company

2013 2012 2013 2012

$’000 $’000 $’000 $’000

Cash at banks and in hand 48,192 36,389 3,874 900

Short-term deposits 15,530 16,692 1,580 1,503

Cash and short-term deposits 63,722 53,081 5,454 2,403

Less: Amount pledged to banks for banking facilities

(1,560) (1,503) (1,560) (1,503)

Less: Bank overdrafts (Note 24) (2) – – –

Cash and cash equivalents 62,160 51,578 3,894 900

Cash at banks earn interest at rates based on daily bank deposit rates. Short-term deposits are placed for varying periods from one month to one year (2012: one month to one year) depending on the immediate cash requirements of the Group, and earn interests at the respective short-term deposit rates.

The short-term deposits bear interest of 0.15% to 3.05% (2012: 0.25% to 1.38%) per annum and 0.15% to 0.5% (2012: 0.25% to 0.39%) per annum respectively for the Group and the Company during the financial year.

As at 31 December 2013, short term deposits of $1,560,000 (2012: $1,503,000) of the Group and the Company have been pledged to banks for banking facilities granted to subsidiaries of the Group, including overdrafts and bank loans (Note 24).

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21. CASH AND CASH EQUIVALENTS (CONT’D)Cash and short-term deposits denominated in currencies other than the functional currencies of the respective entities within the Group at 31 December are as follows:

Group Company

2013 2012 2013 2012

$’000 $’000 $’000 $’000

United States Dollar 6,282 3,342 – –

Hong Kong Dollar 226 453 – –

22. TRADE AND OTHER PAYABLESGroup Company

2013 2012 2013 2012

$’000 $’000 $’000 $’000

Trade and other payables (current):

Related parties 101 62 – –

Associates 1,619 2,629 – –

External parties 62,676 41,879 – –

Total trade payables 64,396 44,570 – –

Accrued project costs 14,267 22,008 – –

Accrued operating expenses 11,174 12,640 1,187 971

Deposits received 68 29 14 14

Other payables 6,953 3,604 270 495

Provision for Performance Share Scheme

508 644 – –

Provision for unutilised leave 675 531 57 56

98,041 84,026 1,528 1,536

Other payables (non-current):

Post employment benefits 119 116 – –

Total trade and other payables (current and non-current) 98,160 84,142 1,528 1,536



22. TRADE AND OTHER PAYABLES (CONT’D)Trade payables

Trade and other payables denominated in currencies other than the functional currencies of the respective entities within the Group at 31 December are as follows:

Group Company

2013 2012 2013 2012

$’000 $’000 $’000 $’000

United States Dollar 2,382 25,729 – –

Hong Kong Dollar 4,708 4,089 – –

Malaysian Ringgit 4,526 3,889 – –

Renminbi 24,096 7,964 – –

The amounts due to related parties and associates are trade in nature, unsecured, non-interest bearing and repayable within normal trade terms. These amounts arose from normal trading activities of the Group.

Other payables

Included in other payables and accruals of the Group are amounts due to associates of $387,000 (2012: $975,000) which are non-trade in nature, unsecured, non-interest bearing and repayable on demand.

Included in other payables of the Company are amounts due to subsidiaries of $12,000 (2012: $120,000). The amount is non-trade in nature, unsecured, non-interest bearing and repayable on demand.

23. DEFERRED INCOME

Group Company

2013 2012 2013 2012

$’000 $’000 $’000 $’000

Deferred income comprising:

Advance billings receivable 2,828 3,299 – –

Advance billings received 42 1,932 – –

2,870 5,231 – –

This refers to advance billings to customers for projects that would commence within the next 12 months.

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24. LOANS AND BORROWINGS

Maturity Group

2013 2012

$’000 $’000

Current:

Obligations under finance leases (Note 29) 2014 41 66

Trust receipts 2014 551 514

Bank overdrafts On demand 2 –

Bank term loans

- MYR term loan at BLR - 2% p.a. On demand 1,784 1,903

- MYR term loan at BECOF + 1.5% p.a. 2014 59 61

- VND short term loan at BLR + 2% p.a. 2014 363 217

2,800 2,761

Non-current:

Obligations under finance leases (Note 29) 2015 - 2017 32 35

Bank term loan

- MYR term loan at BECOF + 1.5% p.a. 2015 - 2031 1,730 1,849

1,762 1,884

Total loans and borrowings 4,562 4,645

Bank overdrafts

Bank overdrafts are denominated in Malaysian Ringgit (“MYR”), bear interest at bank lending rate (“BLR”) + 1.5% p.a. (2012 : BLR + 1.5% p.a.) and are secured by short-term deposits (Note 21), a corporate guarantee given by its subsidiary, Kingsmen Sdn Bhd, and personal guarantees given by certain directors of its subsidiaries.

VND short-term loan at BLR + 2% p.a.

This short-term loan is fully repayable on February 2014 and is secured by a corporate guarantee of the Company.

MYR term loan at BLR - 2% p.a.

This callable term loan is secured by a first mortgage over the Group’s freehold land and building (Note 12), corporate guarantee given by its subsidiary, Kingsmen Sdn Bhd, and personal guarantees given by certain directors of its subsidiary.

MYR term loan at BECOF + 1.5% p.a.

This loan bears interest at the bank effective costs of funds (“BECOF”), is fully repayable in 2031 and is secured by a first mortgage over the Group’s freehold land and buildings (Note 12), a corporate guarantee given by its subsidiary, Kingsmen Sdn Bhd, and personal guarantees given by certain directors of its subsidiary.



25. DEFERRED TAXDeferred tax assets and liabilities as at 31 December relate to the following:

Group Company

2013 2012 2013 2012

$’000 $’000 $’000 $’000

As at 1 January (363) 770 27 22

Exchange differences (16) (22) – –

Debit/(credit) during the financial year to profit or loss (Note 10(a))

462 (1,111) 1 5

As at 31 December 83 (363) 28 27

Represented by:

Deferred tax assets (338) (535) – –

Deferred tax liabilities 421 172 28 27

83 (363) 28 27

Deferred taxation assets as at 31 December comprise:

Group Company

2013 2012 2013 2012

$’000 $’000 $’000 $’000

Deferred tax liabilities:

Differences in depreciation for tax purposes

69 192 – –

Intangible assets – – – –

Gross deferred tax liabilities 69 192 – –

Deferred tax assets:

Provision for Kingsmen Performance Share Scheme

(98) (60) – –

Other provisions (276) (632) – –

Other items (33) (35) – –

Gross deferred tax assets (407) (727) – –

Net deferred tax assets (338) (535) – –

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25. DEFERRED TAX (CONT’D)Deferred taxation liabilities as at 31 December comprise:

Group Company

2013 2012 2013 2012

$’000 $’000 $’000 $’000

Deferred tax liabilities:

Differences in depreciation for tax purposes

287 148 38 37

Others 346 269 – –

Gross deferred tax liabilities 633 417 38 37

Deferred tax assets:

Other provisions (212) (245) (10) (10)

Gross deferred tax assets (212) (245) (10) (10)

Net deferred tax liabilities 421 172 28 27

Unrecognised tax losses

As at 31 December 2013, the Group has unabsorbed tax losses and unutilised capital allowances carried forward totalling approximately $611,000 (2012: $781,000), available for offset against future taxable income. The potential deferred tax assets arising from these unabsorbed tax losses and unutilised capital allowances have not been recognised as taxable profits from the subsidiary companies against which the deferred tax assets can be utilised, are uncertain.

Unrecognised temporary differences relating to investments in subsidiaries

At the end of the reporting period, no deferred tax liability (2012: Nil) has been recognised for taxes that would be payable on the undistributed earnings of certain of the Group’s subsidiaries as the Group has determined that undistributed earnings of its subsidiaries will not be distributed in the foreseeable future.

Such temporary differences for which no deferred tax liability has been recognised aggregate to $1,595,000 (2012: $1,230,000). The deferred tax liability is estimated to be $271,000 (2012: $209,000).

Tax consequences of proposed dividends

There are no income tax consequences (2012: $Nil) attached to the dividends to the shareholders proposed by the Company but not recognised as a liability in the financial statements.




26. SHARE CAPITAL AND TREASURY SHARES(a) Share capital

Group and Company

2013 2012

$’000 $’000

Issued and fully paid ordinary shares

At 1 January and 31 December 194,183,151 (2012: 194,183,151) ordinary shares

23,266 23,266

The holders of ordinary shares (except treasury shares) are entitled to receive dividends as and when declared by the Company. All ordinary shares carry one vote per share. The ordinary shares have no par value.

The Company has an employee share option Scheme under which options to subscribe for the Company’s ordinary shares have been granted to employees of the Group. Further, under the Employee Performance Share Scheme, shares are awarded to directors and employees of the Company as recognition for good work performance or as annual cash bonus payment.

There are no outstanding options to subscribe for the Company’s shares granted under the Kingsmen Share Option Scheme as disclosed in Note 7 to the financial statements.

(b) Treasury shares

Group and Company

2013 2012

No. of shares No. of shares

’000 $'000 ’000 $'000

At 1 January (2,537) (978) (3,204) (1,235)

Reissued pursuant to Performance Share Scheme

1,671 644 667 257

At 31 December (866) (334) (2,537) (978)

Treasury shares relate to ordinary shares of the Company that are held by the Company.

The Company reissued 1,671,000 (2012: 667,000) treasury shares pursuant to its Performance Share Scheme at an average fair value per share of $0.884 (2012: $0.675).

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27. OTHER RESERVES Group Company

2013 2012 2013 2012

$’000 $’000 $’000 $’000

Foreign currency translation reserve (2,520) (2,811) – –

Statutory reserve fund 707 707 – –

Gain or loss on reissuance of treasury shares 1,354 518 1,354 518

Premium paid on acquisition of non-controlling interests

(2,549) (2,436) – –

(3,008) (4,022) 1,354 518

(a) Foreign currency translation reserve

Foreign currency translation reserve represents exchange differences arising from the translation of the financial statements of foreign operations whose functional currencies are different from that of the Group’s presentation currency.

Group Company

2013 2012 2013 2012

$’000 $’000 $’000 $’000

At 1 January (2,811) (1,571) – –

Net effect of exchange differences arising from translation of financial statements of foreign operations

291 (1,240) – –

At 31 December (2,520) (2,811) – –



27. OTHER RESERVES (CONT’D)(b) Statutory reserve fund

In accordance with the Foreign Enterprise Law applicable to a subsidiary in the People’s Republic of China (“PRC”), the subsidiary is required to make appropriation to a Statutory Reserve Fund (“SRF”). At least 10% of the statutory after tax profits as determined in accordance with the applicable PRC accounting standards and regulations must be allocated to the SRF until the cumulative total of the SRF reaches 50% of the subsidiary’s registered capital. Subject to approval from the relevant PRC authorities, the SRF may be used to offset any accumulated losses or increase the registered capital of the subsidiary. The SRF is not available for dividend distribution to shareholders.

Group Company

2013 2012 2013 2012

$’000 $’000 $’000 $’000

At 1 January 707 195 – –

Transferred from retained earnings

– 512 – –

At 31 December 707 707 – –

(c) Gain or loss on reissuance of treasury shares

This represents the gain or loss arising from purchase, sale, issue or cancellation of treasury shares. No dividend may be paid, and no other distribution (whether in cash or otherwise) of the Company’s assets (including any distribution of assets to members on a winding up) may be made in respect of this reserve.

Group Company

2013 2012 2013 2012

$’000 $’000 $’000 $’000

At 1 January 518 325 518 325

Gain on reissuance of treasury shares during the year taken to equity pursuant to:

- Performance share scheme

836 193 836 193

At 31 December 1,354 518 1,354 518

The Company reissued 1,671,000 (2012: 667,000) treasury shares pursuant to its performance share scheme at an average fair value per share of $0.884 (2012: $0.675). The excess of the average fair value per share over the weighted average cost per treasury share of $0.39 (2012: $0.39) was recognised in this reserve.

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27. OTHER RESERVES (CONT’D)(d) Premium paid on acquisition of non-controlling interests

Group Company

2013 2012 2013 2012

$’000 $’000 $’000 $’000

At 1 January (2,436) (2,406) – –

Disposal of non-controlling interests

– (30) – –

Dilution of interest in subsidiary

(113) – – –

At 31 December (2,549) (2,436) – –

28. DIVIDENDSGroup and Company

2013 2012

$’000 $’000

Declared and paid during the financial year:

Dividends on ordinary shares

- Interim exempt (one-tier) dividend for 2013 : 1.5 cents (2012 : 1.5 cents) per share

2,899 2,875

- Final exempt (one-tier) dividend for 2012 : 2.5 cents (2011 : 2.5 cents) per share*

4,826 4,789

7,725 7,664

Proposed but not recognised as a liability as at 31 December:

Dividends on ordinary shares, subject to shareholders’ approval at the Annual General Meeting

- Final exempt (one-tier) dividend for 2013 : 2.5 cents (2012 : 2.5 cents) per share 4,833 4,791

* The difference between the dividends proposed but not recognised as a liability at 31 December 2012 and the final dividends paid for 2012 was attributed to the reissuance of treasury shares in 2013, resulting in an increase in number of ordinary shares which are entitled to the dividend payment.



29. COMMITMENTS(a) Finance lease commitments – as lessee

The Group has finance leases for certain items of plant and equipment. There are no restrictions placed upon the Group by entering into these leases. Finance lease liabilities of the Group are secured by the rights to the leased plant and equipment (Note 12). The lease terms of such finance lease obligations range from 1 to 4 (2012: 1 to 3) years. The average effective interest rate implicit in the finance lease obligations is 4.58% (2012: 3.19%) per annum.

Future minimum lease payments under finance lease obligations, together with the present value of the net minimum lease payments are as follows:

Group

2013 2012

Minimum lease payments

Present value of payments

(Note 24)

Minimum lease payments

Present value of payments

(Note 24)

$’000 $'000 $’000 $'000

Not later than one year 45 41 71 66

Later than one year but not later than five years

36 32 37 35

Total minimum lease payments

81 73 108 101

Less: Amounts representing finance charges

(8) – (7) –

Present values of minimum lease payments

73 73 101 101

(b) Operating lease commitments – as lessee

The Group has entered into lease agreements for office premises. These leases have an average lease term of between 1 to 3 (2012: 1 to 4) years with no renewal option or contingent rent provision included in the contracts. There are no restrictions placed upon the Group by entering into these leases. Minimum lease payments recognised in the consolidated income statement for the financial year ended 31 December 2013 amounted to $3,712,000 (2012: $3,311,000).

Future minimum lease payments payable under non-cancellable operating leases at the end of the reporting period are as follows:

Group

2013 2012

$’000 $’000

Not later than one year 2,856 2,533

Later than one year but not later than five years 4,155 3,766

Later than five years – –

7,011 6,299

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29. COMMITMENTS (CONT’D)(c) Operating lease commitments - as lessor

The Group and the Company have entered into lease agreements for office premises and machinery. These non-cancellable leases have remaining non-cancellable lease term of 1 (2012: 1 to 2.3) year(s) with no renewal option or contingent rent provision included in the contracts. There are no restrictions on the Group and Company by entering into these leases.

Future minimum lease payments receivable under non-cancellable operating leases as at 31 December are as follows:

Group Company

2013 2012 2013 2012

$’000 $’000 $’000 $’000

Not later than one year 540 734 – –

Later than one year but not later than five years – 167 – –

540 901 – –

(d) Capital commitments

Group Company

2013 2012 2013 2012

$’000 $’000 $’000 $’000

Capital commitments in respect of property, plant and equipment 45 243 – –

30. CONTINGENT LIABILITIESLegal proceedings

(i) During the financial year ended 31 December 2011, arbitration proceedings commenced between a subsidiary of the Group and a subcontractor, in respect of claims relating to the structural steel works undertaken for a project at Universal Studios Singapore.

The proceedings involve both claims and cross claims between the parties, with the subcontractor claiming for work done, damages, interest and costs. The claims are disputed in full by the Group. The Group has in turn counterclaimed for back charges, overpayment and liquidated damages.

During the financial year ended 31 December 2013, the Group has entered into a settlement agreement with the subcontractor to resolve the arbitration proceedings. As a result, the Group has paid a full and final settlement sum to the subcontractor as a resolution to this matter.

As the settlement sum has already been fully provided for in the Group’s financial statements as at 31 December 2012, the settlement will therefore not have a material impact on the financial statements as at 31 December 2013.

(ii) During the financial year ended 31 December 2013, an external party had filed legal proceedings against a subsidiary of the Group, for alleged infringement of copyright and trade mark in respect of the subsidiary’s design, production and staging of an exhibition.

The Group’s subsidiary is contesting this claim. As at the date of this report, the amount claimed by the external party has not been made known in the Court proceedings. Based on the advice of the subsidiary’s lawyers, the directors do not expect the claim to have any material impact on the financial statements.

Guarantees

The Company has provided corporate guarantees to banks for the following facilities utilised by its subsidiaries.

- performance guarantees of $15,926,000 (2012: $11,160,000).

- trust receipts of $551,000 (2012: $514,000).

- short term loan of $363,000 (2012: $217,000).




31. RELATED PARTY TRANSACTIONS(a) Sale and purchase of goods and services

In addition to the related party information disclosed elsewhere in the financial statements, the following significant transactions between the Group and related parties took place on terms agreed between the parties during the financial year:

Group Company

2013$’000

2012$’000

2013$’000

2012$’000

Subsidiaries :

Corporate fee income – – (1,232) (942)

Rental income – – (1,364) (1,295)

Other services income – – (68) (22)

Interest income – – (10) (18)

Interest expense – – – 1

Dividend income – – (9,259) (12,382)

Associates :

Sales (1,486) (2,313) – –

Purchases 6,987 6,584 13 2

Corporate fee income (282) (338) (282) (338)

Interest income (6) (28) (6) (28)

Dividend income (497) (160) (497) (160)

Related party :

Sales (1,896) (1,198) – –

Purchases 157 495 – –

Corporate fee income (148) (98) (148) (98)

Dividend income (297) – (297) –

Related party

Related party refers to the company classified as “Other investments” (Note 16). The Company’s effective shareholding in the “Other investments” is 19.98% and both share common directors on the Board.

(b) Compensation of key management personnel

Group

2013$’000

2012 $’000

Short-term employee benefits (including directors’ fees) 9,441 8,912

Contributions to defined contribution plans 203 186

Total compensation paid to key management personnel * 9,644 9,098

* Comprises amounts paid to :

Directors and key management personnel of the Company 3,935 3,575

Directors of the subsidiaries (Note 9) 5,709 5,523

9,644 9,098

Included in short-term employee benefits above is an amount of $144,000 (2012: $160,000) which pertains to bonus provisions that would be settled in subsequent years through performance shares.

The remuneration of key management personnel are determined by the Remuneration Committee having regard to the performance of individuals and market trends.

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32. SEGMENT INFORMATIONFor management purposes, the Group is organised into business units based on their products and services, and has five reportable operating segments as follows:

Exhibitions and Museums

This segment relates to the production of exhibition displays for trade shows and promotional events, interiors and displays for museums and visitor centres, as well as the production of thematic and scenic displays for theme parks.

Interiors

This relates to the provision of interior fitting-out services to commercial and retail properties.

Research and Design

This relates to design works for upmarket specialty stores, departmental stores, eateries, museums, visitors’ centres, corporate offices, showrooms, trade shows, events, promotional functions and festivals.

Alternative Marketing

This segment relates to event management and branding consultancy services.

Corporate and Others

This relates to general corporate income and expense items.

Except as indicated above, no operating segments have been aggregated to form the above reportable operating segments.

Management monitors the operating results of its business units separately for the purpose of making decisions about resource allocation and performance assessment. Segment performance is evaluated based on operating profit or loss which in certain respects, as explained in the table below, is measured differently from operating profit or loss in the consolidated financial statements. Group financing (including finance costs) and income taxes are managed on a group basis and are not allocated to operating segments.

Transfer prices between operating segments are on an arm’s length basis in a manner similar to transactions with third parties.



32. SEGMENT INFORMATION (CONT’D)Ex

hibi

tions

and

M

useu

ms

Inte

rior

sR

esea

rch

and

Des

ign

Alt

erna

tive

Mar

ketin

gC

orpo

rate

and

ot

hers

Elim

inat

ion

Con

solid

atio

n

2013

2012

2013

2012

2013

2012

2013

2012

2013

2012

2013

2012

2013

2012

$'00

0$'

000

$'00

0$'

000

$'00

0$'

000

$'00

0$'

000

$'00

0$'

000

$'00

0$'

000

$'00

0$'

000

Seg

men

t rev

enue

Sale

s to

ext

erna

l cus

tom

ers

103,

440

108,

896

166,

604

158,

472

11,3

8910

,208

14,8

1812

,614

––

––

296,

251

290,

190

Inte

r-se

gmen

t sal

es (N

ote

A)13

,232

14,9

147,

456

10,7

773

1399

85–

–(2

0,79

0)(2

5,78

9)–

–

Tota

l rev

enue

116,

672

123,

810

174,

060

169,

249

11,3

9210

,221

14,9

1712

,699

––

(20,

790)

(25,

789)

296,

251

290,

190

Seg

men

t res

ults

Inte

rest

inco

me

––

––

––

––

––

––

394

240

Inte

rest

exp

ense

––

––

––

––

––

––

(276

)(2

52)

Amor

tisat

ion

of in

tang

ible

ass

ets

–(1

11)

–(9

1)–

––

––

––

–(2

02)

(305

)

Dep

reci

atio

n of

pro

pert

y, pl

ant

and

equi

pmen

t(1

,043

)(2

,509

)(5

97)

(644

)(1

53)

(132

)(1

23)

(136

)(1

01)

(84)

––

(2,0

17)

(3,5

05)

Gai

n/ (l

oss)

on

disp

osal

of

pro

pert

y, pl

ant a

nd

equi

pmen

t

9(8

)32

(9)

––

428

––

––

83(9

)

Impa

irmen

t los

s on

ass

ocia

tes

–(2

90)

–(2

90)

––

––

––

––

–(5

80)

Net

bad

trad

e de

bt w

ritte

n off

(40)

(19)

(47)

(17)

(1)

–(4

0)–

––

––

(128

)(3

6)

Net

allo

wan

ce fo

r dou

btfu

l tra

de

debt

s w

ritte

n ba

ck/(

prov

ided

)(5

6)(1

68)

456

(530

)(1

1)–

–(4

4)–

––

–38

9(7

42)

Shar

e of

resu

lts o

f ass

ocia

tes

518

727

302

555

––

––

––

––

820

1,28

2

Prov

isio

n fo

r Per

form

ance

Sha

re

Sche

me

––

(381

)(4

70)

(95)

(97)

––

––

––

(476

)(5

67)

Prop

erty

, pla

nt a

nd e

quip

men

t w

ritte

n off

(13)

(4)

(3)

(3)

––

––

––

––

(16)

(7)

Seg

men

t pro

fit/(

loss

)3,

008

4,44

117

,166

14,8

102,

624

3,23

319

846

8(9

91)

(1,3

98)

––

22,0

0521

,554

Non

-cur

rent

ass

ets:

Inve

stm

ents

in a

ssoc

iate

s5,

576

4,92

63,

839

3,34

5–

––

––

––

–9,

415

8,27

1

Addi

tions

to p

lant

and

equ

ipm

ent

2,79

51,

103

1,46

761

251

128

8913

219

510

0–

–4,

597

2,07

5

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32. SEGMENT INFORMATION (CONT’D)Notes Nature of adjustments and eliminations to arrive at amounts reported in the consolidated financial statements A Inter-segment revenues are eliminated on consolidation.

Geographical information

Revenue by geographical location are based on the location of customers, except for site orders of booth accessories placed by customers for official trade shows, which are based on location of the shows. Assets and additions to property, plant and equipment are based on the location in which the assets are recognised.

Group

2013 2012

$’000 $’000

Sales by geographical location are as follows:

Singapore 111,010 121,746

Greater China 100,240 63,125

Malaysia 20,996 28,444

Europe 12,023 17,103

Rest of Asia 12,316 14,994

United States and Canada 6,132 11,654

Indonesia 15,029 10,660

Vietnam 16,092 17,454

Middle East 604 3,333

Others 1,809 1,677

296,251 290,190

Carrying amounts of non-current assets based on geographical location of assets are as follows:

Group

2013 2012

$’000 $’000

Singapore 4,210 2,722

Greater China 5,809 4,833

Malaysia 4,971 5,015

Vietnam 754 1,018

Indonesia 506 441

16,250 14,029

Non-current assets information presented above consist of property, plant and equipment, and intangible assets as presented on the consolidated balance sheet.

Information about a major customer

Revenue from one major customer amounted to approximately $20,637,000 (2012: $20,925,000), arising from contract revenue of the exhibitions and museums segment.



105

33. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIESThe Group and the Company are exposed to financial risks arising from its operations and the use of financial instruments. The key financial risks include credit risk, foreign currency risk, interest rate risk and liquidity risk. The board of directors reviews and agrees policies and procedures for the management of these risks, which are executed by the Financial Controller. The audit committee provides independent oversight to the effectiveness of the risk management process. It is, and has been throughout the current and previous financial year, the Group’s policy that no derivatives shall be undertaken except for the use as hedging instruments where appropriate and cost-efficient. The Group and the Company do not apply hedge accounting.

The following sections provide details regarding the Group’s and Company’s exposure to the above-mentioned financial risks and the objectives, policies and processes for the management of these risks.

There has been no change to the Group’s exposure to these financial risks or the manner in which it manages and measures the risks, except as disclosed in Note 33(a) Credit risk section.

(a) Credit risk

Credit risk is the risk of loss that may arise on outstanding financial instruments should a counterparty default on its obligations. The Group’s and the Company’s exposure to credit risk arises primarily from trade and other receivables. For other financial assets (including cash and bank balances), the Group and the Company minimise credit risk by dealing exclusively with high credit rating counterparties.

The Group’s objective is to seek continual revenue growth while minimising losses incurred due to increased credit risk exposure. The Group trades only with recognised and creditworthy third parties. It is the Group’s policy that all customers who wish to trade on credit terms are subject to credit verification procedures. In addition, receivable balances are monitored on an ongoing basis with the result that the Group’s exposure to bad debts is not significant.

Exposure to credit risk

At the end of the reporting period, the Group’s and the Company’s maximum exposure to credit risk is represented by the carrying amount of each class of financial assets recognised in the balance sheets.

Credit risk concentration profile

The Group determines concentrations of credit risk by monitoring the industry sector profile of its trade receivables on an on-going basis. The credit risk concentration profile of the Group’s trade receivables at the end of the reporting period is as follows:

Group

2013 2012

$’000 % of total $’000 % of total

By industry sectors:

Exhibitions and museums 30,606 34.0 27,008 36.7

Interiors 53,741 59.6 41,658 56.6

Research and design 1,728 1.9 1,316 1.8

Alternative marketing 3,212 3.6 2,725 3.7

Corporate and others 837 0.9 886 1.2

Trade receivables 90,124 100.0 73,593 100.0

At the end of the reporting period, approximately:

- 23% (2012: 19%) of the Group’s trade receivables were due from 5 major customers who are located in Asia, Europe and the United States; and

- 3% (2012: 3%) of the Group’s trade and other receivables were due from related parties and associates while almost all of the Company’s receivables were balances with related parties, associates and subsidiaries.

Financial assets that are neither past due nor impaired

Trade and other receivables that are neither past due nor impaired are creditworthy debtors with good payment record with the Group. Cash and short-term deposits, and other investments that are neither past due nor impaired are placed with or entered into with reputable financial institutions or companies with high credit ratings and no history of default.

Financial assets that are either past due or impaired

Information regarding financial assets that are either past due or impaired is disclosed in Note 19 (Trade and other receivables).


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33. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONT’D)

(b) Foreign currency risk

The Group has transactional currency exposures arising from sales or purchases that are denominated in a currency other than the respective functional currencies of Group entities, primarily SGD, Malaysian Ringgit (MYR), Renminbi (RMB) and Hong Kong Dollar (HKD). The foreign currencies in which these transactions are denominated are mainly MYR and US Dollars (USD). Approximately 13% (2012: 15%) of the Group’s sales are denominated in foreign currencies whilst almost 98% (2012: 96%) of costs are denominated in the respective functional currencies of the Group entities. The Group’s trade receivables and trade payables at the end of the reporting period have similar exposures.

The Group and the Company also hold cash and cash equivalents denominated in foreign currencies for working capital purposes. At the end of the reporting period, such foreign currency balances (mainly in USD and HKD) amounted to $6,508,000 (2012: $3,795,000) and $Nil (2012: $Nil) for the Group and the Company respectively.

It is the Group’s policy not to enter into forward currency contracts until a firm commitment is in place. At 31 December 2013, the Group did not have any outstanding forward currency contracts.

The Group is also exposed to currency translation risk arising from its net investments in foreign operations, including Malaysia, Indonesia, Hong Kong, Japan, Korea, UAE and Vietnam.

Sensitivity analysis for foreign currency risk

The following table demonstrates the sensitivity of the Group’s profit net of tax to a reasonably possible change in the USD, RMB and MYR exchange rates (against functional currency of SGD), with all other variables held constant.

Group

2013 2012

Effect on profit net of tax


$’000 $’000

USD - strengthened 3% (2012: 3%) +98 +145

- weakened 3% (2012: 3%) -98 -145

RMB - strengthened 3% (2012: 3%) +304 +317

- weakened 3% (2012: 3%) -304 -317

HKD - strengthened 3% (2012: 3%) +26 +13

- weakened 3% (2012: 3%) -26 -13

MYR - strengthened 3% (2012: 3%) +30 +90

- weakened 3% (2012: 3%) -30 -90

(c) Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of the Group’s and the Company’s financial instruments will fluctuate because of changes in market interest rates. The Group’s and the Company’s exposure to interest rate risk arises primarily from their loans and borrowings. The Group’s policy is to obtain the most favourable interest rates available without increasing its interest rate exposure. All of the Group’s and the Company’s financial assets and liabilities at floating rates are continually re-priced at intervals of less than 6 months (2012: less than 6 months) from the end of the reporting period. Information relating to the Group’s interest rate exposure is disclosed in Notes 20, 21 and 24 to the financial statements.




(c) Interest rate risk (cont’d)

Sensitivity analysis for interest rate risk

The table below demonstrates the sensitivity to a reasonably possible change in interest rates with all other variables held constant of the Group’s profit net of tax (through the impact on interest expense on floating rate loans and borrowings).

Group

2013 2012

Increase/decrease in basis points Effect on profit net of tax


$’000 $’000

- MYR +75 -26 -27

-75 +26 +27

- Vietnam Dong +75 -2 -1

-75 +2 +1

(d) Liquidity risk

Liquidity risk is the risk that the Group or the Company will encounter difficulty in meeting financial obligations due to shortage of funds. The Group’s and the Company’s exposure to liquidity risk arises primarily from mismatches of the maturities of financial assets and liabilities. The Group’s and the Company’s objective is to maintain a balance between continuity of funding and flexibility through the use of stand-by credit facilities.

The Group’s and the Company’s liquidity risk management policy is to maintain sufficient liquid financial assets and stand-by credit facilities with different banks and to ensure sufficient funds to meet the repayment of loans and borrowings that will mature in the next one year period. At the end of the reporting period, approximately 61% (2012: 59%) of the Group’s loans and borrowings (Note 24) will mature in less than one year based on the carrying amount reflected in the financial statements. None (2012: none) of the Company’s loans and borrowings will mature in less than one year at the end of the reporting period.

Analysis of financial instruments by remaining contractual maturities

The table below summarises the maturity profile of the Group’s and the Company’s financial liabilities at the end of the reporting period based on contractual undiscounted payment obligations:

2013 2012

1 yearor less

1 to 5years

Over5 years

Total 1 yearor less

1 to 5years

Over5 years

Total

$’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000

Group

Financial Liabilities

Trade and other payables 97,366 119 – 97,485 83,495 116 – 83,611

Amount due to associates 1,172 – – 1,172 11 – – 11

Loans and borrowings 3,418 586 1,732 5,736 2,925 916 2,204 6,045

Total undiscounted financial liabilities

101,956 705 1,732 104,393 86,431 1,032 2,204 89,667

Company

Financial liabilities

Trade and other payables 1,471 – – 1,471 1,480 – – 1,480

Total undiscounted financial liabilities

1,471 – – 1,471 1,480 – – 1,480

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34. FAIR VALUES OF FINANCIAL INSTRUMENTS(a) Fair value hierarchy

The Group categories fair value measurements using a fair value hierarchy that is dependent on the valuation inputs used as follows:

- Level 1 – Quoted prices (unadjusted) in active market for identical assets or liabilities that the Group can access at the measurement date,

- Level 2 – Inputs other that quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly, and

- Level 3 – Unobservable inputs for the asset or liability

Fair value measurements that use inputs of different hierarchy levels are categorised in its entirety in the same level of the fair value hierarchy as the lowest level input that is significant to the entire measurement.

The following methods and assumptions are used to estimate the fair values of each class of financial instruments:

(i) Cash and short-term deposits, current trade and other receivables, current trade and other payables and accruals, amounts due from/(to) subsidiaries (non-trade), amounts due from associates and current bank term loan

The carrying amounts of these balances approximate their fair values due to their short-term nature.

(ii) Non-current bank term loan

The carrying amount of the non-current bank term loan is a reasonable approximation of fair value as it is a floating rate instrument that is repriced to market interest rates on or near the end of the reporting period.

(d) Liquidity risk (Cont’d)

The table below shows the contractual expiry by maturity of the Company’s contingent liabilities and committments. The maximum amount of the financial guarantee contracts are allocated to the earliest period in which the guarantee could be called.

2013 2012

1 yearor less

1 to 5years

Over5 years

Total 1 yearor less

1 to 5years

Over5 years

Total

$’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000

Company

Financial guarantees 12,794 4,046 – 16,840 6,447 5,444 – 11,891




34. FAIR VALUES OF FINANCIAL INSTRUMENTS (CONT’D)

(b) Assets and liabilities not carried at fair value but for which fair value is disclosed

The following table shows an analysis of the Group’s assets and liabilities not measured at fair value at 31 December 2013 but for which fair value is disclosed:

Determination of fair value

Held-to-maturity investment

Fair value is determined directly by reference to their published market bid price at the end of the reporting period.

Obligation under finance leases

Fair value is estimated by discounting expected future cash flows at market incremental lending rates for similar types of leasing arrangements.

Group

2013 $’000

Fair value measurements at the end of the reporting period using

Quoted prices in active markets for

identical assets(Level 1)

Significant observable inputs other than

quoted prices(Level 2)

Significant unobser-vable

inputs(Level 3) Total

Carrying amount

Assets 101 216 92 176

Other investments (Note 16)

Held-to-maturity investment 1,055 – – 1,055 1,055

Liabilities:

Loans and borrowings (Note 24)

Obligations under finance leases – – (61) (61) (73)

Company

Assets

Other investments (Note 16)

Held-to-maturity investment 1,055 – – 1,055 1,055

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34. FAIR VALUES OF FINANCIAL INSTRUMENTS (CONT’D)(c) Classification of financial instruments

Set out below is a comparison by category of carrying amounts of all the Group’s financial instruments that are carried in the financial statements:

2013 2012

$'000 $'000

Group

Available-for-sale financial assets

Other Investments 580 543

Held-to-maturity investments

Other investments 1,055 –

Loans and receivables

Other receivables, non-current 343 68

Amount due from associates 772 915

Trade and other receivables, current 95,561 83,264

Cash and short-term deposits 63,722 53,081

162,033 137,871

Financial liabilities at amortised cost

Trade and other payables, current 97,366 83,495

Amount due to associates 1,081 11

Loans and borrowings, current 2,800 2,761

Other payables, non-current 119 116

Loans and borrowings, non-current 1,762 1,884

103,128 88,267

2013 2012

$'000 $'000

Company

Available-for-sale financial assets

Other Investments 580 543

Held-to-maturity investments

Other investments 1,055 –

Loans and receivables

Amount due from subsidiaries 531 3,029

Amount due from associates 469 915

Trade and other receivables 3,600 3,065

Cash and short-term deposits 5,454 2,403

11,689 9,955

Financial liabilities at amortised cost

Trade and other payables, current 1,471 1,480

1,471 1,480



35. CAPITAL MANAGEMENTThe primary objective of the Group’s capital management is to ensure that it maintains healthy capital ratios in order to support its business, maximise shareholder value and fulfil all borrowing covenants.

The Group manages its capital structure and makes adjustments to it, in light of changes in economic conditions. To maintain or adjust the capital structure, the Group may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares. No changes were made in the objectives, policies or processes during the years ended 31 December 2013 and 31 December 2012.

As disclosed in Note 27(b), a subsidiary of the Group is required by the Foreign Enterprise Law of the PRC to contribute to and maintain a non-distributable statutory reserve fund whose utilisation is subject to approval by the relevant PRC authorities. This externally imposed capital requirement has been complied with by the above-mentioned subsidiary for the financial years ended 31 December 2013 and 2012.

The Group monitors capital using a gearing ratio, which is net debt divided by total capital plus net debt. The Group includes within net debt, loans and borrowings, and trade and other payables, less cash and short-term deposits. Capital includes equity attributable to the owners of the Company.

Group

2013 2012

$’000 $’000

Loans and borrowings (Note 24) 4,562 4,645

Trade and other payables (Note 22) 98,160 84,142

Amounts due to associates (Note 20) 1,081 11

Less: Cash and short-term deposits (Note 21) (63,722) (53,081)

Net debt 40,081 35,717

Equity attributable to the owners of the Company 85,525 73,848

Capital and net debt 125,606 109,565

Gearing ratio 32% 33%

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36. OTHER MATTERSAs reported in prior year financial statements, a Settlement Agreement dated 20 December 2010 (“Settlement Agreement”) was executed between a subcontractor and its business affiliate and Kingsmen Exhibits Pte Ltd (“KE”) (a wholly owned subsidiary of the Company) which involved the subcontractor assuming the repayment of a prepaid amount of $2,756,000 made by KE to its business affiliate in respect of a project. It was subsequently discovered that up to two employees of KE may have possibly provided personal guarantees to the subcontractor for the project. When the personal guarantee was viewed together with the Settlement Agreement, it would appear that some of the costs of the previously completed projects were under-recognised.

On 10 January 2013, KE had, on the advice or requirement of its professionals, entered into a subsequent Settlement Agreement (“2013 Settlement Agreement”) with the subcontractor for the resolution of certain disputes relating to the value of work done for the above project which was completed as of 31 December 2010.

Management had therefore reassessed the value of the works done and ascertained that a prepaid amount of $2,756,000 could not be recovered. In prior years, $1,300,000 of the prepaid amount of $2,756,000 had been written off to the consolidated income statement due to management being unsure of a full recovery of the prepaid amount. Pursuant to the 2013 Settlement Agreement, KE paid a settlement sum of $765,000 to the subcontractor and also wrote-off a net sum of $691,000 which was sought to be recovered from the subcontractor. The financial impact of $1,456,000 in relation to the aforesaid matter was adjusted for in prior year financial statements.

37. SUBSEQUENT EVENTSSubsequent to 31 December 2013, the Company has subscribed for additional shares in the capital of Kingsmen C.M.T.I. Co., Limited (“CMTI”) for TH 1,000,000 (approximately S$40,000). Upon the completion of the subscription, the Company’s interest in CMTI will increase from 19.996% to 20%, and CMTI will become an associated company of the Company.

38. AUTHORISATION OF FINANCIAL STATEMENTS FOR ISSUEThe financial statements for the financial year ended 31 December 2013 were authorised for issue in accordance with a resolution of the directors on 2 April 2014.



113

SHAREHOLDER’S INFORMATION (as recorded in the Register of Substantial Shareholders as at 21 March 2014)

Number of shares issued (excluding Treasury Shares) : 193,776,051

Number/Percentage of Treasury Shares : 407,100 (0.21%)

Class of Shares : Ordinary Shares

Voting rights : one vote per share

DISTRIBUTION OF SHAREHOLDINGSSize of Shareholdings No. of Shareholders % No. of Shares %

1 – 999 43 3.66 20,665 0.01

1,000 – 10,000 594 50.55 3,271,960 1.69

10,001 – 1,000,000 515 43.83 31,455,030 16.23

1,000,001 and above 23 1.96 159,028,396 82.07

Total 1,175 100.00 193,776,051 100.00

TWENTY LARGEST SHAREHOLDERSNo. Name No. of Shares %

1 Islanda Pte. Ltd. 37,993,060 19.612 O-Vest Pte. Ltd. 37,993,060 19.613 DBS Nominees (Private) Limited 16,616,729 8.584 HSBC (Singapore) Nominees Pte Ltd 11,188,984 5.775 Benedict Soh Siak Poh 7,917,269 4.096 Simon Ong Chin Sim 7,917,250 4.097 Chong Fook Seng Patrick 4,014,000 2.078 Chong Siew Ling 3,634,761 1.889 Ong Chin Kwan 3,598,650 1.8610 United Overseas Bank Nominees (Private) Limited 3,152,646 1.6311 Yee Chee Kong 2,842,249 1.4712 Raffles Nominees (Pte) Limited 2,600,435 1.3413 Jonathan Chadwick 2,400,000 1.2414 Cheong Chai Keng 2,275,038 1.1715 Tan Ai Lin 2,245,573 1.1616 DBSN Services Pte Ltd 1,900,000 0.9817 Tay Kay Sock Gerald 1,808,149 0.9318 Citibank Nominees Singapore Pte Ltd 1,769,500 0.9119 Peok Chong Eng 1,680,749 0.8720 DB Nominees (Singapore) Pte Ltd 1,475,000 0.76

Total 155,023,102 80.02

STATISTICS OF SHAREHOLDINGS

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SUBSTANTIAL SHAREHOLDERS(as recorded in the Register of Substantial Shareholders as at 21 March 2014)

Name of Substantial Shareholders Direct Interest Deemed Interest

No. of Shares % No. of Shares %

Benedict Soh Siak Poh 7,917,269 4.09 37,993,060(1) 19.61

Simon Ong Chin Sim 7,917,250 4.09 37,993,060(2) 19.61

Islanda Pte Ltd 37,993,060 19.61 - -

O-Vest Pte Ltd 37,993,060 19.61 - -

Png Geok Choo Rose - - 37,993,060(3) 19.61

Soh E-Ling Marianne - - 37,993,060(4) 19.61

Soh Hsien Wern Gavin - - 37,993,060(5) 19.61

Jillian Soh E-Ping - - 37,993,060(6) 19.61

Vera Ong Lim Guek Noi - - 37,993,060(7) 19.61

Ong Mei Lin Elita - - 37,993,060(8) 19.61

Notes:

(1) Mr Benedict Soh Siak Poh’s deemed interests refer to the 37,993,060 shares held by Islanda Pte Ltd by virtue of Section 7 of the Companies Act, Cap. 50.

(2) Mr Simon Ong Chin Sim’s deemed interests refer to the 37,993,060 shares held by O-Vest Pte Ltd by virtue of Section 7 of the Companies Act, Cap. 50.

(3) Mdm Png Geok Choo Rose’s deemed interests refer to the 37,993,060 shares held by Islanda Pte Ltd by virtue of Section 7 of the Companies Act, Cap. 50.

(4) Ms Soh E-Ling Marianne’s deemed interests refer to the 37,993,060 shares held by Islanda Pte Ltd by virtue of Section 7 of the Companies Act, Cap. 50.

(5) Mr Soh Hsien Wern Gavin’s deemed interests refer to the 37,993,060 shares held by Islanda Pte Ltd by virtue of Section 7 of the Companies Act, Cap. 50.

(6) Ms Jillian Soh E-Ping’s deemed interests refer to the 37,993,060 shares held by Islanda Pte Ltd by virtue of Section 7 of the Companies Act, Cap. 50.

(7) Mdm Vera Ong Lim Guek Noi’s deemed interests refer to the 37,993,060 shares held by O-Vest Pte Ltd by virtue of Section 7 of the Companies Act, Cap. 50.

(8) Ms Ong Mei Lin Elita’s deemed interests refer to the 37,993,060 shares held by O-Vest Pte Ltd by virtue of Section 7 of the Companies Act, Cap. 50.

FREE FLOATAs at 21 March 2014, approximately 41.58 % of the shareholding in the Company was held in the hands of the public (on the basis of information available to the Company).

Accordingly, the Company has complied with Rule 723 of the Listing Manual of the Singapore Exchange Securities Trading Limited.

STATISTICS OF SHAREHOLDINGS


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NOTICE IS HEREBY GIVEN that the Annual General Meeting of KINGSMEN CREATIVES LTD. (the “Company”) will be held at 3 Changi South Lane Singapore 486118 on Tuesday, 29 April 2014 at 11.00 a.m. (the “Annual General Meeting”) for the following purposes:

AS ORDINARY BUSINESS

1. To receive and adopt the Directors’ Report and Audited Accounts of the Company for the year ended 31 December 2013 together with the Auditors’ Report thereon. (Resolution 1)

2. To declare a final one-tier tax exempt dividend of 2.50 cents per ordinary share for the year ended 31 December 2013. (Resolution 2)

3. To re-elect the following Directors retiring pursuant to the Articles of Association of the Company: Mr. Benedict Soh Siak Poh (Article 107) (Resolution 3) Mr. Prabhakaran Narayanan Nair (Article 107) (Resolution 4) [See Explanatory Note (i)]

4. To approve the payment of Directors’ fees of S$260,000 for the year ended 31 December 2013 (2012: S$260,000/-). (Resolution 5)

5. To transact any other ordinary business which may properly be transacted at an annual general meeting.

AS SPECIAL BUSINESS

To consider and if thought fit, to pass the following resolutions as Ordinary Resolutions, with or without any modifications:

6. Authority to allot and issue shares in the capital of the Company - Share Issue Mandate

“That, pursuant to Section 161 of the Companies Act, Cap. 50 (the “Companies Act”) and Rule 806 of the Listing Manual of the Singapore Exchange Securities Trading Limited (“SGX-ST”), the Directors of the Company be authorised and empowered to:

(A) (i) issue shares in the Company (“Shares”) whether by way of rights, bonus or otherwise; and/or

(ii) make or grant offers, agreements or options (collectively, “Instruments”) that might or would require Shares to be issued, including but not limited to the creation and issue of (as well as adjustments to) options, warrants, debentures or other instruments convertible into Shares,

at any time and upon such terms and conditions and for such purposes and to such persons as the Directors of the Company shall in their absolute discretion deem fit; and

(B) (notwithstanding the authority conferred by this Resolution may have ceased to be in force) issue Shares in pursuance of any Instrument made or granted by the Directors while this Resolution was in force,

provided that:

(1) the aggregate number of Shares (including Shares to be issued in pursuance of the Instruments, made or granted pursuant to this Resolution) and convertible securities to be issued pursuant to this Resolution shall not exceed fifty per cent. (50%) of the total number of issued Shares (excluding treasury shares) in the capital of the Company (as calculated in accordance with sub-paragraph (2) below), of which the aggregate number of Shares and convertible securities to be issued other than on a pro-rata basis to the shareholders of the Company shall not exceed twenty per cent. (20%) of the total number of issued Shares (excluding treasury shares) in the capital of the Company (as at the time of passing this Resolution);

NOTICE OF ANNUAL GENERAL MEETING

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(2) (subject to such calculation as may be prescribed by the SGX-ST) for the purpose of determining the aggregate number of Shares and convertible securities that may be issued under sub-paragraph (1) above on a pro-rata basis, the total number of issued Shares (excluding treasury shares) in the capital of the Company shall be based on the total number of issued Shares (excluding treasury shares) in the capital of the Company at the time of the passing of this Resolution, after adjusting for:

(a) new Shares arising from the conversion or exercise of convertible securities;

(b) new Shares arising from exercising share options or vesting of share awards outstanding or subsisting at the time of the passing of this Resolution, provided the options or awards were granted in compliance with the rules of the Listing Manual of the SGX-ST; and

(c) any subsequent bonus issue, consolidation or subdivision of Shares.

(3) in exercising the authority conferred by this Resolution, the Company shall comply with the provisions of the Listing Manual of the SGX-ST as amended from time to time (unless such compliance has been waived by the SGX-ST) and the Articles of Association of the Company; and

(4) unless revoked or varied by the Company in a general meeting, such authority shall continue in force until the conclusion of the next annual general meeting of the Company or the date by which the next annual general meeting is required by law to be held, whichever is the earlier.”

[See Explanatory Note (ii)] (Resolution 6)

7. Authority to allot and issue Shares under the Kingsmen Performance Share Scheme

“That pursuant to Section 161 of the Companies Act, the Directors be and are hereby authorised and empowered to grant awards in accordance with the Kingsmen Performance Share Scheme and allot and issue from time to time such number of Shares in the capital of the Company to the holders of awards granted by the Company under the Kingsmen Performance Share Scheme upon the vesting of such share awards in accordance with the terms and conditions of the Kingsmen Performance Share Scheme, provided always that the aggregate number of Shares issued and issuable pursuant to the Kingsmen Share Option Scheme, the Kingsmen Performance Share Scheme and any other share based incentive schemes of the Company shall not exceed fifteen per cent. (15%) of the total number of issued Shares (excluding treasury shares) in the capital of the Company from time to time.”

[See Explanatory Note (iii)] (Resolution 7)

8. Grant of share award under the Kingsmen Performance Share Scheme to Mr. Benedict Soh Siak Poh, a controlling shareholder of the Company

“That the Directors be and are hereby authorised to offer and grant an award to Mr. Benedict Soh Siak Poh in accordance with the rules of the Kingsmen Performance Share Scheme and on the following terms:

Proposed date of grant of award : within four (4) weeks from the date of the Company’s annual general meeting

Number of Shares : up to 140,000 Shares

Moratorium period : 12 months from the date of issue and allotment

Date of vesting of award : the date of grant of the award.”

[See Explanatory Note (iv)] (Resolution 8)

9. Grant of share award under the Kingsmen Performance Share Scheme to Mr. Simon Ong Chin Sim, a controlling shareholder of the Company

“That the Directors be and are hereby authorised to offer and grant an award to Mr. Simon Ong Chin Sim in accordance with the rules of the Kingsmen Performance Share Scheme and on the following terms:




Date of vesting of award : the date of grant of the award.”




117

10. Grant of share award under the Kingsmen Performance Share Scheme to Mr. Roy Ong Chin Kwan, an associate of a controlling shareholder of the Company

“That the Directors of the Company be and are hereby authorised to offer and grant an award to Mr. Roy Ong Chin Kwan in accordance with the rules of the Kingsmen Performance Share Scheme and on the following terms:




Date of vesting of award : the date of grant of the Award.”


11. Proposed renewal of the Share Purchase Mandate

“That:

(a) for the purposes of Sections 76C and 76E of the Companies Act, the exercise by the Directors of the Company of all the powers of the Company to purchase or otherwise acquire Ordinary Shares in the issued share capital of the Company not exceeding in aggregate the Prescribed Limit (as hereafter defined), at such price or prices as may be determined by the Directors of the Company from time to time up to the Maximum Price (as hereafter defined), whether by way of:

(i) market purchases (each a “Market Purchase”) on the SGX-ST transacted through the Central Limit Order Book (CLOB) trading system, through one or more duly licensed stockbrokers appointed by the Company for the purpose; and/or

(ii) off-market purchases (each an “Off-Market Purchase”) effected otherwise than on the SGX-ST in accordance with any equal access scheme as may be determined or formulated by the Directors of the Company as they consider fit, such scheme shall satisfy all the conditions prescribed by the Companies Act,

and otherwise in accordance with all other laws, regulations and rules of the SGX-ST as may for the time being be applicable, be and is hereby authorised and approved generally and unconditionally (the “Share Purchase Mandate”);

(b) the authority conferred on the Directors of the Company pursuant to the Share Purchase Mandate may be exercised by the Directors of the Company at any time and from time to time during the period commencing from the passing of this Resolution and expiring on the earliest of:

(i) the date on which the next annual general meeting of the Company is held or required by law to be held;

(ii) the date on which Share purchases have been carried out to the full extent of the Share Purchase Mandate; or

(iii) the date on which the authority contained in the Share Purchase Mandate is varied or revoked by an ordinary resolution of shareholders of the Company in general meeting;

(c) in this Resolution:

“Prescribed Limit” means ten per cent. (10%) of the issued ordinary Shares (excluding treasury shares) of the Company as at the date of the passing of this Resolution; and

“Maximum Price” in relation to a Share to be purchased, means an amount (excluding brokerage, commissions, stamp duties, applicable goods and services tax and other related expenses) not exceeding:

(i) in the case of a Market Purchase: 105 per cent. (105%) of the Average Closing Price; and

(ii) in the case of an Off-Market Purchase: 120 per cent. (120%) of the Highest Last Dealt Price,

where:

“Average Closing Price” is the average of the closing market prices of a Share over the last five (5) market days, on which transactions in the Shares were recorded, preceding the day of the Market Purchase, and deemed to be adjusted for any corporate action that occurs after such five-day market period;


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“Highest Last Dealt Price” means the highest price transacted for a Share as recorded on the market day on which there were trades in the Shares immediately preceding the day of the making of the offer pursuant to the Off-Market Purchase; and

“day of the making of the offer” means the day on which the Company announces its intention to make an offer for the purchase of Shares from shareholders of the Company stating the purchase price (which shall not be more than the Maximum Price calculated on the foregoing basis) for each Share and the relevant terms of the equal access scheme for effecting the Off-Market Purchase; and

(d) the Directors of the Company be and are hereby authorised to complete and do all such acts and things (including executing such documents as may be required) as they may consider expedient or necessary to give effect to the transactions contemplated by this Resolution.” [See Explanatory Note (v)] (Resolution 11)

By Order of the Board

Judith Low Secretary

Singapore, 14 April 2014



119

Explanatory Notes:

(i) Mr. Prabhakaran Narayanan Nair is an Independent Director of the Company. He also serves as the Chairman of the Audit Committee and as a Member of the Nominating Committee and Remuneration Committee. Upon his re-election, Mr Nair will continue to serve as the Chairman of the Audit Committee and as a Member of Nominating Committee and Remuneration Committee. He will be considered independent for the purposes of Rule 704(8) of the Listing Manual of the SGX-ST.

(ii) The Ordinary Resolution 6 proposed in item 6 above, if passed, will empower the Directors of the Company to issue Shares, make or grant instruments convertible into Shares and to issue Shares pursuant to such instruments, up to a number not exceeding, in total, 50% of the total number of issued Shares (excluding treasury shares) in the capital of the Company, of which up to 20% may be issued other than on a pro-rata basis to shareholders.

For determining the aggregate number of Shares that may be issued on a pro-rata basis, the total number of issued Shares (excluding treasury shares) will be calculated based on the total number of issued Shares (excluding treasury shares) in the capital of the Company at the time this Ordinary Resolution is passed after adjusting for new Shares arising from the conversion or exercise of any convertible securities or share options or vesting of share awards which are outstanding or subsisting at the time when this Ordinary Resolution is passed and any subsequent bonus issue, consolidation or subdivision of Shares. In determining the 20% which may be issued other than on a pro-rata basis, the total number of issued Shares (excluding treasury shares) will be calculated based on the total number of issued Shares (excluding treasury shares) in the capital of the Company at the time the Ordinary Resolution 6 is passed.

(iii) The Ordinary Resolution 7 proposed in item 7 above, if passed, will empower the Directors of the Company, to allot and issue such number of fully paid Shares from time to time as may be required to be issued to the holders of awards granted by the Company pursuant to the provisions of the Kingsmen Performance Share Scheme.

(iv) The grant of awards to controlling shareholders of the Company and/or their associates under the Kingsmen Performance Share Scheme must be approved by the shareholders of the Company. Mr. Benedict Soh Siak Poh and Mr. Simon Ong Chin Sim are controlling shareholders of the Company. Mr. Roy Ong Chin Kwan is an immediate family member, and thus an associate of, Mr. Simon Ong.

Further details are set out in the Appendix to the Annual Report.

(v) The Ordinary Resolution 11 in item 11 above, if passed, will empower the Directors of the Company to purchase or otherwise acquire Shares by way of Market Purchases or Off-Market Purchases, provided that the aggregate number of Shares to be purchased or acquired under the Share Purchase Mandate does not exceed the Prescribed Limit, and at such price or prices as may be determined by the Directors of the Company from time to time up to the Maximum Price. The information relating to this proposed Ordinary Resolution is set out in the Appendix to the Annual Report.

Notes:

1. A member of the Company entitled to attend and vote at the Annual General Meeting may appoint not more than two proxies to attend and vote instead of him.

2. Where a member appoints two proxies, he shall specify the proportion of his shareholding to be represented by each proxy in the instrument appointing the proxies. A proxy need not be a member of the Company.

3. If the member is a corporation, the instrument appointing the proxy must be under its common seal or the hand of its attorney or a duly authorised officer.

4. The instrument appointing a proxy must be deposited at the registered office of the Company at 3 Changi South Lane, Singapore 486118 not less than forty-eight (48) hours before the time appointed for holding the Annual General Meeting.

THIS PAGE IS INTENTIONALLY LEFT BLANK

KINGSMEN CREATIVES LTD.(Company Registration Number: 200210790Z) (Incorporated in Singapore)

PROXY FORM(Please see notes overleaf before completing this Form)

I/We, (name) of

(address)

being a member/members of KINGSMEN CREATIVES LTD. (the “Company”), hereby appoint:

Name Address NRIC / Passport No.

Proportion of Shareholdings

%

and/or (delete as appropriate)

or failing him/her, the Chairman of the Meeting as my/our proxy/proxies to vote for me/us on my/our behalf at the Annual General Meeting (“Meeting”) of the Company to be held on Tuesday, 29 April 2014 at 11.00 a.m. and at any adjournment thereof. I/We direct my/our proxy/proxies to vote on the business before the Meeting as indicated below. If no specific direction as to voting is given, the proxy/proxies will vote or abstain from voting at his/her discretion, as he/she will on any other matter arising at the Meeting:

No. Resolutions relating to: For Against

1. Directors’ Report and Audited Accounts for the year ended 31 December 2013

2. Approval of payment of the final one-tier tax exempt dividend

3. Re-election of Mr. Benedict Soh Siak Poh as a Director

4. Re-election of Mr. Prabhakaran Narayanan Nair as a Director

5. Approval of Directors’ fees amounting to S$260,000 for the year ended 31 December 2013

6. Authority to allot and issue shares in the capital of the Company - Share Issue Mandate

7. Authority to allot and issue shares under the Kingsmen Performance Share Scheme

8. Grant of share award to Mr. Benedict Soh Siak Poh under the Kingsmen Performance Share Scheme

9. Grant of share award to Mr. Simon Ong Chin Sim under the Kingsmen Performance Share Scheme

10. Grant of share award to Mr. Roy Ong Chin Kwan under the Kingsmen Performance Share Scheme

11. Renewal of the Share Purchase Mandate

(Please indicate with a cross [X] in the space provided whether you wish your vote to be cast for or against the Resolutions as set out in the Notice of the Meeting).

Dated this day of

Signatures of Shareholder(s) or, Common Seal

Total number of Shares in: No. of Shares Held

(a) CDP Register

(b) Register of Members

IMPORTANT: PLEASE READ NOTES OVERLEAF

IMPORTANT1. For investors who have used their CPF monies to buy shares in the capital

of Kingsmen Creatives Ltd., this Annual Report is forwarded to them at the request of their CPF Approved Nominees and is sent FOR INFORMATION ONLY.

2. This proxy form is not valid for use by CPF investors and shall be ineffective for all intent and purposes if used or purported to be used by them.

Notes:1. A member of the Company entitled to attend and vote at the Meeting is entitled to appoint one or two proxies to attend and vote in his stead.2. Where a member appoints more than one proxy, the proportion of the shareholding to be represented by each proxy shall be specified in this

proxy form. If no proportion is specified, the Company shall be entitled to treat the first named proxy as representing the entire shareholding and any second named proxy as an alternate to the first named or at the Company’s option to treat this proxy form as invalid.

3. A proxy need not be a member of the Company. 4. Please insert the total number of shares held by you. If you have shares entered against your name in the Depository Register (as defined in

Section 130A of the Companies Act, Cap. 50 of Singapore), you should insert that number of shares. If you have shares registered in your name in the Register of Members of the Company, you should insert that number of shares. If you have shares entered against your name in Depository Register and registered in your name in the Register of Members, you should insert the aggregate number of shares. If no number is inserted, this proxy from will be deemed to relate to all the shares held by you.

5. This proxy form must be deposited at the Company’s registered office at 3 Changi South Lane, Singapore 486118 not less than 48 hours before the time set for the Meeting.

6. This proxy form must be under the hand of the appointor or of his attorney duly authorised in writing. Where this proxy form is executed by a corporation, it must be executed either under its common seal or under the hand of its attorney or a duly authorised officer.

7. Where this proxy form is signed on behalf of the appointor by an attorney, the letter or power of attorney or a duly certified copy thereof must (failing previous registration with the Company) be lodged with this proxy form, failing which this proxy form shall be treated as invalid.

General: The Company shall be entitled to reject a Proxy Form which is incomplete, improperly completed, illegible or where the true intentions of the appointor are not ascertainable from the instructions of the appointor specified on the Proxy Form. In addition, in the case of shares entered in the Depository Register, the Company may reject a Proxy Form if the member, being the appointor, is not shown to have shares entered against his name in the Depository Register as at 48 hours before the time appointed for holding the Meeting, as certified by The Central Depository (Pte) Limited to the Company.

The SecretaryKingsmen Creatives Ltd.Kingsmen Creative Centre3 Changi South LaneSingapore 486118

First Fold

Second Fold

Affix Postage

Here

Kingsmen Creatives LtdCo. Reg. No. 200210790Z

Kingsmen Creative Centre3 Changi South LaneSingapore 486118Tel (65) 688 000 88Fax (65) 688 000 38

[email protected]


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