No title

We are pleased to share with you that we ended the \HDU ZLWKLPSURYHGUHVXOWVRYHUWKHSULRUSHULRG ... restaurant chain offering not only premium quality...

0 downloads 148 Views 9MB Size
Annual Report

2013

ABR HOLDINGS LIMITED ANNUAL REPORT 2013

1

Contents

1

2

5

14

About Us

Message from the Executive Chairman and Managing Director

Operations Review

Financial Highlights

16

18

19

20

Board of Directors

Key Management

Group Structure

Corporate Information

21

34

38

39

Report on Corporate Governance

Statement by Directors

Independent

Report

40

42

44

46

Consolidated

Statements of Financial Position

Consolidated Statement of Changes in Equity

Statement of Changes in Equity

47

49

118

120

Consolidated Statement of Cash Flows

Notes to the Financial Statements

Risk Management

List of Properties

121

123

Information

Notice of Annual General Meeting

or Loss and Other Comprehensive Income

Report

ABR HOLDINGS LIMITED ANNUAL REPORT 2013

2

Proxy Form

About Us ABR Holdings Limited (“ABR”) began as the owner and operator

dining category and one of the preferred choices in good value family dining.

food and beverage companies and brands. These include Season

ABR HOLDINGS LIMITED ANNUAL REPORT 2013

1

Message from the Executive Chairman and Managing Director

Chua Tiang Choon, Keith

Ang Yee Lim

Executive Chairman

Managing Director

ABR HOLDINGS LIMITED ANNUAL REPORT 2013

2

Message from the Executive Chairman and Managing Director

presenting you the Annual Report of the Group for the We are pleased to share with you that we ended the

While some economists have posted positive and upbeat sentiments that the general economic environment is on year for the F&B industry. The rising operating costs continue to exert pressure on our business and have compelled us to continually review our operations in

places that will yield us the most mileage. Alongside new and smaller players sprouting across the island. effective and our strong heritage and brandname have placed us in good standing with our many loyal customers. Despite the generally cautious economic

It is against this backdrop that we were able to post

pleased to have remained the choice of our growing

dining to more casual and affordable dining options.

The increase in revenue is attributed mainly to our restaurant operations in Singapore which posted a

contribution from the Malaysian operations and reduced losses from the restaurant operations in the PRC.

times. While there was more positive and upbeat market

ABR HOLDINGS LIMITED ANNUAL REPORT 2013

3

Message from the Executive Chairman and Managing Director

that the recovery of the global economy will continue facing the challenges ahead as we maintain a clear and sustained focus on executing our business strategies. to capitalise on any high potential growth opportunities that might come our way during the year.

to develop strategies to meet the strong competition by

and innovative marketing strategies to keep our customers returning regularly to our outlets. In our efforts to seek new markets and opportunities

of the corporate strategy of the Group to provide growth. After an internal evaluation of the property market based on publicly available information and

believe the long term prospects of the property market remain intact and will seek to capitalise on any opportunities which present themselves.

the best interests of the Group.

ACKNOWLEDGEMENTS This set of results would not be possible without the foresight and guidance of our Board of Directors. Credit must also go to each employee and staff whose commitment and support contributed to our

continued faith and support in our Group.

Chua Tiang Choon, Keith Executive Chairman

Ang Yee Lim Managing Director

ABR HOLDINGS LIMITED ANNUAL REPORT 2013

4

Operations Review

the ABR Group (the “Group”) comprises the operations

despite challenging market conditions and increased operating costs in the face of weak market sentiments and intense competition in the F&B industry.

revenue was mainly from the restaurant operations in Singapore.

something for everyone in the family. Since the opening from the restaurant operations in Singapore. Improved reduced losses from restaurant operations in the PRC

cream desserts. In our continuous efforts to offer our customers eatery began operations at Vivo City and offers a extensive range of specialty grilled entrees in the grand San Francisco tradition. Another distinguishing bar which offers a seasonal change of ingredients. To

its way to Singapore in 1979 and won the hearts of many

we offer our customers an impressive array of choices

families gather for relaxing hearty meals to celebrate company.

Review Against the backdrop of challenging market conditions

restaurant chain offering not only premium quality volume entering our restaurants and higher average expenditure per guest. Our strategy of intensifying

ABR HOLDINGS LIMITED ANNUAL REPORT 2013

5

Operations Review

productivity initiatives during the year in an effort to mitigate the challenges of our operating environment proved to be fruitful. The resulting increase in sales generation opportunities saw an overall improvement in sales volume as our restaurants were able to increase table turns during peak periods. growth strategy implemented by the Group during the our other key strategic initiatives were to enhance outwards from the city areas into the densely populated heartlands. Increase Productivity restaurants were implemented during the year. These involved redesigning and streamlining the logistics

settings at service stations and dining tables were redesigned to help reduce manpower hours in routine

enhance the quality and productivity of food preparation. Concerted efforts were also made to manage raw material costs through the careful negotiation of bulk purchases to enjoy economies of scale and at the same

Enhance Dining Experience In order to enhance the overall dining experience of our during the year to continually excite our customers and encourage repeat visits. emphasis was placed on researching and developing promotions were launched regularly throughout the year Popular new dishes which were well received during such promotions were then included in the general menu. Menu engineering and continuous innovation have allowed both brands to align their offerings more closely with evolving customer preferences.

in collaboration with DreamWorks during the year under review. These cakes featured popular cartoon

also introduced during the year.

ABR HOLDINGS LIMITED ANNUAL REPORT 2013

6

Operations Review

development will continue to be a key focus. We plan to explore evolving our breakfast offerings to make them even stronger propositions in the current year. We will also be looking at developing new offerings like afternoon tea sets and snack items to generate Staff Training & Development next in line on the list of highest contributors to operating costs within the F&B industry. This is an ongoing issue that the Group has had to address and will have to continue managing going forward.

towards the social media platform as an integral part

growth in the participation of our customers and fans in the many online activities we organised in the past

In order to realise the full potential and to further was held at our ION outlet where the popular cast staff development during the year. The key objectives of our staff development strategy were to enhance and to motivate and incentivise so as to improve

bloggers to collaboratively harness the marketing potential of the digital medium to generate interest and create awareness through activities such as food

development efforts translated into better trained staff and an enhanced dining experience. Extending Our Reach

into the current year and beyond as we endeavour to stay relevant and contemporary for future generations.

their preferred brands conducted by Brand Alliance mature heartlands by locating our restaurants at some of the newest and most prominent shopping malls in these estates.

Ang Mo Kio is one of the most densely populated

local Singaporeans to live. On the western side of the medical centres and shopping malls.

ABR HOLDINGS LIMITED ANNUAL REPORT 2013

7

Operations Review

Outlook aware that our operating environment will become opened at a new and more strategic location within the an opportunity for us to adopt and roll out a new outlet menu offerings and source for good locations so that from a younger generation of customers in addition to bringing back our loyal customers who have given us their unstinting support over the years. Alongside experienced an overall improvement in our results. Season Confectionary & Bakery also continued to launch regular varieties in order to offer our customers an element of surprise and delight with each repeat visit to our outlets. In order to harness the marketing potential of the also featured online. The increased volume of sales is testament to the success of our marketing efforts. continued to play a pivotal role in supporting our marketing efforts.

SEASON CONFECTIONARY & BAKERY É

brand has grown to be synonymous with freshly baked are well established in prime residential areas and Season offers franchising opportunities to extend its reach. Review

efforts.

ABR HOLDINGS LIMITED ANNUAL REPORT 2013

8

Operations Review

alongside special menu offerings were launched twice products proved to be a success and enabled our outlets to achieve better results. Increasing labour costs continue to be a challenge for our business. With the roll out of the Malaysian a wide range of businesses in Malaysia have been negatively impacted and we have not been spared. Outlook In our continuous efforts to expand our operations and & Bakery has consistently opened new outlets over the Indah outlet which opened its doors to our customers

Exciting new developments in the Iskandar area include Disney characters on mooncakes packaged creatively and attractively to entice our young customers and draw them into the celebration of this traditional cultural festival.

the expansion of LegoLand with Waterpark and Phase and exciting opportunities for the F&B industry.

improvement in comparison with its performance contributed by our outlet at City Square when it resumed

to capitalise on the development of the Iskandar region to further grow the brand regionally.

a host of marketing initiatives were rolled out. For

to remain challenging. We will continue to strengthen our brand position by creating new and novel ideas to as well as intensifying our marketing efforts to increase

and special set menus to enhance the overall dining experience of our customers and to encourage repeat visits.

to seek new locations to expand our business. We are also in the midst of streamlining operations to in product research to achieve a better quality for our regularly introduce new products to meet customer promotions.

ABR HOLDINGS LIMITED ANNUAL REPORT 2013

9

Operations Review

HIPPOPOTAMUS RESTAURANT

In order to actively improve the performance of the at the dining table. In addition to improving productivity

restaurant and concurrently enabling an increase in the number of table turns. Outlook

unique steak cuts at affordable prices. The menu will be refreshed to provide an even more compelling dining continuing efforts will be made to identify suitable locations to expand the brand within Singapore.

CURRY PUFFS AND OISHI JAPANESE PIZZA

restaurant has gained a strong reputation for offering

offering our customers an even wider range of premium food selections at affordable prices. Our Hippopotamus restaurant welcomes diners in a contemporary authentic Parisian setting. The friendly ambience is a choice gathering place for a hearty meal with family and friends. network of partners to reach out to customers and this strategy brought about improved results. During by creating a lunch offering to meet the needs of our

ABR HOLDINGS LIMITED ANNUAL REPORT 2013

10

Operations Review

the merchandising of food offerings to increase overall appeal. This was achieved by placing special emphasis on creating a variety of lunch offerings. Seasonal

Tip Top Curry Puffs The story of Tip Top Curry Puffs began one Labour Day back in 1979. Since then it has established itself as an iconic brand renowned for curry puffs. Tip Top curry puff recipe that features simple yet the best of traditional culinary ingenuity. Through rigorous periods

steadfast commitment to our customers is evident in the consistent quality of our curry puffs.

setting up a central kitchen to enable scalability of our curry puffs and other snack items in order to meet the demands of our business as the brand looks to continue on its expansion strategy with the opening of more outlets.

the Singapore Changi Airport. Especially noteworthy is and hot beverages. Key marketing initiatives during the year include the launch of bundled sets with an assortment of choices to assist customers in their selection process. The bundled deals offer customers a promotional incentive to purchase larger quantities of curry puffs and creates greater cross marketing opportunities.

ABR HOLDINGS LIMITED ANNUAL REPORT 2013

11

Operations Review

PRC OPERATIONS The Group went through a review of the long term viability of its businesses in the PRC and took decisive steps to consolidate its restaurant operations there. As partner in Chongqing as well as closing the restaurant operation in Shanghai. The Group continued to focus on its Teppanyaki business with two outlets in Beijing. our losses brought on by the operations in the PRC.

Outlook fundamentals of focusing on “quality services and quality products delivered by quality people”.

expansion plans and introduce new product offerings. We will continually rationalise our product mix to ensure that our palate of offerings meets the demands and will introduce key products within each brand to anchor and to garner attention and awareness amidst the fanfare and commotion of an increasingly crowded marketplace. Efforts will be made to improve the facades of our retail outlets and strategically locate new ones where there is the employment of automation and innovation to help our manufacturing processes. ABR HOLDINGS LIMITED ANNUAL REPORT 2013

12

Operations Review

CORPORATE SOCIAL RESPONSIBILITY As the ABR Group grows from strength to strength over

month to celebrate the birthdays of these children. Club Rainbow raises funds for needy ill children and

a treat for the family with something for everyone. meal at our restaurants is always a form of celebration happy events. As we continually create value for our stakeholders we are keenly aware that there are many within our community who are less fortunate in a variety of ways and may not have much to celebrate. We are and have always been committed to the values and principles inculcated a culture of volunteerism and giving back to our community as we lend a helping hand to those community building efforts have ranged from helping the less fortunate by enabling them to celebrate special easily accessible to those with special needs. in the Work Experience Program (“WEP”) organised by the Association for Persons with Special Needs (“APSN”). The Group has been actively participating

raising initiatives such as the Ride for Rainbows cycling HCA Hospice Care is primarily a home hospice care and aims to enable patients to have an improved service dedicated to improving the quality of life for for the terminally ill members of Star PALS.

Nanyang Polytechnic Industry Scholarship for needy and deserving students from the Food Science & Nutrition faculty.

sponsorship in a collaborative effort with our suppliers in

restaurants become the training ground for students

mental health awareness.

this program will be an ongoing initiative to help ease environment.

whereby students are placed in a real work venue to train and prepare themselves for the economically active workforce.

activities and initiatives of the National Volunteer & Philanthropy Centre (“NVPC”). Such initiatives include volunteerism publicity and corporate volunteerism awareness drives. The Group employs persons with disabilities and staff.

ABR HOLDINGS LIMITED ANNUAL REPORT 2013

13

Financial Highlights

31 December 2013 (“FY2013”).

Revenue* ($’000)

($’000)

* From continuing operations

Shareholders’ Equity ($’000)

ABR HOLDINGS LIMITED ANNUAL REPORT 2013

14

Financial Highlights

For the Year ($’000) Change Revenue

At Year End

($’000) Change

Total Assets Equity Attributable to Owners of the Company Total Equity Total Liabilities

FY2013

FY2012

Earnings per share Continuing operations

Continuing & discontinued operations

Dividend per share

Net Asset Value per share

ABR HOLDINGS LIMITED ANNUAL REPORT 2013

15

ABR HOLDINGS LIMITED ANNUAL REPORT 2013

16

CHUA TIANG CHOON, KEITH Executive Chairman

investment private companies in Singapore. Mr Leck also sits

the Nominating Committee.

ALLAN CHUA TIANG KWANG Non-Executive Director

Mr Chua is presently also the Managing Director and Company

M

the Company. He is also the Managing Director of the Alby group of companies in Singapore and Australia for the past

the Audit Committee.

private and unlisted companies in Singapore. He is a substantial shareholder of the Company through his deemed interests in Kechapi Pte Ltd and Alby (Private) Limited.

ANG YEE LIM Managing Director

He is the Director of Kechapi Pte Ltd and serves on the boards of a number of private and unlisted public companies in Singapore. Mr Chua is a substantial shareholder of the Company through his deemed interests in Kechapi Pte Ltd and Alby (Private) Limited.

QUEK MONG HUA Independent and Non-Executive Director Mr Quek Mong Hua has served as an Independent Director Quek currently chairs the Remuneration and Nominating Committees.

Mr Ang is a substantial shareholder of the Company.

ANG LIAN SENG Executive Director Mr Ang Lian Seng has served as an Executive Director on the Remuneration Committee. the property development sector and serves on the boards of a number of property development and investment private companies in Singapore. Mr Ang also sits on the boards of

LECK KIM SENG Executive Director

the appointment of Deputy Head of the Civil Division. Mr Quek is also a member of the Military Court of Appeal under appointment of the Singapore Armed Forces Council.

LIM JEN HOWE Independent and Non-Executive Director

currently chairs the Audit Committee. accounting. He has been a practising Chartered Accountant Lim also holds directorships in Thong & Lim Consultants Pte companies.

on the boards of a number of property development and

ABR HOLDINGS LIMITED ANNUAL REPORT 2013

17

Key Management

NG SOO NOI Group Financial Controller ABR Holdings Limited

ONG KIAN CHUA Group Production General Manager Food Creations Pte Ltd development and production of ice cream.

started her career as an auditor with an international listed industrial conglomerate where she held managerial

manufacturing and marketing a wide range of home brands the setting up of the manufacturing plants in South East Asia region.

Ms Ng is a Fellow member of the Association of Chartered

LIEW HOCK MENG Executive Chef ABR Holdings Limited

Institute of Singapore Chartered Accountants.

LECK KIM SONG Group General Manager Season Confectionary & Bakery Sdn Bhd

franchise auditing for the Group.

Mr Leck Kim Song is responsible for the management and operations of Season Confectionary & Bakery Sdn Bhd. He experience with various F&B chains. and Indonesia.

from the University of Melbourne. He is a Chartered member of the Royal Institution of Chartered Surveyors Management Institute (UK) and the Australian Institute of Building. He is also a corporate member of the Singapore Institute of Surveyors and Valuers.

Director of Business Development and Operations ABR Holdings Limited management of the various brands under the food division of the Company in Singapore and is also involved in corporate activities and strategic Group initiatives. Executive Director of a food company based in Singapore. Mr Khoo graduated with a Bachelor of Arts (Major in Political Science & Minor in Economics) from the University of

ABR HOLDINGS LIMITED ANNUAL REPORT 2013

18

NG CHENG WEE Operations Manager ABR Holdings Limited Mr Ng Cheng Wee is responsible for the management and and special project in Singapore as well as oversees franchise Restaurant Manager cum Area Trainer and was promoted designated as Senior Training Executive and was promoted Ng was redesignated as Area Manager and was promoted to He then pursued his career with an international franchise

Group Structure

(HK) Limited

Pte Ltd Season Confectionary & Bakery Sdn Bhd

Sdn Bhd

SSCB Pte Ltd Sdn Bhd Food Creations Pte Ltd Pte Ltd

Europa Lounge and Restaurant Pte Ltd Europa Entertainment Pte Ltd

Pte Ltd

Europa (Beijing) Food & Beverage Management Co Ltd

Pte Ltd ABR (HK) Limited

Investment Pte Ltd All Best Foods Pte Ltd Kitchen Alchemy Pte Ltd

TT Hara Food Pte Ltd

ABR HOLDINGS LIMITED ANNUAL REPORT 2013

19

Corporate Information

DIRECTORS Ang Lian Seng Leck Kim Seng Allan Chua Tiang Kwang Quek Mong Hua

JOINT SECRETARIES Toon Choi Fan Sin Chee Mei

REGISTERED OFFICE

REGISTRAR Tricor Barbinder Share Registration Services (A division of Tricor Singapore Pte Ltd)

AUDITOR Baker Tilly TFW LLP Public Accountants and Chartered Accountants

SOLICITORS Lee & Lee

United Overseas Bank Ltd

ABR HOLDINGS LIMITED ANNUAL REPORT 2013

20

Report on Corporate Governance

The Board of Directors of ABR Holdings Limited (the “Company”) is committed to maintaining good standards of corporate governance and has applied the principles of the Code of Corporate Governance (the “Code”). This report discusses the Company’s corporate governance processes and activities with specific references to the principles set out in the Code.

BOARD MATTERS Principle 1 – The Board’s conduct of affairs The Board’s principal functions are: • • • • • •

to formulate procedures and strategies to ensure good corporate governance within the Group; to review and approve financial policies, investments and strategies to be implemented by the Management; to approve the Company’s annual business plan including the annual budget, capital expenditure and operational plans; to oversee the processes for risk management, financial reporting and compliance; to consider sustainability issues in the formulation of its strategies; and identify the key stakeholder groups and recognise that their perceptions affect the Company’s reputation.

During the year in review, the Board scheduled five Board meetings to review among other things, the financial performance of the Group, approve the release of the quarterly and full year financial results, approve annual budget as well as to consider and approve the Group’s strategic direction and investment proposals. The Board is assisted by three Board sub-committees, namely, the Audit Committee (“AC”), the Nominating Committee (“NC”) and the Remuneration Committee (“RC”) whose functions are described overleaf. The number of Board and Board sub-committee meetings held in the year and the attendance of each Director are as follows: Audit Committee

Board

Director’s name

Remuneration Committee

Nominating Committee

No. of No. of No. of No. of No. of No. of No. of No. of meetings meetings meetings meetings meetings meetings meetings meetings held attended held attended held attended held attended

Chua Tiang Choon, Keith

5

5

NA

NA

NA

NA

1

1

Ang Yee Lim

5

5

NA

NA

NA

NA

NA

NA

Ang Lian Seng

5

5

NA

NA

1

1

NA

NA

Leck Kim Seng

5

5

NA

NA

NA

NA

NA

NA

Allan Chua Tiang Kwang

5

5

5

5

NA

NA

NA

NA

Quek Mong Hua

5

5

5

5

1

1

1

1

Lim Jen Howe

5

5

5

5

1

1

1

1

NA : Not Applicable ABR HOLDINGS LIMITED ANNUAL REPORT 2013

21

Report on Corporate Governance

The Company’s Articles of Association allows the Board to hold telephonic and videoconference meetings. If any of the Directors are not able to physically attend the Board meetings in Singapore, the Company adopts the policy of connecting them via the telephone, where necessary. The Board has adopted a set of internal guidelines which sets out limits for capital expenditure, investments and divestments, bank borrowings, share issuance, dividends and cheque signatories’ arrangements to be approved at Board level. To enable the Directors to remain updated with the law and corporate governance practices, the Company continues to provide a training budget for the Directors to fund their participation at industry conferences and seminars, and attendance at any training course, where required. Incoming Directors have full access to the minutes of all previous Board meetings to familiarise themselves with the Company’s business and governance practices. They are further briefed by the Management on the business activities of the Company and the Group and its strategic directions. The Company Secretary provides regular updates on the latest governance and listing policies during Board meetings, as and when required. All Directors are updated regularly concerning any changes in company policies. During the year, the Board was briefed and/or updated on the following: (1) amendments to the SGXST Listing Manual; (2) amendments to the Code; and (3) recent changes to the accounting standards. Principle 2 – Board composition and guidance The Board comprises seven Directors – an Executive Chairman, a Managing Director, two Executive Directors, one Non-Executive Director and two Independent Non-Executive Directors. The Directors bring to the Company a combination of knowledge and expertise in the areas of law, accounting, finance, banking and business management. Two out of the seven Directors are independent and the Board recognises that this is not in accordance with the Code’s guidelines that Independent Directors should make up at least one-third of the Board. The Board is of the view that the current Board size and composition are appropriate and effective to provide the necessary objective inputs to the various decisions made by the Board. The Board will constantly examine its composition from time to time to ensure a strong and independent element on the Board. Profiles of the Directors are found in the “Board of Directors” section of this annual report. On an annual basis and upon notification by an Independent Director of a change in circumstances, the NC will review the independence of each Independent Director based on the criteria for independence defined in the Code and recommends to the Board as to whether the Director is to be considered independent. The Board is of the opinion that the current Board size and composition, with diversified background and experience provides core competencies such as finance, accounting, legal, business management, industry knowledge and strategic planning experience, is appropriate and effective to ensure the balance of power and authority to facilitate effective decision making.

ABR HOLDINGS LIMITED ANNUAL REPORT 2013

22

Report on Corporate Governance

The Non-Executive Directors are constructively reviewing and assisting the Board to facilitate and develop proposals on strategy and review the performance of the Management in meeting agreed objectives and monitor the reporting of performance. The Independent Directors have full access to and co-operation of the Company’s Management and officers. They also have full discretion to convene separate meetings without the presence of Management and to invite any Directors or officers to the meetings as and when warranted by certain circumstances. Presently, Mr Lim Jen Howe and Mr Quek Mong Hua have served as independent directors of the Company for more than nine years since their initial appointment in 2003. The Board has subjected their independence to a particularly rigorous review. The Board is of the view that Mr Lim Jen Howe and Mr Quek Mong Hua continue to demonstrate strong independence in character and judgment in the discharge of their responsibilities as directors of the Company. Based on the declaration of independence received from Mr Lim and Mr Quek, they have no association with the Management that could compromise their independence. After taking into account all these factors, and also having weighed the need for Board refreshment against tenure for relative benefit, the Board has determined that Mr Lim and Mr Quek continue to be considered independent directors, notwithstanding they have served on the Board for more than nine years from the date of their first appointment. Principle 3 – Chairman and Chief Executive Officer Mr Chua Tiang Choon, Keith has been the Chairman of the Group since 28 March 2002. On 1 August 2004, he became the Executive Chairman. Since 1 July 2004, the Board has appointed Mr Ang Yee Lim as the Managing Director of the Company. Mr Chua and Mr Ang are both substantial shareholders of the Company. As Executive Chairman, Mr Chua is responsible for the overall management and strategic decision making of the Group jointly with Mr Ang, the Managing Director of the Company. In addition, Mr Chua ensures that Board meetings are held on a regular basis and sets the agenda for each meeting in consultation with the Directors, the Management and the Company Secretary as necessary. Where matters arise which requires the Board’s deliberation and decision, he ensures that ad-hoc meetings are held. The Chairman is instrumental in steering the Board in setting policies for its corporate governance compliance and internal controls and also in formulating strategies for the Group’s business and direction. The Executive Chairman, the Managing Director and the two Executive Directors form the Executive Committee (“Exco”) appointed by the Board. The Exco is responsible for the oversight of the Group’s businesses and performance. The Executive Chairman and the Managing Director, while both being part of the Exco, are two unrelated individuals. Taking into account the relatively small size of the Board and that the Company has two Independent Non-Executive Directors, the Board is of the view that there is currently no need to appoint one of them as the lead Independent Director. Shareholders can channel any concerns they may have to either one of the Independent Non-Executive Directors.

ABR HOLDINGS LIMITED ANNUAL REPORT 2013

23

Report on Corporate Governance

Principle 4 – Board membership Nominating Committee The NC is formed to look into, amongst other matters, the appointment of new Directors to the Board and comprises the following three Directors, the majority of whom, including the Chairman of the NC, are independent: • • •

Mr Quek Mong Hua (Chairman and Independent Non-Executive Director) Mr Lim Jen Howe (Member and Independent Non-Executive Director) Mr Chua Tiang Choon, Keith (Member and Executive Chairman of the Group)

The NC has specific written Terms of Reference setting out their duties and responsibilities. The NC’s main duties and functions are as follows: •

to make recommendations to the Board on all Board appointments having regard to the director’s competencies, commitment, contribution and performance (for example, attendance, preparedness, participation, candour and any other salient factors); to make recommendations to the Board on all new Board appointments, having regard to his/her experience and background; to determine annually whether a director is independent, bearing in mind the guidelines set out in the Code; deciding on how the Board’s performance may be evaluated and propose objective performance criteria to the Board; assessing the effectiveness of the Board as a whole and the contribution by each individual Director to the effectiveness of the Board; reviewing of structure, composition and size of the Board; reviewing board succession plans for directors; and reviewing training program.

• • • • • • •

Article 98 of the Company’s Articles of Association provides that one-third of the Directors for the time being, or if their number is not a multiple of three, the number nearest to one-third, shall retire by rotation at every annual general meeting (“AGM”). Accordingly, the Directors submit themselves for re-nomination and re-election at regular intervals of at least once every three (3) years. The following Directors will retire and seek re-election at the forthcoming AGM: • •

Mr Chua Tiang Choon, Keith Mr Leck Kim Seng

The NC makes recommendations to the Board on re-appointments of Directors based on their contributions and performance, a review of the range of expertise, skills and attributes of current Board members, and the needs of the Board. Article 93 of the Company’s Articles of Association provides that Managing Director not to be subject to retirement by rotation while he continues to hold that office.

ABR HOLDINGS LIMITED ANNUAL REPORT 2013

24

Report on Corporate Governance

During the financial year ended 31 December 2013 (“FY2013”), the NC is satisfied that sufficient time and attention are being given by the directors to the affairs of the Group, notwithstanding that some of the directors have multiple board representations, and there is presently no need to implement internal guidelines to address their competing time commitments. The NC is also of the opinion that the current board size is adequate for the effective functioning of the Board. Key information regarding Directors such as academic and professional qualifications, shareholding in the Company and its subsidiaries, board committees served, date of first appointment as Director and date of last re-election as Director are set out in the “Board of Directors” section of this annual report. Where a vacancy arises, the NC will consider each candidate for directorship based on the selection criteria determined after consultation with the Board and after taking into consideration the qualification and experience of such candidate, his/her ability to enhance the effectiveness of the Board and to add value to the Group’s business in line with its strategic objectives, the NC will recommend the candidate to the Board for approval. Under the Company’s Articles of Association, a newly appointed Director shall retire at the AGM following his/ her appointment and he/she shall be eligible for re-election. Principle 5 – Board performance The NC is responsible for setting the performance criteria to assess the effectiveness of the Board. In the assessment, the NC takes into consideration a number of factors, namely the size and composition of the Board, the Board’s access to information, Board proceedings, the discharge of the Board’s functions and the communications and guidance given by the Board to the Management. A formal review of the Board’s performance will be undertaken collectively by the Board annually. The Board’s performance will also be reviewed by the NC with inputs from the other Board members. The Chairman of the Board will act on the results of the performance evaluation and recommendation, and where appropriate, propose new members to be appointed to the Board or seek the resignation of the Directors, in consultation with the NC. Upon reviewing the assessment, the NC is of the view that the performance of the Board as a whole is satisfactory. The NC is satisfied that each member of the Board has been effective and efficiently contributed to the Board and the Group during the year. Each member of the NC shall abstain from voting on any resolution and making any recommendation and/ or participating in any deliberation of the NC in respect of the assessment of his own performance or renomination as a Director. Principle 6 – Access to information The Directors are provided with relevant Board papers and information prior to each Board meeting. The Company Secretary or representative from the Secretary’s office administers, attends and prepares minutes of Board meetings, and assists the Chairman in ensuring that Board procedures are followed and reviewed so that the Board functions effectively and the Company's Memorandum and Articles of Association and the relevant rules and regulations applicable to the Company are complied with. Board members are also provided with a monthly management report of the Group, comprising financial statements, sales and analysis reports, to apprise the Board regularly on the performance of the Group’s business. Other information are also provided to the Board members as needed on an on-going basis. ABR HOLDINGS LIMITED ANNUAL REPORT 2013

25

Report on Corporate Governance

The Directors have separate and independent access to the Company’s senior management, external auditor and the Company Secretary at all times. Should the Directors, either individually or as a group, require independent professional advice, such professionals will be appointed at the Company’s expense. The appointment and removal of the Company Secretary are decided by the Board as a whole.

REMUNERATION MATTERS Principle 7 – Procedures for developing remuneration policies Principle 8 – Level and mix of remuneration Remuneration Committee The RC’s objective is to make recommendations to the Board on the Group’s framework of executive remuneration as well as to review the adequacy and form of the compensation of Executive Directors (members of the Board who are employees of the Company, whether full time or part-time) to ensure that the compensation realistically commensurate with the responsibilities and risks involved in being an effective Executive Director. The RC comprises the following three members, the majority of whom, including the Chairman of the RC, are Independent Non-Executive Directors: • • •

Mr Quek Mong Hua (Chairman and Independent Non-Executive Director) Mr Lim Jen Howe (Member and Independent Non-Executive Director) Mr Ang Lian Seng (Member and Executive Director)

The Board recognises that the composition of the RC is not in accordance with the Code’s guidelines that the RC should be made up of entirely Non-Executive Directors. However, the Board is of the view that the current composition of the RC is able to provide the necessary objective inputs to the various decisions made by the Board. Mr Ang Lian Seng, the member and Executive Director, also abstains from all discussions, deliberations and decision of his own remuneration. Directors’ fees are set in accordance with a remuneration framework comprising basic fees and committee responsibilities. Executive Directors do not receive Directors’ fees. Non-Executive Directors are paid Directors’ fees, subject to approval of the shareholders at the AGM. The RC also oversees the administration of the ABR Employees Share Option Scheme 1999 (“Option Scheme”) (and such other similar share plans as may be implemented by the Company from time to time) upon the terms of reference as defined in the said Option Scheme. The Option Scheme was implemented on 28 June 1999 and had a 10-year tenure which expired on 27 June 2009. Since the expiry of the Option Scheme, the RC and the Board had ceased grant of new options under the Option Scheme. As at 31 December 2013, all options have been exercised. Directors do not decide on their remuneration package and would abstain from voting at RC meetings when their own remuneration is being deliberated.

ABR HOLDINGS LIMITED ANNUAL REPORT 2013

26

Report on Corporate Governance

The RC ensures that the remuneration packages of the Executive Chairman and the Managing Director are in line with the Company’s Compensation Policy. They also consider and review the disclosure of Directors’ remuneration in the annual report. The RC will also ensure that the Non-Executive Directors are not overcompensated to the extent that their independence may be compromised. The RC’s recommendations are submitted to and endorsed by the Board. Though none of the RC members specialises in the area of executive compensation, the committee has access to the Company’s Human Resource Manager as well as to external human resource professionals’ expert advice where necessary. Principle 9 – Disclosure on remuneration The remuneration of the Directors and the top six key management personnel, who are not Directors of the Company, for FY2013, are disclosed below. The disclosure is to enable investors to understand the link between remuneration paid to Directors and key management personnel, and performance. The remuneration of each Director and the top six key management personnel has been disclosed in the respective bands. The remuneration for the Executive Directors and the top six key management personnel comprises fixed and variable components. The fixed component is in the form of monthly salary whereas the variable component is linked to the performance of the Group and individual. The Board is of the opinion that given the confidentiality of and commercial sensitivity attached to remuneration matters and to be in line with the interest of the Company, the remuneration will not be disclosed in dollar terms. The breakdown (in percentage terms) of each Director and the top six key management personnel’s remuneration for FY2013, are as follows :

Salary1 %

Bonus1 %

Fees2 %

Allowances and other benefits %

Chua Tiang Choon, Keith

54

46





100

Ang Yee Lim

53

45



2

100

Ang Lian Seng

74

26





100

Leck Kim Seng

84

16





100

Allan Chua Tiang Kwang





100



100

Quek Mong Hua





100



100

Lim Jen Howe





100



100

Directors

Total %

$250,000 to below $500,000

Below $250,000

ABR HOLDINGS LIMITED ANNUAL REPORT 2013

27

Report on Corporate Governance

Salary1 %

Bonus1 %

Fees %

Allowances and other benefits %

Ng Soo Noi

77

23





100

Leck Kim Song

73

20



7

100

Khoo Boo Yeow Andrew

76

20



4

100

Ong Kian Chua

89

7



4

100

Liew Hock Meng

75

21



4

100

Ng Cheng Wee

73

21



6

100

Key Management Personnel

Total %

Below $250,000

In aggregate, the total remuneration paid to the top six key management personnel in FY2013 is S$906,000. Notes: (1)

The salary and bonus percentages shown are inclusive of CPF.

(2)

Fees for FY2013 are subject to shareholders’ approval at the AGM.

Apart from Mr Leck Kim Song who is the brother of Mr Leck Kim Seng and Mr Ang Lian Tiong who is the brother of Mr Ang Lian Seng, there were no other employees who are the immediate family members of the Directors with remuneration exceeding S$50,000 during FY2013. Both Mr Leck Kim Song and Mr Ang Lian Tiong received remuneration within the bands of S$100,000 to S$150,000. The RC is of the view that their remunerations are in line with the Company’s staff remuneration guidelines and commensurate with their job scopes and level of responsibilities. Information on the ABR Employees’ Share Option Scheme 1999 is set out in Directors’ Report on page 35.

ACCOUNTABILITY AND AUDIT Principle 10 – Accountability The Board recognises the importance and aims to provide the shareholders with a balanced and understandable assessment of the Group’s performance including accurate, relevant and appropriate information of the financial position, detailed explanatory analysis and the prospects of the Group when it announces the interim and annual financial statements. In addition, periodic and timely announcement of the Group’s developments, price sensitive public reports and information, reports to regulators and all necessary information to the shareholders in order to better comprehend the Group’s performance, position and prospect, are made. The announcements submitted for shareholders and the public will be in accordance to SGX-ST timeline and regulations. The Board reports to the shareholders at each AGM and is elected by the shareholders. The Exco is accountable to the Board and provides regular reports of the business to the Board.

ABR HOLDINGS LIMITED ANNUAL REPORT 2013

28

Report on Corporate Governance

Principle 11 – Risk management and internal controls The internal auditors carried out an agreed programmed review of the effectiveness of the Group’s key internal controls, including financial, operational, compliance and information technology controls. In addition, any major control weaknesses on financial reporting are highlighted by the external auditor in the course of the statutory audit. Any material non-compliance or internal control weaknesses, together with recommendation for improvement are reported to the AC. There were no significant internal control weaknesses highlighted by the internal auditors for the attention of the AC for FY2013. A copy of the report is also issued to the relevant department or business unit for its follow-up action and the implementation of the required improvement measures is monitored. The Board is of the view that, in the absence of any evidence to the contrary, the system of internal control maintained by Management and that was in place throughout the financial year and up to the date of this report, provides reasonable, but not absolute, assurance against material financial misstatements or loss, and include the safeguarding of assets, the maintenance of proper accounting records, the reliability of financial information, compliance with appropriate legislation, regulation and best practice, and the identification and containment of business risk. However, the Board also notes that no system can provide absolute assurance against the occurrence of material errors, poor judgment in decision-making, human error, losses, fraud or other irregularities. Based on the internal controls established and maintained by the Group, work performed by the internal and external auditors and reviews performed by the Management, the Board and the AC, the Board, with the concurrence of the AC, is of the opinion that the system of internal controls which addresses the Group’s financial, operational, compliance and information technology controls risks, is adequate throughout the financial year and up to the date of this report. The Board has received assurance from the Executive Directors and the Group Financial Controller that the financial records have been properly maintained and the financial statements give a true and fair view of the Company’s operations and finances and also an effective risk management and internal control system is in place. Principle 12 – Audit committee The AC comprises the following three members, all of whom are Non-Executive Directors and the majority, including the Chairman of the AC, are independent: • • •

Mr Lim Jen Howe (Chairman and Independent Non-Executive Director) Mr Quek Mong Hua (Member and Independent Non-Executive Director) Mr Allan Chua Tiang Kwang (Member and Non-Executive Director)

The Chairman of the AC, Mr Lim Jen Howe is, by profession a practising Chartered Accountant (Singapore) and is one of the founding partners of Messrs Thong & Lim, an accounting firm in Singapore. He has more than 30 years of experience in finance and accounting. The other members of the AC are experienced in law, business and financial management.

ABR HOLDINGS LIMITED ANNUAL REPORT 2013

29

Report on Corporate Governance

The AC met five times during the year. It reviewed the periodic announcements for the public release in respect of the financial statements of the Company and of the Group for the first three quarters of the financial year 2013 and the full financial year 2013. In conjunction with the review of the full year financial results ended 31 December 2013, it also reviewed the auditor’s review report on the financial statements for the full year. These periodic announcements were then submitted to the Board for approval, together with the AC’s recommendations. The AC also carried out its functions in accordance with the terms of reference and the Companies Act (Cap. 50), including a review of the financial statements of the Company and the Group for FY2013 and the external auditor’s report thereon. The AC also reviewed the annual audit plan of the external auditor, the results of the auditor’s examinations and evaluation of the system of internal controls in the course of its statutory audit. Legal and regulatory matters that may have a material impact on the financial statements, related compliance policies and programs and any reports received from regulators are reviewed by the AC. The AC is also responsible for the nomination of the external auditor for re-appointment. Before nomination, the AC has conducted an annual review of the external auditor’s services provided to the Group during the year. The AC has also conducted a review of the cost effectiveness and the non-audit services provided by the auditor to the Group during the year and are satisfied that the nature and extent of such services will not prejudice the independence and objectivity of the auditor before confirming the auditor’s re-appointment. The AC has recommended to the Board on the nomination of Messrs Baker Tilly TFW LLP for re-appointment as external auditor of the Company at the forthcoming AGM. In appointing the audit firms for the Group, the AC is satisfied that the Company has complied with the Listing Rules 712 and 715. In addition, the AC is satisfied that the Company has complied with Rule 717 of the Listing Manual regarding the audit of the foreign subsidiaries. The aggregate amount of fees paid and/or payable to the external auditor amounted to approximately S$111,000 for audit services and S$48,000 for non-audit services rendered by external auditor. The AC is also tasked to review interested person transactions in accordance with the requirements of the Listing Manual and the procedures set up to monitor and report on such transactions. The AC has full access to and co-operation from Management and has full discretion to invite any director or officer to attend its meetings, and has been given reasonable resources to enable it to discharge its functions. It reviews the assistance given by the Company’s officers to the external and internal auditors. The AC has unrestricted access to the external and internal auditors. The AC meets with the Company’s external auditor and internal auditors without the presence of Management at least once a year. The audit partner of the external auditor is rotated every five years, in accordance with the requirements of the Listing Manual. The Company has implemented a whistle-blowing policy, whereby employees of the Group may, in confidence, raise concerns about possible improprieties in matters of financial reporting or other matters. The AC is vested with the power and authority to receive, investigate and enforce appropriate action when any such noncompliance matter is brought to its attention.

ABR HOLDINGS LIMITED ANNUAL REPORT 2013

30

Report on Corporate Governance

During the financial year, the AC reviewed the quarterly and full year announcements before submission to the Board for approval. The AC also reviewed the audit plan of the external and internal auditors and the results of the audits performed by them, the list of interested person transactions and non-audit services rendered by the external auditor, and the re-appointment of the external auditor and its remuneration. Management’s assessment of fraud risks, adequacy of the whistle-blower arrangements and whistle-blower complaints are also reviewed by the AC. The AC takes measures to keep abreast of the changes to accounting standards and issues which have a direct impact on financial statements. Principle 13 – Internal audit The Group has outsourced its internal audit function to JF Virtus Pte Ltd. The internal auditors (“IA”) report directly to the Chairman of the AC. The role of the IA and scope of its responsibilities are as follows: •

review the Group’s key business segments in the different territories in which they operate, on a riskoriented process based audit;



apprise Management and report to the AC concerning the adequacy and effectiveness of the system of internal control in all areas of the business of the Group. The system includes the policies, systems and procedures pertaining to procurement, operations, sales and marketing, manufacturing, accounting and financial processes, information technology infrastructure and human resources; and



assist the Group to accomplish its objectives by bringing a systematic, disciplined approach to evaluating and improving the effectiveness of risk management, control and governance processes.

To achieve its objectives, the IA has unrestricted access to all records, properties and personnel of the Group. The IA has carried out the internal audit function according to the standards set by recognised professional bodies including standards for the Professional Practice of Internal Auditing set by The Institute of Internal Auditors. During the year, the IA has reviewed the retail operations of the Group in Singapore; the head office support functions in Singapore and Malaysia, namely, human resources and payroll, computer security and control, cash and banking; and the manufacturing and supply chain functions in Singapore. The AC will review the adequacy of the function of the IA annually. Based on the review of the IA, the AC believes that the internal auditors are independent and have the appropriate standing and adequate resources to perform its function effectively and objectively.

ABR HOLDINGS LIMITED ANNUAL REPORT 2013

31

Report on Corporate Governance

SHAREHOLDER RIGHTS AND RESPONSIBILITIES Principle 14 – Shareholder rights Principle 15 – Communication with shareholders Principle 16 – Conduct of shareholder meetings The Group has followed closely the requirements in the Listing Manual in disclosing material information through SGXNET relating to its business and operations. The Group’s quarterly and full year financial results for the year in review were released within 45 days and 60 days respectively for each of the relevant period. The Group ensures that it does not practise selective disclosure of information to any particular group of persons. The Company attends to the queries of the shareholders promptly. All shareholders of the Company receive the annual report and notice of AGMs. The notice is also advertised in the newspapers and published on the SGXNET. Separate resolutions are tabled for each distinct issue during the AGMs. Shareholders are given the opportunity to participate actively during the AGMs and query the Board and management regarding the Group’s business and financial statements. The Company’s Articles of Association allow a shareholder to vote at any general meeting of the Company either personally or by proxy or by attorney or in the case of a corporation, by a representative. If appointing a proxy, a shareholder may appoint one or two proxies to attend and vote in place of the shareholder. The Articles currently do not allow a shareholder to vote in absentia. The members of the AC, NC and RC were present together with the external auditor at the last AGM held on 30 April 2013 to address questions raised by shareholders. To promote a better understanding of shareholders’ views, the Board actively encourages shareholders to participate during the Company’s general meetings. At these meetings, shareholders are given the opportunity to voice their views and raise issues either formally or informally. These meetings provide excellent opportunities for the Board to engage with shareholders to solicit their feedback. The Company Secretary prepares minutes of general meetings that include substantial and relevant comments or queries from shareholders relating to the agenda of the meetings and responses from the Board and Management, and to make these minutes, subsequently approved by the Board, available to shareholders during office hours. The Company has been declaring dividends at half-year and final year-end. Any payouts are clearly communicated to shareholders in public announcements and via announcements on SGXNET when the Company discloses its financial results.

INTERESTED PERSON TRANSACTIONS The Company has established procedures to ensure that all transactions with interested persons are reported in a timely manner to the AC and that transaction is conducted on an arm’s length basis and are not prejudicial to the interests of the shareholders. During the financial year ended 31 December 2013, there were no interested person transactions amounting to more than S$100,000.

ABR HOLDINGS LIMITED ANNUAL REPORT 2013

32

Report on Corporate Governance

DEALINGS IN SECURITIES The Board has adopted Rule 1207(19) of the Listing Manual applicable to the Directors as well as executives in relation to dealings in the Company’s securities. Directors and executives are also expected to observe insider trading laws at all times when dealing in the Company’s securities. Directors and employees of the Company are reminded at the appropriate time, that dealings in the Company’s shares during the period commencing two (2) weeks before the announcement of the Company’s interim results or one (1) month before the announcement of the Company’s full year results, as the case may be, and ending on the date of announcement of the results, are prohibited. An officer should also not deal in the Company’s securities on short-term considerations.

MATERIAL CONTRACTS There are no material contracts of the Group and of the Company involving the interests of the Executive Chairman, the Managing Director (both of whom are deemed to be in the position of the Chief Executive Officer), each other director or controlling shareholder, either still subsisting at the end of the financial year or if not then subsisting, entered into since the end of the previous financial year.

ABR HOLDINGS LIMITED ANNUAL REPORT 2013

33

Directors’ Report

The directors are pleased to present their report to the members together with the audited consolidated financial statements of the Group and the statement of financial position and statement of changes in equity of the Company for the financial year ended 31 December 2013. 1

Directors The directors in office at the date of this report are: Chua Tiang Choon, Keith Ang Yee Lim Ang Lian Seng Leck Kim Seng Allan Chua Tiang Kwang Quek Mong Hua Lim Jen Howe

2

(Executive Chairman) (Managing Director) (Executive) (Executive) (Non-executive) (Independent and non-executive) (Independent and non-executive)

Arrangement to enable directors to acquire benefits 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 objects is, to enable the directors of the Company to acquire benefits by means of the acquisition of shares in or debentures of the Company or any other body corporate.

3

Directors' interest in shares or debentures The directors of the Company holding office at the end of the financial year had no interests in the shares and debentures of the Company and related corporations as recorded in the Register of Directors' Shareholdings kept by the Company under Section 164 of the Companies Act, Cap. 50, except as follows:

Name of directors

Shares held by directors At At At 1.1.13 31.12.13 21.1.14

Shareholdings in which the directors are deemed to have an interest At At At 1.1.13 31.12.13 21.1.14

The Company - Ordinary shares Chua Tiang Choon, Keith

300,000

300,000

300,000 56,925,858 56,925,858 56,925,858

Allan Chua Tiang Kwang

300,000

300,000

300,000 56,925,858 56,925,858 56,925,858

Ang Yee Lim

82,248,301 85,849,301 85,849,301





Ang Lian Seng

2,300,000

2,300,000

2,300,000







Leck Kim Seng

300,000

300,000

300,000







Lim Jen Howe

300,000

300,000

300,000







Quek Mong Hua

300,000

300,000

300,000

40,000

40,000

40,000

ABR HOLDINGS LIMITED ANNUAL REPORT 2013

34



Directors’ Report

3

Directors’ interest in shares or debentures (continued) The deemed interests of Mr Chua Tiang Choon, Keith and Mr Allan Chua Tiang Kwang in the shares of the Company are by virtue of their shareholdings in Alby (Private) Limited, which in turn holds shares in Kechapi Pte Ltd. At 31 December 2013, Kechapi Pte Ltd holds 56,925,858 shares in the Company. Mr Chua Tiang Choon, Keith, Mr Allan Chua Tiang Kwang and Mr Ang Yee Lim, by virtue of their interests of not less than 20% of the issued share capital of the Company, are deemed to have an interest in the whole of the share capital of the Company’s wholly-owned subsidiaries and in the shares of the subsidiaries set out below: Number of ordinary shares At At 1.1.13 31.12.13 ABR (HK) Limited All Best Foods Pte Ltd Cine Art Pictures Pte Ltd Kitchen Alchemy Pte Ltd Oishi Japanese Pizza Pte Ltd Team-Up Overseas Investment Pte Ltd

4

8,001 – 55,000 255,000 925,000 70,000

8,001 4,080,000 55,000 255,000 925,000 70,000

Directors’ contractual benefits Since the end of the previous financial year, no director has received or become entitled to receive a benefit other than disclosed in the consolidated financial statements and this report by reason of a contract made by the Company or a related corporation with the director or with a firm of which he is a member, or with a company in which he has a substantial financial interest. Certain directors received remuneration from related corporations in their capacity as directors and/or executives of these related corporations.

5

Material contracts There are no material contracts of the Group and of the Company involving the interests of the Executive Chairman, the Managing Director (both of whom are deemed to be in the position of the Chief Executive Officer), each other director or controlling shareholder, either still subsisting at the end of the financial year or if not then subsisting, entered into since the end of the previous financial year.

6

Share options The ABR Employees’ Share Option Scheme 1999 (the “Option Scheme”) was approved by the members of the Company at an Extraordinary General Meeting held on 28 June 1999. The Option Scheme expired on 27 June 2009 and was not renewed. Details of the options granted previously under the Option Scheme have been disclosed in the Directors’ Report for the respective financial years. Options granted under the Option Scheme prior to the expiry of the scheme continued to be administered by the Remuneration Committee comprising the following members: Quek Mong Hua Lim Jen Howe Ang Lian Seng

(Chairman)

ABR HOLDINGS LIMITED ANNUAL REPORT 2013

35

Directors’ Report

6

Share options (continued) At the end of the financial year, details of the options to take up unissued ordinary shares of the Company under the Option Scheme were as follows:

Date of grant

Exercise period

30 June 2008

1 July 2009 to 29 June 2013

Number of unissued ordinary shares under option Balance at Aggregate Aggregate Aggregate at 1.1.13 exercised forfeited 31.12.13

103,000

(103,000)





Exercise price

$0.30

Details of options of the Company granted, forfeited/lapsed and exercised since commencement of the Option Scheme (aggregate) to 31 December 2013 were as follows:

Aggregate granted

Aggregate forfeited/ lapsed

Aggregate exercised

Aggregate outstanding

Directors Ang Lian Seng Leck Kim Seng Quek Mong Hua Lim Jen Howe

300,000 300,000 300,000 300,000

– – – –

(300,000) (300,000) (300,000) (300,000)

– – – –

Directors who are controlling shareholders Chua Tiang Choon, Keith Ang Yee Lim Allan Chua Tiang Kwang

300,000 300,000 300,000

– – –

(300,000) (300,000) (300,000)

– – –

5,550,000

(5,550,000)





Others

20,384,000

(14,396,000)

(5,988,000)



Total

28,034,000

(19,946,000)

(8,088,000)



Option participants

Former directors of the Company

There were no unissued shares of any corporation in the Group under options at the end of the financial year. No options to take up unissued shares of the Company or its subsidiaries were granted during the financial year. No options were granted to associates of the Company’s controlling shareholders and no employee has received 5% or more of the total number of options available under the Option Scheme. At 31 December 2013, the Company is not a subsidiary of a parent company.

ABR HOLDINGS LIMITED ANNUAL REPORT 2013

36

Directors’ Report

7

Audit Committee The Audit Committee comprises three members, two of whom are independent directors. The members of the Audit Committee for the financial year are: Lim Jen Howe Quek Mong Hua Allan Chua Tiang Kwang

(Chairman)

The Audit Committee carried out its functions in accordance with Section 201B(5) of the Companies Act and performed the following functions: (a)

reviewed the independence and objectivity of the external auditor;

(b)

reviewed the financial statements of the Company and of the Group for the financial year ended 31 December 2013 and the independent external auditor’s report thereon;

(c)

reviewed the overall scope of the audit work carried out by the independent external auditor and also met with the independent external auditor to discuss the results of their audit and their evaluation of the internal accounting control system and internal control procedures;

(d)

reviewed the overall scope and timing of the work to be carried out by the internal auditors and also met with the internal auditors to discuss the results of their internal audit procedures; and

(e)

reviewed interested person transactions.

The Audit Committee has recommended to the Board of Directors that the independent auditor, Baker Tilly TFW LLP, be re-appointed as auditor of the Company at the forthcoming Annual General Meeting. 8

Independent auditor The independent auditor, Baker Tilly TFW LLP, has expressed its willingness to accept re-appointment.

On behalf of the directors

Chua Tiang Choon, Keith Director

Ang Yee Lim Director

28 March 2014

ABR HOLDINGS LIMITED ANNUAL REPORT 2013

37

Statement by Directors

In the opinion of the directors:

(i)

the consolidated financial statements of the Group and the statement of financial position and the statement of changes in equity of the Company as set out on pages 40 to 117 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, changes in equity and cash flows of the Group and the changes in equity of the Company for the financial year ended on that date in accordance with the provisions of the Singapore Companies Act and Singapore Financial Reporting Standards; 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 directors

Chua Tiang Choon, Keith Director 28 March 2014

ABR HOLDINGS LIMITED ANNUAL REPORT 2013

38

Ang Yee Lim Director

Independent Auditor’s Report To the members of ABR Holdings Limited

Report on the Financial Statements We have audited the accompanying financial statements of ABR Holdings Limited (the “Company”) and its subsidiaries (the “Group”) as set out on pages 40 to 117, which comprise the statements of financial position of the Group and Company as at 31 December 2013, and the consolidated statement of profit or loss and other comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows of the Group and the statement of changes in equity of the Company 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 (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 asset. 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. Opinion In our opinion, the consolidated financial statements of the Group and the statement of financial position and statement of changes in equity of the Company are properly drawn up in accordance with the provisions of the Act and Singapore Financial Reporting Standards so as to give a true and fair view of the state of affairs of the Group and Company as at 31 December 2013 and the results, changes in equity and cash flows of the Group and changes in equity of the Company for the financial year ended on that date. 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.

Baker Tilly TFW LLP Public Accountants and Chartered Accountants Singapore 28 March 2014 ABR HOLDINGS LIMITED ANNUAL REPORT 2013

39

Consolidated Statement of Profit or Loss and Other Comprehensive Income For the financial year ended 31 December 2013

Group Note Continuing operations Revenue Cost of sales

2013 $’000

2012 $’000

98,166 (51,622)

91,837 (49,246)

46,544

42,591

5

1,975

954

Other items of expense Selling, distribution and outlet expenses Administrative expenses Other expenses Finance costs

6

(26,338) (11,932) (835) (5)

(26,113) (12,360) (2,798) (24)

Profit before tax from continuing operations Income tax expense

7 9

9,409 (1,613)

2,250 (1,148)

7,796

1,102

– 7,796

79,495 80,597

4

Gross profit Other items of income Other income

Profit from continuing operations, net of tax Discontinued operation Profit from discontinued operation, net of tax Profit for the year

10

Other comprehensive income: Items that are or may be reclassified subsequently to profit or loss Currency translation differences

(95)

(43)

Other comprehensive income for the year, net of tax

(95)

(43)

Total comprehensive income for the year, net of tax

The accompanying notes form an integral part of these financial statements. ABR HOLDINGS LIMITED ANNUAL REPORT 2013

40

7,701

80,554

Consolidated Statement of Profit or Loss and Other Comprehensive Income For the financial year ended 31 December 2013

Group 2013 $’000

2012 $’000

Profit attributable to: Owners of the Company Profit from continuing operations, net of tax Profit from discontinued operation, net of tax

8,451 –

2,874 74,596

Profit for the year attributable to owners of the Company

8,451

77,470

Note

Non-controlling interests Loss from continuing operations, net of tax Profit from discontinued operation, net of tax

(655) –

(1,772) 4,899

(Loss)/profit for the year attributable to non-controlling interests

(655)

3,127

Total comprehensive income attributable to: Owners of the Company Total comprehensive income from continuing operations, net of tax Total comprehensive income from discontinued operation, net of tax

8,387 –

2,810 74,582

Total comprehensive income for the year attributable to owners of the Company

8,387

77,392

Non-controlling interests Total comprehensive loss from continuing operations, net of tax Total comprehensive income from discontinued operation, net of tax

(686) –

(1,659) 4,821

Total comprehensive (loss)/income for the year attributable to non-controlling interests

(686)

3,162

Earnings per share from continuing operations attributable to owners of the Company Basic Diluted

11 11

4.21 cents 4.21 cents

1.43 cents 1.43 cents

Earnings per share for the year attributable to owners of the Company Basic Diluted

11 11

4.21 cents 4.21 cents

38.56 cents 38.55 cents

The accompanying notes form an integral part of these financial statements. ABR HOLDINGS LIMITED ANNUAL REPORT 2013

41

Statements of Financial Position At 31 December 2013

Group

ASSETS Non-current assets Property, plant and equipment Investment properties Intangible assets Investments in subsidiaries Investments in associated companies Held-to-maturity financial assets Available-for-sale financial assets Loans to subsidiaries

Note

2013 $’000

2012 $’000

12 13 14 15 16 17 18 19(ii)

21,470 3,412 620 – – 1 35 –

20,317 3,532 737 – – 1 – –

9,651 1,150 174 5,469 – 1 35 7,639

9,048 1,187 208 2,420 – 1 – 10,144

25,538

24,587

24,119

23,008

2,303 1,222 5,872 40,127 39,792

2,260 1,313 6,025 14,141 57,508

1,450 911 4,574 39,444 26,645

1,525 1,034 5,048 13,788 49,727

89,316

81,247

73,024

71,122

114,854

105,834

97,143

94,130

Total non-current assets Current assets Inventories Trade receivables Other receivables Fixed deposits Cash and bank balances

21 22 23 24 24

Total current assets Total assets EQUITY AND LIABILITIES Equity Share capital Other reserves Accumulated profits

Company 2013 2012 $’000 $’000

43,299 (360) 50,669

43,264 (567) 49,559

43,299 – 40,130

43,264 5 38,377

Equity attributable to owners of the Company Non-controlling interests

93,608 3,581

92,256 (2,548)

83,429 –

81,646 –

Total equity

97,189

89,708

83,429

81,646

1,274

1,320

600

650

1,274

1,320

600

650

Non-current liability Deferred tax liabilities Total non-current liability

25 26

29

The accompanying notes form an integral part of these financial statements. ABR HOLDINGS LIMITED ANNUAL REPORT 2013

42

Statements of Financial Position At 31 December 2013

Group 2013 $’000

2012 $’000

Company 2013 2012 $’000 $’000

5,280 9,296 – 1,815

4,744 8,664 141 1,257

3,512 8,102 – 1,500

3,239 7,664 – 931

Total current liabilities

16,391

14,806

13,114

11,834

Total liabilities

17,665

16,126

13,714

12,484

114,854

105,834

97,143

94,130

Note Current liabilities Trade payables Other payables Borrowings Tax payable

Total equity and liabilities

30 27

The accompanying notes form an integral part of these financial statements. ABR HOLDINGS LIMITED ANNUAL REPORT 2013

43

Consolidated Statement of Changes In Equity For the financial year ended 31 December 2013

Group Note Balance at 1.1.2013 Profit for the year Other comprehensive income Currency translation differences Other comprehensive income for the year, net of tax Total comprehensive income for the year Distributions to owners of the Company Tax exempt (1-tier) final dividend of 1.0 cent per share for the financial year ended 31.12.2012 Tax exempt (1-tier) interim dividend of 1.0 cent per share for the financial year ended 31.12.2013 Exercise of employee share options Capitalisation of accumulated profits Dividends paid to non-controlling interests Total distributions to owners of the Company Changes in ownership interests in subsidiaries Changes in ownership interest in a subsidiary without a change in control 15(iii) Disposal of interest in a subsidiary 15(iv) Contributions by non-controlling interests Total changes in ownership interests in subsidiaries Total transactions with owners of the Company Balance at 31.12.2013

Total equity

Equity attributable to owners of the Company

Share capital

*Other reserves

Accumulated profits

Noncontrolling interests

$’000

$’000

$’000

$’000

$’000

$’000

89,708

92,256

43,264

49,559

(2,548)

7,796

8,451





8,451

(655)

(95)

(64)



(64)



(31)

(95)

(64)



(64)



(31) (686)

7,701

8,387



(64)

8,451

(2,009)

(2,009)





(2,009)



(2,010)

(2,010)





(2,010)



(5)

30

30

35







276

(8)







(3,989)

35

271

(4,295)

(3,036)





(3,036)









3,864

(10)





(10)

3,874

3,777

(3,046)





(3,046)

6,823

(220) 97,189

(7,035) 93,608

35 43,299

(7,341) 50,669

6,815 3,581

(3,997)

– (87)

* An analysis of “Other reserves” is presented in note 26.

The accompanying notes form an integral part of these financial statements. ABR HOLDINGS LIMITED ANNUAL REPORT 2013

44

(567)

271 (360)

– (276) –

– – (8) (8)

3,036 (87)

Consolidated Statement of Changes In Equity For the financial year ended 31 December 2013

Group

Balance at 1.1.2012 Profit for the year Other comprehensive income Currency translation differences Other comprehensive income for the year, net of tax Total comprehensive income for the year Distributions to owners of the Company Tax exempt (1-tier) final dividend of 1.0 cent per share for the financial year ended 31.12.2011 Tax exempt (1-tier) special dividend of 30.0 cents per share for the financial year ended 31.12.2012 Exercise of employee share options Recognition of share-based payments Dividends paid to non-controlling interests Total distributions to owners of the Company Changes in ownership interests in subsidiaries Disposal of interest in subsidiaries Contribution by non-controlling interests without a change in control Total changes in ownership interests in subsidiaries Total transactions with owners of the Company Balance at 31.12.2012

Total equity

Equity attributable to owners of the Company

Share capital

*Other reserves

Accumulated profits

Noncontrolling interests

$’000

$’000

$’000

$’000

$’000

$’000

103,769

77,110

43,253

34,425

26,659

80,597

77,470





77,470

3,127

(568)

(43)

(78)



(78)



35

(43)

(78)



(78)



35 3,162

80,554

77,392



(78)

77,470

(2,009)

(2,009)





(2,009)



(60,268) 9 (8)

(60,268) 9 (8)

– 11 –

– (2) (8)

(60,268) – –

– – –





11

(10)

30



– 30

(77) (62,353)

(32,478) 216 (32,262)

– (62,276)

(94,615)

(62,246)

89,708

92,256



(77)

(62,277)

(77)

89

(59)

(32,508)









89

(59)

(32,292)

11

79

(62,336)

(32,369)

(567)

49,559

(2,548)

43,264

216

* An analysis of “Other reserves” is presented in note 26.

The accompanying notes form an integral part of these financial statements. ABR HOLDINGS LIMITED ANNUAL REPORT 2013

45

Statement of Changes in Equity For the financial year ended 31 December 2013

Total equity $’000

Share capital $’000

reserves $’000

Accumulated profits $’000

Balance at 1.1.2013 Net profit and total comprehensive income for the year Tax exempt (1-tier) final dividend of 1.0 cent per share for the financial year ended 31.12.2012 Tax exempt (1-tier) interim dividend of 1.0 cent per share for the financial year ended 31.12.2013 Exercise of employee share options

81,646

43,264

5

38,377

5,772





5,772

(2,009)





(2,009)

(2,010) 30

– 35

– (5)

(2,010) –

Balance at 31.12.2013

83,429

43,299



40,130

Balance at 1.1.2012 Net profit and total comprehensive income for the year Tax exempt (1-tier) final dividend of 1.0 cent per share for the financial year ended 31.12.2011 Tax exempt (1-tier) special dividend of 30.0 cents per share for the financial year ended 31.12.2012 Exercise of employee share options Recognition of share-based payments

47,147

43,253

15

3,879

96,775





96,775

(2,009)





(2,009)

(60,268) 9 (8)

– 11 –

– (2) (8)

(60,268) – –

5

38,377

Company

Balance at 31.12.2012

81,646

43,264

* An analysis of “Other reserves” is presented in note 26.

The accompanying notes form an integral part of these financial statements. ABR HOLDINGS LIMITED ANNUAL REPORT 2013

46

*Other

Consolidated Statement of Cash Flows For the financial year ended 31 December 2013

2013 $’000

2012 $’000

Cash flows from operating activities Profit before tax from continuing operations Profit before tax from discontinued operation (note 10)

9,409 –

2,250 81,381

Profit before tax, total

9,409

83,631

Adjustments for: Depreciation and amortisation Gain arising from de-registration of a subsidiary Gain on disposal of interest in a subsidiary Impairment of knowhow and related business goodwill Write-back of impairment loss for property, plant and equipment Gain on disposal of property, plant and equipment, net Loss on deemed disposal of interest in a subsidiary (note 15(iv)) Share option expenses Property, plant and equipment written off Unrealised foreign exchange gain Interest expense Interest income

3,047 – – – – – 127 (1) 412 (139) 5 (263)

3,567 (61) (69,608) 597 (490) (17) – (8) 1,510 (29) 58 (294)

Operating cash flows before movements in working capital

12,597

Changes in working capital: Inventories Trade and other receivables Trade and other payables

18,856

191 (124) 773

(4,863) 6,685 (3,651)

Cash from operations Income tax paid

13,437 (1,109)

17,027 (1,790)

Net cash generated from operating activities

12,328

15,237

Cash flows from investing activities Interest received Purchase of property, plant and equipment Proceeds from disposal of property, plant and equipment Disposal of a subsidiary, net of cash disposed (note 31) Investment in available-for-sale financial assets Translation differences

263 (4,173) 21 – (35) 5

294 (2,156) 367 71,494 – 108

Net cash (used in)/generated from investing activities

(3,919)

70,107

The accompanying notes form an integral part of these financial statements. ABR HOLDINGS LIMITED ANNUAL REPORT 2013

47

Consolidated Statement of Cash Flows For the financial year ended 31 December 2013

2013 $’000 Cash flows from financing activities Interest paid Repayment of borrowings, net Repayment of finance lease obligations Funds withdrawn from/(placed in) non-liquid deposits Proceeds from exercise of employee share options Dividends paid to shareholders Dividends paid to non-controlling interests Contributions by non-controlling interests Net cash used in financing activities

2012 $’000

(5) (139) (2) 1 31 (4,019) (8) 3,864

(58) (977) (86) (196) 9 (62,277) (77) 216

(277)

(63,446)

Net increase in cash and cash equivalents Cash and cash equivalents at beginning of financial year Effect of exchange rate fluctuations on cash and cash equivalents

8,132 71,330 139

21,898 49,579 (147)

Cash and cash equivalents at end of financial year

79,601

71,330

Cash and cash equivalents comprise: Fixed deposits Cash and bank balances

40,127 39,792

14,141 57,508

Less: Funds placed in non-liquid deposits (note 24)

79,919 (318)

71,649 (319)

79,601

71,330

During the financial year, the Group acquired property, plant and equipment with an aggregate cost of $nil (2012: $272,000) by means of finance leases. The cash outflow on acquisition of property, plant and equipment accumulated to $4,173,000 (2012: $2,156,000).

The accompanying notes form an integral part of these financial statements. ABR HOLDINGS LIMITED ANNUAL REPORT 2013

48

Notes to the Financial Statements For the financial year ended 31 December 2013

These notes form an integral part of and should be read in conjunction with the accompanying financial statements. 1

Corporate information The Company (Co. Reg. No. 197803023H) is incorporated and domiciled in Singapore and its registered office is at 41 Tampines Street 92, Singapore 528881. The principal activities of the Company are the manufacture of ice cream, the operation of Swensen’s ice cream parlours cum restaurants, operation of pubs and other specialty restaurants and investment holding. The principal activities of the subsidiaries are shown in note 15.

2

Summary of significant accounting policies

2.1

Basis of preparation The financial statements, expressed in Singapore Dollars which is the Company’s functional currency, have been prepared in accordance with the provisions of the Singapore Companies Act and Singapore Financial Reporting Standards (“FRS”). The financial statements have been prepared under the historical cost convention except as disclosed in the accounting policies below. The preparation of financial statements in conformity with FRS requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the financial year. Although these estimates are based on management’s best knowledge of current events and actions and historical experiences and various other factors that are believed to be reasonable under the circumstances, actual results may ultimately differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the financial statements are disclosed in note 3. The carrying amounts of cash and cash equivalents, trade and other current receivables and payables approximate their respective fair values due to the relatively short-term maturity of these financial instruments. In the current financial year, the Group has adopted all the new and revised FRS and Interpretations of FRS (“INT FRS”) that are relevant to its operations and effective for the current financial year. The adoption of these new/revised FRS and INT FRS did not have any material effect on the financial results or position of the Group and the Company.

ABR HOLDINGS LIMITED ANNUAL REPORT 2013

49

Notes to the Financial Statements For the financial year ended 31 December 2013

2

Summary of significant accounting policies (continued)

2.1

Basis of preparation (continued) At the date of the statement of financial position, the following FRS and INT FRS were issued, revised or amended, but not yet effective and which the Group has not early adopted: FRS 27 FRS 28 FRS 110 FRS 111 FRS 112 INT FRS 121 Amendments to FRS 32 Amendments to FRS 36 Amendments to FRS 39 Amendments to FRS 110, FRS 112 and FRS 27

Separate Financial Statements Investments in Associates and Joint Ventures Consolidated Financial Statements Joint Arrangements Disclosure of Interests in Other Entities Levies Offsetting Financial Assets and Financial Liabilities Recoverable Amount Disclosures for Non-Financial Assets Novation of Derivatives and Continuation of Hedge Accounting Investment Entities

Except for FRS 110, Revised FRS 27 and FRS 112, the directors expect that the adoption of the other standards and interpretations 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 110 and Revised FRS 27 and FRS 112 are described below. FRS 110 Consolidated Financial Statements and Revised FRS 27 Separate 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 control and expects that the adoption of FRS 110 in 2014 will not have any significant impact to the financial position and financial performance of the Group. FRS 112 Disclosure of Interests in Other Entities 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. The Group will apply FRS 112 prospectively from 1 January 2014. As this is a disclosure standard, it will have no impact to the financial position and financial performance of the Group when implemented in 2014.

ABR HOLDINGS LIMITED ANNUAL REPORT 2013

50

Notes to the Financial Statements For the financial year ended 31 December 2013

2

Summary of significant accounting policies (continued)

2.2

Revenue recognition Revenue comprises the fair value of the consideration received or receivables for the sales of goods and rendering of services, net of goods and services tax, rebates and discounts, and after eliminating sales within the Group. Revenue is recognised to the extent that it is probable that the economic benefits associated with the transaction will flow to the entity, and the amount of revenue and related cost can be reliably measured. (a)

Sales of food and beverages Revenue from sales of food and beverages is recognised when the food and beverages have been served or upon delivery to customers.

(b)

Sales of goods Revenue from sales of goods is recognised when a Group entity has delivered the products to the customer and significant risks and rewards of ownership of the goods have been passed to the customer.

(c)

Services Revenue from rendering of services is recognised when services are performed.

(d)

Interest income Interest income is recognised on a time proportion basis using the effective interest method.

(e)

Royalty income Royalty income is recognised on a fixed predetermined percentage of revenue from certain restaurants.

(f)

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

(g)

Rental income Rental income from operating leases are recognised on a straight-line basis over the lease term.

ABR HOLDINGS LIMITED ANNUAL REPORT 2013

51

Notes to the Financial Statements For the financial year ended 31 December 2013

2

Summary of significant accounting policies (continued)

2.3

Principles of consolidation 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 are prepared for the same reporting period as the parent company. Consistent accounting policies are applied for like transactions and events in similar circumstances. Intragroup balances and transactions, including income, expenses and dividends, are eliminated in full. Profits and losses resulting from intragroup transactions that are recognised in assets, such as inventory and property, plant and equipment, 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. Business combinations are accounted for using the acquisition method. The consideration transferred for the acquisition comprises the fair value of the assets transferred, the liabilities incurred and the equity interests issued by the Group. The consideration transferred also includes the fair value of any contingent consideration arrangement and the fair value of any pre-existing equity interest in the subsidiary. Acquisition-related costs are recognised as expenses as incurred. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. Any excess of the fair value of the consideration transferred in the business combination, the amount of any 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 fair value of the net identifiable assets acquired is recorded as goodwill. Goodwill is accounted for in accordance with the accounting policy for goodwill stated in note 2.4. In instances where the latter amount exceeds the former, the excess is recognised as gain on bargain purchase in profit or loss on the date of acquisition. Non-controlling interests are that part of the net results of operations and of net assets of a subsidiary attributable to the interests which are not owned directly or indirectly by the equity holders of the Company. They are shown separately in the consolidated statement of profit or loss and other comprehensive income, statement of changes in equity and statement of financial position. Total comprehensive income is attributed to the non-controlling interest based on their respective interests in a subsidiary, even if the subsidiary incurred losses and the losses allocated exceed the non-controlling interest in the subsidiary’s equity. For non-controlling interests that are present ownership interests and entitle their holders to a proportionate share of the acquiree’s net assets in the event of liquidation, the Group elects on an acquisition-by-acquisition basis whether to measure them at fair value, or at the non-controlling interests’ proportionate share of the acquiree’s net identifiable assets, at the acquisition date. All other non-controlling interests are measured at acquisition date fair value or, when applicable, on the basis specified in another standard.

ABR HOLDINGS LIMITED ANNUAL REPORT 2013

52

Notes to the Financial Statements For the financial year ended 31 December 2013

2

Summary of significant accounting policies (continued)

2.3

Principles of consolidation (continued) 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. 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 (i.e. transactions with owner in their capacity as owners). When a change in the Company’s ownership interest in a subsidiary results in a loss of control over the subsidiary, the assets and liabilities of the subsidiary including any goodwill are derecognised. Amounts recognised in other comprehensive income in respect of that entity are also reclassified to profit or loss or transferred directly to accumulated profits if required by a specific FRS.

2.4

Goodwill Goodwill is initially measured at cost and is subsequently measured at cost less any accumulated impairment losses. The Group tests goodwill annually for impairment, or more frequently if there are indications that goodwill might be impaired. For the purpose of impairment testing, goodwill is allocated to each of the Group’s cash-generating units expected to benefit from the synergies of the combinations. Cash-generating units to which goodwill has been allocated are tested for impairment annually, or more frequently when there is an indication that the unit may be impaired. If the recoverable amount of the cash-generating unit is less than the carrying amount of the unit, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro-rata on the basis of the carrying amount of each asset in the unit. An impairment loss recognised for goodwill is not reversed in subsequent periods. On disposal of a subsidiary, associated company or a jointly controlled entity, the attributable amount of goodwill is included in the determination of the profit or loss on disposal. The Group’s policy for goodwill arising on the acquisition of an associated company is described in note 2.9.

2.5

Property, plant and equipment and depreciation All property, plant and equipment are initially recognised at cost and subsequently carried at cost less accumulated depreciation and any impairment in value. The cost of property, plant and equipment initially recognised includes its purchase price, and any cost that is directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management. Dismantlement, removal or restoration costs are included as part of the cost of property, plant and equipment if the obligation for dismantlement, removal or restoration is incurred as a consequence of acquiring or using the assets. ABR HOLDINGS LIMITED ANNUAL REPORT 2013

53

Notes to the Financial Statements For the financial year ended 31 December 2013

2

Summary of significant accounting policies (continued)

2.5

Property, plant and equipment and depreciation (continued) Expenditure incurred after the property, plant and equipment are put into operation, such as repairs and maintenance and overhaul costs, is normally charged to the profit or loss in the period in which the costs are incurred. In situations where it can be clearly demonstrated that the expenditure has resulted in an increase in the future economic benefits expected to be obtained from the use of an item of property, plant and equipment beyond its originally assessed standard of performance, the expenditure is capitalised as an additional cost of property, plant and equipment. On disposal of a property, plant and equipment, the difference between the net disposal proceeds and its carrying amount is taken to profit or loss. Depreciation is calculated on a straight-line basis to write off the cost of all property, plant and equipment over their expected useful lives. The estimated useful lives are as follows: Leasehold property Building and structural improvements Leasehold improvements Furniture, fixtures and fittings Plant and equipment Motor vehicles

Years 50 10 - 50 1 - 10 3 - 10 2.5 - 12 5 - 10

The residual values, estimated useful lives and depreciation method of property, plant and equipment are reviewed, and adjusted as appropriate, at the end of each reporting period. The effects of any revision are recognised in profit or loss when the changes arise. Fully depreciated assets are retained in the financial statements until they are no longer in use. No depreciation is provided on freehold land, restaurant supplies, crockery and cutlery. When restaurant supplies, crockery and cutlery are replaced, the costs of replacement are expensed off. 2.6

Investment properties Investment properties comprise buildings that are held for long-term rental yields and/or for capital appreciation. Investment properties comprise completed investment properties. Investment properties are initially recorded at cost. Subsequent to recognition, investment properties are measured at cost less accumulated depreciation and accumulated impairment losses. Depreciation begins when the building is available for use and is calculated on the straight-line method over the shorter of 50 years or the lease term of the building. Investment properties are derecognised when either they have been disposed of or when the investment property is permanently withdrawn from use and no future economic benefit is expected from its disposal. Any gains or losses on the retirement or disposal of an investment property are recognised in profit or loss in the year of retirement or disposal. Transfers are made to or from investment property only when there is a change in use. For a transfer between investment property to owner occupied property, there is no change in the carrying amount of the property transferred and there is also no change to the cost of the property for measurement.

ABR HOLDINGS LIMITED ANNUAL REPORT 2013

54

Notes to the Financial Statements For the financial year ended 31 December 2013

2

Summary of significant accounting policies (continued)

2.7

Intangible assets (i)

Goodwill (see note 2.4)

(ii)

Other intangible assets Intangible assets acquired separately are measured on initial recognition at cost. The cost of intangible assets acquired in a business combination is its fair value as at the date of acquisition. Following initial recognition, intangible assets are carried at cost less any accumulated amortisation and any accumulated impairment losses. Internally generated intangible assets are not capitalised and the expenditure is charged against profits in the year in which the expenditure is incurred. The useful lives of intangible assets are assessed to be either finite or indefinite. Intangible assets with finite lives are amortised over the economic useful life and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortisation period and the amortisation method for an intangible asset with a finite useful life is reviewed at least at the end of each reporting period. 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 treated as changes in accounting estimates. The amortisation expense on intangible assets with finite lives is recognised in the statement of profit or loss and other comprehensive income in the expense category consistent with the function of the intangible asset. Intangible assets with indefinite useful lives are tested for impairment annually either individually or at the cash-generating unit level. Such intangibles are not amortised. The useful life of an intangible asset with an indefinite life is reviewed annually to determine whether indefinite life assessment continues to be supportable. If not, the change in the useful life assessment from indefinite to finite is made on a prospective basis. Amortisation for intangible assets with finite lives is recognised in profit or loss on a straight-line basis over the estimated useful lives of intangible assets from the date that they are available for use. The estimated useful lives are as follows: • •

2.8

Franchise rights Trademark

shorter of respective franchise periods or 20 years shorter of remaining period of use or 5 years

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. The Group generally has such power when it directly or indirectly, holds more than 50% of the issued share capital, or controls more than half of the voting power, or controls the composition of the board of directors. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Group has control over another entity. In the Company’s statement of financial position, investments in subsidiaries are accounted for at cost less any accumulated impairment losses. On disposal of the investment, the difference between disposal proceeds and the carrying amounts of the investments are recognised in profit or loss. ABR HOLDINGS LIMITED ANNUAL REPORT 2013

55

Notes to the Financial Statements For the financial year ended 31 December 2013

2

Summary of significant accounting policies (continued)

2.9

Associated companies An associated company is an entity over which the Group has significant influence and that is neither a subsidiary nor an interest in a joint venture. Significant influence is the power to participate in the financial and operating policy decisions of the investee but is not control or joint control over those policies. Investments in associated companies are accounted for in the consolidated financial statements using the equity method of accounting. Investments in associated companies are initially recognised at cost. The cost of an acquisition is measured at the fair value of the assets given, equity instruments issued or liabilities incurred or assumed at the date of exchange, plus costs directly attributable to the acquisition. In applying the equity method of accounting, the Group’s share of its associated companies’ postacquisition profits or losses is recognised in the profit or loss and its share of post-acquisition movements in reserves is recognised in equity directly. These post-acquisition movements are adjusted against the carrying amount of the investment. When the Group’s share of losses in an associated company equals or exceeds its interest in the associated company, including any other unsecured non-current receivables, the Group does not recognise further losses, unless it has obligations or has made payments on behalf of the associated company. Any excess of the cost of acquisition over the Group’s share of the net fair value of the identifiable assets, liabilities and contingent liabilities of the associate recognised at the date of acquisition is recognised as goodwill. The goodwill is included within the carrying amount of the investment and is assessed for impairment as part of the investment. Any excess of the Group’s share of the net fair value of the identifiable assets, liabilities and contingent liabilities over the cost of acquisition, after reassessment, is recognised immediately as income in the Group’s profit or loss. Where a group entity transacts with an associated company of the Group, profits and losses are eliminated to the extent of the Group’s interest in the relevant associated company. Upon loss of significant influence over the associated company, the Group measures any retained investment at its fair value. Any difference between the carrying amount of the associated company 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. In the Company’s financial statements, investments in associated companies are carried at cost less accumulated impairment losses. On disposal of investment in associated companies, the difference between the disposal proceeds and the carrying amount of the investment is recognised in profit or loss.

ABR HOLDINGS LIMITED ANNUAL REPORT 2013

56

Notes to the Financial Statements For the financial year ended 31 December 2013

2

Summary of significant accounting policies (continued)

2.10 Impairment of non-financial assets At the end of each reporting period, the Group reviews the carrying amounts of its non-financial assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs. Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is recognised in other comprehensive income up to the amount of any previous revaluation. Where an impairment loss subsequently reverses, the carrying amount of the asset (cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (cash-generating unit) in prior years. A previously recognised impairment for an asset other than goodwill is only reversed if there has been a change in the estimates used to determine the asset’s recoverable amount since the last impairment loss was recognised. A reversal of an impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase. 2.11 Financial assets (a)

Classification The Group classifies its financial assets according to the purpose for which the assets were acquired. Management determines the classification of its financial assets at initial recognition and re-evaluates this designation at every reporting period. The Group’s financial assets are loans and receivables, held-to-maturity financial assets, at fair value through profit or loss financial assets and available-for-sale financial assets. (i)

Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are included in current assets, except those maturing later than 12 months after the reporting period which are classified as non-current assets. Loans and receivables comprise trade and other receivables (excluding prepayments) and cash and cash equivalents.

ABR HOLDINGS LIMITED ANNUAL REPORT 2013

57

Notes to the Financial Statements For the financial year ended 31 December 2013

2

Summary of significant accounting policies (continued)

2.11 Financial assets (continued) (a)

Classification (continued) (ii)

Financial assets, at fair value through profit or loss This category has two sub-categories: financial assets held-for-trading, and those designated at fair value through profit or loss at inception. A financial asset is classified as held-for-trading if it is acquired principally for the purpose of selling in the short term. Financial assets designated at fair value through profit or loss at inception are those that are managed and their performances are evaluated on a fair value basis, in accordance with a documented Group investment strategy. Assets in this category are presented as current assets if they are either held-for-trading or are expected to be realised within 12 months after the reporting period.

(iii)

Financial assets, held-to-maturity Financial assets, held-to-maturity are non-derivative financial assets with fixed or determinable payments and fixed maturities that the Group’s management has the positive intention and ability to hold to maturity.

(iv)

Financial assets, available-for-sale Financial assets, available-for-sale include equity and debt securities that are non-derivatives and are either designated in this category or not classified in any of the other categories. They are included in non-current assets unless management intends to dispose off the assets within 12 months after the statement of financial position date.

(b)

Recognition and derecognition Regular purchases and sales of financial assets are recognised on trade-date – the date on which the Group commits to purchase or sell the asset. Financial assets are derecognised when the rights to receive cash flows from the financial assets have expired or have been transferred and the Group has transferred substantially all risks and rewards of ownership. On disposal of a financial asset, the difference between the net sale proceeds and its carrying amount is recognised in profit or loss. Any amount in the fair value reserve relating to that asset is also transferred to profit or loss.

(c)

Initial measurement Financial assets are initially recognised at fair value plus transaction costs except for financial assets at fair value through profit or loss, which are recognised at fair value. Transaction costs for financial assets at fair value through profit or loss are recognised as expenses.

ABR HOLDINGS LIMITED ANNUAL REPORT 2013

58

Notes to the Financial Statements For the financial year ended 31 December 2013

2

Summary of significant accounting policies (continued)

2.11 Financial assets (continued) (d)

Subsequent measurement Financial assets, both available-for-sale and at fair value through profit or loss are subsequently carried at fair value. Available-for-sale investments in equity instruments that do not have a quoted market price in an active market and whose fair value cannot be reliably measured, are measured at cost less impairment loss. Loans and receivables and held-to-maturity financial assets are carried at amortised cost using the effective interest method, less impairment. Gains or losses arising from changes in the fair value of financial assets at fair value through profit or loss, including effects of currency translation, are recognised in profit or loss in the financial year in which the changes in fair values arise. Changes in the fair values of available-for-sale debt securities (i.e. monetary items) denominated in foreign currencies are analysed into currency translation differences on the amortised cost of the securities and other changes; the currency translation differences are recognised in profit or loss and the other changes are recognised in fair value reserve/other comprehensive income. Changes in the fair values of available-for-sale equity securities (i.e. non-monetary items) are recognised in fair value reserve/other comprehensive income, together with the related currency translation differences. Interest and dividend income on available-for-sale financial assets are recognised separately in profit or loss. Held-to-maturity financial assets comprising of unquoted non-equity investments are stated at cost less impairment loss.

(e)

Impairment The Group assesses at the end of each reporting period whether there is any objective evidence that a financial asset or a group of financial assets is impaired. (i)

Loans and receivables Significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy or financial reorganisation, and default or delinquency in payments are considered indicators that the receivable is impaired. The carrying amount of these assets is reduced through the use of an impairment allowance account, and the amount of the loss is recognised in profit or loss. The allowance amount is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the original effective interest rate. When the asset becomes uncollectible, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are recognised against the same line item in profit or loss. If in subsequent periods, the impairment loss decrease, and the decrease can be related objectively to an event occurring after the impairment loss was recognised, the previously recognised impairment loss is reversed through profit or loss to the extent that the carrying amount of the asset does not exceed its amortised cost at the reversed date. ABR HOLDINGS LIMITED ANNUAL REPORT 2013

59

Notes to the Financial Statements For the financial year ended 31 December 2013

2

Summary of significant accounting policies (continued)

2.11 Financial assets (continued) (e)

Impairment (continued) (ii)

Financial assets, held-to-maturity If there is objective evidence that an impairment loss on held-to-maturity financial assets has been incurred, the carrying amount of the asset is reduced by an allowance for impairment and the impairment loss is recognised in profit or loss. This allowance, calculated as the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the original effective interest rate, is recognised in the profit or loss in the period in which the impairment occurs. Impairment loss is reversed through the profit or loss if the impairment loss decrease can be related objectively to an event occurring after the impairment loss was recognised. The carrying amount of the asset previously impaired is increased to the extent that the new carrying amount does not exceed the amortised cost had no impairment been recognised in prior periods.

(iii)

Financial assets, available-for-sale In the case of an equity security classified as available-for-sale, a significant or prolonged decline in the fair value of the security below its cost is considered an indicator that the security is impaired. When there is objective evidence that an available-for-sale financial asset is impaired, the cumulative loss that was recognised directly in the fair value reserve is reclassified to profit or loss. The cumulative loss is measured as the difference between the acquisition cost (net of any principal repayments and amortisation) and the current fair value, less any impairment loss on that financial asset previously recognised. Impairment losses on debt instruments classified as available-for-sale financial assets are reversed through profit or loss when the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment loss was recognised. However, impairment losses recognised in profit or loss on equity instruments classified as available-for-sale financial assets are not reversed through profit or loss. For available-for-sale financial assets carried at cost, the amount of impairment 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. The amount of impairment loss is recognised in profit or loss and such losses are not reversed in subsequent periods.

ABR HOLDINGS LIMITED ANNUAL REPORT 2013

60

Notes to the Financial Statements For the financial year ended 31 December 2013

2

Summary of significant accounting policies (continued)

2.12 Inventories Inventories are stated at the lower of cost and net realisable value. Cost comprises direct materials and, where applicable, direct labour costs and those overheads that have been incurred in bringing the inventories to their present location and condition. Cost is determined using a first-in first-out basis. Net realisable value represents the estimated selling price in the ordinary course of business, less the costs of completion and selling expenses. 2.13 Cash and cash equivalents For the purpose of presentation in the consolidated statement of cash flows, cash and cash equivalents comprise cash on hand and deposits with financial institutions which are subject to insignificant risk of change in value, bank overdrafts, and other short-term highly liquid investments that are readily convertible to a known amount of cash and are subject to an insignificant risk of changes in value. They also include bank overdrafts that form an integral part of the Group’s cash management. Bank overdrafts are presented as current borrowings on the statement of financial position. 2.14 Share capital 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. 2.15 Borrowing costs Borrowing costs, which comprise interest and other costs incurred in connection with the borrowing of funds, 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 asset is substantially completed for its intended use or sale. All other borrowing costs are recognised in the profit or loss using the effective interest method. 2.16 Financial liabilities Financial liabilities are recognised on the statement of financial position when, and only when, the Group becomes a party to the contractual provisions of the financial instrument. Financial liabilities are recognised initially at fair value, plus, in the case of financial liabilities other than derivatives, directly attributable transaction costs. Subsequent to initial recognition, derivatives are measured at fair value. Other financial liabilities (except for the financial guarantees) are measured at amortised cost using the effective interest method. For financial liabilities other than derivatives, gains and losses are recognised in profit or loss when the liabilities are derecognised, and through the amortisation process. Any gains or losses arising from changes in fair value of derivatives are recognised in profit or loss. Net gains or losses on derivatives include exchange differences. A financial liability is derecognised when the obligation under the liability is discharged, cancelled or expired. ABR HOLDINGS LIMITED ANNUAL REPORT 2013

61

Notes to the Financial Statements For the financial year ended 31 December 2013

2

Summary of significant accounting policies (continued)

2.17 Financial guarantees 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. Financial guarantee contracts are initially recognised at their fair values plus transaction costs. Financial guarantees are classified as financial liabilities. Subsequent to initial measurement, the financial guarantees are stated at the higher of the initial fair value less cumulative amortisation and the expected amount payable to the holder. Financial guarantee contracts are amortised in profit or loss over the period of the guarantee. 2.18 Leases (a)

When a group company is the lessee Operating leases Leases where a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases (net of any incentives received from the lessor) are taken to profit or loss on a straight-line basis over the period of the lease. When an operating lease is terminated before the lease period has expired, any payment required to be made to the lessor by way of penalty is recognised as an expense in the period in which termination takes place. Finance leases Leases of property, plant and equipment where the Group assumes substantially all the risks and rewards of ownership are classified as finance leases. Finance leases are capitalised at the inception of the lease at the lower of the fair value of the leased property or the present value of the minimum lease payments. Each lease payment is allocated between the liability and finance charges. The corresponding rental obligations, net of finance charges, are included in borrowings. The interest element of the finance cost is taken to profit or loss over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period. The property, plant and equipment acquired under finance leases is depreciated over the shorter of the useful life of the asset or the lease term.

(b)

When a group company is the lessor Operating leases Leases where the Group retains substantially all the risks and rewards of ownership of the asset are classified as operating leases. Rental income (net of any incentives given to lessees) is recognised on a straight-line basis over the lease term.

ABR HOLDINGS LIMITED ANNUAL REPORT 2013

62

Notes to the Financial Statements For the financial year ended 31 December 2013

2

Summary of significant accounting policies (continued)

2.19 Income taxes Income tax on the profit or loss for the year comprises current and deferred tax. Income tax is recognised in the profit or loss except to the extent that it relates to items recognised directly to equity, in which case it is recognised in equity. Current tax is the expected tax payable or recoverable on the taxable income for the current year, using tax rates enacted or substantively enacted at the end of the reporting period, and any adjustment to tax payable in respect of previous years. Deferred income tax is provided using the liability method, on all temporary differences at the end of the reporting period arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements except where the deferred income tax arises from the initial recognition of goodwill or an asset or liability in a transaction that is not a business combination, and at the time of the transaction, affects neither the accounting nor taxable profit or loss. Deferred income tax is provided on temporary differences arising on investments in subsidiaries and associated companies, except where the timing of the reversal of the temporary difference can be controlled by the Group and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax assets are recognised to the extent that it is probable that future taxable profit will be available against which the deductible temporary differences can be utilised. Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realised or the liability is settled, based on currently enacted or substantively enacted tax rates at the end of the reporting period. Deferred taxes are charged or credited to equity if the tax relates to items that are credited or charged, in the same or a different period, directly to equity. 2.20 Provisions Provisions are recognised when the Group has a present legal or constructive obligation as a result of past event, and it is probable that an outflow of economic resources will be required to settle that obligation and the amount can be estimated reliably. Provisions are measured at the management’s best estimate of the expenditure required to settle the obligation at the end of the reporting period, and are discounted to present value where the effect is material. When discounting is used, the increase in the provision due to passage of time is recognised as a finance cost in profit or loss. The Group recognises the estimated costs of dismantlement, removal or restoration items of property, plant and equipment arising from the acquisition or use of assets (note 2.5). This provision is estimated based on the best estimate of the expenditure required to settle the obligation, taking into consideration time value.

ABR HOLDINGS LIMITED ANNUAL REPORT 2013

63

Notes to the Financial Statements For the financial year ended 31 December 2013

2

Summary of significant accounting policies (continued)

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. Contributions to national pension schemes are recognised as an expense in the period in which the related service is performed. Such state-managed retirement benefit schemes are dealt with as payments to defined contribution plans where the Group’s obligations under the plans are equivalent to those arising in a defined contribution retirement benefit plan.

(b)

Employee leave entitlement Employee entitlements to annual leave and long-service leave are recognised when they accrue to employees. An accrual is made for the estimated liability for annual leave and long-service leave as a result of services rendered by employees up to the end of the reporting period.

(c)

Employee share option plans Employees of the Group received remuneration in the form of share options as consideration for services rendered (“equity-settled transactions”). The cost of equity-settled transactions with employees is measured by reference to the fair value at the date on which the share options are granted. In valuing the share options, no account is taken of any performance conditions, other than conditions linked to the price of the shares of the Company (“market conditions”), if applicable. The cost of equity-settled transactions is recognised, together with a corresponding increase in the share option reserve, over the period in which the performance and/or service conditions are fulfilled, ending on the date on which the relevant employees become fully entitled to the award (“the vesting date”). The cumulative expense recognised for equity-settled transactions at the end of each reporting period until the vesting date reflects the extent to which the vesting period has expired and the Group’s best estimate of the number of equity instruments 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 awards that do not ultimately vest, except for awards 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 conditions are satisfied. The share option reserve is transferred to accumulated profits upon expiry of the options.

ABR HOLDINGS LIMITED ANNUAL REPORT 2013

64

Notes to the Financial Statements For the financial year ended 31 December 2013

2

Summary of significant accounting policies (continued)

2.22 Foreign currency translation and transactions (a)

Functional and presentation currency Items included in the financial statements of each entity in the Group are measured using the currency of the primary economic environment in which the entity operates (the “functional currency”). The financial statements of the Group and the Company are presented in Singapore Dollars, which is the Company’s functional currency.

(b)

Transactions and balances Transactions in a currency other than the functional currency (“foreign currency”) are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Currency translation gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in profit or loss, except for currency translation differences on net investment in foreign operations and borrowings and other currency instruments qualifying as net investment hedges for foreign operations, which are included in the foreign currency translation reserve within equity in the consolidated financial statements. The foreign currency translation reserve is reclassified from equity to profit or loss of the Group on disposal of the foreign operation. Non-monetary items measured at fair values in foreign currencies are translated using the exchange rates at the date when the fair values are determined.

(c)

Translation of Group entities’ financial statements The results and financial position of all the Group entities (none of which has the currency of a hyperinflationary economy) that have a functional currency different from the Group’s presentation currency are translated into the presentation currency as follows: (i) (ii)

(iii)

Assets and liabilities are translated at the closing rates at the end of the reporting period; Income and expenses are translated at average exchange rates (unless the average is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated using the exchange rates at the dates of the transactions); and All resulting exchange differences are recognised in the foreign currency translation reserve within equity.

On consolidation, exchange differences arising from the translation of the net investment in foreign operations (including monetary items that, in substance, form part of the net investment in foreign entities), and of borrowings and other currency instruments designated as hedges of such investments, are taken to the foreign currency translation reserve. Goodwill and fair value adjustments arising on the acquisition of a foreign operation are treated as assets and liabilities of the foreign operation and translated at the closing rate. On disposal of a foreign group entity, the cumulative amount of the foreign currency translation reserve relating to that particular foreign entity is reclassified from equity and recognised in profit or loss when the gain or loss on disposal is recognised.

ABR HOLDINGS LIMITED ANNUAL REPORT 2013

65

Notes to the Financial Statements For the financial year ended 31 December 2013

2

Summary of significant accounting policies (continued)

2.23 Segment reporting An operating segment is a component of the Group that engages in business activities from which it may earn revenues and incur expenses, including revenues and expenses that relate to transactions with other components of the Group. Operating segments are reported in a manner consistent with the internal reporting provided to the Group’s chief operating decision maker for making decisions about allocating resources and assessing performance of the operating segments. 2.24 Dividends Interim dividends are recorded during the financial year in which they are declared payable. Final dividends are recorded in the financial statements in the period in which they are approved by the Company’s shareholders. 2.25 Government grants Government grants are recognised at their fair value where there is reasonable assurance that the grant will be received and all attaching conditions will be complied with. Where the grant relates to an asset, the fair value is recognised as deferred capital grant on the statement of financial position and is amortised to profit or loss over the expected useful life of the relevant asset by equal annual instalments. Where the grant relates to an expense item, it is recognised in profit or loss over the period necessary to match them on a systematic basis to the costs that it is intended to compensate. 2.26 Related parties A related party is an entity or person that directly or indirectly through one or more intermediaries controls, is controlled by, or is under common or joint control with, the entity in governing the financial and operating policies, or that has an interest in the entity that gives it significant influence over the entity in financial and operating decisions. It also includes members of the key management personnel or close members of the family of any individual referred to herein and others who have the ability to control, jointly control or significantly influence by or for which significant voting power in such entity resides with, directly or indirectly, any such individual. 2.27 Discontinued operations A discontinued operation is a component of an entity that either has been disposed of, or that is classified as held-for-sale and (a) (b) (c)

represents a separate major line of business or geographical area of operations; or is part of a single co-ordinated plan to dispose of a separate major line of business or geographical area of operations; or is a subsidiary acquired exclusively with a view to resale.

ABR HOLDINGS LIMITED ANNUAL REPORT 2013

66

Notes to the Financial Statements For the financial year ended 31 December 2013

3

Significant accounting estimates and judgments The preparation of the Group’s financial statements requires management to make judgments, estimates and assumptions that affect the reported amounts of revenue, expenses, assets and liabilities, and the disclosure of contingent liabilities at the end of the reporting period. However, uncertainty about these assumptions and estimates could result in outcomes that could require a material adjustment to carrying amount of the asset or liability affected in the future.

3.1

Critical judgment made in applying accounting policies In the process of applying the Group’s accounting policies, management has made the following judgments apart from those involving estimations, which has the most significant effect on the amounts recognised in the financial statements. Income taxes Significant judgment is involved in determining the capital allowance and deductibility of certain expenses during the estimation of the provision for income tax. There are many transactions and calculations for which the ultimate tax determination is uncertain during the ordinary course of business. The Group recognises liabilities for anticipated tax audit issues based on estimates whether additional taxes will be due. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such difference will impact the income tax and deferred tax provisions in the period in which such determination is made. The carrying amount of the Group’s tax payable and deferred tax liabilities at 31 December 2013 was approximately $1,815,000 (2012: $1,257,000) and $1,274,000 (2012: $1,320,000) respectively. The carrying amount of the Company’s tax payable and deferred tax liabilities at 31 December 2013 was approximately $1,500,000 (2012: $931,000) and $600,000 (2012: $650,000) respectively. Information on unabsorbed tax losses and other temporary differences for which deferred tax assets had not been recognised are stated in note 9.

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, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below. (a)

Impairment of loans and receivables, held-to-maturity financial assets and available-for-sale financial assets 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 any 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.

ABR HOLDINGS LIMITED ANNUAL REPORT 2013

67

Notes to the Financial Statements For the financial year ended 31 December 2013

3

Significant accounting estimates and judgments (continued)

3.2

Key sources of estimation uncertainty (continued) (a)

Impairment of loans and receivables, held-to-maturity financial assets and available-for-sale financial assets (continued) Where there is objective evidence of impairment, the amount 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, held-to-maturity and available-for-sale financial assets at the end of the reporting period are disclosed in note 36(a) to the financial statements.

(b)

Property, plant and equipment and investment properties The Group assesses whether there are indicators of impairment for property, plant and equipment and investment properties at the end of each reporting period and at other times when such indicators exist. Property, plant and equipment are depreciated on a straight-line basis over their estimated useful lives within 1 to 50 years. Investment properties are depreciated on a straightline basis over the shorter of 50 years or the lease term of the building. The estimation of useful lives involves significant judgment and the Group reviews the useful lives of property, plant and equipment and investment properties at each reporting period. The carrying amount of the Group’s and the Company’s property, plant and equipment and investment properties at 31 December 2013 was $24,882,000 (2012: $23,849,000) and $10,801,000 (2012: $10,235,000) respectively.

4

Revenue Group

Sales Service charges Royalty income

ABR HOLDINGS LIMITED ANNUAL REPORT 2013

68

2013 $’000

2012 $’000

90,796 6,946 424

85,110 6,335 392

98,166

91,837

Notes to the Financial Statements For the financial year ended 31 December 2013

5

Other income Group

Rental income Interest income Other income Waiver of debts by a former shareholder of a subsidiary

6

2013 $’000

2012 $’000

374 263 522 816

319 288 347 –

1,975

954

Finance costs Group

Bank overdraft and term loan interests Finance lease charges

2013 $’000

2012 $’000

4 1

22 2

5

24

ABR HOLDINGS LIMITED ANNUAL REPORT 2013

69

Notes to the Financial Statements For the financial year ended 31 December 2013

7

Profit before tax from continuing operations Profit before tax from continuing operations is arrived at after charging/(crediting): Group Note Audit fees payable to: - auditor of the Company - other auditors* Fees for non-audit services payable to: - auditor of the Company Amortisation of franchise rights Cost of inventories included in cost of sales Depreciation of property, plant and equipment Depreciation of investment properties Remuneration of the directors of the Company: - salaries, fees and benefits-in-kind - contribution to defined contribution plans Remuneration of the directors of the subsidiaries: - salaries, fees and benefits-in-kind - contribution to defined contribution plans Remuneration of key management personnel (non-directors): - salaries and related costs - contribution to defined contribution plans Remuneration of other staff: - salaries and related costs - contribution to defined contribution plans Loss on deemed disposal of interest in a subsidiary Loss on disposal of property, plant and equipment, net Allowances for doubtful non-trade receivables Rental expenses - operating leases (see note below) Bad debts written off (trade) Write-offs: - property, plant and equipment - inventories Allowances for doubtful trade receivables Net foreign exchange losses Bad debts written off (non-trade) Write-back of allowance for inventories obsolescences, net Impairment of knowhow and related business goodwill Write-back of impairment loss for property, plant and equipment Gain arising from de-registration of a subsidiary

14(c) 12 13 8

15(iv) 20, 23

22

14(b) 12

2013 $’000

2012 $’000

111 50

142 62

48 137 25,406 2,790 120

50 136 24,700 2,819 119

1,452 37

1,125 36

82 7

248 13

1,076 67

1,141 61

26,266 1,807 127 – 13 16,275 1

24,245 1,715 – 99 692 16,170 15

412 57 6 137 – (2) – – –

Note - Included in rental expenses are contingent rents of $3,131,000 (2012: $2,427,000). * Include independent member firms of the Baker Tilly International network. ABR HOLDINGS LIMITED ANNUAL REPORT 2013

70

1,487 177 – 109 166 (48) 597 (490) (61)

Notes to the Financial Statements For the financial year ended 31 December 2013

8

Remuneration bands of directors of the Company Number of directors of the Company in remuneration bands: Group

$250,000 to below $500,000 Below $250,000

9

2013

2012

3 4

2 5

7

7

Income tax expense Group

Tax expense attributable to profits is made up of: Current income tax provision Deferred tax (note 29) (Over)/under provision in preceding financial year - income tax - deferred tax (note 29)

2013 $’000

2012 $’000

1,818 (33)

1,202 135

1,785

1,337

(172) –

(233) 44

1,613

1,148

The income tax expense on the results of the financial year varies from the amount of income tax determined by applying the Singapore statutory rate of income tax to profit before tax due to the following factors: Group 2013

2012

$’000

$’000

Profit before tax

9,409

2,250

Tax calculated at a tax rate of 17% Effect of different tax rates in other countries Statutory stepped income exemption Income not subject to tax Expenses not deductible for tax purposes Effect of tax incentive and tax rebate Over provision in preceding financial year Deferred tax assets not recognised Others

1,600 61 (42) (529) 575 (144) (172) 299 (35) 1,613

383 (134) (38) (429) 817 (71) (189) 772 37 1,148

ABR HOLDINGS LIMITED ANNUAL REPORT 2013

71

Notes to the Financial Statements For the financial year ended 31 December 2013

9

Income tax expense (continued) The statutory income tax rate applicable is 17% (2012: 17%) for companies incorporated in Singapore and 25% (2012: 25%) for companies incorporated in Malaysia and People’s Republic of China. Subject to the satisfaction of the conditions for group relief, tax losses of $nil (2012: $480,000) and capital allowances of $nil (2012: $108,000) arising in the current year are transferred from some subsidiaries to the Company under the group relief system. These tax losses and capital allowances are transferred from the subsidiaries at no consideration. The deferred tax assets on the following temporary differences have not been recognised in the financial statements at the end of the reporting period:

Unabsorbed tax losses Unabsorbed capital allowances

2013

2012

$’000

$’000

15,389 1,942

14,067 2,072

17,331

16,139

At the end of the reporting period, the Group has potential tax benefits arising from unabsorbed tax losses of approximately $15,782,000 (2012: $14,718,000), and unabsorbed capital allowances of approximately $1,942,000 (2012: $2,072,000), that are available for carry-forward to offset against future taxable income of the companies in which the tax losses and capital allowances arose, subject to the agreement of the tax authorities and compliance with certain provisions of the tax legislation of the respective countries in which the companies operate. 10

Discontinued operation Following the disposal of Emirada Trading Pte Ltd in 2012, the results of Emirada Trading Pte Ltd and its direct and indirect subsidiaries (“Disposal Group”) were presented separately on the consolidated statement of profit or loss and other comprehensive income as “Discontinued operation” in 2012. The profit for the year ended 31 December 2012 from the discontinued operation was analysed as follows: 2012 $’000 Profit of the Disposal Group Gain on disposal of the Disposal Group

9,887 69,608 79,495

ABR HOLDINGS LIMITED ANNUAL REPORT 2013

72

Notes to the Financial Statements For the financial year ended 31 December 2013

10

Discontinued operation (continued) The results of the Disposal Group presented as discontinued operation for the financial year ended 31 December 2012 were as follows:

Note

Group 2012 $’000

Revenue Cost of sales

62,373 (35,311)

Gross profit Other income Selling, distribution and outlet expenses Administrative expenses Other expenses Finance costs Gain on disposal of interest

27,062 494 (11,013) (3,918) (818) (34) 69,608

Profit before tax from discontinued operation Income tax expense Profit from discontinued operation, net of tax (i)

(i)

(ii)

81,381 (1,886) 79,495

Other income Other income comprises the following: Group 2012 $’000 Interest income Other income

6 488

ABR HOLDINGS LIMITED ANNUAL REPORT 2013

73

Notes to the Financial Statements For the financial year ended 31 December 2013

10

Discontinued operation (continued) (ii)

Profit before tax from discontinued operation Profit before tax from discontinued operation was arrived at after charging/(crediting): Group 2012 $’000 Audit fees payable to: - auditor of the Company Fees for non-audit services payable to: - auditor of the Company Depreciation of property, plant and equipment Remuneration of the directors of the subsidiaries: - salaries, fees and benefits-in-kind - contribution to defined contribution plans Remuneration of key management personnel (non-directors): - salaries and related costs - contribution to defined contribution plans Remuneration of other staff: - salaries and related costs - contribution to defined contribution plans Rental expenses - operating leases (see note below) Bad debts written off (trade) Write-offs: - property, plant and equipment - inventories Gain on disposal of property, plant and equipment Foreign exchange losses, net Cost of inventories included in cost of sales Note - Included in rental expenses are contingent rents of $6,547,000.

ABR HOLDINGS LIMITED ANNUAL REPORT 2013

74

7 5 493 573 10 285 14 3,676 385 8,687 6 23 73 (116) 904 35,311

Notes to the Financial Statements For the financial year ended 31 December 2013

10

Discontinued operation (continued) (ii)

Profit before tax from discontinued operation (continued) The impact of the discontinued operation on the cash flows of the Group were as follows: Group 2012 $’000 Operating cash flows Investing cash flows Financing cash flows

8,791 (323) (1,324)

Total cash flows

7,144

The carrying amounts of the assets and liabilities of Emirada Trading Pte Ltd and its subsidiaries at the date of disposal are disclosed in note 31. (iii)

Earnings per share from discontinued operation attributable to owners of the Company 2012 Basic earnings per share (cents)

37.13

Diluted earnings per share (cents)

37.12

The basic and diluted earnings per share from discontinued operation are calculated by dividing profit from discontinued operation, net of tax, attributable to owners of the Company by the weighted average number of ordinary shares outstanding during the financial year for basic earnings per share computation and weighted average number of ordinary shares in issue adjusted for the effects of dilutive potential ordinary shares for diluted earnings per share computation respectively. These profit and share data are presented in note 11.

ABR HOLDINGS LIMITED ANNUAL REPORT 2013

75

Notes to the Financial Statements For the financial year ended 31 December 2013

11

Earnings per share The calculation of the basic and diluted earnings per share attributable to owners of the Company is based on the following data: 2013 $’000

2012 $’000

Profit for the year attributable to owners of the Company Less: Profit for the year from discontinued operation

8,451 –

77,470 (74,596)

Profit for the year from continuing operations used in the computation of basic earnings per share from continuing operations

8,451

2,874

2013

2012

Weighted average number of ordinary shares in issue for basic earnings per share (’000) Adjustment for share options (’000)

200,956 –

200,885 60

Adjusted weighted average number of ordinary shares in issue for diluted earnings per share (’000)

200,956

200,945

Basic earnings per share (cents)

4.21

1.43

Diluted earnings per share (cents)

4.21

1.43

(a)

Continuing operations

Basic earnings per share from continuing operations is calculated by dividing profit from continuing operations, net of tax, attributable to owners of the Company by the weighted average number of ordinary shares outstanding during the financial year. Diluted earnings per share is calculated by dividing profit from continuing operations, net of tax, attributable to owners of the Company by the weighted average number of ordinary shares in issue adjusted for the effects of dilutive potential ordinary shares. The Company has only one category of dilutive potential ordinary shares: share options.

ABR HOLDINGS LIMITED ANNUAL REPORT 2013

76

Notes to the Financial Statements For the financial year ended 31 December 2013

11

Earnings per share (continued) (b)

Continuing and discontinued operations 2013

2012

Basic earnings per share (cents)

4.21

38.56

Diluted earnings per share (cents)

4.21

38.55

Basic earnings per share is calculated by dividing profit for the year attributable to owners of the Company by the weighted average number of ordinary shares outstanding during the financial year. Diluted earnings per share is calculated by dividing profit for the year attributable to owners of the Company by the weighted average number of ordinary shares in issue adjusted for the effects of dilutive potential ordinary shares. The Company has only one category of dilutive potential ordinary shares: share options. For share options, the weighted average number of shares in issue had been adjusted as if all dilutive share options were exercised. The number of shares that could have been issued upon the exercise of all dilutive share options less the number of shares that could have been issued at fair value (determined as the Company’s average share price for the financial year) for the same total proceeds is added to the denominator as the number of shares issued for no consideration. No adjustment is made to the net profit.

ABR HOLDINGS LIMITED ANNUAL REPORT 2013

77

Notes to the Financial Statements For the financial year ended 31 December 2013

12

Property, plant and equipment Group 2013

Building Furniture, and fixtures Plant Freehold structural Leasehold Leasehold and and Motor land improvements property improvements fittings equipment vehicles

Restaurant supplies, crockery and cutlery

Total

$’000

$’000

$’000

$’000

$’000

$’000

$’000

$’000

$’000

Cost At 1.1.2013

443

12,724

2,300

12,160

4,815

13,549

267

795

47,053

Additions







2,564

584

1,547



273

4,968

Disposals/write-off







(692)

(296)

(721)

(14)

Attributable to deemed disposal







(208)



(67)



Reclassification

(279) (2,002) –

(275)











(441)

441





Translation

(15)

(68)



(18)

(22)

(155)

(1)



(279)

At 31.12.2013

428

12,656

2,300

13,806

5,081

13,712

693

789

49,465



5,056

1,035

8,569

2,490

9,349

237



26,736

Accumulated depreciation and impairment losses At 1.1.2013 Charge for 2013



207

46

1,230

416

880

11



2,790

Disposals/write-off







(577)

(193)

(556)

(1)



(1,327)

Attributable to deemed disposal







(49)

(12)





(61)

Reclassification











(267)

267





Translation



(24)



3

(9)

(112)

(1)



(143)

At 31.12.2013



5,239

1,081

9,176

2,704

9,282

513



27,995

428

7,417

1,219

4,630

2,377

4,430

180

789

21,470



Net carrying value At 31.12.2013

ABR HOLDINGS LIMITED ANNUAL REPORT 2013

78

Notes to the Financial Statements For the financial year ended 31 December 2013

12

Property, plant and equipment (continued) Group 2012

Freehold land

Building Furniture, and fixtures Plant structural Leasehold Leasehold and and Motor improvements property improvements fittings equipment vehicles

Restaurant supplies, crockery and cutlery

Total

$’000

$’000

$’000

$’000

$’000

$’000

$’000

$’000

$’000

454

12,772

2,300

15,766

5,427

21,409

2,106

845

61,079 2,428

Cost At 1.1.2012 Additions







643

428

682

492

183

Disposals/write-off







(2,522)

(1,008)

(2,197)

(429)

(233) (6,389)

Attributable to discontinued operation (note 31)







(1,611)



(6,188)

(1,884)



(9,683)

Translation

(11)

(48)



(116)

(32)

(157)

(18)



(382)

At 31.12.2012

443

12,724

2,300

At 1.1.2012



5,366

Charge for 2012



196

Write-back of impairment loss (note 7)



(490)













(490)

Disposals/write-off







(1,846)

(592)

(1,644)

(256)



(4,338)

Attributable to discontinued operation (note 31)







(637)



(4,424)

(894)



(5,955)

Translation



(16)



(56)

(20)

(104)

(15)



(211)

At 31.12.2012



5,056

1,035

8,569

2,490

9,349

237



26,736

443

7,668

1,265

3,591

2,325

4,200

30

795

20,317

12,160

4,815

13,549

267

795

47,053

989

9,880

2,637

14,264

46

1,228

465

1,257

1,282



34,418

120



3,312

Accumulated depreciation and impairment losses

Net carrying value At 31.12.2012

ABR HOLDINGS LIMITED ANNUAL REPORT 2013

79

Notes to the Financial Statements For the financial year ended 31 December 2013

12

Property, plant and equipment (continued) Company

Restaurant supplies, crockery Motor and vehicles cutlery

Leasehold property

Leasehold improvements

Furniture, fixtures and fittings

$’000

$’000

$’000

$’000

Cost At 1.1.2013 Additions Disposals/write-off

2,300 – –

7,008 1,536 (592)

3,817 434 (267)

8,344 696 (622)

185 – –

794 273 (277)

22,448 2,939 (1,758)

At 31.12.2013

2,300

7,952

3,984

8,418

185

790

23,629

Accumulated depreciation and impairment losses At 1.1.2013 Charge for 2013 Disposals/write-off

1,035 46 –

4,409 844 (521)

2,055 300 (167)

5,747 550 (483)

154 9 –

– – –

13,400 1,749 (1,171)

At 31.12.2013

1,081

4,732

2,188

5,814

163



13,978

1,219

3,220

1,796

2,604

22

790

9,651

Cost At 1.1.2012 Additions Disposals/write-off

2,300 – –

7,879 358 (1,229)

4,211 98 (492)

9,258 206 (1,120)

185 – –

843 183 (232)

24,676 845 (3,073)

At 31.12.2012

2,300

7,008

3,817

8,344

185

794

22,448

4,686 792 (1,069)

2,061 316 (322)

6,101 576 (930)

146 8 –

– – –

13,983 1,738 (2,321)

1,035

4,409

2,055

5,747

154



13,400

1,265

2,599

1,762

2,597

31

794

9,048

Plant and equipment

$’000

$’000

Total $’000

2013

Net carrying value At 31.12.2013

2012

Accumulated depreciation and impairment losses At 1.1.2012 Charge for 2012 Disposals/write-off At 31.12.2012

989 46 –

Net carrying value At 31.12.2012

ABR HOLDINGS LIMITED ANNUAL REPORT 2013

80

Notes to the Financial Statements For the financial year ended 31 December 2013

12

Property, plant and equipment (continued) At the end of the reporting period, the following property, plant and equipment with net carrying value set out below were pledged to certain financial institutions for banking facilities (note 27). Group

Freehold land Building and structural improvements Leasehold property Leasehold improvements

2013 $’000

2012 $’000

Company 2013 2012 $’000 $’000

428 7,417 1,219 82

443 7,668 1,265 94

– – 1,219 –

– – 1,265 –

9,146

9,470

1,219

1,265

Included in the additions of property, plant and equipment of the Group and Company are amounts of $795,000 (2012: $nil) and $667,000 (2012: $nil) respectively, representing provision for restoration costs. 13

Investment properties Group 2013 $’000

2012 $’000

Company 2013 2012 $’000 $’000

Cost At beginning/end of financial year

5,482

5,482

1,863

1,863

Accumulated depreciation and impairment losses At beginning of financial year Charge for the financial year (note 7)

1,950 120

1,831 119

676 37

638 38

At end of financial year

2,070

1,950

713

676

Net carrying value At end of financial year

3,412

3,532

1,150

1,187

ABR HOLDINGS LIMITED ANNUAL REPORT 2013

81

Notes to the Financial Statements For the financial year ended 31 December 2013

13

Investment properties (continued) At the end of the reporting period, the following investment properties with net carrying value set out below were pledged to certain financial institutions for banking facilities (note 27). Group

Investment properties

2013 $’000

2012 $’000

Company 2013 2012 $’000 $’000

1,150

1,187

1,150

2013 $’000

2012 $’000

Company 2013 2012 $’000 $’000

374

319

82

77

213

226

56

55

Group

Consolidated statement of profit or loss and other comprehensive income Rental income from investment properties Direct operating expenses arising from investment properties that generated rental income

1,187

At 31 December 2013, the fair values of the investment properties were determined based on the properties’ highest-and-best use valuations performed by accredited independent valuers using direct comparison with recent transactions of comparable properties within the vicinity and elsewhere at the end of the reporting period. The values of the investment properties of the Group and Company are $9,580,000 (2012: $7,097,000) and $4,100,000 (2012: $2,570,000) respectively. At 31 December 2012, the fair values of the investment properties were valued by accredited independent valuers on an open market and existing use basis at the end of the reporting period.

ABR HOLDINGS LIMITED ANNUAL REPORT 2013

82

Notes to the Financial Statements For the financial year ended 31 December 2013

13

Investment properties (continued) Details of investment properties are as follows:

Description

Floor area (Sqm)

Location

Tenure of Lease (Use)

Singapore A shop unit located on the first storey of a shoppingcum-residential development known as City Plaza

810 Geylang Road #01-103 City Plaza Singapore 409286

25

Freehold (Rental)

A shop unit located on the second storey of Far East Plaza

14 Scotts Road #02-22 Far East Plaza Singapore 228213

39

Freehold (Rental)

A HDB shop unit with living quarters located within Block 5 Changi Village Road

Block 5 Changi Village Road #01-2001 Singapore 500005

358

85 years from 1 July 1994 (Rental)

Unit 06-23 Jalan Kebon Kacang Raya No.2 Jakarta 10230

159

20 years and is renewable for a further term of 20 years (Rental)

Indonesia An apartment unit in Ascott Towers Indonesia

14

Intangible assets Group

Composition Goodwill arising on consolidation (note (a)) Knowhow and related business goodwill (note (b)) Trademark (note (c)) Franchise rights (note (c))

Company

2013 $’000

2012 $’000

2013 $’000

2012 $’000









77 109 434

77 158 502

– – 174

– – 208

620

737

174

208

ABR HOLDINGS LIMITED ANNUAL REPORT 2013

83

Notes to the Financial Statements For the financial year ended 31 December 2013

14

Intangible assets (continued) Group 2013 $’000 (a)

(b)

2012 $’000

Goodwill arising on consolidation At cost At beginning of financial year Disposal of a subsidiary

– –

At end of financial year



451 (451) –

Knowhow and related business goodwill At cost At beginning of financial year Impairment loss (note 7)

77 –

674 (597)

At end of financial year

77

77

In 2012, an impairment loss of $597,000 was recognised to write down the carrying amount of knowhow and related business goodwill to its recoverable amount. The impairment loss is included in administrative expenses in the consolidated statement of profit or loss and other comprehensive income. Group

(c)

2013 $’000

2012 $’000

1,603 – 20

1,663 (48) (12)

406 – –

406 – –

1,623 (1,080)

1,603 (943)

406 (232)

406 (198)

660

174

208

Franchise rights and trademark At cost At beginning of financial year Disposal of a subsidiary Translation difference Accumulated amortisation At end of financial year

ABR HOLDINGS LIMITED ANNUAL REPORT 2013

84

Company 2013 2012 $’000 $’000

543

Notes to the Financial Statements For the financial year ended 31 December 2013

14

Intangible assets (continued) (c)

Franchise rights and trademark (continued) Movements in accumulated amortisation of franchise rights during the financial year are as follows: Group

At beginning of financial year Amortisation (note 7) At end of financial year

Company 2013 2012 $’000 $’000

2013 $’000

2012 $’000

943 137

807 136

198 34

165 33

1,080

943

232

198

The amount of franchise rights amortised is included in administrative expenses in the consolidated statement of profit or loss and other comprehensive income. The Group’s and Company’s franchise rights and trademark consist of: (i)

the amount incurred by ABR (HK) Limited, a subsidiary, for exclusive franchise rights of “Swensen’s” in Singapore, Malaysia, Brunei and the People’s Republic of China. The franchise rights for Singapore, Malaysia and Brunei are for a period of 20 years from 27 November 1998 to 26 November 2018. The franchise rights for the People’s Republic of China is for a period of 20 years from 13 August 2001 to 12 August 2021;

(ii)

the amount incurred by ABR (HK) Limited, a subsidiary, for exclusive franchise rights of “Yogen Fruz” in Singapore for a period of 20 years from 28 September 2004 to 27 September 2024;

(iii)

the amount incurred by the Company, for exclusive rights of “Brasserie Flo” and “Hippopotamus” in Singapore for a period of 12 years from 6 February 2007 to 5 February 2019;

(iv)

the amount incurred by KJ Coffees Singapore Pte Ltd, a subsidiary, for exclusive franchise rights of “Gloria Jean’s Coffees” in Singapore for a period of 10 years from 30 June 2006 to 29 June 2016; and

(v)

the amount incurred by Kitchen Alchemy Pte Ltd, a subsidiary, for trade name of “Tip Top”, registered on 23 November 2005 and expiring on 23 November 2015.

ABR HOLDINGS LIMITED ANNUAL REPORT 2013

85

Notes to the Financial Statements For the financial year ended 31 December 2013

15

Investments in subsidiaries Company 2013 2012 $’000 $’000 Investment in unquoted equity shares at cost Less: Allowance for impairment in value

19,000 (13,531)

14,920 (12,500)

5,469

2,420

Movements in allowance for impairment in value during the financial year are as follows: Company 2013 2012 $’000 $’000 At beginning of financial year Allowance made

12,500 1,031

11,845 655

At end of financial year

13,531

12,500

During the financial year, management performed an impairment test for investment in certain subsidiaries as these subsidiaries have been incurring losses in the current and past financial years. An impairment loss of $1,031,000 (2012: $655,000) is recognised for the year ended 31 December 2013 to write down these subsidiaries to their recoverable amounts.

ABR HOLDINGS LIMITED ANNUAL REPORT 2013

86

Notes to the Financial Statements For the financial year ended 31 December 2013

15

Investments in subsidiaries (continued) (i)

Details of the Company’s subsidiaries at 31 December 2013 are as follows:

Name of subsidiary

Country of incorporation

Principal activities

Group’s equity holding 2013 2012 % %

Held by the Company 100

100

99.99

99.99

Singapore

100

100

Provision of services for the manufacture and production of ice cream and related products

Singapore

100

100

Europa Lounge and Restaurant Pte Ltd

Investment holding

Singapore

100

100

(e)

Hippopotamus Restaurants Pte Ltd

Dormant

Singapore

100

100

(e)

Orchard 501 Café Pub Pte Ltd

Dormant

Singapore

100

100

(a)

Europa Entertainment Pte Ltd

Investment holding

Singapore

100

100

(e)

Pleasuredome Pte Ltd

Dormant

Singapore

100

100

(a)

Lawry’s (Singapore) Ltd

Investment holding and provision of processing, supply, warehousing and distribution activities

Singapore

(b)

ABR (HK) Limited

Manage, obtain and exploit industrial and intellectual rights with respect to the ice cream, fast food and restaurant business

Hong Kong

(a)

Swensen’s of Singapore (1996) Pte Ltd

Investment holding

(a)

Food Creations Pte Ltd

(a)

ABR HOLDINGS LIMITED ANNUAL REPORT 2013

87

Notes to the Financial Statements For the financial year ended 31 December 2013

15

Investments in subsidiaries (continued)

Name of subsidiary

Principal activities

Country of incorporation

Group’s equity holding 2013 2012 % %

Held by the Company (continued) (e)

Europa Ridley’s (1992) Pte Ltd

Dormant

Singapore

100

100

(e)

Cine Art Pictures Pte Ltd

Dormant

Singapore

55

55

(b)

Team-Up Investments (HK) Limited

Investment holding

Hong Kong

100

100

(e)

Bistro Europa Pte Ltd

Dormant

Singapore

100

100

(e)

Europa Specialty Restaurants (S) Pte Ltd

Dormant

Singapore

100

100

(e)

Kads Associates Advertising Pte Ltd

Dormant

Singapore

100

100

(a)

Team-Up Overseas Investment Pte Ltd

Investment holding

Singapore

70

70

(a)

Oishi Japanese Pizza Pte Ltd

Pizza delivery business

Singapore

84.1

84.1

(a)

KJ Coffees Singapore Pte Ltd

Operator of café, coffee houses and snack bars

Singapore

100

100

(a)

E.Y.F. (S) Pte Ltd

Investment holding

Singapore

100

51

(a)

Kitchen Alchemy Pte Ltd

Retail of food

Singapore

51

51

(a)

All Best Foods Pte Ltd

Manufacturing, retailing of food products and operator of café and snack bars

Singapore

51



ABR HOLDINGS LIMITED ANNUAL REPORT 2013

88

Notes to the Financial Statements For the financial year ended 31 December 2013

15

Investments in subsidiaries (continued)

Name of subsidiary

Country of incorporation

Principal activities

Group’s equity holding 2013 2012 % %

Held by the subsidiaries Held by ABR (HK) Limited (d)

E.D. Swensen’s B.V.

Manage, obtain and exploit industrial and intellectual rights with respect to the ice cream business

The Netherlands

100

100

People’s Republic of China

100

100

Held by Europa Entertainment Pte Ltd (c)

Europa (Beijing) Food & Beverage Management Co., Ltd

Operation of restaurants and food and beverage management company

Held by Team-Up Investments (HK) Limited (d)

Win Win Food (Shenzhen) Co., Ltd

Dormant

People’s Republic of China

100

100

(c)

Xuansheng Food & Beverage Management (Chengdu) Co., Ltd

Dormant

People’s Republic of China

100

100

100

100

Held by Lawry’s (Singapore) Ltd (e)

Lawry’s PRC Investment Pte Ltd

Dormant

Singapore

(c)

Season Confectionary & Bakery Sdn. Bhd.

Manufacturing and retailing of bread, cakes and confectionery

Malaysia

80

80

(c)

Season’s Cafe Sdn. Bhd.

Operation of a chain of cafeteria

Malaysia

80

80

ABR HOLDINGS LIMITED ANNUAL REPORT 2013

89

Notes to the Financial Statements For the financial year ended 31 December 2013

15

Investments in subsidiaries (continued)

Name of subsidiary

Principal activities

Country of incorporation

Group’s equity holding 2013 2012 % %

Held by the subsidiaries (continued) Held by Season Confectionary & Bakery Sdn. Bhd. (c)

Season Confectionary & Bakery (KL) Sdn. Bhd.

Dormant

Malaysia

51

51

(c)

Swensen’s (Malaysia) Sdn. Bhd.

Ice cream manufacturing and franchising

Malaysia

100

100

(a)

SSCB Pte Ltd

Commission agents

Singapore

100

100

Held by E.Y.F. (S) Pte Ltd (b)

EY. Food (SH) Pte Ltd

Operation of restaurants and food and beverage management company

People’s Republic of China

100

100

(b)

EY. Food (BJ) Pte Ltd

Operation of restaurants and food and beverage management company

People’s Republic of China

100

100

#

Max Empire Development Limited

Dormant

Hong Kong



65

People’s Republic of China



60

Singapore

25

70

Singapore

75



Held by EY. Food (BJ) Pte Ltd *

Chongqing Ding Zhan Can Yin Guan Li You Xian Gong Si

Operation of restaurants and food and beverage management company

Held by Kitchen Alchemy Pte Ltd (a)

TT Hara Food Pte Ltd

Manufacturing and retail sale of food products

Held by All Best Foods Pte Ltd (a)

TT Hara Food Pte Ltd

ABR HOLDINGS LIMITED ANNUAL REPORT 2013

90

Manufacturing and retail sale of food products

Notes to the Financial Statements For the financial year ended 31 December 2013

15

Investments in subsidiaries (continued) (a) (b) (c) (d) (e) # *

(ii)

Audited by Baker Tilly TFW LLP. Audited by overseas independent member firms of Baker Tilly International. These subsidiaries are not significant as defined under Listing Rule 718 of the Singapore Exchange Listing Manual. Audited by other certified public accountants. These subsidiaries are not significant as defined under Listing Rule 718 of the Singapore Exchange Listing Manual. Not required to be audited in the country of incorporation. Exempted from audit in 2013 as company is dormant during the financial year. The subsidiary was disposed during the financial year. The subsidiary was deemed disposed during the financial year (note 15(iv)).

Incorporation of subsidiary During the financial year, the Company incorporated a subsidiary known as All Best Foods Pte Ltd with a registered capital of $8,000,000.

(iii)

Changes in ownership in subsidiary During the financial year, the Company acquired additional equity interest in a subsidiary, E.Y.F. (S) Pte Ltd from the non-controlling interest at a nominal consideration of $1. As a result of this acquisition, E.Y.F. (S) Pte Ltd became a wholly-owned subsidiary of the Company. The effect of the addition is as follows: Group 2013 $’000 (3,036)

Carrying amount of non-controlling interest disposed Consideration paid to a non-controlling interest, net of transaction costs Difference recognised in accumulated profits within equity

* (3,036)

* Amount less than $1,000.

ABR HOLDINGS LIMITED ANNUAL REPORT 2013

91

Notes to the Financial Statements For the financial year ended 31 December 2013

15

Investments in subsidiaries (continued) (iv)

Deemed disposal of a subsidiary Though the Group held 60% of the shareholding in Chongqing Ding Zhan Can Yin Guan Li You Xian Gong Si, it was unable to exercise control over the company. Accordingly, the Group treated this as deemed disposal during the financial year. (a)

The attributable assets and liabilities of the subsidiary deemed disposed off and the cash flows relating to the deemed disposal are set out as follows: Group 2013 $’000 214 5 397 (402)

Property, plant and equipment Inventories Trade and other receivables Trade and other payables

214

Total identifiable net assets at fair value Non-controlling interest measured at the non-controlling interest proportionate share of net identifiable assets

(87) 127 (127)

Carrying value of net assets Loss on deemed disposal of interest in a subsidiary (note 7)



Total consideration (b)

Effect on cash flows of the Group There is no effect on cash flows of the Group as it is a deemed disposal with no consideration involved.

16

Investments in associated companies Group

Unquoted equity shares at cost Less: Allowance for impairment loss Group’s share of post-acquisition losses

ABR HOLDINGS LIMITED ANNUAL REPORT 2013

92

Company 2013 2012 $’000 $’000

2013 $’000

2012 $’000

97 –

97 –

97 (97)

97 (97)

97 (97)

97 (97)

– –

– –









Notes to the Financial Statements For the financial year ended 31 December 2013

16

Investments in associated companies (continued) The following information relates to associated companies:

Name of associated company

Group’s equity holding 2013 2012 % %

Principal activities

Country of incorporation

Swensen’s Ice Cream Company (Australia) Pty Ltd

Dormant

Australia

50

50

Chinoiserie Wine Bar and Discotheque Pte Ltd

Investment holding

Singapore

30

30

Held by the Company

17

Held-to-maturity financial assets Group

Unquoted non-equity investments 18

2013 $’000

2012 $’000

1

1

Company 2013 2012 $’000 $’000 1

1

Available-for-sale financial assets Group

Unquoted equity investments, at cost

2013 $’000

2012 $’000

35



Company 2013 2012 $’000 $’000 35



ABR HOLDINGS LIMITED ANNUAL REPORT 2013

93

Notes to the Financial Statements For the financial year ended 31 December 2013

19

Due from/(to) subsidiaries (i)

Due from subsidiaries, current Company 2013 2012 $’000 $’000 Trade Less: Allowance for doubtful receivables

4,650 (4,563)

4,654 (4,470)

87 Non-trade Less: Allowance for doubtful receivables

Total (note 23)

3,864 (3,422)

184 4,377 (3,463)

442

914

529

1,098

Movements in allowance for doubtful receivables during the financial year are as follows: Company 2013 2012 $’000 $’000 Trade At beginning of financial year Allowance made Receivables written off against allowances Write-back of allowance At end of financial year Non-trade At beginning of financial year Allowance made Write-back of allowance Receivables written off against allowances At end of financial year

4,470 94 – (1)

4,617 65 (212) –

4,563

4,470

3,463 326 (193) (174)

3,126 344 (7) –

3,422

3,463

The amounts due from subsidiaries are unsecured, interest-free and repayable on demand. During the financial year, the Company provided allowance of $94,000 (2012: $65,000) and $326,000 (2012: $344,000) for trade and non-trade amounts due from subsidiaries respectively. These subsidiaries have been incurring losses in the current and past financial years.

ABR HOLDINGS LIMITED ANNUAL REPORT 2013

94

Notes to the Financial Statements For the financial year ended 31 December 2013

19

Due from/(to) subsidiaries (continued) (i)

Due from subsidiaries, current (continued) Analysis of trade receivables due from subsidiaries at the end of the reporting period: Company 2013 2012 $’000 $’000 Not past due and not impaired Past due and not impaired

39 48

33 151

87

184

Trade receivables due from subsidiaries that are past due and not impaired: Company 2013 2012 $’000 $’000 Past Past Past Past

due due due due

0 - 30 days 31 - 60 days 61 - 90 days more than 90 days

17 19 11 1

17 17 16 101

48

151

Trade receivables due from subsidiaries of approximately $4,563,000 (2012: $4,470,000) are past due and fully impaired. (ii)

Loans to subsidiaries, non-current Company 2013 2012 $’000 $’000 Loans to subsidiaries Less: Allowance for doubtful receivables

15,498 (7,859)

20,680 (10,536)

7,639

10,144

ABR HOLDINGS LIMITED ANNUAL REPORT 2013

95

Notes to the Financial Statements For the financial year ended 31 December 2013

19

Due from/(to) subsidiaries (continued) (ii)

Loans to subsidiaries, non-current (continued) Movements in allowance for doubtful receivables during the financial year are as follows: Company 2013 2012 $’000 $’000 At beginning of financial year Allowance made Receivables written off against allowances Write-back of allowance Reclassification of allowance made (note 23) At end of financial year

10,536 2,145 (2,879) (220) (1,723)

7,157 3,379 – – –

7,859

10,536

The non-current loans to subsidiaries of $7,639,000 (2012: $10,144,000) are not expected to be repaid within the next twelve months. It is not practicable to estimate the fair value of the portion of the loans that does not have fixed repayment terms. During the financial year, the Company provided an allowance of $2,145,000 (2012: $3,379,000) for impairment of non-current loans to subsidiaries. These subsidiaries have been incurring losses in the current and past financial years. (iii)

Due to subsidiaries, current Company 2013 2012 $’000 $’000 Trade Non-trade

1,437 460

681 2,534

Total (note 30)

1,897

3,215

The amounts due to subsidiaries are unsecured, interest-free and repayable on demand.

ABR HOLDINGS LIMITED ANNUAL REPORT 2013

96

Notes to the Financial Statements For the financial year ended 31 December 2013

20

Due from associated companies, current Group 2013 $’000 Non-trade Less: Allowance for doubtful receivables

2012 $’000

188 (188) –

181 (181) –

Company 2013 2012 $’000 $’000 188 (188) –

181 (181) –

Movements in allowance for doubtful receivables during the financial year are as follows: Group

Company 2013 2012 $’000 $’000

2013 $’000

2012 $’000

At beginning of financial year Allowance made (note 7)

181 7

160 21

181 7

160 21

At end of financial year

188

181

188

181

The amounts due from associated companies are unsecured, interest-free and repayable on demand. 21

Inventories Group

Ice cream and ingredients Confectionery and ingredients Food and beverages Merchandise Wines and liquor

Company 2013 2012 $’000 $’000

2013 $’000

2012 $’000

814 591 663 193 42

887 462 628 239 44

747 – 500 161 42

820 – 474 187 44

2,303

2,260

1,450

1,525

ABR HOLDINGS LIMITED ANNUAL REPORT 2013

97

Notes to the Financial Statements For the financial year ended 31 December 2013

22

Trade receivables Group

Trade receivables Less: Allowance for doubtful receivables

Company 2013 2012 $’000 $’000

2013 $’000

2012 $’000

1,344 (122)

1,436 (123)

911 –

1,036 (2)

1,222

1,313

911

1,034

Concentrations of credit risk with respect to trade receivables are limited due to the Group’s large number of customers. At the end of the reporting period, 30% (2012: 27%) and 39% (2012: 34%) of the Group’s and Company’s trade receivables were due from 5 major customers. Management believes that no additional credit risk beyond amounts provided for collection losses is inherent in the Group’s and Company’s trade receivables. Movements in allowance for doubtful receivables during the financial year are as follows: Group 2013 $’000

2012 $’000

At beginning of financial year Allowance made (note 7) Receivables written off against allowances Disposal of a subsidiary

123 6

187 –

2 –

52 –

(50) (14)

(2) –

(50) –

At end of financial year

122

123



2

(i)

(7) –

Analysis of trade receivables at the end of the reporting period: Group

Not past due and not impaired Past due and not impaired

ABR HOLDINGS LIMITED ANNUAL REPORT 2013

98

Company 2013 2012 $’000 $’000

Company 2013 2012 $’000 $’000

2013 $’000

2012 $’000

700 522

710 603

608 303

687 347

1,222

1,313

911

1,034

Notes to the Financial Statements For the financial year ended 31 December 2013

22

Trade receivables (continued) (ii)

Trade receivables that are past due and not impaired: Group

Past due 0 - 30 days Past due 31 - 60 days Past due 61 - 90 days Past due more than 90 days

23

Company 2013 2012 $’000 $’000

2013 $’000

2012 $’000

354 108 29 31

391 108 68 36

201 74 18 10

208 74 64 1

522

603

303

347

Other receivables Group

Rental and sundry deposits Prepayments Due from subsidiaries (note 19 (i)) Sundry receivables Tax recoverable Less: Allowance for doubtful sundry receivables

2013 $’000

2012 $’000

Company 2013 2012 $’000 $’000

4,394 732 – 2,722 287

4,319 946 – 1,211 257

3,575 450 529 1,890 –

3,433 446 1,098 218 –

8,135

6,733

6,444

5,195

(2,263) 5,872

(708) 6,025

(1,870) 4,574

(147) 5,048

Movements in allowance for doubtful sundry receivables during the financial year are as follows: Group 2013 $’000

2012 $’000

Company 2013 2012 $’000 $’000

At beginning of financial year Allowance made (note 7) Reclassification of allowance made (note 19 (ii)) Receivables written off against allowances Translation

708 6

84 671

147 –

84 102

1,723



1,723



At end of financial year

2,263

(166) (8)

(39) (8) 708

– – 1,870

(39) – 147

ABR HOLDINGS LIMITED ANNUAL REPORT 2013

99

Notes to the Financial Statements For the financial year ended 31 December 2013

24

Fixed deposits and cash and bank balances The fixed deposits of the Group and Company are placed with banks and mature on varying dates within 12 months from year end. The interest rates of these deposits at the end of the reporting period range from 0.25% to 3.6% (2012: 0.07% to 3.6%) per annum. Included in the Group’s and Company’s fixed deposits and cash and bank balances are amounts of $318,000 (2012: $319,000) and $217,000 (2012: $217,000) respectively, pledged to banks for banking facilities granted to the Company and certain subsidiaries.

25

Share capital Group and Company 2013 2012 Number of shares (a)

Group and Company 2013 2012 $’000 $’000

Share capital, issued and fully paid ordinary shares At beginning of financial year Shares issued upon exercise of options

200,892,734

200,862,734

43,264

43,253

103,000

30,000

35

11

At end of financial year

200,995,734

200,892,734

43,299

43,264

The holders of ordinary shares are entitled to receive dividends as and when declared by the Company. All ordinary shares carry one vote per share without restriction. The ordinary shares have no par value. (b)

Share options – Company At the end of the reporting period, details of the options to take up unissued ordinary shares of the Company under the Option Scheme were as follows:

Date of grant

Exercise period

30 June 2008

1 July 2009 to 29 June 2013

Number of unissued ordinary shares under option Balance at Aggregate Aggregate Aggregate at 1.1.13 exercised forfeited 31.12.13

103,000

(103,000)





Exercise price

$0.30

The fair value of the Company’s share options as at the date of grant is computed using the BlackScholes model, taking into account the terms and conditions upon which the options were granted.

ABR HOLDINGS LIMITED ANNUAL REPORT 2013

100

Notes to the Financial Statements For the financial year ended 31 December 2013

25

Share capital (continued) (b)

Share options – Company (continued) The inputs to the model used are shown below: Date of grant

30 June 2008

Share price Exercise price Expected volatility Expected option life Expected dividend yield Risk-free interest rate

$0.30 $0.30 28.97% 2 3.33% 1.625%

The expected volatility reflects the assumption that historical volatility is indicative of future trends, which may also not necessarily be the actual outcome. The expected option life used is based on management’s best estimate, for the effects of non-transferability, exercise restrictions and behavioural considerations. No other features of the options were incorporated into the measurement of fair value. No options to take up unissued shares of the Company or its subsidiaries were granted during the financial year. 26

Other reserves Other reserves comprise the following: Group 2013 $’000 Foreign currency translation reserve Share option reserve Capital reserve

2012 $’000

Company 2013 2012 $’000 $’000

(636) – 276

(572) 5 –

– – –

– 5 –

(360)

(567)



5

ABR HOLDINGS LIMITED ANNUAL REPORT 2013

101

Notes to the Financial Statements For the financial year ended 31 December 2013

26

Other reserves (continued) Movements in other reserves are as follows: Group 2013 $’000 Foreign currency translation reserve At beginning of financial year Net exchange differences on translation of financial statements of foreign subsidiaries Disposal of a subsidiary At end of financial year Share option reserve At beginning of financial year Recognition of share-based payments Exercise of employee share options At end of financial year Capital reserve Capitalisation of accumulated profits At end of financial year

27

2012 $’000

Company 2013 2012 $’000 $’000

(572)

(583)





(64) –

(78) 89

– –

– –

(636)

(572)





5 (1) (4)

15 (8) (2)

5 (1) (4)

15 (8) (2)



5



5

276







276







Borrowings Group 2012 $’000 Current Secured Term loan Finance lease liabilities (note 28)

139 2 141

The term loan of $nil (2012: $139,000) of a subsidiary is secured by way of legal charges over the subsidiary’s properties with net carrying value of $1,680,000 (2012: $1,779,000), pledged on its fixed deposits and joint and several corporate guarantees from its holding company (which is a wholly-owned subsidiary of the Company) and the Company.

ABR HOLDINGS LIMITED ANNUAL REPORT 2013

102

Notes to the Financial Statements For the financial year ended 31 December 2013

27

Borrowings (continued) The annual interest rates at the end of the reporting period were as follows: Group 2012 % Term loans Finance lease liabilities (note 28)

3.40 3.60

Short-term bank loan has variable interest rates, whereas finance lease liabilities have fixed interest rates. The carrying amounts of the term loan and finance lease liabilities approximate their fair values. 28

Finance lease liabilities Group 2012 $’000 Minimum lease payments payable: Within one financial year

2

Minimum lease payments Less: Finance charges allocated to future periods

2 – 2

Included in: Current liabilities (note 27)

2

ABR HOLDINGS LIMITED ANNUAL REPORT 2013

103

Notes to the Financial Statements For the financial year ended 31 December 2013

29

Deferred tax liabilities Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when the deferred income taxes relate to the same fiscal authority. The movements in the deferred tax account are as follows: Group

Company 2013 2012 $’000 $’000

2013 $’000

2012 $’000

At beginning of financial year Tax debit/(credit) to - Profit or loss (note 9) - Translation difference Disposal of a subsidiary

1,320

1,307

At end of financial year

1,274

1,320

600

650

Representing: Non-current Deferred tax liabilities

1,274

1,320

600

650

(33) (13) –

179 (11) (155)

Group

Tax effect of temporary differences on excess of capital allowances utilised over accounting depreciation Allowances/provisions Others

650 (50) – –

650 – – –

Company 2013 2012 $’000 $’000

2013 $’000

2012 $’000

1,341 (124) 57

1,387 (124) 57

724 (124) –

766 (116) –

1,274

1,320

600

650

The Group’s and Company’s provision for deferred tax has been computed based on the corporate tax rate and tax laws prevailing at the end of the reporting period. At the end of the reporting period, the Group has undistributed earnings of subsidiaries for which deferred tax liabilities have not been recognised. No liability has been recognised in respect of these differences because the Group is in a position to control the timing of the reversal of the temporary differences and it is probable that the temporary differences will not reverse in the foreseeable future.

ABR HOLDINGS LIMITED ANNUAL REPORT 2013

104

Notes to the Financial Statements For the financial year ended 31 December 2013

30

Other payables Group

Other payables Accrued operating expenses Deferred income Due to subsidiaries (note 19 (iii)) Purchase consideration for acquisition of trademark and related knowhow and goodwill

2013 $’000

2012 $’000

Company 2013 2012 $’000 $’000

3,811 5,048 181 –

4,108 4,150 150 –

2,055 3,996 154 1,897

1,025 3,295 129 3,215

256

256





9,296

8,664

8,102

7,664

Included in other payables of the Group and Company are amounts of $795,000 (2012: $nil) and $667,000 (2012: $nil) respectively, representing provision for restoration costs. Included in accrued operating expenses of the Group and Company are amounts of $566,000 (2012: $632,000) and $510,000 (2012: $567,000) respectively, representing unutilised employees’ annual leave. Purchase consideration payable is designated at fair value through profit or loss at initial recognition.

ABR HOLDINGS LIMITED ANNUAL REPORT 2013

105

Notes to the Financial Statements For the financial year ended 31 December 2013

31

Disposal of a subsidiary As referred to in note 10 to the financial statements, following the disposal of the Group’s entire interest in Emirada Trading Pte Ltd in 2012, the Group ceased to have any interest in Emirada Trading Pte Ltd and its direct and indirect subsidiaries. Effect of disposal on the financial position of the Group Group 2012 $’000 Non-current assets Property, plant and equipment (note 12) Intangible asset Held-to-maturity financial assets

3,728 499 799

Total non-current assets

5,026

Current assets Inventories Trade receivables Other receivables Fixed deposits Cash and bank balances

30,615 27,271 5,377 1,292 28,506

Total current assets

93,061

Non-current liabilities Borrowings Deferred tax liability

(220) (155)

Total non-current liabilities

(375)

Current liabilities Trade payables Other payables Borrowings Derivative financial instruments Tax payable

(17,469) (9,232) (1,339) (1,997) (4,866)

Total current liabilities

(34,903)

Foreign currency reserve Non-controlling interests

175 (3,393)

Net assets derecognised

59,591

ABR HOLDINGS LIMITED ANNUAL REPORT 2013

106

Notes to the Financial Statements For the financial year ended 31 December 2013

31

Disposal of a subsidiary (continued) Effect of disposal on the financial position of the Group (continued) Group 2012 $’000 Consideration received: Cash

100,000

Gain on disposal: Consideration received Net assets derecognised Non-controlling interests derecognised

100,000 (59,591) 29,199

Gain on disposal

69,608

The gain on disposal of the subsidiary is recorded as part of the profit for the year ended 31 December 2012 from discontinued operation in the consolidated statement of profit or loss and other comprehensive income. Group 2012 $’000 Net cash inflow arising on disposal: Cash consideration received Cash and bank balances disposed of

100,000 (28,506) 71,494

The impact of disposal of Emirada Trading Pte Ltd on the Group’s results and cash flows in 2012 is disclosed in note 10. 32

Dividends The directors have proposed a final tax exempt, one-tier dividend for 2013 of 1.5 cents per share of approximately $3,015,000. These financial statements do not reflect these dividends payable, which if approved at the Annual General Meeting of the Company, will be accounted for in the shareholders’ equity as an appropriation of accumulated profits in the financial year ending 31 December 2014.

ABR HOLDINGS LIMITED ANNUAL REPORT 2013

107

Notes to the Financial Statements For the financial year ended 31 December 2013

33

Contingent liabilities At 31 December 2013, The Company has provided corporate guarantees for the following: (i)

jointly and severally with a wholly-owned subsidiary guaranteed banking facilities granted by a bank to a subsidiary amounting to RM6 million (approximately $2.3 million) (2012: RM6 million, approximately $2.4 million);

(ii)

banking facilities granted to a subsidiary of $nil (2012: $0.8 million); and

(iii)

proportionate guarantee for banking facilities granted by a bank to a subsidiary amounting to $1 million (2012: $nil).

Management has determined that the fair value of the above financial guarantees provided by the Company is not material and is therefore not recognised in the Company’s financial statements. No material losses under the guarantees are expected as management is of the opinion that the requirements to reimburse are remote. 34

Commitments for expenditure Lease commitments The Group and Company lease warehouses and sales outlets under non-cancellable operating lease agreements. The leases have varying terms, escalation clauses and renewal rights. Certain leases also provide for contingent rentals based on certain percentages of sales. Commitments in relation to noncancellable operating leases contracted for but not recognised as liabilities, are payable as follows: Group

Not later than one financial year Later than one financial year but not later than five financial years More than five financial years

Company 2013 2012 $’000 $’000

2013 $’000

2012 $’000

13,401

11,831

12,164

10,128

14,876 916

18,652 1,062

13,761 –

15,413 –

29,193

31,545

25,925

25,541

Lease terms do not contain restrictions on the Group’s and the Company’s activities concerning dividends, additional debt or further leasing.

ABR HOLDINGS LIMITED ANNUAL REPORT 2013

108

Notes to the Financial Statements For the financial year ended 31 December 2013

35

Related party transactions In addition to information disclosed elsewhere in the financial statements, the following transactions took place between the Group and related parties during the financial year on terms agreed by the parties concerned: Group

Expenses Purchases from and professional fees to related parties 36

2013 $’000

2012 $’000

2

73

Financial instruments (a)

Categories of financial instruments Financial instruments at the end of the reporting period are as follows: Group

Loans and receivables Held-to-maturity financial assets Available-for-sale financial assets Financial liabilities at amortised cost Financial liabilities at fair value through profit or loss (b)

Company 2013 2012 $’000 $’000

2013 $’000

2012 $’000

85,994 1 35

77,784 1 –

78,763 1 35

79,295 1 –

12,684

12,397

10,190

10,093

256

256





Financial risks and management The Group’s overall risk management framework is set by the Board of Directors of the Company which sets out the Group’s overall business strategies and its risk management philosophy. The Group’s overall risk management approach seeks to minimise potential adverse effects on the financial performance of the Group.

ABR HOLDINGS LIMITED ANNUAL REPORT 2013

109

Notes to the Financial Statements For the financial year ended 31 December 2013

36

Financial instruments (continued) (b)

Financial risks and management (continued) There has been no changes to the Group’s exposure to these financial risks or the way in which it manages and measures financial risk. Market risk, credit risk and liquidity risk exposures are measured using sensitivity analysis indicated below. Market risk Foreign exchange risk The Group’s foreign currency exposure arises mainly from holding cash and short-term deposits denominated in foreign currencies for working capital purposes and purchases that are denominated in currencies other than the respective functional currencies of the Group entities. At the end of the reporting period, such foreign currency balances are mainly in United States Dollars (“USD”). It is not the Group’s policy to take speculative positions in foreign currencies. The Group’s foreign currency exposure is as follows: USD $’000 2013 Financial assets Cash and cash equivalents Financial liabilities Trade payables

464

Currency exposure – net financial assets

4,045

2012 Financial assets Cash and cash equivalents

4,024

Financial liabilities Trade payables Currency exposure – net financial assets

ABR HOLDINGS LIMITED ANNUAL REPORT 2013

110

4,509

434

3,590

Notes to the Financial Statements For the financial year ended 31 December 2013

36

Financial instruments (continued) (b)

Financial risks and management (continued) Market risk (continued) Foreign exchange risk (continued) The Company has no significant foreign currency exposure. The sensitivity analysis for foreign exchange risk is not disclosed as the effect on the profit or loss is considered not significant if USD changes against the SGD by 5% (2012: 5%) with all other variables including tax rate being held constant. Interest rate risk The Group’s exposure to changes in interest rates relates primarily to the Group’s debt obligations and fixed deposits placed with financial institutions. The Group maintains its borrowings in both variable and fixed rate instruments depending on which terms are more favourable to the Group. The Group manages its interest rate risk on its interest income by placing the surplus funds in fixed deposits of varying maturities and interest rate terms. An increase in interest rates by 50 basis points for variable rate borrowings was not expected to have a significant impact on the Group’s profit after tax. Credit risk The Group’s principal financial assets are cash and bank balances, trade and other receivables and investments. The credit risk on liquid funds is limited because the counterparties are banks with high creditratings assigned by international credit-rating agencies. The Group’s credit risk is primarily attributable to its trade receivables. The amounts presented in the statement of financial position are net of allowances for doubtful receivables. An allowance for impairment is made where there is an identified loss event which, based on previous experience, is evidence of a reduction in the recoverability of the cash flows. 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 statements of financial position; and



corporate guarantees provided by the Group and Company as set out in note 33.

See note 19 and 22 for credit risk concentration and trade receivables aging analysis and information on the Group’s and Company’s trade receivables.

ABR HOLDINGS LIMITED ANNUAL REPORT 2013

111

Notes to the Financial Statements For the financial year ended 31 December 2013

36

Financial instruments (continued) (b)

Financial risks and management (continued) 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 the 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. In managing its liquidity, management monitors and reviews the Group’s and Company’s forecasts of liquidity reserves (comprise cash and cash equivalents and available credit facilities) based on expected cash flows of the respective operating companies of the Group. The table below summarises the maturity profile of the Group’s and the Company’s non-derivative financial liabilities at the end of the reporting period based on contractual undiscounted repayment obligations.

Within 1 year

2013 $’000 Within 2 to 5 years

12,684 –

Total

Within 1 year

2012 $’000 Within 2 to 5 years

Total

– –

12,684 –

12,256 142

– –

12,256 142

256



256

256



256

10,190



10,190

10,093



10,093

3,300



3,300

3,200



3,200

Group Trade and other payables Borrowings Purchase consideration for acquisition of trademark and related knowhow and business goodwill Company Trade and other payables Financial guarantee contracts

ABR HOLDINGS LIMITED ANNUAL REPORT 2013

112

Notes to the Financial Statements For the financial year ended 31 December 2013

37

Fair value of assets and liabilities (a)

Fair value hierarchy The Group classify fair value measurement using a fair value hierarchy that reflects the significance of the inputs used in making the measurements. The fair value hierarchy have the following levels: (i)

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

(ii)

Level 2 – Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and

(iii)

Level 3 – Inputs for the asset or liability that are not based on observable market data (unobservable inputs).

The Group’s only Level 3 financial instruments is the purchase consideration for acquisition of trademark and related knowhow and goodwill of $256,000 (2012: $256,000) included in other payables (note 30). The Group and the Company does not have any other Level 1, Level 2 and Level 3 financial assets and liabilities. (b)

Fair value of financial instruments by classes that are not carried at fair value and whose carrying amounts are reasonable approximation of fair value Loans and receivables, available-for-sale financial assets, held-to-maturity financial assets, trade and other payables and borrowings at floating rate (note 27). The carrying amounts of these financial assets and liabilities are reasonable approximation of fair values, either due to their shortterm nature or that they are floating rate instruments that are re-priced to market interest rates on or near the reporting period.

(c)

Fair value of financial instruments by classes that are not carried at fair value and whose carrying amounts are not reasonable approximation of fair value The loans to subsidiaries disclosed in note 19 (ii) do not have fixed repayment terms and as such, it is not practicable to determine the fair value of the amounts and loans with sufficient reliability.

(d)

Assets not carried at fair value but for which fair value is disclosed The fair values of the investment properties are categorised within Level 3. The fair values of the Group’s investment properties were determined based on the properties’ highest-and-best valuations performed by accredited independent valuers using direct comparison with recent transactions of comparable properties within the vicinity and elsewhere at the end of the reporting period. Based on the comparison approach, direct comparison was made to recent transactions of comparable properties within the vicinity and elsewhere. Necessary adjustments have been made for differences in location, tenure, size, shape, design and layout, age and condition of buildings, dates of transactions and the prevailing market conditions amongst other factors affecting its value. Any significant changes to the adjustments made to market value for differences in location or condition would result in higher or lower fair value measurement. ABR HOLDINGS LIMITED ANNUAL REPORT 2013

113

Notes to the Financial Statements For the financial year ended 31 December 2013

38

Segment information The Group is organised into business units based on its products and services for management purposes. The reportable segments are restaurants and confectionery and others. The discontinued operation segment was related to a subsidiary company which has been disposed (note 10). Management monitors the operating results of its business units separately for making decisions about allocation of resources and assessment of performances of each segment. The segment information provided to management for the reportable segments are as follows: Restaurants and confectionery $’000

Others $’000

2013 Revenue from external customers Inter-segment revenue

98,106 –

60 2,460

Total revenue

98,106

2,520

Continuing operations $’000

Group $’000

– (2,460)

98,166 –

98,166 –

(2,460)

98,166

98,166

Eliminations $’000

9,414 (5)

9,414 (5)

9,409 (1,613)

9,409 (1,613)

Profit after tax Non-controlling interests

7,796 655

7,796 655

Net profit

8,451

8,451

Segment results Finance costs

9,954 (5)

(540) –

– –

Profit before tax Income tax expense

Assets Segment assets Total assets

107,214

17,489

(9,849)

114,854

114,854 114,854

17,312

12,441

(15,177)

14,576

14,576 3,089

Liabilities Segment liabilities Unallocated tax payable Total liabilities Capital expenditure Depreciation and amortisation Other non-cash expenses

ABR HOLDINGS LIMITED ANNUAL REPORT 2013

114

17,665 4,173 2,721 538

– 326 (139)



4,173

4,173

– –

3,047 399

3,047 399

Notes to the Financial Statements For the financial year ended 31 December 2013

38

Segment information (continued) Restaurants and confectionery $’000 2012 Revenue from external customers Inter-segment revenue Total revenue Segment results Finance costs Profit before tax Income tax expense Profit after tax Non-controlling interests Net profit Assets Segment assets Total assets Liabilities Segment liabilities Unallocated tax payable Total liabilities Capital expenditure Depreciation and amortisation Other non-cash expenses Impairment of knowhow and related business goodwill Write-back of impairment loss for property, plant and equipment Note:

Others Eliminations $’000 $’000

91,779

58

– 91,779

2,246 2,304

3,130 (24)

(856) –

– (2,246) (2,246) – –

Continuing operations $’000

Discontinued operation $’000

Group $’000

91,837

62,373

154,210

– 91,837

– 62,373

– 154,210

2,274 (24) 2,250 (1,148) 1,102

81,415 (34) 81,381 (1,886) 79,495

83,689 (58) 83,631 (3,034) 80,597

1,772 2,874

(4,899) 74,596

(3,127) 77,470

98,034

18,477

(10,677)

105,834



105,834 105,834

18,191

12,754

(17,396)

13,549



13,549 2,577 16,126

1,680





1,680

748

2,428

2,760

314



3,074

493

3,567

1,587

(72)



1,515





597



597



(490)



(490)

597



(490)

(69,728)

(68,213)

Inter-segment revenues are eliminated on consolidation. Inter-segment assets and liabilities are eliminated to arrive at the total assets and liabilities reported in the consolidated statement of financial position. Other segment included unallocated Group-level corporate services cost, income from investment holding and franchising.

ABR HOLDINGS LIMITED ANNUAL REPORT 2013

115

Notes to the Financial Statements For the financial year ended 31 December 2013

38

Segment information (continued) Segment results Performance of each segment is evaluated based on segment profit or loss which is measured in a manner that is consistent with the net profit or loss before tax in the consolidated statement of profit or loss and other comprehensive income. Sales between operating segments are on terms agreed by Group companies concerned. Segment assets The amounts provided to management with respect to total assets are measured in a manner consistent with that of the financial statements. Management monitors the assets attributable to each segment for the purposes of monitoring segment performance and for allocating resources between segments. All assets are allocated to reportable segments. Segment liabilities The amounts provided to management with respect to total liabilities are measured in a manner consistent with that of the financial statements. All liabilities are allocated to the reportable segments based on the operations of the segments other than deferred income tax liabilities and current tax payable which are classified as unallocated liabilities. Geographical information Revenue and non-current assets information based on the entity’s country of domicile are as follows: Sales to external customers 2013 2012 $’000 $’000 Singapore Malaysia Rest of Asia Discontinued operation

Non-current assets 2013 2012 $’000 $’000

83,795 13,156 1,215 –

77,611 12,251 1,975 62,373

20,974 4,250 278 –

20,038 4,204 344 –

98,166

154,210

25,502

24,586

Information about major customer The Group did not have any single customer contributing 10% or more to its revenue for the financial years 2013 and 2012.

ABR HOLDINGS LIMITED ANNUAL REPORT 2013

116

Notes to the Financial Statements For the financial year ended 31 December 2013

39

Capital management The Group manages its capital to ensure it will be able to continue as a going concern while maximising the return to stakeholders through the optimisation of the debt and equity balance. The directors of the Group review the capital structure on a periodic basis. As part of the review, the directors consider the cost of capital and other sources of funds, including borrowings from the banks and third parties. The Group monitors capital on the basis of the gearing ratio. This ratio is calculated as net debt divided by total capital. Net debt is calculated as total borrowings less cash and cash equivalents. The capital structure of the Group consists of equity attributable to owners of the Company comprising share capital, reserves and accumulated profits. The Group’s overall strategy remains unchanged from 2012. The Group and the Company are in compliance with all externally imposed capital requirements for the financial years ended 31 December 2013 and 2012.

40

Authorisation of financial statements The consolidated financial statements of the Group and the statement of financial position and statement of changes in equity of the Company for the financial year ended 31 December 2013 were authorised for issue in accordance with a resolution of the directors on 28 March 2014.

ABR HOLDINGS LIMITED ANNUAL REPORT 2013

117

Risk Management

The Group’s overall risk management framework is set by the Board of Directors of the Company which sets out the Group’s overall business strategies and its risk management philosophy. The Group’s overall risk management approach seeks to minimise potential adverse effects on the financial performance of the Group. The Group, with the assistance of the internal auditors, had embarked on an enterprise risk assessment study to identify areas of significant business risks as well as appropriate measures to control and mitigate these risks within the Group’s policies and strategies. Management had reviewed the results of the enterprise risk assessment study and considered controls to mitigate any signification risk exposure to the Group. The control effectiveness would be assessed through an internal audit of each business unit. Operational Risk Management The restaurants and confectionery businesses are subject to operating risks such as competition, shortage of labour, availability of suitable retail sites, increase in operating costs such as food cost, rental, labour and energy costs, the recurring need for renovation and upgrading of outlets, government regulations and adverse effects of economic and market conditions. It is recognised that these risks are inherent in all businesses. The Group’s strategy of operational risk management is to balance cost and risk; and stay focused in risk and incident management. Competition Risk Management The Group’s businesses operate under a highly competitive environment. Demand for the Group’s products and services is susceptible to changes in consumer preferences and economic conditions. For the restaurants and confectionery businesses, the Group recognises that it has to continually improve its products and services and develop its brand presence, and has put in place a comprehensive marketing and promotion programme. Financial Risk Management The Group’s activities expose it to a variety of financial risks, namely foreign exchange, interest rate, credit and liquidity risks. (i)

Foreign exchange risk The Group’s foreign currency risk arises mainly from the holding of cash and short-term deposits denominated in foreign currencies for working capital purposes and purchases that are denominated in currencies other than the respective functional currencies of the Group entities. The main currency that gives rise to this risk at the end of the reporting period is primarily United States Dollars. It is not the Group’s policy to take speculative positions in foreign currencies.

ABR HOLDINGS LIMITED ANNUAL REPORT 2013

118

Risk Management

Financial Risk Management (continued) (ii)

Interest rate risk The Group’s exposure to changes in interest rates relates primarily to the Group’s debt obligations and fixed deposits placed with financial institutions. The Group maintains its borrowings in both variable and fixed rate instruments depending on which terms are more favourable to the Group. The Group manages its interest rate risk on its interest income by placing the surplus funds in fixed deposits of varying maturities and interest rate terms.

(iii)

Credit risk The Group’s principal financial assets are cash and bank balances, trade and other receivables and investments. The credit risk on liquid funds is limited because the counterparties are banks with high credit-ratings assigned by international credit-rating agencies. The Group’s credit risk is primarily attributable to its trade receivables. The amounts presented in the statement of financial position are net of allowances for doubtful receivables. An allowance for impairment is made where there is an identified loss event which, based on previous experience, is evidence of a reduction in the recoverability of the cash flows. Concentrations of credit risk with respect to trade receivables are limited due to the Group’s large number of customers.

(iv)

Liquidity risk Liquidity risk is the risk that the Group will encounter difficulty in meeting financial obligations due to shortage of funds. The Group’s exposure to liquidity risk arises primarily from mismatches of the maturities of financial assets and liabilities. The Group’s objective is to maintain a balance between continuity of funding and flexibility through the use of stand-by credit facilities. In managing its liquidity, management monitors and reviews the Group’s forecasts of liquidity reserves (comprise cash and cash equivalents, and available credit facilities) based on expected cash flows of the respective operating companies of the Group.

Investment Risk Management The Group has in place processes and procedures to consider and approve all capital investment proposals. All capital investment proposals are subject to thorough review to ensure that they meet the internal investment criteria and all the relevant risk factors are considered before submitting to the Board for approval. Compliance & Legal Risk Management The Group’s operations are subject to regulations and possible changes in regulations could affect the Group’s operations. The Group has in place processes to ensure compliance with applicable laws and regulations.

ABR HOLDINGS LIMITED ANNUAL REPORT 2013

119

List of Properties As at 31 December 2013

Description

Location

Floor Area (Sqm)

Tenure of Lease (Use)

Singapore A shop unit located on the first storey of a shopping-cum-residential development known as City Plaza

810 Geylang Road #01-103 City Plaza Singapore 409286

25

Freehold (Rental)

A shop unit located on the second storey of Far East Plaza

14 Scotts Road #02-22 Far East Plaza Singapore 228213

39

Freehold (Rental)

A shop unit located on the third storey of Thomson Plaza

301 Upper Thomson Road #03-23 & 23A Thomson Plaza Singapore 574408

349

Leasehold 99 years less one day from 15 October 1976 (Food and Beverage outlet)

A HDB shop unit with living quarters located within Block 5 Changi Village Road

Block 5 Changi Village Road #01-2001 Singapore 500005

358

85 years from 1 July 1994 (Rental)

A 4-storey factory building with a basement carpark

41 Tampines Street 92 Singapore 528881

9,780

30 years from 1 July 1993, with a further term of 30 years (Factory, warehouse and office)

A double storey factory building

No.1 Jalan Dewani Satu Off Jalan Tampoi Kawasan Perindustrian Temenggong 81100 Johor Bahru

3,420

Freehold (Factory)

A 3-storey terrace shop

No.82 Jalan Serampang Taman Pelangi 86400 Johor Bahru

178

Freehold (Food and Beverage outlet)

Unit 06-23 Jalan Kebon Kacang Raya No.2 Jakarta 10230

159

20 years and is renewable for a further term of 20 years (Rental)

Malaysia

Indonesia An apartment unit in Ascott Towers Indonesia

ABR HOLDINGS LIMITED ANNUAL REPORT 2013

120

Shareholders’ Information As at 19 March 2014

Class of Shares Voting Rights No. of Issued Shares Treasury Shares

: : : :

Ordinary Shares One Vote per Share 200,995,734 Ordinary Shares NIL

Distribution of Shareholdings as at 19 March 2014

Size of Shareholdings

No. of Shareholders

%

No. of Shares

%

17 910 257 12 1,196

1.42 76.09 21.49 1.00 100.00

3,820 4,017,701 14,837,519 182,136,694 200,995,734

0.00 2.00 7.38 90.62 100.00

1 – 999 1,000 – 10,000 10,001 – 1,000,000 1,000,001 and above Total

Substantial Shareholders as at 19 March 2014

Name of Substantial Shareholders Ang Yee Lim Kechapi Pte Ltd Alby (Private) Limited Chua Tiang Choon, Keith Allan Chua Tiang Kwang Chua Tiang Chuan Kestrel Capital Pte Ltd Lim Eng Hock Notes: 1. 2. 3. 4. 5.

Direct Interest No. of Shares 86,019,3011 56,925,8582 – 300,000 300,000 – 13,403,0004 –

%

42.80 28.32 – 0.15 0.15 – 6.67 –

Indirect Interest No. of Shares – – 56,925,8583 56,925,8583 56,925,8583 56,925,8583 – 20,137,0005

%

– – 28.32 28.32 28.32 28.32 – 10.02

43,000,000 ordinary shares are held through nominees 20,000,000 ordinary shares are held through nominees Deemed to have interest in 56,925,858 ordinary shares held by Kechapi Pte Ltd 13,403,000 ordinary shares are held through nominees Deemed to have interest in 13,403,000 ordinary shares held by Kestrel Capital Pte Ltd and 6,734,000 ordinary shares held by nominees

ABR HOLDINGS LIMITED ANNUAL REPORT 2013

121

Shareholders’ Information As at 19 March 2014

Twenty Four Largest Shareholders as at 19 March 2014 No.

Name of Shareholders

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24

Ang Yee Lim Kechapi Pte Ltd HSBC (Singapore) Nominees Pte Ltd UOB Kay Hian Pte Ltd Hong Leong Finance Nominees Private Limited Maybank Nominees (Singapore) Pte Ltd Yap Boh Sim Ang Lian Seng DBS Nominees Pte Ltd Yit Teng Yuet So Lan Chin So Meng Seng United Overseas Bank Nominees Private Limited Seng Hwee Lan Oh Cher Kiat Ong Kheng Ho So Tai Lai Chua Chor Heah Allan Chua Tiang Kwang Bank Of Singapore Nominees Pte Ltd Chua Tiang Choon, Keith Leck Kim Seng Ong Kok Foo Quek Mong Hua Total

No. of shares

%

43,019,301 36,925,858 32,248,000 30,490,000 20,000,000 10,000,000 2,310,000 2,300,000 1,446,535 1,335,000 1,039,000 1,023,000 946,000 612,000 522,000 495,000 470,000 400,000 300,000 300,000 300,000 300,000 300,000 300,000 187,381,694

21.40 18.37 16.04 15.17 9.95 4.98 1.15 1.14 0.72 0.66 0.52 0.51 0.47 0.30 0.26 0.25 0.23 0.20 0.15 0.15 0.15 0.15 0.15 0.15 93.22

Based on Shareholders’ Information as at 19 March 2014, approximately 16.95% of the total number of issued shares of the Company are held by the public and therefore, Rule 723 of the Listing Manual of the Singapore Exchange Securities Trading Limited is complied with.

ABR HOLDINGS LIMITED ANNUAL REPORT 2013

122

Notice of Annual General Meeting

NOTICE IS HEREBY GIVEN that the 35th Annual General Meeting of the Company will be held at 41 Tampines Street 92, #03-00 ABR Building, Singapore 528881 on 29 April 2014 at 10.00 a.m. to transact the following businesses: AS ORDINARY BUSINESSES: 1.

To receive and adopt the Directors’ Report and Audited Financial Statements for the financial year ended 31 December 2013 together with the Independent Auditor’s Report thereon.

Resolution 1

2.

To approve the payment of a tax exempt (1-tier) Final Dividend of 1.50 cents per ordinary share for the financial year ended 31 December 2013.

Resolution 2

3.

To approve the payment of Directors’ fees of S$205,000 for the financial year ended 31 December 2013 (2012: S$175,000).

Resolution 3

4.

To re-elect Mr Chua Tiang Choon, Keith, the director retiring by rotation pursuant to Article 98 of the Company’s Articles of Association.

Resolution 4

[See Explanatory Note (i)] 5.

To re-elect Mr Leck Kim Seng, the director retiring by rotation pursuant to Article 98 of the Company’s Articles of Association.

Resolution 5

[See Explanatory Note (ii)] 6.

To re-appoint Messrs Baker Tilly TFW LLP as Auditor of the Company and to authorise the Directors to fix the Auditor’s remuneration.

Resolution 6

AS SPECIAL BUSINESSES: To consider and, if thought fit, to pass the following ordinary resolutions with or without modifications: 7.

Authority to Allot and Issue Shares

Resolution 7

“THAT pursuant to Section 161 of the Companies Act, Chapter 50, and the Listing Rules of the Singapore Exchange Securities Trading Limited (“SGX-ST”), authority be and is hereby given for the Directors of the Company at any time to such persons and upon such terms and for such purposes as the Directors may in their absolute discretion deem fit, to: (i)

issue shares in the capital of the Company whether by way of rights, bonus or otherwise;

(ii)

make or grant offers, agreements or options that might or would require shares to be issued or other transferable rights to subscribe for or purchase shares (collectively, “Instruments”) including but not limited to the creation and issue of warrants, debentures or other instruments convertible into shares;

ABR HOLDINGS LIMITED ANNUAL REPORT 2013

123

Notice of Annual General Meeting

(iii)

issue additional Instruments arising from adjustments made to the number of Instruments previously issued in the event of rights, bonus or capitalisation issues;

and (notwithstanding the authority conferred by the shareholders may have ceased to be in force) issue shares in pursuant to any Instrument made or granted by the Directors while the authority was in force, provided always that: (a)

(b)

the aggregate number of shares to be issued pursuant to this Resolution (including shares to be issued in pursuance of Instruments made or granted pursuant to this Resolution) does not exceed fifty per centum (50%) of the Company’s total number of issued shares excluding treasury shares, of which the aggregate number of shares (including shares to be issued in pursuance of Instruments made or granted pursuant to this Resolution) to be issued other than on a pro-rata basis to shareholders of the Company does not exceed twenty per centum (20%) of the total number of issued shares excluding treasury shares, and for the purpose of this Resolution, the total number of issued shares excluding treasury shares shall be the Company’s total number of issued shares excluding treasury shares at the time this Resolution is passed, after adjusting for: i.

new shares arising from the conversion or exercise of convertible securities, or

ii.

new shares arising from exercising share options or vesting of share awards outstanding or subsisting at the time this Resolution is passed, and

iii.

any subsequent bonus issue, consolidation or subdivision of the Company’s shares;

such authority shall, unless revoked or varied by the Company at a general meeting, continue in force until the conclusion of the next Annual General Meeting or the date by which the next Annual General Meeting of the Company is required by law to be held, whichever is earlier.”

[See Explanatory Note (iii)] 8.

To transact any other business which may be properly transacted at an Annual General Meeting.

ABR HOLDINGS LIMITED ANNUAL REPORT 2013

124

Notice of Annual General Meeting

NOTICE OF BOOKS CLOSURE AND DIVIDEND PAYMENT DATE NOTICE IS HEREBY GIVEN that subject to approval being obtained at the 35th Annual General Meeting to be held at 41 Tampines Street 92, #03-00 ABR Building, Singapore 528881 on 29 April 2014 at 10.00 a.m.: 1.

A tax exempt (1-tier) Final Dividend of 1.50 cents per ordinary share for the financial year ended 31 December 2013 will be paid on 28 May 2014.

2.

The Share Transfer Books and Register of Members of the Company will be closed on 9 May 2014 for the purpose of determining the shareholders’ entitlements to the proposed dividend. Duly completed and stamped transfers received by the Company’s Share Registrar, Tricor Barbinder Share Registration Services at 80 Robinson Road, #02-00, Singapore 068898, up to 5.00 p.m. on 8 May 2014 will be registered to determine shareholders’ entitlements to the proposed dividend. Shareholders (being depositors) whose securities account with The Central Depository (Pte) Limited are credited with shares as at 5.00 p.m. on 8 May 2014 will be entitled to the payment of the proposed dividend.

FOR AND ON BEHALF OF THE BOARD

Chua Tiang Choon, Keith Executive Chairman 14 April 2014

Explanatory Notes: (i)

Key information on Mr Chua Tiang Choon, Keith can be found on page 17 of the Annual Report 2013. Mr Chua is a brother of Mr Allan Chua Tiang Kwang, the Non-Executive Director and Substantial Shareholder and Mr Chua Tiang Chuan, a Substantial Shareholder.

(ii)

Key information on Mr Leck Kim Seng can be found on page 17 of the Annual Report 2013. Mr Leck is a cousin of the Managing Director and Substantial Shareholder, Mr Ang Yee Lim and uncle of the Executive Director, Mr Ang Lian Seng.

(iii)

Ordinary Resolution No. 7 proposed in item no. 7 is to empower the Directors, from the date of the passing of Ordinary Resolution No. 7 to the date of the next Annual General Meeting, to issue shares in the capital of the Company and to make or grant instruments (such as warrants or debentures) convertible into shares, and to issue shares in pursuance of such instruments, up to an amount not exceeding in total 50% of the issued shares (excluding treasury shares) in the capital of the Company, with a sublimit of 20% of the issued shares (excluding treasury shares) for issues other than on a pro-rata basis to shareholders.

ABR HOLDINGS LIMITED ANNUAL REPORT 2013

125

Notice of Annual General Meeting

Notes: a)

A member entitled to attend and vote at the Annual General Meeting of the Company shall be entitled to appoint not more than two proxies to attend and vote instead of him.

b)

In any case where the Proxy Form appoints more than one proxy, the proportion of the shareholding concerned to be represented by each proxy shall be specified in the Proxy Form.

c)

A proxy need not be a member of the Company.

d)

The Proxy Form shall be in writing under the hand of the appointor or of his attorney duly authorised in writing, or if the appointor is a corporation, either under its seal or under the hand of an officer or attorney duly authorised.

e)

The Proxy Form and the power of attorney or other authority (if any) under which it is signed or a notarially certified copy of that power or authority, must be deposited with the registered office of the Company at 41 Tampines Street 92, ABR Building, Singapore 528881, not less than forty-eight (48) hours before the time appointed for holding the Meeting.

ABR HOLDINGS LIMITED ANNUAL REPORT 2013

126

ABR HOLDINGS LIMITED

IMPORTANT

(Company Registration No.: 197803023H) (Incorporated in the Republic of Singapore)

ANNUAL GENERAL MEETING PROXY FORM

*I/We

1.

For investors who have used their CPF monies to buy ABR Holdings Limited’s shares, the Annual Report is forwarded to them at the request of their CPF Approved Nominees and is sent solely FOR INFORMATION ONLY.

2.

This Proxy Form is not valid for use by CPF investors and shall be ineffective for all intents and purposes if used or purported to be used by them.

3.

CPF investors who wish to attend the Meeting as an observer must submit their requests through their CPF Approved Nominees within the time frame specified. If they also wish to vote, they must submit their voting instructions to the CPF Approved Nominees within the time frame specified to enable them to vote on their behalf.

(Name) NRIC/Passport no.*

of being *a member/members of ABR Holdings Limited (the “Company”), hereby appoint Name

NRIC/Passport No.

Proportion of Shareholdings to be represented by proxy No. of Shares

%

Address: *and/or Name

NRIC/Passport No.

Proportion of Shareholdings to be represented by proxy No. of Shares

%

Address: or failing him/her, the Chairman of the Meeting as *my/our *proxy/proxies to vote for *me/us on *my/our behalf and, if necessary, to demand a poll, at the Annual General Meeting of the Company to be held at 41 Tampines Street 92, #03-00 ABR Building, Singapore 528881 on 29 April 2014 at 10:00 a.m. and at any adjournment thereof. *I/We direct *my/our *proxy/proxies to vote for or against the Ordinary Resolutions to be proposed at the Annual General Meeting as indicated hereunder. If no specified directions as to voting are given, the *proxy/proxies will vote or abstain from voting at *his/their discretion. No.

Ordinary Resolutions

For#

1.

Adoption of the Directors’ Report and Audited Financial Statements for the financial year ended 31 December 2013 together with the Independent Auditor’s Report thereon.

2.

Approval of payment of a tax exempt (1-tier) Final Dividend of 1.50 cents per ordinary share for the financial year ended 31 December 2013.

3.

Approval of payment of Directors’ fees of S$205,000 for the financial year ended 31 December 2013.

4.

Re-election of Mr Chua Tiang Choon, Keith as Director.

5.

Re-election of Mr Leck Kim Seng as Director.

6.

Re-appointment of Messrs Baker Tilly TFW LLP as Auditor.

7.

Authority to allot and issue shares.

Against#

* Delete accordingly # If you wish to use all your votes “For” or “Against”, please indicate with an “X” within the box provided. Otherwise, please indicate number of votes “For” or “Against” for each resolution within the box provided.

Dated this

day of

2014

Total Number of Shares in (a) CDP Register (b) Register of Members

Signature(s) of Member(s)/Common Seal IMPORTANT. Please read notes overleaf

No. of Shares

Notes: (i)

A member entitled to attend and vote at the Annual General Meeting of the Company shall be entitled to appoint not more than two proxies to attend and vote instead of him.

(ii)

In any case where the Proxy Form appoints more than one proxy, the proportion of the shareholding concerned to be represented by each proxy shall be specified in the Proxy Form.

(iii)

A proxy need not be a member of the Company.

(iv)

The Proxy Form shall be in writing under the hand of the appointor or of his attorney duly authorised in writing, or if the appointor is a corporation, either under its seal or under the hand of an officer or attorney duly authorised.

(v)

The Proxy Form and the power of attorney or other authority (if any) under which it is signed or a notarially certified copy of that power or authority, must be deposited with the registered office of the Company at 41 Tampines Street 92, ABR Building, Singapore 528881, not less than forty-eight (48) hours before the time appointed for holding the Meeting.

(vi)

A member should insert the total number of shares held. If the member has shares entered against his name in the Depository Register (as defined in Section 130A of the Companies Act, Chapter 50 of Singapore), he should insert that number of shares. If the member has shares registered in his name in the Register of Members of the Company, he should insert that number of shares. If the member has shares entered against his name in the Depository Register and shares registered in his name in the Register of Members of the Company, he should insert the aggregate number of shares. If no number is inserted, this Proxy Form will be deemed to relate to all the shares held by the member of the Company.

(vii)

The Company shall be entitled to reject the instrument appointing a proxy or proxies if it is incomplete, improperly completed or illegible or where the true intentions of the appointor are not ascertainable from the instructions of the appointor specified in the instrument appointing a proxy or proxies. In addition, in the case of members of the Company whose shares are entered against their names in the Depository Register, the Company may reject any instrument appointing a proxy or proxies lodged if such members are not shown to have shares entered against their names in the Depository Register as at forty-eight (48) hours before the time appointed for holding the Annual General Meeting as certified by The Central Depository (Pte) Limited to the Company.

(viii)

A Depositor shall not be regarded as a member of the Company entitled to attend the Annual General Meeting and to speak and vote thereat unless his name appears on the Depository Register as at forty-eight (48) hours before the time set for holding the Annual General Meeting.

AFFIX STAMP

The Company Secretary ABR HOLDINGS LIMITED 41 Tampines Street 92 ABR Building Singapore 528881

ABR Holdings Limited