Creative 2009 Annual Report Download
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CONTENTS
Chairman’sMessage 2
BoardofDirectorsandExecutiveOfficers 4
CorporateGovernance 5
Directors’Report 10
StatementbyDirectors 14
IndependentAuditor’sReport 15
ConsolidatedIncomeStatement 16
BalanceSheets 17
ConsolidatedStatementofChangesinEquity 18
ConsolidatedCashFlowStatement 19
NotestotheFinancialStatements 20
SGX-STListingManualRequirements 62
AR09 pg1-64_Final.indd 1 10/2/2009 10:38:05 AM
Table of contents
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Page 1
...'s฀Message฀ Board฀of฀Directors฀and฀Executive฀Ofï¬cers฀ Corporate฀Governance฀ Directors'฀Report฀ Statement฀by฀Directors฀ Independent฀Auditor's฀Report฀ Consolidated฀Income฀Statement฀ Balance฀Sheets฀ Consolidated฀Statement฀of฀Changes฀in฀Equity... -
Page 2
...phones, TV set-top boxes, video conferencing systems, digital signs, netbooks, eBooks and other mobile communication devices. In addition, we plan to utilize the Zii Platform in a new line of our own Zii-branded products, including portable media players, speakers, audio solutions and other personal... -
Page 3
...global MP3 market, we added our X-Fi audio technology to the high end of our product line with the introduction of the Creative ZEN X-Fi early in the ï¬scal year, followed by the Creative ZEN XFi2 in September 2009. These are the only players that have award-winning X-Fi audio enhancement solutions... -
Page 4
... Chief฀Financial฀Ofï¬cer SIM WONG HOO founded Creative in Singapore in 1981 and has been its Chairman of the Board and Chief Executive Ofï¬cer since its inception. LEE KHENG NAM became a Director of Creative in 1991. Mr Lee is currently a non-executive chairman of Vertex Management (II) Pte... -
Page 5
... the review and approval of strategic plans, direction and policies, material acquisitions and disposals of assets, corporate or ï¬nancial restructuring and share issuances, dividends and other returns to shareholders. The Articles of Association of the Company allow the Company's Directors to... -
Page 6
... exercising objective judgement on corporate affairs of the Group. No individual or small group of individuals dominates the Board's decision-making. PRINCIPLE 3: CHAIRMAN AND CHIEF EXECUTIVE OFFICER The Company has the same Chairman and Chief Executive Ofï¬cer ("CEO"), Mr Sim Wong Hoo. The Company... -
Page 7
... of the committees administering the existing Employee Share Option Plans and the new Creative Performance Share Plan. Mr Sim Wong Hoo, the Chairman and CEO of the Company, and the Chairman of the RC, has received a nominal sum of S$1 as his annual remuneration for the ï¬nancial years ended 30 June... -
Page 8
... of the CEO or any other Director of the Company, Details of the existing Creative Employee Share Option Plans are set out in the Notes to the Financial Statements. PRINCIPLE 10: ACCOUNTABILITY The Company provides shareholders with quarterly and annual ï¬nancial results of the Group within the... -
Page 9
... 13: INTERNAL AUDIT The Internal Audit ("IA") team is independent of the activities that it audits. The Head of IA's primary reporting line is to the Chairman of the AC with an administrative line of reporting to the Chief Financial Ofï¬cer of the Company. The AC reviews the annual IA plans and... -
Page 10
... The directors of the Company in ofï¬ce at the date of this report are as follows: Sim Wong Hoo Lee Kheng Nam Ng Kai Wa Lee Gwong-Yih (appointed on 12 June 2009) 2. ARRANGEMENTS TO ENABLE DIRECTORS TO ACQUIRE SHARES AND DEBENTURES Neither at the end of nor at any time during the ï¬nancial year was... -
Page 11
... the average of the closing prices of the Company's shares as quoted on the Singapore Exchange Securities Trading Limited ("SGX-ST") or the National Association of Securities Dealers Automated Quotations ("NASDAQ") for ï¬ve market days preceding the date of the grant. Options expire after the tenth... -
Page 12
... system of internal accounting control of the Company and its subsidiaries. The Committee also reviewed interested person transactions and the effectiveness of the internal audit function. The Committee reviewed the balance sheet of the Company and the consolidated ï¬nancial statements of the Group... -
Page 13
CREATIVE฀TECHNOLOGY฀LTD฀AND฀ITS฀SUBSIDIARIES 7. INDEPENDENT AUDITOR The independent auditor, PricewaterhouseCoopers LLP, has expressed its willingness to accept re-appointment. On behalf of the directors Sim Wong Hoo Director 30 September 2009 Lee Kheng Nam Director 13 AR09 pg1-... -
Page 14
... business, changes in equity and cash ï¬,ows of the Group for the ï¬nancial year then ended; and 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. (b) On behalf of the directors Sim Wong Hoo Director... -
Page 15
... the Act and Singapore Financial Reporting Standards so as to give a true and fair view of the state of affairs of the Company and of the Group as at 30 June 2009 and the results, changes in equity and cash ï¬,ows of the Group for the ï¬nancial year ended on that date; and the accounting and other... -
Page 16
... CONSOLIDATED INCOME STATEMENT - For the ï¬nancial year ended 30 June 2009 Note฀ 2009฀ US$'000฀ Group 2008฀ US$'000 Sales,฀net฀ Cost฀of฀goods฀sold฀ Gross฀proï¬t฀ Expenses: Selling,฀general฀and฀administrative฀฀ Research฀and฀development฀ Restructuring... -
Page 17
...-sale฀ Other฀non-current฀receivables฀ Amounts฀due฀from฀subsidiaries฀ Investments฀in฀associated฀companies฀ Investments฀in฀subsidiaries฀ Property฀and฀equipment฀ Intangible฀assets฀ Other฀non-current฀assets Total฀assets฀ LIABILITIES฀AND฀EQUITY Current... -
Page 18
...shares฀฀ ฀ for฀shares฀issued฀under฀฀ ฀ employee฀options฀plans฀ Cancellation฀of฀treasury฀shares฀ Share฀option฀expense฀ Balance฀at฀30฀June฀2009฀ 2008 Balance฀at฀1฀July฀2007฀ Financial฀assets,฀฀ ฀ available-for-sale ฀ -฀Fair฀value... -
Page 19
...฀tax฀(credit)฀expense฀ ฀ ฀ Depreciation฀of฀property฀and฀equipment฀ ฀ ฀ Amortisation฀of฀intangible฀assets฀ ฀ ฀ Employee฀share฀option฀expense฀ ฀ ฀ Share฀of฀loss฀of฀associated฀companies฀ ฀ ฀ Loss฀(gain)฀on฀disposal฀of฀property... -
Page 20
...ce is: 31 International Business Park Creative Resource Singapore 609921 The principal activities of the Company and its subsidiaries consist of the design, manufacture and distribution of digitised sound and video boards, computers and related multimedia and personal digital entertainment products... -
Page 21
... method of accounting less impairment losses. 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... -
Page 22
...TO THE FINANCIAL STATEMENTS - For the ï¬nancial year ended 30 June 2009 2. 2.2 SIGNIFICANT ACCOUNTING POLICIES (cont'd) Group accounting (cont'd) (c) Associated companies (cont'd) In applying the equity method of accounting, the Group's share of its associated companies' post-acquisition proï¬ts... -
Page 23
... payments that are not quoted in an active market. They are presented as current assets, except for those maturing later than 12 months after the balance sheet date which are presented as non-current assets. Loans and receivables are presented as "cash and cash equivalents", "trade receivables... -
Page 24
... assets unless management intends to dispose of the assets within 12 months after the balance sheet date. (b) Recognition and derecognition Regular way purchases and sales of ï¬nancial assets are recognised on trade-date, the date on which the Group commits to purchase or sell the asset. Financial... -
Page 25
... work-in-progress, cost includes materials, direct labour and an appropriate proportion of production overheads. Net realisable value is the estimated selling price in the ordinary course of business, less applicable variable selling expenses. 2.8 Investments in subsidiaries and associated companies... -
Page 26
... TO THE FINANCIAL STATEMENTS - For the ï¬nancial year ended 30 June 2009 2. SIGNIFICANT ACCOUNTING POLICIES (cont'd) 2.10 Trade and other payables Trade and other payables are initially recognised at fair value, and subsequently carried at amortised cost using the effective interest method. 2.11... -
Page 27
...in which the Group expects, at the balance sheet date, to recover or settle the carrying amounts of its assets and liabilities. (ii) Current and deferred income taxes are recognised as income or expense in the income statement. 2.17 Operating leases Leases where substantially all risks and rewards... -
Page 28
.... (b) Share-based compensation The Group operates an equity-settled, share-based compensation plan. The fair value of the employee services received in exchange for the grant of options is recognised as an expense in the income statement with a corresponding increase in shareholders' equity over... -
Page 29
... of the balance sheet. 2.20 Segment reporting Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decisionmaker. 2.21 Share capital and treasury shares Ordinary shares are classiï¬ed as equity. Incremental costs directly attributable to... -
Page 30
... are determined using quoted market prices. Fair values for unlisted equity securities are determined by using valuation techniques. The Group uses a variety of methods, such as asset values, and makes assumptions that are based on market conditions existing at each balance sheet date. In order to... -
Page 31
...BY NATURE Group 2008฀ US$'000 Amortisation฀of฀intangible฀assets฀(Note฀19)฀ Depreciation฀of฀property฀and฀equipment฀ (Note฀18)฀ Employee฀compensation฀(Note฀5)฀ Advertising฀expenses฀ Rental฀expenses฀on฀operating฀leases฀ Research฀and฀development... -
Page 32
... NOTES TO THE FINANCIAL STATEMENTS - For the ï¬nancial year ended 30 June 2009 5. ฀ ฀ EMPLOYEE COMPENSATION Group ฀ ฀ 2009฀ US$'000฀ 2008฀ US$'000 Wages฀and฀salaries฀ Employer's฀contribution฀to฀deï¬ned฀contribution฀plans ฀ including฀Central฀Provident... -
Page 33
... (515)฀ 3,333 (1,810) 53 1,576 159 159 1,735 The tax (credit) expense on (loss) proï¬t differs from the amount that would arise using the Singapore standard rate of income tax as explained below: Group ฀ ฀ 2009฀ US$'000฀ 2008฀ US$'000 ฀ ฀ (Loss)฀proï¬t฀before฀income... -
Page 34
... NOTES TO THE FINANCIAL STATEMENTS - For the ï¬nancial year ended 30 June 2009 9. (a) EARNINGS PER SHARE Basic earnings per share Basic earnings per share is calculated by dividing the net (loss) proï¬t attributable to equity holders of the Company by the weighted average number of ordinary... -
Page 35
... on demand. There are no ï¬xed repayment terms for the non-current portions of non-trade amounts due from and due to subsidiaries. Management has assessed the fair values of the non-current amounts due from and due to subsidiaries and concluded that the fair values at balance sheet date approximate... -
Page 36
... NOTES TO THE FINANCIAL STATEMENTS - For the ï¬nancial year ended 30 June 2009 13. ฀ ฀ INVENTORIES Group฀ ฀ ฀ 2009฀ US$'000฀ 2008฀ US$'000฀ Company 2009฀ US$'000฀ 2008฀ US$'000 Raw฀materials฀ Work-in-progress฀ Finished฀products฀ ฀ 13,486฀ 273... -
Page 37
... to an associated company is unsecured and interest free with no ï¬xed repayment terms. Management has assessed the fair values of other non-current receivables and concluded that the fair values as at balance sheet date approximate carrying values. 37 AR09 pg1-64_Final.indd 37 10/2/2009 10:38... -
Page 38
CREATIVE฀TECHNOLOGY฀LTD฀AND฀ITS฀SUBSIDIARIES NOTES TO THE FINANCIAL STATEMENTS - For the ï¬nancial year ended 30 June 2009 17. ฀ ฀ INVESTMENTS IN SUBSIDIARIES Company ฀ ฀ 2009฀ US$'000฀ 2008฀ US$'000 Equity฀investments฀at฀cost฀ ฀ Beginning฀of฀ï¬nancial... -
Page 39
... year ended 30 June 2008 were: Group Disposal Carrying฀฀ amount฀ US$'000 2008 Identiï¬able฀assets฀and฀liabilities฀ Cash฀and฀cash฀equivalents฀ Trade฀receivables฀ Inventories฀ Other฀current฀assets฀฀ Property฀and฀equipment฀(Note฀18)฀ Total฀assets... -
Page 40
CREATIVE฀TECHNOLOGY฀LTD฀AND฀ITS฀SUBSIDIARIES NOTES TO THE FINANCIAL STATEMENTS - For the ï¬nancial year ended 30 June 2009 18. PROPERTY AND EQUIPMENT Freehold฀ land฀ US$'000 Leasehold฀ Leasehold฀ ฀ land฀ improvements฀ Building฀ US$'000฀฀ US$'000฀฀ US$'000... -
Page 41
... of building was recognised in the ï¬nancial year ended 30 June 2008, and the security deposit and advance rental payment for the leaseback of the property were included in the Balance Sheet as "other current assets" for the current portion and "other non-current assets" for the non-current portion... -
Page 42
CREATIVE฀TECHNOLOGY฀LTD฀AND฀ITS฀SUBSIDIARIES NOTES TO THE FINANCIAL STATEMENTS - For the ï¬nancial year ended 30 June 2009 19. ฀ ฀ INTANGIBLE ASSETS Group฀ ฀ ฀ 2009฀ US$'000฀ 2008฀ US$'000฀ Company 2009฀ US$'000฀ 2008฀ US$'000 Composition:฀ Goodwill฀... -
Page 43
CREATIVE฀TECHNOLOGY฀LTD฀AND฀ITS฀SUBSIDIARIES 20. ฀ ฀ OTHER NON-CURRENT ASSETS Group฀ ฀ ฀ 2009฀ US$'000฀ 2008฀ US$'000฀ Company 2009฀ US$'000฀ 2008฀ US$'000 ฀ Security฀deposits฀ Others฀ ฀ ฀ 30,327฀ 1,366฀ 31,693฀ ฀ 42,785฀ 3,699฀ 46,... -
Page 44
CREATIVE฀TECHNOLOGY฀LTD฀AND฀ITS฀SUBSIDIARIES NOTES TO THE FINANCIAL STATEMENTS - For the ï¬nancial year ended 30 June 2009 22. (a) ACCRUED LIABILITIES AND PROVISIONS (cont'd) Warranty The warranty period for the bulk of the products typically ranges between 1 to 3 years. The product ... -
Page 45
... income tax account are as follows: 2009฀ US$'000฀ Group฀ 2008฀ US$'000฀ Company 2009฀ US$'000฀ 2008฀ US$'000 ฀ Beginning฀of฀ï¬nancial฀year฀ Effects฀of฀change฀in฀Singapore฀tax฀rate฀(Note฀8)฀ Exchange฀difference฀ Acquisition฀of฀subsidiaries... -
Page 46
...000฀ US$'000 Group฀and฀Company 2009 Beginning฀of฀ï¬nancial฀year฀฀ Purchase฀of฀treasury฀shares฀ Utilisation฀of฀treasury฀shares฀for฀shares฀issued฀฀ ฀ under฀employee฀options฀plans฀฀ Cancellation฀of฀treasury฀shares฀ End฀of฀ï¬nancial... -
Page 47
.... The exercise price of the options is determined at the average of the closing prices of the Company's shares as quoted on the SGX-ST or the National Association of Securities Dealers Automated Quotations ("NASDAQ") for ï¬ve market days preceding the date of the grant. Options expire after... -
Page 48
CREATIVE฀TECHNOLOGY฀LTD฀AND฀ITS฀SUBSIDIARIES NOTES TO THE FINANCIAL STATEMENTS - For the ï¬nancial year ended 30 June 2009 25. (b) SHARE CAPITAL AND TREASURY SHARES (cont'd) Share options (cont'd) Movements in the number of unissued ordinary shares under option and their exercise ... -
Page 49
...ï¬nancial years. Share-based compensation reserves comprised mainly of compensation expense for share options, tax beneï¬ts relating to exercise of non qualiï¬ed share options by US employees and Chairman's gift of shares to employees. 2009฀ US$'000฀ Group฀ 2008฀ US$'000฀ Company 2009... -
Page 50
... contracted for at the balance sheet date but not recognised in the ï¬nancial statements are as follows: 2009฀ US$'000฀ Group฀ 2008฀ US$'000฀ Company 2009฀ US$'000฀ 2008฀ US$'000 ฀ Property฀and฀equipment฀ Other฀purchase฀obligations฀ ฀ ฀ 145฀ 15,118... -
Page 51
... policies for managing each of these risks at the Group level are summarised below. (a) (i) Market risk Price risk As part of its long-term business strategy, from time to time, the Group makes strategic equity investments in companies that can provide the Group with technologies or products that... -
Page 52
... FINANCIAL STATEMENTS - For the ï¬nancial year ended 30 June 2009 30. (a) (i) ฀ ฀ FINANCIAL RISK MANAGEMENT (cont'd) Market risk (cont'd) Price risk (cont'd) Equity ฀ ฀ 10%฀increase฀ US$'000฀ 10%฀decrease฀ US$'000 Group 2009 Quoted฀equity฀securities฀ 2008฀฀ Quoted... -
Page 53
... and current income tax liabilities of the Group are denominated in the following currencies: ฀ ฀ ฀ US$฀ S$฀฀ US$'000฀balance฀denominated฀in:฀ EURO฀ GBP฀ Others฀฀ Total฀ Group 2009 Cash฀and฀cash฀equivalents฀ Trade฀receivables฀ Other฀current฀assets... -
Page 54
...its customers, current economic trends, contractual terms and conditions and historical payment, returns and discount experience. The maximum exposure to credit risk for each class of ï¬nancial instruments is the carrying amount of that class of ï¬nancial instruments presented on the balance sheet... -
Page 55
... reports reviewed and used by the chief operating decisionmaker ("CODM") to make strategic decisions. The CODM considers the business from a geographic segment perspective. Geographically, management considers the performance of the business of the sale of advanced multimedia solutions for personal... -
Page 56
...net฀ Share฀of฀loss฀of฀associated฀companies฀ Interest฀expense฀ (Loss)฀proï¬t฀before฀income฀tax฀ Income฀tax฀credit฀(expense)฀ Net฀(loss)฀proï¬t฀ Other฀segment฀items฀ Additions฀to฀ ฀ -฀property฀and฀equipment฀ ฀ -฀intangible฀assets... -
Page 57
...฀of฀associated฀companies฀ Interest฀expense฀ Proï¬t฀before฀income฀tax฀ Income฀tax฀(expense)฀credit฀฀ Net฀proï¬t฀ Other฀segment฀items฀ Additions฀to฀ ฀ -฀property฀and฀equipment฀ Depreciation฀ Amortisation฀ Impairment฀of฀ï¬nancial฀assets... -
Page 58
...NOTES TO THE FINANCIAL STATEMENTS - For the ï¬nancial year ended 30 June 2009 32. ฀ ฀ SEGMENT INFORMATION (cont'd) Summary of net sales by product category: Group ฀ ฀ 2009฀ US$'000฀ 2008฀ US$'000 Personal฀Digital฀Entertainment฀ Audio฀ Speakers฀and฀Headphones฀ All... -
Page 59
... presented as "Advance payments from sale of building". The gain on the sale equalled to the difference between the net book value of the building and the balance of the "Advance payments from sale of building" will be recognised at the end of the initial ï¬ve year lease term. Under the accounting... -
Page 60
... but does not have an impact on the accounting policies and measurement bases adopted by the Group. 35. AUTHORISATION OF FINANCIAL STATEMENTS These ï¬nancial statements were authorised for issue in accordance with a resolution of the Board of Directors of CREATIVE TECHNOLOGY LTD. on 30 September... -
Page 61
...฀฀ sound฀and฀video฀boards,฀฀ computers฀and฀related฀ multimedia฀products Property฀investment฀holding฀ Provision฀of฀data฀฀ communications,฀ telecommunications,฀ wireless฀broadband฀and฀ related฀services Design,฀development฀฀฀ and฀manufacture... -
Page 62
CREATIVE฀TECHNOLOGY฀LTD฀AND฀ITS฀SUBSIDIARIES SGX-ST LISTING MANUAL REQUIREMENTS - For the ï¬nancial year ended 30 June 2009 Additional Requirements of SGX-ST Listing Manual DIRECTORS' REMUNERATION The following information relates to remuneration of directors of the Company during the ... -
Page 63
...LARGEST SHAREHOLDERS ฀ Name฀of฀shareholder฀ Number฀of฀shares฀ Percentage฀(%) ฀1฀ ฀2฀ ฀3฀ ฀4฀ ฀5฀ ฀6฀ ฀7฀ ฀8฀ ฀9฀ 10฀ 11฀ 12฀ 13฀ 14฀ 15฀ 16฀ 17฀ 18฀ 19฀ 20฀ ฀ Sim฀Wong฀Hoo฀ Citibank฀Nominees฀Singapore฀Pte฀Ltd... -
Page 64
...฀LTD฀AND฀ITS฀SUBSIDIARIES CORPORATE INFORMATION Board of Directors Sim Wong Hoo, Chairman Lee Kheng Nam, Director Ng Kai Wa, Director Lee Gwong-Yih, Director Company Secretary Ng Keh Long Registered Ofï¬ce 31 International Business Park Creative Resource Singapore 609921 Tel: 65-6895-4000...