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5
CREATIVE TECHNOLOGY LTD AND ITS SUBSIDIARIES
Expenses
Total expenses increased from US$118.8 million in FY2010 to US$128.0 million in FY2011.
Selling, general and administrative expenses were US$61.5 million compared to US$59.9 million in FY2010. Included in the selling,
general and administrative expenses in FY2011 were US$2.2 million employee severance costs pertaining to the restructuring
exercise.
Research and development expenses in FY2011 were US$66.4 million compared to US$58.8 million in FY2010. Research and
development expenses in FY2011 included restructuring charges of US$4.0 million comprising mainly employee severance
costs. Going forward, the Group will continue to invest in product research and development in areas that are strategic to the
Group, cutting back spending only in product areas that are not strategic to the Group.
Net Loss
Net loss in FY2011 was US$47.1 million or US$36.7 million before restructuring charges, compared to US$38.4 million in
FY2010.
Net loss in FY2011 included a US$25.3 million currency translation gain. Net loss in FY2010 included a US$9.7 million gain on
disposal of investments in associated companies and currency translation losses of US$8.2 million.
The Group’s income tax was a credit of US$4.8 million in FY2011 due mainly to a US$3.3 million write back of deferred tax
liability and a US$1.7 million write back of tax provisions. Deferred tax liability of US$3.0 million was previously provided for
the tax exposure of a subsidiary company. The amount was written back in FY2011 as the Group had disposed the subsidiary
company in FY2011 and is no longer liable to its tax exposure. Tax provision of US$2.0 million pertaining to open years of
assessment were nalised and written back by the Company in FY2011.
The Group’s income tax was a credit of US$8.3 million in FY2010 due to several factors. A deferred tax asset of US$11.8 million
was recognised in FY2010 due to the expiration of the Company’s pioneer status where pioneer losses brought forward from
the previous nancial years could be used to oset against certain future tax liabilities. Additionally, a deferred tax liability of
US$2.0 million was written back in FY2010 pertaining to oshore interest income remitted to Singapore which was not taxable
due to a tax concession granted by the Singapore tax authorities. These were oset by an additional provision of US$5.5 million
for deferred tax liabilities in FY2010.
Balance Sheet
The decrease in trade receivables by US$1.5 million and trade payables by US$3.5 million to US$27.5 million and US$20.6 million
respectively as at 30 June 2011 were in line with the reduction in sales.
The decrease in property and equipment by US$3.3 million to US$26.1 million in FY2011 was due mainly to the disposal of a
subsidiary company which owns a factory in China, oset by an increase in equipment of another subsidiary company pertaining
to its investments in a WiMax Wireless Broadband network in Singapore.
Other non-current assets as at 30 June 2011 decreased by US$6.6 million to US$15.6 million compared to US$22.2 million as at
30 June 2010. The decrease was mainly due to the utilisation of security deposit for the payment of the Group’s headquarters
oce building rental.