Creative 2012 Annual Report Download

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A WHOLE NEW GENERATiON
OF SOUND BLASTER
by
ANNUAL REPORT 2012

Table of contents

  • Page 1
    A WHOLE NEW GENERATiON OF SOUND BLASTER by ANNUAL REPORT 2012

  • Page 2
    ... else. Finally, ban the unwieldy power adapter together with its cable and plugs! So a sexy no-brainer wireless Sound Blaster that makes great sound and also a great listener that virtually doesn't require power! Sounds like magic? You be the judge. by Sim Wong Hoo CEO of Creative Technology Ltd

  • Page 3
    ... Message Financial Highlights and Review Board of Directors and Executive Officers Corporate Governance Directors' Report Statement by Directors Independent Auditor's Report Consolidated Income Statement Consolidated Statement of Comprehensive Income Balance Sheets Consolidated Statement of Changes...

  • Page 4
    ... touch-sensitive panel, the Sound BlasterAxx SBX 20 works wirelessly with any Bluetooth-enabled device, including the iPhone, iPad, Android tablet, smartphone, PC and Mac, to deliver superb audio performance for entertainment and voice calls. For Sound Blaster PC sound cards, we announced the new...

  • Page 5
    ... cost structure and our new products, particularly the Sound BlasterAxx family of products, provide good potential growth opportunities. This positions us well to take advantage of any recovery in the global economy and re-grow our business. Thank you Sim Wong Hoo Chairman & Chief Executive Officer...

  • Page 6
    ... to 21% in FY2011. Gross profit margin in FY2012 continued to be affected by the difficult market conditions, particularly for the personal digital entertainment products, and as a percentage of sales, gross profit margin in FY2012 was lower due primarily to higher write-downs of inventories. 4

  • Page 7
    ... expenses was mainly a result of cost cutting actions taken in FY2011. 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...

  • Page 8
    creative technology ltd and its sUBsidiaries For the financial year ended 30 June 2012 financial highlights and review Balance sheet The decrease in trade receivables by US$8.7 million to US$18.8 million, inventories by US$16.3 million to US$27.8 million and trade payables by US$6.8 million to US...

  • Page 9
    ...Singapore in 1981 and has been its Chairman of the Board and Chief Executive Officer since its inception. Lee KHenG naM has been a Director of Creative since 1991. Mr Lee is presently a Venture Partner of GGV Capital. At the same time he is Chairman of Advantec Pte Ltd, an investment holding company...

  • Page 10
    ... the review and approval of strategic plans, direction and policies, material acquisitions and disposals of assets, corporate or financial restructuring and share issuances, dividends and other returns to shareholders. The Articles of Association of the Company allow the Company's Directors to...

  • Page 11
    ... anD cHief executive officer The Company has the same Chairman and Chief Executive Officer ("CEO"), Mr Sim Wong Hoo. The Company believes that the independent non-Executive Directors have demonstrated high commitment in their role as Directors and have ensured that there is a good balance of power...

  • Page 12
    ... Board member's and CEO's compensation annually and determine appropriate adjustments where necessary; and to review any other long term incentive schemes which may be set up from time to time. The RC members are also members of the committees administering the Creative Employee Share Option Plans...

  • Page 13
    ...of the CEO or any other Director of the Company. Details of the Creative Employee Share Option Plans and Creative Performance Share Plan are set out in the Notes to the Financial Statements. PrinciPLe 10: accountaBiLitY The Company provides shareholders with quarterly and annual financial results of...

  • Page 14
    ...full year results within the regulatory periods. Material and price-sensitive information is publicly released via SGXNET on a timely basis. All shareholders of the Company receive the annual report of the Company and the notice of the Annual General Meeting, for which a notice is also advertised in...

  • Page 15
    ... the members together with the audited financial statements of the Group for the financial year ended 30 June 2012 and the balance sheet of the Company as at 30 June 2012. 1. Directors The directors of the Company in office at the date of this report are as follows: Sim Wong Hoo Lee Kheng Nam Ng Kai...

  • Page 16
    creative technology ltd and its sUBsidiaries For the financial year ended 30 June 2012 directors' rePort sHare oPtions 5. (a) employee share option plans (cont'd) offer. If it is not specifically stated in the letter of offer, 1/4 of the total amount of the grant vests on the first anniversary ...

  • Page 17
    .... The Committee also reviewed interested person transactions, the effectiveness of the internal audit function and the assistance given by the Company's officers to the auditor. The Committee reviewed the balance sheet of the Company and the consolidated financial statements of the Group as well...

  • Page 18
    ... the business, changes in equity and cash flows of the Group for the financial 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 19
    ..., the consolidated statement of changes in equity and the consolidated statement of cash flows of the Group for the financial year then ended, and a summary of significant accounting policies and other explanatory information. Management's Responsibility for the Financial Statements Management is...

  • Page 20
    ... stateMent group note 2012 Us$'000 2011 US$'000 Sales, net Cost of goods sold Gross profit Expenses: Selling, general and administrative Research and development total expenses Other income Other (losses) gains, net Share of losses of associated companies Interest expense loss before income tax...

  • Page 21
    creative technology ltd and its sUBsidiaries consolidated stateMent of coMPrehensive incoMe group 2012 Us$'000 2011 US$'000 For the financial year ended 30 June 2012 Net loss Other comprehensive income: Fair value (losses) gains of financial assets, available-for-sale: Fair value (losses) gains ...

  • Page 22
    creative technology ltd and its sUBsidiaries As at 30 June 2012 Balance sheets group note assets Current assets: Cash and cash equivalents Trade receivables Amounts due from subsidiaries Inventories Property and equipment held for sale Other current assets Non-current assets: Financial assets, ...

  • Page 23
    ... Us$'000 Retained earnings Us$'000 Non-controlling Total interests equity Us$'000 Us$'000 For the financial year ended 30 June 2012 note Total Us$'000 2012 Beginning of financial year Purchase of treasury shares Utilisation of treasury shares for shares issued under employee options plans and...

  • Page 24
    ... of investments in associated companies Loan from minority shareholder forgiven Currency translation losses (gains) Dividend income Interest income Interest expense Changes in working capital, net of effects from acquisition and disposal of subsidiaries Trade receivables Inventories Other assets and...

  • Page 25
    ... the financial year ended 30 June 2012 Creative Technology Ltd. (the "Company") is listed on the Singapore Exchange Securities Trading Limited ("SGX-ST") and incorporated and domiciled in Singapore. The address of its registered office is: 31 International Business Park Creative Resource Singapore...

  • Page 26
    ... using the equity 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...

  • Page 27
    ... rights and estimated useful lives of the assets, ranging from one to ten years. The amortisation period and amortisation method are reviewed at least at each balance sheet date. The effects of any revision are recognised in profit or loss when the changes arise. 2.4 Impairment of non-financial...

  • Page 28
    ...balance sheet date. (b) recognition and derecognition Regular way 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...

  • Page 29
    ...these financial assets are impaired. The carrying amount of these assets is reduced through the use of an impairment allowance account which is calculated as the difference between the carrying amount and the present value of estimated future cash flows, discounted at the original effective interest...

  • Page 30
    ...improvements 20 to 30 years 1 to 6 years 1 to 8 years Shorter of lease term or useful life The residual values, estimated useful lives and depreciation methods are reviewed and adjusted as appropriate, at each balance sheet date. The effects of any revision are recognised in profit or loss when the...

  • Page 31
    ... instruments that are not traded in an active market are determined by using valuation techniques. The Group uses a variety of methods and makes assumptions that are based on market conditions existing at each balance sheet date. The fair values of current financial assets and liabilities carried at...

  • Page 32
    creative technology ltd and its sUBsidiaries For the financial year ended 30 June 2012 notes to the financial stateMents 2. siGnificant accountinG PoLicies (cont'd) 2.15 income taxes (cont'd) A deferred income tax liability is recognised on temporary differences arising on investments in ...

  • Page 33
    ... non-market conditions, the Company revises its estimates of the number of share grants expected to vest and corresponding adjustments are made to profit or loss and share-based compensation reserves. 2.18 currency translation (a) functional and presentation currency Items included in the financial...

  • Page 34
    creative technology ltd and its sUBsidiaries For the financial year ended 30 June 2012 notes to the financial stateMents siGnificant accountinG PoLicies (cont'd) 2. 2.20 share capital and treasury shares Ordinary shares are classified as equity. Incremental costs directly attributable to the ...

  • Page 35
    ... development plans, quality issues, and current inventory levels. The markets for PC peripherals and personal digital entertainment products are subject to a rapid and unpredictable pace of product and component obsolescence and demand changes. If future demand or market conditions for the Group...

  • Page 36
    ... stateMents exPenses BY nature Included in the cost of goods sold, selling, general and administrative and research and development expenses are the following: group 2012 Us$'000 2011 US$'000 4. Amortisation of intangible assets (Note 19) Depreciation of property and equipment (Note 18) Employee...

  • Page 37
    creative technology ltd and its sUBsidiaries 7. otHer (Losses) Gains, net group 2012 Us$'000 2011 US$'000 Gain on disposal of financial assets, available-for-sale Gain on dilution of subsidiary to an associated company Gain on disposal of investments in subsidiaries Gain on disposal of ...

  • Page 38
    creative technology ltd and its sUBsidiaries For the financial year ended 30 June 2012 notes to the financial stateMents 8. incoMe taxes (cont'd) The tax expense (credit) on results differs from the amount that would arise using the Singapore standard rate of income tax as explained below: group ...

  • Page 39
    ... 11. traDe receivaBLes group 2012 Us$'000 2011 US$'000 2012 Us$'000 company 2011 US$'000 Trade receivables - Associated companies - Non-related parties 643 25,107 25,750 278 34,925 35,203 454 8,738 9,192 233 10,866 11,099 Less: Allowance for sales returns and impairment of receivables Trade...

  • Page 40
    ... values of the non-current amounts due from and due to subsidiaries and concluded that the fair values at balance sheet date approximate carrying values. 13. inventories group 2012 Us$'000 2011 US$'000 2012 Us$'000 company 2011 US$'000 Raw materials Work-in-progress Finished products 1,794 74 25...

  • Page 41
    creative technology ltd and its sUBsidiaries 14. otHer current assets group 2012 Us$'000 2011 US$'000 2012 Us$'000 company 2011 US$'000 Prepaid expenses and security deposits Prepaid non-income taxes Other receivables from associated companies Other receivables from non-related parties Loan to ...

  • Page 42
    ...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. 17. investMents in suBsiDiaries company 2012 Us$'000 2011 US$'000 Equity investments at cost Beginning of financial year...

  • Page 43
    ... on the cashflows of the Group in the financial years ended 30 June 2012 and 2011 are as follows: group disposal carrying amount 2012 Us$'000 2011 US$'000 Identifiable assets and liabilities Cash and cash equivalents Trade receivables Inventories Other current assets Property and equipment (Note 18...

  • Page 44
    ...Us$'000 Land and buildings Us$'000 Total Us$'000 group 2012 Cost Beginning of financial year Additions Disposal of subsidiary (Note 17) Disposals Reclassification to property and equipment held for sale End of financial year Accumulated depreciation Beginning of financial year Depreciation charge...

  • Page 45
    creative technology ltd and its sUBsidiaries Land and building reclassified to property and equipment held for sale as at 30 June 2012 amounting to net book value of US$4,991,000 (2011: Nil) relates to a property owned by a subsidiary in the United States, which was sold subsequent to the financial...

  • Page 46
    creative technology ltd and its sUBsidiaries For the financial year ended 30 June 2012 notes to the financial stateMents 19. intanGiBLe assets group 2012 Us$'000 2011 US$'000 2012 Us$'000 company 2011 US$'000 Goodwill arising on consolidation (Note (a)) Trademarks and licences (Note (b)) - - -...

  • Page 47
    ... expense included in profit or loss is analysed as follows: group 2012 Us$'000 2011 US$'000 Cost of goods sold Research and development expenses 210 59 269 403 59 462 20. otHer non-current assets group 2012 Us$'000 2011 US$'000 2012 Us$'000 company 2011 US$'000 Security deposits Others 112...

  • Page 48
    .... Management determines the warranty provision based on known product failures (if any), historical experience, and other currently available evidence. Movements in provision for warranty are as follows: group 2012 Us$'000 2011 US$'000 2012 Us$'000 company 2011 US$'000 Beginning of financial year...

  • Page 49
    ... position and accordingly, further information on the nature of the obligation has not been provided. 23. DeferreD incoMe tax LiaBiLities Movements in deferred income tax account are as follows: group 2012 Us$'000 2011 US$'000 2012 Us$'000 company 2011 US$'000 Beginning of financial year...

  • Page 50
    ... from the previous financial years which can be used to offset certain future tax liabilities. Respectively, the Group and the Company have unrecognised tax losses of approximately US$514,000,000 and US$203,000,000 (2011: US$466,000,000 and US$147,000,000) at the balance sheet date which can be...

  • Page 51
    ... treasurY sHares number of ordinary shares issued share capital '000 treasury shares '000 share capital Us$'000 amount treasury shares Us$'000 group and company 2012 Beginning of financial year Purchase of treasury shares Utilisation of treasury shares for shares issued under employee options plans...

  • Page 52
    creative technology ltd and its sUBsidiaries For the financial year ended 30 June 2012 notes to the financial stateMents sHare caPitaL anD treasurY sHares (cont'd) share options (cont'd) Options expire after the tenth anniversary of the date of grant, except in the case of options granted to ...

  • Page 53
    .... Capital reserves arose from changes of interests in the group companies in prior financial years. Share-based compensation reserves comprised mainly of compensation expense for share options, tax benefits relating to exercise of non qualified share options by US employees, performance share plans...

  • Page 54
    ... 25. (b) Movements: Share-based compensation reserves Beginning of financial year Amortisation of deferred share compensation (Note 5) Utilisation of shares issued under employee options plans and performance share plan Cash settlement under performance share plan End of financial year 44,697...

  • Page 55
    ...is a lessor The Group leases out office space to non-related parties under non-cancellable operating leases. The future minimum lease receivables under non-cancellable operating leases contracted for at the balance sheet date but not recognised as receivables, are as follows: group 2012 Us$'000 2011...

  • Page 56
    ... Group level. The 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...

  • Page 57
    creative technology ltd and its sUBsidiaries The Group's currency exposure is as follows: Us$ Us$'000 s$ Us$'000 eUro Us$'000 gBP Us$'000 others Us$'000 total Us$'000 group 2012 Financial assets Cash and cash equivalents Financial assets, available-for-sale Trade receivables Other receivables ...

  • Page 58
    ... economic trends, contractual terms and conditions and historical payment, returns and discount experience. The maximum exposure to credit risk for each class of financial instruments is the carrying amount of that class of financial instruments presented on the balance sheet. As at 30 June 2012...

  • Page 59
    ... 1 Level 2 Level 3 total group Financial assets, available-for-sale - Listed equity securities - Unlisted equity securities 16,497 - 16,497 - - - - 10,154 10,154 16,497 10,154 26,651 Fair values for listed equity securities are determined using quoted market prices at the balance sheet date...

  • Page 60
    ...1,861 Outstanding balances arising from sale/purchase of goods and services, are set out in Notes 11 and 21 respectively. (b) Key management personnel compensation Key management personnel compensation is as follows: group 2012 Us$'000 2011 US$'000 Short-term employees benefits Share-based expense...

  • Page 61
    ...), net Share of loss of associated companies Interest expense (Loss) profit before income tax Income tax credit (expense) Net (loss) profit other segment items Additions to - property and equipment Depreciation Amortisation Impairment of financial assets, available-for sale segment assets Segment...

  • Page 62
    creative technology ltd and its sUBsidiaries For the financial year ended 30 June 2012 notes to the financial stateMents seGMent inforMation (cont'd) The revenue reported to the CODM excludes sales between segments. The revenue from external parties reported to the CODM is measured in a manner ...

  • Page 63
    ... technology ltd and its sUBsidiaries 34. ListinG of siGnificant coMPanies in tHe GrouP Name of companies Principal activities country of business/ incorporation Equity holding 2012 % significant subsidiaries held by the group Creative Labs, Inc. (a) Distribution of digitised sound and video boards...

  • Page 64
    creative technology ltd and its sUBsidiaries For the financial year ended 30 June 2012 SGX-ST LiSTiNG MANUAL REqUiREMENTS additional requirements of sGx-st Listing Manual Directors' reMuneration The following information relates to remuneration of directors of the Company during the financial ...

  • Page 65
    ...,933,024 2.42 22.53 26.58 48.47 100.00 tWentY 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 DBS Nominees Pte Ltd Citibank Nominees Singapore Pte Ltd Raffles Nominees (Pte) Ltd United Overseas Bank Nominees...

  • Page 66
    ... Lee Gwong-Yih, Independent Non-Executive Director company secretary Ng Keh Long Registered Office 31 International Business Park Creative Resource Singapore 609921 Tel: 65-6895-4000 Email: [email protected] share registrar Boardroom Corporate & Advisory Services Pte. Ltd. 50 Raffles...

  • Page 67
    A WORLD OF DiGiTAL ENTERTAiNMENT Creative T6 Series II Inspire T6300 Creative D100 Creative D200 ZiiSound D5x Sound Blaster Tactic3D Rage Wireless Sound Blaster Recon3D Omega Wireless AURVANA Live! Creative WP-450 Creative WP-350 HS-660i2 MA930 Sound Blaster ZxR Sound Blaster Zx ...

  • Page 68
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