Creative 2014 Annual Report Download

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1
Chairman’s Message 2
Financial Highlights and Review 4
Board of Directors and Execuve Ocers 6
Corporate Governance 7
Directors’ Report 13
Statement by Directors 16
Independent Auditor’s Report 17
Consolidated Income Statement 18
Consolidated Statement of Comprehensive Income 19
Balance Sheets 20
Consolidated Statement of Changes in Equity 21
Consolidated Statement of Cash Flows 22
Notes to the Financial Statements 23
SGX-ST Lisng Manual Requirements 62
CONTENTS

Table of contents

  • Page 1
    ... 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 in Equity Consolidated Statement of Cash Flows Notes to the Financial Statements...

  • Page 2
    ... of the annual report. During the year, despite the very challenging market conditions, we continued to push forward with ongoing research and development in key product categories that are strategic to our business - placing a strong focus on the core audio technology behind the Sound Blaster brand...

  • Page 3
    ..., the introduction of new and exciting products which I mentioned earlier, particularly the Sound Blaster Roar, is expected to provide good potential revenue growth opportunities for the Group and position us to re-grow our business. Thank you. Sim Wong Hoo Chairman & Chief Executive Officer 3

  • Page 4
    ...the uncertain and difficult market conditions which affected the sales of the Group's products and impacted sales across all three geographical regions. Us$million sales by Product category Audio, speakers and headphones Personal digital entertainment Other products 2014 103.5 8.2 4.6 116.3 2013 122...

  • Page 5
    ...was due mainly to net cash used in operating activities and payment of dividends to equity holders of the Company. The decrease in trade receivables by US$4.2 million to US$10.6 million as at 30 June 2014 was due mainly to the lower level of sales. The increase in inventories by US$3.6 million to US...

  • Page 6
    ... of Creative in 2009. He is currently a Senior Managing Director of Translink Capital, a Silicon Valley-based venture capital firm. Prior to joining Translink Capital in 2014, Mr. Lee was Chairman and Chief Executive Officer of the CyberTAN Technology, Inc., a leading networking company listed in...

  • Page 7
    ...full Board for decision-making include those involving 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...

  • Page 8
    ... 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 Officer ("CEO"), Mr Sim Wong Hoo. The Company believes that the independent non...

  • Page 9
    ...; 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 and the Creative Performance Share Plan. Mr Sim Wong Hoo, the Chairman and CEO of the Company, and the...

  • Page 10
    ...sUBsidiaries For the financial year ended 30 June 2014 corPorate governance PrinciPLe 7: ProceDures for DeveLoPinG reMuneration PoLicies PrinciPLe 8: LeveL anD Mix of reMuneration PrinciPLe 9: DiscLosure on reMuneration (cont'd) Each non-Executive Director is paid an annual Director's fee of S$60...

  • Page 11
    ... risks. Annually, the Board reviews the adequacy and effectiveness of the Company's risk management and internal control systems, including financial, operational, compliance and information technology controls. For the financial year ended 30 June 2014, the Board has received assurance from the CEO...

  • Page 12
    ... year ended 30 June 2014 corPorate governance PrinciPLe 13: internaL auDit The Company outsourced its internal audit function to Boardroom Business Solutions Pte. Ltd. The internal audit team performs risk assessment and conducts review to assess the adequacy and effectiveness of the Group...

  • Page 13
    ... directors holding office at the end of the financial year had any interests in options to subscribe for ordinary shares of the Company granted pursuant to the Creative Technology (1999) Share Option Scheme ("1999 Scheme") as set out under "Share options" on pages 13 to 14 of this report. Directors...

  • Page 14
    creative technology ltd and its sUBsidiaries For the financial year ended 30 June 2014 directors' rePort 5. (a) sHare oPtions employee share option plans (cont'd) immediate preceding financial year. The Option Committee has the discretion to decide the vesting schedule in the letter of offer. If...

  • Page 15
    ...,000 - - - No participant was granted 5% or more of the total awards available under the Plan. No performance shares were awarded to controlling shareholders of the Company or their associates. 7. auDit coMMittee At the end of the financial year, the Audit Committee comprises the following members...

  • Page 16
    ... 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 Lee Kheng Nam Director...

  • Page 17
    ... of the Act and Singapore Financial Reporting Standards so as to give a true and fair view of the state of affairs of the Group and of the Company as at 30 June 2014, and the results, changes in equity and cash flows of the Group for the financial year ended on that date. report on other Legal and...

  • Page 18
    creative technology ltd and its sUBsidiaries For the financial year ended 30 June 2014 consolidated incoMe stateMent group note 2014 Us$'000 2013 US$'000 Sales, net Cost of goods sold Gross profit Expenses: Selling, general and administrative Research and development total expenses Other income ...

  • Page 19
    creative technology ltd and its sUBsidiaries consolidated stateMent of coMPrehensive incoMe group 2014 Us$'000 2013 US$'000 For the financial year ended 30 June 2014 Net (loss) profit Other comprehensive income: Fair value gains (losses) of financial assets, available-for-sale: Fair value gains ...

  • Page 20
    creative technology ltd and its sUBsidiaries As at 30 June 2014 Balance sheets group note assets Current assets: Cash and cash equivalents Trade receivables Amounts due from subsidiaries Inventories Other current assets Non-current assets: Financial assets, available-for-sale Amounts due from ...

  • Page 21
    creative technology ltd and its sUBsidiaries consolidated stateMent of changes in eQUity Share capital Us$'000 Treasury shares Us$'000 Fair value reserve Us$'000 Other Accumulated reserves losses Us$'000 Us$'000 Non-controlling Total interests equity Us$'000 Us$'000 For the financial year ended 30...

  • Page 22
    creative technology ltd and its sUBsidiaries For the financial year ended 30 June 2014 consolidated stateMent of cash flows group Cash flows from operating activities: Net (loss) profit Adjustments for: Income tax credit Depreciation of property and equipment Employee share-based expense Share of...

  • Page 23
    ... statements. 1. GeneraL inforMation For the financial year ended 30 June 2014 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...

  • Page 24
    creative technology ltd and its sUBsidiaries For the financial year ended 30 June 2014 notes to the financial stateMents siGnificant accountinG PoLicies (cont'd) Group accounting (cont'd) (a) subsidiaries (cont'd) plus costs directly attributable to the acquisition. Identifiable assets acquired ...

  • Page 25
    ...and associated companies" for the accounting policy on investments in associated companies in the separate financial statements of the Company. 2.3 intangible assets (a) Goodwill on acquisitions Goodwill represents the excess of the cost of an acquisition over the fair value of the Group's share of...

  • Page 26
    ... non-current 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 financial assets are recognised on trade-date, the date on which the Group commits to purchase or sell the asset...

  • Page 27
    ... at fair value. Loans and receivables are subsequently carried at amortised cost using the effective interest method. Interest and dividend income on financial assets, available-for-sale are recognised separately in profit or loss. Changes in fair values of available-for-sale equity securities are...

  • Page 28
    creative technology ltd and its sUBsidiaries For the financial year ended 30 June 2014 notes to the financial stateMents siGnificant accountinG PoLicies (cont'd) Property and equipment (a) Measurement 2. 2.9 Property and equipment are initially recognised at cost and subsequently carried at cost...

  • Page 29
    .... 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 amortised cost approximate their carrying amounts. 2.13 revenue recognition Sales comprise the...

  • Page 30
    creative technology ltd and its sUBsidiaries For the financial year ended 30 June 2014 notes to the financial stateMents 2. siGnificant accountinG PoLicies (cont'd) 2.15 income taxes (cont'd) A deferred income tax asset is recognised to the extent that it is probable that future taxable profit ...

  • Page 31
    creative technology ltd and its sUBsidiaries The fair value of employee services received in exchange for the grant of the awards is recognised as a share-based compensation expense in profit or loss with a corresponding increase in the share-based compensation reserves over the vesting period. The...

  • Page 32
    ... ended 30 June 2014 notes to the financial stateMents 2. siGnificant accountinG PoLicies (cont'd) 2.20 share capital and treasury shares (cont'd) When treasury shares are subsequently cancelled, the cost of treasury shares are deducted against the share capital account if the shares are purchased...

  • Page 33
    ...exPenses BY nature Included in the cost of goods sold, selling, general and administrative and research and development expenses are the following: group 2014 Us$'000 2013 US$'000 Depreciation of property and equipment (Note 17) Employee compensation (Note 5) Advertising expenses Rental expenses on...

  • Page 34
    creative technology ltd and its sUBsidiaries For the financial year ended 30 June 2014 notes to the financial stateMents 5. eMPLoYee coMPensation group 2014 Us$'000 2013 US$'000 Wages and salaries Employer's contribution to defined contribution plans including Central Provident Fund Termination...

  • Page 35
    creative technology ltd and its sUBsidiaries 8. incoMe taxes group 2014 Us$'000 2013 US$'000 Tax (credit) expense attributable to profit (loss) is made up of: Current income tax: - Tax expense for current financial year - Withholding tax Under (over) provision in respect of previous years : - ...

  • Page 36
    creative technology ltd and its sUBsidiaries For the financial year ended 30 June 2014 notes to the financial stateMents 9. (Loss) earninGs Per sHare group 2014 Basic Us$'000 diluted Us$'000 Basic US$'000 2013 Diluted US$'000 Net (loss) profit attributable to equity holders of the Company (21,...

  • Page 37
    ...For the purpose of presenting the statement of cash flows, cash and cash equivalents as at 30 June 2013 exclude cash held in escrow account of US$4,500,000 relating to the divestment of ZiiLABS Limited, which was released to the Group in the financial year ended 30 June 2014. group 2014 Us$'000 2013...

  • Page 38
    ...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 carrying values. 13. inventories group 2014 Us$'000 2013 US$'000 2014 Us$'000 company 2013 US$'000 Raw materials Finished products...

  • Page 39
    ... year ended 30 June 2009. The other receivables from associated companies and non-related parties are unsecured, interest-free and repayable on demand. 15. financiaL assets, avaiLaBLe-for-saLe group 2014 Us$'000 2013 US$'000 2014 Us$'000 company 2013 US$'000 Beginning of financial year Fair value...

  • Page 40
    ... the Company's investment in a wholly-owned subsidiary, Creative Technology Centre Pte Ltd, following the cessation of the property rental business. In the financial year ended 30 June 2013, the Group has disposed its equity interest in a wholly-owned indirect subsidiary, ZiiLABS Limited, for a cash...

  • Page 41
    ... cashflows of the Group in the financial years ended 30 June 2014 and 2013 are as follows: group disposal carrying amount 2014 Us$'000 2013 US$'000 Identifiable assets and liabilities Cash and cash equivalents Other current assets Property and equipment (Note 17) Total assets Trade payables Accrued...

  • Page 42
    ... buildings Us$'000 Total Us$'000 group 2014 Cost Beginning of financial year Additions Disposals Reclassification End of financial year Accumulated depreciation Beginning of financial year Depreciation charge (Note 4) Disposals Reclassification End of financial year Net book value End of financial...

  • Page 43
    ... office equipment Us$'000 Total Us$'000 company 2014 Cost Beginning of financial year Additions Disposals Reclassification End of financial year Accumulated depreciation Beginning of financial year Depreciation charge Disposals Reclassification End of financial year Net book value End of financial...

  • Page 44
    ...262 - 2,262 - (b) trademarks and licences group 2014 Us$'000 2013 US$'000 2014 Us$'000 company 2013 US$'000 Cost Beginning of financial year Write-off End of financial year Accumulated amortisation Beginning of financial year Write-off End of financial year Net book value 35,139 (18,565) 16,574...

  • Page 45
    ... non-current assets group 2014 Us$'000 2013 US$'000 2014 Us$'000 company 2013 US$'000 Security deposits Others 98 - 98 98 1,729 1,827 - - - - 1,729 1,729 20. traDe PaYaBLes group 2014 Us$'000 2013 US$'000 2014 Us$'000 company 2013 US$'000 Trade payables - Non-related parties - Associated...

  • Page 46
    ... product failures (if any), historical experience, and other currently available evidence. Movements in provision for warranty are as follows: group 2014 Us$'000 2013 US$'000 2014 Us$'000 company 2013 US$'000 21. (a) Beginning of financial year Provision (written back) made Provision utilised End...

  • Page 47
    ... tax account are as follows: group 2014 Us$'000 2013 US$'000 2014 Us$'000 company 2013 US$'000 Beginning of financial year Over provision in prior financial years (Note 8) End of financial year 15,202 (4,500) 10,702 17,902 (2,700) 15,202 - - - - - - Deferred income tax liabilities (assets...

  • Page 48
    ... taxable profit is probable. The deferred tax asset of US$11,800,000 as at the financial years ended 30 June 2014 and 2013 pertains to losses brought forward from the previous financial years which can be used to offset certain future tax liabilities. Respectively, the Group and the Company have...

  • Page 49
    ... number of ordinary shares issued share capital '000 treasury shares '000 share capital Us$'000 amount treasury shares Us$'000 group and company 2014 Beginning of financial year Utilisation of treasury shares for shares issued under employee options plans and performance share plan End of financial...

  • Page 50
    creative technology ltd and its sUBsidiaries For the financial year ended 30 June 2014 notes to the financial stateMents sHare caPitaL anD treasurY sHares (cont'd) share options (cont'd) 1999 Scheme do not entitle the holders of the options, by virtue of such holdings, to any right to participate ...

  • Page 51
    ... 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 52
    ... be accounted for in shareholders' equity as an appropriation of retained earnings in the financial year ending 30 June 2015. 27. continGencies The Company has issued banker's guarantee of US$1,295,000 (2013: US$1,281,000) to its landlord as security deposit for its office building in Singapore. 52

  • Page 53
    ... group 2014 Us$'000 2013 US$'000 2014 Us$'000 company 2013 US$'000 Property and equipment Other purchase obligations 9 2,695 2,704 328 8,144 8,472 9 2,674 2,683 328 8,123 8,451 (b) operating lease commitments - where the Group is a lessee The Group leases office space from non-related parties...

  • Page 54
    ... the financial year ended 30 June 2014 notes to the financial stateMents financiaL risK ManaGeMent (cont'd) 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...

  • Page 55
    ... equipment manufacturers, distributors and key retailers. The Group believes that the concentration of credit risk in its trade receivables is substantially mitigated due to performance of ongoing credit evaluations of its customers' financial condition, use of short collection terms, use of letters...

  • Page 56
    ... End of financial year The impaired trade receivables arose mainly from sales to customers who significantly delayed their payments. (c) Liquidity risk To manage liquidity risk, the Group monitors its net operating cash flows and maintains an adequate level of cash and cash equivalents and secured...

  • Page 57
    ... of methods, such as asset values, and makes assumptions that are based on market conditions existing at each balance sheet date. These instruments are included in Level 3. The changes in Level 3 instruments are as follows: group 2014 Us$'000 2013 US$'000 group Beginning of financial year Purchase...

  • Page 58
    ... from sale/purchase of goods and services, are set out in Notes 11 and 20 respectively. (b) Key management personnel compensation Key management personnel compensation is as follows: group 2014 Us$'000 2013 US$'000 Short-term employees benefits Employer's contribution to defined contribution plans...

  • Page 59
    ... to - property and equipment Depreciation Impairment of financial assets, available-for sale segment assets Segment liabilities group 2013 sales (Loss) profit after total expenses Other income Other gains, net Share of loss of associated companies Profit before income tax Income tax credit (expense...

  • Page 60
    ... 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 consistent with that in profit or loss. Geographic revenue information for the financial years ended 30 June 2014...

  • Page 61
    ...coMPanies in tHe GrouP Name of companies Principal activities country of business/ incorporation Equity holding 2014 % significant subsidiaries held by the group Creative Labs, Inc. (a) Distribution of digitised sound and video boards, computers, related multimedia and personal digital entertainment...

  • Page 62
    ... For the financial year ended 30 June 2014 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 year: 2014 2013 Number of directors of the...

  • Page 63
    ... 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 (Private) Limited Citibank Nominees Singapore Pte Ltd United Overseas Bank Nominees (Private) Limited OCBC Nominees Singapore Private Limited Pornchada...

  • Page 64
    ... Non-Executive Director company secretary Ng Keh Long Registered Office 31 International Business Park #03-01 Creative Resource Singapore 609921 Tel: 65-6895-4000 Email: [email protected] share registrar Boardroom Corporate & Advisory Services Pte. Ltd. 50 Raffles Place #32-01 Singapore...