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This document has been reviewed by the Companys sponsor, CIMB Bank Berhad, Singapore Branch (Sponsor) for compliance with the Singapore Exchange Securities Trading Limited (SGX-ST) Listing Manual Section B: Rules of Catalist. The Sponsor has not independently verified the contents of this document. This document has not been examined or approved by the SGXST. The Sponsor and the SGX-ST assume no responsibility for the contents of this document, including the correctness of any of the statements or opinions made or reports contained in this document. The contact person for the Sponsor is Ms Tan Cher Ting, Director, Corporate Finance, CIMB Bank Berhad, Singapore Branch, at 50 Raffles Place, #09-01 Singapore Land Tower, Singapore 048623, Telephone +65 6337 5114.
Who We Are Our Brands At A Glance Where We Are Chairmans Message Financial Highlights Operating and Financial Review Board of Directors Group Structure & Corporate Information Corporate Governance Report Directors Report Statement by Directors Independent Auditors Report Financial Statements Statistics of Shareholdings Notice of Annual General Meeting
8 10 12 16 17 18 35 38 39 41 83 85
Who We Are
Established in 1997, Japan Foods Holding Ltd. and its subsidiaries (the Group) is one of the leading food and beverage (F&B) groups in Singapore specialising in quality and authentic Japanese cuisine. The Group operates a chain of restaurants in Singapore serving authentic Japanese fare under various brands such as Ajisen Ramen, Aoba, Botejyu and Kazokutei, as well as concept stalls under the Botejyu Yatai and Ajisen Ramen brands in selected food courts in Singapore. Focused on innovation, the Group continuously refreshes the dining experience of its customers and has developed its own F&B brands such as Aji Tei, Fruit Paradise, Osaka Town and Japanese Gourmet Town. Besides operating its own restaurants, the Group also sub-franchises the Ajisen Ramen brand to operators in Indonesia, Malaysia and Vietnam, and franchises its own Aji Tei brand to an operator in Indonesia. As at 31 March 2012, the Group, together with its sub-franchisees and franchisee, operate a total of 55 restaurants and food court outlets under various brands in Singapore, Malaysia, Indonesia and Vietnam. The Group has its own noodle production facility located at its central kitchen in Kampong Ampat, Singapore.
Our Brands
9 Franchise Brands from Japan
6 Self-Developed Brands
Our Brands
FRANCHISE BRANDS
In FY2012, the Group continued to build upon the success of its popular franchised brands and also launched three new brands, including an award winning ramen brand from Japan.
AJISEN RAMEN
The word Ajisen means a thousand tastes in Japanese. Founded in 1968, the Ajisen Ramen brand has its origins in Kumamoto, Japan. It is a strong and internationally recognised brand with presence in numerous countries across the world, including Japan, China, Hong Kong and the USA. Ajisen Ramen is the flagship brand of Japan Foods.
AJINo CHANpoN
Ajino Chanpon is Singapores first chanpon specialty restaurant. Chanpon is a unique combination of fresh vegetables, seafood and meat cooked in a thick broth using noodles that are thicker than most ramen noodles. Ajino Chanpon is the sister brand of Senno Chanpon which was established in Kumamoto, Japan in 2007.
AoBA
Established since 1947, Aoba first started out as a noodle stand in Asahikawa, Hokkaido, and gradually expanded to 15 stalls in Japan. For more than 60 years, the owner of Aoba guarded his recipes carefully. Japan Foods is the first and only company to serve Aoba ramen outside of Japan.
BotEJyu
Bote means the action of flipping over an okonomiyaki (a type of Japanese pan-fried batter cake with various ingredients) with a spatula. Jyu depicts the sound of the okonomiyaki sizzling on the teppan grill. The Botejyu brand originates from Osaka, Japan, and has a history that dates back to 1946. Singapore is the only country outside of Japan where Botejyu okonomiyaki is available.
KAzoKutEI
Established since 1947, Kazokutei is one of Osakas most wellknown udon brands with over 200 outlets in Japan. Japan Foods imports udon and dashi (soup stock) directly from Japan to maintain consistency in taste with its Japanese counterpart.
yoNEHACHI
Set up in Tokyo in 1977, Yonehachi is a traditional restaurant with more than 150 outlets all over Japan. Serving traditional Okawa rice, Yonehachi uses top-quality rice from northern Japan such as Iwate and Akita.
SElF-DEvElopED BRANDS
AJI tEI
The word Aji Tei means a restaurant of tastes in Japanese. This brand was developed to offer a wide variety of specialty dishes and desserts from different parts of Japan, ranging from Kyoto-style desserts to seafood from Hokkaido.
FRuIt pARADISE
Fruit Paradise is a Japanese-themed dessert shop offering freshly made fruit tarts such as Chocolate Banana, Orange, Blueberry and Grapefruit.
oSAKA towN
Developed by the Group in 2010, Osaka Town is a mixed-concept restaurant which houses the Botejyu and Ajino Chanpon brands under one roof, allowing customers to enjoy both authentic okonomiyaki and chanpon noodles.
toKyo wAlKER
Located on level 4 of Plaza Singapura, the Groups new Tokyo Walker concept was launched in October 2010. A Japanese food street dining concept, Tokyo Walker boasts the widest selection of Japanese noodle specialty shops at a single location, stretching over 7,000 square feet with close to 400 seats. Tokyo Walker houses 4 Japanese food and beverage brands Ajisen Ramen, Botejyu, Kazokutei and the Groups self-developed brand Fruit Paradise.
At a Glance
ouR BuSINESS
Self-Operated Restaurants - Ajisen Ramen - Aoba - Kazokutei - Botejyu - Fruit Paradise - Japanese Gourmet Town - Osaka Town - Yonehachi
Sub-Franchise & Franchise - Ajisen Ramen Malaysia Indonesia Vietnam - Aji Tei Indonesia
ouR StRAtEGy
Launch new brands Develop new concepts such as food court concept stalls Sub-franchising and franchising model Strategic joint ventures
Cost control through central kitchen, bulk purchase and economies of scale Production of noodles to control supply, quality and cost
SHAREHolDERS EquIty
S$m
25 20 15
10
0.2
5 0
5.0
FY2012
FY2008
FY2009
FY2010
FY2011
FY2012
S$
0.34
0.33 0.32 0.31 0.30 0.29 0.28 0.27 0.26 0.25 0.24 0.23 0.22 0.21 4 18 Aug 15 Sep 19 Oct 17 Nov 14 Dec 19 2012 16 Feb 13 Mar 19 Apr 16 May 21 Jun 18 Jul
Source : Shareinvestor.com
Where We Are
SINGApoRE
AJISEN RAMEN
Bugis Junction Causeway Point Shopping Centre Changi Airport Terminal 3 Changi City Point Mall City Square Clementi Mall Compass Point Shopping Centre Hougang Mall IMM Building Junction 8 Shopping Centre Jurong Point Shopping Centre Lot 1 Shoppers Mall Marina Bay Sands Shoppes Premium Food Precinct nex Shopping Mall Parkway Parade Plaza Singapura Sembawang Shopping Centre Square 2 Takashimaya Shopping Centre Tampines Mall Tiong Bahru Plaza As at 30 June 2012
AoBA
ION Orchard VivoCity
BotEJyu
Liang Court Shopping Centre Plaza Singapura
BotEJyu yAtAI
Food Junction, Bugis Junction Food Junction, Great World City Food Junction, Junction 8 Food Junction, Raffles City
FRuIt pARADISE
Raffles City Shopping Centre VivoCity Plaza Singapura
MENyA MuSASHI
SINGApoRE
JApANESE GouRMEt towN
VivoCity IMM Building
KAzoKutEI
Bugis Junction Causeway Point Junction 8 Plaza Singapura
oSAKA towN
Raffles City Shopping Centre
yoNECHACHI
Takashimaya Shopping Centre
MAlAySIA
AJISEN RAMEN
Jusco 1 Utama Shopping Centre, Selangor Sunway Pyramid, Selangor Sutera Mall, Johore Aeon2, Malacca Boulevard Commercial Centre Miri, Sarawak
INDoNESIA
AJISEN RAMEN
Living World Alam Sutera, Tangerang Kelapa Gading Mall 3, Jakarta Pluit Village, Jakarta Puri Indah Mall, Jakarta Taman Anggrek Mall, Jakarta Summarecon Mal Serpong II, Tangerang
AJI tEI
Pacific Place, Jakarta
vIEtNAM
AJISEN RAMEN
Nguyen Dinh Chiew Street, Da Kao, District 1, Ho Chi Minh City
Japan Foods Holding Ltd. Annual Report 2012
Chairmans Message
areas and this had enabled us to increase our revenue by S$5.7 million or 11%, from S$50.4 million in FY2011 to S$56.1 million in FY2012. Buoyed by the new restaurant at Changi City Point and also the full year contributions from the restaurants located at nex Shopping Mall and Clementi Mall, which were opened during FY2011, our flagship brand Ajisen Ramen, continued to be our biggest revenue contributor at S$30.7 million in FY2012, which represented a S$1.9 million increase from FY2011. The restaurants operating under our other brands also generated combined revenue of S$25.4 million in FY2012, representing a S$3.8 million increase from the preceding year. The Groups gross profit also grew by 12% to S$43.9 million in FY2012. During FY2012, the Group continued to strengthen its portfolio of restaurants by eliminating non-performing brands and expanding and diversifying more popular ones through brand extensions. One example of how the Group had extended its existing brands was the launch of Botejyu Yatai, which is an extension of the Groups franchised Botejyu brand that was adapted for the mass market food court segment. Besides Botejyu Yatai outlets located in several food courts in Singapore, we also launched an Ajisen Ramen outlet at the Marina Bay Sands Shoppes Premium Food Precinct.
Dear Shareholders
yEAR IN REvIEw
It gives me great pleasure to report on a good year for the Group. We wrapped up the financial year ended 31 March (Fy) 2012 by recording a 50% increase in net profits to S$3.7 million as compared to S$2.5 million in FY2011. The F&B industry in Singapore continues to be very competitive and challenging and FY2012 was no exception. Although there are consistently new entrants entering the scene, we note that just as many players leave the industry annually. This demonstrates the need for us to continually manage our expenses, increase our productivity and regularly review the performance of our portfolio of restaurants, as well as explore opportunities to grow our restaurant business both locally and overseas. I am proud to report that the Group had achieved a good measure of success in the above-mentioned
8 Japan Foods Holding Ltd. Annual Report 2012
Due to underperformance, the Group decided to cease the operations of some brands including Lets Sweets, Manpuku, Tokyo Deli Caf, Kura Ramen and Ajino Chanpon during FY2012. Some of the premises vacated by these restaurants have been converted for use by other brands within our portfolio, such as Kazokutei. During FY2012, we also made some headway in our overseas expansion plans with the opening of the first Ajisen Ramen restaurant in Ho Chi Minh City, Vietnam, in August 2011, as well as two more Ajisen Ramen restaurants in Indonesia in May and November last year, by our sub-franchisees. Overall, the Groups earnings per share in FY2012 was 3.22 Singapore cents (based on the weighted average number of 115,404,000 ordinary shares), compared to 2.24 Singapore cents in FY2011 (based on the weighted average number of 110,669,753 ordinary shares). As at 31 March 2012, the Groups net asset value per share was 17.73 cents, up from 15.14 cents as at 31 March 2011.
Based on the years performance, the Board is pleased to propose a final tax-exempt cash dividend of 0.7 Singapore cents per share in respect of FY2012, bringing the total dividend for FY2012 to 1.05 Singapore cents, which represents a 31% increase as compared to FY2011.
FutuRE GRowtH
Going into FY2013, the Group has already achieved several milestones, the most significant of which was the establishment of our own noodle production facility at our central kitchen facility at Kampong Ampat in April 2012. Established at a cost of about S$450,000, the main objective of the noodle production facility is to enable the Group to manage its costs better, reduce its reliance on suppliers and also to improve the freshness, quality and consistency of the noodles used at the Groups various restaurants. The facility has a production capacity of about 2.5 million units(1) of noodles. It currently produces ramen for use at the Groups Ajisen Ramen restaurants but will eventually produce various types of noodles for all our other brands. In April 2012, we also launched a new addition to our family of brands the award winning Menya Musashi, which now occupies the premises vacated by Tokyo Deli Caf at Raffles City Shopping Centre. Menya Musashi is a very popular brand in Japan where it has more than 10 outlets. We are very pleased to note that since the restaurants opening, it has drawn quite a following with long queues of diners waiting for seats at mealtimes. Reviews from the media have also been very positive and we are optimistic that the restaurant will continue to pull in the crowds. The Group has also been actively looking for opportunities to expand its presence in South-East Asia, Hong Kong and China via franchising or strategic joint ventures. To this end, the Group had on 14 June 2012 entered into an acquisition and shareholders agreement with Ajisen Investments (International) Limited, an indirect wholly-owned subsidiary of Ajisen (China) Holdings Limited, Shigemitsu Industry Co., Ltd. and ACJF Holding Limited (ACJF BvI), in relation to, inter alia, the proposed joint development of a Japanese restaurant business under the Menya Musashi brand in Hong Kong by ACJF BVI and its subsidiary. All these developments are part of our ongoing strategies to grow our top and bottom lines through
brand diversification, network expansion and consolidation, tightening of cost controls and overseas ventures. We believe that these strategies, which have been in place since our listing, remain relevant as businesses continue to grapple with rising costs and the increasingly competitive operating environment. We will also continue to constantly review and renew our brand portfolio in order to maximise the performance of the Group and achieve greater returns.
ACKNowlEDGEMENtS
I would like to take this opportunity to thank Mr Yeo Guat Kwang who has been the Lead Independent Director on our Board since 2008. The Group has benefitted greatly from his experience and guidance and we wish him all the best in his future pursuits. At the same time, I would like to welcome Mdm Constance Lee Sok Koon, who joined the Board as an Independent Director on 1 September 2011. She has over 20 years of experience dealing with the financial and corporate affairs of publiclisted companies including Lum Chang Holdings Limited and L.C. Development Ltd. On behalf of the Board, I want to express my sincere gratitude to the management and staff of Japan Foods, whose hard work has made it possible for us to achieve such good results in FY2012. I also want to express my appreciation to my fellow directors for their guidance, advice and foresight to steer the Group towards greater success. Special thanks also to our customers and business partners your loyalty and support has enabled us to achieve our goals as a company. To our shareholders, thank you for believing in us. We will continue to strive towards stronger growth and to achieve higher returns on your investment in us.
tAKAHASHI KENICHI
ExECUTIVE CHAIRMAN AND CEO
(1) Estimated based on one 8-hour shift per day, 5 working days per week and 52 weeks per year.
Financial Highlights
S$ million
Fy2008
Fy2009
Fy2010
Fy2011
Fy2012
FINANCIAl RESultS Revenue Gross profit Profit before tax Net profit CASH Flow StAtEMENt Net cash provided by operating activities Net cash used in investing activities Net cash (used in) / provided by financing activities Cash and cash equivalents at end of financial year(1) BAlANCE SHEEt Current assets Non-current assets Total assets Current liabilities Non-current liabilities Total liabilities Share capital Reserves Total shareholders equity FINANCIAl RAtIoS Gross profit margin (%) Earnings per share (Singapore cents) Return on assets (%) Return on equity (%) Net debt to equity ratio
(2)
Net Cash
Notes: (1) This excludes bank deposits pledged as security for bank facilities granted by financial institution(s) to the Group. (2) Earnings per share for FY2011 and net asset value per share as at 31 March 2011 have been adjusted to take into account the issuance of the 19,234,000 new shares on 21 December 2011 pursuant to a bonus issue.
Revenue
S$m
60 50 40 30 20 10 0
50 40 30 20 10 0
69.0%
73.9%
24.8 18.5
CAGR: 22.5%
FY2008 FY2009 FY2010 FY2011 FY2012
CAGR: 24.8%
FY2008 FY2009 FY2010 FY2011 FY2012
FY2011
FY2012
35 30 25 20 15 10 5 0
Ajisen Ramen Aji Tei Botejyu Kazokutei Manpuku Japanese Aoba Fruit Gourmet Paradise Town Sub Others Franchise 4.3 1.4 0.0 0.9 0.5 0.3 3.0 2.3 3.9 3.7 4.5 3.8 3.2 3.8 0.3 0.2 4.2 28.8 30.7
6.8
Revenue Breakdown
FY2011
Others, 8.3% Botejyu, 1.8% Kazokutei, 0.6% Aoba, 8.9% Fruit Paradise, 6.4% Manpuku, 5.9% Japanese Gourmet Town, 7.7 % Aji Tei, 2.8% Fruit Paradise, 6.8% Manpuku, 4.0% Japanese Gourmet Town, 6.6 % Sub Franchise, 0.5% Others, 12.0% Botejyu, 0.9%
Net Prot
FY2012
Sub Franchise, 0.4%
S$m
5 4 3
Kazokutei, 7.7%
Aoba, 6.7%
2 1 0
FY2008 FY2009 FY2010 FY2011 FY2012
CAGR: 44.9%
11
As at 31 March 2012, the Group had a total of 36 restaurants and 6 food court outlets in operation in Singapore. Below is a snapshot of the Groups restaurants and food court outlets as at 31 March 2012, compared to as at 31 March 2011.
No. of Restaurants As at 31 March 2011 19 2 2 No. of Restaurants As at 31 March 2012 20 2 2
Restaurants in Singapore
Ajisen Ramen
Aoba Botejyu
Closed Orchard Central restaurant in June 2011 Opened Botejyu-San restaurant in Plaza Singapura in December 2011 (converted from Kazokutei restaurant) 4 2 1 1 1 2 4 2
Closed Raffles City restaurant in March 2012 Closed Bugis Junction restaurant in August 2011 Closed Junction 8 restaurant in July 2011 1
lets Sweets
Ajino Chanpon
Closed Plaza Singapura restaurant in November 2011 (space taken over by Kazokutei)
Kura Ramen
Closed Plaza Singapura restaurant in March 2012
1 1 1
1 4
yonehachi Kazokutei
Opened Bugis Junction restaurant in September 2011 (converted from Lets Sweets ) Opened Junction 8 restaurant in July 2011 (converted from Lets Sweets) Opened Causeway Point restaurant in October 2011 No. of outlets As at 31 March 2011 No. of outlets As at 31 March 2012 1
Ajisen Ramen
Opened at Marina Bay Sands Shoppes Premium Food Precinct in February 2012
Botejyu yatai
Opened at Food Junction, Bugis Junction in September 2011 Opened at Food Junction, United Square in September 2011 Opened at Food Junction, Great World City in November 2011 Opened at Food Junction, Junction 8 in November 2011 Opened at Food Junction, Raffles City in December 2011
totAl
38
42
13
Gross profit
The Groups gross profit increased by S$4.8 million or 12.3%, from S$39.1 million in FY2011 to $43.9 million in FY2012, in line with the increase in the Groups revenue. The Groups overall gross profit margin increased from 77.5% in FY2011 to 78.3% in FY2012, primarily due to better control of raw material costs, elimination of non-performing brands and the appreciation of the Singapore dollar against the Japanese yen and the Hong Kong dollar.
Expenses
The Group recorded higher expenses in FY2012 as compared to FY2011, in tandem with the expansion of its network of restaurants. The table below gives an overview of the various expenses incurred by the Group in FY2012 as compared to FY2011.
Increase in the number of restaurants and food court outlets operating during the year Rise in rental rates and tightening of labour supply, which resulted in an increase in manpower and related expenses, rental, depreciation and utility expenses
Administrative expenses Other operating expenses and other gains / (losses) net
(1.3 million)
(51.4)
No change Absence
of the one-time impairment charge on plant and equipment of S$1.6 million for the Groups Manpuku food court in FY2011 Offset by increase in royalty fees paid and plant and equipment written off upon closure and conversion of certain outlets in FY2012 due to lower balance in FY2012 loan
(61.4) 14.1
Mainly
Increase in profit
Net profit
As a result of the reasons mentioned above, the Groups net profit attributable to equity holders of the Company increased by S$1.2 million or 49.7%, from S$2.5 million in FY2011 to S$3.7 million in FY2012.
S$0.5 million, from S$6.8 million as at 31 March 2011 to S$7.3 million as at 31 March 2012. This was mainly due to higher trade and other payables resulting from more operating restaurants and food court outlets as at 31 March 2012 and higher current year tax provision, which amounted to S$1.3 million in aggregate. This was partially offset by a decrease in bank borrowings of S$0.8 million.
Non-current liabilities
The Groups total non-current liabilities decreased by S$0.5 million from approximately S$1.0 million as at 31 March 2011 to S$0.5 million as at 31 March 2012, mainly due to a decrease in bank borrowings of S$0.3 million and deferred income tax liabilities of S$0.2 million.
Shareholders Equity
The Groups shareholders equity increased by S$3.0 million, from S$17.5 million as at 31 March 2011 to S$20.5 million as at 31 March 2012. This was mainly a result of the net profit achieved by the Group of S$3.7 million in FY2012, partially offset by the distribution of dividends S$0.7 million.
Non-current Assets
The Groups total non-current assets decreased by S$1.2 million, from S$14.0 million as at 31 March 2011 to S$12.8 million as at 31 March 2012. The decrease in non-current assets was a result of a decrease in net book value of plant and equipment of S$1.6 million partially offset by the increase in long term security deposits placed with lessors in respect of the Groups leases (which are recoverable upon expiry of the lease tenure) of S$0.4 million. The decrease in net book value of plant and equipment was a result of depreciation amounting to S$4.0 million and disposal and write-off amounting to S$0.5 million, which was offset by renovation works and equipment acquired for the Groups new and existing restaurants of S$2.9 million.
Current liabilities
The Groups total current liabilities increased by
15
Board of Directors
takahashi Kenichi
Executive Chairman and CEO
Takahashi Kenichi is the founder, Executive Chairman and CEO of our Company. He is instrumental in the establishment, development and expansion of our Groups business and is responsible for our Groups entire operations, strategic planning, major decision making, as well as developing the business and vision of our Group. Mr Takahashi has 15 years of experience in the F&B industry in Singapore. Prior to founding our Group in 1997, Mr Takahashi practised as a professional engineer in the research and development division of Pioneer Asia Singapore from April 1978 to March 1997. He was involved in the establishment of the research and development and quality control department of Pioneer Asia Singapore. In March 1997, he left his engineering profession and set up our business. Mr Takahashi graduated from Sophia University with a Certificate of Mechanical and Engineering. a non-executive director of Jason Marine Group Limited, companies which are listed on the Singapore Exchange Securities Trading Limited (SGx-ST). He also serves on the board of the Agri-Food and Veterinary Authority of Singapore and International Enterprise Singapore (IE Singapore) and is the chairman of Crimsonlogic Pte Ltd, a subsidiary of IE Singapore. Mr Wong graduated from the National University of Singapore with a Bachelor of Business Administration (First Class Honours) in 1992 and obtained a Masters in Business Administration from the Imperial College, London in 1998. He also attended the Harvard Business School Owner/ President Management Programme. A chartered financial analyst since 2001, Mr Wong is a member of the Institute of Directors in Singapore and the United Kingdom.
Shigemitsu Katsuaki
Non-Executive Director
Shigemitsu Katsuaki was appointed as a Non-executive Director of our Company on 24 November 2008. He is a shareholder and director of Shigemitsu Industry Co., Ltd. (Shigemitsu Industry), our main franchisor. He has over 20 years of experience in the F&B industry. He joined Shigemitsu Industry in 1990 and commenced work as a branch manager in a restaurant under the Ajisen Ramen brand in Japan upon his graduation. Following several senior management positions in Shigemitsu Industry, he was appointed as its vice-chairman in 1995. In 1997, he was appointed as its president and CEO. Shigemitsu Katsuaki is also a non-executive director of Ajisen (China) Holdings Limited listed on the Hong Kong Stock Exchange. Mr Shigemitsu graduated from the Kumamoto Institute of Technology (now known as SOJO University) with a degree in structural engineering in 1991.
BOARD OF DIRECTORS
Takahashi Kenichi (Executive Chairman and CEO) Shigemitsu Katsuaki (Non-executive Director) Eugene Wong Hin Sun (Non-executive Director) Tan Lye Huat (Lead Independent Director) Constance Lee Sok Koon (Independent Director)
REGISTERED OFFICE
420 North Bridge Road #02-01 North Bridge Centre Singapore 188727 Tel: (65) 6333 9781 Fax: (65) 6333 9782
AUDIT COMMITTEE
Tan Lye Huat (Chairperson) Constance Lee Sok Koon Eugene Wong Hin Sun
SHARE REGISTRAR
B.A.C.S. Private Limited 63 Cantonment Road Singapore 089758
NOMINATING COMMITTEE
Constance Lee Sok Koon (Chairperson) Tan Lye Huat Eugene Wong Hin Sun
AUDITORS
Nexia TS Public Accounting Corporation 100 Beach Road #30-00 Shaw Tower Singapore 189702 Director-in-charge: Christine Lee Look Ling (a member of the ICPAS) Appointed since financial year ended 31 March 2012
REMUNERATION COMMITTEE
Constance Lee Sok Koon (Chairperson) Tan Lye Huat Eugene Wong Hin Sun
PRINCIPAL BANKER
United Overseas Bank Limited 80 Raffles Place UOB Plaza 1 Singapore 049513
COMPANY SECRETARY
Esther Au Siew Peng (ACIS)
17
BOARD MATTERS THE BOARDS CONDUCT OF ITS AFFAIRS Principle 1: Effective Board to Lead and Control the Company Guideline 1.1 & Guideline 1.2 Roles of Board and Objective Decision Making The Board aims to preserve and enhance long-term Shareholders value. To this end, each director of the Company (Director) endeavours to objectively take decisions in the interests of the Company. Apart from its statutory duties and responsibilities, the Board also: (a) (b) (c) (d) (e) decides on matters in relation to the Groups activities which are of significant nature, including decisions on strategic directions and guidelines and approvals of annual budget, major funding investment and divestment proposals; oversees risk management and internal control processes, financial reporting and compliance, including the release of financial results and announcements of material transactions; approves the nominations to the Board and appointments to the various Board committees; approves the framework of remuneration for the Board and key executives as recommended by the Remuneration Committee (as defined hereinafter); and provides oversight in the proper conduct of the Groups business and assume responsibility for corporate governance.
Guideline 1.3 Delegation of Authority to Board Committees To facilitate effective management, the Board has delegated certain functions to the Board committees, namely, the audit committee (Audit Committee), the remuneration committee (Remuneration Committee) and the nominating committee (Nominating Committee), to ensure that there are appropriate checks and balances. These Board committees operate within clearly defined terms of reference which are reviewed from time to time. As at 31 March 2012, the Audit Committee, the Remuneration Committee and the Nominating Committee each comprised entirely of non-executive Directors. Guideline 1.4 Meetings of Board and Board Committees The articles of association of the Company (Articles) provide for the Directors to participate in Board meetings by teleconference or videoconference means.
Takahashi Kenichi Shigemitsu Katsuaki Eugene Wong Hin Sun Yeo Guat Kwang (1) Lee Sok Koon Tan Lye Huat
Notes:
(2)
(1) Mr Yeo Guat Kwang resigned as a Director with effect from 1 September 2011. Following his resignation, Mr Yeo also relinquished his position as Lead Independent Director, the Chairperson of the Nominating Committee and the Remuneration Committee and a member of the Audit Committee. (2) Mdm Lee Sok Koon was appointed as a Director with effect from 1 September 2011. Mdm Lee was also appointed as the Chairperson of the Nominating Committee and the Remuneration Committee and a member of the Audit Committee with effect from the same date.
Guideline 1.5 Internal Guidelines on Matters Requiring Board Approval The Group has in place financial authorisation and approval limits for, amongst others, operating and capital budgets, procurement of goods and services, bank borrowings and operation of the Groups various bank accounts and the approval of the Board are required for these matters. Guideline 1.6 Continuous Training and Development of Directors During FY2012, the management has kept the Directors up-to-date on pertinent developments in the business of the Group during Board and/or Board committee meetings to facilitate the discharge of their duties. Guideline 1.7 & Guideline 1.8 Appointment and Training for First-time Directors Each of the Directors, upon their appointment to the Board, has furnished a letter stating that they are aware and have been informed of their duties and obligations as Directors. A formal letter will be sent to newly appointed Directors upon their appointment explaining, among other matters, their roles, duties and responsibilities as members of the Board. Directors are encouraged to attend training and seminars to familiarise themselves with the latest relevant laws and regulations in connection with the discharge of their duties. The Board is also regularly updated on the activities and developments of the Group. The Company will arrange for new Directors with no prior experience of serving as a director in a listed company to attend appropriate courses, conferences or seminars, including programmes or courses organised by the Singapore Institute of Directors or other training institutions. During FY2012, Mdm Lee Sok Koon was appointed as a Director with effect from 1 September 2011. Mdm Lee has prior experience of serving as a director in a listed company, having served on the board of directors of Lum Chang Holdings Limited and L.C. Development Ltd, companies which are listed on the Main Board of the Singapore Exchange Securities Trading Limited (SGX-ST).
19
With effect from 1 September 2011, Mdm Lee Sok Koon was appointed as a Director and Mr Yeo Guat Kwang resigned as a Director. With effect from the same date, Mr Tan Lye Huat was appointed as the Lead Independent Director of the Company. Following the above-mentioned appointment and resignation of Directors, the Board currently has five members, comprising two independent Directors, two non-executive Directors and one executive Director. As at the date of this report, the Board comprises the following members: Mr Takahashi Kenichi Mr Shigemitsu Katsuaki Mr Eugene Wong Hin Sun Mr Tan Lye Huat Mdm Lee Sok Koon Executive Chairman and Chief Executive Officer Non-executive Director Non-executive Director Lead Independent Director Independent Director
Guideline 2.2 Independence of Directors The Nominating Committee deliberates annually to determine the independence of a Director bearing in mind the salient factors set out under this guideline in the Code as well as all other relevant circumstances and facts. Guideline 2.3 Composition and Size of the Board The Board is of the opinion that its current size and composition is appropriate for decision making, taking into account the scope and nature of the operations of the Group. With two out of five members of the Board being independent, the Company maintains a satisfactory independent element on the Board. The Nominating Committee is of the opinion that the current Board composition represents a well balanced mix of expertise and experience comprising accounting, finance, business experience as well as industry knowledge to provide core competencies necessary to meet the requirements of the Company and the Group and which facilitates effective decision making. Guideline 2.4 Competency of the Board During FY2012, the Directors have updated their Board of Directors Competency Matrix Form by providing additional information (if any) in their areas of specialisation and expertise. The Nominating Committee, having reviewed the returns, is satisfied that members of the Board possess the relevant core competencies in areas of accounting and finance, business and management experience, and strategic planning. In particular, the non-executive Directors, who are mostly professionals in their selected fields, are able to take a broader view of the Groups activities, contribute their valuable experience and provide independent judgement during the Boards deliberation on Groups matters.
20 Japan Foods Holding Ltd. Annual Report 2012
ROLE OF CHAIRMAN AND CHIEF EXECUTIVE OFFICER Principle 3: Clear Division of Responsibilities and Balance of Power and Authority Guideline 3.1 Common Role of Chairman and CEO Mr Takahashi Kenichi is both the chairman of the Board (Chairman) and the chief executive officer (CEO) of the Company. The Board is of the view that it is not necessary to separate the role of the Chairman and the CEO after taking into consideration the size, scope and the nature of the operations of the Group. Mr Takahashi Kenichi is the founder of the Group and has played an instrumental role in developing the business since its establishment. He has considerable industry experience and business network and has also provided the Group with strong leadership and vision. The Board is of the view that it is in the interest of the Group to adopt a single leadership structure. Guideline 3.2 Roles and Responsibilities of Chairman The Chairman, who is also the CEO, seeks to, amongst others, lead the Board to ensure its effectiveness, ensure that the Directors receive accurate, timely and clear information, ensure effective communication with Shareholders, encourage constructive relations between the Board and the management, as well as facilitate the effective contribution of nonexecutive Directors. Guideline 3.3 Lead Independent Director The Nominating Committee, Remuneration Committee and Audit Committee are all chaired by independent Directors and Mr Tan Lye Huat has been appointed to replace Mr Yeo Guat Kwang as the Companys Lead Independent Director with effect from 1 September 2011. The Board is of the view that there are sufficient safeguards and checks in place to ensure that the process of decision-making by the Directors is independent and based on collective decision-making without the Chairman and CEO being able to exercise considerable concentration of power or influence.
BOARD MEMBERSHIP Principle 4: Formal and Transparent Process for the Appointment of Directors to the Board Guideline 4.1 Membership of the Nominating Committee The Nominating Committee at the beginning of FY2012 comprised the following members, the majority of whom, including the chairperson of the committee, were independent non-executive Directors: Mr Yeo Guat Kwang, Chairperson Mr Tan Lye Huat Mr Eugene Wong Hin Sun Independent and non-Executive Independent and non-Executive Non-independent and non-Executive
21
During FY2012, the Nominating Committee held 1 scheduled meeting, which all members attended. The principal functions of the Nominating Committee include: (a) (b) (c) (d) recommending to the Board on all new Board appointments; making recommendations on re-nomination of Directors, having regard to the Directors past contribution and performance; evaluating the independence of each Director annually; and evaluating the effectiveness of the Board as a whole and the contribution of each individual Director towards the effectiveness of the Board.
Guideline 4.2 & Guideline 4.3 Roles and Responsibilities of the Nominating Committee Board renewal must be an on-going process to ensure good governance and to maintain relevance to the changing needs of the Group. No Director stays in office for more than three years without being re-elected by Shareholders. The Articles provide that at least one-third of the Directors, except the CEO, shall retire from office by rotation at every annual general meeting of the Company (AGM) and Directors appointed during the course of the year will be subjected to reelection at the next AGM following his appointment. At the forthcoming AGM, Mr Tan Lye Huat and Mdm Lee Sok Koon are due for re-election pursuant to Article 98 and Article 102 of the Articles respectively. The Nominating Committee has recommended and the Board has agreed for Mr Tan Lye Huat and Mdm Lee Sok Koon to retire and seek re-election at the forthcoming AGM. The Nominating Committee deliberates annually to determine the independence of a Director bearing in mind the salient factors set out in the Code as well as all other relevant circumstances and facts. No member of the Nominating Committee should participate in the deliberation in respect of his own status as an independent Director. Guideline 4.4 Commitment of Directors Sitting on Multiple Boards In assisting the Nominating Committee to determine whether the Directors who have multiple board representations are able to adequately carry out their duties and commitments towards the Company, the Directors have adopted a form of internal guidelines for Directors serving on multiple boards. The Nominating Committee, after reviewing the completed forms that were returned by all Directors together with the respective list of directorships held by each Director as well as their attendance, is satisfied that all the Directors who sit on multiple boards are able to devote adequate time and attention to the affairs of the Company and to fulfil their duties as Directors.
BOARD PERFORMANCE Principle 5: Assessment of the Effectiveness of the Board Guideline 5.1 Board Performance The Board has in place a process to assess its effectiveness as a whole as well as its ability to discharge its responsibilities in providing stewardship, corporate governance and overseeing of managements performance. Guideline 5.2 Board Evaluation The Boards performance is a function of the experience and expertise that each of the Directors bring with them. The Nominating Committee assesses the Boards effectiveness as a whole by completing a Board Evaluation Questionnaire. The results of the exercise are collated by the company secretary for review by the Nominating Committee before submitting to the Board for reviewing and determining the areas for improvement. In assessing the effectiveness of the Board as a whole, the Nominating Committee takes into consideration a number of factors such as the size and composition of the Board, the Boards access to information, participation in Board proceedings and the communications and guidance given by the Board to the management. Guideline 5.3, Guideline 5.4 & Guideline 5.5 Performance Criteria and Evaluation of Individual Director An individual self-assessment is performed by each Director in the form of a Board of Directors Competency Matrix and the results of the self-assessment are discussed with the Nominating Committee. Among the factors considered in the individual self-assessment are the Directors knowledge or experience as directors, experience of being in board committees, in sector experience and functional experience. The criteria for evaluation of the performance of individual Directors include the level of participation, attendance at Board and Board committees meetings and the individual Directors functional expertise. The Board has taken the view that the Companys share price performance and financial indicators set out in the Code as a guide for the evaluation of the Board and its Directors, may not be appropriate as a performance measurement for the Board but more of a measurement of management performance.
23
The Remuneration Committee was reconstituted during FY2012 following the resignation of Mr Yeo Guat Kwang as a Director and the appointment of Mdm Lee Sok Koon as a Director. As at the date of this report, the Remuneration Committee comprises the following members, the majority of whom are independent non-executive Directors: Mdm Lee Sok Koon, Chairperson Mr Tan Lye Huat Mr Eugene Wong Hin Sun Independent and non-Executive Independent and non-Executive Non-independent and non-Executive
No Director will be involved in deciding his own remuneration, except in providing information and documents if specifically requested by the Remuneration Committee to assist in its deliberations. The Remuneration Committees review covers all aspects of remuneration, including salaries, fees, allowances, bonuses and benefits-in-kind. The Remuneration Committees recommendations are submitted for endorsement by the entire Board. Guideline 7.3 Remuneration Committees Access to Advice on Remuneration Matters The Remuneration Committee may seek expert advice on the remuneration of all Directors, if required.
LEVEL AND MIX OF REMUNERATION Principle 8: Level of Remuneration of Directors to be Appropriate and Not Excessive Guideline 8.1 & Guideline 8.5 Remuneration of Executive Directors The Company adopts an overall remuneration policy for employees, comprising a fixed component in the form of a base salary, and a variable component in the form of a bonus that is linked to the performance of the Group, the individual, the industry and the economy. In reviewing its remuneration policy, the Company generally takes into account compensation and employment conditions within the industry and in comparable companies. Guideline 8.3 & Guideline 8.6 Service Agreement The CEO had entered into a service agreement with the Company which took effect on 23 February 2009 (being the date of admission of the Company to Catalist). As the initial effective period of the service agreement of three years has since passed, the service agreement has been renewed for another year on the same terms and may be terminated at any time by either party giving the other party three months prior written notice of such termination. The Remuneration Committee has reviewed the key terms of the service agreement. The CEOs remuneration comprises performance-related element designed to align his interests with those of Shareholders. The CEO does not receive directors fees.
25
DISCLOSURE ON REMUNERATION Principle 9: Clear Disclosure of Remuneration Policy, Level and Mix of Remuneration and Procedure for Setting Remuneration Guideline 9.1 & Guideline 9.2 Remuneration of Directors and Top Key Executives The breakdown of the annual remuneration (including all forms of remuneration from the Company and any of its subsidiaries) for each Director for FY2012 is set out below: Incentive bonus and other benefits (%) 52 -
Remuneration band and name of Director S$525,000 to S$550,000 Takahashi Kenichi S$25,000 to S$50,000 Tan Lye Huat Eugene Wong Hin Sun Below S$25,000 Shigemitsu Katsuaki Yeo Guat Kwang (1) Lee Sok Koon (2)
Notes:
Salary (%) 48 -
(1) Mr Yeo Guat Kwang resigned as a Director with effect from 1 September 2011. The disclosure above was based on Mr Yeos actual remuneration from 1 April 2011 to 1 September 2011. (2) Mdm Lee Sok Koon was appointed as a Director with effect from 1 September 2011. The disclosure above was based on Mdm Lees actual remuneration from 1 September 2011 to 31 March 2012.
The Company had, on 19 December 2008, entered into a service agreement with Mr Takahashi Kenichi, in relation to his appointment as the Chairman and CEO. The service agreement took effect from the date of the Companys admission to Catalist, being 23 February 2009, for an initial period of three years, and shall be renewable automatically on a yearly basis thereafter.
ACCOUNTABILITY AND AUDIT Principle 10: Presentation of a Balanced and Understandable Assessment of the Companys Performance, Position and Prospects The Board recognises the importance of providing accurate and relevant information on a timely basis. In this respect, the Audit Committee reviews all of the Groups financial statements and recommends them to the Board for approval. In addition, the Audit Committee ensures that the Group maintains a sound system of internal controls to safeguard Shareholders interests and the Groups assets as well as to manage potential risks.
Japan Foods Holding Ltd. Annual Report 2012
27
AUDIT COMMITTEE Principle 11: Establishment of Audit Committee with Written Terms of Reference Guideline 11.1 and 11.8 Membership of the Audit Committee At the beginning of FY2012, the Audit Committee comprised the following members, the majority of whom, including the Chairperson, were independent non-executive Directors: Mr Tan Lye Huat, Chairperson Mr Yeo Guat Kwang Mr Eugene Wong Hin Sun Independent and non-Executive Independent and non-Executive Non-independent and non-Executive
During FY2012, following the resignation of Mr Yeo Guat Kwang as a Director and the appointment of Mdm Lee Sok Koon as a Director, the Audit Committee was reconstituted. As at the date of this report, the Audit Committee comprises the following members, the majority of whom, including the Chairperson, are independent non-executive Directors: Mr Tan Lye Huat, Chairperson Mdm Lee Sok Koon Mr Eugene Wong Hin Sun Independent and non-Executive Independent and non-Executive Non-independent and non-Executive
During the year, the Audit Committee held 4 scheduled meetings, which all members attended.
(b) (c)
The Audit Committee has explicit authority to investigate any matter within its Terms of Reference. It has full access to, and the co-operation of management. It also has direct and independent access to the Internal/External Auditors and full discretion to invite any Director or any member of the management to attend its meetings. Guideline 11.5 and Guideline 11.6 External and Internal Auditors During FY2012, the aggregate amount of fees paid to the External Auditors, Nexia TS Public Accounting Corporation, amounted to approximately S$75,400, comprising S$60,000 paid for the provision of audit services and S$15,400 paid for the provision of non-audit services. The Audit Committee has reviewed the non-audit services provided by the External Auditors as part of the Audit Committees assessment of the External Auditors independence. The Audit Committee is of the view that the fee of S$15,400 paid for the non-audit services (being tax advisory) provided by the External Auditors in FY2012 will not prejudice their objectivity and independence and has recommended to the Board that Nexia TS Public Accounting Corporation be nominated for re-appointment as the External Auditors of the Company at the forthcoming AGM. The Company complies with Rules 712 and 715 of the Catalist Rules in relation to the appointment of Nexia TS Public Accounting Corporation as its external auditors.
29
The Group takes concerns with the integrity and honesty of its employees seriously. A copy of the Policy has been disseminated to all staff to encourage the report of any behaviour or action that anyone reasonably believes might be suspicious, against any rules/regulations/accounting standards as well as internal policies. The whistle blowers could also contact the Chairperson of the Audit Committee directly via email and in confidence and his/her identity is protected from reprisals within the limits of the law.
INTERNAL CONTROL Principle 12: Sound System of Internal Controls Guideline 12.1 Internal Controls System The Board recognises the importance of maintaining a sound system of internal controls to safeguard the shareholders investments and the Groups assets. The Audit Committee is responsible for ensuring that such a system has been appropriately implemented and monitored.
RISK MANAGEMENT The Management has put in place a Risk Management Policy to assist the Board in identifying, evaluating, monitoring and managing potential risks. The CEO and senior management of the Company assume the responsibilities of the risk management function. They regularly assess and review the Groups business and operational environment in order to identify areas of significant business and financial risks, such as credit risks, foreign exchange risks, liquidity risks and interest rates risk, as well as adopt appropriate measures to control and mitigate the risks that may affect the Groups achievement of its business objectives or assets. Guideline 12.2 Adequacy of Internal Controls The system of internal controls and risk management policies established by the Group is designed to manage, rather than eliminate, the risk of failure in achieving the Groups strategic objectives. It should be recognised that such systems are designed to provide reasonable assurance, but not an absolute guarantee, against material misstatement or loss. Based on the internal controls established and maintained by the Group, work performed by the Internal and External Auditors, and reviews performed by management, various Board Committees and the Board as well as the assurances from the CEO and the Chief Financial Officer of the Company, the Board, with the concurrence of the Audit Committee, is of the opinion that the Groups internal controls in addressing financial, operational and compliance risks, were adequate as at 31 March 2012.
INTERNAL AUDIT Principle 13: Independent Internal Audit Function Guideline 13.1 Internal Auditors The Audit Committees responsibilities over the Groups internal controls and risk management are complemented by the work of the Internal Auditors (IA). An internal audit function that is independent of the activities it audits has been established and the IAs primary line of reporting is to the Chairperson of the Audit Committee. Guideline 13.2 and Guideline 13.3 Internal Audit Function The Company has outsourced its internal audit function to Yang Lee and Associates, which is a member of the Institute of Internal Auditors, Singapore. The IA is guided by the International Standards for the Professional Practice of Internal Auditing (IIA Standards) issued by the Institute of Internal Auditors. An annual audit plan which entails the review of the effectiveness of the Companys material internal controls has been developed by the IA. The Audit Committee has discussed with the IA its resource deployment plan and is satisfied that the Companys internal audit function is adequately resourced to perform the job for the Group.
31
COMMUNICATION WITH SHAREHOLDERS Principle 14: Regular, Effective and Fair Communication with Shareholders Principle 15: Shareholders Participation at General Meetings Guideline 14.1 and Guideline 14.2 Communication and Information Available to Shareholders The Company endeavours to maintain full and adequate disclosure, in a timely manner, of material events and matters concerning its business. All the necessary disclosures required by the Catalist Rules will be made in public announcements, press releases and annual reports to Shareholders. Guideline 15.1 Shareholders Participation The AGM provides a principal forum for dialogue and interaction with Shareholders. As the authentication of Shareholders identity information and other related integrity issues still remain a concern, the Company has decided, for the time being, not to implement voting in absentia by mail, e-mail or facsimile. In addition to the AGM, the Company also maintains regular dialogue with Shareholders and prospective investors through results briefings. Guideline 15.2 Proceedings of General Meeting Issues or matters requiring Shareholders approval will be tabled in the form of separate and distinct resolutions at the AGMs. Guideline 15.3 Questions Raised at General Meetings The Chairman of the Board and the Board committees attend all AGMs to address issues raised by Shareholders. The Companys External Auditors are also present to address questions raised by Shareholders at AGMs. Guideline 15.4 Limit on Number of Proxies for Nominee Companies The Articles allows a Shareholder to appoint up to two proxies to attend and vote at general meetings. The Company also allows investors who hold Shares through nominees such as the Central Provident Fund and custodian banks, to attend AGMs as observers without being constrained by the two-proxy rule, subject to availability of seats. Guideline 15.5 Minutes of General Meetings The company secretary will prepare minutes of general meetings held which will be made available to Shareholders upon request.
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 the transactions are on an arms length basis. The Company has obtained a general mandate for recurring transactions with Shigemitsu Industry Co., Ltd. (Shareholders Mandate), which will be put forth to Shareholders for renewal at the forthcoming AGM. The aggregate value of all interested person transactions entered into during FY2012 (including transactions of less than S$100,000 each) is as follows: Aggregate value of all interested person transactions during FY2012 (excluding transactions conducted under shareholders mandate pursuant to Rule 920 of the Catalist Rules) (S$000) Aggregate value of all interested person transactions conducted during FY2012 under shareholders mandate pursuant to Rule 920 of the Catalist Rules (S$000)
1,181 (4)
(1) Shigemitsu Katsuaki, the Companys Non-executive Director, is the president, chief executive officer and major shareholder of Shigemitsu Industry Co., Ltd (Shigemitsu Industry). Accordingly, transactions between the Group and Shigemitsu Industry are interested person transactions within the ambit of Chapter 9 of the Catalist Rules. (2) The royalty and franchise fees in FY2012 comprise fees paid for the use of the Ajisen Ramen brand amounting to S$378,000 and the Sen No Chanpon and Aji No Chanpon brands amounting to S$24,000. The royalty and franchise fees relating to the Ajisen Ramen brand are deemed to have been specifically approved by the Shareholders at the time of the Companys initial public offering in February 2009 and are not subject to Rule 905 and Rule 906 of the Catalist Rules to the extent that there is no variation or amendment to the terms of the relevant franchise agreement. (3) This amount relates to the Groups purchases of ingredients for the Sen No Chanpon and Aji No Chanpon business from Shigemitsu Industry. The Company had on 1 February 2011 entered into a franchise agreement (the Agreement) with Shigemitsu Industry pursuant to which the Company was granted the exclusive franchise rights to use the Sen No Chanpon and Aji No Chanpon trademarks (collectively, the Trademarks) in Singapore for a period of three (3) years from the date of the Agreement. Under the Agreement, the Company is obliged to, inter alia, purchase from Shigemitsu Industry four (4) ingredients as specified by Shigemitsu Industry for the operation of shops under the Trademarks. The aggregate value of all purchases from Shigemitsu Industry for this purpose amounted to approximately S$20,000 (i.e. less than S$100,000) in FY2012. (4) The Shareholders had, at the last AGM of the Company held on 28 July 2011, approved the renewal of the Shareholders Mandate in respect of its purchases of soup base and such other ingredients necessary for the Ajisen Ramen business from Shigemitsu Industry. The aggregate value of all purchases (including transactions less than S$100,000 each) from Shigemitsu Industry for this purpose amounted to approximately S$1,181,000 in FY2012. The Shareholders Mandate is subject to annual renewal and will expire at the forthcoming AGM. The Company will be seeking Shareholders approval for the renewal of the Shareholders Mandate at the forthcoming AGM.
33
(ii)
SPONSOR No fees relating to non-sponsorship activities or services were paid to the Companys sponsor, CIMB Bank Berhad, Singapore Branch, during FY2012.
Directors Report
for the financial year ended 31 March 2012
The directors present their report to the members together with the audited financial statements of the Group for the financial year ended 31 March 2012 and the balance sheet of the Company as at 31 March 2012. Directors The directors of the Company (Directors) in office at the date of this report are as follows: Takahashi Kenichi Shigemitsu Katsuaki Tan Lye Huat Eugene Wong Hin Sun Lee Sok Koon (Appointed on 1 September 2011) Arrangements to enable Directors to acquire shares and debentures Neither at the end of nor at any time during the financial year was the Company a party to any arrangement whose object was to enable the Directors to acquire benefits by means of the acquisition of shares in, or debentures of, the Company or any other body corporate. Directors interests in shares or debentures According to the register of Directors shareholdings, none of the Directors holding office at the end of the financial year had any interest in the shares or debentures of the Company or its related corporations, except as follows: Holdings registered in the name of a Director or his nominee Company (No. of ordinary shares) Takahashi Kenichi Shigemitsu Katsuaki Eugene Wong Hin Sun As at As at 21 April 2012 31 March 2012 76,543,200 2,240,400 76,543,200 2,240,400 As at 1 April 2011 63,786,000 1,867,000 Holdings in which Director is deemed to have an interest As at As at 21 April 2012 31 March 2012 5,400,000 2,240,400 4,777,200 5,400,000 2,240,400 4,777,200 As at 1 April 2011 4,500,000 1,867,000 3,981,000
By virtue of Section 7 of the Singapore Companies Act (Cap. 50) (the Act), Takahashi Kenichi is deemed to have an interest in the shares of all the Companys subsidiaries at the beginning and at the end of the financial year. The Company undertook a bonus issue on the basis of 1 new share for every 5 existing shares in December 2011. The Directors interests in the ordinary shares of the Company increased between 1 April 2011 and 31 March 2012 due to the aforementioned bonus issue. The Directors interests in the ordinary shares of the Company as at 21 April 2012 were the same as those as at 31 March 2012.
35
Directors Report
for the financial year ended 31 March 2012
Directors contractual benefits Since the end of the previous financial year, no Director has received or become entitled to receive a benefit 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, except as disclosed in the accompanying financial statements and in this report. Share options There were no options granted during the financial year to subscribe for unissued shares in the Company or its subsidiaries. No shares have been issued during the financial year by virtue of the exercise of any option to take up unissued shares of the Company or its subsidiaries. There were no unissued shares of the Company under option at the end of the financial year. Audit Committee The members of the audit committee of the Company (Audit Committee) at the end of the financial year were as follows: Tan Lye Huat Lee Sok Koon Eugene Wong Hin Sun (Chairperson, Lead Independent Director) (Member, Independent Director) (Member, Non-independent and Non-executive Director)
The Audit Committee carried out its function in accordance with Section 201B (5) of the Act. It undertakes to perform inter alia the following: (a) (b) (c) reviewing the audit plan of the Companys independent auditor and its report on the effectiveness of material internal controls, including financial, operational and compliance controls and risk management; reviewing the internal audit plans, the scope and results of internal audit procedures; reviewing the balance sheet of the Company, the consolidated financial statements of the Group for the financial year ended 31 March 2012 and other announcements to shareholders and the Singapore Exchange Securities Trading Limited before their submission to the Board of Directors, as well as the independent auditors report on the balance sheets of the Company and the consolidated financial statements of the Group; conducting investigation into any matter within the Audit Committees scope of responsibility and review any significant findings of investigations; assessing the independence and objectivity of the independent auditors; recommending to the Board of Directors on the appointment or re-appointment of independent auditor; reviewing the assistance given by the Companys management to the independent auditor; and reviewing transactions falling within the scope of Chapter 9 of the Catalist Rules.
Directors Report
for the financial year ended 31 March 2012
Audit Committee (Contd) The Audit Committee has conducted an annual review of the non-audit services provided by the independent auditor. During the financial year ended 31 March 2012, the fees charged by the independent auditor for the provision of non-audit services amounted to $15,400. The Audit Committee is of the opinion that such fees charged by the independent auditor for non-audit services were insignificant and would not prejudice the independence of the independent auditor. Accordingly, the Audit Committee has recommended that Nexia TS Public Accounting Corporation be nominated for re-appointment as the independent auditor of the Company at the forthcoming Annual General Meeting. Independent auditor The independent auditor, Nexia TS Public Accounting Corporation, has expressed its willingness to accept re-appointment.
37
Statement by Directors
for the financial year ended 31 March 2012
In the opinion of the Directors, (a) the balance sheet of the Company and the consolidated financial statements of the Group as set out on pages 41 to 82 are drawn up so as to give a true and fair view of the state of affairs of the Company and of the Group as at 31 March 2012 and of the results of 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)
39
Nexia TS Public Accounting Corporation Public Accountants and Certified Public Accountants Director-in-charge: Christine Lee Look Ling Appointed since financial year ended 31 March 2012
41
Balance Sheets
as at 31 March 2012
Group 2012 Note ASSETS Current assets Cash and cash equivalents Trade and other receivables Inventories Other current assets Non-current assets Investment in subsidiaries Property, plant and equipment Intangible assets Long-term security deposits Total assets LIABILITIES Current liabilities Trade and other payables Borrowings Current income tax liabilities Non-current liabilities Borrowings Deferred income tax liabilities Total liabilities NET ASSETS 21 23 521 521 7,851 20,463 317 746 1,063 7,879 17,477 1,332 10,547 786 9,250 20 21 10 5,780 317 1,233 7,330 4,890 1,154 772 6,816 1,301 31 1,332 755 31 786 16 17 18 19 10,200 150 2,431 12,781 28,314 11,756 178 2,066 14,000 25,356 5,178 5,178 11,879 5,178 5,178 10,036 12 13 14 15 11,148 982 809 2,594 15,533 7,570 596 955 2,235 11,356 754 5,478 469 6,701 244 4,582 32 4,858 $000 2011 $000 Company 2012 $000 2011 $000
EQUITY Share capital Currency translation reserve Retained profits TOTAL EQUITY 24 25 26 8,791 8 11,664 20,463 8,809 2 8,666 17,477 8,791 1,756 10,547 8,809 441 9,250
43
12
45
The residual values, estimated useful lives and depreciation method of property, plant and equipment are reviewed, and adjusted as appropriate, at each balance sheet date. The effects of any revision are recognised in the profit or loss when the changes arise. Fully depreciated assets are retained in the financial statements until they are no longer in use and no further change for depreciation is made in respect of these assets. (c) Subsequent expenditure Subsequent expenditure relating to property, plant and equipment that has already been recognised is added to the carrying amount of the asset only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. All other repair and maintenance expenses are recognised in the profit or loss when incurred. (d) Disposal On disposal of an item of property, plant and equipment, the difference between the disposal proceeds and its carrying amount is recognised in profit or loss within Other (losses)/gains - net.
47
49
51
(iii)
53
(ii)
Current and deferred income taxes are recognised as income or expense in the profit or loss. 2.19 Leases (a) When the Group is the lessee: The Group leases motor vehicles under finance leases and restaurant premises under operating leases from non-related parties. (i) Lessee - Finance leases Leases where the Group assumes substantially all risks and rewards incidental to ownership of the leased assets are classified as finance leases. The leased assets and the corresponding lease liabilities (net of finance charges) under finance leases are recognised on the balance sheet as plant and equipment and borrowings respectively, at the inception of the leases based on the lower of the fair value of the leased assets and the present value of the minimum lease payments.
55
3.
Critical accounting estimates, assumptions and judgements Estimates, assumptions and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. Estimated impairment of non-financial assets Intangible assets with indefinite useful lives are tested for impairment annually and whenever there is indication that the intangible assets may be impaired. Intangible assets with definite useful lives, property, plant and equipment and investment in subsidiaries are tested for impairment whenever there is any objective evidence or indication that these assets may be impaired. The recoverable amounts of these assets and where applicable, cash-generating units, have been determined based on value-in-use calculations. These calculations require the use of judgement and estimates (Note 17). There is no impairment charge on the intangible asset of the Group which has an indefinite useful life for the financial year ended 31 March 2012. If managements estimated revenue from FY2013 to FY2015 is lowered by 10%, there is no impairment charge on the intangible asset as the recoverable amount for the intangible asset is above its carrying amount.
57
The tax on the Groups profit before tax differs from the theoretical amount that would arise using the Singapore standard rate of income tax is as follows: Group 2012 2011 $000 $000 Profit before income tax Tax calculated at a tax rate of 17% (2011: 17%) Effects of: - Expenses not deductible for tax purposes - Statutory tax exemption - Deferred tax asset not recognised - Others Tax charge 4,472 760 86 (56) 3 1 794 3,145 535 555 (51) 8 2 1,049
Deferred income tax assets are recognised for tax losses and capital allowances carried forward to the extent that realisation of the related tax benefits through future taxable profits are probable. A subsidiary of the Company has losses before tax at the balance sheet date which cannot be carried forward and used to offset against future taxable income as the losses has not met the statutory requirements. (b) Movement in current income tax liabilities 2012 $000 Beginning of financial year Income tax paid Income tax expense (Over)/under provision in prior financial years End of financial year 772 (517) 1,019 (41) 1,233 Group 2011 $000 744 (486) 903 (389) 772 Company 2012 $000 31 (4) 3 1 31
59
115,404 3.22
110,670 2.24
The comparative figure of weighted average number of ordinary shares outstanding has been adjusted to take into account the issuance of the 19,234,000 bonus shares on 21 December 2011. There were no dilutive potential ordinary shares during the financial year. 12. Cash and cash equivalents Group 2012 $000 Cash at bank and on hand Short-term bank deposits 6,053 5,095 11,148 2011 $000 5,776 1,794 7,570 Company 2012 $000 254 500 754 2011 $000 244 244
For the purpose of presenting the consolidated statement of cash flows, the consolidated cash and cash equivalents comprise the following: Group 2012 $000 Cash and cash equivalents Less: Bank deposits pledged 11,148 (1,825) 9,323 2011 $000 7,570 (1,629) 5,941 Company 2012 $000 754 754 2011 $000 244 244
Short-term bank deposits amounting to $1,825,000 (2011:$1,629,000) have been pledged to a financial institution as security for performance guarantee.
The non-trade amounts due from subsidiaries are unsecured, interest free and are repayable on demand. 14. Inventories Group 2012 $000 Raw materials and consumables 809 2011 $000 955 Company 2012 $000 2011 $000 -
The cost of inventories recognised as an expense and included in cost of sales amounted to $12,091,000 (2011: $11,199,000). 15. Other current assets Group 2012 $000 Deposits Prepayments 1,957 637 2,594 2011 $000 2,015 220 2,235 Company 2012 $000 469 469 2011 $000 32 32
61
The details of subsidiaries are: Name of subsidiaries Principal activities Country of business/ incorporation Equity holding 2012 2011 % %
Bachmann Enterprises Pte Ltd (a) Bachmann Japanese Restaurant Pte Ltd (a) Japan Foods Enterprises Pte. Ltd. (Formerly known as Ajisen Parco Japanese Restaurant Pte. Ltd.) (a) Bachmann Japanese Restaurant Sdn. Bhd.(b)
100
100
100
100
100
100
100
100
(a) Audited by Nexia TS Public Accounting Corporation, Singapore. (b) Audited by SSY Partners, Malaysia, an independent member firm of Nexia International
Renovation $000
Total $000
185 185
121 26 147
1,049
2,717
6,016
38
380
10,200
185 185
95 26 121
1,314
2,610
7,345
64
423
11,756
63
308 308
277 31 308
50 36 44 130 178
The cost of intangible assets included a trademark under the name Aoba which has an indefinite useful life by virtue that, in accordance to the terms of agreement with the franchisor, the period in which the Group has the right to use the trademark is for perpetuity. The carrying amount of this trademark as at 31 March 2012 was $65,000 (2011:$65,000).
19. Long-term security deposits Group 2012 $000 Refundable security deposits 2,431 2011 $000 2,066 Company 2012 $000 2011 $000 -
These are mainly deposits placed with the landlords. Management is of the opinion that these deposits have been placed with counterparties who are creditworthy and accordingly, no allowance for impairment is required. At the balance sheet date, the fair values of long-term security deposits amounted to $2,205,000 (2011: $1,849,000). The fair values of long-term security deposits are computed based on cash flow analyses, discounted at market borrowing rates of an equivalent instrument at the balance sheet date which the directors expect to be available to the Group. The discounted rate used is 5% (2011: 5%).
65
1,701
1,584
The non-trade amounts due to subsidiaries are unsecured, interest-free and are repayable on demand. 21. Borrowings Group 2012 $000 Current Bank borrowings Finance lease liabilities (Note 22) 2011 $000 Company 2012 $000 2011 $000
307 10 317
1,128 26 1,154
317
Total borrowings
(a)
Security granted Bank borrowings are secured by corporate guarantees given by the Company (Note 28) and personal guarantees by a director. Finance lease liabilities are secured over the leased motor vehicles (Note 17), as the legal title is retained by the lessor and will be transferred to the Company upon full settlement of the finance lease liabilities.
(b)
Fair value of non-current borrowings Group 2012 $000 Bank borrowings Finance lease liabilities (Note 22) 2011 $000 307 10 Company 2012 2011 $000 $000 -
The fair values above are determined from the cash flow analyses, discounted at market borrowing rates of an equivalent instrument at the balance sheet date which the directors expect to be available to the Group as follows: Group 2012 $000 Bank borrowings Finance lease liabilities (Note 22) 2011 $000 5.42% 6.30% Company 2012 2011 $000 $000 -
67
Minimum lease payments due: - Not later than one year - Between one and five years Less: future finance charges Present value of finance lease liabilities
11 11 (1) 10
29 11 40 (4) 36
The present values of finance lease liabilities are analysed as follows: Group 2012 $000 2011 $000
- Not later than one year - Between one and five years
10 10
26 10 36
23. Deferred income taxes Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current income tax assets against current income tax liabilities and when the deferred income taxes relate to the same fiscal authority. The amounts, determined after appropriate offsetting, are shown on the balance sheet as follows: Group 2012 $000 Deferred income tax liabilities to be settled after one year 2011 $000 2012 $000 Company 2011 $000
521
746
The movement in deferred income tax liabilities (prior to offsetting of balances within the same tax jurisdiction) is as follow: Accelerated tax depreciation Group Company $000 2012 Beginning of financial year Tax credited to profit or loss End of financial year 2011 Beginning of financial year Tax charged to profit or loss End of financial year $000
24. Share capital 2012 Number of ordinary shares 000 Issued share capital Beginning of financial year Issuance of bonus shares Issuance of share pursuant to private placement exercise Share issue expenses End of financial year Group and Company 2011 Number of ordinary Amount shares $000 000
Amount $000
69
At the Annual General Meeting on 26 July 2012, a final exempt (one-tier) dividend of 0.7 cents per share amounting to a total $808,000 has been recommended. These financial statements do not reflect this dividend, which will be accounted for in shareholders equity as an appropriation of retained profits in the financial year ending 31 March 2013. 28. Financial guarantees The Company has issued corporate guarantees to banks for borrowings of a subsidiary. These bank borrowings amounted to $307,000 (2011: $1,435,000). The fair values of the corporate guarantees have not been recognised in the financial statements of the Company as the amounts involved are not material to the Company. 29. Operating lease commitments The Group leases restaurants and central kitchen facilities under non-cancellable operating lease agreements. The leases have varying terms, escalation clauses and renewal rights. The future aggregate minimum lease payable under non-cancellable operating leases contracted for at the balance sheet date but not recognised as liabilities, are as follows: Group 2012 $000 Not later than one year Between one and five years 12,360 10,854 23,214 2011 $000 11,824 9,518 21,342
71
31. Financial risk management The Groups activities expose it to market risk (including currency risk, cash flow risk and fair value interest rate risk), credit risk, liquidity risk and capital risk. The Groups overall risk management strategy seeks to minimise adverse effects from the unpredictability of financial markets on the Groups financial performance. The Board of Directors is responsible for setting the objectives and underlying principles of financial risk management for the Group. This includes establishing policies such as authority levels, oversight responsibilities, risk identification and measurement and exposure limits. (a) Market risk (i) Currency risk Currency risk arises within entities in the Group when transactions are denominated in foreign currencies. The Groups exposure to currency risk is not significant as the Group operates mainly in Singapore. Certain of the Groups purchases are from Japan and Hong Kong, giving rise to exposures to the changes in foreign exchange rates primarily with respect to the Japanese Yen (JPY) and Hong Kong Dollar (HKD). The Group does not enter into any derivative contracts to hedge its foreign exchange risk.
74 3 2 79
(306) (306)
(77) (77)
(48) (2) 50
Net financial assets/(liabilities) Add: Net non-financial assets Net assets/ (liabilities) Currency profile including non-financial assets/ (liabilities) Currency exposure of financial assets/(liabilities) in the respective entities in the respective entities functional currency
(306) (306)
(77) (77)
29 29
20,817
(306)
(77)
29
20,463
(306)
(77)
(380)
73
84 3 1 88
(145) (145)
(74) (74)
Net financial assets/(liabilities) Add: Net non-financial assets Net assets/ (liabilities) Currency profile including non-financial assets/ (liabilities) Currency exposure of financial assets/(liabilities) in the respective entities in the respective entities functional currency
(145) (145)
(74) (74)
37 37
17,659
(145)
(74)
37
17,477
(145)
(74)
(210)
At 31 March 2012, if the JPY and HKD both strengthened/weakened by 5% (2011: 5%) against the SGD with all variables including tax rate being held constant, the Groups profit after tax for the financial year would have been $19,000 (2011: $11,000) higher/lower respectively as a result of currency translation gains/losses on the remaining JPY and HKD denominated financial assets. The Company does not have significant exposure to currency risk as it operates only in Singapore.
75
322 322
Company As at 31 March 2012 Trade and other payables Financial guarantee contracts
322 322
Balance due within 12 months equal their carrying amounts as the impact of discounting is not significant. (d) Capital risk The primary objective of the Groups capital management is to ensure that it maintains a strong credit rating and healthy capital ratios in order to support its business and maximise shareholder value. The Group manages its capital structure and makes adjustments to it, in light of changes in economic conditions. To maintain or adjust the capital structure, the Group may adjust the amount of dividend payment, return capital to shareholders, issue new shares, buy back issued shares, obtain new borrowings or sell assets to reduce borrowings. Management monitors capital based on gross gearing ratio. The Group is also required by the banks to maintain a gearing ratio of not exceeding 100% (2011: 100%)
The Group is in compliance with all externally imposed capital requirements for the financial year ended 31 March 2012 and 2011. (e) Fair value measurement The fair value of long-term security deposits for disclosure purposes are computed based on cash flow analyses, discounted at market borrowing rates of an equivalent instrument at the balance sheet date, as disclosed in Note 19. The carrying value of the financial assets and liabilities approximate their fair value because of short period to maturity. The carrying amounts of these financial assets and liabilities carried at cost or amortised costs are not materially different from their fair values as at 31 March 2012.
77
2,892 5,412
368
2,892 5,780
7,223 4,608
31 282
7,223 31 4,890
The Groups principal business is in the operation of restaurants and its ancillary business is in the supply of food ingredients to its sub-franchisees and franchisee. Sales between segments are carried out at the normal business terms and conditions. The revenue from external parties reported to Directors is measured in a manner consistent with that in the consolidated statement of comprehensive income.
79
Reportable segments assets are reconciled to total assets as follows: The amounts provided to the BOD with respect to total assets are measured in a manner consistent with that of financial statements. For the purposes of monitoring segment performance and allocating resources between segments, the BOD monitors the property, plant and equipment, intangible assets, inventories, receivables and operating cash attributable to each segment. All assets are allocated to reportable segments other than short-term bank deposits. Group 2012 $000 Segment assets for reportable segments Short-term bank deposits 23,219 5,095 28,314 2011 $000 23,562 1,794 25,356
The Groups two business segments operate in two main geographical areas: (i) (ii) Singapore the Group is headquartered and has operations in Singapore. The principal business in this area is the operation of restaurants and sales of food ingredients. Malaysia the principal operations in this area is the operation of restaurants. There is no operating activity in Malaysia since the financial year ended 31 March 2011.
33. Events occurring after balance sheet date On 14 June 2012, the Company entered into an acquisition and shareholders agreement with Ajisen Investments (International) Limited (Ajisen Investments), an indirect wholly-owned subsidiary of Ajisen (China) Holdings Limited, Shigemitsu Industry Co., Ltd (Shigemitsu Industry) and ACJF Holding Limited (ACJF) to jointly develop and operate restaurants under the Menya Musashi trademark in Hong Kong. Under the agreement, the Company and Shigemitsu Industry have agreed to acquire from Ajisen Investments, 12,500 and 5,000 ordinary shares of USD1.00 (equivalent to $1.28) each in capital of ACJF, for a purchase consideration of HKD98,000 and HKD39,000 respectively (equivalent to approximately $16,000 and $6,000 respectively), based on par value of the capital of ACJF.
81
The management anticipates that the adoption of the above FRSs, INT FRSs and amendments to FRS in the future periods will not have a material impact on the financial statements of the Group and the Company in the period of their initial adoption. 35. Authorisation of financial statements The financial statements were authorised for issue in accordance with a resolution of the Board of Directors of Japan Foods Holding Ltd on 26 June 2012.
Statistics of Shareholdings
Number of shares issued Class of shares Voting rights : 115,404,000 shares : Ordinary share : One vote per share
Size of shareholdings 1 999 1,000 10,000 10,001 1,000,000 1,000,001 and above Total
Twenty largest shareholders as at 18 June 2012 No. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Name of shareholders Kenichi Takahashi Chan Chau Mui HSBC (Singapore) Nominees Pte Ltd Sirius Venture Capital Pte Ltd DBS Nominees Pte Ltd Loh Yih Shigemitsu Katsuaki Shigemitsu Industry Co. Ltd. DB Nominees (S) Pte Ltd Amfraser Securities Pte. Ltd. DBS Vickers Securities (S) Pte Ltd Tan Kay Toh or Yu Hea Ryeong Kwok Lai Fong Evangeline Kwok Meng Sun or Wong Poh Yook Christella Chuah Poh Choo Teng Chai Hai CIMB Securities (Singapore) Pte Ltd Koh Chin Hwa Morgan Stanley Asia (Spore) Securities Pte Ltd United Overseas Bank Nominees Pte Ltd Total No. of shares 76,543,200 5,400,000 5,022,000 4,777,200 4,572,000 3,567,600 2,240,400 2,240,400 1,720,800 1,608,000 1,608,000 1,106,400 300,000 300,000 240,000 240,000 232,000 226,000 208,800 139,200 112,292,000 % 66.33 4.68 4.35 4.14 3.96 3.09 1.94 1.94 1.49 1.39 1.39 0.96 0.26 0.26 0.21 0.21 0.20 0.20 0.18 0.12 97.30
83
Statistics of Shareholdings
Based on the information available to the Company as at 18 June 2012, approximately 20.97% of the issued ordinary shares of the Company is held by the public and, therefore, Rule 723 of the SGX-ST Listing Manual Section B : Rules of Catalist is complied with. The Company has no treasury shares as at 18 June 2012.
% 66.33
% 4.68
AS ORDINARY BUSINESS 1. To receive and adopt the Directors Report and the audited financial statements of the Company for the financial year ended 31 March 2012 together with the Auditors Report thereon. To declare a final tax-exempt one-tier dividend of 0.7 cents for each ordinary share held in the capital of the Company in respect of the financial year ended 31 March 2012. To approve the payment of S$100,000 as fees to the directors of the Company (Directors) for the financial year ended 31 March 2012 (2011: S$100,000). To re-elect the retiring Director, Mr Tan Lye Huat, who is retiring pursuant to Article 98 of the Companys Articles of Association. [See explanatory Note (a)] To re-elect the retiring Director, Mdm Lee Sok Koon, who is retiring pursuant to Article 102 of the Companys Articles of Association. [See explanatory Note (b)] To re-appoint Nexia TS Public Accounting Corporation as the auditors of the Company to hold office until the conclusion of the next AGM of the Company and to authorise the Directors to fix their remuneration. To transact any other business which may properly be transacted at an AGM. (Resolution 1)
2.
(Resolution 2)
3.
(Resolution 3)
4.
(Resolution 4)
5.
(Resolution 5)
6.
(Resolution 6)
7.
AS SPECIAL BUSINESS To consider and if thought fit, to pass the following resolutions as Ordinary Resolutions, with or without any modifications: 8. Authority to issue shares in the capital of the Company and/or Instruments (as defined hereinafter) That pursuant to Section 161 of the Companies Act, Cap. 50 of Singapore (Companies Act) and Rule 806 of the Singapore Exchange Securities Trading Limited (SGX-ST) Listing Manual Section B: Rules of Catalist (Catalist Rules), the Directors be and are hereby authorised and empowered to: (a) (1) allot and issue shares in the capital of the Company (Shares) whether by way of rights, bonus or otherwise; and/or (Resolution 7)
85
at any time and upon such terms and conditions and for such purposes and to such persons as the Directors may in their absolute discretion deem fit; and (b) (notwithstanding the authority conferred by this Ordinary Resolution may have ceased to be in force) issue Shares in pursuance of any Instrument made or granted by the Directors while this Ordinary Resolution is in force,
provided that: (1) the aggregate number of Shares (including Shares to be issued in pursuance of the Instruments, made or granted pursuant to this Ordinary Resolution) and Instruments to be issued pursuant to this Ordinary Resolution shall not exceed 100% of the total issued Shares at the time of passing of this Ordinary Resolution (excluding treasury shares) (as calculated in accordance with sub-paragraph (2) below), of which the aggregate number of Shares to be issued other than on a pro rata basis to existing shareholders of the Company shall not exceed 50% of the total issued Shares (excluding treasury shares) (as calculated in accordance with sub-paragraph (2) below); (subject to such manner of calculation as may be prescribed by the SGX-ST) for the purpose of determining the aggregate number of Shares and Instruments that may be issued under sub-paragraph (1) above, the percentage of issued Shares shall be based on the Companys total issued Shares (excluding treasury shares) at the time of the passing of this Ordinary Resolution, after adjusting for: (i) new Shares arising from the conversion or exercise of the Instruments or any convertible securities; new Shares arising from exercising of share options or vesting of shares awards outstanding and/or subsisting at the time of the passing of this Ordinary Resolution provided that share options or share awards (as the case may be) were granted in compliance with Part VIII of Chapter 8 of the Catalist Rules; and any subsequent bonus issue, consolidation or sub-division of Shares;
(2)
(ii)
(iii) (3)
in exercising the authority conferred by this Ordinary Resolution, the Company shall comply with the provisions of the Catalist Rules for the time being in force (unless such compliance has been waived by the SGX-ST) and the Articles of Association of the Company; and
9.
Authority to grant options and issue Shares under the Japan Foods Employee Share Option Scheme That pursuant to Section 161 of the Companies Act, the Directors be and are hereby authorised and empowered to offer and grant options (Options) under the Japan Foods Employee Share Option Scheme (Scheme) and to allot and issue from time to time such number of Shares as may be required to be issued pursuant to the exercise of Options granted by the Company under the Scheme, whether granted during the subsistence of this authority or otherwise, provided always that the aggregate number of additional Shares to be allotted and issued pursuant to the Scheme shall not exceed 15% of the total issued Shares (excluding treasury shares) from time to time and that such authority shall, unless revoked or varied by the Company in a general meeting, continue in force until the conclusion of the next AGM of the Company or the date by which the next AGM of the Company is required by law to be held, whichever is earlier. [See explanatory Note (d)]
10. Renewal of the IPT Mandate That: (a) approval be and is hereby given, for the purposes of Chapter 9 of the Catalist Rules, for the Company, its subsidiaries and associated companies (if any) (Group) or any of them that are deemed an entity at risk as defined in Chapter 9 of the Catalist Rules, to enter into any of the transactions falling within the type of Mandated Transactions as defined and set out in the Companys appendix to the Annual Report 2012 (Appendix), with any party who falls within the classes of Interested Persons as defined and set out in the Appendix, provided that such Mandated Transactions are carried out in the ordinary course of business, on normal commercial terms and are not prejudicial to the interests of the Company and its minority Shareholders, and is in accordance with the guidelines and review procedures for Mandated Transactions as set out in the Appendix (IPT Mandate); such approval given in paragraph (a) above shall, unless revoked or varied by the Company in general meeting, continue in force until the conclusion of the next AGM of the Company or the date by which the next AGM of the Company is required by law to be held, whichever is the earlier; and the Audit Committee of the Company be and are hereby authorised to complete and do all such acts and things (including, without limitation, executing all such documents as may be required) as they may consider expedient or necessary or in the interests of the Company to give effect to the IPT Mandate and/or this Ordinary Resolution. [See explanatory Note (e)]
(Resolution 9)
(b)
(c)
87
Explanatory Notes: (a) (b) Mr Tan Lye Huat will, upon re-election as a Director, remain as the Chairperson of the Audit Committee and a member of the Nominating and Remuneration Committees of the Company, and will be considered independent for the purposes of Rule 704(7) of the Catalist Rules. Mdm Lee Sok Koon will, upon re-election as a Director, remain as the Chairperson of the Nominating and Remuneration Committees of the Company and a member of the Audit Committee of the Company, and will be considered independent for the purposes of Rule 704(7) of the Catalist Rules. The Ordinary Resolution 7 in item 8 above, if passed, will empower the Directors, from the date of this AGM of the Company until the date of the next AGM of the Company, or the date which the next AGM of the Company is required by law to be held, or such authority is varied or revoked by the Company in general meeting, whichever is the earlier, to issue Shares, make or grant instruments convertible into Shares pursuant to such instruments, up to a number not exceeding, in total, 100% of the issued Shares (excluding treasury shares), of which up to 50% may be issued other than on a pro-rata basis to existing shareholders of the Company. The Ordinary Resolution 8 in item 9 above, if passed, will empower the Directors, from the date of this AGM of the Company until the next AGM of the Company, or the date by which the next AGM of the Company is required by law to be held, or such authority is varied or revoked by the Company in a general meeting, whichever is the earlier, to issue Shares pursuant to the exercise of options granted or to be granted under the Scheme up to a number not exceeding in total (for the entire duration of the Scheme) 15% of the total issued Shares (excluding treasury shares) from time to time.
(c)
(d)
Notes:
1. 2. A member of the Company entitled to attend and vote at the AGM of the Company is entitled to appoint a proxy to attend and vote in his/her stead. A proxy need not be a member of the Company. The instrument appointing a proxy must be deposited at the registered office of the Company at 420 North Bridge Road, #02-01 North Bridge Centre, Singapore 188727 not less than forty-eight (48) hours before the time for holding the AGM.
89
PROXY FORM
I/We,
(Please see notes overleaf before completing this form) (Name) (Address)
of being a *member/members of JAPAN FOODS HOLDING LTD. (Company) hereby appoint: Name Address NRIC/Passport No.
and/or (delete as appropriate) Name Address NRIC/Passport No. Proportion of Shareholdings No. of Shares %
or failing the person, or either or both of the persons, referred to above, the Chairman of the Annual General Meeting (AGM) of the Company as *my/our *proxy/proxies to vote for *me/us and on *my/our behalf, at the AGM of the Company, to be held at Ajisen Gourmet Town, 23 Serangoon Central, #03-06/07 nex, Singapore 556083 on Thursday, 26 July 2012 at 9.30 a.m. and at any adjournment thereof. *I/We direct *my/our *proxy/proxies to vote for or against the Resolutions to be proposed at the AGM of the Company as indicated hereunder. If no specific direction as to voting is given or in the event of any other matter arising at the AGM of the Company and at any adjournment thereof, the *proxy/proxies will vote or abstain from voting at *his/their discretion. The authority herein includes the right to demand or to join in demanding a poll and to vote on a poll. (Please indicate your vote For or Against with a tick [3] within the box provided.)
No. 1. 2. 3. 4. 5. 6.
Ordinary Resolutions Ordinary Business Adoption of the Directors Report and the audited financial statements for the financial year ended 31 March 2012, together with the Auditors Report thereon. Payment of proposed final tax-exempt one-tier dividend of 0.7 cents for each ordinary share in the capital of the Company for the financial year ended 31 March 2012. Approval of Directors fees of S$100,000 for the financial year ended 31 March 2012 (2011: S$100,000). Re-election of Mr Tan Lye Huat as a Director. Re-election of Mdm Lee Sok Koon as a Director. Re-appointment of Nexia TS Public Accounting Corporation as auditors of the Company. Special Business Authority to issue shares in the capital of the Company pursuant to Section 161 of the Companies Act, Cap. 50 of Singapore. Authority to grant options and issue shares in the capital of the Company under the Japan Foods Employee Share Option Scheme. Renewal of the IPT Mandate. 2012
For
Against
7. 8. 9.
Dated this
No. of Shares
Notes: 1. Please insert the total number of Shares held by you. If you have Shares entered against your name in the Depository Register (as defined in Section 130A of the Companies Act, Chapter 50 of Singapore), you should insert that number of Shares. If you have Shares registered in your name in the Register of Members, you should insert that number of Shares. If you have Shares entered against your name in the Depository Register and Shares registered in your name in the Register of Members, you should insert the aggregate number of Shares entered against your name in the Depository Register and registered in your name in the Register of Members. If no number is inserted, the instrument appointing a proxy or proxies shall be deemed to relate to all the Shares held by you. A member of the Company entitled to attend and vote at the above meeting is entitled to appoint one or two proxies to attend and vote in his/her stead. A proxy need not be a member of the Company. Where a member appoints two proxies, the appointments shall be invalid unless he/she specifies the proportion of his/her shareholding (expressed as a percentage of the whole) to be represented by each proxy. Completion and return of this instrument appointing a proxy shall not preclude a member from attending and voting at the AGM of the Company. Any appointment of proxy or proxies shall be deemed to be revoked if a member attends the meeting in person, and in such event, the Company reserves the right to refuse to admit any person or persons appointed under the instrument of proxy to the AGM of the Company.
2. 3. 4.
5. 6.
The instrument appointing a proxy or proxies must be deposited at the Companys place of business at 420 North Bridge Road, #02-01 North Bridge Centre, Singapore 188727, not less than 48 hours before the time appointed for the AGM of the Company. The instrument appointing a proxy or proxies must be under the hand of the appointor or of his attorney duly authorised in writing. Where the instrument appointing a proxy or proxies is executed by a corporation, it must be executed either under its seal or under the hand of an officer or attorney duly authorised. Where the instrument appointing a proxy or proxies is executed by an attorney on behalf of the appointor, the letter of power of attorney or a duly certified copy thereof must be lodged with the instrument. A corporation which is a member may authorise by resolution of its directors or other governing body such person as it thinks fit to act as its representative at the AGM of the Company, in accordance with Section 179 of the Companies Act, Chapter 50 of Singapore.
7.
General: The Company shall be entitled to reject the instrument appointing a proxy or proxies if it is incomplete, imporperly 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 Shares entered in the Depository Register, the Company may reject any instrument appointing a proxy or proxies lodged if the member, being the appointor, is not shown to have Shares entered against his name in the Depository Register as at 48 hours before the time appointed for holding the AGM of the Company, as certified by The Central Depository (Pte) Limited to the Company.