XPRS Xpress Holdings Annual Report 2012 - Next Lap Beyond Print

7/29/2019 XPRS Xpress Holdings Annual Report 2012 - Next Lap Beyond Print ...

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Xpress Holdings Ltd

Annual Report 2012

THE

NEXTLAPbeyond print....


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01 Vision/Mission

02 Financial Highlights

03 Corporate Structure

04 Chairmans Statement

06 Board of Directors

08 Operations Review

10 Our Products

12 Our Geographical Presence

13 Corporate Governance

26 Financial Contents

To be the industry leader in time-sensitive

printing services with unsurpassed

reputation for speed, absolute reliability

and uncompromising quality.

To exceed customer expectations

through service excellence and product

innovation; reach and surpass shareholder

expectations by striving for new growthand cost efciencies; develop employee

potential by providing a challenging, but

safe and happy work environment; be

considerate to supplier needs by being

fair and reasonable; and be socially and

environmentally conscious, and where

possible, to positively contribute back to

the society.

CONTeNTS

Established in 1986, Xpress was listed on

the SGX Mainboard on 28 June 1999. With

its headquarters in Singapore, the Groups

staff strength of 451 is united by its core values

and commitment to excellence and quality.

The Group offers the full range of print management

services that include conceptualisation, design,

copywriting, translation, typesetting and colourproong; printing; post-press packaging; global

distribution and delivery.

Xpress flagship Print Stations, its sales and service

centres, are strategically located at the heart of the

business districts in the key cities of China, Vietnam,

the Philippines, Malaysia, Hong Kong, Australia and

Singapore. Supported by a comprehensive network of

printing facilities, Xpress Print Stations provide clients

easy-access to print services at quick-turnaround time

in close proximities. The On-Site Print Stations provide

an extension of its services by bringing them right to

the clients premises.

Products of Xpress include nancial research

reports, annual reports, asset management

reports, IPO prospectuses, corporate brochures,

year books, magazines and other commercial

publications and collaterals.

With innovative use of technology, Xpress

will continuously revolutionise the pace

of competition in the printing industry

and raise the standards of customer

service by offering unsurpassed

convenience, quality, speedand reliability to its

customers.

Xpess Holdins Ltd | Annual Report 2012 1


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GROUP FINANCIALS AT 31 JULY 2012$000

2011$000

2010$000

2009$000

2008$000

INCOME STATEMENT

Revenue 38,862 48,313 59,545 54,999 61,290

Operating EBITDA* (248) 9,274 8,476 8,927 10,861

Prot/Loss before income tax (4,558) 5,289 8,916 10,291 10,311

Net prot/Loss after tax and minority interests (4,579) 5,263 8,470 13,025 10,234

BALANCE SHEET

Total assets 162,648 163,303 164,678 165,819 142,882

Net tangible assets 73,136 75,996 78,517 80,558 46,865

Total equity 137,620 140,480 143,001 145,042 111,349

Total liabilities 25,028 22,823 21,677 20,777 31,533

Cash and cash equivalents 6,260 6,656 10,772 10,775 12,813

PEr SHArE DATA (SINgAPOrE CENTS)

Earnings per share - basic and diluted (0.30) 0.34 0.55 0.93 0.74

Net dividend (Final) - 0.03 0.06 0.11 0.13

Net dividend (Special) - - - 0.04 -

Net tangible assets 4.72 4.91 5.1 5.2 3.36Return on average shareholders equity (%) (3.3%) 3.7% 5.9% 10.2% 9.6%

*Operating EBITDA is dened as prot before tax excluding nancing costs, depreciation, amortization and non-operating income.

GROUP ReveNUe($M)

2008 2009 2010 2011 2012 2008 2009 2010 2011

61.3

55.059.5

48.3

9.6

4.24.7

5.3

OPeRATING PROFIT/LOSSbeFORe TAx($M)

38.9

(4.5)

2012

2 Xpress Holdings Ltd | Annual Report 2012


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100%Xpress Print

(Pte) Ltd

100%Precise MediaGroup Limited

100%Xpress Print

(Vietnam) Co., Ltd

Xpress Holdings(Korea Branch Ofce)

76%

Xpress Print(Australia) Pty Ltd

100%Xpress Print(K.L.) Sdn Bhd

100%Xpress Print(H.K.) Limited

100%

Print Planner(Beijing) Co., Ltd

100%

Print Planner(Hong Kong) Limited

100%Xpress Print(Shanghai) Co., Ltd

100%Print Planner(Shenzhen) Co., Ltd

100%Shenzhen Xpress PrintTechnology Co., Ltd

100%Print Planner (Intl) Limited

100%Print Planner(Chengdu) Co., Ltd

100%Xpress Print(Shenyang) Co., Ltd

XPrESS HOLDINgS LTD

100%Xpress Print

(Shenzhen) Co., Ltd

50%Shenzhen Xpress WisdomTranslation Co., Ltd

100%Xpress Print(Shenzhen) Co., Ltd Xiamen Branch

100%Xpress Print(Shenzhen) Co., Ltd Wuhan Branch

100%Xpress Print(Shenzhen) Co., Ltd Changsha Branch

100%Xpress Print(Shenzhen) Co., Ltd Guangzhou Branch

100%Xpress MediaPte Ltd

100%Xpress Print(Taiwan BranchOfce)

100%Xpress MediaPhilippines Inc.



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D Wan Kai Yuen

Independent Non-Executive Chairman

Our isting Print

Station ntworkcan tappd tooffr alu-adddusinss andlifstyl solutionsat a tim whn thdomstic conomyin Asia Pacific

Citis is growingin siz and itsuran workrs arcoming morsophisticatd and

intrnt-say.

4 Xpess Holdins Ltd | Annual Report 2012


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Dea Shaeholdes

A Challenin Yea

The nancial year ended 31 July 2012 (FY2012) was

a turbulent period for the global economy. Business

condence was buffeted by the European sovereign

debt crisis, continued weakness in the US economy and

simmering geopolitical issues. In Asia, fears of economic

slowdown in China also persisted throughout the year.

Amidst this challenging environment, Xpress recorded

sales of $38.8 million in FY2012, compared to $48.3

million in the prior year. During FY2012, we also made a

provision of $8.2 million in receivables, resulting in a loss

of $4.5 million, the rst since FY2002.

Excluding this provision and non-recurring items, our

Group recorded recurring operating prot of $3.2 million,

compared to $4.3 million in the prior year. Our Group

nished the year with net assets of $137.6 million,

equivalent to 8.9 cents per share.

Leveain ou Coe Stenths

In response to the challenging business environment,

Xpress will focus on maximising client value through

optimising efciency and leveraging the core strengths

that are our hallmark namely quality service, proven

track record, established reputation and strong brand

recognition. Our existing Print Station network can

be tapped to offer value-added business and lifestyle

solutions at a time when the domestic economy in Asia

Pacic Cities is growing in size and its urban workers are

becoming more sophisticated and internet-savvy. Our

Board will carefully evaluate various options to enhance

our value to customers and to shareholders.

Moving forward, Xpress will continue to prudently expand

our Print Station network to continue broadening our

market reach in an asset light framework.

Outlook

Global economic conditions are likely to remain uncertain

in the year ahead. To foster the long-term development

of our Group, we will rely on the strength of our business

model, brand recognition and broad network of 38

print stations. These are the battle tested competitive

strengths of our Group and we will leverage them

aggressively to build a strong foundation for growth inFY2013 and beyond.

Thanks and Appeciation

As we enter another challenging year, your support will

help us overcome challenges and embrace the new

opportunities ahead. I take this opportunity to extend my

deep appreciation to our valued shareholders, clients,

business associates and staff for their support, as well

as to my Board of Directors for the wise counsel. I look

forward to scaling greater heights together with you in

the years ahead.

D Wan Kai Yuen


29 October 2012

Xpress Holdings Ltd | Annual Report 2012 5


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D Wan Kai Yuen


Dr Wang Kai Yuen was appointed as IndependentNon-Executive Chairman on 25 March 2002. He chairsthe Nominating Committee and Investment and RiskManagement Committee; and is also a member of theAudit and Remuneration Committee.

Formerly the Managing Director of Fuji Xerox SingaporeSoftware Centre, he interacted with senior business andproduct development managers in the US, China andJapan of the global ofce equipment company. He retiredfrom Fuji Xerox in December 2009.

Because of his extensive exposure overseas,Dr Wang is familiar with American and Asian cultures,international business practices and corporate nanceand governance. Dr Wang had also participated in manyinternational meetings of parliamentarians during histenure as Member of Parliament from 1984 to 2006. Hehas wide business and political contacts in China, havingled many grassroots delegations to visit numerous cityand state governments. In 2005, Dr Wang was appointedas a Member in the Foreign Specialist Committee Overseas Chinese Affairs Ofce of the State Council,

Peoples Republic of China.

Dr Wang graduated in 1972 with First Class Honoursdegree in Electrical and Electronics from the NationalUniversity of Singapore, and holds a Master of Sciencein Electrical Engineering with a PhD in Engineering fromStanford University.

K K fon PBMFounder, CEO & Executive Director,Xpress Holdings Ltd

Mr K K Fong (Fong Kah Kuen) was re-appointed as

Chief Executive Ofcer & Executive Director on 16 May2010. He has over 30 years of experience in the printingindustry and served Xpress as its Chief Operating Ofcersince 2006. Based in Shenzhen, he was responsible forthe general management of the Group and the promotionof its activities and expansion in the region.

Mr K K Fong plays a pivotal role in setting the strategicdirection for the Group and has been instrumental in theGroups expansion, particularly in the Peoples Republicof China (PRC). He is also responsible for forging thestrategic relationships with the Groups major business

partners. He spearheaded the business development inthe PRC and built up the Groups robust print solutionbusiness, the engine of growth for Xpress.

He is a recipient of various national business awards

such as the National IT Award, the Enterprise of the YearAward, Enterprise 50 Awards, and the Entrepreneur ofthe Year Award. For his contributions to Singapore, hewas conferred the Public Service Medal by the Presidentof the Republic of Singapore in 2010.

Dalinton Tsen Te-LinExecutive Director

Mr Darlington Tseng was appointed as Executive Directoron 1 March 2008. He joined Xpress on 2 July 2007 asDirector of Business Development for Greater China.

Prior to joining Xpress, Mr Tseng held a senior executiveposition at BASF Taiwan Ltd, from 2005 to 2007. Hegained extensive knowledge of the regions businessclimate during his tenure with BASFs regional businessunit, where he collected vast market analyses andformulated strong marketing strategies. Between 1998and 2002, Mr. Tseng also worked in the chemicalindustry for AGI Corporation based in Taiwan where hewas responsible for the companys overseas market andsuccessfully set up the companys Mexico manufacturingplant that produces specialty varnish for printing/coating industry.

With his extensive knowledge of the regional businessclimate, Mr Tseng is responsible for strategising theGroups penetration into the Greater China marketsand growth opportunities in the Asia-Pacic markets.He is also involved in expanding the business andmanaging the development of service offerings to theGroups VIP accounts in China. To sustain the Groupscontinuing growth, he spearheaded the re-engineeringof operations to strengthen the Groups business model,while enhancing customer service, attracting andnurturing talent.

Mr Tseng graduated with Honours from Peking UniversitysInternational Masters of Business Administration.

Victo Khoo Choon MenExecutive Director

Mr Victor Khoo was appointed as Executive Directoron 1 March 2008. He is also the Director of Salesand Marketing, responsible for the management andsupervision of the Groups sales and marketing plans.

Mr Khoo joined Xpress in 1996 as an Account Manager,

servicing the Groups nancial printing clients. Hespearheaded Xpress Asset Management business,which continues to be a key product under the nancialprinting market. Mr Khoo is responsible for strategicplanning and sales. He has standardised Xpress



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K K fonPBM

Founder, CEO & Executive Director,Xpress Holdings Ltd

As part of our

olution to th ntlap, w ar ploringopportunitis totap into our ownntwork to offrsrics yond

print, catring toth incrasinglysophisticatd uranprofssionals andcutis.



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revenue and Pofit

For the full year ended 31 July 2012 (FY2012), the

Group recorded revenue of $38.9 million, down from

$48.3 million in the prior year. Revenue was moderated

by the effect of volatile business condence on our

nancial and time-sensitive printing business.

Mindful of the challenging economic environment, our

Group completed an extensive review of receivables

and set aside $8.2 million in provisions during the

year. This was the primary reason for the net loss of

$4.5 million recorded in FY2012. Excluding this and the

other items shown in the table below, the Group recorded

an adjusted recurring net prot of $3.2 million, versus

$4.3 million in the prior year.

FY2012S$m

FY2011S$m

Net loss(profit) before tax (4.5m) 5.3

Adjusted for:Provision for doubtful debts 8.2 -

Write back of non-recurring items (0.5) (1.0)Adjusted recurring profit before tax 3.2 4.3

Costs and Mains

In FY2012, direct material cost decreased by

approximately 22%. The overall decrease is consistent

with the change in revenue mix and in line with the lower

sales recorded and the Groups efforts in exercising

better control over processing and raw materials costs.

The Gross Prot margin increased from 56.1% in

FY2011 to 59.1% in FY2012 mainly due to a change inrevenue mix in favour of higher margin print management

business.

In FY2012, the Group reduced operating expenses by

$2.5 million to $21.2 million. This was achieved despite

signicant inflationary pressure, due to tight controls of

marketing expenses and other corporate expenditure.

Taxation

A signicant portion of the Groups prots from overseas

are tax-exempt. As a result, the Group recorded negligible

tax expense during both FY2012 and FY2011.

Net Asset Value

Shareholder funds as at 31 July was $137.6 million,

equivalent to 8.9 cents per share. This was slightly down

from the prior year primarily due to the provision for

doubtful debts taken during the year.

Outlook o Pint Sevices Maket

Although time-sensitive nancial and commercial printing

has been unfavourably affected by the current global

economic situation, we remain optimistic about our VIP

division, which witnessed strong growth in the past year.

Xpress will continue to focus on short print-run jobs,

catering to the growing market demand of low volume,

on-demand print services. We are positive that themarket will recover and we are well-positioned to capture

the growth opportunities.

Addin Value Beyond Pint

In view of the major disruption to the global print industry

in recent years, the Group is actively exploring ways to

offer value-added services beyond printing. Our Print

Station concept has allowed us in the last few years to

venture into low-volume high-mix print business, with a

signicant footprint established in major cities in China.As part of our evolution to the next lap, we are exploring

opportunities to tap into our own network to offer services

beyond print, catering to the increasingly sophisticated

urban professionals and executives.



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Commercial Print

Financial Print



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Large Format Printing

Corporate Premiums



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For Xpress to thrive in this challenging industry, it has to be a leader in

the print industry regionally. We have presence in 19 cities across the

Asia-Pacic region, where our Print Stations and On-Site Print Stations

are linked to a robust network of print facilities.

Our network of Print Stations is strategically linked to print factories

located within a 15 18 hour radius road transport distance.

12 Xpress Holdings Ltd | Annual Report 2012


15/96Xpress Hldings Ltd | Annual Report 2012 13

The Board o Directors (the Board) is committed to enhancing long-term shareholder value and in ensuring highstandards o corporate governance to protect the interests o shareholders and adheres to the principles and guidelinesset out in the Code o Corporate Governance 2005 (the Code).

This report outlines the Companys corporate governance practices with specic reerence made to the Code. TheBoard is pleased to conrm that the Company has complied with the Code.

A. Bard Matters

The Bards Cndct its Aairs

Principle 1: Eery cmpany shld be headed by an eectie Bard t lead and cntrl the cmpany. TheBard is cllectiely respnsible r the sccess the cmpany inclding the enhancement lng- termsharehlder ale. The Bard wrks with Management t achiee this and Management remains accntablet the Bard.

The primary unction o the Board is to protect the assets and to enhance the long-term value o the Company or itsshareholders. To this end the Board helps sets objectives and strategy and approves policies and perormance targets.The Board also oversees the processes or evaluating the adequacy o internal controls, risk management, nancialreporting, perormance evaluation, compliance and other monitoring and eedback responsibilities. Major acquisitionsare also approved at Board level.

To acilitate eective management, certain unctions have been delegated by the Board to various Board Committees.The Board Committees operate under clearly dened terms o reerence. The Chairman o the respective Committeeswill report to the Board on the outcome o the Committee meetings.

The Board conducts regular scheduled meetings during the year. Ad-hoc meetings are convened when circumstances

require. Article 99(2) o the Companys Articles o Association permits meetings o the Directors to be conducted bymeans o telephone conerence or other methods o simultaneous communication by electronic or telegraphic means.

A record o the Directors attendances at Board and Board Committee meetings during the nancial year ended 31 July2012 is disclosed as ollows:

Name Directr

Bard Adit Cmmittee Nminating CmmitteeRemneratin

Cmmittee

Inestment and RiskManagementCmmittee

N. meetings Attendance





Dr WangKai Yuen

5 5 4 4 2 2 4 4 2 2

Mr Fong KahKuen

5 5 NotApplicable

NotApplicable

NotApplicable

NotApplicable

4 3 NotApplicable

NotApplicable

Mr ChristopherChong MengTak

5 5 4 4 2 2Not

ApplicableNot

Applicable2 2

Mr SamChong Keen

5 5 4 4Not

ApplicableNot

Applicable4 4

NotApplicable

NotApplicable

Dr LeeTsu-Der

5 1Not

ApplicableNot

ApplicableNot

ApplicableNot

ApplicableNot

ApplicableNot

ApplicableNot

ApplicableNot

Applicable

Mr Jerry LeeYin Chia

5 5 4 4 2 2Not

ApplicableNot

Applicable2 2

Mr KhooChoon Meng

5 5Not

ApplicableNot

ApplicableNot

ApplicableNot

ApplicableNot

ApplicableNot

ApplicableNot

ApplicableNot

Applicable

Mr DarlingtonTseng Te-Lin 5 5

NotApplicable

NotApplicable

NotApplicable

NotApplicable

NotApplicable

NotApplicable

NotApplicable

NotApplicable

Mr LaiHock Meng(resigned on23/11/2012)

5 2 4 1Not

ApplicableNot

ApplicableNot

ApplicableNot

Applicable2 1

CoRPoRATEGovERNANCE


16/9614 Xpress Hldings Ltd | Annual Report 2012

At meetings and as and when necessary, the directors are provided with regular updates on changes in the relevantlaws and regulations to enable them to make well-inormed decisions. The Directors also take it upon themselves,to distribute certain tasks such as visiting various operational locations, meeting with key clients or suppliers andholding independent meetings with various proessionals and consultants to the Company during the year. The Boardencourages Directors to attend courses held by the SGX-ST, the Singapore Institute o Directors and other proessionalbodies. The Company has also been reviewing a set o policies which will orm the basis or a Code o Ethics. Duringthe year, several Directors have attended such seminars.

Bard Cmpsitin and Gidance

Principle 2: There shld be a strng and independent element n the Bard, which is able t exercisebjectie jdgment n crprate aairs independently, in particlar, rm Management. N indiidal rsmall grp indiidals shld be allwed t dminate the Bards decisin making.

Three out o the total eight Directors on the Board are independent, in accordance with the Codes denition oindependent director and guidance as to the existence o relationships which would deem a director not to beindependent. A urther two Directors are non-executive non-independent and unrelated to any executive Director.

The Board comprises the ollowing members:

Directr Fnctin Appintment Date Crrent Directrships Pblic Cmpanies

Past Directrships inther Listed Cmpanies(1 Agst 2008 t 31 Jly2012)

Dr Wang Kai Yuen Chairman o theBoard Non-Executive,Independent

25 March 20028 June 1999

A-Sonic Aerospace Ltd China Aviation Oil

(Singapore) Corporation Ltd ComortDelGro Corporation

Ltd COSCO Corporation

(Singapore) Ltd EOC Ltd Ezion Holdings Ltd Hiap Hoe Limited HLH Group Ltd Matex International Ltd SuperBowl Holdings Ltd

Carats Limited China Liestyle Food and

Beverages Group Limited Koon Holdings Ltd

Asian Micro Holdings Ltd

Christopher Chong Meng Tak Non-Executive,Independent

5 December 2001Ms Ong Wui Lengceased as analternate directorto Mr Chongwith eect rom 6February 2012

ASL Marine Holdings Ltd Koda Ltd Koon Holdings Limited Lorenzo International

Limited Ying Li International Real

Estate Limited GLG Corporation Ltd

(Listed on Australian StockExchange)

Sky China PetroleumServices Ltd

Win Fund (Listed onLuxembourg StockExchange)

Imagi International HoldingsLtd (Listed on Hong KongStock Exchange)

Sam Chong Keen Non-Executive,Independent

16 February 2008Mr Sam was re-designated as anindependent andnon-executivedirector o theCompany with eectrom 21 November2012

Lion Asiapac Ltd Stamord Tyres Corporation

Ltd

Sino-EnvironmentTechnology Group Limited

Jade Technologies Ltd

Fong Kah Kuen Executive DirectorChie Executive Ocer(CEO)

16 May 2010 N/A N/A

Darlington Tseng Te-Lin Executive Director 1 March 2008 N/A N/A

Khoo Choon Meng Executive Director 1 March 2008 N/A N/A

Dr Lee Tsu-Der Non-Executive, Non-Independent

15 December 2004 Hsu Fu Chi International Ltd N/A

Jerry Lee Yin Chia Non-Executive, Non-Independent

15 December 2004 N/A N/A

CoRPoRATEGovERNANCE



The Company has a good balance o directors who have extensive business, nancial, accounting and managementexperience. The proles o the Directors are ound in the Board o Directors section o this annual report. The diverseand objective judgment o the Independent and Non-Executive Directors on corporate aairs and their experience andcontributions are valuable to the Company.

The independent and non-executive Directors participate actively during Board meetings. In addition to providingconstructive advice to management on pertinent issues aecting the aairs and business o the Group, they also reviewmanagements perormance in meeting goals and objectives. The Company has beneted rom managements accessto its directors or guidance and exchange o views both within and outside o the meetings o the Board and BoardCommittees. The independent non-executive directors communicate amongst themselves and, as noted above, withthe Companys auditors and senior managers independently.

The Boards structure, size and composition are reviewed annually by the Nominating Committee who is o the view thatthe size o the Board in FY2012 was appropriate, taking into account the nature and scope o the Groups operations,to acilitate eective decision making.

The Nominating Committee is satised that the Board comprises Directors who, as a group, provide core competenciessuch as accounting, nance, business and management experience, industry knowledge, strategic planning experienceand customer-based experience and knowledge to lead the Company eectively.

Chairman and Chie Exectie ocer

Principle 3: There shld be a clear diisin respnsibilities at the tp the cmpany the wrking the Bard and the exectie respnsibility the cmpanys bsiness which will ensre a balance pwerand athrity, sch that n ne indiidal represents a cnsiderable cncentratin pwer.

The Company practices a clear division o responsibilities between the Chairman and the CEO since its listing on theSingapore Exchange Securities Trading Limited (SGX-ST) in 1999. This ensures an appropriate balance o powerbetween the Chairman and the CEO and thereby allows or increased accountability and greater capacity o the Boardor independent decision-making. The Chairman and the CEO are not related to each other.

The primary role o the Chairman, who perorms a non-executive unction, is to lead the Board eectively in all aspects,promote high standards o corporate governance and ensure that the directors receive accurate, timely and clearinormation. The Chairman also encourages regular and eective communications between the Board and Management,among the Directors, and the shareholders.

The CEO implements the Boards strategic directions and ensures compliance with regulatory standards and corporate

governance guidelines. The CEO also manages the daily running o the Groups operations. The CEO is assisted byan Executive Committee.

CoRPoRATEGovERNANCE



Bard Membership

Principle 4: There shld be a rmal and transparent prcess r the appintment new directrs t theBard.

The Nominating Committee (NC) is established or the purposes o ensuring that there is a ormal and transparentprocess or all Board appointments. The NC comprises the ollowing three members, the majority o whom areindependent non-executive directors:-

Dr Wang Kai Yuen (Chairman)Mr Christopher Chong Meng Tak (Member)Mr Jerry Lee Yin Chia (Member)

The NC has adopted written terms o reerence dening its membership, administration and duties. Some o the dutiesand responsibilities o the NC include:

a) to make recommendations to the Board on all board appointments having regard to the directors contributionand perormance;

b) determining annually whether or not a director is independent; and

c) deciding whether a director is able to and has adequately carried out his duties as a director o the Company inparticular where the director concerned has multiple board representations.

The NC has proposed to the Board and the Board has adopted the ollowing policies:

a. The Chairman should be an Independent or Non-Executive Director;b. That at least hal the Board shall comprise o Non-Executive Directors;c. The least one-third o the Board shall comprise o Independent Directors;d. The NC shall have the right to appoint such consultants as it deems necessary during a search or new directors;e. The implementation o a succession plan.

The NC notes that:-

The Chairman is an Independent Director; The Chairman is an Independent Director; Independent Directors comprise one-third o the Board.

Each member o our NC shall abstain rom voting on any resolution in respect o his re-nomination as a director.

No new director was appointed by the Company during the nancial year under review. In the event a new Directorhad been required the search would have been through search companies, contacts and recommendations so that theCompany could cast its net as wide as possible or the right candidates. In the event a new Director had been appointedthis Director: would have had a letter setting out his duties and obligations; undergone an orientation program withrespect to the Groups businesses and governance practices; and met with management to gain a better understandingo the Groups business operations.

The Companys Articles o Association requires one-third o the Directors or the number nearest to one-third, other thanthe Managing Director to retire by rotation at every Annual General Meeting (AGM).

CoRPoRATEGovERNANCE



Bard Perrmance

Principle 5: There shld be a rmal assessment the eectieness the Bard as a whle and thecntribtin by each directr t the eectieness the Bard.

The NC assesses the perormance and eectiveness o the Board and the contribution o individual directors. Theassessment process involves evaluation against a set o objective, quantitative and qualitative perormance criteria. Theperormance criteria includes: the evaluation o the size and composition o the Board; Director access to inormation;Board accountability and perormance against set targets, objectives and expected standards o conduct; and nancialtargets such as return on assets, return on equity and the Companys share price perormance. The Board, however,notes that the nancial indicators provide only a snapshot o the Companys perormance, and do not ully refect on-going risk or measure the sustainable long-term wealth and value creation o the Company.

The NC notes that some Directors have multiple board representations. Notwithstanding this, the NC is satised thateach Director is able to and has been adequately carrying out his duties as a director o the Company.

The Board and the NC have endeavoured to ensure that directors appointed to the Board possess the experience,knowledge and expertise critical to the Groups business.

Access t inrmatin

Principle 6: In rder t lll their respnsibilities, Bard members shld be prided with cmpleteadeate and timely inrmatin prir t Bard meetings and n an n-ging basis.

Management provides the Board with adequate and timely inormation as well as a review o the Groups perormanceprior to the Board meetings. All Directors have separate and independent access to the Groups senior management

and Company Secretary, should they have any queries on the aairs o the Group. Independent and non-executiveDirectors can and do visit various operational sites oten with little warning. Independent Directors have spoken to selectcustomers, suppliers and middle management sta. Independent Directors also meet the proessional advisers o theCompany both with and without management.

Should the directors, whether as a group or individually, require independent proessional advice, the Company will bearthe expenses incurred i such advice is required to enable the directors to discharge their duties proessionally.

Prior to each Board and Board committee meeting, notice o meeting is issued to the Board and Board Committeemembers containing inormation on the agenda and documents to be reviewed. The Company Secretary attendsall Board meetings and is responsible or ensuring the Board procedures are ollowed and that applicable rules andregulations (in particular the Companies Act and the SGX-ST Listing rules) are complied with.

B. Remneratin Matters

Prcedres r Deelping Remneratin Plicies

Principle 7: There shld be a rmal and transparent prcedre r deelping plicy n exectieremneratin and r xing the remneratin packages indiidal directrs. N directr shld beinled in deciding his wn remneratin.

The Remuneration Committee (RC) is established or the purposes o ensuring that there is a ormal and transparentprocess or developing policy and xing the remuneration packages o individual directors. The composition o the RCwas changed with eect rom 8 December 2011. The RC now comprises the ollowing three members, the majority owhom are independent non-executive directors:

Mr Sam Chong Keen (Chairman)Dr Wang Kai Yuen (Member)Mr Fong Kah Kuen (Member)

CoRPoRATEGovERNANCE


20/9618 Xpress Holdings Ltd | Annual Report 2012

The RC has adopted written terms o reerence defning its membership, administration and duties. The duties andresponsibilities o the RC include:

a) recommending to the Board a ramework o remuneration or the Board and key executives;

b) recommending to the Board a ramework o remuneration or the Board and key executives; determining specifc

remuneration packages which should cover all aspects o remuneration including but not limited to directors

fees,salaries,allowances,bonuses,optionsandbenets-in-kindforeachExecutiveDirector,theCEOandsenior

management including but not limited to senior executives, divisional directors and those reporting directly to the

ManagingDirector,Chairman,CEOandemployeesrelatedtotheexecutivedirectorsandcontrollingshareholders

o the Group;

c) reviewing and recommending to the Board the terms o renewal o service contracts o directors;

d) administeringtheCompanysExecutiveShareOptionScheme;

e) appointing or retaining such proessional consultancy frm as the RC may deem necessary to enable it to

discharge its duties hereunder satisactory; and

) considering the various disclosure requirements or directors remuneration, particularly those required by

regulatory bodies such as the SGX-ST, and ensuring that there is adequate disclosure in the fnancial statements

to ensure and enhance transparency between the Company and relevant interested parties.

The RCs recommendations would be made in consultation with the Chairman o the Board and submitted or

endorsement by the entire Board.

No Director has or shall participate in decisions on his own remuneration.

Level and Mix o Remuneration

Principle 8: The level o remuneration should be appropriate to attract, retain and motivate the directorsneeded to run the company successully but the company should avoid paying more or this purpose. A

signifcant proportion o executive directors remuneration should be structured so as to link rewards to

corporate and individual perormance.

The Companys remuneration policy is to provide packages which will reward perormance and attract, retain and

motivate directors and key executives to run the business successully. In setting the remuneration packages, the RC

takes into consideration the remuneration and employment conditions within the country, the same industry and in

comparable companies, and takes into account the business segments and the individuals perormance.

The executive Directors do not receive directors ees. The remuneration or the executive directors and the key

executives comprises primarily a basic salary component and a variable component which is the bonuses, based on the

perormance o the Group as a whole and their individual perormance. Executive Directors may also be given sharesfromtheCompanysExecutivesShareOptionScheme.

The non-executive directors receive directors ees, in accordance with their contributions, taking into account actors

such as responsibilities, eort and time spent or serving on the Board and Board Committees. The Board may, i

it considers necessary, consult experts on the remuneration o non-executive directors and would recommend the

remuneration o the non-executive directors or approval at the AGM. The non-executive directors ees were derived

using the ee structure as ollows:

CORPORATEGOVERNANCE


21/96



The Company encourages independent Directors to invest in the Company. The shareholdings o the individual directorso the Company are set out on page F 01 o this Annual Report. None o the independent Directors hold shares in thesubsidiaries o the Company.

The Company has not disclosed the remuneration o its key executives as it is not in the best interests o the Companyand the employees to disclose such details due to the sensitive nature o such inormation.

C. Accntability and Adit

Accntability

Principle 10: The Bard shld present a balanced and nderstandable assessment the cmpanysperrmance, psitin and prspects.

One o the Boards principal duties is to enhance and protect the long-term value and returns to the shareholders o theCompany. The accountability o the Board to the shareholders is demonstrated through the presentation o the periodicnancial statements, including powerpoint presentations, as well as the timely announcements and news releases osignicant corporate developments and activities so that the shareholders can have a detailed explanation and balancedassessment o the Groups nancial position and prospects.

Management presents to the Audit Committee the interim and ull-year results. The Audit Committee reviews the resultsand recommends them to the Board or approval. The Board approves the results and authorizes the release o theresults to the SGX-ST and the public via SGXNET as required by SGX-ST Listing Manual.

In line with the requirements o SGX-ST, negative assurance conrmations on interim nancial results were issued by the

Board conrming that to the best o its knowledge, nothing had come to the attention o the Board which may renderthe Companys quarterly results to be alse or misleading in any material aspect.

Adit Cmmittee

Principle 11: The Bard shld establish an Adit Cmmittee (AC) with written terms reerence whichclearly set t its athrity and dties.

The AC comprises the ollowing our members, the majority o whom are independent non-executive directors:-

Mr Christopher Chong Meng Tak (Chairman)Dr Wang Kai Yuen (Member)

Mr Jerry Lee Yin Chia (Member)Mr Sam Chong Keen (Member)

The prole o each member o the AC is ound in the Board o Directors section o this annual report. The Board iso the view that the members o the AC are eminently qualied; having accounting or related nancial managementexpertise, industry experience or such other experience as the Board interprets such qualication, to discharge theirresponsibilities.

As a sub-committee o the Board o Directors, it assists the Board in discharging their responsibility to maximize long-term shareholder value, saeguard the Groups assets, maintain adequate accounting records, and develop and maintaineective systems o internal control, with the overall objective o ensuring that Management creates and maintains aneective control environment in the Group. The AC will also review and supervise the internal audit unctions o theGroup.

The AC will provide a channel o communication between our Board, our Management and our external auditors onmatters relating to audit.

CoRPoRATEGovERNANCE


23/96


24/96



) monitoring the processes o investment management to ensure that they are being implemented in a proessionaland controlled manner according to plan;

g) reviewing the adequacy and completeness o the Groups risk management processes and recommendimprovements, where deemed necessary; and

h) reviewing the Companys key material risks that have been identied by the risk management process andwhether the response action plans being developed by Management are adequate to manage these risks at anacceptable level.

In addition, the Group has also put in place appropriate risk management policies and processes to evaluate theoperating, investment and nancial risks o the Group. In evaluating a new investment proposal or business opportunity,several actors will be considered by Management and the Board beore a decision is being made. These actors,which are essentially designed to ensure that the rate o returns commensurate with the risk exposure taken, including

evaluating (i) return on investment; (ii ) the pay back period; (iii) cash fow generation and certainty o cash fow generationrom the operation; (iv) potential or growth; (v) specic risk; (vi) market and sector risk; and (vi) other risk such as countrystability.

The main areas o nancial risks aced by the Group are oreign exchange risk, interest rate risk, credit risk and liquidityrisk. Further details o the nancial risks and how the Group manages them are set out in the notes to the nancialstatements in this annual report.

Based on the external and internal auditors report, the actions taken by the group on the recommendations made byexternal and internal auditors, the on-going review o and the continuing eorts at enhancing controls and processes, theBoard and the Audit Committee, are o the opinion that the Groups internal controls, addressing nancial, operationaland compliance risks, were adequate as at 31 July 2012.

Internal Adit

Principle 13: The Cmpany shld establish an internal adit nctin that is independent the actiitiesit adits.

The Company has outsourced its internal audit unction. The scope o the internal audit unction is to:

review the eectiveness o the Groups internal controls; provide assurance that key business and operational risks are identied and managed; internal controls are in place and unctioning as intended; and operations are conducted in an eective and ecient manner.

The internal auditors are able to meet the standards set by nationally or internationally recognized bodies, including theStandards or the Proessional Practice o Internal Auditing set by The Institute o Internal Auditors. The annual internalaudit plan is prepared in consultation with, but independently o Management, and submitted to the AC or approval.

The internal auditors report directly to the AC.

Cmmnicatin with Sharehlders

Principle 14: Cmpanies shld engage in reglar, eectie and air cmmnicatin with sharehlders.

The Company endeavours to communicate regularly, eectively and airly with its shareholders. Timely, as well as,detailed disclosure in plain English is made to the public in compliance with SGX-ST guidelines. The Company does notpractice selective disclosure and endeavours not to use overly technical or legal language. All price sensitive inormationis announced on the SGXNET on a timely basis.

CoRPoRATEGovERNANCE



Shareholders and other investors are provided regularly with:1. An Annual Report;2. Quarterly nancial results and other nancial announcements as required;3. Press releases and other announcements on important developments;4. Powerpoint Presentations;5. A website and portal (www.xpress.com.sg); and6. The presence o all members o Senior Management at the AGM.

Greater Sharehlder Participatin

Principle 15: Cmpanies shld encrage greater sharehlder participatin at AGMs, and allw sharehldersthe pprtnity t cmmnicate their iews n aris matters aecting the cmpany.

All registered shareholders are invited to participate and given the right to vote on resolutions at general meetings. Everymatter requiring shareholders approval is proposed as a separate resolution. Each item o special business includedin the notice o the meeting is accompanied, where appropriate, by an explanation or the proposed resolution. Proxyorm is sent with notice o general meeting to all shareholders. I any shareholder is unable to attend the general meetingin person, he is allowed to appoint up to two proxies to attend and vote on his behal. The Company also allows CPFinvestors to attend general meetings as observers. Voting in absentia by mail, acsimile or e-mail is currently not allowedas such voting methods would need to be cautiously evaluated or easibility to ensure that there is no compromise tothe integrity o the inormation and the authentication o the shareholders identity.

The Board, Chairman o the AC, NC, RC and management are present at general meetings to address questionsthat shareholders may have concerning the Group. The Companys external auditors are also present to address anyrelevant queries relating to the conduct o audit and the preparation and content o the auditors report.

D. Dealings In Secrities

The Company has adopted an Internal Compliance Code on Securities Transactions to Directors and key employees(including employees with access to price-sensitive inormation to the Companys shares by these persons) o the Groupsetting out the code o conduct on transactions in the Companys shares by these persons, the implications o insidertrading and the recommendations o the Best Practices Guide issued by the SGX-ST.

The Internal Compliance Code also prohibits dealings in securities o the Company by Directors and employees duringthe period commencing at least 4 weeks beore the announcement o the hal-year and ull-year nancial results, andtwo weeks beore the announcement o the rst and third quarter results and ending on the date o the announcement.

E. Interested Persn Transactin

The Board had reviewed all interested person transactions or the nancial year ended 31 July 2012 and was satisedthat the transactions were conducted at arms length and do not require any immediate announcement or obtainshareholder approval as dened under the Listing Rules.

F. Material Cntracts

Pursuant to Rule 1207(8) o the Listing Manual, the Company conrms that there was no material contract enteredinto between the company and its subsidiaries which involved the interests o any director or controlling shareholder,either still subsisting at the end o the nancial year or i not then subsisting, which was entered into since the end o theprevious nancial year.

CoRPoRATEGovERNANCE



G. SGX Checklists

The Company submits the ollowing compliance checklists to SGX-ST when required:

Acquisitions and Realisations Announcement o Financial Statements o SGX-ST Listed Companies Annual Report Bonus Issue o Shares and Warrants Circular Disclosure in relation to Employee Share Option Scheme Circular Disclosure in relation to Share Buy-Back Mandate Placement o Shares or Convertibles For Cash Rights Issue

Share Split

CoRPoRATEGovERNANCE


28/96F N Xpress Holdings Ltd | Annual Report 2012

F 01 Directors report

F 07 Statement by directors

F 08 Independent auditors report

F 10 Statements o nancial position

F 11 Consolidated income statement

F 12 Consolidated statement o comprehensive income

F 13 Consolidated statement o changes in equity

F 14 Consolidated statement o cash fows

F 15 Notes to the nancial statements

F 60 Statistics o Shareholdings

F 61 Shareholders Inormation

F 62 Notice o Annual General Meeting

F 65 Proxy Form

FINANCIAL CONTENTS


29/96


30/96F 02 Xpress Holdings Ltd | Annual Report 2012

DIRECToRS INTEREST IN SHARES oR DEBENTuRES (CoNTD)

other hldings in which the directr

is deemed t hae an interest

At beginningo the year

At end the year

Fong Kah Kuen @ Foong Kah Kuen ** 77,539,000 77,539,000

Dr Lee Tsu-Der *** 137,943,313 137,943,313

optins t sbscribe r rdinary sharesexercisable between 11.12.2004 and 10.12.2013 at

an exercise price $0.0733 per share

Khoo Choon Meng 200,000 200,000

optins t sbscribe r rdinary sharesexercisable between 01.03.2008 and 28.02.2017 atan exercise price $0.1650 per share

Khoo Choon Meng 300,000 300,000


Darlington Tseng Te-Lin 2,000,000 2,000,000Khoo Choon Meng 2,000,000 2,000,000


Dr Wang Kai Yuen 2,000,000 2,000,000Chong Meng Tak, Christopher 2,000,000 2,000,000Lai Hock Meng (Resigned on 23 November 2011) 2,000,000 -Dr Lee Tsu-Der 2,000,000 2,000,000Jerry Lee Yin Chia 2,000,000 2,000,000

Sam Chong Keen 2,000,000 2,000,000


Darlington Tseng Te-Lin 2,000,000 2,000,000Khoo Choon Meng 2,000,000 2,000,000

* Chong Meng Tak, Christopher has a total benecial interest in 15,032,830 shares out o which 5,132,830 shares are held in the nameo a nominee.

** By virtue o Section 7 o the Act, Mr Fong Kah Kuen @ Foong Kah Kuen is deemed to have an interest in the 77,539,000 shares heldby K K Fong Holdings Pte Ltd.

*** By virtue o Section 7 o the Act, Dr Lee Tsu-Der is deemed to have an interest in the 137,943,313 shares held by Triumph DevelopmentHoldings Limited.

There were no changes in any o the above mentioned interests in the Company between the end o the nancial yearand 21 August 2012.

DIRECToRSREPoRTor the nancial year ended 31 July 2012


31/96



No share options were granted during the nancial year ended 31 July 2012. During the nancial year ended 31 July2011, 4,000,000 share options were exercised. The weighted average share price at the date o exercise or optionsexercised was $0.06.

At 31 July 2012, 33,181,000 (2011 - 36,496,000) share options were exercisable.

The weighted average remaining contractual lie o share options outstanding at 31 July 2012 is 3.4 (2011 - 4.1) years.

d) Inormation o directors o the Company participating in the SOS is as ollows:

Name participants

Aggregate

ptinsgranted since

cmmencement SoS t the

beginning thenancial year

optinsgranted

dring thenancial

year

Aggregate

ptinsgranted since


end thenancial year

Aggregateptins

cancelled/

lapsed/reited since


end thenancial year

Aggregate

ptinsexercised since


end thenancial year

Aggregate

ptinststanding

at end the

nancialyear

Dr Wang Kai Yuen 2,000,000 - 2,000,000 - - 2,000,000

Darlington Tseng

Te-Lin 4,000,000 - 4,000,000 - - 4,000,000

Khoo Choon Meng 4,500,000 - 4,500,000 - - 4,500,000

Dr Lee Tsu-Der 2,000,000 - 2,000,000 - - 2,000,000

Christopher Chong

Meng Tak 2,000,000 - 2,000,000 - - 2,000,000Lai Hock Meng

(Resigned on 23November 2011)

2,000,000 - 2,000,000 (2,000,000) - -

Jerry Lee Yin Chia 2,000,000 - 2,000,000 - - 2,000,000

Sam Chong Keen 2,000,000 - 2,000,000 - - 2,000,000

20,500,000 - 20,500,000 (2,000,000) - 18,500,000

e) Since the commencement o the SOS, no participant under the SOS has been granted 5% or more o the totaloptions available under the Scheme.

) These options do not entitle the holder to participate, by virtue o such holdings, to any right to participate in any

share issue o any other corporation. Except as disclosed above, there were no unissued shares o the Companyor its subsidiaries under options granted by the Company at the end o the nancial year.



33/96



INDEPENDENT AuDIToR

The independent auditor, Foo Kon Tan Grant Thornton LLP, Certied Public Accountants, has expressed willingness toaccept re-appointment.

On behal o the Directors

...................................................................WANG KAI YuENChairman

...................................................................FoNG KAH KuENChie Executive Ocer

Dated: 29 October 2012



35/96



Reprt n the nancial statements

We have audited the accompanying nancial statements o Xpress Holdings Ltd (the Company) and its subsidiaries(the Group), which comprise the statements o nancial position o the Group and the Company as at 31 July 2012,the income statement, statement o comprehensive income, statement o changes in equity and statement o cashfows o the Group or the year then ended, and a summary o signicant accounting policies and other explanatoryinormation.

Managements responsibility or the nancial statements

Management is responsible or the preparation o nancial statements that give a true and air view in accordance withthe provisions o the Singapore Companies Act, Chapter 50 (the Act) and Singapore Financial Reporting Standards,

and or devising and maintaining a system o internal accounting controls sucient to provide a reasonable assurancethat assets are saeguarded against loss rom unauthorised use or disposition; and transactions are properly authorisedand that they are recorded as necessary to permit the preparation o true and air prot and loss accounts and balancesheets and to maintain accountability o assets.

Auditors responsibility

Our responsibility is to express an opinion on these nancial statements based on our audit. We conducted our audit inaccordance with Singapore Standards on Auditing. Those standards require that we comply with ethical requirementsand plan and perorm the audit to obtain reasonable assurance about whether the nancial statements are ree rommaterial misstatement.

An audit involves perorming procedures to obtain audit evidence about the amounts and disclosures in the nancial

statements. The procedures selected depend on the auditors judgment, including the assessment o the risks omaterial misstatement o the nancial statements, whether due to raud or error. In making those risk assessments, theauditor considers internal control relevant to the entitys preparation o nancial statements that give a true and air viewin order to design audit procedures that are appropriate in the circumstances, but not or the purpose o expressingan opinion on the eectiveness o the entitys internal control. An audit also includes evaluating the appropriateness oaccounting policies used and the reasonableness o accounting estimates made by management, as well as evaluatingthe overall presentation o the nancial statements.

We believe that the audit evidence we have obtained is sucient and appropriate to provide a basis or our audit opinion.

INDEPENDENT AuDIToRSREPoRTto the members o Xpress Holdings Ltd


37/96Xpress Holdings Ltd | Annual Report 2012 F 09

Independent aditrs reprt t the members Xpress Hldings Ltd (Cntd)

Opinion

In our opinion, the consolidated nancial statements o the Group and the statement o nancial position o the Companyare properly drawn up in accordance with the provisions o the Act and Singapore Financial Reporting Standards to givea true and air view o the state o aairs o the Company and o the Group as at 31 July 2012 and the results, changesin equity and the cash fows o the Group or the nancial year ended on that date.

Reprt n ther legal and reglatry reirements

In our opinion, the accounting and other records required by the Act to be kept by the Company and by those subsidiariesincorporated in Singapore o which we are the auditors have been properly kept in accordance with the provisions othe Act.

F Kn Tan Grant Thrntn LLPPublic Accountantsand Certied Public Accountants

Singapore, 29 October 2012

INDEPENDENT AuDIToRSREPoRTto the members o Xpress Holdings Ltd


38/96



Year ended Year ended

31 Jly 2012 31 July 2011

Note $000 $000

Revenue 18 38,862 48,313

Changes in inventories o raw materials and consumables 440 (273)

Raw materials and consumables used 8 (16,335) (20,943)

Depreciation o plant and equipment 4 (2,877) (2,880)

Other income 19(a) 756 689

Sta costs 19(b) (9,922) (10,277)

Other expenses 19(c) (15,159) (9,439)Exchange gain, net 1,023 1,174

Interest income 20(a) 87 30

Finance costs 20(b) (1,433) (1,105)

(Loss)/prot beore taxation 20(c) (4,558) 5,289

Tax expense 21 (21) (26)

(Loss)/prot or the year (4,579) 5,263

(Loss)/prot or the year attributable to:

Owners o the Company (4,581) 5,261

Non-controlling interests 2 2

(4,579) 5,263

(Loss)/Earnings per share (cents)

- Basic 22 (0.30) 0.34

- Diluted 22 (0.30) 0.34

CoNSoLIDATED INCoMESTATEMENTor the nancial year ended 31 July 2012

The accompanying notes orm an integral part o these fnancial statements



Year ended Year ended

31 Jly 2012 31 July 2011

$000 $000

(Loss)/prot ater taxation (4,579) 5,263

Other comprehensive income, at nil tax:

Translation dierences arising rom translation o nancial

statements o oreign operations 2,988 (4,020)

Translation dierences arising rom monetary items orming parto net investments in oreign operations (804) (3,035)

Other comprehensive income/(loss) or the year 2,184 (7,055)

Total comprehensive (loss)/income or the year (2,395) (1,792)

Total comprehensive (loss)/income attributable to:

Owners o the Company (2,380) (1,808)

Non-controlling interests (15) 16

Total comprehensive (loss)/income or the year (2,395) (1,792)

CoNSoLIDATED STATEMENT oFCoMPREHENSIvE INCoMEor the nancial year ended 31 July 2012




Fair Crrency Share Nn-

Share ale translatin ptin Retained cntrlling Ttal

capital resere resere resere earnings Ttal interests eity

$000 $000 $000 $000 $000 $000 $000 $000

Note 11Note 12(a) Note 12(b) Note 12(c)

Balance at 1 Agst 2010 100,390 5,717 (3,978) 706 39,987 142,822 179 143,001

Total comprehensive incomeor the year

- - (7,069) - 5,261 (1,808) 16 (1,792)

Exercise o share options 200 - - - - 200 - 200

Dividends (Note 28) - - - - (929) (929) - (929)Balance at 31 Jly 2011 100,590 5,717 (11,047) 706 44,319 140,285 195 140,480

Total comprehensive loss orthe year

- - 2,201 - (4,581) (2,380) (15) (2,395)

Dividends (Note 28) - - - - (465) (465) - (465)

Balance at 31 Jly 2012 100,590 5,717 (8,846) 706 39,273 137,440 180 137,620


CoNSoLIDATED STATEMENT oFCHANGES IN EquITYor the nancial year ended 31 July 2012



2012 2011

Note $000 $000

Cash fws rm operating Actiities

(Loss)/prot beore taxation (4,558) 5,289

Adjustments or:

Depreciation o plant and equipment 4 2,877 2,880

Plant and equipment written o 20(c) 7 31

Gain on disposal o plant and equipment 20(c) (246) (46)

Interest income 20(a) (87) (30)

Interest expense 20(b) 961 958

Exchange gain on project receivable (273) -Fair value adjustment or project receivable 20(b) 472 147

operating (lss)/prt bere wrking capital changes (847) 9,229

Changes in:

- Inventories (441) 250

- Trade and other receivables 1,638 (12,266)

- Trade and other payables 1,913 299

Cash generated rm/(sed in) peratins 2,263 (2,488)

Income tax reunded/(paid) 2 (26)

Cash fws generated rm/(sed in) perating actiities 2,265 (2,514)

Cash fws rm Inesting Actiities

Interest received 35 30

Purchase o plant and equipment (Note A) (1,151) (1,782)

Proceeds rom disposal o plant and equipment 412 151

Proceeds rom disposal o long-term investments - 2,227

Cash fws (sed in)/generated rm inesting actiities (704) 626

Cash Flws rm Financing Actiities

Interest paid (961) (958)

Repayment o nance lease instalments (1,519) (1,163)

Proceeds rom borrowings 2,026 4,814

Repayment o borrowings (1,272) (4,938)

Proceed rom sale and leaseback o plant and equipment - 930

Proceeds rom exercise o share options (Note 11) - 200

Deposits pledged 80 (650)

Dividend paid to owners o the Company (465) (929)

Cash fws sed in nancing actiities (2,111) (2,694)

Net decrease in cash and cash eialents (550) (4,582)

Cash and cash equivalents at beginning o year (4,054) 1,679

Eect o exchange fuctuations on cash held (188) (1,151)

Cash and cash eialents at end year 10 (4,792) (4,054)

Ntes:

A Plant and eipment

Plant and equipment amounting to $0.50 million (2011 - $0.90 million) was acquired through nance lease arrangements.


CoNSoLIDATED STATEMENT oF CASHFLoWSor the nancial year ended 31 July 2012



Notes to the fiNaNcial

statemeNtor the fnancial year ended 31 July 2012

The nancial statements o the Company and the consolidated nancial statements o the Group were authorised orissue in accordance with a resolution o the Directors on 29 October 2012.

1 CoRPoRATE INFoRMATIoN

Xpress Holdings Ltd is incorporated in the Republic o Singapore with its principal place o business and registeredoce at No. 1 Kallang Way 2A, Communications Techno Centre, Singapore 347495. The Company is listed onthe Singapore Exchange Securities Trading Limited.

The principal activities o the Company are those relating to investment holding. The principal activities osignicant subsidiaries are set out in Note 5 to the accompanying nancial statements.

2 BASIS oF PREPARATIoN

The nancial statements have been prepared in accordance with Singapore Financial Reporting Standards(FRS) including related Interpretations promulgated by the Accounting Standards Council.

The nancial statements have been prepared on the historical basis, except as disclosed in the accountingpolicies below.

The nancial statements are presented in Singapore dollars which is the Companys unctional currency. Allnancial inormation has been presented in Singapore dollars, unless otherwise stated.

The accounting policies set out below have been applied consistently to all periods presented in these nancialstatements and have been applied consistently by Group entities.

Use o estimates and judgements

The preparation o nancial statements in conormity with FRS requires management to make judgement,estimates and assumptions that aect the application o accounting policies and the reported amounts o assets,liabilities, income and expenses. The estimates and associated assumptions are based on historical experienceand various other actors that are believed to be reasonable under the circumstances, the results o which ormthe basis o making the judgement about carrying amounts o assets and liabilities that are not readily apparentrom other sources. Actual results may dier rom these estimates.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates arerecognised in the period in which the estimate is revised and in any uture periods aected.

The key assumptions concerning the uture and other key sources o estimation uncertainty at the balance sheetdate, that have a signicant risk o causing a material adjustment to the carrying amounts o assets and liabilitieswithin the next nancial year are discussed below.


44/96F 16 Xpr Hldng Ld | Annual Report 2012

Notes to tHe fiNaNciaLstatemeNtor the fnancial year ended 31 July 2012

2 BASIS oF PREPARATIoN (CoNTD)

Allwance r dbtl receiables

Allowance or doubtul receivables o the Group is based on an evaluation o the recoverability o trade and otherreceivables. Allowances are applied to trade and other receivables where events or changes in circumstancesindicate that the balances may not be collectible. The identication o bad and doubtul debts requires the useo judgement and estimates. Where the expected outcome is dierent rom the original estimate, such dierencewill impact carrying value o trade and other receivables and doubtul debt expenses in the period in which suchestimate has been changed.

Impairment gdwill and ther nn-nancial assets

Goodwill is tested or impairment at least annually, more oten i indicators o impairment are identied. Assetsthat are subject to depreciation and amortisation are reviewed to determine whether there is any such indicationthat the carrying value o these assets may not be recoverable and have suered an impairment loss. I any suchindication exists, the assets are tested or impairment. The recoverable amounts o the assets are estimated inorder to determine the extent o the impairment loss, i any. The recoverable amount is the higher o an assetsair value less costs to sell and value in use. Such impairment loss is recognised in prot or loss.

Management judgement is required in the area o asset impairment, particularly in assessing: (1) whether an eventhas occurred that may indicate that the related asset values may not be recoverable; (2) whether the carryingvalue o an asset can be supported by the net present value o uture cash fows which are estimated based uponthe continued use o the asset in the business; (3) the appropriate key assumptions to be applied in preparingcash fow projections including whether these cash fow projections are discounted using an appropriate rate.

Changing the assumptions selected by management to determine the level, i any, o impairment, including thediscount rates or the growth rate assumptions in the cash fow projections could materially aect the net presentvalue used in the impairment test and as a result aect the Groups results.

Impairment testing or cash-generating units containing goodwill

The recoverable amount o goodwill is determined based on the values in use o the cash-generating unit (CGU)to which goodwill is allocated. Determining the recoverable amount o requires management to make signicantjudgments, estimates and assumptions. While management believes that the estimates and assumptionsunderlying the valuation methodology are reasonable, these estimates and assumptions could have a signicantimpact on whether or not an impairment charge is recognised and also the magnitude o any such charge.

The results o an impairment analysis are as o a point in time. There is no assurance that the actual utureearnings or cash fows o the CGU will not decline signicantly rom the projections. Any signicant decline in theoperations could result in in impairment charges in uture periods, which could have a signicant impact on theGroups operating results and nancial condition.

A number o actors, many o which management has no ability to control, could aect the Groups nancialcondition, operating results and business prospects and could cause actual results to dier rom the estimatesand assumptions management employed. These actors include: a prolonged global economic slowdown; theinability to develop new and enhanced services in a timely manner; a signicant decrease in the demand or theGroups services; a signicant adverse change in the business climate; successul eorts by competitors to gainmarket share in the Groups markets; and a loss o key personnel.

A hypothetical one percentage point increase in the pre-tax discount rate and one percentage point decrease inthe long-term assumed growth rate would not result in an impairment o goodwill.





2 BASIS oF PREPARATIoN (CoNTD)

Depreciatin plant and eipment

Plant and equipment are depreciated on a straight-line basis over their estimated useul lives. Managementestimates the useul lives o plant and equipment to be within the range as indicated in the accounting policy orplant and equipment and depreciation. Changes in the expected level o usage and technological developmentscould impact the economic useul lives and the residual values o these assets, leading to potential changes inuture depreciation charges, impairment losses and/or write-os. A 5% (2011 - 5%) dierence in the expecteduseul lives o these assets rom managements estimates would result in approximately 2.6% variance in theGroups loss or the nancial year (2011 - 2.3% prot or the nancial year).

Impairment inestment in sbsidiaries

Determining whether investments in subsidiaries are impaired requires an estimation o the value-in-use o theseinvestments. The value-in-use calculation requires the Group to estimate the uture cash fows expected rom thecash-generating units and an appropriate discount rate in order to calculate the present value o the uture cashfows. Management has evaluated the recoverability o the investments based on such estimates.

Impairment aailable-r-sale Financial Assets

The Group ollows the guidance o IAS 39 to determine when an available-or-sale nancial asset is impaired.This determination requires signicant judgement. In making this judgement, the Group evaluates, among otheractors, the duration and extent to which the air value o an investment is less than its cost; and the nancial healtho and short-term business outlook or the investee, including actors such as industry and sector perormance,

changes in technology and operational and nancing cash fow.

Share-based payments

Equity-settled share-based payments are measured at air value at the date o grant. Judgement is required indetermining the most appropriate valuation model or the share options granted, depending on the terms andconditions o the grant. Management are also required to use judgement in determining the most appropriateinputs to the valuation model including expected lie o the option, volatility and dividend yield. The assumptionsand model used are disclosed in Note 17 to the nancial statements.

Incme tax

Signicant judgement is involved in determining the provision or income taxes. The Group recognises liabilitiesor expected tax issues based on estimates o whether additional taxes will be due. Where the nal tax outcomeo these matters is dierent rom the amounts that were initially recognised, such dierences will impact theincome tax provision in the period in which such determination is made.




2.1 NEW oR REvISED ACCouNTING STANDARDS AND INTERPRETATIoNS

Adptin new r reised FRSs and Interpretatins t FRSs (INT FRSs)

On 1 August 2011, the Group adopted new or amended FRSs and INT FRSs that are mandatory or applicationrom that date.

FRS 24 (revised) Related party disclosures

FRS 107 Amendments to FRS 107 Disclosures - Transers o Financial Assets

Improvements to FRSs 2010

The adoption o these new/revised FRSs and INT FRSs did not result in substantial changes to the Groups

accounting policies nor any signicant impact on these nancial statements.

New accnting standards and interpretatins nt yet adpted

At the date o authorisation o these nancial statements, the ollowing FRSs and INT FRSs were issued but notyet eective:

FRS 1 Amendments to FRS 1: Presentation o Items o Other ComprehensiveIncome

FRS 12 Amendments to FRS12 Deerred Tax: Recovery o Underlying Assets

FRS 19 (revised) Employee Benets

FRS 27 (revised) Separate nancial statements

FRS 28 (revised) Investments in Associates and Joint Ventures

FRS 32 Osetting o Financial Assets and Financial LiabilitiesFRS 107 Osetting o Financial Assets and Financial Liabilities

FRS 110 Consolidated Financial Statements, Joint Arrangements and Disclosureo Interests in Other Entities: Transition Guidance (Amendments to FRS110, FRS 111 and FRS 112)

FRS 111 Joint Arrangements

FRS 112 Disclosure o Interests in Other Entities

FRS 113 Fair Value Measurements

Improvements to FRSs 2012

The directors do not anticipate that the adoption o other FRSs and INT FRSs in uture periods will have a materialimpact on the nancial statements o the Group.


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2.2 SuMMARY oF SIGNIFICANT ACCouNTING PoLICIES (CoNTD)

Cnslidatin (cntd)

Subsidiaries (contd)

Investments in subsidiaries are stated in the Companys statement o nancial position at cost less accumulatedimpairment losses. The accounting policies or subsidiaries are adjusted to be consistent with the policiesadopted by the Group, only where it is material. Losses applicable to the non-controlling interests in a subsidiaryare allocated to the non-controlling interests even i doing so causes the non-controlling interests to have a decitbalance.

Transactions with non-controlling interests

Non-controlling interest represents the equity in subsidiaries not attributable, directly or indirectly, to owners othe Company and are presented separately in the consolidated statement o comprehensive income and withinequity in the consolidated statement o nancial position, separately rom equity attributable to owners o theCompany.

Changes in the Company owners ownership interest in a subsidiary that do not result in a loss o control areaccounted or as equity transactions. In such circumstances, the carrying amounts o the controlling and non-controlling interests are adjusted to refect the changes in their relative interests in the subsidiary. Any dierencebetween the amount by which the non-controlling interest is adjusted and the air value o the consideration paidor received is recognised directly in equity and attributed to owners o the parent.

Transactions eliminated on consolidation

All inter-company balances and signicant inter-company transactions and resulting unrealised prots or lossesare eliminated on consolidation and the consolidated nancial statements refect external transactions andbalances only.

Gdwill

Goodwill acquired in a business combination is initially measured at cost. Following initial recognition, goodwill ismeasured at cost less any accumulated impairment loss. Goodwill is reviewed or impairment, at least annuallyor more requently i events or changes in circumstances indicate that the carrying value may be impaired.

Freign crrency

Foreign currency transactions

Transactions in oreign currencies are translated to the respective unctional currencies o the Group entitiesat the exchange rate at the date o the transaction. Monetary assets and liabilities denominated in oreigncurrencies at the reporting date are translated to the unctional currency at the exchange rate at the reportingdate. Non-monetary assets and liabilities denominated in oreign currencies that are measured at air value aretranslated to the unctional currency at the exchange rate at the date on which the air value was determined.Non-monetary items that are measured in terms o historical cost in a oreign currency are translated using theexchange rate at the date o the transaction.


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Financial assets (cntd)

Loans and receivables

Loans and receivables are non-derivative nancial assets with xed or determinable payments that are not quotedin an active market. They arise when the Group provides money, goods or services directly to a debtor with nointention o trading the receivables. They are included in current assets, except or maturities greater than 12months ater the reporting date which are classied as non-current assets.

Loans and receivables are recognised initially at air value plus any directly attributable transaction costs.

Subsequent to initial recognition, loans and receivables are measured at amortised cost using the eectiveinterest method, less provision or impairment.

The Group considers evidence o impairment or loans and receivables at both a specic asset and collective level.All individually signicant loans and receivables are assessed or specic impairment. All individually signicantreceivables ound not to be specically impaired are then collectively assessed or any impairment that has beenincurred but not yet identied. Loans and receivables that are not individually signicant are collectively assessedor impairment by grouping together loans and receivables with similar risk characteristics.

In assessing collective impairment, the Group uses historical trends o the probability o deault, the timingo recoveries and the amount o loss incurred, adjusted or managements judgement as to whether currenteconomic and credit conditions are such that the actual losses are likely to be greater or less than suggested byhistorical trends.

An impairment loss in respect o a nancial asset measured at amortised cost is calculated as the dierencebetween its carrying amount and the present value o the estimated uture cash fows, discounted at the assetsoriginal eective interest rate. Losses are recognised in prot or loss and refected in an allowance account againstloans and receivables. Interest on the impaired asset continues to be recognised. When a subsequent event (e.g.repayment by a debtor) causes the amount o impairment loss to decrease, the decrease in impairment loss isreversed through prot or loss.

Loans and receivables include trade receivables, other receivables, amounts due rom related parties, and cashand cash equivalents.

Cash and cash equivalents comprise cash balances and bank deposits. Bank overdrats that are repayable on

demand and which orm an integral part o the Groups cash management are included as a component o cashand cash equivalents or the purpose o the cash fow statement.

Intra-grp nancial garantees

Financial guarantees are nancial instruments issued by the Group that require the issuer to make speciedpayments to reimburse the holder or the loss it incurs because a specied debtor ails to meet payment whendue in accordance with the original or modied terms o a debt instrument.

Financial guarantees are recognised initially at air value and are classied as nancial liabilities. Subsequentto initial measurement, the nancial guarantees are stated at the higher o the initial air value less cumulativeamortisation and the amount that would be recognised i they were accounted or as contingent liabilities. Whennancial guarantees are terminated beore their original expiry date, the carrying amount o the nancial guaranteeis transerred to prot or loss.


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Financial liabilities (cntd)

Borrowings which are due to be settled within 12 months ater the reporting date are included in currentborrowings in the statement o nancial position even though the original terms were or a period longer than 12months and an agreement to renance, or to reschedule payments, on a long-term basis is completed ater thereporting date. Borrowings to be settled within the Groups normal operating cycle are considered as current.Borrowings with agreements incorporating an overriding repayment on demand clause, which gives the lendersthe right to demand repayment at any time, at their sole discretion and irrespective o whether a deault event hasoccurred are considered as current. Other borrowings due to be settled more than 12 months ater the reportingdate are included in non-current borrowings in the statement o nancial position.

Trade payables are initially measured at air value, and subsequently measured at amortised cost, using theeective interest method.

Incme taxes

Income tax expense comprises current and deerred tax. Income tax expense is recognised in the incomestatement except to the extent that it relates to items recognised directly in equity, in which case it is recognisedin equity.

Current tax is the expected tax payable on the taxable income or the year, using tax rates enacted or substantivelyenacted at the reporting date, and any adjustment to tax payable in respect o previous years.

Deerred tax is recognised in respect o temporary dierences between the carrying amounts o assets andliabilities or nancial reporting purposes and the amounts used or taxation purposes.

Deerred tax is not recognised or the ollowing temporary dierences: the initial recognition o goodwill, the initialrecognition o an asset or liability in a transaction that is not a business combination and that aects neitheraccounting nor taxable prot or loss, and dierences relating to investments in subsidiaries and jointly controlledentities to the extent that it is probable that they will not reverse in the oreseeable uture. Deerred tax assetsand liabilities are measured at the tax rates that are expected to apply to the year when the asset is realised orthe liability is settled, based on tax rates enacted or substantively enacted at the balance sheet date.

A deerred tax asset is recognised or unused tax losses, tax credits and deductible temporary dierences, to theextent that it is probable that uture taxable prots will be available against which they can be utilised. Deerred

tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable thatthe related tax benet will be realised.

Deerred tax assets and liabilities are oset i there is a legally enorceable right to oset current tax liabilitiesand assets and they relate to income taxes levied by the same tax authorities on the same taxable entity, or ondi

Documents

XPRS Xpress Holdings Annual Report 2012 - Next Lap Beyond Print