contents · contents 1 corporate profile 2 at a glance 4 our brands 6 where we are 8 chairman’s...

JAPA

N FO

OD

S H

OLD

ING

LTD.

AN

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EPO

RT 2013

JAPANFOODS

HOLDING LTD.

JAPAN FOODSHOLDING LTD.

our Wings

Annual Report 2013

Incorporated in the

Republic of Singapore on

3 December 2007

(Company Registration No: 200722314M)

420 North Bridge Road

#02-01 North Bridge Centre

Singapore 188727

Tel: (65) 6333 9781

Fax: (65) 6333 9782

Spreading

Contents1 Corporate Profile

2 At a Glance

4 Our Brands

6 Where We Are

8 Chairman’s Message

10 Financial Highlights

12 Operating and Financial Review

16 Board of Directors

17 Corporate Structure/Corporate Information

18 Corporate Governance Report

36 Directors’ Report

39 Statement by Directors

40 Independent Auditor’s Report

42 Financial Statements

92 Statistics of Shareholdings

94 Notice of Annual General Meeting

This document has been reviewed by the Company’s

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 verifi ed the

contents of this document. This document has not been

examined or approved by the SGX-ST. 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 Raffl es Place, #09-01 Singapore Land Tower, Singapore

048623, Telephone: +65 6337 5115.

Designed and produced by

(65) 6578 6522

JAPAN FOODS HOLDING LTD.Annual Report 2013

1

Corporate Profile10 Franchise Brands From Japan

Ajisen Ramen Botejyu

Aoba

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.

In Singapore, the Group operates a chain of 37 restaurants and three concept stalls in selected food court outlets, serving authentic Japanese fare under various franchise as well as self-developed brands.

The Group's franchise restaurant brands include its flagship “Ajisen Ramen” brand as well as the “Aoba”, “Botejyu” and “Kazokutei” brands. Its food court concept stalls operate under the “Botejyu Yatai” and “Ajisen Ramen” brands. The latest additions to its portfolio of franchise brands include the“Menya Musashi” and “Osaka Ohsho” brands and most recently "Menzo Butao", which opened on 20 June 2013.

Besides franchise brands, the Group has also developed its own F&B brands such as “Aji Tei”, “Fruit Paradise”, “Ajisen Gourmet Town”, “Japanese Gourmet Town”, and most recently, “Udon King”.

Over the years, the Group has expanded its network beyond Singapore. Today, the Group has 11 “Ajisen Ramen” sub-franchise restaurants in the region including four in Indonesia, five in Malaysia and two in Vietnam. It also holds interests in five “Menya Musashi” restaurants in Hong Kong through joint ventures.

Currently, the Group, together with its joint venture partners and sub-franchisees, operate or invest in a total of 56 restaurants and food court outlets under various brands in Singapore, Malaysia, Indonesia, Vietnam and Hong Kong.

Botejyu Yatai

Botejyu San

Menya Musashi Osaka Ohsho

Kazokutei Yonehachi

6 Self-Developed Brands

Japanese Gourmet TownFruit ParadiseAji Tei Udon King

Ajisen Gourmet Town Tokyo Walker

Menzo Butao

JAPAN FOODS HOLDING LTD.2

At a Glance

Annual Report 2013

FOUR-PRONGEDSTRATEGY

DEVELOPMENTOF NEWCONCEPTS• Launch new franchise

and self-developed brands • Via central kitchen,

bulk purchase and economies of scale

COST &QUALITYCONTROL

OVERSEASEXPANSION

• Via strategic joint ventures and franchising/sub-franchising model

NETWORK EXPANSION &CONSOLIDATION

OUR BUSINESS

e

Self-Operated Restaurants in

Singapore

Self-Operated Food CourtOutlets in Singapore

Overseas Sub-Franchise

OverseasJoint Ventures

• Grow network prudently and close/convert underperforming outlets

EAS

NNNNNNNNNET

JAPAN FOODS HOLDING LTD. 3Annual Report 2013

OUR FOCUS ON SHAREHOLDERS’ VALUE

The Group is focused on growing long-term shareholders’ value and has been consistently rewarding shareholders with cash dividends since FY2009. In FY2012, the Group completed a one-for-five bonus issue of new ordinary shares in the capital of the Company to reward shareholders and also to increase the liquidity and trading of its shares and broaden its shareholder base.

In FY2013, the Board recommended to distribute not less than 35% of the Group’s audited consolidated net profits attributable to shareholders as dividends annually, subject to the Group’s business requirements and other relevant considerations and barring unforeseen circumstances.

S$

0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

Apr 2012 Jul 2012 Oct 2012 Jan 2013 Apr 2013 Jun 2013

SHARE PRICE PERFORMANCE

SHAREHOLDERS’ EQUITY

S$’million

9.3

13.4

17.5

20.5

25.0

0

5

10

15

20

25

30

FY2009 FY2010 FY2011 FY2012 FY20130.3 0.4 0.35

0.9

0.2

0.30.4 0.7

1.0

0.6

6%

12%

30%33%

45%

0%

10%

20%

30%

40%

50%

0.0

0.5

1.0

1.5

2.0

2.5

3.0

Interim Final Special Payout Ratio

Dividend Payout Ratio (%)

FY2009 FY2010 FY2011 FY2012 FY2013

FIVE-YEAR DIVIDEND HISTORYDividend per Share(Singapore cents)

The Group continued to build upon the success of its popular and award winning franchise and self-developed brands, while launching three new brands, “Menzo Butao”, “Osaka Ohsho” and “Udon King”.

FRANCHISE BRANDSAJISEN RAMENThe word “Ajisen” means a thousand tastes in Japanese. The flagship brand of Japan Foods, “Ajisen Ramen” originated from Kumamoto, Japan, in 1968. Known for its rich and aromatic soup base which is derived from hours of boiling pork bones, “Ajisen Ramen” offers a wide selection of ramen to cater to discerning customers. With over 700 shops worldwide, it is an internationally recognised brand with presence in countries such as Japan, China, Hong Kong and the United States.

AOBAFrom its humble beginnings as a noodle stand in Asahikawa, Hokkaido, “Aoba” has since expanded its presence to 15 stalls in Japan. The Hokkaido ramen it serves differs from the typical ramen with the use of seafood broth as its soup base instead of the usual tonkatsu stock (pork broth). Japan Foods is the first and only company to offer “Aoba” ramen outside of Japan.

BOTEJYUOriginating from Osaka, Japan, “Botejyu” has a history that dates back to 1946 when it fired up its first okonomiyaki (Japanese pan-fried batter cake filled with various ingredients). The brand name is derived from the rhythmic cooking sound of okonomiyaki. “Bote” occurs when an okonomiyaki is being flipped over by a spatula, while “jyu” represents the sizzling sound of an okonomiyaki on a teppan grill.

BOTEJYU YATAIAn extension of the “Botejyu” brand, “Botejyu Yatai” was launched by Japan Foods in September 2011 for the mass market segment. By setting up Osaka's street food concept stalls in food courts, the Group hopes to tap into a new and large consumer segment as well as develop greater brand awareness amongst the food court goers.

BOTEJYU SANAnother spin-off of the “Botejyu” brand, “Botejyu San” provides a comfortable teppan-dining experience serving okonomiyaki, teppan-yaki and other grilled items. “Botejyu San” opened its first restaurant as part of the Group's “Tokyo Walker” multi-concept outlet at Plaza Singapura in December 2011.

KAZOKUTEIUdon fans would be familiar with “Kazokutei”, one of Osaka's most well-known udon brands with over 200 outlets in Japan alone. Established in 1947, “Kazokutei” takes pride in serving delicious and high quality handmade udon specially cooked to bring out the natural taste of the noodles. To ensure consistency in taste, both the udon and dashi (soup stock) are imported directly from Japan.

MENYA MUSASHIIn April 2012, “Menya Musashi”, an award winning ramen brand from Japan, made its debut at Raffles City Shopping Centre. Known for its signature white, red, and black ramen, this samurai-themed restaurant continues to receive positive reviews from media and customers. Riding on the success of its first outlet, four additional outlets soon followed at ION Orchard, Star Vista, Thomson Plaza and VivoCity. Abroad, Japan Foods has five “Menya Musashi” restaurants in Hong Kong through joint ventures.

MENZO BUTAO [NEW!]“Menzo Butao” made its debut in Singapore with the opening of the first outlet in Marina Square Shopping Mall on 20 June 2013. Established in 1936, “Menzo Butao” specialises in Hakata Tonkatsu Ramen and offers more than 20 varieties of the dish. There are three different and delicious soups to choose from – Butao (White), Kuroo (Black) and Akao (Red). The Butao soup base consists of pork broth made from boiling pork bones and sinews for over 14 hours to extract all the natural flavour of the bones. This soup base is flown straight to Singapore before it is mixed with more pork bones and simmered for hours to obtain the right consistency and flavour. The Kuroo broth is an emulsion of fried shallots and vegetable oil and the Akao broth is slightly spicy as it contains chilli oil but gets its red colour from the Gochujang (Korean Miso) and Doubanjiang (Chinese Miso).

OSAKA OHSHO [NEW!]Established in 1969, “Osaka Ohsho” draws in healthy crowds with its casual ambience and irresistible gyoza (Japanese style dumplings). Cabbage, ginger and garlic are mixed with well-seasoned minced pork and encased in a special gyoza wrapper and grilled to perfection. This deliciously crispy gyoza is available in 300 outlets in Japan, Hong Kong, Thailand, Korea and in Singapore, since November 2012, when Japan Foods opened its first outlet at Raffles City Shopping Centre.

YONEHACHIEstablished in 1976, “Yonehachi” has more than 140 shops across Japan. Using top quality rice from northern Japan such as Iwate and Akita, “Yonehachi” serves okawa (glutinous rice mixed with different ingredients) made the traditional way.

JAPAN FOODS HOLDING LTD.4Annual Report 2013

Our Brands

SELF-DEVELOPED BRANDSAJISEN GOURMET TOWNUsing the same concept as “Japanese Gourmet Town”, “Ajisen Gourmet Town” features Japan Foods' most popular brands which include “Ajisen Ramen”, “Aji Tei” and “Botejyu”.

AJI TEIThe 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” offers fruit tarts made with lightly sweetened cream and topped with fresh fruits. To ensure that our customers get to enjoy the fruits' natural goodness, our fruit tarts are made using only the freshest and most delicious fruits, which are carefully selected by our Japanese patissiers daily.

JAPANESE GOURMET TOWNThe Group adopted a mixed concept approach for the “Japanese Gourmet Town” brand which commenced operations in October 2008. Through this concept, customers from various target consumer groups are able to mix and match our various F&B brands to cater to their dining preferences. As a result, “Japanese Gourmet Town” has been well-received by consumers as they got to savour different varieties of Japanese fare in one restaurant.

TOKYO WALKERLocated on level four of Plaza Singapura, the Group's “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 four Japanese F&B brands – “Ajisen Ramen”, “Botejyu”, “Kazokutei” and the Group's self -developed brand “Fruit Paradise".

UDON KING [NEW!]Newly opened in February 2013 at AMK Hub, “Udon King” serves up handmade udon but with a twist. Incorporating cuisine elements from all over the world, diners can expect fusion style udon in non-traditional soup bases such as Thai Tom Yum and Seattle Clam Chowder.



Where We Are

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Singapore

AJISEN RAMEN• AMK Hub• Bugis Junction• Causeway Point Shopping Centre• Changi Airport Terminal 3• Changi City Point Mall• Clementi Mall• Compass Point Shopping Centre• IMM Building• Junction 8 Shopping Centre• Jurong Point Shopping Centre• Lot 1 Shoppers' Mall• Marina Bay Sands Shoppes Premium Food Precinct

(Food Court Outlet)• nex Shopping Mall• Parkway Parade• Plaza Singapura• Sembawang Shopping Centre• Square 2• Takashimaya Shopping Centre• Tampines Mall

• Tiong Bahru Plaza

BOTEJYU• Plaza Singapura

BOTEJYU YATAI (FOOD COURT OUTLETS)• Food Junction, Bugis Junction• Food Junction, Junction 8 Shopping Centre

FRUIT PARADISE• AMK Hub• Raffles City Shopping Centre• VivoCity• Plaza Singapura

JAPANESE GOURMET TOWN• VivoCity

KAZOKUTEI• Bugis Junction• Junction 8 Shopping Centre• Plaza Singapura

MENYA MUSASHI• ION Orchard• Raffles City Shopping Centre• Star Vista• Thomson Plaza• VivoCity

MENZO BUTAO• Marina Square Shopping Mall

OSAKA OHSHO• Raffles City Shopping Centre

UDON KING• AMK Hub

YONECHACHI• Takashimaya

Shopping Centre

As at 30 June 2013


Malaysia

AJISEN RAMEN(1)

• Jusco 1 Utama Shopping Centre, Selangor• Sunway Pyramid, Selangor• Sutera Mall, Johor• KSL City Mall, Johor• Boulevard Commercial Centre Miri, Sarawak

Indonesia

AJISEN RAMEN(1)

• Living World Alam Sutera, Tangerang• Kelapa Gading Mall 3, Jakarta• Pluit Village, Jakarta• Taman Anggrek Mall, Jakarta

Vietnam

AJISEN RAMEN(1)

• Nguyen Dinh Chiew Street, Da Kao, District 1, Ho Chi Minh City

• Vincom Center, Ho Chi Minh City

Hong Kong

MENYA MUSASHI(2) • Kwun Tong, Kowloon• Tsim Sha Tsui, Kowloon• Tuen Mun, Hong Kong• Hung Hom, Hong Kong• Shatin, Hong Kong

Notes:

(1) Operated by sub-franchisees

(2) Interests in restaurants through joint ventures

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Chairman’s Message

Annual Report 2013

Dear Shareholders

A Record PerformanceThe financial year ended 31 March (“FY”) 2013 was an outstanding year for the Group. Not only did we launch more new brands, we also achieved the best results in the history of the Group with both our top and bottom lines reaching record highs.

FY2013 was more than just a year of strong financial performance for the Group. The Group also benefitted from the implementation of strategies whose foundations had been laid from previous years. These strategies enabled us to achieve an exceptional performance despite the uncertain global economy and the increasingly challenging operating environment, which continued to face issues such as a shortage in manpower, high rental and material costs as well as higher wages.

We believe that the strength of our financial performance in FY2013 was attributable to our existing four-pronged strategy, which focuses on the constant development and renewal of concepts, cost and quality control to maintain our efficiency and high quality standards, spreading our wings to overseas markets through joint ventures and franchising, as well as regular network expansion and consolidation.

Towards the end of FY2013, the Group achieved yet another significant milestone in our overseas expansion strategy – the entry into of the F&B industry in the People’s Republic of China (“PRC”) with the “Menya Musashi” brand. This fulfilled a long-time goal of the Group to enter into this market and it was achieved through joint ventures in both the PRC and Hong Kong. We now have five “Menya Musashi” restaurants in Hong Kong through our joint ventures, which have been doing very well and we look forward to opening more restaurants throughout the region in FY2014.

Year In ReviewFor FY2013, the Group’s revenue reached an all-time high of S$61.3 million, an increase from S$56.1 million in FY2012. Net profit for the year also rose by an impressive 72.3% to S$6.4 million in FY2013 as compared to S$3.7 million in FY2012.

Overall, the Group’s gross profit margin increased from 78.3% in FY2012 to 80.1% in FY2013. Such results were possible due to both internal and external factors. Internally, we had established a noodle making facility at our central kitchen in Kampong Ampat in April 2012, which played a major part in helping us to better manage our raw material costs and quality. We also eliminated non-performing brands and expanded other brands that were performing. Externally, the market conditions favoured the Group with the appreciation of the Singapore dollar during the year.

Our flagship “Ajisen Ramen” brand continued to be the main revenue contributor for the Group at S$33.3 million for FY2013, which represented a S$2.5 million increase in revenue from FY2012.

The restaurants operating under our other brands also generated an increase in revenue of S$1.8 million in FY2013 compared to FY2012. In addition, revenue from the Group’s three food court outlets operating under the “Ajisen Ramen” and “Botejyu Yatai” brands also saw an increase by S$0.9 million in FY2013 compared to FY2012 as a result of full year contribution.

Takahashi Kenichi

Executive Chairman and CEO


Given the competitiveness of the local F&B industry where consumers are faced with a myriad of food choices, we recognise that we have to constantly renew ourselves to keep up with their needs and expectations. For this reason, we have added three new brands into our portfolio in FY2013. We debuted popular Japanese ramen brand “Menya Musashi”, gyoza specialist “Osaka Ohsho” as well as launched a new self-developed udon brand “Udon King”.

As at 31 March 2013, the Group had a total of 40 restaurants and food court outlets in Singapore, and 12 restaurants in Malaysia, Indonesia and Vietnam operated by our sub-franchisees. We also have presence in Hong Kong through interests in three restaurants through joint ventures.

Overall, the Group’s earnings per share in FY2013 was 5.55 Singapore cents (based on the weighted average number of 115,404,000 ordinary shares), compared to 3.22 Singapore cents in FY2012 (based on the weighted average number of 115,404,000 ordinary shares). As at 31 March 2013, the Group’s net asset value per share was 21.69 Singapore cents, up from 17.73 Singapore cents as at 31 March 2012.

In line with the sterling set of results for FY2013, the Group is pleased to propose a final and a special tax-exempt one-tier dividend of 1.0 Singapore cents and 0.6 Singapore cents per share respectively. Inclusive of the interim dividend of 0.9 Singapore cents per share paid in November 2012, the total dividend per share for FY2013 will be 2.5 Singapore cents, representing a dividend payout ratio of 45%. Going forward, subject to the Group’s business requirements and other relevant considerations and barring unforeseen circumstances, the Board intends to recommend and distribute not less than 35% of the Group’s audited consolidated net profits attributable to shareholders as dividends annually.

Spreading Our WingsIn the year ahead, we will abide closely with our four-pronged strategy to manage and sustain our growth. This includes our everlasting search for new brands and concepts that we feel may appeal to the diners in our various markets. We will also be looking at opportunities to spread our wings further to more cities in the region.

Most recently on 20 June 2013, we added yet another exciting new brand “Menzo Butao” to our portfolio. Established in 1936, this popular ramen brand, which specialises in Hakata Tonkatsu Ramen, has 23 outlets in Japan, China, Korea, United States, Thailand, Vietnam, Taiwan, and now Singapore with the first outlet located at Marina Square Shopping Mall.

AcknowledgementsOn behalf of the Board, I would like to take this opportunity to thank the management and staff of the Group, whose hard work had made it possible for us to achieve the record breaking year in FY2013. In addition, I would like to express my appreciation to my fellow directors for their guidance, advice and foresight which have steered the Group towards greater success.

Special thanks also to our customers and business partners, whose loyalty and support have enabled us to achieve our goals as a company.

Last but not least, I would like to thank our shareholders, whose faith in us has allowed the Group to reach new heights. Together, with your ongoing trust and support, we will strive towards stronger growth and seek greater returns on your investment in us.

TAKAHASHI KENICHIExecutive Chairman and CEO


Financial Highlights

Annual Report 2013

S$’million FY2009 FY2010 FY2011 FY2012 FY2013

FINANCIAL RESULTSRevenue 33.5 43.7 50.4 56.1 61.3

Gross profit 24.8 34.1 39.1 43.9 49.1

Profit before tax 3.4 5.6 3.1 4.5 7.9

Net profit 2.7 4.6 2.5 3.7 6.4

CASH FLOW STATEMENTNet cash provided by operating activities 5.4 6.2 6.7 8.4 12.5

Net cash used in investing activities (8.1) (3.3) (7.2) (2.9) (4.7)

Net cash provided by/(used in) financing activities 2.4 0.1 (0.3) (2.1) (2.3)

Cash and cash equivalents at end of financial year(1) 3.8 6.8 5.9 9.3 14.8

BALANCE SHEETCurrent assets 7.1 11.4 11.4 15.5 21.6

Non-current assets 11.7 12.2 14.0 12.8 12.4

Total assets 18.8 23.6 25.4 28.3 34.0

Current liabilities 8.8 8.1 6.8 7.3 8.3

Non-current liabilities 0.8 2.1 1.1 0.5 0.7

Total liabilities 9.6 10.2 7.9 7.8 9.0

Share capital 6.6 6.6 8.8 8.8 8.8

Reserves 2.7 6.8 8.7 11.7 16.2

Total shareholders’ equity 9.3 13.4 17.5 20.5 25.0

FINANCIAL RATIOSGross profit margin (%) 73.9 77.9 77.5 78.3 80.1

Earnings per share (Singapore cents)(2) 3.57 5.18 2.24 3.22 5.55

Net asset value per share (Singapore cents)(2) 10.55 15.23 15.14 17.73 21.69

Return on assets (%) 14.4 19.3 9.8 13.1 18.9

Return on equity (%) 29.2 34.0 14.2 18.2 25.6

Net debt to equity ratio Net Cash Net Cash Net Cash Net Cash 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.


FY2013

61.3

S$’m CAGR: 18.0%

70

60

50

40

30

20

10

Revenue

FY2009 FY2010 FY2011

50.4

FY2012

56.1

Revenue Breakdown

FY2012 FY2013

CAGR: 21.6%S$’m %

FY2009 FY2010 FY2011 FY2012 FY2013

50

40

30

20

10

100

50

Gross Profit and Gross Margin

73.9%77.9% 77.5%

24.8

39.134.1 43.9 49.1

CAGR: 17.3%

Net ProfitS$’m

FY2009 FY2010 FY2011 FY2012 FY2013

7

6

5

4

3

2

1

2.7

4.6

2.5

3.7

6.4

S$’m

FY2012 FY2013

35

30

25

20

15

10

5

0

Revenue Mix by Brands

AjisenRamen

MenyaMusashi

Kazo-kutei

FruitParadise

Japanese Gourmet

Town

Botejyu Aoba Others

30.733.3

4.3 5.43.8 3.9 3.7 3.1

0.5 0.6

3.82.5

9.06.7

80.1%78.3%

5.5

33.5

43.7

Sub Franchise 0.4%

Others16.1%

Ajisen Ramen54.8%

Fruit Paradise 6.8%

Kazokutei7.7%

Botejyu0.9%

Japanese Gourmet Town

6.6%

Aoba6.7%

Sub Franchise0.5%

Others10.9%

Ajisen Ramen54.2%

Menya Musashi 8.9%

Fruit Paradise6.3%

Kazokutei8.9%

Botejyu1.0%

Japanese Gourmet Town

5.1%

Aoba4.2%


Operating and Financial Review

Annual Report 2013

Review of the Financial Performance for FY2013

RevenueThe Group’s revenue increased by S$5.2 million or 9.3%, from S$56.1 million in FY2012 to S$61.3 million in FY2013. The net increase in the Group’s revenue was a result of the following:

(i) an increase in revenue of S$2.5 million from restaurants operating under the “Ajisen Ramen” brand

The increase in the Group’s revenue from its “Ajisen Ramen” restaurants in FY2013 was mainly attributable to (a) contribution of revenue from the new restaurant located at AMK Hub which commenced operations in July 2012; (b) the full year contribution of revenue from restaurant located at Changi City Point Mall which commenced operations in November 2011; and (c) net increase in sales from existing restaurants. Such increase in revenue was however partially offset by the decrease in revenue due to the closure of the restaurant located at City Square Mall in September 2012.

(ii) a net increase in revenue of S$2.7 million from the restaurants operating under other brands

The Group’s restaurants operating under other brands, namely “Fruit Paradise”, “Kazokutei”, “Yonehachi”, “Menya Musashi”, “Osaka Ohsho”, “Udon King” and “Botejyu” brands, recorded an increase in revenue of S$8.5 million in aggregate in FY2013 as compared to FY2012.

The Group’s outlets located in various food courts also recorded an increase of S$0.9 million in revenue as a result of a full year contribution.

These increases were offset by the closure of the “Manpuku” food court in FY2012, the “Aoba” restaurant at ION Orchard in July 2012, the “Japanese Gourmet Town” restaurant at IMM Building in August 2012, the “Kazokutei” restaurant at Causeway Point Shopping Centre in September 2012 and the “Osaka Town” restaurant at Raffles City Shopping Centre in October 2012, which accounted for a decrease of S$6.7 million in aggregate.

As at 31 March 2013, the Group had a total of 37 restaurants and 3 food court outlets in operation in Singapore. Table 1 shows a snapshot of the Group’s restaurants and food court outlets as at 31 March 2013, compared to as at 31 March 2012.

JAPAN FOODS HOLDING LTD.12Annual Report 2013

Review of the Financial Performance for FY2013

RevenueThThThe e GrGrououp’p’ss rerevevenunue inincrc eased by S$5.2 million or 9.3%, frfrom S$56.1 million in FY2012 to S$61.3 million in FY20133. The net increase in the Group’s revenue was a result of thhefollowing:

(i) an increase in revenue of S$2.5 million from restaurants operating under the “Ajisen Ramen” brand

The increase in the Group’s revenue from its “Ajisen Ramen” restaurants in FY2013 was mainly attributable to (a) contribution of revenue from the new restaurant locateed at AMK Hub which commenced operations in July 2012; ((b) the full year contribution of revenue from restaurant locatted at Changi City Point Mall which commenced operations innNovember 2011; and (c) net increase in sales from existingg restaurants. Such increase in revenue was however partiallyoffset by the decrease in revenue due to the closure of the restaurant located at City Square Mall in September 2012.

(ii) a net increase in revenue of S$2.7 million from therestaurants operating under other brands

The Group’s restaurants operating under other brands,namely “Fruit Paradise”, “Kazokutei”, “Yonehachi”, “Mennya Musashi”, “Osaka Ohsho”, “Udon King” and “Botejyu” brands, recorded an increase in revenue of S$8.5 million in aggregate in FY2013 as compared to FY2012.

The Group’s outlets located in various food courts also recorded an increase of S$0.9 million in revenue as a resuultof a full year contribution.

These increases were offset by the closure of the“Manpuku” food court in FY2012, the “Aoba” restaurantt at ION Orchard in July 2012, the “Japanese Gourmet Towwn” restaurant at IMM Building in August 2012, the “Kazokuttei” restaurant at Causeway Point Shopping Centre in September 2012 and the “Osaka Town” restaurant at Raffles City Shopping Centre in October 2012, which accounted for adecrease of S$6.7 million in aggregate.

As at 31 March 2013, the Group had a total of restaurants and 3 food court outlets in operSingapore. Table 1 shows a snapshot ofrestaurants and food court outlets acompared to as at 31 March 2


Table 1: Restaurant Network

Self-Operated Restaurants in Singapore No. of Restaurants As at 31 Mar 2012

No. of Restaurants As at 31 Mar 2013

Ajisen Ramen• Opened AMK Hub restaurant in July 2012• Closed City Square Mall restaurant in September 2012

20 20

Aoba• Closed ION Orchard restaurant in July 2012 (converted to “Menya Musashi” restaurant)

2 1

Botejyu• Closed Liang Court Shopping Centre restaurant in October 2012

2 1

Fruit Paradise• Closed Orchard Central restaurant in June 2012• Opened AMK Hub restaurant in March 2013

4 4

Japanese Gourmet Town• Closed IMM Building restaurant in August 2012

2 1

Kazokutei• Closed Causeway Point Shopping Centre restaurant in September 2012

4 3

Menya Musashi• Opened Raffles City Shopping Centre restaurant in April 2012 (took over space vacated by “Tokyo Deli Cafe”)• Opened ION Orchard restaurant in July 2012• Opened Star Vista restaurant in September 2012• Opened Thomson Plaza restaurant in November 2012

– 4

Osaka Town• Closed Raffles City Shopping Centre restaurant in October 2012

(converted to “Osaka Ohsho” restaurant)

1 –

Osaka Ohsho• Opened Raffles City Shopping Centre restaurant in November 2012

(converted from “Osaka Town” restaurant)

– 1

Udon King• Opened AMK Hub restaurant in February 2013

– 1

Yonehachi 1 1Food Court Outlets in Singapore

Ajisen Ramen 1 1

Botejyu Yatai• Closed at Food Junction, United Square in May 2012• Closed at Food Junction, Great World City in October 2012• Closed at Food Junction, Raffles City Shopping Centre in October 2012

5 2

TOTAL 42 40Restaurants outside of Singapore

Ajisen Ramen(1)

• Closed Puri Indah Mall restaurant in Jakarta in October 2012• Opened Vincom Center restaurant in Ho Chi Minh City in October 2012

5 in Malaysia6 in Indonesia1 in Vietnam

5 in Malaysia5 in Indonesia2 in Vietnam

Aji Tei(2)

• Closed Pacific Place restaurant in Jakarta in June 20121 in Indonesia –

Menya Musashi(3)

• Invested in restaurants located at Kwun Tong, Tuen Mun and Hung Hom– 3 in Hong Kong

TOTAL 13 15

Notes:(1) operated by sub-franchisees(2) operated by franchisee(3) interests in restaurants through joint ventures


Operating and Financial Review

Annual Report 2013

Gross ProfitThe Group’s gross profit increased by S$5.2 million or 11.8%, from S$43.9 million in FY2012 to S$49.1 million in FY2013, in line with the increase in the Group’s revenue.

The Group’s overall gross profit margin increased from 78.3% in FY2012 to 80.1% in FY2013 primarily due to

Table 2: Expenses

Type of expense

Amount incurred in FY2012 (S$)

Amount incurred in FY2013 (S$)

Increase/(Decrease) (S$)

Increase/(Decrease) (%)

Reasons for increase/decrease

Selling and distribution expenses

36.7 million 37.9 million 1.2 million 3.3 • Tightening of labour supply, which resulted in an increase in manpower and related expenses, advertising, repair and maintenance costs and utilities expenses

Administrative expenses

2.1 million 2.5 million 0.4 million 16.6 • Higher manpower cost due to additional headcounts to support the Group’s expanded restaurant network

Other operating expenses and other gains/(losses) – net

1.3 million 1.6 million 0.3 million 28.9 • Write-off of plant and equipment as a result of closure of certain restaurants upon expiry of lease and conversion of existing restaurants to other brands

• Increase in royalty fees paid

Finance expenses

51,000 5,000 (46,000) (90.2) • Lower average loan balance in FY2013

Income tax expenses

0.8 million 1.5 million 0.7 million 97.2 • Increase in profi t

Share of results of an associated companyThe Group’s share of results of an associated company of S$0.1 million in FY2013 arose from its 25% shareholding interest in ACJF Holding Limited which the Group acquired on 14 June 2012. ACJF Holding Limited is in the operation of “Menya Musashi” restaurants in Hong Kong.

(a) better control of raw material costs; (b) elimination of non performing brands; and (c) the appreciation of the Singapore dollar.

ExpensesThe Group’s expenses rose in FY2013 in tandem with higher manpower cost and rising rental rates, as a result of the expansion of its restaurant network.


Net profitAs a result of the reasons mentioned in the preceding section, the Group’s net profit attributable to equity holders of the Company increased by S$2.7 million or 72.3%, from S$3.7 million in FY2012 to S$6.4 million in FY2013. The Group’s net profit margin also increased to 10.5% in FY2013 from 6.6% in FY2012.

Review of Financial Position of the Group as at 31 March 2013

Current assetsThe Group’s total current assets increased by S$6.1 million, from S$15.5 million as at 31 March 2012 to S$21.6 million as at 31 March 2013.

This was mainly a result of (a) an increase in cash and cash equivalents of S$5.6 million due to cash flows generated from operations less capital expenditure and repayment of borrowings, and (b) an increase in receivables, inventories and deposits of S$0.5 million.

Non-current assetsThe Group’s total non-current assets decreased by S$0.4 million, from S$12.8 million as at 31 March 2012 to S$12.4 million as at 31 March 2013.

The decrease was mainly due to a decrease in (a) the long term security deposits placed with lessors in respect of the Group’s leases (which are due after one year and recoverable upon expiry of the lease tenure) of S$0.4 million and (b) the net book value of plant and equipment of S$0.7 million which was mainly due to depreciation charged and plant and equipment written off during FY2013. The decrease was partially offset by the increase in club membership as well as a loan and investment to an associated company which amounted to S$0.7 million in aggregate.

Current liabilitiesThe Group’s total current liabilities increased by S$1.0 million, from S$7.3 million as at 31 March 2012 to S$8.3 million as at 31 March 2013.

This was mainly due to higher (a) accrual of capital expenditure for new outlets as at 31 March 2013; (b)

accrual of operating expenses; and (c) current year tax provision, which amounted to S$1.3 million in aggregate. This was partially offset by a decrease in bank borrowings and finance lease liabilities of S$0.3 million.

Non-current liabilitiesThe Group’s total non-current liabilities increased by S$0.2 million from approximately S$0.5 million as at 31 March 2012 to S$0.7 million as at 31 March 2013, mainly due to an increase in deferred income tax liabilities.

Shareholders’ equityThe Group’s shareholders’ equity increased by S$4.6 million, from S$20.5 million as at 31 March 2012 to S$25.1 million as at 31 March 2013.

This was mainly a result of the net profit achieved by the Group of S$6.4 million in FY2013, which was partially offset by the payment of dividends S$1.8 million.

Review of Cash Flow Statement for FY2013

The Group’s net cash provided by operating activities in FY2013 was S$12.4 million. This was mainly due to the operating profit before working capital changes of S$12.5 million and working capital inflow of S$1.2 million, partially offset by payment of income tax of S$1.3 million.

The Group’s net cash used in investing activities in FY2013 was S$4.7 million, which was mainly due to the renovation costs and purchase of equipment for the Group’s new and existing restaurants of S$4.0 million in aggregate, acquisition of intangible assets of S$0.2 million, acquisition of club membership of S$0.3 million and loan to an associated company of S$0.2 million.

The Group’s net cash used in financing activities in FY2013 was S$2.2 million, which was mainly due to repayment of borrowings of S$0.3 million, interest paid and bank deposits pledged of S$0.1 million, and dividend payment of S$1.8 million.


Board of Directors

Annual Report 2013

TAKAHASHI KENICHIExecutive 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 Group’s business and is responsible for our Group’s entire operations, strategic planning, major decision making, as well as developing the business and vision of our Group.

Mr Takahashi has more than 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.

SHIGEMITSU KATSUAKINon-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 the 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.

WONG HIN SUN, EUGENENon-Executive Director

Mr Wong Hin Sun, Eugene was appointed as Non-executive Director of our Company on 24 November 2008. He founded Sirius Venture Capital Pte Ltd, a venture capital investment company, in September 2002. He is currently the managing director of Sirius Venture and its group of companies.

He currently serves as a Non-executive Director of Ajisen (China) Holdings Limited, a company listed on the Hong Kong Stock Exchange; a Non-executive Director of Neo Group Limited and Jason Marine Group Limited; and an independent director of TMC Education Corporation Limited, which are

listed on the Catalist Board of the SGX-ST. He also serves on the board of Agri-Food & 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 Master of Business Administration from the Imperial College of Science, Technology and Medicine, University of London in 1998. He also completed the Owner President Management Program from Harvard Business School in 2011. He qualified as a chartered financial analyst in 2001 and is a member of the Institute of Directors in Singapore and the United Kingdom.

TAN LYE HUATLead Independent Director

Tan Lye Huat was appointed as the Lead Independent Director of our Company on 1 September 2011. Mr Tan is the founder and Non-executive Chairman of HIM Governance Private Limited. Besides senior professional and management experience, Mr Tan sits on the boards of other Singapore-listed companies, namely, SP Corporation Limited, Neo Group Limited, Dynamic Colours Limited and Nera Telecommunications Ltd., as well as not-for-profit organisations. He was also a director of Kian Ho Bearings Limited, Yaan Security Technology Limited and Agis Pte Ltd.

Mr Tan is a Chartered Director of the Institute of Directors, and a member of the Australian Institute of Company Directors. Mr Tan is presently a Fellow of the Association of Chartered Certified Accountants and a member of the Institute of Certified Accountants of Singapore.

LEE SOK KOON, CONSTANCEIndependent Director

Lee Sok Koon, Constance was appointed as the Independent Director of our Company on 1 September 2011.

Mdm Lee was an Executive Director of Lum Chang Holdings Limited and L.C. Development Ltd from June 2001 and May 2006 respectively until 31 December 2010, where she was responsible for the financial and corporate affairs of the two groups, both of which are listed on SGX-ST. Mdm Lee currently holds the position of Director (Operations) in the Development Office of National University of Singapore. She is also a director on the Board of Singapore Arts School Ltd.

Mdm Lee holds a Bachelor of Accountancy (Second Class Honours) from the University of Singapore and is a Fellow of the Institute of Certified Public Accounts in Singapore. She is also a member of the Singapore Institute of Directors.


17

Corporate Structure

Corporate Information

100%BachmannEnterprises

Pte Ltd

100%Bachmann Japanese

RestaurantPte Ltd

100%Japan Foods Enterprises

Pte. Ltd.

100%BachmannJapanese

RestautantSdn. Bhd.

25%ACJF

HoldingLimited

20%HighlyYield

Group

30%First

HarmonyGroup

JAPAN FOODS HOLDINGS

LTD.

BOARD OF DIRECTORSTakahashi Kenichi (Executive Chairman and CEO)

Shigemitsu Katsuaki (Non-Executive Director)

Wong Hin Sun, Eugene (Non-Executive Director)

Tan Lye Huat (Lead Independent Director)

Lee Sok Koon, Constance (Independent Director)

AUDIT COMMITTEETan Lye Huat (Chairperson)

Lee Sok Koon, Constance Wong Hin Sun, Eugene

NOMINATING COMMITTEELee Sok Koon, Constance (Chairperson)

Tan Lye HuatWong Hin Sun, Eugene

REMUNERATION COMMITTEELee Sok Koon, Constance (Chairperson)

Tan Lye HuatWong Hin Sun, Eugene

COMPANY SECRETARYAu Siew Peng, Esther (ACIS)

REGISTERED OFFICE420 North Bridge Road#02-01 North Bridge CentreSingapore 188727Tel: (65) 6333 9781Fax: (65) 6333 9782

SHARE REGISTRARB.A.C.S. Private Limited63 Cantonment RoadSingapore 089758

AUDITORSNexia TS Public Accounting Corporation100 Beach Road#30-00 Shaw TowerSingapore 189702Director-in-charge: Lee Look LingAppointed since financial year ended 31 March 2012

PRINCIPAL BANKERUnited Overseas Bank Limited80 Raffles PlaceUOB Plaza 1Singapore 049513


Corporate Governance Report

Annual Report 2013

INTRODUCTION

The board of directors (“Board”) and the management of Japan Foods Holding Ltd. (the “Company”) are committed to

achieving a high standard of corporate governance within the Company and its subsidiaries (the “Group”). Underlying

this commitment is the belief that good corporate governance will help to enhance corporate performance and protect

the interests of the Company's shareholders (“Shareholders”).

This report describes the Company's corporate governance processes and structures that were in place throughout the

financial year, with specific reference made to the principles and guidelines of the Code of Corporate Governance 2005

(the “Code 2005”) issued on 14 July 2005. The Board has also considered certain corporate practices with reference to

the revised Code of Corporate Governance 2012 (“Code 2012”) issued on 2 May 2012 which is effective for financial

years commencing on or after 1 November 2012.

The Board is pleased to confirm that for the financial year ended 31 March 2013 (“FY2013”), the Company has generally

adhered to the framework as outlined in the Code 2005 and where possible/practical, certain corporate practices under

the Code 2012, and deviations from any guideline of the Code 2005 are explained in this report.

BOARD MATTERS

THE BOARD'S 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) decides on matters in relation to the Group's activities which are of significant nature, including decisions on

strategic directions and guidelines and approvals of annual budget, major funding investment and divestment

proposals;

(b) oversees risk management and internal control processes, financial reporting and compliance, including the

release of financial results and announcements of material transactions;

(c) approves the nominations to the Board and appointments to the various Board committees;

(d) approves the framework of remuneration for the Board and key executives as recommended by the Remuneration

Committee (as defined hereinafter); and

(e) provides oversight in the proper conduct of the Group's business and assumes responsibility for corporate

governance.

JAPAN FOODS HOLDING LTD. 19


Annual Report 2013

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 2013, 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.

The number of Board and board committee meetings held in FY2013 and the attendance of each Director is set out

below:

Name of Director

BoardAudit

CommitteeNominating Committee

Remuneration Committee

No. of meetings

held during tenure on

Board

No. of meetings attended

No. of meetings


Board


No. of meetings


Board


No. of meetings


Board


Takahashi Kenichi 4 4 4 – 1 – 1 –

Shigemitsu Katsuaki 4 4 4 – 1 – 1 –

Wong Hin Sun, Eugene 4 4 4 4 1 1 1 1

Lee Sok Koon, Constance 4 4 4 4 1 1 1 1

Tan Lye Huat 4 4 4 4 1 1 1 1

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 Group's various bank accounts and the

approval of the Board are required for these matters.

Guideline 1.6

Continuous Training and Development of Directors

During FY2013, 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.



Annual Report 2013


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.

BOARD COMPOSITION AND BALANCE

Principle 2: Strong and Independent Element on the Board

Guideline 2.1

Composition and Independent Element of the Board

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 Executive Chairman and Chief Executive Officer

Mr Shigemitsu Katsuaki Non-executive Director

Mr Wong Hin Sun, Eugene Non-executive Director

Mr Tan Lye Huat Lead Independent Director

Mdm Lee Sok Koon, Constance Independent Director

Guideline 2.2

Independence of Directors

As set out under the Code 2012, an independent director is one who has no relationship with the Company, its related

corporations, its 10% shareholders or its officers that could interfere, or be reasonably perceived to interfere, with the

exercise of the director's independent business judgement with a view to the best interests of the Company.

The Nominating Committee deliberates annually to determine the independence of a Director bearing in mind the

salient factors set out under the guidelines in the Code 2012 as well as all other relevant circumstances and facts.

To facilitate the Nominating Committee in its review of the independent status of the Directors, each Director will

complete a checklist to confirm his/her independence. The checklist is based on the guidelines provided in the Code

2012 and will also indicate whether a Director considers himself/herself as an independent Director despite not having

any of the relationships identified in the Code 2012. The Nominating Committee also reviews the checklist completed

by each Director to determine whether a Director is independent.



Annual Report 2013

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 FY2013, 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 Group's activities, contribute

their valuable experience and provide independent judgement during the Board's deliberation on Group's matters.


Non-Executive Directors

The Board has four non-executive Directors (including the independent Directors) who endeavour to constructively

challenge and help develop proposals on strategy and to review the performance of management in meeting goals

and objectives. To facilitate a more effective check on management, the non-executive Directors may meet without the

presence of management. Where necessary, the Company would co-ordinate informal sessions for individual Directors

to meet without the presence of the management.

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 non-

executive Directors.



Annual Report 2013

Guideline 3.3

Lead Independent Director

The Nominating Committee, Remuneration Committee and Audit Committee are all chaired by independent Directors.

Mr Tan Lye Huat is the Audit Committee Chairman and also the Lead Independent Director of the Company. 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 comprises the following members, the majority of whom, including the chairperson of the

committee, are independent non-executive Directors:

Mdm Lee Sok Koon, Constance, Chairperson Independent and Non-executive

Mr Tan Lye Huat Independent and Non-executive

Mr Wong Hin Sun, Eugene Non-independent and Non-executive

During FY2013, the Nominating Committee held 1 scheduled meeting, which all members attended.

The principal functions of the Nominating Committee include:

(a) recommending to the Board new Board appointments;

(b) making recommendations on re-nomination of Directors, having regard to the Director's contribution and

performance;

(c) evaluating the independence of each of the Directors annually; and

(d) evaluating the effectiveness of the Board as a whole and the contribution of each individual Director towards

the effectiveness of the Board.


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 subject

to re-election at the next AGM following his appointment. At the forthcoming AGM, Mr Wong Hin Sun, Eugene and

Mr Shigemitsu Katsuaki are due for re-election pursuant to Article 98 of the Articles. The Nominating Committee has

recommended and the Board has agreed for Mr Wong Hin Sun, Eugene and Mr Shigemitsu Katsuaki to retire and seek

re-election at the forthcoming AGM.



Annual Report 2013

The Nominating Committee deliberates annually to determine the independence of a Director bearing in mind the salient

factors set out in the Code 2012 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. The Nominating Committee has

recommended and the Board has agreed that the maximum number of listed company board representations which a

Director may hold should not be more than six listed companies for Directors who do not hold any full time employment

and not more than three listed companies for Directors who are in full time employment outside the Company and

the Group.

Guideline 4.5

Process for Selecting and Appointment of New Directors

In the event that a vacancy on the Board arises, the Nominating Committee may identify suitable candidates for

appointment as new Directors through the business network of the Board members or engage independent professional

advisers to assist in the search for suitable candidates. The Nominating Committee will generally identify suitable

candidates skilled in core competencies such as accounting or finance, business or management expertise, or industry

knowledge. If the Nominating Committee decides that the candidate is suitable, the Nominating Committee then

recommends its choice to the Board. Meetings with such candidates may be arranged to facilitate open discussion. Upon

appointment, arrangements will be made for the new Director to attend various briefings with the management team.

Guideline 4.6

Information on Directors

Key information on the Directors, including their academic and professional qualifications and their shareholdings in

the Company, are found on page 16 of this annual report.

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 management's performance.



Annual Report 2013

Guideline 5.2

Board Evaluation

The Board's performance is a function of the experience and expertise that each of the Directors bring with them. The

Nominating Committee assesses the Board's 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 Board's 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 committee meetings and the individual Director's functional expertise.

The Board has taken the view that the Company's share price performance and financial indicators set out in the Code

2005 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.

ACCESS TO INFORMATION

Principle 6: Board Members Provided with Complete, Adequate and Timely Information


Board's Access to Information

On a timely basis before each meeting, Directors are provided with information by management pertaining to relevant

matters to be brought before the Board for its decision as well as ongoing reports, explanations and updates relating

to the operational and financial performance of the Group.

Guideline 6.3

Board's Access to the Company Secretary

Board members have separate and independent access to the Company's senior management and the company secretary.

The company secretary attends all meetings of the Board and Board committees and is responsible for ensuring, amongst

other things, that Board procedures are followed and that all applicable rules and regulations are complied with.

Guideline 6.4

Appointment and Removal of Company Secretary

The appointment and removal of the company secretary is a matter for consideration by the Board as a whole.



Annual Report 2013

Guideline 6.5

Board's Access to Independent Professional Advice

Where necessary and to enable the Directors to discharge their duties, the Directors, whether as a group or individually,

may seek independent professional advice at the Company's expense and after consultation with the Chairman.

REMUNERATION MATTERS

PROCEDURES FOR DEVELOPING REMUNERATION POLICIES

Principle 7: Formal and Transparent Procedure for Developing Policy on Executives' Remuneration and

Fixing the Remuneration Packages of Individual Directors

Guideline 7.1

Remuneration Committee

The Remuneration Committee comprises the following members, the majority of whom, including the chairperson of

the committee, are independent non-executive Directors:

Mdm Lee Sok Koon, Constance, Chairperson Independent and Non-executive

Mr Tan Lye Huat Independent and Non-executive


During the year, the Remuneration Committee held 1 scheduled meeting, which all members attended.

Guideline 7.2

Functions of the Remuneration Committee and Remuneration Framework

The principal functions of the Remuneration Committee include:

(a) reviewing and recommending to the Board the structure of the compensation policies and recruitment strategies

of the Group so as to align compensation with Shareholders' interests;

(b) reviewing and recommending to the Board the framework of remuneration for the executive Directors and key

executives of the Group and to determine appropriate adjustments;

(c) reviewing and recommending to the Board for endorsement guidelines for directors' fees of non-executive

Directors;

(d) reviewing and approving succession plans for key positions; and

(e) administering and approving long-term incentive schemes which are approved by Shareholders.

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 Committee's review covers all aspects of remuneration, including salaries, fees, allowances, bonuses

and benefits-in-kind. The Remuneration Committee's recommendations are submitted for endorsement by the entire

Board.



Annual Report 2013

Guideline 7.3

Remuneration Committee's 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


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.


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 automatically on a yearly basis thereafter 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 CEO's

remuneration comprises performance-related element designed to align his interests with those of Shareholders. The

CEO does not receive directors' fees.

Guideline 8.2

Remuneration of Non-Executive Directors

The non-executive Directors receive directors' fees in accordance with their level of contributions, taking into account

factors such as responsibilities, effort and time spent for serving on the Board and Board committees. The Directors'

fees are recommended by the Board and are subject to the approval of Shareholders at the AGM.

Guideline 8.4

Long-term Incentive Scheme

The Company has adopted the Japan Foods Employee Share Option Scheme (“Scheme”), further details of which are

set out herein.

The Company will be seeking the approval of Shareholders at its forthcoming Extraordinary General Meeting (“EGM”)

for the proposed termination of the Scheme and the proposed adoption of the Japan Foods Performance Share Plan

(“PSP”), details of which are set out in the Company's circular dated 2 July 2013 (“Circular”).

As the CEO is also the controlling Shareholder of the Company, he is not eligible to participate in both the Scheme

and the PSP.



Annual Report 2013

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 & Guideline 9.3

Remuneration of Directors and Top Key Management Personnel

The breakdown of the annual remuneration (including all forms of remuneration from the Company and any of its

subsidiaries) of each of the Directors for FY2013 is set out below:

Remuneration band and

name of DirectorDirector's fees Salary

Incentive bonus and

other benefits Total

(%) (%) (%) (%)

S$650,000 to S$675,000

Takahashi Kenichi – 39 61 100

S$25,000 to S$50,000

Tan Lye Huat 100 – – 100

Wong Hin Sun, Eugene 100 – – 100

Lee Sok Koon, Constance 100 – – 100

Below S$25,000

Shigemitsu Katsuaki 100 – – 100

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 Company's

admission to Catalist, being 23 February 2009, for an initial period of three years, and shall be renewable automatically

on a yearly basis thereafter.

The breakdown of the annual remuneration (including all forms of remuneration from the Company and any of its

subsidiaries) of the top five key management personnel of the Group for FY2013 is set out below:

Remuneration band and name of

key management personnelSalary(1)

Incentive bonus and

other benefits Total

(%) (%) (%)

Below S$250,000

Chan Chau Mui(2) 86 14 100

Chan Fuang Chiang 80 20 100

Fong Siew Geen 79 21 100

Kenneth Liew 84 16 100

Koga Tsutomu 82 18 100

Notes:(1) Salary is inclusive of Central Provident Fund contribution.

(2) Ms Chan Chau Mui is a deemed associate of Mr Takahashi Kenichi, the Chairman and CEO of the Company. Ms Chan's annual remuneration in FY2013 was less than S$150,000.



Annual Report 2013

Guideline 9.4

Employee Share Option Scheme

The Scheme

The Company has adopted the Scheme which was approved on 20 January 2009 by the Company's then Shareholder.

The Scheme is administered by the Remuneration Committee currently comprising Mdm Lee Sok Koon, Constance,

Mr Tan Lye Huat and Mr Wong Hin Sun, Eugene.

The Scheme provides an opportunity for employees of the Group who have contributed to the growth and performance

of the Group (including executive and non-executive Directors) and who satisfy the eligibility criteria as set out under

the rules of the Scheme, to participate in the equity of the Company. Controlling shareholders of the Company and

their associates shall not be eligible to participate in the Scheme.

The total number of shares in the capital of the Company (“Shares”) over which the Remuneration Committee may

grant options under the Scheme (“Options”) on any date, when added to the number of Shares issued and issuable

in respect of all Options, shall not exceed 15% of the number of the issued Shares on the day immediately preceding

the date on which the Options shall be granted.

Under the rules of the Scheme, the Options that are granted may have exercise prices that are, at the Remuneration

Committee's discretion, set at the price (“Market Price”) equal to the average of the last dealt prices for the Shares on

Catalist for the five consecutive market days immediately preceding the relevant date of grant of the relevant Option,

or (provided that Shareholders' approval is obtained in a separate resolution) at a discount to the Market Price (subject

to a maximum discount of 20%). Options which are fixed at the Market Price may be exercisable at any time by the

participant after the first anniversary of the date of grant of that Option while Options granted at a discount to the

Market Price may only be exercised after the second anniversary from the date of grant of the Option. Options granted

under the Scheme will have a life span of ten years. The Options may be exercisable in full or in part only in respect of

1,000 Shares or multiple thereof, on payment of the exercise price.

No Options has been granted by the Company since the date of approval of the Scheme. Accordingly, the disclosure

requirements under Rule 851(1)(b), (c) and (d) of the SGX-ST Listing Manual Section B: Rules of Catalist (“Catalist

Rules”) are not applicable.

The Company will be seeking the approval of Shareholders at the forthcoming EGM for the proposed termination of

the Scheme and the proposed adoption of the PSP. Please refer to the Circular for further details.

ACCOUNTABILITY AND AUDIT

Principle 10: Presentation of a Balanced and Understandable Assessment of the Company's 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 Group's 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 Group's assets as well as to manage potential risks.



Annual Report 2013

Guideline 10.1

Accountability for Accurate Information

In discharging its responsibility of providing accurate and relevant information on a timely basis, the Board ensures

the timely release of the Company's annual reports and public announcements of financial results on a half yearly and

yearly basis and disclosure of other relevant information of the Group such that the information provides a balanced

and understandable assessment of the Group's performance, position and prospects.

To assist the Board in discharging its responsibility, the Company has established a system whereby the management

of the Company would furnish an overall representation to the Audit Committee and the Board confirming, inter alia,

the integrity of the Group's financial statements.

On a half-yearly basis, the management of the Company issues a representation letter to the Audit Committee

confirming that the Group's financial processes and controls are in place, highlighting material financial risks and

impacts and providing updates on status of significant financial issues of the Group. In accordance with Rule 705(5) of

the Catalist Rules, the Board provides confirmation in its half-yearly financial results announcements that, to the best

of its knowledge, nothing had come to the attention of the Board which might render the financial statements to be

false or misleading in any material aspect.

Guideline 10.2

Management Accounts

The management of the Company provides the Board with regular updates on the Group's business activities and

financial performance by providing balanced and understandable management accounts of the Company's performance,

position and prospects on a quarterly basis. Such reports compare the Group's actual performance against the approved

budget and where appropriate, against forecast. They also highlight key business indicators and major issues that are

relevant to the Group's performance.

AUDIT COMMITTEE

Principle 11: Establishment of Audit Committee with Written Terms of Reference

Guideline 11.1 and 11.8

Membership of the Audit Committee

The Audit Committee comprises the following members, the majority of whom, including the Chairperson, are

independent non-executive Directors:

Mr Tan Lye Huat, Chairperson Independent and Non-executive

Mdm Lee Sok Koon, Constance Independent and Non-executive


During the year, the Audit Committee held 4 scheduled meetings, which all members attended.

Guideline 11.2

Expertise of Members of the Audit Committee

The Board is satisfied that all the members of the Audit Committee, having the necessary accounting and/or related

financial management expertise, are appropriately qualified to discharge their responsibilities.



Annual Report 2013

Guideline 11.3 and Guideline 11.4

Roles and Responsibilities of the Audit Committee

The Audit Committee is guided by its Terms of Reference and meets periodically to undertake the following principal

functions:

(a) reviewing the annual audit plan, scope and results of the audit undertaken by the External Auditors, including

non-audit services performed by them to ensure that there is a balance between maintenance of their objectivity

and cost effectiveness;

(b) reviewing the effectiveness and adequacy of the internal audit function, which is outsourced to a professional

services firm;

(c) reviewing with the internal auditors the scope and procedures of the audit plans, the results and adequacy of the

Group's material internal controls and with Management the adequacy of financial, operational and compliance

risk management;

(d) reviewing the financial statements and other relevant announcements to shareholders and the SGX-ST, prior to

submission to the Board;

(e) assessing the independence and objectivity of the External Auditors and recommending to the Board the

appointment/re-appointment/removal of External Auditors;

(f) reviewing the assistance given by the Company's officers to the External/Internal Auditors; and

(g) reviewing and recommending for the Board's approval the interested person transactions as specified under

Chapter 9 of the Catalist Rules and/or the procedures set out in the general mandate approved by Shareholders.

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.


External and Internal Auditors

During FY2013, the aggregate amount of fees paid to the External Auditors, Nexia TS Public Accounting Corporation,

amounted to approximately S$75,700, comprising S$60,000 paid for the provision of audit services and S$15,700 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

Committee's assessment of the External Auditor's independence. The Audit Committee is of the view that the fee of

S$15,700 paid for the non-audit services (being tax advisory) provided by the External Auditors in FY2013 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.



Annual Report 2013

The Company's Internal and External Auditors were invited to make presentations to the Audit Committee during the

year to facilitate the Audit Committee's review of the work performed by and the findings of the Internal and External

Auditors as well as to keep the Audit Committee abreast of changes to accounting standards and issues which may

have a direct impact on financial statements. The Internal and External Auditors have also met separately with the Audit

Committee without the presence of management during FY2013.

Guideline 11.7

Whistle Blowing Policy

To encourage proper work ethics and eradicate any internal improprieties, unethical acts, malpractices, fraudulent acts,

corruption and/or criminal activities in the Group, the Company has put in place a whistle blowing policy (“Policy”).

The Policy stipulates the mechanism by which concerns about possible improprieties in matters of financial reporting

or other matters may be raised by employees of the Group and a Whistle-Blowing Committee (“WBC”) has been

established for this purpose. In addition, a dedicated and secured e-mail address also allows whistle blowers to contact

the WBC and members of the Audit Committee directly.

Assisted by the WBC, the Audit Committee addresses issues/concerns raised and arranges for investigation and/or

follow-up of appropriate action. The Audit Committee reports to the Board on any issues/concerns received by it

and the WBC, at the ensuing Board meeting. Should the Audit Committee or WBC receive reports relating to serious

offences, and/or criminal activities in the Group, the Audit Committee and the Board have access to the appropriate

external advice where necessary. Where appropriate or required, a report shall be made to the relevant governmental

authorities for further investigation/action.

The WBC consists of the CEO, the Head (Operations) and the Chief Financial Officer of the Company. The WBC is

empowered to:

(a) investigate all issues/concerns relating to the Group (except for issues/concerns that are directed specifically or

affecting any member of the WBC, which shall be dealt with by the Audit Committee);

(b) make the necessary reports and recommendations to the Audit Committee or the Board for their review and

further action, if deemed required by them; and

(c) access the appropriate external advice where necessary and, where appropriate or required, report to the relevant

government authorities for further investigations/actions.

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.



Annual Report 2013

INTERNAL CONTROLS

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 Group's assets. The Audit Committee is responsible for ensuring that such a system has been

appropriately implemented and monitored.

During FY2013, the Audit Committee has reviewed the reports submitted by the External Auditors and the Internal

Auditors relating to the effectiveness of the Group's internal controls, including the adequacy of the Group's internal

financial controls, operational and compliance controls, as well as risk management policies and systems established

by the management of the Company.

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 Group's business and operational environment in order to

identify areas of significant financial, operation and compliance risks, as well as adopt appropriate measures to control

and mitigate the risks that may affect the Group's 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 Group's 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 Group's internal controls in addressing financial, operational and compliance risks, were

adequate as at 31 March 2013.

INTERNAL AUDIT

Principle 13: Independent Internal Audit Function

Guideline 13.1

Internal Auditors

The Audit Committee's responsibilities over the Group's internal controls and risk management are complemented by

the work of the Internal Auditors (“IA”).



Annual Report 2013

An internal audit function that is independent of the activities it audits has been established and the IA's primary line

of reporting is to the Chairperson of the Audit Committee.


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 Company's 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 Company's internal audit function is adequately resourced to perform the job for the Group.

Guideline 13.4

Adequacy of the Internal Audit Function

The Audit Committee reviews annually the adequacy of the internal function to ensure that the internal audits are

performed effectively. The Audit Committee reviews and approves the annual internal audit plan to ensure that there is

sufficient coverage of the Group's activities over a cycle. It also oversees the implementation of the internal audit plan

and ensures that the management of the Company provides the necessary co-operation to enable the IA to perform

its function.

COMMUNICATION WITH SHAREHOLDERS

Principle 14: Regular, Effective and Fair Communication with Shareholders

Principle 15: Shareholders' Participation at General Meetings


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

Shareholder's 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.



Annual Report 2013

Guideline 15.3

Questions Raised at General Meetings

The Chairmen of the Board and the Board committees attend all AGMs to address issues raised by Shareholders. The

Company's 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.

DEALING IN SECURITIES

The Company has adopted an internal code on dealings in securities to govern dealings in the Shares by the Directors

and the key executives of the Group. The Directors, management and officers of the Group, who have access to price-

sensitive, financial or confidential information are not allowed to deal in the Shares during the period commencing one

month before the announcement of the Group's half yearly and yearly results and ending on the date of announcement

of such results, and when in possession of unpublished price-sensitive information. In addition, the officers of the

Company are advised not to deal in the Shares for short term considerations and are expected to observe the insider

trading laws at all times even when dealing in securities within the permitted trading periods.

INTERESTED PERSON TRANSACTIONS

The Company has established procedures to ensure that all transactions with interested persons are reported in a timely

manner to the Audit Committee and that the transactions are on an arm's 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.



Annual Report 2013

The aggregate value of all interested person transactions entered into during FY2013 (including transactions of less

than S$100,000 each) is as follows:

Name of interested person

Aggregate value of all

interested person transactions

(including transactions of less

than S$100,000 each) during

FY2013 (excluding transactions

conducted under shareholders'

mandate pursuant to Rule 920

of the Catalist Rules)

Aggregate value of all

interested person transactions

(including transactions of

less than S$100,000 each)

conducted during FY2013

under shareholders' mandate

pursuant to Rule 920 of the

Catalist Rules

(S$'000) (S$'000)

Shigemitsu Industry Co., Ltd.(1):

– Royalty, franchise and licence fees(2) 428 –

– Purchases of food ingredients 5(3) 1,314(4)

Notes:

(1) Shigemitsu Katsuaki, the Company's 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, franchise and licence fees in FY2013 comprise fees paid for the use of the “Ajisen Ramen“ brand amounting to S$404,000, the use of the “Sen No Chanpon“ and the “Aji No Chanpon“ brands amounting to S$8,000 and the right to use the technique for the production of noodles amounting to S$16,000.

The royalty, franchise and licence fees relating to the “Ajisen Ramen“ brand are deemed to have been specifically approved by the Shareholders at the time of the Company's 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 Group's purchases of ingredients for the “Sen No Chanpon“ and “Aji No Chanpon“ business from Shigemitsu Industry. The aggregate value of all purchases from Shigemitsu Industry for this purpose amounted to approximately S$5,000 (i.e. less than S$100,000) in FY2013.

(4) The Shareholders had, at the last AGM of the Company held on 26 July 2012, 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$1,314,000 in FY2013. 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.

Save as disclosed above, there are no material contracts or loans entered into by the Group involving the interests of

any Director or controlling shareholder of the Company, either still subsisting at the end of FY2013 or if not subsisting,

were entered into since 31 March 2013.

SPONSOR

No fees relating to non-sponsorship activities or services were paid to the Company's sponsor, CIMB Bank Berhad,

Singapore Branch, during FY2013.

36

Directors’ Reportfor the financial year ended 31 March 2013


The directors present their report to the members together with the audited financial statements of the Group for the

financial year ended 31 March 2013 and the balance sheet of the Company as at 31 March 2013.

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

Wong Hin Sun, Eugene

Lee Sok Koon

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 nominee

Holdings in which Director is

deemed to have an interest

As at

21 April 2013

As at

31 March 2013

As at

1 April 2012

As at

21 April 2013

As at

31 March 2013

As at

1 April 2012

Company

(No. of ordinary shares)

Takahashi Kenichi 76,543,200 76,543,200 76,543,200 5,400,000 5,400,000 5,400,000

Shigemitsu Katsuaki 2,240,400 2,240,400 2,240,400 2,240,400 2,240,400 2,240,000

Wong Hin Sun, Eugene – – – 4,777,200 4,777,200 4,777,200

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 Company’s subsidiaries at the beginning and at the end of the financial year.

The Directors‘ interests in the ordinary shares of the Company as at 21 April 2013 were the same as those as at 31

March 2013.

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.

37



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 (Chairman, Lead Independent Director)

Lee Sok Koon (Member, Independent Director)

Wong Hin Sun, Eugene (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) reviewing the audit plan of the Company’s independent auditor and its report on the effectiveness of material

internal controls, including financial, operational and compliance controls and risk management;

(b) reviewing the internal audit plans, the scope and results of internal audit procedures;

(c) reviewing the balance sheet of the Company, the consolidated financial statements of the Group for the financial

year ended 31 March 2013 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 auditor’s report

on the balance sheets of the Company and the consolidated financial statements of the Group;

(d) conducting investigation into any matter within the Audit Committee’s scope of responsibility and review any

significant findings of investigations;

(e) assessing the independence and objectivity of the independent auditors;

(f) recommending to the Board of Directors on the appointment or re-appointment of independent auditor;

(g) reviewing the assistance given by the Company’s management to the independent auditor; and

(h) reviewing transactions falling within the scope of Chapter 9 of the Catalist Rules.

38



Audit Committee (Continued)

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 2013, the fees charged by the independent auditor for the provision of

non-audit services amounted to $15,700. 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.

On behalf of the Directors

Takahashi Kenichi

Director


Director

Singapore

25 June 2013

39

Statement by Directorsfor the financial year ended 31 March 2013


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 42 to 91 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 2013 and of the results of the business, changes in equity and cash flows of the Group

for the financial year then ended; and

(b) 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.

On behalf of the Directors

Takahashi Kenichi

Director


Director

Singapore

25 June 2013

40

Independent Auditor’s Reportto the Members of Japan Foods Holding Ltd.


Report on the Financial Statements

We have audited the accompanying financial statements of Japan Foods Holding Ltd. (the “Company”) and its

subsidiaries (the “Group”) set out on pages 42 to 91, which comprise the consolidated balance sheet of the Group

and the balance sheet of the Company as at 31 March 2013, the consolidated statement of comprehensive income,

statement of changes in equity and statement of cash flows of the Group for the financial year then ended, and a

summary of significant accounting policies and other explanatory information.

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation of financial statements that give a true and fair view in accordance

with the provisions of the Singapore Companies Act (the “Act”) and Singapore Financial Reporting Standards, and for

devising and maintaining a system of internal accounting controls sufficient to provide a reasonable assurance that

assets are safeguarded against loss from unauthorised use or disposition; and transactions are properly authorised and

that they are recorded as necessary to permit the preparation of true and fair profit and loss accounts and balance

sheets and to maintain accountability of assets.

Auditor’s Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in

accordance with Singapore Standards on Auditing. Those standards require that we comply with ethical requirements

and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from

material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial

statements. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of

material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the

auditor considers internal control relevant to the entity’s preparation of financial statements that give a true and fair

view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing

an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of

accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating

the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit

opinion.

41

Independent Auditor’s Reportto the Members of Japan Foods Holding Ltd.


Opinion

In our opinion, the consolidated financial statements of the Group and the balance sheet of the Company are properly

drawn up in accordance with the provisions of the Act and Singapore Financial Reporting Standards so as to give a

true and fair view of the state of affairs of the Group and of the Company as at 31 March 2013, and of the results,

changes in equity and cash flows of the Group for the financial year ended on that date.

Report on Other Legal and Regulatory Requirements

In our opinion, the accounting and other records required by the Act to be kept by the Company and by those

subsidiaries incorporated in Singapore of which we are the auditors, have been properly kept in accordance with the

provisions of the Act.

Nexia TS Public Accounting Corporation

Public Accountants and Certified Public Accountants

Director-in-charge: Lee Look Ling

Appointed since financial year ended 31 March 2012

Singapore

25 June 2013

42

Consolidated Statement of Comprehensive Incomefor the financial year ended 31 March 2013


2013 2012

Note $’000 $’000

Revenue 4 61,311 56,116

Cost of sales (12,225) (12,195)

Gross profit 49,086 43,921

Other income 5 670 694

Other gains/(losses) – net 6 88 (5)

Expenses

– Selling and distribution (37,952) (36,747)

– Administrative (2,481) (2,128)

– Other operating (1,612) (1,212)

– Finance 7 (5) (51)

Share of profit of an associated company 17 100 –

Profit before income tax 7,894 4,472

Income tax expense 10 (1,485) (753)

Net profit 6,409 3,719

Other comprehensive income

Currency translation differences arising from consolidation 28 5 6

Total comprehensive income 6,414 3,725

Profit attributable to equity holders of the Company 6,414 3,725

Total comprehensive income attributable to equity

holders of the Company 6,414 3,725

Earnings per share attributable to equity holders of

the Company (cents per share)

– Basic and diluted 11 5.55 3.22

The accompanying notes form an integral part of the financial statements

43

Balance Sheetsas at 31 March 2013


Group Company

2013 2012 2013 2012

Note $’000 $’000 $’000 $’000

ASSETS

Current assets

Cash and cash equivalents 12 16,730 11,148 818 754

Trade and other receivables 13 830 982 6,785 5,478

Inventories 14 862 809 – –

Other current assets 15 3,186 2,594 44 469

21,608 15,533 7,647 6,701

Non-current assets

Investment in subsidiaries 16 – – 5,178 5,178

Investment in an associated company 17 116 – 16 –

Loan to an associated company 18 248 – 248 –

Property, plant and equipment 19 9,538 10,200 – –

Intangible assets 20 209 150 – –

Club membership 21 259 – 259 –

Long-term security deposits 22 2,020 2,431 – –

12,390 12,781 5,701 5,178

Total assets 33,998 28,314 13,348 11,879

LIABILITIES

Current liabilities

Trade and other payables 23 7,076 5,780 1,564 1,301

Borrowings 24 – 317 – –

Current income tax liabilities 10 1,238 1,233 6 31

8,314 7,330 1,570 1,332

Non-current liabilities

Deferred income tax liabilities 26 653 521 – –

653 521 – –

Total liabilities 8,967 7,851 1,570 1,332

NET ASSETS 25,031 20,463 11,778 10,547

EQUITY

Share capital 27 8,791 8,791 8,791 8,791

Currency translation reserve 28 13 8 – –

Retained profits 29 16,227 11,664 2,987 1,756

TOTAL EQUITY 25,031 20,463 11,778 10,547


44

Consolidated Statement of Changes in Equityfor the financial year ended 31 March 2013


Share

capital

Currency

translation

reserve

Retained

profits

Total

equity

Note $’000 $’000 $’000 $’000

Group

2013

Beginning of financial year 8,791 8 11,664 20,463

Dividends paid 30 – – (1,846) (1,846)

Total comprehensive income for the year – 5 6,409 6,414

End of financial year 8,791 13 16,227 25,031

2012

Beginning of financial year 8,809 2 8,666 17,477

Share issue expenses (18) – – (18)

Dividends paid 30 – – (721) (721)

Total comprehensive income for the year – 6 3,719 3,725

End of financial year 8,791 8 11,664 20,463


45

Consolidated Statement of Cash Flowsfor the financial year ended 31 March 2013


Group

2013 2012

$’000 $’000

Cash flows from operating activities


Adjustments for:

– Income tax expense 1,485 753

– Depreciation of property, plant and equipment 4,067 3,959

– Amortisation of intangible assets 40 28

– Written off of property, plant and equipment 579 441

– Loss on disposal of property, plant and equipment 8 45

– Impairment of intangible assets 65 –

– Unrealised currency translation gains 5 8

– Share of profit of an associated company (100) –

– Inventories written off 2 –

– Interest expense 5 51

– Interest income (31) (17)

12,534 8,987

Change in working capital

– Inventories (55) 146

– Trade and other receivables 152 (386)

– Other current assets (592) (359)

– Long-term security deposits 411 (365)

– Trade and other payables 1,296 890

Cash generated from operations 13,746 8,913

Income tax paid (1,348) (517)

Interest received 31 17

Net cash provided by operating activities 12,429 8,413

Cash flows from investing activities

– Additions to intangible assets (164) –

– Additions to property, plant and equipment (3,993) (2,892)

– Acquisition of an associated company (16) –

– Acquisition of club membership (259) –

– Loans to an associated company (248) –

– Proceeds from disposal of property, plant and equipment 1 3

Net cash used in investing activities (4,679) (2,889)

46

Consolidated Statement of Cash Flowsfor the financial year ended 31 March 2013


Group

2013 2012

$’000 $’000

Cash flows from financing activities

– Proceeds from issuance of ordinary shares (net) – (18)

– Interest paid (5) (51)

– Bank deposits pledged (85) (197)

– Repayment of borrowings (307) (1,128)

– Repayment of finance lease liabilities (10) (26)

– Dividend paid to equity holders to the Company (1,846) (721)

Net cash used in financing activities (2,253) (2,141)

Net increase in cash and cash equivalents 5,497 3,383

Cash and cash equivalents

Beginning of financial year 9,323 5,941

Effects of currency translation on cash and cash equivalents –* (1)

End of financial year (Note 12) 14,820 9,323

* The effect of currency translation on cash and cash equivalents is less than $1,000


47

Notes to the Financial Statementsfor the financial year ended 31 March 2013


These notes form an integral part of and should be read in conjunction with the accompanying financial statements.

1 GENERAL INFORMATION

Japan Foods Holding Ltd. (the “Company”) was incorporated in the Republic of Singapore with its registered

office and principal place of business at 420 North Bridge Road, #02-01, North Bridge Centre, Singapore 188727.

The Company is listed on the Catalist Board of the Singapore Exchange Securities Trading Limited.

The principal activity of the Company is relating to investment holding.

The principal activities of the subsidiaries are disclosed in Note 16 to the financial statements.

2 SIGNIFICANT ACCOUNTING POLICIES

2.1 Basis of preparation

These financial statements have been prepared in accordance with Singapore Financial Reporting Standards

(“FRS”) under the historical cost convention, except as disclosed in the accounting policies below. The

financial statements are presented in Singapore Dollars and have been rounded to the nearest thousand,

unless otherwise stated.

The preparation of financial statements in conformity with FRS requires management to exercise its

judgement in the process of applying the Group’s accounting policies. It also requires the use of certain

critical accounting estimates and assumptions. The areas involving a higher degree of judgement or

complexity, or areas where assumptions and estimates are significant to the financial statements are

disclosed in Note 3.

Interpretations and amendments to published standards effective in 2012

On 1 April 2012, the Group adopted the new or amended FRS and Interpretations to FRS (“INT FRS”) that

are mandatory for application for the financial year. Changes to the Group’s accounting policies have

been made as required, in accordance with the transitional provisions in the respective FRS and INT FRS.

The adoption of these new or amended FRS and INT FRS did not result in substantial changes to the

accounting policies of the Group and the Company and had no material effect on the amounts reported

for the current or prior financial years.

48



2 SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

2.2 Group accounting

(a) Subsidiaries

(i) Consolidation

Subsidiaries are entities (including special purpose entities) over which the Group has power

to govern the financial or operating policies so as to obtain benefits from its activities,

generally accompanied by a shareholding giving rise to a majority of the voting rights. The

existence and effect of potential voting rights that are currently exercisable or convertible

are considered when assessing whether the Group controls another entity. Subsidiaries

are consolidated from the date on which control is transferred to the Group. They are de-

consolidated from the date on which control ceases.

In preparing the consolidated financial statements, transactions, balances and unrealised

gains on transactions between group entities are eliminated. Unrealised losses are also

eliminated but are considered an impairment indicator of the asset transferred. Accounting

policies of subsidiaries have been changed where necessary to ensure consistency with the

policies adopted by the Group.

Non-controlling interests are that part of the net results of operations and of net assets

of a subsidiary attributable to the interests which are not owned directly or indirectly

by the equity holders of the Company. They are shown separately in the consolidated

statement of comprehensive income, statement of changes in equity and balance sheet.

Total comprehensive income is attributed to the non-controlling interests based on their

respective interests in a subsidiary, even if this results in the non-controlling interests having

a deficit balance.

(ii) Acquisitions

The acquisition method of accounting is used to account for business combinations by the

Group.

The consideration transferred for the acquisition of a subsidiary or business comprises the

fair value of the assets transferred, the liabilities incurred and the equity interests issued

by the Group. The consideration transferred also includes the fair value of any contingent

consideration arrangement and the fair value of any pre-existing equity interest in the

subsidiary.

Acquisition-related costs are expensed as incurred.

49




2.2 Group accounting (Continued)

(a) Subsidiaries (Continued)

(ii) Acquisitions (Continued)

Identifiable assets acquired and liabilities and contingent liabilities assumed in a business

combination are, with limited exceptions, measured initially at their fair values at the

acquisition date.

On an acquisition-by-acquisition basis, the Group recognises any non-controlling interest in

the acquiree at the date of acquisition either at fair value or at the non-controlling interest’s

proportionate share of the acquiree’s net identifiable assets.

The excess of (i) the consideration transferred the amount of any non-controlling interest

in the acquiree and the acquisition-date fair value of any previous equity interest in the

acquiree over the (ii) fair value of the net identifiable assets acquired is recorded as goodwill.

(iii) Disposals

When a change in the Group ownership interest in a subsidiary results in a loss of control

over the subsidiary, the assets and liabilities of the subsidiary including any goodwill are

derecognised. Amounts previously recognised in other comprehensive income in respect of

that entity are also reclassified to profit or loss or transferred directly to retained earnings

if required by a specific Standard.

Any retained equity interest in the entity is remeasured at fair value. The difference between

the carrying amount of the retained interest at the date when control is lost and its fair

value is recognised in profit or loss.

Please refer to the paragraph “Investment in subsidiaries and associated companies” for

the accounting policy on investments in subsidiaries in the separate financial statements

of the Company.

50





(b) Associated companies

Associated companies are entities over which the Group has significant influence, but not control,

generally accompanied by a shareholding giving rise to voting rights of 20% and above but not

exceeding 50%. Investments in associated companies are accounted for in the consolidated

financial statements using the equity method of accounting less impairment losses, if any.

(i) Acquisitions

Investments in associated companies are initially recognised at cost. The cost of acquisition is

measured at the fair value of the assets given, equity instruments issued or liabilities incurred

or assumed at the date of exchange, plus costs directly attributable to the acquisition.

Goodwill on associated companies represents the excess of the cost of acquisition of the

associate over the Group’s share of the fair value of the identifiable net assets of the

associate and is included in the carrying amount of the investments.

(ii) Equity method of accounting

In applying the equity method of accounting, the Group’s share of its associated companies’

post-acquisition profits or losses are recognised in profit or loss and its share of post-

acquisition other comprehensive income is recognised in other comprehensive income.

These post-acquisition movements and distributions received from the associated companies

are adjusted against the carrying amount of the investments. When the Group’s share of

losses in an associated company equals to or exceeds its interest in the associated company,

including any other unsecured non-current receivables, the Group does not recognise

further losses, unless it has obligations to make or has made payments on behalf of the

associated company.

Unrealised gains on transactions between the Group and its associated companies are

eliminated to the extent of the Group’s interest in the associated companies. Unrealised

losses are also eliminated unless the transactions provide evidence of impairment of the

assets transferred. The accounting policies of associated companies have been changed

where necessary to ensure consistency with the accounting policies adopted by the Group.

51





(b) Associated companies (Continued)

(iii) Disposal

Investments in associated companies are derecognised when the Group losses significant

influence. Any retained equity interest in the entity is remeasured at its fair value. The

difference between the carrying amount of the retained interest at the date when significant

influence is lost and its fair value is recognised in profit and loss.

Gains and losses arising from partial disposals or dilutions in investments in associated

companies in which significant influence is retained are recognised in profit and loss.

Please refer to the paragraph “Investment in subsidiaries and associated companies” for

the accounting policy on investments in associated companies in the separate financial

statements of the Company.

2.3 Property, plant and equipment

(a) Measurement

Property, plant and equipment are initially recognised at cost and subsequently carried at cost less

accumulated depreciation and accumulated impairment losses.

The cost of an item of property, plant and equipment initially recognised includes its purchase

price and any cost that is directly attributable to bringing the asset to the location and condition

necessary for it to be capable of operating in the manner intended by management.

52




2.3 Property, plant and equipment (Continued)

(b) Depreciation

Depreciation is calculated using the straight-line method to allocate their depreciable amounts

over their estimated useful lives as follows:

Furniture and fittings – 5 years

Kitchen equipment – 5 years

Renovation – 3 – 5 years

Motor vehicles – 5 years

Computer and office equipment – 5 years

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 gains/(losses) – net”.

53




2.4 Intangible assets

Trademark

Trademark acquired are initially recognised at cost and subsequently carried at cost less accumulated

amortisation and accumulated impairment losses. Intangible assets with finite useful life are amortised

on a straight-line basis over 6 years. Intangible assets with indefinite useful life are reviewed annually to

determine whether the useful life assessments continue to be supportable. If not, the change in useful

life from indefinite to finite is made on a prospective basis.

2.5 Club membership

Club membership is stated at cost less impairment loss, if any.

2.6 Borrowing costs

Borrowing costs are recognised in profit or loss using the effective interest method.

2.7 Investments in subsidiaries and associated companies

Investments in subsidiaries and associated companies are carried at cost less accumulated impairment

losses in the Company’s balance sheet. On disposal of such investments, the difference between disposal

proceeds and the carrying amounts of the investments are recognised in profit or loss.

2.8 Cash and cash equivalents

For the purpose of presentation in the consolidated statement of cash flows, cash and cash equivalents

include cash on hand, bank balances and fixed deposits with financial institutions which are subject to

an insignificant risk of changes in value.

2.9 Trade and other payables

Trade and other payables represent liabilities for goods and services provided to the Group prior to the

end of financial year which are unpaid. They are classified as current liabilities if payment is due within

one year or less (or in the normal operating cycle of the business if longer). If not, they are presented as

non-current liabilities.

Trade and other payables are initially recognised at fair value, and subsequently carried at amortised cost

using the effective interest method.

54




2.10 Impairment of non-financial assets

Investments in subsidiaries and associated companies

Property, plant and equipment

Intangible assets

Club membership

Investments in subsidiaries and associated companies, property, plant and equipment, club membership

and intangible assets with finite useful life are tested for impairment whenever there is any objective

evidence or indication that these assets may be impaired. Intangible assets with indefinite useful life

are tested for impairment annually and whenever there is indication that the intangible assets may be

impaired.

For the purpose of impairment testing, the recoverable amount (i.e. the higher of the fair value less cost

to sell and the value-in-use) is determined on an individual asset basis unless the asset does not generate

cash inflows that are largely independent of those from other assets. If this is the case, the recoverable

amount is determined for the cash-generating unit (“CGU”) to which the asset belongs.

If the recoverable amount of the asset (or CGU) is estimated to be less than its carrying amount, the

carrying amount of the asset (or CGU) is reduced to its recoverable amount.

The difference between the carrying amount and recoverable amount is recognised as an impairment

loss in profit or loss.

An impairment loss for an asset is reversed if, and only if, there has been a change in the estimates used

to determine the asset’s recoverable amount since the last impairment loss was recognised. The carrying

amount of this asset is increased to its revised recoverable amount, provided that this amount does not

exceed the carrying amount that would have been determined (net of any accumulated amortisation or

depreciation) had no impairment loss been recognised for the asset in prior years. A reversal of impairment

loss for an asset is recognised in profit or loss.

2.11 Inventories

Inventories comprising raw materials and sundry consumables are stated at the lower of cost and net

realisable value.

Cost is determined using the first-in, first-out method and includes all costs of purchase in bringing the

inventories to their present location and condition.

Net realisable value is the estimated selling price in the ordinary course of business, less the applicable

variable selling expenses. Allowance is made for obsolete, slow-moving and defective inventories.

55




2.12 Financial assets

(a) Classification

The Group classifies its financial assets into loans and receivables. The classification depends on the

nature of the asset and the purpose for which the assets were acquired. Management determines

the classification of its financial assets at initial recognition.

Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments

that are not quoted in an active market. They are presented as current assets, except for those

expected to be realised later than 12 months after the balance sheet date which are presented as

non-current assets. Loans and receivables are presented as “trade and other receivables” (Note

13) and “cash and cash equivalents” (Note 12) on the balance sheet.

(b) Recognition and derecognition

Regular way purchases and sales of financial assets are recognised on trade date – the date on

which the Group commits to purchase or sell the asset.

Financial assets are derecognised when the rights to receive cash flows from financial assets have

expired or have been transferred and the Group has transferred substantially all risks and rewards

of ownership. On disposal of a financial asset, the difference between the carrying amount and the

sale proceeds is recognised in profit or loss. Any amount in other comprehensive income relating

to that asset is reclassified to profit or loss.

(c) Initial measurement

Financial assets are initially recognised at fair value plus transaction costs.

56




2.12 Financial assets (Continued)

(d) Subsequent measurement

Loans and receivables are subsequently carried at amortised cost using the effective interest

method.

(e) Impairment

The Group assesses at each balance sheet date whether there is objective evidence that a financial

asset or a group of financial assets is impaired and recognises an allowance for impairment when

such evidence exists.

Loans and receivables

Significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy,

and default or significant delay in payments are objective evidence that these financial assets are

impaired.

The carrying amount of these assets is reduced through the use of an impairment allowance

account which is calculated as the difference between the carrying amount and the present value

of the estimated future cash flows, discounted at the original effective interest rate. When the

asset becomes uncollectible, it is written off against the allowance account. Subsequent recoveries

of amounts previously written off are recognised against the same line item in profit or loss.

The impairment allowance is reduced through profit or loss in subsequent period when the amount

of impairment loss decreases and the related decrease can be objectively measured. The carrying

amount of the asset previously impaired is increased to the extent that the new carrying amount

does not exceed the amortised cost had no impairment been recognised in prior periods.

57




2.13 Financial guarantees

The Company has issued corporate guarantees to banks for banking facilities of its subsidiaries. These

guarantees are financial guarantees as they require the Company to reimburse the banks if the subsidiaries

fail to make principal or interest payments when due in accordance with the terms of their borrowings.

Financial guarantee are initially recognised at their fair values plus transaction costs in the Company’s

balance sheet.

Financial guarantees are subsequently amortised to profit or loss over the period of the subsidiary’s

banking facilities, unless it is probable that the Company will reimburse the bank for an amount higher

than the unamortised amount. In this case, the financial guarantees shall be carried at the expected

amount payable to the bank in the Company’s balance sheet.

Intra-group transactions are eliminated on consolidation.

2.14 Borrowings

Borrowings are presented as current liabilities unless the Group has an unconditional right to defer

settlement for at least 12 months after the balance sheet date, in which case they are presented as non-

current liabilities.

Borrowings are initially recognised at fair value (net of transaction costs) and subsequently carried at

amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption value

is recognised in profit or loss over the period of the borrowings using the effective interest method.

2.15 Revenue recognition

Revenue comprises the fair value of the consideration received or receivable for sale of goods and

rendering of services in the ordinary course of the Group’s activities. Revenue is presented, net of value-

added tax, rebates and discount, and after eliminating transactions within the Group.

The Group recognises revenue when the amount of revenue and related cost can be reliably measured,

it is probable that collectability of the related receivables is reasonably assured and when the specific

criteria for each of the Group’s activities are met as follows:

(a) Restaurant sales

Restaurant sales represent the invoiced value of food and beverages, net of discounts and goods

and services tax.

58




2.15 Revenue recognition (Continued)

(b) Sub-franchisees sales

Sub-franchisees sales represent the invoiced value of raw materials and sundry consumables, net

of discounts and goods and services tax.

(c) Franchise income

Initial franchise income is recognised upon the grant of rights, completion of the designated phases

of the franchise set-up and transfer of know-how to the franchisee in accordance with the terms

stated in the franchise agreement. Recurring franchise income is recognised on a pre-determined

amount in accordance with terms as stated in the franchise agreements.

(d) Interest income

Interest income is recognised using the effective interest methods.

(e) Royalty income

Royalty income is recognised on an accrual basis in accordance with the substance of the relevant

agreements.

(f) Membership fees income

Revenue from the sale of membership cards is recognised when the members obtain the right to

have access to the membership.

(g) Rental income

Rental income from operating lease is recognised on a straight-line basis over the lease term.

59




2.16 Employee compensation

Employee benefits are recognised as an expense, unless the cost qualifies to be capitalised as an asset.

Defined contribution plans

Defined contribution plans are post-employment benefit plans under which the Group pays fixed

contributions into separate entities such as Central Provident Fund on a mandatory, contractual or

voluntary basis. The Group has no further payment obligations once the contributions have been paid.

Employee leave entitlement

Employee entitlements to annual leave are recognised when they accrue to employees. A provision is

made for the estimated liabilities for annual leave as a result of services rendered by employees up to

balance sheet date.

Profit sharing and bonus plan

The Group recognises a liability and an expense for bonuses and profit-sharing, based on a formula that

takes into consideration the profit attributable to the Company’s shareholders after certain adjustments.

The Group recognises a provision when contractually obliged to pay or when there is a past practice that

has created a constructive obligation to pay.

2.17 Provisions

Provisions are recognised when the Group has a present legal or constructive obligation as a result of a

past event, it is more likely than not that an outflow of resources will be required to settle the obligation

and the amount has been reliably estimated.

2.18 Currency translation

(a) Functional and presentation currency

Items included in the financial statements of each entity in the Group are measured using the

currency of the primary economic environment in which the entity operates (“functional currency”).

The financial statements are presented in Singapore Dollars, which is the functional currency of

the Company.

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2.18 Currency translation (Continued)

(b) Transactions and balances

Transactions in a currency other than the functional currency (“foreign currency”) are translated

into the functional currency using the exchange rates at the dates of transactions. Currency

translation differences resulting from settlement of such transactions and from the translation of

monetary assets and liabilities denominated in foreign currencies at the closing rates at the balance

sheet date are recognised in profit or loss. However, in the consolidated financial statements,

currency translation differences from other currency are recognised in other comprehensive income.

Foreign exchange gains or losses that relate to borrowings are presented in the income statement

within “finance cost”. All other foreign exchange gains and losses impacting profit or loss are

presented in the income statement within “other gains/(losses) – net”.

Non-monetary items measured at fair values in foreign currencies are translated using the exchange

rates at the date when the fair values are determined.

(c) Translation of Group entities’ financial statements

The results and financial position of all the Group entities (none of which has the currency of a

hyperinflationary economy) that have a functional currency different from the presentation currency

are translated into the presentation currency as follows:

(i) assets and liabilities are translated at the closing exchange rates at the reporting date;

(ii) income and expenses are translated at average exchange rates (unless the average is not a

reasonable approximation of the cumulative effect of the rates prevailing on the transaction

dates, in which case income and expenses are translated using the exchange rates at the

dates of transactions); and

(iii) all resulting currency translation differences are recognised in the currency translation

reserve.

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2.19 Income taxes

Current income tax for current and prior periods is recognised at the amount expected to be paid to or

recovered from the tax authorities, using the tax rates and tax laws that have been enacted or substantively

enacted by the balance sheet date.

Deferred income tax is recognised for all temporary differences arising between the tax bases of assets

and liabilities and their carrying amounts in the financial statements except when the deferred income tax

arises from the initial recognition of goodwill or an asset or liability in a transaction that is not a business

combination and affects neither accounting nor taxable profit or loss at the time of the transaction.

A deferred income tax liability is recognised on temporary differences arising on investments in subsidiaries,

associated companies and joint ventures, except where the Group is able to control the timing of the

reversal of the temporary difference and it is probable that the temporary difference will not reverse in

the foreseeable future.

A deferred income tax asset is recognised to the extent that it is probable that future taxable profit will

be available against which the deductible temporary differences and tax losses can be utilised.

Deferred income tax is measured:

(i) at the tax rates that are expected to apply when the related deferred income tax asset is realised or

the deferred income tax liability is settled, based on tax rates and tax laws that have been enacted

or substantively enacted by the balance sheet date; and

(ii) based on the tax consequence that will follow from the manner in which the Group expects, at

the balance sheet date, to recover or settle the carrying amounts of its assets and liabilities.

Current and deferred income taxes are recognised as income or expense in profit or loss.

2.20 Leases

The Group leases restaurant premises under operating leases from non-related parties.

Leases where substantially all risks and rewards incidental to ownership are retained by the lessors are

classified as operating leases. Payments made under operating leases (net of any incentives received from

the lessors) are recognised in profit or loss on a straight-line basis over the period of the lease.

When an operating lease is terminated before the lease period expires, any payment required to be made

to the lessor by way of penalty is recognised as an expense in the financial year in which termination

takes place.

Contingent rents are recognised as an expense in profit or loss when incurred.

62




2.21 Share capital

Ordinary shares are classified as equity. Incremental costs directly attributable to the issuance of new

ordinary shares are deducted against the share capital account.

2.22 Dividends to Company’s shareholders

Dividends to the Company’s shareholders are recognised when the dividends are approved for payment.

2.23 Fair value estimation of financial assets and liabilities

The fair values of financial instruments traded in active markets (such as exchange-traded and over-the-

counter securities and derivatives) are based on quoted market prices at the balance sheet date. The

quoted market prices used for financial assets are the current bid prices; the appropriate quoted market

prices for financial liabilities are the current asking prices.

The fair value of current financial assets and liabilities carried at amortised cost approximate their carrying

amounts.

2.24 Segment reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the

Board of Directors. All operating segments’ results are reviewed regularly by the Group’s Chief Executive

Officer to make decisions for allocating resources and assessing performance of the operating segments.

2.25 Government grants

Grants from the government are recognised as a receivable at their fair value when there is reasonable

assurance that the grant will be received and the Group will comply with all the attached conditions.

Government grants receivable are recognised as income over the periods necessary to match them with

the related costs which they are intended to compensate, on a systematic basis. Government grants

relating to expenses are shown separately as other income.

63



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 19).

An impairment charge of $65,000 (2012: Nil) was recognised for intangible assets in the financial year ended

31 March 2013 due to closure of all restaurants under ”Aoba’ trademark which reduced the carrying amounts

of intangible assets from $209,000 to $150,000.

The carrying amount of investments in subsidiaries, property, plant and equipment and intangible assets are

disclosed in Notes 16, 19 and 20 respectively.

4 REVENUE

Group

2013 2012

$’000 $’000

Restaurant sales 60,979 55,867

Sub-franchisees sales 332 249

61,311 56,116

64



5 OTHER INCOME

Group

2013 2012

$’000 $’000

Royalty income 378 268

Franchise income 20 34

Interest income from bank deposits 31 17

Rental income – 133

Membership card sales 78 83

Government grant 104 5

Marketing grant 5 90

Other 54 64

670 694

6 OTHER GAINS/(LOSSES) – NET

Group

2013 2012

$’000 $’000

Currency translation gains – net 96 40

Loss on disposal of property, plant and equipment (8) (45)

88 (5)

7 FINANCE EXPENSES

Group

2013 2012

$’000 $’000

Interest expense:

– Finance lease liabilities – 1

– Bank borrowings 5 50

5 51

65



8 EXPENSES BY NATURE

Group

2013 2012

$’000 $’000

Purchases of inventories 12,192 11,945

Amortisation of intangible assets (Note 20) 40 28

Depreciation of property, plant and equipment (Note 19) 4,067 3,959

Impairment of intangible assets (Note 20) 65 –

Consumables 729 549

Credit card commission 455 393

Fees on audit services paid/payable to:

– Auditor of the Company 60 59

– Other auditor – 1

Fees on non-audit services paid/payable to:

– Auditor of the Company 17 18

– Other auditor – 1

Employee compensation (Note 9) 14,792 14,058

Property, plant and equipment written off 579 441

Rental 14,876 15,309

Repair and maintenance 728 507

Royalty fee 911 744

Sub-contractors 393 393

Utilities 2,496 2,241

Other 1,923 1,490

Changes in inventories (53) 146

Total cost of sales, selling and distribution, administrative

and other operating expenses 54,270 52,282

9 EMPLOYEE COMPENSATION

Group

2013 2012

$’000 $’000

Wages and salaries 13,002 12,370

Directors’ fees 108 100

Employer’s contribution to Central Provident Fund 687 628

Other short-term benefits 995 960

14,792 14,058

66



10 INCOME TAX EXPENSE

(a) Income tax expense

Group

2013 2012

$’000 $’000

Tax expense attributable to profit is made up of:

– Current income tax 1,475 1,019

– Deferred income tax (Note 26) 132 (225)

1,607 794

Over provision in prior financial years

– Current income tax (122) (41)

1,485 753

The tax on the Group’s profit before tax differs from the theoretical amount that would arise using the

Singapore standard rate of income tax is as follows:

Group

2013 2012

$’000 $’000


Share of profit of associated company, net of tax (100) –

7,794 4,472

Tax calculated at a tax rate of 17% (2012: 17%) 1,325 760

Effects of:

– Expenses not deductible for tax purposes 357 86

– Statutory tax exemption (42) (56)

– Tax incentives (35) –

– Others 2 4

Tax charge 1,607 794

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.

67



10 INCOME TAX EXPENSE (CONTINUED)

(b) Movement in current income tax liabilities

Group Company

2013 2012 2013 2012

$’000 $’000 $’000 $’000

Beginning of financial year 1,233 772 31 31

Income tax paid (1,348) (517) (4) (4)

Income tax expense 1,475 1,019 6 3

(Over)/under provision in prior

financial years (122) (41) (27) 1

End of financial year 1,238 1,233 6 31

11 EARNINGS PER SHARE

Basic earnings per share is calculated by dividing the net profit attributable to equity holders of the Company

by the weighted average number of ordinary share outstanding during the financial year.

Group

2013 2012

$’000 $’000

Net profit attributable to equity holders of the Company ($’000) 6,409 3,719

Weighted average number of ordinary shares outstanding for basic

earnings per share (’000) 115,404 115,404

Basic and diluted earnings per share (cents per share) 5.55 3.22

There were no dilutive potential ordinary shares during the financial year.

68



12 CASH AND CASH EQUIVALENTS

Group Company

2013 2012 2013 2012

$’000 $’000 $’000 $’000

Cash at bank and on hand 10,485 6,053 818 254

Short-term bank deposits 6,245 5,095 – 500

16,730 11,148 818 754

For the purpose of presenting the consolidated statement of cash flows, the consolidated cash and cash

equivalents comprise the following:

Group Company

2013 2012 2013 2012

$’000 $’000 $’000 $’000

Cash and cash equivalents 16,730 11,148 818 754

Less: Bank deposits pledged (1,910) (1,825) – –

14,820 9,323 818 754

Short-term bank deposits amounting to $1,910,000 (2012: $1,825,000) have been pledged to a financial

institution as security for performance guarantee.

13 TRADE AND OTHER RECEIVABLES

Group Company

2013 2012 2013 2012

$’000 $’000 $’000 $’000

Trade receivables

– Subsidiaries – – 4,189 2,895

– Non-related parties 774 862 – –

774 862 4,189 2,895

Non-trade receivables

– Subsidiaries – – 2,596 2,583

– Non-related parties 56 120 – –

56 120 2,596 2,583

830 982 6,785 5,478

The non-trade amounts due from subsidiaries are unsecured, interest free and are repayable on demand.

69



14 INVENTORIES

Group Company

2013 2012 2013 2012

$’000 $’000 $’000 $’000

Raw materials and consumables 862 809 – –

The cost of inventories recognised as an expense and included in “cost of sales” amounted to $12,139,000

(2012: $12,091,000).

15 OTHER CURRENT ASSETS

Group Company

2013 2012 2013 2012

$’000 $’000 $’000 $’000

Deposits 2,613 1,957 5 –

Prepayments 573 637 39 469

3,186 2,594 44 469

16 INVESTMENTS IN SUBSIDIARIES

Company

2013 2012

$’000 $’000

Equity investment at cost

Beginning and end of financial year 5,237 5,237

Accumulated impairment

Beginning and end of financial year (59) (59)

Net book value

End of financial year 5,178 5,178

70



16 INVESTMENTS IN SUBSIDIARIES (CONTINUED)

The details of subsidiaries are:

Name of subsidiaries Principal activities

Country of

business/

incorporation Equity holding

2013 2012

% %

Bachmann Enterprises

Pte Ltd (a)

Trading and management

of franchisees and sub-

franchisees

Singapore

19 July 1997

100 100

Bachmann Japanese

Restaurant Pte Ltd (a)

Operating restaurants Singapore

20 October 1997

100 100

Japan Foods Enterprises

Pte. Ltd.(a)

Operating restaurants

– Currently dormant

Singapore

6 May 2005

100 100

Bachmann Japanese

Restaurant (M) Sdn. Bhd.(b)

Operating restaurants

– Currently dormant

Malaysia

21 April 2008

100 100

(a) Audited by Nexia TS Public Accounting Corporation, Singapore.

(b) The subsidiary is in the process of striking off.

71



17 INVESTMENT IN AN ASSOCIATED COMPANY

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, pursuant to which the

Company subscribed for 12,500 ordinary shares in ACJF Holding Limited, representing 25% of the enlarged

issued and paid-up share capital of ACJF Holding Limited. The aggregate consideration for the subscription of

the shares is $16,000.

Group Company

2013 2012 2013 2012

$’000 $’000 $’000 $’000

Equity investment at cost 16 –

Beginning of financial year – –

Additions 16 –

Share of profit 100 –

End of financial year 116 –

The summarised financial information of the associated company, not adjusted for the proportion of ownership

interest held by the Group, is as follows:

Group

2013 2012

$’000 $’000

Assets 2,071 –

Liabilities 1,071 –

Revenue 2,933 –

Net profit 399 –

Name of the associated

company Principal activities

Country of

business/

incorporation Equity holding

2013 2012

% %

Held by the Company

ACJF Holding Limited Investment holding

company

British Virgin Islands 25 –

(Audited by Lo and Kwong C.P.A. Company Limited, Hong Kong)

72



18 LOAN TO AN ASSOCIATED COMPANY

Group Company

2013 2012 2013 2012

$’000 $’000 $’000 $’000

Loan to an associated company 248 – 248 –

The loan to an associated company is unsecured, interest-free and with no fixed repayment terms. The

management has indicated not to recall the loan within the next 12 months from the date of the financial

statements.

19 PROPERTY, PLANT AND EQUIPMENT

Furniture

and fittings

Kitchen

equipment Renovation

Motor

vehicles

Computer

and office

equipment Total

$’000 $’000 $’000 $’000 $’000 $’000

Group

2013

Cost

Beginning of financial year 1,873 6,250 12,747 185 810 21,865

Additions 51 947 2,733 152 110 3,993

Written off (220) (242) (2,009) – (3) (2,474)

Disposals – (12) – – – (12)

End of financial year 1,704 6,943 13,471 337 917 23,372

Accumulated depreciation

and impairment losses

Beginning of financial year 824 3,533 6,731 147 430 11,665

Depreciation charge (Note 8) 210 991 2,696 23 147 4,067

Written off (155) (170) (1,567) – (3) (1,895)

Disposals – (3) – – – (3)

End of financial year 879 4,351 7,860 170 574 13,834

Net book value


73



19 PROPERTY, PLANT AND EQUIPMENT (CONTINUED)

Furniture

and fittings

Kitchen

equipment Renovation

Motor

vehicles

Computer

and office

equipment Total

$’000 $’000 $’000 $’000 $’000 $’000

Group

2012

Cost

Beginning of financial year 1,946 5,471 14,727 185 723 23,052

Additions 27 1,045 1,729 – 91 2,892

Written off (100) (141) (3,709) – (4) (3,954)

Disposals – (125) – – – (125)


Accumulated depreciation and

impairment losses

Beginning of financial year 632 2,861 7,382 121 300 11,296

Depreciation charge (Note 8) 238 891 2,670 26 134 3,959

Written off (46) (142) (3,321) – (4) (3,513)

Disposals – (77) – – – (77)


Net book value


a) Assets held under finance lease

The carrying amounts of motor vehicles held under finance leases amounted to Nil (2012: $28,000) at

the balance sheet date (Note 24).

b) Write-off of property, plant and equipment

During the current financial year, the Group ceased the operations of certain restaurants. This has

caused the Group to write-off the cost of furniture and fittings, kitchen equipment and renovation in

these restaurants which was previously capitalised. In addition, the Group has also written-off the cost

of some furniture and fittings, kitchen equipment and renovation which are deemed to be unusable by

the Management in the current financial year. The carrying amount of the property, plant and equipment

written-off amounts to approximately $579,000 (2012: $441,000).

74



20 INTANGIBLE ASSETS

Group Company

2013 2012 2013 2012

$’000 $’000 $’000 $’000

Trademark

Cost

Beginning of financial year 308 308 – –

Additions 164 – – –

End of financial year 472 308 – –

Accumulated amortisation

and impairment loss

Beginning of financial year 158 130 – –

Amortisation charge (Note 8) 40 28 – –

Impairment loss (Note 8) 65 – – –

End of financial year 263 158 – –

Net book value 209 150 – –

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. During the current financial year, the Group recognised an

impairment loss of $65,000 (2012: Nil) which is included within “Other operating expenses” in the consolidated

statement of comprehensive income due to closure of all restaurants under “Aoba” trademark. The carrying

amount of this trademark as at 31 March 2013 was Nil (2012: $65,000).

For financial year 2012

Impairment testing of intangible asset with indefinite useful life

The recoverable amount for the intangible asset with indefinite useful life is determined based on a value-in-use calculation using cash flow projections based on financial budgets by management covering a three-year period. The following describes each key assumption in which management has based its cash flow projections to undertake impairment testing of the intangible asset:

• forecasted sales of approximately $2,200,000 each year from FY2013 to FY2015;

• forecasted cost of sales of approximately 25% of the forecasted sales each year from FY2013 to FY2015;

• forecasted direct cost of approximately $1,200,000 each year from FY2013 to FY2015; and

• weighted average costs of capital of approximately 5%.

75



21 CLUB MEMBERSHIP

Group and Company

2013 2012

$’000 $’000

Club membership, at cost 259 –

In the opinion of the directors of the Company, the book value of the club membership approximates its fair

value.

22 LONG-TERM SECURITY DEPOSITS

Group Company

2013 2012 2013 2012

$’000 $’000 $’000 $’000

Refundable security deposits 2,020 2,431 – –

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.

The carrying amounts of the above deposits are approximate to their fair value.

23 TRADE AND OTHER PAYABLES

Group Company

2013 2012 2013 2012

$’000 $’000 $’000 $’000

Trade payables

– Non-related parties 1,783 1,701 – –

Non-trade payables

– Subsidiaries – – 941 909

– Non-related parties 1,499 866 118 57

1,499 866 1,059 966

Accrued operating expenses 3,719 3,138 505 335

Franchise deposit 75 75 – –

7,076 5,780 1,564 1,301

The non-trade amounts due to subsidiaries are unsecured, interest-free and are repayable on demand.

76



24 BORROWINGS

Group Company

2013 2012 2013 2012

$’000 $’000 $’000 $’000

Bank borrowings – 307 – –

Finance lease liabilities (Note 25) – 10 – –

Total borrowings – 317 – –

The exposure of the borrowings of the Group and of the Company to interest rate changes and the contractual

repricing dates at the balance sheet dates are as follows:

Group Company

2013 2012 2013 2012

$’000 $’000 $’000 $’000

6 months or less – 298 – –

6-12 months – 19 – –

Total borrowings – 317 – –

Security granted

Bank borrowings are secured by corporate guarantees given by the Company (Note 31) and personal guarantees

by a director. Finance lease liabilities are secured over the leased motor vehicles (Note 19), as the legal title is

retained by the lessor and will be transferred to the Company upon full settlement of the finance lease liabilities.

25 FINANCE LEASE LIABILITIES

Group

2013 2012

$’000 $’000

Minimum lease payments due:

– Not later than one year – 11

Less: future finance charges – (1)

Present value of finance lease liabilities – 10

The present values of finance lease liabilities are analysed as follows:

Group

2013 2012

$’000 $’000

– Not later than one year – 10

77



26 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

2013 2012

$’000 $’000

Deferred income tax liabilities to

be settled after one year 653 521

Movement in deferred income tax account is as follows:

Group

2013 2012

$’000 $’000

Beginning of the financial year 521 746

Charged/(credited) to profit or

loss (Note 10) 132 (225)

End of the financial year 653 521

The movement in deferred income tax liabilities (prior to offsetting of balances within the same tax jurisdiction)

is as follows:

Accelerated tax

depreciation

Group

$’000

2013

Beginning of financial year 521

Tax charged to profit or loss 132

End of financial year 653

2012

Beginning of financial year 746

Tax credited to profit or loss (225)

End of financial year 521

78



27 SHARE CAPITAL

Group and Company

2013 2012

Number of

ordinary

shares Amount

Number of

ordinary

shares Amount

’000 $’000 ’000 $’000

Issued share capital

Beginning of financial year 115,404 8,791 96,170 8,809

Issuance of bonus shares – – 19,234 –

Share issue expenses – – – (18)

End of financial year 115,404 8,791 115,404 8,791

All issued ordinary shares are fully paid. There is no par value for these ordinary shares. Fully paid ordinary shares

carry one vote per share and carry a right to dividends as and when declared by the Company.

On 21 December 2011, the Company issued and allotted 19,234,000 new ordinary shares in the capital of the

Company pursuant to a bonus issue of new ordinary shares in the capital of the Company on the basis of one

bonus share for every five existing ordinary shares in the capital of the Company. The newly issued bonus shares

rank pari passu in all respects with the previously issued shares.

28 CURRENCY TRANSLATION RESERVE

Group

2013 2012

$’000 $’000

Beginning of financial year 8 2

Net currency translation differences of financial

statements of foreign subsidiary 5 6

End of financial year 13 8

The currency translation reserve is non-distributable.

79



29 RETAINED PROFITS

(a) Retained profits of the Group and the Company are distributable.

(b) Movement in retained profits for the Company is as follows:

Company

2013 2012

$’000 $’000

Beginning of financial year 1,756 441


Dividend paid (Note 30) (1,846) (721)

End of financial year 3,087 1,756

30 DIVIDENDS

Group

2013 2012

$’000 $’000

Ordinary dividends paid

Final exempt dividend paid in respect of the previous financial year

of 0.7 cents (2012: 0.4 cents) per share 808 385

Interim exempt dividend paid in respect of the current financial year

of 0.9 cents (2012: 0.35 cents) per share 1,038 336

1,846 721

At the forthcoming Annual General Meeting on 24 July 2013, a final and a special exempt (one-tier) dividend

of 1.0 cents and 0.6 cents respectively per share amounting to a total $1,846,000 will be 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 2014.

31 CONTINGENT LIABILITIES

Company

The Company has issued corporate guarantees to banks for borrowings of a subsidiary. These bank borrowings

amounted to Nil (2012: $307,000). 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.

80



32 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

2013 2012

$’000 $’000

Not later than one year 10,795 12,360

Between one and five years 7,927 10,854

18,722 23,214

33 RELATED PARTY TRANSACTIONS

Related parties are entities with common direct or indirect shareholders and/or directors or management.

Parties are considered to be related if one party has the ability to control the other party or exercise significant

influence over the party in making financial or operating decisions. There is no related party identified by the

management in the financial year.

Key management personnel compensation

Group

2013 2012

$’000 $’000

Wages and salaries 1,128 992

Directors’ fees 108 100

Employer’s contribution to Central Provident Fund 35 40

1,271 1,132

Included in the above is total compensation to the directors amounting to $776,000 (2012: $636,000).

34 FINANCIAL RISK MANAGEMENT

The Group’s 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 Group’s overall risk management strategy seeks to minimise

adverse effects from the unpredictability of financial markets on the Group’s 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.

81



34 FINANCIAL RISK MANAGEMENT (CONTINUED)

(a) Market risk

(i) Currency risk

Currency risk arises within entities in the Group when transactions are denominated in foreign

currencies. The Group’s exposure to currency risk is not significant as the Group operates mainly

in Singapore. Certain of the Group’s 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.

The Group’s currency exposure are analysed as follows:

SGD JPY HKD Other Total

$’000 $’000 $’000 $’000 $’000

2013

Financial assets

Cash and cash equivalents 16,711 – – 19 16,730

Trade and other receivables 822 8 – – 830

Other financial assets 4,606 27 248 – 4,881

Receivables from subsidiaries 9,272 – – – 9,272

31,411 35 248 19 31,713

Financial liabilities

Trade and other payables (6,665) (384) (27) – (7,076)

Payables to subsidiaries (9,272) – – – (9,272)

(15,937) (384) (27) – (16,348)

Net financial assets/

(liabilities) 15,474 (349) 221 19 15,365

Add: Net non-financial assets 9,540 10 116 – 9,666

Net assets/(liabilities) 25,014 (339) 337 19 25,031

Currency profile including

non-financial assets/

(liabilities) 25,014 (339) 337 19 25,031

Currency exposure of

financial assets/(liabilities)

net of those denominated

in the respective entities

functional currency – (339) 337 – (2)

82




(a) Market risk (Continued)

(i) Currency risk (Continued)

SGD JPY HKD Other Total

$’000 $’000 $’000 $’000 $’000

2012

Financial assets

Cash and cash equivalents 11,074 – – 74 11,148

Trade and other receivables 982 – – – 982

Other financial assets 4,385 – – 3 4,388

Receivables from subsidiaries 8,299 – – 2 8,301

24,740 – – 79 24,819

Financial liabilities

Trade and other payables (5,349) (306) (77) (48) (5,780)

Borrowings (317) – – – (317)

Payables to subsidiaries (8,299) – – (2) (8,301)

(13,965) (306) (77) (50) (14,398)

Net financial assets/

(liabilities) 10,775 (306) (77) 29 10,421

Add: Net non-financial assets 10,042 – – – 10,042

Net assets/(liabilities) 20,817 (306) (77) 29 20,463

Currency profile including

non-financial assets/

(liabilities) 20,817 (306) (77) 29 20,463

Currency exposure of

financial assets/(liabilities)

net of those denominated

in the respective entities

functional currency – (306) (77) 3 (380)

At 31 March 2013, if the JPY and HKD both strengthened/weakened by 5% (2012: 5%) against

the SGD with all variables including tax rate being held constant, the Group’s profit after tax for

the financial year would have been $100 (2012: $19,000) 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.

83




(a) Market risk (Continued)

(ii) Cash flow and fair value interest rate risk

Cash flow interest rate risk is the risk that the future cash flows of a financial instrument will

fluctuate because of changes in market interest rates. Fair value interest rate risk is the risk that the

value of a financial instrument will fluctuate due to changes in market interest rates. The Group’s

interest rate risk is primarily from short-term deposits that will mature from 1 to 12 months.

These short-term deposits are placed on as short-term basis according to the Group’s cash flow

requirements, and hence the Group does not hedge against interest rate fluctuations.

(b) Credit risk

Credit risk refers to the risk that counterparties will default on their contractual obligations resulting in

financial loss to the Group. The Group trades mainly in cash. Receivable balances are monitored on an

ongoing basis with the result that the Group’s exposure to bad debts is not significant.

The Group’s major classes of financial assets are bank deposits and trade receivables. As the Group and the

Company do not hold any collateral, the maximum exposure to credit risk for each class of financial assets

is the carrying amount of that class of financial assets presented on the balance sheet, except as follows:

Company

2013 2012

$’000 $’000

Corporate guarantees provided to banks on subsidiary’s loans – 307

There are no significant concentrations of credit risk within the Group.

There are no financial assets that are past due and/or impaired as at each of the balance sheet dates.

84




(c) Liquidity risk

Liquidity or funding risk is the risk that an enterprise will encounter difficulty in raising funds to meet

commitments associated with financial assets. Liquidity risk may result from an inability to sell a financial

asset quickly at close to its fair value.

The Group manages its liquidity risk by ensuring the availability of adequate funds to meet its obligation.

The table below analyses the maturity profile of the Group’s financial liabilities based on contractual

undiscounted cash flows:

Not later

than one year

Between one

and five years Total

$’000 $’000 $’000

Group

As at 31 March 2013

Trade and other payables 7,076 – 7,076

As at 31 March 2012


Borrowings 322 – 322

6,102 – 6,102

Company

As at 31 March 2013


As at 31 March 2012


Financial guarantee contracts 322 – 322

1,623 – 1,623

Balance due within 12 months equal their carrying amounts as the impact of discounting is not significant.

85




(d) Capital risk

The primary objective of the Group’s 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% (2012: 100%).

The gearing ratio is calculated as total borrowing, as disclosed in Note 24, divided by total equity.

Group

2013 2012

$’000 $’000

Total borrowing – 317

Total equity 25,031 20,463

Gearing ratio – 2%

The Group has no externally imposed capital requirements for the financial year 2013. The Group was in

compliance with all externally imposed capital requirements for the financial year ended 31 March 2012.

(e) Fair value measurement

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 2013.

86



35 SEGMENT INFORMATION

Management has determined the operating segments based on the reports reviewed by the Board of Directors

(“BOD”) that are used to make strategic decisions.

The BOD considers the business from both a geographic and business segment perspective. Geographically,

management manages and monitors the business in the two geographic areas: Singapore and Malaysia. The

Singapore operation derives its revenue from operation of restaurants and sales of food ingredients. There is no

operating activity in Malaysia since the financial year ended 31 March 2011.

The segment information provided to the BOD for the reportable segments for the financial year ended 31 March

2013 is as follows:

Restaurant

sales

Food

ingredients

sales

Total

reportable

segments

$’000 $’000 $’000

Group

2013

Revenue

Total segment revenue 60,980 477 61,457

Inter-segment revenue – (146) (146)

External revenue 60,980 331 61,311

Segment results 7,660 108 7,768

Depreciation and amortisation 4,067 40 4,107

Written off of property, plant and equipment 579 – 579

Loss on disposal of property, plant and equipment 8 – 8

Impairment of intangible assets – 65 65

Written off inventories 2 – 2

Segment assets 27,018 735 27,753

Segment assets includes:

Additions to property, plant and equipment 3,993 – 3,993

Additions to intangible assets – 164 164

Additions to club membership 259 – 259

Acquisition of an associated company 16 – 16

Loan to an associated company 248 – 248

Segment liabilities 6,738 338 7,076

87



35 SEGMENT INFORMATION (CONTINUED)

Restaurant

sales

Food

ingredients

sales

Total

reportable

segments

$’000 $’000 $’000

Group

2012

Revenue

Total segment revenue 55,867 353 56,220

Inter-segment revenue – (104) (104)

External revenue 55,867 249 56,116

Segment results 4,448 58 4,506

Depreciation and amortisation 3,959 28 3,987

Impairment loss on property, plant and equipment 441 – 441

Written off of property, plant and equipment 45 – 45

Segment assets 22,541 678 23,219

Segment assets include:

Additions to property, plant and equipment 2,892 – 2,892

Segment liabilities 5,412 368 5,780

The Group’s 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.

The BOD assesses the performance of the operating segments based on a measure of segment results before

interest (net), share of results of an associated company and income tax expenses. Interest income and finance

expenses are not allocated to segments, as this type of activity is driven by the Group finance team, which

manages the cash position of the Group.

88




A reconciliation of reported segment results to profit before tax is provided as follows:

Group

2013 2012

$’000 $’000

Reported segments 7,768 4,506

Interest income 31 17

Finance expense (5) (51)

Share of results of an associated company 100 –


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

2013 2012

$’000 $’000

Segment assets for reportable segments 27,753 23,219

Short-term bank deposits 6,245 5,095

33,998 28,314

89




Reportable segments’ liabilities are reconciled to total liabilities as follows:

The amounts provided to the BOD with respect to total liabilities are measured in a manner consistent with

that of financial statements. These liabilities are allocated based on the operations of the segment. All liabilities

are allocated to the reportable segments other than current income tax and deferred income tax liabilities and

borrowings.

Group

2013 2012

$’000 $’000

Segment liabilities for reportable segments 7,076 5,780

Borrowings – 317

Current income tax liabilities 1,238 1,233

Deferred income tax liabilities 653 521

8,967 7,851

Geographical Segments

Revenue Assets

As at 31 March

2013 2012 2013 2012

$’000 $’000 $’000 $’000

Singapore 61,311 56,116 33,979 28,240

Malaysia – – 19 74

61,311 56,116 33,998 28,314

The Group’s two business segments operate in two main geographical areas:

(i) 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.

(ii) 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.

90



36 EVENTS OCCURRING AFTER BALANCE SHEET DATE

On 21 May 2013, the Company entered into an acquisition and shareholders’ agreement with Ajisen Investments


Limited, and First Harmony Holdings Limited (“First Harmony”) to jointly develop and operate restaurants under

the “Menya Musashi” trademark in Hong Kong. Under the agreement, the Company has agreed to acquire

15,000 ordinary shares of USD1.00 (equivalent to $1.26) each in capital of First Harmony, for a purchase

consideration of USD15,000 (equivalent to approximately $19,000), based on par value of the capital of First

Harmony.

The acquisition has been completed as at date of this report. Ajisen Investments and the Company shall provide

funding to First Harmony by way of a shareholder’s loan amounting to HKD3,500,000 and HKD1,500,000

respectively (equivalent to approximately $566,000 and $243,000 respectively) for the purpose of working capital

for First Harmony. The loan shall be unsecured, interest-free and with no fixed repayment terms.

On the same day, the Company entered into an acquisition and shareholders’ agreement with Ajisen Investments


Limited, and Highly Yield Limited (“Highly Yield”) to jointly develop and operate restaurants under the “Menya

Musashi” trademark in People’s Republic of China (“PRC”). Under the agreement, the Company has agreed to

acquire 10,000 ordinary shares of USD1.00 (equivalent to $1.26) each in capital of Highly Yield, for a purchase

consideration of USD10,000 (equivalent to approximately $12,600), based on par value of the capital of Highly

Yield.

The acquisition has been completed as at date of this report. Ajisen Investments and the Company shall

provide funding to Highly Yield by way of a shareholder’s loan amounting to USD4,000,000 and USD1,000,000

respectively (equivalent to approximately $5,040,000 and $1,260,000 respectively) for purpose of working capital

for Highly Yield. The loan shall be unsecured, interest-free and with no fixed repayment terms.

91



37 NEW OR REVISED ACCOUNTING STANDARDS AND INTERPRETATIONS

Below are the mandatory standards, amendments and interpretations to existing standards that have been

published, and are relevant for the Group’s accounting periods beginning on or after 1 April 2013 or later

periods and which the Group has not early adopted:

• Amendments to FRS 1 – Presentation of Items of Other Comprehensive Income (effective for annual

periods beginning on or after 1 July 2012)

• FRS 19 (Revised) – Employee Benefits (effective for annual periods beginning on or after 1 January 2013)

• FRS 27 (Revised) – Separate Financial Statements (effective for annual periods beginning on or after 1

January 2014)

• FRS 28 (Revised) – Investment in Associates and Joint Ventures (effective for annual periods beginning

on or after 1 January 2014)

• Amendments to FRS 32 – Financial Instruments: Offsetting of Financial Assets and Financial Liabilities

(effective for annual periods beginning on or after 1 January 2014)

• FRS 110 (New) – Consolidated Financial Statements (effective for annual periods beginning on or after 1

January 2014)

• FRS 111 (New) – Joint Arrangements (effective for annual periods beginning on or after 1 January 2014)

• FRS 112 (New) – Disclosure of Interest in Other Entities (effective for annual periods beginning on or after

1 January 2014)

• FRS 113 (New) – Fair Value Measurement (effective for annual periods beginning on or after 1 January

2013)

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.

38 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 25 June 2013.


Statistics of Shareholdings

Annual Report 2013

Number of shares issued : 115,404,000 shares

Class of shares : Ordinary share

Voting rights : One vote per share

Distribution of shareholdings as at 10 June 2013

Size of shareholdings No. of shareholders % No. of shares %

1 – 999 12 6.35 5,600 0.00

1,000 – 10,000 99 52.38 300,200 0.26

10,001 – 1,000,000 67 35.45 6,652,200 5.77

1,000,001 and above 11 5.82 108,446,000 93.97

Total 189 100.00 115,404,000 100.00

Twenty largest shareholders as at 10 June 2013

No. Name of shareholders No. of shares %

1 Takahashi Kenichi 76,543,200 66.33

2 Chan Chau Mui 5,400,000 4.68

3 HSBC (Singapore) Nominees Pte Ltd 5,215,000 4.52

4 Sirius Venture Capital Pte Ltd 4,777,200 4.14

5 DBS Nominees Pte Ltd 4,679,000 4.06

6 Shigemitsu Katsuaki 2,240,400 1.94

7 Shigemitsu Industry Co. Ltd. 2,240,400 1.94

8 DBS Vickers Securities (S) Pte Ltd 2,022,000 1.75

9 Loh Yih 2,000,000 1.73

10 DB Nominees (S) Pte Ltd 1,720,800 1.49

11 Amfraser Securities Pte. Ltd. 1,608,000 1.39

12 CIMB Securities (Singapore) Pte Ltd 1,000,000 0.87

13 Tan Kay Toh or Yu Hea Ryeong 558,400 0.48

14 Koh Chin Hwa 470,000 0.41

15 Tan Bin Cheng Guy 336,000 0.29

16 Teng Chai Hai 280,000 0.24

17 Christella Chuah Poh Choo 220,000 0.19

18 Morgan Stanley Asia (Singapore) Securities Pte Ltd 208,800 0.18

19 United Overseas Bank Nominees Pte Ltd 203,200 0.18

20 Hong Leong Finance Nominees Pte Ltd 193,000 0.17

Total: 111,915,400 96.98


Statistics of Shareholdings

Annual Report 2013

Percentage of Shareholding in Public’s Hands

Based on the information available to the Company as at 10 June 2013, 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 10 June 2013.

Substantial shareholder

Name of Shareholder

No. of shares

(Direct interest) %

No. of shares

(Deemed interest) %

Takahashi Kenichi(1) 76,543,200 66.33 5,400,000 4.68

Note:

(1) Takahashi Kenichi is deemed interested in the 5,400,000 shares held by his deemed associate, Chan Chau Mui.


Notice of Annual General Meeting

Annual Report 2013

NOTICE IS HEREBY GIVEN that the Annual General Meeting (“AGM”) of Japan Foods Holding Ltd. (“Company”) will

be held at The Imagination Room, Level 5, National Library Building, Singapore 188064 on Wednesday, 24 July 2013

at 9.30 a.m. for the purpose of transacting the following business:

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 2013 together with the Auditors’ Report thereon.

(Resolution 1)

2. To declare a final tax-exempt one-tier dividend of 1.0 cents per ordinary share and a special tax-

exempt one-tier dividend of 0.6 cents per ordinary share for the financial year ended 31 March 2013.

(Resolution 2)

3. To approve the payment of S$108,000 as fees to the directors of the Company (“Directors”)

for the financial year ended 31 March 2013 (2012: S$100,000).

(Resolution 3)

4. To re-elect the following Directors who are retiring pursuant to Article 98 of the Company’s

Articles of Association:

(i) Mr Wong Hin Sun, Eugene [See explanatory Note (a)] (Resolution 4)

(ii) Mr Shigemitsu Katsuaki (Resolution 5)

5. 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.

(Resolution 6)

6. To transact any other business which may properly be transacted at the AGM.

AS SPECIAL BUSINESS

To consider and if thought fit, to pass the following resolutions as Ordinary Resolutions, with or

without any modifications:

7. Authority to issue shares in the capital of the Company and/or Instruments (as defined

hereinafter)

(Resolution 7)

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



Annual Report 2013

(2) make or grant offers, agreements or options (collectively, “Instruments”) that

might or would require Shares to be issued, including but not limited to the creation

and issue of (as well as adjustments to) options, warrants, debentures or other

instruments convertible into Shares,

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);

(2) (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 Company’s

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;

(ii) 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

(iii) any subsequent bonus issue, consolidation or sub-division of Shares;

(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



Annual Report 2013

(4) unless revoked or varied by the Company in a general meeting, such authority shall

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.

[See explanatory Note (b)]

8. Renewal of the IPT Mandate (Resolution 8)

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 Company’s appendix to the Annual Report 2013 (“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”);

(b) 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

(c) 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 (c)]



Annual Report 2013

NOTICE OF BOOKS CLOSURE DATE

NOTICE IS ALSO HEREBY GIVEN that subject to approval of shareholders of the Company (“Shareholders”) being

obtained for the proposed final tax-exempt one-tier dividend of 1.0 cents per ordinary share and a special tax-exempt

one-tier dividend of 0.6 cents per ordinary share (“2013 Dividends”) for the financial year ended 31 March 2013, the

Share Transfer Books and Register of Members of the Company will be closed on 1 August 2013 for the purpose of

determining Shareholders’ entitlements to the 2013 Dividends.

Duly completed registrable transfers received by the Company’s Share Registrar, B.A.C.S. Private Limited, at 63

Cantonment Road, Singapore 089758 up to 5.00 p.m. on 31 July 2013 will be registered to determine Shareholders’

entitlements to the 2013 Dividends. Shareholders whose securities accounts with The Central Depository (Pte) Limited

are credited with the Shares as at 5.00 p.m. on 31 July 2013 will be entitled to the 2013 Dividends.

Payment of the 2013 Dividends, if approved by Shareholders at the AGM of the Company, will be made on 15 August

2013.

By Order of the Board

Esther Au

Company Secretary

Singapore

2 July 2013

Explanatory Notes:

(a) Mr Wong Hin Sun, Eugene will, upon re-election as a Director, remain as a Non-executive Director and a member of the Audit,

Nominating and Remuneration Committees of the Company, and will be considered as non-independent for the purposes of

Rule 704(7) of the Catalist Rules.

(b) The Ordinary Resolution 7 in item 7 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.

(c) The Ordinary Resolution 8 in item 8 above, if passed, will empower the Group, 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, enter into the Mandated

Transactions as described in the Appendix and to do all acts necessary to give effect to the IPT Mandate. In accordance with the



Annual Report 2013

requirements of Chapter 9 of the Catalist Rules, Shigemitsu Industry Co., Ltd and Mr Shigemitsu Katsuaki will abstain and each

of them has also undertaken that their respective associates will abstain, from voting on this Ordinary Resolution 9 in relation

to the proposed renewal of the IPT Mandate.

The Audit Committee of the Company has reviewed the terms of the IPT Mandate and is satisfied that the guidelines and

review procedures for the Mandated Transactions as set out in the Appendix have not changed since the IPT Mandate was

renewed at the AGM of the Company held on 26 July 2012. The Audit Committee of the Company is also of the view that

the guidelines and review procedures for the Mandated Transactions are adequate to ensure that the Mandated Transactions

will be transacted on arm’s length basis and on normal commercial terms and will not be prejudicial to the interests of the

Company and its minority shareholders.

If during the periodic reviews by the Audit Committee of the Company, it is of the view that the established guidelines and review

procedures for the Mandated Transactions are no longer appropriate or adequate to ensure that the Mandated Transactions

will be transacted on arm’s length basis and on normal commercial terms and would not be prejudicial to the interests of the

Company and its minority shareholders, the Company will seek a fresh mandate from its shareholders based on new guidelines

and procedures.

Notes:

1. A member of the Company entitled to attend and vote at the AGM of the Company 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.

2. 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.

JAPAN FOODS HOLDING LTD.(Company Registration No. 200722314M)(Incorporated in the Republic of Singapore)

PROXY FORM(Please see notes overleaf before completing this form)

I/We, (Name)

of (Address)

being a *member/members of JAPAN FOODS HOLDING LTD. (“Company”) hereby appoint:

Name NRIC/Passport No. Proportion of Shareholdings

No. of Shares %

Address

and/or (delete as appropriate)

Name NRIC/Passport No. Proportion of Shareholdings

No. of Shares %

Address

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 The Imagination Room, Level 5, National Library Building, Singapore 188064 on Wednesday, 24 July 2013 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 [√] within the box provided.)

No. Ordinary Resolutions For Against

Ordinary Business

1. Adoption of the Directors’ Report and the audited financial statements for the financial year ended 31 March 2013, together with the Auditors’ Report thereon.

2. Payment of proposed final tax-exempt one-tier dividend of 1.0 cents per ordinary share and a special tax-exempt one-tier dividend of 0.6 cents per ordinary share for the financial year ended 31 March 2013.

3. Approval of Directors’ fees of S$108,000 for the financial year ended 31 March 2013. (2012: S$100,000)

4. Re-election of Mr Wong Hin Sun, Eugene as a Director.

5. Re-election of Mr Shigemitsu Katsuaki as a Director.

6. Re-appointment of Nexia TS Public Accounting Corporation as auditors of the Company.

Special Business

7. Authority to issue shares in the capital of the Company pursuant to Section 161 of the Companies Act, Cap. 50 of Singapore.

8. Renewal of the IPT Mandate.

Dated this day of 2013

Total Number of Shares in: No. of Shares

CDP Register

Signature of Shareholder(s)/Common Seal of Corporate Shareholder

Register of Members

* Delete where inapplicable

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.

2. 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.

3. 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.

4. 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.

5. The instrument appointing a proxy or proxies must be deposited at the Company’s 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.

6. 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.

7. 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.

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.

Second fold along this line

AffixPostageStamp

First fold along this line

Japan Foods Holding Ltd.420 North Bridge Road


Singapore 188727

Contents1 Corporate Profile

2 At a Glance

4 Our Brands

6 Where We Are

8 Chairman’s Message

10 Financial Highlights

12 Operating and Financial Review

16 Board of Directors

17 Corporate Structure/Corporate Information

18 Corporate Governance Report

36 Directors’ Report

39 Statement by Directors

40 Independent Auditor’s Report

42 Financial Statements

92 Statistics of Shareholdings

94 Notice of Annual General Meeting

This document has been reviewed by the Company’s

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 verifi ed the

contents of this document. This document has not been

examined or approved by the SGX-ST. 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 Raffl es Place, #09-01 Singapore Land Tower, Singapore

048623, Telephone: +65 6337 5115.

Designed and produced by

(65) 6578 6522

JAPA

N FO

OD

S H

OLD

ING

LTD.

AN

NU

AL R

EPO

RT 2013

JAPANFOODS

HOLDING LTD.

JAPAN FOODSHOLDING LTD.

our Wings

Annual Report 2013

Incorporated in the

Republic of Singapore on

3 December 2007

(Company Registration No: 200722314M)

420 North Bridge Road


Singapore 188727

Tel: (65) 6333 9781

Fax: (65) 6333 9782

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contents · contents 1 corporate profile 2 at a glance 4 our brands 6 where we are 8 chairman’s...

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