Sunbridge Group Limited Annual Report - ASX · Member of the Audit and Risk Committee ... China...

Sunbridge Group Limited and Its Controlled Entities

ABN 40 163 886 020 Annual Report for the year ended 31 December 2014

Sunbridge Group Limited Annual Report For the year ended 31 December 2014

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Content

Page

Directors’ Report 1

Auditor’s Independence Declaration 14

Corporate Governance Statement 15

Consolidated Statement of Profit or Loss and Other Comprehensive Income 27

Consolidated Statement of Cash Flows 30

Notes to the Consolidated Financial Statements 31

1 Nature of operations 31

2 General information and statement of compliance 31

3 New and revised standards that are effective for these financial statements 32

4 Summary of accounting policies 34

5 Segment reporting 43

6 Revenue 45

7 Operating and administrative expenses 45

8 Finance costs 45

9 Income tax expenses 46

10 Cash and cash equivalents 46

11 Trade and other receivables 47

12 Security deposits to suppliers 47

13 Inventories 48

14 Controlled entities 48

15 Property, plant and equipment 49

15 Property, plant and equipment (Continued) 50

16 Intangible assets 51

17 Deferred tax assets 51

18 Trade and other payables 52

19 Financial liabilities 52

20 Current tax liabilities 52

21 Contingent assets and liabilities 52

22 Share capital 53

23 Other components of equity 54

24 Earnings per share and dividends 54

25 Capital and leasing commitments 54

26 Reconciliation of cash flows from operating activities 55

27 Auditor remuneration 56

28 Related party transactions 56

29 Financial instrument risk 57

30 Fair value measurement 61



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31 Accounting standards applicable in the future 61

32 Parent entity information 66

33 Post-reporting date events 66

34 Company details 67

Directors’ Declaration 68

Independent Auditor’s Report 69

ASX Additional Information 72



1

Directors’ Report

The Directors of Sunbridge Group Limited (‘Sunbridge’) present their Report together with the financial statements of the consolidated entity, being Sunbridge (‘the Company’) and its Controlled Entities (‘the Group’) for the year ended 31 December 2014.

Director details

The following persons were Directors of Sunbridge during or since the end of the financial year.

Mr Jia Yin Xu

MBA

Managing Director and CEO Director since May 2013

Mr Xu has founded the Group’ operations

since 1996 and he is responsible for

formulating the overall operation, strategic

planning, business development and corporate

management of the Group, including devising

the annual plan and financial budget of the

Group.

Other current Directorships:

None

Previous Directorships (last 3 years):

None

Interests in shares:

259,200,000 shares

Interest in options:

None

Ms Wayne V Reid

O.B.E.

Independent Non-Executive Chairman

Member of the Audit and Risk Committee

Director since July 2013

Mr Reid has served on a government advisory

board, was President of Tennis Australia and

the Melbourne Football Club and is a Member

of Australian Sporting Hall of Fame. He has

been a Director on over 30 company boards

of various companies across several continents

in diverse and wide raging industries, including

insurance, pharmaceutical, retail, mining,

stock-broking, construction, property

development and hospitality.


Victor Group Holdings Limited (ASX: VIG)

Phillip Island Regional Tourism Board


Telent International Ltd


None


None



2

Mr Ting Jiang

MB, MAcc, MFin

Independent Non-Executive Director Chairman of Audit and Risk Committee Member of Remuneration and Nomination Committee

Director since May 2013

Mr Jiang is a qualified Certified Practising

Accountant in Australia and has broad

experience in corporate finance and corporate

advisory and legal practice, and has completed

a range of capital market transactions in both

Australia and China.


Xiaoxiao Education Limited (ASX: XXL)

China Herbal Medicine Limited (NSX: CHI)


Premiere Eastern Energy Limited (ASX: PEZ)


None


None

Mr Andrew J Plymton

Independent Non-Executive Director

Member of Audit and Risk Committee

Appointed as director on July 2013, resigned

on 30 December 2014

Mr Plymton is an entrepreneur with extensive

experience in the financial services sectors,

sports administration and listed companies. Mr

Plymton also currently serves as Director of a

number of listed companies.


Entellect Limited (ASX: ESN)

Shoply Limited (ASX: SHP)

Energy Mad Limited (NZX)


Beyond Sportswear International Limited

(ASX:BSI)

Blue Stone Global Limited (ASX: BUE)

Newsat Limited (ASX: NWT)


None


None



3

Prof. Qiang An Liu

Ph D

Independent Non-Executive Director Chairman of Remuneration and Nomination Committee Member of Audit and Risk Committee

Director since July 2013

Prof. Liu holds a Doctorate in Accountancy and post doctorate research in Peking University. Prof. Liu is presently the charing professor in the entrepreneur development program in Xiamen University. Prof. Liu possesses extensive practical experience in corporate financial management, enterprise management information system, internal controls and capital operations.


None


None


None


None

Mr Benny Yubin Qiu

Independent Non-Executive Director Member of Remuneration and Nomination Committee

Appointed as director on 30 December 2014

Mr Benny Qiu has over 30 years of experience

in corporate finance, business management

and international business across different

industries, including manufacturing, real estate

services, investment and financial services.

Other Current Directorships

Australia Asia Investment Capital Pty Ltd


None


None


None



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Company secretary

Mr Chow Yee Koh has previously held senior positions with a number of professional accounting

firms and has a degree in Accounting and Finance.

Principal activities

During the year, the principal activities of entities within the Group were:

• Wholesale of clothing apparel to franchised distributors; and

• Retail of clothing apparel to company owned stores.

There have been no significant changes in the nature of these activities during the year.

Review of operations and financial results

The Sunbridge Group recognised an after tax profit of $AUD8.4 million for the 2014 financial year which represents a decrease of 40% on the previous year. The Company recognised a foreign exchange gain on translation of foreign operation of $AUD4.2 million. The Company’s cash and cash equivalents reserves remain strong at $AUD29.3 million.

Below is a Summarised operation review of 2014:

• Group revenue for the year (excluding interest received) was up by 6% to $AUD84.2 million compared to 2013 revenue of $AUD79.5 million;

• Invested $AUD4.18 million (2013: $AUD0.38 million) to the number of directly owned stores to 71 stores, which generated a total revenues of $AUD6.75 million, a significant increase from 2013’s revenues of $AUD1.5 million through direct store expansion, improved brand recognition and effective management of the Group’s own stores.

• Overhaul of franchisee’s stores owned by distributors, of which the Group paid out over $AUD6.3 million (2013: NIL) in renovation subsidies to the franchisee for them to renovate and upgrade their stores, so as to provide customers with a premium shopping experience.

• The Group has also restructured the commission paid to wholesalers, giving them better incentives for meeting targets. The wholesaler commission paid in 2014 increased to $AUD1.27 million (2013: $AUD0.14 million).

• For the 2014 financial year the Group had a NPBT of $AUD11.7 million, a decrease of 38.2% compared to previous year NPBT of $AUD18.9 million. Similarly, the Group NPAT of $AUD8.4 million has also decreased by 40% compared to previous year NPAT of $AUD13.9 million;

• Foreign exchange translation gain impacting on comprehensive income of $AUD4.2 million;

• Continuing strong cash reserves of $AUD29.3 million.



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Likely development, business strategies and prospects

As one of China’s leading brands in menswear, Sunbridge seeks to continue to grow its market share while increasing its profit margin.

The Group’s new headquarter and warehouse is now in use. The Group expects further cost savings from streamlining of the warehousing and distribution process.

The Group will continue its current strategies of acquiring profitable stores from franchisees while at the same time encouraging franchisees to upgrade their stores. In addition, the Group will also be partnering with online wholesalers to market the Group’s product online. Partnering with established online wholesalers will be more effective as the Group is able to capitalise on the huge followings of the online wholesalers. To further complement the brand image building strategies, the Group will continue sponsorship of premium social and sporting events.

The management believes that the above strategies will improve the image of the Group’s two existing brands, Pandist and Agueseadan and thereby increasing sales and achieving better margin.

Significant changes in the state of affairs

There have been no significant changes in the state of affairs of the Group present entity during the

financial year.

Dividends

The Directors have resolved not to pay a dividends due to the decrease of NPAT and investment planning in 2015.

Events arising since the end of the reporting period

The Group’s new headquarter and warehouse is now in use. The Construction in progress amount of

$AUD2.03 million is expected to be transferred to Land and Building in April 2015.

Apart from the above, there are no other matters or circumstances that have arisen since the end of

the year which significantly affected or may significantly affect the operations of the Consolidated

Group, the results of the operations, or the state of affairs of the Consolidated Group in future

financial years.

Directors’ Meetings

The number of Directors Meetings (including meetings of Committees of Directors) held during the

year, and the number of meetings attended by each Director is as follows:

Directors’ Name Board Meetings Audit and Risk Committee Nomination and Remuneration

Committee

A B A B A B

Jia Yin Xu 10 10 - - - -

Wayne V Reid 10 10 - - 1 1

Andrew J Plymton 10 10 1 1 - -

Ting Jiang 10 10 1 1 1 1

Qiang An Liu 10 7 1 - 1 1

Benny Qiu - - - - - -

• Column A is the number of meetings the Director was eligible to attend

• Column B is the number of meetings the Director attended.



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Shares options

There are no options issued by Sunbridge.

Remuneration Report (audited)

The Directors of Sunbridge Group Limited and its controlled entities (‘the Group’) present the

Remuneration Report for Non-Executive Directors, Executive Directors and other Key Management

Personnel, prepared in accordance with the Corporations Act 2001 and the Corporations Regulations 2001.

The Remuneration Report is set out under the following main headings:

a Principles used to determine the nature and amount of remuneration; b Details of remuneration; c Director shareholdings; d Service agreements; e Share-based remuneration; f Transaction with Key Management Personnel (KMP) and related parties; and g Other information

a Principles used to determine the nature and amount of remuneration

The principles of the Group’s executive strategy and supporting incentive programs and frameworks

are:

• to align rewards to business outcomes that deliver value to shareholders;

• to drive a high performance culture by setting challenging objectives and rewarding high

performing individuals; and

• to ensure remuneration is competitive in the relevant employment market place to

support the attraction, motivation and retention of executive talent.

Sunbridge has structured a remuneration framework that is market competitive and complementary to

the reward strategy of the Group.

The Board has established a Nomination and Remuneration Committee which operates in accordance

with its Charter as approved by the Board and is responsible for determining and reviewing

compensation arrangements for the Directors and the Executive Team.

The remuneration structure that has been adopted by the Group consists fixed remuneration being

annual salary.

The Nomination and Remuneration Committee assess the appropriateness of the nature and amount

of remuneration on a periodic basis by reference to recent employment market conditions with the

overall objective of ensuring maximum stakeholder benefit from the retention of a high quality Board

and Executive Team.

The payment of bonuses, share options and other incentive payments are reviewed by the Nomination

and Remuneration Committee annually as part of the review of executive remuneration and a

recommendation is put to the Board for approval. All bonuses, options and incentives must be linked

to pre-determined performance criteria.

Use of Remuneration Consultants

No remuneration consultant has been engaged by the Company during the period.



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Short Term Incentive (STI)

Sunbridge performance measures involve the use of annual performance objectives, metrics,

performance appraisals and continuing emphasis on living the Company values.

The performance measures are set annually after consultation with the Directors and Executives and

are specifically tailored to the areas where each executive has a level of control. The measures target

areas the Board believes hold the greatest potential for expansion and profit and cover financial and

non-financial measures.

The Key Performance Indicators (‘KPI’s’) for the Executive Team are summarised as follows:

Performance area:

• financial: operating profit and earnings per share; and

• non-financial: strategic goals set by each individual business unit based on job

descriptions.

The STI Program incorporates both cash and share-based components for the Executive Team and

other employees.

The Board may, at its discretion, award bonuses for exceptional performance in relation to each

person’s pre-agreed KPIs.



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b Details of remuneration

Details of the nature and amount of each element of the remuneration of each Key Management Personnel (‘KMP’) of Sunbridge are shown in the table below:

Director and other Key Management Personnel Remuneration

Employee Year

Short Term Employee Benefits Post-Employment Benefits

Long-Term Benefits

Termination Benefits

Share-Based Payments

Total ($)

Performance Based

Percentage of Remuneration

($) Cash Salary & Fees ($)

Cash Bonus ($)

Non-Monetary Benefits ($)

Superannuation ($)

Long Service Leave ($)

Termination Payments

($) Options ($)

Executive Directors

Jia Yin Xu - Managing Director and CEO (Appointed 22 May 2013)

2014 364,080 9,834 1,192 - - - - 375,106 3%

2013 227,106 - - 1,104 - - - 228,210 0%

Non-Executive Directors

Wayne V Reid – Chairman and Independent Non-executive Director (Appointed 2 July 2013)

2014 54,996 - - 5,156 - - - 60,152 0%

2013 4,583 - - 424 - - - 5,007 0%

Andrew J Plymton – Independent Non-executive Director (Appointed 23 July 2013)

2014 48,000 - - - - - - 48,000 0%

2013 3,750 - - - - - - 3,750 0%

Ting Jiang – Independent Non-executive Director (Appointed 22 May 2013)

2014 48,000 - - - - - - 48,000 0%

2013 4,000 - - - - - - 4,000 0%

Qiang An Liu – Independent Non-executive Director (Appointed 2 July 2013)

2014 - - - - - - - - 0%

2013 920 - - - - - - 920 0%

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Employee Year

Short Term Employee Benefits Post-Employment Benefits

Long-Term Benefits

Termination Benefits

Share-Based Payments

Total

Performance Based

Percentage of Remuneration

Cash Salary & Fees Cash Bonus

Non-Monetary Benefits Superannuation

Long Service Leave

Termination Payments Options

Other Key Management Personnel

Chow Yee Koh – Company Secretary (Appointed 22 May 2013)

2014 33,000 - - 3,094 - - - 36,094 0%

2013 16,928 - - - - - - 16,928 0%

Yee Shyang Wong – CFO (Appointed 2 July 2013, resigned 4 August 2014)

2014 17,500 - - 1,625 - - - 19,125 0%

2013 15,011 - - 1,389 - - - 16,400 0%

Fang Zhang – CFO (Appointed 5 August 2014)

2014 13,750 - - 1,306 - - - 15,056 0%

2013 - - - - - - - - 0%

Feifu Lin – PRC Financial Manager

2014 21,138 2,384 914 - - - - 24,436 10%

2013 19,699 - - 607 - - - 20,306 0%

Wenjian Xu – PRC Head of Sales Division*

2014 35,694 8,416 1,192 - - - - 45,302 19%

2013 - - - - - - - - 0%

Ji Duo Lin – PRC Head of Sales Division*

2014 7,495 - - 527 - - - 8,022 0%

2013 52,765 - - 1,104 - - - 53,869 0%

Lin Mao Ye – Administrative Manager

2014 15,694 1,582 - 1,898 - - - 19,174 8%

2013 9,341 - - 497 - - - 9,838 0%

2014 Total 659,347 22,216 3,298 13,606 - - - 698,467 0%

2013 Total 291,997 - - 3,524 - - - 359,228 0%

* Mr Ji Duo Lin resigned during the year and was replaced by Mr Wenjian Xu.



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The relative proportions of remuneration that are linked to performance and those that are fixed are

as follows:

Name Fixed Remuneration At Risk – STI At Risk – Options

$ $ $

Executive Directors

Jia Yin Xu 365,272 - -

Other Key Management Personnel

Chow Yee Koh 36,094 - -

Yee Shyang Wong 19,125 - -

Fang Zhang 15,056 - -

Feifu Lin 22,052 - -

Wenjian Xu 36,886 - -

Ji Duo Lin 8,022 - -

Lin Mao Ye 17,592 - -

c Director shareholdings

The table below shows the shareholdings of each director in number and percentage as at 31

December 2014.

Name Shareholding in Shareholding in

Number Percentage

Jia Yin Xu 259,200,000 54.95%

Wayne V Reid - -

Andrew Plymton - -

Ting Jiang - -

Prof. Qiang An Liu - -

Benny Qiu - -

d Service agreements

Remuneration and other terms of employment for the Executive Directors and other Key

Management Personnel are formalised in a Service Agreement. The major provisions of the

agreements relating to remuneration are set out below:

Name Base Salary ($)

Term of Agreement Notice Period

Jia Yin Xu 365,272 3 years and auto-renewal 1 month

Chow Yee Koh 33,000 1 year and auto-renewal 1 month

Fang Zhang 33,000 1 year and auto-renewal 1 month

Feifu Lin 22,052 1 year and auto-renewal 1 month

Wenjian Xu 36,886 1 year and auto-renewal 1 month

Lin Mao Ye 17,592 1 year and auto-renewal 1 month



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e Share-based remuneration

Options granted over unissued shares

There are no options issued by Sunbridge.

f Transaction with Key Management Personnel (KMP) and related parties

Transactions with Key Management Personnel

2014 2013

$ $

Cash paid to Jia Yin Xu 835,983 3,517,988

Prepaid reimbursement made to Ting Jiang 2,000 -

Cash received from Jia Yin Xu (505,748) -

Company expenses paid by Jia Yin Xu (291,914) (1,217,087)

Cash advances repaid by Jia Yin Xu - (3,555,452)

The above relate to transactions between the Group and the Company Directors. The transactions between the related parties are on normal commercial terms and conditions no more favourable than to those to other parties unless otherwise stated.

Balance with Key Management Personnel

Amounts receivable from and payable to Key Management Personnel of the Group at reporting date comprise of the following:

Receivable from

the party Payable to the

party

31 December 2014 $ $

Mr Jia Yin Xu - 1,178,765

Mr Ting Jiang 2,000 -

Receivable from


party



Mr Ting Jiang - -

Related party transactions have been determined to be on an arm’s length basis, which comprise of related party loans and no specific terms and conditions have been attached to the transactions above.

g Other information

Cash bonus

Cash bonuses are approved by the Company and paid on an annual basis to all staff, including executive KMP. The payment of the cash bonus is not contractual and is dependent on the Group’s performance and KPI assessments. Amount paid is variable and at the discretion of the Company.

End of audited Remuneration Report.



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Environmental legislation

The Group’s operations are not subject to any particular or significant environmental regulation under

a law of the Commonwealth or of a State or Territory in Australia or in China.

Indemnities given to, and insurance premiums paid for, auditors and officers

During the year, Sunbridge paid a premium to insure officers of the Group. The officers of the

Group covered by the insurance policy include all directors.

The liabilities insured are legal costs that may be incurred in defending civil or criminal proceedings

that may be brought against the officers in their capacity as officers of the Group, and any other

payments arising from liabilities incurred by the officers in connection with such proceedings, other

than where such liabilities arise out of conduct involving a wilful breach of duty by the officers or the

improper use by the officers of their position or of information to gain advantage for themselves or

someone else to cause detriment to the Group.

Details of the amount of the premium paid in respect of insurance policies are not disclosed as such

disclosure is prohibited under the terms of the contract.

The Group has not otherwise, during or since the end of the financial year, except to the extent

permitted by law, indemnified or agreed to indemnify any current or former officer or auditor of the

Group against a liability incurred as such by an officer or auditor.

Non-audit services

During the year, Grant Thornton, the Company’s auditors, performed certain other servides in

addition to their statutory audit duties.

The Board has considered the non-audit services provided during the year by the auditor and, in

accordance with written advice provided by resolution of the Audit and Risk Committee, is satisfied

that the provision of those non-audit services during the year is compatible with, and did not

compromise, the auditor independence requirements of the Corporations Act 2001 for the following

reasons:

• All non-audit services were subject to the corporate governance procedures adopted by the

Company and have been reviewed by the Audit and Risk Committee to ensure they do not

impact upon the impartiality and objectivity of the auditor; and

• The non-audit services do not undermine the general principles relating to auditor

independence as set out in APES 110 Code of Ethics for Professional Accountants, as they

did not involve reviewing or auditing the auditor’s own work, acting in a management or

decision-making capacity for the Company, acting as an advocate for the Company or jointly

sharing risks and rewards.

Details of the amount paid to the auditors of the Company, Grant Thornton, and its related practices

for audit and non-audit services provided during the year are set out in Note 27 to the Financial

Statements.

A copy of the auditor’s independence declaration as required under s307C of the Corporations Act

2001 is included on page 14 of this financial report and forms part of this Directors’ report.

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Proceedings of behalf of the Company

No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring

proceedings on behalf of the Company, or to intervene in any proceedings to which the Company is a

party, for the purpose of taking responsibility on behalf of the Company for all or part of those

proceedings.

Signed in accordance with a resolution of the Directors.

Wayne V Reid

Chairman

31 March 2015

Level 1,

67 Greenhill Rd

Wayville SA 5034

Correspondence to:

GPO Box 1270

Adelaide SA 5001

T 61 8 8372 6666

F 61 8 8372 6677

E [email protected]

W www.grantthornton.com.au

Grant Thornton Audit Pty Ltd ABN 94 269 609 023 ACN 130 913 594 a subsidiary or related entity of Grant Thornton Australia Ltd ABN 41 127 556 389

‘Grant Thornton’ refers to the brand under which the Grant Thornton member firms provide assurance, tax and advisory services to their clients and/or refers to one or more member firms, as the

context requires. Grant Thornton Australia Ltd is a member firm of Grant Thornton International Ltd (GTIL). GTIL and the member firms are not a worldwide partnership. GTIL and each member firm

is a separate legal entity. Services are delivered by the member firms. GTIL does not provide services to clients. GTIL and its member firms are not agents of, and do not obligate one another and

are not liable for one another’s acts or omissions. In the Australian context only, the use of the term ‘Grant Thornton’ may refer to Grant Thornton Australia Limited ABN 41 127 556 389 and its

Australian subsidiaries and related entities. GTIL is not an Australian related entity to Grant Thornton Australia Limited.

Liability limited by a scheme approved under Professional Standards Legislation. Liability is limited in those States where a current scheme applies.

AUDITOR’S INDEPENDENCE DECLARATION

TO THE DIRECTORS OF SUNBRIDGE GROUP LIMITED

In accordance with the requirements of section 307C of the Corporations Act 2001, as lead

auditor for the audit of Sunbridge Group Limited for the year ended 31 December 2014, I

declare that, to the best of my knowledge and belief, there have been:

a no contraventions of the auditor independence requirements of the Corporations Act

2001 in relation to the audit; and

b no contraventions of any applicable code of professional conduct in relation to the

audit.

GRANT THORNTON AUDIT PTY LTD Chartered Accountants

S J Gray

Partner – Audit & Assurance

Adelaide, 31 March 2015



15

Corporate Governance Statement

The Board is committed to achieving and demonstrating the highest standards of corporate

governance. As such, Sunbridge Group Limited and its Controlled Entities (‘the Group’) have

adopted a corporate governance framework and practices to ensure they meet the interests of

shareholders.

The Group complies with the Australian Securities Exchange Corporate Governance Council’s

Corporate Governance Principles and Recommendations with 2010 Amendments (‘the ASX

Principles’). This statement incorporates the disclosures required by the ASX Principles under the

headings of the eight (8) core principles. All of these practices, unless otherwise stated, were in place

for the full reporting period.

Further information on the Group’s corporate governance policies and practices can be found on

Sunbridge Group Limited’s website at www.sunbridge.com.au/compliance_policies.



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Principle 1: Lay solid foundations for management and oversight

Functions of the Board and Management

The Board of Directors is responsible for the corporate governance of the Group and operates in

accordance with the principles set out in its Charter, which is available in the corporate governance

section of Sunbridge Group Limited’s website. To ensure that the Board is well equipped to discharge

its responsibilities it has established guidelines for the nomination and selection of Directors and for

the operation of the Board. These responsibilities include:

• setting the strategy for the Group, including operational and financial objectives and

ensuring that there are sufficient resources for this strategy to be achieved

• appointing and, where appropriate, removing the Chief Executive Officer (‘CEO’),

approving other key executive appointments and planning for executive succession

• overseeing and evaluating the performance of the CEO and the Executive Team through

a formal performance appraisal process having regard to the Group’s business strategies

and objectives

• monitoring compliance with legal, regulatory and occupational health and safety

requirements and standards

• overseeing the identification of key risks faced by the Group and the implementation of

an appropriate internal control framework to ensure those risks are managed to an

acceptable level

• approving the Group’s budgets, including operational and capital budgets, and the

approval of significant acquisitions, expenditures or divestitures

• approval of the annual and half-yearly financial reports; and

• ensuring the market and shareholders are fully informed of material developments.

The responsibility for the operation and administration of the Group is delegated by the Board to the

Chief Executive Officer (‘CEO’) and the Executive Management Team. The Board ensures that both

the Managing Director (‘MD’) and Executive Team, including the CEO, are appropriately qualified

and experienced to discharge their responsibilities and, as discussed above, has in place procedures to

monitor and assess their performance.

To ensure that the responsibilities of the Board are upheld and executed to the highest level, the

Board has established the following sub-committees:

• Audit and Risk Committee

• Nomination and Remuneration Committee.

Sub-committees are able to focus on a particular responsibility and provide informed feedback to the

Board. Each of these sub-committees have established Charters and operating procedures in place,

which are reviewed on a regular basis. The Board may also establish other sub-committees from time

to time to deal with issues of special importance.

Senior Executive performance evaluation

The Board and its Committees are reviewing its senior executive performance evaluation process and

will establish policies to meet the requirements of a public listed company.



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Principle 2: Structure the Board to add value

Board composition

The names of the members of the Board as at the date of this report are as follows:

• Mr Wayne V Reid (Chairman) - Independent Non-Executive Director

• Mr Jia Yin Xu - Managing Director and Chief Executive Officer

• Mr Benny Yubin Qiu - Independent Non-Executive Director

• Mr Ting Jiang - Independent Non-Executive Director

• Prof. Qiang An Liu - Independent Non-Executive Director

The Board’s composition is determined with regard to the following criteria:

• a majority of independent Non-Executive Directors and a Non-Executive Director as

Chairman

• a majority of Directors having extensive experience in the industries that the Group

operates in, with those that do not, having extensive experience in significant aspects of

financial reporting and risk management in large ASX Listed Companies

• re-election of Directors at least every three (3) years (except for the Managing Director

and Chief Executive Officer)

• the size of the Board is appropriate to facilitate effective discussion and efficient decision

making

• there are a sufficient number of Directors to serve on Board sub-committees without

overburdening the Directors of making it difficult for the Directors to effectively

discharge their responsibilities.

With regards to Director Independence, the Board has adopted specific principles which state that an

Independent Director must not be a member of management and must comply with the following

criteria:

• not, within the last three (3) years, have been employed in an executive capacity by

Sunbridge or any other member of the Group

• not be a substantial shareholder or be associated either directly or indirectly with a

substantial shareholder

• not, within the last three (3) years, have been a professional advisor to the Group either as

a principal, or material consultant, or an employee materially associated with the service

provided

• are not a material supplier or customer of the Group or associated either directly or

indirectly with a material supplier or customer of the Group; and

• have no material contractual relationship with any Entity within the Group other than in

the capacity as a Director.

The Board undertakes an annual review of the extent to which each Non-Executive Director is

independent, having regard to the criteria set out in its Charter. As part of this review, each Director

is required to make an annual declaration stating their compliance with the independence criteria to

the Board. As at the date of this report, the three (3) Non-Executive Directors have submitted their

annual declaration to the Board, and the Board is satisfied that they have retained their independence

throughout the reporting period.



18

Individual details of the Directors, including period in office, Board Committee memberships,

qualifications, experience and skills are set out in the information on Directors section of the

Directors’ Report.

Role of the Chairman

The Board Charter provides that the Chairman should be an Independent Non-Executive Director.

The Chairman is responsible for the leadership of the Board. This includes taking responsibility for

ensuring that the Board functions effectively and that they comply with the continuous disclosure

requirements of the ASX with regard to communicating the operations and activities of the Group to

shareholders. The Chairman’s responsibilities are set out in the Board Charter and include:

• setting the agenda for Board meetings

• managing the conduct, frequency and length of Board meetings to ensure that all

Directors have had the opportunity to establish a detailed understanding of the issues

affecting the Group

• facilitating the Board meetings to ensure effective communication between the Directors

and that all Directors have contributed to the decision making process thereby leading to

a considered decision being made in the best interest of the Group and its shareholders.

Nomination and Remuneration Committee

The Nomination and Remuneration Committee oversees the appointment and induction process for

Directors and the selection, appointment and succession planning process of the Group’s Managing

Director and Chief Executive Officer. A copy of the Committee’s Charter is available on Sunbridge’s

website at www.sunbridge.com.au/compliance_policies.

When a vacancy exists or there is a need for a particular skill, the Committee, in consultation with the

Board, determines the selection criteria that will be applied. The Committee will then identify suitable

candidates, with assistance from an external consultant if required, and will assist the Board in

interviewing and assessing the selected candidates.

Directors are initially appointed to office by the Board and must stand for re-election at the Group’s

next Annual General Meeting of shareholders. Directors must then retire from office and nominate

for re-election at least once every three (3) years with the exception of the Managing Director and

Chief Executive Officer.

The Nomination and Remuneration Committee comprises of Prof. Qiang An Liu (Chairman), Mr

Wayne V Reid and Mr Ting Jiang, being a majority of Independent Non-Executive Directors. Details

of attendance at Nomination and Remuneration Committee meetings are set out in the Meetings of

Directors section of the Directors’ Report.

Directors’ performance evaluation

The Board undertakes an assessment of its collective performance, the performance of the Board

Committees and the Chairman on an annual basis.

The Chairman meets each Director on an individual basis to discuss their performance and to provide

feedback. The results of this discussion including any key areas for development are formally

documented.



19

Each Board Committee annually reviews the fulfilment of its responsibilities as set out in its Charter

and provides a report with a summary of issues and recommendations for the Board’s review. Upon

review the Board will then provide their feedback to the Committee including an endorsement of the

recommendations made.

These performance evaluations were carried out in December 2013 and were compliant with the

Group’s established practices.

Independent professional advice and access to information

Each Director has the right of access to all relevant information in the Group in addition to access to

the Group’s executives. Each Director also has the right to seek independent professional advice

subject to prior consultation with, and approval from, the Chairman. This advice will be provided at

the Group’s expense and will be made available to all members of the Board.

Insurance

The Group has in place, a Directors and Officers liability insurance policy providing a specified level

of cover for current and former Directors and Executive Officers of the Group against liabilities

incurred whilst acting in their respective capacity.



20

Principle 3: Promote ethical and responsible decision making

Code of Conduct

The Group recognises the importance of establishing and maintaining high ethical standards and

decision making in conducting its business and is committed to increasing shareholder value in

conjunction with fulfilling its responsibilities as a good corporate citizen. All Directors, managers and

employees are expected to act with the utmost integrity, honesty and objectivity, striving at all times to

enhance the reputation and performance of the Group.

The Group has established a Code of Conduct and a Directors and Officers Code of Conduct, copies

of which are available on Sunbridge’s website under the corporate governance section. New

employees are introduced to the Code of Conduct as part of their induction training. Employees sign

a declaration confirming receipt of the Code of Conduct and their compliance with it. Periodical

training is then provided throughout the course of their employment.

Unethical practices, including fraud, legal and regulatory breaches, and policy breaches are required to

be reported on a timely basis to management. Reporting parties are able to do so without fear of

reprisal or retribution as their identity and report are kept in the strictest confidence. External third

party reporting procedures are available to employees to provide them with the assurance that their

identity will be kept confidential at all times.

Whistle-blower Policy

The Board is currently reviewing the whistle-blower policy to identify the appropriate policies to put

in place.

Share Trading Policy

The Group has established a share trading policy which governs the trading in the Group’s shares and

applies to all Directors and employees of the Group. A copy of this policy is available on Sunbridge’s

website under www.sunbridge.com.au/compliance_policies.

Under this share trading policy, an employee, Executive or Director must not trade in any securities of

the Group at any time when they are in possession of unpublished, price sensitive information in

relation to those securities.

Before commencing to trade, an Executive or employee must first obtain the permission of the

Company Secretary to do so, and a Director must obtain the permission of the Chairman. The

trading windows are four (4) weeks after the release of the half year results, full year results and the

holding of the Annual General Meeting. Trading of securities outside the trading windows can only

occur in exceptional circumstances and with the approval of the Company Secretary.

As required by the ASX listing rules, the Group notifies the ASX of any transaction conducted by

Directors in the securities of the Group.



21

Diversity Policy

Diversity includes, but is not limited to, gender, age, ethnicity and cultural background. The Company

is committed to diversity and recognises the benefits arising from employee and Board diversity and

the importance of benefiting from all available talent. A copy of the Company’s Diversity Policy is

available on Sunbridge’s website at www. sunbridge.com.au/compliance_policies. This Diversity

Policy outlines the requirements for the Board to develop measurable objectives for achieving

diversity, and annually assess both the objectives and the progress in achieving those objectives.



22

Principle 4: Safeguard integrity in financial reporting

Audit and Risk Committee

An Audit and Risk Committee has been established by the Board. The Committee’s role and

operations are documented in a Charter which is approved by the Board. This Charter is available on

Sunbridge’s website under www. sunbridge.com.au/ compliance_policies.

The Committee’s Charter provides that all members of the Audit and Risk Committee must be

Independent Non-Executive Directors and that the Chair cannot be the Chairman of the Board.

Members of the Committee throughout the period and at the date of this report are Mr Ting Jiang

(Chairman), Mr Andrew Plymton and Prof. Qiang An Liu, all of whom are Independent Non-

Executive Directors of the Group.

The purpose of the Committee is to:

• ensure the integrity of the Group’s internal and external financial reporting including

compliance with applicable laws and regulations

• ensure that financial information provided to the Board is of a sufficiently high quality to

allow the Board to make informed decisions

• ensure that appropriate and effective internal systems and controls are in place to manage

the Group’s exposure to risk

• oversee the appointment, compensation, retention and oversight of the external auditor,

and review of any non-audit services provided by the external auditor; and

• regularly review the performance of the external auditor regarding quality, costs and

independence.

The Managing Director, Chief Financial Officer and external auditor also regularly attend the

Committee meetings by standing invitation. Other Directors and management are invited to attend

Committee meetings and participate in discussion relating to specific issues that they have an interest

in.

The Committee is authorised to obtain independent legal advice at the Group’s expense if it considers

it necessary in fulfilling its duties.



23

Principle 5: Make timely and balanced disclosure

Sunbridge has established policies and procedures to ensure timely and balanced disclosure of all

material matters concerning the Group, and ensure that all investors have access to information on

the Group’s financial performance. This ensures that the Group is compliant with the information

disclosure requirements under the ASX Listing Rules.

These policies and procedures include a comprehensive Disclosure Policy that includes identification

of matters that may have a material impact on the price of Sunbridge’s securities, notifying them to

the ASX, posting relevant information on the Group’s website and issuing media releases. These

policies are available on Sunbridge’s website under www. sunbridge.com.au/compliance_policies.

Matters involving potential market sensitive information must first be reported to the Managing

Director either directly or via the Company Secretary. The Managing Director will advise the other

Directors if the issue is important enough to warrant the consideration of the full Board. In all cases

the appropriate action must be determined and carried out in a timely manner in order for the Group

to comply with the continuous disclosure requirements of the ASX.

Once the appropriate course of action has been agreed upon, either the Managing Director or Company Secretary, being the only authorised officers of the Group who are able to disclose such information, will disclose the information to the relevant authorities. Board approval is required for market sensitive information such as financial results, material transactions or upgrading / downgrading financial forecasts. This approval is minuted in the meetings of the Board of Directors.

Principle 6: Respect the rights of shareholders

Sunbridge has established a Shareholder Communication Policy which describes the Group’s

approach to promoting effective communication with shareholders which includes:

• the Annual Report, including relevant information about the operations of the Group

during the year, key financial information, changes in the state of affairs and indications

of future developments. The Annual Report can be accessed either through the ASX

website or Sunbridge’s website

• the half year and full year financial results are announced to the ASX and are available to

shareholders via the Sunbridge and ASX websites

• detailed notices of shareholder meetings are sent to all shareholders in advance of the

meeting; and

• shareholding and dividend payment details are available through the Group’s Share

Register, Boardroom Limited.

The Board encourages full participation by shareholders at the Annual General Meeting to ensure a

high level of Director accountability to shareholders and shareholder identification with the Group’s

strategy and goals. Important issues are presented to the shareholders as single resolutions. The

shareholders are requested to vote on matters such as the adoption of the Group’s remuneration

report, the granting of options and shares to Directors and changes to the Constitution.

The external auditor attends the Annual General Meeting to answer any questions concerning the

audit of the Group and the contents of the Auditor’s Report.



24

Principle 7: Recognise and manage risk

Risk management framework

Sunbridge recognises that a robust risk management framework is essential for corporate stability,

protecting the interests of its stakeholders and for sustaining its competitive market position and long

term performance.

The following objectives drive the Group’s approach to risk management:

• having a culture that is risk aware and supported by high standards of accountability at all

levels

• promoting and achieving an integrated risk management approach whereby risk

management forms a part of all key organisational processes

• supporting more effective decision making through better understanding and

consideration of risk exposures

• increasing shareholder value by protecting and improving share price and earnings per

share in the short to medium term while building a sustainable business in the longer term

• safeguarding the Group’s assets

• enabling the Board to fulfil its governance and compliance requirements; and

• supporting the sign off for ASX Principles four and seven by the Chief Executive Officer.

In achieving effective risk management, Sunbridge recognises the importance of leadership. As such,

the Board and executive management have responsibility for driving and supporting risk management

across the Group. Each subsidiary then has responsibility for implementing this approach and

adapting it, as appropriate, to its own circumstances.

Audit and Risk Committee

Under its Charter, the Audit and Risk Committee has been delegated responsibility by the Board to

oversee the implementation and review of risk management and related internal compliance and

control systems throughout the Group.

The Committee reviews the appropriateness and adequacy of internal processes for determining,

assessing and monitoring risk areas including the assessment of the effectiveness of the Group’s

internal compliance and controls including:

• the existence and adequacy of key policies and procedures;

• the adequacy of disclosures and processes for regular reporting of information to the

appropriate parties, including the Board.

The Committee is also responsible for monitoring the Group’s compliance with applicable laws and

regulations including:

• ensuring that management is reviewing developments and changes in applicable laws and

regulations relating to the Group’s responsibilities;

• reviewing management’s actions and responses to ensure that the Group’s practices are

compliant with all new developments;

• reviewing material actual and suspected breaches of applicable laws and regulations, and

any breaches of Group policies;



25

• reviewing material litigation, legal claims, contingencies or significant risks relating to the

Group; and

• reviewing Director and executive management related party transactions.

Major issues and findings that are presented and discussed at the Committee meetings are reported to

the Board by the Audit and Risk Committee.

Corporate reporting

The Board has required management to design and implement a Risk Management and Internal

Control System to manage the Group’s material business risks and to report on whether those risks

are being effectively managed.



26

Principle 8: Remunerate fairly and responsibly

Nomination and Remuneration Committee

As previously stated in Principle 2, the Board has established a Nomination and Remuneration

Committee whose role is documented in a Charter which is approved by the Board.

The objective of the Committee with respect to its remuneration function is to assist the Board in

determining appropriate remuneration arrangements for the Directors and Executive management.

These objectives include:

• reviewing the adequacy and form of remuneration of Independent Non-Executive

Directors

• ensuring that the remuneration of the Independent Non-Executive Directors is reflective

of the responsibilities and the risks of being a Director of the Group

• reviewing the contractual arrangements of the Managing Director and the executive

management team including their remuneration

• comparing the remuneration of the Managing Director and executive management to

comparable groups within similar industries to ensure that the remuneration on offer can

attract, retain and properly reward performance which will translate into long term

growth in shareholder value

• annually review key performance indicators of the Managing Director and Executive

Team to ensure that they remain congruent with the Group’s strategies and objectives

• reviewing the basis for remuneration of other Executive Directors of the Group for their

services as Directors

• reviewing incentive performance arrangements when instructed by the Board; and

• reviewing proposed remuneration arrangements for new Director or Executive

appointments.

The Committee will submit their recommendations to the Board regarding the remuneration

arrangements and performance incentives for the Managing Director and Executive Team. The

Board will review these recommendations before providing their approval.

Details of the Group’s remuneration structure and details of Senior Executives’ remuneration and

incentives are set out in the Remuneration Report contained within the Directors’ Report. The

Remuneration Report also contains details on the structure of Non-Executive Director Remuneration



27

Consolidated Statement of Profit or Loss and

Other Comprehensive Income

For the year ended 31 December 2014

Notes 2014 2013

$ $

Revenue 6 84,242,060 79,485,327

Cost of Goods Sold (55,661,471) (52,553,215)

Gross Profit 28,580,589 26,932,112

Other Income 6 124,737 2,354

Operating Expenses 7 (14,352,721) (4,853,291)

Administrative Expenses (2,190,548) (1,870,855)

Finance Costs 8 (469,160) (453,638)

Listing Expenses - (830,869)

Profit/(Loss) before Income Tax 11,692,897 18,925,813

Income Tax Expense 9 (3,306,514) (5,025,762)

Profit for The Year 8,386,383 13,900,051

Other Comprehensive Income for The Year Net of Tax

Items that may be reclassified subsequently to profit or loss

Exchange differences on translating foreign operations 4,192,264 5,572,456

Total Comprehensive Income for The Year Attributable to Members 12,578,647 19,472,507

Profit attributable to members of the parent entity 8,386,383 13,900,051

Total comprehensive income attributable to members of the parent entity 12,578,647 19,472,507

Earnings Per Share (on profit attributable to ordinary equity holders) Cents Cents

Basic Earnings Per Share 24 1.78 3.52

Diluted Earnings Per Share 24 1.78 3.52

Note: This statement should be read in conjunction with the notes to the financial statements.



28

Consolidated Statement of Financial Position

As at 31 December 2014

Notes 2014 2013

$ $

ASSETS

CURRENT ASSETS

Cash and cash equivalents 10 29,320,103 27,856,579

Trade and other receivables 11 16,159,086 18,689,883

Security deposits to suppliers 12 2,185,085 1,817,514

Inventories 13 5,392,135 4,537,344

TOTAL CURRENT ASSETS 53,056,409 52,901,320

NON-CURRENT ASSETS

Property, plant and equipment 15 6,439,403 4,440,842

Intangible assets 16 4,115,326 385,841

Deferred tax assets 17 1,731,340 -

TOTAL NON-CURRENT ASSETS 12,286,069 4,826,683

TOTAL ASSETS 65,342,478 57,728,003 CURRENT LIABILITIES Trade and other payables 18 5,940,314 3,864,836

Financial liabilities 19 2,891,300 9,150,495

Current tax liabilities 20 1,090,267 1,587,678

TOTAL CURRENT LIABILITIES 9,921,881 14,603,009 TOTAL LIABILITIES 9,921,881 14,603,009 NET ASSETS 55,420,597 43,124,994

EQUITY Issued capital 22 12,495,825 12,495,825

Foreign exchange translation reserve 23 7,150,083 2,957,819

Other Reserves 23 6,771,262 6,771,262

Retained Earnings 29,003,427 20,900,088

TOTAL EQUITY 55,420,597 43,124,994




29

Consolidated Statement of Changes in Equity


Share Capital Ordinary Retained Earnings

Foreign Exchange Reserve Other Reserves Total Equity

$ $ $ $ $

Balance at 1 January 2013 8,430,622 7,000,037 (2,614,637) 6,771,262 19,587,284

Share capital issued during the year 4,065,203 - - - 4,065,203

Profit for the year - 13,900,051 - - 13,900,051

Other comprehensive income - - 5,572,456 - 5,572,456

Balance at 31 December 2013 12,495,825 20,900,088 2,957,819 6,771,262 43,124,994

Dividend paid for the year ended 31 December 2013 - (283,044) - - (283,044)

Profit for the year - 8,386,383 - - 8,386,383

Other comprehensive income - - 4,192,264 - 4,192,264

Balance at 31 December 2014 12,495,825 29,003,427 7,150,083 6,771,262 55,420,597




30

Consolidated Statement of Cash Flows


Notes 2014 2013

$ $

CASH FLOW FROM OPERATING ACTIVITIES

Receipts from customers 88,702,292 79,723,555

Payments to suppliers and employees (70,915,338) (64,590,584)

Interest received 124,737 2,354

Finance costs (469,161) (453,638)

Income tax paid (5,665,346) (4,764,946)

Net cash provided by operating activities 26 11,777,184 9,916,741

CASH FLOW FROM INVESTING ACTIVITIES

Purchase of property, plant and equipment (1,819,685) (3,129)

Proceeds from disposals of property, plant and equipment - -

Purchase of intangible assets (4,518,857) (38,933)

Net cash provided by/(used in) investing activities (6,338,542) (42,062)

CASH FLOW FROM FINANCING ACTIVITIES

Proceeds/(Repayment) of borrowings (7,008,910) 1,704,775

Proceeds from issue of share capital - 4,347,600

Cash receipts (advances) from (to) related parties 375,000 -

Dividends paid (282,509) -

Net cash used in financing activities (6,916,419) 6,052,375

Net change in cash and cash equivalents (1,477,777) 15,927,053

Cash and cash equivalents, beginning of year 10 27,856,579 8,632,696

Effects of exchange rates on cash and cash equivalents holdings in foreign currencies 2,941,301 3,296,830

Cash and cash equivalents, end of year 10 29,320,103 27,856,579




31

Notes to the Consolidated Financial

Statements

1 Nature of operations

Sunbridge and subsidiaries’ (‘the Group’) principal activities include the followings:


• Retail of clothing apparel to company owned stores.

There have been no significant changes in the nature of these activities during the year.

2 General information and statement of compliance

The consolidated general purpose financial statements of the Group have been prepared in

accordance with the requirements of the Corporations Act 2001, Australian Accounting Standards and

other authoritative pronouncements of the Australian Accounting Standards Board (‘AASB’).

Compliance with Australian Accounting Standards results in full compliance with the International

Financial Reporting Standards (‘IFRS’) as issued by the International Accounting Standards Board

(‘IASB’). Sunbridge is a for-profit entity for the purpose of preparing the financial statements.

Sunbridge is the Group’s Ultimate Parent Company Sunbridge is a Public Company incorporated and

domiciled in Australia. The address of its registered office and its principal place of business is Level

31, 120 Collins Street, Melbourne, VIC 3000.

The consolidated financial statements for the year ended 31 December 2014 were approved and

authorised for issue by the Board of Directors on 31 March 2015.



32

3 New and revised standards that are effective for these financial statements

The accounting policies adopted are consistent with those of the previous financial year, except as

follows:

AASB 2011-4 Amendments to Australian Accounting Standards to Remove Individual Key

Management Personnel Disclosure Requirements

The Standards amends AASB 124 Related Party Disclosure to remove the individual Key

Management Personnel (‘KMP’) disclosure required by Australian specific paragraphs. This

amendment reflects the AASB’s view that these disclosures are more in the nature of governance

disclosures that are better dealt within the legislation, rather than by the accounting standards.

In mid-2013, the Australian government passed Corporations and Related Legislation Amendment Regulation

2013 (No.1) and Corporations and Australian Securities and Investments Commission Amendment Regulation 2013

(No. 1) to insert these disclosures, with minor changes, into Corporations Regulations 2001. These

disclosures are required to be included in remuneration reports for financial years commencing on or

after 1 July 2013.

As a result of these amendments, the Group has transferred certain individual Key Management

Personnel disclosures relating to shareholdings, options/rights holdings, loans and other transactions

from the notes to the financial statements to the remuneration report.

AASB 2012-3 Amendments to Australian Accounting Standards – Offsetting Financial Assets and

Financial Liabilities

AASB 2012-3 adds application guidance to AASB 132 to address inconsistencies identified in applying

some of the offsetting criteria of AASB 132, including clarifying the meaning of “currently has a

legally enforceable right of set-off” and that some gross settlement systems may be considered

equivalent to net settlement.

AASB 2012-3 is applicable to annual reporting periods beginning on or after 1 January 2014.

The adoption of these amendments has not had a material impact on the Group as the amendments

merely clarify the existing requirements in AASB 132.

AASB 2013-3 Amendments to AASB 136 – Recoverable Amount Disclosures for Non-Financial Assets

These narrow-scope amendments address disclosure of information about the recoverable amount of

impaired assets if that amount is based on fair value less costs of disposal.

When developing IFRS 13 Fair Value Measurement, the IASB decided to amend IAS 36 Impairment of

Assets to require disclosures about the recoverable amount of impaired assets. The IASB noticed

however that some of the amendments made in introducing those requirements resulted in the

requirement being more broadly applicable than the IASB had intended. These amendments to

IAS 36 therefore clarify the IASB’s original intention that the scope of those disclosures is limited to

the recoverable amount of impaired assets that is based on fair value less costs of disposal.

AASB 2013-3 makes the equivalent amendments to AASB 136 Impairment of Assets and is applicable to

annual reporting periods beginning on or after 1 January 2014.

The adoption of these amendments has not had a material impact on the Group as they are largely of

the nature of clarification of existing requirements.



33

AASB 2013-5 Amendments to Australian Accounting Standards – Investment Entities

The amendments in AASB 2013-5 provide an exception to consolidation to investment entities and

require them to measure unconsolidated subsidiaries at fair value through profit or loss in accordance

with AASB 9 Financial Instruments (or AASB 139 Financial Instruments: Recognition and Measurement where

AASB 9 has not yet been adopted). The amendments also introduce new disclosure requirements for

investment entities that have subsidiaries.

These amendments apply to investment entities, whose business purpose is to invest funds solely for

returns from capital appreciation, investment income or both. Examples of entities which might

qualify as investment entities would include Australian superannuation entities, listed investment

companies, pooled investment trusts and Federal, State and Territory fund management authorities.

AASB 2013-5 is applicable to annual reporting periods beginning on or after 1 January 2014.

This Standard has not had any impact on the Group as it does not meet the definition of an

‘investment entity’ in order to apply this consolidation exception.

AASB Interpretation 21 Levies

Interpretation 21 addresses how an entity should account for liabilities to pay levies imposed by

governments, other than income taxes, in its financial statements (in particular, when the entity should

recognise a liability to pay a levy).

Interpretation 21 is an interpretation of AASB 137 Provisions, Contingent Liabilities and Contingent Assets.

AASB 137 sets out criteria for the recognition of a liability, one of which is the requirement for the

entity to have a present obligation as a result of a past event (known as an obligating event). The

Interpretation clarifies that the obligating event that gives rise to a liability to pay a levy is the activity

described in the relevant legislation that triggers the payment of the levy. For example, if the activity

that triggers the payment of the levy is the generation of revenue in the current period, and the

calculation of that levy is based on the revenue that was generated in a previous period, the obligating

event for that levy is the generation of revenue in the current period. The generation of revenue in

the previous period is necessary, but not sufficient, to create a present obligation.

The Interpretation is applicable to annual reporting periods beginning on or after 1 January 2014.

The adoption of this interpretation has not had any impact on the Group as it is not subject to any

such levies addressed by the interpretation.



34

4 Summary of accounting policies

4.1 Overall considerations

The consolidated financial statements have been prepared using the significant accounting policies and

measurement bases summarised below.

4.2 Basis of consolidation

The Group financial statements consolidate those of the Parent Company and all of its subsidiaries as

of 31 December 2014. The Parent controls a subsidiary if it is exposed, or has rights, to variable

returns from its involvement with the subsidiary and has the ability to affect those returns through its

power over the subsidiary. All subsidiaries have a reporting date of 31 December.

All transactions and balances between Group companies are eliminated on consolidation, including

unrealised gains and losses on transactions between Group companies. Where unrealised losses on

intra-group asset sales are reversed on consolidation, the underlying asset is also tested for impairment

from a group perspective. Amounts reported in the financial statements of subsidiaries have been

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

Profit or loss and other comprehensive income of subsidiaries acquired or disposed of during the year

are recognised from the effective date of acquisition, or up to the effective date of disposal, as

applicable.

Non-controlling interests, presented as part of equity, represent the portion of a subsidiary’s profit or

loss and net assets that is not held by the Group. The Group attributes total comprehensive income

or loss of subsidiaries between the owners of the parent and the non-controlling interests based on

their respective ownership interests.

4.3 Business combination

Sunbridge and Mega Rich International Creation Limited are owned and controlled by the same shareholder (before and after the business combination) therefore the business combination represents a common control transaction.

Business combination involving entities under common control is scoped out under AASB 3: Business Combination. AASB 3 provides no guidance on the accounting for these types of transactions; however requires an entity to develop an accounting policy. The two most common methods utilised are the acquisition method and the pooling of interest-type method (predecessor values method). A business combination involving entities under common control is a business combination in which all of the combining entities are ultimately controlled by the same party, both before and after the business combination, and control is not transitory.

Management has determined the pooling of interest-type method to be most appropriate. The pooling of interest-type method requires the financial statements to be prepared using the predecessor book values without any set up to fair value. The difference between any consideration given and the aggregate book value of the assets and liabilities of the acquired entity are recorded as an adjustment to equity. This may be recorded in retained earnings/reserve and no additional goodwill is created by the transaction. The comparatives have been presented as if the transaction took place at the beginning of the earliest comparative period.

All transaction cost incurred in relation to the business combination are expensed to the statement of profit and loss and other comprehensive income



35

4.4 Foreign currency translation

Functional and presentation currency

The functional currency of each of the Group’s entities is measured using the currency of the primary

economic environment in which that entity operates. The consolidated financial statements are

presented in Australian dollars (‘$AUD’), which is the functional and presentation currency of the

Parent Company.

Foreign currency transactions and balances

Foreign currency transactions are translated into the functional currency of the respective Group

entity, using the exchange rates prevailing at the dates of the transactions (spot exchange rate). Foreign

currency monetary items are translated at the year-end exchanging rate. Non-monetary items are

measured at historical cost continue to be carried at the exchange rate at the date of transaction. Non-

monetary items measured at fair value are reported at the exchange rate at the date when fair values

were determined.

Exchange differences arising on the translation of monetary items are recognised in the income

statement, except where deferred in equity as a qualifying cash flow or net investment hedge.

Exchange differences arising on the translation of non-monetary items are recognised directly in

equity to the extent that the gain or loss is directly recognised in equity; otherwise the exchange

difference is recognised in income statement.

Non-monetary items are not retranslated at year-end and are measured at historical cost (translated

using the exchange rates at the date of the transaction), except for non-monetary items measured at

fair value which are translated using the exchange rates at the date when fair value was determined.

Foreign operations

The financial results and positions of foreign operations whose functional currency is difference from

the Group’s presentation currency are translated as follows:

• assets and liabilities are translated at year-end exchange rates prevailing at the reporting

date;

• income and expenses are translated at average exchange rates for the period; and

• retained earnings are translated at the exchange rates prevailing at the date of transaction.

Exchange differences arising on translation of foreign operations are transferred directly to the

Group’s foreign exchange translation reserve in the balance sheet. These differences are recognised in

the income statement in the period in which the operation is disposed.



36

4.5 Segment reporting

The measurement policies the Group uses for segment reporting under AASB 8 are the same as those

used in its financial statements, except that:

• post-employment benefit expenses

• expenses relating to share-based payments

• research costs relating to new business activities; and

• revenue, costs and fair value gains from investment property

are not included in arriving at the operating profit of the operating segments. In addition, corporate

assets which are not directly attributable to the business activities of any operating segment are not

allocated to a segment. In the financial periods under review, this primarily applies to the Group’s

headquarters.

There have been no changes from prior periods in the measurement methods used to determine

reported segment profit or loss.

4.6 Revenue and Other Income

Revenue arises from the sale of goods is recognised at the point of delivery as this corresponds to the

transfer of significant risks and rewards of ownership of the goods and the cessation of all

involvement in those goods.

Interest revenue is recognised using the effective interest rate method, which, for floating rate

financial assets, is the rate inherent in the instrument. Dividend revenue is recognised when the right

to receive a dividend has been established.

All revenue is stated net of the amount of goods and services (GST) or value added tax (VAT).

4.7 Operating expenses

Operating expenses are recognised in profit or loss upon utilisation of the service or at the date of

their origin. Expenditure for warranties is recognised and charged against the associated provision

when the related revenue is recognised.

4.8 Borrowing costs

Borrowing costs directly attributable to the acquisition, construction or production of assets that

necessarily take a substantial period of time to prepare for their intended use or sale, are added to the

cost of those assets, until such time as the assets are substantially ready for their intended use or sale.

4.9 Intangible assets

Franchising rights and software have a finite useful life and are carried at cost less accumulated

amortisation and impairment losses. Amortisation is calculated using the straight line method to

allocate the cost of franchising rights and software over their estimated useful lives, which is based on

lease agreements for franchising rights (3 years) and 2 years for software.



37

4.10 Property, plant and equipment

Each class of property, plant and equipment is carried at cost as indicated less, where applicable, any

accumulated depreciation and impairment losses.

The carrying amount of plant and equipment is reviewed annually by directors to ensure it is not in

excess of the recoverable amount from these assets. The recoverable amount is assessed on the basis

of the expected net cash flows that will be received from the asset’s employment and subsequent

disposal. The expected net cash flows have been discounted to their present values in determining

recoverable amounts.

The cost of fixed assets constructed within the consolidated group includes the cost of materials,

direct labour, borrowing costs and an appropriate proportion of fixed and variable overheads.

Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as

appropriate, 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 repairs and maintenance are

charged to the income statement during the financial period in which they are incurred.

Depreciation

The depreciable amount of all fixed assets including buildings and capitalised lease assets, but

excluding freehold land, is depreciated on a straight-line basis over the asset’s useful life to the

consolidated group commencing from the time the asset is held ready for use. Leasehold

improvements are depreciated over the shorter of either the unexpired period of the lease or the

estimated useful lives of the improvements.

The depreciation rates used for each class of depreciable assets are:

Class of Fixed Asset Depreciation Rate

Land and buildings 2%

Office equipment 10%-20%

Director store equipment 33%

Motor vehicle 33%

The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each reporting

date.

An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s

carrying amount is greater than its estimated recoverable amount.

Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These

gains and losses are included in the income statement..



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4.11 Impairment testing of goodwill, other intangible assets and property, plant

and equipment

For impairment assessment purposes, assets are grouped at the lowest levels for which there are

largely independent cash inflows (cash-generating units). As a result, some assets are tested

individually for impairment and some are tested at cash-generating unit level. Goodwill is allocated to

those cash-generating units that are expected to benefit from synergies of the related business

combination and represent the lowest level within the Group at which management monitors

goodwill.

Cash-generating units to which goodwill has been allocated (determined by the Group’s management

as equivalent to its operating segments) are tested for impairment at least annually. All other

individual assets or cash-generating units are tested for impairment whenever events or changes in

circumstances indicate that the carrying amount may not be recoverable.

An impairment loss is recognised for the amount by which the asset’s or cash-generating unit’s

carrying amount exceeds its recoverable amount, which is the higher of fair value less costs to sell and

value-in-use. To determine the value-in-use, management estimates expected future cash flows from

each cash-generating unit and determines a suitable interest rate in order to calculate the present value

of those cash flows. The data used for impairment testing procedures are directly linked to the

Group’s latest approved budget, adjusted as necessary to exclude the effects of future reorganisations

and asset enhancements. Discount factors are determined individually for each cash-generating unit

and reflect management’s assessment of respective risk profiles, such as market and asset-specific risks

factors.

Impairment losses for cash-generating units reduce first the carrying amount of any goodwill allocated

to that cash-generating unit. Any remaining impairment loss is charged pro rata to the other assets in

the cash-generating unit. With the exception of goodwill, all assets are subsequently reassessed for

indications that an impairment loss previously recognised may no longer exist. An impairment charge

is reversed if the cash-generating unit’s recoverable amount exceeds its carrying amount.

4.12 Financial instruments

Recognition and Initial Measurement

Financial instruments, incorporating financial assets and financial liabilities, are recognised when the

entity becomes a party to the contractual provisions of the instrument. Trade date accounting is

adopted for financial assets that are delivered within timeframes established by marketplace

convention.

Financial instruments are initially measured at fair value plus transactions costs where the instrument

is not classified as at fair value through profit or loss. Transaction costs related to instruments

classified as at fair value through profit or loss are expensed to profit or loss immediately. Financial

instruments are classified and measured as set out below.



39

De-recognition

Financial assets are derecognised where the contractual rights to receipt of cash flows expires or the

asset is transferred to another party whereby the entity is no longer has any significant continuing

involvement in the risks and benefits associated with the asset. Financial liabilities are derecognised

where the related obligations are either discharged, cancelled or expire. The difference between the

carrying value of the financial liability extinguished or transferred to another party and the fair value of

consideration paid, including the transfer of non-cash assets or liabilities assumed, is recognised in

profit or loss.

Classification and subsequent measurement

i. Financial assets at fair value through profit or loss

Financial assets are classified at fair value through profit or loss when they are held for trading for the

purpose of short term profit taking, where they are derivatives not held for hedging purposes, or

designated as such to avoid an accounting mismatch or to enable performance evaluation where a

group of financial assets is managed by key management personnel on a fair value basis in accordance

with a documented risk management or investment strategy. Realised and unrealised gains and losses

arising from changes in fair value are included in profit or loss in the period in which they arise.

ii. Loans and receivables

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

not quoted in an active market and are subsequently measured at amortised cost using the effective

interest rate method.

iii. Financial Liabilities

Non-derivative financial liabilities (excluding financial guarantees) are subsequently measured at

amortised cost using the effective interest rate method.

4.13 Inventories

Inventories are stated at the lower of cost and net realisable value. Cost includes all expenses directly

attributable to the manufacturing process as well as suitable portions of related production overheads,

based on normal operating capacity. Costs of ordinarily interchangeable items are assigned using the

first in, first out cost formula. Net realisable value is the estimated selling price in the ordinary course

of business less any applicable selling expenses.

4.14 Income taxes

Tax expense recognised in profit or loss comprises the sum of deferred tax and current tax not

recognised in other comprehensive income or directly in equity.

Current income tax assets and / or liabilities comprise those obligations to, or claims from, the

Australian Taxation Office (‘ATO’) and other fiscal authorities relating to the current or prior

reporting periods that are unpaid at the reporting date. Current tax is payable on taxable profit, which

differs from profit or loss in the financial statements. Calculation of current tax is based on tax rates

and tax laws that have been enacted or substantively enacted by the end of the reporting period.



40

Deferred income taxes are calculated using the liability method on temporary differences between the

carrying amounts of assets and liabilities and their tax bases. However, deferred tax is not provided

on the initial recognition of goodwill or on the initial recognition of an asset or liability unless the

related transaction is a business combination or affects tax or accounting profit. Deferred tax on

temporary differences associated with investments in subsidiaries and joint ventures is not provided if

reversal of these temporary differences can be controlled by the Group and it is probable that reversal

will not occur in the foreseeable future.

Deferred tax assets and liabilities are calculated, without discounting, at tax rates that are expected to

apply to their respective period of realisation, provided they are enacted or substantively enacted by

the end of the reporting period.

Deferred tax assets are recognised to the extent that it is probable that they will be able to be utilised

against future taxable income, based on the Group’s forecast of future operating results which is

adjusted for significant non-taxable income and expenses and specific limits to the use of any unused

tax loss or credit. Deferred tax liabilities are always provided for in full.

Deferred tax assets and liabilities are offset only when the Group has a right and intention to set off

current tax assets and liabilities from the same taxation authority.

Changes in deferred tax assets or liabilities are recognised as a component of tax income or expense in

profit or loss, except where they relate to items that are recognised in other comprehensive income

(such as the revaluation of land) or directly in equity, in which case the related deferred tax is also

recognised in other comprehensive income or equity, respectively.

4.15 Cash and cash equivalents

Cash and cash equivalents comprise cash on hand and demand deposits, together with other short-

term, highly liquid investments that are readily convertible into known amounts of cash and which are

subject to an insignificant risk of changes in value.

4.16 Equity, reserves and dividend payments

Share capital represents the fair value of shares that have been issued. Any transaction costs

associated with the issuing of shares are deducted from share capital, net of any related income tax

benefits.

Other components of equity include the following:

• other reserves – statutory reserve;

• foreign exchange translation reserve – comprises foreign currency translation differences arising on the translation of financial statements of the Group’s foreign entities into $AUD.

Retained earnings include all current and prior period retained profits.

Dividend distributions payable to equity shareholders are included in other liabilities when the

dividends have been approved in a general meeting prior to the reporting date.

All transactions with owners of the parent are recorded separately within equity.



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4.17 Employee benefits

Provision is made for the company’s liability for employee benefits arising from services rendered by employees to reporting date. Employee benefits that are expected to be settled within one year have been measured at the amounts expected to be paid when the liability is settled. Employee benefits payable later than one year have been measured at the present value of the estimated future cash outflows to be made for those benefits. Those cash flows are discounted using market yields on national government bonds with terms to maturity that match the expected timing of cash flows.

4.18 Provisions, contingent liabilities and contingent assets

Provisions for warranties, legal disputes, onerous contracts or other claims are recognised when the

Group has a present legal or constructive obligation as a result of a past event, it is probable that an

outflow of economic resources will be required from the Group and amounts can be estimated

reliably. Timing or amount of the outflow may still be uncertain.

Provisions are measured at the estimated expenditure required to settle the present obligation, based

on the most reliable evidence available at the reporting date, including the risks and uncertainties

associated with the present obligation. Where there are a number of similar obligations, the likelihood

that an outflow will be required in settlement is determined by considering the class of obligations as a

whole. Provisions are discounted to their present values, where the time value of money is material.

Any reimbursement that the Group can be virtually certain to collect from a third party with respect

to the obligation is recognised as a separate asset. However, this asset may not exceed the amount of

the related provision.

No liability is recognised if an outflow of economic resources as a result of present obligation is not

probable. Such situations are disclosed as contingent liabilities, unless the outflow of resources is

remote in which case no liability is recognised.

4.19 Goods and Services Tax (GST) and Value Added Tax (VAT)

Revenues, expenses and assets are recognised net of the amount GST and VAT, except where the

amount of GST and VAT incurred is not recoverable from the Tax Office. In these circumstances the

GST and VAT is recognised as part of the cost of acquisition of the asset or as part of an item of

expense. Receivables and payables in the statement of financial position are shown as inclusive of

GST and VAT.

Cash flows are presented in the cash flow statement on a gross basis, except for the GST and VAT

component of investing and financing activities, which are disclosed as operating cash flows.



42

4.20 Significant management judgement in applying accounting policies

When preparing the financial statements, management undertakes a number of judgements, estimates

and assumptions about the recognition and measurement of assets, liabilities, income and expenses.

Significant management judgement

The following are significant management judgements in applying the accounting policies of the

Group that have the most significant effect on the financial statements.

Recognition of deferred tax assets

The extent to which deferred tax assets can be recognised is based on an assessment of the probability

of the Group’s future taxable income against which the deferred tax assets can be utilised. In

addition, significant judgement is required in assessing the impact of any legal or economic limits or

uncertainties in various tax jurisdictions.

Impairment

The group assesses impairment at each reporting date by evaluating conditions specific to the group

that may lead to impairment of assets. Where an impairment trigger exists, the recoverable amount of

the asset is determined. Value-in-use calculations performed in assessing recoverable amounts

incorporate a number of key estimates

Useful lives of depreciable assets and intangible assets

Management reviews its estimate of the useful lives of depreciable assets and intangible assets at each

reporting date, based on the expected utility of the assets. Uncertainties in these estimates relate to

technical obsolescence that may change the utility of certain software and IT equipment.

Inventories

Management estimates the net realisable values of inventories, taking into account the most reliable

evidence available at each reporting date. The future realisation of these inventories may be affected

by future technology or other market-driven changes that may reduce future selling prices.

Fair value of financial instruments

Management uses valuation techniques to determine the fair value of financial instruments (where

active market quotes are not available) and non-financial assets. This involves developing estimates

and assumptions consistent with how market participants would price the instrument. Management

bases its assumptions on observable data as far as possible but this is not always available. In that case

management uses the best information available. Estimated fair values may vary from the actual

prices that would be achieved in an arm’s length transaction at the reporting date (see Note 30).



43

5 Segment reporting

Identification of reportable segments

The Group has identified its operating segments based on the internal reports that are reviewed and used by the Directors (chief operating decision makers) in assessing performance and determining the allocation of resources.

The Group is managed primarily on the basis of product category and service offerings as the diversification of the Group’s operations inherently have notably different risk profiles and performance assessment criteria. Operating segments are therefore determined on the same basis.

Reportable segments disclosed are based on aggregating operating segments where the segments are considered to have similar economic characteristics and are also similar with respect to the following:

• the products sold and/or services provided by the segment; and

• the type or class of customer for the products or services.

Types of products and services by segment

Segments as determined by the Directors and Management are as follows:


• Retail sales of clothing apparel by company owned stores

The group operates predominately in one geographical segment, being the People's Republic of China where 100% of external sales are generated.

During 2014, no (2013: 2) customers within the wholesale segment contributed more than 10% of total revenues totalling $nil (2013:$19,455,585 (21%)). No (2013: nil) customers within the retail segment contributed more than 10% of total revenues for 2014.

Basis of accounting for purposes of reporting by operating segments:

Accounting policies adopted

Unless stated otherwise, all amounts reported to the Directors, being the chief decision makers with respect to operating segments, are determined in accordance with accounting policies that are consistent to those adopted in the annual financial statements of the Group.

Inter-segment transactions

Inter-segment loans payables and receivables are initially recognised at the consideration received net of transaction costs. If inter-segment loans receivable and payable are not on commercial terms, there are not adjusted to fair value based on market interest rates. This policy represents a departure from that applied to the statutory financial statements.

Segment assets

Where an asset is used across multiple segments, the asset is allocated to the segment that receives majority economic value from the asset. In the majority of instances, segment assets are clearly identifiable on the basis of their nature and physical location.

Segment liabilities

Liabilities are allocated to segments where there is a direct nexus between the incurrence of the liability and the operations of the segment. Borrowings and tax liabilities are generally considered to relate to the Group as a whole and are not allocated. Segment liabilities include trade and other payables and certain direct borrowings.

44

Unallocated items

The following items of revenue, expenses, assets and liabilities are not allocated to operating segments as they are not considered part of the core operations of any segment:

• income tax expense;

• current tax liabilities; and

• other financial liabilities.

Segment information for the reporting year is as follows:

Wholesale Retail Total

$ $ $

2014

Segment revenues – external sales 77,496,684 6,745,376 84,242,060

Segment cost of sales (52,737,050) (2,924,421) (55,661,471)

Segment other expenses (14,026,403) (2,026,447) (16,052,850)

Segment operating results (Profits after tax) 7,999,228 1,345,882 9,345,110

Unallocated expense net of unallocated revenue (958,727)

Group result (Profit after tax) 8,386,383

Segment assets 61,176,514 4,115,326 65,291,840

Total corporate and unallocated assets 50,638

Total consolidated assets 65,342,478

Segment liabilities (8,269,145) (8,269,145)

Total corporate and unallocated liabilities (1,652,736)

Total consolidated liabilities (9,921,881)

2013

Segment revenues – external sales 77,978,479 1,506,848 79,485,327

Segment cost of sales (51,904,668) (648,547) (52,553,215)

Segment other expenses (6,257,663) (382,420) (6,640,083)

Segment operating results (Profits after tax) 15,030,383 356,911 15,387,294

Unallocated expense net of unallocated revenue (1,487,243)

Group result (Profit after tax) 13,900,051

Segment assets 51,570,476 1,882,296 53,452,772

Total corporate and unallocated assets 4,275,231

Total consolidated assets 57,728,003

Segment liabilities (9,447,007) (9,447,007)

Total corporate and unallocated liabilities (5,156,002)

Total consolidated liabilities (14,603,009)



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6 Revenue

2014 2013

$ $

Sales revenue

- Sales of goods 84,242,060 79,485,327

Other income

- Bank interest received 123,884 2,354

- Other income 853 -

Total other income 124,737 2,354

7 Operating and administrative expenses

Some material expenditures during the year ended 31 December 2014 are listed below:

2014 2013

$ $

Depreciation & amortisation 911,109 120,833

Audit fee 135,000 80,000

Distributor support 6,272,419 -

Direct store expenses 2,026,447 382,420

Wholesale commission 1,266,266 138,469

Advertising expenses 2,252,082 2,375,660

Salary expenses 1,521,362 1,340,187

8 Finance costs

Finance costs for the reporting periods consist of the following:

2014 2013

$ $

Finance costs

- Bank charges 6,034 13,937

- Interest expenses 463,127 439,701

Total 469,161 453,638



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9 Income tax expenses

The major components of tax expense and the reconciliation of the expected tax expense based on

the domestic effective tax rate of Sunbridge. The Australian assessable earning will be taxed at 30%

(2013: 30%). The Chinese assessable earnings are taxed at 25%.

The components of tax expense comprise:

Note

2014 2013

$ $

Current tax 4,830,826 5,025,762

Deferred tax (1,524,312) -

Current tax expense/(benefit) 3,306,514 5,025,762

The prima facie tax on profit from ordinary activities before income tax is reconciled to the income

tax as follows:

2014 2013

$ $’

Prima facie tax payable on profit from ordinary activities before income tax at local tax rates

- Consolidated group 2,923,224 4,731,453

- Parent entity - -

Add:

Tax effect of other allowable items 1,863,809 -

Refund of prior year overpayment of tax 43,793 175,258

Deferred tax assets reversed - 121,027

Less:

Tax effect of losses not brought into accounts as they do not meet the recognition criteria

- (1,976)

Deferred tax assets taken up (1,524,312) -

Income tax attributable to entity 3,306,514 5,025,762

The applicable weighted average effective tax rates are as follows 28% 27%

10 Cash and cash equivalents

Cash and cash equivalents include the following components:

2014 2013

$ $’

Cash at bank and in hand 29,320,103 26,999,584

Short term bank deposits - 856,995

Cash and cash equivalents 29,320,103 27,856,579

As at 31 December 2014 $Nil (2013: $856,995) was held in the interest bearing short-term deposits as

a guarantee for notes payable (Refer to Note 19).



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11 Trade and other receivables

Trade and other receivables consist of the following:

Note

2014 2013

$ $

CURRENT

Trade receivables 10a 16,128,613 18,679,540

Other receivables 10b 14,312 5,948

Goods & services tax receivable 10c 16,161 4,395

Total 16,159,086 18,689,883

a. Trade receivables past due but not impaired:

Current trade receivables are non-interest bearing and generally on 30 day terms. As of 31 December

2014, trade receivables of $8,058,394 (2013: $9,346,249) were past due but not impaired. These relate

to independent customers for whom there is no recent history of default. The ageing analysis of these

trade receivables is as follows:

2014 2013

$ $’

30-90 days 8,058,394 9,346,249

90 days above - -

Total 8,058,394 9,346,249

The other balances within trade receivables are not past due and do not contained impaired assets.

Based on the credit history of these receivables, it is expected that these amounts will be received

when due.

b. Other receivables

Other receivables arise from transaction outside the usual operating activities of the Company and are

unsecured, interest free and repayable on demand.

There are no balances that are past due and impaired. It is expected these balances will be received

when demanded.

c. Goods & services tax receivable

Goods & services tax (“GST”) receivable relates to the GST receivable for the Australia parent entity.

12 Security deposits to suppliers

2014 2013

$ $

CURRENT

Security deposits to suppliers 2,185,085 1,817,514

Other assets represent advances/security deposits to suppliers for inventory purchases.



48

13 Inventories

Inventories consist of the following:

2014 2013

$ $

CURRENT

Inventory recognised at cost 5,392,135 4,537,344

Net inventory 5,392,135 4,537,344

Inventories are valued at the lower of cost and net realisable value. Inventory includes various forms of clothing apparel items held for sale. Inventory has been determined to be valued at the lower of cost and net realisable value at reporting date.

14 Controlled entities

a. Controlled entities consolidated

Country of Incorporation

Percentage Owned (%)(1)

2014 2013

% %

Sunbridge Group Limited Australia

Subsidiaries of Sunbridge Group Limited:

- Mega Rich International Creation Limited(2) Hong Kong 100 100

- Bangdisidun (Fujian) Dress Development Co., Ltd.

People’s Republic of China 100 100

- Hengjiasi Dress Development Co., Ltd People’s Republic of China 100 100

Note: (1) Percentage of voting power is in proportion to ownership; (2) Mega Rich International Creation Limited is the intermediate parent entity of Bangdisidun (Fujian) Dress Development Co., Ltd and Hengjiasi Dress Development Co., Ltd.

b. Cross guarantee There is no deed of cross guarantee as at 31 December 2014 or 31 December 2013.

c. Non-controlling interest No subsidiaries have a non-controlling interest.



49

15 Property, plant and equipment

Details of the Group’s property, plant and equipment and their carrying amount are as follows:

Office Equipment Land and Buildings

Construction in Progress

Direct Store Equipment

Motor Vehicle Consolidated

$ $ $ $ $ $

Gross carrying amount

Balance 1 January 2014 32,600 2,927,021 1,714,272 - - 4,673,893

Additions - - 162,540 1,385,635 99,944 1,648,119

Net exchange differences 2,671 239,816 157,372 144,241 10,404 554,504

Balance 31 December 2014 35,271 3,166,836 2,034,185 1,529,877 110,348 6,876,518

Depreciation and impairment

Balance 1 January 2014 (28,160) (204,891) - - - (233,051)

Depreciation (1,342) (57,365) - (108,822) - (167,530)

Net exchange differences (2,447 (22,759) - (11,328) - (36,534)

Balance 31 December 2014 (31,949) (285,015) - (120,150) - (36,534)

Carrying amount 31 December 2014 3,322 2,881,821 2,034,185 1,409,726 110,348 6,439,403



50

15 Property, plant and equipment (Continued)

Office Equipment Land and Buildings

Construction in Progress

Direct Store Equipment

Motor Vehicle Consolidated

$ $ $ $ $ $


Balance 1 January 2013 24,402 2,423,566 1,419,414 - - 3,867,382

Additions 3,129 - - - - 3,129

Net exchange differences 5,068 503,455 294,859 - - 803,382

Balance 31 December 2013 32,599 2,927,021 1,714,273 - - 4,673,893

Depreciation and impairment

Balance 1 January 2013 (21,948) (121,178) - - - (143,126)

Depreciation (1,652) (58,541) - - - (60,193)

Net exchange differences (4,559) (25,173) - - - (29,732)

Balance 31 December 2013 (28,159) (204,892) - - - (233,051)

Carrying amount 31 December 2013 4,440 2,722,129 1,714,272 - - 4,440,842



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16 Intangible assets

Details of the Group’s intangible assets and their carrying amounts are as follows:

Franchising Rights Software Total

$ $ $


Balance at 1 January 2014 421,244 62,294 483,538

Addition 4,610,008 - 4,610,008

Termination of franchising right (91,152) - (91,152)

Currency translation differences 34,514 5,104 39,618

Balance at 31 December 2014 4,974,614 67,397 5,042,012

Amortisation and impairment

Balance at 1 January 2014 (74,337) (23,360) (97,697)

Amortisation (713,037) (30,542) (743,579)

Currency translation differences (80,316) (5,093) (85,409)

Balance at 31 December 2014 (867,690) (58,996) (926,686)

Carrying amount 31 December 2014 4,106,924 8,402 4,115,326

Franchising Rights Software Total

$ $ $


Balance at 1 January 2013 348,789 - 348,789

Addition - 62,294 62,294

Termination of franchising right - - -

Currency translation differences 72,455 - 72,455

Balance at 31 December 2013 421,244 62,294 483,538

Amortisation and impairment

Balance at 1 January 2013 (20,517) - (20,517)

Amortisation (49,558) (23,360) (72,918)

Currency translation differences (4,262) - (4,262)

Balance at 31 December 2013 (74,337) (23,360) (97,697)

Carrying amount 31 December 2013 346,907 38,934 385,841

17 Deferred tax assets

Deferred taxes arising from temporary differences and unused tax losses can be summarised as

follows:

2014 2013

$ $

Deferred tax asset 1,731,340 -

Amount relates to temporary differences attributable to distributor support recognised in the current

year profit or loss.



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18 Trade and other payables

Trade and other payables consist of the following:

2014 2013

$ $

CURRENT:

Trade payables 1,305,668 857,404

Security deposits from customers 1,655,020 1,179,520

Related party loans 1,178,765 1,217,087

Other payables 1,800,861 610,825

Total Trade and Other Payables 5,940,314 3,864,836

All amounts are short-term. The carrying values of trade payables and other payables are considered

to be a reasonable approximation of fair value.

19 Financial liabilities

Note

2014 2013

$ $

CURRENT

Notes payable 9 - 2,699,995

Short term borrowings 2,891,300 6,450,500

Total 2,891,300 9,150,495

Interest payable on short-term borrowings is between 8.1% and 9.6% (2013: 5.6% and 8.7%). The

notes payable are guaranteed against interest bearing short-term deposits of $Nil (2013: $856,995, see

Note 10).

20 Current tax liabilities

The Group’s current liabilities are as below:

2014 2013

$ $

CURRENT:

Income Tax Liability 1,090,267 1,587,678

21 Contingent assets and liabilities

The Company has contingent liabilities at 31 December 2014 in the form of loan guarantee provided

to non-related parties totalling $8,973,000 ($2013: $2,289,000), of which $7,976,000 expired in January

2015. As at the signing date of the annual report, the total contingent liabilities for existing guarantee

contracts is $997,000.



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22 Share capital

Ordinary shares

The share capital of Sunbridge consists only of fully paid ordinary shares; the shares do not have a par

value. All shares are equally eligible to receive dividends and the repayment of capital.

Ordinary shares participate in dividends in proportion to the number of shares held.

At the Shareholders’ meetings each ordinary share is entitled to one vote when a poll is called,

otherwise each Shareholder has one vote on a show of hands.

2014 2013 2014 2013

Shares Shares $’000 $’000

Shares issued and fully paid:

Beginning of the year 471,738,000 1 12,495,825 1

Shares issued for the acquisition of Mega Rich - 449,999,999 - 8,430,622

Shares issued following capital raising - 21,738,000 - 4,347,600

Capital raising costs - - - (282,398)

Total contributed equity at 31 December 471,738,000 471,738,000 12,495,825 12,495,825

Capital Management

The management’s objectives when managing capital are to ensure that the group can fund its

operations and continue as a going concern and to provide shareholders with adequate returns.

The management monitors capital on the basis of debt to equity ratio. This ratio is calculated as net

liabilities divided by equity. Net liabilities is “Total liabilities” as shown on the consolidated statement

of financial position less cash and cash equivalent and equity is “equity” as shown on the consolidated

balance sheet.

There are no externally imposed capital requirements.

There have been no changes in the strategy adopted by management to control the capital of the

group since the prior year, which is to maintain the debt to equity ratio at not more than 100%. The

debt-equity ratios as at 31 December 2014 and 31 December 2013 are as follows:

2014 2013

$ $

Total liabilities 9,921,881 14,603,009

Less: Cash and cash equivalents (29,320,103) (27,856,579)

Net liabilities (net of cash) (19,398,222) (13,253,570)

Total equity 55,420,597 43,124,994

Net liabilities to equity ratio (35%) (31 %)



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23 Other components of equity

Foreign Currency Translation Reserve

The foreign currency translation reserve records exchange differences arising on translation of a

foreign controlled subsidiary.

Statutory General Reserve

Pursuant to the current People’s Republic of China Company Law, the Company is required to

transfer between 5% to 10% of its profit after taxation to a statutory reserve until the surplus reserve

balance reaches a minimal of 50% of the registered capital. For the purposes of calculating the transfer

to this reserve, the profit after taxation shall be the amount determined under the People’s Republic of

China accounting standards.

24 Earnings per share and dividends

Earnings per share

Both the basic and diluted earnings per share have been calculated using the profit attributable to

shareholders of the Parent Company (Sunbridge) as the numerator (i.e. no adjustments to profit were

necessary in 2013 or 2014).

The reconciliation for the calculation of earnings per share for 2014 and 2013 are as follows:

2014 2013

Profit used to calculate basic EPS and dilutive EPS 8,386,383 13,900,051

Weighted average number of ordinary shares outstanding during the year used in calculating basic EPS and diluted EPS

471,738,000 394,575,196

Dividends

The board has resolved not to pay any dividends for the year ended 31 December 2014 (2013: 0.06

cents per share).

25 Capital and leasing commitments

Leasing commitments

The Consolidated Group has leasing commitments at 31 December 2014 as follow:

2014 $

2013 $

Payable – minimum lease payments

- Not later than 12 months 87,314 92,424

- Between 12 months and 5 years 38,848 -

- Greater than 5 years - -

Total 126,162 92,424

Lease commitment relates to future contracted operating lease payment for direct stores.



55

Management fee commitments

The Consolidated Group has management fee commitments at 31 December 2014 as follow:

2014 $

2013 $

Management fee payable

- Not later than 12 months 166,840 -

- Between 12 months and 5 years 262,094 -


Total 428,934 -

Management fee commitment relates to contracted future payment for direct stores.

Capital commitments

The Consolidated Group has capital commitments at 31 December 2014 as follow:

2014 $

2013 $

Planned capital expenditure

- Not later than 12 months 694,204 475,764

- Between 12 months and 5 years - -


Total 694,204 475,764

Capital commitment relates to contracted future payment for the office building under consecution.

Other Commitments

1. Support to distributors for store renovation purposes amounting to $2,560,096. The payment

will be made within 12 months.

2. Advertising commitment within 12 months totalling $171,484.

26 Reconciliation of cash flows from operating activities

Reconciliation of Cash Flows from Operating Activities 2014 2013

$ $

Cash flows from operating activities

Profit/(loss) for the period 8,386,383 13,900,051

Adjustments for:

amortisation 167,530 72,918

depreciation 743,579 60,193

listing expenses paid by related party - 830,869

loss on deferred tax asset charged to the statement of profit or loss and other comprehensive income

- 92,584

foreign exchange differences 1,700,066 2,691,101

change in inventories (854,791) (3,250,215)

change in trade receivables 2,550,927 (4,704,544)

change in other receivables (387,702) (763,418)

change in trade and payables 448,264 112,189

change in income taxes payable (497,411) 412,380

change in deferred tax (1,731,340) -

change in other liabilities 1,251,679 462,633

Net cash from operating activities 11,777,184 9,916,741



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27 Auditor remuneration

2014 2013

$ $

Remuneration for audit and review of financial statements for the parent entity:

- Auditing and reviewing of financial report 135,000 80,000

Other services

- investigating accountants’ report - 45,000

- tax return 2,700 -

- taxation report - 5,000

- work related to listing - 2,000

Total Auditor’s remuneration 137,700 132,000

28 Related party transactions

28.1 Transactions with Key Management Personnel

2014 2013

$ $

Cash paid to Jia Yin Xu 835,983 3,517,988

Prepaid reimbursement made to Ting Jiang 2,000

Cash received from Jia Yin Xu (505,748) -

Company expenses paid by Jia Yin Xu (291,914) (1,217,087)

Cash advances repaid by Jia Yin Xu - (3,555,452)

The above relate to transactions between the Group and the Company Directors. The transactions between the related parties are on normal commercial terms and conditions no more favourable than to those to other parties unless otherwise stated.

28.2 Balance with Key Management Personnel

Amounts receivable from and payable to Key Management Personnel of the Group at reporting date comprise of the following:

Receivable from


party



Mr Ting Jiang 2,000 -

Receivable from


party



Mr Ting Jiang - -

Related party transactions have been determined to be on an arm’s length basis, which comprise of related party loans and no specific terms and conditions have been attached to the transactions above.



57

29 Financial instrument risk

29.1 Risk management objectives and policies

The Group is exposed to various risks in relation to financial instruments. The Group’s financial

assets and liabilities consist of:

- Cash and cash equivalents;

- Trade and other receivables;

- Security deposits to suppliers;

- Trade and other payables;

- Short-term borrowings;

- Notes payable.

The main types of risks are market risk, credit risk and liquidity risk.

The Group’s risk management is coordinated at its headquarters, in close cooperation with the Board

of Directors, and focuses on actively securing the Group’s short to medium-term cash flows by

minimising the exposure to financial markets. Long-term financial investments are managed to

generate lasting returns.

The Group does not actively engage in the trading of financial assets for speculative purposes nor

does it write options. The most significant financial risks to which the Group is exposed are described

below.

29.2 Risk analysis

The main risks the Group is exposed to through its use of financial instruments are credit risks,

liquidity risk and customer concentration risks. The Group does not have any significant exposure to

currency risk and price risks.

Foreign currency risk

The Group does not have significant balances denominated in foreign currency other than the

functional currency of the respective companies within the Group (Renminbi – RMB).

Credit risk

Credit risk is managed on a group basis and reviewed regularly by the finance committee. It arises

from exposures to customers as well as through deposits with financial institutions.

The finance committee monitors credits risk on a regular basis.

The maximum exposure to credit risk, excluding the value of any collateral or other security, at

reporting date to recognised financial assets, is the carrying amount, net of any provisions for

impairment of those assets, as disclosed in the statement of financial position and notes to the

financial statements.



58

29.2 Risk analysis (Continued)

The Group performs ongoing credit evaluation of its customers’ financial conditions and require no

collateral from its customers. The allowance for doubtful debts is based upon a review of the expected

collectability of all trade and other receivables.

There are no other material amounts of collateral held as security at 31 December 2014.

Price risk

The Group’s financial instruments are not exposed to price risk.

Liquidity risk

Liquidity risk is the risk that the Group might be unable to meet its obligations. The Group manages

its liquidity needs by monitoring scheduled debt servicing payments for financial liabilities as well as

forecast cash inflows and outflows due in day-to-day business.

Interest rate risk

The Group’s exposure to interest rate risk relates primarily to its short-term deposits placed with

financial institutions. For further details on interest rate risk refer to Note 29.4.

Customer concentration risk

The Group’s exposure to customer concentration risk relates to its dependence on major customers.

The Group’s top 10 customers in 2014 generated more than 70% (2013: more than 78%) of the

Group’s revenue during the financial period.



59

29.3 Financial instrument composition and maturity analysis

The table below reflect the undiscounted contractual settlement terms for financial instruments of a fixed period of maturity, as well as management’s

expectations of the settlement period for all other financial instruments.

Weighted Average Effective Interest Rate

Interest Bearing Maturing within 1 Year

Interest Bearing Maturing within 2 Years

Non-interest Bearing Maturing within 1 Year

Total

2014 %

2013 %

2014 $

2013 $

2014 $

2013 $

2014 $

2013 $

2014 $

2013 $

Financial Assets:

- Cash and cash equivalents (Variable interest rate)

0.35% 0.39% 29,320,103 27,856,579 - - - - 29,320,103 27,856,579

- Trade and other receivables

- - - - - - 16,159,086 18,689,883 16,159,086 18,689,883

- Security deposits to suppliers

- - - - - - 2,185,085 1,817,514 2,185,085 1,817,514

Total Financial Assets 29,320,103 27,856,579 18,344,171 20,507,397 47,664,274 48,363,976

Financial Liabilities:

- Trade and other payables

- - - - - - 5,940,314 3,864,836 5,940,314 3,864,836

- Notes payable (Fixed interest rate)

- 5.60% - 2,699,995 2,699,995

- Short-term borrowings (Fixed interest rate)

8.21% 7.41% 2,891,300 6,450,500 - - - - 2,891,300 6,450,500

Total Financial Liabilities

2,891,300 9,150,495 - - 5,940,314 3,864,836 8,831,614 13,015,331

Net Financial Assets: 38,832,660 35,348,645



60

29.4 Interest rate sensitivity analysis

The Group has performed sensitivity analysis relating to its financial instrument’s exposure to interest

rate at reporting date. The Group’s financial instruments do not have significant exposure to price risk

and foreign exchange risk.

Interest rate sensitivity

The Group’s exposure to interest rate risks relates principally to short-term deposits placed with

financial institutions, short term borrowings and notes payable.

At 31 December 2014, the Group is exposed to changes in market interest rates through bank

borrowings at variable interest rates. Other borrowings are at fixed interest rates.

The following table illustrates the sensitivity of profit and equity to a reasonably possible change in

interest rates of +/- 5% (2013: +/- 5%). These changes are considered to be reasonably possible

based on observation of current market conditions. The calculations are based on a change in the

average market interest rate for each period, and the financial instruments held at each reporting date

that are sensitive to changes in interest rates. All other variables are held constant.

Profit/(Loss) for the year Equity

$ $

+5% -5% +5% -5%

31 December 2014 (6,738) 6,738 (6,738) 6,738

31 December 2013 (26,083) 26,083 (26,083) 26,083

29.5 Credit risk analysis

The Group’s maximum exposure to credit risk is limited to the carrying amount of financial assets recognised at the reporting date, as summarised below:

2014 2013

Class of financial assets $ $

Carrying amounts:

Cash and cash equivalents 29,320,103 27,856,579

Cash advanced to suppliers 2,185,085 1,817,514

Trade and other receivables 16,159,086 18,689,883

Total 47,664,274 48,363,976

:



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30 Fair value measurement

Financial assets and financial liabilities measured at fair value in the Statement of Financial Position

are grouped into three levels of a fair value hierarchy. The three (3) levels are defined based on the

observability of significant inputs to the measurement, as follows:

• Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities

• Level 2: inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly or indirectly

• Level 3: unobservable inputs for the asset or liability

The Group does not hold any financial assets or liabilities carried at fair value as at 31 December 2014. All financial assets and liabilities are carried at amortised cost

The carrying amounts of current receivables and payables are assumed to approximate their fair values due to their short-term nature. The fair value of financial liabilities approximates the carrying amount as the impact of discounting is not significant.

31 Accounting standards applicable in the future

The accounting standards that have not been early adopted for the year ended 31 December 2014, but will be applicable to the Group in future reporting periods, are detailed below. Apart from these standards, other accounting standards that will be applicable in future periods have been reviewed, however they have been considered to be insignificant to the Group.

At the date of authorisation of these financial statements, certain new standards, amendments and interpretations to existing standards have been published but are not yet effective, and have not been adopted early by the Group.

Management anticipates that all of the relevant pronouncements will be adopted in the Group's accounting policies for the first period beginning after the effective date of the pronouncement. Information on new standards, amendments and interpretations that are expected to be relevant to the Group’s financial statements is provided below. Certain other new standards and interpretations have been issued but are not expected to have a material impact on the Group's financial statements.

Accounting standards issued but not yet effective and not been adopted early by the Group

The Group notes the following Accounting Standards which have been issued but are not yet effective at 31 December 2014. These standards have not been adopted early by the Group. The Group‘s assessment of the impact of these new standards and interpretations is set out below:

AASB 9 Financial Instruments AASB 9 introduces new requirements for the classification and measurement of financial assets and liabilities.

These requirements improve and simplify the approach for classification and measurement of financial assets compared with the requirements of AASB 139. The main changes are:

a) financial assets that are debt instruments will be classified based on: (i) the objective of the entity’s business model for managing the financial assets; and (ii) the characteristics of the contractual cash flows;



62

b) allows an irrevocable election on initial recognition to present gains and losses on investments in equity instruments that are not held for trading in other comprehensive income (instead of in profit or loss). Dividends in respect of these investments that are a return on investment can be recognised in profit or loss and there is no impairment or recycling on disposal of the instrument;

c) introduces a ‘fair value through other comprehensive income’ measurement category for particular simple debt instruments;

d) financial assets can be designated and measured at fair value through profit or loss at initial recognition if doing so eliminates or significantly reduces a measurement or recognition inconsistency that would arise from measuring assets or liabilities, or recognising the gains and losses on them, on different bases;

e) where the fair value option is used for financial liabilities the change in fair value is to be accounted for as follows:

• the change attributable to changes in credit risk are presented in other comprehensive income (OCI)

• the remaining change is presented in profit or loss

If this approach creates or enlarges an accounting mismatch in the profit or loss, the effect of the changes in credit risk are also presented in profit or loss.

Otherwise, the following requirements have generally been carried forward unchanged from AASB 139 into AASB 9:

• classification and measurement of financial liabilities; and

• derecognition requirements for financial assets and liabilities.

AASB 9 requirements regarding hedge accounting represent a substantial overhaul of hedge accounting that enable entities to better reflect their risk management activities in the financial statements.

Furthermore, AASB 9 introduces a new impairment model based on expected credit losses. This model makes use of more forward-looking information and applies to all financial instruments that are subject to impairment accounting.

The entity is yet to undertake a detailed assessment of the impact of AASB 9. However, based on the entity’s preliminary assessment, the Standard is not expected to have a material impact on the transactions and balances recognised in the financial statements when it is first adopted for the year ending 31 December 2018.

AASB 2013-3 Recoverable Amount Disclosures for Non-Financial Assets These narrow-scope amendments address disclosure of information about the recoverable amount of impaired assets if that amount is based on fair value less costs of disposal.

When developing IFRS 13 Fair Value Measurement, the IASB decided to amend IAS 36 Impairment of Assets to require disclosures about the recoverable amount of impaired assets. The IASB noticed however that some of the amendments made in introducing those requirements resulted in the requirement being more broadly applicable than the IASB had intended. These amendments to IAS 36 therefore clarify the IASB’s original intention that the scope of those disclosures is limited to the recoverable amount of impaired assets that is based on fair value less costs of disposal. AASB 2013-3 makes the equivalent amendments to AASB 136 Impairment of Assets.



63

When these amendments are first adopted for the year ending 31 December 2015, they are unlikely to have any significant impact on the entity given that they are largely of the nature of clarification of existing requirements.

AASB 2014-1 Amendments to Australian Accounting Standards (Part A: Annual Improvements 2010–2012 and 2011–2013 Cycles) Part A of AASB 2014-1 makes amendments to various Australian Accounting Standards arising from the issuance by the International Accounting Standards Board (IASB) of International Financial Reporting Standards Annual Improvements to IFRSs 2010-2012 Cycle and Annual Improvements to IFRSs 2011-2013 Cycle.

Among other improvements, the amendments arising from Annual Improvements to IFRSs 2010-2012 Cycle:

a) clarify that the definition of a ‘related party’ includes a management entity that provides key management personnel services to the reporting entity (either directly or through a group entity); and

b) amend AASB 8 Operating Segments to explicitly require the disclosure of judgements made by management in applying the aggregation criteria.

Among other improvements, the amendments arising from Annual Improvements to IFRSs 2011-2013 Cycle clarify that an entity should assess whether an acquired property is an investment property under AASB 140 Investment Property and perform a separate assessment under AASB 3 Business Combinations to determine whether the acquisition of the investment property constitutes a business combination.

When these amendments are first adopted for the year ending 31 December 2015, there will be no material impact on the entity.

AASB 2014-1 Amendments to Australian Accounting Standards (Part E: Financial Instruments) Part E of AASB 2014-1 makes amendments to Australian Accounting Standards to reflect the AASB’s decision to defer the mandatory application date of AASB 9 Financial Instruments to annual reporting periods beginning on or after 1 January 2018. Part E also makes amendments to numerous Australian Accounting Standards as a consequence of the introduction of Chapter 6 Hedge Accounting into AASB 9 and to amend reduced disclosure requirements for AASB 7 Financial Instruments: Disclosures and AASB 101 Presentation of Financial Statements.

The entity has not yet assessed the full impact of these amendments.

AASB 15 Revenue from Contracts with Customers AASB 15: replaces AASB 118 Revenue, AASB 111 Construction Contracts and some revenue-related Interpretations:

• establishes a new revenue recognition model

• changes the basis for deciding whether revenue is to be recognised over time or at a point in time

• provides new and more detailed guidance on specific topics (e.g., multiple element arrangements, variable pricing, rights of return, warranties and licensing)

• expands and improves disclosures about revenue In the Australian context, AASB 15 will apply to contracts of not-for-profit (NFP) entities that are exchange transactions. AASB 1004 Contributions will continue to apply to non-exchange transactions until the Income from Transactions of NFP Entities Project is completed (with an Exposure Draft inviting public comment on those proposals targeted for issue in Q1 2015).



64

The entity is yet to undertake a detailed assessment of the impact of AASB 15. However, based on the entity’s preliminary assessment, the Standard is not expected to have a material impact on the transactions and balances recognised in the financial statements when it is first adopted for the year ending 31 December 2017

Clarification of Acceptable Methods of Depreciation and Amortisation (Amendments to AASB 116 and AASB 138) The amendments to AASB 116 prohibit the use of a revenue-based depreciation method for property, plant and equipment. Additionally, the amendments provide guidance in the application of the diminishing balance method for property, plant and equipment.

The amendments to AASB 138 present a rebuttable presumption that a revenue-based amortisation method for intangible assets is inappropriate. This rebuttable presumption can be overcome (i.e. a revenue-based amortisation method might be appropriate) only in two limited circumstances:

• the intangible asset is expressed as a measure of revenue, for example when the predominant limiting factor inherent in an intangible asset is the achievement of a revenue threshold (for instance, the right to operate a toll road could be based on a fixed total amount of revenue to be generated from cumulative tolls charged); or when it can be demonstrated that revenue and the consumption of the economic benefits of the intangible asset are highly correlated.

The Australian Accounting Standards Board (AASB) have issued the equivalent Australian amendment AASB 2014-4. When these amendments are first adopted for the year ending 31 December 2017, they are unlikely to have any significant impact on the entity. Clarification of Acceptable Methods of Depreciation and Amortisation (Amendments to AASB 2014-4 Amendments to Australian Accounting Standards – Clarification of Acceptable Methods of Depreciation and Amortisation amends AASB 116 Property, Plant and Equipment and AASB 138 Intangible Assets to limit the use of revenue based depreciation and amortisation methods.) This is the second amending standard implementing the IASB’s May amendments to IAS 16 Property, Plant and Equipment and IAS 38 Intangible Assets. The changes as a result of the IASB’s decision that revenue based methods are not appropriate as they do not reflect the underlying principle that depreciation/amortisation should be based on the 'consumption of the expected future economic benefits embodied in the asset'. Revenue based methods reflect a pattern of generation of economic benefits that arise from the operation of the business of which an asset is part, rather than the pattern of consumption of an asset’s expected future economic benefits.

The revenue based method can still be used for amortisation for intangible assets if it can be demonstrated that revenue is directly related to the consumption of economic benefits of the intangible asset.

The Australian Accounting Standards Board (AASB) have issued the equivalent Australian amendment AASB 2014-4. When these amendments are first adopted for the year ending 31 December 2017, they are unlikely to have any significant impact on the entity.

Accounting for Acquisitions of Interests in Joint Operations (Amendments to IFRS 11 and AASB 2014-3) The amendments to AASB 11 state that an acquirer of an interest in a joint operation in which the activity of the joint operation constitutes a ‘business’, as defined in AASB 3 Business Combinations, should:



65

• apply all of the principles on business combinations accounting in AASB 3 and other AASBs except principles that conflict with the guidance of AASB 11. This requirement also applies to the acquisition of additional interests in an existing joint operation that results in the acquirer retaining joint control of the joint operation (note that this requirement applies to the additional interest only, i.e. the existing interest is not remeasured) and to the formation of a joint operation when an existing business is contributed to the joint operation by one of the parties that participate in the joint operation; and

• provide disclosures for business combinations as required by AASB 3 and other AASBs. The Australian Accounting Standards Board (AASB) had issued the equivalent Australian amendment AASB 2014-3.

The entity has not yet assessed the full impact of these amendments.

There are no other standards that are not yet effective and that are expected to have a material impact on the entity in the current or future reporting periods and on foreseeable future transactions.

The Group has not elected to early adopt any new standards or amendments that are issued but not yet effective and has not yet assessed the impact of these standards.



66

32 Parent entity information

Information relating to Sunbridge (‘the Parent Entity’):

2014 2013

$ $

Statement of financial position

Assets

Current assets 50,639 4,261,160

Non-current assets 23,388,315 19,587,284

Total assets 23,438,954 23,848,444

Liabilities

Current liabilities 105,994 1,288,750

Non-current liabilities 1,459,163 -

Total liabilities 1,565,157 1,288,750

Net assets 21,873,797 22,559,694

Equity

Issued capital 23,652,487 23,652,487

Retained earnings (1778,690) (1,092,793)

Total equity 21,873,797 22,559,694

Financial performance

Profit/(loss) Loss for the year (685,897) (1,092,793)

Total comprehensive income (685,897) (1,092,793)

The Parent Entity has no contingent liabilities or contingent assets at 31 December 2014 (2013: $ Nil).

Sunbridge Group Limited (Parent Entity) was incorporated on 22 May 2013.

33 Post-reporting date events

No matters or circumstances have arisen since the end of the financial year to the date of authorisation which significantly affected or may significantly affect the operations of the consolidated group, the results of those operations, or the state of affairs of the consolidated group in future financial years.



67

34 Company details

Registered Office

Level 31, 120 Collins Street

Melbourne VIC 3000

Principal place of business

No. 11 Longhu, Shaohui Industrial Area,

Jinjiang City, Fujian Province

People’s Republic of China

Website

www.sunbridge.com.au



68

Directors’ Declaration

1 In the opinion of the Directors of Sunbridge Group Limited and Its Controlled Entities:

a The consolidated financial statements and notes of Sunbridge Group Limited and Its Controlled Entities are in accordance with the Corporations Act 2001, including

i Giving a true and fair view of its financial position as at 31 December 2014 and of its performance for the financial year ended on that date; and

ii Complying with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Regulations 2001; and

b There are reasonable grounds to believe that Sunbridge Group Limited and Its Controlled Entities will be able to pay its debts as and when they become due and payable.

2 The Directors have been given the declarations required by Section 295A of the Corporations Act 2001 from the Chief Executive Officer and Chief Financial Officer for the financial year ended 31 December 2014.

3 Note 2 confirms that the consolidated financial statements also comply with International Financial Reporting Standards.

Signed in accordance with a resolution of the Directors:

____________________________________________

Director

Dated the 31st day of March 2015.

Level 1,

67 Greenhill Rd

Wayville SA 5034

Correspondence to:

GPO Box 1270

Adelaide SA 5001

T 61 8 8372 6666

F 61 8 8372 6677

E [email protected]

W www.grantthornton.com.au

Grant Thornton Audit Pty Ltd ABN 94 269 609 023 ACN 130 913 594 a subsidiary or related entity of Grant Thornton Australia Ltd ABN 41 127 556 389

‘Grant Thornton’ refers to the brand under which the Grant Thornton member firms provide assurance, tax and advisory services to their clients and/or refers to one or more member firms, as the

context requires. Grant Thornton Australia Ltd is a member firm of Grant Thornton International Ltd (GTIL). GTIL and the member firms are not a worldwide partnership. GTIL and each member firm

is a separate legal entity. Services are delivered by the member firms. GTIL does not provide services to clients. GTIL and its member firms are not agents of, and do not obligate one another and

are not liable for one another’s acts or omissions. In the Australian context only, the use of the term ‘Grant Thornton’ may refer to Grant Thornton Australia Limited ABN 41 127 556 389 and its

Australian subsidiaries and related entities. GTIL is not an Australian related entity to Grant Thornton Australia Limited.

Liability limited by a scheme approved under Professional Standards Legislation. Liability is limited in those States where a current scheme applies.

INDEPENDENT AUDITOR’S REPORT

TO THE MEMBERS OF SUNBRIDGE GROUP LIMITED

Report on the financial report

We have audited the accompanying financial report of Sunbridge Group Limited (the

“Company”), which comprises the consolidated statement of financial position as at 31

December 2014, the consolidated statement of profit or loss and other comprehensive

income, consolidated statement of changes in equity and consolidated statement of cash

flows for the year then ended, notes comprising a summary of significant accounting

policies and other explanatory information and the directors’ declaration of the consolidated

entity comprising the Company and the entities it controlled at the year’s end or from time

to time during the financial year.

Directors’ responsibility for the financial report

The Directors of the Company are responsible for the preparation of the financial report

that gives a true and fair view in accordance with Australian Accounting Standards and the

Corporations Act 2001. The Directors’ responsibility also includes such internal control as

the Directors determine is necessary to enable the preparation of the financial report that

gives a true and fair view and is free from material misstatement, whether due to fraud or

error. The Directors also state, in the notes to the financial report, in accordance with

Accounting Standard AASB 101 Presentation of Financial Statements, the financial

statements comply with International Financial Reporting Standards.

Auditor’s responsibility

Our responsibility is to express an opinion on the financial report based on our audit. We

conducted our audit in accordance with Australian Auditing Standards. Those standards

require us to comply with relevant ethical requirements relating to audit engagements and

plan and perform the audit to obtain reasonable assurance whether the financial report is

free from material misstatement.

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

disclosures in the financial report. The procedures selected depend on the auditor’s

judgement, including the assessment of the risks of material misstatement of the financial

report, whether due to fraud or error.

In making those risk assessments, the auditor considers internal control relevant to the

Company’s preparation of the financial report that gives 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 Company’s internal control. An audit

also includes evaluating the appropriateness of accounting policies used and the

reasonableness of accounting estimates made by the Directors, as well as evaluating the

overall presentation of the financial report.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide

a basis for our audit opinion.

Independence

In conducting our audit, we have complied with the independence requirements of the

Corporations Act 2001.

Auditor’s opinion

In our opinion:

a the financial report of Sunbridge Group Limited is in accordance with the

Corporations Act 2001, including:

i giving a true and fair view of the consolidated entity’s financial position as at 31

December 2014 and of its performance for the year ended on that date; and

ii complying with Australian Accounting Standards and the Corporations

Regulations 2001; and

b the financial report also complies with International Financial Reporting Standards as

disclosed in the notes to the financial statements.

Report on the remuneration report

We have audited the remuneration report included in the directors’ report for the year

ended 31 December 2014. The Directors of the Company are responsible for the

preparation and presentation of the remuneration report in accordance with section 300A of

the Corporations Act 2001. Our responsibility is to express an opinion on the remuneration

report, based on our audit conducted in accordance with Australian Auditing Standards.

Auditor’s opinion on the remuneration report

In our opinion, the remuneration report of Sunbridge Group Limited for the year ended 31

December 2014, complies with section 300A of the Corporations Act 2001.

GRANT THORNTON AUDIT PTY LTD Chartered Accountants

S J Gray

Partner – Audit & Assurance

Adelaide, 31 March 2015



72

ASX Additional Information

Additional information required by the ASX Limited Listing Rules and not disclosed elsewhere in this

report is set out below. The information is effective as at 13 March 2015.

Substantial Shareholders

The number of substantial shareholders and their associates are set out below:

Shareholder Number of Shares

MR JIA YIN XU 259,200,000

PERSHING AUSTRALIA NOMINEES PTY LTD <PHILLIP SECURITIES (HK) A/C> 48,789,908

Voting Rights

Ordinary Shares: On a show of hands, every member present at a meeting in person or by

proxy shall have one vote and upon a poll each share shall have one

vote.

Distribution of equity security holders

Ordinary Shares Options

Holding Shareholders Shares Option holders Options

1 - 1,000 18 1,672 - -

1,001 - 5,000 14 56,926 - -

5,001 - 10,000 208 1,944,693 - -

10,001 - 100,000 466 22,666,627 - -

100,001-1,000,000 260 82,600,910 - -

1,000,001-9,999,999,999 24 364,467,172 - -

990 471,738,000 - -



73

Twenty (20) Largest Shareholders

Ordinary Shares

Number of Shares

Held Percentage (%) of Issued Shares

JIAYIN XU 259,200,000 54.95%

PERSHING AUSTRALIA NOMINEES PTY LTD <PHILLIP SECURITIES (HK) A/C>

48,789,908 10.34%

FINETRADE INTERNATIONAL LIMITED 9,097,003 1.93%

HISHENK PTY LTD 5,900,000 1.25%

PICTON COVE PTY LTD 4,000,000 0.85%

REDBROOK NOMINEES PTY LTD 4,000,000 0.85%

MR ZHI GANG WU & MRS LI HONG REN 3,400,000 0.72%

FORTUNE GRAIN LIMITED 3,368,296 0.71%

OPEN GOLD LIMITED 2,823,459 0.60%

MS SHAN SHAN HUNG 2,534,298 0.54%

HYECORP PROPERTY FUND NO 1 PTY LTD 2,200,000 0.47%

ROCLEAD LIMITED 2,198,871 0.47%

HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED 2,177,482 0.46%

MR GARY STUBBS & MRS SATISH STUBBS 2,000,000 0.42%

BUDUVA PTY LTD 1,500,000 0.32%

LAMRO PTY LTD <ORAMA A/C> 1,500,000 0.32%

MERINDA MIP PTY LTD <MCORP 1 ACCOUNT> 1,450,000 0.31%

WHITECHURCH DEVELOPMENTS PTY LTD <WHITECHURCH S/F A/C> 1,424,000 0.30%

SMGURU INVESTMENTS PTY LTD 1,350,000 0.29%

MR PIERS DUGDALE 1,250,224 0.27%

360,163,541 76.35%

Unissued equity securities

There are no options issued by the Company.

Securities Exchange

The Company is listed on the Australian Securities Exchange.

Sunbridge Group Limited Annual Report - ASX · Member of the Audit and Risk Committee ... China...

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Transcript of Sunbridge Group Limited Annual Report - ASX · Member of the Audit and Risk Committee ... China...