FRENCKEN GROUP LIMITED
ANNUAL REPORT 2015
104
NOTES TO FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2015 (CONT’D)
30 STATUTORY RESERVE FUND
In accordance with the Foreign Enterprise Law applicable to the subsidiary in the People’s Republic of China (“PRC”),
the subsidiary is required to make appropriation to a Statutory Reserve Fund (“SRF”). At least 10% of the statutory
after tax profits as determined in accordance with the applicable PRC accounting standards and regulations must be
allocated to the SRF until cumulative total of the SRF reaches 50% of the subsidiary’s registered capital. Subject to
approval from the relevant PRC authorities, the SRF may be used to offset any accumulated losses or increase the
registered capital of the subsidiary. The SRF is not available for dividend distribution to shareholders.
31 SEGMENT INFORMATION
(a) Business segments
The Group has two principal business segments, as described below, which are the Group’s strategic business
units. The two strategic business units are organised and managed separately because they require differing
technological skill sets and marketing strategies. They are as follows:
• Mechatronics – specialising in the design and manufacture of complex electro-mechanical assemblies and
automation systems for original equipment manufacturers.
• Integrated Manufacturing Services (“IMS”) – specialising in a one-stop integrated solution to manufacture
plastic components (including design and fabrication of mould) and PCBAs for assembly into modules and
finished products. It also designs and manufactures high quality oil filters.
The investment segment is not a business segment but essentially an investment holding and management
companies at sub-group and the ultimate holding company level.
Inter-segment transactions are determined on terms agreed between the parties. Segment assets consist of
non-current and current assets while segment liabilities comprise non-current and current liabilities. Capital
expenditure comprises additions to property, plant and equipment.
The accounting policies of the reportable segments are materially similar as the Group’s accounting policies
described in Note 2.
