TIDMALR
RNS Number : 3890Y
Alternative Energy Limited
29 February 2012
For immediate release 29 February 2012
ALTERNATIVE ENERGY LIMITED
("Alternative Energy" or "the Company")
Report and Accounts
The Company today announces that it has published the Report and
Accounts for the year to 31 August 2011 ("the Accounts"), and they
are being posted to shareholders today. The Accounts will shortly
be available on the Company website, www.alternativeenergy.com.sg
and extracts are set out below:
CHAIRMANS STATEMENT
The financial year to 31(st) August 2011 was the first year of
the Group's operational activities and was a period in which the
Group started to sell its products around the world.
Distributorships were signed with distributors in the United
Kingdom, Indonesia and Nigeria and the Group's LED lighting
products, being the first market ready products produced by the
Group, were installed in many locations around the world, including
not only those countries in which we have distributorships but
others in which we have established sales leads.
The Group has continued to develop its two groups of
technologies, energy generation technologies led by the group's
eRoof system and energy saving, which is at present led by the
groups eLumen LED lighting technologies. These technologies have
been combined together in the Group's eLive housing which is now
also being marketed around the world, but particularly to
developing countries.
Being the first year of commercial operations much time was
spent by the Group and its distributors in testing, as LED lighting
technologies are new to many potential purchasers, and this meant
that orders expected to be placed during this period were delayed,
the generally cautious global economic climate also acting to slow
down orders. Despite the disappointing revenue figures for this
period the group maintained its levels of expenditure, reducing
overheads in some areas, although the adjustment for the non-cash
item of options granted to staff in 2010 on the relisting of the
Company pushed the overall loss for the year to a higher
figure.
The Group is now pushing hard to drive revenues from all of its
product ranges with a view to enabling sales to grow substantially
in 2012.
During this financial period the Group continued to develop its
intellectual property with more of its patents being granted, and
the core team headed by Dr Eric Goh and Dr Tay Boon Hou have been
steadfast in their hard work and commitment to success.
During the past year I continued to support the Group by
extending my interest free unsecured convertible loan from US$2
million to US$3 million of which approximately US$2.9 million was
drawn in the period. I am continuing to support the Group but I am
also exploring ways to bring further working capital into the Group
in the coming months in order to enable the Group to achieve its
full potential.
Green energy remains a strong growth area in which the Group can
play a part, despite the negative general global economic
situation, and the Group's focus for 2012 will be on bringing all
of its products to the market and thus achieving strong revenue
growth built upon its years of technological development and
experience.
Christopher Nightingale
For further information, please
contact:
Dr Eric Goh, Alternative Energy Tel: +65 6873 7782
Limited
Richard Lascelles, Alternative Tel: +44 (0) 20 7408 1067
Energy Limited
Roland Cornish, Beaumont Cornish Tel: +44 (0) 20 7628 3396
Limited
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF
ALTERNATIVE ENERGY LIMITED
Report on the Financial Statements
We have audited the accompanying financial statements of
Alternative Energy Limited (the "Company") and its subsidiaries
(the "Group") which comprise the statements of financial position
of the Group and of the Company as at 31 August 2011, and the
consolidated statement of comprehensive income, consolidated
statement of changes in equity and consolidated statement of cash
flows of the Group and statement of changes in equity of the
Company for the financial year then ended, and a summary of
significant accounting policies and other explanatory
information.
Management's Responsibility for the Financial Statements
Management is responsible for the preparation of financial
statements that give a true and fair view in accordance with the
provisions of the Singapore Companies Act, Cap 50 (the "Act") and
International Financial Reporting Standards, and for devising and
maintaining a system of internal accounting controls sufficient to
provide a reasonable assurance that assets are safeguarded against
loss from unauthorised use or disposition; and transactions are
properly authorised and that they are recorded as necessary to
permit the preparation of true and fair profit and loss accounts
and balance sheets and to maintain accountability of assets.
Auditors' Responsibility
Our responsibility is to express an opinion on these financial
statements based on our audit. We conducted our audit in accordance
with International Standards on Auditing. Those standards require
that we comply with ethical requirements and plan and perform the
audit to obtain reasonable assurance about whether the financial
statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence
about the amounts and disclosures in the financial statements. The
procedures selected depend on the auditors' judgement, including
the assessment of the risks of material misstatement of the
financial statements, whether due to fraud or error. In making
those risk assessments, the auditors consider internal control
relevant to the entity's preparation of financial statements that
give a true and fair view in order to design audit procedures that
are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the entity's internal
control. An audit also includes evaluating the appropriateness of
accounting policies used and the reasonableness of accounting
estimates made by management, as well as evaluating the overall
presentation of the financial statements.
We believe that the audit evidence we have obtained is
sufficient and appropriate to provide a basis for our audit
opinion.
Opinion
In our opinion, the consolidated financial statements of the
Group, the statement of financial position and statement of change
in equity of the Company are properly drawn up in accordance with
the provisions of the Act and International Financial Reporting
Standards so as to give a true and fair view of the state of
affairs of the Group and of the Company as at 31 August 2011 and of
the results, changes in equity and cash flows of the Group and
changes in equity of the Company for the financial year ended on
that date and;.
Emphasis of Matter
We draw attention to Note 2.2 to the financial statements which
indicate that the Group and the Company have been incurring losses
for the current and past years. The Group and the Company have
taken measures as described in Note 2.2 to the financial statements
to secure the necessary funding to meet their daily operations
needs. If these measures fail to materialise, this would indicate
an existence of a material uncertainty which may cast significant
doubt about the Group's and the Company's abilities to continue as
a going concern. Our audit opinion is not qualified in respect of
this matter.
Report on Other Legal and Regulatory Requirements
In our opinion, the accounting and other records required by the
Act to be kept by the Company and by subsidiaries incorporated in
Singapore of which we are the auditors have been properly kept in
accordance with the provisions of the Act.
BDO LLP
Public Accountants and
Certified Public Accountants
Singapore
29 February 2012
Lai Keng Wei
Partner-in-charge
ALTERNATIVE ENERGY LIMITED
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE FINANCIAL YEAR ENDED 31 AUGUST 2011
Note 2011 2010
US$ US$
Revenue 4 52,826 658
Cost of sales (45,457) (596)
Gross profit 7,369 62
Other income 4,135 15,517
Administrative expenses (1,590,911) (1,026,326)
Other expenses (2,419,223) (2,588,733)
Share of loss from equity-accounted
joint venture (2,021) -
Loss before income tax 5 (4,000,651) (3,599,480)
Income tax 6 - -
Loss for the financial year (4,000,651) (3,599,480)
============
Other comprehensive income:
Exchange differences on translating
foreign joint venture 15 -
Other comprehensive income for
the financial year, net of tax 15 -
============ ============
Total comprehensive loss for the
financial year (4,000,636) (3,599,480)
============ ============
Attributable to equity holders
of the Company:
Loss for the financial year (4,000,651) (3,599,480)
Other comprehensive income for
the financial year,
net of tax 15 -
------------ ------------
(4,000,636) (3,599,480)
============ ============
Loss per share (US$ cents)
Basic and diluted 7 # #
============ ============
(#) denotes a figure which is less than US$0.01 cent.
ALTERNATIVE ENERGY LIMITED
STATEMENTS OF FINANCIAL POSITION AS AT 31 AUGUST 2011
Group Company
Note 2011 2010 2011 2010
US$ US$ US$ US$
Assets
Non-current assets
Plant and equipment 8 25,295 114,416 12,565 24,170
Investments in subsidiaries 9 - - 1,118,921 668,072
Investment in joint
venture 10 118,690 - - -
Intangible assets 11 14,997,818 7,207,908 14,107,433 6,387,805
Trade and other receivables 12 - - 2,688,805 -
------------ ----------- ----------- -----------
15,141,803 7,322,324 17,927,724 7,080,047
------------ ----------- ----------- -----------
Current assets
Cash and bank balances 13 924,864 1,681,620 915,409 1,389,641
Trade and other receivables 12 193,222 148,969 3,660,905 4,579,657
------------
1,118,086 1,830,589 4,576,314 5,969,298
------------ ----------- ----------- -----------
Total assets 16,259,889 9,152,913 22,504,038 13,049,345
============ =========== =========== ===========
Equity and liabilities
Capital and reserves
Issued capital 14 19,400,355 14,383,792 19,400,355 14,383,792
Capital reserve 14 3,505,104 - 3,505,104 -
Treasury shares 15 (56,400) (56,400) (56,400) (56,400)
Share options reserve 16 981,260 264,082 981,260 130,411
Convertible loans reserve 17 201,162 401,052 201,162 401,052
Accumulated losses (11,260,437) (7,259,786) (4,823,060) (3,153,167)
Foreign currency translations
reserve 15 - - -
12,771,059 7,732,740 19,208,421 11,705,688
------------ ----------- ----------- -----------
Current liabilities
Other payables and
accruals 18 694,527 182,513 573,254 147,984
Convertible loans 19 2,722,363 1,195,673 2,722,363 1,195,673
Provisions 20 71,940 41,987 - -
3,488,830 1,420,173 3,295,617 1,343,657
Total equity and liabilities 16,259,889 9,152,913 22,504,038 13,049,345
============ =========== =========== ===========
ALTERNATIVE ENERGY LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE FINANCIAL YEAR ENDED 31 AUGUST 2011
Foreign
Share Convertible currency
Issued Capital Treasury options loans Accumulated translations
2011 capital reserve shares reserve reserve losses reserve Total
Group US$ US$ US$ US$ US$ US$ US$ US$
Balance at 1
September 2010 14,383,792 - (56,400) 264,082 401,052 (7,259,786) - 7,732,740
Total comprehensive
loss for
the financial year - - - - - (4,000,651) 15 (4,000,636)
Shares issued during
the financial
year (Note 14) 5,016,563 - - - - - - 5,016,563
Shares alloted but
not issued
during the
financial year
(Note
14) - 3,505,104 - - - - - 3,505,104
Grant of
equity-settled
share
options to
employees - - - 717,178 - - - 717,178
Reserve attributable
to equity
components of
convertible loans - - - - (199,890) - - (199,890)
Balance at 31 August
2011 19,400,355 3,505,104 (56,400) 981,260 201,162 (11,260,437) 15 12,771,059
========== ========= ======== ======== =========== ============ ============= ===========
ALTERNATIVE ENERGY LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE FINANCIAL YEAR ENDED 31 AUGUST 2011 (Continued)
Share Convertible
Issued Treasury options loan Accumulated
2010 capital shares reserve reserve losses Total
Group US$ US$ US$ US$ US$ US$
Balance at 1 September 2009 7,916,392 (1,200,000) - - (3,847,806) 2,868,586
Total comprehensive loss for the
financial year - - - - (3,599,480) (3,599,480)
Shares issued during the financial
year (Note 14) 6,467,400 - - - - 6,467,400
Re-issue of treasury share during
the financial year (Note 15) - 1,143,600 - - - 1,143,600
Gain from re-issue of treasury
share during the financial year
(Note 15) - - - - 187,500 187,500
Grant of equity-settled share
options to employees - - 264,082 - - 264,082
Reserve attributable to equity
component of convertible loan - - - 401,052 - 401,052
Balance at 31 August 2010 14,383,792 (56,400) 264,082 401,052 (7,259,786) 7,732,740
========== =========== ======== =========== =========== ===========
ALTERNATIVE ENERGY LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE FINANCIAL YEAR ENDED 31 AUGUST 2011 (Continued)
Share Convertible
Issued Capital Treasury options loans Accumulated
2011 capital reserve shares reserve reserve losses Total
Company US$ US$ US$ US$ US$ US$ US$
Balance at 1 September 2010 14,383,792 - (56,400) 130,411 401,052 (3,153,167) 11,705,688
Total comprehensive loss for the
financial year - - - - - (1,669,893) (1,669,893)
Shares issued during the financial
year (Note 14) 5,016,563 - - - - - 5,016,563
Shares allotted but not issued
during the financial year (Note
14) - 3,505,104 - - - - 3,505,104
Grant of equity-settled share
options
to employees - - - 850,849 - - 850,849
Reserve attributable to equity
components of convertible loans - - - - (199,890) - (199,890)
Balance at 31 August 2011 19,400,355 3,505,104 (56,400) 981,260 201,162 (4,823,060) 19,208,421
========== ========= ======== ======== =========== =========== ===========
ALTERNATIVE ENERGY LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE FINANCIAL YEAR ENDED 31 AUGUST 2011 (Continued)
Share Convertible
Issued Treasury options loan Accumulated
2010 capital shares reserve reserve losses Total
Company US$ US$ US$ US$ US$ US$
Balance at 1 September 2009 7,916,392 (1,200,000) - - (1,607,092) 5,109,300
Total comprehensive loss for
the financial year - - - - (1,733,575) (1,733,575)
Shares issued during the financial
year (Note 14) 6,467,400 - - - - 6,467,400
Re-issue of treasury share during
the financial year (Note 15) - 1,143,600 - - - 1,143,600
Gain from re-issue of treasury
share during the financial year
(Note 15) - - - 187,500 187,500
Grant of equity-settled share
options to employees - - 130,411 - - 130,411
Reserve attributable to equity
component of convertible loan - - - 401,052 - 401,052
Balance at 31 August 2010 14,383,792 (56,400) 130,411 401,052 (3,153,167) 11,705,688
========== =========== ======== =========== =========== ===========
ALTERNATIVE ENERGY LIMITED
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE FINANCIAL YEAR ENDED 31 AUGUST 2011
2011 2010
US$ US$
Operating activities
Loss before income tax (4,000,651) (3,599,480)
Adjustments for:
Depreciation of plant and equipment 95,425 132,258
Plant and equipment written off - 1,393
Amortisation of intangible assets 12,976 16,624
Provision for reinstatement cost (870) 1,245
Provision for unutilised leave 30,823 (2,552)
Share options expense 717,178 264,082
Interest income (446) (746)
Share of loss from equity-accounted joint
venture 2,021 -
----------- -----------
Operating cash flows before movements
in working capital (3,143,544) (3,187,176)
Increase in trade and other receivables (44,253) (49,008)
Increase in other payables and accruals 512,014 67,266
----------- -----------
Net cash used in operating activities (2,675,783) (3,168,918)
----------- -----------
Investing activities
Interest received 446 746
Purchase of plant and equipment (6,304) (41,515)
Increase in pledged fixed deposits (1,800) (437)
Investment in joint venture (120,696) -
Additions of intangible assets (136,219) (302,650)
----------- -----------
Net cash used in investing activities (264,573) (343,856)
----------- -----------
Financing activities
Proceeds from convertible loans 3,490,328 2,000,000
Repayment of convertible loans (2,163,528) (403,275)
Net proceeds from issue of shares 855,000 467,400
Proceeds from re-issue of treasury shares - 1,331,100
Net cash from financing activities 2,181,800 3,395,225
----------- -----------
Net decrease in cash and cash equivalents (758,556) (117,549)
Cash and cash equivalents at beginning
of financial year 1,584,158 1,701,707
Cash and cash equivalents at end of financial
year (Note 13) 825,602 1,584,158
=========== ===========
ALTERNATIVE ENERGY LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 31 AUGUST 2011
These notes form an integral part of and should be read in
conjunction with the accompanying financial statements
1. General corporate information
The Company (Registration Number 200619290H) is incorporated and
domiciled in Singapore with its principal place of business and
registered office at 1 Science Park Road, #02-09, The Capricorn,
Singapore Science Park II, Singapore 117528.
On 12 October 2007, the Company was successfully admitted to the
official list of the AIM of the London Stock Exchange in the United
Kingdom.
The principal activity of the Company is the provision of
technology, hardware and equipment for renewable energy and green
energy solutions. It also makes investments and/or acquisitions in
and to develop energy technologies, businesses and companies which
offer an alternative to conventional fossil fuel and nuclear
methods of generating household and industrial energy, as well as
providing management services (including marketing and other
necessary services) to its subsidiaries.
The principal activities of the subsidiaries are set out in Note
9 to the financial statements.
The consolidated financial statements of the Group and the
statement of financial position and statement of changes in equity
of the Company for the financial year ended 31 August 2011 were
authorised for issue by the Board of directors on 29 February
2012.
2. Summary of significant accounting policies
2.1 Statement of compliance
The financial statements have been prepared in accordance with
the provisions of the Singapore Companies Act, Cap. 50 and the
International Financial Reporting Standards (IFRS), including
interpretations made by the International Financial Reporting
Interpretations Committee (IFRIC).
2.2 Basis of preparation
The principal accounting policies adopted in the preparation of
the financial statements are set out below. The policies have been
consistently applied to all the years presented, unless otherwise
stated.
These financial statements have been prepared on historical cost
basis except as disclosed in the accounting policies below, and are
in line with IFRS and IFRIC issued by the International Accounting
Standards Board (IASB).
The individual financial statements of each Group entity are
measured and presented in the currency of the primary economic
environment in which the entity operates (its functional currency).
The consolidated financial statements of the Group, the statement
of financial position and statement of changes in equity of the
Company are presented in United States dollar ("US$") which is the
functional currency of the Company and the presentation currency
for the consolidated financial statements.
The preparation of financial statements in conformity with IFRS
requires management to make judgements, estimates and assumptions
that affect the Group's application of accounting policies and
reported amounts of assets, liabilities, revenue and expenses.
Although these estimates are based on management's best knowledge
of current events and actions, actual results may differ from those
estimates. Critical accounting judgements and key sources of
estimates uncertainty used that are significant to the financial
statements are disclosed in Note 3 to the financial statements.
In the current financial year, the Group has adopted the new or
revised IFRS and IFRIC that are relevant to their operations and
effective for the current financial year. The adoption of these new
and revised IFRS and IFRIC does not result in changes to the
Group's accounting policies and has no material effect on the
amounts reported for the current or prior financial years.
IFRS and IFRIC issued but not yet effective
At the date of authorisation of these financial statements, the
following IFRS and IFRIC that are relevant to the Group were issued
but not yet effective:
Effective
date (annual
periods
beginning
on or after)
1 January
IAS 24 : Related Party Disclosures 2011
: Amendment to Deferred tax: Recovery 1 January
IAS 12 of Underlying Assets 2012
IAS 1 : Amendments to Presentation of Items 1 July 2012
of Other Comprehensive Income
IAS 19 : Amendments to Employment Benefits 1 January
2013
IFRS 1 January
10 : Consolidated Financial Statements 2013
IFRS 1 January
11 : Joint Arrangements 2013
IFRS : Disclosures of Interest in Other 1 January
12 Entities 2013
IFRS 1 January
13 : Fair Value Measurement 2013
IAS 27 1 January
(R) : Separate Financial Statements 2013
IAS 28 : Investments in Associates and Joint 1 January
(R) Ventures 2013
Consequential amendments were also made to various standards as
a result of these new/revised standards.
The management anticipates that the adoption of the above IFRS
and IAS in future periods will not have a material impact on the
financial statements of the Group in the period of their initial
adoption.
Going concern
In preparing the consolidated financial statements, the
directors have carefully considered the future liquidity of the
Group and the Company in the light of the current financial
position of the Group and as at 31 August 2011 the recurring losses
from operations in the current and past financial years.
The Group has signed a number of distribution agreements and has
started to generate revenue from the sales of its products in
several countries. The Group also has outstanding quotations for a
number of projects, including for its eLive houses, which are
expected to become orders during the next few months and revenue
from these projects is expected to make an increasing contribution
to the Group's overheads. During the course of the next financial
year, the Group will be concentrating of producing additional
revenue from its existing distributors and from additional
distributors based on previous negotiations and discussions and on
the commercial and market testing of the Group's products. The
Group has been continuing to draw down its facility from its
Chairman to fund overheads, who has indicated that he is prepared
to continue to fund the working capital of the Group and is also
continuing to raise working capital with investors in Asia and
Europe.
In addition, the directors continue to keep administrative and
operating costs to a minimum, they continue to actively seek new
business opportunities that will generate cash inflow and
profitability for the Group.
The directors are confident that the measures they are taking,
together with the continuing financial support of the Chairman,
will yield the Group sufficient working capital to finance its
operations and remain a going concern for the foreseeable future.
Hence, notwithstanding that the Group has incurred an operating
loss of US$4,000,651 (2010: US$3,599,480) for the year ended 31
August 2011, the directors of the Company are of the opinion that
it is appropriate to prepare the consolidated financial statements
of the Group on a going concern basis.
If the Group is unable to continue in operational existence for
the foreseeable future, the Group may be unable to discharge its
liabilities in the normal course of business and adjustments may
have to be made to reflect the situation that assets may need to be
realised other than in the normal course of business and at amounts
which could differ significantly from the amounts at which they are
currently recorded in the statements of financial position of the
Group and the Company. No such adjustments have been made to these
financial statements.
2.3 Basis of consolidation
The consolidated financial statements incorporate the financial
statements of the Company and its subsidiaries. Subsidiaries are
entities over which the Group has the power to govern the financial
and operating policies of an entity so as to obtain benefits from
their activities.
Subsidiaries are consolidated from the date on which control is
transferred to the Group up to the effective date on which control
ceases as appropriate.
Intra-group balances and transactions and any unrealised gains
arising from intra-group transactions are eliminated on
consolidation. Unrealised losses are eliminated in the same way as
unrealised gains, but only to the extent that there is no
impairment.
The financial statements of the subsidiaries are prepared for
the same reporting period as that of the Company, using consistent
accounting policies adopted by other members of the Group. Changes
in the Group's interest in a subsidiary that do not result in a
loss of control are accounted for as equity transactions. The
carrying amounts of the Group's interests and the non-controlling
interests are adjusted to reflect the changes in their relative
interests in the subsidiary. Any difference between the amount by
which the non-controlling interests is adjusted and the fair value
of the consideration paid or received is recognised directly in
equity and attributed to owners of the Company.
When the Group loses control of a subsidiary, the gain or loss
on disposal is calculated as the difference between (i) the
aggregate of the fair value of the consideration received and the
fair value of any retained interest and (ii) the previous carrying
amount of the assets (including goodwill), and liabilities of the
subsidiary and any non-controlling interests. Amounts previously
recognised in other comprehensive income in relation to the
subsidiary are accounted for (i.e. reclassified to profit or loss
or transferred directly to retained earnings) in the same manner as
would be required if the relevant assets or liabilities were
disposed of. The fair value of any investment retained in the
former subsidiary at the date when control is lost is regarded as
the fair value on initial recognition for subsequent accounting
under IAS 39 Financial Instruments: Recognition and Measurement or,
when applicable, the cost on initial recognition of an investment
in an associate or jointly controlled entity.
2.4 Revenue recognition
Revenue is recognised to the extent that it is probable that the
economic benefits will flow to the Group and the revenue can be
reliably measured. Revenue is measured at the fair value of the
consideration received or receivable. Revenue is presented, net of
rebates, discounts and sales related taxes.
Management fee income
Management fee income is recognised on an accrual basis in
accordance with the substance of the relevant agreements.
Sale of goods
Sale of goods is recognised when the Group has transferred to
the buyer the significant risks and rewards of ownership of the
goods and retains neither continuing managerial involvement to the
degree usually associated with ownership nor effective control over
the goods sold, the amount of revenue can be measured reliably, and
the costs incurred or to be incurred in respect of the transaction
can be measured reliably.
Finance income
Interest income from fixed depositsis recognised as the interest
accrues (using the effective interest method that is the rate that
exactly discounts estimated future cash receipt through the
expected life of the financial instrument) to the net carrying
amount of the financial asset.
2.5 Income tax
Income tax for the financial year comprises current and deferred
taxes. Income tax is recognised in profit or loss except to the
extent that it relates to items recognised directly in equity, in
which case, such income tax is recognised in equity.
Current income tax is the expected tax payable on the taxable
income for the financial year, using tax rates enacted or
substantively enacted by the end of financial year, and any
adjustment to tax payable in respect of previous financial
years.
2.5 Income tax (Continued)
Deferred income tax is provided, using the liability method, on
all temporary differences at the end of financial year between the
tax bases of assets and liabilities and their carrying amounts for
financial reporting purposes. Deferred tax assets and liabilities
are measured using the tax rates expected to apply to taxable
income in the years in which those temporary differences are
expected to be recovered or settled based on tax rates enacted or
substantively enacted by the end of financial year.
Deferred tax liabilities are recognised for all taxable
temporary differences associated with investments in subsidiaries
and joint venture, except where the Group is able to control the
reversal of the temporary difference and it is probable that the
temporary difference will not reverse in the foreseeable
future.
Deferred tax assets are recognised for all deductible temporary
differences, carry-forward of unused tax losses and unabsorbed
capital allowances to the extent that it is probable that taxable
profit will be available against which the deductible temporary
differences, carry-forward of unused tax losses and unused tax
credits can be utilised.
At the end of each financial year, the Group re-assesses
unrecognised deferred tax assets and the carrying amount of
deferred tax assets. The Group recognises a previously unrecognised
deferred tax asset to the extent that it has become probable that
future taxable profit will allow the deferred tax asset to be
recovered. The Group conversely reduces the carrying amount of a
deferred tax asset to the extent that it is no longer probable that
sufficient taxable profit will be available to allow the benefit of
part or all of the deferred tax asset to be utilised.
Deferred tax is charged or credited directly to equity if the
tax relates to items that are charged or credited, in the same or a
different period, directly to equity.
Deferred tax assets and liabilities are offset against each
other if they relate to the same tax authority and can be
offset.
2.6 Employee benefits
Retirement benefit costs
Payments to defined contribution retirement benefit plans are
charged as an expense as they fall due. Payments made to
state-managed retirement benefit schemes, such as the Singapore
Central Provident Fund, are dealt with as payments to defined
contribution plans where the Group's obligations under the plans
are equivalent to those arising in a defined contribution
retirement benefit plan.
Employee leave entitlement
Employee entitlements to annual leave are recognised when they
accrue to employees. An accrual is made for the estimated liability
for annual leave as a result of services rendered by employees up
to the end of the financial year.
Share-based compensation
The Group and the Company operate an equity-settled share-based
compensation plan. The fair value of the employee services received
in exchange for the grant of the option is recognised as an expense
in profit or loss with a corresponding increase in the share
options reserve over the vesting period. The total amount to be
recognised over the vesting period is determined by reference to
the fair value of the options granted, excluding the impact of any
non-market vesting conditions (for example, profitability and sales
growth targets), on the date of the grant. Non-market vesting
conditions are included in assumptions on the number of options
that are expected to become exercisable on vesting date. At the end
of the financial year, the entity revises its estimates of the
number of options that are expected to become exercisable on
vesting date. It recognises the impact of the revision of original
estimates, if any, in profit or loss, and a corresponding
adjustment to equity over the remaining vesting period.
The proceeds received, net of any directly attributable
transaction costs are credited to issued capital when the options
are exercised.
2.7 Foreign currency translation
In preparing the financial statements of the individual
entities, transactions in currencies other than the entity's
functional currency are recorded at the rate of exchange prevailing
on the date of the transaction. At the end of each financial year,
monetary items denominated in foreign currencies are retranslated
at the rates prevailing as of the end of the financial year.
Non-monetary items carried at fair value that are denominated in
foreign currencies are retranslated at the rates prevailing on the
date when the fair value was determined. Non-monetary items that
are measured in terms of historical cost in a foreign currency are
not retranslated.
Exchange differences arising on the settlement of monetary
items, and on retranslation of monetary items are included in
profit or loss for the period. Exchange differences arising on the
retranslation of non-monetary items carried at fair value are
included in profit or loss for the period except for differences
arising on the retranslation of non-monetary items in respect of
which gains and losses are recognised directly in equity. For such
non-monetary items, any exchange component of that gain or loss is
also recognised directly in equity.
Exchange differences which relate to assets under construction
for future productive use, are included in the cost of those assets
where they are regarded as an adjustment to interest costs on
foreign currency borrowings.
For the purpose of presenting consolidated financial statements,
the assets and liabilities of the Group's foreign operations
(including comparatives) are expressed in United States dollars
using exchange rates prevailing at the end of the financial year.
Income and expense items (including comparatives) are translated at
the average exchange rates for the period, unless exchange rates
fluctuated significantly during that period, in which case the
exchange rates at the dates of the transactions are used. Exchange
differences arising, if any, are classified as equity and
transferred to the Group's translation reserve. Such translation
differences are recognised in profit or loss in the period in which
the foreign operation is disposed of.
On consolidation, exchange differences arising from the
translation of the net investment in foreign entities (including
monetary items that, in substance, form part of the net investment
in foreign entities), and of borrowings and other currency
instruments designated as hedges of such investments, are taken to
the foreign currency translation reserve.
Goodwill and fair value adjustments arising on the acquisition
of a foreign operation are treated as assets and liabilities of the
foreign operation and translated at the closing rate.
2.8 Operating leases
Rentals payable under operating leases are charged to profit or
loss on a straight-line basis over the term of the relevant lease
unless another systematic basis is more representative of the time
pattern in which economic benefits from the leased asset are
consumed. Contingent rentals arising under operating leases are
recognised as an expense in the year in which they are
incurred.
In the event that lease incentives are received to enter into
operating leases, such incentives are recognised as a liability.
The aggregate benefit of incentives is recognised as a reduction of
rental expense on a straight-line basis, except where another
systematic basis is more representative of the time pattern in
which economic benefits from the leased asset are consumed.
2.9 Investments in subsidiaries
Subsidiaries are entities over which the Group and the Company
have power to govern the financial and operating policies,
generally accompanying a shareholding of more than one half of the
voting rights. The existence and effect of potential voting rights
that are currently exercisable or convertible are considered when
assessing whether the Group and the Company control another
entity.
Investments in subsidiaries are stated at cost on the Company's
statement of financial position less impairment in value, if
any.
2.10 Investment in joint venture
A joint venture is an entity which operates under a contractual
arrangement between the Group and other parties, where the
contractual arrangement establishes that the Group and one or more
of the other parties share joint control over the economic activity
of the entity.
An investment in joint venture is accounted for in the
consolidated financial statements under the equity method, unless
it is classified as held for sale (or included in a disposal group
that is classified as held for sale). Under the equity method, the
investment is initially recorded at cost, adjusted for any excess
of the Group's share of the acquisition-date fair values of the
investee's identifiable net assets over the cost of the investment
(if any). Thereafter, the investment is adjusted for the post
acquisition change in the Group's share of the investee's net
assets and any impairment loss relating to the investment. Any
acquisition-date excess over cost, the Group's share of the
post-acquisition, post-tax results of the investees and any
impairment losses for the year are recognised in profit or loss,
whereas the Group's share of the post-acquisition post-tax items of
the investees' other comprehensive income is recognised in other
comprehensive income.
When the Group's share of losses exceeds its interest in the
joint venture, the Group's interest is reduced to nil and
recognition of further losses is discontinued except to the extent
that the Group has incurred legal or constructive obligations or
made payments on behalf of the investee. For this purpose, the
Group'slong-term interests that in substance form part of the
Group's net investment in the joint venture.
Unrealised gains or losses resulting from transactions between
the Group and its joint venture are eliminated to the extent of the
Group's interest in the investee, except where unrealised losses
provide evidence of an impairment of the asset transferred, in
which case they are recognised immediately in profit or loss.
When the Group ceases to have jointly control over joint
venture, it is accounted for as a disposal of the entire interest
in that investee, with a resulting gain or loss being recognised in
profit or loss. Any interest retained in that former investee at
the date when significant joint control is lost is recognised at
fair value and this amount is regarded as the fair value on initial
recognition of a financial asset or, when appropriate, the cost on
initial recognition of an investment in an associate.
Investment in joint venture is stated at cost on the Company's
statement of financial position less impairment in value, if
any.
2.11 Intangible assets
(i) Goodwill on acquisition
Goodwill on acquisition represents the excess of the cost of a
business combination or cost of an acquisition over the Group's
interest in the net fair value of the identifiable assets,
liabilities and contingent liabilities. Goodwill is initially
measured at cost and is subsequently measured at cost less
impairment in value, if any.
Goodwill acquired in a business combination is included in
intangible assets.
Gains and losses on disposal of a subsidiary include the
carrying amount of goodwill relating to the entity or business
sold.
(ii) Patents and trademarks
Patents and trademarks are initially recognised at cost and are
subsequently carried at cost less accumulated amortisation and
accumulated impairment losses. Patents and trademarks with finite
useful lives are amortised on a straight-line basis over their
estimated useful lives. The estimated useful life and amortisation
method are reviewed at the end of each financial year, with the
effect of any changes in estimate being accounted for on a
prospective basis. Patents and trademarks with indefinite useful
lives are not amortised. At the end of each financial year, the
useful lives of such assets are reviewed to determine whether
events and circumstances continue to support the indefinite useful
life assessment for the asset. Such assets are tested for
impairment in accordance with the accounting policy for impairment
stated in Note 2.13 to the financial statements.
(iii) Computer software
Acquired computer software licences are initially capitalised at
cost which includes purchase price and other cost attributed to
prepare the assets for its intended use. Direct expenditure, which
enhances or extends the performance of computer software beyond its
specifications and which can be reliably measured, is recognised as
a capital improvement and added to the original cost of the
software. Maintenance costs are recognised as an expense as
incurred.
Computer software licences are subsequently carried at cost less
accumulated amortisation and accumulated impairment loss. These
costs are amortised using the straight-line method over their
estimated useful lives of 3 years.
(iv) Research and development
Expenditure on research activities is recognised as an expense
in the period in which it is incurred.
An internally-generated intangible asset arising from
development (or from the development phase of an internal project)
is recognised, if, any only if, all the following have been
demonstrated:
-- the technical feasibility of completing the intangible asset
so that it will be available for use or sale;
-- the intention to complete the intangible asset and use or sell it;
-- the ability to use or sell the intangible asset;
-- how the intangible asset will generate probable future economic benefits;
-- the availability of adequate technical, financial and other
resources to complete the development and to use or sell the
intangible assets; and
-- the ability to measure reliably the expenditure attributable
to the intangible asset during its development.
The amount initially recognised for internally-generated
intangible assets is the sum of the expenditure incurred from the
date when the intangible asset first meets the recognition criteria
listed above. Where no internally-generated intangible asset can be
recognised, development expenditure is charged to profit or loss in
the period in which it is incurred.
Subsequent to initial recognition, internally-generated
intangible assets are reported at cost less accumulated
amortisation and accumulated impairment losses, on the same basis
as intangible assets acquired separately.
The amortisation period and amortisation method of intangible
assets other than goodwill are reviewed at least at end of each
financial year. The effects of any revision are recognised in
profit or loss when the changes arise.
2.12 Plant and equipment
Plant and equipment are stated at cost less accumulated
depreciation and impairment in value, if any.
The cost of plant and equipment comprises its purchase price and
any direct attributable costs of bringing the plant and equipment
to working condition for its intended use. Expenditure for
additions, improvements and renewals are capitalised, and
expenditure for maintenance and repairs are charged to profit or
loss. Dismantlement, removal or restoration costs are included as
part of the cost of plant and equipment if the obligation for
dismantlement, removal or restoration is incurred as a consequence
of acquiring or using the plant and equipment.
Depreciation is provided using the straight-line method so as to
write off the depreciable cost of the plant and equipment over
their estimated useful lives of 3 years.
The carrying values of plant and equipment are reviewed for
impairment when events or changes in circumstances indicate that
the carrying value may not be recoverable.
The residual value, useful life and depreciation method of plant
and equipment are reviewed at the end of each financial year to
ensure that the residual values, period of depreciation and
depreciation method are consistent with previous estimates and the
expected pattern of consumption of future economic benefits
embodied in the items of plant and equipment.
Subsequent expenditure relating to the plant and equipment that
has already been recognised is added to the carrying amount of the
asset when it is probable that the future economic benefits, in
excess of the standard of performance of the asset before the
expenditure was made, will flow to the Group and the cost can be
reliably measured. Other subsequent expenditure is recognised as an
expense during the financial year in which it is incurred.
The gain or loss arising on disposal or retirement of an item of
plant and equipment is determined as the difference between the
sales proceeds and the carrying amount of the asset and is
recognised in profit or loss.
Fully depreciated plant and equipment are retained in the
financial statement until they are no longer in use.
2.13 Impairment of non-financial assets
Tangible and intangible assets excluding goodwill
At the end of each financial year, the Group reviews the
carrying amounts of its tangible and intangible assets to determine
whether there is any indication that those assets have suffered an
impairment loss. If any such indication exists, the recoverable
amount of the asset is estimated in order to determine the extent
of the impairment loss (if any). Where it is not possible to
estimate the recoverable amount of an individual asset, the Group
estimates the recoverable amount of the cash-generating unit to
which the asset belongs.
Intangible assets with indefinite useful lives and intangible
assets not yet available for use are tested for impairment
annually, and whenever there is an indication that the asset may be
impaired.
The recoverable amount of an asset or cash-generating unit is
the higher of its fair value less costs to sell and its value in
use. In assessing value in use, the estimated future cash flows are
discounted to their present value using a pre-tax discount rate
that reflects current market assessments of the time value of money
and the risks specific to the asset.
If the recoverable amount of an asset (or cash-generating unit)
is estimated to be less than its carrying amount, the carrying
amount of the asset (cash-generating unit) is reduced to its
recoverable amount. An impairment loss is recognised immediately in
profit or loss, unless the relevant asset is carried at a revalued
amount, in which case the impairment loss is treated as a
revaluation decrease.
Where an impairment loss subsequently reverses, the carrying
amount of the asset (cash-generating unit) is increased to the
revised estimate of its recoverable amount, but so that the
increased carrying amount does not exceed the carrying amount that
would have been determined had no impairment loss been recognised
for the asset (cash-generating unit) in prior years. A reversal of
an impairment loss is recognised immediately in profit or loss,
unless the relevant asset is carried at a revalued amount, in which
case the reversal of the impairment loss is treated as a
revaluation increase.
Goodwill
Goodwill is tested annually for impairment, as well as when
there is any indication that the goodwill may be impaired.
For the purpose of impairment testing, goodwill is allocated to
each of the Group's cash-generating-units expected to benefit from
the synergies of the business combination. If the recoverable
amount of the cash-generating-unit is less than the carrying amount
of the unit including the goodwill, the impairment in value is
recognised in profit or loss and allocated first to reduce the
carrying amount of any goodwill allocated to the unit and then to
the other assets of the unit pro-rata on the basis of the carrying
amount of each asset in the unit. An impairment in value recognised
for goodwill is not reversed in subsequent periods.
2.14 Financial instruments
Financial assets and financial liabilities are recognised on the
Group's and the Company's statement of financial position when the
Group and the Company becomes a party to the contractual provisions
of the instrument.
Effective interest method
The effective interest method calculates the amortised cost of a
financial instrument and allocates the interest income or expense
over the relevant period. The effective interest rate is the rate
that exactly discounts estimated future cash receipts or payments
(including all fees on points paid or received that form an
integral part of the effective interest rate, transaction costs and
other premiums or discounts) through the expected life of the
financial instrument, or where appropriate, a shorter period.
Income and expense is recognised on an effective interest basis for
debt instruments other than those financial instruments "at fair
value through profit or loss".
Financial assets
All financial assets are recognised on a trade date where the
purchase of a financial asset is under a contract whose terms
require delivery of the financial asset within the timeframe
established by the market concerned, and are initially measured at
fair value, plus transaction costs, except for those financial
assets classified as at fair value through profit or loss, which
are initially measured at fair value.
Financial assets are initially measured at fair value, plus
transaction costs. The Group classifies its financial assets as
loans and receivables. The classification depends on the nature and
purpose for which these financial assets were acquired and is
determined at the time of initial recognition.
Loans and receivables
Trade and other receivables that have fixed or determinable
payments that are not quoted in an active market are classified as
"loans and receivables". Loans and receivables are initially
recognised at fair value plus transaction costs. They are
subsequently carried at amortised cost, where applicable, using the
effective interest method. Interest is recognised by applying the
effective interest method, except for short-term receivables when
the recognition of interest would be impacted.
Impairment of financial assets
Financial assets are assessed for indicators of impairment at
the end of each financial year. Loans and receivables are impaired
where there is objective evidence that, as a result of one or more
events that occurred after the initial recognition of the loans and
receivables, the estimated future cash flows of the investment have
been impacted.
The amount of the impairment is the difference between the
asset's carrying amount and the present value of estimated future
cash flows, discounted at the original effective interest rate.
The carrying amounts of financial assets are reduced by the
impairment loss directly with the exception of trade and other
receivables where the carrying amount is reduced through the use of
an allowance account. Changes in the carrying amount of the
allowance account are recognised in profit or loss.
If, in a subsequent financial year, the amount of the impairment
loss decreases and the decrease can be related objectively to an
event occurring after the impairment loss was recognised, the
previously recognised impairment loss is reversed through profit or
loss to the extent the carrying amount of the financial asset at
the date the impairment is reversed does not exceed what the
amortised cost would have been had the impairment not been
recognised.
Derecognition of financial assets
The Group derecognises a financial asset only when the
contractual rights to the cash flows from the asset expire, or it
transfers the financial asset and substantially all the risks and
rewards of ownership of the asset to another entity. If the Group
neither transfers nor retains substantially all the risks and
rewards of ownership and continues to control the transferred
asset, the Group recognises its retained interest in the asset and
an associated liability for amounts it may have to pay. If the
Group retains substantially all the risks and rewards of ownership
of a transferred financial asset, the Group continues to recognise
the financial asset and also recognises a collateralised borrowing
for the proceeds receivables.
Financial liabilities and equity instruments
Classification as debt or equity
Financial liabilities and equity instruments issued by Group are
classified according to the substance of the contractual
arrangements entered into and the definitions of a financial
liability and an equity instrument.
Equity instruments
An equity instrument is any contract that evidences a residual
interest in the assets of the Group after deducting all of its
liabilities. Equity instruments are recorded at the proceeds
received, net of direct issue costs.
When shares recognised as equity are reacquired, the amount of
consideration paid is recognised directly in equity. Reacquired
shares are classified as treasury shares and presented as a
deduction from total equity. No gain or loss is recognised in
profit or loss on the purchase, sale issue or cancellation of
treasury shares.
When treasury shares are subsequently cancelled, the cost of
treasury shares are deducted against the share capital account if
the shares are purchased out of capital of the Company, or against
the retained earnings of the Company if the shares are purchased
out of earnings of the Company.
When treasury shares are subsequently sold or reissued pursuant
to the employee share option scheme, the cost of treasury shares is
reversed from the treasury share account and the realised gain or
loss on sale or reissue, net of any directly attributable
incremental transaction costs and related income tax, is recognised
in the equity of the Company.
Financial liabilities
The Group classifies its financial liabilities as other
financial liabilities.
Other payables and accruals
Other payables and accruals are initially measured at fair
value, net of transaction costs, and are subsequently measured at
amortised cost, where applicable, using the effective interest
method, with interest expense recognised on an effective yield
basis.
Convertible loans
Convertible loans are regarded as compound instruments,
consisting of a liability component and an equity component. The
component parts of compound instruments are classified separately
as financial liabilities and equity in accordance with the
substance of the contractual arrangement. At the date of issue, the
fair value of the liability component is estimated using the
prevailing market interest rate for a similar non-convertible
instrument. This amount is recorded as a liability, on an amortised
cost basis until extinguished upon conversion or at the instruments
maturity date. The equity component is determined by deducting the
amount of the liability component from the fair value of the
compound instrument as a whole. This is recognised and included in
equity, net of income tax effects, and is not subsequently
re-measured.
Derecognition of financial liabilities
The Group derecognises financial liabilities when, and only
when, the Group's obligations are discharged, cancelled or they
expire.
2.15 Cash and cash equivalents
Cash and cash equivalents comprise cash on hand and cash with
banks. Cash equivalents are short-term, highly liquid investments
that are readily convertible to known amounts of cash and are
subject to an insignificant risk of changes in value.
2.16 Provisions
Provisions 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 resources embodying economic benefits will be
required to settle the obligation and a reliable estimate of the
amount of the obligation can be made. The expenses relating to any
provisions are recognised in profit or loss.
If the effect of the time value of money is material, provisions
are discounted using a current pre-tax rate that reflects, where
appropriate, the risks specific to the liability. Where discounting
is used, the increase in the provision due to the passage of time
is recognised as finance costs.
Provisions are reviewed at the end of each financial year and
adjusted to reflect the current best estimates. If it is no longer
probable that an outflow of resources embodying economic benefits
will be required to settle the obligation, the provision is
reversed.
2.17 Segment reporting
Operating segments are reported in a manner consistent with the
internal reporting provided to the Chief operating decision-maker.
The chief operating decision-maker, who is responsible for
allocating resources and assessing performance of the operating
segments, has been identified as the group of executive directors
and the chief executive officer who make strategic decisions.
3. Critical accounting judgements and key sources of estimation uncertainty
In the application of the Group's accounting policies, which are
described in Note 2 to the financial statements, management made
judgements, estimates and assumptions about the carrying amounts of
assets and liabilities that were not readily apparent from other
sources. The estimates and associated assumptions were based on
historical experience and other factors that were considered to be
reasonable under the circumstances. Actual results may differ from
these estimates.
These estimates and underlying assumptions are reviewed on an
ongoing basis. Revisions to accounting estimates are recognised in
the period in which the estimate is revised if the revision affects
only that period, or in the period of the revision and future
periods if the revision affects both current and future
periods.
3.1 Critical judgements made in applying the accounting policies
The following are the critical judgements, apart from those
involving estimations (see below) that management has made in the
process of applying the Group's accounting policies and which have
the significant effect on the amounts recognised in the financial
statements.
(i) Patents and trademarks
Patents and trademarks are capitalised in accordance with the
accounting policy in Note 2.11 to the financial statements. Initial
capitalisation of costs is based on management's judgement that the
assets are separate from the entity, the entity controls the asset
and it is probable that future economic benefits from the assets
will flow to the entity. The management has determined the useful
lives of patents and trademarks after having considered various
factors such as competitive environment, product life cycles,
operating plans and the macroeconomic environment of the patents
and trademarks. In addition, management believes there is no
foreseeable limit to the period over which the indefinite
trademarks are expected to generate net cash inflows for the
Group.
3.2 Key sources of estimation uncertainty
The key assumptions concerning the future and other key sources
of estimation uncertainty at the date of the statement of financial
position that have a significant risk of causing a material
adjustment to the carrying amounts of assets and liabilities and
the reported amounts of revenue and expense within the next
financial year, are discussed below.
(i) Impairment of investments in subsidiaries
At the end of each financial year, an assessment is made on
whether there is objective evidence that the investments in
subsidiaries are impaired. The management's assessment is based on
the estimation of the value-in-use of the cash-generating unit
("CGU") by forecasting the expected future cash flows for a period
up to 5 years, using a suitable discount rate in order to calculate
the present value of those cash flows. The Company's carrying
amount of investments in subsidiaries as at 31 August 2011 was
US$1,118,921 (2010: US$668,072).
(ii) Impairment of amounts due from subsidiaries
The provision policy for doubtful debts of the Company is based
on the ageing analysis and management's ongoing evaluation of the
recoverability of the outstanding receivables. A considerable
amount of judgement is required in assessing the ultimate
realisation of these receivables. If the financial conditions of
these subsidiaries were to deteriorate, resulting in an impairment
of their ability to make payments, additional allowances may be
required. The carrying amounts of the Company's amounts due from
subsidiaries as at 31 August 2011 are disclosed in Note 12 to the
financial statements.
(iii) Going concern basis of preparation
The financial statements of the Company and its subsidiaries
have been prepared on a going concern basis. The appropriateness of
the going concern basis is assessed after taking into consideration
all relevant information about the future of the Company and its
subsidiaries available at the date of this report. However, the
current uncertain economic outlook may affect consumer's
discretionary spending and confidence which could in turn impact
the future operations of the Group.
(iv) Depreciation of plant and equipment and amortisation of computer software
Plant and equipment and computer software are
depreciated/amortised on a straight-line basis over their estimated
useful lives. Management estimates the useful lives of these assets
to be 3 years. The carrying amounts of the Group's plant and
equipment and computer software as at 31 August 2011 are US$25,295
and US$7,469 (2010: US$114,416 and US$20,445) respectively. Changes
in the expected level of usage and technological developments could
impact the economic useful lives and the residual values of these
assets, therefore future depreciation/amortisation charges could be
revised.
(v) Income taxes
The Group has exposure to income taxes in several jurisdictions
of which a portion of these taxes arose from certain transactions
and computations for which ultimate tax determination is uncertain
during the ordinary course of business. The Group recognises
liabilities of expected tax issues based on their best estimates of
the likely taxes due. Where the final tax outcome of these matters
is different from the amounts that were initially recognised, such
differences will impact the income tax and deferred tax positions
in the period in which such determination is made.
(vi) Impairment of goodwill, patents and trademarks
The management determines whether goodwill, patents and
trademarks are impaired at least on an annual basis and as and when
there is an indication that goodwill and patents and trademarks may
be impaired. Such assessment and determination require the
management to make judgements, estimates and assumptions. These
estimates and associated assumptions are continually evaluated and
are based on historical experience and other factors including
expectations of future events or changes in circumstances. Actual
results may differ from these estimates. The carrying amounts of
goodwill and patents and trademarks as at 31 August 2011 are
disclosed in Note 11 to the financial statements.
(vii) Share options reserve
The charge for share options reserve is calculated in accordance
with estimates and assumptions which are described in Note 21 to
the financial statements. The option valuation model used requires
highly subjective assumptions to be made including the future
volatility of the Company's share price, expected dividend yields,
risk-free interest rates and expected staff turnover. The
management draws upon a variety of external sources to aid them in
determination of the appropriate data to use in such calculations.
The carrying amounts of share-based payments for the Group and
Company as at 31 August 2011 are disclosed in the statements of
changes in equity.
(viii) Convertible loans
The fair values of the liability components of the convertible
loans, at their initial recognition, estimated by independent
valuer based on the present value of the contractual stream of cash
flows using the effective interest rate of 5.5% (2010: 13%) which
generally represents the best estimate of the market value of
similar instrument without the conversion feature. The fair values
of the equity components are determined as the residual amount by
deducting the fair values of the liability components from the fair
values of the convertible loans.
4. Revenue
Revenue represents invoiced value earned from sale of goods to
third parties.
5. Loss before income tax
In addition to the information disclosed elsewhere in the
financial statements, the Group's loss before income tax is arrived
at after charging the following:
Group
2011 2010
US$ US$
Employee benefits expense:
* Salaries and related costs 728,548 677,777
* Contributions to defined contributions plans 51,314 45,984
- Share options expense 717,178 264,082
Amortisation of intangible assets 12,976 16,624
Depreciation of plant and equipment 95,425 132,258
Operating lease expense - rental of office
premises and equipment 299,755 207,039
Research expense 296,552 166,654
Professional fees 668,724 415,087
======= =======
Employee benefits expense includes key management personnel
compensation which are disclosed in Note 22.2 to the financial
statements.
6. Income tax
There is no current tax charge for the current financial year
(2010: Nil) as the Group has no chargeable income.
Group
2011 2010
US$ US$
Reconciliation of effective tax rate
Loss before income tax (4,000,651) (3,599,480)
=========== ===========
Tax calculated at statutory rate of 17%
(2010:17%) (680,111) (611,912)
Expenses not deductible for tax purposes 95,414 89,765
Income not subject to tax 5,979 2,329
Deferred tax assets not recognised 577,893 519,818
Others 825 -
----------- -----------
- -
=========== ===========
6. Income tax (Continued)
Deferred tax assets not recognised are related to the
following:
Group
2011 2010
US$ US$
Tax losses 1,565,367 1,000,181
Plant and equipment 70,828 59,974
Provision for unutilised leave 8,627 3,387
--------- ---------
1,641,435 1,063,542
========= =========
Deferred tax assets have not been recognised because it is not
certain whether future taxable profits will be available against
which the Group can utilise the benefits.
As at the end of the financial year, the Group had unutilised
tax losses amounting to US$9,208,041 (2010: US$5,883,417), which
are available for set-off against future taxable profits subject to
the provisions of the Singapore Income Tax Act and agreement by the
Singapore tax authority.
7. Basic and diluted loss per share
Basic loss per share is calculated by dividing the Group's loss
attributable to equity holders by the weighted average number of
ordinary shares in issue during the financial year.
For the purpose of calculating diluted loss per share, the
Group's net loss attributable to equity holders and the weighted
average number of ordinary shares in issue are adjusted for the
effects of all dilutive potential ordinary shares. The outstanding
are adjusted for the effects of all dilutive potential ordinary
shares. The Group has two categories of dilutive potential ordinary
shares: convertible loans and share options.
Diluted earnings per share amounts are calculated by dividing
the loss attributable to ordinary equity holders of the Company by
the weighted average number of ordinary shares outstanding during
the financial year plus the weighted average number of ordinary
shares that would be issued on the conversion of all dilutive
potential ordinary shares into ordinary shares.
Convertible loans are assumed to have been converted into
ordinary shares at US$0.03 per share and net of any expenses amount
owing from the lender to the Company against the loan. The net loss
is adjusted to eliminate the interest expense less the tax
effect.
For the share options, a calculation is done to determine the
number of shares that could have been acquired at fair value
(determined as the average annual market share price of the
Company's shares) based on the monetary value of the subscription
rights attached to outstanding share options. The number of shares
calculated as above is compared with the number of shares that
would have been issued assuming the exercise of the share options.
The differences are added to the denominator as an issuance of
ordinary shares for no consideration. No adjustment is made to
earnings.
The basic and diluted loss per share are calculated as
follows:
Group
2011 2010
Basic Diluted Basic Diluted
US$ US$ US$ US$
Loss for the financial
year attributable
to equity holders
of the Company 4,000,651 4,000,651 3,599,480 3,599,480
============= ============= ============= =============
Number of shares Number of shares
Basic Diluted Basic Diluted
Weighted average
number of ordinary
shares 1,469,141,000 1,469,141,000 1,242,382,000 1,242,382,000
Adjustments for
potentially dilutive
ordinary shares - 122,063,000 - 120,856,000
------------- ------------- ------------- -------------
Weighted average
number of ordinary
shares used 1,469,141,000 1,591,204,000 1,242,382,000 1,363,238,000
============= ============= ============= =============
Basic loss per
share # # # #
============= ============= ============= =============
# denotes a figure which is less than US$0.01 cent
8. Plant and equipment
Machinery,
office
equipment,
Office furniture
Group renovation Computers and fittings Total
US$ US$ US$ US$
2011
Cost
As at 1 September 2010 117,788 61,322 230,896 410,006
Additions - 4,057 2,247 6,304
Written off - (3,353) - (3,353)
----------- --------- ------------- -------
As at 31 August 2011 117,788 62,026 233,143 412,957
----------- --------- ------------- -------
Accumulated depreciation
As at 1 September 2010 106,263 43,775 145,552 295,590
Depreciation charge
for the financial year 11,525 14,276 69,624 95,425
Written off - (3,353) - (3,353)
----------- --------- ------------- -------
As at 31 August 2011 117,788 54,698 215,176 387,662
----------- --------- ------------- -------
Net carrying amount
As at 31 August 2011 - 7,328 17,967 25,295
=========== ========= ============= =======
Machinery,
office
equipment,
Office furniture
Group renovation Computers and fittings Total
US$ US$ US$ US$
2010
Cost
As at 1 September 2009 117,788 58,504 195,215 371,507
Additions - 4,208 37,307 41,515
Write off - (1,390) (1,626) (3,016)
----------- --------- ------------- -------
As at 31 August 2010 117,788 61,322 230,896 410,006
----------- --------- ------------- -------
Accumulated depreciation
As at 1 September 2009 67,884 24,638 72,433 164,955
Depreciation charge
for the financial year 38,379 19,948 73,931 132,258
Write off - (811) (812) (1,623)
----------- --------- ------------- -------
As at 31 August 2010 106,263 43,775 145,552 295,590
----------- --------- ------------- -------
Net carrying amount
As at 31 August 2010 11,525 17,547 85,344 114,416
=========== ========= ============= =======
Furniture
Company and fittings Computers Total
US$ US$ US$
2011
Cost
As at 1 September 2010 and 31
August 2011 29,725 7,247 36,972
Accumulated depreciation
As at 1 September 2010 7,251 5,551 12,802
Depreciation charge for the financial
year 9,909 1,696 11,605
------------- --------- ------
As at 31 August 2011 17,160 7,247 24,407
------------- --------- ------
Net carrying amount
As at 31 August 2011 12,565 - 12,565
============= ========= ======
Furniture
Company and fittings Computers Total
US$ US$ US$
2010
Cost
As at 1 September 2009 - 7,247 7,247
Additions 29,725 - 29,725
------------- --------- ------
As at 31 August 2010 29,725 7,247 36,972
------------- --------- ------
Accumulated depreciation
As at 1 September 2009 - 3,136 3,136
Depreciation charge for the financial
year 7,251 2,415 9,666
------------- --------- ------
As at 31 August 2010 7,251 5,551 12,802
------------- --------- ------
Net carrying amount
As at 31 August 2010 22,474 1,696 24,170
============= ========= ======
9. Investments in subsidiaries
Company
2011 2010
US$ US$
Unquoted equity shares, at cost 668,072 668,072
Issuance of share option to Group's employee 450,849 -
--------- -------
1,118,921 668,072
========= =======
Particulars of the subsidiaries are as follows:
Country of Effective
incorporation/ equity
Subsidiaries Principal activities operation interest
2011 2010
Held by the Company % %
Research and development
renewable energies
for household consumers
Renewable Power and trading in lighting
Pte Ltd(1) products Singapore 100 100
Alternative Energy Holding of trademarks
Technology Pte and intellectual
Ltd(1) properties Singapore 100 100
Holding of operational
Alternative Energy subsidiaries but British Virgin
Limited (BVI)(2) is currently dormant Islands 100 100
Holding of operational
Alternative Energy subsidiaries but British Virgin
Worldwide Limited(2) is currently dormant Islands 100 100
Holding of operational
Alternative Energy subsidiaries but
Holdings Limited(2) is currently dormant Hong Kong 100 100
Country of Effective
incorporation/ equity
Subsidiaries Principal activities operation interest
Held by Alternative Energy Limited
(BVI)
Alternative Energy British Virgin
(Africa) Limited(2) Dormant Islands 100 100
Alternative Energy
(Middle East) British Virgin
Limited(2) Dormant Islands 100 100
Alternative Energy Dormant British Virgin 100 -
(Asia) Limited(2) Islands
Alternative Energy Dormant British Virgin 100 -
(Caribbean) Limited(2) Islands
Alternative Energy Dormant British Virgin 100 -
(Europe) Limited(2) Islands
(1) Audited by BDO LLP, Singapore, for statutory audit
purposes
(2) The company is inactive or dormant and unaudited management
financial statements are used for the preparation of the
consolidated financial statements
During the financial year, Alternative Energy Limited (BVI) has
incorporated and subscribed to all ordinary shares of Alternative
Energy (Asia) Limited, Alternative Energy (Caribbean) Limited and
Alternative Energy (Europe) Limited.
10. Investment in joint venture
Group Company
2011 2010 2011 2010
US$ US$ US$ US$
Unquoted equity shares,
at cost - -
==== ====
Balance at beginning
of
financial year - -
Acquisition of joint
venture 120,696 -
Share of loss (2,021) -
Currency translation
differences 15 -
Balance at end of financial
year 118,690 -
======= ====
The details of the joint venture are as follows:
Country of Effective
incorporation/ equity
Joint venture Principal activities operation interest
2011 2010
Held by Alternative Energy Holdings
Limited % %
The Green Light Manufacture light China 50 -
Company fittings, street
lights and other
lighting equipment
but is currently
dormant
On 21 January 2011, Alternative Energy Holdings Limited, a
wholly-owned subsidiary of the Company, incorporated a joint
venture company in China with Jiashan Joray Electronic Technology
Co. Ltd. The joint venture is a limited liability company.
The joint venture is dormant and unaudited management financial
statements are used for the equity accounting purposes in
preparation of the consolidated financial statements.
The Group's interest (based on the paid-up capital ratio) in the
joint venture are as follows:
Group
2011 2010
US$ US$
Assets and liabilities:
Total assets 118,690 -
Total liabilities - -
-------- -----
Net assets 118,690 -
======== =====
Results
Revenue - -
Loss for the financial year (2,021) -
-------- -----
(2,021) -
======== =====
11. Intangible assets
Computer
Group Goodwill software Patents Trademarks Total
2011 US$ US$ US$ US$ US$
Cost
As at 1 September
2010 464,726 54,486 6,396,350 326,387 7,241,949
Additions - - 7,734,778 68,108 7,802,886
As at 31 August
2011 464,726 54,486 14,131,128 394,495 15,044,835
-------- --------- ---------- ---------- ----------
Accumulated amortisation
As at 1 September
2010 - 34,041 - - 34,041
Amortisation for
the financial year - 12,976 - - 12,976
-------- --------- ---------- ---------- ----------
As at 31 August
2011 - 47,017 - - 47,017
-------- --------- ---------- ---------- ----------
Net carrying amount
AAs at 31 August
2011 464,726 7,469 14,131,128 394,495 14,997,818
======== ========= ========== ========== ==========
Computer
Group Goodwill software Patents Trademarks Total
2010 US$ US$ US$ US$ US$
Cost
As at 1 September
2009 464,726 37,574 218,108 218,891 939,299
Additions - 16,912 6,178,242 107,496 6,302,650
-------- --------- --------- ---------- ---------
As at 31 August
2010 464,726 54,486 6,396,350 326,387 7,241,949
-------- --------- --------- ---------- ---------
Accumulated amortisation
As at 1 September
2009 - 17,417 - - 17,417
Amortisation for
the financial year - 16,624 - - 16,624
-------- --------- --------- ---------- ---------
As at 31 August
2010 - 34,041 - - 34,041
-------- --------- --------- ---------- ---------
Net carrying amount
AAs at 31 August
2010 464,726 20,445 6,396,350 326,387 7,207,908
======== ========= ========= ========== =========
Patents
2011 2010
Company US$ US$
Cost and carrying amount
Balance at beginning of financial year 6,387,805 216,083
Additions 7,719,628 6,171,722
---------- ---------
Balance at end of financial year 14,107,433 6,387,805
========== =========
Pursuant to an agreement entered into between the Company and a
related party in 2010, the Company is to acquire certain patents
and technology from the said related party. An independent
professional valuer had valued these patents and technology at
US$33 million. Having considered this, on the date of agreement,
the Company and the said related party have agreed on the purchase
consideration for the purchase of these patents and technology at
US$20 million and amount shall be fully settled by the issue of
666,666,666 new ordinary shares of the Company at US$0.03 per
share. The obligation to pay the purchase consideration is subject
to certain terms and conditions.
During the financial year, upon the successful registration of
certain patents, the Company purchased part of these patents and
technology for a contractual purchase consideration of US$4 million
(2010: US$6 million) by issuing 133,333,333 (2010: 199,999,999) new
ordinary shares for the fair value of the purchase consideration of
US$7,666,667 (2010: US$6,000,000) as disclosed in Note 14 to the
financial statements. The remaining ordinary shares of 333,333,334
will be issued in the next 12 months from the end of the financial
year as the remaining patents and technology have been successfully
registered by the related party subsequent to the end of the
financial year.
For the purpose of the consolidated statement of cash flows, the
Group's additions to intangible assets during the financial year
comprise of the following:
Group
2011 2010
US$ US$
Additions to intangible assets 7,802,886 6,302,650
Non-cash transaction settlement by issuance
of new ordinary shares (Note 14) * (7,666,667) (6,000,000)
------------- -----------
Purchase of intangible assets by cash
payment 136,219 302,650
============= ===========
* This represents a fair value based on the Company's share
price as at 27 January 2011
12. Trade and other receivables
Group Company
2011 2010 2011 2010
US$ US$ US$ US$
Current
Trade receivables 19,072 - - -
Other receivables 51,996 23,915 51,996 23,915
Deposits 117,002 95,894 83,520 54,743
Prepayments 5,152 29,160 - -
Amounts due from subsidiaries - - 3,525,389 4,500,999
------- ------- --------- ---------
193,222 148,969 3,660,905 4,579,657
Non-current
Amounts due from subsidiaries - - 2,688,805 -
------- ------- --------- ---------
193,222 148,969 6,349,710 4,579,657
======= ======= ========= =========
Trade receivables are not past due, non-interest bearing and are
generally on 30 days' credit term.
All other receivables are not past due, non-interest bearing and
are repayable on demand except for the amounts due from
subsidiaries (non-current) which are not expected to be repaid
within the next 12 months.
Trade and other receivables (excluding prepayments) are
denominated in the following currencies:
Group Company
2011 2010 2011 2010
US$ US$ US$ US$
United States dollar 42,625 2,731 6,239,194 4,503,730
Singapore dollar 142,982 93,655 108,053 52,504
British pound 2,463 23,423 2,463 23,423
------- ------- --------- ---------
188,070 119,809 6,349,710 4,579,657
======= ======= ========= =========
13. Cash and bank balances
Group Company
2011 2010 2011 2010
US$ US$ US$ US$
Cash on hand and bank
balances 825,602 1,584,158 830,293 1,318,174
Fixed deposits 99,262 97,462 85,116 71,467
-------- --------- ------- ---------
Cash and bank balances 924,864 1,681,620 915,409 1,389,641
======= =========
Less: fixed deposits
pledged to banks (99,262) (97,462)
-------- ---------
Cash and cash equivalents
as per consolidated
statement of cash flows 825,602 1,584,158
======== =========
Fixed deposits pledged to banks are deposits that are placed
with banks, with original maturing periods of not more than 365
(2010: 183) days. The fixed deposits earn interests at rates
ranging from 0.35% to 0.45% (2010: 0.55%) per annum.
Cash and bank balances are denominated in the following
currencies:
Group Company
2011 2010 2011 2010
US$ US$ US$ US$
Singapore dollar 915,325 284,055 915,403 122,359
United States dollar 38 1,267,285 6 1,267,282
Hong Kong dollar 9,501 130,280 - -
------- --------- ------- ---------
924,864 1,681,620 915,409 1,389,641
======= ========= ======= =========
The Group's and the Company's fixed deposits of US$99,262 and
US$85,116 (2010: US$97,462 and US$71,467) respectively, are pledged
to banks for credit card facilities granted to the Company and a
subsidiary.
14. Issued capital
Group and Company
2011 2010 2011 2010
Number of ordinary
shares US$ US$
Issued and paid-up
Balance at beginning
of
financial year 1,398,672,563 1,183,092,564 14,383,792 7,916,392
Issue of new ordinary
shares 94,875,000 215,579,999 5,016,563 6,467,400
------------- ------------- ---------- ----------
Balance at end of financial
year 1,493,547,563 1,398,672,563 19,400,355 14,383,792
============= ============= ========== ==========
The Company has one class of ordinary shares. All issued
ordinary shares are fully paid and carry one vote per ordinary
share and also carry a right to dividends. There is no par value
for these ordinary shares.
In January 2011, the Company purchased patents from a related
party for a contractual purchase consideration of US$4 million
(which represents a fair value of US$7,666,667 based on the
Company's share price as at 27 January 2011) by issuing 133,333,333
ordinary shares of the Company to the related party as follows:
(a) US$4,161,563 of the 1(st) tranche has been settled by way of
issuing 72,375,000 new ordinary shares; and
(b) US$3,505,104 of the 2(nd) tranche (to be settled by way of
issuing 60,958,333 new ordinary shares) is included in capital
reserve as the shares have not been issued yet as at 31 August
2011.
In May 2011, the Company issued 22,500,000 new ordinary shares
to shareholders. These ordinary shares were issued at US$0.04. Cash
amounting to US$900,000 was raised from this exercise. The costs
directly attributable to this issuance of new ordinary shares
amounted to US$45,000 has been deducted from the proceeds
received.
In the financial year 2010,
(a) the Company issued 15,580,000 new ordinary shares to
shareholders for cash amounted to US$467,400; and
(b) the Company issued 199,999,999 new ordinary shares to a
related party as consideration for the Company's purchase of
patents and technology amounted to US$6 million (Note 11) and no
cash was raised from this transaction .
15. Treasury shares
Group and Company
2011 2010 2011 2010
Number of shares US$ US$
Balance at beginning
of
financial year 1,922,966 40,042,966 56,400 1,200,000
Re-issue during the
financial year - (38,120,000) - (1,143,600)
Balance at end of financial
year 1,922,966 1,922,966 56,400 56,400
========= ============ ====== ===========
In September 2008, the Company acquired 40,042,966 of its own
shares from its shareholders through off-market purchases at an
average price of US$0.03 per share. The Company paid US$1,200,000
in cash to acquire the said shares. This amount was deducted from
issued share capital within the shareholders' equity. These bought
back shares are held as treasury shares.
In November 2009, the Company re-issued 19,370,000 treasury
shares to shareholders. These shares were issued at US$0.03. Cash
amounting to US$581,100 was raised from this exercise. There is no
gain or lossarising from this transaction.
In August 2010, the Company re-issued 18,750,000 treasury shares
to shareholders. These shares were issued at US$0.04. Cash
amounting to US$750,000 was raised from this exercise. Gain arising
from this transaction US$187,500 is recognised directly in
statement of changes in equity.
16. Share options reserve
Share options reserve represents equity-settled share options
granted to directors of the Company and employees of the Group. The
reserve is made up of cumulative value of services received from
share options holders recorded on grant of equity-settled share
options.
The movement of this account is disclosed in the statement of
changes in equity.
17. Convertible loans reserve
The convertible loans reserve represents the residual amount of
convertible loans after deducting the fair values of the liability
components.
18. Other payables and accruals
Group Company
2011 2010 2011 2010
US$ US$ US$ US$
Other payables 506,979 134,017 485,857 124,382
Accruals 124,697 48,496 27,397 23,602
Amount due to a director 62,851 - 60,000 -
------- ------- ------- -------------
694,527 182,513 573,254 147,984
======= ======= ======= =============
No interest is charged on the other payables.
The amount owing to a director is unsecured, interest-free and
repayable on demand.
Other payables and accruals are denominated in the following
currencies:
Group Company
2011 2010 2011 2010
US$ US$ US$ US$
British pound 146,899 47,530 146,899 47,530
Singapore dollar 418,021 134,983 300,691 100,454
United States dollar 123,950 - 120,901 -
Hong Kong dollar 894 - - -
Chinese renminbi 4,763 - 4,763 -
------- ------- ------- -------
694,527 182,513 573,254 147,984
======= ======= ======= =======
19. Convertible loans
Group Company
2011 2010 2011 2010
US$ US$ US$ US$
Convertible loans due to
a director 2,722,363 1,195,673 2,722,363 1,195,673
========= ========= ========= =========
The convertible loans are denominated in United States dollar.
Amount due to a director represents the residual amount of
convertible loans due to Christopher Nightingale after deducting
the fair values of the equity components and is made up as
follows:
Group and Company
2011 2010
US$ US$
Net proceeds of convertible loans issued 5,087,053 2,000,000
Equity components (201,162) (401,052)
----------- ---------
Liability components at date of issue 4,885,891 1,598,948
Repayment (2,163,528) (403,275)
----------- ---------
Liability components at end of financial
year 2,722,363 1,195,673
=========== =========
The salient terms and conditions of the convertible loan
agreement are summarised as follows:
-- The term of the loans commence on the date of the convertible
loan agreement and shall terminate on 1 May 2012 ("Repayment
Date");
-- The loans shall be interest-free;
-- The Lender shall have the right at any time during the term
of the loans to convert any part of the loans into ordinary shares
of the Company at US$0.03 share;
-- The Company may without penalty repay the whole or part of
the loans before the repayment date; and
-- The Company may also offset any expenses or amount owing from
the Lender to the Company against the loans.
20. Provisions
Group Company
2011 2010 2011 2010
US$ US$ US$ US$
Provision for unutilised
leave 50,745 19,922 - -
Provision for reinstatement
cost 21,195 22,065 - -
------ ------ ---- ----
71,940 41,987 - -
====== ====== ==== ====
Movements of provisions during the financial year are as
follows:
Group Company
2011 2010 2011 2010
US$ US$ US$ US$
Balance at beginning of
financial year 41,987 43,294 - -
Addition/(Reversal) during
the
financial year 29,953 (1,307) - -
------ ------- ---- ----
Balance at end of financial
year 71,940 41,987 - -
====== ======= ==== ====
Provision for unutilised leave represents employee entitlements
to annual leave as a result of services rendered by employees up to
the end of the financial year.
Provision for reinstatement cost is relation to the obligation
for dismantlement, removal or restoration of office premises.
21. Share-based payments
The Employee Share Option Scheme (ESOS) enables directors and
employees of the Company and its subsidiaries to subscribe for
ordinary shares in the capital of the Company, exercisable at
varying periods from the date of grant depending whether the
exercise price is set at market price in respect of that offer.
Since the date of inception, no shares were granted or awarded
under the Share Performance Plan (SPP).
The EOS Committee has on 5 May 2010 resolved to grant Incentive
Options to the employees of the Group under the existing
Alternative Energy Limited (AEL) ESOS scheme exercisable at US$0.03
per ordinary share.
Information in respect of the share options granted under the
Company's ESOS was as follows:
Group and Company
2011 2010
Number of share options
('000) ('000)
Balance at beginning of financial year 81,000 -
Number of share options granted during
the financial year - 81,000
Balance at end of financial year 81,000 81,000
============ ===========
81,000,000 share options were granted in the prior financial
year. The estimated fair value of the share options granted is
US$1,480,000.
The fair value of share options as at the date of grant is
estimated by an external valuer using the Black-Scholes-Merton
model, taking into account the terms and conditions upon which the
options were granted. The inputs to the model used are shown
below.
Risk-free Expected Share price
Date of Expected interest life of Exercise at date of
grant volatility rate options price grant
(%) (%) (years) (US$) (US$)
5 May 2010 21.5 2.72-3.72 5-10 0.03 0.04
22. Related parties transactions
For the purposes of these financial statements, parties are
considered to be related to the Group if the Group has the ability,
directly or indirectly, to control the party or exercise
significant influence over the party in making financial and
operating decisions, or vice versa, or where the Group and the
party are subject to common control or common significant
influence. Related parties may be individuals or other
entities.
22.1 In addition to the information disclosed elsewhere in the
financial statements, related party transactions between the Group
and the Company and its related parties during the financial year
were as follows:
Group Company
2011 2010 2011 2010
US$ US$ US$ US$
Advances to subsidiary - - 1,289,328 1,334,500
Payment made on behalf
of subsidiaries - - 125,437 138,129
Payment made on behalf
by subsidiary - - 61,571 42,826
Management fee charged
to subsidiaries - - 360,000 360,000
Purchase of patents * 7,666,667 6,000,000 * 7,666,667 6,000,000
Net convertible loans
from a director 2,923,525 1,598,725 2,923,525 1,598,725
============= ========= =========== =========
* The Company purchased patents from a related party, being a
company in which the director has substantial interest, for a
contractual purchase consideration of US$4 million (which
represents a fair value of US$7,666,667 based on the Company's
share price as at 27 January 2011).
22.2 Key management personnel compensation
Fees/
Salary Defined Share
and related contribution option
costs Bonus plans expense Total
US$ US$ US$ US$ 2011 2010
Executive Directors
Christopher
Nightingale 240,000 - - 240,000 240,000
Dr Goh Swee
Ming 160,048 8,287 8,116 100,000 276,451 172,778
Non-Executive
Directors
Richard Lascelles 20,000 - - 100,000 120,000 52,603
Bay Yew Chuan 20,000 - - 100,000 120,000 52,603
Noel Meaney 20,000 - - 100,000 120,000 52,603
Total Key Management
2011 460,048 8,287 8,116 400,000 876,451
------------- ------ ------------- --------- ========
Total Key Management
2010 424,155 9,085 6,936 130,411 570,587
------------- ------ ------------- --------- ========
The Non-Executive Directors' consultancy fees of US$60,000 were
accrued and have not been paid as at 31 August 2011 along with
US$60,000 of Christopher Nightingale's salary.
The remuneration of directors is determined by the Remuneration
Committee having regard to the performance of individuals and
market trends. The remuneration disclosed above includes only the
directors as there is no personnel other than directors who are
considered to be a member of key management of the Group.
23. Operating lease commitments
At the end of the financial year, the commitments in respect of
non-cancellable operating leases of office premises and equipment
were as follows:
Group Company
2011 2010 2011 2010
US$ US$ US$ US$
Future minimum lease payments
payable:
Within one year 276,812 244,085 146,718 138,309
After one year but within
five years 379,960 276,343 97,812 242,040
After five years - 735 - -
------- ------- ------- -------
656,772 521,163 244,530 380,349
======= ======= ======= =======
The above operating lease commitments are based on existing
rates. The lease agreements provide for a periodic revision of such
rates in the future. The Grouphas an option to renew the leases for
another 1 year after the expiry of the current lease terms.
24. Financial instruments and financial risks
The Group's activities are exposed to a variety of financial
risks: credit risk, market risk (including foreign exchange risk
and interest risk) and liquidity risk. The Group's overall risk
management programme focuses on the predictability of financial
markets and seeks to minimise potential adverse effects on the
Group's financial performance. The Group does not use derivatives
financial instruments to hedge any risk exposures.
The Group has established risk management policies and
guidelines, which set out its overall risk management
strategies.
24.1 Credit risk
Credit risk refers to the risk that the counterparty will
default on its contractual obligations resulting in a loss to the
Group. The Group has adopted a policy of only dealing with
creditworthy counterparties and obtaining sufficient collateral
where appropriate, as a means of mitigating the risk of financial
loss from defaults. The Group performs ongoing credit evaluation of
its counterparties' financial condition and generally do not
require a collateral.
The carrying amounts of cash and bank balances and trade and
other receivables represent the Group's and the Company's maximum
exposure to credit risk in relation to financial assets. These
assets are neither past due nor impaired at the end of the
financial year.
Bank balances are placed with high credit-ratings assigned by
international credit rating agencies. Management is not expecting
any counterparty to fail to meet its obligations.
At the end of the financial year, the Group and the Company's
credit risks in respect of cash and bank balances are concentrated
on amounts kept in a single bank and an entity with a total amount
of US$924,864 and US$915,409 (2010: US$1,681,620 and US$1,389,641)
or 100% (2010: 100%) and 100% (2010: 100%) respectively.
24.2 Market risk
Market risk is the risk that changes in market prices, such as
foreign exchange rates and interest rates will affect the Group's
income or value of its holdings of financial instruments. The
objective of market risk management is to manage and control market
risk exposures within acceptable parameters, while optimising the
return on risk.
Foreign currency risk
The Group is exposed to currency risk arising from various
currency exposures. The currencies giving rise to this risk are
primarily Singapore dollar. Exposure to foreign currency risk is
monitored on an ongoing basis by the Group to ensure that the net
exposure is at an acceptable level, as the Group manages its
transactional exposure by a policy of matching, as far as possible,
receipts and payments in each individual currency. As the entities
in the Group transacts substantially in the functional currency of
the respective entities within the Group.
The carrying amounts of the Group's and the Company's foreign
currency denominated monetary assets and liabilities as at the end
of the financial year are as follows:
Group Company
2011 2010 2011 2010
US$ US$ US$ US$
Monetary assets
Singapore dollar 1,058,307 377,710 1,023,456 174,863
British pound 2,463 23,423 2,463 23,423
Hong Kong dollar 9,501 130,280 - -
Monetary liabilities
Singapore dollar 418,021 134,983 300,691 100,454
British pound 146,899 47,530 146,899 47,530
Hong Kong dollar 894 - - -
Chinese renminbi 4,763 - 4,763 -
Foreign currency sensitivity analysis
The Group is mainly exposed to Singapore dollar (SGD) and
British pound (GBP).
The following table details the Group's sensitivity to a 10%
change in SGD and GBP against United States dollar. The sentivitiy
analysis assumes instantaneous 10% change in the foreign currency
exchange rates from the end of the financial year, with all
variables held constant. The results of the model are also
constrained by the fact that only monetary items, including
external loans and loans to foreign operations, which are
denominated in SGD and GBP are included in the analysis.
Consequentially, reported changes in the values of some of the
financial instruments impacting the results of the sensitivity
analysis are not matched with the offsetting changes in the values
of certain excluded items that those instruments are designed to
finance or hedge.
Increase/(Decrease)
Group Company
Profit or Loss
2011 2010 2011 2010
US$. US$. US$. US$.
SGD
Strengthens against
US$ 64,029 24,273 72,277 7,441
Weakens against US$ (64,029) (24,273) (72,277) (7,441)
GBP
Strengthens against
US$ (14,444) (2,411) (14,444) (2,411)
Weakens against US$ 14,444 2,411 14,444 2,411
Interest rate risk
Interest rate risk is the risk that the fair value future cash
flows of a financial instrument will fluctuate because of changes
in market interest rates. The Group's exposure to interest rate
risk arises primarily from their fixed deposits with financial
institution, which is not significant.
24.3 Liquidity risks
Liquidity risks refer to the risks in which the Group will not
be able to meet its financial obligations as they fall due. The
Group ensure availability of funds through an adequate of cash and
where necessary, fund raising exercise will be considered via right
issues, private placements, other equity or equity-related
exercise.
Prudent liquidity risk management implies maintaining sufficient
cash. Due to the dynamic nature of the underlying businesses, the
Group financial control maintains flexibility in funding by
maintaining availability of a sufficient balance of cash.
Management monitors rolling forecast of the Group's liquidity
reserve (comprising cash and bank balances) on the basis of
expected cash flow.
All financial liabilities as disclosed in the statement of
financial position are payable within the next twelve months.
25. Fair value of financial assets and financial liabilities
The carrying amounts of cash and bank balances, trade and other
receivables, other payables and accruals and amount due to a
director approximate to their respective fair values due to the
relatively short-term maturity of these financial instruments.
The fair values of the liability components of the convertible
loans at 31 August 2011 amounting to US$2,722,363 (2010:
US$1,195,673). The fair values are calculated using the market
price of the convertible loans at the end of the financial
year.
26. Capital management policies and objectives
The management's policy is to achieve a strong capital base so
as to sustain future development of the business. The Group manages
its capital structure and makes adjustments to it, in light of
changes in economic conditions. The Group regards the equity
attributable to shareholders as capital. Equity is represented by
net liabilities. The Group's overall strategy remains unchanged
from the financial year 2010.
The Group manages its capital structure by various means such as
deciding on the amount of dividends paid to shareholders, return of
capital to shareholders, issue of new shares to reduce debts, as it
deems beneficial to the interest of its shareholders.
In financial year 2009, the Company purchased its own shares
from the market and the timing of these purchases depends on market
prices. Primarily, such actions are intended to enhance the return
to the Group's shareholders and to be used for issuing shares under
the Group's share option scheme. Buy and sell decision are made on
a specific transaction basis by the management. The Group does not
have a defined share buy-back plan.
The management believes that employees' participations in the
capital of the Group will increase the shareholders' value and
therefore will implement the Group's share option scheme, which is
extended to both key management personnel and certain classes of
employees of the Group.
There are no changes in the Group's approach to capital
management during the financial year.
Neither the Company nor any of its subsidiaries are subject to
externally imposed capital requirements.
27. Segment reporting
No segment reporting is presented as the Group is principally
engaged in a single business segment of dealing with household and
industrial clean energy and a single geographical segment located
in Asia.
28. Contingent liabilities - Company
Continuing financial support
The Company has given undertaking to its subsidiaries to provide
financial support to these companies, where necessary, to enable
them to operate as going concern and to meet their obligations for
at least 12 months from the end of the financial year of their
respective audited financial statements.
At the end of the financial year, the subsidiaries had capital
deficiencies of approximately US$5,882,000 (2010: US$3,899,000)
including amounts due by the subsidiaries to the Company of
US$6,189,000 (2010: US$4,500,000). In the opinion of the
management, no significant actual losses are expected to arise from
these contingent liabilities.
29. Events subsequent to the end of the financial year
Subsequent to the end of the financial year till the date of
these financial statements, the Company has the following events
which require disclosure in accordance with IAS 10 - Events after
the end of the financial year:
(a) The Company has issued an additional 41,183,333 new ordinary
shares to a related party as settlement in respect of the patents
and technology amounted to US$2,368,042 purchased in January 2011
(Note 14).
(b) The Company increased its cost of investment in the
subsidiary, Renewable Power Pte Ltd, amounting to US$3,500,000 by
way of capitalisation of a sum of US$3,500,000 owing by the
subsidiary to the Company as at 31 August 2011.
(c) The Company has made an announcement in January 2012 in
respect of the application of 333,333,334 new ordinary shares for
the purchase of the remaining patents and technology which have
been successfully registered by the related party (Note 11).
This information is provided by RNS
The company news service from the London Stock Exchange
END
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