TIDMALR
RNS Number : 2123I
Alternative Energy Limited
28 June 2013
For immediate release 28 June 2013
ALTERNATIVE ENERGY LIMITED
("Alternative Energy" or "the Company")
Final Results and Report and Accounts
The Company today announces that it has published the Report and
Accounts for the financial period from 1 September 2011 to 31
December 2012 ("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:
CHAIRMAN'S STATEMENT
2012 was a challenging period for all in the green energy
business, as indeed it was for many other business sectors.
Recession driven changes in government spending and anti-dumping
pressures around the world led to a decline in the subsidies which
supported many green energy businesses causing many around the
world to experience hardship. Many green energy projects,
particularly in Europe, were put on hold or scaled down and
research and development spending on green energy declined, our own
clients or potential clients were not unaffected by this.
Against this difficult background I am pleased to report that
Alternative Energy Limited has held its ground. Having never been a
solar panel manufacturer or systems integrator, and not having
built our business in reliance on subsidies we have been less
affected by the issues which have damaged these sectors, if
anything the dramatic decline in the price of solar cells and
panels is a positive thing for us as it will make our next
generation solar technology, eRoof and eLive, cheaper and more
competitive. The reason we have spent so much time and money on
intellectual property protection now becomes clear as we see solar
panels become an open technology commodity.
Geographically we have focused on developing, rather than
developed markets, and although our main revenues in 2012 came from
a contract for the supply of solar panels to Germany, our principal
focus was in finding a role in the rapidly expanding energy sector
in Indonesia. As our neighbor here in Singapore, one of the largest
economies in the world, the fourth largest country by population
with a large committed budget for green energy, Indonesia has been
seen as the best market for Alternative Energy to start rolling out
its products services and technology. The heads of terms signed
with P.T. Mega UripPesona in the summer of 2012 has subsequently
become the significant Master Project Agreement announced in April
this year, under which we expect to participate in a growing number
of solar projects in Indonesia.
In respect of our own technologies we are now commencing
production of our new low cost eRoof for deployment in South East
Asia in the coming months, alongside a revised design for our eLive
housing and improved designs for our conventional eSlate. We
anticipate that the reduced cost of the solar cells we incorporate
will make these more competitive and consider these technologies,
which are proprietary to Alternative Energy Limited, to be the next
generation of solar technology. With sales and associated revenues
stable and secure in Indonesia, we will be able to revert to other
markets to build the global business we aspire to.
In the meantime we are stabilising the company's financial
position with the US$4.8m preferred offering of the company's
shares announced earlier in the year, of which have received US$2.2
million to date and in respect of which we have a further US$1m in
commitments for which we are awaiting funds. We all understand that
it is time for the Company's products to demonstrate the kind of
sales which will justify the losses which the Company has sustained
over the last few years, including 2012, as they were
developed.
The next six months will be a critical time for the company as
we turn our technology and expertise into revenues, and with the
benefit of our new arrangements in Indonesia, our dedicated and
hardworking team here and the developing world's continued demand
for new energy sources and technologies, I believe that our
business still offers opportunities for growth which few other
business sectors can match.
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 / Emily Staples, Tel: +44 (0) 20 7628 3396
Beaumont Cornish Limited
INDEPENDENT AUDITOR'S 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 consolidated statement of
financial position of the Group and the statement of financial
position of the Company as at
31 December 2012, 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 period from 1
September 2011 to 31 December 2012, 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.
Auditor's Responsibility
Our responsibility is to express an opinion on these financial
statements based on our audit. We conducted our audit in accordance
with 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 auditor's judgement, including
the assessment of the risks of material misstatement of the
financial statements, whether due to fraud or error. In making
those risk assessments, the auditor considers internal control
relevant to the entity's preparation of financial statements that
give a true and fair view in order to design audit procedures that
are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the entity's internal
control. An audit also includes evaluating the appropriateness of
accounting policies used and the reasonableness of accounting
estimates made by management, as well as evaluating the overall
presentation of the financial statements.
We believe that the audit evidence we have obtained is
sufficient and appropriate to provide a basis for our audit
opinion.
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 December 2012 and
of the results, changes in equity and cash flows of the Group and
changes in equity of the Company for the financial period from 1
September 2011 to 31 December 2012.
Emphasis of Matter
We draw attention to Note 2.2 to the financial statements which
indicate that the Group has been incurring losses for the current
and past years/periods. The Group has 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
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 auditor have been properly kept in
accordance with the provisions of the Act.
BDO LLP
Public Accountants and
Certified Public Accountants
Singapore
27 June 2013
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE FINANCIAL PERIOD FROM 1 SEPTEMBER 2011 TO 31 DECEMBER
2012
Financial Financial
period from year from
1 September 1 September
2011 to 2010 to
31 December 31 August
2012 2011
US$ US$
Revenue 4 12,324,954 52,826
Cost of sales (12,575,636) (45,457)
Gross (loss)/profit (250,682) 7,369
Other income 10,869 4,135
Administrative expenses (1,686,457) (1,590,911)
Other expenses (3,326,528) (2,419,223)
Share of loss from equity-accounted
joint venture 10 (118,675) (2,021)
Loss before income tax 5 (5,371,473) (4,000,651)
Income tax 6 - -
Loss for the financial period/year (5,371,473) (4,000,651)
------------ ------------
Other comprehensive income:
Exchange differences on translating
foreign joint venture (15) 15
Other comprehensive income for the
financial period/year, net of tax (15) 15
------------ ------------
Total comprehensive loss for the financial
period/year (5,371,488) (4,000,636)
============ ============
Attributable to equity holders of
the Company:
Loss for the financial period/year (5,371,473) (4,000,651)
Other comprehensive income for the
financial period/year, net of tax (15) 15
------------ ------------
(5,371,488) (4,000,636)
============ ============
Loss per share (cents per share)
Basic loss per share 7 0.33 0.27
Diluted loss per share 7 0.32 0.26
============ ============
STATEMENTS OF FINANCIAL POSITION AS AT 31 DECEMBER 2012
Group Company
31 December 31 August 31 December 31 August
Note 2012 2011 2012 2011
US$ US$ US$ US$
ASSETS
Non-current assets
Plant and equipment 8 2,565 25,295 157 12,565
Investments in subsidiaries 9 - - 4,848,072 1,118,921
Investment in joint
venture 10 - 118,690 - -
Intangible assets 11 29,215,697 14,997,818 28,311,631 14,107,433
Other receivables 12 - - 3,894,859 2,688,805
------------ ------------ ----------- -----------
29,218,262 15,141,803 37,054,719 17,927,724
------------ ------------ ----------- -----------
Current assets
Cash and cash equivalents 13 14,942 924,864 600 915,409
Trade and other receivables 12 3,146,340 193,222 571,370 3,660,905
------------
3,161,282 1,118,086 571,970 4,576,314
------------ ------------ ----------- -----------
Total assets 32,379,544 16,259,889 37,626,689 22,504,038
============ ============ =========== ===========
EQUITY AND LIABILITIES
Capital and reserves
Issued capital 14 37,472,123 19,400,355 37,472,123 19,400,355
Capital reserve 14 - 3,505,104 - 3,505,104
Treasury shares 15 (56,400) (56,400) (56,400) (56,400)
Share options reserve 16 1,480,000 981,260 1,480,000 981,260
Convertible loans
reserve 17 252,794 201,162 252,794 201,162
Accumulated losses (16,631,910) (11,260,437) (7,607,448) (4,823,060)
Foreign currency
translations reserve - 15 - -
22,516,607 12,771,059 31,541,069 19,208,421
------------ ------------ ----------- -----------
Current liabilities
Trade and other payables 18 6,148,986 694,527 2,405,304 573,254
Convertible loans 19 3,680,316 2,722,363 3,680,316 2,722,363
Provisions 20 33,635 71,940 - -
9,862,937 3,488,830 6,085,620 3,295,617
Total equity and
liabilities 32,379,544 16,259,889 37,626,689 22,504,038
============ ============ =========== ===========
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE FINANCIAL PERIOD FROM 1 SEPTEMBER 2011 TO 31 DECEMBER
2012
Foreign
Share Convertible currency
Issued Capital Treasury options loans Accumulated translations
2012 capital reserve shares reserve reserve losses reserve Total
Group US$ US$ US$ US$ US$ US$ US$ US$
Note 14 Note 14 Note 15 Note 16 Note 17
Balance at 1
September
2011 19,400,355 3,505,104 (56,400) 981,260 201,162 (11,260,437) 15 12,771,059
Total
comprehensive
loss
for the financial
period:
----------------- ---------- ----------- -------- --------- ----------- ------------ ------------- -----------
Loss for the
financial
period - - - - - (5,371,473) - (5,371,473)
Other
comprehensive
loss:
Exchange
differences on
translating
foreign joint
venture - - - - - - (15) (15)
----------------- ---------- ----------- -------- --------- ----------- ------------ ------------- -----------
Total
comprehensive
loss
for the
financial period - - - - - (5,371,473) (15) (5,371,488)
Shares issued
during the
financial period 18,071,768 (3,505,104) - - - - - 14,566,664
Grant of
equity-settled
share options to
employees - - - 498,740 - - - 498,740
Reserve
attributable to
equity
components of
convertible
loans - - - - 51,632 - - 51,632
Balance at 31
December
2012 37,472,123 - (56,400) 1,480,000 252,794 (16,631,910) - 22,516,607
========== =========== ======== ========= =========== ============ ============= ===========
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE FINANCIAL PERIOD FROM 1 SEPTEMBER 2011 TO 31 DECEMBER
2012 (Continued)
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$
Note 14 Note 14 Note 15 Note 16 Note 17
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:
-------------------- ---------- --------- -------- -------- ----------- ------------ ------------- -----------
Loss for the
financial
year - - - - - (4,000,651) - (4,000,651)
Other comprehensive
income:
Exchange differences
on
translating foreign
joint
venture - - - - - - 15 15
-------------------- ---------- --------- -------- -------- ----------- ------------ ------------- -----------
Total comprehensive
loss
for the financial
year - - - - - (4,000,651) 15 (4,000,636)
Shares issued during
the
financial year 5,016,563 - - - - - - 5,016,563
Shares alloted but
not
issued during the
financial
year - 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
========== ========= ======== ======== =========== ============ ============= ===========
STATEMENT OF CHANGES IN EQUITY
FOR THE FINANCIAL PERIOD FROM 1 SEPTEMBER 2011 TO 31 DECEMBER
2012 (Continued)
Share Convertible
Issued Capital Treasury Options loans Accumulated
2012 capital reserve shares reserve reserve losses Total
Company US$ US$ US$ US$ US$ US$ US$
Note 14 Note 14 Note 15 Note 16 Note 17
Balance at 1 September 2011 19,400,355 3,505,104 (56,400) 981,260 201,162 (4,823,060) 19,208,421
Total comprehensive loss
for the financial period - - - - - (2,784,388) (2,784,388)
Shares issued during the
financial period 18,071,768 (3,505,104) - - - - 14,566,664
Grant of equity-settled share
options to employees - - - 498,740 - - 498,740
Reserve attributable to equity
components of convertible
loans - - - - 51,632 - 51,632
Balance at 31 December 2012 37,472,123 - (56,400) 1,480,000 252,794 (7,607,448) 31,541,069
========== =========== ======== ========= =========== =========== ===========
STATEMENT OF CHANGES IN EQUITY
FOR THE FINANCIAL PERIOD FROM 1 SEPTEMBER 2011 TO 31 DECEMBER
2012 (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$
Note 14 Note 14 Note 15 Note 16 Note 17
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 5,016,563 - - - - - 5,016,563
Shares allotted but not issued
during the financial year - 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
========== ========= ======== ======== =========== =========== ===========
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE FINANCIAL PERIOD FROM 1 SEPTEMBER 2011 TO 31 DECEMBER
2012
Financial Financial
period from year from
1 September 1 September
2011 to 2010 to
31 December 31 August
2012 2011
US$ US$
Operating activities
Loss before income tax (5,371,473) (4,000,651)
Adjustments for:
Depreciation of plant and equipment (Note
8) 22,730 95,425
Gain on disposal of plant and equipment (77) -
Amortisation of intangible assets (Note
11) 7,071 12,976
Reversal for reinstatement cost - (870)
(Reversal)/Provision for unutilised leave
(Note 20) (38,305) 30,823
Share options expense (Note 5) 498,740 717,178
Interest income (346) (446)
Share of loss from equity-accounted joint
venture (Note 10) 118,675 2,021
------------ ------------
Operating cash flows before movements in
working capital (4,762,985) (3,143,544)
Increase in trade and other receivables (2,553,118) (44,253)
Increase in trade and other payables 5,454,459 512,014
------------ ------------
Net cash used in operating activities (1,861,644) (2,675,783)
------------ ------------
Investing activities
Interest received 346 446
Purchase of plant and equipment (Note 8) - (6,304)
Proceeds from disposal of property and
equipment 77 -
Withdrawal/(Placement) in pledged fixed
deposits 85,058 (1,800)
Investment in joint venture (Note 10) - (120,696)
Additions of intangible assets (Note 11) (58,286) (136,219)
------------ ------------
Net cash from/(used in) investing activities 27,195 (264,573)
------------ ------------
Financing activities
Proceeds from convertible loans (Note 19) 1,254,482 3,490,328
Repayment of convertible loans (Note 19) (244,897) (2,163,528)
Net proceeds from issue of shares - 855,000
Net cash from financing activities 1,009,585 2,181,800
------------ ------------
Net decrease in cash and cash equivalents (824,864) (758,556)
Cash and cash equivalents at beginning
of financial period/year 825,602 1,584,158
Cash and cash equivalents at end of financial
period/year
(Note 13) 738 825,602
============ ============
NOTES TO THE FINANCIAL STATEMENTS
FOR THE FINANCIAL PERIOD FROM 1 SEPTEMBER 2011 TO 31 DECEMBER
2012
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 AIM
a market of that name operated by 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 Company and its
subsidiaries (the "Group") and the statement of financial position
and statement of changes in equity of the Company for the financial
year ended 31 December 2012 were authorised for issue by the Board
of Directors on
27 June 2013.
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), International
Accounting Standards and Interpretations (collectively IFRSs)
issued by the International Accounting Standards Board (IASB).
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.
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 IFRSs that are relevant to their operations and effective
for the current financial year. The adoption of these new and
revised IFRSs 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.
IFRSs issued but not yet effective
At the date of authorisation of these financial statements, the
following IFRSs that are relevant to the Group were issued but not
yet effective:
Effective date
(annual periods
beginning on
or after)
IFRSs (Amendments) : Annual Improvements to IFRSs 1 January 2013
2009-2011 Cycle
IFRS 7 (Amendments) : Offsetting Financial Assets 1 January 2013
and Financial Liabilities
IFRS 9 : Financial Instruments 1 January 2015
IFRS 10 : Consolidated Financial Statements 1 January 2013
IFRS 11 : Joint Arrangements 1 January 2013
IFRS 12 : Disclosure of Interests 1 January 2013
in Other Entities
IFRS 13 : Fair Value Measurement 1 January 2013
Amendments to IAS : Presentation of Items of 1 July 2012
1 Other Comprehensive Income
IAS 19 : Employee Benefits 1 January 2013
IAS 27 : Separate Financial Statements 1 January 2013
IAS 28 : Investments in Associates 1 January 2013
and Joint Ventures
IAS 32 (Amendments) : Financial Instruments: Presentation 1 January 2014
Improvements to IFRSs 2012
: Presentation of Financial 1 January 2013
* IAS 1 (Amendments) Statement
: Property, Plant and Equipment 1 January 2013
* IAS 16 (Amendments)
: Financial Instruments: Presentation 1 January 2013
* IAS 32 (Amendments)
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 IFRSs
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 December 2012, the recurring
losses from operations in the current and past financial
years/periods.
The Group has signed a Master Project Agreement with PT Mega
Urip Pesona ("MUP") and a new distribution agreement in respect of
lighting with the Sumber Berkat Group. Work has started on the
projects which are the subject of these agreements and invoices
have been issued. The Group also has outstanding quotations for a
number of projects which are expected to become orders during the
next few months. Revenue from these projects is expected to make an
increasing contribution to the Group. During the course of the next
financial period, the Group will be concentrating of producing
additional revenue from new markets.
In addition to the above the Group has now raised a total of
US$2,208,929 from the total preferential offering of US$4,800,000
in the first half in year 2013, which leaves the Group with
sufficient cash to fund its working capital for the next financial
period. During the current financial period the Group has also been
continuing to draw down its facility from Christopher Nightingale
("Chairman") to fund the Group's overheads, pursuant to the revised
Facility arrangements agreed with the Chairman and approved by
shareholders on 11 January 2013, and the Chairman has indicated
that he is prepared to continue to provide financial support to
ease the Group to pay its debt as and when they fall due.
The Directors are confident that the measures they are taking,
together with the continuing financial support from 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$5,371,473 for the period from 1 September 2011 to 31
December 2012, 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 Company has the power to govern the
financial and operating policies, generally accompanied by a
shareholding giving rise to the majority of the voting rights, 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 financial year as that of the Company, using consistent
accounting policies. Where necessary, accounting policies of
subsidiaries are changed to ensure consistency with the 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 are adjusted and
the fair value of the consideration paid or received is recognised
directly in equity and attributed to owners of the parent.
When the Group loses control of a subsidiary, the profit 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.
In the separate financial statements of the Company, investments
in subsidiaries are carried at cost, less any impairment losses
that has been recognised in profit or loss.
2.4 Revenue recognition
Revenue is measured at the fair value of the consideration
received or receivable. Revenue is presented net of estimated
customer returns, rebates, other similar allowances and sales
related taxes.
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, it
is probable that the economic benefits associated with the
transaction will flow to the entity and the costs incurred or to be
incurred in respect of the transaction can be measured reliably.
Normally these criteria are met when the goods are delivered to or
collected by and accepted by the buyer.
Finance income
Interest income from fixed deposits is 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 expense represents the sum of the tax currently
payable and deferred tax.
Current income tax
The tax currently payable is based on taxable profit for the
year. Taxable profit differs from profit as reported in the
consolidated profit or loss because it excludes items of income or
expense that are taxable or deductible in other years and it
further excludes items that are not taxable or tax deductible. The
Group's and the Company's liabilities for current tax are
calculated using tax rates (and tax laws) that have been enacted or
substantively enacted in countries where the Company and
subsidiaries operate by the end of the financial year.
Deferred tax
Deferred tax is recognised on the differences between the
carrying amounts of assets and liabilities in the financial
statements and the corresponding tax bases used in the computation
of taxable profit, and are accounted for using the liability
method. Deferred tax liabilities are generally recognised for all
taxable temporary differences and deferred tax assets are
recognised to the extent that it is probable that taxable profits
will be available against which deductible temporary differences
can be utilised. Such assets and liabilities are not recognised if
the temporary difference arises from goodwill or from the initial
recognition (other than in a business combination) of other assets
and liabilities in a transaction that affects neither the taxable
profit nor the accounting profit.
Deferred tax liabilities are recognised on taxable temporary
differences arising on investments in subsidiaries, except where
the Group and the Company are able to control the reversal of the
temporary difference and it is probable that the temporary
difference will not reverse in the foreseeable future.
The carrying amount of deferred tax assets is reviewed at the
end of each financial year and reduced to the extent that it is no
longer probable that sufficient taxable profits will be available
to allow all or part of the asset to be recovered.
Deferred tax is calculated at the tax rates that are expected to
apply in the period when the liability is settled or the asset
realised based on the tax rates (and tax laws) that have been
enacted or substantively enacted by the end of the financial year.
Deferred tax is charged or credited to the consolidated profit or
loss, except to the extent that they relate to items recognised in
consolidated statement of other comprehensive income or directly in
equity, in which case the relevant amounts of tax are recognised in
consolidated profit or loss or directly in equity,
respectively.
Deferred tax assets and liabilities are offset when there is a
legally enforceable right to set off current tax assets against
current tax liabilities and when they relate to income taxes levied
by the same taxation authority and the Group intends to settle its
current tax assets and liabilities on a net basis.
Current and deferred tax are recognised as an expense or income
in the consolidated profit or loss, except when they relate to
items credited or debited directly to equity, in which case the tax
is also recognised directly in equity, or where they arise from the
initial accounting for a business combination. In the case of a
business combination, the tax effect is taken into account in
calculating goodwill or determining the excess of the acquirer's
interest in the net fair value of the acquiree's identifiable
assets, liabilities and contingent liabilities over cost.
2.6 Employee benefits
Retirement benefit costs
Payments to defined contribution retirement benefit plans are
charged as an expense when employees have rendered the services
entitling them to the contributions. 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 unutilised 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 Share based payment policy on shares to subsidiary's employees
The grant by the Company of its equity instruments to the
employees of subsidiary undertakings in the Group is treated as a
capital contribution. The fair value of employee services received,
measured by reference to the grant date fair value, is recognised
as an increase to investment in subsidiary undertakings, with a
corresponding credit to equity.
2.8 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
period/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.
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.
2.9 Operating leases
Rentals payable under operating leases are charged to the
consolidated 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 period 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.
2.10 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 2.12 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 on the following bases:
Office renovation 33%
Computers 33%
Machinery, office equipment, furniture and fittings 33%
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 is a method of calculating the
amortised cost of a financial instrument and allocating 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, to the net carrying amount of the financial
instrument. Income and expense are recognised on an effective
interest basis for debt instruments other than those financial
instruments at fair value through profit or loss.
Financial assets
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, cash and cash equivalents are
classified as loans and receivables. Loans and receivables are
measured at amortised cost, using the effective interest method
less impairment. Interest is recognised by applying the effective
interest method, except for short-term receivables when the
recognition of interest would be immaterial.
Impairment of financial assets
Financial assets are assessed for indicators of impairment at
the end of each financial year. Financial assets are impaired where
there is objective evidence that, as a result of one or more events
that occurred after the initial recognition of the financial asset,
the estimated future cash flows of the investment have been
impacted.
For financial assets carried, at amortised cost, 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 all 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 the profit or loss.
If, in a subsequent period, 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 the profit or loss
to the extent the carrying amount of the investment 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.
Trade and other payables
Trade and other payables 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. Restricted
cash including pledged fixed deposits are excluded from cash and
cash equivalent for purpose of cash flow statement
presentation.
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 patents
and 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 December 2012 was
US$4,848,072 (2011: US$1,118,921).
(ii) Impairment of amounts due from subsidiaries and due from a related party
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 Group's amounts due from a
related party and the Company's amounts due from subsidiaries as at
31 December 2012 are disclosed in Note 12 to the financial
statements.
(iii) 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.
(iv) 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 December 2012 are
disclosed in Note 11 to the financial statements.
(v) 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 December 2012 are disclosed in the statements of
changes in equity
(vi) 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 average effective interest rate of 6.25% (2011:
5.5%) 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/(credit) the following:
Group
Financial Financial
period from year from
1 September 1 September
2011 to 2010 to
31 December 31 August
2012 2011
US$ US$
Administrative expenses
Employee benefits expense:
* Salaries and related costs 1,068,085 668,548
* Directors' fee 40,000 60,000
* Contributions to defined contributions plans 63,232 51,314
* Share options expense 498,740 717,178
Other expenses
Amortisation of intangible assets (Note
11) 7,071 12,976
Depreciation of plant and equipment
(Note 8) 22,730 95,425
Exchange loss/(gain) 41,787 (9,779)
Operating lease expense - rental of
office premises and equipment 384,777 299,755
Feasibility study expense 1,000,000 -
Research expense 51,202 296,552
Professional fees 837,389 668,724
Travelling and accommodation 222,438 494,046
============ ============
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
(2011: Nil) as the Group has no chargeable income.
Group
Financial Financial
period from year from
1 September 1 September
2011 to 2010 to
31 December 31 August
2012 2011
US$ US$
Reconciliation of effective tax rate
Loss before income tax (5,371,473) (4,000,651)
============ ============
Tax calculated at statutory rate of
17% (2011:17%) (913,150) (680,111)
Effect of different tax rates of overseas
operations 1,668 -
Expenses not deductible for tax purposes 342,062 95,414
Income not subject to tax - 5,979
Deferred tax assets not recognised 569,420 577,893
Others - 825
------------ ------------
- -
============ ============
Deferred tax assets not recognised are related to the
following:
Group
31 December 31 August
2012 2011
US$ US$
Tax losses 1,963,373 1,392,507
Plant and equipment 84,486 79,420
Provision 2,115 8,627
Enhance productivity and innovation
credit 279,836 279,836
----------- ---------
2,329,810 1,760,390
=========== =========
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.
Subject to the agreement by relevant tax authorities, at the end
of the financial period, the Group has unutilised tax losses of
approximately US$11,549,000 (2011: US$8,191,000) available for
offset against future profits.
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$0.008 (2011: US$0.03) per share and net of
any expenses amount owing from the lender to the Company against
the loan. The net loss is adjusted to eliminate the interest
expense less the tax effect.
For the share options, a calculation is done to determine the
number of shares that could have been acquired at fair value
(determined as the average annual market share price of the
Company's shares) based on the monetary value of the subscription
rights attached to outstanding share options. The number of shares
calculated as above is compared with the number of shares that
would have been issued assuming the exercise of the share options.
The differences are added to the denominator as an issuance of
ordinary shares for no consideration. No adjustment is made to
earnings.
The basic and diluted loss per share are calculated as
follows:
Group
31 December 2012 31 August 2011
Basic Diluted Basic Diluted
US$ US$ US$ US$
Loss for the financial
period/year attributable
to equity holders
of the Company 5,371,473 5,371,473 4,000,651 4,000,651
============= ============= ============= =============
Number of shares Number of shares
Basic Diluted Basic Diluted
Weighted average
number of ordinary
shares 1,610,613,978 1,610,613,978 1,469,141,000 1,469,141,000
Adjustments for:
* Convertible loan - 29,604,054 - 41,764,643
* Share options - 18,290,323 - 34,714,286
Weighted average
number of ordinary
shares used 1,610,613,978 1,658,508,355 1,469,141,000 1,545,619,929
============= ============= ============= =============
Loss per share
(cents per share) 0.33 0.32 0.27 0.26
============= ============= ============= =============
8. Plant and equipment
Machinery,
office
equipment,
Office furniture
Group renovation Computers and fittings Total
US$ US$ US$ US$
2012
Cost
As at 1 September 2011 117,788 62,026 233,143 412,957
Disposal - (1,496) - (1,496)
----------- --------- ------------- -------
As at 31 December 2012 117,788 60,530 233,143 411,461
----------- --------- ------------- -------
Accumulated depreciation
As at 1 September 2011 117,788 54,698 215,176 387,662
Depreciation charge
for the financial period
(Note 5) - 5,794 16,936 22,730
Disposal - (1,496) - (1,496)
----------- --------- ------------- -------
As at 31 December 2012 117,788 58,996 232,112 408,896
----------- --------- ------------- -------
Net carrying amount
As at 1 September 2011 - 7,328 17,967 25,295
=========== ========= ============= =======
As at 31 December 2012 - 1,534 1,031 2,565
=========== ========= ============= =======
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
(Note 5) 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 1 September 2010 11,525 17,547 85,344 114,416
======= ======= ======= =======
As at 31 August 2011 - 7,328 17,967 25,295
======= ======= ======= =======
Furniture
Company and fittings Computers Total
US$ US$ US$
2012
Cost
As at 1 September 2011 and 31
December 2012 29,725 7,247 36,972
------------- --------- ------
Accumulated depreciation
As at 1 September 2011 17,160 7,247 24,407
Depreciation charge for the
financial period 12,408 - 12,408
------------- --------- ------
As at 31 December 2012 29,568 7,247 36,815
------------- --------- ------
Net carrying amount
As at 1 September 2011 12,565 - 12,565
============= ========= ======
As at 31 December 2012 157 - 157
============= ========= ======
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 1 September 2010 22,474 1,696 24,170
============= ========= ======
As at 31 August 2011 12,565 - 12,565
============= ========= ======
9. Investments in subsidiaries
Company
31 December 31 August
2012 2011
US$ US$
Unquoted equity shares, at cost:
Beginning of financial period/year 1,118,921 668,072
Add: Increase in investment in a subsidiary 3,500,000 -
Add: Share option granted to Group's
employee 229,151 450,849
----------- ---------
End of financial period/year 4,848,072 1,118,921
=========== =========
During the financial period, the Company has increased the
investment in a subsidiary through capitalisation of US$3,500,000
loan to the subsidiary.
Particulars of the subsidiaries are as follows:
Country of
Principal incorporation/ Effective
Subsidiaries activities operation equity interest
2012 2011
% %
Held by the Company
Research and
development renewable
energies for
household consumers
and trading in
Renewable Power Pte Ltd(1) lighting products Singapore 100 100
Holding of trademarks
Alternative Energy Technology and intellectual
Pte Ltd(1) properties Singapore 100 100
Holding of operational
subsidiaries
Alternative Energy Limited but is currently British Virgin
(BVI)(2) dormant Islands 100 100
Holding of operational
subsidiaries
Alternative Energy Worldwide but is currently British Virgin
Limited(2) dormant Islands 100 100
Holding of operational
Alternative Energy Holdings subsidiaries
Limited(3) and trading Hong Kong 100 100
Held by Alternative Energy
Limited (BVI)
Alternative Energy (Africa) British Virgin
Limited(2) Dormant Islands 100 100
Alternative Energy (Middle British Virgin
East) Limited(2) Dormant Islands 100 100
Alternative Energy (Asia) British Virgin
Limited(2) Dormant Islands 100 100
Alternative Energy(Caribbean) British Virgin
Limited(2) Dormant Islands 100 100
Alternative Energy (Europe) British Virgin
Limited(2) Dormant Islands 100 100
(1) Audited by BDO LLP, Singapore, for statutory audit purposes
(2) The company is inactive or dormant and unaudited management
financial statements are used for the preparation of the
consolidated financial statements
(3) The company is audited by BDO LLP, Singapore, for consolidation purposes.
10. Investment in joint venture
Group
31 December 31 August
2012 2011
US$ US$
Unquoted equity shares, at cost
Balance at beginning of financial period/year 118,690 -
Acquisition of joint venture - 120,696
Share of loss (118,675) (2,021)
Currency translation differences (15) 15
----------- ---------
Balance at end of financial period/year - 118,690
=========== =========
The details of the joint venture are as follows:
Country of
Principal incorporation/ Effective
Joint venture activities operation equity interest
2012 2011
% %
Held by Alternative
Energy Holdings Limited
Manufacture light
fittings, street
lights and other
The Green Light Company lighting equipment China 50 50
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 Group's interest (based on the paid-up capital ratio) in the
joint venture are as follows:
Group
31 December 31 August
2012 2011
US$ US$
Assets and liabilities:
Total assets 113,245 118,690
Total liabilities 172,735 -
Net (liabilities)/assets (59,490) 118,690
=========== =========
Group
Financial Financial
period from year from
1 September 1 September
2011 to 2010 to
31 December 31 August
2012 2011
US$ US$
Results
Revenue 95,432 -
Loss for the financial period/year (343,498) (4,042)
Group's share of joint venture's loss
for the financial period/year (118,675) (2,021)
============ ============
11. Intangible assets
Computer
Group Goodwill software Patents Trademarks Total
US$ US$ US$ US$ US$
2012
Cost
As at 1 September
2011 464,726 54,486 14,131,128 394,495 15,044,835
Additions - - 14,204,198 20,752 14,224,950
As at 31 December
2012 464,726 54,486 28,335,326 415,247 29,269,785
-------- --------- ---------- ---------- ----------
Accumulated amortisation
As at 1 September
2011 - 47,017 - - 47,017
Amortisation for
the financial period
(Note 5) - 7,071 - - 7,071
-------- --------- ---------- ---------- ----------
As at 31 December
2012 - 54,088 - - 54,088
-------- --------- ---------- ---------- ----------
Net carrying amount
As at 1 September
2011 464,726 7,469 14,131,128 394,495 14,997,818
======== ========= ========== ========== ==========
As at 31 December
2012 464,726 398 28,335,326 415,247 29,215,697
======== ========= ========== ========== ==========
Computer
Group Goodwill software Patents Trademarks Total
US$ US$ US$ US$ US$
2011
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
(Note 5) - 12,976 - - 12,976
-------- --------- ---------- ---------- ----------
As at 31 August
2011 - 47,017 - - 47,017
-------- --------- ---------- ---------- ----------
Net carrying amount
As at 1 September
2010 464,726 20,445 6,396,350 326,387 7,207,908
======== ========= ========== ========== ==========
As at 31 August
2011 464,726 7,469 14,131,128 394,495 14,997,818
======== ========= ========== ========== ==========
Patent
31 December 31 August
2012 2011
US$ US$
Company
Cost and carrying amount
Balance at beginning of financial period/year 14,107,433 6,387,805
Additions 14,204,198 7,719,628
----------- ----------
Balance at end of financial period/year 28,311,631 14,107,433
=========== ==========
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.
Upon the successful registration of certain patents, the Company
purchased part of these patents and technology for a contractual
purchase consideration of US$10 million (2011: US$4 million) by
issuing 333,333,334 (2011: 133,333,333) new ordinary shares for the
fair value of the purchase consideration of US$14,166,664 (2011:
US$7,666,667) as disclosed in Note 14 to the financial
statements.
For the purpose of the consolidated statement of cash flows, the
Group's additions to intangible assets during the financial
period/year comprise of the following:
Group
31 December 31 August
2012 2011
US$ US$
Additions to intangible assets 14,224,950 7,802,886
Non-cash transaction settlement by
issuance of new ordinary shares (Note
22.1) *(14,166,664) *(7,666,667)
------------- ------------
Purchase of intangible assets by cash
payment 58,286 136,219
============= ============
* This represents a fair value based on the Company's share
price as at relevant date.
Impairment testing for intangible assets
The recoverable amount of intangible assets has been determined
based on a value-in-use calculation using the cash flow projections
which are based on financial budgets approved by management
covering a period four years. The discount rate applied to cash
flow projections is 10% per annum.
12. Trade and other receivables
Group Company
31 December 31 August 31 December 31 August
2012 2011 2012 2011
US$ US$ US$ US$
Current
Trade receivables 4,505 19,072 - -
Other receivables 56,088 51,996 56,088 51,996
Deposits 124,758 117,002 86,163 83,520
Prepayments 5,117 5,152 5,117 -
Amounts due from
a related party 2,555,872 - - -
Amounts due from
Chairman 400,000 - 400,000 -
Amounts due from
subsidiaries - - 24,002 3,525,389
----------- --------- ----------- ---------
3,146,340 193,222 571,370 3,660,905
Non-current
Amounts due from
subsidiaries - - 3,894,859 2,688,805
----------- --------- ----------- ---------
Total trade and
other receivables 3,146,340 193,222 4,466,229 6,349,710
Add: Cash and cash
equivalents 14,942 924,864 600 915,409
Less: Prepayments (5,117) (5,152) (5,117) -
----------- --------- ----------- ---------
Total loan and receivables 3,156,165 1,112,934 4,461,712 7,265,119
=========== ========= =========== =========
Trade receivables are not past due, non-interest bearing and are
generally on 30 days' credit term.
Other receivables and amounts due from subsidiaries (current)
are not past due, non-interest bearing and are repayable on
demand.
Amounts due from a related party are unsecured, non-interest
bearing and are repayable on demand. The related party is Real
Capital International Limited, which is controlled by the
Chairman.
Amounts due from a Chairman relates to proceed from new ordinary
shares issued in November 2012 (Note 14) received by Chairman and
are unsecured, non-interest bearing and are repayable on demand.
The amount has been subsequently used to repay the Company's
creditor.
Amounts due from subsidiaries (non-current) are non-trade in
nature, unsecured, non-interest bearing and repayable on demand
from 12 months after the end of financial year. As a result, the
timing of the future cash flows in relation to this balance cannot
be estimated reliably. Consequently, it is not practicable to
determine with sufficient reliability its fair value and the amount
is stated at cost.
Trade and other receivables (excluding prepayments) are
denominated in the following currencies:
Group Company
31 December 31 August 31 December 31 August
2012 2011 2012 2011
US$ US$ US$ US$
United States dollar 446,617 42,625 4,343,861 6,239,194
Singapore dollar 155,207 142,982 114,828 108,053
British pound 2,423 2,463 2,423 2,463
Euro 2,536,976 - - -
----------- --------- ----------- ---------
3,141,223 188,070 4,461,112 6,349,710
=========== ========= =========== =========
13. Cash and cash equivalents
Group Company
31 December 31 August 31 December 31 August
2012 2011 2012 2011
US$ US$ US$ US$
Cash on hand and
bank balances 738 825,602 600 830,293
Fixed deposits 14,204 99,262 - 85,116
----------- --------- ----------- ---------
Cash and cash equivalents 14,942 924,864 600 915,409
=========== =========
Less: fixed deposits
pledged to banks (14,204) (99,262)
----------- ---------
Cash and cash equivalents
as per consolidated
statement of cash
flows 738 825,602
=========== =========
Fixed deposits pledged to banks are deposits that are placed
with banks, with original maturing periods of not more than 365
(2011: 365) days. The fixed deposits earn interests at rates
ranging from 0.45% to 0.55% (2011: 0.35% to 0.45%) per annum.
The Group's and the Company's fixed deposits of US$14,204 and
US$ Nil (2011: US$99,262 and US$85,116) respectively, are pledged
to banks for credit card facilities granted to the Company and a
subsidiary.
Cash and cash equivalents are denominated in the following
currencies:
Group Company
31 December 31 August 31 December 31 August
2012 2011 2012 2011
US$ US$ US$ US$
Singapore dollar 14,766 915,325 538 915,403
United States dollar 109 38 62 6
Euro 56 - - -
Hong Kong dollar 11 9,501 - -
----------- --------- ----------- ---------
14,942 924,864 600 915,409
=========== ========= =========== =========
14. Issued capital
Group and Company
31 December 31 August 31 December 31 August
2012 2011 2012 2011
Number of ordinary
shares US$ US$
Issued and paid-up
Balance at beginning
of financial period/year 1,493,547,563 1,398,672,563 19,400,355 14,383,792
Issue of new ordinary
shares 444,291,667 94,875,000 18,071,768 5,016,563
------------- ------------- ----------- ----------
Balance at end of
financial period/year 1,937,839,230 1,493,547,563 37,472,123 19,400,355
============= ============= =========== ==========
Capital reserve - 60,958,333 - 3,505,104
============= ============= =========== ==========
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 current financial period, the Company purchased patents from
a related party for a contractual purchase consideration of US$10
million (which represents a fair value of US$14,166,664 based on
the Company's share price at the relevant date) by issuing
333,333,334 ordinary shares of the Company to the related party as
follows:
(a) US$2,460,367 of the 1(st) tranche has been settled by way of
issuing 57,891,044 new ordinary shares; and
(b) US$11,706,297 of the 2(nd) tranche has been settled by way
of issuing 275,442,290 new ordinary shares.
In November 2012, the Company issued 50,000,000 new ordinary
shares. These ordinary shares were issued at US$0.008. Cash
amounting to US$400,000 was raised from this exercise.
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. Subsequently, these shares have been allocated in different
batches and the capital reserve has been transferred to share
capital during the financial period ended 31 December 2012.
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$45,000 has been deducted from the proceeds
received.
15. Treasury shares
Group and Company
31 December 31 August 31 December 31 August
2012 2011 2012 2011
Number of ordinary
shares US$ US$
Balance at beginning
and end of financial
period/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 loss arising 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$187,500 is recognised directly in
statement of changes in equity.
16. Share options reserve
Share options reserve represents equity-settled share options
granted to Directors of the Company and employees of the Group. The
reserve is made up of cumulative value of services received from
share options holders recorded on grant of equity-settled share
options.
The movement of this account is disclosed in the statement of
changes in equity.
17. Convertible loans reserve
The convertible loans reserve represents the residual amount of
convertible loans after deducting the fair values of the liability
components. The movement in convertible loan is disclosed in the
statement of changes equity.
18. Trade and other payables
Group Company
31 December 31 August 31 December 31 August
2012 2011 2012 2011
US$ US$ US$ US$
Trade payable 3,239,649 - - -
Other payables 2,096,212 506,979 1,775,071 485,857
Accruals 215,954 124,697 100,000 27,397
Amount due to directors 597,171 62,851 359,220 60,000
Amount due to a
subsidiary - - 171,013 -
----------- --------- ----------- ---------
Total financial
liabilities carried
at amortised cost 6,148,986 694,527 2,405,304 573,254
=========== ========= =========== =========
Trade payables are non-interest bearing with a credit terms of
90 days.
No interest is charged on the other payables.
The amount owing to directors and subsidiary are unsecured,
interest-free and repayable on demand.
Trade and other payables are denominated in the following
currencies:
Group Company
31 December 31 August 31 December 31 August
2012 2011 2012 2011
US$ US$ US$ US$
British pound 304,230 146,899 304,230 146,899
Singapore dollar 1,088,295 418,021 417,518 300,691
United States dollar 1,512,050 123,950 1,678,793 120,901
Hong Kong dollar - 894 - -
Euro 3,239,648 - - -
Chinese renminbi 4,763 4,763 4,763 4,763
----------- --------- ----------- ---------
6,148,986 694,527 2,405,304 573,254
=========== ========= =========== =========
19. Convertible loans
Group Company
31 December 31 August 31 December 31 August
2012 2011 2012 2011
US$ US$ US$ US$
Convertible loans
due to a director 3,680,316 2,722,363 3,680,316 2,722,363
=========== ========= =========== =========
The convertible loans are denominated in United States dollar.
Convertible loans due to a Chairman represents the fair values of
the liability components after deducting equity components from the
fair values of the convertible loans and is made up as follows:
Group
31 December 31 August
2012 2011
US$ US$
Net proceeds of convertible loans issued 6,341,535 5,087,053
Less: Liability components at date
of issue (6,088,741) (4,885,891)
----------- -----------
Equity components 252,794 201,162
----------- -----------
Liability components at date of issue 6,088,741 4,885,891
Less: Repayment (2,408,425) (2,163,528)
----------- -----------
Liability components at end of financial
period/year 3,680,316 2,722,363
=========== ===========
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
loans agreement and shall terminate on 1 May 2012. The lender has
agreed to extent the loan period to 9 January 2013. All the terms
and conditions remain the unchanged;
-- As at 31 December 2012, the terms of the convertible loans
remain as follows:
-- 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 listed
shares of the Company at US$0.03 share;
-- The Company may without penalty repay the whole or part of
the loans before the repayment date; and
-- The Company may also offset any expenses or amount owing from
the Lender to the Company against the loans.
20. Provisions
Group Company
31 December 31 August 31 December 31 August
2012 2011 2012 2011
US$ US$ US$ US$
Provision for unutilised
leave 12,440 50,745 - -
Provision for reinstatement
cost 21,195 21,195 - -
----------- --------- ----------- ---------
33,635 71,940 - -
=========== ========= =========== =========
Movements of provisions during the financial period/year are as
follows:
Group Company
31 December 31 August 31 December 31 August
2012 2011 2012 2011
US$ US$ US$ US$
Balance at beginning
of financial period/year 71,940 41,987 - -
(Reversal)/Addition
during the financial
period/year (38,305) 29,953 - -
----------- --------- ----------- ---------
Balance at end of
financial period/year 33,635 71,940 - -
=========== ========= =========== =========
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 period/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.
The ESOS 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
31 December 31 August
2012 2011
'000 '000
Balance at beginning and end of financial
period/year 81,000 81,000
=========== =========
81,000,000 share options were granted on 5 May 2010. The
estimated fair value of the share options granted is
US$1,480,000.
The fair value of share options as at the date of grant is
estimated by an external valuer using the Black-Scholes-Merton
model, taking into account the terms and conditions upon which the
options were granted. The options have the vesting period of 2
years and the inputs to the model used are shown below.
Share price
Risk-free Expected at date
Expected interest life of Exercise of
Date of grant volatility rate options price grant
(%) (%) (years) (US$) (US$)
5 May 2010 21.5 2.72-3.72 5-10 0.03 0.04
22. Related parties transactions
For the purposes of these financial statements, parties are
considered to be related to the Group if the Group has the ability,
directly or indirectly, to control the party or exercise
significant influence over the party in making financial and
operating decisions, or vice versa, or where the Group and the
party are subject to common control or common significant
influence. Related parties may be individuals or other
entities.
22.1 During the year, in addition to the information disclosed
elsewhere in these financial statements, the Group entities entered
into the following transactions with related parties at rates and
terms agreed between the parties:
Group
1 September 1 September
2011 to 2010 to
31 December 31 August
2012 2011
US$ US$
Purchase of patents (Note 11) 14,166,664 7,666,667
Proceeds from convertible loans 1,254,482 3,087,053
Payment on behalf to a director 244,897 1,760,253
Advances from a director 97,854 -
Receipt on behalf by Chairman 400,000 -
============ ===========
22.2 Key management personnel compensation
Fees/
salary
and Defined Share
related contribution option
costs Bonus plans expense Total
US$ US$ US$ US$ 2012 2011
Executive Directors
Christopher Nightingale 320,000 - - - 320,000 240,000
Dr Goh Swee Ming 196,746 24,186 15,034 124,685 360,651 276,451
Non-Executive Directors
Richard Lascelles 20,000 - - 124,685 144,685 120,000
Bay Yew Chuan 20,000 - - 124,685 144,685 120,000
*Noel Meaney - - - 124,685 124,685 120,000
-------- ------ ------------- -------- ---------
Total Key Management
2012 556,746 24,186 15,034 498,740 1,094,706
------ ------------- -------- ---------
Total Key Management
2011 460,048 8,287 8,116 400,000 876,451
-------- ------ ------------- -------- =======
* Resigned on 29 November 2012.
The Non-Executive Directors' consultancy fees of US$40,000
(2011: US$60,000) were accrued and have not been paid as at 31
December 2012 along with US$326,416 (2011: US$60,000) and
US$172,902 (2011: US$2,851) of Christopher Nightingale's and Dr Goh
Swee Ming's salary respectively.
The remuneration of Directors is determined by the Remuneration
Committee having regard to the performance of individuals and
market trends. The remuneration disclosed above includes only the
Directors as there is no personnel other than Directors who are
considered to be a member of key management of the Group.
23. Operating lease commitments
At the end of the financial period/year, the commitments in
respect of non-cancellable operating leases of office premises and
equipment were as follows:
Group Company
31 December 31 August 31 December 31 August
2012 2011 2012 2011
US$ US$ US$ US$
Future minimum lease
payments payable:
Within one year 190,670 276,812 38,423 146,718
After one year but
within five years 136,219 379,960 - 97,812
----------- --------- ----------- ---------
326,889 656,772 38,423 244,530
=========== ========= =========== =========
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 Group has 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 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 period/year.
The Company has a significant concentration of credit risk in
the form of outstanding balances due from 2 (2011: 2) subsidiaries
representing 88% (2011: 97%) of total trade and other
receivables.
As at the end of the financial year, the Group's and the
Company's maximum exposure to credit risk is represented by the
carrying amount of each class of financial assets recognised in the
statements of financial position.
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.
In prior 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 with a total amount of US$924,864 and
US$915,409 respectively. No significant exposure for the financial
period from 1 September 2011 to 31 December 2012.
24.2 Market risk
Market risk is the risk that changes in market prices, such as
foreign exchange rates and interest rates will affect the Group's
income or value of its holdings of financial instruments. The
objective of market risk management is to manage and control market
risk exposures within acceptable parameters, while optimising the
return on risk.
Foreign currency risk
The Group is exposed to currency risk arising from various
currency exposures. The currencies giving rise to this risk are
primarily Singapore dollar, British pound and Euro. Exposure to
foreign currency risk is monitored on an ongoing basis by the Group
to ensure that the net exposure is at an acceptable level, as the
Group manages its transactional exposure by a policy of matching,
as far as possible, receipts and payments in each individual
currency. As the entities in the Group transacts substantially in
the functional currency of the respective entities within the
Group.
The carrying amounts of the Group's and the Company's foreign
currency denominated monetary assets and liabilities as at the end
of the financial period/year are as follows:
Group Company
31 December 31 August 31 December 31 August
2012 2011 2012 2011
US$ US$ US$ US$
Monetary assets
Euro 2,537,032 - - -
Singapore dollar 169,973 1,058,307 115,366 1,023,456
British pound 2,423 2,463 2,423 2,463
Hong Kong dollar 11 9,501 - -
=========== ========= =========== =========
Group Company
31 December 31 August 31 December 31 August
2012 2011 2012 2011
US$ US$ US$ US$
Monetary liabilities
Singapore dollar 1,088,295 418,021 417,518 300,691
Euro 3,239,648 - - -
British pound 304,230 146,899 304,230 146,899
Chinese renminbi 4,763 4,763 4,763 4,763
Hong Kong dollar - 894 - -
=========== ========= =========== =========
Foreign currency sensitivity analysis
The Group is mainly exposed to Singapore dollar (SGD), British
pound (GBP) and Euro (EUR).
The following table details the Group's sensitivity to a 10%
change in SGD, GBP and EUR against United States dollar. The
sensitivity analysis assumes instantaneous 10% change in the
foreign currency exchange rates from the end of the financial year,
with all variables held constant.
Increase/(Decrease)
--------------------------------------
Group Company
Profit or Loss
--------------------------------------
2012 2011 2012 2011
US$ US$ US$ US$
SGD
Strengthens against
US$ (91,832) 64,029 (30,215) 72,277
Weakens against US$ 91,832 (64,029) 30,215 (72,277)
GBP
Strengthens against
US$ (30,181) (14,444) (30,181) (14,444)
Weakens against US$ 30,181 14,444 30,181 14,444
EUR
Strengthens against
US$ (70,262) - - -
Weakens against US$ 70,262 - - -
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, convertible loans, 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.
The Group's financial liabilities at the end of financial
period/year is disclosed in the statement of financial position are
payable within next twelve months and there is no significant
interest expected from these liabilities. The balances due within
12 months equal their carrying balances as the impact of
discounting is not expected to be significant.
25. Fair value of financial assets and financial liabilities
The carrying amounts of the financial assets and liabilities in
the consolidated financial statements approximate their fair values
due to the relative short term maturity of these financial
instruments. The fair value of other classes of financial assets
and liabilities are disclosed in the respective notes to the
financial statements.
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 2011.
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
Management has determined the operating segments based on the
reports reviewed by chief operating decision-maker (Note 2.16).
The chief operating decision-maker considers the business from
only a business segment perspective, as geographical, management
manages and monitors the business only from Singapore. Most of the
assets and liabilities are located in Singapore.
The principal operations of the Group relates the provision of
technology, hardware and equipment for renewable energy and green
energy solutions product in Asia Pacific and Europe region.
In presenting information on the basis of geographical segments,
segment revenue is based on the geographical markets.
Distribution of total revenue by geographical markets:
Group
-------------------------
1 September 1 September
2011 to 2010 to
31 December 31 August
2012 2011
USD USD
Asia Pacific 154,072 52,826
Europe 12,170,883 -
------------ -----------
12,324,955 52,826
============ ===========
The Group has one (2011: Nil) major customer in which represent
approximately 99% of the Group's total revenue.
28. Contingent liabilities
Continuing financial support
As at end of the financial period/year, the Company has given
undertakings to provide continued financial support to certain
subsidiaries to enable them to operate as going concern and meet
their obligations as and when they fall due for at least 12 months
from the end of the financial period/year.
At the end of the financial period/year, these subsidiaries had
capital deficienciesof approximately US$4,282,691 (2011:
US$5,881,996) including amounts due by the subsidiaries to the
Company ofUS$3,747,848 (2011: US$6,214,194).
29. Comparatives
The Group changed its financial year from 31 August to 31
December. As a result, this set of financial statements present the
financial position of the Group and the Company as at 31 December
2012 and the financial results for the financial period from 1
September 2011 to 31 December 2012. The comparatives present the
financial position of the Group and the Company as at 31 August
2011 and the financial results for the financial year ended 31
August 2011.
30. Events subsequent to the reporting period
Subsequent to 31 December 2012, the following events have taken
place:
(a) On 9 January 2013, the shareholders of the Company approved
the Company entered into the revised convertible loan agreement
dated 3 October 2012 with Christopher Nightingale (Chairman).
Pursuant to the Revised Convertible Loan Agreement, the parties
have determined to increase the total facility to the Company to an
aggregate amount of US$7,000,000.
The salient terms and conditions of the Revised Convertible loan
agreement are summarised as follow:
- The Lender grants to the Borrower an unsecured term loan in an
aggregate principal amount to US$7,000,000.
- In the event of redemption by the Company of all or any of the
Revised Convertible Loan during its term, Christopher Nightingale
shall have the option to require the Company to draw the amount of
the Revised Convertible Loan in order to enable him to exercise his
Conversion Rights.
- The repayment period has extended from 9 January 2013 to 3
October 2014
- An interest of 4% per annum be imposed.
- 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$0.008 share.
- In the event that the conversion of the Loan into Conversion
Shares does not take place either fully or partially, the Borrower
shall on the Repayment Date repay all outstanding sums of the Loan,
including the interest on Loan, in United States dollars.
(b) On 9 January 2013, the Company proposed to undertake a
non-renounceable and non-underwritten preferential offering of up
to 600,000,000 new ordinary shares at issue price of US$0.008 for
each preferential offering shares ("POS"). The total amount
expected is US$4,800,000. Pursuant to the offering, the Company has
raised a total of US$2,208,929 at the issue price of US$0.008 per
POS which including the share subscribed by the two directors as
disclosed below.
(c) Dr Eric Goh Swee Ming, the Executive Director of the
Company, who is also an entitled shareholder, has subscribed for
3,750,000 POS at the Issue price. Following this subscription Dr
Eric Goh Swee Ming will hold 10,808,823 Ordinary Shares in the
Company representing approximately 0.52 per cent of the Enlarged
Issued Shares.
(d) Mr Bay Yew Chuan, the Non-Executive Director of the Company,
who is also an entitled shareholder, has subscribed for 2,000,000
POS at the Issue price. Following this subscription Mr Bay Yew
Chuan will hold 27,000,000 ordinary Shares in the Company
representing approximately 1.29 per cent of the Enlarged Issued
Shares.
(e) The proceed raised from Preferential Offering is for the
general working capital purposes of the Company and to develop the
business and technologies of the Company, particularly those in
relation to the 1000 Island Project.
(f) On 18 April 2013, a subsidiary has entered into a
distribution agreement with PT. Graha Raja Wali Pratama, a third
party, to appoint sole distributor for the promotion and sale of
the products within the agreed territory.
(g) On 22 April 2013, the Company has entered into the master
project agreement ("Master Project Agreement") with P.T. Mega Urip
Pesona on 12 April 2013. Pursuant to the Master Project Agreement,
the Company has been appointed as exclusive Employers Engineering,
Procurement and Construction contractor ("Employers EPC
Contractor") for the 1000 Island Project, which involves the
establishment of solar energy generating facilities across
Indonesia.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR ZMGZVNRRGFZM
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