TIDMALR
RNS Number : 9958B
Alternative Energy Limited
28 February 2011
For immediate release 28 February 2011
ALTERNATIVE ENERGY LIMITED
("Alternative Energy" or "the Company")
Report and Accounts
The Company today announces that it has published the Report and
Accounts for the year to 31 August 2010 ("the Accounts"), and they
are being posted to shareholders. The Accounts will shortly be
available on the Company website, www.alternativeenergy.com.sg and
extracts are set out below:
CHAIRMANS STATEMENT
I am pleased to present to you the Company's financial
statements for the financial year ended 31(st) August 2010.
The period since the Company relisted in June 2010 has seen a
transformation in the Company. For the period up until the
relisting, which effectively encompassed the period covered by the
attached financial statements, the Company had been heavily engaged
in the research and development necessary to provide the basis for
becoming an operational business. The three years of background and
hard work put in by Dr Goh, Dr Tay and their team have resulted in
the Company now having an increasing range of products representing
both green energy generation systems and energy saving products led
by its range of LED lights.
The company now has 116 patent applications in 56 countries in
respect of 15 inventions, 5 of which inventions now have patents
granted. We have also filed applications for 27 trade marks across
39 countries with a view to securing our brands. These applications
are supported by a growing number of certifications in respect of
the Company's products to ensure quality and also ensure that those
products meet the highest international standards and are accepted
in all of the major international markets.
The Company now owns 50% of a manufacturing plant in China which
enables its engineers to oversee the design and quality control of
its lighting products for supply into the international market
place. Advances in the design and production methods of the
Company's solar eRoof, and progress with its eLive housing are
expected to put the Company in a position to deliver to its first
customers by the end of the year.
Significant efforts have also been made during the past six
months to begin to establish a global network of distributors for
the Company's products, with candidates being carefully vetted to
ensure that they have the necessary competence. This has resulted
in the signing of two distribution agreements to date, in the
United Kingdom and Nigeria. The Company's products are currently
being tested in a number of other countries around the world and we
will be seeking to appoint further distributors during the coming
months. The Company has also received a grant from the Singapore
government to establish a marketing office in the United States,
and this will help to ensure that the Company's reach will become
truly global.
The Company is now truly focussed on revenue generation from its
products, building on the very solid foundations it has
established, with a view to revenues making an increasing
contribution to overheads and achieving profitability as soon as
possible. In the meantime the Company is exploring the possibility
of a further fund raising in order to enable it to match growth to
the available opportunities, for example the opportunity created by
the abolition of conventional incandescent light bulbs across the
European Union in accordance with climate change directives.
Pending our analysis of the Company's funding requirements for
growth I will continue to support the Company and for this reason I
have also agreed to increase the level of my convertible loan to
the Company by a further US$1,000,000.
As a result of all of the combined efforts of our dedicated
team, Alternative Energy is becoming a multi-technology focussed
green energy company which develops practical and well priced
branded technology which will be marketed by a global network of
competent distributors.
This time last year I expressed confidence that shareholders'
patience would be seen to be justified. I believe that if
shareholders reflect on the tremendous amount which has been
achieved within the Company's budget, including the cost of
relisting the Company, the amount of intellectual property secured,
the establishment of the Company's manufacturing capacity in China
and the development of a growing product list and distribution
network, they would accept that these words were an accurate
prediction of the Company's achievements.
There is still much to be done, but the Company is now
operational and will be seeking to capitalise on the key business
drivers, which are the worldwide growth of energy consumption, the
political support for green energy and climate change incentives
which is now manifesting itself in increasing financial incentives
around the world, and the volatility of fossil fuel prices, which
make adoption of alternative energy and energy saving measures, the
Company's core business, an imperative and not an option.
Christopher Nightingale, Chairman
For further information, please
contact:
--------------------------------- --------------------------
Dr Eric Goh, Alternative Energy Tel: +65 6873 7782
Limited
--------------------------------- --------------------------
Richard Lascelles, Alternative Tel: +44 (0) 20 7408 1067
Energy Limited
--------------------------------- --------------------------
Roland Cornish, Beaumont Cornish Tel: +44 (0) 20 7628 3396
Limited
--------------------------------- --------------------------
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF
ALTERNATIVE ENERGY LIMITED
Report on the Financial Statements
We have audited the accompanying financial statements of
Alternative Energy Limited (the Company) and its subsidiaries (the
Group) which comprise the statements of financial position of the
Group and of the Company as at 31 August 2010, and the consolidated
statement of comprehensive income, statement of changes in equity
of the Group and of the Company and statement of cash flows of the
Group for the financial year then ended, and a summary of
significant accounting policies and other explanatory note.
Management's Responsibility for the Financial Statements
Management is responsible for the preparation and fair
presentation of these financial statements in accordance with the
provisions of the Singapore Companies Act, Cap. 50 (the "Act") and
International Financial Reporting Standards. This responsibility
includes:
(a) 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 statement
of comprehensive income and statement of financial position and to
maintain accountability of assets;
(b) selecting and applying appropriate accounting policies;
and
(c) making accounting estimates that are reasonable in the
circumstances.
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 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 and fair presentation of the
financial statements in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the Company's
internal control. An audit also includes evaluating the
appropriateness of accounting policies used and the reasonableness
of accounting estimates made by 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,
(a) the consolidated financial statements of the Group, the
statement of financial position and statement of changes in equity
of the Company are properly drawn up in accordance with the
provisions of the Act and International Financial Reporting
Standards so as to give a true and fair view of the state of
affairs of the Group and of the Company as at 31 August 2010 and of
the results, changes in equity and cash flows of the Group and
changes in equity of the Company for the financial year ended on
that date and;
(b) the accounting and other records required by the Act to be
kept by the Company and by subsidiaries incorporated in Singapore
of which we are the auditors have been properly kept in accordance
with the provisions of the Act.
Emphasis of Matter
Without qualifying our opinion, we draw attention to Note 2.2 to
the financial statements which indicate that the Group and the
Company have been incurring losses for the current and past years.
The Group and the Company have taken measures as described in Note
2.2 to the financial statements to secure the necessary funding to
meet their daily operation needs. If these measures described in
Note 2.2 to the financial statements fail to materialise, this
would indicate an existence of a material uncertainty which may
cast significant doubt about the Group's and the Company's
abilities to continue as a going concern.
BDO LLP
Public Accountants and
Certified Public Accountants
Singapore
25 February 2011
Lai Keng Wei
Partner-in-charge
ALTERNATIVE ENERGY LIMITED
STATEMENT OF FINANCIAL POSITION AS AT 31 AUGUST 2010
Group Company
Note 2010 2009 2010 2009
US$ US$ US$ US$
Assets
Non-current
assets
Plant and
equipment 4 114,416 206,552 24,170 4,111
Investment in
subsidiaries 5 - - 668,072 537,742
Intangible assets 6 7,207,908 921,882 6,387,805 216,083
----------- ----------- ----------- -----------
7,322,324 1,128,434 7,080,047 757,936
=========== =========== =========== ===========
Current assets
Cash and bank
balances 7 1,681,620 1,798,732 1,389,641 1,700,055
Other receivables 8 148,969 99,961 4,579,657 2,744,336
-----------
1,830,589 1,898,693 5,969,298 4,444,391
----------- ----------- ----------- -----------
Total assets 9,152,913 3,027,127 13,049,345 5,202,327
=========== =========== =========== ===========
Equity and
liabilities
Capital and
reserves
Issued capital 9 14,383,792 7,916,392 14,383,792 7,916,392
Treasury shares 10 (56,400) (1,200,000) (56,400) (1,200,000)
Share options
reserve 11 264,082 - 130,411 -
Convertible loan
reserve 12 401,052 - 401,052 -
Accumulated
losses (7,259,786) (3,847,806) (3,153,167) (1,607,092)
7,732,740 2,868,586 11,705,688 5,109,300
----------- ----------- ----------- -----------
Current
liabilities
Other payables
and accruals 13 182, 513 115,247 147,984 93,027
Convertible loan 14 1,195,673 - 1,195,673
Provisions 15 41,987 43,294 - -
1,420,173 158,541 1,343,657 93,027
Total equity and
liabilities 9,152,913 3,027,127 13,049,345 5,202,327
=========== =========== =========== ===========
ALTERNATIVE ENERGY LIMITED
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE FINANCIAL YEAR ENDED 31 AUGUST 2010
Note 2010 2009
US$ US$
Revenue 658 -
Cost of Sales (596) -
Gross profit 62 -
Other income 15,517 53,926
Administrative expenses (786,326) (511,447)
Other expenses (2,828,733) (2,118,112)
Finance costs - (2,296)
Loss before income tax 16 (3,599,480) (2,577,929)
Income tax 17 - (115)
Total loss for the financial year (3,599,480) (2,578,044)
============
Other comprehensive income:
Foreign currency translation differences - (5,621)
------------ ------------
Total comprehensive loss for the
year, net of tax (3,599,480) (2,583,665)
============ ============
Attributable to:
Equity holders of the Company (3,599,480) (2,578,044)
============ ============
Earning per share (US$ cents)
Basic and diluted 18 # #
============ ============
(#) denotes a figure which is less than US$0.01 cent.
ALTERNATIVE ENERGY LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE FINANCIAL YEAR ENDED 31 AUGUST 2010
Share Convertible
Issued Treasury options loan Accumulated
capital shares reserve reserve losses Total
Group US$ US$ US$ US$ US$ US$
Balance at 1
September
2009 7,916,392 (1,200,000) - - (3,847,806) 2,868,586
Total
comprehensive
loss for the
financial
year - - - - (3,599,480) (3,599,480)
Shares issued
during the
financial
year 6,467,400 - - - - 6,654,900
Re-issue of
treasury share
during the
financial
year - 1,143,600 - - - 1,143,600
Gain from
re-issue of
treasury share
during the
financial
year - - - - 187,500 187,500
Grant of
equity-settled
share options
to employees - - 264,082 - - 264,082
Reserve
attributable
to equity
component of
convertible
loan - - - 401,052 - 401,052
Balance at 31
August 2010 14,383,792 (56,400) 264,082 401,052 (7,259,786) 7,732,740
========== =========== ======= =========== =========== ===========
ALTERNATIVE ENERGY LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE FINANCIAL YEAR ENDED 31 AUGUST 2010 (Continued)
Foreign
currency
Issued Treasury translation Accumulated
2009 capital shares reserve losses Total
Group US$ US$ US$ US$ US$
Balance at 1
September 2008 7,916,392 - 5,621 (1,269,762) 6,652,251
Total
comprehensive
loss for the
financial
year - - (5,621) - (2,578,044) (2,583,665)
Shares
repurchased
during the
financial
year - (1,200,000) - - - (1,200,000)
-
Balance at 31
August 2009 7,916,392 (1,200,000) - (3,847,806) 2,868,586
========= =========== ============= =========== ===========
ALTERNATIVE ENERGY LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE FINANCIAL YEAR ENDED 31 AUGUST 2010 (Continued)
Share Convertible
Issued Treasury options loan Accumulated
2010 capital Shares reserve reserve losses Total
Company US$ US$ US$ US$ US$ US$
Balance at 1
September
2009 7,916,392 (1,200,000) - - (1,607,092) 5,109,300
Total
comprehensive
loss for the
financial
year - - - - (1,733,575) (1,733,575)
Shares issued
during the
financial
year 6,467,400 - - - - 6,654,900
Re-issue of
treasury share
during the
financial
year - 1,143,600 - - - 1,143,600
Gain from
re-issue of
treasury share
during the
financial
year - - - 187,500 187,500
Grant of
equity-settled
share options
to employees - - 130,411 - - 130,411
Reserve
attributable
to equity
component of
convertible
loan - - - 401,052 - 401,052
Balance at 31
August 2010 14,383,792 (56,400) 130,411 401,052 (3,153,167) 11,705,688
========== =========== ======= =========== =========== ===========
ALTERNATIVE ENERGY LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE FINANCIAL YEAR ENDED 31 AUGUST 2010 (Continued)
Issued Treasury Accumulated
2009 capital shares losses Total
Company US$ US$ US$ US$
Balance at 1
September
2008 7,916,392 - (505,742) 7,410,650
Total
comprehensive
loss for the
financial
year - - - ( (1,101,350) (1,101,350)
Shares
repurchased
during the
financial
year - - (1,200,000) - (1,200,000)
-
Balance at 31
August 2009 7,916,392 (1,200,000) (1,607,092) 5,109,300
========= =========== =========== ===========
ALTERNATIVE ENERGY LIMITED
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE FINANCIAL YEAR ENDED 31 AUGUST 2010
2010 2009
US$ US$
Operating activities
Loss before income tax (3,599,480) (2,577,929)
Adjustments for:
Depreciation of plant and equipment 132,258 120,914
Plant and equipment written off 1,393 -
Amortisation of intangible assets 16,624 12,021
Provision for reinstatement cost 1,245 (375)
Provision for unutilised leave (2,552) 11,611
Share options expense 264,082 -
Interest expense - 2,296
Interest income (746) (53,926)
------------- ------------
Operating cash flows before movements
in working capital (3,187,176) (2,485,388)
Other receivables (49,008) 49,869
Other payables and accruals (excluding
amount due to a director) 74,507 (66,037)
------------- ------------
Cash used in operations (3,161,677) (2,501,556)
Interest paid - (2,296)
Income tax paid - (115)
------------- ------------
Net cash used in operating activities (3,161,677) (2,503,967)
------------- ------------
Investing activities
Interest received 746 53,926
Purchase of plant and equipment (41,515) (169,482)
Increase in pledged fixed deposits (437) (11,252)
Additions of intangible assets (302,650) (290,884)
------------- ------------
Net cash used in investing activities (343,856) (417,692)
------------- ------------
Financing activities
Proceeds from convertible loan 2,000,000 -
Repayment to director (410,516) -
Proceeds from issue of shares 467,400 -
Proceeds from re-issue of treasury shares 1,331,100 -
Cash returned to shareholders during
buyback exercise - (1,200,000)
------------- ------------
Net cash from /(used in) from financing
activities 3,387,984 (1,200,000)
------------- ------------
Net decrease in cash and cash equivalents (117,549) (4,121,659)
Cash and cash equivalents at beginning
of financial year 1,701,707 5,828,987
Effect of foreign exchange on cash and
cash equivalents - (5,621)
------------- ------------
Cash and cash equivalents at end of
financial year 1,584,158 1,701,707
============= ============
ALTERNATIVE ENERGY LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 31 AUGUST 2010
These notes form an integral part of and should be read in
conjunction with the accompanying financial statements
1. General corporate information
The Company (Registration Number 200619290H) is incorporated and
domiciled in Singapore with its principal place of business and
registered office at 1 Science Park Road, #02-09, The Capricorn,
Singapore Science Park II, Singapore 117528.
On 12 October 2007, the Company was successfully admitted to the
official list of the Alternative Investment Market of the London
Stock Exchange in the United Kingdom.
The principal activity of the Company is the provision of
technology, hardware and equipment for renewable energy and green
energy solutions. It also makes investments and/or acquisitions in
and to develop energy technologies, businesses and companies which
offer an alternative to conventional fossil fuel and nuclear
methods of generating household and industrial energy, as well as
performing management services (including marketing and other
necessary services) for its subsidiaries.
The principal activities of the subsidiaries are set out in Note
5 to the financial statements.
The consolidated financial statements of the Group and the
statement of financial position of the Company for the financial
year ended 31 August 2010 were authorised for issue by the Board of
directors on 25 February 2011.
2. Summary of significant accounting policies
2.1 Statement of compliance
The financial statements have been prepared in accordance with
the provisions of the Singapore Companies Act, Cap. 50 and the
International Financial Reporting Standards (IFRS), including
interpretations made by the International Financial Reporting
Interpretations Committee (IFRIC).
2.2 Basis of preparation
The principal accounting policies adopted in the preparation of
the financial statements are set out below. The policies have been
consistently applied to all the years presented, unless otherwise
stated.
These financial statements have been prepared on historical cost
basis except as disclosed in the accounting policies below, and are
in line with International Financial Reporting Standards (IFRS) and
IFRIC interpretations issued by the International Accounting
Standards Board (IASB). The adoption of all of the new and revised
Standards and Interpretations issued by the IASB and the
International Financial Reporting Interpretations Committee (IFRIC)
of the IASB that are relevant to the operations and effective for
annual reporting periods beginning on 1 September 2009 are
reflected in these financial statements.
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.
2. Summary of significant accounting policies
2.2 Basis of preparation
Going concern
In preparing the consolidated financial statements, the
directors have carefully considered the future liquidity of the
Group and the Company in the light of the current financial
position of the Group and as at 31 August 2010 the recurring losses
from operations in the current and past years, during which the
Company concentrated on the research and development necessary to
prepare the Company's products for sale in the international
markets.
For the last few months the Company has been supported by its
Chairman, Christopher Nightingale, who entered into a US$2 million
convertible loan agreement with the Company in 2010. The Company
has now started to generate revenues having entered into two
distributorship agreements and is expecting to generate further
revenues during the course of the coming year which will make an
increasing contribution to its overheads with a view to taking the
Company into profitability. In the meantime the Chairman has
confirmed that he will continue to support the Company and has now
offered to extend his convertible loan to the Company by a further
US$1 million to US$3 million. The Company is also exploring other
options to raise funds in order to fund the global distribution of
the Company's products which will augment the Company's available
cash. The directors continue to keep administrative and operating
costs to a minimum.
The directors are confident that the measures they are taking,
together with the support of the Chairman, will yield the Group and
the Company 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$3.599 million (2009: US$2.578 million) for the year ended 31
August 2010, 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.
The financial statements do not include the adjustments that
would result if the Group was not able to continue as a going
concern.
The preparation of financial statements in conformity with IFRS
requires management to make judgements, estimates and assumptions
that affect the application of policies and reported amounts of
assets and liabilities, income and expenses. The estimates and
associated assumptions are based on historical experience and
factors that are believed to be reasonable under the circumstances,
the results of which form the basis of making judgements about
carrying values of assets and liabilities that are not readily
apparent from other sources. Actual results may differ from these
estimates.
The 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 only
affects that period or in the period of revision and future periods
if the revision affects both current and future periods.
Information about significant sources of estimation uncertainty
and critical accounting judgements that are significant to the
financial statements is disclosed in Note 3 to the financial
statements.
During the financial year, the Group and the Company adopted the
new or revised IFRS and IFRIC that are relevant to their operations
and effective for the current financial year. Changes to the
Group's and the Company's accounting policies have been made as
required, in accordance with the relevant transitional provisions
in the respective IFRS and IFRIC.
2.2 Basis of preparation
The adoption of these new/revised IFRS and IFRIC does not result
in changes to the Group's and the Company's accounting policies and
has no material effect on the amounts reported for the current or
prior year's except as discussed below.
IAS 1 (2008) Presentation of Financial Statements
The Group and the Company have adopted IAS 1 (2008) from 1
September 2009. IAS 1 (2008) requires the Group and the Company to
present all changes in equity arising from transactions with
non-owners in a statement of comprehensive income separately from
those equity changes arising from transactions with owners in their
capacity as owners to be presented in the statement of changes in
equity. IAS 1 (2008) also requires the Group and the Company to
disclose income tax relating to each component of other
comprehensive income and to disclose reclassification adjustments
relating to components of other comprehensive income. Where the
Group and the Company restate or reclassify comparative
information, the Group and the Company will be required to present
a restated balance as of the beginning of the earliest comparative
period in addition to the current requirement to present the
statements of financial position as at the end of the current
period and comparative period. The Group and the Company have
chosen to present both the income statement and the statement of
other comprehensive income in a consolidated statement of
comprehensive income.
As a result of the application of IAS 1 (2008), certain
comparative figures have been adjusted to conform to the current
year's presentation and to provide for comparative amounts in
respect of items disclosed for the first time in 2009. This change
in presentation has no effect on reported profit or loss, total
income and expense or net assets for any period presented.
IAS 27 (revised) Consolidated and Separate Financial Statements
(effective for annual periods beginning on or after 1 July
2009)
The Group and the Company were adopted IAS 27(revised)
prospectively to all business combinations from 1 September 2009.
IAS 27 (revised) requires the effects of all transactions with
non-controlling interests to be recorded in equity if there is no
change in control and these transactions will no longer result in
goodwill or gains and losses. The standard also specifies the
accounting when control is lost. Any remaining interest in the
entity is re-measured to fair value, and a gain or loss is
recognised in income statement.
IFRS 3 (revised) Business Combinations (effective from 1 July
2009)
The Group and the Company have adoptedIFRS 3(revised)
prospectively to all business combinations from 1 September 2009.
The revised standard continues to apply the acquisition method to
business combinations, with some significant changes. For example,
all payments to purchase a business are to be recorded at fair
value at the acquisition date, with contingent payments classified
as debt subsequently re-measured through the statement of
comprehensive income. There is a choice on an
acquisition-by-acquisition basis to measure the non-controlling
interest in the acquiree at fair vale or at the non-controlling
interest's proportionate share of the acquiree's net assets. All
acquisition-related costs should be expensed off.
2.2 Basis of preparation
IFRS and IFRIC issued but not yet effective
IFRS 9 Financial Instruments (effective from 1 January 2013)
IFRS 9 replaces the multiple classification and measurement
models in IAS 39 with a single model that has only two
classification categories: amotised cost and fair value.
Classification under IFRS 9 is driven by the entity's business
model for managing the financial assets and the contractual
characteristics of the financial assets. A financial asset is
measured at amortised cost if two criteria are met: a) the
objective of the business model is to hold the financial asset for
the collection of the contractual cash flows, and b) the
contractual cash flows under the instrument solely represent
payments of principal and interest. The Group and the Company will
apply this standard from 1 January 2013.
2.3 Basis of consolidation
The consolidated financial statements incorporate the financial
statements of the Company and entities controlled by the Company
(its subsidiaries). Control is achieved where the Company has the
power to govern the financial and operating policies of an entity
so as to obtain benefits from its activities.
The results of subsidiaries acquired or disposed of during the
year are included in the consolidated statement of comprehensive
income from the effective date of acquisition and up to the
effective date of disposal, as appropriate.
Where necessary, adjustments are made to the financial
statements of subsidiaries to bring their accounting policies into
line with those used by other members of the Group.
All intra-group transactions, balances, income and expenses are
eliminated in full on consolidation.
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 Company.
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.
2.4 Investment in subsidiaries
Subsidiaries are entities over which the Group and the Company
have power to govern the financial and operating policies,
generally accompanying a shareholding of more than one half of the
voting rights. The existence and effect of potential voting rights
that are currently exercisable or convertible are considered when
assessing whether the Group and the Companycontrolanother
entity.
Investments in subsidiaries are stated at cost on the Company's
statement of financial position less impairment in value, if
any.
2.5 Intangible assets
(i) Goodwill on acquisition
Goodwill on acquisitionrepresents the excess of the cost of a
business combination or cost of an acquisition of an associate 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 annual reporting period,
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. Each period, 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 2.7 to the
financial statements.
(iii) Computer software
Acquired computer software licences are initially capitalised at
cost which includespurchase 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.
2.6 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 the
statement of comprehensive income. 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 cost of the plant and equipment over their estimated
useful lives of 3 years.
The residual value, useful life and depreciation method of plant
and equipment are reviewed at each end of the 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 Company 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 the statement of comprehensive income.
2.7 Financial instruments
Financial assets and financial liabilities are recognised on the
Group and the Company's statement of financial position when the
Group and the Company becomes a party to the contractual provisions
of the instruments.
Effective interest method
The effective interest method calculates the amortised cost of a
financial instrument and allocates the interest income or expense
over the relevant period. The effective interest rate is the rate
that exactly discounts estimated future cash receipts or payments
(including all fees on points paid or received that form an
integral part of the effective interest rate, transaction costs and
other premiums or discounts) through the expected life of the
financial instrument, or where appropriate, a shorter period.
Income and expense is recognised on an effective interest basis for
debt instruments other than those financial instruments "at fair
value through profit or loss".
2.7 Financial instruments
Financial assets
The Group and the Company follow the guidance of IAS 39 in
determining the classification of its financial assets. The
classification depends on the nature and purpose of these financial
assets and is determined at the time of initial recognition.
Loans and receivables
Loans and receivables that have fixed or determinable payments
that are not quoted in an active market are classified as "loans
and receivables". Loans and receivables are initially recognised at
fair value plus transaction costs. They are subsequently carried at
amortised cost, where applicable, using the effective interest
method. Interest is recognised by applying the effective interest
method, except for short-term receivables when the recognition of
interest would be impacted.
Impairment of financial assets
Loans and receivables are assessed for indicators of impairment
at the end of each financial year. Loans and receivables are
impaired where there is objective evidence that, as a result of one
or more events that occurred after the initial recognition of the
loans and receivables, the estimated future cash flows of the
investment have been impacted.
The carrying amounts of all financial assets are reduced by the
impairment losses directly with the exception of trade receivables
where the carrying amounts are reduced through the use of an
allowance account. Changes in the carrying amount of the allowance
account are recognised in the statement of comprehensive
income.
If, in a subsequent financial year, the amount of the impairment
loss decreases and the decrease can be related objectively to an
event occurring after the impairment loss was recognised, the
previously recognised impairment loss is reversed through the
statement of comprehensive income 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 Company 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 Company
neither transfers nor retains substantially all the risks and
rewards of ownership and continues to control the transferred
asset, the Company recognises its retained interest in the asset
and an associated liability for amounts it may have to pay. If the
Company retains substantially all the risks and rewards of
ownership of a transferred financial asset, the Company continues
to recognise the financial asset and also recognises a
collateralised borrowing for the proceeds receivables.
2.7 Financial instruments
Financial assets
Impairment of non-financial assets
The carrying amounts of non-financial assets are reviewed at the
end of each financial year to determine whether there is any
indication of impairment in value and whenever events or changes in
circumstances indicate that the carrying amount may not be
recoverable. If any such indication exists, or when annual
impairment testing for an asset (intangible assets with indefinite
useful life and intangible assets not yet available for use) is
required, the asset's recoverable amount is estimated.
An impairment in value is recognised whenever the carrying
amount of the asset or its cash-generating unit exceeds its
recoverable amount. Impairment in value is recognised in the
statement of comprehensive income.
The recoverable amount is the higher of an asset's fair value
less cost to sell and value in use. The fair value less cost to
sell is the amount obtainable from the sale of an asset in an arm's
length transaction. Value in use is the estimated future cash flow
discounted to their present value using a pre-tax discount rate
that reflects current market assessment of the time value of money
and the risks specific to the asset, expected to arise from the
continuing use of the asset and from its disposal at the end of its
useful life.
Recoverable amounts are estimated for individual assets or, if
it is not possible, for the cash-generating unit to which the asset
belongs.
An impairment in value is reversed if there has been a change in
the estimates used to determine the recoverable amount. An
impairment in value is reversed only to the extent that the asset's
carrying amount does not exceed the carrying amount that would have
been determined, net of depreciation or amortisation, if no
impairment in value has been recognised. Reversals of impairment in
value are recognised in the statement of comprehensive income.
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 the statement of comprehensive income 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.
Financial liabilities and equity instruments
Classification as debt or equity
Financial liabilities and equity instruments issued by the Group
and the Company are classified according to the substance of the
contractual arrangements entered into and the definitions of a
financial liability and an equity instrument.
2.7 Financial instruments
Financial liabilities and equity instruments
Equity instruments
An equity instrument is any contract that evidences a residual
interest in the assets of the Company after deducting all of its
liabilities. Equity instruments are recorded at the proceeds
received, net of direct issue costs.
Financial liabilities
The Company classifies its financial liabilities as other
financial liabilities.
Other payables and accruals
Other payables and accruals are initially measured at fair
value, net of transaction costs, and are subsequently measured at
amortised cost, where applicable, using the effective interest
method, with interest expense recognised on an effective yield
basis.
Derecognition of financial liabilities
The Company derecognises financial liabilities when, and only
when, the Company's obligations are discharged, cancelled or they
expire.
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.
2.8 Cash and cash equivalents
Cash and cash equivalents comprise cash on hand, cash with banks
and financial institutions. Cash equivalents are short-term, highly
liquid investments that are readily convertible to known amounts of
cash and are subject to an insignificant risk of changes in
value.
2.9 Provisions
Provisions are recognised when the Group and the Company have 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 the statement
of comprehensive income.
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 each end of the 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.
2.10 Employee benefits
Retirement benefit costs
Payments to defined contribution retirement benefit plans are
charged as an expense as they fall due. Payments made to
state-managed retirement benefit schemes, such as the Singapore
Central Provident Fund, are dealt with as payments to defined
contribution plans where the Company's obligations under the plans
are equivalent to those arising in a defined contribution
retirement benefit plan.
Employee leave entitlement
Employee entitlements to annual leave are recognised when they
accrue to employees. An accrual is made for the estimated liability
for annual leave as a result of services rendered by employees up
to the reporting date.
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 the statement of comprehensive income 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 the statement of
comprehensive income, 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.
2.11 Revenue recognition
Revenue is recognised to the extent that it is probable that the
economic benefits will flow to the Group and the Company and the
revenue can be reliably measured. Revenue is measured at the fair
value of the consideration received or receivable.
Management fee income
Management fee income is recognised on an accrual basis in
accordance with the substance of the relevant agreements.
Sale of goods
Sale of goods is recognised when the Company has transferred to
the buyer the significant risks and rewards of ownership of the
goods and retains neither continuing managerial involvement to the
degree usually associated with ownership nor effective control over
the goods sold, the amount of revenue can be measured reliably, and
the costs incurred or to be incurred in respect of the transaction
can be measured reliably.
Finance income
Interest income from fixed 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.
2.12 Finance costs
Interest expense are expensed in the statement of comprehensive
income in the period in which they are incurred, except to the
extent that they are capitalised as being directly attributable to
the acquisition, construction or production of an asset which
necessarily takes a substantial period of time to be prepared for
its intended use or sale. There is no borrowing cost incurred by
the Group during the financial year that has been capitalised.
2.13 Income tax
Income tax for the financial year comprises current and deferred
taxes. Income tax is recognised in the statement of comprehensive
income except to the extent that it relates to items recognised
directly in equity, in which case, such income tax is recognised in
equity.
Current income tax is the expected tax payable on the taxable
income for the financial year, using tax rates enacted or
substantively enacted by the end of financial year, and any
adjustment to tax payable in respect of previous financial
years.
Deferred income tax is provided, using the liability method, on
all temporary differences at the end of financial year between the
tax bases of assets and liabilities and their carrying amounts for
financial reporting purposes. Deferred tax assets and liabilities
are measured using the tax rates expected to apply to taxable
income in the years in which those temporary differences are
expected to be recovered or settled based on tax rates enacted or
substantively enacted by the end of financial year.
2.13 Income tax
Deferred tax liabilities are recognised for all taxable
temporary differences associated with investments in subsidiaries,
except where the timing of the reversal of the temporary difference
can be controlled by the Group and the Company and it is probable
that the temporary difference will not be reversed in the
foreseeable future.
Deferred tax assets are recognised for all deductible temporary
differences, carry-forward of unused tax losses and unabsorbed
capital allowances to the extent that it is probable that taxable
profit will be available against which the deductible temporary
differences, carry-forward of unused tax losses and unused tax
credits can be utilised.
At the end of each financial year, the Group and the Company
re-assesses unrecognised deferred tax assets and the carrying
amount of deferred tax assets. The Group and the Company recognises
a previously unrecognised deferred tax asset to the extent that it
has become probable that future taxable profit will allow the
deferred tax asset to be recovered. The Group and the Company
conversely reduces the carrying amount of a deferred tax asset to
the extent that it is no longer probable that sufficient taxable
profit will be available to allow the benefit of part or all of the
deferred tax asset to be utilised.
Deferred tax is charged or credited directly to equity if the
tax relates to items that are charged or credited, in the same or a
different period, directly to equity.
Deferred tax assets and liabilities are offset against each
other if they relate to the same tax authority and can be
offset.
2.14 Foreign currency translation
In preparing the financial statements of the individual
entities, transactions in currencies other than the entity's
functional currency are recorded at the rate of exchange prevailing
on the date of the transaction. At the end of each financial year,
monetary items denominated in foreign currencies are retranslated
at the rates prevailing as of the end of the financial year.
Non-monetary items carried at fair value that are denominated in
foreign currencies are retranslated at the rates prevailing on the
date when the fair value was determined. Non-monetary items that
are measured in terms of historical cost in a foreign currency are
not retranslated.
Exchange differences arising on the settlement of monetary
items, and on retranslation of monetary items are included in the
statement of comprehensive income for the period. Exchange
differences arising on the retranslation of non-monetary items
carried at fair value are included in the statement of
comprehensive income for the period except for differences arising
on the retranslation of non-monetary items in respect of which
gains and losses are recognised directly in equity. For such
non-monetary items, any exchange component of that gain or loss is
also recognised directly in equity.
Exchange differences which relate to assets under construction
for future productive use, are included in the cost of those assets
where they are regarded as an adjustment to interest costs on
foreign currency borrowings.
2.14 Foreign currency translation
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 the statement of comprehensive income
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.
2.15 Operating leases
Rentals payable under operating leases are charged to the
statement of comprehensive income on a straight-line basis over the
term of the relevant lease unless another systematic basis is more
representative of the time pattern in which economic benefits from
the leased asset are consumed. Contingent rentals arising under
operating leases are recognised as an expense in the year in which
they are incurred. In the event that lease incentives are received
to enter into operating leases, such incentives are recognised as a
liability. The aggregate benefit of incentives is recognised as a
reduction of rental expense on a straight-line basis, except where
another systematic basis is more representative of the time pattern
in which economic benefits from the leased asset are consumed.
2.16 Share capital and treasury shares
Ordinary shares are classified as equity. Incremental costs
directly attributable to the issuance of new equity instruments are
shown in equity as a deduction against the share capital
account.
When share capital recognised as equity is repurchased
("treasury shares"), the consideration paid including any directly
attributable incremental cost is presented as a deduction within
equity, until they are subsequently cancelled, sold or
reissued.
Where shares are held as treasury shares, the Company may at any
time:
(i) sell the treasury shares for cash;
(ii) transfer the treasury shares for the purposes or pursuant
to an employees' share scheme;
(iii) transfer the treasury shares as consideration for the
acquisition of shares in or assets of another company or assets of
a person;
(iv) cancel the treasury shares; or
(v) sell, transfer or otherwise use the treasury shares for such
other purposes as may be prescribed by the Minister Of Finance.
2.16 Share capital and treasury shares
When the treasury shares are subsequently cancelled, the cost of
the treasury shares is deducted from 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 the treasury shares are subsequently sold or reissued
pursuant to the employee share option scheme and share performance
plan, the cost of treasury shares is reversed from the treasury
shares 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 as a change in equity of the
Company.
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
3.1 Critical judgements made in applying the accounting
policies
In the process of applying the accounting policies, the
management is of the opinion that there are no critical judgements
involved that have a significant effect on the amounts recognsied
in the financial statements except as discussed below.
(i) Impairment of investment in subsidiaries and financial
assets
The Group and the Company follow the guidance of IAS 36 and IAS
39 in determining when investments in subsidiaries and financial
assets (including amounts due from subsidiaries) are other than
temporary impaired. This determinationrequiresthe assumption made
regarding the duration or extent to which the fair value of an
investment or a financial asset is less than its costs and the
financial health of and near-term business outlook for the
investment or financial asset, including factors such as industry
and sector performance, changes in technology and operational and
financing cash flow.
Based on the management's assessment, it has determined that the
investment in subsidiaries and financial assets are not impaired as
at 31 August 2010. The carrying amount of investment in
subsidiaries at 31 August 2010 was US$668,072 (2009:
US$537,742).
3.1 Critical judgements made in applying the accounting
policies
(ii) Patents and trademarks
Patents and trademarks are capitalised in accordance with the
accounting policy in Note 2.7. Initial capitalisation of costs is
based on management's judgement that the assets are separate from
the entity, the entity controls the asset and it is probable that
future economic benefits from the assets will flow to the entity.
The management has determined the useful lives of patents and
trademarks after having considered various factors such as
competitive environment, product life cycles, operating plans and
the macroeconomic environment of the patents and trademarks. In
addition, management believes there is no foreseeable limit to the
period over which the indefinite trademarks are expected to
generate net cash inflows for the Group.
3.2 Key sources of estimation uncertainty
The key assumptions concerning the future and other key sources
of estimation uncertainty at the date of the statement of financial
position that have a significant risk of causing a material
adjustment to the carrying amounts of assets and liabilities and
the reported amounts of revenue and expense within the next
financial year, are discussed below.
(i) Going concern basis of preparation
The financial statements of the Company and its subsidiaries
have been prepared on a going concern basis. The appropriateness of
the going concern basis is assessed after taking into consideration
all relevant information about the future of the Company and its
subsidiaries available at the date of this report. However, the
current uncertain economic outlook may affect consumer's
discretionary spending and confidence which could in turn impact
the future operations of the Group.
(ii) Depreciation of plant and equipmentand amortisation of
computer software
Plant and equipment and computer software are
depreciated/amortised on a straight-line basis over their estimated
useful lives. Management estimates the useful lives of these assets
to be 3years. The carrying amounts of the Group's plant and
equipment and computer software as at 31 August 2010were US$114,416
and US$20,445(2009: US$206,552 and US$20,157) respectively. Changes
in the expected level of usage and technological developments could
impact the economic useful lives and the residual values of these
assets, therefore future depreciation/amortisation charges could be
revised.
(iii) Income taxes
Significant judgement is involved in determining the Group's
provision for income taxes. The Group and the Company recognise
expected liabilities for tax based on an estimation of the likely
taxes due, which requires significant judgement as to the ultimate
tax determination of certain items. Where the actual liability
arising from these issues differs from these estimates, such
differences will have an impact on income tax and deferred tax
provisions in the period when such determination is made.
3.2 Key sources of estimation uncertainty
(iv) Impairment of goodwill and patents and trademarks
The management determines whether goodwill and patents and
trademarks are impaired at least on an annual basis and as and when
there is an indication that goodwill and patents and trademarks may
be impaired. Such assessment and determination require the
management to make judgements, estimates and assumptions. These
estimates and associated assumptions are continually evaluated and
are based on historical experience and other factors including
expectations of future events or changes in circumstances. Actual
results may differ from these estimates. The carrying amounts of
goodwill and patents and trademarks as at 31 August 2010 were
US$464,726 and US$6,722,737 (2009: US$464,726 and US$436,999),
respectively.
(v) Share options reserve
The charge for share options reserve is calculated in accordance
with estimates and assumptions which are described in Note 19 to
the financial statements. The option valuation model used requires
highly subjective assumptions to be made including the future
volatility of the Company's share price, expected dividend yields,
risk-free interest rates and expected staff turnover. The
management draws upon a variety of external sources to aid them in
determination of the appropriate data to use in such calculations.
The carrying amounts of share-based payments for the Group and
Company as at 31 August 2010 was US$264,082 (2009: nil) and
US$130,411 (2009: nil) respectively.
(v) Convertible loan
The fair value of the liability component of the convertible
loan, at itsinitial recognition, estimated by independent valuer
based on the present value of the contractual stream of cash flows
using the effective interest rate of 13% which generally represents
the best estimate of the market value of similar instrument without
the conversion feature. The fair value of the equity component is
determined as the residual amount by deducting the fair value of
the liability component from the fair value of the convertible
loan.
4. Plant and equipment
Machinery,
office equipment,
Office furniture
Group renovation Computers and fittings Total
2010 US$ US$ US$ US$
Cost
As at 1 September 2009 117,788 58,504 195,215 371,507
Additions - 4,208 37,307 41,515
Write off - (1,390) (1,626) (3,016)
----------- --------- ------------------ -------
As at 31 August 2010 117,788 61,322 230,896 410,006
----------- --------- ------------------ -------
Accumulated depreciation
As at 1 September 2009 67,884 24,638 72,433 164,955
Depreciation charge
for the year 38,379 19,948 73,931 132,258
Write off - (811) (812) (1,623)
----------- --------- ------------------ -------
As at 31 August 2010 106,263 43,775 145,552 295,590
----------- --------- ------------------ -------
Net book value
As at 31 August 2010 11,525 17,547 85,344 114,416
=========== ========= ================== =======
2009
Cost
As at 1 September 2008 117,788 39,824 44,413 202,025
Additions - 18,680 150,802 169,482
------- ------ ------- -------
As at 31 August 2009 117,788 58,504 195,215 371,507
------- ------ ------- -------
Accumulated depreciation
As at 1 September 2008 28,621 7,478 7,942 44,041
Depreciation charge
for the year 39,263 17,160 64,491 120,914
------- ------ ------- -------
As at 31 August 2009 67,884 24,638 72,433 164,955
------- ------ ------- -------
Net book value
As at 31 August 2009 49,904 33,866 122,782 206,552
======= ====== ======= =======
4. Plant and equipment
Furniture
Company and fittings Computers Total
2010 US$ US$
Cost
As at 1 September 2009 - 7,247 7,247
Additions 29,725 - 29,725
------------- --------- ------
As at 31 August 2010 29,725 7,247 36,972
------------- --------- ------
Accumulated depreciation
As at 1 September 2009 - 3,136 3,136
Depreciation charge for the year 7,251 2,415 9,666
------------- --------- ------
As at 31 August 2010 7,251 5,551 12,802
------------- --------- ------
Net book value
As at end of the year 22,474 1,696 24,170
============= ========= ======
2009
Cost
As at 1 September 2008 -3,523 3,523
Additions -3,724 3,724
----- -----
As at 31 August 2009 -7,247 7,247
----- -----
Accumulated depreciation
As at 1 September 2008 - 720 720
Depreciation charge for the year -2,416 2,416
----- -----
As at 31 August 2009 -3,136 3,136
----- -----
Net book value
As at end of the year -4,111 4,111
===== =====
5. Investment in subsidiaries
Company
2010 2009
US$ US$
Unquoted equity shares, at cost 668,072 537,742
======= =======
Particulars of the subsidiaries are as follows:
Effective
Country of equity
Principal Incorporation/ Interest held
Subsidiaries activities operation By the Group
Held by the Company 2010 2009
% %
Research and
development
renewable
energies for
Renewable Power household
Pte Ltd(1) consumers Singapore 100 100
Holding of
Alternative Energy trademarks and
Technology Pte intellectual
Ltd(1) properties Singapore 100 100
Holding of
operational
subsidiaries but
Alternative Energy is currently British Virgin
Limited(2) dormant Islands 100 100
Holding of
operational
Alternative Energy subsidiaries but
Worldwide is currently British Virgin
Limited(3) dormant Islands 100 -
Holding of
operational
Alternative Energy subsidiaries but
Holdings is currently
Limited(3) dormant Hong Kong 100 -
Held by Alternative Energy Limited
(BVI)
Alternative Energy
(Africa) British Virgin
Limited(3) Dormant Islands 100 100
Alternative Energy Dormant British Virgin 100 -
(Middle East) Islands
Limited(3)
( ) (1) Audited by BDO LLP, Singapore, for statutory audit purposes
(2) Audited by BDO LLP, Singapore, for consolidation purposes
(3) The company is inactive or dormant and management financial statements are used for the preparation of the consolidated financial statements
During the year, the Company has invested in wholly-owned
subsidiaries, Alternative Energy Holdings Limited (HK) and
Alternative Energy Worldwide Limited. In addition, Alternative
Energy Limited (BVI), a subsidiary has invested in a wholly-owned
subsidiary, Alternative Energy (Middle East) Limited, and they are
currently dormant.
6. Intangible assets
Computer
Group Goodwill software Patents Trademarks Total
2010 US$ US$ US$ US$ US$
Cost
As at 1 September
2009 464,726 37,574 218,108 218,891 939,299
Additions - 16,912 6,178,242 107,496 6,302,650
As at 31 August
2010 464,726 54,486 6,396,350 326,387 7,241,949
-------- --------- --------- ---------- ---------
Accumulated
amortisation
As at 1 September
2009 - 17,417 - - 17,417
Amortisation for
the year - 16,624 - - 16,624
-------- --------- --------- ---------- ---------
As at 31 August
2010 - 34,041 - - 34,041
-------- --------- --------- ---------- ---------
Net book value
AAs at 31 August
2010 464,726 20,445 6,396,350 326,387 7,207,908
======== ========= ========= ========== =========
2009
Cost
As at 1 September
2008 464,726 30,351 57,626 95,712 648,415
Additions - 7,223 160,482 123,179 290,884
As at 31 August
2009 464,726 37,574 218,108 218,891 939,299
------- ------ ------- ------- -------
Accumulated amortisation
As at 1 September
2008 - 5,396 - - 5,396
Amortisation for
the year - 12,021 - - 12,021
------- ------ ------- ------- -------
As at 31 August
2009 - 17,417 - - 17,417
------- ------ ------- ------- -------
Net book value
AAs at 31 August
2009 464,726 20,157 218,108 218,891 921,882
======= ====== ======= ======= =======
Patents
2010 2009
US$ US$
Company
Cost and carrying amount
As at 1 September 2009 216,083 57,626
Additions 6,171,722 158,457
--------- -------
As at 31 August 2010 6,387,805 216,083
========= =======
6. Intangible assets
Pursuant to an agreement entered into between the Company and a
related party, 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, the Company and the said related party have
agreed to fix the purchase consideration for the purchase of these
patents and technology at US$20 million. This purchase
consideration of US$20 million shall be fully settled by the issue
of 666,666,666 new ordinary shares of the Company at US$0.03 per
share. The obligation to pay the purchase consideration is subject
to certain terms and conditions.
During the year, upon the successful registration of certain
patents, the Company purchased part of these patents and technology
for a consideration of US$6 million by issuing 199,999,999 new
ordinary shares at US$0.03. The remaining patents costing US$14
million will be purchased as and when the remaining patents and
technology are successfully registered in the near future.
Subsequent to the year end, as disclosed in note 27(c) to the
financial statements, upon successful registration of certain
patents, the Company further purchases part of these patents and
technology for a consideration of US$4 million by issuing
133,333,333 new ordinary shares at US$0.03.
For the purpose of the consolidated statement of cashflows, the
group's additions to intangible assets during the year comprise of
the following:
Group and Company
2010 2009
US$ US$
Additions to intangible assets 6,302,650 290,884
Non-cash transaction settlement by issuance
of new ordinary shares (Note 9) (6,000,000) -
----------- -------
Purchase of intangible assets by cash
payment 302,650 290,884
=========== =======
7. Cash and bank balances
Group Company
2010 2009 2010 2009
US$ US$ US$ US$
Cash on hand and bank balances 1,584,158 698,636 1,318,174 624,364
Fixed deposits 97,462 1,100,096 71,467 1,075,691
--------- --------- --------- ---------
Cash and bank balances 1,681,620 1,798,732 1,389,641 1,700,055
========= =========
Less: fixed deposit pledged
to a bank (97,462) (97,025)
--------- ---------
Cash and cash equivalents
as per
consolidated cash flow
statement 1,584,158 1,701,707
========= =========
Fixed deposits pledged to a bank are deposits that are placed
with banks, with original maturing periods of not more than 183
(2009: 183) days. Interest rate 0.55% (2009: 0.06% to 1.5%) per
annum.
7. Cash and bank balances
Cash and bank balances are denominated in the following
currencies:
Group Company
2010 2009 2010 2009
US$ US$ US$ US$
Singapore dollar 284,055 188,772 122,359 90,096
United States dollar 1,267,285 1,609,960 1,267,282 1,609,959
Hong Kong dollar 130,280 - - -
--------- --------- --------- ---------
1,681,620 1,798,732 1,389,641 1,700,055
========= ========= ========= =========
The Group's and the Company's fixed deposits of US$97,462 and
US$71,467 respectively (2009: US$97,025 and US$72,620) are pledged
toabank for credit card facilities granted to the company and a
subsidiary company and for the GST registration of a subsidiary
company.
8. Other receivables
Group Company
2010 2009 2010 2009
US$ US$ US$ US$
Other receivables 23,915 21,215 23,915 20,976
Deposits 95,894 49,586 54,743 12,164
Prepayments 29,160 29,160 - -
Amounts due from subsidiaries - - 4,500,999 2,711,196
------- ------ --------- ---------
148,969 99,961 4,579,657 2,744,336
======= ====== ========= =========
All other receivables are not past due and are not impaired as
at 31 August 2010 and 31 August 2009.
Amounts due from subsidiaries are interest-free, unsecured and
repayable on demand.
Other receivables are denominated in the following
currencies:
Group Company
2010 2009 2010 2009
US$ US$ US$ US$
United States dollar 2,731 20,976 52,504 1,361,676
Singapore dollar 122,815 78,985 4,503,730 1,381,551
British pound 23,423 - 23,423 1,109
------- ------ --------- ---------
148,969 99,961 4,579,657 2,744,336
======= ====== ========= =========
9. Issued capital
Group and Company
2010 2009 2010 2009
Number of ordinary
shares US$ US$
Issued and paid-up
As at 1 September
2009 1,183,092,564 1,183,092,564 7,916,392 7,916,392
Issue of new ordinary
shares 215,579,999 - 6,467,400 -
As at 31 August 2010 1,398,672,563 1,183,092,564 14,383,792 7,916,392
============= ============= ========== =========
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 February 2010, the Company issued 15,580,000 new ordinary
shares to shareholders. These ordinary shares were issued at
US$0.03. Cash amounting to US$467,400 was raised from this
exercise.
In June 2010, the Company issued 199,999,999 new ordinary shares
to a related party as consideration for the Company's purchase of
patents and technology. The new ordinary shares were issued at
US$0.03 and no cash was raised from this transaction.
10. Treasury shares
Group and Company
31.8.2010 31.8.2009 31.8.2010 31.8.2009
No. of shares No. of shares US$ US$
Balance at beginning
of
financial year 40,042,966 - 1,200,000 -
Repurchase during
the
financial year - 40,042,966 - 1,200,000
Re-issue during the
financial year (38,120,000) - (1,143,600) -
Balance at end of
financial year 1,922,966 40,042,966 56,400 1,200,000
============= ============= =========== =========
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. The shares
brought back are held as treasury shares.
In November 2009, the Company re-issued 19,370,000 treasury
shares to shareholders. These shares were issued at US$0.03. Cash
amounting to US$581,100 was raised from this exercise. There is no
gain or lossarising from this transaction.
In August 2010, the Company re-issued 18,750,000 treasury shares
to shareholders. These shares were issued at US$0.04. Cash
amounting to US$750,000 was raised from this exercise. Gain arising
from this transaction US$187,500 is recognised directly in
statement of changes in equity.
11. Share options reserve
Share options reserve represents equity-settled share options
granted to directors of the Company and employees of the Group. The
reserve is made up of cumulative value of services received from
share options holders recorded on grant of equity-settled share
options.
The movement of this account is disclosed in the statement of
changes in equity.
12. Convertible loan reserve
The convertible loan reserve represents the residual amount of
convertible loan after deducting the fair value of the liability
component. This amount is presented net of transaction costs and
deferred liability arising from the convertible loan.
13. Other payables and accruals
Group Company
2010 2009 2010 2009
US$ US$ US$ US$
Other payables 134,017 66,354 124,382 66,354
Accruals 48,496 41,652 23,602 19,432
Amount due to a director - 7,241 - 7,241
------- ------- ------------- ------
182,513 115,247 147,984 93,027
======= ======= ============= ======
Other payables and accruals are denominated in the following
currencies:
Group Company
2010 2009 2010 2009
US$ US$ US$ US$
British pound 47,530 25,632 47,530 25,632
Singapore dollar 134,983 62,374 100,454 40,154
United States dollar - 27,241 - 27,241
------- ------- ------- ------
182,513 115,247 147,984 93,027
======= ======= ======= ======
14. Convertible loan
Group Company
2010 2009 2010 2009
US$ US$ US$ US$
Convertible loan due to
a director 1,195,673 - 1,195,673 -
========= ==== ========= ====
The convertible loan is denominated in United States dollar.
Amount due to a directorrepresents the residual amount of
convertible loan due to Christopher Nightingale after deducting the
fair value of the equity component and is made up as follows:
Group and Company
2010 2009
US$ US$
Net proceeds from issue of convertible
loan 2,000,000 -
Amount classified as equity (401,052) -
------------ -----
1,598,948 -
Less: Account with director (403,275) -
------------ -----
Amount due to a director (net) 1,195,673 -
============ =====
The salient terms and conditions of the convertible loan
agreement are summarised as follows:
-- The term of the loan commences on the date of the convertible
loan agreement and shall terminate on 1 May 2012 ("Repayment
Date");
-- The loan shall be interest free;
-- The Lender shall have the right at any time during the term
of the loan to convert any part of the loan into ordinary listed
shares of the Company at US$0.03 share;
-- The Company may without penalty repay the whole or part of
the loan before the repayment date; and
-- The Company may also offset any expenses or amount owning
from the Lender to the Company against the loan.
15. Provisions
Group Company
2010 2009 2010 2009
US$ US$ US$ US$
Provision for unutilised
leave 19,922 22,474 - -
Provision for reinstatement
cost 22,065 20,820 - -
------ ------ ---- ----
41,987 43,294 - -
====== ====== ==== ====
Movements of provisions during the financial year are as
follows:
Group Company
2010 2009 2010 2009
US$ US$ US$ US$
At beginning of financial
year 43,294 32,058 - -
(Reversal)/additions during
the year (1,307) 11,236 - -
------- ------ ---- ----
As at end of the financial
year 41,987 43,294 - -
======= ====== ==== ====
Provision for unutilised leave represents employee entitlements
to annual leave as a result of services rendered by employees up to
the end of the financial year.
Provision for reinstatement cost is relation to the obligation
for dismantlement, removal or restoration of office premises.
16. Loss before income tax
In addition to the information disclosed elsewhere in the
financial statements, the Group's loss before income tax is arrived
at after charging the following:
Group
2010 2009
US$ US$
Staff costs
- Directors' remuneration other than
fees 370,612 278,795
- Employee benefits expense 353,149 347,280
- Share options expense 264,082 -
Amortisation of intangible assets 16,624 12,021
Depreciation of plant and equipment 132,258 120,914
Office rental 207,039 101,102
Foreign currency exchange loss, net 9,472 44,813
Research and development costs 166,654 54,305
Professional fees 415,087 486,353
======= =======
17. Income tax
Group
2010 2009
US$ US$
Current income tax
- under provision in prior period - (115)
==== =====
The income tax expense has been determined by applying the
Singapore income tax rate of 17% (2009:17%) to loss before income
tax and total charge for the financial year can be reconciled to
accounting loss as follows:
Group
2010 2009
US$ US$
Reconciliation of effective tax rate
Loss for the financial year (3,599,480) (2,577,929)
=========== ===========
Tax calculated at statutory rate of 17%
(2009:17%) (611,912) (438,248)
Effect of change in tax rate - 7,616
Under provision in prior period - (115)
Expenses not deductible for tax purposes 89,765 155,469
Income not subject to tax 2,329 (407)
Deferred tax assets not recognised 519,817 275,570
----------- -----------
- (115)
=========== ===========
17. Income tax
Deferred tax assets not recognised related to the following:
Group
2010 2009
US$ US$
Tax losses 871,517 375,524
Property, plant and equipment 49,190 24,932
Provision for unutilised leave 3,387 3,821
------- -------
924,094 404,277
======= =======
Deferred tax assets have not been recognised because it is not
certain whether future taxable profits will be available against
which the Group can utilise the benefits.
As atthe end of the financial year, the Group had unutilised tax
losses amounting to US$4,992,900 (2009: US$2,2208,969), which are
available for set-off against future taxable profits subject to the
provisions of the Singapore Income Tax Act and agreement by the
Singapore tax authority.
18. 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 loan 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 loan is assumed to have been converted into ordinary
shares at US$0.03 per share and net of any expenses amount owing
from the lender to the Company against the loan. The net profit is
adjusted to eliminate the interest expense less the tax effect.
For the share options, a calculation is done to determine the
number of shares that could have been acquired at fair value
(determined as the average annual market share price of the
Company's shares) based on the monetary value of the subscription
rights attached to outstanding share options. The number of shares
calculated as above is compared with the number of shares that
would have been issued assuming the exercise of the share options.
The differences are added to the denominator as an issuance of
ordinary shares for no consideration. No adjustment is made to
earnings (numerator).
The basic and diluted loss per share are calculated as
follows:
Group
2010 2009
Basic Diluted Basic Diluted
US$ US$ US$ US$
Net loss
attributable to
equity holders
of the Company 3,599,480 3,599,480 2,578,044 2,578,044
============= ============= ============= =============
Number of shares Number of shares
Basic Diluted Basic Diluted
Weighted average
number of
ordinary
shares 1,242,382,000 1,242,382,000 1,144,110,254 1,144,110,254
Adjustments for
potentially
dilutive
ordinary
shares - 120,856,000 - -
------------- ------------- ------------- -------------
Weighted average
number of
ordinary shares
used 1,242,382,000 1,363,238,000 1,144,110,254 1,144,110,254
============= ============= ============= =============
Basic loss per # # # #
share
============= ============= ============= =============
# denotes a figure which is less than US$0.01 cent
19. Share-based payments
The Employee Share Option Scheme (ESOS) enables directors and
employees of the Company and its subsidiaries to subscribe for
ordinary shares in the capital of the Company, exercisable at
varying periods from the date of grant depending whether the
exercise price is set at market price in respect of that offer.
Since the date of inception, no shares were granted or awarded
under the Share Performance Plan (SPP).
The EOS Committee has on 5 May 2010 resolved to grant Incentive
Options to the employees of the Group under the existing
Alternative Energy Limited (AEL) ESOS scheme exercisable at US$0.03
per ordinary share.
Information in respect of the share options granted under the
Company's ESOS was as follows:
2010
Number
of share Exercise
options price
('000) US$
Balance at 1 September 2009 - -
Number of share options granted during
the financial year 81,000 0.03
Expired/cancelled - -
Exercised - -
----------
Outstanding at end of financial year 81,000
==========
During the financial year, 81,000,000 (2009: nil) share options
were granted. The estimated fair values of the share options
granted are US$264,082 (2009: nil).
The fair value of share options as at the date of grant is
estimated by an external valuer using the Black-Scholes-Merton
model, taking into account the terms and conditions upon which the
options were granted. The inputs to the model used are shown
below.
Risk-free Expected Share price
Date of Expected interest life of Exercise at date of
grant volatility rate options price grant
(%) (%) (years) (US$) (US$)
5 May 2010 21.5 2.72-3.72 5-10 0.03 0.04
20. Related parties transactions
For the purposes of these financial statements, parties are
considered to be related to the Group if the Group has the ability,
directly or indirectly, to control the party or exercise
significant influence over the party in making financial and
operating decisions, or vice versa, or where the Group and the
party are subject to common control or common significant
influence. Related parties may be individuals or other
entities.
20.1 In addition to the information disclosed elsewhere in the
financial statements, related party transactions between the Group
and the Company and its related parties during the financial year
were as follows:
Company
2010 2009
US$ US$
Advances to subsidiary 1,334,500 1,055,413
Payment made on behalf of subsidiaries 138,129 142,814
Payment made on behalf by subsidiary 42,826 31,208
Management fee charged to subsidiaries 360,000 360,000
Purchased of patents and technology
from a related party which is also
a controlling party 6,000,000 -
Convertible loan from a director 2,000,000 -
========= ============
20.2 Compensation of directors and key management personnel
The remuneration of directors during the financial year was as
follows:
Group
2010 2009
US$ US$
Remuneration 370,612 278,795
Post-employment benefits - CPF
contribution 6,936 6,577
Short-term benefits 2,628 1,077
Consultancy fee paid 20,000 80,000
Consultancy fee paid to companies
in which certain
directors have interest 40,000 40,000
Share options expense 130,411 -
-------- --------
704,258 406,449
======== ========
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.
21. Operating lease commitments
At the end of the financial year, the commitments in respect of
non-cancellable operating leases of office premises and equipment
were as follows:
Group Company
2010 2009 2010 2009
US$ US$ US$ US$
Future minimum lease payments
payable:
Within one financial year 244,085 105,909 138,309 -
In second to fifth financial
year
inclusive 276,343 134,237 242,040 -
After the fifth financial
year 735 - - -
------- ------- ------- ----
521,163 240,146 380,349 -
======= ======= ======= ====
The above operating lease commitments are based on existing
rates. The lease agreement provides for a periodic revision of such
rates in the future.
The Group has an option to renew the lease for another 1 year
after the expiry of the current lease term.
22. Financial risk management
The Group's and the Company's activities are exposed to a
variety of financial risks: market risk (including foreign exchange
risk and interest risk), credit risk and liquidity risk. The
Group's and the Company's overall risk management programme focuses
on the predictability of financial markets and seeks to minimise
potential adverse effects on the Group's and the Company's
financial performance. The Group and the Company do not use
derivatives financial instruments to hedge any risk exposures.
The Group and the Company have established risk management
policies and guidelines, which set out its overall risk management
strategies.
22.1 Credit risk
The carrying amounts of cash and bank balances and other
receivables represent the Group's and the Company's maximum
exposure to credit risk in relation to financial assets. The Group
and the Company have no significant concentration of credit
risk.
Credit risk is managed on a group basis. Credit risk arises from
cash and bank balances, deposits with banks and financial
institutions, including outstanding receivables and committed
transactions.
Cash and fixed deposits are placed with major and reputable
financial institution whichis regulated and located in Singapore.
Management is not expecting any counterparty to fail to meet its
obligations.
As at the reporting date, the Group and the Company's credit
risk in respect of cash and bank balances are concentrated on bank
balances kept in a single bank amounting to $1,681,620 (2009:
US$1,797,374) and $1,389,641 (2009: $1,700,055) or 100% (2009:
100%) and 100% (2009: 100%) respectively.
22.2 Market risk
The Group's activities expose it primarily to the financial
risks of changes in foreign currency exchange rates and interest
rates.
Foreign currency risk
The Group and the Company are exposed to currency risk arising
from various currency exposures. The currencies giving rise to this
risk are primarily Singapore dollar. Exposure to foreign currency
risk is monitored on an ongoing basis by the Group and the Company
to ensure that the net exposure is at an acceptable level, as the
Group and the Company manage its transactional exposure by a policy
of matching, as far as possible, receipts and payments in each
individual currency. As the entities in the Group transacts
substantially in the functional currency of the respective entities
within the Group.
The carrying amounts of the Group's and the Company's foreign
currency denominated monetary liabilities as at the end of the
financial year are as follows:
Foreign currency risk
The carrying amounts of the Group's and the Company's foreign
currency denominated monetary liabilities as at the end of the
financial year are as follows:
Group Company
2010 2009 2010 2009
US$ US$ US$ US$
Monetary assets
Singapore dollar 406,870 267,757 4,626,089 1,471,647
British pound 23,423 - 23,423 -
Hong Kong dollar 130,280 - - -
Monetary liabilities
Singapore dollar 134,983 62,374 100,454 40,154
British pound 47,530 25,632 47,530 25,632
Foreign currency sensitivity analysis
The Group is mainly exposed to Singapore dollar (SGD) and
British pound (GBP).
The following table details the Group's sensitivity to a 10%
change in SGD and GBP against United States dollar. The sentivitiy
analysis assumes instantaneous 10% change in the foreign currency
exchange rates from the end of the financial year, with all
variables held constant. The results of the model are also
constrained by the fact that only monetary items, including
external loans and loans to foreign operations, which are
denominated in SGDand GBP are included in the analysis.
Consequentially, reported changes in the values of some of the
financial instruments impacting the results of the sensitivity
analysis are not matched with the offsetting changes in the values
of certain excluded items that those instruments are designed to
finance or hedge.
Increase/(Decrease)
Group Company
Profit or Loss
2010 2009 2010 2009
US$ US$ US$ US$
SGD
Strengthens against
US$ 21,189 20,539 452,563 143,149
Weakens against US$ (21,189) (20,539) (452,563) (143,149)
GBP
Strengthens against
US$ (2,410) (2,563) (2,410) (2,563)
Weakens against US$ 2,410 2,563 2,410 2,563
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 and the Company's exposure to
interest rate risk arises primarily from their fixed deposits with
financial institution, which is not significant.
22.3 Liquidity risks
Liquidity risks refer to the risks in which the Group and the
Company will not be able to meet its financial obligations as they
fall due. The Group and the Company ensure availability of funds
through an adequate of cash and where necessary, fund raising
exercise will be considered via right issues, private placements,
other equity or equity-related exercise.
Prudent liquidity risk management implies maintaining sufficient
cash. Due to the dynamic nature of the underlying businesses, the
Group and the Company financial control maintains flexibility in
funding by maintaining availability of a sufficient balance of
cash. Management monitors rolling forecast of the Group's liquidity
reserve (comprising cash and bank balances) on the basis of
expected cash flow.
All financial liabilities as disclosed in the statement of
financial position are payable within the next twelve months.
23. Fair value of financial assets and financial liabilities
The carrying amounts of cash and bank balances, other
receivables, other payables and accruals and amount due to a
director approximate totheir respective fair values due to the
relatively short-term maturity of these financial instruments.
The fair value of the liability component of the convertible
loan at 31 August 2010 amount to US$1,195,673. The fair value is
calculated using the market price of the convertible loan at the
end of the financial year.
24. 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 and the
Company manages its capital structure and makes adjustments to it,
in light of changes in ec onomic conditions. The Group and the
Company regards the equity attributable to shareholder as capital.
Equity is represented by net liabilities. The Group and the
Company's overall strategy remains unchanged from 2009.
The Group and the Company manages its capital structure by
various means such as deciding on the amount of dividends paid to
shareholder, return of capital to shareholder, issue of new shares
to reduce debts, as it deems beneficial to the interest of its
shareholders.
24. Capital management policies and objectives
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 and the Company'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 Company does not have a defined share buy-back
plan.
The management believes that employees' participations in the
capital of the Group and the Company will increase the
shareholder's 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 further changes in the Group and the Company's
approach to capital management during the financial year.
Neither the Company nor any of its subsidiaries are subject to
externally imposed capital requirements.
25. Segment reporting
No segment reporting is presented as the Group is principally
engaged in a single business segment of dealing with household and
industrial clean energy and a single geographical segment located
in Asia.
26. Contingent liabilities
Continuing financial support
The Company has given undertaking to its subsidiaries to provide
financial support to these companies, where necessary, to enable
them to operate as going concern and to meet their obligations for
at least 12 months from the date of their respective audited
financial statements.
At the end of the financial year, the subsidiaries had capital
deficiencies of approximately US$3,899,000 (2009: US$2,168,000 )
including amounts due by the subsidiaries to the Company
ofUS$4,500,000 (2009: US$2,711,000).
In the opinion of the management, no significant actual losses
are expected to arise from these contingent liabilities.
27. Events subsequent to the reporting date
Subsequent to the end of the financial year till the date of
this report, the Company has the following events which require
disclosure in accordance with IAS 10 Events after the end of the
financial year:
(a) On 21 January 2011, Alternative Energy Holdings Limited,
["AEL(HK)"], 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 liability of each Party for the obligations,
liabilities, debts and losses of the Company shall be limited to
that Party's obligation to make its respective contribution of RMB
800,000 each to the registered capital of the joint venture company
within the period required by Chinese law. AEL(HK) has 50%
shareholding in this joint venture company. The joint venture
company will manufacture light fittings, street lights and other
lighting equipment to be distributed by the Group.
(b) On 22 October 2010, the Company was offered a grant of
S$150,000 from the International Enterprise Singapore to set up an
Overseas Marketing Office in Philadelphia, USA.
(c) On 27 January 2011, the Company has issued an additional
133,333,333 new ordinary shares at US$0.03 for each ordinary share
to a related party and its nominees as partial consideration for
the Company's purchase of the patents and technology relating to
eRoof. The remaining patents costing US$10 million will be
purchased as and when the remaining patents and technology are
successfully registered in the future.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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