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ASIAEP BHD (Company No. 253387-W)
asiaEP Annual Report 2009
Contents
Page
Chairman’s Statement 02
Corporate Information 04
Our Chairman and Managing Director 05
Profile of Directors 06
Statement of Corporate Governance 08
Additional Compliance Information 12
Audit Committee Report 14
Statement on Internal Control 16
Financial Statements 17
Analysis of Shareholdings 74
List of Properties 78
Share Buy Back Statement 79
Notice of Annual General Meeting 83
Statement Accompanying Notice of AGM 86
Proxy Form 87
asiaEP Annual Report 2009 2
ASIAEP BHD (Company No. 253387-W)
Tan Sri Dato’ (DR) Abdul Aziz Bin Abdul RahmanChairman
Dear Shareholders,On behalf of the Board of Directors, Ihave the pleasure of presenting theAnnual Report and FinancialStatements of asiaEP Berhad and itsGroup of Companies for the financialyear ended 28 February 2009.
The past year has been a year of challenge for the Group.The global economy is facing a more diff icult set ofcircumstances than before. The global financial crisisthat began last year in the US sub-prime mortgage marketare spreading to other major economies.
For financial year ended 28 February 2009, the Group posteda net loss of RM7.679 million compared with net profit ofRM7.059 million for financial year ended 29 February 2008.
Research & Development
During the financial year ended 28 February 2009, the Group invested RM6.296 million in Research and Development.
The Group will continue to develop its online business model and improve the quality of its product offerings through productdevelopments and updated versions of existing products with enhanced features to meet various business requirements of itscustomers.
Industry Outlook
Changes brought about by macro factors in this region, such as the global economic downturn, rising energy and raw materialprices and inflation, have made it more difficult for all businesses particularly for the ICT business.
The impact of the downturn of global economy will continue to affect our customers and our business in the near future. Whilstthese may change the economic dynamics of Malaysia versus other countries in the long-run, we do believe that Malaysia’seconomy will continue to be vigorous in the long-term.
Chairman’s Statement
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ASIAEP BHD (Company No. 253387-W)
asiaEP Annual Report 2009
Chairman’s Statement (continued)
Current Year Prospects
The Company will undertake the following proposals for the financial year ending 28 February 2010 to raise RM14m toRM17m .
(i) Proposed renounceable two-call rights issue of up to 293,037,675 new ordinary shares of RM0.10 each in asiaEPon the basis of 1 Rights Share for each existing ordinary share of RM0.10 each in asiaEP held on an entitlement dateto be determined later, together with:
(a) bonus issue of up to 293,037,675 new asiaEP Shares on the basis of 1 Bonus Share for each Rights Sharesubscribed; and
(b) issuance of up to 293,037,675 new free detachable warrants on the basis of 1 Warrant foreach Rights Share subscribed,
with the Rights Share at an indicative issue price of RM0.10 each, of which the indicative first call of RM0.06 for eachRights Share is payable in cash on application and the second call of RM0.04 for each Rights Share is to be capitalisedfrom asiaEP’s share premium account;
(ii) Proposed increase in authorised share capital of asiaEP from RM50,000,000 comprising 500,000,000 asiaEPShares to RM150,000,000 comprising 1,500,000,000 asiaEP Shares and
(iii) Proposed amendments to the Memorandum and Articles of Association of asiaEP,
The proceeds will be utilized for repayment of bank borrowings, purchase of computer equipments and peripherals,marketing and promotion, working capital and defrayment of expenses relating to the Proposals.
With the above proposals, the Company will be better equipped to face the financial crisis.
The Board expects the financial performance of the Group to be challenging for the financial year ending 28 February2010.
Lastly, I would like to inform all concerned that in view of my age I have made the decision to slow down in my corporateactivities and in this regard I shall not offer myself for reelection as a Director of the Company at the coming AnnualGeneral Meeting.
I thank the management and all the shareholders for their support during my tenure of office as Chairman of theCompany and I sincerely hope the Company will be even more successful in the future.
Tan Sri Dato’ (Dr) Abdul Aziz Bin Abdul RahmanChairman
asiaEP Annual Report 2009 4
ASIAEP BHD (Company No. 253387-W)
Registered OfficeNo. 18 & 20 Jalan TK 2/1CTaman Kinrara Seksyen 247100 Puchong SelangorMalaysiaTel : 603 - 8075 6213 (hunting line)Fax: 603 - 8070 5668
Company SecretariesMary Margret A/P V. PellySin May Peng
AuditorsBaker Tilly Monteiro HengChartered Accountants22-1, Monteiro & Heng Chambers,Jalan Tun Sambanthan 3,50470 Kuala LumpurMalaysia
Share RegistrarSectrars Services Sdn Bhd28-1 Jalan Tun Sambathan 3Brickfields 50470 Kuala LumpurTel : 603 - 2274 6133Fax : 603 - 2274 1016
Principal BankersMalayan Banking BerhadHong Leong Bank BerhadCIMB Bank Berhad(formerly know as Bumiputra- Commerce Bank Berhad)
Affin Bank Berhad
AdviserRHB Investment Bank BerhadLevel 10, Tower OneRHB CentreJalan Tun Razak50400 Kuala LumpurMalaysia
Stock Exchange ListingMESDAQ MarketBursa Malaysia Securities Berhad
Websitewww.asiaEP.com
Corporate InformationCorporate Information
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ASIAEP BHD (Company No. 253387-W)
asiaEP Annual Report 2009
Dr Tan Boon NuntManaging Director
Our Chairman and Managing Director
Tan Sri Dato’ (Dr) Abdul Aziz Bin Abdul RahmanChairman
asiaEP Annual Report 2009 6
ASIAEP BHD (Company No. 253387-W)
Tan Sri Dato’ (Dr) Abdul Aziz Bin Abdul RahmanChairman/ Independent Non-Executive DirectorMalaysian, Aged 76
Tan Sri Dato’ (Dr) Abdul Aziz Bin Abdul Rahman was appointed to the Board of the Company as the Non-Executive Chairman and an Independent Non-Executive Director on 8 July 2003.
A lawyer by profession with multiple doctorates obtained from University Utara Malaysia, Tan Sri who hasmore than 39 years of experience in managing public and private corporations both locally and abroad is awell respected individual among the business and professional fraternity. Some of the organisations whichTan Sri has been involved in previously include Malaysian Airlines System Berhad (Managing Director &CEO), Sessions Court (Magistrate & President), ABACUS (Chairman), International Council of the CharteredInstitute of Transport (President). He also sits on the Board of Maju Perak Holdings Bhd & BTM ResourcesBhd.
Tan Sri Dato’ (Dr) Abdul Aziz does not have any family relationship with any other Directors and / or substantialshareholders of the Company or any conflict of interest with the Company. He has not been convicted of anyoffences in the last ten (10) years, other than traffic offences (if any).
Dr Tan Boon NuntManaging Director/ Chief Executive OfficerMalaysian, Aged 51
Dr Tan Boon Nunt was appointed to the Board of the Company in 1992. He was subsequently appointed asthe Managing Director and Chief Executive Officer in 2002. He is the co-founder of the Company as well asTopclass Access Sdn Bhd (TASB). Dr Tan achieved his doctorate in Management from Greenwich Universityof Australia in 2000.
He started his career as a media planner in the publication industry for more than eleven (11) years. Beforefounding the Company, he was the Managing Director of Better Living Sdn Bhd, a trading house, for fiveyears prior to 1992. Dr Tan was awarded the 2002 Ernst & Young Entrepreneur of the Year Award forInformation & Communication Technology.
Dr Tan does not have any family relationship with any Director and / or substantial shareholder of theCompany or any conflict of interest with the Company. He has not been convicted of any offences in the lastten (10) years, other than traffic offences (if any).
Madam Lee Suet HongExecutive Director/ Chief Operating OfficerMalaysian, Aged 53
Madam Lee Suet Hong was appointed to the Board of the Company in 1992. She was subsequently appointedas the Executive Director and Chief Operating Officer in 2002. She is also the co-founder of the Company aswell as TASB. She graduated with a Diploma in Business Studies and Management from The London Collegeof Business Studies in 1979. She obtained her MBA, majoring in E-Marketing from the Greenwich Universityof Australia in 2002.
Madam Lee started her career as a Personal Assistant to the Managing Director of Atkinson Pte Ltd inLondon from 1978 to 1979. She held senior management and administrative positions in several publiclisted companies before joining the company.
Madam Lee does not have any family relationship with any Director and / or substantial shareholders of theCompany or any conflict of interest with the Company. She has not been convicted of any offences in the lastten (10) years, other than traffic offences (if any).
Profile of Directors
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ASIAEP BHD (Company No. 253387-W)
asiaEP Annual Report 2009
Mr. Khor Chai TianIndependent Non-Executive DirectorMalaysian, Aged 47
Mr. Khor Chai Tian was appointed to the Board of the Company as an Independent Non-Executive Directoron 13 December 2007. He obtained a Bachelor of Economics Degree(Honours) from University of Malayaand M.B.A from Asia International Open University, Macau.
He was Executive Director of Hunza Consolidation Berhad from 1995 to 2004. Currently, he is an ExecutiveDirector of Master Advisory Services Sdn Bhd and Oceanpac Sdn Bhd.
Mr. Khor does not have any family relationship with any Director and / or substantial shareholders of theCompany or any conflict of interest with the Company. He has not been convicted of any offences in the lastten (10) years, other than traffic offences (if any).
Mr. Lim Ghim ChaiIndependent Non-Executive DirectorMalaysian, Aged 34
Mr. Lim Ghim Chai was appointed to the Board of the Company as an Independent Non-Executive Directoron 11 April 2008.
He graduated with a Bachelor of Commerce (Accounting) Degree from La Trobe University at Melbourne,Australia and is a member of Malaysian Institute of Accountants and Malaysian Insurance Institute. Heobtained membership of Certified Practising Accountant of CPA Australia in year 2003.
Mr. Lim worked as a Financial Accountant in Acer Technologies (M) Sdn. Bhd. from year 2000 to 2001 andwas a Financial Analyst in Agilent Technologies (M) Sdn Bhd in year 2001. Thereafter, he worked as anAccountant in Lorry Commercial Logistic Sdn Bhd in year 2002.
He was a Partner and also a Director in a professional firm providing services of taxation, business planningconsultancy, company accounting and company secretarial from years 2003 until 2006.
Currently, Mr. Lim is a Partner, Managing Director and Executive Director and also Shareholder of a fewcompanies in the business of Interior Design, Property Development and Recycling.
Mr. Lim does not have any family relationship with any Director and / or substantial shareholders of theCompany or any conflict of interest with the Company. He has not been convicted of any offences in the lastten (10) years, other than traffic offences (if any).
Profile Directors (continued)
asiaEP Annual Report 2009 8
ASIAEP BHD (Company No. 253387-W)
The Board of Directors acknowledges the importance of adopting high standards of corporate governance within theCompany. Good corporate governance is a fundamental part of the Company’s responsibility to protect, realize andenhance long-term shareholders’ value and the financial performance of the Company.
The Statement below sets out how the Company has applied the Key Principles of the Malaysian Code on CorporateGovernance for the financial year ended 28 February 2009.
a) BOARD OF DIRECTORS
The Board of Directors consists of five (5) dedicated members, comprising of Chairman / Independent Non-Executive Director, CEO/Managing Director, Executive Director, two Independent Non-Executive Directors.
The Company complied with the Listing Requirements of Bursa Malaysia Securities Bhd (Bursa Malaysia) for theMesdaq Market (Listing Requirements) which states that a listed company must have at least two directors or onethird of the Board of Directors, whichever is the higher, whom are independent.
There is a clear division of responsibilities between the Chairman / Independent Non-Executive Directorand the Managing Director to ensure clear and definitive segregation of duties, balance of power and authority.
The Independent Non-Executive Directors are independent of management and free from any business orother relationship that could materially interfere with the exercise of their independent judgement.
i) Board Meetings
Since the Company’s previous financial year end, the Board has met six (6) times for the financial yearended 28 February 2009. The Board meetings have always gathered full attendance of its members.
The records of attendance of each Director at Board Meetings held during the financial year ended 28February 2009 are disclosed below:
Director (s) Number of Meeting(s) attended PercentageTan Sri Dato’(Dr) Abdul Aziz Bin Abdul Rahman 7 out of 7 100%Dr Tan Boon Nunt 7 out of 7 100%Madam Lee Suet Hong 7 out of 7 100%Mr. Khor Chai Tian 6 out of 7 85.71%Mr. Lim Ghim Chai 6 out of 7 85.71%
ii) Supply Of Information
The Directors have full and timely access to information concerning the Company. Agenda of meetingsand discussion papers are circulated prior to Board meetings to allow the Directors time to study andevaluate the matters to be discussed.
The Directors have unrestricted access to the advice and services of the Company Secretariesand senior management in the Company and may obtain independent professional advice at theCompany’s expense in order to discharge their duties effectively.
iii) The Board and Board Committees
To assist the Board in the discharge of its duties effectively, the Board has delegated specific functionsto certain Committees, namely the Nomination Committee, Remuneration Committee and AuditCommittee, each operating within its clearly defined terms of reference. The Chairman of the variousCommittees will report to the Board on the outcome of the Committee meetings.
iv) Nomination Committee
This Committee was formed on 16 February, 2004, consisting of the Chairman, Tan Sri Dato’ (Dr)Abdul Aziz Bin Abdul Rahman (Chairman / Independent Non-Executive Director) and Mr Khor ChaiTian (Independent Non-Executive Director).
Statement of Corporate Governance
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ASIAEP BHD (Company No. 253387-W)
asiaEP Annual Report 2009
The primary function of the Nomination Committee is to identify and recommend to the Board,technically competent persons of integrity with a strong sense of professionalism to be appointed tothe Board.
The Nomination Committee will assess the suitability of an individual to be appointed to the Boardby taking into account the individual’s other commitments, resources and time available for input tothe Board before recommendation is made for the Board’s approval. The Committee shall reviewannually the required mix of skills and experience and other qualities and competencies of itsDirectors and shall review the composition, structure and size of the Board.
Two Nomination Committee Meetings were held from April 2008 to May 2009 in dischanging theirduties and responsibilities.
v) Remuneration Committee
The Remuneration Committee was established on 16 February, 2004 and its members are :Chairman : Tan Sri Dato’ (Dr) Abdul Aziz Bin Abdul Rahman (Independent Non- ExecutiveDi rec to r ) , Madam Lee Suet Hong (Execu t i ve D i rec to r ) and Mr . Khor Cha i T ian(Independent Non-Executive Director).
The Committee is responsible for recommending to the Board from time to time, the remunerationframework and package of the Executive Directors of the Company in all forms to commensuratewith the respective contributions of the Executive Directors. Executive Directors are to abstain fromdeliberations and voting on the decision in respect of their own remuneration packages.
The Board as a whole decides on the remuneration of Non-Executive Directors, including the Non-Executive Chairman. The individuals concerned should abstain from discussion on their ownremuneration packages. The shareholders at the Annual General Meeting (AGM) approvethe Directors’ fees.
Two Remuneration Committee Meetings were held from May 2008 to May 2009 in dischanging theirduties and responsibilities.
- Review and recomend to the board the remuneration package of Executive Directors for finanacial year ended 28 February 2009.
b) DIRECTORS’ REMUNERATION
The Directors are satisfied that the current levels of remuneration are in line with the responsibilitiesas undertaken by directors.
A summary of the remuneration of the Directors for the financial year under review, distinguishingbetween Executive and Non-Executive Directors in aggregate with categorization into appropriatecomponents is set out below:
Directors’ Remuneration Executive Non-executive Directors Total
Directors’ Fee (RM’000) - 83 83 Salaries and Other Emoluments (RM’000) 816 - 816
The number of Directors whose remuneration falls into the following bands are:-
Remuneration Range Executive Director Non Executive Director
Below RM50,000 - 3 RM350,001-RM400,000 2 -
The Board is of the view that the above disclosure, without divulging respective Directors’ individualremuneration, is sufficients.
asiaEP Annual Report 2009 10
ASIAEP BHD (Company No. 253387-W)
vi) Training for Directors
All the Directors have attended the Mandatory Accreditation Programme (MAP) conducted by theResearch Institute of Investment Analysts Malaysia, an affiliate of Bursa Malaysia.
The Board has assessed the training needs of the Directors and encourages the Directors to attend anyrelevant programme to further enhance their knowledge to enable them to discharge their responsibilitymore effectively.
During the financial year under review the directors were updated on new regulatory and statutory requirements.
vii) Appointment and Re-election
In accordance with the Company’s Articles of Association, all new Directors are subject to electionat the AGM following their first appointment.
In every year, one-third of the Directors or if their number is not three or a multiple of three, then thenumber nearest to one-third, shall retire by rotation from office and seek re-election at each AGM andthat each Director shall retire from office at least once in every three years and shall be eligible forre-election.
c) SHAREHOLDERS
i) Relations with Shareholders and Investors
The Company acknowledges the significance of being accountable to its shareholders and investors andas such, has maintained active communication and feedback policy from institutional investors, shareholdersand the public generally. All shareholders, including private investors, have an opportunity to participate indiscussion with the Board on matters relating to the Company’s operation and performance at the Company’sAGM. Alternatively, they may obtain the Company’s latest announcements such as quarterly financial resultsfrom the Bursa Malaysia’s website (www.bursamalaysia.com).
ii) Annual General Meeting (AGM)
The AGM is the principal forum for dialogue with public shareholders. The shareholders are encouraged toparticipate in the open question and answer sessions in the AGM in which they may raise questions on theresolutions being proposed at the meeting and the financial performance and business operation in general.
d) ACCOUNTABILITY AND AUDIT
i) Financial Reporting
The Directors have taken reasonable steps to provide a balanced and understandable assessment of theCompany’s financial performance and prospects. In this respect, the Audit Committee assists the Board tooversee of the Company’s financial reporting process and the quality of the financial reporting.
ii) Statement of Directors’ in Relation to the Financial Statements
The Directors are responsible for the preparation of the Annual Audited Financial Statements which give atrue and fair view of the state of affairs of the Company and will ensure that they are presented in accordancewith the provisions of the Companies Act, 1965 and the applicable approved accounting standards inMalaysia.
In the preparation of the financial statements for the year ended 28 February 2009, the Directors are satisfiedthat the Company had used appropriate accounting policies that are consistently applied and supported byreasonable and prudent judgement and estimates.
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ASIAEP BHD (Company No. 253387-W)
asiaEP Annual Report 2009
iii) Internal Control
The Board recognises the importance of internal control systems whereby shareholders’ investment and theCompany’s assets can be safeguarded. As at to date, the Board is comfortable with the current internalcontrols which are in place. The Board will improve the internal controls of the Company should the Boardbecome aware of any weaknesses.
iv) External Auditors
The Board has established a transparent relationship with the external auditors through the Audit Committee,which has been accorded with the power to communicate directly with the external auditors towards ensuringcompliance with the accounting standards and other related regulatory requirements.
v) Statement Of Compliance with the Best Practices of the Case
The Company is committed to achieve high standards of corporate governance throughout the Group and thehighest level of integrity and ethical standards in all of its business dealings.
The Board will continue to strive for full compliance with the Malaysian Code of Corporate Governance in thecoming financial year.
asiaEP Annual Report 2009 12
ASIAEP BHD (Company No. 253387-W)
1. CONFLICT OF INTEREST
None of the Directors have any family relationship with other Directors or major shareholders of the Company.
2. CONVICTIONS FOR OFFENCES
None of the Directors have been convicted for offences within the past ten (10) years other than traffic offences, ifany.
3. SHARE BUY BACKS
The Company purchased 3,423,300 of its ordinary shares from the open market at an average RM0.194 per share.
The total consideration paid for the repurchase including transaction costs was RM669,025.84 and this was financed by internally generated funds. The shares repurchased are being held as treasury shares in accordance with Section 67A of the Companies Act, 1965.
4. OPTIONS, WARRANTS OR CONVERTIBLE SECURITIES
There were no options, warrants or convertible securities issued by the Company during the financial year.
5. AMERICAN DEPOSITORY RECEIPT (ADR) OR GLOBAL DEPOSITORY (GDR) PROGRAMME
During the financial year under review, the Company did not sponsor any ADR or GDR programmes.
6. IMPOSITION OF SANCTIONS / PENALTIES
There were no sanctions and/or penalties imposed on the Company, directors or management by the relevantregulatory bodies during the financial year under review.
7. NON-AUDIT FEES
There was no non-audit fees paid to the External Auditors, Messrs Baker Tilly Monteiro Heng during the financialyear ended 28 February 2009.
8. PROFIT ESTIMATE, FORECAST OR PROJECTION
There is no material variance between the results for the financial year and the unaudited results previouslyannounced by the Company. The Company did not issue any profit estimate, forecast or projections for the financialyear.
9. MATERIAL CONTRACTS
There were no material contracts entered into by the Company/or its subsidiaries involving Director’s or majorshareholders’ interest, during the financial year under review.
Additional Compliance Information
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ASIAEP BHD (Company No. 253387-W)
asiaEP Annual Report 2009
10. PROFIT GUARANTEE
During the year, there was no profit guarantee given by the Company.
11. CONTRACTS RELATING TO LOAN
During the financial year under review, there were no contracts relating to loan by the Company involving Directorsand major shareholders.
12. REVALUATION OF LANDED PROPERTIES
The Company does not have a revaluation policy on landed properties.
13. CORPORATE SOCIAL RESPONSIBILITY ACTIVITIES OR PRACTICES
The Group was actively involved in corporate social responsibilty activities or practices during the financialyear ended 28 February 2009.
During the financial year, the management encouraged the staff to recycle paper and reduce the storageof paper and documents.
The Group interacts responsibly with our shareholders, suppliers, customers, government departments,regulators and industry associations in a number of ways, such as supporting the market with goodproducts, engaging in ethical procurement practices, maintaining quality of its service and businessofferings and compliance with the relevant regulations and obligations.
We are also committed to career development of our management and support staff, by sponsoring key personnelfor training and seminars.
14. RECURRENT RELATED PARTY TRANSACTIONS STATEMENT
During the financial year, the Company did not enter into any recurrent related party transactions ofrevenue or trading nature.
asiaEP Annual Report 2009 14
ASIAEP BHD (Company No. 253387-W)
Audit Committee Report
COMPOSITION
Members of the Committee shall be determined by the Board of Directors and shall be composed of no fewerthan 3 members and all the members must be non-executive directors, with a majority of them beingindependent directors. The Chairman of the Audit Committee shall be an independent director & non-executivedirector.
The members of the Committee possess the requisite qualification and experience that meet the prescribedrequirements of Bursa Malaysia Securities Berhad for the MESDAQ Market from time to time in force.
No Alternate Director or Chief Executive Officer shall be appointed as a member of the audit Committee.
The Audit committee comprise the following:-
Members
Mr. Khor Chai Tian (Chairman) Independent and Non-Executive DirectorTan Sri Dato’ (DR) Abdul Aziz Bin Abdul Rahman Independent and Non-Executive Director/ChairmanMr. Lim Ghim Chai Independent and Non-Executive Director
TERMS OF REFERENCE OF AUDIT COMMITTEE
Chairman
The Chairman of the Committee must be an independent Director. In the absence of the Chairman, themembers shall elect any one of the members present at the meeting to be Chairman of the meeting.
MEETINGS
The committee shall meet at least 4 times a year with 2 members in attendance to form a quorum.
SECRETARY
The Company Secretary shall be the Secretary of the Committee.
QUORUM
In order to form a quorum in respect of a meeting of an audit committee, the majority of members present mustbe independent directors.
MEETINGS
The Executive Directors, Accountant, Representative of the internal auditors may be present in any meetingupon the invitation of the Committee.
AUTHORITY
The Committee is authorised by the Board to investigate any matter within its terms of reference.
The Committee shall have the resources and shall be allowed to obtain independent professional or otheradvice as deemed necessary to assist the Committee in fulfilling its responsibilities at the cost of the Company.The Committee shall have full and unrestricted access to the Chief Executive Officer and any informationpertaining to the Company. The Committee shall also have direct communication channels with the externalauditors and person(s) carrying out the internal audit function or activity.
Whenever necessary, the Committee may also convene meetings with the external auditors, the_internalauditors or both, without the attendance of the other directors and employees of the Company
Audit Committee Report
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ASIAEP BHD (Company No. 253387-W)
asiaEP Annual Report 2009
MATERIAL CONTRACTS INVOLVING DIRECTORS AND SUBSTANTIAL SHAREHOLDERS
There were no material contracts entered into by the Company or its subsidiaries, which involved the interests of theDirectors and substantial shareholders during the financial year.
VARIATION IN RESULTS
There were no significant variations between the audited results for the financial year and the unaudited resultspreviously announced.
RECURRENT RELATED PARTY TRANSACTION
Details of Recurrent Related Party Transactions of revenue or trading nature are disclosed in the Notes to the FinancialStatements.
SUMMARY OF ACTIVITIES OF THE COMMITTEE DURING THE FINANCIAL YEAR ENDED 28 FEBRUARY 2009
During the financial year under review, the Committee convened five (5) meetings. Details of attendance are asfollows:-
Committee Members No. of meetings attended
Mr. Khor Chai Tian 5/5Tan Sri Dato (DR) Abdul Aziz B. Abdul Rahman 5/5Mr. Lim Ghim Chai (appointed on 11/4/2008) 5/5
STATEMENT VERIFYING ALLOCATION OF OPTIONS
The Committee has reviewed and verified that the allocation of share options pursuant to the Employees Share OptionScheme (ESOS) for the financial year ended 28 February 2009 was made in accordance with the criteria as set out inthe By-Laws of the Company’s ESOS.
There were no options granted to any of the non-executive directors of the company.
Internal Audit Function
The Group has outsourced its internal audit function to a professional consulting firm. The internal audit function istherefore independent of the activities of the Group and performs its duties with impartiality, objectivity and dueprofessional care.
Audit Committee Report (continued)
DUTIES
The duties of the Audit Committee are :-• to report to the Board of Directors after review the following :-• the audit plan with the external auditors;• the evaluation of the internal control system with the external auditors;• the external auditors’ audit report and any management letter from the external auditors to the Company
and the management’s response to such letter;• the assistance given by the employees of the Company to the external auditor;• the adequacy of the scope, functions, competency and resources of the internal audit function and that
it has the necessary authority to carry out its work;• the internal audit programme, processes, the results of the internal audit programme, processes or
investigation undertaken and whether or not appropriate action is taken on the recommendations ofthe internal audit function,
• the quarterly results and year end consolidated financial statements, prior to the approval by theboard of directors, focusing particularly on:-(i) changes in or implementation of major accounting policy changes;(ii) significant and unusual events; and(i i i) compliance with accounting standards and other legal requirements;
• any related party transaction and potential conflict of interest situation that may arise within the listedcompany or group including any transaction, procedure or course of conduct that raises questions ofmanagement integrity;
• to recommend to the board the nomination, appointment or reappointment of the external auditors andany question of their resignation and termination; and
• to perform any other duties as may be agreed by the Committee and the Board of Directors
asiaEP Annual Report 2009 16
ASIAEP BHD (Company No. 253387-W)
INTRODUCTION
The Malaysian Code on Corporate Governance requires listed companies to maintain a sound system of internalcontrols to safeguard shareholders’ investments and the Group’s assets. The Bursa Malaysia Securities Berhad’s(“Bursa Securities”) Revamped Listing Requirements require directors of public listed companies to include a statementin their annual reports on the state of their internal controls. The Bursa Securities’ Statement on Internal Control:Guidance for Directors of Public Listed Companies (“Guidance”) provides guidance for compliance with theserequirements.
The Board of Directors is pleased to present the Statement on Internal Control of the Group which outlines the keyelements of internal control for the year ended 28 February 2009. This statement has been prepared in accordance withthe Guidance and the Listing Requirements of Bursa Securities.
RESPONSIBILITY OF THE BOARD
The Board is ultimately responsible for the Group’s system of internal control which includes financial, compliance andoperational controls of the Group. The Board also recognises its responsibility for reviewing the adequacy and integrityof the system of internal control to safeguard shareholders’ investments and the Group’s assets.
RISK MANAGEMENT FRAMEWORK
The Executive Directors with assistance of the management are continuously identifying, evaluating and managingsignificant business risks that affect the day-to-day operations of the Group.
The Audit Committee, on behalf of the Board, considers the effectiveness of the operation of the internal controlprocedures in the Group during the financial year. The Audit Committee reviews internal control issues identified bymanagement and evaluates the adequacy and effectiveness of the Group’s risk management and internal controlsystem.
In accordance with the Malaysia Code on Corporate Governance, the Group has appointed an external professionalfirm as internal auditor in March 2008. The Internal Audit function reports directly to the Audit Committee, carries outregular review of business process to assess the effectiveness of internal controls and highlights any significant riskthat may adversely affect the Group. Whenever necessary, the Audit Committee reviews and discusses with keymanagement on the issues brought up by the Internal Audit function.
KEY ELEMENTS
The key elements of the Group’s internal control system include the following:
- There is a clearly defined delegation of responsibility to the Management and operating units to ensure properidentification of accountability and segregation of duties.
- Policy guidelines, procedures and authority limits are established for Executive Directors and management withinthe Group in respect of the day-to-day operations, acquisitions and disposal of assets.
- There are standard operating policies and procedures which are set out and communicated to all levels of theorganisation.
- Regular Board and Management Meetings are held where information is provided to the Board and Managementcovering financial performance and operation.
CONCLUSION
The Board is of the opinion that based on the current level of activities, the Group’s system of internal control isadequate, and the Management will continue to take measures to strengthen the control environment. This statmentwas made in accordance with a resolution of the Board of Directors.
Statement on Internal Control
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ASIAEP BHD (Company No. 253387-W)
asiaEP Annual Report 2009
Contents Page
Directors’ Report 1 - 6
Financial statements
Balance Sheet 7 - 8
Income Statement 9
Statement of Changes in Equity 10 - 12
Cash Flow Statement 13 - 15
Notes to the Financial Statements 16 - 51
Statement by Directors 52
Statutory Declaration 53
Report of the Auditors 54 - 55
Financial Statements
REPORTS AND FINANCIAL STATEMENTSFOR THE YEAR ENDED 28TH FEBRUARY 2009
ASIAEP BHD.(Incorporated in Malaysia)
1
Company No. 253387 - W
asiaEP BHD.
(Incorporated in Malaysia)
DIRECTORS' REPORT
The directors hereby submit their report together with the audited financial statements of the
Group and of the Company for the financial year ended 28th February 2009.
PRINCIPAL ACTIVITIES
The Company is principally engaged in providing e-commerce solutions and developing an e-
market place for both local and international enterprises. The principal activities of its
subsidiaries are disclosed in Note 6 to the financial statements. There have been no significant
changes in the nature of these principal activities during the financial year.
RESULTS
Group Company
RM'000 RM'000
Net loss for the financial year (7,679) (1,998)
DIVIDEND
No dividend was paid or declared by the Company since the end of the previous financial year.
The directors do not recommend the payment of any dividend in respect of the financial year ended
28th February 2009.
RESERVES AND PROVISIONS
All material transfers to and from reserves and provisions during the financial year have been
disclosed in the financial statements.
BAD AND DOUBTFUL DEBTS
Before the income statements and balance sheets of the Group and of the Company were made out,
the directors took reasonable steps to ascertain that action had been taken in relation to the writing
off of bad debts and the making of allowance for doubtful debts, and had satisfied themselves that
all known bad debts had been written off and adequate allowance had been made for doubtful
debts.
2
Company No. 253387 - W
At the date of this report, the directors are not aware of any circumstances that would render the
amount written off for bad debts, or the amount of the allowance for doubtful debts in the financial
statements of the Group and of the Company inadequate to any substantial extent.
CURRENT ASSETS
Before the income statements and balance sheets of the Group and of the Company were made out,
the directors took reasonable steps to ensure that any current assets, other than debts, which were
unlikely to be realised in the ordinary course of business, their values as shown in the accounting
records of the Group and of the Company had been written down to an amount that they might be
expected to be realised.
At the date of this report, the directors are not aware of any circumstances that would render the
values attributed to the current assets in the financial statements of the Group and of the Company
misleading.
VALUATION METHODS
At the date of this report, the directors are not aware of any circumstances which have arisen
which render adherence to the existing methods of valuation of assets or liabilities of the Group
and of the Company misleading or inappropriate.
CONTINGENT AND OTHER LIABILITIES
At the date of this report, there does not exist:-
(i) any charge on the assets of the Group and of the Company that has arisen since the end of
the financial year which secures the liabilities of any other person, or
(ii) any contingent liability in respect of the Group and of the Company that has arisen since the
end of the financial year.
No contingent liability or other liability of the Group and of the Company has become enforceable,
or is likely to become enforceable within the period of twelve months after the end of the financial
year which, in the opinion of the directors, will or may substantially affect the ability of the Group
and of the Company to meet their obligations as and when they fall due.
CHANGE OF CIRCUMSTANCES
At the date of this report, the directors are not aware of any circumstances, not otherwise dealt
with in this report or the financial statements of the Group and of the Company that would render
any amount stated in the financial statements misleading.
3
Company No. 253387 - W
ITEMS OF AN UNUSUAL NATURE
The results of the operations of the Group and of the Company for the financial year were not, in
the opinion of the directors, substantially affected by any item, transaction or event of a material
and unusual nature.
No item, transaction or event of a material and unusual nature has arisen in the interval between
the end of the financial year and the date of this report which is likely to affect substantially the
results of the operations of the Group and of the Company for the financial year in which this
report is made.
ISSUE OF SHARES AND DEBENTURES
The Company did not issue any shares or debentures during the financial year.
TREASURY SHARES
The shareholders of the Company, by an ordinary resolution passed at the Extraordinary General
Meeting held on 28th May 2007, approved the plan of the Company to buy-back from the open
market of up to 10% of the Company’s issued and paid-up ordinary share capital at any point in
time through Bursa Malaysia Securities Berhad (“Proposed Share Buy-Back”).
During the financial year, the Company repurchased 2,083,400 of its issued share capital from the
open market at an average price of RM0.17 per share. The total consideration paid for the
repurchase including transaction costs was RM344,943/-. The shares repurchased are being held
as treasury shares in accordance with Section 67A of the Companies Act, 1965.
Further relevant details are disclosed in Note 15 to the financial statements.
ISSUE OF WARRANTS
The Company did not issue any warrants during the financial year.
Details of the warrants are set out in Note 14 to the financial statements.
4
Company No. 253387 - W
EMPLOYEES’ SHARE OPTION SCHEME (“ESOS”)
At an Extraordinary General Meeting held on 23rd August 2004, the Company’s shareholders
approved the establishment of an ESOS of up to 15% of the issued share capital of the Company,
to eligible Executive Directors and employees of the Group (“the Scheme”). The Scheme was set
to expire on 27th August 2007 (“Date of Expiry”).
However, prior to the Date of Expiry, on 20th August 2007 the Company approved the proposal
to extend the existing scheme for a further period of up to 3 years from the date of expiry
(“Extended Scheme”). The Extended Scheme shall be implemented in accordance with the terms
of the Company’s By-Laws of the ESOS Scheme.
No options were granted to any person to take up unissued shares or debentures of the Company
during the financial year.
Details of the ESOS are set out in Note 12 to the financial statements.
The persons to whom the options have been granted have no right to participate by virtue of the
options in any share issue of any other companies.
DIRECTORS
The names of the directors of the Company in office since the date of the last report and at the date
of this report are:-
YB Tan Sri Dato’ (Dr) Abdul Aziz Bin Abdul Rahman
Dr. Tan Boon Nunt
Lee Suet Hong
Khor Chai Tian
Lim Ghim Chai
Low To Fong (resigned on 11.04.2008)
5
Company No. 253387 - W
DIRECTORS’ INTERESTS
According to the register of directors’ shareholdings kept by the Company under Section 134 of
the Companies Act, 1965, the interests of those directors who held office at the end of the financial
year in shares and warrants in the Company during the financial year ended 28th February 2009
are as follows:-
Number of ordinary shares of RM0.10 each
At At
1.3.2008 Bought Sold 28.2.2009
Shareholdings in the Company
YB Tan Sri Dato’(Dr) Abdul Aziz
Bin Abdul Rahman 100,000 - - 100,000
Dr. Tan Boon Nunt 9,374,260 100,000 - 9,474,260
Lee Suet Hong 13,723,760 - (13,723,500) 260
Shareholdings in which directors
have deemed interests through
Topclass Access Sdn. Bhd.
Dr. Tan Boon Nunt 18,562,509 - - 18,562,509
Lee Suet Hong 18,562,509 - - 18,562,509
Warrants 2006/2011
At
1.3.2008
Bought
Exercised
At
28.2.2009
Dr. Tan Boon Nunt 2,166,716 - - 2,166,716
Lee Suet Hong 1,333,383 - - 1,333,383
Other than as disclosed above, none of the directors in office at the end of the financial year had
any interest in shares and warrants in the Company and its related corporations during the
financial year.
DIRECTORS' BENEFITS
Since the end of the previous financial year, no director of the Company has received or become
entitled to receive a benefit (other than benefits included in the aggregate amount of emoluments
received or due and receivable by the directors shown in the financial statements) by reason of a
contract made by the Company or a related corporation with the director or with a firm of which
the director is a member, or with a company in which the director has a substantial financial
interest.
6
Company No. 253387 - W
DIRECTORS' BENEFITS (Continued)
Neither during nor at the end of the financial year was the Company or any of its related
corporations a party to any arrangement, whose object was to enable the directors to acquire
benefits by means of the acquisition of shares in, or debentures of, the Company or any other body
corporate apart from the director’s entitlements to subscribe for new ordinary shares in the
Company under the ESOS of the Company.
SIGNIFICANT EVENTS DURING AND AFTER THE FINANCIAL YEAR
Significant events during and after the financial year are disclosed in Note 29 to the financial
statements.
AUDITORS
The auditors, Messrs Baker Tilly Monteiro Heng, have expressed their willingness to continue in
office.
On behalf of the Board,
……………………………..
DR. TAN BOON NUNT
Director
……………………………..
LEE SUET HONG
Director
Kuala Lumpur
Date: 26th May 2009
7
Company No. 253387 - W
asiaEP BHD.
(Incorporated in Malaysia)
BALANCE SHEETS AS AT 28TH FEBRUARY 2009
2009 2008 2009 2008
Note RM'000 RM'000 RM'000 RM'000
ASSETS
Non-current assets
Property, plant and equipment 4 28,976 32,118 1,727 2,242
Prepaid land lease payments 5 475 480 475 480
Investment in subsidiaries 6 - - 1,466 1,466
Intangible assets 7 32,723 30,721 12,468 13,739
62,174 63,319 16,136 17,927
Current assets
Trade receivables 8 1,644 3,940 1,124 3,940
Other receivables, deposits and
prepayments 9 117 301 114 197
Amount owing by subsidiaries 10 - - 53,965 47,099
Short term investments 11 - 1,049 - 1,049
Tax recoverable 5 - 5 -
Cash and bank balances 531 2,314 485 1,871
2,297 7,604 55,693 54,156
TOTAL ASSETS 64,471 70,923 71,829 72,083
EQUITY AND LIABILITIES
Equity attributable to equity holders
of the Company
Share capital 12 24,532 24,532 24,532 24,532
Reserves 13 37,144 45,668 44,544 46,887
Shareholders' funds 61,676 70,200 69,076 71,419
Minority interest - - - -
Total equity 61,676 70,200 69,076 71,419
Group Company
8
Company No. 253387 - W
asiaEP BHD.
(Incorporated in Malaysia)
BALANCE SHEETS AS AT 28TH FEBRUARY 2009 (Continued)
2009 2008 2009 2008
Note RM'000 RM'000 RM'000 RM'000
Non-current liabilities
Hire purchase liabilities 16 226 23 226 23
Deferred tax liabilities 17 239 127 239 127
465 150 465 150
Current liabilities
Trade payables 18 24 24 24 24
Other payables and accruals 19 673 452 631 442
Hire purchase liabilities 16 129 41 129 41
Short term borrowing 20 1,504 - 1,504 -
Tax payable - 56 - 7
2,330 573 2,288 514
Total liabilities 2,795 723 2,753 664
TOTAL EQUITY AND LIABILITIES 64,471 70,923 71,829 72,083
Group Company
The accompanying notes form an integral part of these financial statements.
9
Company No. 253387 - W
asiaEP BHD.
(Incorporated in Malaysia)
INCOME STATEMENTS
FOR THE FINANCIAL YEAR ENDED 28TH FEBRUARY 2009
2009 2008 2009 2008
Note RM'000 RM'000 RM'000 RM'000
REVENUE 21 5,831 15,049 4,963 15,016
Cost of services (1,692) (2,378) (1,687) (1,898)
GROSS PROFIT 4,139 12,671 3,276 13,118
Other operating revenue 228 55 224 49
Administrative expenses (11,921) (5,472) (5,324) (4,704)
Other operating expenses - - - (691)
Operating (loss)/profit (7,554) 7,254 (1,824) 7,772
Finance expense
- hire purchase interest (7) (5) (7) (5)
- overdraft interest (55) - (55) -
(LOSS)/PROFIT BEFORE
TAXATION 22 (7,616) 7,249 (1,886) 7,767
TAXATION 23 (63) (190) (112) (141)
NET (LOSS)/PROFIT FOR THE
FINANCIAL YEAR (7,679) 7,059 (1,998) 7,626
Attributable to:
Equity holders of the Company (7,679) 7,059 (1,998) 7,626
Minority interest - - - -
Net profit for the financial year (7,679) 7,059 (1,998) 7,626
(Loss)/Earnings per share attributable to
ordinary equity holders of the
Company: 24
Basic (sen) (3.30) 3.01
Diluted (sen) N/A 2.63
Group Company
The accompanying notes form an integral part of these financial statements.
10
Company No. 253387 - W
asiaEP BHD.
(Incorporated in Malaysia)
STATEMENTS OF CHANGES IN EQUITY
FOR THE FINANCIAL YEAR ENDED 28TH FEBRUARY 2009
Share
Share ESOS Translation Warrant Premium Retained Treasury Minority Total
Group Capital Reserve Reserve Reserve Reserve Profits Shares Total Interest Equity
RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000
At 1st March 2007 21,707 210 (112) 446 15,917 18,162 - 56,330 - 56,330
Issue of shares
- exercise of options 911 (470) - - 788 - - 1,229 - 1,229
- options expense charged
during the financial year - 260 - - - - - 260 - 260
- warrants exercised 1,914 - - (127) 3,956 - - 5,743 - 5,743
Purchase of treasury shares - - - - - - (324) (324) - (324)
Exchange differences - - (97) - - - - (97) - (97)
Net profit for the financial year - - - - - 7,059 - 7,059 - 7,059
At 29th February 2008 24,532 - (209) 319 20,661 25,221 (324) 70,200 - 70,200
Attributable to equity holders of the Company
Non-distributable Distributable
11
Company No. 253387 - W
asiaEP BHD.
(Incorporated in Malaysia)
STATEMENTS OF CHANGES IN EQUITY
FOR THE FINANCIAL YEAR ENDED 28TH FEBRUARY 2009 (Continued)
Share
Share ESOS Translation Warrant Premium Retained Treasury Minority Total
Group Capital Reserve Reserve Reserve Reserve Profits Shares Total Interest Equity
RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000
At 29th February 2008 24,532 - (209) 319 20,661 25,221 (324) 70,200 - 70,200
Purchase of treasury shares - - - - - - (345) (345) - (345)
Exchange differences - - (495) - - (5) - (500) - (500)
Net loss for the financial year - - - - - (7,679) - (7,679) - (7,679)
At 28th February 2009 24,532 - (704) 319 20,661 17,537 (669) 61,676 - 61,676
Attributable to equity holders of the Company
Non-distributable Distributable
12
Company No. 253387 - W
asiaEP BHD.
(Incorporated in Malaysia)
STATEMENTS OF CHANGES IN EQUITY
FOR THE FINANCIAL YEAR ENDED 28TH FEBRUARY 2009 (Continued)
Share
Share ESOS Translation Warrant Premium Retained Treasury
Company Capital Reserve Reserve Reserve Reserve Profits Shares Total
RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000
At 1st March 2007 21,707 210 - 446 15,917 18,605 - 56,885
Issue of shares
- exercise of options 911 (470) - - 788 - - 1,229
- options expense charged
during the financial year - 260 - - - - - 260
- warrants exercised 1,914 - - (127) 3,956 - - 5,743
Purchase of treasury shares - - - - - - (324) (324)
Net profit for the financial year - - - - - 7,626 - 7,626
At 29th February 2008 24,532 - - 319 20,661 26,231 (324) 71,419
Purchase of treasury shares - - - - - - (345) (345)
Net loss for the financial year - - - - - (1,998) - (1,998)
At 28th February 2009 24,532 - - 319 20,661 24,233 (669) 69,076
Non-distributable Distributable
The accompanying notes form an integral part of these financial statements
13
Company No. 253387 - W
asiaEP BHD.
(Incorporated in Malaysia)
CASH FLOW STATEMENTS
FOR THE FINANCIAL YEAR ENDED 28TH FEBRUARY 2009
2009 2008 2009 2008
RM'000 RM'000 RM'000 RM'000
CASH FLOWS FROM
OPERATING ACTIVITIES:
(Loss)/Profit before taxation (7,616) 7,249 (1,886) 7,767
Adjustments for:
Amortisation
- intellectual property 1,175 1,146 1,175 1,146
- development costs 3,110 720 330 350
- prepaid land lease payments 5 5 5 5
Waiver of debt - - - 158
Bad debt recovered (216) - (216) -
ESOS expenses - 260 - 260
Currency realignment (506) (55) - -
Impairment loss on investment in a subsidiary - - - 533
Interest expense 62 5 62 5
Interest income (12) (55) (8) (49)
Depreciation 3,708 1,163 395 652
Loss on winding up of subsidiary 29 - - -
Development cost written off 11 91 - -
Property, plant and equipment written off 419 1 - -
169 10,530 (143) 10,827
Changes In Working Capital:
Receivables 2,696 879 3,115 898
Payables 221 205 189 205
Development costs paid (1,752) (1,273) (114) (208)
Tax paid (12) (9) (12) (9)
Net Operating Cash Flow 1,322 10,332 3,035 11,713
CASH FLOWS FROM
INVESTING ACTIVITIES:
Purchase of property, plant and equipment (5,167) (18,911) (4,982) (254)
Interest income 12 55 8 49
Loss on winding up of subsidiary (29) - - -
Net Investing Cash Flow (5,184) (18,856) (4,974) (205)
Group Company
14
Company No. 253387 - W
asiaEP BHD.
(Incorporated in Malaysia)
CASH FLOW STATEMENTS
FOR THE FINANCIAL YEAR ENDED 28TH FEBRUARY 2009 (Continued)
2009 2008 2009 2008
RM'000 RM'000 RM'000 RM'000
CASH FLOWS FROM
FINANCING ACTIVITIES:
Interest expense (62) (5) (62) (5)
Repayment of hire purchase liabilities (61) (42) (61) (42)
Advances to subsidiaries - - (1,532) (19,987)
Drawndown of short term borrowing 1,504 - 1,504 -
Proceeds from the exercise of options - 1,229 - 1,229
Proceeds from the warrants exercised - 5,743 - 5,743
Purchase of company's own shares (345) (324) (345) (324)
Net Financing Cash Flow 1,036 6,601 (496) (13,386)
NET CHANGE IN CASH AND
CASH EQUIVALENTS (2,826) (1,923) (2,435) (1,878)
EFFECT ON EXCHANGE RATE CHANGES
ON OPENING CASH (6) (32) - -
CASH AND CASH EQUIVALENTS AT THE
BEGINNING OF THE FINANCIAL YEAR 3,363 5,318 2,920 4,798
CASH AND CASH EQUIVALENTS AT
THE END OF THE FINANCIAL YEAR 531 3,363 485 2,920
ANALYSIS OF CASH AND CASH
EQUIVALENTS:
Short term investments - 1,049 - 1,049
Cash and bank balances 531 2,314 485 1,871
531 3,363 485 2,920
Group Company
During the financial year, the Group and the Company acquired property, plant and equipment
totalling to RM5,519,000/- (2008 : RM18,911,000/-) and RM5,334,000/- (2008 : RM254,000/-)
respectively of which RM470,000/- (2008 : RMNil) were acquired under hire purchase
arrangements. Cash payments of RM118,000/- (2008 : RMNil) were made towards the hire
purchase liabilities.
The accompanying notes form an integral part of these financial statements.
15
Company No. 253387 - W
asiaEP BHD.
(Incorporated in Malaysia)
CASH FLOW STATEMENTS
FOR THE FINANCIAL YEAR ENDED 28TH FEBRUARY 2009 (Continued)
Winding up of a wholly owned subsidiary, asiaEP China Co. Ltd.
On 16th September 2008, the Company announced that its wholly-owned subsidiary, asiaEP China
Co. Ltd. (“asiaEP China”), a company incorporated in the People’s Republic of China (“PRC”)
had applied to the relevant authority in the PRC to be voluntarily wound-up. In this connection,
asiaEP China had on 25th March 2008 appointed a firm of Certified Public Accountants in
Shanghai, PRC to submit the statement of affairs of asiaEP China to the relevant authorities.
The effects of the winding up of the subsidiary on the financial position of the Group as at 28th
February 2009 are as follows:-
2009
RM'000
Cash and bank balances 29
Net assets disposed 29
Cash proceeds -
Loss on winding up of the subsidiary 29
Cash outflow arising on winding up:-
Cash proceeds -
Cash and cash equivalent of subsidiary 29
29
The effects of the winding up of the subsidiary on the financial results of the Group are as
follows:-
2009
RM'000
Revenue -
Administrative expenses -
-
16
Company No. 253387 - W
asiaEP BHD.
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS
1. CORPORATE INFORMATION
The Company is principally engaged in providing e-commerce solutions and developing an e-
market place for both local and international enterprises. The principal activities of its
subsidiaries are disclosed in Note 6 to the financial statements. There have been no
significant changes in the nature of these principal activities during the financial year.
The Company is a public limited liability company, incorporated and domiciled in Malaysia,
and listed on the MESDAQ Market of Bursa Malaysia Securities Berhad.
The registered office and the principal place of business of the Company are both located at
No. 18 & 20, Jalan TK 2/1C, Taman Kinrara Seksyen 2, 47100 Puchong, Selangor Darul
Ehsan.
The financial statements are expressed in Ringgit Malaysia and all values are rounded to the
nearest thousand (RM’000) except when otherwise indicated.
The financial statements were authorised for issue by the board of directors in accordance
with a resolution of the directors on 26th May 2009.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
2.1 Basis of Preparation
The financial statements of the Group and of the Company have been prepared in accordance
with the Financial Reporting Standards (“FRS”) and the provisions of the Companies Act,
1965 in Malaysia.
The financial statements of the Group and of the Company have been prepared under the
historical cost basis, except as disclosed in the significant accounting policies in Note 2.3 to
the financial statements.
The preparation of financial statements in conformity with FRS requires the use of certain
critical accounting estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosures of contingent assets and liabilities at the date of the financial
statements, and the reported amounts of the revenue and expenses during the reported
financial period. It also requires directors’ best knowledge of current events and actions, and
therefore actual results may differ.
The areas involving a higher degree of judgement of complexity, or areas where assumptions
and estimates are significant to the financial statements are disclosed in Note 3 to the
financial statements.
17
Company No. 253387 - W
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
2.2 New and Revised FRS, Amendments to FRS and IC Interpretations
(a) Adoption of Revised FRS, Amendments to FRS and IC Interpretations
The Group and the Company had adopted the following revised FRS, amendments to
FRS and IC Interpretations (“IC Int”) that are relevant to their operations and are
mandatory for the current financial year:-
Revised FRS
FRS 107 Cash Flow Statements
FRS 111 Construction Contracts
FRS 112 Income Taxes
FRS 118 Revenue
FRS 120 Accounting for Government Grants and Disclosure of Government
Assistance
FRS 134 Interim Financial Reporting
FRS 137 Provisions, Contingent Liabilities and Contingent Assets
Amendments to FRS
FRS 121 The Effects of Changes in Foreign Exchange Rates – Net Investment
in a Foreign Operation
IC Interpretations
IC Int 1 Changes in Existing Decommissioning, Restoration & Similar
Liabilities
IC Int 2 Members’ Shares in Co-operative Entities & Similar Instruments
IC Int 5 Rights to Interests arising from Decommissioning, Restoration &
Environmental Rehabilitation Funds
IC Int 6 Liabilities arising from Participating in a Specific Market – Waste
Electrical & Electronic Equipment
IC Int 7 Applying the Restatement Approach under IAS 29 Financial
Reporting in Hyperinflationary Economics
IC Int 8 Scope of FRS 2
The adoption of the above revised FRS, amendments to FRS and IC Int did not result
in any substantial changes in the Group’s and the Company’s accounting policies, and
have any material impact on the results and the financial positions of the Group and of
the Company.
18
Company No. 253387 - W
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
2.2 New and Revised FRS, Amendments to FRS and IC Interpretations (Continued)
(b) FRS and IC Interpretations that are issued, not yet effective and have not been
early adopted
The Group and the Company have not adopted the following new FRS and IC Int that
have been issued as at the date of authorisation of these financial statements but are
not yet effective for the Group and the Company:-
Effective for
financial periods
beginning on
or after
New FRS
FRS 4 Insurance Contracts 1 January 2010
FRS 7 Financial Instruments : Disclosures 1 January 2010
FRS 8 Operating Segments 1 July 2009
FRS 139 Financial Instruments : Recognition and
Measurement
1 January 2010
IC Int
IC Int 9 Reassessment of Embedded Derivatives 1 January 2010
IC Int 10 Interim Financial Reporting and Impairment 1 January 2010
Other than FRS 139, the directors do not anticipate that the application of the above
new FRS and IC Int, when they are effective, will have a material impact on the results
and the financial position of the Group and of the Company.
The Group and the Company has applied the transitional provision in FRS 139.103AB
which exempts entities from disclosing the possible impact arising from the initial
recognition of this standard on the financial statements of the Group and of the
Company as required by paragraph 30(b) of FRS 108.
2.3 Significant Accounting Policies
The following accounting policies have been used consistently in dealing with items which
are considered material in relation to the financial statements:-
(a) Subsidiaries and Basis of Consolidation
The consolidated financial statements include the financial statements of the Company
and its subsidiaries made up to the end of the financial year. The financial statements
of the parent and its subsidiaries are all drawn up to the same reporting date.
19
Company No. 253387 - W
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
2.3 Significant Accounting Policies (Continued)
(a) Subsidiaries and Basis of Consolidation (Continued)
Subsidiaries are entities over which the Group has the power to exercise control over
the financial and operating policies so as to obtain benefits from their activities,
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 controls another entity.
Subsidiaries are consolidated using the purchase method of accounting. Under the
purchase method of accounting, subsidiaries are fully consolidated from the date on
which control is transferred to the Group and are de-consolidated from the date that
control ceases. The cost of an acquisition is measured as the fair value of the assets
acquired, equity instruments issued and liabilities and contingent liabilities incurred or
assumed at the date of exchange, plus costs directly attributable to the acquisition.
Identifiable assets acquired and liabilities and contingent liabilities assumed in a
business combination are measured initially at their fair values at the date of
acquisition, irrespective of the extent of any minority interest. The excess of the cost
of the acquisition over the fair value of the Group’s identifiable net assets acquired at
the date of acquisition is reflected as goodwill. See the accounting policies Note
2.3(c)(i) on goodwill. If the cost of acquisition is less than the fair value of the net
assets of the subsidiary acquired, the difference is recognised directly in the income
statement.
Intra-group transactions, balances and unrealised gains on transactions within the
Group are eliminated in full on consolidation and the consolidated financial statements
reflect external transactions only. Unrealised losses resulting from intra-group
transactions are also eliminated on consolidation unless costs cannot be recovered.
The unrealised losses are considered an impairment indicator of the asset transferred.
When necessary, adjustments are made to the financial statements of the subsidiaries
to ensure consistency of accounting policies with those adopted by the Group.
The gain or loss on disposal of a subsidiary is the difference between net disposal
proceeds and the Group’s share of its net assets as of the date of disposal including the
cumulative amount of any exchange differences that relate to the subsidiary and is
recognised in the consolidated income statements.
(b) Property, Plant and Equipment and Depreciation
Property, plant and equipment are stated at cost less accumulated depreciation and
impairment losses, if any. Cost includes expenditure that is directly attributable to the
acquisition of the asset. When significant parts of an item of property, plant and
equipment have different useful lives, they are accounted for as separate items of
property, plant and equipment.
20
Company No. 253387 - W
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
2.3 Significant Accounting Policies (Continued)
(b) Property, Plant and Equipment and Depreciation (Continued)
The cost of replacing part of an item of property, plant and equipment is recognised in
the carrying amount of the item if it is probable that the future economic benefits
embodied within the part will flow to the Group and its cost can be measured reliably.
The costs of the day-to-day servicing of property, plant and equipment are recognised
in the financial statements as incurred.
Depreciation of property, plant and equipment is provided on the straight line basis to
write off the cost of each asset to its residual value over their estimated useful lives, at
the following annual rates:-
Leasehold buildings 2%
Motor Vehicles 20%
Computer equipment 20%
Office equipment 10%
Furniture and fittings 10%
Renovation 20%
The residual values, useful lives and depreciation methods of assets are reviewed, and
adjusted if appropriate at each balance sheet date to ensure that the amounts, method
and period of depreciation are consistent with previous estimates and the expected
pattern of consumption of the future economic benefits embodied in these items of
property, plant and equipment.
Fully depreciated assets are retained in the accounts until the assets are no longer in
use.
At each balance sheet date, the Group assesses whether there is any indication of
impairment. If such indications exist, an analysis is performed to assess whether the
carrying amount of the asset is fully recoverable. A write down is made if the carrying
amount exceeds the recoverable amount. See accounting policy Note 2.3(k) on
impairment of assets.
An item of property, plant and equipment is derecognised upon disposal or when no
future economic benefits are expected from its use or disposal. Any gain or loss
arising on derecognition of the asset is included in the income statement in the financial
year the asset is derecognised.
(c) Intangible Assets
(i) Goodwill on consolidation
Goodwill represents the excess of the cost of business combination over the fair
value of the Group’s share of the identifiable net assets at the date of acquisition.
21
Company No. 253387 - W
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
2.3 Significant Accounting Policies (Continued)
(c) Intangible Assets (Continued)
(i) Goodwill on consolidation (Continued)
Following the initial recognition, goodwill is measured at cost less accumulated
impairment losses. Goodwill is reviewed for impairment annually or more
frequently if events or changes in circumstances indicate that the carrying value
may be impaired. Impairment losses on goodwill are not reversed. Gains and
losses on the disposal of an entity include the carrying amount of goodwill
relating to the entity sold.
Goodwill is allocated to cash-generating units for the purpose of impairment
testing. The allocation is made to those cash-generating units or groups of cash-
generating units that are expected to benefit from the synergies of the business
combination in which the goodwill arose. See accounting policy Note 2.3(k) on
impairment of assets.
(ii) Research and development costs
All research costs undertaken with the prospect of gaining new scientific or
technical knowledge and understanding are recognised in the income statement
as incurred.
Expenditure on development activities, whereby research findings are applied to
a plan or design for the production of new or substantively improved products
and processes, is capitalised and deferred only when the Group can demonstrate
the technical feasibility of completing the intangible asset so that it will be
available for use or sale, its intention to complete and its ability to use or sell the
asset, how the asset will generate future economic benefits, the availability of
resources to complete the project and the ability to measure reliably the
expenditure during the development. Product development expenditure which do
not meet these criteria are expensed when incurred.
The expenditure capitalised includes cost of materials, direct labour and an
appropriate proportion of overheads. Other development expenditure is
recognised in the income statement as an expense as incurred.
Capitalised development costs, considered to have finite useful lives, are stated
at cost less any impairment losses and are amortised using the straight line basis
over the commercial lives of the underlying products, not exceeding a period of 5
years. Impairment is assessed whenever there is an indication of impairment and
the amortisation period and method are also reviewed at least at each balance
sheet date.
The recoverable amount of development costs not yet available for use are
measured annually, irrespective of whether there is any indication that it may be
impaired. See accounting policy Note 2.3(k) on impairment of assets.
22
Company No. 253387 - W
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
2.3 Significant Accounting Policies (Continued)
(c) Intangible Assets (Continued)
(iii) Intellectual property
Intellectual property consists of the exclusive rights of an online platform
system, including the intellectual property trademarks, copyright, source
programmes and associated documentation. This expenditure is capitalised as it
is able to generate future economic benefits to the Group.
The intellectual property is amortised and recognised as an expense based on the
forecasted income stream so as to reflect the pattern in which the asset’s
economics benefits are consumed by the Group over fifteen years.
(d) Investments
Investments in subsidiaries are stated at cost less impairment losses, if any. Where
there is an indication of impairment, the carrying amount of the investment is reviewed,
and if found to be in excess of the recoverable amount, it is written down immediately
to its recoverable amount. The policy of the recognition and measurement of
impairment losses is in accordance with Note 2.3(k) to the financial statements.
On disposal of an investment, the difference between net disposal proceeds and its
carrying amount is charged or credited to the income statement.
(e) Receivables
Receivables are carried at anticipated realisable values. Bad debts are written off when
identified. An estimate is made for doubtful debts based on a review of all outstanding
amounts as at the balance sheet date.
(f) Payables
Payables are stated at cost which is the fair value of the consideration to be paid in the
future, whether or not billed to the Group.
(g) Taxation
The tax expense in the income statement represents the aggregate amount of current
tax and deferred tax included in the determination of net profit or loss for the year.
Current tax is the expected amount of income taxes payable in respect of the taxable
profit for the year and is measured using the tax rates that have been enacted or
substantively enacted at the balance sheet date, and adjustment of tax payable in
respect of the previous year.
23
Company No. 253387 - W
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
2.3 Significant Accounting Policies (Continued)
(g) Taxation (Continued)
Deferred tax is provided for, using the liability method, on temporary differences at the
balance sheet date between the tax bases of assets and liabilities and their carrying
amounts in the financial statements. In principle, deferred tax liabilities are recognised
for all taxable temporary differences and deferred tax assets are recognised for all
deductible temporary differences, unused tax losses and unused tax credits to the extent
that it is probable that taxable profit will be available against which the deductible
temporary differences, unused tax losses and unused tax credits can be utilised.
Deferred tax is not recognised if the temporary difference arises from goodwill or from
the initial recognition of an asset or liability in a transaction which is not a business
combination and at time of the transaction, affects neither accounting profit nor taxable
profit.
Deferred tax is measured at the tax rates that are expected to apply in the period when
the asset is realised or the liability is settled, based on tax rates that have been enacted
or substantively enacted at the balance sheet date. Deferred tax is recognised in the
income statement, except when it arises from a transaction which is recognised directly
in equity, in which case the deferred tax is also charged or credited directly in equity, or
when it arises from a business combination that is an acquisition, in which case the
deferred tax is included in the resulting goodwill.
(h) Foreign Currencies
The individual financial statements of each entity in the Group are measured using the
currency of the primary economic environment in which the entity operates (“the
functional currency”). The financial statements are presented in Ringgit Malaysia,
which is the Group’s functional currency and presentation currency.
(i) Foreign currency translation
Transactions in foreign currencies are translated into Ringgit Malaysia at rates
of exchange ruling at transaction dates. Monetary assets and liabilities
denominated in foreign currencies at the balance sheet date are translated into
Ringgit Malaysia at the foreign exchange rates ruling at that date. Exchange
differences arising from the settlement of foreign currency transactions and from
the translation of foreign currency monetary assets and liabilities are included in
the income statement.
Non-monetary items are measured in term of historical cost in a foreign currency
or translated using the exchange rates as at the date of the initial transaction.
Non-monetary items measured at fair value in foreign currency are translated
using the exchange rates at the date when the fair value was determined.
24
Company No. 253387 - W
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
2.3 Significant Accounting Policies (Continued)
(h) Foreign Currencies (Continued)
(ii) Financial statement of foreign operation
The Group’s foreign entities are those operations that are not an integral part of
the operations of the Group. Income statements of foreign entities are translated
into Ringgit Malaysia at average exchange rates for the financial year and the
balance sheets are translated at exchange rates ruling at the balance sheet date.
Exchange differences arising from the retranslation of the net investment in
foreign entities are taken up in Exchange Translation Reserve in shareholders’
equity. On disposal of the foreign entity, such translation differences are
recognised in the income statement as part of the gain or loss on disposal.
(i) Revenue Recognition
Revenue is recognised to the extent that it is probable that the economic benefits will
flow to the Group and the revenue can be reliably measured. The following specific
recognition criteria must also be met before revenue is recognised.
(i) Sales of Goods and Services Rendered
Revenue is measured at the fair value of the consideration received or receivable
for the sale of goods and services in the ordinary course of the Group’s activities
and is recognised in the income statement when the significant risks and rewards
of ownership of the goods have been transferred to the buyer and when the
services are rendered.
(ii) Interest Income
Interest income is recognised on the accrual basis.
(j) Financial Instruments
Financial instruments are recognised in the balance sheet when the Group has become
a party to the contractual provisions of the instruments. The particular recognition
methods adopted are disclosed in the individual accounting policy associated with each
item.
Financial instruments are classified as liabilities or equity in accordance with the
substance of the contractual arrangement. Interest, dividends, gains and losses relating
to a financial instrument classified as liability are reported as expense or income.
Distributions to holders of financial instruments classified as equity are charged
directly to equity. Financial instruments are offset when the Company has a legally
enforceable right to set off the recognised amounts and intends either to settle on a net
basis, or to realise the asset and settle the liability simultaneously.
25
Company No. 253387 - W
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
2.3 Significant Accounting Policies (Continued)
(k) Impairment of Assets
The carrying amount of assets, other than deferred tax assets and non-current assets
(or disposal group) held for sale, are reviewed at each balance sheet date to determine
whether there is any indication of impairment. If any such indication exists, the asset’s
recoverable amount is estimated to determine the amount of impairment loss.
For goodwill, intangible assets that have an indefinite useful life and intangible assets
that are not yet available for use, the recoverable amount is estimated at each balance
sheet date or more frequently when indicators of impairment are identified.
For the purpose of impairment testing of these assets, the recoverable amount is
determined on an individual asset basis unless the asset does not generate cash flows
that are largely independent of those from other assets. If this is the case, the
recoverable amount is determined for the cash-generating unit (“CGU”) to which the
asset belongs to. Goodwill acquired on a business combination is, from the acquisition
date, allocated to each of the Group’s CGUs, or groups of CGUs, that are expected to
benefit from the synergies of the combination, irrespective of whether other assets or
liabilities of the Group are assigned to those units or groups of units.
An asset’s recoverable amount is the higher of an asset’s or CGU’s fair value less cost
to sell and its value in use. In assessing value in use, the estimated future cash flows
are discounted to their present value using a pre-tax discount rate that reflects current
market assessments of the time value of money and the risk specific to the asset.
Where the carrying amounts of an asset exceed its recoverable amount, the asset is
considered impaired and is written down to its recoverable amount. Impairment losses
recognised in respect of a CGU or groups of CGUs are allocated first to reduce the
carrying amount of any goodwill allocated to those units or groups of units and then, to
reduce the carrying amount of the other assets in the unit or groups of units on a pro-
rata basis.
An impairment loss is recognised in the income statement in the period in which it
arises.
Impairment loss on goodwill is not reversed in a subsequent period. An impairment
loss for an asset other than goodwill is reversed if, and only if, there has been a change
in the estimates used to determine the asset’s recoverable amount since the last
impairment was recognised. The carrying amount of an asset other than goodwill is
increased to its revised recoverable amount, provided that this amount does not exceed
its carrying amount that would have been determined (net of amortisation or
depreciation) had no impairment loss been recognised for the asset in prior years. A
reversal of impairment loss for an asset other than goodwill is recognised in the income
statement.
26
Company No. 253387 - W
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
2.3 Significant Accounting Policies (Continued)
(l) Borrowing Costs
Borrowing costs are charged to the income statement as an expense in the period in
which they are incurred.
(m) Employee Benefits
(i) Short term employee benefits
Wages, salaries, bonuses, social security contribution and non-monetary benefits
are recognised as an expense in the financial year in which the associated
services are rendered by the employees. Short-term accumulating compensated
absences such as paid annual leave are recognised when services are rendered by
employees that increase their entitlement to future compensated absences. Short
term non-accumulating compensated absences sick leave, maternity and
paternity leave are recognised when absences occur.
(ii) Post-employment benefits
The Group contributes to the Employees’ Provident Fund, the national defined
contribution plan. The contributions are charged to the income statement in the
period to which they are related. Once the contributions have been paid, the
Group has no further payment obligations.
(iii) Share-based compensation
The Company operates its Employees’ Share Option Scheme (“ESOS”), an
equity-settled, share-based compensation plan for employees of the Group which
allows the Group’s employees to acquire ordinary shares of the Company. The
total fair value of share options granted to employees is recognised as an
employee cost with a corresponding increase in the share option reserve within
equity over the vesting period and taking into account the probability that the
options will vest. The fair value of share options is measured at grant date,
taking into account, if any, the market vesting conditions upon which the options
were granted but excluding the impact of any non-market vesting conditions.
Non-market vesting conditions are included in the assumptions about the number
of options that are expected to become exercisable on the vesting date.
At each balance sheet date, the Company revises its estimates of the number of
options that are expected to become exercisable on the vesting date. It
recognises the impact of the revision of original estimates, if any, in the income
statement, and a corresponding adjustment to equity over the remaining vesting
period. The equity amount is recognised in the share option reserve until the
option is exercised, upon which it will be transferred to the share premium
account, or until the option expires, upon which it will be transferred directly to
retained earnings.
27
Company No. 253387 - W
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
2.3 Significant Accounting Policies (Continued)
(m) Employee Benefits (Continued)
(iii) Share-based compensation (Continued)
The proceeds received net of any directly attributable transaction costs are
credited to share capital (nominal value) and share premium when the options
are exercised.
(n) Leases
(i) Finance Lease
Assets financed by hire purchase arrangements which transfer substantially all
the risks and rewards of ownership to the Group are capitalised as property,
plant and equipment, and the corresponding obligations are treated as liabilities.
The assets so capitalised are depreciated in accordance with the accounting
policy on property, plant and equipment. Finance charges are charged to the
income statement over the periods of the respective agreements to give a
constant periodic rate of charge on the remaining hire-purchase and lease
liabilities.
(ii) Operating Lease
Leases of assets were a significant portion of the risks and rewards of ownership
are retained by the lessor are classified as operating leases. Operating lease
payments are recognised as an expense on a straight line basis over the term of
the relevant lease. The aggregate benefit of incentives provided by the lessor is
recognised as a reduction of rental expense over the lease term on a straight line
basis.
In the case of a lease of land and buildings, the minimum lease payments or the
up-front payments made are allocated, whenever necessary, between the land
and the buildings elements in proportion to the relative fair values for leasehold
interests for the land element and the buildings element of the lease at the
inception of the lease. The up-front payments relating to the land element
represents prepaid lease payment and are amortised to the income statement on a
straight line basis over the lease term.
(o) Share Capital
(i) Ordinary shares
Ordinary shares are recorded at the nominal value and the consideration in
excess of nominal value of shares issued, if any, is accounted for as share
premium. Both ordinary shares and share premium are classified as equity.
28
Company No. 253387 - W
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
2.3 Significant Accounting Policies (Continued)
(o) Share Capital (Continued)
(i) Ordinary shares (Continued)
Dividends on ordinary shares are recognised as liabilities when proposed or
declared before the balance sheet date. A dividend proposed or declared after the
balance sheet date, but before the financial statements are authorised for issue, is
not recognised as a liability at the balance sheet date.
Cost incurred directly attributable to the issuance of the shares are accounted for
as a deduction from share premium, if any, otherwise it is charged to the income
statement. Equity transaction costs comprise only those incremental external
costs directly attributable to the equity transaction which would otherwise have
been avoided.
(p) Segmental Information
Segment reporting is presented for enhanced assessment of the Group’s risks and
returns. A business segment is a group of assets and operations engaged in providing
products or services that are subject to risks and returns that are different from those
of other business segments. A geographical segment is engaged in providing products
or services within a particular economic environment that is subject to risks and
returns that are different from those components.
The primary reporting segment information is in respect of geographical segment. No
business segment is prepared as the Group’s activities are predominantly in one
industry.
Segment revenue, expense, assets and liabilities are those amounts resulting from the
operating activities of a segment that are directly attributable to the segment and the
relevant portion that can be allocated on a reasonable basis to the segment. Segment
revenue, expense, assets and segment liabilities are determined before intra-group
transactions are eliminated as part of the consolidation process, except to the extent
that such intra-group balances and transactions are between group enterprises within a
single segment. Inter-segment pricing is based on similar terms as those available to
other external parties.
Segment assets and liabilities do not include income tax assets and liabilities
respectively.
Segment capital expenditure is the total cost incurred during the period to acquire
segment assets that are expected to be used for more than one period.
(q) Cash and Cash Equivalents
For the purpose of cash flow statement, cash and cash equivalents comprise cash in
hand, bank balances, demand deposits, other short-term and highly liquid investments
that are readily convertible to known amounts of cash and which are subject to an
insignificant risk of changes in value.
29
Company No. 253387 - W
3. SIGNIFICANT ACCOUNTING ESTIMATES AND JUDGEMENTS
Estimates and judgements are continually evaluated by the directors and are based on
historical experience and other factors, including expectations of future events that are
believed to be reasonable under the circumstances.
The key assumption concerning the future and other key sources of estimation uncertainty at
the balance sheet date, that have a significant risk of causing a material adjustment to the
carrying amounts of assets and liabilities within the next financial year are as stated below:-
(i) Useful lives of property, plant and equipment
The Group estimates the useful lives of property, plant and equipment based on the
period over which the assets are expected to be available for use. The estimated useful
lives of property, plant and equipment are reviewed periodically and are updated if
expectations differ from previous estimates due to physical wear and tear, technical or
commercial obsolescence and legal or other limits on the use of the relevant assets.
In addition, the estimation of the useful lives of property, plant and equipment are
based on internal technical evaluation and experience with similar assets. It is
possible, however, that future results of operations could be materially affected by
changes in the estimates brought about by changes in factors mentioned above. The
amounts and timing of recorded expenses for any period would be affected by changes
in these factors and circumstances. A reduction in the estimated useful lives of the
property, plant and equipment would increase the recorded expenses and decrease the
non-current assets.
(ii) Impairment of property, plant and equipment
The Group assess impairment of assets whenever the events or changes in
circumstances indicate that the carrying amount of an asset may not be recoverable i.e.
the carrying amount of the asset is more than the recoverable amount.
Recoverable amount is measured at the higher of the fair value less cost to sell for that
asset and its value-in-use. The value-in-use is the net present value of the projected
future cash flow derived from that asset discounted at an appropriate discount rate.
Projected future cash flows are based on the Group’s estimates calculated based on
historical, sector and industry trends, general market and economic conditions, changes
in technology and other available information.
As at balance sheet date, the directors of the Company are of the opinion that there is
no impact resulting from the impairment review by the management.
30
Company No. 253387 - W
3. SIGNIFICANT ACCOUNTING ESTIMATES AND JUDGEMENTS (Continued)
(iii) Recoverability of receivables
The Group makes allowances for doubtful debts based on an assessment of the
recoverability of receivables. Allowances are applied to receivables where events or
changes in circumstances indicate that the carrying amounts may not be recoverable.
Management specifically analysed historical bad debts, customer concentrations,
customer creditworthiness, current economic trends and changes in customer payment
terms when making a judgement to evaluate the adequacy of the allowance for doubtful
debts of receivables. Where the expectation is different from the original estimate,
such difference will impact the carrying value of receivables.
(iv) Impairment of investment in subsidiaries
The Group carried out the impairment test based on a variety of estimation including
the value-in-use of the cash generating unit. Estimating the value-in-use requires the
Group to make an estimate of the expected future cash flows from the cash generating
unit and also to choose a suitable discount rate in order to calculate the present value
of those cash flows. The carrying amounts of the Company’s investment in
subsidiaries as at 28th February 2009 was RM1,466,000/- (2008 : RM1,466,000/-)
(v) Impairment of intangible assets
The Group carried out the impairment test based on a variety of estimation including
the value-in-use of the cash generating unit. Estimating the value-in-use requires the
Group to make an estimate of the expected future cash flows from the cash operating
unit and also to choose a suitable discount rate in order to calculate the present value
of those cash flows. The carrying amounts of the Group and the Company’s intangible
assets as at 28th February 2009 was RM32,723,000/- (2008 : RM30,721,000/-) and
RM12,468,000/- (2008 : RM13,739,000/-) respectively.
(vi) Income taxes
The Group is subject to income taxes in numerous jurisdictions. Significant judgement
is required in determining the capital allowances and deductibility of certain expenses
during the estimation of the provision for income taxes. There are many transactions
and calculations for which the ultimate tax determination is uncertain during the
ordinary course of business. Where the final tax outcome of these matters is different
from the amounts that were initially recorded, such differences will impact the income
tax and deferred income tax provisions in the period in which such determination is
made.
31
Company No. 253387 - W
4. PROPERTY, PLANT AND EQUIPMENT
Furniture
Leasehold Motor Computer Office and
Group Buildings Vehicles Equipment Equipment Fittings Renovation Total
RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000
2009
Cost
At 1st March 2008 580 765 46,031 1,198 838 1,108 50,520
Additions - - 5,519 - - - 5,519
Written off - - (4,146) (18) (92) (617) (4,873)
Currency alignment - - - - 5 15 20
At 28th February 2009 580 765 47,404 1,180 751 506 51,186
Accumulated
Depreciation
At 1st March 2008 40 641 16,028 409 379 905 18,402
Depreciation for the
financial year 6 72 7,849 119 82 123 8,251
Written off - - (3,727) (18) (92) (617) (4,454)
Currency alignment - - - - 3 8 11
At 28th February 2009 46 713 20,150 510 372 419 22,210
Net Book Value at
28th February 2009 534 52 27,254 670 379 87 28,976
2008
Cost
At 1st March 2007 580 765 27,329 1,047 785 1,116 31,622
Additions - - 18,702 153 56 - 18,911
Written off - - - (2) - - (2)
Currency alignment - - - - (3) (8) (11)
At 29th February 2008 580 765 46,031 1,198 838 1,108 50,520
Accumulated
Depreciation
At 1st March 2007 34 569 9,980 293 296 758 11,930
Depreciation for the
financial year 6 72 6,048 117 84 149 6,476
Written off - - - (1) - - (1)
Currency alignment - - - - (1) (2) (3)
At 29th February 2008 40 641 16,028 409 379 905 18,402
Net Book Value at
29th February 2008 540 124 30,003 789 459 203 32,118
32
Company No. 253387 - W
4. PROPERTY, PLANT AND EQUIPMENT (Continued)
Furniture
Leasehold Motor Computer Office and
Company Buildings Vehicles Equipment Equipment Fittings Renovation Total
RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000
2009
Cost
At 1st March 2008 580 765 3,918 1,195 809 1,018 8,285
Additions - - 5,334 - - - 5,334
Written off - - (3,697) (18) (92) (617) (4,424)
Transfers - - (5,334) - - - (5,334)
At 28th February 2009 580 765 221 1,177 717 401 3,861
Accumulated
Depreciation
At 1st March 2008 40 641 3,720 407 367 868 6,043
Depreciation for the
financial year 6 72 138 118 76 105 515
Written off - - (3,697) (18) (92) (617) (4,424)
At 28th February 2009 46 713 161 507 351 356 2,134
Net Book Value at
28th February 2009 534 52 60 670 366 45 1,727
2008
Cost
At 1st March 2007 580 765 3,873 1,042 753 1,018 8,031
Additions - - 45 153 56 - 254
At 29th February 2008 580 765 3,918 1,195 809 1,018 8,285
Accumulated
Depreciation
At 1st March 2007 34 569 3,338 291 289 738 5,259
Depreciation for the
financial year 6 72 382 116 78 130 784
At 29th February 2008 40 641 3,720 407 367 868 6,043
Net Book Value at
29th February 2008 540 124 198 788 442 150 2,242
33
Company No. 253387 - W
4. PROPERTY, PLANT AND EQUIPMENT (Continued)
Group and Company
Included in property, plant and equipment of the Group and of the Company are motor vehicles
and computer equipment acquired under hire purchase instalment plans with a total net book
value of RM14,964/- (2008 : RM59,854/-) and RM454,333/- (2008 : RMNil) respectively.
Depreciation charged during the financial year for certain computer equipment of the Group
and of the Company amounting to RM4,543,000/- (2008 : RM5,313,000/-) and RM120,000/-
(2008 : RM132,000/-) respectively have been capitalised as development costs.
5. PREPAID LAND LEASE PAYMENTS
2009 2008
RM'000 RM'000
Cost
At the beginning of the financial year 527 527
Additions - -
At the end of the financial year 527 527
Accumulated Amortisation
At the beginning of the financial year 47 42
Amortisation for the financial year 5 5
At the end of the financial year 52 47
Net Book Value 475 480
Group and Company
6. INVESTMENT IN SUBSIDIARIES
2009 2008
RM'000 RM'000
Unquoted shares, at cost 1,466 1,999
Less: Impairment loss - (533)
1,466 1,466
Company
34
Company No. 253387 - W
6. INVESTMENT IN SUBSIDIARIES (Continued)
Details of the subsidiaries are as follows:-
Name of Company
Country of
Incorporation
Effective
Equity
Interest
Principal Activities
2009 2008
% %
asiaEP China Co. Ltd. China - 100 Voluntarily wound up
asiaEP Hong Kong
Ltd.*
Hong Kong 100 100 Dormant – Intended principal
activity is to provide e-
commerce solutions and
develop an e-market place.
asiaEP eMarketplace
Sdn. Bhd.
Malaysia 100 100 Dormant – Intended activity is
to provide e-commerce
solutions and e-market
platform.
Defined Search Sdn.
Bhd.
Malaysia 100 100 To provide internet search
engine services.
Smart Infra Sdn. Bhd.
(formerly known as
Exportmate Sdn. Bhd.)
Malaysia 100 100 Dormant – Intended activity
is to provide online
marketing solutions.
* the subsidiary is audited by another firm of chartered accountants other than Baker
Tilly Monteiro Heng.
Winding up of wholly owned subsidiary, asiaEP China Co. Ltd.
On 16th September 2008, the Company announced that its wholly-owned subsidiary, asiaEP
China Co. Ltd. (“asiaEP China”), a company incorporated in the People’s Republic of China
(“PRC”) had applied to the relevant authority in the PRC to be voluntarily wound up. In this
connection, asiaEP China had on 25th March 2008 appointed a firm of Certified Public
Accountants in Shanghai, PRC to submit the statement of affairs of asiaEP China to the
relevant authorities.
35
Company No. 253387 - W
7. INTANGIBLE ASSETS
Development Intellectual
Group Costs Property Total
RM'000 RM'000 RM'000
2009
Cost
At 1st March 2008 19,923 16,500 36,423
Additions 6,296 - 6,296
Written off (13) - (13)
Exchange differences 2 - 2
At 28th February 2009 26,208 16,500 42,708
Accumulated Amortisation
At 1st March 2008 1,571 4,131 5,702
Amortisation for the financial year 3,110 1,175 4,285
Written off (2) - (2)
At 28th February 2009 4,679 5,306 9,985
Net Book Value at 28th February 2009 21,529 11,194 32,723
2008
Cost
At 1st March 2007 13,430 16,500 29,930
Additions 6,586 - 6,586
Written off (91) - (91)
Exchange differences (2) - (2)
At 29th February 2008 19,923 16,500 36,423
Accumulated Amortisation
At 1st March 2007 851 2,985 3,836
Amortisation for the financial year 720 1,146 1,866
At 29th February 2008 1,571 4,131 5,702
Net Book Value at 29th February 2008 18,352 12,369 30,721
36
Company No. 253387 - W
7. INTANGIBLE ASSETS (Continued)
Development Intellectual
Company Costs Property Total
RM'000 RM'000 RM'000
2009
Cost
At 1st March 2008 2,571 16,500 19,071
Additions 2,471 - 2,471
Transfers (2,237) - (2,237)
At 28th February 2009 2,805 16,500 19,305
Accumulated Amortisation
At 1st March 2008 1,201 4,131 5,332
Amortisation for the financial year 330 1,175 1,505
At 28th February 2009 1,531 5,306 6,837
Net Book Value at 28th February 2009 1,274 11,194 12,468
2008
Cost
At 1st March 2007 2,231 16,500 18,731
Additions 340 - 340
At 29th February 2008 2,571 16,500 19,071
Accumulated Amortisation
At 1st March 2007 851 2,985 3,836
Amortisation for the financial year 350 1,146 1,496
At 29th February 2008 1,201 4,131 5,332
Net Book Value at 29th February 2008 1,370 12,369 13,739
37
Company No. 253387 - W
7. INTANGIBLE ASSETS (Continued)
Intellectual Property (“IP”) of the Group costing RM16.5 million represents the exclusive
rights to an online platform system, acquired from one of the Directors on 16 August 2002.
The IP constitutes a trademark, copyrights, source programmes and associated
documentation.
The IP has an estimated economic life of fifteen years and will be amortised and recognised
as an expense based on the forecasted revenue stream so as to reflect the pattern in which
the asset’s economic benefits are consumed by the company.
Included in the additions of the development costs of the Group and of the Company are
depreciation charge for certain computer equipment of RM4,543,000/- (2008 :
RM5,313,000/-) and RM120,000/- (2008 : RM132,000/-) respectively.
8. TRADE RECEIVABLES
2009 2008 2009 2008
RM'000 RM'000 RM'000 RM'000
Trade receivables 2,029 4,541 1,509 4,541
Less: Allowance for doubtful debts (385) (601) (385) (601)
1,644 3,940 1,124 3,940
Group Company
The Group’s normal trade credit terms range from 30 to 90 days. Other credit terms are
assessed and approved on a case by case basis.
9. OTHER RECEIVABLES, DEPOSITS AND PREPAYMENTS
2009 2008 2009 2008
RM'000 RM'000 RM'000 RM'000
Other receivables 31 127 31 29
Deposits 59 53 56 47
Prepayments 27 121 27 121
117 301 114 197
Group Company
38
Company No. 253387 - W
10. AMOUNT OWING BY SUBSIDIARIES
The amount owing by subsidiaries represents advances and payments made on behalf, which
is unsecured, interest free and has no fixed terms of repayment.
11. SHORT TERM INVESTMENTS
2009 2008
RM'000 RM'000
Placement in repo - 1,049
Group and Company
12. SHARE CAPITAL
Number
of shares
Number
of shares
Unit RM'000 Unit RM'000
Ordinary shares of RM0.10 each
Authorised:
At the beginning/end of the
financial year 500,000 50,000 500,000 50,000
Issued and fully paid:
At the beginning the financial year 245,318 24,532 217,074 21,707
Issued during the financial year
- exercise of options - - 9,102 911
- warrants exercised - - 19,142 1,914
- - 28,244 2,825
At the end of the financial year 245,318 24,532 245,318 24,532
Group and Company
2009 2008
39
Company No. 253387 - W
12. SHARE CAPITAL (Continued)
Employees’ Share Option Scheme (“ESOS”)
The salient terms of the scheme are as follows:-
(a) Eligible employees and Executive Directors must be at least eighteen (18) years of age
and must have been confirmed on the date of offer.
(b) The option is personal to the grantee whilst he is in employment of any company in
the Group and is non-assignable.
(c) The exercise price shall be discounted by not more than 10% from the weighted
average of the market price of the Shares as shown in the daily official list issued by
the Bursa Malaysia Securities Berhad for the five (5) trading days immediately
preceding the respective dates of the offer in writing to the grantee or at the par value
of the ordinary shares of the Company, whichever is higher.
(d) The option granted may be exercised at any time within a period of three (3) years
from the date of offer of the option or such shorter period as may be specifically
stated in the offer upon giving notice in writing. In the event that duration of the
option shall be renewed, the Date of Expiry of the option shall be that Date of Expiry
as so extended or renewed.
(e) The options granted may be exercised in full or in lesser number of ordinary shares
provided that the number shall be in multiples of 100 shares.
Other provisions are stipulated in the Company’s By-Laws of ESOS Scheme.
On 20th August 2007, the Company approved the proposal to extend the existing ESOS
Scheme for a further period of up to 3 years from the Date of Expiry on 27th August 2007
(“Extended Scheme”). As at 28th February 2009, there were no options granted to any
person to take up unissued shares or debentures of the financial year under this Extended
Scheme.
13. RESERVES
2009 2008 2009 2008
RM'000 RM'000 RM'000 RM'000
Non-distributable
Share premium reserve 20,661 20,661 20,661 20,661
ESOS reserve - - - -
Translation reserve (704) (209) - -
Warrant reserve (Note 14) 319 319 319 319
Distributable
Treasury shares (Note 15) (669) (324) (669) (324)
Retained profits 17,537 25,221 24,233 26,231
37,144 45,668 44,544 46,887
Group Company
40
Company No. 253387 - W
14. WARRANT RESERVE
On 16th February 2006, the Company issued 66,861,390 new warrants, for cash at an issue
price of RM0.01 per warrant arising from the renounceable Rights Issue which were
constituted by a Deed Poll dated 3rd April 2006.
Number of warrants 2006/2011
Issue
Date
Expiry
Date
Exercise
Price
RM per
Warrant
At the
beginning
of
Financial
Year
Issued
Exercised
At the
end of
Financial
Year
19.6.2006 18.6.2011 0.30 47,719,390 - - 47,719,390
2009 2008
RM'000 RM'000
Balance at the beginning of the financial year 319 446
Less: Warrants exercised during the financial year - (127)
Balance at the end of the financial year 319 319
Group and Company
The new warrants are listed on Bursa Malaysia Securities Bhd.. Each new warrant entitles
its registered holder, at any time from the date of its issue up to and including 18th June
2011, to subscribe for one new ordinary shares of RM0.10 each in the Company at an
exercise price of RM0.30 per share which is subject to adjustments under the terms set out
in the Deed Poll.
15. TREASURY SHARES
At the Extraordinary General Meeting held on 28th May 2007, the shareholders of the
Company authorised the directors of the Company to buy back the Company’s own shares
based on the following terms:-
(i) The number of shares to be purchased shall not exceed ten percent (10%) of the issued
and paid-up share capital of the Company at any given point in time.
(ii) The share buy-back will be financed through internally generated funds and/or
external borrowings. The funds to be allocated by the Company for the share buy-
back will be made wholly out of retained profits and/or the share premium account.
The account to be utilised shall not exceed the total audited retained profits and share
premium account of the Company.
41
Company No. 253387 - W
15. TREASURY SHARES (Continued)
(iii) The Company may retain the shares purchased as treasury shares, or to cancel the
shares purchased or a combination of both as defined under Section 67A of the
Companies Act, 1965. The purchased shares held as treasury shares may either be
distributed as share dividends, resold on Bursa Malaysia Securities Berhad in
accordance with the relevant rules of Bursa Malaysia Securities Berhad or
subsequently cancelled. The distribution of treasury shares as share dividends may be
applied as a reduction of retained profits or share premium account of the Company
subject to applicable prevailing laws.
During the financial year, the details of the shares purchased were as follows:-
No. of Unit cost Total
Shares Purchased Shares Lowest Highest Average Consideration
Unit RM RM RM RM
March 386,500 0.150 0.190 0.170 65,423
April 37,000 0.175 0.185 0.180 6,566
May 155,900 0.165 0.175 0.170 26,962
June 1,460,900 0.150 0.180 0.165 240,379
July 43,100 0.120 0.140 0.130 5,613
2,083,400 0.166 344,943
All the shares purchased during the financial year were retained as treasury shares in
accordance with Section 67A of the Companies Act, 1965.
16. HIRE PURCHASE LIABILITIES
2009 2008
RM'000 RM'000
Minimum hire purchase payment
- not later than one year 152 47
- later than one year and not later than five years 243 20
395 67
Less: Future interest charges (40) (3)
Present value of hire purchase liabilities 355 64
Current 129 41
Non-current 226 23
355 64
Group and Company
The hire purchase liabilities are effectively secured on the rights of the assets under hire
purchase.
42
Company No. 253387 - W
17. DEFERRED TAX LIABILITIES
2009 2008
RM'000 RM'000
At the beginning of the financial year 127 -
Transfer to income statement 112 127
At the end of the financial year 239 127
Representing the tax effect of:-
Temporary differences between net book value and
corresponding tax written down value 239 127
Group and Company
18. TRADE PAYABLES
The normal credit term granted to the Group is 30 days.
19. OTHER PAYABLES AND ACCRUALS
2009 2008 2009 2008
RM'000 RM'000 RM'000 RM'000
Other payables 338 276 309 274
Accruals 335 176 322 168
673 452 631 442
Group Company
20. SHORT TERM BORROWING
The short term borrowing consists of Cash Line-i facilities granted by a bank and is
repayable on demand within 2 years.
The short term borrowing is secured against the following:
(a) First charge for RM1,500,000/- over 2 units of two storey shopoffices of the
premises; and
(b) Joint and Several guarantee of the directors for RM1,500,000/- in their personal
capacity.
The short term borrowing bears interest at rate of 7.75% per annum.
43
Company No. 253387 - W
21. REVENUE
Revenue represents the invoiced value of products and services rendered, net of discounts.
22. (LOSS)/PROFIT BEFORE TAXATION
(Loss)/Profit before taxation has been arrived at:-
2009 2008 2009 2008
RM'000 RM'000 RM'000 RM'000
After charging:-
Amortisation
- intellectual property 1,175 1,146 1,175 1,146
- development costs 3,110 720 330 350
- prepaid land lease payments 5 5 5 5
Audit fee
- current year 38 38 28 26
- prior year 7 4 5 4
Depreciation 3,708 1,163 395 652
Directors' remuneration
- fees 83 46 83 46
- salaries and allowances 816 460 816 460
- Employees' Provident Fund 86 37 86 37
Development cost written off 10 91 - -
ESOS expenses - 260 - 260
Impairment loss on investment in a
subsidiary - - - 533
Interest expense 62 5 62 5
Loss on winding up of subsidiary 29 - - -
Property, plant and equipment written off 419 1 - -
Rental of premises 25 68 25 51
Staff costs
- Employees' Provident Fund 110 169 110 169
- salaries and wages 522 635 522 635
- other staff related costs 246 215 246 215
Waiver of debt - - - 158
And crediting:-
Bad debts recovered 216 - 216 -
Interest income 12 55 8 49
Group Company
Staff costs of the Group and of the Company amounting to RM452,812/- (2008 :
RM824,838/-) and RM113,343/- (2008 : RM208,923/-) respectively have been capitalised
as development costs.
44
Company No. 253387 - W
23. TAXATION
2009 2008 2009 2008
RM'000 RM'000 RM'000 RM'000
Tax expense
- current year - (62) - (13)
- prior years 49 (1) - (1)
Deferred tax expense
- current year 9 87 9 87
- prior years (121) (214) (121) (214)
(112) (127) (112) (127)
(63) (190) (112) (141)
Group Company
The income tax rate is calculated at the Malaysian statutory rate of 25% (2008 : 26%) of
the estimated taxable profit for the fiscal year.
A reconciliation of income tax expense applicable to profit before income tax expense at the
statutory income tax rate to income tax expense at the effective income tax rate of the Group
and the Company are as follows:-
2009 2008 2009 2008
RM'000 RM'000 RM'000 RM'000
(Restated)
(Loss)/Profit before taxation (7,616) 7,249 (1,886) 7,767
Taxation at applicable tax rate 1,904 (1,957) 472 (2,097)
Tax effects arising from
- tax incentive - pioneer status - 2,783 - 2,775
- depreciation charges capitalised as
development costs 1,106 1,399
- non-deductible expenses (1,183) (685) (462) (632)
- underaccrual in prior year (73) (214) (122) (214)
- origination of deferred tax assets
not recognised in the financial statements (1,817) (1,429) - -
- deferred tax recognised at
different tax rate - (87) - 27
Tax expense for the financial year (63) (190) (112) (141)
Group Company
45
Company No. 253387 - W
23. TAXATION (Continued)
The deferred tax assets have not been recognised for the following items:
2009 2008
RM'000 RM'000
Property, plant and equipment (27,194) (29,805)
Unutilised capital allowances 35,423 30,764
8,229 959
Potential deferred tax assets 2,057 240
Group
24. EARNINGS PER SHARE
(a) Basic Earnings Per Share
Basic earnings per share of the Group is calculated by dividing the net (loss)/profit for
the financial year of RM7.679 million (2008 : RM7.059 million) by the weighted
average number of 232,911,228 (2008 :234,398,812) ordinary shares in issue during
the financial year.
(b) Diluted Earnings Per Share
For the diluted earnings per share calculation, the weighted average number of
ordinary shares in issue is adjusted to assume conversion of all dilutive potential
ordinary shares. The Company has ESOS and warrants that can potentially be
converted into ordinary shares.
Group
2008
Net profit for the financial year (RM'000) 7,059
Weighted average number of ordinary shares in issue ('000) 234,399
Adjustment for share options ('000) 3,617
Adjustment for warrants ('000) 30,646
Adjusted weighted average number of ordinary
shares in issue ('000) 268,662
Diluted earnings per share (sen) 2.63
No disclosure is required in the income statement for the current financial year, since the
loss per share was anti-dilutive.
46
Company No. 253387 - W
25. CONTINGENT LIABILITIES
The Group is contingently liable for the following:-
The Company has commenced legal action against an IT company and on an individual for
infringement of copyright and passing off in relation to the Company’s business. An interim
injunction has been obtained by the Company restraining the defendants from further
infringement. The defendants have filed their defence and counter claimed. Both the
Company and the defendants have sought unliquidated damages in their respective claims.
The solicitors representing the Company are of the view that the Defendants do not have a
valid counter-claim against the Company. Further, the defendants have not pursued the
counter-claim since the grant of the injunction in 2000. The solicitors had via a letter dated
16th May 2005 confirmed that the suit is still pending and may take 2 to 5 years to reach
trial stage. To date, the solicitors have not received any instruction from the Company to
file a Notice for Case Management to move the case towards trial.
26. SIGNIFICANT RELATED PARTY TRANSACTIONS
(a) Identification of Related Parties
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 operational decisions, or vice versa, or where the Group and the
party are subject to common control. Related parties may be individuals or other
entities.
Related parties of the Group include:-
(i) Direct subsidiaries; and
(ii) Key management personnel which comprise persons (including the directors of
the Company) having the authority and responsibility for planning, directing
and controlling the activities of the Company directly or indirectly.
(b) The remuneration of the key management personnel during the financial year is as
follows:-
2009 2008
RM'000 RM'000
Short term employee benefits 1,053 634
Post-employment benefits
- defined contribution plan 102 52
Share-based payment - 37
Group and Company
47
Company No. 253387 - W
26. SIGNIFICANT RELATED PARTY TRANSACTIONS (Continued)
(b) The remuneration of the key management personnel during the financial year is as
follows:- (Continued)
2009 2008
RM'000 RM'000
Directors' remuneration
- fees 83 46
- salaries and allowances 816 460
- Employees' Provident Fund 86 37
985 543
Company
(c) The directors and other members of key management of the Group and the Company
have been granted the following number of options under the ESOS as follows:-
2009 2008
At the beginning of the financial year - 1,450
Exercised - (1,270)
Forfeited - (180)
At the end of the financial year - -
Group and Company
The share options were granted on the same terms and conditions as those offered to other
employees of the Group.
27. SEGMENTAL REPORTING
Segment reporting is presented in respect of the Group’s business and geographical
segments. The primary format, geographical segments by location of customer, is based on
the Group’s management and internal reporting structure.
Segment results, assets and liabilities include items directly attributable to a segment as well
as those that can be allocated on a reasonable basis.
Segment capital expenditure is the total cost incurred during the year to acquire property,
plant and equipment.
48
Company No. 253387 - W
27. SEGMENTAL REPORTING (Continued)
Business Segments
No business segmental reporting is prepared as the Group’s activities are predominantly in
one industry.
Geographical Segments
People's
Republic Hong
Malaysia of China Kong Total
2009 RM'000 RM'000 RM'000 RM'000
Revenue 5,831 - - 5,831
Total assets 44,962 - 19,509 64,471
Total liabilities 1,027 - 25 1,052
Capital expenditure 5,519 - - 5,519
Depreciation 8,225 - 26 8,251
2008
Revenue 15,049 - - 15,049
Total assets 54,419 28 16,476 70,923
Total liabilities 540 - - 540
Capital expenditure 18,911 - - 18,911
Depreciation 6,450 - 26 6,476
28. FINANCIAL INSTRUMENTS
(a) Financial Risk Management and Objectives
The Group seeks to manage effectively the various risks namely credit, liquidity,
foreign currency and interest rate risks to which the Group is exposed to in its daily
operations.
(i) Credit risk
The management has a credit procedure in place to monitor and minimise the
exposure of default. Trade receivables are monitored on an ongoing basis.
As at balance sheet date, there were no significant concentrations of credit risk
in the Group except for amount owing by subsidiaries as disclosed in Note 10 to
the financial statements. The maximum exposure to credit risk for the Group is
represented by the carrying amount of each financial instrument.
49
Company No. 253387 - W
28. FINANCIAL INSTRUMENTS (Continued)
(a) Financial Risk Management and Objectives (Continued)
(ii) Liquidity risk
The Group actively manages its debt maturity profile, operating cash flows and
the availability of funding so as to ensure that all financing, repayment and
funding needs are met. As part of its overall prudent liquidity management, the
Group maintains sufficient level of cash and cash equivalents to meet its
working capital requirement.
(iii) Foreign currency risk
The Group operates apart from Malaysia, in Hong Kong and is exposed to the
Hong Kong Dollar. Foreign currency denominated assets and liabilities give
rise to foreign exchange exposure. The Group’s policy is to manage all its
foreign financial assets and liabilities using the best available foreign currency
exchange rates where applicable.
(iv) Interest rate risk
The Group’s primary interest rate risk relates to interest-bearing debt as at 28th
February 2009. The investment in financial asset is mainly short term in nature
and is not held for speculative purposes.
Effective interest rates
Effective Between
Interest Within 1 to 5 > 5
Group and Company Rate 1 Year Years Years Total
% RM'000 RM'000 RM'000 RM'0002009
Financial Asset
Placement in Repo - - - - -
Financial Liability
Hire purchase liabilities 4.49 - 6.73 129 226 - 355
2008
Financial Asset
Placement in Repo 2.70 - 3.25 1,049 - - 1,049
Financial Liability
Hire purchase liabilities 5.82 - 7.21 41 23 - 64
(b) Fair Values
(i) Recognised financial instruments
In the opinion of the directors, there were no significant differences between the
fair values and the book values of the financial assets and financial liabilities.
50
Company No. 253387 - W
28. FINANCIAL INSTRUMENTS (Continued)
(b) Fair Values (Continued)
(ii) Unrecognised financial instruments
There were no unrecognised financial instruments in the balance sheet as at
28th February 2009.
The nominal/notional amount and net fair value of contingent liabilities (as
disclosed in Note 25 to the financial statements) are not recognised in the
balance sheet as at 28th February 2009 as it is not practicable to make a
reliable estimate due to the uncertainties of timing, costs and eventual outcome.
29. SIGNIFICANT EVENTS DURING AND AFTER THE FINANCIAL YEAR
(i) Proposed Acquisition of General Perfect Sdn. Bhd.
On 20th November 2007, the Company had entered into a conditional Sale and
Purchase Agreement (“SPA”) to acquire 80% equity interest in General Perfect Sdn.
Bhd. (“GP”) for a total consideration of RM23.2 million (“Proposed Acquisition”).
The principal activities of GP are eCommerce system research and development,
eMarket place deployment, online eCommerce, kiosk eCommerce, maintenance and
service provider of software to operate payment kiosk system and vending machines to
include electronic prepaid solution, provision of mobile airtime, prepaid call vouchers,
internet access, transportation, entertainment and others.
The Company had entered into an agreement with the vendors to extend the date of
fulfillment of all the conditions precedent as provided in the SPA for another three
months from 19th May 2008.
On 19th November 2008, RHB Investment Bank Berhad on behalf of the Company
announced that the Company and the vendors of General Perfect Sdn. Bhd. had
mutually agreed to terminate the Proposed Acquisition. This is in view of the non-
fulfilment of certain conditions precedent within the timeframe stipulated and the
prevailing challenging global economic outlook.
(ii) Proposed Rights Issue
On 27th March 2009, the Company announced that it proposed to issue renounceable
two-call rights issue of up to 293,037,675 new ordinary shares of RM0.10 each in
asiaEP (“Rights Shares”) on the basis of 1 Rights Share for each existing ordinary
share of RM0.10 each in asiaEP (“asiaEP Shares”) held on an entitlement date to be
determined later, together with:
(a) Bonus issue of up to 293,037,675 new asiaEP Shares (“Bonus Shares”) on the
basis of 1 Bonus Share for each Rights Share subscribed; and
51
Company No. 253387 - W
29. SIGNIFICANT EVENTS DURING AND AFTER THE FINANCIAL YEAR
(Continued)
(ii) Proposed Rights Issue (Continued)
(b) Issuance of up to 293,037,675 new free detachable warrants (“Warrants”) on
the basis of 1 Warrant for each Rights Share subscribed,
with the Rights Share at an indicative issue price of RM0.10 each, of which the
indicative first call of RM0.05 for each Rights Share is payable in cash on application
and the second call of RM0.05 for each Rights Share is to be capitalised from
asiaEP’s share premium account.
(iii) Proposed Increased In Authorised Share Capital
On 27th March 2009, the Company announced that it proposed to increase the
authorised share capital of asiaEP from RM50,000,000/- comprising 500,000,000
asiaEP Shares to RM150,000,000/- comprising 1,500,000,000 asiaEP Shares.
52
Company No. 253387 - W
asiaEP BHD.
(Incorporated in Malaysia)
STATEMENT BY DIRECTORS
We, DR. TAN BOON NUNT and LEE SUET HONG, being two of the directors of asiaEP
Bhd., do hereby state that in the opinion of the directors, the accompanying financial statements
set out on pages 7 to 51 are properly drawn up in accordance with Financial Reporting Standards
and the provisions of the Companies Act, 1965 in Malaysia so as to give a true and fair view of
the financial position Group and of the Company as at 28th February 2009 and of the results and
cash flows of the Group and of the Company for the financial year ended on that date.
On behalf of the Board,
...............................................
DR. TAN BOON NUNT
Director
..............................................
LEE SUET HONG
Director
Kuala Lumpur
Date : 26th May 2009
53
Company No. 253387 - W
asiaEP BHD.
(Incorporated in Malaysia)
STATUTORY DECLARATION
I, YEONG WENG SEONG, being the officer primarily responsible for the financial
management of asiaEP Bhd., do solemnly and sincerely declare that to the best of my knowledge
and belief, the accompanying financial statements set out on pages 7 to 51 are correct, and I make
this solemn declaration conscientiously believing the same to be true, and by virtue of the
provisions of the Statutory Declarations Act, 1960.
...............................................
YEONG WENG SEONG
Subscribed and solemnly declared by the abovenamed at Kuala Lumpur in the Federal Territory
on 26th May 2009.
Before me,
...................................................
Zulkifla Mohd Dahlim
License No. : W 541
Commissioner for Oaths
54
Company No. 253387 - W
INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF
asiaEP BHD.
(Incorporated in Malaysia)
Report on the Financial Statements
We have audited the financial statements of asiaEP Berhad, which comprise the balance sheets as
at 28th February 2009 of the Group and of the Company, and the income statements, statements
of changes in equity and cash flow statements of the Group and of the Company for the financial
year then ended, and a summary of significant accounting policies and other explanatory notes, as
set out on pages 7 to 51.
Directors’ responsibility for the financial statements
The directors of the Company are responsible for the preparation and fair presentation of these
financial statements in accordance with Financial Reporting Standards and the Companies Act,
1965 in Malaysia. This responsibility includes designing, implementing and maintaining internal
controls relevant to the preparation and fair presentation of financial statements that are free from
material misstatement, whether due to fraud or error; selecting and applying appropriate
accounting policies; and making accounting estimates that are reasonable in the circumstances.
Auditors’ responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We
conducted our audit in accordance with approved standards on auditing in Malaysia. Those
standards require that we comply with ethical requirements and plan and perform the audit to
obtain reasonable assurance as to 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 our 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, we consider internal controls relevant to
the Company’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 the directors, 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.
55
Company No. 253387 - W
Opinion
In our opinion, the financial statements have been properly drawn up in accordance with Financial
Reporting Standards and the Companies Act, 1965 in Malaysia so as to give a true and fair view of the financial position of the Group and of the Company as of 28th February 2009 and of their
financial performance and cash flows for the financial year then ended.
Report on Other Legal and Regulatory Requirements
In accordance with the requirements of the Companies Act, 1965 in Malaysia, we also report the
following:
(a) In our opinion, the accounting and other records and the registers required by the Act to be
kept by the Company and its subsidiaries of which we have acted as auditors have been
properly kept in accordance with the provisions of the Act.
(b) We have considered the financial statement and the auditors’ report of the subsidiary of
which we have not acted as auditors, which are indicated in Note 6 to the financial
statements.
(c) We are satisfied that the financial statements of the subsidiaries that have been consolidated
with the Company’s financial statements are in form and content appropriate and proper for
the purposes of the preparation of the financial statements of the Group and we have
received satisfactory information and explanations required by us for those purposes.
(d) The audit reports on the financial statements of the subsidiaries did not contain any material
qualifications or any adverse comments made under Section 174(3) of the Act.
Other Matters
This report is made solely to the members of the Company, as a body, in accordance with Section
174 of the Companies Act, 1965 in Malaysia and for no other purpose. We do not assume
responsibility to any other person for the content of this report.
Baker Tilly Monteiro Heng Heng Ji Keng
No. AF 0117 No. 578/05/10 (J/PH)
Chartered Accountants Partner
Kuala Lumpur
Date: 26th May 2009
asiaEP Annual Report 2009 74
ASIAEP BHD (Company No. 253387-W)
Type of shares : Ordinary shares of RM 0.10 each
Voting rights : One vote per shareholder on a show of handsOne vote per ordinary share on a poll
Number of shareholders : 5,537
Analysis of Shareholdings
Size of Holdings No of Holders % of Holders No of Shares %
Less than 100100 - 1,0001,001 - 10,00010,001 - 100,000100,001 - Less than 5% ofissued shares5% and above of issued share
Total
853327,958
16,196,63380,521,861
107,270,980
41,000,000
245,318,285
0.000.136.60
32.8243.73
16.71
100
Analysis of Shareholdings as at 20 May 2009
18374
2,6622,147 333
3
5,537
List of Substantial Shareholders as Per Register of Substantial Shareholders
Name Direct % Indirect %
Topclass Access Sdn. Bhd (TASB)
Dr. Tan Boon Nunt
Lee Suet Hong
41, 250, 020
9,474,260
260
-
17.05
17.05
17.05
3.92
0.00
-
41, 250, 020 *
41, 250, 020 *
Direct & deemed interest of Director
Name Direct % Indirect % Esos % Warrant %
* Deemed interested by virtue of their shareholding in TASB pursuant to Section 6A of the Companies Act, 1965.
Dr. Tan Boon Nunt
Lee Suet Hong
Tan Sri Dato’ (Dr) Abdul Aziz Bin Abdul Rahman
Khor Chai Tian
Lim Ghim Chai
3.92
0.00
0.04
-
-
41, 250, 020 *
41, 250, 020 *
-
-
-
17.05
17.05
-
-
-
-
-
-
-
-
-
-
-
-
-
2,166,716
1,333,383
-
-
-
4.54
2.79
-
-
-
9,474,260
260
100,000
-
-
0.336.75
48.0838.78
6.01
0.05
100
75
ASIAEP BHD (Company No. 253387-W)
asiaEP Annual Report 2009
List of Top 30 shareholdersName No. of Shares Held %
M&A Nominee (Tempatan) Sdn. Bhd.For Topclass Access Sdn Bhd (M&A)
CIMB Group Nominees (Tempatan) Sdn. Bhd. Lee Suet Hong For Topclass Access Sdn. Bhd. (17876 Peta)
CIMB Group Nominees (Tempatan) Sdn. Bhd. Tan Boon Nunt For Topclass Access Sdn. Bhd. (3977 Peta)
Kenanga Nominees (Tempatan) Sdn. Bhd. Pledged Securities Account For Tan Boon Nunt
Lee Suat Yean
asiaEP Berhad Share Buy Back Account
Ku Lian Sin
Chia Yong Kiang
Kee Ngeng Hong
Lee Chai Eng
Lau Kheng Tong
Goh Chye Hong
Yap Kon Hin
Liang Chee Kong
Lim Kean Hwa
Ng Chye Choo
Ho Chee Sheong
Sim Seow Heng
Cimsec Nominees (Tempatan) Sendirian Berhad Exempt An For CIMB-GK securities Pte Ltd (Retail Clients)
Gan Surt Neo
asiaEP Berhad Share Buy Back Account
Public Nominees (Tempatan) Sendirian Berhad Pledged Securities Account For Lian Man Hoong (E-SS2)
Teong Peck Joo
Chew Kim Ying
Oon Teik Hock
Eng Cheng Teng @ Vun Chen Teng
Wan Rozita Binti Mohamed Ismail
Tan Chong Keat
Fuziah Binti Ali
Hsu May Hwa
Total
15, 000, 000
13, 000, 000
13, 000, 000
9, 374, 260
4, 980, 000
2,683, 700
1, 800, 000
1, 406, 000
1,384, 000
1,300, 000
1,263, 000
1,224, 200
1, 200, 000
1, 070, 000
1, 060, 000
1, 022, 000
1, 000, 000
1, 000, 000
819, 000
788, 800
739, 600
730, 400
711, 000
700, 000
700, 000
620, 000
620, 000
611, 000
600, 000
600, 000
81, 007, 060
6.11
5.30
5.30
3.82
2.03
1.09
0.73
0.57
0.56
0.53
0.51
0.50
0.49
0.44
0.43
0.42
0.41
0.41
0.33
0.32
0.30
0.30
0.29
0.29
0.29
0.25
0.25
0.25
0.24
0.24
33.02
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
Analysis of Shareholdings as at 20 May 2009
asiaEP Annual Report 2009 76
ASIAEP BHD (Company No. 253387-W)
Analysis of warrant holdings
Size of holdings No of Holders % No of warrants %
Less than 100100 - 1,0001,001 - 10, 00010,001 - 100,000100,001 - Less than 5% ofissued warrants5% and above ofissued warrants
Total
6,09557,693
3,365,96315,292,13025,354,534
3, 642, 975
47, 719, 390
0.010.127.05
32.0553.13
7.63
100
Analysis of warrant holdings as at 20 May 2009
12674
541421
76
1
1, 239
10.175.97
43.6633.98
6.13
0.08
100
77
ASIAEP BHD (Company No. 253387-W)
asiaEP Annual Report 2009
List of Top 30 warrant holders
Name No. of warrant held %
Topclass Access Sdn. Bhd.
EB Nominees (Tempatan) Sendirian BerhadPledged Securities Account For Tan Boon Nunt (SFC)
Topclass Access Sdn Bhd
Oon Teik Hock
Goh Chye Hong
EB Nominees (Tempatan) Sendirian BerhadPledged Securities Account For Lee Suet Hong (SFC)
Toh Bee Hiang
RHB Capital Nominees (Tempatan) Sendirian BerhadPledged Securities Account For Wong Chan Thong (CEB)
Ta Nominees (Tempatan) Sdn. Bhd.Pledged Securities Account For Tan Siew Tin
Mayban Nominees (Tempatan) Sdn. Bhd.Pledged Securities Account For Eng Beng Lan
Wong Ah Yong
Gan Tiong Huat
Hong Ai Kok
Ambank (M) BerhadPledged Securities Account For Wong Ah Yong (SMART)
Low Chew Thiam
SJ Sec Nominees (Tempatan) Sdn. Bhd.Pledged Securities Account For Ang Siew Im (SMT)
HDM Nominees (Asing) Sdn. Bhd.UOB Kay Hian Pte Ltd for Lee Kah Kiam
Harjinder Singh A/L Kuldip Singh
Mayban Nominees (Tempatan) Sdn. Bhd.Pledged Securities Account For Liang Chee Hoo
Public Nominees (Tempatan) Sdn. Bhd.Pledged Securities Account For Yeo Boon Yong (E-TSA)
Lim Kean Hwa
Hsu May Hwa
Matheswaran Rajagopal
Moo Kim Wa
Lin Onn Lee
Hii Yu Guan
Ta Nominees (Tempatan) Sdn. Bhd.Pledged Securities Account For Chew Saa Kok
Tan Siew Tin
Amsec Nominees (Tempatan) Sdn. Bhd.Ambank (M) Berhad For Cheang Yoong Tat (SMART)
Cimsec Nominees (Tempatan) Sdn. Bhd.Pledged Securities Account For Yap Yit Chang (Taman Semarak)
Total
3, 642, 975
2, 166, 666
1, 688, 636
1, 450, 000
1, 340, 000
1, 333, 333
890, 000
703,000
674, 000
672, 000
610, 000
500, 000
490, 000
430, 600
354, 000
343, 000
339. 000
335, 000
325, 900
308, 900
300, 033
300, 000
300, 000
300, 000
280, 500
277, 000
256, 300
256, 000
250, 000
250, 000
21,366,843
7.63
4.54
3.54
3.04
2.81
2.79
1.87
1.47
1.41
1.41
1.28
1.05
1.03
0.90
0.74
0.72
0.71
0.70
0.68
0.65
0.63
0.63
0.63
0.63
0.59
0.58
0.54
0.54
0.52
0.52
44.78
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
Analysis of warrant holdings as at 20 May 2009
asiaEP Annual Report 2009 78
ASIAEP BHD (Company No. 253387-W)
Description/existing use
3rd Floor,Corner-Shop lot/Commercial
Single-storeysemi-detached
house/residential
Double-storeyshop-office
Double-storeyshop-office
Date ofAcquisition/Price
24 Nov 2001RM 67,400
12 April 2002RM 180,000
6 July 2004RM 430,000
6 July 2004RM 430,000
Age ofBuildings/Land Area
5 year/ 784 sq ft
48 years/2942 sq ft
12 years/1540 sq ft
12 years/1540 sq ft
Tenure
Leaseholdfor99 years,expiringon14 June2092
Leaseholdfor99 years,expiringon12 July2056
Leaseholdfor99 years,expiringon18 July2095
Leaseholdfor99 years,expiringon18 July2095
List of Properties
Auditednet bookvalueas at28 February2009 (RM’000)
59
159
399
399
Landed property
Registered owner/title/ Address
Unit 553-3A,3rd FloorMetro Ipoh Baru,Perak(Master Title Nos:HS(D)KA 27098,27099, 27100,27101, 27105 andPT No. 123928 inthe Mukin of HuluKinta, District ofKinta, State ofPerak)
35, Jalan 8/18,Petaling Jaya46050 Selangor(H.S. (D) 124476,Lot No. PT 35,Road 8/18, BandarPetaling Jaya,District of PetalingJaya)
18, Jalan TK2/1C, TamanKinrara Seksyen 2,47100 Puchong, SelangorDarul Ehsan, Malaysia
20, Jalan TK2/1C, TamanKinrara Seksyen 2,47100 Puchong, SelangorDarul Ehsan, Malaysia
79
ASIAEP BHD (Company No. 253387-W)
asiaEP Annual Report 2009
1. INTRODUCTION
At the Company’s EGM held on 28 May 2007 a shareholders’ mandate was obtained for the Company toundertake a Share Buy-back of up to 10% of the Company’s issued and paid-up share capital (“ProposedShare Buy-back”). Pursuant to the Listing Requirements of Bursa Securities, the authority to undertake theShare Buy-back shall lapse at the conclusion of the forthcoming AGM unless the authority is renewed. Themandate was renewed at the 14th AGM held on 27 July 2007 and 15th AGM held on 25 June 2008.
Consequently, the Company had on 29 May 2009 announced to Bursa Securities that the Company proposesto seek its shareholders’ approval to renew the mandate for the Company to purchase such number ofordinary shares of RM0.10 each in the Company (“ASIAEP Shares”) representing up to 10% of its issued andpaid-up share capital at the forthcoming 16th AGM.
2. DETAILS OF THE PROPOSED SHARE BUY-BACK
The Company proposes to seek the mandate from its shareholders to purchase such number of ASIAEPShares representing up to a maximum of 10% of the Company’s issued and paid-up share capital at anypoint of time, subject to compliance with Section 67A of the Act, Listing Requirements, any prevailing laws,orders, requirements, rules, regulations and guidelines issued by the relevant authorities (“Prevailing Law”)at the time of purchase.
2.1 Retained Earnings and Share Premium Account
The maximum amount of funds to be utilized for the Proposed Share Buy-back shall not exceedthe aggregate of the retained earnings and the share premium account of the Company. Theaudited Retained Earnings and Share Premium Account of the Company as at 28 February2009 were as follows:-
RM’000Retained Earnings 24,233Share Premium Account 20,661Total: 44,894Less: 3,423,300 Treasury Share (669)
Limit of maximum funds available for Proposed Share Buy-back 44,225
2.2 Source of Funds
The Proposed Share Buy-back will be financed through internally generated funds and/orexternal borrowings, the actual amount to be utilized will depend on the number of ASIAEPShares to be purchased, the price of ASIAEP Shares and the availability of funds at the time ofpurchase.
In the event that borrowings are used for the Proposed Share Buy-back, the amount of borrowingswill depend on the amount of ASIAEP Shares to be purchased by the Company and theappropriate borrowing capacity of the Company. The Company’s net cash flow may be affectedto the extent of the interest costs associated with any borrowings. The Board will ensure that theCompany is able to meet the repayment of such borrowings, if any.
SHARE BUY BACK STATEMENT
IN RELATION TO THE
PROPOSED SHARE BUY-BACK OF UP TO TEN PER CENT (10%) OFTHE ISSUED AND PAID-UP SHARE CAPITAL OF ASIAEP
asiaEP Annual Report 2009 80
ASIAEP BHD (Company No. 253387-W)
2.3 The Company had purchased 2,083,400 of its shares during the financial year ended 28 February2009 and retained it as treasury shares.
3. RATIONALE FOR THE PROPOSED SHARE BUY-BACK
The Proposed Share Buy-Back is expected to stabilise the supply and demand of asiaEP’s Shares, whichmay subsequently have a favourable impact on the Company’s share price. A reduced capital base as aresult of cancellation of purchased Shares will also have the effect of increasing the earnings per share ofasiaEP, thereby making the Shares more attractive to investors. Purchased Shares held as treasury sharesmay also result in potential gains if resold at prices higher than purchase prices thus realising potentialcapital appreciation on the Shares. Shareholders may also be rewarded by way of distribution of the treasuryshares as dividends.
The Board will be prudent with any purchase of its own Shares that it may undertake, taking into considerationthe interest of asiaEP and its group of companies as well as its shareholders.
4. POTENTIAL ADVANTAGES AND DISADVANTAGES FOR THE PROPOSED SHARE BUY-BACK
4.1 Advantages
The Proposed Share Buy-Back will enhance the EPS of asiaEP. This is expected to have apositive impact on the market price of asiaEP Shares which in turn will benefit the shareholdersof asiaEP.
If the purchased Shares are retained as treasury shares, asiaEP may realize potential gainswhen the treasury shares are resold on the market of Bursa Securities. Alternatively, the treasuryshares may be distributed to shareholders of asiaEP by way of dividends.
4.2 Disadvantages
The Proposed Share Buy-Back can only be made out of retained profits and/or share premiumavailable. This would result in the reduction of the amount available for distribution of dividendto the shareholders of asiaEP.
The financial resources utilized in the Proposed Share Buy-Back will divert the Company frompursuing investment opportunities which may yield higher return.
5. PUBLIC SHAREHOLDING SPREAD
As at 20 May 2009, the issued and paid-up share capital of the Company was RM24,531,828.50 Comprising245,318,285 ordinary shares of RM0.10 each and its public shareholding spread was 79.03%. Assuming theshare buy-back of ten percent (10%) of the issued and paid-up share capital of the Company is carried out infull and retained as Treasury Shares, and the number of ordinary shares held by the substantial shareholders,Directors and persons connected to the substantial shareholders and/or Directors remain unchanged, theproforma public shareholding spread of the Company will be approximately 22.97%.
6. FINANCIAL EFFECTS OF THE PROPOSED SHARE BUY-BACK
The financial effects of the Proposed Share Buy-back are set out below:-
6.1 Share capital
The issued and paid-up share capital of ASIAEP will be decreased if shares purchased arecancelled.
81
ASIAEP BHD (Company No. 253387-W)
asiaEP Annual Report 2009
The proforma effect of the Proposed Share Buy-back on the issued and paid-up share capital ofthe Company assuming ASIAEP buys and subsequently cancels up to 10% of the existing issuedand paid-up share capital as at 20 May 2009 is as follows:-
No. of Issued Shares
As at 20 May 2009 245,318,28510% of Shares to be cancelled (24,531,829)
Upon completion of the purchase and cancellation 220,786,457
However, the Proposed Share Buy-back will not have any effect on the issued and paid-upshare capital of the Company if the purchased shares are retained as treasury shares, areresold or are distributed to its shareholders.
6.2 EPS
The effect of the Proposed Share Buy-back on the EPS of the Group will depend on the purchaseprices and the number of shares purchased. If the shares so purchased are treated as TreasuryShares, the extent of the effect on the earnings of the Group will depend on the actual sellingprice, the number of Treasury Shares resold and the effective gain or interest savings arisingtherefrom.
6.3 N A
If the shares are cancelled, it will reduce the NA per share of the Company if the purchase priceexceeds the audited NA per share of the Company at the relevant point in time and will increasethe NA per share of the Company if the purchase price is less than the audited NA per share of theCompany at the relevant point in time.
For shares so purchased which are retained as Treasury Shares, upon its resale, the NA of theCompany will increase assuming that a gain has been realised. The quantum of the increase in NAwill depend on the actual selling price of the Treasury Shares and the number of Treasury Sharesresold.
6.4 Working Capital
The Proposed Share Buy-back is likely to reduce the working capital of the Group, the quantum ofwhich will depend on the purchase price, the actual number of shares bought back and any associatedcosts incurred in making the purchase.
For shares so purchased which are kept as treasury shares, upon its resale, the working capital ofthe Company will increase. Again, the quantum of the increase in the working capital will dependon the actual selling price of the treasury shares and the number of treasury shares resold.
6.5 Dividends
The Proposed Renewal of Authority for Share Buy-back may reduce the amount of distributablereserves available for payment of dividend in the immediate future.
asiaEP Annual Report 2009 82
ASIAEP BHD (Company No. 253387-W)
7. IMPLICATIONS RELATING TO THE CODE
As at 20 May 2009, the substantial shareholders, held a total of 50,724,540 ordinary shares representingapproximately 20.97% of the issued and paid-up share capital of ASIAEP.
The Proposed Share Buy-back , if carried out in full, will result in the equity interests of substantial shareholdersto increase to 22.97% assuming that their total shareholdings in ASIAEP remain unchanged.
Based on the shareholdings of the other shareholders of ASIAEP as at 20 May 2009, none of their shareholdingswill exceed 33% of the total voting shares of ASIAEP in the event that ASIAEP implements the Proposed ShareBuy-back in full.
In the circumstances, the Proposed Share Buy-back has no implications on ASIAEP’s shareholders under theCode.
8. DIRECTORS’ AND MAJOR SHAREHOLDERS’ INTERESTS
None of the Directors and major shareholders of the Company and/or persons connected with them, have anyinterest, direct or indirect (other than as a shareholder of the Company), in the Proposed Share Buy-back and/or resale of Treasury Shares.
9. DIRECTORS’ RECOMMENDATION
Your Board, having considered all aspects of the Proposed Share Buy-back, is of the opinion that the ProposedShare Buy-back is in the best interest of the Company and accordingly, they recommend that you vote in favourof the Ordinary Resolution for the Proposed Share Buy-back to be tabled at the forthcoming AGM.
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ASIAEP BHD (Company No. 253387-W)
asiaEP Annual Report 2009
NOTICE IS HEREBY GIVEN THAT the Sixteenth Annual General Meeting of the Company will be held at SuteraRoom, CYBERVIEW LODGE RESORT & SPA, Persiaran Multimedia, 63000 Cyberjaya, Selangor Darul EhsanMalaysia on Friday, 26 June 2009, at 10.00 a.m. to transact the following businesses:-
Resolution 1
Resolution 2
Resolution 3
Resolution 4
Resolution 5
Resolution 6
Notice of Annual General Meeting
AGENDA
ORDINARY BUSINESS
1. To receive the Audited Financial Statements of the Company for the financial year ended28 February 2009 together with the Reports of the Directors and Auditors thereon.
2. To approve the payment of Directors’ Fees for the financial year ended 28 February 2009.
3. To consider and if thought fit, to pass the following resolutions:-
3.1. ““That Tan Sri Dato (Dr) Abdul Aziz Bin Abdul Rahman who retires pursuant toSection 129 of the Companies Act, 1965 and does not seek re-appointment, shallnot be re-appointed as Director of the Company.”
3.2. ““That Ms Lee Suet Hong who retires pursuant to Article 90 of the Company’sArticles of Association, be and is hereby re-elected a Director of the Company.”
4. To re-appoint Messrs Baker Tilly Monteiro Heng as Auditors of the Company andto authorise the Directors to fix their remuneration.
SPECIAL BUSINESS
To consider and, if thought fit, to pass the following ordinary resolutions:-
5. Authority to issue shares
“THAT, subject always to the Companies Act, 1965, the Articles of Association of theCompany and approvals of the relevant governmental and/or regulatory authorities,approval be and is hereby given for the Directors to exercise, pursuant to Section 132D ofthe Companies Act, 1965, the power to issue shares in the Company from time to time andupon such terms and conditions and for such purposes as the Directors may deem fitprovided that the aggregate number of shares issued pursuant to this resolution does notexceed ten per centum (10%) of the total issued share capital of the Company and thatsuch approval shall continue in force until the conclusion of the next Annual GeneralMeeting of the Company.”
asiaEP Annual Report 2009 84
ASIAEP BHD (Company No. 253387-W)
Resolution 76. Proposed Renewal of Authority to Purchase Company’s Own Shares (“Proposed Share Buy-Back)
“THAT, subject to the Companies Act, 1965, the Articles of Association of the Companyand the approvals of all relevant governmental and/or regulatory authorities, theCompany be and is hereby authorised to purchase such amount of ordinary shares ofRM0.10 each in the Company (“Proposed Share Buy-Back) as may be determined bythe Directors of the Company from time to time through Bursa Malaysia SecuritiesBerhad (“Bursa Securities”) upon such terms and conditions as the Directors of theCompany may deem fit in the interest of the Company provided that the aggregatenumber of shares purchased pursuant to this resolution does not exceed ten per cent(10%) of its issued and paid-up share capital and the 10% shall always take intoaccount any of the Proposed Share Buy-Back backed by an equivalent amount ofaudited retained profits and/or share premium of the Company. Upon purchase by theCompany of its own shares, the purchased shares will be cancelled or retained astreasury shares or both and/or dealt with in accordance with the relevant prevailingstatutory provisions and guidelines.
7. To transact any other business for which due notice shall have been given.
BY ORDER OF THE BOARD
Mary Margret A/P V. Pelly (LS 04402)Sin May Peng (MAICSA 7018354)Secretaries
Selangor Darul Ehsan
Dated : 4 June 2009
85
ASIAEP BHD (Company No. 253387-W)
asiaEP Annual Report 2009
NOTES:-
A proxy may but does not need to be a Member of the Company and the provisions of Section 149(1)(b) of theCompanies Act, 1965 need not be complied with.
To be valid this form duly completed must be deposited at the office of the Company or such place as isspecified for that purpose in the notice convening the meeting not less than 48 hours before the time for holdingthe meeting.
A Member shall be entitled to appoint more than one proxy to attend and vote at the same meeting.
Where a Member appoints more than one proxy, the appointments shall be invalid unless he specifies theproportion of his holding to be represented by each proxy.
If the appointor is a corporation, this form must be executed under its common seal or under the hand of itsattorney.
Explanatory notes on special business
1. Authority to issue shares
The proposed Ordinary Resolution, under item (5), if passed, will empower the Directors to issue shares in theCompany up to an amount not exceeding 10% of the total issued share capital of the Company for suchpurposes as the Directors consider would be in the interest of the Company. In order to avoid any delay andcosts involved in convening a general meeting, it is thus appropriate to seek members’ approval.
2. Proposed Renewal of Share Buy-Back
The proposed Ordinary Resolution, under item (6), if passed, will give the Directors of the Company authority topurchase its own shares up to 10% of the issued and paid-up share capital of the Company. This authority,unless revoked or varied by the shareholders of the Company in general meeting, will expire at the conclusionof the next Annual General Meeting.
asiaEP Annual Report 2009 86
ASIAEP BHD (Company No. 253387-W)
Pursuant to Rule 8.36(2) of the Listing Requirements of Bursa Malaysia Securities Berhad for the MESDAQ Market
Further to the details of the individuals who are standing for re-election as Directors
The Directors retiring are
1. Tan Sri Dato’ (Dr) Abdul Aziz Bin Abdul Rahman who retires pursuant to Section 129 of the Companies Act,1965.
2. Madam Lee Suet Hong who retires pursuant to Article 90 of the Company’s Articles of Association.
Their details are set out in the Directors’ Profile which appear on pages 6 and 7 of this Annual Report, while theirsecurity holdings in the Company and its subsidiaries (if any) are disclosed on pages 5 of the Audited FinancialStatements.
Statement Accompanying Notice of Annual General Meeting
Notice of Annual General Meeting (continued)
87
ASIAEP BHD (Company No. 253387-W)
asiaEP Annual Report 2009
ASIAEP BERHAD(Company No. : 253387-W)(Incorporated In Malaysia)
I/We, ………… ….……..………………………………NRIC No. :…………………………...............................….
of……………………….………………………………………………………………………..............................…..
……………………..…………………………………………………………………………...........................………
being a member/members of the abovenamed Company, hereby appoint……………………................………………………………………..……of………………………………………………..………….…or failing him, theChairman of the Meeting as my/our proxy to attend and vote for me/us on my/our behalf at the Annual GeneralMeeting of the Company to be held at Sutera Room, CYBERVIEW LODGE RESORT & SPA, Persiaran Multimedia,63000 Cyberjaya, Selangor Darul Ehsan Malaysia on Friday, 26 June 2009 at 10.00 a.m. and at any adjournmentthereof in the manner indicated below :-
Resolutions Number For Against
Adoption of Financial Statements and Reports 1
Directors’ fees 2
Re-appointment/ Re-election of Directors of the Company:-
-Tan Sri Dato’ (Dr) Abdul Aziz Bin Abdul Rahman 3
- Ms Lee Suet Hong 4
Re-Appointment of Auditors - Baker Tilly Monteiro Heng 5
Authority to issue shares pursuant to Section 132D 6
Proposed Renewal of Share Buy-Back Authority 7
Please indicate with an “X” in the appropriate box against the resolution how you wish your proxy to vote. Ifno instruction is given, this form will be taken to authorise the proxy to vote at his/her discretion.
Number of Shares ………………………
CDS No. ……………............................…
……………………….……..….……..…........ …………………………..……..….……..….Date : Signature
Notes:-A proxy may but does not need to be a Member of the Company and the provisions of Section 149(1)(b) of theCompanies Act, 1965 need not be complied with.
To be valid this form duly completed must be deposited at the office of the Company or such place as is specified for thatpurpose in the notice convening the meeting not less than 48 hours before the time for holding the meeting.
A Member shall be entitled to appoint more than one proxy to attend and vote at the same meeting.
Where a Member appoints more than one proxy, the appointments shall be invalid unless he specifies the proportionof his holding to be represented by each proxy.
Proxy FormProxy Form
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