Epicentre 2008 AR

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Our Vision
To be the Best Digital Lifestyle Store in Asia. Delivering a delightful customers shopping experience and providing value adds to our stakeholders. Total Commitment to Customers, unmatched service excellence and innovative services for their one stop shop Digital Lifestyle needs.
Our Mission
Our Core Values
Innovative.
Provide fresh, new & effective ideas, actions, services & value add to our customers, employees and stakeholders.
Learning.
Continuous Learning. Open learning and sharing of knowledge with each other.
Ownership.
Take pride in your work; be accountable with your job. Act on best interests of the company. Speed in execution and implementation.
Vision.
Ability to think and plan ahead according to business needs.
Excellence.
Perform 2Q & 1T. Quality Service to Customers. Quantity to Sales. Transcend Beyond Job Scope.
Integrity.
Be honest; keep to promise and deliver as promise.
Teamwork.
Be proactive to achieve Companys vision, mission & objective. Trust in each other professionalism.
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iMac
iPod classic
iPhone 3G
Contents
1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. Corporate Prole Awards & Achievements CEOs Message Board of Directors Management Team Corporate Information Group Structure Group of Companies Retail Locations Financial Highlights Corporate Governance Financial Statements Statistic of Shareholdings Notice of Annual General Meeting Proxy Form
PA G E 2 3 4 6 8 9 10 11 12 13 14 23 71 73 75
Afor Limited Annual Report 2008
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Everything Mac & More
1. Corporate Profile
Incorporated in Singapore in April 2002, and listed on Singapore Exchange in January 2008, Afor Limited (Afor), is the rst Apple Premium Reseller in Asia specialising in the sale of Apple brand products and its complementary products. As an Apple Premium Reseller, Afor carries a wide range of Apple brand products, accessories and a variety of softwares as well as complementary products under its own proprietary iWorld brand. Headquartered in Singapore and listed on the Singapore Exchange in January 2008, Afor has six outlets in Singapore and Malaysia named EpiCentre. Afor offers customers a one-stop shop Digital Lifestyle shopping experience. At its EpiCentre outlets, customers can enjoy an interactive shopping experience where they are encouraged to touch, feel and test the range of Apple products offered. Other than a wide range of Apple products and accessories, Afor also provides training and hands-on coaching on Everything Mac & more.... As a one-stop service centre, it also provides after-sales support at its EpiCentre outlets. This would include the iConcierge where support and guidance for Mac users can be obtained and trade-in services, where Apple products can be brought in for a valuation and trade-in for a new one.
Our Services
iConcierge and After-Sales Services
Training
Repair Clinic
Membership Loyalty Programme
Trade-in Services
Best Apple Deals
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2. Awards & Achievements

We have been recognised by Apple for our growth rate and the quality of our service. In this regard, we received the following awards for our successful retailing efforts :
Best Apple Centre in Singapore in 2003
Best Apple Point-of-Sale (Retail Store) in Asia 2006
Best Apple Service Provider in ASEAN 2006
Top Apple Point-of-Sale (Retail Store) in Asia 2007
Afor Afor Limited Limited Annual Annual Report Report 2008 2008
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3. CEOs Message
Dear Shareholders
with third-parties and complementary products.
am pleased to announce that FY2008 was another successful year for the Group. We have continued our track record of profitability and growth. For FY2008, the Group recorded a 26.1 % growth in revenues to S$64.3 million, compared to S$51.0* million in FY2007. The Group continued to remain protable with the net prot attributable to equity holders stood at S$3.3 million, a marginal decrease of 5.5% as compared to S$3.5* million in FY2007. Concurrently, the Groups cash and cash equivalents increased by S$7.5 million. Earnings per share for the year based on the weighted average number of ordinary shares issued was 6.42 cents while net tangible assets backing per ordinary share based on our issued share capital was 15.90 cents. The increase in the Groups revenue was attributed mainly to:
Full-year revenue contributions from the retail outlet at Suntec City Mall; and Maiden contributions from the newlyopened outlet in Kuala Lumpur, Malaysia.
One of the highlights of the Group over the year was our initial public offering of shares was made on 18 January 2008. The IPO, comprising 23.5 million shares at S$0.33 each, was more than 1.67 times subscribed. In addition to raising S$6.4 million in net proceeds (after deducting S$1.4 million in the IPO expenses for the Group), the issue has also raised the prole of Afor Limited and put it in good stead to improve its business relationships with existing and potential customers and suppliers. The IPO net proceeds of S$6.4 million has been used for: a. b. S$2.4 million for working capital. Balance of S$4.0 million is currently
Demand increase for Apple brand products through new products introduced and product bundling
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placed in the Fixed Deposit for future business expansion. The consistent prot achievements for the past few years and efcient working capital management have put us in good nancial standing. The Group is relatively debtfree. With a strong cash position of S$11.0 million bolstered in part by the initial public offering of shares in January 2008, coupled with strong working capital of S$14.5 million, we strongly believe that we could bring the Group to greater heights. We want to thank our shareholders in supporting our vision to create value. In recognition of their unwavering loyalty and given our healthy financial position, the Board is pleased to propose a nal exempt (one-tier) dividend of 2 cents per ordinary share for FY2008. We are well on-track with our aggressive expansion to increase our retail footprint with the set up of our flagship store, EpiCentre@Pavilion, at Pavilion Kuala Lumpur in Malaysia and the addition of two new outlets in Singapore towards
the end of FY 2008. Recently in July, we have also launched another outlet in Bugis Junction, Singapore and are excited about the opening of our next two outlets in ION and Marina Sands, Singapore. We are also keeping in view our developments in the Asia region. Barring unforeseen circumstances, the Group is cautiously optimistic about the performance for FY2009. On behalf of the Board of Directors and the management team, I would like to sincerely thank our customers, suppliers, business associates and shareholders for their support, without which we would not have been able to achieve the strong growth which we have. I would also like to thank my colleagues on the Board for their support and service. Last but not least, I also want to thank the management and our employees for their hard work and dedication.
Jimmy Fong Teck Loon Chief Executive Ofcer
* Results of the Proforma Group as disclosed in Prospectus
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4. Board of Directors
The Board of Directors is entrusted with the responsibility for the overall management of our Group. Our Directors particulars are listed below :
Jimmy Fong Teck Loon

Mr Fong is our Chief Executive Ofcer and was one of the co-founders of the Group. He was appointed to our Board on 9 April 2002. He is responsible for setting the strategic direction, tracking the nancial and protability growth of the Group, managing the business and overseeing all aspects of the daily operations of the Company. He has more than 12 years of experience in audit, management, IT and nance with commercial and nancial organisations in Asia and Singapore. In 1991, he began his career in audit and was with Oversea-Chinese Banking Corporation as an IT system auditor before moving on to hold various senior audit positions in nancial institutions and corporations, such as, Citibank, Schlumberger Oileld Services and I.B.M. World Trade Asia Corporation. Prior to establishing our Company in 2002, he held managerial positions in nance and was the Director of Finance for the Asia Pacic region with Intensia Asia Pacic. He holds a Bachelor of Commerce and Administration from the Victoria University of Wellington, New Zealand, majoring in accountancy with a minor in IT. In 1998, he also obtained a Master of Business Administration from Rutgers, the State University of New Jersey, the USA.
Johnson Goh Ann Ann

Mr Goh is our Executive Director and Chief Operations Ofcer who was appointed to our Board on 10 December 2007. He is responsible for our Companys local and regional sales and operations, including the overall management and continued development of strategic partners and supplier relationships. He also leads the formulation and execution of EpiCentres retail strategy and heads the ODM and distribution business units for third party products, playing a key role in securing exclusive rights to major accessories brands as well as developing new accessory products under our Companys own brand, iWorld. He has more than 15 years of experience in sales, operations and business development and prior to joining our Group in 2004, he was also the Director of Business Development for Avant-logic Computer Technology Pte Ltd. He holds an Advanced Diploma in Marketing Management from Oklahoma City University as well as a Graduate Diploma in Marketing Management from the Marketing Institute of Singapore. In 2003, he received a Master in Business Administration (Marketing) from the University of Leicester.
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Brenda Yeo
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Ms Yeo is our Executive Director who was appointed to our Board on 21 February 2007. She oversees the human resource department of our Group and has more than 7 years of experience in human resource. In 2005, she rst joined our Group as a human resource executive and was promoted to a personal assistant in 2006. She holds a Diploma in Human Resource Management from the International Business and Management Education Centre.
Siow Chee Keong

Mr Siow is is our Lead Independent Director and was appointed to our Board on 10 December 2007. He has more than 25 years of audit and management experience in operations, business systems, information technology, nance and accounting with commercial and nancial organisations in Canada, USA, England and Singapore. He is currently the Managing Director of JF Virus Pte. Ltd. and offers audit, risk and consultancy services to exchange listed companies. Mr Siow qualied as a Chartered Certied Accountant with the Association of Chartered Certied Accountants in 1981, a Certied Internal Auditor with the Institute of Internal Auditors Inc. in 1985, a Certied General Accountants with the Certied General Accountants of Canada in 1990 and is a member of the Institute of Certied Public Accountants of Singapore. He graduated from the University of Warwick, England, with a Master of Business Administration in 1998. Mr Siow is on board of several listed and private companies, and is a member of the Singapore Institute of Directors.
Lee Keen Whye

Mr Lee is our Independent Director and was appointed to our Board on 10 December 2007. He is the Managing Director of Strategic Alliance Capital Pte Ltd (SAC), a venture capital and investment management advisory company. Prior to founding SAC, Mr Lee was the founder and Managing Director of Rothschild Ventures Asia Pte Ltd, a member of the N M Rothschild & Sons global merchant banking group, and worked there from 1990 to 1997. He was Associate Director with Kay Hian James Capel Pte Ltd which he joined in 1987 as Head of Research for Singapore and Malaysia. Between 1985 and 1987, Mr Lee was based in California and worked with venture capital companies seeking investments in emerging growth companies. Prior to that, he was an Investment Manager with the Government of Singapore Investment Corporation. Mr Lee currently sits on the boards of several companies, including Santak Holdings Ltd, Oniontech Limited and Ultro Technologies Limited, which are listed on the SGX-ST. Mr Lee holds a Masters Degree in Business Administration from Harvard Business School and a Bachelors Degree in Business Administration from the University of Singapore.
Liu Zipeng
Mr Liu is our Independent director and was appointed to our Board on 10 December 2007. He is presently a director with Quantum Law Corporation and has undertaken a broad spectrum of general corporate and commercial matters including domestic and cross border mergers and acquisitions and real estate transactional work including the sales, acquisitions and leasing of residential and commercial properties and development work. He has also advised nancial institutions and corporations in the negotiation and legal documentation of various aspects of corporate banking business. He also had experience in the advisory and transactional work relating to initial public offerings in Singapore as well as corporate nance work. Mr Liu graduated from the University of Nottingham and joined Messrs William Lai & Alan Wong (now known as WLAW LLC) as a legal assistant after being called to the Singapore Bar in July 1997. Mr Liu then joined Societe Generale as their in-house legal counsel from 1999 to 2000. Prior to joining Quantum Law Corporation, Mr Liu was an associate with Wong Partnerships Corporate Real Estate Department from April 2006 to April 2007 and a partner with Chang See Hiang & Partners which he joined from November 2000 to February 2006.
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5. Management Team
The particulars of our Executive Ofcers are set out below :
Ong Omar Peter Young

Mr Ong is our Chief Financial Ofcer responsible for the overall group nance and corporate affairs of our Group. Mr Ong joined our Group in June 2008 prior to which he was a Chief Financial Ofcer and Executive Director of Esmart Holdings Limited, an SGX listed company. Prior to joining Esmart Holdings Limited, Mr Ong held the posts of nance manager of Price Johnson Controls Pte Ltd and nance manager and logistics manager of Shanghai Johnson Controls Air-Conditioning Co. Ltd., both subsidiaries of Johnson Controls, Inc., a global market leader in automative systems, facility management and control. Mr Ong has approximately 14 years experience in accounting and nance. Mr Ong holds a Bachelor of Business (Accounting) from the University of Technology Sydney and is a member of CPA Australia and Singapore Institute of Directors.
Joanne Lee Sieu Wei

Ms Lee is our Operations Manager who is responsible for the retail management of the Group. In 1999, she started her career as a sales executive with Challenger Technologies Ltd (Challenger), and was subsequently promoted to become its assistant manager. Prior to joining our Group in August 2005, she was tasked with overseeing the operations of two of Challengers subsidiary companies. She holds an International Diploma in Computer Studies from Informatics Computer School, Singapore, as well as a Diploma in Retail Management from the University of Stirling.
Goh Ling Chuan

Mr Goh is our General Manager for Afor (Malaysia) who is responsible for the general operations of Afor (Malaysia). He joined our Group in August 2007. Between 1980 and 1985, he was employed as the Customer Service Manager for Unidata Sdn Bhd and was the Operations Manager (Operations & Services) for Pan Malaysian Pools Sdn Bhd from 1985 to 1991. Between 1991 and 2007, Mr Goh was employed as the Senior Manager for OCE System (M) Sdn Bhd, SiS Distribution (M) Sdn Bhd and Basis Bay Sdn Bhd, respectively, where he was responsible for the management and development of the respective companies nancial targets and business goals. Mr Goh holds a Diploma in Electrical Engineering from the Federal Institute of Technology of Kuala Lumpur and was awarded certicates for Telecommunication Technician by the City and Guilds of London Institute. He has also received several certicates for completing various management, technology and development courses from institutions including Oce Nederland B.V. Venlo, Concurrent Computer Corporation of the USA, Robert Lam English Language Centre, Malaysian Institute of Management and Singapore Institute of Management.
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, iLife 08
, iWork 08
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6. Corporate Information
BOARD OF DIRECTORS :
6. Corporate Information
Jimmy Fong Teck Loon Johnson Goh Ann Ann Brenda Yeo Siow Chee Keong Lee Keen Whye Liu Zhipeng Siow Chee Keong Lee Keen Whye Liu Zhipeng Liu Zhipeng Siow Chee Keong Lee Keen Whye Jimmy Fong Teck Loon Lee Keen Whye Siow Chee Keong Liu Zhipeng Tham Lee Meng 501 Orchard Road, Wheelock Place, #02-20/22 Singapore 238880 Telephone: (65) 62389378 Facsimile: (65) 62387681 BDO Rafes 19 Keppel Road, Jit Poh Building, #02-01 Singapore 089058 Chia Soo Hien
Appointed with effect from nancial year ended 30 June 2007
(Chief Executive Ofcer) (Chief Operations Ofcer) (Executive Director) (Independent Director) (Independent Director) (Independent Director) (Chairman)
AUDIT COMMITTEE
NOMINATING COMMITTEE
(Chairman)
REMUNERATION COMMITTEE
(Chairman)
COMPANY SECRETARY REGISTERED OFFICE
: :
AUDITORS
PARTNER-IN-CHARGE
SHARE REGISTRAR AND SHARE TRANSFER OFFICE
Boardroom Corporate & Advisory Services Pte. Ltd. 3 Church Street, Samsung Hub, #08-01 Singapore 049483 Telephone: (65) 65365355 Facsimile: (65) 65361360 Oversea-Chinese Banking Corporation Limited Citibank, N.A., Singapore Branch Standard Chartered Bank
PRINCIPAL BANKERS
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7. Group Structure
Afor Limited
EpiCentre Pte. Ltd. 100%
ACDC Technologies Pte. Ltd. 100%
Afor Sdn. Bhd. 100%
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8. Companies 8. Group Groof up of Companies

SINGAPORE
Afor Limited 501 Orchard Road, Wheelock Place, #02-20/22 Singapore 238880 Telephone: +65 6238 9378 Facsimile: +65 6238 6780 Epicentre Pte. Ltd. 501 Orchard Road, Wheelock Place, #02-20/22 Singapore 238880 Telephone: +65 6238 9378 Facsimile: +65 6238 6780 ACDC Technologies Pte. Ltd. 501 Orchard Road, Wheelock Place, #02-20/22 Singapore 238880 Telephone: +65 6238 9378 Facsimile: +65 6238 6780
MALAYSIA
Afor Sdn. Bhd. Central Plaza Suite 1706 17th Floor, 34 Jalan Sultan Ismail, Kuala Lumpur, Malaysia Telephone: +603 2141 1787 Facsimile: +603 2141 3787
Afor Afor Limited Limited Annual Annual Report Report 2008 2008
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9. Retail Locations
SINGAPORE
EpiCentre@Orchard 501 Orchard Road, Wheelock Place #02-20/23 Singapore 238880 Tel : +65 6238 9378 Fax : +65 6238 6780 EpiCentre@Suntec 3 Temasek Boulevard #02-179 Singapore 038983 Tel : +65 6835 8168 Fax : +65 6337 8246 EpiCentre@Bugis Junction 200 Victoria Street, #01-57 Singapore 188021 Tel : +65 6338 4855 Fax : +65 6338 4892 EpiCentre@Friven & Co 56 Tanglin Road, #02-01 Singapore 247964 Tel : +65 6238 9378 Fax : +65 6238 6780 EpiCentre@Best Denki 391 Orchard Road, Ngee Ann City #05-01/05 Singapore 238873 Tel : +65 6238 9378 Fax : +65 6238 6780
MALAYSIA
EpiCentre@Pavilion Lot 5.24.07, Level 5, Pavilion 168 Jalan Bukit Bintang 55100 Kuala Lumpur Tel : +603 2141 6378 Fax : +603 2141 6318
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10. Hightlights 10.Financial Financial Highlights

64.3 51.0
Revenue (S$M)
37.9 26.1
11.7 7.8
Gross Prot (S$M)
5.6 3.7
3.5
3.3
Net Prot Attributable to Shareholders (S$M)
2.0 0.9
4.3
4.0
Prot Before Tax (S$M)

1.2
2.4
* Financial results for the years 2005, 2006 and 2007 are based on the performances of the Proforma Group as disclosed in the Prospectus.
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11. Governance 11. Corporate Corporate Governance
Corporate Governance Report
The Board of Directors (the Board) of Afor Limited (the Company) is committed and dedicated to maintaining a high standard of corporate governance in order to protect and enhance the interests of its shareholders. This report outlines the Companys corporate governance processes and activities that were in place throughout the nancial year, with specic reference made to the principles and guidelines of the Code of Corporate Governance (Code) .
The Boards conduct of its Affairs

Principle1: Every company should be headed by an effective Board to lead and control the company. The Board is collectively responsible for the success of the company. The Board works with Management to achieve this and the Management remains accountable to the Board. The Boards primary role is to protect and enhance long-term shareholder value. It sets the overall strategy for the Group and supervises executive management. To fulll this role, the Board sets the Groups strategic direction, establishes goals for management and monitors the achievement of these goals, thereby taking responsibility for the overall corporate governance of the Group. The Board meets at least twice a year and ad hoc meetings are convened when circumstances require. Important and critical matters concerning the Group are also tabled for the Boards decision by way of written resolutions, faxes, electronic mails and tele-conferencing. In addition to its statutory duties, the Boards principal functions are :1. approving the Groups strategic plans, key operational initiatives, major investments and divestments and funding requirements; 2. approving the annual budget, reviewing the performance of the business and approving the release of the nancial results of the Group to shareholders; 3. providing guidance in the overall management of the business and affairs of the Group; 4. overseeing the processes for risk management, nancial reporting and compliance; and 5. approving the recommended framework of remuneration for the Board and key executives. All newly appointed Directors are given briengs by Management on the history and business operations and corporate governance practices of the Group. The Company will, from time to time, organise seminars and brieng sessions for the Directors to enable them to keep pace with regulatory changes, where changes to regulations and accounting standards have a material bearing on the Company.
Board Composition and Balance

Principle 2 : There should be a strong and independent element on the Board, which is able to exercise objective judgement on corporate affairs independently, in particular, from
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Management. No individual or small group of individuals should be allowed to dominate the Boards decision making. As at the end of the nancial year, the Board comprises six Directors, three of whom are Independent Directors. The criteria for independence are determined based on the denition provided in the Code. The Board is supported by various sub-committees, namely, the Nominating Committee, the Audit Committee and the Remuneration Committee, whose functions are described below. The Board is able to exercise objective judgment independently from Management and no individual or small group of individuals dominate the decisions of the Board. The Board is of the opinion that, given the scope and nature of the Groups operations, the present size of the Board is appropriate for effective decision making. The Board is made up of Directors who are qualied and experienced in various elds including manufacturing, legal, business administration and nance. Accordingly, the current Board comprises of persons who as a group, have core competencies necessary to lead and manage the Company.
Chairman and Chief Executive Ofcer

Principle 3 : There should be a clear division of responsibilities at the top of the company the working of the Board and the executive responsibility of the companys business which will ensure a balance of power and authority, such that no one individual represents a considerable concentration of power. The Company has not created a separate position of Chairman as the Board is of the view that it is in the best interests of the Group to adopt a single leadership structure so as to ensure the decision-making process of the Group would not be unnecessarily hindered. The CEO, Mr Jimmy Fong Teck Loon, plays a pivotal role in the Groups business development and provides the Group with strong leadership and vision. As CEO of the Group, he supervises the business operations and developments, as well as implements the decisions and directions of the Board. For administrative purposes only, he is usually elected as the Chairman of each Board meeting. The Board collectively schedules Board meetings as and when required and sets the agenda for the Board meetings. In addition, the Board sets guidelines on and ensures quality, quantity, accurateness, and timeliness of information ow between the Board, Management and shareholders of the Company. The Board also encourages and builds constructive relation between the Board and Management and takes a leading role in ensuring the Companys compliance with corporate governance guidelines. As all major decisions made by Mr Fong are reviewed by the respective Board Committees, the Board is of the view that there are sufcient safeguards to ensure accountability and independent decision making. The Company has also appointed Mr Siow Chee Keong as the Lead Independent Director pursuant to the recommendations of the Code. The Lead Independent Director will be available to shareholders where they have concerns which contact through the normal channels of the CEO has failed to resolve or for which such contact is in-appropriate.
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11. Corporate Governance

Nominating Committee
Principle 4 : There should be a formal and transparent process for the appointment of new directors to the Board. As a principle of good corporate governance, all directors should be required to submit themselves for re-nomination and re-election at regular intervals. To facilitate a formal and transparent process for the appointment of new Directors, the Board has formed the Nominating Committee (NC). The Nominating Committee comprises :Mr Liu Zhipeng (Chairman) Mr Jimmy Fong Teck Loon (Member) Mr Siow Chee Keong (Member) Mr Lee Keen Whye (Member)
Save for Mr Jimmy Fong Teck Loon, the other members of the Committee are independent Directors. The NC has written terms of reference and their role includes:1. making recommendations to the Board on all board appointments, including the development of a set of criteria for Director appointments; 2. re-nominating Directors having regard to the Directors contribution to the Group and his performance at Board Meetings, for example, attendance, participation and critical assessment of issues deliberated upon by the Board; 3. considering and determining on an annual basis, whether or not a Director is independent; and 4. to decide on how the Boards performance may be evaluated and propose objective performance criteria to the Board. The independence of each Director is reviewed annually by the NC based on the Codes denition of what constitutes an independent director. Pursuant to the Articles of Association of the Company :(a) one third of the Directors are to retire from ofce and be subject to re-election at every Annual General Meeting; and (b) directors appointed during the course of the year must retire and submit themselves for re-election at the next Annual General Meeting of the Company following their appointments. Principle 5 : There should be a formal assessment of the effectiveness of the Board as a whole and the contribution by each director to the effectiveness of the Board. The NC assesses the performance of the Board as a whole in view of the complementary and collective nature of the Directors contributions. The Committee has established objective performance criteria by which the Boards performance may be evaluated.
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Access to Information
Principle 6 : In order to full their responsibilities, Board members should be provided with complete, adequate and timely information prior to board meetings and on an on-going basis. The Board is provided with complete and adequate information prior to Board meetings and kept informed of on-going developments within the Group. Board papers are generally made available to Directors before the meeting and would include nancial management reports, reports on performance of the Group, papers pertaining to matters requiring the Boards decision, updates on key outstanding issues, strategic plans and developments in the Group. The Directors have separate and independent access to the Companys senior management and the Company Secretary at all times. Should the Directors, whether as a group or individually, require independent professional advice, such professionals (who will be selected with the approval of the Chairman of the Committee requiring such advice) will be appointed at the Companys expense. The Company Secretary attends all Board Meetings and is responsible for ensuring that Board procedures are followed. The Company Secretary assists senior management in ensuring that the Company complies with rules and regulations which are applicable to the Company.
Remuneration Committee
Principle 7: There should be a formal and transparent procedure for developing policy on executive remuneration and for xing the remuneration packages of individual directors. No director should be involved in deciding his own remuneration. Principle 8 : The level of remuneration should be appropriate to attract, retain and motivate the directors needed to run the company successfully but companies should avoid paying more than is necessary for this purpose. A signicant proportion of the remuneration, especially that of executive directors, should be structured so as to link rewards to corporate and individual performance. The Remuneration Committee comprises:Mr Lee Keen Whye (Chairman) Mr Liu Zhipeng (Member) Mr Siow Chee Keong (Member) All members of the Committee are Independent Directors. The Remuneration Committee (RC) has written terms of reference and their role includes:1. making recommendations to the Board on a framework of remuneration for the directors and key executives to ensure that it is appropriate to attract, retain and motivate them to run the Group successfully; 2. reviewing and determining specic remuneration packages for each executive director and key executives; 3. reviewing and recommending to the Board terms of renewal of service contracts; 4. considering various disclosure requirements for directors remuneration; and
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5. considering the participation of directors, CEO and key executives in the share schemes and other long-term incentive schemes as may from time to time be implemented. In setting remuneration packages, RC took into account the performance of the Group as well as the Directors and key executives aligning their interests with those of shareholders and linking rewards to corporate and individual performance as well as industry benchmarks. The review of remuneration packages takes into consideration the longer term interests of the Group. The review covers all aspects of remuneration including salaries, fees, allowances, bonuses, options and benets-in-kind. The Committees recommendations are submitted for endorsement by the entire Board. The payment of Directors fees is subject to the approval of shareholders.
Disclosure on Remuneration
Principle 9 : Each company should provide clear disclosure of its remuneration policy, level and mix of remuneration, and the procedure for setting remuneration, in the companys annual report. It should provide disclosure in relation to its remuneration policies to enable investors to understand the link between remuneration paid to directors and key executives, and performance. Details of remuneration of Directors of the Company for FY2008 is set out below :Directors of the Company $250,000 to $499,999 Below $250,000 Jimmy Fong Teck Loon Johnson Goh Ann Ann Brenda Yeo Siow Chee Keong Lee Keen Whye Liu Zhipeng Fong Kim Seong(a) Salary & Bonus % 100 100 100 100 Fees % 100 100 100 Total % 100 100 100 100 100 100 100
(a) Fong Kim Seong retired from ofce on 10 December 2007 before the Companys IPO on 18 January 2008
Rather than set out the names of the top ve executives who are not also Directors of the Company, the remuneration of the top ve executives for FY 2008 are set out below in bands of S$250,000. This will maintain condentiality of the remuneration packages of the key executives: > S$250,000 < S$500,000 < S$250,000 : : 0 4
Brenda Yeo, our Executive Director, is the spouse of Jimmy Fong Teck Loon, our Chief Executive Ofcer and Substantial Shareholder. Fong Kim Seong who retired from ofce on 10 December 2007 before the Companys IPO on 18 January 2008 is the father of Jimmy Fong Teck Loon. Save as disclosed above, none of our Directors or employees are immediate family members of the Directors or the Chief Executive Ofcer.
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Accountability and Audit

Accountability Principle 10 : The Board is accountable to the shareholders while the Management is accountable to the Board. Management provides the Board with the necessary nancial information on a quarterly basis for the discharge of its duties. In presenting the half year and full year nancial statement and dividend announcement to shareholders, as well as timely announcements of other matters as prescribed by the relevant rules and regulation, it is the aim of the Board to provide shareholders with a balanced and understandable assessment of the Companys and Groups performance, position and prospects. Audit Committee Principle 11: The Board should establish an Audit Committee with written terms of reference which clearly set out its authority and duties. The Audit Committee comprises :Mr Siow Chee Keong (Chairman) Mr Lee Keen Whye (Member) Mr Liu Zhipeng (Member) All three Audit Committee (AC) members are independent Directors of the Company. The members have had many years of experience in accounting, legal, business and nancial management. The Board considers that the members of the AC are appropriately qualied to discharge the responsibilities of the AC. The AC has written terms of reference. Specically, the AC meets on a periodic basis to perform the following functions :1. review with the external and internal auditorstheir respective audit plans, scope, reports, ndings and action taken by management on the ndings. 2. review the independence of the external and internal auditors annually. 3. recommend the appointment or reappointment of external and internal auditors and remuneration of the external and internal auditors. 4. review the adequacy of internal nancial controls, operational and compliance controls, and risk management policies and systems established by Management (collectively internal controls). 5. review the effectiveness of the internal audit activities. 6. review the co-operation given by the Management to the auditors. 7. review the performance of external and internal auditors with the management. 8. review the nancial statements of the Company and draft announcements to SGX before their submission to the Board. 9. review Interested Party Transactions (IPT). 10. review arrangements by which staff of the company may, in condence, raise concerns about possible improperties in matters of nancial reporting or other matters.
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11. undertake such other functions and duties as may be required by statute or the Listing Manual, and by such amendments made thereto from time to time. 12. to meet with the external and internal auditors without the presence of Management at least once a year. 13. to note any signicant actions commenced against the Company and to note any signicant breaches of regulations or legislation. 14. to consider any other topics specically delegated to the Committee by the Board from time to time.
The AC has full access to and the co-operation of Management and the full discretion to invite any Director or executive ofcer to attend its meetings, and has reasonable resources to enable it to discharge its functions properly. The AC has undertaken a review of all non-audit services provided by the auditors and in the ACs opinion, the provision of these services does not affect the independence of the auditors. The AC has recommended to the Board the nomination of Messrs BDO Rafes for reappointment as external auditors of the Company at the forthcoming AGM. The AC has reviewed arrangements by which the staff of the Company may, in condence, raise any improprieties in matters of nancial reporting or other matters, with the objective of ensuring that arrangements are in place for the independent investigation of such matters for appropriate follow-up action. In this regard, the Management is in the process of adopting a whistle-blower policy.
Internal Controls
Principle 12 : The Board should ensure that Management maintains a sound system of internal controls to safeguard the shareholders investments and the companys assets. The Company has in place a system of internal controls to safeguard shareholders investment and the Groups assets. The AC has, during the year, reviewed, with the assistance of the external auditors, the effectiveness of the Companys material internal controls, including nancial, operational and administrative controls and nancial risk management. Based on the review of the AC, the Board is satised that the internal controls of the Group are adequate to safeguard shareholders investments and the Companys assets and ensure the integrity of its nancial statements. The Board, however, recognizes that no system of internal controls could provide absolute assurance against human error, poor judgement in decision making, fraud and other irregularities. The Board conducts regular review on the effectiveness of the Companys system of internal controls.
Internal Audit
Principle 13 : The company should establish an internal audit function that is independent of the activities it audits.
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The Company outsources its internal audit function to an external CPA rm. The internal auditors plan its internal audit schedules in consultation with, but independent of the Management. The audit plan is submitted to the Audit Committee for approval prior to the commencement of the internal audit. The Audit Committee reviews of the internal auditors on a regular basis, including overseeing and monitoring of the implementation or the improvements required on internal control weaknesses identied.
Communications with the Shareholders

Principle 14 : Companies should engage in regular, effective and fair communication with shareholders. Communications with Shareholders The Company ensures that timely and adequate disclosure of information on matters of material impact on the Company are made to shareholders of the Company via SGXNET and press releases where appropriate, in compliance with the requirements set out in the Listing Manual of the Singapore Exchange Securities Trading Limited with particular reference to the Corporate Disclosure Policy set out therein. Principle 15 : Companies should encourage greater shareholder participation at AGMs, and allow shareholders the opportunity to communicate their views on various matters affecting the company. Greater Shareholder Participation At general meetings, shareholders of the Company are given the opportunity to air their views and ask Directors or Management questions regarding the Company. The Board and Management are present at these meetings to address any questions that shareholders may have. The external auditors are also present to assist the Board in addressing queries by shareholders. The Articles of Association of the Company (Articles) allow a member of the Company to appoint one or two proxies to attend and vote in place of the member at general meetings. For the time being, the Board is of the view that this is adequate to enable shareholders to participate in general meetings of the Company and is not proposing to amend their Articles to allow votes in absentia. Separate resolutions on each distinct issue are tabled at general meetings and the Chairman of the Audit Committee and the external auditors will be present to address any queries from the shareholders attending the meeting.
Dealings in Securities
The Company has adopted the Singapore Exchange Securities Trading Limiteds Best Practices Guide applicable in relation to dealings in the Companys securities by its ofcers. The Company has informed its ofcers not to deal in the Companys shares whilst they are in possession of unpublished material price sensitive information and during the period commencing one month before the announcement of the Companys nancial results and ending on the date of announcement of such nancial results.
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Interested Person Transaction
The aggregate value of interested person transaction entered during the nancial year was as follows: Name of interested person
Aggregate value of all interested person transactions conducted under shareholders mandate pursuant to Rule 920 (excluding transactions less than $100,000) S$ Aggregate value of all interested person transactions during the nancial year under review (excluding transactions conducted under shareholders mandate pursuant to Rule 920) S$
Material Contracts
Since the end of the previous year, the company and its subsidiaries did not enter into any material contract involving interests of the Chief Executive Ofcer, directors or controlling shareholders and no such material contract still subsist at the nancial year.
Directors Attendance at Board and Committee Meetings

The number of Directors and other committees meetings and the record of attendance of each Director during the nancial year ended 30 June 2008 is set out below:-
Director Number of Meetings Held
Board
Audit Committee 1
Remuneration Committee 1
Nominating Committee 1
Number of Meetings Attended Jimmy Fong Teck Loon Johnson Goh Ann Ann Brenda Yeo Siow Chee Keong Lee Keen Whye Liu Zhipeng 1 1 1 1 1 1 1* 1* 1* 1 1 1 1* 1* 1* 1 1 1 1 ** 1* 1* 1 1 1
* By invitation ** Jimmy Fong Teck Loon was appointed as member of NC on 14 February 2008.
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AFOR LIMITED AND ITS SUBSIDIARIES REPORT OF THE DIRECTORS The Directors of the Company present their report to the members together with the audited financial statements for the financial year ended 30 June 2008 of the Group and the balance sheet of the Company as at 30 June 2008. 1. Directors The Directors of the Company in office at the date of this report are: Jimmy Fong Teck Loon Brenda Yeo Lee Keen Whye Goh Ann Ann Johnson Siow Chee Keong Liu Zhipeng 2.
(appointed on 10 December 2007) (appointed on 10 December 2007) (appointed on 10 December 2007) (appointed on 10 December 2007)
Arrangements to enable Directors to acquire shares or debentures Neither at the end of nor at any time during the financial year was the Company a party to any arrangement whose object is to enable the Directors of the Company to acquire benefits by means of the acquisition of shares in or debentures of the Company or any other body corporate.
3.
Directors interests in shares or debentures According to the register of Directors shareholdings kept by the Company for the purposes of Section 164 of the Singapore Companies Act, Cap. 50 (the Act), none of the Directors of the Company who held office at the end of the financial year had any interests in the shares or debentures of the Company or its related corporations except as detailed below:
Shareholdings registered in the name of Directors Balance at 1 July 2007 or later date of appointment Shareholdings in which Directors are deemed to have an interest Balance at 1 July 2007 or later date of appointment
Balance at 30 June 2008
Balance at 30 June 2008
Number of ordinary shares Company
Jimmy Fong Teck Loon Brenda Yeo Lee Keen Whye Goh Ann Ann Johnson Siow Chee Keong Liu Zhipeng
290,119 -
51,629,800 630,000 100,000 9,450,000 100,000 100,000
290,119 -
630,000 51,629,800 -
By virtue of Section 7 of the Act, Jimmy Fong Teck Loon is deemed to have interests in the shares of all the subsidiaries of the Company as at the end of the financial year. Jimmy Fong Teck Loon is deemed to be interested in the shares held by his wife, Brenda Yeo, and vice versa.
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AFOR LIMITED AND ITS SUBSIDIARIES REPORT OF THE DIRECTORS (Continued) 3. Directors interests in shares or debentures (Continued) In accordance with the continuing listing requirements of the Singapore Exchange Securities Trading Limited, the Directors of the Company state that, according to the register of Directors shareholdings, the Directors interests as at 21 July 2008 in the shares of the Company have not changed from those disclosed as at 30 June 2008. 4. Directors contractual benefits Since the end of the previous financial year, no Director of the Company has received or become entitled to receive a benefit by reason of a contract made by the Company or by a related corporation with the Director or with a firm of which he is a member, or with a company in which he has a substantial financial interest, except as disclosed in the financial statements. 5. Share options There were no share options granted by the Company or its subsidiaries during the financial year. There were no shares issued during the financial year by virtue of the exercise of options to take up unissued shares of the Company or its subsidiaries. There were no unissued shares of the Company or of its subsidiaries under options as at the end of the financial year. 6. Audit committee The Audit Committee comprises the following members, who are all non-executive Directors and a majority of whom, including the Chairman, are Independent Directors. The members of the Audit Committee during the financial year and at the date of this report are: Siow Chee Keong Lee Keen Whye Liu Zhipeng (Chairman) (appointed on 10 December 2007) (appointed on 10 December 2007) (appointed on 10 December 2007)
The Audit Committee performs the functions specified in Section 201B (5) of the Act. In performing those functions, the Audit Committee reviewed the audit plans and the overall scope of examination by the external auditors of the Group and of the Company. The Audit Committee also reviewed the independence of the external auditors of the Company and the nature and extent of the non-audit services provided by the external auditors. The Audit Committee also reviewed the assistance provided by the Companys officers to the external auditors and the consolidated financial statements of the Group and the balance sheet of the Company as well as the Independent Auditors Report thereon prior to their submission to the Directors of the Company for adoption and reviewed the interested person transactions as defined in Chapter 9 of the Listing Manual of the Singapore Exchange.
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AFOR LIMITED AND ITS SUBSIDIARIES REPORT OF THE DIRECTORS (Continued) 6. Audit committee (Continued) The Audit Committee has full access to and has the co-operation of the management and has been given the resources required for it to discharge its function properly. It has also full discretion to invite any Director and executive officer to attend its meetings. The external auditors have unrestricted access to the Audit Committee. The Audit Committee has recommended to the Board of Directors the nomination of BDO Raffles, for re-appointment as auditors of the Company at the forthcoming Annual General Meeting. The Audit Committee has carried out an annual review of non-audit services provided by the external auditors to satisfy itself that the nature and extent of such services will not prejudice the independence and objectivity of the external auditors prior to recommending their recommendation. 7. Auditors The auditors, BDO Raffles, have expressed their willingness to accept re-appointment.
On behalf of the Board of Directors
Jimmy Fong Teck Loon Director Singapore 18 September 2008
Goh Ann Ann Johnson Director
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AFOR LIMITED AND ITS SUBSIDIARIES STATEMENT BY DIRECTORS In the opinion of the Board of Directors, (a) the accompanying financial statements comprising the balance sheets, consolidated income statement, consolidated statement of changes in equity and consolidated cash flow statement together with the notes thereon are properly drawn up in accordance with the provisions of the Singapore Companies Act, Cap. 50 and Singapore Financial Reporting Standards so as to give a true and fair view of the state of affairs of the Group and of the Company as at 30 June 2008 and of the results, changes in equity and cash flows of the Group for the financial year ended on that date; and at the date of this statement, there are reasonable grounds to believe that the Company will be able to pay its debts as and when they fall due.
(b)
On behalf of the Board of Directors
Jimmy Fong Teck Loon Director Singapore 18 September 2008
Goh Ann Ann Johnson Director
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INDEPENDENT AUDITORS REPORT TO THE MEMBERS OF AFOR LIMITED We have audited the accompanying financial statements of Afor Limited (the Company) and its subsidiaries (the Group) as set out on page 31 to 70, which comprise the balance sheets of the Group and of the Company as at 30 June 2008, the consolidated income statement, consolidated statement of changes in equity and consolidated cash flow statement of the Group for the financial year then ended, and a summary of significant accounting policies and other explanatory notes. Managements Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with the provisions of the Singapore Companies Act, Cap. 50 (the Act) and Singapore Financial Reporting Standards. This responsibility includes: (a) devising and maintaining a system of internal accounting controls sufficient to provide a reasonable assurance that assets are safeguarded against loss from unauthorised use or disposition; and transactions are properly authorised and that they are recorded as necessary to permit the preparation of true and fair income statements and balance sheets and to maintain accountability of assets; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.
(b) (c)
Auditors Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Singapore Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entitys 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 entitys internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
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INDEPENDENT AUDITORS REPORT TO THE MEMBERS OF AFOR LIMITED (Continued) Opinion In our opinion, (a) the consolidated financial statements of the Group and the balance sheet of the Company are properly drawn up in accordance with the provisions of the Act and Singapore Financial Reporting Standards so as to give a true and fair view of the state of affairs of the Group and of the Company as at 30 June 2008 and of the results, changes in equity and cash flows of the Group for the financial year ended on that date; and the accounting and other records required by the Act to be kept by the Company and by the subsidiary incorporated in Singapore of which we are the auditors, have been properly kept in accordance with the provisions of the Act.
(b)
BDO Raffles Public Accountants and Certified Public Accountants Singapore 18 September 2008
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AFOR LIMITED AND ITS SUBSIDIARIES BALANCE SHEETS AS AT 30 JUNE 2008
Note
Group 2008 $000
Company 2008 $000
2007 $000
Non-current assets Plant and equipment Investments in subsidiaries
4 5
437 437
229 165 394
310 310
Current assets Inventories Trade and other receivables Cash and cash equivalents
6 7 8
5,528 3,822 10,992 20,342
4,725 6,091 9,451 20,267
3,828 3,181 3,514 10,523
Less: Current liabilities Trade and other payables Finance lease payable Current income tax payable Net current assets Less : Non-current liabilities Finance lease payable Deferred tax liabilities
9 10
5,062 6 775 5,843 14,499
4,658 6 775 5,439 14,828
4,672 906 5,578 4,945
10 11
13 51 64 14,872
13 51 64 15,158
51 51 5,204
Capital and reserves Share capital Foreign currency translation reserve Accumulated profits Equity attributable to equity holders of the Company
12 13
6,709 6 8,157 14,872
6,709 8,449 15,158
315 4,889 5,204
The accompanying notes form an integral part of these financial statements.

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AFOR LIMITED AND ITS SUBSIDIARIES CONSOLIDATED INCOME STATEMENT FOR THE FINANCIAL YEAR ENDED 30 JUNE 2008
Note
2008 $000 64,312 (52,628) 11,684
Revenue Cost of sales Gross profit Other income Administrative expenses Selling and distribution costs Profit before income tax Income tax expense Profit after income tax attributable to equity holders of the Company Earnings per share (in cents) - Basic - Diluted
14
15
415 (5,759) (2,293)
16 17
4,047 (779) 3,268
18 6.42 6.42

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AFOR LIMITED AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE FINANCIAL YEAR ENDED 30 JUNE 2008
Note
Share capital $000 315 6 6,709 6 6
Foreign currency translation reserve $000 Accumulated profits $000 4,889 3,268 3,268 8,157
Total equity attributable to equity holders of the Company $000 5,204 7,790 (1,396) 6 3,268 3,274 14,872
Balance as at 1 July 2007 12 12 (1,396) 7,790
Issue of shares
Share issue expenses
Currency translation adjustment recognised directly in equity
Net profit for the financial year
Total recognised income and expense for the financial year
Balance as at 30 June 2008
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AFOR LIMITED AND ITS SUBSIDIARIES CONSOLIDATED CASH FLOW STATEMENT FOR THE FINANCIAL YEAR ENDED 30 JUNE 2008
Note
2008 $000
Cash flows from operating activities Profit before income tax Adjustments for: Bad trade receivables written off Depreciation of plant and equipment Goodwill on acquisition of subsidiaries written off Interest income Currency translation adjustment Operating profit before working capital changes Working capital changes: Inventories Trade and other receivables Trade and other payables Cash generated from operations Interest received Income taxes paid Net cash from operating activities Cash flows from investing activities Purchase of plant and equipment Acquisition of subsidiaries Net cash used in investing activities Cash flows from financing activities Increase in fixed deposits pledged Net proceeds from issue of shares Finance lease payments Net cash from financing activities Net change in cash and cash equivalents Cash and cash equivalents at beginning of financial year Cash and cash equivalents at end of financial year
4,047
4 5
9 274 13 (22) 15 4,336
(1,700) (580) 312 2,368 22 (910) 1,480
4 5
(384) 29 (355)
(1,740) 6,359 (6) 4,613 5,738 3,151 8,889
________________________________________________________________________________ The accompanying notes form an integral part of these financial statements.
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AFOR LIMITED AND ITS SUBSIDIARIES NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 30 JUNE 2008 These notes form an integral part of and should be read in conjunction with the financial statements. 1. General corporate information The balance sheet of Afor Limited (the Company) and the consolidated financial statements of the Company and its subsidiaries (the Group) for the financial year ended 30 June 2008 were authorised for issue in accordance with a Directors resolution dated 18 September 2008. On 10 December 2007, the Company was converted to a public limited company and changed its name from Afor Pte. Ltd. to Afor Limited. On 18 January 2008, the Company was admitted to the official list of Catalist under the Singapore Exchange Securities Trading Limited Dealing and Automated Quotation ("SGX-SESDAQ) rules. The Company is a public limited company, incorporated and domiciled in Singapore with its registered office address and principal place of business at 501 Orchard Road, #02-20/22, Wheelock Place, Singapore 238880. The Companys registration number is 200202930G. The principal activities of the Company are those of distribution and selling of computers and computer products and providing maintenance and computer related services. The principal activities of the subsidiaries are set out in Note 5 to the financial statements. 2. Summary of significant accounting policies (a) Basis of preparation of financial statements The financial statements have been prepared in accordance with the provisions of the Singapore Companies Act, Cap. 50 and Singapore Financial Reporting Standards (FRS). The financial statements are presented in Singapore dollar and all values are rounded to the nearest thousand ($000) except when otherwise indicated. The financial statements have been prepared under the historical cost convention, except as disclosed in the accounting policies below. The preparation of financial statements in conformity with FRS requires the management to exercise judgement in the process of applying the Group's and the Companys accounting policies and requires the use of accounting estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the balance sheet date, and the reported amounts of revenue and expenses during the financial year. Although these estimates are based on the managements best knowledge of historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances, actual results may ultimately differ from those estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the financial year in which the estimate is revised if the revision affects only that financial year, or in the financial year of the revision and future financial years if the revision affects both current and future financial years. Critical accounting judgements and key sources of estimation uncertainty used that are significant to the financial statements are disclosed in Note 3 to the financial statements.
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AFOR LIMITED AND ITS SUBSIDIARIES NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 30 JUNE 2008 (Continued)
2.
Summary of significant accounting policies (Continued) (a) Basis of preparation of financial statements (Continued) During the financial year, the Group and the Company adopted the new and revised FRS and Interpretations of FRS ("INT FRS") that are relevant to their operations and effective for the current financial year. The adoption of FRS 107 has resulted in the expansion of the disclosures in these financial statements regarding the Groups and the Companys financial instruments. The Group and the Company have also presented information regarding the objectives, policies and processes for managing capital as required by the amendments to FRS 1 (revised). FRS and INT FRS issued but not yet effective The Group and the Company have not adopted the following FRS and INT FRS that have been issued but not yet effective: Effective date (Annual periods beginning on or after) FRS 23 FRS 108 INT FRS 112 INT FRS 113 INT FRS 114 : Borrowing Costs (revised) : Operating Segments : Service Concession Arrangements : Customer Loyalty Programmes : FRS 19 The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction 1 January 2009 1 January 2009 1 January 2008 1 July 2008
1 January 2008
The Group and the Company expect that the adoption of the above pronouncements, if applicable will have no material impact on the financial statements in the period of initial application, except for FRS 23 (revised) and FRS 108 as indicated below. FRS 23, Borrowing Costs (revised) The revised standard removes the option to recognise immediately as an expense, borrowing costs that are attributable to qualifying assets, and requires an entity to capitalise borrowing costs directly attributable to the acquisition, construction or production of a qualifying asset as part of the cost of plant and equipment. FRS 108, Operating Segments FRS 108, requires an entity to adopt a management perspective approach in reporting financial and descriptive information about its reportable segment. Financial information is required to be reported on the basis that it is used internally for evaluating operating segment performance and deciding how to allocate resources to operating segments. FRS 108 introduces additional segment disclosures to be made to improve the information about the operating segments. The Group and the Company will apply FRS 23 (revised) and FRS 108 from annual period beginning 1 July 2009. _______________________________________________________________________________
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2.
Summary of significant accounting policies (Continued) (b) Basis of consolidation The consolidated financial statements comprise the financial statements of the Company and its subsidiaries made up to end of the financial year. The financial statements of the subsidiaries are prepared for the same reporting date as the parent company. The purchase method of accounting is used to account for the acquisition of subsidiaries. The cost of an acquisition is measured as the fair value of the assets given, equity instruments issued or 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 on the date of acquisition, irrespective of the extent of any minority interest. Subsidiaries are consolidated from the date on which control is transferred to the Group to the date on which that control ceases. In preparing the consolidated financial statements, inter-company transactions, balances and unrealised gains on transactions between group companies are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Where necessary, adjustments are made to the financial statements of subsidiaries to ensure consistency of accounting policies with those of the Group. (c) Subsidiaries Subsidiaries are entities (including special purpose entities) over which the Group has power to govern the financial and operating policies, generally accompanying a shareholding of more than one half of the voting rights. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Group controls another entity. Investments in subsidiaries are stated at cost on the Companys balance sheet less accumulated impairment in value, if any. (d) Plant and equipment Plant and equipment are initially recorded at cost. Subsequent to initial recognition, plant and equipment are stated at cost less accumulated depreciation and impairment in value, if any. The cost of plant and equipment includes expenditure that is directly attributable to the acquisition of the items. Dismantlement, removal or restoration costs are included as part of the cost of plant and equipment if the obligation for dismantlement, removal or restoration is incurred as a consequence of acquiring or using the plant and equipment. Subsequent expenditure relating to the plant and equipment that has already been recognised is added to the carrying amount of the asset when it is probable that the future economic benefits, in excess of the standard of performance of the asset before the expenditure was made, will flow to the Group and the Company and the cost can be reliably measured. Other subsequent expenditure is recognised as an expense during the financial year in which it is incurred.
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2.
Summary of significant accounting policies (Continued) (d) Plant and equipment (Continued) On disposal of an item of plant and equipment, the difference between the net disposal proceeds and its carrying amount is taken to the income statement. Depreciation is calculated on the straight-line method so as to write off the depreciable amount of the plant and equipment over the estimated useful lives as follows: Years Demo equipment Office equipment Furniture and fittings Renovation Motor vehicles 3 3 3 3 10
The residual values, useful life and depreciation method are reviewed at each balance sheet date to ensure that the residual values, period of depreciation and depreciation method are consistent with previous estimates and the expected pattern of consumption of the future economic benefits embodied in the items of plant and equipment. (e) Impairment of non-financial assets The carrying amounts of non-financial assets are reviewed at each balance sheet date to determine whether there is any indication of impairment in value and whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. If any such indication exists, or when annual impairment testing for an asset is required, the assets recoverable amount is estimated. An impairment in value is recognised whenever the carrying amount of an asset or its cash-generating unit exceeds its recoverable amount. A cash-generating unit is the smallest identifiable asset group that generates cash flows that largely are independent from other assets and groups of assets. Impairment in value is recognised in the income statement, unless it reverses a previous revaluation, credited to equity, in which case it is charged to equity. The recoverable amount of an asset or cash-generating unit is the higher of its fair value less costs to sell and its value in use. Recoverable amount is determined for individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets. If this is the case, the recoverable amount is determined for the cash-generating unit to which the assets belong. The fair value less costs to sell is the amount obtainable from the sale of an asset or cash-generating unit in an arms length transaction between knowledgeable, willing parties, less costs of disposal. Value in use is the present value of estimated future cash flows expected to be derived from the continuing use of an asset and from its disposal at the end of its useful life, discounted at pre-tax rate that reflects current market assessment of the time value of money and the risks specific to the asset or cash-generating unit for which the future cash flow estimates have not been adjusted.
_______________________________________________________________________________
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2.
Summary of significant accounting policies (Continued) (e) Impairment of non-financial assets (Continued) An assessment is made at each balance sheet date as to whether there is any indication that an impairment in value recognised in prior periods for an asset may no longer exist or may have decreased. If such indication exists, the recoverable amount is estimated. An impairment in value recognised in prior periods is reversed only if there has been a change in the estimates used to determine the recoverable amount since the last impairment in value was recognised. If that is the case, the carrying amount of the asset is increased to its recoverable amount. An impairment in value is reversed only to the extent that the assets carrying amount does not exceed the carrying amount that would have been determined, net of depreciation, if no impairment in value has been recognised. Reversals of impairment in value are recognised in the income statement unless the asset is carried at revalued amount, in which case the reversal in excess of impairment in value recognised in the income statement in prior periods is treated as a revaluation increase. After such a reversal, the depreciation is adjusted in future periods to allocate the assets revised carrying amount, less any residual value, on a systematic basis over its remaining useful life. (f) Inventories Inventories are stated at the lower of cost and net realisable value. Cost is determined on a first-in, first-out basis and includes all costs of purchase, costs of conversion and other costs incurred in bringing the inventories to their present location and condition. Net realisable value is the estimated selling price at which inventories can be realised in the ordinary course of business after allowing for the costs of realisation. Allowance is made for obsolete, slow-moving and defective inventories. (g) Financial assets The Group and the Company classify their financial assets as loans and receivables. The classification depends on the purpose of which the assets were acquired. The management determines the classification of the financial assets at initial recognition and re-evaluate this designation at the balance sheet date, where allowed and appropriate. (i) Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. Loans and receivables are classified within trade and other receivables and cash and cash equivalents on the balance sheets.
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2.
Summary of significant accounting policies (Continued) (g) Financial assets (Continued) Recognition and derecognition Regular purchases and sales of financial assets are recognised on trade-date, the date on which the Group and the Company commit to purchase or sell the asset. Financial assets are derecognised when the rights to receive cash flows from the financial assets have expired or have been transferred and the Group and the Company have transferred substantially all risks and rewards of ownership. On sale of a financial asset, the difference between the carrying amount and the net sale proceeds is recognised in the income statement. Initial and subsequent measurement Financial assets are initially recognised at fair value plus transaction costs. After initial recognition, loans and receivables are carried at amortised cost using the effective interest method, less impairment in value, if any. Effective interest method The effective interest method is a method of calculating the amortised cost of a financial instrument and of allocating interest income or expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts or payments through the expected life of the financial instrument, or where appropriate, a shorter period. Income and expense are recognised on an effective interest basis for debt instruments other than those financial instruments at fair value through profit or loss. Impairment The Group and the Company assess at each balance sheet date whether there is objective evidence that a financial asset or a group of financial assets is impaired. (i) Loans and receivables An allowance for impairment in value of loans and receivables is recognised when there is objective evidence that the Group and the Company will not be able to collect all amounts due according to the original terms of the receivables. The amount of allowance is the difference between the assets carrying amount and the present value of estimated future cash flows, discounted at the original effective interest rate. The carrying amount of the asset is reduced through the use of an allowance account. The amount of the loss is recognised in the income statement. If, in a subsequent period, the amount of the impairment in value decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised impairment in value is reversed either directly or by adjusting an allowance account. Any subsequent reversal of an impairment in value is recognised in the income statement, to the extent that the carrying amount of the asset does not exceed its amortised cost at the reversal date.
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2.
Summary of significant accounting policies (Continued) (h) Cash and cash equivalents Cash and cash equivalents consist of cash and bank balances and short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. (i) Financial liabilities The accounting policies adopted for specific financial liabilities are set out below: (i) Trade and other payables Trade and other payables are recognised initially at cost which represents the fair value of the consideration to be paid in the future, less transaction cost, for goods received or services rendered, whether or not billed to the Group and the Company, and are subsequently measured at amortised cost using the effective interest method. Gains or losses are recognised in the income statement when the liabilities are derecognised as well as through the amortisation process. Recognition and derecognition Financial liabilities are recognised on the balance sheets when, and only when, the Group and the Company become parties to the contractual provisions of the financial instrument. Financial liabilities are derecognised when the contractual obligation has been discharged or cancelled or expired. On derecognition of a financial liability, the difference between the carrying amount and the consideration paid is recognised in the income statement. (j) Equity instruments An equity instrument is any contract that evidences a residual interest in the assets of the Group and the Company after deducting all of its liabilities. Ordinary shares are classified as equity and recognised at the fair value of the consideration received by the Group and the Company. Incremental costs directly attributable to the issuance of new equity instruments are shown in the equity as a deduction from the proceeds.
41
2.
Summary of significant accounting policies (Continued) (k) Revenue recognition Revenue is measured at the fair value of the consideration received or receivable for the sale of goods in the ordinary course of business. Revenue is recognised to the extent that it is probable that the economic benefits will flow to the entity and the revenue can be reliably measured. Revenue is presented, net of rebates, discounts and sales related taxes. The Groups revenue is in respect of external transactions only. Revenue from sale of goods is recognised upon passage of title to the customer which coincides with the delivery and acceptance. Interest income is recognised on a time-proportion basis using the effective interest method. Sponsorship income is recognised upon public presentation for media advertising. Facilities fees income is recognised on a straight-line basis over the term of the service agreement. (l) Employee benefits Defined contribution plan Contributions to defined contribution plans are recognised as an expense in the income statement in the same financial year as the employment that gives rise to the contributions. Employee leave entitlement Employee entitlements to annual leave are recognised when they accrue to employees. An accrual is made for estimated liability for unutilised annual leave as a result of services rendered by employees up to the balance sheet date. (m) Leases When the Group and the Company are the lessees of a finance lease Leases in which the Group and the Company assume substantially the risks and rewards of ownership are classified as finance leases. Upon initial recognition, plant and equipment acquired through finance leases are capitalised at the lower of its fair value and the present value of the minimum lease payments. Any initial direct costs are also added to the amount capitalised. Subsequent to initial recognition, the asset is accounted for in accordance with the accounting policy applicable to that asset. Lease payments are apportioned between finance charge and reduction of the lease liability. The finance charge is allocated to each period during the lease term so as to achieve a constant periodic rate of interest on the remaining balance of the finance lease liability. Finance charge is recognised in the income statement.
42
2.
Summary of significant accounting policies (Continued) (m) Leases (Continued) When the Group and the Company are the lessees of operating leases Leases of assets in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases (net of any incentives received from the lessor) are recognised in the income statement on a straight-line basis over the period of the lease. When an operating lease is terminated before the lease period has expired, any payment required to be made to the lessor by way of penalty is recognised as an expense in the financial year in which termination takes place. Contingent rents are recognised as an expense in the income statement in the financial year in which they are incurred. (n) Income tax expense Income tax expense for the financial year comprises current and deferred taxes. Income tax expense is recognised in the income statement except to the extent that it relates to items recognised directly in equity, in which case such income tax is recognised in equity. Current income tax is the expected tax payable on the taxable income for the financial year, using tax rates enacted or substantively enacted at the balance sheet date, and any adjustment to income tax payable in respect of previous financial years. Deferred tax is provided, using the liability method, providing for temporary differences at the balance sheet date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes. Deferred tax is measured using the tax rates expected to be applied to the temporary differences when they are realised or settled, based on tax rates enacted or substantially enacted at the balance sheet date. Deferred tax assets are recognised only to the extent that it is probable that future taxable profits will be available against which the temporary differences can be utilised. Deferred tax assets are reviewed at each balance sheet date and reduced to the extent that it is no longer probable that the related tax benefit will be realised. Unrecognised deferred tax assets are reassessed at each balance sheet date and are recognised to the extent that it has become probable that future taxable profits will be available against which the temporary differences can be utilised. Deferred tax assets and liabilities are offset if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred taxes relate to the same tax authority and there is intention to settle the current tax assets and liabilities on a net basis.
43
2.
Summary of significant accounting policies (Continued) (o) Foreign currencies The individual financial statements of each entity in the Group are presented in the currency of the primary economic environment in which the entity operates (functional currency). The consolidated financial statements of the Group and the balance sheet of the Company are presented in Singapore dollar, which is the functional currency of the Company and the presentation currency for the consolidated financial statements. In preparing the financial statements, transactions in currencies other than the entitys functional currency (foreign currencies) are recorded at the rates of exchange prevailing on the date of the transaction. At each balance sheet date, monetary items denominated in foreign currencies are re-translated at the rates prevailing on the balance sheet date. Non-monetary items carried at fair value that are denominated in foreign currencies are re-translated at the rates prevailing on the date when the fair value was determined. Nonmonetary items that are measured in terms of historical cost in a foreign currency are not re-translated. Exchange differences arising on the settlement of monetary items and on re-translating of monetary items are included in the income statement for the financial year. Exchange differences arising on the re-translation of non-monetary items carried at fair value are included in the income statement for the financial year except for differences arising on the re-translation of non-monetary items in respect of which gains and losses are recognised directly in equity. For such non-monetary items, any exchange component of that gain or loss is also recognised directly in equity. For the purpose of presenting consolidated financial statements of the Group and the balance sheet of the Company, the results and financial position of the Groups entity that has a functional currency different from the presentation currency are translated into the presentation currency as follows: (i) (ii) assets and liabilities for the balance sheet presented are translated at the closing exchange rate at the date of the balance sheet; income and expenses for the income statement are translated at average exchange rate for the financial year (unless this average is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated using the exchange rates at the dates of the transactions); and the resulting exchange differences are recognised in the foreign currency translation reserve within equity.
(iii)
44
2.
Summary of significant accounting policies (Continued) (p) Dividends Interim dividends are recorded in the financial year in which they are declared payable. Final dividends on ordinary shares are recognised as a liability in the financial year in which the dividends are approved by the shareholders.
3.
Critical accounting judgements and key sources of estimation uncertainty (a) Critical judgements in applying the accounting policies In the process of applying the Groups and the Companys accounting policies, the management is of the opinion that there are no critical judgements involved that have a significant effect on the amounts recognised in the financial statements except as discussed below. (i) Impairment of investments in subsidiaries and financial assets The Group and the Company follow the guidance of FRS 36 and FRS 39 on determining whether an investment or a financial asset is other than temporarily impaired. This determination requires significant judgement. The Group and the Company evaluate, among other factors, the duration and extent to which the fair value of an investment or a financial asset is less than its cost and the financial health of and near-term business outlook for the investment or financial asset, including factors such as industry and sector performance, changes in technology and operational and financing cash flow. (b) Key sources of estimation uncertainty The key assumptions 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 and reported amounts of revenue and expenses within the next financial year, are discussed below. (i) Depreciation of plant and equipment Plant and equipment are depreciated on a straight-line basis over their estimated useful lives. The management estimates the useful lives of these assets to be within 3 to 10 years. The carrying amounts of the Groups and the Companys plant and equipment as at 30 June 2008 were approximately $437,000 and $229,000 (2007: $Nil and $310,000) respectively. Changes in the expected level of usage and technological developments could impact the economic useful lives and the residual values of these assets, therefore future depreciation charges could be revised.
45
3.
Critical accounting judgements and key sources of estimation uncertainty (Continued) (b) Key sources of estimation uncertainty (Continued) (ii) Allowance for inventory obsolescence Inventories are stated at the lower of cost and net realisable value. The management primarily determines cost of inventories using the first-in, first out method. The management estimates the net realisable value of inventories based on assessment of receipt or committed sales prices and provides for excess and obsolete inventories based on historical and estimated future demand and related pricing. In determining excess quantities, the management considers recent sales activities, related margin and market positioning of its products. However, factors beyond its control, such as demand levels and pricing competition, could change from period to period. Such factors may require the Group and the Company to reduce the value of their inventories. The carrying amounts of the Groups and the Companys inventories as at 30 June 2008 were approximately $5,528,000 and $4,725,000 (2007: $Nil and $3,828,000) respectively. (iii) Allowance for doubtful receivables The management establishes allowance for doubtful receivables on a case-by-case basis when they believe that payment of amounts owed is unlikely to occur. In establishing these allowances, the management considers the historical experience and changes to its customers financial position. If the financial conditions of receivables were to deteriorate, resulting in impairment of their abilities to make the required payments, additional allowances may be required. The carrying amounts of the Groups and the Companys trade and other receivables as at 30 June 2008 were approximately $3,822,000 and $6,091,000 (2007: $Nil and $3,181,000) respectively. (iv) Income taxes Significant judgements are involved in determining the Groups and the Companys income taxes. There are certain transactions and computations for which the ultimate tax determination is uncertain during the ordinary course of business. Where the final tax outcome of these matters differs from the amounts that were initially recognised, such differences will impact the current income tax and deferred tax provisions, in the financial year in which such determination is made. The carrying amounts of the Groups and the Companys current income tax payable as at 30 June 2008 were approximately $775,000 and $775,000 (2007: $Nil and $906,000) respectively. The carrying amounts of the Groups and the Companys deferred tax liabilities as at 30 June 2008 were approximately $51,000 and $51,000 (2007: $Nil and $51,000) respectively.
46
NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 30 JUNE 2008 (Continued)
4.
Plant and equipment
Group
Demo Office equipment equipment $000 $000 Furniture and fittings Renovation $000 $000
Motor vehicles $000
Total $000
Cost Balance at 1 July 2007 Additions Currency re-alignment Balance at 30 June 2008 31 31 134 208 (8) 334 42 94 (3) 133
343 55 (1) 397
52 52
550 409 (12) 947
Accumulated depreciation Balance at 1 July 2007 Depreciation charged for the financial year Currency re-alignment Balance at 30 June 2008 5 26 31 59 88 (2) 145
19 41 (1) 59
157 114 (1) 270
5 5
240 274 (4) 510
Net book value At 30 June 2008
189
74
127
47
437
47
48
4.
Plant and equipment (Continued)
Company
Demo equipment $000 Office equipment $000 Furniture and fittings Renovation $000 $000
Motor vehicles $000
Total $000
Cost Balance at 1 July 2007 Additions Balance at 30 June 2008 31 31 134 25 159 42 6 48
343 27 370
52 52
550 110 660
Accumulated depreciation Balance at 1 July 2007 Depreciation charged for the financial year Balance at 30 June 2008 5 26 31 59 43 102
18 14 32
157 104 261
5 5
239 192 431
Net book value At 30 June 2008 -
57
16
109
47
229
4.
Plant and equipment (Continued)
Company
Demo equipment $000
Office Furniture equipment and fittings Renovation $000 $000 $000
Total $000
Cost Balance at 1 July 2006 Additions Written off Balance at 30 June 2007 91 32 (92) 31 132 50 (48) 134
26 19 (3) 42
263 80 343
512 181 (143) 550
Accumulated depreciation Balance at 1 July 2006 Depreciation charged for the financial year Written off Balance at 30 June 2007 83 14 (92) 5
60 44 (45) 59
9 13 (3) 19
39 118 157
191 189 (140) 240
Net book value At 30 June 2007
26
75
23
186
310
49
4.
Plant and equipment (Continued) As at the balance sheet date, the net book value of motor vehicle of the Group and the Company which was acquired under finance lease arrangement was approximately $47,000 and $47,000 (2007: $Nil and $Nil) respectively. Finance leased asset is pledged as a security for the related finance lease liability (Note 10). For the purpose of consolidated cash flow statement, the Groups additions to plant and equipment were financed as follows: Group 2008 $000 Additions of plant and equipment Acquired under finance lease agreements Cash payments to acquire plant and equipment 409 (25) 384
5.
Investments in subsidiaries Company 2008 $000 Unquoted equity shares, at cost Acquisition of subsidiaries On 30 July 2007, the Company acquired 100% equity interest in Afor Sdn. Bhd. for a cash consideration of RM2. On 18 October 2007, the Company subscribed for additional 299,998 ordinary shares of RM1 each in Afor Sdn. Bhd. for a total consideration of RM299,998. On 20 November 2007, the Company acquired 100% equity interest in ACDC Technologies Pte. Ltd. for a consideration of $22,366. The purchase consideration was satisfied by the issue and allotment of 35,002 ordinary shares of the Company. Afor Sdn. Bhd. contributed revenue of approximately $4,474,000 and net loss of approximately $264,000 to the Group for the financial period from 30 July 2007 to 30 June 2008. ACDC Technologies Pte. Ltd. contributed revenue of approximately $Nil and net loss of approximately $6,000 to the Group for the financial period from 20 November 2007 to 30 June 2008. If the acquisitions had occurred from 1 July 2007, the Groups revenue would still remain at approximately $64,312,000 since there were no revenue earned from 1 July 2007 to the date of acquisitions of the subsidiaries. 165
2007 $000 -
50
5.
Investments in subsidiaries (Continued) Incorporation of a subsidiary On 6 May 2008, the Company incorporated a wholly-owned subsidiary, Epicentre Pte. Ltd., for a cash consideration of $2. The particulars of the subsidiaries are as follows: Name of company (Country of incorporation) Effective equity interest 2008 2007 % % 100 Principal activities
ACDC Technologies Pte. Ltd. (1) (Singapore) Epicentre Pte. Ltd. (2) (Singapore) Afor Sdn. Bhd. (3) (Malaysia)
Providing IT solutions to educational institutions within Singapore Dormant Retail of Apple brand products and complementary products
100 100
(1) Audited by BDO Raffles, Singapore. (2) Unaudited management financial statements were used for consolidation purposes as the subsidiary is not required to be audited as it is newly incorporated during the financial year. (3) Audited by BDO Binder, Malaysia, a member firm of BDO International.
The fair value of the identifiable assets and liabilities of the subsidiaries as at the date of acquisitions were: Carrying Recognised amounts on dates of before acquisitions combination $000 $000 Trade and other receivables Cash and bank balances Trade and other payables Net identifiable assets acquired Goodwill arising on acquisitions Goodwill written off Consideration satisfied by way of issue of shares Cash consideration paid Cash and bank balances acquired Net cash inflow for acquisition of subsidiaries * Denotes less than $1,000 The Directors of the Company are of the opinion that the goodwill arising on acquisitions of these subsidiaries are immaterial to the Group and consequently these have been written off in the income statement during the financial year. 32 29 (39) 22 13 (13) (22) * 29 29 32 29 (39) 22
51
6.
Inventories Group 2008 $000 Trading goods 5,528 Company 2008 $000 4,725
2007 $000 3,828
The cost of inventories recognised as an expense in the consolidated income statement and included in the cost of sales for the financial year ended 30 June 2008 amounted to approximately $52,498,000. 7. Trade and other receivables Group 2008 $000 Trade receivables - third parties - subsidiary - related party Advance payments to suppliers Other receivables Rental and other deposits Prepayments Due from subsidiaries - non-trade Due from related parties - non-trade Company 2008 $000
2007 $000
2,885 2,885 84 115 622 116 3,822
2,827 439 3,266 84 23 265 40 2,413 6,091
2,431 22 2,453 237 44 208 190 49 3,181
Trade receivables are non-interest bearing and generally on 30 to 60 days (2007: 30 to 60 days) terms. The trade amounts due from subsidiaries are unsecured, non-interest bearing and repayable within the normal credit terms. The non-trade amounts due from subsidiaries are unsecured, non-interest bearing and repayable on demand. Trade and other receivables are denominated in the following currencies: Group 2008 $000 Singapore dollar United States dollar Ringgit Malaysia 3,553 36 233 3,822 Company 2008 $000 6,055 36 6,091
2007 $000 3,007 174 3,181
52
8.
Cash and cash equivalents Group 2008 $000 Cash and bank balances Fixed deposits with banks Cash and cash equivalents as per balance sheets Fixed deposits pledged with banks Cash and cash equivalents as per consolidated cash flow statement 4,889 6,103 10,992 (2,103) 8,889 Company 2008 $000 3,348 6,103 9,451
2007 $000 3,151 363 3,514
Fixed deposits mature on varying dates between 30 to 365 days from the end of the financial year. The effective interest rates on the fixed deposits range from 0.1825% to 2.2% (2007: 0.1825% to 2.2%) per annum. The fixed deposits of the Group and of the Company amounting to approximately $2,103,000 and $2,103,000 (2007: $Nil and $363,000) respectively are pledged to banks for bankers guarantee issued on behalf of the Group and of the Company. As at 30 June 2008, the Group and the Company have banking facilities as follows: Group 2008 $000 Facilities granted Facilities utilised 20,961 2,168 Company 2008 $000 20,961 2,168
2007 $000 3,702 1,059
As at 30 June 2008, the Groups and the Companys banking facilities amounted to approximately $20,961,000 and $20,961,000 (2007: $Nil and $3,702,000) respectively were secured by fixed deposits with banks. Cash and cash equivalents are denominated in the following currencies: Group 2008 $000 Singapore dollar United States dollar Ringgit Malaysia 7,570 1,935 1,487 10,992 Company 2008 $000 7,541 1,910 9,451
2007 $000 3,377 137 3,514
53
9.
Trade and other payables Group 2008 $000 Trade payables - third parties Accrued operating expenses Other payables Due from a related party - non-trade 4,317 513 232 5,062 Company 2008 $000 3,994 450 214 4,658
2007 $000 4,556 14 100 2 4,672
Trade payables are unsecured, non-interest bearing, and are normally settled between 30 to 60 days (2007: 30 to 60 days) terms. Trade and other payables are denominated in the following currencies: Group 2008 $000 Singapore dollar United States dollar Ringgit Malaysia 2,013 2,933 116 5,062 Company 2008 $000 2,008 2,650 4,658
2007 $000 1,408 3,264 4,672
10.
Finance lease payable Minimum lease payments $000 Future finance charges $000 Present value of payments $000
Group and Company
2008 Within one financial year After one financial year but within five financial years
7 15 22
(1) (2) (3)
6 13 19
2007 Within one financial year The lease term is 4 years (2007: $Nil).
During the financial year, the effective interest rate for finance lease is 3.85% (2007: Nil%) per annum.
54
10.
Finance lease payable (Continued) Interest rates are fixed at the contract date, and thus expose the Group and the Company to fair value interest rate risk. All leases are on a fixed repayment basis and no arrangements have been entered into for contingent rental payments. The Groups and the Companys obligations under finance leases are secured by the lessors title to the leased assets, which will revert to the lessors in the event of default by the Group and the Company. The finance lease payable is denominated in Singapore dollar.
11.
Deferred tax liabilities Group 2008 $000 Balance at beginning of financial year Transferred from income statement Balance at end of financial year 51 51 Company 2008 $000 51 51
2007 $000 51 51
Deferred tax liabilities arise as a result of temporary differences between the tax written down values and the net book values of plant and equipment computed at statutory tax rate of 18% (2007: 18%). 12. Share capital
Group and Company 2008 No. of shares Issued and fully-paid At beginning of financial year Issue of new ordinary shares pursuant to the restructuring exercise New additional ordinary shares as a result of subdivision of ordinary shares Issue of ordinary shares pursuant to initial public offering exercise Share issue expenses At end of financial year Company 2007 No. of shares Group and Company 2008 $000 Company 2007 $000
315,006 35,002 350,008 69,651,592 23,500,000 93,501,600
315,006 315,006 315,006
315 35 350 7,755 (1,396) 6,709
315 315 315
55
AFOR LIMITED AND ITS SUBSIDIARIES NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 30 JUNE 2008 (Continued) 12. Share capital (Continued) On 20 November 2007, the Company acquired 100% equity interest in ACDC Technologies Pte. Ltd. for a consideration of $22,366. The purchase consideration was satisfied by the issue and allotment of 35,002 ordinary shares of the Company. On 5 December 2007, the Company sub-divided the issued ordinary shares of 350,008 into 200 ordinary shares. On 10 January 2008, the Company issued 23,500,000 ordinary shares at $0.33 for each share at cash pursuant to the Companys initial public offering. Included in the share issue expenses were professional fees paid to the auditors of the Company amounting to $180,000 in respect of the professional services rendered in connection with the Companys initial public offering. 13. Foreign currency translation reserve The foreign currency translation reserve comprises all foreign exchange differences arising from the translation of the financial statements of foreign operation whose functional currency is different from that of the Groups presentation currency and is non-distributable. Movements in this reserve are set out in the consolidated statement of changes in equity. 14. Revenue Revenue of the Group represents the invoiced value of goods sold less goods returned, discounts allowed and goods and services tax. 15. Other income Group 2008 $000 Interest income Facilities fees Sponsorship income Sundry income 22 92 196 105 415
56
16.
Profit before income tax The above is arrived at after charging: Group 2008 $000 Administrative expenses Bad trade receivables written off Depreciation of plant and equipment Directors fees - Directors of the Company Foreign exchange loss, net Goodwill on acquisition of subsidiaries written off Operating lease expenses Non-audit fees paid - auditors of the Company - other auditors of a subsidiary Staff costs - salaries, wages, and bonuses - contributions to defined contribution plans - other related employee expenses Selling and distribution costs Advertising and promotion Commission expenses Credit card charges
9 274 60 489 13 982 3 1 2,641 270 300
550 238 1,325
Included in the staff costs were Directors remuneration as shown in Note 21 to the financial statements. 17. Income tax expense Group 2008 $000 Current income tax - current financial year - underprovision in prior financial years
775 4 779
57
17.
Income tax expense (Continued) Reconciliation of effective income tax rate Group 2008 $000 Profit before income tax Income tax calculated at Singapores statutory income tax rate of 18% Effect of different income tax rate in other country Expenses not deductible for income tax purposes Singapores statutory stepped income tax exemption Underprovision of current income tax in prior financial years Deferred tax asset not recognised Others 4,047 728 (21) 31 (27) 4 50 14 779
Unrecognised deferred tax asset Group 2008 $000 Balance at beginning of financial year Amount not recognised Balance at end of financial year Deferred tax asset have not been recognised in respect of the following items: Group 2008 $000 Net unrealised foreign exchange loss Unutilised capital allowances 20 30 50 50 50
The above deferred tax assets relating to one of the subsidiaries, Afor Sdn. Bhd., have not been recognised as there is no certainty that there will be sufficient future taxable profits to realise these future benefits. Accordingly, these deferred tax assets have not been recognised in the consolidated financial statements of the Group in accordance with the accounting policy in Note 2(n) to the financial statements.
58
AFOR LIMITED AND ITS SUBSIDIARIES NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 30 JUNE 2008 (Continued) 18. Earnings per share The calculations for earnings per share are based on: Group 2008 Net profit after income tax attributable to equity holders of the Company ($000) Weighted average number of ordinary shares in issue during the financial year applicable to basic and diluted earnings per share Basic earnings per share (in cents) Diluted earnings per share (in cents) 3,268
50,906,850 6.42 6.42
Basic earnings per share is calculated by dividing the net profit after income tax attributable to equity holders of the Company by the weighted average number of ordinary shares in issue during the financial year. As the Group has no dilutive potential ordinary shares, the diluted earnings per share are equivalent to basic earnings per share. 19. Operating lease commitments Group and Company as lessees As at the balance sheet date, there were operating leases for rental payable in subsequent accounting periods as follows: Group 2008 $000 Within one financial year After one financial year but within five financial years 1,466 3,259 4,725 Company 2008 $000 914 2,182 3,096
2007 $000 743 407 1,150
The above operating lease commitments are based on existing rental rates. Some of the operating leases of premises provide for rentals based on percentage of sales derived from the rented premises.
59
AFOR LIMITED AND ITS SUBSIDIARIES NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 30 JUNE 2008 (Continued) 20. Segment information A segment is a distinguishable component of the Group that is engaged either in providing products or services (business segment), or in providing products or services within a particular economic environment (geographical segment), which is subject to risks and rewards that are different from those of other segments. Segment information is presented in respect of the Groups business and geographical segments. The primary format, business segments, is based on the Groups 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. Unallocated items mainly comprise corporate assets, liabilities and expenses. Segment capital expenditure is the total costs incurred during the financial year to acquire segment assets that are expected to be used for more than one financial year. Business segments The Group is primarily engaged in two business segments namely: (i) (ii) Apple brand products; and Third party and proprietary brand complementary products.
The Group adopts these two business segments for its primary segment information. Third party and proprietary brand Apple brand complementary products products $000 $000 2008 Revenue External revenue Inter-segment revenue Results Segment results Other income Profit before income tax Income tax expense Profit after income tax
Elimination Consolidated $000 $000
55,247 55,247 3,611
9,065 900 9,965 21
(900) (900) -
64,312 64,312 3,632 415 4,047 (779) 3,268
60
AFOR LIMITED AND ITS SUBSIDIARIES NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 30 JUNE 2008 (Continued) 20. Segment information (Continued) Business segments (Continued) Third party and proprietary brand Apple brand complementary products products $000 $000 2008 Assets and liabilities Segment assets Segment liabilities Current income tax payable Deferred tax liabilities Total liabilities Capital expenditure Depreciation
Elimination Consolidated $000 $000
20,441 6,814
3,354 1,118
(3,016) (2,851)
20,779 5,081 775 51 5,907 409 274
351 235
58 39
Geographical segments The Groups business segments operate in two main geographical areas. Sales revenue is based on the country in which the customers are located. Segment assets consist primarily of plant and equipment, inventories, trade and other receivables, cash and cash equivalents. Capital expenditure comprise of additions to plant and equipment. Segment assets and capital expenditure are shown by the geographical area in which the assets are located. Singapore $000 2008 Revenue External revenue Assets Segment assets Capital expenditure Malaysia $000 Elimination Consolidated $000 $000
60,738
4,474
(900)
64,312
21,039 111
2,756 298
(3,016) -
20,779 409
61
AFOR LIMITED AND ITS SUBSIDIARIES NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 30 JUNE 2008 (Continued) 21. Significant related party transactions For the purpose of these financial statements, parties are considered to be related to the Group or the Company if the Group or the Company have the ability, directly or indirectly, to control the party or exercise significant influence over the party in making financial and operating decisions, or vice versa, or where the Group or the Company and the party are subject to common control or common significant influence. Related parties may be individuals or other entities. In addition to the information disclosed elsewhere in the financial statements, the following are significant related party transactions at rates and terms agreed between the parties: Company 2008 $000 Subsidiaries Sales to subsidiaries Settlement of liabilities on behalf of subsidiaries Settlement of liabilities on behalf by a subsidiary Related parties Sales to related parties Settlement of liabilities on behalf of related parties Settlement of liabilities on behalf by related parties Advances to related parties Receipt of monies on behalf of a related party Directors Companys banking facilities supported by personal guarantee given by a Director of the Company Fixed deposits with banks held in trust by certain Directors of the Company Compensation of key management personnel The remuneration of Directors and other members of key management of the Group and of the Company during the financial year are as follows: Group 2008 $000 Short-term benefits Post-employment benefits 940 23 963 Company 2008 $000 940 23 963
2007 $000
900 3,434 130
21 161 52 15 176
1,370 363
2007 $000 458 16 474
62
22.
Financial risk management (i) Financial risk The Groups and the Companys activities expose them to a variety of financial risks: credit risk, market risk (including currency risk and interest rate risk) and liquidity risk. The Group and the Company have adopted risk management policies and utilise a variety of techniques to manage exposure to the financial risks. (a) Credit risk Credit risk refers to the risk that counterparty will default on its contractual obligations resulting in a loss to the Group and the Company. The Group does not have any significant credit exposure to any single counterparty or any group of counterparties having similar characteristics. The Company has significant credit exposure arising from the non-trade amounts due from subsidiaries amounting to approximately $2,413,000 (2007: $Nil) as at the balance sheet date. As the Group and the Company do not hold any collateral, the maximum exposure to credit risk for each class of financial instrument is the carrying amount of that class of financial instrument. The Groups and Companys major classes of financial assets are bank deposits and trade receivables. The table below is an analysis of trade receivables as at 30 June 2008. Group 2008 $000 Not past due and not impaired Past due Total trade receivables 2,389 496 2,885 Company 2008 $000 2,770 496 3,266
2007 $000 2,265 188 2,453
63
22.
Financial risk management (Continued) (i) Financial risk (Continued) (a) Credit risk (Continued) The age analysis of past due trade receivables but not impaired is as follows: Group 2008 $000 Past due 61 - 90 days Past due more than 90 days 131 365 496 Company 2008 $000 131 365 496
2007 $000 78 110 188
Based on historical default rates, the Group and the Company believe that no impairment in value is necessary in respect of trade receivables past due as the management has a credit policy in place to monitor the exposure to credit risk on an ongoing basis. These receivables are mainly arising by customers that have a good collection track record with the Group and the Company. (b) Market risk (i) Currency risk Currency rate risks arise from transactions denominated in currencies other than the respective functional currencies of the entities in the Group. In addition, the Company has investment in foreign operations, whose net assets are exposed to currency translation risk. The Group and the Company do not hedge their foreign currency exposure using derivative financial instruments. The Group and the Company manage foreign currency risks by close monitoring of the timing of inception and settlement of the foreign currency transactions.
64
22.
Financial risk management (Continued)
(i)
Financial risk (Continued)
(b) Market risk (Continued)
(i) Currency risk (Continued)
The Groups currency exposure based on the information available to key management is as follows:
Financial assets Financial liabilities
2008
Trade and other receivables, excluding advance to suppliers and prepayments Cash and cash equivalents Total $000 10,930 1,971 1,713 14,614 $000 (2,013) (2,933) (116) (5,062) Trade and other payables $000 7,570 1,935 1,487 10,992 Finance lease payables $000 (19) (19) $000 3,360 36 226 3,622
Total $000 (2,032) (2,933) (116) (5,081)
Net financial assets/ (liabilities) $000 8,898 (962) 1,597 9,533
Net financial assets denominated in the respective entities functional currencies $000 (8,530) (1,598)
Currency exposure $000 368 (962) (1)
Singapore dollar United States dollar
Ringgit Malaysia
AFOR LIMITED
65
66
Financial assets Financial liabilities Cash and cash equivalents Total $000 13,472 1,946 15,418 $000 (2,008) (2,650) (4,658) Trade and other payables $000 7,541 1,910 9,451 Finance lease payables $000 (19) (19) Total $000 (2,027) (2,650) (4,677) Net financial assets/ (liabilities) $000 11,445 (704) 10,741 Net financial assets denominated in the respective entities functional currencies $000 (11,445) Currency exposure $000 (704) $000 5,931 36 5,967
22.
(i)
The Companys currency exposure based on the information available to key management is as follows:
2008
Trade and other receivables, excluding advance to suppliers and prepayments
22.
(i)
The Companys currency exposure based on the information available to key management is as follows:
Financial assets Financial liabilities
2007
Trade and other receivables, excluding advance to suppliers and prepayments Cash and cash equivalents Total $000 5,957 311 6,268 $000 (1,408) (3,264) (4,672) Trade and other payables $000 3,377 137 3,514 Finance lease payables $000 $000 2,580 174 2,754
Total $000 (1,408) (3,264) (4,672)
Net financial assets/ (liabilities) $000 4,549 (2,953) 1,596
Net financial assets denominated in the respective entities functional currencies $000 (4,549) -
Currency exposure $000 (2,953)
67
AFOR LIMITED AND ITS SUBSIDIARIES NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 30 JUNE 2008 (Continued) 22. Financial risk management (Continued) (i) Financial risk (Continued) (b) Market risk (Continued) (i) Currency risk (Continued) Foreign currency sensitivity The Group transacts business mainly in Singapore dollar, Ringgit Malaysia and United States dollar. The following table details the sensitivity to a 5% increase and decrease in Singapore dollar against the relevant foreign currencies. 5% is the sensitivity rate used when reporting foreign currency risk. The sensitivity analysis includes only outstanding foreign currency denominated monetary items and adjusts their translation at the financial year end for a 5% change in foreign currency rates. 2008 $000
Group Ringgit Malaysia Strengthened 5% Weakened 5% United States dollar Strengthened 5% Weakened 5%
(80) 80
48 (48)
The potential impact on the income statement of the Group as described in the sensitivity analysis above is attributable mainly to the Groups foreign exchange rate exposure on receivables and payables at financial year end. (ii) Interest rate risk The Groups and the Companys exposure to market risk for changes in interest rates relates primarily to finance lease liability as shown in Note 10 to the financial statements. The Groups and the Companys results are affected by changes in interest rates due to the impact of such changes on interest income and expenses from time deposit and interest-bearing finance lease liability which are at floating interest rates. It is the Groups and the Companys policy to obtain quotes from reputable banks to ensure that the most favourable rates are made available to the Group and the Company.
68
AFOR LIMITED AND ITS SUBSIDIARIES NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 30 JUNE 2008 (Continued) 22. Financial risk management (Continued) (i) Financial risk (Continued) (c) Liquidity risk Liquidity risks refer to the risks in which the Group and the Company encounter difficulties in meeting short-term obligations. Liquidity risks are managed by matching the payment and receipt cycle. The Group and the Company manage their debt maturity profile, operating cash flows and the availability of funding so as to ensure that all repayment and funding needs are met. As part of the overall prudent liquidity management, the Group and the Company maintain sufficient levels of cash and available banking facilities to meet their working capital requirements. The table below analyses the maturity profile of the Groups and Companys financial liabilities based on contractual undiscounted cash flows. After one financial year but within five financial years $000
Group 2008
Within one financial year $000
Financial liabilities Trade payables Other payables and accrued operating expenses Finance lease payable Company 2008 Financial liabilities Trade payables Other payables and accrued operating expenses Finance lease payable 2007 Financial liabilities Trade payables Other payables and accrued operating expenses
4,317 745 6
13
3,994 664 6
13
4,556 116
69
AFOR LIMITED AND ITS SUBSIDIARIES NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 30 JUNE 2008 (Continued) 22. Financial risk management (Continued) (ii) Capital risk management policies and objectives The Group manages its capital to ensure that entities in the Group will be able to continue as going concern and to maintain an optimal capital structure so as to maximise shareholder value. The capital structure of the Group consists of debt, which includes the finance lease payable, cash and cash equivalents and equity attributable to equity holders of the Company, comprising issued capital, foreign currency translation reserve and accumulated profits. In order to maintain or achieve an optimal capital structure, the Group may, in the future, issue new shares, make dividend payment or obtain new borrowings. (iii) Fair value of financial assets and financial liabilities The carrying amounts of the Groups and the Companys current financial assets and financial liabilities approximate their respective fair values as at balance sheet date due to the relatively short-term maturity of these financial instruments. The fair value of noncurrent liability in relation to finance lease payable is disclosed in Note 10 to the financial statements. 23. Contingent liabilities Company As at the balance sheet date, there was a contingent liability in respect of the bankers guarantee provided by the Company on behalf of a subsidiary approximately $410,000 (US$300,000) (2007: $Nil). In the opinion of the Directors of the Company after considering the operating results and financial position of the subsidiary, no loss will rise and accordingly, no provision has been made in the financial statements for the amount guaranteed. 24. Comparative figures This is the first set of consolidated financial statements as the Company acquired its subsidiaries only during this current financial year hence there are no comparative figures for the Group. 25. Events subsequent to the balance sheet date Subsequent to 30 June 2008, the Directors of the Company recommended a first and final exempt (one-tier) dividend of $0.02 per share in respect of the financial year ended 30 June 2008, subject to the approval of the members at the forthcoming Annual General Meeting. These financial statements do not reflect this dividend, which will be accounted for in shareholders equity as an appropriation of accumulated profits in the financial year ending 30 June 2009.
70
AFOR LIMITED
STATISTICS OF SHAREHOLDINGS AS AT 23 SEPTEMBER 2008 Issued and fully paid-up capital Class of shares Voting rights Treasury shares
**
: : : :
S$8,105,008** Ordinary share 1 vote per share Nil
This is based on records kept with the Accounting & Corporate Regulatory Authority (ACRA) and differs from the accounting records of the Company which is S$6,708,737.53 due to certain share issue expenses.
DISTRIBUTION OF SHAREHOLDINGS NO. OF SHAREHOLDERS 0 551 92 9 652
SIZE OF SHAREHOLDINGS 1 - 999 1,000 - 10,000 10,001 - 1,000,000 1,000,001 AND ABOVE TOTAL
% 0.00 84.51 14.11 1.38 100.00
NO. OF SHARES 0 2,223,000 10,251,000 81,027,600 93,501,600
% 0.00 2.38 10.96 86.66 100.00
TWENTY LARGEST SHAREHOLDERS NO. OF SHARES NO. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 NAME FONG TECK LOON JOHNSON GOH ANN ANN LAM WAI HENG ROWSLEY SPORTS PTE LTD DMG & PARTNERS SECURITIES PTE LTD CHALLENGER TECHNOLOGIES LTD DBS VICKERS SECURITIES (S) PTE LTD MERRILL LYNCH (SINGAPORE) PTE LTD UNITED OVERSEAS BANK NOMINEES PTE LTD ABN AMRO NOMINEES SINGAPORE PTE LTD KIM ENG SECURITIES PTE. LTD. BRENDA YEO UOB KAY HIAN PTE LTD TAN WANG CHEOW NG CHWEE LIAN NATALIE AMANDA TAN CHOON KEAT TONY CHUA CHAI TIANG BNP PARIBAS NOMINEES SINGAPORE PTE LTD GOH TZE HONG (WU ZIHONG) CHAK LEE HUNG MARGARET TOTAL 50,837,800 9,450,000 5,933,800 4,968,000 4,962,000 1,500,000 1,206,000 1,160,000 1,010,000 1,000,000 813,000 630,000 450,000 400,000 299,000 250,000 243,000 218,000 200,000 180,000 85,710,600
% OF ISSUED SHARE CAPITAL
54.37 10.11 6.35 5.31 5.31 1.60 1.29 1.24 1.08 1.07 0.87 0.67 0.48 0.43 0.32 0.27 0.26 0.23 0.21 0.19 91.66
71
SUBSTANTIAL SHAREHOLDERS AS AT 23 SEPTEMBER 2008 (As recorded in the Register of Substantial Shareholders)
NAME FONG TECK LOON (1) JOHNSON GOH ANN ANN BRENDA YEO (1) LAM WAI HENG ROWSLEY SPORTS PTE. LTD. ROWSLEY LTD (2) GARVILLE PTE LTD (2) LIM ENG HOCK (2) Notes:
** (1) (2)
DIRECT INTEREST NO. OF SHARES % 51,629,800** 9,450,000 630,000 5,933,800 4,801,000 55.22 10.11 0.67 6.35 5.13 -
DEEMED INTEREST NO. OF SHARES % 630,000 51,629,800 4,801,000 4,801,000 4,801,000 0.67 55.22 5.13 5.13 5.13
Includes 792,000 shares held by DMG & Partners Securities Pte Ltd. Jimmy Fong Teck Loon is deemed to be interested in the shares held by his wife, Brenda Yeo and vice versa. Deemed to be interested in the shares held by Rowsley Sports Pte. Ltd. by virtue of Section 7 of the Companies Act, Cap 50.
PERCENTAGE OF SHAREHOLDING IN PUBLIC'S HAND AS AT 23 SEPTEMBER 2008 Approximately 14.19% of the issued share capital of the Company are held in the hands of public. Accordingly, the Company has complied with Rule 723 of the Listing Manual of the SGX-ST.
72
AFOR LIMITED
(Company Registration No. 200202930G) (Incorporated in the Republic of Singapore)
NOTICE OF ANNUAL GENERAL MEETING NOTICE IS HEREBY GIVEN that the Annual General Meeting of Afor Limited (the Company) will be held at 1 Orchid Club Road, Orchid Country Club, Sapphire 1, Singapore 769162 on Thursday, 30 October 2008 at 2.30 p.m. for the following purposes :As Ordinary Business 1. To receive and adopt the Audited Financial Statements for the financial year ended 30 June 2008 together with the Directors Report and the Auditors Report thereon. To declare a first and final dividend of 2 cents per ordinary share (One-Tier Tax Exempt) for the financial year ended 30 June 2008. To approve the payment of Directors fees of S$100,000 for the financial year ended 30 June 2008. (FY2007: Nil) To re-elect Ms Brenda Yeo who is retiring pursuant to Article 93 of the Companys Articles of Association. To re-elect Mr Liu Zhipeng who is retiring pursuant to Article 93 of the Companys Articles of Association. Mr Liu Zhipeng will, upon re-election as a Director of the Company, remain as Chairman of the Nominating Committee and a member of the Audit Committee and Remuneration Committee. Mr Liu is considered as an independent director. 6. To re-appoint Messrs BDO Raffles as the Companys Auditors and to authorise the Directors to fix their remuneration. To transact any other ordinary business which may properly be transacted at an Annual General Meeting. Resolution 6 Resolution 1
2.
Resolution 2
3.
Resolution 3
4.
Resolution 4
5.
Resolution 5
7.
As Special Business To consider and, if thought fit, to pass the following resolutions as Ordinary Resolution, with or without modifications:8. Authority for Directors to allot and issue new shares in the capital of the Company That pursuant to Section 161 of the Companies Act, Cap. 50 and Rule 806 of the Listing Manual of the Singapore Exchange Securities Trading Limited (the Listing Rules), authority be and is hereby given to the Directors of the Company to allot and issue:(a) (b) (c) (d) shares; or convertible securities; or additional convertible securities issued pursuant to Rule 829 of the Listing Rules; or shares arising from the conversion of securities in (b) and (c) above, Resolution 7
in the Company (whether by way of rights, bonus or otherwise) at any time to such persons and upon such terms and conditions and for such purposes as the Directors may in their absolute discretion deem fit, provided that:
73
(i)
the aggregate number of shares and convertible securities to be allocated and issued pursuant to this resolution must be not more than fifty per centum (50%) of the issued share capital of the Company (calculated in accordance with (ii) below), of which the aggregate number of shares and convertible securities issued other than on a pro rata basis to existing shareholders must be not more than twenty per centum (20%) of the issued share capital of the Company (calculated in accordance with (ii) below); and for the purpose of determining the number of shares and convertible securities that may be issued pursuant to (i) above, the percentage of issued share capital shall be calculated based on the Companys issued share capital at the time of the passing of this resolution after adjusting for (a) new shares arising from the conversion or exercise of convertible securities; (b) new shares arising from exercising share options or vesting of share awards outstanding or subsisting at the time of the passing of this resolution and (c) any subsequent consolidation or subdivision of shares.
(ii)
Unless revoked or varied by ordinary resolution of the shareholders of the Company in general meeting, this resolution shall remain in force until the conclusion of the next Annual General Meeting of the Company or the date by which the next Annual General Meeting of the Company is required by law to be held, whichever is the earlier. [see Explanatory Note (a)] By Order of the Board Tham Lee Meng Company Secretary Singapore, 14 October 2008
Explanatory Notes: (a) Resolution No. 7, if passed, will empower the Directors from the date of the above Meeting until the date of the next Annual General Meeting, to allot and issue shares and convertible securities in the Company. The number of shares and convertible securities that the Directors may allot and issue under this Resolution would not exceed fifty per centum (50%) of the issued capital of the Company at the time of the passing of this resolution. For issue of shares and convertible securities other than on a pro rata basis to all shareholders, the aggregate number of shares and convertible securities to be issued shall not exceed twenty per centum (20%) of the issued capital of the Company. The percentage of issued capital is based on the Companys issued capital after adjusting for (a) new shares arising from the conversion of convertible securities or employee share options on issue at the time this proposed Ordinary Resolution is passed, and (b) any subsequent consolidation or subdivision of shares.
Notes: 1. A member entitled to attend and vote at the Annual General Meeting of the Company is entitled to appoint not more than two proxies to attend and vote in his/her stead. A proxy need not be a member of the Company. If the appointor is a corporation, the instrument appointing a proxy must be executed under seal or the hand of its duly authorized officer or attorney. The instrument of proxy must be deposited at the Business Office of the Company at 545 Orchard Road, Far East Shopping Centre #12-11, Singapore 238882, not less than 48 hours before the time appointed for holding the Meeting.
2. 3.
74
IMPORTANT: 1. For investors who have used their CPF monies to buy AFOR LIMITED's shares, this Report is forwarded to them at the request of the CPF approved Nominees and is sent solely FOR INFORMATION ONLY. This Proxy Form is not valid for use by CPF investors and shall be ineffective or all intents and purposes if used or purported to be used by them. CPF investors who wish to attend the Meeting as an observer must submit heir requests through their CPF Approved Nominees within the time frame specified. If they also wish to vote, they must submit their voting instructions o the CPF Approved Nominees within the time frame specified to enable them to vote on their behalf.
AFOR LIMITED
(Company Registration No.: 200202930G) (Incorporated in the Republic of Singapore)
2.
PROXY FORM
(Please see notes overleaf before completing this Form)
3.
I/We, ___________________________________________________________________________________________ of _____________________________________________________________________________________________ being a member/members of AFOR LIMITED, (the Company), hereby appoint: Name Address: and/or (delete as appropriate) Name Address: or failing him/her, the Chairman of the Meeting as my/our proxy to vote for me/us on my/our behalf, if necessary to demand a poll, at the Annual General Meeting of the Company to be held on Thursday, 30 October 2008 at 2.30 p.m. and at any adjournment thereof. The proxy is to vote on the business before the Meeting as indicated below. If no specific direction as to voting is given, the proxy will vote or abstain from voting at his/her discretion, as he/she will on any other matter arising at the Meeting. Please indicate your vote For or Against with an X within the box provided. To be used on a show of hands No 1 2 3 4 5 6 7 Resolutions relating to: Adoption of Audited Financial Statements, Directors' Report and Auditors' Report for the financial year ended 30 June 2008 Payment of proposed first and final dividend Approval of Directors' fees amounting to $100,000 for the financial year ended 30 June 2008 Re-election of Ms Brenda Yeo as a Director Re-election of Mr Liu Zhipeng as a Director Re-appointment of Messrs BDO Raffles as Auditors and authority for Directors to fix their remuneration Authority for Directors to allot and issue new shares
For** Against**
NRIC/Passport No.
Proportion of Shareholdings No. of Shares %
NRIC/Passport No.
Proportion of Shareholdings No. of Shares %
To be used in the Event of a Poll

For** Against**
** Please indicate your vote For or Against with an X within the box provided. *** If you wish to exercise all your votes For or Against, please indicate (X) within the box provided. Alternatively, please indicate the number of votes as appropriate.
Dated this _______ day of ________________ 2008

Total Number of Shares in (a) CDP Register (b) Register of Members No. of shares
________________________________________________________ Signature(s) of Member(s) or Common Seal of Corporate Shareholder
75
Notes: 1. Please insert the total number of Shares held by you. If you have Shares entered against your name in the Depository Register (as defined in Section 130A of the Singapore Companies Act, Cap. 50), you should insert that number of Shares. If you have shares registered in your name in the Register of Members, you should insert that number of Shares. If you have Shares entered against your name in the Depository Register and Shares registered in your name in the Register of Members, you should insert the aggregate number of Shares entered against your name in the Depository Register and registered in your name in the Register of Members. If no number is inserted, the instrument appointing a proxy or proxies shall be deemed to relate to all the Shares held by you. A member of the Company entitled to attend and vote at a meeting of the Company is entitled to appoint one or two proxies to attend and vote in his/her stead. A proxy need not be a member of the Company. Where a member appoints two proxies, the proportion of the shareholding concerned to be represented by each proxy shall be specified in the form of proxy. If no proportion is specified, the Company shall be entitled to treat the first named proxy as representing the entire number of shares and any second named proxy as an alternate to the first named or at the Companys option, to treat the instrument of proxy as invalid. The instrument appointing a proxy or proxies must be deposited at the Business Office of the Company at 545 Orchard Road, Far East Shopping Centre #12-11, Singapore 238882, not less than forty-eight (48) hours before the time appointed for the Annual General Meeting. The instrument appointing a proxy or proxies must be under the hand of the appointor or of his attorney duly authorised in writing. Where the instrument appointing a proxy or proxies is executed by a corporation, it must be executed either under its seal or under the hand of an officer or attorney duly authorised. A corporation which is a member may authorise by resolution of its directors or other governing body such person as it thinks fit to act as its representative at the Annual General Meeting, in accordance with Section 179 of the Singapore Companies Act, Cap. 50.
2. 3.
4.
5.
6.
General: The Company shall be entitled to reject the instrument appointing a proxy or proxies if it is incomplete, improperly completed or illegible or where the true intentions of the appointor are not ascertainable from the instructions of the appointor specified in the instrument appointing a proxy or proxies. In addition, in the case of Shares entered in the Depository Register, the Company may reject any instrument appointing a proxy or proxies lodged if the members, being the appointor, is not shown to have shares entered against his name in the Depository Register as at forty-eight (48) hours before the time appointed for holding the Annual General Meeting, as certified by The Central Depository (Pte) Limited to the Company.
76
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