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Contents
Corporate Information Chairmans Statement Profile Of Directors Corporate Governance Statement Audit Committee Report Statement On Internal Control Directors Report Statement By Directors Statutory Declaration Report Of The Independent Auditors Statements Of Financial Position Statements Of Comprehensive Income Statements of Changes in Equity Statements Of Cash Flows Notes To The Financial Statements Analysis Of Shareholdings Notice Of Annual General Meeting Statement Accompanying Notice of Annual General Meeting Proxy Form 2-3 4 5-7 8-12 13-15 16 17-20 21 21 22-23 24-25 26 27 28-29 30-64 65-67 68-69 70 71
Corporate Information
BOARD OF DIRECTORS Lai Ka Wai (Executive Director) Yuen Chun Fai (Executive Director) (Appointed on 25.4.2012) Lee Chee Cheng (Independent Non-Executive Director) Lee Choong Kin (Independent Non-Executive Director) (Appointed on 3.4.2012) Chua Hwa Nian (Independent Non-Executive Director) (Appointed on 20.4.2012) Wong Chook Ping (Non-Executive Chairman) (Resigned on 3.4.2012) Por Yew Guan (Independent Non-Executive Director) (Resigned on 20.4.2012) Wong Kek Wei (Managing Director) (Resigned on 22.6.2012)
AUDIT COMMITTEE Chairman: Lee Chee Cheng Member: Lee Choong Kin (Appointed on 3.4.2012) Member: Chua Hwa Nian (Appointed on 20.4.2012) Member: Wong Chook Ping (Resigned on 3.4.2012)
REMUNERATION COMMITTEE Chairman: Lee Chee Cheng Member: Lee Choong Kin (Appointed on 3.4.2012) Member: Chua Hwa Nian (Appointed on 20.4.2012) Member: Wong Chook Ping (Resigned on 3.4.2012)
NORMINATION COMMITTEE Chairman: Lee Chee Cheng Member: Lai Ka Wai Member: Chua Hwa Nian (Appointed on 20.4.2012) Member: Por Yew Guan (Resigned on 20.4.2012)
REGISTERED OFFICE Ground Floor, No.8, Lorong Universiti B Section 16, 46350 Petaling Jaya Selangor Darul Ehsan Tel:03-7956 5889 Fax:03-7958 7889
Corporate Information
PRINCIPAL PLACE OF BUSINESS Suite 11.07, Level 11, The Garden South Tower Mid Valley City, Lingkaran Syed Putra 59200 Kuala Lumpur
SHARE REGISTRAR Symphony Share Registrars Sdn Bhd Level 6, Symphony House Pusat Dagangan Dana 1 Jalan PJU 1A/46 47301 Petaling Jaya Selangor Darul Ehsan
PRINCIPAL BANKERS AmInvestment Services Berhad The Hongkong and Shanghai Banking Corporation Limited
STOCK EXCHANGE LISTING ACE Market of Bursa Malaysia Securities Berhad (Bursa Securities)
Chairmans Statement
On behalf of the Board of the Directors, I am pleased to present the Annual Report and Audited Financial Statements of Cybertowers Berhad for the financial year ended 31 August 2012.
Financial Highlights For the financial year ended (FYE) 31 August 2012, the group registered a revenue of RM12.66 million, representing an increase of RM 8.42 million as compared to RM4.24 million in the previous FYE 31 August 2011. The Group also recorded a consolidated profit after tax of RM 1.95 million as compared to profit after tax of RM 0.12 million the last year. The increase in revenue and operating profit were mainly due to the increase in sales to new and existing customers and efforts are still being made to secure more opportunities to enhance the groups activities.
Prospects During the FYE 31 August 2012, the Company made a strategic decision to incorporate subsidiaries in Hong Kong and Malaysia to streamline its operation. We strive to provide better services and solutions, and at the same time, cater for future growth of the group. Overall, the group was able to achieve better contribution from revenue and profit for the year under review, and we strive to upkeep this in the coming year. The group also shows a better financial position with net cash balances increasing to RM 3.1 million as compared to RM 1.3 million last year as a result of implementation of business strategy and prudent financial management. The Board expects that the stiff competition in the AVL market may continue as competition remains strong and due to overall slowdown in global economies. Barring unforeseen circumstances, the Board will continue improving gains and various costs containments, effective deployment of financial resources to optimise returns, increase market share and undertake other measures.
Acknowledgement and Appreciation On behalf of the Board, I would like to thank all our staff and management for their perseverance in tackling the challenges and for their contributions in 2012. The Board also wishes to record a vote of thanks to our fellow Directors for their counsel and contributions to the Group during their tenure of office. I would also take this opportunity to express the appreciation of the Board of the continuous support given by our shareholders and business associates during the year.
Profile Of Directors
MR. LAI KA WAI
Hong Kong citizen, aged 40, is an Executive Director of the Company, was appointed to the Board of Directors on 24 August 2011. He is also a member of the Nomination Committee of the Company. He has a Bachelor Degree of Science from University of Toronto. He has over 11 years experience in technology research and development for various technologies such as Short Messaging Service (MMS) and JAYA (programming language). He is currently an information technology consultant. Mr. Lai has no direct or indirect shareholdings in the Company. He does not have any family relationship with any Director of the Company, nor any conflict of interest in any business arrangement involving the Company. He has had no convictions for any offences within the past ten years.
Profile Of Directors
MR. LEE CHEE CHENG
Malaysian, aged 43, is an Independent Non-Executive Director of the Company, was appointed to the Board of Directors on 16 August 2011. He is also the Chairman of Audit Committee, Remuneration Committee and Nomination Committee of the Company. He obtained his professional qualification with the Association of Chartered Certified Accountant, United Kingdom in 1997 and is also a member of the Malaysian Institute of Accountants. He began his career with Deloitte Kassim Cham, one of the big 5 public accounting firms in 1993. He has in total 17 years of working experience in audit and commercial sectors specializing in retailing and ICT industry in Malaysia. Mr. Lee has no direct or indirect shareholdings in the company. He does not have any family relationship with any Director of the Company, nor any conflict of interest in any business arrangement involving the Company. He has had no convictions for any offences within the past ten years. He holds directorship in Gpro Technologies Berhad.
Profile Of Directors
MR. CHUA HWA NIAN
Malaysian, aged 32, is an Independent Non-Executive Director of the Company, was appointed to the Board of Directors on 20 April 2012. He is also the member of Audit Committee, Remuneration Committee and Nomination Committee of the Company. He holds a Bachelor of Information System Engineering from University of Campbell United State and a Masters of Business degree in Financing from Open University, Malaysia. He began his career in Tiong Nam Logistic Solution, one of famous logistic company in present. He has over 9 years working experience in logistic sectors specializing in supply chain, distribution and operating industry. Mr. Chua has no direct or indirect shareholdings in the Company. He does not have any family relationship with any Director of the Company, nor any conflict of interest in any business arrangement involving the Company. He has had no convictions for any offences within the past ten years.
The number of Directors whose aggregate remuneration for financial year ended 31 August 2012 is as follows:Executive (RM000) 57 97 154 Non-Executive (RM000) 71 71
C.
ACCOUNTABILITY AND AUDIT (a) Financial Reporting The Board has ensured that the annual financial statements presented to the shareholders and the quarterly results announced to Bursa Securities present a fair assessment of the Companys position and prospects. The Audit Committee assists Board in ensuring the accuracy, adequacy and completeness of information for disclosure. (b) Internal Control In discharging its duties in ensuring the effectiveness of the Groups internal control systems, the Board has delegated the duty to the Audit Committee. The scope and results of the review are detailed in Statement of Internal Control set out on page 16 of the Annual report. (c) Relationship with Auditors The Board has maintained a formal and transparent relationship with the Auditors. The role of the Audit Committee in relation to the external auditors is stated on page 13 to page 15 of the Annual Report. STATEMENTS OF DIRECTORS RESPONSIBILITIES IN RELATION TO THE FINANCIAL STATEMENTS Directors are required by company law to prepare financial statements for each financial year which give a true and fair view of the state of affairs of the Company. Such information is communicated to shareholders and investors through various disclosures and announcements to the Bursa Malaysia, including the quarterly financial results, annual reports and where appropriate. In preparing the financial statements, the Directors had to: adopted suitable accounting policies and applied them consistently made adjustments and estimates that are prudent and reasonable ensured that applicable accounting standards have been followed prepared the financial statements on the going concern basis The Directors had prepared the annual financial statements in compliance with the Companies Act, 1965.
D.
10
F.
ADDITIONAL COMPLIACE INFORMATION (a) Material Contracts There were no material contracts entered into by the Company involving the Companys Directors and/or substantial shareholders interest either still subsisting at the end of the financial year, or which were entered into since the end of the previous financial year. (b) Share Buy-back There were no share buy-back exercises undertaken by the Company during the financial year under review. (c) Options, Warrants Or Convertible Securities There were no options, warrants or convertible securities issued by the Company during the financial year under review. (d) American Depository Receipt (ADR) Or Global Depository Receipt (GDR) There were no ADR or GDR programmers sponsored by the Company during the financial year under review. (e) Non-Audit Fees There were no non-audit fees made to the External Auditors, Messrs Siew Boon Yeong & Associates during the financial year under review. (f) Profit Guarantees There were no profit guarantees given by the Company during the financial year under review.
(g) Imposition Of Sanctions And/ Or Penalties There were no sanction and/or penalties imposed on the Company, Directors or Management by any of the regulatory authorities. (h) Variation In Results There was no variation in result (differing by 10% or more) from the unaudited results announced.
11
The Directors had prepared the annual financial statements in compliance with the Companies Act, 1965. (k) Corporate Social Responsibility Activities and Practices The Company did not undertake any corporate social responsibility activities or practices during the financial year ended 31 August 2012.
12
A brief profile of each of the Audit Committee members is detailed in the Directors Profiles on page 6 to page 7 of this Annual Report.
B.
TERMS OF REFERENCE 1. Composition of the Audit Committee The Audit Committee shall appoint by the Board from among their number and shall consist of at least three (3) members of which the majority shall comprise Independent Directors. The members of the Committee shall elect a Chairman from among their number who is an Independent Non-Executive Director. If a member of the Committee retires, resigns, passed away or for any other reason ceases to be a member with the result that the number of members is reduced to below three (3), the Board of Directors shall, within three (3) months of that event, appoint such number of new members as may be required to make up the minimum of three (3) members. 2. Authority Wherever necessary and reasonable for the performance of its duties, the Audit Committee shall:(i) Investigate any activity within its terms of reference and shall have unrestricted access to the external auditors and to all employees of the Company; Have the resources, which are required to perform its duties as set out in its terms of reference;
(ii)
(iii) Have direct communication channels with the external auditors and person(s) carrying out the internal audit function or activity; and
13
(iii) to review the quarterly and annual financial statements of the Company focusing particularly on:(a) any changes in accounting policies and practices; (b) significant adjustments arising from the audit, significant and unusual events; (c) the going concern assumption; and (d) compliance with accounting standards and other legal requirements. (iv) to review the adequacy of the scope, functions, authority and resources of the internal audit function; to review the internal audit program and results, ensuring that appropriate action is taken on the recommendations of the internal audit function; to consider related party transactions and review the procedures to ensure appropriateness and adequacy; and to perform any other functions as authorised by the Board.
(v)
(vi)
14
Members
Lee Chee Cheng (Chairman) Lee Choong Kin (Appointed on 3.4.2012) Chua Hwa Nian (Appointed on 20.4.2012) Wong Chook Ping (Resigned on 3.4.2012) Por Yew Guan (Resigned on 20.4.2012)
During the financial year ended 31 August 2012, the Audit Committee reviewed the quarterly and yearly results / announcements of the Company and ensures compliance with approved accounting standards and adherence to other legal and regulatory requirements as well as making relevant recommendations to the Board for approval. 6. Internal Audit Function During the financial year, the Groups internal audit function is outsourced to an independent professional firm who assesses the adequacy and integrity of the internal control system and reports directly to the Audit Committee. Its principal role is to conduct regular and systematic review of system of internal control so as to provide independent assurance on the adequacy and effectiveness of internal control processes. The Internal Auditor has conducted assurance review on adequacy and effectiveness of internal control system on certain operating units and presented its findings together with recommendation and management action to Audit Committee for review. A number of minor internal control problems were identified, all of which have been or being addressed. None of the weakness has resulted in any material losses or uncertainties that would require disclosure in this Annual Report.
15
The system is designed to manage rather than eliminate the risk of failure to achieve the corporate objectives and to provide reasonable but not absolute assurance against material misstatement or loss. Risk Management Framework Key management staff and Heads of Department are delegated with the responsibility to manage risks of their respective areas of responsibilities. In the periodic management meetings, key risks and mitigating controls are deliberated. Significant risks affecting the Groups strategic and business plans are escalated to the Board at their scheduled meetings. The abovementioned risk management practices of the Group serve as the on-going process used to identify, evaluate and manage significant risks. The Board shall continue to eva luate the Groups risk management process to ensure it remains relevant to the Groups requirements. Internal Audit The Groups internal audit function is outsourced to an independent professional firm who assesses the adequacy and integrity of the internal control system and reports directly to the Audit Committee. An internal audit plan for 2012 was approved by the Audit Committee and carried out. The results of the internal audit review and the recommendations for improvement were presented to the Audit Committee. The cost of outsourcing the internal audit function for the year ended 31 August 2012 was RM6,560. Key Features of Internal Control The key features of the Groups internal control are as follows: 1. An annual budget is prepared to facilitate the monitoring of Groups financial performance and review its actual performance against the budget. Quarterly review of the financial performance of the Group by the Board and the Audit Committee. The Group has established policies and procedures.
2. 3.
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CYBERTOWERS BERHAD
(Incorporated in Malaysia)
DIRECTORS' REPORT The directors hereby submit their report together with the audited financial statements of the Group and of the Company for the financial year ended 31 August 2012. PRINCIPAL ACTIVITIES The principal activity of the Company is engaged in the business of developing and operating an internet based automatic vehicle locating system using satellite and wireless telecommunication solutions. The principal activities of the subsidiary companies are as set out in Note 7 to the financial statements. There were no significant changes in the nature of these activities during the financial year. FINANCIAL RESULTS
Group RM Profit attributable to:Owners of the parent Company RM
1,951,396
2,174,306
In the opinion of the directors, the results of the operations of the Group and of the Company during the financial year were not substantially affected by any item, transaction or event of a material and unusual nature other than as disclosed in the financial statements. DIVIDEND No dividend has been paid, declared or proposed since the end of the previous financial year. The directors do not recommend the payment of any dividend in respect of the current financial year. MOVEMENTS ON RESERVES AND PROVISIONS There were no material transfers to or from reserves or provisions during the financial year other than as disclosed in the financial statements. ISSUE OF SHARES AND DEBENTURES There was no issue of shares or debentures by the Company during the financial year. OPTIONS No option has been granted during the financial year to take up unissued shares of the Company.
17
(appointed on 25.4.2012) (appointed on 20.4.2012) (appointed on 3.4.2012) (resigned on 3.4.2012) (resigned on 22.6.2012) (resigned on 20.4.2012)
18
(ii) On 8 March 2012, the Company acquired the entire issued and paid-up share capital of King Arts Limited, a company incorporated in Hong Kong, representing 1 ordinary share for a total consideration of Hong Kong Dollar 1. (iii) On 16 July 2012, the Company acquired the entire issued and paid-up share capital of Pioneer Streams Consolidated Sdn. Bhd. (PSCSB), a company incorporated in Malaysia, representing 100,000 ordinary shares of RM1 each for a total consideration of RM200,000.
19
20
CYBERTOWERS BERHAD
(Incorporated in Malaysia)
STATEMENT BY DIRECTORS In the opinion of the directors, the financial statements set out on pages 24 to 64 are drawn up in accordance with the provisions of the Companies Act, 1965 and Financial Reporting Standards so as to exhibit a true and fair view of the state of affairs of the Group and of the Company as at 31 August 2012 and of the results and cash flows of the Group and of the Company for the year ended on that date. The information set out in Note 31 on page 64 to the financial statements have been prepared in accordance with the Guidance on Special Matter No. 1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants. Signed in Kuala Lumpur on 27 December 2012 Signed on behalf of the Board of Directors in accordance with a resolution of the Directors
LAI KA WAI
YUEN CHUN FAI STATUTORY DECLARATION I, Yuen Chun Fai, being the director primarily responsible for the financial management of Cybertowers Berhad, do solemnly and sincerely declare that to the best of my knowledge and belief the financial statements set out on pages 24 to 64 are correct, and I make this solemn declaration conscientiously believing the same to be true and by virtue of the provisions of the Statutory Declarations Act, 1960. Subscribed and solemnly declared in Kuala Lumpur on 27 December 2012 YUEN CHUN FAI Before me:
21
22
23
CYBERTOWERS BERHAD
(Incorporated in Malaysia)
Note
ASSETS NON-CURRENT ASSETS Property, plant and equipment Intangible assets Investments in subsidiary companies
5 6 7
CURRENT ASSETS Inventories Trade receivables Other receivables, deposits and prepayments Amounts owing by subsidiary companies Fixed deposits with licensed banks Cash and bank balances
8 9 10 11 12
TOTAL ASSETS
14,618,866
CYBERTOWERS BERHAD
(Incorporated in Malaysia)
Note
EQUITY AND LIABILITIES EQUITY Share capital Share premium Foreign exchange translation reserve Accumulated losses TOTAL EQUITY NON-CURRENT LIABILITIES Amount owing to a shareholder CURRENT LIABILITIES Trade payables Other payables and accruals Amount owing to a shareholder Hire purchase payables
13 14 15
16
1,500,000
17 18 16 19
6,193,730 14,618,866
CYBERTOWERS BERHAD
(Incorporated in Malaysia)
Note
REVENUE COST OF SALES GROSS PROFIT OTHER OPERATING INCOME OTHER OPERATING EXPENSES PROFIT FROM OPERATIONS FINANCE COSTS PROFIT BEFORE TAXATION INCOME TAX EXPENSE PROFIT AFTER TAXATION OTHER COMPREHENSIVE INCOME NET OF TAX: Foreign currency translation differences for foreign operations TOTAL OTHER COMPREHENSIVE INCOME FOR THE YEAR TOTAL COMPREHENSIVE INCOME FOR THE YEAR PROFIT ATTRIBUTABLE TO: Owners of the parent TOTAL COMPREHENSIVE INCOME ATTRIBUTABLE TO: Owners of the parent BASIC EARNINGS PER SHARE - Basic (sen)
20
21 22 24
2,174,306
122,943
1,951,396
2,174,306
122,943
1,955,092
2,174,306
122,943
25
1.95
2.17
0.12
CYBERTOWERS BERHAD
(Incorporated in Malaysia)
Balance at 1 September 2010 Profit for the year/Total comprehensive income for the year Balance at 31 August 2011 Foreign currency translation differences for foreign operations Total other comprehensive income for the year Profit for the year Total comprehensive income for the year Balance at 31 August 2012
Company
10,000,000
2,032,070
(5,684,969)
6,347,101
10,000,000
2,032,070
122,943 (5,562,026)
122,943 6,470,044
10,000,000
2,032,070
Balance at 1 September 2010 Profit for the year/Total comprehensive income for the year Balance at 31 August 2011 Profit for the year/Total comprehensive income for the year Balance at 31 August 2012
10,000,000
2,032,070
(5,684,969)
6,347,101
10,000,000
2,032,070
122,943 (5,562,026)
122,943 6,470,044
10,000,000
2,032,070
2,174,306 (3,387,720)
2,174,306 8,644,350
CYBERTOWERS BERHAD
(Incorporated in Malaysia)
Note
CASH FLOWS FROM OPERATING ACTIVITIES Profit before taxation Adjustments for: Amortisation of development expenditures Depreciation Interest expenses Property, plant and equipment written off Write-down of inventories Gain on foreign exchange - unrealised Gain on disposal of property, plant and equipment Interest income Operating profit before working changes Decrease/(increase) in inventories Increase in receivables Increase/(decrease) in payables Cash generated from operations Interest received Interest paid Net cash generated from operating activities
1,951,396
2,174,306
122,943
140,435 1,849,002 89 381,663 600,000 (77,840) (59,930) (12,902) 4,771,913 423,707 (372,421) 524,534 5,347,733 12,902 (89) 5,360,546
140,435 374,090 89 367,202 600,000 (71,696) (59,930) (11,595) 3,512,901 446,113 (3,833,940) 77,160 202,234 11,595 (89) 213,740
151,448 569,449 966 (36,011) 808,795 (53,511) (223,408) (157,261) 374,615 36,011 (966) 409,660
28
CYBERTOWERS BERHAD
(Incorporated in Malaysia)
Note CASH FLOWS FROM INVESTING ACTIVITIES Addition of intangible assets Purchase of property, plant and equipment Proceeds from disposal of property, plant and equipment Investment in subsidiary companies Net cash outflow from acquisition of subsidiary companies Net cash used in investing activities CASH FLOWS FROM FINANCING ACTIVITIES Net advances from a shareholder Repayment of hire purchase payables Placement of fixed deposits pledged as securities Net cash generated from/(used in) financing activities Net increase in cash and cash equivalents Cash and cash equivalents at beginning of year Effect of foreign exchange rate changes, net Cash and cash equivalents at end of year NOTE TO STATEMENTS OF CASH FLOWS: Cash and cash equivalents comprise: Cash and bank balances Fixed deposits with licensed banks Less: Fixed deposits pledged with licensed banks
(8,662,542) 64,000 26
(98,238) (8,696,780)
(17,286) (17,286)
Amendment to FRS 5: Plan to Sell the Controlling Interest in a Subsidiary Amendments to FRS 7: Financial Instruments: Disclosures - Improving Disclosures about Financial Instruments
30
31
32
Capitalised development expenditures are measured at cost less accumulated amortisation and impairment losses, if any. Development expenditures initially recognised as an expense is not recognised as assets in the subsequent period. Development expenditures are amortised on a straight-line basis over a period of five years. Impairment is assessed whenever there is an indication of impairment and the amortisation period and method are also reviewed at each statements of financial position date. (c) Goodwill Goodwill is measured at cost less accumulated impairment losses, if any. The carrying value of goodwill is reviewed for impairment annually. The impairment value of goodwill is recognised immediately in profit or loss. An impairment loss recognised for goodwill is not reversed in a subsequent period. Under the purchase method, goodwill represents the excess of the fair value of the purchase consideration over the Groups share of the fair values of the identifiable assets, liabilities and contingent liabilities of the subsidiaries at the date of acquisition. If, after reassessment, the Groups interest in the fair values of the identifiable net assets of the subsidiaries exceeds the cost of the business combinations, the excess is recognised as income immediately in statements of comprehensive income. (d) Investments In Subsidiary Companies Subsidiary companies are those companies in which the Group has power to exercise control over their financial and operating activities so as to obtain benefits therefrom. Investments in subsidiaries are stated at cost and are written down when there is a permanent impairment in the value of the investments. The impairment loss is recognised in the statements of comprehensive income. On disposal of an investment, the difference between net disposal proceeds and their carrying amounts is charged or credited to statements of comprehensive income.
33
Computers and GSM tracking devices and servers Furniture, fittings and office equipment Motor vehicles Renovation
The residual value, useful lives and depreciation method of property, plant and equipment are reviewed at each statements of financial position date. An assets carrying amount is written down immediately to its recoverable amount if the assets carrying amount is greater than its estimated recoverable amount. On disposal of property, plant and equipment, the difference between the net disposal proceeds and the carrying amount is credited or charged to the statements of comprehensive income in determining profit from operations. (g) Financial Instruments Financial instruments are recognised in the statements of financial position when the Group has become a party to the contractual provisions of the instruments. Financial instruments are classified as liabilities or equity in accordance with the substance of the contractual arrangement. Interest, dividends, gains and losses relating to a financial instrument classified as a liability, are reported as an expense or income. Distributions to holders of financial instruments classified as equity are charged directly to equity. Financial instruments are offset when the Group has a legally enforceable right to offset and intends to settle either on a net basis or to realise the asset and settle the liability simultaneously. A financial instrument is recognised initially, at its fair value plus, in the case of a financial instrument not at fair value through profit or loss, transaction costs that are directly attributable to the acquisition or issue of the financial instrument. Financial instruments recognised in the statements of financial position are disclosed in the individual policy statement associated with each item.
34
35
36
37
ii.
iii. the party is a joint venture in which the entity is a venture; iv. the party is a member of the key management personnel of the entity or its parent; v. the party is a close member of the family of any individual referred to in (i) or (iv);
vi. the party is an entity that is controlled, jointly controlled or significantly influenced by, or for which significant voting power in such entity resides with, directly or indirectly, any individual referred to in (iv) or (v); or vii. the party is a post-employment benefit plan for the benefit of employees of the entity, or of any entity that is a related party of the entity. Close members of the family of an individual are those family members who may be expected to influence, or be influenced by, that individual in their dealings with the entity. (m) Foreign Currency Translation i. Transactions And Balances Foreign currency monetary assets and liabilities have been converted into Ringgit Malaysia (RM) at the rates of exchange ruling at the statements of financial position date. Transactions in foreign currencies have been converted at rates ruling at the transaction dates. Exchange differences arising from the settlement of foreign currency transactions and from the translation of foreign currency monetary assets and liabilities are included in the statements of comprehensive income. Non-monetary assets and liabilities are translated using exchange rates that existed when the values determined.
38
(n) Revenue Recognition Revenue comprises the fair value of the consideration received or receivable for the sale of goods and services rendered in the ordinary course of the companys activities. Revenue from sales of goods and services is recognised upon delivery of goods and customers acceptance and where applicable, net of returns and trade discounts, and services are performed. (o) Interest Income Interest on fixed deposits is recognised on an accrual basis. (p) Income Tax Expense Income taxes for the year comprise current and deferred tax. Current tax is the expected amount of income taxes payable in respect of the taxable profit for the year and is measured using the tax rates that have been enacted or substantively enacted at the end of the reporting period. Deferred tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. Deferred tax liabilities are recognised for all taxable temporary differences other than those that arise from goodwill or excess of the acquirers interest in the net fair value of the acquirees identifiable assets, liabilities and contingent liabilities over the business combination costs or from the initial recognition of an asset or liability in a transaction which is not a business combination and at the time of the transaction, affects neither accounting profit nor taxable profit. Deferred tax assets are recognised for all deductible temporary differences, unused tax losses and unused tax credits to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, unused tax losses and unused tax credits can be utilised.
39
40
41
42
Group Cost At 1 September 2011 Additions Acquisition of a subsidiary Disposals Written off Currency translation differences At 31 August 2012 Accumulated depreciation At 1 September 2011 Charge for the year Disposals Written off Currency translation differences At 31 August 2012 Net book value At 31 August 2012
43
Company Cost At 1 September 2010 Additions At 31 August 2011 Additions Disposals Written off At 31 August 2012 Accumulated depreciation At 1 September 2010 Charge for the year At 31 August 2011 Charge for the year Disposals Written off At 31 August 2012 Net book value At 31 August 2012 At 31 August 2011
44
Group Cost At 1 September 2011 Additions At 31 August 2012 Accumulated amortisation: At 1 September 2011 Amortisation for the year At 31 August 2012 Carrying amount At 31 August 2012
80,176
142,164
222,340
Company Cost At 1 September 2011/2010 Additions At 31 August 2012/2011 Accumulated amortisation: At 1 September 2011/2010 Amortisation for the year At 31 August 2012/2011 Carrying amount At 31 August 2012/2011
142,164
282,599
(a) Goodwill (i) Allocation of goodwill The goodwill was in relation to the acquisition of a subsidiary, PSCSB, during the financial year which was also the Groups cash generating unit (CGU) of the goodwill.
45
7.
Imagine Data Sdn. Bhd. Pioneer Streams Consolidated Sdn. Bhd. Incorporated in Hong Kong Starvista Limited* King Arts Limited*
100 100
100 100
46
22,406
1,046,113
9.
TRADE RECEIVABLES The Groups and Companys normal trade credit terms ranged from 30 to 90 days. Other credit terms are assessed and approved on a case-by-case basis. Included in the trade receivables in the previous financial year was an amount of RM5,642 owing by a company in which certain directors have an interest.
11. AMOUNTS OWING BY SUBSIDIARY COMPANIES Company The amounts owing are non-trade in nature, unsecured, interest-free and repayable on demand and are to be settled in cash.
12. FIXED DEPOSITS WITH LICENSED BANKS Group and Company Fixed deposits with licensed banks of the Group and of the Company amounting to RM211,250 (2011: Nil) have been pledged to the banks for credit facilities granted to the Group and the Company.
47
2011 RM
100,000,000 100,000,000
10,000,000 10,000,000
10,000,000 10,000,000
The share premium is distributable by way of dividends and may be utilised in the manner as set out in Section 60(3) of the Companies Act, 1965 in Malaysia.
The foreign exchange fluctuation reserve arose from the translation of the financial statements of a foreign subsidiary and is not distributable by way of dividends.
During the year, the Group received advances from a shareholder. The advances were utilised for the purchase of servers. The amount is interest-free and unsecured. Advances classified as non-current liabilities amounting to RM1,500,000 is repayable one year after 31 August 2012 and the shareholder has confirmed that he will not seek repayment of the amount of RM1,500,000 at least 12 months from the date of approval of these financial statements, and only when the Group has sufficient available funds.
48
19. HIRE PURCHASE PAYABLES The hire purchase payables are repayable as follows:
Future instalments payable RM Principal payable RM -
Group/Company 2012 Company 2011 Shown under current liabilities Within 1 year Shown under non-current liabilities Between 2 to 5 years
Undue interest RM -
4,739
(89)
4,650
4,739
(89)
4,650
The effective interest rate for hire purchase creditors is 7.24% (2011: 7.24%) per annum.
49
(36,011)
50
128,491 96,841
74,491 55,517
7,200 96,200
51
A reconciliation of income tax expense applicable to profit before taxation at the statutory income tax rate to income tax expense at the effective income tax rate is as follows:
Group 2012 RM Profit before taxation Income tax expense at Malaysian statutory tax rate of of 25% (2011: 25%) Adjustments for the following tax effects: - expenses not deductible for tax purposes - income not subject to tax - deferred tax assets not recognised during the year - utilisation of deferred tax assets not recognised in prior years 1,951,396 Company 2012 RM 2,174,306 2011 RM 122,943
487,849
543,577
30,736
302,702 (35,279) -
46,996 -
(811,000) (487,849) -
(811,000) (543,577) -
(77,732) (30,736) -
The amounts of temporary differences for which no deferred tax assets have been recognised in the statements of financial positions are as follows:
Group 2012 RM Excess of capital allowances claimed over corresponding accumulated depreciation Unutilised capital allowances Unabsorbed tax losses (8,634,278) 7,140,533 1,897,809 404,064
Company 2012 RM (1,563,549) 55,817 1,879,561 371,829 2011 RM (2,164,020) 4,028,662 1,879,561 3,744,203
Deferred tax assets have not been recognised in respect of these items as it is not probable that future taxable profits will be available against which the above deductible temporary differences can be utilised.
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26. ACQUISITION OF SUBSIDIARY COMPANIES During the financial year, the Group acquired the following subsidiaries: (i) On 8 March 2012, the Company acquired the entire issued and paid-up share capital of King Arts Limited, a dormant company incorporated in Hong Kong, representing 1 ordinary share for a total consideration of Hong Kong Dollar 1.
(ii) On 16 July 2012, the Company acquired the entire issued and paid-up share capital of Pioneer Streams Consolidated Sdn. Bhd., a company incorporated in Malaysia, representing 100,000 ordinary shares of RM1 each for a total consideration of RM200,000. The fair value of the identifiable assets and liabilities of the subsidiary companies acquired as at the dates of acquisition were:At dates of acquisition Carrying Fair value amount recognised RM RM Property, plant and equipment Deposit paid Cash and bank balances Total identifiable net assets Goodwill on acquisition Total purchase consideration Less: Cash and bank balances of subsidiaries acquired Net cash outflow for acquisition of subsidiary companies 14,462 3,600 101,762 119,824 14,462 3,600 101,762 119,824 80,176 200,000 (101,762) 98,238
The acquired subsidiaries have contributed a loss after taxation amounting to RM26,557 to the results of the Group. If the acquisition had taken place at the beginning of the financial year, the Groups loss after taxation would have been RM6,733.
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(b) In addition to the transactions detailed elsewhere in the financial statements, the Group and the Company carried out the following significant transactions with the related parties during the financial year:(i) Subsidiary company
Company 2012 RM Management fee paid/payable to a subsidiary company 235,072 2011 RM -
(ii)
28. FINANCIAL INSTRUMENTS The Groups activities are exposed to a variety of market risks (including foreign currency risk, interest rate risk and price risk), credit risk and liquidity risk. The Groups overall financial risk management policy focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the Groups financial performance. (a) Financial Risk Management Policies The Groups policies in respect of the major areas of treasury activity are as follows: (i) Market Risk (i) Foreign Currency Risk The Group and the Company is exposed to foreign currency risk on transactions and balances that are denominated in currencies other than RM. Foreign currency risk is monitored closely on an ongoing basis to ensure that the net exposure is at an acceptable level.
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Group 2012 Trade and other receivables Amount owing to a shareholder Trade and other payables Cash and bank balances Currency exposure Company 2012 Trade and other receivables Amounts owing by subsidiary companies Cash and bank balances Currency exposure
626,300 626,300
The Company had no foreign currency exposure for the financial year ended 31 August 2011.
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(ii) Interest Rate Risk The Groups and Companys exposure to interest rate risk arises mainly from hire purchase. Its policy is to obtain the most favourable interest rates available. Interest Rate Risk Sensitivity Analysis The Group is not exposed to interest rate risk as the interest-bearing financial instruments carry fixed interest rate and are measured at amortised cost. (iii) Equity Price Risk The Group does not have any quoted investments and hence is not exposed to price risk. (ii) Credit Risk The Groups exposure to credit risk, or the risk of counterparties defaulting, arises mainly from receivables. The maximum exposure to credit risk is represented by the carrying amount of this financial asset in the statements of financial position reduced by the effects of any netting arrangements with counterparties.
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Group 2012 RM Not past due Due past - less than 3 months - within 3 to 6 months 1,203,148 672,566 1,875,714
Company 2012 RM 609,550 547,598 1,157,148 2011 RM 297,526 683,823 722,670 1,704,019
Trade receivables of the Group and the Company that are past due but not impaired are unsecured in nature. They are creditworthy receivables.
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Group
2012 Trade payables Other payables and accruals Amount owing to a shareholder
2-5 years RM -
Over 5 years RM -
Company
Carrying Amount RM
Within 1 year RM
1-2 years RM
2-5 years RM
Over 5 years RM
480,011
480,011
480,011
Company
2011 Trade payables Other payables and accruals Hire purchase payables
1-2 years RM -
2-5 years RM -
Over 5 years RM -
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Financial liabilities Other financial liabilities Trade payables Other payables and accruals Amount owing to a shareholder Hire purchase payables
480,011 480,011
(d) Fair Values Of Financial Instruments The carrying amounts of the financial assets and financial liabilities reported in the financial statements approximated their fair values. Fair value estimates are made at a specific point in time and based on relevant market information and information about the financial instruments. These estimates are subjective in nature, involve uncertainties and matters of significant judgment and therefore cannot be determined with precision. Changes in assumptions could significantly affect the estimates. ` (e) Fair value hierarchy As at 31 August 2012, there were no financial instruments measured at fair value in the statements of financial position.
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Developing and operating an internet based automatic vehicle locating system using satellite and wireless tele-communication solutions.
(ii) Hosting services The hosting services segment commenced operation during the year and it is in the business of provision of internet hosting services to internet content providers. Other segments comprise companies providing management services and dormant companies. The Executive Directors assess the performance of the operating segments based on operating profits or losses which is measured differently from those disclosed in the consolidated financial statements. The Executive Directors are of the opinion that all inter segment transactions are entered into in the normal course of business and are at arms length basis in a manner similar to transactions with third parties.
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Others RM
Total RM
5,762,420 5,762,420
6,902,171 6,902,171
240,000 (240,000) -
Results Segment results Interest income Interest expenses Profit before taxation Income tax expense Profit after taxation Segment assets Segment liabilities Other information Capital expenditures Gain on foreign exchange unrealised Gain on disposal of property, plant and equipment Depreciation of property, plant and equipment Amortisation of development expenditures Property, plant and equipment written off Write-down of inventories
202,360 27,480 -
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Major Customers No segmental disclosure for the financial year ended 31 August 2011 as the Company was principally engaged in the business of tracking solutions, which was substantially within a single business segment. The Company operates primarily in Malaysia. Information about major customers Group
Revenue Provision of hosting services to internet service providers in Hong Kong Provision of tracking solution in Hong Kong No. of Customers 3 1 %* 54.5 39.8 2012 RM 6,902,171 5,037,403
Note: *- Computed based on revenue from major customers by business segments over total revenue.
30. SIGNIFICANT EVENTS DURING THE FINANCIAL YEAR (i) On 6 September 2011, the Company incorporated two wholly-owned subsidiaries in Malaysia under the names of Imagine Data Sdn. Bhd. (IDSB) and Nautical Angle Sdn. Bhd. (NASB). The issued and paid-up share capital of IDSB and NASB are 2 ordinary shares of RM1 each, respectively. On 8 March 2012, the Company acquired the entire issued and paid-up share capital of King Arts Limited, a company incorporated in Hong Kong, representing 1 ordinary share for a total consideration of Hong Kong Dollar 1. On 16 July 2012, the Company acquired the entire issued and paid-up share capital of Pioneer Streams Consolidated Sdn. Bhd., a company incorporated in Malaysia, representing 100,000 ordinary shares of RM1 each for a total consideration of RM200,000.
(ii)
(iii)
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Group 2012 RM Total accumulated losses of the Group and the Company - Realised - Unrealised Accumulated losses of the Group and the Company (3,688,470) 77,840 (3,610,630)
(5,562,026) (5,562,026)
32. AUTHORISATION FOR ISSUE OF FINANCIAL STATEMENTS These financial statements were authorised for issue on 27 December 2012 by the Board of Directors.
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Size of Shareholdings
Size of Shareholdings Less than 100 shares 100-1,000 shares 1,001-10,000 shares 10,001-100,000 shares 100,001 to less than 5% of Issued shares 5% and above of issued shares Total No .of Shareholders 5 133 821 998 138 1 2,096 % of Shareholders 0.24 6.35 39.17 47.61 6.58 0.05 100 No. of Shares 203 91,947 5,465,950 36,850,600 47,901,800 9,689,500 100,000,000 % of Issued Share Capital 0.00 0.09 5.47 36.85 47.90 9.69 100
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AGENDA
As Ordinary Business 1. To receive the Audited Financial Statements for the financial year ended 31 August 2012 together with the Reports of the Directors and Auditors thereon. (Resolution 1) 2. To approve the payment of directors fees amounting to RM 128,491 in respect of financial year ended 31 August 2012. (Resolution 2) 3. To re-elect the following as Directors pursuant to the Companys Articles of Association: 3.1 3.2 3.3 3.4 Mr. Lee Chee Cheng (Article 83) Mr. Lee Choong Kin (Article 90) Mr. Chua Hwa Nian (Article 90) Mr. Yuen Chun Fai (Article 90) (Resolution 3) (Resolution 4) (Resolution 5) (Resolution 6)
4. To re-appoint Messrs Siew Boon Yeong & Associates as Auditors of the Company and to authorise the Directors to fix their remuneration. (Resolution 7) As Special Business 5. To consider and, if thought fit, pass the following resolution: (Resolution 8) Authority to allot shares pursuant to Section 132D of the Companies Act, 1965 THAT pursuant to Section 132D of the Companies Act, 1965, the Directors be and be hereby empowered to allot and issue shares in the Company, at any time, at such price, until the conclusion of the next Annual General Meeting and upon such terms and conditions and for such purposes as the Directors may, in their absolute discretion, deem fit, provided that the aggregate number of shares does not exceed 10% of the issued share capital of the Company at the time of issue and THAT the Directors be and are also empowered to obtain the approval for the listing of and quotation for the additional shares so issued, subject to the Companies Act, 1965, the Articles of Association of the Company and approval from the Bursa Malaysia Securities Berhad and other relevant bodies where such approval is necessary. On Behalf Of The Board
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EXPLANATORY NOTE ON THE SPECIAL BUSINESS Resolution 8 Authority to allot shares pursuant to Section 132D of the Companies Act, 1965 The proposed Resolution 8, if passed, will empower the Directors of the Company, from the date of the Annual General Meeting, to issue shares (other than bonus or rights issue) of the Company up to and not exceeding in total 10% of the issued share capital of the Company at the time of issue for such purpose as they considered would be in the best interest of the Company. This authority, unless revoked or varied at a general meeting, will expire at the next Annual General Meeting of the Company. As at the date of this Notice, no new shares of the Company were issued pursuant to the mandate granted to the Directors of the Company at the Fifteenth Annual General Meeting held on 28 February 2012. The new mandate will provide flexibility to the Company to issue new shares without the need to convene a separate general meeting to obtain shareholders approval so as to avoid incurring additional cost and time. The purpose of this general mandate is for any possible fund raising activities, including but not limited to further placement of shares for purpose of funding current and/or future investment projects, working capital and/or acquisitions.
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The aforesaid Directors shareholdings is set out on page 61 of this Annual Report. Further details of the Directors are set out in the Profile of the Board of Directors on page 5 to page 7 of this Annual Report. 2. Date, time and place of the Sixteenth Annual General Meeting The Sixteenth Annual General Meeting of Cybertowers Berhad will be held at Hotel Sri Petaling, 30, Jalan Radin Anum, Bandar Baru Sri Petaling, 57000 Kuala Lumpur on Thursday, 28 February 2013 at 10.00 a.m. 3. Attendance of Board of Directors Meetings Eight (8) Board meetings were held during the financial year from 1 September 2011 to 31 August 2012. Details of attendance of Directors at Board meetings are as follows:Number of meetings held 6 5 5 8 8 3 3 2 Number of meetings attended 6 3 3 8 5 3 3 2
Name Wong Kek Wei (Resigned on 22.6.2012) Wong Chook Ping (Resigned on 3.4.2012) Por Yew Guan (Resigned on 20.4.2012) Lee Chee Cheng Lai Ka Wai Lee Choong Kin (Appointed on 3.4.2012) Chua Hwa Nian (Appointed on 20.4.2012) Yuen Chun Fai (Appointed on 25.4.2012)
Designation Managing director Non-Executive Chairman Independent Non-Executive Director Independent Non-Executive Director Executive Director Independent Non-Executive Director Independent Non-Executive Director Executive Director
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of_______________________________________________________________________________________________
(FULL ADDRESS)
of _____________________________________________________________________________________________
(FULL ADDRESS)
or failing him/her, the CHAIRMAN OF THE MEETING as my/our proxy to attend and vote for me/us and on my/our behalf at the Sixteenth Annual General Meeting of the Company to be held at Hotel Sri Petaling, 30, Jalan Radin Anum, Bandar Baru Sri Petaling, 57000 Kuala Lumpur on Thursday, 28 February 2013 at 10.00 a.m. or at any adjournment thereof. My/our proxy is to vote as indicated below:-
Resolution
Resolution 1 To receive the Audited Financial Statements for the financial year ended 31 August 2012 together with the Reports of the Directors and Auditors thereon. To approve the payment of directors fees amounting to RM 128,491 in respect of financial year ended 31 August 2012. To re-elect the following as Directors pursuant to the Companys Articles of Association: Resolution 3 Resolution 4 Resolution 5 Resolution 6 Resolution 7 Mr. Lee Chee Cheng (Article 83) Mr. Lee Choong Kin (Article 90) Mr. Chua Hwa Nian (Article 90) Mr. Yuen Chun Fai (Article 90) To re-appoint Messrs. Siew Boon Yeong & Associates as Auditors of the Company and to authorize the Directors to fix their remuneration. Authority to allot shares pursuant to Section 132D of the Companies Act, 1965.
For
Against
Resolution 2
Resolution 8
(Please indicate with an X in the appropriate box against each Res olution how you wish your proxy to vote. If no instruction is given, this form will be taken to authorise the proxy to vote at his/her discretion). Signed this___________ day of __________________2013 Number of shares held _________________________________ Signature of Shareholder or Common Seal
NOTES:1. A member entitled to attend and vote at the meeting is entitled to appoint one (1) or more proxies (or in the case of a corporation, a duly authorised representative) to attend and vote in his/her stead. A proxy may but need not to be a member of the Company and the provision of Sections 149(a) and (b) of the Companies Act, 1965 shall not apply to the Company. 2. A member may appoint two (2) or more proxies to attend and vote at the same meeting, such appointment shall be invalid unless the member specifies the proportion of his/her shareholdings to be represented by each proxy. 3. A member who is an authorised nominee as defined under the Securities Industry (Central Depositor) Act, 1991 ma y appoint one (1) proxy in respect of each securities account. 4. The instrument appointing a proxy shall be in writing in the hand of the appointer or his attorney duly authorised in writing or if such appointer is a corporation, it must be under its seal or under the hand of an officer or attorney duly authorised 5. The instrument appointing a proxy must be deposited at the Registered Office of the Company, Ground Floor, 8, Lorong Universiti B, Section 16, 46350 Petaling Jaya, Selangor Darul Ehsan not less than forty-eight (48) hours before the time for holding the meeting or any adjournment thereof.
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To:
Here
The Company Secretary CYBERTOWERS BERHAD (385635-V) Ground Floor, 8, Lorong Universiti B, Section 16, 46350 Petaling Jaya, Selangor Darul Ehsan, Malaysia.
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