SYSTEMS@WORK PTE. LTD. AND ITS SUBSIDIARIES Registration Number: 199906900E
FINANCIAL STATEMENTS For the financial year ended 31 December 2011
Table Of Contents
Directors' Report
3
Statement by Directors
6
Independent Auditors' Report
7
Statement of Comprehensive Income
9
Statement of Financial Position
11
Statement of Changes in Equity
13
Statement of Cash Flows
16
Notes to the Financial Statements
18
SYSTEMS@WORK PTE. LTD. AND ITS SUBSIDIARIES DIRECTORS' REPORT For the financial year ended 31 December 2011
The directors present their report to the members together with the consolidated financial statements of SYSTEMS@WORK PTE. LTD. (the Company) and its subsidiaries (collectively, the Group) for the financial year ended 31 December 2011. 1
DIRECTORS The directors at the date of this report are: Wolf - Ekkehard Frank Boettger
[Appointed on 1 December 2011]
Jeffry Ho Kok Hoong Ng Fook Sun 2
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 was to enable the directors of the Company to acquire benefits by means of the acquisition of shares or debentures of the Company or any other body corporate.
3
DIRECTORS' INTERESTS IN SHARES OR DEBENTURES According to the register of directors' shareholdings, none of the directors holding office at the end of the financial year had any interest in the shares, warrants or debentures of the Company or any related corporation either at the beginning of the financial year, or at the date of appointment if later, or at the end of the financial year, except as follows: At beginning
At end
of financial year
of financial year
Ordinary shares The Company, Systems@Work Pte. Ltd. Ng Fook Sun
13,083,238
-
Jeffry Ho Kok Hoong
13,083,238
-
Ordinary share of RM 1 each Subsidiary company, Systems@Work (M) Sdn Bhd Ng Fook Sun
Ser a Number: 730498995515354
1
1
3
SYSTEMS@WORK PTE. LTD. AND ITS SUBSIDIARIES DIRECTORS' REPORT For the financial year ended 31 December 2011
4
DIRECTORS' CONTRACTUAL BENEFITS Since the end of the previous financial year, none of the directors have received or become entitled to receive a benefit (other than as disclosed in the financial statements) by reason of a contract made by the Company or a related corporation with the director or with a firm of which he is a member or with a company in which he has a substantial financial interest.
5
SHARE OPTIONS In March 2002, the Company approved the Systems@Work Employees' Share Option Scheme (the "Scheme") under which non-transferable option will be granted to selected employees and directors of the Company and its subsidiary companies to subscribe for ordinary shares of $0.01 each in the Company. Under the Scheme, options granted generally have a vesting period of 4 years from the date of grant and have an exercise period of 10 years. The exercise price of these option is $0.05 per option. No options were exercised during the financial year. The share options were surrendered and extinguished during the year. There were no unissued shares of the Company under option at the end of the financial year.
Ser a Number: 730498995515354
4
SYSTEMS@WORK PTE. LTD. AND ITS SUBSIDIARIES DIRECTORS' REPORT For the financial year ended 31 December 2011
6
AUDITOR The auditors, Helmi Talib & Co, have expressed their willingness to accept re-appointment as auditors.
On behalf of the directors
JEFFRY HO KOK HOONG Director
NG FOOK SUN Director 13 March 2012
Ser a Number: 730498995515354
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SYSTEMS@WORK PTE. LTD. AND ITS SUBSIDIARIES STATEMENT BY DIRECTORS For the financial year ended 31 December 2011
We, Jeffry Ho Kok Hoong and Ng Fook Sun, being the directors of SYSTEMS@WORK PTE. LTD., do hereby state that, in the opinion of the directors:(i)
the accompanying statements of financial position, consolidated statement of comprehensive income, statement of changes in equity and consolidated statement of cash flows together with notes thereto are drawn up so as to give a true and fair view of the state of affairs of the Group and of the Company as at 31 December 2011 and the results of the business, changes in equity of the Group and the Company and cash flows of the Group for the financial year ended 31 December 2011; and
(ii)
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.
On behalf of the directors
JEFFRY HO KOK HOONG Director
NG FOOK SUN Director 13 March 2012
Ser a Number: 730498995515354
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SYSTEMS@WORK PTE. LTD. AND ITS SUBSIDIARIES INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF SYSTEMS@WORK PTE. LTD.
Report on the Financial Statements We have audited the accompanying financial statements of SYSTEMS@WORK PTE. LTD. (the Company) and its subsidiaries (collectively, the Group) which comprise the statements of financial position of the Group and the Company as at 31 December 2011, the statements of changes in equity of the Group and the Company and the statement of comprehensive income and statement of cash flows of the Group for the financial year then ended, and a summary of significant accounting policies and other explanatory information.
Management's Responsibility for the Financial Statements Management is responsible for the preparation of financial statements that give a true and fair view in accordance with the provisions of the Singapore Companies Act (the Act) and Singapore Financial Reporting Standards, and for devising and maintaining a system of internal accounting controls sufficient to provide a reasonable assurance that assets are safeguarded against loss from unauthorised use or disposition; and transactions are properly authorised and that they are recorded as necessary to permit the preparation of true and fair statement of comprehensive income and statements of financial position and to maintain accountability of assets.
Auditor's Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Singapore Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, 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 Company's preparation of financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Ser a Number: 730498995515354
7
SYSTEMS@WORK PTE. LTD. AND ITS SUBSIDIARIES INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF SYSTEMS@WORK PTE. LTD.
Opinion In our opinion, the consolidated financial statements of the Group and the statement of financial position and statement of changes in equity of the Company are properly drawn up in accordance with the provisions of the Act and 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 31 December 2011 and the results, changes in equity and cash flows of the Group and the changes in equity of the Company for the financial year ended on that date.
Report on Other Legal and Regulatory Requirements In our opinion, the accounting and other records required by the Act to be kept by the Company have been properly kept in accordance with the provisions of the Act.
HELMI TALIB & CO Public Accountants and Certified Public Accountants Singapore 13 March 2012
Ser a Number: 730498995515354
8
SYSTEMS@WORK PTE. LTD. AND ITS SUBSIDIARIES STATEMENT OF COMPREHENSIVE INCOME For the financial year ended 31 December 2011
Group Note Revenue
2011 SGD
2010 SGD
5,879,164
5,168,765
Other Items of Income Interest Income
4
2,374
2,222
Other Income
5
40,941
127,904
6
(1,806,651)
(1,600,976)
(2,616,587)
(1,920,861)
(18,686)
(19,386)
-
(240)
(583,282)
(625,829)
897,273
1,131,599
-
-
Profit (Loss) from Continuing Operations, Net of Tax
897,273
1,131,599
Profit (Loss) Net of Tax
897,273
1,131,599
Foreign Currency Translation
9,757
(5,291)
Other Comprehensive Income, Net of Tax
9,757
(5,291)
907,030
1,126,308
897,273
1,131,599
905,164
1,157,596
Other Items of Expense Employee Benefits Expense Cost of Services Depreciation Expense Finance Costs
7
Other Expenses Profit (Loss) Before Tax from Continuing Operations Income Tax Benefit (Expense)
8 9
Other Comprehensive Income
Total Comprehensive Income
Profit (Loss) Net of Tax Profit (Loss) Attributable to Owners of the Parent, Net of Tax
The accompanying notes form an integral part of these financial statements Ser a Number: 730498995515354
9
SYSTEMS@WORK PTE. LTD. AND ITS SUBSIDIARIES STATEMENT OF COMPREHENSIVE INCOME For the financial year ended 31 December 2011 Group Note Profit (Loss) Attributable to Non-Controlling Interests, Net of Tax Total Comprehensive Income Total Comprehensive Income Attributable to Owners of the Parent Total Comprehensive Income Attributable to Non-Controlling Interests
2011 SGD
2010 SGD
(7,891)
(25,997)
907,030
1,126,308
914,921
1,152,657
(7,891)
(26,349)
The accompanying notes form an integral part of these financial statements Ser a Number: 730498995515354
10
SYSTEMS@WORK PTE. LTD. AND ITS SUBSIDIARIES STATEMENT OF FINANCIAL POSITION As at 31 December 2011
Group Note
2011 SGD
Company 2010 SGD
2011 SGD
2010 SGD
ASSETS Non-Current Assets Plant and Equipment Intagible Assets Investment in Subsidiary Companies
10
29,330
21,889
28,233
20,039
11 12
20,178,000 -
-
20,178,000 17,360
23,313
20,207,330
21,889
20,223,593
43,352
13
1,084,425
616,300
1,078,359
609,431
14
2,980,591
2,985,129
2,944,159
2,939,565
Total Current Assets
4,065,016
3,601,429
4,022,518
3,548,996
Total Assets
24,272,346
3,623,318
24,246,111
3,592,348
10,539,527 (7,436,897)
10,404,701 (8,342,061)
10,539,527 (7,544,352)
10,404,701 (8,416,898)
(75,023)
(9,335)
-
-
422
(9,335)
-
-
(75,445)
-
-
-
3,027,607
2,053,305
2,995,175
1,987,803
Total Non-Current Assets Current Assets Trade and Other Receivables Cash and Cash Equivalents
EQUITY AND LIABILITIES Equity Share Capital Retained Earnings (Accumulated Losses) Other Reserves, Total Translation Reserves Other Reserves
15
16
Equity, Attributable to
The accompanying notes form an integral part of these financial statements Ser a Number: 730498995515354
11
SYSTEMS@WORK PTE. LTD. AND ITS SUBSIDIARIES STATEMENT OF FINANCIAL POSITION As at 31 December 2011 Group Note
2011 SGD
Company 2010 SGD
2011 SGD
2010 SGD
Owners of the Parent, Total Non-Controlling Interests
17
-
(24,823)
-
-
3,027,607
2,028,482
2,995,175
1,987,803
20,178,000
-
20,178,000
-
20,178,000
-
20,178,000
-
20
1,066,440
1,594,530
1,072,936
1,604,545
9
299
306
-
-
1,066,739
1,594,836
1,072,936
1,604,545
Total Liabilities
21,244,739
1,594,836
21,250,936
1,604,545
Total Equity and Liabilities
24,272,346
3,623,318
24,246,111
3,592,348
Total Equity
Non-Current Liabilities Long Term Loan
19
Total Non-Current Liabilities Current Liabilities Trade and Other Payables Income Tax Payable Total Current Liabilities
The accompanying notes form an integral part of these financial statements Ser a Number: 730498995515354
12
SYSTEMS@WORK PTE. LTD. AND ITS SUBSIDIARIES STATEMENT OF CHANGES IN EQUITY For the financial year ended 31 December 2011
Group Note
Opening Balance at 01/01/2011
Equity, Attributable to Owners of the Parent, Total
Share Capital
Retained Earnings (Accumulated Losses)
Translation Reserve
Other Reserves
Non-Controlling Interests
SGD
SGD
SGD
SGD
SGD
SGD
SGD
2,028,482
2,053,305
10,404,701
(8,342,061)
(9,335)
-
(24,823)
897,273
905,164
-
905,164
-
-
(7,891)
9,757
9,757
-
-
9,757
-
-
907,030
914,921
-
905,164
9,757
-
(7,891)
15
134,826
134,826
134,826
-
-
-
-
17, 18
(41,205)
(75,445)
-
-
-
(75,445)
34,240
17
(1,526)
-
-
-
-
-
(1,526)
3,027,607
3,027,607
10,539,527
(7,436,897)
422
(75,445)
-
Profit Net of Tax Other Comprehensive Income for the Year Total Comprehensive Income for the Period Shares Issued Acquisition of Non-Controlling Interest
Total Equity
Disposal of Subsidiary
Closing Balance at 31/12/2011
The accompanying notes form an integral part of these financial statements Ser a Number: 730498995515354
13
SYSTEMS@WORK PTE. LTD. AND ITS SUBSIDIARIES STATEMENT OF CHANGES IN EQUITY For the financial year ended 31 December 2011 Group Note
Opening Balance at 01/01/2010
Total Equity
Equity, Attributable to Owners of the Parent, Total
Share Capital
Retained Earnings (Accumulated Losses)
Translation Reserve
Other Reserves
Non-Controlling Interests
SGD
SGD
SGD
SGD
SGD
SGD
SGD
900,648
900,648
10,404,701
(9,499,657)
(4,396)
-
-
1,131,599
1,157,596
-
1,157,596
-
-
(25,997)
(5,291)
(4,939)
-
-
(4,939)
-
(352)
Total Comprehensive Income for the Period
1,126,308
1,152,657
-
1,157,596
(4,939)
-
(26,349)
Acquisition of Subsidiary Companies
1,526
-
-
-
-
-
1,526
2,028,482
2,053,305
10,404,701
(8,342,061)
(9,335)
-
(24,823)
Profit Net of Tax Other Comprehensive Income for the Year
Closing Balance at 31/12/2010
The accompanying notes form an integral part of these financial statements Ser a Number: 730498995515354
14
SYSTEMS@WORK PTE. LTD. AND ITS SUBSIDIARIES STATEMENT OF CHANGES IN EQUITY For the financial year ended 31 December 2011 Company Note
Total Equity
Equity, Attributable to Owners of the Parent, Total
Share Capital
Retained Earnings (Accumulated Losses)
SGD
SGD
SGD
SGD Opening Balance at 01/01/2011 Total Comprehensive Income for the Period Shares Issued
15
Closing Balance at 31/12/2011
Opening Balance at 01/01/2010 Total Comprehensive Income for the Period Shares Issued
Closing Balance at 31/12/2010
15
1,987,803
1,987,803
10,404,701
(8,416,898)
872,546
872,546
-
872,546
134,826
134,826
134,826
-
2,995,175
2,995,175
10,539,527
(7,544,352)
840,086
840,086
10,404,701
(9,564,615)
1,147,717
1,147,717
-
1,147,717
-
-
-
-
1,987,803
1,987,803
10,404,701
(8,416,898)
The accompanying notes form an integral part of these financial statements Ser a Number: 730498995515354
15
SYSTEMS@WORK PTE. LTD. AND ITS SUBSIDIARIES STATEMENT OF CASH FLOWS For the financial year ended 31 December 2011
Group Note Cash Flows From Operating Activities Profit (Loss) before Tax
2011 SGD
2010 SGD
897,273
1,131,599
43,216 24,840 18,686 2,064 (2,374)
188,058 (3,150) 19,386 36,369 145,512 28,486 24,196 4,000 240 (64,759) (2,222)
940,489
1,319,657
(1,002,148)
115,237
(476,518) (525,630)
69,035 46,202
Cash Flows From (Used In) Operations Interest Received Interest Paid
(61,659) 2,374 -
1,434,894 2,222 (240)
Net Cash Flows From (Used In) Operating Activities
(59,285)
1,436,876
Cash Flows From Investing Activities Acquisition of Intangible asset Acquisition of Non-Controlling Interests Acquisition of Plant and Equipment Disposal of Subsidiary, Net of Cash Disposed Of
(20,178,000) (41,205) (26,165) (6,090)
(13,928) 2,091
Net Cash Flows From (Used In) Investing Activities
(20,251,460)
(11,837)
20,178,000 134,826
-
Total Adjustments Unrealised Foreign Exchange Difference Depreciation of Plant and Equipment Loss on Disposal of Subsidiary Allowance for Impairment on Trade Receivables Reversal of Impairment Losses Bad Debt Written Off Grant Income Impairment of Goodwill Interest Expense Interest Income Bad Debt Recovered Operating Cash Flows before Changes in Working Capital Total Changes in Working Capital (Increase) Decrease in Trade and Other Receivables (Decrease) Increase in Trade and Other Payables
Cash Flows From Financing Activities Proceeds from loan from holding company Proceeds from Issuance of Shares
The accompanying notes form an integral part of these financial statements Ser a Number: 730498995515354
16
SYSTEMS@WORK PTE. LTD. AND ITS SUBSIDIARIES STATEMENT OF CASH FLOWS For the financial year ended 31 December 2011 Group Note
2011 SGD
2010 SGD
Net Cash Flows From (Used In) Financing Activities
20,312,826
-
Net Increase (Decrease) in Cash and Cash Equivalents Effect of Exchange Rate Changes on Cash and Cash Equivalents Cash and Cash Equivalents, Statement of Cash Flows, Beginning Balance
2,081 (6,619)
1,425,039 -
2,985,129
1,560,090
2,980,591
2,985,129
Cash and Cash Equivalents, Statement of Cash Flows, Ending Balance
14
The accompanying notes form an integral part of these financial statements Ser a Number: 730498995515354
17
SYSTEMS@WORK PTE. LTD. AND ITS SUBSIDIARIES NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 31 December 2011
These notes form an integral part of and should be read in conjunction with the accompanying financial statements. 1.
CORPORATE INFORMATION
The Company is domiciled and incorporated in the Republic of Singapore on 5 November 1999 as SYSTEMS@WORK PTE. LTD. The financial statements of the Company for the financial year ended 31 December 2011 were authorised for issue in accordance with a resolution of the directors on 13 March 2012. The registered office of the Company is located at 8 Wilkie Road, #03-01, Wilkie Edge, Singapore 228095. The principal place of business of the Company is located at 14A Jalan Klapa, Singapore 199326. The principal activities of the Company and its subsidiary companies are of the provision of multi-channel payment processing services. There have been no significant changes in the nature of these activities during the financial year.
2.
SIGNIFICANT ACCOUNTING POLICIES
2.1
Basis of preparation
The financial statements are prepared in accordance with and comply with Singapore Financial Reporting Standards (FRS). The financial statements are prepared under the historical cost basis except as disclosed in the accounting policies below. The preparation of financial statements requires the use of estimates, assumptions and judgments that affect the reported amounts of assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the financial year. These estimates are based on directors' best knowledge of current events, actual results may ultimately differ from those estimates. The key estimates and judgments made that have a material effect are those relating to depreciation and income tax. The financial statements are expressed in Singapore Dollar (SGD or $). The accounting policies have been consistently applied by the Group and the Company and are consistent with those used in the previous financial year.
Ser a Number: 730498995515354
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SYSTEMS@WORK PTE. LTD. AND ITS SUBSIDIARIES NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 31 December 2011
2.2
Changes in accounting policies
The accounting policies are consistent with those of the previous financial year except in the current financial year, the Company has adopted all the new and revised standards and Interpretations of FRS (INT FRS) that are effective for annual periods beginning on or after 1 January 2011. The adoption of these standards and interpretations did not have any effect on the financial performance or position of the Company. Revised FRS 24 Related Party Disclosures The revised FRS 24 clarifies the definition of a related party to simplify the identification of such relationships and to eliminate inconsistencies in its application. The revised FRS 24 expands the definition of a related party and would treat two entities as related to each other whenever a person (or a close member of that person's family) or a third party has control or joint control over the entity, or has significant influence over the entity. The revised standard also introduces a partial exemption of disclosure requirements for government-related entities. As this is a disclosure standard, it will have no impact on the financial position or financial performance of the Company.
2.3
New or revised accounting standards and interpretations
The Company has not adopted the following standards and interpretations that have been issued but not yet effective: Effective for annual periods Description
beginning on or after
FRS 1
:
Presentation of Items of Other Comprehensive Income
1 July 2012
FRS 27
:
Separate Financial Statements
1 January 2013
FRS 112
:
Disclosure of Interest in Other Entities
1 January 2013
FRS 113
:
Fair Value Measurements: - Amendments to FRS 12 Deferred Tax: Recovery of Underlying Assets
1 January 2012
- Amendments to FRS 107 Disclosures: Transfers of Financial Assets
1 July 2011
The directors expect that the adoption of the standards and interpretations above will have no material impact on the financial statements in the period of initial application.
Ser a Number: 730498995515354
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SYSTEMS@WORK PTE. LTD. AND ITS SUBSIDIARIES NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 31 December 2011
2.4
Basis of consolidation
(a)
Business combinations from 1 January 2010 The consolidated financial statements comprise the financial statements of the Company and its subsidiaries as at the end of the reporting period. The financial statements of the subsidiaries used in the preparation of the consolidated financial statements are prepared for the same reporting date as the Company. Consistent accounting policies are applied to like transactions and events in similar circumstances. All intro-group balances income and expenses and unrealised gains and losses resulting from intra-group transactions are eliminated in full. Subsidiaries are consolidated from the date of acquisition, being the date on which the Group obtains control, and continue to be consolidated until the date that such control ceases. Business combinations are accounted for by applying the acquisition method. Identifiable assets acquired and liabilities assumed in a business combination are measured intially at their fair values at the acquisition date. Acquisition-related costs are recognised as expenses in the periods in which the costs are incurred and the services are received. When the Group acquires a business, it assesses the financial assets and liabilities assumed for appropriate classification and designation in accordance with the contractual terms, economic circumstances and pertinent conditions as at the acquisition date. This includes the separation of embedded derivatives in host contracts by the acquiree. Any contingent consideration to be transferred by the acquirer will be recognised at fair value at the acquisition date. Subsequent changes to the fair value of the contingent consideration which is deemed to be an asset or liability, will be recognised in accordance with FRS 39 either in profit or loss or as the change to other comprehensive income. If the contingent consideration is classified as equity, it is not be remeasured until it is finally settled within equity. In business combinations achieved in stages, previously held equity interests in the acquiree are remeasured to fair value at the acquisition date and any corresponding gain or loss is recognised in profit or loss. The Group elects for each individual business combination, whether non-controlling interest in the acquiree (if any) is recognised on the acquisition date at the fair value, or at the non-controlling interest's proportionate share of the acquiree identifiable net assets.
Ser a Number: 730498995515354
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SYSTEMS@WORK PTE. LTD. AND ITS SUBSIDIARIES NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 31 December 2011
Any excess of the sum of the fair value of the consideration transferred in the business combination, the amount of non-controlling interest in the acquiree (if any), and the fair value of the Group's previously held equity interest in the acquiree (if any), over the net fair value of the acquiree's identifiable assets and liabilities is recorded as goodwill. (b)
Business combinations before 1 January 2010 In comparison to the above mentioned requirements, the following differences applied: Business combinations are accounted for by applying the purchase method. Transaction costs directly attributable to the acquisition formed part of the acquisition costs. The non-controlling interest (formerly known as minority interest) was measured at the proportionate share of the acquiree's identifiable net assets. Business combinations achieved in stages were accounted for as separate steps. Adjustments to those fair values relating to previously held interests are treated as a revaluation and recognised in equity. When the Group acquired a business, embedded derivatives separated from the host contract by the acquiree are not reassessed on acquisition unless the business combination results in a change in the terms of the contract that significantly modifies the cash flows that would otherwise be required under the contract. Contingent consideration was recognised if, and only if, the Group had a present obligation, the economic outflow was more likely than not and a reliable estimate was determinable. Subsequent measurements to the contingent consideration affected goodwill.
2.5
Transactions with non-controlling interest
Non-controlling interest represents the equity in subsidiaries not attributable, directly or indirectly, to owners of the Company, and are presented separately in the consolidated statement of comprehensive income and within equity in the consolidated statement of financial position, separately from equity attributable to owners of the Company. Changes in the Company owners' ownership interest in the subsidiaries that do not result in a loss of control are accounted for as equity transactions. In such circumstances, the carrying amounts of the controlling and non-controlling interests are adjusted to reflect the changes in their relative interests in the subsidiaries. Any difference between the amount by which the non-controlling interest is adjusted and the fair value of the consideration paid or received is recognised directly in equity and attributed to owners of the parent.
Ser a Number: 730498995515354
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SYSTEMS@WORK PTE. LTD. AND ITS SUBSIDIARIES NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 31 December 2011
2.6
Functional and foreign currency
(a)
Functional currency The management has determined the currency of the primary economic enviroment in which the Company operates i.e. functional currency, to be SGD. Sales prices and major costs of providing goods and services including major operating expenses are primarily influenced by fluctuations in SGD.
(b)
Foreign currency Transactions in foreign currencies are measured in the respective functional currency of the Company and its subsidiaries and are recorded on initial recognition in the functional currency at exchange rates approximating those ruling at the transaction dates. Monetary assets and liabilities denominated in foreign currencies are translated at the closing rate of exchange ruling at the end of the reporting period. Non-monetary items that are measured in terms of historical cost in the foreign currencies are translated using the exchange rates as at dates of the initial transactions. Non-monetary items measured at fair value in the foreign currencies are translated using the exchange rates at the date when the fair value was determined. Exchange difference arising on the settlement on monetary items or on translating monetary items at the end of the reporting period are recognised in profit or loss.
(c)
Foreign currency translation The results and financial position of foreign operations are translated into SGD using the following procedures: • Assets and liabilities for each statement of financial position presented are translated at the closing rate ruling at the end of the reporting period; and • Income and expenses for each profit or loss are translated at average exchange rates for the year, which approximates the exchange rates at the dates of the transactions. All resulting exchange differences are recognised in a separate component of equity as foreign currency translation reserve. On disposal of a foreign operation, the cumulative amount recognised in other comprehensive income relating to that particular foreign operation is recognised in profit or loss.
Ser a Number: 730498995515354
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SYSTEMS@WORK PTE. LTD. AND ITS SUBSIDIARIES NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 31 December 2011
2.7
Plant and equipment
Plant and equipment are stated at cost less accumulated depreciation and any impairment. The cost of plant and equipment initially recognised includes its purchase price and any directly attributable costs of bringing the plant and equipment to working condition for its intended use. Dismantlement, removal or restoration cost are included as part of the cost of plant and equipment if obligation for dismantlement, removal or restoration is incurred as a consequence of acquiring or using the items. Subsequent expenditure relating to plant and equipment that has already been recognised is added to the carrying amount of the asset only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. All other repair and maintenance expense is recognised in profit or loss when incurred. Depreciation is calculated on a straight line method over their estimated useful lives as follows: Office equipment
3 years
Computer and software
3 years
Furniture & fittings
2 years
The carrying values of plant and equipment are reviewed for impairment when events or changes in circumstances indicate that the carrying value may not be recoverable. The residual values, useful life and depreciation method are reviewed at the end of each reporting period to ensure that the amount, method and period of depreciation are consistent with previous estimates and the expected pattern of consumption of the future economic benefits embodied in the items of plant and equipment. An item of plant and equipment is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss on derecognition of the asset is included in profit or loss in the year the asset is derecognised.
2.8
Intangible assets
Intangible assets acquired separately are measured initially at cost. The cost of intangible assets acquired in a business combination is their fair value as at the date of acquisition. Following initial acquisition, intangible assets are carried at cost less any accumulated amortisation and any accumulated impairment losses. Internally generated intangible assets, excluding capitalised development costs are not capitalised and expenditure is reflected in profit or loss in the year in which the expenditure is incurred. The useful lives of intangible assets are assessed as either finite or indefinite.
Ser a Number: 730498995515354
23
SYSTEMS@WORK PTE. LTD. AND ITS SUBSIDIARIES NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 31 December 2011
Intangible assets with finite useful lives are amortised over the estimated useful lives and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortisation period and the amortisation method are reviewed at least at each financial year-end. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset is accounted for by changing the amortisation period or method, as appropriate, and are treated as changes in accounting estimates. The amortisation expense on intangible assets with finite useful lives is recognised in profit or loss in the expense category consistent with the function of the intangible asset. Intangible assets with indefinite useful lives or not yet available for use are treated for impairment annually, or more frequently if the events and circumstances indicate that the carrying value may be impaired either individually or at the cash-generating unit level. Such intangible assets are not amortised. The useful life of an intangible asset with an indefinite useful life is reviewed annually to determine whether the useful life assessment continues to be supportable. If not, the change in useful life from indefinite to finite is made on a prospective basis. Gains and losses arising from de-recognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognised in profit or loss when the asset is derecognised. Payment Processing Method The costs include acquisition of patent, copyright and intellectual property right in respect of a payment processing method. the intangible asset is stated at cost less accumulated amortisation and impairment loss. Amortisation is calculated on a straight line basis over the estimated useful life of 5 years. Acquired customer relationships Acquired customer relationships are recognised at cost and a substantial portion thereof is subject to impairment testing on a regular basis, at least once annually. A minor portion is amortised using straight line method over the course of the useful economic life of 10 years.
2.9
Impairment of non-financial assets
The carrying amounts of the Group's assets are reviewed at the end of each reporting period to determine whether there is any indication of impairment. If any such indication exists, the asset's recoverable amount is estimated. All impairment losses are recognised in profit or loss whenever the carrying amount of an asset or its cash generating unit exceeds its recoverable amount. An impairment loss is only revised to the extent that the asset's carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or impairment, if no impairment loss had been recognised. All reversals of impairment are recognised in profit or loss.
Ser a Number: 730498995515354
24
SYSTEMS@WORK PTE. LTD. AND ITS SUBSIDIARIES NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 31 December 2011
2.10 Financial assets
Financial assets are recognised on the statement of financial position when, and only when, the Group becomes a party to the contractual provisions of the financial instrument. When financial assets are recognised initially, they are measured at fair value, plus transaction costs. All regular way purchases and sales of financial assets are recognised or derecognised on the trade date i.e. the date that the Group commits to purchase or sell the asset. Regular way purchases or sales are purchases or sales of financial assets that require delivery assets, within the period generally established by regulation or convention in the market place concerned. Non-derivative financial assets with fixed or determinable payments that are not quoted in an active market are classified as loans and receivables. Subsequent to initial recognition, loans and receivables are measured at amortised cost using the effective interest method, less impairment losses. Gains and losses are recognised in profit or loss when the loans and receivables are derecognised or impaired, and through the amortisation process. The Group classifies the following financial assets as loans and receivables: • trade and other receivables, including the amounts due from related party • cash and cash equivalents
2.11 Cash and cash equivalents
Cash and cash equivalents comprise cash on hand and bank balances and demand deposits (but excludes deposits which are pledged to bank to secure credit facilities) which are readily convertible to known amounts of cash and subject to an insignificant risk of changes in value. Cash carried in the statement of financial position is classified and accounted for as loans and receivables under FRS 39.
2.12 Impairment of financial assets
The Group assesses at the end of each reporting period whether there is any objective evidence that a financial asset or group of financial assets is impaired.
Ser a Number: 730498995515354
25
SYSTEMS@WORK PTE. LTD. AND ITS SUBSIDIARIES NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 31 December 2011
If there is objective evidence that an impairment loss on loans and receivables carried at amortised cost has been incurred, the amount of the loss is measured as the difference between the asset's carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the financial asset's original effective interest rate (i.e. the effective interest rate computed at initial recognition). The carrying amount of the asset is reduced through the use of an allowance account. The amount of the loss is recognised in profit or loss. When the financial asset becomes uncollectible, the carrying amount of impaired financial asset is reduced directly or if an amount was charged to the allowance account, the amounts charged to the allowance account are written off against the carrying value of the financial assets. To determine whether there is objective evidence that an impairment loss on financial assets has been incurred, the Group considers factors such as the probability of insolvency or significant financial difficulties of the debtor and default or significant delay in payments. If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occuring after the impairment was recognised, the previously recognised impairment loss is reversed. Any subsequent reversal of an impairment loss is recognised in profit or loss, to the extent that the carrying value of the asset does not exceed its amortised cost at the reversal date.
2.13 Derecognition of financial assets
A financial asset is derecognised where the contractual rights to receive cash flows from the asset have expired. On derecognition of a financial asset in its entirety, the difference between the carrying amount and the sum of the consideration received and any cumulative gain or loss that has been recognised directly in equity is recognised in profit or loss.
2.14 Financial liabilities
Financial liabilities include trade payables, which are normally settled on 30-90 days terms, other amounts payable, payables to related parties and interest-bearing loans and borrowings. Financial liabilities are recognised on the statement of financial position when, and only when, the Group becomes a party to the contractual provisions of the financial instrument. Financial liabilities are initially recognised at fair value of consideration received less attributable transaction costs and subsequently measured at amortised cost using the effective interest method.
Ser a Number: 730498995515354
26
SYSTEMS@WORK PTE. LTD. AND ITS SUBSIDIARIES NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 31 December 2011
Gains and losses are recognised in profit or loss when the liabilities are derecognised and through the amortisation process. The liabilities are derecognised when the obligation under the liability is discharged or cancelled or expired. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability and the difference in the respective carrying amounts is recognised in profit or loss.
2.15 Provisions
Provisions are recognised when the Group has a present legal or constructive obligation as a result of past events where it is probable that it will result in an outflow of economic benefits that can be reasonably estimated. Provisions are reviewed at the end of each reporting period and adjusted to reflect the current best estimate. If it is no longer probable that an outflow of resources embodying economic benefits will be required to settle the obligation, the provision is reversed. If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, where appropriate, the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost.
2.16 Government grants
Government grants are recognised at their fair value when there is reasonable assurance that the grant will be received and all attaching conditions will be compiled with. Job Credit Scheme Cash grants received from government in relation to the Job Credit Scheme are recognised as income upon receipt.
2.17 Operating leases
Leases where the lessor effectively retains substantially all the risk and benefit of ownership of the lease asset, are classified as operating leases. Operating lease payments are charged to profit or loss on a straight line basis over the period of the lease term.
Ser a Number: 730498995515354
27
SYSTEMS@WORK PTE. LTD. AND ITS SUBSIDIARIES NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 31 December 2011
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 period in which termination takes place.
2.18 Employee Benefits
(a)
Defined contribution plan As required by law, the Group makes contribution to the state pension schemes in Singapore and Malaysia. Such contributions are recognised as compensation expenses in the same period as the employment that gives rise to the contribution.
(b)
Employee leave entitlement Employee entitlements to annual leave are recognised when they accrued to employees. A provision is made for the estimated liability for leave as a result of services rendered by employees up to the end of the reporting period.
(c)
Employee share option plans Employees of the Group receive remuneration in the form of share options as consideration for services rendered. The cost of these equity-settled transactions with employees is measured by reference to the fair value of the options at the date on which the options are granted. This cost is recognised in profit or loss, with a corresponding increase in the employee share option reserve, over the vesting period. The cumulative expense recognised at the end of each reporting period until the vesting date reflects the extent to which the vesting period has expired and the Group's best estimate of the number of options that will ultimately vest. The charge or credit to profit or loss for a period represents the movement in cumulative expense recognised as at the beginning and end of that period. No expense is recognised for options that do not ultimately vest, except for options where vesting is conditional upon a market condition, which are treated as vested irrespective of whether or not the market condition is satisfied, provided that all other performance and/or service conditions are satisfied. The employee share option reserve is transferred to retained earnings upon expiry of the share options. When the options are exercised, the employee share option reserve is transferred to share capital if new shares are issued, or to treasury shares if the options are satisfied by the reissuance of treasury shares. In situations where equity instruments are issued and some or all of the goods or services received by the entity as consideration cannot be specifically identified, the unidentified goods or services received (or to be received) are measured as the difference between the fair value of the share-based payment and the fair value of any identifiable goods or services received at the grant date. This is then capitalised or expensed as appropriate.
Ser a Number: 730498995515354
28
SYSTEMS@WORK PTE. LTD. AND ITS SUBSIDIARIES NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 31 December 2011
2.19 Revenue recognition
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured. The following specific recognition criteria must also be met before revenue is recognised: (a)
Rendering of services Revenue arising from customisation and integration services are recognised as services which are rendered and accepted by the customers. Revenue from post-contract customer support are recognised proportionately on a time basis over contract period. Revenue from payment processing services are recognised as services rendered.
(b)
Interest income Interest income is recognised as interest accrues (using the effective interest method) unless collectibility is in doubt.
2.20 Income tax
(a)
Current tax Current tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantially enacted by the end of the reporting period. Current taxes are recognised in profit or loss except that tax relating to items recognised in equity is recognised directly in equity.
(b)
Deferred taxation Deferred income tax is provided using the liability method on temporary differences at the end of the reporting period between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.
Ser a Number: 730498995515354
29
SYSTEMS@WORK PTE. LTD. AND ITS SUBSIDIARIES NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 31 December 2011
Deferred tax assets and liabilities are recognised for all temporary differences, except: • Where the deferred tax arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction affects neither the accounting profit nor taxable profit or loss; and • In respect of deductible temporary differences and carry-forward of unused tax credits and unused tax losses, if it is not probable that taxable profit will be available against which the deductible temporary differences and carry-forward of unused tax credits and unused tax losses can be utilised. The carrying amount of deferred tax asset is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised. Unrecognised deferred tax assets are reassessed at the end of each reporting period and are recognised to the extent that it has become probable that future taxable profit will allow the deferred tax asset to be utilised. Deferred tax assets and liabilities are measured at the tax rates that are expected to be applied to the year when the asset is realised or the liability is settled, based on tax rates and tax laws that have been enacted or substantively enacted at the end of the reporting period. Deferred taxes are recognised in profit or loss except that deferred tax relating to items recognised directly in equity is recognised directly in equity. (c)
Goods and services Revenues, expenses and assets are recognised net of the amount of goods and services tax (GST) except: • Where the GST incurred on a purchase of assets or services is not recoverable from the taxation authority, in which case the GST is recognised as part of the cost of acquisition of the asset or as part of the expense item as applicable; and • Receivables and payables that are stated with the amount of GST included. The net amount of GST recoverable from, or payable to, the taxation authority is included as part of the receivables or payables in the statement of financial position.
3.
HOLDING COMPANY AND RELATED PARTY DISCLOSURES
The Company's immediate holding company is TrustPay International GMBH, a company incorporated in Germany and the ultimate holding company is Wirecard AG, a company incorporated in Germany.
Ser a Number: 730498995515354
30
SYSTEMS@WORK PTE. LTD. AND ITS SUBSIDIARIES NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 31 December 2011
Related parties are entities with common direct or indirect shareholders and or directors. Parties are also considered to be related if one party has the ability to control the other party or exercise significant influence over the other party in making financial and operating decision. Some of the Group's transactions and arrangement are with related parties. The effect of these on the basis determined between parties are reflected in financial statements. The related party balances are unsecured, interest-free and repayable on demand unless otherwise stated. (a)
Significant related party transactions 2011
2010
$
$
Holding company, Trustpay International GMBH Payment on behalf
20,178,000
-
During the financial year, the holding company, Trustpay International GMBH, made payment on behalf of the Group amounted to $20,178,000 (2010: NIL) for the acquisition of intangible assets from a third party. As at 31 December 2011, the Group has $20,178,000 (2010: NIL) payable to its holding company. (b)
Compensation of key management personnel Group 2011
2010
$
$
Directors Directors' remuneration
4.
368,516
353,698
INTEREST INCOME
Group
Interest income from fixed deposits
Ser a Number: 730498995515354
2011
2010
$
$ 2,374
2,222
31
SYSTEMS@WORK PTE. LTD. AND ITS SUBSIDIARIES NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 31 December 2011
5.
OTHER INCOME
Group 2011
2010
$
$
Miscellaneous credits
35,907
126,668
5,034
1,236
40,941
127,904
Government grant
There are no unfulfilled conditions or contingencies attached to the government grant.
6.
EMPLOYEE BENEFITS EXPENSE
Group
Staff salaries and wages
2011
2010
$
$
1,236,775
1,008,606
Staff defined contribution plan
171,435
133,197
Directors' salaries and wages
361,653
329,671
6,864
24,028
29,924
105,474
1,806,651
1,600,976
Directors' defined contribution plan Others
7.
FINANCE COSTS
Group
Interest on late payment
Ser a Number: 730498995515354
2011
2010
$
$ -
240
32
SYSTEMS@WORK PTE. LTD. AND ITS SUBSIDIARIES NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 31 December 2011
8.
PROFIT (LOSS) BEFORE TAX FROM CONTINUING OPERATIONS
This item includes the following charges (credit): Group 2011
2010
$
$
Foreign exchange differences
9.
10,317
30,640
Allowance for impairment on trade receivables
-
36,369
Bad debt written off
-
28,486
Bad debt recovered
-
(64,759)
INCOME TAX (BENEFIT) EXPENSE
(a)
Income tax expense Tax expense attributable to profits is made up of: Group 2011
2010
$
$
Income tax (benefit) expense
-
-
The income tax expense on the results of the financial year varies from the amount of income tax determined by applying the Singapore standard rate of income tax to profit before taxation due to the following factors: Group
Profit before income tax
Ser a Number: 730498995515354
2011
2010
$
$
897,273
1,131,599
33
SYSTEMS@WORK PTE. LTD. AND ITS SUBSIDIARIES NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 31 December 2011
Group 2011
2010
$
$
Tax calculated at a tax rate of 17%
152,537
192,372
(3,559)
(3,417)
3,774
33,616
(6,916)
(4,323)
661
536
(146,497)
(218,784)
-
-
Effect of different tax rates in other countries Expenses not deductible for tax purposes Income not subject to taxation Tax losses not allowed to be carried forward Deferred tax movement not recognised
Deferred income tax assets An analysis of the deferred income tax assets is as follows: Group 2011
2010
$
$
Deferred tax assets Differences in depreciation
124,645
121,650
Unutilised tax losses
1,000,397
1,149,889
Deferred tax assets not recognised
1,125,042
1,271,539
In accordance with Section 37 and Section 23 of Income Tax Act, the Company's accumulated tax losses and capital allowances totalled approximately $6,300,000 carried forward would be disallowed due to the substantial change in shareholders. The Company intends to apply to the Minister of Finance to allow the Company to carry forward the accumulated tax losses and capital allowances. On the assumption that the accumulated tax losses and capital allowances can be carried forward, the net deferred tax assets of the Group of $1,125,042 (2010: $1,271,539) is not recognised in the financial statements as it is uncertain that there will be future taxable profits that will allow the deferred tax assets to be utilised.
Ser a Number: 730498995515354
34
SYSTEMS@WORK PTE. LTD. AND ITS SUBSIDIARIES NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 31 December 2011
The unabsorbed tax losses available for set off against future taxable income subject to agreement with the authorities and compliance with certain provisions in the tax legislations of the respective countries in which the Company and its subsidiary companies operate are approximately as follows: Group
Unabsorbed losses brought forward (b)
2011
2010
$
$
5,805,004
6,499,129
Income tax payable Group
Balance at beginning of financial year Income tax received (paid)
2011
2010
$
$ 306
300
-
-
Tax expense on profit: -
Current financial year
-
-
-
Underprovision in prior years
-
-
(7)
6
299
306
Exchange differences Balance at end of financial year
Ser a Number: 730498995515354
35
SYSTEMS@WORK PTE. LTD. AND ITS SUBSIDIARIES NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 31 December 2011
10.
PLANT AND EQUIPMENT
Office
Computers
Furniture
equipment
& software
& fittings
Total
$
$
$
$
Group Cost At 31.12.2009
36,493
231,257
48,961
316,711
Additions
1,235
12,694
-
13,929
Disposals
(21,758)
(178,593)
(48,440)
(248,791)
(694)
(969)
10
(1,653)
At 31.12.2010
15,276
64,389
531
80,196
Additions
10,383
15,782
-
26,165
Disposals
-
-
-
-
(423)
(226)
(12)
(661)
25,236
79,945
519
105,700
28,935
212,900
45,394
287,229
4,676
11,143
3,567
19,386
(21,758)
(178,593)
(48,440)
(248,791)
20
453
10
483
11,873
45,903
531
58,307
4,834
13,852
-
18,686
-
-
-
-
(31)
(580)
(12)
(623)
16,676
59,175
519
76,370
At 31.12.2010
3,403
18,486
-
21,889
At 31.12.2011
8,560
20,770
-
29,330
Translation difference
Translation difference At 31.12.2011 Accumulated depreciation At 31.12.2009 Charge for the financial year Disposals Translation difference At 31.12.2010 Charge for the financial year Disposals Translation difference At 31.12.2011 Net carrying amount
Ser a Number: 730498995515354
36
SYSTEMS@WORK PTE. LTD. AND ITS SUBSIDIARIES NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 31 December 2011
Office
Computers
Furniture
equipment
& software
& fittings
Total
$
$
$
$
Company Cost At 31.12.2009
35,303
206,821
48,440
290,564
Additions
-
10,185
-
10,185
Disposals
(21,758)
(178,593)
(48,440)
(248,791)
At 31.12.2010
13,545
38,413
-
51,958
Additions
10,000
15,560
-
25,560
Disposals
-
-
-
-
23,545
53,973
-
77,518
27,853
189,800
44,873
262,526
4,515
10,102
3,567
18,184
(21,758)
(178,593)
(48,440)
(248,791)
10,610
21,309
-
31,919
4,602
12,764
-
17,366
-
-
-
-
15,212
34,073
-
49,285
At 31.12.2010
2,935
17,104
-
20,039
At 31.12.2011
8,333
19,900
-
28,233
At 31.12.2011 Accumulated depreciation At 31.12.2009 Charge for the financial year Disposals At 31.12.2010 Charge for the financial year Disposals At 31.12.2011 Net carrying amount
Ser a Number: 730498995515354
37
SYSTEMS@WORK PTE. LTD. AND ITS SUBSIDIARIES NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 31 December 2011
11.
INTANGIBLE ASSETS
Intellectual
Customer-
property
Goodwill
relationships
Total
$
$
$
$
Group Cost At 31.12.2009
375,000
29,625
-
404,625
Additions
-
4,000
-
4,000
Disposals
-
-
-
-
375,000
33,625
-
408,625
Additions
-
-
20,178,000
20,178,000
Disposals
-
(4,000)
-
(4,000)
375,000
29,625
20,178,000
20,582,625
375,000
29,625
-
404,625
-
4,000
-
4,000
375,000
33,625
-
408,625
-
(4,000)
-
(4,000)
375,000
29,625
-
404,625
At 31.12.2010
-
-
-
-
At 31.12.2011
-
-
20,178,000
20,178,000
At 31.12.2010
At 31.12.2011 Accumulated amortisation and impairment At 31.12.2009 Amortisation charge At 31.12.2010 Amortisation charge At 31.12.2011 Net carrying amount
Ser a Number: 730498995515354
38
SYSTEMS@WORK PTE. LTD. AND ITS SUBSIDIARIES NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 31 December 2011
Intellectual
Customer-
property
relationships
Total
$
$
$
Company Cost At 31.12.2009
375,000
-
375,000
Additions
-
-
-
Disposals
-
-
-
375,000
-
375,000
Additions
-
20,178,000
20,178,000
Disposals
-
-
-
At 31.12.2011
-
20,178,000
20,553,000
375,000
-
375,000
-
-
-
375,000
-
375,000
-
-
-
375,000
-
375,000
At 31.12.2010
-
-
-
At 31.12.2011
-
20,178,000
20,178,000
At 31.12.2010
Accumulated amortisation and impairment At 31.12.2009 Amortisation charge At 31.12.2010 Amortisation charge At 31.12.2011 Net carrying amount
Acquisition of customer-relationships was only completed on 15 December 2011. The Company will start amortisation in the next financial year when the benefits of the acquisition commences to flow.
12.
INVESTMENT IN SUBSIDIARY COMPANIES
Company
Investment in subsidiary companies, at cost Impairment losses
Ser a Number: 730498995515354
2011
2010
$
$ 276,903
409,903
(259,543)
(386,590)
17,360
23,313
39
SYSTEMS@WORK PTE. LTD. AND ITS SUBSIDIARIES NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 31 December 2011
Name of Company
Principal activities
(Country of incorporation)
(Place of business)
*Systems@Work (M) Sdn Bhd
Provision of multi-channel payment processing service
(Malaysia)
(Malaysia)
** Safe2Pay Pte. Ltd.
Remittance services
(Singapore)
Equity held Cost
by Company
2011
2010
2011
2010
$
$
%
%
207,903
84,903
99.9
93
69,000
69,000
100
100
-
256,000
-
58
276,903
409,903
(Singapore)
* Telemoney Asia Pte Ltd
Mobile payment services through installation and use of telemarketing
(Singapore)
(Singapore)
* Audited by another firm of accountants. ** Audited by Helmi Talib & Co, Singapore. Disposal of subsidiary Telemoney Asia Pte Ltd The Company disposed off Telemoney Asia Pte Ltd, a 58% owned subsidiary on 21 November 2011 at its carrying values. The disposal consideration of $1 was fully settled in cash. The value of assets and liabilities of Telemoney Asia Pte Ltd recorded in the consolidated financial statements as at 21 November 2011 and cash flow effect of the disposal were: $ Cash and cash equivalents Trade and other payables Net identifiable assets (liabilities) disposed
Ser a Number: 730498995515354
6,091 (2,500) 3,591
40
SYSTEMS@WORK PTE. LTD. AND ITS SUBSIDIARIES NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 31 December 2011
$ Non-controlling interest
(1,526)
Proceeds from disposal
(1)
Loss on disposal
2,064
Total consideration received for 100% equity interest
13.
1
Less: Cash and cash equivalents of subsidiary disposed
(6,091)
Net cashflow on disposal
(6,090)
TRADE AND OTHER RECEIVABLES
Group
Company
2011
2010
2011
2010
$
$
$
$
Trade receivables Outside parties
1,042,227
443,265
1,040,035
439,241
(20,987)
(20,987)
(20,987)
(20,987)
1,021,240
422,278
1,019,048
418,254
Amount due from subsidiaries
-
-
420,406
389,021
Less: Allowance for impairment Subsidiaries
-
-
(420,406)
(389,021)
-
-
-
-
Deposits and prepayments
49,381
191,857
45,507
189,012
Outside parties
12,804
2,165
12,804
2,165
1,000
-
1,000
-
63,185
194,022
59,311
191,177
1,084,425
616,300
1,078,359
609,431
Total trade and other receivables (excluding prepayments)
1,065,950
595,818
1,061,184
588,949
Add: Cash and cash equivalents (Note 14)
2,980,591
2,985,129
2,944,159
2,939,565
Total loans and receivables
4,046,541
3,580,947
4,005,343
3,528,514
Less: Allowance for impairment Outside parties
Other receivables
Amount due from director
Ser a Number: 730498995515354
41
SYSTEMS@WORK PTE. LTD. AND ITS SUBSIDIARIES NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 31 December 2011
Receivables that are past due but not impaired The Group and the Company has trade receivables amounting to $575,043 (2010: $83,561) and $575,043 (2010: $82,313), respectively that are past due at the end of the reporting period but not impaired. These receivables are unsecured and the analysis of their aging at the end of the reporting period is as follows: Group
Company
2011
2010
2011
2010
$
$
$
$
Trade receivables past due Lesser than 30 days
406,064
10,631
406,064
10,317
31 to 60 days
104,708
5,681
104,708
5,576
61 and above
64,271
67,249
64,271
66,420
575,043
83,561
575,043
82,313
Receivables that are impaired The carrying amount of trade receivables individually determined to be impaired and the movement in the related allowance for impairment as follows: Group and Company
Trade receivables - Nominal amounts
2011
2010
$
$ 44,998
58,726
(20,987)
(20,987)
24,011
37,739
20,987
49,356
Charge for the financial year
-
36,369
Recovered during the financial year
-
(64,759)
Exchange differences
-
21
20,987
20,987
Less: Allowance for impairment
Movement in allowance accounts At 1 January
At 31 December
Trade receivables that are individually determined to be impaired at the end of the reporting period relate to debtors that are in significant financial difficulties and have defaulted on payments. These receivables are not secured by any collateral or credit enhancements.
Ser a Number: 730498995515354
42
SYSTEMS@WORK PTE. LTD. AND ITS SUBSIDIARIES NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 31 December 2011
At the end of the reporting period, the Company has provided an allowance of $420,406 (2010: $389,021) for impairment of the asset due from the subsidiary companies with a nominal amount of $420,406 (2010: $389,021). These subsidiaries have been suffering significant financial losses for the current and past years. Trade and other receivables are denominated in the following currencies: Group 2011
2010
2011
2010
$
$
$
$
Singapore Dollar
484,550
393,041
484,550
393,041
United States Dollar
592,664
215,310
592,664
215,310
Malaysian Ringgit
6,066
6,869
-
-
Japanese Yen
1,142
1,077
1,142
1,077
3
3
3
3
1,084,425
616,300
1,078,359
609,431
Hong Kong Dollar
14.
Company
CASH AND CASH EQUIVALENTS
Group
Cash in hand
Company
2011
2010
2011
2010
$
$
$
$
26
2,027
-
2,000
Cash at banks
1,843,556
1,844,792
1,807,150
1,799,255
Fixed deposits
1,137,009
1,138,310
1,137,009
1,138,310
2,980,591
2,985,129
2,944,159
2,939,565
Cash at banks are held in non-interest bearing accounts. Fixed deposits bear interest rates ranging from approximately 0.01% to 0.35% (2010: 0.01% to 0.40%) per annum. The company has the banking facilities which gives them the right to set off against its fixed deposit. For the purpose of the statement of cash flows, cash is comprised of the balances as shown above.
Ser a Number: 730498995515354
43
SYSTEMS@WORK PTE. LTD. AND ITS SUBSIDIARIES NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 31 December 2011
Cash and cash equivalents are denominated in the following currencies: Group 2011
2010
2011
2010
$
$
$
$
2,179,423
2,303,439
2,179,201
2,297,286
635,571
588,747
635,571
588,747
Euro
77,538
1,727
77,538
1,727
Hong Kong Dollar
37,231
37,566
37,231
37,566
Malaysian Ringgit
36,210
39,411
-
-
Australian Dollar
9,713
9,613
9,713
9,613
Japanese Yen
4,905
4,626
4,905
4,626
2,980,591
2,985,129
2,944,159
2,939,565
Singapore Dollar United States Dollar
15.
Company
SHARE CAPITAL
Issued and fully paid ordinary share capital, with no par value Group and Company 2011
2010
No. of
No. of
shares Balance at beginning of financial year Issued during the financial year Balance at end of financial year
$
shares
$
92,338,741
10,404,701
92,338,741
10,404,701
-
134,826
-
-
92,338,741
10,539,527
92,338,741
10,404,701
On 21 November 2011, the Company made call on unpaid or partially paid shares amounted to $134,826. In March 2002, the Company approved Systems@Work Employees' Share option Scheme (the Scheme) under which non-transferable options are granted to selected employees and directors of the Company and its subsidiary companies to subscribe for ordinary shares in the Company. Under the Scheme, options granted generally have a vesting period of 4 years from date of grant and have an exercise period of 10 years. The exercise price of these options is $0.05 per share. No options were exercised during the year.
Ser a Number: 730498995515354
44
SYSTEMS@WORK PTE. LTD. AND ITS SUBSIDIARIES NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 31 December 2011
The options were surrendered and extinguished during the year. Movement in the number of unissued ordinary shares under option and their exercise prices are as follows: No. of ordinary shares under option Granted Beginning
during
of financial financial year
year
Exercised Extinguished during
during
End of
financial
financial
financial
Exercise
Exercise
year
year
year
price
period
Group and Company 2011 2002 Options
859,375
-
-
859,375
-
$0.05
20022012
2003 Options
100,000
-
-
100,000
-
$0.05
20032013
2005 Options
1,000,000
-
- 1,000,000
-
$0.05
20052015
2006 Options
150,000
-
-
150,000
-
$0.05
20062016
2007 Options
1,950,000
-
- 1,950,000
-
$0.05
20072017
4,059,375
-
- 4,059,375
-
2002 Options
859,375
-
-
-
859,375
$0.05
20022012
2003 Options
100,000
-
-
-
100,000
$0.05
20032013
2005 Options
1,000,000
-
-
- 1,000,000
$0.05
20052015
2006 Options
150,000
-
-
-
150,000
$0.05
20062016
2007 Options
1,950,000
-
-
- 1,950,000
$0.05
20072017
4,059,375
-
-
- 4,059,375
2010
Share options granted under the employee share option scheme carry no rights to dividends and no voting rights.
Ser a Number: 730498995515354
45
SYSTEMS@WORK PTE. LTD. AND ITS SUBSIDIARIES NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 31 December 2011
The share options deemed to have no value as at the end of the reporting period.
16.
FOREIGN CURRENCY TRANSLATION RESERVE
Group 2011
2010
$
$
Balance at beginning of financial year
(9,335)
(4,396)
9,757
(4,939)
422
(9,335)
Exchange difference on translation Balance at end of financial year
Foreign currency translation reserve is not distributable reserve arising on translation of the financial statements of foreign operations whose functional currencies are different from that of the Group's presentation currency.
17.
NON-CONTROLLING INTEREST
Group
Balance at beginning of financial year
18.
2011
2010
$
$
(24,823)
-
Share of profits (losses) for the financial year
(7,891)
(26,349)
Acquisition of non-controlling interest
34,240
-
Disposal of subsidiary
(1,526)
1,526
-
(24,823)
OTHER RESERVE
Group 2011
2010
Balance at beginning of financial year
-
-
Acquisition of non-controlling interest
(75,445)
-
Balance at end of financial year
(75,445)
-
Ser a Number: 730498995515354
46
SYSTEMS@WORK PTE. LTD. AND ITS SUBSIDIARIES NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 31 December 2011
Other reserve is not distributable reserve arising from the premium paid on acquisition of non-controlling interest without the loss in control in subsidiary.
19.
LONG TERM LOAN
Group
Loan from holding company
Company
2011
2010
2011
2010
$
$
$
$
20,178,000
-
20,178,000
-
The loan from holding company is unsecured, interest rate and repayment terms are not specified for the time being. As at the end of the reporting period, The Group is negotiating the terms of agreement. Loan term loan is denominated in Euro.
20.
TRADE AND OTHER PAYABLES
Group
Company
2011
2010
2011
2010
$
$
$
$
Trade payable Outside parties
5,779
49,830
1,701
49,717
94,025
139,703
94,025
139,703
Accruals - Outside parties
179,921
154,075
171,601
141,164
Deposits from customers
786,629
1,021,006
786,629
1,021,006
86
229,916
-
229,827
-
-
18,980
23,128
1,060,661
1,544,700
1,071,235
1,554,828
1,066,440
1,594,530
1,072,936
1,604,545
Other payables Accruals - Staff costs
Amount due to directors Amount due to subsidiary companies
Ser a Number: 730498995515354
47
SYSTEMS@WORK PTE. LTD. AND ITS SUBSIDIARIES NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 31 December 2011
Group
Company
2011
2010
2011
2010
$
$
$
$
Total trade and other payables
1,066,440
1,594,530
1,072,936
1,604,545
Add: Long term loan (Note 19)
20,178,000
-
20,178,000
-
Total financial liabilities carried at amortised cost 21,244,400
1,594,530
21,250,936
1,604,545
The amount due to directors is unsecured, interest free and is repayable on demand. This amount is to be settled in cash. The amount due to subsidiary companies is unsecured, interest free and repayable on demand. These amounts are to be settled in cash. Trade and other payables are denominated in the following currencies: Group
Singapore Dollar
2011
2010
2011
2010
$
$
$
$
1,053,020
1,583,238
1,070,200
1,601,965
10,684
8,712
-
-
2,736
2,580
2,736
2,580
1,066,440
1,594,530
1,072,936
1,604,545
Malaysian Ringgit Japanese Yen
21.
Company
OPERATING LEASE COMMITMENTS
The Group and the Company has entered into rental leases on the office premises. These leases have an average life of 3 years with no contingent rent provision included in the contracts. The leases include a renewal clause for extending the lease period for a further 2 years at a rental rate to be agreed between the parties. Rental expenses for office premises and photocopier for the Group was approximately $119,658 (2010: $93,050) and NIL (2010: $840) for the financial years ended 31 December 2011 and 2010 respectively.
Ser a Number: 730498995515354
48
SYSTEMS@WORK PTE. LTD. AND ITS SUBSIDIARIES NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 31 December 2011
Future minimum lease payments payable under non-cancelable operating leases as of 31 December are as follows: Group
Not later than one financial year Later than two financial years but not later than five financial years
22.
Company
2011
2010
2011
2010
$
$
$
$
92,565
111,097
89,500
107,960
-
89,500
-
89,500
92,565
200,597
89,500
197,460
FINANCIAL INSTRUMENTS
(a) Financial risk management objectives and policies The main risks arising from the Group's financial instruments are credit risk, foreign currency risk, liquidity risk and interest rate risk. The Group has no market price risk. The board policies for managing these risks are summarised below. There has been no change to the Group's exposures to these financial risks or the manner in which it manages and measures the risk. Credit risk Credit risk is limited to risk arising from the inability of trade receivables to make payments when due. It is the Group's policy to provide credit terms to creditworthy customers. These debts are continually monitored and therefore, the Group does not expect to incur material credit losses. Credit risk is the risk of the loss that may arise on outstanding financial instruments should a counterparty default on its obligations. The Group's exposure to credit risk arises primarily from trade and other receivables. For other financial assets that is cash and cash equivalents, the Group minimises credit risk by dealing exclusively with high credit rating counterparties. Exposure to credit risk The carrying amount of intercompany balances, trade and other receivables and cash and cash equivalents represents the Group's maximum exposure to credit risk. No other financial asset carries a significant exposure to credit risk.
Ser a Number: 730498995515354
49
SYSTEMS@WORK PTE. LTD. AND ITS SUBSIDIARIES NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 31 December 2011
Information regarding credit enhancements for trade and other receivables is disclosed in Note 13 to the financial statements. Credit risk concentration profile The Group determines concentration of credit risk by monitoring the geographical areas of its trade receivables on an on-going basis. At the end of the reporting period, 100% (2010: 100%) of the Group's and Company's trade receivables were due from customers who are located in Asia. Financial assets that are neither past due nor impaired Trade and other receivables that are neither past due nor impaired are creditworthy debtors with good payment record and long term business relationship with the Group. Cash and cash equivalents that are neither past due nor impaired are placed with or entered into with a reputable financial institutions with high credit ratings. Financial asset are neither past due or impaired Information regarding financial assets that are either past due or impaired is disclosed in Note 13 to the financial statements. Foreign currency risk The Group foreign currency exposures arise from the exchange rate movements of Malaysian Ringgit (MYR), United States Dollar (USD), Hong Kong Dollar (HKD), Australian Dollar (AUD), Japanese Yen (JPY) and Euro (EUR) to Singapore Dollar (SGD), which is the Company's functional currency. As at the end of the reporting period, foreign currency balance for trade and other receivables, cash and cash equivalents, long term loan and trade and other payables are disclosed in Notes 13, 14, 19 and 20 to the financial statements.
Ser a Number: 730498995515354
50
SYSTEMS@WORK PTE. LTD. AND ITS SUBSIDIARIES NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 31 December 2011
Sensitivity analysis for foreign currency risk The following table demonstrates the sensitivity to a reasonably possible change in the MYR, USD, HKD, AUD, JPY and EUR (against SGD), with all other variables held constant, of the Group's profit (loss) net of tax and equity. Group 2011
2010
Profit net
MYR
-
USD
-
HKD
-
AUD
-
JPY
-
EUR
-
strengthened 3% (2010: 3%) weakened 3% (2010: 3%) strengthened 3% (2010: 3%) weakened 3% (2010: 3%) strengthened 3% (2010: 3%) weakened 3% (2010: 3%) strengthened 3% (2010: 3%) weakened 3% (2010: 3%) strengthened 3% (2010: 3%) weakened 3% (2010: 3%) strengthened 3% (2010: 3%) weakened 3% (2010: 3%)
Ser a Number: 730498995515354
Loss net
of tax
Equity
of tax
Equity
$
$
$
$
787
787
935
935
(787)
(787)
(935)
(935)
30,583
30,583
20,089
20,089
(30,583)
(30,583)
(20,089)
(20,089)
927
927
935
(935)
(927)
(927)
(935)
(935)
242
242
239
239
(242)
(242)
(239)
(239)
82
82
78
78
(82)
(82)
(78)
(78)
(500,502)
(500,502)
43
43
500,502
500,502
(43)
(43)
51
SYSTEMS@WORK PTE. LTD. AND ITS SUBSIDIARIES NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 31 December 2011
Liquidity risk In the management of liquidity risk, the Group monitors and maintains a level of cash deemed adequate by management to finance the Group's operations and mitigate the effects of fluctuations in cash flows. The table below summarises the maturity profile of the Group's and the Company's financial liabilities at the end of the reporting period based on contractual undiscounted payments. 2011
2010
1 year
More than
or less
1 year
$
$
1 year
More than
Total
or less
1 year
Total
$
$
$
$
Group Trade and other payables 1,066,440 Long term loan
-
- 1,066,440 1,594,530 20,178,000 20,178,000
-
- 1,594,530 -
-
1,066,440
20,178,000 21,244,440 1,594,530
- 1,594,530
Trade and other payables 1,072,936
- 1,072,936 1,604,545
- 1,604,545
Company
Long term loan
1,072,936
20,178,000 20,178,000
-
20,178,000 21,250,936 1,604,545
-
-
- 1,604,545
Interest rate risk Interest rate risk is the risk that the fair value or future cash flows of the Company's financial instruments will fluctuate because of changes in market interest rates. The Company's exposure to interest rate risk arises primarily from interest bearing fixed deposits. The interest rates for the interest bearing fixed deposits during the financial year range approximately from 0.01% to 0.35% (2010: 0.01% to 0.40%) per annum. The Company has no policies in place to mitigate the effect of the exposure on interest rate risk. Sensitivity analysis for interest rate risk At the end of the reporting period, if the interest rate had been 100 basis points higher/lower with all other variables held constant, the Group's profits net of tax would have been $9,437 (2010: $9,448) higher/lower arising mainly as a result of a higher/lower interest income on fixed deposits.
Ser a Number: 730498995515354
52
SYSTEMS@WORK PTE. LTD. AND ITS SUBSIDIARIES NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 31 December 2011
(b) Fair values of financial assets and financial liabilities The fair value of financial assets and financial liabilities reported in the statement of financial position approximates the carrying amounts of those assets and liabilities, as these are short term in nature, except for advances from shareholder. During the financial year, no amount (2010: NIL) has been recognised in profit or loss in relation to the change in fair value of financial liabilities estimated using a valuation technique. The Group has no fair value measurement recognised in the statement of financial position as at the end of the reporting period.
23.
CAPITAL MANAGEMENT
The Group's objective when managing capital are to safeguard the Group's ability to continue as a going concern. The Group monitors its cash resources to enable it to pay its creditors as and when they fall due. Net cash resources of the Group is as follows: 2011
2010
$
$
Trade and other receivables (excluding prepayments) (Note 13)
1,065,950
595,818
Cash and cash equivalents (Note 14)
2,980,591
2,985,129
(1,066,440)
(1,594,530)
2,980,101
1,986,417
Less: Trade and other payables (Note 20) Net cash resources
The Group's overall strategy remains unchanged from the previous financial year. The Group is not subject to any externally imposed capital requirements.
Ser a Number: 730498995515354
53
