Change for the Better - koyotech.comkoyotech.com/Koyo AR08_060409.pdf · 47800 Petaling Jaya Selangor Malaysia Independent Auditor ... outsourcing & maintenance Such services were

KOYO INTERNATIONAL LIMITED5 Kaki Bukit Crescent #05-01Koyotech Building Singapore 416238Tel: 6744 9388 Fax: 6744 0788Email: [email protected]

KOYO INTERNATIONAL LIMITED • ANNUAL REPORT 2008

Change forthe Better...

Koyo cover 020409.indd 1 2009-4-4 15:34:20

CONTENTS

PAGE

CORPORATE INFORMATION 2

EXECUTIVE DIRECTOR’S MESSAGE 3

CORE SERVICES 5

BOARD MEMBERS 6

KEY MANAGEMENT TEAM 7

PERFORMANCE REVIEW 8

CORPORATE GOVERNANCE 9 -15

DIRECTORS’ REPORT 16 - 21

STATEMENT BY DIRECTORS 22

INDEPENDENT AUDITOR’S REPORT 23 - 24

BALANCE SHEETS 25

CONSOLIDATED INCOME STATEMENT 26

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY 27

CONSOLIDATED CASH FLOW STATEMENT 28

NOTES TO THE FINANCIAL STATEMENTS 29 - 62

SHAREHOLDINGS STATISTICS 63

NOTICE OF ANNUAL GENERAL MEETING 65 - 66

PROXY FORM

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Koyo International Limited (formerly known as “Cyber Village Holdings Limited”) • Annual Report 2008 Koyo International Limited (formerly known as “Cyber Village Holdings Limited”) • Annual Report 2008

Corporate Information

Board of Directors

Lee Chen ChongNon-Executive Chairman (Appointed on 21 January 2009)

Foo Chek HengExecutive Director (Appointed on 21 January 2009)

Dr Foo Fatt KahExecutive Director (Resigned on 21 January 2009)

Lee Yuen WaiNon-Executive Director (Resigned on 21 January 2009)

Manu BhaskaranIndependent & Non-Executive Director

Serena Lee Chooi LiIndependent & Non-Executive Director

Audit Committee

Manu BhaskaranSerena Lee Chooi LiLee Chen Chong (appointed on 21 January 2009)

Company secretary

Chin Hooi Yen

Registered office

8 Eu Tong Sen Street#15-98 The CentralSingapore 059818Telephone: 6221 9780Fax: 6221 6375

share Registrar

3 Church Street #08-01 Samsung Hub Singapore 049483

solicitors

Gateway Law Corporation8 Eu Tong Sen Street #15-98 The CentralSingapore 059818

Ting & PartnersT109 Level 3 Centrepoint 3 Lebuh Bandar Utama47800 Petaling JayaSelangor Malaysia

Independent Auditor

Nexia TS Public Accounting Corporation Public Accountants and Certified Public Accountants5 Shenton Way #23-03 UIC Building Singapore 068808

Director-in-charge: Kristin YS KimYear of appointment: 2006

Principal Bankers

DBS Bank LtdUOB LtdMalayan Banking BhdCIMB Bank Berhad

Company Registration No. 200100075E

Koyo International Limited (formerly known as “Cyber Village Holdings Limited”) • Annual Report 2008

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executive Director’s Message

Introduction

The previous management and board sought a strategy to reverse the loss-making profile of the previous Cyber Village Group and had worked tirelessly to execute it. As a result of their hard work, they were successful in their efforts and the former Cyber Village Group’s financial losses were reduced by 73.1% in 2008. With the stabilisation of the losses and additional funding obtained from the share placement exercise in 2007, the previous management and board could concentrate on the Reverse Take Over (“RTO”) and on the sale of the Cyber Village e-business consulting business back to the management of the operating subsidiary in Malaysia in a management buy-out (“MBO”).

Regulatory approval was obtained on 20 November 2008 when the Singapore Exchange Securities Trading Limited (SGX-ST) granted its in-principle approval and an extraordinary general meeting was promptly called on 29 December 2008 to seek shareholders approval. With both regulatory and shareholder approvals, the RTO and MBO were finally completed on 21 January 2009.

2008 had indeed been a busy year.

The completion of the RTO on 21st January 2009 marks the end of a chapter for the former Cyber Village Holdings Limited and the beginning of a new one for Koyo International Limited. Cyber Village Holdings Limited will be known as Koyo International Limited and the Koyo Group will take on a new business direction by focusing on the provision of engineering services. We hope to continue pursuing a strategy of growth and expansion while keeping to our core competency in providing engineering services. We will invest in organic growth by taking a multi-pronged approach. This includes, among others, the further improvement of the efficiency of our business so as to maintain a competitive edge over our competitors, expansion of our capabilities in the facilities management sector and increase in the number of design-and-build projects.

Cyber Village Performance

As with the last year, the previous Cyber Village Group’s financial statements for FY2008 was prepared in accordance with FRS 105 in view of the ongoing MBO. The continuing operations from the listed holding company will be presented separately from the disposal group, which will consist of discontinued operations pertaining to the operations of the

subsidiaries. The disposal group (operating Cyber Village subsidiaries) had a slight decrease in turnover, from $2.71m in FY2007 to $2.59m in FY2008. At the net level however, the disposal group improved its performance from a loss of $1.82m to $0.12m due to the implementation of various cost reducing measures implemented as part of the previous management’s restructuring strategy.

The previous Cyber Village Group’s balance sheet as at 31 December 2008 remained largely similar to that as at 31 December 2007. The reduction in cash from about $3.75m in FY2007 to about $2.49m in FY2008 was largely due to payment of professional fees relating to the RTO. The increase in current assets from $168,000 to about $1.10m was due to the prepayment of the said professional fees. Key Markets

The previous Cyber Village Group was largely based in Malaysia and the majority of revenue contribution was from the Malaysian subsidiaries. The Singapore subsidiary focused only on the existing maintenance contracts which had been novated to it by the former Cyber Village Holdings Limited.

With the completion of the RTO and MBO transactions, the Koyo Group will only have operations in Singapore, where it operates within the M&E engineering services industry. The Koyo Group will continue to monitor overseas opportunities in developing countries such as the People’s Republic of China and the Middle East. We may consider expanding into these regions should the opportunities arise.

outlook

With a new business direction and management team in place, we hope that the previous loss making earnings profile of Cyber Village can be reversed and shareholder value can henceforth be created and sustained. One of the ways we hope to use to increase shareholders’ value is through the conduct of share buybacks. As such, we require a mandate from the shareholders in order for us to do so.

We should also be mindful of the far-reaching impacts of the current economic crisis which will, in all likelihood, adversely affect us as well. While we will still secure projects, these will probably be at a lower margin and slower rate as competition for M&E projects become keener and profit margins grow thinner.

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Nevertheless, with our years of experience in the Singapore construction industry, experienced management team, well-established reputation and track record, as well as low gearing, we believe that we will be well positioned to ride the cycles of the construction industry. The Koyo Group will continue to be vigilant and remain alert to the possible challenges ahead.

expression of Appreciation

On behalf of the Koyo Group, I would like to take this opportunity to thank the shareholders for approving the RTO of the Koyo Group and giving us the opportunity to serve them. We would also like to express our appreciation and thank our Board of Directors for their contributions and guidance. In particular, we wish to thank Dr Foo Fatt Kah and Mr Lee Yuen Wai, both of whom stepped down from the Board on 21st January 2009 upon the completion of the RTO. Both of them had worked assiduously to execute the previous management and board’s strategy of enhancing

the investment profile and preserving the listing status of the Cyber Village shares. We wish the both of them all the best as they move to pursue other endeavours.

We would also like to extend a warm welcome to the new chairman of the Board of the Directors, Mr. Lee Chen Chong and thank him for graciously accepting our invitation to sit on the Board of Koyo International Limited. We look forward to his invaluable advice and working with him. Lastly, I would like to personally thank the management and employees of the Koyo Group for their service and support, especially in this trying economic climate. I hope that we can continue working together to face future challenges.

Foo Chek HengExecutive Director

1 April 2009

executive Director’s Message


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Core services

Koyo Group

The Koyo Group is one of the leading homegrown specialist M&E engineering services providers in Singapore. We serve customers from all industries, including the construction sector; marine, oil and gas; industrial sector; pharmaceutical industries; as well as the public sectors.

Koyo is principally engaged in the provision and integration of the various types of engineering services which includes:

• Integrated M&E Engineering• Industrial Engineering• Oil, Gas and Marine Engineering• Facility Management

Cyber Village Group (Prior to 21 January 2009)

It should be noted that the results presented in the financial statements of this Annual Report were based on the business of the former Cyber Village Group. Cyber Village was in e-business consulting with operations in Singapore and Malaysia. Cyber Village specialised in the new generation web-based technologies to build and implement e-business applications to reengineer, streamline or enhance operational efficiencies for multi-national corporations and small medium enterprises.

Cyber Village specialised in:

• Java & its related technologies, for e.g., EJB, Servlets, Beans, J2EE, Struts etc

• Microsoft and its related technologies, for e.g., ASP, .NET, SharePoint etc

• Opensource technologies, for e.g., Linux and PHP

Cyber Village’s core business could be grouped broadly into 3 inter-dependent segments:

e-Business software Products

Cyber Village had researched and developed several e-business software products utilising web-based technologies. These software products enabled Cyber Village to focus on certain industries or sectors and target specific markets which had strong demands for certain software. Cyber Village has developed products for Internet Banking, Electronic Procurement, Project Management and E-Learning applications.

e-Business Application Development & Implementation services

Cyber Village’s e-business application development and implementation services could be approximately categorised in two types:

1. Customisation & implementation of existing e-business application software

Cyber Village was often required to implement purchased software applications, as well as incorporate special customisation requirements to meet the specific needs of the client.

2. Full customisation of new e-business application software

When there were no suitable ready-made applications which can cater to the requirements of the clients, Cyber Village was often requested to propose a completely tailor-made bespoke software application.

e-Business Process & Application outsourcing & Maintenance

Outsourcing and maintenance contributed only a small proportion of Cyber Village’s overall income and included:

1. E-Business application development outsourcing & maintenance

Such services were usually offered as part of a maintenance contract signed after implementing a software application for a client. This would entail maintenance and support for the software, as well as outsourcing elements for the continual upgrades and change requests made by the client.

2. E-business process outsourcing

Cyber Village was also actively seeking projects to assist clients in outsourcing certain e-business processes such as that of a document imaging & control system while charging on a per transaction basis.

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Board Members

Lee Chen Chong Non-Executive Chairman

Lee Chen Chong is a Fellow of the Chartered Institute of Bankers, London and spent a total of 34 years in the banking industry. He commenced his banking career with Malayan Banking Berhad in 1962 and was later the General Manager of the bank’s London branch from 1972 to 1985.

Chen Chong recently retired after six years of holding office as Executive Director of Ipmuda Berhad, a company listed on the main board of Bursa Malaysia Securities Berhad. From 1985 to 1993, he was the Executive Director of Malaysian French Bank (now known as Alliance Bank Berhad), in charge of its daily operations. In 1993, Chen Chong moved to Europe to serve as the President of the International Commercial Bank and managed the commercial banking operations of the bank in Prague and Budapest. From 1995 to 1997, Chen Chong was the Director of Lombard Bank of Malta Limited. Chen Chong was also a Non-Executive Director of Firstlink Investments Corporation Ltd, a Singapore mainboard listed company for approximately one and a half years. From year 1999 to 2000, he also served as the Executive Director of Multi-Purpose Berhad, the holding company of Malaysian French Bank.

serena Lee Chooi LiIndependent Director

Serena is a solicitor of England and Wales and is also an Advocate and Solicitor of the Supreme Court of Singapore. She was trained in London and has been practising in Singapore for more than fifteen years in corporate/commercial, property and banking areas. She is now a Partner in the firm of ALD LLP and is

also a Company Secretary for more than 50 Singapore companies.

Serena holds a Bachelor of Law (Honours) degree from the University of Sheffield and was also educated at the Chester Law School.

Foo Chek HengExecutive Director

Foo Chek Heng has more than 20 years of experience in the M&E services industry. He is the founding member of the Koyo Group and is responsible for the strategic direction, planning and development of the long term growth of the business, as well as overall general management and operations of the group.

Chek Heng has been the Director of Koyo Engineering since June 1993 and a Director of Koyo M&E since its incorporation in September 2006. Prior to joining the Koyo Group, Chek Heng was the senior Management of a Japanese M&E company in Singapore for 10 years.

Chek Heng holds a Bachelor of Science (Honours) degree in Mechanical Engineering and a Master of Science degree in Air-condition and Refrigeration from King’s College, University of London.

Manu BhaskaranIndependent Director

Manu Bhaskaran is a Partner and Member of the board of Centennial Group, a strategic advisory firm. As head of its economic research practice, he oversees the firm’s economic research in Asia. Prior to this position, Manu was Chief Economist for a regional investment bank for 12 years and before that

Manu worked in the Singapore Ministry of Defence analysing regional security issues.

Manu is also concurrently a Senior Adjunct Fellow at the Institute of Policy Studies (IPS), where his major area of study is the structural issues facing the Singapore economy and the policy responses to those issues. He has published a monograph on this area “Re-inventing the Asian Model: The Case of Singapore”. He is also the editor and convenor of the Singapore Economic Roundtable, which is jointly organised by the IPS and Business Times as a forum for economic policy makers to meet with economists from academia and the private sector.

Manu also has several Non-Executive Directorships in Singapore companies including Silk Air, a subsidiary of Singapore Airlines.

Manu was educated at Magdalene College, Cambridge University where he earned an MA (Cantab) in 1980. He also has a Masters in Public Administration from the Kennedy School of Government, Harvard University. Manu is also a Chartered Financial Analyst.


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Key Management team

Goh Chin HiewCommercial Division Manager

Goh Chin Hiew is currently the Operations Manager of the Commercial Division of the Koyo Group and has been with the Koyo Group since February 1999. Chin Hiew’s job scope and responsibilities cover the tender, procurement, maintenance and quantity surveying departments. Her current duties

include tendering, procurement, liaising and coordinating projects for the Koyo Group. She is also the Management Representative for the ISO 9002 Quality Management System.

Chin Hiew has more than 10 years experience in the engineering and construction industry. She holds a Diploma in Electrical Engineering from the Ngee Ann Polytechnic of Singapore.

Puah Chung KeongElectrical Engineering Department Manager

Puah Chung Keong is currently the Department Manager of the Electrical Engineering Department of the Koyo Group and is mainly responsible for managing and coordinating the day-to-day operations of the electrical engineering projects undertaken by the Koyo Group. Chung Keong has held various positions as an electrical

engineer with engineering companies in Singapore since 1997. He joined the Koyo Group in December 2005.

Chung Keong graduated with a Bachelor (Honours) degree in Electrical and Electronic Engineering from the University of Hertfordshire, United Kingdom in 1997. He also obtained a Higher National Diploma in Electrical Engineering from the University of Nottingham, United Kingdom in 1995 and a Mechanical and Electrical Coordination Certificate from the Construction Industry Training Institute of Singapore in 2001.

Dalat KositanonCorporate Services Division Manager

Dalat Kositanon is currently the Administration Manager of the Corporate Services Division of the Koyo Group. Her duties are to oversee the administrative and human resource functions of the Koyo Group. She has held this position since 1994. Dalat holds a Postgraduate Diploma in Education and a Master of Arts

degree (Psychology of Education), both from the Institute of Education, University of London.

Goh Hwee HiongFinancial Controller

Goh Hwee Hiong is currently the Financial Controller of the Koyo Group and has been with the group since September 2005. She has held positions as an Accounts Manager and Finance Manager for more than 10 years prior to joining the Koyo Group. She has more than 6 years experience in auditing.

Hwee Hiong is a Certified Public Accountant of Singapore. She graduated with a Bachelor of Accountancy degree from the National University of Singapore in 1983. She is also a non-practising member of the Institute of Certified Public Accountants of Singapore.

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Performance Review

turnover

For the Company’s continuing operations, turnover for the year was almost eliminated due to the successful novation of all maintenance contracts to the Singapore subsidiary, CVPL. CVPL had all along been providing maintenance support to all Singapore-based customers.

For the Company’s discontinued operations, turnover fell approximately 5% to $2.59m. This was largely attributable to the main operating subsidiary, CVSB in Malaysia, being able to secure new contracts during the year despite the slowing economy.

Costs of sales

For the Company’s continuing operations, the cost of sales reflected the associated costs relating to the customer maintenance contracts. Due to the novation, as described in the preceding paragraph, these costs were no longer incurred in the second half of the year.

For the Company’s discontinued operations, costs were well controlled during the year, reflecting prudence and an improved planning process. This resulted in total costs associated with the business being reduced by about half during the financial year.

Gross Profit

The Company’s continuing operations had negligible negative gross profit level of $1,000. This can be attributed to the associated costs relating to maintenance contract incurred in the first half of the financial year. The Company’s continuing operations in the second half of the financial year did not contribute to gross profit due to the elimination of all operations as a result of the aforementioned novation of contracts which occurred during the first half of FY08.

Loss after tax

For the Company’s continuing operations, the Group recorded a pre-tax loss of $669,000. These were largely associated with the running costs incurred by the Holding company, CVHL.

For the Company’s discontinued operations, the pre-tax losses narrowed from the previous year to $125,000, compared to $1,815,000 previously. This was largely due to the result of improved cost controls and operational procedures within the subsidiaries.

Balance sheetWith the share placements made in FY2007, the Company maintained sufficient cash reserves to provide adequate funding for the RTO transaction. The Company’s cash was well-conserved and stood at nearly $2.49m as at 31st December 2008. “Other Current Assets” rose to $1,103,000 from $168,000 previously due to a rise in pre-payment expenses in connection with professional fees for the RTO.

Commentary on Current Year Prospects

With the completion of the RTO and MBO, Koyo International Limited will no longer be in the IT services sector but will instead be focusing on the provision of mechanical and electrical (M&E) engineering services. The business prospects, trend information and risk factors will be markedly different from former Cyber Village Group.

As mentioned in our Executive Director’s message, we will continue to focus on organic growth by tendering for a greater number of larger projects as well as look out for opportunities in emerging markets such as the Middle East and China.

The current economic crisis will probably hold back the Koyo Group’s growth strategy as we preserve our cash reserves to ride out the crisis. Competition for new projects will be competitive and margins will be thinner. However, we will continue to be selective and cautious in our tender of new projects and only undertake projects that yield reasonable returns.

Review of the Performance of the Company & its Principal subsidiaries


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Corporate Governance

Koyo International Limited (formerly known as “Cyber Village Holdings Limited”) (the “Company”) is committed to maintaining a high standard of corporate governance within the Company and its subsidiaries (the “Group”). Good corporate governance establishes and maintains an ethical environment in the Group, which strives to enhance the interests of the shareholders of the Company (“the shareholders”). This Report describes the Company’s corporate governance processes and activities with specific reference to the Code of Corporate Governance (the “Code”).

Board of Directors (the “Board”)

(Principles 1 to 3 and 6)

The Board’s Conduct of Its Affairs

In the financial year ended 31 December 2008 (“FY 2008”) the Board comprised of four directors, one of whom is Executive Director, two of whom are independent and Non-Executive Directors and one of whom is a Non-Executive Director.

The board’s principal functions include, among others, supervising the overall management of the business and affairs of the Group and approving the Group’s corporate and strategic policies and direction.

Matters that are specifically reserved for the approval of the Board include material acquisitions and disposals of assets and major undertakings other than in the ordinary course of business.

Certain functions have been delegated to various board committees, namely, the Audit Committee (the “AC”), the Nominating Committee (“the nC”) and the Remuneration Committee (the “RC”).

In FY 2008, the Board conducted three regular scheduled meetings. The number of Board meetings held in FY2008 and the attendance of each Board member at those meetings was as follows:

Board Meetings

Board Members no. Meetings Conducted no. Meetings Attended

Richard Gao Xiang Jun (Resigned on 30 April 2008)

3 1

Dr Foo Fatt Kah (Resigned on 21 January 2009)

3 3

Lee Yuen Wai(Resigned on 21 January 2009)

3 3

Manu Bhaskaran 3 3

Serena Lee Chooi Li 3 3

Directors, upon appointment, are briefed on the business and organization structure of the Board. There are update sessions to inform the Directors on new legislation and/or regulations which are relevant to the Group.

Chairman & Executive Director

The Chairman and Executive Director (ED) functions in the company were assumed by different individuals until 30 April 2008. The board appointed Richard Gao Xiang Jun as Chairman of the Company on 17 May 2004 until his resignation from the board on 30 April 2008. The sole Executive Director represented on the board was Dr Foo Fatt Kah, who undertook the role of Acting Chairman of the Company after Richard Gao Xiang Jun resigned, until 21 January 2009.

The Board is also of the view that there is a sufficiently strong independent element on the Board to enable Independent exercise of objective judgment on corporate affairs of the Group by members of the Board, taking into account factors such as the number of Non-Executive and Independent Directors on the Board, as well as the size and scope of the affairs and operations of the Group. As such, it is not necessary to separate the functions of Chairman and Managing Director.

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As Acting Chairman from 30 April 2008 to 21 January 2009, Dr Foo Fatt Kah bore responsibility for the working of the Board and, together with the AC, ensured the integrity and effectiveness of the governance process of the Board.

As Executive Director to 21 January 2009, Dr Foo Fatt Kah bore overall daily operational responsibility for the former Cyber Village Group’s business.

Access to Information

For FY 2008, the management provided the members of the Board with management accounts on a half yearly basis or as and when requested. In addition, the relevant background information and documents relating to items of business to be discussed at a Board meeting are provided on a timely basis before the scheduled meeting.

The Board has, in the furtherance of its duties, access to independent professional advice at the Company’s expenses.

nominating Committee (“nC”)

(Principles 4 and 5)

Nominating Committee

The NC was set up on 18 September 2002. In FY 2008, the NC comprised of two Independent and Non-Executive Directors including the Chairman and one Executive Director. The Chairman of the NC is Serena Lee Chooi Li. The Chairman of the NC is not, and is not directly associated with a substantial shareholder. The NC has adopted specific written terms of reference.

According to the terms of reference of the NC, the members of the NC are responsible for, among others, the appointment and re-nomination of Directors having regard to their independence, qualifications, performance and contributions. The NC also ensures that the Board, as a whole, possesses the core competencies required by the Code.

The NC adopted the Code’s definition on what constitutes an Independent Director under guidance note 2.1 (a) to (d) of the Code. For FY2008, the NC is of the view that the Company was headed and controlled by an effective Board, as:

i. two of the Board’s four Non-Executive Directors of the Company were independent and able to exercise objective judgment on the corporate affairs of the Group independently from Management;

ii. there was no individual or small group of individuals on the Board who dominates the Board’s decision making process;

iii. the Board as a whole, possess core competencies required for the effective conduct of the affairs and operations of the Group; and

iv. the size of the Board was adequate for the purposes of the Group.

Board Performance

As stated above, one of the terms of reference of the NC is to review and evaluate the performance of each Director and of the Board as a whole for each financial year. The review parameters for evaluating each Director include, among others, the following:

i. attendance at board/committee meetings;ii. participation at meetings;iii. involvement in management; andiv. availability for consultation and advice, when required.

The NC held one meeting in year 2008 which was attended by Dr Foo Fatt Kah (previous board member), Mr Manu Bhaskaran & Miss Serena Lee Chooi Li.



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Audit Committee (“AC”)

(Principles 10 to 13)

Audit Committee

The AC was reconstituted on 18 September 2002 and presently comprises three members, the majority of whom (including the chairman of the AC) are Independent Directors. All the members of the AC are Non-Executive Directors. The Chairman of the AC is Manu Bhaskaran. The AC has adopted specific written terms of reference.

Manu Bhaskaran is the head of economic research practice and member of the board of Centennial Group, a strategic advisory firm. He also holds several Non-Executive directorships in Singapore companies including Silk Air, a subsidiary of Singapore Airlines. The other members of the AC, Serena Lee Chooi Li is a partner of ALD LLP and Lee Yuen Wai is a corporate lawyer by training and holds the position of Deputy Chairman in Firstlink Investments Corporation Limited, an investment holding company listed on the Singapore Exchange.

As members of the AC have many years of experience in legal, accounting and finance related matters, the Board considers that the members of the AC are appropriately qualified to discharge the responsibilities of the AC.

In FY2008, the AC conducted three meetings. Details of the members’ attendance at the AC meetings in FY2008 are as per the table below.

Audit Committee Meetings

Board Members no. Meetings Conducted no. Meetings Attended

Lee Yuen Wai(resigned on 21 January 2009)

3 3

Manu Bhaskaran 3 3

Serena Lee Chooi Li 3 3

The AC performed the following functions in respect of FY2008:

A. Independent Auditor

For FY2008, the AC reviewed together with the independent auditor:

i. the audit plan (including, among others, the nature and scope of the audit and the risk management issues of the Group);

ii. its independent auditor’s report;iii. the assistance given to them by the Company’s officers;iv. the consolidated balance sheet and income statement of the Group.

The independent auditor did not provide any non-audit services to the Group in FY2008 except for the services as reporting accountant of $210,000 in relation to Reverse Take Over, and accordingly, the AC is satisfied that the independence of the independent auditor is not affected. The AC has met with internal and independent auditors, without the presence of the Company’s management, at least once a year.

The AC shall continue to monitor the scope and results of the independent audit, its cost effectiveness and the independence and objectivity of the independent auditor and give its recommendations to the Board and the Company regarding the appointment, re-appointment or removal of the independent auditor.

B. Review of financial statements

In FY2008, the AC reviewed the half yearly and full year financial statements of the Company and the Group, including announcements relating thereto, to Shareholders and the SGX-ST. The AC shall continue to review the financial statements of the Company and the Group on a half yearly basis.


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C. Review of interested person transactions

The AC has reviewed interested person transactions of the Group for FY2008 and reported its findings to the Board. Please refer to Note 23 of the annual report for further details on the interested person transactions of the Group for FY2008.

Internal Audit

In FY2008, the Company continued to engage an external professional firm as the internal auditor (the “IA”) to perform the Company’s internal audit function till February 2008. The Company will ensure that the IA will meet the Standards for the Professional Practice of Internal Auditing set by The Institute of Internal Auditor.

The AC shall also review (a) the adequacy of the IA’s activities to ensure that the IA has adequate resources and appropriate standing within the Company; and (b) the internal audit programme and ensure co-ordination between the IA, independent auditor and Management.

Internal Controls

Based on its assessment of work performed by the independent and internal auditors, the AC is of the view that there are adequate internal controls in the Group.

Remuneration Committee (“RC”)

(Principles 7 to 9)

Procedures for Developing Remuneration Policies

The RC was set up on 18 September 2002. In FY2008, the RC comprised of three members, two are Independent Directors and all of whom are Non-Executive Directors. The chairman of the RC is Manu Bhaskaran. The RC has adopted specific written terms of reference. The other members are Serena Lee Chooi Li and Lee Yuen Wai.

The RC held one meeting in year 2008 which was attended by Mr Manu Bhaskaran, Mr Lee Yuen Wai (previous board member) & Miss Serena Lee Chooi Li.

According to the terms of reference, the functions of the RC include the setting up and implementation of formal and transparent processes by which the remuneration packages of all the Executive Directors (in the form of service agreements or otherwise) and at least the top five executives (in terms of aggregate remuneration and only those who are not Directors) are formulated and approved.

No Director or member of the RC has been involved in deciding his own remuneration, except for providing information and documents specifically requested by the RC to assist in its deliberations.

Level and Mix of Remuneration

According to the respective service agreements of the Executive Directors:

i. the term of service is for a fixed period and is subjected to review thereafter;ii. the remuneration includes a fixed salary and a variable performance bonus, which is designed to align the Executive

Directors’ interests with that of the Shareholders; and iii. there are no onerous compensation commitments on the part of the Company in the event of an early termination of

the service of an Executive Director.

The Independent and Non-Executive Directors do no have any service agreements with the Company. Save for Director’s fees, which have to be approved by the Shareholders at every annual general meeting (“AGM”), the Independent Directors and Non-Executive Directors do not receive any remuneration from the Company.



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The Company has an employee share option scheme (“esos”). The Company has granted 6,230,000 share options in May 2003 and 6,206,000 in June 2004. The salient features of the ESOS are highlighted in the Directors’ Report under the “Share Options” header.

The purpose of the former Cyber Village ESOS was to provide an opportunity for our Executive Directors and employees of our Group to participate in the equity of the Company and to give recognition to Non-Executive Directors of our Group and employees of our associated companies who have contributed to the success and development of our Company and/or our Group.

The former Cyber Village ESOS is proposed on the basis that it is important to acknowledge the contribution, which is essential to the well-being of our Group, made by these categories of persons. The Company, by adopting the Cyber Village ESOS, will give these categories of persons a meaningful stake in our Company and will help achieve the following objectives:

i. the motivation of participants to optimize performance, efficiency and to maintain a high level of contribution;ii. the retention of key employees whose contributions are important to the long term growth of our Group;iii. the attainment of harmonious employer/staff relations, as well as the strengthening of working relationships with our

Group’s close business associates; andiv. the development of a participatory style of the management which promotes greater dedication amongst the employees

and instills loyalty to the long term goals of our Group.

Disclosure on Remuneration

For FY2008, only the Executive Director, Dr Foo Fatt Kah received remuneration between $250,000 to $499,999. The remuneration paid to all the other Directors was less than $250,000. A breakdown of the level and mix of remuneration paid and/or payable to each Director is as follows:

Number of directors 2008 2007 $500,000 and above - -$250,000 to $499,999 1 -Below $250,000 4* 9*

5 9

*Including previous board members who have resigned

Between $250,000 to $499,000 Dr Foo Fatt Kah (Resigned on 21 January 2009)

2008 2007 (Below $250,000)

% %

Fee - -Salary 95 95Bonus - -Allowance 2 2CPF Contributions 3 3

100 100


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Below $250,000 Richard Gao Xiang Jun Lee Yuen Wai** (Resigned on 30 April 2008) (Resigned on 21 January 2009)

2008 2007 2008 2007

% % % %

Fee - - 100 100Salary - - - -Bonus - - - -Allowance - - - -CPF Contributions - - - -

- - 100 100

Manu Bhaskaran** Serena Lee Chooi Li**

2008 2007 2008 2007

% % % %

Fee 100 100 100 100Salary - - - -Bonus - - - -Allowance - - - -CPF Contributions - - - -

100 100 100 100

**Subject to approval of the Shareholders at the AGM for FY2008.

For FY2008, the remuneration paid to each of the top five key executives (in terms of salary and who are not Directors of the Company) was less than $250,000. A breakdown of the level and mix of remuneration of these top five executives is as follows:

Number of Key Executives 2008 2007 $500,000 and above - -$250,000 to S$499,999 - -Below $250,000 4 4

4 4

Below $250,000

Law Kam Kuan Shieh Yee Bing Sua Shii Huey

Louis Chin Foon Hwa (Resigned on

15 August 2008)

2008 2007 2008 2007 2008 2007 2008 2007

% % % % % % % %

Fee 100 100 - - - - - -

Salary - - 89 89 89 89 91 92

Bonus - - - - - - - -

Allowance - - - - - - - -

CPF Contributions - - 11 11 11 11 9 8

100 100 100 100 100 100 100 100

There are no employees of the Company who are related to any of the Executive Directors of the Company.



15


The board has not included an annual remuneration report in its annual report for FY2008 (as suggested by guidance 9.1 of the Code) as the Board is of the view that the matters which are required to be disclosed in the annual remuneration report have already been sufficiently disclosed in this Report and in the financial statements of the Company.

Communications with shareholders

(Principles 14 and 15)

The Board is pleased to provide timely and fair disclosure of material information in accordance with the Corporate Disclosure Policy of the SGX-ST. In accordance with our market capitalization during the financial year, we announce our financial results bi-annually.

All shareholders receive the annual report and the notice of AGM. This notice is advertised in the newspaper media and is also published via SGXNET.

The Board welcomes the views of shareholders on matters affecting the Company whether at a shareholders’ meeting or on an ad hoc basis. At AGM’s, shareholders are given the opportunity to air their views and to ask the Directors and Management questions regarding the group and its prospects.

Dealing in Securities

The Company has adopted the SGX-ST’s Best Practices Guide applicable in relation to dealing in the Company’s securities by its officers. The Company has informed all its officers not to deal in the Company’s shares whilst they are in possession of unpublished material price sensitive information and during the period commencing one month before the announcement of the Company’s financial results and ending on the date of the announcement of such financial results.


16


Directors’ Reportfor the financial year ended 31 December 2008

The directors present their report to the members together with the audited financial statements of Koyo International Limited (formerly known as Cyber Village Holdings Limited) (the “Company”) and its subsidiaries (collectively the “Group”) for the financial year ended 31 December 2008 and the balance sheet of the Company as at 31 December 2008.

Directors

The Directors of the Company in office at the date of this report are as follows:

Lee Chen Chong Non-Executive Chairman (appointed on 21 January 2009)Foo Chek Heng Executive Director (appointed on 21 January 2009)Manu Bhaskaran Independent & Non-Executive DirectorSerena Lee Chooi Li Independent & Non-Executive DirectorDr Foo Fatt Kah Executive Director (resigned on 21 Jan 2009)Lee Yuen Wai Non-Executive Director (resigned on 21 Jan 2009)

Arrangements to enable directors to acquire shares and 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 in, or debentures of, the Company or any other body corporate, other than as disclosed under the former Cyber Village Share Option Scheme (the “Scheme”) on page 17, 18 and 19 of this report.

Directors’ interest 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 or debentures of the Company or its related corporations, except as follows:

Holdings registered in name of Holdings in which director is director or nominee deemed to have an interest

At At At At At At 21.01.2009 31.12.2008 1.1.2008 21.01.2009 31.12.2008 1.1.2008

the Company (no. of ordinary shares) Foo Chek Heng 69,300,500 - - - - -Richard Gao Xiang Jun (resigned on 30 April 2008) - - - 3,397,500 13,590,000 13,590,000

Except as disclosed in this report, no Director who held office at the end of the financial year had interests in any shares, share options, warrants or debentures of the Company or related corporations either at the beginning of the financial year or the end of the financial year or on 21 January 2009.

According to the register of directors’ shareholdings, none of the directors holding office at the end of the financial year had interests in options to subscribe for ordinary shares of the Company granted pursuant to the former Cyber Village Employee Share Option Scheme.

Directors’ contractual benefits

Since the end of the previous financial year, no director has received or become entitled to receive a benefit 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, except as disclosed in the accompanying financial statements and in this report.


17



share options

(a) Cyber Village employee share option scheme

On 7 August 2001, the shareholders of the Company approved the Scheme.

Under the rules of the Scheme, the Executive Directors of the Company and employees of the Group and associated companies are eligible to participate in the Scheme. Persons who are controlling shareholders of the Company or the associates of such controlling shareholders may also participate in the Scheme, subject to the approval of the minority shareholders. The Scheme is administered by the Remuneration Committee appointed and authorised by the Directors.

The aggregate number of ordinary shares in respect of all options granted under the Scheme will not at any time exceed 15% of the issued share capital of the Company. The exercise prices of the options shall be at the discretion of the Remuneration Committee. These may be:

(i) Market Price Options which are priced (the “Market Price”) equal to the average of the last dealt prices for a share for the 5 consecutive market days immediately preceding the grant of the relevant option; or

(ii) Incentive Options which are priced at a discount to the Market Price, subject to a maximum discount of 20% to the Market Price.

Where the exercise price as determined above is less than the par value of the share, the exercise price shall be the par value.

The exercise period of the Market Price Options commences after the first anniversary of the date of grant of the options while the exercise period for the Incentive Options commences after the second anniversary of the date of the grant. Options granted to executive employees of the Group shall expire on the tenth anniversary of the date of grant of the options while options granted to non executive employees of the Group shall expire on the fifth anniversary of the date of grant.

The Company offered 6,230,000 Market Price Options to the Executive Directors and employees in May 2003.

The Company offered 6,206,000 options (3,103,000 Market Price Options and 3,103,000 Incentive Options granted at a discount of 14.8%) to the Executive Directors and employees in June 2004.

No options have been granted to the controlling shareholders of the Company or their associates.

No participant under the Scheme has received 5% or more of the total number of shares under option available under the Scheme.

No options were granted to the directors and employees of the Company and its subsidiaries for FY2008. (b) effect of the completion of the Reverse take over (“Rto”) on share options

The completion of the RTO transaction on 21 January 2009 resulted in a 4-for-1 share consolidation and the subscription price for the Shares and/or number of Shares of the unexercised option was adjusted by the committee overseeing the administration of the Scheme to give each participant to the Scheme, the same proportion of the equity capital of the Company as that to which he was previously entitled.

Accordingly, upon completion of the RTO transaction:

(i) The exercise price of each outstanding share option shall be adjusted such that it will be four times the original exercise price of each such outstanding share option, as set out below:

share option granted Adjustment in exercise price

ESOS II (Market Options) – June 2004 from $0.27 to $1.08 ESOS II (Incentive Options) – June 2004 from $0.23 to $0.92

18



share options (cont’d)

(b) effect of the completion of the Rto on share options (cont’d)

(ii) The number of Shares comprised in each outstanding share option will be reduced by the same proportion as the Shares under the share consolidation, fractions to be disregarded, as set out below:

share option granted Adjustment in no. of shares

ESOS II (Market Options) – June 2004 from 362,500 to 90,625 ESOS II (Incentive Options) – June 2004 from 362,500 to 90,625

(c) effect of the completion of the disposal of subsidiaries (“Management Buy out” or “MBo”) on share options

On completion of the MBO on 21 January 2009, the subsidiaries of Cyber Village will no longer be part of the Cyber Village group. Hence, any employees of the subsidiaries and associated companies will not be employees of the Cyber Village group.

Under the rules of the Scheme, an option, to the extent unexercised, shall immediately lapse without any claim against the Company, amongst other things, upon a Participant ceasing to be in the full-time employment of the Group or an associated company for any reason whatsoever. As such, 599,000 share options (149,750 consolidated share options) issued to non-executive employees as at 31 December 2008 lapsed on 21 January 2009.

(d) share options outstanding

The number of unissued ordinary shares of the Company under option in relation to the former Cyber Village Employee Share Option Scheme outstanding at the end of the financial year was as follows:

options options options outstanding granted exercised lapsed options share options issued in May 2003 Balance as at 1 January 2008 6,230,000 (3,669,000) (2,210,000) 351,000 Movement during the financial year - - (351,000) (351,000)

Balance as at 31 December 2008 6,230,000 (3,669,000) (2,561,000) -

options options options outstanding granted exercised lapsed options share options issued in June 2004 Balance as at 1 January 2008 6,206,000 - (5,168,000) 1,038,000 Movement during the financial year - - (313,000) (313,000)

Balance as at 31 December 2008 6,206,000 - (5,481,000) 725,000

The Company offered a total of 12,436,000 options to the Executive Directors and employees as at 31 December 2008. Table below shows the summary movement of the options for the financial year ended 31 December 2008.

options options options outstanding granted exercised lapsed options total share options issued Balance as at 1 January 2008 12,436,000 (3,669,000) (7,378,000) 1,389,000 Movement during the financial year - - (664,000) (664,000)

Balance as at 31 December 2008 12,436,000 (3,669,000) (8,042,000) 725,000


19


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20


Audit Committee

The members of the Audit Committee at the end of the financial year were as follows:

Manu Bhaskaran (Chairman)Serena Lee Chooi LiLee Yuen Wai

The members of the Audit Committee at the date of this report are as follows:

Manu Bhaskaran (Chairman)Lee Chen Chong (appointed on 21 January 2009)Serena Lee Chooi Li

All members of the Audit Committee were non-executive directors.

The Audit Committee (“AC”) carried out its functions in accordance with Section 201B(5) of the Singapore Companies Act. In performing those functions, the Committee reviewed:

• The audit plans of the internal and independent auditors of the Company and ensures the adequacy of the Company’s system of accounting controls and the co-operation given by the Company’s management to the independent and internal auditors;

• The half yearly and annual financial statements and the auditor’s report on the annual financial statements of the Company before their submission to the Board of Directors;

• The effectiveness of the Company’s material internal controls, including financial, operational and compliance controls and risk management via reviews carried out by the internal auditor;

• Legal and regulatory matters that may have a material impact on the financial statements, related compliance policies and programmes and any reports received from regulators;

• The cost effectiveness and the independence and objectivity of the independent auditor; • The nature and extent of non-audit services provided by the independent auditor;• Recommendation to the Board of Directors the independent auditor to be nominated, approves the compensation of

the independent auditor, and reviews the scope and results of the audit; • Reports of actions and minutes of the AC to the Board of Directors with such recommendations as the AC considers

appropriate; and• Interested person transactions in accordance with the requirements of the Singapore Exchange Securities Trading

Limited Listing Manual.

The AC, having reviewed all non-audit services provided by the independent auditor to the Group, is satisfied that the nature and extent of such services would not affect the independence of the independent auditor. The AC has also conducted a review of interested person transactions.

The AC has met with independent auditor without the presence of the Company’s management at least once a year.

The AC has recommended that Nexia TS Public Accounting Corporation be nominated for appointment as independent auditor at the forthcoming Annual General Meeting.

Further details regarding the Audit Committee are disclosed in the Report on Corporate Governance.



21


Independent Auditor

The independent auditor, Nexia TS Public Accounting Corporation, has expressed its willingness to accept re-appointment.

On behalf of the Board of Directors

Foo Chek Heng Lee Chen ChongDirector Director

Singapore

1 April 2009


22


In the opinion of the directors,

(i) the balance sheet of the Company and the consolidated financial statements of the Group, as set out on page 25 to 62, are drawn up so as to give a true and fair view of the state of affairs of the Company and the Group as at 31 December 2008 and of the results of the business, changes in equity and cash flows of the Group for the financial year then ended; 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.

The Board of Directors has, on the date of this statement, authorised these financial statements for issue.

On behalf of the Board of Directors

Foo Chek Heng Lee Chen ChongDirector Director

Singapore

1 April 2009

statement by Directorsfor the financial year ended 31 December 2008


23


We have audited the accompanying financial statements of Koyo International Limited (formerly known as “Cyber Village Holdings Limited”) (the “Company”) and its subsidiaries (the “Group”), which comprise the balance sheets of the Company and of the Group as at 31 December 2008, and the consolidated income statement, the consolidated statement of changes in equity and the consolidated cash flow statement of the Group for the financial year then ended, and a summary of significant accounting policies and other explanatory notes.

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these financial statements in accordance with the provisions of the Singapore Companies Act (Cap. 50) (the “Act”) and Singapore Financial Reporting Standards. This responsibility includes:

(a) devising and maintaining a system of internal accounting control sufficient to provide a reasonable assurance that assets are safeguarded against loss from unauthorised use or disposition; and transactions are properly authorised and that they are recorded as necessary to permit the preparation of true and fair income statement and balance sheets and to maintain accountability of assets;

(b) selecting and applying appropriate accounting policies; and

(c) making accounting estimates that are reasonable in the circumstances.

Auditor’s Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Singapore Standards on Auditing. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’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.

Independent Auditor’s Report to the Members of Koyo International Limited (formerly known as “Cyber Village Holdings Limited”)

24


Independent Auditor’s Report to the Members of Koyo International Limited (Formerly known as Cyber Village Holdings Limited)

Opinion

In our opinion,

(a) the balance sheets of the Company and the consolidated financial statements of the Group 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 Company and of the Group as at 31 December 2008, and the results, changes in equity and cash flows of the Group for the financial year ended on that date; and

(b) the accounting and other records required by the Act to be kept by the Company and by those subsidiaries incorporated in Singapore of which we are the auditor, have been properly kept in accordance with the provisions of the Act.

Nexia TS Public Accounting CorporationsPublic Accountants and Certified Public Accountants

Director-in-charge : Kristin YS KimAppointment since financial year ended 31 December 2006

Singapore

1 April 2009


25


note Group Company

2008 2007 2008 2007

$ $ $ $Assets Current assets Cash and cash equivalents 3 2,485,866 3,753,022 2,485,866 3,753,022Trade and other receivables 4 25,141 18,177 25,141 62,232Other current assets 5 1,102,930 167,847 1,102,930 167,847

3,613,937 3,939,046 3,613,937 3,983,101

Disposal group classified as held for sale 6 976,266 1,117,281 200,000 200,000

total assets 4,590,203 5,056,327 3,813,937 4,183,101

LIABILItIes Current liabilities Trade and other payables 11 466,715 135,298 466,715 135,298Liabilities directly associated with disposal group classified as held for sale 6 776,266 917,281 - -

total liabilities 1,242,981 1,052,579 466,715 135,298

net Assets 3,347,222 4,003,748 3,347,222 4,047,803

eQUItY Capital and reserve attributable to equity holders of the Company Share capital 12 14,883,603 14,883,603 14,883,603 14,883,603Other reserves 13 288,371 275,942 532,100 532,100Accumulated losses (11,824,752) (11,155,797) (12,068,481) (11,367,900)

total equity 3,347,222 4,003,748 3,347,222 4,047,803

Balance sheets as at 31 December 2008

The accompanying notes form an integral part of these financial statements.

26


note 2008 2007

$ $Continuing operations Revenue 14 1,158 50,166Cost of sales (2,589) (26,840)

Gross (Loss)/profit (1,431) 23,326

Other income 15 44,502 1,273

Expenses - Selling and distribution (4,846) (12,907)- Administrative (548,161) (636,271)- Other (34,146) (44,193)

Loss before income tax (544,082) (668,772)Income tax expense 18 - -

Loss from continuing operations (544,082) (668,772) Discontinued operations Loss from discontinued operations 6 (124,873) (1,815,733)

total loss attributable to shareholders (668,955) (2,484,505)

Loss per share for loss from continuing operations attributable to equity holders of the Company (cents per share) - Basic and Diluted 19 (0.92) (1.40)

Loss per share for loss from discontinued operations attributable to equity holders of the Company (cents per share) - Basic and Diluted 19 (0.20) (3.76)

Consolidated Income statementfor the financial year ended 31 December 2008



27


Attributable to equity holders of the Company

share other Accumulated total note capital reserves losses equity

$ $ $ $ 2008 Beginning of financial year 14,883,603 275,942 (11,155,797) 4,003,748

Currency translation differences 13(b)(ii) - 12,429 - 12,429Total loss - - (668,955) (668,955)

total recognised income/ (losses) 14,883,603 12,429 (668,955) (656,526)

end of financial year 14,883,603 288,371 (11,824,752) 3,347,222

2007 Beginning of financial year 10,296,284 268,362 (8,671,292) 1,893,354

Currency translation differences 13(b)(ii) - 7,580 - 7,580Total loss - - (2,484,505) (2,484,505)

total recognised income/ (losses) - 7,580 (2,484,505) (2,476,925) Employee share option scheme- ordinary shares issued 12 2,450 - - 2,450Issues of shares 12 4,647,850 - - 4,647,850Share issues expenses 12 (62,981) - - (62,981)

end of financial year 14,883,603 275,942 (11,155,797) 4,003,748

Consolidated statement of Changes in equityfor the financial year ended 31 December 2008


28


note 2008 2007

$ $

Cash flows from operating activities Total loss (668,955) (2,484,505) Adjustments for - Income tax expense 18 937 (585)- Amortisation of intangible assets 415,327 385,054- Allowance for Impairment of trade receivables 117,066 -- Impairment of goodwill - 130,978 - Impairment of intangible assets - 1,018,149- Written back of Impairment of intangible assets (432,382) -- Depreciation of property, plant and equipment 42,753 59,622- Interest expense 362 14,625- Interest income (41,634) (4,647)- Unrealised translation losses 50,397 8,145

Change in working capital (516,129) (873,164)- Trade and other receivables (75,960) 693,937- Other current assets (882,849) (118,915)- Trade and other payables 187,225 (1,001,489)

Cash used in operations (1,287,713) (1,299,631)Interest paid (362) (14,625)Income tax paid (1,490) (2,658)

net cash used in operating activities (1,289,565) (1,316,914)

Cash flows from investing activities Purchases of property, plant and equipment (14,779) (13,685)Interest received 41,634 4,647Development costs incurred - (138,654)

net cash provided by/ (used in) investing activities 26,855 (147,692)

Cash flows from financing activities Repayment of finance lease liabilities (12,640) (19,309)Proceeds from issue of ordinary shares - 4,587,319Withdrawal of bank deposits pledged to bank - 322,224

net cash (used in)/ provided by financing activities (12,640) 4,890,234

net (decrease)/ increase in cash and cash equivalents (1,275,350) 3,425,628Effects of currency translation on cash and cash equivalents (108) 241Cash and cash equivalents at beginning of financial year 3,790,881 365,012

Cash and cash equivalents at end of financial year 3 2,515,423 3,790,881

Consolidated Cash Flow statementfor the financial year ended 31 December 2008



29


These notes form an integral part of and should be read in conjunction with the accompanying financial statements.

1. Corporate information

Koyo International Limited (the “Company”) is a company domiciled and incorporated in the Republic of Singapore with its shares listed on the Singapore Exchange. The address of its registered office is changed to 8 Eu Tong Sen Street, #15-98 The Central Singapore 059818 from 152 Beach Road, #37-06 Gateway East, Singapore 189721.

On 21 January 2009, the company changed its name from Cyber Village Holdings Limited to Koyo International Limited and changed its principal places of business address from 9 Shenton Way, #04-01 Singapore Conference Hall, Singapore 068813 and T111 Level 3, Centrepoint, 3 Lebuh Bandar Utama, 47800 Petaling Jaya, Selangor, Malaysia to No.5 Kaki Bukit Crescent #05-01 Koyotech Building Singapore 416238.

The principal activities of the Company are those of investment holding and e-business consulting services. On 21 January 2009, the company changed its principal activities to investment holding and business of providing integrated mechanical and electrical engineering (M&E) services.

The principal activities of the subsidiaries are shown in Note 8 to the financial statements.

The Company disposed all its subsidiaries on 21 January 2009 (Note 6).

2. summary of significant accounting policies

2.1 Basis of preparation

These financial statements have been prepared in accordance with Singapore Financial Reporting Standards (“FRS”). The financial statements have been prepared under the historical cost convention, except as disclosed in the accounting policies below.

The preparation of financial statements in conformity with FRS requires management to exercise its judgement in the process of applying the Group’s accounting policies. It also requires the use of certain critical accounting estimates and assumptions. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements are disclosed below.

The financial statements of the Group and the Company are prepared on a going-concern basis even though all the Company’s subsidiaries and business have been disposed off subsequent to the financial year. The Company acquired the entire issued share capital of Koyo Engineering (S.E.Asia) Pte Ltd and its subsidiary for a consideration of $26,350,000 by issuing 527,000,000 shares in the capital of the Company on 21 January 2009 (Note 25).

Interpretations and amendments to published standards effective in 2008

On 1 January 2008, the Group adopted the new or amended FRS and Interpretations to FRS (“INT FRS”) that are mandatory for application from that date. Changes to the Group’s accounting policies have been made as required, in accordance with the transitional provisions in the respective FRS and INT FRS.

There are no new or amended Standard and Interpretation effective in 2008 which are relevant to the Group.

Critical accounting estimates, assumptions and judgements

Estimates, assumptions and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

notes to the Financial statementsfor the financial year ended 31 December 2008

30


2. summary of significant accounting policies (cont’d)

2.1 Basis of preparation (cont’d)

The Group is subject to the uncertainty caused by the world financial crisis. The world economy has experienced significant downward pressure and credit has become very tight. Significant judgement is required to determine the fair value and forecasts of business that may have impact on cashflow, collectibility and realisability of assets. In making these judgements, the Group has relied on past experience and its view of the economy.

The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below:

(a) Estimated impairment of non-financial assets

Goodwill is tested for impairment annually and whenever there is indication that the goodwill may be impaired. Goodwill was fully impaired in financial year 2007 (Note 10(a)). Intangible assets, property, plant and equipment, investments in subsidiaries and investment in associated companies are tested for impairment whenever there is any objective evidence or indication that these assets may be impaired. The carrying amounts of these non-financial assets are disclosed in Note 7,8,9 and 10.

(b) Project contracts

The Group recognises the contract revenue to the extent of contract costs incurred where it is probable these costs will be recoverable or based on the stage of completion method. The stage of completion is measured by reference to the contract cost incurred to date to the estimated total costs for the contract.

Significant judgement is required in determining the stage of completion, the extent of the contract cost incurred the estimated total contract revenue and contract cost, as well as the recoverability of the contracts. In making the judgement, the Group evaluates by relying on past experience.

If the revenue on contracts that are work-in-progress increases/decreases by 10% from management’s estimates, the Group’s revenue will increase/decrease by $263,341.

If the contract costs to be incurred increase/decrease by 10% from management’s estimates, the Group’s profit will decrease/increase by $275,825.

(c) Income taxes The Group is subject to income taxes in numerous jurisdictions. In determining the income tax liabilities,

management is required to estimate the amount of capital allowances and deductibility of certain expenses (“uncertain tax position”) at each tax jurisdiction. Where the final tax outcome is different from the amounts that were initially recorded, such differences will impact the income tax and deferred income tax provisions in the period in which such determination is made. There are no income tax liability as at 31 December 2008 and 2007.

(d) Impairment of loans and receivables

Management reviews its loans and receivables for objective evidence of impairment at least annually. Significant financial difficulties of the debtors, the probability that the debtor will enter bankruptcy, and default or significant delay in payments are considered objective evidence that a receivable is impaired. In determining this, management make judgement as to whether there is observerable data indicating that there has been a significant change in the payments ability of the debtor, or whether there have been significant charges with adverse effect in the technological, market, economic or legal environment in which the debtor operates.



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2.1 Basis of preparation (cont’d)

(d) Impairment of loans and receivables (cont’d)

Where there is objective evidence of impairment, management make adjustments as to whether an impairment loss should be recorded in the income statement. The carrying amounts of trade and other receivables are disclosed in Note 4.

2.2 Group accounting

(a) Subsidiaries

Subsidiaries are entities over which the Group has power to govern the financial and operating policies, generally accompanied by a shareholding giving rise to the majority of the voting rights. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Group controls another entity.

The purchase method of accounting is used to account for the acquisition of subsidiaries. The cost of an acquisition is measured as the fair value of the assets given, equity instruments issued or liabilities incurred or assumed at the dates of exchange, plus costs directly attributable to the acquisition. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair value on the date of acquisition. Please refer to the paragraph “Intangible assets – Goodwill” for the accounting policy on goodwill on acquisition of subsidiaries.

Subsidiaries are consolidated from the date on which control is transferred to the Group. They are de-consolidated from the date on which control ceases.

In preparing the consolidated financial statements, transactions, balances and unrealised gains on transactions between group entities are eliminated. Unrealised losses are also eliminated but are considered an impairment indicator of the asset transferred. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group.

(b) Associated companies

Associated companies are entities over which the Group has significant influence, but not control, and generally accompanied by a shareholding giving rise to between and including 20% and 50% of the voting rights. Investments in associated companies are accounted for in the consolidated financial statements using the equity method of accounting.

Investments in associated companies are initially recognised at cost. The cost of an acquisition is measured at the fair value of the assets given, equity instruments issued or liabilities incurred or assumed at the date of exchange, plus costs directly attributable to the acquisition.

In applying the equity method of accounting, the Group’s share of its associated companies’ post-acquisition profits or losses is recognised in the income statement and its share of post-acquisition movements in reserves is recognised in equity directly. These post-acquisition movements are adjusted against the carrying amount of the investment. When the Group’s share of losses in the associated companies equals or exceeds its interest in the associated companies, including any other unsecured non-current receivables, the Group does not recognise further losses, unless it has obligations or has made payments on behalf of the associated companies.

Unrealised gains on transactions between the Group and its associated companies are eliminated to the extent of the Group’s interest in the associated companies. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of associated companies have been changed where necessary to ensure consistency with the accounting policies adopted by the Group.


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2.2 Group accounting (cont’d)

Please refer to the paragraph “Investment in subsidiaries and associated companies” for the accounting policy on investment in subsidiaries in the separate financial statements of the Company.

2.3 Investment in subsidiaries and associated companies

Investment in subsidiaries and associated companies are carried at cost less accumulated impairment losses in the Company’s balance sheet. On disposal of investments in subsidiaries and associated companies, the difference between disposal proceeds and the carrying amounts of the investments are recognised in the income statement.

2.4 Property, plant and equipment

All other items of property, plant and equipment are initially recognised at cost and subsequently carried at cost less accumulated depreciation and accumulated impairment losses.

Component of costs The cost of an item of property, plant and equipment initially recognised includes its purchase price and any cost that

is directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management.

Depreciation

Depreciation is calculated using the straight-line method to allocate their depreciable amounts over their estimated useful lives as follows: Useful lives

Computer equipment and software 3 - 5 yearsOffice equipment 4 - 5 yearsFurniture and fittings 4 - 5 yearsRenovations 4 - 5 years

The residual values, estimated useful lives and depreciation method of property, plant and equipment are reviewed, and adjusted as appropriate, at each balance sheet date. The effects of any revision are recognised in the income statement when the changes arise.

subsequent expenditure

Subsequent expenditure relating to property, 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 the income statement when incurred.

Disposal

On disposal of an item of property, plant and equipment, the difference between the disposal proceeds and its carrying amount is recognised in the income statement.

Fully depreciated plant and equipment are retained in the financial statements until they are no longer in use.



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2.5 Intangible assets

(a) Goodwill on acquisitions

Goodwill represents the excess of the cost of an acquisition over the fair value of the Group’s share of the net identifiable net assets and contingent liabilities of the acquired subsidiaries at the date of acquisition.

Goodwill on subsidiaries is recognised separately as intangible assets and carried at cost less accumulated impairment losses.

Goodwill on associated companies is included in the carrying amount of the investments.

Gains and losses on the disposal of subsidiaries and associated companies include the carrying amount of goodwill relating to the entity sold, except for goodwill arising from acquisitions prior to 1 January 2001. Such goodwill was adjusted against retained earnings in the year of acquisition and not recognised in the income statement on disposal.

(b) Other Intangible assets

Intangible assets acquired separately are initially recognised at cost and subsequently carried at cost less accumulated amortisation and accumulated impairment losses. The cost of intangible assets acquired in a business combination is their fair values as at the date of acquisition. The useful lives of intangible assets are assessed to be either finite or indefinite. Intangible assets with finite lives are amortised on a straight-line basis over the estimated economic 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 for an intangible asset are reviewed at least at each balance sheet date. The amortisation expense on intangible assets with finite lives is recognised in the income statement.

(i) e-Business software and consulting unit

e-Business software and consulting unit comprising all the units intellectual property, key employees and backlog contracts and is amortised on a straight line basis over its estimated useful life of 10 years.

(ii) Web Based e-Learning application

It comprises the intellectual property right and the software and technical know-how together with all the updates and enhancements to the software and is amortised on a straight line basis over its estimated useful life of 3 years.

(iii) Development costs

Development costs for an e-Banking web portal and an e-Learning web portal are charged to income statement in the period the cost are incurred except for those which are expected to have future economic benefits in which case, they are capitalised. Development costs initially recognised as an expense are not recognised as an asset in subsequent period. An intangible asset arising from development expenditure on an individual project is recognised only when the Group can demonstrate the technical feasibility of completing the intangible asset so that it will be available for use or sale, its intention to complete and its ability to use or sell the asset, how the asset will generate future economic benefits, the availability of resources to complete and the ability to measure reliably the expenditure during the development.

The carrying value of development costs is reviewed for impairment annually when the asset is not yet in use or more frequently when an indication of impairment arises. Amortisation is charged to the income statement on a straight line basis over 3 years commencing from the completion of the development.


34



2.5 Intangible assets (cont’d)

Gain or loss arising from derecognition of an intangible asset is measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognised in the income statement when the asset is derecognised.

2.6 Impairment of non-financial assets

(a) Goodwill Goodwill is tested for impairment annually and whenever there is indication that the goodwill may be impaired.

Goodwill included in the carrying amount of an investment in associated companies is tested for impairment as part of the investment, rather than separately.

For the purpose of impairment testing of goodwill, goodwill is allocated to each of the Group’s cash-generating-units (“CGU”) expected to benefit from synergies arising from the business combination.

An impairment loss is recognised when the carrying amount of a CGU, including the goodwill, exceeds the recoverable amount of the CGU. Recoverable amount of a CGU is the higher of the CGU’s fair value less cost to sell and value-in-use.

The total impairment loss of a CGU is allocated first to reduce the carrying amount of goodwill allocated to the CGU and then to the other assets of the CGU pro-rata on the basis of the carrying amount of each asset in the CGU.

An impairment loss on goodwill is recognised in the income statement and is not reversed in a subsequent period.

(b) Intangible assets Property, plant and equipment Investment in subsidiaries and associated companies

Intangible assets, property, plant and equipment, investment in subsidiaries and associated companies are tested for impairment whenever there is any objective evidence or indication that these assets may be impaired.

For the purpose of impairment testing, the recoverable amount (i.e. the higher of the fair value less cost to sell and the value-in-use) is determined on an individual asset basis unless the asset does not generate cash flows that are largely independent to those from other assets. If this is the case, the recoverable amount is determined for the CGU to which the asset belongs.

If the recoverable amount of the asset (or CGU) is estimated to be less than its carrying amount, the carrying amount of the asset (or CGU) is reduced to its recoverable amount.

The difference between the carrying amount and recoverable amount is recognised as an impairment loss in the income statement.

An impairment loss for an asset other than goodwill is reversed if, and only if, there has been a change in the estimates used to determine the asset’s recoverable amount since the last impairment loss was recognised. The carrying amount of this asset other than goodwill is increased to its revised recoverable amount, provided that this amount does not exceed the carrying amount that would have been determined (net of any accumulated amortisation or depreciation) had no impairment loss been recognised for the asset in prior years. A reversal of impairment loss for an asset other than goodwill is recognised in the income statement.



35



2.7 trade and other receivables

Trade and other receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less allowance for impairment. An allowance for impairment of trade and other receivables is established when there is objective evidence that the Group will not be able to collect all amounts due according to the original terms of the receivables. The amount of the allowance is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the original effective interest rate. The amount of the allowance is recognised in the income statement.

2.8 trade and other payables

Trade and other payables are initially recognised at fair value, and subsequently measured at amortised cost, using the effective interest method.

2.9 Lease

(a) When the Group is the lessee

The Group leases certain property, plant and equipment under finance leases and office building under operating lease from non-related parties.

(i) Lessee – Finance leases Leases where the Group assumes substantially all risks and rewards incidental to ownership of the

leased assets are classified as finance leases.

The leased assets and the corresponding lease liabilities (net of finance charges) under finance leases are recognised on the balance sheet as property, plant and equipment and finance lease liabilities respectively, at the inception of the leases based on the lower of the fair value of the leased assets and the present value of the minimum lease payments.

Each lease payment is apportioned between the finance expense and the reduction of the outstanding lease liability. The finance expense is recognised in the income statement on a basis that reflects a constant periodic rate of interest on the finance lease liability.

(ii) Lease – Operating leases

Leases of office building where substantially all risks and rewards incidental to ownership are retained by the lessors are classified as operating leases. Payments made under operating lease (net of any incentives received from the lessor) are taken to the income statement on a straight-line basis over the period of the lease.

(b) When the Group is the lessor

The Group leases office building under operating leases to related parties.

Leases of office building where the Group retains substantially all risks and reward incidental to ownership are classified as operating leases. Rental income from operating leases (net of any incentives given to the lessees) is recognised in the income statement on a straight-line basis over the lease term.


36



2.10 Income taxes

Current income tax for current and prior periods is recognised at the amount expected to be paid to or recovered from the tax authorities, using the tax rates and tax laws that have been enacted or substantively enacted by the balance sheet date.

Deferred income tax is recognised for all temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements except when the deferred income tax arises from the initial recognition of goodwill or an asset or liability in a transaction that is not a business combination and affects neither accounting nor taxable profit or loss at the time of the transaction.

A deferred income tax asset is recognised to the extent that it is probable that future taxable profit will be available against which the deductible temporary differences and tax losses can be utilised.

Deferred income tax is measured:

(i) at the tax rates that are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled, based on tax rates and tax laws that have been enacted or substantively enacted by the balance sheet date; and

(ii) based on the tax consequence that will follow from the manner in which the Group expects, at the balance sheet date, to recover or settle the carrying amounts of its assets and liabilities.

Current and deferred income taxes are recognised as income or expense in the income statement.

2.11 Provisions Provisions are recognised when the Group has a present legal or constructive obligation as a result of past events, it

is more likely than not that an outflow of resources will be required to settle the obligation and the amount has been reliably estimated.

2.12 employee compensation

(a) Defined contribution plans

Defined contribution plans are post-employment benefit plans under which the Group pays fixed contributions into separate entities such as the Central Provident Fund in Singapore and Employee Provident Fund in Malaysia on a mandatory, contractual or voluntary basis. The Group has no further payment obligations once the contributions have been paid.

(b) Share - based compensation

The Group operates an equity-settled, share-based compensation plan. The fair value of the employee services received in exchange for the grant of options is recognised as an expense in the income statement with a corresponding increase in the share option reserve over the vesting period. The total amount to be recognised over the vesting period is determined by reference to the fair value of the options granted on the date of the grant. Non-market vesting conditions are included in the estimation of the number of shares under options that are expected to become exercisable on the vesting date. At each balance sheet date, the Group revises its estimates of the number of shares under options that are expected to become exercisable on the vesting date and recognises the impact of the revision of the estimates in the income statement, with a corresponding adjustment to the share option reserve over the remaining vesting period.



37



2.12 employee compensation (cont’d)

(b) Share - based compensation (cont’d)

When the options are exercised, the proceeds received (net of transaction costs) and the related balance previously recognised in the share options reserve are credited to share capital account when new ordinary shares are issued to the employee.

2.13 Currency translation

(a) Functional and presentation currency

Items included in the financial statements of each entity in the Group are measured using the currency of the primary economic environment in which the entity operates (“functional currency”). The financial statements are presented in Singapore Dollar.

(b) Translations and balances

Transactions in a currency other than the functional (“foreign currency”) are translated into the functional currency using the exchange rates at the dates of the transactions. Currency translation differences from the settlement of such transactions and from the translation of monetary assets and liabilities denominated in foreign currencies at the closing rates at the balance sheet date are recognised in the income statement.

Non-monetary items measured at fair values in foreign currencies are translated using the exchange rates at the date when the fair value was determined.

(c) Translation of Group entities’ financial statements

The results and financial position of all the Group entities (none of which has the currency of a hyperinflationary economy) that have a functional currency different from the presentation currency are translated into the presentation currency as follows:

(i) Assets and liabilities are translated at the closing exchange rates at the date of the balance sheet date;

(ii) Income and expenses are translated at average exchange rates (unless the average is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated using the exchange rates at the dates of the transactions); and

(iii) All resulting currency translation differences are recognised in the currency translation reserve.

2.14 segment reporting

A geographical segment is a distinguishable component of the Group engaged in providing products or services within a particular economic environment that is subject to risks and returns that are different from those of other economic environments. A business segment is a distinguishable component of the Group engaged in providing products or services that are subject to risks and returns that are different from those of other business segments.

2.15 Cash and cash equivalents

Cash and cash equivalents include cash on hand and deposit with financial institutions.


38



2.16 Revenue recognition

Revenue is recognised to the extent that it is probable that future economic benefits will flow to the Group and the revenue can be reliably measured.

Contract revenue from systems and software development which will be completed within the next twelve months is accounted upon services rendered to customers and customers’ acceptance, net of discount.

Contract revenue from systems and software development which will be completed within the next twelve months is accounted for by the stage of completion method as described in Note 2.17.

Web maintenance fees, E-Commerce and internet-related services fees, interest income and rental income are recognised on accrual basis.

Rental income from operating leases (net of any incentives given to the lessees) is recognised on a straight-line basis over the lease term.

Interest income is recognised using the effective interest method.

2.17 Project contract

The Group uses the percentage-of-completion method in accounting for its contract revenue and cost where it is probable that contract costs are recoverable. The stage of completion is measured by reference to the contract costs incurred to date to the estimated total costs for the contract.

Significant judgement is required in determining the stage of completion, the extent of the contract costs incurred, the estimated total contract revenue and contract costs, as well as the recoverability of the contracts. Total contract revenue also includes an estimation of the variation works and claims that are recoverable from the customers. In making the judgement, the Group has relied on past experience and the work of specialists.

2.18 non-current assets (or disposal groups) held for sale and discontinued operations

Non-current assets (or disposal groups) are classified as assets held for sale and carried at the lower of carrying amount and fair value less costs to sell if their carrying amount is recovered principally through a sale transaction rather than through continuing use. The assets (including those that are part of a disposal group) are not depreciated or amortised while they are classified as held for sale. Any impairment loss on initial classification and subsequent measurement is recognised in the income statement. Any subsequent increase in fair value less costs to sell up (not exceeding the accumulated impairment loss that has been previously recognised) is recognised in the income statement.

A discontinued operation is a component of an entity that either has been disposed of, or that is classified as held for sale and:

(a) Represents a separate major line of business or geographical area of operations; or(b) Is part of a single co-ordinated plan to dispose of a separate major line of business or geographical area of

operations; or(c) Is a subsidiary acquired exclusively with a view to resale.

2.19 share capital

Ordinary shares are classified as equity. Incremental costs directly attributable to the issuance of new ordinary shares are deducted against the share capital account.



39



2.20 Fair value estimation of financial assets and liabilities

The fair values of current financial assets and liabilities carried at amortised cost approximate their carrying amounts.

3. Cash and cash equivalents Group Company

2008 2007 2008 2007

$ $ $ $ Cash at bank and on hand 1,485,866 853,022 1,485,866 853,022Short-term bank deposits 1,000,000 2,900,000 1,000,000 2,900,000

2,485,866 3,753,022 2,485,866 3,753,022

For the purpose of presenting the consolidated cash flow statement, the consolidated cash and cash equivalents comprise the following:

Group Company

2008 2007 2008 2007

$ $ $ $

Cash and bank balances (as above) 2,485,866 3,753,022 2,485,866 3,753,022Add: Included under disposal group classified as held for sale (Note 6) 29,557 37,859 - -

2,515,423 3,790,881 2,485,866 3,753,022


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4. trade and other receivables Group Company

2008 2007 2008 2007

$ $ $ $

Trade receivables - Non-related parties 25,141 4,387 25,141 4,387- Subsidiaries - - 18,264 18,264

25,141 4,387 43,405 22,651Less: Allowance for impairment - - (18,264) (18,264)

Trade receivables - net 25,141 4,387 25,141 4,387 Non-trade receivables - Non-related parties - 13,790 - 13,790- Subsidiaries - - 156,503 44,055

- 13,790 156,503 57,845Less: Allowance for impairment - - (156,503) -

Non-trade receivables - net - 13,790 - 57,845

25,141 18,177 25,141 62,232

Non-trade receivables to subsidiaries are unsecured, interest-free and repayable on demand.

5. other current assets Group Company

2008 2007 2008 2007

$ $ $ $

Deposit 2,563 2,563 2,563 2,563Prepayments - Deferred RTO expenses 1,090,282 18,500 1,090,282 18,500- Others 10,085 146,784 10,085 146,784

1,102,930 167,847 1,102,930 167,847



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6. Discontinued operations and Disposal Group classified as held for sale

On 15 February 2008, the Company entered into Sale and Purchase Agreement with Brightsphere Sdn. Bhd. to sell the Cyber Village Pte Ltd in Singapore, Cyber Village Sdn. Bhd. and CV Ventures Sdn. Bhd. in Malaysia. The assets and liabilities related to Cyber Village Pte Ltd, Cyber Village Sdn. Bhd. and CV Ventures Sdn. Bhd. are classified as a disposal group held for sale on the balance sheet, and the results from Cyber Village Pte Ltd, Cyber Village Sdn. Bhd. and CV Ventures Sdn. Bhd. are presented separately on the income statement as “Discontinued operations”. The transaction is completed on 21 January 2009.

The results of the discontinued operations and the re-measurement of the disposal group are as follows:

Group

2008 2007

$ $ Revenue 2,585,004 2,713,110Expense (2,708,940) (4,529,428)

Loss before tax from discontinued operations (123,936) (1,816,318)Tax (Note 18) (937) 585

Loss after tax from discontinued operations (124,873) (1,815,733)

Pre-tax loss recognised on the measurement to fair value less cost to sell on disposal group - -Tax - -

After tax loss recognised on the measurement to fair value less cost to sell on disposal group - -

Total loss from discontinued operations (124,873) (1,815,733)

Group Company

2008 2007 2008 2007

$ $ $ $

Details of the assets in disposal group classified as held for sale are as follows: Cash and cash equivalents (Note 3) 29,557 37,859 - -Trade and other receivables 642,944 726,879 - -Investments in associated companies (Note 7) - - - -Investments in subsidiaries (Note 8) - - 200,000 200,000Property, plant and equipment (Note 9) 42,299 72,685 - -Intangible assets (Note 10) 261,466 279,858 - -

976,266 1,117,281 200,000 200,000


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6. Discontinued operations and Disposal Group classified as held for sale (cont’d)

Details of the liabilities directly associated with disposal group classified as held for sale are as follows:

Group

2008 2007

$ $

Trade and other payables 767,463 895,838Finance lease liabilities 8,803 21,443

776,266 917,281

The impact of the discontinued operations on the cash flows of the Group is as follows:

Group

2008 2007

$ $

Operating cash (outflows)/ inflows 19,117 (482,336)Investing cash outflows (14,779) (148,965)Financing cash (outflows)/ inflows (12,640) 302,915

Total cash outflows (8,302) (328,386)

7. Investments in associated companies Group Company

2008 2007 2008 2007

$ $ $ $

Unquoted equity shares, at cost 30,073 30,073 - -Share of post-acquisition reserves (30,073) (30,073) - -

- - - -

The Group has not recognised its share of losses of associated companies amounting to $6,422 (2007: $9,554) because the Group’s cumulative share of losses exceeds its interest in those associated companies and the Group has no obligation in respect of those losses. The cumulative unrecognised losses amount to $149,737 (2007: $113,679) at the balance sheet date.

The summarised financial information of associated companies are as follows:

2008 2007

$ $

- Assets 17,522 12,675- Liabilities 382,860 315,311- Revenue 88,288 82,498- Net loss (13,520) (20,113)



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7. Investments in associated companies (cont’d)

Details of the associated companies were as follows as at 31 December:

Country of business/

name of companies Principal activities incorporation equity holding

2008 2007 % %Held by subsidiaries NetFlowers Pte. Ltd. e-retaining of flowers and gifts over the internet Singapore 47.5 47.5 MyFlowers Sdn. Bhd. e-retaining of flowers and gifts over the internet Malaysia 47.5 47.5 (currently dormant)

8. Investments in subsidiaries Company

2008 2007

$ $

Unquoted equity shares, at cost 4,576,000 4,576,000Less: Allowance for impairment (4,376,000) (4,376,000)

200,000 200,000

Details of the subsidiaries were as follows as at 31 December:

Country of business/


2008 2007 % %Held by the Company Cyber Village Pte Ltd @ Provision of e-business consulting services Singapore 100 100 including web design, web application development and internet marketing services Cyber Village Sdn. Bhd. * Provision of e-business consulting services Malaysia 100 100 including web design, web application development and internet marketing services

CV Ventures Sdn. Bhd. * Investment holding Malaysia 100 100

Held by subsidiaries Spark Media Pte Ltd @ Provision of web design and multimedia Singapore 100 100 development services (currently dormant)


44


8. Investments in subsidiaries (cont’d) Country of business/


2008 2007 % %

Held through subsidiaries (cont’d)

CV Distribution and Dissemination of information, knowledge, Singapore 100 100Services Pte. Ltd. @ data and details in respect of information technology and related areas and the provision of information technology and software development and implementation services including contracting of IT skills and outsourcing of information technology services (currently dormant) Fuels N Lubricants Pte. Ltd. ^ Provision of consultancy services and Singapore 100 100 software development in e-commerce applications for business.

Learning Sciences Pte Ltd. ^ Provision of information technology Singapore 100 100 consultancy and services, and e-learning and training solutions KakakTua.com Sdn. Bhd. * Providing online education services, Malaysia 100 100 internet and e-commerce marketing consultancy services

@ Audited by Nexia TS Public Accounting Corporation, Singapore, a member of Nexia International.* Audited by Monteiro & Heng, Malaysia, a member firm of Baker Tilly International.^ The companies are dormant during financial year, audited by Nexia TS Public Accounting Corporation, Singapore,

a member of Nexia International, for consolidation purpose.



45


9. Property, plant and equipment

Group

Computer equipment

and softwareoffice

equipmentFurniture and

fittings Renovations total

$ $ $ $ $2008 CostBeginning of financial year 738,291 23,043 66,280 170,167 997,781Additions 15,127 - - - 15,127Currency translation differences (33,978) (861) (3,102) (7,963) (45,904)

Reclassified to disposal group (Note 6) (719,440) (22,182) (63,178) (162,204) (967,004)

End of financial year - - - - -

Accumulated depreciation and accumulated impairmentBeginning of financial year 697,182 23,042 66,273 138,599 925,096Depreciation charge- Discontinued operations 30,101 - - 12,652 42,753Currency translation differences (32,405) (861) (3,101) (6,777) (43,144)



Net book value

end of financial year - - - - -

2007CostBeginning of financial year 721,943 22,974 66,030 169,524 980,471Additions 13,685 - - - 13,685Currency translation differences 2,663 69 250 643 3,625



Accumulated depreciation and accumulated impairmentBeginning of financial year 648,102 22,970 66,024 125,157 862,253Depreciation charge- Discontinued operations 46,662 - - 12,960 59,622Currency translation differences 2,418 72 249 482 3,221



Net book value

end of financial year - - - - -

Included in the property, plant and equipment are computer equipment held under finance leases with carrying amounts of $17,014 (2007: $17,850) at the balance sheet date.


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10. Intangible assets

(a) Goodwill arising on consolidation Group

2008 2007

$ $Cost Beginning and end of financial year 2,899,251 2,899,251

Accumulated impairment Beginning of financial year 2,899,251 2,768,273Impairment charge (Note 16) - 130,978

End of financial year 2,899,251 2,899,251

Net book value - -

Goodwill acquired through business combination are considered as allocated to the Group’s e-business consulting services as a whole for impairment testing purpose. The recoverable amount is determined based on a value in use calculation using cash flow projections based on financial budgets approved by management covering a five-year period. The pre-tax discount rate applied to the cash flow projections is 11%.

(b) Computer software and development costs

e-Business and Web based consulting e-Learning DevelopmentGroup unit application Costs total

$ $ $ $2008 Cost Beginning of financial year 1,089,750 293,906 1,191,398 2,575,054Currency translation differences (51,000) (13,755) (55,758) (120,513)Reclassified to disposal group (Note 6) (1,038,750) (280,151) (1,135,640) (2,454,541)

End of financial year - - - -

Accumulated amortisation and accumulated impairment Beginning of financial year 809,892 293,906 1,191,398 2,295,196Reversal of prior year impairment (93,763) - (338,619) (432,382)Amortisation during the financial year 106,322 - 309,005 415,327Currency translation differences (45,167) (13,755) (26,144) (85,066)Reclassified to disposal group (Note 6) (777,284) (280,151) (1,135,640) (2,193,075)


Net book value end of financial year - - - -



47


10. Intangible assets (cont’d)

(b) Computer software and development costs (cont’d)

e-Business and Web based consulting e-Learning DevelopmentGroup unit application Costs total

$ $ $ $2007 Cost Beginning of financial year 1,085,635 292,796 1,052,281 2,430,712Additions during the financial year - - 135,129 135,129Currency translation differences 4,115 1,110 3,988 9,213Reclassified to disposal group (Note 6) (1,089,750) (293,906) (1,191,398) (2,575,054)


Accumulated amortisation and accumulated impairment Beginning of financial year 579,005 219,597 89,691 888,293Amortisation during the financial year 108,908 73,432 202,714 385,054Impairment during the financial year 119,619 - 898,530 1,018,149Currency translation differences 2,360 877 463 3,700Reclassified to disposal group (Note 6) (809,892) (293,906) (1,191,398) (2,295,196)


Net book value end of financial year - - - -

The e-Business and consulting unit arises from the acquisition of the IBM Lotus e-Business Software and Consulting Unit from Ericsson Business Consulting (M) Sdn. Bhd.

The Web based e-Learning application arises from the acquisition of the legal and beneficial rights in the e-Learning Software and Technical Know-How together with all updates and enhancements to the Software and the intellectual property rights in the Software.

The development costs are incurred for developing an e-Banking web portal and an e-Learning web portal.

Impairment test of computer software and development costs

Since all the subsidiaries are disposed on 21 January 2009, the intangible assets of the Group are impaired to its fair value.

(a) A reversal of impairment of $432,382 (2007: impairment loss of $1,018,149) is included in “loss from discontinued operations”.

(b) Amortisation expense of $415,327 (2007: $385,054) included in the income statement is included in “loss from discontinued operations”.


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11. trade and other payables Group Company

2008 2007 2008 2007

$ $ $ $

Trade payables to - Non-related parties - 2,195 - 2,195 Non-trade payables to - Non-related parties 332,934 4,333 332,934 4,333

Accrued operating expenses 133,781 128,770 133,781 128,770

466,715 135,298 466,715 135,298

12. share capital number of ordinary shares Amount

Issued share share capital Group and Company $

2008 Beginning and end of financial year 237,234,000 14,883,603

2007 Beginning of financial year 165,185,000 10,296,284Share issue 72,000,000 4,647,850Exercise of Employee Share Options Scheme 49,000 2,450Share issue expenses - (62,981)

End of financial year 237,234,000 14,883,603

On 30 March 2007 and 22 November 2007, the Company issued 32,500,000 and 39,500,000 ordinary shares, respectively, for a total of consideration of $4,647,850 for cash to provide funds for the operating activities of the Group.

On 13 August 2007, the Company issued 49,000 ordinary shares at $0.05 each under the Cyber Village Share Options Scheme (2006: 186,000 ordinary shares of $0.05 each).

The holders of ordinary shares are entitled to receive dividends as and when declared by the Company. All ordinary shares carry one vote per share without restriction.

The newly issued shares rank pari passu in all respects with the previously issued shares.

share options

The Company has a share option scheme (the “Scheme”) plan for the granting of non-transferable options to employees of the Group.

The Company offered 6,230,000 Market Price Options to the Executive Directors and employees in May 2003.

The Company offered 6,206,000 options (3,103,000 Market Price Options and 3,103,000 Incentive Options granted at a discount of 14.8%) to the Executive Directors and employees in June 2004.



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12. share capital (cont’d)

share options (cont’d)

The aggregate number of ordinary shares in respect of all options granted under the Scheme will not at any time exceed 15% of the issued share capital of the Company. The exercise prices of the options shall be at the discretion of the Committee. These may be:

(i) Market Price Options which are priced (the “Market Price”) equal to the average of the last dealt prices for a share for the 5 consecutive market days immediately preceding the grant of the relevant option; or

(ii) Incentive Options which are priced at a discount to the Market Price, subject to a maximum discount of 20% to the Market Price.

Where the exercise price as determined above is less than the par value of the share, the exercise price shall be the par value.

The exercise period of the Market Price Options commences after the first anniversary of the date of grant of the options while the exercise period for the Incentive Options commences after the second anniversary of the date of the grant. Options granted to executive employees of the Group shall expire on the tenth anniversary of the date of grant of the options while the options granted to non executive employees of the Group shall expire on the fifth anniversary of the date of grant.

Movements in the number of unissued ordinary shares under options at the end of financial year and their exercise prices were as follows:

number of ordinary shares under options outstanding

Beginning of financial

year

Forfeited during

financial year

exercised during

financial year

end of financial

yearexercise

price exercise period

Group and Company

2008

Executive employees

2003 Market Price Options 240,000 (240,000) - - $0.05 08.05.04 – 08.05.132004 Market Price Options 156,000 (93,000) - 63,000 $0.27 21.06.05 – 21.06.142004 Incentive Options 156,000 (93,000) - 63,000 $0.23 21.06.06 – 21.06.14

Non-executive employees

2003 Market Price Options 111,000 (111,000) - - $0.05 08.05.04 – 08.05.082004 Market Price Options 363,000 (63,500) - 299,500 $0.27 21.06.05 – 21.06.092004 Incentive Options 363,000 (63,500) - 299,500 $0.23 21.06.06 – 21.06.09

1,389,000 (664,000) - 725,000


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12. share capital (cont’d)

number of ordinary shares under options outstanding

Beginning of financial

year

Forfeited during

financial year

exercised during

financial year

end of financial

yearexercise

price exercise period

Group and Company

2007

Executive employees

2003 Market Price Options 422,000 (182,000) - 240,000 $0.05 08.05.04 – 08.05.132004 Market Price Options 156,000 - - 156,000 $0.27 21.06.05 – 21.06.142004 Incentive Options 156,000 - - 156,000 $0.23 21.06.06 – 21.06.14

Non-executive employees

2003 Market Price Options 180,000 (20,000) (49,000) 111,000 $0.05 08.05.04 – 08.05.082004 Market Price Options 407,000 (44,000) - 363,000 $0.27 21.06.05 – 21.06.092004 Incentive Options 407,000 (44,000) - 363,000 $0.23 21.06.06 – 21.06.09

1,728,000 (290,000) (49,000) 1,389,000

The fair value of share options as at the date of grant, is estimated by the management using the Binomial Valuation Model, taking into account the terms and conditions upon which the options were granted. The inputs to the model used for the financial years ended 31 December 2008 and 31 December 2007 are shown below:

2008 2007

Dividend yield (%) - -Expected volatility (%) 95 95Risk-free interest rate (%) – executive employees 3.71 3.71Risk-free interest rate (%) – non executive employees 2.54 2.54Expected life of option (years) – executive employees 10 10Expected life of option (years) – non executive employees 5 5Weighted average share price ($) 0.27 0.27

The expected life of the options is based on historical data and is not necessarily indicative of exercise patterns that may occur. The expected volatility reflects the assumption that the historical volatility is indicative of future trends, which may also not necessarily be the actual outcome. No other features of the option grant were incorporated into the measurement of fair value.

Since the Company completed the sale of subsidiaries on 21 January 2009, all the shares option granted to non-executive employees of subsidiaries are lapsed at the date except for the shares option granted to previous director of the Company, Law Kam Kuan (refer to Note 25).



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13. other reserve Group Company

2008 2007 2008 2007

$ $ $ $

(a) Composition: Share option reserve 532,100 532,100 532,100 532,100 Currency translation reserve (243,729) (256,158) - -

288,371 275,942 532,100 532,100

(b) Movements: (i) share option reserve Beginning and end of financial year 532,100 532,100 532,100 532,100

(ii) currency translation reserve Beginning of financial year (256,158) (263,738) - - Net currency translation differences of financial statements of foreign subsidiaries 12,429 7,580 - -

End of financial year (243,729) (256,158) - -

14. Revenue Group

2008 2007

$ $

Web support and maintenance 1,158 43,197Web design and development - 6,469Hardware sales - 500

1,158 50,166

15. other income

Group

2008 2007

$ $

Interest income 41,634 4,647Currency translation gain 2,868 1,273 44,502 5,920Less: amounts attributable to discontinued operation - (4,647)

Amounts attributable to continuing operations 44,502 1,273


52


16. expenses by nature Group 2008 2007 $ $

Cost of sales 2,589 26,840 Impairment loss of goodwill (Note 10) - 130,798Employee compensation (Note 17) 417,769 409,608Legal and professional fees 34,827 63,430Operating lease – office rental 34,641 17,941Other 99,916 71,594

Total cost of sales, selling and distribution, administrative and other expenses 589,742 720,211

17. employee compensation Group 2008 2007 $ $

Wages, salaries and bonuses 1,505,302 1,452,245CPF/EPF contributions 104,343 116,562Other personnel expenses 59,512 47,066

Total staff costs 1,669,157 1,615,873Less: Amounts attributable to discontinued operations (1,251,388) (1,206,265)

Amounts attributable to continuing operations (Note 16 ) 417,769 409,608

18. Income taxes

(a) Income tax expense

There is no tax provision on the Group’s continuing operations for the financial year as the Group does not have taxable profit from its continuing operations.

Group 2008 2007 $ $

Tax expense is made up of: - Profit from current financial year From discontinued operations Current income tax - Foreign 202 -

202 -- (Over)/under provision in prior financial years From discontinued operations Current income tax - Singapore - (709) - Foreign 735 124

735 (585)

Tax expense is attributable to: - discontinued operations (Note 6) 937 (585)



53


18. Income taxes (cont’d)

(a) Income tax expense (cont’d)

The tax expense on loss differs from the amount that would arise using the Singapore Standard rate of income tax is as explained below:

Group

2008 2007

$ $

Loss before tax from - continuing operations (544,082) (668,772)- discontinued operations (Note 6) (123,936) (1,816,318)

(668,018) (2,485,090)

Tax calculated at the applicable tax rate of 18% (2007: 18%) (120,243) (447,317)Effects of - difference tax rate in other country (29,619) (85,465)- expenses not deductible for tax purposes 157,652 353,096- income not subjected to tax 4,048 -- deferred income tax asset not recognised (11,636) 179,686

Tax charge 202 -

(b) Deferred income taxes Deferred income tax assets are recognised for tax losses and capital allowances carried forward to the extent

that realisation of the related tax benefits through future taxable profits is probable.

At the balance sheet date, the Group has unrecognised tax losses of $4,840,613 (2007: $4,038,118) and capital allowances of $22,419 (2007:$22,419) which can be carried forward and used to offset against future taxable income subject to meeting certain statutory requirements by those companies with unrecognised tax losses and capital allowances in their respective countries of incorporation.


54


19. Loss per share

The completion of Reverse Take Over which was completed on 21 January 2009 resulted in a 4-for-1 share consolidation of all existing ordinary shares in issue. The consolidation also resulted in the corresponding adjustment in the subscription price of the shares and/or number of shares comprised in all unexercised share options granted by the Company under the Employee Share Option Scheme.

(a) Basic loss per share

Basic loss per share amount is calculated by dividing the total loss attributable to ordinary equity holders of the Company by the weighted average number of ordinary shares outstanding during the financial year.

Continuing Discontinued operations operations total

2008 2007 2008 2007 2008 2007 Total loss attributable to equity holders of the Company ($) (544,082) (668,772) (124,873) (1,815,733) (668,955) (2,484,505) Weighted average number of ordinary shares outstanding for basic loss per share (‘000) 237,234 192,872 237,234 192,872 237,234 192,872 Effect of share consolidation 4-for-1 (‘000) 59,309 48,218 59,309 48,218 59,309 48,218

Basic loss per share (cents) (0.92) (1.40) (0.20) (3.76) (1.12) (5.16)

(b) Diluted loss per share For the purpose of calculating diluted loss per share, loss attributable to equity holders of the Company and

the weighted average number of ordinary shares outstanding are adjusted for the effects of all dilutive potential ordinary shares. The Company has dilutive ordinary shares from employee share option scheme.

For share options, the weighted average number of shares on issue has been adjusted as if all dilutive share options were exercised, except for 725,000 (2007: 1,038,000) of share options granted to employee in June 2004, which have not been included in the calculation of diluted loss per share because they are anti-dilutive for the current and previous financial year presented. The number of shares that could have been issued upon the exercise of all dilutive share options less the number of shares that could have been issued at fair value (determined as the Company’s average share price for the financial year) for the same total proceeds is added to the denominator as the number of shares issued for no consideration. No adjustment is made to the total loss.



55


19. Loss per share (cont’d)

(b) Diluted loss per share (cont’d)

Diluted loss per share for continuing operations and discontinued operations attributable to equity holders of the Company is calculated as follows:

Continuing Discontinued operations operations total

2008 2007 2008 2007 2008 2007

Total loss attributable to equity holders of the Company ($) (544,082) (668,772) (124,873) (1,815,733) (668,955) (2,484,505) Weighted average number of ordinary shares outstanding for basic loss per share (‘000) 237,234 192,872 237,234 192,872 237,234 192,872

Adjustment for share options (‘000) - 81 - 81 - 81

237,234 192,953 237,234 192,953 237,234 192,953

Effect of share consolidation 4-for-1 (‘000) 59,309 48,238 59,309 48,238 59,309 48,238

Diluted loss per share (cents) (0.92) (1.40) (0.20) (3.76) (1.12) (5.16)

20. Contingencies

Cyber Village Sdn. Bhd. (“CVSB”) vs Elixir Group (Macau) Limited (“Elixir”)

On 28 November 2007, a Writ of Summons and Statement of claim has been taken out by Elixir Group (Macau) Limited in the High Court of Malaysia on Cyber Village Sdn. Bhd. Elixir’s claim is for the outstanding amount of US$284,347; interest at the rate of 8% per annum to be calculated from 14 November 2008 until full realisation thereof; costs on a solicitor and client basis; and such further or other relief as the High Court of Malaysia deems fit.

On 30 January 2008, Elixer has agreed to re-enter into negotiation with Cyber Village Sdn. Bhd to settle the outstanding balances together with 6.75% per annum calculating from 14 November 2007 to 4 February 2008 by 9 instalments. CVSB has made 3 instalments amounting to US$94,789 during the financial year.


56


21. operating lease commitments

The Group has various operating lease agreements for the rental of office premises.

The future minimum lease payables under non-cancellable operating leases contracted for at the balance sheet date but not recognised as liabilities, are as follows:

Group

2008 2007

$ $

Not later than one year 20,046 87,527Between one and five years - 20,482

20,046 108,009

22. Financial risk management

Financial risk factors

The Group’s activities expose it to currency risk, credit risk and liquidity risk. The Group’s overall risk management strategy seeks to minimise adverse effects from the unpredictability of financial markets on the Group’s financial performance. The Board of directors reviews and agrees policies for managing each of these risks and they are summarised below. It is the Group’s policy not to trade in derivative contracts.

(a) Market risk

(i) Currency risk

The Group is exposed to currency translation risk on the net assets of the subsidiaries. The Group’s assets, liabilities, sales and purchases are mainly denominated in Malaysia Ringgit. Hence, it creates natural hedging.

As at 31 December 2008, the Group’s and the Company’s currency risk exposures are insignificant.

(b) Credit risk

The carrying amount of cash and cash equivalents, trade receivables and other receivables represent the Group’s maximum exposure to credit risk in relation to financial assets. No other financial assets carry a significant exposure to credit risk.

As at balance sheet date, the Group has no significant concentration of credit risk.

Credit risk refers to the risk that a counter party will default on its contractual obligations resulting in financial loss to the Group. For trade receivables, the Group adopts the policy of dealing only with customers of appropriate credit history to mitigate credit risk.

As the Group and Company does not hold any collateral, the maximum exposure to credit risk for each class of financial instruments is the carrying amount of that class of financial instruments presented on the balance sheet.



57


22. Financial risk management (cont’d)

Financial risk factors (cont’d)

(b) Credit risk (cont’d)

The credit risk for trade receivables based on the information provided to key management is as follows:

Group Company

2008 2007 2008 2007

$ $ $ $

By geographical areas singapore - Continuing operations 25,141 4,387 25,141 4,387- Discontinued operations 5,938 35,000 - -

31,079 39,387 25,141 4,387 Malaysia - Discontinued operations 600,959 575,113 - -

632,038 614,500 25,141 4,387

By type of customers non-related parties - Other companies 632,038 614,500 25,141 4,387

(i) Financial assets that are neither past due nor impaired

Bank deposits that are neither past due nor impaired are mainly deposits with banks with high credit-ratings. Trade receivables that are neither past due nor impaired are substantially companies with a good collection track record with the Group.

(ii) Financial assets that are past due and/or impaired

There is no other class of financial assets that is past due and/or impaired except for trade and other receivables.

All trade and other receivables that are past due have been fully impaired.


58


22. Financial risk management (cont’d)

Financial risk factors (cont’d)

(c) Liquidity risk

The Group and the Company manage the liquidity risk by maintaining sufficient cash and cash equivalents to enable them to meet their normal operating commitments.

(d) Capital risk

The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern and to maintain an optimal capital structure so as to maximise shareholder value. In order to maintain or achieve an optimal capital structure, the Group may issue new shares, obtain new borrowings or sell assets to increase the working capital.

Management monitors capital based on the financial position of the Group and the Company. With its cash holding and no bank borrowings, the Group is still in positive net assets. Future decisions to raise capital and funds will be made with the objective to maintain positive working capital structure.

The Group and the Company have no externally imposed capital requirements for the financial years ended 31 December 2008 and 2007.



59


23. Related parties transactions

In addition to the information disclosed elsewhere in the financial statements, the following transactions took place between the Group and related parties at terms agreed between the parties:

(a) Services rendered, income received and expenses paid

Group

2008 2007

$ $

Service rendered to - associated companies 25,517 27,445

Ting & PartnersRental income charged to 11,270 7,841Legal, professional and secretarial fees paid to 15,524 11,765

Maida Vale Consulting Group Pte. Ltd.Rental paid to 34,641 28,193

Ms Yow Ting Fong, who is a director of a subsidiary is the managing partner of Ting & Partners. The professional fee paid to Ting & Partners is according to prevailing market rates as compared to other legal firms providing similar services.

Dr Foo Fatt Kah, who is a director of the company is the managing partner of Maida Vale Consulting Group Pte Ltd. The rental paid to Maida Vale Consulting Group Pte Ltd is according to prevailing market rates as compared to other company providing similar services.

Outstanding balances at 31 December 2008, arising from services rendered, income received or expenses paid are set out in Note 4 and 6, respectively.

(b) Key management personnel compensation

Key management personnel compensation is as follows:

Group

2008 2007

$ $

Wages and salaries 558,967 663,664Employer’s contribution to defined contribution plans 29,123 31,731

588,090 695,395

Included in the above is total compensation to directors of the Company, amounting to $466,930 (2007: $384,986).


60


24. segment information

(a) Primary reporting format – geographical segments

The Group is organised on into two geographical segments, Singapore and Malaysia. Inter-segment pricing is on an arm’s length basis.

Revenue for Revenue for continuing discontinued total operations operations consolidated revenue

2008 2007 2008 2007 2008 2007

$ $ $ $ $ $

Malaysia - - 2,345,230 2,408,030 2,345,230 2,408,030Singapore 1,158 50,166 226,192 305,080 227,350 355,246

1,158 50,166 2,571,422 2,713,110 2,572,580 2,763,276

total consolidated assets

2008 2007

$’000 $’000 Malaysia 815 988Singapore 3,772 4,068

4,587 5,056

Capitalised expenditure for Capitalised for continuing discontinued total operations operations Capital expense

2008 2007 2008 2007 2008 2007

$’000 $’000 $’000 $’000 $’000 $’000

Malaysia - - 15 149 15 149

(b) Secondary reporting format – business segments

The Group’s core business is the provision of e-business consulting services and there are no meaningful figures and analyses available for segmentation by activities.



61


25. event occurring after balance sheet date

The Company entered into a conditional sale and purchase agreement with the individual shareholders of Koyo Engineering (S.E.Asia) Pte Ltd on 24 August 2007 to acquire the entire issued and paid up capital of Koyo Engineering (S.E.Asia) Pte Ltd for a consideration of $26,350,000, to be satisfied by the issuance of 439,166,666 new shares at an issue price of $0.06 per share. The issue price per share was subsequently revised on 3 March 2008 to $0.05 and the maximum number of shares to be issued as consideration was adjusted to 527,000,000.

The Company also entered into a conditional sale and purchase agreement with Brightsphere Sdn. Bhd. on 15 February 2008 to dispose shares in its wholly owned subsidiaries, namely Cyber Village Pte Ltd, Cyber Village Sdn. Bhd. and CV Ventures Sdn. Bhd., for a consideration of $200,000.

On 21 January 2009, in relation to the aforementioned transactions, the Company completed the sale and purchase agreement with the individual shareholders of Koyo Engineering (S.E.Asia) Pte Ltd, and disposed the Company’s wholly owned subsidiaries. The Company also changed its name to Koyo International Limited.

The completion of the sale and purchase agreement with the individual shareholders of Koyo Engineering (S.E.Asia) Pte Ltd on 21 January 2009 resulted in a 4-for-1 share consolidation of all existing ordinary shares in issue. The consolidation also resulted in the corresponding adjustment in the subscription price of the shares and/or number of shares comprised in all unexercised share options previous granted by the Company under the Employee Share Option Scheme.

The disposal of the Company’s wholly owned subsidiaries on 21 January 2009 resulted in the lapsing of all 599,000 share options (149,750 consolidated share options) issued to non-executive employees as at 31 December 2008 as the employees were no longer employees of the Group.

26. new or revised accounting standards and interpretations

Certain new standards, amendments and interpretations to existing standards have been published and are mandatory for the Group’s accounting period beginning on or after 1 January 2009 or later periods and which the Group has not early adopted. The Group’s assessment of the impact of adopting those standards, amendments and interpretations that are relevant to the Group is set out below:

(a) FRS 1(R) Presentation of Financial Statements (effective for annual periods beginning on or after 1 January 2009)

The revised standard requires:

• All changes in equity arising from transaction with owners in their capacity as owners to be presented separately from components of comprehensive income;

• Components of comprehensive income not to be included in statement of changes in equity;• Items of income and expenses and components of other comprehensive income to be presented either

in a single statement of comprehensive income with subtotals, or in two separate statements (a separate statement of profit and loss followed by a statement of comprehensive income); and

• Presentation of restated balance sheet as at the beginning of the comparative period when entities make restatements or reclassifications of comparative information.

The revisions also include changes in the titles of some of the financial statements primary statements.

The Group will apply the revised standard from 1 January 2009 and provide comparative information that conforms to the requirements of the revised standard. The key impact of the application of the revised standard is the presentation of an additional primary statement, that is, the statement of comprehensive income.


62


26. new or revised accounting standards and interpretations (cont’d)

(b) FRS 108 Operating Segments (effective for annual periods beginning on or after 1 January 2009)

FRS 108 supersedes FRS 14 Segment Reporting and requires the Group to report the financial performance of its operating segments based on the information used internally by management for evaluating segment performance and deciding on allocation of resources. Such information may be different from the information included in the financial statements, and the basis of its preparation and reconciliation to the amounts recognised in the financial statements shall be disclosed.

The Group will apply FRS 108 from 1 January 2009 and provide comparative information that conforms to the requirements of FRS 108. The Group expects the new operating segments to be significantly different from business segments currently disclosed and expects more information to be disclosed under FRS 108.

27. Authorisation of financial statements for issue

The financial statements for the financial year ended 31 December 2008 were authorised for issue in accordance with a resolution of the Directors on 1 April 2009.



63


shareholding statistics

LIst oF tWentY LARGest sHAReHoLDeRs (as at 18 March 2009) no. name no. of shares % 1 FOO CHEK HENG 69,300,500 36.272 HENG JEE MOI 62,449,500 32.693 UOB KAY HIAN PTE LTD 4,021,785 2.114 TAI HO FAH 3,453,500 1.815 ONG SWEE GUAN 2,165,250 1.136 NG PHAIK AI 1,875,000 0.987 UNITED OVERSEAS BANK NOMINEES PTE LTD 1,829,750 0.968 LIM SIN TAT 1,800,000 0.949 KIM ENG SECURITIES PTE. LTD. 1,713,000 0.9010 OCBC SECURITIES PRIVATE LTD 1,329,000 0.7011 ONG TIAK BENG 1,250,000 0.6512 CITIBANK NOMINEES SINGAPORE PTE LTD 787,250 0.4113 OCBC NOMINEES SINGAPORE PTE LTD 753,250 0.3914 WONG HO LAN 750,000 0.3915 PHILLIP SECURITIES PTE LTD 562,530 0.2916 DBS VICKERS SECURITIES (S) PTE LTD 558,500 0.2917 CHENG KIM MAN EDWIN 510,000 0.2718 WONG WAI KAR MICHAEL 500,000 0.2619 WONG YAT FOO 500,000 0.2620 MAYBAN NOMINEES (S) PTE LTD 490,000 0.26

total 156,598,815 81.96

DIstRIBUtIon oF sHAReHoLDInGs (as at 18 March 2009)

no. of no. ofsize of shareholdings shareholders % shares % 1 - 999 87 6.30 38,807 0.021,000 - 10,000 516 37.36 2,747,675 1.4410,001 - 1,000,000 767 55.54 37,084,730 19.411,000,001 and above 11 0.80 151,187,285 79.13

total 1,381 100.00 191,058,497 100.00

During FY2008, the Company had only one class of shares, being ordinary shares.

64


shareholding statistics

substantial shareholders(As shown in the Register of Substantial Shareholders as at 18 March2009)

name of shareholders

number of shares

Direct Interest Deemed Interest total %

Foo Chek Heng 69,300,500 - 69,300,500 36.27Heng Jee Moi 62,449,500 - 62,449,500 32.69

Confirmation of Compliance with Rule 723

The Company is required to state the percentage of shareholding held in the hands of the public and confirm that it complies with Rule 723 of the Listing Manual, which states that an issuer must ensure that at least 10% of the total number of issued shares (excluding preference shares, convertible equity securities and treasury shares) in a class that is listed is at all times held by the public.

Based on information available to the Company as at 18 March 2009, approximately 31.04% of the issued ordinary shares of the Company was held by the public and therefore, the Company is in compliance with Rule 723 of the Listing Manual.

treasury shares

The Company did not hold any of its shares as treasury shares during FY2008.


65


NOTICE IS HEREBY GIVEN THAT the Annual General Meeting of Koyo International Limited will be held at Paramount Hotel Singapore, 25 Marine Parade, Level 4 The Gallery, Singapore 449536 on the 30th day of April 2009 at 9.30 a.m. for the following purposes:

As oRDInARY BUsIness

1. To receive and, if approved, to adopt the Audited Financial Statements for the financial year ended 31 December 2008 together with the Directors’ Report and Independent Auditor’s Report thereon. [Resolution 1]

2. To approve Directors’ fees of $100,000 for the financial year ended 31 December 2008. [Resolution 2]

3. To re-elect Mr. Manu Bhaskaran, who is retiring under Article 98 of the Articles of Association. [Resolution 3]

4. To re-elect Ms Serena Lee Chooi Li, who is retiring under Article 98 of the Articles of Association. [Resolution 4]

5. To appoint Nexia TS Public Accounting Corporation, Public Accountants and Certified Public Accountants as the Company’s Independent Auditor and to authorise the Directors to fix their remuneration. [Resolution 5]

6. To transact any other business which may be properly conducted at the Annual General Meeting.

As sPeCIAL BUsIness

To consider and, if thought fit, to pass the following resolutions (with or without amendments) as Ordinary Resolutions:

7. THAT the Directors be and are hereby authorised to offer and grant options in accordance with the provisions of the Koyo International Share Option Scheme (the “Scheme”) and to allot and issue from time to time such number of shares in the Company as may be required to be issued pursuant to the exercise of options under the Scheme, provided always that the aggregate number of shares to be issued pursuant to the Scheme shall not exceed 15 per cent (15%) of the total issued share capital of the Company from time to time. [Resolution 6]

8. THAT the Directors be and are hereby authorised pursuant to the provisions of Section 161 of the Companies Act, Cap. 50 to allot and issue such of the unissued shares of the Company on such terms and conditions and with such rights or restrictions as they may deem fit PROVIDED ALWAYS THAT the aggregate number of shares to be issued pursuant to this resolution shall not exceed fifty per cent (50%) of the issue share capital of the Company, of which the aggregate number of shares to be issued other than on a pro rata basis to existing shareholders shall not exceed twenty per cent (20%) of the issued share capital of the Company for the time being and that such authority shall continue in force until the conclusion of the next Annual General Meeting or the expiration of the period within which the next Annual General Meeting of the Company is required by law to be held, whichever is earlier. For the purposes of this resolution, the percentage of issued share capital shall be based on the Company’s issued share capital at the time of the passing of this resolution after adjusting for:

a. new shares arising from the conversion or exercise of convertible securities or from exercising employee share options outstanding or subsisting at the time of the passing of this resolution; and

b. any subsequent consolidation or subdivision of shares. [Resolution 7]

BY ORDER OF THE BOARDCHIN HOOI YENCOMPANY SECRETARY9 APRIL 2009

notice of Annual General Meeting

66


notes

i. A member of the Company entitled to attend and vote at the Meeting is entitled to appoint a proxy to attend and vote in his stead. A member of the Company which is a corporation is entitled to appoint its authorised representative or proxy to vote on its behalf. A proxy need not be a member of the Company. The instrument appointing a proxy must be deposited at the Company’s registered office at 8 Eu Tong Sen Street, #15-98 The Central, Singapore 059818.

ii. If re-elected, Mr. Manu Bhaskaran will remain a Non-Executive Director, the Chairman of the Audit Committee and a member of the Nominating Committee and Remuneration Committee of the Company.

iii. If re-elected, Ms Serena Lee Chooi Li will remain a Non-Executive Director, the Chairman of the Nominating Committee and Remuneration Committee and a member of the Audit Committee of the Company.

iv. Ordinary Resolution 6 above, if passed, will empower the Directors to issue shares pursuant to the Koyo International Share Option Scheme (the “Scheme”), which was approved at the Extraordinary General Meeting of the Company held Company for the time being pursuant to the exercise of the options under the Scheme. This authority will continue in force until the next Annual General Meeting of the Company, unless previously revoked or varied at a general meeting.

v. Ordinary Resolution 7 above, if passed, will empower the Directors of the Company from the date of the Meeting until the next Annual General Meeting to issue shares in the Company of up to a maximum of fifty (50) percent of the issued share capital of the Company for the time being for such purposes as they consider would be in the interests of the Company. This authority will continue in force until the next Annual General Meeting of the Company, unless previously revoked or varied at a general meeting.

notice of Annual General Meeting


KoYo InteRnAtIonAL LIMIteD(Incorporated in the Republic of Singapore)

PRoXY FoRM

I/We, ________________________________________________________________________________________________________

of ___________________________________________________________________________________________________________

being a member/members of the abovenamed Company hereby appoint:

name Address nRIC/ Passport no. Proportion of shareholdings (%)

and/or (delete as appropriate)

name Address nRIC/ Passport no. Proportion of shareholdings (%)

as my/our proxy/proxies to attend and to vote for me/us on my/our behalf at the Annual General Meeting of the Company to be held at Paramount Hotel Singapore,25 Marine Parade, Level 4 The Gallery, Singapore 449536 on the 30th day of April 2009 at 9.30 am and at any adjournment thereof. I/We direct my/our proxy to vote for or against the Resolutions to be proposed at the Meeting as hereunder indicated.

no. ordinary Resolutions For Against

1 To receive and, if approved, to adopt the Audited Financial Statements for the financial year ended 31 December 2008 together with the Directors’ Report and Independent Auditor’s Report thereon.

2 To approve Directors’ fees of $100,000 for the financial year ended 31 December 2008.

3 To re-elect Mr. Manu Bhaskaran, who is retiring under Article 98 of the Articles of Association

4 To re-elect Ms Serena Lee Chooi Li, who is retiring under Article 98 of the Articles of Association.

5 To appoint Nexia TS Public Accounting Corporation, Public Accountants and Certified Public Accountants as the Company’s Independent Auditor and to authorise the Directors to fix their remuneration

6 To transact any other business which may be properly conducted at the Annual General Meeting.

special Resolutions

7 THAT the Directors be and are hereby authorised to offer and grant options in accordance with the provisions of the Koyo International Share Option Scheme (the “Scheme”) and to allot and issue from time to time such number of shares in the Company as may be required to be issued pursuant to the exercise of options under the Scheme, provided always that the aggregate number of shares to be issued pursuant to the Scheme shall not exceed 15 per cent (15%) of the total issued share capital of the Company from time to time.

8 THAT the Directors be and are hereby authorised pursuant to the provisions of Section 161 of the Companies Act, Cap. 50 to allot and issue such of the unissued shares of the Company on such terms and conditions and with such rights or restrictions as they may deem fit PROVIDED ALWAYS THAT the aggregate number of shares to be issued pursuant to this resolution shall not exceed fifty per cent (50%) of the issue share capital of the Company, of which the aggregate number of shares to be issued other than on a pro rata basis to existing shareholders shall not exceed twenty per cent (20%) of the issued share capital of the Company for the time being and that such authority shall continue in force until the conclusion of the next Annual General Meeting or the expiration of the period within which the next Annual General Meeting of the Company is required by law to be held, whichever is earlier. For the purposes of this resolution, the percentage of issued share capital shall be based on the Company’s issued share capital at the time of the passing of this resolution after adjusting for:

a. a. new shares arising from the conversion or exercise of convertible securities or from exercising employee share options outstanding or subsisting at the time of the passing of this resolution; and

b. any subsequent consolidation or subdivision of shares.

Date this ___________________ day of ___________ 2009

no. of shares Held

___________________________________________Signature(s) of member(s) or Common Seal

IMPoRtAnt: PLeAse ReAD notes oVeRLeAF

FOLD HERE FOR SEALING

tHe CoMPAnY seCRetARYKoYo InteRnAtIonAL LIMIteD

8 Eu Tong Sen Street#15-98 The CentralSingapore 059818

FOLD HERE

FOLD HERE

notes to Proxy Form:1. Please insert the total number of shares held by you. If you have shares entered against your name in the Depository Register (as defined

in Section 130A of the Companies Act, Chapter 50), you should insert that number of shares. If you have shares registered in your name in the Register of Members of the Company, you should insert that number of shares. If you have shares entered against your name in the Depository Register and shares registered in your name in the Register of Members, you should insert the aggregate number of shares entered against your name in the Depository Register and registered in your name in the Register of Members. If no number is inserted, the instrument appointing a proxy or proxies shall be deemed to relate to all the shares held by you.

2. A member entitled to attend and vote at a meeting of the Company is entitled to appoint not more than two proxies to attend and vote in his stead.

3. Where a member appoints two proxies, he shall specify the percentage of his shares to be represented by each proxy and if no percentage is specified, the first named proxy shall be deemed to represent 100 per cent of his shareholdings and the second named proxy shall to be deemed to be an alternate to the first named.

4. A proxy need not to be a member of the Company.5. The instrument appointing a proxy or proxies together with the letter of power of attorney , if any , under which it is signed or duly certified

copy thereof, must be deposited at the registered office of the Company at 8 Eu Tong Sen Street #15-98 The Central Singapore 059818 at least 48 hours before the time appointed for the Annual General Meeting.

6. A corporation which is a member may authorise by resolution of its directors or other governing body such a person as it thinks fit to act as its representative at the Annual General Meeting, in accordance with Section 179 of the Companies Act, Chapter 50.

7. Please indicate with an “X” in the spaces provided whether you wish your vote(s) to be for or against the Resolutions as set out in the Notice of Annual General Meeting. In the absence of specific directions, the proxy/proxies will vote or abstain as he/they may think fit, as he/they will on any other matter arising at the Annual General Meeting.

8. The company shall be entitled to reject the instrument appointing a proxy or proxies if it is incomplete, improperly completed or illegible or where the true intentions of the appointor are not ascertainable from the instructions of the appointor specified in the instrument appointing a proxy or proxies.

9. In the case of a member whose shares are entered against his name in the Depository Register, the company may reject any instrument appointing a proxy or proxies lodged if the member, being the appointor, is not shown to have shares entered against his name in the Depository Register as at 48 hours before the time appointed for holding the Annual General Meeting, as certified by The Central Depository (Pte) Limited to the Company.

PostageStamp

KOYO INTERNATIONAL LIMITED5 Kaki Bukit Crescent #05-01Koyotech Building Singapore 416238Tel: 6744 9388 Fax: 6744 0788Email: [email protected]

KOYO INTERNATIONAL LIMITED • ANNUAL REPORT 2008

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