Discontinued-Operation-10-October-2009 by gegeshandong


Discontinued operation

On 1 February 2009, due to continued unstable political climate in which the directors deemed that this is the
major factor causing substantial losses suffered by its overseas subsidiaries in Country X, the Company
announced its decision to discontinue and dispose of all its foreign subsidiaries, ABC Pte. Ltd and DEF Pte. Ltd for
a total consideration of RM1,200,000 comprised cash consideration of RM200,000 and the balance of unpaid
amount converted to a loan receivable to be repaid over a period of 5 years with interest at a rate of 15% per
annum. The disposal of the subsidiaries was completed on 10 April 2009. As at the end of the financial year, the
results from these subsidiaries are presented separately on the consolidated income statement as discontinued
An analysis of the financial results of the discontinued operation is as follow :
Revenue                                                                                                15,000,000
Expenses                                                                                           -   48,000,000
Loss before tax of discontinued operation                                                          -   33,000,000
Income tax expense                                                                                 -      150,000
Loss for the year from discontinued operation                                                      -   33,150,000

The following items have been included in arriving at loss before tax of discontinued operation:
Directors' remuneration:
- Salaries and other emoluments                                                                           150,000
Auditor's remuneration                                                                                     25,000
Foreign exchanges losses/(gains)
-Realised                                                                                          -      200,000
-Unrealised                                                                                             1,500,000
Depreciation of property, plant and equipment                                                           1,300,000

The effect of the discontinued operation on the financial position of the Group analysed as follows:
Property, plant and equipment                                                                      -   55,000,000
Inventories                                                                                        -    6,000,000
Trade and other receivebles                                                                        -   15,000,000
Cash and bank balances                                                                             -      280,000
Trade and other payables                                                                                8,000,000
Loans and borrowings                                                                                   20,000,000
Net assets diposed                                                                                 -   48,280,000
Foreign exchange reserves                                                                               2,000,000
Net assets diposed                                                                                 -   46,280,000
Total disposal proceeds received and receivable                                                         1,200,000
Decrease in Group net assets as a result of the discontinued operation                             -   45,080,000
Disposal proceeds settled by way of:
Cash                                                                                                      200,000
Balance of unpaid amount converted to loan receivable                                                   1,000,000

The effect of the discontinued operation on the cash flow of the Group analysed as follows:
Cash consideration received                                                                               200,000
Cash and cash equivalents of subsidiaries disposed                                                 -      280,000
Net cash outflow to the Group                                                                      -       80,000

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