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WIMEMS CORPORATION BERHAD
(Company No. 641158-D)
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2008
1. Basis of Preparation
The interim financial report is unaudited and has been prepared in compliance with Financial
Reporting Standards (FRS) 134 – Interim Financial Reporting and the Listing Requirements of
Bursa Malaysia Securities Berhad (“Bursa Securities”) for the MESDAQ Market (“MMLR”).
Going Concern Basis
As at 31 December 2008 the Group has net current liabilities of RM26.854 million and as disclosed
in Note 23, its subsidiary, Flex-P Industries Sdn Bhd (“Flex-P”) has defaulted on maturing credit
facilities pursuant to Guidance Note No. 5/2006 (“GN5”) of the MMLR. The assessment of the
Board of Directors is that the Company is unable to provide for a solvency declaration to Bursa
Securities.
Nevertheless, the financial statements of the Group have been prepared on a going concern basis.
This going concern basis (which presumes that the Group will be able to operate profitably in the
foreseeable future and consequently, the realisation of assets and settlement of liabilities will occur
in the ordinary course of business), depends on the successful implementation of a comprehensive
debt restructuring scheme and do not include any adjustments relating to the recoverability and
classification of assets or the amounts and classification of liabilities that might be necessary should
the Group be unable to continue on a going concern. In this connection, the Group is in the process
of implementing a comprehensive debt restructuring scheme and is dependent upon the continuing
financial support from the shareholders, creditors and bankers.
Changes to accounting policies
The following FRSs have been adopted for the Group’s financial statements for the financial year
ending 31 December 2008:-
FRS-107 Cash Flow Statements
FRS-111 Construction Contracts
FRS-112 Income Taxes
FRS-118 Revenue
FRS-120 Accounting for government grants and disclosure of government assistance
FRS-121 The Effects of Changes in Foreign Exchange Rates – Net Investment in a Foreign
Operations
FRS-134 Interim Financial Reporting
FRS-137 Provisions, Contingent Liabilities and Contingent Assets
The adoption of the above FRS does not have significant financial impact on the Group.
The Group has not adopted FRS 139 Financial Instruments: Recognition and measurement as its
effective date has been deferred to 1 January 2010.
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WIMEMS CORPORATION BERHAD
(Company No. 641158-D)
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2008
2. Auditors’ Report on Preceding Annual Financial Statements
The audit report for the financial statements of the Group for the financial year ended 31 December
2007 included a modified audit opinion which is reproduced as follows:
"We have audited the financial statements as set out on pages 6 to 50 of WIMEMS
CORPORATION BERHAD. The preparation of the financial statements is the responsibility of the
Group's directors.
It is our responsibility to form an independent opinion, based on our audit, on those financial
statements and to report our opinion to you, as a body, in accordance with Section 174 of the
Companies Act, 1965 (“Act”) and for no other purpose. We do not assume responsibility towards
any other person for the content of this report.
We conducted our audit in accordance with approved Standards on Auditing in Malaysia. Those
standards require that we plan and perform the audit to obtain all the information and explanations,
which we considered necessary to provide us with sufficient evidence to give reasonable assurance
that the financial statements are free of material misstatement. An audit includes examining, on a
test basis, evidence relevant to the amounts and disclosures in the financial statements. An audit also
includes assessing the accounting principles used and significant estimates made by the directors, as
well as evaluating the overall financial statements presentation. We believe that our audit provides a
reasonable basis for our opinion.
1. Our report on the financial statements of a subsidiary company, Flex-P, contained a disclaimer
of opinion in view of the significance of the following matters:-
(a) As disclosed in Note 10 and Note 11 to the financial statements:-
(i) Flex-P had made an advance of RM1,258,326 to Neomeridian Sdn Bhd (‘NM’), a
company that is handling the development project for the Group, as part payment
for the subscription of preference shares totaling RM4,600,000 in the said company;
(ii) Flex-P had, based on a letter from NM dated 5 March 2007, set-off an amount of
RM3,833,895 owing by NM against billing for work carried out by NM to develop
the Group’s wireless products pursuant to an agreement dated 8 January 2007
entered into between Flex-P & NM;
(iii) Flex-P had made a total sales of RM18,904,992 to three customers of which two are
new customers. Full allowance for doubtful debts has been made for all three of the
customers during the financial year;
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WIMEMS CORPORATION BERHAD
(Company No. 641158-D)
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2008
2. Auditors’ Report on Preceding Annual Financial Statements (continued)
We are unable to obtain satisfactory explanations to enable us to:-
(i) conclude on the substance and validity of the above transactions; and
(ii) determine the consequential financial effects of these transactions on the financial
statements of Flex-P
(b) As disclosed in Note 6 to the financial statements:-
(i) Flex-P had made a total payment of RM18,938,500 to NM during the the financial
year. According to the development agreement, NM was supposed to deliver test
units by July 2007. No test units has been delivered as at the date of this report
and the full amount has been impaired as at 31 December 2007;and
(ii) Flex-P had made a total payment of RM3,805,830 towards the development of a
gaming software. No software has been delivered as at the date of this report and
the full amount has been impaired as at 31 December 2007.
We are unable to obtain satisfactory explanations to enable us to conclude on the substance
and validity of the above transactions
2 As disclosed in an announcement pursuant to GN5 dated 14 November 2007, the subsidiary
has defaulted in the repayment of credit facilities and the Board of Directors of the Company
is of the opinion that the subsidiary is insolvent as it would not be able to meet its debt
obligations that would fall due within the next twelve months.
The validity of preparing the financial statements of the Group and of the Company on going
concern basis is dependent upon future profitable operations, the continuing financial support
from the shareholders, creditors and bankers. In the event that the going concern basis of
preparing the financial statements of the Group and of the Company are no longer appropriate,
adjustments would have to be made to reduce the values of assets to their recoverable
amounts, to provide for any further liabilities which might arise, and to reclassify non-current
assets and long-term liabilities as current assets and liabilities respectively.
Accordingly, we are unable to determine whether the going concern basis of accounting used
in preparation of the financial statements is appropriate.
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WIMEMS CORPORATION BERHAD
(Company No. 641158-D)
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2008
2. Auditors’ Report on Preceding Annual Financial Statements (continued)
In view of the significance of the matters referred to in the preceding paragraphs, we are
unable to form an opinion on whether the financial statements are properly drawn up in
accordance with the provisions of the Act and Financial Reporting Standards, the MASB
Approved Accounting Standards in Malaysia for Entities Other than Private Entities so as to
give a true and fair view of:-
(i) the state of affairs of the Group and the Company as at 31 December 2007 and of the
results and cash flows for the financial year ended on that date; and
(ii) the matters required by Section 169 of the Act to be dealt with in the financial
statements.
In our opinion, the accounting and other records and the registers required by the Act to be kept by
the Company and by the subsidiaries of which we have acted as auditors have been properly kept in
accordance with the provisions of the Act.”
3. Unusual Items affecting Assets, Liabilities, Equity, Net Income or Cash Flow
There were no unusual items affecting assets, liabilities, equity, net income or cash flow during the
quarter ended 31 December 2008.
4. Seasonal or Cyclical Factors
There were no seasonal or cyclical factors for the 4th quarter of 2008.
5. Material Changes in Estimates
There were no material changes in the estimates used for the preparation of this interim financial
report.
6. Debt and Equity Securities
There were no other issuance, cancellations, repurchases, resale and repayment of debt and equity
securities for the financial period to date.
7. Valuation of Property, Plant and Equipment
The Group does not have any property. The valuation of its plant and equipment has been brought
forward, without amendment, from the previous audited financial statements.
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WIMEMS CORPORATION BERHAD
(Company No. 641158-D)
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2008
8. Dividend
No dividend has been declared during the current quarter under review.
9. Segmental Information
There were no segmental information as the Group had temporarily ceased its operation.
10. Unquoted Investments and/or Properties
There were no purchases or disposals of unquoted investments and/or properties for the financial
period under review.
11. Quoted Investments
There were no purchases or disposals of quoted investments for the financial period under review.
12. Contingent Liabilities and Contingent Assets
Save as disclosed in Note 23, there were no contingent liabilities and assets for the Group since the
end of the previous financial year ended 31 December 2007 to date of this report.
13. Significant Related Party Transactions
There were no significant related party transactions for the financial period under review.
14. Effect of Changes in the Composition of the Group
There were no changes in the composition of the Group for the period under review.
15. Material events subsequent to the end of the interim reporting period
(a) The development of the material events as reported in the previous quarterly report are as
follows: -
1) The Company has entered into Memorandum of Understanding (“MOU”) with Leinet
Technology Berhad (“White Knight”) on 12 March 2008 for the acquisition of Syscatech
Sdn Bhd from White Knight to facilitate its restructuring scheme. However, the proposed
transaction was not materialized.
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WIMEMS CORPORATION BERHAD
(Company No. 641158-D)
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2008
15. Material events subsequent to the end of the interim reporting period (continued)
2) The securities of Wimems was suspended on 19 March 2008 for failure to submit its
regularisation plans to the Securities Commission and other relevant authorities for approval
within the timeframe stipulated under Rule 8.16 of the MMLR.
3) On 3 June 2008, the Company had served Bursa Securities with a court injunction against
Bursa Securities’ decision to delist the securities of Wimems from the Official List of Bursa
Securities until the hearing of judicial review application of Wimems is heard and disposed
off. The inter-partes hearing has been fixed on 7 July 2008. The hearing of the said judicial
review has been postponed to 23 April 2009.
16. Review of Performance
The Group has no turnover for the current quarter ended 31 December 2008.
17. Comment on Material Changes in the Loss Before Taxation for the Quarter Reported on as
Compared With The Immediate Preceding Quarter
Presently, the Company has no revenue. Nevertheless, the heavy finance and overhead cost had led
to losses.
18. Comments on Prospects
The Group’s future business prospect would be dependent on the outcome of its regularisation plan.
19. Variance on Profit Forecast and Profit Guarantee
The Group has not provided any profit forecast or profit guarantee in a public document.
20. Taxation
The Company is an investment holding company and does not derive any operating income.
The Group’s income is contributed by Flex-P, its wholly owned subsidiary. No taxation is
anticipated to be payable by the Group for the loss incurred during the year.
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WIMEMS CORPORATION BERHAD
(Company No. 641158-D)
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2008
21. Borrowings and Debt Securities
The Group’s borrowings which are all denominated in Ringgit Malaysia are as follows:
As at 31.12.2008 As at 31.12.2007
RM’000 RM’000
Short term borrowings
Bank Overdrafts – Secured 3,589 3,445
BA / RC – Secured 10,146 10,683
Leasing - Secured 2,724 2,700
Hire Purchase - Secured 42 42
Long term borrowings
Leasing - Secured - -
Hire Purchase - Secured 67 101
Total Borrowings 16,568 16,971
22. Off Balance Sheet Financial Instruments
There were no off Balance Sheet financial instruments entered into by the Group as at the date of
this announcement.
23. Material Litigation
(a) PENANG HIGH COURT
Writ No (MT4-22-573-07)
CIT International (Malaysia) Sdn Bhd filed a writ of summon on 24 September 2007 against
Flex-P Industries Sdn Bhd (First Defendant), Wimems Corporation Berhad (Second
Defendant) and Fong Piau (Third Defendant) for the outstanding sum of RM2.8 million. It
has further filed the application for Summary Judgement on 17 January 2008. The hearing
of the case has been fixed on 25 March 2009.
The Group has appointed Messrs Ban Eng, Annual & Foong as the Company representative
to defend the case.
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WIMEMS CORPORATION BERHAD
(Company No. 641158-D)
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2008
23. Material Litigation (continued)
(b) PENANG HIGH COURT
Writ No (22-666-2007)
RHB Bank Berhad has filed a writ of summon on 12 November 2007 against Flex-P
Industries Sdn Bhd (First Defendant) and Fong Piau (Second Defendant) for total
outstanding sum of RM1,224,700.28. It has filed the application for Summary Judgement on
31 December 2007. The hearing of the case has been fixed on 30 July 2009.
The Group has appointed Messrs Malkit Singh Randhawa Baidura & Co to defend the case.
(c) PENANG HIGH COURT
Writ No. (52-665-2008)
Harpers Travel (M) Sdn Bhd filed a writ of summon on 10 April 2008 against Flex-P
Industries Sdn Bhd for total outstanding sum of RM 102,689.00.
On 12 August 2008, Flex-P was served with a notice under section 218 of the Companies
Act, 1965, whereby Harpers Travel (M) Sdn Bhd has claimed for a sum of RM 102,689.00
as at 31 January 2008 and RM 17,620.93 being the interest chargeable at the rate 1.5% per
month from 1st February 2008 until the date of full realization and costs of RM 1,176.00
pursuant to the Judgement dated 24 April 2008 until 21 days from the date of receipt of the
Notice. The Group has filed for appeal against the summary judgement but no date has been
fixed.
The Group has sought legal opinion to defend the case.
(d) PENANG HIGH COURT
Judicial Review No. (25-59-2008)
The High Court had on 2 June 2008 granted Wimems the following orders: -
i) that Bursa Malaysia Berhad’s decision of 11 April 2008 and 22 May 2008 be
suspended and the “listing status” of Wimems on the MESDAQ Market of Bursa
Securities and/or at the Official List of Bursa Securities be retained until the hearing
of judicial review application of Wimems is heard and disposed off;
ii) it was ordered that inter-partes hearing be fixed on 7 July 2008;
iii) the inter-partes hearing was postponed to December 2008; and
iv) the case is fixed on 23 April 2009 in respect of application to court for judicial
review of the decision of Bursa to delist Wimems Corporation Bhd. and interim stay
has been obtained.
The Group has appointed Messrs Malkit Singh Randhawa Baidura & Co to as the legal
advisor for the case.
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WIMEMS CORPORATION BERHAD
(Company No. 641158-D)
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2008
23. Material Litigation (continued)
(e) PENANG HIGH COURT
Civil Suit No. (22-319-2008)
Malayan Banking Bhd. filed a civil suit against Flex-P Industries Sdn Bhd (First
Defendant), Wimems Corporation Berhad (Second Defendant) and Fong Piau (Third
Defendant) for total outstanding amount of RM2.5 million. The Group is in the process of
preparing an application to court to set aside the judgement in Default.
The Group has appointed Malkit Singh Randhawa Baidura & Co to defend the case.
(f) MAHKAMAH SEYSEN (2) SHAH ALAM
Saman No. (52-2170-2008)
On 23 October 2008, the Company was served with a notice dated 20 october 2008 on its
wholly-owned subsidiary, Flex-P Industries Sdn. Bhd. under Section 218 of the Companies
Act, 1965, by Federal Express Services (M) Sdn. Bhd. (‘Petitioner”)
The Petitioner has on 23 July 2008 obtained a judgement in default from the Shah Alam
Sessions Court against Flex-P Industries Sdn. Bhd. for the payment of RM 30,183.11 as at
10 June 2008, interest chargeable at the rate of 8% per annum from 11 June 2008 until the
date of full realization and costs of RM 944.
The Group has sought legal opinion to defend the case.
(g) PENANG HIGH COURT
Civil Suit No. (22-630-2008)
On 13 November 2008, Wimems (as guarantor), Flex-P (as borrower) and a director of the
Company namely Fong Piau (as guarantor) were served with a Writ of Summons together
with the Statement of Claim by Bank Pembangunan Malaysia Berhad (“Plaintiff”) for the
following:-
i) the outstanding sum of RM10,070,371.97 as at 31 August 2008;
ii) the interest on the RM10,070,371.97 at the rate of 2.0% per annum above the effective
cost of funds (which at this juncture stands at 6.25% per annum, and subject to changes)
calculated from 1 September 2008 until the judgment date;
iii) interest on the judgment sum at the rate of 2% per annum above the effective cost of
funds (which at this juncture stands at 6.25% per annum, and subject to changes)
calculated from the judgment date until the date of settlement;
iv) interest on the RM10,070,371.97, being late interest charges, at the rate of 1.0% per
annum on daily rest calculated from 1 September 2008 until the judgment date;
v) interest on the judgment sum, being late interest charges, at the rate of 1.0% per annum
on daily rest calculated from the judgment date until the date of settlement;
vi) legal cost;
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WIMEMS CORPORATION BERHAD
(Company No. 641158-D)
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2008
23. Material Litigation (continued)
(g) PENANG HIGH COURT
Civil Suit No. (22-630-2008) (continued)
vii) cost; and
viii) any other order and/ or relief which is deemed necessary and fair by the Penang High
Court.
The Group has sought legal opinion to defend the case.
(h) KUALA LUMPUR SESSION COURT
Summons No. (52-20764-2008)
On 29 September 2008, Flex-P was served with a Writ of Summon & Statement of Claim
by Maxis Mobile Services Sdn Bhd (“Maxis Mobile”) which was filed in the Kuala Lumpur
Session Court (Summons No. 52-20764-2008) for following:-
i. the outstanding sum of RM35,696.25 as at 12 July 2007 for mobile
telecommunication services rendered;
ii. the interest on the RM35,696.25 at the rate of 18% per annum calculated from 12
July 2007 until the date of settlement;
iii. cost; and
iv. any other order and/ or relief which is deemed necessary and fair by the Session
Court.
The Group has sought legal opinion to defend the case.
24. Capital Commitments
There were no capital commitments entered into by the Group as at the date of this announcement.
25. Earnings / (Loss) Per Share
The basic earnings/(loss) per share for the current year to date is calculated by dividing the Group’s
net profit attributable to shareholders over the weighted average number of ordinary shares in issue
during the financial period as follows:
Current
Current Year
Quarter To Date
31.12.2008 31.12.2008
Loss attributable to shareholders (376) (6,128)
(RM’000)
Weighted average number of ordinary
shares in issue (‘000) 265,000 265,000
Basic loss per ordinary share (sen) (0.14) (2.31)
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WIMEMS CORPORATION BERHAD
(Company No. 641158-D)
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2008
26. Utilisation of Proceeds
The IPO proceeds have been fully utilized.
27. Corporate Proposals
There were no corporate proposals as at the date of issue of this interim financial report.
By Order of the Board,
Alex Wang
Director
Date : 27.2.2009
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