ANNUAL REPORT 2012 - Wawasan TKH Holdings Berhad

040
WAWASAN TKH HOLDINGS BERHAD (540218-A)
ANNUAL REPORT 2012
NOTES TO THE FINANCIAL STATEMENTS
31 DECEMBER 2012(cont’d)
4. SIGNIFICANT ACCOUNTING POLICIES
4.1 Basis of accounting
The financial statements of the Group and of the Company have been prepared under the historical
cost convention except as otherwise stated in the financial statements and on the basis of accounting
principles applicable to a going concern.
The Group and the Company have incurred net loss of RM10,245,000 and RM3,334,000 respectively
during the financial year ended 31 December 2012, and as of that date, the current liabilities of the
Group exceeded the current assets by RM10,239,000. These conditions indicate the existence of a
material uncertainty, which may cast significant doubts about the Group’s and the Company’s ability
to achieve profitable operations in the foreseeable future, to meet their obligations as and when they
fall due and to continue operations as going concerns.
The continuation of the Group and of the Company as going concerns is dependent upon the Group’s
and the Company’s ability to operate profitably in the foreseeable future and to receive continuous
financial support from its corporate shareholder, Wawasan TKH Sdn. Bhd. (‘WTKHSB’).
The Group will continue to pursue initiatives to increase revenue and margins progressively towards
recovery. In relation to this, the Directors are of the view that the disposable foodwares unit will continue
to invest in new machines and moulds, which would result in an increase in productivity and lower
maintenance cost, while extending its product range and market reach towards improving gross margin.
The mining unit is expected to introduce new improved products, while containing its operational cost
through cost rationalisation. This will improve the results of the Group in the foreseeable future.
In addition to the above, WTKHSB has agreed to provide the necessary continuous financial support
to the Group and to the Company and it has also agreed to the Company’s request to subordinate the
advances due to WTKHSB amounting to RM38,996,000 (2011: RM39,735,000) for the next twelve (12)
months from the date of this report.
WTKHSB had waived RM2,000,000 of the advances and RM2,429,000 of the interest charged during the
current financial year. It has also committed to waive further amount of up to RM5,000,000 of the above
advances as and when required to support the Group.
During the current financial year, WTKHSB exercised 16 million detachable warrants 2008/2013
(‘Warrants’) at exercise price of RM0.21 per Warrant on the basis of one (1) new ordinary share for
every one (1) Warrant exercised pursuant to the Deed Poll dated 24 July 2008.
Based on the latest financial position of WTKHSB, the Directors confirmed that WTKHSB is able to
provide the necessary financial support to the Group and the Company to continue operations as
going concerns in the next twelve (12) months from the date of this report.
In view of the foregoing, the Directors consider that it is appropriate to prepare the financial statements of
the Group and of the Company on a going concern basis, and accordingly, the financial statements do
not include any adjustments relating to the recoverability and classification of recorded assets amounts,
or to amounts or classification of liabilities that may be necessary if the going concern basis of preparing
the financial statements of the Group and of the Company is not appropriate.
The preparation of financial statements in conformity with MFRSs requires the Directors to make
estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses
and disclosure of contingent assets and contingent liabilities. In addition, the Directors are also required
to exercise their judgement in the process of applying the accounting policies. The areas involving such
judgements, estimates and assumptions are disclosed in Note 6 to the financial statements. Although
these estimates and assumptions are based on the Directors’ best knowledge of events and actions,
actual results could differ from those estimates.