Notes to the Financial Statements 30 June 2008 - Abterra

Operating and Financial Performance Review• On 18 April 2008, the Company had written offS$40,244,613 accumulated losses of the Company as at30 June 2007 against its issued and fully paid sharecapital. This capital reduction exercise was approved bythe shareholders of the Company in an extraordinarygeneral meeting. The capital reduction exercise hasrationalized the balance sheet of the Company to reflectmore reasonably the value of its underlying assets as wellas the financial position of the Company.As at 30 June 2008, the number of issued and paid-up sharesof the Company was 4,968,173,765.Foreign Exchange ExposuresThe Group’s purchases and sales are all in US dollars. Theoperating expenses and capital financing of the Group aremainly transacted in Singapore dollars. The Group’s treasurypolicy is in place to monitor and manage its exposure tofluctuations in exchange rates.Capital Commitmentsa) Purchase of office propertyOn 6 June 2008, the Company had committed toacquire a commercial property at Suntec Tower Onefrom an independent third party at a consideration ofS$31,636,000. The acquisition was funded througha combination of both external bank financing andinternal financial resources. As of 30 June 2008, a downpayment of S$3,163,600 was paid. The transactionwas subsequently completed on 2 August 2008. As aresult, the Company will be able to stabilize its operatingexpenses in the long run and buffer against possiblerental hikes incurred from an extension of the use of thecurrent office.b) Acquisition of 49% equity interest inTaixing JiaozhongS$’000Consideration 36,800Less: deposit paid (18,400)Outstanding commitment as at 30 June 2008 18,400c) Acquisition of 22.8% equity interest inZuoquan XinruiS$’000Consideration 77,800Less: deposit paid (32,320)Outstanding commitment as at 30 June 2008 45,480The outstanding commitment is to be settled partly incash (RMB 160 million, or approximately S$32.3 million)and partly by issuance of options by the Company.d) Acquisition of 49.9% equity interest in Shanxi LoudongThe purchase consideration of up to approximately S$181million is to be fully satisfied by the issuance of up to1,945,398,531 new shares of the Company at a price ofS$0.093 each. No deposit has been paid yet.Commentary on Segmental InformationGeographical segmentsThe geographical segments are prepared based on thelocation of our business operations. As the Groupoperates from Singapore, Macao and Malaysia, theturnover, assets and capital expenditure have beensegregated accordingly. The Management had ceasedthe spa pools and bathroom products business whichoperated in Malaysia, the related turnover and assets aregeographically categorized under Malaysia. Details of theresults by geographical segments are shown in note 35 tothe financial statements.Business segmentsThe Group was organized into four main operating divisions,namely, iron ore trading, coal trading, other products tradingand spa pools and bathroom products business. Because theManagement had terminated its spa pools and bathroomproducts business, the related results, assets and liabilities aregrouped under the “discontinued operation” category. Detailsof the information by business segments are shown in note 35to the financial statements.The outstanding commitment is to be settled fully in cash.ABTERRAAnnual Report 200819