EL CORPORATION LTD and Controlled Entities · EL CORPORATION LTD and Controlled Entities . ABN 41...

EL CORPORATION LTD and Controlled Entities

ABN 41 002 737 733

Annual Financial Report for the year ended 31 December 2010

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EL Corporation Limited and Controlled Entities

ABN 41 002 737 733

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CONTENTS Chairman's Report 2

Corporate Governance Report 3

Directors' Report 7

Auditor’s Independence Declaration 10

Consolidated Statement of Comprehensive Income 11

Statement of Financial Position 12

Statement of Changes in Equity 13

Statement of Cash Flows 14

Notes to the Financial Statements 15

Directors’ Declaration 27

Independent Auditor's Report 28

Shareholders' Statistics 30 Directors Poh Seng Isaac Ng Sim Pin Quek Rajen Rai Executive Director Chairman and CEO Non-executive Director Mark Roy Howard-Browne Non-executive Director Secretary Nicholas J. Geddes Registered Office Auditor Share Register c/- Australian Company Secretaries P/L RSM Bird Cameron Partners Link Market Services Limited Level 9, 20 Hunter Street, Level 12, 60 Castlereagh Street, Level 12, 680 George Street Sydney NSW 2000 Sydney NSW 2000 Sydney NSW 2000 Tel: (02) 9252-1933 Tel: (02) 9233-8933 Tel: (02) 8280-7519 Fax: (02) 9252-2487 Fax: (02) 9233-8521 Fax: (02) 9287-0303 Stock Exchange Listing EL Corporation Limited’s shares are listed on the Australian Stock Exchange.

EL Corporation Limited

ABN 41 002 737 733 Annual General Meeting

The Annual General Meeting of EL Corporation Limited will be held in the Board Room

at Level 9, 20 Hunter Street Sydney on Tuesday 31st May 2011, at 3.00 pm where this report will be presented.

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ABN 41 002 737 733

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Chairman’s Report The directors of El Corporation Limited announce a loss after income tax of $576,237 for the year ending 31st December 2010 compared to a profit of $473,989 for the same period in 2009. Material items affecting the result included the following: 2010

$ 2009

$

% Revenues – other 2,084 6,129 (Loss) / profit before tax (576,237) 473,989 N/A (Loss) / profit after tax (576,237) 474,989 N/A EL Corporation Ltd is pleased to advise that we have initiated discussions with a company that is associated with the resource based industry in Australia to collaborate on a business which has a huge potential that will generate a very positive result. We will make an announcement to all shareholders as soon as the information can be released. Atlas Capital is committed to provide support on a continuing basis and we are pleased to advise that we have received a fresh round of funding through Atlas and Doris Chung, another substantial shareholder, which has been reported in our last accounts to the ASX. In the future, the company expects to have a positive cash flow when a new funding initiative is being implemented. In our last report, we advised that the company is in discussions with parties outside of Australia as it has become increasing evident that we will need to raise funds from sources outside of Australia. The joint venture in Taiwan, Max Media Co Ltd, with joint-venture partner Taiwanese company, Cosmactive Broadband Network Co Limited is progressing steadily. The installation of cable broadband, IPTV (Internet Protocol Television) and VOD (Video-On-Demand) in apartment buildings in Taiwan will be expanded when we are successful in securing additional funding for the project. The present unstable economic situation in the Middle East and in Europe has caused many investors to adopt a wait-and-see attitude towards any new investments. Atlas Capital Pte Ltd has provided EL Corporation Limited with a letter of continuing support. No dividend was paid or recommended during the financial year. Sim Pin Quek Chairman and CEO F

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ABN 41 002 737 733

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CORPORATE GOVERNANCE Introduction We would like to affirm that the company has sufficient cash to fund its ongoing activities. We have advised all our shareholders that funding will continue to be provided from Atlas Capital Pte Ltd. The company's administrative function is largely provided on an outsourced basis in order to minimise cost. The company's corporate governance statement should be read in the context of the company's present operating state. Principle 1 Lay solid foundations for management and oversight Recommendation 1.1 Companies should establish the functions reserved to the board and those delegated to senior executives and disclose those functions. Only one executive is employed by the company, who is also the CEO, Mr. Isaac Ng. All other functions such as financial management and corporate secretarial are provided to the company on an outsourced basis. The company's operations are in Taiwan where the company's joint-venture partner is responsible for trialling, rollout and installation of cable television in apartments. Recommendation 1.2. Companies should disclose the process for evaluating the performance of senior executives. The Board of Directors will review the performance of the Senior Executives. Principle 2 Structure of the board to add value Recommendation 2.1 A majority of the board should be independent directors. The company complies with this recommendation. Recommendation 2.2 The chair should be an independent director. The present size of the company includes the appointment of an independent director as chairman. Recommendation 2.3 The roles of chairman and chief executive officer should not be exercised by the same individual. Mr S P Quek has assumed the role as Chairman and CEO and Mr Isaac Ng will continue as Executive Director. Recommendation 2.4 The board should establish a nomination committee. Appointment of such committee will be addressed when the board and staffing is expanded. Recommendation 2.5 Companies should disclose the process for evaluating the performance of the board, its committees and individual directors. The process for evaluating the performance will be disclosed to all. Recommendation 2.6 Companies should provide the information indicated in the guide to reporting on Principle 2.

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ABN 41 002 737 733

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Mr. Rajen Rai and Mr Mark Howard-Browne are both independent directors on the board. A substantial shareholder, or a representative thereof or an executive is not considered to be independent. Mr. Isaac Ng is not considered independent as he is the executive director of the company. Directors have been in office since the date indicated below:

• Mr. Sim Pin Quek was appointed a director on 3rd September 2002. • Mr. Rajan Rai was appointed a director on 14th March 2002. • Mr. Isaac Ng was appointed a director on 14th December 2007. • Mr. Stephen Crouch resigned as a director on 29th November 2010. • Mr. Mark Howard-Browne was appointed a director on 29th November 2010.

Principle 3 Promote ethical and responsible decision-making. Recommendation 3.1 Companies should establish a code of conduct and disclose the code or a summary of the code as to:

• the practices necessary to maintain confidence in the company's integrity; • the practices necessary to take into account of their legal obligations under reasonable

expectations of their stakeholders; and • the responsibility and accountability of individuals for reporting and investigating

reports of unethical practices Recommendation 3.2 Companies should establish a policy concerning trading in Company securities. The company has a share trading policy which is as follows: The directors and employees of the company are not permitted to deal in shares of the company in the period between the end of the financial half or full year until the release of the financial information for that period. Directors and employees of the company are prohibited from dealings in the company's shares at any time whilst in possession of price sensitive information. Recommendation 3.3 Companies should provide the information indicated in the guide to reporting on principle 3. The company's website will be launched at an appropriate time and the corporate governance material including the code of conduct and trading policy will be included in an Investor section on the website. Principle 4 Safeguard the integrity in financial reporting Recommendation 4.1 The board should establish an audit committee. The board currently comprises four members and will form an audit committee when the board and staffing is expanded. Recommendation 4.2 The audit committee should be structured according to the ASX corporate governance principles and recommendations. Not applicable Recommendation 4.3 The audit committee should have a formal charter. Not applicable.

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ABN 41 002 737 733

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Recommendation 4.4 Companies should provide information indicated in the guide to reporting on Principle 4. Not applicable. Principle 5 Make timely and balanced disclosure Recommendation 5.1 Companies should establish written policies designed to ensure compliance with ASX listing rule disclosure requirements and to ensure accountability at a senior executive level that complies and disclose those policies or a summary of those policies. A summary of a policy follows: The company will comply with a continuous disclosure requirements set out in chapter 3 of the ASX is listing rules. The board of directors, employees and consultants of the Company are required to adhere to the procedure set out this policy document to ensure compliance with this listing rule. In conjunction with this policy reference should be made to EL Corporation’s Market Disclosure Protocol and Share Trading policy. Copies of these policies will be posted on the company's website. Recommendation 5.2 Companies should provide information indicated in the Guide to reporting on principle 5. The company has set out in detail in this report the extent of its compliance with the recommendations set out in the ASX corporate governance guidelines. Principle 6 Respect the rights of shareholders Recommendation 6.1 Companies should design a communications policy of promoting effective communication with shareholders and encouraging their participation in general meetings and disclose the policy or a summary of that policy. The board of EL Corporation Limited respects the rights of shareholders and will improve its electronic shareholder communication in the company's development. Recommendation 6.2 Companies should provide the information indicated in regard to reporting on Principle 6. The company is rebuilding the business and has provided all the information to the ASX as it develops, in all the reporting requirements. Principle 7 Recognise and manage risk Recommendation 7.1 Company should establish policies for the oversight management of material business risks and discloses some of those policies. The company's business risks principally relate to the rollout of its business in Taiwan which is managed by the joint-venture, and the need to raise further funds for working capital to support the business. The risks in Taiwan relate principally to marketing, technical and foreign exchange risk considerations. Recommendation 7.2 The board should require management to design and implement a risk management and internal control system to manage the company's material business risks and report on whether those risks are being managed effectively. The board should disclose that management has reported as to the effectiveness of the company's management of its material risks. The Board will establish a committee to set the policy on a risk management and internal control system when the board and staffing have been expanded. This committee will identify specific risk factors, and design, implement and monitor a risk management and internal control system.

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ABN 41 002 737 733

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Recommendation 7.3 The board should disclose whether it has received assurance from the Chief Executive officer and the chief financial officer that the declaration provided in accordance with section 295A of the Corporations Act is founded on a sound system of risk management and internal control and that the system is operating effectively in all material respects in relation to financial reporting risks. Both the Chief Executive Officer and the person in an equivalent position to the Chief Financial Officer will sign off to the board that these systems of risk management and internal control are adequate and appropriate for the size of the business. Principle 8 Remunerate fairly and responsibly Recommendation 8.1 The board should establish a remuneration committee. A remuneration committee will be formed when the board and staffing have been expanded.

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DIRECTORS’ REPORT

Your directors present their report on the company and its controlled entities for the financial year ended 31 December 2010. Directors The names of directors in office at any time during or since the end of the year are: Sim Pin Quek Rajen Rai Isaag Ng Stephen Crouch (resigned 29 November 2010) Mark Howard-Browne (appointed 29 November 2010) Directors have been in office since the start of the financial year to the date of this report unless otherwise stated. Company Secretary The following person held the position of company secretary at the end of the financial year: Nicholas Geddes. Principal Activities The principal activities of the consolidated group during the financial year were: Import, design, sales, service and support of computer and communication systems and equipment; Provision of information technology education, systems design; Integration and development of consultancy services. There were no other significant changes in the nature of the consolidated group’s principal activities during the financial year. Operating Results The consolidated loss of the consolidated group after providing for income tax amounted to $576,237 (2009: profit $473,899). Dividends Paid or Recommended No dividend was paid or recommended during the financial year. Review of Operations During the year ended 31 December 2010 the group incurred a loss of $576,237 which included the impairment of the plant and equipment and the impairment of the prepaid licence fees in Taiwan which amounted to $264,588. Significant Changes in the State of Affairs El Corporation Ltd is pleased to advise that we have initiated discussions with a company that is associated with the resource based industry in Australia to collaborate on a business which has a huge potential that will generate a very positive result. We will make an announcement to all shareholders as soon as the information can be released. Atlas Capital Pte Ltd is committed to provide support on a continuing basis and we are pleased to advise that we have received a fresh round of funding through Atlas Capital Pte Ltd and another substantial shareholder, which has been reported in our last accounts to the ASX. In the future, the company expects to have a positive cash flow when a new funding initiative is being implemented. In our last report, we advised that the company is in discussions with parties outside of Australia as it has become increasing evident that we will need to raise funds from sources outside of Australia. Atlas Capital Pte Ltd has provided EL Corporation Limited with a letter of continuing support. After balance date events There were no events after balance date that would affect the operations of the consolidated group. Future Developments, Prospects and Business Strategies In the opinion of the directors it would prejudice the company's interests if any information on likely developments in the operations of the economic entity and the expected results of operations were included in this report, and the omission of such information is hereby disclosed. Environmental Issues The consolidated group’s operations are subject to significant environmental regulation under the law of the Commonwealth and State. The consolidated group has not incurred any liability under any environmental legislation. Information on Directors Sim Pin Quek Qualifications - Bachelor of Business Administration (Honours), Associated Member of the Chartered

Insurance Institute (London) Experience - Over 22 years experience as Executive Chairman of China Auto Corporation Ltd Interest in shares and Options - Nil Special Responsibilities - Chairman and CEO Directorship held in other listed entities - China Auto Corporation Ltd (A company listed on the Singapore Stock Exchange)

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DIRECTORS’ REPORT Rajen Rai Qualifications - Fellow of the Association of Chartered Certified Accountants (UK) and Certified Public

Accountant Experience - 8 years experience as Finance Director followed by 15 years experience as Managing

Director of China Auto Corporation Ltd Interest in shares and Options - Nil Special Responsibilities - Non-executive Director Directorship held in other listed entities - China Auto Corporation Ltd (A company listed on the Singapore Stock Exchange) Isaac Ng Qualifications - Master of Social Science (Australia), Diploma in Business Studies (Singapore)

Diploma in Chartered Marking (UK) Experience - Over 30 years in marketing and senior management positions. Ex CEO of Devon Industries

Ltd (New Zealand) and current CEO of Raffles College of Design and Commerce, Australia. Interest in shares and Options - 3,000,000 Shares in the Company Special Responsibilities - Executive Director Directorship held in other listed entities - Nil Mark Howard-Browne Qualifications - Member of the Australian Institute of Chartered Accountants Experience - Over 22 years experience in senior financial management positions in South Africa and

Australia Interest in shares and Options - Nil Special Responsibilities - Non-executive Director Directorship held in other listed entities - Nil REMUNERATION REPORT This report details the nature and amount of remuneration for each key management person of EL Corporation Limited, and for the executives receiving the highest remuneration. Remuneration policy The board of studies objective is to: Reward executive officers with financial incentives linked to business unit performance, which in turn will increase shareholder value. Provide base salaries to attract and retain key executives who are critical to the Company’s long-term success by providing a secure level if income that recognises the market value of the position as well as internal between roles, the individual’s performance and experience. Generally, increases in the base pay only occur in response to market changes or when warranted by an executive’s change in responsibilities. Executive Directors and Senior Directors The Company has designed its executive compensation programs to reward performance based on business unit performance results for which they are responsible and which differentiates the composition of compensation into to two types: base salary and annual performance bonus. The program is administrated by the Board, which includes three non-executive directors. The Board takes into account the recommendations of Executive Directors with respect to the compensation of the group’s key executives. Non-Executive Directors Non-Executive Directors are remunerated by fees determined by the Board. In setting Directors’ fees, account is taken of the responsibilities inherent on the stewardship of the company and the demands made of Directors in the discharge of their responsibilities. Active is taken from industry sources to ensure remuneration accords with market place. Company performance, shareholder wealth and director and executive remuneration The remuneration policy has been tailored to increase goal congruence between shareholders, directors and executives. The method applied in achieving this aim will be performance based unit profitability as the Company currently does not have an active business unit.

Short-term benefits

Salary and commissions

Non-cash Benefit

Other Superannuation Total

2010 $ $ $ $ $ Key management Personnel Sim Pin Quek - - - - - Rajen Rai - - - - - Stephen Crouch - - - - - Mark Howard-Browne - - - - - Isaac Ng 97,500 - - 8,775 106,275 97,500 - - 8,775 106,275 Options Issued as part of remuneration for the year ended 31 December 2010 No options are issued to directors and executives as part of their remuneration. Meetings of Directors The Board did not formally meet during the financial year. The directors of the company, who reside in Singapore and Sydney, frequently communicate on all operational and financial matters by phone and email and where appropriate, formally resolved matters by the way of circular resolution.

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DIRECTORS’ REPORT Indemnifying Officers or Auditor The Company has not, during or since the financial year, in respect of any person who is or had been an officer or auditor of the company or a related body corporate indemnified or made any relevant agreement for indemnifying against a liability incurred as an officer, including costs and expenses in successfully defending legal proceedings, or paid or agreed to pay a premium in respect of a contract insuring against a liability incurred as an officer for the cost or expenses to defend legal proceedings. Options At the date of this report no options to shares in the company have been granted and there were no options outstanding at the end of the financial year. Proceedings on Behalf of Company No person had applied for leave of Court to bring proceedings on behalf of the company or intervene in any proceedings to which the company is a party for the purpose of taking responsibility on behalf of the company for all or any part of those proceedings. The Company was not a party to any such proceedings during the year. Insurance of Officers The directors of the company are not insured. Auditor During the year, the auditors were replaced by RSM Bird Cameron Partners and they continue in office in accordance with section 327 of the Corporations Law. Non-audit Services No fees for non-audit services were paid/payable to the external auditors during the ended 31 December 2010. Auditor’s Independence Declaration The lead auditor’s independence declaration for the year ended 31 December 2010 has been received and can be found on page 10 of this report. This report is made in accordance with a resolution of the Board of Directors. Director _________________________________ Sim Pin Quek Dated this 31st day of March 2011

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RSM Bird Cameron Partners

Level 12, 60 Castlereagh Street Sydney NSW 2000 GPO Box 5138 Sydney NSW 2001 T +61 2 9233 8933 F +61 2 9233 8521

Liability limited by a scheme approved under Professional Standards Legislation

Major Offices in: Perth, Sydney, Melbourne, Adelaide and Canberra ABN 36 965 185 036

RSM Bird Cameron Partners is an independent member firm of RSM International, an affiliation of independent accounting and consulting firms. RSM International is the name given to a network of independent accounting and consulting firms each of which practices in its own right. RSM International does not exist in any jurisdiction as a separate legal entity.

AUDITOR’S INDEPENDENCE DECLARATION As lead auditor for the audit of the financial report of El Corporation Limited for the year ended 31 December 2010, I declare that, to the best of my knowledge and belief, there have been no contraventions of:

(i) the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and

(ii) any applicable code of professional conduct in relation to the audit. RSM BIRD CAMERON PARTNERS

Chartered Accountants G N SHERWOOD

Partner Sydney, NSW

Dated: 31 March 2011

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EL Corporation Limited ABN 41 022 737 733

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CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 DECEMBER 2010

Consolidated Group Parent Entity

Note 2010 2009 2010 2009

$ $ $ $

Revenue 2 2,084 6,129 2,084 6,126

Debt Forgiveness 2 - 796,519 - 489,994

Employee benefits expense (97,275) (7,185) (97,275) (7,185)

Depreciation and amortisation expense 3 (3,977) (7,974) (3,977) (3,710)

Impairment of property, plant and equipment 3 (129,209) - - -

Impairment of licence fees 3 (135,379) - - -

Other expenses (212,480) (313,251) (149,189) (295,527)

Finance costs 3 (1) (249) (1) (249)

Profit/(loss) before income tax 3 (576,237) 473,989 (248,358) 189,449

Income tax expense 4 - - - -

Profit/(loss) from continuing operations (576,237) 473,989 (248,358) 189,449

Profit/(loss) from discontinued operations - - - -

Profit/(loss) for the year (576,237) 473,989 (248,358) 189,499

Other comprehensive income

Exchange differences on translating foreign controlled

entities

(1,293) - - -

Total comprehensive income for the year (577,530) 473,989 (248,358) 189,499

Profit/(loss) attributable to minority equity interest - - - -

Profit/(loss) attributable to members of the parent entity (577,530) 473,989 (248,358) 189,449

Overall Operations

Basic earnings per share (cents per share) 8 (0.51) 0.45

Diluted earnings per share (cents per share) 8 (0.51) 0.45

Continuing Operations

Basic earnings per share (cents per share) 8 (0.51) 0.45

Diluted earnings per share (cents per share) 8 (0.51) 0.45

The accompanying notes form part of these financial statements

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STATEMENT OF FINANCIAL POSITION AS AT 31 December 2010 Consolidated Group Parent Entity

Note 2010 2009 2010 2009

$ $ $ $

ASSETS

CURRENT ASSETS

Cash and cash equivalents 9 60,083 230,417 57,710 223,043

Trade and other receivables 10 386 57,520 386 2,225

TOTAL CURRENT ASSETS 60,469 287,937 58,096 225,268

NON-CURRENT ASSETS

Trade and other receivables 10 - 135,796 201,589 203,030

Property, plant and equipment 12 12,665 147,474 12,665 13,725

TOTAL NON-CURRENT ASSETS 12,665 283,270 214,254 216,755

TOTAL ASSETS 73,134 571,207 272,350 442,023

CURRENT LIABILITIES

Trade and other payables 13 55,844 67,387 52,422 64,737

Short-term provisions 15 6,077 15,077 6,077 15,077

TOTAL CURRENT LIABILITIES 61,921 82,464 58,499 79,814

NON-CURRENT LIABILITIES

Financial liabilities 14 400,000 300,000 400,000 300,000

TOTAL NON-CURRENT LIABILITIES 400,000 300,000 400,000 300,000

TOTAL LIABILITIES 461,921 382,464 458,499 379,814

NET ASSETS/(LIABILITIES) (388,787) 188,743 (186,149) 62,209

EQUITY

Issued Capital 16 24,512,976 24,512,976 24,512,976 24,512,976

Reserves (6,285) (4,992) 5,000 5,000

Retained earnings (25,041,747) (24,465,510) (24,704,125) (24,455,767)

Parent interest (535,056) 42,474 (186,149) 62,209

Non-controlling interest 146,269 146,269 - -

TOTAL EQUITY (388,787) 188,743 (186,149) 62,209


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STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 DECEMBER 2010

CONSOLIDATED GROUP

Note Share

Capital

Ordinary

Retained

Earnings

Foreign

Currency

Translation

Reserve

Forfeited

Share

Reserve

Minority

Interest

TOTAL

$ $ $ $ $ $

Balance at 1 January 2009 24,012,976 (24,939,499) (9,992) 5,000 (931,515)

Profit attributable to ordinary members of parent

entity

-

473,989

-

-

-

473,989

Shares issued during the year 500,000 - - - - 500,000

Sub-total 24,512,976 (24,465,510) (9,992) 5,000 - 42,474

Minority Interest - - - - 146,269 146,269

Balance at 31 December 2009 24,512,976 (24,465,510) (9,992) 5,000 146,269 188,743

Loss attributable to ordinary members of parent

entity

-

(576,237)

-

-

-

(576,237)

Adjustments from translation of foreign

controlled entities

-

-

(1,293)

-

-

(1,293)

Balance at 31 December 2010 24,512,976 (25,041,747) (11,285) 5,000 146,269 (388,787)


PARENT ENTITY

Note Share

Capital

Ordinary

Retained

Earnings

Forfeited

Share

Reserve

TOTAL

$ $ $ $

Balance at 1 January 2009 24,012,976 (24,645,216) 5,000 (627,240)

Profit attributable to ordinary members of parent

entity

-

189,449

-

189,449

Shares issued during the year 500,000 - - 500,000

Balance at 31 December 2009 24,512,976 (24,455,767) 5,000 62,209

Loss attributable to ordinary members of parent

entity

-

(248,358)

-

(248,358)

Balance at 31 December 2010 24,512,976 (24,704,125) 5,000 (186,149)


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STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 DECEMBER 2010 Consolidated Group Parent Entity

Note 2010 2009 2010 2009

$ $ $ $

CASH FLOWS FROM OPERATING ACTIVITIES

Interest received 2,084 230 2,084 227

Payments to suppliers and employees (267,792) (488,693) (262,791) (284,322)

Finance costs (1) (249) (1) (249)

Income tax paid - - - -

Net cash used in operating activities 19 (265,709) (488,712) (260,708) (284,344)

CASH FLOWS FROM INVESTING ACTIVITIES

Proceeds from sale of property, plant and equipment 10,000 27,804 10,000 27,264

Purchase of property, plant and equipment (14,625) (167,719) (14,625) (31,800)

Net cash used in investing activities (4,625) (139,915) (4,625) (4,536)

CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from borrowings 100,000 100,000 100,000 50,000

Repayment of borrowings - (91,000) - (241,000)

Minority interests - 146,269 - -

Proceeds from issue of shares - 500,000 - 500,000

Net cash provided by financing activities 100,000 655,269 100,000 309,000

Net increase/(decrease) in cash held (170,334) 26,642 (165,333) 20,120

Cash at beginning of financial year 230,417 203,775 223,043 202,923

Cash at end of financial year 9 60,083 230,417 57,710 223,043


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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2010

Note 1 Statement of Significant Accounting Policies This financial report is a general purpose financial report that has been prepared in accordance with Australian Accounting Standards, Australian Accounting Interpretations, other authoritative pronouncements of the Australian Accounting Standards Board (AASB) and the Corporations Act 2001. The financial report covers the consolidated group of EL Corporation Limited and controlled entities, and EL Corporation as an individual entity. EL Corporation Limited is a listed company, incorporated and domiciled in Australia. The financial report of EL Corporation Limited and controlled entities, and EL Corporation as an individual parent entity comply with all International Financial Reporting Standards (IFRS) in their entirety. The following is a summary of the material accounting policies adopted by the consolidated group in the preparation of the financial report. The accounting policies have been consistently applied, unless otherwise stated. Basis of Preparation Australian Accounting Standards set out accounting policies that the AASB has concluded would result in a financial report containing relevant and reliable information about transactions, events and conditions to which they apply. Compliance with Australian Accounting Standards ensures that the financial statements and notes also comply with the International Financial Reporting Standards. Material accounting policies adopted in the preparation of this financial report are presented below. They have been consistently applied unless otherwise stated. (a)

Going Concern

The financial statements have been prepared on the going concern basis, which contemplates continuity of normal business activities and the realisation of assets and discharge of liabilities in the normal course of business. As disclosed in the financial statements, the company and consolidated entity incurred losses of $248,358 and $576,237 respectively and had net cash outflows from operating activities of $260,708 and $265,709 respectively for the year ended 31 December 2010. As at that date the company and consolidated entity had net current liabilities of $403 and $1,452 respectively and net liabilities of $186,149 and $388,787 respectively. These factors indicate significant uncertainty as to whether the company and consolidated entity will continue as going concerns and therefore whether they will realise their assets and extinguish their liabilities in the normal course of business and at the amounts stated in the financial report. The Directors believe that there are reasonable grounds to believe that the company and consolidated entity will be able to continue as going concerns, after consideration of the following factors: • Atlas Capital (Pte) (“Atlas”) is a major financier of EL Corporation Limited (“EL Corporation”). Atlas has confirmed that it is

its intention to provide continuing financial support to EL Corporation sufficient to allow it to meet its current and future financial obligations and to enable it to pay its debt as and when they become due.

• The financial support provided by Atlas includes not requiring repayment of the balances owed by EL Corporation which for

reference purposes are disclosed in Note 14 to the financial statements to the extent that such repayment would affect the ability of EL Corporation to continue as a going concern and to meet its debts as and when they fall due.

• Atlas has confirmed that should cash reserves be insufficient for EL Corporation to meet its and financial obligation as and

when they fall due over the next 12 months, Atlas will inject further funds as necessary. • The directors have considered expected future cashflow requirements, and have satisfied themselves that EL Corporation

has the financial resources available to meet those needs. • The company has the ability to continue to raise additional funds pursuant to the Corporations Act 2001. • The ability of the company and consolidated entity to further scale back certain parts of their activities that are non

essential so as to conserve cash Accordingly, the Directors believe that the company and consolidated entity will be able to continue as going concerns and that it is appropriate to adopt the going concern basis in the preparation of the financial report. The financial report does not include any adjustments relating to the amounts or classification of recorded assets or liabilities that might be necessary if the company and consolidated entity do not continue as going concerns.

(b) Principles of Consolidation A controlled entity is any entity over which EL Corporation Limited has the power to govern the financial and operating policies so

as to obtain benefits from its activities. In assessing the powers to govern, the existence and effect of holding actual and potential voting rights are considered.

A list of controlled entity is contained in Note 11 to the financial statements.

As at reporting date, the assets and liabilities of controlled entities have been incorporated into the consolidated financial statements as well as their results for the year then ended. Where controlled entities have entered (left) the consolidated group during the year, the operating results have been included (excluded) from the date the control was obtained (ceased).

All inter-group balances and transactions between entities of the consolidated group, including any unrealised profits or losses, have been eliminated on consolidation. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with those adopted by the parent entity.

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(c) Income Tax The income tax expense (revenue) for the year comprises current income tax expense (income) and deferred tax expense

(income).

Current income tax expense charged to the profit or loss is the tax payable on taxable income calculated using applicable income tax rates enacted, or substantially enacted, as at reporting date. Current tax liabilities (assets) are therefore measured at the amounts expected to be paid to (recovered from) the relevant taxation authority.

Deferred income tax expense reflects the movements in deferred tax asset and deferred tax liability balances during the year as

well as unused tax losses. Current and deferred income tax expense (income) is charged or credited directly to equity instead of the profit and loss when the

tax relates to items that are credited or charged directly to equity. Deferred tax assets and liabilities are ascertained based on temporary differences arising between the tax bases of assets and

liabilities and their carrying amounts in the financial statements. Deferred tax assets also result where amounts have been fully expensed but future tax deductions are available. No deferred income tax will be recognised from the initial recognition of an asset or liability, excluding a business combination, where there is no effect on accounting or taxable profit or loss.

Deferred tax assets and liabilities are calculated at the tax rates that are expected to apply to the period when the asset is

realised or the liability is settled, based on tax rates enacted or substantively enacted at reporting date. Their measurement also reflects the manner in which management expects to recover or settle the carrying amount of the related asset or liability.

Deferred tax assets relating to temporary differences and unused tax losses are recognised only to the extent that it is probable

that future taxable profit will be available against which the benefits of the deferred tax asset can be utilised. When temporary differences exist in relation to investments in subsidiaries, branches, associates, and joint ventures, deferred tax

assets and liabilities are not recognised where the timing of the reversal of the temporary difference can be controlled and it is not probable that the reversal will occur in the foreseeable future.

Current tax assets and liabilities are offset where a legally enforceable right of set-off exists and it is intended that net settlement

or simultaneous realisation and settlement of the respective assets and liability will occur. Deferred tax assets and liabilities are offset where a legally enforceable right of set-off exists, the deferred tax assets and liabilities relate to income tax levied by the same taxation authority on either the same taxable authority on either the same taxable entity or different taxable entities where it is intended that net settlement or simultaneous realisation and settlement of the respective assets and liability will occur in future periods in which significant amounts of deferred tax assets or liabilities are expected to be recovered or settled.

Tax Consolidation

EL Corporation Limited and its wholly-owned Australian subsidiaries have not formed an income tax consolidated group under tax legislation.

(d) Property, Plant and Equipment Each class of property, plant and equipment is carried at cost or fair value as indicated, less, where applicable, any accumulated

depreciation and impairment losses.

Plant and Equipment Plant and equipment are measured on the cost basis. The carrying amount of plant and equipment is reviewed annually by

directors to ensure that it is not in excess of the recoverable amount from these assets. The recoverable amount is assessed on the basis of the expected net cash flows that will be received from the assets employed and subsequent disposal. The expected net cash flows have been discounted to their present values in determining recoverable amounts.

The cost of fixed assets constructed within the consolidated group includes the cost of materials, direct labour, borrowing costs

and an appropriate proportion of fixed and variable overheads. Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that the future economic benefits associated with the item will flow to the group and the cost of the item can be measured reliably. All other repairs and maintenance is charged to the statement of comprehensive income during the financial year in which they are incurred.

Depreciation The depreciable amount of all fixed assets including buildings and capitalised lease assets, but excluding freehold land, is

depreciated on a straight-line basis over the asset’s useful life to the consolidated group commencing from the time the asset is held ready for use. Leasehold improvements are depreciated over the shorter of either the unexpired period of the lease or the estimated useful lives of the improvements.

The depreciation rates used for each class of depreciable assets are: Class of Fixed Asset Depreciation Rate Plant and equipment 10-30% The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each balance date. An assets’ carrying

amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than the estimated recoverable amount.

Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These gains and losses are

included in the statement of comprehensive income. When revalued assets are sold, amounts included in the revaluation reserve relating to that asset are transferred to retained earnings.

(e) Leases and Hire Purchase Contracts Leases of fixed assets where substantially all the risks and benefits incidental to the ownership of the asset, but not the legal

ownership that is transferable to the entities in the consolidated group are classified as finance leases. Finance leases are capitalised by recording an asset and a liability at the lower of the amounts equal to the fair value of the leased property or the present value of the minimum lease payments, including any guaranteed residual values. Lease payments are allocated between the reduction of the lease liability and the lease interest expense for the period.

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Leased assets are depreciated on a straight-line basis over the shorter of their estimated useful lives or the lease term. Lease

payments for operating leases, where substantially all the risks and benefits remain with the lessor, are charged in the periods in which they are incurred. Lease incentives under operating leases are recognised as a liability and amortised on a straight-line basis over the life of the lease term.

(f) Financial Instruments Recognition Financial instruments are initially measured at costs on trade date, which includes trade costs, when the related contractual rights

or obligations exist. Subsequent to initial recognition these instruments are measured as set out below. Financial assets at fair value through profit or loss A financial asset is classified in this category if acquired principally for the purpose of selling in the short term or if so designated

by management and within the requirements of AASB139: Recognition and Measurement of Financial Instruments. Derivatives are also categorised as held for trading unless they are designated as hedges. Realised and unrealised gains and losses arising from changes in fair value of these assets are included in the statement of comprehensive income in the period in which they arise.

Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active

market and are stated at amortised cost using the effective interest rate method. Held-to-maturity investments These investments have fixed maturities and it is the group’s intention to hold these investments to maturity. Any held-to-

maturity investments held by the group are stated at amortised cost using the effective interest rate method. Available-for-sale financial assets Available –for-sale financial assets include any financial assets not included in the above categories. Available-for-sale financial

assets are reflected at fair value. Unrealised gains and losses arising from changes in fair value are taken directly to equity. Financial Liabilities Non-derivative financial liabilities are recognised at amortised cost, comprising original debt less principal payments and

amortisation. Derivative Instruments The group has not utilised any derivatives during the year. Fair Value Fair value is determined based on current bid prices for all quoted investments. Valuation techniques are applied to determine the

fair value for all unlisted securities, including recent arm’s length transactions, reference to similar instruments and option pricing models.

Impairment At each reporting date, the group assesses whether there us objective evidence that a financial instrument has been impaired. In

the case of available-for-sale financial instruments, a prolonged decline in the value of the instrument is considered to determine whether an impairment has arisen. Impairment losses are recognised in the statement of comprehensive income.

Financial guarantees Where material, financial guarantees are issues, which requires the issuer to make specific payments to reimburse the holder for

a loss it incurs because a specific debtor fails to make a payment when due, are recognised as a financial liability at fair value on initial recognition. The guarantee is subsequently measured at the higher of the best estimate of the obligation and the amount initially recognised less, when appropriate, cumulative amortisation id accordance with AASB 118: Revenue. When the entity gives guarantees in exchange for a fee, revenue is recognised under AASB 118. The fair value of financial guarantee contracts has been assessed using a probability weighted discounted cash flow approach. The probability has been based on:

- The likelihood of the guarantee party defaulting in a year period: - The proportion of the exposure that is not expected to be recovered due to the guarantee party defaulting; - The maximum loss exposed if the guarantee party were to default.

(g) Impairment of Assets At each reporting date, the group reviews the carrying value of its tangible and intangible assets to determine whether there us

any indication that those assets have been impaired. If such an indication exists, the recoverable amount of the asset, being the higher of the asset’s fair value less costs to sell and value in use, is compared to the asset’s carrying value. Any excess of the asset’s carrying value over its recoverable amount is expensed to the statement of comprehensive income Impairment testing is performed annually for goodwill and intangible assets with indefinite lives. Where it is not possible to estimate the recoverable amount of an individual asset, the group estimates the recoverable amount of the cash-generating unit to which the asset belongs.

(h) Investments in Associates Investments in associate companies are recognised in the financial statements by applying the equity method of accounting. The

equity method of accounting recognises the group’s share if post acquisition reserves of associates.

(i) Foreign Currency Transactions and Balances Functional and presentation currency The functional currency of each of the group’s entities is measured using the currency of the primary economic environment in

which the entity operates. The consolidated financial statements are presented in Australian dollars which is the parent entity’s functional and presentation currency.

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Transaction and Balances Foreign currency transactions are translated into functional currency using exchange rates prevailing at the date of the

transaction. Foreign currency monetary items are translated at the year-end exchange rate. Non-monetary items measured at historical cost continue to be carried at the exchange rate at the date of transaction. Non-monetary items measured at fair value are reported at the exchange rate at the date when fair values were determined. Exchange differences arising on the translation of monetary items are recognised in the statement of comprehensive income, except where deferred in equity as a qualifying cash flow or net investment hedge. Exchange differences arising on the translation of non-monetary items are recognised directly in equity to the extent that the gain or loss is directly recognised in equity; otherwise the exchange difference is recognised in the statement of comprehensive income.

Group Companies The financial results and position of foreign operations whose functional currency is different from the group’s presentation

currency are translated as follows:

- Assets and liabilities are translated at year-end exchange rates prevailing at the reporting date; - Income and expenses are translated at average exchange rates for the period; and - Retained earnings are translated at the exchange rates prevailing at the date of transaction. -

Exchange differences arising on translation of foreign operations are transferred directly to the group’s foreign currency translation reserve in the statement of financial position. These differences are recognised in the statement of comprehensive income in the period in which the operation is disposed.

(j)

Employee Benefits

Equity-settled compensation The group does not operate and share-based compensation plans. (k) Provisions Provisions are recognised when the group has a legal or constructive obligation, as a result of past events, for which it is probable

that an outflow of economic benefits will result and that the outflow can be reliably measured.

(l) Cash and cash equivalents Cash and cash equivalents include cash on hand, deposits held at call with banks, other short-term highly liquid investments with

original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within short-term borrowings in current liabilities on the statement of financial position.

(m) Revenue Revenue from the sale of goods is recognised at the point of delivery as this corresponds to the transfer of significant risks and

rewards of ownership of the goods and cessation of all involvement in those goods. Revenue from investment properties is recognised on an accrual basis or straight line basis in accordance with lease agreements. Dividend revenue is recognised when the right to receive a dividend has been established. Dividends received from associates and joint venture entities are accounted for in accordance with the equity method of accounting. Revenue from the rendering of services is recognised upon the delivery of services to the customers. All revenue is stated net of the amount of good and services tax (GST).

(n) Borrowing Costs Borrowing costs directly attributable to the acquisition, construction or production of assets that necessarily take a substantial

period of time to prepare for their intended use or sale, are added to the cost of those assets. , until such time as the assets are substantially ready for their intended use or sale. All other borrowing costs are recognised in income in the period in which they are incurred.

(o) Good and service Tax (GST) Revenue, expenses and assets are recognised net of the amount of GST, except where the amount of GST incurred is not

recoverable from the Australian Taxation Office. In these circumstances the ST us recognised as part of the cost of acquisition of the asset or as part of the item of the expense. Receivables and payables in the statement of financial position are shown inclusive of GST. Cash flows are presented in the cash flow statement on a gross basis, except for the GST component of investing and financing activities, which are disclosed as operating cash flows.

(p) Comparative Figures When required by Accounting Standards, comparative figures have been adjusted to conform to changes in presentation for the

current financial year. (q) Critical Accounting Estimates and Judgements The directors evaluate estimates and judgements incorporated into the financial reports based on historical knowledge and best

available current information. Estimates assume a reasonable expectation of future events and are based on current trends and economic data, obtained both externally and within the group.

Key estimates – impairment The group assesses impairment at each reporting date by evaluating conditions specific to the group that may lead to impairment

of assets. Where an impairment trigger exists, the recoverable amount of the asset is determined. Value-in-use calculations performed in assessing recoverable amounts incorporate a number of key estimates.

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(r) Adoption of New and Revised Accounting Standards During the current year the Group adopted all of the new and revised Australian Accounting Standards and Interpretations

applicable to its operations which became mandatory.

The adoption of these standards has impacted the recognition, measurement and disclosure of certain transactions. The following is an explanation of the impact the adoption of these standards and interpretations has had on the financial statements of EL Corporation Limited.

AASB 101: Presentation of Financial Statements In September 2007 the Australian Accounting Standards Board revised AASB 101 and as a result, there have been changes to

the presentation and disclosure of certain information within the financial statements. Below is an overview of the key changes and the impact on the Group’s financial statements.

Disclosure impact Terminology changes — the revised version of AASB 101 contains a number of terminology changes, including the amendment of

the names of the primary financial statements.

Reporting changes in equity — the revised AASB 101 requires all changes in equity arising from transactions with owners, in their capacity as owners, to be presented separately from non-owner changes in equity. Owner changes in equity are to be presented in the statement of changes in equity, with non-owner changes in equity presented in the statement of comprehensive income. The previous version of AASB 101 required that owner changes in equity and other comprehensive income be presented in the statement of changes in equity.

Statement of comprehensive income — the revised AASB 101 requires all income and expenses to be presented in either one statement, the statement of comprehensive income, or two statements, a separate income statement and a statement of comprehensive income. The previous version of AASB 101 required only the presentation of a single income statement.

The Group’s financial statements now contain a statement of comprehensive income.

Other comprehensive income — The revised version of AASB 101 introduces the concept of ‘other comprehensive income’ which comprises of income and expenses that are not recognised in profit or loss as required by other Australian Accounting Standards. Items of other comprehensive income are to be disclosed in the statement of comprehensive income. Entities are required to disclose the income tax relating to each component of other comprehensive income. The previous version of AASB 101 did not contain an equivalent concept.

(s) New Accounting Standards for Application in Future Periods The AASB has issued new and amended accounting standards and interpretations that have mandatory application dates for

future reporting periods. The Group has decided against early adoption of these standards. A discussion of those future requirements and their impact on the Group follows:

• AASB 9: Financial Instruments and AASB 2009–11: Amendments to Australian Accounting Standards arising from AASB 9 [AASB 1, 3, 4, 5, 7, 101, 102, 108, 112, 118, 121, 127, 128, 131, 132, 136, 139, 1023 & 1038 and Interpretations 10 & 12] (applicable for annual reporting periods commencing on or after 1 January 2013).

These standards are applicable retrospectively and amend the classification and measurement of financial assets. The Group has not yet determined the potential impact on the financial statements.

The changes made to accounting requirements include: • simplifying the classifications of financial assets into those carried at amortised cost and those carried at fair

value; • simplifying the requirements for embedded derivatives; • removing the tainting rules associated with held-to-maturity assets; • removing the requirements to separate and fair value embedded derivatives for financial assets carried at

amortised cost; • allowing an irrevocable election on initial recognition to present gains and losses on investments in equity

instruments that are not held for trading in other comprehensive income. Dividends in respect of these investments that are a return on investment can be recognised in profit or loss and there is no impairment or recycling on disposal of the instrument; and

• reclassifying financial assets where there is a change in an entity’s business model as they are initially classified based on:

(a) the objective of the entity’s business model for managing the financial assets; and (b) the characteristics of the contractual cash flows.

AASB 2009–4: Amendments to Australian Accounting Standards arising from the Annual Improvements Project [AASB 2

and AASB 138 and AASB Interpretations 9 & 16] (applicable for annual reporting periods commencing from 1 July 2009) and AASB 2009-5: Further Amendments to Australian Accounting Standards arising from the Annual Improvements Project [AASB 5, 8, 101, 107, 117, 118, 136 & 139] (applicable for annual reporting periods commencing from 1 January 2010).

These standards detail numerous non-urgent but necessary changes to accounting standards arising from the IASB’s annual improvements project. No changes are expected to materially affect the Group.

The Group does not anticipate the early adoption of any of the above Australian Accounting Standards.

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Note 2 Revenue Consolidated Group Parent Entity 2010 2009 2010 2009 $ $ $ $ Other Revenue

- Interest received 2,084 230 2,084 227 Total other revenue 2,084 230 2,084 227 Total sales and other revenue 2,084 230 2,084 227 Other Income

- Gain on disposal of property, plant and equipment - 5,899 - 5,899 Total other income 2,084 6,129 2,084 6,126 Debt forgiveness - 796,519 - 489,994 Note 3 Profit/ (loss) for the Year Expenses Finance costs:

- Other persons 1 249 1 249 Total finance costs 1 249 1 249 Loss on disposal of property, plant and equipment 1,708 - 1,708 - Depreciation and amortisation 3,977 7,974 3,977 3,710 Impairment of plant & equipment 129,209 - - - Impairment of licence fees 135,797 - - - Note 4 Income Tax Expense The prima facie tax on profit from ordinary activities before income tax is reconciled to the statement of comprehensive income as follows:

Prima facie tax payable on profit from ordinary activities - Consolidated group (172,871) 142,197 - - - Parent entity - - (74,507) 56,835

Less: Tax effect of:

- Tax losses not brought to account 172,871 (142,197) 74,507 (56,835) Income Tax attributable to entity - - - - Note 5 Key Management Personnel Compensation (a) Names and positions held of consolidated and parent entity key management personnel in office at any time during the financial

year are: Key Management Personnel Position Sim Pin Quek Chairman and CEO Isaac Ng Executive director Rajen Rai Non-executive director Mark Howard-Browne Non-executive director Key Management Personnel remuneration has been included in the Remuneration Report section of the Directors’ Report (b) Shareholdings Number of shares held by Key Management Personnel Balance at

01 Jan 10 Received as

compensation Options

Exercised Balance at 31 Dec 10

No. No. No. No. Key Management Personnel Isaac Ng 3,000,000 - - 3,000,000 3,000,000 - - 3,000,000 Note 6 Auditors’ Remuneration Consolidated Group Parent Entity 2010 2009 2010 2009 $ $ $ $ Remuneration of the auditor of the parent entity for:

- Auditing or reviewing the financial report 18,000 12,000 18,000 12,000 - Taxation services - - - -

Remuneration of other auditors of subsidiaries for:

- Auditing or reviewing the financial report - - - - - Taxation services - - - -

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Note 7 Dividends Franking credit balance The amount of franking credits available for the subsequent financial year are:

Franking account balance as at the end of the financial year at 30% (2009: 30%)

1,497,000

1,497,000

1,497,000

1,497,000

1,497,000 1,497,000 1,497,000 1,497,000 Note 8 Earnings per Share Consolidated Group 2010 2009 $ $ (a) Reconciliation of earnings to profit or loss Profit/(loss) (576,237) 473,989 Profit attributable to minority equity interest - Earnings used to calculate basic EPS (576,237) 473,989 Earnings used in the calculation of dilutive EPS (576,237) 473,989 (b) Reconciliation of earnings to profit or loss from continuing operations Profit/(loss) from continuing operations (576,237) 473,989 Profit attributable to minority equity interest from continuing operations - - Earnings used to calculate basic EPS from continuing operations (576,237) 473,989 Earnings used in the calculation of dilutive EPS from continuing operations (576,237) 473,989 No. No. (c) Weighted average number of ordinary shares outstanding during the year used in calculating

basic EPS

112,442,265

105,174,505 Weighted average number of ordinary shares outstanding during the year used in calculating

dilutive EPS

112,442,265

105,174,505 Note 9 Cash and Cash Equivalents Consolidated Group Parent Entity 2010 2009 2010 2009 $ $ $ $ CURRENT Cash at bank and in hand 60,083 230,417 57,710 223,043 60,083 230,417 57,710 223,043 Reconciliation of cash Cash at the end of the financial year as shown in the cash flow statement is reconciled to items in the statement of financial position as follows:

Cash and cash equivalents 60,083 230,417 57,710 223,043 60,083 230,417 57,710 223,043 Note 10 Trade and Other Receivables CURRENT Other receivables 386 57,520 386 2,225 386 57,520 386 2,225 NON-CURRENT Amounts receivable from: - Wholly owned entities 21 - - 201,589 203,030 - Other related parties - - - - - Capitalised Licence Fees - 135,796 - - - 135,796 201,589 203,030 Note 11 Controlled Entities Controlled Entities Consolidated Country of Incorporation Percentage (%) Owned Parent Entity: 2010 2009 El Corporation Limited Australia Subsidiaries of El Corporation Limited: Datamatic Limited New Zealand 90 90 Datamatic (Fiji) Limited Fiji - 100 Acma Network Pty Ltd Australia 100 100 Max Media Pte Ltd Taiwan 60 60

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Note 12 Property, Plant and Equipment Consolidated Group Parent Entity 2010 2009 2010 2009 $ $ $ $ PLANT AND EQUIPMENT At Cost 14,625 149,915 14,625 14,536 Accumulated depreciation (1,960) (2,441) (1,960) (811) 12,665 147,474 12,665 13,725 Movements in Carrying Amounts Movements in carrying amounts for each class of property, plant and equipment between the beginning and the end of the financial year: Consolidated Group:

Plant and Equipment

Total

$ $ Balance at 1 January 2010 147,474 147,474 Additions 14,625 14,625 Disposals (16,248) (16,248) Depreciation expense (3,977) (3,977) Impairment expense (129,209) (129,209) Balance at 31 December 2010 12,665 12,665 Parent entity:

Plant and Equipment

Total

$ $ Balance at 1 January 2010 13,725 13,725 Additions 14,625 14,625 Disposals (11,708) (11,708) Depreciation expense (3,977) (3,977) Balance at 31 December 2010 12,665 12,665 Note 13 Trade and Other Payables Consolidated Group Parent Entity 2010 2009 2010 2009 $ $ $ $ CURRENT Unsecured liabilities Trade Payables 4,253 4,824 4,178 4,425 Sundry payables and accrued expenses 51,591 62,563 48,244 60,312 55,844 67,387 52,422 64,737 Note 14 Financial Liabilities NON-CURRENT Long-term borrowings 400,000 300,000 400,000 300,000 400,000 300,000 400,000 300,000 Note 15 Provisions Employee entitlements - Opening balance at 1 January 2010 15,077 7,892 15,077 7,892 - Amounts provided (9,000) 7,185 (9,000) 7,185 - Balance at 31 December 2010 6,077 15,077 6,077 15,077 Analysis of total provisions - Current 6,077 15,077 6,077 15,077 - Non-current - - - - 6,077 15,067 6,077 15,077 Note 16 Issued Capital 112,442,265 fully paid ordinary shares 24,512,976 24,512,976 24,512,976 24,512,976 24,512,976 24,512,976 24,512,976 24,512,976 Ordinary Shares No. No. No. No. - At the beginning of the reporting period 112,442,265 102,442,265 112,442,265 102,442,265 - Shares issued during the year - 10,000,000 - 10,000,000 - At reporting date 112,442,265 112,442,265 112,442,265 112,442,265 Ordinary shares participate in dividends and the proceeds on winding up of the parent entity in proportion to the number of shares held. At the shareholders’ meetings each ordinary share is entitled to one vote when a poll is called, otherwise each shareholder has one vote on a show of hands.

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Note 17 Reserves (a) Foreign Currency Translation Reserve The foreign currency translation reserve records change differences arising on translation of a foreign controlled subsidiary. (b) Forfeited Share Reserve The forfeited share reserve records the value of shares forfeited under a since terminated executive share scheme. Note 18 Segment Reporting Primary Reporting – Business Segments Communication

2010 2009 $ $

REVENUE Unallocated revenue 2,084 6,129 Total Revenue 2,084 6,129 RESULT Segment Result (576,236) 474,238 Unallocated expense net of unallocated revenue Finance Costs (1) (249) Profit/(loss) before income tax (576,237) 473,989 Profit/(loss) after income tax (576,237) 473,989 ASSETS Segment Assets 73,134 571,207 Total Assets 73,134 571,207 LIABILITIES Segment Liabilities 461,921 382,464 Total Liabilities 461,921 382,464

OTHER Depreciation and amortisation of segment assets 3,977 7,974 Secondary Reporting – Geographic Segments

Segment revenues from external customers

Carrying amount of segment assets

Carrying amount of non-current segment assets

2010 2009 2010 2009 2010 2009 $ $ $ $ $ $

Australia 2,084 6,126 71,716 242,580 12,665 13,725 Taiwan - 3 1,418 328,627 - 269,545 2,084 6,129 73,134 571,207 12,665 283,270

Note 19 Cash flow Information Consolidated Group Parent Entity 2010 2009 2010 2009 $ $ $ $ Reconciliation of cash flow from operations with loss after income tax Profit/(loss) after income tax (576,237) 473,989 (248,358) 189,449

Non-cash flows in profit/(loss) Depreciation 3,977 7,974 3,977 3,710

(Profit)/loss on disposal of property, plant and equipment 1,708 (5,899) 1,708 (5,899) Impairment of plant & equipment 129,209 - - - Impairment of licence fees 135,797 - - - Debt forgiveness - (796,519) - (489,994)

Changes in assets and liabilities, net of the effects of purchase and disposal of subsidiaries

(Increase)/decrease in trade and term receivables 57,134 (135,796) 1,441 (8,000) (Increase)/decrease in other assets - (56,323) 1,839 (1,000) Increase/(decrease) in trade payables and accruals (8,297) 16,677 (12,315) 18,390 Increase/(decrease) in provisions (9,000) 7,185 (9,000) 9,000 Cash flow from Operations (265,709) (488,712) (260,708) (284,344) Note 20 Events after Balance Date (a) There were no events subsequent to balance date that would affect the operations of the Company. (b) The financial report was authorised for issue on March 31, 2011 by the board of directors

Note 21 Related Party Transactions Transactions between related parties are on normal commercial terms and conditions no more favourable than those available to other parties unless otherwise stated.

Loans to Related Parties ACMA Network Pty Ltd The receivables from the related parties are unsecured in nature and bear no interest.

-

-

201,589

203,030

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Note 22 Financial Risk Instruments (a) Financial Risk Management Policies

The group’s financial instruments consist mainly of deposit with banks, local money market instruments, short-term investments, accounts receivable and payable, loans to and from subsidiaries, bills, leases, preference shares, and derivative

The main purpose of non-derivative financial instruments is to raise finance for group operations. Derivatives are not used by the group.

(i) Financial Risk

The main risks the group is exposed to through its financial instruments are interest rate risk, foreign currency risk, liquidity risk, credit risk and price risk.

Interest rate risk Interest rate risk is managed with a mixture of fixed and floating rate debt. At 31 December 2010 & 100% of group debt is fixed. For further details on interest rate risk refer to Note 22 (b) (i) & (ii).

Foreign currency risk The group is exposed to fluctuations in foreign currencies arising from the sale and purchase of goods and services in currencies other than the group’s measurements currency. Refer to Note 22 (b) (i) for further details.

Liquidity risk The group manages liquidity risk by monitoring forecast cash flow and ensuring that adequate unutilised borrowing facilities are maintained.

Credit risk The maximum exposure to credit risk, excluding the values of any collateral or other security, at balance date to recognised financial assets, is then carrying amount, net of any provisions for impairment of those assets, as disclosed in the balance and notes to the financial statements. The consolidated group does not have any material credit risk exposure to any single receivable or group of receivable or Group of receivables under financial instruments entered into by the consolidated group.

(b) Financial Instruments

(i) Financial Instruments Composition and Maturity Analysis The consolidated group’s exposure to interest rate risk, which is the risk that a financial instrument value will fluctuate as a

result of changes in market interest rates and the effective weighted average interest rates on classes of financial assets and financial liabilities , is as of follows:

Weighted Average Effective Interest

Rate

Floating Interest Rate

Non-interest Bearing Total

2010 2009 2010 2009 2010 2009 2010 2009 % % $ $ $ $ $ $ Consolidated Group Financial Assets

Cash and cash equivalents 0.40 0.25 60,083 230,417 - - 60,083 230,417 Receivables - - 386 57,520 386 57,520 Total Financial Assets 60,083 230,417 386 57,520 60,469 287,937 Financial Liabilities Trade and other payables 55,844 67,387 55,844 67,387 Long-term borrowings 400,000 300,000 400,000 300,000 Total Financial Liabilities

455,844 367,387 455,844 367,387

Financial liability and financial asset maturity analysis

Within 1 Year 1 to 5 Years Total 2010 2009 2010 2009 2010 2009 $ $ $ $ $ $ Consolidated Group Financial liabilities due for payment

Trade and other payables 55,844 67,387 - - 55,844 67,387 Long-term borrowings - - 400,000 300,000 400,000 300,000 Total expected outflows 55,844 67,387 400,000 300,000 455,844 367,387 Financial assets – cash flows realisable

Cash and cash equivalents 60,083 230,417 - - 60,083 230,417 Receivables 386 57,520 - - 386 57,520 Total anticipated inflows

60,469

287,937

-

-

60,469

287,937

Net inflow/(outflow) on financial instruments

4,625

220,550

(400,000)

(300,000)

(395,375)

(79,450)

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(ii) Net Fair Values The net fair values of: - Term receivables and government and fixed interest securities and bonds are determined by discounting the cash

flows, at the market interest rates of similar securities, to their present value. - Other assets and other liabilities approximate the carrying value.

No financial assets and financial liabilities are readily traded on organised markets in standardised form other than listed investments, forward exchange contracts and interest rate swaps.

Financial assets where carrying amounts exceeds net fair values have not been written down as the consolidated group

intends to hold these assets to maturity.

Aggregate net fair values and carrying amounts of financial assets and financial liabilities at balance date:

2010 2009 Consolidated Group Carrying

Amount Net Fair Value Carrying

Amount Net Fair Value

$ $ $ $ Financial Assets Cash and cash equivalents 60,083 60,083 230,417 230,417 Receivables 386 386 57,520 57,520 Total Financial Assets 60,469 60,469 287,937 287,937 Financial Liabilities Trade and other payables 55,844 55,844 67,387 67,387 Long-term borrowings 400,000 400,000 300,000 300,000 Total Financial Liabilities 455,844 455,844 367,387 367,387

Note 23 Cash Management Management controls the capital of the Group in order to maintain a good debt to equity ratio, provide the shareholders with adequate returns and ensure that the Group can fund its operations and continue as a going concern. The Group’s debt and capital includes ordinary share capital and financial liabilities, supported by financial assets. There are no externally imposed capital requirements. Management effectively manages the Group’s capital by assessing the Group’s financial risks and adjusting its capital structure in response to changes in these risks and in the market. These responses include the management of debt levels, distributions to shareholders and share issues. Note 24 Changes in Accounting Policy

The following Australian Accounting standards have been issued or amended the parent and consolidated group but are not yet effective. They have not been adopted in preparation of the financial statement at reporting date.

Reference Title Summary Application date (financial

years beginning)

Expected Impact

AASB 9 Financial Instruments Replaces the requirements of AASB 139 for the classification and measurement of financial assets. This is the result of the first part of Phase 1 of the IASB’s project to replace IAS 39.

1 January 2013 No material impact expected

2009-11 Amendments to Australian Accounting Standards arising from AASB 9

Amends AASB 1, 3, 4, 5, 7, 101, 102, 108, 112, 118, 121, 127, 128, 131, 132, 136, 139, 1023 and 1038 and Interpretations 10 and 12 as a result of the issuance of AASB 9.


2010-7 Amendments to Australian Accounting Standards arising from AASB 9 (December 2010)

Amends AASB 1, 3, 4, 5, 7, 101, 102, 108, 112, 118, 120, 121, 127, 128, 131, 132, 136, 137, 139, 1023 & 1038 and Interpretations 2, 5, 10, 12, 19 & 127 for amendments to AASB 9 in December 2010


AASB 124 Related Party Disclosures

Revised standard. The definition of a related party is simplified to clarify its intended meaning and eliminate inconsistencies from the application of the definition

1 January 2011 Disclosure only

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Note 25 Company Details The registered office of the company is: EL Corporation Limited Level 9, 20 Hunter St SYDNEY NSW 2000 The principal place of business is: EL Corporation Limited Level 18, 99 Mount St NORTH SYDNEY NSW 2060

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Directors’ Declaration The directors of the company declare that: 1. the financial statements and notes set out on pages 11 to 26, are in accordance with the Corporations Act 2001 and:

(a) comply with Accounting Standards, which, as stated in accounting policy note 1 to the financial statements, constitutes explicit

and unreserved compliance with International Financial Reporting Standards (IFRS); and

(b) give a true and fair view of the financial position as at 31 December 2010 and of the performance for the year ended on that date of the company and the consolidated group;

2. the Chief Executive Officer and Chief Finance Officer have each declared that:

(a) the financial records of the company for the financial year have been properly maintained in accordance with Section 286 of the Corporations Act 2001;

(b) (c)

the financial statements and notes for the financial year comply with Accounting Standards: and the financial statements and notes for the financial year give a true and fair view;

3. e in the directors’ opinion there are reasonable grounds to believe that the company will be able to pay its debts as and when they me due and payable.

This declaration is made in accordance with a resolution of the Board of Directors ................................................... Sim Pin Quek Chairman and CEO Dated this 31st day of March 2011

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RSM Bird Cameron Partners

Level 12, 60 Castlereagh Street Sydney NSW 2000 GPO Box 5138 Sydney NSW 2001 T +61 2 9233 8933 F +61 2 9233 8521

Liability limited by a scheme approved under Professional Standards Legislation

Major Offices in: Perth, Sydney, Melbourne, Adelaide and Canberra ABN 36 965 185 036

RSM Bird Cameron Partners is an independent member firm of RSM International, an affiliation of independent accounting and consulting firms. RSM International is the name given to a network of independent accounting and consulting firms each of which practices in its own right. RSM International does not exist in any jurisdiction as a separate legal entity.

INDEPENDENT AUDITOR’S REPORT

TO THE MEMBERS OF

EL CORPORATION LIMITED

Report on the Financial Report We have audited the accompanying financial report of El Corporation Limited (“the company”), which comprises the statements of financial position as at 31 December 2010, and the statements of comprehensive income, statements of changes in equity and statements of cash flows for the year then ended, notes comprising a summary of significant accounting policies and other explanatory information, and the directors' declaration of the company and the consolidated entity comprising the company and the entities it controlled at the year’s end or from time to time during the financial year. Directors’ Responsibility for the Financial Report The directors of the company are responsible for the preparation of the financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the financial report that is free from material misstatement, whether due to fraud or error. In Note 1, the directors also state, in accordance with Accounting Standard AASB 101 Presentation of Financial Statements, that the financial statements comply with International Financial Reporting Standards. Auditor’s Responsibility Our responsibility is to express an opinion on the financial report based on our audit. We conducted our audit in accordance with Australian Auditing Standards. These Auditing Standards require that we comply with relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain reasonable assurance about whether the financial report is free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial report. The procedures selected depend on the auditor's judgement, including the assessment of the risks of material misstatement of the financial report, 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 report 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 the directors, as well as evaluating the overall presentation of the financial report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.

Independence

In conducting our audit, we have complied with the independence requirements of the Corporations Act 2001. We confirm that the independence declaration required by the Corporations Act 2001, which has been given to the directors of El Corporation Limited, would be in the same terms if given to the directors as at the time of this auditor's report.

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Opinion In our opinion: (a) the financial report of El Corporation Limited is in accordance with the Corporations Act 2001, including:

(i) giving a true and fair view of the company's and consolidated entity’s financial positions as at 31 December 2010 and of their performance for the year ended on that date; and

(ii) complying with Australian Accounting Standards and the Corporations Regulations 2001; and

(b) the financial report also complies with International Financial Reporting Standards as disclosed in Note 1. Material Uncertainty Regarding Continuation as a Going Concern Without qualifying our opinion, we draw attention to Note 1(a) in the financial report which indicates that the company and consolidated entity incurred losses of $248,358 and $576,237 respectively and had net cash outflows from operating activities of $260,708 and $265,709 respectively for the year ended 31 December 2010. As at that date the company and consolidated entity had net current liabilities of $403 and $1,452 respectively and net liabilities of $186,149 and $388,787 respectively. These conditions, along with other matters as set forth in Note 1(a), indicate the existence of a material uncertainty which may cast significant doubt about the company and consolidated entity's ability to continue as a going concerns and, therefore, whether they will realise their assets and extinguish their liabilities in the normal course of business and at the amounts stated in the financial report. Report on the Remuneration Report We have audited the Remuneration Report included in page 8 of the directors’ report for the year ended 31 December 2010. The directors of the company are responsible for the preparation and presentation of the Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards. Opinion In our opinion the Remuneration Report of El Corporation Limited for the year ended 31 December 2010 complies with section 300A of the Corporations Act 2001. RSM BIRD CAMERON PARTNERS

Chartered Accountants G N SHERWOOD

Partner Sydney, NSW

Dated: 31 March 2011

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ADDITIONAL INFORMATION FOR LISTED PUBLIC COMPANIES SHAREHOLDER STATISTICS Distribution of Shareholders Range of Holdings Numbers of

shareholders Ordinary

% of Issued

Capital 1 - 1000 27 0.02 1,001 – 5,000 224 0.47 5,001 – 10,000 44 0.35 10,001 – 10,000 57 1.39 100,000 – and over 29 97.77 381 100.00 The twenty largest shareholders of ordinary shares held 96.49% of the total ordinary shares on issue. Shareholder’s Name

Numbers of shares held

% of Issued

Capital GIM LIAN DORIS CHUNG 20,166,667 17.94 KEONG CHEE YAM 20,000,000 17.79 PATRICK HWA KWANG CHEW 19,500,000 17.34 LEE HOON QUEK 16,500,000 14.67 INFINIO GROUP LIMITED 10,000,000 8.89 CHOONG ONN LEE 5,500,000 4.89 CHECK KIAN LOW 3,000,000 2.67 ISAAC POH SENG NG 3,000,000 2.67 CHEOW TONG YEO 3,000,000 2.67 EQUATOR CAPITAL LIMITED 1,378,869 1.23 MARCELLO PRAGIER 1,061,924 0.94 AI LIN LOW 900,000 0.80 KENG LIN TAN 781,901 0.70 JENNIFER JANE FIELD 682,001 0.61 FOON SEEN LEONG 570,000 0.51 GA & AM LEAVER INVESTMENTS PTY LTD 539,957 0.48 TIMOTHY CURTIS WINN 528,835 0.47 NEFCO NOMINEES PTY LTD 499,504 0.44 TSUEY CHIN THAM 445,000 0.40 IANAKI SEMERDZIEV 426,672 0.38 Voting Rights All voting shares (whether fully paid or not) carry one vote per share without restriction.

Substantial Shareholding as at 2nd March 2011 Shareholder’s Name

Numbers of shares held

GIM LIAN DORIS CHUNG 20,166,667 KEONG CHEE YAM 20,000,000 PATRICK HWA KWANG CHEW 19,500,000 INFINIO GROUP LIMITED 10,000,000 LEEHOON QUEK 10,000,000

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EL CORPORATION LTD and Controlled Entities · EL CORPORATION LTD and Controlled Entities . ABN 41...

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Transcript of EL CORPORATION LTD and Controlled Entities · EL CORPORATION LTD and Controlled Entities . ABN 41...