EMPOWER THE EMERGING MARKETS FOUNDATION (HONG KONG) LIMITED REPORTS AND FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012 James Ngai & Partners CPA Limited CERTIFIED PUBLIC ACCOUNTANTS Member of Russell Bedford International, a global network of independent accountancy firms with affiliated offices worldwide.
Reports and financial statements For the year ended 30 June 2012 Contents Pages Report of the directors 1-2 Independent auditors report 3 Income and expenditure account and statement of comprehensive income 4 Balance sheet 5 Statement of changes in fund 6 Cash flow statement 7 Notes to the financial statements 8-14
Report of the directors The directors have pleasure in presenting herewith their report together with the audited financial statements for the year ended 30 June 2012. Principal place of business EMpower - The Emerging Markets Foundation (Hong Kong) Limited (the Company ) is a charitable organisation incorporated and domiciled in Hong Kong and has its registered office at Room 1708, Dominion Centre, 43-59 Queen s Road East, Wanchai, Hong Kong. Principal activities The principal activities of the Company are to raise funds and disburse funds to locally led organisations to support at-risk youth over the world. Financial statements The results of the Company for the year ended 30 June 2012 are set out in the income and expenditure account on page 4 and the state of the Company s affairs as at that date are set out in the financial statements on pages 5 to 14. Grants Grants made by the Company during the year amounted to 145,000. Directors The directors of the Company during the year and up to the date of this report were: FOO Yin Pheng Marta CABRERA Aasha PAI (appointed on 4 June 2012) Brent MORGANS (appointed on 4 June 2012 and resigned on 5 December 2012) Johnny MAYANI (appointed on 4 June 2012) Paul ANGWIN (appointed on 4 June 2012) Neil HARVEY (appointed on 4 June 2012) Monica HSIAO (appointed on 1 November 2012) Vishal TOURANI (appointed on 6 December 2012) Stephen CHANG (appointed on 6 December 2012) In accordance with the Company s Articles of Association, one-third of the directors, or the number nearest one-third, shall retire and, being eligible, offer themselves for re-election at the forthcoming Annual General Meeting. 1
Report of the directors (Continued) Directors interests Except for the transactions as disclosed in note 7 to the financial statements, no other contracts of significance to which the Company was a party, and in which a director of the Company had a material interest, whether directly or indirectly, subsisted at the end of the year or at any time during the year. At no time during the year was the Company a party to any arrangements to enable the directors of the Company to acquire benefits by means of acquisition of shares in or debentures of the Company or any other body corporate. Management contracts No contracts concerning the management and administration of the whole or any substantial part of the business of the Company were entered into or existed during the year. Auditors The financial statements have been audited by Messrs. James Ngai & Partners CPA Limited, Certified Public Accountants, and a resolution to reappoint them as auditors will be proposed at the forthcoming Annual General Meeting. For and on behalf of the Board Chairman Dated: 2
James Ngai & Partners CPA Limited 倪雅各會計師事務所有限公司 Room 1708 Dominion Centre, 43-59 Queen s Road East, Wanchai, Hong Kong Tel: +852-2851-0260 Fax: +852-2543-3343 www.russellbedford.com.hk Independent auditors report To the member of EMpower - The Emerging Markets Foundation (Hong Kong) Limited (Incorporated in Hong Kong and limited by guarantee) We have audited the financial statements of EMpower - The Emerging Markets Foundation (Hong Kong) Limited (the Company ) set out on pages 4 to 14, which comprise the balance sheet as at 30 June 2012, and the income and expenditure account, statement of comprehensive income, statement of changes in fund and cash flow statement for the year ended 30 June 2012, and a summary of significant accounting policies and other explanatory notes. Directors responsibility for the financial statements The directors are responsible for the preparation of financial statements that give a true and fair view in accordance with Hong Kong Financial Reporting Standards issued by the Hong Kong Institute of Certified Public Accountants and the Hong Kong Companies Ordinance, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. Auditors responsibility It is our responsibility to form an independent opinion, based on our audit, on these financial statements and to report our opinion solely to you, as a body, in accordance with section 141 of the Hong Kong Companies Ordinance, and for no other purpose. We do not assume responsibility towards or accept liability to any other person for the contents of this report. We conducted our audit in accordance with Hong Kong Standards on Auditing issued by the Hong Kong Institute of Certified Public Accountants. These standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance as to whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making these risk assessments, the auditors consider internal control relevant to the entity s preparation of financial statements that give a true and fair view 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 statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the financial statements give a true and fair view of the state of the Company s affairs as at 30 June 2012 and of its surplus and cash flows for the year then ended in accordance with Hong Kong Financial Reporting Standards and have been properly prepared in accordance with the Hong Kong Companies Ordinance. James Ngai & Partners CPA Limited Certified Public Accountants Hong Kong, Ho Kit Man Practising Certificate Number P05319 3 Certified Public Accountants Member of Russell Bedford International, a global network of independent accountancy firms with affiliated offices worldwide.
Income and expenditure account and statement of comprehensive income Note Year ended 30 June 2012 Period from 16 March 2011 (date of incorporation) to 30 June 2011 Income Contributions 292,502 141,567 Expenditure Accounting fee 7,346 544 Administrative expenses 650 - Audit fee 2,000 1,700 Bank charges 972 232 Board representation 25 - Communications and outreach 2,805 - Exchange loss, net 301 16 Fundraising expenses 29,077 424 Grants 145,000 131,000 Office costs 2,542 - Printing and postage 959 476 Telephone and internet 163 15 Travel and transportation 18,966 5,004 Staff costs 4 57,186 - Sundry expenses 385-268,377 139,411 Surplus for the year / period and comprehensive income for the year / period 24,125 2,156 4
Balance sheet At 30 June 2012 Note 2012 2011 Current assets Contributions receivable 5,000 60,000 Prepayments 1,799 - Cash and bank balances 176,843 47,320 183,642 107,320 Current liabilities Grants payables 108,000 - Amounts due to related companies 6 39,703 102,860 Other payable and accrued expenses 9,658 2,304 157,361 105,164 Net current assets and net assets 26,281 2,156 Representing: Surplus fund 26,281 2,156 Approved by the Board of Directors on Director Director 5
Statement of changes in fund Balance at 16 March 2011 - Surplus and comprehensive income for the period 2,156 Balance at 30 June 2011 2,156 Balance at 1 July 2011 2,156 Surplus and comprehensive income for the year 24,125 Balance at 30 June 2012 26,281 6
Cash flow statement Year ended 30 June 2012 Period from 16 March 2011 (date of incorporation) to 30 June 2011 Surplus for the year / period and before working capital changes 24,125 2,156 Decrease / (increase) in contributions receivable 55,000 (60,000) Increase in prepayments (1,799) - Increase in grants payables 108,000 - (Decrease) / increase in amounts due to related companies (63,157) 102,860 Increase in other payable and accrued expenses 7,354 2,304 Net cash generated from operations 129,523 47,320 Net increase in cash and cash equivalents 129,523 47,320 Cash and cash equivalents at beginning of year / period 47,320 - Cash and cash equivalents at end of year / period 176,843 47,320 Analysis of cash and cash equivalents at end of year / period Cash and bank balances 176,843 47,320 7
Notes to the financial statements 1. Corporate status The Company is a charitable organisation incorporated under the Hong Kong Companies Ordinance as a Company limited by guarantee and not having a share capital. The liability of the members is limited to HKD100 per member in the event of the Company being wound up, whilst they remain members, or within one year after they cease to be members. The address of its registered office is Room 1708, Dominion Centre, 43-59 Queen s Road East, Wanchai, Hong Kong. Its principal activities are to raise funds and disburse funds to locally led organisations to support at-risk youth over the world. 2. Principal accounting policies (a) Statement of compliance The financial statements have been prepared in accordance with Hong Kong Financial Reporting Standards ( HKFRSs ) issued by the Hong Kong Institute of Certified Public Accountants ( HKICPA ) and the requirements of the Hong Kong Companies Ordinance. A summary of the significant accounting policies adopted by the Company is set out below. (b) Basis of preparation of the financial statements The financial statements have been prepared on the historical cost basis. The HKICPA has issued the following new and revised standards and interpretations that are mandatory for the first time for the current accounting year of the Company: HKFRS 1 (Amendment) Limited Exemption from Comparative HKFRS 7 Disclosures for First-time Adopters Amendments to HKFRS 1 - First-time Adoption of Hong Kong Financial Reporting Standards Severe Hyperinflation and Removal of Fixed Dates for First-time Adopters Amendments to HKFRS 7 - Financial Instruments : Disclosures Disclosures Transfer of Financial Assets HKAS 24 (Revised) Related Party Disclosures HKAS 32 (Amendment) Classification of Rights Issues Amendments to HK (IFRIC) Int 14 Prepayments of a Minimum Funding Requirement HK (IFRIC) Int 19 Extinguishing Financial Liabilities with Equity Instruments HKFRSs (Amendments) Improvements to HKFRSs issued in 2010 The amendments or new standards above have had no material impact on the Company s financial statements as the amendments and interpretations were consistent with policies already adopted by the Company. 8
Notes to the financial statements 2. Principal accounting policies (Continued) (b) Basis of preparation of the financial statements (Continued) Up to the date of issuance of these financial statements, the HKICPA has issued a number of amendments, new standards and interpretations which are not yet effective for the year ended 30 June 2012 and which have not been adopted in these financial statements. The Company has not early applied the following new and revised standards or interpretations that have been issued but are not yet effective: HKFRSs (Amendments) Improvements to HKFRSs issued in 2009-2011 1 Amendments to HKFRS 1 - First-time Adoption of Hong Kong Financial Reporting Standards Government Loans existing at Date of Transition to HKFRSs 1 Amendments to HKFRS 7 - Financial Instruments : Disclosures Disclosures Offsetting Financial Assets and Financial Liabilities 1 HKFRS 9 - Financial Instruments 4 HKFRS 10 - Consolidated Financial Statements 1 HKFRS 11 - Joint Arrangements 1 HKFRS 12 - Disclosure of Interests in Other Entities 1 HKFRS 13 - Fair Value Measurement 1 Amendments to HKAS 1 - Presentation of Financial Statements Presentation of Items of Other Comprehensive Income 3 Amendments to HKAS 12 - Income Taxes - Deferred Tax: Recovery of Underlying Assets 2 HKAS 19 (2011) Employee Benefits 1 HKAS 27 (2011) Separate Financial Statements 1 HKAS 28 (2011) Investments in Associates and Joint Ventures 1 HKAS 32 Financial Instruments Presentation - Offsetting Financial Assets and Financial Liabilities 5 HK(IFRIC) - Int 20 Stripping Costs in the Production Phase of a Surface Mine 1 1 Effective for annual periods beginning on or after 1 January 2013 2 Effective for annual periods beginning on or after 1 January 2012 3 Effective for annual periods beginning on or after 1 July 2012 4 Effective for annual periods beginning on or after 1 January 2015 5 Effective for annual periods beginning on or after 1 January 2014 The Company is in the process of making an assessment of what the impact of these amendments and new interpretations is expected to be in the period of initial application. It is concluded that the adoption of them is unlikely to have a significant impact on the Company s results of operations and financial position. (c) Revenue recognition Contributions are recognised when the donor makes a promise to give to the Company. 9
Notes to the financial statements 2. Principal accounting policies (Continued) (d) Employee benefits Salaries, paid annual leave, contributions to defined contribution retirement plans and the cost of non-monetary benefits are accrued in the year in which the associated services are rendered by employees. Where payment or settlement is deferred and the effect would be material, these amounts are stated at their present values. (e) Income tax The Company has been exempted from paying Hong Kong Profits Tax under Section 88 of the Inland Revenue Ordinance. (f) Impairment of assets Assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset s fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units). Where an impairment loss subsequently reverses, the carrying amount of the asset (cashgenerating unit) is increased to the revised estimate of its recoverable amount to the extent that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the assets (cash-generating unit) in prior periods. A reversal of an impairment loss is recognised immediately in the income and expenditure account. (g) Receivables Receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less provision for impairment. When the effect of discounting would be immaterial, the receivables are stated at cost. (h) Cash and cash equivalents Cash and cash equivalents are short-term, highly liquid investments that are readily convertible into known amounts of cash and which are subject to an insignificant risk of change in value. (i) Payables Payables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method unless the effect of discount would be immaterial in which case they are stated at cost. 10
Notes to the financial statements 2. Principal accounting policies (Continued) (j) Translation of foreign currencies (i) Functional and presentation currency Items included in the financial statements are measured using the currency of the primary economic environment in which the entity operates (the functional currency ). The financial statements are presented in United States Dollar, which is the Company s functional and presentation currency. (ii) Transactions and balances Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the income and expenditure account. (k) Related parties A person or a close member of that person s family is related to the Company if that person (i) has control or joint control over the Company; (ii) has significant influence over the Company; or (iii) is a member of the key management personnel of the Company or of a parent of the Company. An entity is related to the Company if (i) the entity and the Company are members of the same group of companies, (ii) the entity is an associate or joint venture of either the Company or a member of a group of which the Company is a member, (iii) the Company is an associate or joint venture of either the entity or a member of a group of which the entity is a member, (iv) the entity and the Company are joint ventures of the same third party, (v) the entity is a joint venture of a third entity and the Company is an associate of that third entity, (vi) the Company is a joint venture of a third entity and the entity is an associate of that third entity, (vii) the entity is a post-employment benefit plan for the benefit of employees of either the Company or an entity related to the Company, (viii) the entity is controlled or jointly controlled by a person related to the Company or a close member of that person s family, (ix) a person who has control or joint control over the Company has significant influence over the entity, or (x) a person who has control or joint control over the Company is a member of the key management personnel of the entity (or of a parent of the entity). Close members of the family of a person are those family members who may be expected to influence, or be influenced by, that person in their dealings with the entity. 11
Notes to the financial statements 3. Directors emoluments Year ended 30 June 2012 Period from 16 March 2011 (date of incorporation) to 30 June 2011 Directors emoluments - Fees - - - Other emoluments - - The Company considered the directors of the Company as the key management, accordingly there is no separate disclosure of key management compensation. 4. Staff costs Year ended 30 June 2012 Period from 16 March 2011 (date of incorporation) to 30 June 2011 Salaries 53,750 - Retirement plan contribution - defined contribution plan 1,637 - Staff welfare 1,799-57,186-5. Taxation The Company has been exempted from paying Hong Kong Profits Tax under Section 88 of the Inland Revenue Ordinance. 6. Amounts due to related companies Amounts due to related companies are unsecured, interest-free and repayable on demand. 12
Notes to the financial statements 7. Related party transactions During the year / period, the Company undertook the following material related party transactions:- Year ended 30 June 2012 Period from 16 March 2011 (date of incorporation) to 30 June 2011 Contributions from directors 50,082 40,000 The directors were of the opinion that the above transactions were entered into in the normal course of operation and at terms agreed between the Company and the directors. 8. Financial instruments The Company has exposure to credit, liquidity and fair value risks arise in the normal course of the Company s business. These risks are limited by the Company s financial management policies and practices described below: (a) Credit risk The Company s credit risk is primarily attributable to contributions receivable and bank balances. The Company takes action in reminding donors on outstanding but promised contributions to ensure collectability. The Company s bank balances were held by a financial institution located in Hong Kong, which management believes is of high credit rating. Accordingly the overall credit risk is considered limited. (b) Liquidity risk Management of the Company aims to maintain sufficient cash to meet its demand in daily operation. In the opinion of the directors, the Company has a solid financial position and the exposure to liquidity risk is minimal. (c) Fair value The carrying amounts of the Company s financial instruments approximate their fair values due to their short maturity. 13
Notes to the financial statements 9. Capital risk management The Company s objectives when managing capital are to safeguard the Company s ability to continue as a going concern in order to continue its charitable activities. As at 30 June 2012, the Company did not have any external borrowings. The Company has no specific capital management policy and is not subject to externally imposed capital requirements. 10. Approval of financial statements The financial statements were approved by the Board of Directors on. 14