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SUIWAH-AnnualReport2012 (1.9MB)
SUIWAH-AnnualReport2012 (1.9MB)
SUIWAH-AnnualReport2012 (1.9MB)
Notice Of Annual General Meeting Statement Accompanying The Notice Of Annual General Meeting Corporate Information Financial Highlights Directors' Profile Managing Director's Statement Statement On Corporate Social Responsibility Statement On Corporate Governance Statement On Internal Control Audit Committee Report Statement Of Directors' Responsibility Other Information Required By The Main Market Listing Requirements Of Bursa Malaysia Securities Berhad Directors' Report Statement By Directors Statutory Declaration Independent Auditors' Report Statements Of Comprehensive Income Statements Of Financial Position Statements Of Changes In Equity Statements Of Cash Flows Notes To The Financial Statements Supplementary Information List Of Properties Owned By The Group Analysis Of Shareholdings Proxy Form
2-8 9 10 11 12 - 14 15 - 16 17 - 18 19 - 23 24 25 - 27 28 29 - 30 31 - 34 35 35 36 37 38 39 - 40 41 - 42 43 - 94 95 96 97 - 98 Enclosed
ANNUAL REPORT 2012
Resolution 1
2.
Resolution 2
3.
Resolution 3
Datin Cheah Gaik Huang Dato Haji Mohd Suhaimi bin Abdullah Mr. Jen Shek Voon
b. c. 5.
To approve the payment of directors fees of Ringgit Malaysia Two Hundred Thirty Nine Thousand and Six Hundred (RM239,600) only for the year ended 31 May 2012. To re-appoint Messrs Ernst & Young as Auditors of the Company until the conclusion of the next Annual General Meeting and to authorise the Directors to fix their remuneration.
6.
Resolution 8
AS SPECIAL BUSINESS:7. To consider and if thought fit, to pass the following resolutions as Ordinary Resolutions:(i) ORDINARY RESOLUTION NO. 1: AUTHORITY TO ISSUE AND ALLOT SHARES PURSUANT TO SECTION 132D OF THE COMPANIES ACT, 1965 THAT subject to Section 132D of the Companies Act, 1965, the Articles of Association of the Company and subject to the approvals of the relevant governmental and/or regulatory authorities, the Directors be and are hereby empowered to issue and allot shares in the Company, at any time to such person or persons and upon such terms and conditions and for such purposes as the Directors may, in their absolute discretion, deem fit, provided that the aggregate number of shares issued pursuant to this resolution does not exceed ten per centum (10%) of the issued and paid-up share capital of the Company (excluding treasury shares) for the time being and the Directors be and are also empowered to obtain the approval for the listing of and quotation for the additional shares so issued on Bursa Malaysia Securities Berhad; AND THAT such authority shall commence immediately upon the passing of this resolution and continue to be in force until the conclusion of the next Annual General Meeting of the Company. Resolution 9
03
THAT approval be and is hereby given to the Companys subsidiaries to enter into and give effect to the recurrent related party transactions of a revenue or trading nature with Dato Hwang Thean Long, Datin Cheah Gaik Huang, Hwang Poh Choo, Hwang Siew Peng, Suiwah Holdings Sdn Bhd and Suiwah Supermarket Sendirian Berhad (hereinafter referred to as Related Parties) as specified in Section 2.3 under Part A of the Circular dated 31 October 2012, and falling within the ambit of Part E, Paragraph 10.09 of Chapter 10 of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad, which are necessary for the dayto-day operations and undertaken in the ordinary course of business of the Company, on terms not more favourable to Related Parties than those generally available to the public and not detrimental to minority shareholders of the Company; THAT such approval unless revoked or varied by the Company in general meeting shall continue to be in full force and effect until: (i) the conclusion of the next Annual General Meeting (AGM) of the Company following the general meeting at which this mandate was passed, at which time it will lapse, unless by a resolution passed at the general meeting whereby the authority is renewed; or the expiration of the period within which the next AGM of the Company after the date it is required to be held pursuant to Section 143(1) of the Companies Act, 1965 (the Act) (but shall not extend to such extension as may be allowed pursuant to Section 143(2) of the Act); or revoked or varied by resolution passed by the shareholders of the Company in a general meeting;
Resolution 10
(ii)
(iii)
whichever is the earlier; THAT the above mandate is subject to annual renewal and disclosure will be made in the annual report of the aggregate value of transactions conducted by the Group. AND THAT the Directors of the Company be authorised to complete and do all such acts and things (including executing all such documents as may be required) as they may consider expedient or necessary to give effect to the above mandate.
(i)
the conclusion of the next Annual General Meeting (AGM) of the Company following the general meeting at which this mandate was passed, at which time it will lapse, unless by a resolution passed at the general meeting whereby the authority is renewed; or the expiration of the period within which the next AGM of the Company after the date it is required to be held pursuant to Section 143(1) of the Companies Act, 1965 (the Act) (but must not extend to such extension as may be allowed pursuant to Section 143(2) of the Act); or revoked or varied by resolution passed by the shareholders of the Company in a general meeting;
(ii)
ANNUAL REPORT 2012
(iii)
whichever is the earlier; THAT the above mandate is subject to annual renewal and disclosure will be made in the annual report of the aggregate value of transactions conducted by the Group. AND THAT the Directors of the Company be authorised to complete and do all such acts and things (including executing all such documents as may be required) as they may consider expedient or necessary to give effect to the above mandate. (iv) ORDINARY RESOLUTION NO. 4: PROPOSED RENEWAL OF SHAREHOLDERS MANDATE FOR RECURRENT RELATED PARTY TRANSACTIONS OF A REVENUE OR TRADING NATURE INVOLVING A DIRECTOR OF A SUBSIDIARY, NAMELY LOOI TIK MIOW THAT approval be and is hereby given to the Companys subsidiaries to enter into and give effect to the recurrent related party transactions of a revenue or trading nature with a Director of a subsidiary, namely Looi Tik Miow (hereinafter referred to as Interested Director) as specified in Section 2.3 under Part A of the Circular dated 31 October 2012, and falling within the ambit of Part E, Paragraph 10.09 of Chapter 10 of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad, which are necessary for the day-to-day operations and undertaken in the ordinary course of business of the Company, on terms not more favourable to Interested Director than those generally available to the public and not detrimental to minority shareholders of the Company; THAT such approval unless revoked or varied by the Company in general meeting shall continue to be in full force and effect until: (i) the conclusion of the next Annual General Meeting (AGM) of the Company following the general meeting at which this mandate was passed, at which time it will lapse, unless by a resolution passed at the general meeting whereby the authority is renewed; or Resolution 12
05
(iii)
whichever is the earlier; THAT the above mandate is subject to annual renewal and disclosure will be made in the annual report of the aggregate value of transactions conducted by the Group. AND THAT the Directors of the Company be authorised to complete and do all such acts and things (including executing all such documents as may be required) as they may consider expedient or necessary to give effect to the above mandate. (v) ORDINARY RESOLUTION NO. 5: PROPOSED RENEWAL OF SHAREHOLDERS MANDATE FOR RECURRENT RELATED PARTY TRANSACTIONS OF A REVENUE OR TRADING NATURE INVOLVING A DIRECTOR OF A SUBSIDIARY, NAMELY LEONG KONG MENG THAT approval be and is hereby given to the Companys subsidiaries to enter into and give effect to the recurrent related party transactions of a revenue or trading nature with a Director of a subsidiary, namely Leong Kong Meng (hereinafter referred to as Interested Director) as specified in Section 2.3 under Part A of the Circular dated 31 October 2012, and falling within the ambit of Part E, Paragraph 10.09 of Chapter 10 of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad, which are necessary for the day-to-day operations and undertaken in the ordinary course of business of the Company, on terms not more favourable to Interested Director than those generally available to the public and not detrimental to minority shareholders of the Company; THAT such approval unless revoked or varied by the Company in general meeting shall continue to be in full force and effect until: (i) the conclusion of the next Annual General Meeting (AGM) of the Company following the general meeting at which this mandate was passed, at which time it will lapse, unless by a resolution passed at the general meeting whereby the authority is renewed; or the expiration of the period within which the next AGM of the Company after the date it is required to be held pursuant to Section 143(1) of the Companies Act, 1965 (the Act) (but must not extend to such extension as may be allowed pursuant to Section 143(2) of the Act); or revoked or varied by resolution passed by the shareholders of the Company in a general meeting; Resolution 13
(ii)
(iii)
whichever is the earlier; THAT the above mandate is subject to annual renewal and disclosure will be made in the annual report of the aggregate value of transactions conducted by the Group. AND THAT the Directors of the Company be authorised to complete and do all such acts and things (including executing all such documents as may be required) as they may consider expedient or necessary to give effect to the above mandate.
Resolution 14
(a)
the conclusion of the next Annual General Meeting (AGM) of the Company following the forthcoming AGM, at which time the authority will lapse unless renewed by ordinary resolution passed at the general meeting, the authority is renewed, either unconditionally or subject to conditions; or the expiration of the period within which the next AGM of the Company after the date it is required by law to be held; or revoked or varied by ordinary resolution passed by the shareholders of the Company in a general meeting,
(b)
(c)
whichever occurs first; but not so as to prejudice the completion of purchase(s) by the Company of the SCB Shares before the aforesaid expiry date and, made in any event, in accordance with the provisions of the guidelines issued by Bursa Securities and any prevailing laws, rules, regulations, orders, guidelines and requirements issued by any relevant authorities; and (iv) upon completion of the purchase(s) of the SCB Shares by the Company, authority be and is hereby given to the Directors of the Company to decide at their absolute discretion to either to cancel the SCB Shares so purchased and/or to retain the SCB Shares so purchased as treasury shares which maybe distributed as shares dividends to shareholders and if retained as treasury shares, may resell the treasury shares on Bursa Securities and/or subsequently cancelled, or to retain part of the SCB Shares so purchased as treasury shares and cancel the remainder in the manner as prescribed by the Act, rules, regulations and orders made pursuant to the Act and the requirements of the Bursa Securities and any other relevant authority for the time being in force; AND THAT authority be and is hereby unconditionally and generally given to the Directors of the Company to take all such steps as are necessary or expedient to implement, finalise, complete or to effect the Proposed Share Buy-back with full powers to assent to any conditions, modifications, resolutions, variations and/or amendments (if any) as may be imposed by the relevant authorities and to do all such acts and things as the said Directors may deem fit and expedient in the best interest of the Company to give effect to and to complete the purchase of the SCB Shares.
07
(b)
By Order of the Board, THUM SOOK FUN (MIA 24701) Company Secretary Dated: 31 October 2012 Penang
(i)
Resolution No. 9 - Authority to issue and allot shares pursuant to Section 132D of the Companies Act, 1965 The Resolution No. 9, if passed, will give powers to the Directors of the Company to issue and allot ordinary shares in the capital of the Company up to an aggregate amount of not exceeding 10% of the issued share capital of the Company (excluding treasury shares) for the time being. This is a renewal of a general mandate which will provide flexibility to the Company for any possible fund raising activities, including but not limited to further placing of shares, for funding future investments and the purpose of increasing the capacity of current business operations for long term growth and to cater for additional working capital requirement. The Company did not utilise the mandate granted in the preceding years Annual General Meeting. This authority, unless revoked or varied at a general meeting, will expire at the next Annual General Meeting of the Company.
(ii)
Resolutions Nos. 10 to 13 - Proposed renewal of shareholders mandate for the recurrent related party transactions of a revenue or trading nature (Proposed RRPT Mandate) The proposed adoption of Resolution Nos. 10 to 13, if passed, will enable the Company and/or its subsidiaries to carry out the recurrent related party transactions of a revenue or trading nature.
(iii)
Resolution No. 14 - Proposed Share Buy-back The proposed adoption of Resolution No. 14, if passed, will empower the Directors to buy-back and/or hold up to a maximum of 10% of the Companys issued and paid-up share capital at any point of time, by utilising the funds allocated which shall not exceed the total retained profits and/or share premium account of the Company. This authority, unless revoked or varied by the Company in a general meeting, will expire at the conclusion of the next Annual General Meeting of the Company, or the expiration of period within which the next Annual General Meeting is required by law to be held, whichever is earlier. Further information on Resolutions No. 10 - 14 on the Proposed RRPT Mandate and Proposed Share Buy-back is set out in Circular/Statement to Shareholders dated 31 October 2012, which is despatched together with the Companys Annual Report 2012.
3.
4. 5.
6.
SUIWAH CORPORATION BHD (253837-H) STATEMENT ACCOMPANYING THE NOTICE OF ANNUAL GENERAL MEETING
(Pursuant to Paragraph 8.27(2) of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad)
09
As at date of this notice, there are no individuals who are standing for election as Directors (excluding the above Directors who are standing for re-election/re-appointment) at this forthcoming Annual General Meeting.
COMPANY SECRETARY THUM SOOK FUN (MIA 24701) REGISTERED OFFICE No. 1-20-1 SUNTECH @ Penang Cybercity, Lintang Mayang Pasir 3, 11950 Bayan Baru, Penang, Malaysia. Tel. No. : +604-6437387 Fax No. : +604-6437389 Web Page: http://www.suiwah.com.my SHARE REGISTRAR SECURITIES SERVICES (HOLDINGS) SDN BHD Suite 18.05, MWE Plaza, No. 8, Lebuh Farquhar, 10200 Penang, Malaysia. Tel. No. : +604-2631966 Fax No. : +604-2628544 AUDITORS ERNST & YOUNG (AF0039) Chartered Accountants 21st Floor, MWE Plaza, No. 8, Lebuh Farquhar, 10200 Penang, Malaysia. ADVOCATES & SOLICITORS GHAZI & LIM NG SEE KEE & LEONG WONG-CHOOI & MOHD. NOR PRINCIPAL BANKERS OCBC BANK (MALAYSIA) BERHAD MALAYAN BANKING BERHAD STOCK EXCHANGE LISTING Main Market of Bursa Malaysia Securities Berhad Stock Code : 9865 Stock Name : SUIWAH
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Revenue
RM'000 430,000 420,000 410,000 422,263 400,000 390,000 380,000 370,000 360,000 2010 2011 Year 2012 413,591 RM'000 20,000 18,000 16,000 14,000 12,000 10,000 6,000 381,010 4,000 2,000 0 8,000
18,973
11,626
12,622
2010
2011 Year
2012
Paid-up Capital
RM'000 70,000 60,000 50,000 40,000 61,000 61,000 61,000 30,000 20,000 10,000 0 2010 2011 Year 2012 RM'000 120,000 118,000 116,000 114,000
Reserves
2011 Year
116,199
2012
117,882
112,000
DATIN CHEAH GAIK HUANG - Executive Director Aged 59, Malaysian Datin Cheah Gaik Huang was appointed to the Board on 14 March 1997. She is also the Chairman of the Employees Share Option Scheme Committee of the Company. She has more than 31 years of working experience in the supermarket retailing business and also acting as director of the subsidiary companies namely Aljano Sdn Bhd, Magirex Sdn Bhd, Sunshine Electrical Superstore Sdn. Bhd, Sunshine Supermarket & Departmental Store Sdn Bhd and Sunshine Wholesale Mart Sdn Bhd. She does not hold any directorship in other public companies. She is the spouse of Dato Hwang Thean Long, the Managing Director and a major shareholder of the Company. Therefore, she is deemed to have an interest in shares of the Company through Suiwah Holdings Sdn Bhd (SHSB) and Suiwah Supermarket Sendirian Berhad (SSSB) by virtue of her husbands shareholdings held through SHSB and SSSB. She is also the mother of Ms. Hwang Siew Peng, who is an Executive Director of the Company. Datin Cheah Gaik Huang attended all the five (5) Board Meetings held during the financial year ended 31 May 2012.
MS. HWANG SIEW PENG - Executive Director Aged 38, Malaysian Ms. Hwang Siew Peng was appointed to the Board on 26 December 2001. She is presently a member of the Employees Share Option Scheme Committee of the Company. She also sits on the Board of Directors of several subsidiary companies of the Company and other private companies. She holds a Bachelor of Commerce Degree (Marketing and Management) from Curtin University of Technology, Western Australia. She worked as store operational assistant before joining Suiwah group of companies as Business Development Executive in the year 2000. She does not hold any directorship in other public companies. She is the daughter to Dato Hwang Thean Long and Datin Cheah Gaik Huang, who are the Executive Directors and major shareholders of the Company. Therefore, she is deemed to have interest in shares of the Company by virtue of the shareholdings of her parents. Ms. Hwang Siew Peng attended all the five (5) Board Meetings held during the financial year ended 31 May 2012.
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DATO AHMAD HASSAN BIN OSMAN - Independent Non-Executive Director Aged 74, Malaysian Dato Ahmad Hassan Bin Osman was appointed to the Board on 18 December 1995 and on 16 September 2004, his position has been redesignated from Non-Independent Non-Executive Director to Independent Non-Executive Director. He is presently the Chairman of the Nomination and Remuneration Committee respectively and also a member of Audit Committee in the Company. He is also a director of the subsidiary company, namely Crimson Omega Sdn Bhd. He graduated from the University of Malaya, Kuala Lumpur in 1962 and subsequently obtained a Masters Degree in Economics from the University of Wisconsin, Madison in 1978. He has vast experience in the public service, spanning a period of over 30 years. His last post with the Government was as the Secretary-General of the Ministry of Housing and Local Government, Malaysia. Upon retirement, he was appointed as an Executive Director of the Islamic Development Bank based in Jeddah, Saudi Arabia from 1994 to 1997. His current directorship in other public company includes Kimble Corporation Bhd. He is also a Director of Dijaya Corporation Bhds subsidiary. Dato Ahmad Hassan Bin Osman attended four (4) of the five (5) Board Meetings held during the financial year ended 31 May 2012.
MR. JEN SHEK VOON - Independent Non-Executive Director Aged 65, Singaporean Mr. Jen Shek Voon was appointed to the Board on 1 July 2004. He is also a member of the Audit Committee of the Company. He sits on the Board of Directors of a number of publicly listed companies on the stock exchanges of Singapore, Malaysia and Hong Kong SAR. He does not hold any directorship in other public companies in Malaysia. He is a fellow member of the Singapore Institute of Directors.
ANNUAL REPORT 2012
He holds Master of Bachelor of Accounting (Hons) from University of Singapore and obtained a post-graduate Commerce Hons degree from the University of New South Wales. He is a fellow of the Institute of Chartered Accountants in Australia, Association of Chartered Certified Accountants in United Kingdom and the Taxation Institute of Australia. He also is a practicing member of the Institute of Certified Public Accountants, Singapore (ICPAS) and a member of Information System Audit and Control Association, British Computer Society, Institute of Internal Auditors and the Malaysian Institute of Accountants. He currently manages his own public accounting practice, Jen Shek Voon PAS, as a sole proprietor. Mr. Jen is a Public Accountant Singapore, licensed by the Singapore Accounting and Corporate Regulatory Authority (ACRA). Mr. Jen Shek Voon attended all the five (5) Board Meetings held during the financial year ended 31 May 2012.
DATUK HAJI RADZALI BIN HASSAN - Non-Independent Non-Executive Director Aged 55, Malaysian Datuk Haji Radzali Bin Hassan is a Pioneering Environmental Entrepreneur, was appointed to the Board on 16 September 2004. Born in 1957 in Perak, Datuk Radzali completed his Masters in Business Administration and holds an Advance Diploma in International Business Studies. Datuk Radzali was conferred the Kestaria Setia DiRaja Award by DYMM Paduka Baginda Yang DiPertuan Agong in 1997. Datuk Radzali the Chairman/Group Managing Director of Harta Maintenance Sdn Bhd and Harta Group of Companies since April 1980, is also an acting director of the subsidiary companies namely Qdos Holdings Bhd and Qdos Flexcircuits Sdn Bhd. Datuk does not hold any directorship in other public companies. Datuk Radzali is a major shareholder of the Company by virtue of Datuks interests held through Hozone Sdn Bhd. Datuk is also a Director and shareholder of Hozone Sdn Bhd. Datuk Haji Radzali Bin Hassan attended four (4) of the five (5) Board Meetings held during the financial year ended 31 May 2012.
Save for the family relationship as disclosed above, none of the above Directors have any family relationship with other Directors and/or major shareholders of the Company. None of the above Directors have any conflict of interest with the Company or any conviction for any offences other than traffic offences within the past ten (10) years.
15
(3)
PROSPECTS The ongoing global economy continues to exhibit significant volatility and uncertainty. However, the Group believes that its business will continue to grow despite the economy and expect the impact on Asian economic growth to be less severe. We remain cautious about the strength of global economic growth in the year ahead. Nevertheless, the Group will continue to formulate plans and measures to respond to all challenges and changing consumer demands. CORPORATE GOVERNANCE The Groups commitment to corporate governance is outlined in the Statement of Corporate Governance and other related reports found in the relevant sections of this Annual Report. The Board of Directors of the Company has also ensured that the decision making process is impartial. Independence is assured in key appointments as well as maintaining proper standards of conduct at all times. APPRECIATION On behalf of the Group and the Board of Directors, I would like to thank all our shareholders, customers, bankers, suppliers, business associates and regulatory authorities for their invaluable and continuing support to the Group. We would also like to extend our gratitude and appreciation to the management team and all the employees of the Group for their diligent services, commitment, loyalty to the Group and their efforts in moving the Group forward through a very challenging year. I would also like to extend my personal thanks to my fellow Directors for their constant dedication as the Group attributed its success to the leadership of its Board of Directors and it also owes much to the dedication of its employees and the support of its loyal customers and trust given by all our shareholders. Moving forward, the Group commits to better serve and give back to the community, particularly Penangites by going global. Thank you. DATO HWANG THEAN LONG Managing Director Date : 3 October 2012
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The Board The Board has been entrusted with the overall responsibility for the overall governance, strategic direction and overseeing the investments of the Group. The Board retains full and effective control of the Group and assumes responsibility for determining the Groups strategies and direction, shareholders and investors relationship, approval of annual and quarterly financial results, acquisition and disposal, major capital expenditure as well as reviewing the adequacy and integrity of the Groups system of internal controls. Board Balance The Board comprises of three (3) Executive Directors, one (1) NonIndependent Non-Executive Director and four (4) Independent and Non-Executive Directors, all of whom bring to the Group a broad and valuable range of experience. Currently, the Chairman of the Board Meeting is appointed amongst the Directors at each Board meeting. There was a strong independent element on the Board as 50% of its Board members comprises of Independent and Non-Executive Directors. The presence of Independent and Non-Executive Directors in the Board provides objectivity and they are of the caliber necessary to carry sufficient weight in Board decisions. The role of the Independent and Non-Executive Directors is particularly important in ensuring that the strategies proposed by the management are fully discussed and examined, and takes into account the long-term interests, not only of the shareholders, but also of employees, customers, suppliers, and the many communities in which the Group conducts business. The Board meets regularly at least four (4) times a year. At the end of every quarter, the Groups financial statements and results are tabled and deliberated by the Board. During the Board Meeting, the Board reviews the operation and performance of the Group and any other strategic issues that may affect the Groups business. Board Meetings During the financial year ended 31 May 2012, the Board held five (5) meetings and the details of each Directors attendance are as follows: Name of Directors Executive Directors Dato Hwang Thean Long Datin Cheah Gaik Huang Ms. Hwang Siew Peng Independent and Non-Executive Directors Dato Haji Mohd Suhaimi Bin Abdullah Dato Ahmad Hassan Bin Osman Mr. Wong Thai Sun Mr. Jen Shek Voon Non-Independent and Non-Executive Director Datuk Haji Radzali Bin Hassan 4 80 5 4 5 5 100 80 100 100 5 5 5 100 100 100 Total Meetings Attended % of Attendance
ANNUAL REPORT 2012
(b)
Directors over seventy (70) years of age are required to submit themselves for re-appointment annually in accordance with Section 129(6) of the Companies Act, 1965.
ANNUAL REPORT 2012
Directors Training All Directors have attended the Mandatory Accreditation Programme (MAP) as required by Bursa Malaysia Securities Berhad (Bursa Securities) on all directors of listed companies. The Directors are also encouraged to attend the relevant training courses deemed necessary so as to keep abreast with the changes on guidelines issued by the relevant authorities as well as the latest developments in the market place, which can complement their services to the Group. The Directors are also updated by the Company Secretary on any changes to legal and governance requirements of the Group. The Directors will continue to undergo other relevant training programmes from time to time to enhance their skills and knowledge where relevant. The training programmes attended by the individual Directors during the financial year ended 31 May 2012 are as follows : Title of the seminars, workshops or courses attended Dato Haji Mohd Suhaimi Bin Abdullah The International Conference on Global Movement of Moderates Dato Ahmand Hassan Bin Osman Advocacy sessions on Disclosure for CEOs and CFOs Mr. Wong Thai Sun Seminar Percukaian Kebangsaan 2011 2012 Tax Update Merger and Affiliation Seminar 2012 Datuk Haji Radzali Bin Hassan Harvard Business School - 4th Senior Management Development Program Team Building - Effective Communication and Networking Mode of Training Conference Seminar Seminar Seminar Seminar Class-Room Lecture Class-Room Lecture and Activity Conference Forum Class-Room Conference Class-Room Class-Room No. of hours / days spent 3 days day 8 hours 8 hours 8 hours 8 days 36 hours
Mr. Jen Shek Voon Public Accountants Conference 2011 ICPAS-ICAEW EC Green Paper on Audit Policy Forum Financial Statements: Presentation and Disclosures Asia Investors Corporate Governance Accounting for Financial Instruments under SFRS 32, 39 and SFRS 107 SFRS Update for the Reporting Season 2012
21
The Audit Committees terms of reference include the review of the Groups quarterly and financial year end results, review of any audit findings raised by external auditors and internal auditors and managements response thereon. At each Audit Committee Meeting held to review the Groups quarterly financial results, agendas will also include internal audit findings of operating units of the Group and investigations carried out by internal audit. The Audit Committee Report for the financial year is set out on pages 25 to 27 of the Annual Report. (ii) Nomination and Remuneration Committee The Nomination and Remuneration Committee comprises three (3) members of the Board, all of whom are Independent and Non-Executive Directors. The members of the said committees are as follows: (1) Dato Ahmad Hassan Bin Osman (2) Dato Haji Mohd Suhaimi Bin Abdullah (3) Mr. Wong Thai Sun Chairman (Independent Non-Executive Director) Member (Independent Non-Executive Director) Member (Independent Non-Executive Director)
ANNUAL REPORT 2012
The Board has delegated to the Nomination Committee the responsibility for considering the appointment of Directors, identifying and selecting potential new Directors and proposing to the Board, the appointment of new Directors although ultimate responsibility for appointment rests with the Board. The Nomination Committee met once during the financial year ended 31 May 2012 to review the re-election/re-appointment of the retiring directors. The Remuneration Committees primary responsibilities are to recommend to the Board the remuneration policies and packages and the terms of employment on each Executive Director. The determination of fees payable to NonExecutive Director will be a matter for the Board as a whole and a director shall not participate in the decision on their own remuneration packages. The Remuneration Committee met once during the financial year 31 May 2012 to review the remuneration of the Executive Directors before recommending the same to the Board for approval. The Board was of the view that the performance appraisal and assessment on the Board is not applicable to the Group as all the Board are already subject to the retirement by rotation at least once in every three (3) years but eligible for re-election by the shareholders at the AGM of the Company. The assessment of Boards performance shall be dependent on the shareholders review before they decide to vote for or against the re-election of the retiring Directors at the AGM. (iii) Employees Share Option Scheme (ESOS) Committee The ESOS Committee was established on 29 April 2002 to administer the ESOS of the Group which has been in force for a period of ten (10) years commencing from 24 April 2002 has expired on 23 April 2012. During the financial year ended 31 May 2012, no option was granted to any employee of the Group. As at 23 April 2012, a total of 42,300 option shares were exercised.
(b)
(c)
The number of Directors whose remuneration falls into each successive band of RM50,000 is as follows: Number of Directors Executive Directors 2 1 3 Non-Executive Directors 5 5
Range of Remuneration Below RM50,000 RM50,001- RM100,000 RM100,001- RM150,000 RM300,001- RM350,000 Above RM350,000 Total (C) SHAREHOLDERS Communication with Shareholders and Investors
The Board acknowledges the need for shareholders to be informed of all material business and developments concerning the Group. In additional to various announcements made during the year, the Board had ensured timely release of financial results on a quarterly basis to provide shareholders with an overview of the Groups performance and operations. The AGM is the principal forum for communicating with shareholders. Shareholders who are unable to attend are allowed to appoint proxy, who need not be the shareholders, to attend and vote on their behalf. Board members are present to answer questions raised by shareholders. Shareholders are given the opportunity to ask questions during the questions and answers session prior to each resolution being proposed to consideration by shareholders. The Companys website at http://www.suiwah.com.my also provides an easy and convenient avenue for shareholders and investors to gain access to more information on the Group such as its history, corporate information, corporate governance matters as well as the products and or goods offered by the Group.
23
Financial Reporting The Board acknowledges their responsibility to ensure that the financial statements of the Company and the Group are prepared in accordance with the provisions of the Companies Act, 1965 and approved accounting standards in Malaysia so as to give a true and fair view of the state of affairs and the result of the Company and of the Group. Internal Control The Board acknowledges its overall responsibility for ensuring that a sound system on internal control is maintained throughout the Group and the need to review its effectiveness regularly. The Groups Statement of Internal Control is set out in page 24 of the Annual Report. Relationship with External Auditors A transparent and appropriate relationship with the external auditors to enable them to independently report to shareholders in accordance with statutory and professional requirement is established through the Audit Committee. The role of the Audit Committee members and their relationship with the external auditors may be found in the Audit Committee Report on pages 25 to 27 of the Annual Report. The Audit Committee also met with the External Auditors twice during the financial year 2011 without the presence of management and Executive Directors in compliance with the best practices of the Code. Internal Audit The Group has established Internal Audit Department, which assists the Audit Committee in the discharge of its duties and responsibilities. Its role is to provide independent and objective reports on the organisations management, records, accounting policies and controls to the Board. The internal audits activities may be found in the Audit Committee Report as set out in page 27 of the Annual Report and total costs incurred by the Group for maintaining the Internal Audit function for financial year 2012 is RM133,949.80. Such audits also ensure instituted controls are appropriate, effectively applied and achieve acceptable risk exposures consistent with the Groups risk management policy. The Internal Audit Department reports directly to the Audit Committee and its findings and recommendations are communicated to the Audit Committee. STATEMENT OF COMPLIANCE WITH THE BEST PRACTICE OF THE CODE Save for the exceptions set out above, the Group will continuously review the principles and best practices of the Code in achieving high standard of corporate governance throughout the Group and to the highest level of integrity and ethical standards in all its business dealings. This statement is made in accordance with the resolution of the Board dated 25 September 2012.
A defined organisational structure with clear lines of delegation of responsibilities to the management of the Group and operating units including proper authorisation levels for significant aspects of the operations. There is annual budgeting and target setting processes including forecast for each area of business with detailed reviews at all levels of operations. Operational Management Meetings are held on a monthly basis to review the business performance and to compare the results against the financial budgets and to take appropriate actions and also to chart new directions/strategies if necessary. Adequate financial and operational information are provided to the Board at each Board Meeting comprising financial performance reporting and key business indicators. In-house training and development programmes corresponding to the needs of employees. Regular visits to business operating units by the Senior Management and Executives Directors. Staff Handbook which provides consistency and uniformity in the administrative of the Groups manpower resources is available for reference. All documents made are communicated promptly to staff of all levels within the Group and vice versa where feedbacks and suggestions on improvements could be communicated to the Management and the Board. Adherence to health, safety, environmental and quality standard of the Group as enforced by the regulatory authorities.
(2)
(3)
(4)
(9)
The Boards Commitment The Board, through the Audit Committee, which with the assistance of the Group internal auditor, continuously review the adequacy, effectiveness and integrity of the system of internal controls, and the Board continues to take measures to strengthen and improve the internal control environment of the Group. This statement is made in accordance with the resolution of the Board dated 25 September 2012.
25
Objectives To assist the Board in discharging its statutory duties and responsibilities relating to accounting and financial reporting practices of the Company and its subsidiaries. In addition, the Audit Committee shall: (i) (ii) (iii) (iv) evaluate the quality of the audits performed by the internal and external auditors; provide assurance that the financial information presented by management is relevant, reliable and timely; oversee compliance with laws and regulations and observance of a proper code of conduct; and determine the quality, adequacy and effectiveness of the Groups control environment and quality of the audits.
Membership
ANNUAL REPORT 2012
The Audit Committee shall be appointed by the Board from amongst its directors which fulfils the following requirements: (i) (ii) (iii) the Audit Committee must be composed of no fewer than three (3) members; all the Audit Committee members must be non-executive directors, with a majority of members must be independent directors. No alternate director is to be appointed as a member of the Audit Committee. at least one (1) member of the Audit Committee: (a) (b) must be a member of the Malaysian Institute of Accountants (MIA); or if he is not a member of the MIA, he must have at least three (3) years working experience and:i he must have passed the examinations specified in Part I of the 1st Schedule of the Accountants Act, 1967; or ii he must be a member of one of the associations of accountants specified in Part II of the 1st Schedule of the Accountants Act, 1967; or fulfils such other requirements as prescribed or approved by Bursa Securities.
(c)
The definition of independent directors shall have the meaning given in Chapter 1.01 of the Listing Requirements.
The Chairman of the Audit Committee shall be appointed among the members of the Audit Committee who shall be an independent director. In the absence of the Audit Committee Chairman and/or an appointed deputy, the remaining Audit Committee members present shall elect one of themselves to chair the Audit Committee meeting. Mr. Wong Thai Sun is a member of the MIA and the Certified Public Accountants, Australia. Mr. Jen Shek Voon is a practicing member of the Institute of Certified Public Accountants, Singapore and a member of Information System Audit and Control Association, British Computer Society, a member of Institute of Internal Auditors and MIA. Meetings (1) (2) The Audit Committee shall meet at least four (4) times a year, with due notice of issues to be discussed, and shall record its conclusions in discharging its duties and responsibilities and at such times as and when necessary. A quorum for the Audit Committee meeting shall consist of a majority of independent non-executive directors and shall not be less than two (2). For the purpose of this provision, any Audit Committee member who is able (directly or by telephone communication) to speak and be heard by each of the other Audit Committee members present, shall be deemed to be present in person at such meeting and shall be entitled to vote or be counted in quorum accordingly. Upon the request of the external auditors, the Chairman of the Audit Committee shall convene a meeting of the Audit Committee to consider any matter the external auditors believe should be brought to the attention of the directors or shareholders. Notice of Audit Committee meetings shall be given to all the Audit Committee members unless the Audit Committee waives such requirement.
(3)
(4)
(6) (7)
During the financial year ended 31 May 2012, five (5) Audit Committee meetings were held. Details of attendance of each Audit Committee member were as follows:Name of Directors Dato Haji Mohd. Suhaimi Bin Abdullah Dato Ahmad Hassan Bin Osman Mr. Wong Thai Sun Mr. Jen Shek Voon Authority The Audit Committee shall whenever necessary and reasonable for performance of its duties in accordance with a procedure to be determined by the Board and at the expense of the Company, (1) (2)
ANNUAL REPORT 2012
(3) (4)
have explicit authority to investigate any matter within its terms of reference. have full and unlimited/unrestricted access to all information and documents/resources which are required to perform its duties. All employees shall be directed to co-operate as requested by members of the Audit Committee. obtain independent professional or other advice and to invite outsiders with relevant experience to attend the meeting, if necessary. have direct communication channels with the external auditors and person(s) carrying out the internal audit function or activity.
Where the Audit Committee is of the view that the matter reported by it to the Board has not been satisfactorily resolved resulting in a breach of the Listing Requirements, the Audit Committee shall promptly report such matter to Bursa Securities. Duties and Responsibilities The duties and responsibilities of the Audit Committee are as follows: (1) (2) (3) (4) To consider the appointment of the external auditors, the audit fee and any question of resignation or dismissal from the external auditors. To discuss with the external auditors the nature and scope of the audit before the audit commences, ensure co-ordination where more than one audit firm is involved. To review with the external auditors, their evaluation of the system of internal controls and their audit report. To review the Companys quarterly/financial report and annual financial statements before submission to the Board, focusing particularly on: (a) any changes to the accounting policies and practices; (b) significant adjustments resulting from the audit; (c) the going concern assumption; and (d) compliance with accounting standards and other legal requirements. To review any related party transactions and conflict of interest situation that may arise within the Company or the Group, including any transaction, procedure or course of conduct that raises questions of management integrity. To discuss problems and reservations arising from the interim and final audits, and any matter the auditors may wish to discuss (in the absence of management, where necessary). To review the external auditors management letter and managements response. To do the following, in relation to the internal audit function: (a) review the adequacy of the scope, functions, competency and resources of the internal audit function, and that it has the necessary authority to carry out its work; (b) review the internal audit programme and results of the internal audit process and, where necessary, ensure that appropriate actions are taken on the recommendations of the internal audit function; (c) review any appraisal or assessment of the performance of members of the internal audit function; (d) approve any appointment or termination of senior staff members of the internal audit function; and (e) take cognizance of resignations of internal audit staff members and provide the resigning staff member an opportunity to submit his reasons for resigning.
27
Internal Audit Function The Internal Audit function of the Group is assumed by the Internal Audit Department to assist the Audit Committee in discharging its duties and responsibilities. The role of the internal audit function is to provide the Audit Committee with independent assessment for adequate, efficient and effective internal control system to ensure compliance with policies and procedures. The internal audit function is also involved in risk assessment, risk evaluation and recommendation of control activities to manage such identified risk. The attainment of such objectives involves the following activities being carried out by the Department: (1) (2) (3) (4) (5) (6) (7) (8) (9) Reviewing and appraising the soundness, adequacy and application of accounting, financial and other controls and promoting effective control in the Company and the Group at reasonable cost. Ascertaining the extent to whom the Groups and the Companys assets are accounted for and safeguarded from losses of all kinds. Attending stock counts of merchandise. Appraising the reliability and usefulness of information developed within the Group and the Company for management reporting purposes. Carrying out audit work and to liaise with the external auditors to maximize the use of resources and for effective coverage of audit risks. Recommending improvement to the existing systems of controls. Carrying out investigations and special reviews requested by management and/or the Audit Committee of the Company. Continuously identifying opportunity for improvement in the operations of business processes of the Company and the Group. Discussed with management action taken to improve the system of internal control.
Statement Verifying Allocation of Options During the year, the Group did not allocate or offer any share options to employees pursuant to Company's share option scheme which expired on 23 April 2012. This statement is made in accordance with the resolution of the Board dated 25 September 2012.
The Board is required to prepare audited financial statements which give a true and fair view of the state of affairs of the Group and the Company at the end of each financial year and of their results and their cash flows for that year then ended. In preparing the financial statements for the year ended 31 May 2012, the Board considers that: all applicable approved accounting standards in Malaysia have been followed; the Group and the Company have used appropriate accounting policies and have consistently applied them; reasonable and prudent judgments and estimates were made; and the financial statements were prepared on the going concern basis as the Board has a reasonable expectation, having made enquiries, that the Group and the Company have adequate resources to continue in operational existence for the foreseeable future.
The Board is responsible for ensuring that the Group and the Company maintain accounting records which disclose with reasonable accuracy the financial position of the Group and the Company, and which enable them to ensure that the financial statements comply with the Companies Act, 1965. The Board has general responsibilities for taking such steps that are reasonably available to them to safeguard the assets of the Group, and to prevent and detect fraud and other irregularities. This statement is made in accordance with the resolution of the Board dated 25 September 2012.
OTHER INFORMATION
29
Utilisation of Proceeds No proceeds were raised by the Company from any corporate exercise during the financial year and no new shares being issued by the Company during the financial year based on the general mandate granted by the shareholders pursuant to Section 132D of the Companies Act, 1965 at the last Annual General Meeting of the Company. Share Buy-back During the financial year ended 31 May 2012, the details of its ordinary shares of RM1.00 each (SCB Shares) bought back during the year are as follows: Buy Back Price Per SCB Share (RM) Lowest Highest 1.44 1.45 1.46 1.46 No. of SCB Shares Bought Back & retained as Treasury Shares 315,300 2,700 318,000
Note: * exclude transaction charges. All shares purchased by the Company were retained as treasury shares and no shares were resold or cancelled during the financial year. As at 31 May 2012, a total of 3,646,100 SCB Shares were held as treasury shares in accordance with Section 67A of the Companies Act, 1965. Options or Convertible Securities Exercised
ANNUAL REPORT 2012
Apart from the options pursuant to the Employees Shares Option Scheme as disclosed in the Directors Report, there was no issue or exercise of options or convertible securities during the financial year. As the Company has no plan to renew or extend the ESOS, the ESOS has lapsed on 23 April 2012. Depository Receipt Programme The Company did not sponsor any Depository Receipt programme during the financial year. Sanctions and Penalties There were no sanctions or penalties imposed on the Company and its subsidiaries, directors or management by the relevant regulatory bodies during the financial year. Non-Audit Fees The amount of non-audit fees paid to the external auditors by the Group for the financial year 2012 amounted to RM21,000. Variation in Results There were no material variations between the audited results and announced unaudited results of the Group for the year ended 31 May 2012. Profit Guarantee The Company did not provide any profit guarantee to any parties during the financial year. Material Contracts There were no material contracts entered into by the Company and its subsidiaries involving Directors and major shareholders interest during the financial year.
Recurrent Related Party Transactions of a Revenue or a Trading Nature The summary of the Recurrent Related Party Transactions which have been entered by the Group based on the mandate as obtained at the Eighteenth Annual General Meeting held on 30 November 2011 are as follows:No. 1 Nature of Transaction Rental of premises which is located at Sunshine Square (Level 2, 3 & 4), 1, Jalan Mahsuri measuring approximately 9,635 square metres by Suiwah Holdings Sdn Bhd (SHSB) to Sunshine Wholesale Mart Sdn Bhd (SWMSB) for a monthly rental and service charges of RM161,943 Purchase of direct materials such as polyester and pressure sensitive adhesive by Qdos Flexcircuits Sdn Bhd (QFSB) from Zephyr (Penang) Sdn Bhd (ZSB) Purchase of label sticker by SWMSB from ZSB Rental of premises which is located at 608 M&N, Jalan Paya Terubong, Ayer Itam, Penang measuring approximately 4,500 square feet by Dato Hwang Thean Long to SSDS for a monthly rental of RM4,000 Interested Related Parties SHSB SSSB Dato Hwang Thean Long Datin Cheah Gaik Huang Hwang Siew Peng Looi Tik Miow Transaction Value (RM) 1,295,544
151,107
3 4
Looi Tik Miow SHSB SSSB Dato Hwang Thean Long Datin Cheah Gaik Huang Hwang Siew Peng SHSB SSSB Dato Hwang Thean Long Datin Cheah Gaik Huang Hwang Siew Peng Leong Kong Meng Hwang Siew Peng Leong Kong Meng Hwang Siew Peng Leong Kong Meng Hwang Siew Peng HSB Datuk Haji Radzali Bin Hassan SHSB SSSB Dato Hwang Thean Long Datin Cheah Gaik Huang Hwang Siew Peng Leong Kong Meng SHSB SSSB Dato Hwang Thean Long Datin Cheah Gaik Huang Hwang Siew Peng Leong Kong Meng SHSB SSSB Dato Hwang Thean Long Datin Cheah Gaik Huang Hwang Siew Peng
32,000
5
ANNUAL REPORT 2012
Rental of premises which is located at 88 Lintang Mayang Pasir 1, Mk 12, 11950 Bayan Baru, Penang measuring approximately 139.79 square metres by Meridian Chance Sdn Bhd (MCSB) to SWMSB for a monthly rental of RM2,000 Provide laundry services for cleaning clean room clothing to QFSB by Mylaco Sdn Bhd (MSB) Sales of merchandise from SWMSB to MSB
16,000
7 8
1,518
Sales of merchandise from Crimson Omega Sdn Bhd to MSB Purchase of Dycem Cleanzone for floor coverings and mat solutions by QFSB from Sinar Bekal (M) Sdn Bhd (SBSB) Provide Surface Mounted Technology (SMT) and other subcontract services related to flexible printed circuits boards to QFSB by Nanometric Electronics Sdn Bhd (NESB)
10
986,350
11
2,878
12
Rental of 80 car park bays located at Level 3 Sunshine Square Complex, Lintang Mayang Pasir 1, Mk 12, 11950 Bayan Baru, Penang by SHSB to SWMSB for a monthly rental of RM4,000.
20,060
31
Profit for the year Attributable to: Equity holders of the Company Non controlling interests
1,146,929 1,146,929
There were no material transfers to or from reserves or provisions during the financial year other than as disclosed in the financial statements. In the opinion of the directors, the results of the operations of the Group and of the Company during the financial year were not substantially affected by any item, transaction or event of a material and unusual nature. Dividend The amount of dividend paid by the Company since 31 May 2011 was as follows: In respect of the financial year ended 31 May 2011 as reported in the directors report of that year: First and final dividend of 8% less 25% taxation, approved on 30 November 2011 and paid on 15 December 2011 RM
3,441,411
At the forthcoming Annual General Meeting, a first and final dividend in respect of the current financial year ended 31 May 2012, of 8% less 25% taxation on 57,353,148 ordinary shares (the number of outstanding ordinary shares in issue of the Company as at 31 May 2012 after the set off with 1,000 ordinary shares bought back by the Company and held as treasury shares subsequent to year end) amounting to RM3,441,189 (6 sen net per share) will be proposed for shareholders approval. The financial statements for the current financial year do not reflect this proposed dividend. Such dividends when approved by the shareholders will be accounted for in equity as an appropriation of retained earnings in the financial year ending 31 May 2013. Directors The names of the directors of the Company in office since the date of the last report and at the date of this report are: Dato Hwang Thean Long Dato Haji Mohd Suhaimi bin Abdullah * Dato Ahmad Hassan bin Osman * Datin Cheah Gaik Huang Hwang Siew Peng Wong Thai Sun * Jen Shek Voon ^ Datuk Haji Radzali bin Hassan * ^ Being members of Audit, Remuneration and Nomination Committees Being member of Audit Committee
The Company Direct interest Dato Hwang Thean Long Dato Haji Mohd Suhaimi bin Abdullah Datin Cheah Gaik Huang
ANNUAL REPORT 2012
Indirect interest Dato Hwang Thean Long * Hwang Siew Peng ** Datuk Haji Radzali bin Hassan *** Indirect interest Interest of Spouse/Children of the Directors ^ Dato Hwang Thean Long Datin Cheah Gaik Huang
26,400 15,404,486
26,400 15,404,486
Options outstanding as at 1 June 2011 Dato Hwang Thean Long Datin Cheah Gaik Huang Hwang Siew Peng 88,300 88,300 61,800
Granted -
Exercised -
By virtue of his interests in shares of Suiwah Holdings Sdn. Bhd. and Suiwah Supermarket Sendirian Berhad, both companies incorporated in Malaysia, Dato Hwang Thean Long is deemed to have an interest in the shares of the Company and all its subsidiaries to the extent both these companies have interests. By virtue of the interests of her parents, Dato Hwang Thean Long and Datin Cheah Gaik Huang, Hwang Siew Peng is deemed to have an interest in the shares of the Company and all its subsidiaries to the extent her parents have interests. By virtue of his interests in shares of Hozone Sdn. Bhd. (Hozone), a company incorporated in Malaysia, Datuk Haji Radzali bin Hassan is deemed to have an interest in the shares of the Company, and all its subsidiaries to the extent Hozone has an interest. Disclosure pursuant to Section 134 (12) (c) of the Companies Act, 1965
** ***
None of the other directors in office at the end of the financial year had any interest in shares in the Company or its related corporations and share options of the Company during the financial year.
33
(ii)
(b)
At the date of this report, the directors are not aware of any circumstances which would render: (i) the amount written off for bad debts and the amount of the provision for doubtful debts in the financial statements of the Group inadequate to any substantial extent nor are they aware of any circumstances which would render it necessary to write off any bad debts or the amount of the provision for doubtful debts in the financial statements of the Company inadequate to any substantial extent; and the values attributed to the current assets in the financial statements of the Group and of the Company misleading.
(ii)
(c)
At the date of this report, the directors are not aware of any circumstances which have arisen which would render adherence to the existing method of valuation of assets or liabilities of the Group and of the Company misleading or inappropriate. At the date of this report, the directors are not aware of any circumstances not otherwise dealt with in this report or financial statements of the Group and of the Company which would render any amount stated in the financial statements misleading. As at the date of this report, there does not exist: (i) any charge on the assets of the Group and of the Company which have arisen since the end of the financial year which secures the liabilities of any other person; or any contingent liability of the Group and of the Company which have arisen since the end of the financial year.
(d)
(e)
(ii) (f)
In the opinion of the directors: (i) no contingent or other liability has become enforceable or is likely to become enforceable within the period of twelve months after the end of the financial year which will or may affect the ability of the Group or of the Company to meet their obligations when they fall due; and no item, transaction or event of a material and unusual nature has arisen in the interval between the end of the financial year and the date of this report which is likely to affect substantially the results of the operations of the Group or of the Company for the financial year in which this report is made.
(ii)
Auditors The auditors, Ernst & Young, have expressed their willingness to continue in office. Signed on behalf of the Board in accordance with a resolution of the directors dated 25 September 2012.
STATEMENT BY DIRECTORS
35
We, Dato Hwang Thean Long and Wong Thai Sun, being two of the directors of Suiwah Corporation Bhd., do hereby state that, in the opinion of the directors, the accompanying financial statements set out on pages 37 to 94 are drawn up in accordance with Financial Reporting Standards and the Companies Act, 1965 in Malaysia so as to give a true and fair view of the financial position of the Group and of the Company as at 31 May 2012 and of their financial performance and cash flows for the year then ended. The information set out in Note 45 to the financial statements on page 95 have been prepared in accordance with the Guidance on Special Matter No.1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants.
Signed on behalf of the Board in accordance with a resolution of the directors dated 25 September 2012.
STATUTORY DECLARATION
I, Dato Hwang Thean Long, being the director primarily responsible for the financial management of Suiwah Corporation Bhd., do solemnly and sincerely declare that the accompanying financial statements set out on pages 37 to 95 are in my opinion correct, and I make this solemn declaration conscientiously believing the same to be true and by virtue of the provisions of the Statutory Declarations Act, 1960. Subscribed and solemnly declared by the abovenamed Dato Hwang Thean Long at Georgetown in the state of Penang on 25 September 2012.
Before me,
CHEAH BENG SUN DJN, AMN, PKT, PJK, PJM, PK No: P. 103 Commissioner for Oaths
Opinion In our opinion, the financial statements have been properly drawn up in accordance with Financial Reporting Standards and the Companies Act, 1965 in Malaysia so as to give a true and fair view of the financial position of the Group and of the Company as at 31 May 2012 and of their financial performance and cash flows for the year then ended. Report on other legal and regulatory requirements In accordance with the requirements of the Companies Act 1965 in Malaysia, we also report the following: (a) In our opinion, the accounting and other records and the registers required by the Act to be kept by the Company and its subsidiaries of which we have acted as auditors have been properly kept in accordance with the provisions of the Act. (b) We have considered the financial statements and the auditors reports of all the subsidiaries of which we have not acted as auditors, which are indicated in Note18 to the financial statements, being financial statements that have been included in the consolidated financial statements. (c) We are satisfied that the financial statements of the subsidiaries that have been consolidated with the financial statements of the Company are in form and content appropriate and proper for the purposes of the preparation of the consolidated financial statements and we have received satisfactory information and explanations required by us for those purposes. (d) The auditors reports on the financial statements of the subsidiaries were not subject to any qualification and did not include any comment required to be made under Section 174(3) of the Act. Other matters The supplementary information set out in Note 45 on page 95 is disclosed to meet the requirement of Bursa Malaysia Securities Berhad. The directors are responsible for the preparation of the supplementary information in accordance with Guidance on Special Matter No. 1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants ("MIA Guidance") and the directive of Bursa Malaysia Securities Berhad. In our opinion, the supplementary information is prepared, in all material respects, in accordance with the MIA Guidance and the directive of Bursa Malaysia Securities Berhad. This report is made solely to the members of the Company, as a body, in accordance with Section 174 of the Companies Act 1965 in Malaysia and for no other purpose. We do not assume responsibility to any other person for the content of this report.
Ernst & Young Oo Boon Beng AF: 0039 No. 1939/12/12(J) Chartered Accountants Chartered Accountant Penang, Malaysia Date: 25 September 2012
37
Note Revenue 4 Other operating income 5 Changes in inventories of merchandise, finished goods and work-in-progress Raw materials and consumable goods used Inventories purchased Property development costs 15(b) Employee benefits expense 6 Inventories written down/off Reversal of inventories written down Amortisation of: - land use rights 16 Commission Depreciation of: - property, plant and equipment 13 - investment property 14 Impairment loss on investment in subsidiaries Promotional expenses Property, plant and equipment written off Operating leases: - minimum lease payments for land and buildings - payments for equipment and machinery Subcontract charges Upkeep and maintenance Utilities Other operating expenses 8 Operating profit Finance costs 9 Share of loss of associates Profit before tax Income tax expense 10 Net profit for the year, representing total comprehensive income for the year Attributable to: Equity holders of the Company Non-controlling interests
Group 2012 RM 381,010,045 2,172,255 (7,472) (38,573,549) (260,980,686) (23,439,274) (207,470) (215,266) (1,326,120) (10,413,424) (4,352,545) (74,473) (4,342,809) (115,750) (7,002,164) (5,006,645) (9,633,589) (4,586,241) 12,904,823 (241,571) (40,797) 12,622,455 (5,076,098) 7,546,357
2011 RM
Company 2012 RM 6,696,684 67,290 (192,600) (1,183) (473,171) (1,123) (3,389,074) 2,706,823 2,706,823 (1,559,894) 1,146,929
2011 RM
422,263,249 1,648,568 (2,029,816) (39,630,844) (285,810,838) (4,535,715) (22,821,224) (493,880) 50,284 (394,654) (1,368,977) (10,490,180) (309,332) (2,375,745) (66,823) (3,914,848) (42,700) (8,088,250) (4,180,509) (9,443,296) (8,641,476) 19,322,994 (350,471) 18,972,523 (5,665,759) 13,306,764
6,696,684 40,130 (191,600) (1,343) (473,171) (162,951) (1,760) (467,839) 5,438,150 5,438,150 (1,534,843) 3,903,307
1,146,929 1,146,929
3,903,307 3,903,307
Earnings per share attributable to equity holders of the Company (sen) Basic, for profit for the year Diluted, for profit for the year
11(a) 11(b)
13.17 13.17
22.41 22.41
The accompanying accounting policies and explanatory notes form an integral part of the financial statements.
Assets Property, plant and equipment Investment property Land held for property development Land use rights Prepaid land lease payments Investments in subsidiaries Investments in associates Investments securities Goodwill on consolidation Current assets Property development costs Inventories Trade and other receivables Other current assets Tax recoverable Loan receivables Short term investments Cash and bank balances
ANNUAL REPORT 2012
Note
Group 2012 RM
2011 RM
Company 2012 RM
2011 RM
13 14 15(a) 16 17 18 19 20 21
96,926,092 7,665,612 471,675 12,456,899 3,123 4,665,045 122,188,446 16,267,936 34,062,297 28,458,463 4,771,053 711,885 16,516 3,841,946 31,143,760 119,273,856 241,462,302
15(b) 22 23 24 25 26 27
Total assets Equity and liabilities Equity attributable to equity holders of the Company Share capital Treasury shares Share premium Other reserves Retained earnings Non-controlling interests Total equity Non-current liabilities Government grant Borrowings Deferred tax 31 32 33 28 28 28 29 30
Current liabilities Provision for liabilities Government grant Borrowings Trade and other payables Deferred revenue Tax payable Total liabilities Total equity and liabilities 34 31 32 35 36 270,285 50,000 2,512,730 55,899,102 1,277,852 468,590 60,478,559 66,896,117 241,462,302 284,453 50,000 2,210,331 56,541,909 1,153,089 1,698,270 61,938,052 68,771,685 241,497,752 3,137,967 92,000 3,229,967 3,229,967 100,155,086 8,018,837 107,502 8,126,339 8,126,339 107,808,594
The accompanying accounting policies and explanatory notes form an integral part of the financial statements.
Attributable to equity holders of the Company Noncontrolling Total RM RM RM interests equity Total Share capital RM RM RM RM RM shares premium reserves earnings Non-distributable Treasury Share Distributable Other Retained
Group
At 1 June 2010 61,000,248 61,000,248 61,000,248 (4,854,244) 13,934,711 816,151 (44,229) 101,448,571 (3,460,449) 12,926,739 (611,938) 38,565 12,926,739 (3,460,449) (44,229) 172,345,437 (38,565) (573,373) 38,565 (573,373) (573,373) (4,810,015) 13,934,711 1,428,089 91,943,716 163,496,749 (983,613) (983,613) (4,810,015) 13,934,711 1,428,089 92,927,329 164,480,362 15,101 15,101 380,025 (14,646) 150 380,630 164,495,463 (983,613) 163,511,850 (573,373) (573,373) 13,306,764 (3,460,449) (14,646) 150 (44,229) 172,726,067
As previously stated
As restated
At 31 May 2011
101,448,571
172,345,437
380,630
172,726,067
At 31 May 2012
39
Non-distributable Share capital RM Company At 1 June 2010 Total comprehensive income for the year Dividend (Note 12) Purchase of treasury shares At 31 May 2011 At 1 June 2011 Total comprehensive income for the year Dividend (Note 12) Purchase of treasury shares Transfer in/(out) upon expiration of ESOS At 31 May 2012 61,000,248 61,000,248 61,000,248 61,000,248 (4,810,015) (44,229) (4,854,244) (4,854,244) (462,654) (5,316,898) 13,934,711 13,934,711 13,934,711 13,934,711 863,790 863,790 863,790 (863,790) Treasury shares RM Share premium RM Other reserves RM
99,283,626 3,903,307 (3,460,449) (44,229) 99,682,255 99,682,255 1,146,929 (3,441,411) (462,654) 96,925,119
The accompanying accounting policies and explanatory notes form an integral part of the financial statements.
41
Group 2012 Note Operating activities Profit before tax Adjustments for: - Amortisation of: - government grant - land use rights Bad debts written off Depreciation of: - property, plant and equipment - investment property Negative goodwill on consolidation recognised Gross dividends from subsidiaries Interest expense Interest income Inventories written down/off Impairment loss on investment in subsidiaries Gain on disposal of property plant and equipment Property, plant and equipment written off (Reversal)/Provision for liquidated damages Allowance for impairment of doubtful debts Reversal of inventories written down Unrealised foreign exchange (gains)/losses Share of loss of associates Operating cash flows before changes in working capital carried forward (Increase)/Decrease in property development costs Decrease/(Increase) in receivables Decrease/(Increase) in other current assets Decrease/(Increase) in inventories (Decrease)/Increase in payables Increase/(Decrease) in deferred revenue Cash generated from operations Interest paid Interest received Tax paid Net cash from operating activities 8 8 8 5 13 14 8 4 9 5 10,413,424 241,571 (877,373) 207,470 (13,600) 74,473 (1,168) 157,729 (1,179,320) 40,797 21,906,191 (2,913,949) 10,041,690 2,222,774 141,965 (731,531) 124,764 30,791,904 (241,571) 877,373 (5,926,533) 25,501,173 10,490,180 309,332 (14,637) 350,471 (574,258) 493,880 (10,999) 66,823 41,608 (50,284) 130,739 31,185,435 9,741,934 (2,118,930) (3,632,508) (5,781,590) (389,816) (121,339) 28,883,186 (350,471) 574,258 (2,901,806) 26,205,167 5 16 8 (50,000) 215,266 54,467 (52,084) 394,654 637,487 12,622,455 18,972,523 RM
2,706,823
5,438,150
1,183 473,171 (4,800,000) (66,790) 2,910,160 1,224,547 44,611 1,269,158 66,790 (375,396) 960,552
1,343 473,171 (4,800,000) (40,130) 162,951 1,235,485 4,518 (27,503) 1,212,500 40,130 (345,328) 907,302
ANNUAL REPORT 2012
Group 2012 Note Investing activities Decrease in deposits pledged to banks Proceeds from disposal of property, plant and equipment Net dividends received Investment in an associate Acquisition of non-controlling interests in a subsidiary Shares issued by a newly incorporated subsidiary to: - the Company - non-controlling interests Additional shares issued by a subsidiary to non-controlling interests Purchase of property, plant and equipment Government grant received Net cash (used in)/from investing activities Financing activities Repayment of term loan Dividend paid Purchase of treasury shares Decrease/(Increase) in amounts due from subsidiaries (Decrease)/Increase in amounts due to subsidiaries Net changes in bankers acceptance Net cash (used in)/from financing activities Net increase/(decrease) in cash and cash equivalents Effects of exchange rate changes Cash and cash equivalents as at 1 June Cash and cash equivalents as at 31 May 27 12 28(a) (874,902) (3,441,411) (462,654) 261,110 (4,517,857) 436,437 139,127 34,029,302 34,604,866 (836,907) (3,460,449) (44,229) (2,015,860) (6,357,445) 13,768,723 (482,366) 20,742,945 34,029,302 13 31 629,192 (14,956,529) (20,546,879) 150 (4,072,029) 200,000 (6,078,999) 166,665 13,600 (6,399,807) 6,438,355 18,100 (8,663,566) (9) RM 2011 RM
3,600,000
The accompanying accounting policies and explanatory notes form an integral part of the financial statements.
43
1.
Corporate information The Company is a public limited liability company, incorporated and domiciled in Malaysia and is listed on the Main Market of Bursa Malaysia Securities Berhad. The registered office of the Company is located at No. 1-20-1 SUNTECH @ Penang Cybercity, Lintang Mayang Pasir 3, 11950 Bayan Baru, Penang. The principal activities of the Company are investment holding, provision of management services and letting of property. The principal activities of the subsidiaries and associates are described in Notes 18 and 19. There have been no significant changes in the nature of the principal activities during the financial year other than a subsidiary which has commenced property development activity during the year. The financial statements were authorised for issue by the Board of Directors in accordance with a resolution of the directors on 25 September 2012.
2. 2.1
Summary of significant accounting policies Basis of preparation The financial statements of the Group and of the Company have been prepared in accordance with Financial Reporting Standards (FRS) and the Companies Act, 1965 in Malaysia. At the beginning of the current financial year, the Group and the Company adopted new and revised FRSs which are mandatory for the financial periods beginning on or after 1 July 2010 and 1 January 2011 as described fully in Note 2.2. The financial statements of the Group and of the Company have also been prepared on a historical cost basis, unless otherwise stated in the accounting policies below. The financial statements are presented in Ringgit Malaysia (RM).
ANNUAL REPORT 2012
2.2
Changes in accounting policies The accounting policies adopted are consistent with those of the previous financial year except as follows: On 1 June 2011, the Group and the Company adopted the following new and amended FRSs, IC Interpretations and Technical Releases mandatory for annual financial periods beginning on or after 1 July 2010 and 1 January 2011: Effective for annual periods beginning on or after 1 July 2010 1 July 2010 1 July 2010 1 July 2010 1 July 2010 1 July 2010 1 July 2010 1 July 2010 1 July 2010 1 July 2010 1 January 2011 1 January 2011 1 January 2011 1 January 2011 1 January 2011 1 January 2011 1 January 2011 1 January 2011 1 January 2011
Description FRS 1: First-time Adoption of Financial Reporting Standards FRS 3: Business Combinations (Revised) Amendment to FRS 2: Share-based Payment Amendment to FRS 5: Non-current Assets Held for Sale and Discontinued Operations Amendment to FRS 127: Consolidated and Separate Financial Statements Amendment to FRS 138: Intangible Assets Amendment to IC Interpretation 9: Reassessment of Embedded Derivatives IC Interpretation 12: Service Concession Arrangements IC Interpretation 16: Hedges of a Net Investment in a Foreign Operation IC Interpretation 17: Distributions of Non-cash Assets to Owners Amendment to FRS 1: Limited Exemption from Comparative FRS 7 Disclosures for First-time Adopters Amendment to FRS 1: Additional Exemptions for First time Adopters Amendment to FRS 2: Group Cash-settled Share-based Payment Transactions Amendment to FRS 7: Improving Disclosures about Financial Instruments Improvements to FRSs issued in 2010 IC Interpretation 4: Determining whether an Arrangement contains a Lease IC Interpretation 18: Transfers of Assets from Customers Technical Release 3: Guidance on Disclosures of Transition to IFRSs Technical Release i-4: Shariah Compliant Sale Contracts
2. 2.2
Summary of significant accounting policies (contd.) Changes in accounting policies (contd.) Adoption of the above standards and interpretations did not have any significant effect on the financial performance and position of the Group and of the Company except for those discussed below: Revised FRS 3 Business Combinations and Amendments to FRS 127 Consolidated and Separate Financial Statements The revised standards are effective for annual periods beginning on or after 1 July 2010. The revised FRS 3 introduces a number of changes in accounting for business combinations occurring after 1 July 2010. These changes impact the amount of goodwill recognised, the reported results in the period that an acquisition occurs, and future reported results. The revised FRS 3 continues to apply the acquisition method to business combinations but with some significant changes. All payments to purchase a business are recorded at fair value at the acquisition date, with contingent payments classified as debt subsequently remeasured through the statement of comprehensive income. There is a choice on an acquisition-by-acquisition basis to measure the non-controlling interest in the acquiree either at fair value or at the non-controlling interests proportionate share of the acquirees net assets. All acquisition-related costs are expensed. The amendments to FRS 127 require that a change in the ownership interest of a subsidiary (without loss of control) is accounted for as an equity transaction. Therefore, such transactions will no longer give rise to goodwill, nor will they give rise to a gain or loss. Furthermore, the amended standard changes the accounting for losses incurred by the subsidiary as well as the loss of control of a subsidiary.
The changes by Revised FRS 3 and Amendments to FRS 127 will be applied prospectively and only affect future acquisition or loss of control of subsidiaries and transactions with non-controlling interests. Amendments to FRS 7: Improving Disclosures about Financial Instruments The amended standard requires enhanced disclosure about fair value measurement and liquidity risk. Fair value measurements related to items recorded at fair value are to be disclosed by source of inputs using a three level fair value hierarchy (Level 1, Level 2 and Level 3), by class, for all financial instruments recognised at fair value. A reconciliation between the beginning and ending balance for Level 3 fair value measurements is required. Any significant transfers between levels of the fair value hierarchy and the reasons for those transfers need to be disclosed. The amendments also clarify the requirements for liquidity risk disclosures with respect to derivative transactions and assets used for liquidity management. The fair value measurement disclosures are presented in Note 40. The liquidity risk disclosures are not significantly impacted by the amendments and are presented in Note 41(c). 2.3 Malaysian Financial Reporting Standards On 19 November 2011, the Malaysian Accounting Standards Board (MASB) issued a new MASB approved accounting framework, the Malaysian Financial Reporting Standards (MFRS Framework). The MFRS Framework is to be applied by all Entities Other Than Private Entities for annual periods beginning on or after 1 January 2012, with the exception of entities that are within the scope of MFRS 141 Agriculture (MFRS 141) and IC Interpretation 15 Agreements for Construction of Real Estate (IC 15), including its parent, significant investor and venturer. The Group will be required to prepare financial statements using the MFRS Framework in its first MFRS financial statements for the year ending 31 May 2013. In presenting its first MFRS financial statements, the Group will be required to restate the comparative financial statements to amounts reflecting the application of MFRS Framework. The majority of the adjustments required on transition will be made, retrospectively, against opening retained profits. The Group has not completed its assessment of the financial effects of the differences between Financial Reporting Standards and accounting standards under the MFRS Framework. Accordingly, the financial performance and financial position as disclosed in these financial statements for the year ended 31 May 2012 could be different if prepared under the MFRS Framework. The Group considers that it is achieving its scheduled milestones and expects to be in a position to fully comply with the requirements of the MFRS Framework for the financial year ending 31 May 2013.
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2. 2.4
Summary of significant accounting policies (contd.) Basis of consolidation The consolidated financial statements comprise the financial statements of the Company and its subsidiaries as at the reporting date. The financial statements of the subsidiaries used in the preparation of the consolidated financial statements are prepared for the same reporting date as the Company. Consistent accounting policies are applied to like transactions and events in similar circumstances. All intra-group balances, income and expenses and unrealised gains and losses resulting from intra-group transactions are eliminated in full. Acquisitions of subsidiaries are accounted for by applying the purchase method. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. Adjustments to those fair values relating to previously held interests are treated as a revaluation and recognised in other comprehensive income. The cost of a business combination is measured as the aggregate of the fair values, at the date of exchange, of the assets given, liabilities incurred or assumed, and equity instruments issued, plus any costs directly attributable to the business combination. Any excess of the cost of business combination over the Groups share in the net fair value of the acquired subsidiarys identifiable assets, liabilities and contingent liabilities is recorded as goodwill on the statements of financial position. The accounting policy for goodwill is set out in Note 2.8. Any excess of the Groups share in the net fair value of the acquired subsidiarys identifiable assets, liabilities and contingent liabilities over the cost of business combination is recognised as income in profit or loss on the date of acquisition. When the Group acquires a business, embedded derivatives separated from the host contract by the acquiree are reassessed on acquisition unless the business combination results in a change in the terms of the contract that significantly modifies the cash flows that would otherwise be required under the contract. Subsidiaries are consolidated from the date of acquisition, being the date on which the Group obtains control, and continue to be consolidated until the date that such control ceases.
ANNUAL REPORT 2012
2.5
Transactions with non-controlling interests Non-controlling interests represent the portion of profit or loss and net assets in subsidiaries not held directly or indirectly by the Group. Non-controlling interests are presented separately in the statements of comprehensive income of the Group and within equity in the statements of financial position of the Group, separately from parent shareholders equity. All total comprehensive income is proportionately allocated to non-controlling interests, even this results in the noncontrolling interests having a deficit balance. A change in the ownership interest of a subsidiary (without loss of control), is accounted for as transaction with owners in their capacity as owners.
2.6
Subsidiaries Subsidiaries are entities over which the Group has the power to govern the financial and operating policies so as to obtain benefits from its activities. In the Companys separate financial statements, investments in subsidiaries are accounted for at cost less impairment losses.
2.7
Associates Associates are entities, not being a subsidiary or a joint venture, in which the Group has significant influence. An associate is equity accounted for from the date the Group obtains significant influence until the date the Group ceases to have significant influence over the associate. The Groups investments in associates are accounted for using the equity method. Under the equity method, the investment in associates is measured in the statements of financial position at cost plus post-acquisition changes in the Groups share of net assets of the associates. Goodwill relating to associates is included in the carrying amount of the investment. Any excess of the Groups share of the net fair value of the associates identifiable assets, liabilities and contingent liabilities over the cost of the investment is excluded from the carrying amount of the investment and is instead included as income in the determination of the Groups share of the associates profit or loss for the period in which the investment is acquired.
2. 2.7
Summary of significant accounting policies (contd.) Associates (contd.) When the Groups share of losses in an associate equals or exceeds its interest in the associate, the Group does not recognise further losses, unless it has incurred obligations or made payments on behalf of the associate. After application of the equity method, the Group determines whether it is necessary to recognise an additional impairment loss on the Groups investment in its associates. The Group determines at each reporting date whether there is any objective evidence that the investment in the associate is impaired. If this is the case, the Group calculates the amount of impairment as the difference between the recoverable amount of the associate and its carrying value and recognises the amount in profit or loss. The financial statements of the associates are prepared as of the same reporting date as the Company. Where necessary, adjustments are made to bring the accounting policies in line with those of the Group. In the Companys separate financial statements, investments in associates are stated at cost less impairment losses. On disposal of such investments, the difference between net disposal proceeds and their carrying amounts is included in profit or loss.
2.8
Intangible assets Goodwill Goodwill is initially measured at cost. Following initial recognition, goodwill is measured at cost less accumulated impairment losses. For the purpose of impairment testing, goodwill acquired is allocated, from the acquisition date, to each of the Groups cash-generating units that are expected to benefit from the synergies of the combination. The cash-generating unit to which goodwill has been allocated is tested for impairment annually and whenever there is an indication that the cash-generating unit may be impaired, by comparing the carrying amount of the cash-generating unit, including the allocated goodwill, with the recoverable amount of the cash-generating unit. Where the recoverable amount of the cash-generating unit is less than the carrying amount, an impairment loss is recognised in the profit or loss. Impairment losses recognised for goodwill are not reversed in subsequent periods. Where goodwill forms part of a cash-generating unit and part of the operation within that cash-generating unit is disposed of, the goodwill associated with the operation disposed of is included in the carrying amount of the operation when determining the gain or loss on disposal of the operation. Goodwill disposed of in this circumstance is measured based on the relative fair values of the operations disposed of and the portion of the cash-generating unit retained. Goodwill and fair value adjustments arising on the acquisition of foreign operation on or after 1 January 2006 are treated as assets and liabilities of the foreign operations and are recorded in the functional currency of the foreign operations and translated in accordance with the accounting policy set out in Note 2.24. Goodwill and fair value adjustments which arose on acquisitions of foreign operation before 1 January 2006 are deemed to be assets and liabilities of the Company and are recorded in RM at the rates prevailing at the date of acquisition.
2.9
Property, plant and equipment and depreciation All items of property, plant and equipment are initially recorded at cost. The cost of an item of property, plant and equipment is recognised as an asset if, and only if, it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. Subsequent to recognition, property, plant and equipment are measured at cost less accumulated depreciation and accumulated impairment losses. When significant parts of property, plant and equipment are required to be replaced in intervals, the Group recognises such parts as individual assets with specific useful lives and depreciation, respectively. Likewise, when a major inspection is performed, its cost is recognised in the carrying amount of the plant and equipment as a replacement if the recognition criteria are satisfied. All other repair and maintenance costs are recognised in profit or loss as incurred. Leasehold land and buildings are measured at fair value less accumulated depreciation on buildings and impairment losses recognised after the date of the revaluation. Valuations are performed with sufficient regularity to ensure that the carrying amount does not differ materially from the fair value of the leasehold land and buildings at the reporting date.
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2. 2.9
Summary of significant accounting policies (contd.) Property, plant and equipment and depreciation (contd.) Short-term leasehold land Long-term leasehold apartment Buildings Plant and machinery Office equipment, renovation, furniture and fittings Computers Motor vehicles 5% - 6% 1.27% 2% - 18% 10% - 20% 10% - 20% 20% - 33.3% 10% - 20%
Capital work-in-progress are not depreciated as these assets are not yet available for use. The carrying values of property, plant and equipment are reviewed for impairment when events or changes in circumstances indicate that the carrying value may not be recoverable. The residual value, useful life and depreciation method are reviewed at each financial year-end, and adjusted prospectively, if appropriate. An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss on derecognition of the asset is included in profit or loss in the year the asset is derecognised. 2.10 Investment properties
ANNUAL REPORT 2012
Investment properties are measured at cost model which is to measure investment properties at cost less accumulated depreciation and accumulated impairment losses. Depreciation is computed on a straight-line basis over the estimated useful lives of the assets as follows: Leasehold land Buildings 1% 1% - 2%
A property interest under an operating lease is classified and accounted for as an investment property on a propertyby-property basis when the Group holds it to earn rentals or for capital appreciation or both. Any such property interest under an operating lease classified as an investment property is carried at fair value. Investment properties are derecognised when either they have been disposed of or when the investment property is permanently withdrawn from use and no future economic benefit is expected from its disposal. Any gain or loss on the retirement or disposal of an investment property is recognised in profit or loss in the year of retirement or disposal. Transfers are made to or from investment property only when there is a change in use. During the year, the investment property of the Group has been transferred to property, plant and equipment and property development cost as set out in Note 13,14 & 15 and is accounted for in accordance with the accounting policy set out in Note 2.9 and 2.11 (ii) respectively.
2. 2.11
Summary of significant accounting policies (contd.) Land held for property development and property development costs i. Land held for property development Land held for property development consists of land where no development activities have been carried out or where development activities are not expected to be completed within the normal operating cycle. Such land is classified within non-current assets and is stated at cost less any accumulated impairment losses. Land held for property development is reclassified as property development costs at the point when development activities have commenced and where it can be demonstrated that the development activities can be completed within the normal operating cycle. ii. Property development costs Property development costs comprise all costs that are directly attributable to development activities or that can be allocated on a reasonable basis to such activities. One of its subsidiaries, commenced its development activities during the financial year. As a results, a portion of its investment property recognised in prior year, has been transferred to property development cost during the year. The summary of the comparative figures are presented in Note 14 and 15(b). When the financial outcome of a development activity can be reliably estimated, property development revenue and expenses are recognised in profit or loss by using the stage of completion method. The stage of completion is determined by the proportion that property development costs incurred for work performed to date bear to the estimated total property development costs. Where the financial outcome of a development activity cannot be reliably estimated, property development revenue is recognised only to the extent of property development costs incurred that is probable will be recoverable, and property development costs on properties sold are recognised as an expense in the period in which they are incurred. Any expected loss on a development project, including costs to be incurred over the defects liability period, is recognised as an expense immediately. Property development costs not recognised as an expense are recognised as an asset, which is measured at the lower of cost and net realisable value. The excess of revenue recognised in profit or loss over billings to purchasers is classified as accrued billings within other current assets and the excess of billings to purchasers over revenue recognised in profit or loss is classified as progress billings within trade payables.
2.12
Impairment of non-financial assets The Group assesses at each reporting date whether there is an indication that an asset may be impaired. If any such indication exists, or when an annual impairment assessment for an asset is required, the Group makes an estimate of the assets recoverable amount. An assets recoverable amount is the higher of an assets fair value less costs to sell and its value in use. For the purpose of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units (CGU)). In assessing value in use, the estimated future cash flows expected to be generated by the asset are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. Where the carrying amount of an asset exceeds its recoverable amount, the asset is written down to its recoverable amount. Impairment losses recognised in respect of a CGU or groups of CGUs are allocated first to reduce the carrying amount of any goodwill allocated to those units or groups of units and then, to reduce the carrying amount of the other assets in the unit or groups of units on a pro-rata basis. Impairment losses are recognised in profit or loss except for assets that are previously revalued where the revaluation was taken to other comprehensive income. In this case the impairment is also recognised in other comprehensive income up to the amount of any previous revaluation.
49
2. 2.12
Summary of significant accounting policies (contd.) Impairment of non-financial assets (contd.) An assessment is made at each reporting date as to whether there is any indication that previously recognised impairment losses may no longer exist or may have decreased. A previously recognised impairment loss is reversed only if there has been a change in the estimates used to determine the assets recoverable amount since the last impairment loss was recognised. If that is the case, the carrying amount of the asset is increased to its recoverable amount. That increase cannot exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised previously. Such reversal is recognised in profit or loss unless the asset is measured at revalued amount, in which case the reversal is treated as a revaluation increase. Impairment loss on goodwill is not reversed in a subsequent period.
2.13
Financial assets Financial assets are recognised in the statements of financial position when, and only when, the Group and the Company become a party to the contractual provisions of the financial instrument. When financial assets are recognised initially, they are measured at fair value, plus, in the case of financial assets not at fair value through profit or loss, directly attributable transaction costs. The Group and the Company determine the classification of their financial assets at initial recognition, and the categories include financial assets at fair value through profit or loss, loans and receivables, held-to-maturity investments and available-for-sale financial assets. (a) Financial assets at fair value through profit or loss
ANNUAL REPORT 2012
Financial assets are classified as financial assets at fair value through profit or loss if they are held for trading or are designated as such upon initial recognition. Financial assets held for trading are derivatives (including separated embedded derivatives) or financial assets acquired principally for the purpose of selling in the near term. Subsequent to initial recognition, financial assets at fair value through profit or loss are measured at fair value. Any gains or losses arising from changes in fair value are recognised in profit or loss. Net gains or net losses on financial assets at fair value through profit or loss do not include exchange differences, interest and dividend income. Exchange differences, interest and dividend income on financial assets at fair value through profit or loss are recognised separately in profit or loss as part of other losses or other income. Financial assets at fair value through profit or loss could be presented as current or non-current. Financial assets that is held primarily for trading purposes are presented as current whereas financial assets that is not held primarily for trading purposes are presented as current or non-current based on the settlement date. (b) Loans and receivables Financial assets with fixed or determinable payments that are not quoted in an active market are classified as loans and receivables. Subsequent to initial recognition, loans and receivables are measured at amortised cost using the effective interest method. Gains and losses are recognised in profit or loss when the loans and receivables are derecognised or impaired, and through the amortisation process. Loans and receivables are classified as current assets, except for those having maturity dates later than 12 months after the reporting date which are classified as non-current. (c) Held-to-maturity investments Financial assets with fixed or determinable payments and fixed maturity are classified as held-to-maturity when the Group has the positive intention and ability to hold the investment to maturity. Subsequent to initial recognition, held-to-maturity investments are measured at amortised cost using the effective interest method. Gains and losses are recognised in profit or loss when the held-to-maturity investments are derecognised or impaired, and through the amortisation process. Held-to-maturity investments are classified as non-current assets, except for those having maturity within 12 months after the reporting date which are classified as current.
2. 2.13
Summary of significant accounting policies (contd.) Financial assets (contd.) (d) Available-for-sale financial assets Available-for-sale financial assets are financial assets that are designated as available for sale or are not classified in any of the three preceding categories. After initial recognition, available-for-sale financial assets are measured at fair value. Any gains or losses from changes in fair value of the financial assets are recognised in other comprehensive income, except that impairment losses, foreign exchange gains and losses on monetary instruments and interest calculated using the effective interest method are recognised in profit or loss. The cumulative gain or loss previously recognised in other comprehensive income is reclassified from equity to profit or loss as a reclassification adjustment when the financial asset is derecognised. Interest income calculated using the effective interest method is recognised in profit or loss. Dividends on an available-for-sale equity instrument are recognised in profit or loss when the Groups and the Companys right to receive payment is established. Investments in equity instruments whose fair value cannot be reliably measured are measured at cost less impairment loss. Available-for-sale financial assets are classified as non-current assets unless they are expected to be realised within 12 months after the reporting date.
A financial asset is derecognised when the contractual right to receive cash flows from the asset has expired. On derecognition of a financial asset in its entirety, the difference between the carrying amount and the sum of the consideration received and any cumulative gain or loss that had been recognised in other comprehensive income is recognised in profit or loss. Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the period generally established by regulation or convention in the marketplace concerned. All regular way purchases and sales of financial assets are recognised or derecognised on the trade date i.e., the date that the Group and the Company commit to purchase or sell the asset. 2.14 Impairment of financial assets The Group and the Company assess at each reporting date whether there is any objective evidence that a financial asset is impaired. (a) Trade and other receivables and other financial assets carried at amortised cost To determine whether there is objective evidence that an impairment loss on financial assets has been incurred, the Group and the Company consider factors such as the probability of insolvency or significant financial difficulties of the debtor and default or significant delay in payments. For certain categories of financial assets, such as trade receivables, assets that are assessed not to be impaired individually are subsequently assessed for impairment on a collective basis based on similar risk characteristics. Objective evidence of impairment for a portfolio of receivables could include the Groups and the Companys past experience of collecting payments, an increase in the number of delayed payments in the portfolio past the average credit period and observable changes in national or local economic conditions that correlate with default on receivables. If any such evidence exists, the amount of impairment loss is measured as the difference between the assets carrying amount and the present value of estimated future cash flows discounted at the financial assets original effective interest rate. The impairment loss is recognised in profit or loss. The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets with the exception of trade receivables, where the carrying amount is reduced through the use of an allowance account. When a trade receivable becomes uncollectible, it is written off against the allowance account. If in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed to the extent that the carrying amount of the asset does not exceed its amortised cost at the reversal date. The amount of reversal is recognised in profit or loss.
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2. 2.14
Summary of significant accounting policies (contd.) Impairment of financial assets (contd.) (b) Available-for-sale financial assets Significant or prolonged decline in fair value below cost, significant financial difficulties of the issuer or obligor, and the disappearance of an active trading market are considerations to determine whether there is objective evidence that investment securities classified as available-for-sale financial assets are impaired. If an available-for-sale financial asset is impaired, an amount comprising the difference between its cost (net of any principal payment and amortisation) and its current fair value, less any impairment loss previously recognised in profit or loss, is transferred from equity to profit or loss. Impairment losses on available-for-sale equity investments are not reversed in profit or loss in the subsequent periods. Increase in fair value, if any, subsequent to impairment loss is recognised in other comprehensive income. For available-for-sale debt investments, impairment losses are subsequently reversed in profit or loss if an increase in the fair value of the investment can be objectively related to an event occurring after the recognition of the impairment loss in profit or loss.
2.15
Financial liabilities Financial liabilities are classified according to the substance of the contractual arrangements entered into and the definitions of a financial liability. Financial liabilities, within the scope of FRS 139, are recognised in the statements of financial position when, and only when, the Group and the Company become a party to the contractual provisions of the financial instrument. Financial liabilities are classified as either financial liabilities at fair value through profit or loss or other financial liabilities. (a) Financial liabilities at fair value through profit or loss Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial liabilities designated upon initial recognition as at fair value through profit or loss. Financial liabilities held for trading include derivatives entered into by the Group and the Company that do not meet the hedge accounting criteria. Derivative liabilities are initially measured at fair value and subsequently stated at fair value, with any resultant gains or losses recognised in profit or loss. Net gains or losses on derivatives include exchange differences. The Group and the Company have not designated any financial liabilities as at fair value through profit or loss. (b) Other financial liabilities The Groups and the Companys other financial liabilities include trade payables, other payables and loans and borrowings. Trade and other payables are recognised initially at fair value plus directly attributable transaction costs and subsequently measured at amortised cost using the effective interest method. Loans and borrowings are recognised initially at fair value, net of transaction costs incurred, and subsequently measured at amortised cost using the effective interest method. Borrowings are classified as current liabilities unless the group has an unconditional right to defer settlement of the liability for at least 12 months after the reporting date. For other financial liabilities, gains and losses are recognised in profit or loss when the liabilities are derecognised, and through the amortisation process.
ANNUAL REPORT 2012
2. 2.15
Summary of significant accounting policies (contd.) Financial liabilities (contd.) A financial liability is derecognised when the obligation under the liability is extinguished. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amounts is recognised in profit or loss.
2.16
Income taxes i. Current tax Current tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted by the reporting date. Current taxes are recognised in profit or loss except to the extent that the tax relates to items recognised outside profit or loss, either in other comprehensive income or directly in equity. ii. Deferred tax Deferred tax is provided using the liability method on temporary differences at the reporting date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes. Deferred tax liabilities are recognised for all temporary differences, except:
where the deferred tax liability arises from the initial recognition of goodwill or of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and in respect of taxable temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, where the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future.
Deferred tax assets are recognised for all deductible temporary differences, carry forward of unused tax credits and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilised except: where the deferred tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and in respect of deductible temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, deferred tax assets are recognised only to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilised.
The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised. Unrecognised deferred tax assets are reassessed at each reporting date and are recognised to the extent that it has become probable that future taxable profit will allow the deferred tax assets to be utilised. Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realised or the liability is settled, based on tax rates and tax laws that have been enacted or substantively enacted at the reporting date. Deferred tax relating to items recognised outside profit or loss is recognised outside profit or loss. Deferred tax items are recognised in correlation to the underlying transaction either in other comprehensive income or directly in equity and deferred tax arising from a business combination is adjusted against goodwill on acquisition. Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority.
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2. 2.17
Summary of significant accounting policies (contd.) Share capital and share issuance expenses An equity instrument is any contract that evidences a residual interest in the assets of the Group and the Company after deducting all of its liabilities. Ordinary shares are equity instruments. Ordinary shares are recorded at the proceeds received, net of directly attributable incremental transaction costs. Ordinary shares are classified as equity. Dividends on ordinary shares are recognised in equity in the period in which they are declared.
2.18
Cash and cash equivalents Cash and cash equivalents comprise cash at bank and on hand, demand deposits, and short-term, highly liquid investments that are readily convertible to known amount of cash and which are subject to an insignificant risk of changes in value. These also include bank overdrafts that form an integral part of the Groups cash management.
2.19
Inventories Inventories are stated at the lower of cost and net realisable value. Cost of inventories of merchandise held for resale is determined using the weighted average method. Cost of manufactured goods is determined using the first in, first out method. The cost of raw materials comprises costs of purchase. The cost of finished goods and work-in-progress comprise costs of raw materials, direct labour, other direct costs and appropriate proportions of manufacturing overheads based on normal operating capacity. The cost of unsold properties comprises cost associated with the acquisition of land, direct costs and appropriate proportions of common costs. Cost is determined on a specific identification basis.
2.20
Leases i. As lessee Finance leases, which transfer to the Group substantially all the risks and rewards incidental to ownership of the leased item, are capitalised at the inception of the lease at the fair value of the leased asset or, if lower, at the present value of the minimum lease payments. Any initial direct costs are also added to the amount capitalised. Lease payments are apportioned between the finance charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are charged to profit or loss. Contingent rents, if any, are charged as expenses in the periods in which they are incurred. Leased assets are depreciated over the estimated useful life of the asset. However, if there is no reasonable certainty that the Group will obtain ownership by the end of the lease term, the asset is depreciated over the shorter of the estimated useful life and the lease term. Operating lease payments are recognised as an expense in profit or loss on a straight-line basis over the lease term. The aggregate benefit of incentives provided by the lessor is recognised as a reduction of rental expense over the lease term on a straight-line basis. ii. As lessor Leases where the Group and the Company retain substantially all the risks and rewards of ownership of the asset are classified as operating leases. Initial direct costs incurred in negotiating an operating lease are added to the carrying amount of the leased asset and recognised over the lease term on the same bases as rental income. The accounting policy for rental income is set out in Note 2.25 (v).
2. 2.21
Summary of significant accounting policies (contd.) Borrowings costs Borrowing costs are capitalised as part of the cost of a qualifying asset if they are directly attributable to the acquisition, construction or production of that asset. Capitalisation of borrowing costs commences when the activities to prepare the asset for its intended use or sale are in progress and the expenditures and borrowing costs are incurred. Borrowing costs are capitalised until the assets are substantially completed for their intended use or sale. All other borrowing costs are recognised in profit or loss in the period they are incurred. Borrowing costs consist of interest and other costs that the Group and the Company incurred in connection with the borrowing of funds.
2.22
Provisions Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of economic resources will be required to settle the obligation and the amount of the obligation can be estimated reliably. Provisions are reviewed at each reporting date and adjusted to reflect the current best estimate. If it is no longer probable that an outflow of economic resources will be required to settle the obligation, the provision is reversed. If the effect of the time value of money is material, provisions are discounted using a current pre tax rate that reflects, where appropriate, the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost.
2.23
ANNUAL REPORT 2012
Employee benefits i. Short term benefits Wages, salaries, bonuses and social security contributions are recognised as an expense in the year in which the associated services are rendered by employees. Short term accumulating compensated absences such as paid annual leave are recognised when services are rendered by employees that increase their entitlement to future compensated absences. Short term non-accumulating compensated absences such as sick leave are recognised when the absences occur. ii. Defined contribution plans Defined contribution plans are post-employment benefit plans under which the Group pays fixed contributions into separate entities or funds and will have no legal or constructive obligation to pay further contributions if any of the funds do not hold sufficient assets to pay all employee benefits relating to employee services in the current and preceding financial years. Such contributions are recognised as an expense in profit or loss as incurred. As required by law, companies in Malaysia make such contributions to the Employees Provident Fund (EPF). The Groups foreign subsidiary also make contributions to its respective countrys statutory pension scheme. iii. Share-based compensation The Companys Employee Share Options Scheme (ESOS), an equity-settled, share-based compensation plan, allows the Groups employees to acquire ordinary shares of the Company. The total fair value of share options granted to employees is recognised as an employee cost with a corresponding increase in the share option reserve within equity over the vesting period and taking into account the probability that the options will vest. The fair value of share options is measured at grant date, taking into account, if any, the market vesting conditions upon which the options were granted but excluding the impact of any non-market vesting conditions. Non-market vesting conditions are included in assumptions about the number of options that are expected to become exercisable on vesting date. At each reporting date, the Group revises its estimates of the number of options that are expected to become exercisable on vesting date. It recognises the impact of the revision of original estimates, if any, in profit or loss, and a corresponding adjustment to equity over the remaining vesting period. The equity amount is recognised in the share option reserve until the option is exercised, upon which it will be transferred to share premium, or until the option expires, upon which it will be transferred directly to retained earnings. The proceeds received net of any directly attributable transaction costs are credited to equity when the options are exercised.
55
2. 2.24
Summary of significant accounting policies (contd.) Foreign currencies i. Functional and presentation currency The individual financial statements of each entity in the Group are measured using the currency of the primary economic environment in which the entity operates (the functional currency). The financial statements are presented in Ringgit Malaysia (RM), which is also the Companys functional currency. ii. Foreign currency transactions In preparing the financial statements of the individual entities, transactions in currencies other than the entitys functional currency (foreign currencies) are recorded in the functional currency using the exchange rates prevailing at the dates of the transactions. At each reporting date, monetary items denominated in foreign currencies are translated at the rates prevailing on the reporting date. Non-monetary items carried at fair value that are denominated in foreign currencies are translated at the rates prevailing on the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not translated. Exchange differences arising on the settlement of monetary items, and on the translation of monetary items, are included in profit or loss for the period except for exchange differences arising on monetary items that form part of the Groups net investment in foreign operation. These are initially taken directly to the foreign currency reserve within equity until the disposal of the foreign operations, at which time they are recognised in profit or loss. Exchange differences arising from on monetary items that form part of the Groups net investment in foreign operation, where that monetary item is denominated in a currency other than the functional currency of either the reporting entity or the foreign operation are recognised in profit or loss in the Companys separate financial statements or the individual financial statements of the foreign operation, as appropriate. Exchange differences arising on the translation of non-monetary items carried at fair value are included in profit or loss for the period except for the differences arising on the translation of non-monetary items in respect of which gains and losses are recognised directly in equity. Exchange differences arising from such non-monetary items are also recognised directly in equity. iii. Foreign operations The results and financial position of foreign operations that have a functional currency different from the presentation currency (RM) of the consolidated financial statements are translated into RM as follows: Assets and liabilities for each statement of financial position presented are translated at the closing rate prevailing at the reporting date; Income and expenses for each statement of comprehensive income are translated at average exchange rates for the year, which approximate the exchange rates at the dates of the transactions; and All resulting exchange differences are taken to the foreign currency translation reserve within equity.
Goodwill and fair value adjustments arising on the acquisition of foreign operations on or after 1 January 2006 are treated as assets and liabilities of the foreign operations and are recorded in the functional currency of the foreign operations and translated at the closing rate at the reporting date. Goodwill and fair value adjustments which arose on the acquisition of foreign subsidiaries before 1 January 2006 are deemed to be assets and liabilities of the parent company and are recorded in RM at the rates prevailing at the date of acquisition.
2. 2.25
Summary of significant accounting policies (contd.) Revenue recognition Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured. The following specific recognition criteria must also be met before revenue is recognised: i. Sale of goods Revenue is recognised net of sales taxes and upon transfer of significant risks and rewards of ownership to the buyer. Revenue is not recognised to the extent where there are significant uncertainties regarding recovery of the consideration due, associated costs or the possible return of goods. ii. Sale of properties Revenue from sale of properties is accounted for by the stage of completion method as described in Note 2.11(ii). iii. Dividend income Dividend income is recognised when the Groups right to receive payment is established. iv. Management fees Management fees are recognised when services are rendered. v. Rental income Rental income is recognised on a straight-line basis over the term of the lease. The aggregate cost of incentives provided to lessees is recognised as a reduction of rental income over the lease term on a straightline basis. vi. Interest income Interest income is recognised on an accrual basis using the effective interest method. vii. Revenue on award credits Revenue on award credits is recognised based on the number of award credits that have been redeemed in exchange for free or discounted goods, relative to the total number of award credits expected to be redeemed.
2.26
Government grant Government grant is recognised at its fair value where there is reasonable assurance that the grant will be received and all conditions attached will be met. Where the grant relates to an asset, the fair value is recognised as deferred capital grant in the statements of financial position and is amortised to the statements of comprehensive income over the expected useful life of the relevant asset by equal annual instalments. Grant contributed towards the acquisition of plant and equipment is deducted from the cost of those assets.
2.27
Land use rights Land use rights are initially measured at cost. Following initial recognition, land use rights are measured at cost less accumulated amortisation and accumulated impairment losses. The land use rights are amortised over the lease term.
57
3.
Significant accounting judgements and estimates The preparation of the financial statements of the Group and of the Company requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the disclosure of contingent liabilities at the reporting date. However, uncertainty about these assumptions and estimates could result in outcomes that could require a material adjustment to the carrying amount of the asset or liability affected in the future.
3.1
Judgements made in applying accounting policies In the process of applying the Groups accounting policies, management has made the following judgements, apart from those involving estimations, which have the most significant effect on the amounts recognised in the financial statements: i. Classification between investment property and property, plant and equipment The Group has developed certain criteria based on FRS 140: Investment Property in making judgement whether a property qualifies as an investment property. Investment property is a property held to earn rentals or for capital appreciation or both. The Company has leased out its building to a subsidiary as a supermarket and departmental store and accordingly the building is classified as investment property in the Companys financial statements. The building is classified as property, plant and equipment in the Groups financial statements as it is held for use in the supply of goods and services. ii. Operating lease commitments the Company as a lessor
ANNUAL REPORT 2012
The Company has entered into property leases with a subsidiary on its investment properties. The Company has determined that it retains all the significant risks and rewards of ownership of these properties which are leased out as operating leases. 3.2 Key sources of estimation uncertainty The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below. i. Impairment of goodwill The Group determines whether goodwill are impaired at least on an annual basis. This requires an estimation of the value-in-use of the cash-generating units (CGU) to which goodwill are allocated. Estimating a valuein-use amount requires management to make an estimate of the expected future cash flows from the CGU and also to choose a suitable discount rate in order to calculate the present value of those cash flows. The carrying amount of the goodwill as at 31 May 2012 of the Group was RM4,665,045 (2011: RM4,665,045). Further details are disclosed in Note 21. ii. Deferred tax assets Deferred tax assets are recognised for all unused tax losses and unabsorbed capital allowances to the extent that it is probable that taxable profit will be available against which the losses and capital allowances can be utilised. Significant management judgement is required to determine the amount of deferred tax assets that can be recognised, based upon the likely timing and level of future taxable profits together with future tax planning strategies. The total carrying value of unrecognised tax losses and capital allowances of the Group is disclosed in Note 33. iii. Depreciation of plant and machinery The cost of plant and machinery for the manufacturing of flexible printed circuit boards of the Group are depreciated on a straight-line basis over the assets useful lives. Management estimates the useful lives of these plant and machinery to be within 5 to 8 years. These are common life expectancies applied in the precisions industry. Changes in the expected level of usage and technological developments could impact the economic useful lives and the residual values of these assets, therefore future depreciation charges could be revised.
3. 3.2
Significant accounting judgements and estimates (contd.) Key sources of estimation uncertainty (contd.) iv. Property development The Group recognises property development revenue and expenses in profit or loss by using the stage of completion method. The stage of completion is determined by the proportion that property development costs incurred for work performed to date bear to the estimated total property development costs. Significant judgement is required in determining the stage of completion, the extent of the property development costs incurred, the estimated total property development revenue and costs, as well as the recoverability of the development projects. In making the judgement, the Group evaluates based on past experience and by relying on the work of specialists. v. Impairment of financial assets The Group and the Company assess at each reporting date whether there is any objective evidence that a financial asset is impaired. To determine whether there is objective evidence of impairment, the Group and the Company consider factors such as the probability of insolvency or significant financial difficulties of the debtor and default or significant delay in payments. Where there is objective evidence of impairment, the amount and timing of future cash flows are estimated based on historical loss experience for assets with similar credit risk characteristics. The carrying amount of the Groups and the Companys loans and receivables at the reporting date is disclosed in Note 23.
vi.
Deferred revenue The Group allocates the consideration received from the sale of goods to the goods sold and the points issued under its loyalty programme. The consideration allocated to the points issued is measured at their fair value. The carrying amount of deferred revenue allocated to the award credits at the reporting date was RM1,277,852 (2011: RM1,153,089).
4.
Revenue Group 2012 RM Sales of goods Sales of properties Loan interest income Rental income from: - investment property - operating leases, other than those relating to investment property Management fees from subsidiaries Gross dividends from subsidiaries 375,273,075 1,539,000 12,340 4,185,630 381,010,045 Company 2012 RM 1,656,684 240,000 4,800,000 6,696,684
2011 RM
2011 RM -
59
5.
Other operating income Group 2012 RM Advertising and promotional income Amortisation of government grant Gain on disposal of property, plant and equipment Commission income Insurance claim Interest income Miscellaneous 414,082 50,000 13,600 14,640 3,262 877,373 799,298 2,172,255 2011 RM 323,494 52,084 10,999 27,782 29,759 574,258 630,192 1,648,568 Company 2012 RM 66,790 500 67,290 2011 RM 40,130 40,130
6.
Employee benefits expense Group 2012 RM Wages and salaries Executive directors remuneration (Note 7) Social security contributions Contribution to defined contribution plan Other benefits 19,241,780 1,415,803 192,398 1,416,075 1,173,218 23,439,274 2011 RM 18,613,568 1,350,545 198,350 1,268,767 1,389,994 22,821,224 Company 2012 RM 192,600 192,600 2011 RM 191,600 191,600
7.
Directors remuneration Group 2012 RM Directors of the Company Executive: Salaries and other emoluments Fees Bonus Contribution to defined contribution plan 385,505 175,600 45,000 40,560 646,665 Non-executive: Other emoluments Fees 48,500 68,000 116,500 54,000 81,000 135,000 48,500 65,000 113,500 54,000 65,000 119,000 306,959 176,600 33,600 37,224 554,383 18,000 174,600 192,600 17,000 174,600 191,600 2011 RM Company 2012 RM 2011 RM
7.
Directors remuneration (contd.) Group 2012 RM Directors of subsidiaries Executive: Salaries and other emoluments Fees Bonus Contribution to defined contribution plan Non-executive: Fees Total directors remuneration (Note 39(b)) Estimated money value of benefits-in-kind Total directors remuneration including benefitsin-kind 146,000 1,678,303 33,473 148,000 1,633,545 32,410 306,100 310,600 642,554 3,000 63,396 60,188 769,138 649,747 22,000 70,727 53,688 796,162 2011 RM Company 2012 RM 2011 RM
1,711,776
1,665,955
306,100
310,600
Analysis: Total executive directors remuneration (Note 6) Total non-executive directors remuneration (Note 8) Total directors remuneration Estimated money value of benefits-in-kind Total directors remuneration including benefitsin-kind 1,415,803 262,500 1,678,303 33,473 1,711,776 1,350,545 283,000 1,633,545 32,410 1,665,955 192,600 113,500 306,100 306,100 191,600 119,000 310,600 310,600
The executive directors remuneration of the Group amounting to RM1,415,803 (2011: RM1,243,688) and RM Nil (2011: RM106,857) are paid to the present and past directors of the Group. The number of directors of the Company whose total remuneration during the year fell within the following bands is analysed below: Number of directors 2012 Executive directors: RM50,001 - RM100,000 RM100,001 - RM150,000 RM300,001 - RM350,000 Non-executive directors: Below RM50,000 5 6 2 1 1 1 1 2011
61
8.
Other operating expenses Included in other operating expenses are: Group 2012 RM Auditors remuneration: - statutory audit - current year - underprovision in prior years - other services Bad debts written off Foreign exchange (gains)/losses: - realised - unrealised Negative goodwill on consolidation recognised Non-executive directors remuneration (Note 7) - present directors - past director (Reversal)/Provision for liquidated damages Allowance for impairment of doubtful debts Company 2012 RM
2011 RM
2011 RM
9.
Finance costs Group 2012 RM Interest expense: Term loan Bank overdrafts Bankers acceptance 178,490 54,278 8,803 241,571 2011 RM 215,906 100,012 34,553 350,471
10.
Income tax expense Group 2012 RM Current year income tax: Malaysian income tax (Over)/Underprovision in prior year Deferred tax (Note 33): Relating to origination and reversal of temporary differences Underprovision in prior year Income tax recognised in profit or loss 4,526,388 (406) 4,525,982 2011 RM 5,961,587 (271,164) 5,690,423 Company 2012 RM 1,559,500 394 1,559,894 2011 RM
1,559,894
1,534,843
Domestic income tax is calculated at the Malaysian statutory tax rate of 25% (2011: 25%) of the estimated assessable profit for the year. Taxation of other jurisdictions is calculated at the rates prevailing in the respective jurisdiction.
10.
Income tax expense (contd.) A reconciliation of income tax expense applicable to profit before tax at the statutory income tax rate to income tax expense at the effective income tax rate of the Group and of the Company is as follows: 2012 RM Group Profit before tax Taxation at Malaysian statutory tax rate of 25% Different tax rates in other countries Expenses not deductible for tax purposes Income not subject to tax Effect of utilisation of previously unrecognised deferred tax assets Deferred tax assets not recognised during the year Overprovision of income tax expense in prior year Underprovision of deferred tax in prior year Income tax expense for the year 12,622,455 3,155,615 (2,610) 1,241,896 (123,183) 417,185 (406) 387,601 5,076,098 18,972,523 4,743,131 (1,072) 1,519,065 (473,145) (125,215) 230,577 (271,164) 43,582 5,665,759 2011 RM
Company Profit before tax Taxation at Malaysian statutory tax rate of 25% Expenses not deductible for tax purposes Under/(Over)provision of income tax expense in prior year Income tax expense for the year Included in the Group are: (i) a subsidiary which has obtained approval from the Malaysian Industrial Development Authority (MIDA) which exempts 100% of the statutory income from the development and production of high density interconnect flexible printed circuit boards (HDI) for a period of five years. This pioneer status has expired on 31 December 2008. On 18 Jan 2010, MIDA has approved, subject to certain conditions being complied with, 100% tax exemption on the statutory income on Fine Resolution Interconnect Flexible Printed Circuit Boards (Pitch < 3mm) for 5 years. The company has yet to submit an application to fix its Production Date to the Ministry of International Trade and Industry (MITI) for approval as it has applied to MIDA for approval to waive one of its condition. Consequently the companys chargeable income is computed on the basis that it is subject to income tax of 25%; and another subsidiary which has been accorded with the Multimedia Super Corridor (MSC) Status and was granted pioneer status for an initial period of 5 years effective 10 February 2003 which expired on 9 February 2008. The subsidiarys pioneer status was extended for a further period of 5 years, i.e. from 10 February 2008 to 9 February 2013. The chargeable income arising from the pioneer activity is 100% tax exempt. 2,706,823 676,706 882,794 394 1,559,894 5,438,150 1,359,538 181,713 (6,408) 1,534,843
(ii)
63
11.
Earnings per share (a) Basic Basic earnings per share amounts are calculated by dividing profit for the year attributable to ordinary equity holders of the Company by the weighted average number of ordinary shares in issue during the financial year, excluding treasury shares held by the Company. Group 2012 2011 RM RM Profit for the year attributable to ordinary equity holders of the Company (RM) Weighted average number of ordinary shares in issue Basic earnings per share (sen) (b) Diluted For the purpose of calculating diluted earnings per share, the profit for the year attributable to ordinary equity holders of the Company and the weighted average number of ordinary shares in issue during the financial year have been adjusted for the dilutive effects of all potential ordinary shares, i.e. Employee Share Options Scheme (ESOS). The effect on the basic earnings per share for the financial year arising from the assumed conversion of the existing ESOS was anti-dilutive. The ESOS has lapsed on 23 April 2012 and all the unexercised options shall automatically lapse upon the expiry of the option period. Accordingly, the diluted earnings per share for the current financial year are presented as equal to basic earnings per share.
12.
Dividend Amount 2012 RM Group and Company In respect of financial year ended 31 May 2010: First and final dividend of 8% less 25% taxation, declared on 3 December 2010 and paid on 23 December 2010 In respect of financial year ended 31 May 2011: First and final dividend of 8% less 25% taxation, declared on 5 December 2011 and paid on 15 December 2011 2011 RM Net dividend per share 2012 Sen 2011 Sen
3,460,449
6.00
3,441,411 3,441,411
3,460,449
6.00 6.00
6.00
At the forthcoming Annual General Meeting, a first and final dividend in respect of the current financial year ended 31 May 2012, of 8% less 25% taxation on 57,353,148 ordinary shares (the number of outstanding ordinary shares in issue of the Company as at 31 May 2012 after the set off with 1,000 ordinary shares bought back by the Company and held as treasury shares subsequent to year end) amounting to RM3,441,189 (6 sen net per share) will be proposed for shareholders approval. The financial statements for the current financial year do not reflect this proposed dividend. Such dividends when approved by the shareholders will be accounted for in equity as an appropriation of retained earnings in the financial year ending 31 May 2013.
64
13.
Group
Short term leasehold land RM Buildings RM Plant and machinery RM Computers RM Motor vehicles RM
2012
Cost/Valuation 1,030,570 1,030,570 59,670,654 33,767 (387,435) 59,316,986 19,661,639 560,958 316,420 (70,290) (22,734) 20,445,993 73,458,161 2,307,164 948,515 (122,650) 76,591,190 5,221,706 134,719 (73,000) 5,283,425 2,974,120 189,879 (215,680) 2,948,319 877,500 165,176,923 10,699,473 14,956,529 18,597,864 18,597,864 (877,500) (215,680) (265,940) (22,734) 29,297,337 198,226,962
At 1 June 2011 Additions Transfer in Reclassifications Disposals Write off Exchange differences At 31 May 2012
3,313,143 3,313,143
Representing: At cost At valuation 1,030,570 1,030,570 20,445,993 20,445,993 13,823,961 1,634,853 13,471 (62,392) (19,533) 15,390,360 49,066,986 10,250,000 59,316,986 76,591,190 76,591,190
5,283,425 5,283,425
2,948,319 2,948,319
29,297,337 29,297,337
Accumulated depreciation At 1 June 2011 Depreciation charge for the year Transfer in Reclassifications Disposals Write off Exchange differences At 31 May 2012 2,181 2,181 13,944,886 3,126,439 (17,349) 17,053,976 55,072,528 5,105,546 3,878 (107,175) 60,074,777
1,096,591 1,096,591
16,516,413 16,516,413
5,055,633 5,055,633
569,994 569,994
850,896 850,896
28,200,746 28,200,746
13.
Group
Short term leasehold land RM Buildings RM Plant and machinery RM Computers RM Motor vehicles RM Total RM
2011
Cost/Valuation 62,058,174 889,556 1,793,278 (5,070,354) 59,670,654 76,030,215 1,739,663 440,000 (77,800) (4,673,917) 73,458,161 20,781,306 83,973 (45,679) (8,010) (1,141,159) (8,792) 19,661,639 5,606,584 90,805 (475,683) 5,221,706 2,583,588 390,532 2,974,120 2,187,599 172,560,609 877,500 4,072,029 (440,000) (1,747,599) (85,810) - (11,361,113) (8,792) 877,500 165,176,923
At 1 June 2010 Additions Adjustments Reclassification Disposals Write off Exchange differences At 31 May 2011
3,313,143 3,313,143
Representing: At cost At valuation 49,420,654 10,250,000 59,670,654 73,458,161 73,458,161 19,661,639 19,661,639
5,221,706 5,221,706
2,974,120 2,974,120
877,500 877,500
Accumulated depreciation At 1 June 2010 Depreciation charge for the year Disposals Write off Exchange differences At 31 May 2011 15,884,084 3,131,152 (5,070,350) 13,944,886 54,200,974 5,515,093 (6,909) (4,636,630) 55,072,528
Net carrying amount At 31 May 2011 At cost At valuation 37,765,048 7,960,720 45,725,768
18,385,633 18,385,633
5,837,678 5,837,678
770,276 770,276
857,663 857,663
877,500 877,500
65
13.
Property, plant and equipment (contd.) Office equipment, renovation, furniture and fittings RM
Company 2012 Cost At 1 June 2011/ At 31 May 2012 Accumulated depreciation At 1 June 2011 Depreciation charge for the year At 31 May 2012 Net carrying amount At 31 May 2012 2011 Cost At 1 June 2010 Additions At 31 May 2011
ANNUAL REPORT 2012
Computers RM
Motor vehicles RM
Total RM
Accumulated depreciation At 1 June 2010 Depreciation charge for the year At 31 May 2011 Net carrying amount At 31 May 2011 (a)
The short term leasehold land and building of a subsidiary in the manufacturing segment was revalued on 23 July 2010 using the comparison and depreciated replacement cost method. However, the Group has continued to carry the short term leasehold land and building based on its earlier revalued amount in March 2000 since the surplus based on the latest revaluation was immaterial. Had the revalued short term leasehold land and building been carried at historical cost less accumulated depreciation, the net carrying amount that would have been included in the financial statements of the Group as at 31 May 2012 would have been RM4,388,164 (2011: RM4,509,339).
(b)
Included in property, plant and equipment are: (i) (ii) a motor vehicle of the Company with net carrying amount of RM1 (2011: RM1) registered under the name of an employee of the subsidiary, in trust for the Company; motor vehicles of a subsidiary with net carrying amount of RM83,757 (2011: RM105,640) registered under the name of a director of the Company, i.e. Dato Hwang Thean Long in trust for the said subsidiary; capital work-in-progress transferred in from investment property and other receivables with a carrying amount of RM16,273,409 (2011: RM Nil) and RM1,227,864 (2011: RM Nil) respectively; leasehold land under capital work-in-progress with a net carrying amount of RM16,273,409 (2011: RM Nil) pledged to a bank to secure bank borrowings as disclosed in Note 32; and fully depreciated property, plant and equipment which are still in use with the following costs: Group 2012 RM Buildings Plant and machinery Office equipment, renovation, furniture and fittings Computers Motor vehicles 938,648 37,291,990 9,787,764 3,858,145 1,327,710 53,204,257 2011 RM 404,173 29,659,194 8,954,282 3,844,473 1,390,196 44,252,318 Company 2012 RM 1,438,512 18,290 21,303 535,017 2,013,122 2011 RM
67
13.
Property, plant and equipment (contd.) (c) (d) (e) The short term leasehold land has an unexpired lease of 37 years (2011: 38 years). The long term leasehold apartment has an unexpired lease of 78 years. Included in the buildings of the Group are buildings erected on land leased from regulatory bodies with a carrying amount of RM6,479,463 (2011: RM9,167,181).
14.
Leasehold land and building Cost At 1 June Transfer from prepaid land lease (Note 17) Transfer to property, plant and equipment and development costs (Note 13, 15(b)) At 31 May Accumulated depreciation At 1 June Transfer from prepaid land lease (Note 17) Transfer to property, plant and equipment and development costs (Note 13, 15(b)) Depreciation charge for the year At 31 May Net carrying amount At 31 May Group
2011 RM
2011 RM
30,623,822 (30,623,822) -
30,623,822 30,623,822
29,078,033 29,078,033
29,078,033 29,078,033
1,933,322 (1,933,322) -
28,690,500
24,446,633
24,919,804
The investment property of the Group has an open market value of approximately RM32,000,000 (2011: RM28,700,000). During the year, the investment property of the Group has been transferred to property, plant and equipment and property development costs amounting to RM16,273,409 and RM12,417,091 respectively as the Group has commenced its development activities and the Group will retain a portion of the project for its own use while the balance will be disposed off to third parties. The investment property with net book value of RM Nil (2011: RM28,690,500) is pledged to a bank to secure bank borrowings as disclosed in Note 32. Direct operating expenses incurred by the Group on the investment property during the financial year amounted to RM Nil (2011: RM482,363). The unexpired lease period for the long term leasehold land is 92 years (2011: 93 years). Company The investment property of the Company has an open market value of approximately RM25,800,000 (2011: RM25,800,000) and is leased to a subsidiary as a supermarket and departmental store. The title deed of the investment property is registered under the name of a corporate shareholder of the Company, i.e. Suiwah Holdings Sdn. Bhd., a company in which a director of the Company, i.e. Dato Hwang Thean Long has a substantial interest. The strata title of the building is in the process of being transferred to the Company. Direct operating expenses incurred by the Company on the investment property during the financial year amounted to RM652,357 (2011: RM652,357).
15.
Land held for property development and property development costs (a) Land held for property development Group Freehold Development land cost RM RM
2011 Cost At 1 June Transfer from property development cost (Note 15(b)) At 31 May Accumulated impairment loss At 1 June / 31 May Net carrying amount At 31 May 2012 Cost At 1 June / 31 May Accumulated impairment loss At 1 June / 31 May Net carrying amount At 31 May
Total RM
2,394,702 2,394,702
2,394,702
2,394,702
2,394,702
Included in freehold land is a Malay reserve freehold land with a carrying value of RM800,000 (2011: RM800,000). (b) Property development costs Leasehold land RM Group Freehold Development land costs RM RM
2012 Cumulative property development costs At 1 June 2011 Costs incurred during the year Transfer from other receivables Transfer from investment property (Note 14) At 31 May 2012 Cumulative costs recognised in statements of comprehensive income At 1 June 2011 Recognised during the year At 31 May 2012 Property development costs at 31 May 2012
Total RM
12,417,091 12,417,091
12,417,091
3,850,845
16,267,936
69
15.
Land held for property development and property development costs (contd.) (b) Property development costs (contd.) Leasehold land RM Freehold land RM Group Development costs RM
2011 Cumulative property development costs At 1 June 2010 Costs incurred during the year Reversal of completed projects Transfer to land held for property development (Note 15(a)) At 31 May 2011 Cumulative costs recognised in statements of comprehensive income At 1 June 2010 Recognised during the year Reversal of completed projects Transfer to inventories At 31 May 2011 Property development costs at 31 May 2011
Total RM
The leasehold land is pledged to a bank to secure bank borrowings as disclosed in Note 32. 16. Land use rights
17.
Group 2012 RM -
2011 RM
At 1 June Transfer to investment property (Note 14): - Cost - Amortisation to date Amortisation for the year At 31 May Analysed as: Long term leasehold land
18.
Investments in subsidiaries Company 2012 RM Unquoted shares in Malaysia, at cost: Impairment losses 60,560,774 (1,276,096) 59,284,678 Equity interest held (%) 2012 2011 2011 RM 60,560,774 (1,276,096) 59,284,678
Principal activities
100
100
Operator of a supermarket and departmental store and money lending Operator of supermarkets and departmental stores and trading of cable wires Investment holding Trading in general merchandise, garments and construction materials Property investment Electrical goods retailer
Sunshine Supermarket & Departmental Store Sdn. Bhd. Sunshine Link Sdn. Bhd. Aljano Sdn. Bhd.
100
100
100 100
100 100
Magirex Sdn. Bhd. Sunshine Electrical Superstore Sdn. Bhd. Great Support Sdn. Bhd. Crimson Omega Sdn. Bhd.
100 100
100 100
75 100
70 100
Property development Operator of a supermarket and departmental store and a wholesale centre and property development Property development Sub-letting of properties and trading of merchandise goods Dormant Investment holding International trading business
100 100
100 100
Sunshine (Labuan) Private Limited * Qdos Holdings Bhd. Sunshine Amanjaya Pte Ltd ** Incorporated in Indonesia PT. Sunshine Amanjaya Indonesia * ^
100 100 51
100 100 51
100
100
Intended principal activities are to act as a main distributor, importer and exporter of merchandise goods
71
18.
Name of subsidiaries Held under Qdos Holdings Bhd. Incorporated in Malaysia Qdos Flexcircuits Sdn. Bhd. Qdos Technology Sdn. Bhd.
Principal activities
100 100
100 100
Manufacturing of flexible printed circuit boards Research and development, design and prototyping of flexible printed circuit boards Design services of flexible printed circuit boards and trading in general merchandise
Qdos Marketing Sdn. Bhd. Held under Qdos Flexcircuits Sdn. Bhd. Incorporated in India Qdos Flexcircuits (India) Private Limited * * ^
100
100
100
100
Design of flexible printed circuit boards. The Company remained dormant during the year.
ANNUAL REPORT 2012
Audited by firms of auditors other than Ernst & Young The Company has a 99% equity interest in the subsidiary and the remaining 1% equity interest is held by a wholly owned subsidiary, Sunshine Amanjaya Sdn. Bhd.
** The Company has a 50% equity interest in the subsidiary and the remaining 1% equity interest is held by a wholly owned subsidiary, Sunshine Wholesale Mart Sdn. Bhd. 19. Investments in associates Group 2012 RM Unquoted shares outside Malaysia, at cost Accumulated impairment losses Share of post acquisition reserve Exchange difference 16,695,099 16,695,099 (1,554,422) (2,683,778) 12,456,899 2011 RM 10,295,292 10,295,292 (1,513,625) (118,101) 8,663,566 Company 2012 RM 1,631,726 (1,631,726) 2011 RM 1,631,726 (1,631,726) -
In the prior year, the Groups subsidiaries, Qdos Flexicircuits Sdn. Bhd. and Qdos Flexicircuit (India) Private Limited have entered into a Shareholders Agreement with M.J Shantharam, Valdel Real Estate Pvt. Ltd and Exora Technologies Private Limited (Exora) to subscribe up to 22,500,000 new shares of Rupees 10 each in Exora, representing 49% of the equity interest in Exora, for a total cash consideration of approximately RM15 million. As at 31 May 2012, the Groups subsidiaries have subscribed for 9,358,018 new shares of Rupees 10 each in Exora, representing 49% of the equity interest in Exora for a total cash consideration of RM6,399,807.
19.
Investments in associates (contd.) Details of the associates are as follows: Name of associate Incorporated in India Valdel Oil and Gas Private Limited (VOG) Held under Qdos Flexcircuits Sdn. Bhd. and its subsidiary Exora Technologies Private Limited Held under Exora Technologies Private Limited Unival Willows Estate Private Limited 50 50 Property development 49 49 Venture into the development of commercial/ residential properties in India through a special purpose vehicle 25 25 Carrying on business connected with oil and natural gas. The Company has remained dormant during the year Equity interest held (%) 2012 2011 Principal activities
The summarised financial information based on the audited and unaudited financial statements of the associates, not adjusted for the proportion of ownership interest held by the Group, is as follows:
ANNUAL REPORT 2012
Assets and liabilities Current assets Non-current assets Total assets Current liabilities Non-current liabilities Total liabilities Results Revenue Profit/(Loss) for the year
636,845 52,992
501,086 (1,192,829)
20.
Investments securities
Non-current Available-for-sale financial assets - Equity instruments (quoted in Malaysia) - Equity instruments (quoted outside Malaysia)
Group 2012 RM
2011 RM
Market value
Impairment losses of RM7,067 (2011: RM7,067) for quoted equity instruments classified as available-for-sale financial assets have been recognised by the Group as there were significant or prolonged decline in the fair value of these investments below their costs.
73
21.
Goodwill on consolidation
2011 RM 4,665,045
Goodwill has been allocated to the Groups cash-generating units (CGU) identified according to the business segment and relates to the manufacturing and designing of flexible printed circuits boards as follows: 2012 RM Manufacturing (b) Key assumptions used in value-in-use (VIU)calculations The recoverable amount of the CGU is determined based on VIU calculations using cash flow projections based on financial forecasts approved by management covering a 5-year period. The following describes each key assumptions on which management has based its cash flow projection for VIU calculations of CGU to undertake impairment testing of goodwill: (i) Budgeted gross margin The basis used to determine the value assigned to the budgeted gross margin is the average gross margin achieved in the year immediately before the budgeted year adjusted for expected efficiency improvement, market and economic conditions and internal resource efficiency, where applicable. (ii) Growth rates The weighted average growth rates used are consistent with the long term average growth rates for the relevant industry. (iii) Discount rates The discount rates used are on a basis that reflect specific risks relating to the relevant business segment. The significant post-tax discount rates, applied to post-tax cash flows, used are in the range of 9% to 13%. Sensitivity to changes in assumptions With regard to the assessment of value-in-use of the CGU, management believes that no reasonable change in any of the above key assumptions would cause the carrying value of the CGU to materially exceed its recoverable amount.
ANNUAL REPORT 2012
2011 RM 4,665,045
4,665,045
22.
Inventories
Group 2012 RM
2011 RM
At cost: Merchandise held for resale Raw materials Work-in-progress Finished goods Property held for sale Spare parts Raw materials in transit At net realisable value: Raw materials 1,042,469 34,062,297 34,411,732 18,792,865 4,780,683 2,755,549 1,501,622 4,757,714 213,656 217,739 33,019,828 19,657,504 4,867,833 1,894,838 1,120,958 6,218,346 221,949 430,304 34,411,732
The cost of inventories recognised as an expense during the year amounted to RM299,561,707 (2011: RM327,471,498).
23.
ANNUAL REPORT 2012
Trade receivables Third parties Allowance for impairment Trade receivables, net Other receivables Due from subsidiaries: - Magirex Sdn. Bhd. - Sunshine Amanjaya Sdn. Bhd. - PT. Sunshine Amanjaya Indonesia - Sunshine Wholesale Mart Sdn. Bhd. - Sunshine (Labuan) Private Limited - Sunshine Amanjaya Pte. Ltd. Deposits for: - Rental - Others Rental income receivable Sundry receivables Allowance for impairment Other receivables, net Total trade and other receivables Add: Loan receivables (Note 25) Add: Cash and bank balances (Note 27) Total loans and receivables
Group 2012 RM
2011 RM
Company 2012 RM
2011 RM
33,936,855 33,936,855
886,352 938,865 32,576 1,380,356 3,238,149 3,238,149 28,458,463 16,516 31,143,760 59,618,739
509,728 1,336,568 36,375 3,693,193 5,575,864 5,575,864 39,512,719 127,424 34,116,283 73,756,426
2,278,260 8,714,029 586 3,163,342 260,160 23,897 1,000 14,441,274 (2,910,160) 11,531,114 11,531,114 4,872,516 16,403,630
2,648,260 8,830,075 586 3,600,003 257,760 1,000 15,337,684 15,337,684 15,337,684 8,245,100 23,582,784
75
23.
Trade and other receivables (contd.) (a) Trade receivables The Groups primary exposure to credit risk arises through its trade receivables of its manufacturing subsidiaries. The Groups trading terms with its customers are mainly on credit, except for new customers, where payment in advance is normally required. The normal credit periods range from 30 to 75 days (2011: 30 to 75 days). Other credit terms are assessed and approved on a case-by-case basis. The Group seeks to maintain strict control over its outstanding receivables and has a credit control department to minimise credit risk. Overdue balances are reviewed regularly by senior management. As at 31 May 2012, the Group has significant exposure to a group of customers, which constitutes approximately 70% (2011: 47%) of the trade receivables as at year end. Ageing analysis of trade receivables The ageing analysis of the Groups trade receivables is as follows : 2012 RM Neither past due nor impaired 1 to 30 days past due not impaired 31 to 60 days past due not impaired 61 to 90 days past due not impaired 91 to 120 days past due not impaired More than 121 days past due not impaired Impaired 9,093,558 5,240,574 4,873,999 2,969,845 897,081 2,145,257 16,126,756 157,729 25,378,043 2011 RM 14,847,036 4,604,931 4,771,314 3,168,403 2,750,610 3,794,561 19,089,819 33,936,855
Receivables that are neither past due nor impaired Trade receivables that are neither past due nor impaired are creditworthy debtors with good payment records with the subsidiaries. None of the Groups trade receivables that are neither past due nor impaired have been renegotiated during the financial year. Receivables that are past due but not impaired The Group has trade receivables amounting to RM16,126,756 (2011: RM19,089,819) that are past due at the reporting date but not impaired. These relate to customers which have no recent history of default and are monitored on an on-going basis. The receivables that are past due but not impaired are unsecured in nature. Receivables that are impaired The Groups trade receivables that are impaired at the reporting date and the movement of the allowance accounts used to record the impairment are as follows: Group 2012 2011 RM RM Trade receivables: - nominal amounts 157,729 Allowance for impairment (157,729) -
23.
Trade and other receivables (contd.) (a) Trade receivables (contd.) The movement in allowance accounts used to record the impairment is as follows: Movement in allowance accounts: Group 2012 RM At 1 June Charge for the year At 31 May 157,729 157,729 2011 RM -
Trade receivables that are individually determined to be impaired at the reporting date relate to debtors that are in significant financial difficulties and have defaulted on payments. These receivables are not secured by any collateral or credit enhancement. (b) Amount due from subsidiary companies Amount due from subsidiary companies are non-interest bearing and are repayable on demand. Amount due from subsidiary companies are unsecured and are to be settled in cash.
ANNUAL REPORT 2012
Other receivables that are impaired At the reporting date, the Company has provided an allowance of RM2,910,160 (2011: RM Nil) for impairment of the unsecured advances to subsidiary companies with nominal amounts of RM8,974,189 (2011: RM Nil). These subsidiaries have been suffering financial losses for the current and past two financial years. Company 2012 RM Other receivables: - nominal amounts Allowance for impairment 14,441,274 (2,910,160) 11,531,114
2011 RM -
The movement of the allowance accounts used to record the impairment is as follows: Movement in allowance accounts: Company 2012 RM At 1 June Charge for the year At 31 May Further details on related party transactions are disclosed in Note 39. Other information on financial risks of receivables are disclosed in Note 41. 2,910,160 2,910,160
2011 RM -
77
24.
Other current assets Group 2012 RM Prepayments 4,771,053 2011 RM 6,993,827 Company 2012 RM 14,932 2011 RM 14,932
Included in prepayments of the Group are advances of RM4,132,595 (2011: RM6,318,952) given by a subsidiary to a supplier for purchase of mineral.
25.
Loan receivables
The advances are made by a subsidiary, Sunshine Wholesale Mart Sdn. Bhd. whose principal activities include that of money lending under the Moneylenders Act, 1951. The advances bear interest rates of 12.00% to 18.00% (2011: 8.00% to 18.00%) per annum. 26. Short term investments
ANNUAL REPORT 2012
Quoted unit trust funds OSK-UOB Money Market Fund Hwang DBS - AIIMAN Cash Fund Hwang DBS - Select Cash Fund Unquoted investments AmIncome
Group 2012 RM
2011 RM
1,967,518 3,841,946
173,339 460,524
Market value of investments/unit trust funds: Quoted unit trust funds OSK-UOB Money Market Fund Hwang DBS - AIIMAN Cash Fund Hwang DBS - Select Cash Fund 54,040 1,377,814 442,574 1,874,428 52,479 234,706 287,185
(a)
OSK-UOB Money Market Fund OSK-UOB Money Market Fund is a short term fund which aims to provide investors with a high level of liquidity whilst providing reasonable returns by investing in low risk investments.
26.
Short term investments (contd.) (b) Hwang DBS - AIIMAN Cash Fund Hwang DBS - AIIMAN Cash Fund is a Shariah-compliant wholesale income type fund, which invests in debentures, money market instruments and deposits with different maturity periods. The fund aims to provide investors with a regular income stream and high level of liquidity in order to meet their cash flow requirements while maintaining capital preservation. The redemption monies to be paid the day following the next business day upon the receiving of the redemption request. (c) Hwang DBS - Select Cash Fund The investment objective of Hwang DBS - Select Cash Fund is to provide investors with a regular income stream and high level of liquidity to meet cash flow requirements while maintaining capital preservation. The Fund will invest between 90% to 100% in short term fixed income instruments with maturity of not more than 365 days. Up to 10% of the Net Asset Value (NAV) of the Fund is to be invested in debentures, money market instruments and deposits with maturity periods, exceeding 365 days but no longer than 732 days. (d) AmIncome AmIncome is a short to medium-term money market fund that aims to provide investors with a stream of income. The proceeds from withdrawals will be received in the following manner: (i) the first RM2 million and below not later than the 7th day of receipt of repurchase notice; and any amount above RM2 million withdrawn, not later than the 30th day of receipt of repurchase notice. the range of interest rates earned per annum during the financial year is 2.72% to 3.00% (2011: 2.46% to 2.86%).
(ii) (iii)
Other information on financial risks of short term investments is disclosed in Note 41. 27. Cash and bank balances
2011 RM
Cash on hand and at banks Deposits with licensed banks: - short term placements - fixed deposits
8,245,100 8,245,100
Included in cash at banks of the Group are amounts of RM2,240,247 (2011: RM2,255,210) held pursuant to Section 7A of the Housing Development (Control and Licensing) Act, 1966 and are restricted from use in other operations. The cash at banks of a subsidiary with a balance of RM Nil (2011: RM41,923) are placed with two banks in Peoples Republic of China under the name of a director of the subsidiary in trust for the subsidiary. Deposits with licensed banks of the Group amounting to RM380,840 (2011: RM547,505) have been pledged to banks as collaterals for bank facilities and bankers guarantees obtained. The range of interest rates earned per annum and the maturities period during the financial year for short term placements and fixed deposits were as follows: 2012 Interest rates Maturities period 2.65% - 9.5% 31 - 365 days 2011 0.10% - 6.25% 10 - 365 days
Other information on financial risks of cash and cash equivalents is disclosed in Note 41.
79
27.
Cash and bank balances (contd.) For the purposes of the statements of cash flows, cash and cash equivalents comprise the following as at the reporting date: Group 2012 RM Cash and bank balances Short-term investments (Note 26) Fixed deposits pledged to banks Cash and cash equivalents 31,143,760 3,841,946 34,985,706 (380,840) 34,604,866 2011 RM 34,116,283 460,524 34,576,807 (547,505) 34,029,302 Company 2012 RM 4,872,516 4,872,516 4,872,516 2011 RM 8,245,100 8,245,100 8,245,100
28.
Share capital, share premium and treasury shares Number of ordinary shares of RM1 each Share capital (issued and fully paid) Treasury shares Share capital (issued and fully paid) Treasury shares RM At 1 June 2010 Transaction costs Purchase of treasury shares At 31 May 2011 At 1 June 2011 Transaction costs Purchase of treasury shares At 31 May 2012 61,000,248 61,000,248 61,000,248 61,000,248 (3,297,500) (30,600) (3,328,100) (3,328,100) (318,000) (3,646,100) 61,000,248 61,000,248 61,000,248 61,000,248 (4,810,015) (243) (43,986) (4,854,244) (4,854,244) (1,577) (461,077) (5,316,898) Share premium RM 13,934,711 13,934,711 13,934,711 13,934,711
ANNUAL REPORT 2012
Amount
Number of ordinary shares of RM1 each 2012 Authorised: At 1 June and 31 May 100,000,000 100,000,000 2011
100,000,000
100,000,000
There is no movement in authorised, issued and fully paid share capital during the year. The holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at meetings of the Company. All ordinary shares rank equally with regard to the Companys residual assets.
28.
Share capital, share premium and treasury shares (contd.) (a) Treasury shares The shareholders of the Company, by a special resolution passed in a general meeting held on 30 November 2011, renewed their approval for the Companys plan to buy back its own ordinary shares. The directors of the Company are committed to enhancing the value of the Company for its shareholders and believe that the share buy back plan can be applied in the best interests of the Company and its shareholders. During the financial year, the Company bought back 318,000 of its issued ordinary shares from the open market at an average price of RM1.45 per share. The total consideration paid for the share buy back was RM462,654, comprising of consideration paid amounting to RM461,077 and transaction costs of RM1,577. The shares bought back are being held as treasury shares in accordance with Section 67A of the Companies Act, 1965. Of the total 61,000,248 (2011: 61,000,248) issued and fully paid ordinary shares as at 31 May 2012, 3,646,100 (2011: 3,328,100) are held as treasury shares by the Company. As at 31 May 2012, the number of outstanding ordinary shares in issue after the setoff is therefore 57,354,148 (2011: 57,672,148) ordinary shares of RM1 each. Subsequent to year end, the Company bought back 1,000 of its issued ordinary shares from the open market at an average price of RM1.50 per share. The total consideration paid for the share buy back was RM1,514, comprising of consideration paid amounting to RM1,500 and transaction costs of RM14. The share buy back transactions were financed by internally generated funds.
29.
Other reserves (non-distributable) Asset revaluation reserve RM Group At 1 June 2011 Realisation of revaluation reserve Foreign currency translation Transfer to retained earnings At 31 May 2012 At 1 June 2010 Realisation of revaluation reserve Foreign currency translation At 31 May 2011 Group The nature and purpose of each category of reserve are as follows: (a) Asset revaluation reserve The asset revaluation reserve represents the surpluses arising from the revaluation of the Groups land and building in prior years. (b) Foreign currency translation reserve The foreign currency translation reserve is used to record exchange differences arising from the translation of the financial statements of foreign operations whose functional currencies are different from that of the Groups presentation currency. It is also used to record the exchange differences arising from monetary items which form part of the Groups net investment in foreign operations, where the monetary item is denominated in either the functional currency of the reporting entity or the foreign operation. (c) Share option reserve The share option reserve represents the equity-settled share options granted to employees. This reserve is made up of the cumulative value of services received from employees recorded on grant date of share options. Shares option reserves has been transferred to distributable retained earnings during the year upon expiration of ESOS. Company Other reserve of the Company represents share option reserve. The share option reserve has been transferred to distributable retained earnings during the year upon expiration of ESOS. 1,471,912 (38,565) 1,433,347 1,510,477 (38,565) 1,471,912 (1,519,551) (2,431,366) (3,950,917) (946,178) (573,373) (1,519,551) 863,790 (863,790) 863,790 863,790 816,151 (38,565) (2,431,366) (863,790) (2,517,570) 1,428,089 (38,565) (573,373) 816,151 Foreign currency translation reserve RM
Total RM
81
30.
Retained earnings Prior to the year of assessment 2008, Malaysian companies adopted the full imputation system. In accordance with the Finance Act 2007 which was gazetted on 28 December 2007, companies shall not be entitled to deduct tax on dividend paid, credited or distributed to its shareholders, and such dividends will be exempted from tax in the hands of the shareholders (single tier system). However, there is a transitional period of six years, expiring on 31 December 2013, to allow companies to pay franked dividends to their shareholders under limited circumstances. Companies also have an irrevocable option to disregard the revised 108 balance and pay dividends under the single tier system. The change in the tax legislation also provides for the 108 balance to be locked-in as at 31 December 2007 in accordance with Section 39 of the Finance Act 2007. The Company did not elect for the irrevocable option to disregard the revised 108 balance. Accordingly, during the transitional period, the Company may utilise the credit in the revised 108 balance as at 31 May 2012 to distribute cash dividend payments to ordinary shareholders as defined under the Finance Act 2007. As at 31 May 2012, the Company has sufficient tax credit in the revised 108 balance to pay franked dividends amounting of RM23,484,213 (2011: RM26,925,624) out of it retained earnings. If the balance of the retained earnings of RM3,822,845 (2011: RM1,812,126) were to be distributed as dividends, the Company may distribute such dividends under the single tier system. As at 31 May 2012, the Company has tax exempt profits available for distribution of approximately RM226,897 (2011: RM226,897), subject to the agreement of the Inland Revenue Board.
31.
Government grant
Cost: At 1 June Received during the year At 31 May Accumulated amortisation: At 1 June Amortisation during the year At 31 May Net carrying amount: Current Non-current
Group 2012 RM 400,000 400,000 85,417 50,000 135,417 50,000 214,583 264,583
Government grant relates to grant received for the acquisition of plant and equipment for development activities undertaken by a subsidiary of the Group to promote technology advancement. There are no unfulfilled conditions or contingencies attached to the grant. 32. Borrowings
Short term borrowings: Secured: Bankers acceptance Term loan Long term borrowings: Secured: Term loan Total borrowings: Bankers acceptance Term loan Maturity of borrowings: Within one year More than 1 year and less than 2 years More than 2 years and less than 5 years
Group 2012 RM 1,594,851 917,879 2,512,730 2,409,893 1,594,851 3,327,772 4,922,623 2,512,730 931,871 1,478,022 4,922,623
2011 RM 1,333,741 876,590 2,210,331 3,326,084 1,333,741 4,202,674 5,536,415 2,210,331 917,879 2,408,205 5,536,415
32.
Borrowings (contd.) The bank borrowings of the Group are secured by way of: (i) (ii) (iii) a corporate guarantee by the Company; fixed deposits of certain subsidiaries amounting to RM Nil (2011: RM78,152); and a first legal charge over the leasehold land of a subsidiary under capital work-in-progress and property development costs with a carrying amount of RM16,273,409 (2011: RM Nil) and RM12,417,091 (2011: RM Nil) respectively as disclosed in Note 13 and Note 15. In previous year, the said leasehold land with the carrying value of RM28,690,500 was disclosed as investment property.
The bankers acceptances bore interest rates at the reporting date ranging from 3.6% to 3.8% (2011: 3.6%) per annum. The term loan of the Group is repayable over seventy eight (78) equal monthly installments of RM87,217 commencing 1 September 2009. The term loan bore interest rates at the reporting date ranging from 4.5% to 6.3% (2011: 4.5% to 6.3%) per annum. Other information on financial risks of borrowings is disclosed in Note 41.
33.
ANNUAL REPORT 2012
Deferred tax Group 2012 RM At 1 June - As previously stated - Effects of adopting IC interpretation 13 As restated Recognised in profit or loss (Note 10) At 31 May Presented after appropriate offsetting as follows: Deferred tax liabilities Deferred tax assets At 31 May 3,242,966 3,242,966 550,116 3,793,082 2011 RM 3,558,444 (290,814) 3,267,630 (24,664) 3,242,966
The components and movements of deferred tax liabilities and assets during the financial year prior to offsetting are as follows: Deferred tax liabilities of the Group Property, plant and equipment RM At 1 June 2011 Recognised in profit or loss At 31 May 2012 At 1 June 2010 Recognised in profit or loss At 31 May 2011 2,640,708 284,637 2,925,345 2,787,119 (146,411) 2,640,708
83
33.
Deferred tax (contd.) Deferred tax assets of the Group Provisions RM At 1 June 2011 Recognised in profit or loss At 31 May 2012 At 1 June 2010 - As previously stated - Effects of adopting IC interpretation 13 As restated Recognised in profit or loss At 31 May 2011 (359,810) (290,814) (650,624) 138,387 (512,237) (62,872) (62,872) 13,853 (49,019) (422,682) (290,814) (713,496) 152,240 (561,256) (512,237) 61,558 (450,679) Others RM (49,019) (61,438) (110,457) Total RM (561,256) 120 (561,136)
Deferred tax assets have not been recognised in respect of the following items: Group 2012 RM Unused tax losses Unabsorbed capital allowances Other deductible temporary differences 907,845 4,538,106 282,757 5,728,708 2011 RM
ANNUAL REPORT 2012
The availability of the unused tax losses and unabsorbed capital allowances for offsetting against future taxable profits of the respective subsidiaries are subject to no substantial change in shareholdings under the Income Tax Act, 1967 and guidelines issued by the tax authority. No deferred tax assets are recognised in respect of the above as it is not probable that future taxable profit will be available against which these items can be utilised.
34.
Provision for liabilities Group 2012 RM At 1 June (Reversal)/Provision during the year Utilisation of provision At 31 May 284,453 (1,168) (13,000) 270,285 2011 RM 403,122 41,608 (160,277) 284,453
This represents provision for liquidated damages in respect of the development projects undertaken by a subsidiary company. The provision is recognised for expected liquidated damages claims based on the terms of the applicable sale and purchase agreements.
35.
Trade payables Third parties Related party * Other payables Due to subsidiaries: - Sunshine Wholesale Mart Sdn. Bhd. - Crimson Omega Sdn. Bhd. - Aljano Sdn. Bhd. - Sunshine Supermarket and Departmental Store Sdn. Bhd. - Silver Resort Sdn. Bhd. - Qdos Flexcircuits Sdn. Bhd. Due to Mr. Ooi Kim Keat Due to Mission View Sdn. Bhd. Due to tooling suppliers Deposits received Rental deposits Accruals Other payables
ANNUAL REPORT 2012
Company 2012 RM -
2011 RM -
614,212 14,980 232,962 67,400 434,854 3,582,328 5,400,738 10,347,474 56,541,909 5,536,415 62,078,324
2,307,278 3,390,350 247,244 1,135,331 556,290 66,593 254,101 61,650 8,018,837 8,018,837 8,018,837
Add: Borrowings (Note 32) Total financial liabilities carried at amortised cost * (a)
relates to Zephyr (Penang) Sdn. Bhd., a company in which a director of a subsidiary, Qdos Holdings Bhd., i.e. Looi Tik Miow, has an interest. Trade payables Trade payables are non-interest bearing and the normal trade credit terms granted to the Group range from 30 to 90 days (2011: 30 to 90 days).
(b)
Amount due to subsidiary companies Amount due to subsidiary companies are non-interest bearing and are repayable on demand. These amounts are unsecured and are to be settled in cash.
(c)
Other payables The amount due to Mr. Ooi Kim Keat was related to unsecured advances due to a former director who is related to a director of a subsidiary, Great Support Sdn. Bhd., i.e. Mr. Ooi Yong Ping, by virtue of their family relationships. Mission View Sdn. Bhd. (MVSB) is a company connected with Mr. Ooi Yong Ping, a director of a subsidiary, Great Support Sdn. Bhd., by virtue of his family relationship with a substantial shareholder of MVSB.
Further details on related party transactions are disclosed in Note 39. Other information on financial risks of payables are disclosed in Note 41. 36. Deferred revenue The Group operates a loyalty programme which allows customers to accumulate points when they purchase products in the Groups stores. The points can be redeemed for free or for discounted goods from the Groups stores. Deferred revenue represents consideration received from the sale of goods that is allocated to the points issued under the loyalty programme that are expected to be redeemed but are still outstanding as at the reporting date.
85
37. Employee benefits Employee share options scheme (ESOS) The following table illustrates the number and exercise price of, and movements in, share options during the year:
Group Exercise Grant date 2012 Option 1 2011 Option 1 24 April 2002 23 April 2012 2.24 1,473,900 (114,500) 1,359,400 1,359,400 24 April 2002 23 April 2012 1,359,400 - (1,359,400) Expiry date price RM Outstanding at 1 June Granted Exercised Forfeited Expired Outstanding Exercisable at 31 May at 31 May
The ESOS has lapsed on 23 April 2012. The Group has no plan to extend the ESOS plan. Hence, all the unexercised options shall automatically lapse upon the expiry of the option period. 38. Commitments (a) Capital commitments
Group 2012 RM
2011 RM
Capital expenditure: Approved and contracted for: - Buildings Approved by not contracted for - Buildings (b) Operating lease commitments as lessee
6,800,000
25,000,000
The Group has entered into non-cancellable operating lease agreements for the use of the leasehold land and buildings. These leases have an average life of between 3 and 15 years with no renewal or purchase option included in the contracts. There were no restrictions placed upon the Group by entering into these leases. The future aggregate minimum lease payments under non-cancellable operating leases contracted for as at the reporting date but not recognised as liabilities, are as follows: Group 2012 2011 RM RM Not later than 1 year Later than 1 year and not later than 5 years Later than 5 years 4,082,818 4,885,975 2,575,673 11,544,466 1,290,398 4,555,059 3,179,138 9,024,595
(c)
Operating lease commitments as lessor The Group and the Company have entered into commercial property leases on its investment property and property, plant and equipment. These non-cancellable leases have remaining lease terms of between two and four years. All leases include a clause to enable upward revision of the rental charge on an annual basis based on prevailing market conditions.
38.
Commitments (contd.) (c) Operating lease commitments as lessor (contd.) Future minimum rentals receivable under non-cancellable operating leases at the reporting date are as follows: Group 2012 RM Not later than 1 year Later than 1 year and not later than 5 years Later than 5 years 2,421,955 242,438 2,664,393 2011 RM 2,267,194 384,350 2,651,544 Company 2012 RM 1,656,684 1,656,684 2011 RM
1,656,684 1,656,684
39.
Related party disclosures (a) In addition to the transactions detailed elsewhere in the financial statements, the Group and the Company had the following transactions with related parties during the financial year: 2012 2011 Group RM RM Rental paid/payable to: - Suiwah Holdings Sdn. Bhd., a corporate shareholder - Suiwah Supermarket Sdn. Bhd., a company in which a director of the Company, i.e. Dato Hwang Thean Long has an interest - a director of the Company, i.e. Dato Hwang Thean Long - Meridian Chance Sdn. Bhd., a company connected with a director of the Company, i.e. Dato Hwang Thean Long by virtue of his family relationship Sales of goods to Mylaco Sdn. Bhd., a company in which a director of the Company, i.e. Hwang Siew Peng has an interest Purchases of merchandise from Zephyr (Penang) Sdn. Bhd., a company in which Looi Tik Miow, a director of a subsidiary, Qdos Holdings Bhd., has an interest Company Gross dividends from subsidiaries Management fees from subsidiaries Rental income from a subsidiary 2,284,806 6,000 48,000 24,000 11,407 209,726 2012 RM 4,800,000 240,000 1,656,684 2,284,806 6,000 48,000 24,000 30,616
Datin Cheah Gaik Huang and Hwang Siew Peng are also deemed interested in the transactions in which Dato Hwang Thean Long has an interest by virtue of their family relationship. Information regarding outstanding balances arising from related party transactions as at 31 May 2012 are disclosed in Notes 23 and 35. (b) Compensation of key management personnel The remuneration of directors and other members of key management personnel during the year was as follows: Group 2012 RM Short term employee benefits Defined contribution plan 1,645,935 109,988 1,755,923 2011 RM 1,612,383 99,288 1,711,671 Company 2012 RM 306,100 306,100 2011 RM 310,600 310,600
87
39.
Related party disclosures (contd.) (b) Compensation of key management personnel (contd.) Included in the remuneration of total key management personnel are: Group 2012 RM Directors remuneration (Note 7) 1,678,303 Company 2012 RM 306,100
2011 RM 1,633,545
2011 RM 310,600
Directors of the Group and the Company and other members of key management have been granted the following number of options under the Employees Share Option Scheme (ESOS). The ESOS has expired on 23 April 2012. The Company has no plan to renew or extend the ESOS. Hence, all the unexercised options shall automatically lapse upon the expiry of the ESOS. The cumulative value of services received from the directors and members of key management recorded on grant date which was included in shares option reserve has been transferred to distributable retained earnings during the year upon expiration of ESOS. Group 2012 RM At 1 June Transfer to retained earnings At 31 May 392,500 (392,500) Company 2012 RM 238,400 (238,400) -
40.
Fair value of financial instruments A. Fair value of financial instruments by classes that are carried at fair value The following table shows an analysis of financial instruments carried at fair value by level of fair value hierarchy : Level 1 RM Level 2 RM Level 3 RM Total RM
2012 Financial assets Investment securities Quoted equity instruments (Note 20) Short term investments - Quoted unit trust funds (Note 26) - Unquoted investments(Note 26) 2011 Financial assets Investment securities Quoted equity instruments (Note 20) Short term investments - Quoted unit trust funds (Note 26) - Unquoted investments (Note 26)
3,123
3,123
1,874,428 -
1,967,518
1,874,428 1,967,518
3,176 287,185 -
173,339
40.
Fair value of financial instruments (contd.) A. Fair value of financial instruments by classes that are carried at fair value (contd.) Fair value hierarchy The Group and Company classify fair value measurement using a fair value hierarchy that reflects the significance of the inputs used in making the measurement. The fair value hierarchy has the following levels: Level 1 : Quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2 : Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices). Level 3 : Inputs for the assets and liability that are not based on observable market data (unobservable inputs). B. Financial instruments that are not carried at fair value and whose carrying amounts are reasonable approximation of fair value The following are classes of financial instruments that are not carried at fair value and whose carrying amounts are reasonable approximation of fair value: Note Trade receivables Other receivables Trade payables Other payables Bank borrowings 23 23 35 35 32
The carrying amounts of these financial assets and liabilities are reasonable approximation of fair values, either due to their short-term nature or that they are floating rate instruments that are re-priced to market interest rates on or near the reporting date. The carrying amounts of the bank borrowings are reasonable approximations of fair values due to the insignificant impact of discounting. The fair values of bank borrowings are estimated by discounting expected future cash flows at market incremental lending rate for similar types of lending, borrowing or leasing arrangements at the reporting date. 41. Financial risk management objectives and policies The Group and the Company are exposed to financial risks arising from their operations and the use of financial instruments. The key financial risks include credit risk, liquidity risk, interest rate risk, foreign currency risk and market price risk. The Board of Directors reviews and agrees policies and procedures for the management of these risks. The audit committee provides independent oversight to the effectiveness of the risk management process. It is, and has been throughout the current and previous financial year, the Groups policy that no derivatives shall be undertaken except for the use as hedging instruments where appropriate and cost-efficient. The Group and the Company do not apply hedge accounting. The following sections provide details regarding the Groups and Companys exposure to the above-mentioned financial risks and the objectives, policies and processes for the management of these risks. (a) Interest rate risk Interest rate risk is the risk that the fair value or future cash flows of the Groups and the Companys financial instrument will fluctuate because of changes in market interest rates. As the Group has no significant interest-bearing financial assets, the Groups income and operating cash flows are substantially independent of changes in market interest rates. The Groups interest-bearing financial assets are mainly short term in nature and have been mostly placed in deposits in licensed banks. The Groups interest rate risk arises primarily from interest-bearing borrowings. Borrowings at floating rates expose the Group to cash flow interest rate risk. Borrowings obtained at fixed rates expose the Group to fair value interest rate risk. The Group manages its interest rate exposure by maintaining a mix of fixed and floating rate borrowings. Sensitivity analysis for interest rate risk At the reporting date, if interest rates had been 10 basis points lower/higher, with all other variables held constant, the Groups profit net of tax would have been RM4,923 higher/lower, arising mainly as a result of lower/higher interest expense on floating rate loans and borrowings. The assumed movement in basis points for interest rate sensitivity analysis is based on the currently observable market environment.
89
41.
Financial risk management objectives and policies (contd.) (b) Foreign exchange risk Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. Some of the Groups subsidiaries have transactional currency exposures arising from sales or purchases that are denominated in a currency other than the respective functional currencies of the Groups subsidiaries, primarily RM. The foreign currencies in which these transactions are denominated are mainly US Dollars (USD). Approximately 33% (2011: 52%) of the Groups subsidiaries sales are denominated in foreign currencies. The Groups subsidiaries trade receivable and trade payable balances at the reporting date have similar exposures. The Group also hold cash and cash equivalents denominated in foreign currencies for working capital purposes. At the reporting date, such foreign currency balances (mainly in USD) amounted to RM13,586,310 (2011: RM13,483,595) for the Group. Sensitivity analysis for foreign currency risk The following table demonstrates the sensitivity of the Groups profit net of tax to a reasonably possible change in the USD exchange rates against the respective functional currencies of the Group entities, with all other variables held constant. Profit net of tax 2012 2011 RM RM USD/RM - strengthened 2% - weakened 2% (c) Liquidity risk Liquidity risk is the risk that the Group or the Company will encounter difficulty in meeting financial obligations due to shortage of funds. The Groups and the Companys exposure to liquidity risk arises primarily from mismatches of the maturities of financial assets and liabilities. The Groups and the Companys objective is to maintain a balance between continuity of funding and flexibility through the use of stand-by credit facilities. The Group and the Company manage its debt maturity profile, operating cash flows and the availability of funding so as to ensure that all refinancing, repayment and funding needs are met. As part of its overall liquidity management, the Group and the Company maintain sufficient levels of cash or cash convertible investments to meet its working capital requirements. In addition, the Group and the Company strive to maintain available banking facilitites of a reasonable level to its overall debt position. Furthermore, the Group and the Company are able to raise funds from both capital markets and financial institutions and balance its portfolio with combination of a mixture of short and long term fundings so as to achieve overall cost effectiveness. Analysis of financial instruments by remaining contractual maturities The table below summarises the maturity profile of the Groups and the Companys liabilities at the reporting date based on contractual undiscounted repayment obligations. 2012 On demand or within one year RM Over one year RM Total RM 420,160 (420,160) 532,883 (532,883)
ANNUAL REPORT 2012
Group Financial liabilities: Trade payables Other payables and accruals Borrowings Total undiscounted financial liabilities Company Financial liabilities: Other payables and accruals Amount due to subsidiaries Total undiscounted financial liabilities
2,409,893 2,409,893
41.
Financial risk management objectives and policies (contd.) (c) Liquidity risk (contd.) 2011 On demand or within one year RM Over one year RM
Group Financial liabilities: Trade payables Other payables and accruals Borrowings Total undiscounted financial liabilities Company Financial liabilities: Other payables and accruals Amount due to subsidiaries Total undiscounted financial liabilities (d)
ANNUAL REPORT 2012
Total RM
3,326,084 3,326,084
61,650 61,650
Credit risk Credit risk is the risk of loss that may arise on outstanding financial instruments should a counterparty default on its obligations. The Groups and the Companys exposure to credit risk arises primarily from trade and other receivables. For other financial assets (including investment securities, cash and bank balances and derivatives), the Group and the Company minimise credit risk by dealing exclusively with high credit rating counterparties. The Groups objective is to seek continual revenue growth while minimising losses incurred due to increased credit risk exposure. The Group trades only with recognised and creditworthy third parties. It is the Groups policy that all customers who wish to trade on credit terms are subject to credit verification procedures. In addition, receivable balances are monitored on an ongoing basis with the result that the Groups exposure to bad debts is not significant. For transactions that do not occur in the country of the relevant operating unit, the Group does not offer credit terms without the approval. i. Exposure to credit risk At the reporting date, the Groups and the Companys maximum exposure to credit risk are represented by: (a) (b) The carrying amount of each class of financial assets recognised in the statements of financial position. A nominal amount of RM5,361,274 (2011: RM5,977,065) relating to corporate guarantees provided by the Company to financial institutions for credit facilities granted to subsidiaries.
Information regarding credit enhancements for trade and other receivables are disclosed in Note 23. ii. Credit risk concentration profile The Group determines concentrations of credit risk by monitoring the country sector profile of its trade receivables on an ongoing basis. The credit risk concentration profile of the Groups trade receivables at the reporting date are as follows: 2012 RM 18,659,314 1,754,885 1,451,156 283,870 746,091 2,324,998 25,220,314 % 74 7 6 1 3 9 100 2011 RM 20,338,232 9,084,242 1,178,081 720,347 712,451 1,903,502 33,936,855 % 60 27 3 2 2 6 100
By country: Within Malaysia China Germany Switzerland Singapore Other countries Total
91
41.
Financial risk management objectives and policies (contd.) (d) Credit risk (contd.) iii. Financial assets that are neither past due nor impaired Information regarding trade receivables that are neither past due nor impaired is disclosed in Note 23. iv. Financial assets that are either past due or impaired Information regarding trade receivables that are either past due or impaired is disclosed in Note 23. (e) Market price risk Market price risk is the risk that the fair value or future cash flows of the Groups financial instruments will fluctuate because of changes in market prices (other than interest or exchange rates). The Group is exposed to equity price risk arising from its investment in quoted equity instruments. The quoted equity instruments in Malaysia are listed on Bursa Malaysia. These instruments are classified as available-forsale financial assets. The Group does not has exposure to commodity price risk.
42.
Capital management The primary objective of the Groups capital management is to ensure that it maintains a strong credit rating and healthy capital ratios in order to support its business and maximise shareholder value. The Group manages its capital structure and makes adjustments to it, in light of changes in economic conditions. To maintain or adjust the capital structure, the Group may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares. No changes were made in the objectives, policies or processes during the years ended 31 May 2012 and 31 May 2011.
43.
Significant events The following events took place during the financial year: (i) A subsidiary, Qdos Flexcircuits Sdn. Bhd. (Qdos Flex) further subscribed for and was allotted 9,358,018 shares of Rupees (Rs) 10 each, in Exora Technologies Private Limited (Exora) for a total cash consideration of RM6,399,807. Qdos Flexs equity participation in Exora is now 29%. The two subsidiaries of the Company, Qdos Flex and Qdos Flexcircuits (India) Private Limited have in total subscribed 13,151,893 and 9,000,000 shares of Rupees (Rs) 10 each in Exora respectively, which constitute a total equity participation of 49% in Exora. (ii) (iii) A subsidiary, Crimson Omega Sdn. Bhd. has commenced development activities for a development project on its existing leasehold land at Bandar Baru Air Itam, Penang. A subsidiary, Sunshine Supermarket and Departmental Store Sdn. Bhd. purchased a piece of freehold land in Bertam and planned to develop the land into commercial complex for its own use with an estimated construction cost of RM25 million.
44.
Segment information For management purposes, the Group is organized into business units based on their products and services, and have four reportable operating segments as follows: (i) (ii) (iii) (iv) Retail - operation of supermarket and departmental stores and a hypermarket; Manufacturing - manufacturing and designing of flexible printed circuits boards; Property investment and development of residential and commercial properties; and Trading
The directors are of the opinion that all inter-segment transactions have been entered into in the normal course of business and have been established on terms and conditions that are not materially different from those obtained in transaction with unrelated parties. There are minimal inter-segment sales within the Group.
44.
Share of loss of associates Profit before tax Income tax expense Profit for the year Assets Segment assets Investment in associates Unallocated assets Total assets Liabilities Segment liabilities Unallocated liabilities Total liabilities Other segment information Additions to non-current assets Amortisation expense Depreciation Non-cash expenses other than depreciation, amortisation and impairment losses 232,201 (967,383) (1,168) 10,645,036 2,690,434 4,269,263 4,236,417 2,094 215,266 3,483,172 40,136 3,401 43,060,853 11,154,310 1,428,404 2,068,255 82,374,486 81,295,968 12,456,899 54,301,295 10,321,766 -
(736,350)
93
44.
Trading RM
Eliminations Consolidated RM RM
RM
RM
82,227,781 82,227,781
32,998,039 32,998,039
(3,167,683) (3,167,683)
422,263,249 422,263,249
Information about major customers Revenue from 6 major customers amounted to RM50,869,117 (2011 : RM71,251,944), arising from sales made by the manufacturing segment.
44.
Segment information (contd.) (b) Geographical segments The Group operates locally except for the manufacturing segment which has a wholly owned subsidiary in India. All of the Groups manufacturing activities are conducted in Malaysia while the overseas subsidiary is principally engaged in the design of flexible printed circuit boards. The following table provides an analysis of the Groups revenue, segments assets and capital expenditure by geographical segment: Singapore, India, Philippines, Sri Lanka, Vietnam and Malaysia RM 2012 Total revenue from external customers Segment assets Thailand RM Korea, Hong Kong, Taiwan and Japan RM United States of America, Europe and New Zealand RM Consolidated RM
3,053,971 6,633,784 -
8,285,865 -
15,476,786 -
Capital expenditure
2011 Total revenue from external customers Segment assets Capital expenditure
3,726,795 6,696,806 -
32,126,457 -
17,874,174 -
95
2011 RM
2011 RM
Location No. 1, Jalan Mayang Pasir, 11950 Bayan Baru, Pulau Pinang
Description Basement level & Level 1, Sunshine Square Complex Leasehold land with a warehouse and 3 storey office block Freehold land
Tenure 99 years leasehold expiring 2090 60 years leasehold expiring 2050 Freehold land
No. 2A, Lebuhraya Kampung Jawa, 11900 Bayan Lepas, Pulau Pinang Plot 1109, Tempat Kelibang, Langkawi Lots Nos. 2704, 2705, 2706 and 453, Mukim 7, Province Wellesley South, Penang Lot 7703, Mukim 13, N.E.D, Bandar Baru Air Itam, Penang
20 years
4,444,136
32,055 sq ft
Not Applicable
800,000
Freehold land
501,376 sq ft
Freehold land
Not Applicable
4,470,910
Leasehold land with single storey hypermarket complex, Sunshine Farlim Wholesale Centre Leasehold land with double storey factory building
392,434 sq ft / 126,325 sq ft
13 years
28,690,500
No. 99, Lebuhraya Kampung Jawa, Taman Perindustrian Bayan Lepas, 11900 Penang 3-9-3A, Jalan Bukit Jambul, 11900 Bayan Lepas Penang
12 years
9,333,792
Condominium
2,281 sq ft
99 years leashold expiring 2090 6 years leasehold expiring 2014 16 years leasehold expiring 2023
11 years
1,028,389
No 294, Jalan Thean Teik, Bandar Baru Air Itam, 11500 Penang
4 years
4,462,930
No 5047, Diatas Sebahagian Lot HS (D) 9813, Plot (A), Jalan Bagan Dalam, Dermaga Butterworth Seksyen 4, 12100 Seberang Perai Utara, Pulau Pinang HS(D) 30054, lot 20016, HS(D) 25593, lot 12767, Mukim 6, Daerah Seberang Perai Utara, Pulau Pinang
64,400 sq ft
2 years
2,016,534
Vacant land
727,229 sq ft
Freehold land
Contruction in progress **
4,521,690
97
: :
Distribution Schedule of Shareholders No of Holders Holdings 58 Less than 100 223 100 - 1,000 1,028 1,001 10,000 213 10,001 to 100,000 shares 32 100,001 to less than 5% of issued shares 4 5% and above of issued shares 1,558
# This represents the total issued and paid up capital of RM61,000,248, comprises of 61,000,248 shares after deducting 3,647,100 Shares retained by the Company (or SCB) as treasury shares. 30 Largest Securities Account Holders (without aggregating the securities from different securities accounts belonging to the same person) No. Name 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 HOZONE SDN.BHD. SUIWAH HOLDINGS SDN. BHD. DAUNPURI SDN. BHD. SUIWAH HOLDINGS SDN. BHD. DATO HWANG THEAN LONG WONG THAN KIM DATO HWANG THEAN LONG LENA LEONG OY LIN TEO KWEE HOCK LEONG KOK TAI LOOI TIK MIOW LIM KENG HONG HO SAM FONG JF APEX NOMINEES (TEMPATAN) SDN BHD PLEDGED SECURITIES ACCOUNT FOR TEO SIEW LAI DB (MALAYSIA) NOMINEE (ASING) SDN BHD EXEMPT AN FOR BRITISH AND MALAYAN TRUSTEES LIMITED UNG PENG JOO NG BARBARA ELIZABETH KENANGA NOMINEES (TEMPATAN) SDN BHD PLEDGED SECURITIES ACCOUNT FOR DATO HAJI MOHD SUHAIMI BIN ABDULLAH SIVA KUMAR A/L M JEYAPALAN LENA LEONG OY LIN GOH SING YENG CHAN SENG CHEONG TAWAKAR ENTERPRISE SDN. BHD. NEOH SENG CHYE CH'NG BOON CHONG LEE ENG HOCK & CO. SENDIRIAN BERHAD INTER-PACIFIC EQUITY NOMINEES (TEMPATAN) SDN BHD HO SOO TAK KANG KHOON SENG POH BIN SENG (DATO') YEO KHEE HUAT 180,000 172,000 170,380 0.31 0.30 0.30 376,600 289,900 287,760 230,820 200,000 193,000 192,700 190,000 183,800 0.66 0.51 0.50 0.40 0.35 0.34 0.34 0.33 0.32 464,400 434,800 417,125 0.81 0.76 0.73 500,000 0.87 No. of Shares held 12,117,948 7,591,200 6,595,171 3,296,700 2,296,881 2,173,880 2,148,500 1,426,600 1,109,300 689,700 668,300 618,400 597,000 595,800 % # 21.13 13.24 11.50 5.75
ANNUAL REPORT 2012
4.00 3.79 3.75 2.49 1.93 1.20 1.17 1.08 1.04 1.04
Substantial Shareholders (Direct & Indirect) (excluding those who are bare trustees pursuant to Section 69 of the Companies Act, 1965) No. of Shares beneficially held by the Substantial Shareholders No. Name of Shareholders Direct Interest % # Indirect Interest % # Note 1 Hozone Sdn Bhd 12,117,948 21.13 2 Suiwah Holdings Sdn Bhd 10,887,900 18.98 3 Daunpuri Sdn Bhd 6,595,171 11.50 4 Dato Hwang Thean Long 4,445,381 7.75 10,985,505 19.15 (i) 5 Datin Cheah Gaik Huang 26,400 0.05 15,404,486 26.86 (ii) 6 Suiwah Supermarket Sendirian Bhd 71,205 0.12 10,887,900 18.98 (iii) 7 Hwang Siew Peng 15,430,886 26.91 (iv) 8 Datuk Haji Radzali bin Hassan 12,117,948 21.13 (v) 9 Che Wan Bin Mat 6,595,171 11.50 (vi) 10 Yeoh Eng Wan 6,595,171 11.50 (vi) Notes : (i) Deemed interested through his shareholdings in Suiwah Holdings Sdn Bhd (SHSB) and Suiwah Supermarket Sdn Bhd (SSSB) by virtue of Section 6A of the Companies Act, 1965 (the Act) and the shareholdings of his wife, Datin Cheah Gaik Huang in SCB. (ii) Deemed interested through the shareholdings of her husband, Dato Hwang Thean Long in SCB. (iii) Deemed interested through SHSB in SCB by virtue of Section 6A of the Act. (iv) Deemed interested through the shareholdings of her parents, Dato Hwang Thean Long and Datin Cheah Gaik Huang in SCB (v) Deemed interested through his shareholdings in Hozone Sdn Bhd pursuant to Section 6A of the Act. (vi) Deemed interested through their shareholdings in Daunpuri Sdn Bhd pursuant to Section 6A of the Act. Directors Shareholdings (Direct & Indirect) Name of Directors Dato Hwang Thean Long Datin Cheah Gaik Huang Dato Haji Mohd Suhaimi bin Abdullah Dato Ahmad Hassan bin Osman Datuk Haji Radzali bin Hassan Wong Thai Sun Hwang Siew Peng Jen Shek Voon No. of Shares beneficially held by the Directors Direct Interest % # Indirect Interest %# 4,445,381 7.75 10,985,505 19.15 26,400 0.05 15,404,486 26.86 417,125 0.73 12,117,948 21.13 15,430,886 26.91 Note (i) (ii)
(iii) (iv)
Notes : (i) Deemed interested through his shareholdings in SHSB and SSSB by virtue of Section 6A of the Act and the shareholdings of his wife, Datin Cheah Gaik Huang in SCB. (ii) Deemed interested through the shareholdings of her husband, Dato Hwang Thean Long in SCB. (iii) Deemed interested through his shareholdings in Hozone Sdn Bhd pursuant to Section 6A of the Act. (iv) Deemed interested through the shareholdings of her parents, Dato Hwang Thean Long and Datin Cheah Gaik Huang in SCB. Interest In The Related Corporation Dato Hwang Thean Long, Datin Cheah Gaik Huang, Hwang Siew Peng and Datuk Haji Radzali Bin Hassan by virtue of their interest in Shares in the Company, are deemed interested in Shares of all the Companys subsidiaries to the extent the Company has an interest. Save as disclosed above, none of the other Directors in office have any interest in Shares in the Company or its related corporations.
99
of _____________________________________________________________________________________________________________
(FULL ADDRESS)
member/members of the abovenamed Company, hereby appoint ____________________________________________________________ of ________________________________________________________ or failing him,__________________________________________ of ________________________________________________or the Chairman of the Meeting, as *my/our proxy to vote for *me/us on *my/ our behalf at the Nineteenth (19th) Annual General Meeting of the Company to be held at Sunshine Banquet Hall, Level 4, Sunshine Square Complex, 1, Jalan Mayang Pasir, 11950 Bayan Baru, Penang on Thursday, 22 November 2012 at 11.00 a.m. and at any adjournment thereof. *My/Our Proxy is to vote as indicated below: Resolution No. 1 2 3 4 5 6 7 8 9 10 Resolutions To receive the Audited Financial Statements for the year ended 31 May 2012 together with the Reports of the Directors and Auditors thereon. To approve the declaration of a first and final dividend of 8% less 25% Malaysian Income Tax. To re-appoint Dato Ahmad Hassan Bin Osman as Director of the Company pursuant to Section 129(6) of the Companies Act, 1965. To re-elect Datin Cheah Gaik Huang as Director of the Company. To re-elect Dato Haji Mohd Suhaimi bin Abdullah as Director of the Company. To re-elect Mr. Jen Shek Voon as Director of the Company. To approve the payment of Directors fees. To re-appoint Messrs Ernst & Young as Auditors of the Company and to authorise Directors to fix their remuneration. To authorise Directors to issue and allot shares pursuant to Section 132D of the Companies Act, 1965. Proposed renewal of shareholders mandate for recurrent related party transactions of a revenue or trading nature (RRPT) involving Dato Hwang Thean Long, Datin Cheah Gaik Huang, Hwang Poh Choo, Hwang Siew Peng, Suiwah Holdings Sdn Bhd and Suiwah Supermarket Sendirian Berhad. Proposed renewal of shareholders mandate for RRPT involving Datuk Haji Radzali Bin Hassan and Hozone Sdn Bhd. Proposed renewal of shareholders mandate for RRPT involving Looi Tik Miow. Proposed renewal of shareholders mandate for RRPT involving Leong Kong Meng. Proposed renewal of authority for the Company to purchase its own shares. For Against
11 12 13 14
(Please indicate with an X in the appropriate box against each Resolution how you wish your proxy to vote. If no instruction is given, the proxy will vote or abstain at his/her discretion). * Strike out whichever not applicable. Signed this day of 2012.
3.
4. 5.
6.
7.
stamp
No. 1-20-1, SUNTECH @ Penang Cybercity, Lintang Mayang Pasir 3, 11950 Bayan Baru, Penang, Malaysia . Tel: 604-643 7387 Fax: 604-643 7389 www.suiwah.com.my | www.sunshineonline.com.my