Professional Documents
Culture Documents
(193094-K)
CONTENTS
Page NOTICE OF ANNUAL GENERAL MEETING NOTICE OF DIVIDEND ENTITLEMENT AND PAYMENT STATEMENT ACCOMPANYING THE NOTICE OF ANNUAL GENERAL MEETING CORPORATE INFORMATION BOARD OF DIRECTORS STATEMENT ON CORPORATE GOVERNANCE AUDIT COMMITTEE'S REPORT STATEMENT OF INTERNAL CONTROL STATEMENT OF DIRECTORS' RESPONSIBILITY IN RELATION TO THE FINANCIAL STATEMENTS PENYATA PENGERUSI CHAIRMAN'S STATEMENT DIRECTORS' REPORT STATEMENT BY DIRECTORS STATUTORY DECLARATION REPORT OF THE AUDITORS TO THE MEMBERS OF MULTI-CODE ELECTRONICS INDUSTRIES (M) BERHAD INCOME STATEMENTS BALANCE SHEETS CONSOLIDATED STATEMENT OF CHANGES IN EQUITY COMPANY STATEMENT OF CHANGES IN EQUITY CASH FLOW STATEMENTS NOTES TO THE FINANCIAL STATEMENTS LIST OF PROPERTIES ANALYSIS OF SHAREHOLDINGS SUBSTANTIAL SHAREHOLDERS DIRECTORS' SHAREHOLDINGS THIRTY LARGEST SHAREHOLDERS FORM OF PROXY 2 3 4 5-6 7-9 10 - 17 18 - 20 21 22 23 24 25 - 30 31 31 32 33 34 35 36 37 - 38 39 - 64 65 - 66 67 67 68 69 - 70
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5.
As Special Business 6. To consider and if thought fit, to pass the following resolution as an Ordinary Resolution : Authority to Issue Shares THAT pursuant to Section 132D of the Companies Act, 1965, the Directors be and are hereby authorised to issue shares in the Company at any time until the conclusion of the next Annual General Meeting 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 to be issued does not exceed 10 per cent of the issued share capital of the Company for the time being, subject always to the approval of all the relevant regulatory bodies being obtained for such allotment and issue. 7. Any Other Business To transact any other ordinary business of which due notice shall have been given.
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Resolution 8
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TAN SOI LIM (LS 00565) SUJATA MENON A/P K.R.D.S. CHANDRAN (LS 02004) Secretaries Johor Bahru Dated: 4 December 2003
Notes: (a) A member of the Company entitled to attend and vote at this meeting is entitled to appoint a proxy to attend and vote instead of him. A proxy need not be a member of the Company and a member may appoint any person to be his proxy without limitation and the provisions of Section 149(1)(a) and (b) of the Companies Act, 1965 shall not apply to the Company. The instrument appointing a proxy shall be in writing under the hand of the appointer or his attorney duly authorised in writing or if such appointer is a corporation, under its Common Seal or the hand of its attorney. Where a member appoints two proxies, the appointments shall be invalid unless he specifies the proportions of his holding to be represented by each proxy. The Proxy Form must be deposited with the Secretary at the Registered Office of the Company at Suite 5.3A, Level 5, Menara Pelangi, No. 2, Jalan Kuning, Taman Pelangi, 80400 Johor Bahru, Johor, Malaysia not less than 48 hours before the time set for the meeting or any adjournment thereof. Explanatory Notes to Special Business Ordinary Resolution (8) Authority to Issue Shares (i) The proposed Ordinary Resolution 8 in relation to the authority to allot shares pursuant to Section 132D of the Companies Act, 1965, if passed will empower the Directors to issue shares up to an aggregate amount not exceeding 10% of the issued share capital of the Company for the time being, for such purposes as the Directors consider would be in the interests of the Company. This would avoid any delay and cost involved in convening a general meeting to approve such issue of shares. This authority, unless revoked or varied at a general meeting, will expire at the next Annual General Meeting of the Company.
(b) (c)
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(d)
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CORPORATE INFORMATION
BOARD OF DIRECTORS Chairman Managing Director Directors Dato Hj Sulaiman Bin Ahmad (Non-Independent Non-Executive Director) Goh Tong Huat (Non-Independent Executive Director) Goh Kar Chun (Non-Independent Executive Director) Goh Chai Siong (Non-Independent Non-Executive Director) Nora Lam Siew Wan (Non-Independent Non-Executive Director) Mohd. Nadzir Mahmud (Non-Independent Non-Executive Director) Dato Bahari Bin Haron (Independent Non-Executive Director) Huang Yan Teo (Independent Non-Executive Director) Chai Lai Koon (Independent Non-Executive Director)
AUDIT COMMITTEE Chairman Members Huang Yan Teo Mohd Nadzir Mahmud Nora Lam Siew Wan Dato Bahari Bin Haron Chai Lai Koon
REMUNERATION COMMITTEE Chairman Members Mohd Nadzir Mahmud Nora Lam Siew Wan Huang Yan Teo
NOMINATION COMMITTEE Chairman Member Chai Lai Koon Nora Lam Siew Wan Dato Bahari Bin Haron
SECRETARIES Tan Soi Lim (LS00565) Sujata Menon A/P K.R.D.S. Chandran (LS02004) REGISTERED OFFICE Suite 5.3A, Level 5, Menara Pelangi, No 2, Jalan Kuning, Taman Pelangi, 80400 Johor Bahru, Johor Tel: 07-3341750 Fax: 07-3318617
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CORPORATE INFORMATION
REGISTRAR Securities Services (Holdings) Sdn Bhd (36869-T) Level 7, Menara Milenium, Jalan Damanlela, Pusat Bandar Damansara, Damansara Heights, 50490 Kuala Lumpur. Tel: 03-20849000 Fax: 03-20949940 AUDITORS Messrs. Ernst & Young PRINCIPAL BANKERS Public Bank Berhad Malayan Banking Berhad RHB Bank Berhad HSBC Bank Malaysia Berhad Affin Bank Berhad SUBSIDIARY COMPANIES Beaucar Accessories (M) Sdn Bhd (102803-P) Plasmet Industries (M) Sdn Bhd (393571-K) ASSOCIATED COMPANY Wirapadu Sistem Sdn Bhd (485384-M) STOCK EXCHANGE LISTING Second Board of The Kuala Lumpur Stock Exchange
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BOARD OF DIRECTORS
DIRECTORS PROFILE DATO HAJI SULAIMAN BIN AHMAD Dato Haji Sulaiman Bin Ahmad, Malaysian, aged 66, is the Chairman and Non - Executive Director of the Company. He was appointed to the Board on 28 May 1996. He has over 30 years experience in automotive industry. He is deemed interested in recurrent related party transactions, for which a Shareholders Mandate was obtained at the Extraordinary General Meeting held on 23 December 2002. Details pertaining to these transactions are disclosed in Note 22 to the financial statements. He currently sits on the Board of Golden Pharos Berhad. He has had no convictions for any offences within the past 10 years. GOH TONG HUAT Goh Tong Huat, Malaysian, aged 49, is the Managing Director of the Company. He was appointed to the Board on 6 February 1990 . He holds a Bachelor of Science degree in Mechanical Engineering. Prior to joining the Group, he served as Head of the Quality Control Section at Amalgamated Steel Mills Sdn Bhd from year 1978 to year 1985. He started a car parts and accessories business since 1985. He is a brother of Goh Chai Siong, who is a Non-Executive Director and substantial shareholder of the Company, and an uncle of Goh Kar Chun, who is the Executive Director of the Company. He is also a brother-in-law of Chang Choon Cheng @ Chang Chu Chen, who is a substantial shareholder of the Company. He has had no convictions for any offences within the past 10 years. GOH CHAI SIONG Goh Chai Siong, Malaysian, aged 51, is a Non-Executive Director of the Company. He was appointed to the Board on 8 August 1990. He has over 30 years experience in the hardware and car accessories business. He is deemed interested in recurrent related party transactions, for which a Shareholders Mandate was obtained at the Extraordinary General Meeting held on 23 December 2002. Details pertaining to these transactions are disclosed in Note 22 to the financial statements. He is a brother of Goh Tong Huat, who is the Managing Director and substantial shareholder of the Company, and an uncle of Goh Kar Chun, who is the Executive Director of the Company. He is also a brother-in-law of Chang Choon Cheng @ Chang Chu Chen, who is a substantial shareholder of the Company. He has had no convictions for any offences within the past 10 years. NORA LAM SIEW WAN Nora Lam Siew Wan, Malaysian, aged 45, is a Non-Executive Director of the Company. She was appointed to the Board on 20 May 1997. She is also a member of the Audit Committee, Nomination Committee and Remuneration Committee. Ms Lam who holds a Law Degree, LLB (Hons), is a Barrister-at-law (Lincolns Inn, London) and a mediator (Bar Council) in Malaysia. She had previously practiced in a legal firm as a legal assistant from year 1983 to early of year 1987. Prior to joining the Group, she served as Legal Manager for 4 years at East Asiatic Company (M) Berhad from year 1987 to year 1991 and as Company Secretary for its subsidiaries. She is the Founder Partner of M/s Lam & Lim from year 1991 to year 1998, and subsequently she became the sole-proprietor of M/s Nora S.W. Lam & Associates from year 1998 to year 1999. Since the year 2000 she has been the Managing Partner of M/s Nora S.W. Lam & Associates. She is deemed interested in recurrent related party transactions, for which a Shareholders Mandate was obtained at the Extraordinary General Meeting held on 23 December 2002. Details pertaining to these transactions are disclosed in Note 22 to the financial statements. She has no family relationship with any directors and/ or substantial shareholders of the Company. She has had no convictions for any offences within the past 10 years.
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BOARD OF DIRECTORS
HUANG YAN TEO Huang Yan Teo, Malaysian, aged 56, is an Independent Non-Executive Director of the Company. He was appointed to the Board on 29 March 2002. He is also the Chairman of the Audit Committee, and a member of the Remuneration Committee. He is a Chartered Accountant and served for 8 years from year 1966 to year 1974 with an audit firm, Coopers & Lybrand before working as financial controller in the private sector from year 1974 to year 1981. He has been the principal of his own accounting firm since year 1981. Other directorships of public listed companies are London Biscuits Berhad and Pelangi Berhad. He has no family relationship with any directors/ or substantial shareholders of the Company and does not have any conflict of interest with the Company. He has had no convictions for any offences within the past 10 years. MOHD NADZIR MAHMUD Mohd Nadzir Mahmud, Malaysian, aged 62, is a Non-Executive Director of the Company. He was appointed to the Board on 2 August 1999. He is also the Chairman of Remuneration Committee and a member of the Audit Committee. He is a Barrister-at-law (Inner Temple, London) and holds a postgraduate qualification in Business Administration from the Harvard University, Graduate School of Business Administration, United States of America. He had previously held various senior management positions in both local and multinational corporations. He currently sits on the Board of Hock Seng Lee Berhad, a public listed company. He has no family relationship with any directors/ or substantial shareholders of the Company and does not have any conflict of interest with the Company. He has had no convictions for any offences within the past 10 years. GOH KAR CHUN Goh Kar Chun, Malaysian, aged 27, is the Executive Director of the Company. He was appointed to the Board on 27 December 2001. He had a degree of Bachelor of Medicine, Bachelor of Surgery and Bachelor of Obstretrics. He worked in General Practitioner Clinic in year 1994 and voluntary worked in Cerebral Palsy Centre in year 1996. He also had elective training in Subang Jaya Medical Centre and Penang General Hospital in year 1999. In year 2000, he worked as a doctor at ST. Vincent University Hospital, Ireland. He is the nephew of Goh Tong Huat, who is the Managing Director of the Company, and Goh Chai Siong, who is a Non-Executive Director of the Company. He is also the son of Chang Choon Cheng @ Chang Chu Chen, who is a substantial shareholder of the Company. He has had no convictions for any offences within the past 10 years.
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CHAI LAI KOON Chai Lai Koon, Malaysian, aged 46, is an Independent Non-Executive Director of the Company. He is also a member of Audit Committee and the Chairman of Nomination Committee. He was appointed to the Board on 29 March 2002. He is a qualified Chartered Accountant(M), FCCA and ATII. He was a partner of public accounting firm, namely SC Associates, from year 1993 to year 1997. He was also a city councilor of Majlis Bandaraya Johor Bahru from year 1994 to year 1998. He is now a principal of own accounting firm, namely CLK Associates since year 1998. He has no family relationship with any directors/ or substantial shareholders of the Company and does not have any conflict of interest with the Company. He has had no convictions for any offences within the past 10 years.
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BOARD OF DIRECTORS
DATO BAHARI BIN HARON Dato Bahari Bin Haron, Malaysian, aged 56, is an Independent Non-Executive Director of the Company. He was appointed to the Board on 29 March 2002. He is a member of Audit Committee and Nomination Committee. He is a Barrister At Law (Inner Temple, London) and a Magistrate of Kuala Lumpur Court from year 1973 to year 1974. He started his own legal practice in year 1974 and was actively involved in UMNO Johor and made a candidate for the Labis Parliamentary Constituency for the General Election in year 1982. He won the seat uncontested. He was appointed as the State Exco Member in year 1989 and held the portfolio of Chairman of the State Housing and Local Government Committee. He is currently retired from active politics. Prior to joining the Group, he was involved in many business activities in the retail, property, food and manufacturing industries. He was the Director of Bank Rakyat for 5 years and was the Vice-Chairman of Kejora (Lembaga Kemajuan Johor Tenggara) for 8 years. He has no family relationship with any directors and/ or substantial shareholders of the Company and does not have any conflict of interest with the Company. He has had no convictions for any offences within the past 10 years.
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Directors Training The Board ensures that it recruits to the Board only individuals of caliber, knowledge and experience to fulfill the duties of a Director. All Directors have attended and completed the Mandatory Accreditation Programme(MAP) conducted by the Research Institute of Investment Analysis Malaysia(RIIAM). Pursuant to KLSE Practice Note No. 15/2003, Continuing Education Programme (CEP), directors who have completed the MAP or whose stipulated timeframes for completion of the MAP expire on or before 31 December 2002 must attend the CEP in the manner prescribed by the Exchange vide this Practice Note, beginning with the calendar year 2003. All directors have yet to attend CEP due to this Practice Note takes effects on 1 July 2003. Directors are provided with the opportunity for training on an ongoing basis to ensure they are kept up to date on relevant new legislation, regulations and changing commercial risks. Additionally, the seminars and continuing education programmes conducted by KLSE, other relevant regulatory authorities and professional bodies are notified to the Board for their participation.
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* Nora Lam Siew Wan was appointed to the committee on 23 September 2002. The Remuneration Committee reviews and approves the annual salaries, incentive arrangements, service arrangements and other employment conditions for the executive directors. The determination of remuneration of non-executive directors is a matter for the Board as a whole. The non-executive directors abstain from discussion of their own remuneration. The policy of the Remuneration Committee is in line with the Groups overall practice on compensation and benefits. This is to reward employees competitively, taking into account performance, market comparisons and competitive pressures in the industry. The strategy for executive pay, in general terms, is for basic salaries to reflect the relevant market median, with total direct compensation (that is, basic salary, annual bonus payments) to be at the upper quartile for outstanding performance.
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The details of the total remuneration of each director of the Company during the financial year are as disclosed in Note 5 to the financial statements. SECTION 3: SHAREHOLDERS Dialogue Between the Company and Investors As part of the Boards responsibility in developing and implementing an investor relations programme, meeting will be held between the Managing Director and analyst/investors throughout the year as and when required. Presentations based on permissible disclosures are made to explain the Groups performance and major development programmes. Pricesensitive information about the Group is, however, not disclosed in these exchanges until after the prescribed announcement to the KLSE has been made. In addition, the annual and quarterly reports, together with the Groups earnings and other announcements about the Group provides shareholders with an overview of the Groups performance and operations, are available at the KLSEs website.
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Directors Dato Haji Sulaiman Bin Ahmad Mohd Nadzir Mahmud Goh Tong Huat Goh Chai Siong Nora Lam Siew Wan Chai Lai Koon Dato Bahari Bin Haron Goh Kar Chun Huang Yan Teo
OTHER INFORMATION REQUIRED BY THE LISTING REQUIREMENTS OF THE KLSE Share Buybacks During the financial year, the Company did not enter into any share buyback transactions. Options or Warrants During the financial year, 3,738,000 share options under the Employees Share Options Scheme (ESOS) were granted to Eligible Employees in the Group pursuant to the ESOS of the Group that was established in March 2003. Each option holder is given a right to exercise one share option for one ordinary share in MCE at an option price of RM1.45 per share. During the financial year ended 31 July 2003, the Option Committee had accepted the exercise of options by the eligible employees of the Group for a total of 61,000 new ordinary shares. The company did not issue any warrants or convertible securities during the financial year. Further information on the ESOS is set out on pages 27 to 29. American Depository Receipt (ADR) or Global Depository Receipt (GDR) Programme During the financial year, the Company did not sponsor any ADR or GDR programme. Imposition of 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.
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Composition Compliance The members of the Audit Committee shall be appointed by the Board from amongst the directors which shall fulfil the following requirements: i. ii. iii. The Audit Committee must compose of no fewer than 3 members; The majority of the Audit Committee must be independent non-executive directors; At least one member of the Audit Committee: ! must be a member of the Malaysian Institute of Accountants (MIA); or ! if he is not member of the Malaysian Institute of Accountants, he must have at least 3 years working experience and : - he must have passed the examinations specified in Part 1 of the 1st Schedule of the Accountants Act 1967; or - 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.
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The Board confirms that no alternate director has been appointed as a member of the Audit Committee. Mr Huang Yan Teo, who is a member of MIA and an Independent Non-Executive Director, chairs the Audit Committee. In the event of any vacancy in the Audit Committee resulting in the non-compliance of the above requirements, the Board must fill the vacancy within 3 months.
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! ! !
To review the effectiveness of management information and other systems of internal control within the Group. To review with the external auditors the scope of their audit plan, their evaluation of the system of internal control and the audit reports on the financial statements. To review the quarterly and annual financial statements with management and external auditors prior to approval by the Board. To review the scope and recommendations in the internal audit reports and the effectiveness of the internal audit function. To carry out in-depth review on major findings of internal investigations and managements response and to recommend corrective measures. To consider compliance of statutory legislation or guidelines as imposed by relevant Authorities which will include, but are not limited to : a. The Securities Commission b. The Kuala Lumpur Stock Exchange To consider external auditors appointment and remuneration. To consider any related party transactions and conflict of interest situation that may arise within the Group including transaction, procedure or course of conduct that raises questions of management integrity. To consider other matters directed by the Board.
Meetings Number of Meetings The Committee shall meet at least four (4) times a year. The Chairman shall also convene a meeting of the Committee if requested to do so by any member, the management or the internal or external auditors to consider any matter within the scope and responsibilities of the Committee. As part of its duty to foster open communication, the Group Accounts Manager, General Manager and the representative from the external auditors are normally invited to attend the meetings. Quorum A quorum shall consist of a majority of Independent Non-Executive Directors. Secretary The Company Secretary shall be the Secretary of the Committee or, in her absence, another person authorised by the Chairman of the Committee.
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The Groups Audit Committee held four (4) meetings during the year under review. The attendance of each Audit Committee member were as follows : Total no. of meetings held during directors tenure in office 4 4 4 4 4
Huang Yan Teo Dato Bahari Bin Haron Chai Lai Koon Mohd. Nadzir Mahmod Nora Lam Siew Wan Activities
During the financial year under review, the activities of the Audit Committee included :
! ! ! ! ! ! !
reviewing the unaudited quarterly financial results and announcements of the results prior to the approval by the Board of Directors; reviewing the audit reports with the external auditors; reviewing any related party transaction; reviewing the Companys compliance with the Listing Requirements of the Kuala Lumpur Stock Exchange; reviewing the recommendations in the quarterly internal audit reports and the effectiveness of the internal audit function; reviewing the internal audit plan for the financial year ended 31 July 2003 and financial year ending 31 July 2004; and discussing with the external auditors the audit plan and scope for the year as well as audit procedures to be utilized.
Internal Audit Function The Audit Committee is supported by an independent and adequately resourced internal audit function which is outsourced from Hanafiah Raslan and Mohamad. The Committee is aware of the fact that an independent and adequately resourced internal audit function is essential to assist in obtaining the assurance it requires regarding the effectiveness of the system of internal control. The committee is satisfied that the internal auditor has performed its role with impartiality, proficiency and due professional care. During the financial year, the internal audit activities were carried out according to the internal audit plan which have been approved by the Audit Committee.
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There is a system of financial reporting to the Board based on quarterly results; The Group outsourced its internal audit function to assist the Audit Committee in discharging its duties in respect of the internal controls within the Group. The internal auditors reporting to the Audit Committee, performs regular reviews of business processes to assess the effectiveness of internal controls and highlight significant risks impacting the Group. The Audit Committee conducts annual reviews on the adequacy of the internal audit scope of work and resources; The Audit Committee, on behalf of the Board, regularly reviews and holds discussions with management on the action taken on internal control issues identified in reports prepared by the internal auditors, the external auditors and the management. During the current financial year, four of such reports were received and reviewed by the Audit Committee; Close involvement in daily operations of the Group by the Managing Director and the Executive Director.
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A number of internal control weaknesses were identified during the year under review. None of the weaknesses have resulted in any material losses, contingencies or uncertainties that would require disclosure in the Groups annual report. Statement made in accordance with the resolution of the Board of Directors dated 30 October 2003.
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the Group and the Company have used appropriate accounting policies and are consistently applied; reasonable judgements and estimates that are prudent and reasonable have been used; all applicable Approved Accounting Standards in Malaysia have been followed. the accounting and other records required by the Act are properly kept and disclosed with reasonable accuracy at any time the financial position of the Group and of the Company which enable them to ensure the financial statements comply with the Act. the financial statements have been prepared on the going concern basis.
The directors have 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 and material misstatements, as described more fully in the corporate governance section of this report. Such system, by their nature, can only provide reasonable and not absolute assurance against material misstatement, loss and fraud.
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PENYATA PENGERUSI
Bagi pihak Lembaga Pengarah, saya dengan sukacitanya membentangkan Laporan Tahunan Multi-Code Electronics Industries (M) Berhad (MCE atau Syarikat) berserta dengan anakanak syarikat dalam kumpulannya ("Kumpulan") bagi tahun kewangan berakhir 31 Julai, 2003. GAMBARAN KESELURUHAN KEWANGAN Dalam tahun kewangan ini, Kumpulan telah mencapai perolehan sebanyak RM52.30 juta berbanding dengan RM71.51 juta dalam tahun 2002, menggambarkan penurunan sebanyak 26.86%. Ini adalah berikutan dengan penurunan kadar permintaan daripada pelangganpelanggan utama. Sejajar dengan penurunan perolehan ini, Kumpulan telah mencatatkan keuntungan selepas cukai dan kepentingan minoriti yang rendah sebanyak RM6.75 juta berbanding dengan RM8.96 juta pada tahun sebelumnya. PERKEMBANGAN KORPORAT Semasa tahun kewangan ini, Syarikat berbangga dengan kejayaan dalam peningkatan taraf pengiktirafan kepada ISO9001:2000. Pengiktirafan ke atas kualiti pengurusan yang cemerlang ini menunjukkan komitmen kami terhadap mutu barangan yang berkualiti tinggi dan juga adalah syarat penting untuk membolehkan syarikat kami membekal barangan kepada pelanggan-pelanggan utama. Pengilangan dan pembekalan alat kawalan jauh, alat penggera automatik, kunci pusat, tingkap berkuasa, pengesan undur, lampu berhenti, suis dan juga set kunci untuk kenderaan akan merupakan perniagaan utama dan penyumbang keuntungan Kumpulan bagi tahun kewangan berakhir 31 Julai 2004. PROSPEK Lembaga Pengarah menjangkakan prestasi Kumpulan bagi tahunan kewangan hadapan akan merosot berbanding dengan tahun kewangan semasa disebabkan oleh kekurangan permintaan daripada pelanggan-pelanggan. DIVIDEN Lembaga Pengarah telah mencadangkan dividen akhir sebanyak 10% dikecualikan cukai bagi tahun kewangan berakhir 31 Julai 2003. Ini tertakluk diatas persetujuan para pemegang saham dalam Mesyuarat Agung Tahunan yang akan datang. PENGHARGAAN Bagi pihak Lembaga Pengarah, saya ingin merakamkan penghargaan kami kepada pihak Pengurusan dan semua kakitangan di atas dedikasi dan usaha gigih mereka pada tahun lepas dan semua pelanggan, pembekal, bank, rakan niaga dan para pemegang saham di atas sokongan mereka yang berterusan dan keyakinan yang diberikan kepada Kumpulan. Saya juga ingin mengambil peluang ini untuk mengucapkan ribuan terima kasih kepada rakan-rakan sejawat di dalam Lembaga Pengarah ini di atas nasihat yang bernilai dan panduan yang telah diberikan oleh mereka dalam tahun lepas dan mengharap akan sokongan yang berterusan untuk masa yang mendatang.
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CHAIRMANS STATEMENT
On behalf of the Board of Directors, I am pleased to present the Annual Report of Multi-Code Electronics Industries (M) Berhad (MCE or the Company) and its subsidiaries (the Group) for the financial year ended 31 July 2003. FINANCIAL OVERVIEW For the year under review, the Group achieved a turnover of RM52.30 million compared to RM71.51 million in year 2002, representing a decrease of 26.86% is mainly due to decrease in demand from the main customers. In tandem with the lower turnover, the Group recorded a lower profit after tax and minority interest of RM6.75 million compared to RM8.96 million in the preceding year. CORPORATE DEVELOPMENTS During the year under review, the Company takes pride in that it has successfully been upgraded to ISO9001:2000 accreditation. This certification of quality management excellence marks our commitment to the high standard of product quality and is also a prerequisite for the supply of parts to our main customers. Manufacture and supply of remote control auto alarm, central locks, power window, reverse sensor, stop lamp, switches and key sets will be the Groups core business and earning contributor for the financial year ending 31 July 2004. PROSPECTS The Board anticipates that the Groups performance for the next financial year will be lower compared to the current financial year due to the expected weak demand by the customers. DIVIDENDS The Board has recommended a final 10% tax exempt dividend for the financial year ended 31 July 2003. This would be subject to the approval of shareholders at the forthcoming annual general meeting to be convened by the Company. APPRECIATION On behalf of the Board, I would like to express my appreciation to the Management and staff for their hard work and dedication during the past year and all customers, suppliers, bankers, business associates and shareholders for their continued cooperation and support to the Group. I would also like to take this opportunity to thank all my fellow Board members for their invaluable advice and guidance in the past year and look forward to their continued support in the future.
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DIRECTORS REPORT
The directors have pleasure in presenting their report together with the audited financial statements of the Group and of the Company for the financial year ended 31 July 2003. PRINCIPAL ACTIVITIES The principal activities of the Company are the manufacture and supply of remote control auto alarm, central locks, power window, reverse sensor, switches and stop lamp for motor vehicles. The principal activities of the subsidiaries are manufacture and supply of metal stamping and plastic injection parts and trading in auto accessories. There have been no significant changes in these activities during the financial year. RESULTS Group RM Profit after taxation Minority interests Net profit for the year 6,756,447 (6,760) 6,749,687 Company RM 8,597,430 8,597,430
There were no material transfers to or from reserves or provisions during the financial year other than as disclosed in the statements of changes in equity. 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. DIVIDENDS The amount of dividends paid by the Company since 31 July, 2002 were as follows :
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In respect of the financial year ended 31 July 2002 as reported in the directors report of that year Final tax exempt dividend of 10% paid on 28 January 2003
RM 4,361,170
At the forthcoming Annual General Meeting, a final dividend in respect of the financial year ended 31 July 2003 of 10% tax exempt on 43,672,700 ordinary shares amounting to a total dividend payable of RM4,367,270 (10 sen net per share) will be proposed for shareholders approval. The financial statements for the current year do not reflect this proposed dividend. Such dividend, if approved by the shareholders, will be accounted for in shareholders equity as an appropriation of retained profits in the financial year ending 31 July 2004.
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DIRECTORS REPORT
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 Hj Sulaiman bin Ahmad Goh Tong Huat Mohd. Nadzir Mahmud Goh Chai Siong Nora Lam Siew Wan Goh Kar Chun Huang Yan Teo Chai Lai Koon Dato Bahari Bin Haron DIRECTORS BENEFITS Neither at the end of the financial year, nor at any time during that year, did there subsist any arrangement to which the Company was a party, whereby the directors might acquire benefits by means of acquisition of shares in or debentures of the Company or any other body corporate, other than as may arise from the share options to be granted pursuant to the Employee Share Options Scheme ("ESOS"). Since the end of the previous financial year, no director has received or become entitled to receive a benefit (other than benefits included in the aggregate amount of emoluments received or due and receivable by the directors as shown in Note 5 to the financial statements or the fixed salary of a full-time employee of the Company) by reason of a contract made by the Company or a related corporation with any director or with a firm of which he is a member, or with a company in which he has a substantial financial interest. DIRECTORS INTERESTS According to the register of directors shareholdings, the interests of directors in office at the end of the financial year in shares in the Company during the financial year were as follows:
2 0 0 3 A N N U A L R E P O R T
<---- Number of Ordinary Shares of RM1 Each ----> 1 August 31 July 2002 Bought Sold 2003 Direct interest Goh Tong Huat Goh Chai Siong Indirect interest Dato Hj Sulaiman bin Ahmad Goh Tong Huat 12,021,520 3,526,836 2,415,600 502,118 12,021,520 3,526,836 2,415,600 502,118
26
(193094-K)
DIRECTORS REPORT
The options to subscribe for shares pursuant to the ESOS of the Company are as follows : Number of Options Over Unissued Ordinary Shares of RM1 Each Multi-Code Electronics Industries (M) Berhad Direct interest Goh Tong Huat Goh Kar Chun 1 August 2002 Granted Exercised 31 July 2003
412,000 76,000
412,000 76,000
Other than as disclosed above, the other directors in office at the end of the financial year had no interest in shares in the Company. ISSUE OF SHARES During the financial year, the Company increased its issued and paid-up share capital from RM43,611,700 to RM43,672,700 by way of issuance of 61,000 ordinary shares of RM1 each at an issued price of RM1.45 per share pursuant to ESOS. The share premium arising amounted to RM27,450, and this has been credited to the share premium account. The new ordinary shares rank pari passu in all respects with existing ordinary shares. Subsequent to the financial year, the Company increased its issued and paid-up share capital from RM43,672,700 to RM43,702,700 by the issuance of 30,000 ordinary shares of RM1 each at an issued price of RM1.45 per share pursuant to ESOS. All the shares issued ranked pari passu in all respects with the existing shares of the Company. PROPOSED PRIVATE PLACEMENT (PPP) During the financial year, the Companys proposal of a private placement of 500,000 new ordinary shares of RM1.00 each representing approximately 1.15% of the issued and paid up share capital of the Company was approved by the Ministry of International Trade and Industry on 21 January 2003 and the Securities Commission (SC) on 6 March 2003. The SC had further approved the PPP on 25 July 2003 to be regulated under the SCs revised Policies and Guidelines on Issue/Offer of Securities which come into effect on 1 May 2003 and also approved the extension of time until 6 March 2004 to complete the PPP via its letter dated 5 September 2003. EMPLOYEE SHARE OPTIONS SCHEME ("ESOS") The Multi-Code Electronics Industries (M) Berhad ESOS is governed by the by-laws approved by the shareholders at an Extraordinary General Meeting held on 3 December 2001. The main features of the ESOS are as follows: (a) (b) The ESOS shall be in force for a period of five years from the date of the receipt of the last of the requisite approvals. Eligible persons are employees of the Group (including executive directors) who have been confirmed in the employment of the Group and have served for at least one year before the date of the offer. The eligibility for participation in the ESOS shall be at the discretion of the Options Committee appointed by the Board of Directors.
2 0 0 3 A N N U A L R E P O R T
27
(193094-K)
DIRECTORS REPORT
(c) (d) The total number of shares to be issued under the ESOS shall not exceed in aggregate 10% of the issued share capital of the Company at any point of time during the tenure of the ESOS. The option price for each share shall be the average of the mean market quotation of the shares of the Company in the daily official list issued by the Kuala Lumpur Stock Exchange for the five trading days preceding the date of offer, or the par value of the shares of the Company of RM1, whichever is the higher. No option shall be granted for less than 1,000 shares to any eligible employee. An option granted under the ESOS shall be capable of being exercised by the grantee by notice in writing to the Company commencing from the date of the offer but before the expiry of five years from the date of the receipt of the last of the requisite approvals. All new ordinary shares issued upon exercise of the options granted under the ESOS will rank pari passu in all respects with the existing ordinary shares of the Company other than as may be specified in a resolution approving the distribution of dividends prior to their exercise dates. The persons to whom the options have been granted have no right to participate by virtue of the options in any share issue of any other company.
(e) (f)
(g)
(h)
Information with respect to the number of options granted under the ESOS is as follows : Number of Share Options At 1 August 2002 Granted Exercised Lapsed At 31 July 2003
2 0 0 3 A N N U A L R E P O R T
Details of share options granted during the financial year : Exercise Period 21 March 2003 - 10 March 2007 Exercise Price RM 1.45 Number of Share Options 3,738,000
The Company has been granted exemption by the Companies Commission of Malaysia from having to disclose the list of option holders and their holdings.
28
(193094-K)
DIRECTORS REPORT
Details of share options exercised during the year and the fair value at the exercise date of shares issued are as follows : Consideration Received RM 8,700 13,050 24,650 33,350 8,700 88,450 The terms of share options outstanding as at the end of the year are as follows : Exercise Price RM 1.45 Number of Share Options Options Outstanding 3,527,000 Number of Share Options 6,000 9,000 17,000 23,000 6,000 61,000 Fair Values of Shares Issued RM 1.78 1.73 1.87 1.93 2.05
Exercise Date 13 June 2003 1 July 2003 8 July 2003 11 July 2003 15 July 2003
Exercise Period 21 March 2003 - 10 March 2007 OTHER STATUTORY INFORMATION (a)
Before the income statements and balance sheets of the Group and of the Company were made out, the directors took reasonable steps : (i) to ascertain that proper action had been taken in relation to the writing off of bad debts and the making of provision for doubtful debts and satisfied themselves that there were no known bad debts and that adequate provision had been made for doubtful debts; and to ensure that any current assets which were unlikely to realise their values as shown in the accounting records in the ordinary course of business had been written down to an amount which they might be expected so to realise.
2 0 0 3 A N N U A L R E P O R T
(ii)
(b)
At the date of this report, the directors are not aware of any circumstances which would render : (i) (ii) it necessary to write off any bad debts or the amount of the provision for doubtful debts 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.
(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.
(d)
29
(193094-K)
DIRECTORS REPORT
(e) As at the date of this report, there does not exist : (i) (ii) (f) any charge on the assets of the Group or of the Company which has arisen since the end of the financial year which secures the liabilities of any other person; or any contingent liability of the Group or of the Company which has arisen since the end of the financial year.
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.
30
(193094-K)
2 0 0 3 A N N U A L R E P O R T
31
(193094-K)
REPORT OF THE AUDITORS TO THE MEMBERS OF MULTI-CODE ELECTRONICS INDUSTRIES (M) BERHAD
We have audited the accompanying financial statements set out on pages 33 to 64. These financial statements are the responsibility of the Companys directors. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with applicable Approved Standards on Auditing in Malaysia. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by the directors, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion. In our opinion : (a) the financial statements have been properly drawn up in accordance with the provisions of the Companies Act, 1965 and applicable Approved Accounting Standards in Malaysia so as to give a true and fair view of : (i) (ii) (b) the financial position of the Group and of the Company as at 31 July 2003 and of the results and the cash flows of the Group and of the Company for the year then ended; and the matters required by Section 169 of the Companies Act, 1965 to be dealt with in the financial statements; and
the accounting and other records and the registers required by the Act to be kept by the Company and by its subsidiaries have been properly kept in accordance with the provisions of the Act.
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. The auditors reports on the financial statements of the subsidiaries were not subject to any qualification material to the consolidated financial statements and did not include any comment required to be made under Section 174(3) of the Act.
2 0 0 3 A N N U A L R E P O R T
Ernst & Young No. AF 0039 Chartered Accountants Johor Bahru, Malaysia Date : 30 October 2003
32
(193094-K)
2 0 0 3 A N N U A L R E P O R T
33
(193094-K)
Company 2002 RM 2003 RM 26,421,917 2,391,942 5,000 28,818,859 2002 RM 26,077,627 2,391,942 5,000 28,474,569
2003 RM
FINANCED BY : Share capital Reserves Shareholders equity Deferred taxation Minority interests 17 43,672,700 38,758,052 82,430,752 1,402,133 1,194,820 85,027,705 43,611,700 36,268,959 79,880,659 1,314,863 1,360,260 82,555,782 43,672,700 35,708,225 79,380,925 1,402,133 80,783,058 43,611,700 31,371,389 74,983,089 1,314,863 76,297,952
18
34
(193094-K)
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 JULY 2003
<------------ Non-distributable ------------> Revaluation Share buy Share reserve back premium (Note 19) reserve RM RM RM 4,343,713 4,343,713 (3,964,700) (92,175) 286,838 1,438,685 (210,726) 1,227,959 (162,137) (197,662) 868,160 352,000 352,000 352,000 Distributable Retained profits RM 29,770,723 29,770,723 8,955,938 (3,964,700) 34,761,961 Total RM 75,552,121 (210,726) 75,341,395 (162,137) (197,662) 8,955,938 (92,175) (3,964,700) 79,880,659
21
At 1 August 2001 (restated) Charged to deferred taxation 18 Deficit on revaluation of freehold land and buildings during the year Net profit for the year Bonus issue during the year Expenses incurred for the bonus issue during the year Dividend 20 At 31 July 2002
21
At 1 August 2002 (restated) Issue of shares for cash pursuant to ESOS Charged to deferred taxation 18 Surplus on revaluation of freehold land and buildings during the year Net profit for the year Dividend 20 At 31 July 2003
2 0 0 3 A N N U A L R E P O R T
35
(193094-K)
COMPANY STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 JULY 2003
<------------ Non-distributable ------------> Revaluation Share buy Share reserve back premium (Note 19) reserve RM RM RM 4,343,713 4,343,713 (3,964,700) (92,175) 286,838 1,438,685 (210,726) 1,227,959 (162,137) (197,662) 868,160 352,000 352,000 352,000 Distributable Retained profits RM 26,916,950 26,916,950 6,912,141 (3,964,700) 29,864,391 Total RM 72,698,348 (210,726) 72,487,622 (162,137) (197,662) 6,912,141 (92,175) (3,964,700) 74,983,089
21
At 1 August 2001 (restated) Charged to deferred taxation 18 Deficit on revaluation of freehold land and buildings during the year Net profit for the year Bonus issue during the year Expenses incurred for the proposed bonus issue during the year Dividend 20 At 31 July 2002
21
At 1 August 2002 (restated) Issue of shares for cash pursuant to ESOS Charged to deferred taxation 18 Surplus on revaluation of freehold land and buildings during the year Net profit for the year Dividend 20 2 0 0 3 A N N U A L R E P O R T At 31 July 2003
36
(193094-K)
37
(193094-K)
NET INCERASE IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR CASH AND CASH EQUIVALENTS AT END OF YEAR (NOTE 14)
11,840,001 19,433,840
799,556 18,634,284
11,307,626 18,715,327
742,927 17,972,400
31,273,841
19,433,840
30,022,953
18,715,327
38
(193094-K)
The principal activities of the Company are the manufacture and supply of remote control auto alarm, central locks, power window, reverse sensor, switches and stop lamp for motor vehicles. The principal activities of the subsidiaries are described in Note 9. There have been no significant changes in the nature of these activities during the financial year. The Company is a public limited liability company, incorporated and domiciled in Malaysia and is listed on the Second Board of the Kuala Lumpur Stock Exchange. The principal place of business of the Company is located at No. 2 & 4, Jalan Waja 7, Kawasan Perindustrian Pandan, 81100 Johor Bahru, Johor. The number of employees in the Group and in the Company at the end of the financial year were 463 (2002 : 593) and 364 (2002 : 472) respectively. The financial statements were authorised for issue by the Board of Directors in accordance with a resolution of the directors on 30 October 2003. 2. (a) SIGNIFICANT ACCOUNTING POLICIES Basis of Preparation
The financial statements of the Group and of the Company have been prepared under the historical cost convention except for the revaluation of freehold land and buildings. The financial statements comply with the provisions of the Companies Act, 1965 and applicable Approved Accounting Standards in Malaysia. During the financial year ended 31 July 2003, the Group and the Company adopted the following Malaysian Accounting Standards Board (MASB) Standards for first time : MASB 25 MASB 29 Income Taxes Employee Benefits
The effects of adopting MASB 25 are summarised in the Statements of Changes in Equity and further information is disclosed in Note 21. The adoption of MASB 29 has not given rise to any adjustments to the opening balances of retained profits of prior and current year or to changes in comparatives. (b) (i) Basis of Consolidation Subsidiaries The consolidated financial statements include the financial statements of the Company and all its subsidiaries. Subsidiaries are those companies in which the Group has a long term equity interest and where it has power to exercise control over the financial and operating policies so as to obtain benefits therefrom. Subsidiaries are consolidated using the acquisition method of accounting. Under the acquisition method of accounting, the results of subsidiaries acquired or disposed of during the year are included in the consolidated income statement from the effective date of acquisition or up to the effective date of disposal, as appropriate. The assets and liabilities of a subsidiary are measured at their fair values at the date of acquisition and these values are reflected in the consolidated balance sheet. The difference between the cost of an acquisition and the fair value of the Groups share of the net assets of the acquired subsidiary at the date of acquisition is included in the consolidated balance sheet as goodwill or negative goodwill arising on consolidation.
2 0 0 3 A N N U A L R E P O R T
39
(193094-K)
The Companys investments in subsidiaries and associate are stated at cost less impairment losses. The policy for the recognition and measurement of impairment losses is in accordance with Note 2(l). On disposal of such investments, the difference between net disposal proceeds and their carrying amounts is recognised in the income statement. (d) Property, Plant and Equipment and Depreciation
Property, plant and equipment are stated at cost less accumulated depreciation and impairment losses. The policy for the recognition and measurement of impairment losses is in accordance with Note 2(l).
2 0 0 3 A N N U A L R E P O R T
Freehold land is stated at valuation less impairment losses. Revaluations are made once in five years from the date of last revaluation based on a valuation by an independent valuer. Any revaluation increase is credited to equity as a revaluation surplus, except to the extent that it reverses a revaluation decrease for the same asset previously recognised as an expense, in which case the increase is recognised in the income statement to the extent of the decrease previously recognised. A revaluation decrease is first offset against an increase on unutilised earlier valuations in respect of the same asset and is thereafter recognised as an expense. Upon the disposal of revalued assets, the attributable revaluation surplus remaining in the revaluation reserve is transferred to retained profits.
40
(193094-K)
Upon the disposal of an item of property, plant or equipment, the difference between the net disposal proceeds and the net carrying amount is recognised in the income statement. (e) Inventories Inventories are stated at the lower of cost (determined on the first-in, first-out basis) and net realisable value. Cost of finished goods and work-in-progress includes direct materials, direct labour, other direct cost and appropriate production overheads. Net realisable value represents the estimated selling price less all estimated costs to completion and costs to be incurred in marketing, selling and distribution. (f) Cash and Cash Equivalents For the purposes of the cash flow statements, cash and cash equivalents include cash on hand and at bank and fixed deposits which have an insignificant risk of changes in value. (g) Provision for Liabilities Provision for liabilities are recognised when the Group has a present obligation as a result of a past event and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and a reliable estimate of the amount can be made. Provisions are reviewed at each balance sheet date and adjusted to reflect the current best estimate. Where the effect of the time value of money is material, the amount of a provision is the present value of the expenditure expected to be required to settle the obligation. (h) Income Tax Income tax on the profit or loss for the year comprises current and deferred tax. Current tax is the expected amount of income taxes payable in respect of the taxable profit for the year and is measured using the tax rates that have been enacted at the balance sheet date. Deferred tax is provided for, using the liability method, on temporary differences at the balance sheet date between the tax bases of assets and liabilities and their carrying amounts in the financial statements. In principle, deferred tax liabilities are recognised for all taxable temporary differences and deferred tax assets are recognised for all deductible temporary differences, unused tax losses and unused tax credits to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, unused tax losses and unused tax credits can be utilised. Deferred tax is not recognised if the temporary difference arises from goodwill or negative goodwill or from the initial recognition of an asset or liability in a transaction which is not a business combination and at the time of the transaction, affects neither accounting profit nor taxable profit.
2 0 0 3 A N N U A L R E P O R T
41
(193094-K)
(ii)
Prior to the adoption of MASB 29 Employee Benefits on 1 August 2002, no liability was recognised for the obligations in respect of short term employee benefits in the form of accumulating compensated absences. This change in accounting policy has not given rise to any adjustments to the opening balances of retained profits of the prior and current year or to changes in comparatives as the amount involved and the effect on the financial statements is insignificant. (j) Revenue Recognition
Revenue is recognised when it is probable that the economic benefits associated with the transaction will flow to the enterprise and the amount of the revenue can be measured reliably.
2 0 0 3 A N N U A L R E P O R T
(i) (ii)
Sale of goods Revenue relating to sale of goods is recognised net of sales tax and discounts upon the transfer of risks and rewards. Interest and rental income Interest is recognised on a time proportion basis that reflects the effective yield on the asset and rental income is recognised on an accrual basis.
(iii) Dividend income Dividend income is recognised when the right to receive payment is established.
42
(193094-K)
Transactions in foreign currencies are initially recorded in Ringgit Malaysia at rates of exchange ruling at the date of the transaction. At each balance sheet date, foreign currency monetary items are translated into Ringgit Malaysia at exchange rates ruling at that date. Non-monetary items initially denominated in foreign currencies, which are carried at historical cost are translated using the historical rate as of the date of acquisition and non-monetary items which are carried at fair value are translated using the exchange rate that existed when the values were determined. All exchange rate differences are taken to the income statement. The principal exchange rates used for every unit of foreign currency ruling at the balance sheet date used are as follows: 2003 RM United States Dollar Singapore Dollar Taiwan New Dollar Japanese Yen (l) Impairment of Assets 3.805 2.180 0.112 0.032 2002 RM 3.805 2.200 0.112 -
At each balance sheet date, the Group reviews the carrying amounts of its assets to determine whether there is any indication of impairment. If any such indication exists, impairment is measured by comparing the carrying values of the assets with their recoverable amounts. Recoverable amount is the higher of net selling price and value in use, which is measured by reference to discounted future cash flows. An impairment loss is recognised as an expense in the income statement immediately unless the asset is carried at a revalued amount. Any impairment loss of a revalued asset is treated as a revaluation decrease to the extent of any unutilised previously recognised revaluation surplus for the same asset. Reversal of impairment losses recognised in prior years is recorded when the impairment losses recognised for the asset no longer exist or have decreased. (m) Financial Instruments Financial instruments are recognised in the balance sheet when the Group has become a party to the contractual provisions of the instrument. Financial instruments are classified as liabilities or equity in accordance with the substance of the contractual arrangement. Interest, dividends, gains and losses relating to a financial instrument classified as a liability, are reported as expense or income. Distributions to holders of financial instruments classified as equity are charged directly to equity. Financial instruments are offset when the Group has a legally enforceable right to offset and intends to settle either on a net basis or to realise the asset and settle the liability simultaneously. (i) Trade Receivables Trade receivables are carried at anticipated realisable values. Bad debts are written off when identified. An estimate is made for doubtful debts based on a review of all outstanding amounts as at the balance sheet date. Trade Payables Trade payables are stated at cost which is the fair value of the consideration to be paid in the future for goods and services received.
2 0 0 3 A N N U A L R E P O R T
(ii)
43
(193094-K)
Revenue of the Group and of the Company consist of invoiced value of sales of goods less returns and discounts. During the financial year, a customer and its associate contributed to approximately 78% (2002 : 80%) of the Group and the Company revenue.
2 0 0 3 A N N U A L R E P O R T
44
(193094-K)
45
(193094-K)
70,070 70,070
1,060,855
900,987
Total
1,178,925
Number of Directors 2003 Executive directors : RM1 to RM50,000 RM50,001 to RM100,000 RM100,001 to RM150,000 RM150,001 to RM200,000 RM200,001 to RM250,000 RM250,000 and above Non-executive directors : RM1 to RM50,000 RM50,001 to RM100,000 RM100,001 to RM150,000 RM150,001 to RM200,000 RM200,001 to RM250,000 RM250,000 and above 1 1 5 1 1 2002 2 1 1 6 1 -
2 0 0 3 A N N U A L R E P O R T
46
(193094-K)
48,367 2,439,806
942,000 4,150,800
48,367 3,147,585
942,000 3,259,388
Domestic income tax is calculated at the Malaysian statutory tax rate of 28% (2002 : 28%) of the estimated assessable profit for the year. A reconciliation of income tax expense applicable to profit before taxation 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 : 2003 RM Group Profit before taxation and share of results of associate Taxation at Malaysian statutory tax rate of 28% (2002 : 28%) Taxation at Malaysian tax rate of 20% (2002 : 28%) for subsidiaries qualified for small and medium enterprise status Deferred tax assets not recognised during the year Expenses not deductible for tax pusposes Tax effect of group consolidation eliminating entries Utilisation of current years reinvestment allowances (Over)/Under provision of deferred tax in prior year Under/(Over) provision of income tax expense in prior years Share of tax of associate Tax expense for the year 6,166,503 1,726,621 (8,000) (8,778) 15,022 16,749 (292,517) (36,839) 179,218 848,330 2,439,806 9,196,091 2,574,905 57,510 690,715 (30,064) (216,286) 851,938 (941,400) 1,163,482 4,150,800 2002 RM
2 0 0 3 A N N U A L R E P O R T
47
(193094-K)
The Company has tax credits and tax exempt accounts to frank the payment of dividends out of its entire retained profits under the following Acts subject to agreement with the Inland Revenue Board : (a) (b) (c) (d) (e) Tax credits under Section 108 of Income Tax, 1967 of approximately RM19,460,000 (2002 : RM16,017,000). Tax exempt account under Section 133A of Income Tax Act, 1967 of approximately RM8,462,000 (2002 : RM7,417,000). Tax exempt account arising from pioneer status of approximately RM6,485,000 (2002 : RM10,846,000). Tax exempt account under Section 12 of Income Tax (Amendment) Act, 1999 of approximately RM4,158,000 (2002 : RM4,158,000). Tax exempt account arising out of tax exempt dividends received of approximately RM668,000 (2002 : RM614,000).
2 0 0 3 A N N U A L R E P O R T
48
(193094-K)
2 0 0 3 A N N U A L R E P O R T
Comparative diluted earnings per share has not been presented as there was no potential ordinary shares outstanding during the previous financial year.
49
(193094-K)
Group Cost/Valuation At 1 August 2002 Additions Disposals Reclassification Write offs Revaluation At 31 July 2003 Accumulated Depreciation At 1 August 2002 Charge for the year Disposals Reclassification Write offs Revaluation At 31 July 2003 Net Book Value At 31 July 2003 At 31 July 2002
2 0 0 3 A N N U A L R E P O R T
58,248 (58,248) -
3,717,180 22,100
50
(193094-K)
Company Cost/Valuation At 1 August 2002 Additions Disposals Reclassification Write offs Revaluation At 31 July 2003 Accumulated Depreciation At 1 August 2002 Charge for the year Disposals Reclassification Write offs Revaluation At 31 July 2003 Net Book Value At 31 July 2003 At 31 July 2002 Depreciation charge for 2002
58,248 (58,248) -
3,717,180 22,100
* Other assets comprise of equipment, furniture and fittings, renovation, electrical installation, loose tools and computer.
51
(193094-K)
Included in property, plant and equipment of the Group and the Company are the cost of the following fully depreciated assets which are still in use : Group Plant and machinery Mould Motor vehicles Computer Renovation Loose tools and electrical installation Equipment Company Plant and machinery Mould Motor vehicles Computer Renovation Loose tools and electrical installation Equipment 621,770 4,617,850 1,514,309 677,632 162,411 862,861 410,481 8,867,314 618,989 4,517,634 1,741,796 363,034 157,211 856,106 404,826 8,659,596 2003 RM 2,276,922 4,617,850 1,663,724 687,101 206,097 925,793 469,944 10,847,431 2002 RM 1,437,732 4,517,634 1,741,796 363,034 200,897 919,038 461,989 9,642,120
2 0 0 3 A N N U A L R E P O R T
52
(193094-K)
July 2002
13,070,000
July 2002
2,920,000
Had the revalued freehold land and buildings been stated at historical cost less accumulated depreciation, the net book value of each class of freehold land and buildings that would have been included in the financial statements at the end of the financial year are as follows : Group 2003 RM Freehold land Buildings 12,980,790 5,971,743 18,952,533 2002 RM 10,310,400 5,061,389 15,371,789 2003 RM 12,806,597 5,948,760 18,755,357 Company 2002 RM 10,136,207 5,037,871 15,174,078
2 0 0 3 A N N U A L R E P O R T
53
(193094-K)
Name of Company Beaucar Accessories (M) Sdn. Bhd. Plasmet Industries (M) Sdn. Bhd.
Principal activities Trading in auto accessories Manufacture and supply of metal stamping and plastic injection parts Company
10. INVESTMENT IN ASSOCIATE Group 2003 RM Unquoted shares, at cost Share of post acquisition reserves 5,000 749,636 754,636 Represented by : Share of net tangible assets
2 0 0 3 A N N U A L R E P O R T
754,636
The results of the associate are based on the audited financial statements as at 31 December 2002 and management financial statements for the seven months ended 31 July 2003. Details of the associate are as follows : Country of Incorporation Malaysia Equity Interest Held (%) 2003 2002 50 50
54
(193094-K)
The Groups normal trade credit term ranges from 30 to 60 days. Other credit terms are assessed and approved on a case-by-case basis. Included in the other trade receivables is a major customer who contributed to a substantial portion of the Group and the Company revenue. 13. OTHER RECEIVABLES Group 2003 RM Due from the associate Sundry deposits and prepayments Sundry receivables 26,000 672,916 267,384 966,300 2002 RM 8,000 400,736 1,110,317 1,519,053 2003 RM 26,000 457,814 221,362 705,176 Company 2002 RM 8,000 385,947 983,392 1,377,339
2 0 0 3 A N N U A L R E P O R T
The non-trade amount due from associate is interest free, unsecured and has no fixed terms of repayment. The Group has no significant concentration of credit risk that may arise from exposures to a single debtor or groups of debtors.
55
(193094-K)
Included in the fixed deposits of the Group and the Company are amounts of RM50,000 (2002 : RM50,000) and RM25,000 (2002 : RM25,000) respectively which have been pledged to a licensed bank as security for bank guarantee facility granted to the Group and the Company. The weighted average effective interest rates of deposits at the balance sheet date were as follows : Group 2003 RM Licensed banks Licensed finance company 3.7% 2.9% 2002 RM 3.7% 3.1% 2003 RM 3.2% 2.9% Company 2002 RM 3.2% 3.1%
The average maturities of deposits as at the end of the financial year were as follows : Group 2003 RM Licensed banks Licensed finance company
2 0 0 3 A N N U A L R E P O R T
Company 2002 RM 2003 RM 30 days to 365 days 30 days 2002 RM 30 days to 180 days 30 days
56
(193094-K)
The normal trade credit terms granted to the Group range from 30 to 60 days. 16. OTHER PAYABLES Group 2003 RM Due to a subsidiary Other payables and accruals 3,631,729 3,631,729 2002 RM 4,728,382 4,728,382 2003 RM 5,265 3,377,885 3,383,150 Company 2002 RM 34,652 4,431,423 4,466,075
The amount due to a subsidiary is unsecured, interest free and has no fixed terms of repayment. 17. SHARE CAPITAL Number of Ordinary Shares of RM1 Each 2003 2002 Authorised Issued and fully paid : At 1 August Issue and paid up during the year : - bonus issue - for cash pursuant to ESOS At 31 July 50,000,000 43,611,700 61,000 43,672,700 50,000,000 39,647,000 3,964,700 43,611,700 Amount 2003 RM 50,000,000 43,611,700 61,000 43,672,700 2002 RM 50,000,000 39,647,000 3,964,700 43,611,700
2 0 0 3 A N N U A L R E P O R T
57
(193094-K)
(c) (d)
(e) (f)
(g)
2 0 0 3 A N N U A L R E P O R T
(h)
Information with respect to the number of options granted under the ESOS is as follows : Number of Share Options 2003 2002 At 1 August Granted Exercised Lapsed At 31 July 3,738,000 (61,000) (150,000) 3,527,000 -
58
(193094-K)
Details of share options exercised during the year and the fair value at the exercise date of shares issued are as follows : Consideration Received RM 8,700 13,050 24,650 33,350 8,700 88,450 Fair Values of Shares Issued RM 1.78 1.73 1.87 1.93 2.05
Exercise Date 13 June 2003 1 July 2003 8 July 2003 11 July 2003 15 July 2003
Number of Share Options 2003 2002 6,000 9,000 17,000 23,000 6,000 61,000 -
The terms of share options outstanding as at the end of the year are as follows : Number of Share Options Outstanding 2003 2002 3,527,000 2 0 0 3 A N N U A L R E P O R T
18. DEFERRED TAXATION Group and Company 2003 2002 RM RM At 1 August Recognised in the income statement (Note 6) Recognised in equity (Note 19) At 31 July Presented after appropriate offsetting as follows : Deferred tax assets Deferred tax liabilities 1,402,133 1,402,133 1,314,863 1,314,863 1,314,863 48,367 38,903 1,402,133 210,726 942,000 162,137 1,314,863
59
(193094-K)
Group and Company At 1 August 2002 Recognised in the income statement Charged to equity At 31 July 2003 19. REVALUATION RESERVE
Group and Company 2003 2002 RM RM Revaluation reserve : Freehold land and buildings The movement in revaluation reserve was as follows : Group and Company 2003 2002 RM RM Balance at 1 August Revaluation increase/(decrease) Charged to deferred taxation (Note 18)
2 0 0 3 A N N U A L R E P O R T
941,286
868,160
Balance at 31 July 20. DIVIDEND Amount 2003 RM Ordinary final dividend 10%* (2002 : 10%) tax exempt * 4,361,170 2002 RM 3,964,700
Dividends declared and proposed in year 2003 in respect of the financial year ended 31 July 2002 as reported in the directors report of that year.
60
At the forthcoming Annual General Meeting, a final dividend in respect of the financial year ended 31 July 2003 of 10% tax exempt on 43,672,700 ordinary shares amounting to a total dividend payable of RM4,367,270 (10 sen net per share) will be proposed for shareholders approval. The financial statements for the current year do not reflect this proposed dividend. Such dividend, if approved by the shareholders, will be accounted for in shareholders equity as an appropriation of retained profits in the financial year ending 31 July 2004.
(193094-K)
61
(193094-K)
Significant transactions with other related parties undertaken by the Company during the financial year were as follows : Group 2003 RM Sales of goods to the associate Management fee received from the associate Other income received from the associate Sales of goods to Eng Siang International Pte. Ltd., a company in which a director, namely Goh Chai Siong has interest Motor vehicle purchased from Regensi Motor Sdn. Bhd., a company in which a director, namely Dato Hj Sulaiman Bin Ahmad has interest Professional fee paid to Nora S.W. Lam & Associates, a professional legal firm in which a director, namely Nora Lam Siew Wan is the Managing Partner 2002 RM 2003 RM 16,224,541 24,000 Company 2002 RM 23,844,581 24,000 -
6,940
17,600
6,940
17,600
2 0 0 3 A N N U A L R E P O R T
93,120
93,120
53,100
26,040
53,100
26,040
The directors of the Company are of the opinion that the above 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 that obtainable in transactions with unrelated parties.
62
(193094-K)
118,340
(b)
(c)
(d)
(e)
63
(193094-K)
2 0 0 3 A N N U A L R E P O R T
64
(193094-K)
LIST OF PROPERTIES
Location Tenure
(approximate age of building)
Description
Existing Use
Registered Owner
No 6, Jalan Waja 7, Kawasan Perindustrian Pandan, 81100 Johor Bahru, Johor Darul Takzim No 8, Jalan Waja 7, Kawasan Perindustrian Pandan, 81100Johor Bahru, Johor Darul Takzim HS(D)240365 to 240370 PTD34424 to 34429 Mukim of Tebrau, District of Johor Bahru, State of Johor No 24, Lebuh Pulau Pinang Pusat Perniagaan NBC, Batu 1 1/2 , Jalan Meru, 41050 Klang, Selangor Darul Ehsan
1,280
Rented
30 July,2002
1,280
Rented
1,787,200
30 July, 2002
Freehold (6 years)
893
Vacant
2,299,100
30 July, 2002
Freehold (7 years)
240
Vacant
1,786,100
30 July, 2002
No 2, Jalan Waja 7, Kawasan Perindustrian Pandan, 81100 Johor Bahru, Johor Darul Takzim
Freehold (9 years)
1,281
Factory
2,326,200
30 July, 2002
No 4, Jalan Waja 7, Kawasan Perindustrian Pandan, 81100 Johor Bahru, Johor Darul Takzim No. 10, Jalan Permatang, Taman Desa Jaya, 81100 Johor Bahru, Johor Darul Takzim
Freehold (9 years)
1,280
Factory
2,179,200
30 July, 2002
2 0 0 3 A N N U A L R E P O R T
641
Vacant
447,240
30 July, 2002
No 12, Jalan Permatang, Taman Desa Jaya, 81100 Johor Bahru, Johor Darul Takzim
641
Rented
447,240
30 July, 2002
65
(193094-K)
LIST OF PROPERTIES
Location Tenure
(approximate age of building)
Description
Existing Use
Registered Owner
No 6, Jalan Permatang 17, Taman Desa Jaya, 81100 Johor Bahru, Johor Darul Takzim No 8, Jalan Permatang 17, Taman Desa Jaya, 81100 Johor Bahru, Johor Darul Takzim No 33, Jalan Permatang 21, Taman Desa Jaya, 81100 Johor Bahru, Johor Darul Takzim No 15, Jalan Kakak Tua, Taman Eng Ann, 41150 Klang, Selangor Darul Ehsan Off Sungai Rasah, 41150 Klang, Selangor Darul Ehsan HS(M)No 2845 to 2847 PT No 494 to 496 (Lots 13282 to 13284)
641
Rented
Multi-Code Electronics Industries (M) Berhad Multi-Code Electronics Industries (M) Berhad Multi-Code Electronics Industries (M) Berhad Multi-Code Electronics Industries (M) Berhad Multi-Code Electronics Industries (M) Berhad
30 July,2002
641
Rented
447,240
30 July, 2002
143
Hostel
188,700
30 July, 2002
186
Hostel
179,200
30 July, 2002
3 continuous units of 2storey with mazzanine workshop terrace light industrial buildings 1 1/2 storey semi-detached factories
453
933,200
30 July, 2002
2 0 0 3 A N N U A L R E P O R T
No 7, Jalan Waja 8, Kawasan Perindustrian Pandan, 81100 Johor Bahru, Johor Darul Takzim No 9, Jalan Waja 8, Kawasan Perindustrian Pandan, 81100 Johor Bahru, Johor Darul Takzim
1,366
Factory
2,011,389
28 January, 2003
1,392
Vacant
1,793,790
28 January, 2003
No 92 & 92A, Jalan Meranti, Taman Melodies, 80250 Johor Bahru, Johor Darul Takzim
2-storey shophouse
156
Rented
607,800
30 July, 2002
66
(193094-K)
ANALYSIS OF SHAREHOLDINGS
AS AT 6 NOVEMBER 2003 AUTHORISED SHARE CAPITAL ISSUED AND PAID-UP CAPITAL CLASS OF SHARES VOTING RIGHTS : : : : RM50,000,000 RM43,702,700 ORDINARY SHARE OF RM1.00 EACH ONE VOTE PER ORDINARY SHARE
DISTRIBUTION OF SHAREHOLDINGS Number Shareholders 3 244 1,784 89 9 8 2,137 REMARK : * Less than 5% of issued shares ** 5% and above of issued shares Number of Shares 110 177,800 3,503,400 2,166,790 3,391,018 34,463,582 43,702,700 Percentage of Issued Capital 0.00 0.41 8.01 4.96 7.76 78.86 100
1 99 100 1000 1,001 10,000 10,001 100,000 100,001 2,185,134 (*) 2,185,135 and above (**)
SUBSTANTIAL SHAREHOLDERS
AS AT 6 NOVEMBER 2003 Direct Goh Tong Huat Amanah Raya Nominees (Tempatan) Sdn Bhd Skim Amanah Saham Bumiputera Chang Choon Cheng @ Chang Chu Chen Goh Chai Siong DatoHj Sulaiman Bin Ahmad Regensi Motor Sdn Bhd Estate of Ong See Chuan @ Goh See Chuan * # > 12,021,520 6,600,000 6,004,240 3,526,836 2,415,600 2,388,586 No. of Shares % Deemed Interest 27.51 15.10 13.74 8.07 5.53 5.47 502,118* 2,388,586# 2,415,600> % 1.15 5.47 5.53 2 0 0 3 A N N U A L R E P O R T
Indirect interest through shares held by his spouse. Deemed interest by virtue of being the executrix of the estate of Ong See Chuan @ Goh See Chuan. Deemed interest by virtue of his shareholdings in Regensi Motor Sdn. Bhd.
67
(193094-K)
DIRECTORS SHAREHOLDINGS
AS AT 6 NOVEMBER 2003 Direct Dato Hj Sulaiman Bin Ahmad Goh Tong Huat Goh Chai Siong Goh Kar Chun Nora Lam Siew Wan Mohd Nadzir Mahmud Huang Yan Teo Chai Lai Koon Dato Bahari Bin Haron > * 12,021,520 3,526,836 No. of Shares % Deemed Interest 27.51 8.07 2,415,600> 502,118* % 5.53 1.15 -
Deemed interest by virtue of his shareholdings in Regensi Motor Sdn. Bhd. Indirect interest through shares held by his spouse.
2 0 0 3 A N N U A L R E P O R T
68
(193094-K)
2 0 0 3 A N N U A L R E P O R T
69
(193094-K)
The 1,111,847 shares are under dispute by Goh Tong Huat in respect of the unauthorized deposit of shares in the Malaysian Central Depository Sdn Bhd (MCD) by AMMB Nominees (Tempatan) Sdn Bhd and AmFinance Berhad. The 1,087,286 shares are under dispute by the estate of Ong See Chuan @ Goh See Chuan in respect of the unauthorized deposit of shares in the MCD by AMMB Nominees (Tempatan) Sdn Bhd and AmFinance Berhad.
2 0 0 3 A N N U A L R E P O R T
70
(193094-K)
FORM OF PROXY
I/We of a member / members of the abovenamed Company, hereby appoint Mr / Ms (Name) of or failing him / her, of (Address) (Name) (Address) (Name) (Address)
as *my / our proxy to vote for *me / us and on *my / our behalf at Thirteenth Annual General Meeting of the Company to be held on Monday, 29 December 2003 at the Ponderosa Golf & Country Club, 10-C, Jalan Bumi Hijau Tiga, Taman Molek, 81100 Johor Bahru, Johor Darul Tazim on at 10.30 a.m. and, at every adjournment thereof for / against the resolutions to be proposed thereat. My/Our Proxy is to vote as indicated below: No. 1. 2. 3. Resolutions To receive and adopt the Audited Financial Statements for the year ended 31 July, 2003 and the Reports of the Directors and the Auditors thereon. To declare a Final dividend of 10% (tax exempt) for the year ended 31 July, 2003 To approve the payment of Directors fee of RM373,000.00 for the year ended 31 July, 2003 To re-elect the following Directors who are retiring under Article 76 of the Articles of Association of the Company :4. 5. 6. 7. 8. DATO HAJI SULAIMAN GOH TONG HUAT GOH CHAI SIONG To re-appoint Messrs Ernst & Young as Auditors of the Company and to authorise the directors to fix their remuneration. To consider and if thought fit, to pass the following resolution as an Ordinary Resolution : Authority to Issue Shares THAT pursuant to Section 132D of the Companies Act, 1965, the Directors be and are hereby authorised to issue shares in the Company at any time until the conclusion of the next Annual General Meeting 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 to be issued does not exceed 10 per cent of the issued share capital of the Company for the time being, subject always to the approval of all the relevant regulatory bodies being obtained for such allotment and issue. For Against
2 0 0 3 A N N U A L R E P O R T
(Please indicate with an X in the space provided how you wish the vote to be cast. If you do not do so, the proxy will vote or abstain from voting at his discretion). Signature of shareholder(s) Signed this day of 2003 No. of Share Held
Notes : (a) A member of the Company entitled to attend and vote at this meeting is entitled to appoint a proxy to attend and vote instead of him. A proxy need not be a member of the Company and a member may appoint any person to be his proxy without limitation and the provisions of Section 149(1)(a) and (b) of the Companies Act, 1965 shall not apply to the Company. The instrument appointing a proxy shall be in writing under the hand of the appointer or his attorney duly authorised in writing or if such appointer is a corporation, under its Common Seal or the hand of its attorney. (b) Where a member appoints two proxies, the appointments shall be invalid unless he specifies the proportions of his holding to be represented by each proxy. (c) The Proxy Form must be deposited with the Secretary at the Registered Office of the Company at Suite 5.3A, Level 5, Menara Pelangi, No. 2, Jalan Kuning, Taman Pelangi, 80400 Johor Bahru, Johor, Malaysia not less than 48 hours before the time set for the meeting or any adjourment thereof.
71