annual report 2005

Transcription

annual report 2005

Transforming challenges
into opportunities
ANNUAL REPORT 2005
CONTENTS
1
JAKS At a Glance
2
Corporate Information
3
4
28
Directors’ Responsibility
Statement
Corporate Structure
29
Financial Statements
Profile of Board of Directors
78
Properties of the Group
Managing Director’s
Statement / Penyata
Pengarah Urusan
80
Analysis of Shareholdings
83
Notice of Annual General
Meeting
17
Corporate Governance
Statement
84
22
Board Committees
Statement Accompanying
Notice of Annual General
Meeting
27
Statement on Internal
Control
8
vision
Proxy Form
“A Global leader in the integrated water resources management industry by providing a
comprehensive range of services including designing, manufacturing, supplying and
laying of pipes”
mission • To provide total customer satisfaction by providing cost effective, quality products
and services on a timely basis.
• To fully utilize integrated technology and information system to improve operational
processes to ensure a sustainable and competitive advantage.
• To optimize shareholder wealth by continuously exploring new business opportunities
while strengthening and expanding current core business with good corporate
governance and prudent risk management.
• To build a dynamic, innovative and competent workforce through teamwork and
commitment to excel.
• To build strategic alliances with our consultants, contractors, suppliers and other
business associates for further growth and expansion.
J A K S AT A G L A N C E ■
JAKS RESOURCES BERHAD The business of JAKS was started by our
founder Datuk Ang Ken Seng in the 60’s from the humble beginning as a
plumber providing services to residential premises. With the aim to be a major
player in the water recticulation works, Datuk Ang later incorporated JAKS Sdn
Bhd (formerly known as Ang Ken Seng & Sons Sdn Bhd) in 1987, which
eventually became the core business and subsidiary of JAKS Resources
Berhad (JAKS) for its listing on the Main Board of Bursa Malaysia on 1 July
2004. JAKS is a group of companies primarily engaged in the water sector
involved in the water supply construction projects, manufacturing and supply
of mild steel pipes and manufacturing and trading of steel pipes and steel
hollow sections.
Emerging as MALAYSIA’S MOST PROGRESSIVE ENTERPRISE, the Group initially commenced
operations as water supply contractors and other water related works but advanced into pipe laying and
reservoir construction works. Over the years, we have built a CONSISTENT RECORD OF QUALITY,
EXCELLENCE AND DEPENDABILITY in the designing and construction of sewerage treatment facilities.
Our manufacturing operations produces mild steel pipes and other steel products and is also actively
INVOLVED IN INFRASTRUCTURAL PROJECTS, LAND DEVELOPMENT AND TRADING OF
CONSTRUCTION AND STEEL RELATED PRODUCTS, both locally and abroad.
Today, our EXTENSIVE EXPERTISE AND EXPERIENCE enables us to adopt and implement solutions to
meet our customers’ specific requirements. We will use OUR COMPETITIVE STRENGTH and continue TO
STRIVE FOR GREATER GROWTH by seizing the opportunities of tomorrow.
2005 Annual Report | JAKS RESOURCES BERHAD ■ 1
■ C O R P O R AT E I N F O R M AT I O N
Standing from left : Dato’ Chor Chee Heung • Ang Lam Aik • Liew Jee Min @ Chong Jee Min
Sitting from left : Dato’ Azman Bin Mahmood • Ang Lam Poah • Dato’ Razali Merican Bin Naina Merican • Datuk Kamarulzaman Bin Zainal
Board of Directors
Ang Lam Poah
Managing Director & Group
Chief Executive Officer
Dato' Razali Merican Bin
Naina Merican
Executive Director
Ang Lam Aik
Executive Director
Dato' Azman Bin Mahmood
Independent Non-Executive
Director
Liew Jee Min @
Chong Jee Min
Director
Dato' Chor Chee Heung
Director
Datuk Kamarulzaman
Bin Zainal
Director
Secretary
Leong Oi Wah
(MAICSA 7023802)
Registered Office
312, 3rd Floor
Block C, Kelana Square
17, Jalan SS7/26
47301, Petaling Jaya
Selangor Darul Ehsan
Tel No : 603-78031126
Fax No : 603-78061387
Registrars
Epsilon Registration Services
Sdn Bhd
312, 3rd Floor
Block C, Kelana Square
17, Jalan SS7/26
47301, Petaling Jaya
Tel No : 603-78062116
Fax No : 603-78061261
2 ■ JAKS RESOURCES BERHAD | 2005 Annual Report
Auditors
Monteiro & Heng
22-1, Monteiro &
Heng Chambers
Jalan Tun Sambanthan 3
50470 Kuala Lumpur
Principal Place of Business
Lot 526, Persiaran Subang
Permai, Sungai Penaga
Industrial Park, USJ 1
47600 Subang Jaya
Website : www.jaks.com.my
Principal Bankers
AmBank (M) Berhad
HSBC Bank Malaysia Berhad
Bumiputra-Commerce Bank
Berhad
Stock Exchange Listing
Malaysia Securities
Exchange Berhad
(Main Board)
Stock Number (4723)
C O R P O R AT E S T R U C T U R E ■
JAKS RESOURCES BERHAD
585648-T
100%
JAKS Sdn Bhd
100%
70%
100%
98.05%
70%
Surge System Sdn Bhd
JAKS Marketing
Sdn Bhd
JAKS - KDEB
Consortium
Sdn Bhd
100%
Integrated Pipe
Industries
Sdn Bhd
JAKS Steel
Industries Sdn Bhd
Pipe Technology System
Sdn Bhd
Construction
Manufacturing
Trading
■ PROFILE OF BOARD OF DIRECTORS
from left
Ang Lam Poah
Managing Director & Group Chief Executive Officer
Dato' Razali Merican Bin Naina Merican
Executive Director
Ang Lam Poah
Managing Director & Group Chief Executive Officer
Ang Lam Poah, a Malaysian, aged 39 was
appointed to the Board on 23 December
2003. He is the Managing Director and
Group Chief Executive Officer and a member
of the Audit Committee.
He holds a Diploma in Business
Administration from the Toronto School of
Business. Upon obtaining his diploma in
1990, he started his career in JAKS.
He has been actively involved in the day-today operations and management of the
water construction projects undertaken by
JAKS over the past 16 years. Apart from the
water construction activities, he has also
been involved in setting up companies
manufacturing mild steel pipes and
manufacturing common clay bricks. He also
holds directorships in several other private
limited companies.
Ang Lam Poah is the brother to the Director,
Ang Lam Aik and son to Dato' Ang Ken
Seng, the substantial shareholder of the
Company. Save as disclosed, he does not
have any family relationship with any other
Director and/or major shareholder of the
Company and has no other conflict of
interest with the Company. He has had no
convictions for any offence within the past
ten years.
He attended all the Board meetings held
during the financial year ended 31 October
2005.
Dato’ Razali Merican Bin Naina Merican
Executive Director
Dato' Razali Merican Bin Naina Merican, a
Malaysian, aged 36 was appointed to the
Board on 23 December 2003. He is an
Executive Director.
He has been actively involved in business
after the completion of his University degree
in 1995. Since then, he has acquired
extensive experience and expertise.
Dato' Razali does not have any family
relationship with any other Director and/or
major shareholder of the Company and has
no other conflict of interest with the
Company. He has had no convictions for
any offence within the past ten years.
2005.
PROFILE OF BOARD OF DIRECTORS
■
from left
Ang Lam Aik
Executive Director
Dato’ Azman Bin Mahmood
Independent Non-Executive Director
Ang Lam Aik
Executive Director
Ang Lam Aik, a Malaysian aged 33, was
appointed to the Board on 23 December
2003. He is an Executive Director.
He holds a Diploma in Computer Science
from Canada and has been involved in
project management and construction
related fields since 1995.
Ang Lam Aik is the brother to the Director,
Ang Lam Poah and son to Ang Ken Seng,
the substantial shareholder of the Company.
Save as disclosed, he does not have any
family relationship with any other Director
and/or major shareholder of the Company
and has no other conflict of interest with the
2005.
Dato' Azman Bin Mahmood, a Malaysian
aged 55, was appointed to the Board as
Director on 23 December 2003. He is an
Independent Non-Executive Director and the
Chairman of the Audit Committee.
Dato' Azman is a member of the Institute of
Chartered Accountants in England and
Wales. He has vast experience working in a
number of auditing firms in London and
Johor Bahru.
He joined Kumpulan Perangsang Selangor
Berhad in 1983 and left in 1990 to become
the Managing Director of Worldwide Holdings
Berhad, a public listed company in Bursa
Securities until 1996.
Presently, Dato' Azman is the Executive
Chairman of Fine Access Sdn Bhd, a
company involved with property
development and the Chairman of
Cocoaland Holdings Berhad, a food
confectionary manufacturer listed on the
Second Board of Bursa Securities. He is also
the Director of Kumpulan Hartanah Selangor
Berhad and Tabung Amanah Saham
Selangor Bhd.
Dato' Azman does not have any family
relationship with any other Director and/or major
shareholder and has no conflict of interest with
the Company. He has had no convictions for
2005.
■
from left
Liew Jee Min @ Chong Jee Min
Dato’ Chor Chee Heung
Liew Jee Min @ Chong Jee Min, a Malaysian
aged 47, was appointed to the Board on 23
December 2003. He is an Independent NonExecutive Director and the Chairman of the
Remuneration Committee.
Dato' Chor Chee Heung, a Malaysian, aged
51 was appointed to the Board on 20 August
2004. He is an Independent Non-Executive
Director and is the Chairman of the
Nomination Committee.
He holds the LLB (Hons) degree from
University of Leeds, England and was
admitted as an advocate and solicitor at the
High Court of Malaya in 1986. He is a
partner of the legal firm, J.M. Chong, Vincent
Chee & Co and has been practicing since the
date of admission. He also sits on the board
of Lion Industries Corporation Berhad.
He is a Member of the Honourable Society of
Lincoln's Inn. He obtained his professional
Barrister at Law in 1978 and his Masters
degree in Business Law in 1980. In the same
year, he was also admitted as a Member of
the Chartered Institute of Arbitrators London.
Chong Jee Min does not have any family
relationship with any other Director and/or
major shareholder of the Company and has
no other conflict of interest with the
2005.
He began his career as a practising lawyer
dealing mainly in commercial and civil law for
more than 16 years. He was then elected as
a Member of Parliament for Alor Star in 1990.
In 1995, he was appointed as Parliamentary
Secretary in the Ministry of Transport. In
1999, he was appointed as the Deputy
Minister of Home Affairs. He retired from
front bench politics and is currently still a
Member of Parliament representing Alor Star.
Since 1990, he has represented Malaysia and
the National Parliament in various
international forums such as UN, Asean InterParliamentary Association, Commonwealth
Parliamentary Association and Inter-
■
from left
Datuk Kamarulzaman Bin Zainal
Parliamentary Union. Currently he is the
Deputy Chairman of Wijaya Baru Global
Berhad and also serves as advisor to a few
public listed companies.
Dato' Chor Chee Heung does not have any
and/or major shareholder of the Company
He has attended five out of six of the Board
meetings held during the financial year
ended 31 October 2005.
Datuk Kamarulzaman Bin Zainal, a
Malaysian, aged 49, was appointed to the
Board on 31 January 2005. He is an
Independent Non-Executive Director.
He started his career as a reporter in 1975
and in 1991 he started his public service
where he was the Press Secretary to Foreign
Minister for seven years and then Press
Secretary to the Deputy Prime Minister for
another four years. Currently he is the
Director of News and Current Affairs at TV3
and sits on the board of Sistem Televisyen
Malaysia Berhad.
Datuk Kamarulzaman does not have any
and/or major shareholder of the company
company. He has had no convictions for any
offence within the past ten years.
He has attended four out of five board
meetings that were held after his
appointment during the financial year ended
31 October 2005.
He holds a Diploma in Mass
Communications and Journalism, London
College of Journalism. He was the Executive
Secretary for Malaysian Students Union in
United Kingdom and Eire in 1979 to 1981.
■ M A N A G I N G D I R E C T O R ’ S S TAT E M E N T
“ The Board views these
changes as a positive
step forward in the
future positioning of the
Group in the local and
global market. ”
On behalf of the Board of Directors, it gives me great pleasure to present the results of our
operations as reflected in the annual report and financial reports of the Group for the year ended
31 October 2005.
I would like to first acknowledge the contribution and dedication of our founding Executive
Chairman and Director Dato’ Jamian bin Mohamad, who resigned on 6 January 2006. Dato’
Jamian’s contributions to JAKS in his tenure with the Group were invaluable and we want to
assure the shareholders that his replacement will meet all the values that Dato’ Jamian stood
for. The Board has shortlisted a select list of high-calibre individuals to fill the Chairman position
and will make an announcement of the appointment in due course.
OVERVIEW
The year 2005 represents our second straight year as a public listed company and has
presented positive challenges that warrant changes in the principles and strategies of the JAKS
investment policy. In view of the global turbulent socio-economic environment, the Board of
Directors is of the view that the Group should concentrate its funds and expertise on JAKS’ core
activities, to strengthen its fundamentals, and then proceed to launch a focused onslaught in
viable foreign and local investments. The Board views these changes as a positive step forward
in the future positioning of the Group in the local and global market.
CORPORATE DEVELOPMENT
The Company initiated a fund raising exercise through the private placement of up to 39,851,000
new shares in the middle of last year and obtained approval from the Securities Commission
(SC) shortly thereafter. The issue price of the placement shares announced was RM1.27 per
share representing a discount of approximately 5% based on the 5-day weighted average
market price of the Company’s share price as at 13 June 2005. The weak stock market that
followed did not allow the Company to initiate the placement. However, SC has given an
extension to 5 June 2006 to complete the placement.
M A N A G I N G D I R E C T O R ’ S S TAT E M E N T
■
OPERATIONS REVIEW
As a fully integrated service provider for water related industry, JAKS has continued its efforts in
strengthening its three major divisions of construction, manufacturing and trading. These
responsibilities are shared amongst our subsidiary companies mainly JAKS Sdn Bhd (JSB) and its
subsidiaries, JAKS Steel Industries Sdn Bhd (JSI) and Pipe Technology System Sdn Bhd (PTS).
Construction and Engineering business are undertaken by our wholly owned subsidiary, JAKS
Sdn Bhd. This division has performed better than 2004, recording a revenue of RM90.1 million
and profit before taxation of RM21.3 million. The contributing projects to this success were the
pipe-laying projects and reservoir construction in the State of Selangor and Sabah.
The Group’s trading and manufacturing are channeled through its subsidiaries, JAKS-KDEB
Consortium Sdn Bhd, JAKS Marketing Sdn Bhd, Integrated Pipe Industries Sdn Bhd, JSI and
PTS. Despite the increase in turnover as compared to 2004, the manufacturing division
recorded a loss before taxation of RM3.9 million as margins were squeezed on higher average
raw material cost. The difficult operating environment pushed selling price lower in the
competitive market. In addition, the immediate RM2.3 million charge-off on pre-operating
expenses and the exceptional loss of RM2.5 million on termination of the land purchase
agreement also affected the performance of the manufacturing division. The weak market
demand in 2005 affected the trading division resulting in lower revenue and profits.
The Group’s foray into the regional business, particularly in China was short-lived as it found the
technical and financing requirements demanding. Nonetheless, the Group not only gained
financially from this decision but Management also increased its understanding of the business
environment in China. The proceeds on sale of the investment in China have since been
received.
On the local front, the Group continues to rely on its competitive advantages steering from its
expertise and experience having undertaken and completed various projects for various Stateowned corporations.
■
... The Group should
concentrate its funds and
expertise on JAKS’ core
activities, to strengthen
its fundamentals, and
then proceed to launch a
focused onslaught in
viable foreign and local
investments.
In the last few months, the media had raised
interest on JAKS-KDEB Consortium’s 10 year
supply contract with the Selangor State
Government since SYABAS had taken over the
water privatization of the Selangor State and
SYABAS had announced the award of similar
supply contracts to other companies. This has
created uncertainties on the State’s existing
contract with JAKS. The Directors wish to assure
its shareholders that the Board is fully aware of
the matter and is pursuing its contractual rights
with the Selangor State Government.
OBJECTIVES & OUTLOOK
As for the immediate future, the Board has
collectively decided to remain focused on its
core area of activities. Water and steel related
activities remain its stronghold, where its
expertise and experience are recognized. As
such the Group’s priority will be to expand from
within its area of expertise. The Government has
already identified this sector as a priority, under
its National Water Resources Plan over a-50
year period, which is expected to cost RM 52.9
billion. Thus, an enormous potential awaits and
it will solely remain in the Group’s capacity to
take advantage of it.
On the other hand, JAKS being a naturally
progressive company will remain vigilant for new
opportunities that may arise. To this effect,
JAKS has already identified a few new markets
that are definitely worth looking into.
Taking into consideration the constant demand
of building materials in the ever-growing
construction and infrastructural industry, the
Company is seriously considering a move into
the polished shafts metal sector. The Company
already has a platform for this venture through
its subsidiary JAKS Steel Industries Sdn Bhd
(JSI). This new market segment will complement
JSI’s existing product range and the new
products can be easily marketed under the
existing marketing team’s extensive portfolio of
more than 350 customers. The proposed new
venture capitalizes on building material products
such as CQ round bars, deformed bars, hard
■
drawn wires and polished shafts. The Board views this extension to JSI’s portfolio as a step
forward in establishing JSI as a diversified and innovative steel manufacturer.
JAKS has also set its eyes on the lucrative oil and gas sectors. With its reputation and expertise
as one of Malaysia’s largest mild steel pipes manufacturer, the Board believes that the Company
can meet the manufacturing requirements of pipe fittings for such venture. This proposed task
mainly focuses on fabrication of fittings for the oil and gas industry which will mainly be for
export to US, Mexico and Canada. However, with its ready platform and strong trading arm, the
Company is confident that its expertise and reputation will offset any challenges.
The Company’s on-going projects continue to shape progressively with steady strides being
made constantly. The Company’s pipe supply contracts with the Melaka Water Authority, an
exclusive 10-year contract to supply steel pipes and fittings for the state’s water supply system
is progressing smoothly. JAKS is confident that having undertaken and accomplished various other
projects of similar stature, the Melaka State Authority will extend its contract to another 10 years.
JAKS has recently secured an upgrading pipe works, reservoirs construction, together with M &
E works in the state of Terengganu.
The Group foresees the 9th Malaysian Plan (9MP) to have a significant and direct impact on the
Malaysian steel industry, with infrastructural development playing a key role in the market. As
such the company is preparing itself for this demand through on-going and ready available
facility. We continue to rely on our reputation as an integrated services provider with a proven
track record.
In conclusion, with expected rolled out from more water related projects in the coming years
arising from the 9th Malaysian Plan; the Group’s on-going projects in Selangor, Melaka, Sabah
and Terengganu; ventures into other states and also the new market segments such as building
materials and oil and gas fittings, the Group is confident it will regain its strength and
competitiveness, and expects to sustain a favorable growth in the next 3 to 5 years.
■
The Group is confident it will regain its strength and
competitiveness, and expects to sustain a favorable
growth in the next 3 to 5 years.
FINANCIAL REVIEW
The Group’s collective revenue for the financial year ended 31st October 2005 stood at RM235.6
million, with a profit before taxation of RM19.2 million. The results were a representation of the
fluctuating world steel prices and uncertainties in domestic construction activities.
DIVIDEND
The Board is not recommending any dividend for the year ended 31st October 2005.
ACKNOWLEDGEMENT
I would like to express my sincere thanks to our shareholders for their continued support; to our
business partners, financiers, suppliers and clients, for their confidence and trust; and to my
fellow Directors on the Board for their leadership and counsel. My thanks also to the
management and staff of the Group for their dedication and commitment.
Finally, my gratitude and sincere appreciation to the various government authorities and
regulatory authorities for their invaluable support throughout the year.
Andy Ang Lam Poah
Managing Director
P E N YATA P E N G A R A H U R U S A N ■
“Pembaharuan-pembaharuan
ini adalah langkah positif untuk
mengukuhkan lagi kedudukan
masa depan syarikat di pasaran
tempatan dan juga asing.”
Saya, bagi pihak Lembaga Pengarah dengan sukacitanya membentangkan keputusan Laporan
Tahunan dan Penyata Kewangan Kumpulan bagi tahun berakhir 31hb Oktober 2005.
Pertama sekali, saya ingin menghargai sumbangan dan dedikasi pengasas syarikat ini yang juga
Pengerusi Eksekutif dan Pengarah iaitu Dato’ Jamian bin Mohamad yang telah meletakkan
jawatannya pada 6 Januari 2006. Sumbangan Dato’ Jamian terhadap JAKS adalah tidak ternilai
dan kami ingin memberi keyakinan kepada para pemegang saham bahawa penggantinya akan
memenuhi segala ciri-ciri dan nilai-nilai Dato’ Jamian. Pihak Lembaga Pengarah telah pun
mengenal pasti individu-individu terpilih yang penuh berkaliber untuk memenuhi kekosongan
jawatan beliau. Pihak Lembaga Pengarah akan mengumumkan pelantikan ini tidak lama lagi.
TINJAUAN AM
2005 adalah tahun kedua syarikat kami beroperasi sebagai sebuah syarikat awam berhad, dan
syarikat telah pun menghadapi pelbagai cabaran positif yang memerlukan perubahan dalam
amalan-amalan dan strategi-strategi pelaburan JAKS. Memandangkan pergolakan sosioekonomi sedunia, para Pengarah berpendapat bahawa pihak kami seharusnya menumpukan
kewangan dan kemahirannya pada aktiviti-aktiviti utama JAKS untuk mengukuhkan lagi dasar
prinsipnya dan sejurus itu melancarkan tumpuannya kepada pelaburan asing dan tempatan.
Pihak Lembaga Pengarah juga berpendapat bahawa pembaharuan-pembaharuan ini adalah
langkah positif untuk mengukuhkan lagi kedudukan masa depan syarikat di pasaran tempatan
dan juga asing.
PEMBANGUNAN KORPORAT
Syarikat telah memulakan langkah untuk mengembangkan dana menerusi tawaran persendirian
sebanyak 39,851,000 saham baru di pertengahan tahun lepas dan telah menerima kelulusan
daripada Suruhanjaya Sekuriti (SC) sejurus kemudian. Harga terbitan saham tawaran yang
diumumkan adalah RM1.27 sesaham, mewakili diskaun sebanyak 5% berdasarkan purata
wajaran 5 hari harga pasaran saham syarikat pada 13 Jun 2005. Memandangkan keadaan
pasaran saham yang lemah, Syarikat berpendapat tidak memadai untuk memulakan tawaran
■
P E N YATA P E N G A R A H U R U S A N
tersebut. Namun begitu SC telah memberikan lanjutan masa sehingga 5 Jun 2006 untuk
melengkapkan tawaran tersebut.
TINJAUAN OPERASI
Sebagai sebuah syarikat berkhidmat integrasi penuh bagi industri berkaitan air, JAKS sentiasa
meneruskan usahanya mengukuhkan tiga bahagian utamanya iaitu pembinaan, pengeluaran
dan perdagangan. Tanggungjawab ini disempurnakan menerusi syarikat subsidiari kami iaitu
JAKS Sdn Bhd (JSB) dan syarikat-syarikat subsidiarinya, JAKS Steel Industries Sdn Bhd (JSI)
dan Pipe Technology System Sdn Bhd (PTS).
Kegiatan pembinaan dan kejuruteraan adalah tanggungjawab syarikat milik penuh kami iaitu,
JAKS Sdn Bhd. Bahagian ini telah menunjukkan prestasi lebih baik daripada tahun 2004,
dengan mencatatkan hasil sebanyak RM90.1 juta dan keuntungan sebelum cukai sebanyak
RM21.3 juta. Kejayaan ini disumbangkan terutamanya oleh projek bekalan paip dan pembinaan
bekalan air di Negeri Selangor dan Sabah.
Operasi perdagangan dan pengeluaran Kumpulan JAKS disalurkan menerusi syarikat-syarikat
subsidiarinya iaitu JAKS-KDEB Consortium Sdn Bhd, JAKS Marketing Sdn Bhd, Integrated Pipe
Industries Sdn Bhd, JSI dan PTS. Walaupun peningkatan hasil dicatatkan berbanding dengan
tahun 2004, bahagian pengeluaran telah mencatatkan kerugian sebelum cukai sebanyak RM3.9
juta disebabkan oleh kos purata bahan mentah yang tinggi. Keadaan operasi ekonomi yang
sukar juga telah menurunkan lagi harga jualan dalam pasaran persaingan masa kini. Tambahan
lagi, caj berjumlah RM2.3 juta ke atas perbelanjaan pra-operasi dan kerugian luarbiasa
berjumlah RM2.5 juta disebabkan oleh penamatan perjanjian jual-beli tanah juga telah
menjejaskan prestasi bahagian pengeluaran. Permintaan pasaran yang lemah pada tahun 2005
juga telah menjejaskan bahagian perdagangan syarikat yang mencatatkan hasil dan keuntungan
yang rendah.
Kemasukan Syarikat ke dalam perniagaan asing, terutamanya di negara China telah ditamatkan
memandangkan keadaan teknikal dan kewangan yang diperlukan. Namun begitu, Syarikat
bukan sahaja meraih keuntungan daripada pelaburan ini, Syarikat juga telah mempertingkatkan
pengalaman dalam perihal kegiatan perniagaan dan pelaburan di negara China. Sehingga kini,
hasil daripada penamatan urusniaga ini telahpun diterima oleh Syarikat.
Bagi operasi tempatan, Syarikat berpegang kuat kepada kelebihan saingannya yang diperolehi
daripada kemahiran dan pengalaman melaksanakan pelbagai projek untuk beberapa syarikat
milik kerajaan tempatan.
Sejak kebelakangan ini, pihak media telah banyak menumpukan isu JAKS-KDEB Consortium
dan perjanjian 10 tahunnya dengan Kerajaan Negeri Selangor. Semenjak SYABAS
mengambilalih kontrak penswastaan air Negeri Selangor dan pengumumannya
menganugerahkan kontrak pembekalan seumpama kepada syarikat-syarikat lain, ini telah
menimbulkan ketidakpastian akan perjanjian JAKS dengan Kerajaan Negeri Selangor. Pihak
Pengarah ingin menyakinkan para pemegang saham bahawa Lembaga Pengarah sedar akan
perkembangan ini dan sedang berusaha melanjutkan hak perjanjian asalnya dengan Kerajaan
Negeri Selangor.
■
MATLAMAT & MASA DEPAN
Matlamat jangka masa pendek kami adalah untuk menumpukan usaha terhadap aktiviti-aktiviti
asas syarikat. Perusahaan berkaitan air dan keluli adalah tunggak perniagaan kami di mana
kemahiran dan pengalaman syarikat telah diiktiraf. Oleh itu, keutamaan akan diberikan kepada
perkembangan menerusi bidang kemahiran Syarikat. Kerajaan telah mengenalpasti kepentingan
sektor ini di bawah Pelan Sumber Air Nasional untuk tempoh jangkamasa 50 tahun akan datang
yang akan menelan belanja sebanyak RM52.9 bilion. Justeru itu potensi sektor ini adalah amat
besar dan syarikat akan mengambil peluang keemasan ini.
JAKS sebagai sebuah syarikat yang berkembang secara progresif akan sentiasa memberi
perhatian kepada peluang-peluang perniagaan yang mungkin muncul. Selaras dengan ini,
Syarikat telah pun mengenalpasti beberapa pasaran baru yang sesungguhnya perlu diberi
tumpuan.
Memandangkan permintaan yang tinggi terhadap bahan-bahan binaan dalam industri
pembinaan dan infrastuktur, Syarikat sedang mempertimbangkan secara mendalam untuk
menceburi bidang besi “polished shafts”. Syarikat memiliki platform untuk bidang ini menerusi
JAKS Steel Industries Sdn Bhd (JSI). Sektor ini akan melengkapkan lagi rangkaian barangan
terkininya, dan ianya dapat dipasarkan secara mudah melalui portfolio sedia ada yang
merangkumi lebih daripada 350 pelanggan. Sektor ini akan merangkumi barangan seperti “CQ
round bars”, “deformed bars”, “hard drawn wires” dan “polished shafts”. Lembaga Pengarah
berpendapat perkembangan portfolio barangan JSI adalah satu langkah positif terhadap
mengukuhkan kedudukan JSI sebagai sebuah pengusaha keluli yang pelbagai dan inovatif.
Satu lagi sektor yang menjadi tumpuan JAKS adalah sektor minyak dan gas yang
sememangnya menguntungkan. Dengan reputasi dan kemahiran sebagai salah satu daripada
pengeluar paip besi terbesar di Malaysia, Lembaga Pengarah yakin dapat menepati keperluan
“pipe fittings” sektor ini. Tumpuan Syarikat dalam sektor ini mengutamakan fabrikasi “pipe
fittings” untuk industri minyak dan gas yang akan dieskport terutamanya ke Amerika Syarikat,
Mexico dan Kanada. Dengan platform yang sedia ada dan rangkaian perdagangan yang kuat,
Syarikat yakin dapat mengatasi sebarang cabaran yang mungkin dihadapi.
Projek-projek sedia ada Syarikat berjalan lancar dengan peningkatan yang berterusan.
Perjanjian pembekalan paip dengan Perbadanan Air Melaka, iaitu sebuah kontrak 10 tahun yang
eksklusif untuk pembekalan paip besi dan kelengkapan bagi sistem pembekalan air Negeri
Melaka sedang berjalan lancar. JAKS yakin dengan kebolehan dan pengalamannya yang sedia
ada dalam melaksanakan projek-projek seumpama ini, Perbadanan Negeri Melaka akan
melanjutkan perjanjiannya untuk 10 tahun lagi.
Baru-baru ini JAKS juga telah berjaya mendapatkan kontrak kerja-kerja membaik-pulih paip,
pembinaan infrastruktur bekalan air dan juga kerja-kerja penyelenggaraan di Negeri Terengganu.
Syarikat meramalkan Rancangan Malaysia Ke 9 (9MP) akan membawa kesan yang berterusan
ke atas industri besi di Malaysia, di mana industri infrastruktur akan memainkan peranan yang
penting. Oleh itu Syarikat sentiasa bersedia untuk menghadapi permintaan ini menerusi strategistrategi yang dirancangkan dan kemudahan-kemudahan yang sedia ada. Syarikat akan terus
berusaha untuk meningkatkan dan mengekalkan reputasinya sebagai sebuah syarikat
perkhidmatan integrasi berdasarkan pengalamannya yang telah dibuktikan.
■
“JAKS sebagai sebuah
syarikat yang
berkembang secara
progresif akan sentiasa
memberi perhatian
kepada peluangpeluang perniagaan.”
Kesimpulannya, dengan ramalan projek-projek
berkaitan air hasil daripada 9MP; projek-projek
sedia ada di Negeri Selangor, Melaka, Sabah
dan Terengganu; penceburan ke negeri-negeri
lain dan juga pasaran-pasaran baru seperti
bahan-bahan pembinaan dan “pipe fittings”
minyak dan gas, JAKS amat yakin akan dapat
memulihkan kekuatan dan kedudukkannya
sekaligus menjangkakan pertumbuhan yang
selaras dalam tempoh 3 - 5 tahun yang akan
datang.
TINJAUAN KEWANGAN
Pendapatan terkumpul Kumpulan untuk tahun
kewangan berakhir 31 Oktober 2005 adalah
RM235.6 juta, dengan keuntungan sebelum
cukai sebanyak RM19.2 juta. Keputusan ini
mewakili harga pasaran besi dunia yang turun
naik dan juga ketidakpastian dalam aktiviti
pembinaan tempatan.
DIVIDEN
Lembaga tidak mengesyorkan sebarang dividen
untuk tahun kewangan berakhir 31 Oktober
2005.
PENGHARGAAN
Saya ingin mengucapkan setinggi-tinggi
penghargaan kepada para pemegang saham
untuk sokongan berterusan dari mereka; kepada
rakan
perniagaan,
pembiaya-pembiaya,
pembekal-pembekal dan pelanggan-pelanggan
kami untuk keyakinan dan kepercayaan; dan
juga kepada para pengarah untuk kepimpinan
dan nasihat mereka. Penghargaan saya juga
kepada pihak pengurusan dan kakitangan
Kumpulan untuk dedikasi dan komitmen
mereka.
Dan akhirnya, setinggi-tinggi penghargaan dan
ucapan terima kasih kepada semua pihak
kerajaan dan pihak berkuasa tempatan untuk
sokongan dan bantuan mereka sepanjang tahun
ini.
Andy Ang Lam Poah
Pengarah Urusan
C O R P O R AT E G O V E R N A N C E S TAT E M E N T ■
The Board of Directors support high standards of corporate governance and assume
responsibility in ensuring that the Best Practices in Corporate Governance as develop in Part 1
and Part 2 of the Malaysian Code on Corporate Governance (“the Code”) as required by virtue
of paragraph 15.2 Bursa Malaysia Securities Berhad (“Bursa Securities”) Listing Requirements
is being fully applied.
Set out herewith are the Corporate Governance principles and practices that were applied
during the financial year ended 31 October 2005.
A.
THE BOARD OF DIRECTORS
a.
Duties of Board of Directors
The Board of Directors takes full responsibility for the performance of the Group. The
Board provides stewardship to the Group's strategic direction and operations which
will ultimately maximize shareholder value. To fulfill this role, the Board provides
balance and advice to the Management in establishing and monitoring of the
Group's goals.
The Board's most important functions are as follows:
• ensuring that the Company Goals are clearly established, and that strategies are
in place for achieving them;
• establishing policies for strengthening the performance of the Company including
ensuring that Management is proactively seeking to build the Business through
innovation, initiative, technology, new products and the development of its
business capital;
• monitoring the performance of Management;
• appointing the MD & CEO, setting the terms of the MD & CEO's employment contract
and, where necessary, terminating the MD & CEO's employment with the Company;
• deciding on whatever steps are necessary to protect the Company's financial
position and the ability to meet its debts and other obligations when they fall due,
and ensuring that such steps are taken;
• ensuring that the Company's financial statements are true and fair and conform
with law;
• ensuring that the Company adheres to high standards of ethics and corporate
behaviour; and
• ensuring that the Company has appropriate risk management/regulatory
compliances policies in place.
In discharging its fiduciary duties, the Board has delegated specific tasks to 4 Board
Committee which are Audit Committee, Nomination Committee and Remuneration
Committee. The respective committee reports are disclosed on pages 22 to 26.
b.
Board Composition and Balance
The Board of JAKS Resources Berhad presently has 7 members and majority of the
Board comprise of Independent Non-Executive Directors.
■
C O R P O R AT E G O V E R N A N C E S TAT E M E N T
The Board has identified and appointed Dato' Chor Chee Heung as the Senior
Independent Non-Executive Director, to whom any concerns may be conveyed. The
profile of each Director is summarized under pages 4 to 7 of this Annual Report.
The Board meetings are presided by the Chairman, whose role is clearly separated
from role of MD & CEO to ensure a balance of power and authority.
The Executive Directors are responsible for implementing the policies and decisions of
the Board, overseeing the operations as well as managing the development and
implementation of business and corporate strategies. The Non-Executive Directors are
independent of Management and free from any business relationship which could
materially interfere with their independent judgement. Their presence ensures that issues
of strategies, performance and resources proposed by the Management are objectively
evaluated and thus provide a capable check and balance for the Executive Directors.
c.
Board Meetings
During the year ended 31 October 2005, six Board meetings were held and the
respective Directors' attendance record for the financial year ended 31 October 2005
are as shown in the table below:
Directors
Dato' Jamian Bin Mohamad @ Md. Semaal
(Resigned on 6/01/2006)
Ang Lam Poah
Ang Lam Aik
(Appointed on 31/1/2005)
d.
Meeting Attendance
No. of meetings
attended
Percentage
of attendance
6/6
6/6
6/6
6/6
6/6
6/6
5/6
100
100
100
100
100
100
83
4/5
80
Supply of Information
The Board is provided with the agendas and board papers prior to Board Meetings.
This is issued in sufficient time to enable the Board to solicit further explanations
and/or information, where necessary, to enable them to discharge their duties.
The board papers provided include inter alia, financial results, business plan and
budget, status of major projects, minutes of meetings of Board, circulars from Bursa
Securities, announcements made to Bursa Securities, directors' resolution in writing
that had been passed and other major operational and financial issues for the
Board's information and/or approval.
All Directors have access to the advices and services of the Company Secretary and
all information in relation to the Group whether as a full Board or in their individual
capacity to assist them in furtherance of their duties. The Board or the individual
Directors may seek independent advice, from independent professional advisers at
the Group's expense, if necessary.
e.
■
Directors' Training
The Group acknowledges that continuous education is vital for the Board members
to gain insight into the state of economy, technological advances, regulatory updates
and Management strategies. All members of the Board have attended the Mandatory
Accreditation Programme and some members have attended other seminars and
conferences. Directors are encouraged to attend continuous education programmes
to further enhance their skills and knowledge, where relevant.
As the Continuous Education Programme (CEP) has been repealed by Bursa Securities
with effect from 1 January 2005, the Board has assessed the training needs of the
individual directors to ensure that the board is equipped with necessary knowledge to
enable them to discharge duties as directors. For the financial year ended 31 October
2005, the following training was conducted and attended by all the Directors:
(i)
One hour briefing on the new Financial Reporting Standard (FRS) and an
overview of the financial reporting implication of the new FRS.
(ii)
One hour briefing on Enterprise Wide Risk Management and the establishment
of a more formalized risk management framework.
The Board is regularly updated by the Company Secretary on the latest
update/amendments on the Bursa Securities Listing Requirements and other regulatory
requirements relating to the discharge of the Directors' duties and responsibilities.
f.
Appointments and Re-election of Directors
In accordance with the Company's Articles of Association, all Directors who are
appointed by the Board are subject to election by Shareholders at the first opportunity
after their appointment. The Articles also provide that at least one third of the
remaining Directors be subject to re-election by rotation at each Annual General
Meeting provided always that all Directors including the Managing Directors shall
retire from office at least once every three years but shall be eligible for re-election.
The Board has empowered the Nomination Committee to consider and make their
recommendation to the Board for the continuation in service of those Directors who
are due for retirement and recommendation of new Directors, if required to enhance
the composition of the Board. The Nomination Committee will recommend to the
Board candidates for all directorships to be filled and review the composition of the
Board to ensure that the Board has the required mix of skills, expertise, attributes
and core competencies to discharge their duties efficiently and effectively.
At the forthcoming Annual General Meeting, Dato' Azman bin Mahmood and Dato'
Razali Merican bin Naina Merican who are due for retirement pursuant to Article 101
of the Company's Articles of Association and being eligible, have offered themselves
for re-election.
B.
DIRECTORS' REMUNERATION
a.
Level and Make-up
The Company has adopted the objective as recommended by the Code to determine
the remuneration of the Directors so as to ensure that the Company attracts and
retains the Directors needed to run the Group successfully. The component parts
are designed to link rewards to corporate and individual performance in the case of
Executive Directors. In the case of Non-Executive Directors, the level of
remuneration reflects the experience and level of responsibilities undertaken by the
individual Non-Executive Director concerned.
■
b.
Procedure
The Remuneration Committee recommends for the Board's approval on all elements
of remuneration and terms of employment for Executive Directors.
Non-Executive Directors' fees are determined by the Board as a whole with the
Director concerned abstaining from deliberations and voting on decisions in respect
of his fee. The fees payable to Directors are subject to the approval of shareholders.
c.
Details of Remuneration
Details of the remuneration received by the Directors from the Group and Company
for the financial year ended 31 October 2005 are set out on page 65 of the Financial
Statements.
The aggregate remuneration paid/payable to all Directors of the Company are further
categorized into the following components.
Executive Directors
Non-Executive Directors
Fees
(RM)
Salaries
(RM)
EPF &
SOCSO (RM)
Total
(RM)
135,000
1,152,500
-
129,559
-
1,282,059
135,000
The number of Directors whose remuneration falls under the following remuneration
bands:
Remuneration Bands
RM50,000 and below
RM200,000 - RM250,000
RM350,000 - RM400,000
RM450,000 - RM460,000
C.
Executive
Directors
Non-Executive
Directors
2
1
1
4
-
SHAREHOLDERS
The Company recognizes the importance of transparency and accountability in disclosure of
the Group's business activities to its shareholders and investors. The Board has maintained
an effective communication policy that enables both the Board and Management to
communicate effectively with its stakeholders, investors and even the public.
The Company uses the Annual General Meeting as the main channel of communicating
with its shareholders where the Board of Directors and Auditors of the Company are
present to answer any queries of shareholders.
D.
ACCOUNTABILITY AND AUDIT
a.
Financial Reporting
In presenting the annual financial statements and quarterly announcements of its
results, the Board of Directors has ensured that the financial statements represent a
true and fair assessment of the Company and Group's financial position. The
Responsibility Statement by the Directors pursuant to the Bursa Securities Listing
Requirements is set out on page 28.
b.
■
Internal Control and Risk Management
The Board acknowledges its responsibility for establishing a sound system of
internal control to safeguard shareholders' investment and Group's assets, and to
provide assurances on the reliability of the financial statements.
While the internal control system is devised to cater for particular needs of the
Group, such controls by their nature can only provide reasonable assurance but not
absolute assurance against material miss-statement or loss. A statement of internal
control is set out on page 27.
c.
E.
Relationship with Auditors
The Company maintains a transparent relationship with the auditors in seeking their
professional advice and towards ensuring compliance with the accounting standards.
ADDITIONAL COMPLIANCE INFORMATION
1.
Share Buy Back
No share buy back scheme was in place during the financial year 2005.
2.
Options, Warrants or Convertible Securities Exercised in the Financial Year 2005
There were no options, warrants or convertible securities issued in the financial year
2005. A total of 5,073,274 Redeemable Convertible Secured Loan Stock-B 2004/2011
were converted into ordinary shares of RM1.00 each for the financial
year 2005.
3.
American Depository Receipt (“ADR”)/Global Depository Receipt (“GDR”)
During the financial year 2005, the Company did not sponsor any ADR or GDR
programme.
4.
Sanctions and/or Penalties Imposed on the Company & its Subsidiaries,
Directors or Management by the Relevant Regulatory
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 2005.
5.
Non-audit Fees
The amount of non-audit fees paid to external auditors by the Company and its
Subsidiaries for the financial year 2005 is RM10,000.00.
6.
Profit Guarantee
During the financial year 2005, there was no profit guarantee given by the Group.
7.
Material Contract
There is no material contract entered into by the Company and/or its subsidiary
companies which involved Directors' and Major Shareholders' interest in the financial
year 2005.
8.
Revaluation Policy
The properties of the Group will be revalued on a periodic basis by external
independent valuers at an interval of at least once in every five years. The last
valuation was done in 2002.
■ BOARD COMMITTEES
A.
AUDIT COMMITTEE
a.
Members
The Audit Committee consists of the following members during the financial year:
Chairman
Members
Ang Lam Poah
Managing Director & Group Chief Executive Officer (MD & Group CEO)
b.
Terms of Reference
1.
Composition of Audit Committee
The Audit Committee (“the Committee”) shall be appointed by the Board of
Directors (“the Board”) from amongst the Directors and shall consist of not less
than three members, a majority of whom shall be Independent Non-Executive
Directors.
The Board shall, within three months of a vacancy occurring in the Audit
committee which result in the number of members reduced to below three,
appoint such number of new members as may be required to make up the
minimum number of three members.
The members of the Committee shall elect a chairman from among their
members who shall be an Independent Non-Executive Director. An alternate
Director must not be appointed as a member of the Committee.
2.
Membership
At least one member of the Committee:
• Must be a member of the Malaysian Institute of Accountants; or
• If not a member of the Malaysian Institute of Accountants, that member
must have at least three years' working experience and; must have passed
the examinations specified in Part I of the 1st Schedule of the Accountants
Act, 1967; or must be a member of one of the associations of the
accountants specified in Part II of the 1st Schedule of the Accountants Act,
1967; or
• Must have a degree/masters/doctorate in accounting or finance and at least
three years' post qualification in accounting or finance; or
BOARD COMMITTEES
■
• Must have at least seven years' experience being a chief financial officer of
a corporation or having the function of being primarily responsible for the
management of the financial affairs of a corporation.
3.
Authority
The Committee is authorised by the Board to investigate any activity of the
Company and its subsidiaries within its terms of reference or otherwise
directed by the Board. It shall have:
i.
The authority to investigate any matter within its terms of reference;
ii.
The resources which are required to perform its duties;
iii. Full and unrestricted access to any information pertaining to the Company
iv. Direct communication channels with the external auditors and internal
auditors;
v.
The right to obtain independent professional or other advice;
vi. The rights to convene meetings with the external auditors, excluding the
attendance of the executive members of the committee, whenever
deemed necessary.
The Committee is also authorized by the Board to obtain outside legal or other
independent professional advice and to secure the attendance of outsiders
with relevant experience and expertise if it considers this necessary and
reasonable for the performance of its duties.
4.
Meetings and Minutes
The Committee shall meet at least four times a year and such additional
meetings as the Chairman shall decide in order to fulfill its duties.
In addition to the Committee members, the meetings will normally be attended
by the representatives of the departments in the Company and of the external
auditors as and when required.
The Committee may invite any person to be in attendance to assist it in its
deliberations.
A quorum shall consist of a majority of Independent Non-Executive Directors
and shall not be less than two.
The decision of the Audit Committee shall be decided by a majority of votes.
In the case of an equality of votes, the Chairman shall have a second or casting
vote, provided that where two members form a quorum, the Chairman of a
meeting at which only such a quorum is present, or at which only two Directors
are competent to vote on the question in issue, the Chairman shall not have a
casting vote.
■
BOARD COMMITTEES
The Committee shall be reporting to the full Board from time to time its
recommendation for consideration and implementation and the actual decision
shall be the responsibility of the Board of Director after considering the
recommendation of the Committee.
The Company Secretary shall act as Secretary of the Committee and shall be
responsible for drawing up the agenda with the concurrence of the chairman
and circulating it, supported by explanatory documentation to Committee
members prior to each meeting.
The Secretary shall also be responsible for recording the proceedings of the
Audit Committee and the minutes of meetings tabled at Board meetings.
5.
Duties
The duties of the Committee should include the following:
• To consider the appointment of the External Auditor, the audit fee and any
questions of resignation or dismissal;
• To discuss with the External Auditor before the audit commences, the nature
and scope of the audit, and ensure coordination where more than one audit
firm is involved;
• To review the quarterly and year-end financial statements of the Company,
focusing particularly on:
■
Any changes in accounting policies and practices;
■
Significant adjustments arising from the audit;
■
The going concern assumption;
■
Compliance with accounting standards and other legal requirements.
• To discuss problems and reservations arising from the interim and final
audits, and any matter the Auditor may wish to discuss (in the absence of
management where necessary).
• To review the External Auditor's management letter and management's
response.
• To consider any related party transactions that may arise within the
Company or group.
• To consider the major findings of internal investigations and management's
response.
• To do the following where an internal audit function exists:
■
Review the adequacy of the scope, functions and resources of the
internal audit function, and the necessary authority to carry out its work;
BOARD COMMITTEES
c.
■
■
Review the internal audit programme and results of the internal audit
programme and the results of the internal audit process and where
necessary ensure that appropriate actions taken on the commendations
of the internal audit function;
■
Review any appraisal or assessment of the performance of members of
the internal audit functions;
■
Approve any appointment or termination of senior staff members of the
internal audit function;
■
Inform the Company on the resignation of internal audit staff members
and provide the resigning staff member an opportunity to submit his
reasons for resigning.
■
To consider other topics as defined by the Board.
Summary of Activities of Audit Committee for the Financial Year ended
31 October 2005
The Audit Committee held five meetings during the financial year ended 31 October
2005.
The attendance record for the financial year ended 31 October 2005 of each member
of the Audit Committee is as shown in the table below.
Audit Committee Members
Ang Lam Poah
Meeting Attendance
No. of meetings
attended
Percentage
of attendance
5/5
5/5
5/5
5/5
100
100
100
100
The minutes of each meeting held were distributed to each member of the Board at
the subsequent Board Meeting. The Audit Committee Chairman reported on each
of the meetings to members of the Board.
d.
Summary of Activities of the Internal Audit Division for the Financial Year ended
31 October 2005
The Company's Internal Audit Division assists the Audit Committee in the discharge
of its duties and responsibilities. Its role is to undertake independent regular and
systematic reviews of internal controls, so as to provide the Audit Committee with
independent and objective feedback and reports that the internal control systems
continue to operate satisfactorily and effectively.
■
BOARD COMMITTEES
There are two staff in the Internal Audit Division during the financial year 2005. The
Internal Audit Division together with an external consultant reviewed the key risk
profile of the various business divisions to develop the risk management framework
as well as ascertained the extent of compliance with established policies and
procedures and statutory requirements. The Internal Audit Division recommended
and obtained concurrence on improvements to the system of controls implemented.
B.
NOMINATION COMMITTEE
The Nomination Committee comprises exclusively of Non-Executive Directors. The MD &
Group CEO and Group General Manager, Finance attend the meetings on the invitation of
the Committee.
Chairman
Members
During the financial year, three meetings were held and attended by all members.
The Committee is responsible for making recommendations to the Board on new Board
and Board Committee appointments. It also assists the Board in reviewing the Board
structure, size and composition of the Board annually.
C.
REMUNERATION COMMITTEE
The Remuneration Committee comprises of a majority of Non-Executive Directors.
Chairman
Members
Ang Lam Poah
MD & Group CEO
During the financial year, one meeting was held and attended by all members.
The Committee is responsible in reviewing and implementing policies governing the
remuneration of Executive Directors as well as to make recommendations to the Board on
all elements of remuneration and terms of employment for Executive Directors.
S TAT E M E N T O N I N T E R N A L C O N T R O L ■
Responsibility
The Directors acknowledge that they are responsible for ensuring that a sound system of
internal control to safeguard shareholders’ interests and Group’s assets is maintained. The
Board is responsible for reviewing the adequacy and the integrity of the Group’s internal control
systems and management information systems. The Board is informed of all control issues
pertaining to internal controls and regulatory compliance. This system of internal control cannot,
however, provide protection with certainty against the Group failing to meet its business
objectives or all material errors, losses, fraud, or breaches of law or regulations as a sound
system of internal control reduces, but cannot eliminate human errors, control processes being
circumstanced by employees and the occurrence of unforeseeable circumstances.
Risk Management Framework
The Board established an organizational structure with clearly defined lines of accountability and
delegated authority as part of its risk management framework. This is achieved through a clearly
defined operating structure with lines of responsibility and delegated authority. Written policies
and procedures have been issued with clearly defined limits of delegated authority and provide
a framework for management to deal with areas of significant risk. The policies and procedures
to achieve such goals include areas of human resources and quality management.
Human Resources policies encompass areas of recruitment, training and development heals
and safety, staff performance, appraisal and succession planning with the objective to enhance
staff integrity and the development of the professionalism and competency of employees in the
Group.
Quality Management places emphasis in satisfying the requirement of quality policy and
objectives as outline in the Quality Manual issued by the Managing Director. The Management
Review Team periodically reviews this Quality Management process that is implemented
throughout the financial year. Three subsidiary companies in the Group have the ISO9001: 2000
International Standard certification.
Business risk assessment and evaluation takes place as an integral part of the Group’s annual
strategic cycle. The process within the Group are continuously reviewed and improved on. This
information is reviewed by senior management as part of the strategic review.
Financial Reporting
Monitoring of results on a monthly basis and the appropriate management action will be
undertaken. The Managing Director reviews the management accounts covering financial
performance, key business indicators and cash flow performance on a weekly and monthly
basis.
Internal Audit
The Internal Audit Department has laid down regulations and procedures to identify govern and
verify business weaknesses and risks within the Group. The internal audit function is carried out
systematically across the Group, with regular visits and reviews conducted on the areas of risks
and furnish reports on compliance with internal control and procedures. Internal Audit also
ensures that all applicable recommendations to improve control are followed through by the
Management at all levels.
■ D I R E C T O R S ’ R E S P O N S I B I L I T Y S TAT E M E N T
The Board is responsible to ensure that the financial statements are properly drawn up 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 of the Group as at the end of
the financial year and of the results and cash flows of the Group for the financial year then
ended.
The Directors are satisfied that in preparing the financial statements of the Group for the year
ended 31 October 2005, the Group has adopted suitable accounting policies and applied them
consistently, prudently and reasonably. The Directors also consider that all applicable approved
accounting standards have been followed in the preparation of the financial statements, subject
to any material departures being disclosed and explained in the notes to the financial
statements. The financial statements have been prepared on the going concern basis.
The Directors are responsible for ensuring that the Group keeps sufficient accounting records to
disclose with reasonable accuracy, the financial position of the Group and which enable them
to ensure that the financial statements comply with the Companies Act, 1965.
FINANCIAL STATEMENTS
30
Directors’ Report
34
Balance Sheets
36
37
38
41
Notes to the Financial
Statements
Income Statements
74
Statement by Directors
Statements of Changes in
Equity
75
Statutory Declaration
76
Report of the Auditors
Cash Flow Statements
■ D I R E C T O R S ’ R E P O RT
The directors hereby submit their report together with the audited financial statements of the Group
and of the Company for the financial year ended 31st October 2005.
PRINCIPAL ACTIVITIES
The Company is principally engaged in investment holding. The principal activities of its subsidiary
companies are set out in Note 4 to the financial statements. There have been no significant changes
to the nature of these principal activities during the financial year.
RESULTS
Group
RM
Company
RM
Profit after taxation
Minority interest
8,952,800
123,209
473,209
-
Net profit for the year
9,076,009
473,209
DIVIDEND
No dividend was paid or declared by the Company since the end of the previous financial year.
The directors do not recommend the payment of any dividend in respect of the financial year ended
31st October 2005.
RESERVES AND PROVISIONS
All material transfers to and from reserves and provisions during the financial year have been disclosed
in the financial statements.
BAD AND DOUBTFUL DEBTS
Before the income statements and balance sheets of the Group and of the Company were made out,
the directors took reasonable steps to ascertain that action had been taken in relation to the writing
off of bad debts and the making of allowance for doubtful debts, and satisfied themselves that all
known bad debts had been written off and that adequate allowance had been made for doubtful debts.
At the date of this report, the directors are not aware of any circumstances that would render the
amount written off for bad debts, or the amount of the allowance for doubtful debts, in the financial
statements of the Group and of the Company inadequate to any substantial extent.
CURRENT ASSETS
Before the income statements and balance sheets of the Group and of the Company were made out, the
directors took reasonable steps to ensure that any current assets, other than debts, which were unlikely
to realise in the ordinary course of business, their values as shown in the accounting records of the Group
and of the Company have been written down to an amount that they might be expected to realise.
D I R E C T O R S ’ R E P O RT
■
CURRENT ASSETS (CONT’D)
At the date of this report, the directors are not aware of any circumstances that would render the
values attributed to the current assets in the financial statements of the Group and of the Company
misleading.
VALUATION METHODS
At the date of this report, the directors are not aware of any circumstances which have arisen which
render adherence to the existing methods of valuation of assets or liabilities of the Group and of the
Company misleading or inappropriate.
CONTINGENT AND OTHER LIABILITIES
At the date of this report, there does not exist:(i)
any charge on the assets of the Group and of the Company that has arisen since the end of the
financial year which secures the liabilities of any other person, or
(ii)
any contingent liability in respect of the Group and of the Company that has arisen since the end
of the financial year.
No contingent liability or other liability of the Group and of the Company has become enforceable, or
is likely to become enforceable within the period of twelve months after the end of the financial year
which, in the opinion of the directors, will or may substantially affect the ability of the Group and of the
Company to meet their obligations as and when they fall due.
CHANGE OF CIRCUMSTANCES
At the date of this report, the directors are not aware of any circumstances, not otherwise dealt with
in this report or the financial statements of the Group and of the Company that would render any
amount stated in the financial statements misleading.
ITEMS OF AN UNUSUAL NATURE
The results of the operations of the Group and of the Company for the financial year were not, in the
opinion of the directors, substantially affected by any item, transaction or event of a material and
unusual nature.
There has not arisen in the interval between the end of the financial year and the date of this report
any item, transaction or event of a material and unusual nature likely, in the opinion of the directors, to
affect substantially the results of the operations of the Group and of the Company for the financial year
in which this report is made.
ISSUE OF SHARES, DEBENTURES AND LOAN STOCKS
During the financial year, the Company has increased its issued and fully paid-up share capital from
RM393,436,798/- to RM398,510,072/- through the issuance of 5,073,274 new ordinary shares of RM1/- each
pursuant to the conversion of Redeemable Convertible Secured Loan Stock-B 2004/2011 (“RCSLS-B”).
■
ISSUE OF SHARES, DEBENTURES AND LOAN STOCKS (CONT’D)
The movements in the issued and fully paid-up share capital of the Company are as disclosed in Note
19 to the financial statements.
No debentures were issued by the Company during the financial year.
DIRECTORS
The directors in office since the date of the last report are:Ang Lam Aik
Ang Lam Poah
Dato’ Jamian Bin Mohamad @ Md. Semaal - resigned on 6.1.2006
Dato’ Azman Bin Mahmood
DIRECTORS’ INTERESTS
According to the Register of Directors’ Shareholdings, the interests of those directors who held office
at the end of the financial year in shares in the Company during the financial year are as follows:Number of ordinary shares of RM1/- each
At
1.11.2004
Bought
Sold
At
31.10.2005
5,000,000
20,000,000
-
25,000,000
100,000
26,800,002
508,000
22,000
430,000
100,000
26,800,002
100,000
62,400,000
-
33,960,000
28,440,000
Indirect
Direct
Ang Lam Aik
Ang Lam Poah
Dato’ Jamian Bin Mohamad @
Md. Semaal
Other than as stated above, none of the other directors in office at the end of the financial year had
any interest in shares in the Company and its subsidiary companies during the financial year.
In accordance with Article 101 of the Articles of Association of the Company, Dato’ Azman Bin
Mahmood and Dato’ Razali Merican Bin Naina Merican retire from the Board at the forthcoming Annual
General Meeting and being eligible, offer themselves for re-election.
■
SIGNIFICANT EVENTS DURING AND AFTER THE FINANCIAL YEAR
Significant events during and after the financial year are disclosed in Note 34 to the financial
statements.
DIRECTORS' BENEFITS
Since the end of the previous financial year, no director of the Company has received or become
entitled to receive any benefit (other than as disclosed in the financial statements) by reason of a
contract made by the Company or a related corporation with the director or with a firm of which the
director is a member, or with a company in which the director has a substantial financial interest.
Neither during nor at the end of the financial year was the Company or any of its related corporations
a party to any arrangement whose object was to enable the directors to acquire benefits by means of
the acquisition of shares in, or debentures of, the Company or any other body corporate.
AUDITORS
The auditors, Messrs Monteiro & Heng, have expressed their willingness to continue in office.
On behalf of the Board,
DATO’ RAZALI MERICAN BIN NAINA MERICAN
Director
ANG LAM POAH
Director
Kuala Lumpur
Date: 27 February 2006
■ BALANCE SHEETS
A S AT 3 1 S T O C T O B E R 2 0 0 5
Group
Note
PROPERTY, PLANT
AND EQUIPMENT
INVESTMENT IN
SUBSIDIARY COMPANIES
OTHER INVESTMENTS
INTANGIBLE ASSETS
DEFERRED TAX ASSETS
2005
RM
2004
RM
3 104,358,249 125,903,904
Company
2005
2004
RM
RM
79,319,721
78,309,749
4
- 220,772,140 220,272,142
5
13,316,011
2,373,010
10,519,601
6 202,357,597 202,357,597 103,510,070 103,510,070
23
10,423,183
14,142,085
-
CURRENT ASSETS
Inventories - at cost
Amount due from customers
for contract works
Trade receivables
Other receivables,
deposits and prepayments
Amounts owing by
subsidiary companies
Fixed deposits with licensed banks
Cash and bank balances
CURRENT LIABILITIES
Trade payables
Other payables, deposits
and accruals
Amounts owing to
Amount owing to director
Hire purchase liabilities
Tax payable
Short term borrowings
- bank overdrafts
- other borrowings
NET CURRENT
ASSETS/(LIABILITIES)
7
54,462,427
50,404,907
-
-
8
9
87,886,886
66,624,223
74,576,477
91,055,416
-
-
10
60,498,279
25,254,709
29,222,155
104,630
11
12
13
8,273,298
13,250,336
10,441,018
11,540,075
2,378,771
241,146
4,260,235
92,535
290,995,449 263,272,602
31,842,072
4,457,400
14
17,692,524
53,890,775
-
-
15
4,111,373
21,363,424
1,256,275
316,558
11
16
17
20,593
248,880
17,185,773
436,663
279,047
15,986,614
16,312,293
186,296
-
8,505,000
157,752
-
11,570,494
97,761,298
9,422,504
61,118,480
10,172,734
-
148,590,935 162,497,507
27,927,598
8,979,310
142,404,514 100,775,095
3,914,474
(4,521,910)
18
472,859,554 445,551,691 418,036,006 397,570,051
B A L A N C E S H E E T S A S AT 3 1 S T O C T O B E R 2 0 0 5
Group
Note
2005
RM
2004
RM
■
Company
2005
2004
RM
RM
Financed by:
SHARE CAPITAL
ACCUMULATED PROFIT/(LOSS)
RESERVE ON CONSOLIDATION
OTHER RESERVE
19 398,510,072 393,436,798 398,510,072 393,436,798
41,440,125
32,364,116
(1,171,821)
(1,645,030)
6
2,170,725
2,170,725
20
841,298
841,298
SHAREHOLDERS' FUNDS
MINORITY INTERESTS
HIRE PURCHASE LIABILITIES
LONG TERM LIABILITIES
DEFERRED TAX LIABILITIES
442,120,922 428,812,937 397,338,251 392,633,066
6,257,011
6,380,220
17
648,049
758,410
607,071
705,009
21
23,225,333
8,678,132
20,090,684
3,904,805
23
608,239
921,992
327,171
472,859,554 445,551,691 418,036,006 397,570,051
The accompanying notes form an integral part of these financial statements.
■ I N C O M E S TAT E M E N T S
FOR THE YEAR ENDED 31ST OCTOBER 2005
Group
Note
REVENUE
2005
RM
Company
2005
2004
RM
RM
2004
RM
24 235,645,693 217,231,270
7,180,000
720,000
(201,178,723) (184,588,887)
-
-
COST OF SALES
GROSS PROFIT
34,466,970
32,642,383
7,180,000
720,000
Other operating income
Selling and distribution expenses
Administrative expenses
2,486,572
(1,729,741)
(9,551,504)
269,425
(3,047,810)
(4,979,778)
(6,587,055)
(2,283,363)
OPERATING PROFIT/(LOSS)
25
25,672,297
24,884,220
592,945
(1,563,363)
Finance costs
Exceptional items
26
27
(3,942,660)
(2,526,058)
(1,726,712)
-
(119,736)
-
(69,413)
-
19,203,579
23,157,508
473,209
(1,632,776)
(10,250,779)
9,540,887
-
-
8,952,800
32,698,395
473,209
(1,632,776)
123,209
(322,025)
-
-
9,076,009
32,376,370
473,209
(1,632,776)
2.28
12.41
2.28
12.33
PROFIT/(LOSS) BEFORE TAXATION
Taxation
28
PROFIT/(LOSS) AFTER TAXATION
Minority interest
NET PROFIT/(LOSS) FOR THE YEAR
Earnings per share (sen)
Basic
Fully diluted
29
S TAT E M E N T S O F C H A N G E S I N E Q U I T Y ■
Accumulated
Reserve on
Profit/(Loss) Consolidation
RM
RM
Other
Reserve
RM
Total
RM
Note
Share
Capital
RM
19
2
393,436,796
(12,254)
-
-
-
(12,252)
393,436,796
20
-
-
-
841,298
841,298
6
-
32,376,370
2,170,725
-
-
2,170,725
32,376,370
393,436,798
32,364,116
2,170,725
841,298
428,812,937
19
5,073,274
-
-
-
5,073,274
20
-
9,076,009
-
(841,298)
-
(841,298)
9,076,009
398,510,072
41,440,125
2,170,725
-
442,120,922
Note
Share
Capital
RM
Accumulated
Loss
RM
Other
Reserve
RM
Total
RM
19
2
393,436,796
(12,254)
-
-
(12,252)
393,436,796
-
(1,632,776)
841,298
-
841,298
(1,632,776)
393,436,798
(1,645,030)
841,298
392,633,066
19
5,073,274
-
-
5,073,274
20
-
473,209
(841,298)
-
(841,298)
473,209
398,510,072
(1,171,821)
-
397,338,251
Group
Balance at
1st November 2003
Issued during the year
Redeemable
Convertible
Secured Loan
Stock-B 2004/2011
Acquisition of
Balance at
31st October 2004
Conversion of
Redeemable
Convertible
Secured Loan
Stock-B 2004/2011
Balance at
31st October 2005
Company
Balance at 1st November 2003
Redeemable Convertible
Secured Loan Stock-B 2004/2011
Net loss for the year
20
Balance at 31st October 2004
Conversion of Redeemable Convertible
Secured Loan Stock-B 2004/2011
Balance at 31st October 2005
■ C A S H F L O W S TAT E M E N T S
Group
Company
2005
2004
RM
RM
2005
RM
2004
RM
9,076,009
32,376,370
473,209
(1,632,776)
(1,102,293)
(5,000)
94,760
(1,984,508)
2,292
80,244
-
-
2,526,058
-
-
-
2,614,575
(700)
1,483,225
(350)
665,173
-
189,006
-
CASH FLOWS FROM
OPERATING ACTIVITIES
Net Profit/(Loss) for the financial year
Adjustment for:
Allowance for doubtful debt
no longer required
Amortisation of golf membership
Amortisation of leasehold land
Forfeiture of deposit due to termination
of sale and purchase agreement for
the acquisition of long leasehold land
Depreciation of property,
plant and equipment
Dividend income
Loss on disposal of property,
plant and equipment
Interest expenses
Interest income
Minority interest
Property, plant and equipment
written off
Taxation
12,025
3,942,660
(254,126)
(123,209)
153,931
1,726,712
(217,326)
322,025
119,736
-
69,413
-
339
10,250,779
(9,540,887)
-
-
Operating Profit/(loss) before
Working Capital Changes
27,031,877
24,401,728
1,258,118
(1,374,357)
Inventories
Amount due from customers
for contract works
Receivables
Payables
(4,057,520) (15,176,266)
-
-
(13,310,409) (19,533,627)
(9,710,084) 34,700,468
(33,998,222) (35,855,385)
(29,117,525)
939,717
(104,630)
304,304
Interest received
Interest paid
Tax paid
(34,044,358) (11,463,082) (26,919,690)
254,126
217,326
(3,095,982)
(941,613)
(50,034)
(5,319,300)
(9,555,980)
-
(1,174,683)
(8,951)
-
(42,205,514) (21,743,349)
(1,183,634)
Net Operating Cash Flow
(26,969,724)
C A S H F L O W S TAT E M E N T S F O R T H E Y E A R E N D E D 3 1 S T O C T O B E R 2 0 0 5
Group
■
Company
2005
2004
RM
RM
2005
RM
2004
RM
700
350
-
-
-
555,177
-
-
113,933
(220,010) (10,519,601)
(499,998)
(272,142)
CASH FLOWS FROM
INVESTING ACTIVITIES
Dividend income
Net cash inflow from acquisition of
Proceeds from disposal of
property, plant and equipment
Purchase of investment
Investment in subsidiary companies
Purchase of property,
plant and equipment
Net Investing Cash Flow
44,000
(10,938,001)
(3,185,301)
(14,078,602)
(7,837,103)
(1,578,345)
(2,610,755)
(7,387,653) (12,597,944)
(2,882,897)
CASH FLOWS FROM
FINANCING ACTIVITIES
Net changes from subsidiaries
Net changes from directors
Fixed deposits held as security value
Interest paid
Net proceeds from
short term borrowings
Repayments of hire purchase liabilities
Repayments of term loan
Drawdown of term loan
Net Financing Cash Flow
(416,070)
2,467,720
(696,759)
436,070
(10,441,018)
(724,637)
9,688,757
(69,702)
4,244,765
(60,462)
26,990,284
(303,328)
(2,827,998)
30,932,538
41,267,000
(304,198)
(673,549)
1,688,903
(166,194)
30,263,418
(25,239)
-
56,146,387
31,248,571
39,716,279
4,159,064
NET CHANGE IN CASH AND
CASH EQUIVALENTS
CASH AND CASH EQUIVALENTS AT
BEGINNING OF THE YEAR
(137,729)
2,117,569
148,611
92,533
2,117,571
2
92,535
2
CASH AND CASH EQUIVALENTS AT
END OF THE YEAR
1,979,842
2,117,571
241,146
92,535
■
C A S H F L O W S TAT E M E N T S F O R T H E Y E A R E N D E D 3 1 S T O C T O B E R 2 0 0 5
Group
Company
2005
2004
RM
RM
2005
RM
2004
RM
8,273,298
13,250,336
(11,570,494)
10,441,018
11,540,075
(9,422,504)
241,146
-
92,535
-
9,953,140
12,558,589
(7,973,298) (10,441,018)
241,146
-
92,535
-
1,979,842
241,146
92,535
ANALYSIS OF CASH
AND CASH EQUIVALENTS:
Fixed deposits with licensed banks
Cash and bank balances
Bank overdrafts
Less: Deposits held as security values
2,117,571
During the year, the Group and the Company acquired property, plant and equipment amounting to
RM3,348,101/- (2004: RM83,767,103/-) and RM1,675,145/- (2004:RM78,498,755/-) of which
RM176,921/- (2004:RM1,013,959/-) and RM103,082/- (2004: RM965,376/-) were acquired under hire
purchase instalment plans respectively. Cash payments amounting to RM14,121/- (2004:RM83,959/-)
and RM6,282/- (2004:RM77,376/-) were made towards the hire purchase.
N O T E S T O T H E F I N A N C I A L S TAT E M E N T S ■
1.
GENERAL INFORMATION
The Company is principally engaged in investment holding. The principal activities of its
subsidiary companies are set out in Note 4 to the financial statements. There have been no
significant changes in the nature of these principal activities during the financial year.
The Company is a public limited liability company, incorporated and domiciled in Malaysia and
listed on the Main Board of Bursa Malaysia Securities Berhad.
The registered office is located at 312, 3rd Floor, Block C, Kelana Square, 17 Jalan SS 7/26,
47301 Petaling Jaya, Selangor Darul Ehsan.
The principal place of business of the Company is located at Lot 526, Persiaran Subang Permai,
Sungai Penaga Industrial Park, USJ 1, 47600 Subang Jaya, Selangor Darul Ehsan.
The number of employees of the Group and of the Company at the end of the financial year were
308 (2004: 286) and 19 (2004 : 15) respectively.
The financial statements are expressed in Ringgit Malaysia.
The financial statements were authorised for issue by the Board of Directors in accordance with
a resolution of the directors on 27 February 2006.
2.
SIGNIFICANT ACCOUNTING POLICIES
(a)
Basis of Accounting
The financial statements of the Group and of the Company have been prepared under the
historical cost convention, unless otherwise indicated in the accounting policies set out
below, and comply with the provisions of the Companies Act, 1965 and the applicable
approved accounting standards in Malaysia.
(b)
Basis of Consolidation
The consolidated financial statements include the financial statements of the Company and
its subsidiary companies made up to the end of the financial year.
Subsidiary companies are those enterprises controlled by the Company. Control exists when
the Company has the power, directly or indirectly, to govern the financial and operating
policies of an enterprise so as to obtain benefits from its activities. The financial statements
of subsidiary companies are included in the consolidated financial statements from the date
that control effectively commences until the date that control effectively ceases.
Subsidiary companies are consolidated using the acquisition method of accounting. Under
the acquisition method of accounting, the results of subsidiary companies acquired or
disposed during the year are included in the Group financial statements from their respective
effective dates of acquisitions or up to their respective dates of disposals.
The financial statements of the parent and its subsidiary companies are all drawn up to the
same reporting date.
■
2.
N O T E S T O T H E F I N A N C I A L S TAT E M E N T S
SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
(b)
Basis of Consolidation (Cont’d)
Intra group transactions, balances and resulting unrealised gains are eliminated on
consolidation and the consolidated financial statements reflect external transactions only.
Unrealised losses are eliminated on consolidation unless costs cannot be recovered.
Minority interest represents the interest of outside members in the operating results and net
assets of subsidiary companies.
The gains or loss on disposal of subsidiary companies is the difference between net disposal
proceeds and the Group’s share of its assets together with any unamortised goodwill or reserve
on consolidation which was not previously recognised in the consolidated income statement.
(c)
Intangible Assets
(i)
Premium paid for the listing status of Wing Tiek Holdings Berhad (“WTHB”) is stated at
cost and is not amortised unless in the opinion of the directors, there is an indication
of impairment loss. The policy for the recognition and measurement of impairment loss
is in accordance with Note 2(t).
(ii)
Goodwill and Reserves on consolidation
At the date of acquisition, the fair values of the subsidiary company’s net assets are
determined and these values are reflected in the Group financial statements. The
differences between the acquisition cost and the fair values of the subsidiary
company’s net assets are reflected as goodwill or reserve on consolidation.
The carrying amount of goodwill arising on consolidation is reviewed annually and is
written down for impairment where it is considered necessary.
(d)
Investments
Investments in subsidiary companies are stated at cost less impairment losses, if any. The
policy for the recognition and measurement of impairment losses is in accordance with Note
2(t).
Other investments are stated at cost less impairment losses, if any. The policy for the
recognition and measurement of impairment losses is in accordance with Note 2(t).
On disposal of an investment, the difference between net disposal proceeds and its carrying
amount is charged or credited to the income statement.
(e)
Property, Plant and Equipment and Depreciation
Property, plant and equipment are stated at cost or at valuation less accumulated
depreciation and impairment losses, if any. The policy for the recognition and measurement
of impairment losses is in accordance with Note 2(t).
Capital work-in-progress is not depreciated until it is ready for its intended used.
2.
■
(e)
Property, Plant and Equipment and Depreciation (Cont’d)
All other property, plant and equipment are depreciated on the straight line basis to write off
the cost over the estimated useful lives of the assets concerned. The principal annual rates
used for this purpose are as follows:Freehold buildings
Long leasehold land
Leasehold buildings
Factory buildings
Plant and machinery
Motor vehicles
Furniture, fittings, office equipment and renovation
2%
96 years
2%
2%
10%
10 - 20 %
10 - 33.3%
Fully depreciated assets are retained in the accounts until the assets are no longer in use.
(f)
Revaluation of Assets
The long leasehold land at valuation is revalued at a regular interval of at least once in every
five years with additional valuations in the intervening years where market conditions
indicate that the carrying values of the revalued long leasehold land materially differs from
the market value.
Any surplus or deficit arising from revaluations will be dealt with in the revaluation reserve
account. Any deficit is set-off against the revaluation reserve account only to the extent of
surplus credited from previous revaluations of the long leasehold and the excess of the
deficit is charged to the income statement.
(g)
Amount due from/to Customers for Contract Works
When costs incurred on construction contracts plus recognised profits (less recognised
losses) exceed progress billings, the balance is shown as amount due from customers for
contract works. When progress billings exceed costs incurred plus recognised profits (less
recognised losses), the balance is shown as amount due to customers for contract works.
Contract costs incurred to date include:(i)
(ii)
(iii)
(h)
Costs directly related to the contract;
Costs attributable to contract activity in general and can be allocated to the contract;
and
Other costs specifically chargeable to the customer under the terms of the contract.
Inventories
Raw materials, work-in-progress, consumables and finished goods are stated at the lower
of cost and net realisable value. Cost is determined on the weighted average basis.
The costs for work-in-progress and finished goods includes cost of materials, direct labour
and an appropriate proportion of fixed and variable production overheads.
■
2.
(i)
Receivables
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 at the balance sheet date.
(j)
Payables
Payables are stated at cost which is the fair value of the consideration to be paid in the
future, whether or not billed to the Group.
(k)
Foreign Currency Translation
Transactions in foreign currencies are converted into Ringgit Malaysia at the exchange rates ruling
at the transaction dates. Monetary assets and liabilities in foreign currencies at the balance sheet
date are converted into Ringgit Malaysia at the rate of exchange ruling on that date. Exchange
differences arising from the settlement of foreign currency transactions and from the translation of
foreign currency monetary assets and liabilities are included in the income statements.
The principal closing rate used in translation of foreign currency amounts is stated below:-
(l)
Foreign currency
2005
RM
2004
RM
1 United States Dollar
1 Singapore Dollar
3.80
2.15
3.80
2.15
Hire Purchase
Assets financed by hire purchase arrangements which transfer substantially all the risks and
rewards of ownership to the Group are capitalised as property, plant and equipment and the
corresponding obligations are treated as liabilities. The assets so capitalised are depreciated
in accordance with the accounting policy on property, plant and equipment. Finance
charges are charged to the income statements over the periods to give a constant periodic
rate of interest on the remaining hire purchase liabilities.
(m) Borrowing Costs
Borrowing costs are charged to the income statement as an expense in the period in which
they are incurred.
(n)
Redeemable Convertible Secured Loan Stocks (“RCSLS”)
The RCSLS are regarded as compound instruments, consisting of a liability component and
equity component. At the date of issue, the fair value of the liability component is estimated
using the prevailing market interest rate for a similar non-convertible loan stock. The difference
between the proceeds of issue of the RCSLS and the fair value assigned to the liability
component, representing the conversion option is included in equity. The liability component is
subsequently stated at amortised cost using the effective interest rate method until extinguished
on conversion or redemption, whilst the value of the equity component is not adjusted in
subsequent periods. Attributable transaction costs are apportioned and deducted directly from
the liability and equity component based on their carrying amounts at the date of issue.
2.
■
(n)
Redeemable Convertible Secured Loan Stocks (“RCSLS”) (Cont’d)
Under the effective interest rate method, the interest expense on the liability component is
calculated by applying the prevailing market interest rate for an equivalent convertible loan
stock to the instrument. The difference between this amount and the interest paid is added
to the carrying value of the RCSLS.
(o)
Revenue Recognition
(i)
Contract Works
Revenue from contract works are recognised on a percentage of completion method.
Percentage of completion is determined on the proportion of contract costs incurred to
date against total estimated costs where the outcome of the project can be reliably
determined. All foreseeable losses on projects are recognised as soon as they are
anticipated. When the outcome of a project cannot be estimated reliably, revenue
should be recognised only to the extent of contract costs incurred that is probable to
be recovered.
(ii)
Sale of Finished Goods
Revenue from sale of goods is measured at the fair value of the consideration
receivable and is recognised in the income statements when the significant risks and
rewards of ownership have been transferred to the buyer.
(iii) Dividend, Interest and Rental Income
Dividend, interest and rental income is recognised on the accrual basis.
(p)
Employee Benefits
(i)
Short Term Employee Benefits
Wages, salaries, social security contribution, bonuses and non-monetary benefits are
accrued in the period in which the associated services are rendered by the employees.
(ii)
Post-Employment Benefits
The Group contributes to the Employees’ Provident Fund, the national defined
contribution plan. The contributions are charged to the income statement in the period
to which they are related. Once the contributions have been paid, the Group has no
further payment obligations.
(q)
Taxation
The tax expense in the income statement represents the aggregate amount of current tax
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.
■
2.
(q)
Taxation (Cont’d)
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 time of the transaction, affects neither accounting profit nor taxable profit.
Deferred tax is measured at the tax rates that are expected to apply in the period when the
asset is realised or the liability is settled, based on tax rates that have been enacted or
substantively enacted at the balance sheet date. Deferred tax is recognised in the income
statement, except when it arises from a transaction which is recognised directly in equity, in
which case the deferred tax is also charged or credited directly in equity, or when it arises
from a business combination that is an acquisition, in which case the deferred tax is
included in the resulting goodwill or negative goodwill.
(r)
Financial Instruments
Financial instruments are recognised in the balance sheet when the Group has become a
party to the contractual provisions of the instruments. Financial instruments carried on the
balance sheet include cash and bank balances, investments, receivables, payables and
borrowings. The particular recognition methods adopted are disclosed in the individual
accounting policy statements associated with each item.
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 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 set off the
recognised amounts and intends either to settle on a net basis, or to realise the asset and
settle the liability simultaneously.
(s)
Equity Instruments
Ordinary shares are classified as equity.
The transaction cost of an equity transaction is accounted for as a deduction from equity,
net of tax. Equity transaction costs comprise only those incremental external costs directly
attributable to the equity transaction which would otherwise have been avoided.
2.
■
(t)
Impairment of Assets
At each balance sheet date, the carrying values of assets other than inventories, deferred
tax assets and financial assets are reviewed for impairment when there is an indication that
the assets might be impaired. Impairment is measured by comparing the carrying values of
the assets with their recoverable amounts. The recoverable amount is the higher of an
asset’s net selling price and its value in use, which is measured by reference to discounted
future cash flows. Recoverable amounts are estimated for individual assets, or if it is not
possible, for the cash-generating unit.
An impairment loss is recognised as an expense in the income statement immediately,
unless the asset is carried at 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.
Subsequent increase in the recoverable amount of an asset is treated as reversal of the
previous impairment loss and is recognised to the extent of the carrying amount of the asset
that would have determined (net of amortisation and depreciation) had no impairment loss
been recognised. The reversal is recognised in the income statement immediately, unless
the asset is carried at revalued amount. A reversal of an impairment loss on a revalued asset
is credited directly to revaluation surplus, to the extent that an impairment loss on the same
revalued asset was previously recognised as an expense in the income statement, a reversal
of that impairment loss is recognised as income in the income statement.
(u)
Segmental Information
Segment revenues and expenses are those directly attributable to the segments and include
any joint revenue and expenses where a reasonable basis of allocation exists. Segments
assets include all assets used by a segment and consist principally of cash, receivables,
inventories, intangibles and property, plant and equipment, net of allowances and
accumulated depreciation and amortisation. Most segment assets can be directly attributed
to the segments on a reasonable basis. Segment assets and liabilities do not include
income tax assets and liabilities respectively.
(v)
Intersegment Transfers
Segment revenues, expenses and result include transfers between segments. The prices
charged on intersegment transactions are the same as those charged for similar goods to
parties outside of the economic entity at an arm’s length transactions. These transfers are
eliminated on consolidation.
(w) Cash and Cash Equivalents
Cash and cash equivalents for the purpose of cash flow statement comprise cash in hand,
bank balances and short term, highly liquid investment that are readily convertible to known
amounts of cash and which are subject to an insignificant risk of changes in value. Cash
and cash equivalents are stated net of bank overdrafts which are repayable on demand.
3.
Cost
Valuation
11,163,008
80,188,483
10,057,221
4,052,233
7,110,775
79,592,310
Net Book Value at
31st October 2005
1,105,787
1,011,027
94,760
-
11,163,008
32,943,008
(21,780,000)
-
Long
leasehold
land and
buildings
RM
80,188,483
-
596,173
At 31st October 2005
Cost/Valuation is represented by:
140,354
455,819
-
80,188,483
Accumulated Depreciation
At 1st November 2004
Charge for the year
Disposals/write off
78,635,290
1,553,193
-
Freehold
land and
buildings
RM
Cost/Valuation
Additions
Disposals/write off
Reversal
Transfer
Group
2005
PROPERTY, PLANT AND EQUIPMENT
2,846,559
2,846,559
-
2,368,886
477,673
420,742
56,931
-
2,846,559
2,846,559
-
Factory
buildings
RM
63,670,078
63,670,078
-
10,021,968
53,648,110
52,188,649
1,459,461
-
63,670,078
58,367,070
1,354,015
3,948,993
Plant and
machinery
RM
-
-
-
-
-
-
4,277,051
20,000
(348,058)
(3,948,993)
Capital
work-inprogress
RM
4,116,479
4,116,479
-
1,916,518
2,199,961
1,973,652
477,649
(251,340)
4,116,479
4,047,961
374,221
(305,703)
-
Motor
vehicles
RM
Total
RM
59,206,469
56,755,974
2,709,335
(258,840)
1,580,111 163,564,718
1,580,111 156,453,943
7,110,775
401,346 104,358,249
1,178,765
1,021,550
164,715
(7,500)
1,580,111 163,564,718
1,542,939 182,659,878
46,672
3,348,101
(9,500)
(315,203)
- (22,128,058)
-
Furniture,
fittings,
office
equipment
and
renovation
RM
■
3.
Cost
Valuation
32,943,008
78,635,290
31,931,981
25,832,233
7,110,775
78,494,936
Net Book Value at
31st October 2004
1,011,027
930,783
80,244
-
32,943,008
32,943,008
-
Long
leasehold
land and
buildings
RM
78,635,290
-
140,354
Cost/Valuation is represented by:
140,354
-
78,635,290
New subsidiaries acquired
Charge for the year
Disposals/write off
78,635,290
-
Cost/Valuation
Additions
Disposals/write off
Group
2004
Freehold
land and
buildings
RM
PROPERTY, PLANT AND EQUIPMENT(CONT’D)
2,846,559
2,846,559
-
2,425,817
420,742
368,556
52,186
-
2,846,559
2,846,559
-
Factory
buildings
RM
58,367,070
58,367,070
-
6,178,421
52,188,649
51,319,540
869,109
-
58,367,070
58,367,070
-
Plant and
machinery
RM
4,277,051
4,277,051
-
4,277,051
-
-
4,277,051
248,058
4,028,993
-
Capital
work-inprogress
RM
4,047,961
4,047,961
-
2,074,309
1,973,652
1,855,377
320,409
(202,134)
4,047,961
3,448,994
1,064,152
(465,185)
Motor
vehicles
RM
99,365,165
83,767,103
(472,390)
Total
RM
56,755,974
55,397,031
1,563,469
(204,526)
1,542,939 182,659,878
1,542,939 175,549,103
7,110,775
521,389 125,903,904
1,021,550
922,775
101,167
(2,392)
1,542,939 182,659,878
1,511,476
38,668
(7,205)
Furniture,
fittings,
office
equipment
and
renovation
RM
■
■
3.
Freehold
land and
buildings
RM
Motor
Vehicles
RM
Office
Equipment
RM
Total
RM
Additions
Disposals/write off
77,526,490
1,553,193
-
965,376
103,082
-
6,889
18,870
-
78,498,755
1,675,145
-
79,079,683
1,068,458
25,759
80,173,900
Charge for the year
Disposals/write off
140,354
455,819
-
48,269
203,383
-
383
5,971
-
189,006
665,173
-
596,173
251,652
6,354
854,179
78,483,510
816,806
19,405
79,319,721
Additions
Disposals/write off
77,526,490
-
965,376
-
6,889
-
78,498,755
-
77,526,490
965,376
6,889
78,498,755
Charge for the year
Disposals/write off
140,354
-
48,269
-
383
-
189,006
-
140,354
48,269
383
189,006
77,386,136
917,107
6,506
78,309,749
Company
2005
Cost
Net Book Value at
31st October 2005
2004
Cost
Net Book Value at
31st October 2004
Group
Long leasehold land belonging to a subsidiary company with net book value of RM6,156,498/- is
stated at directors’ valuation based on the valuation conducted by a professional firm of
independent valuers, using the forced sale value basis in June 2002.
3.
■
Had the revalued long leasehold land been carried at historical cost less accumulated
depreciation, the total net book values of the said long leasehold land that would have been
included in the financial statements of the Group is RM5,600,254/-.
The freehold land and buildings of the Company and leasehold land and buildings of the
subsidiary companies with net book values of RM54,387,964/- and RM6,204,964/- respectively
have been pledged to licensed banks to secure credit facilities granted to the group.
Motor vehicles of the Group and the Company with total net book values of RM935,717/- (2004:
RM1,560,567/-) and RM816,806/- (2004: RM917,107/-) respectively are acquired under hire
purchase instalment plans.
4.
INVESTMENT IN SUBSIDIARY COMPANIES
Company
2005
2004
RM
RM
Unquoted shares at cost
220,772,140 220,272,142
The following information relates to the subsidiaries which are all incorporated in Malaysia:Name of Company
Direct subsidiary companies
JAKS Sdn. Bhd. *
Effective Equity
Interest
2005
2004
%
%
Principal Activities
100.00 100.00
General contractor, supplier of
building materials.
Pipe Technology System Sdn. Bhd. *
70.00
70.00
Pipe manufacturer
JAKS Steel Industries Sdn. Bhd.
98.05
98.05
Manufacturing and trading of
steel pipes, steel hollow section
and trading of other steel
related products
Surge System Sdn. Bhd.
Indirect subsidiaries held through
JAKS Sdn. Bhd.
JAKS-KDEB Consortium Sdn. Bhd.
JAKS Marketing Sdn. Bhd. *
100.00 100.00
70.00
General
trading
construction
and
70.00
Investment holding and supply
of products for water supply
industry
100.00 100.00
Providing
sub-contracting
activities and general trading
of steel and construction
related products
■
4.
INVESTMENT IN SUBSIDIARY COMPANIES (CONT’D)
Name of Company
Indirect subsidiaries held through
Integrated Pipe Industries Sdn. Bhd.
Effective Equity
Interest
2004
2005
%
%
70.00
Principal Activities
70.00
Pipe manufacturer.
* Subsidiaries not audited by Monteiro & Heng.
5.
OTHER INVESTMENTS
Group
Company
2005
2004
RM
RM
2005
RM
2004
RM
102,010
(13,600)
70,010
-
-
-
88,410
70,010
-
-
12,627,601
2,108,000
10,519,601
-
At cost
Accumulated amortisation
600,000
-
200,000
(5,000)
-
-
Net book value
600,000
195,000
-
-
13,316,011
2,373,010
10,519,601
-
75,458
93,113
* Quoted shares
At cost
Impairment loss
Unquoted shares
Golf club membership
* Market value of quoted shares
Group and Company
The unquoted investment of the group and of the company of RM10,519,601/- represents
investment in Weifang JAKS Water Management Co. Ltd.
6.
INTANGIBLE ASSETS AND RESERVE ON CONSOLIDATION
Group
2005
2004
RM
RM
(a) INTANGIBLE ASSETS
■
Company
2005
2004
RM
RM
Goodwill on consolidation
Balance at 1st November
165,425,438
-
165,425,438
-
-
Balance at 31st October
165,425,438 165,425,438
-
-
Premium paid for transfer
of listing status
Amount incurred during
the year
36,932,159
-
103,510,070
-
-
36,932,159
-
103,510,070
36,932,159
(b)
7.
36,932,159 103,510,070 103,510,070
202,357,597 202,357,597 103,510,070 103,510,070
RESERVE ON
CONSOLIDATION
(2,170,725)
-
(2,170,725)
-
-
(2,170,725)
(2,170,725)
-
-
INVENTORIES – at cost
Group
Raw materials
Work-in-progress
Finished goods
Building materials
2005
RM
2004
RM
10,091,853
7,585,926
35,783,964
1,000,684
16,012,481
3,089,905
31,295,569
6,952
54,462,427
50,404,907
■
8.
AMOUNT DUE FROM CUSTOMERS FOR CONTRACT WORKS
Group
2005
RM
9.
2004
RM
Aggregate costs incurred to date
Recognised profits
452,007,922 374,830,677
114,733,769 88,435,239
Progress billings
566,741,691 463,265,916
(478,854,805) (388,689,439)
Amount due from customers for contract works
87,886,886
74,576,477
Construction contract costs recognised
as contract expenses during the year
63,866,836
71,925,613
Construction contract revenues recognised
as contract revenue during the year
90,165,366
90,534,717
TRADE RECEIVABLES
Group
2005
RM
Trade receivables
Allowances for doubtful debts
Allowances for overdue interest charged
2004
RM
69,598,354 94,876,100
(1,634,862) (2,737,155)
(1,339,269) (1,083,529)
66,624,223
91,055,416
66,330,228
293,995
89,743,415
1,312,001
66,624,223
91,055,416
The currency exposure profile of trade receivables is as follows:
Ringgit Malaysia
Singapore Dollar
Group
The Group’s normal trade credit terms range from 60 to 120 days. Other credit terms are
assessed and approved on a case-by-case basis.
Included in trade receivables are amounts totalling RM108,337/- (2004 : RM2,172,659/-) owing
from companies which the directors have interest.
■
10. OTHER RECEIVABLES, DEPOSITS AND PREPAYMENTS
Group
Other receivables
Deposits
Prepayments
Company
2005
2004
RM
RM
2005
RM
2004
RM
51,134,868
779,957
8,583,454
14,909,944
1,202,888
9,141,877
29,020,167
88,400
113,588
24,275
6,500
73,855
60,498,279
25,254,709
29,222,155
104,630
58,436,569
5,572
2,056,138
23,895,248
1,359,461
29,222,155
-
104,630
-
60,498,279
25,254,709
29,222,155
104,630
The currency exposure profile of
other receivables, deposits and
prepayments is as follows:
Ringgit Malaysia
US Dollar
Singapore Dollar
Group and Company
Included in other receivables are amounts of RM28,587,972/- (2004 : NIL) represent payments
made for Weifang Port Extension Project in China.
Included in deposits in the group as at 31st October 2004 are as follows:(a)
an amount of RM323,607/- representing consideration paid to secure an option to purchase
additional parcels of land adjacent to the leasehold land. The balance of the purchase
consideration was disclosed as capital commitment in Note 31 to the financial statements.
(b)
amounts totalling RM133,500/- representing deposits paid for the purchase of
manufacturing machinery. The balance of the purchase consideration was disclosed as
capital commitment in Note 31 to the financial statements.
11. AMOUNTS OWING BY/(TO) SUBSIDIARY COMPANIES
Company
The amounts owing by/(to) subsidiary companies are non-trade in nature. These amounts are
unsecured, interest free and have no fixed terms of repayment.
12. FIXED DEPOSITS WITH LICENSED BANKS
Group
The fixed deposits with licensed banks are pledged to the banks to secure credit facilities granted
to the subsidiary companies.
■
13. CASH AND BANK BALANCES
Group
Company
2005
2004
RM
RM
2005
RM
2004
RM
12,277,846
711,409
261,081
11,232,330
330
307,415
241,146
-
92,535
-
13,250,336
11,540,075
241,146
92,535
The currency exposure profile of
cash and bank balances is as follows:
Ringgit Malaysia
US Dollar
Singapore Dollar
14. TRADE PAYABLES
Group
The normal trade credit terms granted to the Group range from 30 to 90 days.
Included in trade payables are amounts totalling RM11,788/- (2004 : RM2,906,162/-) owing to
companies which the directors have interests.
15. OTHER PAYABLES, DEPOSITS AND ACCRUALS
Group
Other payables
Deposits
Accruals
Company
2005
2004
RM
RM
2005
RM
2004
RM
2,400,211
360,000
1,351,162
18,009,133
25,804
3,328,487
342,015
360,000
554,260
146,278
170,280
4,111,373
21,363,424
1,256,275
316,558
Group
Included in other payables as at 31st October 2004 was an amount of RM17,151,750/representing the remaining purchase consideration payable to the vendor for the acquisition of a
parcel of long leasehold land. During the financial year, the subsidiary company terminate the
sale and purchase agreement in relation to the acquisition of the said long leasehold land.
Included in trade payables are amounts totalling RM79,892/- (2004 : RM109,269/-) owing to
companies which the directors have interests.
■
16. AMOUNT OWING TO DIRECTOR
The amount owing to director is unsecured, interest free and has no fixed term of repayment.
17. HIRE PURCHASE LIABILITIES
Group
Minimum hire purchase payments:
- not later than one year
- later than one year and not
later than five years
Less: Future interest charges
Present value of hire-purchase
liabilities
Company
2005
2004
RM
RM
2005
RM
2004
RM
296,683
398,838
227,316
205,140
703,946
800,031
658,752
786,320
1,000,629
(103,700)
1,198,869
(161,412)
886,068
(92,701)
991,460
(128,699)
896,929
1,037,457
793,367
862,761
248,880
279,047
186,296
157,752
648,049
758,410
607,071
705,009
896,929
1,037,457
793,367
862,761
Represented by:
Current:
- not later than one year
Non Current:
- later than one year and not
later than five years
The hire purchase liabilities of the Group bear interest at rates ranging from 3.20% to 6.54% per
annum.
18. SHORT TERM BORROWINGS
Group
Bank Overdrafts
Other borrowings
Bankers acceptances
Term loans
Long term loan due
within one year (Note 21)
Company
2005
2004
RM
RM
2005
RM
2004
RM
11,570,494
9,422,504
-
-
86,809,512
116,993
56,933,051
3,003,170
-
-
10,834,793
1,182,259
10,172,734
-
97,761,298
61,118,480
10,172,734
-
109,331,792
70,540,984
10,172,734
-
■
18. SHORT TERM BORROWINGS (CONT’D)
Group
The short term borrowings are secured by:(a)
a registered debenture over all fixed and floating assets charge over the present and future
assets of Pipe Technology System Sdn. Bhd.;
(b)
the freehold and long term leasehold land and buildings of the Company and the subsidiary
companies;
(c)
fixed deposits of JAKS-KDEB Consortium Sdn. Bhd. of RM500,000/-;
(d)
corporate guarantee by JAKS Resources Berhad,
(e)
properties belonging to persons connected to certain directors of the Company and a
director of a subsidiary company; and
(f)
joint and several guarantees by certain directors of the Company and persons connected to
the directors.
The bankers acceptances of the Group bear interest at rates ranging from 3.50% to 5.00% per
annum. The bank overdrafts of the Group bear interest at rates ranging from 7.00% to 7.75% per
annum.
19. SHARE CAPITAL
Group and Company
2004
2005
Number of ordinary shares
Group and Company
2005
2004
RM
RM
Ordinary shares of RM 1/- each
Authorised
Created during the year
500,000,000
100,000 500,000,000
100,000
- 499,900,000
- 499,900,000
500,000,000 500,000,000 500,000,000 500,000,000
Issued and fully paid
393,436,798
2 393,436,798
2
- acquisition of subsidiary companies
- 220,000,000
- 220,000,000
- in exchange for shares in WTHB
8,510,070
8,510,070
- settlement of WTHB's payables
35,000,000
35,000,000
- acquisition of freehold land
and buildings
40,000,000
40,000,000
- conversion of RCSLS-A
60,000,000
60,000,000
- conversion of RCSLS-B
5,073,274
29,926,726
5,073,274
29,926,726
398,510,072 393,436,798 398,510,072 393,436,798
■
20. OTHER RESERVE – non-distributable
Group
Redeemable Convertible Secured
Loan Stock-B 2004/2011 ("RCSLS-B")
- equity component (Note 22)
2005
RM
2004
RM
-
841,298
Company
2005
2004
RM
RM
-
841,298
This reserve represents the fair value of the equity component of RCSLS-B, net of deferred tax,
as determined on the date of issue.
21. LONG TERM LIABILITIES
Group
2005
RM
2004
RM
Company
2005
2004
RM
RM
Outstanding long term loans
principal
Portion due within one year
(Note 18)
34,060,126
5,955,586
30,263,418
-
(10,834,793)
(1,182,259) (10,172,734)
-
Portion due after one year
RCSLS-B (Note 22)
23,225,333
-
4,773,327
3,904,805
20,090,684
-
3,904,805
23,225,333
8,678,132
20,090,684
3,904,805
Group and Company
The long term loans of the Group and Company bear interest at rates ranging from 6.00 % to
7.75% (2004: 7.50% to 7.75%) per annum and are secured by the securities as mentioned in
Note 18 to the financial statements.
The terms of repayment of the loans are as follows:Group
Within next twelve months (Note 18)
Company
2005
2004
RM
RM
2005
RM
2004
RM
10,834,793
1,182,259
10,172,734
-
23,225,333
2,364,518
20,090,684
-
-
2,408,809
-
-
23,225,333
4,773,327
20,090,684
-
34,060,126
5,955,586
30,263,418
-
After next twelve months
- not later than two years
- later than two year and not later
than five years
■
22. REDEEMABLE CONVERTIBLE SECURED LOAN STOCKS (“RCSLS”)
Group and Company
(a)
Pursuant to the corporate restructuring exercise in the financial year ended 31 October 2004,
the Company issued RM60 million nominal value of RCSLS-A 2004/2011 at 100% of its
nominal value to the creditors of JAKS Steel Industries Sdn. Bhd. (formerly known as Wing
Tiek Steel Pipe Sdn. Bhd.) (“JAKS Steel”) to partly settle the principal debt of JAKS Steel.
(b)
Pursuant to the acquisition of the freehold land and buildings from Wing Tiek Holdings Berhad
(“WTHB”), the Company issued RM35 million nominal value of RCSLS-B at 100% of its
nominal value to the scheme creditors of WTHB and its subsidiary companies as part
settlement towards the consideration of the acquisition of the said freehold land and buildings.
The salient terms of the RCSLS-A and RCSLS-B are as follows:(i)
The registered holder(s) of the RCSLS-A and RCSLS-B will have the right to convert the
RCSLS-A and RCSLS-B at the Conversion Price into new Company’s shares during the
Conversion Period.
(ii)
RM1.00 of the RCSLS-A and RCSLS-B is convertible into 1 new ordinary share of RM1/each in the Company. The Conversion Price will be subject to adjustments under certain
circumstances in accordance with the provision of the trust deed constituting the RCSLS-A
and RCSLS-B executed between the Company and the trustee.
The Conversion Period shall be on any day between Monday and Friday that is not public
holiday (gazetted or ungazetted) and unscheduled public holidays during the period
commencing from and including the date of issue of the RCSLS-A and RCSLS-B up to and
including 5.00 p.m. on the Maturity Date, i.e. the seventh anniversary of the date of issue of
the RCSLS-A and RCSLS-B.
(iii)
The RCSLS-A and RCSLS-B bear coupon at the rate of 3.0% per annum for the first and second
year and 5.2% per annum for the third, fourth, fifth, sixth and seventh year, payable in arrears
annually and on the Maturity Date based on amount outstanding at respective anniversaries.
(iv)
The RCSLS-A and RCSLS-B shall be repaid in equal annual instalments of RM 12.0 million
and RM 7.0 million respectively commencing from the third anniversary of the date of issue
of the RCSLS-A and RCSLS-B. The issuer shall have the option to prepay early in part or in
full without penalty.
(v)
The new shares to be issued shall rank pari passu in all respects with the existing
Company’s shares in issue at the date of conversion, except that they shall not be entitled
to any dividends, rights, allotments and/or other distributions, the entitlement date of which
is prior to the date of allotment of such new Company’s shares.
The RCSLS-A and RCSLS-B are secured over the following:(i)
The RCSLS-A is secured by a fixed and floating charge on the present and future assets of
JAKS Steel; and
(ii)
The RCSLS-A is secured together with the RCSLS-B on a proportionate basis, the freehold
land and buildings with net book value totaling RM38,495,052/- owned by the Company. In
the event that the Company intends to dispose the said land and buildings, the trustee shall
give consent to the disposal subject to the proceeds arising there from shall be utilised to
redeem the RCSLS-A and the RCSLS-B on a proportionate basis.
■
22. REDEEMABLE CONVERTIBLE SECURED LOAN STOCKS (“RCSLS”) (CONT’D)
The proceeds received from the issue of the RCSLS-A and RCSLS-B have been split between
the liability component and the equity component, representing the fair value of the conversion
option. The RCSLS-A and RCSLS-B are accounted for in the balance sheets of the Group and
of the Company as follows:Group and Company
2005
2004
RM
RM
RCSLS-A
Nominal value
Unamortised discount
- 60,000,000
- (13,819,110)
-
46,180,890
Less: Converted to new ordinary share capital of
RM 1/- each of the Company during the year
Nominal value
Equity component, net of deferred tax
- (60,000,000)
- 13,819,110
- (46,180,890)
Amount included in long term liabilities
RCSLS-B
Nominal value
Unamortised discount
-
-
5,073,274 35,000,000
(1,168,469) (8,061,148)
3,904,805
26,938,852
Nominal value
Deferred tax liability
(5,073,274) (29,926,726)
841,298
4,962,729
327,171
1,929,950
(3,904,805) (23,034,047)
Amount included in long term liabilities
-
3,904,805
The amounts recognised in the balance sheets of the Group and of the Company may be
analysed as follows:Group and Company
2005
2004
RM
RM
Liabilities component
Liabilities component at beginning of the year/date of issue:
5,073,274 35,000,000
Nominal value of RCSLS-B
(841,298) (5,804,027)
(327,171) (2,257,121)
3,904,805
26,938,852
■
22. REDEEMABLE CONVERTIBLE SECURED LOAN STOCKS (“RCSLS”) (CONT’D)
Group and Company
2005
2004
RM
RM
Nominal value
(5,073,274) (29,926,726)
841,298
4,962,729
327,171
1,929,950
(3,904,805) (23,034,047)
Interest expense recognised in the income statement:
At 1st November
Recognised during the year
60,462
-
60,462
At 31st October
60,462
60,462
At 1st November
Accrued during the year
(60,462)
-
(60,462)
At 31st October
(60,462)
(60,462)
-
3,904,805
841,298
(841,298)
8,061,148
(2,257,121)
(4,962,729)
-
841,298
Interest accrued:
Liability component at 31st October (Note 21)
Equity component
At beginning of the year/date of issue
Deferrred tax liability
Effect of conversion of RCSLS-B, net of deferred tax
At 31st October (Note 20)
Interest expense on RCSLS-B is calculated on the effective yield basis by applying the coupon
interest rate of 8.0% for an equivalent convertible loan stock to the liability component of the
RCSLS-B.
The RCSLS-A and RCSLS-B have been fully converted as at 31 October 2005.
■
23. DEFERRED TAX ASSETS/(LIABILITIES)
Group
Deferred tax liabilities
Deferred tax assets
Recognised in income statements
Recognised in equity
Company
2005
2004
RM
RM
2005
RM
2004
RM
(608,239)
10,423,183
(921,992)
14,142,085
-
(327,171)
-
9,814,944
13,220,093
-
(327,171)
13,220,093
(3,732,320)
327,171
-
14,107,324
(327,171)
(560,060)
(327,171)
327,171
-
(327,171)
-
9,814,944
13,220,093
-
(327,171)
The components and movements of deferred tax liabilities and assets during the financial year
prior to offsetting are as follows:Defferred tax liabilities:Redeemable
Deductible convertible
temporary
secured
difference loan stocks
RM
RM
Total
RM
Group
(594,821)
(13,418)
-
(327,171)
327,171
(921,992)
(13,418)
327,171
(608,239)
-
(608,239)
-
(327,171)
327,171
(327,171)
327,171
-
-
-
Company
■
23. DEFERRED TAX ASSETS/(LIABILITIES) (CONT’D)
Deferred Tax Assets:Unabsorbed
tax losses
RM
Deductible
temporary
difference
RM
Total
RM
10,091,499
314,934
4,050,586
(4,033,836)
14,142,085
(3,718,902)
10,406,433
16,750
10,423,183
Group
Deferred tax assets have not been recognised in respect of the following items:Group
Unabsorbed tax losses
Deductible temporary diferrences
Potential deferred tax assets
not recognised (at 28%)
Company
2005
2004
RM
RM
2005
RM
2004
RM
3,693,411
1,838,181
3,810,286
2,759,569
1,334,620
1,365,790
1,334,620
2,759,569
5,531,592
6,569,855
2,700,410
4,094,189
1,548,846
1,839,559
756,115
1,146,373
The unabsorbed tax losses and unutilised capital allowances are available indefinitely for offset
against future taxable profits of the respective subsidiary companies.
24
REVENUE
Group
2005
RM
Contract income
Sale of finished goods
Management fee
Rental income
2004
RM
Company
2005
2004
RM
RM
90,165,366
88,198,295
145,160,327 129,032,975
320,000
-
3,500,000
3,680,000
720,000
235,645,693 217,231,270
7,180,000
720,000
25
■
OPERATING PROFIT/(LOSS)
Operating profit/(loss) has been arrived at:Group
Company
2005
2004
RM
RM
2005
RM
2004
RM
94,760
(5,000)
88,000
2,614,575
80,244
2,292
80,000
1,483,225
10,000
665,173
10,000
189,006
145,432
308,667
1,267,710
13,600
95,737
110,000
789,520
-
129,559
135,000
1,152,500
-
41,346
33,000
340,000
-
12,025
153,931
-
-
339
-
2,643
-
-
48,150
11,678
8,770
180,000
62,450
4,776
14,748
-
-
1,158,450
9,916,113
46,268
817,639
5,846,432
-
165,849
1,361,888
-
30,856
258,910
-
1,102,293
700
254,126
320,000
185,584
1,984,508
350
217,326
-
3,680,000
-
720,000
-
After charging:Amortisation of leasehold land
Amortisation of golf membership
Audit fee
Depreciation
Directors' remuneration
- Employees' Provident Fund
and SOCSO
- fee
- salaries and allowances
Impairment loss
Loss on disposal of property, plant
and equipment
Property, plant and equipment
written off
Realised loss an foreign exchange
Rental expenses
- factory
- office
- office equipment
- vehicle
Staff costs
- Employees' Provident Fund
and SOCSO
- salaries, bonuses and allowances
- others
After crediting:Allowance for doubtful debts
no longer required
Dividend income
Interest income
Rental income
Realised gain on foreign exchange
26
FINANCE COSTS
Group
Interest expenses
- bank overdraft
- bankers acceptances
- hire purchase
- RCSLS-B 2004/2011
- term loans
- others
Company
2005
2004
RM
RM
2005
RM
2004
RM
(703,428)
(2,392,554)
(78,136)
(618,623)
(149,919)
(440,376)
(501,237)
(71,450)
(60,462)
(653,187)
-
(50,034)
(69,702)
-
(8,951)
(60,462)
-
(3,942,660)
(1,726,712)
(119,736)
(69,413)
■
27
EXCEPTIONAL ITEMS
The exceptional item arises from the forfeiture of deposits paid due to the termination of the sale
and purchase agreement of a long leasehold land during the financial year.
28
TAXATION
Group
Income tax
- current year's provision
- overaccrual in prior years
Tax deducted at sources
Deferred tax
Company
2005
2004
RM
RM
2005
RM
2004
RM
(6,728,862)
210,599
(196)
(3,732,320)
(5,020,214)
453,777
14,107,324
-
-
(10,250,779)
9,540,887
-
-
The income tax rate applicable to small and medium scale enterprise (“SME”) incorporated in
Malaysia with paid-up capital of RM2,500,000/- and below is subject to the statutory tax rate of
20% on chargeable income of up to RM500,000/-. For chargeable income in excess of
RM500,000/-, the statutory tax rate of 28% is applicable.
The reconciliation of income tax expense applicable to profit/(loss) before taxation at the statutory
income tax rate to income tax expense at the effective income tax rate of the Group and the
Company are as follows:
Group
Company
2005
2004
2005
2004
RM
RM
RM
RM
Profit/(loss) before taxation
Taxation at applicable tax rate of 28%
Tax effects arising from
- SME tax saved
- non taxable income
- non-deductible expenditure
- double deduction
- net deferred tax assets not
recognised in the financial
statements
- (under)/overaccrual in prior years
19,203,579
23,157,508
473,209
(1,632,776)
(5,377,002)
(6,484,103)
(132,499)
457,177
122,517
308,642
(1,489,202)
7,903
20,386
(686,935)
-
(311,813)
-
(40,821)
-
(352,792)
16,237,762
444,312
(416,356)
(3,470,845)
453,777
-
-
(10,250,779)
9,540,887
-
-
■
29. EARNINGS PER SHARE
Group
Basic Earnings Per Share
The earnings per share for the year has been calculated based on the Group’s profit after taxation
and minority interests of RM9,076,009/- and on the weighted average number of 397,460,189
ordinary shares in issue during the financial year.
Diluted Earnings Per Share
For the purpose of calculating diluted earnings per share, the net profit for the year 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.
Group
2005
RM
2004
RM
After tax effect of interest on RCSLS-B
9,076,009
-
32,376,370
43,533
Adjusted net profit for the year
9,076,009
32,419,903
Weighted average number of ordinary shares in issue
Effect of dilution on RCSLS-B
397,460,189 260,885,048
2,009,904
Adjusted weighted average number of ordinary shares
in issue and issuable
397,460,189 262,894,952
30. CONTINGENT LIABILITIES
As at 31st October 2005, the Group and the Company is contingently liable for the following:Group
Secured
Bank guarantees issued for
- execution of contracts of
the subsidiary company
Company
2005
2004
RM
RM
2005
RM
2004
RM
500,000
878,905
-
-
13,377,815
395,500
-
-
-
Unsecured
Bank guarantees issued for
- execution of contracts of
the subsidiary company
- others
■
30. CONTINGENT LIABILITIES (CONT’D)
Group
2005
RM
Corporate guarantees given to licensed
banks to secure credit facilities granted
to subsidiary companies
2004
RM
Company
2005
2004
RM
RM
-
- 114,483,445
42,013,550
14,273,315
878,905 114,483,445
42,013,550
Group
The bank guarantees are secured over the fixed deposits of RM500,000/- of the subsidiary company.
31. CAPITAL COMMITMENTS
Group
Capital expenditure approved but not contracted for
- option granted to buy additional parcels of leasehold land
by a subsidiary company
- purchase of manufacturing machinery
Capital expenditure approved and contracted for
2005
RM
2004
RM
-
32,037,117
-
7,181,306
5,464,452
5,464,452
-
311,500
5,464,452
44,994,375
32. SIGNIFICANT RELATED PARTY TRANSACTIONS
Company
2004
2005
RM
RM
Management fee from subsidiary companies
JAKS Sdn. Bhd.
JAKS Marketing Sdn. Bhd.
Pipe Technology System Sdn. Bhd.
Surge System Sdn. Bhd.
1,600,000
240,000
160,000
1,120,000
160,000
160,000
60,000
-
Rental income from subsidiary companies
2,160,000
1,200,000
720,000
-
The directors of the Company are of the opinion that the above transactions have been entered
into in the normal course of business and the terms are no less favourable than those arranged
with third parties.
■
33. SEGMENTAL ANALYSIS
The Group’s operating businesses are classified according to the nature of activities as follows:Manufacturing
:
Comprise mainly manufacturing of pipes, steel pipes and steel hollow
section.
Trading
:
Comprise mainly trading in sheet piles, steel bars, mild steel and
special pipes, other steel related products and supply of products for
water supply industry.
Construction
:
Comprise mainly provision of sub-contracting activities, general
contractor, supplier of building materials.
Investment
:
Investment holdings
Primary Reporting – Business Segments
2005
Manufacturing
RM
Trading
RM
Construction
RM
Investment
RM
Total
RM
122,610,165 22,550,162
90,165,366
320,000 235,645,693
REVENUE
External revenue
SEGMENT RESULTS
Finance costs
1,297,045
(2,497,864)
53,729
(278,755)
1,135,798
(1,046,305)
(119,736)
2,486,572
(3,942,660)
Profit/(loss)
before taxation
(3,926,584) 1,357,062
21,299,892
473,209
19,203,579
Taxation
(3,734,623)
(358,376)
(6,157,780)
-
(10,250,779)
Profit/(loss)
after taxation
(7,661,207)
998,686
15,142,112
473,209
8,952,800
(11,313)
134,522
-
-
123,209
(7,672,520) 1,133,208
15,142,112
473,209
9,076,009
Minority interest
Net profit/(loss)
for the year
OTHER INFORMATION
Total assets
Total liabilities
130,677,848 37,927,079
123,642,886 318,779,493 611,027,306
69,347,397
7,863,096
45,754,991
32,313,060 155,278,544
Capital Expenditure
1,423,508
-
249,449
1,675,144
3,348,101
Depreciation
1,691,319
82,622
270,221
665,173
2,709,335
■
33. SEGMENTAL ANALYSIS (CONT’D)
Primary Reporting – Business Segments (Cont’d)
Manufacturing
RM
2004
Trading
RM
Construction
RM
Investment
RM
Total
RM
83,648,703 45,384,274
88,198,293
-
217,231,270
REVENUE
External revenue
SEGMENT RESULTS
Finance costs
2,494
(885,392)
(276,524)
266,931
(495,383)
(69,413)
269,425
(1,726,712)
7,216,860
3,283,758
14,291,864
(1,634,974)
23,157,508
Taxation
14,604,588
(951,396)
(4,112,305)
-
9,540,887
Profit/(loss)
after taxation
21,821,448
2,332,362
10,179,559
(1,634,974)
32,698,395
(366,774)
44,749
-
-
(322,025)
21,454,674
2,377,111
10,179,559
(1,634,974)
32,376,370
Profit/(loss)
before taxation
Minority interest
Net profit/(loss)
for the year
OTHER INFORMATION
Total assets
Total liabilities
173,384,174 47,112,978
81,857,873 32,435,197
257,970,886 115,439,075 593,907,113
36,570,241
5,084,124 155,947,435
Capital Expenditure
4,032,752
-
1,235,596
78,498,755
83,767,103
Depreciation
1,010,426
75,737
288,300
189,006
1,563,469
No geographical segment information is presented as the Group operates principally in Malaysia.
34. SIGNIFICANT EVENTS DURING AND AFTER THE FINANCIAL YEAR
(a)
Significant events during the financial year
(i)
On 23rd of November 2004, the Company entered into a Heads of Agreement (“HOA”)
with Shandong Weifang Port Limited Company (“SWP”) for a proposed joint
development and extension of a twenty thousand (20,000) tonnage dock and berth at
Weifang Port in Shandong, China (“Weifang Port Extension Project”).
■
34. SIGNIFICANT EVENTS DURING AND AFTER THE FINANCIAL YEAR (CONT’D)
(b)
Significant events after the financial year
(i)
On 18th November 2005 the Company entered into a sale and purchase agreement
with the Weifang Yintong Guoji Investment Co. Ltd (“WYGI”), which is a Weifang City
Government-Linked Company, to dispose off the Company’s entire investment in
Weifang JAKS Water Management Co. Ltd to WYGI.
(ii)
On 18th November 2005, after due review of the technical and financing requirements
for the Weifang Port Extension Project, it is of the opinion that it would be in the best
interest of the Company to rescind the HOA for the joint venture with SWP.
35. FINANCIAL INSTRUMENTS
(a)
Financial Risk Management and Objectives
The Group seeks to manage effectively various risks namely credit, foreign currency, liquidity
and interest rate risks, to which the Group is exposed to in its daily operations.
(i)
Credit Risk
The management has a credit policy in place to monitor and minimise the exposure of
default. Trade receivables are monitored on an ongoing basis.
As at balance sheet date, there were no significant concentrations of credit risk in the
Group.
(ii)
Foreign Currency Risk
The Group incurs foreign exchange risk on sales and purchases that are denominated
in a currency other than Ringgit Malaysia. The currency give rise to this risk is primarily
US Dollar and Singapore Dollar. The Company monitors its foreign exchange exposure
closely.
(iii)
Liquidity Risk
The Group actively manages its debt maturity profile, operating cash flows and the
availability of funding so as to ensure that all financing, repayment and funding needs
are met. As part of its overall prudent liquidity management, the Group maintains
flexibility of funding through adequate amount of credit facility.
■
35. FINANCIAL INSTRUMENTS (CONT’D)
(a)
Financial Risk Management and Objectives (Cont’d)
(iv) Interest Rate Risk
The Group’s primary interest rate risk relates to interest-bearing debt as at 31st
October 2005. The investments in financial assets are mainly short term in nature and
they are not held for speculative purposes.
Group
Effective
interest
rate
%
Within
1 Year
RM
1-5
Years
RM
More
than
5 years
RM
Total
RM
2.50-3.75
8,273,298
-
-
8,273,298
3.50-5.00 86,809,512
7.00-7.75 11,570,494
-
- 86,809,512
- 11,570,494
3.20-6.54
248,880
648,049
7.25-7.65
116,993
6.00-7.75 10,834,793 23,225,333
896,929
116,993
- 34,060,126
Financial Asset
Fixed deposits with
licensed banks
Financial Liabilities
Bills payables
Bank Overdrafts
Hire purchase
liabilities
Short term loans
Term loans
Financial Asset
Fixed deposits with
licensed banks
3.00 - 3.70 10,441,018
-
- 10,441,018
3.50-7.75 56,933,051
7.00-7.75 9,422,504
3.00
-
-
- 56,933,051
- 9,422,504
3,904,805 3,904,805
Bills payables
Bank Overdrafts
RCSLS-B 2004/2011
Hire purchase
liabilities
Short term loans
Term loans
5.64-6.54
7.25-7.65
7.50-7.75
279,047
3,003,170
1,182,259
758,410
4,773,327
-
1,037,457
3,003,170
5,955,586
■
35. FINANCIAL INSTRUMENTS (CONT’D)
(a)
Financial Risk Management and Objectives (Cont’d)
(iv) Interest Rate Risk (Cont’d)
Effective
interest
rate
%
Within
1 Year
RM
1-5
Years
RM
More
than
5 years
RM
Total
RM
5.46 - 6.54
186,296
607,071
-
793,367
RCSLS-B 2004/2011
3.00
Hire purchase
liabilities
5.64 - 6.54
-
-
3,904,805
3,904,805
157,752
705,009
-
862,761
Company
Hire purchase
liabilities
b)
Fair Values
(i)
Recognised financial instruments
The fair values of financial assets and financial liabilities approximate their respective
carrying values on the balance sheets of the Group and of the Company.
(ii)
Unrecognised financial instruments
The nominal/notional amount and net fair value of contingent liabilities (as disclosed in
Note 30 to the financial statements) are not recognised in the balance sheet as at 31
October 2005 as it is not practicable to make a reliable estimate due to the
uncertainties of timing, costs and eventual outcome.
There are no financial instruments not recognised in the balance sheets as at 31st
October 2005 that are required to be disclosed.
■ S TAT E M E N T B Y D I R E C T O R S
We, DATO’ RAZALI MERICAN BIN NAINA MERICAN and ANG LAM POAH being two of the directors
of JAKS RESOURCES BERHAD, do hereby state that in the opinion of the directors, the
accompanying financial statements set out on pages 34 to 73, are drawn up in accordance with the
provisions of the Companies Act, 1965 and the applicable approved accounting standards in Malaysia
so as to give a true and fair view of the state of affairs of the Group and of the Company as at 31st
October 2005 and of the results and cash flows of the Group and the Company for the year ended on
that date.
On behalf of the Board,
DATO’ RAZALI MERICAN BIN NAINA MERICAN
Director
ANG LAM POAH
Director
Kuala Lumpur
S TAT U T O RY D E C L A R AT I O N ■
I, CHEE SEONG HENG, being the officer primarily responsible for the financial management of JAKS
RESOURCES BERHAD, do solemnly and sincerely declare that to the best of my knowledge and
belief, the accompanying financial statements set out on pages 34 to 73 are 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, l960.
CHEE SEONG HENG
Subscribed and solemnly declared by the abovenamed at Kuala Lumpur in the Federal Territory on
27 February 2006.
Before me,
Commissioner for Oaths
S. MASOHOOD OMAR
No. W.354
■ R E P O RT O F T H E A U D I T O R S
TO THE MEMBERS OF JAKS RESOURCES BERHAD
We have audited the financial statements set out on pages 34 to 73.
These financial statements are the responsibility of the Company’s directors.
It is our responsibility to form an independent opinion, based on our audit, on those financial
statements and to report our opinion to you, as a body, in accordance with Section 174 of the
Companies Act, 1965 and for no other purpose. We do not assume responsibility towards any other
person for the content of this report.
We conducted our audit in accordance with approved standards on auditing in Malaysia. Those
standards require that we plan and perform the audit to obtain reasonable assurance 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 directors, as well as
evaluating the overall financial statements presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion:(a)
the financial statements are 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)
the state of affairs of the Group and of the Company as at 31st October 2005 and of the
results and cash flows of the Group and of the Company for the year ended on that date;
and
(ii)
the matters required by Section 169 of the Companies Act, 1965 to be dealt with in the
financial statements of the Group and of the Company;
and
(b)
the accounting and other records and the registers required by the Companies Act, 1965 to be
kept by the Company and its subsidiary companies of which we have acted as auditors have
been properly kept in accordance with the provisions of the said Act.
We have considered the financial statements and the auditors’ reports thereon of the subsidiaries of
which we have not acted as auditors, as indicated in Note 4 to the financial statements, being financial
statements that have been included in the consolidated financial statements.
We are satisfied that the financial statements of the subsidiary companies 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.
Other than the above the auditors’ reports on the financial statements of the subsidiary companies
were not subject to any material qualification and did not include any comment made under
subsection (3) of Section 174 of the Companies Act, 1965.
R E P O RT O F T H E A U D I T O R S TO THE MEMBERS OF JAKS RESOURCES BERHAD
■
Emphasis of matters have been highlighted in the auditors’ report of a subsidiary company, Integrated
Pipe Industries Sdn. Bhd. as to the appropriateness of the going concern basis in the preparation of
its financial statements which is dependent upon sustaining profitable operations in the future and/or
secure continued financial support from its holding company to meet its liabilities as and when they
fall due.
Monteiro & Heng
No. AF 0117
Chartered Accountants
Heng Ji Keng
No. 578/05/06 (J/PH)
Partner
Kuala Lumpur
■ P R O P E RT I E S O F T H E G R O U P
Location
Tenure
AS AT 31ST OCTOBER 2005
Area
Age of
Building
Approximate
Years
Existing
Use
Net Book
Value
RM'000
Lot No. 532
Mukim of Damansara
District of Petaling
Freehold land
Land area:
10,205 sq. metres
Gross building area:
6,491 sq. metres
21 Years
Factory
6,338
Lot No. 531
Mukim of Damansara
Freehold land
Land area:
12,140 sq. metres
7,967 sq. metres
16 Years
Factory
8,646
Lot No. 527
Mukim of Damansara
Freehold land
Land area:
12,140 sq. metres
6,540 sq. metres
19 Years
Factory
8,012
Lot No. 528
Mukim of Damansara
Freehold land
Land area:
12,140 sq. metres
6,270 sq. metres
19 Years
Factory
7,881
Lot No. 526
Mukim of Damansara
Freehold land
Land area:
12,140 sq. metres
Warehouse
2,191 sq. metres
Office floor area:
3,039 sq. metres
15 Years
Office
warehouse
& factory
building
7,496
Lot No. 536
Mukim of Damansara
Freehold land
Land area:
12,140 sq. metres
9,431 sq. metres
15 Years
Factory
8,515
Lot No. 537
Mukim of Damansara
Freehold land
Land area:
12,140 sq. metres
Gross floor area:
8,236 sq. metres
13 Years
Factory
8,084
Lot No. 541
Mukim of Damansara
Freehold land
Land area:
12,140 sq. metres
6,023 sq. metres
11 Years
Factory
6,411
PT 21884
Mukim of Kapar
District of Klang
Freehold
industrial
land
Land area:
93,128 sq. metres
15,734 sq. metres
9 Years
Factory
17,101
P R O P E RT I E S O F T H E G R O U P AS AT 31ST OCTOBER 2005
Location
■
Age of
Building
Approximate
Years
Existing
Use
Net Book
Value
RM'000
Tenure
Area
Lot No : BL 1081a
Lot No. 17475
Mukim Dengkil
Freehold land
Land area:
8,400 sq feet
-
Site
277
Lot No : BL 1082
Lot No. 17475
Mukim Dengkil
Freehold land
Land area:
8,400 sq feet
-
Site
277
Lot No : BL 1083
Lot No. 17475
Mukim Dengkil
Freehold land
Land area:
8,400 sq feet
-
Site
277
Lot No : BL 1084
Lot No. 17475
Mukim Dengkil
Freehold land
Land area:
8,400 sq feet
-
Site
277
Lot 20, Section 4
Phase 2B, Part of
P.N. No: 7939 &
Lot No: 74074, Mukim
and District of Klang
Leasehold land
with industrial
building
Land area:
3.47 acres
(151,153
sq. feet)
5 Years
Site
2,792
JAKS SDN BHD
JAKS STEEL INDUSTRIES SDN BHD
P.T. No. 2611
HS (M) 17018
Mukim and District
of Petaling
Leasehold land
(Industrial)
(Duration 99 Years)
(Exp - date
30/5/2089)
Land area:
4.176 acres
-
Vacant land
3,088
P.T. No. 2612
HS (M) 17019
Mukim and District
of Petaling
Leasehold land
(Industrial)
(Duration 99 Years)
(Exp - date
30/5/2089)
Land area:
4.176 acres
-
Vacant land
3,068
10 Years
Office
cum factory
3,478
PIPE TECHNOLOGY SYSTEM SDN BHD
P.T. No. 12186
H.S.(D) 11480
Mukim and District
of Bentong, State of
Pahang Darul Makmur
Leasehold land
Land area:
25,657 sq. metres
Gross Building area:
4,598 sq. metres
Note: The properties of the Group will be revalued on a periodic basic by external independent valuers at an interval of at least once in every five years.
The last valuation was done in 2002.
■ A N A LY S I S O F S H A R E H O L D I N G S
Authorised Share Capital
Issued and Paid-up Capital
Class of Share
Voting Right
:
:
:
:
AS AT 28TH FEBRUARY 2006
RM500,000,000.00
RM398,510,072.00
Ordinary Shares of RM1.00 each
One Vote per Ordinary Share held
Analysis of Shareholdings
as at 28 February 2006
Size of Holdings
No. of
Shareholders
%
No. of
Shares
%
350
10,379
3,745
1,281
252
4
2.19
64.82
23.39
8.00
1.57
0.03
14,477
3,124,823
17,586,749
41,037,654
216,676,808
120,069,561
0.00
0.79
4.41
10.30
54.37
30.13
16,011
100.00
398,510,072
100.00
No. of Shares
(%)
1 – 99
100 – 1,000
1,001 – 10,000
10,001 – 100,000
100,001 – 19,925,502 (*)
19,925,502 and above (**)
NOTES:
*
Less than 5% of the issued and paid-up share capital
**
5% and above of the issued and paid-up share capital
30 Largest Shareholders
Names
1.
Ang Ken Seng
39,829,559
9.99
2.
Jamian Bin Mohamad @ Md. Semaal
28,440,000
7.14
3.
Ang Lam Poah
26,800,002
6.73
4.
AMMB Nominees (Tempatan) Sdn Bhd
Pledged securities account for Original Invention Sdn Bhd
25,000,000
6.27
Pledged securities account for Upper Prestige Sdn Bhd
13,400,000
3.36
Citigroup Nominees (Asing) Sdn Bhd
GSCO for Indus Asia Pacific Master Fund Ltd
12,908,200
3.24
HSBC Nominees (Asing) Sdn Bhd
TNTC for Government of Singapore Investment Corporation Pte Ltd
9,109,700
2.29
A.A. Assets Nominees (Tempatan) Sdn Bhd
Pledged Securities Account for Goh Theow Hiang
8,747,100
2.19
9.
Sabah Development Bank Berhad
6,718,730
1.69
10.
Pledged securities account for Lee Ching Leng
6,000,000
1.51
5.
6.
7.
8.
A N A LY S I S O F S H A R E H O L D I N G S AS AT 28TH FEBRUARY 2006
■
30 Largest Shareholders (Cont’d)
Names
No. of Shares
(%)
Pledged securities account for Gan Cheng See
6,000,000
1.51
HSBC-FS for Legg Mason Asian Enterprise Trust
5,583,000
1.40
HSBC Nominees (Tempatan) Sdn Bhd
Pledged securities account for Tee Tuan Sem
5,378,400
1.35
14.
Lyn Hian Woon
4,564,500
1.15
15.
Alliancegroup Nominees (Tempatan) Sdn Bhd
PHEIM Asset Management Sdn Bhd for Employees Provident Fund
4,472,300
1.12
16.
Wong Chong Shee
4,298,000
1.08
17.
HLG Nominee (Tempatan) Sdn Bhd
HLG Asset Management Sdn Bhd for Pertubuhan Keselamatan Sosial
4,259,600
1.07
Scotia Nominees (Tempatan) Sdn Bhd
The Bank of Nova Scotia Bhd
3,773,494
0.95
19.
Goh Theow Hiang
3,439,008
0.86
20.
Citigroup Nominees (Asing) Sdn Bhd
CBHK for Kuwait Investment Authority
3,344,000
0.84
21.
Sulaiman Bin Abu Bakar
3,300,000
0.83
22.
DZ Bank Intl for Uni Em Fernost Treuhandkonto, Luxembourg
3,000,000
0.75
23.
Chow Chee Keong
3,000,000
0.75
24.
Gan Cheng See
2,920,968
0.73
25.
Universal Trustee (Malaysia) Berhad
SBB Savings Fund
2,240,500
0.56
Citigroup Nominees (Tempatan) Sdn Bhd
Pledged securities account for Gan Cheng See
2,192,200
0.55
HSBC Nominees (Tempatan) Sdn Bhd
HSBC (M) Trustee Bhd for Hwang-DBS Select Small Caps Fund
2,074,400
0.52
28.
Goh Theow Hiang
2,014,000
0.51
29.
Tan Kong Han
2,000,000
0.50
30
Malaysian Reinsurance Berhad
2,000,000
0.50
246,807,661
61.93
11.
12.
13.
18.
26.
27.
Total
■
A N A LY S I S O F S H A R E H O L D I N G S AS AT 28TH FEBRUARY 2006
Directors’ Shareholding
Names of Directors
Ang Lam Poah
Ang Lam Aik
Liew Jee Ming @ Chong Jee Min
Direct Interest
No. of Shares
(%)
Indirect Interest
No. of Shares
(%)
26,800,002
100,000
400,000
-
6.73
0.02
0.10
-
*25,000,000
-
6.27
-
NOTES:
* Deemed interest through his directorship and substantial shareholding in Original Invention Sdn Bhd
Shares in related corporation
Other than as stated above, none of the other directors in office at the end of the financial year has any interest
in shares in the Company and its subsidiary companies during the financial year.
Substantial Shareholders
Substantial Shareholders
1.
2.
3.
4.
5.
Ang Ken Seng
Jamian bin Mohamad @ Md. Semaal
Ang Lam Poah
Original Invention Sdn Bhd
Direct Interest
No. of Shares
(%)
39,829,559
28,440,000
26,800,002
25,000,000
9.99
7.14
6.73
6.27
Indirect Interest
No. of Shares
(%)
-
-
25,000,000
6.27
N O T I C E O F F O U RT H A N N U A L G E N E R A L M E E T I N G ■
NOTICE IS HEREBY GIVEN THAT the Fourth Annual General Meeting of the Company will be held at Kelab Golf
Seri Selangor (PKNS Public Golf Course), Persiaran Damansara Indah, Kota Damansara, 47410 Petaling Jaya,
Selangor Darul Ehsan on Friday, 21 April 2006 at 10.00 a.m. for the purpose of considering the following
businesses:
1.
To receive the Audited Financial Statements for the year ended 31 October 2005 together with
the Reports of the Directors and the Auditors thereon.
2.
To re-elect the following Directors who are retiring pursuant to Article 101 of the Company's
Articles of Association:
(i) Dato' Azman bin Mahmood
Resolution 1
(ii) Dato' Razali Merican bin Naina Merican
Resolution 2
3.
To re-appoint Messrs Monteiro & Heng as Auditors of the Company for the ensuing year and Resolution 3
to authorise the Directors to fix their remuneration.
As Special Business:
To consider and if thought fit, pass the following resolution:
4.
ORDINARY RESOLUTION
Authority to allot shares pursuant to Section 132D of the Companies Act, 1965
Resolution 4
"THAT pursuant to Section 132D of the Companies Act, 1965 and subject always to the
approval of the relevant authorities, the Directors be and are hereby empowered to issue
shares in the capital of the Company from time to time and upon such terms and conditions
and for such purposes as the Directors may deem fit provided that the aggregate number of
shares issued pursuant to this resolution does not exceed 10% of the issued share capital of
the Company for the time being and that the Directors be and are also empowered to obtain
the approval for the listing of and quotation for the additional shares so issued on the Bursa
Malaysia Securities Berhad and that such authority shall continue in force until the conclusion
of the next Annual General Meeting of the Company."
By Order of the Board
LEONG OI WAH (MAICSA 7023802)
Company Secretary
Petaling Jaya
30 March 2006
Notes:
1.
A member of the company who is entitled to attend and vote at this meeting is entitled to appoint a proxy or in the case of a corporation a
duly authorised representative to attend and to vote in his stead.
2.
When a member appoints two or more proxies, the appointments shall be invalid unless the proportion of the holding to be represented by
each proxy is specified.
3.
A proxy may but need not be a member of the Company and Section 149(1)(b) of the Companies Act, 1965 shall not apply.
4.
If the appointer is a corporation, the Form of Proxy must be executed under the common seal or the hand of its attorney.
5.
The instrument appointing a proxy together with the power of attorney (as the case may be) must be deposited at the Registered Office of
the Company at 312, 3rd Floor, Block C, Kelana Square, 17 Jalan SS 7/26, 47301 Petaling Jaya, Selangor Darul Ehsan at least 48 hours before
the time appointed for holding the meeting or adjourned meeting.
NOTES ON SPECIAL BUSINESS
Ordinary Resolution
The proposed Ordinary Resolution No. 1 will give powers to the Directors to issue up to a maximum ten per centum (10%) of the issued share
capital of the Company for the time being for such purposes as the Directors would consider in the best interest of the Company. This authority,
unless revoked or varied by the Company at a general meeting, will expire at the next Annual General Meeting of the Company.
■ STATEMENT ACCOMPANYING NOTICE OF ANNUAL GENERAL MEETING
1.
Directors who are standing for re-election at the Fourth Annual General Meeting of the Company are:
i.
ii.
Dato' Azman bin Mahmood
Dato' Razali Merican bin Naina Merican
(Resolution 1)
(Resolution 2)
The information of the Directors standing for re-election is set out in the Directors' Profile appearing on
pages 4 and 5 of the Annual Report.
2.
Details of attendance of Directors at Board Meeting
There were six Board of Directors' Meetings held during the financial year ended 31 October 2005.
The details of attendance of Directors are set out in the Corporate Governance Statement appearing on
pages 18 of the Annual Report.
3.
Place, date and time of the Fourth Annual General Meeting
The Fourth Annual General Meeting of the Company will be held at Kelab Golf Seri Selangor (PKNS Public
Golf Course), Persiaran Damansara Indah, Kota Damansara, 47410 Petaling Jaya, Selangor Darul Ehsan on
Friday, 21 April 2006 at 10.00 a.m.
PROXY FORM ■
Number of Shares Held
585648-T
*I/We
(Full Name in Block Letters) of
(Address) being a
member / members of JAKS Resources Berhad hereby appoint *Mr/Ms
of
(the next name and address should be completed where it is desired to appoint two/more proxies)
*Mr/Ms of
or failing *him/*them, the Chairman of the Meeting as *my/our *proxy/proxies to attend and vote for *me/us on
*my/our behalf, and if necessary, to demand a poll, at the Fourth Annual General Meeting of the Company to be
held at Kelab Golf Seri Selangor (PKNS Public Golf Course), Persiaran Damansara Indah, Kota Damansara, 47410
Petaling Jaya, Selangor Darul Ehsan on Friday, 21 April 2006 at 10.00 a.m. and at any adjournment thereof.
*I/We direct *my/our *proxy/proxies to vote for or against the Resolutions to be proposed at the meeting as
indicated hereunder. If no specific direction as to voting is given or in the event of any item arising not summarized
below, *my/our *proxy/proxies may vote or abstain from voting at his/her discretion.
For#
No.
Resolutions
1.
Re-election of Dato' Azman bin Mahmood as Director
2.
Re-election of Dato' Razali Merican bin Naina Merican as Director
3.
Re-appointment of Auditors
4.
Approval to issue shares pursuant to Section 132D of the Companies Act, 1965
Against#
# Please indicate your vote “For” or “Against” with an “X” within the box provided.
* Delete if not applicable
Signed this
day of
2006
Signature/Common Seal
of Shareholder(s)
Notes: 1. A member of the company who is entitled to attend and vote at this meeting is entitled to appoint a proxy or
in the case of a corporation a duly authorised representative to attend and to vote in his stead.
2. When a member appoints two or more proxies, the appointments shall be invalid unless the proportion of the
holding to be represented by each proxy is specified.
3. A proxy may but need not be a member of the Company and Section 149(1)(b) of the Companies Act, 1965
shall not apply.
4. If the appointer is a corporation, the Form of Proxy must be executed under the common seal or the hand of
its attorney.
5. The instrument appointing a proxy together with the power of attorney (as the case may be) must be deposited
at the Registered Office of the Company at 312, 3rd Floor, Block C, Kelana Square, 17 Jalan SS 7/26, 47301
Petaling Jaya, Selangor Darul Ehsan at least 48 hours before the time appointed for holding the meeting or
adjourned meeting.
Fold here
Affix
Postage Here
The Company Secretary
JAKS RESOURCES BERHAD (585648-T)
312, 3rd Floor,
Block C, Kelana Square,
17, Jalan SS 7/26,
47301 Petaling Jaya,
Selangor Darul Ehsan.
Fold here

annual report 2005

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