Midas Holdings Limited

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ON TRACK TO SUCCESS
Quality, Efficiency, Delivery and Expansion are the engines of our growth. Our
uncompromising standards have enabled us to become the partner of choice to some
of the world’s leading train manufacturers and MNCs. By consistently delivering on
our promises and an unending focus on perfection, new benchmarks are constantly
reached. At Midas, our passion for excellence... drives us forward.
1. Corporate Structure 2. Corporate Profile 6. Message from the Executive Chairman
10. Message from the Chief Executive Officer 12. Board of Directors 13. Executive Officers
14. Financial Highlights 15. Corporate Information 16. Financial Contents
CORPORATE
StRucture
Corporate office
Chen Wei Ping, Executive Chairman
Chew Hwa Kwang, Patrick, Chief Executive Officer
Tan Kai Teck, Chief Financial Officer
Yang Xiao Guang, General Manager (Business Development)
Jilin Midas Aluminium Industries Co., Ltd
Wang Jiaxin, General Manager
Shanxi Wanshida Engineering Plastics Co., Ltd
Ma Mingzhang, General Manager
Midas Beijing (Trading) Co., Ltd
Chew Hwa Kwang, Patrick, General Manager
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CORPORATE PROFILE
Our high standards of quality
controls and commitment to
excellence means that Midas
always brings you the best in line.
Q U A L I T Y
Incorporated on 17th of November 2000 as an investment holding company,
Midas Holdings Limited has grown over the years to gain recognition as a leading
manufacturer of Aluminium Alloy extrusion products and Polyethylene (“PE”) pipes
for the rail transportation and infrastructure sectors in the PRC.
Incorporated on 17th of
November 2000 as an
investment holding company,
Midas Holdings Limited has
grown over the years to
gain recognition as a leading
manufacturer of Aluminium
Alloy extrusion products and
Polyethylene (“PE”) pipes for
the rail transportation and
infrastructure sectors in the PRC.
Under the Midas Group are three business divisions, namely:
(a) the Aluminium Alloy Division,
(b) the PE Pipe Division and
(c) the Agency and Procurement Division.
These three divisions are strategically located in the PRC to take on the opportunities
as well as capitalise on the potential benefits of the vast developments that are taking
place in the infrastructure and rail transport sectors.
Our customer base has evolved over the years to include MNCs and PRC stateowned companies such as ALSTOM Transport SA, Siemens Transportation Systems
Group, Changchun Railway Vehicles Co., Ltd, Tangshan Rolling Stock Works, Nanjing
Puzhen Rolling Stock Works, etc.
Besides our core business, in FY2006, we have also entered into two joint
ventures in the PRC, namely:
(a) Nanjing SR Puzhen Rail Transport Co., Ltd. (“Puzhen”) and
(b) China Northeast Light Alloy Co., Ltd. (“CNELA”)
Aluminium Alloy Division
Our Aluminium Alloy Division, Jilin Midas Aluminium Industries Co., Ltd, has achieved
the distinction of being the only manufacturer in the PRC to be accredited with the
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Quality Focus Global sourcing Grade “A” international certification by ALSTOM Transport SA (“ALSTOM”),
in accordance to Alstom Transport Standard. As a testimony to our capability to manufacture large-section
aluminium alloy extrusion products, this certification enables us to be the global sourcing partner of all
ALSTOM Transport units.
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In addition, our Aluminium Alloy Division has entered into a Master Agreement with Siemens Aktiengesellschaft,
Berlin and Munich, Transportation Systems Group (“Siemens”). Under this agreement, Siemens will engage
our Aluminium Alloy Division as a long term high technology supplier of aluminium alloy extrusion products
in the context of long term partnership-based cooperation on a global basis.
In recognition of our ability to supply the highest quality aluminium extrusion products, our Aluminium Alloy
Division was certified as an approved supplier to Changchun Bombardier Railway Vehicles Co. Ltd (“CBRC”)
in January 2006. CBRC is a joint venture between Bombardier Transportation and China’s leading train
manufacturer Changchun Railway Vehicles Co., Ltd. with Bombardier Transportation being the world leader
in rail transport manufacturing.
We are now the only PRC certified supplier for the world’s three renowned train manufacturers, which is a
testimony and endorsement of the quality of our aluminium alloy extrusion products. This recognition given
by ALSTOM, Siemens and CBRC has provided us the platform to expand and grow our business both in the
PRC and the international export markets.
Our Aluminium Alloy Division currently has two production lines, with annual production capacity of up to
20,000 tonnes. Our production lines can produce large section aluminium alloy extrusion products of up to 28
metres in length and 0.7 meters in width for profiles and 0.48 metres in diameter for large diameter tubes and
rods. Our large section aluminium alloy products are used in a variety of industries. They are utilised in the rail
transportation industry to manufacture body frames of high-speed trains, MRT and LRT trains. In addition, our
aluminium alloy products are also used in power stations for power transmission purposes, electrical energy
distribution, transmission cables as well as production of mechanical parts for industrial equipment.
EFFICIENCY
In FY2004 and FY2005, we successfully exported our large section aluminium alloy profiles to manufacture
MRT body frames for the Singapore Circle Line Project and the Metro Oslo MRT project in Norway.
We have further demonstrated our capabilities in supplying aluminium alloy profiles of international standards
and meeting the stringent requirements of our international customers by securing the Valero Rus Project
for the Russian market and the Desiro Mainline Project for the European and ex-European markets in
early 2007.
DELIVERY
EXPANSION
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CORPORATE PROFILE
We are involved in many high profile rail transport projects in the
PRC since 2003. Some of these projects include:
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Regional Line Phase 1 Project
Shanghai MRT Line 1 Extension 2 Project
Shanghai MRT Line 1 Extension Project
Shanghai Yangpu MRT Line Phase 1 Project
Shanghai Pearl Line Project
Nanjing MRT Project
Guangzhou MRT Line 3 Project
Tianjin MRT Project
Magnetic Levitation Train Prototype Project
Beijing to Tianjin High Speed Train Project
Changchun City Light Rail Transit Phase 1 Project
Shanghai MRT Line 2 Extension 1 Project
We are currently the market leader in supplying large section aluminium alloy
profiles for the railway industry in the PRC. Significantly, we have been appointed
as the sole supplier for the local content portions of two major high speed train
projects in the PRC, namely:
QUALITY
• Regional Line Phase 1 Project, by Changchun Railway Vehicles in collaboration with Alstom
• Beijing to Tianjin High Speed Train Project by Tangshan Rolling Stock Works in collaboration
with Siemens
In addition to being the leader in the high speed train market, we also managed to secure a significant market
share of the metro train market. We were awarded the contract in January 2007, valued at RMB22.4 million, to
be the sole supplier to supply aluminium alloy profiles for the Shanghai MRT Line 2 Extension 1 Project.
In addition, we manufactured large section aluminum alloy extrusion products for use as roofing sun shields in
the following projects:
• Beijing Airport Terminal 3 Project
• Shenzhen Exhibition Centre Project
The recognition for our manufacturing capability of aluminium alloy extrusion products positions us for greater
growth in the PRC market. Moving forward, we aim to expand our presence internationally by capitalising on
opportunities emanating from the overseas market.
PE Pipe Division
Our PE Pipe Division manufactures and installs PE Pipes for use in various types of piping networks, including gas
piping networks and water distribution networks.
Made of high density polyethylene, our PE Pipes are relatively light-weight and chemically inert. Considered as
viable substitutes for traditional concrete and metal pipes, PE Pipes are easier and safer to install, more durable
and flexible. A proponent that is non-toxic in nature, our PE Pipes are cost efficient and possess a high resistance
to corrosion.
Broadly categorised into two types of PE Pipes, namely the Gas PE Pipes and the Water PE Pipes which are
manufactured through the extrusion process, we manufacture the various parts required in a piping network,
including pipes, joints and fittings.
Our market segments include new and replacement markets for the PRC municipal cities gas transmission and
water distribution infrastructure projects, where PE Pipes are used in the cities’ transmission and distribution networks.
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Agency and Procurement Division
We set up our Agency and Procurement Division in November 2005. This division deals with the import,
export and wholesale of aluminium alloy, polyethylene pipes, metal materials and other related products.
It also serves as the procurement centre for our two other business divisions. We intend to leverage on
our existing established relationships and networks, by bringing together both suppliers and customers, to
expand our product range to our existing and potential customers. In this manner, we can value add and
better serve the requirements and needs of our customers.
Associated Companies
Our 32.5% stake investment in Puzhen has been approved by the relevant authorities and this new associated
company has started commercial production in FY2007. Through Puzhen, we are able to further entrench
our position in the PRC railway industry as Puzhen is only one of the four rolling stock companies in the
PRC licensed to manufacture and sell metro trains on a nationwide basis. We believe that Puzhen will be a
direct beneficiary of the high growth metro train industry in the PRC given the limited number of players
in the market.
Besides the strategic move to venture into metro train manufacturing, we have also signed an agreement
to invest RMB300 million for a proposed 30% stake in CNELA. This new associated company is pending
regulatory approvals from the relevant PRC authorities.The existing company has been granted the approval
by China State Development and Reform Commission to embark on a new project to manufacture super
large specification and special function aluminium alloy plates and sheets, mainly used in the aviation,
aerospace, shipbuilding, transportation and petrochemical industries. The PRC has traditionally relied on
imports of such products to meet her needs. This project, upon commissioning, is expected to help alleviate
the PRC’s requirements.
Moving Forward
In our comparatively short history, we are encouraged by our current success. Moving forward, we are
committed to springboard towards greater expansion, growth value creation, as well as strengthen our
key competencies.
DELIVERY
EXPANSION
E F F I C I E N C Y
At Midas, we work hard and
fast, with no compromise. Our
determination to be the best
means that you get the best.
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message from the executive chairman
My Dear Shareholders,
On behalf of the Board of Directors, I am pleased
to present to you our 2006 annual report for
the financial year ended 31 December 2006.
2006 marked a very exciting year for the
Group. In addition to being upgraded to the
Main Board of the Singapore Exchange, we
became the first and only aluminium alloy
extrusion product manufacturer in the PRC to
be a certified supplier by all three of the world’s
leading train manufacturers, namely, ALSTOM,
Siemens and Changchun Bombardier.
Importantly, this signals that our good
reputation established over the years and
our quality products have not only earned us
recognition from the top train makers in the
world, but also attest to our market position
in the PRC rail transport industry as we
continue to secure a major portion of the
major projects in the PRC, including being
appointed as the sole supplier for the local
content portions of 2 major high speed train
projects in the PRC, namely the Regional Line Phase 1 Project and the Beijing to Tianjin High Speed
Train Project.
Significantly, the year also marked our expansion in the international markets through securing two
new international contracts in February 2007 from Siemens to supply aluminium alloy extrusion
profiles for the Desiro Mainline Project for the European and ex-European markets and the Valero
Rus Project in Russia. These abode well for us as we build a sustainable growth business.
“ With a clear vision, we can go
a long way…“
As part of our strategy of continuous enhancements to our capabilities and our business model,
we expanded downstream to venture into metro train manufacturing through the establishment
of Nanjing SR Puzhen Rail Transport Co., Ltd (“Puzhen”). Puzhen provides us with the platform
to tap on the growing opportunities in the PRC metro rail transport infrastructure industry.
We hold a 32.5% stake in Puzhen, which is one of only four rolling stock companies licensed to
undertake metro train projects on a nationwide basis in the PRC. Puzhen has started commercial
production in January 2007 and is involved in the development, manufacturing and sale of
metro trains, bogies and their related parts. Given the strong demand for new and expansion
of public metro train projects in many PRC cities, Puzhen is in a strong position to capitalize on
these opportunities.
D E L I V E R Y
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EFFICIENCY
Beside Puzhen, we have also signed an agreement in September 2006 to set up China Northeast Light
Alloy Co., Ltd. (“CNELA”) where we will hold a 30% stake. This new associated company is pending
regulatory approvals from the relevant PRC authorities. The existing company has been granted the
approval by China State Development and Reform Commission to embark on a new project to
manufacture super large specification and special function aluminium alloy plates and sheets, mainly
used in the aviation, aerospace, shipbuilding, transportation and petrochemical industries.
On behalf of the Board of Directors, I would like to take this opportunity to express my appreciation
to our staff and management for their unwavering commitment, and to our customers, suppliers and
business associates for their steadfast support. We look forward to your continued commitment.
Last but not least, on behalf of the Board of Directors, my most sincere appreciation to our
shareholders. Thank you for your unfaltering support and confidence in us. We will continue with the
hard work and focus on bringing greater shareholder value.
Chen Wei Ping
Executive Chairman
EXPANSION
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“目标明确，我们能
行得更远…”
亲爱的股东，
我谨此代表董事会向您汇报集团截至2006年12月31日财政年的
年度报告。
在2006年，我们集团的发展连续取得突破。首先，集团升格成
为新加坡交易所主板股市上市公司；另外，在中国，我们成为
首家、也是唯一获得全球三家顶尖火车制造商：阿尔斯通，西
门子和长春长客庞巴迪核准的铝合金产品供应商。
多年来建立起的良好声誉，再加上拥有品质优良的产品，让我
们获得全球顶尖火车制造商的认可，也巩固我们在中国铁路运
输业的市场地位。在中国，我们继续获选参与多个大型工程，
包括作为当地两个主要高速铁路工程：区域线第一阶段工程和
北京天津高速铁路项目，唯一的国产配备部分供应商。
EFFICIENCY
QUALITY
我们今年取得的另外一个重要突破是成功扩大
国际市场。在2007年2月，我们获得西门子公
司的两份国际合同，供应铝合金产品给Desiro
Mainline项目在欧洲和欧洲以外的市场，以及俄
罗斯的Valero Rus项目。这项突破将为我们建立
能够持续成长的业务。
作为我们不断加强能力的发展策略，以及配合
我们的发展模式，我们成立了中外合资公司南
京南车浦镇城轨车辆有限公司(“浦镇”) ，将业务
扩大到下游的城市铁路生产业务。我们拥有浦
镇32.5%的股权。它是获准承接中国全国城市
铁路项目的四家铁道车辆公司之一。它已经在
2007年1月投入商业生产，业务包括开发、生
产和销售城市铁路车辆、转向架和其它配件。
目前，中国多个城市正在展开城市铁路扩建项
目，浦镇具备的优势，将能够抓紧蓬勃发展的
城市铁路基建业带来的发展机会。
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We have our eye on growth.
We actively seek out potential
areas of expansion so that we
have only one direction: UP. E X P A N S I O N
在2006年9月，我们也签订成立中外合资公司东北轻合金有限责
任公司(“东轻”) 的协议。我们拥有东轻30%的股权。这项协议正
在等待中国相关监管机构审批，现有公司已经获得中国国家发
展与改革委员会的批准，展开新项目，生产主要用于航空、宇
航、造船、运输和石化业的超大型铝合金板。
我谨此借这个机会代表董事会，感谢我们的职员和管理层对公
司的投入，以及客户、供应商和业务伙伴的支持。我们期待您
在未来会继续支持我们。
我也要代表董事会致以我们的股东最真诚的感谢，谢谢您坚定
的支持和投予我们信心。我们会继续努力，并且尽心尽力地提
升股东价值。
陈维平
执行主席
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message from the chief executive officer
“Great things can be achieved
by seeing the big picture and
doing the small things well.”
DELIVERY
Dear Shareholders,
Continuing from the momentum we set in 2005, we saw our business accelerate
to the next phase of growth through a series of corporate developments and an
expanded manufacturing capacity in 2006.
In September 2006, we signed a second agreement to set up the proposed
China Northeast Light Alloy Co., Ltd (“CNELA”), with a PRC state-owned
enterprise and three other PRC companies. Under the agreement, Midas will
hold a 30% stake through the investment of RMB 300 million into CNELA. The
existing state-owned enterprise is the first PRC aluminium and magnesium alloy
processing company which commenced operations under the PRC’s first fiveyear plan in 1956.
Milestones in 2006…
On the corporate front, our certification by Changchun Bombardier Railway
Vehicles Co. Ltd as an approved supplier to their projects started us on a positive
note for 2006 and marked another first in our corporate history. This third
certification made us the only aluminium alloy extrusion product manufacturer
in the PRC to be certified by the world’s three leading train manufacturers, the
other two being ALSTOM SA and Siemens Transportation Systems Group.
Apart from these corporate developments, 2006 was also a milestone year for
us as we were upgraded to the Main Board on September 7.
Financial Review…
More significantly, to maintain the momentum of growth and to tap the
growing opportunities in the PRC rail transport infrastructure industry, we
have expanded our business to include metro train manufacturing through the
establishment of our new associated company, Nanjing SR Puzhen Rail Transport
Co., Ltd (“Puzhen”).
FY2006 was a rewarding year for us as we achieved record top and bottomlines.
Our revenue jumped 48.7% to about S$104.8 million, mainly due to higher
revenue contribution from our Aluminium Alloy Division which saw our new
55 MN production line began production in July 2006. This new production
line has effectively doubled our annual production capacity from 10,000 tonnes
to 20,000 tonnes. With this increased in capacity, we are able to fulfill more
customers’ orders and take on more new contracts. Revenue for this division
surged 43.4% to hit a record S$71.8 million in FY2006 from S$50.1 million in
FY2005. In addition, our new Agency and Procurement Division, which started
operations in January 2006 also contributed about S$11.9 million to our Group’s
topline.
Puzhen was formed with CSR Nanjing Puzhen Rolling Stock Works (“CSR”),
Nanjing New and High Tech Development Zone General Company, Pukou
State-owned Capital Operation (Holding) Co., Ltd and Sanpower Group Co.,
Ltd. We hold a 32.5% stake in Puzhen. Currently, in addition to CSR, there
are only three other rolling stock companies approved to undertake metro
train projects on a nationwide basis in the PRC. Under the agreement, CSR will
transfer its manufacturing rights to Puzhen, which will engage in the development,
manufacturing and sale of metro trains, bogies and their related parts.
Our Aluminium Alloy Division continued to be the main revenue contributor
in FY2006, accounting for about 68.5% of the Group’s revenue. The PE Pipe
Division and Agency and Procurement Division contributed 20.2% and 11.3%
respectively.
To finance the investment in Puzhen and other development plans, we did a
placement exercise of 76.5 million new Ordinary Shares in May 2006.This raised
net proceeds of about S$61.5 million.
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The “Rail Transport Industry” remained the largest revenue contributor for the
Aluminium Alloy Division, accounting approximately 46.1% of this division’s
revenue in FY2006. Going forward, we expect revenue contributions from this
segment to increase further as we secure more orders, both in the PRC as well
as international markets.
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contracts from Siemens, namely, the Valero Rus Project in Russia and the
Desiro Mainline Project for the European and ex-European markets. Our first
international contract by Siemens for the Norway Oslo Metro Train Project
and these two new contracts are a testament that our efforts in expanding our
international presence are paying off. These contracts also signify that we are
competitive both in terms of pricing and more importantly, that the quality of
our products is comparable with international standards. Following the success
of these two contracts, we will continue to strengthen our sales and marketing
efforts to establish a strong presence in the international market.
Our Group’s net income hit S$25.6 million in FY2006, up 39.5% from S$18.3
million in FY2005.
About 2007 & Beyond…
It has been my ambition to take Midas to greater heights. I am pleased that
this has been partially fulfilled when our 32.5% stake in Puzhen obtained the
necessary regulatory approvals in late October 2006, and has since started
operations in January 2007. Through Puzhen, we have progressed from being
just a parts supplier for the railway industry to a participant in a full-fledged
metro train manufacturing operation in the PRC. I believe that Puzhen will be a
direct beneficiary of the high growth metro train industry in the PRC given that
there are only 4 licensed rolling stock companies in the PRC nationwide.
We started 2007 with a big bang!
In January 2007, our Aluminium Alloy Division secured the contract to supply
aluminium alloy profiles for an additional 10 train sets for the Regional Line
Phase 1 Project. Upon securing this contract, we have become the sole supplier
for the local content portion of this project. Currently, our Aluminium Alloy
Division has been appointed the sole supplier for the local content portions
of 2 high profiles high speed train projects in the PRC, namely, the Regional
Line Phase 1 Project and the Beijing to Tianjin High Speed Train Project. Besides
achieving dominant market share in the High Speed Train segment, we are also
appointed the sole supplier for the latest metro train project, the Shanghai MRT
Line 2 Extension 1 Project. Our efforts in building close relationships with the
PRC train manufacturers and our commitment to deliver high quality products
have entrenched our leadership position in the PRC. We will continue to work
closely with our customers and aim to be involved in all the major rail projects
in the PRC.
Besides the strategic move to venture into metro train manufacturing, we have
also signed an agreement in September 2006 to invest RMB300 million for a
30% stake in CNELA. The existing company has been granted approval from the
China State Development and Reform Commission to embark on a new project to
manufacture super large specification and special function aluminium alloy plates
and sheets, mainly used in the aviation, aerospace, shipbuilding, transportation
and petrochemicals industries. At the moment, China has to rely on import
of such products to meet her needs. This project, upon its commissioning,
which is targeted in the 2nd half of 2008, is expected to help alleviate
China’s requirements.
Beside the PRC market, we also successfully expanded our presence in the
international markets in February 2007, when we secured two international
Looking forward, I am optimistic that our Group will continue to achieve
good performance.
QUALITY
EFFICIENCY
Thank You…
In conclusion, I would like to take this opportunity to say a big thank you to our
Board of Directors for their commitment and unreserved efforts in providing
guidance in the past year. On behalf of the Board, I would also like to extend a
warm welcome to Mr. Chan Soo Sen as an Independent Director of our Board.
We will leverage on Mr. Chan’s rich experience in the civil service and his China
business experience, as we continue to penetrate deeper into the PRC market.
My gratitude also goes out to all our staff. Without your hard work, we would
not be able to arrive at where we are today. I would also like to extend my
appreciation to our valued customers and business associates for the continual
support. We look forward to forging even stronger relationships and partnerships
in the years to come.
Chew Hwa Kwang, Patrick
Chief Executive Officer
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PARTNERING TO MAKE
POSSIBILITY A REALITY
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1. Chen Wei Ping
3. Zhang Xingbo
Mr Chen Wei Ping, age 46, was appointed as our Director on 21 August 2002
and has been Executive Chairman since March 2003. Mr Chen is instrumental in
developing and steering our Group’s corporate directions and strategies. He is
responsible for the effective management of business relations with our strategic
partners. In addition, Mr Chen spearheaded the listing of our Company’s shares
on the Singapore Exchange Securities Trading Limited on 23 February 2004. Mr
Chen has more than twenty years of management experience and currently holds
directorship in several companies in the PRC and Singapore. He holds a Bachelor
Degree in Economics from Jilin Finance & Trade College (PRC) and a Master
Degree in Economics from Jilin University (PRC).
Mr Zhang Xingbo, age 49 was appointed as an Independent Director of our
Company on 6 January 2004. Mr Zhang was the section chief of the Finance
Section of Jilin Province Foodstuff Company from 1981 to 1986. Mr Zhang
became the deputy head of the Finance Department of the Commercial &
Trade Department of Jilin Province from 1986 to 1994. In 1997, Mr Zhang
became the Vice General Manager of Jilin Province Investment & Trust Co., Ltd.
Mr Zhang was promoted to and is currently its General Manager. Mr Zhang is a
certified public accountant in the PRC and holds a Master Degree in Economics
from Jilin University (PRC).
4. Chew Chin Hua
2. Chew Hwa Kwang, Patrick
Mr Chew Chin Hua, age 51 was appointed as an Independent Director of
our Company on 6 January 2004. Mr Chew is currently a practising certified
public accountant. Mr Chew has more than twenty years of experience in the
accounting and auditing profession. Mr Chew is a member of the Association
of Chartered Certified Accountants and the Institute of Certified Public
Accountants in Singapore. Mr Chew is also a director of several other listed
companies in Singapore.
Mr Patrick Chew Hwa Kwang, age 44 is a founding member of our Group and
is our Chief Executive Officer who is responsible for the overall operations and
finance of our Group and its financial well-being. Mr Patrick Chew is responsible
for identifying future business opportunities and services which our Group may
provide to drive future growth. Mr Patrick Chew is also in charge of overseeing
the day-to-day management of our Group as well as our Group’s strategic and
business development. Mr Patrick Chew has served as our Executive Director
since November 2000. He played a major role in the listing of our Company’s
shares on the Singapore Exchange Securities Trading Limited on 23 February
2004. Mr Patrick Chew has more than twenty years of management experience
and currently holds directorship in several companies in Singapore.
5. Gay Chee Cheong
Mr Gay Chee Cheong, age 50, was appointed as an Independent Director on 23
June 2004. Mr Gay co-founded 2G Capital Pte Ltd, a private equity investment
company investing in the Asia Pacific economies. Prior to 2G Capital, Mr Gay was
the Group Executive Director of JIT Holdings Limited and the Managing Director
to the various JIT companies in Singapore, China and Europe. Mr Gay holds
directorships in several listed and non-listed companies in Singapore. Mr Gay holds
a Bachelor Degree in Electronics Engineering (Honours) from the Royal Military
College of Science Shrivenham, UK, a Bachelor Degree in Economics (Honours)
from the University of London, UK and a Master of Business Administration from
the National University of Singapore.
Mr Patrick Chew is concurrently the General Manager of our Agency and
Procurement Division, responsible for the overall business operations of
this division.
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6. Chan Kam Loon
Mr Chan Kam Loon, age 46, was appointed as an Independent Director of our Company on 18
February 2005. He is presently the Director of Philip Chan Consulting Pte Ltd. He was formerly a
Vice President of the Singapore Exchange Limited, Director (Investments) of Suez Asia Holdings Ltd
and Associate Director, Corporate Finance of HG Asia Securities. He is a member of the Institute of
Chartered Accountants of England and Wales. He is also a director of several other listed companies
in Singapore.
7. Chan Soo Sen
Mr Chan Soo Sen, age 50, was appointed as an Independent Director of our Company on 29
June 2006.He is currently the Director, Chairman’s Office and Director, Group Human Resources
for Keppel Corporation Limited, and Member of Parliament for Joo Chiat Constituency. Mr Chan
was previously a Minister of State and has served in several ministries including the Ministry
of Education, Ministry of Trade and Industry and Ministry of Community Development, Youth
and Sports. Before entering the political scene, Mr Chan started up the China-Singapore
Suzhou Industrial Park as the founding CEO in 1994, laying the foundation and framework for
infrastructure and utilities development. Mr Chan holds a Master in Management Science from
the University of Stanford, United States of America and is a director of a few listed companies
in Singapore.
EXECUTIVE OFFICERS
Tan Kai Teck
Mr Tan Kai Teck, age 37, is our Chief Financial Officer responsible for our financial management and the reporting
functions of our Group. Mr Tan Holds a Bachelor Degree in Accountancy (Second Upper Class Honours)
from the Nanyang Technological University and is a member of the Institute of Certified Public Accountants of
Singapore.
Yang Xiao Guang
Mr Yang Xiao Guang, age 47, is our General Manager (Business Development) responsible for the
execution and implementation of the development and business strategies of our Group. He is also
involved in new business development and new venture management. Mr Yang holds a Bachelor Degree
in Economics from Jilin Finance & Trade College (PRC) and a Master Degree in the Science of Law from
Jilin University (PRC).
Wang Jiaxin
Mr Wang Jiaxin, age 51, is the General Manager of Jilin Midas Aluminium Industries Co., Ltd. Mr Wang is
responsible for the overall business operations of the Aluminium Alloy Division. Mr Wang holds a Bachelor
Degree in Mechanical Engineering from Jilin University (PRC).
Ma Mingzhang
Mr Ma Mingzhang, age 53, is the General Manager of Shanxi Wanshida Engineering Plastics Co., Ltd. Mr
Ma is responsible for the overall business operations of the PE Pipe Division. Mr Ma holds a Bachelor
Degree in Industrial Automation Instrument from Harbin Industry University (PRC) and a Master Degree
in Science and Engineering from Chengdu Science and Technology University (PRC).
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FINANCIAL HIGHLIGHTS
2006
S$’ 000
Revenue
Gross profit
Profit before income tax
Profit attributable to equity holders
of the Company
Shareholders’ funds
Non current assets
Current assets
Current liabilities
Non current liabilities
For the Year (S$’ 000)
Revenue
Gross profit
of the Company
At Year End (S$’ 000)
Shareholders’ funds
Non current assets
Current assets
Current liabilities
Non current liabilities
Financial Ratios
Net Tangible Assets per Share (cents)
Basic Earnings per Share (cents)
70,473
FY 2005
60,208
FY 2004
FY 2003
23,873
11,571
7,019
7,019
162,894
101,577
103,241
38,978
2,946
91,877
48,241
68,396
22,179
2,581
78,379
36,891
67,666
23,688
2,490
7,837
39,308
28,151
36,228
23,394
6,269
40,098
15,677
49,506
-
2006
2005
Change (%)
104,764
34,241
27,723
25,567
70,473
26,160
21,103
18,322
48.7
30.9
31.4
39.5
162,894
101,577
103,241
38,978
2,946
91,877
48,241
68,396
22,179
2,581
77.3
110.6
50.9
75.7
14.1
19.35
3.18
12.01
2.40
61.1
32.5
34,241
FY 2006
26,160
FY 2005
FY 2004
23,620
13,876
11,571
gROSS pROFIT
( S$’000 )
27,723
FY 2006
21,103
FY 2005
18,521
FY 2004
FY 2002
S$’ 000
33,964
13,876
8,954
8,954
Revenue
( S$’000 )
FY 2003
S$’ 000
60,208
23,620
18,521
15,302
FY 2002
23,873
S$’ 000
PROFORMA
2002
70,473
26,160
21,103
18,322
FY 2003
33,964
FY 2002
S$’ 000
2003
104,764
34,241
27,723
25,567
104,764
FY 2006
ACTUAL
2005
2004
8,954
15,302
FY 2004
FY 2002
Profit BEFORE
INCOME TAX
( S$’000 )
18,322
FY 2005
FY 2003
7,019
25,567
FY 2006
8,954
7,019
pROFIT ATTRIBUTABLE TO EQUITY
HOLDERS OF THE COMPANY
( S$’000 )
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CORPORATE
INFORMATION
BOARD OF DIRECTORS:
SHARE REGISTRAR:
Mr Chen Wei Ping,
Executive Chairman
Mr Chew Hwa Kwang, Patrick,
Chief Executive Officer
Mr Zhang Xingbo,
Independent Director
Mr Chew Chin Hua,
Mr Gay Chee Cheong,
Mr Chan Kam Loon,
Mr Chan Soo Sen,
Independent Director,
appointed on 29 June 2006
Compact Administrative Services Pte Ltd
6 Shenton Way #28-09
DBS Building Tower Two
Singapore 068809
AUDIT COMMITTEE:
Mr Chew Chin Hua, Chairman
Mr Gay Chee Cheong
Mr Chan Kam Loon
NOMINATING COMMITTEE:
Mr Chan Kam Loon, Chairman
Mr Gay Chee Cheong
Mr Chew Chin Hua
REMUNERATION COMMITTEE:
Mr Chew Chin Hua, Chairman
Mr Gay Chee Cheong
Mr Chan Kam Loon
COMPANY SECRETARY:
Ms Tan Cheng Siew @ Nur Farah Tan, ACIS
REGISTERED OFFICE:
2 Shenton Way
#04-01 SGX Centre 1
Singapore 068804
Tel: (65) 6438 3052
Fax: (65) 6438 3053
Website: www.midas.com.sg
Company Registration No. 200009758W
AUDITORS:
BDO Raffles
5 Shenton Way #07-01
UIC Building
Singapore 068808
Partner-in-charge: Mr Chia Soo Hien
(Appointed with effect from 29
November 2005)
BANKERS:
United Overseas Bank Limited
80 Raffles Place
UOB Plaza
Singapore 048624
Oversea-Chinese Banking
Corporation Limited
65 Chulia Street
OCBC Centre
Singapore 049513
Industrial & Commercial Bank of China
Liaoyuan City Branch
518 Renmin Avenue,
Liaoyuan City,
Jilin Province, PRC 136200
Industrial & Commercial Bank of China
Shanxi Branch
Da Yu West Street,
Ruicheng County,
Shanxi Province, PRC
SUBSIDIARIES:
Green Oasis Pte Ltd
2 Shenton Way
#04-01 SGX Centre 1
Singapore 068804
Tel: (65) 6438 3052
Fax: (65) 6438 3053
North East Industries Pte Ltd
2 Shenton Way
#04-01 SGX Centre 1
Singapore 068804
Tel: (65) 6438 3052
Fax: (65) 6438 3053
Midas Ventures Pte. Ltd.
2 Shenton Way
#04-01 SGX Centre 1
Singapore 068804
Tel: (65) 6438 3052
Fax: (65) 6438 3053
15
Jilin Midas Aluminium Industries Co., Ltd
188 Fuzhen Road
Liaoyuan City
Jilin Province
PRC 136200
Tel: (86) 437 - 352 2510
Fax: (86) 437 - 352 0483
Shanxi Wanshida Engineering Plastics Co., Ltd
108 Yongle South Road
Ruicheng County
Shanxi Province
PRC 044600
Tel: (86) 359 - 303 0518
Fax: (86) 359 - 302 7431
Midas Trading (Beijing) Co., Ltd
No. 7 Dong San Huan Middle Road
Chao Yang District
Room 703, Block A
Beijing Fortune Plaza
Beijing 100020
Tel: (86) 10 - 6530 9595
Fax: (86) 10 - 6530 9586
Associate:
Nanjing SR Puzhen Rail Transport Co. Ltd
No. 208 Puzhu Middle Road, Nanjing,
Jiangsu Province
PRC 210031
Tel: (86) 25 – 8584 7392
Fax: (86) 25 – 8584 7392
IR Contact:
Citigate Dewe Rogerson, i.MAGE Pte Ltd
1 Raffles Place
#26-02 OUB Centre
Singapore 048616
Tel: (65) 6534 5122
Fax: (65) 6534 4171
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Financial Statements
17. Financial Review 20. Risk Management 21. Corporate Governance Statement 27. Report of the Directors
31. Statement by the Directors 32. Independent Auditors’ Report 34. Balance Sheets 35. Consolidated Profit and Loss Account
36. Consolidated Statement of Changes in Equity 38. Consolidated Cash Flow Statement 39. Notes to the Financial Statements
68. Statistics of Shareholdings 69. Substantial Shareholders 70. Notice of Annual General Meeting Proxy Form
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FINANCIAL REVIEW
REVENUE
Our Group’s principal activities for FY2006 are as follows:
a.
manufacture of large section aluminium alloy extrusion products for use mainly in the following:
o
Rail Transport Industry - We produce aluminium alloy profiles which are used to manufacture train car body frames for use by
high-speed trains, MRT and LRT trains;
o
Power Industry - We produce aluminium alloy tubings which are used in power stations for power transmission purposes,
electrical energy distribution and transmission cables ; and
o
Others - We produce aluminium alloy rods and other specialized profiles which are used in the production of mechanical parts
for industrial machinery as well as louvre panels for the Beijing Airport Terminal 3 project .
b.
manufacture and installation of PE Pipes for use in various types of piping networks including gas piping networks and water distribution
networks.
c.
import, export and wholesale of aluminium alloy, PE Pipes, metal materials and other related products.
Our revenue by business activities is set out below:
Business segments
(S$’ 000)
PE Pipe Division
Agency & Procurement Division
Total
FY2006
71,766
21,137
11,861
104,764
FY2005
50,059
20,414
70,473
Change
21,707
723
11,861
34,291
%
43.4
3.5
NM
48.7
NM – Not meaningful
Our Group’s revenue increased by about S$34.3 million or 48.7% from S$70.5 million in FY2005 to S$104.8 million in FY2006. Our Aluminium
Alloy Division recorded an increase in revenue by approximately 43.4% or S$21.7 million in FY2006. This was mainly due to higher business
volume as a result of the growth experienced in the rail transport industry and infrastructural developments in the PRC. In addition, we were
able to fulfil more customers’ orders through our new 55MN aluminium alloy extrusion production line which became operational in July 2006,
effectively doubling our annual production capacity to 20,000 tonnes. Our PE Pipe Division recorded a slight increase in revenue by 3.5% or
S$0.7 million in FY2006. FY2006 also saw maiden revenue contribution from our Agency and Procurement Division.
For FY2006, revenue contribution from our Aluminium Alloy Division accounted for a lower percentage of Group’s revenue as compared to
FY2005. Aluminium Alloy Division accounted for about 68.5% of our Group’s revenue for FY2006 as compared to about 71.0% for FY2005
whereas PE Pipe Division accounted for about 20.2% and 29.0% of our Group’s revenue for FY2006 and FY2005 respectively. This was mainly
due to the new Agency and Procurement Division that accounted for about 11.3% of our Group’s revenue for FY2006. Our Aluminium Alloy
Division is currently well placed to compete more effectively, especially in supplying aluminium alloy profiles for use as train car body frames in
the rail transport industry. Our Aluminium Alloy Division is certified by the world’s three leading train manufacturers, namely ALSTOM, Siemens
and Changchun Bombardier. We are the only PRC manufacturer that has obtained such certifications from these renowned train manufacturers.
We believe that such recognition would provide us the platform to expand our business both in the PRC and the international markets. We
have demonstrated our capabilities in supplying aluminium alloy profiles of international standards and meeting the stringent requirements of our
international customers by securing more contracts in the international markets. We have also been appointed as the sole supplier for the local
content portions of 2 high profile high speed trains projects in the PRC namely, Regional Line Phase 1 Project and Beijing to Tianjin High Speed
Train Project. Therefore, going forward, we expect contributions from the Aluminium Alloy Division to increase further.
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FINANCIAL REVIEW
The tables below show the revenue segmentation in percentage terms by end usage at the Aluminium Alloy Division and the PE Pipe Division
for the financial year ended 31 December 2006:
FY2006
%
46.1
24.2
29.7
100.0
Rail Transport Industry
Power Industry
Others
Total
FY2005
%
41.2
17.1
41.7
100.0
Sales by end usage indicate that revenue contribution from the rail transport industry is still the major revenue contributor, contributing
approximately 46.1% of the revenue for the Aluminium Alloy Division. “Others” segment included mainly revenue from the supply of aluminium
alloy rods and other specialized profiles for industrial equipment as well as louver panels, which were used as roofing sun shields for the Beijing
International Airport Terminal 3 Project.
Moving ahead, we expect contributions from the rail transport industry to increase in FY2007 as evidenced by the quantum of the recent
contracts that we have secured and the increasing demand from this industry.
We had expanded our production facilities at our Aluminium Alloy Division and our new 55MN aluminium alloy extrusion line commenced
operation in July 2006. This additional production line doubles our annual production capacity from the previous 10,000 tonnes per year to
20,000 tonnes per year. With this new line, we are able to better optimize the utilization of our production capabilities by scheduling our
production mix between the two lines more efficiently. The new production line would enable us to gear up our business volume by doubling
our production capacity and provide us the capability to meet the growing demands.
PE Pipe Division
FY2006
%
92.5
2.7
4.8
100.0
Gas Industry
Water Industry
Others
Total
FY2005
%
70.1
26.5
3.4
100.0
In terms of end usage, gas pipes industry is still the main revenue contributor at about 92.5% for FY2006. Going forward, we do not expect
significant variations from the existing trend and we will continue to work towards strengthening our foothold in the new and replacement
markets for the PRC municipal cities’ gas transmission and water distribution infrastructure projects.
PROFITABILITY
Our gross profit by business activities is set our below:
Business segments
(S$’ 000)
PE Pipe Division
Total
Gross Profit Margin (%)
FY2006
27,373
6,402
466
34,241
32.7
FY2005
18,957
7,203
26,160
37.1
Change
8,416
(801)
466
8,081
%
44.4
(11.1)
NM
30.9
Gross profit increased by approximately S$8.1 million or 30.9% from S$26.2 million in FY2005 to S$34.2 million in FY2006. This was brought
about by higher gross profits experienced at our Aluminium Alloy Division due to increased business volume and maiden contribution from
our Agency and Procurement Division, partially offset by the slight decline in gross profit experienced at our PE Pipe Division due to a decline
in gross profit margin.
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FINANCIAL REVIEW
Our Group’s gross profit margin for FY2006 was 32.7% versus 37.1% in FY2005.The difference is due mainly to new revenue from the Agency
and Procurement Division (none in FY2005) whose gross profit margin is typically around 3 to 5%. In addition, gross profit margin for the PE
Pipe Division declined from about 35.3% in FY2005 to about 30.3% in FY2006 mainly due to increased competition. The gross profit margin
for the Aluminium Alloy Division remained stable at about 38% for the two financial years.
Our profit before income tax by business activities is set out below:
Business segments
(S$’ 000)
PE Pipe Division
Corporate Division
Unallocated interest expenses
Total
FY2006
25,400
4,870
298
(2,088)
(757)
27,723
FY2005
17,266
5,803
(1,324)
(642)
21,103
Change
8,134
(933)
298
(764)
(115)
6,620
%
47.1
(16.1)
NM
(57.7)
(17.9)
31.4
Other operating income increased by approximately S$0.8 million in FY2006. This was mainly due to higher interest income from interest
earnings deposits.
Administrative expenses increased by about S$2.0 million in FY2006 mainly as a result of operating expenses incurred at our Agency and
Procurement Division of about S$0.7 million (which commenced operations only in FY2006), higher share-based payment expenses of about
S$0.7 million and also higher administrative expenses incurred at our Aluminium Alloy Division due to expanded scope of business.
Finance costs increased by 17.9% or S$0.1 million in FY2006 due to a higher level of borrowings during the 2nd half of FY2006.
Income tax expense for FY2006 decreased by 22.5% despite higher profits. This was mainly due to a tax rebate amounting to about S$0.9
million granted to our subsidiary, Jilin Midas Aluminium Industries Co., Ltd. In addition, Jilin Midas Aluminium Industries Co., Ltd was granted
tax concessions whereby the profits generated from the new 55 MN production line for the first two financial years beginning with the first
profit making year is exempt from income tax and profit for each of the subsequent three financial years is taxed at 50% of the prevailing tax
rate set by local authority.
FY2006 ended with net profit attributable to shareholders of about S$25.6 million which represented a 39.5% increase over FY2005.
UPDATE ON USE OF PROCEEDS
Update on the usage of proceeds for the following placement exercises:
(a)
Placement of 100,000,000 new ordinary shares pursuant to the placement agreement dated 13 October 2004:
The net proceeds of S$34.64 had been fully utilised for the purchase of the new 55MN production line for the Aluminium Alloy
Division.
(b)
Placement of 76,500,000 new ordinary shares pursuant to the placement agreement dated 9 May 2006:
The net proceeds of S$61.4 million had been utilised as follows:
(i)
S$29.7 million as capital injection for the acquisition of 32.5% interest in new associate, Puzhen.
(ii)
S$8.1 million for the acquisition of plant and machinery for our Aluminium Alloy Division, including welding, straightening,
bending and other auxiliary machinery which are used for downstream processes. Approximately S$2.3 million has been set
aside for the remaining payments in relation to the machinery which are used for downstream processes and will be disbursed
accordingly when the payments are due, and
(iii)
The remaining balance of approximately S$21.3 million is being held for general corporate and working capital requirements.
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Risk Management
Business Risk
Our revenue is mainly derived in the PRC from the sales of aluminium alloy extrusion products and PE Pipes for the transport and infrastructure
industries. We intend to further our growth opportunities by marketing our products overseas to minimise any over reliance on the local PRC
markets. During the previous two financial years, the Group has successfully exported its aluminium alloy extrusion profiles for the Singapore
Circle Line Project and the Metro Oslo MRT Project in Norway. In early 2007, we have further secured two contracts to supply aluminium
alloy profiles for the Valero Rus Project in Russia and and the Desiro Mainline Project for the European and Ex-European markets.
The raw materials used in our manufacturing processes are plastic resins (for our PE Pipe Division) and aluminium alloy billets (for our
Aluminium Alloy Division). Raw materials make up a significant component of the cost of sales. We are therefore vulnerable to fluctuations
in the prices of these raw materials and components. We generally do not purchase or store raw materials in advance. Purchases of raw
materials are generally made in response to customers’ order. Our Group makes use of this natural hedge to minimise any impact of
fluctuations in raw materials prices on our Group’s profitability.
Interest Rate Risk
The Group’s cash balances are placed with reputable banks and financial institutions. Financing is obtained through bank borrowings. Our
Group’s policy is to obtain the most favourable rates available.
Liquidity Risk
The objective of liquidity management is to ensure that our Group has sufficient funds to meet our contractual and financial obligations.
Management is of the view that there is no liquidity risk as our Group maintain adequate lines with financial institutions and the cash flow from
operations is sufficient for present working capital requirements.
Foreign Currency Risk
Our revenue is denominated mainly in RMB and our purchases/expenses are also mainly incurred in RMB. Our Group makes use of natural
hedge in the above situation to minimise exposure to foreign currency movements.
However, our Company’s working capital is derived from dividend income from our subsidiaries. Hence, our Company would be exposed to
foreign exchange risks when our Company receives dividends from our PRC subsidiaries.
Our Group currently does not have a formal hedging policy with respect to our foreign exchange exposure as we do not currently have a
significant foreign exchange currency exposure in our operations.
Credit Risk
Our Group performs ongoing credit evaluation of our customers’ financial condition and generally does not require collateral. This evaluation
includes assessing and valuation of customers’ credit reliability and periodic review of their financial status to determine credit limits to be
granted.
The maximum exposure to credit risk in the event that the customers fail to perform their obligations as at the end of the financial year is the
carrying amount stated in the balance sheet.
The Group’s trade receivables are mainly located in the PRC. There are no concentrations of credit risk with any customers or group of
customers.
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CORPORATE GOVERNANCE STATEMENT
Midas Holdings Limited (“the Company”) is committed to maintaining a high standard of corporate governance in complying with the
benchmark set by the Code of Corporate Governance 2005 (“the Code”) issued by the Ministry of Finance on 14 July 2005.
The main corporate governance practices that were in place since are set out below.
A
BOARD MATTERS
Board’s conduct of its affairs
The Board of Directors (“the Board”) supervises the management of the business and affairs of the Company and its subsidiaries (“the
Group”). The Board approves the Group’s corporate and strategic direction, appointment of Directors and key managerial personnel,
major funding and investment proposals, and reviews the financial performance of the Group.
To assist in the execution of its responsibilities, the Board has established an Audit Committee (“AC”), a Remuneration Committee
(“RC”) and a Nominating Committee (“NC”). Each of these committees has its own written terms of reference and whose actions
are reported to and monitored by the Board. The Company has adopted internal guidelines setting forth matters that require Board
approval.
The types of material transactions that require the Board’s approval under such guidelines included the following:
•
•
•
•
•
•
•
•
•
Approval of quarterly results announcement;
Approval of the annual reports and accounts;
Declaration of interim dividends and proposal of final dividends;
Convening of shareholders’ meetings;
Approval of broad policies, strategies and financial objectives of the Group and monitoring the performance of management;
Oversee the processes for evaluating the adequacy of internal controls, risk management, financial reporting and compliance;
Approval of nominations of Directors;
Approval of material acquisitions and disposals of assets; and
Authorisation of major transactions.
The Board comprises business leaders and professionals with financial backgrounds. Profiles of our Directors are found on pages 12
to 13 of this Report.
The Board conducts scheduled meetings on a regular basis. Ad hoc meetings will be convened to deliberate on urgent substantive
matters when necessary. Telephonic attendance and conference via audio-visual communications at Board meetings are allowed under
the Company’s Articles of Association. The attendance of the Directors at meetings of the Board and Board committees, as well as the
frequency of such meetings, is disclosed in Part E of this Report.
The Directors are provided with important and relevant information of the Company and the Group. The Directors are also provided
with the phone numbers and email addresses of the Company’s senior management and Company Secretary to facilitate access to
information.
Newly appointed Directors are given an orientation on the Group’s business strategies and operations, including factory visits to ensure
their familiarity with the Group’s operations and governance practices.
The Company Secretary and/or her representative attend(s) all Board meetings and, together with the Directors, is responsible for
ensuring that the Board procedures are followed and that applicable rules and regulations are complied with. The Company Secretary
and/or her representative administer(s), attend(s) and prepare(s) minutes of all Board and Board committee meetings.
Directors are welcome to request further explanations, briefings or informal discussions on any aspects of the Company’s operations
or business issues from the management. The Chief Executive Officer (“CEO”) will make the necessary arrangements for the briefings,
informal discussions or explanations required by the Directors.
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Board composition and balance
The Board comprises two Executive Directors and five Independent Directors. Key information regarding the Directors can be found
under the Board of Directors’ Profile section in this annual report.
Board
Committee as
Chairman or
Name of Director member
Chen Wei Ping
Chew Hwa Kwang,
Patrick
NA
Zhang Xingbo
NA
Chairman of AC
and RC, Member
of NC
Member of AC,
NC and RC
Chairman of NC,
Member of AC
and RC
NA
Chew Chin Hua
Gay Chee Cheong
Chan Kam Loon
Chan Soo Sen
NA
Directorship:
Date of first
appointment/
Date of last reelection
21 August 2002/
27 April 2005
17 November 2000/
27 April 2004
6 January 2004/
28 April 2006
Board
appointment:
Executive or
non-executive/
Independent
Due for re-election at next AGM
Executive
NA
Executive
Retirement pursuant to Article 91
Independent
NA
Independent
NA
Independent
18 February 2005/ 27
April 2005
Independent
29 June 2006
Independent
6 January 2004/
28 April 2006
23 June 2004/
27 April 2005
The independence of each Independent Director is reviewed annually by the NC. The NC adopts the Code’s definition of what
constitutes an Independent Director in its review, and the Company requires the Independent Directors to declare their independence
annually. As a result of the review of the independence of each Director for the year, the NC is satisfied with the independence of all
the Independent Directors.
Role of Chairman and CEO
The roles for both Chairman and CEO in the Company are separately assumed by Mr Chen Wei Ping and Mr Chew Hwa Kwang,
Patrick. As such, there is a clear division of responsibilities at the top of the Group. Mr Chen bears responsibility for the workings of
the Board and ensures that the procedures are introduced to comply with the Code while Mr Chew bears executive responsibility
for the Group’s business.
Nominating Committee (“NC”)
The NC comprises 3 Independent Directors:
•
•
•
Mr Chan Kam Loon, Chairman of the NC and Independent Director
Mr Chew Chin Hua, Independent Director
Mr Gay Chee Cheong, Independent Director
The principal functions of the NC are to:
•
•
•
•
•
Identify suitable candidates and review all nominations for the appointment to the Board of Directors before making
recommendations to the Board for appointment.
Assess the independence of the Directors annually and is of the opinion that the Directors who have been classified as
independent under the “Board of Directors” section are indeed independent.
Decide whether or not a Director is able to and has been adequately carrying out his duties as a Director of the Company
particularly where the Director has multiple board representations.
Access the effectiveness of the Board.
To recommend Directors who are retiring by rotation to be put forward for re-election, having regard to their contribution
and performance.
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The NC is of the view that the current Board comprises persons who as a group, provide core competencies necessary to meet
the Company’s targets and that the current board size is adequate, taking into account the nature and scope of the Company’s
operations.
Key information on the individual Directors of the Company is set out on pages 12 to 13 of this Annual Report. Their shareholdings
are also disclosed on page 27 of the Directors’ report. None of the directors hold shares in the subsidiaries of the Company.
Board Performance
The NC will use its best efforts to ensure that Directors appointed to the Board possess the relevant background, experience and
knowledge to enable balanced and well-considered decisions to be made. The performance criteria the NC will consider in relation to
an individual Director include the Director’s industry knowledge and/or functional expertise, contribution and workload requirements,
sense of independence and attendance at the Board and committee meetings. One of the NC’s responsibilities is to undertake a
review of the Board’s performance. The NC will consider practicable methods to assess the effectiveness of the Board.
B
REMUNERATION MATTERS
Remuneration Committee (“RC”)
The RC comprises 3 Independent Directors:
1.
2. 3. Mr Chew Chin Hua, Chairman of the RC and Independent Director
Mr Gay Chee Cheong, Independent Director
Mr Chan Kam Loon, Independent Director
The principal functions of the RC are to:
•
•
•
•
Review and advise the Board on the remuneration packages of senior management employees of the Group.
Review and approve annually the remuneration for the Directors.
Determine targets for any performance related pay schemes operated by the Company.
Administer the Midas Employees Share Option Scheme (“the Scheme”).
The members of the RC do not have specialised knowledge in the field of executive compensation. However, they have gained
experiences in this area via managing the business and/or the human resources matters of the Group and companies outside the
Group. The Company will ensure that the RC has access to expert advice on the human resource matter whenever there is a need
to consult externally. In setting remuneration packages, the Group takes into account pay and employment conditions within the same
industry and in comparable companies, as well as the Group’s performance and individual performance. No Director or executive will
be involved in deciding his own remuneration.
The remuneration packages for our Executive Chairman and Chief Executive Officer include a basic salary component as well as
a profit sharing component, which are performance related. Both our Executive Chairman and CEO have entered into service
agreements with the Group with effect from 1 January 2006 for a period of three years.
Independent Directors do not have service contracts with the Company. Independent Directors will receive directors’ fees, in
accordance with their contributions, taking into factors such as effort and time spent, responsibilities of the Directors and the need to
pay competitive fees to attract, retain and motivate the Directors. Director’s fees have been recommended by the Board for approval
at the Company’s Annual General Meeting (“AGM”).
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Disclosure on Remuneration
A breakdown of each individual Director’s remuneration, in percentage terms showing the level and mix for the year ended 31
December 2006, is as follows:
S$250,000 to S$499,999:
Chen Wei Ping
Below S$250,000:
Chew Chin Hua
Zhang Xingbo
Gay Chee Cheong
Chan Kam Loon
Chan Soo Sen
Fees
%
Salary
%
Other Benefits
%
Total
%
-
77
76
23
24
100
100
100
100
100
100
100
-
-
100
100
100
100
100
The remuneration of the top 5 key executives (who are not Directors) is not disclosed in this report. The Company believes that
disclosure of the remuneration of individual executives is disadvantageous to its business interests, in view of the shortage of talented
and experienced personnel in the industry.
There are no persons occupying managerial positions in the Company who are related to a Director or substantial shareholder of the
Company or any of its principal subsidiaries who earned more than S$150,000 per annum for the financial year ended 31 December
2006.
C
ACCOUNTABILITY AND AUDIT
Audit Committee (“AC”)
The AC comprises 3 Independent Directors:
• Mr Chew Chin Hua, Chairman of the AC and Independent Director
• Mr Gay Chee Cheong, Independent Director
• Mr Chan Kam Loon, Independent Director
The chairman of the AC, Mr Chew Chin Hua, is by profession a practicing Certified Public Accountant. Mr Chan Kam Loon is a member of the Institute of Chartered Accountants of England and Wales. Mr Gay Chee Cheong has many years of experience in business
and financial management. The AC members bring with them extensive managerial and financial expertise. All of them are also board
members of various listed companies in Singapore. The AC meets at least 4 times a year, with further meetings if circumstances require.
The Board is of the view that the members of the AC have sufficient financial management expertise and experience to discharge the
AC’s functions.
The AC assists the Board to maintain a high standard of corporate governance, particularly in the areas of effective financial reporting
and the adequacy of internal control systems of the Group.
During the year, the AC reviewed and approved the audit plans submitted by both the internal and external auditors.The AC reviewed
the findings and recommendations from the auditors. The AC also reviewed and discussed the announcements of the quarterly, half
year and full year results.
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The AC evaluates the assistance given by management to the external auditors and also reviews any interested person transactions.
The AC has full access to management and is given the resources required for it to discharge its functions. It has the full authority and
discretion to invite any Director or executive officer to attend its meetings.
The AC meets with the external auditors, without the presence of management, at least once a year.
The AC, having reviewed all non-audit services provided by the external auditors to the Group, is satisfied that the nature and extent of
such services would not affect the independence of the external auditors.The AC recommends BDO Raffles to the Board of Directors
for re-appointment as external auditors of the Company.
Internal Control
The Board believes that, in the absence of any evidence to the contrary, the system of internal control maintained by the Group
throughout the financial year and up to the date of this report, provides reasonable, but not absolute, assurance against material
financial misstatements or loss, and include the safeguarding of assets, the maintenance of proper accounting records, the reliability of
financial information, compliance with appropriate legislation, regulation and best practice, and the identification and containment of
business risk. The Board notes that no system of internal control could provide absolute assurance against the occurrence of material
errors, poor judgement in decision-making, human error, losses, fraud or other irregularities.
Internal Audit
The internal audit function is outsourced to a firm of certified public accountants.The internal auditors report directly to the Chairman
of the AC.The AC reviews and approves the annual internal audit plans and reviews the scope of internal audit procedures.The internal
auditors report to the AC directly their significant findings and recommendations arising from the internal audit carried out.
D
COMMUNICATIONS WITH SHAREHOLDERS
The Group is mindful of the obligation to provide regular, effective and fair communication with shareholders on a timely basis. The
Group does not practice selective disclosure. The Company holds analysts briefing after announcing its half-year and full-year results.
The announcements of results are published through the SGXNET and news releases. All information on the Company’s and/or the
Group’s new initiatives are first disseminated via SGXNET followed by a news release. Results and annual reports are announced or
issued within the mandatory period.
All shareholders of the Company receive the annual reports, circulars and notices of the shareholder’s meetings. The notices are
also advertised in newspapers. The Company encouraged shareholders to attend the AGM to ensure a high level of accountability
and to stay informed of the Company’s and/or the Group’s strategies and goals. The notice of this AGM has been dispatched to
the shareholders, at least 14 working days before the meeting. The Board welcomes questions from shareholders either formally or
informally before or at the AGM.
The Company’s Articles of Association allow a shareholder of the Company to appoint one or two proxies to attend and vote instead
of the shareholder.
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Director’s Attendance at Board & Committee Meetings
The number of Board and Committee meetings held in the financial year ended 31 December 2006 and the attendance at those
meetings were as follows:
Chen Wei Ping
Chew Chin Hua
Zhang Xingbo
Gay Chee Cheong
Chan Kam Loon
Chan Soo Sen
Board
Audit Committee
Total no. of meetings
held = 4
No. of meetings
attended
4/4
4/4
4/4
3/4
4/4
4/4
2/2
held = 4
No. of meetings
attended
NA
NA
4/4
NA
4/4
4/4
NA
Nominating
Committee
held = 1
No. of meetings
attended
NA
NA
1/1
NA
1/1
1/1
NA
Remuneration
Committee
held = 1
No. of meetings
attended
NA
NA
1/1
NA
1/1
1/1
NA
Securities Trading
The Group has adopted the best practices stipulated in Listing Rule 1207(18) of the SGX-ST Listing Manual with respect to the
dealings in securities for the guidance of Directors and officers. In line with the guidelines, Directors and executive officers of the
Group are not permitted to deal in the Company’s shares during the period commencing two weeks before the announcement of
the Group’s financial statements for each of the first three quarters of its financial year, or one month before the announcement of
the Group’s annual results and ending on the date of the announcement of the relevant results, or when they are in possession of any
unpublished price sensitive information on the Group.
Interested Person Transactions Policy
The Group has adopted an internal policy in respect of any transactions with interested persons and has set out the procedures for
periodic review and approval of these transactions by the AC.
Name of Interested Person
Aggregate value of all interested
person transactions during the
financial year under review
(excluding transactions less than
$100,000/- and transactions
conducted under shareholders’
mandate pursuant to Rule 920)
Chen Wei Ping
S$6.2 million
Aggregate value of all interested
person transactions conducted
under shareholders’ mandate
pursuant to Rule 920 (excluding
transactions less than $100,000/-) Nature of transaction
Unsecured interest free
loan to the Company
Risk Management
The Group regularly reviews and improves its business and operational activities to take into account the risk management perspective.
The Group seeks to identify areas of significant business risks as well as appropriate measures to control and mitigate these risks. The
Group reviews all significant control policies and procedures and highlights all significant matters to the AC.
Whistle-Blowing Program
The Company is in the process of establishing the whistle blowing procedure where employees within the Group may raise concerns
about possible improprieties in matters of business activities, financial reporting, and unethical or illegal conduct through well defined
and accessible channels.
Material Contracts
Save as disclosed, there are no other material contracts entered into by the Company and its subsidiaries involving the interest of the
CEO, director or controlling shareholder, which are either subsisting at the end of the financial year or, if not then subsisting, entered
into since the end of the previous financial year.
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REPORT OF THE DIRECTORS
The Directors are pleased to present their report to the members together with the audited consolidated financial statements of the Group
and the balance sheet and statement of changes in equity of the Company for the financial year ended 31 December 2006.
1.
Directors
The Directors of the Company in office at the date of this report are:
Mr. Chen Wei Ping Mr. Chew Hwa Kwang, Patrick
Mr. Zhang Xingbo
Mr. Chew Chin Hua
Mr. Gay Chee Cheong
Mr. Chan Kam Loon
Mr. Chan Soo Sen
(appointed on 29 June 2006)
2.
Arrangements to enable directors to acquire shares and debentures
Neither at the end of nor at any time during the financial year was the Company a party to any arrangement whose object is to enable
the Directors of the Company to acquire benefits by means of the acquisition of shares in or debentures of the Company or any other
body corporate, other than as disclosed under “Share Options” of this report.
3.
Directors’ interests in shares or debentures
According to the register of Directors’ shareholding kept by the Company for the purpose of Section 164 of the Singapore Companies
Act, Chapter 50 (“Act”), the Directors who were holding office at the end of financial year had interest in the shares or debentures of
the Company and its related corporations as detailed below:-
Name of Director
Direct interest
At beginning
of the financial
year or date of
appointment,
At end of the
if later
financial year
Deemed interest
At beginning
of the financial
year or date of
appointment,
At end of the
if later
financial year
The Company
Mr. Chen Wei Ping
288,905,200
204,905,200
-
-
Mr. Chew Hwa Kwang, Patrick
118,211,800
118,211,800
-
-
Mr. Zhang Xingbo
200,000
200,000
-
-
Mr. Chew Chin Hua
600,000
600,000
-
400,000
Mr. Gay Chee Cheong
22,200,000
33,400,000
-
-
Mr. Chan Kam Loon
-
93,000
105,000
130,000
Mr. Chan Soo Sen
-
-
-
-
By virtue of Section 7 of the Singapore Companies Act, Mr. Chen Wei Ping is deemed to be interested in the shares of all the
subsidiaries held by the Company as at the beginning and end of the financial year.
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REPORT OF THE DIRECTORS (CONTINUED)
3.
Directors’ interests in shares or debentures (Continued)
In accordance with the continuing listing requirements of the Singapore Exchange Securities Trading Limited, the Directors of the
Company state that, according to the register of directors’ shareholdings, the Directors’ interests as at 21 January 2007 in shares of the
Company and its related corporations have not changed from those disclosed as at 31 December 2006.
According to the register of directors’ shareholdings, certain directors holding office at the end of the financial year had interests in
options to subscribe for ordinary shares of the Company granted pursuant to the Midas Employee Share Option Scheme as set out
below:-
Name of Director
Exercise
price per
share
Exercise period
At beginning of
the financial
year or date
of appointment,
if later
$0.873
$0.873
$0.873
$0.873
$0.873
$0.873
11.5.2007 to 10.5.2012
11.5.2007 to 10.5.2012
11.5.2007 to 10.5.2012
11.5.2007 to 10.5.2012
11.5.2007 to 10.5.2012
11.5.2007 to 10.5.2012
-
At end of
the financial
year
1,500,000
1,500,000
400,000
400,000
400,000
200,000
Options to subscribe for ordinary shares
Mr. Chen Wei Ping
Mr. Zhang Xingbo
Mr. Gay Chee Cheong
Mr. Chew Chin Hua
Mr. Chan Kam Loon
4.
Corporate governance
The Board of Directors (the “Board”) is committed to ensuring that the highest standards of corporate governance are practiced
throughout Midas Holdings Limited (the “Company”) and its subsidiaries (the “Group”), as a fundamental part of its responsibilities to
protect and enhance shareholder value and the financial performance of the Group.
5.
Directors’ contractual benefits
Since the end of the previous financial year, no Director of the Company has received or become entitled to receive a benefit by reason
of a contract made by the Company or by a related corporation with the director or with a firm of which he is a member, or with a
company in which he has a substantial financial interest, except as disclosed in the financial statements.
6. Share options
Midas Employee Share Option Scheme
The Midas Employee Share Option Scheme (“the Scheme”) was approved by the shareholders of the Company at an Extraordinary
General Meeting held on 6 January 2004. The Scheme is administered by the Company’s Remuneration Committee, comprising of Mr.
Chew Chin Hua, Mr. Gay Chee Cheong and Mr. Chan Kam Loon.
Under the Scheme, an option entitles the option holder to subscribe for a specific number of new ordinary shares in the Company
comprised in the option at a subscription price per share determined with reference to the market price of the share at the time of
grant of the option. The Remuneration Committee may at its discretion, fix the subscription price at a maximum discount of 20% off
the market price. Options granted with the subscription price set at the market price shall only be exercised after the first anniversary
from the date of the grant of the option. Options granted with the market price set at a discount to the market price shall only be
exercised after the second anniversary from the date of the grant of the option.The shares under option may be exercised in whole or
in part thereof. Options granted will lapse when the option holder ceases to be a full-time employee of the Company or any Company
of the Group subject to certain exceptions at the discretion of the Company.
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6. Share options (Continued)
The number of shares available under the Scheme shall not exceed 15% of the issued share capital of the Company.
The scheme became operative with options to subscribe for 2,500,000 ordinary shares of the Company being granted on 18 May
2005 (“2005 Options”). Particulars of the 2005 Options were set out in the Directors’ Report for the financial year ended 31
December 2005.
On 11 May 2006, options to subscribe for 4,950,000 ordinary shares of the Company at an exercise price of $0.873 per share were
granted (“2006 Options”). The 2006 Options are exercisable from 11 May 2007 and expire on 10 May 2012.
The details of options granted and exercised during the financial year were as follows:-
Option participants
Granted
in financial
year end
31.12.2006
Aggregate
granted since
commencement
of scheme to
31.12.2006
Aggregate
exercise since
commencement
of scheme to
31.12.2006
Aggregate
outstanding
as at
31.12.2006
1,500,000
1,500,000
400,000
400,000
400,000
200,000
1,500,000
1,500,000
400,000
400,000
400,000
200,000
-
1,500,000
1,500,000
400,000
400,000
400,000
200,000
550,000
3,050,000
600,000
2,450,000
Directors of the Company
Mr. Chen Wei Ping
Mr. Zhang Xingbo
Mr. Gay Chee Cheong
Mr. Chew Chin Hua
Mr. Chan Kam Loon
Other executives
During the financial year, there were 3,000,000 share options granted to controlling shareholders of the Company at the financial year
pursuant to the Midas Employee Share Option Scheme.
No other key management or employee has received options on 5% or more of the total number of shares available under the scheme
during the financial year. No other director or employee of the Company and its subsidiaries (as defined in the Singapore Exchange
Securities Trading Listing Manual) has received options on 5% or more of the total number of shares available to all directors and
employees of the Company and its subsidiaries under the Scheme during the financial year.
During the financial year, the Company issued a total of 600,000 ordinary shares at exercise price of $0.28 each, pursuant to the Midas
Employee Share Option Scheme to take up unissued shares of the Company or its subsidiaries.
According to the register of directors’ shareholdings, there were 4,400,000 share options granted to Directors of the Company at the
end of the financial year pursuant to the Midas Employee Share Option Scheme.
The number of unissued ordinary shares of the Company under options outstanding at the end of the financial year is as follows:
Number
outstanding at
31.12.2006
Exercise price
Exercise period
2005 Options
1,900,000
$0.28
18.5.2006 to 17.5.2011
2006 Options
4,950,000
$0.873
11.5.2007 to 10.5.2012
Option relating to Midas Employee
Share Option Scheme
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7.
Audit committee
The members of the Audit Committee during the financial year and the date of this report are:
Mr. Chew Chin Hua (Chairman)
Mr. Gay Chee Cheong
Mr. Chan Kam Loon
- Independent Director
The Audit Committee performs the functions specified in Section 201B of the Singapore Companies Act.
The Audit Committee has held four meetings since the last directors’ report. In performing its functions, the Audit Committee met
with the Company’s external and internal auditors to discuss the scope of their work, the results of their examination and evaluation
of the Company’s internal accounting control system.
The Audit Committee also reviewed the following:
•
the Group’s financial and operating results and accounting policies;
•
the quarterly, half-yearly and annual announcements as well as the related press releases on the results and financial position of
the Company and the Group;
•
the co-operation and assistance given by the management to the Group’s internal and external auditors;
The Audit Committee has recommended to the Board that the auditors BDO Raffles, be nominated for re-appointment at the
forthcoming Annual General Meeting of the Company.
8.
Auditors
The auditors, BDO Raffles, have expressed their willingness to accept re-appointment.
On behalf of the Board of Directors
________________________________
MR. Chen wei ping
Director
__________________________________
MR. chew hwa kwang, patrick
Director
Singapore
1 March 2007
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STATEMENT BY THE DIRECTORS
The Board of Directors is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with
the provisions of the Singapore Companies Act, Cap. 50 (the “Act”) and Singapore Financial Reporting Standards. This responsibility includes:
designing, implementing and maintaining internal control relevant to the preparation and fair presentation of consolidated financial statements
that are free from material misstatements, whether due to fraud or error; selecting and applying appropriate accounting policies; and making
accounting estimates that are reasonable in the circumstances.
In our opinion:
(a)
the accompanying consolidated financial statements of the Group and the balance sheet and statement of changes in equity of the
Company are properly drawn up in accordance with the provisions of the Act and Singapore Financial Reporting Standards so as to give
a true and fair view of the state of affairs of the Group and of the Company as at 31 December 2006 and of the results, consolidated
statement of changes in equity and consolidated cash flow statements of the Group and changes in equity of the Company for the
financial year ended on that date; and
(b)
at the date of this statement, there are reasonable grounds to believe that the Company will be able to pay its debts as and when they
fall due.
On behalf of the Board of Directors
________________________________
MR. CHEN WEI PING
Director
__________________________________
MR. CHEW HWA KWANG, PATRICK
Director
Singapore
1 March 2007
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INDEPENDENT AUDITORS’ REPORT
THE MEMBERS OF MIDAS HOLDINGS LIMITED
We have audited the accompanying consolidated financial statements of Midas Holdings Limited (“the Company”) and its subsidiaries
(collectively the “Group”) as set out on pages 34 to 68, which comprise the balance sheets of the Group and of the Company as at 31
December 2006, profit and loss account, statement of changes in equity and cash flow of the Group and the statement of changes in equity of
the Company for the financial year then ended, and a summary of significant accounting policies and other explanatory notes.
Directors’ Responsibility for the Financial Statements
The Company’s Directors are responsible for the preparation and fair presentation of these financial statements in accordance with the
provisions of the Singapore Companies Act, Cap. 50 (the “Act”) and Singapore Financial Reporting Standards. This responsibility includes:
designing, implementing and maintaining internal controls relevant to the preparation and fair presentation of financial statements that are free
from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting
estimates that are reasonable in the circumstances.
Auditor’s Responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with
Singapore Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain
reasonable assurance whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements.The procedures
selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether
due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair
presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose
of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting
policies used and the reasonableness of accounting estimates made by Directors, as well as evaluating the overall presentation of the financial
statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
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(CONTINUED)
THE MEMBERS OF MIDAS HOLDINGS LIMITED
Opinion
In our opinion,
(a) the consolidated financial statements of the Group and the balance sheet and statement of changes in equity of the Company are
properly drawn up in accordance with the provisions of the Act and Singapore Financial Reporting Standards so as to give a true and
fair view of the state of affairs of the Group and of the Company as at 31 December 2006 and of the results, changes in equity and cash
flows of the Group and changes in equity of the Company for the financial year ended on that date; and
(b) the accounting and other records required by the Act to be kept by the Company and by those subsidiary companies incorporated in
Singapore of which we are the auditors have been properly kept in accordance with the provisions of the Act.
BDO Raffles
Certified Public Accountants
Singapore
1 March 2007
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BALANCE SHEETS
AS AT 31 DECEMBER 2006
Note
Non-current assets
Property, plant and equipment
Investment in subsidiaries
Investment in an associate
Land use rights
Prepaid rental
Due from subsidiaries
Pledged bank deposits
Current assets
Inventories
Trade and other receivables
Fixed deposits
Cash and cash equivalents
Less :
Current liabilities
Trade and other payables
Borrowings - secured
Due to a related party
Dividends payable
Current income tax payable
3
4
5
6
7
8
9
10
11
12
13
14
15
28
Net current assets/(liabilities)
Non-current liability
Borrowings – secured
14
Net assets
Capital and reserves
Share capital
Share premium
Foreign currency translation account
General reserve
Share option reserve
Accumulated profits
16
17
18
19
20
The accompanying notes form an integral part of these financial statements
34
The Group
2006
2005
$’000
$’000
The Company
2006
2005
$’000
$’000
64,559
29,729
1,894
29
5,366
1
9,682
29,729
99,010
-
40,035
2,035
32
6,139
101,577
48,241
9,804
43,493
6,972
42,972
7,521
36,938
23,937
138,422
328
4,200
3
6,837
74,735
81,575
4,528
48
345
103,241
68,396
14,611
13,772
6,203
4,209
183
7,088
3,689
7,279
1,912
2,211
38,978
22,179
10,629
9,638
64,263
46,217
(6,101)
(9,245)
(2,946)
(2,581)
162,894
91,877
128,878
(6,692)
7,366
799
32,543
30,593
36,537
(43)
4,883
118
19,789
162,894
91,877
82
6,203
4,209
135
-
393
396
7,279
1,912
51
-
132,321
72,330
128,878
799
2,644
30,593
36,537
118
5,082
132,321
72,330
A
N
N
U
A
L
R
E
P
O
R
T
2
0
0
6
CONSOLIDATED PROFIT AND LOSS ACCOUNT
FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2006
Note
2006
$’000
2005
$’000
104,764
70,473
Cost of sales
(70,523)
(44,313)
Gross profit
34,241
26,160
2,777
1,944
Selling and distribution expenses
(2,069)
(1,888)
Administrative expenses
(6,469)
(4,471)
(757)
(642)
Revenue
21
Other operating income
22
Finance cost
23
24
27,723
21,103
Income tax
26
(2,156)
(2,781)
25,567
18,322
Profit attributable to equity holders of the Company
Earnings per share (cents)
27
Basic
3.18
2.40
Dilutive
3.18
2.39
35
(36,537)
-
42
36,537
-
7,366
799
-
-
32,543
(10,330)
(2,483)
-
-
162,894
(10,330)
723
(1,192)
36
* Under the Companies (Amendment) Act 2005 effective 30 January 2006, the concepts of ‘par value’ and ‘authorised capital’ are abolished and the amount in the share premium account as
at 30 January 2006 became part of the Company’s share capital.
(6,692)
(42)
723
-
E
-
2,483
-
-
62,730
168
T
-
-
-
18,918
I
-
-
25,567
(6,649)
25,567
(6,649)
M
128,878
-
(1,192)
-
-
25,567
-
I
-
-
-
-
L
-
-
-
-
S
(6,649)
-
-
G
Balance at 31 December 2006
-
62,730
168
28
-
-
Total recognised gains for the financial year
Issue of shares
- Private placement
- Option shares
Share issue expenses
- Private placement
Transfer of option reserve to share capital
upon exercise of ESOS
Transfer from share premium*
Dividends
Transfer to general reserve
Value of employee services
(6,649)
-
(6,649)
91,877
N
-
-
Net gains recognised directly in equity
-
19,789
21,028
(7,648)
118
I
-
-
18,322
(5,736)
(1,759)
-
2,706
18,322
2,706
78,379
D
Translation adjustment
118
(1,912)
-
18,322
-
8,962
L
4,883
118
-
-
1,912
Total
$’000
O
(43)
1,759
-
-
-
-
Accumulated
profits
$’000
H
36,537
2,706
-
-
-
3,124
Proposed
dividend
$’000
S
-
2,706
-
2,706
(2,749)
Share
option
reserve
$’000
A
30,593
-
Total recognised gains for the financial year
Dividends
Transfer to general reserve
-
-
36,537
General
reserve
$’000
D
-
Net gains recognised directly in equity
28
-
30,593
Share
premium
$’000
Foreign
currency
translation
account
$’000
I
Translation adjustment
Balance at 1 January 2005
The Group
Note
Share
capital
$’000
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
M
D
- Option shares
-
-
-
-
799
723
-
-
-
-
-
-
2,644
-
(10,330)
7,892
-
-
132,321
723
(10,330)
7,892
-
-
(1,192)
37
* Under the Companies (Amendment) Act 2005 effective 30 January 2006, the concepts of ‘par value’ and ‘authorised capital’ are abolished and the amount in the share premium account as
at 30 January 2006 became part of the Company’s share capital.
-
-
168
62,730
0
128,878
-
-
-
-
72,330
118
0
-
(42)
-
5,082
-
2
28
(36,537)
-
-
9,521
(7,648)
T
Dividends
42
-
-
-
9,521
(5,736)
R
36,537
-
-
(1,912)
O
Transfer from share premium*
(1,192)
-
-
118
118
-
P
- Private placement
Transfer of option reserve to share capital
upon exercise of ESOS
168
-
70,339
E
Share issue expenses
62,730
36,537
-
-
-
1,297
R
- Private placement
-
$’000
Total
L
Issue of shares
30,593
-
-
-
$’000
Accumulated
profits
A
-
1,912
$’000
Proposed
dividend
U
28
-
$’000
Share option
reserve
N
Dividends
36,537
$’000
$’000
30,593
Share
premium
Share
capital
N
The Company
Note
STATEMENT OF CHANGES IN EQUITY
A
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CONSOLIDATED CASH FLOW STATEMENT
Cash flows from operating activities
Adjustments for:
Depreciation of property, plant and equipment
Allowance for doubtful trade receivables
Amortisation of land use rights
Amortisation of prepaid rental
Property, plant and equipment written off
Cost of share based-payment
Interest expense
Interest income
Loss on disposal of property, plant and equipment
2006
$’000
2005
$’000
27,723
21,103
4,367
41
43
2
250
723
757
(995)
154
3,794
23
43
2
4
118
642
(46)
-
Operating profits before changes in working capital
(Increase)/decrease in inventories
Increase in trade and other receivables
Increase/(decrease) in trade and other payables
33,065
(2,283)
(6,596)
7,523
25,683
748
(10,136)
(820)
Cash generated from operations
Interest paid
Interest received
Income tax paid
31,709
(757)
995
(4,182)
15,475
(642)
46
(1,748)
Net cash from operating activities
27,765
13,131
Cash flows from investing activities
Proceeds from disposal of property, plant and equipment
Purchase of property, plant and equipment
Increase in fixed deposits
Decrease/(increase) in pledged bank deposits
24
(31,668)
(6,972)
(29,729)
773
5
(10,029)
(3,438)
Net cash used in investing activities
(67,572)
Cash flows from financing activities
Net proceeds from issuance of share capital
Dividends paid
Decrease in amount due to a related party
Repayment of bank loans
Net increase in bank borrowings
Net repayment of liabilities under finance lease
61,748
(6,121)
(723)
(1,076)
10,477
(29)
(13,462)
(5,736)
(118)
(1,173)
(2,273)
(98)
Net cash from/ (used in) financing activities
64,276
(9,398)
Net effect of exchange rate changes in consolidating subsidiaries
(5,434)
1,096
Net increase / (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of the financial year
19,035
23,937
(8,633)
32,570
Cash and cash equivalents at end of the financial year
42,972
23,937
38
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N
N
U
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O
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2
0
0
6
NOTES TO THE FINANCIAL STATEMENTS
These notes form an integral part of and should be read in conjunction with the accompanying financial statements.
1.
General corporate information
The principal activity of the Company is that of investment holding.
2.
Summary of significant accounting policies
The Company is a public limited liability company incorporated and domicile in the Republic of Singapore with its registered office and
principal place of business at No. 2 Shenton Way, #04-01 SGX Centre 1, Singapore 068804 and is publicly traded on the Singapore
Exchange Securities Trading Limited.
The principal activities of the subsidiaries are set out in Note 4 to the financial statements.
(a)
Basis of preparation of financial statements
The financial statements have been prepared in accordance with the provision of the Singapore Companies Act, Cap. 50 (the
“Act”) and Singapore Financial Reporting Standards (“FRS”). The financial statements are presented in Singapore dollars and
rounded to the nearest thousand, unless otherwise stated. They are prepared under the historical cost convention.
The preparation of financial statements in conformity with FRS requires management to exercise its judgment in the process
of applying the Group’s accounting polices. It also requires the use of accounting estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements, and the
reported amounts of revenues and expenses during the financial year. Although these estimates are based on management’s
best knowledge of current events and actions, actual results may ultimately differ from those estimates.
On 1 January 2006, the Group adopted the new or revised FRS and Interpretations to FRS (INT FRS) that are mandatory for
application from that date. Changes to the Group’s accounting policies have been made as required, in accordance with the
relevant transitional provisions in the respective FRS and INT FRS. The adoption of the above FRS and INT FRS did not result
in substantial changes to the Group’s accounting policies.
FRS and INT FRS issued but not yet effective
The Company has not adopted the following FRS and INT FRS that have been issued but not yet effective:
Effective date
(Financial periods
beginning on or
after)
FRS 1
FRS 40
FRS 108
FRS 107
INT FRS 107
:
:
:
:
:
Amendments to FRS 1 (revised), Presentation of financial statements
(Capital Disclosure)
Investment Property
Operating Segments
Financial Instruments: Disclosures
Applying the Restatement Approach under FRS 29 Financial Reporting in
Hyperinflationary Economies
1 January 2007
1 January 2007
1 January 2009
1 January 2007
1 March 2006
39
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2.
Summary of significant accounting policies (Continued)
(a)
Basis of preparation of financial statements (Continued)
INT FRS 108
INT FRS 109
INT FRS 110
INT FRS 111
INT FRS 112
:
:
:
:
:
Scope of FRS 102
Reassessment of Embedded Derivatives
Interim Financial Reporting and Impairment
FRS 12 – Group and Treasury Share Transactions
Service Concession Arrangements
Effective date
(Financial periods
beginning on or
after)
1 May 2006
1 June 2006
1 November 2006
1 March 2007
1 January 2008
The Company expects that the adoption of the above pronouncements, if applicable, will have no material impact on the
financial statements in the period of initial application.
(b)
Subsidiaries
Subsidiaries are entities (including special purpose entities) over which the Group has power to govern the financial and
operating policies, generally accompanying a shareholding of more than one half of the voting rights. The existence and effect
of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Group
controls another entity.
In the Company’s separate financial statements, investments in subsidiaries are accounted for at cost less impairment losses.
(c)
Consolidation
The purchase method of accounting is used to account for the acquisition of subsidiaries. The cost of an acquisition is measured
as the fair value of the assets given, equity instruments issued or liabilities incurred or assumed at the date of exchange, plus
costs directly attributable to the acquisition. Identifiable assets acquired and liabilities and contingent liabilities assumed in a
business combination are measured initially at their fair values on the date of acquisition, irrespective of the extent of any
minority interest.
Subsidiaries are consolidated from the date on which control is transferred to the Group to the date on which that control
ceases. In preparing the consolidated financial statements, inter-company transactions, balances and unrealised gains on
transactions between group companies are eliminated. Unrealised losses are also eliminated unless the transaction provides
evidence of an impairment of the asset transferred. Where necessary, adjustments are made to the financial statements of
subsidiaries to ensure consistency of accounting policies with those of the Group.
(d)
Associates
An associate is an entity over which the Group has significant influence and that is neither a subsidiary nor an interest in joint
venture. Significant influence is the power to participate in the financial and operating policy decisions of the investee but is not
control or joint control over those policies.
The results and assets and liabilities of associates are incorporated in these consolidated financial statements using the equity
method of accounting, except when the investment is classified as held for sale, in which case it is accounted for under FRS 105
Non-current Assets Held for Sale and Discounted Operations. Under the equity method, investments in associates are carried
in the consolidated balance sheet at cost as adjusted for post-acquisitions changes in the Group’s interest in that associate
(which includes any long-term interests that, in substance, form part of the Group’s net investment in the associate) are not
recognised.
Any excess of the cost of acquisition over the Group’s share of the net fair value of the identifiable assets, liabilities and
contingent liabilities of the associate recognised at the date of acquisition is recognised as goodwill. The goodwill is included
within the carrying amount of the investment and is assessed for impairment as part of the investment. Any excess of the
Group’s share of the net fair value of the identifiable assets, liabilities and contingent liabilities over the cost of acquisition, after
assessment, is recognised immediately in the consolidated profit and loss statement.
Where a group entity transacts with an associate of the Group, profit and losses are eliminated to the extent of the Group’s
interest in the relevant associate.
40
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2.
(e)
Property, plant and equipment are stated at cost less accumulated depreciation and impairment in value, if any.
The cost of property, plant and equipment comprises its purchase price and any direct attributable cost of bringing the
property, plant and equipment to working condition for its intended use. Expenditure for additions, improvements and renewals
are capitalised and expenditure for maintenance and repairs are charged to the consolidated profit and loss account. Upon
disposal, the difference between the disposal proceeds and the carrying amount is charged or credited to the consolidated
profit and loss account.
Depreciation is charged so as to write off the cost of assets over their estimated useful lives, using the straight-line method on
the following bases:
Buildings and improvements3% to 5%
Plant and equipment5% to 20%
Motor vehicles10% to 20%
Office equipment10%
No depreciation is charged on the construction-in-progress until the asset is ready for use.
Fully depreciated property, plant and equipment are retained in the financial statements until such time when they are no
longer in use.
Assets held under finance lease arrangements are depreciated over their expected useful lives on the same basis as owned
assets, or where shorter, the term of the relevant leases.
The residual values, useful life and depreciation method are reviewed at each balance sheet date to ensure that the residual
values, period of depreciation and depreciation method are consistent with previous estimates and expected pattern of
consumption of the future economic benefits embodied in the items of property, plant and equipment.
(f)
Land use rights
Land use rights are stated at cost less accumulated amortisation and any impairment losses. Amortisation is calculated on the
straight-line basis to write off the cost of the land use rights over the lease terms.
.
(g)
Impairment of non-financial assets
The carrying amounts of the non-financial assets are reviewed at each balance sheet date to determine whether there is any
indication of impairment in value. If any such indication exists, the assets’ recoverable amount is estimated.
An impairment in value is recognised whenever the carrying amount of an asset or its cash-generating unit exceeds its
recoverable amount. A cash-generating unit is the smallest identifiable asset group that generates cash flows that largely are
independent from other assets and groups. Impairment in value is recognised in the consolidated profit and loss account unless
it reverses a previous revaluation, credited to equity, in which case it is charged to equity.
The recoverable amount of an asset or cash-generating unit is the higher of its fair value less costs to sell and its value in
use. Recoverable amount is determined for individual asset, unless the asset does not generate cash inflows that are largely
independent of those from other assets or groups of assets. The fair value less costs to sell is the amount obtainable from
the sale of an asset or cash-generating unit in an arm’s length transaction between knowledgeable, willing parties, less costs of
disposal. Value in use is the present value of estimated future cash flows expected to arise from the continuing use of an asset
and from its disposal ant the end of its useful life, discounted at a pre-tax rate that reflects current market assessments of the
time value of the money and the risks specific to the asset or cash-generating unit for which the future cash flow estimates
have not been adjusted.
41
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2.
(g) Impairment of non-financial assets (Continued)
An assessment is made at the balance sheet as to whether there is any indication that an impairment in value recognised
in prior periods for an asset may no longer exist or may have decreased. If such indication exists, the recoverable amount is
estimated. An impairment in value recognised in prior periods is reversed if there has been a change in the estimates used to
determine the recoverable amount since that last impairment in value was recognised. An impairment in value is reversed only
to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of
depreciation or amortisation, if no impairment in value had been recognised. Reversals of impairment in value are recognised
in the consolidated profit and loss account unless the asset or cash is carried at revalued amount, in which case the reversal in
excess of impairment in value recognised in the consolidated profit and loss account in prior periods is treated as a revaluation
increase. After such a reversal, the deprecation or amortisation is adjusted in future periods to allocate the asset’s revised
carrying amount, less any residual value, on a systematic basis over its remaining useful life.
(h)
Inventories
Inventories are stated at the lower of cost and net realisable value. Cost is determined on a weighted average basis. The cost of
finished goods and work-in-progress comprise raw materials, direct labour, other direct costs and related production overheads
(based on normal operating capacity) but exclude borrowing costs. The net realisable value is the estimated selling price in the
ordinary course of business less the cost of completion and selling expenses.
(i)
Financial assets
(a)
Classification
Financial assets of the Group within the scope of FRS 39 comprise loans and receivables, which are non-derivative
financial assets with fixed or determinable payments that are not quoted in an active market.
When financial assets are recognised initially, they are measured at fair value. Management determines the classification
of its financial assets at initial recognition and re-evaluates this designation at every reporting date.
Loans and receivables of the Group are carried at amortised cost using the effective interest method. Gains or losses
are recognised in the consolidated profit and loss account when the loans and receivables are derecognised or impaired
as well as through the amortisation process.
(i)
Trade and other receivables are classified and accounted for as loans and receivables under FRS 39.
An allowance for doubtful receivables is established when there is objective evidence that the Group will not be
able to collect all amounts due according to the original terms of the receivables. The amount of the allowance
is recognised in the consolidated profit and loss account.
(j)
Cash and cash equivalents
Cash consists of cash on hand and cash with banks. Cash equivalents are short-term, highly liquid investments that are readily
convertible to known amounts of cash and are subject to an insignificant risk of changes in value.
42
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0
0
6
2.
(k)
Financial liabilities
The accounting policies adopted for specific financial liabilities are set out below:(i)
Trade and other payables are carried at cost which represents the fair value of the consideration to be paid in the future
for goods and services received and subsequently measured at amortised cost using the effective interest method.
Gains and losses are recognised in the consolidated profit and loss account when the liabilities are derecognised as well
as through the amortisation process.
(ii)
Borrowings
Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently stated at
amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption value is taken to
the consolidated profit and loss account over the period of the borrowings using the effective interest method.
Gains or losses are recognised in the consolidated profit and loss account when the liabilities are derecognised as well
as through the amortisation process.
(l)
Provisions
Provision are recognised when the Group has a present obligations as a result of a past event and it is probable that the Group
will be required to settle that obligations. Provision are measured at the Directors’ best estimate of the expenditure required
to settle the obligation at the balance sheet date, and are discounted to present value where the effect is material.
(m) Leases
When a group company is the lessee:
Finance leases
Leases of assets in which the Group assumes substantially the risks and rewards of ownership are classified as finance leases.
Finance leases are capitalised at the inception of the lease at the lower of the fair value of the leased property and the present
value of the minimum lease payments. Each lease payment is allocated between the liability and finance charges so as to achieve
a constant rate on the finance balance outstanding.
The corresponding rental obligations, net of finance charges, are included in borrowings.The interest element of the finance cost
is taken to the consolidated profit and loss account over the lease period so as to produce a constant periodic rate of interest
on the remaining balance of the liability for each period.
Operating lease
Leases of assets in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified
as operating leases. Payments made under operating leases (net of any incentives received from the lessor) are taken to the
consolidated profit and loss account on a straight-line basis over the period of the lease.
When an operating lease is terminated before the lease period has expired, any payment required to be made to the lessor
by way of penalty is recognised as an expense in the period in which termination takes place.
43
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2.
(n)
Employee benefits
Defined contribution plan
Contributions to defined contribution plans are recognised as an expense in the consolidated profit and loss account in the
same financial year as the employment that gives rise to the contributions.
Pursuant to the relevant regulations of the PRC government, the subsidiaries in the PRC have each participated in a local
municipal government retirement benefits scheme (the “Scheme”), whereby the subsidiaries in the PRC are required to
contribute a certain percentage of the basic salaries of its employees to the Scheme to fund their retirement benefits.The local
municipal government undertakes to assume the retirement benefits obligations of all existing and future retired employees
of the subsidiaries in the PRC. The only obligation of the Group with respect to the Scheme is to pay the ongoing required
contributions under the Scheme mentioned above.
Contributions under the Scheme are charged to the consolidated profit and loss account as incurred. There are no provisions
under the Scheme whereby forfeited contributions may be used to reduce future contributions.
Employee leave entitlement
Employment entitlements to annual leave are recognised when they accrue to the employees. An accrual is made for estimated
liability for annual leave as a result of services rendered by employees up to the balance sheet date.
Share-based payment
Where share options are awarded to employees, the fair value of the options at the date of grant is charged to the consolidated
profit and loss account over the vesting period. Non-market vesting conditions are taken into account by adjusting the number
of equity instruments expected to vest at each balance sheet date so that, ultimately, the cumulative amount recognised over
the vesting period is based on the number of options that eventually vest. Market vesting conditions are factored into the
fair value of the options granted. As long as all other vesting conditions are satisfied, a charge is made irrespective of whether
the market vesting conditions are satisfied. The cumulative expense is not adjusted for failure to achieve a market vesting
condition.
Where the terms and conditions of options are modified before they vest, the increase in the fair value of the options,
measured immediately before and after the modification, is also charged to the consolidated profit and loss account over the
remaining vesting period.
Where equity instruments are granted to persons other than employees, the consolidated profit and loss account is charged
with the fair value of goods and services received.
Fair value is measured using the Hull-White pricing model. Under this pricing model, the fair value take into account the impact
of events, such as the early exercise of options by employees or employee exit rates after vesting, which occur during the term
of the option. The exit rate is defined as the probability that an employee will leave the company during the vesting period. The
Hull-White model also incorporates the employee’s early exercise strategy or possibility of the employee’s termination after
the vesting period. It assumes that early exercise may occur when the stock price is a certain multiple of the exercise price.The
exercise multiple is defined as the average ratio of the stock price to the exercise price at the time of exercise.
(o)
Share capital
Ordinary share capital is recognised at the fair value of the consideration received by the Company.
Incremental costs directly attributable to the issuance of new equity instruments are taken to equity as a deduction, net of tax,
from the proceeds.
44
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6
2.
(p)
Revenue recognition
Revenue is measured at the fair value of the consideration received or receivable and represents amounts receivable for goods
and services provided in the normal course of business, net of discounts and sales related taxes.
Sales of goods recognised when goods are delivered and title has been passed.
Interest income is accrued on time basis, by reference to the principal outstanding and at the effective rate applicable.
Dividend income from investments is recognised when the shareholders’ right to receive payment has been established.
(q)
Income tax
Income tax for the financial year comprises current and deferred taxes. Income tax is recognised in the Consolidated profit and
loss account to the extent that it relates to items recognised directly in equity, in which case such income tax is recognised in
equity.
Current tax is the expected tax payable on the taxable income for the financial year, using tax rates enacted or substantially
enacted by the balance sheet date.
Deferred tax is provided for temporary differences at the balance sheet date between the tax bases of assets and liabilities and
their carrying amounts for financial reporting purposes. Deferred tax is measured using the tax rates expected to be applied
to the temporary differences when they are realised or settled, based on tax rates enacted or substantially enacted by the
balance sheet date.
Deferred tax assets are recognised only to the extent that it is probable that future taxable profits will be available against
which the temporary differences can be utilised. Deferred tax assets are reviewed at each balance sheet date and reduced to
the extent that it is no longer probable that the related tax benefits will be realised.
Unrecognised deferred tax assets are reassessed at each balance sheet date and are recognised to the extent that is has
become probable that future taxable profits will be available against which the temporary differences can be utilised.
Deferred tax assets and liabilities are offset if a legally enforceable right exists to set off current tax assets against tax liabilities
and the deferred taxes to the same tax authority and the Company intends to settle its current tax assets and liabilities on a
net basis.
(r)
Finance costs
Interest expense and similar charges are expensed in the consolidated profit and loss account in the financial year in which
they are incurred, except to the extent that they are capitalised as being directly attributable to the acquisition, construction
or production of an asset which necessarily takes a substantial period of time to be prepared for its intended use or sale. The
interest component of finance lease payments is recognised in the consolidated profit and loss account using the effective
interest rate.
(s)
Dividends
Equity dividends are recognised when they become legally payable. Interim dividends are recorded in the financial year in
which they are declared payable. Final dividends are recorded in the financial year in which the dividends are approved by the
shareholders.
Dividends proposed or declared after the balance sheet date are not recognised as a liability at the balance sheet date.
45
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A
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H
O
L
D
I
N
G
S
L
I
M
I
T
E
D
2.
(t)
Currency translation
(a)
Functional and presentation currency
The individual financial statements of each group entity are presented in the currency of the primary economic
environment in which the entity operates (its functional currency). The consolidated financial statements of the Group
and the balance sheet and statement of changes in equity of the Company are presented in Singapore dollars, which is
the functional currency of the Company and the presentation currency for the consolidated financial statements.
(b)
Transactions and balances
Transactions in a currency other than the functional currency (“foreign currency”) are translated into the functional
currency using the exchange rates prevailing at the dates of the transactions. Currency translation gains and losses
resulting from the settlement of such transactions and from the translation of monetary assets and liabilities denominated
in foreign currencies at the closing rates at the balance sheet date are recognised in the consolidated profit and
loss account, except for currency translation differences on the net investment in foreign operations, borrowings in
foreign currencies and other currency instruments qualifying as net investment hedges for foreign operations, which are
included in the currency translation reserve within equity in the consolidated financial statements.
Changes in the fair value of monetary securities denominated in foreign currencies classified as available-for-sale are
analysed into currency translation differences on the amortised cost of the securities, and other changes. Currency
translation differences on the amortised cost are recognised in the consolidated profit and loss account and other
changes are recognised in fair value reserve within equity.
Non-monetary items that are measured at fair values in foreign currencies are translated using the exchange rates
at the date when the fair values are determined. Currency translation differences on non-monetary items, whereby
the gains or losses are recognised in the consolidated profit and loss account, such as equity investments held at
fair value through profit or loss, are reported as part of the fair value gains or losses in “other gains/losses - net”.
Currency translation differences on non-monetary items whereby the gains or losses are recognised directly in equity,
such as equity investments classified as available-for-sale financial assets, investment properties and property, plant and
equipment are included in the fair value reserve and asset revaluation reserve respectively.
(c)
Translation of Group entities’ financial statements
The results and financial position of all the group entities (none of which has the currency of a hyperinflationary
economy) that have a functional currency different from the presentation currency are translated into the presentation
currency as follows:
(d) (i)
Assets and liabilities are translated at the closing rates at the date of the balance sheet;
(ii)
Income and expenses are translated at average exchange rates (unless the average is not a reasonable
approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income
and expenses are translated using the exchange rates at the dates of the transactions);and
(iii)
All resulting exchange differences are taken to the currency translation reserve within equity.
Consolidation adjustments
On consolidation, currency translation differences arising from the net investment in foreign operations, borrowings in
foreign currencies, and other currency instruments designated as hedges of such investments, are taken to the currency
translation reserve. When a foreign operation is sold, such currency translation differences recorded in the currency
translation reserve are recognised in the consolidated profit and loss account as part of the gain or loss on sale.
46
A
N
N
U
A
L
R
E
P
O
R
T
2
0
0
6
2.
(u)Key sources of estimation uncertainty
The key assumptions concerning the future and other key sources of estimation uncertainty at the balance sheet date, that
have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial
year are discussed below.
These assets are depreciated on a straight-line basis over their estimated useful lives. Management estimates the useful
lives of these assets to be within 5 to 30 years. The carrying amounts of the Group’s property, plant and equipment as
at 31 December 2006 were approximately $64,559,000 (2005: $40,035,000). Changes in the expected level of usage and
technological developments could impact the economic useful lives and the residual values of these assets, therefore future
depreciation charges could be revised.
Income taxes
The Group has exposure to income taxes in PRC and Singapore. Due to its inherent nature judgement is involved in determining
the Group’s provisions for income taxes.
The Group recognised liabilities for expected tax issues based on estimates of whether additional taxes will be due. Where the
final tax outcome of these matters is different from the amounts that were initially recognised, such differences will impact the
income tax and deferred tax provision in the financial year in which such determination is made. The carrying amount of the
Group’s current income tax payable as at 31 December 2006 was approximately $183,000 (2005: $2,211,000).
(v)
Critical judgement made in applying accounting policies
Judgement made by management in the application of FRS that has significant effect on the financial statements and in arriving
at estimates with a significant risk of material adjustment in the next financial year is discussed below.
Impairment of investments and financial assets
The Group follows the guidance of FRS 39 on determining when an investment of financial asset is other than temporarily
impaired. This determination requires significant judgement, the Group evaluates, among other factors, the duration and extent
to which the fair value of an investment or financial asset is less than its cost and the financial health of and near-term business
outlook for the investment or financial asset, including factors such as industry and sector performance, changes in technology
and operational and financing cash flow.
(w)
Segment reporting
A segment is a distinguishable component of the Group’s business that is engaged either in providing products or services
(business segment), or in providing products or services within a particular economic environment (geographical segment),
which is subject to risks and rewards that are different from those of other segments.
Segment information is presented in respect of the Group’s business and segments. The primary format, business segments, is
based on the Group’s management and internal reporting structure. Secondary segment information is not presented as the
Group’s principal activities and assets are located in the People’s Republic of China.
Inter-segment pricing is determined on an arm’s length basis.
Segment results, assets and liabilities include items directly attributable to a segment as well as those that can be allocated on
a reasonable basis. Unallocated items mainly comprise corporate assets and expenses.
Segment capital expenditure is the total cost incurred during the financial year to acquire segment assets that are expected to
be used for more than one financial year.
47
3.
18,294
At 31 December 2006
48
744
3,211
6,269
64,559
40,035
E
915
688
T
735
17,239
I
41,395
21,289
11,054
-
M
13,762
(733)
4,367
(114)
(43)
I
687
-
L
253
S
13,957
550
(28)
168
(3)
G
2,342
279
(14)
102
(114) -
N
10,910
(586)
3,633
- I
Net book value
At 1 January 2006
2,023
(105)
464
- (40) Accumulated depreciation
Exchange differences
Depreciation for the financial year
Disposals
Write off
81,798
D
3,211
L
1,431
53,797
(3,082)
31,668
(292)
(293)
Total
$’000
O
1,168
6,269
(266)
26,023
(28,815) -
Construction
-in -progress
$’000
H
55,352
1,238
(63)
259
- (3) Office
equipment
$’000
S
20,636
1,014
(53)
499
- (292) -
Motor
vehicles
$’000
A
32,199
(1,940)
4,514
20,581 (2) Plant and
equipment
$’000
D
13,077
(760)
373
8,234
- (288)
Building and
improvements
$’000
I
The Group
Cost
Additions
Transfers
Disposals
Write off
M
D
3.
11,054
At 31 December 2005
6,269
-
40,035
32,175
49
As at the balance sheet date, certain plant and machinery with net book value of approximately $26,224,000 (2005: $8,061,000) were pledged with financial institution as securities for
short-term and long-term loans. The net book value of motor vehicles purchased under finance lease contracts amounted to $Nil (2005: $312,000).
0
688
725
13,762
0
735
580
-
2
21,289
19,906
10,964
9,499
504
3,794
(14)
(21)
T
550
-
R
279
O
10,910
390
19
141
-
P
2,023
144
9
126
-
53,797
E
7,447
399
3,080
(14)
(2)
6,269
41,674
2,138
10,029
(19)
(25)
R
Net book value
At 1 January 2005
1,518
77
447
(19)
Accumulated depreciation
Disposals
Write off
1,238
82
6,187
-
L
1,014
Total
$’000
A
32,199
1,115
53
70
-
Construction
-in-progress
$’000
U
13,077
724
37
253
-
Office
equipment
$’000
N
27,353
1,365
3,519
(19)
(19)
12,482
601
(6)
Motor
vehicles
$’000
N
The Group
Cost
Additions
Disposals
Write off
Plant and
equipment
$’000
Building and
improvements
$’000
Property, plant and equipment (Continued)
A
6
M
I
D
A
S
H
O
L
D
I
N
G
S
L
I
M
I
T
E
D
3.
Property, plant and equipment (Continued)
Buildings and
improvements
$’000
Office
equipment
$’000
Total
$’000
The Company
Cost
Balance at 1 January 2006 and 31 December 2006
28
33
5
-
25
2
30
2
5
27
32
Net book value
At 1 January 2006
-
3
3
At 31 December 2006
-
1
1
5
28
33
5
-
17
8
22
8
5
25
30
Cost
Balance at 1 January 2005 and
31 December 2005
4.
5
Net book value
At 1 January 2005
-
11
11
At 31 December 2005
-
3
3
Investment in subsidiaries
The Company
2006
2005
$’000
$’000
Unquoted equity shares, at cost
9,682
50
6,837
A
N
N
U
A
L
R
E
P
O
R
T
2
0
0
6
4.
Investment in subsidiaries (Continued)
Details of the subsidiaries are as follows:
Effective equity
interest
2006
2005
%
%
Name of subsidiaries
Country of
incorporation/
operations
Principal activities
North East Industries Pte Ltd (1)
100
100
Singapore
Investment holding
Green Oasis Pte Ltd(1)
100
100
Singapore
Investment holding
Midas Ventures Pte. Ltd.(1)
100
100
Singapore
Trading of aluminum
alloy and related
products
Midas Trading (Beijing) Co.,Ltd(2)
100
100
People’s Republic
of China (“PRC”)
Agency and trading
of aluminium alloy,
polyethylene pipes and
other related products
Subsidiary of North East Industries Pte Ltd
Jilin Midas Aluminium Industries Co.,Ltd (2)
100
100
PRC
Manufacture of
aluminium alloy
extrusion products
Subsidiary of Green Oasis Pte Ltd
Shanxi Wanshida Engineering Plastics Co.,Ltd (2)
100
100
PRC
Manufacture of
polyethylene pipes
(1) Audited by BDO Raffles, Singapore
(2) Audited by BDO Reanda, Beijing, a member firm of BDO International
5.
Details of the associate is as follows:
The Group and
the Company
2006
2005
$’000
$’000
Equity investment, at cost
29,729
Effective equity
interest
2006
2005
Name of associate
Nanjing SR Puzhen Rail Transport Co., Ltd(1)
51
%
%
32.5
-
Country of
incorporation/
operations
PRC
-
Principal activities
Manufacturing and sale of
metro trains, bogies and
their related parts
M
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A
S
H
O
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D
I
N
G
S
L
I
M
I
T
E
D
5.
Investment in an associate (Continued)
Nanjing SR Puzhen Rail Transport Co., Ltd was incorporated on 18 October 2006 and commenced its commercial operations with
effect from January 2007. The summary of financial information as at 31 December 2006 is as follows:
The Group and
the Company
2006
2005
$’000
$’000
Total assets
Total liabilities
(1)
6.
80,068
9
-
BDO Raffles, Singapore reviewed the management accounts of Nanjing SR Puzhen Rail Transport Co,. Ltd for the financial
period ended 31 December 2006.
Land use rights
The Group
2006
$’000
2005
$’000
Cost
Balance at beginning of the financial year
2,244
(110)
2,141
103
Balance at end of the financial year
2,134
2,244
Accumulated amortisation
Charged for the financial year
209
43
(12)
158
43
8
240
209
1,894
2,035
Net book value
At end of the financial year
52
A
N
N
U
A
L
R
E
P
O
R
T
2
0
0
6
7.
Prepaid rental
The Group
2006
2005
$’000
$’000
Cost
39
(1)
2
38
39
Accumulated amortisation
Amortisation for the financial year
7
5
2
2
9
7
29
32
Carrying amount
At end of the financial year
8.
Due from subsidiaries
These amounts are non-trade, unsecured, interest-free and are effectively quasi-equity to the subsidiaries.
9.
Pledged bank deposits
37
The Company
As at the balance sheet date, bank deposits pledged to financial institution to secure trade financing facilities and performance bonds
issued amounted to $Nil (2005: $1,033,000) and $5,366,000 (2005: $5,106,000) respectively.The weighted average interest rate ranges
from 0.72% to 1.00% (2005: 0.26% to 1.05 %) per annum.
10.
Inventories
Finished goods
Work -in -progress
Raw materials
The Group
2006
$’000
2,830
2,032
4,942
2005
$’000
1,633
1,876
4,012
9,804
7,521
The cost of inventories recognised as expense and included in “Cost of Sales” amounted to $63,271,000 (2005: $38,627,000).
53
M
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A
S
H
O
L
D
I
N
G
S
L
I
M
I
T
E
D
11.
The Group
2006
$’000
2005
$’000
Trade receivables
34,345
(469)
25,496
(450)
-
-
33,876
250
363
588
415
4,578
2,334
687
402
25,046
97
81
601
7,176
3,889
48
33
261
6
28
-
Deposits
Prepayments
Staff advances
GST receivables/VAT receivables
Advances for purchases of inventories
Advances for purchases of plant and equipment
Notes receivables
Others
33
11
4
-
43,493
The Company
2006
2005
$’000
$’000
36,938
328
48
Others mainly consist of amount due from third parties which is interest-free and repayable on demand.
Trade and other receivables are denominated in the following currencies.
Singapore Dollars
Renminbi
Euro
United States Dollars (“USD”)
The Group
2006
$’000
2005
$’000
330
42,531
348
284
50
36,785
103
-
43,493
12.
Fixed deposits
The Group
36,938
The Company
2006
2005
$’000
$’000
328
328
The amount represents deposit with financial institution bearing interest rate of 6.15% (2005: Nil) per annum.
54
48
48
A
N
N
U
A
L
R
E
P
O
R
T
2
0
0
6
13.
Trade payables
Payable for property, plant and equipment
Accruals
VAT payables
Notes payable
Others
The Group
2006
$’000
2005
$’000
10,888
129
626
763
1,964
241
4,238
518
572
920
840
14,611
The Company
2006
2005
$’000
$’000
7,088
52
-
396
-
30
-
82
396
Trade and other payables are denominated in the following currencies.
Singapore Dollars
Renminbi
USD
The Group
2006
$’000
2005
$’000
95
14,388
128
408
6,680
-
14,611
14.
The Company
2006
2005
$’000
$’000
7,088
82
-
82
396
396
Borrowings – secured
Current
Trust receipts
Short-term trade loan 1
Short-term trade loan 2
Liabilities under finance lease
Non-current
Long-term trade loan
Total borrowings
55
The Group
2006
$’000
2005
$’000
2,989
10,783
-
1,033
562
2,065
29
13,772
3,689
2,946
2,581
16,718
6,270
M
I
D
A
S
H
O
L
D
I
N
G
S
L
I
M
I
T
E
D
14.
Borrowings – secured (Continued)
(a)
(b)
Security granted
(i)
As at balance sheet date, trust receipts of RMB Nil (2005: RMB5,000,000) is secured by bank deposit amounting to
RMB Nil (2005: RMB5,000,000).
(ii)
Short-term trade loan 1 and long-term trade loan are secured by a mortgage of plant and equipment with net book
value of $5,530,000 (2005: $4,329,000).The effective weighted average interest rate was 7.6981% (2005: 7.6951%) per
annum
(iii)
Short-term trade loan 2 is secured by a mortgage of plant and equipment with net book value of $20,694,000 (2005:
$3,732,000). The effective weighted average interest rate was 6.48% (2005: 6.96%) per annum.
Maturity of borrowings
The total borrowings had the following maturity:
Within one financial year
After one financial year but within five financial years
(c)
The Group
2006
$’000
2005
$’000
13,772
2,946
3,689
2,581
16,718
6,270
Currency risk
The carrying amounts of total borrowings were denominated in Renminbi at balance sheet date.
Renminbi
The Group
2006
$’000
2005
$’000
16,718
6,270
Liabilities under finance lease
The Group
2006
$’000
2005
$’000
Minimum lease payments due:
Less: Future finance charges
-
32
(3)
Present value of liabilities under finance lease
-
29
The net book value of motor vehicles purchases under finance lease contract amounted to $Nil (2005: $312,000). The effective
weighted average interest rate was Nil% (2005: 5.9%) per annum.
56
A
N
N
U
A
L
R
E
P
O
R
T
2
0
0
6
15.
Due to a related party
The Group and the Company
The amount due is non-trade, unsecured, interest-free and is repayable on demand.
16.
Share capital
The Group and
the Company
2006
2005
$’000
$’000
Issued and fully paid
764,817,800 ordinary shares at beginning of financial year
30,593
Issuance of 76,500,000 ordinary shares pursuant for private placement at $0.82 each (2005: Nil)
62,730
-
Issuance expenses
(1,192)
-
168
-
42
-
36,537
-
Issued of 600,000 ordinary shares in respect of the conversion of employee share options at $0.28
each (2005: Nil)
Transfer of option reserve to share capital upon exercise of employee share options
Transfer from share premium
841,917,800 (2005: 764,817,800) ordinary shares
30,593
128,878
30,593
On 19 May 2006, the Company issued 76,500,000 new shares from the placement, of $0.82 each to raise funds from the capital
markets to finance business expansion.
On 19 May 2006, 550,000 ordinary shares were issued in respect of the conversion of share options under the Employee Share Option
Scheme (“ESOS”). Subsequently, on 10 October 2006, an additional 50,000 ordinary shares were issued under ESOS.
The Singapore Companies (Amendment) Act 2005 came into effect on 30 January 2006. Among other things, the Companies Act was
amended to abolish the concept of par value, authorised share capital, share premium, capital redemption reserve and share discounts.
As a result, share capital does not have a par value and there is no authorised share capital.
17.
Share premium
The application of the share premium account is governed by Section 69-69F of the Singapore Companies Act, Chapter 50.
From 30 January 2006, the balance of the share premium account amounting to approximately $36,537,000 became part of the share
capital after taking into consideration the amendments of the Singapore Companies (Amendment) Act 2005.
57
M
I
D
A
S
H
O
L
D
I
N
G
S
L
I
M
I
T
E
D
18.
Foreign currency translation account
The Group
The foreign currency translation account comprises all foreign exchange differences arising from the translation of the financial
statements of foreign operations whose functional currencies are different from that of the Group’s presentation currency. Movement
in this account is set out in the consolidated statement of changes in equity.
19.
General reserve
The Group
General reserve represents the amount transferred from profit after income tax of the subsidiaries incorporated in the People’s
Republic of China (“PRC”) in accordance with the PRC statutory requirements. The general reserve cannot be reduced except where
approval is obtained from the relevant PRC authority to apply the amount either in setting off the accumulated losses or increasing
share capital. Movement in this account is set out in the consolidated statement of changes in equity.
20.
Share option reserve represents the equity-settled share options granted to employees.The reserve is made up of the cumulative value
of services received from employees recorded on grant of equity-settled share options.
The Group and
the Company
2005
2006
$’000
$’000
21.
Transfer of option reserve to share capital upon exercise of ESOS
118
723
799
(42)
118
118
Revenue
Sales of polyethylene pipes
Sales of aluminium alloy extrusion products
Agency and trading of aluminium alloy, polyethylene pipes and related products
The Group
2006
$’000
2005
$’000
21,137
71,766
11,861
20,414
50,059
-
104,764
58
70,473
A
N
N
U
A
L
R
E
P
O
R
T
2
0
0
6
22.
Other operating income
Foreign exchange gain
Income from disposal of scrap materials
Interest income from bank deposits
Interest income from fixed deposits
Interest income from loan to third parties
Government grants
Commission income
Sundry income
23.
2005
$’000
1,211
191
570
397
28
279
101
1,441
46
407
50
2,777
1,944
The Group
2006
$’000
2005
$’000
Finance cost
Interest on term loans
Interest on finance lease
24.
The Group
2006
$’000
757
-
637
5
757
642
The above is arrived at:
The Group
2006
$’000
2005
$’000
8
4,367
41
45
154
250
358
723
3
3,794
23
45
4
244
118
After charging:
Non-audit fee payable/paid to auditors of the Company
Amortisation of prepaid rental and land use rights
Loss on disposal of property plant and equipment
Write off of property plant and equipment
Operating leases
Cost of share based payment
59
M
I
D
A
S
H
O
L
D
I
N
G
S
L
I
M
I
T
E
D
25.
Staff costs
The Group
2006
2005
$’000
$’000
Salaries, allowances and bonuses
Contributions to defined contributions plans
Share options granted (Note 20 and 29)
26.
2,565
159
723
118
3,447
2,980
The Group
2006
$’000
2005
$’000
2,156
2,781
27,723
21,103
Income tax using statutory rate of 20%
Effect of different tax rates of overseas operations
Expenses not deductible for tax purposes
Tax relief
Others
5,545
2,570
2
(5,869)
(92)
4,221
2,032
6
(3,437)
(41)
2,156
2,781
Income tax
Current income tax
2,699
163
Reconciliation of effective tax rate is as below:
In accordance with the “Income Tax Law of the People’s Republic of China (“PRC”) for Enterprises with Foreign investment and Foreign
Enterprises”, the subsidiaries in the PRC are entitled to full exemption from Enterprise Income Tax (“EIT”) for the first two years
commencing from their first profitable year and thereafter entitled to a 50% relief of EIT for the next three years.
A subsidiary obtained the foreign investment enterprise license in April 2002 and accordingly is exempted from income tax commencing
from April 2002. In 2006, the subsidiary has been granted two additional income tax incentives from the Income Tax Law of the
People’s Republic of China. The first income tax incentive was granted as the subsidiary increase the share capital. The second income
tax incentive on the new production line which profit arise from the new production line is entitled to full exemption from Enterprise
Income Tax (“EIT”) for the first two years commencing from their first profitable year and thereafter entitled to a 50% relief of EIT for
the next three years.
Another subsidiary obtained the foreign investment enterprise license in 2001 but incurred losses in 2001. Accordingly, its first year of
exemption is 2002.
60
A
N
N
U
A
L
R
E
P
O
R
T
2
0
0
6
27.
Earnings per share (cents)
The calculations for earnings per share of the Group are based on:
The Group
2006
Profit attributable to equity holders of the Company ($’000)
2005
25,567
18,322
Weighted average (2005: Actual) number of ordinary shares in
basic earnings per share (’000)
803,355
764,818
Weighted average number of ordinary shares on a fully diluted basis (’000)
804,463
765,016
Basic earnings per share (cents)
3.18
2.40
Diluted earnings per share (cents)
3.18
2.39
Basic earnings per share is calculated by dividing the Group’s profit attributable to equity holders of the Company by the weighted
average number of ordinary shares in issue during the financial year.
Diluted earnings per share amounts are calculated by dividing the profit attributable to equity holders of the Company by the weighted
average number of ordinary shares outstanding during the financial year plus the weighted average number of ordinary shares that
would be issued on the conversion of all dilutive potential ordinary shares into ordinary shares.
28.
Dividends
The Group and
The Company
2006
2005
$’000
$’000
Dividends paid during the financial year:
Final dividend of $0.0025 per share paid in respect of the financial year ended 2005
(2005: Final dividend paid in respect of financial year ended 2004)
1,912
1,912
Interim tax-exempt dividends of $0.0075 (2005: $0.0050) per ordinary share under the
exempt-1-tier system
4,209
3,824
6,121
5,736
4,209
10,330
1,912
7,648
Dividend declared during the financial year
Interim tax-exempt dividend of $0.0050 (2005: $0.0025) per ordinary share
A third interim dividend for the financial year ended 31 December 2006 amounting to $4,209,000 which has been recognised as a
liability at end of the financial year was paid on 8 February 2007.
Subsequent to the balance sheet date, the Directors proposed a final tax-exempt dividend of $0.005 per ordinary share amounting to
$4,209,000 under the exempt-1-tier system. The proposed dividend has not been recognised as a liability at year end in accordance
with FRS 10 – Events after the balance sheet date.
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29.
Share-based payments
The Company has a share option scheme for all employees of the Group. An option entitles the option holder to subscribe for a
specific number of new ordinary shares in the Company comprised in the option at a subscription price per share determined with
reference to the market price of the share at the time of grant of the option.
Options granted with the subscription price set at the market price shall only be exercised after the first anniversary from the date of
grant of the option. The shares under option may be exercised in whole or in part thereof.
Options granted will lapse when the option holder ceases to be a full-time employee of the Group subject to certain exceptions at
the discretion of the Company.
Details of the share options outstanding during the financial year are as follows:
2006
Number
of share
options
2005
Number
of share
options
Exercise
price
$
Exercise
price
$
Outstanding at beginning of the financial year
2,500,000
0.280
-
-
Exercised during the financial year
(600,000)
0.280
-
-
Granted during the financial year
4,950,000
0.873
Outstanding at end of the financial year
6,850,000
2,500,000
0.280
2,500,000
The options outstanding at the end of the financial year have a weighted average remaining contractual life of 4.5 years (2005: 5
years). During the financial year, 4,950,000 options were granted on 11 May 2006. The estimated fair value of the options granted is
$665,000.
These fair values were calculated using the Hull-White option pricing model. The maximum life of the options granted is 5 years in
accordance with the Midas Employee Share Option Scheme set out on the prospectus dated 11 February 2004.
The exit rate is assumed to be zero as the vesting period is only one year.The exercise multiple is assumed to be 1.0 time for directors,
senior management, middle management and support staff, on the assumption that employees will exercise their options as long as the
stock price is the same as the exercise price.
The risk-free rate is assumed to be the latest available yield of 3.05% of a 5-year government bond, given that the maximum lifespan
of the options is 5 years. Dividend yield of the Company as at 31 December 2006 is 0.8% (2005: 0.5%).
The volatility percent is computed as 44.2% by taking a sample of historical closing share prices starting from the first week of July 2004
(after eliminating the effect of share subdivision) to the last week of 2006 to forecast future volatility trend. As the period of trading is
short, caution must be put on the accuracy of this volatility.
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30.
Contingent liabilities
Performance bonds
The Group
2006
$’000
2005
$’000
5,366
5,106
The performance bonds are secured by bank deposits, equivalent to $5,366,000 (2005: $5,106,000).
31.
Operating lease commitments
Where the Group is a lessee
As at the balance sheet date, the future aggregate minimum lease payments under non-cancellable operating leases contracted for at
the reporting date but not recognised as liabilities are as follows:
The Group and
The Company
2006
2005
$’000
$’000
After one financial year but within five financial years
32.
433
645
136
21
1,078
157
Significant related party transactions
For the purpose of these financial statements, parties are considered to be related to the Group or the Company if the Group or the
Company have the ability, directly or indirectly, to control the party or exercise significant influence over the party in making financial
and operating decisions, or vice versa, or where the Group or the Company and the party are subject to common control or common
significant influence. Related parties may be individuals or other entities.
In addition to the information disclosed elsewhere in the financial statements, significant related party transactions between the Group
and the Company and its related parties during the financial year were as follows:
The Group
2006
$’000
With subsidiaries
Dividend income
Management income
Payment on behalf
Loan to subsidiaries
Receipt of payments from subsidiaries
-
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The Company
2006
2005
$’000
$’000
2005
$’000
-
10,400
2,757
67
19,629
4,423
8,800
2,094
124
500
8,678
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32.
Significant related party transactions (Continued)
Key management personnel compensation is as follows:
Salaries and other short-term employee benefits paid to Executive Directors
Post-employment benefits-CPF contribution for Executive Directors
Share option granted to Executive Directors
The Group
2006
$’000
708
14
439
1,161
33.
2005
$’000
708
16
724
Financial risk management
The Group and the Company are exposed to financial risk arising from the normal course of business. The Group and the Company
do not hold or issue derivative financial instruments for trading purposes or to hedge against fluctuation, if any, in interest rates and
foreign exchange rates.
(a)
Credit risk
The Group places its bank balances with credit worthy financial institutions. The Group performs ongoing credit evaluation of
its customers’ financial condition and generally does not require collateral. This evaluation includes assessing and valuation of
customers’ credit reliability and periodic review of their financial status to determine credit limits to be granted.
The maximum exposure to credit risk in the event that the counter parties fail to perform their obligations as at end of
the financial year in relation to each class of recognised financial assets is the carrying amount of those assets stated in the
consolidated balance sheet.
(b)
Foreign currency risk
The Group’s foreign currency exposures arose mainly from the exchange rate movements of the Renminbi against Singapore
dollars, which is also the Group’s reporting currency. Revenues and sales, mainly denominated in Renminbi, are matched with
corresponding costs in the same foreign currency. The Group makes use of natural hedge in the above situation to minimise its
exposure to foreign currency movements. It is not the Group’s policy to enter into any forward derivates to hedge its exchange
risk.
(c)
Liquidity risk
Management is of the view that there is no liquidity risk as the Group maintains adequate lines of facilities with financial
institutions and the cash flow from operations is sufficient for present working capital requirements.
(d)
Interest rate risk
Interest bearing financial assets are mainly bank balances which are all short-term in nature. Interest bearing financial liabilities
are mainly bank loans. The interest rates are disclosed in the notes to financial statements.
(e)
Fair values
Management has determined that the carrying amounts of current trade receivables, other receivables, cash and cash equivalents,
trade payables, other payables and due to a related party, based on their notional amounts, reasonably approximate their fair
values because these are mostly short term in nature.
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34.
Segment information
(a)
Business segments
The operations of the Group are grouped mainly under the Aluminium Alloy Division whose principal activities are manufacturing
and sale of Aluminium alloy extrusion products, the Polyethylene Pipe Division whose principal activities are manufacturing
and sale of polyethylene pipes and the Agency and Procurement Division whose principal activities are agency and trading
of aluminium alloy, polyethylene pipes and other related products. Most of the assets of the Group are deployed in these
operations.
Segment revenue and expense are revenue and expense reported in the Group’s Consolidated profit and loss account that
either are directly attributable to a segment or can be allocated on a reasonable basis to a segment.
Segment assets are all operating assets that are employed by a segment in its operating activities and that either are directly
attributable to the segment or can be allocated to the segment on a reasonable basis.
Segment liabilities are all operating liabilities of a segment and that either are directly attributable to the segment or can be
allocated to the segment on a reasonable basis. Segment liabilities exclude income tax liabilities.
Aluminium
Alloy
Division
$’000
Agency &
Procurement
Division
$’000
Polyethylene
Pipe Division
$’000
Corporate
Division
$’000
Total
$’000
-
104,764
2006
Revenue
Result
Segment result
Interest expense
71,766
11,861
25,400
298
21,137
4,870
(2,088)
Income tax
Profit attributable to equity
holders
Other information
Additions of property, plant
and equipment
Depreciation
Amortisation of land
use rights
28,480
(757)
27,723
(2,156)
25,567
31,480
123
65
3,575
35
755
-
17
26
65
-
31,668
2
4,367
-
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34.
Segment information (Continued)
(a)
Business segments (Continued)
Aluminium
Alloy
Division
$’000
Agency &
Procurement
Division
$’000
Polyethylene
Pipe Division
$’000
Corporate
Division
$’000
Total
$’000
-
70,473
2005
Revenue
50,059
-
20,414
Result
Segment result
Interest expense
17,266
-
5,803
(1,324)
Income tax
Profit attributable to equity
holders
18,322
Other information
Additions of property, plant
and equipment
8,382
Depreciation
3,008
26
Amortisation of land use
rights
21,745
(642)
21,103
(2,781)
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1,586
-
778
-
17
Aluminium
Alloy
Division
$’000
Agency &
Procurement
Division
$’000
-
10,029
8
3,794
-
43
Polyethylene
Pipe Division
$’000
Total
$’000
2006
Assets
Segment assets
Unallocated corporate assets
134,013
14,416
22,131
170,560
34,258
204,818
Liabilities
Segment liabilities
Unallocated corporate liabilities
24,767
239
6,137
31,143
10,781
41,924
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Segment information (Continued)
(a)
Business segments (Continued)
Aluminium
Alloy
Division
$’000
Agency &
Procurement
Division
$’000
Polyethylene
Pipe Division
$’000
Total
$’000
2005
Assets
Segment assets
Unallocated corporate assets
76,603
12,926
26,709
116,238
399
116,637
Liabilities
Segment liabilities
Unallocated corporate liabilities
8,194
623
6,292
15,109
9,651
24,760
(b)
Geographical segment
Secondary segment information is not presented as the Group’s principal activities and assets are located in the People’s
Republic of China.
35.
Comparative figures
Certain comparative figures have been restated to conform with the current financial year’s presentation.
36.
Capital commitments
On 12 September 2006, the Company has also signed an agreement to invest RMB 300 million for a 30% stake in China Northeast
Light Alloy Co., Ltd. This new associated company is pending regulatory approvals from the relevant PRC authorities. The existing
company has been granted the approval by China State Development and Reform Commission to embark on a new project to
manufacture super large specification and special function aluminium alloy plates and sheets, mainly used in the aviation, aerospace,
shipbuilding, transportation and petrochemical industries.
37.
Authorisation of Financial Statements
The financial statements for the financial year ended 31 December 2006 were authorised for issue in accordance with a resolution of
the Directors on 1 March 2007.
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STATISTICS OF SHAREHOLDINGS
As At 26 March 2007
Issued share capital
Number of shares
Class of shares
Voting rights
: S$130,559,827.68
: 843,817,800
: ordinary shares
: one vote per share
Distribution of Shareholdings
Size of Shareholdings
No. of Shareholders
Percentage
No. of Shares Held
Percentage
1
999
1,000 10,000
10,001 - 1,000,000
1,000,001 and above
6
967
545
27
1,545
0.38%
62.59%
35.28%
1.75%
100.00%
1,130
5,835,200
43,454,400
794,527,070
843,817,800
0.00%
0.69%
5.15%
94.16%
100.00%
Based on information available to the Company as at 26 March 2007, approximately 57.58% of the issued ordinary shares of the Company
is held by the public and, therefore, Rule 723 of the Listing Manual issued by the Singapore Exchange Securities Trading Limited is complied
with.
Top Twenty Shareholders
S/No. Name
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
CHEN WEIPING
CHEW HWA KWANG PATRICK
DBS NOMINEES PTE LTD
CITIBANK NOMINEES S’PORE PTE LTD
HSBC (SINGAPORE) NOMINEES PTE LTD
UOB KAY HIAN PTE LTD
DBSN SERVICES PTE LTD
OCBC SECURITIES PRIVATE LTD
RAFFLES NOMINEES PTE LTD
UNITED OVERSEAS BANK NOMINEES (PTE) LTD
TOMMIE GOH THIAM POH
DMG & PARTNERS SECURITIES PTE LTD
MORGAN STANLEY ASIA (S’PORE) PTE
PHILLIP SECURITIES PTE LTD
YAP CHONG HIN GABRIEL
CITIBANK CONSUMER NOMINEES PTE LTD
KIM ENG SECURITIES PTE. LTD.
KHOO KONG HUAT ALBERT
FOO LAI FUAN
YAP MAY IMM GILLIAN
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No. of Shares
Percentage
149,905,200
103,711,800
99,963,000
66,598,169
64,527,000
46,946,000
40,874,000
36,079,000
34,698,000
33,117,000
29,428,000
13,900,000
12,605,901
12,455,000
10,053,000
8,894,000
6,910,000
5,269,000
3,000,000
3,000,000
781,934,070
17.77%
12.29%
11.85%
7.89%
7.65%
5.56%
4.84%
4.28%
4.11%
3.92%
3.49%
1.65%
1.49%
1.48%
1.19%
1.05%
0.82%
0.62%
0.36%
0.36%
92.67%
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SUBSTANTIAL SHAREHOLDERS
As shown in the Register of Substantial Shareholders As At 26 March 2007
No of Shares
Direct Interest
Deemed Interest
204,905,200
118,211,800
-
Name of Shareholders
Chen Wei Ping
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NOTICE OF ANNUAL GENERAL MEETING
NOTICE IS HEREBY GIVEN that the Sixth Annual General Meeting of Midas Holdings Limited (the “Company”) will be held at Diamond
Room, Lower Lobby, Sheraton Towers Singapore, Thirty-Nine Scotts Road, Singapore 228230 on Monday, 30 April 2007 at 10.00 a.m. to
transact the following business:
AS ORDINARY BUSINESS
1.
To receive and adopt the Directors’ Report and Audited Accounts of the Company for the financial year ended 31 December 2006
together with the Auditors’ Report thereon.
[Resolution 1]
2.
To declare a Final Dividend of 0.5 cents per ordinary share for the financial year ended 31 December 2006 (2005 : 0.25 cents).
[Resolution 2]
3.
To approve the Directors’ fees of S$150,000/- for the year ended 31 December 2006. (2005 : S$120,000/-)
[Resolution 3]
4.
To re-elect Mr Chew Hwa Kwang, Patrick who retires pursuant to Article 91 of the Company’s Article of Association
[Resolution 4]
5.
To re-elect Mr Gay Chee Cheong who retires pursuant to Article 91 of the Company’s Articles of Association.
[Resolution 5]
6.
To note the retirement of Mr Chan Kam Loon, a Director retiring pursuant to Article 91 of the Company’s Articles of Association, who
would not be seeking re-election.
7.
To re-elect Mr Chan Soo Sen who retires pursuant to Article 97 of the Company’s Articles of Association.
8.
To re-appoint Messrs BDO Raffles, as the Company’s Auditors and to authorise the Directors to fix their remuneration.
[Resolution 7]
[Resolution 6]
9. To transact any other ordinary business which may properly be transacted at an Annual General Meeting.
AS SPECIAL BUSINESS
To consider and, if thought fit, to pass the following Ordinary Resolutions with or without any modifications:10.
Authority to allot and issue shares up to 50% of the total number of issued shares
“That pursuant to Section 161 of the Companies Act, Cap. 50 and subject to Rule 806 of the Listing Manual of the Singapore Exchange
Securities Trading Limited (“SGX-ST”), authority be and is hereby given to the Directors of the Company to issue shares or convertible
securities in the capital of the Company (whether by way of rights, bonus or otherwise) at any time and upon such terms and
conditions and for such purposes and to such persons as the Directors may in their absolute discretion deem fit provided that: (i)
the aggregate number of shares and convertible securities to be issued pursuant to this Resolution does not exceed 50 per
cent (50%) of the issued shares in the capital of the Company (as calculated in accordance with sub-paragraph (ii) below),
of which the aggregate number of shares and convertible securities to be issued other than on a pro rata basis to existing
shareholders of the Company does not exceed 20 per cent (20%) of the issued shares in the capital of the Company (as
calculated in accordance with sub-paragraph (ii) below);
(ii)
(subject to such manner of calculation as may be prescribed by the SGX-ST), for the purpose of determining the aggregate
number of shares that may be issued under sub-paragraph (i) above, the percentage of issued shares shall be based on the
number of issued shares in the capital of the Company at the time this Resolution is passed, after adjusting for: a.
b.
c.
new shares arising from the conversion or exercise of any convertible securities;
new shares arising from exercising share options or vesting of share awards which are outstanding or subsisting at the time
this Resolution is passed provided the options or awards were granted in compliance with Part VIII of Chapter 8 of the
Listing Manual of SGX-ST; and
any subsequent consolidation or subdivision of shares; and
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(iii)
unless revoked or varied by the Company in general meeting, the authority conferred by this Resolution shall continue in
force until the conclusion of the next Annual General Meeting of the Company or the date by which the next Annual General
Meeting of the Company is required by law to be held, whichever is the earlier.”
[Resolution 8]
[See Explanatory Note (i)]
11.
Authority to grant options and issue shares under the Midas Employee Share Option Scheme
“THAT pursuant to Section 161 of the Companies Act, Cap. 50, the Directors of the Company be and are hereby authorised to offer
and grant options in accordance with the Midas Employee Share Option Scheme (“the Scheme”) and to allot and issue from time to
time such number of shares in the capital of the Company as may be required to be issued pursuant to the exercise of the options
under the Scheme provided always that the aggregate number of shares to be issued pursuant to the Scheme shall not exceed fifteen
per cent (15%) of the total number of issued shares in the capital of the Company from time to time.”
[Resolution 9]
[See Explanatory Note (ii)]
BY ORDER OF THE BOARD
Tan Cheng Siew
Company Secretary
Singapore,
13 April 2007
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Note:
A Member is entitled to appoint a proxy to attend and vote in his place. A proxy need not be a Member of the Company. Members wishing
to vote by proxy at the meeting may use the proxy form enclosed. The completed proxy form must be lodged at the Registered Office of the
Company at 2 Shenton Way, #04-01 SGX Centre 1, Singapore 068804 not less than 48 hours before the time appointed for the Meeting.
Note to item nos. 4, 5 and 7:
The Board of Directors, in consultation with the Nominating Committee, recommends to members the re-election of Messrs Chew Hwa
Kwang, Patrick, Gay Chee Cheong and Chan Soo Sen.
Note to Resolution 5
Mr Gay Chee Cheong will, upon re-election as a Director of the Company, remain as a member of the Audit Committee and will be considered
independent for the purpose of Rule 704(8) of Listing Manual of the Singapore Exchange Securities Trading Limited.
EXPLANATORY NOTES ON SPECIAL BUSINESS TO BE TRANSACTED:
(i)
The proposed Resolution 8, if passed, will empower the Directors of the Company from the date of the above Meeting until the date
of the next Annual General Meeting, to allot and issue new shares in the Company (whether by way of rights, bonus or otherwise).
The number of shares which the Directors may issue under this Resolution shall not exceed 50% of the number of issued shares in the
capital of the Company. For issue of shares other than on a pro-rata basis to all shareholders of the Company, the aggregate number of
shares to be issued shall not exceed 20% of the total number of issued shares in the capital of the Company. This authority will, unless
previously revoked or varied at a general meeting, expire at the next Annual General Meeting of the Company.
(ii)
The proposed Resolution 9, if passed, will empower the Directors of the Company from the date of the above Meeting until the next
Annual General Meeting to issue shares up to an amount in aggregate not exceeding 15% of the total number of issued shares in the
capital of the Company from time to time pursuant to the exercise of the options under the Scheme.
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Important
1. For investors who have used their CPF monies to buy shares of
Midas Holdings Limited, the Annual Report 2006 is forwarded to
them at the request of their CPF Approved Nominees and is sent
solely FOR INFORMATION ONLY.
2. This Proxy Form is not valid for use by CPF Investors and shall be
ineffective for all intents and purposes if used or purported to be
used by them.
MIDAS HOLDINGS LIMITED
(Company Registration No.: 200009758W)
PROXY FORM
I/We of being a *member/members of Midas Holdings Limited, hereby appoint
Name
Address
NRIC / Passport
No.
Proportion of
Shareholdings
(%)
and/or (delete as appropriate)
as my/our proxy/proxies to vote for me/us on my/our behalf at the Sixth Annual General Meeting of the Company to be held at Diamond
Room, Lower Lobby, Sheraton Towers Singapore, Thirty-Nine Scotts Road, Singapore 228230 on Monday, 30 April 2007 at 10.00 a.m and at
any adjournment thereof.
The proxy is required to vote as indicated with an “X” on the resolutions set out in the Notice of Meeting and summarised below. If no specific
direction as to voting is given, the proxy/proxies may vote or abstain at his discretion.
No.
Resolution
1.
To receive and adopt the Directors’ Report and Audited Accounts for the financial year ended 31
December 2006 together with the Auditors’ Report thereon.
2.
To approve payment of proposed final dividend.
3.
To approve payment of Directors’ fees.
4.
To re-elect Mr Chew Hwa Kwang, Patrick as a Director.
5.
To re-elect Mr Gay Chee Cheong as a Director.
6.
To re-elect Mr Chan Soo Sen as a Director.
7.
To re-appoint Messrs BDO Raffles as the Company’s Auditors and to authorise the Directors to fix their
remuneration.
8.
Authority to allot and issue shares.
9.
Authority to grant options and issue shares under the MIDAS Employee Share Option Scheme.
Signed this
day of For
2007
Total No. of Shares in:
1) CDP Register
2) Register of Members
Signature(s) of Member(s)/Common Seal
Against
No. of Shares
Notes:
1.
A member of the Company entitled to attend and vote at a meeting of the Company is entitled to appoint one or two proxies to
attend and vote in his stead. Such proxy need not be a member of the Company.
2.
Where a member appoints two proxies, he must specify the proportion of his shareholding to be represented by each proxy.
3.
The instrument appointing a proxy must be signed by the appointer or his duly authorised attorney or if the appointer is a corporation,
it must be executed either under its common seal or signed by its attorney or a duly authorised officer of the corporation.
4.
A corporation which is a member may also appoint by resolution of its directors or other governing body an authorised representative
or representatives in accordance with its Articles of Association and Section 179 of the Companies Act, Chapter 50 of Singapore, to
attend and vote on its behalf.
5.
The instrument appointing a proxy or proxies (together with the power of attorney, if any, under which it is signed or a certified copy
thereof), must be deposited at the registered office of the Company, 2 Shenton Way, #04-01 SGX Centre 1, Singapore 068804 at least
48 hours before the time fixed for holding the Annual General Meeting.
6.
A member should insert the total number of Ordinary Shares held. If the member has Ordinary Shares entered against his name in
the Depository Register (as defined in Section 130A of the Companies Act, Chapter 50 of Singapore), he should insert that number of
Ordinary Shares. If the member has Ordinary Shares registered in his name in the Register of Members, he should insert that number
of Ordinary Shares. If the member has Ordinary Shares entered against his name in the Depository Register as well as Ordinary
Shares registered in his name in the Register of Members, he should insert the aggregate number of Ordinary Shares. If no number is
inserted, this form of proxy will be deemed to relate to all the Ordinary Shares held by the member.
7.
The Company shall be entitled to reject this instrument of proxy if it is incomplete, or illegible or where the true intentions of the
appointor are not ascertainable from the instructions of the appointor specified in this instrument of proxy. In addition, in the case of
a member whose Ordinary Shares are entered in the Depository Register, the Company shall be entitled to reject this instrument of
proxy which has been lodged if such member is not shown to have Ordinary Shares entered his name in the Depository Register at
least 48 hours before the time appointed for holding the Annual General Meeting as certified by The Central Depository (Pte) Limited
to the Company.
2 Shenton Way #04-01 SGX Centre 1, Singapore 068804
Tel: (65) 6438 3052 Fax (65) 6438 3053
Website: www.midas.com.sg
Company Registration No. 200009758W

Midas Holdings Limited

Transcription

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