1.86 MB - Sapura

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cover rationale
We regard our achievements as stepping stones that would lead us to greater success in the future. This
is exemplified through the development of better automotive components which typifies our commitment
to deliver more to our stakeholders in service and value. At Sapura, achieving more defines how we
do business.
Thirty Second
Annual General
Meeting
Date :
Time :
Venue :
09 July 2008, Wednesday
11.00 a.m.
Multi Purpose Hall, Ground Floor
Sapura@Mines, No. 7, Jalan Tasik, The Mines Resort City,
43300 Seri Kembangan, Selangor Darul Ehsan
contents
001 Corporate Profile 002 Notice of Annual General Meeting 004 Statement Accompanying Notice of AGM 005 Corporate Information 008 Company Structure
009 Corporate Events 2007-2008 010 Board of Directors 012 Profile of Board of Directors 015 Financial Highlights 018 Chairman’s Statement
026 Corporate Social Responsibility 028 Statement on Internal Control 030 Corporate Governance Statement 034 Audit Committee’s Report 036 Statement of
Directors’ Responsibility in Respect of the Audited Financial Statements 037 Additional Compliance Information 038 Financial Statements 100 Analysis of
Shareholdings 102 Particulars of Properties • Proxy Form
Sapura Industrial Berhad’s involvement in the automotive
component parts industry started in the early 1980’s with the
manufacture of automobile suspension parts. The strong and
steady expansion of the business and the industry during the
period led to the creation of a group structure through the
set up of a holding company in 1994 under the name of
Sapura Motors Berhad. Sapura Motors was subsequently
listed on the Second Board of the Bursa Securities Malaysia
Berhad on 9 May 1997. On 14 January 2004, it was
transferred to the Main Board of Bursa Securities Malaysia
Berhad. To reflect its diversified business interests, the name
Sapura Motors was changed to Sapura Industrial Berhad on
11 August in the same year.
Presently, Sapura Industrial’s main principal activity is the
manufacturing of automotive component parts ranging from
raw material, precision machining parts to safety
components. These include engine, transmission, chasis
modules, steering, suspension and brake systems.
Throughout the years, Sapura Industrial has evolved into one
of the leading Original Equipment Manufacturers in the
country, which in turn has provided assurance for its
developing After Market segment. Its continuing success in
corporate profile
the local industry has also paved the way for Sapura
Industrial to expand globally, ensuring future growth and
preserving its relevance. In its effort to diversification, Sapura
Industrial has also ventured into the manufacture of
specialised high technology fittings for the Oil and Gas,
Petrochemical and Chemical industries in 2005.
Today’s competitive and dynamic business environment
presents adversities and also opportunities with fresh new
routes to success. It is with this spirit Sapura Industrial
Berhad moves forward, seeking new opportunities and
enhancing our core business.
002
NOTICE OF ANNUAL GENERAL MEETING
NOTICE IS
HEREBY GIVEN
THAT the
Thirty Second
Annual General Meeting of the
Company will be held at the
Multi Purpose Hall, Ground Floor,
Sapura @ Mines, No. 7, Jalan Tasik,
The Mines Resort City,
43300 Seri Kembangan, Selangor
Darul Ehsan on Wednesday,
9 July 2008 at 11.00 a.m. to
transact the following businesses:
AGENDA
SPECIAL BUSINESS
ORDINARY BUSINESS
As Special Business, to consider and if
thought fit, to pass the following resolutions:
1.
2.
To receive the Audited Financial
Statements together with the
Directors’ and Auditors’ reports for the
financial year ended 31 January 2008.
Ordinary Resolution 1
To approve the declaration of a first
and final tax exempt dividend of 3 sen
per ordinary share in respect of the
financial year ended 31 January 2008.
Ordinary Resolution 2
3.
To re-elect the following directors
who retire pursuant to Article 107 of
the Articles of Association of the
Company and being eligible, offer
themselves for re-election:
i.
Datuk Shahril bin Shamsuddin
Ordinary Resolution 3
ii.
Dato’ Mazlin bin Md Junid
Ordinary Resolution 4
4.
To re-elect the following director who
retires pursuant to Section 129(1) and
(6) of the Companies Act, 1965 and
being eligible, offer himself for
re-election:
Tan Sri Dato’ Seri Ir. Shamsuddin bin
Abdul Kadir
Ordinary Resolution 5
5.
To re-appoint Messrs Ernst & Young as
Auditors of the Company until the
conclusion of the next Annual General
Meeting and to authorise the directors
to fix their remuneration.
Ordinary Resolution 6
6.
DIRECTORS’ FEES
To approve the directors’ fees for the
financial year ended 31 January 2008.
Ordinary Resolution 7
7.
AUTHORITY FOR DIRECTORS TO ISSUE
SHARES UNDER SECTION 132D OF THE
COMPANIES ACT, 1965
“THAT subject to the provisions of the
Company’s Articles of Association and
the Listing Requirements of Bursa
Malaysia Securities Berhad ("Bursa
Malaysia"), the directors be and are
hereby empowered, pursuant to
Section 132D of the Companies Act,
1965, to issue shares in the Company
at any time and upon such terms and
conditions and for such purpose as
the directors may, at their absolute
discretion deem fit, provided that the
aggregate number of shares issued
pursuant to this resolution does not
exceed ten per centum (10%) of the
total issued and paid-up share capital
of the Company as at the date of such
issuance and that the directors be and
are also empowered to obtain all
necessary approvals from the relevant
authorities for the issuance and the
listing of and quotation for the
additional shares so issued on Bursa
Malaysia and that such authority shall
continue to be in force until the
conclusion of the next Annual General
Meeting of the Company.”
Ordinary Resolution 8
003
8.
PROPOSED AMENDMENTS TO THE ARTICLES
OF ASSOCIATION OF THE COMPANY
“THAT the proposed amendments to the
Articles of Association of the Company as
contained in Appendix 1 attached herein
and duly signed by a Director for the
purposes of identification be and are hereby
approved AND THAT the directors of the
Company be and are hereby authorised to
assent to any modifications, variation
and/or amendments as may be required by
the relevant authorities and to do all acts
and things and take all steps as may be
considered necessary to give full effect to
the proposed amendments to the Articles of
Association of the Company.”
Special Resolution 1
NOTICE OF BOOK CLOSURE FOR PAYMENT
OF DIVIDENDS
NOTICE IS ALSO GIVEN that the Register of
Members will be closed from 2 September 2008 to
4 September 2008 (both dates inclusive) to
determine shareholders’ entitlement to the
dividend payment. The dividend, if approved, will
be paid on 17 September 2008 to shareholders
whose names appear in the Register of Members
and Record of Depositors on 1 September 2008.
FURTHER NOTICE IS HEREBY GIVEN that a Depositor
shall qualify for entitlement only in respect of:
a)
Notes:
1.
Proxy Form
A member of the Company who is entitled to attend and
vote at this Meeting is entitled to appoint a proxy to
attend and vote on a poll in his stead. A proxy may but
need not be a member of the Company.
Where a member is an authorised nominee, it may
appoint at least one (1) proxy in respect of each
securities account it holds with ordinary shares
of the Company standing to the credit of the said
securities account.
Where a member appoints more than one (1) proxy, the
appointment shall be invalid unless he specifies the
proportion of his shareholdings to be represented by
each proxy.
The instrument appointing a proxy shall be in writing and
in the case of an individual shall be signed by the
appointor or by his attorney and in the case of a
Shares transferred into the Depositor's
Securities Account before 4.00 p.m. on
1 September 2008 in respect of ordinary
transfer;
b)
BY ORDER OF THE BOARD
Chua Chooi Hong
(MAICSA NO: 0815871)
Liyana Lee Abdullah
(MIA 10293)
Company Secretaries
Bandar Baru Bangi, Selangor Darul Ehsan
17 June 2008
corporate member, shall be either under its Common Seal
or signed by its attorney or an officer of the corporation
duly authorised.
The instrument appointing a proxy must be deposited at
the Registered Office of the Company at Lot 2 & 4, Jalan
P/11, Seksyen 10, Kawasan Perindustrian Bangi, 43650
Bandar Baru Bangi, Selangor Darul Ehsan, not less than
forty eight (48) hours before the time set for holding the
Meeting or any adjournment thereof.
2.
Directors’ fees
The directors’ fees for the financial year ended
31 January 2008 amounted to RM206,000.
3.
Ordinary Resolution pursuant to Section 132D of the
Companies Act, 1965
The proposed Ordinary Resolution 8, if passed, would,
subject to the Listing Requirements of Bursa Malaysia,
enable the directors to issue up to a maximum of ten per
centum (10%) of the total issued and paid-up share
Shares bought on Bursa Malaysia Securities
Berhad on a cum entitlement basis
according to the rules of the Bursa Malaysia
Securities Berhad.
capital of the Company at the date of such issuance for
such purposes as the directors consider would be in
the best interest of the Company. This authority
unless revoked or varied by the Company at a general
meeting will expire at the conclusion of the next Annual
General Meeting.
4.
Special Resolution pursuant to proposed amendment
to the Articles of Association
The proposed Special Resolution 1 if passed, will cause
the Company’s Articles of Association to be amended in
line with the amendments on the Listing Requirements of
Bursa Malaysia Securities Berhad.
5.
The Statement accompanying this Notice of Annual
General Meeting is contained on page 004 of the
Annual Report.
004
STATEMENT ACCOMPANYING NOTICE OF AGM
Directors who are retiring and standing for re-election at the Thirty Second Annual General Meeting:
(a)
Retiring pursuant to Article 107 of the Company’s Articles of Association
(i) Datuk Shahril bin Shamsuddin
(ii) Dato’ Mazlin bin Md Junid
(b)
Retiring pursuant to Section 129 (1) and (6) of the Companies Act, 1965
(i) Tan Sri Dato’ Seri Ir. Shamsuddin bin Abdul Kadir
Details of the above Directors who are standing for re-election are provided for in the respective Directors’ Profile on pages 012 and 014 of this Annual Report.
Details of their interest in the securities of the Company can be found on page 040 of this Annual Report.
CORPORATE INFORMATION
BOARD OF DIRECTORS
Tan Sri Dato’ Seri Ir. Shamsuddin bin Abdul Kadir
Chairman
Datuk Shahril bin Shamsuddin
Deputy Chairman
Dato’ Azlan bin Hashim
Company Director
BOARD NOMINATION AND
REMUNERATION COMMITTEE
Tan Sri Dato’ Seri Ir. Shamsuddin bin Abdul Kadir
Chairman of Committee
Non-Independent Non-Executive
Dato’ Mazlin bin Md Junid
Member of Committee
Independent Non-Executive
005
REGISTERED OFFICE
Lot 2 & 4, Jalan P/11, Seksyen 10
Kawasan Perindustrian Bangi
43650 Bandar Baru Bangi
Selangor Darul Ehsan
: 603-8925 6011
: 603-8925 8292
REGISTRAR
Dato’ Mazlin bin Md Junid
Company Director
Datuk Kisai bin Rahmat
Member of Committee
Independent Non-Executive
Shah Hakim bin Zain
Company Director
Datuk Kisai bin Rahmat
Company Director
Ir. Md. Shah bin Hussin
Managing Director
EMPLOYEE SHARES OPTION SCHEME (ESOS)
COMMITTEE
Azmi bin Hashim (alternate Director
to Dato’ Azlan bin Hashim)
Chairman of Committee
Non-Independent Non-Executive
Shahriman bin Shamsuddin
Executive Director
Ir. Md. Shah bin Hussin
Member of Committee
Managing Director
AUDIT COMMITTEE
Datuk Kisai bin Rahmat
Member of Committee
Independent Non-Executive
Datuk Kisai bin Rahmat
Chairman of Committee
Independent Non-Executive
Tenaga Koperat Sdn. Bhd.
20th Floor, Plaza Permata
Jalan Kampar
Off Jalan Tun Razak
50400 Kuala Lumpur
: 603-4041 6522
: 603-4042 6352
AUDITORS AND REPORTING ACCOUNTANTS
Ernst & Young
Chartered Accountants
Level 23A, Menara Milenium
Jalan Damanlela
Pusat Bandar Damansara
50490 Kuala Lumpur
: 603-2087 7000
: 603-2095 9076/9078
STOCK EXCHANGE LISTING
Dato’ Mazlin bin Md Junid
Member of Committee
Independent Non-Executive
COMPANY SECRETARIES
Dato’ Azlan bin Hashim
Member of Committee
Non-Independent Non-Executive
Liyana Lee binti Abdullah
(MIA NO: 10293)
Chua Chooi Hong
(MAICSA NO : 0815871)
Bursa Malaysia Securities Berhad
(Main Board)
A surge in demand for locally manufactured automotive components
continues to result in better financial performance.
008
COMPANY STRUCTURE
AS AT 31 JANUARY 2008
Sapura Holdings
Sdn. Bhd.
Malaysian Public
AMDB Berhad
44.55%
47.93%
7.52%
Paid-up Capital: RM72.776 million
Sapura Machining
Corporation
Sdn. Bhd.
Sapura Automotive
Industries Sdn. Bhd.
Sapura Technical
Centre Sdn. Bhd.
Asian Automotive
Steels Sdn. Bhd.
Sapura Brake
Technologies Sdn. Bhd.
100%
(RM15 million)
100%
(RM7.1 million)
100%
(RM2 million)
100%
(RM4 million)
100%
(RM3 million)
Metal Formers
Sdn. Bhd.
Subang Properties
Sdn. Bhd.
Sapura-Schulz
Hydroforming
Sdn. Bhd.
Isencorp Sdn. Bhd.
Automotive Specialist
Centre Sdn. Bhd.
100%
(RM4.5 million)
51.68%
(RM184 thousand)
75%
(RM32 million)
100%
(RM500 thousand)
100%
(RM1 million)
Ciri Tegap Sdn. Bhd.
Awaltek Sdn. Bhd.
33.3%
(RM900 thousand)
100%
(RM2)
CORPORATE EVENTS 2007-2008
2 February 2007
We care, we share
* Realising the pain and hardship of flood victims
especially in Johor, the Group organised a donation
activity among its staff to be contributed to the
flood victims.
7 May 2007 & 7 August 2007
Quality – standards of formality
* Sapura Machining Corporation Sdn. Bhd.
successfully achieved ISO 14001 EMS and OHSAS
18001 certifications from SGS (Malaysia) Sdn. Bhd.
(Systems & Services Certification). These
international standards set the guidelines for
environmental and safety management.
11 June 2007
Safety – Never an option
* Safety and Health campaign for the Group was
organised at Sapura Industrial Berhad. During the
campaign, various activities were held such
as exhibition, talks and demonstrations. The main
objective was to inculcate safety and health
awareness to the staff.
009
28 July 2007
20 September 2007
A Day of Fitness
*The Group’s Sports Carnival was successfully
organised at Institut Latihan Sultan Ahmad Shah
(ILSAS), Bangi with the objective of fostering the
sporting spirit among the staff. Sapura Machining
Corporation Sdn. Bhd. emerged as the year’s overall
champion.
Sharing of good fortune
* A breaking fast ceremony with “Anak-anak yatim”
from Sungai Sampo, Serting, Negeri Sembilan was
held at Dewan Felda Serting Hilir 4, Bandar Sri
Jempol, Negeri Sembilan. Donations in monetary
form and clothes which were collected earlier by
Sapura staff were distributed to the Anak-anak
Yatim. Apart from giving the “sedekah”, it is the
objective of the Group to inspire and give
happiness to these children.
8 September 2007
Creating an innovative work force
* The Group’s annual Innovative & Creative Circle
(ICC) Convention was held at Dewan Akademi
Percukaian Negara, Bangi. The objective of the
convention is to instill innovative thinking among
our staff. All subsidiaries participated in this half
day convention. The best ICC team award went to
Sapura Machining Corporation Sdn. Bhd.
15 December 2007
Family at heart
* Family Day is a yearly event with the objective of
providing a platform for staff and families to know
and interact with each other. During the financial
year the event was held at the Taman Botani,
Putrajaya.
14 September 2007
Sharing of good fortune
* A breaking fast ceremony for the Group with
Y. Bhg. Tan Sri Dato’ Seri Ir. Shamsuddin bin Abdul
Kadir was held at Sapura Machining Corporation
Sdn. Bhd. followed by terawih prayers and
qiamulail in the later part of the evening. Family
members and the Group’s adopted children were
also invited for this occasion.
July to December 2007
MAJAICO Programme
* Sapura Machining Corporation Sdn. Bhd. has been
selected by SMIDEC with seven (7) other companies
in Malaysia as a role model especially for
improvement process and capacity upgrading.
29 January 2008
Financial Seminar
* The Financial Seminar for Financial year
2008/09 was held at JW Marriot, Putrajaya with
the objective of sharing information between the
management and all the executives on the Group’s
performance and future direction.
010
BOARD OF DIRECTORS
standing from left to right
Tan Sri Dato’ Seri Ir. Shamsuddin bin Abdul Kadir Chairman
Datuk Shahril Shamsuddin Deputy Chairman
Shahriman Shamsuddin Executive Director
Datuk Kisai bin Rahmat Independent Non-Executive Director
011
Dato’ Mazlin bin Md Junid Independent Non-Executive Director
Dato’ Azlan bin Hashim Non-Independent Non-Executive Director
Shah Hakim bin Zain Independent Non-Executive Director
Ir. Md. Shah bin Hussin Managing Director
012
PROFILE OF BOARD OF DIRECTORS
Tan Sri Dato’ Seri Ir. Shamsuddin bin Abdul Kadir
Non-Independent Non-Executive Chairman
Malaysian/Age: 76
PSM, SPCM, DPMJ, DPCM, JMN, Hon. Fellow I.E.M., F.A.Sc. C.Eng., D.Sc. (Mgmt Tech)(Hon)(UTM), D.Eng. (Hon)(USM), DBA(Hon)(UKM), P.Eng., MIE(Mal), MIEE(UK), MIMARE (UK)
Tan Sri Dato’ Seri Ir. Shamsuddin bin Abdul Kadir was first appointed to the Board of Sapura Industrial Berhad on 12 March 1974. Tan Sri is the Chairman of
Sapura Industrial Berhad’s Board Nomination and Remuneration Committee. Tan Sri is also the Founder and Chairman of Sapura Holdings Sdn. Bhd., Chairman
of Sapura Technology Berhad, Sapura Resources Berhad and Universiti Tun Hussein Onn Malaysia. Tan Sri started his career with Jabatan Telekom Malaysia in
1959 and served in various posts, the last being Telekom Controller of Perak. Formerly, Tan Sri was the Executive Director of United Motor Works Berhad (UMW),
Chairman of BIMB Holdings Berhad and Bank Islam Malaysia Berhad and Director of Universiti Teknologi Malaysia.
Datuk Shahril bin Shamsuddin
Non-Independent Non-Executive Deputy Chairman
Malaysian/Age: 47
PJN, M.Sc. in Management of Technology (Massachusetts Institute of Technology, Sloan), B.Sc. Industrial Technology (Cal Poly)
Datuk Shahril Shamsuddin, aged 47, is the President and Chief Executive Officer of the Sapura Group – a group of companies in the businesses of oil & gas
services, secured communications technologies, industrial and automotive component manufacturing, education and premium retail.
Datuk Shahril has held several senior positions in the Sapura Group since 1985 and assumed the helm as Group President and CEO in 1997. Since then he has
restructured the Group’s financials and its portfolio of businesses – making several key acquisitions of companies and technologies and disposing of some assets
and businesses, based on fit with the Group’s strategies.
Datuk Shahril was appointed to the Board of Sapura Industrial Berhad on 2 December 1993 and as Deputy Chairman on 29 November 2002.
Other appointments held by Datuk Shahril presently include Executive Vice Chairman of SapuraCrest Petroleum Berhad, Non-Executive Director of Sapura
Resources Berhad and President and CEO of Sapura Secured Technologies, a privately held division of the Sapura Group. Beyond the Sapura Group, appointments
presently held include Chairman of Mimos Berhad, Board Member of Malaysian External Trade Development Corporation (MATRADE), Multimedia Development
Corporation Sdn Bhd (MDC) and Board of Trustee of Perdana Leadership Foundation.
Awards and honours that Datuk Shahril has received include the Panglima Jasa Negara (PJN) from the Federal Government of Malaysia which carries the title
“Datuk” (June 1998), Darjah Seri Paduka Tuanku Ja’afar (SPTJ) from Negeri Sembilan, Malaysia, which carries the title “Dato’ Seri” (July 2007) and the Legion
d Honneur from the Republic of France (November 2007).
Datuk Shahril holds a Master of Science in Management of Technology from MIT Sloan School of Management and a Bachelor of Science in Industrial
Technology from California Polytechnic State University.
013
Dato’ Azlan bin Hashim
Non-Independent and Non-Executive Director
Malaysian/Age: 66
DSNS, DSSA, FCA (Ireland), MACPA (Mal), FIBM (Mal), FEDI (Washington)
Dato’ Azlan was first appointed to the Board of Sapura Industrial Berhad on 20 December 1996. Dato’ is a member of the Audit Committee of Sapura
Industrial Berhad.
Dato’ is the Deputy Chairman of AMMB Holdings Berhad and AmInternational (L) Limited. Dato’ is also the Executive Chairman of Global Carriers Berhad and sits
on the Boards of Kumpulan Perangsang Selangor Berhad, Paramount Corporation Berhad, Metrod (M) Berhad and Syarikat Permodalan & Perusahaan
Selangor Berhad.
Prior to his joining AMDB Berhad in 1982, Dato’ was a Senior Partner of the public accounting firm, Azman, Wong, Salleh & Co. He also served with the Malayan
Railways between 1966 to 1971, two years of which as its Chief Accountant.
Dato’ is also a Fellow of the Institute of Chartered Accountants (Ireland), a Fellow of the Economic Development Institute (World Bank, Washington DC, USA) as
well as a Fellow of the Institute of Bankers Malaysia. Dato’ is also a Certified Public Accountant registered with Malaysian Association of Certified Public
Accountants (MACPA).
Datuk Kisai bin Rahmat
Independent Non-Executive Director
Malaysian/Age: 57
KMN, PJN, B.Sc. (Mech.Eng.), M.Sc. in Industrial Engineering and Production Management
Datuk Kisai was first appointed to the Board of Sapura Industrial Berhad on 18 October 2006. Datuk is the Chairman of the Audit Committee and a member of
the Board Nomination and Remuneration Committee as well as the Employee Share Option Scheme (ESOS) Committee of Sapura Industrial Berhad.
Prior to joining Sapura Industrial Berhad, Datuk was the Executive Director for Proton Holdings Berhad and a Director of several Proton’s subsidiary companies
including Lotus Group International Limited UK and Vina Star Motors Corporation Vietnam. At present, Datuk is an Advisor to Yasmin Holdings Sdn. Bhd. and the
Vice-Executive Chairman to Jurumuda Sdn. Bhd.
Shah Hakim bin Zain
Independent Non-Executive Director
Malaysian/Age: 43
Encik Shah Hakim was first appointed to the Board of Sapura Industrial Berhad on 22 February 1999. He started his career as an auditor with Ernst & Young
and was subsequently promoted as Consulting Manager, responsible for servicing large local corporations. He went on to be appointed as Executive Director of
a regional packaging manufacturer in 1992 with direct operational responsibility.
Currently, Encik Shah Hakim is the Chief Executive Officer and Executive Director of Scomi Group Berhad, Scomi Marine Berhad and Scomi Engineering Berhad.
014
PROFILE OF BOARD OF DIRECTORS (CONT’D.)
Dato’ Mazlin bin Md Junid
Independent Non-Executive Director
Malaysian/Age: 46
MBA, B.Sc. (Mech.Eng.), DIMP
Dato’ Mazlin was first appointed to the Board of Sapura Industrial Berhad on 2 January 2002. Dato’ is a member of the Audit Committee and the Board
Nomination and Remuneration Committee of Sapura Industrial Berhad.
Dato’ is currently the Executive Vice-Chairman of Daya Materials Berhad. Dato’ also sits on the Board of Sapura Technology Berhad and MTD Infraperdana Berhad
where he is the Chairman of the Audit Committee. He is also a director of several private companies within the Daya Materials Group and companies which he
owns. Dato’ previously held various senior posts in the Sime Darby Group where he managed five (5) companies within the group.
Shahriman bin Shamsuddin
Executive Director
Malaysian/Age: 39
M.Sc. in Engineering Business Management (Warwick), B.Sc. Industrial Technology (Purdue, USA)
Encik Shahriman was first appointed to the Board of Sapura Industrial Berhad on 29 January 2002. He held a number of senior positions within the Sapura Group
since 1991. Currently, he is also the Managing Director of Sapura Resources Berhad as well as a director in Sapura Technology Berhad and Sapura Holdings Sdn. Bhd.
Ir. Md. Shah bin Hussin
Managing Director
Malaysian/Age: 57
MBA, B.Sc. (Mech.Eng.), P.Eng., MIEM
Encik Md. Shah has been the Managing Director of Sapura Industrial Berhad since 1 September 1997. He is also a member of the Employee Share Option Scheme
(ESOS) Committee of Sapura Industrial Berhad.
Prior to his appointment as Managing Director, he was the Group General Manager of Sapura Industrial Berhad. He was formerly an Assistant General Manager
of HICOM-Yamaha Manufacturing (M) Sdn. Bhd., General Manager of Body Fashion (M) Sdn. Bhd. and H & R Johnson (M) Berhad.
ADDITIONAL INFORMATION ON BOARD OF DIRECTORS
1.
2.
3.
4.
Family relationship with directors and/or substantial shareholders
None of the directors of the Company have any family relationship with the other directors and/or substantial shareholders of the Company except for
Datuk Shahril bin Shamsuddin and Encik Shahriman bin Shamsuddin who are the sons of Tan Sri Dato’ Seri Ir. Shamsuddin bin Abdul Kadir and who are
deemed to have an indirect interest of 44.55% in Sapura Industrial Berhad as at 31 January 2008 pursuant to Section 6A of the Companies Act, 1965 by
virtue of their direct and indirect interest in Sapura Holdings Sdn. Bhd.
Conflict of Interest
None of the directors of the Company have any conflict of interest with the Company.
Convictions for offences
None of the directors of the Company have been convicted for offences within the past 10 years other than traffic offences, if any.
Attendance at Board Meetings
The Board of Directors’ attendance record at Board meetings held during the financial year ended 31 January 2008 can be found on page 031 of this
Annual Report.
FINANCIAL HIGHLIGHTS
2004
2005
31 JANUARY
2006
015
2007
2008
Revenue
(RM’mil)
96.5
143.9
173.4
166.5
145.4
Profit/(loss) for the year
(RM’mil)
0.8
12.1
7.1
(70.0)
5.1
Profit/(loss) attributable to equity holders of the Company
(RM’mil)
0.8
8.2
7.2
(57.9)
5.1
Shareholders’ fund/Equity
(RM’mil)
108.5
120.8
147.5
54.9
60.0
Basic EPS
(sen)
1.31
12.56
10.27
(79.57)
7.06
Diluted EPS
(sen)
1.30
12.56
10.27
(79.57)
7.06
Net asset per share
(RM)
1.67
1.86
2.03
0.75
0.82
Number of ordinary shares at financial year end
(‘mil)
64.9
64.9
72.8
72.8
72.8
1.67
120.8
0.8
0.82
0.75
60.0
5.1
7.1
12.1
54.9
96.5
108.5
1.86
147.5
2.03
(RM‘mil)
(RM‘mil)
143.9
145.4
166.5
173.4
(RM‘mil)
Net asset per share
Shareholders‘ fund/Equity
Profit/(loss) for the year
(RM)
Revenue
‘05
‘06
‘07
‘08
‘04
(70.0)
‘04
‘04
‘05
‘06
‘07
‘08
‘05
‘06
‘07
‘08
‘04
‘05
‘06
‘07
‘08
Developing exceptional products and executing innovative strategies
ensure we gain new businesses in international markets.
018
CHAIRMAN’S STATEMENT
‘Achieving More’
Dear Shareholders,
The year under review ended 31 January 2008 marked Sapura Industrial Berhad’s
(“Sapura Industrial” or “the Group”) return to profitability. The Group recorded a
profit before tax of RM9.12 million, which is a 113% improvement from the loss
before tax of RM67.87 million recorded in financial year 2007. The turnaround was
achieved against a background of significant and persistent challenges in the
Malaysian automotive industry.
Financial numbers aside, the Group also made
positive gains on several fronts during the year in
review. In the face of a dynamic business
landscape, Sapura Industrial continued to build
resilience through improvements in capacity
utilisation and developing its own design
capabilities to meet customers’ requirements. We
have also made headway in diversifying our
customer base, expanding export sales in the
original equipment market (OEM). The Group has
also drawn up and implemented far-ranging plans
for technology development and charted new
directions to expand its markets over the next five
years. These plans will position the Group for the
next thrust forward and serve as a roadmap
towards the realisation of our Vision and Mission.
Sapura Industrial will continue to play a key role
in the national aspiration of making Malaysia a
regional automotive hub. In doing so, the Group
will also fulfil its ultimate objective of ensuring
long-term sustainable growth and profitability,
thereby enhancing shareholder value.
It is my pleasure to present this Annual Report and
the Audited Financial Statements of Sapura
Industrial Berhad for the financial year ended
31 January 2008 (FY 2008).
OPERATING ENVIRONMENT
The automotive industry in Malaysia, which is the
mainstay of the Group’s business, has undergone
rapid changes over the past few years. The postAFTA (ASEAN Free Trade Agreement) regime has
given rise to the growing liberalisation of the
Malaysian automotive markets. In compliance with
AFTA, Malaysia has reduced import duties on
foreign cars from January 2005 and this has
resulted in a broader range of vehicles imported
into the country, posing stiff competition to local
marques. The myriad of challenges faced by
automotive manufacturers was also compounded
by a scarcity of supply of raw materials, notably
steel, which resulted in a 50% spike in the price
of steel.
019
Tan Sri Dato’ Seri
Ir. Shamsuddin
bin Abdul Kadir
Chairman
020
CHAIRMAN’S STATEMENT (CONT’D.)
Although the Malaysian economy grew by 6.3% in
2007, the strong growth momentum was not
translated into vehicle sales. For the year,
according to data released by the Malaysian
Automotive Association (MAA), the total industry
volume (TIV) of motor vehicles sold in 2007
registered a 0.7% decrease to 487,176 units.
However, it is noteworthy that the decline was not
as steep as the 11% drop experienced in 2006 and
we see this as a positive and encouraging
development. Passenger vehicle sales of 466,172
units accounted for a 91% share of the TIV, with
commercial vehicles making up the remainder.
Sales of both passenger and commercial vehicles
fell by 0.7% in 2007.
The Group’s return to profitability was attributed
mainly to more stringent cost-cutting measures;
improved efficiencies and productivity; and
provisions made for full impairment loss in a
subsidiary, Sapura-Schulz Hydroforming Sdn Bhd
(Sapura-Schulz).
Against this scenario, competition among the
various automotive players remained stiff. Despite
a massive advertising blitz and promotional
campaigns to boost sales, these were offset by
higher interest rates, tighter credit controls, higher
fuel prices and lower trade-in values for used cars.
With the Group’s return to the black, the Board
of Directors is pleased to recommend a first and
final tax-exempt dividend of three (3) sen per
ordinary share for the financial year ended
31 January 2008. This will be subject to the
approval of shareholders at the forthcoming
Annual General Meeting.
The lower turnover in FY 2008 also stemmed
from the Group’s consolidation efforts, which
involved divesting operations that do not perform
according to expectations and the down sizing of
Sapura-Schulz.
DIVIDENDS
IMPROVED FINANCIAL
PERFORMANCE
ACHIEVING MORE
For the year under review, the Group recorded a
profit before tax of RM9.12 million, a 113%
improvement from the loss before tax of RM67.87
million posted in FY 2007. This was achieved on the
back of turnover of RM145.36 million, which is
12.7% lower than the RM166.52 million registered
previously. Correspondingly, earnings per share rose
to 7.06 sen, against a loss of 79.57 sen in FY 2007.
Achieving a turnaround in the financial
performance of the Group was without question,
the outstanding achievement of the year in
review. But this is but one of the targets in a broad
range of key performance indicators (KPIs). The
Group’s KPIs cover an entire spectrum of the
manufacturing business, which include operations,
quality, capacity utilisation, downtime,
021
Group is also striving to achieve more
in terms of operational efficiency.
maintenance, business development, safety and
human resource development, just to cite a few
examples. While it is beyond the scope of this
report to delve into details, I am pleased to report
that in almost every area of the business
manufacturing and supply chain, the group has met
most of its KPIs. Though more work need to be
done to improve in this area, these benchmark KPIs
has helped ensure that the overall objectives of the
Group for the FY 2008 have been met.
The rollout of new models such as the Persona and
new Saga from Proton and the Viva from Perodua
has improved capacity utilisation rates to a more
competitive and efficient level. This has also been
boosted by increased orders from export sales. The
Group is now looking into additional investments
to accommodate the volume increase in Campro
engine components as well as the brake system
assembly modules.
At the same time, the Group is also striving to
achieve more in terms of operational efficiency.
Besides implementing cost control and cost
reduction measures, we are looking into ways of
achieving greater flexibility in operations to
maintain a high level of capacity utilisation. The
key consideration is practicality and this means
that before investing in any new equipment and
machinery, we ensure it is adaptable to prevent
obsolescence and wastage.
The Group has also achieved more in terms of
penetrating new export markets. Our overseas drive
began in 2006, when we established our presence
in markets such as Norway, Singapore, Thailand
and the Philippines. Building on a track record of
meeting critical and stringent requirements set by
customers, we began to look further afield.
Recently, the Group has secured two additional
customers in India and Brazil.
Customers of today are more quality-savvy and
demanding and in order to successfully penetrate
overseas markets, all operating companies within
the Group have been certified to internationally
recognised quality management systems such as
TS 16949, ISO 14001 and most recently the OHSAS
18001. OHSAS 18001 is an international
occupational health and safety management
system specification that aims to eliminate risks to
employees, demonstrate diligence and
conformance, whilst allowing for continual
improvements. These certifications are a
prerequisite among global car manufacturers to
be short-listed as a bidder and ensure the practice
of global quality standard in the Group. The
customers would conduct yearly audits on-site to
ensure the efficacy and effectiveness of the quality
system in place.
Apart from these certifications, the Group has also
adopted other quality-improvement systems such
as the Toyota Production System (TPS), Total
Productive Maintenance (TPM) and Quality
Management System (QMS). The TPS was created
by the founder of Toyota, and is specifically
designed to weed out overburden (Muri),
inconsistency (Mura) as well as to eliminate waste
022
CHAIRMAN’S STATEMENT (cont’d.)
The Group has channelled its focus on five main
development areas: business; technology; human resource;
operational and financial.
(Muda). I am proud to inform you, that on the
strength of the TPS system implemented, our
subsidiary Sapura Machining Corporation Sdn Bhd
(SMC), was selected together with seven other
companies in Malaysia, to be a role model for
improvement process and capacity upgrading. SMC
achieved a 64.8% reduction in setting-up time and
a 193% increase in productivity with the TPS
system. The programme was jointly carried out by
the Small and Medium Industries Development
Corporation (SMIDEC) and the Malaysia Japan
Automotive Industries Cooperation (MAJAICO)
agency. It therefore came as no surprise when SMC
bagged the best team award for the Sapura
Group’s annual Innovative and Creative Circle (ICC)
Convention held in September 2007.
Certification to these environmental quality
systems meets more than just a business objective.
From the very outset, the Group long believed
it has a moral responsibility to do more than
just pay lip services on health, safety and
environmental (HSE) matters. We owe it to our
employees, our customers and the public at large,
and this is one of the principles of corporate social
responsibility that the Group has embraced. This is
also enshrined in the Group’s Health, Safety and
Environment Policy whereby the implementation
of HSE is clearly spelled out as a management
responsibility that requires the total commitment
of all employees.
THE WAY FORWARD
As reflected in the theme, FY 2008 was a year of
achieving more, but I believe that this is only the
beginning of more to come. The results we have
chalked up the last year have provided the Group
with a solid foundation to launch itself into a new
phase of growth. As the contours of the Malaysian
automotive landscape become better defined in the
wake of the National Automotive Policy, there is still
significant untapped potential in the industry.
On the part of Sapura Industrial, we have in place
strategic plans that will take the Group to where we
want to be over the next five years. The Group has
channelled its focus on five main development areas:
business; technology; human resource; operational
023
and financial. For each of these areas, we have
developed well-thought out and detailed plans that
will enable the Group to migrate from one level to
the next. Targets have been established so that we
can measure the progress and take the necessary
steps to bridge any gaps that may result.
The Group will also continue with efforts to enhance
its in-house capabilities. Over the next several years,
Sapura Industrial plans to invest close to RM6.0
million to see its technology development plan
through to fruition. In this regard, we have forged
strong ties with some of the leading names in the
automotive businesses in Japan, Korea, Germany and
United Kingdom. We will continue to establish
strategic partnerships to acquire leading-edge
automotive technologies.
automotive industry, where the MAA has projected
that the positive sales trend recorded since June
2007 would continue and spill over into 2008. The
favourable market conditions for vehicle sales
would be supported by factors such as a pay
increase for civil servants, less stringent approvals
for hire purchase loans, introduction of new
models in the lower engine capacity range and
the full-year impact of new models launched in
the second half of 2007. Customers too have come
to terms with the existing car prices now that duty
structures have stabilised.
Taking all these factors into consideration, the
MAA has forecast that the TIV of motor vehicle
sales in 2008 will grow by 4.7% to 510,000 units.
Passenger vehicle sales would register an increase
by 4.5%, while sales of commercial vehicles are
expected to increase by 6.1%.
A PROMISING OUTLOOK
The coming financial year (FY 2009) is already
shaping up to be a promising one. While
moderation is expected in the developed
economies in 2008, the growth momentum is
expected to be sustained in Asia and other
emerging economies. According to Bank Negara
Malaysia, the Malaysian economy is expected to
remain on a steady growth path, expanding by 5%
to 6% in 2008, supported by resilient domestic
demand. This outlook bodes well for the domestic
The Group remains confident that we will continue
to break into new overseas markets. Past
experience has taught us that the primary
concerns of our customers abroad are quality, cost
and timely delivery of orders. The Group has an
excellent track record of meeting these conditions,
which we will continue to reinforce with the
introduction of new initiatives and measures.
For all these very cogent reasons, I remain
optimistic on the future of Sapura Industrial Group
performance.
ACKNOWLEDGEMENTS
A great deal was accomplished the past year and
we owe this to the hard work, dedication and
professionalism of our management and staff.
They make a great team, and we will continue to
rely on them as we strive to achieve even more.
I would also like to thank my fellow Board
members for their unstinting support and
wise counselling.
The Group is also indebted to members of our
support team, comprising our shareholders,
customers, suppliers, financiers, business associates
and government agencies. Your support and
encouragement have always made the difference
in a challenging environment and is a critical
ingredient to our future success.
Sapura Industrial has a busy and eventful year
ahead. Let us all work together to unlock the full
potential that the Group has to offer.
Thank you.
Tan Sri Dato’ Seri Ir. Shamsuddin
bin Abdul Kadir
Chairman
Creating new technological methods whilst investing in our human
capital in order for us to develop a sustainable future.
026
CORPORATE SOCIAL RESPONSIBILITY
CSR is a Sapura Group undertaking and Sapura Industrial
is proud to play an integral part of Sapura Group’s efforts
in enriching the society in which it operates.
established by the Chairman and Founder of the
Sapura Group of Companies. The Shamsuddin
Abdul Kadir Foundation provides a platform for
the Sapura Group to render assistance to improve
local communities, provide education-related
resources and support for economically
challenged students, and participate meaningfully
in other social welfare campaigns.
Through the Foundation, the Sapura Group has
provided funding for two new children’s homes in
the tsunami-devastated region of Acheh,
Indonesia. Opened between 2006 – 2007, the
homes offer shelter and sustenance to 300
orphans from Acheh and the surrounding
communities. Through our efforts, we hope to give
these children a fresh start to rebuild their lives.
Senior executives from Sapura and representatives
from Mercy Malaysia visit the homes regularly to
evaluate the progress and needs of the children.
Corporate Social Responsibility (CSR) has long
been an integral part of the Sapura Group’s
business and operating philosophy. A strong sense
of humanitarianism, community service and
nation building form key elements of the bedrock
on which the Group is built and has grown and
prospered. With prosperity comes an obligation to
ensure that our success is inclusive. The Group’s
commitment to CSR is best manifested in Yayasan
Shamsuddin Abdul Kadir, named after and
In a land of plenty such as Malaysia, it is easy to
forget that there are also those who are less
fortunate. The Group continues to look out for the
well-being of orphans by responding to fundraising requests from orphanages all over
Malaysia. We also make it a point to celebrate the
festive cheer of Ramadhan and the Hari Raya
season with orphans from various homes all over
the country. Staff participation at these events
have made the festive season even more
meaningful for all.
Apart from the homes, the Group has also
contributed to the recovery and rehabilitation of
Acheh province on an ongoing basis. In the
immediate aftermath of the disaster, we
contributed field communications equipment and
a four-wheel drive to facilitate rescue efforts by
Mercy Malaysia. Sapura is also funding the
construction and outfitting of vessels to enable the
fishing community to get back their source of
livelihood. To date, nine boats have been
completed and delivered to the community and
are in good working order.
As part of our efforts to alleviate the suffering of
flood victims in Pekan and Rompin, the Group
donated 1,550kg of “Qurban” meat during Hari
Raya Haji. Gifts of meat were delivered to flood
relief centres as well as to stranded families via
barges. In addition, some 2,800 blankets, 1,500
sarongs and 4,200 packs of baby milk powder
were provided to help meet the basic needs of
those affected by the floods.
The Sapura Group is committed to nurturing young
minds by providing an avenue for needy and
deserving students to realise their academic and
career goals. Over the course of the year, Sapura’s
subsidiary, Asia Pacific Institute of Information
Technology in conjunction with Malaysian dailies
and scholarship bodies granted some RM0.9
million worth of higher-education scholarships to
26 students for their undergraduate studies.
027
Rallying round the clarion call of “Malaysia Boleh”,
the Sapura hockey team did the Group and the
nation proud when it was selected by the
Malaysian Hockey Federation and endorsed by the
Olympic Council of Malaysia to represent the
country at the 2nd Asian Indoor Games Macau
2007. The Group also played a part in helping spur
on the disabled through its support of the Sport
Carnival OKU 2007 organised by Persatuan Warga
Istimewa & Rehabilitasi, Hospital Kuala Lumpur.
We played our part in upholding Malaysian arts
and our cultural heritage by taking on the main
sponsorship for “P. Ramlee the Musical”, a fitting
tribute to the beloved artiste who elevated the
status of Malaysian theatre and film. The musical
played to audience of 21,000 and boasted over 18
sold-out shows at Istana Budaya.
In recognition of the worthy sacrifices of past and
present defence serviceman, Sapura made a
RM350,000 donation to Tabung Hari Pahlawan
PBTM for the benefit of ex-military personnel and
their families. To boost the morale of on-duty
servicemen outside Malaysia during the Raya
period, the Group played the role of main sponsor
for the “Bungkusan Hari Raya Aidilfitri 1428H”
that saw parcels being sent to all our military
servicemen overseas.
As part of our commitment to giving back to the
communities we operate in, Sapura supports
numerous worthy causes through sponsorship of
charity dinners, functions and tournaments. In
2007, the Group was the main sponsor for the
Pride-Monsoon Cup Charity Gala Dinner for breast
cancer awareness and treatment. As part of our
efforts to alleviate the suffering of the less
privileged, we played the role of main sponsor for
the Sheila Majid Concert in aid of the IJN
Foundation which aimed to fund treatment
charges and hospital bills for poor and
underprivileged heart patients.
While the Sapura Group supports many registered
charitable groups and worthy causes, as the saying
goes, charity must also begin at home. For Sapura,
our CSR efforts must cover our employees, many of
whom have invested years in the Group, building a
lifetime career. As a token of appreciation for their
years of service and outstanding performance
record, a number of Muslim staff from the Group
were selected to perform the Umrah, with all
expenses borne by Sapura.
We take the welfare and well-being of our
employees very seriously. That is why we place a
premium on issues related to health, safety and
the environment. As part of the Group’s CSR effort,
safety and health campaigns and various sporting
and social activities were organised to ensure the
well-being of our employees. It is a concern that is
extended to the children of employees who have
passed away whilst in service within the Group.
These, the Group’s adopted children as we call
them, are given a stipend each month until they
reach the age of 18.
The Group’s CSR contributions may not always be
in the form of cash. Take for example, the blood
donation drive held in January 2008. Some 96
donors from the various subsidiaries were on
hand to donate what is perhaps the most precious
gift of all – the gift of life.
It is through these many CSR programmes that the
Sapura Group hopes to make a difference and
build a better tomorrow for the various
communities within which we operate.
028
STATEMENT ON INTERNAL CONTROL
Responsibility
The Board of Directors (“the Board”) of Sapura
Industrial Berhad acknowledges responsibility for
maintaining a sound system of internal control for
the Group and for reviewing its adequacy
and integrity so as to safeguard shareholders’
invesment and the assets of the Group whilst the
management’s role is to implement Board policies
on risk and control.
However, due to inherent limitation the Board
recognises that the system of internal control is
designed to manage rather than eliminate the risk
of failure to achieve business objectives and can
only provide reasonable and not absolute
assurance against material misstatement or loss.
Key Internal Control Process
In pursuing its responsibility, the Board has an
ongoing process for identifying, evaluating and
managing the significant risks faced by the Group,
which has been in place for the financial year
under review and up to the date of approval of the
Annual Report and Financial Statements.
This process is regularly reviewed by the
Board through its Audit Committee and is in
accordance with the guidelines on Statement on
Internal Controls: Guidance for Directors of Public
Listed Companies.
The Audit Committee assists the Board in
reviewing the adequacy and integrity of the
system of internal controls of the Group. The Audit
Committee is assisted by the Internal Audit
Department which carries out regular and
systematic review of the systems of internal
control of the Group and also the extent
of compliance with the Group’s operating policies
and procedures.
The Internal Audit Department carries out internal
control reviews on the financial and operating
activities of the Group based on an annual
plan that was presented and approved by the
Audit Committee.
An Enterprise – Wide Risk Management framework
through the application of the Corporate Risk
Scorecard (CRS) has been established for Sapura
Industrial Berhad. The risk assessment and findings
were identified through a combination of
interviews and a facilitated workshop. The process
used in the interviews and workshop provided a
structured approach in identifying, prioritising and
managing the risks. The systems adopted are
reviewed on a routine basis by subsidiaries under
the Group’s activities.
System of Internal Controls
The key elements of the framework of the internal
control system of the Group are as follows:
•
All major decisions require the full approval
of the Board and are only made after
appropriate in-depth analysis. The Board
meets regularly on a quarterly basis, and
receives comprehensive reports covering all
Divisions and Departments within the Group.
•
All Departments and Divisions of the Group
have clearly documented Manuals
incorporating control procedures and scope
of responsibilities and authorities. The
Manuals are regularly updated on practical
needs and industry best practice.
•
The
Internal
Audit
Department
independently reviews the control processes
implemented by management and reports
its findings and recommendations to
the Audit Committee for presentation to
the Board.
•
The Audit Committee, on behalf of the Board,
regularly reviews and holds discussion with
management on the action taken on internal
control issues identified in reports prepared
by the Internal Audit Department, the
External Auditors and the Management.
During the current financial year to
31 January 2008, six (6) of such reports
were received and reviewed by the
Audit Committee.
029
•
Annual Budget and Business Plan is
prepared and adopted by the Board to
facilitate the Group in its business and
financial performance. The Board reviews
and monitors the achievements of the
Group’s performance covering each business
unit’s performance on a quarterly basis.
•
Weekly Senior Management Meeting
attended by Senior General Managers
chaired by the Managing Director are
conducted to deliberate on business,
financial and operating issues which include
reviewing and approving all key business
strategic measures and policies.
•
A monthly Coordination Committee Meeting
attended by all unit Business Head, Senior
General Managers and Internal Audit and
chaired by the Managing Director or Chief
Operating Officer to review operational
performance, progress of tasks undertaken
and progress status of any internal control
measures recommended to the business unit
during the course of internal audit.
•
At each operating company level, a monthly
company Management Meeting, chaired by
the Chief Operating Officer or General
Manager and attended by all Department
Heads to deliberate on operational issues
and performance of the company where
actual expenses against budget are
discussed and reviewed in the meeting.
Review of the Statement by
External Auditors
The external auditors have reviewed this
Statement on Internal Control for the inclusion in
the annual report of the Group for the financial
year ended 31 January 2008 and reported to the
Board that nothing has come to their attention
that causes them to believe that the statement is
inconsistent with their understanding of the
process adopted by the Board in reviewing the
adequacy and integrity of the system of internal
controls.
Statement made in accordance with a resolution
of the Board of Directors dated 21 May 2008.
The Board
030
CORPORATE GOVERNANCE STATEMENT
The Board recognizes that corporate governance is about commitment to values and ethical conduct
and thus, the Board is fully committed in ensuring that the interests of all stakeholders are not just
safeguarded, but continually enhanced in values. The stakeholders’ expectations must be assessed
and managed, and not assumed.
The Board is pleased to report to the shareholders
on the manner in which the Company has
strengthened its application of the principles of
corporate governance and adopted the corporate
governance best practices laid down in the
Malaysian Code on Corporate Governance
(the Code).
A. DIRECTORS
The Board
The Board is responsible and committed to
adopting good corporate governance practices as
part of their continuing obligations. It guides and
monitors the affairs of the Group on behalf of the
shareholders and retains full and effective control
over the Group. The principal responsibilities
include the primary responsibilities prescribed
under the Code. These cover a review of the
strategic direction for the Group, overseeing
the business operations of the Group, and
evaluating whether these are being properly and
effectively managed.
Board Balance
The composition of the Company’s current Board of
Directors is well balanced, with an effective mix of
executive directors and independent non-executive
directors. There are two (2) executive directors,
three (3) non-independent non-executive directors
and three (3) independent non-executive directors.
The Board is satisfied that the current Board
composition fairly reflects the investment of
minority shareholders in the Company. A brief
profile of the directors is presented on page 012
to page 014 of this Annual Report. The directors
with diverse background provides an effective
Board with a mix of industry-specific knowledge
and broad business and commercial experience.
The Board in respect of the ratio of independent
directors complies with the Bursa Malaysia
Securities Berhad (Bursa Malaysia) Listing
Requirements that one third of its Board consists of
independent directors. The independent directors
are professionals of credibility and repute who
demonstrate independence of judgement and
objectivity in the Board’s deliberations.
The Managing Director in particular has the
general responsibility for running the business on
a day-to-day basis, ensuring business excellence
and operational efficiency. He is responsible for
implementing the policies and decisions of the
Board, overseeing the operations as well as
031
coordinating the development and implementation of business and corporate strategies. The Managing
Director is supported by the Senior Management team and Coordination Committee who possess vast
experience, skill and knowledge in the industry.
The independent non-executive directors bring to bear objective and independent judgement to the
decision making of the Board and provide a check and balance for the executive directors.
The non-executive directors contribute significantly in areas such as policy and strategy, performance
monitoring, allocation of resources as well as improving governance and controls. Together with the
Managing Director who has an intimate knowledge of the business, the Board is constituted of individuals
who are committed to business integrity and professionalism in all its activities.
Board and Board Committee Meetings
The board ordinarily meets at least four (4) times a year at quarterly intervals, with additional meetings
convened as and when deemed necessary. At each regularly scheduled meeting there is a full financial
and business review and discussion including evaluating the performance to date against the annual
budget and business plan previously approved by the Board for that year. In the current financial year
under review, the Board held six (6) meetings. All the Directors attended more than 50% of the Board
meetings held, in compliance with the Listing Requirements of Bursa Malaysia and the Company’s Articles
of Association. The details of the attendance of the directors to the Board meetings are as follows:No
Name of Directors
Attendance
1.
Tan Sri Dato’ Seri Ir. Shamsuddin bin Abdul Kadir
4
2.
Datuk Shahril bin Shamsuddin
4
3.
Dato’ Azlan bin Hashim
5
4.
Dato’ Mazlin bin Md Junid
6
5.
Shah Hakim bin Zain
4
6.
Ir. Md. Shah bin Hussin
6
7.
Shahriman bin Shamsuddin
6
8.
Datuk Kisai bin Rahmat
6
To facilitate effective discharge of responsibilities, dedicated Board Committees were established guided
by clear terms of references with Directors who have committed time and effort as members. The Board
Committees are chaired by non-executive directors who exercise skillful leadership with in-depth
knowledge of the relevant industry.
• Audit Committee
The primary objective of the Audit committee is to assist the Board of Directors in discharging its
responsibilities relating to financial accounting and reporting matters. In compliance with the Bursa
Malaysia Listing Requirements and the Code,
the Audit Committee comprises of three (3)
directors, a majority of whom are
independent non-executive directors:
Chairman : Datuk Kisai bin Rahmat
(Independent Non-Executive
Director)
Members : Dato’ Mazlin bin Md Junid
(Independent Non-Executive
Director)
Dato’ Azlan bin Hashim (NonIndependent Non-Executive
Director)
The terms of reference and the report of Audit
Committee are set out on page 034 to 035.
The Audit committee held five (5) meetings
during the financial year.
• Board Nomination and
Remuneration Committee
The Board Nomination and Remuneration
Committee (BNRC) which was set up by the
Board is made up of a majority of
Independent Non-Executive Directors.
Currently, the BNRC comprised of wholly
Non-Executive Directors.
Chairman : Tan Sri Dato’ Seri Ir.
Shamsuddin bin Abdul Kadir
(Non-Independent NonExecutive Director)
Member : Dato' Mazlin bin Md Junid
(Independent Non-Executive
Director)
Datuk Kisai bin Rahmat
(Independent Non-Executive
Director)
The Board Committees are chaired by non-executive directors who exercise
skillful leadership with in-depth knowledge of the relevant industry.
032
CORPORATE GOVERNANCE STATEMENT (CONT’D.)
This composition of only Non-Executive
Directors in the Committee ensures that any
decision made are impartial and in the best
interest of the Company without any
element of fear or favour.
Independent Professional Advice
•
There is a formal procedure sanctioned by the
Board of Directors, whether as a full board or in
their individual capacity to take independent
professional advice at the Group’s expense, where
necessary and in furtherance of their duties.
•
The BNRC held two (2) meetings during the
financial year.
The proceedings of and resolutions passed at each
Board and Board Committee meeting are minuted
and kept in the statutory register at the registered
office of the Company. In the event of potential
conflict of interest, the directors in such a position
will make a declaration to that effect as soon as
practicable. The directors concerned will then
abstain from any decision making process in
which they are interested.
Supply of Information
The Board has unrestricted access to timely and
accurate information, necessary in the furtherance
of their duties. The Company Secretary ensures
that all Board Meetings are furnished with proper
agendas. Board papers which include reports on
group performance and major operational,
financial, strategic and regulatory matters, are
circulated to all the directors at least three (3)
days prior to the meeting, to allow the directors to
have sufficient time to review the Board papers. In
most instances, senior management of the
Company as well as external advisors are invited
to be in attendance at Board meetings to provide
insight and to furnish clarification on issues that
may be raised by the Board.
Directors also have full and unrestricted access to
the advice and services of the Company Secretary
who ensures compliance with current laws, rules
and regulations.
Appointment to the Board
The proposed appointment of new Board members
are reviewed and assessed by the BNRC. Thereafter
the BNRC submits its recommendation on the
proposed appointment to the Board for approval.
The BNRC’s primary role is to review the required
mix of skills and experience of the directors on the
Board, and determine the appropriate Board
balance and size of non-executive directors. It will
establish procedures and processes towards an
annual assessment of the effectiveness of the
Board as a whole, the committees of the Board
and for assessing the contribution of each
individual director. The Board is satisfied that the
current composition of the Board brings the
required mix of skills and experience required for
the Board to function effectively.
Director’s Training
All directors have attended the Mandatory
Accreditation Program (MAP) as required under
the Listing Requirements of Bursa Malaysia
Securities Berhad.
During the financial year ended 31 January 2008,
the Company together with other listed companies
within the Sapura Group had successfully
organised training programmes and workshops for
the directors. The list of training programmes and
workshops are as follows:•
•
Corporate Social Responsibility (CSR) for
Malaysian Business.
Amendments to Companies Act, 1965 –
Impact on Directors’ Duties and
Responsibilities.
•
•
National Integrity Plan and Implementing a
Code of Conduct (Increasing Productivity
through Integrity and Ethics).
Linking Good Governance to Corporate
Branding.
Business Failure and Corporate Recovery.
Winning Through Assertive Leadership.
Re-election
The existing Company’s Articles of Association
provides that all directors appointed by the Board
are subject to election by the shareholders at their
first annual general meeting and thereafter shall
retire from office by rotation at least once in each
three years, but shall be eligible for re-election at
each Annual General Meeting.
B. DIRECTORS’
REMUNERATION
Level and make-up of Remuneration
The BNRC is responsible for evaluating and
recommending to the Board the level and makeup of the remuneration of the Managing Director
and Executive Director ensuring that they
commensurate with the scope of responsibilities
held in order to attract and retain the persons of
necessary caliber, experience and quality needed
to lead the Company successfully.
Remuneration Procedure
During the financial year, the remuneration
package for the Managing Director and Executive
Director were recommended by the BNRC and
approved by the Board with the individual director
affected not involved in the approval of their own
packages. The directors’ fees are approved by the
shareholders at the Annual General Meeting.
033
The details of the directors’ remuneration for the financial year ended 31 January 2008 are as follows:
Fees
Salaries and other emoluments
Other emoluments
Benefits in kind
Contributions to defined contribution plan
Total
Executive
Non-Executive
Total
RM
RM
RM
–
206,000
206,000
950,609
–
950,609
–
22,500
22,500
42,925
2,400
45,325
108,252
–
108,252
1,101,786
230,900
1,332,686
The number of Directors whose remuneration fall into the following bands are as follows:
Executive
Non-Executive
Total
Below RM50,000
Band
–
7
7
RM350,001 – RM400,000
1
–
1
RM700,001 – RM750,000
1
–
1
Total
2
7
9
C. SHAREHOLDERS
The Annual General Meeting
The Company has been using Annual General
Meetings as a platform for communicating with its
shareholders. All shareholders are welcomed to
attend the Company’s Annual General Meeting and
to actively participate in the proceedings. They are
encouraged to give their views and suggestions
for the benefit of the Company. Every opportunity
is given to shareholders to ask questions and seek
clarification on the business and performance of
the Company.
Dialogue between companies and
investors
The annual reports and the quarterly announcements
are the primary mode of communication to report on
the Group’s business, activities and financial
performance to all its shareholders.
The key elements of the company’s dialogue with
its shareholders is the opportunity to gather views
of and answer questions from both private and
institutional shareholders on all issues relevant to
the Company at the Annual General Meeting. At
the Annual General Meeting, the shareholders are
encouraged to ask questions both about the
resolutions being proposed or about the Group’s
operations in general.
D. ACCOUNTABILITY AND
AUDIT
Internal Control
The Board acknowledges its overall responsibility
for maintaining a sound system of internal control
to safeguard shareholders’ investment and Group
assets. The Statement on Internal Control is
presented on page 028 to 029 of the Annual
Report providing an overview of the state of
internal control within the Group.
Relationship with Auditors
The Board, through the Board Audit Committee,
maintains a formal and transparent professional
relationship with both the Group internal and
external auditors.
The function of the Audit Committee in relation to
the external auditors and the number of meetings
held since the previous financial year end as well
as the attendance record of each member is
shown in the Audit Committee Report on page 034
to 035 of the Annual Report.
The membership of the Audit Committee, the terms
of reference and a summary of the activities of the
committee are presented in the Audit Committee
Report on page 034 to 035 of the Annual Report.
Directors’ Responsibility Statement
The Directors are required by the Companies Act,
1965 to ensure that financial statements prepared for
each financial year give a true and fair view of the
state of the affairs of the Company and the Group as
at the end of the financial year and of the results and
cash flow of the Group for the financial year.
Financial Reporting
The Board aims to provide and present a balanced
and meaningful assessment of the Group’s financial
performance and prospects at the end of the financial
year, primarily through the annual financial
statements, quarterly announcement of results to
shareholders as well as the Chairman’s statement and
review of operations in the annual report. The Board
is assisted by the Audit Committee to oversee the
Group’s financial reporting processes and the quality
of its financial reporting.
COMPLIANCE WITH THE BEST
PRACTICES
The Group has adopted various steps to set out
principles and best practice to ensure compliance
with the Best Practices of the Code during the
financial year.
Statement made in accordance with a resolution
of the Board of Directors dated 21 May 2008.
034
AUDIT COMMITTEE’S REPORT
FOR THE FINANCIAL YEAR ENDED 31 JANUARY 2008
The members of the Audit Committee of Sapura
Industrial Berhad are pleased to submit
their report for the financial year ended
31 January 2008.
members to the Committee to make up the
minimum number.
conduct that raises questions of management
integrity.
8.
Consider any matters the External Auditor
may wish to bring to the attention of the
directors or shareholders.
9.
Consider the major findings of internal
investigations and management’s response.
10.
Review of any significant transactions which
are not a normal part of the Company’s
business.
11.
To recommend to the Board the
appointment and reappointment of the
External Auditor and any question of their
resignation or dismissal.
12.
Such other responsibilities as may be agreed
to by the Audit Committee and the Board
of Directors.
Duties and Responsibilities
Membership
1.
To discuss with the External Auditor before
the audit commences, the nature and scope
of the audit.
2.
Review with the External Auditor:
a.
the audit plan;
b.
the evaluation of the system of
internal accounting control; and
c.
the audit report on the financial
statement.
The present members of the Audit Committee
comprise of:
Datuk Kisai bin Rahmat, Chairman
Independent Non-Executive Director
(appointed as Chairman with effect from
22 May 2007)
Dato’ Mazlin bin Md Junid, Member
Independent Non-Executive Director
(retired as Chairman with effect from
22 May 2007)
3.
Review of the assistance given by the
Company’s officers to the External Auditors.
4.
Review the adequacy of the scope, functions
and resources of the internal audit function
and that it has the necessary authority to
carry out its work.
5.
Review the internal audit programme,
processes, the results of the internal audit
programme, processes or investigation
undertaken and whether or not appropriate
action is taken on the recommendations of
the internal audit function.
Dato’ Azlan bin Hashim, Member
Non-Independent Non-Executive Director
Terms of Reference
Size and Composition
The Board shall by resolution appoint members of
the Audit Committee, which shall comprise at least
three (3) directors, the majority of whom shall be
independent directors as defined under the Bursa
Malaysia Securities Berhad (“BMSB”) Listing
Requirements. At least one member of the
Committee is an accountant and fulfils the
requirements of the BMSB.
6.
The Committee shall elect a chairperson from
among its members who is not an executive
director or employee of the Company or any
related corporation.
In the event of an Independent Non-Executive
member of the Committee ceases to be a member
resulting in the number of Independent NonExecutive members falls below the minimum
number required, the Board of Directors shall
within three (3) months of the event appoint such
number of new Independent Non-Executive
7.
Review of the quarterly results and year end
financial statements and the press release
relating to the financial matters of
importance with the Management and the
External Auditor prior to them being
approved by the Board of Directors, focusing
particularly on:
a.
changes in or implementation of
major accounting policy changes;
b.
significant and unusual events; and
c.
compliance with accounting standards
and other legal requirements.
Review of any related party transaction and
conflict of interest situation that may arise
within the Company and the Group including
any transaction, procedure or course of
Terms of Membership
Members of the Committee shall be appointed for
an initial term of three (3) years after which they
will be reappointed on such terms as may be
determined by the Board of Directors.
Meetings
The Audit Committee shall hold at least four (4)
regular meetings per financial year, and such
additional meetings as the chairperson shall
decide in order to fulfil its duties and if requested
to do so by any Committee member, the
Management or the Internal or External Auditors.
The Committee may invite any person to be in
attendance to assist it in its deliberations.
A quorum shall consist of a majority of
Independent Non-Executive Committee members
and shall not be less than two (2).
The Company Secretary or any person appointed
by the Committee for this purpose shall act as
Secretary of the Committee.
035
Authority
The Committee is authorised by the Board to
investigate any activity within its terms of
reference. It is authorised to seek information it
requires from any employee and all employees
are directed to co-operate with any request made
by the Committee.
Access
The Committee shall have unlimited access to all
information and documents relevant to its
activities, to the Internal and External Auditors,
and to Senior Management of the Company and its
subsidiaries. The Committee is also authorised to
take such independent professional and legal
advice, as it considers necessary.
Meetings Held for the
Financial Year Ended
31 January 2008
The Audit Committee held five (5) meetings during
the financial year ended 31 January 2008 with the
Head of Internal Audit and the Group Financial
Controller cum Company Secretary in attendance.
The External Auditors and the Head of the Auditee
Company were also invited to brief the Audit
Committee on issues tabled for discussion.
Summary of Activities of the
Audit Committee for the
Financial Year Ended
31 January 2008
Summary of Activities of
Internal Audit Department
for the Financial Year Ended
31 January 2008
Appraisal of the internal audit plan was made by
the Audit Committee to confirm the annual audit
of the Group. The Audit Committee also reviewed
and appraised the audit reports by the Internal
Auditors, the various internal control systems in
place and the financial statements of the Group.
Significant issues arising from the annual audit by
the External Auditors were also considered. The
Audit Committee held separate meeting with the
external auditors, excluding the attendance of the
Management, to discuss any problem and
reservation. The Audit Committee reviewed the
quarterly and year end financial statements to
recommend to the Board for approval to
announce to Bursa Malaysia Securities Berhad. At
the conclusion of each meeting, recommendations
were made for Management to improve on
internal controls, procedures and systems of the
Group, wherever appropriate.
The Internal Audit Department reviewed and
evaluated the adequacy and effectiveness of the
internal control system to anticipate any potential
risks and recommended improvements, where
necessary. The department also assessed:
The Audit Committee monitored the
implementation of the audit recommendations in
the subsequent meetings to obtain assurances that
all key risks and control concerns have been fully
addressed.
Audit Committee Meeting Attendance
There were five (5) meetings held during the
financial year ended 31 January 2008 and the
details of attendance are as follows:-
No.
Name of Directors
Attendance
1.
Datuk Kisai bin Rahmat (Independent)
5
2.
Dato’ Mazlin bin Md Junid (Independent)
5
3.
Dato’ Azlan bin Hashim (Non-Independent)
2
a.
b.
c.
d.
the Group’s compliance to its established
policies and procedures, guidelines and
statutory requirements;
reliability and integrity of financial and
operational information;
safeguarding of assets; and
operational effectiveness and efficiency.
The Management was required to explain any
purported lack of compliance pursuant to the
audit reports issued. The audit reports,
incorporating relevant action plans agreed with
the Management, were circulated to the respective
Senior Management, Business Units Head, Group
Financial Controller and were reviewed by the
Audit Committee.
The Internal Audit Department also conducted
several special assignments and investigations
requested by Management. Validation of controls
based on the key risk profile identified under the
Enterprise - Wide Risk Management framework
were also conducted in all subsidiaries to ensure
those controls are in place and adequate.
The resulting report was forwarded to the
Management and Audit Committee for
recommendations.
A follow-up audit review was also conducted
to monitor and ensure that all audit
recommendations have been effectively
implemented.
Datuk Kisai bin Rahmat
Chairman
Audit Committee
036
STATEMENT OF DIRECTORS’ RESPONSIBILITY
IN RESPECT OF THE AUDITED FINANCIAL STATEMENTS
Pursuant to Paragraph 15.27(a) of the Listing Requirements of Bursa Malaysia Securities Berhad, the directors are required by law to prepare financial
statements for each financial year in accordance with the applicable approved accounting standards in Malaysia and give a true and fair view of the state of
affairs of the Group and of the Company at the end of the financial year and of the results and the cash flows of the Group and of the Company for the
financial year.
In preparing the financial statements of the Group and of the Company, the directors have adopted appropriate accounting policies and applied them
consistently and prudently. The directors have also ensured that those applicable accounting standards have been followed and confirmed that the financial
statements have been prepared on a going concern basis.
The directors are responsible for ensuring that the Company keeps accounting records which disclose with reasonable accuracy the financial position of the
Group and of the Company and which enable them to ensure that the financial statements are in compliance with the provisions of the Companies Act, 1965.
The directors are also responsible for taking such steps that are reasonably open to them to safeguard the assets of the Group and to prevent and detect fraud
and other irregularities.
ADDITIONAL COMPLIANCE INFORMATION
MATERIAL CONTRACTS
There were no material contracts entered
into by the Company and/or its subsidiary
companies involving the Company’s
directors and/or major shareholders’
interests either still subsisting at the end of
financial year, or which were entered into
since the end of the previous financial year.
MATERIAL CONTRACTS
RELATED TO LOAN
There were no material contracts related to
loan entered into by the Company and/or
its subsidiary companies involving the
Company’s directors and/or major
shareholder’s interests during the financial
year under review.
RECURRENT RELATED PARTY
TRANSACTIONS ENTERED
INTO DURING FINANCIAL
YEAR ENDED 31 JANUARY
2008 PURSUANT TO
SHAREHOLDERS’ MANDATE
037
OPTIONS, WARRANTS OR
CONVERTIBLE SECURITIES
REVALUATION POLICY OF
LANDED PROPERTIES
The Company has not issued any options,
warrants or convertible securities during the
financial year under review.
There was no revaluation policy of landed
properties undertaken by the Company or
any of its subsidiaries during the financial
year under review.
AMERICAN DEPOSITORY
RECEIPT (ADR) OR GLOBAL
DEPOSITORY RECEIPT (GDR)
There were no ADR or GDR programme
sponsored by the Company during the
financial year under review.
NON-AUDIT FEES
Apart from the annual audit fees, there were
non-audit fees amounting to Ringgit
Malaysia Five Thousand (RM5,000) paid to
Messrs Ernst & Young during the financial
year under review.
PROFIT ESTIMATION,
FORECAST OR PROJECTION
Shareholders’ mandate was not required to
be procured for recurrent related party
transactions entered into during financial
year ended 31 January 2008.
There were no profit estimation, forecast
or projection made or released by the
Company during the financial year under
review.
SHARE BUY-BACK
PROFIT GUARANTEES
There were no share buy-back exercises
undertaken by the Company during the
financial year under review.
There were no profit guarantees given
by the Company during the financial year
under review.
IMPOSITION OF SANCTIONS
AND/OR PENALTIES
There were no sanctions and/or penalties
imposed on the Company and/or its
subsidiaries, Directors or Management
arising from any significant breach of rules/
guidelines/legislations by any of the
regulatory authorities.
VARIATION IN RESULTS
There was no variation in results (differing
by 10% or more) from unaudited results
announced.