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ANNUAL REPORT 2013
CONTENTS
Notice of Annual General Meeting Statement Accompanying the Notice of Annual General Meeting Corporate Information Financial Highlights Directors' Profile Managing Director's Statement Statement on Corporate Social Responsibility Statement on Corporate Governance Statement of Risk Management and Internal Control Audit Committee Report Statement of Directors' Responsibility
2-8 9 10 11 12 - 14 15 - 16 17 - 18 19 - 26 27 28 - 31 32
Other Information Required by the Main Market Listing Requirements of Bursa Malaysia Securities Berhad 33 - 34 Directors' Report Statement by Directors Statutory Declaration Independent Auditors' Report Statements of Comprehensive Income Statements of Financial Position Statements of Changes in Equity Statements of Cash Flows Notes to the Financial Statements Supplementary Information List of Properties owned by the Group Analysis of Shareholdings Proxy Form
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2.
3.
Resolution 3 Resolution 4
4.
Resolution 6 Resolution 7
6.
AS SPECIAL BUSINESS:7. To consider and if thought fit, to pass the following resolutions with or without modification: 7.1 ORDINARY RESOLUTION: AUTHORITY TO ISSUE AND ALLOT SHARES PURSUANT TO SECTION 132D OF THE COMPANIES ACT, 1965 THAT subject to Section 132D of the Companies Act, 1965, the Articles of Association of the Company and approvals of the relevant governmental and/or regulatory authorities, the Directors be and are hereby empowered to issue and allot shares in the Company, at any time to such person or persons and upon such terms and conditions and for such purposes as the Directors may, in their absolute discretion, deem fit, provided that the aggregate number of shares issued pursuant to this resolution does not exceed ten per centum (10%) of the issued and paid-up share capital of the Company (excluding treasury shares) for the time being and the Directors be and are also empowered to obtain the approval for the listing of and quotation for the additional shares so issued on Bursa Malaysia Securities Berhad; AND THAT such authority shall commence immediately upon the passing of this resolution and continue to be in force until the conclusion of the next Annual General Meeting of the Company. 7.2 ORDINARY RESOLUTION: PROPOSED RENEWAL AND NEW SHAREHOLDERS MANDATE FOR RECURRENT RELATED PARTY TRANSACTIONS OF A REVENUE OR TRADING NATURE INVOLVING DATO HWANG THEAN LONG, DATIN CHEAH GAIK HUANG, HWANG POH CHOO, HWANG SIEW PENG, SUIWAH HOLDINGS SDN BHD AND SUIWAH SUPERMARKET SENDIRIAN BERHAD Resolution 8
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(ii)
(iii)
whichever is the earlier; THAT the above mandate is subject to annual renewal and disclosure will be made in the annual report of the aggregate value of transactions conducted by the Group. AND THAT the Directors of the Company be authorised to complete and do all such acts and things (including executing all such documents as may be required) as they may consider expedient or necessary to give effect to the above mandate. 7.3 ORDINARY RESOLUTION: PROPOSED RENEWAL OF SHAREHOLDERS MANDATE FOR RECURRENT RELATED PARTY TRANSACTIONS OF A REVENUE OR TRADING NATURE INVOLVING DATUK HAJI RADZALI BIN HASSAN AND HOZONE SDN BHD THAT approval be and is hereby given to the Companys subsidiaries to enter into and give effect to the recurrent related party transactions of a revenue or trading nature involving Datuk Haji Radzali Bin Hassan and person connected to him, namely Hozone Sdn Bhd (hereinafter referred to as Interested Persons) as specified in Section 2.3 under Part A of the Circular dated 6 November 2013, and falling within the ambit of Part E, Paragraph 10.09 of Chapter 10 of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad which are necessary for the day-to-day operations and undertaken in the ordinary course of business of the Company, on terms not more favourable to Interested Persons than those generally available to the public and not detrimental to minority shareholders of the Company; THAT such approval unless revoked or varied by the Company in general meeting shall continue to be in full force and effect until: (i)the conclusion of the next Annual General Meeting (AGM) of the Company following the general meeting at which this mandate was passed, at which time it will lapse, unless by a resolution passed at the general meeting whereby the authority is renewed; or (ii) the expiration of the period within which the next AGM of the Company after the date it is required to be held pursuant to Section 143(1) of the Companies Act, 1965 (the Act) (but must not extend to such extension as may be allowed pursuant to Section 143(2) of the Act); or revoked or varied by resolution passed by the shareholders of the Company in a general meeting; Resolution 10
(iii)
whichever is the earlier; THAT the above mandate is subject to annual renewal and disclosure will be made in the annual report of the aggregate value of transactions conducted by the Group. AND THAT the Directors of the Company be authorised to complete and do all such acts and things (including executing all such documents as may be required) as they may consider expedient or necessary to give effect to the above mandate.
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(ii)
(iii) revoked or varied by resolution passed by the shareholders of the Company in a general meeting; whichever is the earlier; THAT the above mandate is subject to annual renewal and disclosure will be made in the annual report of the aggregate value of transactions conducted by the Group. AND THAT the Directors of the Company be authorised to complete and do all such acts and things (including executing all such documents as may be required) as they may consider expedient or necessary to give effect to the above mandate. 7.5 ORDINARY RESOLUTION: PROPOSED RENEWAL OF SHAREHOLDERS MANDATE FOR RECURRENT RELATED PARTY TRANSACTIONS OF A REVENUE OR TRADING NATURE INVOLVING A DIRECTOR OF THE COMPANYS SUBSIDIARY, NAMELY LEONG KONG MENG THAT approval be and is hereby given to the Companys subsidiaries to enter into and give effect to the recurrent related party transactions of a revenue or trading nature involving a Director of the Companys subsidiary, namely Leong Kong Meng (hereinafter referred to as Interested Director) as specified in Section 2.3 under Part A of the Circular dated 6 November 2013, and falling within the ambit of Part E, Paragraph 10.09 of Chapter 10 of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad, which are necessary for the dayto-day operations and undertaken in the ordinary course of business of the Company, on terms not more favourable to Interested Director than those generally available to the public and not detrimental to minority shareholders of the Company; THAT such approval unless revoked or varied by the Company in general meeting shall continue to be in full force and effect until: (i) the conclusion of the next Annual General Meeting (AGM) of the Company following the general meeting at which this mandate was passed, at which time it will lapse, unless by a resolution passed at the general meeting whereby the authority is renewed; or the expiration of the period within which the next AGM of the Company after the date it is required to be held pursuant to Section 143(1) of the Companies Act, 1965 (the Act) (but must not extend to such extension as may be allowed pursuant to Section 143(2) of the Act); or Resolution 12
(ii)
(iii) revoked or varied by resolution passed by the shareholders of the Company in a general meeting; whichever is the earlier; THAT the above mandate is subject to annual renewal and disclosure will be made in the annual report of the aggregate value of transactions conducted by the Group. AND THAT the Directors of the Company be authorised to complete and do all such acts and things (including executing all such documents as may be required) as they may consider expedient or necessary to give effect to the above mandate.
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(ii)
(iii) the authority hereby given shall commence immediately upon passing of this ordinary resolution and shall continue to be in force until:(a) the conclusion of the next Annual General Meeting (AGM) of the Company following the forthcoming AGM, at which time the authority will lapse unless renewed by ordinary resolution passed at the general meeting, the authority is renewed, either unconditionally or subject to conditions; or (b) the expiration of the period within which the next AGM of the Company after the date it is required by law to be held; or (c) revoked or varied by ordinary resolution passed by the shareholders of the Company in a general meeting, whichever occurs first; but not so as to prejudice the completion of purchase(s) by the Company of the SCB Shares before the aforesaid expiry date and, made in any event, in accordance with the provisions of the guidelines issued by Bursa Securities and any prevailing laws, rules, regulations, orders, guidelines and requirements issued by any relevant authorities; and (iv) upon completion of the purchase(s) of the SCB Shares by the Company, authority be and is hereby given to the Directors of the Company to decide at their absolute discretion to either to cancel the SCB Shares so purchased and/or to retain the SCB Shares so purchased as treasury shares which maybe distributed as shares dividends to shareholders and if retained as treasury shares, may resell the treasury shares on Bursa Securities and/or subsequently cancelled, or to retain part of the SCB Shares so purchased as treasury shares and cancel the remainder in the manner as prescribed by the Act, rules, regulations and orders made pursuant to the Act and the requirements of the Bursa Securities and any other relevant authority for the time being in force; AND THAT authority be and is hereby unconditionally and generally given to the Directors of the Company to take all such steps as are necessary or expedient to implement, finalise, complete or to effect the Proposed Renewal of Share Buy-Back Mandate with full powers to assent to any conditions, modifications, resolutions, variations and/or amendments (if any) as may be imposed by the relevant authorities and to do all such acts and things as the said Directors may deem fit and expedient in the best interest of the Company to give effect to and to complete the purchase of the SCB Shares. 7.7 ORDINARY RESOLUTION: MANDATE FOR DATO HAJI SUHAIMI BIN ABDULLAH WHO HAS SERVED AS AN INDEPENDENT NON-EXECUTIVE DIRECTOR OF THE COMPANY FOR A CUMULATIVE TERM OF MORE THAN NINE (9) YEARS, TO CONTINUE TO ACT AS AN INDEPENDENT NON-EXECUTIVE DIRECTOR OF THE COMPANY THAT approval be and is hereby given to Dato Haji Suhaimi Bin Abdullah, who has served as an Independent Non-Executive Director of the Company for a cumulative term of more than nine (9) years, to continue to act as an Independent Non-Executive Director of the Company in compliance with the recommendation of Malaysian Code on Corporate Governance 2012. Resolution 14
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ANNUAL REPORT 2013
By Order of the Board, THUM SOOK FUN (MIA 24701) Company Secretary Dated: 6 November 2013 Penang
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As at date of this notice, there are no individuals who are standing for election as Directors (excluding the above Directors who are standing for re-election or re-appointment) at this forthcoming 20th Annual General Meeting.
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CORPORATE INFORMATION
BOARD OF DIRECTORS DATO HWANG THEAN LONG - Managing Director DATIN CHEAH GAIK HUANG - Executive Director MS. HWANG SIEW PENG - Executive Director DATUK HAJI RADZALI BIN HASSAN - Non-Independent Non-Executive Director DATO HAJI MOHD SUHAIMI BIN ABDULLAH - Independent Non-Executive Director DATO AHMAD HASSAN BIN OSMAN - Independent Non-Executive Director MR. WONG THAI SUN - Independent Non-Executive Director MR. JEN SHEK VOON - Independent Non-Executive Director AUDIT COMMITTEE DATO HAJI MOHD SUHAIMI BIN ABDULLAH - Chairman DATO AHMAD HASSAN BIN OSMAN - Member MR. WONG THAI SUN - Member MR. JEN SHEK VOON - Member NOMINATION COMMITTEE DATO AHMAD HASSAN BIN OSMAN - Chairman DATO HAJI MOHD SUHAIMI BIN ABDULLAH - Member MR. WONG THAI SUN - Member REMUNERATION COMMITTEE DATO AHMAD HASSAN BIN OSMAN - Chairman DATO HAJI MOHD SUHAIMI BIN ABDULLAH - Member MR. WONG THAI SUN - Member COMPANY SECRETARY THUM SOOK FUN (MIA 24701) REGISTERED OFFICE No. 1-20-1 SUNTECH @ Penang Cybercity, Lintang Mayang Pasir 3, 11950 Bayan Baru, Penang, Malaysia. Tel. No. : +604-6437387 Fax No. : +604-6437389 Web Page: http://www.suiwah.com.my SHARE REGISTRAR SECURITIES SERVICES (HOLDINGS) SDN BHD Suite 18.05, MWE Plaza, No. 8, Lebuh Farquhar, 10200 Penang, Malaysia. Tel. No. : +604-2631966 Fax No. : +604-2628544 AUDITORS ERNST & YOUNG (AF0039) Chartered Accountants 21st Floor, MWE Plaza, No. 8, Lebuh Farquhar, 10200 Penang, Malaysia. ADVOCATES & SOLICITORS GHAZI & LIM NG SEE KEE & LEONG WONG-CHOOI & MOHD. NOR ROWENA YAM, KHOO & ASSOCIATES PRINCIPAL BANKERS OCBC BANK (MALAYSIA) BERHAD MALAYAN BANKING BERHAD STOCK EXCHANGE LISTING Main Market of Bursa Malaysia Securities Berhad Stock Code : 9865 Stock Name : SUIWAH
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FINANCIAL HIGHLIGHTS
2011 RM000 Revenue Profit Before Tax Paid up Capital Reserves (Restated) 422,263 18,973 61,000 118,234 2012 RM000 381,010 12,622 61,000 119,917 2013 RM000 372,335 19,187 61,000 129,922
Revenue
RM'000 430,000 420,000 410,000 400,000 422,263 390,000 380,000 370,000 360,000 350,000 340,000 2011 2012 Year 2013 15,000 10,000 381,010 372,335 5,000 0 20,000 RM'000 25,000
18,973
2011
2012 Year
12,622
2013
Paid-up Capital
RM'000 70,000 60,000 50,000 40,000 61,000 61,000 30,000 20,000 10,000 0 2011 2012 Year 2013 61,000 RM'000 132,000 130,000 128,000 126,000 124,000 122,000 120,000 116,000 114,000 112,000 2011 118,234 118,000
Reserves
2012 Year
119,917
2013
129,922
19,187
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ANNUAL REPORT 2013
DIRECTORS PROFILE
DATO HWANG THEAN LONG - Managing Director Aged 64, Malaysian Dato Hwang Thean Long was appointed to the Board on 10 December 1992. He is presently the Managing Director of the Company and also acting as director of the subsidiary companies namely Crimson Omega Sdn Bhd, PT Sunshine Amanjaya Indonesi, Qdos Holdings Bhd, Qdos Marketing Sdn Bhd, Sunshine (Labuan) Private Limited, Sunshine Supermarket & Departmental Store Sdn Bhd and Sunshine Wholesale Mart Sdn Bhd. He has more than 42 years of experience in business industry especially supermarket retailing. He started his career with a mini market when he joined his father, the late Mr. Hwang Siong Wah, the founder of the well-known Swee Wah general merchant at Ayer Itam, Penang in 1970. After taking over the Swee Wah general merchant, he has expanded the business by opening additional outlets, which comprise of Sunshine Square, Sunshine Farlim Shopping Mall, Suiwah Ayer Itam and Sunshine Lip Sin. His current directorship in other public company includes Penang Commercial and Industrial Development Berhad. He is also a major shareholder of the Company by virtue of his interests held through Suiwah Holdings Sdn Bhd and Suiwah Supermarket Sendirian Berhad in the Company. He is the spouse of Datin Cheah Gaik Huang, an Executive Director of the Company and the father of Ms. Hwang Siew Peng who is also an Executive Director of the Company. Dato Hwang Thean Long attended all the five (5) Board Meetings held during the financial year ended 31 May 2013.
DATIN CHEAH GAIK HUANG - Executive Director Aged 60, Malaysian Datin Cheah Gaik Huang was appointed to the Board on 14 March 1997. She has more than 32 years of working experience in the supermarket retailing business and also acting as director of the subsidiary companies namely Aljano Sdn Bhd, Magirex Sdn Bhd, Sunshine Electrical Superstore Sdn. Bhd, Sunshine Supermarket & Departmental Store Sdn Bhd and Sunshine Wholesale Mart Sdn Bhd. She does not hold any directorship in other public companies. She is the spouse of Dato Hwang Thean Long, the Managing Director and a major shareholder of the Company. Therefore, she is deemed to have an interest in shares of the Company through Suiwah Holdings Sdn Bhd (SHSB) and Suiwah Supermarket Sendirian Berhad (SSSB) by virtue of her husbands shareholdings held through SHSB and SSSB. She is also the mother of Ms. Hwang Siew Peng, who is an Executive Director of the Company. Datin Cheah Gaik Huang attended all the five (5) Board Meetings held during the financial year ended 31 May 2013.
MS. HWANG SIEW PENG - Executive Director Aged 39, Malaysian Ms. Hwang Siew Peng was appointed to the Board on 26 December 2001. She also sits on the Board of Directors of several subsidiary companies of the Company and other private companies. She holds a Bachelor of Commerce Degree (Marketing and Management) from Curtin University of Technology, Western Australia. She worked as store operational assistant before joining Suiwah group of companies as Business Development Executive in the year 2000. She does not hold any directorship in other public companies. She is the daughter to Dato Hwang Thean Long and Datin Cheah Gaik Huang, who are the Executive Directors and major shareholders of the Company. Therefore, she is deemed to have interest in shares of the Company by virtue of the shareholdings of her parents. Ms. Hwang Siew Peng attended all the five (5) Board Meetings held during the financial year ended 31 May 2013.
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DATO AHMAD HASSAN BIN OSMAN - Independent Non-Executive Director Aged 75, Malaysian Dato Ahmad Hassan Bin Osman was appointed to the Board on 18 December 1995 and on 16 September 2004, his position has been redesignated from Non-Independent Non-Executive Director to Independent Non-Executive Director. He is presently the Chairman of the Nomination Committee and Remuneration Committee and also a member of Audit Committee in the Company. He is also a director of the subsidiary company, namely Crimson Omega Sdn Bhd. He graduated from the University of Malaya, Kuala Lumpur in 1962 and subsequently obtained a Masters Degree in Economics from the University of Wisconsin, Madison in 1978. He has vast experience in the public service, spanning a period of over 30 years. His last post with the Government was as the Secretary-General of the Ministry of Housing and Local Government, Malaysia. Upon retirement, he was appointed as an Executive Director of the Islamic Development Bank based in Jeddah, Saudi Arabia from 1994 to 1997. His current directorship in other public company includes Kimble Corporation Bhd. Dato Ahmad Hassan Bin Osman attended all the five (5) Board Meetings held during the financial year ended 31 May 2013.
MR. WONG THAI SUN - Independent Non-Executive Director Aged 58, Malaysian Mr. Wong Thai Sun was appointed to the Board on 26 December 2001. He is a member of the Audit Committee, Nomination Committee and Remuneration Committee of the Company. He also sits as a member in the Employees Share Option Scheme Committee of the Company. He holds a Bachelor of Economics and Accountancy from Australian National University. He is a member of the Malaysian Institute of Accountants and the Certified Public Accountants, Australia. He has public practice experience in accountancy for over 20 years in Malaysia and in overseas and currently has his own public practice firm, which is Wong Thai Sun & Associates. He is the Independent Non-Executive Director of Dnonce Technology Bhd and Emico Holdings Bhd. Mr. Wong Thai Sun attended all the five (5) Board Meetings held during the financial year ended 31 May 2013.
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DATUK HAJI RADZALI BIN HASSAN - Non-Independent Non-Executive Director Aged 56, Malaysian Datuk Haji Radzali Bin Hassan is a Pioneering Environmental Entrepreneur, was appointed to the Board on 16 September 2004. Born in 1957 in Perak, Datuk Radzali completed his Masters in Business Administration and holds an Advance Diploma in International Business Studies. Datuk Radzali was conferred the Kestaria Setia DiRaja Award by DYMM Paduka Baginda Yang DiPertuan Agong in 1997 and Darjah Mulia Seri Melaka by TYT Yang Di Pertua Negeri Melaka. Datuk Radzali is currently the Chairman/Group Managing Director of Harta Maintenance Sdn Bhd and Harta Group of Companies since April 1980, is also an acting director of the subsidiary companies namely Qdos Holdings Bhd and Qdos Flexcircuits Sdn Bhd. Datuk Radzali does not hold any directorship in other public companies. Datuk Radzali is a major shareholder of the Company by virtue of his interests held through Hozone Sdn Bhd. Datuk is also a Director and shareholder of Hozone Sdn Bhd. Datuk Radzali Bin Hassan attended all the five (5) Board Meetings held during the financial year ended 31 May 2013. Save for the family relationship as disclosed above, none of the above Directors have any family relationship with other Directors and/or major shareholders of the Company. None of the above Directors have any conflict of interest with the Company or any conviction for any offences other than traffic offences within the past ten (10) years.
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The Group is also committed to its social responsibilities at the workplace and continues to provide employment opportunities to new job seekers in the labour market and to hire graduates to create job opportunities to help the government to reduce unemployment. In addition as part of the employees benefit, the manufacturing sector provides regular health checks such as audiometric test were made available for those employees who are constantly exposed to an environment of high level of noise. The Group will continue training either in-house or through outsourcing throughout the year for all its employees and further enhanced their skills at all level to create a career advancement path.
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The following paragraphs describe how the Group has applied the Principles of the Code and how the Board has complied with the recommendations set out in the Code for the financial year ended 31 May 2013. Principle 1 - Establish Clear Roles and Responsibilities 1.1 Board should establish clear functions reserved for Board and those to delegated to Management The Board has been entrusted with the overall responsibility for the overall governance, strategic direction and overseeing the investments of the Group. The Board retains full and effective control of the Group and assumes responsibility for determining the Groups strategies and direction, shareholders and investors relationship, approval of annual and quarterly financial results, acquisition and disposal, major capital expenditure as well as reviewing the adequacy and integrity of the Groups system of internal controls. 1.2 Board should establish clear roles and responsibilities in discharging its fiduciary and leadership functions Currently, the position of the Chairman of the Company is vacant subsequent to the demise of the late Tun Dato Seri Utama Dr. Lim Chong Eu. In this respect, the Board will elect among themselves to chair its meeting. The Chairman of the Board Meeting is primarily responsible for orderly conduct of a Board Meeting whilst the Managing Director is responsible for the day-to-day business operations and implementation of Board policies and decisions. Hence, there is a clear division of responsibility between the Chairman and Managing Director to ensure there is a balance of power and authority. None of the members of the Board has unfettered powers of decision. The Board comprises of the Managing Director, two (2) Executive Directors, one (1) Non-Independent Non-Executive Director and four (4) Independent and Non-Executive Directors, all of whom bring to the Group a broad and valuable range of experience. There was a strong independent element on the Board as 50% of its Board members comprises of Independent and Non-Executive Directors. The presence of Independent and Non-Executive Directors in the Board provides objectivity and they are of the caliber necessary to carry sufficient weight in Board decisions. The role of the Independent and Non-Executive Directors is particularly important in ensuring that the strategies proposed by the management are fully discussed and examined, and takes into account the long-term interests, not only of the shareholders, but also of employees, customers, suppliers, and the many communities in which the Group conducts business. The Board meets regularly at least four (4) times a year. At the end of every quarter, the Groups financial statements and results are tabled and deliberated by the Board. During the Board Meeting, the Board reviews the operation and performance of the Group and any other strategic issues that may affect the Groups business.
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(v)
(xi) (xii)
The Board was of the view that the performance appraisal and assessment on the Board is not applicable to the Group as all the Board are already subject to the retirement by rotation at least once in every three (3) years but eligible for re-election by the shareholders at the AGM of the Company. The assessment of Boards performance shall be dependent on the shareholders review before they decide to vote for or against the re-election of the retiring Directors at the AGM. While the Board recognizes the initiatives by the government to enlarge the womens representation at boardroom, the Board composition comprise of two (2) female Directors out of the eight (8) Directors.
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Directors Fees Salaries, Bonus and Other Emoluments Meeting Allowance Total
The number of Directors whose remuneration falls into each successive band of RM50,000 is as follows: Range of Remuneration Below RM50,000 RM50,001- RM100,000 RM100,001- RM150,000 RM300,001- RM350,000 Above RM350,000 Total Number of Directors Executive Directors 2 1 3 Non-Executive Directors 5 5
Principle 3 - Reinforce Independence 3.1 Board should undertake an assessment of its Independent Directors annually The Board through the NC assessed the independence of Independent Directors on an annual basis, with a view to ensure the Independent Directors bring independent and objective judgement to the Board and this mitigates arising from conflict of interest or undue influence from interested parties. Where there is a likely conflict of interest position, the Board would take appropriate action to rectify the situation. Should any Director has an interest in any matter under deliberation, he is required to disclose his interest and abstain from participating in the discussions and voting on the matter. The Board also received confirmation in writing from the Independent Directors of their independence. The Board is satisfied with the assessment of the Independent Directors. 3.2 Tenure of Independent Director should not exceed cumulative term of nine (9) years. Upon completion of tenure, Independent Director can continue serving but as Non-Executive Director One of the recommendation of the Code states that the tenure of an Independent Director should be capped at nine (9) years, either be a consecutive service of nine (9) years or a cumulative service of nine (9) years with intervals. Upon completion of the nine (9) years tenure in office, an Independent Director may continue to serve on the company subject to the re-designation as a Non-Independent Director. Currently, the following Independent Directors, who have served the Company as Independent Non-Executive Directors for a cumulative term more than nine (9) years are: (i) (ii) (iii) (iv) Dato Haji Mohd Suhaimi Bin Abdullah Dato Ahmad Hassan Bin Osman Mr. Wong Thai Sun Mr. Jen Shek Voon
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In the intervals between Board meetings, for exceptional matters requiring urgent Board decisions, the Board decisions are obtained via circular resolutions to which sufficient information required is attached to facilitate the Board in making informed decisions.
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Save as disclosed above, the other Directors have not attended any trainings during the financial year under review, due to their respective tight traveling schedules and busy/heavy work commitments. Nevertheless, they are kept abreast with new statutory or regulatory development and various operational issues facing the changing business environment within the Group. Principle 5 - Uphold Integrity in Financial Reporting 5.1 Audit Committee should ensure financial statements comply with applicable financial reporting standards The Board acknowledges their responsibility to ensure that the financial statements of the Company and the Group are prepared in accordance with the provisions of the Companies Act, 1965 and approved accounting standards in Malaysia so as to give a true and fair view of the state of affairs and the result of the Company and of the Group. 5.2 Audit Committee should have policies and procedures to assess suitability and independence of External Auditors A transparent and appropriate relationship with the External Auditors to enable them to independently report to shareholders in accordance with statutory and professional requirement is established through the Audit Committee. The role of the Audit Committee members and their relationship with the External Auditors may be found in the Audit Committee Report in the Annual Report. The Audit Committee also met with the External Auditors twice during the financial year ended 2013 without the presence of Management and Executive Directors in compliance with the best practices of the Code.
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Conclusion The Board has received assurance from top management and Group Managing Director that the Groups risk management and internal control systems have been operating adequately and effectively, in all material aspects, during the financial year under review and up to date of this statement. Taking this assurance into consideration, the Board is of the view that there were no significant weaknesses in the current system of internal control of the Group that may have material impact on the operations of the Group for the financial year ended 31 May 2013. The Board and the Management will continue to take necessary measures and ongoing commitment to strengthen and improve its internal control environment and risk management. The statement is issued in accordance with a resolution of the Directors date 23 September 2013.
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Objectives The principal objectives of the Audit Committee are to assist the Board in discharging its statutory duties and responsibilities relating to accounting and financial reporting practices of the Company and its subsidiaries. In addition, the Audit Committee shall: (i) (ii) (iii) (iv) evaluate the quality of the audits performed by the Internal and External Auditors; provide assurance that the financial information presented by Management is relevant, reliable and timely; oversee compliance with laws and regulations and observance of a proper code of conduct; and determine the quality, adequacy and effectiveness of the Groups control environments and quality of the audits.
Membership The Audit Committee shall be appointed by the Board from amongst its Directors which fulfill the following requirements: (i) (ii) The Audit Committee must be composed of no fewer than three (3) members; All the Audit Committee members must be Non-Executive Directors, with a majority of members must be independent. No alternate Director is to be appointed as a member of the Audit Committee. At least one (1) member of the Audit Committee: (a) must be a member of the Malaysian Institute of Accountants (MIA); or (b) if he is not a member of the MIA, he must have at least three (3) years working experience; and a. he must have passed the examinations specified in Part I of the 1st Schedule of the Accountants Act, 1967; or b. he must be a member of one of the associations of accountants specified in Part II of the 1st Schedule of the Accountants Act, 1967; or (c) fulfills such other requirements as prescribed or approved by Bursa Securities. The definition of Independent Directors shall have the meaning given in Chapter 1.01 of the Listing Requirements. The Chairman of the Audit Committee shall be appointed among the members of the Audit Committee who shall be an Independent Director. In the absence of the Audit Committee Chairman and/or an appointed deputy, the remaining Audit Committee members present shall elect one of themselves to chair the Audit Committee meeting. Mr. Wong Thai Sun is a member of the MIA and the Certified Public Accountants, Australia. Mr. Jen Shek Voon is a practicing member of the Institute of Certified Public Accountants, Singapore and a member of Information System Audit and Control Association, British Computer Society, a member of Institute of Internal Auditors and MIA.
(iii)
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(ii)
(iii)
(iv)
(v)
(vi)
(vii)
During the financial year ended 31 May 2013, five (5) Audit Committee meetings were held. Details of attendance of each Audit Committee member were as follows:Name of Directors Dato Haji Mohd. Suhaimi Bin Abdullah Dato Ahmad Hassan Bin Osman Mr. Wong Thai Sun Mr. Jen Shek Voon Authority The Audit Committee shall, in accordance with a procedure to be determined by the Board and at the expense of the Company, (i) have explicit authority to investigate any matter within its terms of reference, the resources to do so, and full access to information. All employees shall be directed to co-operate as requested by members of the Audit Committee. have full and unlimited/unrestricted access to all information and documents/resources which are required to perform its duties as well as to the Internal and External Auditors and Senior Management of the Company and Group. obtain independent professional or other advice and to invite outsiders with relevant experience to attend, if necessary. have direct communication channels with the External Auditors and person(s) carrying out the internal audit function or activity. No. of the Audit Committee Meetings Attended 4 5 5 5 % of Attendance 80 100 100 100
(ii)
(iii) (iv)
Where the Audit Committee is of the view that the matter reported by it to the Board has not been satisfactorily resolved resulting in a breach of the Listing Requirements, the Audit Committee shall promptly report such matter to Bursa Securities.
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(iii) (iv)
(v) (vi)
(vii) (viii)
(ix)
(x)
(xi)
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ANNUAL REPORT 2013
Internal Audit Function The Internal Audit function of the Group is assumed by the Internal Auditor appointed externally to assist the Audit Committee in discharging its duties and responsibilities. The role of the Internal Audit is to provide the Audit Committee with independent assessment for adequate, efficient and effective Internal Control System to ensure compliance with policies and procedures. The Internal Audit function is also involved in risk management, risk evaluation and recommendation of control activities to manage such identified risk. The attainment of such objectives involves the following activities being carried out by the Department: (i) (ii) (iii) (iv) (v) (vi) (vii) (viii) (ix) Reviewing and appraising the soundness, adequacy and application of accounting, financial and other controls and promoting effective control in the Company and the Group at reasonable cost. Ascertaining the extent to whom the Groups and the Companys assets are accounted for and safeguarded from losses of all kinds. Attending stock counts of merchandise. Appraising the reliability and usefulness of information developed within the Group and the Company for management reporting purposes. Carrying out audit work and to liaise with the External Auditors to maximise the use of resources and for effective coverage of audit risks. Recommending improvement to the existing systems of controls. Carrying out investigations and special reviews requested by Management and/or the Audit Committee of the Company. Continuously identifying opportunity for improvement in the operations of business processes of the Company and the Group. Discuss with management action taken to improve the system of internal control.
This statement is made in accordance with the resolution of the Board dated 23 September 2013.
32
ANNUAL REPORT 2013
The Board is required to prepare audited financial statements which give a true and fair view of the state of affairs of the Group and the Company at the end of each financial year and of their results and their cash flows for that year then ended. In preparing the financial statements for the year ended 31 May 2013, the Board considers that: (i) (ii) (iii) (iv) all applicable approved accounting standards in Malaysia have been followed; the Group and the Company have used appropriate accounting policies and have consistently applied them; reasonable and prudent judgments and estimates were made; and the financial statements were prepared on the going concern basis as the Board has a reasonable expectation, having made enquiries, that the Group and the Company have adequate resources to continue in operational existence for the foreseeable future.
The Board is responsible for ensuring that the Group and the Company maintain accounting records which disclose with reasonable accuracy the financial position of the Group and the Company, and which enable them to ensure that the financial statements comply with the Companies Act, 1965. The Board has general responsibilities for taking such steps that are reasonably available to them to safeguard the assets of the Group, and to prevent and detect fraud and other irregularities. This statement is made in accordance with the resolution of the Board dated 23 September 2013.
33
ANNUAL REPORT 2013
REQUIRED BY THE MAIN MARKET LISTING REQUIREMENTS OF BURSA MALAYSIA SECURITIES BERHAD
OTHER INFORMATION
Utilisation of Proceeds No proceeds were raised by the Company from any corporate exercise during the financial year and no new shares being issued by the Company during the financial year based on the general mandate granted by the shareholders pursuant to Section 132D of the Companies Act, 1965 at the last Annual General Meeting of the Company. Share Buy-back During the financial year ended 31 May 2013, the details of its ordinary shares of RM1.00 each (SCB Shares) bought back by the Company are as follows: Buy Back Price Per SCB Share (RM) Monthly Breakdown August 2012 February 2013 Total: Note: * exclude transaction charges. A total of 20,000 SCB shares purchased by the Company were retained as treasury shares and no shares were resold or cancelled during the financial year. As at 31 May 2013, a total of 3,666,100 SCB Shares were held as treasury shares in accordance with Section 67A of the Companies Act, 1965. Options, Warrants or Convertible Securities There was no issue or exercise of options, warrants or convertible securities during the financial year. Depository Receipt Programme The Company did not sponsor any Depository Receipt programme during the financial year. Sanctions and Penalties There were no sanctions or penalties imposed on the Company and its subsidiaries, Directors or Management by the relevant regulatory bodies during the financial year. Non-Audit Fees The amount of non-audit fees paid to the External Auditors by the Group and by the Company for the financial year 2013 amounted to RM22,000.00 and RM3,000.00 respectively. Variation in Results There were no material variations between the audited results and the unaudited results for the year ended 31 May 2013 of the Group as previously announced. Profit Guarantee The Company did not provide any profit guarantee to any parties during the financial year. Material Contracts Other than those related party transactions disclosed in Note 40 to the financial statements, there were no material contracts outside the ordinary course of business, including contract relating to loan entered into by the Company and its subsidiaries involving Directors and major shareholders interests that are still subsisting at the end of financial year or which were entered into since the end of the previous financial year. Lowest 1.50 1.47 Highest 1.50 1.50
No. of SCB Shares Bought Back & retained as Treasury Shares 1,000 19,000 20,000
34
ANNUAL REPORT 2013
OTHER INFORMATION
REQUIRED BY THE MAIN MARKET LISTING REQUIREMENTS OF BURSA MALAYSIA SECURITIES BERHAD (CONTD.)
Recurrent Related Party Transactions of a Revenue or a Trading Nature The summary of the Recurrent Related Party Transactions which have been entered by the Group based on the mandate as obtained at the Nineteenth Annual General Meeting held on 22 November 2012 are as follows:No. 1 Nature of Transaction Rental of premises which is located at Sunshine Square (Level 2, 3 & 4), 1, Jalan Mahsuri measuring approximately 9,635 square metres by Suiwah Holdings Sdn Bhd (SHSB) to Sunshine Wholesale Mart Sdn Bhd (SWMSB) for a monthly rental and service charges of RM161,943 Purchase of direct materials such as polyester and pressure sensitive adhesive by Qdos Flexcircuits Sdn Bhd (QFSB) from Zephyr (Penang) Sdn Bhd (ZSB) Purchase of label sticker by SWMSB from ZSB Rental of premises which is located at 608 M&N, Jalan Paya Terubong, Ayer Itam, Penang measuring approximately 4,500 square feet by Dato Hwang Thean Long to Sunshine Supermarket & Departmental Store Sdn Bhd (SSDS) for a monthly rental of RM4,000 Rental of premises which is located at 88 Lintang Mayang Pasir 1, Mk 12, 11950 Bayan Baru, Penang measuring approximately 139.79 square metres by Meridian Chance Sdn Bhd (MCSB) to SWMSB for a monthly rental of RM2,000 Provide laundry services for cleaning clean room clothing to QFSB by Mylaco Sdn Bhd (MSB) Sales of merchandise from SWMSB to MSB Interested Related Parties SHSB Suiwah Supermarket Sendirian Berhad (SSSB) Dato Hwang Thean Long Datin Cheah Gaik Huang Ms. Hwang Siew Peng Mr. Looi Tik Miow Transaction Value (RM) 1,943,316
155,947
3 4
Mr. Looi Tik Miow SHSB SSSB Dato Hwang Thean Long Datin Cheah Gaik Huang Ms. Hwang Siew Peng
48,000
SHSB SSSB Dato Hwang Thean Long Datin Cheah Gaik Huang Ms. Hwang Siew Peng Mr. Leong Kong Meng Ms. Hwang Siew Peng Mr. Leong Kong Meng Ms. Hwang Siew Peng Mr. Leong Kong Meng Ms. Hwang Siew Peng Hozone Sdn Bhd (HSB) Datuk Haji Radzali Bin Hassan SHSB SSSB Dato Hwang Thean Long Datin Cheah Gaik Huang Ms. Hwang Siew Peng Mr. Leong Kong Meng SHSB SSSB Dato Hwang Thean Long Datin Cheah Gaik Huang Ms. Hwang Siew Peng Mr. Leong Kong Meng SHSB SSSB Dato Hwang Thean Long Datin Cheah Gaik Huang Ms. Hwang Siew Peng
24,000
Sales of merchandise from Crimson Omega Sdn Bhd to MSB Purchase of Dycem Cleanzone for floor coverings and mat solutions by QFSB from Sinar Bekal Sdn Bhd (SBSB) Provide Surface Mounted Technology and other subcontract services related to flexible printed circuits boards to QFSB by Nanometric Electronics Sdn Bhd (NESB)
10
1,266,275
11
2,207
12
Rental of 80 car park bays located at Level 3 Sunshine Square Complex, Lintang Mayang Pasir 1, Mk 12, 11950 Bayan Baru, Penang by SHSB to SWMSB for a monthly rental of RM4,000.
31,338
35
ANNUAL REPORT 2013
DIRECTORS REPORT
The Directors have pleasure in presenting their report together with the audited financial statements of the Group and of the Company for the financial year ended 31 May 2013. Principal Activities The principal activities of the Company are investment holding, provision of management services and letting of property. The principal activities of the subsidiaries, jointly controlled entity and associate are described in Notes 18, 19 and 20 to the financial statements. There have been no significant changes in the nature of the principal activities during the financial year. Results Group RM 13,696,760 Company RM 6,036,107
Profit for the year Attributable to: Equity holders of the Company Non-controlling interests
6,036,107 6,036,107
There were no material transfers to or from reserves or provisions during the financial year other than as disclosed in the financial statements. In the opinion of the Directors, the results of the operations of the Group and of the Company during the financial year were not substantially affected by any item, transaction or event of a material and unusual nature. Dividend The amount of dividend paid by the Company since 31 May 2012 was as follows: In respect of the financial year ended 31 May 2012 as reported in the directors' report of that year: First and final dividend of 8% less 25% taxation, approved on 22 November 2012 and paid on 14 December 2012 RM
3,441,189
At the forthcoming Annual General Meeting, a first and final dividend in respect of the current financial year ended 31 May 2013, of 8% less 25% taxation on 57,322,148 ordinary shares (the number of outstanding ordinary shares in issue of the Company as at 31 May 2013 after the set off with 12,000 ordinary shares bought back by the Company and held as treasury shares subsequent to year end) amounting to RM3,439,329 (6 sen net per share) will be proposed for shareholders' approval. The financial statements for the current financial year do not reflect this proposed dividend. Such dividends when approved by the shareholders will be accounted for in equity as an appropriation of retained earnings in the financial year ending 31 May 2014. Directors The names of the Directors of the Company in office since the date of the last report and at the date of this report are: Dato' Hwang Thean Long Dato' Haji Mohd Suhaimi bin Abdullah * Dato' Ahmad Hassan bin Osman * Datin Cheah Gaik Huang Hwang Siew Peng Wong Thai Sun * Jen Shek Voon ^ Datuk Haji Radzali bin Hassan * ^ Being members of Audit, Remuneration and Nomination Committees Being member of Audit Committee
36
ANNUAL REPORT 2013
The Company Direct interest Dato' Hwang Thean Long Dato' Haji Mohd Suhaimi bin Abdullah Datin Cheah Gaik Huang Indirect interest Dato' Hwang Thean Long * Hwang Siew Peng ** Datuk Haji Radzali bin Hassan *** Indirect interest Interest of Spouse/Children of the Directors ^ Dato Hwang Thean Long Datin Cheah Gaik Huang
26,400 15,404,486
26,400 15,404,486
By virtue of his interests in shares of Suiwah Holdings Sdn. Bhd. and Suiwah Supermarket Sendirian Berhad, both companies incorporated in Malaysia, Dato' Hwang Thean Long is deemed to have an interest in the shares of the Company and all its subsidiaries to the extent both these companies have interests. By virtue of the interests of her parents, Dato' Hwang Thean Long and Datin Cheah Gaik Huang, Hwang Siew Peng is deemed to have an interest in the shares of the Company and all its subsidiaries to the extent her parents have interests. By virtue of his interest in shares of Hozone Sdn. Bhd. ("Hozone"), a company incorporated in Malaysia, Datuk Haji Radzali bin Hassan is deemed to have an interest in the shares of the Company, and all its subsidiaries to the extent Hozone has an interest. Disclosure pursuant to Section 134 (12) (c) of the Companies Act 1965
**
***
None of the other Directors in office at the end of the financial year had any interest in shares in the Company or its related corporations and share options of the Company during the financial year.
37
ANNUAL REPORT 2013
(ii)
(b)
At the date of this report, the Directors are not aware of any circumstances which would render: (i) the amount written off for bad debts inadequate to any substantial extent or it necessary to make any provision for doubtful debts in the financial statements of the Group nor they are aware of any circumstances which would render it necessary to write off any bad debts or the amount of the provision for doubtful debts in the financial statements of the Company inadequate to any substantial extent; and the values attributed to the current assets in the financial statements of the Group and of the Company misleading.
(ii)
(c)
At the date of this report, the Directors are not aware of any circumstances which have arisen which would render adherence to the existing method of valuation of assets or liabilities of the Group and of the Company misleading or inappropriate. At the date of this report, the Directors are not aware of any circumstances not otherwise dealt with in this report or financial statements of the Group and of the Company which would render any amount stated in the financial statements misleading. At the date of this report, there does not exist: (i) any charge on the assets of the Group and of the Company which have arisen since the end of the financial year which secures the liabilities of any other person; or any contingent liability of the Group and of the Company which have arisen since the end of the financial year.
(d)
(e)
(ii) (f)
In the opinion of the Directors: (i) no contingent or other liability has become enforceable or is likely to become enforceable within the period of twelve months after the end of the financial year which will or may affect the ability of the Group or of the Company to meet their obligations when they fall due; and no item, transaction or event of a material and unusual nature has arisen in the interval between the end of the financial year and the date of this report which is likely to affect substantially the results of the operations of the Group or of the Company for the financial year in which this report is made.
(ii)
38
ANNUAL REPORT 2013
39
ANNUAL REPORT 2013
STATEMENT BY DIRECTORS
We, Dato' Hwang Thean Long and Wong Thai Sun, being two of the directors of Suiwah Corporation Bhd., do hereby state that, in the opinion of the directors, the accompanying financial statements set out on pages 42 to 108 are drawn up in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act 1965 in Malaysia so as to give a true and fair view of the financial position of the Group and of the Company as at 31 May 2013 and of their financial performance and cash flows for the year then ended. The information set out in Note 48 to the financial statements on page 109 have been prepared in accordance with the Guidance on Special Matter No.1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants. Signed on behalf of the Board in accordance with a resolution of the directors dated 26 September 2013.
STATUTORY DECLARATION
I, Dato' Hwang Thean Long, being the director primarily responsible for the financial management of Suiwah Corporation Bhd., do solemnly and sincerely declare that the accompanying financial statements set out on pages 42 to 109 are in my opinion correct, and I make this solemn declaration conscientiously believing the same to be true and by virtue of the provisions of the Statutory Declarations Act 1960. Subscribed and solemnly declared by the abovenamed Dato' Hwang Thean Long at Georgetown in the state of Penang on 26 September 2013
Before me,
40
ANNUAL REPORT 2013
We have audited the financial statements of Suiwah Corporation Bhd., which comprise the statements of financial position as at 31 May 2013 of the Group and of the Company, and the statements of comprehensive income, statements of changes in equity and statements of cash flows of the Group and of the Company for the year then ended, and a summary of significant accounting policies and other explanatory information, as set out on pages 42 to 108. Directors responsibility for the financial statements The Directors of the Company are responsible for the preparation of financial statements so as to give a true and fair view in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act 1965 in Malaysia. The directors are also responsible for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. Auditors responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We have conducted our audit in accordance with approved standards on auditing in Malaysia. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about 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 our judgement, including the assessment of risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the entitys preparation of financial statements that give a true and fair view 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 entitys internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the 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. Opinion In our opinion, the financial statements give a true and fair view of the financial position of the Group and of the Company as at 31 May 2013 and of their financial performance and cash flows for the year then ended in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act 1965 in Malaysia. Report on Other Legal And Regulatory Requirements In accordance with the requirements of the Companies Act 1965 in Malaysia, we also report the following: (a) In our opinion, the accounting and other records and the registers required by the Act to be kept by the Company and its subsidiaries of which we have acted as auditors have been properly kept in accordance with the provisions of the Act. (b) We have considered the financial statements and the auditors reports of all the subsidiaries of which we have not acted as auditors, which are indicated in Note18 to the financial statements, being financial statements that have been included in the consolidated financial statements. (c) We are satisfied that the financial statements of the subsidiaries that have been consolidated with the financial statements of the Company are in form and content appropriate and proper for the purposes of the preparation of the consolidated financial statements and we have received satisfactory information and explanations required by us for those purposes.
(d) The auditors reports on the financial statements of the subsidiaries were not subject to any qualification and did not include any comment required to be made under Section 174(3) of the Act. Other Reporting Responsibilities The supplementary information set out in Note 48 on page 109 is disclosed to meet the requirement of Bursa Malaysia Securities Berhad. The directors are responsible for the preparation of the supplementary information in accordance with Guidance on Special Matter No. 1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants ("MIA Guidance") and the directive of Bursa Malaysia Securities Berhad. In our opinion, the supplementary information is prepared, in all material respects, in accordance with the MIA Guidance and the directive of Bursa Malaysia Securities Berhad.
41
ANNUAL REPORT 2013
Other Matters 1. As stated in Note 2.2 to the financial statements, the Group and the Company adopted Malaysian Financial Reporting Standards on 1 June 2012 with a transition date of 1 June 2011. These standards were applied retrospectively by the directors to the comparative information in these financial statements, including the statements of financial position as at 31 May and 2012 and 1 June 2011, and the statements of comprehensive income, statement of changes in equity and statements of cash flows for the year ended 31 May 2012 and related disclosures. We were not engaged to report on the comparative information and it is unaudited. Our responsibilities as part of our audit of the financial statements of the Group and of the Company for the year ended 31 May 2013 have, in these circumstances, included obtaining sufficient appropriate audit evidence that the opening balances as at 1 June 2012 do not contain misstatements that materially affect the financial position as at 31 May 2013 and financial performance and cash flows for the year then ended. This report is made solely to the members of the Company, as a body, in accordance with Section 174 of the Companies Act 1965 in Malaysia and for no other purpose. We do not assume responsibility to any other person for the content of this report.
2.
Ernst & Young Lim Foo Chew AF: 0039 No. 1748/01/14(J) Chartered Accountants Chartered Accountant Penang, Malaysia Date: 26 September 2013
42
ANNUAL REPORT 2013
Note Revenue Other operating income Changes in inventories of merchandise, finished goods and work-in-progress Raw materials and consumable goods used Inventories purchased Employee benefits expense Inventories written down/off Amortisation of land use rights Commission Depreciation of: - property, plant and equipment - investment property Impairment loss on investment in a subsidiary Promotional expenses Property, plant and equipment written off Operating leases - minimum lease payment for: - land and buildings - equipment and machinery Subcontract charges Upkeep and maintenance Utilities Other operating expenses Operating profit Finance costs Share of loss in a jointly controlled entity Profit before tax Income tax expense Profit net of tax Other comprehensive income Foreign currency translation Total comprehensive income for the year Profit for the year attributable to: Equity holders of the Company Non-controlling interests 4 5
Group 2013 RM 372,334,550 1,866,301 6,151,223 (30,099,756) (263,009,754) (22,968,308) (553,092) (215,266) (1,380,393) (9,851,927) (4,489,626) (185,753) (2,326,378) (102,000) (5,882,726) (4,451,348) (8,474,771) (6,997,400) 19,363,576 (172,005) (4,627) 19,186,944 (5,490,184) 13,696,760
2012 RM
Company 2013 RM 13,735,220 331,351 (192,600) (1,106) (473,171) (28,334) (1,547) (5,673,635) 7,696,178 7,696,178 (1,660,071) 6,036,107
2012 RM
381,010,045 2,172,255 (7,472) (38,573,549) (260,980,686) (23,439,274) (207,470) (215,266) (1,326,120) (10,413,424) (4,352,545) (74,473) (4,342,809) (115,750) (7,002,164) (5,006,645) (9,633,589) (4,586,241) 12,904,823 (241,571) (40,797) 12,622,455 (5,076,098) 7,546,357
6,696,684 67,290 (192,600) (1,183) (473,171) (1,123) (3,389,074) 2,706,823 2,706,823 (1,559,894) 1,146,929
6 16
13 14
8 9
10
(443,660) 13,253,100
(2,431,366) 5,114,991
6,036,107
1,146,929
6,036,107 6,036,107
1,146,929 1,146,929
Total comprehensive income attributable to: Equity holders of the Company Non-controlling interests
6,036,107 6,036,107
1,146,929 1,146,929
Earnings per share attributable to equity holders of the Company (sen) Basic, for profit for the year Diluted, for profit for the year
11(a) 11(b)
24.23 24.23
13.17 13.17
The accompanying accounting policies and explanatory notes form an integral part of the financial statements.
43
ANNUAL REPORT 2013
Note Assets Non-current assets Property, plant and equipment Investment property Inventory property Land use rights Intangible asset Investments in subsidiaries Investment in a jointly controlled entity Investment in an associate Investments securities Goodwill on consolidation
2013 RM
Group 2012 RM
1.6.2011 RM
2013 RM
Company 2012 RM
1.6.2011 RM
13 14 15 16 17 18 19 20 21 22
Current assets Inventory property Inventories Trade and other receivables Other current assets Tax recoverable Loan receivables Short term investments Cash and bank balances Total assets Equity and Liabilities
15 23 24 25 26 27 28
16,466,059 33,511,211 24,205,914 398,315 675,660 28,730 13,698,835 32,199,611 121,184,335 270,515,559
16,267,936 34,062,297 28,458,463 4,771,053 711,885 16,516 3,841,946 31,143,760 119,273,856 243,497,111
Equity attributable to equity holders of the Company Share capital Treasury shares Share premium Other reserves Retained earnings Non-controlling interests Total equity 29 29 29 30 31 61,000,248 61,000,248 61,000,248 (5,346,718) (5,316,898) (4,854,244) 13,934,711 13,934,711 13,934,711 (2,875,026) (2,431,366) 863,790 118,862,638 108,413,462 103,435,741 185,575,853 175,600,157 174,380,246 807,232 1,000,837 380,630 186,383,085 176,600,994 174,760,876 61,000,248 (5,346,718) 13,934,711 29,901,976 99,490,217 99,490,217 61,000,248 (5,316,898) 13,934,711 27,307,058 96,925,119 96,925,119 61,000,248 (4,854,244) 13,934,711 863,790 28,737,750 99,682,255 99,682,255
44
ANNUAL REPORT 2013
2013 RM
Group 2012 RM
1.6.2011 RM
2013 RM
Company 2012 RM
1.6.2011 RM
32 33 34
Current liabilities Provision for liabilities Government grant Borrowings Trade and other payables Deferred revenue Tax payable Total liabilities Total equity and liabilities
35 32 33 36 37
The accompanying accounting policies and explanatory notes form an integral part of the financial statements.
Attributable to equity holders of the Company Non-distributable Share capital RM RM RM RM RM RM shares premium reserves earnings Total interests RM Treasury Share Other Retained controlling Distributable NonTotal equity RM
Group 61,000,248 61,000,248 61,000,248 61,000,248 (5,346,718) (29,820) 13,934,711 (5,316,898) 13,934,711 (2,431,366) (443,660) (2,875,026) (5,316,898) 13,934,711 (2,431,366) (863,790) (462,654) 863,790 108,413,462 108,413,462 13,890,365 (3,441,189) 118,862,638 (3,441,411) (2,431,366) 7,555,342 (4,854,244) 13,934,711 863,790 103,435,741 174,380,246 5,123,976 (3,441,411) (462,654) 175,600,157 175,600,157 13,446,705 (3,441,189) (29,820) 185,575,853 380,630 (8,985) 629,192 1,000,837 1,000,837 (193,605) 807,232 174,760,876 5,114,991 (3,441,411) 629,192 (462,654) 176,600,994 176,600,994 13,253,100 (3,441,189) (29,820) 186,383,085
At 1 June 2011
non-controlling interests
At 31 May 2012
At 1 June 2012
At 31 May 2013
45
46
ANNUAL REPORT 2013
Non-distributable Share capital RM Company At 1 June 2011 Total comprehensive income for the year Dividend (Note 12) Purchase of treasury shares Transfer in/(out) upon expiration of ESOS At 31 May 2012 At 1 June 2012 Total comprehensive income for the year Dividend (Note 12) Purchase of treasury shares At 31 May 2013 61,000,248 61,000,248 61,000,248 61,000,248 (4,854,244) (462,654) (5,316,898) (5,316,898) (29,820) (5,346,718) 13,934,711 13,934,711 13,934,711 13,934,711 863,790 (863,790) Treasury shares RM Share premium RM Other reserves RM
99,682,255 1,146,929 (3,441,411) (462,654) 96,925,119 96,925,119 6,036,107 (3,441,189) (29,820) 99,490,217
The accompanying accounting policies and explanatory notes form an integral part of the financial statements.
47
ANNUAL REPORT 2013
Group 2013 Note Operating activities Profit before tax Adjustments for: - Amortisation of: - government grant - land use rights Bad debts written off Depreciation of: - property, plant and equipment - investment property Gross dividends from subsidiaries Interest expense Interest income Inventories written down/off Impairment loss on investment in a subsidiary Gain on disposal of property plant and equipment Property, plant and equipment written off Reversal for provision for liquidated damages Allowance for impairment of doubtful debts Reversal of impairment loss Unrealised foreign exchange losses/(gains) Share of loss in a jointly controlled entity Operating cash flows before changes in working capital Increase in inventory property Decrease in receivables Decrease in other current assets (Increase)/Decrease in inventories Increase/(Decrease) in payables Increase in deferred revenue Cash generated from operations Interest paid Interest received Tax paid Net cash from operating activities 8 8 5 8 5 13 14 4 9 5 9,851,927 172,005 (570,272) 553,092 185,753 213,646 4,627 30,229,253 (198,123) 3,305,298 4,372,738 (2,006) 6,620,053 38,952 44,366,165 (172,005) 570,272 (4,795,548) 39,968,884 10,413,424 241,571 (877,373) 207,470 (13,600) 74,473 (1,168) 157,729 (1,179,320) 40,797 21,906,191 (2,913,949) 10,041,690 2,222,774 141,965 (731,531) 124,764 30,791,904 (241,571) 877,373 (5,926,533) 25,501,173 5 16 8 (50,000) 215,266 466,265 (50,000) 215,266 54,467 19,186,944 12,622,455 RM
7,696,178
2,706,823
1,106 473,171 (11,838,536) (71,191) 28,334 5,183,179 (260,160) 1,212,081 (29,611) 1,182,470 71,191 (282,441) 971,220
1,183 473,171 (4,800,000) (66,790) 2,910,160 1,224,547 44,611 1,269,158 66,790 (375,396) 960,552
48
ANNUAL REPORT 2013
Group 2013 Note Investing activities (Increase)/Decrease in deposits pledged to banks Decrease/(Increase) in deposits placed with licensed banks (more than 3 months) Increase in short term investments Proceeds from disposal of property, plant and equipment Net dividends received Investment in a jointly controlled entity Additional shares issued by a subsidiary to non-controlling interests Acquisition of patent licence Purchase of property, plant and equipment Net cash (used in)/from investing activities Financing activities Repayment of term loan Dividend paid Purchase of treasury shares (Increase)/Decrease in amounts due from subsidiaries Increase/(Decrease) in amounts due to subsidiaries Net changes in bankers' acceptances Net cash used in financing activities Net decrease in cash and cash equivalents Effects of exchange rate changes Cash and cash equivalents as at 1 June 2012 / 2011 Cash and cash equivalents as at 31 May 2013 / 2012 28 12 29 (915,546) (3,441,189) (29,820) 1,742,398 (2,644,157) (8,077,313) 195,072 30,107,763 22,225,522 (874,902) (3,441,411) (462,654) 261,110 (4,517,857) (3,067,117) 139,127 33,035,753 30,107,763 17 13 19,000 (6,905,900) (28,862,248) (45,402,040) 13,600 (6,399,807) 629,192 (14,956,529) (24,050,433) RM 2012 RM
10,571,402 10,571,402
3,600,000 3,600,000
The accompanying accounting policies and explanatory notes form an integral part of the financial statements.
49
ANNUAL REPORT 2013
1.
Corporate Information The Company is a public limited liability company, incorporated and domiciled in Malaysia and listed on the Main Market of Bursa Malaysia Securities Berhad ("Bursa Malaysia"). The registered office of the Company is located at No. 1-20-1 SUNTECH @ Penang Cybercity, Lintang Mayang Pasir 3, 11950 Bayan Baru, Penang. The principal activities of the Company are investment holding, provision of management services and letting of property. The principal activities of the subsidiaries, jointly controlled entity and associate are described in Notes 18, 19 and 20. There have been no significant changes in the nature of the principal activities during the financial year.
2. 2.1
Summary of Significant Accounting Policies Basis of preparation The financial statements of the Group and of the Company have been prepared in accordance with Malaysian Financial Reporting Standards ("MFRS"), International Financial Reporting Standards ("IFRS") and the requirements of the Companies Act, 1965 in Malaysia. For all periods up to and including the year ended 31 May 2012, the Group and the Company prepared their financial statements in accordance with Financial Reporting Standards ("FRS") in Malaysia. These financial statements for the year ended 31 May 2013 are the first financial statements of the Group and the Company prepared in accordance with MFRS and MFRS 1: First-Time Adoption of Malaysian Financial Reporting Standards ("MFRS 1") has been applied. The financial statements have been prepared on a historical cost basis except those disclosed below in the accounting policies. The financial statements are presented in Ringgit Malaysia ("RM").
2.2
First-time adoption of Malaysian Financial Reporting Standards ("MFRS") In preparing their opening MFRS Statements of Financial Position as at 1 June 2011 (which is also the date of transition), the Group adjusted the amounts previously reported in financial statements prepared in accordance with FRS. An explanation of how the transition from FRS to MFRS has affected the Group's financial position is set out below. These notes include reconciliations of equity at the date of transition reported under FRS to those reported at the date of transition under MFRS. Exemptions Applied MFRS 1 allows first-time adopters certain exemptions from the retrospective application of certain MFRS. The Group has applied the following exemptions: (a) Business combinations MFRS 1 provides the option to apply MFRS 3 Business Combinations prospectively from the date of transition or from a specific date prior to the date of transition. This provides relief from full retrospective application of MFRS 3 which would require restatement of all business combinations prior to the date of transition. The Group has elected to apply MFRS 3 prospectively from the date of transition. In respect of acquisitions prior to the date of transition: Acquisition before date of transition The Group has elected to apply MFRS 3 prospectively from the date of transition. In respect of acquisitions prior to the date of transition, (i) (ii) The classification of former business combinations under FRS is maintained; There is no re-measurement of original fair values determined at the time of business combination (date of acquisition); and The carrying amount of goodwill recognised under FRSs is not adjusted.
(iii)
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2. 2.2
Summary of Significant Accounting Policies (contd.) First-time adoption of Malaysian Financial Reporting Standards ("MFRS") (contd.) Exemptions Applied (contd.) (b) Property, plant and equipment The short term leasehold land and building of a subsidiary were revalued in March 2000 by a firm of professional valuers using the comparison cost method. The surplus arising from the revaluation had been credited to revaluation reserve in the prior year. The Group has continued to carry the short term leasehold land and building based on its revalued amount in March 2000 since the surplus based on the latest revaluation in July 2010 was immaterial. Upon transition to MFRS, the Group has elected to measure all its property, plant and equipment using the cost model under MFRS 116, Property, Plant and Equipment. At the date of transition to MFRS, the Group elected to regard the revalued amounts of leasehold land and buildings as at March 2000 as deemed cost at the date of revaluation as these amounts were broadly comparable to fair value at that date. The revaluation surplus of RM1,471,912 was transferred to retained earnings at the date of transition to MFRS. (c) Foreign currency translation reserve Under FRS, the Group recognised translation differences on foreign operations in a separate component of equity. Cumulative foreign currency translation differences for all foreign operations are deemed to be zero at the date of transition to MFRS. Accordingly, at the date of transition to MFRS, the cumulative foreign currency translation differences of RM1,519,551 were adjusted to retained earnings. (d) Estimates The estimates at 1 June 2011 and 31 May 2012 are consistent with those made for the same dates in accordance with FRS. The estimates used by the Group to present these amounts in accordance with MFRS reflect conditions at 1 June 2011, the date of transition to MFRS and as at 31 May 2012. The reconciliation of statements of financial position for comparative year and of statements of financial position at the date of transition reported under FRS, as restated to reflect the effect of prior year adjustments to those reported for those periods and at the date of transition under MFRS are provided below: FRS (as previously stated) RM Effect of adopting MFRS 1 RM
Group 1 June 2011 Statements of financial position Inventory property Investment in a jointly controlled entity Investment in an associate Asset revaluation reserve Foreign currency translation reserve Retained earnings
MFRS RM
2,034,809
(i)
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Group 31 May 2012 Statements of financial position Inventory property Investment in a jointly controlled entity Investment in an associate Asset revaluation reserve Foreign currency translation reserve Retained earnings * Prior year adjustments (i)
MFRS RM
2,034,809
(i)
Inventory property (Note 15) The Group had previously recognised an impairment loss of RM2,034,809 on its land held for property development in the profit and loss of the Group to write down the cost of the land held for development of a subsidiary to its recoverable amount. During the financial year ended 31 May 2013, the management has engaged an external property valuer to review the estimated market value of the land held for property development. An error was noted in the estimates used to determine the asset's recoverable amount in prior year which had resulted in the impairment loss having been incorrectly recognised in prior year. Hence, a reversal of impairment loss is recognised through a prior year adjustment. The carrying amount is increased to its revised recoverable amount, not exceeding the original cost of the land held for property development. The comparative figures for the financial year ended 31 May 2011 and 31 May 2012 have been restated to correct this error.
(ii)
Investment in a jointly controlled entity (Note 19) The Group had previously classified its investment in unquoted shares outside Malaysia, at cost in an entity incorporated in India, Exora Technologies Private Limited as investment in an associate. The management has reassessed and concluded that this investment is to be accounted for in the consolidated financial statements as investment in a jointly controlled entity as the Group has joint control over the activities of the entity, where the entity's strategic financial and operating decisions require unanimous consent as set out in the contractual agreement. Hence, a reclassification is made through a prior year adjustment.
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2. 2.2
Summary of Significant Accounting Policies (contd.) First-time adoption of Malaysian Financial Reporting Standards ("MFRS") (contd.) First-time adoption of MFRS 107: Statement of Cash Flows In accordance with MFRS 107, cash and cash equivalents are held for the purpose of meeting short-term cash commitments (such as cash in hand, at banks and deposits with a maturity of three months or less) rather than investment. In the previous financial year, the Group designated its cash in hand and bank balances and all its deposits as cash and cash equivalents. The Group and the Company have applied this standard retrospectively. Consequently, certain comparative figures have been restated. The following are the reclassification effects to the notes to the statements of cash flows for the year ended 31 May 2013 arising from the change in accounting policy stated above: Effect of adopting MFRS 107 RM
Group 1 June 2011 Statements of cash flows Cash and cash equivalents as at 1 June 2011 31 May 2012 Statements of cash flows Increase in deposit placed with licensed banks (more than 3 months) Increase in short term investments Cash and cash equivalents as at 31 May 2012
FRS RM
MFRS RM
34,029,302
(993,549)
33,035,753
34,604,866
2.3
Changes in accounting policies The standards and interpretations that are issued but not yet effective up to the date of issuance of the Group's and the Companys financial statements are disclosed below. The Group and the Company intend to adopt these standards, if applicable, when they become effective. Effective for annual periods beginning on or after
Description MFRS 101: Presentation of Items of Other Comprehensive Income (Amendments to MFRS 101) Amendments to MFRS 101: Presentation of Financial Statements (Annual Improvements 2009-2011 Cycle) MFRS 3: Business Combinations (IFRS 3: Business Combinations issued by IASB in March 2004) MFRS 10: Consolidated Financial Statements MFRS 11: Joint Arrangements MFRS 12: Disclosure of Interests in Other Entities MFRS 13: Fair Value Measurement MFRS 119: Employee Benefits MFRS 127: Separate Financial Statements
1 July 2012 1 January 2013 1 January 2013 1 January 2013 1 January 2013 1 January 2013 1 January 2013 1 January 2013 1 January 2013
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Description MFRS 127: Consolidated and Separate Financial Statements (IAS 27 as revised by IASB in December 2003) MFRS 128: Investment in Associates and Joint Ventures Amendments to IC Interpretation 2: Members Shares in Co-operative Entities and Similar Instruments (Annual Improvements 2009-2011 Cycle) IC Interpretation 20: Stripping Costs in the Production Phase of a Surface Mine Amendments to MFRS 7: Disclosures Offsetting Financial Assets and Financial Liabilities Amendments to MFRS 1: First-time Adoption of Malaysian Financial Reporting Standards Government Loans Amendments to MFRS 1: First-time Adoption of Malaysian Financial Reporting Standards Annual Improvements 2009-2011 Cycle) Amendments to MFRS 116: Property, Plant and Equipment (Annual Improvements 2009-2011 Cycle) Amendments to MFRS 132: Financial Instruments: Presentation (Annual Improvements 2009-2011 Cycle) Amendments to MFRS134: Interim Financial Reporting (Annual Improvements 2009-2011 Cycle) Amendments to MFRS 10: Consolidated Financial Statements: Transition Guidance Amendments to MFRS 11: Joint Arrangements: Transition Guidance Amendments to MFRS 12: Disclosure of Interests in Other Entities: Transition Guidance Amendments to MFRS 10, MFRS 12 and MFRS 127: Investment Entities Amendments to MFRS 132: Offsetting Financial Assets and Financial Liabilities Amendments to MFRS 136: Recoverable Amount Disclosures for Non-Financial Assets Amendments to MFRS 139: Novation of Derivatives and Continuation of Hedge Accounting IC Interpretation 21: Levies MFRS 9: Financial Instruments
1 January 2013 1 January 2013 1 January 2013 1 January 2013 1 January 2013 1 January 2013 1 January 2013 1 January 2013 1 January 2013 1 January 2013 1 January 2013 1 January 2013 1 January 2013 1 January 2014 1 January 2014 1 January 2014 1 January 2014 1 January 2014 1 January 2015
The directors expect that the adoption of the above standards and interpretations will have no material impact on the financial statements in the period of initial application, except as discussed below: MFRS 3 Business Combinations (IFRS 3 Business Combinations issued by IASB in March 2004) and MFRS 127 Consolidated and Separate Financial Statements (IAS 27 as revised by IASB in December 2003) An entity shall apply these earlier versions of MFRS 3 and MFRS 127 only if the entity elected to do so as allowed in MFRS 10 Consolidated Financial Statements. The adoptions of these standards are not expected to have any significant impact to the Group and the Company. MFRS 9 Financial Instruments: Classification and Measurement MFRS 9 reflects the first phase of the work on the replacement of MFRS 139 Financial Instruments: Recognition and Measurement and applies to classification and measurement of financial assets and financial liabilities as defined in MFRS 139 Financial Instruments: Recognition and Measurement. The adoption of the first phase of MFRS 9 will have an effect on the classification and measurement of the Group and the Companys financial assets. The Group and the Company will quantify the effect in conjunction with the other phases, when the final standard including all phases is issued.
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2. 2.3
Summary of Significant Accounting Policies (contd.) Changes in accounting policies (contd.) MFRS 10 Consolidated Financial Statements MFRS 10 replaces part of MFRS 127 Consolidated and Separate Financial Statements that deals with consolidated financial statements and IC Interpretation 112 Consolidation - Special Purpose Entities. Under MFRS 10, an investor controls an investee when: (i) (ii) (iii) the investor has power over an investee, the investor has exposure, or rights, to variable returns from its involvement with the investee, and the investor has ability to use its power over the investee to affect the amount of the investor's returns.
Under MFRS 127 Consolidated and Separate Financial Statements, control was defined as the power to govern the financial and operating policies of an entity so as to obtain benefits from its activites. MFRS 10 includes detailed guidance to explain when an investor has control over the investee. MFRS 10 requires the investor to take into account all relevant facts and circumstaces. The Group is still assessing the impact of this standard. MFRS 11 Joint Arrangements MFRS 11 establishes the principles for classification and accounting for joint arrangements and supersedes MFRS 131, Interest in Joint Ventures. Under MFRS 11, a joint arrangement may be classified as joint venture or joint operation. Interest in joint venture will be accounted for using equity method whilst interest in joint operation will be accounted for using the applicable MFRSs relating to the underlying assets, liabilities, income and expense items arising from the joint operations. The Group is still assessing the impact of adoption of MFRS 11. MFRS 12 Disclosures of Interests in Other Entities MFRS 12 includes all disclosure requirements for interests in subsidiaries, joint arrangements, associates and structured entities. A number of new disclosures are required. This standard affects disclosures only and has no impact on the Groups financial position or performance. MFRS 13 Fair Value Measurement MFRS 13 establishes a single source of guidance under MFRSs for all fair value measurements. MFRS 13 does not change when an entity is required to use fair value, but rather provides guidance on how to measure fair value under MFRS when fair value is required or permitted. The Group is still assessing the impact of this standard. MFRS 127 Separate Financial Statements As a consequence of the new MFRS 10 and MFRS 12, MFRS 127 is limited to accounting for subsidiaries, jointly controlled entities and associates in separate financial statements. MFRS 128 Investments in Associates and Joint Ventures As a consequence of the new MFRS 11 and MFRS 12, MFRS 128 is renamed as MFRS 128 Investments in Associates and Joint Ventures. This new standard describes the application of the equity method to investments in joint ventures in addition to associates.
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2. 2.7
Summary of Significant Accounting Policies (contd.) Associates Associates are entities, not being a subsidiary or a joint venture, in which the Group has significant influence. An associate is equity accounted for from the date the Group obtains significant influence until the date the Group ceases to have significant influence over the associate. The Groups investments in associates are accounted for using the equity method. Under the equity method, the investment in associates is measured in the statements of financial position at cost plus post-acquisition changes in the Groups share of net assets of the associates. Goodwill relating to associates is included in the carrying amount of the investment. Any excess of the Groups share of the net fair value of the associates identifiable assets, liabilities and contingent liabilities over the cost of the investment is excluded from the carrying amount of the investment and is instead included as income in the determination of the Groups share of the associates profit or loss for the period in which the investment is acquired. When the Groups share of losses in an associate equals or exceeds its interest in the associate, the Group does not recognise further losses, unless it has incurred obligations or made payments on behalf of the associate. After application of the equity method, the Group determines whether it is necessary to recognise an additional impairment loss on the Groups investment in its associates. The Group determines at each reporting date whether there is any objective evidence that the investment in the associate is impaired. If this is the case, the Group calculates the amount of impairment as the difference between the recoverable amount of the associate and its carrying value and recognises the amount in profit or loss. The financial statements of the associates are prepared as of the same reporting date as the Company. Where necessary, adjustments are made to bring the accounting policies in line with those of the Group. In the Companys separate financial statements, investments in associates are stated at cost less any accumulated impairment losses. On disposal of such investments, the difference between net disposal proceeds and their carrying amounts is included in profit or loss.
2.8
Joint venture Jointly-controlled entity Jointly-controlled entities are those entities over whose activities the Group has joint control, established by contractual agreement and requiring unanimous consent for strategic financial and operating decisions. Joint ventures are accounted for in the consolidated financial statements using the equity method unless it is classified as held for sale (or included in a disposal group that is classified as held for sale). The consolidated financial statements include the Groups share of the profit or loss of the equity accounted joint ventures, after adjustments to align the accounting policies with those of the Group, from the date that joint control commences until the date that joint control ceases. When the Groups share of losses exceeds its interest in an equity accounted joint venture, the carrying amount of that interest (including any long-term investments) is reduced to nil and the recognition of further losses is discontinued except to the extent that the Group has an obligation or has made payments on behalf of the joint venture. In the Company's separate financial statements, investments in jointly controlled entities are stated at cost less any accumulated impairment losses, unless the investment is classified as held for sale. On disposal of such investment, the difference between net disposal proceeds and the carrying amount is included in profit or loss.
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2. 2.10
Summary of Significant Accounting Policies(contd.) Property, plant and equipment and depreciation (contd.) Subsequent to recognition, property, plant and equipment are measured at cost less accumulated depreciation and any accumulated impairment losses. When significant parts of property, plant and equipment are required to be replaced in intervals, the Group recognises such parts as individual assets with specific useful lives and depreciation, respectively. Likewise, when a major inspection is performed, its cost is recognised in the carrying amount of the plant and equipment as a replacement if the recognition criteria are satisfied. All other repair and maintenance costs are recognised in profit or loss as incurred. Short-term leasehold land Long-term leasehold apartment Buildings Plant and machinery Office equipment, renovation, furniture and fittings Computers Motor vehicles 5% - 6% 1.27% 2% - 18% 10% - 20% 10% - 20% 20% - 33.3% 10% - 20%
Capital work-in-progress are not depreciated as these assets are not yet available for use. The carrying values of property, plant and equipment are reviewed for impairment when events or changes in circumstances indicate that the carrying value may not be recoverable. The residual value, useful life and depreciation method are reviewed at each financial year-end, and adjusted prospectively, if appropriate. An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss on derecognition of the asset is included in profit or loss in the year the asset is derecognised. 2.11 Investment properties Investment properties are measured at cost model which is to measure investment properties at cost less accumulated depreciation and any accumulated impairment losses. Depreciation is computed on a straight-line basis over the estimated useful lives of the assets as follows: Buildings 1% - 2%
A property interest under an operating lease is classified and accounted for as an investment property on a propertyby-property basis when the Group holds it to earn rentals or for capital appreciation or both. Any such property interest under an operating lease classified as an investment property is carried at fair value. Investment properties are derecognised when either they have been disposed of or when the investment property is permanently withdrawn from use and no future economic benefit is expected from its disposal. Any gain or loss on the retirement or disposal of an investment property is recognised in profit or loss in the year of retirement or disposal. Transfers are made to or from investment property only when there is a change in use. During the financial year ended 31 May 2012, the investment property of the Group has been transferred to property, plant and equipment and property development cost as set out in Note 13, 14 & 15(b) and is accounted for in accordance with the accounting policy set out in Note 2.10 and 2.12 respectively.
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2. 2.14
Summary of Significant Accounting Policies (contd.) Financial assets (contd.) The Group and the Company determine the classification of their financial assets at initial recognition, and the categories include financial assets at fair value through profit or loss, loans and receivables, held-to-maturity investments and available-for-sale financial assets. (a) Financial assets at fair value through profit or loss Financial assets are classified as financial assets at fair value through profit or loss if they are held for trading or are designated as such upon initial recognition. Financial assets held for trading are derivatives (including separated embedded derivatives) or financial assets acquired principally for the purpose of selling in the near term. Subsequent to initial recognition, financial assets at fair value through profit or loss are measured at fair value. Any gains or losses arising from changes in fair value are recognised in profit or loss. Net gains or net losses on financial assets at fair value through profit or loss do not include exchange differences, interest and dividend income. Exchange differences, interest and dividend income on financial assets at fair value through profit or loss are recognised separately in profit or loss as part of other losses or other income. Financial assets at fair value through profit or loss could be presented as current or non-current. Financial assets that is held primarily for trading purposes are presented as current whereas financial assets that is not held primarily for trading purposes are presented as current or non-current based on the settlement date. (b) Loans and receivables Financial assets with fixed or determinable payments that are not quoted in an active market are classified as loans and receivables. Subsequent to initial recognition, loans and receivables are measured at amortised cost using the effective interest method. Gains and losses are recognised in profit or loss when the loans and receivables are derecognised or impaired, and through the amortisation process. Loans and receivables are classified as current assets, except for those having maturity dates later than 12 months after the reporting date which are classified as non-current. (c) Held-to-maturity investments Financial assets with fixed or determinable payments and fixed maturity are classified as held-to-maturity when the Group has the positive intention and ability to hold the investment to maturity. Subsequent to initial recognition, held-to-maturity investments are measured at amortised cost using the effective interest method. Gains and losses are recognised in profit or loss when the held-to-maturity investments are derecognised or impaired, and through the amortisation process. Held-to-maturity investments are classified as non-current assets, except for those having maturity within 12 months after the reporting date which are classified as current. (d) Available-for-sale financial assets Available-for-sale financial assets are financial assets that are designated as available for sale or are not classified in any of the three preceding categories. After initial recognition, available-for-sale financial assets are measured at fair value. Any gains or losses from changes in fair value of the financial assets are recognised in other comprehensive income, except that impairment losses, foreign exchange gains and losses on monetary instruments and interest calculated using the effective interest method are recognised in profit or loss. The cumulative gain or loss previously recognised in other comprehensive income is reclassified from equity to profit or loss as a reclassification adjustment when the financial asset is derecognised. Interest income calculated using the effective interest method is recognised in profit or loss.
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2. 2.15
Summary of Significant Accounting Policies (contd.) Impairment of financial assets (contd.) (b) Available-for-sale financial assets Significant or prolonged decline in fair value below cost, significant financial difficulties of the issuer or obligor, and the disappearance of an active trading market are considerations to determine whether there is objective evidence that investment securities classified as available-for-sale financial assets are impaired. If an available-for-sale financial asset is impaired, an amount comprising the difference between its cost (net of any principal payment and amortisation) and its current fair value, less any impairment loss previously recognised in profit or loss, is transferred from equity to profit or loss. Impairment losses on available-for-sale equity investments are not reversed in profit or loss in the subsequent periods. Increase in fair value, if any, subsequent to impairment loss is recognised in other comprehensive income. For available-for-sale debt investments, impairment losses are subsequently reversed in profit or loss if an increase in the fair value of the investment can be objectively related to an event occurring after the recognition of the impairment loss in profit or loss.
2.16
Financial liabilities Financial liabilities are classified according to the substance of the contractual arrangements entered into and the definitions of a financial liability. Financial liabilities, within the scope of MFRS 139, are recognised in the statements of financial position when, and only when, the Group and the Company become a party to the contractual provisions of the financial instrument. Financial liabilities are classified as either financial liabilities at fair value through profit or loss or other financial liabilities. (a) Financial liabilities at fair value through profit or loss Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial liabilities designated upon initial recognition as at fair value through profit or loss. Financial liabilities held for trading include derivatives entered into by the Group and the Company that do not meet the hedge accounting criteria. Derivative liabilities are initially measured at fair value and subsequently stated at fair value, with any resultant gains or losses recognised in profit or loss. Net gains or losses on derivatives include exchange differences. The Group and the Company have not designated any financial liabilities as at fair value through profit or loss. (b) Other financial liabilities The Groups and the Company's other financial liabilities include trade payables, other payables and loans and borrowings. Trade and other payables are recognised initially at fair value plus directly attributable transaction costs and subsequently measured at amortised cost using the effective interest method. Loans and borrowings are recognised initially at fair value, net of transaction costs incurred, and subsequently measured at amortised cost using the effective interest method. Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the reporting date. For other financial liabilities, gains and losses are recognised in profit or loss when the liabilities are derecognised, and through the amortisation process.
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Deferred tax assets are recognised for all deductible temporary differences, carry forward of unused tax credits and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilised except: where the deferred tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and in respect of deductible temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, deferred tax assets are recognised only to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilised.
The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised. Unrecognised deferred tax assets are reassessed at each reporting date and are recognised to the extent that it has become probable that future taxable profit will allow the deferred tax assets to be utilised. Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realised or the liability is settled, based on tax rates and tax laws that have been enacted or substantively enacted at the reporting date. Deferred tax relating to items recognised outside profit or loss is recognised outside profit or loss. Deferred tax items are recognised in correlation to the underlying transaction either in other comprehensive income or directly in equity and deferred tax arising from a business combination is adjusted against goodwill on acquisition. Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority.
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2. 2.18
Summary of Significant Accounting Policies (contd.) Share capital and share issuance expenses An equity instrument is any contract that evidences a residual interest in the assets of the Group and the Company after deducting all of its liabilities. Ordinary shares are equity instruments. Ordinary shares are recorded at the proceeds received, net of directly attributable incremental transaction costs. Ordinary shares are classified as equity. Dividends on ordinary shares are recognised in equity in the period in which they are declared.
2.19
Cash and cash equivalents Cash and cash equivalents comprise cash at bank and on hand, demand deposits, and short-term, highly liquid investments with maturity of 3 months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. These also include bank overdrafts that form an integral part of the Groups and the Company's cash management.
2.20
Inventories Inventories are stated at the lower of cost and net realisable value. Cost of inventories of merchandise held for resale is determined using the weighted average method. Cost of manufactured goods is determined using the first in, first out method. The cost of raw materials comprises costs of purchase. The cost of finished goods and work-in-progress comprise costs of raw materials, direct labour, other direct costs and appropriate proportions of manufacturing overheads based on normal operating capacity. The cost of properties held for sale comprises cost associated with the acquisition of land, direct costs and appropriate proportions of common costs. Cost is determined on a specific identification basis. Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs necessary to make the sale.
2.21
Leases (i) As lessee Finance leases, which transfer to the Group substantially all the risks and rewards incidental to ownership of the leased item, are capitalised at the inception of the lease at the fair value of the leased asset or, if lower, at the present value of the minimum lease payments. Any initial direct costs are also added to the amount capitalised. Lease payments are apportioned between the finance charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are charged to profit or loss. Contingent rents, if any, are charged as expenses in the periods in which they are incurred. Leased assets are depreciated over the estimated useful life of the asset. However, if there is no reasonable certainty that the Group will obtain ownership by the end of the lease term, the asset is depreciated over the shorter of the estimated useful life and the lease term. Operating lease payments are recognised as an expense in profit or loss on a straight-line basis over the lease term. The aggregate benefit of incentives provided by the lessor is recognised as a reduction of rental expense over the lease term on a straight-line basis. (ii) As lessor Leases where the Group and the Company retain substantially all the risks and rewards of ownership of the asset are classified as operating leases. Initial direct costs incurred in negotiating an operating lease are added to the carrying amount of the leased asset and recognised over the lease term on the same bases as rental income. The accounting policy for rental income is set out in Note 2.26 (v).
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2. 2.25
Summary of Significant Accounting Policies (contd.) Foreign currencies (i) Functional and presentation currency The individual financial statements of each entity in the Group are measured using the currency of the primary economic environment in which the entity operates ("the functional currency"). The financial statements of the Group and of the Company are presented in Ringgit Malaysia ("RM"), which is also the Company's functional currency. (ii) Foreign currency transactions In preparing the financial statements of the individual entities, transactions in currencies other than the entity's functional currency (foreign currencies) are recorded in the functional currency using the exchange rates prevailing at the dates of the transactions. At each reporting date, monetary items denominated in foreign currencies are translated at the rates prevailing on the reporting date. Non-monetary items carried at fair value that are denominated in foreign currencies are translated at the rates prevailing on the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not translated. Exchange differences arising on the settlement of monetary items, and on the translation of monetary items, are included in profit or loss for the period except for exchange differences arising on monetary items that form part of the Group's net investment in foreign operation. These are initially taken directly to the foreign currency reserve within equity until the disposal of the foreign operations, at which time they are recognised in profit or loss. Exchange differences arising from on monetary items that form part of the Groups net investment in foreign operation, where that monetary item is denominated in a currency other than the functional currency of either the reporting entity or the foreign operation are recognised in profit or loss in the Companys separate financial statements or the individual financial statements of the foreign operation, as appropriate. Exchange differences arising on the translation of non-monetary items carried at fair value are included in profit or loss for the period except for the differences arising on the translation of non-monetary items in respect of which gains and losses are recognised directly in equity. Exchange differences arising from such non-monetary items are also recognised directly in equity. (iii) Foreign operations The results and financial position of foreign operations that have a functional currency different from the presentation currency of the consolidated financial statements are translated into RM as follows: Assets and liabilities for each statement of financial position presented are translated at the closing rate prevailing at the reporting date; Income and expenses for each statement of comprehensive income are translated at average exchange rates for the year, which approximate the exchange rates at the dates of the transactions; and All resulting exchange differences are taken to the foreign currency translation reserve within equity.
Goodwill and fair value adjustments arising on the acquisition of foreign operations on or after 1 January 2006 are treated as assets and liabilities of the foreign operations and are recorded in the functional currency of the foreign operations and translated at the closing rate at the reporting date. Goodwill and fair value adjustments which arose on the acquisition of foreign subsidiaries before 1 January 2006 are deemed to be assets and liabilities of the parent company and are recorded in RM at the rates prevailing at the date of acquisition.
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Significant Accounting Judgements and Estimates The preparation of the financial statements of the Group and of the Company requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the disclosure of contingent liabilities at the reporting date. However, uncertainty about these assumptions and estimates could result in outcomes that could require a material adjustment to the carrying amount of the asset or liability affected in the future.
3.1
Judgements made in applying accounting policies In the process of applying the Groups accounting policies, management has made the following judgements, apart from those involving estimations, which have the most significant effect on the amounts recognised in the financial statements: (i) Classification of property The Group has developed certain criteria based on MFRS 140: Investment Property in making judgement whether a property qualifies as an investment property. Investment property is a property held to earn rentals or for capital appreciation or both. The Company has leased out its building to a subsidiary as a supermarket and departmental store and accordingly the building is classified as investment property in the Company's financial statements. The building is classified as property, plant and equipment in the Group's financial statements as it is held for use in the supply of goods and services. Property that is held for sale in the ordinary course of business is classified as inventory property. (ii) Operating lease commitments the Company as a lessor The Company has entered into property leases with a subsidiary on its investment properties. The Company has determined that it retains all the significant risks and rewards of ownership of these properties which are leased out as operating leases.
3.2
Key sources of estimation uncertainty The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below. (i) Impairment of goodwill The Group determines whether goodwill are impaired at least on an annual basis. This requires an estimation of the value-in-use of the cash-generating units ("CGU") to which goodwill are allocated. Estimating a valuein-use amount requires management to make an estimate of the expected future cash flows from the CGU and also to choose a suitable discount rate in order to calculate the present value of those cash flows. The carrying amount of the goodwill as at 31 May 2013 of the Group was RM4,665,045 (2012: RM4,665,045). Further details are disclosed in Note 22. (ii) Deferred tax assets Deferred tax assets are recognised for all unused tax losses and unabsorbed capital allowances to the extent that it is probable that taxable profit will be available against which the losses and capital allowances can be utilised. Significant management judgement is required to determine the amount of deferred tax assets that can be recognised, based upon the likely timing and level of future taxable profits together with future tax planning strategies. The total carrying value of unrecognised tax losses and capital allowances of the Group is disclosed in Note 34. (iii) Depreciation of plant and machinery The cost of plant and machinery for the manufacturing of flexible printed circuit boards of the Group are depreciated on a straight-line basis over the assets' useful lives. Management estimates the useful lives of these plant and machinery to be within 5 to 8 years. These are common life expectancies applied in the precisions industry. Changes in the expected level of usage and technological developments could impact the economic useful lives and the residual values of these assets, therefore future depreciation charges could be revised.
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ANNUAL REPORT 2013
4.
Revenue
2012 RM
2012 RM -
Sales of goods Sales of properties Loan interest income Rental income from: - investment property - operating leases, other than those relating to investment property Management fees from subsidiaries Gross dividends from subsidiaries
70
ANNUAL REPORT 2013
5.
Group 2013 RM 310,684 50,000 50,000 7,466 20,839 570,272 857,040 1,866,301
Advertising and promotional income Amortisation of government grant (Note 32) Bad debts recovered Gain on disposal of property, plant and equipment Commission income Insurance claim Interest income Miscellaneous Reversal of impairment loss (Note 24)
6.
Wages and salaries Executive directors' remuneration (Note 7) Social security contributions Contributions to defined contribution plan Other benefits
7.
Directors' Remuneration
Directors of the Company Executive: Salaries and other emoluments Fees Bonus Contributions to defined contribution plan
Group 2013 RM
2012 RM
Company 2013 RM
2012 RM
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ANNUAL REPORT 2013
Directors of subsidiaries Executive: Salaries and other emoluments Fees Bonus Contributions to defined contribution plan Non-executive: Fees Total directors remuneration (Note 40(b)) Estimated money value of benefits-in-kind Total directors remuneration including benefits-in-kind
Group 2013 RM
2012 RM
Company 2013 RM
2012 RM
307,600 -
306,100 -
1,643,689
1,711,776
307,600
306,100
Analysis: Total executive directors' remuneration (Note 6) Total non-executive directors' remuneration (Note 8) Total directors' remuneration Estimated money value of benefits-in-kind Total directors remuneration including benefits-in-kind
The executive directors remuneration of the Group amounting to RM1,341,395 (2012: RM1,415,803) are paid to the present directors of the Group. The number of directors of the Company whose total remuneration during the year fell within the following bands is analysed below:
Number of directors 2013 2012 Executive directors: RM50,001 - RM100,000 RM100,001 - RM150,000 RM300,001 - RM350,000 Non-executive directors: Below RM50,000 2 1 2 1
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ANNUAL REPORT 2013
8.
Other Operating Expenses Included in other operating expenses are: Group 2013 RM Auditors' remuneration: - statutory audit - current year - underprovision in prior years Allowance for impairment of doubtful debts (Note 24) Bad debts written off Foreign exchange (gains)/losses: - realised - unrealised Non-executive directors' remuneration (Note 7) - present directors Reversal for provision for liquidated damages (Note 35) Company 2013 RM
2012 RM
2012 RM
9.
Finance Costs
10.
2012 RM
Current year income tax: Malaysian income tax (Over)/Underprovision in prior year Deferred tax (Note 34): Relating to origination and reversal of temporary differences (Over)/Underprovision in prior year Income tax recognised in profit or loss
1,660,071
1,559,894
Domestic income tax is calculated at the Malaysian statutory tax rate of 25% (2012: 25%) of the estimated assessable profit for the year. Taxation of other jurisdictions is calculated at the rates prevailing in the respective jurisdiction.
73
ANNUAL REPORT 2013
Group Profit before tax Taxation at Malaysian statutory tax rate of 25% Different tax rates in other countries Expenses not deductible for tax purposes Income not subject to tax Effect of utilisation of previously unrecognised deferred tax assets Deferred tax assets not recognised during the year Overprovision of income tax expense in prior year (Over)/Underprovision of deferred tax in prior year Income tax expense for the year
19,186,944 4,796,736 (1,996) 1,351,529 (333,476) (406,117) 288,405 (4,401) (200,496) 5,490,184
Company Profit before tax Taxation at Malaysian statutory tax rate of 25% Expenses not deductible for tax purposes Income not subject to tax (Over)/Underprovision of income tax expense in prior year Income tax expense for the year Group (i) A subsidiary, which has on 18 January 2010 obtained approval from Malaysian Industrial Development Authority ("MIDA"), subject to certain conditions being complied with, 100% tax exemption on its statutory income on "Fine Resolution Interconnect Flexible Printed Circuit Boards" (Pitch < 3mm) for a period of 5 years from the "Production Date". The subsidiary has subsequently applied to MIDA to vary one of its conditions and its application has been approved by MIDA. The subsidiary has submitted an application to fix its "Production Date" to the Ministry of International Trade and Industry ("MITI") and its application is still subject to MITI's approval as at 31 May 2013. Consequently, the subsidiarys chargeable income as at 31 May 2013 continues to be calculated on the basis that it is subject to income tax at a rate of 25% (2012: 25%). Subsequent to 31 May 2013, MITI has approved the subsidiary's application and fixed 1 June 2009 as the "Production Date" of the subsidiary where 100% of its statutory income on "Fine Resolution Interconnect Flexible Printed Circuit Boards" (Pitch < 3mm) will be tax exempted for a period of 5 years from 1 June 2009 to 31 May 2014. Further details are disclosed in Note 46. (ii) Another subsidiary has been accorded the Multimedia Super Corridor ("MSC") Status and was granted an extention of pioneer status for a further period of 5 years from 10 February 2008 to 9 February 2013. The chargeable income arising from the pioneer activity is 100% tax exempt during the pioneer status period. The pioneer status has expired on 9 February 2013 and consequently the subsidiarys income tax is calculated at a rate of 25% of the assessable profit generated from 10 February 2013 onwards. 7,696,178 1,924,045 1,503,126 (1,757,541) (9,559) 1,660,071 2,706,823 676,706 882,794 394 1,559,894
74
ANNUAL REPORT 2013
11.
Earnings Per Share (a) Basic Basic earnings per share amounts are calculated by dividing profit for the year attributable to ordinary equity holders of the Company by the weighted average number of ordinary shares in issue during the financial year, excluding treasury shares held by the Company. Group 2013 RM 13,890,365 57,334,148 24.23
Profit for the year attributable to ordinary equity holders of the Company (RM) Weighted average number of ordinary shares in issue Basic earnings per share (sen) (b) Diluted
For the purpose of calculating diluted earnings per share, the profit for the year attributable to ordinary equity holders of the Company and the weighted average number of ordinary shares in issue during the financial year, excluding treasury shares held by the Company have been adjusted for the dilutive effects of all potential ordinary shares, i.e. Employee Share Options Scheme ("ESOS"). The effect on the basic earnings per share for the financial year arising from the assumed conversion of the existing ESOS was anti-dilutive. The ESOS has lapsed on 23 April 2012 and all the unexercised options shall automatically lapse upon the expiry of the option period. Accordingly, the diluted earnings per share for the current financial year are presented as equal to basic earnings per share.
12.
Dividend Amount 2013 RM Group and Company In respect of financial year ended 31 May 2011: First and final dividend of 8% less 25% taxation, declared on 5 December 2011 and paid on 15 December 2011 In respect of financial year ended 31 May 2012: First and final dividend of 8% less 25% taxation, declared on 22 November 2012 and paid on 14 December 2012 Net dividend per share 2013 2012 Sen Sen
2012 RM
3,441,411
6.00
3,441,189 3,441,189
3,441,411
6.00 6.00
6.00
At the forthcoming Annual General Meeting, a first and final dividend in respect of the current financial year ended 31 May 2013, of 8% less 25% taxation on 57,322,148 ordinary shares (the number of outstanding ordinary shares in issue of the Company as at 31 May 2013 after the set off with 12,000 ordinary shares bought back by the Company and held as treasury shares subsequent to year end) amounting to RM3,439,329 (6 sen net per share) will be proposed for shareholders' approval. The financial statements for the current financial year do not reflect this proposed dividend. Such dividends when approved by the shareholders will be accounted for in equity as an appropriation of retained earnings in the financial year ending 31 May 2014.
13. Office equipment, Long-term leasehold apartment RM RM RM RM RM RM RM Buildings machinery and fittings Computers vehicles progress Total RM Plant and furniture Motor work-inrenovation, Capital
Short-term
leasehold
land
Group
RM
2013
Cost 1,030,570 1,030,570 59,368,975 63,104,649 19,477,253 5,237,725 741 (14,614,895) (1,318,435) (75,350) 633,096 65,000 (130,556) 3,131,457 51,989 495,258 283,954 29,650 313,695 59,316,986 76,591,190 20,445,993 5,283,425 2,948,318 29,297,337 27,687,702 (698,096) (19,000) 56,267,943 198,226,962 28,862,248 (19,000) (16,139,236) 741 210,931,715
At 1 June 2012
3,313,143
Additions
Reclassifications
Disposals
Write off
Exchange differences
At 31 May 2013
3,313,143
Accumulated depreciation 2,181 13,099 15,280 20,153,248 49,613,625 (14,479,498) 3,099,272 4,018,346 2,182,324 (1,303,127) 643 16,270,200 17,053,976 60,074,777 15,390,360 4,713,431 271,413 (40,303) 4,944,541 2,097,423 203,617 (130,555) 2,170,485 1,096,591 1,096,591 101,300,870 9,851,927 (15,953,483) 643 95,199,957
At 1 June 2012
872,131
the year
63,856
Write off
Exchange differences
At 31 May 2013
935,987
Net carrying amount 1,015,290 39,215,727 13,491,024 3,207,053 293,184 960,972 55,171,352 115,731,758
At 31 May 2013
2,377,156
75
76
13. Office equipment, Long-term leasehold apartment RM RM RM RM RM RM RM Buildings machinery and fittings Computers vehicles progress Plant and furniture Motor work-inTotal RM renovation, Capital
Short-term
leasehold
land
Group
RM
2012
Cost 1,030,570 1,030,570 59,316,986 76,591,190 20,445,993 (22,734) (122,650) (70,290) (73,000) 5,283,425 (387,435) 948,515 316,420 33,767 2,307,164 560,958 134,719 189,878 (215,680) 2,948,318 59,670,654 73,458,161 19,661,639 5,221,706 2,974,120 877,500 10,699,473 18,597,864 (877,500) 29,297,337 165,176,923 14,956,529 18,597,864 (215,680) (265,940) (22,734) 198,226,962
At 1 June 2011
3,313,143
Additions
Transfer in
Reclassifications
Disposals
Write off
Exchange differences
At 31 May 2012
3,313,143
Accumulated depreciation 2,181 2,181 17,053,976 (17,349) 3,878 (107,175) 60,074,777 3,126,439 5,105,546 13,944,886 55,072,528 13,823,961 1,634,853 13,471 (62,392) (19,533) 15,390,360 4,451,430 283,901 (21,900) 4,713,431 2,116,457 196,646 (215,680) 2,097,423 1,096,591 1,096,591 90,217,535 10,413,424 1,096,591 (215,680) (191,467) (19,533) 101,300,870
At 1 June 2011
808,273
the year
63,858
Transfer in
Reclassifications
Disposals
Write off
Exchange differences
At 31 May 2012
872,131
Net carrying amount 1,028,389 42,263,010 16,516,413 5,055,633 569,994 850,895 28,200,746 96,926,092
At 31 May 2012
2,441,012
77
ANNUAL REPORT 2013
Company 2013 Cost At 1 June 2012/ At 31 May 2013 Accumulated depreciation At 1 June 2012 Depreciation charge for the year At 31 May 2013 Net carrying amount At 31 May 2013 2012 Cost At 1 June 2011/ At 31 May 2012 Accumulated depreciation At 1 June 2011 Depreciation charge for the year At 31 May 2012 Net carrying amount At 31 May 2012 (a)
Computers RM
Motor vehicles RM
Total RM
The short-term leasehold land and building of a subsidiary in the manufacturing segment was revalued on 23 July 2010 using the comparison cost method by a firm of professional valuers. However, the Group has continued to carry the short-term leasehold land and building based on its earlier revalued amount in March 2000 since the surplus based on the latest revaluation was immaterial. Upon transition to MFRS, the subsidiary has elected to measure all its property, plant and equipment using the cost model under MFRS 116, Property, Plant and Equipment. At the date of transition to MFRS, the subsidiary elected to regard the revalued amounts of leasehold land and buildings as at March 2000 as deemed cost at the date of revaluation as these amounts were broadly comparable to fair value at that date. The revaluation surplus was transferred to retained earnings at the date of transition to MFRS.
(b)
Included in property, plant and equipment are: (i) (ii) a motor vehicle of the Company with net carrying amount of RM1 (2012: RM1) registered under the name of an employee of the subsidiary, in trust for the Company; motor vehicles of a subsidiary with net carrying amount of RM65,309 (2012: RM83,757) registered under the name of a director of the Company, i.e. Dato' Hwang Thean Long in trust for the said subsidiary; capital work-in-progress transferred in from investment property and other receivables with a carrying amount of RM Nil (2012: RM16,273,409) and RM Nil (2012: RM1,227,864) respectively; leasehold land under capital work-in-progress with a net carrying amount of RM16,273,409 (2012: RM16,273,409) pledged to a bank to secure bank borrowings as disclosed in Note 33; and fully depreciated property, plant and equipment which are still in use with the following costs: Group 2013 RM Buildings Plant and machinery Office equipment, renovation, furniture and fittings Computers Motor vehicles 938,648 23,828,544 8,942,112 4,037,880 1,426,417 39,173,601 2012 RM 938,648 37,291,990 9,787,764 3,858,145 1,327,710 53,204,257 Company 2013 RM 1,438,512 18,290 21,803 535,017 2,013,622 2012 RM
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ANNUAL REPORT 2013
13.
Property, Plant and Equipment (contd.) (c) (d) The short term leasehold land has an unexpired lease of 36 years (2012: 37 years). The long term leasehold land under capital work-in-progress has an unexpired lease of 91 years (2012: 92 years). The long term leasehold apartment has an unexpired lease of 77 years (2012: 78 years). Included in the buildings of the Group are buildings erected on land leased from statutory bodies with a net carrying amount of RM4,208,483 (2012: RM6,479,463).
(e) (f)
14.
Investment Property
Leasehold land and building Cost At 1 June 2012 / 2011 Transfer to property, plant and equipment and development costs (Note 13, 15(b)) At 31 May 2013 / 2012 Accumulated depreciation At 1 June 2012 / 2011 Transfer to property, plant and equipment and development costs (Note 13, 15(b)) Depreciation charge for the year At 31 May 2013 / 2012 Net carrying amount At 31 May 2013 / 2012
Group 2013 RM
2012 RM
Company 2013 RM
2012 RM
30,623,822 (30,623,822) -
29,078,033 29,078,033
29,078,033 29,078,033
1,933,322 (1,933,322) -
23,973,462
24,446,633
Group The investment property of the Group has an open market value of approximately RM32,000,000 as at 31 May 2012. During the financial year ended 31 May 2012, the investment property of the Group has been transferred to property, plant and equipment and property development costs amounting to RM16,273,409 and RM12,417,091 respectively as the Group has commenced its development activities and the Group will retain a portion of the project for its own use while the balance will be disposed off to third parties. Company The investment property of the Company has an open market value of approximately RM25,800,000 (2012: RM25,800,000) and is leased to a subsidiary as a supermarket and departmental store. The title deed of the investment property is registered under the name of a corporate shareholder of the Company, i.e. Suiwah Holdings Sdn. Bhd., a company in which a director of the Company, i.e. Dato' Hwang Thean Long has a substantial interest. The strata title of the building is in the process of being transferred to the Company. Direct operating expenses incurred by the Company on the investment property during the financial year amounted to RM652,355 (2012: RM652,357).
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ANNUAL REPORT 2013
Non-current Land held for property development Current Property development cost
Note (a)
(b)
16,466,059 26,166,480
16,267,936 25,968,357
(a)
2013 Cost At 1 June 2012 / 31 May 2013 2012 Cost At 1 June 2011 / 31 May 2012
Freehold land RM
Total RM
7,305,719
2,394,702
9,700,421
7,305,719
2,394,702
9,700,421
Included in freehold land is a Malay reserve freehold land with a carrying value of RM2,834,809 (2012: RM2,834,809). (b) Property development costs Leasehold land RM
2013 Cumulative property development costs At 1 June 2012 Costs incurred during the year At 31 May 2013 Cumulative costs recognised in statements of comprehensive income At 1 June 2012 / 31 May 2013 Property development costs at 31 May 2013
Total RM
12,417,091 12,417,091
12,417,091
4,048,968
16,466,059
80
ANNUAL REPORT 2013
15.
Inventory Property (contd.) (b) Property development costs (contd.) Leasehold land RM
2012 Cumulative property development costs At 1 June 2011 Costs incurred during the year Transfer from other receivables Transfer from investment property (Note 14) At 31 May 2012 Cumulative costs recognised in statements of comprehensive income At 1 June 2011 / 31 May 2012 Property development costs at 31 May 2012
Total RM
12,417,091 12,417,091
12,417,091
3,850,845
16,267,936
The long term leasehold land is pledged to a bank to secure bank borrowings as disclosed in Note 33 and has an unexpired lease of 91 years (2012: 92 years).
16.
At 1 June 2012 / 2011 Amortisation during the year At 31 May 2013 / 2012
17.
Intangible Asset
2012 RM -
During the financial year ended 31 May 2013, the newly incorporated subsidiary of the Group, Qdos Interconnect Sdn Bhd ("QISB") has entered into a technology license and transfer agreement with a third party for a term of 20 years which grants the subsidiary an exclusive license to manufacture the Licensed Products, and a non-exclusive license to sell the Licensed Products on a world-wide basis and to provide technology transfer to the subsidiary. In consideration of the Patent Licence granted and Know-how transferred, the subsidiary shall pay the aforesaid third party by way of instalments, a Licence Fee by cash in the aggregate sum of USD 3,000,000 in accordance with the payment schedule specified in the technology license and transfer agreement. The intangible asset is measured initially at cost, which is the fair value of consideration to be paid to acquire the asset at the time of its acquisition. The calculation of fair value of consideration to be paid is based on assumption of a 10year repayment term, as set out in the payment schedule and a discount rate of 4.95%. The useful life of the patent license is estimated to be 20 years.
81
ANNUAL REPORT 2013
Company 2013 RM
2012 RM
Impairment assessment As at 31 May 2013, the Company carried out a review of the recoverable amount of its investments in subsidiaries. An impairment loss of RM28,334 (2012: RM Nil) has been recognised in profit or loss, reducing the net carrying amount of the investment in Sunshine (Labuan) Private Limited to its recoverable amount as at 31 May 2013. The review has also led to the retention of the impairment loss of RM1,276,096 recognised in the prior years profit or loss. Equity interest held (%) 2013 2012 Principal activities
100
100
Operator of supermarkets and departmental stores and money lending Operator of supermarkets and departmental stores and trading of cable wires Investment holding Trading in general merchandise, garments and construction materials Property investment Dormant Property development Property development Property development Sub-letting of properties and trading of merchandise goods Dormant Investment holding International trading business
Sunshine Supermarket & Departmental Store Sdn. Bhd. Sunshine Link Sdn. Bhd. Aljano Sdn. Bhd.
100
100
100 100
100 100
Magirex Sdn. Bhd. Sunshine Electrical Superstore Sdn. Bhd. Great Support Sdn. Bhd. Crimson Omega Sdn. Bhd. Silver Resort Sdn. Bhd. Sunshine Amanjaya Sdn. Bhd. (i)
Sunshine (Labuan) Private Limited (i) Qdos Holdings Bhd. Sunshine Amanjaya Pte Ltd (i), (iii) Incorporated in Indonesia PT. Sunshine Amanjaya Indonesia (ii)
100 100 51
100 100 51
100
100
Intended principal activities are to act as a main distributor, importer and exporter of merchandise goods
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ANNUAL REPORT 2013
18.
Investments in Subsidiaries (contd.) Equity interest held (%) 2013 2012 Principal activities
Name of subsidiaries Held under Qdos Holdings Bhd. Incorporated in Malaysia Qdos Flexcircuits Sdn. Bhd.
100
100
Manufacturing of flexible printed circuit boards Research and development, design and prototyping of flexible printed circuit boards Design services of flexible printed circuit boards and trading in general merchandise Manufacturing and trading in semiconductor
100
100
100
100
Qdos Interconnect Sdn. Bhd. Held under Qdos Flexcircuits Sdn. Bhd. Incorporated in India Qdos Flexcircuits (India) Private Limited (i)
100
Nil
100
100
Design of flexible printed circuit boards. The Company remained dormant during the year.
(i) (ii)
Audited by firms of auditors other than Ernst & Young The Company has a 99% equity interest in the subsidiary and the remaining 1% equity interest is held by a wholly owned subsidiary, Sunshine Amanjaya Sdn. Bhd. The Company has a 50% equity interest in the subsidiary and the remaining 1% equity interest is held by a wholly owned subsidiary, Sunshine Wholesale Mart Sdn. Bhd.
(iii)
19.
Unquoted shares outside Malaysia, at cost Share of post acquisition reserve Exchange differences
During the year ended 31 May 2011, the Groups subsidiaries, Qdos Flexicircuits Sdn. Bhd. and Qdos Flexicircuit (India) Private Limited have entered into a Shareholders' Agreement with M.J Shantharam, Valdel Real Estate Pvt. Ltd and Exora Technologies Private Limited (Exora) to subscribe up to 22,500,000 new shares of Rupees 10 each in Exora, representing 49% of the equity interest in Exora, for a total cash consideration of approximately RM15 million. As at 31 May 2013, the Groups subsidiaries have in total subscribed for 22,151,893 shares of Rupees 10 each in Exora, representing 49% of the equity interest in Exora for a total cash consideration of RM15,063,373.
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ANNUAL REPORT 2013
Name of jointly controlled Held under Qdos Flexcircuits Sdn. Bhd. and its subsidiary Incorporated in India Exora Technologies Private Limited
49
49
Venture into the development of commercial/ residential properties in India through a special purpose vehicle
The aggregate amounts of each of the current assets, non-current assets, current liabilities, non-current liabilities, income and expenses related to the Groups interests in the jointly-controlled entity are as follows: 2013 RM Assets and liabilities Current assets Non-current assets Total assets Current liabilities Non-current liabilities Total liabilities Results Revenue Loss for the year 2012 RM
(4,627)
(40,797)
20.
Investment in an Associate Group 2013 RM Unquoted shares outside Malaysia, at cost Accumulated impairment losses Share of post acquisition reserve Exchange difference 1,631,726 1,631,726 (1,513,625) (118,101) Company 2013 RM 1,631,726 (1,631,726) -
2012 RM
1,631,726 (1,631,726) -
Impairment assessment The Company has carried out a review of the recoverable amount of its investment in associate due to its net liability position. The review has led to the retention of the impairment loss of RM1,631,726 recognised in profit or loss in the prior year, reducing the net carrying amount of the investment to nil.
84
ANNUAL REPORT 2013
20.
Investment in an Associate (contd.) Details of the associate are as follows: Equity interest held (%) 2013 2012 Principal activities
Name of associate Incorporated in India Valdel Oil and Gas Private Limited ("VOG")
25
25
Carrying on business connected with oil and natural gas. The Company has remained dormant during the year.
The summarised financial information based on the audited financial statements of the associate, not adjusted for the proportion of ownership interest held by the Group, is as follows: 2013 RM 403,301 5,382,920 5,786,221 6,615,544 9,921 6,625,465 2012 RM 415,197 5,693,403 6,108,600 6,628,152 890,510 7,518,662
Assets and liabilities Current assets Non-current assets Total assets Current liabilities Non-current liabilities Total liabilities Results Revenue Profit/(Loss) for the year
428,693 547,716
636,845 137,807
21.
Investments securities
Non-current Available-for-sale financial assets - Equity instruments (quoted in Malaysia) - Equity instruments (quoted outside Malaysia)
Group 2013 RM
2012 RM
Market value
85
ANNUAL REPORT 2013
2012 RM 4,665,045
Impairment test on goodwill (a) Allocation of goodwill Goodwill has been allocated to the Group's cash-generating units ("CGU") identified according to the business segment and relates to the manufacturing and designing of flexible printed circuits boards as follows: 2013 RM Manufacturing (b) Key assumptions used in value-in-use ("VIU")calculations The recoverable amount of the CGU is determined based on VIU calculations using cash flow projections based on financial forecasts approved by management covering a 5-year period. The following describes each key assumption on which management has based its cash flow projection for VIU calculations of CGU to undertake impairment testing of goodwill: (i) Budgeted gross margin The basis used to determine the value assigned to the budgeted gross margin is the average gross margin achieved in the year immediately before the budgeted year adjusted for expected efficiency improvement, market and economic conditions and internal resource efficiency, where applicable. (ii) Growth rate The weighted average growth rate used is consistent with the long term average growth rate for the relevant industry. The forecasted growth rate used to extrapolate cash flows beyond the five-year period is 3.9% (2012: 3.6%). (iii) Discount rate The discount rate used is on a basis that reflects specific risks relating to the relevant business segment. The pre-tax discount rate applied to the cash flow projections is 10% (2012: 9%) Sensitivity to changes in assumptions With regard to the assessment of value-in-use of the CGU, management believes that no reasonable change in any of the above key assumptions would cause the carrying value of the CGU to materially exceed its recoverable amount. 4,665,045 2012 RM 4,665,045
86
ANNUAL REPORT 2013
23.
Inventories
Group 2013 RM
2012 RM
At cost: Merchandise held for resale Raw materials Work-in-progress Finished goods Properties held for sale Spare parts Raw materials in transit At net realisable value: Raw materials 791,272 33,511,211 1,042,469 34,062,297 20,619,755 4,518,819 2,206,200 436,670 4,569,693 368,802 32,719,939 18,792,865 4,780,683 2,755,549 1,501,622 4,757,714 213,656 217,739 33,019,828
The cost of inventories recognised as an expense during the year amounted to RM286,958,287 (2012: RM299,561,707).
24.
Trade receivables Third parties Allowance for impairment Trade receivables, net Other receivables Due from subsidiaries: - Magirex Sdn. Bhd. - Sunshine Amanjaya Sdn. Bhd. - PT. Sunshine Amanjaya Indonesia - Sunshine Supermarket & Departmental Store Sdn. Bhd. - Sunshine Wholesale Mart Sdn. Bhd. - Sunshine (Labuan) Private Limited - Sunshine Amanjaya Pte. Ltd. Deposits for: - Rental - Others Rental income receivable Sundry receivables Dividend receivable from Qdos Holdings Bhd. Allowance for impairment Other receivables, net Total trade and other receivables Add: Loan receivables (Note 26) Add: Cash and bank balances (Note 28) Total loans and receivables
2012 RM
2012 RM
22,306,783 22,306,783
864,803 594,019 24,750 415,559 1,899,131 1,899,131 24,205,914 28,730 32,199,611 56,434,255
886,352 938,865 32,576 1,380,356 3,238,149 3,238,149 28,458,463 16,516 31,143,760 59,618,739
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ANNUAL REPORT 2013
Receivables that are neither past due nor impaired Trade receivables that are neither past due nor impaired are creditworthy debtors with good payment records with the subsidiaries. None of the Groups trade receivables that are neither past due nor impaired have been renegotiated during the financial year. Receivables that are past due but not impaired The Group has trade receivables amounting to RM12,598,308 (2012: RM16,126,756) that are past due at the reporting date but not impaired. These relate to customers which have no recent history of default and are monitored on an on-going basis. The receivables that are past due but not impaired are unsecured in nature. Receivables that are impaired The Group's trade receivables that are impaired at the reporting date and the movement of the allowance accounts used to record the impairment are as follows: Group 2013 2012 RM RM Trade receivables: - nominal amounts Allowance for impairment
157,729 (157,729) -
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ANNUAL REPORT 2013
24.
Trade and Other Receivables (contd.) (a) Trade receivables (contd.) Movement in allowance accounts: Group 2013 RM At 1 June 2012 / 2011 Charge for the year Written off At 31 May 2013 / 2012 157,729 (157,729) 2012 RM 157,729 157,729
Trade receivables that are individually determined to be impaired at the reporting date relate to debtors that are in significant financial difficulties and have defaulted on payments. These receivables are not secured by any collateral or credit enhancement.
(b)
Amounts due from subsidiaries Amounts due from subsidiaries are non-interest bearing and are repayable on demand. These amounts are unsecured and are to be settled in cash. Other receivables that are impaired At the reporting date, the Company has provided an allowance of RM7,833,179 (2012: RM2,910,160) for impairment of the unsecured advances to subsidiaries with nominal amounts of RM8,733,639 (2012: RM8,974,189). These subsidiaries have been suffering financial losses for the current and past two financial years. Company 2013 RM Other receivables: - nominal amounts Allowance for impairment 44,106,815 (7,833,179) 36,273,636
2012 RM
Movement in allowance accounts: Company 2013 RM At 1 June 2012 / 2011 Charge for the year Reversal of impairment loss At 31 May 2013 / 2012 2,910,160 5,183,179 (260,160) 7,833,179
2012 RM
2,910,160 2,910,160
Further details on related party transactions are disclosed in Note 40. Other information on financial risks of receivables are disclosed in Note 42.
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ANNUAL REPORT 2013
2012 RM 4,771,053
2012 RM 14,932
Prepayments
Included in prepayments of the Group are advances of RM Nil (2012: RM4,132,595) given by a subsidiary to a supplier for purchase of mineral.
26.
Loan Receivables
The advances are made by a subsidiary, Sunshine Wholesale Mart Sdn. Bhd. whose principal activities include that of money lending under the Moneylenders Act, 1951. The advances bear interest rates of 12% to 18% (2012: 12% to 18%) per annum.
27.
Quoted unit trust funds OSK-UOB Money Market Fund Hwang DBS - AIIMAN Cash Fund Hwang DBS - Select Cash Fund Hwang DBS - Select Bond Fund Unquoted investments AmIncome
2012 RM
4,189,173 13,698,835
1,967,518 3,841,946
Market value of investments/unit trust funds: Quoted unit trust funds OSK-UOB Money Market Fund Hwang DBS - AIIMAN Cash Fund Hwang DBS - Select Cash Fund Hwang DBS - Select Bond Fund 55,633 101,605 74,999 9,277,425 9,509,662 54,040 1,377,814 442,574 1,874,428
(a)
OSK-UOB Money Market Fund OSK-UOB Money Market Fund is a short term fund which aims to provide investors with a high level of liquidity whilst providing reasonable returns by investing in low risk investments.
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ANNUAL REPORT 2013
27.
Short Term Investments (contd.) (b) Hwang DBS - AIIMAN Cash Fund Hwang DBS - AIIMAN Cash Fund is a Shariah-compliant wholesale income type fund, which invests in debentures, money market instruments and deposits with different maturity periods. The fund aims to provide investors with a regular income stream and high level of liquidity in order to meet their cash flow requirements while maintaining capital preservation. The redemption monies are to be paid the day following the next business day upon the receiving of the redemption request. (c) Hwang DBS - Select Cash Fund The investment objective of Hwang DBS - Select Cash Fund is to provide investors with a regular income stream and high level of liquidity to meet cash flow requirements while maintaining capital preservation. The Fund will invest between 90% to 100% in short term fixed income instruments with maturity of not more than 365 days. Up to 10% of the Net Asset Value ("NAV") of the Fund is to be invested in debentures, money market instruments and deposits with maturity periods, exceeding 365 days but no longer than 732 days. (d) Hwang DBS - Select Bond Fund The investment objective of Hwang DBS - Select Bond Fund is to provide investors with a steady income stream over the medium to long term period through investment primarily in bonds and other fixed income securities. The investment process will be driven by considering the interest rate outlook over the medium to long-term horizon and seeking potential credit upgrade fixed income securities. 80% of the Fund will be invested in medium to long-term government bond, private debt securities and other fixed income securities. The balance will be held in cash deposits and short-term money market instruments. (e) AmIncome AmIncome is a short to medium-term money market fund that aims to provide investors with a stream of income. The proceeds from withdrawals will be received in the following manner: (i) (ii) the first RM2 million and below not later than the 7th day of receipt of repurchase notice; and any amount above RM2 million withdrawn, not later than the 30th day of receipt of repurchase notice.
The range of interest rates earned per annum during the financial year is from 2.67% to 2.80% (2012: 2.72% to 3.00%). Other information on financial risks of short term investments is disclosed in Note 42.
28.
Cash and Bank Balances Group 2013 RM Cash on hand and at banks Deposits with licensed banks: - short term placements - fixed deposits 31,367,611 832,000 32,199,611 Company 2013 RM 4,008,160 4,008,160
2012 RM
4,872,516 4,872,516
Included in cash at banks of the Group are amounts of RM2,285,371 (2012: RM2,240,247) held pursuant to Section 7A of the Housing Development (Control and Licensing) Act, 1966 and are restricted from use in other operations. Deposits with licensed banks of the Group amounting to RM420,070 (2012: RM380,840) have been pledged to banks as collaterals for bank facilities and bankers' guarantees obtained. Deposits with licensed banks of the Group amounting to RM136,755 (2012: RM134,050) are held in trust by a director.
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ANNUAL REPORT 2013
Other information on financial risks of cash and cash equivalents is disclosed in Note 42. For the purposes of the statements of cash flows, cash and cash equivalents comprise the following as at the reporting date: Group 2013 RM Deposits with licensed banks Less: Fixed deposits pledged to banks Fixed deposits (more than 90 days) Deposits with licensed banks Add: Cash on hand and at banks Less: Bank overdraft (Note 33) Cash and cash equivalents 832,000 (420,070) (411,930) 31,367,611 (9,142,089) 22,225,522 Company 2013 RM 4,008,160 4,008,160
2012 RM
4,872,516 4,872,516
29.
Share Capital, Share Premium and Treasury Shares Number of ordinary shares of RM1 each Share capital (issued and Treasury fully paid) shares
Share capital (issued and fully paid) RM 61,000,248 61,000,248 61,000,248 61,000,248
Amount
At 1 June 2011 Purchase of treasury shares At 31 May 2012 At 1 June 2012 Purchase of treasury shares At 31 May 2013
Number of ordinary shares of RM1 each 2013 2012 Authorised: At 1 June and 31 May 100,000,000 100,000,000
Amount 2013 RM
2012 RM
100,000,000
100,000,000
There is no movement in issued and fully paid/ authorised share capital during the year. The holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at meetings of the Company. All ordinary shares rank equally with regard to the Company's residual assets.
92
ANNUAL REPORT 2013
29.
Share Capital, Share Premium and Treasury Shares (contd.) (a) Treasury shares The shareholders of the Company, by an ordinary resolution passed in a general meeting held on 22 November 2012, renewed their approval for the Company's plan to buy back its own ordinary shares. The directors of the Company are committed to enhancing the value of the Company for its shareholders and believe that the share buy back plan can be applied in the best interests of the Company and its shareholders. During the financial year, the Company bought back 20,000 (2012: 318,000) of its issued and fully paid ordinary shares from the open market at an average price of RM1.49 (2012: RM1.45) per share. The total consideration paid for the share buy back was RM29,820 (2012: RM462,654), consisting of consideration paid amounting to RM29,650 (2012: RM461,077) and transaction costs of RM170 (2012: RM1,577). The shares bought back are being held as treasury shares in accordance with Section 67A of the Companies Act, 1965. Of the total 61,000,248 (2012: 61,000,248) issued and fully paid ordinary shares as at 31 May 2013, 3,666,100 (2012: 3,646,100) are held as treasury shares by the Company. As at 31 May 2013, the number of outstanding ordinary shares in issue after the setoff is therefore 57,334,148 (2012: 57,354,148) ordinary shares of RM1 each. Subsequent to year end, the Company bought back 12,000 of its issued ordinary shares from the open market at an average price of RM1.82 per share. The total consideration paid for the share buy back was RM21,840, consisting of consideration paid amounting to RM21,720 and transaction costs of RM120. The share buy back transactions were financed by internally generated funds.
30.
Other Reserves (Non-Distributable) Foreign currency translation reserve RM Share option reserve RM Total RM
Group 2013 At 1 June 2012 Foreign currency translation At 31 May 2013 2012 At 1 June 2011 Transfer to retained earnings Foreign currency translation At 31 May 2012 Group
(2,431,366) (2,431,366)
863,790 (863,790) -
The nature and purpose of each category of reserve are as follows: (a) Foreign currency translation reserve The foreign currency translation reserve is used to record exchange differences arising from the translation of the financial statements of foreign operations whose functional currencies are different from that of the Group's presentation currency. It is also used to record the exchange differences arising from monetary items which form part of the Group's net investment in foreign operations, where the monetary item is denominated in either the functional currency of the reporting entity or the foreign operation. (b) Share option reserve The share option reserve represents the equity-settled share options granted to employees. This reserve is made up of the cumulative value of services received from employees recorded on grant date of share options. The share option reserve has been transferred to distributable retained earnings during the year ended 31 May 2012 upon expiration of ESOS. Company Other reserve of the Company represents share option reserve. The share option reserve has been transferred to distributable retained earnings during the year ended 31 May 2012 upon expiration of ESOS.
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ANNUAL REPORT 2013
Cost: At 1 June 2012 / 2011 Received during the year At 31 May 2013 / 2012 Accumulated amortisation: At 1 June 2012 / 2011 Amortisation during the year At 31 May 2013/ 2012 Net carrying amount: Current Non-current
Group 2013 RM 400,000 400,000 135,417 50,000 185,417 50,000 164,583 214,583
Government grant relates to grant received for the acquisition of plant and equipment for development activities undertaken by a subsidiary of the Group to promote technology advancement. There are no unfulfilled conditions or contingencies attached to the grant. 33. Borrowings
Short term borrowings: Secured: Bank overdrafts Bankers' acceptances Term loan Long term borrowings: Secured: Term loan Total borrowings: Bank overdrafts Bankers' acceptances Term loan Maturity of borrowings: On demand or within one year More than 1 year and less than 2 years More than 2 years and less than 5 years
Group 2013 RM 9,142,089 3,337,249 931,872 13,411,210 1,480,354 9,142,089 3,337,249 2,412,226 14,891,564 13,411,210 1,480,354 14,891,564
2012 RM 1,594,851 917,879 2,512,730 2,409,893 1,594,851 3,327,772 4,922,623 2,512,730 931,871 1,478,022 4,922,623
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ANNUAL REPORT 2013
33.
Borrowings (contd.) The bank borrowings of the Group are secured by way of: (i) (ii) a corporate guarantee by the Company; a first legal charge over the leasehold land of a subsidiary under capital work-in-progress and property development costs with a carrying amount of RM16,273,409 (2012: RM16,273,409) and RM12,417,091 (2012: RM12,417,091) respectively as disclosed in Note 13 and Note 15.
Bank overdrafts are denominated in RM and bear interest rate at 7.50% (2012: 7.5%) per annum. The bankers' acceptances bore interest rates at the reporting date ranging from 3.6% to 3.8% (2012: 3.6% to 3.8%) per annum. The term loan of the Group is repayable over seventy eight (78) equal monthly installments of RM87,217 commencing 1 September 2009. The term loan bore interest rates at the reporting date ranging from 4.5% to 6.3% (2012: 4.5% to 6.3%) per annum. Other information on financial risks of borrowings is disclosed in Note 42.
34.
Deferred Tax Group 2013 RM At 1 June 2012 / 2011 Recognised in profit or loss (Note 10) At 31 May 2013 / 2012 Presented after appropriate offsetting as follows: Deferred tax liabilities Deferred tax assets At 31 May 3,793,082 (1,172,056) 2,621,026
2,621,026 2,621,026
3,793,082 3,793,082
The components and movements of deferred tax liabilities and assets during the financial year prior to offsetting are as follows: Deferred tax liabilities of the Group Property, plant and equipment RM At 1 June 2012 Recognised in profit or loss At 31 May 2013 At 1 June 2011 Recognised in profit or loss At 31 May 2012 2,925,345 (743,695) 2,181,650 2,640,708 284,637 2,925,345
95
ANNUAL REPORT 2013
Revaluation surplus relates to revaluation of property, plant and equipment in prior years. Upon transition to MFRS, the Group elected to measure all its property, plant and equipment using cost model. Accordingly, the revaluation surplus was transferred to retained earnings on date of transition to MFRS.
Deferred tax assets have not been recognised in respect of the following items: Group 2013 RM Unused tax losses Unabsorbed capital allowances Other deductible temporary differences 3,393,696 2,742,312 23,954 6,159,962
The availability of the unused tax losses and unabsorbed capital allowances for offsetting against future taxable profits of the respective subsidiaries are subject to no substantial change in shareholdings under the Income Tax Act, 1967 and guidelines issued by the tax authority. No deferred tax assets are recognised in respect of the above as it is not probable that future taxable profit will be available against which these items can be utilised.
35.
Provision for Liabilities Group 2013 RM At 1 June 2012 / 2011 Reversal during the year Utilisation of provision At 31 May 2013 / 2012 270,285 (13,768) 256,517
This represents provision for liquidated damages in respect of the development projects undertaken by a subsidiary. The provision is recognised for expected liquidated damages claims based on the terms of the applicable sale and purchase agreements.
96
ANNUAL REPORT 2013
36.
Company 2013 RM -
2012 RM -
Other payables Due to subsidiaries: - Crimson Omega Sdn. Bhd. - Aljano Sdn. Bhd. - Sunshine Supermarket and Departmental Store Sdn. Bhd. - Silver Resort Sdn. Bhd. Due to tooling suppliers Deposits received Rental deposits Accruals Other payables
Add: Borrowings (Note 33) Total financial liabilities carried at amortised cost *
The related party is Zephyr (Penang) Sdn. Bhd., a company in which a director of a subsidiary, Qdos Holdings Bhd., i.e. Looi Tik Miow, has an interest. Trade payables Trade payables are non-interest bearing and the normal trade credit terms granted to the Group range from 30 to 90 days (2012: 30 to 90 days).
(a)
(b)
Amounts due to subsidiaries Amounts due to subsidiaries are non-interest bearing and are repayable on demand. These amounts are unsecured and are to be settled in cash.
Further details on related party transactions are disclosed in Note 40. Other information on financial risks of payables are disclosed in Note 42.
37.
Deferred Revenue The Group operates a loyalty programme which allows customers to accumulate points when they purchase products in the Groups stores. The points can be redeemed for free or for discounted goods from the Groups stores. Deferred revenue represents consideration received from the sale of goods that is allocated to the points issued under the loyalty programme that are expected to be redeemed but are still outstanding as at the reporting date.
97
ANNUAL REPORT 2013
The ESOS has lapsed on 23 April 2012. The Group has no plan to extend the ESOS plan. Hence, all the unexercised options shall automatically lapse upon the expiry of the option period. 39. Commitments (a) Capital commitments Group 2013 RM Capital expenditure: Approved and contracted for: - Buildings Approved but not contracted for - Buildings (b) Operating lease commitments as lessee The Group has entered into non-cancellable operating lease agreements for the use of the leasehold land and buildings. These leases have an average life of between 3 and 15 years with no renewal or purchase option included in the contracts. There were no restrictions placed upon the Group by entering into these leases. The future aggregate minimum lease payments under non-cancellable operating leases contracted for as at the reporting date but not recognised as liabilities, are as follows: Group 2013 RM Not later than 1 year Later than 1 year and not later than 5 years Later than 5 years 3,434,700 1,126,178 802,011 5,362,890
2012 RM
11,656,000
6,800,000
25,000,000
(c)
Operating lease commitments as lessor The Group and the Company have entered into commercial property leases on its investment property and property, plant and equipment. These non-cancellable leases have remaining lease terms of between two and four years. All leases include a clause to enable upward revision of the rental charge on an annual basis based on prevailing market conditions.
98
ANNUAL REPORT 2013
39.
Commitments (contd.) (c) Operating lease commitments as lessor (contd.) Future minimum rentals receivable under non-cancellable operating leases at the reporting date are as follows: Group 2013 RM Not later than 1 year Later than 1 year and not later than 5 years Later than 5 years 1,930,227 129,500 2,059,727 Company 2013 RM 1,656,684 1,656,684
2012 RM
1,656,684 1,656,684
40.
Related Party Disclosures (a) Related party transactions In addition to the transactions detailed elsewhere in the financial statements, the Group and the Company had the following transactions with related parties during the financial year: 2013 RM 2012 RM
Group Rental paid/payable to: - Suiwah Holdings Sdn. Bhd., a corporate shareholder - Suiwah Supermarket Sdn. Bhd., a company in which a director of the Company, i.e. Dato' Hwang Thean Long has an interest - a director of the Company, i.e. Dato Hwang Thean Long - Meridian Chance Sdn. Bhd., a company connected with a director of the Company, i.e. Dato Hwang Thean Long by virtue of his family relationship Sales of goods to Mylaco Sdn. Bhd., a company in which a director of the Company, i.e. Hwang Siew Peng has an interest Purchases of merchandise from Zephyr (Penang) Sdn. Bhd., a company in which Looi Tik Miow, a director of a subsidiary, Qdos Holdings Bhd., has an interest
24,000 -
24,000 11,407
155,947 2013 RM
209,726 2012 RM
Company Gross dividends from subsidiaries Management fees from subsidiaries Rental income from a subsidiary Advances (from) /to subsidiaries, net: - Sunshine Supermarket & Departmental Store Sdn. Bhd. - Crimson Omega Sdn. Bhd. - Sunshine Wholesale Mart Sdn. Bhd. - Magirex Sdn. Bhd. - Aljano Sdn. Bhd. - Sunshine (Labuan) Private Limited - Sunshine Amanjaya Sdn. Bhd. - Sunshine Amanjaya Pte Ltd - Silver Resort Sdn. Bhd. - Qdos Flexcircuits Sdn. Bhd.
11,838,536 240,000 1,656,684 6,331,960 (21,133,742) 21,219,470 (440,000) (515,061) (258,846) 19,610 8,937 23,638 -
4,800,000 240,000 1,656,684 239,741 1,683,342 1,870,617 (370,000) 134,897 2,401 (116,046) 23,897 493,632 66,593
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ANNUAL REPORT 2013
Included in the remuneration of total key management personnel are: Group 2013 RM Directors' remuneration (Note 7) 1,615,395 2012 RM 1,678,303 Company 2013 RM 307,600 2012 RM 306,100
Directors of the Group and the Company and other members of key management have been granted the following number of options under the Employees' Share Option Scheme ("ESOS"). The ESOS has expired on 23 April 2012. The Company has no plan to renew or extend the ESOS. Hence, all the unexercised options shall automatically lapse upon the expiry of the ESOS. The cumulative value of services received from the directors and members of key management recorded on grant date which was included in shares option reserve has been transferred to distributable retained earnings during the year upon expiration of ESOS. Group 2013 RM At 1 June 2012 / 2011 Transfer to retained earnings At 31 May 2013 / 2012 2012 RM 392,500 (392,500) Company 2013 RM 2012 RM 238,400 (238,400) -
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ANNUAL REPORT 2013
41.
Fair Value of Financial Instruments (a) Fair value of financial instruments by classes that are carried at fair value The following table shows an analysis of financial instruments carried at fair value by level of fair value hierarchy : Level 1 RM Level 2 RM Level 3 RM Total RM
2013 Financial assets Investment securities Quoted equity instruments (Note 21) Short term investments - Quoted unit trust funds (Note 27) - Unquoted investments (Note 27) 2012 Financial assets Investment securities Quoted equity instruments (Note 21) Short term investments - Quoted unit trust funds (Note 27) - Unquoted investments (Note 27) Fair value hierarchy
3,114
3,114
9,509,662 -
4,189,173
9,509,662 4,189,173
3,123
3,123
1,874,428 -
1,967,518
1,874,428 1,967,518
The Group and the Company classify fair value measurement using a fair value hierarchy that reflects the significance of the inputs used in making the measurement. The fair value hierarchy has the following levels: Level 1 :Quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2 :Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices). Level 3 :Inputs for the assets and liability that are not based on observable market data (unobservable inputs). (b) Financial instruments that are not carried at fair value and whose carrying amounts are reasonable approximation of fair value The following are classes of financial instruments that are not carried at fair value and whose carrying amounts are reasonable approximation of fair value: Note Trade receivables Other receivables Loan receivables Bank borrowings Trade payables Other payables 24 24 26 33 36 36
The carrying amounts of these financial assets and liabilities are reasonable approximation of fair values, either due to their short-term nature or that they are floating rate instruments that are re-priced to market interest rates on or near the reporting date. The carrying amounts of the bank borrowings are reasonable approximations of fair values due to the insignificant impact of discounting. The fair values of bank borrowings are estimated by discounting expected future cash flows at market incremental lending rate for similar types of lending, borrowing or leasing arrangements at the reporting date.
101
ANNUAL REPORT 2013
Sensitivity analysis for foreign currency risk The following table demonstrates the sensitivity of the Groups profit net of tax to a reasonably possible change in the USD exchange rates against the respective functional currencies of the Group entities, with all other variables held constant. Increase/ (decrease) in profit net of tax 2013 2012 RM RM USD/RM - strengthened 5% (2012: 2%) - weakened 5% (2012: 2%) 858,071 (858,071) 420,160 (420,160)
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ANNUAL REPORT 2013
42.
Financial Risk Management Objectives and Policies (contd.) (c) Liquidity risk Liquidity risk is the risk that the Group or the Company will encounter difficulty in meeting financial obligations due to shortage of funds. The Groups and the Companys exposure to liquidity risk arises primarily from mismatches of the maturities of financial assets and liabilities. The Groups and the Companys objective is to maintain a balance between continuity of funding and flexibility through the use of stand-by credit facilities. The Group and the Company manage their debt maturity profile, operating cash flows and the availability of funding so as to ensure that all refinancing, repayment and funding needs are met. As part of its overall liquidity management, the Group and the Company maintain sufficient levels of cash or cash convertible investments to meet their working capital requirements. In addition, the Group and the Company strive to maintain available banking facilities of a reasonable level to its overall debt position. Furthermore, the Group and the Company are able to raise funds from both capital markets and financial institutions and balance its portfolio with combination of a mixture of short and long term fundings so as to achieve overall cost effectiveness. Analysis of financial instruments by remaining contractual maturities The table below summarises the maturity profile of the Groups and the Companys liabilities at the reporting date based on contractual undiscounted repayment obligations. 2013 Over one year RM
Group Financial liabilities: Trade payables Other payables Borrowings Total undiscounted financial liabilities Company Financial liabilities: Other payables Amounts due to subsidiaries Total undiscounted financial liabilities
Total RM
1,545,312 1,545,312
Group Financial liabilities: Trade payables Other payables Borrowings Total undiscounted financial liabilities Company Financial liabilities: Other payables Amounts due to subsidiaries Total undiscounted financial liabilities
Total RM
2,591,916 2,591,916
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ANNUAL REPORT 2013
A nominal amount of RM16,426,914 (2012: RM6,717,621) relating to corporate guarantees provided by the Company to financial institutions as securities for credit facilities granted to subsidiaries.
Information regarding credit enhancements for trade and other receivables are disclosed in Note 24. (ii) Credit risk concentration profile The Group determines concentrations of credit risk by monitoring the country sector profile of its trade receivables on an ongoing basis. The credit risk concentration profile of the Groups trade receivables at the reporting date are as follows: 2013 RM 17,052,605 1,277,345 316,150 2,505,158 1,155,525 22,306,783 % 77 6 1 11 5 100 2012 RM 18,659,314 1,754,885 1,451,156 283,870 746,091 2,324,998 25,220,314 % 74 7 6 1 3 9 100
By country: Within Malaysia China Germany Switzerland Singapore Other countries Total (iii)
Financial assets that are neither past due nor impaired Information regarding trade receivables that are neither past due nor impaired is disclosed in Note 24.
(iv)
Financial assets that are either past due or impaired Information regarding trade receivables that are either past due or impaired is disclosed in Note 24.
(e)
Market price risk Market price risk is the risk that the fair value or future cash flows of the Groups financial instruments will fluctuate because of changes in market prices (other than interest or exchange rates). The Group is exposed to equity price risk arising from its investment in quoted equity instruments. The quoted equity instruments in Malaysia are listed on Bursa Malaysia. These instruments are classified as availablefor-sale financial assets. The Group does not have exposure to commodity price risk.
104
ANNUAL REPORT 2013
43.
Capital Management The primary objective of the Group's capital management is to ensure that it maintains a strong credit rating and healthy capital ratios in order to support its business and maximise shareholder value. The Group manages its capital structure and makes adjustments to it, in light of changes in economic conditions. To maintain or adjust the capital structure, the Group may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares. No changes were made in the objectives, policies or processes during the years ended 31 May 2013 and 31 May 2012. The Group monitors capital using a gearing ratio, which is net debt divided by total capital plus net debt. The Group includes within net debt, borrowings, trade and other payables, less short term investments and cash and bank balances. Capital includes equity attributable to the owners of the parent. Group 2013 2012 Note RM RM Borrowings Trade and other payables Less: - short term investments - cash and bank balances Net debt Equity attributable to the owners of the parent, representing total capital Capital and net debt Gearing ratio 33 36 27 28 14,891,564 62,532,923 (13,698,835) (32,199,611) 31,526,041 4,922,623 55,899,102 (3,841,946) (31,143,760) 25,836,019
44.
Significant Events The following events took place during the financial year: (i) A subsidiary, Sunshine Supermarket and Departmental Store Sdn. Bhd. has commenced construction activities on a piece of freehold land in Bertam to develop the land into commercial complex for its own use. On 3 April 2013, a subsidiary, Qdos Holdings Bhd. has incorporated a new wholly owned subsidiary, i.e. Qdos Interconnect Sdn. Bhd. ("QISB") in Malaysia with an authorised and issued and paid up capital of RM100 divided into 100 ordinary shares of RM1.00 each at the date of incorporation. QISB has during the financial year increased its authorised share capital to RM1,000,000 of RM1.00 ordinary shares each and Qdos Holdings Bhd. has further subscribed for 999,900 ordinary shares of RM1.00 each at par in QISB. The principal activity of QISB is to undertake trading in semiconductor.
(ii)
45.
Segment Information For management purposes, the Group is organized into business units based on their products and services, and there are four reportable operating segments as follows: (i) (ii) (iii) (iv) Retail - operation of supermarkets and departmental stores and a hypermarket; Manufacturing - manufacturing and designing of flexible printed circuits boards; Property investment and development of residential and commercial properties; and Trading
The Directors are of the opinion that all inter-segment transactions have been entered into the normal course of business and have been established on terms and conditions that are not materially different from those obtained in transaction with unrelated parties. There are minimal inter-segment sales within the Group.
105
ANNUAL REPORT 2013
Trading RM
Eliminations Consolidated RM RM
241,412
687,639
58,501
381,204
1,368,756
106
ANNUAL REPORT 2013
Trading RM
Eliminations Consolidated RM RM
232,201
(967,383)
(1,168)
(736,350)
107
ANNUAL REPORT 2013
2013 Total revenue from external customers Segment assets Capital expenditure
Malaysia RM
Consolidated RM
2,615,286 6,593,756 -
1,687,555 -
12,776,654 -
2012 Total revenue from external customers Segment assets Capital expenditure
3,053,971 6,633,784 -
8,285,865 -
15,476,786 -
46.
Subsequent Events There were no material events subsequent to the end of the year except for the following: (i) On 26 June 2013, the board of directors of a subsidiary, Qdos Interconnect Sdn. Bhd. has approved the purchase of 3 units of machines amounting to approximately RM3,840,000. On 4 July 2013, a subsidiary, Qdos Flexcircuits Sdn. Bhd. ("QFSB") has applied to Malayan Banking Berhad ("the said Bank") to allow the following third party utilisation of the letter of credit facility granted by the said Bank to QFSB by another subsidiary, Qdos Interconnect Sdn. Bhd. ("QISB"): (a) (b) Ac-hoc third party letter of credit facility of up to USD1,200,000 to facilitate its purchase of machines. Ad-hoc temporary letter of credit of RM1,800,000 up to 60 days from date of invoice.
(ii)
The facilities are secured by a RM1,800,000 deposit pledged to the said Bank. (iii) On 23 July 2013, a subsidiary, Sunshine Supermarket & Departmental Store Sdn. Bhd. has obtained an advance amounting to RM3,500,000 from a company in which certain directors have interest. The advance is repayable within 12 months and bears interest at a rate of BLR - 1.5% per annum. On 29 July 2013, the Ministry of International Trade and Industry has approved and fixed 1 June 2009 as the "Production Date" of a subsidiary, Qdos Flexcircuits Sdn. Bhd. where the 100% tax exemption on its statutory income on "Fine Resolution Interconnect Flexible Printed Circuit Boards" (Pitch < 3mm) will be for a 5-year period from 1 June 2009 to 31 May 2014. As at the date the financial statements are authorised for issue, the Group is still assessing the impact of the total tax to be discharged by the Inland Revenue Board.
(iv)
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ANNUAL REPORT 2013
46.
Subsequent Events (contd.) (v) On 2 September 2013, a subsidiary, Sunshine Supermarket & Departmental Store Sdn. Bhd. has accepted the following financing facilities from OCBC Al-Amin Bank Berhad: (a) (b) Term financing-I Ijarah Muntahiah bi Al-Tamlik with a limit of RM12,000,000 (Facility I) and; Cash line facility-I Bai Bithaman Ajil with a limit of RM8,000,000 (Facility II).
Facility I bears interest at a rate of BFR - 1.5% or 2.5% whichever is higher per annum and is repayable over 144 months from the date of the first utilisation. Facility II bears interest at a rate of 6% per annum and is repayable over 60 months. Both facilities are secured by: (1) a fixed charge over a piece of freehold land known as Hakmilik Sementara No HS(D) 32854, Lot 21477, Mukim 6, Daerah Seberang Perai Utara, Pulau Pinang. which is included in capital work-inprogress (Note13); and a corporate guarantee from the Company.
(2) (vi)
On 20 September 2013, the Company has increased its investment in a subsidiary, Sunshine Amanjaya Sdn. Bhd. from RM100,000 divided into 100,000 ordinary shares of RM1.00 each fully paid to RM8,800,000 divided into 8,800,000 ordinary shares of RM1.00 in settlement of the debt due by the subsidiary to the Company. The Group has initiated a deal to dispose off the land held for development of its subsidiary, Great Support Sdn. Bhd. for approximately RM3,590,000. As at the date the financial statements are authorised for issue, the said disposal has yet to be finalised.
(vii)
47.
Authorisation of Financial Statements for Issue The financial statements were authorised for issue by the Board of Directors in accordance with a resolution of the directors on 26 September 2013.
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ANNUAL REPORT 2013
SUPPLEMENTARY INFORMATION
48. Supplementary Information Breakdown of Retained Profits Into Realised and Unrealised The breakdown of the retained profits of the Group and of the Company as at 31 May 2013 into realised and unrealised profits is presented in accordance with the directive issued by Bursa Malaysia Securities Berhad dated 25 March 2010 and prepared in accordance with Guidance on Special Matter No. 1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants. The retained earnings as at reporting date may be analysed as follows: Group 2013 RM Total retained earnings of the Company and its subsidiaries - Realised - Unrealised Company 2013 RM
2012 RM
2012 RM
29,901,976 29,901,976
27,307,058 27,307,058
Total share of accumulated losses from jointly controlled entity - Realised Total share of accumulated losses from associate - Realised - Unrealised Consolidation adjustments Retained earnings as per financial statements
(40,090)
(35,635)
29,901,976 29,901,976
27,307,058 27,307,058
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ANNUAL REPORT 2013
Location No. 1, Jalan Mayang Pasir, 11950 Bayan Baru, Pulau Pinang
Description Basement level & Level 1, Sunshine Square Complex Leasehold land with a warehouse and 3 storey office block Freehold land
Tenure 99 years leasehold expiring 2090 60 years leasehold expiring 2050 Freehold land
No. 2A, Lebuhraya Kampung Jawa, 11900 Bayan Lepas, Pulau Pinang Plot 1109, Tempat Kelibang, Langkawi Lots Nos. 2704, 2705, 2706 and 453, Mukim 7, Province Wellesley South, Penang Lot 7703, Mukim 13, N.E.D, Bandar Baru Air Itam, Penang
21 years
4,328,705
32,055 sq ft
Not Applicable
2,834,809
Freehold land
501,376 sq ft
Freehold land
Not Applicable
4,470,910
Leasehold land
392,434 sq ft
Not Applicable
21,579,630
No. 99, Lebuhraya Kampung Jawa, Taman Perindustrian Bayan Lepas, 11900 Penang 3-9-3A, Jalan Bukit Jambul, 11900 Bayan Lepas Penang
13 years
8,802,542
Condominium
2,281 sq ft
99 years leashold expiring 2090 6 years leasehold expiring 2014 16 years leasehold expiring 2023
12 years
1,015,290
No 294, Jalan Thean Teik, Bandar Baru Air Itam, 11500 Penang
5 years
2,338,234
No 5047, Diatas Sebahagian Lot HS (D) 9813, Plot ('A'), Jalan Bagan Dalam, Dermaga Butterworth Seksyen 4, 12100 Seberang Perai Utara, Pulau Pinang HS(D) 32854, Lot 21477, Mukim 6, Daerah Seberang Perai Utara, Pulau Pinang
64,400 sq ft
3 year
1,870,250
Freehold land with 1 sub-basement and 2 storey shopping mall, Sunshine Bertam
727,229 sq ft
Freehold land
33032 , Lot No 602 , Seksyen 1, Freehold land with Daerah Timor Laut, Pulau Pinang. 1 basement and 4 storey shopping floor and 16 car park bay ** Relates to building construction in progress
28,083 sq ft
Freehold land
Construction in progress **
2,400,000
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ANNUAL REPORT 2013
ANALYSIS OF SHAREHOLDINGS
AS AT 7 OCTOBER 2013
SHARE CAPITAL Authorised Capital Issued and Fully Paid-Up Capital Class of Shares Voting Rights : RM100,000,000.00 : RM61,000,248.00 consists of 61,000,248 ordinary shares of RM1.00 each : Ordinary Share of RM1.00 each (Shares) : One Vote Per Share
Distribution Schedule of Shareholders No of Holders Holdings 58 Less than 100 228 100 - 1,000 930 1,001 10,000 193 10,001 to 100,000 shares 34 100,001 to less than 5% of issued shares 4 5% and above of issued shares 1,447
# This represents the total issued and paid up capital of RM61,000,248, comprises of 61,000,248 shares after deducting 3,647,100 Shares retained by the Company (or SCB) as treasury shares. 30 Largest Securities Account Holders (without aggregating the securities from different securities accounts belonging to the same person) No. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 Name HOZONE SDN.BHD. SUIWAH HOLDINGS SDN. BHD. DAUNPURI SDN. BHD. SUIWAH HOLDINGS SDN. BHD. DATO HWANG THEAN LONG WONG THAN KIM DATO HWANG THEAN LONG TEO KWEE HOCK LENA LEONG OY LIN JF APEX NOMINEES (TEMPATAN) SDN BHD PLEDGED SECURITIES ACCOUNT FOR TEO SIEW LAI LEONG KOK TAI LOOI TIK MIOW LIM KENG HONG HO SAM FONG DB (MALAYSIA) NOMINEE (ASING) SDN BHD EXEMPT AN FOR BRITISH AND MALAYAN TRUSTEES LIMITED UNG PENG JOO BARBARA ELIZABETH NG KENANGA NOMINEES (TEMPATAN) SDN BHD PLEDGED SECURITIES ACCOUNT FOR DATO HAJI MOHD SUHAIMI BIN ABDULLAH SIVA KUMAR A/L M JEYAPALAN LENA LEONG OY LIN GOH SING YENG CHAN SENG CHEONG TAWAKAR ENTERPRISE SDN. BHD. CIMSEC NOMINEES (TEMPATAN) SDN BHD PLEDGED SECURITIES ACCOUNT FOR IRENE YEOH POH IM CH'NG BOON CHONG LEE ENG HOCK & CO. SENDIRIAN BERHAD INTER-PACIFIC EQUITY NOMINEES (TEMPATAN) SDN BHD HO SOO TAK KANG KHOON SENG POH BIN SENG (DATO') YEO KHEE HUAT No. of Shares held 12,117,948 7,591,200 6,595,171 3,296,700 2,296,881 2,207,380 2,148,500 1,551,900 1,426,600 748,900 672,000 668,300 618,400 597,000 500,000 464,400 434,800 417,125 376,600 288,700 287,760 230,820 200,000 193,000 192,700 190,000 183,800 180,000 172,000 168,380 % # 21.14 13.24 11.51 5.75 4.01 3.85 3.75 2.71 2.49 1.31 1.17 1.17 1.08 1.04 0.87 0.81 0.76 0.73 0.66 0.50 0.50 0.40 0.35 0.34 0.34 0.33 0.32 0.31 0.30 0.29
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ANNUAL REPORT 2013
ANALYSIS OF SHAREHOLDINGS
AS AT 7 OCTOBER 2013 (CONTD.)
Substantial Shareholders (Direct & Indirect) (excluding those who are bare trustees pursuant to Section 69 of the Companies Act, 1965) No. of Shares beneficially held by the Substantial Shareholders No. Name of Shareholders Direct Interest % # Indirect Interest % # Note 1 Hozone Sdn Bhd 12,117,948 21.14 2 Suiwah Holdings Sdn Bhd 10,887,900 18.99 3 Daunpuri Sdn Bhd 6,595,171 11.51 4 Dato' Hwang Thean Long 4,445,381 7.76 10,985,505 19.16 (i) 5 Datin Cheah Gaik Huang 26,400 0.05 15,404,486 26.87 (ii) 6 Suiwah Supermarket Sendirian Bhd 71,205 0.12 10,887,900 18.99 (iii) 7 Hwang Siew Peng 15,430,886 26.92 (iv) 8 Datuk Haji Radzali bin Hassan 12,117,948 21.14 (v) 9 Che Wan Bin Mat 6,595,171 11.51 (vi) 10 Yeoh Eng Wan 6,595,171 11.51 (vi) Notes : (i) Deemed interested through his shareholdings in Suiwah Holdings Sdn Bhd (SHSB) and Suiwah Supermarket Sdn Bhd (SSSB) by virtue of Section 6A of the Companies Act, 1965 (the Act) and the shareholdings of his wife, Datin Cheah Gaik Huang in SCB. (ii) Deemed interested through the shareholdings of her husband, Dato' Hwang Thean Long in SCB. (iii) Deemed interested through SHSB in SCB by virtue of Section 6A of the Act. (iv) Deemed interested through the shareholdings of her parents, Dato' Hwang Thean Long and Datin Cheah Gaik Huang in SCB. (v) Deemed interested through his shareholdings in Hozone Sdn Bhd pursuant to Section 6A of the Act. (vi) Deemed interested through their shareholdings in Daunpuri Sdn Bhd pursuant to Section 6A of the Act. Directors Shareholdings (Direct & Indirect) Name of Directors Dato' Hwang Thean Long Datin Cheah Gaik Huang Dato' Haji Mohd Suhaimi bin Abdullah Dato' Ahmad Hassan bin Osman Datuk Haji Radzali bin Hassan Wong Thai Sun Hwang Siew Peng Jen Shek Voon No. of Shares beneficially held by the Directors Direct Interest % # Indirect Interest %# 4,445,381 7.76 10,985,505 19.16 26,400 0.05 15,404,486 26.87 417,125 0.73 12,117,948 21.14 15,430,886 26.92 Note (i) (ii)
(iii) (iv)
Notes : (i) Deemed interested through his shareholdings in SHSB and SSSB by virtue of Section 6A of the Act and the shareholdings of his wife, Datin Cheah Gaik Huang in SCB. (ii) Deemed interested through the shareholdings of her husband, Dato' Hwang Thean Long in SCB. (iii) Deemed interested through his shareholdings in Hozone Sdn Bhd pursuant to Section 6A of the Act. (iv) Deemed interested through the shareholdings of her parents, Dato' Hwang Thean Long and Datin Cheah Gaik Huang in SCB.
Interest In The Related Corporation Dato Hwang Thean Long, Datin Cheah Gaik Huang, Hwang Siew Peng and Datuk Haji Radzali Bin Hassan by virtue of their interest in Shares in the Company, are deemed interested in Shares of all the Companys subsidiaries to the extent the Company has an interest. Save as disclosed above, none of the other Directors in office have any interest in Shares in the Company or its related corporations.
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ANNUAL REPORT 2013
PROXY FORM
No. of Shares held
I/We ___________________________________________________________________________________________________________
(FULL NAME IN CAPITAL LETTERS)
of _____________________________________________________________________________________________________________
(FULL ADDRESS)
member/members of the abovenamed Company, hereby appoint ____________________________________________________________ of ________________________________________________________ or failing him,__________________________________________ of ________________________________________________or the Chairman of the Meeting, as *my/our proxy to vote for *me/us on *my/ our behalf at the Twentieth (20th) Annual General Meeting of the Company to be held at Sunshine Banquet Hall, Level 4, Sunshine Square Complex, 1, Jalan Mayang Pasir, 11950 Bayan Baru, Penang on Thursday, 28 November 2013 at 11.00 a.m. and at any adjournment thereof. *My/Our Proxy is to vote as indicated below: AS ORDINARY BUSINESS: Resolution 1 To receive the Audited Financial Statements for the year ended 31 May 2013 together with the Reports of the Directors and Auditors thereon. Resolution 2 To approve the declaration of a first and final dividend of 8% less 25% Malaysian Income Tax for the financial year ended 31 May 2013. Resolution 3 To re-elect Dato Hwang Thean Long as Director of the Company. Resolution 4 To re-elect Datuk Haji Radzali Bin Hassan as Director of the Company. Resolution 5 To re-appoint Dato Ahmad Hassan Bin Osman as Director of the Company. Resolution 6 To approve the payment of Directors fees. Resolution 7 To re-appoint Messrs Ernst & Young as Auditors of the Company and to authorise Directors to fix their remuneration. AS SPECIAL BUSINESS: Resolution 8 Ordinary Resolution Authority to issue and allot shares pursuant to Section 132D of the Companies Act, 1965. Resolution 9 Ordinary Resolution - Proposed renewal and new shareholders mandate for recurrent related party transactions of a revenue or trading nature (RRPT) involving Dato Hwang Thean Long, Datin Cheah Gaik Huang, Hwang Poh Choo, Hwang Siew Peng, Suiwah Holdings Sdn Bhd and Suiwah Supermarket Sendirian Berhad. Resolution 10 Ordinary Resolution - Proposed renewal of shareholders mandate for RRPT involving Datuk Haji Radzali Bin Hassan and Hozone Sdn Bhd. Resolution 11 Ordinary Resolution - Proposed renewal of shareholders mandate for RRPT involving Looi Tik Miow. Resolution 12 Ordinary Resolution - Proposed renewal of shareholders mandate for RRPT involving Leong Kong Meng. Resolution 13 Ordinary Resolution - Proposed renewal of Shares Buy-Back Mandate. Resolution 14 Ordinary Resolution - Mandate for Dato Haji Suhaimi Bin Abdullah to continue to act as an Independent NonExecutive Director of the Company. Resolution 15 Ordinary Resolution - Mandate for Dato Ahmad Hassan Bin Osman to continue to act as an Independent NonExecutive Director of the Company. Resolution 16 Ordinary Resolution - Mandate for Mr. Jen Shek Voon to continue to act as an Independent Non-Executive Director of the Company. Resolution 17 Ordinary Resolution - Mandate for Mr. Wong Thai Sun to continue to act as an Independent Non-Executive Director of the Company. Resolution 18 Special Resolution - Proposed Amendments to the Articles of Association of the Company. For Against
(Please indicate with an X in the appropriate box against each Resolution how you wish your proxy to vote. If no instruction is given, the proxy will vote or abstain at his/her discretion). * Strike out whichever not applicable. Signed this day of 2013.
stamp
No. 1-20-1, SUNTECH @ Penang Cybercity, Lintang Mayang Pasir 3, 11950 Bayan Baru, Penang, Malaysia . Tel: 604-643 7387 Fax: 604-643 7389 www.suiwah.com.my | www.sunshineonline.com.my