table of contents - malaysiastock.biz the form of proxy must be deposited at the registered office...
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TABLE OF CONTENTS
Notice of Annual General Meeting 1 - 2 Additional Information 44 – 45
Corporate Structure
3
Director‟s Report 46 – 50
Corporate Information 4 – 5
Statement by Directors 51
Board of Directors 6
Statutory Declaration 51
Key Management Executives 7
Independent Auditor‟s
Report
52- 54
Profile of the Board of Directors 8 – 10
Statement of Financial
Position
55 - 56
Profile of the Executive Personnel 11 – 14
Statement of Comprehensive
Income
57
Chairman‟s Statement 15- 17
Statement of Changes in
Equity
58 – 59
Audit Committee Report 18 – 22
Cash Flow Statements 60
Review of Operations 23 – 28
Notes to Financial
Statements
61 – 112
Research and Development 29
List of Properties
113
Our Mission Statements
30
Analysis of Shareholdings
114 –
115
Statement on Corporate Governance 31 – 38 Investor Relations 116
Statement of Internal Control 39 – 43 Proxy Form 117
1
SCGM BHD
(Company No. 779028 H)
(Incorporated in Malaysia)
NOTICE IS HEREBY GIVEN THAT the Fourth Annual General Meeting of the Company will be
held at the office of SCGM Bhd, Lot 3304, Batu 24 ½, Jalan Kulai – Air Hitam, 81000 Kulai, Johor
on Tuesday, 27th September 2011 at 2.00 p.m. for the purpose of transacting the following
businesses:-
A G E N D A
1. To receive the Audited Financial Statements of the Company and its Group for the financial
year ended 30 April 2011 together with the Directors‟ and Auditors‟ Reports thereon.
(Please refer to Note A)
2. To approve the payment of a first and final tax exempt dividend of 3.0 sen per ordinary share of
RM0.50 each in respect of the financial year ended 30 April 2011.
Resolution 1
3. To approve the payment of Directors‟ fees for the financial year ended 30 April 2011.
Resolution 2
4. To re-elect the following Directors retiring pursuant to Article 85 of the Company‟s Articles of
Association and being eligible, have offered themselves for re-election:-
(i) Lee Hock Meng Resolution 3
(ii)
Tang Nai Soon
Resolution 4
5. To re-appoint Messrs SJ Grant Thornton as Auditors of the Company to hold office until he
conclusion of the next Annual General Meeting and to authorize the Directors to fix their
remuneration.
Resolution 5
6. To transact any other business which may properly be transacted at an Annual General Meeting
for which due Notice shall have been given.
By Order of the Board
LIM SECK WAH (MAICSA 0799845)
M. CHANDRASEGARAN A/L S. MURUGASU (MAICSA 0781031)
Company Secretaries
Kuala Lumpur
6 September 2011
2
NOTICE OF DIVIDEND ENTITLEMENT AND PAYMENT
NOTICE IS ALSO HEREBY GIVEN that the first and final tax exempt dividend of 3.0 sen per
ordinary share of RM0.50 each in respect of the financial year ended 30 April 2011, if approved by
members, will be paid on 14 October 2011 to depositors whose names appear in the Record of
Depositors on 30 September 2011.
A depositor shall qualify for entitlement only in respect of:-
(a) Shares transferred into the Depositor‟s Securities Account before 4.00 p.m. on 30 September
2011 in respect of ordinary transfers; and
(b) Shares bought on the Bursa Malaysia Securities Berhad on a cum entitlement basis according
to the Rules of the Bursa Malaysia Securities Berhad.
Notes:-
A. This Agenda item is meant for discussion only as the provision in the Company‟s Articles of Association do
not require a formal approval of the shareholders and hence, is not put forward for voting.
1. A member entitled to attend and vote at the meeting is entitled to appoint up to two proxies to attend and vote
in his/her stead. A proxy need not be a member of the Company.
2. Where a member appoints two proxies, the appointment shall be invalid unless he/she specifies the proportions
of his/her holdings to be represented by each proxy.
3. If the appointer is a corporation, this form must be executed under its Common Seal or under the hand of its
attorney duly authorized.
4. Where a member of the Company is an authorized nominee as defined in accordance with the Securities
Industry (Central Depositories) Act, 1991, it may appoint at least one proxy in respect of each securities
account it holds with ordinary shares of the Company standing to the credit of the said securities account.
5. The Form of Proxy must be deposited at the Registered Office of the Company at Level 15-2, Bangunan Faber
Imperial Court, Jalan Sultan Ismail, 50250 Kuala Lumpur not less than 48 hours before the time appointed for
holding the meeting or any adjournment thereof.
3
CORPORATE STRUCTURE
Our Company was incorporated in Malaysia on 29 June 2007 under the Act as a public
limited company. Our Company is an investment holding company while our subsidiary,
namely LSSPI is principally involved in the manufacturing and trading of plastic products.
The structure of our Group is as follows:
SCGM BERHAD
LSSPI
100%
4
CORPORATE INFORMATION
Domicile Malaysia
Legal Form & Place of Incorporation
A public listed company incorporated in Malaysia under the Companies Act, 1965 and
limited by shares
BOARD OF DIRECTORS
Dato‟ Lee Hock Seng Executive Chairman/ Managing Director
Lee Hock Chai Executive Director
Lee Hock Guan Executive Director
Lee Hock Meng Executive Director
Wong Tun Boon Independent Non-Executive Director
Tang Nai Soon Independent Non-Executive Director
Amrik Singh Harcharan Singh Independent Non-Executive Director
COMPANY SECRETARIES REGISTERED OFFICE
Lim Seck Wah Level 15-2, Bangunan Faber Imperial
(MAICSA No. 0799845) Court
Jalan Sultan Ismail
M. Chandrasegaran A/L S. Murugasu 50250 Kuala Lumpur
(MAICSA No. 0781031) Tel: 03-26924271
Fax: 03-27325388
SHARE REGISTRAR PRINCIPAL PLACE OF
BUSINESS
Mega Corporate Services Sdn Bhd (187984-H) Lot 3304, Batu 24 ½
Level 15-2, Bangunan Faber Imperial Court Jalan Kulai-Air Hitam
Jalan Sultan Ismail 81000 Kulai, Johor.
50250 Kuala Lumpur Tel: 07-6522288
Tel: 03-26924271 E-mail: [email protected]
Fax: 03-27325388 Website: www.scgmbhd.com
www.leesoonsengplastic.com
5
AUDITORS STOCK EXCHANGE LISTING
SJ Grant Thornton (AF:0737) Bursa Malaysia Securities Berhad
Unit 29-08, Level 29, Mailbox 227 Stock Name: SCGM
Menara Landmark Stock Code: 7247
12, Jalan Ngee Heng
80000 Johor Bahru
Tel: 07-2231848
Fax: 07-2249848
PRINCIPAL BANKERS SOLICITORS
RHB Bank Berhad Teh & Lee
45, Jalan Kuning Dua Advocates & Solicitors
Taman Pelangi A-3-3 & A-3-4, North Point Offices
50400 Johor Bahru Mid Valley City
Tel: 07-6631911 No. 1, Medan Syed Putra Utara
59200 Kuala Lumpur
Tel: 03-22832800
6
BOARD OF DIRECTORS
From left:
Wong Tun Boon (Independent Director),
Amrik Singh Harcharan Singh (Independent Director),
Lee Hock Guan, Lee Hock Chai, Lee Hock Seng, Lee Hock Meng,
Tang Nai Soon (Independent Director),
Folk Jee Yoong (Group Financial Controller)
7
KEY MANAGEMENT EXECUTIVES
From left:
Adam Ng Boon King (Production Manager),
Chai Chwan Fuat (Assistant QA Manager),
Kok Yon Lan (Finance Manager),
Lee Lih Chyong (Administration and Human Resource Manager),
Wong Voon Foong (Assistant Production Manager),
Tai Chin Lian (Business Development Manager),
Tan Hong Huat (Assistant Sales Manager).
8
PROFILE OF DIRECTORS
Dato’ Lee Hock Seng, Malaysian, aged 61, was appointed as the Executive
Chairman/Managing Director of SCGM Bhd (“SCGM”) on 19 December 2007. He was
appointed as the Managing Director of Lee Soon Seng Plastic Industries Sdn. Bhd.
(“LSSPI”) on 4 May 1984. He is one of the founders of LSSPI and has been the company‟s
Managing Director since its incorporation on 4 May 1984. In 1995, he completed an
external training programme, namely the 7th Asian Factory Management Course 1995 in
Taipei, Taiwan. Subsequently, in 1997, he completed a course in Middle Management
Leadership Training Programme in Johor Bahru, Johor.
Dato‟ Lee started his career in 1969 as a Marketing and Distribution personnel with Lee
Soon Seng, a distributor and wholesaler for F&N (M) Sdn Bhd. In 1984, he left Lee Soon
Seng to set up LSSPI. Presently, he is responsible for the strategic business development
and future directions of our Group. He frequently travels abroad to keep abreast with the
latest developments in the packaging industry and to explore new market prospects for our
Group. Furthermore, his responsibilities also include the development and implementation
of marketing strategies and product distribution. He was awarded the DIMP which carries
the title of Dato‟ by the Sultan of Pahang in 2010. He is a member of Remuneration
Committee of the Company.
Lee Hock Chai, Malaysian, aged 49, was appointed as the Executive Director of SCGM on
19 December 2007. He was appointed as the Executive Director of LSSPI on 4 May 1984.
He is one of the founders of LSSPI. He began his career as a Factory Manager with LSSPI
in 1984. In 1998, he was promoted to his current position as an Operations Manager. His
responsibilities include developing new products and providing engineering support,
machinery and factory facility maintenance. He has more twenty (20) years of experience
in the field of research and development.
Lee Hock Guan, Malaysian, aged 51, was appointed as the Executive Director of SCGM
on 19 December 2007. He was appointed as the Executive Director of LSSPI on 4 May
1984. In 1997, he completed a course on Middle Management Leadership Training
Programme in Johor Bahru, Johor. Mr. Lee began his career in 1979 as a Sales Executive in
Lee Soon Seng, a distributor and wholesaler for F&N (M) Sdn Bhd. In 1984, he joined
LSSPI as a Factory Manager and has held his current position since then. His
responsibilities include planning for material requirements, manpower and production
capacity, providing general machinery maintenance and ensuring overall safety in
production. He frequently travels abroad to enhance his knowledge in new technology and
automation for production. He has more than twenty (20) years of experience in the field of
production.
Lee Hock Meng, Malaysian, aged 58, was appointed as the Executive Director of SCGM
on 19 December 2007. He was appointed as the Executive Director of LSSPI on 4 May
1984. In 1997, he participated in the 9th seminar on Factory Management and Marketing
for Overseas Chinese Businessman. In 1979, he began his career with Lee Soon Seng, a
distributor and wholesaler for F&N (M) Sdn Bhd, as a Sales Executive. He was attached to
Lee Soon Seng for approximately ten (10) years before joining LSSPI in 1990 as a
Logistics Manager. He is presently responsible for overseeing shipping and logistic
arrangements for our Group.
9
Amrik Singh Harcharan Singh, Malaysian, aged 42, was appointed as the Independent
Non-Executive Director of SCGM on 19 December 2007. He graduated with an Honours
Degree from the University of London in 1994 and later obtained a Certificate in Legal
Practice to qualify as an Advocate and Solicitor in 1996. He has eleven (11) years
experience in handling civil litigation matters, as well as Industrial Court cases. He has
been appointed as the legal adviser and counsel for the Food Industry Employees Union for
the state of Johor, Malaysia which is recognised by the United Nations. He is currently
acting as counsel for more than five (5) legal firms throughout the country. He is also
running his own legal advisory firm under the name of Messrs. Amrik Singh and Co. since
2003. He is a member of Audit Committee and Nomination Committee of the Company.
Wong Tun Boon, Malaysian, aged 35, was appointed as the Independent Non-Executive
Director of SCGM on 19 December 2007. He holds a Bachelor of Commerce (Honours)
degree from the University of Windsor, Canada, which he obtained in 1998. After
graduation up to 2001, he worked in two (2) audit firms, namely Syarikat Y.S. Tay and
Azman, Wong, Salleh & Co. He also completed his post graduate studies and was
conferred the Masters Degree of Business by the Victoria University of Technology,
Australia in 2001. He joined M. S. Wong & Co. in Johor as an audit & tax senior executive
from 2001 till 2005. In 2004, Mr. Wong fulfilled all required practical requirements and
was successfully admitted as the member of the Certified Practicing Accountant (CPA),
Australia and also the Malaysia Institute of Accountants (“MIA”). Mr Wong had set up his
own firm in Johor and has been practicing as a Chartered Accountant and Company
Secretary since then. His firm, Thomas Wong & Co., which is registered with MIA,
provides a range of complementary professional services such as accountancy, secretarial
and taxation services. He is also a Government Licensed Tax Consultant approved by the
Ministry of Finance. He is the Chairman of Audit Committee and Remuneration
Committee, and a member of Nomination Committee of the Company.
Tang Nai Soon, Malaysian, aged 42, was appointed as the Independent Non-Executive
Director of SCGM on 19 December 2007. He graduated with a degree in Computer Science
(Hons) from Universiti Teknologi Malaysia (UTM) in 1993. Up to 1994, he worked as a
marketing executive in CTE Computer (M) Sdn Bhd, Johor Bahru. Subsequently, he works
as the personal assistant for YB Datuk Lim Si Cheng, Member of Parliament for Senai/
Kulai since June 1995. From 1996 to 2006, he occupied the post of a Kulai District
Councillor. He was also appointed as the Advisor for the Juvenile Court in Johor Bahru as
well as the Village Chief of the Ayer Bemban New Village in 2006 and 2007, respectively.
Mr. Tang is also the Pekan Nenas state assemblyman, MCA Youth Central Committee
Member, the Johor State MCA Youth deputy chief, Kulai MCA division chief and
Chairman of the Ayer Bemban MCA Branch. He is a member of Audit Committee and
Remuneration Committee, and the Chairman of Nomination Committee of the Company.
10
Other Information of Directors
i) Save as disclosed above, Dato‟Lee Hock Seng, Mr Lee Hock Chai, Mr Lee Hock Guan
and Mr Lee Hock Meng are siblings. The other Directors do not have any family
relationship with any Director and/or major shareholder of the Company.
ii) None of the Directors have any conflict of interest with the Company.
iii) None of the Directors has been convicted of any offences within the past ten (10) years
other than traffic offences, if any.
iv) None of the Directors hold any directorship on the Board of other public listed
companies in Malaysia.
11
PROFILE OF EXECUTIVE PERSONNEL
Lee Lih Chyong
Administrative and
Human Resource
Manager
Lee Lih Chyong, aged 40, is our Administration cum
Human Resource Manager. In 1994, Ms. Lee graduated
with a degree in Business Administration from Coventry
University, United Kingdom. After graduation, she joined
Beaver Industries (M) Sdn Bhd as a Production and
Materials Control Coordinator, where she was in charge
of material purchase and scheduling as well as import and
export arrangements. In 1996, she was transferred to
Beaver Industries (Philippines) Co. as a Trainer. She was
responsible for training new recruits and assisting in
setting up the workflow of, the Production and Materials
Control Department for the new plant. In 1997, Ms. Lee
was employed as a General Manager in Formpak
Industries Sdn Bhd, a company involved in thermo-
vacuum forming activities. Her responsibilities included
the management of the entire company‟s operations. In
2000, she joined LSSPI and has held her current position
since then. Presently, her responsibilities include
managing administrative, human resource and purchasing
matters.
Kok Yon Lan
Finance Manager
Kok Yon Lan, aged 48, is our Finance Manager. In 2002,
she completed an External Training Programme (Taiwan)
in the 3rd Study Session of the Financial Manager
Workshop of Overseas Chinese Business Persons by the
Overseas Chinese Affairs Commission Taiwan, PRC. Ms.
Kok began her career in 1981 as an Accounts Clerk in
Inhoe Construction Sdn Bhd, a company involved in the
construction industry. In 1989 and 1991, she joined Kelex
Industries Sdn Bhd, a manufacturer of school and
travelling bags, and Idex Builder (M) Sdn Bhd, a
company involved in renovation and decoration works,
respectively as an Accounts and Administration
Executive. In 1993, she joined LSSPI as an Accounts
Officer. She was responsible for credit control,
accounting, taxation, financial planning, business
analysis, collating financial information together with
monthly sales figures, profit and loss reporting and
advising the management on financial related matters.
She is also experienced in dealing with issues relating to
the Customs Department, and matters relating to
manufacturing licenses, import duty exemption and
government grant. She was promoted to her current
position in 2003.
12
Lan Kim Fah
Quality Assurance
Manager
Lan Kin Fah, aged 52, is our Quality Assurance Manager.
He was Manufacturing / Maintenance Engineer in
General Electric (USA) Malaysia Appliance Components
S/B from year 1982 to 1993. He was Factory Manager in
Clay Brick & Tiles (M) S/B for 2 years. Between 1996
and 1999, he was Operation Manager of Compact (M)
S/B. In year 200 to 2007, he was Sales and Marketing
Manager in Medic Technology S/B where to lead sales
team to build future growth of the company. He joined
LSSPI in 2007 as Quality Manager to lead a team of
quality assurance personnel to ensure product quality.
Chai Chwan Fuat
Assistant Quality
Assurance Manager
Chai Chwan Fuat, aged 38, is our Assistant Quality
Assurance Manager. In 1998, Mr. Chai graduated with a
Bachelor in Business Administration from the National
Chung-Ching University, Taiwan. After graduation, he
was employed as a Junior Purchasing Executive in
Kenmark Industrial Co., Taiwan, a company involved in
the manufacturing of furniture. In 1999, he was
transferred to Kenmark Industrial Co., Malaysia Sdn Bhd
as a Junior Production Executive, where he was
responsible for the production control. Between 2000 and
2001, he joined Ecom Computer, a company involved in
the trading of computers, as a Lecturer. In 2001, Mr. Chai
left Ecom Computer and joined LSSPI. He is first
engaged as Production Supervisor and soon promoted to
the position of Assistant Production Manager responsible
for production control and maintenance of machineries.
In year 2008, he was promoted as his current position to
assist the whole Quality Assurance Process.
Wong Khai Loon
Maintenance Manager
Wong Khai Loon, aged 37, is our Maintenance Manager. Mr. Wong graduated with a Diploma in Computer Programming from Informatics Computer College in 1992. After graduation, he was employed as a Computer Programmer in Tai Wah Garments Sdn Bhd, a company involved in the manufacturing of garments. From 1996 to 1999, he was working in KODA Woodcraft Sdn Bhd, a company involved in the manufacturing of furniture, as a Research and Development Executive. In 1999, he joined LSSPI and held the position as QA Manager. He was promoted as Maintenance Manager and responsible for overseeing the whole maintenance process and department.
13
Tai Chin Lian
Business Development
Manager
Tai Chin Lian, aged 40, is our Business Development Manager. Mr. Tai graduated with a degree in Electrical and Electronic Engineering from the University of Plymouth, United Kingdom in 1998. After graduation, he was employed as a Customer Quality Failure Analysis Engineer, responsible for identifying the causes of product failure, in Seagate (Prai) Sdn Bhd. Between 2000 and 2001, he was working in Flextronics (Senai) Sdn Bhd as a Quality Engineer. In 2001, Mr. Tai joined LSSPI and has held his current position since then. He is presently responsible for developing our local and overseas business as well as assisting Mr Lee Hock Chai in RDD of new products and design.
Tan Hong Huat
Assistant Sales Manager
Tan Hong Huat, aged 42, is our Assistant Sales Manager. In 1990, he graduated with a Diploma in Computer Programming from the Informatics College, Johor Bahru, Johor. He started his career in 1991 as a Production Planner with Han Tong Metal Component Sdn Bhd. From 1994 to 1996, he was employed with Masuna Sdn Bhd as a Sales Representative, and between 1996 and 1998, he worked in Perniagaan Yakin Diri as a Sales Executive. In 1999, he joined Victory Packaging Industries Sdn Bhd as a Marketing Executive. Within the same year, Mr. Tan joined LSSPI as a Marketing Executive and was responsible for overseeing domestic sales. He was promoted to his current position in 2005. He is responsible for sales and marketing plans and activities for the company products.
Folk Jee Yoong
Group Financial
Controller
Folk Jee Yoong, a Malaysian, aged 49, was appointed as
the Group Financial Controller in January 2008.
Mr. Folk received his Bachelor of Business degree in
Accounting & Secretarial Administration from Curtin
University of Technology in Perth, Western Australia,
Bachelor of Economics degree from University of Western
Australia, Master of Commerce degree in Accounting from
University of Auckland, New Zealand and Doctor of
Business Administration from University of South
Australia. He is a member of the Australian CPA and the
Malaysian Institute of Accountants. He also holds a
Certificate in Investor Relation from U.K.
Mr. Folk has over twenty years of experience in corporate
finance, restructurings, audits and financial management
in diversified industries such as mortgage banking,
property development, construction, seafood trawling &
processing, pulp & paper, jewellery, office furniture,
multi-level marketing, plastic injection moulding, timber
14
plantation & processing and travel. Between l984 and
l990, amongst other public accounting firms, he was
attached to Deloitte, Haskins & Sells, New Zealand and
McLaren & Stewart, Perth, Australia. He has also worked
with multi-nationals such as Sinar Mas Group, Raja
Garuda Mas Group and Fletcher Challenge Group in
various countries such as New Zealand, India and
Indonesia.
Adam Ng Boon King
Production Manager
Adam Ng Boon King, aged 49, is Production Manager. He has 25 years experience in Electronic and Food Manufacturing lines. He was involved in the design, process, quality, production and mechanical during his career. He joined LSSPI in year 2007 as Quality Manager. With his excellent leadership, he was transferred as a Production Manager on year 2008. His responsibilities cover over 200 workmanship quality products for customers. Besides this, he is also involved in new machinery set up and technology transfer.
Wong Voon Foong
Assistant Production
Manager
Wong Voon Foong, aged 30, is our Assistant Production Manager. He started his employment with LSSPI as a Planner in year 2002. Over the 7 years, in view of his good performance he was promoted to Assistant Planning Manager, and then to his present position. His responsibilities include assisting the Factory Manager and Production Manager in overseeing various production functions and processes.
15
CHAIRMAN’S STATEMENT
On behalf of the Board of Director‟s of SCGM Bhd (“SCGM” or “the Group”), I am
pleased to present the Company‟s Annual Report and Financial Statements for the financial
year ended (“FYE”) 30 April 2011.
Financial Performance
For the financial year ended 30 April 2011, the Group achieved sales turnover of RM75.07
million compared to a sales turnover of RM67.72 million in the previous financial year.
The Group has performed well with the increase in sales turnover of 10.8% from our
previous year‟s revenues. The increase in the revenue can be attributed mainly to the global
economy recovering from a low base in the previous year. Consumer confidence has
returned in the second half of the financial year resulting in increase spending. The sales
performance was commendable as the new machines purchased last year contributed to the
production despite a challenging external environment.
Despite the improved sentiments, SCGM has taken several measures to maintain
profitability by adopting several cost cutting measures to reduce the operating costs.
Profit After Tax
The Profit after Tax for the year under review of RM6.36 million was 4.7% lower
compared to RM6.66 million for FYE 2011. The slightly lower than expected profit after
tax was mainly attributed to the higher operating cost, namely from electricity and fuel
costs in the first half of the financial year. This has affected margins despite some
improvement in production efficiency due to the new machines having been installed in the
first half of the financial year. The Government has earlier warned that input costs such as
electricity and fuel are expected to increase further in the near future as subsidies are being
rationalised gradually. However, the Group is expected to adapt to this new policy going
forward.
Industry Trends And Development
Plastic packaging will continue to be the most versatile packaging material in the
world in the foreseeable future. There are no other cheaper and versatile alternatives
available. So the demand will continue to be there. More efficient machineries are
continuously being developed to minimize any wastage. These machines are
environment friendly. To this end, the Group has been keeping abreast with this
development and has purchased these machineries recently.
16
Dividends
I am pleased to inform the shareholders that the Board of Directors has recommended a
first and final tax exempt dividend of 3.0 sen per share which is subject to shareholders
approval at the Annual General Meeting to be held on 27 September 2011.
Progress Toward A Stronger Business Foundation
In order to continue building a resilient and establishing a stable high-earnings structure
that enables the Group to sustain development, the Group has decided to embark on a
program known as SPM (SCGM Productivity Management). The Group will continue to
embark on raising profitability by implementing the strength of the manufacturing
segments and expand its productivity by using the advanced machinery including automatic
packing and cutting thus increasing productivity per output through less manpower.
We are also working to increase manufacturing activity via enhancing the skills of our staff
through rigorous training program with the objective to increase the productivity and
efficiency. Among the program which will be our focus this year would be the Six Sigma
Black Belt program which focuses on lean manufacturing cost.
We plan to increase earnings quality of our core businesses, especially our extrusion sheets
and thermo forming operations. Progress will be made in such a way so as to uphold the
Group‟s reputation. We will continue along this path as our relationship with customers and
local communities are important to us.
In line with building a stronger business foundation, the Group has also expanded into new
territories to increase market share, namely Myanmar, U.S.A., China, India, Hong Kong
and Portugal. We are targeting Eastern Europe in the future.
In addition, the Group is actively participating in various trade shows worldwide to
promote the business presence in these countries mentioned previously.
With regard to the future direction of progressing towards stronger business foundations,
we plan to execute initiatives based on careful analysis of key factors from medium to long
term perspective.
We have also completed expansion plans for our plant facilities with the latest technology
and adding at least another 20% production capacity to cope with increasing demand.
Corporate Social Responsibility
There have been much said about a greener environment. The Group has a responsibility in
contributing towards this. Through various efforts, the Group has implemented various key
measures such as maintaining air-conditioning temperature at 25 degree Celsius, initiated
among staff to create awareness towards recycling of waste materials, and continuous
improvements in our manufacturing processes. These steps contribute towards a greener
17
environment. The Group has also emphasized on „green‟ machineries which will contribute
to less wastage.
Employees
The Group‟s success over the years has been attributable to its greatest asset, that is, its
employees. As at 30 April 2011, the Group has a workforce of 422 employees under its
employment. Our employees have worked hard and have contributed to the efficiency and
productivity of the Group‟s business and revenues positively. The Group will continue
training all our employees and further enhanced their skills at all levels to create a career
advancement path for themselves in the area of thermo-forming and extrusion sheets.
Corporate Governance
We will continue to uphold the principles and best practices as set out in the Code of
Corporate Governance has been disclosed in the Annual Report, which also includes a
“Statement on Internal Control” as required under Bursa Malaysia Securities Berhad‟s
Listing Requirements.
The Board is committed to ensuring that the highest standard of corporate governance is
practiced throughout the Group. A risk management committee has been organized.
Appreciation
On behalf on the Board of Directors, I wish to express my utmost gratitude to our
customers, shareholders and business associates for their support. I also thank my fellow
directors, management and staff for their effort, dedication and commitment to bringing the
Group to a higher level of achievement and look forward to yet another exciting year of
challenge and accomplishments.
Dato‟ Lee Hock Seng
Chairman
18
AUDIT COMMITTEE REPORT
COMPOSITION
The members of the Audit Committee as at the date of this report are as follows:
Chairman
Wong Tun Boon Independent Non-Executive Director
Members
Tang Nai Soon Independent Non-Executive Director
Amrik Singh Harcharan Singh Independent Non-Executive Director
TERMS OF REFERENCE
Duties and Responsibilities
• To review the quarterly results and annual financial statements of the Company and the
Group, and to recommend the same to the Board for approval whilst ensuring that they
are prepared in a timely and accurate manner, complying with all applicable accounting
and regulatory requirements and are promptly published.
• To review any related party transaction and conflict of interest that may arise within the
Company or the Group, including any transaction, procedure or conduct that may affect
the management integrity.
• To review with the external and internal auditors whether the employees of the Group
have given them appropriate assistance in discharging their duties.
• To review the adequacy of the scope, functions and resources of the internal audit
function and that it has the necessary authority to carry out its work.
• To review the internal audit plan and processes, the results of the internal audit
programme or investigation undertaken and whether or not appropriate action is taken by
management on the recommendations of the internal auditors.
• To appraise the performance of staff members of the internal audit function.
• To approve any appointment or termination of the staff members of the internal audit
function and to review any resignations of internal audit staff members and provide
resigning staff members the opportunities to submit reasons for resigning, where
necessary.
• To review the adequacy of the competency of the internal audit function.
• To review with the external auditors, the nature and scope of their audit plan, their
evaluation of the system of internal controls and their management letter and discuss any
matter that the external auditors may wish to raise in the absence of management, where
necessary.
19
• To recommend to the Board on the appointment and the annual reappointment of the
external auditors and their audit fee, after taking into consideration the independence and
objectivity of the external auditors and the cost effectiveness of their audit.
• To discuss and review with the external auditors any proposal from them to resign as
auditors.
• To review inspection and examination reports issued by any regulatory authority and to
ensure prompt and appropriate actions are taken in respect of any findings.
• To perform any other functions as authorized by the Board.
Authority
• The Committee is authorized by the Board to investigate any matter within its terms of
reference, to obtain the resources which it needs, and to have full and unrestricted access
to information. It is also authorized to seek any information it requires from any
employee of the Group and all employees are directed to cooperate with any request
made by the Committee.
• The Committee shall have direct communication channels with the external and internal
auditors.
• The Committee is authorized by the Board to obtain independent professional or other
advice at the Company‟s expense and to invite outsiders with relevant experience and
expertise to attend meetings if it considers this necessary.
• Where the Committee is of the view that a matter reported by it to the Board has not been
satisfactorily resolved resulting in a breach of the Listing Requirements of the Bursa
Malaysia Securities Berhad, the Committee shall promptly report such matter to the
Exchange.
• Be able to convene meetings with external auditors and internal auditors, excluding the
attendance of the other directors and employees, whenever deemed necessary.
Meetings
• Meetings shall be held at least four (4) times a year with a minimum quorum of two (2)
members and the majority of members present shall be independent Directors. Additional
meetings may be called at any time at the discretion of the Committee.
• The head of internal audit shall be in attendance at meeting of the Committee when
requested. The Committee may invite the external auditors, the Chief Financial Officer,
any other Directors or members of the management and employees of the Group to be in
attendance during meetings to assists in its deliberations.
• At least once a year, the Committee shall meet with the external and internal auditors
without any Executive Board members present and upon the request of the external and
or internal auditors, the Chairman of the Committee shall convene a meeting to consider
20
any matter which the external and or internal auditors believe should be brought to the
attention of the Board or shareholders.
• The minutes of each Committee meeting shall be tabled to the Board by the Chairman of
the Committee.
Membership
• The Committee shall be appointed by the Board from amongst its members and shall
comprise not less than three (3) members.
• All the audit committee members must be non-executive directors, with a majority of
them being independent directors.
• The Chairman of the Committee shall be an independent Director appointed by the Board.
• No alternate Director shall be appointed as a member of the Committee.
• At least one member of the Committee:-
i) shall be a member of the Malaysian Institute of Accountants (“MIA”); or
ii) if he is not a member of the MIA, he shall have at least three (3) years‟ working
experience and :-
a) he must have passed the examinations specified in Part 1 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 Acts 1967; or
iii) fulfils such other requirement as prescribed or approved by the Exchange.
• The term of office and performance of the Committee and each of its members must be
reviewed by the Board at least once every three (3) years.
• If a member of the Committee resigns or for any other reason ceases to be a member with
the result that the number of members is reduced to below three (3), the Board shall
within three (3) months of that event, appoint such number of new members as may be
required to make up a minimum number of three (3) members.
21
AUDIT COMMITTEE REPORT
The Committee shall ensure that an audit committee report is prepared at the end of each
financial year that complies with subparagraph (1) and (2) below:
1. The audit committee report shall be clearly set out in the Annual Report of the Company.
2. The audit committee report shall include the following:
(a) the composition of the Committee, including the name, designation (indicating the
chairman) and directorship of the members (indicating whether the Directors are
independent or otherwise);
(b) the terms of reference of the Committee;
(c) the number of Committee meetings held during the financial year end and details of
attendance of each members;
(d) a summary of activities of the Committee in the discharge of its functions and duties
for that financial year of the Company; and
(e) a summary of the activities of the internal audit function or activity.
Reporting of Non-Compliance with the Listing Requirements of Bursa Malaysia Securities
Berhad (“Bursa Securities”)
In the event the Audit Committee is of the view that a matter reported to the Board has not
been satisfactorily resolved resulting in a breach of the Bursa Securities Listing
Requirements, the Committee must promptly report such matters to Bursa Securities.
ATTENDANCE AT MEETINGS
The majority of members present in order to form a quorum necessary for the transaction of
business of Audit Committee shall be the independent directors.
During the financial year ended 30 April 2011, the Audit Committee held a total of four (4)
meetings. Details of attendance of the members of the Committee are as follows:
Name Attendance
Wong Tun Boon 4/4
Tang Nai Soon 4/4
Amrik Singh Harcharan Singh 4/4
ACTIVITIES OF THE AUDIT COMMITTEE DURING THE FINANCIAL YEAR
In line with the Terms of Reference of the Committee, the Committee carried out the
following activities during the financial year ended 30 April 2011 in discharging its
functions:
1. Reviewed the Group‟s audited financial statements for the financial year ended 30 April
2011 and discussed significant audit findings with the external Auditors before
recommending the same for the Board‟s approval;
22
2. Reviewed and recommended the unaudited quarterly financial results for the Board‟s
approval prior to their release to Bursa Securities;
3. Reviewed the scope of work and audit plan of the Internal and External Auditors;
4. Reviewed and discussed with the Internal and External Auditors, the results of their
audit, the audit report and internal control recommendations in respect of improvements
in the internal control procedures noted in the course of their audit;
5. Analysed the overall performance of the Group in terms of profitability, concern over
debt recovery, inventories level, taxation and major litigations;
6. Reviewed the compliance of the Company with the Amendments to Listing
Requirements of Bursa Securities and the applicable approved accounting standards
issued by the Malaysian Accounting Standards Board;
7. Ensured that the transactions entered into by the Company and the Group are in
compliance with requirements of Bursa Securities, Securities Commission and other
regulatory bodies; and
8. Reviewed the related party transactions that arose within the Company or Group.
INTERNAL AUDIT FUNCTION
During the financial year under review, the Group‟s internal audit function has been
outsourced to Messrs TT Corporate Consultants Sdn. Bhd.
The internal audit function is independent of the activities or operations it audits. The
principal role of the internal audit is to undertake regular and systematic reviews of the
systems of internal control in order to provide reasonable assurance that such systems
continue to operate satisfactorily and effectively. It is ultimately the responsibility of the
internal audit function to provide the Audit Committee with independent and objective
reports on the state of internal controls of the various operating units within the Group and
the extent of compliance of the units with the Group‟s established policies and procedures
as well as relevant statutory requirements.
A summary of the internal audit activities carried out includes:
Prepared a road map on risk management
Prepared an internal audit schedule.
Prepared guidelines on audit process flow in the Company.
Presentation of the internal audit findings at the quarterly Audit Committee meeting.
All the findings raised by the Internal Audit Function have been appropriately
addressed by management.
The Statement on Internal Control which provides an overview of the state of internal
controls within the Group is set out on page 39 of this Annual Report.
The total cost incurred for the internal audit service for the financial year was RM12,000.00
23
REVIEW OF OPERATIONS
Our core business products can be classified into the following categories:
Thermo-Vacuum Formed Plastic Packaging
We have more than 5,000 different moulds in current use to form thermo-vacuum formed
plastic packaging products, We have the capabilities to thermo-vacuum form single-layer
and multilayer extrusion sheets into plastic packaging, with thickness ranging from less
than 0.11mm to 2mm, the extrusion sheets we use in our thermo-vacuum forming process
are APET, PET-G, GAG, PVC, HIPS, PP and OPS sheets.
Our packaging is used to pack a variety of food products, including sandwiches, cakes,
chocolates, biscuits, salads and moon cakes. Meanwhile, we are able to produce antistatic
and black conductive trays to hold semi-finished electronic products, such as liquid crystal
display and hard disk drive parts, as well as packaging to store end-products, such as
computer software.
Thermo-vacuum formed plastic packaging for food products should not contain any
components that could migrate into the food, including harmful chemicals, contaminants
and other relevant ingredients. They should also adequately protect the quality, freshness
and safety of the food products, and ideally add to the appeal of the product by having
attractive designs.
Similarly, thermo-vacuum formed plastic packaging for electronic products should
adequately protect the products, for example from theft and/or damage, and at the same
time provide total product visibility to showcase the products, if it is displayed in retail
outlets.
Our thermo-vacuum formed plastic packaging is capable of both providing protection to
our customers‟ products as well as adding an aesthetic value to these products, which
enhances their value and presentation.
Extrusion Sheets
We produce extrusion sheets, namely, APET, PET-G, GAG, HIPS and PP sheets. These
extrusion sheets are semi-raw materials used in the production of thermo-vacuum formed
plastic packaging.
We began producing HIPS and PP sheets in September 2004. Subsequently in March 2007,
we started producing APET, PET-G and GAG sheets. Our HIPS, PP, APET, PET-G and
GAG sheets are either used as semi-raw materials in our production of thermo-vacuum
formed plastic packaging or sold to our customers.
In FYE 2006, sales of our extrusion sheets to external customers contributed only
approximately 5.0% to our total revenue percentage but increased significantly to 21.31%
in FYE 2009.
24
Receive order from Sales
Department
Check schedule and plan
for production
Thermo-vacuum forming
process
Extrusion process
Material and/or mould
requisition
Mould
preparation
Mould Preparation and Production Process
An overview of our production process is shown below:
Once orders are received from our Sales Department, our Production Department would
check our internal schedule and plan the production timeline as well as request for the
required materials and/or moulds. Depending on the production process, materials required
are plastic resins, colour masterbatches and additives, or extrusion sheets.
Plastic resins, colour masterbatches and additives are purchased from our suppliers.
Meanwhile, extrusion sheets are either internally produced or sourced from our suppliers.
On the other hand, moulds used in our thermo-vacuum forming process are designed and
prepared internally by our Moulding Department, based on customers‟ requirements.
Once we have all the required materials and/or moulds, we would conduct the extrusion
process and/or thermo-vacuum forming process, depending on the customer requirements.
25
Yes
No
Receive sample
product/drawing from
customer
Production/store
Fabrication of mould
Design mould/redraw dimension
Produce prototype mould and
forming sample
Sample
confirmed?
QC
QC
Mould Preparation
Our customers normally provide us with either a sample of the product that needs to be
packaged, or a drawing of the packaging they require. If we receive a product sample, we
would proceed with mould design. Moulds determine the shape and dimension of the
thermo-vacuum formed plastic packaging produced. On the other hand, if we receive a
rough sketch of the packaging required and the dimensions are inaccurate, we would
redraw the dimensions for the mould.
A prototype mould is produced based on the mould design. This prototype mould is fixed
onto our forming machine to form a sample packaging, which is sent for QC checks to
ensure that the mould and the sample packaging formed are as per specifications. The
sample packaging is also sent to customers for their approval. The prototype mould is
modified, if necessary, until it meets specified requirements.
The prototype mould is then used as a master mould, to form a set of identical moulds for
the thermo-vacuum forming process. Each thermo-vacuum formed plastic packaging has
one (1) mould design. However, a set of identical moulds with the same design is usually
made to maximise the number of moulds assembled on a base plate. This allows more
thermo-vacuum formed plastic packaging to be produced at one time and reduce the
wastage of extrusion sheets.
26
Once the moulds are formed, we conduct parts work. Parts work involves drilling small air
passages in the moulds, thereby allowing vacuum to remove air from the area between the
sheet and the mould shape as well as hold the sheet against the mould‟s surface during the
thermo-vacuum forming process. All the moulds are then assembled on a base plate, and
finishing is conducted to polish and clean the moulds‟ surface.
A final QC check is conducted before the moulds are sent to the production line or to the
store. The moulds are visually checked to see if there are any differences in size. If there
are differences, the moulds are modified or new moulds are fabricated. Once the mould
passes the QC check, they are sent either to the production line or to produce thermo-
vacuum formed plastic packaging for our customers or to the store to be kept until such
production process is required.
We have the capabilities to produce four (4) different types of moulds, the details of which
are as follows:
(i) Aluminium
Aluminium moulds are mainly used to form packaging with more precise dimensions, such
as packaging for electronic products. Our aluminium moulds are designed using
CAD/CAM software and formed using CNC milling machine.
The CAD software produces the mould design, while the CAM software controls the CNC
milling machine to ensure that moulds are made as per requirements. Meanwhile, the CNC
milling machine conducts turning and machining processes, to change the shape and
surface finishing of the aluminium into the required mould design.
Our aluminium moulds are durable and can normally last for approximately ten (10) years,
depending on the usage. Although we do not currently produce all of our aluminium
moulds, we plan to purchase one (1) additional new CNC milling machine in the financial
year ending 30 April 2009 to allow us to produce more aluminium moulds in a shorter time
frame.
(ii) Epoxy
Epoxy moulds are produced when aluminium powder is mixed with two (2) types of resins
to harden it, and then cast using a plastic tray. The plastic tray is a duplicate from a master
mould. Although epoxy is softer than aluminium, it is more economical. Furthermore, our
epoxy moulds are durable and can also last for approximately ten (10) years, depending on
the usage. We presently produce our own epoxy moulds.
(iii) Plaster stone
Plaster stone is normally used to make prototype/master moulds. It is cast out by mixing
plaster powder with water, and then left to harden. Moulds made of plaster stone are not as
durable as aluminium or epoxy moulds, but they are more economical and can be easily
modified should customers require changes to be made. We presently produce our own
plaster stone moulds.
27
(iv) Wood
Wood moulds are shaped into the design/pattern as required. Similar to plaster stone, wood
moulds are not as durable as aluminium or epoxy moulds, and are used to make
prototype/master moulds only. We presently produce our own wood moulds.
Extrusion Sheets Production Process Flow
Materials are fed through a top-mounted hopper into the barrel of the extruder. A barrel is a
hollow cylindrical container positioned horizontally in an extruder. Materials fed into the
barrel are as follows:
Inform supervisor
to rectify problem
Acceptable
Not acceptable
Acceptable
Not acceptable
Feed materials into plastic
sheet extruder
Plastic
resins
Colour
masterbatches
Additives
Set T-die based on width
and thickness required
Extrusion process
QC
Roll-up sheet
Pack and label
QC Inform supervisor to
rectify problem
Store or deliver to
customers
28
Resins - Raw thermoplastic material in the form of
small beads
Colour
masterbatches
- To add specific colour to the end-product
Additives - An anti-blocking additive is added to prevent
self-adhesion of plastic film or sheet, making
it easier to handle
Besides the barrel, the main components within the extruder are the screw, screen pack, T-
die and cooling rolls. The T-die, which provides the final product with its profile, is
adjusted according to product specifications. The extrusion process commences once the T-
die is set.
The materials enter through the feed throat (i.e. an opening near the rear of the barrel) and
come in contact with the screw, which is located within the barrel. The rotating screw
forces the materials forward into the barrel, which is heated to the desired melt temperature
of the molten plastic. The plastic resins melt gradually as they are pushed through the
barrel. At the front of the barrel, the molten plastic leaves the screw and travels through a
screen pack to remove any contaminants in the melt. After passing through the screen pack,
the molten plastic enters the T-die and plastic sheeting is formed. The extrusion sheets are
then cooled by pulling them through a set of cooling rolls.
A QC check is conducted on the thickness of the extrusion sheets. The ideal thickness
depends on customers‟ orders and we set a 2% tolerance on thickness variations. If the
thickness is not acceptable, the supervisors would be informed to rectify the problem. If it
is acceptable, the sheets would be rolled-up.
Another QC check would be conducted to check on the weight of each roll of extrusion
sheets. The ideal weight depends on customers‟ orders and we set a 0.1 kilogram tolerance
on weight variations for each roll of extrusion sheets. If it is not acceptable, the supervisors
would be informed to rectify the problem. On the other hand, if it is acceptable, each roll of
extrusion sheets would be packed and properly labelled. QC equipment used to check the
thickness and weight of the extrusion sheets are described in Section 5.4.12 of this
Prospectus.
The extrusion sheet rolls are stored until they are required for the thermo-vacuum forming
process, or delivered to customers. The extrusion sheet rolls must be stored in a spacious,
dry area with room temperature of ±30ºC, to prevent damage from heat, humidity and
contamination. Our warehouse meets this requirement.
29
RESEARCH & DEVELOPMENT
The company leverages on core technological expertise that it has acquired over many
years in plastic thermo-forming to increase the value of SCGM Brand and to stimulate new
demand by developing innovative, high-quality products and providing excellent services.
The company has cultivated an excellent global reputation for original mould design and
producing newer cost effective packaging solutions for consumers.
The next stage in the SCGM brand evolution is to produce plastic resins using recycle
materials to support the lifestyle consciousness for consumers wanting to go green with
their packaging.
SCGM Research and Development is planning to embark on projects which will satisfy the
needs of consumers wanting to go green. Therefore, to further boost its presence as an
environment friendly company, SCGM will work with international experts as well as
leveraging on its core technologies to support future business growth. SCGM invests in
employee trainings to ensure that core skills are passed on and nurtured within its
workforce.
Other areas of R&D include programs to maintain and upgrade technologies for product
development and manufacturing. These efforts strengthen the SCGM Brand and boost the
value of the Company‟s intellectual property and other intangible assets.
R&D contribution to
brand and technology
developments
30
OUR MISSION STATEMENT
31
STATEMENT ON CORPORATE GOVERNANCE
The Board of SCGM Bhd (“the Company” or “SCGM”) is pleased to report to the
shareholders on the manner the Group has applied the Principles, and the extent of
compliance with the Best Practices of good corporate governance as set out in Part 1 and
Part 2 respectively of the Malaysian Code on Corporate Governance (“the Code”) pursuant
to Paragraph 15.25 of the Bursa Malaysia Securities Berhad (“Bursa Malaysia”) Main
Market Listing Requirements (“Main LR”). The Group recognises that the implementation
of the Best Practices set out in the Code is an on-going process, thus the Company strives to
ensure that the areas of the Code which have yet to be implemented are given due attention.
A. THE BOARD OF DIRECTORS
1. The Board and its Responsibilities
The Board consists of seven (7) members comprising the Executive Chairman/Managing
Director, three (3) Executive Directors and three (3) Independent Non-Executive Directors.
The present Board composition complies with the Listing Requirements of the Bursa
Malaysia.
The role of the Executive Chairman is to ensure a balance of power and authority. The
current Board, which comprised of professionals drawn from various backgrounds, with
wide experience and knowledge, provides the relevant skills, expertise and experience for
making sound investment decisions and manage the Group's business operations.
The Executive Chairman and Executive Directors are responsible for making and
implementing operational decisions and running the Group's day to day business. The Non-
Executive Directors support the skills and experience of the Executive Chairman by
reviewing and approving strategy and policy based on their knowledge and experience of
similar and other business fields. While the Board is responsible for creating the framework
and policies within which the Group should be operating, the management is accountable
for the execution of the expressed policies and attainment of the Group‟s expressed
corporate objectives. This demarcation reinforces the supervisory role of the Board.
The Board also assumes various functions and responsibilities that are required of them by
regulatory authorities, as specified in guidelines and directives issued from time to time.
The profiles of the Directors are set out on pages 8 to 10 in this Annual Report.
2. Board Meetings
Board meetings are scheduled in advance at the beginning of the new financial year to
enable Directors to plan ahead and fit the year‟s meeting into their own schedule. The
Board meets at least four times a year. Special Board meetings to deliberate on corporate
proposals or urgent issues which require the Board‟s consideration will be held as and when
necessary. At each regularly scheduled meeting, there is a financial and business review
and discussion. Items reviewed would include business performance of the Group, against
plan previously approved by the Board, review and approve quarterly and annual financial
32
statements, corporate exercises and other proposals that require the approval of the Board.
Senior management and advisers may be invited to attend Board meetings, where
necessary, to provide additional information and insights on the relevant agenda items
tabled at Board meetings.
The Board met four (4) times during the financial year ended 30 April 2011. Details of each
director‟s attendance for the financial year ended 30 April 2011 are as follows:-
Name Attendance
Dato‟ Lee Hock Seng 4/4
Lee Hock Chai 4/4
Lee Hock Guan 4/4
Lee Hock Meng 4/4
Tang Nai Soon 4/4
Amrik Singh Harcharan Singh 4/4
Wong Tun Boon 4/4
3. Supply of Information
The agenda and a full set of Board papers for consideration are distributed well before
meetings of the Board to ensure that Directors have sufficient time to read and be properly
prepared for discussion at the meetings. The Board members are supplied with full and
timely information to enable them to discharge their duties.
All Directors have full and complete access to the information and are entitled to obtain full
disclosure from the management. In addition, they also have access to the advice and
services of the Company Secretary who is responsible for ensuring that Board Meeting
procedures are followed and that applicable rules and regulations are complied with.
Independent professional advice is also available to them, where necessary, at the
Company's expense.
The proceedings and resolutions reached at each Board meeting are recorded in the Minutes
Book kept at the registered office. Besides Board meetings, the Board also exercises control
on matters that requires its approval through the circulation of Directors‟ resolutions.
4. Appointment to the Board
In the past, the appointments of the Directors were solely made by the Board. In adopting
the Best Practice of the Code, the Nomination Committee was established on 26 December
2007.
33
Currently, the present members of the Nomination Committee are as follows:
a. Mr. Tang Nai Soon (Chairman)
b. Mr. Amrik Singh Harcharan Singh
c. Mr. Wong Tun Boon
The Nomination Committee serves to ensure that the Company has an effective Board
comprising Directors of the required mix of skill, experience and other qualities including
core competencies. This Committee shall be responsible for identifying, recruiting and
recommending suitable candidates for directorship as well as to annually assess the
effectiveness of the Board as a whole.
The Nomination Committee will hold a meeting at least once a year. Additional meetings
can be scheduled if considered necessary by the Chairman of the Committee.
5. Re-election
In accordance with the Company's Articles of Association, one-third (1/3) of the Directors
shall retire by rotation each financial year, and they may, offer themselves for re-election at
the Annual General Meeting. An election of the Directors of the Company shall take place
every year and all the Directors of the Company shall retire from office once at least in
each three (3) years but shall be eligible for re-election. Directors appointed by the Board to
fill vacancies are subject to retirement and election by the shareholders at the next Annual
General Meeting following their appointments.
6. Directors' Training
All the Directors have completed the Mandatory Accreditation Programme (MAP) within
the period stipulated. The Board members shall appraise and keep abreast with the
developments in the regulations and statutes relevant to the industry and to further enhance
their skills and knowledge by attending the relevant seminars, training programmes,
conferences, etc, from time to time.
Description of the type of training attended by the Directors for financial year ended 30
April 2011 are as follows:-
Seminar/Training Programme
Dato‟ Lee Hock Seng
HACCP Awareness and Internal Auditing training by
SQC Consulting Group
ISO 9001:2008 Awareness and Internal Auditing
training by SQC Consulting Group
Lee Hock Chai
HACCP Awareness and Internal Auditing training by
SQC Consulting Group
ISO 9001:2008 Awareness and Internal Auditing
training by SQC Consulting Group
Lee Hock Guan
HACCP Awareness and Internal Auditing training by
SQC Consulting Group
ISO 9001:2008 Awareness and Internal Auditing
training by SQC Consulting Group
34
Lee Hock Meng
HACCP Awareness and Internal Auditing training by
SQC Consulting Group
ISO 9001:2008 Awareness and Internal Auditing
training by SQC Consulting Group
Wong Tun Boon
Tax Planning for Employers and HR Manager by
MIA
Workshop on New Public Rulings by CTIM
National Tax Conference by LHDN
Siminar Percukaian Kebangsaan 2010 by LHDN
Amrik Singh
Harcharan Singh
An Update on the Progress of the Johor Infrastructure
The Board of Directors will continue to evaluate and determine the training needs that will
assist the Directors in discharging of their duties.
7. Relationship of the Board to Management
The Management maintains a very close relationship with the Board of Directors in order to
implement the objectives, policies and decisions made by the Board.
B. DIRECTORS' REMUNERATION
1. The Level and Make-up
The remuneration policy of the Company for the Executive Chairman and the Executive
Directors are structured to link rewards to corporate and individual performance in order to
retain staff with the relevant skills and experience to meet the challenges of the Group. For
Non-Executive Directors, the level of remuneration shall reflect the experience and level of
responsibilities undertaken by the particular Non-Executive Director concerned.
2. Remuneration Committee and Procedure
The remuneration policy of the Company for the Executive Chairman and the Executive
Directors shall be recommended by the Remuneration Committee for the Board‟s approval
with the Directors concerned abstaining from deliberations and voting on decisions in
respect of their individual remuneration. The fees payable to the Independent Non-
Executive Directors shall from time to time be determined by an ordinary resolution of the
Company in general meeting.
In compliance with the Code, the Remuneration Committee was established on 19
December 2007. Currently the present members of the Remuneration Committee are as
follows:
a. Mr. Wong Tun Boon (Chairman)
b. Dato‟ Lee Hock Seng
c. Mr. Tang Nai Soon
35
This Committee is responsible in assessing the appropriate remuneration level and ensuring
that the remuneration of each of the Board member reflects the level of performance and
responsibility taken.
The Committee meets at least once a year. Additional meetings can be scheduled if
considered necessary by the Chairman of the Committee. No Director shall take part in
decisions pertaining to his own remuneration.
3. Disclosure
The details of the Directors' remuneration for the financial year ended 30 April 2011 in
respective bands of RM50,000 are as follows: -
Range of Remuneration Executive Non-Executive
RM 50,000 & below - 3
RM 500,001 to RM 550,000 4 -
The aggregate remuneration of the Directors is categorised below:
Salaries & Allowances (RM) Fees (RM) Total (RM)
Executive 2,081,022 - 2,081,022
Non-Executive 2,400 60,000 62,400
C. RELATIONSHIP WITH SHAREHOLDERS
The Board maintains an effective communications policy that enables both the Board and
the management to communicate effectively with its shareholders and the public. The
policy effectively interprets the operations of the Company and the Group to the
shareholders and accommodates feedback from shareholders, which are factored into the
Group's business decision.
The Board communicates information on the operations, activities and performance of the
Group to the shareholders, stakeholders and the public through the following:
(i) The Annual Report, which contains the financial and operational review of the
Company and the Group's business, corporate information, financial statements and
information on Audit Committee and Board of Directors; and
(ii) Various announcements made to the Bursa Malaysia, which includes announcements
on quarterly results.
(iii) The Website.
The Annual General Meeting serves as an important means for shareholders'
communication. Notice of the Annual General Meeting and Annual Reports are sent to
shareholders twenty one (21) days prior to the meeting. At each Annual General Meeting,
the Board presents the performance and progress of the Company and the Group and
provides shareholders with the opportunity to raise questions pertaining to the Group. The
Chairman and the Board will respond to the questions raised by the shareholders during the
Annual General Meeting.
36
The Board has ensured each item of special business included in the notice will be
accompanied by an explanatory statement on the effects of the proposed resolution.
D. ACCOUNTABILITY AND AUDIT
The Board aims to present a balanced and understandable assessment of the Company and
the Group's position and prospect through the annual financial statements and quarterly
announcements of results to the Bursa Malaysia. The Directors are responsible in ensuring
that the annual financial statements are prepared in accordance with the provisions of the
Companies Act, 1965 and applicable approved accounting standards in Malaysia.
1. Audit Committee
The Board is assisted by the Audit Committee to oversee the financial reporting processes
and the quality of the financial reporting of the Group. The Audit Committee holds
quarterly meetings to review matters including the Group‟s financial reporting, the audit
plans for the year as well as to deliberate the findings of the internal and external auditors.
The current members of the Audit Committee are as follows:
1. Mr. Wong Tun Boon (Chairman)
2. Mr. Tang Nai Soon
3. Mr. Amrik Singh Harcharan Singh
The composition of the Audit Committee is in compliance with the Code of Corporate
Governance and Main LR, which require that all the Directors on the Audit Committee to
be independent.
Full details of the composition, complete terms of reference and the activities of the Audit
Committee during the financial year are set out in the Audit Committee Report included in
this Annual Report.
2. Financial Reporting
The Directors consider that in preparing the financial statements, the Company has adopted
appropriate accounting policies, consistently applied and supported by reasonable and
prudent judgments and estimates and all applicable approved accounting standards have
been followed in order to present a true and fair view of the state of affairs of the Company
and the Group as at the end of the financial year and of the profit or loss for the year.
The Directors, in preparation of the financial statements, have requested the Auditors to
take whatever steps and to undertake whatever inspections they consider to be appropriate
to enable them to render their audit report. The Directors are responsible to ensure the
annual financial statements are prepared in accordance with the provision of the
Companies‟ Act, 1965 and applicable approved accounting standards in Malaysia.
A statement by the Directors of their responsibilities in preparing the financial statements is
set out separately on page 51 of this Annual Report.
37
3. Relationship with Auditors
The Audit Committee always maintain a transparent and professional relationship with the
external and internal Auditors. The external and internal Auditors attend Audit Committee
Meetings of the Company whenever requested to do so. From time to time, the external and
internal Auditors highlight to the Audit Committee and the Board on matters that require
their attention.
The external Auditors are also present at the Company's Annual General Meeting and they
work closely with the Board in attending to questions raised by shareholders, specifically in
relation to the financial reports of the Company.
4. Internal Control
The Directors acknowledge their responsibilities for maintaining a sound system of internal
control to safeguard shareholders' investment and the Group's assets. The internal control
system covers not only financial controls but operational and compliance controls. The
internal control system is designed to enable the Company and the Group to manage the
risk of failure to achieve business objectives. The internal control system is designed to
provide reasonable and not absolute assurance against material misstatement and losses.
The Group is continuously looking into the adequacy and integrity of its systems of internal
control.
The Directors are currently taking steps to enhance the Group's overall control system
which include:
• Clearly established policies and procedures;
• Regular review and update of policies and procedures to meet business needs;
• Clearly defined job responsibilities and appropriate segregation of duties;
• Engaging outsourced internal auditors to review the internal control systems.
Processes shall also be established for identifying, evaluating and managing the significant
risks facing the Group in accordance with the guidance “Statement on Internal Control:
Guidance for Directors of Public Listed Companies” issued by the Bursa Malaysia.
5. Statement of Compliance with the Best Practices of the Code
The Company is committed to achieving high standards of corporate governance
throughout the Group and to the highest level of integrity and ethical standards in all its
business dealings. The Board considers that it has complied throughout the financial year
with the Best Practices as set out in the Code.
6. Statement of Directors' Responsibilities for Preparing the Annual Audited
Accounts
In accordance with the requirements in Paragraph 15.26 (a) of the Bursa Malaysia
Securities Berhad Main Market Listing Requirements, the Board of Directors are required
to issue a statement explaining their responsibility for preparing the annual audited
financial statements.
38
The Directors are responsible for the preparation of the financial statements for each
financial year which give a true and fair view of the state of affairs of the Company and of
the Group as at the financial year end and of the results and cashflows of the Company and
of the Group for the financial year then ended.
In ensuring the preparation of these financial statements, the Directors have:
• Adopted suitable accounting policies and apply them consistently;
• Made judgments and estimates that are reasonable and prudent;
• Ensures that applicable approved accounting standards have been complied with and
confirm that the financial statements have been prepared on a going concern basis.
The Directors are accountable to keep all the accounting and other statutory records for a
requisite statutory period of time. The directors are to ensure that the financial statements
are prepared in compliance with approved accounting standards and the provisions of the
Companies Act, 1965. The Directors are also responsible to safeguard the assets of the
Company and of the Group and to prevent and detect fraud and other irregularities.
39
STATEMENT OF INTERNAL CONTROL
The Malaysian Code on Corporate Governance stipulates that the Board of Directors of
listed companies should maintain a sound system of internal control to safeguard
shareholders‟ investments and the Group‟s assets. The Board of Directors is pleased to
provide the following Statement of Internal Control, which is made pursuant to the Listing
Requirements with regards to the nature and scope of internal control within the Group
during the financial year.
Responsibility
The Board of Directors recognizes the importance of a sound system of internal control and
effective risk management practices to good corporate governance. The Board affirms its
overall responsibility for maintaining sound systems of internal control within the Group
covering financial, operational, compliance and risk management issues, and for reviewing
regularly the adequacy and effectiveness of such systems within the Group. The Board, in
the discharge of its stewardship responsibilities, is committed to identify key risks in which
companies within the Group are exposed and will introduce appropriate systems
progressively to manage such risks.
Notwithstanding that, there are, however, limitations inherent in any system of internal
control, and such system is designed to manage rather than eliminate the risk that may
impede the achievement of business objectives. It should be appreciated that it could
therefore only provide reasonable and not absolute assurance against material misstatement
of management or financial information or financial losses or frauds. It should be further
noted that the cost of control procedures should not exceed the benefits to be derived from
such procedures.
The internal audit adopts a risk-based approach in developing its audit plan which
addresses the core auditable areas of the Group based on the risk profile established by the
Risk Management Committee. Scheduled internal audits shall be carried out by the internal
auditors based on the audit plan presented to and approved by the Audit Committee to
provide independent and objective reports on the state of internal control of the operating
units. The internal audit function commences its work in the financial year ending 30 April
2011. The audit focuses on areas with high risk as well as areas identified with inadequate
controls to ensure the effectiveness of the controls in mitigating those risks in the detail risk
registers. The internal auditors will follow up with the management in the implementation
of action plans recommended to improve areas where control deficiencies identified during
the internal audits.
The Board affirms that it is ultimately responsible for the adequacy and integrity of the
Group‟s systems of internal control, which includes the establishment of an appropriate
control environment and reporting framework. Since there are limitations, which are
inherent in any system of internal control, this system is designed to manage rather than
eliminate the risk of failure to achieve the Group‟s corporate objectives. Accordingly, the
system can only provide reasonable and not absolute assurance against material
misstatement or loss. The system of internal control encompasses financial, organizational,
operational and compliance controls and risk management.
40
The Board confirms that there is an on-going process for identifying, evaluating and
managing significant risks faced by the Group.
Risk Management
The Board recognises the need for an effective risk management practice and to maintain a
sound system of internal control. Hence, the Board has formalized and established the risk
management framework for the Group to create awareness among all management staff on
the risk management process. Workshop and interviews were conducted with the senior
management staff of the Group to identify and evaluate the significant risks faced by the
Group.
The Board has set up a Risk Management Committee (“RMC”) which comprises of Senior
Management and Head of Departments of the Group to identify, evaluate, and manage
significant risks faced by the Group as well as report to the Board on a regular basis. Detail
risk registers of the principal risks and controls have been created and a risk profile for the
Group has been developed and is reviewed by the Risk Management Committee and Board
of Directors on an annual basis.
The RMC meet from time to time to identify and manage risks to a manageable level. The
risks are being continually monitored and appropriate actions taken to address any change
in existing risks or new risks identified as part of an on-going proactive control measure.
The objectives of the risk management framework are:
• To systemise a continuous process for identifying, evaluating and managing the
significant risks faced by the Group,
• To provide a platform for communication, of risk and control profiles and the
management action plans to manage the risks, between Senior Management and the
Board,
• To nominate key management personnel to prepare action plans to address any risk and
control issues,
• To inculcate an organization-wide culture of risk awareness and management and embed
internal controls and risk management further into the operations of the Group‟s business,
• To establish a documented process of control monitoring and improvement plans.
The Board recognized that risk management can become a strategic competitive advantage
if it is used to identify specific actions that enhance performance and optimize risk. It can
also influence business strategy by identifying potential adjustments related to previously
unidentified opportunities and risks. As much as risks give rise to the need for controls, we
consciously look out for opportunities for improvement arising from risks and uncertainties.
Risk management has been adopted also as a strategic tool in strategy formulation,
investment and resource allocation.
The Board, throughout the financial year under review, has identified, evaluated and
managed the significant risks faced by the Group through monitoring of the Group‟s
operational efficiency and performance at its Board Meeting. The Board has assigned to the
Audit Committee the duty of reviewing and monitoring the effectiveness of the Group‟s
internal control system. At operation levels, risks were discussed on ad hoc basis during the
periodic management operations meetings.
41
The system of internal control is designed to manage rather than eliminate the risk of
failure to achieve the Group‟s business objectives. Accordingly, the internal control system
can only provide reasonable and not absolute assurance against material misstatement or
loss.
Internal Audit Function
The Board recognises the need for an internal audit function and has engaged the services
of an independent professional accounting and consulting firm, Messrs TT Corporate
Consultants Sdn Bhd (“TTC”) to provide much of the assurance it requires on the
effectiveness as well as the adequacy and integrity of the Group‟s systems of internal
control. The internal auditors is focusing on risk-based approach to the implementation and
monitoring of internal controls. The monitoring process will also form the basis for
continually improving the risk management process in the context of the Group's overall
goals.
The internal auditors will provide the Audit Committee of the Company with an
independent assessment of the efficiency and adequacy of the internal control systems of
the Group. This will be done by reviewing and reporting on any material deviations and
non-compliances of policies and control procedures implemented by management and the
Board.
A road map on risk and Enterprise Risk Management guidelines were presented by the
Internal Auditor in 2009. The Statement on Internal Control which provides an overview of
the state of internal controls within the Group is set out on page 39 of this Annual Report.
A summary of the internal audit activities carried out includes:
Prepared a road map on risk management.
Prepared guidelines on audit process flow in the Company.
Reviewed the Internal Control System of the Company.
Reviewed any weaknesses in the Internal Control System of the Company.
In particular, TTC appraised and contributed towards improving the Group‟s risk
management and control systems and reports to the Audit Committee. In assessing the
adequacy and effectiveness of the system of internal control and financial control
procedures of the Group, the Audit Committee reports to the Board on its activities,
significant audit results or findings and the necessary recommendations or actions needed
to be taken by management to rectify those issues.
The internal audit work plan, which reflects the risk profile of the Group‟s major business
sectors is routinely reviewed and approved by the Audit Committee. The scope of TTC‟s
function covered the audit and review of governance, risk assessment, compliance,
operational and financial control across all business units.
TTC assisted the Audit Committee in discharging its duties and responsibilities. They
continued to independently monitor the compliance with policies and procedures and the
effectiveness of the internal control systems and highlights significant findings and
corrective measures in respect of any non-compliance. They reviewed the controls in the
key activities of the Group‟s business based on the annual internal audit plan and report
42
audit findings to the Audit Committee for review annually. The management is responsible
for ensuring that corrective actions on reported weaknesses are addressed within a specific
time frame. However for the financial year 2009, focus was on the management of
business, operation and liquidity risks and minimum testing was done on internal controls
except for the regular checking of inventory. Audit work covered for the financial year
ending 30 April 2010 were the following:
Material planning and purchasing
Supplier selection and evaluation
Receiving of materials and payment
Inventory management & quality control
Follow-up on the audit findings for the abovementioned areas were carried out in the
second half of the financial year 2011. The findings were not material in nature and
improvements were carried out.
Audit work covered for the financial year ending 30 April 2011 were the following:
Marketing and order entry
Credit Authorisation and customer evaluation
Shipping and delivery of goods
Collection
For the financial year ended 30 April 2011, fees incurred in respect of internal audit
reviews performed by the professional service amounted to RM12,000.00
Other Risks and Control Processes
The Group also has in place an organizational structure with defined line of responsibility
and delegation of authority. A process of hierarchical reporting has been established, which
provides for a documented and auditable trail of accountability. The procedures include the
establishment of limits of authority and are relevant across the Group‟s operations and
provide for continuous assurance to be given at increasingly higher levels of management,
and finally to the Board. The process is now facilitated by internal audit, which also
provides a degree of assurance as to validity of the systems of internal control. Planned
corrective actions are independently monitored for timely completion.
The Managing Director reports to the Board on significant changes in the business and the
external environment, if any. The Group Financial Controller provides the Board with
quarterly financial information. Where areas of improvement in the system are identified,
the Board considers the recommendation made by the Audit Committee and the
Management.
Control Environment
• Clear reporting responsibilities are set out in the organisational structure.
• Annual budgets are prepared by each operating unit and consolidated by the Group Finance
function. These are reviewed before they are tabled to the Management Committee, Audit
Committee and the Board for approval.
43
• Monthly operation meetings are formal platforms for Management to set its tone on control
culture and emphasise on Group‟s strategic directions as agreed upon by the Board.
Risk Assessment
• The Board and management are aware of its overall responsibility in managing the Group‟s
enterprise risk management.
• Business risks and risk mitigating strategies are discussed among the Executive Directors
and the Head of Business units during its monthly management meetings held at the Head
Office.
Control Activities
• Procedures at subsidiary levels, where relevant, are continuously reviewed for relevancy to
business processes and activities as well as for uniformity and standardisation of practices
across the Group.
• Periodic and annual audit reviews by internal and external quality auditors were conducted
to ensure compliance with and continuous improvement of the ISO Quality Standards
certification as assurance to the quality standards of products and services provided by the
Group.
Information and Communication
• Management promotes good working relationship at all levels of employees by ensuring
information and communication channels are open and sinuous. Relevant information are
shared both downwards (from Management to employees) and upwards (from employees to
Management) for proper attention and further action.
• Regular management meetings are conducted at the Group and subsidiary levels and are
attended by all heads of departments to discuss and resolve issues or challenges faced with
regard to operational and administrative matters. The proceedings of these meetings are
minuted for further action and reference.
Monitoring
• Management maintains close monitoring of the Group operations through submission of
monthly reports and constant communication with the heads of the respective subsidiaries.
• Management also constantly monitors the gaps and highlighted issues through the conduct
of follow-up audits and had showed its commitment to improve on current processes and
internal controls.
• During the financial year, the Board and Audit Committee have diligently continued in its
role as external overseers of internal controls and monitors performances of the Group‟s
quarterly results announcements.
Control Weaknesses
During the year under review, nothing has come to the attention of the Board which would
result in material losses or contingencies requiring separate disclosure in the Annual
Report. There were no material losses incurred during the financial year under review as a
result of weaknesses in internal control, and the Board and Management continue to take
measures to strengthen the control environment within the Group.
This statement on internal control has been reviewed by the external auditors and the
Board of Directors.
44
ADDITIONAL INFORMATION
1. Utilisation of Proceeds
The total gross proceeds arising from the Public Issue and the Restricted Issue were fully
utilised in the previous financial year.
2. Share Buy-Backs
The Company had not undertaken any share buy-back exercise during the financial year.
3. Options, Warrants or Convertible Securities
There were no options, warrants or convertible securities exercised during the financial
year.
4. Depository Receipt Programme
The Company did not sponsor any depository receipt programme during the financial year.
5. Sanctions and/or Penalties
There were no sanctions or penalties imposed on the Company during the financial year.
6. Variation of Results
There were no variation in results from any profit estimates, forecasts or projections or
unaudited results released which differed by 10% or more from the audited results.
7. Profit Guarantee
There was no profit guarantee made during the financial year.
8. Revaluation Policy
The Company did not adopt any revaluation policy on landed properties during the
financial year.
9. Non-Audit Fees
An amount totaling RM 3,500.00 for non-audit fees was paid to the external auditors,
Messrs SJ Grant Thornton during the financial year.
10. Material Contracts involving Directors’ and Major Shareholders’ Interest
There were no material contracts entered into by the Company and its subsidiaries
involving the Directors‟ and major shareholders‟ interest.
45
11. Recurrent Related Party Transactions of a Revenue or Trading Nature (“RRPT”)
The Company did not seek for Shareholders‟ mandate to enter into recurrent related party
transactions (“RRPT”) of a revenue or trading nature at the Annual General Meeting but
will monitor closely the transaction value of the RRPT as per paragraph 10.09 of the Main
Market Listing Requirements.
46
SCGM BERHAD (Incorporated in Malaysia)
DIRECTORS’ REPORT
The Directors of SCGM Berhad have pleasure in submitting their report together with the
audited financial statements of the Group and of the Company for the financial year ended
30 April 2011.
PRINCIPAL ACTIVITIES
The Company is principally engaged in investment holding.
The principal activities of the subsidiary company are disclosed in Note 7 to the Financial
Statements.
There have been no significant changes in the nature of these activities of the Company and
its subsidiary company during the financial year.
FINANCIAL RESULTS
Group Company
RM RM
Net profit for the financial year 6,359,974 2,295,797
Attributable to:-
Owners of the parent 6,359,974 2,295,797
DIVIDENDS
The amount of dividends paid and declared since the end of the last financial year were as
follows:-
RM
First and final tax exempt dividend of 3.00 sen per ordinary share in
respect of the financial year ended 30 April 2010 and paid on 11
October 2010.
2,400,000
47
DIVIDENDS (CONT’D)
At the forthcoming Annual General Meeting, a first and final tax exempt dividend, in
respect of the financial year ended 30 April 2011, of 3.00 sen per ordinary share on
80,000,000 ordinary shares amounting to a dividend payable of RM2,400,000 will be
proposed for shareholders‟ approval. The financial statements for current financial year do
not reflect this proposed dividend. Such dividend, if approved by the shareholders, will be
accounted for in equity as an appropriation of unappropriated profit in the financial year
ending 30 April 2012.
RESERVES AND PROVISIONS
There were no material transfers to or from reserves or provisions during the financial year
other than those disclosed in the financial statements.
ISSUE OF SHARES AND DEBENTURES
There were no shares or debentures issued during the financial year.
INFORMATION ON THE FINANCIAL STATEMENTS
Before the financial statements of the Group and of the Company were made out, the
Directors took reasonable steps:-
to ascertain that action had been taken in relation to the writing off of bad debts and the
making of provision for doubtful debts and satisfied themselves that there were no
bad debts to be written off and adequate provision had been made for doubtful
debts; and
(b) to ensure that any current assets which were unlikely to be realised in the ordinary
course of business including their values as shown in the accounting records of the
Group and of the Company have been written down to an amount which they might
be expected so to realise.
At the date of this report, the Directors are not aware of any circumstances:-
(a) which would render it necessary to write off any bad debts or the amount of
provision for doubtful debts in the financial statements of the Group and of the
Company inadequate to any substantial extent; or
(b) which would render the values attributed to current assets in the financial statements
of the Group and of the Company misleading; or
(c) which have arisen which render adherence to the existing method of valuation of
assets or liabilities of the Group and of the Company misleading or inappropriate.
48
INFORMATION ON THE FINANCIAL STATEMENTS (CONT’D)
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, in the opinion
of the Directors, will or may affect the ability of the Group and of the Company to meet its
obligations as and when they fall due.
At the date of this report, there does not exist:-
(a) any charge on the assets of the Group and of the Company which has arisen since
the end of the financial year which secures the liability of any other person; or
(b) any contingent liability of the Group and of the Company which has arisen since the
end of the financial year.
OTHER STATUTORY INFORMATION
The Directors state that:-
At the date of this report, they are not aware of any circumstances not otherwise dealt with
in this report or the financial statements which would render any amount stated in the
financial statements misleading.
In the opinion of the Directors:-
(a) the results of 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; and
(b) there has not arisen in the interval between the end of the financial year and the date
of this report any item, transaction or event of a material and unusual nature likely
to affect substantially the results of operations of the Group and of the Company for
the current financial year in which this report is made.
SIGNIFICANT EVENT AFTER THE REPORTING DATE
Significant event after the reporting date is disclosed in Note 29 to the Financial
Statements.
DIRECTORS OF THE COMPANY
The Directors in office since the date of the last report are:-
Dato‟ Lee Hock Seng (Executive Chairman / Managing Director)
Lee Hock Chai (Executive Director)
Lee Hock Guan (Executive Director)
Lee Hock Meng (Executive Director)
Amrik Singh Harcharan Singh (Independent Non-Executive Director)
Tang Nai Soon (Independent Non-Executive Director)
Wong Tun Boon (Independent Non-Executive Director)
49
DIRECTORS OF THE COMPANY (CONT’D)
According to the Register of Directors‟ Shareholdings, the beneficial interests of those who
were Directors at the end of the financial year in the shares of the Company are as follows:-
Ordinary shares of RM0.50 each
As at As at
1.5.2010 Bought Sold 30.4.2011
Dato‟ Lee Hock Seng
- direct interest 8,303,141 - - 8,303,141
- indirect interest 24,000,000 - - 24,000,000
Lee Hock Chai
- direct interest 5,928,953 - - 5,928,953
- indirect interest 24,000,000 - - 24,000,000
Lee Hock Guan
- direct interest 5,928,953 - - 5,928,953
- indirect interest 24,000,000 - - 24,000,000
Lee Hock Meng
- direct interest 5,928,953 - - 5,928,953
- indirect interest 24,000,000 - - 24,000,000
Amrik Singh Harcharan Singh 80,000 - - 80,000
Tang Nai Soon 400,000 - - 400,000
Wong Tun Boon 20,000 - - 20,000
By virtue of Dato‟ Lee Hock Seng, Mr. Lee Hock Chai, Mr. Lee Hock Guan and Mr. Lee
Hock Meng‟s direct and indirect interest in the Company, they are also deemed to have
interest in the shares of the subsidiary company to the extent that the Company has an
interest under Section 6A of the Companies Act, 1965.
DIRECTORS’ BENEFITS
During and at the end of the financial year, no arrangements subsisted to which the
Company is a party, with the object or objects of enabling the Directors of the Company to
acquire any benefits by means of the acquisition of shares in or debentures of the Company
or any other body corporate.
Since the end of the previous financial year, no Director has received or become entitled to
receive any benefit (other than as disclosed in Notes 22 and 25 to the Financial Statements)
by reason of a contract made by the Company or a related corporation with the Director or
with a firm of which he is a member, or with a company in which he has a substantial
financial interest.
50
AUDITORS
Messrs SJ Grant Thornton have expressed their willingness to continue in office.
Signed on behalf of the Board of Directors in accordance with a resolution of the Directors
dated 25 August 2011.
............................................................... )
DATO‟ LEE HOCK SENG )
)
)
)
)
)
) DIRECTORS
)
)
)
)
)
............................................................... )
LEE HOCK GUAN )
Johor Bahru
51
SCGM BERHAD (Incorporated in Malaysia)
STATEMENT BY DIRECTORS
In the opinion of the Directors, the financial statements set out on pages 55 to 112 are
drawn up in accordance with the provisions of Companies Act, 1965 and Financial
Reporting Standards in Malaysia so as to give a true and fair view of the financial position
of the Group and of the Company as at 30 April 2011 and of their financial performance
and cash flows of the Group and of the Company for the financial year then ended.
The supplementary information as set out in Note 34, page 112 is 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
Requirement, as issued by the Malaysian Institute of Accountants and the directive of Bursa
Malaysia Securities Berhad.
On behalf of the Board
................................................................... ……...........................................................
DATO‟ LEE HOCK SENG LEE HOCK GUAN
Johor Bahru
25 August 2011
STATUTORY DECLARATION
I, Folk Jee Yoong, being the Officer primarily responsible for the financial management of
SCGM Berhad, do solemnly and sincerely declare that to the best of my knowledge and
belief, the financial statements set out on pages 55 to 112 are correct and I make this
solemn declaration conscientiously believing the same to be true and by virtue of the
provisions of the Statutory Declarations Act, 1960.
Subscribed and solemnly declared by )
the abovenamed at Johor Bahru in the )
State of Johor this day of )
25 August 2011 ) ...............................................................
FOLK JEE YOONG
Before me:
Commissioner for Oaths
52
INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF
SCGM BERHAD (Incorporated in Malaysia)
Company No: 779028 H
Report on the Financial Statements
We have audited the financial statements of SCGM Berhad, which comprise the statements of
financial position as at 30 April 2011, and the statements of comprehensive income, statements of
changes in equity and statements of cash flows for the financial year then ended, and a summary of
significant accounting policies and other explanatory notes, as set out on pages 61 to 112.
Directors’ Responsibility for the Financial Statements
The Directors of the Company are responsible for the preparation of financial statements that give a
true and fair view in accordance with Financial Reporting Standards and the Companies Act, 1965
in Malaysia, and 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
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 entity‟s
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 entity‟s 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.
53
Company No: 779028 H
Report on the Financial Statements (cont’d)
Opinion
In our opinion, the financial statements have been properly drawn up in accordance with Financial
Reporting Standards and 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 30 April 2011 and of their financial
performance and cash flows for the financial year then ended.
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 subsidiary company have been properly kept in accordance with
the provisions of the Act.
b) We are satisfied that the financial statements of the subsidiary company that have been
consolidated with the Company‟s financial statements are in form and content appropriate
and proper for the purposes of the preparation of the financial statements of the Group and we
have received satisfactory information and explanations required by us for those purposes.
c) The auditors‟ report on the financial statements of the subsidiary company did not contain
any qualification or any adverse comment made under Section 174 (3) of the Act.
Other Reporting Responsibilities
The supplementary information set out in Note 34 on page 112 is disclosed to meet the requirement of
Bursa Malaysia Securities Berhad and is not part of the financial statements. 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.
54
Company No: 779028 H
Other Matters
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.
SJ GRANT THORNTON TAN CHEE BENG
(NO. AF: 0737) CHARTERED ACCOUNTANT
CHARTERED ACCOUNTANTS (NO: 2664/02/13(J))
Johor Bahru
25 August 2011
55
SCGM BERHAD
(Incorporated in Malaysia)
STATEMENTS OF FINANCIAL POSITION AS AT 30 APRIL 2011
Group Company Note 2011 2010 2011 2010
RM RM RM RM
ASSETS
Non-current assets
Property, plant and equipment 4 33,769,708 32,085,071 - -
Prepaid land lease payments 5 177,368 179,555 - -
Investment properties 6 530,000 530,000 - -
Investment in a subsidiary company 7 - - 30,427,000 30,427,000
_________ _________ _________ _________
Total non-current assets 34,477,076 32,794,626 30,427,000 30,427,000
Current assets
Inventories 8 14,940,041 11,117,222 - -
Trade receivables 9 19,181,377 15,687,756 - -
Other receivables 10 2,367,417 2,362,210 - -
Amount due from a subsidiary company 7 - - 13,523,378 13,534,258
Tax recoverable - 178,419 - -
Fixed deposits with licensed banks 11 272,635 2,171,315 164,652 230,601
Cash and bank balances 12 1,761,198 4,144,136 38,833 45,264
_________ _________ _________ _________
Total current assets 38,522,668 35,661,058 13,726,863 13,810,123
Total assets 72,999,744 68,455,684 44,153,863 44,237,123
EQUITY AND LIABILITIES
EQUITY Share capital 13 14,815,000 40,000,000 40,000,000 40,000,000
Share premium 14,075,000 3,937,345 3,937,345 1,637,345
Reverse acquisition reserve 14 (28,227,000) (28,227,000) - -
Unappropriated profit 41,530,763 37,570,789 2,465,782 2,569,985
_________ _________ _________ ________
Total equity 57,241,108 53,281,134 44,103,127 44,207,330
LIABILITIES
Non-current liabilities Deferred income - Government grant 15 45,800 89,296 - -
Borrowings 16 2,082,964 3,952,956 - -
Deferred tax liabilities 17 2,771,000 2,765,000 - -
Finance lease creditors 18 674,126 790,862 - -
________ ________ _________ ________
Total non-current liabilities 5,573,890 7,598,114 - -
The accompanying notes form an integral part of the financial statements.
56
SCGM BERHAD
(Incorporated in Malaysia)
STATEMENTS OF FINANCIAL POSITION AS AT 30 APRIL 2011 (CONT'D)
Group Company Note 2011 2010 2011 2010
RM RM RM RM
Current liabilities
Trade payables 19 4,151,940 1,051,752 - -
Other payables 20 2,620,495 4,308,345 49,335 29,793
Deferred income - Government grant 15 43,496 43,496 - -
Finance lease creditors 18 505,625 405,779 - -
Borrowings 16 2,837,837 1,767,064 - -
Tax payable 25,353 - 1,401 -
_________ ________ ________ ______
Total current liabilities 10,184,746 7,576,436 50,736 29,793
Total liabilities 15,758,636 15,174,550 50,736 29,793
Total equity and liabilities 72,999,744 68,455,684 44,153,863 44,237,123
The accompanying notes form an integral part of the financial statements.
57
SCGM BERHAD
(Incorporated in Malaysia)
STATEMENTS OF COMPREHENSIVE INCOME
FOR THE FINANCIAL YEAR ENDED 30 APRIL 2011
Group Company Note 2011 2010 2011 2010
RM RM RM RM
Revenue 21 75,069,599 67,717,054 2,500,000 2,500,000
Cost of sales (59,826,808) (51,817,078) - -
Gross profit 15,242,791 15,899,976 2,500,000 2,500,000
Other income 392,726 385,096 5,606 11,006
Selling and distribution expenses (3,317,112) (2,867,910) - -
Administration expenses (4,573,281) (4,450,189) (208,257) (197,530)
Other expenses (44,752) (467,681) - -
Finance costs (446,916) (453,947) - -
Profit before tax 22 7,253,456 8,045,345 2,297,349 2,313,476
Tax expense 23 (893,482) (1,390,008) (1,552) -
Net profit for the financial year 6,359,974 6,655,337 2,295,797 2,313,476
Other comprehensive income
for the financial year, net of tax - - - -
Total comprehensive income
for the financial year 6,359,974 6,655,337 2,295,797 2,313,476
Attributable to:-
Owners of the parent 6,359,974 6,655,337 2,295,797 2,313,476
Earnings per share attributable
to owners of the parent
Earnings per 50 sen share
- Basic (sen) 24 7.95 8.32
The accompanying notes form an integral part of the financial statements.
58
SCGM BERHAD
(Incorporated in Malaysia)
STATEMENTS OF CHANGES IN EQUITY
FOR THE FINANCIAL YEAR ENDED 30 APRIL 2011
Attributable to equity holders of the Company
Non-distributable Distributable
Reverse
Share Share acquisition Unappropriated Total
Capital premium reserve profit equity
RM RM RM RM RM
Group
Balance at 1 May 2009 40,000,000 3,937,345 (28,227,000) 32,915,452 8,625,797
Transaction with owners:
First and final tax exempt
dividend of 2.50 sen per share - - - (2,000,000) (2,000,000)
Total transaction with owners - - - (2,000,000) (2,000,000)
Total comprehensive income
for the financial year - - - 6,655,337 6,655,337
Balance at 30 April 2010 40,000,000 3,937,345 (28,227,000) 37,570,789 53,281,134
Transaction with owners:
First and final tax exempt
dividend of 3.00 sen per share - - - (2,400,000) (2,400,000)
Total transaction with owners - - - (2,400,000) (2,400,000)
Total comprehensive income
for the financial year - - - 6,359,974 6,359,974
Balance at 30 April 2011 40,000,000 3,937,345 (28,227,000) 41,530,763 57,241,108
The accompanying notes form an integral part of the financial statements.
59
SCGM BERHAD (Incorporated in Malaysia)
STATEMENTS OF CHANGES IN EQUITY
FOR THE FINANCIAL YEAR ENDED 30 APRIL 2011 (CONT'D)
Non-distributable Distributable
Share Share Unappropriated Total
Capital premium profit equity
RM RM RM RM
Company
Balance at 1 May 2009 40,000,000 1,637,345 2,256,509 43,893,854
Transaction with owners:
First and final tax exempt
dividend of 2.50 sen per share - - (2,000,000) (2,000,000)
Total transaction with owners - - (2,000,000) (2,000,000)
Total comprehensive income
for the financial year - - 2,313,476 2,313,476
Balance at 30 April 2010 40,000,000 1,637,345 2,569,985 44,207,330
Transaction with owners:
First and final tax exempt
dividend of 3.00 sen per share - - (2,400,000) (2,400,000)
Total transaction with owners - - (2,400,000) (2,400,000)
Total comprehensive income
for the financial year - - 2,295,797 2,295,797
Balance at 30 April 2011 40,000,000 1,637,345 2,465,782 44,103,127
The accompanying notes form an integral part of the financial statements.
60
SCGM BERHAD (Incorporated in Malaysia)
STATEMENTS OF CASH FLOWS
FOR THE FINANCIAL YEAR ENDED 30 APRIL 2011
Group Company
Note 2011 2010 2011 2010
CASH FLOWS FROM OPERATING ACTIVITIES
Profit before tax 7,253,456 8,045,345 2,297,349 2,313,476
Adjustments for:-
Allowance for impairment of receivables 41,901 226,017 - -
Allowance for impairment of receivables no longer required (56,942) (13,141) - -
Amortisation of deferred income - government grant (43,496) (43,496) - -
Amortisation of prepaid land lease payments 2,187 2,186 - -
Depreciation of property, plant and equipment 3,550,282 2,939,528 - -
Interest expense 446,916 453,947 - -
Interest income (28,209) (56,150) (5,606) (602)
Inventories written down 24,472 157,307 - -
Loss on disposal of property, plant and equipment - 4,419 - -
Property, plant and equipment written off 2,851 - - -
Reversal of inventories written down (150,967) - - -
Unrealised (gain)/loss on foreign exchange (204,185) 237,245 - -
Waiver of debts - (10,404) - (10,404)
Operating profit before working capital changes 10,838,266 11,942,803 2,291,743 2,302,470
Changes in working capital:-
Inventories (3,696,324) (653,899) - -
Receivables (3,295,192) (2,693,513) - -
Payables 1,427,928 3,080,298 19,542 8,293
Subsidiary company - - 10,880 (41,971)
Bills payables 978,302 - - -
Cash generated from operations 6,252,980 11,675,689 2,322,165 2,268,792
Tax paid (683,710) (552,776) ( 151) -
Net cash from/(used in) operating activities 5,569,270 11,122,913 2,322,014 2,268,792
CASH FLOWS FROM INVESTING ACTIVITIES
Interest received 28,209 56,150 5,606 602
Proceeds from disposal of property, plant and equipment - 1,500 - -
Purchase of property, plant and equipment A (3,152,770) (10,254,053) - -
Net cash (used in)/from investing activities (3,124,561) (10,196,403) 5,606 602
CASH FLOWS FROM FINANCING ACTIVITIES
Dividend paid (2,400,000) (2,000,000) (2,400,000) (2,000,000)
Interest paid (446,916) (453,947) - -
Repayment of finance lease creditors (2,101,890) (1,118,743) - -
Repayment of term loans (1,777,521) (1,344,854) - -
Drawdown of term loans - 1,100,000 - -
Net cash used in financing activities (6,726,327) (3,817,544) (2,400,000) (2,000,000)
CASH AND CASH EQUIVALENTS
Net (decrease)/increase (4,281,618) (2,891,034) (72,380) 269,394
At beginning of financial year 6,315,451 9,206,485 275,865 6,471
At end of financial year B 2,033,833 6,315,451 203,485 275,865
61
SCGM BERHAD (Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS - 30 APRIL 2011 1. GENERAL INFORMATION
The Company is principally engaged in investment holding.
The principal activities of the subsidiary company are disclosed in Note 7 to the Financial
Statements.
There have been no significant changes in the nature of these activities during the financial
year.
The Company is a public limited liability company, incorporated and domiciled in Malaysia.
The registered office of the Company is located at Level 15-2, Bangunan Faber Imperial Court,
Jalan Sultan Ismail, 50250 Kuala Lumpur. The principal place of business of the Company is
located at Lot 3304, Batu 24 ½, Jalan Kulai-Air Hitam, 81000 Kulai, Johor Darul Takzim.
The financial statements were authorised for issue by the Board of Directors in accordance with
a resolution of the Directors on 25 August 2011.
2. BASIS OF PREPARATION
2.1 Statement of Compliance
The financial statements of the Group and of the Company have been prepared in
accordance with the Companies Act, 1965 in Malaysia and Financial Reporting
Standards issued by the Malaysian Accounting Standards Board (“MASB”). At the
beginning of the current financial year, the Group and the Company adopted new and
revised Financial Reporting Standards (“FRSs”) which are mandatory for financial
periods beginning on or after 1 January 2010 as described fully in Note 2.4 to the
Financial Statements.
2.2 Basis of Measurement
The financial statements of the Group and of the Company are prepared under the
historical cost convention, unless otherwise indicated in the summary of significant
accounting policies.
2.3 Functional and Presentation Currency
The financial statements are presented in Ringgit Malaysia (RM) which is the Group‟s
and the Company‟s functional currency and all values are rounded to the nearest RM
except when otherwise stated.
62
2. BASIS OF PREPARATION (CONT’D)
2.4 Adoption of New/Revised Financial Reporting Standards (“FRSs”)
On 1 May 2010, the Group and the Company adopted the following new and amended
FRSs and IC Interpretations which are mandatory for annual financial period beginning
on or after 1 January 2010:-
1) FRS 7 - Financial Instruments: Disclosures 2) Amendments to FRS 7 - Financial Instruments: Disclosures 3) FRS 8 - Operating Segments 4) Amendment to FRS 8 - Operating Segments 5) FRS 101 - Presentation of Financial Statements
(Revised) 6) Amendment to FRS 107 - Statement of Cash Flows 7) Amendment to FRS 108 - Accounting Policies, Changes in
Accounting Estimates and Errors 8) Amendment to FRS 110 - Events After the Reporting Period 9) Amendment to FRS 116 - Property, Plant and Equipment 10) Amendment to FRS 117 - Leases 11) Amendment to FRS 118 - Revenue 12) Amendment to FRS 119 - Employee Benefits 13) Amendment to FRS 120 - Accounting for Government Grants and
Disclosure of Government Assistance 14) FRS 123 - Borrowing Costs 15) Amendment to FRS 123 - Borrowing Costs 16) Amendment to FRS 127 - Consolidated and Separate Financial
Statement: Cost of an Investment in a
Subsidiary, Jointly Controlled Entity or
Associate 17) Amendments to FRS 132 - Financial Instruments: Presentation 18) Amendments to FRS 134 - Interim Financial Reporting 19) Amendment to FRS 136 - Impairment of Assets 20) FRS 139 - Financial Instruments: Recognition and
Measurement 21) Amendments to FRS 139 - Financial Instruments: Recognition and
Measurement 22) Amendment to FRS 140 - Investment Property 23) IC Interpretation 10 - Interim Financial Reporting and
Impairment
63
2. BASIS OF PREPARATION (CONT’D)
2.4 Adoption of New/Revised Financial Reporting Standards (“FRSs”) (cont’d)
Cont‟d
The following new and revised FRSs and IC Interpretations, which are effective for
financial period beginning on or after 1 January 2010, are not applicable to the Group‟s
and the Company‟s operations:-
1) Amendments to FRS 1 - First-time Adoption of Financial
Reporting Standards 2) Amendments to FRS 2 - Share-based Payment
-Vesting Conditions and Cancellations 3) FRS 4 - Insurance Contracts 4) Amendment to FRS 5 - Non-current Assets Held for Sale and
Discontinued Operations 5) Amendment to FRS 128 - Investments in Associates 6) Amendment to FRS 129 - Financial Reporting in
Hyperinflationary Economies 7) Amendment to FRS 131 - Interests in Joint Ventures
8) Amendment to FRS 138 - Intangible Assets 9) IC Interpretation 9 - Reassessment of Embedded
Derivatives 10) IC Interpretation 11 - FRS 2 – Group and Treasury Share
Transactions 11) IC Interpretation 13 - Customer Loyalty Programmes 12) IC Interpretation 14 - FRS 119 – The Limit on a Defined
Benefit Asset, Minimum Funding
Requirements and Their Interaction
The adoption of the relevant FRSs and Interpretations effective from 1 January 2010
has no significant impact on the financial performance or position of the Group and of
the Company except for those discussed below:-
FRS 7 Financial Instruments: Disclosures
FRS 7 and the consequential Amendment to FRS 101 - Presentation of Financial
Statements require disclosure of information about the significance of financial
instruments on the Group‟s and the Company‟s financial position and performance,
nature and extent of risks arising from financial instruments and the objectives, policies
and processes for managing capital.
The Group and the Company applied FRS 7 prospectively in accordance with the
transitional provisions. Disclosures required were included throughout the Group‟s and
the Company‟s financial statements for the financial year ended 30 April 2011.
However, such disclosures were not applied to the comparatives.
64
2. BASIS OF PREPARATION (CONT’D)
2.4 Adoption of New/Revised Financial Reporting Standards (“FRSs”) (cont’d)
Cont‟d
The adoption of the relevant FRSs and Interpretations effective from 1 January 2010
has no significant impact on the financial performance or position of the Group and of
the Company except for those discussed below (cont‟d):-
FRS 8 Operating Segments
FRS 8, which replaces FRS 1142004 - Segment Reporting, requires identification of
operating segments based on internal reports that are regularly reviewed by the Group‟s
chief operating decision maker in order to allocate resources to the segments and to
assess their performance. Currently, the Group identifies two sets of segments (business
and geographical) using a risks and rewards approach, with the Group‟s system of
internal financial reporting to key management personnel serving only as the starting
point for the identification of such segments. The Group has adopted FRS 8
retrospectively.
FRS 101 Presentations of Financial Statements (Revised)
The revised FRS 101 introduces changes in the presentation and disclosures of financial
statements. The revised Standard separates owner and non-owner changes in equity. The
statement of changes in equity includes only details of transactions with owners, with all
non-owner changes in equity presented as a single line. The Standard also introduces the
statement of comprehensive income, with all items of income and expense recognised in
profit or loss, together with all other items of income and expense recognised directly in
equity, either in one single statement, or in two linked statements. The Group and the
Company has elected to present this statement as one single statement.
A statement of financial position is required at the beginning of the earliest comparative
period following a change in accounting policy, the correction of an error or the
classification of items in the financial statements. The revised FRS 101 also requires the
Group and the Company to make new disclosures to enable users of the financial
statements to evaluate the Group‟s and the Company‟s objective, policies and processes
for managing capital as disclosed in Note 32 to the financial statements.
65
2. BASIS OF PREPARATION (CONT’D)
2.4 Adoption of New/Revised Financial Reporting Standards (“FRSs”) (cont’d)
Cont‟d
The adoption of the relevant FRSs and Interpretations effective from 1 January 2010
has no significant impact on the financial performance or position of the Group and of
the Company except for those discussed below (cont‟d):-
FRS 123 Borrowing Costs
FRS 123 eliminates the option available under the previous version of FRS 123 to
recognise all borrowing costs immediately as an expense. The Group shall capitalise
borrowing costs that are directly attributable to the acquisition, construction or
production of a qualifying asset as part of the cost of that asset.
The revised FRS 123 was adopted prospectively by the Group.
FRS 139 Financial Instruments: Recognition and Measurement
FRS 139 establishes principles for recognising and measuring financial assets, financial
liabilities and some contracts to buy and sell non-financial items.
In accordance with FRS 139, the recognition, derecognition, measurement and hedge
accounting requirements are applied prospectively from 1 May 2010 and the effects of
remeasurement of financial assets and financial liabilities brought forward from
previous financial year are adjusted to opening unappropriated profit and other opening
reserves as disclosed in the statement of changes in equity.
2.5 Standards issued but not yet effective
The following standards and IC Interpretations are not yet effective and have not been
early adopted by the Group and the Company:-
Effective date
1) FRS 1 - First-time Adoption of
Financial Reporting Standards
1 July 2010
2) Amendments to
FRS 1
- First-time Adoption of
Financial Reporting Standards
1 January
2011
66
2. BASIS OF PREPARATION (CONT’D)
2.5 Standards issued but not yet effective (cont’d)
The following standards and IC Interpretations are not yet effective and have not been
early adopted by the Group and the Company (cont‟d):-
Effective date
3) Amendments to
FRS 2
- Share-Based Payment 1 July 2010
4) Amendments to
FRS 2
- Share-Based Payment. Group
Cash-settled Share-based
Payment Transactions
1 January
2011
5) FRS 3 - Business Combinations
(Revised)
1 July 2010
6) Amendments to
FRS 3
- Business Combinations 1 January
2011 7) Amendments to
FRS 5
- Non-Current Assets Held for
Sale and Discontinued
Operations
1 July 2010
8) Amendments to
FRS 7
- Financial Instruments:
Disclosures. Improving
Disclosures about Financial
Instruments
1 January
2011
9) Amendments to
FRS 101
- Presentation of Financial
Statements
1 January
2011 10) Amendments to
FRS 121
- The Effects of Changes in
Foreign Exchange Rates
1 January
2011 11) FRS 124 - Related Party Disclosures 1 January
2012 12) FRS 127 - Consolidated and Separate
Financial Statements
1 July 2010
13) Amendments to
FRS 128
- Investment in Associates 1 January
2011 14) Amendments to
FRS 131
- Interests in Joint Ventures 1 January
2011 15) Amendments to
FRS 132
- Financial Instruments:
Presentation
1 January
2011 16) Amendments to
FRS 134
- Interim Financial Reporting 1 January
2011 17) Amendments to
FRS 138
- Intangible Assets 1 July 2010
18) Amendments to
FRS 139
- Financial Instruments:
Recognition and Measurement
1 January
2011 19) IC Interpretation
4
- Determining Whether an
Arrangement contains a Lease
1 January
2011
67
2. BASIS OF PREPARATION (CONT’D)
2.5 Standards issued but not yet effective (cont’d)
The following standards and IC Interpretations are not yet effective and have not been
early adopted by the Group and the Company (cont‟d):-
Effective date
20) Amendments to
IC Interpretation
9
- Reassessment of Embedded
Derivatives
1 July 2010
21) IC Interpretation
12
- Service Concession
Arrangements
1 July 2010
22) Amendments to
IC Interpretation
13
- Customer Loyalty Programmes 1 January
2011
23) Amendment to
IC
Interpretation 14
- Prepayments of a Minimum
Funding Requirement
1 July 2011
24) Amendment to
IC Interpretation
15
- Agreements for the
Construction of Real Estate
1 January
2012
25) IC Interpretation
16
- Hedges of Net Investment in a
Foreign Operation
1 July 2010
26) IC Interpretation
17
- Distributions of Non-Cash
Assets to Owners
1 July 2010
27) IC Interpretation
18
- Transfers of Assets from
Customers
*
28) IC Interpretation
19
- Extinguishing Financial
Liabilities with Equity
Instruments
1 July 2011
* During the financial year, MASB approved and issued IC Interpretation 18 -
Transfers of Assets from Customers and requires the interpretation to be
applied prospectively to all transfers of assets from customers received on or
after 1 January 2011.
The existing FRS 1, FRS 3, FRS 124 and FRS 127 will be withdrawn upon the adoption
of the new requirements. IC Interpretation 15 will replace FRS 2012004 . IC
Interpretation 8 and IC Interpretation 11 will be withdrawn upon the application of
Amendments to FRS 2 – Group Cash-settled Share-based Payment Transactions.
The above FRS 1, FRS 2, FRS 5, FRS 128, FRS 131, FRS 138, IC Interpretation 4, 9,
12, 13, 14, 15, 16, 18 and 19 are not applicable to the Group‟s operations.
68
2. BASIS OF PREPARATION (CONT’D)
2.5 Standards issued but not yet effective (cont’d)
Cont‟d
The above FRS 1, FRS 2, FRS 5, FRS 121, FRS 128, FRS 131, FRS 134, FRS 138, IC
Interpretation 4, 9, 12, 13, 14, 15, 16, 18 and 19 are not applicable to the Company‟s
operations.
The Directors anticipate that the adoption of these new/revised FRS, amendments to
FRS and IC Interpretations will have no material impact on the financial statements of
the Group in the period for initial application except for the following:-
FRS 3 Business Combination
The revised standard continues to apply the acquisition method to business
combinations, with some significant changes. All payments to purchase a business are
to be recorded at fair value at the acquisition date, with contingent payments classified
as debt subsequently re-measured through profit or loss. There is a choice to measure
the non-controlling interest in the acquiree at fair value or at the non-controlling
interest‟s proportionate share of the acquiree‟s net assets. All acquisition-related costs
should be expensed.
FRS 127 Consolidated and Separate Financial Statements
The revised standard requires the effects of all transactions with non-controlling
interests to be recorded in equity if there is no change in control and these transactions
will no longer result in goodwill or gains and losses. The standard also specifies the
accounting treatment when control is lost. Any remaining interest in the entity is
remeasured to fair value, and a gain or loss is recognised in profit or loss. Losses are
required to be allocated to non-controlling interests, even if it results in the non-
controlling interest to be in a deficit position.
IC Interpretation 17 Distributions of Non-Cash Assets to Owners
This interpretation provides guidance on accounting for arrangements whereby an entity
distributes non-cash assets to shareholders either as a distribution of reserves or as
dividends. The Company should measure the dividend payable at the fair value of the
assets to be distributed when the dividend is appropriately authorised and is no longer at
the discretion of the Group. On settlement of the dividend, the difference between the
dividend paid and the carrying amount of the assets distributed is recognised in profit or
loss. If the dividend remains unpaid at the end of the financial year, the dividend
payable‟s carrying amount is reviewed with any changes recognised in equity.
69
2. BASIS OF PREPARATION (CONT’D)
2.5 Standards issued but not yet effective (cont’d)
Cont‟d
The Directors anticipate that the adoption of these new/revised FRS, amendments to
FRS and IC Interpretations will have no material impact on the financial statements of
the Group in the period for initial application except for the following (cont‟d):-
FRS 124 Related Party Disclosures (Revised)
The revised standard modifies the definition of a related party and simplifies disclosures
for government-related entities. The disclosure exemptions introduced in the standard
do not affect the Group because the Group is not a government-related entity. However,
disclosures regarding related party transactions and balance in this financial statement
may be affected when the revised standard is applied in future accounting periods
because some counterparties that did not previously meet the definition of a related
party may come within the scope of the Standard.
2.6 Significant Accounting Estimates and Judgements
Estimates, assumptions concerning the future and judgements are made in the
preparation of the financial statements. They affect the application of the Group‟s
accounting policies and reported amounts of assets, liabilities, income and expenses, and
disclosures made. They are assessed on an on-going basis and are based on experience
and relevant factors, including expectations of future events that are believed to be
reasonable under the circumstances.
Key sources of estimation uncertainty
The key assumptions concerning the future and other key sources of estimation
uncertainty at the reporting date that have significant risk of causing a material
adjustment to the carrying amounts of assets and liabilities within the next financial year
are discussed below:-
Useful lives of depreciable assets
The management estimates the useful lives of the property, plant and equipment to be
within 5 to 50 years and reviews the useful lives of depreciable assets at each reporting
date. At 30 April 2011, the management assesses that the useful lives represent the
expected utility of the assets to the Group. The carrying amounts are analysed in Note 4
to the Financial Statements. Actual results, however, may vary due to change in the
expected level of usage and technological developments, which resulting the adjustment
to the Group‟s assets.
70
2. BASIS OF PREPARATION (CONT’D)
2.6 Significant Accounting Estimates and Judgements (cont’d)
Key sources of estimation uncertainty (cont’d)
Impairment of loans and receivables
The Group assesses at each reporting date whether there is any objective evidence that a
financial asset is impaired. Factors such as probability of insolvency or significant
financial difficulties of the receivables and default or significant delay in payments are
considered in determining whether there is objective evidence of impairment.
Where there is objective evidence of impairment, the amount and timing of future cash
flows are estimated based on historical loss experience for assets with similar credit risk
characteristics.
Impairment of property, plant and equipment and prepaid land lease payments
The Group carried out impairment tests where there is indications of impairment based
on a variety of estimation including value-in-use of cash-generating unit to which the
property, plant and equipment and prepaid land lease payments are allocated. Estimating
the value-in-use requires the Group to make an estimate of the expected future cash
flows from cash-generating unit and also to choose a suitable discount rate in order to
calculate present value of those cash flows.
Impairment of inventories
The management reviews inventories to identify damaged, obsolete and slow-moving
inventories which require judgement and changes in such estimates could result in
revision to valuation of inventories.
Income taxes/Deferred tax liabilities
Significant judgement is involved in determining the Group-wide provision for income
taxes. There are certain transactions and computations for which the ultimate tax
determination is uncertain during the ordinary course of business. The Group
recognised tax liabilities based on estimates of whether additional taxes will be due.
Where the final tax outcome of these matters is different from the amounts that were
initially recognised, such difference will impact the income tax and deferred tax
provisions in the period in which such determination is made.
71
3. SIGNIFICANT ACCOUNTING POLICIES
3.1 Basis of consolidation
The consolidated financial statements incorporate the financial statements of the Company and entity controlled by the Group made up to 30 April 2011.
Control is achieved where the Group has the power to govern the financial and
operating policies of an entity so as to obtain benefits from its operations. Control is
presumed to exist when the Company owns, directly or indirectly through subsidiary
companies, more than one half of the voting rights of the said company.
Financial statements of Lee Soon Seng Plastic Industries Sdn. Bhd. (“LSSPI”) are
consolidated with those of the Company by using the reverse acquisition method of
accounting.
FRS 3 requires that the consolidated financial statements to be issued under the name of
the legal parent company, though they are a continuation of the financial statements of
the legal subsidiary. In order to comply with FRS 3, the following have been reflected
in the consolidated financial statements:-
(i) the assets and liabilities of the Company and LSSPI have been recognised at
their book values immediately prior to the reverse acquisition;
(ii) the unappropriated profit and other equity balances recognised in the
consolidated financial statements are those of LSSPI immediately before the
business combination;
(iii) the amount recognised as issued equity instruments in the consolidated financial
statements is the sum of:-
a) the issued and paid-up share capital of LSSPI immediately before the
reverse acquisition; and
b) the cost of achieving the combination;
(iv) the equity structure appearing in these consolidated financial statements after the
reverse acquisition reflects the equity structure of the Company.
The acquisition of other subsidiary company is accounted for using acquisition method
of accounting. The cost of the business combination is measured as the aggregate of the
fair values (at the date of exchange) of assets given, liabilities incurred or assumed, and
equity instruments issued by the Group in exchange for control of the acquiree, plus any
costs directly attributable to the business combination. The acquiree‟s identifiable
assets, liabilities and contingent liabilities that meet the conditions for recognition under
FRS 3, Business Combinations are recognised at their fair values at the acquisition date.
72
3. SIGNIFICANT ACCOUNTING POLICIES
3.1 Basis of consolidation (cont‟d)
The results of subsidiary companies acquired or disposed of during the financial year
are included in the consolidated financial statements from the effective date of
acquisition or up to the effective date of disposal.
Where necessary, adjustments are made to the financial statements of subsidiary
companies to bring their accounting policies in line with those used by other members
of the Group.
All significant intercompany transactions, balances and resulting unrealised gains are
eliminated on consolidation. Unrealised losses are eliminated on consolidation unless
costs cannot be recovered.
3.2 Property, plant and equipment
Property, plant and equipment are stated at historical cost less accumulated depreciation
and any impairment losses.
Depreciation is provided on the straight-line method in order to write-off the cost of
each asset over its estimated useful life. Plant and machinery under construction is not
depreciated until it is completed and ready for commercial utilisation.
The principal annual depreciation rates used are as follows:-
Buildings 2%
Factory equipment
Plant and machinery
Fire and electrical installation
Fire extinguishers
10%
10%
10%
10%
Moulds
Signboards
Air-conditioners
Mobile phones
Computers
20%
10%
10%
10%
20%
Motor vehicles 20%
Furniture and fittings
Office equipment
10%
10%
Freehold land is not depreciated.
Restoration cost relating to an item of property, plant and equipment is capitalised only
if such expenditure is expected to increase the future benefits from the existing
property, plant and equipment beyond its previously assessed standard of performance.
73
3. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
3.2 Property, plant and equipment (cont‟d)
Property, plant and equipment are written down to recoverable amount if, in the opinion
of the Directors, it is less than their carrying value. Recoverable amount is the net
selling price of the property, plant and equipment i.e. the amount obtainable from the
sale of an asset in an arm‟s length transaction between knowledgeable, willing parties,
less the costs of disposal.
The residual values, useful life and depreciation method are reviewed at each financial
year end to ensure that the amount, method and period of depreciation are consistent
with previous estimates and the expected pattern of consumption of the future economic
benefits embodied in the items of property, plant and equipment.
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 arising
on derecognition of the asset is included in profit or loss in the financial year in which
the asset is derecognised.
3.3 Asset acquired under lease agreements
Accounting by lessees
Finance leases
Lease of property, plant and equipment acquired under finance lease arrangements
which transfer substantially all the risks and rewards of ownership to the Group are
capitalised. Depreciation policy on these assets is similar to that of the Group‟s
property, plant and equipment depreciation policy.
Outstanding obligation due under finance lease arrangements after deducting finance
expenses are included as liabilities in the financial statements. Finance charges on
finance lease arrangements are allocated to profit or loss over the period of the
respective agreements.
Operating leases
Leased payments for operating leases, where substantially all the risk and benefits
remain with the lessor, are charged as expenses in the period in which they are incurred.
Leased assets
Leasehold land that normally has an indefinite economic life and title is not expected to
pass to the Group by the end of the lease term is treated as operating lease. The payment
made on entering into or acquiring a leasehold land is accounted for as prepaid land
lease payment and is amortised over the leasehold period of 99 years.
74
3. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
3.4 Subsidiary company
A subsidiary is a company in which the Group or the Company has the power to
exercise control over the financial and operating policies so as to obtain benefits from
its activities. In assessing control, potential voting rights that presently are exercisable
are taken into account.
Investment in a subsidiary company is stated at cost in the Company‟s statement of
financial position. Where an indication of impairment exists, the carrying amount of the
subsidiary company is assessed and written down immediately to their recoverable
amount.
3.5 Government grants
Government grants are recognised at fair value when there is reasonable assurance that
the Group will comply with the conditions attaching to them and the grants will be
received.
Government grants relating to expenditure on property, plant and equipment are
credited to profit or loss on the straight-line basis over the expected lives of the related
property, plant and equipment. Government grants used for financial support, assistance
or to reimburse costs incurred by the Group are recognised in profit or loss of the period
in which they become receivable.
3.6 Investment properties
Investment properties consist of land and building held for capital appreciation or rental
purpose and not occupied by the Group or only an insignificant portion is occupied for
use or in the operations of the Group. Investment properties are treated as long-term
investments and are measured initially at cost, including transaction costs. The carrying
amount includes the cost of replacing part of an existing investment property at the time
that cost is incurred if the recognition criteria are met and excludes the costs of day-to-
day servicing of an investment property.
Subsequent to initial recognition, investment properties are stated at fair value, which
reflects market conditions at the reporting date. Gain or losses arising from changes in
the fair values of investment properties are included in profit or loss in the financial year
in which they arise.
Investment properties are derecognised when either they are disposed of or when they
are permanently withdrawn from use and no future economic benefit is expected from
the disposal. Any gain or loss on the retirement or disposal of an investment property is
recognised in profit or loss in the financial year of retirement or disposal.
75
3. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
3.7 Inventories
Inventories are stated at the lower of cost and net realisable value, determined on the
first-in-first-out method.
Cost of raw materials includes the original cost of purchase plus the incidental cost
incurred in bringing the inventories to their present location and condition. Cost of
work-in-progress and finished goods includes cost of materials, direct labour and an
appropriate proportion of production overheads.
Net realisable value represents the estimated selling price in the ordinary course of
business less selling and distribution costs and all other estimated costs to completion.
Allowance is made for damaged, obsolete and slow-moving inventories.
3.8 Income tax
Income tax on profit or loss for the year comprises current and deferred tax. Current tax
expense is the expected amount of income taxes payable in respect of the taxable profit
for the financial year and is measured using the tax rates that have been enacted or
substantively enacted by the reporting date.
Deferred tax liabilities and assets are provided for under the liability method at the
current tax rate in respect of all temporary differences at the reporting date between the
carrying amount of an asset or liability in the statements of financial position and its tax
base including unused tax losses and capital allowances.
Deferred tax asset are recognised only to the extent that it is probable that taxable profit
will be available against which the deductible temporary differences can be utilised.
The carrying amount of a deferred tax asset is reviewed at each reporting date. If it is
no longer probable that sufficient taxable profit will be available to allow the benefit of
part or all of that deferred tax asset to be utilised, the carrying amount of the deferred
tax asset will be reduced accordingly. When it becomes probable that sufficient taxable
profit will be available, such reductions will be reversed to the extent of the taxable
profit.
Current and deferred tax are recognised in profit or loss, except when it arises from a
transaction which is recognised directly in equity, in which case the deferred tax is also
charged or credited directly in equity, or when it arises from a business combination
that is an acquisition, in which case the deferred tax is included in the resulting
goodwill.
76
3. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
3.8 Income tax (cont‟d)
Deferred tax is measured at the tax rates that are expected to apply in the period when
the asset is realised or the liability is settled, based on tax rates that have been enacted or
substantively enacted by the reporting date.
3.9 Foreign currency transactions and balances
Transactions in foreign currencies are recorded in Ringgit Malaysia at rates of exchange
ruling at the date of the transactions. Foreign currency monetary assets and liabilities
are translated at exchange rates ruling at reporting date.
Gains and losses resulting from settlement of such transactions and conversion of
monetary assets and liabilities, whether realised or unrealised, are included in profit or
loss as they arise.
All other foreign exchange differences are taken to profit or loss in the financial year in
which they arise.
3.10 Dividends
Final dividends proposed by the Directors are not accounted for in shareholders‟ equity
as an appropriation of unappropriated profit, until they have been approved by the
shareholders in a general meeting. When these dividends have been approved by the
shareholders and declared, they are recognised as a liability.
Interim dividends are simultaneously proposed and declared, because the articles of
association of the Company grant the Directors the authority to declare interim
dividends. Consequently, interim dividends are recognised directly as a liability when
they are proposed and declared.
3.11 Revenue recognition
Revenue from sale of goods is recognised when the goods are delivered.
Other revenues are recognised on the following bases:-
i) Interest on bank fixed deposits is recognised on time proportion basis.
ii) Rental income is recognised when the right to receive has been established.
Sales and inter-company transactions between companies of the Group are excluded
from revenue of the Group.
77
3. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
3.12 Financial assets
Financial assets are recognised in the statements of financial position when, and only
when, the Group and the Company becomes a party to the contractual provisions of the
financial instrument and they are derecognised when the contractual rights to the cash
flows from the financial asset expire, or when the financial asset and all substantial risks
and rewards are transferred.
Financial assets are measured initially at fair value, plus transactions costs, except for
financial assets carried at fair value through profit or loss, which are measured initially
at fair value. Financial assets are subsequently measured as described below.
For the purpose of subsequent measurement, financial assets other than those designated
and effective as hedging instruments are classified into the following categories upon
initial recognition:-
a) Loans and receivables
b) Financial assets at fair value through profit or loss
c) Held-to-maturity investments
d) Available-for-sale financial assets
The category mentioned above determines subsequent measurement of a financial asset
and whether any resulting income and expense is recognised in profit or loss or in
statement of comprehensive income. All financial assets except for those at fair value
through profit or loss are subject to review for impairment at least once at each
reporting date. Financial assets are impaired when there is any objective evidence that a
financial asset or a group of financial assets is impaired. Different criteria are applied to
determine impairment for each category of financial assets, as described in note 3.14.
All income and expenses relating to financial assets are recognised in profit or loss.
Other than loan and receivables, the Group does not have financial assets at fair value
through profit or loss, held-to-maturity investments and available-for-sale financial
assets.
78
3. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
3.12 Financial assets (cont‟d)
Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable
payments that are not quoted in an active market and they are measured at amortised
cost using effective interest method, less provision for impairment subsequently.
Discounting is omitted where the effect of discounting is immaterial in subsequent
measurement. Cash and cash equivalents, trade and most other receivables of the Group
and of the Company fall into this category of financial instruments.
Loans and receivables are classified as current assets and those that mature 12 months
after the reporting date are classified as non-current.
3.13 Financial liabilities
Financial liabilities are recognised when the Group becomes a party to the contractual
provisions of the financial instrument. Financial liability is derecognised when it is
extinguished, discharged, cancelled or expires.
Financial liabilities are measured initially at fair value plus transactions costs, except for
financial liabilities carried at fair value through profit or loss, which are measured
initially at fair value. Subsequently, they are measured at amortised cost using the
effective interest method except for financial liabilities held for trading or designated at
fair value through profit or loss, that are carried subsequently at fair value with gains or
losses recognised in profit or loss.
All derivative financial instruments which are not designated and effective as hedging
instruments are accounted for at fair value through profit or loss.
The Group‟s financial liabilities include trade payables, other payables, borrowings and
finance lease creditors.
3.14 Impairment of financial assets
The Group assesses at each reporting date whether there is any objective evidence
indicating that a financial asset is impaired.
79
3. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
3.14 Impairment of financial assets (cont‟d)
Trade and other receivables and other financial assets carried at amortised cost
The Group considers factors such as the probability of insolvency or significant
financial difficulties of the debtor and default or significant delay in payments to
determine whether there is objective evidence that an impairment loss has occurred. For
certain categories of financial assets, such as trade receivables, assets that are assessed
not to be impaired individually are subsequently assessed for impairment on a collective
basis based on similar risk characteristics. Objective evidence of impairment for a
portfolio of receivables could include the Group‟s past experience with industry group,
increase in cases of delayed payments and observable changes in economic conditions.
If such evidence exists, the amount of impairment loss is measured as the difference
between the asset‟s carrying amount and the present value of estimated future cash
flows discounted at the financial asset‟s original effective interest rate and the loss is
recognised in profit or loss.
The carrying amount of the financial asset is reduced by the impairment loss directly for
all financial assets with the exception of trade receivables, where the carrying amount is
reduced through the use of an allowance account. When a trade receivable becomes
uncollectible, it is written off against the allowance account.
If in a subsequent period, the amount of the impairment loss decreases and the decrease
related objectively to an event occurring after the impairment was recognised, the
previously recognised impairment loss is reversed to the extent that the carrying amount
of the asset does not exceed its amortised cost at the reversal date. The amount of
reversal is recognised in profit or loss.
3.15 Impairment of non-financial assets
At each reporting date, the Group reviews carrying amounts of non-financial assets to
determine whether there is any indication of impairment.
If any such indication exists, or when annual impairment testing for an asset is required,
the recoverable amount is estimated and an impairment loss is recognised whenever the
recoverable amount of the asset or a cash-generating unit is less than its carrying
amount. Recoverable amount of an asset or a cash-generating unit is the higher of its
fair value less costs to sell and its value in use.
80
3. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
3.15 Impairment of non-financial assets (cont‟d)
In assessing value in use, estimated future cash flows are discounted to present value
using a pre-tax discount rate that reflects current market assessments of the time value
of money and the risks specific to the asset. Impairment losses of continuing operations
are recognised in profit or loss in those expense categories consistent with the function
of the impaired asset.
An impairment loss is recognised as an expense in profit or loss immediately, unless the
asset is carried at a revalued amount. Any impairment loss of a revalued asset is treated
as a revaluation decrease to the extent of previously recognised revaluation surplus for
the same asset.
An assessment is made at each reporting date as to whether there is any indication that
previously recognised impairment losses for an asset other than goodwill may no longer
exist or may have decreased. If such indication exists, the recoverable amount is
estimated. A previously recognised impairment loss is reversed only if there has been a
change in the estimates used to determine the asset‟s recoverable amount. That
increased amount cannot exceed the carrying amount that would have been determined,
net of depreciation, had no impairment loss been recognised for the asset in prior years.
All reversals of impairment losses are recognised as income immediately in profit or
loss unless the asset is carried at revalued amount, in which case, the reversal in excess
of impairment loss previously recognised through profit or loss is treated as revaluation
increase. After such a reversal, depreciation charge is adjusted in future periods to
allocate the revised carrying amount of the asset, less any residual value, on a
systematic basis over its remaining useful life.
3.16 Interest-bearing borrowings
Interest-bearing borrowings are recorded at the amount of proceeds received, net of
transaction costs incurred. Borrowing costs are recognised as an expense in profit or
loss in the period in which they are incurred. However, borrowing costs incurred to
finance the construction of property, plant and equipment are capitalised as part of the
cost of those assets during the period of time that is required to complete and prepare
the assets for its intended use.
81
3. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
3.17 Employee benefits
(i) Short term benefits
Wages, salaries, bonuses and social security contributions are recognised as an
expense in the financial year in which the associated services are rendered by
employees of the Group. Short term accumulating compensated absences such
as paid annual leave are recognised when services are rendered by employees
that increase their entitlement to future compensated absences, and short term
non-accumulating compensated absences such as sick leave are recognised
when the absences occur.
(ii) Defined contribution plans
Defined contribution plans are post-employment benefit plans under which the
Group pays fixed contributions into separate entities or funds and will have no
legal or constructive obligation to pay further contribution if any of the funds do
not hold sufficient assets to pay all employee benefits relating to employee
services in the current and preceding financial years.
Such contributions are recognised as an expense in profit or loss as incurred. As
required by law, the Group made such contributions to the Employees Provident
Fund (“EPF”).
3.18 Cash and cash equivalents
Cash and cash equivalents comprise cash on hand, bank balances, short term demand
deposits and highly liquid investments which are readily convertible to known amount
of cash and which are subject to an insignificant risk of changes in value.
For the purpose of the statements of financial position, cash and cash equivalents
restricted to be used to settle a liability of 12 months or more after the reporting date are
classified as non-current asset.
3.19 Segment reporting
In identifying its operating segments, management generally follows the Group‟s
internal reports regularly reviewed by the Group‟s chief operating decision makers in
order to allocate resources to the respective segments and to assess their performance.
3.20 Inter-segment transfers
Segment revenues, expenses and result include transfers between segments. The prices
charged on inter-segment transactions are based on negotiation basis. These transfers
are eliminated on consolidation.
82
3. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
3.21 Equity
An equity instrument is any contract that evidences a residual interest in the assets of
the Company after deducting all of its liabilities. Ordinary shares are equity instruments.
Share capital represents the nominal value of shares that have been issued.
Share premium includes any premiums received on issue of share capital. Any
transaction costs associated with the issuing of shares are deducted from share
premium, net of any related income tax benefits.
Unappropriated profit includes all current and prior period profit.
All transactions with shareholder are recorded separately within equity.
3.22 Financial guarantee contracts
A financial guarantee contract is a contract that requires the issuer to make specified
payments to reimburse the holder for a loss it incurs because a specified debtor fails to
make payment when due.
Financial guarantee contracts are recognised initially as a liability at fair value, net of
transaction costs. Subsequent to initial recognition, financial guarantee contracts are
recognised as income in profit or loss over the period of the guarantee. If the debtor
fails to make payment relating to financial guarantee contract when it is due and the
Group, as the issuer, is required to reimburse the holder for the associated loss, the
liability is measured at the higher of the best estimate of the expenditure required to
settle the present obligation at the reporting date and the amount initially recognised
less cumulative amortisation.
3.23 Contingent liabilities/assets
A contingent liability or asset is a possible obligation or asset that arises from past
events and whose existence will be confirmed only through the occurrences or non-
occurrence of uncertain future events not wholly within the control of the Group.
Contingent liabilities and assets are not recognised in the statements of financial
position of the Group.
83
3. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
3.24 Earnings per Share
The Group presents basic and diluted earnings per share (“EPS”) data for its ordinary
shares. Basic EPS is calculated by dividing the profit or loss attributable to ordinary
shareholders of the Company by the weighted average number of ordinary shares
outstanding during the period. Diluted EPS is determined by adjusting the profit or loss
attributable to ordinary shareholders and the weighted average number of ordinary
shares outstanding for the effects of all dilutive potential ordinary shares, which
comprise convertible notes and share options granted to employees.
4. PROPERTY, PLANT AND EQUIPMENT
Group
Land and
buildings
Equipment,
plant and
machinery
Motor
vehicles
Furniture,
fittings
and others
Total
RM RM RM RM RM
Cost
At 1 May 2009 10,093,465 23,444,068 2,833,098 1,516,242 37,886,873
Additions 5,531,020 5,525,649 226,080 327,097 11,609,846
Disposal - - - (10,600) (10,600)
At 30 April 2010 15,624,485 28,969,717 3,059,178 1,832,739 49,486,119
Additions 382,050 4,082,649 647,968 125,103 5,237,770
Written off - - - (6,997) (6,997)
At 30 April 2011 16,006,535 33,052,366 3,707,146 1,950,845 54,716,892
Accumulated depreciation
At 1 May 2009 1,176,764 9,721,574 2,652,533 915,330 14,466,201
Charge for the financial year 173,838 2,487,714 96,338 181,638 2,939,528
Disposal - - - (4,681) (4,681)
At 30 April 2010 1,350,602 12,209,288 2,748,871 1,092,287 17,401,048
Charge for the financial year 234,577 2,903,784 203,075 208,846 3,550,282
Written off - - - (4,146) (4,146)
At 30 April 2011 1,585,179 15,113,072 2,951,946 1,296,987 20,947,184
Net carrying amount
2011 14,421,356 17,939,294 755,200 653,858 33,769,708
2010 14,273,883 16,760,429 310,307 740,452 32,085,071
84
4. PROPERTY, PLANT AND EQUIPMENT (CONT’D)
Analysis of land and buildings as at 30 April:-
Group Long
Freehold Freehold leasehold
land building building Total
Cost RM RM RM RM
At 1 May 2009 2,680,308 3,972,541 3,440,616 10,093,465
Additions 1,500,000 4,031,020 - 5,531,020
At 30 April 2010
4,180,308
8,003,561
3,440,616
15,624,485
Additions - 382,050 - 382,050
At 30 April 2011
4,180,308
8,385,611
3,440,616
16,006,535
Accumulated depreciation
At 1 May 2009 - 351,795 824,969 1,176,764
Charge for the financial year - 105,026 68,812 173,838
At 30 April 2010 - 456,821 893,781 1,350,602
Charge for the financial year - 165,765 68,812 234,577
At 30 April 2011 - 622,586 962,593 1,585,179
Net carrying amount
2011
4,180,308
7,763,025
2,478,023
14,421,356
2010
4,180,308
7,546,740
2,546,835
14,273,883
The net carrying amount of property, plant and equipment which are acquired under finance
lease arrangements amounted to RM1,697,004 (2010: RM1,596,242).
The net carrying amount of property, plant and equipment pledged to secure the borrowings
granted to the Group amounted to RM8,264,692 (2010: RM8,400,664).
Included in the property, plant and equipment of the Group are fully depreciated property, plant
and equipment with a total cost of RM7,320,747 (2010: RM5,181,421) but still in use.
85
5. PREPAID LAND LEASE PAYMENTS
Group
2011 2010
Long leasehold land RM RM
Cost
At beginning and at end of financial year 216,425 216,425
Accumulated amortisation
At beginning of financial year 36,870 34,684
Charge for the financial year 2,187 2,186
At end of financial year
39,057
36,870
Net carrying amount
177,368
179,555
The long leasehold land is amortised over the leasehold period of 99 years. The above prepaid
land lease payments are pledged to the bank for banking facilities granted to the Group.
6. INVESTMENT PROPERTIES
Freehold
land
Buildings
Total
Group RM RM RM
At fair value:-
Balance as at 1 May 2009, as at
30 April 2010 and as at
30 April 2011
53,371
476,629
530,000
The fair value of the Group‟s investment properties was arrived at by reference to market
indication of transactions prices for similar properties determined by Group‟s Directors.
86
7. SUBSIDIARY COMPANY
(a) Investment in a subsidiary company
Company
2011 2010
RM RM
Unquoted shares - At cost 30,427,000 30,427,000
The particulars of the subsidiary company are as follows:-
Name of company
Place of
incorporation Effective equity
interest
Principal activities
2011 2010
% %
Lee Soon Seng
Plastic Industries
Sdn. Bhd. (“LSSPI”)
Malaysia 100 100 Manufacturing and
trading of plastic
products.
During the previous financial years, the Company completed the acquisition of 2,200,000
ordinary shares of RM1.00 each of LSSPI representing the entire issued and paid-up
share capital of LSSPI for a purchase consideration of RM30,427,000 satisfied entirely
by the issuance of 60,854,000 new ordinary shares of RM0.50 each in the Company at an
issue price of RM0.50 per share.
The substance of the business combination between the Company and LSSPI is that
LSSPI acquired the Company in a reverse acquisition. The cost of this business
combination is determined in accordance with FRS 3: Business Combination, on the
basis of the fair value of the Company as at 18 December 2007 and the number of shares
that LSSPI would have had to issue to the shareholders of the Company to provide the
same percentage of the combined entity. The cost of business combination of RM1,000
represents the fair value of shares of the Company immediate prior to the reverse
acquisition.
(b) Amount due from a subsidiary company
The amount due from a subsidiary company is non-trade in-nature, bears no interest and
repayable upon demand.
87
8. INVENTORIES
Group
2011 2010
RM RM
At cost
Raw materials 12,323,042 9,183,445
Work-in-progress 410,309 651,448
Finished goods 2,206,690 1,282,329
Total inventories 14,940,041 11,117,222
A total of RM42,667,996 (2010: RM37,379,680) of inventories was included in income
statement as expense. This includes an amount of RM24,472 (2010: RM157,307) resulting
from write down of inventories.
The reversal of written down of inventories was made when the related inventories were sold
above their carrying amounts and increased in net realisable value because of changed
economic circumstances.
9. TRADE RECEIVABLES
Group
2011 2010
RM RM
Amount due from a company connected
with certain Directors
759,201
852,014
Trade receivables 18,918,274 15,346,881
19,677,475 16,198,895
Less: Allowance for impairment of trade
receivables
(496,098)
(511,139)
19,181,377
15,687,756
Movement in allowance for impairment of trade receivables: -
Group
2011 2010
RM RM
At beginning of financial year (511,139) (298,263)
Charge for the financial year (41,901) (226,017)
Reversal of impairment 56,942 13,141
At end of financial year (496,098) (511,139)
88
9. TRADE RECEIVABLES (CONT’D)
The currency exposure profile of the trade receivables is as follows (foreign currency balances
are unhedged):-
Group
2011
RM
2010
RM
Ringgit Malaysia 13,477,119 10,577,612
Singapore Dollar 5,155,451 4,744,856
US Dollar 853,830 675,973
Hong Kong Dollar - 123,262
EURO 191,075 77,192
19,677,475 16,198,895
Trade receivables comprise amounts receivable from sales of goods. The credit term granted on
sales of goods ranged from 30 days to 90 days (2010: 30 days to 90 days). Allowance has been
made for estimated irrecoverable of trade receivables based on default experience of the Group.
10. OTHER RECEIVABLES
Group
2011 2010
RM RM
Advance to contract manufacturer 1,607,336 2,209,189
Advance payment to suppliers 525,070 -
Non-trade receivables 6,256 56
Deposits 76,396 31,706
Prepayments 152,359 121,259
2,367,417 2,362,210
The currency exposure profile of the other receivables is as follows (foreign currency balance is
unhedged):-
Group
2011
RM
2010
RM
Ringgit Malaysia 1,842,847 2,362,210
US Dollar 524,570 -
2,367,417 2,362,210
89
11. FIXED DEPOSITS WITH LICENSED BANKS
Group and Company
The fixed deposits with licensed banks are on fixed rate basis and will mature within 1 month
to 12 months (2010: 1 month to 12 months).
The effective interest rates on fixed deposits with licensed banks ranged from 2.15% to 3.10%
(2010: 2.15% to 2.50%) per annum.
The entire fixed deposits with licensed banks are denominated in Ringgit Malaysia currency.
12. CASH AND BANK BALANCES
The currency exposure profile of the cash and bank balances is as follows (foreign currency
balances are unhedged):-
Group Company 2011 2010 2011 2010
RM RM RM RM
Ringgit Malaysia 949,795 2,552,110 38,833 45,264
Australian Dollar 30 135 - -
EURO 5 3 - -
Hong Kong Dollar - 27,611 - -
Japanese Yen 25 - - -
Singapore Dollar 572,118 820,378 - -
US Dollar 239,225 743,899 - -
1,761,198
4,144,136
38,833 45,264
13. SHARE CAPITAL
Group and Company 2011 2010
RM RM
Authorised:-
200,000,000 ordinary shares of RM0.50 each 100,000,000 100,000,000
Issued and fully paid-up:-
80,000,000 ordinary shares of RM0.50 each
40,000,000
40,000,000
90
14. REVERSE ACQUISITION RESERVE
Reverse acquisition reserve arose from the reverse acquisition of the Company by Lee Soon
Seng Plastic Industries Sdn. Bhd. (“LSSPI”) as follows:-
Group
2011 2010
RM RM
Paid-up share capital of the Company
immediately prior to the reverse acquisition
1,000
1,000
Shares issued by the Company to acquire
LSSPI
30,427,000
30,427,000
Reversal of LSSPI‟s paid-up share capital
pursuant to reverse acquisition
(2,200,000)
(2,200,000)
Equity instruments deemed issued to the
owner of the legal parent
(1,000)
(1,000)
28,227,000 28,227,000
15. DEFERRED INCOME – GOVERNMENT GRANT
Group 2011 2010
RM RM
At beginning of financial year 132,792 176,288
Amortised during the financial year (43,496) (43,496)
At end of financial year 89,296 132,792
Analysed as:-
Amortised within the next 12 months 43,496 43,496
Amortised after the next 12 months 45,800 89,296
89,296
132,792
The government grant amounted to RM326,729 was granted in financial year ended 30 April
2007 to finance a purchase of machine and equipment. The grant is recognised as income over
the useful life of the machine and equipment.
91
16. BORROWINGS
Group
2011 2010
RM RM
Current
Unsecured:-
Bankers‟ acceptance 978,302 -
Secured:-
Term loans 1,859,535 1,767,064
2,837,837 1,767,064
Non-current
Secured:-
Term loans 2,082,964 3,952,956
Total borrowings
4,920,801
5,720,020
Repayment terms:-
Bankers‟ acceptance
- not later than 1 year 978,302 -
Term loans
- not later than 1 year 1,859,535 1,767,064
- between 1 to 2 years 1,540,573 1,858,958
- more than 2 years 542,391 2,093,998
4,920,801
5,720,020
92
Term loans
The term loans are repayable by monthly installments and bear interest at rates ranging from
2.81% to 5.80% (2010: 2.81% to 5.80%) per annum.
The term loans are secured against certain Group‟s freehold and leasehold land and buildings
and guaranteed by a Director of the Company.
Bankers‟ acceptance
The bankers‟ acceptance of the Group is jointly and severally guaranteed by certain Directors
of the Company.
The bankers‟ acceptance bears interest at rates ranging from 3.14% to 4.18% (2010: 2.25%) per
annum.
The above borrowings are denominated in Ringgit Malaysia currency.
17. DEFERRED TAX LIABILITIES
Group
2011 2010
RM RM
At beginning of financial year 2,765,000 2,245,000
Transferred from profit or loss (Note 23) 6,000 520,000
At end of financial year
2,771,000
2,765,000
The balance in the deferred tax liabilities is made up of temporary differences arising from:-
Group
2011 2010
RM RM
Carrying amount of qualifying property, plant
and equipment in excess of their tax base
2,865,000
2,883,000
Inventories written down (18,000) (49,000)
Allowance for impairment of receivables (76,000) (69,000)
2,771,000 2,765,000
93
18. FINANCE LEASE CREDITORS
Group
2011 2010
RM RM
Minimum lease payment
- within 1 year 562,416 454,408
- after 1 year but not later than 5 years 749,813 888,931
1,312,229 1,343,339
Less: Interest-in-suspense (132,478) (146,698)
1,179,751 1,196,641
Total principal sum payable
- within 1 year 505,625 405,779
- after 1 year but not later than 5 years 674,126 790,862
1,179,751 1,196,641
The effective interest rates on the finance lease ranged from 2.95% to 3.30% (2010: 3.10% to
4.05%) per annum.
19. TRADE PAYABLES
Group
Trade payables comprise amounts outstanding for trade purchases. The credit terms granted to
the Group ranged from 30 days to 90 days (2010: 30 days to 90 days).
The currency exposure profile of the trade payables is as follows (foreign currency balances are
unhedged):-
Group
2011
RM
2010
RM
Ringgit Malaysia 3,322,730 869,489
US Dollar 775,692 170,019
Singapore Dollar 53,518 12,244
4,151,940 1,051,752
94
20. OTHER PAYABLES
Group Company 2011 2010 2011 2010
RM RM RM RM
Deposit received 5,200 5,200 - -
Non-trade payables 302,653 2,186,143 - -
Accrual of payroll 961,470 896,073 15,000 15,000
Accrual of expenses 1,206,765 1,220,929 34,335 14,793
Advance payment from
customers
144,407
-
-
-
2,620,495
4,308,345
49,335 29,793
The currency exposure profile of the other payables is as follows (foreign currency balances are
unhedged):-
Group Company 2011 2010 2011 2010
RM RM RM RM
Ringgit Malaysia 2,504,345 4,257,834 49,335 29,793
Singapore Dollar 2,599 50,511 - -
US Dollar 113,551 - - -
2,620,495
4,308,345
49,335 29,793
21. REVENUE
Revenue of the Group represents sale of plastic products, net of discounts and returns.
Revenue of the Company represents dividend income from the subsidiary company.
95
22. PROFIT BEFORE TAX
Profit before tax has been determined after charging/(crediting), amongst others, the following
items:-
Group Company 2011 2010 2011 2010
RM RM RM RM
Allowance for impairment
of receivables
41,901
226,017
-
-
Amortisation of prepaid
land lease payments
2,187
2,186
-
-
Audit fee – statutory 47,000 40,000 7,000 5,000
– under
provision in
prior year
5,000
-
-
-
– non-statutory 6,500 6,000 6,500 6,000
Depreciation 3,550,282 2,939,528 - -
Directors‟ remuneration
- fees
60,000
60,000
60,000
60,000
- other emoluments 2,271,435 2,196,418 2,400 2,400
Direct operating expenses
for
- revenue
generating investment
properties during the
financial year
3,386
-
-
-
Interest expense:-
- bankers‟ acceptance 56,079 7,623 - -
- bank overdraft 2,916 211 - -
- finance lease interest 126,782 121,751 - -
- term loans 261,139 324,362 - -
Inventories written down 24,472 157,307 - -
Loss on disposal of
property, plant and
equipment
-
4,419
-
-
Property, plant and
equipment written off
2,851
-
-
-
Rental of hostel 59,750 17,800 - -
Rental of warehouse 19,200 9,600 - -
96
22. PROFIT BEFORE TAX (CONT’D)
Profit before tax has been determined after charging/(crediting), amongst others, the following
items (cont‟d):-
Group Company 2011 2010 2011 2010 RM RM RM RM
Allowance for
impairment of
receivables no longer
required
(56,942)
(13,141)
-
-
Amortisation of deferred
income - government
grant
(43,496)
(43,496)
-
-
Dividend income from
subsidiary company
-
-
(2,500,000)
(2,500,000)
Interest income from
fixed deposits
(28,209)
(56,150)
(5,606)
(602)
Realised gain on foreign
exchange
(28,694)
(230,705)
-
-
Rental income (31,200) (31,200) - -
Reversal of inventories
written down
(150,967)
-
-
-
Waiver of debts - (10,404) - (10,404)
Unrealised (gain)/loss on
foreign exchange
(204,185)
237,245
-
-
The estimated monetary value of benefits provided to the Directors of the Group during the
financial year by way of usage of the Group‟s assets and other benefits amounted to
RM123,566 (2010: RM95,800).
The remuneration paid to the Directors of the Company is categorised as follows:-
Other
Fees emoluments Total RM RM RM
2011
Executive Directors - 2,269,035 2,269,035
Non-Executive Directors 60,000 2,400 62,400
Total 60,000 2,271,435 2,331,435
2010
Executive Directors - 2,194,018 2,194,018
Non-Executive Directors 60,000 2,400 62,400
Total 60,000 2,196,418 2,256,418
97
22. PROFIT BEFORE TAX (CONT’D)
The remuneration paid to the Directors of the Company analysed into bands are as follows:-
Number of Directors
RM100,001
to
<RM100,000 RM600,000
2011
Executive Directors - 4
Non-Executive Directors 3 -
2010
Executive Directors - 4
Non-Executive Directors 3 -
23. TAX EXPENSE
Group Company
2011 2010 2011 2010
RM RM RM RM
Current year‟s tax
expense
685,931
482,163
1,401
-
Under provision in prior
financial years
201,551
387,845
151
-
Transferred to deferred
tax liabilities (Note 17)
6,000
520,000
-
-
893,482
1,390,008 1,552
-
Malaysian income tax is calculated at the statutory tax rate of 25% (2010: 25%) of the
estimated taxable profits for the financial year.
98
23. TAX EXPENSE (CONT’D)
The reconciliation of income tax expense applicable to profit before tax at the statutory tax rate
to the income tax expense at the effective tax rate of the Group and of the Company are as
follows:-
Group Company
2011 2010 2011 2010
RM RM RM RM
Profit before tax 7,253,456 8,045,345 2,297,349 2,313,476
Tax expense at
Malaysian statutory
tax rate of 25% (2010:
25%)
1,813,364
2,011,336
574,337
578,369
Tax effects in respect
of:-
Income not subject to
tax
(579,833)
(10,166)
(572,936)
(578,369)
Expenses not
deductible for tax
purpose
128,101
374,028
-
-
Expenses allowable for
double deduction
-
(7,368)
-
-
Reinvestment
allowance utilised
(669,701)
(1,365,667)
-
-
Under provision in
prior financial years
201,551
387,845
151
-
Total tax expense 893,482 1,390,008 1,552 -
Prior to the year of assessment 2008, Malaysian companies adopted the full imputation system.
In accordance with the Finance Act, 2007 which was gazetted on 28 December 2007,
companies shall not be entitled to deduct tax on dividend paid, credited or distributed to its
shareholders, and such dividends will be exempted from tax in the hands of the shareholders
("single tier system"). However, there is a transitional period of six years, expiring on 31
December 2013, to allow companies to pay franked dividends to their shareholders under
limited circumstances.
Companies also have an irrevocable option to disregard the Section 108 balance and opt to pay
dividends under the single tier system. The change in the tax legislation also provides for the
Section 108 balance to be locked-in as at 31 December 2007 in accordance with Section 39 of
the Finance Act, 2007.
99
23. TAX EXPENSE (CONT’D)
The Company did not elect for the irrevocable option to disregard the Section 108 balance.
Accordingly, during the transitional period, the Company may utilise the credit in the Section
108 balance as at 31 December 2007 to distribute cash dividend payments to ordinary
shareholders as defined under the Finance Act, 2007.
The Group has sufficient tax credit under Section 108 of the Income Tax Act, 1967 and tax
exempt income to frank the payment of dividends to the extent of approximately
RM17,341,000 (2010: RM17,341,000) and RM5,218,000 (2010: RM5,039,000) out of its
unappropriated profit respectively.
However, the above amounts are subject to the approval of the Inland Revenue Board of
Malaysia.
24. EARNINGS PER SHARE
The earnings per share has been calculated based on Group‟s profit after tax for the financial
year attributable to owners of the parent of RM6,359,974 (2010: RM6,655,337) and the number
of ordinary shares in issue during the financial year of 80,000,000 (2010: 80,000,000).
The dilutive earnings per share are not presented as there are no dilutive potential ordinary
shares.
25. EMPLOYEE BENEFITS EXPENSE
Group Company
2011 2010 2011 2010
RM RM RM RM
Staff costs 10,201,918 9,136,288 51,004 55,346
Employee benefits expense of the Group and of the Company consist of, among others, the
following items:-
Group Company
2011 2010 2011 2010
RM RM RM RM
Directors‟
emoluments
2,271,435
2,196,418
2,400
2,400
Defined
contribution plan
326,962
321,010
4,320
4,320
100
26. RELATED PARTY DISCLOSURES
(a) The related party transactions of the Group and of the Company during the financial
year were as follows:-
Group Company
2011 2010 2011 2010
RM RM RM RM
Sales to a company
connected with certain
Directors
1,914,868
2,220,894
-
-
Purchases from a company
connected with certain
Directors
87,766
-
-
-
Rental expense paid to a
company in which certain
Directors have interest
19,200
9,600
-
-
Dividend income from the
subsidiary company
-
-
2,500,000
2,500,000
(b) The outstanding balances arising from related party transactions as at the reporting date
are disclosed in Notes 7 and 9 to the Financial Statements.
(c) The remuneration of key management personnel is same with the Directors‟
remunerations as disclosed in Note 22 to the Financial Statements. The Group and the
Company have no other members of key management personnel apart from the Board
of Directors.
27. COMMITMENTS
(a) Capital expenditure in respect of the following is not provided for in the financial
statements:
Group
2011 2010
RM RM
Authorised and contracted for:-
Renovation - 49,405
101
27. COMMITMENTS (CONT’D)
(b) The future rental expense commitment is as follows:-
Group
2011 2010
RM RM
Year 2011 - 16,600
Year 2012 94,950 5,800
Year 2013-2016 260,250 8,050
28. CONTINGENT LIABILITIES
Company
2011 2010
RM RM
Unsecured:-
Corporate guarantees given to a licensed
financial institution for credit facilities
granted to the subsidiary company
- Limit
11,015,151
11,015,151
29. SIGNIFICANT EVENT AFTER THE REPORTING DATE
At the forthcoming Annual General Meeting, a first and final tax exempt dividend, in respect of
the financial year ended 30 April 2011, of 3.0 sen per ordinary share on 80,000,000 ordinary
shares amounting to a dividend payable of RM2,400,000 will be proposed for shareholders‟
approval. The financial statements for current financial year do not reflect this proposed
dividend. Such dividend, if approved by the shareholders, will be accounted for in equity as an
appropriation of unappropriated profit in the financial year ending 30 April 2012.
102
30. OPERATING SEGMENTS - GROUP
(a) Business segments
The Group is organised on two major operating segments. These operating segments
are monitored separately for the purpose of making decisions about resource allocation
and performance assessment. Segment performance is evaluated based on operating
profit or loss which, in certain respects as explained in the table below, is measured
differently from operating profit in the consolidated financial statements. The following
summary describes the operations in each of the Group‟s reportable segments:-
Operating
segments
Business activities
Manufacturing
Manufacturing and trading of plastic products.
Investment holding Investment holding.
Transfer prices between operating segments are on negotiated basis.
Manufacturing
Investment
holding Eliminations
Notes Consolidated
2011 RM RM RM RM
Revenue
External revenue 75,069,599 - - 75,069,599
Inter-segment revenue - 2,500,000 (2,500,000) A -
Total revenue 75,069,599 2,500,000 (2,500,000) 75,069,599
Results
Segment profit/(loss) 7,880,420 (208,257) - B 7,672,163
Interest income 22,603 5,606 - 28,209
Finance costs (446,916) - - (446,916)
Depreciation and
amortisation
(3,552,469)
-
-
(3,552,469)
Income tax expense (891,930) (1,552) - (893,482)
Other non-cash income 182,181 - - C 182,181
103
30. OPERATING SEGMENTS - GROUP (CONT’D)
(a) Business segments (cont‟d)
Manufacturing
Investment
holding
Eliminations
Notes
Consolidated 2010 RM RM RM RM
Revenue
External revenue 67,717,054 - - 67,717,054
Inter-segment revenue - 2,500,000 (2,500,000) A -
Total revenue 67,717,054 2,500,000 (2,500,000) 67,717,054
Results
Segment profit/(loss) 8,630,268 (187,126) - B 8,443,142
Interest income 55,548 602 - 56,150
Finance costs (453,947) - - (453,947)
Depreciation and
amortisation
(2,941,714)
-
-
(2,941,714)
Income tax expense (1,390,008) - - (1,390,008)
Other non-cash
expenses
(320,702)
-
-
C
(320,702)
Manufacturing
Investment
holding
Eliminations
Notes
Consolidated 2011 RM RM RM RM
Assets
Segment assets 72,796,259 44,153,863 (43,950,378) D 72,999,744
Additions to non-
current assets other
than financial
instruments
5,237,770
-
-
E
5,237,770
Liabilities
Segment liabilities 20,335,774 49,335 (13,523,378) F 6,861,731
2010
Assets
Segment assets 68,001,400 44,237,123 (43,961,258) D 68,277,265
Additions to non-
current assets other
than financial
instruments
11,609,846
-
-
E
11,609,846
104
30. OPERATING SEGMENTS - GROUP (CONT’D)
(a) Business segments (cont‟d)
Manufacturing
Investment
holding
Eliminations
Notes
Consolidated
2010 (cont’d) RM RM RM RM
Liabilities
Segment liabilities 18,997,354 29,793 (13,534,258) F 5,492,889
Notes to the nature of adjustments and eliminations to arrive at amounts reported in the
consolidated financial statements:-
A. Inter-segment revenues are eliminated on consolidation.
B. The following items are added to/(deducted from) segment profit to arrive
at “profit before tax” presented in the consolidated income statement:-
2011 2010
RM RM
Segment profit 7,672,163 8,443,142
Interest income 28,209 56,150
Finance costs (446,916) (453,947)
Profit before tax 7,253,456 8,045,345
C.
Other non-cash income/(expenses) consist of the following items as
presented in the respective notes to the financial statements:-
2011 2010
RM RM
Allowance for impairment of
receivables
(41,901)
(226,017)
Property, plant and equipment written
off
(2,851)
-
Inventories written down (24,472) (157,307)
Allowance for impairment of
receivables no longer required
56,942
13,141
Amortisation of deferred income –
government grant
43,496
43,496
Loss on disposal of property, plant and
equipment
-
(4,419)
Reversal of inventories written down 150,967 -
Waiver of debts - 10,404
182,181 (320,702)
105
30. OPERATING SEGMENTS – GROUP (CONT’D)
(a) Business segments (cont‟d)
Notes to the nature of adjustments and eliminations to arrive at amounts reported in the
consolidated financial statements (cont‟d):-
D. The following items are added to segment assets to arrive at total assets reported
in the consolidated statement of financial position:-
E. Additions to non-current assets other than financial instruments consist of:-
F. The following items are added to segment liabilities to arrive at total liabilities
reported in the consolidated statement of financial position:-
(b) Geographical information
There is no geographical information presented as the Group is predominantly operating
in Malaysia.
(c) Information about a major customer
Revenue from one major customer amounted to RM8,105,064 (2010: RM8,061,140)
arised from sales by the manufacturing segment.
2011
RM
2010
RM
Segment assets 72,999,744 68,277,265
Tax recoverable - 178,419
Total assets
72,999,744
68,455,684
2011
RM
2010
RM
Property, plant and equipment 5,237,770 11,609,846
2011
RM
2010
RM
Segment liabilities 6,861,731 5,492,889
Finance lease creditors 1,179,751 1,196,641
Borrowings 4,920,801 5,720,020
Tax payable 25,353 -
Deferred tax liabilities 2,771,000 2,765,000
Total liabilities 15,758,636 15,174,550
106
31. FINANCIAL INSTRUMENTS
Risk management objectives and policies
The Group is exposed to various risks in relation to financial instruments. The Group's financial
assets and liabilities by category are summarised in note 3.12 and 3.13. The main types of risks
are foreign currency risk, interest rate risk, credit risk and liquidity risk.
Financial risk management policy is established to ensure that adequate resources are available
for the development of the Group‟s business whilst managing its foreign currency risk, interest
rate risk, credit risk and liquidity risk. The Group operates within clearly defined policies and
procedures that are approved by the Board of Directors to ensure the effectiveness of the risk
management process.
(a) Foreign currency risk
Foreign currency risk is the risk that the fair value or future cash flows of a financial
instrument will fluctuate because of changes in foreign exchange rates.
The Group is exposed to foreign currency risk mostly on its sales and purchases that are
denominated in a currency other than the functional currency of the Group. The
currencies giving rise to this risk are primarily US Dollar, Singapore Dollar, EURO,
Australian Dollar and Japanese Yen.
Based on carrying amounts as at the reporting date, foreign currency denominated
financial assets and liabilities which expose the Group to currency risk are disclosed
below:-
USD SGD EURO AUD JPY
RM RM RM RM RM
30 April 2011
Financial assets 1,093,055 5,727,569 191,080 30 25
Financial liabilities (775,692) (53,518) - - -
Net exposure 317,363 5,674,051 191,080 30 25
All financial assets and financial liabilities of the Company are denominated in Ringgit
Malaysia currency.
Foreign currency sensitivity analysis
The following table illustrates the sensitivity of profit in regards to the Group's financial
assets and financial liabilities and the RM/USD exchange rate, RM/SGD exchange rate,
RM/EURO exchange rate, RM/AUD exchange rate and RM/JPY exchange rate with „all
other things are being equal‟.
107
31. FINANCIAL INSTRUMENTS (CONT’D)
Risk management objectives and policies (cont’d)
(a) Foreign currency risk (cont‟d)
Foreign currency sensitivity analysis (cont’d)
It assumes a +/- 3% change of the RM/USD, RM/SGD, RM/EURO, RM/AUD and
RM/JPY exchange rates respectively for the financial year ended at 30 April 2011. The
percentages have been determined based on the average market volatility in exchange
rates in the previous 12 months. The sensitivity analysis is based on the Group's foreign
currency financial instruments held at each reporting date.
If the RM had strengthened against the USD, SGD, EURO, AUD and JPY by 3%
respectively, this would have the following impact:-
Decrease on profit for the year
USD SGD EURO AUD JPY Total
RM RM RM RM RM RM
30 April 2011
(9,521)
(170,221)
(5,732)
(1)
(1)
(185,476)
If the RM had weakened against the USD, SGD, EURO, AUD and JPY by 3%
respectively, then the impact to profit for the year would be the opposite effect.
Exposures to foreign exchange rates vary during the financial year depending on the
volume of overseas transactions. Nonetheless, the analysis above is considered to be
representative of the Group's exposures to foreign currency risk.
(b) Interest rate risk
Interest rate risk is the risk that the fair value or future cash flows of the Group‟s
financial instruments will fluctuate because of changes in market interest rates.
The Group‟s fixed rate borrowings are exposed to a risk of change in their fair value
due to changes in interest rates. The Group‟s variable rate borrowings are exposed to
the risk of change in cash flows due to changes in interest rates. Short term receivables
and payables are not significantly exposed to interest rate risk.
The Group‟s interest rate management objective is to manage interest expenses
consistent with maintaining an acceptable level of exposure to interest rate fluctuation.
108
31. FINANCIAL INSTRUMENTS (CONT’D)
Risk management objectives and policies (cont’d)
(b) Interest rate risk (cont‟d)
Interest rate sensitivity
As at 30 April 2011, the Group‟s borrowings are at fixed interest rates. The exposure to
interest rates for the Group‟s and the Company‟s short term placement is considered
immaterial.
The interest rate profile of the Group‟s and of the Company‟s significant interest-
bearing financial instruments, based on carrying amounts as at the end of the reporting
period is as follows:-
There is
no
interest
rate
sensitivi
ty
analysis
presente
d as the
Group‟s
and the
Compa
ny‟s
financia
l
instruments held at reporting date are not sensitive to changes in interest rate.
Group Company
RM RM
Fixed rate instruments
Financial asset
Fixed deposits with licensed banks 272,635 164,652
Financial liabilities
Term loans (3,942,499) -
Bankers‟ acceptance (978,302) -
Finance lease creditors (1,179,751) -
(6,100,552) -
Net financial (liabilities)/assets (5,827,917) 164,652
109
31. FINANCIAL INSTRUMENTS (CONT’D)
Risk management objectives and policies (cont’d)
(c) Credit risk
Credit risk is the risk that counterparty fails to discharge an obligation to the Group and
the Company. The Group's and the Company‟s maximum exposure to credit risk is
limited to the carrying amount of financial assets recognised at the reporting date, as
summarised below:-
Group Company
2011 2010 2011 2010
RM RM RM RM
Classes of financial
assets - carrying
amounts:-
Cash and cash
equivalents
2,033,833
6,315,451
203,485
275,865
Trade receivables 19,181,377 15,687,756 - -
Other receivables 2,367,417 2,362,210 - -
Amount due from
a subsidiary
company
-
-
13,523,378
13,534,258
23,582,627 24,365,417 13,726,863 13,810,123
The Group continuously monitors defaults of customers and other counterparties,
identified either individually or by group, and incorporate this information into its credit
risk controls. Where available at reasonable cost, external credit ratings and/or reports
on customers and other counterparties are obtained and used. The Group's policy is to
deal only with creditworthy counterparties.
The Group's management considers that all the above financial assets that are not
impaired or past due for each of the reporting dates under review are of good credit
quality.
The ageing analysis of trade receivables of the Group is as follows:-
Allowance for impairment loss
Individually Collectively
Gross impaired impaired Total Net
RM RM RM RM RM
2011
Within terms 14,769,033 - - - 14,769,033
Past due 1 to 30 days 2,413,214 - - - 2,413,214
Past due 31 to 60 days 921,684 - - - 921,684
Past due 61 to 90 days 574,940 - - - 574,940
Past due 91 to 120 days 285,817 - - - 285,817
Past due more than 120
days
712,787
496,098
-
496,098
216,689
19,677,475 496,098 - 496,098 19,181,377
110
31. FINANCIAL INSTRUMENTS (CONT’D)
Risk management objectives and policies (cont’d)
(c) Credit risk (cont‟d)
None of the Group's financial assets are secured by collateral or other credit
enhancements and none of the carrying amount of financial assets whose terms have
been renegotiated that would otherwise be past due or impaired.
In respect of trade and other receivables, the Group is not exposed to any significant
credit risk exposure to any single counterparty or any group of counterparties having
similar characteristics. Trade receivables consist of a large number of customers in
various industries and geographical areas. Based on historical information about
customer default rates, the management consider the credit quality of trade receivables
that are not past due or impaired to be good.
The credit risk for cash and cash equivalents and short term placements is considered
negligible, since the counterparties are reputable banks with high quality external credit
ratings.
(d) Liquidity risk
Liquidity risk is the risk arising from the Group and the Company not being able to
meet its obligations due to shortage of funds.
In managing its exposures to liquidity risk, the Group and the Company maintains a
level of cash and cash equivalents and bank credit facilities deemed adequate by the
management to ensure that it will have sufficient liquidity to meet its liabilities when
they fall due.
The following table shows the areas where the Group and the Company are exposed to
liquidity risk:-
Group Company
Current
Less than
1 year
Non-current
1 to 5 years
Current
Less than
1 year
Non-current
1 to 5 years
RM RM RM RM
30 April 2011
Non-derivative
financial liabilities
Term loans 1,859,535 2,082,964 - -
Bankers‟ acceptance 978,302 - - -
Finance lease
creditors
562,416
749,813
-
-
Trade payables 4,151,940 - - -
Other payables 2,620,495 - 49,335 -
Total undiscounted
financial liabilities
10,172,688
2,832,777
49,335
-
111
31. FINANCIAL INSTRUMENTS (CONT’D)
Risk management objectives and policies (cont’d)
(d) Liquidity risk (cont‟d)
The above amounts reflect the contractual undiscounted cash flows, which may differ
from the carrying values of the financial liabilities at the reporting date.
32. CAPITAL MANAGEMENT OBJECTIVE
The primary capital management objective of the Group is to maintain a strong capital base and
safeguard the Group‟s ability to continue as a going concern, so as to sustain future
development of the business. There is no change to the objectives in financial year 2011.
The Group manages its capital by regularly monitoring its current and expected liquidity
requirement and modifies the combination of equity and borrowings from time to time to meet
the needs. Shareholders equity and gearing ratio of the Group as at 30 April 2011 is as follows:-
RM
Total equity 57,241,108
Borrowings 6,100,552
Debt-to-equity ratio
0.11
The Group has complied with Practice Note No. 17/2009 of Bursa Malaysia Securities Berhad
which requires the Group to maintain a consolidated shareholders‟ equity not less than 25% of
the issued and paid-up capital of the Company and such shareholders‟ equity is not less than
RM40 million.
33. FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying amounts of financial assets and liabilities of the Group and of the Company at the
reporting date approximate their fair values 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.
112
34. DISCLOSURE OF REALISED AND UNREALISED PROFITS/(LOSSES)
Bursa Malaysia Securities Berhad has, on 25 March 2010 and 20 December 2010, issued
directives requiring all listed corporations to disclose the breakdown of unappropriated profits
or accumulated losses into realised and unrealised on group and company basis, as the case
may be, in quarterly reports and annual audited financial statements.
The breakdown of unappropriated profit as at the reporting date that has been prepared by the
Directors in accordance with the directives from Bursa Malaysia Securities Berhad stated above
and Guidance on Special Matter No. 1 issued on 20 December 2010 by the Malaysian Institute
of Accountants are as follows:-
Group Company
2011 2011
RM RM
Total unappropriated profit of the Company
and its subsidiary company:
- Realised 44,097,578 2,465,782
- Unrealised (2,566,815) -
41,530,763 2,465,782
Consolidation adjustments - -
41,530,763 2,465,782
The above disclosures were reviewed and approved by the Board of Directors in accordance
with a resolution of the Directors on 25 August 2011.
113
LANDED PROPERTIES OWNED BY OUR GROUP
The summary of the information on landed properties owned by our Group as at 30 April 2011 are set
out below:
Registered
Owners
Title/Location/ Postal
Address
Date of
Acquisition Description/
Existing Use
Land
area/
Built up
area
(sq ft)
Tenure
(years)
Approximate
age of buildings/
Date of Issuance
of Certificate of
Fitness
Audited
net book
value as at
30 April
2011
RM’000
LSSPI H.S. (M) 2452, Lot
3304, Tempat Batu 24,
Jalan Air Hitam-Johor
Bahru, Mukim Senai-
Kulai, Daerah Kulai,
Negeri Johor Darul
Takzim
02-09-1991 Manufacturing/
Industrial Land/
Factory
136,277/
70,000
Leasehold (99
years expiring
on 9.8.2090)
6 years/
Certificate of
Fitness for
Occupation dated
10.7.2002
2,655
LSSPI Geran 694, Lot 3316,
Tempat Batu 24, Jalan
Ayer Hitam-Johor
Bahru, Mukim Senai-
Kulai, Daerah Kulai,
Negeri Johor Darul
Takzim
16-01-2004 Manufacturing/
Industrial Land/
Single Storey
Factory & Double
Storey Office,
Store &
TNB substation
138,030/
94,613
Freehold 1 year/
Certificate of
Fitness for
Occupation dated
28.03.2007
4,842
LSSPI Geran Mukim 1875, Lot
3303, Mukim Senai-
Kulai, Daerah Kulai,
Negeri Johor Darul
Takzim
10-07-2009 Freehold
agricultural land
(Conversion to
Industrial
land)/Factory,
Office & TNB
substation
132,041 Freehold 5,801
LSSPI H.S.(M) 840, Lot 3059,
Daerah Seberang Perai
Tengah, Mukim 06,
Negeri Pulau Pinang
Sept 2005 Building 5,037 /
5,637
Freehold 15 years/
Certificate of
Fitness for
Occupation dated
29.12.1992
530
LSSPI Geran 696, Lot 3281,
Tempat Batu 24, Jalan
Ayer Hitam-Johor
Bahru, Mukim Senai-
Kulai, Daerah Kulai,
Negeri Johor Darul
Takzim
22-08-2005 Agricultural 117,339 Freehold N/A 650
LSSPI Geran 697, Lot 3282,
Tempat Batu 24, Jalan
Ayer Hitam-Johor
Bahru, Mukim Senai-
Kulai, Daerah Kulai,
Negeri Johor Darul
Takzim
22-08-2005 Agricultural 113,256 Freehold N/A 650
114
ANALYSIS OF SHAREHOLDINGS AS AT 29 JULY 2011
Authorised Capital RM100,000,000.00
Issued and fully paid-up Capital RM40,000,000.00
Class of Shares Ordinary shares of RM0.50 each fully paid up
Voting Right One vote per RM0.50 share
ANALYSIS BY SIZE OF HOLDING
No. of No. of
Shareholders Shares held %
Less than 100 shares Less than 100 shares - - -
100 to 1,000 shares 307 262,800 0.33
1,001 to 10,000 shares 522 2,481,300 3.10
10,001 to 100,000 shares 153 4,853,900 6.07
100,001 to less than 5% of Issued Shares 35 17,879,300 22.35
5% and above of Issued Shares 6 54,522,700 68.15
Total 1,023 80,000,000 100.00
DIRECTORS’ SHAREHOLDINGS AS AT 29 JULY 2011
No. Name No. of Shares Held
Direct % Indirect %
1. Dato‟ Lee Hock Seng 8,303,141 10.38 24,000,000* 30.00
2. Lee Hock Chai 5,928,953 7.41 24,000,000* 30.00
3. Lee Hock Guan 5,928,953 7.41 24,000,000* 30.00
4. Lee Hock Meng 5,928,953 7.41 24,000,000* 30.00
5. Tang Nai Soon 400,000 0.50 - -
6. Amrik Singh Harcharan Singh 80,000 0.10 - -
7. Wong Tun Boon 20,000 0.03 - -
* deemed interest by his direct interest in SCGM Lee Sdn Bhd.
SUBSTANTIAL SHAREHOLDERS AS AT 29 JULY 2011
No. of Shares Held
Name Direct % Indirect %
SCGM Lee Sdn Bhd 24,000,000 30.00 - -
Dato‟ Lee Hock Seng 8,303,141 10.38 24,000,000* 30.00
Lee Hock Chai 5,928,953 7.41 24,000,000* 30.00
Lee Hock Guan 5,928,953 7.41 24,000,000* 30.00
Lee Hock Meng 5,928,953 7.41 24,000,000* 30.00
115
Lew Han Yean 4,534,700 5.67 - -
Rohaya Binti Ali Haidar 4,422,900 5.53 - -
* deemed interest by his direct interest in SCGM Lee Sdn Bhd.
THIRTY LARGEST SHAREHOLDERS AS AT 29 JULY 2011
NO. SHAREHOLDERS NO OF SHARES OF
RM0.50 EACH
PERCENTAGE
(%)
1 SCGM Lee Sdn Bhd 24,000,000 30.00
2 Dato‟ Lee Hock Seng 8,303,141 10.38
3 Lee Hock Meng 5,928,953 7.41
4 Lee Hock Guan 5,928,953 7.41
5 Lee Hock Chai 5,928,953 7.41
6 Lew Han Yean 4,432,700 5.54
7 Amsec Nominees (Tempatan) Sdn Bhd
- Pledged Securities Account For Rohaya Binti
Ali Haidar
3,352,700 4.20
8 Tai Chin Lian 2,507,400 3.13
9 Lee Lih Chyong 1,495,600 1.90
10 Toh Chun Nam 1,134,600 1.42
11 Rohaya Binti Ali Haidar 1,070,100 1.34
12 Omar Bin Zolkifli 1,000,000 1.25
13 Jahubar Sathik Bin Abdul Razak 998,000 1.25
14 Tang Nai Soon 400,000 0.50
15 Chong Set Fah 394,800 0.49
16 Wong Kim Leng 327,000 0.41
17 Chong Yew Chee 317,000 0.40
18 Kok Yon Lan 296,000 0.37
19 Hong Gar Sing 250,000 0.31
20 Lee Hock Lai 250,000 0.31
21 Soh Yeng Kiong 250,000 0.31
22 Lee, Meng-Hsiu 250,000 0.31
23 Tatawa Industries (M) Sdn. Bhd. 250,000 0.31
24 Valutrade (M) Sdn. Bhd. 249,000 0.31
25 Zabir Bin Bajuri 245,000 0.31
26 Lee Huang Yu-Mei 231,000 0.29
27 HLG Nominee (Tempatan) Sdn Bhd Pledged
Securities Account for Ibrahim Bin Hamzah
227,000 0.28
28 Chen Wei Fatt 200,000 0.25
29 Cheaw Yit Ming 200,000 0.25
30 Lee Ship 200,000 0.25
116
INVESTOR RELATIONS
Head Office Lot 3304 Batu 24 ½ Jalan Kulai – Air
Hitam, 81000 Johor.
Tel: 60-7-6522288 Fax: 60-7-6522299
General Administrative Division Lot 3304 Batu 24 ½ Jalan Kulai – Air
Hitam, 81000 Johor.
Tel: 60-7-6522288 Fax: 60-7-6522299
Accounting and Finance Division Lot 3304 Batu 24 ½ Jalan Kulai – Air
Hitam, 81000 Johor.
Tel: 60-7-6522288 Fax: 60-7-6522299
Financial Year 1 May 2010 to 30 April 2011
Date of Establishment 27 June 2007
Authorised Capital RM100,000,000
Ordinary Issued & Paid-Up Capital RM40,000,000
Number of Shareholders 1,023
Number of Employees 422
Stock Exchange Listing Bursa Malaysia Securities Berhad
Registrar Office Mega Corporate Services Sdn Bhd
Auditors Messrs SJ Grant Thornton
Website and Notices www.scgmbhd.com
www.plastictray.com
Historical Stock Price Movements Lowest: RM0.405 Highest: RM0.795
117
SCGM BHD (Company No. 779028 H)
(Incorporated in Malaysia)
FORM OF PROXY (please refer to the notes below)
I/We ______________________________________ I.C No./Co.No./CDS No.: ___________________________ (Full name in block letters)
of _________________________________________________________________________________________
(Full address) being a member/members of SCGM BHD hereby appoint the following person(s):-
Name of proxy, NRIC No. & Address No. of shares to be
represented by proxy
1.
2.
or failing him/her, the Chairman of the Meeting as my/our proxy to vote for me/us on my/our behalf at the Fourth Annual General
Meeting of the Company to be held at the office of SCGM Bhd, Lot 3304, Batu 24 ½, Jalan Kulai – Air Hitam, 81000 Kulai, Johor
on Tuesday, 27th September 2011 at 2.00 p.m. My/our proxy is to vote as indicated below:-
FIRST PROXY SECOND PROXY
For Against For Against
Resolution 1 – First and final tax exempt dividend
Resolution 2 – Directors’ fees
Resolution 3 – Re-election of Lee Hock Meng
Resolution 4 – Re-election of Tang Nai Soon
Resolution 5 – Re-appointment of auditors
(Please indicate with a “” or “X” in the space provided how you wish your vote to be cast. If no instruction as to voting is given, the
proxy will vote or abstain from voting at his/her discretion. The first named proxy shall be entitled to vote on a show of hands).
Dated this …....….. day of ……………..…… 2011 ………………………….
Signature/Common Seal
Notes:-
1. A member entitled to attend and vote at the meeting is entitled to appoint up to two proxies to attend and vote in
his/her stead. A proxy need not be a member of the Company.
2. Where a member appoints two proxies, the appointment shall be invalid unless he/she specifies the proportions of
his/her holdings to be represented by each proxy.
3. If the appointer is a corporation, this form must be executed under its Common Seal or under the hand of its attorney
duly authorized.
4. Where a member of the Company is an authorized nominee as defined in accordance with the Securities Industry
(Central Depositories) Act, 1991, it may appoint at least one proxy in respect of each securities account it holds with
ordinary shares of the Company standing to the credit of the said securities account.
5. The Form of Proxy must be deposited at the Registered Office of the Company at Level 15-2, Bangunan Faber
Imperial Court, Jalan Sultan Ismail, 50250 Kuala Lumpur not less than 48 hours before the time appointed for
holding the meeting or any adjournment thereof.
No. of ordinary shares held
118