MULTI SPORTS HOLDINGS LTD
(Incorporated in Bermuda under the Companies Act, 1981 of Bermuda - Registration No. 42425)
(Registered as a foreign company in Malaysia under the Companies Act, 1965 of Malaysia - Company No. 995199-H)
MULTI SPORTS HOLDINGS LTD | ANNUAL REPORT 2009
ANNUAL REPORT
ANNUAL REPORT
2009
09
table of contents
Financial Highlights .....................................
2
Corporate Information .................................
3
Our Group Structure ...................................
4
Our Milestones ...........................................
5
Our Listing .................................................
6
Press Releases ..........................................
7
Production Process ....................................
8
Our Products .............................................
9
Profile of Directors ..................................... 10
Statement from the Executive Chairman . ....... 14
Corporate Governance Statement ................ 18
Audit Committee Report .............................. 27
Statement on Internal Control . ..................... 31
Financial Statements ................................... 33
Statistics of Shareholdings ........................... 73
List of Properties . ...................................... 75
Notice of Annual General Meeting
for Year 2010 . .......................................... 76
Appendix 1 ................................................ 80
Proxy Form
MULTI SPORTS HOLDINGS LTD
annual report 2009
FINANCIAL HIGHLIGHTS
Revenue by Product (RMB million)
Revenue (RMB million)
.2%
R 30
CAG
500
250
385
400
181
132
181
148
148
150
215
119
100
100
50
0
0
2006
234
200
307
300
200
474
2007
50
2006
TPR
Shareholder’s Equity (RMB million)
11
9
6
5
2009
2008
48
46
34
28
2007
RB
2008
MD1
2009
MD2
Cash and Cash Equivalent (RMB million)
400
200
161
307
300
150
200
; and
100
100
42
53
56
2007
2008
50
17
0
24
30
2007
2008
0
2006
2009
2006
Gross Profit (RMB million)/Margins (%)
250
26.7%
27.8%
200
150
27.3%
.4%
150
161
50
28.1%
24.8%
GR
CA
100
116
100
22.6%
200
R 41
CAG
Operating Profit (RMB million)/Margins (%)
33.9%
30.0%
2009
1%
39.
133
105
76
85
57
49
50
0
0
2006
2007
2008
2009
2006
2007
Profit After Tax (RMB million)/Margins (%)
200
22.6%
150
23.9%
24.8%
.5%
R 32
CAG
24.0%
114
92
100
76
50
49
0
2006
2007
2008
2009
2008
2009
MULTI SPORTS HOLDINGS LTD
annual report 2009
CORPORATE INFORMATION
AUDIT COMMITTEE
SOLICITORS
Chan Chiu Hung Alex (Chairman)
Gong Ane (Member)
Lee Kian Hu (Member)
Conyers Dill & Pearman Pte Ltd
9 Battery Road
#20-01 Straits Trading Building
Singapore 049910
Tel : +65 6223 6006
Fax : +65 6223 7887
NOMINATION COMMITTEE
BOARD OF DIRECTORS
Lin Huozhi
Executive Chairman and
Chief Executive Officer
Lin Liying
Executive Director
Huang Weimin
Executive Director
Chan Chiu Hung Alex
Independent
Non-Executive Director
Gong Ane
Independent
Non-Executive Director
Lee Kian Hu
Independent
Non-Executive Director
Chan Chiu Hung Alex (Chairman)
Gong Ane (Member)
Lee Kian Hu (Member)
REMUNERATION COMMITTEE
Lin Liying (Chairman)
Chan Chiu Hung Alex (Member)
Gong Ane (Member)
COMPANY SECRETARIES
Wong Wei Fong (MAICSA 7006751)
Richard J. Evans –
Assistant Company Secretary
AGENT IN MALAYSIA
PFA Corporate Consultants Sdn Bhd
Level 18, The Gardens North Tower
Mid Valley City, Lingkaran Syed Putra
59200 Kuala Lumpur
Tel : +603-2264 8888
Fax : +603-2282 2733
REGISTERED OFFICE IN BERMUDA
Clarendon House, 2 Church Street
Hamilton HM11, Bermuda
Tel : +1 (441) 295 1422
Fax : +1 (441) 292 4720
REGISTERED OFFICE IN MALAYSIA
Level 18, The Gardens North Tower
Mid Valley City, Lingkaran Syed Putra
59200 Kuala Lumpur
Tel : +603-2264 8888
Fax : +603-2282 2733
AUDITORS
Foo Kon Tan Grant Thornton LLP
47, Hill Street #05-01, Singapore
Chinese Chamber of
Commerce & Industry Building
Singapore 179365
Tel : +65 6336 3355
Fax : +65 6337 2197
BUSINESS ADDRESS
Yanshang Industry Zone
Chendai Town, Jinjiang City
Fujian Province, China
Tel : +86 (595) 8205 8888
Fax : +86 (595) 8508 3788
e-mail : [email protected]
SHARE REGISTRAR IN BERMUDA
Codan Services Limited
Clarendon House, 2 Church Street
Hamilton HM11, Bermuda
Tel : +1 (441) 295 1422
Fax : +1 (441) 292 4720
SHARE REGISTRAR IN MALAYSIA
Tricor Investor Services Sdn Bhd
Level 17, The Gardens North Tower
Mid Valley City, Lingkaran Syed Putra
59200 Kuala Lumpur
Tel : +603-2264 3883
Fax : +603-2282 1886
PRINCIPAL BANKERS
Quanzhou City Commercial Bank
Hepingzhong Road, Qingyang
Jinjiang City, Fujian Province
China 362200
Tel : +86 (595) 8508 3829
Industrial and Commercial Bank of China
Chongde Road
Qingyang, Jinjiang City
Fujian Province China 362200
Tel : + 86 (595) 8586 2680
STOCK EXCHANGE LISTING
Main Market of Bursa Malaysia
Securities Berhad
(Listed since 19 August 2009)
Stock name : MSPORTS
Stock Code : 5150
Website : www.multi-sports.com.cn
MULTI SPORTS HOLDINGS LTD
annual report 2009
OUR GROUP STRUCTURE
The structure of our Group is set out below:-
Pak Sing Shoe Material
(H.K.) Limited
(“Paksing”)
100%
Jinjiang Baixing Shoe
Material Co., Ltd
(“Jinjiang Baixing”)
100%
Multi Sports is an investment holding company. The principal activities of its subsidiaries are as follows:Pak Sing Shoe Material (H.K.) Limited
Investment Holding
Jinjiang Baixing Shoe Material Co., Ltd
Design, development and manufacture of sports-shoe soles
MULTI SPORTS HOLDINGS LTD
annual report 2009
OUR MILESTONES
1993
Production of Rubber (“RB”) shoe soles
1995
Production of Thermoplastic Rubber (“TPR”) shoe soles
1999
Jinjiang Huoxing Investment Co., Ltd (“JHX”) took over entire business of developing, manufacturing and selling shoe soles built by Mr Lin Huozhi
2000
In-house production of TPR compound pellets to improve raw material quality control, lower production costs and eliminate reliance on third party suppliers
2000
Established internal R&D department to strengthen shoe sole R&D and design efforts
2003
Production of Ethylene Vinyl Acetate model (“EVA MD”) I shoe soles
2003
In-house Production of TPU and RB components
2003
JHX received “Enterprise of Credit Rating AA+” in recognition of creditworthiness
2005
Jinjiang Baixing tookover the entire business of JHX
2006
Production of EVA MD II shoe soles
2006 Successfully developed EVA MD I and MD II shoe soles with enhanced elasticity and
shock-absorbing characteristics
2008In-house production of EVA compound pellets to reduce production costs, increase profit margin and eliminate reliance on third party suppliers
2008
Jinjiang Baixing received “Quality Reliable Products” award
2008
Jinjiang Baixing’s production process accredited ISO 9001:2000 Quality Management
System
2009
Listed on Bursa Malaysia
MULTI SPORTS HOLDINGS LTD
annual report 2009
OUR LISTING
MULTI SPORTS HOLDINGS LTD
annual report 2009
PRESS RELEASES
MULTI SPORTS HOLDINGS LTD
annual report 2009
Production Process
Raw materials preparation
Processing of rubber
Completed part after gluing
Processing of EVA I
Gluing section
End product
Processing of EVA II
Components Preparation - Rubber
Components Preparation
MULTI SPORTS HOLDINGS LTD
annual report 2009
OUR PRODUCTS
EVA MD II shoe soles series
The EVA foam used in our production: • is light in weight, soft, flexible and elastic;
• has excellent cushioning and shock-absorbance
abilities;
• has good breathability;
• are resistant to wear and tear;
• are dimensionally stable;
• can be dyed to create shoe soles of various
colours;
• is easily mouldable into various shapes;
• has good tensile strength;
• is waterproof;
• is resistant to ultraviolet radiation; and
•
EVA MD I shoe soles series
Ideal for: • running shoes;
• tennis shoes;
• basketball shoes;
• ping pong shoes;
• climbing shoes;
• skateboarding shoes;
• cross-training shoes;
• general-purpose sports shoes; and
• casual-wear sports shoes.
Although EVA is used in the production of both
EVA MD II and EVA MD I shoe soles, our EVA
MD II shoe soles are produced using a distinct
production process with equipment that are
technologically more advanced. As such, EVA
MD II shoe soles have greater variability in
designs and improved quality control.
is non-toxic.
TPR shoe soles series
Our TPR shoe soles: • are lighter than RB shoe soles;
• have good cushioning abilities;
• are durable;
• have good abrasion resistance;
• are flexible;
• provide good traction even under
cold conditions;
• can be dyed into various colours;
• are easily mouldable into various
shapes;
• have good tensile strength;
• have good tear strength; and
• are waterproof.
Ideal for: • running shoes;
• climbing shoes;
• skateboarding shoes;
• general-purpose sports shoes;
• casual-wear sports shoes;
and
• is non-toxic.
RB shoe soles series
Our RB shoe soles:• are highly durable;
• are highly resistant to wear and
tear;
• have good abrasion resistance;
• provide good traction;
• have excellent tensile strength;
• are weatherproof and waterproof;
• are oil-resistant; and
• are anti-static.
Ideal for:• skateboarding shoes; and
• casual-wear sports shoes.
RB shoe-sole components are
also incorporated into our EVA MD
II and MD I shoe soles.
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MULTI SPORTS HOLDINGS LTD
annual report 2009
PROFILE OF DIRECTORS
LIN HUOZHI
LIN LIYING
Lin Huozhi was appointed to Multi Sports Board on 14
October 2008 as the Executive Chairman and CEO.
Lin Liying was appointed to Multi Sports Board on 14 October
2008 and is currently the Executive Director. She graduated
from Huaqiao University with a Degree in Accounting and
Information Technology in 2004. Upon her graduation, she
joined JHX as deputy finance manager and was responsible
for its accounting, finance and general administration. Ms
Lin joined Baixing in 2005 and assumed the position of Vice
General Manager (Sales, Marketing and Purchasing), which
she currently still holds. She was progressively accorded
further responsibilities to oversee Baixing’s procurement,
marketing and distribution functions.
Executive Chairman and CEO
(People’s Republic of China national) Age 47
He is the founder of the Group (“Multi Sports and its
subsidiaries”) and has been instrumental in the Group’s
development, growth and success. He has more than 20
years of experience in the shoe-sole-production industry and
is responsible for the formulation and execution of the overall
business strategies and policies of our Group. He is also
responsible for implementing the management policies and
overseeing the production and operation, marketing, quality
control, public relations and R&D of the Group. Mr Lin took
up the trade of shoe manufacturing as a production worker
in 1989. From 1991 to 1993, he partnered with a business
partner to manufacture generic shoes soles. From 1993 to
1999, he began his own venture in the manufacturing of
sports shoe soles. Mr Lin started Jinjiang Huoxing Investment
Co., Ltd (“JHX”) in 1999, and his reputation allowed JHX to
successfully procure orders from locally-renowned sportsfootwear manufacturers such as Fujian Guohui Shoe Industry
Co., Ltd. and 3610 (Fujian) Goods Co., Ltd. within a few
months after its establishment. Mr Lin propelled JHX’s growth
until the transfer of JHX’s business to Baixing in 2005.
Mr Lin attended the only Board meeting held in the financial
year ended 31 December 2009.
Mr Lin attended the “Mandatory Accreditation Programme for
Directors of Public Listed Companies” organised by Bursatra
Sdn. Bhd.
Executive Director
(People’s Republic of China national) Age 27
Ms Lin attended the only Board meeting held in the financial
year ended 31 December 2009.
Ms Lin attended the “Mandatory Accreditation Programme
for Directors of Public Listed Companies” organised by
Bursatra Sdn. Bhd.
MULTI SPORTS HOLDINGS LTD
annual report 2009
PROFILE OF DIRECTORS (CONT’D)
HUANG WEIMIN
Executive Director
(People’s Republic of China national) Age 40
Huang Weimin was appointed to Multi Sports Board on 10
July 2009 as an Executive Director.
From 1990 to 1996, he was the assistant to the factory
chairman of Jinjiang Chenghe Shoe Mold Co., Ltd and was
later promoted to manager of its production department. In
1997, Mr Huang joined Haishen Shoe Material Co., Ltd to
head its production department and was later promoted to
deputy general manager. He joined Baixing in 2005, and
assumed the position of Vice General Manager (Production),
which he currently still holds. He is responsible for the
general oversight of our manufacturing operations. He brings
with him more than 18 years of experience and knowledge
in the production of shoe soles and shoe-sole industry
operations.
Mr Huang attended the only Board meeting held in the
financial year ended 31 December 2009.
Mr Huang attended the “Mandatory Accreditation Programme
for Directors of Public Listed Companies” organised by
Bursatra Sdn. Bhd.
GONG ANE
Independent Non-Executive Director /
Member of Audit Committee
(People’s Republic of China national) Age 46
Gong Ane was appointed to Multi Sports Board on 10 July
2009 as an Independent Non-Executive Director. She
holds an MBA from the Open University of Hong Kong,
and graduated from the Xiamen Jimei School of Finance
in 1982. She is a member of the Institute of Certified Public
Accountants, a certified tax agent, and a qualified land
valuer. Upon graduation, she joined the finance department
of an engineering company in Fujian. In 1985, she joined
the investments division of Xiamen Special Economic Zone
Joint-Development Company. In 1990, she moved on to
the Xiamen Siming Correspondence Station of Zhonghua
Accounting Correspondence School. In 1993, she joined
Xiamen Siming Accounting Firm, and in 1998, she moved
on to Xiamen Yonghe Accounting Firm. In 2003, she joined
Xiamen Jinyonghe Tax Firm. She is presently the Director of
Tax and Deputy Director of Accounting at Xiamen Jinyonghe
Tax Firm.
Ms Gong attended the only Board meeting held in the
financial year ended 31 December 2009.
Ms Gong attended the “Mandatory Accreditation Programme
for Directors of Public Listed Companies” and a seminar on
“Communication and Behaviour” organised by Bursatra Sdn.
Bhd. and members of professional bodies respectively.
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12
MULTI SPORTS HOLDINGS LTD
annual report 2009
PROFILE OF DIRECTORS (CONT’D)
CHAN CHIU HUNG ALEX
Independent Non-Executive Director /
Chairman of Audit Committee
(People’s Republic of China national) Age 44
Chan Chiu Hung Alex was appointed to Multi Sports Board
on 10 July 2009 as an Independent Non-Executive Director.
He holds a Bachelor Degree major in Finance from Hong
Kong Baptist University. He has been a Certified Practising
Accountant of Hong Kong Institute of Certified Public
Accountants since 1998, a fellow member of the Association
of Chartered Certified Accountants since 2003, an Associate
in the Hong Kong Institute of Chartered Secretaries and
Institute of Chartered Secretaries and Administrators since
2006, and a member of the Institute of Chartered Accountants
in England and Wales since 2007.
He started his career in 1995 as an accountant in Simmons
Bedding and Furniture (HK) Limited. Subsequently, he
worked in various Hong Kong-listed companies, handling
compliance, accounting, taxation and financial issues. In
1998, he moved on to FT Far East Limited as an accounting
manager. In 2003, he became the financial controller and
qualified accountant of Pak Tak Knitting & Garment Factory
Limited. In 2005, he joined Signal Media and Communications
Holdings Limited as financial controller. In 2006, he was
appointed as financial controller, company secretary, qualified
accountant and authorised representative of Epro Systems
Limited, an IT-services company. In 2007, he moved on to
join China Sports International Limited (“China Sports”),
a company listed on SGX, as chief financial controller, a
position he currently still holds. He oversees the management
of the overall finance and accounting operations of China
Sports. He is also responsible for implementing internal
controls and corporate governance and practices, as well as
liaising with external parties and regulatory bodies in respect
of China Sports’ financial matters.
Mr Chan attended the only Board meeting held in the financial
year ended 31 December 2009.
Mr Chan attended the “Mandatory Accreditation Programme
for Directors of Public Listed Companies” organised by
Bursatra Sdn. Bhd.
In addition, he also attended the following seminars and
briefings conducted by the regulatory authorities and
members of professional bodies:1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
21.
22.
23.
24.
25.
Analysing Annual Reports from an Investor’s Perspective:
Workshop (Part 1)
Credit Analysis for SMEs - Case Study Workshop
(Part 2)
New and Amended HKFRSs for 2009/10
Credit Analysis for SMEs Case Study Workshop
(Part 1)
Understanding Structured Products for Accountants–
Case Study Workshop
HKAS 1 Presentation of Financial Statements and
HKFRS 8 Operating Segments
Understanding Accumulators for Accountants –
Case Study Workshop
How do the new M&A Tax Rules impact your deal in
China
TUE 909 – HKFRS 7 Financial Instruments :
Disclosures
TUE 908 – HKFRS 3 (Revised) Business
Combinations
Workshops on PRC Accounting, Auditing, Capital
Market & Taxation
TUE 907 – Annual Improvements to HKFRSs 2008
Interest Rate Derivatives Make Easy (Part 1) (re-run)
TUE 906 – HKAS 27 (Revised) Consolidated and
Separate Financial Statements
US GAAP Convergence to IFRS
TUE 904 – Amendments to HKAS 39 and HKFRS 7
Recent Development of Company Law in China
Fin. Reporting Forum on IASB Discussion Paper on
Pre. Views on Fin. Statement Presentation (Re-run)
Update and Recap on HKAS 39 and HKFRS 7
TUE 903 – HKAS 1 (Revised) Presentation of Financial
Statements
A Refresher Course on Current Financial Reporting
Standards
Valuation for Accounting Purposes
TUE 901 – HKFRSs Year End Update
Understanding Accumulator for Accountants (Part 1)
HKAS 27 and HKFRS 3 (Revised)
MULTI SPORTS HOLDINGS LTD
annual report 2009
PROFILE OF DIRECTORS (CONT’D)
LEE KIAN HU
Independent Non-Executive Director /
Member of Audit Committee
(Malaysian) Age 36
Lee Kian Hu was appointed to Multi Sports Board on 10
July 2009 as an Independent Non-Executive Director. He
graduated with a Bachelor of Economics, major in Economics
and Accounting from University of Western Australia, Australia
in 1997. He qualified as a Certified Practising Accountant,
Australia in 2001. In 2002, he qualified as a Chartered
Accountant, Malaysia and was granted with the Practicing
Certificate which entitles him to engage in public practice
under Malaysian Institute of Accountants (Membership and
Council) Rules, 2001. After graduation, he gained experience
working for a local accounting firm, and moved on to an
international accounting firm. In 2003, he joined Chiang Huah
Management Consultants Sdn Bhd as Company Director.
He is now the managing partner of Hu & Co. His working
experiences include the areas of corporate and business
advisory, accounting, audit and tax.
Notes:1.
Directorship in Public Companies.
None of the Directors hold any directorship in any public
companies incorporated in Malaysia or companies
which are the subsidiaries of public companies
incorporated in Malaysia.
2.
Family Relationship
Save for the relationship between Lin Huozhi and
Lin Liying as father and daughter, none of the other
Directors are related to each other nor has any family
relationship with the substantial shareholder of the
Company. In addition, other than as disclosed, they
each do not have any personal interest in any business
arrangement involving the Company.
3.
Directors’ Shareholdings
Details of Directors’ shareholdings in the Company can
be found in the “Analysis of Shareholdings” section on
page 73 of this Annual Report.
4.
Non-Conviction of Offences
None of the Directors has been convicted of any
offences, other than traffic offences, within the past
ten (10) years.
5.
No Conflict of Interest
Other than the disclosure under the Recurrent Related
Party Transactions by Mr Lin Huozhi and Ms Lin Liying,
none of the Directors has any conflict of interest with
Company.
Mr Lee attended the only Board meeting held in the financial
year ended 31 December 2009.
Mr Lee attended the “Mandatory Accreditation Programme
for Directors of Public Listed Companies” organised by
Bursatra Sdn. Bhd.
In addition, he also attended the following seminars
conducted by the regulatory authorities and members of
professional bodies:1.
2.
Liberalization & Government Support for Malaysian
Professional Services Sector
Fundamental of Budgeting and Cash Flow Forecasting
13
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MULTI SPORTS HOLDINGS LTD
annual report 2009
STATEMENT FROM THE EXECUTIVE CHAIRMAN
On behalf of the Board of Directors of Multi Sports Holdings Ltd (the
“Board”), I am pleased to present the Annual Report and the audited
financial statements of the Group for the financial year ended 31 December
2009.
Retrospective
Our company was listed on 19 August 2009 on the Main Market of
Bursa Malaysia Securities Berhad. It was a momentous milestone in our
history. We are elated of the listing status of our Company in Malaysia.
Looking back at the listing exercise, we are happy to note that the listing
preparatory work was smooth. A special thank to all our advisers, business
associates, stakeholders and shareholders for the support in making our
listing a success.
Financial Review
LIN HUOZHI
Executive Chairman and
Chief Executive Officer
Our Group has performed well in the year under review although the tough
global economic conditions that have impacted nations and corporations.
The Group recorded a higher turnover from RMB 385.3 million in FY2008
to RMB 474.2 million in FY2009, represented an increase by 23.1% in
turnover. The Group’s profit before tax grew by 25.6% from RMB 105.2
million in FY2008 to RMB 132.1 million in FY2009.
This sterling performance is attributed to the additional set-up of five (5)
production lines each for RB and EVA MD II in Q3 2009 which enabled
the Group to better fulfil the increased demand of shoe soles from our
customers. In line with this expansion, our production capacity has
increased from 24.6 million pairs in FY 2008 to 27.9 million pairs in FY2009
on pro-rata basis, and to 32.5 million pairs on annualised basis.
The gross profit margin improved by 3.9% from 30.0% to 33.9% was mainly due to the better cost efficiencies management
as a result of the in-house production of EVA compound pallets which are key components for production of EVA MD series
and the increase in the average selling price per pair of shoe sole from RMB 17.51 in FY2008 to RMB 18.38 in FY2009.
Overall, we are pleased with the financial results of the Group. We are grateful that the uncertainties of the world economy
and other factors had not taken a toll on our business.
Production Capacity
Following the acquisition of Xibin Land, we have commenced construction of one (1) additional factory building and two (2)
workers’ dormitories on Xibin Land, which are expected to be completed by the last quarter of 2010. In addition, we have
also commenced construction of one (1) office building (of 10 storeys with 1 basement) on Xibin Land, which will also house
a research and development (“R&D”) centre, to be completed by the first half of 2011.
After the completion of the new production centre on Xibin Land, we intend to utilise the remaining RM1.7 million of the IPO
proceeds as at 31 March 2010, as well as additional internally-generated funds for acquisition of production machinery and
equipment to further increase the annual production capacity of the Group in stages to a target of up to 79.6 million pairs
of sports shoe soles per annum.
MULTI SPORTS HOLDINGS LTD
annual report 2009
STATEMENT FROM THE EXECUTIVE CHAIRMAN (CONT’D)
Our production capacity and output of shoe soles were as listed below:
FY2006
‘000
FY2007
‘000
FY2008
‘000
FY2009
‘000
Production capacity (pairs)
Production output (pairs)
Production utilisation rate (%)
17,836
13,406
75.2%
19,477
18,062
92.7%
24,583
22,119
90.0%
27,860*
25,804
92.6%
*Pro-rata basis as the production lines were set up in Q3, 2009. The annualised production capacity is 32.5 million pairs.
Dividend
As mentioned in our Prospectus dated 30 July 2009, our Board intends to recommend and distribute dividends of 20% of our
net profit distributable to our shareholders with respect to the financial years ended 31 December 2010 and 2011. The dividend
payment, if any, will be paid in Ringgit Malaysia. For the financial year ended 2009, we have not declared any dividend. In
line with our statement in our Prospectus, our ability to pay dividends or make any distributions to our shareholders for the
financial year ended 31 December 2009 as well as for future years after the financial year ended 2011, is subject to various
factors, such as having profits and excess funds not required to be retained to fund our business.
We did not declare a dividend for the financial year ended 31 December 2009 due to primarily of our commitment to expand
our production capacity and the construction of a new production centre.
In line with the implementation of the e-Dividend as per the Directive of Bursa Malaysia Securities Berhad, shareholders are
reminded to provide your bank account information to Bursa Malaysia Depository Sdn Bhd. This is to facilitate the payment
of future dividend by us directly into your bank account on and after 1 September 2010.
Industry Review and Future Prospects
Our Group designs, develops and manufactures sports-shoe soles for use by China’s sports-footwear manufacturing industry
in the production of sports shoes, a consumer good for the retail market sector.
Overview of China’s economy in 2010
According to preliminary estimation, the gross domestic product of China in the first quarter of 2010 was RMB8,057.7 billion,
a year-on-year increase of 11.9%, which was 5.7 percentage points higher than that in the same period of 2009. The value
added of the primary industry was RMB513.9 billion, up by 3.8%; that of the secondary industry was RMB3,907.2 billion,
up by 14.5%; and that of the tertiary industry was RMB3,636.6 billion, up by 10.2%.
15
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MULTI SPORTS HOLDINGS LTD
annual report 2009
STATEMENT FROM THE EXECUTIVE CHAIRMAN (CONT’D)
Overview of China’s economy in 2010 (Cont’d)
Industrial production picked up with a substantial increase in economic efficiency of enterprises. In the first quarter of 2010,
the total value added of the industrial enterprises above designated size was up by 19.6% year-on-year, or 14.5% higher
than that in the first quarter of 2009. An analysis on different types of enterprises showed that the value added growth of the
state-owned and state holding enterprises went up by 19.9%; collective enterprises by 13.0%; share-holding enterprises
by 20.8%; and 18.8% growth for enterprises funded by foreign investors or investors from Hong Kong, Macau and Taiwan
provinces. The year-on-year growth of heavy industry was 22.1%, and 14.1% for light industry. All the 39 industrial divisions
registered year-on-year growth. In terms of different areas, the growth in eastern, central and western regions was 18.3%,
23.1% and 20.2% respectively. The production and sales of industrial products went on well. In the first quarter of 2010,
the sales ratio of industrial products was 97.5%, or 0.5 percentage point higher than that in 2009.
In the first two months of 2010, the profits made by industrial enterprises above designated size stood at RMB486.7 billion,
up by 119.7% year-on-year. Among the 39 industrial divisions, 35 divisions registered year-on-year increase in profits, 2
divisions reversed from loss-making to profits, and 1 division witnessed reduction of losses.
Foreign trade recovered rapidly and trade deficit was seen in March 2010. The total value of imports and exports for the
first quarter of 2010 was US$617.85 billion, up by 44.1% year-on-year; it was 34.9 percentage points higher than that in the
fourth quarter of 2009. The value of exports was US$316.17 billion, up by 28.7%, and the value of imports was US$301.68
billion, up by 64.6%. The trade surplus was US$14.49 billion, a drop of US$47.9 billion over the same quarter last year. The
trade deficit in March was US$7.24 billion.
The urban and rural population’s income continued to grow with rapid growth in income transfer. In the first quarter of 2010,
the per capita total income of urban household was RMB5,787. Of this total, the per capita disposable income of urban
population was RMB5,308, a year-on-year growth of 9.8%, or a real growth of 7.5% after deducting price factors. Of the
per capita total income of urban household, the year-on-year growth of wage income was 9.7%; transferred income 13.3%;
net income from operation 7.5%; and 17.0% from property income. The per capita cash income of rural population was
RMB1,814, up by 11.8% year-on-year, or 9.2% growth in real term. Of this total, the growth of wage income was 16.3%;
household operating income 7.6%; property income 15.6%; and 13.8% from transferred income.
Consumer goods / domestic retail sector
Sales in domestic markets enjoyed steady and fast growth, and new areas for consumption increased rapidly. In the first
quarter of 2010, total retail sales of consumer goods reached RMB3,637.4 billion, a year-on-year rise of 17.9%, which was
2.9% higher than that in the same period of 2009. Retail sales in cities reached RMB3,057.1 billion, up by 18.4%, and retail
sales in rural areas stood at RMB580.3 billion, up by 15.4%. In particular, retail sales by businesses above designated size
reached RMB1,287.7 billion, up by 29.6%. Total retail sales of consumer goods under garments, footwear, hats, and knitwear
in the first quarter of 2010 was RMB151.0 billion, an increase of 23.9% over the first quarter of 2009.
(Source: Further Expanding Momentum of China’s Economic Recovery in the First Quarter of 2010, National Bureau of
Statistics of China, 15 April 2010)
MULTI SPORTS HOLDINGS LTD
annual report 2009
STATEMENT FROM THE EXECUTIVE CHAIRMAN (CONT’D)
Future Prospects
We are optimistic that FYE 2010 will be a promising year for our Group, as the growth rate for China’s sports-footwear
market should continue to improve in tandem with the economic growth in China, which continues to be robust, as detailed
in overview of China’s economy in 2010. As China’s per capita disposable income continues to grow, we are optimistic that
average consumption of sports shoes per person per annum will continue to grow with the increasing purchasing power
of the average person in China. This will bode well for our Group, especially in view of the size of the domestic consumer
market in China.
In view of promising market conditions for FYE 2010, we fast-tracked our expansion plans, and expect to complete construction
of all factories and dormitories on our new production centre on Xibin Land by end 2010. Our operations are expected to
grow significantly with the completion of our new production centre. The commencement of operations on Xibin Land after
completion of the buildings on Xibin Land is anticipated to contribute positively to our growth in the forthcoming years.
Our production capacity has increased by over 35% in the first quarter of 2010 as compared to the first quarter of 2009.
In line with the increase in production capacity, our Group recorded higher growth in revenue in the first quarter of 2010
as compared to the first quarter of 2009. In particular, demand for our EVA MD products continues to show growth – in
response, we aim to continue to ramp up production capacity for EVA MD products in FYE 2010.
We expect the performance of the Group to further improve in FYE 2010, as we continue to increase our production capacity
to fulfil customer demand, and increase our new range of design offerings to fulfil forecasted market trends. Apart from
fashion trends, our R&D efforts are also focused on continuing to develop sport-shoe soles with improved ergonomics and
functional features.
Whilst we are optimistic about demand conditions for our sports-shoe soles and sports shoes in China for FYE 2010, we
continue to exercise discipline in managing our operating cost base. Despite promising conditions for continued growth
in FYE 2010, we believe that prudent financial management will be fundamental to sustainable long-term growth for our
Group, and will be essential to weathering any unexpected challenging conditions.
Corporate Social Responsibility
Multi Sports Group places great importance on being a good corporate citizen with extra emphasis on preserving the
environment in the conduct of its business; various CSR initiatives by Multi Sports Group during the year amongst others
to continue activities to reduce pollutions, and improve health and safety measures. The Group will continue to identify
activities where its support will make an impact.
Acknowledgement and Appreciation
On behalf of the Board, I sincerely wish to acknowledge our people for their continued and dedicated effort in their work to
create success for our Company. We are where we are because of the hard work and supportive management team and
strong team spirit of our staff as well as the strong and continuous support and understanding of our valued customers,
suppliers and other stakeholders.
Our sincere and heartfelt thanks to them and we look forward to the continued good working relationship together. We
remain committed to our goals of providing shareholders’ value.
We would also like to thank the Malaysian government and various regulatory authorities for their support and
assistance.
Lin Huozhi
Executive Chairman
17
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MULTI SPORTS HOLDINGS LTD
annual report 2009
CORPORATE GOVERNANCE STATEMENT
The Board and Management of Multi Sports recognise the importance of good corporate governance in running the
operations of the Group and in all of its dealings and are ever mindful of the trust and expectations placed upon their
shoulders by the stakeholders.
In fulfilling the respective fiduciary duties, the principles of transparency, integrity and professionalism are incorporated
into all levels of the Group’s corporate hierarchy. It is hoped that through this common value system, shareholder value
will not just be safeguarded but the performance of the Group further enhanced and brought a notch higher.
Corporate governance principles are adopted in activities undertaken by the Group and the Board has initiated moves to
comply with the best practices of principles of good corporate governance as set out in the Malaysian Code on Corporate
Governance (the “Code”) and the Main Market Listing Requirements of Bursa Malaysia Securities Berhad.
The Board is pleased to report to the shareholders on the manner of application of these principles contained in the Code
and the extent of compliance with the best practises set out therein during the financial year just ended.
1.
DIRECTORS
1.1 Board of Directors
The Board is entrusted with and is fully responsible for the Group’s overall strategy, growth and direction
including its financial performance.
The Board provides direction and guidance and has effective control of the Group. It maintains full control of
the Group’s activities through the matrix of authority filtering down to the various components of the Group.
The CEO is responsible for ensuring the Board’s effectiveness in conducting its business and in fulfilling its
responsibilities to stakeholders.
He oversees the day-to-day operations and implementation of the Board’s corporate and operational policies
and strategies. In line with pre-determined authority levels, certain issues such as approval of interim and
annual results, significant acquisitions and disposals, long term planning and major capital expenditure are
subjected to collective decision by the Board.
Certain responsibilities are delegated to the Audit Committee which operates within clearly defined parameters
as set out in the Committee’s Terms of Reference, details of which are set out on pages 27 to 30 of this Annual
Report. This is for an added degree of independence and objectivity on matters within the ambit of the Audit
Committee.
The Board has also set up a Nomination Committee and a Remuneration Committee.
1.2 Board Balance
The Board comprises of members of diverse expertise, each of whom has a different set of experience and
management skills essential for the effective running of the Group by the coming together of their invaluable
ideas, knowledge and resources.
As at the date of this Statement, there are six (6) directors on the Board of Multi Sports of whom three (3) are
Independent Non-Executive Directors and three (3) are Executive Directors.
The profile of each Director is set out on pages 10 to 13 of this Annual Report.
The Executive Chairman and CEO together with the Executive Directors are responsible for implementing
policies and decisions of the Board. Assisted and supported by a strong Management team, they are tasked
with the respective day-to-day operations and oversee to the overall development and implementation of the
Group’s business and corporate strategies.
The Independent Non-Executive Directors, besides functioning as a check and balance, brings an element of
objectivity to the Board and provides the Board with a diverse set of experience, expertise and independent
judgement to better manage and run the Group.
All Board decisions are arrived at after due discussion and consultation and no individual director or group of
directors has any undue influence or dominance on the Board’s decision making process.
MULTI SPORTS HOLDINGS LTD
annual report 2009
CORPORATE GOVERNANCE STATEMENT (CONT’D)
1.3 Board Meetings
The Board, chaired by the Executive Chairman, meets on a quarterly basis to review and approve the results
of each financial quarter. Additional ad-hoc meetings will be called if so needed.
The Chairman of the Audit Committee would report to the Directors at Board meetings on decisions and key
issues that have been raised at the Audit Committee meetings including any areas of emphasis that may have
been expressed by the Audit Committee.
During the financial year ended 31 December 2009, there was only one Board meeting held as the Company
was listed on 19 August 2009 of which all the Directors attended that particular meeting.
1.4 Access to and Supply of Information to the Board
Prior to the convening of a Board meeting, the notice and agenda for that Board meeting are emailed and faxed
to each Board member and the full set of the relevant Board Papers are provided to them for their perusal.
The Board Papers contain information pertinent to the matters to be deliberated at the coming meeting and
any details or clarifications that the Directors may require on the agenda items would be furnished upon
request.
In a potential conflict of interest situation, the Director concerned would be required to declare his interest and
abstain from decision making.
The Company Secretary or her assistant shall attend all Board meetings as well as the Audit Committee
meetings of the Company. Their duties include minuting the proceedings and decisions of Board meetings and
ensuring that Board proceedings are properly adhered to, providing advice and ensuring that related statutory
obligations namely compliance with the Main Market Listing Requirements of Bursa Malaysia Securities Berhad,
the Malaysian Companies Act, 1965, the Bermuda Companies Act 1981 and any other relevant requirements
as may be applicable to the Company are complied with.
They also advise the Board on matters relating to corporate governance, directors’ responsibilities in
compliance with the relevant legislation and regulations and keep them updated of new statutory and regulatory
requirements relating to the discharge of duties and responsibilities of directors.
Members of the Board have complete and unimpeded access to the services and advice of the Company
Secretaries. They also have direct and unrestricted access to senior management of the Company for
information relating to the affairs of the Group and have authority to seek external professional advice at the
expense of the Company if they so require.
1.5 Appointments and Re-elections to the Board
Matters relating to the appointment of directors are dealt with by the Nomination Committee in considering
appointments of new directors, the Nomination Committee takes into consideration the mix of skills and
expertise, experience and potential contributions of the potential incoming director.
The Bye-Laws of the Company provides that all directors including the managing director shall retire from
office at least once every three (3) years and all retiring directors shall be eligible for re-election at the Annual
General Meeting (“AGM”) in which they retire. A retiring director shall remain in office until the close of the
meeting at which he retires.
The Bye-Laws further provide that directors who are appointed by the Board during the financial period before
an AGM are subject to retirement and shall be eligible for re-election by the shareholders at the next AGM of
the Company to be held following their appointments.
The names of directors seeking for re-election at the coming 2010 AGM of the Company are Lin Huozhi and
Lin Liying under Bye-law 86 and Huang Weimin, Chan Chiu Hung Alex, Gong Ane and Lee Kian Hu under
Bye-law 85 (6).
19
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MULTI SPORTS HOLDINGS LTD
annual report 2009
CORPORATE GOVERNANCE STATEMENT (CONT’D)
1.6 Directors’ Training
While the Board has not set in place formal training programmes for the Directors, each of them is aware of
the need to continuously undergo training appropriate to their needs. Training attended by the Directors during
the financial year is set out in their respective profile on pages 10 to 13 of this Annual Report.
1.7 Directors’ remuneration
The Company has established a Remuneration Committee. There are presently three (3) Directors holding
executive positions and drawing salaries from the Group.
The remuneration packages for the Executive Directors of the Company are, to a certain extent, dictated by
market competitiveness and are tailored to retain and motivate directors of the quality required to manage the
business of Multi Sports Group and to align the interests of the Directors with those of the shareholders.
The contribution, responsibilities and performance of each Executive Director are also taken into account
when determining their respective remuneration packages.
The remuneration packages of the executive directors for the financial year ended 31 December 2009 are as
follows:-
Fees
Category
(RMB)
Executive
–
Directors
Non-Executive
189,734
Directors
Total
189,734
Salaries & other
emoluments
(RMB)
Total
(RMB)
1,079,394
1,079,394
–
189,734
1,079,394
1,269,128
The number of Directors whose total remuneration falls within the following bands is as follows:-
Range of Remuneration
RMB 50,001 – RMB100,000
RMB100,001 – RMB150,000
RMB150,001 – RMB200,000
RMB200,001 – RMB250,000
RMB250,001 – RMB300,000
RMB300,001 – RMB350,000
RMB350,001 – RMB400,000
RMB400,001 – RMB450,000
RMB450,001 – RMB500,000
RMB500,001 – RMB550,000
Executive
–
–
1
–
–
1
–
–
–
1
Non Executive
3
–
–
–
–
–
–
–
–
–
MULTI SPORTS HOLDINGS LTD
annual report 2009
CORPORATE GOVERNANCE STATEMENT (CONT’D)
2.
COMMITTEES OF THE BOARD
The three (3) Committees set up to assist the Board have specific powers and responsibilities. The Chairman of
the respective committee reports the outcome of decisions and recommendations to the Board and minutes of
committee meetings would be tabled for the Board’s notation.
Notwithstanding recommendations from the committees, the ultimate decision on all matters lies with the entire
Board.
2.1 Nomination Committee
The role of the Nomination Committee is to recommend suitable candidates for appointment to the Board. The
Committee is required to evaluate the effectiveness of the Board as a whole, the various committees of the
Board and to assess the contribution of each individual director to the effectiveness of the Board’s decisionmaking process on an annual basis.
The Nomination Committee comprises of the following Directors:•
Chan Chiu Hung Alex (Chairman, Independent Non-Executive Director)
•
Gong Ane (Independent Non-Executive Director)
•
Lee Kian Hu (Independent Non-Executive Director)
During the financial year ended 31 December 2009, the Nomination Committee did not meet.
2.2 Remuneration Committee
The Remuneration Committee is responsible for drawing up policy framework and to make recommendations to
the Board on the remuneration packages of the Executive Directors of the Company. The Executive Directors
do not participate in decisions relating to their remuneration.
The Board as a whole determines the remuneration of the Non-Executive Directors with the Directors concerned
abstaining from participating in decisions in respect of their individual remuneration.
The Remuneration Committee comprises of the following Directors:
•
Lin Liying (Chairman, Executive Director)
•
Chan Chiu Hung Alex (Independent Non-Executive Director)
•
Gong Ane (Independent Non-Executive Director)
During the financial year ended 31 December 2009, the Remuneration Committee did not meet.
2.3 Audit Committee
The main purpose of the Audit Committee is to assist the Board in fulfilling its responsibilities relating to
accounting and reporting practices of the Group.
The report of the Audit Committee, its terms and references and the list of committee members are set out
on pages 27 to 30 of this Annual Report.
21
22
MULTI SPORTS HOLDINGS LTD
annual report 2009
CORPORATE GOVERNANCE STATEMENT (CONT’D)
3.
SHAREHOLDERS
3.1 Shareholders’ Communication and Investor Relation
The Company’s annual reports, quarterly announcements of the quarterly financial results, circulars to
shareholders (where applicable) and as and when needed, announcements on matters pertaining to corporate
and other developments in the Group serve as the Company’s primary medium for dissemination of information
to the shareholders, stakeholders and the general public.
For this purpose, the Company has established a website “www.multi-sports.com.cn” whereby investors can
communicate with the Company directly.
3.2 Annual General Meeting (“AGM”) and Extraordinary General Meeting (“EGM”)
4.
The principal forum for shareholders to interact and have dialogue with the Board is at the AGM of the
Company.
Notice of AGM and the annual report are sent to shareholders at least twenty-one (21) days before the date of
the AGM. Any special business items within the agenda for the AGM would be accompanied by an explanatory
statement in order for the shareholders to have a better understanding of the issues involved and thereby,
better evaluation and decision-making.
For certain business/corporate proposals where shareholders’ approval is required, circulars are sent to
shareholders within the prescribed time frame in compliance with the regulatory and statutory provisions.
These circulars provide the necessary details and are sufficiently comprehensive to enable shareholders to
arrive at an informed decision on the proposals to be tabled at the AGM/EGM.
During the AGM/EGM, shareholders have the opportunity to seek clarification pertaining to the Group or to
request for information regarding operations, business activities, developments and direction of the Group.
Any queries raised would be attended to by the Board and members of senior management would be at hand
to provide the necessary information.
ACCOUNTABILITY AND AUDIT
4.1 Financial Reporting
The Directors are duty bound to present a fair and accurate assessment of the Group’s financial position and
prospects to the shareholders and stakeholders.
The Audit Committee plays a crucial role in assisting the Board to scrutinise information for disclosure to
shareholders in order to ensure accuracy, adequacy, completeness and timeliness.
The Board is responsible for the preparation of the financial statements of the Company and ensuring that
they are drawn up in accordance with the provisions of the Bermuda Companies Act 1981 and International
Financial Reporting Standards. The Statement of Responsibility by Directors in respect of the preparations
of the annual audited financial statements of Multi Sports and the Multi Sports Group is found on page 26 of
this Annual Report.
4.2 Internal Control and Risk Management
The Board has overall responsibility for maintaining a sound system of internal controls, internal procedures
and guidelines that together serve to provide a reasonable assurance of an effective and efficient operation
and always strive to comply with the relevant laws and regulations.
MULTI SPORTS HOLDINGS LTD
annual report 2009
CORPORATE GOVERNANCE STATEMENT (CONT’D)
The internal controls in place are meant to safeguard the Group’s assets and thus, shareholders’ investments.
A key component in carrying out this responsibility is to ensure that risks are appropriately and adequately
managed within the Group. However, it must be noted that such controls by their nature can only provide
reasonable assurance but are not absolute assurance against the risk of material errors, frauds or losses
occurring.
An overview of the state of internal controls within the Group is set out in the Statement on Internal Control
pages 31 to 32 of this Annual Report.
4.3 Relations with the Auditors
5.
The Board has a formal, professional and transparent relationship with both the internal and external auditors
of the Group. The auditors have direct access to the Board and to Audit Committee thus ensuring that issues
highlighted are treated objectively and are free from any potential management influence.
The Audit Committee has the liberty to meet with the external auditors as and when deemed necessary. The
responsibility of the Audit Committee in relation to both the internal and external auditors are described on
page 28 of this Annual Report.
ADDITIONAL COMPLIANCE INFORMATION
5.1 Utilisation of Proceeds as at 31 December 2009
The gross proceeds received from the Initial Public Offering of RM48.96 million will be utilised as follows:Utilisation
(i)
Amounts
Utilised
RM’000
Amount Intended time
Notes
Unutilised
frame for RM’000
utilisation
Expansion of production capacity
- Production Centre
25,000
53,472
(28,472)
(1)
- Production line
5,000
3,312
1,688
(1),(2)
30,000
56,784
(26,784)
24 months
3,960
–
3,960
18 months
(2)
3,000
225
2,775
24 months
(2)
4,000
250
3,750
24 months
(2)
(v) Working capital
1,000
1,000
–
24 months
(vi) Estimated listing expenses
Total
7,000
7,695
(695)
Immediate
(ii) Expansion of sales and
marketing network in China
(iii) Advertising and branding
(iv) Enhancement of product development capabilities
Proceeds
Raised
RM’000 48,960
65,954
(3)
23
24
MULTI SPORTS HOLDINGS LTD
annual report 2009
CORPORATE GOVERNANCE STATEMENT (CONT’D)
Notes:(1)
The new production centre is still in the course of construction and the total expansion cost of production
centre increase up to year end was RM53.5 million, out of which RM25 million was financed via the
IPO proceeds and the deviation of RM28.5 million was financed via funds generated internally by the
Group. The total expansion cost of machinery and equipment amounting to RM3.3 million was financed
via IPO proceeds.
(2)
IPO proceeds will be utilised within the estimated timeframe given and the Group does not expect any
material deviation as at the date of this report.
(3)
The total listing expanses are RM7.7 million, out of which RM2.7 million was offset against share
premium as these transaction costs were directly relating to the public initial offering and the issuance
of equity instrument. The deviation of RM0.7 million was financed via the funds generated internally by
the Group.
5.2 Shares Buy-Back
The Company did not undertake any share buy-back exercise.
5.3 Options, Warrants or Convertible Securities
The Company has not issued any options, warrants or convertible securities during the financial year.
5.4 Depository Receipt (“DR”)
The Company has not sponsored any DR programme during the financial year.
5.5 Sanctions and/or Penalties
There were no sanctions and/or penalties imposed on the Company, its subsidiaries, the Directors and the
Management by the relevant regulatory bodies during the financial year.
5.6 Non-Audit Fees
During the financial year, the amount of non-audit fees paid by the Company to the External Auditors, Foo
Kon Tan Grant Thornton LLP amounted to approximately RMB2,400,000 in respect of fees for work done in
connection with the listing of Multi Sports.
5.7 Material variances
There was no material variance between the interim financial reports previously announced on the 4th Quarter
results and the audited financial results for the financial year ended 31 December 2009.
5.8 Profit forecast
There was no profit forecast issued by the Company and its subsidiary companies during the financial year.
5.9 Profit Guarantee
There were no profit guarantees given by the Company and its subsidiary companies during the financial
year.
MULTI SPORTS HOLDINGS LTD
annual report 2009
CORPORATE GOVERNANCE STATEMENT (CONT’D)
5.10 Material Contracts
During the year under review, the Company and its subsidiaries entered into material contracts involving
Directors’ and major shareholders’ interest as set out below:(a)
Share Sale Agreement dated 6 April 2009 and Supplement Agreement dated 29 May 2009 made between
Lin Huozhi and Leung Sing Kit (“the Vendors”) and Company in relation to the sale and purchase of
10,000 ordinary shares of HK$1.00 each in the capital of Paksing, which represents 82.14% of the issued
and paid-up share capital of Paksing, for a purchase consideration of US$12,420,063.65 which was
satisfied by Company issuing and allotting 248,401,273 ordinary shares of US$0.05 each in Company
to persons nominated by the Vendors.
(b)
Investment Agreement dated 12 May 2009 between GuoLine Capital Limited, Paksing, Company,
Lin Huozhi, and Leung Sing Kit, (“the Investment Agreement”), and novated pursuant to a Novation
Agreement dated 21 May 2009 made between GuoLine Capital Limited (“Assignor”), GuoLine Group
Management Co. Limited (“Assignee”), Paksing, Company, Lin Huozhi and Leung Sing Kit in which
the Assignee subscribed for Redeemable Convertible Loan Stocks in Paksing for an aggregate sum of
US$7,094,010 which was subsequently converted into 2,715 ordinary shares of HK$1.00 each in Paksing
prior to the Acquisition of Paksing based on the terms and conditions of the said agreements.
(c)
Novation Agreement dated 21 May 2009 whereby Guoline Capital Limited novates all its rights, benefits,
liabilities and obligations under the Investment Agreement dated 12 May 2009 to Guoline Group
Management Co. Limited.
(d)
Supplemental Agreement dated 29 May 2009 whereby certain provision in the Share Sale Agreement
dated 6 April 2009 are amended.
(e)
Underwriting Agreement dated 3 July 2009 between Company and AmInvestment Bank Berhad as the
Sole Underwriter for the underwriting of 18,000,000 Public Issue Shares at an underwriting commission
of 3.25% of the Initial Public Offer price of RM0.85 share and upon the terms and conditions contained
therein.
(f)
Agreement entered between Baixing with Fujian Xueyu Property Co. Ltd (“Vendor”) for the transfer
from the Vendor to Baixing of the land-use rights for a parcel of land of 46.8 mu (approximately 3.12
hectares) in Xibin Farm, Xibin Town, Jinjiang City, Fujian Province, China (“Xibin Land”), together with
two (2) completed factory buildings of six-storey with an aggregate built-up area of 17,631.6 square
meters on the Xibin Land.
5.11 Revaluation Policy on Landed Properties
The Group does not revalue its landed properties classified as Property, Plant and Equipment unless the need
arises.
The existing policy of showing the assets at cost less accumulated depreciation and impairment losses as
disclosed in Note 4 to the financial statements on page 49 of this Annual Report.
5.12 Recurrent Related Party Transactions (“RRPT”)
There was no Shareholders Mandate obtained in respect of RRPTs during the financial year end. However,
the Company has obtained the approval of Bursa Securities for an extension of time up to our next Annual
General Meeting (“AGM”) or Extraordinary General Meeting (“EGM”), whichever is held earlier, to obtain
shareholders’ ratification for all RRPTs entered into by the Company from our listing date up to the AGM or
EGM.
25
26
MULTI SPORTS HOLDINGS LTD
annual report 2009
CORPORATE GOVERNANCE STATEMENT (CONT’D)
Details of the RRPT of a revenue or trading nature conducted during the financial year ended 31 December
2009 pursuant to the said shareholders’ mandate are as follows:
Related Party
Nature of Transaction
Baixing and JHX
Lease of factory building on Yanshang Industry Zone, Chendai Town, Jinjiang City, Fujian Province, China Interested directors,
major shareholders and persons connected
Interested Major
Shareholder and
Interested Director
o Lin Huozhi(1)
Value of Transactions
(RMB ‘000)
1,092
Interested Person
Connected:
o Lin Liying(2)
Notes:(1) Lin Huozhi, a Director and Major Shareholder of the Company, is the sole shareholder and director of
JHX.
(2) Lin Liying is the daughter of Lin Huozhi.
6.
STATEMENT PERTAINING TO THE ALLOCATION OF SHARE OPTIONS TO EMPLOYEES
To date, the Company has not established any share options for employees. In the event the Company establishes
such employees share options scheme (“ESOS”), the Audit Committee would carry the responsibility of reviewing
all allocations granted to eligible employees to ensure compliance with the criteria as would have been spelt out in
the by-laws of the Company’s proposed ESOS.
7.
COMPLIANCE WITH THE CODE
Except for matters specifically identified, Multi Sports was substantially in compliance with the Principles and Best
Practices in Corporate Governance throughout the financial year ended 31 December 2009.
8.
DIRECTOR’S RESPONSIBILITY STATEMENT
The Directors are required by the Companies Act, 1965 to prepare financial statements for each financial year which
give a true and fair view of the state of affairs of the Company and the Group as at the end of the financial year.
The Directors consider that in preparing the financial statements, the Group has used appropriate accounting policies,
consistently applied and supported by reasonable and prudent judgements and estimates, and that all applicable
accounting standards have been followed.
The Directors have responsibility for ensuring that the Company and the Group keep accounting records which
disclose with reasonable accuracy the financial position of the Company and the Group and which enable them to
ensure that the financial statements comply with the Companies Act, 1965.
The Directors have general responsibility for taking such steps as are reasonably open to them to safeguard the
assets of the Company and the Group and to prevent and detect fraud and other irregularities.
MULTI SPORTS HOLDINGS LTD
annual report 2009
AUDIT COMMITTEE REPORT
The Audit Committee serve to assist the Board in ensuring the effectiveness of the Group’s system of internal control, risk
management and financial reporting practices of the Group.
1.
COMPOSITION OF THE AUDIT COMMITTEE
The Audit Committee of Multi Sports comprised the following members:Chan Chiu Hung Alex (Chairman), Independent Non-Executive Director
Gong Ane (Member), Independent Non-Executive Director
Lee Kian Hu (Member), Independent Non-Executive Director
2.
TERMS OF REFERENCE
2.1 Composition of the Audit Committee
Members of the Audit Committee shall be appointed by the Board from amongst themselves and the Committee
must fulfil the following requirements:
(a)
must compose of no fewer than three (3) members;
(b)
must comprise of non-executive directors with a majority of them being independent directors;
(c)
at least one member of the Audit Committee:(i) must be a member of the Malaysian Institute of Accountants (“MIA”); or
(ii) if he is not a member of the MIA, he must have at least three (3) years’ working experience and:(aa) he must have passed the examinations specified in Part I of the 1st Schedule of the Accountants
Act 1967; or
(bb) he must be a member of one of the associations of accountants specified in Part lI of the 1st
Schedule of the Accountants Act 1967; or
(iii) fulfils such other requirements as prescribed or approved by the Exchange.
(d)
shall not comprise of any alternate director of the Company.
In the event of any vacancy in the Audit Committee resulting in the non-compliance of the above, the Company
must fill the vacancy within three (3) months.
Members of the Audit Committee shall elect a Chairman from amongst themselves who shall be an Independent
Director.
All members of the Audit Committee, including the Chairman, will hold office only so long as they serve as
Directors of the Company.
The Board of Directors must review the term of office and performance of the Audit Committee and each of
its members at least once every three (3) years to determine whether the Audit Committee and its members
have carried out their duties in accordance with its terms of reference.
27
28
MULTI SPORTS HOLDINGS LTD
annual report 2009
AUDIT COMMITTEE REPORT (CONT’D)
2.2 Secretary of the Audit Committee
The Company Secretary of the Company shall act as Secretary of the Audit Committee.
2.3 Duties and Responsibilities of the Audit Committee
The Audit Committee shall collectively discharge the following functions:(1) review the following and report the same to the Board of Directors:(a) with the external auditor:(i)
the audit plan;
(ii)
his evaluation of the system of internal controls; and
(iii) his audit report;
(b) the assistance given by the employees of the Company to the external auditor;
(c) the adequacy of the scope, functions, competency and resources of the internal audit functions
(which reports directly to the Committee) and that it has the necessary authority to carry out its
work;
(d) the internal audit programme, processes, the results of the internal audit programme, processes or
investigation undertaken and whether or not appropriate action is taken on the recommendations
of the internal audit function;
(e) the quarterly results and year end financial statements, prior to the approval by the Board of Directors
focusing particularly on:(i)
changes in or implementation of major accounting policy changes;
(ii)
significant and unusual events; and
(iii) compliance with accounting standards and other legal requirements;
(f) any related party transaction and conflict of interest situation that may arise within the Company
or Group including any transaction, procedure or course of conduct that raises questions of
management integrity;
(g) any letter of resignation from the external auditors;
(h) whether there is reason (supported by grounds) to believe that the Company’s external auditor is
not suitable for re-appointment; and
(i) allocation of options pursuant to a share scheme for employees.
(2)
recommend the nomination of a person or persons as external auditors.
(3)
report promptly to the Exchange where the Committee is of the view that a matter reported by it
to the Board of Directors has not been satisfactorily resolved resulting in a breach of the Listing
Requirements.
MULTI SPORTS HOLDINGS LTD
annual report 2009
AUDIT COMMITTEE REPORT (CONT’D)
2.4 Authority of the Audit Committee
The Committee shall at the expense of the Company have the following authority:(1)
to investigate any matter within its terms of reference;
(2)
to have the resources which are required to perform its duties;
(3)
to have full and unrestricted access to any information pertaining to the Company;
(4)
to have direct communication channels with the external auditors and person(s) carrying out the internal
audit function or activity;
(5)
(6)
to obtain independent professional or other advice; and
to convene meetings with the external auditors, the internal auditors or both, excluding the attendance
of other directors and employees of the Company, whenever deemed necessary.
Attendance of any particular Audit Committee meeting by other directors and employees of the Company
shall be at the Audit Committee’s invitation and discretion and must be specific to the relevant meeting.
2.5 Conduct of Meetings
i)
The Audit Committee shall meet at least four (4) times per annum or more frequently as circumstances
dictate. Additional meetings may be called at any time at the discretion of the Chairman of the Audit
Committee. The external auditors may request for a meeting if they consider it necessary.
ii)
The quorum shall consist of a majority of independent non-executive committee members and shall be
not less than two (2).
iii)
Recommendations to the Audit Committee are submitted to the Board for approval.
iv)
The Company Secretary or her assistant shall be in attendance at each Audit Committee meeting and
record the proceedings of the meeting thereat.
v)
Minutes of each meeting shall be kept as part of the statutory record of the Company upon confirmation
by the members at the subsequent Committee meeting and a copy shall be distributed to each member
of the Audit Committee.
vi)
The Managing Director and other appropriate officer of the Company may be invited to attend where
their presence are considered appropriate as determined by the Chairman of the Audit Committee.
vii)
The internal and/or external auditors may be invited to appear and be heard at any meeting of the Audit
Committee.
viii) On the request of the auditors, the Chairman of the Audit Committee shall also convene a meeting of
the Audit Committee to consider any matters the auditors believed should be brought to the attention
of the Board or the shareholders.
ix)
Where the Audit 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 requirements of the Bursa Malaysia Securities Berhad,
the Audit Committee must promptly report such matter to Bursa Malaysia Securities Berhad.
29
30
MULTI SPORTS HOLDINGS LTD
annual report 2009
AUDIT COMMITTEE REPORT (CONT’D)
3.
MEETINGS
During the year ended 31 December 2009, the Committee held only one meeting and was attended by all the
committee members.
4.
SUMMARY OF ACTIVITIES
A brief summary and an overall view of the activities of the Audit Committee in discharging their duties and
responsibilities during the financial year ended 31 December 2009 are as follows:i)
reviewed the quarterly financial results of the Group prior to their release to Bursa Malaysia Securities
Berhad;
ii)
reviewed the changes in accounting policies;
iii)
reviewed any significant or unusual events; and
iv)
met up with the external auditors prior to the commencement of the audit of the Group’s financial statements
for the financial year ended 31 December 2009 to discuss the scope of the statutory audit and to review the
audit plan.
5.
INTERNAL AUDIT FUNCTION
The internal audit function is essential in assisting the Audit Committee in reviewing the state of the systems of
internal control maintained by the management.
The Group had established an internal audit function upon listing. Currently, this function is outsourced to an internal
audit services company and functionally, the internal auditor team reports to the Committee directly.
MULTI SPORTS HOLDINGS LTD
annual report 2009
STATEMENT ON INTERNAL CONTROL
(Pursuant to para 15.27(b) of Requirements of Bursa Securities)
The Malaysian Code of Corporate Governance sets out as a principal that the Board of Directors of a listed company
should maintain a sound system of internal control to safeguard shareholders’ investment and the Group’s assets. The
Board is committed to maintaining a sound system of internal controls in the Group and is pleased to provide the following
statement pursuant to Paragraph 15.26(b) of the Bursa Malaysia Securities Berhad Main Market Listing Requirements.
Board Responsibilities
The Board recognises that it is responsible for maintaining a sound system of internal control including the establishment
of a robust control framework to assist management in mitigating business process and regulatory risks. As with any
internal control system, controls can only provide reasonable but not absolute assurance against material misstatement or
loss, as it is designed to manage rather than eliminating the risk of failure to achieve business objectives. As part of the
Board’s commitment to promote good internal controls, the Board will continue to take necessary measures to enhance
its internal control via various measures.
Risk Management Framework
The Board recognises the need for an effective risk management practice and to maintain a sound system of internal
control. Although the Board has not adopted a formal risk management framework, the Directors, being hand-on managers
of the Group’s operation, identify, evaluate and adopt risk mitigation measures on a continuous basis.
Nevertheless, going forward, the Board intends to adopt a formalized risk management framework for the Group to create
awareness among all management staff on the risk management process.
INTERNAL AUDIT
The Board recognises the need for an internal audit function and has engaged the services of an independent professional
accounting and consulting firm 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 Board has established that the internal audit functions are
independent of the activities or operations of the operating units and report directly to the Audit Committee.
The internal audit team commences its work in March 2010 in view that the Company was only listed in August 2009.
The internal audit function adopts a risk-based approach in developing its audit plan which addresses the core auditable
areas of the Group based on the risk profile of the Group. Scheduled internal audits shall be carried out by the internal
auditors based on the audit plan developed to provide independent and objective reports on the state of internal control
of the operating units. The internal auditors will follow up with the management on the implementation of action plans
recommended to improve areas where control deficiencies identified during the internal audits.
31
32
MULTI SPORTS HOLDINGS LTD
annual report 2009
STATEMENT ON INTERNAL CONTROL (CONT’D)
(Pursuant to para 15.27(b) of Requirements of Bursa Securities)
Key Elements of Internal Control
During the financial year ended 31 December 2009 and prior to signing of the published financial statements, the Board
has continued its ongoing process of identifying, evaluating and managing of key financial, operational and compliance
risks facing the business. Control details are as follows:•
•
•
•
• •
Quarterly financial results are presented to the Audit Committee to ensure all matters of concern are noted by the
board;
There is a clearly defined delegation of responsibilities of the Board and the management of the Group who ensure
that appropriate control procedures are in place;
Weekly management meetings are held amongst the Group to review operational matters that includes, Sales and
Marketing, Operational Production, Cash Flow and any other related matters that may arise;
The Company has a policy on the financial limits and approving authority for its revenue and expenditure, and capital
expenditure with appropriate approving authority thresholds to ensure all revenue and expenditure, and capital
expenditure are in line with the Group’s strategic objectives.
The Audit Committee is tasked by the Board with the duty of reviewing the effectiveness of the Group’s system of
internal controls.
The Audit Committee, on behalf of the board, review and hold discussion with management to deliberate on action
plans addressing the internal control issues identified by the external auditors.
Weaknesses in Internal Control Resulting in Material Losses
There were no material losses incurred during the current financial year as a result of weaknesses in internal control. The
management of the Company continues to take measures to strengthen the internal control environment.
Review of the statement by external auditor
The external auditors have reviewed this Statement on Internal Control for the inclusion in the annual report of the
Company for the year ended 31 December 2009 and nothing has come to their attention that causes them to believe that
the statement is inconsistent with their understanding of the process adopted by the Board in reviewing the adequacy
and integrity of the system of internal controls.
Summary
The Board is pleased to disclose that the Group’s internal control system is adequate and is responsive to support its
business objective and its dynamic industrial environment. To this end, the Board remains committed to improve the control
mechanism to achieve optimal performance results.
09
financial statements
Directors’ Report . ...................................... 34
Statement by Directors and
Statutory Declaration .................................. 38
Independent Auditor’s Report ....................... 39
Statement of Financial Position...................... 40
Consolidated Statement
of Comprehensive Income ............................ 41
Consolidated Statements
of Changes in Equity .................................... 42
Consolidated Statement of Cash Flows ........... 43
Notes to the Financial Statements . ............... 44
34
MULTI SPORTS HOLDINGS LTD
annual report 2009
directors’ report
The Directors have pleasure in submitting their report together with the audited financial statements of the Group and of
the Company for the financial year ended 31 December 2009.
PRINCIPAL ACTIVITIES
The principal activity of the Company is investment holding. The principal activities of its subsidiaries are disclosed in
Note 6 to the financial statements.
There have been no significant changes in the nature of these activities of the Company and its subsidiaries during the
financial year.
FINANCIAL RESULTS
Group
RMB’000
Profit/(loss) for the year attributable to equity holders
113,939
Company
RMB’000
(13,297)
There were no material transfers to or from reserves or provisions during the financial year except as disclosed in the
Notes to the financial statements.
DIVIDENDS
The amount of dividends paid and declared since the end of the last financial year were as follows:
RMB’000
In respect of the financial year ended 31 December 2008 and settled on
9 September 2008 * and 31 December 2008 *
90,000
In respect of the financial year ended 31 December 2009
–
*
Pursuant to the dividend payment agreements dated 9 September 2008 and 31 December 2008 entered into between
the Group, a related party and the Group’s shareholders, dividend payable to the shareholders were settled by way
of netting off the dividend payable against amount owing to the related party. Please refer to Prospectus dated 30
July 2009 under Section 7 for more detail.
DIRECTORS
The Directors in office since the date of incorporation are:Lin Huozhi
Lin Liying
Huang Weimin
Chan Chiu Hung
Gong Ane
Lee Kian Hu
( Appointed on 14 Oct 2008 )
( Appointed on 14 Oct 2008 )
( Appointed on 10 Jul 2009 )
( Appointed on 10 Jul 2009 )
( Appointed on 10 Jul 2009 )
( Appointed on 10 Jul 2009 )
MULTI SPORTS HOLDINGS LTD
annual report 2009
directors’ report (cont’d)
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 Directors of the Company to acquire benefits by means of the acquisition of shares in or debentures
of the Company or any other body corporate.
Since the date of incorporation, no Director has received or become entitled to receive any benefit by reason of a contract
made by the Company or a related corporation with the Director or with a firm of which the Director is a member, or with
a company in which the Director has a substantial financial interest, excepts as disclosed in Note 21 to the financial
statements.
DIRECTORS’ INTERESTS
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 were as follows:Interest in the Company
Ordinary shares of USD 0.05 each
Deemed interest
At 1.1.2009
At 31.12.2009
Lin Huozhi (1)
–
181,801,293
(1)
Deemed interest by virtue of his substantial interest in Power Wide Holdings Limited.
Other than those disclosed above, the Directors at the end of the financial year did not hold any interest in shares and/or
option over shares and/ or loan stocks of the Company and its related corporations during the financial year.
ISSUE OF SHARES
During the financial year, the following shares were issued:Date of
Class of
issue
Purpose of issue
shares
14.10.2008
28.05.2009
28.05.2009
15.07.2009
18.08.2009
100 shares were issued
with nil paid
100 shares were paid-up
via cash consideration of
USD1.00
Consolidation of every 5
existing ordinary shares
Issued pursuant to
acquisition of subsidiary
Issue pursuant to the
Public Issue
Number of
shares
@USD 0.01
each
Number of
shares
@USD 0.05
each
Number of
shares
@RM 0.85
each
Ordinary
–
–
–
Ordinary
100
–
–
Ordinary
–
20
–
Ordinary
–
302,399,980
–
Ordinary
–
–
57,600,000
35
36
MULTI SPORTS HOLDINGS LTD
annual report 2009
directors’ report (cont’d)
INFORMATION ON FINANCIAL STATEMENTS
Before the financial statements of the Group and of the Company were made out, the Directors took reasonable steps:(a)
to ascertain that action had been taken in relation to the writing off of bad debts and the making of allowance for
doubtful debts and satisfied themselves that there were no bad debts to be written off and no allowance for doubtful
debts was required; 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 to make any amount of the allowance for doubtful
debts in respect of the financial statements of the Group and of the Company; 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.
No contingent liability 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 period
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 period.
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 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 the operations of the
Group and of the Company for the current financial year in which this report is made.
MULTI SPORTS HOLDINGS LTD
annual report 2009
directors’ report (cont’d)
SIGNIFICANT EVENTS DURING THE FINANCIAL YEAR
The significant events during the financial year are disclosed in Note 27 to the financial statements.
SIGNIFICANT EVENT SUBSEQUENT TO THE BALANCE SHEET DATE
The significant event subsequent to the balance sheet date is disclosed in Note 28 to the financial statements.
INDEPENDENT AUDITORS
The independent auditors, Foo Kon Tan Grant Thornton LLP, Certified Public Accountants, have expressed their willingness
to accept re-appointment.
On behalf of the Board,
Lin Huozhi
Lin Liying
Date: 30 April 2010
Jinjiang City, Fujian Province, China
37
38
MULTI SPORTS HOLDINGS LTD
annual report 2009
statement by directors
In the opinion of the directors, the accompanying statements of the financial position of the Group and of the Company,
consolidated statements of comprehensive income, consolidated statement of changes in equity and the consolidated
statement of cash flow, together with the notes thereon, are drawn up in accordance with the provision of the International
Financial Reporting Standards so as to give a true and fair view of the financial position of the Company and of the Group
as at 31 December 2009 and of the financial performance, changes in equity and cash flow of the Group for the financial
year ended on that date and at the date of this statement there are reasonable grounds to believe that the Company will
be able to pay its debts as and when they fall due.
On behalf of the Directors
LIN HUOZHI
LIN LIYING
Date: 30 April 2010
Jinjiang City, Fujian Province, China
statutory declaration
pursuant to Paragraph 9.27 of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad
I, Mr. TEOH TOH SOON, being the Officer primarily responsible for the financial management of Multi Sports Holdings
Ltd, do solemnly and sincerely declare that the accompanying financial statements set out on pages 40 to 72 are in my
opinion correct and I make this solemn declaration conscientiously believing the same to be true and by virtue of the
provisions of the Oaths and Declaration Act Cap. 211.
Subscribed and solemnly declared by the
abovenamed Mr. TEOH TOH SOON in Singapore
Date: 30 April 2010
Before me:
Commissioner for Oaths/ Notary Public
Mr. TEOH TOH SOON
MULTI SPORTS HOLDINGS LTD
annual report 2009
independent auditor’s report
to the Members of Multi Sports Holdings Ltd
We have audited the accompanying consolidated financial statements of Multi Sports Holdings Ltd (“the Company”)
and its subsidiaries (“the Group”), which comprise the consolidated statement of financial position of the Group and the
Company as at 31 December 2009, the consolidated statement of comprehensive income, consolidated statement of
changes in equity and consolidated statement of cash flows of the Group for the year then ended, and a summary of
significant accounting policies and other explanatory notes.
Management’s responsibility for the consolidated financial statements
Management is responsible for the preparation and fair presentation of these consolidated financial statements in
accordance with International Financial Reporting Standards. This responsibility includes: designing, implementing and
maintaining internal control relevant to the preparation and fair presentation of financial statements that are free from
material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making
accounting estimates that are reasonable in the circumstances.
Auditor’s responsibility
Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted
our audit in accordance with International Standards on Auditing. Those standards require that we comply with ethical
requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free
from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial
statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material
misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor
considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order
to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion
on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting
policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall
presentation of the consolidated financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit
opinion.
Opinion
In our opinion, the Statement of Financial Position of the Company and the consolidated financial statements of the Group
are properly drawn up in accordance with International Financial Reporting Standards so as to give a true and fair view of
the Statement of Financial Position of the Company and the Group as at 31 December 2009, the Consolidated Statement
of Comprehensive Income, Consolidated Statement of Changes in Equity and Consolidated Statement of Cash Flows of
the Group for the financial year then ended on that date.
Foo Kon Tan Grant Thornton LLP
Public Accountants and
Certified Public Accountants
Wong Kian Kok
Partner in charge of the audit
Date of appointment: 20 October 2008
Date: 30 April 2010
Singapore
39
40
MULTI SPORTS HOLDINGS LTD
annual report 2009
statement of financial position
as at 31 December 2009
The Company
The Group
31 December 31 December 31 December 31 December
2009
2008
2009
2008
Notes
RMB’000
RMB’000
RMB’000
RMB’000(1)
ASSETS AND LIABILITIES
Non-current assets Property, plant and equipment 4
–
–
126,545
39,360
Land use rights 5
–
–
23,614
4,719
Subsidiaries
6
103,465
–
–
–
103,465
–
150,159
44,079
7
8
9
–
83,254
–
–
–
–
12,160
64,694
160,706
10,988
40,362
29,943
83,254
–
237,560
81,293
6,911
–
50,575
48,249
238
–
–
–
18,377
11,388
–
3,888
7,149 76,105
–
80,340
52,137
–
157,220
29,156
11
–
–
–
17,735
–
–
–
17,735
Net assets
179,570
–
307,379
55,500
Share capital
12
Reserves
123,178
56,392
–
–
123,178
184,201
11
55,489
Total equity
179,570
–
307,379
55,500
Current assets
Inventories Trade and other receivables Cash and bank balances Current liabilities
Trade and other payables 10
Amount owing to a shareholder
cum director
11
Income tax payable Net current assets
Non-current liability
Amount owing to a shareholder
cum director
(1)
Even though the Company has only completed its reorganisation in 15 July 2009, the Group has been in existence in
the previous period. The accounting treatment was in accordance with INT FRS 12 Consolidation - Special Purpose
Entities.
Approved by the Board of Directors and signed on its behalf by:
LIN HUOZHI
DIRECTOR
Date: 30 April 2010
LIN LIYING
DIRECTOR
Date: 30 April 2010
The annexed notes form an integral part of and
should be read in conjunction with these Consolidated Financial Statements.
MULTI SPORTS HOLDINGS LTD
annual report 2009
consolidated statement of comprehensive income
for the financial year ended 31 December 2009
Notes
Revenue
Cost of sales
Gross profit
14
The Group
31 December 31 December
2009
2008
RMB’000
RMB’000(1)
474,187
(313,303)
385,310
(269,661)
160,884
115,649
Other incomes
14
Selling and distribution expenses Administrative expenses
Finance costs
15
812
(7,599)
(20,859)
(1,113)
1,773
(5,982)
(6,242)
–
Profit before taxation
Income tax expense
132,125
(18,186)
105,198
(13,018)
113,939
92,180
16
17
Total comprehensive income attributable to equity holders
Basic earnings per share (RMB cents)
18 35.17
30.48
Diluted earnings per share (RMB cents) 18 35.17
30.48
(1)
Even though the Company has only completed its reorganisation in 15 July 2009, the Group has been in existence in
the previous period. The accounting treatment was in accordance with INT FRS 12 Consolidation - Special Purpose
Entities.
The annexed notes form an integral part of and
should be read in conjunction with these Consolidated Financial Statements.
41
42
MULTI SPORTS HOLDINGS LTD
annual report 2009
consolidated statements of changes in equity
Share
Share
Statutory
Merger
Capital
Premium
Reserve
Deficit
RMB’000
RMB’000
RMB’000
RMB’000
Notes (Note 12) (Note 13a) (Note 13b) (Note 13c)
Currency
Translation
Reserve
RMB’000
(Note 13d)
Retained
Profits
RMB’000
Total
Equity
RMB’000
Balance at 1 January 2008
11
–
13,184
–
1
40,122
53,318
Currency translation reserve
Net gain recognized
directly in equity
Net profit for the year
–
–
–
–
2
–
2
–
–
–
–
–
–
–
–
2
–
–
92,180
2
92,180
Total recognised income
for the year
Dividend paid
19
–
–
–
–
–
–
–
–
2
–
92,180
(90,000)
92,182
(90,000)
Balance at 31 December 2008
11
–
13,184
–
3
42,302
55,500
Balance at 1 January 2009
11
–
13,184
–
3
42,302
55,500
Currency translation reserve
Net (loss) / gain recognized
directly in equity
Net profit for the year
–
–
–
–
(3)
3
–
–
–
–
–
–
–
–
–
(3)
–
3
113,939
–
113,939
Total recognised income and
expenses for the year
–
–
Arising from reorganisation
103,455
–
Public issue of shares
19,712
74,910
Share issue expenses
–
(5,221)
Transfer to statutory reserve
–
–
(3)
–
(54,916)
–
–
–
–
–
–
–
10,169
113,942
–
–
–
(10,169)
113,939
48,539
94,622
(5,221)
–
Balance at 31 December 2009
23,353
146,075
307,379
123,178
69,689
(54,916)
–
The annexed notes form an integral part of and
should be read in conjunction with these Consolidated Financial Statements.
MULTI SPORTS HOLDINGS LTD
annual report 2009
consolidated statement of cash flows
for the financial year ended 31 December 2009
Notes
Cash flows from operating activities
Profit before taxation
Adjustments for :
Depreciation of property, plant and equipment
4
Amortisation of land use rights 5
Interest income 14
Interest expense The Group
Year ended
Year ended
31 December 31 December
2009
2008
RMB’000
RMB’000
132,125
105,198
8,641
95
(446)
1,113
9,383
24
(239)
–
Operating profit before working capital changes
Increase in inventories Increase in trade receivables
Decrease/(increase) in prepayments and other receivables
Increase/ (decrease) in trade payable
Increase in accrued liabilities and other payables
141,528
(1,172)
(25,638)
1,305
5,319
6,440
114,366
(1,511)
(4,128)
(1,601)
(254)
1,866
Cash generated from operations
Income tax paid
Interest received
Interest paid
127,782
(10,686)
446
(1,113)
108,738
(9,130)
239
–
Net cash generated from operating activities
116,429
99,847
Cash flows from investing activities
Acquisition of property, plant and equipment
Acquisition of land use rights
4
5
(95,826)
(18,990)
(6,636)
(4,743)
Net cash used in investing activities
(114,816)
(11,379)
Cash flows from financing activities
Proceeds from share issued Proceeds from issue of redeemable convertible loan stock
Share issue expenses written off to share premium account Advance from a shareholder Repayment of advances from related parties
(Repayment to)/advances from a shareholder cum director Dividends paid
94,622
48,539
(5,221)
643
–
(9,433)
–
–
–
–
(1,060)
(828)
9,433
(90,000)
Net cash generated from/ (used in) financing activities
129,150
(82,455)
Net increase in cash and cash equivalents Cash and cash equivalents at beginning of the year
130,763
29,943
6,013
23,930
Cash and cash equivalents at end of the year
160,706
29,943
9
The annexed notes form an integral part of and
should be read in conjunction with these Consolidated Financial Statements.
43
44
MULTI SPORTS HOLDINGS LTD
annual report 2009
notes to the financial statements
for the financial year ended 31 December 2009
1.
GENERAL INFORMATION
The financial statements of the Company and of the Group for the year ended 31 December 2009 were
authorised for issue in accordance with a resolution of the directors on the date of the Statement by Directors.
The Company (Bermuda Company Registration No. 42425 and Malaysia Foreign Company Registration No 995199-H)
was incorporated in Bermuda on 18 September 2008 under the Bermuda Companies Act as an exempted company
with limited liability under the name of Multi Sports Holdings Ltd and is listed on the Main Market of Bursa Malaysia
Securities Berhad.
The registered offices of the Company in Bermuda and Malaysia are Clarendon House, 2 Church Street, Hamilton
HM 11, Bermuda and Level 18, The Gardens North Tower, Mid Valley City, Lingkaran Syed Putra 59200 Kuala
Lumpur, Malaysia, respectively. The principal place of business of the Company is located at Yanshang Industrial
Zone, Chendai Town, Jinjiang City, Fujian Province, the People’s Republic of China (“PRC”).
The principal activity of the Company is investment holding. The principal activities of its subsidiaries are disclosed
in Note 6 to the financial statements.
2.
THE REORGANISATION
A reorganisation exercise was undertaken by the Group to rationalise and streamline the business operations and
corporate structure for an initial public offering (“the Reorganisation”). The following steps were undertaken in the
Reorganisation exercise:
(a)
Consolidation and Increase In Authorized Share Capital
On 28 May 2009, a consolidation of every five existing ordinary shares of US$0.01 each in the authorised
and issued share capital of the Company into one ordinary share of US$0.05, resulting in an authorised share
capital of US$10,000 divided into 200,000 shares of US$0.05 each and an issued share capital of US$1.00
divided into 20 shares of US$0.05 each.
Following the Consolidation, the authorised share capital was increased from US$10,000 divided into 200,000
ordinary shares of US$0.05 each to US$50,000,000 divided into 1,000,000,000 ordinary shares of US$0.05
each.
(b) Acquisition of Pak Sing Shoe Material (H.K) Limited (“Paksing”)
Pursuant to the Share Sale Agreement dated 6 April 2009 entered into by the Company and the vendors of
Paksing (“SSA”) and Supplemental Agreement dated 29 May 2009 entered into by the parties to the SSA
(collectively, the “SSA Agreements”) and Redeemable Convertible Loan Stock (“RCLS”) Agreements, the
Company acquired the entire issued and fully paid-up share capital of Paksing, comprising 12,175 ordinary
shares of HK$1.00 each in Paksing, for an aggregate purchase consideration of US$15,119,999, which was
wholly satisfied by the issuance of an aggregate of 302,399,980 new Multi Sports share each credited as fully
paid up, at par value of US$0.05 per share.
Pursuant to the SSA Agreements, the specified vendors of Paksing, namely Lin Huozhi (65.71% shareholding)
and Leung Sing Kit (16.43% shareholding which is being held by Leung Sing Kit in trust for Lin Huozhi under
a trust agreement dated 5 June 2003) agreed and directed that all 248,401,273 new Multi Sports Shares to
which they were entitled be issued and allotted by Multi Sports to certain investors.
Pursuant to the RCLS Agreements and subsequent to the acquisition of Paksing, Guoline Group Management
Company Limited, as one of the vendors of Paksing, was issued 53,998,707 new Multi Sports Shares.
MULTI SPORTS HOLDINGS LTD
annual report 2009
notes to the financial statements (cont’d)
2.
THE REORGANISATION (cont’d)
(b) Acquisition of Paksing (cont’d)
The purchase consideration of US$15,119,999 for the acquisition of Paksing was agreed upon based on a
willing-buyer willing-seller basis, after taking into consideration the combined financial position of Paksing and
Jinjiang Baixing Shoe Material Co.,Ltd (“Jinjiang Baixing”) as at 31 December 2008.
The 302,399,980 new Shares issued pursuant to the acquisition of Paksing rank pari passu in all respects
with all then existing ordinary shares of Multi Sports and carry all rights to receive in full all dividends and
other distributions declared and paid subsequent to the allotment thereof.
The completion of the acquisition of Paksing on 15 July 2009 resulted in the issued share capital of Multi
Sports increasing from US$1 comprising 20 Shares to US$15,120,000 comprising 302,400,000 Shares.
(c) Acquisition of the Company’s shares by Power Wide Holdings Limited (“Power Wide”)
3.
Subsequent to the completion of the acquisition of Paksing, on 15 July 2009, Power Wide acquired the 20
Shares that was held directly by Lin Huozhi, for a nominal amount of US$1.00, which was wholly satisfied by
cash, on a willing-buyer willing-seller basis.
SIGNIFICANT ACCOUNTING POLICIES
3 (a) Basis of preparation
The consolidated financial statements of Multi Sports Holdings Ltd (the “Company”) and its subsidiaries
(collectively referred to as the “Group”) are presented on a full year basis ended on 31 December 2009 as
if the Group is in existence throughout the reported financial period notwithstanding the fact that the first
financial period of the Group is less than 12 months from the date of completion of acquisition of Pak Sing
and its subsidiaries as in substance, the combined entities continue to trade as before but with a new legal
parent.
The financial statements are prepared in accordance with IFRSs including related interpretations. The financial
statements have been prepared under the historical cost convention, except as disclosed in the accounting
policies below.
The Group’s principal operations are conducted in the PRC and thus the financial statements are presented
in Renminbi (RMB), being the measurement and presentation currency of the Group. All values are rounded
to the nearest thousand (RMB’000) except when otherwise indicated.
Significant accounting estimates and judgement
The preparation of the financial statements in conformity with IFRS requires the use of judgements, estimates
and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements and the reported amounts of revenues and expenses
during the financial year. Although these estimates are based on management’s best knowledge of current
events and actions, actual results may differ from those estimates.
45
46
MULTI SPORTS HOLDINGS LTD
annual report 2009
notes to the financial statements (cont’d)
3.
SIGNIFICANT ACCOUNTING POLICIES (cont’d)
3 (a) Basis of preparation (cont’d)
Critical assumptions used and accounting estimates in applying accounting policies
Depreciation of property, plant and equipment
Property, plant and equipment are depreciated on a straight-line basis over their estimated useful lives.
Management estimates the useful lives of property, plant and equipment to be within 3 to 10 years. The
carrying amounts of the Group’s property, plant and equipment as at 31 December 2009 and 31 December
2008 were approximately RMB 126,545,000 and RMB 39,360,000 respectively. Changes in the expected level
of usage and technological developments could impact the economic useful lives and the residual values of
these assets, therefore future depreciation charges could be revised.
Allowance for bad and doubtful debts
Allowances for bad and doubtful debts are based on an assessment of the recoverability of trade and other
receivables. Allowances are applied to trade and other receivables where events or changes in circumstances
indicate that the balances may not be collectible. The identification of bad and doubtful debts requires the
use of judgement and estimates. Where the expected outcome is different from the original estimate, such
difference will impact carrying value of trade and other receivables and doubtful debt expenses in the period
in which such estimate has been changed.
Allowance for inventory obsolescence
The Group reviews the ageing analysis of inventories at each reporting date, and makes provision for obsolete
and slow moving inventory items identified that are no longer suitable for sale. The net realisable value for
such inventories are estimated based primarily on the latest invoice prices and current market conditions.
Possible changes in these estimates could result in revisions to the valuation of inventories in these estimates
could result in revisions to the valuation of inventories
Income tax
The Group has exposure to income taxes in the PRC. Significant judgement is required in determining the
provision for income taxes. There are also claims for which the ultimate tax determination is uncertain during
the ordinary course of business. The Group recognises liabilities for expected tax issues based on estimates
of whether additional taxes will be due. When the final tax outcome of these matters is different from the
amounts that were initially recognised, such differences will impact the income tax and deferred tax provisions
in the period in which such determination is made. The carrying amount of the Group’s tax payable as at 31
December 2008 and at 31 December 2009 amounted to RMB 11,388,000 and RMB 3,888,000 respectively.
The accounting policies used by the Group have been applied consistently to all the year presented in these
financial statements.
MULTI SPORTS HOLDINGS LTD
annual report 2009
notes to the financial statements (cont’d)
3.
SIGNIFICANT ACCOUNTING POLICIES (cont’d)
3 (b) Interpretations and amendments to published standards effective in 2009
On 1 January 2009, the Group adopted the new or amended IFRSs and Interpretations to IFRSs (“’INT IFRSs”)
that are mandatory for application from that date. This includes the following IFRSs and INT IFRSs, which are
relevant to the Group.
IAS 1 (Revised 2008)
Amendments to IAS 1
(revised 2008)
IAS 2
IAS 7
IAS 16
IAS 19
IAS 23(Revised)
Amendments to IAS 32
IAS 33
IAS 34
IAS 36
IAS 38
IFRS 8 Presentation of Financial Statements
Amendments relating to puttable financial instruments and
obligations arising on liquidation
Inventories
Cash Flow Statements
Property, Plant and Equipment
Employee Benefits
Borrowing costs
Amendments relating to puttable financial instruments and
obligations arising on liquidation
Earning Per Share
Interim Financial Reporting
Impairment of assets
Intangible Assets
Operating Segments
The adoption of the above IFRSs and interpretations did not result in substantial changes to the Group’s
accounting policies nor any significant impact on these Financial Statements except for a revision in the titles
of some of the financial statements primary statements and IFRS 8 which requires disclosure of information
about the Group’s operating segments. The Group determines that the reportable operating segments are in
accordance with IFRS 8.
3 (c) FRS not yet effective
At the date of authorisation of these financial statements, the following IFRS and INT IFRS were issued but
not yet effective.
IAS 27 (amended 2009)
IFRS 3 (revised 2009)
Amendments to IAS 39
IFRIC 17
IFRIC 18
IFRIC 19
Annual Improvement Process
Consolidated and separate financial statements
Business combinations
Financial instruments: Recognition and measurement - Eligible
hedged items and Embedded derivatives
Distributions of non-cash assets to owners
Transfer of assets from customers
Extinguishing financial liabilities with equity instruments
Improvements to IFRSs 2008
The directors do not anticipate that the adoption of other IFRSs and INT IFRSs in future periods will have a
material impact on the consolidated financial statements of the Group.
47
48
MULTI SPORTS HOLDINGS LTD
annual report 2009
notes to the financial statements (cont’d)
3.
SIGNIFICANT ACCOUNTING POLICIES (cont’d)
3 (d) Summary of significant accounting policies
Consolidation
The financial statements of the Group include the financial statements of the Company and its subsidiaries
made up to the end of the financial year. Information on its subsidiaries is given in Note 6.
The Group was formed as a result of the Reorganisation exercise undertaken in 2009 for the purpose of the
Company’s listing on the main market of the Bursa Malaysia Securities Berhad. The acquisition of 100%
equity in Jinjiang Baixing and Paksing pursuant to the Reorganisation exercise under common control has
been accounted for using the pooling-of-interests method of consolidation. Under the pooling-of-interest
method, the consolidated financial statements of the Group have been presented as if the Group structure
immediately after the reorganization has been in existence since the earliest financial year presented. The
assets and liabilities were brought into the consolidated statement of financial position at their existing carrying
amounts. The pooling-of-interest method will continue to be used for the entities in existence up to the Group’s
Reorganisation exercise.
All inter-company balances and significant inter-company transactions and resulting unrealised profits or losses
are eliminated on consolidation and the consolidated financial statements reflect external transactions and
balances only. The results of subsidiaries acquired or disposed of during the financial year are included or
excluded from the consolidated statement of comprehensive income from the effective date in which control
is transferred to the Group or in which control ceases, respectively.
Where accounting policies of a subsidiary do not conform with those of the Company, adjustments are made
on consolidation when the amounts involved are considered significant to the Group.
Subsidiaries
Subsidiaries are entities controlled by the Group. Control exists when the Group has the power to govern the
financial and operating policies of an entity so as to obtain benefits from its activities. The existence and effect
of potential voting rights that are currently exercisable or convertible are considered when assessing whether
the Group controls another entity. The results of subsidiaries acquired or disposed of during the financial year
are included or excluded from the consolidated income statement from the effective date in which control is
transferred to the Group or in which control ceases, respectively.
Investments in subsidiaries are stated at cost less allowance for impairment losses in the Company’s statement
of financial position.
For acquisition of subsidiaries under common control, the identifiable assets and liabilities were accounted
for at their carrying values, in a manner similar to the pooling-of-interest method of consolidation.
For acquisition of subsidiaries that is not under common control, the purchase method of accounting is adopted.
The cost of such acquisition is measured as the fair value of the assets given, equity instruments issued or
liabilities incurred or assumed at the dates of exchange, plus costs directly attributable to the acquisition.
Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are
measured initially at fair value on the date of the acquisition, irrespective of the extent of minority interest.
MULTI SPORTS HOLDINGS LTD
annual report 2009
notes to the financial statements (cont’d)
3.
SIGNIFICANT ACCOUNTING POLICIES (cont’d)
3 (d) Summary of significant accounting policies (cont’d)
Property, plant and equipment and depreciation
Property, plant and equipment are stated at cost less accumulated depreciation and impairment losses, if
any. Depreciation is computed utilising the straight-line method to write off the cost of these assets over their
estimated useful lives as follows:
Plant and machinery
Office equipment
Moulding equipment
Motor vehicle
5 - 10 years
5 years
3 - 5 years
3 years
No depreciation is provided on property under construction as it is not ready to be used.
The cost of property, plant and equipment includes expenditure that is directly attributable to the acquisition
of the items. Dismantlement, removal or restoration costs are included to the acquisition of the items.
Dismantlement, removal or restoration costs are included as part of the cost of property, plant and equipment
if the obligation for dismantlement, removal or restoration is incurred as a consequence of acquiring or using
the asset. Cost may also include transfers from equity of any gains/losses on qualifying cash flow hedges of
foreign currency purchases of property, plant and equipment.
Subsequent expenditure relating to property, plant and equipment that have been recognised is added to the
carrying amount of the asset when it is probable that future economic benefits, in excess of the standard of
performance of the asset before the expenditure was made, will flow to the Group and the cost can be reliably
measured. Other subsequent expenditure is recognised as an expense during the financial year in which it
is incurred.
For acquisitions and disposals during the financial year, depreciation is provided from the month of acquisition
and to the month before disposal respectively. Fully depreciated property, plant and equipment are retained in
the books of accounts until they are no longer in use. Depreciation methods, useful lives and residual values
are reviewed, and adjusted as appropriate, at each reporting date as a change in estimates.
Impairment of non-financial assets
The carrying amounts of the Company’s and Group’s non-financial assets subject to impairment are reviewed
at each financial position date to determine whether there is any indication of impairment. If any such indication
exists, the asset’s recoverable amount is estimated.
An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable
amount. The recoverable amount is the higher of fair value, reflecting market conditions less costs to sell
and value-in-use, based on an internal discounted cash flow evaluation. With the exception of goodwill, all
assets are subsequently reassessed for indications that an impairment loss previously recognised may no
longer exist. Any impairment loss is charged to the statement of comprehensive income unless it reverses a
previous revaluation in which case it is charged to equity.
A previously recognised impairment loss is reversed only if there has been a change in the estimates used
to determine the recoverable amount of an asset, however not to an amount higher than the carrying amount
that would have been determined had no impairment loss been recognised for the asset in prior periods. A
reversal of an impairment loss is credited to the statement of comprehensive income in the period in which it
arises.
49
50
MULTI SPORTS HOLDINGS LTD
annual report 2009
notes to the financial statements (cont’d)
3.
SIGNIFICANT ACCOUNTING POLICIES (cont’d)
3 (d) Summary of significant accounting policies (cont’d)
Financial assets
Financial assets, other than hedging instruments, can be divided into the following categories: financial assets
at fair value through profit or loss, held-to-maturity investments, loans and receivables and available-for-sale
financial assets. Financial assets are assigned to the different categories by management on initial recognition,
depending on the purpose for which the investments were acquired. The designation of financial assets is
re-evaluated and classification may be changed at the reporting date with the exception that the designation
of financial assets at fair value through profit or loss is not revocable.
All financial assets are recognised on their trade date - the date on which the Company and the Group commit
to purchase or sell the asset. Financial assets are initially recognised at fair value, plus directly attributable
transaction costs except for financial assets at fair value through profit or loss, which are recognised at fair
value.
Derecognition of financial instruments occurs when the rights to receive cash flows from the investments
expire or are transferred and substantially all of the risks and rewards of ownership have been transferred.
An assessment for impairment is undertaken at least at each financial position date whether or not there is
objective evidence that a financial asset or a group of financial assets is impaired. Non-compounding interest
and other cash flows resulting from holding financial assets are recognised in profit or loss when received,
regardless of how the related carrying amount of financial assets is measured.
Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not
quoted in an active market. They arise when the Group provides money, goods or services directly to a debtor
with no intention of trading the receivables. They are included in current assets, except for maturities greater
than 12 months after the financial position date. These are classified as non-current assets.
Loans and receivables include trade and other receivables. They are subsequently measured at amortised
cost using the effective interest method, less provision for impairment. If there is objective evidence that the
asset has been impaired, the financial asset is measured at the present value of the estimated future cash
flows discounted at the original effective interest rate. Impairment losses are reversed in subsequent periods
when an increase in the asset’s recoverable amount can be related objectively to an event occurring after
the impairment was recognised, subject to a restriction that the carrying amount of the asset at the date the
impairment is reversed does not exceed what the amortised cost would have been had the impairment not
been recognised. The impairment or write back is recognised in the statement of comprehensive income.
Financial liabilities
The Group’s financial liabilities include trade and other payables and amount owing to a shareholder cum
director.
Financial liabilities are recognised when the Group becomes a party to the contractual agreements of the
instrument. All interest related charges are recognised as an expense in “finance cost” in the statement of
comprehensive income. Financial liabilities are derecognised if the Group’s obligations specified in the contract
expire or are discharged or cancelled.
Trade and other payables are initially measured at fair value, and subsequently measured at amortised cost,
using the effective interest method.
Borrowings are recognised initially at the fair value of proceeds received less attributable transaction costs,
if any. Borrowings are subsequently stated at amortised cost which is the initial fair value less any principal
repayments. Any difference between the proceeds (net of transaction costs) and the redemption value is
taken to the statement of comprehensive income over the period of the borrowings using the effective interest
method. The interest expense is chargeable on the amortised cost over the period of the borrowings using
the effective interest method.
MULTI SPORTS HOLDINGS LTD
annual report 2009
notes to the financial statements (cont’d)
3.
SIGNIFICANT ACCOUNTING POLICIES (cont’d)
3 (d) Summary of significant accounting policies (cont’d)
Financial liabilities (cont’d)
Gains and losses are recognised in the profit and loss account when the liabilities are derecognised as well
as through the amortisation process.
Borrowings which are due to be settled within twelve months after the balance sheet are included in current
borrowings in the balance sheet even though the original terms was for a period longer than twelve months and
an agreement to refinance, or to reschedule payments, on a long-term basis is completed after the financial
position date. Borrowings to be settled within the Group’s normal operating cycle are classified as current.
Other borrowings due to be settled more than twelve months after the financial position date are included in
non-current borrowings in the balance sheet.
Inventories
Inventories are valued at the lower of cost and net realisable value. Cost incurred in bringing each product to
its present location and conditions are accounted for as follows:
(a)
Raw materials at purchase cost on a weighted average basis; and
(b)
Finished goods and work in progress at cost of direct materials and labour and a proportion of
manufacturing overheads based on normal operating capacity.
Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs
necessary to make the sale.
Provisions
Provisions are recognised when the Company and the Group have a present obligation (legal or constructive)
as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be
required to settle the obligation and a reliable estimate can be made of the amount of the obligation.
The directors review the provisions annually and where in their opinion, the provision is inadequate or excessive,
due adjustment is made.
If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that
reflects, where appropriate, the risks specific to the liability. Where discounting is used, the increase in the
provision due to the passage of the time is recognised as finance costs.
Recognition of revenue
Revenue is recognised when the significant risks and rewards of ownership have been transferred to the
buyer, generally upon delivery. Revenue excludes goods and services taxes and is arrived at after deduction
of trade discounts. No revenue is recognised if there are significant uncertainties regarding recovery of the
consideration due, associated costs or the possible return of goods.
Interest income is recognised on a time-apportioned basis using the effective interest rate method.
Income taxes
Current income tax for current and prior periods is recognised at the amount expected to be paid to or recovered
from the tax authorities, using the tax rates and tax laws that have been enacted or substantively enacted by
the statement of financial position date.
PRC corporate income tax is provided at rates applicable to an enterprise in the PRC on income for financial
reporting purpose, adjusted for income and expenses items which are not assessable or deductible for income
tax purposes.
51
52
MULTI SPORTS HOLDINGS LTD
annual report 2009
notes to the financial statements (cont’d)
3.
SIGNIFICANT ACCOUNTING POLICIES (cont’d)
3 (d) Summary of significant accounting policies (cont’d)
Income taxes (cont’d)
Deferred income tax is recognised for all temporary differences arising between the tax bases of assets and
liabilities and their carrying amounts in the financial statements except when the deferred income tax arises
from the initial recognition of goodwill or an asset or liability in a transaction that is not a business combination
and affects neither accounting or taxable profit or loss at the time of the transaction.
A deferred income tax liability is recognised on temporary differences arising on investments in subsidiaries,
associates and joint ventures, except where the Group is able to control the timing of the reversal of the
temporary difference and it is probable that the temporary difference will not reverse in the foreseeable
future.
A deferred income tax asset is recognised to the extent that it is probable that future taxable profit will be
available against which the deductible temporary differences and tax losses can be utilised.
Deferred income tax is measured:
(i)
at the tax rates that are expected to apply when the related deferred income tax asset is realised or
the deferred income tax liability is settled, based on tax rates and tax laws that have been enacted or
substantively enacted by the date of the financial position; and
(ii)
based on the tax consequence that will follow from the manner in which the Group expects, at the date
of the financial position, to recover or settle the carrying amounts of its assets and liabilities.
Current and deferred income taxes are recognised as income or expense in the profit or loss, except to the
extent that the tax arises from a business combination or a transaction which is recognised directly in equity.
Deferred tax arising from a business combination is adjusted against goodwill on acquisition.
Value-added tax
Revenues, expenses and assets are recognised net of the amount of VAT except where:
The Group’s sale of goods in the PRC are subjected to Value-added tax (“VAT”) at the applicable tax rate of
17% for PRC domestic sales. Input VAT on purchases can be deducted from output VAT. The net amount of
VAT recoverable from, or payable to, the taxation authority is included as part of “other receivables” or “other
payables” in the statement of financial position respectively.
•
•
VAT incurred on the purchase of assets or services is not recoverable from the taxation authority, in
which case VAT is recognised as part of the cost of acquisition of the asset or as part of the expense
item as applicable; and
Receivables and payables are stated with the amount of VAT included.
Employee benefits
Pursuant to the relevant regulations of the PRC government, the Group participates in a local municipal
government retirement benefits scheme (the “Scheme”), whereby the subsidiaries of the Company in the
PRC are required to contribute a certain percentage of the basic salaries of their employees to the Scheme to
fund their retirement benefits. The local municipal government undertakes to assume the retirement benefits
obligations of all existing and future retired employees of the subsidiaries of the Company. The only obligation
of the Group with respect to the Scheme is to pay the ongoing required contributions under the Scheme
mentioned above. Contributions under the Scheme are expenses as incurred.
MULTI SPORTS HOLDINGS LTD
annual report 2009
notes to the financial statements (cont’d)
3.
SIGNIFICANT ACCOUNTING POLICIES (cont’d)
3 (d) Summary of significant accounting policies (cont’d)
Key management personnel
Key management personnel are those persons having the authority and responsibility for planning, directing and
controlling the activities of the entity. Directors and certain general managers are considered key management
personnel.
Foreign currencies
(i)
Functional and presentation currency
Items included in the financial statements of each entity in the Group are measured using the currency
of the primary economic environment in which the entity operates (“functional currency”). The financial
statements of the Group and the Company are presented in Renminbi, which is also the functional
currency of the Company.
(ii)
Transactions and balances
Transactions in a currency other than the functional currency (“foreign currency”) are translated into
the functional currency using the exchange rates at the dates of the transactions. Currency translation
differences from the settlement of such transactions and from the translation of monetary assets
and liabilities denominated in foreign currencies at the closing rates at the financial position date are
recognised in the statement of comprehensive income, unless they arise from borrowings in foreign
currencies, other currency instruments designated and qualifying as net investment hedges and
net investment in foreign operations. Those currency translation differences are recognised in the
currency translation reserve in the consolidated financial statements and transferred to the profit or loss
as part of the gain or loss on disposal of the foreign operation.
Non-monetary items measured at fair values in foreign currencies are translated using the exchange
rates at the date when the fair values are determined.
(iii) Group companies
The results and financial position of all the entities (none of which has the currency of a hyperinflationary
economy) within the Group that have a functional currency different from the presentation currency are
translated into the presentation currency as follows:
(a) Assets and liabilities are translated at the closing exchange rates at the date of the statement of
financial position;
(b) Income and expenses are translated at average exchange rates (unless the average is not a
reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates,
in which case income and expenses are translated using the exchange rates at the dates of the
transactions); and
(c) All resulting currency translation differences are recognised in the currency translation reserve in
equity.
Related parties
Parties are considered to be related if one party has the ability, directly or indirectly, to control the other party
or exercise significant influence over the other party in making financial and operating decisions. Parties are
also considered related if they are subject to common control or common significant influence. Related parties
may be individuals or corporate entities.
53
54
MULTI SPORTS HOLDINGS LTD
annual report 2009
notes to the financial statements (cont’d)
3.
SIGNIFICANT ACCOUNTING POLICIES (cont’d)
3 (d) Summary of significant accounting policies (cont’d)
Operating leases
Rentals on operating leases are charged to statement of comprehensive income on a straight-line basis over
the lease term. Lease incentives, if any, are recognised as an integral part of the net consideration agreed for
the use of the leased asset. Penalty payments on early termination, if any, are recognised in the statement
of comprehensive income when incurred.
Financial instruments
The recognition methods adopted of financial assets and liabilities are disclosed in the individual policy
statements associated with each item. These instruments are recognised when contracted for. Disclosures
on financial risk management are provided in Note 24.
Operating segment
For management purposes, operating segments are organised based on their products and services which
are independently managed by the respective segment managers responsible for the performance of the
respective segments under their charge. The segment managers are directly accountable to the chief executive
officer who regularly reviews the segment results in order to allocate resources to the segments and to assess
segment performance.
Share capital
Ordinary shares are classified as equity. Incremental costs directly attributable to the issuance of new ordinary
shares are deducted against the share capital account.
Cash and cash equivalents
For the purpose of the consolidated cash flow statement, cash and cash equivalents comprise cash on hand
and in bank.
Intangible assets
Intangible assets are accounted for using the cost model. Capitalised costs are amortised on a straight-line
basis over their estimated useful lives for those considered as finite useful lives. After initial recognition, they
are carried at cost less accumulated amortisation and accumulated impairment losses, if any. In addition,
they are subject to annual impairment testing. Indefinite life intangibles are not amortised but are subject to
annual impairment testing.
Intangible assets are written off where, in the opinion of the directors, no further future economic benefits are
expected to arise.
Land use rights
Land use rights represent up-front payment to acquire long-term interests in the usage of land and are stated
at cost less accumulated amortisation and impairment losses, if any. Amortisation is charged so as to write off
the cost of the land use rights, using the straight-line method, over the period of the grant of 50 years, which
is the lease term.
Research and developments costs
Research costs are expensed as incurred, except for development costs which relate to the design and testing
of new or improved materials, products or processes which are recognised as an asset to the extent that it is
expected that such assets will generate future economic benefits.
MULTI SPORTS HOLDINGS LTD
annual report 2009
notes to the financial statements (cont’d)
4.
PROPERTY, PLANT AND EQUIPMENT
Property
Plant &
Office
Moulding
Motor
under
The Group
Machinery Equipment Equipment
vehicle construction
RMB’000
RMB’000
RMB’000 RMB’000
RMB’000
Total
RMB’000
Cost
At 1 January 2008
Additions
27,650
1,982
323
31
32,395
4,371
–
252
–
–
60,368
6,636
At 31 December 2008
Additions
29,632
3,424
354
53
36,766
4,593
252
532
–
87,224
67,004
95,826
At 31 December 2009
33,056
407
41,359
784
87,224
162,830
7,000
3,144
10,144
3,330
13,474
114
60
174
69
243
11,147
6,151
–
28
–
–
18,261
9,383
17,298
5,140
28
102
–
–
27,644
8,641
22,438
130
–
36,285
19,488
180
19,468
224
–
39,360
19,582
164
18,921
654
87,224
126,545
Accumulated Depreciation
At 1 January 2008
Depreciation
At 31 December 2008
Depreciation
At 31 December 2009
Net Book Value
At 31 December 2008
At 31 December 2009
Property under construction pertains to cost incurred as at 31 December 2009 in relation to new factory, office
building and hostel in Xinbin Farm, Xibin Town, Jinjiang City, Fujian Province, PRC.
All property, plant and equipment held by the Group are located in the PRC.
55
56
MULTI SPORTS HOLDINGS LTD
annual report 2009
notes to the financial statements (cont’d)
5.
LAND USE RIGHTS
The Group
RMB’000
Cost
At 1 January 2008
Additions
–
4,743
At 31 December 2008
Additions
At 31 December 2009
4,743
18,990
23,733
Accumulated Amortisation
At 1 January 2008
Amortisation
At 31 December 2008
Amortisation
At 31 December
119
Net Book Value
At 31 December 2008
4,719
At 31 December 2009
23,614
–
24
24
95
The Group’s land use rights with a net book value of approximately RMB 4,624,000 located at Longgang Salt Yard,
Shanxia Town, Hui-an County, Quanzhou City, Fujian Province, PRC is pledged to a bank as securities for a banking
facility subsequent to year end (Note 28).
Addition of the land use rights of approximately RMB 18,990,000 located at Xinbin Farm, Xibin Town, Jinjiang City,
Fujian Province, PRC pertains to the land in relation to the property under construction (Note 4). Amortisation for
this land use rights will commence upon the land is available for use by the Group.
The Group’s Directors are of the opinion that the recoverable amount of the land use rights exceeds its carrying
amount as at 31 December 2009 and 2008.
6.
SUBSIDIARIES
Unquoted equity investments, at cost
The Company
2009
2008
RMB’000
RMB’000
103,465
–
MULTI SPORTS HOLDINGS LTD
annual report 2009
notes to the financial statements (cont’d)
6.
SUBSIDIARIES (cont’d)
The subsidiaries are:
Country of
incorporation/
Principal place Name
of business
Cost of investments
Equity interest held
2009
2008
2009
2008
RMB’000
RMB’000
%
%
Directly held:
Pak Sing Shoe
Hong Kong
103,465
–
100%
–
Material (H.K.)
Limited (1)
Indirectly held:
Jinjiang Baixing
PRC –
–
100%
–
Shoe Material
Co., Ltd. (2) 7.
Investment holding
Design,
development and
manufacturing of
sport-shoe soles
(1)
Audited by Vision A.S. Limited, Certified Public Accountants, Hong Kong for statutory purposes and reviewed
by Foo Kon Tan Grant Thornton LLP for the purposes of expressing an opinion on the consolidated financial
statements.
(2)
Audited by Quanzhou Ming Cheng You Xian Ze Ren Kuai Ji Shi Shi Wu Suo, Certified Public Accountants for
statutory purposes and audited by Foo Kon Tan Grant Thornton LLP for the purpose of expressing an opinion
on the consolidated financial statements.
INVENTORIES
Principal
activities
The Group
2009
2008
RMB’000
RMB’000
Raw materials
Finished goods
Work in progress
8,172
2,591
1,397
5,929
3,182
1,877
12,160
10,988
During the financial year ended 31 December 2009 and 31 December 2008, there have been no inventory written
off or allowance of inventory obsolescence made.
57
58
MULTI SPORTS HOLDINGS LTD
annual report 2009
notes to the financial statements (cont’d)
8.
TRADE AND OTHER RECEIVABLES
The Company
2009
2008
RMB’000
RMB’000
The Group
2009
2008
RMB’000
RMB’000
Trade receivables
Amounts due from a related party
Amount due from a subsidiary
Advance payments
Prepaid expenses
Deposit
–
–
83,187
–
58
9
–
–
–
–
–
–
63,374
273
–
980
58
9
37,736
273
–
2,353
–
–
83,254
–
64,694
40,362
Amounts due from a related party relates to rental paid in advance. The amounts are unsecured, interest free and
have no fixed terms of repayment.
Amount due from a subsidiary relates to inter-company advances for working capital purposes, net of listing expenses
paid on behalf by the subsidiary. The amount is unsecured, interest free and repayable on demand.
Advance payments relate mainly to payment in advance to suppliers for the financial year ended 2009 and prepaid
listing expenses for the financial year ended 2008.
Trade and other receivables are denominated in the following currencies:
The Company
2009
2008
RMB’000
RMB’000
Renminbi
Hong Kong Dollar
United State Dollar
Ringgit Malaysia
83,185
2
39
28
–
–
–
–
64,652
2
39
28
40,362
–
–
–
83,254
–
64,694
40,362
The ageing analysis of trade receivables past due but not impaired is as follows:
The Group
2009
2008
RMB’000
RMB’000
The Company
2009
2008
RMB’000
RMB’000
The Group
2009
2008
RMB’000
RMB’000
Not past due
Past due 0 to 1 months
–
–
–
–
63,326
48
37,321
415
–
–
63,374
37,736
Based on historical default rates, the Group believes that no impairment allowance is necessary in respect of
trade receivables that are past due. These receivables mainly relate to customers that have a good record with the
Group.
MULTI SPORTS HOLDINGS LTD
annual report 2009
notes to the financial statements (cont’d)
9.
CASH AND BANK BALANCES
Cash on hand
Cash at bank
97
160,609
97
29,846
160,706
29,943
Cash and bank balances are denominated in the following currencies:
The Group
2009
2008
RMB’000
RMB’000
The Group
2009
2008
RMB’000
RMB’000
Renminbi
Hong Kong Dollar
United State Dollar
156,266
176
4,264
29,941
2
–
160,706
29,943
The Renminbi is not freely convertible into foreign currencies. Under the PRC Foreign Exchange Control Regulations
and Administration of Settlement, Sales and Payment of Foreign Exchange Regulations, the Group is permitted
to exchange Renminbi for foreign currencies through banks that are authorised to conduct foreign exchange
business.
The cash at bank bears effective interest rates of 0.36% and 0.60% per annum during the years ended 31 December
2009 and 31 December 2008 respectively.
Cash and bank balances of the Group are in the current account and have no maturity dates or fixed interest rates,
accordingly, there is no repricing of the cash and bank balances.
59
60
MULTI SPORTS HOLDINGS LTD
annual report 2009
notes to the financial statements (cont’d)
10. TRADE AND OTHER PAYABLES
The Company
2009
2008
RMB’000
RMB’000
The Group
2009
2008
RMB’000
RMB’000
Trade payables
VAT payable
Accrued liabilities Amount due to a director Amount due to a subsidiary
Others
–
–
929
–
5,982
–
–
–
–
–
–
–
29,655
4,381
16,539
–
–
–
24,336
3,004
11,466
9,433
–
10
6,911
–
50,575
48,249
Trade payables generally have credit terms of 30 - 40 days and are denominated in Renminbi
Accrued liabilities consist mainly of accrued wages, social security insurance and production overhead.
Amount due to a director as at 31 December 2008 related to advance to the Group for working capital purposes.
The amount is unsecured, interest free and had no fixed terms of repayment. The amount has been fully repaid in
2009.
Amount due to a subsidiary relates to listing expenses paid on behalf by the subsidiary. The amount is unsecured,
interest free and repayable on demand.
Trade and other payables are denominated in the following currencies:
The Company
2009
2008
RMB’000
RMB’000
The Group
2009
2008
RMB’000
RMB’000
Renminbi
Ringgit Malaysia
Singapore Dollar
Hong Kong Dollar 5,982
442
487
–
–
–
–
–
49,627
442
487
19
38,816
–
9,433
–
6,911
–
50,575
48,249
11. AMOUNT DUE TO A SHAREHOLDER CUM DIRECTOR
Amount due to a shareholder cum director is unsecured, interest free and pursuant to an written agreement, the
amount is repayable within 12 months. Accordingly, the amount has been reclassified to current. The directors are
of the opinion that the carrying amount approximates its fair value. The fair value is determined from the discounted
cash flows analysis, using a discount rate based upon the borrowing rate which the directors expect would be
available to the Group at the statement of financial position date. No adjustment has been made to fair value as
the differences between the carrying amount and fair value is not significant to the Group. The amount due to a
shareholder is denominated in Hong Kong Dollar.
MULTI SPORTS HOLDINGS LTD
annual report 2009
notes to the financial statements (cont’d)
12. SHARE CAPITAL
The Company
No. of ordinary shares
Amount
2009
2008
2009
2008
USD’000 RMB’000 USD’000 RMB’000
Authorised share capital
At beginning of year / date of
Incorporation (1)
Consolidation (1)
Addition during the
year/periods (1)
At end of the year / periods
1,000,000
–
10
–
68
–
10
–
68
–
999,800,000
–
49,990
341,932
–
–
1,000,000,000
1,000,000
50,000
342,000
10
68
1,000,000
(800,000)
Issued and fully paid:
At beginning of year / date of
incorporation (3) On acquisition of Pak Sing
Consolidation and increase (1)
Acquisition of Pak Sing (1)
Public Issue shares (2)
12,175
(12,175)
20
302,399,980
57,600,000
12,175
–
–
–
–
2
(2)
*
15,120
2,880
11
(11)
*
103,466
19,712
2
–
–
–
–
11
–
–
–
–
At end of the year/ periods (3)
360,000,000
12,175
18,000
123,178
2
11
*
(1)
US$ 1.00 and its equivalent in RMB
The Company was incorporated in Bermuda on 18 September 2008 under the Bermuda Companies Act as
an exempted company. At date of incorporation, the authorised share capital of the Company was US$10,000
divided into 1,000,000 ordinary shares of US$0.01 each.
On 28 May 2009, the Company effected a consolidation of every five (5) existing ordinary shares of US$0.01
each in our authorised and issued share capital into one (1) ordinary share of US$0.05, resulting in an
authorised share capital of US$10,000 divided into 200,000 shares of US$0.05 each and an issued share
capital of US$1.00 divided into 20 shares of US$0.05 each.
Following the consolidation, the Company increased the authorised share capital from US$10,000 divided
into 200,000 ordinary shares of US$0.05 each to US$50,000,000 divided into 1,000,000,000 ordinary shares
of US$0.05 each.
On 15 July 2009, the Company acquired the entire issued and fully paid-up share capital of Paksing,
comprising 12,175 ordinary shares of HK$1.00 each in Paksing, for an aggregate purchase consideration of
US$15,119,999, which was wholly satisfied by the issuance of an aggregate of 302,399,980 new Multi Sports
Shares each credited as fully paid-up, at par value of US$0.05 per Share.
61
62
MULTI SPORTS HOLDINGS LTD
annual report 2009
notes to the financial statements (cont’d)
12. SHARE CAPITAL (cont’d)
(2)
On 18 August 2009, the Company implemented 57,600,000 public issue shares via public offering.
(3)
The share capital as at 31 December 2008 in the statement of changes in equity represented the issued share
capital of Pak Sing as even though the Company has only completed the Reorganisation in 15 July 2009, the
Group has been in existence in the previous period. This accounting treatment was in accordance with INT
FRS 12 Consolidation – Special Purpose Entities.
13. RESERVES
a)
Share premium
The share premium arises from the difference between the par value and issue price of the share issued
after the transaction costs that are directly relating to the public initial offerings and the issuance of equity
instrument.
b)
Statutory reserves
In accordance with the relevant laws and regulations of the PRC, the subsidiaries of the Company established
in the PRC are required to transfer 10% of its profit after taxation prepared in accordance with the accounting
regulation of the PRC to the statutory reserve until the reserve balance reaches 50% of the respective registered
capital. Such reserve may be used to offset accumulated losses or increase the registered capital of these
subsidiaries, subject to the approval from the PRC authorities, and are not available for dividend distribution
to the shareholders.
c)
Merger Deficit
The merger deficit arises from the difference between the nominal value of shares issued by the Company
and the nominal value of shares and share premium of subsidiary acquired under the pooling interest method
of accounting.
d)
Currency translation reserve
Currency translation reserve represents translation differences arising from translation of foreign currency
financial statements into the Group’s presentation currency.
14. REVENUE AND OTHER INCOMES
Revenue represents the net invoiced value of goods sold, after allowances for return and trade discounts, if any.
An analysis of the Group’s revenue and other income is as follows:
The Group
2009
2008
RMB’000
RMB’000
Revenue
Sale of goods
474,187
385,310
Other incomes
Interest income Exchange gain Sales of scrap material
446
53
313
239
1,060
474
812
1,773
MULTI SPORTS HOLDINGS LTD
annual report 2009
notes to the financial statements (cont’d)
15. FINANCE COSTS
Interest expense
Bank borrowings The Group
2009
2008
RMB’000
RMB’000
1,113
–
The Group’s interest-bearing bank borrowings are guaranteed by external parties and secured on the Group’s land
use rights (Note 5). Bank borrowings bear effective interest rates of 6.90% per annum (2008: Nil).
16. PROFIT BEFORE TAXATION
The Group’s profit before taxation is arrived at after charging:
Notes
Cost of inventories recognised as expenses
Depreciation of property, plant and equipment
4
Amortisation of land use rights 5
Directors’ remuneration - salaries and related cost - retirement scheme contribution
Key management personnel (other than directors)
- salaries and related cost - retirement scheme contribution
Other than directors and key management personnel
- salaries and related cost
- retirement scheme contribution
Operating lease expenses
Research and development expenses
Listing expenses *
*
The Group
2009
2008
RMB’000
RMB’000
210,545
8,641
95
182,456
9,383
24
1,261
8
420
8
556
8
242
8
62,031
4,394
1,870
659
9,822
51,404
2,988
1,870
843
–
Listing expenses are charged to administrative expense in the consolidated statement of comprehensive
income.
Depreciation expenses of approximately RMB 8,471,000 and RMB 9,295,000 have been charged in cost of sales
on the face of the statements of comprehensive income for the year ended 31 December 2009 and 31 December
2008 respectively.
Depreciation expenses of approximately RMB 170,000 and RMB 88,000 have been charged in administrative
expenses on the face of the statements of comprehensive income for the year ended 31 December 2009 and 31
December 2008 respectively.
63
64
MULTI SPORTS HOLDINGS LTD
annual report 2009
notes to the financial statements (cont’d)
17. INCOME TAX EXPENSE
Current year provision:
PRC income tax
The Group
2009
2008
RMB’000
RMB’000
18,186
13,018
No deferred tax has been provided as the Group did not have any significant temporary differences which gave rise
to a deferred tax asset or liability at 31 December 2009 and 31 December 2008.
Reconciliation between tax expense and profit before taxation at applicable tax rates is as follows:
The Group
2009
RMB’000
2008
RMB’000
Profit before taxation
132,125
105,198
Tax at the applicable tax rate of 25%
Tax effect on non-taxable income
Tax effect on non-deductible expenses
Income exempt from tax
Difference in foreign tax rate
33,031
(14)
3,358
(18,186)
(3)
26,299
(175)
1
(13,018)
(89)
18,186
13,018
2009
RMB’000
2008
RMB’000
Movements in current income tax liabilities are as follows:
The Group
Beginning of financial year
Income tax expense for the year
Income tax paid
End of financial year
3,888
18,186
(10,686)
–
13,018
(9,130)
11,388
3,888
Bermuda income tax
The Company was incorporated in the Bermuda as an exempted company with limited liability under the Companies
Law of the Bermuda and accordingly, is exempted from payment of Bermuda income tax.
Hong Kong profit tax
No provision for Hong Kong profits tax was made as the Group has no assessable profits subject to Hong Kong
profits tax.
MULTI SPORTS HOLDINGS LTD
annual report 2009
notes to the financial statements (cont’d)
17. INCOME TAX EXPENSE (cont’d)
PRC enterprise income tax (“EIT”)
As a wholly foreign-owned enterprise established under the laws of the China, Jinjiang Baixing Shoe Material Co.,
Ltd. (“Jinjiang Baixing”) is entitled to full exemption from EIT for the first two years and a 50% reduction in EIT for
the next three years. Jinjiang Baixing has elected 31 December 2006 to be its first profitable year for the purpose of
determining the tax holiday period and will be exempted from EIT for the financial year ended 31 December 2006
and 31 December 2007, and will be subject to EIT at a preferential rate of 12.5% for the financial years ended 31
December 2008 to 31 December 2010.
According to notice Caishui 2008 No.1 released by the Ministry of Finance and the State Administration of Taxation,
dividends distributed to foreign investor by Foreign Invested Enterprises (“FIE”) in the PRC, would be subject to
withholding tax of 5%. The Chinese tax authorities have granted a special tax concession which states that dividends
distributed out of the pre-2008 retained earnings of an FIE shall be exempted from withholding tax in 2008 and
beyond. The management has determined that 2009 profit will not be distributed as dividend and profit will be
reinvested into operation. Accordingly no provision for deferred tax liabilities has been made in the book.
18. EARNINGS PER SHARE
Basic earnings per share are calculated based on profit attributable to equity holders of the Group and weighted
average number of 324,000,000 and 302,400,000 ordinary shares in issue and for the financial year ended 31
December 2009 and 2008 respectively:
The Company and the Group
At beginning of year
Consolidation and increase (20 ordinary shares for 12 months) (1)
Acquisition of Pak Sing (302,399,980 ordinary shares for 12 months) (1)
Public issue (57,600,000 ordinary shares for 4.5 months) –
20
302,399,980
21,600,000
–
20
302,399,980
–
324,000,000
302,400,000
(1)
Weighted average
no. of shares
2009
2008
Ordinary shares arising from the Reorganisation exercise are assumed to be issued throughout the financial
year 31 December 2009 and 2008 as the Reorganisation exercise was accounted for under common control
using the “pooling of interest” method of consolidation.
There is no potential dilutive effect on earnings per share.
65
66
MULTI SPORTS HOLDINGS LTD
annual report 2009
notes to the financial statements (cont’d)
19. DIVIDENDS
The Company and the Group
2009
RMB’000
2008
RMB’000
Ordinary dividends paid
- Final tax-exempt dividend of 0.13 cents per share (1)
- Final dividend with 5% withholding tax of 0.17 cents per share (1) (2)
–
–
38,655
51,345
–
90,000
(1)
Dividends per share are calculated based on the weighted average number of 302,400,000 ordinary shares
in issued for the financial year ended 31 December 2008.
(2)
The 5% withholding tax of approximately RMB 2,567,000 was fully borne by the shareholder, Mr Lin Huo
Zhi. This transaction has not been reflected in the consolidated statement of comprehensive income as the
amount were not material and would not have any impact on the Group’s financial statements.
20. COMMITMENTS
(a)
Operating lease commitments
The Group leases production factory from a related party and a non-related party under non-cancellable
operating lease arrangements. The Group also leases office building and employees’ hostel from a nonrelated party under a non-cancellable operating lease arrangement. The leases have varying terms and the
total future minimum lease payments of the Group under non-cancellable operating leases are as follows:
The Group
2009
2008
RMB’000
RMB’000
Not later than one year
Later than one year and not later than five years
934
–
1,870
934
934
2,804
(b)
Capital commitments
Capital expenditures contracted but not provided for are as follow:
The Group
2009
2008
RMB’000
RMB’000
Property, plant and equipment
Land use rights
40,261
460
–
–
40,721
–
MULTI SPORTS HOLDINGS LTD
annual report 2009
notes to the financial statements (cont’d)
21. SIGNIFICANT RELATED PARTY TRANSACTIONS
Except as disclosed elsewhere in this consolidated financial statements, significant related party transactions of the
Group are as follow:
Rental paid to a related party Advances from a director Dividend paid by a related party on behalf of subsidiary
Expenses paid on behalf by a director
The Group
2009
2008
RMB’000
RMB’000
1,092
–
–
643
1,092
9,433
90,000
–
22. SEGMENT INFORMATION
For management purposes, the Group is organized into business units based on their business activities, and has
four reportable operating segments as follows:
1)
TPR shoe soles
TPR shoe soles are a physical mix of polymers, usually a rubber and a plastic. It combines the functional
properties of rubber and the easy processability, mouldability and recyclability of thermoplastics. TPR-based
sports-shoe soles are lightweight, durable, flexible and provide good traction even under cold conditions.
2)
RB shoe soles
Natural and synthetic rubbers are used in the production of RB shoe soles. They are highly resistant to wear
and tear, possess the highest tensile strength, provide good traction and is waterproof and weatherproof.
However, they provide less dimensional stability, cushioning and shock-absorption capabilities.
3)
MD1 shoe soles
The main components of MD1 shoe soles are ethylene vinyl acetate (“EVA”) and rubber. EVA-based sportsshoe soles are lightweight, soft, flexible, elastic, resistant to wear and tear, and are dimensionally stable with
adequate cushioning, thus serve as an excellent shock-absorber in sports-shoe soles.
4)
MD2 shoe soles
The main component of MD 2 shoe soles are similar to MD 1 shoe soles, but are produced using a distinct
production process with equipment that are technologically more advanced than MD1 shoe soles and as such,
has greater variability in designs and improved quality control.
Except as indicated above, no operating segments have been aggregated to form the above reportable
operating segments
Management monitors the operating results of its business units 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
or loss in the Consolidated Financial Statements. Group income taxes are managed on a group basis and are not
allocated to operating segments.
Transfer prices between operating segments are on an arm’s length basis in a manner similar to transaction with
third parties, if any.
67
68
MULTI SPORTS HOLDINGS LTD
annual report 2009
notes to the financial statements (cont’d)
22. SEGMENT INFORMATION (cont’d)
The segment information provided to the management for the reportable segments for the financial year ended is
as follows:
TPR
Shoe soles
RMB’000
Financial year ended 31 December 2009
RB
MD1
MD2
Shoe soles
Shoe soles
Shoe soles
RMB’000
RMB’000
RMB’000
Total
RMB’000
Revenue:
External sales 48,477
11,256 180,631 233,823 474,187
Results:
Interest income
Interest expenses
Depreciation and amortization
Segment profit 35 113
891
14,826 8
27
208
3,466
129 424
3,329
55,410 167
549
4,308
71,701
339
1,113
8,736
145,403
Assets:
Additions to non-current assets (1)
Reportable segment assets
11,707
39,081 2,737
9,136 43,753
146,056
56,619
189,001 114,816
383,274
Reportable segment liabilities 5,060 1,183 18,912 24,473 49,628
31 December 2009
RMB’000
Profit or loss
Total profit for reportable segments Unallocated interest income
Unallocated other incomes
Unallocated other expenses (2)
145,403
107
53
(13,438)
Profit from operations
132,125
Assets
Total assets for reportable segments
Unallocated prepayment and other receivables (3)
Unallocated cash and cash balances (4)
383,274
68
4,377
Group assets
387,719
Liabilities
Total liabilities for reportable segments Unallocated amount owing to a shareholder cum director (5)
Unallocated income tax payable
Unallocated other payables (6)
49,628
18,377
11,388
947
Group liabilities
80,340
(1)
(4)
(5)
(6)
(2)
(3)
Addition to non-current assets consists of additions to property, plant and equipment and land use rights (Note
4, 5).
Relate mainly to listing expenses and the Company’s administrative expenses.
Relate mainly relate to Pak Sing and the Company’s prepaid administrative expenses.
Relate to Pak Sing’s cash and cash balances.
Relates to advance from a shareholder cum director (Note 11).
Relate mainly to the Company’s administrative expenses.
MULTI SPORTS HOLDINGS LTD
annual report 2009
notes to the financial statements (cont’d)
22. SEGMENT INFORMATION (cont’d)
TPR
Shoe soles
RMB’000
Financial year ended 31 December 2008
RB
MD1
MD2
Shoe soles
Shoe soles
Shoe soles
RMB’000
RMB’000
RMB’000
Total
RMB’000
Revenue:
External sales 46,428
9,236 181,183 148,463 385,310
Results:
Interest income
Depreciation and amortization
Segment profit 29 1,136
12,572 6
231
2,558
112 4,407
48,795 92
3,633
40,222
239
9,407
104,147
Assets:
Additions to non-current assets (1)
Reportable segment assets 1,374
15,135 280 3,079 5,331 58,738 4,394
48,418 11,379
125,370
Reportable segment liabilities 5,825
1,185 22,606 18,633
48,249
31 December 2008
RMB’000
Profit or loss
Total profit for reportable segments
Unallocated other incomes (2) Unallocated other expenses
104,147
1,060
(9)
Profit from operations
105,198
Assets
Total assets for reportable segments
Unallocated cash and cash balances (3) 125,370
2
Group assets
125,372
Liabilities
Total liabilities for reportable segments Unallocated amount owing to a shareholder cum director (4) Unallocated income tax payable
48,249
17,735
3,888
Group liabilities
69,872
(1)
(4)
(2)
(3)
Addition to non-current assets consists of additions to property, plant and equipment and land use rights (Note
4, 5).
Relates to exchange difference arising from shareholder’s loan (Note 14).
Relate to Pak Sing’s cash and cash balances.
Relates to advance from a shareholder cum director (Note 11).
69
70
MULTI SPORTS HOLDINGS LTD
annual report 2009
notes to the financial statements (cont’d)
23. IMMEDIATE AND ULTIMATE HOLDING COMPANY
The Company’s immediate and ultimate holding company is Power Wide Holdings Limited, a company incorporated
in the British Virgin Islands.
24. FINANCIAL RISK MANAGEMENT OBJECTIVES – POLICIES
The Group does not have written risk management policies and guidelines. However, the board of directors meets
periodically to analyse and formulate measures to manage the Group’s exposure to market risk, including principally
changes in interest rates and currency exchange rates. Generally, the Group employs a conservative strategy
regarding its risk management. As the Group’s exposure to market risk is kept at a minimum level, the Group has
not used any derivatives or other instruments for hedging purposes. The Group does not hold or issue derivative
financial instruments for trading purposes.
As at 31 December 2009 the Group’s financial instruments mainly comprise cash and bank balances, trade
receivables, other receivables, trade payables, accrued liabilities, other payables and amount due to a shareholder
cum director.
(i)
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 interest rate risk arises primarily from bank deposits placed with the financial institutions and
interest-bearing bank borrowings.
The Group’s exposures to interest rate risk from the interest-bearing bank borrowings are minimal as the
Group’s policy is to maintain the borrowings on a fixed rate basis. The Group does not have investment in
other financial assets.
(ii)
Foreign currency risk
Foreign currency risk is the risk that the value of a financial instrument will fluctuate due to changes in foreign
exchange rates. Foreign currency risk arises when transactions are denominated in foreign currencies. The
Group carries out its business in the PRC and most of the transactions are denominated in Renminbi except
that the amount due to a shareholder cum director is denominated in Hong Kong Dollar. Accordingly, the
Group’s exposure to risk resulting from changes in foreign currency exchange rates is minimal.
(iii) Liquidity risk
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as and when they fall
due. The Group’s policy is to regularly monitor current and expected liquidity requirements to ensure that it
maintains sufficient reserve for cash to meet its liquidity requirement in the short and long term. Except for
amount due to a shareholder (Note 11), and bank borrowing subsequent to year end (Note 28), the Group’s
financial liabilities are short-term maturity.
MULTI SPORTS HOLDINGS LTD
annual report 2009
notes to the financial statements (cont’d)
24. FINANCIAL RISK MANAGEMENT OBJECTIVES – POLICIES (cont’d)
(iv) Credit risk
Credit risk is the risk of financial loss to the Group if a counterparty fails to meet its contractual obligations.
The carrying amounts of trade receivables and other receivables represent the Group’s maximum exposure
to credit risk in relation to its financial assets. The Group does not have significant concentration of credit
risk as no individual customer forms 5% of the trade receivables balance as at 31 December 2009 and 31
December 2008, respectively.
The Group performs ongoing credit evaluation of its customers’ financial condition and requires no collateral
from its customers. The provision for impairment loss for doubtful debts is based upon a review of the expected
collectibles of all trade and other receivables. There is no impairment loss recognized in the statement of
comprehensive income as majority of the receivables are collected within the credit period granted and directors
expect all balances to be recoverable. Further quantitative disclosure in respect of the Group’s exposure to
credit risk arising from trade and other receivables are set out in Note 8.
Cash and cash balances of the Group are held by reputable financial institutions.
(v)
Fair value
The fair values of the Group’s financial assets and liabilities are not materially different from their carrying
amounts because of the immediate or short term maturity of these financial instruments, except for amount
due to a shareholder cum director as disclosed in Note 11.
(vi) Price risk
Price risk is the risk that the value of a financial instrument will fluctuate due to changes in market prices
whether those changes are caused by factors specific to the individual security or its issuer or factors affecting
all securities traded in the market.
25.
The Group does not hold any quoted or marketable financial instrument, hence is not exposed to any movement
in market prices.
CAPITAL MANAGEMENT
The Group’s objectives when managing capital are:
(a)
(b)
(c)
To safeguard the Group’s ability to continue as a going concern, so that it continues to provide returns to
shareholders and benefits for other stakeholders;
To support the Group’s stability and growth; and
To provide capital for the purpose of strengthening the Group’s risk management capability.
The Group actively and regularly reviews and manages its capital structure to ensure optimal capital structure and
shareholders’ returns, taking into consideration the future capital requirements of the Group and capital efficiency,
prevailing and projected profitability, projected operating cash flows, projected capital expenditures and projected
investment opportunities. The Group currently does not adopt any formal dividend policy.
71
72
MULTI SPORTS HOLDINGS LTD
annual report 2009
notes to the financial statements (cont’d)
26. FINANCIAL INSTRUMENTS
Fair value
The carrying amounts of financial assets and liabilities with a maturity of less than one year approximate their fair
values.
The Group does not anticipate that the carrying amounts recorded at the statement of financial position date would
be significantly different from the values that would eventually be received or settled.
27. SIGNIFICANT EVENTS DURING THE FINANCIAL YEAR
Except for the Reorganisation exercise (Note 2), addition in construction in progress (Note 4) and land use rights
(Note 5), no other significant event has arisen during the financial year.
28. SUBSEQUENT EVENT
Except for the event disclosed below, no other item, transaction or event of a material or unusual nature has arisen
in the interval between 31 December 2009 and the date of the report from the independent auditors.
On 1 January 2010, our subsidiary, Jinjiang Baixing entered into loan agreement with Industrial and Commercial
Bank of China to obtain bank loans amounting to RMB15.7 (RM7.9) million. The Bank loans were pledged by Jinjiang
Baixing’s land use rights and guaranteed by a third party.
MULTI SPORTS HOLDINGS LTD
annual report 2009
statistics of shareholdings
Authorised Ordinary Share Capital
:
Issued and paid-up Ordinary Share Capital :
Class of shares
:
Voting rights
:
USD50,000,000.00
USD18,000,000 comprising of 360,000,000 ordinary shares
of USD0.05 each
Ordinary shares of USD0.05 each
One vote per ordinary share
Analysis of shareholdings
Size of holdings
Number of
holders
% over
shareholders
Number of
shares
% over
total shares
1-99
100 -1,000
1001 – 10,000
10,001 – 100,000
100,001 – 17,999,999
18,000,000 and above
3
517
2,507
1,848
267
1
0.058
10.052
48.745
35.932
5.191
0.019
10
398,100
16,126,397
62,387,400
99,286,800
181,801,293
0.000
0.110
4.479
17.329
27.579
50.500
Total
5,143
100.000
360,000,000
100.000
Number of shares held
%
Indirect
%
Directors’ shareholdings as at 30/04/2010
Name of directors
Direct
Lin Huozhi
Lin Liying Huang Weimin
Chan Chiu Hung Alex
Gong Ane Lee Kian Hu
–
–
–
–
–
–
–
–
–
–
–
–
181,801,293(1)
–
–
–
–
–
50.50
–
–
–
–
–
Note:
(1)
Deemed interested by virtue of his substantial interest in Power Wide Holdings Limited
Substantial shareholdings as at 30/04/2010
Name of substantial shareholders
Direct
Power Wide Holdings Limited 181,801,293
Lin Huozhi
–
Number of shares held
%
Indirect
50.50
–
–
181,801,293(1)
Note:
(1)
Deemed interested by virtue of his substantial interest in Power Wide Holdings Limited
%
–
50.50
73
74
MULTI SPORTS HOLDINGS LTD
annual report 2009
statistics of shareholdings (cont’d)
List of 30 largest securities account holders as at 30/04/2010
No. Name
Number of
shares held
% of issued
share capital
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
21.
22.
23.
24.
25.
26.
27.
28.
29.
30.
181,801,293
7,100,000
4,100,000
2,588,000
50.500
1.972
1.138
0.718
2,085,000
0.579
2,078,000
0.577
2,025,300
1,950,000
0.562
0.541
1,500,000
0.416
1,367,000
1,269,500
0.379
0.352
1,259,400
0.349
1,217,000
1,145,000
0.338
0.318
1,068,300
1,042,800
0.296
0.289
1,023,000
0.284
1,000,000
0.277
1,000,000
0.277
994,000
950,000
940,000
0.276
0.263
0.261
885,100
884,000
0.245
0.245
810,700
800,000
800,000
0.225
0.222
0.222
780,000
0.216
711,900
0.197
600,000
0.166
Power Wide Holdings Limited Koek Tiang Kung
Lee Yih Leang
Kenanga Nominees (Tempatan) Sdn Bhd
Kenanga Capital Sdn Bhd for Sosilawati Binti Lawiya
Public Nominees (Tempatan) Sdn Bhd
Pledged Securities Account for Cheah Chee Choong
Alliancegroup Nominees (Tempatan) Sdn Bhd
Pledged Securities Account for Pong Ching Keong (8048178)
Teh Bee Gaik
Mayban Nominees (Tempatan) Sdn Bhd
Pledged Securities Account for Mak Kok Leong
Amsec Nominees (Tempatan) Sdn Bhd
Pledged Securities Account for Pong Ching Keong
Henry Liang
BHLB Tempatan Berhad
Exempted – Trust Account For EPF Investment for Member Savings Scheme
Affin Nominees (Tempatan) Sdn Bhd
Pledged Securities Account for Tan Kok Soon (TAN1205C)
Lim Hong Cheake
Alliancegroup Nominees (Tempatan) Sdn Bhd
Pledged Securities Account for Chang Kok Keong (8030991)
Lee Yu Yong @ Lee Yuen Ying
UOBM Nominees (Tempatan) Sdn Bhd
UOB-OSK Asset Management Sdn Bhd for UNI Aggressive Fund
HDM Nominess (Tempatan) Sdn Bhd
Pledged Securities Account for Chai Chau @ Peh Chai Chau (M09)
Amsec Nominees (Tempatan) Sdn Bhd
Pledged Securities Account for Chin Chin Seong
Ng Lai Yin
Mayban Securities Nominees (Tempatan) Sdn Bhd
Pledged Securities Account for Ong Fee Chong (Rem157-Margin)
Low Chu Mooi
Cimsec Nominees (Tempatan) Sdn Bhd
CIMB Bank for Yeong Chin Wei @ Yeong Kun Wei (MY0695)
Ooi Cheng Huat @ Ooi Peng Huat
Mayban Nominees (Tempatan) Sdn Bhd
Pledged Securities Account for Lee Choon Fook
Tang Soon Cheong
Foong Khee Seng
HLB Nominees (Tempatan) Sdn Bhd
Pledged Securities Account for Chen Khai Voon
Mercsec Nominees (Tempatan) Sdn Bhd
Pledged Securities Account for Siow Wong Yen @ Siow Kwang Hwa
Alliancegroup Nominees (Tempatan) Sdn Bhd
Pledged Securities Account for Lee Choon Fook (8027431)
Cabaran Performa Sdn Bhd
MULTI SPORTS HOLDINGS LTD
annual report 2009
list of properties
The summary of the information on landed properties owned by our Group is as follows :
Address
Description
Existing use
Tenure
Net book value
Date of
Acquisition
Longgang
Salt Yard,
Shanxia Town,
Hui-an County,
Quanzhou City,
Fujian Province,
PRC
Land
Industry
(30,704
sq m)
Land-use-right
RMB4,624,000
up to 2058
18 September
2008
Xibin Farm,
Xibin Town,
Jinjiang City,
Fujian Province,
PRC
Land
(26,807
sq m)
Land-use-right
RMB18,990,000
up to 2057
25 September
2009
Industry
(under
construction)
75
76
MULTI SPORTS HOLDINGS LTD
annual report 2009
notice of annual general meeting for year 2010
NOTICE IS HEREBY GIVEN THAT the Annual General Meeting for year 2010 of the Company will be held at Sime Darby
Convention Centre, Dillenia & Eugenia Room, Ground Floor, 1A Jalan Bukit Kiara 1, 60000 Kuala Lumpur on Wednesday,
23 June 2010 at 10.00 a.m., to transact the following businesses:-
AGENDA
As Ordinary Business:1.
2.
3.
4.
To receive the Audited Financial Statements of the Company and of the Group and
the Reports of the Directors and the Auditors thereon for the financial year ended 31
December 2009.
(Please refer to
Explanatory Note 1)
To approve the payment of Directors’ fees for the financial year ended 31 December
2009.
(Ordinary Resolution 1)
To re-elect the following Directors who retire pursuant to the Company’s Bye-laws:
3.1 Lin Huozhi
[Bye-Law 86]
(Ordinary Resolution 2)
3.2 Lin Liying
[Bye-Law 86]
(Ordinary Resolution 3)
3.3 Huang Weimin
[Bye-Law 85(6)]
(Ordinary Resolution 4)
3.4 Chan Chiu Hung Alex
[Bye-Law 85(6)]
(Ordinary Resolution 5)
3.5 Gong Ane
[Bye-Law 85(6)]
(Ordinary Resolution 6)
3.6 Lee Kian Hu
[Bye-Law 85(6)]
To re-appoint Messrs. Foo Kon Tan Grant Thornton LLP as Auditors of the Company
and to authorise the Board of Directors to fix their remuneration.
(Ordinary Resolution 7)
(Ordinary Resolution 8)
As Special Business:5.
To consider and if thought fit, to pass the following Ordinary Resolution, with or without
modifications:Authority To Issue Shares
“THAT subject always to the approvals of the relevant governmental and/or regulatory
authorities, the Directors be and are hereby authorised pursuant to the Company’s Byelaw 12 to issue shares in the Company at any time upon such terms and conditions and
for such purposes as the Directors may in their absolute discretion deem fit, PROVIDED
THAT the aggregate number of new ordinary shares to be issued pursuant to this
resolution does not exceed ten per centum (10%) of the total issued share capital of
the Company and that such authority shall unless revoked or varied by an ordinary
resolution by the shareholders of the Company in general meeting commence upon
the passing of this resolution until the conclusion of the next Annual General Meeting
of the Company AND THAT the Directors are further authorised to do all such things
and upon such terms and conditions as the Directors may deem fit and expedient in
the best interest of the Company to give effect to the issuance of new ordinary shares
under this resolution including making such applications to Bursa Malaysia Securities
Berhad for the listing of and quotation for the new ordinary shares to be issued pursuant
to this resolution.”
(Ordinary Resolution 9)
MULTI SPORTS HOLDINGS LTD
annual report 2009
notice of annual general meeting for year 2010 (cont’d)
6.
To consider and if thought fit, to pass the following Ordinary Resolution, with or without
modifications:Proposed Shareholders’ Ratification For the Recurrent Related Party Transaction
of a Revenue or Trading Nature (“Proposed Shareholders’ Ratification)
“THAT all the recurrent related party transactions entered into by the Company and
its subsidiaries with the related parties, as set out in Section 2.3 of the Circular to
Shareholders dated 1 June 2010, from the listing date of the Company, 19 August
2009, up to the date of the 2010 Annual General Meeting, which were undertaken in
the ordinary course of business, on arms length basis, on normal commercial terms
which were not more favorable to the related party than those generally available to
the public and were not detrimental to the minority shareholders of the Company, be
hereby approved and ratified.
AND THAT all the actions taken and the execution of all necessary documents by
the Directors of the Company as they had considered expedient or deemed fit in the
interest of the Company, be hereby approved and ratified.”
7.
To consider and if thought fit, to pass the following Ordinary Resolution, with or without
modifications:-
Proposed Shareholders’ Mandate For Recurrent Related Party Transactions Of
A Revenue Or Trading Nature (“Proposed Shareholders’ Mandate”)
“THAT subject to the provisions of the Listing Requirements of Bursa Malaysia Securities
Berhad, approval be hereby given to the Company and/or its subsidiary companies
to enter into recurrent related party transactions of a revenue or trading nature as set
out in Section 2.3 of the Circular to Shareholders dated 1 June 2010, provided that
such transactions are necessary for the day-to-day operations; and undertaken in the
ordinary course of business, on arms length basis, on normal commercial terms which
are not more favorable to the related party than those generally available to the public
and are not detrimental to the minority shareholders of the Company (“the Shareholders’
Mandate”).
THAT such approval shall continue to be in force until:(a)
(b)
(c)
the conclusion of the next Annual General Meeting (“AGM”) of the Company
following this AGM at which the Shareholders’ Mandate is passed, at which time
it will lapse unless the authority is renewed by a resolution passed at the next
AGM;
the expiration of the period within which the next AGM after that date is required
to be held pursuant to the Company’s Bye-laws and Bermuda Companies Act,
1981; or
is revoked or varied by resolution passed by shareholders in a general meeting,
whichever is earlier;
AND THAT the Directors of the Company be hereby authorised to complete and do
all such acts and things (including executing all such documents as may be required)
as they may consider expedient or necessary to give effect to the Shareholders’
Mandate.”
(Ordinary Resolution 10)
(Ordinary Resolution 11)
77
78
MULTI SPORTS HOLDINGS LTD
annual report 2009
notice of annual general meeting for year 2010 (cont’d)
8.
9.
To consider and if thought fit, to pass the following Special Resolution, with or without
modifications:AMENDMENT TO THE ARTICLES OF ASSOCIATION
(Special Resolution 1)
“THAT the proposed amendments to the Articles of Association of the Company as
contained in the Appendix 1 attached to the Annual Report 2009 be and are hereby
approved.”
To transact any other business that may be transacted at an annual general meeting
of which due notice shall have been given in accordance with the Company’s Bye-laws
and Bermuda Companies Act 1981.
BY ORDER OF THE BOARD
MULTI SPORTS HOLDINGS LTD
WONG WEI FONG (MAICSA 7006751)
Company Secretary
Kuala Lumpur
1 June 2010
Notes:i.
For the purpose of determining a member who shall be entitled to attend this meeting, the Company shall be requesting
Bursa Malaysia Depository Sdn. Bhd. in accordance with Bye-laws 58 (5) of the Company’s Bye-laws and Section
34(l) of the Securities Industry (Central Depositories) Act, 1991 of Malaysia to issue a General Meeting Record of
Depositors as at 16 June 2010. Only a depositor whose name appears on the Record of Depositors as at 16 June
2010 shall be entitled to attend the said meeting or appoint proxies to attend and/or vote on his/her behalf.
ii.
A member shall be entitled to appoint up to two (2) proxies to attend and vote at the same meeting. A proxy may
but need not be a member of the Company. Where a member appoints more than one (1) proxy the appointment
shall be invalid unless he specifies the proportions of his holdings to be represented by each proxy.
iii.
Where a member of the Company is an authorised nominee as defined under the Securities Industry (Central
Depositories) Act 1991 of Malaysia, it may appoint at least one (1) proxy in respect of each securities account it
holds which is credited with ordinary shares of the Company.
iv.
The instrument appointing a proxy shall be in writing under the hand of the appointor or of his attorney duly authorised
in writing or, If the appointer is a corporation, the proxy form must be executed under its Common Seal or under
the hand of an office, attorney or other person duly authorised to sign the same.
v.
The instrument appointing a proxy must be deposited at the Company’s registered office in Malaysia i.e. Level 18,
The Gardens North Tower, Mid Valley City, Lingkaran Syed Putra, 59200 Kuala Lumpur not less than forty-eight (48)
hours before the time for holding the meeting i.e. on or before 10.00 a.m., Monday, 21 June 2010 or any adjournment
thereof.
MULTI SPORTS HOLDINGS LTD
annual report 2009
notice of annual general meeting for year 2010 (cont’d)
Explanatory Notes:1.
Item 1 of the Agenda
The Agenda item is meant for discussion only as the provision of Section 84 of the Bermuda Companies Act, 1981
does not require a formal approval of the shareholders for the Audited Financial Statements. Hence, this Agenda
item is not put forward for voting.
2.
Item 5 of the Agenda – Ordinary Resolution 9
The proposed adoption of the Ordinary Resolution No. 9 is primarily to give flexibility to the Board of Directors to
issue shares to such persons at any time in their absolute discretion without convening a general meeting. This
authorisation will expire at the conclusion of the next Annual General Meeting of the Company.
This is a new mandate and will empower the Board of Directors to raise funds for working capital purpose or such
other applications they may in their absolute discretion deem fit.
The purpose of this general mandate is for fund raising exercises including but not limited to further placement of
shares for purposes of funding current and/or future investment projects, working capital, repayment of borrowings
and/or acquisition.
3.
Item 6 of the Agenda – Ordinary Resolution 10
The Proposed Shareholders’ Ratification, if passed, will ratify all recurrent related party transactions of a revenue
or trading nature pursuant to the provision of the Main Market Listing Requirements of Bursa Securities, from the
listing date of the Company on 19 August 2009 up to the date of the Annual General Meeting.
For further information, please refer to the Circular to Shareholders of the Company dated 1 June 2010.
4.
Item 7 of the Agenda – Ordinary Resolution 11
The Proposed Shareholders’ Mandate, if passed, will enable the Group to enter into the Recurrent Related Party
Transactions of a Revenue or Trading Nature which are necessary for the Groups day-to-day operations, subject
to the transactions being in the ordinary course of business and on normal commercial terms which are not more
favourable to the related parties than those generally available to the public and are not to the detriment of the
minority shareholders of the Company.
For further information, please refer to the Circular to Shareholders of the Company dated 1 June 2010.
5.
Item 8 of the Agenda – Special Resolution 1
The proposed amendments to the Articles of Association will enable the Company to implement the Electronic
Dividend payment (“eDividend”) to comply with the directive of Bursa Malaysia Securities Berhad dated 19 February
2010, and also for administrative purpose.
79
80
MULTI SPORTS HOLDINGS LTD
annual report 2009
appendix 1
PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION
Article
Existing Provisions
Amended Provisions
Rationale
To amend
Bye-law
141 (1)
Subject to Bye-law 141(2), any
dividend, interest or other sum payable
in cash to the holder of shares may be
paid by cheque or warrant sent through
the post addressed to the holder at
his registered address or, in the case
of joint holders, addressed to the
holder whose name stands first in the
Register in respect of the shares at his
address as appearing in the Register
or addressed to such person and at
such address as the holder or joint
holders may in writing direct. Subject
to Bye-law 141(2), every such cheque
or warrant shall, unless the holder or
joint holders otherwise direct, be made
payable to the order of the holder or, in
the case of joint holders, to the order of
the holder whose name stands first on
the Register in respect of such shares,
and shall be sent at his or their risk
and payment of the cheque or warrant
by the bank on which it is drawn shall
constitute a good discharge to the
Company notwithstanding that it may
subsequently appear that the same has
been stolen or that any endorsement
thereon has been forged. Any one
of two or more joint holders may give
effectual receipts for any dividends
or other moneys payable or property
distributable in respect of the shares
held by such joint holders.
Subject to Bye-law 141(2), any
dividend, interest or other sum payable
in cash to the holder of shares may
be paid by cheque or warrant sent
through the post addressed to the
holder at his registered address or, in
the case of joint holders, addressed to
the holder whose name stands first in
the Register in respect of the shares
at his address as appearing in the
Register or addressed to such person
and at such address as the holder or
joint holders may in writing direct or
by way of telegraphic transfer or
electronic transfer or remittance
to such account as designated by
such holder or the person entitled
to such payment. Subject to Byelaw 141(2), every such cheque or
warrant or telegraphic transfer or
electronic transfer or remittance
shall, unless the holder or joint holders
otherwise direct, be made payable
to the order of the holder or, in the
case of joint holders, to the order of
the holder whose name stands first
on the Register in respect of such
shares, and shall be sent at his or
their risk and payment of the cheque
or warrant or telegraphic transfer or
electronic transfer or remittance
by the bank on which it is drawn
shall constitute a good discharge to
the Company notwithstanding that
it may subsequently appear that the
same has been stolen or that any
endorsement thereon has been forged.
Any one of two or more joint holders
may give effectual receipts for any
dividends or other moneys payable or
property distributable in respect of the
shares held by such joint holders.
To e n a b l e t h e
Company
to
implement the
Electronic Dividend
payment to comply
with the directive
of Bursa Malaysia
Securities Berhad
dated 19 February
2010.
MULTI SPORTS HOLDINGS LTD
annual report 2009
appendix 1 (cont’d)
Article
Existing Provisions
Amended Provisions
Rationale
To amend
Bye-law
141 (2)
Any dividend, interest or other sum
payable in cash to the holder of any
deposited security which is jointly held
by the Depository and a Depositor
may be paid by cheque or warrant
sent through the post addressed to
the Depositor at his or its address as
appearing in the Register in respect
of such deposited security. Every
such cheque or warrant shall, unless
the Depositor otherwise directs, be
made payable to the Depositor and
shall be sent at his or its risk and
payment of the cheque or warrant
by the bank on which it is drawn
shall constitute a good discharge to
the Company notwithstanding that
it may subsequently appear that the
same has been stolen or that any
endorsement thereon has been forged.
A Depositor may give effectual receipt
for any dividends or other moneys
payable or property distributable in
respect of the deposited security held
by such Depositor.
Any dividend, interest or other sum
payable in cash to the holder of any
deposited security which is jointly held
by the Depository and a Depositor
may be paid by cheque or warrant
sent through the post addressed to
the Depositor at his or its address as
appearing in the Register in respect
of such deposited security or by way
of telegraphic transfer or electronic
transfer or remittance to such
account as designated by such
holder or the person entitled to
such payment. Every such cheque
or warrant or telegraphic transfer
or electronic transfer or remittance
shall, unless the Depositor otherwise
directs, be made payable to the
Depositor and shall be sent at his or
its risk and payment of the cheque or
warrant or telegraphic transfer or
electronic transfer or remittance
by the bank on which it is drawn
shall constitute a good discharge to
the Company notwithstanding that
it may subsequently appear that the
same has been stolen or that any
endorsement thereon has been forged.
A Depositor may give effectual receipt
for any dividends or other moneys
payable or property distributable in
respect of the deposited security held
by such Depositor.
To e n a b l e t h e
Company
to
implement the
Electronic Dividend
payment to comply
with the directive
of Bursa Malaysia
Securities Berhad
dated 19 February
2010.
81
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MULTI SPORTS HOLDINGS LTD
(Incorporated in Bermuda under the Companies Act 1981 of Bermuda - Registration No. 42425)
(Registered as a Foreign Company in Malaysia under the Companies Act 1965 of Malaysia - Company No. 995199-H)
FORM OF PROXY
I/We ................................................................................................................... NRIC/ Company No. .......................................................
(Full Name in Capital Letters)
of .................................................................................................................................................................................................................
(Full Address)
being a member(s) of MULTI SPORTS HOLDINGS LTD (Incorporated in Bermuda under Companies Act 1981 of Bermuda) (Registered
as a foreign company in Malaysia under the Companies Act 1965 of Malaysia) (Company No. 995199-H) hereby appoint
.....................................................................................................................................................................................................................
(Full Name in Capital Letters)
of .................................................................................................................................................................................................................
(Full Address)
and/or failing him/her, .......................................................................................................... NRIC No. . .....................................................
(Full Name in Capital Letters)
of .................................................................................................................................................................................................................
(Full Address)
as my/our proxy to vote for me/us and on my/our behalf at the 2010 Annual General Meeting of the Company to be held at Sime Darby
Convention Centre, Dillenia & Eugenia Room, Ground Floor, 1A Jalan Bukit Kiara 1, 60000 Kuala Lumpur on Wednesday, 23 June 2010
at 10.00 a.m. and at any adjournment thereof. The proxy is to vote in the manner indicated below, with an “X” in the appropriate spaces.
If no specific direction as to voting is given, the proxy will vote or abstain from voting at his/her discretion.
NO.
RESOLUTIONS
FOR
Ordinary Resolutions
1.
To approve the payment of Directors’ Fees for the financial year ended 31 December 2009.
2.
To re-elect Mr Lin Huozhi who retires pursuant to the Company’s Bye-laws.
3.
To re-elect Ms Lin Liying who retires pursuant to the Company’s Bye-laws.
4.
To re-elect Mr Huang Weimin who retires pursuant to the Company’s Bye-laws.
5.
To re-elect Mr Chan Chiu Hung Alex who retires pursuant to the Company’s Bye-laws.
6.
To re-elect Ms Gong Ane who retires pursuant to the Company’s Bye-laws.
7.
To re-elect Mr Lee Kian Hu who retires who retires pursuant to the Company’s Bye-laws.
8.
To re-appoint Messrs. Foo Kon Tan Grant Thornton LLP as Auditors of the Company and to
authorise the Board of Directors to fix their remuneration.
9.
Authority to issue shares.
10.
Proposed shareholders’ ratification for the recurrent related party transaction of a revenue or
trading nature.
11.
Proposed shareholders’ mandate for recurrent related party transactions of a revenue or trading
nature.
Special Resolution
1.
Amendment to the Articles of Association.
AGAINST
Signed this ………….day of ……………….. 2010.
Number of shares held
.........................................................................
Signature Shareholder or Common Seal
CDS Account No................................................................
✄
.............................................................................................
Telephone no. (During office hours)
Notes:
i.
For the purpose of determining a member who shall be entitled to attend this meeting, the Company shall be requesting Bursa Malaysia Depository
Sdn. Bhd. in accordance with Bye-laws 58 (5) of the Company’s Bye-laws and Section 34(l) of the Securities Industry (Central Depositories) Act,
1991 of Malaysia to issue a General Meeting Record of Depositors as at 16 June 2010. Only a depositor whose name appears on the Record of
Depositors as at 16 June 2010 shall be entitled to attend the said meeting or appoint proxies to attend and/or vote on his/her behalf.
ii.
A member shall be entitled to appoint up to two (2) proxies to attend and vote at the same meeting. A proxy may but need not be a member of the
Company. Where a member appoints more than one (1) proxy the appointment shall be invalid unless he specifies the proportions of his holdings
to be represented by each proxy.
iii.
Where a member of the Company is an authorised nominee as defined under the Securities Industry (Central Depositories) Act 1991 of Malaysia,
it may appoint at least one (1) proxy in respect of each securities account it holds which is credited with ordinary shares of the Company.
iv.
The instrument appointing a proxy shall be in writing under the hand of the appointor or of his attorney duly authorised in writing or, If the appointer
is a corporation, the proxy form must be executed under its Common Seal or under the hand of an office, attorney or other person duly authorised
to sign the same.
v.
The instrument appointing a proxy must be deposited at the Company’s registered office in Malaysia i.e. Level 18, The Gardens North Tower, Mid
Valley City, Lingkaran Syed Putra, 59200 Kuala Lumpur not less than forty-eight (48) hours before the time for holding the meeting i.e. on or before
10.00 a.m., Monday, 21 June 2010 or any adjournment thereof.
Fold this flap for sealing
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Affix
STAMP
The Secretary
Multi Sports Holdings Ltd
Level 18 The Gardens North Tower
Mid Valley City
Lingkaran Syed Puttra
59200 Kuala Lumpur
MALAYSIA
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