FREIGHT MANAGEMENT HOLDINGS BHD (380410-P)
::||::
FREIGHT MANAGEMENT HOLDINGS BHD 380410-P
ANNUAL REPORT 2007
Wisma Freight Management,
Lot 37, Lebuh Sultan Mohammad 1,
Kawasan Perindustrian Bandar Sultan Suleiman,
42000 Port Klang,
Selangor Darul Ehsan, Malaysia
Tel
: 603 - 3176 1111
Fax
: 603 - 3176 2188
Website
: www.fmmalaysia.com.my
Table of
Contents
MULTIMODAL SERVICES OFFERED BY THE GROUP
02
EXTENSIVE WORLDWIDE COVERAGE
04
CORPORATE STRUCTURE
05
CORPORATE INFORMATION
06
DIRECTORS’ PROFILE
07
CHAIRMAN’S STATEMENT
10
AUDIT COMMITTEE REPORT
14
STATEMENT ON CORPORATE GOVERNANCE
17
STATEMENT ON INTERNAL CONTROL
21
ADDITIONAL COMPLIANCE INFORMATION
23
STATEMENT ON DIRECTORS’ RESPONSIBILITIES
24
FINANCIAL STATEMENTS
25
ANALYSIS OF SHAREHOLDINGS
82
LIST OF PROPERTIES
85
NOTICE OF ANNUAL GENERAL MEETING
87
STATEMENT ACCOMPANYING NOTICE OF 11th AGM
90
PROXY FORM
CONTACT PARTICULARS OF FREIGHT MANAGEMENT
GROUP
Multimodal Services Offered by the Group
As an international freight services provider, the Group is a leading player in the
logistics industry acting as intermediary agent between exporters, importers and
freight carriers.
2
SEAFREIGHT
SERVICES
AIRFREIGHT
SERVICES
RAILFREIGHT
SERVICES
As a seafreight specialist, the
Group offers export and import
freight services for both LCL and
FCL shipments. We offer direct
consolidation and transshipment
services to over 40 major ports of
the world, including East Malaysia
ports. FCL services is offered to all
major port.
The Group handles both inbound
and outbound shipments through
Kuala Lumpur International Airport
(KLIA) and Penang International
Airport. The Group is also part of
an established worldwide network
of airfreight professionals with
representation in every major airport
in the world.
Through a network of reliable agents
globally, the Group is able to offer
quality and dependable services to
our customers to meet their logistic
needs. Our range of seafreight
services include port to port, port to
door, and door to door delivery.
Backed by more than 17 years of
experience, the Group is equipped
to handle any time sensitive cargo.
As a pioneer in operating the
containerized rail service by
providing dedicated transit between
Malaysia and Thailand since 1999,
the Group handles both LCL and
FCL shipments between Bangkok in
Thailand and Butterworth, Ipoh and
Port Klang in Malaysia. Presently,
we have four times weekly service
for both northbound and southbound
traffic. This service provides door to
door, port to door and port to port
delivery.
Freight Managem e n t H o l d i n g s B h d
(380410-P)
Multimodal Services Offered by the Group (continued)
TUG
& BARGE
SEAFREIGHT
SERVICES
This a service
specializes
in the
As
seafreight
specialist,
provisionoffers
of barge,
and
Group
export tugboat
and import
other marine
for bulk
freight
services services
for both LCL
and
raw materials
along
Straits
of
FCL
shipments.
Wetheoffer
direct
Malacca to customers
in Singapore,
consolidation
and transshipment
Malaysia to
andover
Thailand.
services
40 major ports of
the world, including East Malaysia
ports. FCL services is offered to all
SUPPORT SERVICES
major port.
Warehouse and Distribution
FMH’s new
warehouse
Port
Through
a network
of reliableatagents
Klang withthea Group
floor space
globally,
is ableoftoabout
offer
200,000and
sq.dependable
ft. offers both
bonded
quality
services
to
and customers
general warehouse
our
to meet theirfacilities
logistic
for valueOur
adding,
and
needs.
rangedistribution
of seafreight
storage. include
The Group
is able
services
port to port,
port to
provide
information
door,
and inventory
door to door
delivery. to
clients through the implementation of
a newly acquired software to update
and assist customers in tracking
their cargo information.
Customs Brokerage
As a support service to our
customers, our team of trained
personnel
handles
customs
clearance at the seaports of Port
The
Group
handles
Klang,
Penang,
ICT both
Ipoh,inbound
and at
and
outbound
shipments
KLIA and Penang Airport. through
Kuala Lumpur International Airport
(KLIA) and Penang International
Airport.
The Group is also part of
Land Transportation
an
established
network
Our current fleetworldwide
of more than
20
of
airfreight
professionals
with
dedicated bonded and general
representation
every major
airport
trucks providesincommitted
trucking
in
the
world.
service to our customers to
AIRFREIGHT
SERVICES
ensure prompt delivery throughout
Backed
by Malaysia.
more thanHaving
17 years
of
Peninsular
been
experience,
the
Group
is
equipped
awarded 30 prime mover and 150
to
handle
any time
trailer
licenses,
thesensitive
Group cargo.
is now
able to offer container haulage
service to customers.
RAILFREIGHT
SERVICES
As a pioneer in operating the
annual repor t 2 0 0 7
3
Extensive Worldwide Coverage
Network of 107 independent agents covering 127 ports in more than 47 countries.
Region - Country/ (Port)
Asia-Pacific
BANGLADESH
Chittagong
Dhaka
BRUNEI
Muara
CHINA
CAMBODIA
Dalian, Huangpu
Sihanoukville
Ningbo, Qingdao
Shanghai, Shekou
Xiamen, Xingang
Yantian, Nanjing
Nansha, Nantong
Sanshui, Shenzen
Tianjin, Zhanjiang
Zhongshan, Fuqing
Guoming, Lianhuashan
Zhangjiagang
HONGKONG
Hongkong
INDIA
Calcutta, Chennai
Mumbai, New Delhi
Nhava Sheva
Bangalore, Cochin
INDONESIA
Belawan
Jakarta
Surabaya
Batam Island
Pontianak
JAPAN
Hakata, Kobe
Moji, Nagoya
Osaka, Shimizu
Tokyo, Yokohama
KOREA
Busan
PAKISTAN
Karachi
PHILIPPINES
Manila
Cebu
SINGAPORE
Singapore
SRI LANKA
Colombo
TAIWAN
Kaoshiung,
Keelung, Taipei
Taichung
THAILAND
Bangkok
Lat Krabang
Laem Chabang
VIETNAM
Ho Chi Minh
Hanoi, Tanchang
Haiphong
MYANMAR
Yangon
AUSTRALIA
Adelaide, Brisbane
Freemantle
Sydney
Melbourne
NEW ZEALAND
Auckland, Timaru
Lyttelton, Wellington
Tuaranga, Napier
New Playmouth
Port Chalmers
UNITED KINGDOM
Felixstowe, Liverpool
London, Dublin
Southampton
Grangemouth
Thamesport
NETHERLANDS
Amsterdam
Rotterdam
PORTUGAL
Leixoes
BRAZIL
Santos
ARGENTINA
Buenos Aires
FRANCE
LeHavre
Paris
GERMANY
Hamburg
U.S.A
Los Angeles
Clintonville, Venice
New York, Chicago
Longbeach
CANADA
Montreal
KUWAIT
Kuwait
IRAN
Bandar Abbas
Europe
SWITZERLAND
Basel, Geneve
ITALY
Genoa, Venice
Americas
MEXICO
Mexico City
Manzanillo
Middle East
BAHRAIN
Bahrain
QATAR
Doha
EGYPT
Alexandria
Sokhna Port
SAUDI ARABIA
Ad Damman
Jeddah, Riyadh
U. ARAB EMIRATES
Dubai, Jabel Ali
Africa & The West Indies
NIGERIA
Apapa
4
KENYA
Mambosa
SOUTH AFRICA
Durban
Johannesburg
Freight Managem e n t H o l d i n g s B h d
(380410-P)
CAMEROON
Douala
GAMBIA
Benjul
GHANA
Tema
SWAZILAND
Matsapha
Corporate Structure
FREIGHT MANAGEMENT HOLDINGS BHD
PROVISION OF
FREIGHT SERVICES
100%
100%
FREIGHT
MANAGEMENT
(M) SDN BHD
FM - HELLMANN
FREIGHT
MANAGEMENT WORLWIDE
(IPOH) SDN BHD LOGISTICS
SDN BHD
49%
100%
100%
FM WORLWIDE
LOGISTICS
(PENANG)
SDN BHD
100%
ICON LINE
(MALAYSIA)
SDN BHD
100%
FREIGHT
MANAGEMENT
(MELAKA)
SDN BHD
100%
FREIGHT
MANAGEMENT
(PENANG)
SDN BHD
100%
100%
CITRA
MULTIMODAL
SERVICES
SDN BHD
ADVANCE
INTERNATIONAL
FREIGHT
SDN BHD
55%
FM
DISTRIBUTION
SDN BHD
ICON FREIGHT
SERVICES
PTY LTD
Incorporated
In Australia
PROVISION OF
TUG & BARGE SERVICES
51%
100%
TCH MARINE
PTE LTD
FM MARINE
PTE LTD
Incorporated
In Singapore
Incorporated
In Singapore
INVESTMENT
HOLDING
100%
PERSPEKTIF
GEMILANG
SDN BHD
annual repor t 2 0 0 7
5
Corporate Information
DIRECTORS
REGISTERED OFFICE
Datuk Dr. Haji Noordin bin Haji Abd. Razak
Chairman/Independent Non-Executive Director
Suite 13A-2, Menara Uni.Asia
1008 Jalan Sultan Ismail
50250 Kuala Lumpur
Tel: +603 2697 7611
Fax:+603 2697 7311
Email: [email protected]
Chew Chong Keat
Group Managing Director
Yang Heng Lam
Executive Director
HEAD / MANAGEMENT OFFICE
Gan Siew Yong
Executive Director
Ong Looi Chai
Executive Director
Aaron Sim Kwee Lein
Independent Non-Executive Director
Chua Tiong Hock
Non-Independent Non-Executive Director
Khua Kian Keong
(Alternate director to Chua Tiong Hock)
AUDIT COMMITTEE
Datuk Dr. Haji Noordin bin Haji Abd. Razak
Chairman of Audit Committee
Independent Non-Executive Director
Chua Tiong Hock
Member of Audit Committee
Non-Independent Non-Executive Director
Aaron Sim Kwee Lein
Member of Audit Committee
Independent Non-Executive Director
REMUNERATION & NOMINATION COMMITTEE
Datuk Dr. Haji Noordin bin Haji Abd. Razak
Chairman
Independent Non-Executive Director
6
Wisma Freight Management
Lot 37, Lebuh Sultan Mohamad 1
Kawasan Perindustrian Bandar Sultan Suleiman
42000 Port Klang, Selangor
Malaysia
Tel: +603 3176 1111
Fax: +603 3176 2188
Website : www.fmmalaysia.com.my
PRINCIPAL BANKERS
EON Bank Berhad
HSBC Bank Malaysia Bhd
OCBC Bank (Malaysia) Bhd
United Overseas Bank (Malaysia) Bhd
AUDITORS
BDO Binder
(Firm No.: AF 0206)
Chartered Accountants
SOLICITORS
Wong Lu Peen & Tunku Alina
Advocate & Solicitor
REGISTRAR
Aaron Sim Kwee Lein
Member
Independent Non-Executive Director
Symphony Share Registrars Sdn Bhd
Level 26, Menara Multi-Purpose
Capital Square, No 8, Jalan Munshi Abdullah
50100 Kuala Lumpur
Tel : +603 2721 2222
Tel : +603 2721 2530
COMPANY SECRETARIES
STOCK EXCHANGE LISTING
Lim Hooi Mooi (f) (MAICSA 0799764)
Tan Enk Purn (MAICSA 7045521)
SECOND BOARD
BURSA MALAYSIA SECURITIES BERHAD
Stock Code : FREIGHT
Stock No. : 7210
Listed on 3rd FEBRUARY 2005
Freight Managem e n t H o l d i n g s B h d
(380410-P)
Directors’ Profile
Datuk Dr. Haji Noordin bin Haji Abd. Razak
Aged 62, Malaysian
Independent Non-Executive Chairman
Datuk Dr. Haji Noordin bin Haji Abd. Razak was appointed on 22 July 2004 and
he is also the Chairman of the Audit Committee, Remuneration Committee and
Nomination Committee.
He obtained his degree in Bachelor of Arts in Sociology and Master of Arts in Sociology
from the University of Malaya in 1971 and 1989 respectively. He later obtained his
Doctor of Philosophy (“PhD”) from the Pacific Western University of USA in 1991. He
is a fellow member of the British Institute of Management and a member of the Institute Management Consultant
Malaysia. He is also a fellow member of the Institute Sultan Iskandar of Urban Habitat and Highrise.
He commenced his career as an Education Officer with the Ministry of Education in 1965. In 1972, he left the
Ministry of Education to join the City Hall of Kuala Lumpur as Assistant Secretary. He was promoted to the position
of Director General of City Hall of Kuala Lumpur in 1989 and assumed the post until his retirement in 2000. Besides
contributing to more than 27 years in the socio-economic development, strategic planning and development of
Kuala Lumpur, he also served in the Board of Directors of Urban Development Agency, PGK Sdn Bhd, Stadium
Negara and Badan Seni Lukis Negara between 1988 and 2000.
He is presently involved primarily in non-governmental organisations, where he is the Chairman of various
organisations such as University Malaya Alumni Association, Institut Pemikiran Kreatif Malaysia (INSPEK) and
Malaysian Red Cresent of Kuala Lumpur. He sits as chairman of National Association for the Prevention of Drug
Abuse (Yayasan PEMADAM) and is a member of the Institute of Islamic Understanding Malaysia (IKIM).
Chew Chong Keat
Aged 46, Malaysian
Group Managing Director/ Executive Director
Mr Chew joined the Board on 20 March 1996 and is the Managing Director of the
Group. He is one of the co-founders of the Group and serves on the board of all
subsidiary and associated companies of the Group. He is principally responsible
for managing the Group’s business and corporate affairs. With more than 20 years of
experience in the provision of freight and logistics services, he is also the key person
in setting directions for the Group business strategies.
In 1984, he graduated from the University of Manchester, United Kingdom with a Bachelor degree in Economics.
He also holds a Diploma in Business Education Council National and Diploma of Competence in Freight Forwarding
from the International Federation of Freight Forwarders (“FIATA”).
annual repor t 2 0 0 7
7
Directors’ Profile (continued)
Gan Siew Yong
Aged 45, Malaysian
Executive Director
Ms Gan joined the Board on 20 March 1996 as Executive Director. She also serves on
the board of several subsidiary companies of the Group.
In 1988, she joined Freight Management (M) Sdn Bhd as the Customers Service
Manager. She is principally responsible for the export related services of the Group
and is actively involved in rates negotiation and securing container space with the
shipping lines. Equipped with more than 18 years experience, and together with the
strong support from her team, she has been instrumental in the establishment of the Group’s LCL consolidation
business which has direct links to other independent agents located at various ports worldwide.
Yang Heng Lam
Aged 44, Malaysian
Executive Director
Mr Yang joined the Board on 20 March 1996 and is also serves on the board of all
subsidiary and associated companies of the Group. He is principally responsible
for business development and operations of the Group, which includes exploring
overseas market and overseeing the development of marketing and promotional
strategies.
He has about 20 years experience in freight and logistics industry and has been
instrumental in securing and maintaining major customers for the Group. His other responsibilities include nurturing
and expanding the supporting services, such as customs brokerage, warehousing and distribution of the Group.
Aaron Sim Kwee Lein
Aged 41, Malaysian
Independent Non-Executive Director
Mr Sim was appointed to the Board on 3 December 2004. He is a Fellow member of
the Chartered Association of Certified Accountants (UK), a Chartered Accountant of
the Malaysian Institute of Accountant, a member of CPA Australia and a Chartered
Member of the Institute of Internal Auditors Malaysia. He is a member of FMH’s Audit
Committee, Remuneration Committee and Nomination Committee.
He commenced his career with an international accounting firm and gained
professional exposure in stock-broking, trading, manufacturing and construction concerns. Thereafter, he joined a
listed company on the Main Board of Bursa Securities, as an Internal Auditor where he was engaged in audit work
of stock-broking, manufacturing, retail and distribution concerns. In addition, he was also involved in due diligence,
operational rationalisation and strategic planning work of corporate acquisitions. Subsequently, he was the Finance
& Administrative Manager in food retail franchise chain companies before becoming the Deputy General Manager
of Corporate Strategies and Affairs of a glove manufacturing company. He is currently the Principal Consultant with
Omni Biz Consulting, offering business and financial advisory services. Mr Sim also serves on the board of Excel
Force MSC Berhad.
8
Freight Managem e n t H o l d i n g s B h d
(380410-P)
Directors’ Profile (continued)
Ong Looi Chai
Aged 39, Malaysian
Executive Director.
Mr Ong was appointed on 1 June 2006. He is also an executive director of Freight
Management (Penang) Sdn Bhd (`FMP’), a fully owned subsidiary of the Group. He
is responsible for the overall business and development of the northern region of
West Malaysia.
Having joined Freight Management in 1989, he was attached to the Port Klang
headquarter. In 1995, he took up the position of Branch Manager of Freight
Management Penang and has been instrumental in the growth and development of the Penang subsidiary since.
Chua Tiong Hock
Aged 54, Singaporean
Non Independent, Non Executive Director
Mr Chua was appointed as Alternate Director to Mr Khua Kian Keong on 5 January
2007 and he ceased to act as Alternate Director on 16 July 2007 following the vacation
of office by Mr Khua Kian Keong on the same date. He was re-appointed to the Board
as a Director on 30 July 2007.
Mr Chua is also an Executive Director of Freight Links Express Holdings Limited,
Singapore, a substantial shareholder of Freight Management Holdings Bhd.
He has wide-ranging experience in logistics, operations management and corporate development with various
MNCs and local companies.
Mr Chua obtained his Bachelor of Arts degree from the former University of Singapore. He also holds a Graduate
Diploma in Business Administration from the National University of Singapore and a Graduate Diploma in Personnel
Management from the Singapore Institute of Personnel Management.
Khua Kian Keong
Aged 38, Singaporean
Non Independent, Non Executive Director
(Alternate Director to Chua Tiong Hock)
Mr Khua was appointed to the Board on 5 January 2007 and he vacated office as
Director on 16 July 2007. He was re-appointed as Alternate Director to Mr Chua Tiong
Hock on 30 July 2007.
He is the Chief Executive Officer of Freight Links Express Holdings Limited, Singapore,
a substantial shareholder of Freight Management Holdings Bhd.
He obtained his Bachelor of Science in Electrical Engineering and graduated cum laude from University of the
Pacific, USA in 1987.
For many years, he has been a Council member at Singapore Metal and Machinery Association, currently serving
as its English correspondent. He is a Vice-President of Nanyang Kuah Si Association and a member of youth
sub-committee of Ann Kway Association.
ADDITIONAL INFORMATION
FAMILY RELATIONSHIPS
Gan Siew Yong is the spouse of Chew Chong Keat
DIRECTOSHIP OF PUBLIC COMPANIES
Save as disclosed above, none of the Directors has any directorship in other public listed companies
CONVICTIONS
None of the Directors has been convicted of offence within the past 10 years. Traffic offences not included.
annual repor t 2 0 0 7
9
Chairman’s Statement
Dear Shareholders,
On behalf of the board, I have the pleasure
of presenting to you the Annual Report and
Audited Financial Statements of Freight
Management Holdings Bhd (“FMH” or “the
Company”) and its subsidiaries (“the Group”)
for the financial year ended 30 June 2007.
Datuk Dr. Haji Noordin bin Haji Abd. Razak
(Chairman/Independent Non-Executive Director)
10
Freight Managem e n t H o l d i n g s B h d
(380410-P)
Chairman’s Statement (continued)
REVIEW OF OPERATIONS AND FINANCIAL RESULTS
The Group continues to perform strongly, achieving another year of excellent results in the financial year under
review. The Group’s revenue grew by RM28.0 million or 16.9% from RM160.1 million to RM188.1 million. The growth
is contributed primarily from seafreight and tug and barge services with an increase of RM14.3 million and RM11.7
million respectively.
Freight services continue to be the main focus of the Group, posting 88% of the Group’s total revenue with seafreight
services contributing approximately 60%, railfreight services about 8%, airfreight 10% and tug and barge 10%. Our
strength in the freight and supporting services has placed the Group as a preferred total logistic service provider
with well diversified and synergistic operations.
A noteworthy mention is the excellent performance of the Group’s tug and barge operations which brought significant
contribution to the Group revenue from RM5.8 million in FY06 to RM17.5 million in FY07. During the year, we
expanded our fleet from 5 pairs of tugboat and barge to the present 6 pairs, thereby allowing us to increase the
number of laden trips from an average of 20 trips per month in FY06 to 27 trips in FY07.
Revenue Analysis by Service Category
RM(mil)
Seafreight
Railfreight
Airfreight
Tug & barge
Warehouse & distribution
Custom brokerage
FY
07
112.6
15.4
19.5
17.5
5.6
17.5
188.1
FY
06
98.3
17.1
20.8
5.8
6.2
12.6
160.8
FY
05
88.6
18.0
18.3
0.0
6.6
9.8
141.3
Revenue by Container Mode RM(mil)
FCL
LCL
FY
07
71.7
56.3
128.0
#This mode covers Seafreight and Railfreight services
annual repor t 2 0 0 7
FY
06
66.1
49.3
115.4
Revenue Analysis by Service Type RM(mil)
FY
05
58.5
48.1
106.6
Import
Export
FY
07
47.1
100.4
147.5
FY
06
49.4
86.8
136.2
FY
05
37.9
86.9
124.8
#The above information includes Seafreight, Airfreight and Railfreight Services.
11
Chairman’s Statement (continued)
The Group achieved a profit before tax (“PBT”) growth
of 23.8% for FY07, with an increase of RM2.6 million
from RM11.1 million in FY06. This surpass the expected
internal growth target of 12-15%. The Group’s well
diversified and synergistic business segments allows
us to continually work on increasing efficiency and yield
enhancement resulting in an overall improved profit
margin. This is reflected in the Group’s PBT margin
improving from 6.9% in FY06 to 7.3% in FY07. Profit
after Tax (“PAT”) increased to RM9.7 million in FY07
from RM7.7 million in FY06. This resulted in the basic
earnings per share increased to 11.37sen in FY07
compared with 9.08 sen in FY06.
CORPORATE DEVELOPMENT
The Company had on 28th May 2007 incorporated
in Singapore, FM Marine Pte Ltd (“FM Marine”), a
100% wholly-owned subsidiary with a paid-up capital
of SGD1.0 million with the purpose of acquiring and
chartering out tugboats and barges. The chartering of
tugboats and barges are primarily to TCH Marine Pte
Ltd, a subsidiary of FMH.
bonus issue that would bring its paid up share capital
to RM60,857,143. This is to enable FMH to reward
shareholders for their continuing support and allow the
existing shareholders of FMH a greater participation in
the Company’s equity in terms of the number of FMH
shares held. Together with this announcement is also
a proposed placement of up to 10% of FMH’s enlarged
paid up share capital for working capital purposes. On
12 October 2007, the Company received approval from
the Securities Commission for the special exercise.
DIVIDENDS
In March 2007, FMH moved into its new headquarters
cum warehouse in Port Klang. The warehouse has an
approximate 200,000 sq feet floor space with docking
bays. By combining its various rented warehouses
and offices to this single new facility, FMH is able to
consolidate the services offered (such as container
freight station, value added services, container stuffing
and unstuffing and general cargo storage) into one site.
This will provide better services to our customers, allow
better management control over the various operations
and achieve cost efficiency.
In line with the Group’s policy of rewarding shareholders,
the Board of Directors has recommended a final gross
dividend of 2.0 sen per ordinary share subject to
shareholders’ approval during the forthcoming Annual
General Meeting on 29th November 2007.
The Group is also pleased to announce that on 18 July
2007, it has been awarded 30 prime mover ‘A’ permits
and 150 container trailer ‘A’ permits by the Commercial
Vehicle Licencing Board, Malaysia. The Group will be
able to operate its own fleet of container haulage in the
immediate future.
Freight services will continue to be the core business
of the Group, while intensifying efforts to grow the other
logistics services; namely warehousing, transportation
and customs brokerage. With indications of high
growth in the logistics sector in the Asia Pacific
region, Malaysia’s logistics sector is definitely on the
upbeat, spurred by the government’s commitment in
developing the industry. Under the 9MP, Malaysia’s
ports are expected to handle a total container
throughput of 18 million and ship calls to increase to
130,000 by 2010.
The Group had on 11 September 2007 announced
to Bursa Malaysia Securities Berhad its proposed
transfer to the Main Board with a proposed 3 for 7
This is in addition to the interim dividend of 2.0 sen per
share declared by the Board and paid during the year. This
brings the full-year’s gross dividend to 4.0 sen per share.
OUTLOOK AND PROSPECTS
To d a y, m o re a n d m o re
manufacturing concerns are
outsourcing their transportation
needs, and are increasingly
using the services of integrated
logistics services provider that
would handle their needs on a
door-to-door basis. This trend
is expected to grow as more
companies are outsourcing
12
Freight Managem e n t H o l d i n g s B h d
(380410-P)
Chairman’s Statement (continued)
•
•
•
•
such activities to focus on their core activities. In view
of these positive developments, the Group is optimistic
that the overall suite of services offered by the Group
will continue to expand.
The recent launch of the Northern Corridor Economic
Region (NCER) by Prime Minister Datuk Seri Abdullah
Ahmad Badawi, to make Penang a regional
logistics hub through airport and port expansion
is a good opportunity for the Group to expand
its presence in the northern region of Malaysia.
FMH’s wholly-owned subsidiary in Penang; namely
Freight Management (Penang) Sdn Bhd and FM
Worldwide Logistics (Penang) Sdn Bhd collectively
contributed 15% to the Group’s Revenue for FY 07.
We are confident that we will see promising growth
in the performance of these companies in FY 08.
putting up safety signages at the work place;
using protective gears at work place;
using gas instead of diesel powered forklifts;
using industrial sweepers daily to minimize dusts in
the warehouses.
As a Malaysian company, we are proud to participate in
the yearly National Day celebration. This year being 50th
Malaysia National Day, besides the usual display of our
national flags, the Company gathered its employees,
managers and staff at the Company’s compound to
celebrate the National Day. To further instill patriotism
among the employees of FMH, the five principles of the
Rukun Negara were recited after singing the national
anthem. FMH plans to make this an annual event to
further inculcate patriotism and goodwill among the
employees of the Group.
For the coming financial year, we expect the
demand for tug and barge services to increase
due to the ongoing infrastructure projects in
Penang and Singapore. Towards this aim, we
have acquired two pairs of barges and tugboats in
year 2007, with plans to place more orders during the
financial year 2008.
Moving forward, the Group is constantly seeking new
acquisition opportunities that will bring enhancements
and synergy to the Group’s existing business.
Consistent with its previous year, the Group is targeting
a PAT growth of 12% to 15% in FY08. Nevertheless, with
the various business strategies and opportunities, we
are working towards exceeding the target.
CORPORATE SOCIAL RESPONSIBILITY
As a responsible organization, the Group is committed
to maintaining a high level of health and safety in
the work place. The Group is continually promoting
and creating awareness among the employees on
occupational hazards and public safety when carrying
out its business activities. Safety and environmental
awareness programmes include:•
sending staff to attend health, safety and security
trainings and seminars;
annual repor t 2 0 0 7
ACKNOWLEDGEMENT
The Board of Directors of FMH would like to thank our
customers and business associates, the regulatory
authorities, investors and shareholders for their continuing
support, which has enabled the Group to achieve another
successful year.
We would also like to thank the management and staff for
their ongoing dedication, resourcefulness, contribution,
commitment and unwavering loyalty towards the Group.
13
Audit Committee Report
MEMBERS
Chairman
:
Datuk Dr Hj Noordin Bin Hj Abd. Razak
(Independent Non-Executive Director)
Members
:
Aaron Sim Kwee Lein
(Independent Non-Executive Director)
Chua Tiong Hock
(Non-Independent Non-Executive)
(Appointed on 9.10.2007)
Yang Heng Lam
(Executive Director)
(Resigned on 9.10.2007)
TERMS OF REFERENCE
1.0
Composition of the Audit Committee
1.1
1.2
1.3
1.4
1.5
1.6
2.0
The Audit Committee shall comprise at least 3 directors.
Alternate director shall not be appointed as members of the Audit Committee.
Majority of the Audit Committee shall be independent directors.
All members of the Audit Committee should be non-executive directors.
All members of the Audit Committee should be financially literate and at least one should be a member
of an accounting association or body.
Members of the Audit Committee shall elect a Chairman from among their members who shall be an
independent director.
Duties of the Audit Committee
The duties of the Audit Committee shall include the following:
To review the following and report the same to the Board of Directors;
2.1
2.2
2.3
To consider the appointment of the external auditor, the audit fee and any question of resignation or
dismissal;
To discuss with the external auditor before the audit commences, the nature and scope of the audit, and
ensure co-ordination where more than one audit firm is involved;
To review the quarterly and year-end financial statements of the board focusing particularly on –
•
•
•
•
2.4
2.5
2.6
To discuss problems and reservations arising from the interim and final audits, and any matter the
auditor may wish to discuss (in the absence of management where necessary);
To review the external auditor’s management letter and management’s responses;
To do the following, in relation to the internal audit function –
•
•
14
any change in accounting policies and practices;
significant adjustments arising from the audit;
the going concern assumption; and
Compliance with accounting standards and other legal requirements.
Review the adequacy of the scope, functions and resources of the internal audit function, and
that it has the necessary authority to carry out its work;
Review the int0-ernal audit programme and results of the internal audit process and, where
necessary, ensure that appropriate actions are taken on the recommendations of the internal
audit function;
Freight Managem e n t H o l d i n g s B h d
(380410-P)
Audit Committee Report (continued)
•
•
•
2.7
2.8
2.9
2.10
2.11
3.0
Review any appraisal or assessment of the performance of members of the internal audit
function;
Approve any appointment or termination of senior staff members of the internal audit function;
Take cognizance of resignations of internal audit staff members and provide the resigning staff
member an opportunity to submit his reasons for resigning.
To consider any related-party transactions that may arise within the company or group;
To consider the major findings of internal investigations and management’s response;
To consider other topics as defined by the Board;
Review and verify the allocation of options under the Company’s share scheme for employees (“ESOS”)
to ensure consistent compliance with the criteria as set out in the scheme by the ESOS Committee;
and
Report promptly to Bursa Malaysia Securities Berhad on any matter the Audit Committee had reported
to the Board of Directors, which was not satisfactorily resolved and/or resulted in a breach of the Listing
Requirement of Bursa Malaysia Securities Berhad.
Rights of the Audit Committee
For the performance of its duties, the Audit Committee shall:
(a)
(b)
(c)
(d)
(e)
4.0
have authority to investigate any matter within its terms of reference;
have the resources which are required to perform its duties and full access to information;
have direct communication channels with the external auditors and the persons carrying out the internal
audit function;
be able to obtain external/independent professional or other advice at a cost to be approved by the
Board of Directors and to invite outsiders with relevant experience to attend, if necessary;
be able to convene meetings with the external auditors, excluding the attendance of the executive
members of the Board, whenever deemed necessary;
Procedure of the Audit Committee
The Audit Committee shall regulate its own procedures as follows:
4.1
4.2
4.3
4.4
4.5
4.6
4.7
4.8
4.9
the Audit Committee shall hold at least 4 meetings each financial year with due notice of issues to be
discussed, and should record its conclusions in discharging its duties and responsibilities;
the finance director, the head of internal audit and a representative of the external auditors should
normally attend meetings. Other board members may attend meetings upon the invitation of the audit
committee. However, the committee should meet with the external auditors without executive board
members present at lease twice a year.
a member of the Audit Committee may at any time summon a meeting of the Audit Committee;
Notice calling for a meeting of the Audit Committee shall be given to all its members at least 7 Days
before the meeting or at shorter notice as the Audit Committee shall determine;
The Chairman of the Audit Committee should engage on a continuous basis with senior management,
such as the chairman, the chief executive officer, the finance director, the head of internal audit and the
external auditors in order to be kept informed of matters affecting the Company.
the quorum necessary for the transaction of business at an Audit Committee meeting shall be two, the
majority of members present must be independent directors;
Questions arising at any Audit Committee meeting shall be decided by the majority votes of its members
present. In case of an equality of votes, the chairman of the meeting shall have a second or casting
vote;
Minutes of each Audit Committee meeting shall be kept by the Secretary of the Audit Committee;
The Company Secretary shall be the Secretary of the Audit Committee and the Secretary’s duties
amongst others shall include:
(a)
(b)
annual repor t 2 0 0 7
the custody, production and availability of inspection of such minutes;
the maintenance of particulars required for the preparation of the Audit Committee Report.
15
Audit Committee Report (continued)
SUMMMARY OF ACTIVITIES DURING THE FINANCIAL YEAR
The Audit Committee met five (5) times during the financial year ended 30 June 2007. The details of attendance of the
Audit Committee members are as follows:
Name of Audit Committee Member
Total meetings attended
Percentag e of attendance (%)
Datuk Dr Hj Noordin Bin Hj Abd. Razak
5/5
100
A a ro n S i m K w e e L e i n
5/5
100
Ya n g H e n g L a m
5/5
100
In line with the terms of reference of the Audit Committee, the following activities were carried out by the
Audit Committee during the financial year ended 30 June 2007:(a)
(b)
(c)
(d)
(e)
(f)
(g)
Reviewed the quarterly financial results announcements for each of the Group to ensure compliance with the
Listing Requirements of Bursa Securities, applicable approved accounting standards and other legal and
regulatory requirements, before recommending them for the Board of Directors’ consideration and approval;
Reviewed and discussed significant audit findings in respect of the Group’s operations with the Group’s
outsourced internal audit function.
Discussed significant audit findings in respect of the financial statements of the Group with the external
auditors;
Reviewed the annual audited financial statements before recommending them for the Board of Directors’
approval;
Reviewed the external auditors’ fees, scope of work and audit plans for the financial year prior to commencement
of audit;
Reviewed the related party transactions entered into by the Group for compliance with the Listing Requirements
of Bursa Securities; and
Attended training by the external auditors on the development and adoption of the new Financial Reporting
Standards in Malaysia and its impact to the Group’s and Company’s future financial statements.
INTERNAL AUDIT FUNCTION
The Audit Committee is aware that an independent adequately resourced internal audit function is essential to
ensure the implementation of a sound internal control system. Accordingly, the Company had appointed an external
professional consultancy firm to conduct its internal audit function. The principal role of the internal audit is to undertake
such systematic reviews of the internal control systems within the Group so as to provide reasonable assurance that
such systems are adequate and functioning as intended. Its responsibilities include provision of independent and
objective reports on the state of internal control of the various operating units within the Group to the Audit Committee
so that remedial actions can be taken in relation to weaknesses noted in the systems and controls of the respective
operating units.
16
Freight Managem e n t H o l d i n g s B h d
(380410-P)
Statement on Corporate Governance
The Board of Directors (“the Board”) of Freight Management Holdings Bhd (“FMH”) is committed to ensure that the
highest standards of corporate governance are practised throughout the Group as a fundamental part of discharging
its responsibilities to enhance shareholders’ value and the financial performance of the Group.
The Board is pleased to report on how the Group has applied the principles and best practices for corporate
governance mentioned in the Malaysian Code of Corporate Governance (“the Code”).
1.
THE BOARD OF DIRECTORS
Board Responsibilities
The Group acknowledges the important role played by the Board in the stewardship of its direction and
operations, and ultimately enhancement of long-term shareholder value. To fulfil this role, the Board is
responsible for the overall corporate governance of the Group, including its strategic direction and overall
well-being. The Board is normally involved in matters concerning the Group strategy and direction, acquisition
and divestment policy, approval of capital expenditure, consideration of significant financial matters and the
review of financial and operating performance of the Group.
Board Composition and Balance
The Board currently consists of seven (7) Directors as listed below:•
One (1) Chairman /Independent Non-Executive Director
•
One (1) Independent Non-Executive Director
•
Four (4) Executive Directors
•
One (1) Non-Independent Non-Executive Director
The Board is of the opinion that the current composition of the Board fairly reflects the investment of minority
shareholders. The independent directors are individuals of calibre, credibility and have the necessary skills and
experiences to provide independent and unbiased view and advice on the strategy, performance, resources
and standards of conduct of the Group. In addition, due to active participation of all the Directors, no individual
or small group of individuals dominate the Board’s decision making process. The profiles of the members of
the Board are set out on pages 7 to 9 in this Annual Report.
Board Meeting
The Board meets at least four times a year and has a formal schedule of matters reserved for it. Additional
meetings are held as and when necessary. The Board deliberated upon and considered various issues
including the Group’s financial results, performance of the Group’s business, business plan and policies and
strategic issues affecting the Group’s business.
Details of attendance of the Directors at Board Meetings held during the financial year are as follows:-
Datuk Dr Hj Noordin Bin Hj Abd. Razak
Chew Chong Keat
Yang Heng Lam
Gan Siew Yong
Aaron Sim Kwee Lein
Ong Looi Chai
Khua Kian Keong (Appointed on 05.01.2007)
(Vacated office on 16.07.2007)
Chua Tiong Hock (Alternate Director to Khua Kian Keong)
(Appointed on 05.01.2007 Ceased to act on 16.07.2007)
Chua Tiong Hock (Appointed on 30.07.2007)
Khua Kian Keong (Alternate Director to Chua Tiong Hock)
(Appointed on 30.07.2007)
annual repor t 2 0 0 7
Total Number of
Meetings
5
5
5
5
5
5
2
Number of
Meetings Attended
5
5
5
5
5
5
-
2
2
N/A
N/A
N/A
N/A
17
Statement on Corporate Governance (continued)
Supply of Information
Board papers are provided to the Board members in sufficient time prior to a Board meeting to enable the
Directors to review and consider the agenda items to be discussed at the Board meeting. The Board reports,
among others, include the following:
•
•
•
•
•
Minutes of meetings of all Committees of the Board
Quarterly performance report of the Group
Business plans and budgets
Updates on statutory regulations and requirements affecting the Group
Relevant market information for decision making
In addition, there is a schedule of matters reserved specifically for the Board’s decision including the approval of
the annual company plans, major acquisitions or disposal of a business or assets and changes to management
and control structure of the Group, namely, key policies and authority limits.
All Directors have access to the advice and services of the Company Secretary.
Appointment and Re-election of Directors
The Nomination Committee shall nominate or consider candidates nominated for appointment to the Board and
Board Committees. The Board shall review and deliberate on the candidates proposed prior to approving the
appointment of board member.
Article 109 of the Articles of Association provides that one-third of the Directors shall retire from office at each
Annual General Meeting and all Directors shall retire from office at least once every three years but may offer
themselves for re-election. This will provide an opportunity for shareholders to renew their mandates. To assist
shareholders in their decision, sufficient information such as the personal profile and the meetings attendance
of each Director are furnished in the Annual Report.
Directors’ Training
As at the date of this Statement, all members of the Board have attended the Mandatory Accreditation
Programme to comply with the Bursa Malaysia Listing Requirements.
Details of the training attended by the Directors during the financial year are as follows:•
•
•
•
•
Updates on Financial Reporting Standard
Updates of Companies Act, 1965
Updates on Listing Requirements
Malaysian Code on take-overs and mergers
The Best of Supply Chain Practice
The Directors will continue to undergo other relevant training programmes to further enhance their skills and
knowledge and to also keep abreast with developments in the market, industry and corporate scene.
2.
BOARD COMMITTEES
The Board has established and delegated certain responsibilities to the Board Committees, namely Audit
Committee, Nomination Committee and Remuneration Committee, which operates within defined terms of
reference and operating procedures, details of which are set out in this Statement.
18
Freight Managem e n t H o l d i n g s B h d
(380410-P)
Statement on Corporate Governance (continued)
Audit Committees
The composition, terms of reference and summary of activities of the Audit Committee are disclosed in the
Audit Committee Report on pages 14 to 16 of this Annual Report.
Nomination Committee
The Nomination Committee (“NC”) was established on 24 February 2005 and comprises the following members
who are exclusively non-executive independent directors:
•
•
Datuk Dr Hj Noordin bin Hj Abd. Razak (Chairman of the Committee)
Aaron Sim Kwee Lein (Member of the Committee)
The NC is empowered by the Board to bring to the Board recommendations on the appointment of new
Directors and to review the Board structure, size and composition as well as those of Board Committees.
The duties and functions of the Nomination Committee encompass the following:-
Recommend to the Board, candidates nominated by shareholders or the Board for directorships to be
filled;
Recommend to the Board, directors to fill seats on board committees;
Review annually the required skills and experience and other qualities and core competencies nonexecutive directors should bring to the Board; and
Assess annually the effectiveness of the Board as a whole and the contribution of each individual
director.
The decision on new appointment of directors rests with the Board after considering the recommendation of
the Nomination Committee.
During the financial year, the Committee met twice to conduct the annual review on the Directors’ core
competencies, contribution and effectiveness and to consider the nomination of new Director to the Board.
Remuneration Committee
The Remuneration Committee was established on 24 February 2005 to assist the Board in determining and
developing a remuneration policy for Directors. The members of the Remuneration Committee are:•
•
Datuk Dr Hj Noordin bin Hj Abd. Razak (Chairman of the Committee)
Aaron Sim Kwee Lein (Member of the Committee)
The role of the Remuneration Committee, in accordance with its Term of Reference, include
•
•
•
the annual review of the various types of components of remuneration such as fees, allowances, basic
salary, bonus and other benefits in kind for directors;
ensuring that a transparent and formal procedure is established in the assessment of the level of
compensation that would be sufficient to attract and keep good calibre directors;
ensuring that the remuneration package is linked to performance, responsibility level and is comparable
with market norm.
The Remuneration Committee is authorized by the Board to draw from outside advice as and when necessary
in forming its recommendations to the Board on the remuneration of the Executive Directors. The remuneration
of the non-executive Directors are determined by the Board as a whole with individual Directors abstaining
from deliberation on his remuneration.
The Remuneration Committee met once during the financial year under review.
annual repor t 2 0 0 7
19
Statement on Corporate Governance (continued)
Remuneration Committee (continued)
Details of the remuneration packages for the Directors of the Group for the financial year ended 30 June 2007
are as follows:Executive
Directors
RM
180,000
20,000
* Fees
Salaries & other emoluments
Non-Executive
Directors
RM
102,000
13,000
* Subject to the approval of shareholders.
The number of Directors of the Company whose income falls within the following bands is set out as follows:Number of Directors
Executive
Non-Executive
1
2
3
1
RM50,000 and below
RM50,001 to RM100,000
3.
SHAREHOLDERS
The Group communicates with its shareholders and investors primarily through timely release of financial
results on a quarterly basis, press release and announcements which gives the shareholders an overview
of the Group’s performance and operation. The Annual General Meeting (AGM) is the principal forum for
dialogue with shareholders who are encouraged to enquire about the Group’s activities and prospects.
The Group maintains frequent dialogues with financial analysts and fund managers as a means of maintaining
and improving investors relation. A press conference is normally held after the AGM.
Shareholders and members of the public can obtain information on the Company through the Bursa Securities
website at www.bursamalaysia.com.
4.
ACCOUNTABILITY AND AUDIT
Financial Reporting
In presenting the annual financial statements and the quarterly announcements to shareholders, the Board has
taken reasonable steps to ensure the financial statements are true and fair reflection of the Group’s position
and prospects. This also applies to circulars to shareholders and other documents that are submitted to the
authorities and regulators. The Directors’ responsibility statement is set out on page 24 of this Annual Report.
Internal Control
Information on the Group’s system of internal control is presented in the Statement on Internal Control set out
on pages 21 to 22 of this Annual Report
Relation with Auditors
The role of the Audit Committee in relation to the external auditors is disclosed in the Audit Committee Report
set out on page 14 of this annual report. The Company maintains a close and transparent relationship with its
auditors in seeking professional advice and ensuring compliance with the approved accounting standards in
Malaysia.
20
Freight Managem e n t H o l d i n g s B h d
(380410-P)
Statement on Internal Control
THE MALAYSIAN CODE ON CORPORATE GOVERNANCE REQUIRES LISTED COMPANIES TO MAINTAIN
A SOUND SYSTEM OF INTERNAL CONTROL TO SAFEGUARD SHAREHOLDERS’ INVESTMENTS AND THE
GROUP’S ASSETS. THE LISTING REQUIREMENTS OF BURSA MALAYSIA SECURITIES BERHAD REQUIRES
DIRECTORS OF THE BOARD TO MAKE A STATEMENT ABOUT THE STATE OF INTERNAL CONTROL OF THE
LISTED ENTITY AS A GROUP.
The Board of Directors’ Statement on Internal Control set out below has been prepared with reference to Bursa
Malaysia Securities Berhad – Statement on Internal Control : Guidance for Directors of Public Listed Companies.
RESPONSIBILITY
The Board acknowledges its overall responsibility for the Group’s system of internal control and for reviewing its
effectiveness whilst the role of management is to implement the Board’s policies on risk and control. It should be noted
that due to the inherent limitations in any system of internal control, the system of internal control is designed to manage
rather than eliminate all risks that may impede the achievement of the Group’s business objectives. Accordingly, in
pursuing these objectives, internal controls can only provide reasonable and not absolute assurance against material
misstatement or loss.
RISK MANAGEMENT FRAMEWORK
The Board maintains an on-going commitment to strengthen the Group’s internal control environment and processes
as well as its risk management framework. The Board has engaged a professional service of Internal Auditor to assist
the Group in the development of the Group’s key risk profile and a risk management framework that is responsive to
changes in the business and operating environment. Apart from the above mentioned exercise, the on-going Board
and management meeting discuss, deliberate and address risks which are associated with strategic, financial and
operational issues as part of the decision making processes. This is the manner adopted by the Group for identifying
and managing risks prior to the implementation of a structured risk management framework as mentioned above.
INTERNAL CONTROL MECHANISM
The responsibility to review the adequacy and integrity of the internal control system has been delegated by the Board
to the Audit Committee. The Audit Committee, in turn, assess the adequacy and integrity of the internal control system
through independent reviews conducted on reports it receives from external auditors, the outsourced internal audit
function and the management. As part of the process, the external auditors provide assurance in the form of their
annual statutory audit of the financial statements of the Group. Any areas of improvement identified during the course
of the statutory audit by the external auditors are being brought to the attention of the Audit Committee through Audit
Review Memorandum.
The Group had outsourced its internal audit function to an independent professional service provider firm to assist the
Audit Committee as well as the Board of Directors in discharging their responsibilities by providing an independent,
objective assurance and advisory services that add value and improve the operations in the following areas:•
•
•
•
•
ensuring existence of processes to monitor the effectiveness and efficiency of operations and the achievement
of business objectives;
ensuring adequacy and effectiveness of internal control systems for safeguarding of assets, providing
consistent, accurate financial and operational data;
promoting risk awareness and the value and nature of an effective internal control system;
ensuring compliance with laws, regulations, corporate policies and procedures; and
assisting management in accomplishing its objectives by adopting a systematic and disciplined audit approach
to evaluating and improving the effectiveness of risk management, control and governance processes within
the companies’ operations.
annual repor t 2 0 0 7
21
Statement on Internal Control (continued)
KEY ELEMENTS OF INTERNAL CONTROL SYSTEM
The key elements of the Group’s internal control system are described below:•
•
•
•
•
•
•
•
Organisation structure with clearly defined delegation of responsibilities to the Board;
Regular meetings are held at operational and management levels to identify and resolve business, financial,
operational and management issues;
Three subsidiary companies were accredited ISO 9001:2000 certification on quality management system.
Documented internal procedures and standard operating procedures have been put in place and surveillance
audits are conducted twice a year by assessors of the ISO certification bodies to ensure that the system is
adequately implemented;
Documented guidelines on operating procedures have been put in place for relevant departments;
Regular information is provided by the management to the Board on financial performance and key business
indicators;
Monthly monitoring of results by the management through financial reports;
Regular internal audit visits and other specific assignments, if the need arises, assigned by the Audit Committee
and/or the Board who monitors compliance with procedures and assesses the integrity of financial information
provided; and
Audit Committee holds regular meetings with the management on the actions taken on internal control issues,
identified through reports prepared by the internal auditors, external auditors and/or the management.
SUMMARY
During the year under review, the Board is not aware of any issues which would result in any material losses,
contingencies or uncertainties that would require separate disclosure in this Annual Report. Notwithstanding this, the
Board will continue to take adequate measures to strengthen the control environment in which the Group operates.
This Statement is made in accordance with the resolution of the Board of Directors dated 22 October 2007.
22
Freight Managem e n t H o l d i n g s B h d
(380410-P)
Additional Compliance Information
1.
Utilisation of proceeds
The proceed of RM2,025,115 from the disposal of a property held under HS(D) 71692 PT 67124, Mukim of
Klang, Daerah Klang, Selangor on 17 November 2006 was utilized for working capital.
2.
Share buyback
The Company did not enter into any share buyback transactions during the financial year ended 30 June 2007.
3.
Options, warrant or convertible securities
The Company has not issued any options, warrants or convertible securities during the financial year.
4.
American Depository Receipt (“ADR”) or Global Depository Receipt (“GDR”) Programme
The Company did not sponsor any ADR or GDR programme during the financial year.
5.
Sanctions and / or Penalties
There were no sanctions and / or penalties imposed on the Company and its subsidiaries, Directors or
management by the regulatory bodies during the financial year.
6.
Non-audit fees
The amount of non-audit fees paid and payable to the external auditors during the financial year ended 30 June
2007 was RM36,600.
7.
Variation in results
The Group’s audited results for the financial year ended 30 June 2007 did not vary by 10% or more from the
unaudited results which were announced to Bursa Malaysia Securities Berhad on 29 August 2007.
8.
Profit Guarantee
There were no profit guarantees given by the Group during the financial year ended 30 June 2007.
9.
Material Contracts
Save as disclosed below, there were no material contracts entered into by the Company and its subsidiaries
which involve Directors’ or Substantial Shareholders’ interests either still subsisting at the end of the financial
year ended 30 June 2007.
i.
Allotment and Subscription Agreement dated 15 February 2006 between Andrew Tay Nguang Yeow
(“Andrew Tay”), TCH Marine Pte Ltd (“TCH Marine”) and Freight Management Holdings Bhd (“FMH”)
whereby FMH agreed to purchase at the consideration of SGD700,000 the rights of Andrew Tay in
a rights issue exercise to be undertaken by TCH Marine. The purchase of the rights allowed FMH
to subscribe for 1,353,000 ordinary shares of SGD1.00 each (“Subscription”) (or 51% of the share
capital) in TCH Marine at the consideration of SGD1,353,000 or equivalent to RM3,103,105. With
the completion of the Subscription on 3 March 2006, TCH Marine became a 51% owned subsidiary
of FMH. The total investment for the 51% shareholding in TCH Marine by FMH is SGD2,053,000
or equivalent to RM4,704,705 and direct cost attributed to the acquisition amounting to RM26,790;
and
ii.
Sale and Purchase Agreement dated 17 November 2006 between FMH and Ng Boon Let, Ng Boon
Huat and Ng Boon Pin (collectively, “Purchasers”) whereby FMH agreed to sell and the Purchasers
agreed to purchase a piece of vacant industrial land held under HS(D) 71692 PT 67124, Mukim Klang,
Daerah Klang, Negeri Selangor at a cash consideration of RM2,025,115, upon the terms and subject
to the conditions contained in the Agreement.
10.
Recurrent Related party transactions
All recurrent related party transactions entered into by the Group during the financial year are disclosed in Note
35 of the financial statement in pages 26 to 81 of this annual report.
11.
Revaluation Policy
The Group and the Company do not adopt a policy of regular revaluation on its landed properties as such
exercises would only be carried out when deemed appropriate by the directors.
annual repor t 2 0 0 7
23
Statement on Directors’ Responsibilities
The Directors are responsible for ensuring that the financial statements of the Company and Group are drawn up in
accordance with the requirements of the applicable approved accounting standards in Malaysia, the provisions of the
Companies Act, 1965 and the Listing Requirements of Bursa Malaysia Securities Berhad.
In preparing the financial statements, the Directors have:
•
•
•
Adopted appropriate accounting policies and applied them consistently;
Ensured that applicable approved Accounting Standards in Malaysia and the provisions of the Companies Act,
1965 have been followed; and
Considered the going concern basis used as being appropriate.
The Directors are also responsible for ensuring that proper accounting records are kept which disclose with reasonable
accuracy the financial position of the Company and of the Group to enable them to ensure that the financial statements
comply with the Companies Act, 1965.
The Directors have general responsibilities for taking such steps as are reasonably open to them to safeguard the
assets of the Company and of the Group and to prevent and detect fraud and other irregularities.
This statement is made in accordance with a resolution by the Board of Directors dated 22 October 2007.
24
Freight Managem e n t H o l d i n g s B h d
(380410-P)
Contents of the
Financial Statements
DIRECTORS’ REPORT
26 - 29
STATEMENT BY DIRECTORS
30
STATUTORY DECLARATION
30
REPORT OF THE AUDITORS
31
BALANCE SHEETS
32 - 33
INCOME STATEMENTS
34
STATEMENTS OF CHANGES IN EQUITY
35 - 36
CASH FLOW STATEMENTS
37 - 38
NOTES TO THE FINANCIAL STATEMENTS
39 - 81
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 30 June 2007.
PRINCIPAL ACTIVITIES
The principal activity of the Company is investment holding. The principal activities of the subsidiaries are disclosed
in Note 9 to the financial statements.
There have been no significant changes in the nature of these activities during the financial year, except for the
acquisition of a subsidiary as disclosed in Note 9 to the financial statements.
RESULTS
Profit for the financial year
Attributable to:
Equity holders of the Company
Minority interest
Profit for the financial year
Group
RM
Company
RM
10,711,708
18,004,372
9,687,600
1,024,108
18,004,372
-
10,711,708
18,004,372
RM
RM
-
1,243,920
746,352
681,600
1,427,952
DIVIDENDS
Dividends paid since the end of the previous financial year were as follows:
In respect of the financial year ended 30 June 2006:
Final dividend of 2.0 sen per ordinary share, less tax,
paid on 18 January 2007
In respect of the financial year ended 30 June 2007:
Interim - gross dividend of 1.2 sen per ordinary share, less tax
- tax exempt dividend of 0.8 sen per ordinary share
paid on 27 July 2007
2,671,872
The Directors proposed a final dividend of 2 sen per ordinary share less tax, amounting to RM1,260,960, in respect
of the financial year ended 30 June 2007 subject to the approval of shareholders at the forthcoming Annual General
Meeting.
RESERVES AND PROVISIONS
There were no material transfers to or from reserves or provisions during the financial year other than those disclosed
in the financial statements.
ISSUE OF SHARES AND DEBENTURES
The Company has not issued any shares or debentures during the year.
26
Freight Managem e n t H o l d i n g s B h d
(380410-P)
Directors’ Report (continued)
EMPLOYEES’ SHARE OPTION SCHEME
The Employees’ Share Option Scheme (“ESOS”) of the Company was approved by its shareholders at an Extraordinary
General Meeting held on 26 November 2004 and came into effect on 28 January 2005. The ESOS should be in force
for a period of 5 years until 27 January 2010 (“the option period”). However, as disclosed in Note 43 to the financial
statements, the ESOS was terminated on 8 December 2006 pursuant to the approval of the shareholders at the Annual
General Meeting.
The details of the options over ordinary shares of the Company are as follows:
Date of offer
28 January 2005
Option
price
RM
0.65
Number of options over ordinary shares of RM0.50 each
Terminated
Balance
Balance
as at
during
as at
1.7.2006
the year
30.6.2007
4,678,000
(4,678,000)
-
The Company has been granted exemption by the Companies Commission of Malaysia in the previous year from
having to disclose the full list of option holders and their holdings except for eligible employees with allocation of
200,000 options and above, which are as follows:
Name of option holders
Chew Chong Keat
Yang Heng Lam
Gan Siew Yong
Ong Looi Chai
Teh Swee Sim
Option
price
RM
0.65
0.65
0.65
0.65
0.65
Number of options over ordinary shares of RM0.50 each
Terminated
Balance
Balance
as at
during
as at
1.7.2006
the year
30.6.2007
200,000
200,000
200,000
200,000
200,000
(200,000)
(200,000)
(200,000)
(200,000)
(200,000)
-
DIRECTORS
The Directors who held office since the date of the last report are:
Datuk Dr. Haji Noordin bin Haji Abd. Razak
Chew Chong Keat
Yang Heng Lam
Gan Siew Yong
Aaron Sim Kwee Lein
Ong Looi Chai
Chua Tiong Hock (Appointed as Director on 30 July 2007)
(Appointed as Alternate Director on 5 January 2007; ceased on 16 July 2007)
Khua Kian Keong (Appointed as Alternate Director on 30 July 2007)
(Appointed as Director on 5 January 2007; vacated office on 16 July 2007)
In accordance with Article 109 of the Company’s Articles of Association, Chew Chong Keat and Yang Heng Lam retire
by rotation at the forthcoming Annual General Meeting and, being eligible, offer themselves for re-election.
In accordance with Article 114 of the Company’s Articles of Association, Chua Tiong Hock retires by casual vacancy
at the forthcoming Annual General Meeting and, being eligible, offers himself for re-election.
annual repor t 2 0 0 7
27
Directors’ Report (continued)
DIRECTORS’ INTERESTS
The Directors holding office at the end of the financial year and their beneficial interest in the ordinary shares of the
Company during the financial year ended 30 June 2007 as recorded in the Register of Directors’ Shareholdings kept
by the Company under Section 134 of the Companies Act, 1965, are as follows:
Balance
as at
1.7.2006/
date of
appointment
Shares in the Company
Number of ordinary shares
Bought
Sold
Balance
as at
30.6.2007
Direct interests
Chew Chong Keat
Gan Siew Yong
Yang Heng Lam
Datuk Dr. Haji Noordin bin Haji Abd. Razak
Ong Looi Chai
24,815,568
3,716,782
16,209,472
2,588,000
1,000,950
-
17,040,000
17,040,000
-
(1,083,750)
(616,250)
(2,588,000)
-
23,731,818
3,716,782
15,593,222
1,000,950
Indirect interests
Khua Kian Keong
Chua Tiong Hock
-
17,040,000
17,040,000
By virtue of Section 6A of the Companies Act, 1965, Chew Chong Keat, Yang Heng Lam and Khua Kian Keong are
deemed to have interest in the shares of all the subsidiaries to the extent the Company has an interest.
Other than as stated above, none of the other Directors in office at the end of the financial year held any interest in the
shares of the Company and its related corporations.
DIRECTORS’ BENEFITS
Since the end of the previous financial year, none of the Directors of the Company has received or become entitled
to receive a benefit (other than a benefit included in the aggregate amount of emoluments received or due and
receivable by the Directors as shown in the financial statements) by reason of a contract made by the Company or a
related corporation with the Director or with a firm of which the Director is a member, or with a company in which the
Director has a substantial financial interest.
There were no arrangements during and at the end of the financial year, to which the Company is a party, which
had the object 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.
OTHER STATUTORY INFORMATION REGARDING THE GROUP AND THE COMPANY
(I)
AS AT THE END OF THE FINANCIAL YEAR
(a)
(b)
28
Before the income statements and balance sheets of the Group and of the Company were made out,
the Directors took reasonable steps:
(i)
to ascertain that proper action had been taken in relation to the writing off of bad debts and the
making of provision for doubtful debts and have satisfied themselves that all known bad debts
had been written off and that adequate provision had been made for doubtful debts; and
(ii)
to ensure that any current assets which were unlikely to realise their book values in the ordinary
course of business had been written down to their estimated realisable values.
In the opinion of the Directors, the results of the operations of the Group and of the Company during the
financial year have not been substantially affected by any item, transaction or event of a material and
unusual nature.
Freight Managem e n t H o l d i n g s B h d
(380410-P)
Directors’ Report (continued)
OTHER STATUTORY INFORMATION REGARDING THE GROUP AND THE COMPANY (continued)
(I)
AS AT THE END OF THE FINANCIAL YEAR (continued)
(c)
(II)
(i)
which would render the amount written off for bad debts or the amount of the provision for
doubtful debts in the financial statements of the Group and of the Company inadequate to any
material extent; or
(ii)
which would render the values attributed to current assets in the financial statements of the
Group and of the Company misleading; and
(iii)
which have arisen which would render adherence to the existing method of valuation of assets
or liabilities of the Group and of the Company misleading or inappropriate.
FROM THE END OF THE FINANCIAL YEAR TO THE DATE OF THIS REPORT
(d)
(III)
The Directors are not aware of any circumstances:
In the opinion of the Directors:
(i)
there has not arisen 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 financial year
in which this report is made; and
(ii)
no contingent or other liability has become enforceable, or is likely to become enforceable,
within the period of twelve months after the end of the financial year which will or may affect the
ability of the Group and of the Company to meet their obligations as and when they fall due.
AS AT THE DATE OF THIS REPORT
(e)
There are no charges on the assets of the Group and of the Company which have arisen since the end
of the financial year to secure the liabilities of any other person.
(f)
There are no contingent liabilities of the Group and of the Company which have arisen since the end of
the financial year.
(g)
The Directors are not aware of any circumstances not otherwise dealt with in the report or financial
statements which would render any amount stated in the financial statements of the Group and of the
Company misleading.
SIGNIFICANT EVENTS DURING THE FINANCIAL YEAR
The significant events during the financial year are disclosed in Note 43 to the financial statements.
AUDITORS
The auditors, BDO Binder, have expressed their willingness to continue in office.
Signed on behalf of the Board of Directors in accordance with a resolution of the Directors.
...................................................…
Chew Chong Keat
Director
...................................................…
Yang Heng Lam
Director
Port Klang
4 September 2007
annual repor t 2 0 0 7
29
Statement By Directors
In the opinion of the Directors, the financial statements set out on pages 32 to 81 have been drawn up in accordance
with applicable approved Financial Reporting Standards in Malaysia so as to give a true and fair view of:
(i)
the state of affairs of the Group and of the Company as at 30 June 2007 and of their results for the financial year
then ended; and
(ii)
the cash flows of the Group and of the Company for the financial year ended 30 June 2007.
On behalf of the Board,
............................................................
Chew Chong Keat
Director
.............................................................
Yang Heng Lam
Director
Port Klang
4 September 2007
Statutory Declaration
I, Chew Chong Keat, being the Director primarily responsible for the financial management of Freight Management
Holdings Bhd., do solemnly and sincerely declare that the financial statements set out on pages 32 to 81 are, to the
best of my knowledge and belief, correct and I make this solemn declaration conscientiously believing the same to be
true and by virtue of the provisions of the Statutory Declarations Act, 1960.
Subscribed and solemnly
declared by the abovenamed at
Kuala Lumpur this
4 September 2007
)
)
)
)
Chew Chong Keat
Before me:
PESURUHJAYA SUMPAH
A.T. VELU
W240
COMMISSIONER FOR OATHS
30
Freight Managem e n t H o l d i n g s B h d
(380410-P)
Report of the Auditors
TO THE MEMBERS OF FREIGHT MANAGEMENT HOLDINGS BHD.
We have audited the financial statements set out on pages 32 to 81.
These financial statements are the responsibility of the Company’s Directors.
It is our responsibility to form an independent opinion, based on our audit, on the financial statements and to report
our opinion to you, as a body, in accordance with Section 174 of the Companies Act, 1965 and for no other purpose.
We do not assume responsibility towards any other person for the content of this report.
We conducted our audit in accordance with approved standards on auditing in Malaysia. These standards require
that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. An audit also includes assessing the accounting principles used and significant estimates
made by the Directors, as well as evaluating the overall financial statement presentation. We believe that our audit
provides a reasonable basis for our opinion.
In our opinion:
(a)
the financial statements have been properly drawn up in accordance with applicable approved Financial
Reporting Standards in Malaysia and the provisions of the Companies Act, 1965 so as to give a true and fair
view of:
(i)
the matters required by Section 169 of the Companies Act, 1965 to be dealt with in the financial
statements of the Group and of the Company; and
(ii)
the state of affairs of the Group and of the Company as at 30 June 2007 and of its results and cash flows
for the financial year then ended;
and
(b)
the accounting and other records and the registers required by the Act to be kept by the Company and by the
subsidiaries of which we have acted as auditors have been properly kept in accordance with the provisions of
the said Act.
We have considered the financial statements and auditors’ reports of the subsidiaries of which we have not acted
as auditors, as indicated in Note 9 to the financial statements, being financial statements that are included in the
consolidated financial statements.
We are satisfied that the financial statements of the subsidiaries that are consolidated with the Company’s financial
statements are in form and content appropriate and proper for the purposes of the preparation of the consolidated
financial statements and we have received satisfactory information and explanations required by us for those
purposes.
The auditors’ reports on the financial statements of the subsidiaries were not subject to any qualification and did not
include any comment made under Section 174(3) of the Act.
BDO Binder
AF: 0206
Chartered Accountants
James Chan Kuan Chee
2271/10/07 (J)
Partner
Kuala Lumpur
4 September 2007
annual repor t 2 0 0 7
31
Balance Sheets
AS AT 30 JUNE 2007
Group
Company
2006
RM
(Restated)
2007
RM
44,478,569
11,434,043
137,209
2,776
1,674,226
35,466,481
14,368,320
121,756
1,150,797
1,674,226
35,828,410
15,031,382
-
33,587,410
14,160,600
-
57,726,823
52,781,580
50,859,792
47,748,010
14
34,100,152
32,252,188
-
-
15
12
16
2,978,423
441,150
1,426,531
3,778,277
3,800,000
7,934,577
2,703,962
459,306
218,416
3,014,088
6,458,832
6,272
14,466,686
5,445,832
3,800,000
2,401,549
24,462
2,826,232
119,500
921,739
54,459,110
45,106,792
26,120,339
3,891,933
5,266,066
-
-
-
59,725,176
45,106,792
26,120,339
3,891,933
117,451,999
97,888,372
76,980,131
51,639,943
NOTE
2007
RM
2006
RM
(Restated)
ASSETS
Non-current assets
Property, plant and equipment
Prepaid lease payments for land
Investment in subsidiaries
Investment in an associate
Other investments
Amount owing by subsidiaries
Goodwill on consolidation
7
8
9
10
11
12
13
Current assets
Trade receivables
Other receivables, deposits and
prepayments
Amounts owing by subsidiaries
Amount owing by an associate
Tax recoverable
Fixed deposits with licensed banks
Short term deposits- Repo
Cash and bank balances
Non-current asset classified as
held for sale
17
18
TOTAL ASSETS
32
Freight Managem e n t H o l d i n g s B h d
(380410-P)
Balance Sheets (continued)
NOTE
2007
RM
Group
Company
2006
RM
(Restated)
2007
RM
2006
RM
(Restated)
42,600,000
23,100,322
42,600,000
16,176,240
42,600,000
22,933,306
42,600,000
7,600,806
65,700,322
4,396,423
58,776,240
3,457,245
65,533,306
-
50,200,806
-
70,096,745
62,233,485
65,533,306
50,200,806
631,926
15,063,162
2,797,800
534,628
1,742,353
2,045,400
4,900,000
-
18,492,888
4,322,381
4,900,000
-
14,691,957
5,484,707
409,966
1,624,088
1,257,292
3,293,390
1,427,952
673,014
13,441,179
7,381,832
416,518
1,289,849
8,270,661
532,467
365,968
4,752,905
1,427,952
-
307,061
1,132,076
-
28,862,366
31,332,506
6,546,825
1,439,137
47,355,254
35,654,887
11,446,825
1,439,137
117,451,999
97,888,372
76,980,131
51,639,943
EQUITY AND LIABILITIES
Equity attributable to equity holders
of the Company
Share capital
Reserves
19
20
Minority interests
TOTAL EQUITY
LIABILITIES
Non-current liabilities
Hire-purchase and lease creditors
Term loans - secured
Deferred tax liabilities
21
22
23
Current liabilities
Trade payables
Other payables and accruals
Amounts owing to subsidiaries
Hire-purchase and lease creditors
Term loans - secured
Banker acceptance
Bank overdrafts - secured
Dividends payable
Tax liabilities
TOTAL LIABILITIES
TOTAL EQUITY AND LIABILITIES
24
25
12
21
22
26
The accompanying notes form an integral part of the financial statements.
annual repor t 2 0 0 7
33
Income Statements
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2007
Group
Company
RM
2006
RM
(Restated)
2007
RM
188,079,313
160,831,784
27,124,500
7,698,000
Cost of sales
(148,158,206)
(128,884,944)
-
-
Gross profit
39,921,107
31,946,840
27,124,500
7,698,000
2,474,121
3,693,149
168,137
159,573
(27,508,010)
(24,220,948)
(2,669,973)
(2,177,404)
Profit from operations
14,887,218
11,419,041
24,622,664
5,680,169
Finance costs
(1,211,680)
NOTE
Revenue
27
Other income
Administration expenses
Share of profit/(loss) in an
associate
2007
15,453
(349,328)
(18,367)
(19,322)
2006
RM
(Restated)
-
-
-
Profit before tax
28
13,690,991
11,051,346
24,603,342
5,680,169
Tax expense
29
(2,979,283)
(3,018,375)
(6,598,970)
(1,647,548)
10,711,708
8,032,971
18,004,372
4,032,621
Equity holders of the Company
9,687,600
7,739,554
18,004,372
4,032,621
Minority interest
1,024,108
293,417
-
-
10,711,708
8,032,971
18,004,372
4,032,621
Profit for the financial year
Attributable to:
Earnings per ordinary share
attributable to equity holders
of the Company (sen):
Basic earnings per ordinary share
31
11.37
9.08
Fully diluted earnings per ordinary
share (sen)
31
11.37
9.06
The accompanying notes form an integral part of the financial statements.
34
Freight Managem e n t H o l d i n g s B h d
(380410-P)
annual repor t 2 0 0 7
-
Transfer to goodwill on consolidation
-
-
Net profit for the financial year
Total recognised income and expense for
the year
Dividends paid (Note 30)
-
-
Income and expense recognised directly
in equity
Net profit for the financial year
Total recognised income and expense for
the year
Dividends paid (Note 30)
4,075,506
-
-
The accompanying notes form an integral part of the financial statements.
42,600,000
-
-
Exchange fluctuation reserve arising from
translation of foreign subsidiaries during
the year
Balance as at 30 June 2007
-
-
Effects of adopting FRS (Note 5.3 (b))
-
4,075,506
-
42,600,000
Balance as at 30 June 2006
-
-
Income recognised directly in equity
-
-
-
Exchange fluctuation reserve arising from
translation of foreign subsidiaries during
the year
-
-
Effect of adopting FRS (Note 5.3 (a)(i))
-
4,075,506
Share
premium
RM
42,600,000
Balance as at 1 July 2005
GROUP
Share
capital
RM
-
-
(4,433,214)
-
(4,433,214)
-
(4,433,214)
4,433,214
-
11,481
-
11,481
-
11,481
-
4,421,733
Negative
goodwill
RM
(70,777)
-
(91,646)
-
(91,646)
(91,646)
-
20,869
-
20,869
-
20,869
20,869
-
-
-
Exchange
fluctuation
reserve
RM
19,095,593
(2,671,872)
14,120,814
9,687,600
4,433,214
-
4,433,214
7,646,651
(2,453,760)
7,739,554
7,739,554
-
-
-
-
2,360,857
Retained
earnings
RM
65,700,322
(2,671,872)
9,595,954
9,687,600
(91,646)
(91,646)
-
58,776,240
(2,453,760)
7,771,904
7,739,554
32,350
20,869
11,481
-
53,458,096
Total
RM
4,396,423
-
939,178
1,024,108
(84,930)
(84,930)
-
3,457,245
-
315,133
293,417
21,716
21,716
-
3,142,112
-
Minority
interest
RM
70,096,745
(2,671,872)
10,535,132
10,711,708
(176,576)
(176,576)
-
62,233,485
(2,453,760)
8,087,037
8,032,971
54,066
42,585
11,481
3,142,112
53,458,096
Total
RM
Statements of Changes In Equity
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2007
35
Statements of Changes in Equity (continued)
Share
capital
RM
Share
premium
RM
Retained
earnings
RM
Total
RM
42,600,000
4,075,506
1,946,439
48,621,945
Net profit for the financial year
-
-
4,032,621
4,032,621
Dividends (Note 30)
-
-
(2,453,760)
(2,453,760)
42,600,000
4,075,506
3,525,300
50,200,806
Net profit for the financial year
-
-
18,004,372
18,004,372
Dividends (Note 30)
-
-
(2,671,872)
(2,671,872)
42,600,000
4,075,506
18,857,800
65,533,306
COMPANY
Balance as at 1 July 2005
Balance as at 30 June 2006
Balance as at 30 June 2007
The attached notes form an integral part of the financial statements.
36
Freight Managem e n t H o l d i n g s B h d
(380410-P)
Cash Flow Statements
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2007
2007
RM
Group
Company
2006
RM
(Restated)
2007
RM
2006
RM
(Restated)
13,690,991
11,061,094
24,603,342
5,680,169
797,751
529,117
-
-
required
(427,446)
(628,980)
-
-
for land
155,430
130,331
(7,910)
34,453
-
-
2,699,119
-
1,978,109
(111,910)
(25,944,500)
(6,000,000)
(130,097)
(113,129)
177,453
349,328
(308,006)
-
19,322
(160,287)
-
(159,573)
-
CASH FLOWS FROM OPERATING
ACTIVITIES
Profit before tax
Adjustments for:
Allowance for doubtful debts
Allowance for doubtful debts no longer
Amortisation of prepaid lease payment
Bad debts recovered
Bad debts written off
Depreciation of property, plant and
equipment
Dividends income
Gain on disposal of property, plant
and equipment
Impairment loss of other investment
Interest expense
Interest income
Loss on disposal of other investment
Loss on disposal of prepaid lease payment
for land
Property, plant and equipment written off
Share of (profit)/loss in an associate
Unrealised (gain)/loss on foreign currency
transactions
Operating profit/(loss) before working capital
changes
Increase in trade receivables
(Increase)/Decrease in other receivables,
deposits and prepayments
Increase in trade payables
(Decrease)/Increase in other payables
and accruals
Decrease/(Increase) in amount owing by an
associate
Cash generated from/(used in) operations
Interest paid
Tax paid
Tax refund
Net cash from/(used in) operating activities
annual repor t 2 0 0 7
(17,956)
4,180
1,211,680
(251,015)
22,792
78,016
56,627
(15,453)
151,850
18,367
-
-
(11,424)
(369,410)
-
7,850
17,863,195
12,890,757
(1,939,102)
(8,381,757)
-
1,252,064
(539,630)
(1,008,303)
2,171,640
18,190
-
(18,302)
-
(1,927,344)
2,715,976
58,907
151,754
18,156
(242,516)
-
-
14,727,339
8,145,797
(186,891)
(3,298,042)
-
11,242,406
(244,009)
(2,111,975)
1,508
5,791,321
(1,482,123)
(471,554)
-
(1,405,026)
(338,102)
(20,287)
-
(210,048)
-
(1,425,313)
(548,150)
37
Cash Flow Statements (continued)
2007
RM
Group
Company
2006
RM
(Restated)
2007
RM
2006
RM
(Restated)
-
(7)
(4,731,493)
CASH FLOWS FROM INVESTING
ACTIVITIES
Acquisition of subsidiaries
Acquisition of subsidiaries, net of cash and
cash equivalents acquired (Note 32)
Additional investment in subsidiary
Purchase of prepaid lease payment for land
Repayment from/(Advances to) subsidiaries
Dividends received
Interest received
Investment in unit trusts
Overpayment made for the purchase of
prepaid lease payment for land
Placements of Repo
(Placement)/Withdrawal of fixed deposits
pledged to licensed banks
Proceeds from disposal of prepaid lease
payment for land
Proceeds from disposal of other investments
Proceeds from disposal of property, plant
and equipment
Purchase of property, plant and equipment
(Note 33)
Withdrawals of Repo
(112,491)
251,015
-
(2,064,720)
(100,000)
106,941
308,006
(106,941)
(2,240,993)
1,152,539
5,275,710
160,287
-
(10,555,261)
4,320,000
159,573
-
131,900
(65,350,000)
(151,700,000)
(65,350,000)
(151,700,000)
400,754
-
-
2,025,115
1,125,229
-
-
-
233,333
133,368
-
151,700,000
(748,234)
(13,640,725)
65,350,000
(16,938,248)
151,700,000
65,350,000
(10,734,858)
(18,260,840)
4,347,536
(10,807,181)
Advances from subsidiaries
Advances from other payables
Dividends paid
Drawdown of term loans
Drawdown of banker acceptance
Repayment of term loans
Repayment of hire-purchase and lease
creditors
Interest paid
(1,243,920)
13,000,000
1,257,292
(1,606,710)
565,119
(3,680,640)
(325,621)
3,620,829
(1,243,920)
-
1,132,076
(3,680,640)
-
(585,627)
(1,024,789)
(452,766)
(105,319)
(19,322)
Net cash from/(used in) financing activities
9,796,246
(3,999,227)
2,357,587
(21,160)
5,279,810
Net cash (used in)/from investing activities
CASH FLOWS FROM FINANCING
ACTIVITIES
Exchange differences
(28,965)
Net increase/(decrease) in cash and cash
equivalents
10,274,829
(16,489,906)
Cash and cash equivalents at beginning
of financial year
(1,380,647)
15,124,630
Effect of changes in exchange
(5,858)
Cash and cash equivalents at end of
financial year (Note 34)
8,888,324
The attached notes form an integral part of the financial statements.
38
Freight Managem e n t H o l d i n g s B h d
(380410-P)
(2,548,564)
(13,903,895)
921,739
14,825,634
(15,371)
-
-
(1,380,647)
6,201,549
921,739
Notes to the Financial Statements
30 JUNE 2007
1.
CORPORATE INFORMATION
The Company is a public limited liability company, incorporated and domiciled in Malaysia and listed on the
Second Board of Bursa Malaysia Securities Berhad.
The registered office of the Company is located at Suite 13A-2, Menara Uni.Asia, 1008 Jalan Sultan Ismail,
50250 Kuala Lumpur.
The principal place of business of the Company is located at Lot 37, Lebuh Sultan Mohamed 1, Kawasan
Perindustrian Bandar Sultan Suleiman, 42000 Port Klang, Selangor Darul Ehsan.
The financial statements are presented in Ringgit Malaysia.
2.
PRINCIPAL ACTIVITIES
The principal activity of the Company is investment holding. The principal activities of the subsidiaries are
disclosed in Note 9 to the financial statements.
There have been no significant changes in the nature of these activities during the financial year, except for the
acquisition of a subsidiary as disclosed in Note 9 to the financial statements.
3.
BASIS OF PREPARATION OF THE FINANCIAL STATEMENTS
The financial statements of the Group and of the Company have been prepared in accordance with applicable
approved Financial Reporting Standards in Malaysia and the provisions of the Companies Act, 1965.
4.
SIGNIFICANT ACCOUNTING POLICIES
4.1
Basis of accounting
The financial statements of the Group and of the Company have been prepared under the historical cost
convention unless otherwise indicated in the significant accounting policies.
The preparation of financial statements in conformity with applicable approved Financial Reporting
Standards in Malaysia and the provisions of the Companies Act, 1965 requires the Directors to make
estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures
of contingent assets and liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. The area involving such judgements, estimates
and assumptions are disclosed in Note 6. Although these estimates and assumptions are based on the
Directors’ best knowledge of events and actions, actual results could differ from those estimates.
4.2
Basis of consolidation
The consolidated financial statements incorporate the financial statements of the Company and all its
subsidiaries made up to the end of the financial year using the purchase method of accounting.
Under the purchase method of accounting, the cost of business combination is measured at the
aggregate of fair value at the date of exchange, of assets given, liabilities incurred or assumed, and
equity instruments issued plus any costs directly attributable to the business combination.
At the acquisition date, the cost of business combination is allocated to identifiable assets, liabilities
and contingent liabilities in the business combination which are measured initially at their fair value at
the acquisition date. The excess of the cost of business combination over the Group’s interest in the
net fair value of the identifiable assets, liabilities and contingent liabilities is recognised as goodwill. If
the cost of business combination is less than the interest in the net fair value of the identifiable assets,
liabilities and contingent liabilities, the Group will:
(a)
reassess the identification and measurement of the acquiree’s identifiable assets, liabilities and
contingent liabilities and the measurement of the cost of the combination; and
(b)
recognise immediately in profit or loss any excess remaining after the reassessment.
annual repor t 2 0 0 7
39
Notes to the Financial Statements (continued)
4.
SIGNIFICANT ACCOUNTING POLICIES (continued)
4.2
Basis of consolidation (continued)
Where more than one exchange transaction is involved, any adjustment to the fair value of the subsidiary’s
identifiable assets, liabilities and contingent liabilities relating to previously held interests of the Group is
accounted for as a revaluation.
Subsidiaries are consolidated from the acquisition date, which is the date on which the Group effectively
obtains control, until the date on which the Group ceases to control the subsidiaries.
Intragroup balances, transactions and unrealised gains and losses on intragroup transactions are eliminated
in full. Intragroup losses may indicate an impairment that requires recognition in the consolidated financial
statements. If a subsidiary uses accounting policies other than those adopted in the consolidated financial
statements for like transactions and events in similar circumstances, appropriate adjustments are made to
its financial statements in preparing the consolidated financial statements.
The gain or loss on disposal of a subsidiary, which is the difference between the net disposal proceeds
and the Group’s share of its net assets as of the date of disposal including the carrying amount of goodwill
and the cumulative amount of any exchange differences that relate to the subsidiary, is recognised in the
consolidated income statement.
Minority interest is that portion of the profit or loss and net assets of a subsidiary attributable to equity
interests that are not owned, directly or indirectly through subsidiaries, by the Group. It is measured at the
minority’s share of the fair value of the subsidiaries’ identifiable assets and liabilities at the acquisition date
and the minority’s share of changes in the subsidiaries’ equity since that date.
Where losses applicable to the minority in a subsidiary exceed the minority interest in the equity of
that subsidiary, the excess and any further losses applicable to the minority are allocated against the
Group’s interest except to the extent that the minority has a binding obligation and is able to make
additional investment to cover the losses. If the subsidiary subsequently reports profits, such profits are
allocated to the Group’s interest until the minority’s share of losses previously absorbed by the Group
has been recovered.
Minority interest is presented in the consolidated balance sheet within equity and is presented in the
consolidated statement of changes in equity separately from equity attributable to equity holders of the
Company.
Minority interest in the results of the Group is presented in the consolidated income statement as an
allocation of the total profit or loss for the year between the minority interest and equity holders of the
Company.
4.3
Property, plant and equipment and depreciation
All items of property, plant and equipment are initially measurement at cost. Cost includes expenditure
that is directly attributable to the acquisition of the items.
Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset,
as appropriate, only when the cost is incurred and it is probable that the future economic benefits
associated with the item will flow to the Group and the cost of the item can be measured reliably.
The costs of the day-to-day servicing of property, plant and equipment are recognised in the income
statement as incurred. Cost also comprises the initial estimate of dismantling and removing the item
and restoring the site on which it is located for which the Group is obligated to incur when the item is
acquired.
Each part of an item of property, plant and equipment except for freehold land are stated at cost less
any accumulated deprecation and any accumulated impairment losses.
Depreciation on other property, plant and equipment is calculated on a straight line basis to write off the
costs of the assets to its residual value of these assets over their estimated useful lives. The principal
annual depreciation rates are as follows:
40
Freight Managem e n t H o l d i n g s B h d
(380410-P)
Notes to the Financial Statements (continued)
4.
SIGNIFICANT ACCOUNTING POLICIES (continued)
4.3
Property, plant and equipment and depreciation (continued)
Buildings
Machinery, furniture and fittings
Office equipment
Renovation
Motor vehicles
Forklifts
Storage containers
Tug boats and barges
2%
7.5% - 100%
7.5% - 100%
10% - 20%
12.5% - 20%
20%
10%
5%
Freehold land is not depreciated. Construction in progress represents the construction and renovationin-progress and is stated at cost. Construction in progress is not depreciated until such time when the
asset is available for use.
At each balance sheet date, the carrying amount of an item of property, plant and equipment is assessed
for impairment when events or changes in circumstances indicate that its carrying amount may not be
recoverable.
The residual values, useful lives and depreciation method are reviewed at each financial year end to
ensure that the amount, method and period of depreciation are consistent with previous estimates and
the expected pattern of consumption of the future economic benefits embodied in the items of property,
plant and equipment.
The carrying amount of an item of property, plant and equipment is derecognised on disposal or when
no future economic benefits are expected from its use or disposal. The difference between the net
disposal proceeds, if any and the carrying amount is included in profit or loss.
4.4
Non-current assets held for sale
Non-current assets are classified as held for sale if their carrying amounts will be recovered principally
through a sale transaction rather than through continuing use. For this to be the case, the asset must be
available for immediate sale in its present condition subject only to terms that are usual and customary
for sales of such assets and its sale must be highly probable.
Immediately before the initial classification as held for sale, the carrying amounts of the non-current
assets are measured in accordance with applicable FRSs. On initial classification as held for sale, noncurrent assets are measured at the lower of carrying amount immediately before the initial classification
as held for sale and fair value less costs to sell. Any differences are recognised in profit or loss as
impairment loss.
Non-current assets held for sale are classified as current assets on the face of the balance sheet and
are stated at the lower of carrying amount immediately before initial classification and fair value less
costs to sell and are not depreciated. Any cumulative income or expense recognised directly in equity
relating to the non-current asset classified as held for sale is presented separately.
4.5
Leases and hire-purchase
(a)
Finance leases and hire-purchase
Assets acquired under finance leases and hire-purchase which transfer substantially all the risks
and rewards of ownership to the Group are recognised initially at amount equal to the fair value
of the leased property, or if lower, the present value of the minimum lease payments, each
determined at the inception of the lease. The discount rate used in calculating the present value
of the minimum lease payments is the interest rate implicit in the leases, if this is practicable to
determine; if not, the Group’s incremental borrowing rate is used. Any initial direct costs incurred
by the Group are added to the amount recognised as an asset. The assets are capitalised
as property, plant and equipment and the corresponding obligations are treated as liabilities.
The property, plant and equipment capitalised are depreciated on the same basis as owned
assets.
annual repor t 2 0 0 7
41
Notes to the Financial Statements (continued)
4.
SIGNIFICANT ACCOUNTING POLICIES (continued)
4.5
Leases and hire-purchase (continued)
(a)
Finance leases and hire-purchase (continued)
The minimum lease payments are apportioned between the finance charge and the reduction of
the outstanding liability. The finance charges are recognised in profit and loss over the period of
the lease term so as to produce a constant periodic rate of interest on the remaining lease and
hire-purchase liabilities.
(b)
Operating leases
Lease payments under operating leases are recognised as an expense on a straight-line basis
over the lease term.
(c)
Leases of land
Leases of land are classified as operating or finance leases in the same way as leases of other
assets.
Leasehold land that normally has an indefinite economic life and where the lease does not
transfer substantially all the risk and rewards incidental to ownership is treated as an operating
lease. The lump-sum upfront lease payment made on entering into or acquiring leasehold land
is accounted as prepaid lease payments and is amortised over the lease term on a straight line
basis.
Prior to 1 October 2006, the Group had classified a lease of land as finance lease and had
recognised the amount of prepaid lease payments as property within its property, plant and
equipment. On adoption of FRS 117 leases, the Group treats such a lease as an operating lease,
with the unamortised carrying amount classified as prepaid lease payments in accordance with
the transitional provision in FRS 117. The effect of the change in accounting policy is disclosed
in Note 5.3(e)(i).
4.6
Investments
(i)
Subsidiaries
A subsidiary is an entity in which the Group and the Company has power to exercise control over
the financial and operating policies 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 has such power over another entity.
Investments in subsidiaries, which are eliminated on consolidation, are stated at cost less
impairment losses, if any, unless the investment is classified as held for sale, the difference
between the net disposal proceeds and their carrying amounts is included in the income
statement.
(ii)
Associate
An associate is an entity in which the Group and the Company have a long term equity interest
and where the Group and the Company is in a position to exercise significant influence over the
financial and operating policies of the investee company.
The Group’s investment in associate is stated at cost less impairment losses, if any, unless the
investment is classified as held for sale. On disposal of such investment, the difference between
the net proceeds and their carrying amounts is included in the income statement.
Investment in associate is accounted for in the consolidated financial statements using the equity
method of accounting. The Group’s interest in associate is stated at cost plus adjustments to
reflect changes in the Group’s share of profits and losses in the associate.
42
Freight Managem e n t H o l d i n g s B h d
(380410-P)
Notes to the Financial Statements (continued)
4.
SIGNIFICANT ACCOUNTING POLICIES (continued)
4.6
Investments (continued)
(ii)
Associate (continued)
Goodwill arising on acquisition of an associate is the excess of cost of investment over the
Group’s share of the net fair value of net assets of the associate’s identifiable assets, liability and
contingent liability at the date of acquisition.
Goodwill in relation to the associate is included in the carrying amount of the investment and is
not amortised. The excess of the Group’s share of the net fair value of the associate’s identifiable
assets, liabilities and contingent liability over the cost of investment is included as income
in determining the Group’s share of the associate’s profit and loss in the period in which the
investment is acquired. Negative goodwill arising on acquisition is not recognised as income.
The Group’s share of results and reserves less losses in the associate acquired or disposed of is
included in the consolidated financial statements from the effective date of acquisition or up to
the effective date of disposal.
The associate is accounted for using the equity method from the date significant influence
commences until the date the Group ceases to have significant influence over the associate.
When the Group’s share of losses in the associate equals or exceeds its interest in the associate,
the Group does not recognise further losses unless it has incurred legal or constructive
obligations or made payments on its behalf. The interest in the associate is the carrying amount
of the investment in the associate under the equity method together with any long-term interest
that, in substance, form part of the Group’s net interest in the associate.
Uniform accounting policies are adopted for like transactions and events in similar
circumstances.
Upon disposal of such investment, the difference between the net disposal proceeds and its
carrying amount is included in profit or loss.
(iii)
Other investments
Investments in shares, unit trusts and debentures held as long term investments are stated at
cost less impairment losses.
Short term investments are stated at the lower of cost and market value.
Upon disposal of such investment, the difference between net disposal proceeds and its carrying
amount is recognised in profit and loss.
4.7
Goodwill
Goodwill acquired in a business combination is recognised as an asset at the acquisition date and is
initially measured at cost being the excess of the cost of business combination over the Group’s interest
in the net fair value of the identifiable assets, liabilities and contingent liabilities. After initial recognition,
goodwill is measured at cost less accumulated impairment losses, if any. Goodwill is not amortised
but instead tested for impairment annually or more frequently if events or changes in circumstances
indicate that the carrying value may be impaired.
Prior to 1 July 2006, goodwill acquired in a business combination represented the excess of the cost of
combination over the Group’s share of the fair value of the identifiable assets and liabilities acquired at
the date of acquisition. Goodwill was subject to impairment testing whenever there was any indication
of impairment.
annual repor t 2 0 0 7
43
Notes to the Financial Statements (continued)
4.
SIGNIFICANT ACCOUNTING POLICIES (continued)
4.8
Impairment of non-financial assets
The carrying amounts of assets, except for financial assets (excluding investment in subsidiaries and
associates), deferred tax assets and non-current assets held for sale, are reviewed at each balance
sheet date to determine whether there is any indication of impairment. If any such indication exists, the
asset’s recoverable amount is estimated.
Goodwill and intangible assets that have an indefinite useful life are tested annually for impairment or
more frequently if events or changes in circumstances indicate that the goodwill or intangible asset
might be impaired.
The recoverable amount of an asset is estimated for an individual asset. Where it is not probable to
estimate the recoverable amount of the individual asset, the impairment test is carried out on the cash
generating unit (CGU) to which the asset belongs. Goodwill acquired in a business combination is
from the acquisition date, allocated to each of the Group’s CGU or groups of CGU that are expected to
benefit from the synergies of the combination giving rise to the goodwill irrespective of whether other
assets on liabilities of the acquiree are assigned to those units or groups of units.
The recoverable amount of an asset or CGU is the higher of its fair value less cost to sell and its value
in use.
In estimating the value in use, the estimated future cash inflows and outflows to be derived from
continuing use of the asset and from its ultimate disposal are discounted to their present value using a
pre-tax discount rate that reflects current market assessments of the time value of money and the risks
specific to the asset for which the future cash flow estimates have not been adjusted. An impairment
loss is recognised in the income statement when the carrying amount of the asset or the CGU, including
the goodwill or intangible asset, exceeds the recoverable amount of the asset or the CGU. The total
impairment loss is allocated, first, to reduce the carrying amount of any goodwill allocated to the CGU
and then to the other assets of the CGU on a pro-rate basis of the carrying amount of each asset in the
CGU.
The impairment loss is recognised in the income statement immediately except for the impairment on a
revalued asset where the impairment loss is recognised directly against the revaluation reserve account
to the extent of the surplus credited from the previous revaluation for the same asset with the excess of
the impairment loss charged to the income statement.
An impairment loss on goodwill is not reversed in subsequent periods. An impairment loss for other
assets is reversed if and only if there has been a change in the estimates used to determine the assets’
recoverable amount since the last impairment loss was recognised.
An impairment loss is only reversed to the extent that the asset’s carrying amount does not exceed the
carrying amount that would have been determined, net of depreciation or amortisation, if no impairment
loss had been recognised.
Such reversals are recognised as income immediately in the income statement.
4.9
Receivables
Receivables are carried at anticipated realisable value. Known bad debts are written off and specific
allowances are made for any debts which are considered doubtful of collection.
4.10
Payables
Payables are stated at cost which is the fair value of the consideration to be paid in the future for goods
and services rendered.
4.11
Provisions
Provisions are recognised when there is a present obligation, legal or constructive, as a result of a past
event, when 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.
44
Freight Managem e n t H o l d i n g s B h d
(380410-P)
Notes to the Financial Statements (continued)
4.
SIGNIFICANT ACCOUNTING POLICIES (continued)
4.11
Provisions (continued)
Where the effect of the time value of money is material, the amount of provision will be discounted to its
present value at a pre-tax rate that reflect current market assessment of the time value of money and
the risks specific to the liability.
4.12
Employee benefits
4.12.1 Short term employee benefits
Wages, salaries, social security contributions, paid annual leave, paid sick leave, bonuses and nonmonetary benefits are recognised as an expense in the financial year when employees have rendered
their services to the Group.
Short term accumulating compensated absences such as paid annual leave are recognised as an
expense when employees render services that increase their entitlement to future compensated
absences. Short term non-accumulating compensated absences such as sick leave are recognised
when the absences occur.
Bonuses are recognised as an expense when there is a present, legal or constructive obligation to
make such payments, as a result of past events and when a reliable estimate can be made of the
amount of the obligation.
4.12.2 Defined contribution plans
The Company and subsidiaries incorporated in Malaysia make contributions to a statutory provident
fund and foreign subsidiaries make contributions to their respective countries’ statutory pension
schemes and recognise the contribution payable:
(a)
(b)
4.13
after deducting contributions already paid as a liability; and
as an expense in the financial year in which the employees render their services.
Income taxes
Income taxes include all domestic and foreign taxes on taxable profit.
Taxes in the income statement comprise current tax and deferred tax.
(a)
Current tax
Current tax is the amount of income taxes payable or receivable in respect of the taxable profit
or loss for a period.
Current tax for the current and prior periods is measured at the amount expected to be recovered
from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount
are those that have been enacted or substantially enacted by the balance sheet date.
(b)
Deferred tax
Deferred tax, which includes deferred tax liabilities and assets, is provided for under the liability
method at the current tax rate in respect of all temporary differences between the carrying
amount of an asset or liability in the balance sheet and its tax base including unused tax losses
and capital allowances.
A deferred tax asset is recognised only to the extent that it is probable that taxable profit will
be available against which the deductible temporary differences can be utilised. The carrying
amount of a deferred tax asset is reviewed at each balance sheet date. If it is no longer probable
that sufficient taxable profit will be available to allow the benefit of part or all of the deferred tax
asset to be utilised, the carrying amount of the deferred tax asset will be reduced accordingly.
When it becomes probable that sufficient taxable profit will be available, such reductions will be
reversed to the extent of the taxable profit.
annual repor t 2 0 0 7
45
Notes to the Financial Statements (continued)
4.
SIGNIFICANT ACCOUNTING POLICIES (continued)
4.13
Income taxes (continued)
(b)
Deferred tax (continued)
Deferred tax assets and liabilities are offset when there is a legally enforceable right to set
off current tax assets against current tax liabilities and when the deferred tax assets and the
deferred tax liabilities relate to the same taxation authority.
4.14
Foreign currencies
4.14.1 Functional and presentation currency
The separate financial statements of each entity in the Group are measured using the functional
currency which is the currency of the primary economic environment in which the entity operates. The
consolidated financial statements are presented in Ringgit Malaysia (RM), which is also the Company’s
functional currency.
4.14.2 Foreign currency transactions and translations
A foreign currency transaction is recorded, on initial recognition in the functional currency, by applying
to the foreign currency amount the spot exchange rate between the functional currency and the foreign
currency at the date of the transaction.
At each balance sheet date, foreign currency monetary items are translated using the closing rates.
Non-monetary items that are measured in terms of historical cost in a foreign currency are translated
using the exchange rate at the date of the transaction. Non-monetary items that are measured at fair
value in a foreign currency are translated using the exchange rates at the date when the fair value was
determined.
Exchange differences arising on the settlement of monetary items or on translating monetary items at
rates different from those at which they were translated on initial recognition during the period or in
previous financial statements are recognised in profit or loss in the period in which they arise.
Exchange differences arising on a monetary item that forms part of a reporting entity’s net investment
in a foreign operation shall be recognised in profit or loss in the financial statements of the Company or
the individual financial statements of the foreign operation, as appropriate. In the consolidated financial
statements, such exchange differences are recognised initially in the exchange translation reserve
except for a monetary item that is denominated in a currency other than the functional currency of either
the reporting entity or the foreign operation, which exchange differences is recognised in profit or loss in
the consolidated financial statements. On the disposal of the foreign operation, the cumulative amount
of the exchange differences relating to the foreign operation is recognised in profit or loss when the gain
or loss on disposal is recognised.
Any goodwill arising on the acquisition of a foreign operation and any fair value adjustments to the
carrying amounts of assets and liabilities arising on the acquisition of a foreign operation is treated as
assets and liabilities of the foreign operation and is translated at the closing rate.
4.15
Revenue recognition
Revenue is measured at the fair value of the consideration received or receivable.
Revenue is recognised to the extent that it is probable that the economic benefits associated with the
transaction will flow to the Group and the amount of revenue and the cost incurred or to be incurred in
respect of the transaction can be reliably measured. The following specific recognition criteria must also
be met before revenue is recognised:
(a)
Revenue from services rendered
Revenue from freight and forwarding is recognised in the income statement when the services
are rendered. Income is recognised in the income statement on accrual basis.
46
Freight Managem e n t H o l d i n g s B h d
(380410-P)
Notes to the Financial Statements (continued)
4.
SIGNIFICANT ACCOUNTING POLICIES (continued)
4.15
Revenue recognition (continued)
(b)
Management fees
Management fees in respect of the rendering of management and consultation services to the
subsidiary companies are recognised on an accrual basis.
(c)
Dividend income
Dividend income is recognised when the shareholder’s right to receive payment is established.
4.16
Cash and cash equivalents
Cash and cash equivalents include cash and bank balances, bank overdraft, deposits and other
short term, highly liquidity investments which are readily convertible to cash and which are subject to
insignificant risk of changes in value.
4.17
Financial instruments
Financial instruments recognised on the balance sheets
(a)
Ordinary shares
Ordinary shares are recorded at the nominal value and proceeds in excess of the nominal value
of shares issued, if any are accounted for as share premium. Both ordinary shares and share
premium are classified as equity. Transaction costs of an equity transaction are accounted for as
a deduction from equity, net of any related income tax benefit. Otherwise, they are charged to
the income statement.
Dividends to shareholders are recognised in equity in the period in which they are declared.
Where the Company reacquires its own equity instrument, the consideration paid, including any
attributable transaction costs is deducted from equity as treasury shares until they are cancelled.
No gain or loss is recognised in profit or loss on the purchase, sale, issue or cancellation of the
Company’s own equity instruments. Where such shares are issued by resale, the difference
between the sales consideration and the carrying amount is shown as a movement in equity.
(b)
Interest bearing borrowings
Interest bearing borrowings are recorded at the amount of proceeds received and interest
accrued.
(c)
Other financial instruments
The accounting policies for other financial instruments recognised on the balance sheets are
disclosed in the individual policy associated with each item.
(d)
Borrowing costs
Interest expense relating to a financial instrument or a component part classified as a financial
liability is reported as finance costs in the income statement.
Costs incurred on borrowings to finance the acquisition, construction or production of a qualifying
asset is capitalised as part of the cost of the asset until when substantially all the activities
necessary to prepare the asset for its intended use or sale are complete, after which such
expense is charged to the income statements.
annual repor t 2 0 0 7
47
Notes to the Financial Statements (continued)
5.
ADOPTION OF NEW AND REVISED FINANCIAL REPORTING STANDARDS
5.1
New and revised FRSs adopted
On 1 July 2006, the Group and the Company adopted the following new and revised FRSs which are
effective for financial periods beginning on or after 1 January 2006. All new and revised standards
adopted by the Group and the Company require retrospective application unless otherwise stated.
FRS 2
FRS 3
FRS 5
FRS 101
FRS 102
FRS 108
FRS 110
FRS 116
FRS 121
FRS 127
FRS 128
FRS 131
FRS 132
FRS 133
FRS 136
FRS 138
FRS 140
Share-based Payment
Business Combinations
Non-current Assets Held for Sale and Discontinued Operations
Presentation of Financial Statements
Inventories
Accounting Policies, Changes in Estimates and Errors
Events after the Balance Sheet Date
Property, Plant and Equipment
The Effects of Changes in Foreign Exchange Rates
Consolidated and Separate Financial Statements
Investments in Associates
Interests in Joint Ventures
Financial Instruments: Disclosure and Presentation
Earnings per Share
Impairment of Assets
Intangible Assets
Investment Properties
IC Interpretation 107
IC Interpretation 110
IC Interpretation 112
IC Interpretation 113
IC Interpretation 115
IC Interpretation 121
IC Interpretation 125
IC Interpretation 127
IC Interpretation 129
IC Interpretation 131
IC Interpretation 132
IC Interpretation 201
Introduction of the Euro
Government Assistance – No Specific Relation to Operating Activities
Consolidation – Special Purpose Entities
Jointly Controlled Entities – Non-Monetary Contributions by Venturers
Operating Leases – Incentives
Income taxes – Recovery of Revalued Non-Depreciable Assets
Income Taxes – Changes in the Tax Status of an Entity or its Shareholders
Evaluating the Substance of Transactions Involving the Legal Form of a Lease
Disclosure – Service Concession Arrangements
Revenue – Barter Transactions Involving Advertising Services
Intangible Assets – Web Site Costs
Preliminary and Pre-operating Expenditure
The Group has chosen an early adoption of FRS 117 Leases which is only effective for annual periods
beginning on or after 1 October 2006 as it is relevant to their operations.
48
Freight Managem e n t H o l d i n g s B h d
(380410-P)
Notes to the Financial Statements (continued)
5.
ADOPTION OF NEW AND REVISED FINANCIAL REPORTING STANDARDS (continued)
5.2
New/Revised/Reformatted FRSs, amendments
Interpretations not adopted
to
FRSs
and
Issues
Committee
(“IC”)
At the date of authorisation of these financial statements, the following FRSs, amendments to FRSs and
IC Interpretations which have effective date as follows were in issue. The Group and the Company have
not elected to early adopt the following standards:
For financial
periods beginning
on or after
FRS 124 : Related Party Disclosures
FRS 6 : Exploration for and Evaluation of Mineral Resource
Amendment to FRS 121: The Effects of Changes in Foreign Exchange Rates
- net investment in foreign operation
FRS 107 : Cash Flow Statements
FRS 111 : Construction Contracts
FRS 112 : Income Taxes
FRS 118 : Revenue
FRS 119 : Employee Benefits
FRS 120 : Accounting for Government Grants and Disclosure of Government
Assistance
FRS 126 : Accounting and Reporting by Retirement Benefit Plans
FRS 129 : Financial Reporting in Hyperinflationary Economies
FRS 134 : Interim Financial Reporting
FRS 137 : Provisions, Contingent Liabilities and Contingent Assets
1 October 2006
1 January 2007
1 July 2007
1 July 2007
1 July 2007
1 July 2007
1 July 2007
1 July 2007
1 July 2007
1 July 2007
1 July 2007
1 July 2007
1 July 2007
IC Interpretation 1 : Changes in Existing Decommissioning, Restoration and
Similar Liabilities
1 July 2007
IC Interpretation 2 : Members’ Shares in Co-operative Entities and Similar
1 July 2007
Instruments
IC Interpretation 5 : Rights to Interests arising from Decommissioning, Restoration
1 July 2007
and Environmental Rehabilitation Funds
IC Interpretation 6 : Liabilities arising from Participating in a Specific MarketWaste Electrical and Electronic Equipment
1 July 2007
IC Interpretation 7 : Applying the Restatement Approach under FRS 1292004
1 July 2007
Financial Reporting in Hyperinflationary Economies
1 July 2007
IC Interpretation 8 : Scope of FRS 2
FRS 139 : Financial Instruments: Recognition and Measurement
Yet to determine
The adoption of the above is not expected to have any significant financial impact on the financial
statements of the Group and the Company upon their initial application.
By virtue of exemption provided for in FRS 124 and FRS 139, the impact of applying these standards
need not be disclosed.
5.3
Impact of new and revised FRSs adopted
The adoption of the above FRSs does not have significant financial impact on the Group and the
Company except FRSs as stated below:
(a)
FRS 101: Presentation of Financial Statements
(i)
Disclosure and presentation of minority interest
FRS 101 requires disclosure, on the face of the consolidated income statement, an allocation of
an entity’s profit or loss for the period between the profit or loss attributable to minority interest and
profit or loss attributable to equity holders of the parent. FRS 101 also requires minority interest to
be presented within total equity on the consolidated balance sheet at the balance sheet date.
Prior to 1 July 2006, minority interest was presented as an item of income or expense in the
consolidated income statement. Minority interest in the consolidated balance sheet was
presented separately from equity and liabilities.
annual repor t 2 0 0 7
49
Notes to the Financial Statements (continued)
5.
ADOPTION OF NEW AND REVISED FINANCIAL REPORTING STANDARDS (continued)
5.3
Impact of new and revised FRSs adopted (continued)
(a)
FRS 101: Presentation of Financial Statements (continued)
(ii)
Disclosure of judgements and estimates
FRS 101 requires disclosures of judgements made by management in the process of applying
the Group’s accounting policies that has the most significant effect in the amounts recognised in
the financial statements and the key assumptions concerning the future and other key sources of
estimation uncertainty at the balance sheet date that have a significant risk of causing a material
adjustment to the carrying amounts of assets and liabilities within the next financial year.
(iii)
Classification of financial liabilities
FRS 101 requires a financial liability due within the next 12 months or is payable on demand
whereby the entity does not have an unconditional right to defer settlement beyond the next 12
months after the balance sheet date be classified as a current liability even if an agreement to
refinance or reschedule payments, on a long-term basis is completed after the balance sheet
date and before the financial statements are authorised for issue.
FRS 101 also requires a long-term financial liability payable on demand because the entity has
breached a condition of its loan agreement on or before the balance sheet date to be classified
as a current liability at the balance sheet date even if, after the balance sheet date and before
the financial statement are authorised for issue, the lender had agreed not to demand payment
as a consequence of the breach.
Prior to 1 July 2006, all such liabilities were classified as non-current liabilities in the financial
statements. The change has no material impact on the financial statements of the Group and
the Company.
(iv)
Presentation of share of tax of an associate
FRS 101 requires the share of tax of an associate accounted for using the equity method be
included in the respective share of profit or loss reported in the consolidated income statement
before arriving at the Group’s profit or loss before tax.
Prior to 1 July 2006, the Group’s share of tax of an associate accounted for using the equity
method was included as part of the Group’s tax expense in the consolidated income statement.
All changes in presentation have been applied retrospectively. These changes in presentation
have no financial impact on the Company’s financial statements.
(b)
FRS 3: Business Combination
Excess of Group’s interest in the net fair value of acquiree’s identifiable assets, liabilities and
contingent liabilities over cost (previously known as negative goodwill).
Under FRS 3, any excess of the Group’s interest in the net fair value of an acquiree’s identifiable
assets, liabilities and contingent liabilities over the cost of business combinations, after
reassessment, is recognised immediately in profit or loss. Prior to 1 July 2006, negative goodwill
was not amortised and was presented as a separate item in equity. In accordance with transitional
provisions of FRS 3, negative goodwill as at 1 July 2006 of RM4,433,214 is derecognised with a
corresponding increase in retained earnings.
The change in accounting policy has no impact on amounts reported for 2005 or prior periods,
as the revised accounting policy has been applied prospectively. This change has no impact on
the Company’s financial statements.
50
Freight Managem e n t H o l d i n g s B h d
(380410-P)
Notes to the Financial Statements (continued)
5.
ADOPTION OF NEW AND REVISED FINANCIAL REPORTING STANDARDS (continued)
5.3
Impact of new and revised FRSs adopted (continued)
(c)
FRS 5: Non-current assets held for sale and discontinued operations
Under FRS 5, non-current assets held for sale are classified as current assets on the face of
the balance sheet and are stated at the lower of carrying amount immediately before initial
classification and fair value less costs to sell and are not depreciated.
Prior to 1 July 2006, non-current assets held for sale were neither classified nor presented as
current assets or liabilities. There were no differences in the measurement of non-current assets
held for sale.
The Group has applied FRS 5 prospectively in accordance with the transitional provisions. The
effects on the consolidated balance sheet as at 30 June 2007 are set out in Note 5.3 (e). This
change has no impact on the Group’s income statement for the year ended 30 June 2007.
(d)
FRS 117: Leases
Leasehold land held for own use
Under FRS 117, leasehold land held for own use is now classified as operating lease. The upfront payment made for the leasehold land represents prepaid lease payments that are amortised
on a straight line basis over the lease term. Prior to 1 October 2006, leasehold land held for own
use was classified as property, plant and equipment and was stated at cost less accumulated
depreciation and impairment losses.
In accordance with the transitional provision of FRS 117, the carrying amount of leasehold land
as at 1 July 2006 is retained as the surrogate carrying amount of prepaid lease payments.
The reclassification of leasehold land as prepaid lease payments has been accounted for
retrospectively. The effects on the consolidated balance sheet as at 30 June 2007 are set out in
Note 5.3(e)(i). There were no effects on the consolidated income statement for the year ended
30 June 2007 and the Group’s financial statements.
(e)
Summary of effects of adopting new and revised FRSs on the current year’s financial
statements
The following tables provide estimates of the extent to which each of the line items in the balance
sheet for the year ended 30 June 2007 is higher or lower than it would have been had the
previous policies been applied in the current year:
(i)
Effects on balance sheet as at 30 June 2007
GROUP
Retained earnings
Negative goodwill
Property, plant and equipment
Prepaid lease payment for land
Non-current asset classified as
held for sale
annual repor t 2 0 0 7
FRS 117
Note 5.3(d)
RM
(11,434,043)
11,434,043
-
FRS 5
Note 5.3(c)
RM
(5,266,067)
5,266,067
FRS 3
Note 5.3(b)
RM
4,433,214
(4,433,214)
-
Total
RM
4,433,214
(4,433,214)
(16,700,110)
11,434,043
5,266,067
51
Notes to the Financial Statements (continued)
6.
SIGNIFICANT ACCOUNTING ESTIMATES AND JUDGEMENTS
6.1
Critical judgements made in applying accounting policies
The following is the judgement made by management in the process of applying the Group’s accounting
policies that have the most significant effect on the amounts recognised in the financial statements.
(i)
Classification between non-current assets held for sale and property, plant and equipment
As mentioned in Note 5.3(c), the Group is actively searching for potential buyers for the properties,
as such, the Directors are of the opinion that it is appropriate to reclassify those properties as
non-current assets held for sale.
6.2
Key sources of estimation uncertainty
The following are key assumptions concerning the future and other key sources of estimation uncertainty
at the balance sheet date, that have a significant risk of causing a material adjustment to the carrying
amounts of assets and liabilities within the next year.
(i)
Impairment of goodwill on consolidation
The Group determines whether goodwill on consolidation is impaired at least on an annual basis.
This requires an estimation of the value-in-use of the subsidiary companies to which goodwill
is allocated. Estimating a value-in-use amount requires management to make an estimate of
the expected future cash flows from the subsidiary companies and also to choose a suitable
discount rate in order to calculate the present value of those cash flows. Further details are
disclosed in Note 13.
(ii)
Income tax
The Group has exposure to income taxes in numerous jurisdictions. Significant judgement is
involved in determining the group-wide provision for income taxes. There are certain transactions
and computations for which the final 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. The carrying amount of the Group’s tax payables at 30 June
2007 was RM673,014 (2006: RM532,467).
52
Freight Managem e n t H o l d i n g s B h d
(380410-P)
7.
annual repor t 2 0 0 7
(103,236)
35,466,481 16,659,736
Freehold land
Buildings
Machinery, furniture and fittings
Office equipment
Renovation
Motor vehicles
Forklifts
Storage containers
Tug boats and barges
(14,861)
(34,501)
(7,265)
-
(1,248)
(100,322)
(1,666)
(56,627)
-
(2,699,119)
(190,223)
(575,827)
(29,938)
(645,960)
(7,169)
(297,170)
(653,842)
(298,990)
-
Depreciation
Written
charge for
the year
off
RM
RM
-
Balance
as at
1.7.2006 Additions Disposals
RM
RM
RM
Freehold land
236,467
Buildings
5,902,586 9,079,722
Construction in progress 15,123,427
Machinery, furniture
and fittings
282,779 1,667,671
Office equipment
1,761,422 1,167,865
Renovation
44,574
268,338
Motor vehicles
1,844,399
576,393
Forklifts
8,727
6,550
Storage containers
1,936,502
Tug boats and barges 8,325,598 3,893,197
Carrying amount
2007
GROUP
PROPERTY, PLANT AND EQUIPMENT
(178,907)
635
3,221
(14)
5,474
(188,223)
-
-
37,963
-
15,075,451
(15,113,414)
Balance
as at
30.6.2007
RM
327,736
809,379
2,300,431
142,481
3,624,886
294,683
1,332,365
3,413,381
12,245,342
56,723,911
44,478,569
236,467
25,159,023
1,782,716
2,322,180
275,695
1,679,984
6,442
1,639,332
11,376,730
At 30.6.2007
Carrying
Accumulated
depreciation
amount
RM
RM
(4,599,746) 44,478,569
1,782,716
2,322,180
275,695
1,679,984
6,442
1,639,332
- 11,376,730
236,467
(4,599,746) 25,159,023
-
236,467
25,486,759
2,592,095
4,622,611
418,176
5,304,870
301,125
2,971,697
14,790,111
Cost
RM
(10,013)
-
(10,013)
Reclassified
Reclassified
as prepaid as non-current
Re- lease payment
assets held
Translations
for land
for sale
adjustments classification
RM
RM
RM
RM
Notes to the Financial Statements (continued)
53
7.
54
Freight Managem e n t H o l d i n g s B h d
(380410-P)
Freehold land
Buildings
Construction in progress
Machinery, furniture and fittings
Office equipment
Renovation
Motor vehicles
Forklifts
Storage containers
Tug boats and barges
Freehold land
Buildings
Construction in progress
Machinery, furniture and fittings
Office equipment
Renovation
Motor vehicles
Forklifts
Storage containers
Tug boats and barges
Carrying amount
2006
GROUP
12,553
7,426,590
7,439,143
12,438,728
Balance
as at Subsidiaries
1.7.2005
acquired
RM
RM
236,467
6,041,531
235,397
1,697,231
60,310
1,881,714
43,812
2,242,266
-
PROPERTY, PLANT AND EQUIPMENT (continued)
17,667,541
15,123,427
164,799
647,772
657,638
1,073,905
Additions
RM
(20,239)
(2,402)
(3,544)
(6,042)
(8,251)
-
Disposals
RM
(151,850)
(12,302)
(48,087)
(91,461)
-
Written
off
RM
71,267
90
573
275
70,329
35,466,481
236,467
5,902,586
15,123,427
282,779
1,761,422
44,574
1,844,399
8,727
1,936,502
8,325,598
Balance
as at
30.6.2006
RM
1,044,596
676,779
2,114,845
130,011
3,229,785
547,125
1,035,194
2,839,953
11,618,288
236,467
6,947,182
15,123,427
959,558
3,876,267
174,585
5,074,184
555,852
2,971,696
11,165,551
47,084,769
35,466,481
236,467
5,902,586
15,123,427
282,779
1,761,422
44,574
1,844,399
8,727
1,936,502
8,325,598
At 30.6.2006
Carrying
Accumulated
Cost depreciation
amount
RM
RM
RM
(1,978,109)
(138,945)
(102,803)
(548,620)
(15,736)
(600,223)
(29,043)
(297,513)
(245,226)
Depreciation
charge for Translations
the year adjustments
RM
RM
Notes to the Financial Statements (continued)
Notes to the Financial Statements (continued)
7.
PROPERTY, PLANT AND EQUIPMENT (continued)
Property, plant and equipment pledged as securities for banking facilities granted to the Group are as
follows:
2007
RM
Group
2006
RM
At net book value
Construction in progress
Freehold land
Buildings
Barges
236,467
25,159,023
7,744,823
15,123,427
236,467
5,759,740
6,325,981
33,140,313
27,445,615
The net book values of property, plant and equipment acquired by way of hire-purchase and lease arrangements
are as follows:
2007
RM
Motor vehicles
Office equipments
8.
Group
2006
RM
1,295,894
192,855
1,517,319
-
1,488,749
1,517,319
PREPAID LEASE PAYMENTS FOR LAND
GROUP
Balance
as at
1.7.2006
RM
Addition
RM
ReclassiDisposal
fication
RM
RM
Over
payment
RM
Amortisation
charge for
the year
RM
Balance
as at
30.6.2007
RM
Carrying amount
Long term leasehold
land
14,368,320 112,491 (2,103,131)
GROUP
(656,307)
Balance
as at
1.7.2005
RM
(131,900)
(155,430) 11,434,043
Amortisation
charge for
the year
Addition
RM
RM
Balance
as at
30.6.2006
RM
Carrying amount
Long term leasehold
land
2,920,579 11,578,072
(130,331) 14,368,320
Prepaid lease payment for land has been pledged as securities for banking facilities granted to the Group.
The title deeds for long leasehold land of subsidiaries have yet to be issued by the relevant authorities.
annual repor t 2 0 0 7
55
Notes to the Financial Statements (continued)
9.
INVESTMENT IN SUBSIDIARIES
Company
2007
2006
RM
RM
Unquoted shares - at cost
35,828,410
33,587,410
The details of the subsidiaries are as follows:
Country of
incorporation
Name of company
Interest in equity
held by
Company
2007
2006
Citra Multimodal Services Sdn. Bhd.
Malaysia
100%
100%
Provision of freight
services
FM-Hellmann Worldwide Logistics
Sdn. Bhd.
Malaysia
100%
100%
Provision of freight
services
FM Worldwide Logistics (Penang)
Sdn. Bhd.
Malaysia
100%
100%
Provision of freight
services
Freight Management (Ipoh)
Sdn. Bhd.
Malaysia
100%
100%
Provision of freight
services
Freight Management (M) Sdn. Bhd.
Malaysia
100%
100%
Provision of freight
services
Freight Management (Melaka)
Sdn. Bhd.
Malaysia
100%
100%
Provision of freight
services
Freight Management (Penang)
Sdn. Bhd.
Malaysia
100%
100%
Provision of freight
services
Advance International Freight
Sdn. Bhd.
Malaysia
100%
100%
Provision of freight
services
Perspektif Gemilang Sdn. Bhd.
Malaysia
100%
100%
Investment holding
#TCH Marine Pte. Ltd.
Singapore
51%
51%
Charterer of barges and
tugboats
FM Marine Pte. Ltd.
Singapore
100%
-
Malaysia
100%
100%
Icon Line (Malaysia) Sdn. Bhd.
Country of
incorporation
Name of company
Subsidiary of Icon Line
(Malaysia) Sdn. Bhd.
#Icon Freight Services Pty. Ltd.
Australia
Interest in equity
held by
Company
2007
2006
55%
# Subsidiaries not audited by member firms of BDO International.
56
Principal activities
Freight Managem e n t H o l d i n g s B h d
(380410-P)
55%
Dormant
Provision of freight
services
Principal activities
Provision of integrated
freight and logistic
services
Notes to the Financial Statements (continued)
9.
INVESTMENT IN SUBSIDIARIES (continued)
During the financial year, the Company acquired 100% equity interest in FM Marine Pte. Ltd. comprising 3
ordinary shares of SGD1 each for a cash consideration of SGD3 or equivalent to RM7.
The Company thereafter subscribed for an additional 999,997 new ordinary shares of SGD1 each paid by way
of cash consideration of SGD999,997 or equivalent to RM 2,240,993.
The effect of this acquisition has no material impact to the financial statements of the Group.
During the last financial year, the Group acquired the following:
(a)
Icon Line (Malaysia) Sdn. Bhd. acquired 55% equity interest in Icon Freight Services Pty. Ltd. comprising
82,500 ordinary shares of AUD1.00 each for a cash consideration of AUD82,500 or equivalent to
RM236,115 on 14 July 2005.
(b)
The Company acquired 51% equity interest in TCH Marine Pte. Ltd. comprising 2,053,000 ordinary
shares of SGD1 each for a cash consideration of SGD2,053,000 or equivalent to RM4,704,705 and
direct cost attributed to the acquisition amounting to RM26,790 on 3 March 2006.
The Company nominated Icon Line (Malaysia) Sdn. Bhd., a wholly-owned subsidiary of the Company
to hold one ordinary share of SGD1 each in TCH Marine Pte. Ltd. for a cash consideration of SGD1 or
equivalent to RM2.
The effect of these acquisitions on the financial results of the Group was as follows:
2006
RM
Revenue
Operating costs
Other operating income
Increase in Group’s profit after tax
11,822,192
(11,226,336)
26,791
622,647
The effect of these acquisitions on the financial position of the Group at the end of the previous financial year
was as follows:
2006
RM
Property, plant and equipment
Receivables
Tax recoverable
Cash and bank balances
Payables
Hire-purchase and lease creditors
Term loans
Bank overdrafts
Increase in Group’s net assets
annual repor t 2 0 0 7
8,497,586
3,805,922
461
1,105,084
(2,926,441)
(83,569)
(2,972,714)
(208,687)
7,217,642
57
Notes to the Financial Statements (continued)
10.
INVESTMENT IN AN ASSOCIATE
2007
RM
Unquoted shares, at cost
Group’s share of post acquisition results
Group
2006
RM
49,000
88,209
49,000
72,756
137,209
121,756
The detail of the associate, which was incorporated in Malaysia, is as follows:
Interest in equity held by Group
Name of company
2007
2006
Principal activity
FM Distribution Sdn. Bhd.
49%
49%
Provision of warehouse services
The summarised financial information of the associate is as follows:
2007
RM
Assets and liabilities
Total assets
Total liabilities
1,601,984
31,536
1,476,166
79,948
OTHER INVESTMENTS
2007
RM
Group
2006
RM
Unquoted shares in Malaysia - at cost
Unit trusts in Malaysia - at cost
2,776
-
2,776
1,406,941
Less: Impairment loss
2,776
-
1,409,717
(258,920)
2,776
1,150,797
-
1,148,021
Market value of unit trusts in Malaysia
12.
2006
RM
709,745
(600,763)
666,762
(526,244)
Results
Revenue
Profit for the financial year
11.
Group
AMOUNTS OWING BY/(TO) SUBSIDIARIES
Current
The amounts owing by/(to) subsidiaries represent advances and payments on behalf which are unsecured and
repayable on demand. Amount owing by subsidiaries are interest-free, except for an amount of RM435,694
(2006: Nil) which bears interest at rates of 7.75% (2006: Nil) per annum.
Non-current
The amount owing by subsidiaries represent advances which are unsecured, interest-free and repayable after
12 months. Amount owing by subsidiaries are interest-free, except for an amount of RM870,782 (2006: Nil)
which bears interest at rates of 7.75% (2006: Nil) per annum.
58
Freight Managem e n t H o l d i n g s B h d
(380410-P)
Notes to the Financial Statements (continued)
13.
GOODWILL ON CONSOLIDATION
Group
2007
RM
2006
RM
1,674,226
-
Transfer from reserve on consolidation
-
11,481
Goodwill arising on acquisition of subsidiary companies
-
1,662,745
1,674,226
1,674,226
As at beginning of the financial year
As at end of the financial year
The recoverable amount of goodwill as at the end of the financial year was determined based on a value in use
calculation by discounting the future cash flows generated from the continuing use of the cash-generating unit
(“CGU”) and was based on the following assumptions:
(i)
Pre-tax cash flow projections based on the most recent financial budgets approved by the Directors
covering a five year period.
(ii)
Pre-tax discount rate of 6.35% was applied in determining the recoverable amount of CGU. The discount
rate was estimated based on the Group’s weighted average cost of debts.
The management believes that no reasonably possible change in any of the above key assumptions would
cause the carrying values of the units to materially exceed their recoverable amounts.
14.
TRADE RECEIVABLES
2007
RM
Trade receivables
Less: Allowance for doubtful debts
Group
2006
RM
34,734,751
(634,599)
32,931,762
(679,574)
34,100,152
32,252,188
The allowance for doubtful debts is net of bad debts written off as follows:
2007
RM
Bad debts written off
173,771
Group
2006
RM
97,828
The credit terms of trade receivables range from 7 to 70 days from date of invoice.
annual repor t 2 0 0 7
59
Notes to the Financial Statements (continued)
15.
OTHER RECEIVABLES, DEPOSITS AND PREPAYMENTS
2007
RM
Other receivables
Less: Allowance for
doubtful debts
Company
2006
RM
2007
RM
1,808,119
43
6,520
-
-
-
1,092,881
599,966
1,285,576
1,808,119
382,476
513,367
43
1,000
5,229
6,520
1,000
16,942
2,978,423
2,703,962
6,272
24,462
1,329,603
(236,722)
Deposits
Prepayments
16.
Group
2006
RM
AMOUNT OWING BY AN ASSOCIATE
The amount owing by an associate represents trade transactions and payment on behalf which are unsecured,
interest-free and repayable on demand except for trade transactions which have a credit term of 30 days from
the date of invoices.
17.
FIXED DEPOSITS WITH LICENSED BANKS
The fixed deposits of the Group as at 30 June 2007 have maturity period of 12 months.
Included in the fixed deposits with licensed banks is an amount of RM3,331,140 (2006: RM2,582,906) which
has been pledged to licensed banks as securities for banking facilities granted to the Group.
Included in the fixed deposits with licensed banks is an amount of RM120,048 (2006: RM115,764) held in trust
by certain Directors of a subsidiary company.
18.
NON-CURRENT ASSET CLASSIFIED AS HELD FOR SALE
Certain asset of the Group is presented as non-current asset held for sale following the Group management’s
commitment to sell off the asset. As at 30 June 2007, the asset of the non-current asset is as follows:
Group
2007
RM
Non-current asset classified as held for sale
Property, plant and equipment (Note 7)
Prepaid lease payment for land
4,599,746
666,320
5,266,066
19.
SHARE CAPITAL
Number
of shares
2007
Group and Company
2006
RM
Number
of shares
200,000,000
100,000,000
200,000,000
100,000,000
85,200,000
42,600,000
85,200,000
42,600,000
RM
Ordinary shares of RM0.50 each:
Authorised
Issued and fully paid up
60
Freight Managem e n t H o l d i n g s B h d
(380410-P)
Notes to the Financial Statements (continued)
19.
SHARE CAPITAL (continued)
Employees’ Share Option Scheme
The Employees’ Share Option Scheme (“ESOS”) of the Company was approved by its shareholders at an
Extraordinary General Meeting held on 26 November 2004 and came into effect on 28 January 2005. The
ESOS should be in force for a period of 5 years until 27 January 2010 (“the option period”). However, as
disclosed in Note 43 to the financial statements, the ESOS was terminated on 8 December 2006 pursuant to
the approval of the shareholders at the Annual General Meeting.
The details of the options over ordinary shares of the Company are as follows:
Date of offer
28 January 2005
Option
price
RM
Number of options over ordinary shares of RM0.50 each
Balance
Terminated
Balance
as at
during
as at
1.7.2006
the year
30.6.2007
0.65
4,678,000
(4,678,000)
-
The Company has been granted exemption by the Companies Commission of Malaysia in the previous year
from having to disclose the full list of option holders and their holdings except for eligible employees with
allocation of 200,000 options and above, which are as follows:
Option
price
RM
Number of options over ordinary shares of RM0.50 each
Balance
Terminated
Balance
as at
during the
as at
1.7.2006
year
30.6.2007
Name of option holders
Chew Chong Keat
Yang Heng Lam
Gan Siew Yong
Ong Looi Chai
Teh Swee Sim
20.
0.65
0.65
0.65
0.65
0.65
200,000
200,000
200,000
200,000
200,000
(200,000)
(200,000)
(200,000)
(200,000)
(200,000)
-
RESERVES
2007
RM
Group
Company
2006
RM
2007
RM
2006
RM
(70,777)
4,075,506
-
20,869
4,075,506
4,433,214
4,075,506
-
4,075,506
-
4,004,729
8,529,589
4,075,506
4,075,506
19,095,593
7,646,651
18,857,800
3,525,300
23,100,322
16,176,240
22,933,306
7,600,806
Non distributable:
Exchange fluctuation reserve
Share premium
Negative goodwill
Distributable:
Retained earnings
The movements in reserves are shown in the Statements of Changes in Equity.
Subject to the agreement of the Inland Revenue Board, the Company has:
(i)
sufficient tax credit under Section 108 of the Income Tax Act, 1967 to frank the payment of the dividends
out of all its retained earnings without incurring additional tax liability.
(ii)
tax exempt account of approximately RM36,000 (2006: RM718,000) for distribution of tax exempt
dividends.
annual repor t 2 0 0 7
61
Notes to the Financial Statements (continued)
20.
RESERVES (continued)
The subsidiaries have tax exempt accounts totalling to approximately RM11,479,000 (2006: RM9,029,900)
available for the distribution of tax exempt dividends which is restricted to the available retained earnings of
approximately RM2,637,000 (2006: RM725,000) as at 30 June 2007.
21.
HIRE-PURCHASE AND LEASE CREDITORS
Group
2007
RM
2006
RM
460,659
674,397
460,345
577,981
Less: Future interest charges
1,135,056
(93,164)
1,038,326
(87,180)
Present value of hire-purchase and lease liabilities
1,041,892
951,146
Current liabilities:
- not later than one year
409,966
416,518
Non-current liabilities:
- later than one year and not later than five years
631,926
534,628
1,041,892
951,146
Minimum hire-purchase and lease payments:
- not later than one year
- later than one year and not later than five years
Repayable as follows:
22.
TERM LOANS - SECURED
2007
RM
Term loan I
Term loan II
Term loan III
Term loan IV
Term loan V
Term loan VI
Term loan VII
62
Freight Managem e n t H o l d i n g s B h d
(380410-P)
Group
2006
RM
36,259
21,563
1,643,482
2,186,987
4,868,279
7,930,680
59,488
407,066
287,272
2,278,376
-
16,687,250
3,032,202
Notes to the Financial Statements (continued)
22.
TERM LOANS - SECURED (continued)
2007
RM
Group
2006
RM
Term loans are repayable as follows:
Current liabilities:
- not later than one year
Non-current liabilities:
- later than one year and not later than two years
- later than two years and not later than five years
- later than five years
(i)
1,624,088
1,289,849
1,650,652
3,163,602
10,248,908
641,692
1,100,661
-
15,063,162
1,742,353
16,687,250
3,032,202
Term loan I is repayable in 72 equal monthly instalments of RM2,273. The interest charged is 1.50% per
annum above the bank’s base lending rate.
The term loan is secured by way of:
(a)
(b)
(c)
(ii)
a fixed charge over the building of a subsidiary;
corporate guarantee by a subsidiary; and
personal guarantee by one of the directors of a subsidiary.
Term loan II has been fully settled during the current financial year. Term loan III is repayable by 18
monthly instalment of SGD10,138 which is equivalent to RM22,618 (2006: RM23,175). Term loan IV
and V are repayable by 48 monthly instalments of SGD24,484 and SGD24,543 which is equivalent
to RM54,624 (2006: RM55,970) and RM54,756 (2006: Nil) respectively. Term loan III and IV bearing
interest at a flat rate of 3.25% per annum and term loan V is charged at 1.25% per annum above the
bank’s prime rate.
The term loans III, IV and V are secured by way of:
(a)
(b)
(iii)
charge over an open mortgage of a subsidiary’s barges; and
personal guarantee by one of the directors of a subsidiary.
Term loan VI and VII are payable by 180 monthly instalment of RM41,400 and RM66,200 respectively
and is charged at 2.0% per annum above the effective cost of fund.
The term loan VI and VII are secured by way of:
(a)
(b)
annual repor t 2 0 0 7
a charged over prepaid lease payment for land of the subsidiary; and
corporate guarantee by the Company.
63
Notes to the Financial Statements (continued)
23.
DEFERRED TAX LIABILITIES
(a)
The deferred tax liabilities are made up of the following:
2007
RM
Balance as at 1 July 2006/2005
2,045,400
Recognised in the income statement (Note 29)
- current year
- under/(over) provision in prior year
Balance as at 30 June 2007/2006
736,227
16,173
Group
2006
RM
1,745,000
317,101
(16,701)
Company
2007
2006
RM
RM
-
-
4,900,000
-
-
2,797,800
2,045,400
4,900,000
-
(94,000)
2,891,800
(94,000)
2,139,400
4,900,000
-
2,797,800
2,045,400
4,900,000
-
Presented after appropriate offsetting:
Deferred tax asset
Deferred tax liabilities
(b)
The movements of deferred tax asset and liabilities during the financial year prior to offsetting are as
follows:
2007
RM
Group
2006
RM
Company
2007
2006
RM
RM
Deferred tax asset
Balance as at 1 July 2006/2005
Recognised in the income statement Unabsorbed
capital allowances
Balance as at 30 June 2007/2006
94,000
92,000
-
-
-
2,000
-
-
94,000
94,000
-
-
2,139,400
1,837,000
-
-
-
-
4,900,000
-
209,400
93,000
-
-
2,139,400
4,900,000
-
Deferred tax liabilities
Balance as at 1 July 2006/2005
Recognised in the income statement Dividend
receivables
Excess of capital allowances over corresponding
depreciation
Unrealised gain on foreign currency transactions
Balance as at 30 June 2007/2006
64
Freight Managem e n t H o l d i n g s B h d
(380410-P)
759,180
(6,780)
2,891,800
Notes to the Financial Statements (continued)
23.
DEFERRED TAX LIABILITIES (continued)
(c)
The component of deferred tax asset and liabilities as at the end of the financial year comprise tax effect of:
2007
RM
Deferred tax asset
Unabsorbed capital allowances
Deferred tax liabilities
Dividend receivables
Excess of capital allowances over corresponding
depreciation
Unrealised gain on foreign
currency transactions
(d)
2006
RM
Company
2007
2006
RM
RM
94,000
94,000
-
-
-
-
4,900,000
-
2,898,580
2,046,400
-
-
93,000
-
-
(6,780)
The amount of temporary differences for which no deferred tax assets have been recognised in the
balance sheet are as follows:
2007
RM
Unabsorbed tax losses
Unabsorbed capital allowances
24.
Group
Group
2006
RM
Company
2007
2006
RM
RM
265,000
162,000
255,000
166,000
-
-
427,000
421,000
-
-
TRADE PAYABLES
The credit terms of trade payables range from 7 to 90 days from date of invoice.
25.
OTHER PAYABLES AND ACCRUALS
2007
RM
Other payables
Accruals
26.
Group
2006
RM
Company
2007
2006
RM
RM
1,696,682
3,788,025
2,139,027
5,242,805
365,968
307,061
5,484,707
7,381,832
365,968
307,061
BANK OVERDRAFTS - SECURED
The bank overdrafts of the Group are secured by way of:
(a)
(b)
(c)
(d)
fixed deposits;
freehold land and building, long leasehold land and building and barges of the Group;
personal guarantee by one of the directors of a subsidiary; and
corporate guarantee by the Company.
annual repor t 2 0 0 7
65
Notes to the Financial Statements (continued)
27.
REVENUE
2007
RM
Rendering of services
Dividends income
Management fees
28.
Group
Company
2006
RM
2007
RM
2006
RM
188,079,313
-
160,831,784
-
25,944,500
1,180,000
6,000,000
1,698,000
188,079,313
160,831,784
27,124,500
7,698,000
PROFIT BEFORE TAX
Group
Company
2007
RM
2006
RM
2007
RM
2006
RM
797,751
177,453
529,117
-
-
155,430
130,331
-
-
158,112
5,255
4,180
94,334
34,453
39,800
5,000
-
25,000
1,000
-
2,699,119
1,978,109
-
-
282,000
93,700
231,000
97,200
282,000
-
231,000
-
33,000
3,889,817
26,000
3,341,211
33,000
-
26,000
-
185,799
67,880
958,001
-
244,009
62,159
43,160
-
19,322
-
22,792
-
-
-
78,016
-
-
-
56,627
52,992
504,641
151,850
65,872
47,082
424,076
-
-
36,269
-
-
-
7,850
Profit before tax is arrived
at after charging:
Impairment loss of other
investment
Allowance for doubtful debts
Amortisation of prepaid lease
payment for land (Note 8)
Auditors’ remuneration:
- current year
- under provision in prior year
Bad debts written off
Depreciation of property, plant and
equipment (Note 7)
Directors’ remuneration:
Fees:
- payable by the Company
- payable by the subsidiaries
Other emoluments:
- paid by the Company
- paid by the subsidiaries
Interest expense on:
- bank overdrafts
- hire-purchase and lease
- term loans
- advances from subsidiary
Loss on disposal of other
investment
Loss on disposal of prepaid
lease payment for land
Property, plant and
equipment written off
Rental of containers
Rental of office equipment
Rental of premises
Loss on foreign currency
transactions:
- realised
- unrealised
66
Freight Managem e n t H o l d i n g s B h d
(380410-P)
Notes to the Financial Statements (continued)
28.
PROFIT BEFORE TAX (continued)
2007
RM
Group
Company
2006
RM
2007
RM
2006
RM
427,446
17,956
628,980
7,910
-
-
-
111,910
25,944,500
-
6,000,000
-
130,097
113,129
-
-
11,424
1,174,818
369,410
7,850
-
-
203,667
21,425
25,923
216,853
91,153
-
76,871
8,345
75,071
-
108,285
51,288
-
517,500
498,500
1,180,000
-
1,698,000
-
2007
RM
2006
RM
2007
RM
2006
RM
2,251,519
736,227
2,727,000
317,101
1,670,000
4,900,000
1,643,000
-
2,987,746
3,044,101
6,570,000
1,643,000
(24,636)
16,173
(9,025)
(16,701)
28,970
-
4,548
-
(8,463)
(25,726)
28,970
4,548
6,598,970
1,647,548
And crediting:
Allowance for doubtful
debts no longer required
Bad debts recovered
Dividends received from
- subsidiaries
- investment in unit trusts
Gain on disposal of
property, plant and
equipment
Gain on foreign currency
transactions:
- realised
- unrealised
Interest income on:
- fixed deposits and Repo
- saving accounts
- advances to subsidiaries
- foreign current accounts
Management fees received
from subsidiaries
Rental income
29.
TAX EXPENSE
Group
Company
Current tax expense based on
profit for the financial year:
- income tax
- deferred tax (Note 23)
(Over)/Under provision in
prior year:
- income tax
- deferred tax (Note 23)
2,979,283
3,018,375
Subject to the agreement of the Inland Revenue Board, the Group has unutilised capital allowances amounting to
RM657,000 (2006: RM502,000) and unabsorbed business losses amounting to RM265,000 (2006: RM255,000)
available to be set off against future taxable income.
annual repor t 2 0 0 7
67
Notes to the Financial Statements (continued)
29.
TAX EXPENSE (continued)
The numerical reconciliation between the average effective tax rate and the applicable tax rate of the Group
and of the Company is as follows:
2007
%
Applicable tax rate
Tax effects in respect of:
Non allowable expenses
Non taxable income
Lower tax rate in foreign
jurisdiction
Utilisation of previously unrecognised
tax losses and capital allowances
Exempt shipping income
Reduction in opening deferred tax
resulting from reduction in tax rate
Reduction in statutory tax rate
on chargeable income up to
RM500,000 for certain subsidiaries
(Over)/ Under provision in
prior year
Average effective tax rate
30.
Group
Company
2006
%
2007
%
27.00
28.00
27.00
28.00
3.42
(0.39)
4.75
(0.59)
0.50
(0.04)
0.93
-
(1.29)
(0.56)
-
-
(0.56)
(2.54)
(0.13)
(1.27)
-
-
(2.05)
-
(1.75)
(2.66)
21.84
(0.76)
2006
%
-
-
-
27.54
26.70
28.93
(0.08)
(0.23)
0.12
0.08
21.76
27.31
26.82
29.01
Group and Company
2007
Gross/tax
Amount
exempt
of dividend
dividend
net of tax
per share
RM
sen
2006
Amount
of dividend
net of tax
RM
DIVIDENDS
Gross/tax
exempt
dividend
per share
sen
Final dividend, less tax, in respect of
the financial year ended 30 June
2006/ 2005
2.0
1,243,920
2.0
1,226,880
1.2
0.8
746,352
681,600
2.0
-
1,226,880
-
2.0
1,427,952
2.0
1,226,880
4.0
2,671,872
4.0
2,453,760
Interim dividend in respect of the
financial year ended 30 June 2007/
2006
- less tax
- tax exempt
A final dividend in respect of the year ended 30 June 2007 of 2 sen per ordinary share, less tax, amounting
to RM1,260,960 has been proposed by the Directors after the balance sheet date for shareholders’ approval
at the forthcoming Annual General Meeting. The financial statements for the current year do not reflect this
proposed dividend. This dividend, if approved by shareholders, will be accounted for as an appropriation of
retained earnings in the year ending 30 June 2008.
68
Freight Managem e n t H o l d i n g s B h d
(380410-P)
Notes to the Financial Statements (continued)
31.
EARNINGS PER ORDINARY SHARE
Basic earnings per ordinary share
The basic earnings per ordinary share for the financial year is calculated by dividing the profit for the financial
year to ordinary equity holders of the Company by the weighted average number of ordinary shares outstanding
during the financial year.
2007
Profit attributable to equity holders of the Company (RM)
Weighted average number of ordinary shares outstanding
Basic earnings per ordinary share (sen)
Group
2006
9,687,600
7,739,554
85,200,000
85,200,000
11.37
9.08
Diluted earnings per ordinary share
Diluted earning per ordinary share for the financial year is calculated by dividing the profit for the financial
year attributable to ordinary equity holders of the Company by weighted average number of ordinary shares
outstanding during the year adjusted for the effects of dilutive options potential ordinary shares.
However, as disclosed in Note 43 to the financial statements, the ESOS was terminated on 8 December 2006
pursuant to the approval of the shareholders at the Annual General Meeting.
2007
Group
2006
9,687,600
7,739,554
Weighted average number of ordinary shares outstanding
Assumed exercise of ESOS
85,200,000
-
85,200,000
271,188
Weighted average number of ordinary shares for diluted
earnings per ordinary share
85,200,000
85,471,188
11.37
9.06
Profit attributable to equity holders of the Company (RM)
Diluted earnings per ordinary share (sen)
annual repor t 2 0 0 7
69
Notes to the Financial Statements (continued)
32.
ACQUISITION OF SUBSIDIARIES
2006
Group
During the previous financial year, the Group acquired Icon Freight Pty. Ltd. and TCH Marine Pte. Ltd..
Details of the net assets acquired and cash flow arising from the acquisition were as follows:
Group
RM
7,439,143
80,935
335,878
3,543,828
(630,646)
(404,836)
(640,938)
(3,276,387)
(3,142,112)
Property, plant and equipment
Trade receivables
Other receivables
Cash and bank balances
Trade payables
Other payables and accruals
Bank overdraft
Term loans
Minority interests
3,304,865
1,662,745
Net assets acquired
Goodwill on consolidation
4,967,610
(2,902,890)
Purchase consideration discharged by cash
Less: Cash and cash equivalents
2,064,720
Cash flow on acquisition, net of cash and cash equivalents acquired
Company
The Company acquired 51% equity interest in TCH Marine Pte. Ltd. comprising 2,053,000 ordinary shares of
SGD1 each for a cash consideration of SGD2,053,000 or equivalent to RM4,704,705 and direct cost attributed
to the acquisition amounting to RM26,790 on 3 March 2006.
The Company nominated Icon Line (Malaysia) Sdn. Bhd., a wholly-owned subsidiary of the Company to hold
one ordinary share of SGD1 each in TCH Marine Pte. Ltd. for a cash consideration of SGD1 or equivalent to
RM2.
33.
PURCHASE OF PROPERTY, PLANT AND EQUIPMENT
During the financial year, the Group made the following cash payments to purchase property, plant and
equipment:
2007
RM
70
Group
2006
RM
Purchase of property, plant and equipment (Note 7)
Deposit paid
Financed by hire-purchase and lease arrangements
Financed by term loan
16,659,736
(666,644)
(2,352,367)
17,667,541
(315,000)
(414,293)
-
Cash payments on purchase of property, plant and
equipment
13,640,725
16,938,248
Freight Managem e n t H o l d i n g s B h d
(380410-P)
Notes to the Financial Statements (continued)
34.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents included in the cash flow statements comprise the following balance sheet
amounts:
2007
RM
Cash and bank balances
Fixed deposits with
licensed banks
Short term deposit-Repo
Bank overdrafts - secured
(Note 26)
Less: Fixed deposits
pledged to licensed
banks (Note 17)
annual repor t 2 0 0 7
Group
Company
2006
RM
2007
RM
2006
RM
7,934,577
6,458,832
2,401,549
921,739
3,778,277
3,800,000
3,014,088
-
3,800,000
-
(3,293,390)
(8,270,661)
-
-
12,219,464
1,202,259
6,201,549
921,739
(3,331,140)
(2,582,906)
-
-
8,888,324
(1,380,647)
6,201,549
921,739
71
Notes to the Financial Statements (continued)
35.
RELATED PARTY DISCLOSURES
(a)
Identities of related parties
Parties are considered to be related to the Group if the Group has the ability, directly or indirectly,
to control the party or exercise significant influence over the party in making financial and operating
decisions, or vice versa, or where the Group and the party are subject to common control or common
significant influence. Related parties may be individuals or other entities.
(b)
In addition to the transactions detailed elsewhere in the financial statements, the Group and the
Company had the following transactions with related parties during the year:
2007
RM
Group
Company
2006
RM
2007
RM
19,165
829,018
13,206
13,669
-
-
-
1,878,740
14,787
3,281,609
17,145
1,414,362
8,216
2,878,308
14,075
-
-
-
-
Rental income received/receivable
from:
- FM Distribution Sdn. Bhd.
495,000
480,000
-
-
Rental expenses paid/ payable to
Poo Hua Pte. Ltd.
41,563
-
-
-
Warehouse services received/
receivable from:
- FM Distribution Sdn. Bhd.
169,111
266,987
-
-
Warehouse services paid/ payable
to:
- FM Distribution Sdn. Bhd.
416,886
175,437
-
-
-
-
1,725,000
1,380,000
Freight charges received/
receivable from:
- TS Freight Services Sdn. Bhd.
- Tuck Sun & Co (M) Sdn. Bhd.
- Poo Hua Pte. Ltd.
Freight charges paid/ payable to:
- FM Forwarding Sdn. Bhd.
- Tuck Sun & Co (M) Sdn. Bhd.
- Advance Logistics Sdn. Bhd.
- TS Freight Services Sdn. Bhd.
Administration expenses paid/
payable to a subsidiary
2006
RM
The terms, conditions and prices of the above transactions are not materially different from those obtainable in
transactions with unrelated parties.
72
Related parties
Relationships
TS Freight Services Sdn. Bhd.
A director is related to Chew Chong Keat and Gan Siew Yong
Tuck Sun & Co (M) Sdn. Bhd.
A director is related to Chew Chong Keat and Gan Siew Yong
FM Forwarding Sdn. Bhd.
Related by a common director, namely Chew Chong Keat
Advance Logistics Sdn. Bhd.
Related by a common director of a subsidiary, namely Law Kok Voon
Poo Hua Pte. Ltd.
Related by a common director of a subsidiary, namely Tay Nguang Yeow
Andrew
Freight Managem e n t H o l d i n g s B h d
(380410-P)
Notes to the Financial Statements (continued)
36.
CAPITAL COMMITMENTS
2007
RM
Group
2006
RM
Capital expenditure in respect of purchase of
property, plant and equipment:
Contracted but not provided for
37.
11,755,370
CONTINGENT LIABILITIES - UNSECURED
2007
RM
Group
Company
2006
RM
2007
RM
1,815,900
1,822,900
-
-
Corporate guarantee given
to financial institutions
for credit facilities
granted to subsidiaries,
limit up to RM41,258,000
-
-
19,119,410
8,336,784
Corporate guarantee given
to financial institutions
for hire-purchase and
lease facilities granted to
subsidiaries, limit up to
RM935,855
-
-
495,257
404,609
Bankers’ guarantees in
favour of third parties
38.
12,475,966
2006
RM
SEGMENT REPORTING
Segment information is presented in respect of the Group’s geographical segments as the primary reporting
segment since the Group’s risks and returns are affected predominantly by different geographical areas.
However, there is no secondary format for reporting segment information as the Group operates principally in
the freight and forwarding industry.
A segment with a majority of operating income earned from providing services to external clients and whose
operating income, results or assets are 10 percent or more of all the segments are reported separately.
Segment results, assets and liabilities include items that are directly attributable to a segment as well as those
that can be allocated on a reasonable basis
Segment capital expenditure is the total cost incurred during the period to acquire segment assets that are
expected to be used for more than one period.
annual repor t 2 0 0 7
73
Notes to the Financial Statements (continued)
38.
SEGMENT REPORTING (continued)
Geographical segments
The Group operates principally in Malaysia. In presenting information on the basis of geographical segments,
segment revenue is based on the geographical location of customers. Segment assets are based on the
geographical location of assets.
Malaysia
RM
Singapore
RM
Australia
RM
Revenue
External sales
Inter-segment sales
158,460,127
90,317
17,477,131
-
12,142,055
26,263
(116,580)
188,079,313
-
Total revenue
158,550,444
17,477,131
12,168,318
(116,580)
188,079,313
11,373,475
2,025,972
276,091
Elimination
RM
Total
RM
2007
Results
Segment results
Share of profit in an
associate
15,453
Profit before tax
Tax expense
Profit for the
financial year
Assets
Segment assets
Investment in an
associate
13,690,991
(2,979,283)
10,711,708
98,060,934
17,060,065
2,193,791
117,451,999
41,210,419
4,998,413
1,146,422
47,355,254
47,355,254
Total liabilities
Other segment information
Capital expenditure
Depreciation of property, plant
and equipment
Amortisation of prepaid lease
payments for land
117,314,790
137,209
Total assets
Liabilities
Segment liabilities
13,675,538
12,534,909
3,931,101
193,726
16,659,736
1,982,637
657,462
59,020
2,699,119
155,430
-
-
155,430
In the last financial year, no segmental reporting has been prepared as the Group activities are predominantly
in the freight services in Malaysia.
39.
FINANCIAL INSTRUMENTS
(a)
Financial risk management objectives and policies
The Group’s financial risk management objective is to optimise value creation for shareholders whilst
minimising the potential impact arising from fluctuations in foreign currency exchange and interest rates
and the unpredictability of the financial markets.
74
Freight Managem e n t H o l d i n g s B h d
(380410-P)
Notes to the Financial Statements (continued)
39.
FINANCIAL INSTRUMENTS (continued)
(a)
Financial risk management objectives and policies (continued)
The Group operates within an established risk management framework and clearly defined guidelines
that are regularly reviewed by the Board of Directors and does not trade in derivative financial instruments.
Financial risk management is carried out through risk review programmes, internal control systems,
insurance programmes and adherence to the Group financial risk management policies. The Group is
exposed mainly to foreign currency risk, liquidity risk, interest rate risk and credit risk. Information on the
management of the related exposures is detailed below.
(i)
Foreign currency risk
The Group is exposed to foreign currency risk as a result of the foreign currency transactions
entered into by the Group in currencies other than its functional currency. The Group monitors the
movements in foreign currency exchange rates closely to ensure their exposures are minimised.
The Group does not use derivative financial instruments to hedge against the volatility associated
with foreign currency transactions.
The Group have subsidiaries operating in both Singapore and Australia whose revenue and
expenses are denominated in its functional currency of Singapore Dollar and Australian Dollar
respectively. This gave rise to foreign exchange exposure which the Group constantly monitors
diligently.
The net unhedged financial assets and liabilities of the Group that are not denominated in their
functional currencies are as follows:
Ringgit
Malaysia
RM
Functional currencies
Singapore
Australian
Dollar
Dollar
RM
RM
Total
RM
30 June 2007
Trade receivables
Australian Dollar
EURO
US Dollar
Singapore Dollar
Ringgit Malaysia
30,491
23,185
3,872,952
475,478
-
631,137
1,250,788
76,609
-
30,491
23,185
4,580,698
475,478
1,250,788
4,402,106
1,881,925
76,609
6,360,640
84,735
123,282
-
1,944,712
388,041
-
84,735
511,323
1,944,712
208,017
1,944,712
388,041
2,540,770
8,123
105,912
27,355
1,604
6,448
2,250,079
41,695
397,761
23,584
77,184
-
8,123
105,912
27,355
1,604
6,448
2,327,263
397,761
65,279
2,441,216
421,345
77,184
2,939,745
Cash and bank balances
Singapore Dollar
US Dollar
Ringgit Malaysia
Trade payables
Australian Dollar
EURO
Sterling Pound
Hong Kong Dollar
Japanese Yen
US Dollar
Ringgit Malaysia
Others
annual repor t 2 0 0 7
75
Notes to the Financial Statements (continued)
39.
FINANCIAL INSTRUMENTS (continued)
(a)
Financial risk management objectives and policies (continued)
(i)
Foreign currency risk (continued)
Ringgit
Malaysia
RM
Functional currencies
Singapore
Australian
Dollar
Dollar
RM
RM
Total
RM
30 June 2006
Trade receivables
US Dollar
Ringgit Malaysia
5,670,130
-
568,720
1,288,104
374,372
-
6,613,222
1,288,104
5,670,130
1,856,824
374,372
7,901,326
528,803
-
1,943
209,108
-
737,911
1,943
528,803
1,943
209,108
739,854
41,440
101,943
124,347
9,019
3,442
2,773,733
74,707
1,241,870
140,534
15,177
-
41,440
101,943
124,347
9,019
3,442
2,788,910
1,241,870
215,241
3,128,631
1,382,404
15,177
4,526,212
Cash and bank balances
US Dollar
Ringgit Malaysia
Trade payables
Australian Dollar
EURO
Sterling Pound
Hong Kong Dollar
Japanese Yen
US Dollar
Ringgit Malaysia
Others
(ii)
Interest rate risk
The Group’s income and operating cash flows are substantially independent of changes in market
interest rates. Interest rate exposure arises from the Group’s borrowings and is managed through
the use of fixed and floating rates debts. The Group monitors the interest rates on borrowings
closely to ensure that the borrowings are maintained at favourable rates. The Group does not use
derivative financial instruments to hedge these risks.
The Group is also exposed to interest rate risk in respect of its fixed deposits with licensed
banks.
76
Freight Managem e n t H o l d i n g s B h d
(380410-P)
39.
(a)
(ii)
annual repor t 2 0 0 7
7.77
6.40
Floating rate
Bank overdraft
Term loans
3.66
6.16
7.28
5.88
Fixed rates
Fixed deposits
Hire purchases and lease creditors
Floating rate
Bank overdraft
Term loans
At 30 June 2006
3.70
2.80
3.25
6.00
Fixed rates
Fixed deposits
Short term deposits - Repo
Term Loan
Hire purchases and lease creditors
Group
At 30 June 2007
Weighted
average
effective
interest
rate
%
8,270,661
1,289,849
3,014,088
416,518
3,293,390
1,022,447
3,778,277
3,800,000
601,641
409,966
Within
1 year
RM
641,692
259,699
1,070,574
580,078
290,993
1–2
years
RM
605,418
130,661
1,125,479
483,326
198,378
2–3
years
RM
495,243
91,981
974,150
102,489
3–4
years
RM
-
52,287
580,647
40,066
4–5
years
RM
-
-
10,248,908
-
More
than
5 year
RM
8,270,661
3,032,202
3,014,088
951,146
3,293,390
15,022,205
3,778,277
3,800,000
1,665,045
1,041,892
Total
RM
The following tables set out the carrying amounts, the weighted average effective interest rates as at the balance sheet date and the remaining maturities
of the Group’s and the Company’s financial instruments that are exposed to the interest rate risk:
Interest rate risk (continued)
Financial risk management objectives and policies (continued)
FINANCIAL INSTRUMENTS (continued)
Notes to the Financial Statements (continued)
77
Notes to the Financial Statements (continued)
39.
FINANCIAL INSTRUMENTS (continued)
(a)
Financial risk management objectives and policies (continued)
(iii)
Liquidity risk
The Group actively manages its debt maturity profile, operating cash flows and the availability of
funding so as to ensure that all operating, investing and financing needs are met. In liquidity risk
management strategy, the Group measures and forecasts its cash commitments and maintains
a level of cash and cash equivalents deemed adequate to finance the Group’s activities.
Short term flexibility is achieved by overdraft facilities.
(iv)
Credit risk
Cash deposits and trade receivables may rise to credit risk which requires the loss to be
recognised if a counter party fails to perform as contracted. The counter parties are major
international institutions and reputable multinational organisations. It is the Group’s policy to
monitor the financial standing of these counter parties on an ongoing basis to ensure that the
Group is exposed to minimal credit risk.
The Group’s primary exposure to credit risk arises through its trade receivables. The Group’s
trading terms with its customers are mainly on credit. The credit period is generally for a period
of one month, extending up to three months for major customers. Each customer has a maximum
credit limit and the Group seeks to maintain strict control over its outstanding receivables via a
credit control department to minimise credit risk. Overdue balances are reviewed regularly by
senior management.
Concentration of credit risk in respect of trade receivables is limited due to the Group’s large
number of customers. The Group’s historical experience in collection of accounts receivables falls
within the recorded allowances. Due to these factors, management believes that no additional
credit risk is inherent to the Group’s trade receivables.
In respect of the deposits, cash and bank balances placed with major financial institutions
in Malaysia, the Directors believe that the possibility of non-performance by these financial
institutions is remote on the basis of their financial strength.
78
Freight Managem e n t H o l d i n g s B h d
(380410-P)
Notes to the Financial Statements (continued)
39.
FINANCIAL INSTRUMENTS (continued)
(b)
Fair values
Carrying
amount
RM
Group
Company
Fair
value
RM
Carrying
amount
RM
Fair
value
RM
2,776
#
-
-
-
-
-
19,119,410
-
-
-
495,257
2,776
1,148,021
#
1,148,021
-
-
-
-
-
8,336,784
-
-
-
404,609
As at 30 June 2007
Unquoted investment
Corporate guarantee given to
financial institutions for credit
facilities granted to subsidiaries
Corporate guarantee given to
financial institutions for hire
purchase and lease facilities
granted to subsidiaries
As at 30 June 2006
Unquoted investment
Unit trusts in Malaysia
Corporate guarantee given to
financial institutions for credit
facilities granted to subsidiaries
Corporate guarantee given to
financial institutions for hire
purchase and lease facilities
granted to subsidiaries
#
It is not practical to estimate the fair values of the long term unquoted investment because of the
lack of quoted market prices and the inability to estimate fair values without incurring excessive
costs. The Directors believe that the carrying amounts represented the recoverable values.
The following methods and assumptions are used to determine the fair values of financial instruments:
42.
(i)
The carrying amounts of financial assets and liabilities maturing within 12 months approximate
their fair values due to the relatively short term maturity of these financial instruments.
(ii)
The fair values of quoted investments are their quoted market prices at the balance sheet date.
(iii)
The fair value of the corporate guarantees given to financial institutions are estimated based on
the fair value of the banking and hire-purchase and lease facilities utilised by the Company’s
subsidiaries as at balance sheet date.
STAFF COSTS
The total staff costs recognised in the income statements are as follows:
2007
RM
Wages and salaries
Defined contribution retirement
plan
Other employee benefits
annual repor t 2 0 0 7
Group
Company
2006
RM
2007
RM
2006
RM
14,453,642
11,988,601
33,000
26,000
1,450,193
654,295
1,304,203
824,420
10,627
7,534
16,558,130
14,117,224
43,627
33,534
79
Notes to the Financial Statements (continued)
43.
SIGNIFICANT EVENTS DURING THE FINANCIAL YEAR
(a)
On 26 November 2004, the shareholders of the Company had approved to establish an Employees’
Share Option Scheme (“ESOS”) and this was established on the 28 January 2005.
On 2 November 2006, the Board of Directors of the Company had announced that it had resolved to
terminate the ESOS, subject to the approval of shareholders of the Company. The Board of Directors
had undertaken the termination as a result of the adoption and implementation of the new Financial
Reporting Standard 2 (“FRS 2”) Share Based Payment which came into effect from 1 January 2006. With
the implementation of the new FRS 2, options granted under an ESOS will have a financial impact on
the Company. The termination will not have any effect on the share capital, earnings, net tangible assets
and shareholding of the Company and upon the approval of the shareholders of the Company obtained
at the Annual General Meeting convened.
The termination had been unanimously agreed by the shareholders of the Company on 8 December
2006.
(b)
On 28 May 2007, the Board of Directors of the Company announced that the Company has acquired 3
ordinary shares of SGD1.00 comprising the total paid-up capital in FM Marine Pte. Ltd. (“FMMarine”),
a private limited company incorporated under the laws of Singapore for a total cash consideration of
SGD3.00.
Upon completion of the acquisition, FMMarine has become a wholly-owned subsidiary of the
Company.
The Company thereafter subscribe for an additional 999,997 new ordinary shares of SGD1 each in
FMMarine paid by way of cash consideration of SGD999,997.
44.
COMPARATIVE FIGURES
(a)
The following comparative amounts have been restated as a result of adopting the new and revised
FRSs:
(i)
Effects on balance sheets as at 30 June 2006
As previously
reported
RM
Increase / (Decrease)
FRS 117
Note 5.3(a)
RM
As
restated
RM
-
14,368,320
14,368,320
(14,368,320)
35,466,481
Group
Prepaid lease payments for
land
Property, plant and
equipment
(ii)
49,834,801
Effects on income statement for the year ended 30 June 2006
As previously
reported
RM
Increase / (Decrease)
FRS 101
Note 5.3(a)(iv)
RM
As
restated
RM
Group
Share of loss of an associate
Profit before tax
Tax expense
80
Freight Managem e n t H o l d i n g s B h d
(380410-P)
(8,619)
11,061,094
(3,028,123)
(9,748)
(9,748)
9,748
(18,367)
11,051,346
(3,018,375)
Notes to the Financial Statements (continued)
44.
COMPARATIVE FIGURES (continued)
(b)
Certain comparative figures have been reclassified in order to conform to the current year’s
presentation:
As previously
reported
RM
Reclassification
RM
As
restated
RM
Group
Income statement
Administration expenses
Other operating expenses
45.
(11,367,137)
(12,853,811)
(12,853,811)
12,853,811
(24,220,948)
-
AUTHORISATION FOR ISSUE OF FINANCIAL STATEMENTS
These financial statements were authorised for issue by the Board of Directors on 4 September 2007.
annual repor t 2 0 0 7
81
Analysis of Shareholdings
AS AT 16 OCTOBER 2007
Authorised share capital
:
RM100,000,000
Issued and paid up share capital
:
RM42,600,000
Class of shares
:
Ordinary shares of RM0.50 each
Voting rights
:
One (1) vote per ordinary share
ANALYSIS BY SIZE OF SHAREHOLDINGS
Size of
Shareholdings
Less Than 100
100 To 1,000
1,001 To 10,000
10,001 to 100,000
100,001 to Less Than 5%
5% And Above
TOTAL
No. of
Shareholders
%
No. of
Shares Held
%
2
452
490
167
40
4
0.17
39.14
42.42
14.46
3.46
0.35
52
185,489
2,140,450
4,849,068
35,003,119
43,021,822
0.00
0.22
2.51
5.69
41.09
50.49
1,155
100.00
85,200,000
100.00
LIST OF DIRECTORS’ INTEREST
No. of
Shares Held
Names
%
No. of
Shares Held
Indirect
%
CHEW CHONG KEAT
23,731,818
27.85
-
-
YANG HENG LAM
15,593,222
18.30
-
-
GAN SIEW YONG
3,696,782
4.34
-
-
DATUK DR HJ NOORDIN BIN HJ ABD RAZAK
-
-
AARON SIM KWEE LEIN
-
-
-
-
1,000,950
1.17
-
-
CHUA TIONG HOCK
-
-
-
-
KHUA KIAN KEONG
(alternate director to Chua Tiong Hock)
0
0
17,040,000
20.00
%
No of
Shares Held
ONG LOOI CHAI
LIST OF SUBSTANTIAL SHAREHOLDERS
No. of
Shares Held
Names
82
Direct
Direct
Iindirect
%
CHEW CHONG KEAT
23,731,818
27.85
0
0
SINGAPORE ENTERPRISES
PRIVATE LIMITED
17,040,000
20.00
0
0
YANG HENG LAM
15,593,222
18.30
0
0
Freight Managem e n t H o l d i n g s B h d
(380410-P)
Analysis of Shareholdings (continued)
LIST OF THIRTY (30) LARGEST SHAREHOLDERS
NO. OF
SHARES HELD
%
1 CHEW CHONG KEAT
23,731,818
27.85
2 SINGAPORE ENTERPRISES PRIVATE LIMITED
17,040,000
20.00
3 YANG HENG LAM
15,593,222
18.30
4 GAN SIEW YONG
3,696,782
4.34
5 MALAYSIA NOMINEES (TEMPATAN) SDN BHD
(A/C FOR GREAT EASTERN LIFE ASSURANCE MALAYSIA BERHAD DR)
1,658,300
1.95
6 ALLIANCEGROUP NOMINEES (TEMPATAN) SDN BHD
(PHEIM ASSET MANAGEMENT SDN BHD FOR EMPLOYEES
PROVIDENT FUND)
1,556,000
1.83
7 AMANAH RAYA BERHAD
(A/C FOR SBB DANA AL-FAIZ)
1,228,000
1.44
8 UNIVERSAL TRUSTEE (MALAYSIA) BERHAD
(A/C FOR SBB DANA AL-AZAM)
1,170,800
1.37
9 CIMSEC NOMINEES (TEMPATAN) SDN BHD
(CIMB BANK FOR SEE KOK HING)
1,060,000
1.24
10 ONG LOOI CHAI
1,000,950
1.17
11 MALAYSIA NOMINEES (TEMPATAN) SDN BHD
(A/C FOR GREAT EASTERN LIFE ASSURANCE MALAYSIA BERHAD LPF)
863,000
1.01
12 BHLB TRUSTEE BERHAD
(A/C FOR PRUSMALL -CAP FUND)
800,000
0.94
13 TEH SWEE SIM
773,893
0.91
14 FOO SOOK WAN
672,050
0.79
15 ALLIANZ LIFE INSURANCE MALAYSIA BERHAD
540,000
0.63
16 CHIN YEW SOON
540,000
0.63
17 HSBC NOMINEES (ASING) SDN BHD
(EXEMPT AN FOR MORGAN STANLEY & CO INTERNATIONAL PLC)
503,500
0.59
18 GOH CHONG WENG
500,693
0.59
19 LIN, KUANG
350,000
0.41
20 CHEW PHEK YING
350,000
0.41
NO NAMES
annual repor t 2 0 0 7
83
Analysis of Shareholdings (continued)
LIST OF THIRTY (30) LARGEST SHAREHOLDERS AS AT 16 OCTOBER 2007 (CONTINUED)
NO. OF
SHARES HELD
%
21 WONG LEE CHOO
336,092
0.39
22 RICHARD ENG
300,000
0.35
23 AMMB NOMINEES (TEMPATAN) SDN BHD
(AMTRUSTEE BERHAD FOR APEX DANA AL-SOFI 1)
300,000
0.35
24 MAYBAN NOMINEES (TEMPATAN) SDN BHD
(PHEIM ASSET MANAGEMENT SDN BHD FOR BENTA
WAWASAN SDN BHD A/C 95-230135)
271,700
0.32
25 TODA TORU
250,000
0.29
26 HSBC NOMINEES (TEMPATAN) SDN BHD
(HSBC M TRUSTEE BHD FOR PHEIM EMERGING COMPANIES
BALANCED FUND)
232,900
0.27
27 PUBLIC INVEST NOMINEES (TEMPATAN) SDN BHD
(A/C FOR YOONG FUI KIEN)
231,000
0.27
28 YVONNE KALATHINI A/P M.VIJAYARAJ
224,000
0.26
29 NIOW SOO SEE
186,500
0.22
30 AIBB NOMINEES (TEMPATAN) SDN BHD
(A/C FOR WONG YOON FOK)
174,000
0.20
NO NAMES
84
Freight Managem e n t H o l d i n g s B h d
(380410-P)
List of Properties
HELD AS AT 30 JUNE 2007
Existing
use
Land
Area
(square
feet)
Tenanted
Net book
value
as at
30.06.07
RM
Tenure
of land
(years)
Approximate
age of
building
4,490
99 years
ending on
27 October
2097
6 years
13 September
1996
329,708
Office
1,019
Freehold
32 years
22 October
1994
436,671
Warehouse
cum four
storey office
building
Vacant
87,120
99 years
ending on
30 June
2105
11 years
16 February
1996
5,266,067
Geran No 2892,
Three storey
Lot 1840, Seksyen 4,
terrace
shophouse
Bandar Butterworth,
Daerah Seberang Perai
Utara, Negeri Pulau
Pinang
Office
1,021
Freehold
32 years
25 June 2002
Postal address /
location
Description
HS(D) 72751, PT
144740, Mukim Hulu
Kinta, Daerah Kinta,
Negeri Perak
1 ½ storey
terrace
industrial
factory
Date
Acquired
Postal Address: 26,
Jalan SCI 1/10, Sunway
City, 31150 Ipoh, Perak
Darul Ridzuan
Three storey
Geran No. 2893,
Lot 1841 Seksyen 4,
terrace
Bandar Butterworth,
shophouse
Daerah Seberang Perai
Utara, Negeri Pulau
Pinang
Postal Address: No
4453, Jalan Bagan Luar,
12000 Butterworth,
Penang
HS(D) 116340, PT 152,
Mukim Bandar Sultan
Sulaiman, Daerah
Klang, Negeri Selangor
Postal Address:
Lot 8, Lingkaran
Sultan Mohamed 2,
Bandar Sultan
Suleiman, 42000
Port Klang,
Selangor Darul Ehsan
494,310
Postal Address:
4454, Jalan Bagan Luar,
12000 Butterworth,
Penang
annual repor t 2 0 0 7
85
List of Properties (continued)
Postal address /
location
Description
Office Unit
Master Title: H.S(D)
49488 and 49489,
PT 49974 and 49975
Mukim Klang, Daerah
Klang, Negeri Selangor
Existing
use
Land
Area
(square
feet)
Vacant
Vacant
Net book
value
as at
30.06.07
RM
Tenure
of land
(years)
Approximate
age of
building
Nil
99 years
ending on
11 March
2095
7 years
23 September
1998
72,947
Nil
99 years
ending on
11 March
2095
7 years
23 September
1998
66,727
Warehouse 653,400 99 years
ending on
and Office
30 June
2105
1 year
16 September
2005
(Land)
11,434,043
Date
Acquired
Postal Address:
78-2A, 2nd Floor, Jalan
Sg. Chandong 15,
Pulau Indah, 42100 Port
Klang, Selangor Darul
Ehsan
Master Title: H.S(D)
Office Unit
49488 and 49489,
PT 49974 and 49975
Mukim Klang, Daerah
Klang, Negeri Selangor
Postal Address:
78-2B, 2nd Floor, Jalan
Sg. Chandong 15,
Pulau Indah, 42100 Port
Klang, Selangor Darul
Ehsan
HS(D) 116412, PT 239, Industrial
Mukim Bandar Sultan
land
Sulaiman, Daerah
Klang, Negeri Selangor.
Postal Address:
Lot 37, Lebuh Sultan
Mohamad 1, Kawasan
Perindustrian Bandar
Sultan Suleiman,
42000 Port Klang,
Selangor Darul Ehsan
86
Warehouse
cum two
storey office
building.
Freight Managem e n t H o l d i n g s B h d
(Building)
23,995,126
(380410-P)
Notice of Annual General Meeting
NOTICE IS HEREBY GIVEN that the Eleventh Annual General Meeting of the Company
will be held at Banyan Room, Ground Floor, Sime Darby Convention Centre, 1A
Jalan Bukit Kiara 1, 60000 Kuala Lumpur on Thursday, 29 November 2007 at 10.00
a.m. for the following purposes:
1.
To receive and adopt the Audited Financial Statements for the year ended 30
June 2007 and the Reports of the Directors and the Auditors thereon.
ORDINARY RESOLUTION 1
2.
To approve the payment of Directors’ Fees amounting to RM282,000 in respect of
the financial year ended 30 June 2007.
ORDINARY RESOLUTION 2
3.
To re-elect the following Directors retiring in accordance with Article 109 of the
Articles of Association of the Company:
(a)
(b)
Mr. Chew Chong Keat
Mr. Yang Heng Lam
ORDINARY RESOLUTION 3
ORDINARY RESOLUTION 4
4.
To re-elect Mr. Chua Tiong Hock, who is retiring in accordance with Article 114 of
the Articles of Association of the Company.
ORDINARY RESOLUTION 5
5.
To approve the payment of a final dividend of 2 sen per share less Malaysian
Income tax for the year ended 30 June 2007.
ORDINARY RESOLUTION 6
6.
To re-appoint BDO Binder as the Auditors of the Company for the ensuing year
and to authorise the Directors to fix their remuneration.
ORDINARY RESOLUTION 7
As Special Business
To consider and if thought fit, to pass the following resolutions:
7.
Ordinary Resolution –
Proposed Renewal of Shareholders’ Mandate for Recurrent Related Party
Transactions of a Revenue or Trading Nature
“THAT, approval be and is hereby given for the renewal of the Shareholders’
Mandate for FMH Group to enter into the categories of recurrent transactions
of a revenue or trading nature with related parties falling within the nature of
transactions set out in Section 3.3 under Part A of the Circular to Shareholders
dated 6 November 2007, provided that such transactions are necessary for the
Group’s day-to-day operations and the transactions are carried out in the ordinary
course of business and are on terms not more favourable to the related parties
than those generally available to the public and are not to the detriment of minority
shareholders.
AND THAT such approval shall continue to be in force until:
(a)
the conclusion of the next Annual General Meeting (“AGM”) of the
Company at which time it will lapse, unless by resolution passed at the
meeting, the authority is renewed;
(b)
the expiration of the period within which the next AGM is required to be
held pursuant to Section 143(1) of the Companies Act, 1965 (“Act”) (but
shall not extend to such extension as may be allowed pursuant to Section
143(2) of the Act); or
(c)
revoked or varied by resolution passed by the shareholders in a general
meeting;
Whichever is the earlier.
AND THAT the Directors of the Company be and are hereby authorized to
complete and do all such acts and things as they may consider expedient or
necessary to give effect to this Ordinary Resolution.”
ORDINARY RESOLUTION 8
annual repor t 2 0 0 7
87
Notice of AGM (continued)
8.
Ordinary Resolution Proposed Renewal of Shareholders’ Mandate for Proposed Share Buy-Back
by the Company
“THAT subject to the Companies Act, 1965, (as may be amended, modified or
re-enacted from time to time), the Listing Requirements of the Bursa Malaysia
Securities Berhad and the approvals of all relevant governmental and / or
regulatory authorities, the Company be and is hereby authorized to purchase
such number of ordinary shares of RM0.50 each in the Company (“Proposed
Renewal of Share Buy Back Authority”) as may be determined by the Board
from time to time on the Bursa Malaysia Securities Berhad upon such terms
and conditions as the Board may deem fit and expedient in the interest of the
Company provided the aggregate number of shares purchased pursuant to this
resolution does not exceed ten percent (10%) of the issued and paid up share
capital of the Company which amount to 85,200,000 ordinary shares of RM0.50
each as at 30 June 2007 and an amount not exceeding the total retained profits of
RM18,857,800 and share premium account of RM4,075,506 based on the latest
audited financial statements of the Company as at 30 June 2007, be allocated by
the Company for the Proposed Renewal of Share Buy-Back Authority.
THAT such authority shall commence upon the passing of this resolution and
shall remain in force until the conclusion of the next Annual General Meeting
of the Company unless earlier revoked or varied by ordinary resolution of the
shareholders of the Company in a general meeting;
THAT authority be and is hereby given to the Directors of the Company to decide
in their discretion to retain the ordinary shares in the Company so purchased by the
Company as treasury shares and / or cancel them and / or resell the treasury shares
or distribute them as share dividend and / or subsequently cancel them;
AND FURTHER THAT authority be and is hereby given to the Directors of the
Company to take all such steps as are necessary (including the appointment
of stockbroking firm and the opening and maintaining of a Central Depository
Account designated as a Share Buy-Back Account) and to enter into any
agreements and arrangements with any party or parties to implement, finalise
and give full effect to the aforesaid with full powers to assent to any conditions,
modifications, variations and / or amendments (if any) as may be imposed by the
relevant authorities and to do all such acts and things as the directors may deem
fit and expedient in the interest of the Company.”
ORDINARY RESOLUTION 9
9.
Ordinary Resolution –
Authority to Allot and Issue shares pursuant to Section 132D of the
Companies Act, 1965
“THAT pursuant to Section 132D of the Companies Act, 1965 and approvals from
Bursa Malaysia Securities Berhad for the listing of and quotation for the additional
shares so issued and other relevant authorities, where approval is necessary,
authority be and is hereby given to the Directors to allot and 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 always that the
aggregate number of shares to be issued shall not exceed 10% of the issued
share capital of the Company for the time being AND THAT such authority shall
continue to be in force until the conclusion of the next Annual General Meeting of
the Company.”
ORDINARY RESOLUTION 10
10.
Special Resolution –
Proposed Amendments to the Articles of Association
“THAT the proposed amendments to the Articles of Association of the Company
as set out in Part C of the Circular be and is hereby approved and adopted.
THAT the Directors and Secretary of the Company be and are hereby authorized
to carry out all the necessary formalities in effecting the amendments as set out in
Part C of the Circular.
AND THAT the Directors of the Company, be and are hereby authorized to assent
to any condition, modification, variation and/or amendments as may be required
SPECIAL RESOLUTION
by Bursa Malaysia Securities Berhad.”
88
Freight Managem e n t H o l d i n g s B h d
(380410-P)
Notice of AGM (continued)
11.
To transact any other business of the Company of which due notice shall have
been given.
CLOSURE OF BOOKS
NOTICE IS ALSO HEREBY GIVEN that subject to the approval of the shareholders at the Eleventh Annual General
Meeting, a final dividend of 2 sen per share less Malaysian Income tax, will be payable on 18 January 2008 to shareholders
whose names appear in the Record of Depositors at the close of business on 31 December 2007.
A Depositor shall qualify for entitlement only in respect of:
a)
Shares transferred into the Depositor’s Securities Account before 4.00 p.m. on 31 December 2007 in respect of
ordinary shares;
b)
Shares bought on Bursa Malaysia Securities Berhad on a cum entitlement basis according to the Rules of Bursa
Malaysia Securities Berhad.
By Order of the Board
LIM HOOI MOOI
TAN ENK PURN
Joint Company Secretaries
Kuala Lumpur
6 November 2007
NOTES
1.
A member of the Company entitled to attend and vote at
the meeting may appoint not more than two (2) proxies
to attend and vote instead of him. Where a member
appoints two (2) proxies, he shall specify the proportion
of his shareholdings to be represented by each proxy. A
member of the Company who is an authorised nominee
as defined under the Securities Industry (Central
Depositories) Act 1991 may appoint one (1) proxy in
respect of each securities account it holds with ordinary
shares of the Company standing to the credit of the said
securities account.
2.
A proxy need not be a member of the Company.
3.
The instrument appointing a proxy shall be in writing
under the hands of the appointer or of his attorney duly
authorised in writing, or if the appointer is a corporation,
either under its common seal or the hand of its attorney
duly authorised.
4.
The instrument of proxy must be deposited at the
Company’s Registered Office at Suite 13A-2 Menara
Uni.Asia, 1008 Jalan Sultan Ismail, 50250 Kuala
Lumpur not later than forty-eight hours before the time
appointed for holding the meeting.
EXPLANATORY NOTES ON SPECIAL BUSINESS
(A) Ordinary Resolution 8
The proposed Ordinary Resolution 8 seeking
Shareholders’ Mandate to allow the Company and
its subsidiaries to enter into Recurrent Related Party
Transactions of a Revenue or Trading Nature are to
enable the Company to comply with Paragraph 10.09,
Part E of Bursa Malaysia Securities Berhad Listing
Requirements. The mandate will take effect from the
date of the passing of the Ordinary Resolutions until the
next Annual General Meeting of the Company.
annual repor t 2 0 0 7
(B) Ordinary Resolution 9
The proposed Ordinary Resolution 9, if passed, will
empower the Directors of the Company to purchase
the Company’s shares up to ten percentage (10%) of
the issued and paid up share capital of the Company
(“Proposed Renewal of Share Buy-Back Authority”) by
utilizing the funds allocated which shall not exceed the
total retained profits and share premium account of the
Company. Further information on the Proposed Renewal
of Share Buy-Back Authority is set out in the Circular to
Shareholders of the Company dated 6 November 2007
which is despatched together with the Company’s 2007
Annual Report.
(C) Ordinary Resolution 10
The proposed Ordinary Resolution No. 10, if passed,
will avoid any delay and cost involved in convening
a general meeting and will empower the Directors to
allot and issue up to 10% of the issued share capital
of the Company. This authority will, unless revoked or
varied by the Company in a general meeting, expire
at the conclusion of the next Annual General Meeting
or the expiration of the period within which the next
Annual General Meeting is required by law to be held,
whichever is earlier.
(D) Special Resolution
The proposed Special Resolution on the amendments
to the Articles of Association, if passed, will enable the
Company to comply with the recent amendments to
the Listing Requirements of Bursa Malaysia Securities
Berhad.
(E) Statement Accompanying Notice of Eleventh Annual
General Meeting
A statement accompanying this notice which contains
additional information as required under Appendix 8A of
Bursa Malaysia Listing Requirements is found on page
90 of the Annual Report dated 6 November 2007.
89
Statement Accompanying
Notice of 11th Annual General Meeting
Pursuant to Paragraph 8.28(2) of the Listing Requirements of Bursa Malaysia Securities Berhad
The profiles of the Directors who are standing for re-election (as per Ordinary Resolutions 3 to 5 as stated above) at the
Eleventh Annual General Meeting of Freight Management Holdings Bhd (the Company) which will be held at Banyan
Room, Ground Floor, Sime Darby Convention Centre, 1A Jalan Bukit Kiara 1, 60000 Kuala Lumpur on Thursday, 29
November, 2007 at 10.00 a.m. are stated on pages 7 to 9 of the Annual Report 2007.
The details of any interest in the securities of the Company and its subsidiaries (if any) held by the said Directors are
stated on pages 26 to 81 of the Financial Statements of the Annual Report 2007.
90
Freight Managem e n t H o l d i n g s B h d
(380410-P)
Notes
annual repor t 2 0 0 7
91
Notes
92
Freight Managem e n t H o l d i n g s B h d
(380410-P)
FREIGHT MANAGEMENT HOLDINGS BHD(380410-P)
(Incorporated in Malaysia)
PROXY FORM
I/We
(I.C. No./Co. Registration No.)
of
being a member/members of Freight Management Holdings Bhd, do hereby appoint
(I.C. No.)
or failing him/her the Chairman of the Meeting as my/our proxy to vote for me/us and on our behalf at the Eleventh
Annual General Meeting of the Company to be held at Banyan Room, Ground Floor, Sime Darby Convention Centre,
1A Jalan Bukit Kiara 1, 60000 Kuala Lumpur on Thursday, 29 November 2007 at 10.00 a.m. and at any adjournment
thereof in the manner indicated below.
Resolution
Ordinary Resolution 1
Ordinary Resolution 2
Ordinary Resolution 3
Ordinary Resolution 4
Ordinary Resolution 5
Ordinary Resolution 6
Ordinary Resolution 7
Ordinary Resolution 8
Ordinary Resolution 9
Ordinary Resolution 10
Special Resolution
For
Against
Please indicate with a cross (X) in the spaces provided whether you wish your votes to be cast for or against the
resolutions. In the absence of specific directions, your proxy will vote or abstain as he think fit.
Dated this
day of
2007
No. of shares held
CDS Account No.
Signature of Shareholder
Notes
1.
A Member of the Company entitled to attend and vote at the meeting may appoint not more than two (2) proxies
to attend and vote instead of him. Where a member appoints two (2) proxies, he shall specify the proportion of
his shareholdings to be represented by each proxy. A member of the Company who is an authorised nominee
as defined under the Securities Industry (Central Depositories) Act 1991 may appoint at least one (1) proxy in
respect of each securities account it holds with ordinary shares of the Company standing to the credit of the
said securities account.
2.
A proxy need not be a member of the Company.
3.
The instrument appointing a proxy shall be in writing under the hands of the appointer or his attorney duly
authorised in writing, or if the appointer is a corporation, either under its common seal or the hand of its attorney
duly authorised.
4.
The instrument of proxy must be deposited at the Company’s Registered Office at Suite 13A-2 Menara Uni.Asia,
1008 Jalan Sultan Ismail, 50250 Kuala Lumpur not later than forty-eight (48) hours before the time appointed
for holding the meeting.
annual repor t 2 0 0 7
93
Fold here
STAMP
The Company Secretary
FREIGHT MANAGEMENT HOLDINGS BHD
(Company No. 380410-P)
Suite 13A-2 Menara Uni. Asia
1008 Jalan Sultan Ismail
50250 Kuala Lumpur
Fold here
Contact Particulars of Freight Management Group
MALAYSIA
TEL
FAX
03-3176 1111
03-3176 8634
FREIGHT MANAGEMENT (M) SDN. BHD.
03-3176 1111
03-3176 2188
ICON LINE (MALAYSIA) SDN BHD
03-3176 1111
03-3176 2188
ADVANCE INTERNATIONAL FREIGHT SDN. BHD.
03-3176 8001
03-3176 2005
CITRA MULTIMODAL SERVICES SDN. BHD.
03-3176 6888
03-3176 3993
FM DISTRIBUTION SDN BHD
03-31765750
03-31765811
FM MARINE PTE LTD
03-3176 1111
03-3176 8634
FREIGHT MANAGEMENT (PENANG) SDN. BHD.
04-331 4358
04-331 4368
FM WORLDWIDE LOGISTICS (PENANG) SDN BHD
04-323 4843
04-323 2070
05-527 1358
05-527 1446
Head Office
FREIGHT MANAGEMENT HOLDINGS BHD.
Lot 37, Lebuh Sultan Mohamad 1,
Kawasan Perindustrian Bandar Sultan Suleiman
42000 Port Klang
Selangor, Malaysia.
Location of Subsidiary Offices
Lot 37, Lebuh Sultan Mohamad 1,
Kawasan Perindustrian Bandar Sultan Suleiman
42000 Port Klang
Selangor, Malaysia.
No. 4453, 1st Floor,
Jalan Bagan Luar,
12000 Butterworth, Penang, Malaysia.
FREIGHT MANAGEMENT (IPOH) SDN. BHD.
No 7A (1st Floor)
Persiaran Greentown 9
Greentown Business Centre
30450 Ipoh, Malaysia.
annual repor t 2 0 0 7
Contact Particulars of Freight Management Group
MALAYSIA (continued)
TEL
FAX
06-317 5143
06-317 5202
03-7492 0388
03-7492 3533
03-8787 2990
03-8787 2925
(65) - 62948422
(65) -62989172
(08) 94331400
(08) 94331422
Location of Subsidiary Offices (continued)
FREIGHT MANAGEMENT (MELAKA) SDN. BHD.
47, Jalan Melaka Baru 22,
Taman Melaka Baru , Batu Berendam,
Batu Berendam, 75350 Melaka , Malaysia.
FM-HELLMANN WORLDWIDE LOGISTICS SDN. BHD.
Administration Office
A-1401-1, Level 14, Menara 1, Kelana Brem Tower
Jalan SS7/15, 47301 Kelana Jaya,
Selangor, Malaysia.
(KLIA-Warehouse & Operation office)
Lot B2B-1, Cargo Forwarders Building,
Malaysia Airlines Freight Forwarders Complex,
Kuala Lumpur International Airport,
64000 KLIA, Selangor, Malaysia.
OVERSEAS
TCH Marine Pte Ltd
Block 1 Beach Road #01- 4747
Singapore 190001
ICON FREIGHT PTY LTD
Unit 4/75 Queen Victoria Street
Fremantle WA 6160
Willetton WA 6955
Australia
F re igh t Manage m e n t H o l d i n g s B h d
(380410-P)
Financial Highlights
KEY PERFORMANCES & FINANCIAL INDICES OF FMH GROUP
Consolidated Financial Results as at 30 June
INCOME (RM’000)
2003
2004
2005
2006
2007
111,142
119,491
141,270
160,832
188,079
PBT
7,301
8,166
8,819
11,061
13,691
PAT after MI
5,129
5,819
6,625
7,740
9,688
6.02
6.83
7.78
9.08
11.37
4.00
4.00
4.00
2005
2006
2007
No. of shares in issue (’000)
85,200
85,200
85,200
Paid-up Share Capital
42,600
42,600
42,600
Shareholders’ Funds
53,458
58,776
65,700
0.63
0.69
0.77
Turnover
Net EPS (sen)
Gross Dividend per share (sen)
BALANCE SHEET (RM’000)
NTA per share (RM)
The table is a summary of proforma consolidated results of the FMH Group for the past five (5) years, based
on the audited financial statements of FMH and its subsidiaries prepared on the assumptions that the curent
structure of the Group has been in existence throughout the five (5) financial years ended 30 June 2003 to 30
June 2007.
2
Freight Managem e n t H o l d i n g s B h d
(380410-P)
THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION.
If you are in any doubt as to the course of action to be taken, you should consult your stockbroker, bank manager,
solicitor, accountant or other professional adviser immediately.
Bursa Malaysia Securities Berhad takes no responsibility for the contents of this Circular, makes no representation as
to its accuracy or completeness expressly disclaims any liability whatsoever for any loss howsoever arising from or in
reliance upon the whole or any part of the contents of this Circular.
In line with the provisions of Practice Note No. 18/2005 on Perusal of Draft Circulars and Other Documents, Bursa
Malaysia Securities Berhad has not perused Part B and C of this Circular as these transactions fall under the
category of Exempt Circulars as outlined in the aforesaid practice note.
Freight Management Holdings Bhd
(Company No. 380410-P)
(Incorporated in Malaysia)
CIRCULAR TO SHAREHOLDERS
PART A
IN RELATION TO THE
PROPOSED RENEWAL OF SHAREHOLDERS’ MANDATE FOR RECURRENT
RELATED PARTY TRANSACTIONS OF A REVENUE OR TRADING NATURE
PART B
IN RELATION TO THE
PROPOSED RENEWAL OF AUTHORITY TO PURCHASE OWN SHARES
PART C
IN RELATION TO THE
PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION
th
The resolutions in respect of the above will be tabled as Special Businesses at the Company’s 11
Annual General Meeting (“AGM”) to be held at Banyan Room, Ground Floor, Sime Darby Convention
Centre, 1A Jalan Bukit Kiara 1, 60000 Kuala Lumpur on Thursday, 29 November 2007, 10.00 am.
Notice of the AGM together with a Form of Proxy are set out in the Annual Report of the Company for
the financial year ended 30 June 2007 dispatched together with this Circular.
A Member entitled to attend and vote at the AGM is entitled to appoint not more than two (2) proxies to
attend and vote on his or her behalf and such proxy or proxies need not be a Member.
The Form of Proxy should be completed and returned in accordance with the instructions therein as
soon as possible and should reach the Registered Office of the Company at Suite 13A-2, Menara
Uni.Asia, 1008 Jalan Sultan Ismail, 50250 Kuala Lumpur no later than forty eight (48) hours before the
appointed time for the meeting. The lodging of the Form of Proxy will not preclude you from attending
and voting in person at the meeting should you subsequently wish to do so. The last date and time for
lodging the Proxy Form is on 27 November 2007 at 10.00 a.m.
This Circular is dated 6 November 2007
THIS PAGE IS INTENTIONALLY LEFT BLANK
PART A
CIRCULAR TO SHAREHOLDERS
IN RELATION TO
PROPOSED RENEWAL OF SHAREHOLDERS MANDATE FOR RECURRENT
RELATED PARTY TRANSACTIONS OF A REVENUE OR TRADING NATURE
DEFINITIONS
Unless where the context otherwise requires, the following definitions shall apply throughout this
Circular:“Act”
:
The Companies Act, 1965, as may be amended form
time to time and any-enactment thereof.
“AGM”
:
Annual General Meeting
“ALSB”
:
Advance International Freight Sdn Bhd (340533-U)
“Board”
:
Board of Directors
“Bursa Securities”
:
Bursa Malaysia Securities Berhad (635998-W)
“FMH” or “the Company”
:
Freight Management Holdings Bhd (380410-P)
“FMH Group or Group”
:
FMH and its subsidiaries as defined in Section 6 of the
Act.
“FMHWL”
:
FM-Hellmann Worldwide Logistics Sdn Bhd (199558-U)
“FM Forwarding”
:
FM Forwarding Sdn Bhd (87612-H)
“FM (Ipoh)”
:
Freight Management (Ipoh) Sdn Bhd (275539-D)
“FMM”
:
Freight Management (M) Sdn Bhd (85740-U)
“FM (Penang)”
:
Freight Management (Penang) Sdn Bhd (190695-K)
“FMWL (Penang)”
:
FM Worldwide Logistics (Penang) Sdn Bhd (287218-U)
“Listing Requirements”
:
Listing Requirements of Bursa Securities
“Logistics”
:
Advance Logistics Sdn Bhd (228190-A)
“Major Shareholder”
:
A person who has an interest or interests in one or more
voting shares in the Company and the nominal amount of
that share, or the aggregate of the nominal amounts of
those shares, is equal to or more than 10% aggregate of
the nominal amounts of all the voting shares in the
Company or equal to or more than 5% of the aggregate
of the nominal amounts of al the voting shares of the
Company where such person is the largest shareholder
of the Company. For the purpose of this definition,
“interest in shares” shall have the meaning given in
Section 6A of the Act.
“Proposal” or “Proposed Renewal
of Shareholders’ Mandate”
:
Proposed renewal of shareholders’ mandate for the FMH
Group to enter into RRPTs.
i
“RRPTs”
:
Recurrent related party transaction of a revenue or
trading nature entered into in the ordinary course of
business which are necessary for the FMH Group’s day
to day operations with Related Parties.
“Related Parties” or “RP”
:
A Director, Major Shareholder or person connected with
such Director or Major Shareholder including any person
who is or was within the preceding six (6) moths of the
date on which terms of the transaction were agreed
upon, a Director or a major Shareholder of the Company
and / or its subsidiary.
“RM” and “sen”
:
Ringgit Malaysia and sen respectively.
“TSMSB”
:
Tuck Sun & Co (Malaysia) Sdn Berhad (96724-V)
“TSFSB”
:
TS Freight Services Sdn Berhad (335801-W)
(The rest of this page is intentionally left blank)
ii
CONTENTS
Page
LETTER TO SHAREHOLDERS CONTAINING:1.
INTRODUCTION
1
2.
BURSA SECURITIES LISTING REQUIREMENTS
2
3.
DETAILS OF THE PROPOSAL
3.1
Principal Activities of the FMH Group
3.2
The Related Parties
3.3
Information on RRPTs
3.4
Review Procedures for the RRPTs
3
3
3
4
5
4.
STATEMENT BY AUDIT COMMITTEE
6
5.
RATIONALE FOR THE PROPOSAL
6
6.
DISCLOSURE IN ANNUAL REPORT
7
7.
DIRECTORS’ AND MAJOR SHAREHOLDERS’ INTERESTS
7
8.
APPROVALS REQUIRED
7
9.
DIRECTORS’ RECOMMENDATION
7
10.
AGM
8
11.
FURTHER INFORMATION
8
-
9
Appendix I
(The rest of this page is intentionally left blank)
iii
Freight Management Holdings Bhd
(Company No. 380410-P)
(Incorporated in Malaysia)
Registered Office:Suite 13A-2, Menara Uni.Asia
1008, Jalan Sultan Ismail
50250 Kuala Lumpur
6 November 2007
Board of Directors:Datuk Dr Hj Noordin Bin Hj Abd Razak (Independent Non-Executive Chairman)
Mr Chew Chong Keat (Group Managing Director)
Mr Yang Heng Lam (Executive Director)
Madam Gan Siew Yong (Executive Director)
Mr Aaron Sim Kwee Lein (Independent Non Executive Director)
Mr Ong Looi Chai (Executive Director)
Mr Chua Tiong Hock (Non Independent Non Executive Director)
Mr Khua Kian Keong (Alternate Director to Chua Tiong Hock)
TO: THE SHAREHOLDERS OF FMH
Dear Sir/Madam,
PROPOSED RENEWAL OF SHAREHOLDERS’ MANDATE FOR RECURRENT RELATED
PARTY TRANSACTIONS
1.
INTRODUCTION
th
At the 10 AGM of the Company held on 8 December 2006 shareholders had given a
mandate for the Company and/or its subsidiaries to enter into recurrent related party
transactions with related parties which are of a revenue or trading nature necessary for
the Group’s day-to-day operations in the ordinary course of business and on terms not
more favorable to the Related Parties than those generally available to the public and are
not to the detriment of the minority shareholders. The said shareholders’ mandate will
lapse at the conclusion of the forthcoming AGM which will be held on 29 November 2007
unless authority for its renewal is obtained.
On 2 November 2007 the Company announced that pursuant to Paragraph 10.09 and
Practice Note 12/2001 of the Listing Requirements, the Company proposes to seek its
shareholders’ approval for the Proposed Renewal of Shareholders’ Mandate at its
forthcoming AGM.
The purpose of this Circular is to provide you with information on the Proposal, to
set out recommendation by the Board and to seek your approval for the ordinary
resolution relating to the Proposal to be tabled at the forthcoming AGM.
1
2.
BURSA SECURITIES LISTING REQUIREMENTS
2.1
Paragraph 10.09 and Practice Note 12/2001 of the Listing Requirements
Pursuant to paragraph 10.09(1) of the Listing Requirements, a listed issuer may
seek shareholders’ mandate in respect of RRPTs subject to the following:-
2.2
(i)
the transactions are in the ordinary course of business and are on terms
not more favorable to the Related Parties than those generally available
to the public;
(ii)
the shareholders’ mandate is subject to annual renewal and disclosure is
made in the annual report of the aggregate value of transactions
conducted pursuant to the shareholders’ mandate during the financial
year;
(iii)
the issuance of a circular to shareholders by the listed issuer for the
shareholders’ mandate; and
(iv)
in a meeting to obtain shareholders’ mandate, the interested director,
interested major shareholder or the interested person connected with a
director or major shareholder, and where it involves the interest of an
interested person connected with a director or a major shareholder, such
director or major shareholder, must not vote on the resolution approving
the transactions. An interested director or interested major shareholder
must ensure that persons connected with him abstain from voting on the
resolution approving the transactions.
Validity period
If approved at the forthcoming AGM, the Shareholders’ Mandate will take effect
from and including 29 November 2007 being the date of the passing of the
Ordinary Resolution relating thereto tabled at the forthcoming AGM, and will
continue to be in force until:
(i)
the conclusion of the next AGM of the Company following the
forthcoming AGM at which the Proposed Shareholders’ Mandate is
approved, at which time it will lapse, unless by a resolution passed at the
AGM the mandate is again renewed;
(ii)
the expiration of the period within which the next AGM of the Company
after the forthcoming AGM is required to be held pursuant to Section
143(1) of the Act (but shall not extend to such extension as may be
allowed pursuant to Section 143(2) of the Act); or
(iii)
revoked or varied by resolution passed by the shareholders in general
meeting,
whichever is earlier.
2
3.
DETAILS OF THE PROPOSALS
3.1
Principal Activities of the FMH Group
FMH is principally an investment holding company and provides management
services to its subsidiary and associated companies. The Proposal will apply to
the following subsidiaries of FMH
Subsidiaries / Associates
FMM
FMHWL
FMWL (Penang)
FM (Penang)
FM (Ipoh)
ALSB
3.2
Effective Equity
Interest (%)
100%
100%
100%
100%
100%
100%
Principal Activities
Provision of freight services
Provision of freight services
Provision of freight services
Provision of freight services
Provision of freight services
Provision of freight services
The Related Parties
The Proposal will apply to the following Related Parties:
Related Party
Principal Activities
TSFSB
TSMSB
Air, rail & sea freight forwarder
Forwarding agent, transportation of goods, cargo and
other similar activities
Forwarding licensee
Forwarding licensee
FM Forwarding
Logistics
Notes:
-
Mr Chew Chong Keat is a major shareholder of FMH and an executive director in
FMH and all its subsidiaries. He is also a major shareholder and director in FM
Forwarding.
-
Mr Yang Heng Lam is a major shareholder of FMH and an executive director in FMH
and all its subsidiaries. He is also a major shareholder and director in FM Forwarding.
-
Mdm Gan Siew Yong is the spouse of Mr Chew Chong Keat and is an executive
director in FMH and all its subsidiaries. She is therefore a person connected to Mr
Chew Chong Keat.
-
En Azha Bin Halip is the Senior Import Manager in FMH Group and is also a major
shareholder and director in FM Forwarding and Logistics.. He is therefore a person
connected to Mr Chew Chong Keat, Mr Yang Heng Lam and Mdm Gan Siew Yong.
-
En Abdul Jalil Hj Abdullah is a Senior Manager in FMH Group. He a director in FM
Forwarding and also a major shareholder of Logistics. He is therefore a person
connected to Mr Chew Chong Keat, Mr Yang Heng Lam and Mdm Gan Siew Yong.
-
Mdm Chew Phek Ying and Mr Chew Chong Way are siblings of Mr Chew Chong Keat
and are therefore persons connected to Mr Chew Chong Keat. Mdm Chew Phek Ying
is a director in TSFSB and TSMSB. Mr Chew Chong Way is a director in TSMSB.
Mdm Chew Phek Ying and Mr Chew Chong Way are indirectly interested in TSMSB.
3
3.3
Information on the RRPTs
It is anticipated that the Group would, in the ordinary course of business continue
to enter into RRPTs which are detailed in the Table below.
In view of the time-sensitive, confidential and frequent nature of such RRPTs, the
Board is seeking shareholders’ approval for the Proposed Shareholders’ Mandate
for the Group to enter into transactions in the normal course of business with the
classes of Related Parties set out below provided such transactions are entered
into at arms’ length and on normal commercial terms which are not more
favorable to the Related Parties than those generally available to the public and
are not detrimental to the minority shareholders.
The estimated values of the RRPTs as set out in the Table below are for the
period from the conclusion of the forthcoming AGM of the Company until the
conclusion of the next AGM of the Company based on the FMH Group’s budget
for financial year ending 30 June 2008 and may be subject to changes. The
aggregate or actual values of these transactions may exceed the estimated
amounts over the said period.
Related
Party
TSFSB
Company
in FMH
Group
FMM
Nature of
transaction
FMM provides
sea
freight
services
to
TSFSB
Estimated Value
of Transaction for
the period from
the forthcoming
AGM to the next
AGM
RM
15,000
Interested Parties
Interested Major
Shareholder:
Chew Chong Keat
15,000
TSFSB provides
freight services
to FMM
TSMSB
FMM
TSMSB provides
forwarding
services to FMM
Persons Connected to
Interested Shareholder:
Gan Siew Yong
Chew Phek Ying
10,000
Interested Major
Shareholder:
Chew Chong Keat
Persons Connected to
Interested Shareholder:
Gan Siew Yong
Chew Phek Ying
Chew Chong Way
FM
Forwarding
Logistics
FMWL
(Penang),
FMHWL,
FM
(Penang),
FM (Ipoh)
FM Forwarding
provides
exclusive custom
clearance
services to the
FMH Group
2,000,000
ALSB
Logistics
provides
exclusive custom
clearance
services to ALSB
3,500,000
4
Interested Major
Shareholder:
Chew Chong Keat
Yang Heng Lam
Persons Connected to
Interested Shareholder:
Gan Siew Yong
Azha bin Halip
Abdul Jalil Hj Abdullah
The shareholdings of the interested persons named above as at 16 October 2007 are as
follows:
Interested Party
Chew Chong Keat
Yang Heng Lam
Gan Siew Yong
Azha Bin Halip
Abdul Jalil Hj Abdullah
Chew Phek Ying
Chew Chong Way
3.4
Interests in FMH
Direct Interest
Indirect Interest
No. of Shares
%
No. of Shares
%
23,732,818
27.85
15,595,222
18.30
3,716,782
4.36
14,200
0.02
6,000
0.01
350,000
0.41
-
Review Procedures for the RRPTs
There are procedures established by the Group to ensure that RPPTs are
undertaken on an arms’ length basis and on the Group’s normal commercial
terms, consistent with the Group’s usual business practices and policies, which
are generally not more favorable to the Related Parties than those generally
available to the public and are not detrimental to the minority shareholders. The
procedures are as follows:(i)
A list of companies related to the Related Parties have been circulated
within the Group and all contracting parties will be notified that all RRPTs
are required to be undertaken on an arm’s length basis and on normal
commercial terms and on terms not more favorable to the Related Parties
than those generally available to the public and are not detrimental to the
minority shareholders;
(ii)
The transaction prices and terms are determined based on the prevailing
market rates which are determined by market forces, demand and
supply, quality of the product and other relevant factors, and where
appropriate, at least 2 quotations will be obtained from unrelated third
parties to ascertain the appropriate transaction prices;
(iii)
The Audit Committee will delegate the day-to-day endorsement of
RRPTs to FMH’s Managing Director, who will ensure that the RRPTs are
entered into on arms length basis, based on commercial terms and are
not more favorable to the Related Parties that those generally available
to the public and are not prejudicial to the minority shareholders.
(iv)
The Audit Committee will review and ratify at each Audit Committee
meeting the transactions that the management has identified as RRPTs
to ensure that the RRPTs are entered into on arms length basis, based
on commercial terms and are not more favorable to the Related Parties
that those generally available to the public and are not prejudicial to the
minority shareholders.
(v)
The Audit Committee will review conflict of interest situations that may
arise with the FMH Group as a result of RRPTs to ensure that
appropriate procedures have been followed and the Audit Committee has
the overall responsibility to determine the review procedures and shall
continue to review the adequacy and appropriateness of the procedures
as and when required.
(vi)
Any member of the Audit Committee may as he deems fit, request for
additional information pertaining to the transaction including from
independent sources or advisers;
5
(vii)
The annual internal audit plan shall incorporate a review of all RRPTs
entered into pursuant to the shareholders’ mandate to ensure that the
relevant approvals have been obtained and the review procedures in
respect of such transactions are adhered to; and
The Board of FMH and the Audit Committee have reviewed the above
procedures and will continue to review the procedures as and when required, with
the authority to sub-delegate such function to individuals or committees within the
Company as they deem appropriate. If a member of the Board of FMH or Audit
Committee has an interest in the transaction to be reviewed by the Board of FMH
or the Audit Committee as the case may be, he will not participate in the
deliberation o such transaction and will abstain from any decision making by the
Board or the Audit Committee in respect of that transaction.
4.
STATEMENT BY AUDIT COMMITTEE
The Audit Committee of the Company has seen and reviewed the procedures mentioned
in Section 3.4 above and is of the view that the said procedures are sufficient to ensure
that the RRPTs are not more favorable to the Related Parties than those generally
available to the public and are not detrimental to the minority shareholders.
5.
RATIONALE FOR THE PROPOSALS
The rationale for and benefits of the Proposal to the FMH Group are as follows:
(i)
to facilitate transactions with Related Parties which are in the ordinary course of
business of the FMH Group undertaken at arms’ length, normal commercial terms
and on terms which are not more favorable to the Related Parties than those
generally available to the public and are not detrimental to the interests of
minority shareholders;
(ii)
to enable the FMH Group to transact with the Related Parties in an expeditious
manner to meet business needs for the supply and/or provision of goods and
services which are necessary for its day-to-day operations particularly business
needs which are time sensitive in nature;
(iii)
for transactions where it is vital that confidentiality be maintained, it will not be
viable for prior shareholders’ mandate to be obtained as this will entail the release
of details of the transactions and may adversely affect the interests of the FMH
Group and place the FMH Group at a disadvantage to its competitors who may
not require shareholders’ mandate to be obtained; and
(iv)
will eliminate the need to announce and convene separate general meetings to
seek shareholders’ mandate for each transaction and as such, substantially
reduce expenses, time and other resources associated with the making of
announcements and convening of general meetings on and ad hoc basis,
improve administrative efficiency considerably and allow financial and manpower
resources to be channeled to attain more productive objectives.
6
6.
DISCLOSURE IN ANNUAL REPORT
Disclosure will be made in the annual report of the Company of the aggregate value of
transactions conducted based on the type of transaction and the names of the Related
Parties pursuant to the Proposal during the financial year and in the annual report of the
subsequent year during which the Proposal is in force.
7.
DIRECTORS’ AND MAJOR SHAREHOLDERS’ INTERESTS
In respect of the Proposal, save as disclosed below, none of the other Directors and/or
major shareholders or persons connected to them (as defined in the Listing
Requirements) have any interest, direct or indirect in the Proposal.
Mr Chew Chong Keat, the group managing director, and Mr Yang Heng Lam, the
executive director, are major shareholders of the Company holding as at 16 October 2007
respectively 27.85% and 18.30% direct equity interest in the Company are interested in
the Proposal.
Madam Gan Siew Yong, who is the spouse of Mr Chew Chong Keat is a person
connected to Mr Chew Chong Keat and is therefore deemed interested in the Proposal.
She is an executive director in FMH and is deemed interested in the Related Parties to
the extent the shares of these companies are held by FMH.
The interested directors, namely Mr Chew Chong Keat, Mr Yang Heng Lam and Madam
Gan Siew Yong have abstained and will continue to abstain from all Board deliberations
in respect of the Proposal. Further, they will abstain from voting in respect of their direct
and/or indirect interests on the resolution approving the Proposal at the forthcoming AGM
and will ensure that persons connected to them namely Chew Phek Ying, Chew Chong
Way, Azha Bin Halip and Abdul Jalil Hj Abdullah will abstain from voting on the resolution
pertaining to the Proposal in respect of their direct and/or indirect shareholding in FMH at
the forthcoming AGM.
The interested directors, interested major shareholders and persons connected to the
interested directors and interested major have all consented that a one resolution
pertaining to the general mandate be sought for all the RRPTs despite several categories
and classes of related parties being involved and they have also undertaken that they will
ensure that persons connected to them (as defined in the Listing Requirements) will
abstain from voting on the proposed ordinary resolution pertaining to the Proposal at the
forthcoming AGM.
8.
APPROVAL REQUIRED
The Proposal is subject to the approval of the shareholders of the Company which will be
sought at the forthcoming AGM.
9.
DIRECTORS’ RECOMMENDATION
Your Directors with the exception of Mr Chew Chong Keat, Mr Yang Heng Lam and
Madam Gan Siew Yong, the Interested Directors, who have abstained and will abstain
from all Board’s deliberations, recommendations and voting on the Proposal having
considered all aspects of the Proposal are of the opinion that the Proposal is in the best
interests of the FMH Group and is not detrimental to the minority shareholders.
Accordingly, they (save for Chew Chong Keat, Yang Heng Lam and Gan Siew Yong)
recommend that you vote in favor of the ordinary resolution in relation to the Proposal
under the agenda of Special Businesses, the text of which are set out in the Notice
convening the forthcoming AGM.
7
10.
AGM
th
The 11 AGM of the Company, the Notice of which is enclosed in the Annual Report of
FMH for the financial year ended 30 June 2007 accompanying this Circular, will be held at
Banyan Room, Ground Floor, Sime Darby Convention Centre, 1A Jalan Bukit Kiara 1,
60000 Kuala Lumpur on Thursday, 29 November 2007 at 10.00 a.m. for the purpose of
considering and if thought fit, passing, inter alia, the ordinary resolution on the Proposal
under the agenda of Special Business as set out in the said Notice.
If you are unable to attend and vote in person at the AGM and wish to appoint a Proxy
instead, you should complete and return the Form of Proxy enclosed in the Annual Report
in accordance with the instructions printed thereon. The Form of Proxy must be lodged at
the registered office of the Company at Suite 13A-2, Menara Uni.Asia, 1008 Jalan Sultan
Ismail, 50250 Kuala Lumpur not later than forty eight (48) hours before the time fixed for
the AGM or any adjournment thereof. The lodging of the Form of Proxy does not preclude
you from attending and voting in person should you subsequently decide to do so.
11.
FURTHER INFORMATION
Shareholders are requested to refer to the attached appendix for additional information.
Yours faithfully
On behalf of the Board of
FREIGHT MANAGEMENT HOLDINGS BHD
Datuk Dr Hj Noordin Bin Hj Abd Razak
Independent Non-Executive Chairman
8
APPENDIX I
1.
DIRECTORS’ RESPONSIBILITY STATEMENT
This Circular has been seen and approved by the Board of FMH who individually and
collectively accepts full responsibility for the accuracy of the information contained herein
and confirm that, after making all reasonable enquiries and to the best of their knowledge
and belief, there are no other materials facts, the omission of which would make any
statement herein misleading.
2.
MATERIAL LITIGATION
FMH Group is not engaged in any current material litigation, claims or arbitration, either
as plaintiff of defendant, and the Board of FMH do not know of any proceedings pending
or threatened against FMH and/or its subsidiaries or of any facts likely to give rise to any
proceeding which may materially and adversely affect the financial position and/or
business of the FMH Group.
3.
MATERIAL CONTRACTS
Save as disclosed below, neither FMH and/or its subsidiaries has entered into any
material contracts which are or may be material, not being contracts entered into in the
ordinary course of business, during the past two (2) years preceding the date of this
Circular:-
4.
(a)
Allotment and Subscription Agreement dated 15 February 2006 between Andrew
Tay Nguang Yeow (“Andrew Tay”), TCH Marine Pte Ltd (“TCH Marine”) and FMH
whereby FMH agreed to purchase at the consideration of SGD700,000 the rights
of Andrew Tay in a rights issue exercise to be undertaken by TCH Marine. The
purchase of rights allows FMH to subscribe for 1,353,000 ordinary shares of
SGD1.00 each at the consideration of SGD1,353,000 equivalent to RM3,103,105.
With the completion of the Subscription on 3 March 2006, TCH Marine became a
51% owned subsidiary of FMH. The total investment for the 51% shareholding in
TCH Marine by FMH is SGD2,053,000 or equivalent to RN4,704,407 and direct
cost attributed to the acquisition amounted to RM26,790; and
(b)
Sale and Purchase Agreement dated 17 November 2006 between FMH and Ng
Boon Let, Ng Boon Huat and Ng Boon Pin (collectively “Purchasers”) whereby
FMH agreed to sell and the Purchasers agreed to purchase a piece of vacant
industrial land held under HS(D) 71692 PT 67124, Mukim Klang, Daerah Klang,
Negeri Selangor at a cash consideration of RM2,025,115 upon the terms and
subject to the conditions contained in the Agreement.
DOCUMENTS FOR INSPECTION
Copies of the following documents are available for inspection at the Registered Office of
FMH at 13A-2, Menara Uni.Asia, 1008 Jalan Sultan Ismail, 50250 Kuala Lumpur during
normal business hours between Monday and Friday (except public holidays) from the
date of this Circular up to and including the date of the AGM:(i)
The Memorandum and Articles of Association of FMH;
(ii)
Audited consolidated accounts of FMH for the past two (2) financial years ended
30 June 2006 and 30 June 2007; and
(iii)
The Material Contracts referred to in Paragraph 3 above.
9
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PART B
STATETEMENT TO SHAREHOLDERS
IN RELATION TO
PROPOSED RENEWAL OF SHARE BUY-BACK AUTHORITY
DEFINITIONS
Unless where the context otherwise requires, the following definitions shall apply throughout this
statement:
AGM
:
Annual General Meeting
Board
:
Board of Directors of FMH
Bursa Securities
:
Bursa Malaysia Securities Berhad (635998-W)
Code
:
The Malaysian Code on Take-Overs and Mergers, 1998 (and
any amendments thereto)
Companies Act
:
The Companies Act, 1965 (and any amendments thereto)
EPS
:
Earnings per share
FMH or the Company
:
Freight Management Holdings Bhd (380410-P)
FMH Group or the Group
:
FMH and its subsidiary and associated companies
Market Day
:
Any day from Mondays to Fridays (both inclusive) which Bursa
Securities is open for the trading of securities
NA
:
Net Assets
:
Proposed renewal of authority to purchase of the Company’s
own Shares representing up to 10% of its issued and paid-up
share capital
Purchased Shares
:
Shares purchased pursuant to the Proposed Renewal of Share
Buy-Back Authority
RM and sen
:
Ringgit Malaysia and sen respectively
Share(s)
:
Ordinary share(s) of RM0.50 each in FMH
Proposed Renewal of
Buy-Back Authority
Share
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i
CONTENTS
Page
LETTER TO SHAREHOLDERS CONTAINING:
1.
INTRODUCTION
1
2.
DETAILS OF THE PROPOSED RENEWAL OF SHARE BUY-BACK AUTHORITY
2
3.
RATIONALE FOR THE PROPOSED RENEWAL OF SHARE BUY-BACK AUTHORITY
3
4.
RISK ASSESSMENT OF THE PROPOSED RENEWAL OF SHARE
BUY-BACK AUTHORTY
4
5.
PURCHASES OF SHARES AND RESALE OF TREASURY SHARES MADE IN
THE PREVIOUS 12 MONTHS
4
6.
EFFECTS OF THE PROPOSED RENEWAL OF SHARE BUY-BACK AUTHORITY
4
7.
CONDITIONS OF THE PROPOSED RENEWAL OF SHARE BUY-BACK AUTHORITY
6
8.
INTERESTS OF DIRECTORS, MAJOR SHAREHOLDERS AND PERSONS
CONNECTED TO THEM
6
9.
IMPLICATIONS OF THE PROPOSED RENEWAL OF SHARE BUY-BACK AUTHORITY
RELATING TO THE CODE
7
10.
DIRECTORS’ RECOMMENDATION
8
11.
RESPONSIBILITY STATEMENT
8
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ii
THIS PAGE IS INTENTIONALLY LEFT BLANK
Freight Management Holdings Bhd
(Company No.380410-P)
(Incorporated in Malaysia)
Registered Office:Suite 13A-2, Menara Uni.Asia
1008, Jalan Sultan Ismail
50250 Kuala Lumpur
6 November 2007
Board of Directors
Datuk Dr Hj Noordin Bin Hj Abd Razak (Independent Non-Executive Chairman)
Mr Chew Chong Keat (Group Managing Director)
Mr Yang Heng Lam (Executive Director)
Madam Gan Siew Yong (Executive Director)
Mr Aaron Sim Kwee Lein (Independent Non Executive Director)
Mr Ong Looi Chai (Executive Director)
Mr Chua Tiong Hock (Non Independent Non Executive Director)
Mr Khua Kian Keong (Alternate Director to Chua Tiong Hock)
To:
THE SHAREHOLDERS OF FMH
Dear Sir/Madam,
PROPOSED RENEWAL OF SHARE BUY-BACK AUTHORITY
1.
INTRODUCTION
On 2 November 2007 the Company announced that it proposes to seek a renewal of the
approval from the shareholders at the forthcoming AGM to be convened on 29 November
2007.
At the AGM held on 8 December 2006, the Board obtained the shareholders approval to allow
the Company to buy-back of up to 10% of its issued and paid-up share capital. This authority
shall lapse at the conclusion of the forthcoming AGM unless it is renewed.
The purpose of this Statement is to provide you with the relevant information and to seek your
approval for an ordinary resolution pertaining to the Proposed Renewal of Share Buy-Back
Authority to be tabled as Special Business at the forthcoming AGM to be convened on 29
November 2007.
YOU ARE ADVISED TO READ THE CONTENTS OF THIS STATEMENT CAREFULLY
BEFORE VOTING ON THE RESOLUTION PERTAINING TO THE PROPOSED RENEWAL
OF SHARE BUY-BACK AUTHORITY.
1
2.
DETAILS OF THE PROPOSED RENEWAL OF SHARE BUY-BACK AUTHORITY
Your Board is seeking your approval for the Company to purchase and/or hold Shares
representing up to 10% of its issued and paid-up share capital on Bursa Securities, subject to
the Companies Act, Listing Requirements of Bursa Securities and any prevailing laws, rules,
regulations and guidelines issued by the relevant authorities at the time of purchase.
The Proposed Renewal of Share Buy-Back Authority will be effective immediately upon the
passing of the ordinary resolution, and will remain in effect until the conclusion of the next
AGM of FMH, or the expiry of the period within which the next AGM is required by law to be
held, unless revoked or varied by ordinary resolution of the shareholders in a general
meeting, whichever occurs first.
Set out below are details of the Proposed Renewal of Share Buy-Back Authority:
(i)
Funding
The Proposed Renewal of Share Buy-Back Authority will be funded from internally
generated funds. Under the Listing Requirements of Bursa Securities, the maximum
funds to be utilised for the purchase of the Shares cannot exceed the level of retained
profits and share premium of the Company. Accordingly, your Directors shall allocate
an amount of funds which will not be more than the aggregate sum of the retained
profits and share premium of the Company in respect of any purchase of Shares
pursuant to the Proposed Renewal of Share Buy-Back Authority. Based on the
audited accounts of FMH as at 30 June 2007, the retained profits and share premium
of the Company stood at approximately RM18,857,800 and RM4,075,506
respectively.
The actual number of Shares to be purchased, the total amount of funds to be
utilised, impact on cash flows and the timing of the purchase(s) will depend on the
prevailing equity market conditions and sentiments as well as the financial resources
available to the Company at the time of the purchase(s).
(ii)
Treatment of Purchased Shares
In accordance with Section 67A of the Companies Act, the Purchased Shares may be
dealt with by your Directors in the following manner:
(a)
(b)
(c)
cancel the Purchased Shares; or
retain the Purchased Shares as treasury shares for distribution as dividends
to the shareholders of the Company and/or resell on Bursa Securities in
accordance with the relevant rules of Bursa Securities and/or subsequently
cancel the treasury shares; or
retain part of the Purchased Shares as treasury shares and cancel the
remainder.
Upon each purchase of Shares, an immediate announcement will be made to Bursa
Securities in respect of your Directors’ decision on the treatment of the Purchased
Shares.
(iii)
Ranking
While the Purchased Shares are held as treasury shares, Section 67A (3C) of the
Companies Act states that the rights attached to them as to voting, dividends and
participation in other distributions or otherwise are suspended and the treasury
shares shall not be taken into account in calculating the number or percentage of
Shares or of a class of Shares for any purposes including substantial shareholding,
takeovers, notices, the requisitioning of meetings, the quorum for a meeting and the
result of a vote on a resolution at a meeting.
2
The Proposed Renewal of Share Buy-Back Authority would effectively reduce the number of
Shares carrying voting and participation rights (unless the Purchased Shares are resold on
Bursa Securities or distributed as share dividends). Consequently (whether the Purchased
Shares are held as treasury shares or cancelled), all else being equal, the EPS of the
Company/FMH Group may be enhanced as the earnings of FMH/FMH Group would be
divided by a reduced number of Shares.
The Purchased Shares may be cancelled at such time(s) where your Directors are of the view
that there is excess share capital and wish to reduce the number of Shares in circulation. If
the Purchased Shares are held as treasury shares, such Shares may potentially be resold on
Bursa Securities at a higher price and therefore realising a potential gain in reserves without
affecting the total issued and paid-up share capital of the Company. The treasury shares may
also be distributed to shareholders as dividends and, if undertaken, would serve to reward the
shareholders of the Company.
4.
RISK ASSESSMENT OF THE PROPOSED RENEWAL SHARE BUY-BACK AUTHORITY
The Proposed Renewal of Share Buy-Back Authority, if implemented, would reduce the
financial resources of the Group. This may result in the Group having to forego future
investment opportunities and/or any interest income that may be derived from the deposit of
such funds in interest bearing instruments. The Proposed Renewal of Share Buy-Back
Authority may also result in a reduction of financial resources available for distribution in the
form of cash dividends to shareholders of FMH.
However, the financial resources of the Group may increase pursuant to the resale of the
Purchased Shares held as treasury shares at prices higher than the purchase price. In this
connection, your Board will be mindful of the interests of the Group and shareholders of FMH
in implementing the Proposed Renewal of Share Buy-Back Authority and in subsequent
resale of the treasury shares on Bursa Securities, if any.
5.
PURCHASES OF SHARES AND RESALE OF TREASURY SHARES MADE IN THE
PREVIOUS 12 MONTHS
FMH has not purchased any Shares in the previous 12 months preceding the date of this
Statement. Consequently, the Company does not have any treasury shares and has not
resold or cancelled any treasury shares in the same period.
6.
EFFECTS OF THE PROPOSED RENEWAL OF SHARE BUY-BACK AUTHORITY
The effects of the Proposed Renewal of Share Buy-Back Authority on the share capital,
consolidated NA, working capital, earnings, dividends and the substantial shareholders’
shareholdings in FMH are set out below:
6.1
Share Capital
The effects of the Proposed Renewal of Share Buy-Back Authority on the issued and paidup share capital of FMH will depend on the treatment of the Purchased Shares. In the event
the Proposed Renewal of Share Buy-Back Authority is carried out in full and all the
Purchased Shares are cancelled, the present issued and paid-up share capital of the
Company will be reduced by the number of Shares so cancelled. However, if the Purchased
Shares are retained as treasury shares, the Proposed Renewal of Share Buy-Back Authority
will not have any effect on the issued and paid-up share capital of the Company. However,
the rights attaching to the Purchased Shares as to voting, dividends and participation in
other distributions or otherwise are suspended in the manner as set out in Section 2(iii) of
this Statement.
4
6.2
NA
The effects of the Proposed Renewal of Share Buy-Back Authority on the consolidated NA of
FMH would depend on the purchase price and number of Purchased Shares. The Proposed
Renewal of Share Buy-Back Authority will reduce the consolidated NA per Share at the time
of purchase if the purchase price exceeds the consolidated NA per Share and conversely will
increase the consolidated NA per Share at the time of purchase if the purchase price is less
than the consolidated NA per Share.
Should the Purchased Shares be held as treasury shares and later resold, the consolidated
NA per Share will increase if the Company realises a gain from the resale, and vice versa.
6.3
Working Capital
The Proposed Renewal of Share Buy-Back Authority is likely to reduce the working capital of
the FMH Group, the quantum of which depends on the purchase price of the Purchased
Shares, the number of Purchased Shares and any associated costs incurred in making the
purchase.
6.4
Earnings
The effects of the Proposed Renewal of Share Buy-Back Authority on the earnings of the
FMH Group would depend on the purchase price and number of Purchased Shares as well
as the effective funding cost to the Company in implementing the Proposed Renewal of
Share Buy-Back Authority. The reduction in the number of Shares applied in the computation
of the EPS pursuant to the Proposed Renewal of Share Buy-Back Authority (whether the
Purchased Shares are held as treasury shares or cancelled) may generally, all else being
equal, have a positive impact on the EPS for the financial year when the Proposed Renewal
of Share Buy-Back Authority is implemented.
Should the Purchased Shares be held as treasury shares and later resold, the extent of the
impact to the EPS of the FMH Group will depend on the actual selling price, the number of
treasury shares resold and the effective funding cost, if any.
6.5
Dividends
Assuming the Proposed Renewal of Share Buy-Back Authority is implemented in full,
dividends would be paid on the remaining issued and paid-up share capital of FMH
(excluding the Shares already purchased). The Proposed Renewal of Share Buy-Back
Authority may have an impact on the Company’s dividend policy for the financial year ending
30 June 2008 as it would reduce the cash available which may otherwise be used for
dividend payments. Nonetheless, the treasury shares purchased may be distributed as
dividends to shareholders of the Company, if the Company so decides.
Any dividends to be declared by FMH in the future would depend on, inter-alia, the
profitability and cashflow position of the FMH Group.
6.6
Substantial Shareholders
Shares bought back by the Company under the Proposed Renewal of Share Buy-Back
Authority that are retained as treasury shares and/or subsequently cancelled will result in a
proportionate increase in the percentage shareholdings of the substantial shareholders in
the Company. Please refer to Section 8 below for further details.
5
6.7
Shareholding Spread
According to the Record of Depositors maintained by Bursa Malaysia Depository Sdn Bhd as
at 16 October 2007, approximately 22,242,930 Shares representing 26.1% of the issued and
paid-up share capital of the Company were held by 1,132 public shareholders holding not
less than 100 Shares each. In this regard, your Board undertakes to purchase Shares only
to the extent that the public shareholding spread of FMH shall not fall below 25% of the
issued and paid-up share capital of the Company and are in the hands of a minimum of
1,000 public shareholders holding not less than 100 Shares each at all times pursuant to the
Proposed Renewal of Share Buy-Back Authority, in accordance with paragraph 12.14 of the
Listing Requirements of Bursa Securities.
7.
CONDITIONS TO THE PROPOSED RENEWAL OF SHARE BUY-BACK AUTHORITY
The Proposed Renewal of Share Buy-Back Authority is subject to the approval of the
shareholders of FMH at the forthcoming AGM.
8.
INTERESTS OF DIRECTORS, MAJOR SHAREHOLDERS AND PERSONS CONNECTED
TO THEM
Save for the inadvertent increase in the percentage shareholdings and/or voting rights of the
shareholders in the Company as a consequence of the Proposed Renewal of Share BuyBack Authority, none of the Directors and major shareholders of FMH nor persons connected
to them has any interest, direct or indirect, in the Proposed Renewal of Share Buy-Back
Authority and, if any, the resale of the treasury shares.
Based on the Record of Depositors maintained by Bursa Malaysia Depository Sdn Bhd as at
16 October 2007 and assuming FMH implements the Proposed Renewal of Share Buy-Back
Authority to the extent that the public shareholding spread of FMH shall not fall below 25% of
the issued and paid-up share capital of the Company and that the Shares purchased are from
public shareholders, the effects of the Proposed Renewal of Share Buy-Back Authority on the
shareholdings of the Directors and major shareholders of FMH are as follows:
Directors
Existing as at 16 October 2007
Direct
Indirect
No. of
No. of
Shares
%
Shares
%
Datuk Dr. Haji
Noordin bin Haji Abd.
Razak
After the Proposed Renewal of
Share Buy-Back Authority*
Direct
Indirect
No. of
No. of
Shares
%
Shares
%
-
-
-
-
Chew Chong Keat
23,732,818
27.85
23,732,818
28.27
Yang Heng Lam
15,595,222
18.30
15,595,222
18.58
Gan Siew Yong
3,716,782
4.36
-
-
3,716,782
4.43
-
-
-
-
-
1,000,950
1.17
Aaron Sim Kwee Lein
Ong Looi Chai
1,000,950
-
-
-
-
17,040,000
20.30
1.19
Chua Tiong Hock
Khua Kian Keong
17,040,000
20.00
Notes:
*
For illustrative purposes only, the above table assumes that FMH purchases up to 1.47.% of its issued and paid-up
share capital as at 16 October 2007 to comply with the 25% public spread requirement.
6
Major Shareholders
Name
After the Proposed Renewal of
*
Share Buy-Back Authority
Direct
Indirect
No. of
No. of
Shares
%
Shares
%
Chew Chong Keat
23,732,818
27.85
23,732,818
28.27
Yang Heng Lam
15,595,222
18.30
15,595,222
18.58
Singapore
Enterprise Pte Ltd
17,040,000
20.00
17,040,000
20.30
Notes:
*
9.
Existing as at 16 October 2007
Direct
Indirect
No. of
No. of
Shares
%
Shares
%
-
-
-
-
For illustrative purposes only, the above table assumes that FMH purchases up to 1.47% of its issued and
paid-up share capital as at 16 October 2076 to comply with the 25% public spread requirement.
IMPLICATIONS OF THE PROPOSED RENEWAL OF SHARE BUY-BACK AUTHORITY
RELATING TO THE CODE
Practice Note 2.7 of the Code which deals with the purchase by a company of its own voting
shares states that Part II of the Code (which is in relation to mandatory offers) shall apply in
the following situations:
(i)
a director of a company, together with persons acting in concert with him (if any), who
as a result of a purchase by a company of its own voting shares, obtains control in
the company;
(ii)
a person, together with persons acting in concert with him (if any), who has acquired
voting shares of a company at a time when he reasonably or ought reasonably to
believe that the company would purchase its own voting shares and who as a result
of a purchase by the company, obtains control in the company;
(iii)
a director of a company, together with persons acting in concert with him (if any), who
holds more than 33% but less than 50% of the voting shares of the company and who
as a result of a purchase by the company of its own voting shares, increases his
holding in any period of 6 months by an additional 2% or more of the voting shares of
the company; and
(iv)
(iv)a person, together with persons acting in concert with him (if any), holding more
than 33% but less than 50% of the voting shares of a company, who has acquired
voting shares of a company at a time when he reasonably or ought reasonably to
believe that the company would purchase its own voting shares and who as a result
of a purchase by the company, increases his holding in any period of 6 months by an
additional 2% or more of the voting shares of the company.
In the event that the Company acquires the maximum amount of its Shares authorised under
the Proposed Renewal of Share Buy-Back Authority and subject to compliance with the
regulatory requirements as set out in Section 2(iv) of this Statement to Shareholders, the
collective equity interest of Chew Chong Keat and Gan Siew Yong (who is a person acting in
concert with him) as at 16 October 2007 will increase by approximately 0.5% from 32.2% to
32.7%.
Pursuant to Part II of the Code, if the collective equity interest of Chew Chong Keat and Gan
Siew Yong increases by more than 2% in any 6 months period, they will be obliged to
undertake a mandatory offer for Shares not already own by them collectively.
7
However, under Practice Note 2.9.10 of the Code, holders of voting shares may apply for an
exemption from a mandatory general offer obligation arising from the purchase of a
company’s own shares. In this regard, Chew Chong Keat and Gan Siew Yong shall apply for
the said waiver if the obligation is expected to be triggered as a result of the Proposed
Renewal of Share Buy-Back Authority..
10.
DIRECTORS’ RECOMMENDATION
After due consideration, your Board is of the opinion that the Proposed Renewal of Share
Buy-Back Authority is in the best interest of the Company. Accordingly, your Board
recommends that you vote in favour of the resolution to be tabled at the forthcoming AGM to
give effect to the Proposed Renewal of Share Buy-Back Authority.
11.
RESPONSIBILITY STATEMENT
This Statement has been reviewed and approved by the Directors of FMH and they
individually and collectively accept full responsibility for the accuracy of the information
contained herein and confirm that after having made all reasonable enquiries and to the best
of their knowledge and belief, there are no other facts the omission of which would make any
statement in this Statement misleading
Yours faithfully,
For and on behalf of the Board of Directors
FREIGHT MANAGEMENT HOLDINGS BHD
Datuk Dr. Haji Noordin bin Haji Abd. Razak
Chairman and Independent Non-Executive Director
8
PART C
CIRCULAR TO SHAREHOLDERS
IN RELATION TO
PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION
DEFINITIONS
Unless where the context otherwise requires, the following definitions shall apply throughout this
Circular:“Act”
:
The Companies Act, 1965, as may be amended from
time to time and any-reenactment thereof.
“AGM”
:
Annual General Meeting
“Bursa Securities”
:
Bursa Malaysia Securities Berhad (635998-W)
“FMH” or “the Company”
:
Freight Management Holdings Bhd (380410-P)
“Listing Requirements”
:
Listing Requirements of Bursa Securities.
“Proposal” or “Proposed
Amendments”
:
Proposed amendments to the Company’s Articles of
Association.
“Rules”
:
Rules of Bursa Malaysia Depository Sdn Bhd, as may be
amended from time to time and any-reenactment thereof.
“SICDA”
:
Securities Industry (Central Depositories) Act, 1991.
(The rest of this page is intentionally left blank)
i
CONTENTS
Page
LETTER TO SHAREHOLDERS CONTAINING:1.
INTRODUCTION
1
2.
DETAILS OF THE PROPOSAL
1
3
APPROVAL REQUIRED
1
4.
RATIONALE FOR THE PROPOSAL
2
5.
DIRECTORS’ AND MAJOR SHAREHOLDERS’ INTERESTS
2
6.
DIRECTORS’ RECOMMENDATION
2
7.
AGM
2
8
FURTHER INFORMATION
2
APPENDICES
-
Appendix II
Appendix III
3
4
(The rest of this page is intentionally left blank)
ii
THIS PAGE IS INTENTIONALLY LEFT BLANK
Freight Management Holdings Bhd
(Company No. 380410-P)
(Incorporated in Malaysia)
Registered Office:Suite 13A-2, Menara Uni.Asia
1008, Jalan Sultan Ismail
50250 Kuala Lumpur
6 November 2007
Board of Directors:Datuk Dr Hj Noordin Bin Hj Abd Razak (Independent Non-Executive Chairman)
Mr Chew Chong Keat (Group Managing Director)
Mr Yang Heng Lam (Executive Director)
Madam Gan Siew Yong (Executive Director)
Mr Aaron Sim Kwee Lein (Independent Non Executive Director)
Mr Ong Looi Chai (Executive Director)
Mr Chua Tiong Hock (Non Independent Non Executive Director)
Mr Khua Kian Keong (Alternate Director to Chua Tiong Hock)
TO: THE SHAREHOLDERS OF FMH
Dear Sir/Madam,
PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION
1.
INTRODUCTION
The purpose of this Circular is to provide you with information on the proposed
amendments to the Articles of Association of the Company (“Proposed Amendments”)
and to seek your approval for the special resolution relating to the Proposed Amendments
to be tabled at the forthcoming AGM.
The Company had on 2 November 2007 announced its intention to seek its shareholders’
approval for the Proposed Amendments.
2.
DETAILS OF THE PROPOSED AMENDMENTS
The details of the Proposed Amendments are set out as Appendix III in this Circular.
3.
APPROVAL REQUIRED
The Proposed Amendments are subject to the approval of the shareholders of FMH which
will be sought at the forthcoming AGM.
1
4.
RATIONALE FOR THE PROPOSED AMENDMENTS
The proposal to amend the Company’s Articles of Association is to render the Articles to
be consistent with Chapter 7 of the Listing Requirements and other new provisions of the
Listing Requirements, the SICDA, the Rules and the Act and to provide new / amend
existing provisions which are necessary to enhance administrative efficiency and to
achieve consistency throughout the Articles.
5.
DIRECTORS’ AND SUBSTANTIAL SHAREHOLDERS’ INTERESTS
None of the directors or substantial shareholders of FMH or persons connected to them
has any interest, direct or indirect in the Proposed Amendments.
6.
DIRECTORS’ RECOMMENDATION
Your Directors are of the opinion that the Proposed Amendments are in the best interest
of the Company and its shareholders and accordingly recommend that you vote in favor
of the special resolution to be tabled at the forthcoming AGM. The text of the said special
resolution is set out in the Notice convening the AGM.
7.
AGM
th
The 11 AGM of the Company, the Notice of which is enclosed in the Annual Report of
FMH for the financial year ended 30 June 2007 accompanying this Circular, will be held at
Banyan Room, Ground Floor, Sime Darby Convention Centre, 1A Jalan Bukit Kiara 1,
60000 Kuala Lumpur on Thursday, 29 November 2007 at 10.00 a.m. for the purpose of
considering and if thought fit, passing, inter alia, the special resolution on the Proposal
under the agenda of Special Business as set out in the said Notice.
If you are unable to attend and vote in person at the AGM and wish to appoint a Proxy
instead, you should complete and return the Form of Proxy enclosed in the Annual Report
in accordance with the instructions printed thereon. The Form of Proxy must be lodged at
the registered office of the Company at Suite 13A-2, Menara Uni.Asia, 1008 Jalan Sultan
Ismail, 50250 Kuala Lumpur not later than forty eight (48) hours before the time fixed for
the AGM or any adjournment thereof. The lodging of the Form of Proxy does not preclude
you from attending and voting in person should you subsequently decide to do so.
8.
FURTHER INFORMATION
Shareholders are requested to refer to the attached appendices for additional information.
Yours faithfully
On behalf of the Board of
FREIGHT MANAGEMENT HOLDINGS BHD
Datuk Dr Hj Noordin Bin Hj Abd Razak
Independent Non-Executive Chairman
2
APPENDIX II
1.
DIRECTORS’ RESPONSIBILITY STATEMENT
This Circular has been seen and approved by the Board of FMH who individually and
collectively accepts full responsibility for the accuracy of the information contained herein
and confirm that, after making all reasonable enquiries and to the best of their knowledge
and belief, there are no other materials facts, the omission of which would make any
statement herein misleading.
2.
MATERIAL LITIGATION
FMH Group is not engaged in any current material litigation, claims or arbitration, either
as plaintiff of defendant, and the Board of FMH do not know of any proceedings pending
or threatened against FMH and/or its subsidiaries or of any facts likely to give rise to any
proceeding which may materially and adversely affect the financial position and/or
business of the FMH Group.
3.
MATERIAL CONTRACTS
Save as disclosed below, neither FMH and/or its subsidiaries has entered into any
material contracts which are or may be material, not being contracts entered into in the
ordinary course of business, during the past two (2) years preceding the date of this
Circular:-
4.
(a)
Allotment and Subscription Agreement dated 15 February 2006 between Andrew
Tay Nguang Yeow (“Andrew Tay”), TCH Marine Pte Ltd (“TCH Marine”) and FMH
whereby FMH agreed to purchase at the consideration of SGD700,000 the rights
of Andrew Tay in a rights issue exercise to be undertaken by TCH Marine. The
purchase of rights allows FMH to subscribe for 1,353,000 ordinary shares of
SGD1.00 each at the consideration of SGD1,353,000 equivalent to RM3,103,105.
With the completion of the Subscription on 3 March 2006, TCH Marine became a
51% owned subsidiary of FMH. The total investment for the 51% shareholding in
TCH Marine by FMH is SGD2,053,000 or equivalent to RN4,704,407 and direct
cost attributed to the acquisition amounted to RM26,790; and
(b)
Sale and Purchase Agreement dated 17 November 2006 between FMH and Ng
Boon Let, Ng Boon Huat and Ng Boon Pin (collectively “Purchasers”) whereby
FMH agreed to sell and the Purchasers agreed to purchase a piece of vacant
industrial land held under HS(D) 71692 PT 67124, Mukim Klang, Daerah Klang,
Negeri Selangor at a cash consideration of RM2,025,115 upon the terms and
subject to the conditions contained in the Agreement.
DOCUMENTS FOR INSPECTION
Copies of the following documents are available for inspection at the Registered Office of
FMH at 13A-2, Menara Uni.Asia, 1008 Jalan Sultan Ismail, 50250 Kuala Lumpur during
normal business hours between Monday and Friday (except public holidays) from the
date of this Circular up to and including the date of the AGM:(i)
The Memorandum and Articles of Association of FMH;
(ii)
Audited consolidated accounts of FMH for the past two (2) financial years ended
30 June 2006 and 30 June 2007; and
(iii)
The Material Contracts referred to in Paragraph 3 above.
3
APPENDIX III
DETAILS OF THE PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION
The details of the existing and the proposed amendments to the Articles of Association of the
Company (for which differences are marked) are as set out below:-
EXISTING PROVISIONS
AMENDED PROVISIONS
Article 2
Words
Meaning
Words
Meaning
Approved Market
place
…….
…
…….
………
….
Means a stock exchange
which is specified to be an
approved market place in
the
Securities Industry
(Central
Depositories)
(Exemption) (No.2) Order
1998.
(Deleted)
(Deleted)
Central Depository
Bursa Malaysia Depository
Sdn Bhd (formerly known
as
Malaysian
Central
Depository Sdn Bhd)
Depository
A holder of Securities
Account
Depositor
Depositor
Bursa Malaysia Depository
Sdn Bhd
AND THAT the term “Central Depository”
wherever it appears in these Articles be replaced
with the term “Depository”.
Article 4 (3)
Article 4 (3)
(3)
(3)
Paragraph 1 of this Article shall be subject
to the following restrictions, that is to say: -
A holder of
securities
account established by the
Depository.
Paragraph 1 of this Article shall be subject to
the following restrictions, that is to say:
(a)
No Director shall participate in an
issue of shares or options to
employees of the Company unless the
shareholders in general meetings have
approved of the specific allotment to
be made to such Director.
(a)
No Director shall participate in an issue
of shares or options to employees of the
Company unless the shareholders in
general meetings have approved of the
specific allotment to be made to such
Director.
(b)
No issue of preference shares shall be
made which would result in the total
nominal value of the issued preference
shares exceeding the total nominal
value of the issued ordinary shares at
any time.
(b)
No shares shall be issued at a discount
except in compliance with the
provisions of Section 59 of the Act.
(c)
No shares shall be issued at a discount
except in compliance with the
provisions of Section 59 of the Act.
(c)
No shares with special rights attached
shall be issued until the same have been
expressed in these Articles and in the
resolution creating the same.
(d)
No shares with special rights attached
shall be issued until the same have
been expressed in these Articles and in
the resolution creating the same.
4
EXISTING PROVISIONS
AMENDED PROVISIONS
Article 5
Article 5
(1)
Subject to Article 4(3)(b), the Company shall
have power to issue preference shares
carrying a right to redemption out of profits
or liable to be redeemed at the option of the
Company or to issue preference capital
ranking equally with or in priority to
preference shares already issued and the
Directors may, subject to the provisions of
the Act, redeem such shares on such terms
and in such manner and either at par or at a
premium as they may think fit.
(1)
Subject to Article 4(3)(b), the Company shall
have power to issue preference shares
carrying a right to redemption out of profits
or liable to be redeemed at the option of the
Company or to issue preference capital
ranking equally with or in priority to
preference shares already issued and the
Directors may, subject to the provisions of
the Act, redeem such shares on such terms
and in such manner and either at par or at a
premium as they may think fit.
(2)
The holder of a preference share shall be
entitled to a return of capital in preference to
holders of ordinary shares when the
Company is wound-up.
(2)
(3)
Preference shareholders shall have the same
rights as ordinary shareholders as regards
receiving of notices, reports and audited
accounts and the attending of general
meetings of the Company. Preference
shareholders shall also have the right to vote
at any meeting convened for the purpose of
reducing the capital or winding up or
sanctioning a sale of the undertaking,
property or business or where the proposition
to be submitted to the meeting directly
affects their rights and privileges or when the
dividend on the preference shares is more
than six (6) months in arrears.
Preference shareholders shall have the same
rights as ordinary shareholders as regards
receiving of notices, reports and audited
accounts and the attending of general
meetings of the Company. Preference
shareholders shall also have the right to vote
at any meeting convened for the purpose of
reducing the capital or winding up or
sanctioning a sale of the undertaking,
property or business or where the proposition
to be submitted to the meeting directly affects
their rights and privileges or when the
dividend or part of the dividend on the
preference shares is more than six (6) months
in arrears.
Article 34
Article 34
34.
34.
The transfer of any Securities or class of
Securities of the Company shall be by way of
book entry by the Central Depository in
accordance with the Rules and,
notwithstanding Sections 103 and 104 of the
Act but subject to Section 107C(2) of the Act
and any exemption that may be made from
compliance with Section 107C(1) of the Act,
the Company shall be precluded from
registering and effecting any transfer of
Securities. No securities shall be transferred to
any infant, bankrupt or person of unsound
mind.
The transfer of any Securities or class of
Securities of the Company shall be by way of
book entry by the Central Depository in
accordance with the Rules and, notwithstanding
Sections 103 and 104 of the Act but subject to
Section 107C(2) of the Act and any exemption
that may be made from compliance with
Section 107C(1) of the Act, the Company shall
be precluded from registering and effecting any
transfer of Securities. No Securities shall be
transferred to any infant, bankrupt or person of
unsound mind.
Article 36
Article 36
(1)
(1)
Where: (a)
the Securities of the Company are
listed on an Approved Market Place;
and
Where: (a)
5
the Securities of the Company are listed
on another stock exchange; and
EXISTING PROVISIONS
(b)
AMENDED PROVISIONS
the Company is exempted from
compliance with Section 14 or Section
29 of the Central Depositories Act, as
the case may be, under the Rules in
respect of such Securities;
(b)
the Company shall, upon request of a
Securities holder, permit a transmission of
Securities held by such Securities holder
from the register of holders maintained by
the registrar of the Company in the
jurisdiction of the Approved Market Place
(hereinafter referred to as “the Foreign
Register”), to the register of holders
maintained by the registrar of the Company
in Malaysia (hereinafter referred to as “the
Malaysian Register”) subject to the
following conditions: -
(2)
(i)
there shall be no change in the
ownership of such Securities; and
(ii)
the transmission shall be executed by
causing such Securities to be credited
into the Securities Account of such
Securities holder.
the Company is exempted from
compliance with Section 14 or Section
29 of the Central Depositories Act, as
the case may be, under the Rules in
respect of such Securities;
the Company shall, upon request of a
Securities holder, permit a transmission of
Securities held by such Securities holder from
the register of holders maintained by the
registrar of the Company in the jurisdiction of
the other stock exchange, to the register of
holders maintained by the registrar of the
Company in Malaysia and vice versa
provided that there shall be no change in the
ownership of such Securities.
For the avoidance of doubt, the Company
which fulfils the requirements of paragraph
(a) and (b) of this Article shall not allow any
transmission of Securities from the
Malaysian Register into the Foreign
Register.
Article 61
Article 61
An annual general meeting and any extraordinary
general meeting at which it is proposed to pass a
special resolution, shall be called by twenty-one
(21) days' notice in writing at the least and any
other extraordinary general meeting by fourteen
(14) days’ notice in writing at the least (exclusive
in either case of the day on which it is served or
deemed to be served and of the day from which it
is given) given in the manner hereinafter
mentioned to the Auditors and to all Members
other than such as are not under the provisions of
these Articles entitled to receive such notices from
the Company. P ROVIDED THAT the accidental
omission to give notice to or the non-receipt of a
notice by any person entitled thereto shall not
invalidate the proceedings at any general meeting.
In addition at least fourteen (14) days' notice, or
twenty-one (21) days’ notice in the case where any
special resolution is proposed or where it is an
annual general meeting, of every such meeting
shall be given by advertisement in any daily press
and in writing to the Stock Exchange.
An annual general meeting and any extraordinary
general meeting at which it is proposed to pass a
special resolution, shall be called by twenty-one
(21) days' notice in writing at the least and any other
extraordinary general meeting by fourteen (14)
days’ notice in writing at the least (exclusive in
either case of the day on which it is served or
deemed to be served and of the day from which it is
given) given in the manner hereinafter mentioned to
the Auditors and to all Members other than such as
are not under the provisions of these Articles
entitled to receive such notices from the Company.
P ROVIDED THAT the accidental omission to give
notice to or the non-receipt of a notice by any
person entitled thereto shall not invalidate the
proceedings at any general meeting. In addition at
least fourteen (14) days' notice, or twenty-one (21)
days’ notice in the case where any special resolution
is proposed or where it is an annual general
meeting, of every such meeting shall be given by
advertisement in at least one (1) nationally
circulated Bahasa Malaysia or English daily
newspaper and in writing to the Stock Exchange.
6
EXISTING PROVISIONS
AMENDED PROVISIONS
Article 62
Article 62
(f)
(f)
The Company shall request the Central
Depository in accordance with the Rules to
issue the Record of Depositors as at t h e
latest date which is reasonably practicable
which shall in any event be not less than
three (3) Market Days before the general
meeting.
(g)
Subject to the Securities Industry (Central
Depositories) (Foreign Ownership)
Regulations 1996 (where applicable), a
depositor shall not be regarded as a
member entitled to attend any general
meeting and to speak and vote thereat
unless his name appears in such Record of
Depositors.
The Company shall request the Central
Depository in accordance with the Rules to
issue the Record of Depositors as at a date
not less than three (3) Market Days before
the general meeting. Subject to the
Securities Industry (Central Depositories)
(Foreign Ownership) Regulations 1996
(where applicable) and notwithstanding any
provision of the Act, the Record of
Depositors shall be the final record of all
depositors who shall be deemed to be the
registered holders of ordinary shares of the
Company eligible to be present and vote at
such meetings.
Article 74
Article 74
On a show of hands every Member who is present
in person or by proxy or by corporate
representative shall have one (1) vote. In case of a
poll every Member holding ordinary shares who is
present in person or by proxy or by corporate
representative shall have one (1) vote for every
ordinary share held by him.
On a resolution to be decided on a show of hands
every holder of ordinary shares or preference
shares who is present in person or by proxy or by
corporate representative shall have one (1) vote. In
case of a poll every holder of ordinary shares or
preference shares who is present in person or by
proxy or by corporate representative shall have one
(1) vote for every ordinary share or preference
share held by him.
Article 77
Article 77
A Member shall be entitled to be present and to
vote on any question either personally or by proxy,
or as proxy for another Member at any general
meeting, or upon a poll and to be reckoned in a
quorum in respect of any fully paid-up shares and
any share upon which any call due and payable to
the Company shall have been paid.
Subject to Article 62, a Member shall be entitled to
be present and to vote on any question either
personally or by proxy, or as proxy for another
Member at any general meeting, or upon a poll and
to be reckoned in a quorum in respect of any fully
paid-up shares and any share upon which any call
due and payable to the Company shall have been
paid.
Article 86
Article 86
Until otherwise recommended by the Board of
Directors and confirmed by the Company in
general meeting the number of Directors shall not
be less than two (2) and not more than nine (9), all
of whom shall be natural persons.
Until otherwise recommended by the Board of
Directors and confirmed by the Company in general
meeting the number of Directors shall not be less
than two (2) and not more than nine (9).
Article 88
Article 88
The office of a Director shall be vacated:
The office of a Director shall be vacated:
(a)
(a)
If he becomes bankrupt or makes any
arrangement or composition with his
creditors;
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If during his term of office, he becomes
bankrupt or makes any arrangement or
composition with his creditors;
EXISTING PROVISIONS
(b)
AMENDED PROVISIONS
(b)
If he be found lunatic or becomes of unsound
mind or a person whose person or estate is
liable to be dealt with in any way under the
law relating to mental disorder;
If during his term of office, he becomes of
unsound mind or a person whose person or
estate is liable to be dealt with in any way
under the law relating to mental disorder;
(c) – (f)
(c)– (f) No Change
(g)
(g)
If he absents himself from more than 50% of
the total Board of Directors’ meetings held
during a financial year.
If he absents himself from more than 50% of
the total Board of Directors’ meeting held
during a financial year unless approval is
sought and obtained from the Stock
Exchange.
Article 125
Article 125
(1)
(1)
Save as by the following paragraphs of this
Article otherwise provide, a Director shall
not vote in respect of any contract or
arrangement in which he has interest (and if
he shall do so his vote shall not be counted),
nor shall he be counted for the purpose of
any resolution regarding the same in the
quorum present at the meeting, but this
Article shall not apply to:(i) – (iv)
Save as by the following paragraphs of this
Article otherwise provide, a Director shall
not vote in respect of any contract or
arrangement in which he has, directly or
indirectly, interest (and if he shall do so his
vote shall not be counted), nor shall he be
counted for the purpose of any resolution
regarding the same in the quorum present at
the meeting, but this Article shall not apply
to:(i) – (iv)
No Change
Article 141.
Article 141.
A copy of every balance sheet and profit and loss
account which is to be laid before the Company in
general meeting (including every document
required by law to be annexed thereto) together
with a copy of the Auditors’ report relating thereto
and of the Directors’ report shall not more than six
(6) months after the close of the financial year and
not less than twenty-one (21) days before the date
of the meeting be sent to every Member of, and
every holder of Debenture of the Company and to
every other person who is entitled to receive
notices from the Company under the provisions of
the Act or of these Articles. Provided that this
Article shall not require a copy of these documents
to be sent to any person of whose address the
Company is not aware of but any Member to whom
a copy of these documents has not been sent shall
be entitled to receive a copy free of charge on
application to the Office.
Subject to the requirements of the Stock
Exchange and the Act, a copy of every balance
sheet and profit and loss account which is to be laid
before the Company in general meeting (including
every document required by law to be annexed
thereto) together with a copy of the Auditors’ report
relating thereto and of the Directors’ report shall not
more than six (6) months after the close of the
financial year and not less than twenty-one (21)
days before the date of the meeting be sent i n
printed form or in compact disc read-only
memory (CD-ROM) or digital versatile disc
read-only memory (DVD-ROM) format or in a
format that may be developed in the future for
the playback of images to every Member of, and
every holder of Debenture of the Company and to
every other person who is entitled to receive notices
from the Company under the provisions of the Act
or of these Articles. Provided that this Article shall
not require a copy of these documents to be sent to
any person of whose address the Company is not
aware of but any Member to whom a copy of these
documents has not been sent shall be entitled to
receive a copy free of charge on application to the
Office.
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