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75 Years of Excellence
Embrace the Futureto
1936 ~ 2011
George Kent (Malaysia) Berhad(1945-X)
George K
ent (Malaysia) Berhad (1945-X
)A
nnual Report for the year ended 31 January 2011
George Kent (Malaysia) Berhad (1945-X)
Lot 1115, Batu 15, Jalan Dengkil, 47100 Puchong, Selangor Darul Ehsan.Tel : 603-8064 8000 Fax : 603-8061 9954, 8061 3295 Email : [email protected]
www.georgekent.net
75 Years of Excellence to Embrace the FutureANNUAL REPORT
for the year ended 31 January 2011
Core Values/Chairman’s Message 1
Corporate Profile 2
Corporate Information 3
History of George Kent (Malaysia) Berhad 4
Five-year Group Financial Highlights 10
Transformation Journey and The Way Forward 9
Chairman’s Statement 12
Management Analysis & Review 14
Event Highlights 18
Profile of Directors 20
Senior Management 23
Statement on Corporate Governance 24
Financial Statements 39
Statement on Corporate Social Responsibility 33
Audit Committee Report 30
Statement on Internal Control 35
Additional Information 37
Shareholders’ Information 116
Statement on Directors’ Interests 119
Notice of Annual General Meeting 121
List of Properties Held 120
Statement Accompanying the Notice of Annual General Meeting 123
Form of Proxy
CONTENTS
Infrastructure Investments,
Major Civil Engineering Construction,
M&E and Process Engineering Design and Build Capability, and
Manufacturing & Sales of Water/Water Related Products including OEM.
VISION STATEMENTTo become an admired Malaysian-based Engineering Company with
Regional and International Operations in:
HISTORY OF
GEORGE KENT (MALAYSIA) BERHADcont’d
CORPORATE PERSONAL
OUR CORE VALUES
75 Years of Excellenceto
Embrace the Future
1936 ~ 2011
CHAIRMAN’S MESSAGE
“This Year 2011 marks the 75th Anniversary of George Kent (Malaysia) Berhad from its humble beginnings in 1936 as just a service branch office in Penang, of the then parent company, George Kent Limited in the United Kingdom.
Today, George Kent is recognised as the leading engineering group in Malaysia specialising in the manufacture of water meters, water works components and brass products; investments in water related infrastructure assets; engineering and turnkey construction of hospitals.
We export our own George Kent products to more than 20 countries worldwide, earning much needed foreign exchange. We also successfully compete in the international arena for the manufacture of OEM products bound for the United Kingdom and Japan markets. The “George Kent” brand is synonymous with quality and is a household name across the world, particularly in the Commonwealth nations.”
(“Excerpt from the Chairman’s speech at the launch of George Kent (Malaysia) Berhad’s 75th Anniversary at the function held on Monday, 14 March 2011,
graced by Y.A.B. Tan Sri Dato’ Hj Muhyiddin Hj Mohd Yassin, Deputy Prime Minister of Malaysia.”)
Over these 75 years, George Kent (Malaysia) Berhad has reached many significant milestones and will have many more important
milestones to reach in the future. We recollect the notable achievements for the past 75 years as set out on pages 4 to 7.
Passionate
Ethical
Responsible
Friendly
Efficient
Committed
Teamwork
Professional
Equitable
Result-driven
Focused
Environment conscious
Caring
Trustworthy
75TH ANNIVERSARY (1936 TO 2011) OF GEORGE KENT (MALAYSIA) BERHAD
75 Years of Excellenceto
Embrace the Future
1936 ~ 2011
2 Annual Report 2011
CORPORATE PROFILE
George Kent (Malaysia) was established in Penang in 1936 as
a service branch of the then parent Company, George Kent
Limited, United Kingdom. The Company was incorporated
in 1951 as George Kent (Malaya) Ltd and on 11 July 1969, it
was converted to a public company under the name of George
Kent (Malaysia) Berhad (“GKM”). In 1974 the Company listed its
shares through an offer for sale of 20% equity by George Kent
Limited and new issue of 20% shares to Malaysians.
George Kent is an engineering company involved in
manufacturing, trading and investment and development of
water infrastructure projects. The core business is in the water
industry. It has contributed to the nation’s manufacturing growth
by building up over the years to become the leader in the region
in brass products manufacturing. George Kent is the market
leader in the supply of control instrumentation, telemetry, pipes,
valves and fittings, industrial and domestic water meters, boilers,
incinerators and building automation systems.
George Kent is also involved in the manufacture of fibre glass
reinforced polyester (FRP) panel tanks for bulk water storage, and
the extrusion of brass rods. George Kent products manufactured
by the Manufacturing Division are up to the standard of MS ISO
9001:2000 Quality Management Systems and ISO 14001: 2004
Environmental Management System.
George Kent is a Company with regional activities in the
ASEAN countries, China and Papua New Guinea. It exports
its manufactured products to Singapore, Thailand, Vietnam,
Myanmar, Cambodia, Indonesia, Philippines, Papua New
Guinea, Australia, Hong Kong, Sri Lanka, Kenya, South Africa,
South America and the United Kingdom.
3George Kent (Malaysia) Berhad (1945-X)
CORPORATE INFORMATION
Registered Office
George Kent Technology Centre
Lot 1115, Batu 15, Jalan Dengkil
47100 Puchong, Selangor Darul Ehsan
Tel : 603-8064 8000
Fax : 603-8061 3295, 603-8061 9954
E-mail : [email protected]
Website : www.georgekent.net
Share Registrar
Johan Management Services Sdn. Bhd.
11th Floor, Wisma E&C
No. 2 Lorong Dungun Kiri, Damansara Heights
50490 Kuala Lumpur
Tel : 603-2092 1858
Fax : 603-2092 2812
E-mail : [email protected]
Auditors
Ernst & Young
(Chartered Accountants)
Group Principal Bankers(in alphabetical order)
Kuwait Finance House (Malaysia) Berhad
Malayan Banking Berhad
The Royal Bank of Scotland Group
Stock Exchange Listing
Main Market, Bursa Malaysia Securities Berhad
Stock Name : GKENT
Stock Code : 3204
Sector : Trading
Audit Committee
Ong Seng Pheow (Chairman)
Dato’ Ir. Haji Zaidan Bin Haji Othman
Dato’ Paduka Prof. (Dr.) Ir. Hj. Keizrul Bin Abdullah
Tan Sri Dato’ Tan Kay Hock
Risk Management Committee
Ong Seng Pheow (Chairman)
Tan Sri Dato’ Tan Kay Hock
Ir. Dr. Cheong Thiam Fook
Remuneration Committee
Tan Sri Dato’ Tan Kay Hock (Chairman)
Dato’ Ir. Haji Zaidan Bin Haji Othman
Puan Sri Datin Tan Swee Bee
Company Secretary
Teh Yong Fah (MACS 00400)
Board of Directors
Tan Sri Dato’ Tan Kay Hock
(Chairman/Non-Independent Non-Executive Director)
Dato’ Ir. Haji Zaidan Bin Haji Othman
(Independent Non-Executive Director)
Puan Sri Datin Tan Swee Bee
(Non-Independent Non-Executive Director)
Ong Seng Pheow
(Independent Non-Executive Director)
Ir. Dr. Cheong Thiam Fook
(Non-Independent Executive Director)
Dato’ Paduka Prof. (Dr.) Ir. Hj. Keizrul Bin Abdullah
(Independent Non-Executive Director)
75 Years of Excellenceto
Embrace the Future
1936 ~ 2011
4 Annual Report 2011
HISTORY OF
GEORGE KENT (MALAYSIA) BERHAD
1936
The Company commenced operations at
No. 8, Ayer Rajah Road, Penang as a
service branch of George Kent Limited,
Luton, United Kingdom. Work involved
repairs and maintenance of water meters,
venture recorders, steam flow indicators
and waste-not taps for public stand pipes.
T
1968
An Industrial Equipment Division was
established by the Company.
1981
On 11 June 1981, Johan Holdings Berhad
acquired from Brown-Boveri Kent Ltd, its
controlling 51% equity interest in GKM,
bringing it under Malaysian control.
1983
An Automation Systems Division was
established in August 1983 to be involved
in the building automation and building
security business.
1985
In February 1985, GKM acquired a
42.85% interest in a local company
specialising in sales of equipment for the
upstream oil and gas industry.
1986
In September 1986, GKM commenced the
manufacture of Fibreglass Reinforced
Polyester (FRP) sectional water tanks
under licence from Sekisui Koji Co. Ltd of
Japan.
1988
During the year, GKM acquired a 51%
interest in Teknologi Air Patcandy Sdn
Bhd, a joint venture company with Portals
Water Treatment Overseas Ltd of United
Kingdom, specializing in water treatment
business.
1990
GKM secured several supply contracts
exceeding RM200 million, the largest of
which was the RM102.7 million contract to
supply pumping equipment, instrumentation
and valves for the Sungai Selangor Water
Project.
1969
In March 1969, the Company’s manufac-
turing plant started operations at a 4-acre
site located on Lot 4 & 6, Jalan Pahat
16/8A, Shah Alam Industrial Estate, Shah
Alam, Selangor.
On 11 July 1969, the Company was
converted to a public company under the
present name of George Kent (Malaysia)
Berhad (“GKM”).
1972
A Medical and Scientific Division for sales
of high quality surgical instruments, sterile
disposables, medical instruments and
monitoring equipment for cardiology was
set up.
1974 On 2 March 1974, GKM made a public
issue of 1,500,000 new shares and offer
for sale of 900,000 shares by George Kent
Ltd, England, with 1,150,000 shares
reserved for Bumiputras in connection with
its application to seek listing on the Kuala
Lumpur Stock Exchange (KLSE) and the
Stock Exchange of Singapore Limited
(SES). GKM’s entire issued and paid up
share capital of $6,000,000 comprising
6,000,000 ordinary shares of $1.00 each
was granted official quotation on the
KLSE and the SES on 15 April 1974.
1951
On 2nd January, 1951, George Kent
(Malaya) Ltd was incorporated in the
Federation of Malaya as a wholly-owned
subsidiary of George Kent Limited.
1956
A workshop was opened in Singapore,
mainly to repair Kent water meters,
maintain and upkeep Kent flow, level and
pressure recorders bought by the
Singapore Municipality.
1962
A branch office was set up at Jalan Ipoh in
Kuala Lumpur to sell Kent instruments in
the Klang Valley.
1963
An Industrial Fittings Division and a
Petroleum Marketing Equipment Division
were established by the Company.
1964 The name of George Kent (Malaya) Ltd
was changed to George Kent (Malaysia)
Limited in July 1964.
1965
A wholly owned subsidiary, George Kent
(Singapore) Pte Ltd, was incorporated on
8 September 1965.
The Company moved from Penang to its
premises at No. 2, Lorong 19/1A, Petaling
Jaya, Selangor in November 1965.
Assembly of water meters had
commenced by then.
5George Kent (Malaysia) Berhad (1945-X)
1991
GKM established an Export Division to
market its expertise and products to the
Asean countries.
GKM established a branch office in Johor
Bahru and a representative office in Kota
Kinabalu, Sabah.
1995
GK-Hardie Sdn Bhd, a 55% subsidiary in
joint venture with James Hardie Plumbing
& Pipelines Pty Ltd of Australia,
commenced commercial production of
high quality plastic pipes for the water
related industry. The RM20 million plant
was located on a 14,951 sq. m site on Lot
20, Rawang Integrated Industrial Park,
Rawang, Selangor.
The Infrastructure Division successfully
completed the contract for design and
build 50 MLD New Gemas Water Supply
Turnkey Project.
1997
In May 1997, Brass Alloys Sdn Bhd’s
brass rods extrusion plant was awarded
full ISO 9002 quality accreditation.
During the year, the Water Infrastructure
Division secured the concession for the
operation and management of the Mt.
Eriama Water Treatment Plant in Port
Moresby, Papua New Guinea. The Group
invested in a 19% equity interest in PNG
(Water) Ltd. which holds the US$120
million concession for this water treatment
plant. A wholly-owned subsidiary, George
Kent (PNG) Pty. Ltd. was incorporated as
sole operator and maintenance contractor
for this project.
In December 1997, GK-Hardie Sdn Bhd
became the first manufacturer in Malaysia
to receive the ISO 9002 quality certification
for its UPVC and polybutylene pipes
manufacturing process. With this
certification, all manufacturing companies
in the GKM Group have attained ISO 9002
quality accreditation for their manufacturing
processes.
1998 Infrastructure Division completed the
160 MLD Lat Krabang distribution
pumping station turnkey contract for the
Metropolitan Waterworks Authority,
Bangkok, Thailand. Also completed a
contract for upgrading and rehabilitation
of Sungai Batu and Sungai Rangkap
water treatment plants in Selangor.
1996
GKM secured a contract from KLCC
Berhad for the security and card access
control system for Petronas Twin Towers.
GKM also secured contracts to supply the
FRP-panel water tanks and valves for the
Twin Towers.
GKM received the “Best Class A
Contractor” award from Jabatan Bekalan
Air Negeri Sembilan for the exemplary
overall performance in the New Gemas
Water Supply Turnkey Project .
In the 4th quarter of 1996, the Group’s
head office and manufacturing plants were
relocated to a newly built RM42 million
integrated faci l i ty, George Kent
Technology Centre, on a 17 acres site in
Jalan Dengkil, Puchong, Selangor.
In October 1996, GKM was awarded full
compliance of ISO 9001:2000 certification
standards for the production of water
meters, brass fittings and FRP panels for
water tanks using the MMD manufacturing
process.
1993
Brass Alloys Sdn Bhd, a wholly owned
subsidiary, successfully commissioned its
RM20 million integrated brass extrusion
plant on a 1.2 hectare site at Lot 6491, 6th
Mile, Mukim of Kapar, Klang, Selangor.
Commercial production of brass rods
commenced in February 1993.
1994
A new Regional Business Development
Division was established to market GKM’s
expertise and products in the Asia Pacific
region. This Division was successful in
securing orders for its products from
Thailand, Vietnam, Indonesia and
Philippines.
HISTORY OF
GEORGE KENT (MALAYSIA) BERHADcont’d
5George Kent (Malaysia) Berhad (1945-X)
of Su g
water treatment plants in S
75 Years of Excellenceto
Embrace the Future
1936 ~ 2011
6 Annual Report 2011
HISTORY OF
GEORGE KENT (MALAYSIA) BERHADcont’d
1999 The completion of two large projects by
the Infrastructure Division _ the Sungai
Kelinchi and the Sungai Linggi projects in
Negeri Sembilan.
GKM in joint venture with a local
construction company was awarded the
RM366 million contract for the Rasa Water
Treatment works for the Sungai Selangor
Water Supply Scheme _ Phase 3 in
Selangor.
2004 Manufacturing Division which operates the
largest hot brass-stamping and water
meter manufacturing plant in South _ East
Asia is accredited with ISO 9001:2000.
The Infrastructure Division also secured
several water projects including the 100
MLD raw water booster pump station at
Mt. Eriama, Port Moresby, the 100 MLD
water transfer from Muar river to Talang
dam in Kuala Pilah, Negeri Sembilan and
the National sewerage treatment plant
project _ Package A.
2009
On 16 February 2009, George Kent
secured the RM 97.75 million contract
from the Ministry of Health, Malaysia to
design, build, complete, and commission
& maintain upgrading works for the Kuala
Lipis Hospital, Pahang. The project is
scheduled to be completed by 25 August
2011.
2010
In June 2010, George Kent in joint venture
with two parties secured the Package 3A
of the inter-state raw water transfer
project, Semantan Intake And Pumping
Station Works, valued at RM317.6 million.
The project is scheduled to be completed
in May 2014.
In July 2010, George Kent secured the
RM129.8 million project to construct and
complete a 160 MLD Water Treatment
Plant in Pancing, Kuantan, Pahang in joint
venture with Leika Sdn Bhd. The project is
scheduled to be completed in August
2013.
History was created in George Kent in
December 2010 when the Manufacturing
Division achieved the 1st ONE MILLION
Water Meters within one financial year.
2005
Industrial Equipment Dept FRP business
unit secured a contract from Sekisui Aqua
Systems Co. Limited of Japan to supply
the water tanks and accessories for the
global markets for 3 years.
2006 Manufacturing Division works towards
achieving the ISO 14001:2004
Environmental Management System
certification.
The Export Division started propecting for
business in the South Asian and African
countries.
2007 The Infrastructure Division works towards
achieving the ISO 9001:2000 certification
for its engineering operations.
In April 2007, George Kent embarked on
initiatives to re-engineer, transform and
streamlined its businesses into four core
divisions, namely, Meters, Manufacturing,
Contracts and Industrial/Systems Divisions.
This is in line with the objective of having
better focus and emphasis in growing the
businesses significantly in meeting the
strategic five years plan.2000 The Manufacturing Division launched a
new series of industrial Multijet water meter
for the export market.
Infrastructure Division successfully
completed the contract for rehabilitation
and upgrading of the Sungai Linggi Water
Treatment Plant (from 70 MLD to 130
MLD) in Negeri Sembilan.
2001
Infrastructure Division successfully
completed Stage 1 works for the Sungai
Selangor Water Supply Phase 3 Project.
2002 GKM won the “Builders Award _
Mechanical & Electrical Works Category
Mechanical Project” by Construction
Industry Development Board (CIDB) for its
outstanding performance in the
implementation of the 250 MLD Rasa
Headworks and Bulk Transfer Works
(Stage 1) _ Sungai Selangor Water Supply
Scheme Phase 3 Project.
2003 GKM secured several landmark projects:
The Central Kedah water supply project in
Gurun, Kedah, and the upgrading works
for a new 50 MLD filtration plant in Mount
Eriama, Port Moresby, PNG.
7George Kent (Malaysia) Berhad (1945-X)
HISTORY OF
GEORGE KENT (MALAYSIA) BERHADcont’d
The Company commenced operations in Penang
as a service branch office of George Kent Ltd,
United Kingdom
1936
Branch office in Perak Lane, Penang
1950’s
United Kingdom
The Head Office was relocated from Penang to No. 2, Lorong 19/1A, Petaling Jaya in November 1965
1996
The Manufacturing plant started operations at Lot 4&6,
Jalan Pahat 16/8A, Shah Alam, Selangor Darul Ehsan
55
196919991965
GKM’s Head Office in Petaling Jaya and Manufacturing plant in Shah Alam were relocated in December 1996 to the RM42 million integrated facility, George Kent Technology Centre on a 17 acres site in Jalan Dengkil, Puchong.
75 Years of Excellenceto
Embrace the Future
1936 ~ 2011
8 Annual Report 2011
Great changes may not happen right away,
but with whole-hearted efforts
even the most difficult one
can be accomplished
9George Kent (Malaysia) Berhad (1945-X)
The Company started business way back in 1936 as just a branch office in Penang, established by George Kent, Luton, United Kingdom. Work performed during this early period were repairs and maintenance of water meters, venture recorders, steam flow indicators and waste-not taps for public stand pipes.
Today, George Kent is recognised as the leading engineering group specialising in water works construction; the largest manufacturer of water meters, water works components and brass products. Our Plant on a 17 acres site in Puchong, Selangor Darul Ehsan, is the largest brass stamping plant in South East Asia; and possibly the largest water facility in a single location in the world outside the United States and China. The “George Kent” brand is a household name across the world. In 2010, we achieved a record output of 2,000,000 completed household water meters and housings, not including other components.
Over the years, many things have changed. Towards the tail end of the last century, the world has changed even faster. Globalization and the introduction of technology especially, the internet, has completely changed the shape of business. It is now becoming more competitive and companies have to move at an even faster pace to keep up with the ever increasing changes in the business environment. The influences shaping business and competition in this technology fuelled environment is a call for action to companies which want to stay ahead of these trends in order to remain competitive. The world is moving faster than we can keep up. Companies must learn to learn, teaching itself to stay curious and innovative, if it is to excel in the global economy. To survive and stay ahead of competitors, companies must adapt to new realities quickly, whether these be unexpected technologies, emerging markets or rule-changing innovations.
George Kent’s Transformation journey began on 12 May 2007, when the Chairman launched the 1st GKM Management Conference to share his vision of a new George Kent to make the Group more competitive and innovative for a fundamental shift in the Group’s performance. The Transformation initiatives implemented to re-engineer and change the way George Kent conducts its businesses were as follows:
(i) Streamlining its businesses under four (4) core divisions, namely (1) Meters, (2) Manufacturing, (3) Contracts and (4) Industrial/Systems Divisions.
(ii) Re-examining its talent resources, succession planning readiness, performance management systems, reward and compensation systems to bring about the needed organisational changes crucial to its long term corporate success and competiveness.
(iii) Re-defining the Group’s strategic thrust and forward planning to capitalise on new business opportunities and growth avenues hitherto untapped and uncontested.
The success of the Transformation initiatives were reflected in the following FYE results of GKM Group:
31 Jan.‘08 31 Jan.‘09 31 Jan.‘10 31 Jan.‘11
(RM’000) (RM’000) (RM’000) (RM’000)
Revenue 89,832 106,933 124,813 165,037
Profit before tax 13,051 14,618 26,095 32,458
Profit attributable to shareholders 8,882 11,193 19,866 24,799
Shareholders’ Fund 122,579 135,585 148,116 163,510
Dividend per share - 3.5 sen 4.0 sen 5.0 sen
The strategic plan under the Transformation initiatives is:
1) To build George Kent into a company with substantial investments in water infrastructure with specialised engineering capabilities in the region.
2) To develop George Kent into a leading water meter supplier in the region.3) To develop George Kent into a major international supplier of waterworks products by capitalising on the “George Kent” brand
name.
To this end, the Transformation Journey that we started in May 2007 continues.
TRANSFORMATION JOURNEY
AND THE WAY FORWARD
75 Years of Excellenceto
Embrace the Future
1936 ~ 2011
10 Annual Report 2011
Revenue(RMmillion)
Profit before tax(RMmillion)
Total assets(RMmillion)
1110090807 1110090807 1110090807
165
125
107
9094
32
26
1513
11
230
207
174156
166
Shareholders’ funds(RMmillion)
Earnings per share(sen)
Net assets per share(sen)
1110090807 1110090807 1110090807
164148
136123
113
11.0
8.8
5.03.93.6
72.665.8
70.477.9
71.7
Feb Mar Apr May June July Aug Sept Oct Nov Dec Jan Feb Mac Apr May
High (RM) 0.94 1.20 1.55 1.57 1.45 1.45 1.41 1.33 1.31 1.25 1.25 1.25 1.23 1.19 1.20 1.19
Low (RM) 0.86 0.92 1.13 1.17 1.23 1.28 1.21 1.15 1.17 1.16 1.15 1.09 1.08 1.06 1.10 1.04
Total Volume (million) 19 132 217 79 38 17 9 11 14 13 9 22 5 5 11 8
-10
40
90
140
190
240
0.00
0.20
0.40
0.60
0.80
1.00
1.20
1.40
1.60
Volume Price Share Performance in 2010/2011
High (RM) Low (RM) Total Volume (million)
FIVE-YEAR GROUP FINANCIAL HIGHLIGHTS
11George Kent (Malaysia) Berhad (1945-X)
FIVE-YEAR GROUP FINANCIAL HIGHLIGHTScont’d
Year Ended 31 January
2011 2010 2009 2008 2007
RM’000 RM’000 RM’000 RM’000 RM’000
Restated
INCOME STATEMENT
Revenue 165,037 124,813 106,933 89,832 93,777
Profit Before Tax 32,458 26,095 14,618 13,051 10,836
Income Tax 7,659 6,229 3,410 4,079 2,609
Profit for the year 24,799 19,866 11,193 8,882 8,081
BALANCE SHEET
Total non-current assets 82,755 79,713 78,709 74,154 78,701
Total current assets 147,679 126,901 95,348 81,995 87,748
Shareholders’ fund 163,510 148,116 135,585 122,579 112,756
Minority Interest 0 0 0 913 823
Shareholders’ Equity 163,510 148,116 135,585 123,492 113,579
Total non-current liabilities 13,415 15,253 16,888 12,551 21,507
Total current liabilities 53,509 43,245 21,584 20,106 31,363
SHARE INFORMATION
Per Ordinary Share
Earnings, fully diluted basis (sen) 11.00 8.80 5.00 3.90 3.60
Dividend – gross (sen) 5.00 4.00 3.50 - -
Net assets (sen) 72.60 65.80 70.40 77.90 71.70
Share price as at 31 January (RM) 1.20 0.880 0.500 0.520 0.565
FINANCIAL RATIOS
Return on equity (%) 15.17 13.40 8.30 7.20 7.20
Net Debt – equity ratio (Note 1) Nil Nil Nil Nil 0.1 : 15.8
Note 1: Net Debt comprise current and non-current bank borrowings, hire purchase and finance lease liabilities less cash and bank balances.
75 Years of Excellenceto
Embrace the Future
1936 ~ 2011
12 Annual Report 2011
Dear Shareholders,
On behalf of your Board of Directors, I am pleased to present the Annual
Report of George Kent (Malaysia) Berhad for the financial year ended
31 January 2011.
ECONOMIC AND BUSINESS ENVIRONMENT REVIEW
Whilst the economy in the United States and parts of Europe remained in the doldrums during 2010, recovery in Asia, under its own steam, continues to surge ahead due to better growth prospects driven by strengthening domestic demand and a more robust financial sector. However structural issues such as high unemployment, a fragile financial sector and weak fiscal policies facing advanced economies posed downside risks to this growth outlook, given Asia’s dependence on export demand.
The Malaysian economy registered commendable growth rate of 7.2% in 2010, underpinned by strong domestic demand and recovery in exports, supported by the Government’s proactive stimulus packages and accommodative monetary policies. 2010 also saw the Government setting in place the necessary measures to start the National Transformation Programme to support sustainable growth and to achieve its objectives of Malaysia becoming a developed and high income nation in 2020.
In tandem with growth of economies in the Asian countries, Singapore, Indonesia and Hong Kong registered growth rates of 14.5%, 6.1% and 6.8% respectively in 2010, all higher than the respective countries’ initial forecasts at the beginning of the year.
FINANCIAL REVIEW
I am delighted to report that for the financial year under review, your Group achieved commendable performance, achieving an all time record profit before tax of RM32.458 million. Highlights of financial results are as follows:
million)
Your Group’s excellent performance was attributed to the higher sales of meters, OEM products and project related jobs.
DIVIDENDS
For the financial year ended 31 January 2011, your Company paid an interim dividend of 2.0 sen per share less 25% tax on 11 November 2010.
CHAIRMAN’S STATEMENT
13George Kent (Malaysia) Berhad (1945-X)
As announced on 11 March 2011, your Board has recommended, subject to shareholder’s approval at the forthcoming Annual General Meeting, a final dividend of 3.0 sen per share less 25% tax. This will bring the total gross dividend to 5.0 sen per share declared for the financial year ended 31 January 2011. In monetary term, the total net dividend payout in respect of the financial year under review will be RM8.448 million (2010: RM6.684 million).
BUSINESS OUTLOOK AND PROSPECTS
The Asian economies, including Malaysia’s, are on track to achieve more sustainable growth rates. Proactive fiscal stimulus measures, strong domestic demand, robust regional demand for Asia’s exports and accommodative monetary policies will remain the key drivers of Asia’s resilience compared to the advanced economies. We expect 2011 to be a better year, however the sovereign debt issue in Europe and rising inflationary pressures are expected to spill over to 2011. The recent upheaval in the Middle East may also negatively affect the global economy and cause oil prices to escalate, further aggravating inflationary pressure. In view of these challenges, your Group will continue to strive for sustainable growth and to enhance our competiveness going forward.
Your Group’s main focus moving forward, is to continue with the upgrading of production capabilites in our manufacturing plant in Puchong over the next 3 years to increase water meters production and for the manufacture of high quality OEM products. We will seek new regional markets and strategic affiliations with major regional players. Your Group has been marketing water meters to Vietnam for many years and it is our plan to further penetrate this and other Asian markets. We continue to pursue major works in infrastructure projects in water, waste water and in the healthcare industry.
Your Group will capitalise on the opportunities arising from the bold initiatives implemented by the Malaysian Government to stimulate the economy which will benefit the private sector. With the improving economic environment, your Group is optimistic of its prospects for the current year.
ACKNOWLEDGEMENT
Pursuant to Section 129 of the Companies Act, 1965, Dato’ Ir. Haji Zaidan bin Haji Othman, age 78, vacates his office as Director at the forthcoming Annual General Meeting of your Company to be held on 7 July 2011. He has intimated that he does not wish to offer himself for re-appointment.
On behalf of your Board of Directors, I would like to thank him for his valuable contribution and wise counsel to the Group during his 23 year tenure of office. We wish to convey our best wishes to him and to wish him well.
On behalf of your Board of Directors, I wish to thank the management and staff at all levels for their commitment, dedication and collective contribution to the Group’s performance. I wish also to thank our valued customers, suppliers, business partners and shareholders for their continued support.
TAN SRI DATO’ TAN KAY HOCKChairman27 May 2011
CHAIRMAN’S STATEMENTcont’d
75 Years of Excellenceto
Embrace the Future
1936 ~ 2011
14 Annual Report 2011
MANAGEMENT ANALYSIS & REVIEW
Manufacturing
The Manufacturing Division operates the largest hot brass forging
plant in South East Asia for the production of internationally
certified water meters for standard household applications and
specialised industrial usage. Its integrated plant on a 17 acres
site in Puchong, Selangor Darul Ehsan, Malaysia is accredited
with full compliance of ISO 9001:2000 certification standards
for the production of water meters, brass fittings and Fibreglass
Reinforced Polyester (FRP) panels for water tanks as well as
ISO14001:2004 Environmental Management System. This plant
is one of the largest single location water meter manufacturing
facilities in the world. The water meters produced by George
Kent are ISO Class ‘C’ rated water meters, the preferred
standard in Malaysia and many other countries worldwide. The
water meters manufactured by the Group are exported to more
than 20 countries worldwide and continuing to make inroads
into new export markets. In addition to meters, the plant also
manufactures a multitude of brass products and components
ranging from waterwork fittings, stopcocks, ferrules, housings,
brass parts, ball float control valves and high quality FRP water
tanks. The plant serves as the in-house manufacturer for the
Meters and Industrial Products Divisions as well as contract
manufacturer of OEM parts and products of the Group’s local
and overseas customers.
The Manufacturing Division achieved production of 2 million
units of water meters and water meter housing during the
financial year under review. Revenue from its OEM contract
manufacturing business for the year under review was 66.3%
higher when compared to the previous year due to sales to new
OEM markets and recovery in the global economy since the
beginning of the financial year under review.
Going forward, the Manufacturing Division’s strategic thrust is to
continue intensifying its efforts to secure more orders for OEM
contract manufacturing, an important revenue stream for the
Group. The Group will capitalise on its long term experience in
working with business partners worldwide to generate a win-
win situation. In this respect, the Company had since the 4th
quarter of 2009 embarked on its 5-year facilities upgrade plan to
increase the production capacity of both meter and non-meter
products. The first phase of the expansion plan was completed
in January 2011 with the purchase of machineries and
equipments which enabled water meters production capacity to
be increased by 30%. The second phase, involving purchase of
additional machineries has commenced and upon completion
will double its water meter production capacity.
George Kent Group has two (2) core business units namely, Manufacturing,
Meters & Industrial Products (MMI) and Infrastructure Investment, Water &
Construction (IWC). Its core businesses are centred in the Water Industry.
MANUFACTURING, METERS & INDUSTRIAL PRODUCTS
15George Kent (Malaysia) Berhad (1945-X)
MANAGEMENT ANALYSIS & REVIEWcont’d
Meters
The Group is a major supplier and distributor of water metering
products to a large number of water authorities in the various
states of Malaysia and also exports significant quantities to
several ASEAN countries. Its diverse product range includes
meters used for residential, industrial and commercial sectors
and offers a complete solution in consumption measurement,
network monitoring and distribution application.
The Meters Division’s revenue for the financial year under review
was higher by 12.3% compared to the previous financial year.
The increased demand for the Group’s water metering products
was due to its success in recapturing some of the water meters
contracts lost previously.
With the shifting of the centre of the global economic growth to
the East Asia region, the demand for basic infrastructure and
related supporting products is set to increase. In this respect,
the Group is well position to benefit from this growth in potential
businesses. Meanwhile, the Group will continue to improve its
efficiencies and product quality so to maintain its leadership
position in the local market and remain competitive in both the
local and export markets.
Industrial Products
The Industrial Products Division comprises non-meters supplies,
trading and industrial equipment supply and installation
businesses which include: brass components, fittings and
parts for waterworks used specifically by the plumbing industry
and distributed through a network of hardware dealers and
agents under the brand name of “George Kent”; FRP water
tanks manufactured under licence from Sekisui Aqua Systems
of Japan; industrial boilers under the Garioni, Fulton and
Wanson brands and other oil heating products under agency
distribution from other established international manufacturers;
and instrumentations that include leak detection equipments,
analytical instruments, recorders & controllers, pressure and
level measurement equipments, gauges and dead weight tester
& calibrators.
The current range of products under the Industrial Products
Division also include stopcocks, bibtaps, ferrules, ball float
valves, brass ball valves, lockable valves, angle valves, brass
gate valves, ductile iron resilient seat sluice valves, ductile
iron gate valves, and cast/ductile iron saddles and fittings and
others.
The Group has sought to deepen and extend its industrial
products distribution channels locally and overseas through
establishing a network of agents and distributors involved in the
hardware trade or building materials supply chain to provide a
consistent level of stocks and customer service. Exports remain
a key driver for the FRP water tanks manufactured locally due to
their high material grade and quality of finishing.
75 Years of Excellenceto
Embrace the Future
1936 ~ 2011
16 Annual Report 2011
Infrastructure Investment
The Group invests in long term infrastructure assets as well as
managing the operation and maintenance for such assets.
The Group’s infrastructure investment in PNG Water Ltd (PWL)
in Papua New Guinea under a 22-year concession to supply
processed water to the capital city of Port Moresby, continues
to contribute significant returns on investment. The Group’s
wholly owned subsidiary, George Kent (PNG) Limited (“GKPNG”)
is the operation and maintenance contractor for PWL’s water
treatment plant. Both PWL and GKPNG are expected to provide
recurring income contribution to the Group’s Contracts Division
over the remaining concession period.
The Group is consistently exploring opportunities to increase
its recurring income base by extending its investment in
infrastructure assets as well as the operation and maintenance
operator for the invested assets.
Water and Construction
The Water and Construction Division bids for mechanical and
engineering contracts for water infrastructure related projects
and non-water related projects with high mechanical and
engineering contents. The Group has successfully completed
over 26 major water-supply contracts in the past 20 years. The
projects are of a varied nature, ranging from construction and
rehabilitation, operation and maintenance of treatment plants;
laying of pipelines and etc. The Company is also a specialist in
turnkey construction of major water supply projects.
As at 31 January 2011, the RM97.75 million contract to
construct and upgrade a new 106-bed hospital at Hospital Kuala
Lipis in Pahang for the Ministry of Health was 78% completed.
The works include the design and building of medical facilities
for a 6-storey medical ward, operating theatres, car park,
building amenities and services for the said new hospital wing.
The contract is expected to be completed during the current
financial year.
During the financial year under review, the Company, together
with its joint venture partners was successful in securing the
following contracts:
MANAGEMENT ANALYSIS & REVIEWcont’d
INFRASTRUCTURE INVESTMENT, WATER AND CONSTRUCTION DIVISION
17George Kent (Malaysia) Berhad (1945-X)
i. Pahang-Selangor raw water transfer project, lot 1-3A
Semantan intake pumping station and related works with
contract value at RM317.6 million; and
ii. Construction and completion of Panching water treatment
works in Kuantan, Pahang, for the East Coast Economic
Region Development (Package 1) with contract value at
RM129.8 million.
The Company’s portion of the works for the above contracts
constitutes approximately 50% of the contract value.
The Group continues to explore business opportunities
to participate in large-scale civil engineering and building
construction works under the 10th Malaysia Plan plus other
water-related infrastructural or mechanical & engineering works.
In this respect, the Group is currently tendering/bidding for
infrastructure projects with value exceeding RM1 billion.
With the plan of providing a total solution in the provision of
mechanical and engineering services, the Group has developed
a strong capability in installation, implementation and the
maintenance of industrial/automation system applications
of commercial buildings and key industrial installations such
as water treatment plants, petrochemical complexes, ports,
telecommunications hubs, or transportation terminus where
security and flow management of day-to-day operations/
transactions/processes are critical and/or prone to security
risks and disruption. These products/systems include building
surveillance systems, building automation/access cards,
SCADA and telemetry systems and flow control processes.
Beside complementing the Group in securing construction
projects, this business unit is also serving non-project related
customers. Leveraging on the Group’s expertise and extensive
experience in this area, the Group is also seeking opportunity to
extend the business reach of this segment.
MANAGEMENT ANALYSIS & REVIEWcont’d
75 Years of Excellenceto
Embrace the Future
1936 ~ 2011
18 Annual Report 2011
EVENT HIGHLIGHTS
3 February 2010
Analysts’ Briefing cum Factory Visit to GKM
8 February 2010
Staff Appreciation Dinner in Quality Hotel Kuala Lumpur
22 February 2010
Lion Dance & Chinese New Year Staff Luncheon in GKM
10 April 2010
Kelab Sukan George Kent Annual Dinner in Klang Executive
Club
23-24 April 2010
Sales Management Seminar – “The Art of Innovative Selling”
8 May 2010
George Kent Family Day & Tree Planting
22 May 2010
7th Management Conference
1 June 2010
Kuala Lipis Hospital Project Topping – Up Ceremony
18 June 2010
Commencement of ERP Foundation Training for all staff
22 June 2010
Career Fair in INTI University College in Nilai
24-25 June 2010
Microsoft Project Application Training
26 June 2010
Tan Sri Dato’ Tan Kay Hock Badminton Challenge Trophy
19George Kent (Malaysia) Berhad (1945-X)
EVENT HIGHLIGHTScont’d
9-10 January 2011
Change Agents’ Teambuilding in Malacca
12 January 2011
George Kent’s 1st One Million Water Meter Celebration at
George Kent Technology Centre, Puchong.
4-5 July 2010
Budget Review Brainstorming in Lumut for all Change Agents
31 July 2010
CPR Safety Training Course
4 October 2010
Hari Raya Puasa Staff Luncheon
23 October 2010
8th Management Conference
30 October 2010
Kejohanan Ping Pong Kelab Sukan George Kent
13 November 2010
Sales Management Seminar “Next Step to Breakthrough
Sales”
23 December 2010
Professional Career in Engineering Talk by IEM
31 December 2010
Annual GKM Badminton Tournament between Office & Factory
Employees
75 Years of Excellenceto
Embrace the Future
1936 ~ 2011
20 Annual Report 2011
PROFILE OF DIRECTORS
Name TAN SRI DATO’ TAN KAY HOCK DATO’ IR. HAJI ZAIDAN BIN HAJI OTHMAN
Age 63 78
Nationality Malaysian Malaysian
Qualification Barrister-at-Law Master of Science in Engineering from Northwestern University, USA, Postgraduate Diploma in Highway & Traffic Engineering from Kings College, Durham University, England and Diploma in Civil & Structural Engineering from Brighton Technical College, England.
Position on Board Chairman(Non-Independent Non-Executive Director)
Director(Independent Non-Executive Director)
Date of Appointment 14 January 1982 27 June 1988
Working Experience A lawyer by training having been called to the Bar by the Honourable Society of Lincoln’s Inn, UK in 1971. In 1972, he was admitted as an advocate and solicitor to the Supreme Court of Malaysia. He is a non-practising lawyer. Since August 1981, he is the Chairman and Chief Executive of Johan Holdings Berhad which is listed on the Main Market of Bursa Malaysia Securities Berhad. The Johan Group principal activities are franchise operator for Diners Club charge & credit cards, travel & tours, manufacturing of ceramics tiles, distribution and retailing of health food & supplements, metal fabrication, property development, resorts and hotels. He is a Member of the Iskandar Regional Development Authority (IRDA), a Committee Member of the Malaysian Philippines Business Council and a Trustee of Malaysian Humanitarian Foundation.
More than 40 years of experience in the engineering industry, and had held the positions of Director of Highway Planning Unit (1972 _ 1980), Director General in Lembaga Lebuhraya Malaysia (1980 _ 1984) and Deputy Director General of Jabatan Kerja Raya Malaysia (1984 _ 1988)
Other directorships of public companies
Johan Holdings BerhadJacks International Limited
NIL
Family relationship with any director and/or major shareholders of the Company
Spouse of Puan Sri Datin Tan Swee Bee, a Non-Executive Director of the Company
NIL
Conflict of interest with the Company NIL NIL
List of convictions for offences within the past ten (10) years
NIL NIL
Committee Member of the Audit Committee, Risk Management Committee, ESOS Committee and Chairman of the Remuneration Committee.
Member of the Audit Committee and Remuneration Committee.
21George Kent (Malaysia) Berhad (1945-X)
PROFILE OF DIRECTORScont’d
PUAN SRI DATIN TAN SWEE BEE ONG SENG PHEOW
64 62
British Citizen Malaysian
Barrister-at-Law Certified Public Accountant (Malaysia)Member of the Malaysian Institute of Certified Public AccountantsMember of the Malaysian Institute of Accountants
Director (Non-Independent Non-Executive Director)
Director(Independent Non-Executive Director)
11 October 1989 13 September 2004
She is a UK trained Barrister-at-Law from the Honourable Society of Lincoln’s Inn, UK in 1971. In 1972, she was admitted as an advocate and solicitor to the Supreme Court of Malaysia. She is a non-practising lawyer. Since December 1984, she is the Group Managing Director of Johan Holdings Berhad, listed on the Main Market of Bursa Malaysia Securities Berhad. The Johan Group principal activities are franchise operator for Diners Club charge & credit cards, travel & tours, manufacturing of ceramics tiles, distribution and retailing of health food & supplements, metal fabrication, property development, resorts and hotels.
Over 30 years of experience as Public Accountant with international firm of accountants and was a partner of Messrs Ernst & Young from 1984 to 2003.
Johan Holdings Berhad Jacks International Limited
Daiman Development BerhadLCTH Corporation BerhadRHB Bank Berhad HELP International Corporation BerhadRHB Insurance Berhad
Spouse of Tan Sri Dato’ Tan Kay Hock, the Chairman of the Company.
NIL
NIL NIL
NIL NIL
Member of the Remuneration Committee and ESOS Committee.
Chairman of the Audit Committee and Risk Management Committee.
75 Years of Excellenceto
Embrace the Future
1936 ~ 2011
22 Annual Report 2011
PROFILE OF DIRECTORScont’d
Name DATO’ PADUKA PROF. (DR.) IR. HJ. KEIZRUL BIN ABDULLAH
IR. DR. CHEONG THIAM FOOK
Age 59 56
Nationality Malaysian Malaysian
Qualification Fellow (F1691), Institute of Engineers, Malaysia (IEM)Registered Professional Engineer (4133 Civil), MalaysiaFounding Fellow (0078), ASEAN Academy of Engineering and TechnologyFounding Member, Malaysian Hydrology Society (MHS)Member, International Association of Hydrological Sciences (IAHS)
BSc in Mechanical EngineeringMaster in Energy Technology PhD in Manufacturing Management
Position on Board Director(Independent Non-Executive Director)
Director(Non-Independent Executive Director)
Date of Appointment 8 December 2009 10 December 2008
Working Experience Dato’ Paduka Prof. (Dr.) Ir. Hj. Keizrul has been involved in the field of water and water resources engineering for the past 34 years. Upon graduation in 1975, he joined the Department of Irrigation and Drainage Malaysia and over an illustrious career, rose to become the Director General in November 1997 until his retirement from public service in December 2007.
He is responsible for all business units in the Group. He has over 25 years of experience in the building and construction services industry and as Project Manager in the successful completion of many projects including high-rise buildings, industrial plant and public infrastructure projects such as Star LRT System Phase 1 & 2.
Other directorships of public companies
Wetlands InternationalKimlun Corporation BerhadMalaysian Green Technology Corporation
NIL
Family relationship with any director and/or major shareholders of the Company
NIL NIL
Conflict of interest with the Company NIL NIL
List of convictions for offences within the past ten (10) years
NIL NIL
Committee Member of the Audit Committee Member of the Risk Management Committee.
23George Kent (Malaysia) Berhad (1945-X)
EXECUTIVE DIRECTOR
Ir. Dr. Cheong Thiam Fook, aged 56, is the Executive Director responsible for the entire operations of the Group. He holds a BSc
in Mechanical Engineering, a Master in Energy Technology and a PhD in Manufacturing Management. He is Fellow member of the
Institute of Engineers, Malaysia and a registered Professional Engineer with the Board of Engineers, Malaysia. He has over 25 years of
experience in the building and construction services industry and as Project Manager in the successful completion of many projects
including high-rise buildings, industrial plant and public infrastructure projects such as Star LRT System Phase 1 & 2.
SENIOR MANAGERS
(in alphabetical order)
Chan Kim Chuan, aged 61, is the General Manager of the Meters, Manufacturing and Industrial Division. He has served the Company
for over 38 years and has experience in factory, engineering and manufacturing management. He is responsible for the development,
manufacturing and marketing of meters and industrial products and OEM-manufacturing services and products.
Kong Chee Khoon, aged 47, is the General Manager Corporate Affairs of the Company. He is a fellow member of the Association of
Chartered Certified Accountants and a member of the Malaysian Institute of Accountants. He has more than 15 years of corporate
finance related experience in his prior engagement with a local conglomerate. Mr Kong is primary responsible in the corporate finance
activities of the Group.
Ir. Thong Koon Choon, aged 56, a registered professional engineer is the General Manager of the Contract Division. He holds a
BSc in Civil Engineering from University of Portsmouth, a MBA from University of Strathclyde and a CDipAF from ACCA, UK. He is a
member of MIEM, MICE, MCIWEM, MMWA, C Eng (UK), P Eng (Malaysia). He has more than 30 years of working experience in the
Water and Wastewater sectors covering Consultancy, Turnkey Contracting, Contracts Management and Sub-Contracting. Key areas
of expertise and knowledge covers design, project management, contract administration, site supervision, marketing and business
development of the Water and Wastewater business.
SENIOR MANAGEMENT
75 Years of Excellenceto
Embrace the Future
1936 ~ 2011
24 Annual Report 2011
STATEMENT ON CORPORATE GOVERNANCE
The Board is committed to ensuring high standards of corporate governance throughout the Group and endeavours to ensure
consistency of policies and procedures of the Group of companies in different geographical regions. This statement illustrates the
extent of which the Board has embodied the spirit and principles of the Malaysian Code on Corporate Governance (“The Code”). The
Code formalises management practices that have generally been adopted by the Board for some time now. Unless otherwise stated
below, the Company is in compliance with the requirements of the Code.
A. BOARD OF DIRECTORS
(i) Board Composition
The Board currently has six (6) members, comprised of one (1) Executive Director and five (5) Non-Executive Directors,
three (3) of whom are Independent Directors. Together, the Directors have a diverse wealth of experience as well as skills
and knowledge in law, engineering, accounting and general management. The profile of each Director on the current
Board is included in Pages 20 to 22 of this Annual Report.
There is clear segregation of responsibilities between the Chairman and Executive Directors to ensure a balance of power
and authority. The role of the non-executive Directors is particularly important as they provide unbiased and independent
view, advice and judgement to fulfil a pivotal role in corporate accountability.
(ii) Duties and Responsibilities
The Board recognises its duties and responsibilities to shareholders of the Company which principally include the
following:
Company and within the Group;
(iii) Supply of Information
All Directors are provided with an agenda and a set of Board papers prior to each Board Meeting to be convened. Board
papers are circulated in sufficient time to enable Directors to obtain further explanation, if necessary, in order to be properly
briefed before each meeting. Board members are supplied with full and timely information necessary to enable them to
discharge their responsibilities. Senior management staffs are also invited to attend Board Meetings when necessary to
provide the Board with further explanation and clarification on matters being tabled for consideration by the Board.
The Board meets quarterly, scheduled to hold within two months of each quarter, to consider the quarterly financial results
and review operational performance. Additional meetings are convened as and when necessary.
All Directors have access to the advice and services of the Company Secretary and are updated on new statutory or
regulations requirements concerning their duties and responsibilities.
Newly appointed Directors are briefed by the Board, the Company Secretary and the members of the management on the
nature of business and current issues within the Company and the Group.
25George Kent (Malaysia) Berhad (1945-X)
A. BOARD OF DIRECTORS cont’d
(iv) Board of Directors’ Meetings
During the financial year ended 31 January 2011, the number of Board of Directors’ Meetings held and the attendance of
each Director were as follows:-
No. of Board Meetings
Directors Held Attended
Tan Sri Dato’ Tan Kay Hock 4 4
Puan Sri Datin Tan Swee Bee 4 4
Dato’ Ir. Haji Zaidan Bin Haji Othman 4 3
Ong Seng Pheow 4 4
Ir. Dr. Cheong Thiam Fook 4 4
Dato’ Paduka Prof. (Dr.) Ir. Hj. Keizrul Bin Abdullah 4 4
(v) Re-election of Directors
In accordance with the Articles of Association of the Company at least one-third of the Directors including the Managing
Director are required to retire by rotation at each Annual General Meeting but shall be eligible for re-election
The Articles of Association of the Company also provided that the newly appointed Director shall hold office until the
forthcoming Annual General Meeting and shall then be eligible for re-election.
Directors over seventy years (70) of age are required to submit themselves for re-appointment annually in accordance with
Section 129(6) of the Companies Act, 1965.
Details of Directors seeking re-election or re-appointment (as the case may be) as required under Paragraph 8.27(2) of the
Bursa Securities Listing Requirements are disclosed in the Statement Accompanying Notice of Annual General Meeting.
(vi) Directors’ Training
The Board encourages its Directors to attend talks, seminars, workshops and in-house conferences to update and
enhance their skills and knowledge and to keep abreast with developments in regulatory and corporate governance
issues. During the year the Directors in their individual capacity and as Director of other public listed companies in
Malaysia, had attended many courses, briefings and seminars, relating to risk management, corporate governance,
investors relations and financial statements reporting under IFRS. The latest seminar organised for Directors was entitled
“Compliance of the Listing Requirements – Expectations on Directors of Listed Companies” conducted by Bursatra Sdn
Bhd.
(vii) Board Committees
The Board had delegated certain responsibilities and duties to the following Board Committees which operate within
clearly defined terms of reference. These Committees as listed below do not have executive powers but report to the
Board on all matters considered and their recommendations thereon.
STATEMENT ON CORPORATE GOVERNANCEcont’d
75 Years of Excellenceto
Embrace the Future
1936 ~ 2011
26 Annual Report 2011
STATEMENT ON CORPORATE GOVERNANCEcont’d
A. BOARD OF DIRECTORS cont’d
(vii) Board Committees cont’d
(a) Audit Committee
The Audit Committee currently is comprised of four (4) Non-Executive Directors as follows:-
1. Ong Seng Pheow (Independent Non-Executive Director) – Chairman2. Dato’ Ir. Haji Zaidan Bin Haji Othman (Independent Non-Executive Director)3. Tan Sri Dato’ Tan Kay Hock (Non-Independent Non-Executive Director)4. Dato’ Paduka Prof. (Dr.) Ir. Hj. Keizrul Bin Abdullah (Independent Non-Executive Director) (appointed w.e.f. 31 March 2010)
The Audit Committee’s terms of reference include the review of the Group’s quarterly and year end financial results, review of any major audit findings raised by external auditors and internal auditors and management’s response thereon. The Executive Directors, Head of Finance & Control and Internal Audit Manager attend the Audit Committee Meetings at the invitation of the Audit Committee. The Audit Committee meet with the external auditors at least once a year without any executive Directors being present.
Agenda of Audit Committee Meetings also include internal audit findings of operating units of the Group and investigations carried out by internal audit department.
The Audit Committee Report for the financial year pursuant to Paragraph 15.15 of the Bursa Securities Listing Requirements is contained in Pages 30 to 32 of this Annual Report.
(b) Risk Management Committee
The Risk Management Committee comprised of the following as members:-
1. Ong Seng Pheow (Independent Non-Executive Director) – Chairman2. Tan Sri Dato’ Tan Kay Hock (Non-Independent Non-Executive Director)3. Ir. Dr. Cheong Thiam Fook (Non-Independent Executive Director)
The Risk Management Committees’ primary responsibility is to oversee the overall risk management of the Group, particularly on the strategic areas of the business. The Risk Management Committee, supported by the Risk Management Working Group, which comprises of the Senior Managers, is responsible for identifying, managing and mitigating risks through a systematic risk evaluation/profiling exercise. The Risk Profile is reviewed and revised on a quarterly basis and submitted to the Risk Management Committee for review.
(c) Remuneration Committee
During the financial year ended 31 January 2011, the Remuneration Committee comprised of two (2) Non-Independent Non-Executive Directors and one (1) Independent Non-Executive Director as follows:-
1. Tan Sri Dato’ Tan Kay Hock (Non-Independent Non-Executive Director) – Chairman2. Dato’ Ir. Haji Zaidan Bin Haji Othman (Independent Non-Executive Director)3. Puan Sri Datin Tan Swee Bee (Non-Independent Non-Executive Director)
The Remuneration Committees’ primary responsibilities are to recommend to the Board the remuneration package and the terms of employment on each executive Director. The determination of fees payable to non-executive Director will be a matter for the Board as a whole, and a Director shall not participate in the decision on their own remuneration packages.
The Remuneration Committee is also responsible for developing the Group’s remuneration policy and determining
the remuneration packages of senior executive employees of the Group.
27George Kent (Malaysia) Berhad (1945-X)
A. BOARD OF DIRECTORS cont’d
(vii) Board Committees cont’d
(d) Nomination Committee
Given the limited size of the Board, the Directors consider it inappropriate for the time being, to formally establish a Nomination Committee as all new nominations of Directors received are assessed and approved by the entire Board. The process of assessing Directors’ performance is also an ongoing responsibility of the entire Board.
(e) Employee Share Option Scheme (“ESOS”) Committee
The ESOS Committee was established on 8 October 2003 to administer the ESOS of the Group implemented to be in force for a period of five (5) years commencing from 8 October 2003 to 7 October 2008. At the Annual General Meeting of the Company held on 28 July 2008, shareholders had approved the extension of the duration of the ESOS for another five (5) years expiring 7 October 2013. The ESOS Committee comprised of the following members:-
1. Tan Sri Dato’ Tan Kay Hock (Non-Independent Non-Executive Director) – Chairman2. Puan Sri Datin Tan Swee Bee (Non-Independent Non-Executive Director)3. Teh Yong Fah (Company Secretary)
Up to 31 January 2011, a total of 443,000 option shares under the 1st tranche were exercised with 283,000 option shares remaining unexercised.
B. DIRECTORS’ REMUNERATION
The remuneration of Directors is determined at levels which enable the Company to attract and retain Directors with the relevant experience and expertise to manage the Groups effectively.
The fees payable to the non-executive Directors, any increase of which are subject to approval by shareholders at annual general meeting. The Chairman of each Board Committee is paid an allowance of RM1,500/- per meeting and each Non-Executive Committee member is paid RM1,000/- per meeting.
The aggregate remuneration of the Directors for the financial year ended 31 January 2011 is as follows:-
Fees
Salaries
and Other
Emoluments
Benefits-
In-Kind Total
(RM’000) (RM’000) (RM’000) (RM’000)
Executive Directors
Ir. Dr. Cheong Thiam Fook - 483 25 508
Non-Executive Directors
Tan Sri Dato’ Tan Kay Hock 144 4 28 176
Puan Sri Datin Tan Swee Bee 72 - - 72
Dato’ Ir. Hj. Zaidan Bin Hj. Othman 45 10 - 55
Ong Seng Pheow 50 10 - 60
Dato’ Paduka Prof. (Dr.) Ir. Hj. Keizrul Bin Abdullah 45 3 - 48
Total 356 510 53 919
STATEMENT ON CORPORATE GOVERNANCEcont’d
75 Years of Excellenceto
Embrace the Future
1936 ~ 2011
28 Annual Report 2011
STATEMENT ON CORPORATE GOVERNANCEcont’d
B. DIRECTORS’ REMUNERATION cont’d
The number of Directors whose remuneration falls within the following bands is as follows:-
Number of Directors
Range of Remuneration Executive Non-Executive Total
Below RM50,000 - 1 1
RM50,001 to RM100,000 - 2 2
RM300,001 to RM400,000 - 1 1
RM400,001 to RM500,000 - 1 1
RM500,001 to RM600,000 1 - 1
C. SHAREHOLDERS COMMUNICATION AND INVESTORS RELATIONSHIP POLICY
The Board acknowledges the need for shareholders to be informed of all material business and developments concerning the
Group. In addition to various announcements made during the year, the Board had ensured timely release of financial results
on a quarterly basis to provide shareholders with an overview of the Group’s performance and operations. Copies of the full
announcement are supplied to shareholders and members of the public upon request.
The Annual General Meeting is the principal forum for communicating with shareholders. Shareholders who are unable to attend
are allowed to appoint not more than two (2) proxies, who need not be the shareholders, to attend and vote on their behalf.
Board members as well as the Head of Finance & Control and the external Auditors of the Company are present to answer
questions raised by shareholders. Shareholders are given the opportunity to ask questions during the questions and answers
session prior to each resolution being proposed for consideration by shareholders.
Briefings to fund managers and analysts are held throughout the year. Corporate information of the Group is also available via
the Company’s website, www.georgekent.net.
D. ACCOUNTABILITY AND AUDIT
(i) Financial Reporting
The Board acknowledge their responsibility to ensure that the financial statements of the Company and the Group are
prepared in accordance with the provisions of the Companies Act, 1965 and approved accounting standards in Malaysia
so as to give a true and fair view of the state of affairs and the result of the Company and of the Group.
In preparing these financial statements, the Directors have:-
- adopted suitable accounting policies and applying them consistently;
- made judgement and estimates that are prudent and reasonable;
- ensured applicable accounting standards have been followed, subject to any material departures disclosed and
explained in the financial statements; and
- prepared the financial statements on a going concern basis.
The Directors are responsible for keeping proper accounting records which disclose with reasonable accuracy at any
time the financial position of the Company and the Group and to enable them to ensure that the financial statements as
prepared comply with the Companies Act, 1965. The Directors are also responsible for safeguarding the assets of the
Company and the Group and to take reasonable steps for the prevention and detection of fraud and other irregularities.
29George Kent (Malaysia) Berhad (1945-X)
D. ACCOUNTABILITY AND AUDIT cont’d
(ii) Internal Control
The Board acknowledges its overall responsibility for ensuring that a sound system of internal control is maintained
throughout the Group and the need to review its effectiveness regularly. The Board recognises that risks cannot be totally
eliminated and the system of internal controls instituted can only help minimise and manage risks and provide some
assurance that the assets of the Company and of the Group are safeguarded against material loss and unauthorised use
and that financial statements are not materially misstated.
The information on the Group’s internal control is presented in the Statement on Internal Control of this Annual Report.
(iii) Relationship with External Auditors
A transparent and professional relationship with the external auditors to enable them to independently report to shareholders
in accordance with statutory and professional requirement is established through the Audit Committee. The role of the
Audit Committee members in relation to the external auditors is set out in the Audit Committee Report of this Annual
Report.
This Statement is made in accordance with the resolution of the Board of Directors dated 27 May 2011.
STATEMENT ON CORPORATE GOVERNANCEcont’d
75 Years of Excellenceto
Embrace the Future
1936 ~ 2011
30 Annual Report 2011
AUDIT COMMITTEE REPORT
MEMBERS
Ong Seng Pheow Chairman (Independent Non-Executive Director)Dato’ Ir. Haji Zaidan Bin Haji Othman (Independent Non-Executive Director)Tan Sri Dato’ Tan Kay Hock (Non-Independent Non-Executive Director)Dato’ Paduka Prof. (Dr.) Ir. Hj. Keizrul Bin Abdullah (Independent Non-Executive Director) (appointed on 31 March 2010)
A. TERMS OF REFERENCE
1. Constitution
(i) The Audit Committee (“the Committee”) was established by the Board of Directors (“the Board”) of the Company at its meeting held on 3 March 1994; and
(ii) The Board shall ensure that the composition and functions of the Committee comply as far as possible with the Bursa Securities Listing Requirements as well as other regulatory requirements.
2. Objectives
(i) To assist the Board in fulfilling its fiduciary responsibilities relating to corporate accounting and reporting practices of the Company and the Group;
(ii) To maintain, through regularly scheduled meetings, a direct line of communication between the Board and the external auditors as well as the internal auditors;
(iii) To act upon the Board of Directors’ request to investigate and report on any issue or concern with regard to the management of the Group.
3. Duties and Responsibilities
(i) To review with the external auditors the audit plan and their evaluation of the system of internal controls;
(ii) To consider and recommend for approval of the Board the appointment or re-appointment of the external auditors, the audit fees and any questions of their resignation or dismissal;
(iii) To review the adequacy of the internal audit plans, scope of examination of the internal auditors and ensure that appropriate action is taken by Management in respect of the audit observations and the Committee’s recommendations;
(iv) To review the quarterly, half-yearly and annual financial statements before submission to the Board. The review should focus primarily on compliance with accounting standards as well as other regulatory requirements and the adequacy of information disclosure for a fair and full presentation of the financial affairs of the Company and the Group;
(v) To review any related party transaction and conflict of interest situation that may arise within the Company and the Group including any transaction, procedure or conduct that raises questions of management integrity;
(vi) To direct any special investigations on the Group’s operations to be carried out by the internal audit department or any other appropriate agencies;
(vii) To discuss problems and reservations arising out of external or internal audits and any matters which the auditors wish to bring up in the absence of Management or the Executive Directors of the Group where necessary; and
(viii) To perform other related duties as may be agreed by the Committee and the Board.
31George Kent (Malaysia) Berhad (1945-X)
B. MEETINGS
During the year ended 31 January 2011, the number of Audit Committee Meetings held and the attendance of each Director
were as follows:-
No. of Audit
Committee Meetings
Held Attended
Ong Seng Pheow (Chairman) 4 4
Dato’ Ir. Haji Zaidan Bin Haji Othman 4 3
Tan Sri Dato’ Tan Kay Hock 4 4
Dato’ Paduka Prof. (Dr.) Ir. Hj. Keizrul Bin Abdullah (appointed w.e.f. 31 March 2010) 3 3
At these Committee Meetings, the Executive Directors, Head of Finance & Control Department together with the Internal Audit
Manager and representatives of the external auditors were as appropriate, in attendance to review with the Committee Members
the quarterly reports as the case may be focusing on going concern assumption compliance with accounting standards,
significant audit issues and internal controls.
After each Committee Meeting, the Chairman of the Committee reports to the Board on the proceedings conducted thereat and
to convey the recommendation of the Committee to the Board for its consideration.
The Audit Committee had also met with the External Auditors separately on an occasion without the presence of Executive
Directors and Senior Management.
C. ACTIVITIES
In line with the terms of reference of the Committee, the following activities were carried out by the Committee during the
financial year ended 31 January 2011 in the discharge of its functions and duties:-
(i) Review of the audit plans and scope for the year for the Group prepared by Internal Audit Department and the external
auditors;
(ii) Review of the internal audit reports of companies within the Group prepared by the Internal Audit Department and Auditors’
Reports by the external auditors and consideration of the major findings by the auditors and management’s responses
thereto. Monitored the corrective actions on the outstanding audit issues to ensure that all the key risks and control lapses
have been addressed;
(iii) Review of the quarterly and annual financial statements of the Group prior to submission to the Board for consideration
and approval;
(iv) Review of the related party transactions entered into by the Group;
(v) Review of the fees of the external auditors; and
(vi) Meeting with the external auditors without the presence of the management.
AUDIT COMMITTEE REPORTcont’d
75 Years of Excellenceto
Embrace the Future
1936 ~ 2011
32 Annual Report 2011
AUDIT COMMITTEE REPORTcont’d
D. INTERNAL AUDIT FUNCTION
The Internal Audit Department was established in year 2006 to carry out internal audit function of the Group’s key operations
in Malaysia and overseas. The internal audit team assists the Audit Committee in providing assurance that a sound system of
internal controls exists by reviewing such controls and procedures of the Company and its subsidiaries. At the beginning of
each year, the audit programme would have to be approved by the Audit Committee and findings would be presented to the
Committee in a timely manner for their consideration. The internal audit team is independent and has no involvement in the
operations of Group companies.
The total cost incurred for the internal audit function for the year ended 31 January 2011 was RM115,000 (2010: RM67,000).
This Audit Committee Report has been reviewed and approved by the Board of Directors for inclusion in this Annual Report on 27
May 2011.
33George Kent (Malaysia) Berhad (1945-X)
STATEMENT ON CORPORATE SOCIAL RESPONSIBILITY
The George Kent Group recognise Corporate Social Responsibility (“CSR”) as an integral part to our approach in managing our
businesses, creating value to our shareholders and enhancing the long term sustainability of our Group. Our Group believe in the concept
of CSR in going beyond business to fulfil our responsibilities towards the Environment, Community, Workplace and Marketplace.
THE ENVIRONMENT
The Group practice environmental preservation and maintain high standards of occupational and health management practices as
part of our commitment to our employees and society as a whole. George Kent had embarked on “resources conservation” since
we started our transformation initiatives back in 2007. The Energy Efficiency Management Team set up aims to achieve savings in
electricity bills and other energy cost of at least 15%. Other eco-friendly steps taken include recycling, air pollution controls, and waste
management. In conjunction with the Company’s Family Day held on 8 May 2010, we also had a Green Day which saw more than 100
trees being planted by the management in the perimeter of GKM’s factory site as a greening of the environment event.
George Kent’s manufacturing plant is fully ISO 14001 compliant. The plant also harvest rainwater for use in its test-bench operations
as well as utility washing and cleaning in general.
THE COMMUNITY
We believe in adding value to the communities in which we operate through providing support in diverse areas of social welfare.
We also encourage our employees to also participate in community projects and undertake voluntary works for fund-raising and
social welfare. The Group support and will continue to contribute to charity organisations which are directed in aiding the needy. In
conjunction with the launch of George Kent’s 75th Anniversary Celebration on 14 March 2011, the Company made a tax exempt
donation of RM500,000 to the MCA 1Malaysia Medical Foundation. This Foundation is to assist Malaysian citizens of all races with
limited financial capacity or medical insurance to pay medical expenses.
THE WORKPLACE
The Company is unwavering in its drive to make George Kent Technology Centre a learning organisation where staff training and
development are given continuous focus and emphasis. Our employees are central to our continued success of our businesses and
our reputation for service excellence.
Existing and new staff are given in-house training programmes such as leadership and team development programmes, management
trainee programmes and, internships etc. To upgrade their work skills and capabilities towards higher responsibilities and career
growth. Some of the staff welfare benefits include staff canteen subsidy, sponsorship of Family Day, local study trips, financial support
of staff sports and recreational amenities, festival celebrations and staff loan assistance. Senior management personnel are given
exposure to study trips overseas and senior management learning programmes are conducted by renowned institutions to widen
their horizon and talents.
On 8th May 2010, a Family Day with the theme “One Team One Spirit” was held in George Kent Technology Centre in Puchong,
attended by more than 800 employees and their family members. Besides a wide array of food and refreshments being provided, other
events include telematches, karaoke & colouring contests and entertainment of children by 2 clowns.
Since November 2008, a quarterly GKM Newsletter was published in-house to provide an additional channel of communication to
keep our staff informed of the Group’s developments.
In conjunction with its 75th Anniversary Celebration, the Company also launched the George Kent Education Fund as its long term
human capital development plan to provide University scholarships to eligible staff family members, Vocational College assistance to
qualified staff members and Management Trainee Programme to develop talents of staff in Engineering, Finance, Business and Law.
75 Years of Excellenceto
Embrace the Future
1936 ~ 2011
34 Annual Report 2011
THE MARKETPLACE
We are committed to actively engage and respond to our shareholders, analyst, fund managers, customers, suppliers and government
and non-government bodies with a view to better relations and understanding.
We are committed to high ethical standards in the areas of marketing, advertising and procurement. We seek to protect our customers’
rights through responsive customer complaint and meeting with the strictest data protection requirements. We continue to monitor all
levels of our operations for efficiency to ensure that these are aligned with our corporate governance statements.
We maintain timely and open communications with our shareholders, analyst and fund managers so as to have a clear understanding
of the Group’s strategy, performance and growth direction. Details of the Company’s “Shareholders Communication and Investors
Relationship Policy” are found on the Statement on Corporate Governance on Page 28 of the Annual Report.
STATEMENT ON CORPORATE SOCIAL RESPONSIBILITYcont’d
35George Kent (Malaysia) Berhad (1945-X)
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 Company’s assets. This Statement is prepared in accordance with Paragraph 15.26 (b) of the Main
Market Listing Requirements (“LR”) of Bursa Malaysia Securities Berhad.
BOARD RESPONSIBILITY
The Board recognizes its responsibilities for and the importance of sound internal controls and risk management practices and for
reviewing the adequacy and integrity of those systems. However it should be noted that such systems are designed to manage rather
than eliminate risk. Also any system can only provide reasonable and not absolute assurance against material loss or misstatement.
INTERNAL CONTROL
Internal audit plays a critical role in the objective assessment of the Group’s business processes by providing the Audit Committee
with reasonable independent assurance on the effectiveness and integrity of the Group’s system of internal control. Further, there are
organizational structures in place for each operating unit with clearly defined levels of authority. Operational management has clear
responsibility for identifying risks affecting their business and for instituting adequate procedures and internal controls to mitigate
and monitor such risks in an ongoing basis. Issues are brought to the Board’s attention regularly during Board meetings. Standard
operating policies and procedures that document how transactions are captured and where internal controls are applied exist for all
Group operating companies. As part of the performance monitoring process, management information in the form of annual budgets,
revised forecasts and quarterly management accounts and reports are provided to the Board for approval and review respectively.
The other key elements of the Group’s internal control system are described below.
Organisation Structure
The Group has in placed an organisation structure with key responsibilities clearly defined for the Board, Committees of the
Board and executive management of the Group’s operating units.
Independence of Audit Committee
The Audit Committee currently comprises three (3) Independent Non-Executive Directors and one (1) Non-Independent Non-
Executive Director, who have full access to both internal and external auditors.
Documented Internal Policies and Procedures
Key policies and control procedures regulating financial and operating activities are clearly documented in manuals for the
Group’s operations. Compliance with the controls set out in the manuals monitored by regular internal audit reviews. These
manuals are also subject to regular reviews and updates to take into consideration the changing business risks and to resolve
any operational deficiencies.
Detailed Budgeting Process
Detailed annual budgets are prepared by individual operating units containing business strategies, financial and operating
targets, performance indicators and capital expenditure proposals, which are reviewed by the Board. The Board approves the
consolidated Group budget with objectives for each operating unit.
Financial Reporting System
Detailed management accounts are prepared by each operating unit based on annual budget with monthly reports compared
against budget, analysis of significant variances and key performance indicators and quarterly re-forecasting.
Capital Expenditure Approval Process
The Group has formal procedures for the appraisal of major capital expenditure, which must be approved by the Board and
detailed procedures and authority levels relating to all other capital expenditure. There are also clear procedures for obtaining
Board approval for assets disposal and major business transactions.
75 Years of Excellenceto
Embrace the Future
1936 ~ 2011
36 Annual Report 2011
STATEMENT ON INTERNAL CONTROLcont’d
RISK MANAGEMENT
The Risk Management Committee, set up by the Board in September 2002, comprised of executive board members and senior
management to better identify and to review the risk profile of companies within the Group.
There is an ongoing process for identifying, evaluating and managing significant risks faced by the Group in the context of its business
objectives. Each major operating unit of the Group has produced a Risk Register which indentifies the key risks, their potential impact
and likelihood of occurrence as well as control strategies material risks are identified, analysed, treated, monitored and reported to the
Risk Management Committee and Audit Committee by various business units through the submission of Risk Profile that is reviewed
on a half-yearly basis.
INTERNAL AUDIT
The internal audit team assists the Audit Committee in providing assurance that a sound system of internal controls exists by reviewing
such controls and procedures of the Company and its subsidiaries. The internal audit team reports to the Audit Committee regarding
the effectiveness of the risk and control management and also recommends improvements in controls. The internal audit team is
independent and has no involvement in the operations of Group companies. At the beginning of each year, the audit programme is
agreed with the Audit Committee and findings are presented to the Committee on a timely manner for their consideration.
REVIEW OF EFFECTIVENESS
The Board is satisfied with the procedures outlined above and believes that the system of internal controls had continued to operate
effectively in the financial year under review.
As required by Paragraph 15.23 of the Listing Requirements of Bursa Malaysia Securities Berhad, the external auditors have reviewed
this Statement on Internal Control. Based on their review, they have reported to the Board that nothing has come to their attention that
caused them to believe that this Statement of Internal Control is inconsistent with their understanding with the procedures adopted by
the Board in the review of the effectiveness of the internal controls.
This Statement is made in accordance with the resolution of the Board of Directors on 27 May 2011.
37George Kent (Malaysia) Berhad (1945-X)
MATERIAL CONTRACTS
There are no material contracts entered into by the Company and its subsidiaries involving Directors’ and major shareholders’ interests.
SANCTIONS AND/OR PENALTIES IMPOSED
No sanctions and/or penalties were imposed on the Company and its subsidiaries, Directors or management by the relevant regulatory bodies during the financial year ended 31 January 2011.
NON-AUDIT FEES
Non-audit fees paid/payable by the Group and the Company to the external auditors and firm affiliated to the external auditors of the Company during the financial year ended 31 January 2011 amounted to RM26,000 (2010 : RM26,000).
SHARE BUYBACKS
The Company does not have a scheme to buy back its own shares.
OPTIONS, WARRANTS OR CONVERTIBLE SECURITIES EXERCISED
81,000 share options under the Company’s Employees Shares Option Scheme were exercised during the financial year ended 31 January 2011.
The Company did not issue any warrants or convertibles securities during the financial year ended 31 January 2011.
VARIATION IN RESULTS FOR THE FINANCIAL YEAR
There was no deviation of 10% or more between the profit after tax and minority interest stated in the announced unaudited results and the audited accounts of the Company and the Group for the financial year ended 31 January 2011.
AMERICAN DEPOSITORY RECEIPT (“ADR”) OR GLOBAL DEPOSITORY RECEIPT (“GDR”)
The Company did not sponsor any ADR or GDR programme during the financial year ended 31 January 2011.
REVALUATION POLICY ON LANDED PROPERTIES
The Group does not have a policy on regular revaluation of its landed properties.
PROFIT GUARANTEE
The Company has not given any profit guarantee during the financial year ended 31 January 2011.
UTILISATION OF PROCEEDS RAISED FROM ANY CORPORATE PROPOSAL
No proceeds were raised by the Company from any corporate exercise implemented during the financial year ended 31 January
2011.
ADDITIONAL INFORMATION
DIRECTORS’ REPORT 40
STATEMENT BY DIRECTORS 45
STATUTORY DECLARATION 45
INDEPENDENT AUDITORS’ REPORT 46
STATEMENTS OF COMPREHENSIVE INCOME 48
STATEMENTS OF FINANCIAL POSITION 49
STATEMENTS OF CHANGES IN EQUITY 51
STATEMENTS OF CASH FLOWS 54
NOTES TO THE FINANCIAL STATEMENTS 56
SUPPLEMENTARY INFORMATION ON THE DISCLOSURE 115
OF REALISED AND UNREALISED PROFIT AND LOSS
FINANCIAL STATEMENTS
75 Years of Excellenceto
Embrace the Future
1936 ~ 2011
40 Annual Report 2011
The directors have pleasure in presenting their report together with the audited financial statements of the Group and of the Company
for the financial year ended 31 January 2011.
PRINCIPAL ACTIVITIES
The principal activities of the Company consist of:
(a) manufacturing and marketing of water meters, waterworks fittings, fibreglass reinforced polyester panel tanks and a variety of
hot-stamped brass products and components;
(b) operation of water infrastructure;
(c) marketing of industrial measurement and automatic control products, compressed air pumping and heating equipment, valves
and pipes and pipeline fittings;
(d) design, supply, installation, commissioning and maintenance of instrumentation, process control systems and Scada systems
for industry as well as building automation and building security systems;
(e) mechanical and electrical turnkey water infrastructure project management; and
(f) investment holding and management company.
The principal activities of its subsidiaries and associates are described in Note 39 to the financial statements.
There have been no significant changes in the nature of the principal activities during the financial year.
RESULTS
Group Company
RM’000 RM’000
Profit, net of tax and attributable to the owner of the Company 24,799 21,293
There were no material transfers to or from reserves or provisions during the financial year.
In the opinion of the directors, the results of the operations of the Group and of the Company during the financial year were not
substantially affected by any item, transaction or event of a material and unusual nature.
DIRECTORS’ REPORT
41George Kent (Malaysia) Berhad (1945-X)
DIVIDENDS
The amount of dividends paid by the Company since 31 January 2010 were as follows:
RM’000
Final dividend in respect of the financial year ended 31 January 2010, of 2.0 sen less 25% tax, approved on
29 June 2010 and paid on 2 August 2010 3,378
Interim dividend in respect of the financial year ended 31 January 2011, of 2.0 sen less 25% tax, declared on
27 September 2010 and paid on 11 November 2010 3,379
6,757
At the forthcoming Annual General Meeting, a final dividend in respect of the financial year ended 31 January 2011, of 3.0 sen less
25% tax per ordinary share of 50 sen amounting to RM5,069,000 will be proposed for shareholders’ approval. The financial statements
for the current financial year do not reflect this proposed dividend. Such dividend, if approved by the shareholders, will be accounted
for in equity as an appropriation of retained earnings in the financial year ending 31 January 2012.
DIRECTORS
The names of the directors of the Company in office since the date of the last report and at the date of this report are:
Tan Sri Dato’ Tan Kay Hock
Dato’ Ir. Haji Zaidan Bin Haji Othman
Puan Sri Datin Tan Swee Bee
Ong Seng Pheow
Dr. Cheong Thiam Fook
Dato’ Paduka Prof. (Dr.) Ir. Hj. Keizrul Bin Abdullah
Neither at the end of the financial year, nor at any time during the year, did there subsist any arrangement to which the Company was
a party, whereby the directors might acquire benefits by means of acquisition of shares in or debentures of the Company or any other
body corporate, other than those arising from the share options granted under the Employee Share Option Scheme.
Since the end of previous financial year, no director has received or become entitled to receive a benefit (other than benefits included in
the aggregate amount of emoluments received or due and receivable by the directors as shown in Note 10 to the financial statements)
by reason of a contract made by the Company or a related corporation with any 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, other than as disclosed in Note 33 to the financial
statements.
DIRECTORS’ REPORT cont’d
75 Years of Excellenceto
Embrace the Future
1936 ~ 2011
42 Annual Report 2011
DIRECTORS’ INTERESTS According to the register of directors’ shareholdings, the interests of directors in office at the end of the financial year in shares and debentures of the Company and its related corporations during the financial year were as follows:
Number of ordinary shares of 50 sen each
As at As at
1.2.2010 Acquired Sold 31.1.2011
The Company
Direct interest
Tan Sri Dato’ Tan Kay Hock 10,753,000 - - 10,753,000
Puan Sri Datin Tan Swee Bee 17,444,100 - - 17,444,100
Ong Seng Pheow 30,000 - - 30,000
Dato’ Paduka Prof. (Dr.) Ir. Hj. Keizrul Bin Abdullah - 5,000 - 5,000
Indirect interest
Tan Sri Dato’ Tan Kay Hock 85,125,743 * 619,000 1,400,000 84,344,743*
Puan Sri Datin Tan Swee Bee 78,434,643* 619,000 1,400,000 77,653,643*
* Include Call Option of 31,600,000 ordinary shares of George Kent (Malaysia) Berhad granted by Star Wealth Investment Ltd which will expire on
6 October 2012.
By virtue of Tan Sri Dato’ Tan Kay Hock’s and Puan Sri Datin Tan Swee Bee’s interests in the shareholdings of George Kent (Malaysia) Berhad, they are deemed interested in the shares in all the Company’s subsidiaries to the extent that the Company has an interest.
None of the other directors in office at the end of the financial year had any interest in shares in the Company or its related corporations during the financial year
ISSUE OF SHARES During the financial year, 81,000 new ordinary shares of RM0.50 each were issued upon the exercise of share options granted pursuant to the Employee Share Options Scheme. Accordingly, the Company’s issued and paid up ordinary share capital increased by RM40,500 to RM112,649,813.
The new ordinary shares issued during the year ranked parri passu in all respects with the existing ordinary shares of the Company.
EMPLOYEE SHARE OPTIONS SCHEME The Company implemented an Employee Share Options Scheme (“ESOS”) which is governed by the Bye-Laws approved by the shareholders at an Extraordinary General Meeting held on 19 June 2003. The ESOS was implemented on 27 October 2003 and is to be in force for a period of 5 years expiring on 26 October 2008. Subsequently at the Annual General Meeting of the Company held on 22 July 2008, shareholders’ approval was obtained for the extension of the term of the ESOS for a further 5 years commencing from 27 October 2008 until 26 October 2013.
The salient features and other terms of the ESOS are disclosed in Note 26 to the financial statements.
DIRECTORS’ REPORT cont’d
43George Kent (Malaysia) Berhad (1945-X)
EMPLOYEE SHARE OPTIONS SCHEME cont’d
The Company has been granted exemption by the Companies Commission of Malaysia vide their letter dated 21 March 2011 from
having to disclose the list of option holders and their holdings pursuant to Section 169(11) of the Companies Act, 1965 except for
information of employees who were granted 20,000 options and above.
There was no employee granted 20,000 options and above.
OTHER STATUTORY INFORMATION
(a) Before the statements of comprehensive income and statements of financial position 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 allowance for
doubtful debts and satisfied themselves that all known bad debts had been written off and that adequate allowance had
been made for doubtful debts; and
(ii) to ensure that any current assets which were unlikely to realise their values as shown in the accounting records in the
ordinary course of business had been written down to an amount which they might be expected so to realise.
(b) At the date of this report, the directors are not aware of any circumstances which would render:
(i) the amount written off for bad debts or the amount of the allowance for doubtful debts in the financial statements of the
Group and of the Company inadequate to any substantial extent; and
(ii) the values attributed to current assets in the financial statements of the Group and of the Company misleading.
(c) At the date of this report, the directors are not aware of any circumstances which have arisen which would render adherence to
the existing method of valuation of assets or liabilities of the Group and of the Company misleading or inappropriate.
(d) At the date of this report, the directors are not aware of any circumstances not otherwise dealt with in this report or financial
statements of the Group and of the Company which would render any amount stated in the financial statements misleading.
(e) At the date of this report, there does not exist:
(i) any charge on the assets of the Group or of the Company which has arisen since the end of the financial year which
secures the liabilities of any other person; or
(ii) any contingent liability of the Group or of the Company which has arisen since the end of the financial year.
(f) In the opinion of the directors:
(i) no contingent or other liability has become enforceable or is likely to become enforceable within the period of twelve
months after the end of the financial year which will or may affect the ability of the Group or of the Company to meet their
obligations when they fall due; and
(ii) no item, transaction or event of a material and unusual nature has arisen in the interval between the end of the financial
year and the date of this report which is likely to affect substantially the results of the operations of the Group or of the
Company for the financial year in which this report is made.
DIRECTORS’ REPORT cont’d
75 Years of Excellenceto
Embrace the Future
1936 ~ 2011
44 Annual Report 2011
AUDITORS
The auditors, Ernst & Young, have expressed their willingness to continue in office.
Signed on behalf of the Board in accordance with a resolution of the directors dated 27 May 2011.
TAN SRI DATO’ TAN KAY HOCK DR. CHEONG THIAM FOOK
Kuala Lumpur, Malaysia
DIRECTORS’ REPORT cont’d
45George Kent (Malaysia) Berhad (1945-X)
STATEMENT BY DIRECTORS
Pursuant to Section 169(15) of the Companies Act, 1965
We, Tan Sri Dato’ Tan Kay Hock and Dr Cheong Thiam Fook, being two of the directors of George Kent (Malaysia) Berhad, do
hereby state that, in the opinion of the directors, the accompanying financial statements set out on pages 48 to 114 are drawn up
in accordance with Financial Reporting Standards and the Companies Act, 1965 in Malaysia so as to give a true and fair view of the
financial position of the Group and of the Company as at 31 January 2011 and of their financial performance and the cash flows for
the year then ended.
The information set out in Note 41 on page 115 to the financial statements have been prepared in accordance with the Guidance
on Special Matter No.1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa
Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants.
Signed on behalf of the Board in accordance with a resolution of the directors dated 27 May 2011.
TAN SRI DATO’ TAN KAY HOCK DR. CHEONG THIAM FOOK
Kuala Lumpur
Malaysia
STATUTORY DECLARATION
Pursuant to Section 169(16) of the Companies Act, 1965
I, Kong Chee Khoon, being the officer primarily responsible for the financial management of George Kent (Malaysia) Berhad, do
solemnly and sincerely declare that the accompanying financial statements set out on pages 48 to 114 are in my opinion correct, and I
make this solemn declaration conscientiously believing the same to be true and by virtue of the provisions of the Statutory Declarations
Act, 1960.
Subscribed and solemnly declared by
the abovenamed Kong Chee Khoon
at Kuala Lumpur in the Federal
Territory on 27 May 2011 KONG CHEE KHOON
Before me,
Mohan A.S. Maniam
No. W521
Pesuruhjaya Sumpah
(Commissioner for Oaths)
Malaysia
75 Years of Excellenceto
Embrace the Future
1936 ~ 2011
46 Annual Report 2011
INDEPENDENT AUDITORS’ REPORTto the Members of George Kent (Malaysia) Berhad(Incorporated in Malaysia)
REPORT ON THE FINANCIAL STATEMENTS
We have audited the financial statements of George Kent (Malaysia) Berhad, which comprise the statements of financial position as at
31 January 2011 of the Group and of the Company, and statements of comprehensive income, statements of changes in equity and
statements of cash flows of the Group and of the Company for the year then ended, and a summary of significant accounting policies
and other explanatory notes, as set out on pages 48 to 114.
Directors’ Responsibility for the Financial Statements
The directors of the Company are responsible for the preparation and fair presentation of these financial statements in accordance
with Financial Reporting Standards and the Companies Act, 1965 in Malaysia. This responsibility includes: designing, implementing
and maintaining internal control relevant to the preparation and fair presentation of financial statements that are free from material
misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates
that are reasonable in the circumstances.
Auditors’ Responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance
with approved standards on auditing in Malaysia. Those standards require that we comply with ethical requirements and plan and
perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The
procedures selected depend on our judgement, including the assessment of risks of material misstatement of the financial statements,
whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the entity’s preparation and
fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not
for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the
appropriateness of the accounting policies used and the reasonableness of accounting estimates made by the directors, as well as
evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the financial statements have been properly drawn up in accordance with Financial Reporting Standards and the
Companies Act, 1965 (“Act”) in Malaysia so as to give a true and fair view of the financial position of the Group and of the Company
as at 31 January 2011 and of their financial performance and cash flows for the year then ended.
Report on Other Legal and Regulatory Requirements
In accordance with the requirements of the Act in Malaysia, we also report the following:
(a) In our opinion, the accounting and other records and the registers required by the Act to be kept by the Entity and its subsidiaries
of which we have acted as auditors have been properly kept in accordance with the provisions of the Act.
(b) We have considered the financial statements and the auditors’ reports of the subsidiaries of which we have not acted as
auditors, which are indicated in Note 39 to the financial statements.
(c) We are satisfied that the financial statements of the subsidiaries that have been consolidated with the financial statements
of the Entity are in form and content appropriate and proper for the purposes of the preparation of the consolidated financial
statements and we have received satisfactory information and explanations required by us for those purposes.
(d) The auditors’ reports on the financial statements of the subsidiaries were not subject to any qualification and did not include any
comment required to be made under Section 174(3) of the Act.
47George Kent (Malaysia) Berhad (1945-X)
INDEPENDENT AUDITORS’ REPORTto the Members of George Kent (Malaysia) Berhad(Incorporated in Malaysia)
cont’d
OTHER MATTERS
The supplementary information set out in Note 41 on page 115 is disclosed to meet the requirement of Bursa Malaysia Securities
Berhad. The directors are responsible for the preparation of the supplementary information in accordance with Guidance on Special
Matter No. 1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa Malaysia
Securities Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants (“MIA Guidance”) and the directive of
Bursa Malaysia Securities Berhad. In our opinion, the supplementary information is prepared, in all material respects, in accordance
with the MIA Guidance and the directive of Bursa Malaysia Securities Berhad.
This report is made solely to the members of the Company, as a body, in accordance with Section 174 of the Companies Act, 1965
in Malaysia and for no other purpose. We do not assume responsibility to any other person for the content of this report.
ERNST & YOUNG KUA CHOO KAI
AF: 0039 No. 2030/03/12(J)
Chartered Accountants Chartered Accountant
Kuala Lumpur, Malaysia
27 May 2011
75 Years of Excellenceto
Embrace the Future
1936 ~ 2011
48 Annual Report 2011
STATEMENTS OF COMPREHENSIVE INCOMEfor the Year Ended 31 January 2011
Group Company
2011 2010 2011 2010
Note RM’000 RM’000 RM’000 RM’000
Restated
Revenue 4 165,037 124,813 161,755 121,676
Cost of sales 5 (110,121) (81,955) (114,269) (84,332)
Gross profit 54,916 42,858 47,486 37,344
Other items of income
Interest income 6 (a) 2,647 4,008 185 1,011
Dividend income from investment activities 130 3 - -
Other income 6 (b) 631 413 186 89
Other items of expense
Administrative expenses (7,894) (5,607) (3,327) (2,932)
Distribution cost (884) (688) (883) (680)
Other operating expenses (17,421) (14,850) (15,467) (12,001)
Operating profit 32,125 26,137 28,180 22,831
Finance costs 7 (1,386) (1,256) (1,299) (1,230)
Share of results of associates 1,719 1,214 - -
Profit before tax 8 32,458 26,095 26,881 21,601
Income tax expense 11 (7,659) (6,229) (5,588) (4,437)
Profit, net of tax 24,799 19,866 21,293 17,164
Other comprehensive income:
Foreign exchange translation (2,714) (1,549) - -
Other comprehensive income for the year,
net of tax (2,714) (1,549) - -
Total comprehensive income for the year 22,085 18,317 21,293 17,164
Profit attributable to:
Owners of the parent 24,799 19,866 21,293 17,164
Total comprehensive income attributable to:
Owners of the parent 22,085 18,317 21,293 17,164
Earnings per share from attributable to owners of
the parent (sen per share)
Basic/diluted 12 11.0 8.8
The accompanying accounting policies and explanatory notes form an integral part of the financial statements
49George Kent (Malaysia) Berhad (1945-X)
STATEMENTS OF FINANCIAL POSITIONas at 31 January 2011
Group Company
As at
Note 2011 2010 1.2.2009 2011 2010
RM’000 RM’000 RM’000 RM’000 RM’000
Restated Restated
Assets
Non-current assets
Property, plant and equipment 14 56,064 49,758 49,603 54,869 48,454
Land use rights 15 - - - - -
Intangible assets 16 496 461 519 496 461
Investment in subsidiaries 17 - - - 2,005 2,005
Investment in associates 18 18,069 17,734 16,943 174 174
Investment in unquoted debentures of
associate 18 6,404 9,894 10,443 - -
Deferred tax assets 31 1,722 1,866 1,201 - -
82,755 79,713 78,709 57,544 51,094
Current assets
Inventories 19 39,814 28,537 29,643 37,673 25,971
Trade and other receivables 20 38,428 30,059 31,789 61,722 64,927
Other current assets 21 3,176 1,782 6,012 3,226 1,736
Investment securities 23 4,547 3,182 232 - -
Tax recoverable - - 179 - -
Cash and bank balances 24 61,714 63,341 27,493 27,833 9,576
147,679 126,901 95,348 130,454 102,210
Total assets 230,434 206,614 174,057 187,998 153,304
Equity and liabilities attributable to
owners of the parent
Share capital 25 112,650 112,610 96,263 112,650 112,610
Share premium 2,091 2,065 2,065 2,091 2,065
Other reserves 27 8,723 11,437 12,986 11,422 11,422
ICULS* - - 16,347 - -
Retained earnings/(accumulated
losses) 40,046 22,004 7,924 (23,422) (37,957)
Total equity 163,510 148,116 135,585 102,741 88,140
75 Years of Excellenceto
Embrace the Future
1936 ~ 2011
50 Annual Report 2011
STATEMENTS OF FINANCIAL POSITIONas at 31 January 2011cont’d
Group Company
As at
Note 2011 2010 1.2.2009 2011 2010
RM’000 RM’000 RM’000 RM’000 RM’000
Restated Restated
Non-current liabilities
Loans and borrowings 28 11,570 14,196 16,083 11,570 14,196
Deferred tax liabilities 31 1,845 1,057 805 1,815 1,057
13,415 15,253 16,888 13,385 15,253
Current liabilities
Loans and borrowings 28 16,674 15,142 5,849 16,674 15,142
Trade and other payables 29 32,183 25,253 15,372 50,444 32,019
Other current liabilities 30 3,826 1,035 - 3,826 1,035
Tax payables 826 1,815 363 928 1,715
53,509 43,245 21,584 71,872 49,911
Total liabilities 66,924 58,498 38,472 85,257 65,164
Total equity and liabilities 230,434 206,614 174,057 187,998 153,304
* Irredeemable Convertible Unsecured Loan Stocks
The accompanying accounting policies and explanatory notes form an integral part of the financial statements
51George Kent (Malaysia) Berhad (1945-X)
STATEMENTS OF CHANGES IN EQUITY
for the Year Ended 31 January 2011
Attributable to owners of the parent
Non-distributable Distributable Non-distributable
Equity,
total
Equity
attributable
to owners
of the
parent,
total
Share
capital
Share
premium
Retained
earnings
Other
reserves,
total
Asset
revaluation
reserve
Foreign
currency
translation
reserve
Group RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
At 1 February 2010 148,116 148,116 112,610 2,065 22,004 11,437 11,508 (71)
Total comprehensive
income 22,085 22,085 - - 24,799 (2,714) - (2,714)
Transactions with
owners
Dividends on ordinary
shares (6,757) (6,757) - - (6,757) - - -
Issue of ordinary shares
pursuant to ESOS 66 66 40 26 - - - -
Total transactions
withowners (6,691) (6,691) 40 26 (6,757) - - -
At 31 January 2011 163,510 163,510 112,650 2,091 40,046 8,723 11,508 (2,785)
75 Years of Excellenceto
Embrace the Future
1936 ~ 2011
52 Annual Report 2011
STATEMENTS OF CHANGES IN EQUITY
for the Year Ended 31 January 2011cont’d
Attributable to owners of the parent
Non-distributable Distributable Non-distributable
Equity,
total
Equity
attributable
to owners
of the
parent,
total
Share
capital
Share
premium ICULS
Retained
earnings
Other
reserves,
total
Asset
revaluation
reserve
Foreign
currency
translation
reserve
Group cont’d RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
At 1 February 2009 135,585 135,585 96,263 2,065 16,347 7,924 12,986 11,508 1,478
Total comprehensive
income 18,317 18,317 - - - 19,866 (1,549) - (1,549)
Transactions with
owners
Dividends on
ordinary shares (5,786) (5,786) - - - (5,786) - - -
Issue of ordinary
shares pursuant to
ICULS - - 16,347 - (16,347) - - - -
Total transactions
with owners (5,786) (5,786) 16,347 - (16,347) (5,786) - - -
At 31 January 2010 148,116 148,116 112,610 2,065 - 22,004 11,437 11,508 (71)
53George Kent (Malaysia) Berhad (1945-X)
STATEMENTS OF CHANGES IN EQUITY
for the Year Ended 31 January 2011cont’d
Non-distributable
Equity,
total
Share
capital
Share
premium ICULS
Accumulated
losses
Other
reserves,
total
Revaluation
reserve –
freehold land
Company RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
At 1 February 2010 88,140 112,610 2,065 - (37,957) 11,422 11,422
Total comprehensive income 21,293 - - - 21,293 - -
Transactions with owners
Dividends on ordinary shares (6,758) - - - (6,758) - -
Issue of ordinary shares pursuant to
ESOS 66 40 26 - - - -
Total transactions with owners (6,692) 40 26 - (6,758) - -
At 31 January 2011 102,741 112,650 2,091 - (23,422) 11,422 11,422
At 1 February 2009 76,762 96,263 2,065 16,347 (49,335) 11,422 11,422
Total comprehensive income 17,164 - - - 17,164 - -
Transactions with owners
Dividends on ordinary shares (5,786) - - - (5,786) - -
Issue of ordinary shares pursuant to
ICULS - 16,347 - (16,347) - - -
Total transactions with owners (5,786) 16,347 - (16,347) (5,786) - -
At 31 January 2010 88,140 112,610 2,065 - (37,957) 11,422 11,422
The accompanying accounting policies and explanatory notes form an integral part of the financial statements
75 Years of Excellenceto
Embrace the Future
1936 ~ 2011
54 Annual Report 2011
STATEMENTS OF CASH FLOWSfor the Year Ended 31 January 2011
Group Company
2011 2010 2011 2010
RM’000 RM’000 RM’000 RM’000
Cash flows from operating activities
Profit before tax 32,458 26,095 26,881 21,601
Adjustments for:
Depreciation of property, plant and equipment 1,559 1,201 1,335 972
Gain on disposal of property, plant and equipment - (69) - (69)
Amortisation of intangible assets 63 58 63 58
Plant and equipment written off - 7 - -
Write-down of inventories - 108 - 108
Inventories written off - 82 - 82
Reversal of impairment loss on on financial assets
- Trade receivables (218) (209) (218) (209)
- Investment securities held for trading - (98) - -
Impairment loss on financial assets
- Trade receivables - 76 - 76
- Bad debt written off - 7 - 126
Net fair value gain on held for trading investment securities (308) - - -
Share of profit of associates (1,719) (1,214) - -
Gain on disposal of investment securities (106) (253) - -
Dividend income (130) (3) (1,500) (3,108)
Unrealised foreign exchange losses/(gain) (2,467) 199 (347) (304)
Interest expense 1,386 1,256 1,299 1,230
Interest income (2,647) (4,008) (185) (1,011)
Operating profit before working capital changes 27,871 23,235 27,328 19,552
(Increase)/decrease in inventories (11,277) 916 (11,702) 1,415
Decrease/(increase) in receivables (8,584) 8,142 1,949 (26,691)
Increase in payables 11,118 10,201 21,254 10,172
Cash generated from operations 19,128 42,494 38,829 4,448
Interest paid (1,386) (1,256) (1,299) (1,230)
Income tax paid (7,716) (5,011) (5,617) (2,291)
Net cash generated from operating activities 10,026 36,227 31,913 927
55George Kent (Malaysia) Berhad (1945-X)
STATEMENTS OF CASH FLOWSfor the Year Ended 31 January 2011cont’d
Group Company
2011 2010 2011 2010
RM’000 RM’000 RM’000 RM’000
Cash flows from operating activities
Proceeds from disposal of property, plant and equipment - 458 - 458
Proceeds from disposal of investment securities 2,191 1,195 - -
Purchase of investment securities (3,142) (3,794) - -
Purchase of intangible assets (98) - (98) -
Purchase of property, plant and equipment (7,989) (1,003) (7,830) (796)
Interest received 2,647 4,008 185 1,011
Redemption of debenture by associate 2,470 - - -
Dividend income received 130 3 1,500 3,108
Net (used in)/cash generated from investing activities (3,791) 867 (6,243) 3,781
Cash flows from financing activities
Repayment of term loans (2,400) (1,600) (2,400) (1,600)
Drawdown of other short term bank borrowings 343 8,136 343 8,136
Repayment of finance lease (271) (276) (271) (276)
Proceeds from exercise of ESOS 66 - 66 -
Dividend paid (6,757) (5,786) (6,757) (5,786)
Net cash (used in)/generated from financing activities (9,019) 474 (9,019) 474
Net change in cash and cash equivalents (2,784) 37,568 16,651 5,182
Effects of exchange rate changes (77) (2,050) 372 25
Cash and cash equivalents at beginning of year 62,206 26,688 8,441 3,234
Cash and cash equivalents at end of year (Note 24) 59,345 62,206 25,464 8,441
The accompanying accounting policies and explanatory notes form an integral part of the financial statements
75 Years of Excellenceto
Embrace the Future
1936 ~ 2011
56 Annual Report 2011
NOTES TO THE FINANCIAL STATEMENTS31 January 2011
1. CORPORATE INFORMATION The Company is a public limited liability company, incorporated and domiciled in Malaysia, and is listed on the Main Market of
Bursa Malaysia Securities Berhad. The registered office and principal place of business of the Company is located at George Kent Technology Centre, Lot 1115, Batu 15, Jalan Dengkil, 47100 Puchong, Selangor Darul Ehsan.
The principal activities of the Company consist of:
(a) manufacturing and marketing of water meters, waterworks fittings, fibreglass reinforced polyester panel tanks and a variety of hot-stamped brass products and components;
(b) operation of water infrastructure;
(c) marketing of industrial measurement and automatic control products, compressed air pumping and heating equipment, valves and pipes and pipeline fittings;
(d) design, supply, installation, commissioning and maintenance of instrumentation, process control systems and Scada systems for industry as well as building automation and building security systems;
(e) mechanical and electrical turnkey water infrastructure project management; and
(f) investment holding and management company.
The principal activities of its subsidiaries and associates are described in Note 39. There have been no significant changes in the nature of the principal activities during the financial year.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
2.1 Basis of preparation
The financial statements of the Group and the Company have been prepared in accordance with Financial Reporting Standards and the Companies Act, 1965 in Malaysia. At the beginning of the current financial year, the Group and the Company adopted new and revised FRS which are mandatory for financial periods beginning on or after 1 February 2010 as described fully in Note 2.2.
The financial statements have been prepared on the respective measurement basis as stated in the significant accounting
policies below.
The financial statements are presented in Ringgit Malaysia (RM).
2.2 Changes in accounting policies
The accounting policies adopted are consistent with those of the previous financial year except as follows:
On 1 February 2010, the Group and the Company adopted the following applicable new and amended FRS and IC Interpretations mandatory for annual financial periods beginning on or after 1 February 2010.
FRS 7 Financial Instruments: Disclosures FRS 8 Operating Segments FRS 101 Presentation of Financial Statements (Revised)
FRS 123 Borrowing Costs FRS 139 Financial Instruments: Recognition and Measurement
Amendments to FRS 1 First-time Adoption of Financial Reporting Standards and FRS 127 Consolidated and Separate
Financial Statements: Cost of an Investment in a Subsidiary, Jointly Controlled Entity or Associate
57George Kent (Malaysia) Berhad (1945-X)
NOTES TO THE FINANCIAL STATEMENTS31 January 2011cont’d
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES cont’d
2.2 Changes in accounting policies cont’d
Amendments to FRS 2 Share-based Payment – Vesting Conditions and Cancellations
Amendments to FRS 132 Financial Instruments: Presentation
Amendments to FRS 139 Financial Instruments: Recognition and Measurement, FRS 7 Financial Instruments:
Disclosures and IC Interpretation 9 Reassessment of Embedded Derivatives
Improvements to FRS issued in 2009
IC Interpretation 9 Reassessment of Embedded Derivatives
IC Interpretation 10 Interim Financial Reporting and Impairment
IC Interpretation 11 FRS 2 Group and Treasury Share Transactions
IC Interpretation 13 Customer Loyalty Programmes
IC Interpretation 14 FRS119 The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction
Adoption of the above standards and interpretations did not have any effect on the financial performance or position of the
Group and of the Company except for those discussed below:
FRS 7 Financial Instruments: Disclosures
Prior to 1 February 2010, information about financial instruments was disclosed in accordance with the requirements of
FRS 132 Financial Instruments: Disclosure and Presentation. FRS 7 introduces new disclosures to improve the information
about financial instruments. It requires the disclosure of qualitative and quantitative information about exposure to risks
arising from financial instruments, including specified minimum disclosures about credit risk, liquidity risk and market risk,
including sensitivity analysis to market risk.
The Group and the Company have applied FRS 7 prospectively in accordance with the transitional provisions. Hence, the
new disclosures have not been applied to the comparatives. The new disclosures are included throughout the Group’s and
the Company’s financial statements for the year ended 31 January 2011.
FRS 8 Operating Segments
FRS 8, which replaces FRS 114 Segment Reporting, specifies how an entity should report information about its operating
segments, based on information about the components of the entity that is available to the chief operating decision maker
for the purpose of allocating resources to the segments and assessing their performance. The Standard also requires the
disclosure of information about the products and services provided by the segments, the geographical areas in which
the Group operates, and revenue from the Group’s major customers. The Group concluded that the reportable operating
segments determined in accordance with FRS 8 are the same as the business segments previously identified under FRS
114. The Group has adopted FRS 8 retrospectively. These revised disclosures, including the related revised comparative
information, are shown in Note 37.
FRS 101 Presentation of Financial Statements (Revised)
The revised FRS 101 introduces changes in the presentation and disclosures of financial statements. The revised Standard
separates owner and non-owner changes in equity. The statement of changes in equity includes only details of transactions
with owners, with all non-owner changes in equity presented as a single line. The Standard also introduces the statement
of comprehensive income, with all items of income and expense recognised in profit or loss, together with all other items of
recognised income and expense recognised directly in equity, either in one single statement, or in two linked statements.
The Group and the Company have elected to present this statement as one single statement.
In addition, a statement of financial position is required at the beginning of the earliest comparative period following a
change in accounting policy, the correction of an error or the classification of items in the financial statements.
75 Years of Excellenceto
Embrace the Future
1936 ~ 2011
58 Annual Report 2011
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES cont’d
2.2 Changes in accounting policies cont’d
FRS 101 Presentation of Financial Statements (Revised) cont’d
The revised FRS 101 also requires the Group and the Company to make new disclosures to enable users of the financial
statements to evaluate the Company’s objectives, policies and processes for managing capital (Note 36).
The revised FRS 101 was adopted retrospectively by the Group and the Company.
FRS 139 Financial Instruments: Recognition and Measurement
FRS 139 establishes principles for recognising and measuring financial assets, financial liabilities and some contracts
to buy and sell non-financial items. The Group and the Company have adopted FRS 139 prospectively on 1 February
2010 in accordance with the transitional provisions. The adoption of this standard has no material impact on the financial
statements as at 1 February 2010. Comparatives are not restated. The details of the changes in accounting policies and
the effects arising from the adoption of FRS 139 are discussed below:
- Equity instruments
Prior to 1 February 2010, the Group classified its investments in equity instruments which were held for trading
purposes as marketable securities. Such investments were carried at the lower of cost and market value, determined
on an aggregate basis. Upon the adoption of FRS 139, these investments are designated at 1 February 2010
as financial assets at fair value through profit or loss and accordingly are stated at their fair values as at that
date amounting to RM3.2 million. As at 1 February 2010, the Group has remeasured these investments and the
differences arising are immaterial.
- Impairment of trade receivables and other receivables
Prior to 1 February 2010, provision for doubtful debts was recognised when it was considered uncollectible. Upon
the adoption of FRS 139, an impairment loss is recognised when there is objective evidence that an impairment loss
has been incurred. The amount of the loss is measured as the difference between the receivable’s carrying amount
and the present value of the estimated future cash flows discounted at the receivable’s original effective interest rate.
As at 1 February 2010, the Group has remeasured the allowance for impairment losses in accordance with FRS 139
and the differences arising are immaterial.
Amendments to FRS 117 Leases
Prior to 1 February 2010, for all leases of land and buildings, if title is not expected to pass to the lessee by the end of the
lease term, the lessee normally does not receive substantially all of the risks and rewards incidental to ownership. Hence,
all leasehold land held for own use was classified by the Group as operating lease and where necessary, the minimum
lease payments or the up-front payments made were allocated between the land and the buildings elements in proportion
to the relative fair values for leasehold interests in the land element and building element of the lease at the inception of
the lease. The up-front payment represented prepaid lease payments and were amortised on a straight-line basis over the
lease term.
The amendments to FRS 117 Leases clarify that leases of land and buildings are classified as operating or finance lease
in the same way as leases of other assets. They also clarify that the present value of the residual value of the property in a
lease with a term of several decades would be negligible and accounting for the land element as a finance lease in such
circumstances would be consistent with the economic position of the lessee. Hence, the adoption of the amendments
to FRS 117 has resulted in certain unexpired land leases to be reclassified as finance leases. The Group has applied this
change in accounting policy retrospectively and certain comparatives have been restated. The following are effects to the
consolidated statement of financial positions at 31 January 2011 arising from the above change in accounting policy.
NOTES TO THE FINANCIAL STATEMENTS31 January 2011cont’d
59George Kent (Malaysia) Berhad (1945-X)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES cont’d
2.2 Changes in accounting policies cont’d
Amendments to FRS 117 Leases cont’d
Group
2011
RM’000
Increase/(decrease) in:
Property, plant and equipment 93
Land use rights (93)
The following comparatives have been restated:
As
previously
stated Adjustments As restated
RM’000 RM’000 RM’000
Consolidated statement of financial position
31 January 2010
Property, plant and equipment 49,665 93 49,758
Land use rights 93 (93) -
1 February 2009
Property, plant and equipment 49,503 100 49,603
Land use rights 100 (100) -
2.3 Standards and interpretations issued but not yet effective
The Group has not adopted the following standards and interpretations that have been issued but not yet effective:
Description
Effective
for financial
periods
beginning
on or after
FRS 1 First-time Adoption of Financial Reporting Standards 1 July 2010
FRS 3 Business Combinations (revised) 1 July 2010
Amendments to FRS 2 Share-based Payment 1 July 2010
Amendments to FRS 5 Non-current Assets Held for Sale and Discontinued Operations 1 July 2010
Amendments to FRS 127 Consolidated and Separate Financial Statements 1 July 2010
Amendments to FRS 138 Intangible Assets 1 July 2010
NOTES TO THE FINANCIAL STATEMENTS31 January 2011cont’d
75 Years of Excellenceto
Embrace the Future
1936 ~ 2011
60 Annual Report 2011
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES cont’d
2.3 Standards and interpretations issued but not yet effective cont’d
Description
Effective
for financial
periods
beginning on
or after
Amendments to IC Interpretation 9 Reassessment of Embedded Derivatives 1 July 2010
IC Interpretation 12 Service Concession Arrangements 1 July 2010
IC Interpretation 16 Hedges of a Net Investment in a Foreign Operation 1 July 2010
IC Interpretation 17 Distributions of Non-cash Assets to Owners 1 July 2010
Amendments to FRS 132 Classification of Rights Issues 1 March 2010
Amendments to FRS 1 Limited Exemption from Comparative FRS 7 Disclosures for First-time
Adopters
1 Jan 2011
Amendments to FRS 7 Improving Disclosures about Financial Instruments 1 Jan 2011
Amendments to FRS 2 Share based Payment – Group Cash settled Share based Payment
Transactions
1 Jan 2011
IC Interpretation 4 Determining Whether An Arrangement contains a Lease 1 Jan 2011
IC Interpretation 18 Transfers of Assets from Customers 1 Jan 2011
FRS 124: Related Party Transactions (Revised) 1 Jan 2012
IC Interpretation 15 Agreements for the Construction of Real Estate 1 Jan 2012
Except for the changes in accounting policies arising from the adoption of the revised FRS 3 and the amendments to FRS
127 as well as the new disclosures required under the Amendments to FRS 7, the directors expect that the adoption of
the other standards and interpretations above will have no material impact on the financial statements in the period of
initial application. The nature of the impending changes in accounting policy on adoption of the revised FRS 3 and the
amendments to FRS 127 are described below.
Revised FRS 3 Business Combinations and Amendments to FRS 127 Consolidated and Separate Financial Statements
The revised standards are effective for annual periods beginning on or after 1 July 2010. The revised FRS 3 introduces a
number of changes in the accounting for business combinations occurring after 1 July 2010. These changes will impact
the amount of goodwill recognised, the reported results in the period that an acquisition occurs, and future reported
results. The Amendments to FRS 127 require that a change in the ownership interest of a subsidiary (without loss of
control) is accounted for as an equity transaction. Therefore, such transactions will no longer give rise to goodwill, nor will
they give rise to a gain or loss. Furthermore, the amended standard changes the accounting for losses incurred by the
subsidiary as well as the loss of control of a subsidiary.
Other consequential amendments have been made to FRS 107 Statement of Cash Flows, FRS 112 Income Taxes, FRS
121 The Effects of Changes in Foreign Exchange Rates, FRS 128 Investments in Associates and FRS 131 Interests in Joint
Ventures. The changes from revised FRS 3 and Amendments to FRS 127 will affect future acquisitions or loss of control
and transactions with non-controlling interests. The standards may be early adopted. However, the Group does not intend
to early adopt.
NOTES TO THE FINANCIAL STATEMENTS31 January 2011cont’d
61George Kent (Malaysia) Berhad (1945-X)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES cont’d
2.4 Basis of consolidation
The consolidated financial statements comprise the financial statements of the Company and its subsidiaries as at the reporting date. The financial statements of the subsidiaries are prepared for the same reporting date as the Company. Consistent accounting policies are applied to like transactions and events in similar circumstances.
All intra-group balances, income and expenses and unrealised gains and losses resulting from intra-group transactions are eliminated in full except for unrealised losses which are not eliminated if there are indications of impairment.
Acquisitions of subsidiaries are accounted for using the purchase method. The purchase method of accounting involves allocating the cost of the acquisition to the fair value of the assets acquired and liabilities and contingent liabilities assumed at the date of acquisition. The cost of an acquisition is measured as the aggregate of the fair values, at the date of exchange, of the assets given, liabilities incurred or assumed, and equity instruments issued, plus any costs directly attributable to the acquisition.
Any excess of the Group’s share in the net fair value of the acquired subsidiary’s identifiable assets, liabilities and contingent liabilities over the cost of business combination is recognised as income in profit or loss on the date of acquisition. When the Group acquires a business, embedded derivatives separated from the host contract by the acquiree are reassessed on acquisition unless the business combination results in a change in the terms of the contract that significantly modifies the cash flows that would otherwise be required under the contract.
Subsidiaries are consolidated from the date of acquisition, being the date on which the Group obtains control, and continue to be consolidated until the date that such control ceases.
2.5 Transactions with non-controlling interests
Non-controlling interests represent the portion of profit or loss and net assets in subsidiaries not held by the Group and are presented separately in profit or loss of the Group and within equity in the consolidated statements of financial position, separately from parent shareholders’ equity. Transactions with non-controlling interests are accounted for using the entity concept method, whereby, transactions with non-controlling interests are accounted for as transactions with owners. On acquisition of non-controlling interests, the difference between the consideration and book value of the share of the net assets acquired is recognised directly in equity. Gain or loss on disposal to non-controlling interests is recognised directly in equity.
2.6 Subsidiaries
A subsidiary is an entity over which the Group has the power to govern the financial and operating policies so as to obtain
benefits from its activities. In the Company’s separate financial statements, investments in subsidiaries are accounted for at cost less impairment
losses.
2.7 Associates
An associate is an entity, not being a subsidiary or a joint venture, in which the Group has significant influence. An associate is equity accounted for from the date the Group obtains significant influence until the date the Group ceases to have significant influence over the associate.
The Group’s investments in associates are accounted for using the equity method. Under the equity method, investment in
associates are measured in the statement of financial position at cost plus post-acquisition changes in the Group’s share of net assets of the associates. Goodwill relating to associates is included in the carrying amount of the investment. Any excess of the Group’s share of the net fair value of the associate’s identifiable assets, liabilities and contingent liabilities over the cost of the investment is excluded from the carrying amount of the investment and is instead included as income in the determination of the Group’s share of the associate’s profit or loss for the period in which the investment is acquired.
NOTES TO THE FINANCIAL STATEMENTS31 January 2011cont’d
75 Years of Excellenceto
Embrace the Future
1936 ~ 2011
62 Annual Report 2011
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES cont’d
2.7 Associates cont’d
When the Group’s share of losses in associates equals or exceeds its interest in the associates, the Group does not
recognise further losses, unless it has incurred obligations or made payments on behalf of the associates.
After application of the equity method, the Group determines whether it is necessary to recognise an additional impairment
loss on the Group’s investment in its associates. The Group determines at each reporting date whether there is any
objective evidence that the investment in the associate is impaired. If this is the case, the Group calculates the amount of
impairment as the difference between the recoverable amount of the associate and its carrying value and recognises the
amount in profit or loss.
The financial statements of the associates are prepared as of the same reporting date as the Company. Where necessary,
adjustments are made to bring the accounting policies in line with those of the Group.
In the Company’s separate financial statements, investments in associates are stated at cost less impairment losses. On
disposal of such investments, the difference between net disposal proceeds and their carrying amounts is included in
profit or loss.
2.8 Intangible assets
Intangible assets acquired separately are measured initially at cost. The cost of intangible assets acquired in a business
combination is their fair value as at the date of acquisition. Following initial acquisition, intangible assets are measured at
cost less any accumulated amortisation and accumulated impairment losses.
Intangible assets with finite useful lives are amortised over the estimated useful lives and assessed for impairment whenever
there is an indication that the intangible asset may be impaired. The amortisation period and the amortisation method are
reviewed at least at each financial year-end. Changes in the expected useful life or the expected pattern of consumption
of future economic benefits embodied in the asset is accounted for by changing the amortisation period or method, as
appropriate, and are treated as changes in accounting estimates. The amortisation expense on intangible assets with finite
lives is recognised in profit or loss.
Intangible assets with indefinite useful lives or not yet available for use are tested for impairment annually, or more
frequently if the events and circumstances indicate that the carrying value may be impaired either individually or at the
cash-generating unit level. Such intangible assets are not amortised. The useful life of an intangible asset with an indefinite
useful life is reviewed annually to determine whether the useful life assessment continues to be supportable. If not, the
change in useful life from indefinite to finite is made on a prospective basis.
Gains or losses arising from derecignition of an intangible asset are measured as the difference between the net disposal
proceeds and the carrying amount of the asset and are recognised in profit or loss when the asset is derecognised.
(i) Development costs
Development costs, considered to have finite useful lives, are stated at cost less any impairment losses and are
amortised using the straight-line basis from the commencement of the contract to which they relate over the period
of their expected benefit not exceeding 20 years.
(ii) Computer software
Computer software are stated at cost less any impairment losses and are amortised on a straight-line basis over the
estimated economic useful lives at the annual rate of 20%. Impairment is assessed whenever there is an indication
that the intangible asset may be impaired. The amortisation period and the amortisation method are reviewed at
least at the end of reporting date.
NOTES TO THE FINANCIAL STATEMENTS31 January 2011cont’d
63George Kent (Malaysia) Berhad (1945-X)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES cont’d
2.9 Property, plant and equipment and depreciation
All items of property, plant and equipment are initially recorded at cost. The cost of an item of property, plant and equipment
is recognised as an asset if, and only if, it is probable that future economic benefits associated with the item will flow to the
Group and the cost of the item can be measured reliably.
Subsequent to recognition, property, plant and equipment except for certain freehold land and buildings are stated at cost
less accumulated depreciation and any accumulated impairment losses. Certain freehold land and buildings of the Group
and of the Company were revalued in 1996 based on independent professional valuations using open market values on
an existing use basis.
Freehold land has an unlimited useful life and therefore is not depreciated. Depreciation of other property, plant and
equipment is provided for on a straight-line basis to write off the cost of each asset to its residual value over the estimated
useful life, at the following annual rates:
Building on freehold land 2%
Long term leasehold building 2%
Plant and machinery, furniture, equipment and vehicles 10%-25%
The residual values, useful life and depreciation method are reviewed at each financial year-end to ensure that the amount,
method and period of depreciation are consistent with previous estimates and the expected pattern of consumption of the
future economic benefits embodied in the items of property, plant and equipment.
An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected
from its use or disposal. Any gain or loss on derecognition of the asset is included in the profit or loss in the year the asset
is derecognised.
2.10 Construction contracts
Where the outcome of a construction contract can be reliably estimated, contract revenue and contract costs are
recognised as revenue and expenses respectively by using the stage of completion method. The stage of completion
is measured by reference to the proportion of contract costs incurred for work performed to date to the estimated total
contract costs.
Where the outcome of a construction contract cannot be reliably estimated, contract revenue is recognised to the extent
of contract costs incurred that it is probable will be recoverable. Contract costs are recognised as expenses in the period
in which they are incurred.
When it is probable that total contract costs will exceed total contract revenue, the expected loss is recognised as an
expense immediately.
When the total of costs incurred on construction contracts plus, recognised profits (less recognised losses), exceeds
progress billings, the balance is classified as amount due from customers on contracts. When progress billings exceed
costs incurred plus, recognised profits (less recognised losses), the balance is classified as amount due to customers on
contracts.
2.11 Impairment of non-financial assets
The Group assesses at each reporting date whether there is an indication that an asset may be impaired. If any such
indication exists, or when an annual impairment assessment for an asset is required, the Group makes an estimate of the
asset’s recoverable amount.
NOTES TO THE FINANCIAL STATEMENTS31 January 2011cont’d
75 Years of Excellenceto
Embrace the Future
1936 ~ 2011
64 Annual Report 2011
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES cont’d
2.11 Impairment of non-financial assets cont’d
An asset’s recoverable amount is the higher of an asset’s fair value less costs to sell and its value in use. For the purpose
of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows
(cash-generating units (“CGU”)).
In assessing value in use, the estimated future cash flows expected to be generated by the asset 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. Where the carrying amount of an asset exceeds its recoverable amount, the asset is written
down to its recoverable amount. Impairment losses recognised in respect of a CGU or groups of CGUs are allocated first
to reduce the carrying amount of any goodwill allocated to those units or groups of units and then, to reduce the carrying
amount of the other assets in the unit or groups of units on a pro-rata basis.
Impairment losses are recognised in profit or loss except for assets that are previously revalued where the revaluation was
taken to other comprehensive income. In this case the impairment is also recognised in other comprehensive income up
to the amount of any previous revaluation.
An assessment is made at each reporting date as to whether there is any indication that previously recognised impairment
losses may no longer exist or may have decreased. A previously recognised impairment loss is reversed only if there has
been a change in the estimates used to determine the asset’s recoverable amount since the last impairment loss was
recognised. If that is the case, the carrying amount of the asset is increased to its recoverable amount. That increase
cannot exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been
recognised previously. Such reversal is recognised in profit or loss unless the asset is measured at the revalued amount, in
which case the reversal is treated as a revaluation increase. Impairment loss on goodwill is not reversed in a subsequent
period.
2.12 Cash and cash equivalents
Cash and cash equivalents comprise cash at bank and on hand, and short-term, highly liquid investments that are readily
convertible to known amount of cash and which are subject to an insignificant risk of changes in value. These also include
bank overdrafts that form an integral part of the Company’s cash management.
2.13 Inventories
Inventories are stated at lower of cost and net realisable value.
Cost is determined using the first in, first out method. The cost of raw materials comprises costs of purchase. The costs
of finished goods and work-in-progress comprise costs of raw materials, direct labour, other direct costs and appropriate
proportions of manufacturing overheads based on normal operating capacity.
Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of completion
and the estimated costs necessary to make the sale.
2.14 Financial assets
Financial assets are recognised in the statements of financial position when, and only when, the Group and the Company
become a party to the contractual provisions of the financial instrument.
When financial assets are recognised initially, they are measured at fair value, plus, in the case of financial assets not at fair
value through profit or loss, directly attributable transaction costs.
NOTES TO THE FINANCIAL STATEMENTS31 January 2011cont’d
65George Kent (Malaysia) Berhad (1945-X)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES cont’d
2.14 Financial assets cont’d
(a) Financial assets at fair value through profit or loss
Financial assets are classified as financial assets at fair value through profit or loss if they are held for trading or are
designated as such upon initial recognition. Financial assets held for trading are derivatives (including separated
embedded derivatives) or financial assets acquired principally for the purpose of selling in the near term.
Subsequent to initial recognition, financial assets at fair value through profit or loss are measured at fair value.
Any gains or losses arising from changes in fair value are recognised in profit or loss. Net gains or net losses
on financial assets at fair value through profit or loss do not include exchange differences, interest and dividend
income. Exchange differences, interest and dividend income on financial assets at fair value through profit or loss
are recognised separately in profit or loss as part of other losses or other income.
Financial assets at fair value through profit or loss could be presented as current or non-current. Financial assets that
is held primarily for trading purposes are presented as current whereas financial assets that is not held primarily for
trading purposes are presented as current or non-current based on the settlement date.
(b) Loans and receivables
Financial assets with fixed or determinable payments that are not quoted in an active market are classified as loans
and receivables.
Subsequent to initial recognition, loans and receivables are measured at amortised cost using the effective interest
method. Gains and losses are recognised in profit or loss when the loans and receivables are derecognised or
impaired, and through the amortisation process.
Loans and receivables are classified as current assets, except for those having maturity dates later than 12 months
after the reporting date which are classified as non-current.
(c) Held-to-maturity investments
Financial assets with fixed or determinable payments and fixed maturity are classified as held-to-maturity when the
Group has the positive intention and ability to hold the investment to maturity.
Subsequent to initial recognition, held-to-maturity investments are measured at amortised cost using the effective
interest method. Gains and losses are recognised in profit or loss when the held-to-maturity investments are
derecognised or impaired, and through the amortisation process.
Held-to-maturity investments are classified as non-current assets, except for those having maturity within 12 months
after the reporting date which are classified as current.
The Company has not designated any financial assets as held-to-maturity.
(d) Available-for-sale financial assets
Available-for-sale financial assets are financial assets that are designated as available for sale or are not classified in
any of the three preceding categories.
NOTES TO THE FINANCIAL STATEMENTS31 January 2011cont’d
75 Years of Excellenceto
Embrace the Future
1936 ~ 2011
66 Annual Report 2011
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES cont’d 2.14 Financial assets cont’d
(d) Available-for-sale financial assets cont’d
After initial recognition, available-for-sale financial assets are measured at fair value. Any gains or losses from changes in fair value of the financial assets are recognised in other comprehensive income, except that impairment losses, foreign exchange gains and losses on monetary instruments and interest calculated using the effective interest method are recognised in profit or loss. The cumulative gain or loss previously recognised in other comprehensive income is reclassified from equity to profit or loss as a reclassification adjustment when the financial asset is derecognised. Interest income calculated using the effective interest method is recognised in profit or loss. Dividends on an available-for-sale equity instrument are recognised in profit or loss when the Company’s right to receive payment is established.
Investments in equity instruments whose fair value cannot be reliably measured are measured at cost less impairment loss.
Available-for-sale financial assets are classified as non-current assets unless they are expected to be realised within
12 months after the reporting date.
The Company has not designated any financial assets as available-for sale.
A financial asset is derecognised when the contractual right to receive cash flows from the asset has expired. On derecognition of a financial asset in its entirety, the difference between the carrying amount and the sum of the consideration received and any cumulative gain or loss that had been recognised in other comprehensive income is recognised in profit or loss.
Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the period generally established by regulation or convention in the marketplace concerned. All regular way purchases and sales of financial assets are recognised or derecognised on the trade date i.e., the date that the Company commit to purchase or sell the asset.
2.15 Impairment of financial assets
The Company assess at each reporting date whether there is any objective evidence that a financial asset is impaired.
(a) Trade and other receivables and other financial assets carried at amortised costs
To determine whether there is objective evidence that an impairment loss on financial assets has been incurred, the Company consider factors such as the probability of insolvency or significant financial difficulties of the debtor and default or significant delay in payments. For certain categories of financial assets, such as trade receivables, assets that are assessed not to be impaired individually are subsequently assessed for impairment on a collective basis based on similar risk characteristics. Objective evidence of impairment for a portfolio of receivables could include the Company’s past experience of collecting payments, an increase in the number of delayed payments in the portfolio past the average credit period and observable changes in national or local economic conditions that correlate with default on receivables.
If any such evidence exists, the amount of impairment loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows discounted at the financial asset’s original effective interest rate. The impairment loss is recognised in profit or loss.
The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets with the exception of trade receivables, where the carrying amount is reduced through the use of an allowance account.
When a trade receivable becomes uncollectible, it is written off against the allowance account.
NOTES TO THE FINANCIAL STATEMENTS31 January 2011cont’d
67George Kent (Malaysia) Berhad (1945-X)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES cont’d
2.15 Impairment of financial assets cont’d
(a) Trade and other receivables and other financial assets carried at amortised costs cont’d
If in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively
to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed to
the extent that the carrying amount of the asset does not exceed its amortised cost at the reversal date. The amount
of reversal is recognised in profit or loss.
(b) Available-for-sale financial assets
Significant or prolonged decline in fair value below cost, significant financial difficulties of the issuer or obligor, and
the disapperance of an active trading market are considerations to determine whether there is objective evidence
that investment securities classified as available-for-sale financial assets are impaired.
If an available-for-sale financial asset is impaired, an amount comprising the difference between its cost (net of any
principal payment and amortisation) and its current fair value, less any impairment loss previously recognised in profit
or loss, is transferred from equity to profit or loss.
Impairment losses on available-for-sale equity investments are not reversed in profit or loss in the subsequent
periods. Increase in fair value, if any, subsequent to impairment loss is recognised in other comprehensive income.
For available-for-sale debt investments, impairment losses are subsequently reversed in profit or loss if an increase in
the fair value of the investment can be objectively related to an event occuring after the recognition of the impairment
loss in profit or loss.
2.16 Provisions
Provisions are recognised when the Company has a present obligation (legal or constructive) as a result of a past event, it
is probable that an outflow of economic resources will be required to settle the obligation and the amount of the obligation
can be estimated reliably.
Provisions are reviewed at each reporting date and adjusted to reflect the current best estimate. If it is no longer probable
that an outflow of economic resources will be required to settle the obligation, the provision is reversed. If the effect of the
time value of money is material, provisions are discounted using a current pre tax rate that reflects, where appropriate,
the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is
recognised as a finance cost.
2.17 Financial liabilities
Financial liabilities are classified according to the substance of the contractual arrangements entered into and the definitions
of a financial liability.
Financial liabilities, within the scope of FRS 139, are recognised in the statement of financial position when, and only when,
the Group and the Company become a party to the contractual provisions of the financial instrument. Financial liabilities
are classified as either financial liabilities at fair value through profit or loss or other financial liabilities.
(a) Financial liabilities at fair value through profit or loss
Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial liabilities
designated upon initial recognition as at fair value through profit or loss.
NOTES TO THE FINANCIAL STATEMENTS31 January 2011cont’d
75 Years of Excellenceto
Embrace the Future
1936 ~ 2011
68 Annual Report 2011
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES cont’d
2.17 Financial liabilities cont’d
(a) Financial liabilities at fair value through profit or loss cont’d
Financial liabilities held for trading include derivatives entered into by the Group and the Company that do not meet
the hedge accounting criteria. Derivative liabilities are initially measured at fair value and subsequently stated at
fair value, with any resultant gains or losses recognised in profit or loss. Net gains or losses on derivatives include
exchange differences.
The Company has not designated any financial liabilities as at fair value through profit or loss.
(b) Other financial liabilities
The Group’s and the Company’s other financial liabilities include trade payables, other payables and loans and
borrowings.
Trade and other payables are recognised initially at fair value plus directly attributable transaction costs and
subsequently measured at amortised cost using the effective interest method.
For other financial liabilities, gains and losses are recognised in profit or loss when the liabilities are derecognised,
and through the amortisation process.
Loans and borrowings are recognised initially at fair value, net of transaction costs incurred, and subsequently
measured at amortised cost using the effective interest method. Borrowings are classified as current liabilities unless
the group has an unconditional right to defer settlement of the liability for at least 12 months after the reporting
date.
A financial liability is derecognised when the obligation under the liability is extinguished. When an existing financial liability
is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are
substantially modified, such an exchange or modification is treated as a derecognition of the original liability and the
recognition of a new liability, and the difference in the respective carrying amounts is recognised in profit or loss.
2.18 Leases
(a) As lessee
Finance leases, which transfer to the Group substantially all the risks and rewards incidental to ownership of the
leased item, are capitalised at the inception of the lease at the fair value of the leased asset or, if lower, at the
present value of the minimum lease payments. Any initial direct costs are also added to the amount capitalised.
Lease payments are apportioned between the finance charges and reduction of the lease liability so as to achieve
a constant rate of interest on the remaining balance of the liability. Finance charges are charged to profit or loss.
Contingent rents, if any, are charged as expenses in the periods in which they are incurred.
Leased assets are depreciated over the estimated useful life of the asset. However, if there is no reasonable certainty
that the Group will obtain ownership by the end of the lease term, the asset is depreciated over the shorter of the
estimated useful life and the lease term.
Total operating lease payments are recognised as an expense in profit or loss on a straight-line basis over the lease
term. The aggregate benefit of incentives provided by the lessor is recognised as a reduction of rental expense over
the lease term on a straight-line basis.
NOTES TO THE FINANCIAL STATEMENTS31 January 2011cont’d
69George Kent (Malaysia) Berhad (1945-X)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES cont’d
2.19 Borrowing costs
Borrowing costs are capitalised as part of the cost of a qualifying asset if they are directly attributable to the acquisition, construction or production of that asset. Capitalisation of borrowing costs commences when the activities to prepare the asset for its intended use or sale are in progress and the expenditures and borrowing costs are incurred. Borrowing costs are capitalised until the assets are substantially completed for their intended use or sale.
All other borrowing costs are recognised in profit or loss in the period they are incurred. Borrowing costs consist of interest and other costs that the Group and the Company incurred in connection with the borrowing of funds.
2.20 Income taxes
(a) Current tax
Current tax assets and liabilities are 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 are enacted or substantively enacted by the reporting date.
Current taxes are recognised in profit or loss except to the extent that the tax relates to items recognised outside profit or loss, either in other comprehensive income or directly in equity.
(b) Deferred tax
Deferred tax is provided using the liability method on temporary differences at the reporting date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.
Deferred tax liabilities are recognised for all temporary differences, except:
- where the deferred tax liability arises from the initial recognition of goodwill or of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and
- in respect of taxable temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, where the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future.
Deferred tax assets are recognised for all deductible temporary differences, carry forward of unused tax credits and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilised except:
- where the deferred tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and
- in respect of deductible temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, deferred tax assets are recognised only to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilised.
The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised. Unrecognised deferred tax assets are reassessed at each reporting date and are recognised to the extent that it has
become probable that future taxable profit will allow the deferred tax assets to be utilised.
NOTES TO THE FINANCIAL STATEMENTS31 January 2011cont’d
75 Years of Excellenceto
Embrace the Future
1936 ~ 2011
70 Annual Report 2011
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES cont’d
2.20 Income taxes cont’d
(b) Deferred tax cont’d
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset
is realised or the liability is settled, based on tax rates and tax laws that have been enacted or substantively enacted
at the reporting date.
Deferred tax relating to items recognised outside profit or loss is recognised outside profit or loss. Deferred tax items
are recognised in correlation to the underlying transaction either in other comprehensive income or directly in equity
and deferred tax arising from a business combination is adjusted against goodwill on acquisition.
Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set off current tax
assets against current tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation
authority.
2.21 Employee benefits
(a) Defined contribution plans
The Group participates in the national pension schemes as defined by the laws of the countries in which it has
operations. The companies in the Group make contributions to the Employee Provident Fund in Malaysia, a defined
contribution pension scheme. Contributions to defined contribution pension schemes are recognised as an expense
in the period in which the related service is performed.
Wages, salaries, bonuses and social security contributions are recognised as an expense in the year in which the
associated services are rendered by employees of the Group. Short term accumulating compensated absences
such as paid annual leave are recognised when services are rendered by employees that increase their entitlement
to future compensated absences, and short term non-accumulating compensated absences such as sick leave are
recognised when the absences occur.
(b) Equity compensation benefits
The Employee Share Options Scheme (“ESOS”), an equity-settled, share-based compensation plan, allows the
Group’s employees to acquire ordinary shares of the Company.
The total fair value of share options granted to employees is recognised as an employee cost with a corresponding
increase in the share option reserve within equity over the vesting period and taking into account the probability
that the options will vest. The fair value of share options is measured at grant date, taking into account, if any,
the market vesting conditions upon which the options were granted but excluding the impact of any non-market
vesting conditions. Non-market vesting conditions are included in assumptions about the number of options that are
expected to become exercisable on vesting date.
At each balance sheet date, the Group revises its estimates of the number of options that are expected to become
exercisable on vesting date. It recognises the impact of the revision of original estimates, if any, in the profit or loss,
and a corresponding adjustment to equity over the remaining vesting period. The equity amount is recognised in
the share option reserve until the option is exercised, upon which it will be transferred to share premium, or until the
option expires, upon which it will be transferred directly to retained earnings.
The proceeds received net of any directly attributable transaction costs are credited to equity when the options are
exercised.
NOTES TO THE FINANCIAL STATEMENTS31 January 2011cont’d
71George Kent (Malaysia) Berhad (1945-X)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES cont’d
2.22 Foreign currency
(a) Functional and presentation currency
The individual financial statements of each entity in the Group are measured using the currency of the primary
economic environment in which the entity operates (“the functional currency”). The consolidated financial statements
are presented in Ringgit Malaysia (“RM”), which is also the Company’s functional currency.
(b) Foreign currency transactions
Transactions in foreign currencies are measured in the respective functional currencies of the Company and its
subsidiaries and are recorded on initial recognition in the functional currencies at exchange rates approximating
those ruling at the transaction dates. Monetary assets and liabilities denominated in foreign curriencies are translated
at the rate of exchange ruling at the reporting date. Non-monetary items denominated in foreign currencies that are
measured at historical cost are translated using the exchange rates as at the dates of the initial transactions. Non-
monetary items denominated in foreign currencies measured at fair value 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 the reporting
date are recognised in profit or loss except for exchange differences arising on monetary items that form part of
the Group’s net investment in foreign operations, which are recognised initially in other comprehensive income
and accumulated under foreign currency translation reserve in equity. The foreign currency translation reserve is
reclassified from equity to profit or loss of the Group on disposal of the foreign operation.
Exchange differences arising on the translation of non-monetary items carried at fair value are included in profit or
loss for the period except for the differences arising on the translation of non-monetary items in respect of which
gains and losses are recognised directly in equity. Exchange differences arising from such non-monetary items are
also recognised directly in equity.
The assets and liabilities of foreign operations are translated into RM at the rate of exchange ruling at the reporting
date and income and expenses are translated at exchange rates at the dates of the transactions. The exchange
differences arising on the translation are taken directly to other comprehensive income. On disposal of a foreign
operation, the cumulative amount recognised in other other comprehensive income and accumulated in equity
under foreign currency translation reserve relating to that particular foreign operation is recognised in the profit or
loss.
(c) Foreign operations
Goodwill and fair value adjustments arising on the acquisition of foreign operations are treated as assets and liabilities
of the foreign operations and are recorded in the functional currency of the foreign operations and translated at the
closing rate at the reporting date.
2.23 Revenue
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue
can be reliably measured. Revenue is measured at the fair value of consideration received or receivable.
(i) Sale of goods
Revenue from sale of goods is recognised upon the transfer of significant risk and rewards of ownership of the
goods to the customer. Revenue is not recognised to the extent where there are significant uncertainties regarding
recovery of the consideration due, associated costs or the possible return of goods.
NOTES TO THE FINANCIAL STATEMENTS31 January 2011cont’d
75 Years of Excellenceto
Embrace the Future
1936 ~ 2011
72 Annual Report 2011
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES cont’d
2.23 Revenue cont’d
(ii) Interest income
Interest income is recognised using the effective interest method.
(iii) Dividend income Dividend income is recognised when the Group’s right to receive payment is established.
(iv) Construction Contracts
Revenue from construction contracts is accounted for by the stage of completion method as described in Note 2.10.
(v) Management fees
Management fees are recognised when services are rendered.
2.24 Segment reporting
For management purposes, the Group is organised into operating segments based on their products and services which are independently managed by the respective segment managers responsible for the performance of the respective segments under their charge. The segment managers report directly to the management of the Company who regularly review the segment results in order to allocate resources to the segments and to assess the segment performance. Additional disclosures on each of these segments are shown in Note 37, including the factors used to identify the reportable segments and the measurement basis of segment information.
3. SIGNIFICANT ACCOUNTING JUDGEMENTS AND ESTIMATES
The preparation of the Group’s financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the disclosure of contingent liabilities at the reporting date. However, uncertainty about these assumptions and estimates could result in outcomes that could require a material adjustment to the carrying amount of the asset or liability affected in the future. However, there are no significant judgements involved in the preparation of these financial statements.
3.1 Key sources of estimation uncertainty
The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below.
(i) Useful lives of plant and equipment
The cost of property, plant and equipment for the Group is depreciated on a straight-line basis over the assets’
estimated economic useful lives. Management estimates the useful lives of these property, plant and equipment to be within 4 to 60 years. These are common life expectancies applied in the industries in which the Group operate. Changes in the expected level of usage and technological developments could impact the economic useful lives and the residual values of these assets, therefore future depreciation charges could be revised. However, management believes that no reasonable probable change in the above key assumptions would cause a material impact to the future depreciation charges. The carrying amount of the Group’s property, plant and equipment at the reporting date is disclosed in Note 14. A 10% difference in the expected useful lives of these assets from management’s estimates
would result in approximately 1% (2010: 1%) variance in the Group’s profit for the year.
NOTES TO THE FINANCIAL STATEMENTS31 January 2011cont’d
73George Kent (Malaysia) Berhad (1945-X)
3. SIGNIFICANT ACCOUNTING JUDGEMENTS AND ESTIMATES cont’d
3.1 Key sources of estimation uncertainty cont’d
(ii) Deferred tax assets
Deferred tax assets are recognised for all unused tax losses and unabsorbed capital allowances to the extent that
it is probable that taxable profit will be available against which the losses and capital allowances can be utilised.
Significant management judgement is required to determine the amount of deferred tax assets that can be recognised,
based upon the likely timing and level of future taxable profits together with future tax planning strategies.
Assumptions about generation of future taxable profits depend on management’s estimates of future cash
flows. These depends on estimates of future production and sales volume, operating costs, capital expenditure,
dividends and other capital management transactions. Judgement is also required about application of income tax
legislation. These judgements and assumptions are subject to risks and uncertainty, hence there is a possibility that
changes in circumstances will alter expectations, which may impact the amount of deferred tax assets recognised
in the statements of financial position and the amount of unrecognised tax losses and unrecognised temporary
differences.
The total carrying value of deferred tax assets of the Group at reporting date and the unrecognised tax losses and
capital allowances of the Group are disclosed in Note 31. These deferred tax assets and unrecognised tax losses
and capital allowances relate to subsidiaries of the Company. If the taxable profits of the said subsidiaries differ by
10% due to the change in estimates of the Group’s future results from operating activites, the Group’s deferred tax
assets and unabsorbed capital allowances will vary by RM20,000 and RM80,000.
(iii) Income taxes
Judgement is involved in determining the provision for income taxes. There are certain transactions and computations
for which the ultimate tax determination is uncertain during the ordinary course of business. The Group recognises
liabilities for expected tax issues based on estimates of whether additional taxes will be due. Where the final tax
outcome of these matters is different from the amounts that were initially recognised, such differences will impact the
income tax and deferred tax provisions in the period in which such determination is made. As at 31 January 2011,
the Group have tax payables and deferred tax liabilities of approximately RM826,000 (2010: RM1,815,000), and
RM1,845,000 (2010: RM1,057,000), respectively.
A 10% difference in taxable profits would result in approximately 5% (2010: 3%) variance in Group’s profit for the
year.
(iv) Construction contracts
The Company recognises contract revenue and expenses in the income statement by using the stage of completion
method. The stage of completion is determined by using the proportion that contract costs incurred for work
performed to date bear to the estimated total contract costs.
Significant judgement is required in determining the stage of completion, the extent of the contract costs incurred, the
estimated total contract revenue and costs, as well as the recoverability of the contracts. In making the judgement,
the Company evaluates by relying on the work of specialists.
The Group has recognised contract revenue of RM49,556,000 (2010: RM27,161,000) and contract costs of
RM34,624,000 (2010: RM20,743,000) during the financial year. If contract revenue and contract cost vary by 10%
from management’s estimates, the Group’s revenue and cost of sales will vary by 3% (2010: 2%) and 3% (2010: 3%)
respectively.
NOTES TO THE FINANCIAL STATEMENTS31 January 2011cont’d
75 Years of Excellenceto
Embrace the Future
1936 ~ 2011
74 Annual Report 2011
4. REVENUE
Group Company
2011 2010 2011 2010
RM’000 RM’000 RM’000 RM’000
Sale of goods and services 115,481 96,652 110,699 90,407
Infrastructure contracts 49,556 28,161 49,556 28,161
Dividend income from subsidiaries and associates - - 1,500 3,108
165,037 124,813 161,755 121,676
5. COST OF SALES
Group Company
2011 2010 2011 2010
RM’000 RM’000 RM’000 RM’000
Cost of inventories sold and services rendered 75,497 61,212 79,645 63,589
Contract costs 34,624 20,743 34,624 20,743
110,121 81,955 114,269 84,332
6. INTEREST INCOME AND OTHER INCOME
Group Company
2011 2010 2011 2010
RM’000 RM’000 RM’000 RM’000
(a) Interest income
Interest income from
- deposits with licensed banks 1,560 2,725 185 1,011
Debenture interest income 1,087 1,283 - -
2,647 4,008 185 1,011
(b) Other income
Net gain on disposal of of property, plant and
equipment - 69 - 69
Gain on disposal of investment securities 106 253 - -
Net fair value gains on held for trading investment
securities 308 - - -
Miscellaneous 217 91 186 20
631 413 186 89
NOTES TO THE FINANCIAL STATEMENTS31 January 2011cont’d
75George Kent (Malaysia) Berhad (1945-X)
7. FINANCE COSTS
Group Company
2011 2010 2011 2010
RM’000 RM’000 RM’000 RM’000
Interest expense on:
- Bank borrowings 1,296 1,182 1,209 1,156
- Hire purchase and finance lease liabilities 90 74 90 74
1,386 1,256 1,299 1,230
8. PROFIT BEFORE TAX
The following amounts have been included in arriving at profit before tax:
Group Company
2011 2010 2011 2010
RM’000 RM’000 RM’000 RM’000
Employee benefits expense (Note 9) 11,437 9,756 10,054 8,500
Non-executive directors’ remuneration (Note 10) 1,011 868 411 335
Auditors’ remuneration
- current year 113 113 53 53
- over provision in prior years - (4) - -
Research and development costs 376 279 376 279
Amortisation of intangible assets (Note 16) 63 58 63 58
Plant and equipment written off - 7 - -
Depreciation of property, plant and equipment (Note 14) 1,559 1,201 1,335 972
Write-down of inventories - 108 - 108
Inventories written off - 82 - 82
Reversal of impairment loss on financial assets:
- Trade receivables (Note 20) (218) (209) (218) (209)
- Investment securities held for trading - (98) - -
Impairment loss on financial assets:
- Trade receivables (Note 20) - 76 - -
- Bad debt written off - 7 - 126
Dividend income from:
- investment securities held for trading (130) (3) - -
- subsidiaries - - (1,500) (3,004)
- associate - - - (104)
NOTES TO THE FINANCIAL STATEMENTS31 January 2011cont’d
75 Years of Excellenceto
Embrace the Future
1936 ~ 2011
76 Annual Report 2011
8. PROFIT BEFORE TAX cont’d
Group Company
2011 2010 2011 2010
RM’000 RM’000 RM’000 RM’000
Rental expenses 37 32 35 30
Utility charges 3,635 3,642 662 608
Transportation charges 883 680 883 680
Legal and other professional fees 751 297 636 175
Loss/(gain) on foreign exchange:
- realised 5,959 421 1,587 345
- unrealised (2,467) 199 (347) (304)
9. EMPLOYEE BENEFITS EXPENSE
Group Company
2011 2010 2011 2010
RM’000 RM’000 RM’000 RM’000
Wages and salaries 10,040 8,611 8,770 7,446
Social security contributions 88 81 85 78
EPF contributions 1,108 979 1,081 946
Other benefits 201 85 118 30
Total 11,437 9,756 10,054 8,500
Included in employee benefits expense of the Group and of the Company are executive directors’ remuneration amounting to
RM508,000 (2010: RM784,000) and RM508,000 (2010: RM784,000) respectively.
NOTES TO THE FINANCIAL STATEMENTS31 January 2011cont’d
77George Kent (Malaysia) Berhad (1945-X)
10. DIRECTORS’ REMUNERATION
The details of remuneration receivable by directors of the Company during the year are as follows:
Group Company
2011 2010 2011 2010
RM’000 RM’000 RM’000 RM’000
Directors of the Company
Executive directors
Salaries and other emoluments 483 750 483 750
Estimated money value of benefits-in-kind 25 34 25 34
508 784 508 784
Non-Executive directors
Fees 356 293 356 293
Other emoluments 627 547 27 14
Estimated money value of benefits-in-kind 28 28 28 28
1,011 868 411 335
1,519 1,652 919 1,119
The number of directors of the Company whose total remuneration during the year fell within the following bands is analysed
below:
Number of directors
2011 2010
Executive directors:
RM300,001 – RM400,000 - 1
RM400,001 – RM500,000 - 1
RM500,001 – RM600,001 1 -
Non-Executive directors:
Below RM50,000 1 3
RM 50,001 – RM100,000 2 -
RM300,001 – RM400,000 1 1
RM400,001 – RM500,000 1 1
NOTES TO THE FINANCIAL STATEMENTS31 January 2011cont’d
75 Years of Excellenceto
Embrace the Future
1936 ~ 2011
78 Annual Report 2011
11. INCOME TAX EXPENSE
Group Company
2011 2010 2011 2010
RM’000 RM’000 RM’000 RM’000
Statement of comprehensive income:
Current income tax
- Malaysian income tax 4,892 4,365 4,822 4,391
- Foreign tax 1,827 2,481 - -
- Under/(over) provision in respect of prior years 8 (204) 8 (206)
6,727 6,642 4,830 4,185
Deferred income tax – continuing operations (Note 31):
- Origination and reversal of temporary differences 932 (90) 758 252
- Over provision in respect of prior years - (323) - -
932 (413) 758 252
Income tax expense recognised in profit or loss 7,659 6,229 5,588 4,437
Domestic income tax is calculated at the Malaysian statutory rate of 25% (2009: 25%) of the estimated assessable profit for the
year. Taxation for other jurisdictions is calculated at the rates prevailing in the respective jurisdictions.
Taxation for other jurisdictions is calculated at the rates prevailing in the respective jurisdictions.
A reconciliation between tax expense and the product of accounting profit multiplied by the applicable corporate tax rate for the
years ended 31 January 2011 and 2010 are as follows:
Group Company
2011 2010 2011 2010
RM’000 RM’000 RM’000 RM’000
Profit before tax 32,458 26,095 26,881 21,601
Taxation at Malaysian statutory tax rate of 25%
(2009: 25%) 8,115 6,523 6,720 5,400
Different tax rates in other countries 408 289 - -
Income not subject to tax (358) (238) (327) (789)
Benefits from utilisation of reinvestment allowance (815) - (815) -
Expenses not deductible for tax purposes 301 182 2 32
(Over)/underprovision in prior years
- current taxation 8 (204) 8 (206)
- deferred taxation - (323) - -
Tax expense for the year 7,659 6,229 5,588 4,437
NOTES TO THE FINANCIAL STATEMENTS31 January 2011cont’d
79George Kent (Malaysia) Berhad (1945-X)
12. EARNINGS PER SHARE Basic earnings per share amounts are calculated by dividing the profit for the year, net of tax, attributable to owners of the parent
by the number of ordinary outstanding during the financial year.
Diluted earnings per share amounts are calculated by dividing profit for the year from continuing operations, net of tax, attributable to owners of the parent by the weighted average number of ordinary shares that would be issued on the conversion of all the dilutive potential ordinary shares into ordinary shares.
(a) Basic
The following tables reflect the profit and share data used in the computation of basic earnings per share for the years
ended 31 January:
2011 2010
RM’000 RM’000
Profit net of tax attributable to owners of the parent 24,799 19,866
No. of
shares
No. of
shares
‘000 ‘000
Weighted average number of ordinary shares for basic earnings per share
computation* 225,264 225,219
Basic earnings per share (sen) 11.0 8.8
* The weighted number of ordinary shares takes into account the weighted average effect of the exercise of share options
during the year.
(b) Diluted
The following tables reflect the profit and share data used in the computation of diluted earnings per share for the years ended 31 January:
2011 2010
RM’000 RM’000
Profit net of tax attributable to owners of the parent 24,799 19,866
No. of
shares
No. of
shares
‘000 ‘000
Weighted average number of ordinary shares for basic earnings per share
computation 225,264 225,219
Effects of dilution
- share options 95 -*
Weighted average number of ordinary shares for diluted earnings per share
computation 225,359 225,219
NOTES TO THE FINANCIAL STATEMENTS31 January 2011cont’d
75 Years of Excellenceto
Embrace the Future
1936 ~ 2011
80 Annual Report 2011
12. EARNINGS PER SHARE cont’d
2011 2010
Diluted earnings per share (sen) 11.0 8.8
* The outstanding share options have not been included in the computation because they are anti-dilutive.
Since the end of the financial year, employees have exercised the options to acquire 3,000 (2010: 46,500) ordinary shares. There
have been no other transactions involving ordinary shares or potential ordinary shares since the reporting date and before the completion of these financial statements.
13. DIVIDENDS
Dividends
in respect of year
Dividends
recognised in year
2011 2010 2011 2010
RM’000 RM’000 RM’000 RM’000
Recognised during the year:
Final dividend for 2010: 2.0 sen less 25% taxation, on
225,218,626 ordinary shares (1.5 sen per ordinary
share) - - 3,378 -
Final dividend for 2009: 1.5 sen less 25% taxation, on
220,422,583 ordinary shares (1.125 sen per ordinary
share) - - - 2,480
Interim dividend for 2011: 2 sen less 25% taxation, on
225,274,626 ordinary shares (1.5 sen per ordinary
share) 3,379 - 3,379 -
Interim dividend for 2010: 2 sen less 25% taxation, on
220,422,583 ordinary shares (1.5 sen per ordinary
share) - 3,306 - 3,306
3,379 3,306 6,757 5,786
Proposed for approval at AGM (not recognised as at
31 January):
Final dividend for 2011: 3.0 sen less 25% taxation, on
225,299,626 ordinary shares (2.25 sen per ordinary
share) 5,069 - - -
Final dividend for 2010: 2.0 sen less 25% taxation, on
225,218,626 ordinary shares (1.5 sen per ordinary
share) - 3,378 - -
5,069 3,378 - -
8,448 6,684 6,757 5,786
NOTES TO THE FINANCIAL STATEMENTS31 January 2011cont’d
81George Kent (Malaysia) Berhad (1945-X)
13. DIVIDENDS cont’d
At the forthcoming Annual General Meeting (“AGM”), a final dividend in respect of the financial year ended 31 January 2011,
of 3.0 sen less 25% tax per ordinary share of 50 sen amounting to RM5,069,000 will be proposed for shareholders’ approval.
The financial statements for the current financial year do not reflect this proposed dividend. Such dividend, if approved by the
shareholders, will be accounted for in equity as an appropriation of retained earnings in the financial year ending 31 January
2012.
14. PROPERTY, PLANT AND EQUIPMENT
Group
Freehold
land
Building
on
freehold
land
Long
term
leasehold
building
Long
term
leasehold
land
Plant and
machinery,
furniture,
equipment
and
vehicles
Capital
work in
progress Total
RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
31 January 2011
At 1 February 2010
- As previously stated 21,012 31,078 123 - 52,515 - 104,728
- Effects of adopting
amendments to FRS 117 - - - 123 - - 123
- As restated 21,012 31,078 123 123 52,515 - 104,851
Cost or valuation
Additions - 13 3 - 7,239 734 7,989
Adjustment - - - - (38) - (38)
Exchange differences - - (10) (10) (100) - (120)
At 31 January 2011 21,012 31,091 116 113 59,616 734 112,682
Representing
At cost 192 31,091 116 113 59,616 734 91,862
At valuation – 1996 20,820 - - - - - 20,820
21,012 31,091 116 113 59,616 734 112,682
Accumulated depreciation
At 1 February 2010
- As previously stated - 7,586 30 - 47,447 - 55,063
- Effects of adopting
amendments to FRS 117 - - - 30 - - 30
- As restated - 7,586 30 30 47,447 - 55,093
Depreciation charge - 621 2 - 978 - 1,601
Exchange differences - - 27 (30) (73) - (76)
At 31 January 2011 - 8,207 59 - 48,352 - 56,618
NOTES TO THE FINANCIAL STATEMENTS31 January 2011cont’d
75 Years of Excellenceto
Embrace the Future
1936 ~ 2011
82 Annual Report 2011
14. PROPERTY, PLANT AND EQUIPMENT cont’d
Group cont’d
Freehold
land
Building
on
freehold
land
Long
term
leasehold
building
Long
term
leasehold
land
Plant and
machinery,
furniture,
equipment
and
vehicles
Capital
work in
progress Total
RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
31 January 2010
At 1 February 2009
- As previously stated 21,012 31,116 129 - 51,810 139 104,206
- Effects of adopting
amendments to FRS 117 - - - 135 - - 135
- As restated 21,012 31,116 129 135 51,810 139 104,341
Cost or valuation
Additons - 9 1 1 1,808 - 1,819
Reclassification - - - - 139 (139) -
Disposals - (47) - - (1,160) - (1,207)
Exchange differences - (7) (13) (61) - (81)
Write off - - - - (21) - (21)
At 31 January 2010 21,012 31,078 123 123 52,515 - 104,851
Representing
At cost 192 31,078 123 123 52,515 - 84,031
At valuation – 1996 20,820 - - - - - 20,820
21,012 31,078 123 123 52,515 - 104,851
Accumulated depreciation
and impairment loss
At 1 February 2009
- As previously stated - 6,973 29 - 47,701 - 54,703
- Effects of adopting
amendments to FRS 117 - - - 35 - - 35
- As restated - 6,973 29 35 47,701 - 54,738
Depreciation charge - 613 2 2 609 - 1,226
Disposals - - - - (818) - (818)
Write off - - - - (14) - (14)
Exchange differences - - (1) (7) (31) - (39)
At 31 January 2010 - 7,586 30 30 47,447 - 55,093
NOTES TO THE FINANCIAL STATEMENTS31 January 2011cont’d
83George Kent (Malaysia) Berhad (1945-X)
NOTES TO THE FINANCIAL STATEMENTS31 January 2011cont’d
14. PROPERTY, PLANT AND EQUIPMENT cont’d
Group cont’d
Freehold
land
Building
on
freehold
land
Long
term
leasehold
building
Long
term
leasehold
land
Plant and
machinery,
furniture,
equipment
and
vehicles
Capital
work in
progress Total
RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
Net carrying amount
At 31 January 2011 192 22,884 57 113 11,264 734 35,244
At cost 20,820 - - - - - 20,820
At valuation 21,012 22,884 57 113 11,264 734 56,064
At 31 January 2010
At cost 192 23,492 93 93 5,068 - 28,938
At valuation 20,820 - - - - - 20,820
21,012 23,492 93 93 5,068 - 49,758
At 31 January 2009
At cost 192 24,143 100 100 4,109 139 28,783
At valuation 20,820 - - - - - 20,820
21,012 24,143 100 100 4,109 139 49,603
Company
31 January 2011
Cost or valuation
At 1 February 2010 21,012 31,078 - - 43,603 - 95,693
Additions - 13 - - 7,083 734 7,830
Adjustment - - - - (38) - (38)
At 31 January 2011 21,012 31,091 - - 50,648 734 103,485
Representing:
At cost 192 31,091 - - 50,648 734 82,665
At valuation – 1996 20,820 - - - - - 20,820
21,012 31,091 - - 50,648 734 103,485
Accumulated depreciation
At 1 February 2010 - 7,586 - - 39,653 - 47,239
Depreciation charge - 621 - - 756 - 1,377
At 31 January 2011 - 8,207 - - 40,409 - 48,616
75 Years of Excellenceto
Embrace the Future
1936 ~ 2011
84 Annual Report 2011
14. PROPERTY, PLANT AND EQUIPMENT cont’d
Company cont’d Freehold
land Building on
freehold land
Plant and machinery,
furniture, equipment
and vehicles
Capital work in
progress Total
RM’000 RM’000 RM’000 RM’000 RM’000
31 January 2011
Net carrying amount
At 31 January 2011
At cost 192 22,884 10,239 734 34,049
At valuation – 1996 20,820 - - - 20,820
21,012 22,884 10,239 734 54,869
At 31 January 2010
Cost or valuation
At 1 February 2009 21,012 31,116 43,021 139 95,288
Additions - 9 1,603 - 1,612
Reclassifications - - 139 (139) -
Disposals - (47) (1,160) - (1,207)
At 31 January 2010 21,012 31,078 43,603 - 95,693
Representing:
At cost 192 31,078 43,603 - 74,873
At valuation – 1996 20,820 - - - 20,820
21,012 31,078 43,603 - 95,693
Accumulated depreciation
At 1 February 2009 - 6,973 40,087 - 47,060
Depreciation charge - 613 384 - 997
Disposals - - (818) - (818)
At 31 January 2010 - 7,586 39,653 - 47,239
Net carrying amount
At 31 January 2010
At cost 192 23,492 3,950 - 27,634
At valuation – 1996 20,820 - - - 20,820
21,012 23,492 3,950 - 48,454
Revaluation of freehold land and buildings
Certain freehold land and buildings of the Group and the Company have not been revalued since they were first revalued in 1996. The directors have not adopted a policy of regular revaluations of such assets and no later valuation has been recorded. As permitted under the transitional provisions of IAS 16 (Revised): Property, Plant and Equipment, these assets continue to be stated at their 1996 valuation less accumulated depreciation.
The freehold land and buildings of the Group and of the Company were revalued by the directors based on valuation carried out in 1996 by Edmund H C Ng, a partner at KGV Lambert Smith Hampton and also a member of the Institution of Surveyors, Malaysia.
Valuations were made on the basis of open market values on existing use bases.
NOTES TO THE FINANCIAL STATEMENTS31 January 2011cont’d
85George Kent (Malaysia) Berhad (1945-X)
14. PROPERTY, PLANT AND EQUIPMENT cont’d
Revaluation of freehold land and buildings cont’d
If the freehold land and buildings were measured using the cost model, the carrying amounts would be as follows:
Group Company
2011 2010 2011 2010
RM’000 RM’000 RM’000 RM’000
Freehold land at 31 January
- Cost and net carrying amount 9,398 9,398 9,398 9,398
Assets held under finance leases
During the financial year, the Group and the Company acquired a property, plant and equipment at aggregate costs of
RM7,989,000 (2010: RM1,819,000) and RM7,830,000 (2010: RM1,612,000) respectively of which motor vehicles of RM816,000
was acquired by means of finance lease for the Group and the Company in previous year.
Net carrying amount of motor vehicles of the Group and of the Company held under finance lease arrangements is RM1,298,000
(2010: RM1,503,000). Leased assets are pledged as security for the related finance lease liabilities (Note 28).
Depreciation charge is recognised in the financial statements as follows:
Group Company
2011 2010 2011 2010
RM’000 RM’000 RM’000 RM’000
- income statement (Note 8) 1,559 1,201 1,335 972
- construction cost (Note 22) 42 25 42 25
Asset pledged as security
The Group’s landed properties with a carrying amount of RM43,896,000 (2010: RM44,504,000) are mortgaged to secure the
Group and the Company’s bank loans (Note 28).
15. LAND USE RIGHTS
Group
2011 2010
RM’000 RM’000
Cost
At 1 February
As previously stated 123 135
Effects of adopting the amendments to FRS 117 (123) (135)
At 31 January (restated) - -
NOTES TO THE FINANCIAL STATEMENTS31 January 2011cont’d
75 Years of Excellenceto
Embrace the Future
1936 ~ 2011
86 Annual Report 2011
15. LAND USE RIGHTS cont’d
Group
2011 2010
RM’000 RM’000
Accumulated amortisation
At 1 February
As previously stated 30 35
Effects of adopting the amendments to FRS 117 (30) (35)
At 31 January (restated) - -
Net carrying amount - -
Amount to be amortised (restated) - -
16. INTANGIBLE ASSETS
Computer
software
Development
costs Total
RM’000 RM’000 RM’000
Group/Company
Cost
At 1 February 2009 145 980 1,125
Addition - - -
At 31 January 2010 145 980 1,125
Addition 98 - 98
At 31 January 2011 243 980 1,223
Accumulated amortisation
At 1 February 2009 116 490 606
Amortisation 9 49 58
At 31 January 2010 125 539 664
Amortisation 14 49 63
At 31 January 2011 139 588 727
Net carrying amount
At 31 January 2010 20 441 461
At 31 January 2011 104 392 496
NOTES TO THE FINANCIAL STATEMENTS31 January 2011cont’d
87George Kent (Malaysia) Berhad (1945-X)
16. INTANGIBLE ASSETS cont’d
Computer software and development costs
Computer software are stated at cost less any impairment losses and are amortised on a straight-line basis over the estimated
economic useful lives at the annual rate of 20%. Impairment is assessed whenever there is an indication that the intangible asset
may be impaired. The amortisation period and the amortisation method are reviewed at least at each reporting date.
Development costs, considered to have finite useful lives, are stated at cost less any impairment losses and are amortised using
the straight-line basis from the commencement of the contract to which they relate over the period of their expected benefit not
exceeding 20 years.
Amortisation expense
The amortisation of computer software and development costs are included in the “Other operating expenses” line item in the
statement of comprehensive income.
17. INVESTMENT IN SUBSIDIARIES
Company
2011 2010
RM’000 RM’000
Shares, at cost
In Malaysia 20,009 20,009
Impairment losses (18,004) (18,004)
2,005 2,005
The Group’s equity interest in the subsidiaries, their respective principal activities and countries of incorporation are set out in
Note 39.
18. INVESTMENT IN ASSOCIATES AND INVESTMENT IN UNQUOTED DEBENTURES OF ASSOCIATE
Group Company
2011 2010 2011 2010
RM’000 RM’000 RM’000 RM’000
Unquoted shares at cost:
- in Malaysia 174 174 174 174
- outside Malaysia 2,396 2,396 - -
Share of post-acquisition reserves 15,499 15,164 - -
18,069 17,734 174 174
Unquoted debentures, outside Malaysia 6,404 9,894 - -
24,473 27,628 174 174
NOTES TO THE FINANCIAL STATEMENTS31 January 2011cont’d
75 Years of Excellenceto
Embrace the Future
1936 ~ 2011
88 Annual Report 2011
18. INVESTMENT IN ASSOCIATES AND INVESTMENT IN UNQUOTED DEBENTURES OF ASSOCIATE cont’d
In accordance with an agreement signed by a subsidiary (Asialink Pacific Limited) and the other shareholders of PNG Water
Limited dated 14 June 1999, that subsidiary had subscribed for K7,670,000 (Papua New Guinea Kina equivalent to RM9,012,000)
Class ‘B’ debentures in PNG Water Limited.
The above debentures are unsecured and bear interest at 13% per annum. PNG Water Limited may repay to the holders of the
Class ‘B’ debentures in proportion to the debentures held by them no earlier than ten years from the last date on which any
Class ‘B’ debentures were issued. However, repayment to Class ‘B’ debenture holders is subordinated in favour of Class ‘A’
debenture holders and other creditors (including contingent obligations) of PNG Water Limited.
The Group’s equity interest in the associates, their respective principal activities and countries of incorporation are set out in
Note 39.
Unquoted debentures, outside Malaysia
Group
2011 2010
RM’000 RM’000
As at 1 February 9,894 9,251
Redemption during the year* (2,470) -
Recognised in profit and loss
- Realised exchange loss due to redemption (322) -
- Revaluation exchange (loss)/gain (698) 643
As at 31 January 6,404 9,894
* PNG Water Limited had redeemed the Class B Debentures issued for K1,320,000 and K950,000 on 16 October 2010 and 24 October
2010 respectively during the year.
The summarised financial information of the associates, not adjusted for the proportion of ownership interest held by the Group,
is as follows:
Group
2011 2010
RM’000 RM’000
Assets and liabilities:
Total assets 146,488 173,680
Total liabilities 56,252 84,371
Results
Revenue 68,458 63,791
Profit for the year 9,150 6,705
NOTES TO THE FINANCIAL STATEMENTS31 January 2011cont’d
89George Kent (Malaysia) Berhad (1945-X)
19. INVENTORIES
Group Company
2011 2010 2011 2010
RM’000 RM’000 RM’000 RM’000
Cost
Raw materials and components 19,282 14,334 17,912 11,938
Work-in-progress 11,329 7,510 11,316 7,504
Manufactured goods 6,123 4,407 6,123 4,407
Finished goods for resale 3,080 21 2,322 -
39,814 26,272 37,673 23,849
Net realisable value
Finished goods for resale - 2,265 - 2,122
39,814 28,537 37,673 25,971
During the year, the amounts of inventories recognised as an expense in cost of sales of the Group and of the Company were RM75,497,000 (2010: RM 61,212,000) and RM79,645,000 (2010: RM63,598,000) respectively.
20. TRADE AND OTHER RECEIVABLES
Group Company
2011 2010 2011 2010
RM’000 RM’000 RM’000 RM’000
Current
Trade receivables
Third parties 28,698 25,665 27,495 24,912
Subsidiaries - - 2,073 6,784
Related parties - 10 - 10
Associates 7,820 3,778 7,820 3,778
36,518 29,453 37,388 35,484
Less: Allowance for impairment (1,126) (1,344) (1,104) (1,322)
Trade receivables, net 35,392 28,109 36,284 34,162
Other receivables
Amounts due from:
Subsidiaries - - 24,611 30,350
Related parties 40 40 49 40
Associates 4 135 4 28
44 175 24,664 30,418
Refundable deposits 659 223 648 209
Other receivables 2,333 1,552 126 138
3,036 1,950 25,438 30,765
Total trade and other receivables (current) 38,428 30,059 61,722 64,927
NOTES TO THE FINANCIAL STATEMENTS31 January 2011cont’d
75 Years of Excellenceto
Embrace the Future
1936 ~ 2011
90 Annual Report 2011
20. TRADE AND OTHER RECEIVABLES cont’d
Group Company
2011 2010 2011 2010
RM’000 RM’000 RM’000 RM’000
Trade and other receivables (current and non-current) 38,428 30,059 61,722 64,927
Add: Cash and bank balances (Note 24) 61,714 63,341 27,833 9,576
Unquoted debentures of associate (Note 18) 6,404 9,894 - -
Total loan and receivables 106,546 103,294 89,555 74,503
(a) Trade receivables
Trade receivables are non-interest bearing and are generally on 30 to 90 days (2010: 30 to 90 days) terms. They are
recognised at their original invoice amounts which represent their fair values on intial recognition.
(b) Amounts due from related parties
Amounts due from related parties are from subsidiaries of a company in which the directors, Tan Sri Dato’ Tan Kay Hock
and Puan Sri Datin Tan Swee Bee have interest in.
The amounts due from related parties are unsecured, interest-free and repayable on demand.
(c) Amounts due from subsidiaries and associates
The amounts due from subsidiaries and associates are unsecured, interest-free and repayable on demand.
(d) Other receivables
Other receivables are unsecured, non-interest bearing and are generally on 30 to 90 days (2010: 30 to 90 days) terms.
Ageing analysis of trade receivables
The ageing analysis of the trade receivables is as follows:
Group Company
2011 2010 2011 2010
RM’000 RM’000 RM’000 RM’000
Neither past due nor impaired 28,649 20,469 28,771 22,232
1 to 30 days past due not impaired 2,775 3,061 2,786 4,377
31 to 60 days past due not impaired 2,304 2,162 2,289 3,105
60 to 90 days past due not impaired 602 1,388 498 1,566
More than 91 days past due not impaired 1,062 1,029 1,940 2,882
6,743 7,640 7,513 11,930
Impaired 1,126 1,344 1,104 1,322
36,518 29,453 37,388 35,484
NOTES TO THE FINANCIAL STATEMENTS31 January 2011cont’d
91George Kent (Malaysia) Berhad (1945-X)
20. TRADE AND OTHER RECEIVABLES cont’d
Receivables that are neither past due nor impaired
Trade receivables that are neither past due nor impaired are creditworthy debtors with good payment records. None of the
Group’s trade receivables that are neither past due nor impaired have been renegotiated during the financial year.
Receivables that are past due but not impaired
Trade receivables that are past due but not impaired are unsecured.
Included in trade receivables of the Group are long outstanding balances totalling RM7,891,000 (2010: RM8,984,000) due from
90 entities (2010: 108). In determining the extent of allowance for doubtful debts, the directors have given due consideration
to the current economic conditions and other information available to assess the likelihood of impairment. Although uncertainty
generally exists with regard to the recovery of debts under the current economic conditions, the directors are of the opinion that
the allowance made for doubtful debts is adequate. It is not possible, however, to anticipate any possible future deterioration in
credit condition of these debtors.
Receivables that are impaired
The trade receivables that are impaired at the reporting date and the movement of the allowance accounts used to record the
impairment are as follows:
Trade receivables that are individually impaired:
Group Company
2011 2010 2011 2010
RM’000 RM’000 RM’000 RM’000
Trade receivables – nominal amounts 36,518 29,453 37,388 35,484
Less: Allowance for impairment (1,126) (1,344) (1,104) (1,322)
35,392 28,109 36,284 34,162
Movement in allowance accounts:
Group Company
2011 2010 2011 2010
RM’000 RM’000 RM’000 RM’000
At 1 February 1,344 1,477 1,322 1,455
Charge for the year (Note 8) - 76 - 76
Reversal of impairment losses (218) (209) (218) (209)
At 31 January 1,126 1,344 1,104 1,322
NOTES TO THE FINANCIAL STATEMENTS31 January 2011cont’d
75 Years of Excellenceto
Embrace the Future
1936 ~ 2011
92 Annual Report 2011
21. OTHER CURRENT ASSETS
Group Company
2011 2010 2011 2010
RM’000 RM’000 RM’000 RM’000
Prepaid operating expenses 605 253 655 207
Amounts due from customers for contract (Note 22) 2,571 1,529 2,571 1,529
3,176 1,782 3,226 1,736
22. DUE (TO)/FROM CUSTOMERS ON CONTRACTS
Group and Company
2011 2010
RM’000 RM’000
Construction costs incurred to date 56,023 22,825
Attributable profits 23,013 7,821
79,036 30,646
Less: Progress billings (80,291) (30,152)
(1,255) 494
Presented as:
Gross amounts due from customers for contract work (Note 21) 2,571 1,529
Gross amounts due to customers for contract work (Note 30) (3,826) (1,035)
(1,255) 494
The costs incurred to date on construction contracts include the following charges made during the financial year:
Group and Company
2011 2010
RM’000 RM’000
Hire of plant and machinery 323 86
Depreciation of property, plant and equipment 42 25
Interest expense 85 671
Rental expense for building 12 2
NOTES TO THE FINANCIAL STATEMENTS31 January 2011cont’d
93George Kent (Malaysia) Berhad (1945-X)
23. INVESTMENT SECURITIES
Group
2011 2010
RM’000 RM’000
Carrying
amount
Market
value
Carrying
amount
Market
value
Current
Held for trading investments
- Equity instruments (quoted in Malaysia) 2,000 2,000 1,876 1,876
- Equity instruments (quoted outside Malaysia) 2,547 2,547 1,306 1,306
Total current investment securities 4,547 3,182
24. CASH AND CASH EQUIVALENTS
Group Company
2011 2010 2011 2010
RM’000 RM’000 RM’000 RM’000
Cash on hand and at banks 26,041 41,660 738 4,743
Short term deposits with licensed banks 35,673 21,681 27,095 4,833
Cash and bank balances 61,714 63,341 27,833 9,576
Cash at banks earns interest at floating rates based on daily bank deposit rates. Short term deposits are made for varying
periods of between 1 to 365 days (2010: between 1 to 365 days) and earn interests at the respective short term deposits rates.
The weighted average effective interest as at 31 January 2011 for the Group were between 0.1% to 16.13% (2010: 0.03% to
5.3%).
For the purpose of the statements of cash flows, cash and cash equivalents comprise the following at the reporting date:
Group Company
2011 2010 2011 2010
RM’000 RM’000 RM’000 RM’000
Cash and short term deposits 61,714 63,341 27,833 9,576
Bank overdrafts (Note 28) (2,369) (1,135) (2,369) (1,135)
Cash and cash equivalents 59,345 62,206 25,464 8,441
NOTES TO THE FINANCIAL STATEMENTS31 January 2011cont’d
75 Years of Excellenceto
Embrace the Future
1936 ~ 2011
94 Annual Report 2011
25. SHARE CAPITAL
Number of ordinary
shares of 50 sen each Amount
2011 2010 2011 2010
‘000 ‘000 RM’000 RM’000
Authorised:
At 1 February/31 January 400,000 400,000 200,000 200,000
Issued and fully paid:
At 1 February 225,219 192,525 112,610 96,263
Issue of ordinary shares pursuant to conversion/
exercise of
- ICULS - 32,694 - 16,347
- ESOS 81 - 40 -
At 31 January 225,300 225,219 112,650 112,610
(a) The holders of ordinary shares are entitled to receive dividends as and when declared by the Company. All ordinary shares
carry one vote per share without restrictions and rank equally with regard to the Company residual assets.
(b) During the financial year, 81,000 new ordinary shares of RM0.50 each were issued upon the exercise of share options
granted pursuant to the Employee Share Options Scheme. Accordingly, the Company’s issued and paid up ordinary share
capital increased by RM40,500 to RM112,649,813.
26. EMPLOYEE BENEFITS
Employee Share Option Scheme (“ESOS”)
The George Kent (Malaysia) Berhad Employee Share Options Scheme (“ESOS”) is governed by the Bye-Laws approved by the
shareholders at an Extraordinary General Meeting held on 19 June 2003. The ESOS was implemented on 27 October 2003
and is to be in force for a period of 5 years from the date of implementation. Subsequently at the Annual General Meeting of the
company held on 22 July 2008, shareholders’ approval was obtained for the extension of the term of the ESOS for a further 5
years commencing from 27 October 2008 until 26 October 2013.
The other salient features of the ESOS are as follows:
(i) Eligible persons are employees of the Group (including executive director) who have been confirmed in the employment
of the Group and have served at least two years in the Company or its Malaysian subsidiaries, or five years in its overseas
subsidiaries before the date of the offer.
(ii) The total number of shares to be issued under the ESOS shall not exceed in aggregate 10% of the issued share capital of
the Company at any point of time during the tenure of the ESOS.
(iii) The option price for each share shall be set at the 5-days weighted average market price of the shares or at a discount
of not more than 10% from the 5-days weighted average market price of the shares at the date the option is granted.
Notwithstanding this, the option price per share shall in no event be less than its par value.
(iv) No option shall be granted for less than 1,000 shares nor more than 400,000 shares to any eligible employee.
NOTES TO THE FINANCIAL STATEMENTS31 January 2011cont’d
95George Kent (Malaysia) Berhad (1945-X)
26. EMPLOYEE BENEFITS cont’d
Employee Share Option Scheme (“ESOS”) cont’d
(v) An option granted under the ESOS shall be capable of being exercised by the grantee by notice in writing to the Company
commencing from the date of the offer but before the expiry of five years from the date of the offer.
(vi) All new ordinary shares issued upon exercise of the options granted under the ESOS shall rank pari passu in all respects
with the existing ordinary shares of the Company other than as may be specified in a resolution approving the distribution
of dividends prior to their exercise dates.
(vii) The persons to whom the options have been granted have no right to participate by virtue of the options in any share issue
of any other company.
Movement of share options during the financial year
The following table illustrates the number (“No.”) and weighted average exercise prices (“WAEP”) of, and movements in, share
options during the financial year:
Group
2011 2010
No. WAEP (RM) No. WAEP (RM)
Outstanding at 1 February 373,000 0.82 460,000 0.82
- Forfeited 9,000 0.82 87,000 0.82
- Exercised 81,000 0.82 - 0.82
Outstanding at 31 January 283,000 373,000
Exercisable at 31 January 283,000 373,000
- The weighted average share price at the date of exercise of the options exercised during the financial year was RM1.32
(2010: nil).
- The exercise price for options outstanding at the end of the year was RM0.82 (2010: RM0.82). The weighted average
remaining contractual life for these options is 2.5 years (2010: 3.5 years).
NOTES TO THE FINANCIAL STATEMENTS31 January 2011cont’d
75 Years of Excellenceto
Embrace the Future
1936 ~ 2011
96 Annual Report 2011
27. OTHER RESERVES
Asset
revaluation
reserve –
freehold
land
Foreign
currency
translation
reserve
Fair value
adjustment
reserve Total
RM’000 RM’000 RM’000 RM’000
Group
At 1 February 2009 11,508 1,478 - 12,986
Foreign currency translation - (1,549) - (1,549)
At 31 January 2010 11,508 (71) - 11,437
Asset
revaluation
reserve –
freehold
land
Foreign
currency
translation
reserve
Total
RM’000 RM’000 RM’000
At 1 February 2010 11,508 (71) 11,437
Foreign currency translation - (2,714) (2,714)
At 31 January 2011 11,508 (2,785) 8,723
Revaluation
reserve –
freehold
land
RM’000
Company
At 1 February 2009/31 January 2010 11,422
At 1 February 2010/31 January 2011 11,422
The nature and purpose of each category of reserve are as follows:
(a) Asset revaluation reserve – freehold land
The asset revaluation reserve represents increases in the fair value of freehold land and decreases to the extent that such
decreases relate to an increase on the same asset previously recognised in other comprehensive income.
(b) Foreign currency translation reserve
The foreign currency translation reserve represents exchange differences arising from the translation of the financial
statements of foreign operations whose functional currencies are different from that of the Group’s presentation currency.
NOTES TO THE FINANCIAL STATEMENTS31 January 2011cont’d
97George Kent (Malaysia) Berhad (1945-X)
28. LOANS AND BORROWINGS
Group Company
2011 2010 2011 2010
Maturity RM’000 RM’000 RM’000 RM’000
Current
Secured:
Bank overdrafts (Note 24) On demand 2,369 1,135 2,369 1,135
Revolving credits 2011 3,000 4,500 3,000 4,500
Bankers’ acceptances 2011 8,679 6,836 8,679 6,836
Term loans 2011 2,400 2,400 2,400 2,400
Finance lease liabilities 2011 226 271 226 271
16,674 15,142 16,674 15,142
Non-current
Secured:
Term loans 2014 11,056 13,456 11,056 13,456
Finance lease liabilities 2012-2016 514 740 514 740
11,570 14,196 11,570 14,196
Total loans and borrowings (Note 29) 28,244 29,338 28,244 29,338
The remaining maturities of the borrowings as at 31 January 2011 are as follows:
Group Company
2011 2010 2011 2010
RM’000 RM’000 RM’000 RM’000
On demand or within one year 16,674 15,142 16,674 15,142
More than 1 year and less than 2 years 11,218 13,684 11,218 13,684
More than 2 year and less than 5 years 352 412 352 412
More than 5 years - 100 - 100
28,244 29,338 28,244 29,338
Bank overdraft
Bank overdraft is denominated in RM, bears interest at BLR + 1% p.a. and is secured by a first, second, third and fourth charge
over a landed property of the Company.
Finance lease liabilities
These liabilities are secured over the leased assets (Note 14). The average discount rate implicit in the lease is 3.25% (2010:
3.15%) per annum.
NOTES TO THE FINANCIAL STATEMENTS31 January 2011cont’d
75 Years of Excellenceto
Embrace the Future
1936 ~ 2011
98 Annual Report 2011
28. LOANS AND BORROWINGS cont’d
RM5.0 million bank loan
This loan is secured by a legal charge over a landed property of the Company (Note 14) and is repayable quarterly in 5 years due
on 30 April 2014. This loan bears an average interest of 3.97% (2010: 3.22%) per annum.
RM12.5 million bank loan
This loan is secured by a legal charge over a landed property of the Company (Note 14) and is repayable quarterly in 5 years due
on 28 February 2014. This loan bears an average interest of 3.97% (2010: 3.22%) per annum.
RM1.0 million Revolving Credits
This short term loan is secured by a legal charge over a landed property of the Company (Note 14) and is due on 9 February
2011. This loan bears an average interest of 3.65% (2010: 3.59%) per annum.
RM2.0 million Revolving Credits
This short term loan is secured by a legal charge over a landed property of the Company (Note 14) and is due on 9 February
2011. This loan bears an average interest of 3.65% (2010: 3.59%) per annum.
RM8.7 million Bankers’ Acceptance
These borrowings are utilised by the Company to finance sales and purchases and due in year 2011. The borrowings are
secured by a legal charge over a landed property of the Company (Note 14) and bear an average interest of 3.97% (2010:
3.22%) per annum.
NOTES TO THE FINANCIAL STATEMENTS31 January 2011cont’d
99George Kent (Malaysia) Berhad (1945-X)
29. TRADE AND OTHER PAYABLES
Group Company
2011 2010 2011 2010
RM’000 RM’000 RM’000 RM’000
Current
Trade payables
Third parties 16,102 16,058 15,935 15,878
Other payables
Related parties 48 93 48 93
Subsidiaries - - 19,394 9,463
Associate 1,264 1,415 1,264 1,415
Accruals 4,613 4,561 3,744 3,807
Other payables 10,156 3,126 10,059 1,363
16,081 9,195 34,509 16,141
Total trade and other payables
(current and non current) 32,183 25,253 50,444 32,019
Add: loans and borrowings (Note 28) 28,244 29,338 28,244 29,338
Total financial liabilities at amortised cost 60,427 54,591 78,688 61,357
(a) Trade payables
Trade payables are non-interest bearing and the normal trade credit terms granted to the Group range from 30 to 90
days.
(b) Other payables
Other payables are non-interest bearing. These amounts are normally settled on 30 to 90-day terms.
(c) Related parties
Related parties refer to subsidiaries of a company in which the directors, Tan Sri Dato’ Tan Kay Hock and Puan Sri Datin
Tan Swee Bee have interest in. The amounts due to related parties are unsecured, non interest bearing and repayable on
demand.
(d) Amounts due to subsidiaries and associates
The amounts due to subsidiaries and associates are unsecured, interest-free and repayable on demand.
NOTES TO THE FINANCIAL STATEMENTS31 January 2011cont’d
75 Years of Excellenceto
Embrace the Future
1936 ~ 2011
100 Annual Report 2011
30. OTHER CURRENT LIABILITIES
Group and Company
2011 2010
RM’000 RM’000
Gross amounts due to customers from contract work (Note 22) 3,826 1,035
31. DEFERRED TAX
Deferred income tax as at 31 January relates to the following:
As at 1
February
2009
Recognised
in profit
or loss
As at 31
January
2010
Recognised
in profit
or loss
As at 31
January
2011
RM’000 RM’000 RM’000 RM’000 RM’000
Group
Deferred tax liabilities:
Property, plant and equipment (797) (260) (1,057) (788) (1,845)
Deferred tax assets:
Provisions - 343 343 99 442
Unutilised tax losses and unabsorbed
allowances 1,193 330 1,523 (243) 1,280
1,193 673 1,866 (144) 1,722
396 413 809 (932) (123)
Company
Deferred tax liabilities:
Property, plant and equipment (805) (252) (1,057) (758) (1,815)
Presented after appropriate offsetting as follows:
Group Company
2011 2010 2011 2010
RM’000 RM’000 RM’000 RM’000
Deferred tax assets 1,722 1,866 - -
Deferred tax liabilities (1,845) (1,057) (1,815) (1,057)
(123) 809 (1,815) (1,057)
NOTES TO THE FINANCIAL STATEMENTS31 January 2011cont’d
101George Kent (Malaysia) Berhad (1945-X)
31. DEFERRED TAX cont’d
Deferred tax assets not recognised are in respect of the following items:
Group
2011 2010
RM’000 RM’000
Unused tax losses 44,302 44,292
Unabsorbed capital allowances 4,571 4,571
The unused tax losses and unabsorbed capital allowances of the Group are available indefinitely for offsetting against future
taxable profits of the respective entities within the Group, except for dormant subsidiaries which are subject to no substantial
change in shareholdings of those entities under the Income Tax Act, 1967 and guidelines issued by the tax authority.
Deferred tax assets have not been recognised in respect of unused tax losses and unabsorbed capital allowances as it is not
probable that future taxable profit will be available against which they can be utilised based on the current plan of the respective
companies.
32. COMMITMENTS
(a) Capital commitments
Capital expenditure as at the reporting date is as follows:
Group Company
2011 2010 2011 2010
RM’000 RM’000 RM’000 RM’000
Approved but not contracted for property, plant
and equipment 12,479 6,693 12,479 6,693
(b) Finance lease commitments
The Group has finance leases for certain motor vehicles. These lease do not have terms of renewal, but have purchase
options at nominal values at the end of the lease term.
NOTES TO THE FINANCIAL STATEMENTS31 January 2011cont’d
75 Years of Excellenceto
Embrace the Future
1936 ~ 2011
102 Annual Report 2011
32. COMMITMENTS cont’d
(b) Finance lease commitments cont’d
Future minimum lease payments under finance leases together with the present value of the net minimum lease payments
are as follows:
Group Company
2011 2010 2011 2010
RM’000 RM’000 RM’000 RM’000
Minimum lease payments:
Not later than 1 year 265 317 265 317
Later than 1 year and not later than 2 years 189 265 189 265
Later than 2 year and not later than 5 years 418 492 418 492
Later than 5 years - 115 - 115
Total minimum future lease payments 872 1,189 872 1,189
Less: Future finance charges (132) (178) (132) (178)
Present value of finance lease liabilities (Note 28) 740 1,011 740 1,011
Present value payments:
Not later than 1 year 226 271 226 271
Later than 1 year and not later than 2 years 162 228 162 228
Later than 2 year and not later than 5 years 352 412 352 412
Later than 5 years - 100 - 100
740 1,011 740 1,011
Less: Amount due within (226) (271) (226) (271)
Amount due after 12 months 514 740 514 740
NOTES TO THE FINANCIAL STATEMENTS31 January 2011cont’d
103George Kent (Malaysia) Berhad (1945-X)
33. SIGNIFICANT RELATED PARTY TRANSACTIONS
Group Company
2011 2010 2011 2010
RM’000 RM’000 RM’000 RM’000
Transactions with subsidiaries:
- Purchases - - 10,886 9,070
- Sales - - 8,161 7,286
- Management fee income - - 418 478
- Dividend income - - 1,500 3,004
Transactions with associates:
- Sales 21,493 18,928 21,493 18,928
- Debenture interest income 1,087 1,283 - -
- Dividend income - - - 104
Transactions with corporations in which the directors
have interest in:
- Purchase of air tickets 321 292 321 292
- Purchase of tiles 414 1 - -
- Share registration charges and secretarial fees 75 81 47 54
Information regarding outstanding balances arising from related party transactions as at reporting date is disclosed in Note 20
and 29.
Compensation of key management personnel
Key management personnel includes directors of the Group and of the Company and their remuneration during the year is
disclosed in Note 10. The remunerations of other members of key management personnel (excluding directors) during the year
are as follows:
Group Company
2011 2010 2011 2010
RM’000 RM’000 RM’000 RM’000
Salaries and other related costs 842 897 842 897
Benefits-in-kind 15 28 15 28
857 925 857 925
NOTES TO THE FINANCIAL STATEMENTS31 January 2011cont’d
75 Years of Excellenceto
Embrace the Future
1936 ~ 2011
104 Annual Report 2011
34. FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying amounts of all financial assets and liabilities are a reasonable approximation of their fair values, except for the
following:
Financial instruments whose carrying amounts approximate fair value
Management has determined that the carrying amounts of cash and short-term deposits, receivables and payables, based on
their notional amounts, reasonably approximate their fair values because these are mostly short-term in nature or that they are
floating rate instruments that are re-priced to market interest rates on or near the reporting date.
35. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
The Group and the Company are exposed to financial risks arising from their operations and the use of financial instruments.
The key financial risks include credit risk, liquidity risk, interest rate risk and market price risk.
The Board of Directors reviews and agrees policies and procedures for the management of these risks. The audit committee
provides independent oversight to the effectiveness of the risk management process.
It is, and has been throughout the current and previous financial year, and the Group’s policy that no derivatives shall be
undertaken except for the use as hedging instruments where appropriate and cost-efficient. The Group and the Company do
not apply hedge accounting.
The following sections provide details regarding the Group’s and Company’s exposure to the above-mentioned financial risks
and the objectives, policies and processes for the management of these risks.
(a) Credit risk
Credit risk is the risk of loss that may arise on outstanding financial instruments should a counterparty default on its
obligations. The Group’s and the Company’s exposure to credit risk arises primarily from trade and other receivables. For
other financial assets (including cash and bank balances), the Group and the Company minimise credit risk by dealing
exclusively with high credit rating counterparties.
The Group’s objectives are to seek continual revenue growth while minimising losses incurred due to increased credit risk
exposure. The Group trades only with recognised and creditworthy third parties. It is the Group’s policy that all customers
who wish to trade on credit terms are subject to credit verification procedures. In addition, receivable balances are
monitored on an ongoing basis with the result that the Group’s exposure to bad debts is not significant.
Exposure to credit risk
At the reporting date, the Group’s and the Company’s maximum exposure to credit risk is represented by the carrying
amount of each class of financial assets recognised in the statements of financial position.
Information regarding credit enhancements for trade and other receivables is disclosed in Note 20.
NOTES TO THE FINANCIAL STATEMENTS31 January 2011cont’d
105George Kent (Malaysia) Berhad (1945-X)
35. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES cont’d
(a) Credit risk cont’d
Credit risk concentration profile
The Group determines concentrations of credit risk by monitoring the geographical segment of its trade receivables on an
ongoing basis. The credit risk concentration profile of the Group’s and the Company’s trade receivables at the reporting
date are as follows:
Group
2011 2010
RM’000 % of total RM’000 % of total
By country:
Malaysia 24,037 68% 25,878 92%
United Kingdom 3,184 9% 208 1%
Hong Kong 2,531 7% 851 3%
Vietnam 2,147 6% 151 1%
Others 3,493 10% 1,021 4%
35,392 100% 28,109 100%
At the reporting date, approximately:
- 38% (2010: 33%) of the Group’s trade receivables were due from 10 major customers who are multi industry
conglomerates located in Malaysia.
Financial assets that are neither past due nor impaired
Information regarding trade and other receivables that are neither past due nor impaired is disclosed in Note 20. Deposits
with banks and other financial institutions, investment securities and derivatives that are neither past due nor impaired
are placed with or entered into with reputable financial institutions or companies with high credit ratings and no history of
default.
Financial assets that are either past due or impaired
Information regarding financial assets that are either past due or impaired is diclosed in Note 20.
(b) Liquidity risk
Liquidity risk is the risk that the Group or the Company will encounter difficulty in meeting financial obligations due to
shortage of funds. The Group’s and the Company’s exposure to liquidity risk arises primarily from mismatches of the
maturities of financial assets and liabilities. The Group’s and the Company’s objective is to maintain a balance between
continuity of funding and flexibility through the use of stand-by credit facilities.
The Group’s and the Company’s liquidity risk management policy is to maintain sufficient liquid financial assets and
stand-by credit facilities with different banks. At reporting date, approximately 59% (2010: 52%) of the Group and of the
Company’s loans and borrowings (Note 28) will mature in less than one year based on the carrying amount reflected in the
financial statements.
NOTES TO THE FINANCIAL STATEMENTS31 January 2011cont’d
75 Years of Excellenceto
Embrace the Future
1936 ~ 2011
106 Annual Report 2011
35. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES cont’d
(b) Liquidity risk cont’d
Analysis of financial instruments by remaining contractual maturities
The table below summarises the maturity profile of the Group’s and the Company’s liabilities at the reporting date based
on contractual undiscounted repayment obligations.
2011
On demand
or within
one year
One to
five years
Over five
years Total
RM’000 RM’000 RM’000 RM’000
Group
Financial liabilities:
Trade and other payables 32,183 - - 32,183
Loans and borrowings 16,674 11,702 - 28,376
Total undiscounted financial liabilities 48,857 11,702 - 60,559
Company
Financial liabilities:
Trade and other payables, 50,444 - - 50,444
Loans and borrowings financial liabilities 16,674 11,702 - 28,376
Total undiscounted financial liabilities 67,118 11,702 - 78,820
(c) Interest rate risk
Interest rate risk is the risk that the fair value or future cash flows of the Group’s and the Company’s financial instruments
will fluctuate because of changes in market interest rates.
The Group and the Company exposure to interest rate risk arise primarily from their loans and borrowings bearing interest
at floating rates and investment in fixed rate unquoted debenture in an associate.
The interest rate risk arising from floating rate loans and borrowing are mitigated by the Group and the Company’s cash
deposits, which are generating interest income at floating rate. The Group does not hedge its investment in fixed rate
unquoted debenture in an associate as these investments are to be held to maturity. All of the Group’s and the Company’s
financial assets and liabilities at floating rates are contractually re-priced quarterly or at maturity date (2010: quarterly or at
maturity date) whichever applicable.
The Group’s policy is to manage interest cost using a mix of fixed and floating rate debts. At the reporting date,
approximately 2.6% (2010: 3.4%) of the Group’s borrowings are at fixed rates of interest.
NOTES TO THE FINANCIAL STATEMENTS31 January 2011cont’d
107George Kent (Malaysia) Berhad (1945-X)
35. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES cont’d
(c) Interest rate risk cont’d
Sensitivity analysis for interest rate risk
At the reporting date, if interest rates had been 10 basis points lower/higher, with all other variables held constant, the
group’s profit net of tax would have been RM13,000 higher/lower, arising mainly as a result of lower/higher interest
expense on floating rate loans and borrowings.
(d) Foreign currency risk
Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of
changes in foreign exchange rates.
The Group has transactional currency exposures arising from sales or purchases that are denominated in a currency
other than the respective functional currencies of Group entities, primarily RM. The foreign currencies in which these
transactions are denominated are mainly United States Dollar, Sterling Pound, Australian Dollar, Japanese Yen, Papua
New Guinea Kina, Singapore Dollar, Euro Dollar and Swiss Franc.
Approximately 37% (2010: 37%) of the Group’s sales are denominated in foreign currencies whilst almost 56% (2010:
45%) of costs are denominated in the foreign currencies. The Group’s trade receivable and trade payable balances at the
reporting date have similar exposures.
The Group and Company also hold cash and cash equivalents denominated in foreign currencies for working capital
purposes. At the reporting date, such foreign currency balances (mainly in SGD) amount to RM41.8 million (2010: RM41.8
million) and RM8.3 million (2010: RM4.1 million) for the Group and the Company respectively.
The Group is also exposed to currency translation risk arising from its net investments in foreign operations, including
United Kingdom, Singapore and Papua New Guinea. The Group’s investment in its Papua New Guinea subsidiary is not
hedged as currency position in Kina is considered to be long-term in nature.
Sensitivity analysis for foreign currency risk
The following table demonstrates the sensitivity of the Group’s profit net of tax to a reasonably possible change in the
USD, EURO, Sterling Pound, Kina, Yen, Australian and Singapore Dollar against the respective functional currencies of the
Group entities, with all other variables held constant.
Group
2011
Company
2011
RM’000 RM’000
Profit net
of tax
Profit net
of tax
USD/RM - strengthened 3% (2010: 3%) (87) (87)
- weakened 3% (2010: 3%) 87 87
EUR/RM - strengthened 3% (2010: 3%) (327) (327)
- weakened 3% (2010: 3%) 327 327
GBP/RM - strengthened 3% (2010: 3%) (15) (15)
- weakened 3% (2010: 3%) 15 15
NOTES TO THE FINANCIAL STATEMENTS31 January 2011cont’d
75 Years of Excellenceto
Embrace the Future
1936 ~ 2011
108 Annual Report 2011
35. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES cont’d
(d) Foreign currency risk cont’d
Sensitivity analysis for foreign currency risk cont’d
Group
2011
Company
2011
RM’000 RM’000
Profit net
of tax
Profit net
of tax
AUD/RM - strengthened 3% (2010: 3%) 45 45
- weakened 3% (2010: 3%) (45) (45)
SGD/RM - strengthened 3% (2010: 3%) 3 3
- weakened 3% (2010: 3%) (3) (3)
JPY/RM - strengthened 3% (2010: 3%) 92 92
- weakened 3% (2010: 3%) (92) (92)
KINA/RM - strengthened 3% (2010: 3%) 176 176
- weakened 3% (2010: 3%) (176) (176)
(e) Market price risk
Market price risk is the risk that the fair value or future cash flows of the Group’s financial instruments will fluctuate because
of changes in market price (other than interest or exchange rates).
The Group is exposed to equity price risk arising from its investment in quoted equity instruments. The quoted equity
instruments in Malaysia are listed on the Bursa Malaysia, whereas the quoted equity instruments outside Malaysia are
substantially listed in Hong Kong and Singapore Stock Exchange. These instruments are classified as held for trading or
available-for-sale financial assets. The Group does not have exposure to commodity price risk.
The Group’s objective is to manage investment returns and equity price risk using a mix of investment grade share with
steady dividend yield and non-investment grade shares with higher volatility. Any deviation from this policy is required to
be approved by the board of directors.
Sensitivity analysis for equity price risk
At the reporting date, if the market price of the equity investment had been 5% higher/lower, with all other variables held
constant, the Group’s profit net of tax would have been RM 227,000 higher/lower, arising as a result of higher/lower fair
value gains on held for trading investments in equity instruments, and the Group’s other reserve in equity would have been
no higher/lower, arising as a result of an increase/decrease in the fair value of equity instruments classified as held for
trading.
NOTES TO THE FINANCIAL STATEMENTS31 January 2011cont’d
109George Kent (Malaysia) Berhad (1945-X)
36. CAPITAL MANAGEMENT
The primary objective of the Group’s capital management is to ensure healthy capital ratios in order to support its business and
maximise shareholder value.
The Group manages its capital structure and makes adjustments to it, in light of changes in economic conditions. To maintain or
adjust the capital structure, the Group may adjust the dividend payment to shareholders, return capital to shareholders or issue
new shares. No changes were made in the objectives, policies or processes during the years ended 31 January 2011 and 31
January 2010.
The Group’s policy is to maintain a sustainable gearing ratio to meet its existing requirements taking into consideration the
facilities agreements entered into by the Group. The Group includes within the net debt, loans and borrowings, hire purchase
liabilities, trade and other payables, less cash and bank balances. Capital refers to equity attributable to owners.
Group Company
Note 2011 2010 2011 2010
RM’000 RM’000 RM’000 RM’000
Loans and borrowings 28,244 29,338 28,244 29,338
Trade and other payables 32,183 25,253 50,444 32,019
Less: – Cash and bank balances (61,714) (63,341) (27,833) (9,576)
Sub-total (1,287) (8,750) 50,855 51,781
Net debt - - 50,855 51,781
Equity attributable to the owners of the parent,
representing total capital 163,510 148,116 102,741 88,140
Capital and net debt 163,510 148,116 153,596 139,921
Gearing ratio - - 33% 37%
NOTES TO THE FINANCIAL STATEMENTS31 January 2011cont’d
75 Years of Excellenceto
Embrace the Future
1936 ~ 2011
110 Annual Report 2011
37. SEGMENT INFORMATION
Investment
Water
infrastructure/
engineering
Adjustments
and
elimination Notes
Per
consolidated
financial
statements
RM’000 RM’000 RM’000 RM’000
2011
Revenue:
External customers 1,500 163,537 - 165,037
Results:
Interest income 2,434 213 - 2,647
Depreciation and amortisation - 1,664 - 1,664
Share of results of associates - 1,719 - 1,719
Other non-cash expenses/(income) (308) (218) - A (526)
Segment profit (1,243) 33,368 333 B 32,458
Assets:
Investment in associates - 18,069 - 18,069
Additions to non-current assets - 8,087 - C 8,087
Segment assets 15,410 188,829 26,195 D 230,434
Segment liabilities 655 35,354 30,915 E 66,924
Investment
Water
infrastructure/
engineering
Adjustments
and
elimination Notes
Per
consolidated
financial
statements
RM’000 RM’000 RM’000 RM’000
2010
Revenue:
External customers - 124,813 - 124,813
Results:
Interest income 2,992 1,016 - 4,008
Depreciation and amortisation - 1,284 - 1,284
Share of results of associates - 1,214 - 1,214
Other non-cash expenses - 57 - A 57
Segment profit 597 25,540 (42) B 26,095
NOTES TO THE FINANCIAL STATEMENTS31 January 2011cont’d
111George Kent (Malaysia) Berhad (1945-X)
37. SEGMENT INFORMATION cont’d
Investment
Water
infrastructure/
engineering
Adjustments
and
elimination Notes
Per
consolidated
financial
statements
RM’000 RM’000 RM’000 RM’000
Assets:
Investment in associates - 17,734 - 17,734
Additions to non-current assets - 1,843 - C 1,843
Segment assets 27,694 149,426 29,494 D 206,614
Segment liabilities 555 25,733 32,210 E 58,498
Notes Nature of adjustments and eliminations to arrive at amounts reported in the consolidated financial statements
A Other material non-cash expenses/(income) consist of the following items as presented in the respective notes to the
financial statements:
2011 2010
RM’000 RM’000
Net fair value gain on held for trading investment activities (308) -
Inventories written down - 190
Impairment of financial assets (218) (133)
(526) 57
B The following items are added to/(deducted from) segment profit to arrive at “Profit before tax from operations”
presented in the consolidated statement of comprehensive income:
2011 2010
RM’000 RM’000
Share of results of associates 1,719 1,214
Finance costs (1,386) (1,256)
333 (42)
C Additions to non-current assets consist of:
2011 2010
RM’000 RM’000
Property, plant and equipment 7,989 1,819
Intangible assets 98 24
8,087 1,843
NOTES TO THE FINANCIAL STATEMENTS31 January 2011cont’d
75 Years of Excellenceto
Embrace the Future
1936 ~ 2011
112 Annual Report 2011
37. SEGMENT INFORMATION cont’d
Notes Nature of adjustments and eliminations to arrive at amounts reported in the consolidated financial statements cont’d
D The following items are added to segment assets to arrive at total assets reported in the consolidated statement of
financial position:
2011 2010
RM’000 RM’000
Investment in associates 18,069 17,734
Investment in unquoted debentures of associate 6,404 9,894
Deferred tax assets 1,722 1,866
26,195 29,494
E The following items are added to segment liabilities to arrive at total liabilities reported in the consolidated statement
of financial position:
2011 2010
RM’000 RM’000
Deferred tax liabilities 1,845 1,057
Income tax payable 826 1,815
Loan and borrowings 28,244 29,338
30,915 32,210
Geographical segments Revenue and non-current assets information based on the geographical location of customers and assets respectively are as
follows:
Revenue Non-current assets
2011 2010 2011 2010
RM’000 RM’000 RM’000 RM’000
Malaysia 152,147 111,279 55,885 49,508
Overseas 12,890 13,534 675 711
165,037 124,813 56,560 50,219
Non-current assets information presented above consist of the following items as presented in the consolidated statement of
financial position.
2011 2010
RM’000 RM’000
Property, plant and equipment 56,064 49,758
Intangible assets 496 461
56,560 50,219
NOTES TO THE FINANCIAL STATEMENTS31 January 2011cont’d
113George Kent (Malaysia) Berhad (1945-X)
37. SEGMENT INFORMATION cont’d
Information about major customers
Revenue from ten major customers amount to RM119,779,000 (2010: RM84,262,000) arising from water infrastructure/
engineering segment.
38. AUTHORISATION OF FINANCIAL STATEMENTS FOR ISSUE
The financial statements for the year ended 31 January 2011 were authorised for issue in accordance with a resolution of the
directors on 27 May 2011.
39. SUBSIDIARIES AND ASSOCIATES
Details of the subsidiaries are as follows:
Name of subsidiaries
Country of
incorporation
Principal
activities
Proportion of
ownership interest
2011 2010
% %
Brass Alloys Sdn. Bhd. Malaysia Manufacturing
of brass rods
100 100
George Kent (Sabah) Sdn. Bhd. Malaysia Inactive 70 70
George Kent (PNG) Ltd. * Papua New
Guinea
Operation and
maintenance of
water treatment
plant
100 100
GK Equities Sdn. Bhd. Malaysia Investment
holding and
trading
100 100
Alfa Management Ltd.* Hong Kong Investment
holding and
trading
100 100
Asialink Pacific Ltd.* British Virgin
Islands
Investment
holding and
marketing
100 100
George Kent (China) Company Limited* Hong Kong Investment
holding
100 100
GK-Hardie Sdn. Bhd. Malaysia Inactive 100 100
Teknologi Air Patcandy Sdn. Bhd. Malaysia Inactive 100 100
NOTES TO THE FINANCIAL STATEMENTS31 January 2011cont’d
75 Years of Excellenceto
Embrace the Future
1936 ~ 2011
114 Annual Report 2011
39. SUBSIDIARIES AND ASSOCIATES cont’d
Name of associates
Country of
incorporation
Principal
activities
Proportion of
ownership interest
2011 2010
% %
PNG Water Limited* Papua New
Guinea
Water
concession
19 19
Meteraya Sdn. Bhd. Malaysia Marketing of
water meters
and brass
products
48 48
Pakar Sains Sdn. Bhd. Malaysia Inactive** 26 26
* subsidiaries and associate audited by firms of auditors other than Ernst & Young.
** voluntarily liquidation currently in progress.
The investment in PNG Water Limited is classified as an associate notwithstanding its 19% shareholding since a director of the
Company has been appointed to the Board of PNG Water Limited. A subsidiary of the Company is providing operation and
maintenance services to the associate and also the Group participates in the policy-making decisions and provides technical
assistance to PNG Water Limited.
The financial statements of the above associates are coterminous with those of the Group, except for PNG Water Limited which
has a financial year end of 31 March to conform with its holding company’s financial year end. For the purpose of applying the
equity method of accounting, the unaudited financial statements of PNG Water Limited for the period ended 31 December 2010
have been used and appropriate adjustments have been made for the effects of significant transactions between that date and
31 January 2011.
40. COMPARATIVES
The presentation and classification of items in the current financial statements have been consistent with previous financial
year except that certain comparative amounts have been adjusted as a result of changes in policies as disclosed in Note 2.2.
In addition, the following comparative amounts as at 31 January 2010 have been reclassified to conform with current year’s
presentation:
As previously
stated Adjustments As restated
RM’000 RM’000 RM’000
Consolidated statement of comprehensive income
Interest income 2,725 1,283 4,008
Administrative and other expenses (19,174) 19,174 -
Other operating expenses - (14,850) (14,850)
Administrative expenses - (5,607) (5,607)
NOTES TO THE FINANCIAL STATEMENTS31 January 2011cont’d
115George Kent (Malaysia) Berhad (1945-X)
41. SUPPLEMENTARY INFORMATION ON THE DISCLOSURE OF REALISED AND UNREALISED PROFIT AND LOSS
On 25 March 2010, Bursa Malaysia Securities Berhad (“Bursa Malaysia”) issued a directive to all listed issuers pursuant to
Paragraph 2.06 and 2.23 of Bursa Malaysia Main Market Listing Requirements. The directive requires all listed issuers to
disclose the breakdown of the unappropriated profits or accumulated losses as at the end of the reporting period, into realised
and unrealised profits or losses.
On 20 December 2010, Bursa Malaysia further issued another directive on the disclosure and prescribed format of
presentation.
Pursuant to the directive, the amounts of realised and unrealised profits or losses included in the retained profits/(accumulated
losses) of the Group and the Company as at 31 January 2011 are as follows:
Group Company
RM’000 RM’000
Total retained profits/(accumulated losses) of the Company and its subsidiaries
- realised (94,115) (21,924)
- unrealised 2,545 (1,498)
(91,570) (23,422)
Total share of profits from associate
- realised 15,762 -
- unrealised (263) -
(76,071) (23,422)
Less: Consolidation adjustments 116,117 -
Retained profits/(accumulated losses) as per financial statements 40,046 (23,422)
The determination of realised and unrealised profits is based on the Guidance of Special Matter No.1, Determination of Realised
and Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirement,
issued by Malaysian Institute of Accountants on 20 December 2010.
The disclosure of realised and unrealised profit above is solely for complying with the disclosure requirements stipulated in the
directive of Bursa Malaysia and should not be applied for any other purpose.
NOTES TO THE FINANCIAL STATEMENTS31 January 2011cont’d
75 Years of Excellenceto
Embrace the Future
1936 ~ 2011
116 Annual Report 2011
SHARE CAPITAL AS AT 18 MAY 2011
Authorised Share Capital : RM200,000,000.00
Issued and Fully Paid up Capital : RM112,651,313.00
Total No. of Shares Issued : 225,302,626
Class of Securities : Ordinary Shares of 50 sen each
Voting Rights : One (1) vote per Ordinary Share
DISTRIBUTION OF SHAREHOLDINGS AS AT 18 MAY 2011
No. of Holders % Size of Holdings No. of Shares %
211 5.34% Less than 100 shares 7,430 0.00%
1,102 27.88% 100 to 1,000 shares 940,482 0.42%
2,049 51.83% 1,001 to 10,000 shares 8,722,487 3.87%
516 13.05% 10,001 to 100,000 shares 15,452,404 6.86%
71 1.80% 100,001 to less than 5% of issued shares 123,051,892 54.62%
4 0.10% 5% and above of issued shares 77,127,931 34.23%
3,953 100.00% Total 225,302,626 100.00%
LIST OF THIRTY LARGEST REGISTERED SHAREHOLDERS AS AT 18 MAY 2011
(as shown in the Record of Depositors)
No. Name of Shareholders No. of Shares Held %
1 Star Wealth Investment Limited 31,600,000 14.03
2 HSBC Nominees (Asing) Sdn Bhd
- Exempt AN for RBS Coutts Bank Ltd (HK Branch)
16,205,831 7.19
3 Cesuco Trading Limited 16,000,000 7.10
4 HSBC Nominees (Asing) Sdn Bhd
- For Tan Swee Bee
13,322,100 5.91
5 Hectomic Limited 11,200,000 4.97
6 Kin Fai International Limited 10,675,000 4.74
7 Norris Pie Limited 9,623,257 4.27
8 OSK Nominees (Tempatan) Sdn Bhd
- Pledged securities account for Johan Equities Sdn Bhd
8,061,400 3.58
9 HSBC Nominess (Asing) Sdn Bhd
- Exempt AN for Credit Suisse (SG BR-TST-Asing)
7,707,200 3.42
10 HSBC Nominees (Asing) Sdn Bhd
- For Suncrown Holdings Limited
7,309,000 3.24
11 Asian Rim Limited 7,057,148 3.13
12 Kwok Heng Holdings Limited 7,000,000 3.11
13 HDM Nominees (Asing) Sdn Bhd
- Pledged securities account for Promoto Company Limited
6,269,000 2.78
SHAREHOLDERS’ INFORMATION
117George Kent (Malaysia) Berhad (1945-X)
No. Name of Shareholders No. of Shares Held %
14 EB Nominees (Tempatan) Sdn Bhd
- Pledged securities account for Tan Kay Hock
5,898,000 2.62
15 Deutsche Bank (Malaysia) Berhad 5,554,817 2.47
16 Cherubim Investment (HK) Limited 5,000,000 2.22
17 HLG Nominee (Tempatan) Sdn Bhd
- Pledged securities account for Tan Kay Hock
3,180,000 1.41
18 HLG Nominee (Asing) Sdn Bhd
- Pledged securities account for Tan Swee Bee
3,167,000 1.41
19 PM Nominees (Tempatan) Sdn Bhd
- PCB Asset Management Sdn Bhd for MUI Continental Insurance Berhad
3,000,000 1.33
20 HDM Nominees (Asing) Sdn Bhd
- Pledged securities account for Aimup Consultants Ltd
2,578,051 1.14
21 EB Nominees (Tempatan) Sdn Bhd
- Pledged securities account for Tan Kay Hock
1,675,000 0.74
22 Mayban Securities Nominees (Asing) Sdn Bhd
- Pledged securities account for Jaginder Singh Pasricha
1,400,000 0.62
23 Leong Tok Wan @ Lim Cho Wan 1,386,000 0.62
24 Johan Equities Sdn Bhd 1,374,200 0.61
25 Kenanga Nominees (Tempatan) Sdn Bhd
- Pledged securities account for Tiong Young Kong
857,000 0.38
26 Mayban Nominees (Tempatan) Sdn Bhd
- Libra Invest Berhad for Kumpulan Wang Persaraan (Diperbadankan)
763,900 0.34
27 Citigroup Nominees (Tempatan) Sdn Bhd
- Pledged securities account for Tan Swee Bee
655,000 0.29
28 Ling Hee Leong 541,600 0.24
29 RHB Capital Nominees (Tempatan) Sdn Bhd
- Pledged securities account for Lim Chee Seong
400,000 0.18
30 Malaysian Assurance Alliance Berhad
- As Beneficial Owner (Dana Mas Maju)
367,800 0.16
189,828,304 84.25
SHAREHOLDERS’ INFORMATIONcont’d
75 Years of Excellenceto
Embrace the Future
1936 ~ 2011
118 Annual Report 2011
SUBSTANTIAL SHAREHOLDERS (EXCLUDING BARE TRUSTEES) AS AT 18 MAY 2011
(as per Register of Substantial Shareholders)
No. of Shares Ordinary Shares of RM0.50 each
Name of Substantial Shareholder
Direct
Interest %
Deemed
Interest %
Star Wealth Investment Limited 31,600,000 14.03 - -
Cesuco Trading Limited 16,000,000 7.10 - -
Puan Sri Datin Tan Swee Bee 17,444,100 7.74 77,653,643(1) 34.47
Tan Sri Dato’ Tan Kay Hock 10,753,000 4.77 84,344,743(1) 37.44
Tan Sri Dato’ Khoo Kay Peng - - 24,058,400(2) 10.68
Malayan United Industries Berhad - - 19,058,400(3) 8.46
MUI Properties Berhad - - 16,058,400(4) 7.13
Notes:-(1) Deemed interested by virtue of their equity interest in Kwok Heng Holdings Ltd, Kin Fai International Limited and various companies, and call
options granted over all existing GKENT shares held by Star Wealth Investment Limited as well as deemed interest in shares held in each other’s
name.(2) Deemed interested through Cherubim Investment (HK) Ltd and Malayan United Industries Berhad by virtue of Section 6A(4) of the Companies
Act, 1965.(3) Deemed interested by virtue of Section 6A(4)(c) of the Companies Act, 1965 which its shareholding exceeding 15% of the issued and paid-up
capital in MUI Properties Berhad and MUI Continental Insurance Berhad.(4) Deemed interested through Bahtera Muhibbah Sdn Bhd and Cesuco Trading Limited being its wholly-owned subsidiaries which hold 58,400
and 16,000,000 shares respectively.
SHAREHOLDERS’ INFORMATIONcont’d
119George Kent (Malaysia) Berhad (1945-X)
DIRECTORS’ INTEREST IN SHARES AS AT 18 MAY 2011
(as shown in the Register of Directors’ Holdings)
In George Kent (Malaysia) Berhad No. of Ordinary Shares of RM0.50 each
Name of Director
Direct
Interest %
Deemed
Interest %
Tan Sri Dato’ Tan Kay Hock 10,753,000 4.77 84,344,743 * 37.44
Puan Sri Datin Tan Swee Bee 17,444,100 7.74 77,653,643* 34.47
Ir. Dr. Cheong Thiam Fook - - - -
Dato’ Ir. Haji Zaidan Bin Haji Othman - - - -
Ong Seng Pheow 30,000 0.01 - -
Dato’ Paduka Dr. Ir. Hj. Keizrul Bin Abdullah 5,000 0.00 - -
* Deemed interested by virtue of their 100% equity interest in Kwok Heng Holdings Limited, Kin Fai International Limited, various companies, and
by virtue of Section 6A(4) of the Companies Act 1965 in Johan Equities Sdn Bhd, and also shares held in each other’s name including call option
granted over all existing GKENT shares held by Star Wealth Investment Limited.
STATEMENT ON DIRECTORS’ INTERESTS
In The Company And Related Corporation As At 18 May 2011
75 Years of Excellenceto
Embrace the Future
1936 ~ 2011
120 Annual Report 2011
Location Description
Area
(Sq. metre) Tenure
Net
Book Value
RM’000
Age of
Building
(Years)
Year of
Revaluation
Year of
Acquisition
Lot 1115, 15th Mile
Jalan Dengkil
47100 Puchong
Selangor Darul Ehsan
Factory,
stores and
offices
67,870 Freehold 43,896 14 20/12/1996 1996
Section 515, Lot 6
Waigani Drive Hohola NCD,
Papua New Guinea
Double-
storey
residential
unit
230 Leasehold
99 year
Expiring on
28.05.2095
170 13 - 1997
LIST OF PROPERTIES HELDas at 31 January 2011
121George Kent (Malaysia) Berhad (1945-X)
NOTICE OF ANNUAL GENERAL MEETING
NOTICE IS HEREBY GIVEN that the Sixtieth Annual General Meeting of the Company will be held at the Registered Office of the Company, George Kent Technology Centre, Lot 1115, Batu 15, Jalan Dengkil, 47100 Puchong, Selangor Darul Ehsan on Thursday, 7th July 2011 at 11:00 a.m. for the following purposes:-
ORDINARY BUSINESS 1. To receive the Audited Financial Statements for the year ended 31 January 2011 and the Directors’ and
Auditors’ Reports thereon.
2. To approve the payment of a final dividend of RM0.03 per 50 sen ordinary share less tax at 25% for the financial year ended 31 January 2011.
3. To re-elect Tan Sri Dato’ Tan Kay Hock who retires by rotation in accordance with Article 83 of the Articles of Association and being eligible, has offered himself for re-election.
4. To re-elect Ir. Dr. Cheong Thiam Fook who retires by rotation in accordance with Article 83 of the Articles of Association and being eligible, has offered himself for re-election.
5 To approve the payment of Directors’ fees of RM356,000 in respect of the year ended 31 January 2011
(2010 : RM293,000).
6. To re-appoint Auditors and to authorise the Directors to fix their remuneration.
SPECIAL BUSINESS 7. To consider and if thought fit, pass with or without modifications the following as Ordinary Resolution:-
Authority To Allot And Issue Shares In General Pursuant To Section 132D Of The Companies Act, 1965
“THAT pursuant to Section 132D of the Companies Act, 1965 and subject to the approvals of the relevant governmental/regulatory authorities, the Directors be and are hereby empowered to issue shares in the capital of the Company from time to time and upon the terms and conditions and for such purposes as the Directors, may in their absolute discretion deem fit including provided that the aggregate number of shares issued pursuant to this resolution does not exceed 10% of the issued share capital of the Company for the time being AND THAT the Directors be and are also empowered to obtain the approval from Bursa Malaysia Securities Berhad for the listing and quotation for the additional shares so issued AND THAT such authority shall continue to be in force until the conclusion of the next Annual General Meeting of the Company.”
8. To transact any other business of which due notice shall have been given.
NOTICE OF DIVIDEND ENTITLEMENT AND PAYMENT
NOTICE IS HEREBY GIVEN THAT subject to the approval by the shareholders at the Sixtieth Annual General Meeting, the final dividend of RM0.03 per 50 sen ordinary share less tax at 25% for year ended 31 January 2011, will be payable on 11 August 2011 to shareholders whose names appear in the Register of Members and Record of Depositors on 22 July 2011.
A Depositor shall qualify for entitlement to the dividend only in respect of:-
(a) Shares transferred into the Depositor’s securities account before 4:00 p.m. on 22 July 2011 in respect of ordinary transfers; and
(b) Shares bought on Bursa Malaysia Securities Berhad on a cum entitlement basis according to the Rules of Bursa Malaysia
Securities Berhad.
(Please refer to Note A)
(Resolution 1)
(Resolution 2)
(Resolution 3)
(Resolution 4)
(Resolution 5)
(Resolution 6)
75 Years of Excellenceto
Embrace the Future
1936 ~ 2011
122 Annual Report 2011
By order of the Board,
Teh Yong Fah
Company Secretary (MACS00400)
KUALA LUMPUR
Dated: 15 June 2011
Notes:-
A. This Agenda item is meant for discussion only. The provisions of Section 169 of the Companies Act, 1965 and the Articles of Association of the
Company require that the Audited Financial Statements and the Reports of the Directors and Auditors thereon be laid before the Company at
its Annual General Meeting. As such this Agenda item is not a business which requires a resolution to be put to the vote by shareholders.
1. A member of the Company entitled to attend and vote is entitled to appoint not more than two proxies to attend and vote instead of him. A
proxy need not be a member of the Company. Where a member appoints two proxies, he shall specify the proportion of his shareholdings to
be represented by each proxy.
2. To be valid, the proxy form shall be deposited at the Registered Office of the Company, George Kent Technology Centre, Lot 1115, Batu 15,
Jalan Dengkil, 47100 Puchong, Selangor Darul Ehsan not less than forty-eight (48) hours before the time appointed for holding the meeting.
Explanatory Notes on Special Business
1. Authority To Allot And Issue Shares In General Pursuant to Section 132 of the Companies Act, 1965
The proposed Ordinary Resolution if passed will empower the Directors to issue shares of the Company up to 10% of the issued capital of the
Company for the time being for such purposes as the Directors consider would be in the interest of the Company. This is also to avoid any
delays and costs in convening a general meeting to specifically approve such an issue of shares. This authority unless revoked or varied by the
Company in general meeting will expire at the next Annual General Meeting (AGM) of the Company.
The Company has not issued any new shares under this general authority which was approved at the last AGM held on 29 June 2010 and which
will lapse at the conclusion of this AGM. A renewal of this general authority is being sought at this AGM under the proposed Resolution 6. The
renewed mandate is to provide flexibility to the Company for any possible future fund raising activities including but not limited to placement of
shares for purposes of funding future investments, working capital and/or acquisitions.
NOTICE OF ANNUAL GENERAL MEETINGcont’d
123George Kent (Malaysia) Berhad (1945-X)
DIRECTORS STANDING FOR RE-ELECTION
Pursuant to Paragraph 8.27(2) of the Bursa Malaysia Securities Berhad Listing Requirements, Directors who are standing for re-
election at the Sixtieth Annual General Meeting of the Company are as follows:-
Tan Sri Dato’ Tan Kay Hock - Article 83 of the Articles of Association
Ir. Dr. Cheong Thiam Fook - Article 83 of the Articles of Association
Dato’ Ir. Haji Zaidan bin Haji Othman, age 78, pursuant to Section 129 of the Companies Act, 1965, is required to vacate his position
as Director at the Annual General Meeting (AGM) of the Company to be held on 7 July 2011. He has intimated that he does not wish
to seek re-appointment as Director. He will therefore retire from office as Director with effect from the conclusion of this AGM.
The profile and further details of Tan Sri Dato’ Tan Kay Hock and Ir. Dr. Cheong Thiam Fook, the two Directors retiring by rotation
above, are set out on pages 20 and 22 in the Annual Report respectively. Details of any interest in securities of the Company and
their attendance of Board Meetings held during the financial year ended 31 January 2011 can be found on pages 119 and 25 in the
Annual Report respectively.
FOR SHAREHOLDERS’ INFORMATION
The Sixtieth Annual General Meeting of the Company will be held at the Registered Office of the Company, George Kent Technology
Centre, Lot 1115, Batu 15, Jalan Dengkil, 47100 Puchong, Selangor Darul Ehsan on Thursday, 7 July 2011 at 11:00 a.m.
Details of the Sixtieth Annual General Meeting are set out in the Notice of Annual General Meeting which accompanies the Annual
Report 2011 together with a Form of Proxy. They are also available on Bursa Malaysia’s website, www.bursamalaysia.com
The Company has requested Bursa Malaysia Depository in accordance with Article 57(1) of the Company’s Articles of Association and
Section 34(1) of the Securities Industry (Central Depositories) Act 1991 to issue a Record of Depository (ROD) as at 10 June 2011 for
the purpose of determining the members to whom the Notice of Sixtieth Annual General Meeting shall be given by the Company. Only
a depositor whose name appears on the ROD as at 10 June 2011 shall be given the notice of the said meeting.
The General Meeting ROD as at 4 July 2011 will determine a member who shall be entitled to attend the Sixtieth Annual General
Meeting or to appoint proxy(s) to attend and/or vote on his/her behalf.
Final dividend of RM0.03 per 50 ordinary share less tax of 25% in respect of financial year ended 31 January 2011 if approved by
the shareholders under Resolution 1 at the Sixtieth Annual General Meeting of the Company will be paid on 11 August 2011 to
shareholders as per ROD on 22 July 2011.
STATEMENT ACCOMPANYING
THE NOTICE OF ANNUAL GENERAL MEETING
123 Annual Report 2011
75 Years of Excellenceto
Embrace the Future
1936 ~ 2011
This page has been intentionally left blank.
I/We (Company/Passport/NRIC No. )
of
being a member/members of GEORGE KENT (MALAYSIA) BERHAD hereby appoint:-
Name Address NRIC/Passport No.
Proportion of
Shareholding (%)
and/or (delete as appropriate)
Name Address NRIC/Passport No.
Proportion of
Shareholding (%)
as my/our proxy/proxies to vote for me/us on my/our behalf at the Sixtieth Annual General Meeting of the Company, to be held at the
Registered Office of the Company, George Kent Technology Centre, Lot 1115, Batu 15, Jalan Dengkil, 47100 Puchong, Selangor
Darul Ehsan on Thursday, 7th July 2011 at 11:00 a.m. and at any adjournment thereof.
I/We direct my/our proxy/proxies to vote for or against the Resolutions to be proposed at the meeting as hereunder indicated.
RESOLUTIONS For Against
1. To approve the payment of a final dividend
2. Re-election of Tan Sri Dato’ Tan Kay Hock as a Director
3. Re-election of Ir. Dr. Cheong Thiam Fook as a Director
4. To approve payment of Directors’ fees
5. Re-appointment of Auditors and to authorise the Directors to fix their remuneration
6. Authority to Directors to allot shares
(Please indicate with a cross (“X”) in the appropriate box against each Resolution how you wish your proxy/proxies to vote. If this proxy form is returned
without any indication as to how the proxy/proxies shall vote, the proxy/proxies will vote or abstain as he/their think fit.)
Dated this day of , 2011.
Signature/Common Seal*Strike out whichever is not desired.
FORM OF PROXY (Before completing the form, please refer to notes on the next page)
No. of Shares Held
CDS Account No.
Notes:-
1. Vote may be given personally or by proxy/proxies (not more than two proxies) or in the case of a corporation by a representative duly authorised.
Where a member appoints two proxies, he shall specify the proportion of his shareholdings to be represented by each proxy. The instrument
appointing proxy/proxies shall be in writing under the hand of the appointor or his attorney or if such an appointor is a corporation under its Common
Seal or the hands of its attorney. Proxy/proxies need not be a member of the Company.
2. The instrument appointing proxy/proxies and the power of attorney (if any) under which it is signed or an office copy or notarially certified copy
thereof shall be deposited at the registered office not less than forty-eight (48) hours before the time for holding the meeting or adjourned meeting
(as the case may be) at which the person named in such instrument propose to vote but no instrument (other than power of attorney under seal)
appointing proxy/proxies shall be valid after the expiration of twelve months from the date of its execution
AFFIX
POSTAGE
STAMP
1st Fold Here
Then Fold Here
The Company Secretary
GEORGE KENT (MALAYSIA) BERHAD
George Kent Technology Centre
Lot 1115, Batu 15, Jalan Dengkil
47100 Puchong
Selangor Darul Ehsan
MALAYSIA