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KPS Consortium Bhd (143816-V) • Annual Report 2009 �
Table of Contents
Notice of Annual General Meeting
Corporate Information
Profile of the Board of Directors
Corporate Governance Statement
Other Information Required Pursuant to Part A,Appendix 9C of the BMSB Listing Requirements
Audit Committee
Statement on Internal Control
Chairman/Group Managing Director’s Statement
Financial Statements
Directors’Report
StatementbyDirectors
StatutoryDeclaration
IndependentAuditors’Report
BalanceSheets
IncomeStatements
StatementsofChangesinEquity
CashFlowStatements
NotestotheFinancialStatements
List of Properties
Shareholdings Structure
eDividend
Proxy Form
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Enclosed•
KPS Consortium Bhd (143816-V) • Annual Report 20092 KPS Consortium Bhd (143816-V) • Annual Report 2009
Notice of Annual General Meeting
KPS CONSORTIUM BERHAD (CompanyNo.143816-V)IncorporatedinMalaysia
NOTICEISHEREBYGIVENTHATtheTwentyFourthAnnualGeneralMeetingoftheCompanywillbeheldatKlangExecutiveClub,PersiaranBukitRaja2,BandarBaruKlang,41150Klang,SelangorDarulEhsanonSaturday,26June2010at11.00amforthefollowingpurposes:-
AGENDA
AS ORDINARY BUSINESS
1. To receive the Audited Financial Statements for the financial year ended 31December2009togetherwiththeReportsoftheDirectorsandAuditorsthereon. (PleaserefertoNote1).
2. To re-elect the following Director retiring in accordance with Article 80 of the Company’sArticlesofAssociation:-
Mr.LauFookMeng
3. ToapprovethepaymentofDirectors’feeforthefinancialyearended31December2009.4. To re-appoint Messrs SJ Grant Thornton as Auditors of the Company and to hold officeuntiltheconclusionofthenextAnnualGeneralMeetingandtoauthorisethe DirectorstofixtheAuditors’remuneration.AS SPECIAL BUSINESS
Toconsiderand,ifthoughtfit,topassthefollowingresolution:-
5. ORDINARY RESOLUTION - AUTHORITY TO ISSUE SHARES PURSUANT TO SECTION �32D OF THE COMPANIES ACT, �965
“THATpursuanttoSection132DoftheCompaniesAct,1965,andsubjecttothe approval from other relevant governmental/regulatory authorities, the Directors beandareherebyempoweredtoissuesharesintheCompanyfromtimetotime anduponsuchtermsandconditionsandforsuchpurposesastheDirectorsmay deem fit provided that the aggregate number of shares issued pursuant to this resolutiondoesnotexceed10%oftheissuedcapitaloftheCompanyatthedateof thisAnnualGeneralMeetingandthatsuchauthorityshallcontinueinforceuntil theconclusionofthenextannualgeneralmeetingoftheCompany.”6. TotransactanyotherbusinesswhichmayproperlybetransactedatanAnnualGeneral Meetingforwhichduenoticeshallhavebeengiven.
Resolution �
Resolution 2
Resolution 3
Resolution 4
KPS Consortium Bhd (143816-V) • Annual Report 2009 KPS Consortium Bhd (143816-V) • Annual Report 2009 3
Notice of Annual General Meeting (cont’d.)
ByorderoftheBoard
LIM SECK WAH (MAICSA 0799845)M. CHANDRASEGARAN A/L S.MURUGASU (MAICSA 078�03�) CompanySecretaries
SelangorDarulEhsan
Datedthis4thdayofJune2010
NOTES:-
1. TheAgendaNo.1ismeantfordiscussiononlyastheCompany’sArticlesofAssociationprovidesthattheaudited financialstatementsaretobelaidinthegeneralmeetingonlywhichdoesnotrequireaformalapprovalof shareholders.Hence,isnotputforwardforvoting.
2. Amembershallbeentitledtoappointmorethanone(1)proxytoattendandvoteinhisplace.Aproxyneedsnotbe amemberoftheCompanyandtheprovisionofSection149(1)(b)oftheCompaniesAct,1965shallnotapplytothe Company.
3. Whereamemberappointsmorethanone(1)proxy,theappointmentsshallbeinvalidunlesshespecifiesthe proportionsofhisholdingstoberepresentedbyeachproxy.
4. Where a member of the Company is an authorised nominee as defined under the Securities Industry (Central Depositories)Act1991,itmayappointatleastone(1)proxyinrespectofeachsecuritiesaccountitholdswithordinary sharesofthecompanystandingtothecreditofthesaidsecuritiesaccount.
5. Iftheappointerisacorporation,theproxyformmustbeexecutedunderitsCommonSealorunderthehandofits attorney.
6. Theinstrumentappointingaproxyandthepowerofattorney, ifany,underwhichit issignedoracertifiedcopy thereofmustbedepositedattheCompany’sRegisteredOffice,Lot765,JalanHajiSiratOffJalanMeru,42100Klang, SelangorDarulEhsannotlessthan48hoursbeforethetimesetforholdingtheMeetingoranyadjournmentthereof.
7. ExplanatorynotesontheSpecialBusiness
7.1 TheproposedResolution4isprimarilytogiveflexibilitytotheBoardofDirectorstoissueandallotsharesatany timeintheirabsolutediscretionandforsuchpurposesastheyconsiderwouldbeintheinterestoftheCompany withoutconveningageneralmeeting.Thisauthority,unlessrevokedorvariedatageneralmeeting,willexpire attheconclusionofthenextannualgeneralmeetingoftheCompany.
TheCompanycontinuestoconsideropportunitiestobroadenitsearningspotential.Ifanyoftheexpansion/ diversificationproposalsinvolvestheissueofnewshares,theDirectors,undercertaincircumstancewhenthe opportunityarises,wouldhavetoconveneageneralmeetingtoapprovetheissueofnewshareseventhough thenumberinvolvedmaybelessthan10%oftheissuedcapital.
Inordertoavoidanydelayandcostsinvolvedinconveningageneralmeetingtoapprovesuchissueofshares, itisthusconsideredappropriatethattheDirectorsbeempoweredtoissuesharesintheCompany,uptoany amountnotexceeding intotal10%of the issuedsharecapitalof theCompanyfor thetimebeing, forsuch purposes. The renewed authority for allotment of shares will provide flexibility to the Company for the allotment of shares for the purpose of funding future investment, working capital and/or acquisitions.
No shares have been issued and allotted by the Company since obtaining the said authority from its shareholdersatthelastAnnualGeneralMeetingheldon27June2009.
KPS Consortium Bhd (143816-V) • Annual Report 20094 KPS Consortium Bhd (143816-V) • Annual Report 2009
Corporate Information
BOARD OF DIRECTORSDirectors
COMPANY SECRETARIES
STOCK EXCHANGE LISTING
AUDIT COMMITTEEChairman
Member
NOMINATION COMMITTEEChairman
Member
REMUNERATION COMMITTEEChairman
Member
KohPohSengChairman/Group Managing Director
LauFookMengExecutiveDirector
FaunCheeYarnIndependentandNon-ExecutiveDirector
TanKongAngIndependentandNon-ExecutiveDirector
LimChoonLiatIndependentandNon-ExecutiveDirector
LimSeckWah(MAICSA0799845)M.Chandrasegarana/lS.Murugasu(MAICSA0781031)
BursaMalaysiaSecuritiesBerhad,MainMarketStockcode:9121
FaunCheeYarn
TanKongAngLimChoonLiat
FaunCheeYarn
TanKongAngLimChoonLiat
FaunCheeYarn
KohPohSengTanKongAngLimChoonLiat
KPS Consortium Bhd (143816-V) • Annual Report 2009 KPS Consortium Bhd (143816-V) • Annual Report 2009 5
Corporate Information (cont’d.)
REGISTERED OFFICE ANDPRINCIPAL PLACE OF BUSINESS
REGISTRAR
AUDITORS
PRINCIPAL BANKERS
SOLICITORS
WEBSITE
E-MAIL ADDRESS
Lot765,JalanHajiSiratOffJalanMeru,42100Klang,SelangorTel:(603)32915566Fax:(603)32914489
MegaCorporateServicesSdnBhdLevel15-2,FaberImperialCourtJalanSultanIsmail50250KualaLumpurTel:(603)26924271Fax:(603)27325388
SJGrantThornton(MemberofGrantThorntonInternationalLtd)Level11,FaberImperialCourtJalanSultanIsmail50250KualaLumpurTel:(603)26924022Fax:(603)27325119AmBank(Malaysia)BerhadMalayanBankingBerhadHSBCBankMalaysiaBerhad
MessrsSooThienMing&NashrahRhiza&Richard,Advocates&AssociatesHSLee&Co.
http://www.kpscb.com.my
enquiry@kpscb.com.my
KPS Consortium Bhd (143816-V) • Annual Report 20096 KPS Consortium Bhd (143816-V) • Annual Report 2009
Profile of The Board of Directors
TheBoardofDirectorsofKPSConsortiumBerhad(“KPSCB”or“theCompany”)comprisingtheChairman/GroupManagingDirector,one(1)ExecutiveDirectorandthree(3)IndependentNon-ExecutiveDirectors.
TheBoardmeetsquarterlyandadditionalBoardMeetingsareheldasandwhenrequired.TheBoardmetfour(4)timesduringthefinancialyearended31December2009.
ParticularsoftheDirectorsareasfollows:
KOH POH SENG,Malaysian,age54,isthefounderandManagingDirectorofKPSPlywoodSdnBhd(“KPSP”)andwas appointed as the Chairman and Group Managing Director of KPS Consortium Berhad (“KPSCB”) on18September2002.Hehasmorethantwentyyearsofexperienceintradingofplywoodandwoodrelatedproducts. In1990,KPSPwassetupbyMrKoh toundertake thebusinessof trading inplywood. KPSPventuredintothetradingofcementandsteelbarssince1998.
Presently,MrKohisalsoadirectorofvariousotherprivatecompanies,wherebytheirprincipalactivitiesarethatofconstructionandtimber.
HeisamemberoftheRemunerationCommittee.
LAU FOOK MENG,Malaysian,age58,wasappointedExecutiveDirectorofKPSCBon19September2002.Heisa chartered accountant who has obtained his Fellowship from the Institute of Chartered Accountant ofEngland&Wales.Upongraduation,hejoinedAsiaticDevelopmentBhdin1981asanAccountantuntil1983.In1984,hejoinedUnicoHoldingsBhdastheGroupAccountantandleftin1992.From1993to2002,hewastheGeneralManagerofNichmurniSdnBhd.Currently,heisaDirectorofOCIBerhad.
FAUN CHEE YARN, Malaysian, age 50, was appointed as an Independent and Non-Executive Director ofKPSCBon1November2008.HeisaFellowMemberoftheMalaysianInstituteofAccountantsandcertifiedmemberoftheFinancialPlanningAssociationofMalaysia.
HehasmanyyearsofexperiencesinprivatesectorasanAuditor,Accountant,FinanceManagerandGeneralManagerinvarioussectorsincludingsoftware,insuranceagency,recyclingandvehiclefleetmanagement.HewastheFinanceManagerofarenownedrecyclingcompanyinMalaysiabeforere-designatedasFinancialControllersince2009.
HeisaChairmanoftheAuditCommittee,NominationCommitteeandRemunerationCommittee.
KPS Consortium Bhd (143816-V) • Annual Report 2009 KPS Consortium Bhd (143816-V) • Annual Report 2009 7
Profile of The Board of Directors (cont’d.)
TAN KONG ANG,Malaysian,age50,wasappointedasanIndependentandNon-ExecutiveDirectorofKPSCBon26May2009.HeisaMemberofCharteredInstituteofMarketingUKformorethan20years.
He is a professional manager with more than 26 years of working experiences in sale, marketing,purchasing, operation, administration and management. He possesses extensive working experiences inthetextile industry,electricalandelectronic,agencieshouse,wholesaler,retailer,distributor,oilandgas,hardware, building material, chemical, steel industry, financial products, life and general insuranceorganizations.
HeisamemberoftheAuditCommittee,NominationCommitteeandRemunerationCommittee.
LIM CHOON LIAT,Malaysian,age49,wasappointedasanIndependentandNon-ExecutiveDirectorofKPSCBon26May2009.HeobtainedBachelorofScience(Forestry)fromFacultyofForestry,UniversityPertanianMalaysia,Serdang,SelangorDarulEhsan.
Between1986 and1991, heworked as aTechnicalTrainingOfficer atMalaysianTimber IndustryBoard(MTIB), Ministry of Primary Industries. He organized technical training courses at national level for theMalaysianfurnitureindustries/timberindustrialist,intheareaoffurnitureproductiontechnology,furniturefinishing,furnituredesign,furnituremarketingandtechnicalaspectsoftimberi.e.preservationoftimber,kilndryingoftimber,identificationoftimberandgradingoftimber.
Between 1991 and 1995, he was appointed as the Executive Director in Furnicom Machinery Sdn Bhd,CamycomSdnBhdandCamycomEngineeringSdnBhd.From 1995 to present, he is the Managing Director for Bonaprimo Resources Sdn Bhd, a WoodworkingMachinery business as well as consultancy services for the furniture industries. He is also an AssociateSeniorConsultantofSageForestry&TimberConsultantsSdnBhd.HeisinvolvedinprovidingconsultancyservicesforPengurusanDanaharta,inassessingtheassetsoffailedfurniturecompanieswithnonperformingloansandintheStudyforMIDA–AstudyoftheImpactofAFTAandAIAontheWood/Cane/Bamboo-basedIndustryinMalaysia.HeisamemberoftheAuditCommittee,NominationCommitteeandRemunerationCommittee.
Note:
All the above-named Directors of the Company have no family relationship with the other directors orsubstantial shareholders of the Company; and have not been convicted of any criminal offences(otherthanordinarytrafficoffences,ifany)anddonothaveanyconflictofinterestoftheCompany.
KPS Consortium Bhd (143816-V) • Annual Report 20098 KPS Consortium Bhd (143816-V) • Annual Report 2009
Corporate Governance Statement
TheBoardofDirectorsfullyacknowledgestheimportanceofgoodcorporategovernanceandistakingstepstoevaluatethestatusofthecorporategovernancepracticesadoptedbytheGroupastabulatedbelowanditscompliancewiththecodeofbestpracticesassetoutinPart1andPart2oftheMalaysianCodeonCorporateGovernancepursuanttoParagraph15.25oftheListingRequirementsoftheBursaMalaysiaSecuritiesBerhad(“BMSB”)throughoutthefinancialyearfrom1January2009to31December2009.TheBoardwillcontinuallyevaluatethestatusoftheGroup’scorporategovernancepracticesandprocedurestoensureconformanceandenhanceperformanceinpursuitofitscommitmenttothehigheststandardsofcorporategovernance.
�.0 Board of Directors
�.� Board Composition and Balance
TheBoardcurrentlyhasfive(5)members,comprisingtheChairman/GroupManagingDirector, one(1)ExecutiveDirectorandthree(3)IndependentNon-ExecutiveDirectors.TheCompanyisin compliancewithParagraph15.02oftheBMSBListingRequirementswherebyone-thirdofitsBoard membersareindependentdirectors.TheprofileofeachDirectorispresentedseparatelyinthe AnnualReport. AllBoardmembersparticipatefullyindecisionsmakingonthekeyissuesinvolvingtheGroup. TheChairman/GroupManagingDirectorhasprimaryresponsibilitiesformanagingtheGroup’s day-to-dayoperationsand togetherwith theExecutiveDirector andNon-ExecutiveDirectors to ensurethatthestrategiesproposedbythemanagementarefullydiscussedandexamined,and take into account the long term interests of the various stakeholders including shareholders, employees, clients, suppliers and the various communities in which the Group conducts its business.
TheBoardisassuredofabalancedandindependentviewatallBoarddeliberationslargelydueto thepresenceof itsNon-ExecutiveDirectorswhoare independent fromManagementandmajor shareholdersoftheCompany.TheIndependentDirectorsarealsofreefromanybusinessorother relationships that could materially interfere with the exercise of their independent judgment. TogetherwiththeChairman/GroupManagingDirectorandExecutiveDirectorwhohaveintimate knowledgeoftheCompany’sandGroup’sbusiness,theBoardisconstitutedofindividualswhoare committedtobusinessintegrityandprofessionalisminallitsactivities.
Aspartofitscommitment,theBoardsupportsthehigheststandardsofcorporategovernanceand thedevelopmentofthebestpracticesfortheGroup.
In addition to the role of guidance by the Non-Executive Directors, each Director brings independent judgment to bear on issues of strategy, performance, resources and standard of conduct.
�.2 Duties and Responsibilities of the Board
The Board retains full and effective control of the Company and the Group. This includes responsibilityfordeterminingtheGroup’soverallstrategicdirectionaswellasdevelopmentand controloftheGroup. TheGroupManagingDirectoralsoundertakestheroleoftheChairman. Despitethattherolesarecombined,thereisastrongindependentelementontheBoardasthere are adequatenumberof independentdirectorswhoareparticularly important as theyprovide unbiasedandindependentviews,adviceandjudgment.
KPS Consortium Bhd (143816-V) • Annual Report 2009 KPS Consortium Bhd (143816-V) • Annual Report 2009 9
Corporate Governance Statement (cont’d.)
�.3 Board Meetings and Supply of Information
Four (4)BoardMeetingswereheldduring the financial yearended31December2009and the detailsofattendanceofeachdirectoraresetoutbelow:
Name ofDirectors
MrKohPohSeng MrLauFookMeng MrFaunCheeYarn MrTanKongAng(appointedon26/5/09) MrLimChoonLiat(appointedon26/5/09) MrLeeWhayHoong(resignedon26/5/09)
Total Number ofMeetings Attended
4/44/44/43/33/31/1
TheBoardMeetingswereheldatNo.3, JalanBK1/10,BandarKinrara IndustrialCentre,47100 Puchong,Selangor.
Thedateandtimeofthemeetingsheldwereasfollows:
Date
27February2009 28May2009 28August2009 21November2009
Time
11.30am12.30pm10.30am11.30am
AllDirectorshavecompliedwiththeminimumattendanceatBoardmeetingsasstipulatedinthe ListingRequirementsoftheBMSBduringthefinancialperiod.
The agendaandBoardpapers for each itemaswell asminutesofpreviousmeetings areduly servedtoallBoardmembersfewdaysbeforetheBoardmeetingstogiveDirectorstimetoreview andstudyandthus,todeliberateontheissuestoberaisedattheBoardmeetings.
InarrivingatanydecisiononrecommendationsbytheManagement,thoroughdeliberationand discussionby theBoard isapre-requisite. Allproceedingsof theBoardMeetingsareminuted andsignedbytheChairmanofthemeetinginaccordancewiththeprovisionofSection156ofthe CompaniesAct,1965.
TheBoardiskeptupdatedontheCompanyandGroup’sactivitiesanditsoperationsonaregular basis. The directors also have access to reports on the Group’s activities, both financial and operational.
AlldirectorshaveaccesstotheadviceandservicesoftheCompanySecretarywhoisresponsible forensuringthatboardproceduresarefollowedandtheBoardmayalsotakeindependenceadvice, attheCompany’sexpense,inthefurtheranceoftheirdutiesifsorequired.TheBoardalsohas unlimitedaccesstoallinformationwithregardtotheactivitiesoftheCompany.
KPS Consortium Bhd (143816-V) • Annual Report 2009�0 KPS Consortium Bhd (143816-V) • Annual Report 2009
Corporate Governance Statement (cont’d.)
�.4 Directors’ Training TheBoardasawholeensuresthatitappointsonlyindividualsofsufficientcaliber,knowledgeand experiencetofulfillthedutiesofaDirectorappropriately.TheBoardofDirectorsisawareofthe importanceofcontinuouslypursuing for the relevantseminars/ trainingprogrammes toequip themselvestodischargetheirdutiesdiligently.
ThenewappointedDirectors,Mr.TanKongAngandMr.LimChoonLiathaverespectivelyattended theMandatoryAccreditationProgramme(MAP)on23June2009and24June2009.
TheBoardmembershaveattendedthecontinuouseducationprogrammefor thefinancialyear 2009.TrainingprogrammesandseminarsattendedbytheDirectorsduringthefinancialyearare asfollows:
MrKohPohSeng
• ImplementingBusinessPlanStrategies MrLauFookMeng
• FRSUpdates2009 • TechnicalBriefing–MainMarketListingRequirements • MindMappingforQuickAction–MIA • Budget2010TaxProposals
MrFaunCheeYarn
• FRSUpdates2009 • TechnicalBriefing-MainMarketListingRequirements • Budget2010TaxProposals • MakingSenseoftheAuditorsReportandItsImpact
MrTanKongAng • ImplementingBusinessPlanStrategies
MrLimChoonLiat • RiskManagementBestPractises
�.5 Appointments to the Board The appointment of any additional Director is made as and when it is deemed necessary by the existing Board with due consideration given to the mix of expertise and experience requiredforaneffectiveBoard.
TheNominationCommittee isempoweredby theBoardand its termsof reference toconsider and evaluate the appointment of new Directors and Directors to Board Committees of the Company. The Nomination Committee will recommend the candidates to the Board for the appointment. The Nomination Committee also keeps under review the Board structure, size and composition and the mix of skills and core competencies required for the Board to discharge its duties effectively. In addition, the Nomination Committee will deliberate on Board succession plan as and when appropriate. The Nomination Committee will also assess the effectiveness of the Board as a whole, the Committees of the Board and the contribution ofeachindividualDirectoronatleastanannualbasis.
KPS Consortium Bhd (143816-V) • Annual Report 2009 KPS Consortium Bhd (143816-V) • Annual Report 2009 ��
Corporate Governance Statement (cont’d.)
TheNominationCommitteecomprisesthefollowing:-
a. MrFaunCheeYarn(Chairman) b. MrTanKongAng c. MrLimChoonLiat
�.6 Retirement and Re-election InaccordancewiththeArticlesofAssociationoftheCompany,atleastone-thirdoftheDirectors shallretirebyrotationateachAnnualGeneralMeetingandcanofferthemselvesforre-election attheAnnualGeneralMeeting(“AGM”).DirectorswhoareappointedbytheBoardtofillcasual vacancies or as additional directors during the financial year are subject to re-election by shareholdersatthenextAGMfollowingtheirappointment.AllDirectorsshallretirefromoffice atleastonceineverythreeyears,butshallbeeligibleforre-election.
�.7 Relationship of the Board to Management • Quality of Information Information plays a key role in the Board’s decision-making and in setting up the policies and strategies of the Company. The Board has unrestricted access to timely and accurate information,whichisnotonlyconfinedtoqualitativeandquantitativeinformation,butalso to other information deemed suitable such as customer satisfaction, products and services quality,marketshareandmarketreactionandmacroeconomicperformance.
• Access to information Prior to the board meetings, all Directors receive an agenda and Board Papers containing informationrelevanttothebusinessofthemeetingincludinginformationonmajorfinancial, operational and corporate matters relating to the activities and performance of the Group. This is issued in sufficient time to enable Directors to obtain further explanation, where necessary,inordertobeproperlyinformedbeforethemeeting.
All Board members have unlimited access to the financial information. They get the advice from theCompanySecretary,Auditors, legal advisoror anyother resources,be it from the organizationorexternally.
• Use of Board Committees As appropriate, the Board has delegated certain responsibilities to Board Committees that operatewithinclearlydefinedtermsofreference.TheCommitteesareasfollows: a. AuditCommittee b. RemunerationCommittee c. NominationCommittee
AlltheaboveCommitteeshavewrittentermsofreferenceandoperatingprocedures.Eachof thecommitteeshastheauthoritytoexamineparticularissuesandreporttotheBoardwiththeir recommendations.TheultimatedecisiononallmatterslieswiththeBoard.
�.8 The relationship between the Board and the shareholders Theprincipalforumfordialoguewithshareholders is theAGM,duringwhichshareholdersare encouraged toparticipateandposequestions to theBoard regardingoperationaland financial information.TheAGMalsoallowsshareholdersanopportunitytointeractdirectlywiththeBoard andseekfirst-handinformationontheabovematters.ExtraordinaryGeneralMeetingsareheld as and when shareholders’ approvals are required on specific matters and shareholders are notifiedofsuchmeetingsrequirements.
KPS Consortium Bhd (143816-V) • Annual Report 2009�2 KPS Consortium Bhd (143816-V) • Annual Report 2009
Corporate Governance Statement (cont’d.)
2.0 Directors’ Remuneration
2.� The Level and Make-Up of Remuneration TheremunerationoftheDirectorsoftheCompanyandforthefinancialyearended31December 2009issetoutbelow:
(i) AggregateremunerationofDirectorswithcategorisationintoappropriatecomponents:
(ii) NumberofDirectorswhoseremunerationfallsintothefollowingbands:
Total(RM)
ExecutiveDirector
(RM)
FeesSalary & other emoluments
Total
60,000108,000
168,000
Non-ExecutiveDirectors
(RM)
60,000-
60,000
60,000108,000
168,000
TotalExecutive
DirectorRange ofRemuneration
Below RM50,000RM50,001 to RM100,000RM100,001 to RM150,000
51-
Non-ExecutiveDirectors
4--
11-
There is no contract of service between any Directors and the Company or its subsidiary Companies.
2.2 Procedure In compliance with the Listing Requirements of the BMSB, the Board has established a Remuneration Committee comprising Independent Non-Executive Directors and the Chairman/ GroupManagingDirector.TheCommittee’sprimaryresponsibilityistorecommendtotheBoard, the remuneration of Directors. In the case of Executive Directors, the component parts of remunerationarestructuredtolinkrewardstocorporateandindividualperformance.Inthecase of Non-Executive Directors, the level of remuneration reflects the experience and level of responsibilitiesundertakenbytheparticularnon-executiveconcerned.
However,thefinaldecisiononremunerationforDirectorsisamatterfortheBoardasawholeand individual directors are required to abstain from discussion of their own remuneration. The membersoftheRemunerationCommitteeareasfollows: a. MrFaunCheeYarn(Chairman) b. MrKohPohSeng c. MrTanKongAng d. MrLimChoonLiat
KPS Consortium Bhd (143816-V) • Annual Report 2009 KPS Consortium Bhd (143816-V) • Annual Report 2009 �3
Corporate Governance Statement (cont’d.)
3.0 Shareholders
3.� Dialogue between the Company and Investors TheGroupvaluesdialoguewithinvestorsasameanofeffectivecommunicationthatenablesthe BoardtoconveyinformationabouttheGroup’sperformance,corporatestrategyandothermatters affectingshareholders’interests.
The AGM is the principal forum for dialogue with individual shareholders. It is a crucial mechanism in shareholder communication for the Company. At the Company’s AGM, shareholdershavedirectaccesstotheBoardandaregiventheopportunitytoaskquestionsduring the open questions and answers session prior to moving for approval of the Company’s AuditedFinancialStatementsandDirectors’Report for the financialyearandotherbusinesses (ifapplicable).Theshareholdersareencouragedtoaskquestionsbothabouttheresolutionsbeing proposedorabouttheGroup’soperationsingeneral.
TheChairman/GroupManagingDirectoralsoaddresses theshareholderson thereviewof the Group’soperations for the financial yearandoutlines theprospectsof theGroup for thenew financialyear.
TheBoardisalsocommittedtoensurethatshareholdersarewellinformedofmajordevelopments oftheCompanyandtheGroupandtheinformationisalsocommunicatedtothemthroughthe followingchannels:-
a. theAnnualReport;
b. variousdisclosuresandannouncementsmade to theBMSB including thequarterly results andannualresults;and
c. theCompany’swebsitewww.kpscb.com.my throughwhich shareholdersand thepublic in general can gain access to the latest corporate and product information of the Group.
3.2 Annual General Meeting (“AGM”) NoticeofAGMandannualreportsaresentouttoshareholdersatleast21daysbeforethedateof themeeting.
AttheAGM,theBoardalsoprovidesopportunitiesforshareholderstoraisequestionspertaining tothebusinessactivitiesoftheGroup.Directorsandseniormanagementstaffareavailableto provideresponsestoshareholders’questionsduringthesemeetings.
Forthere-electionofDirectors,theBoardwillensurethatfullinformationisdisclosedthrough the notice of meeting regarding Directors who are retiring and who are willing to serve if re-elected.
Each item of special business included in the notice of meeting will be accompanied by an explanatorystatementfortheproposedresolutiontofacilitatefullunderstandingandevaluation ofissuesinvolved.
KPS Consortium Bhd (143816-V) • Annual Report 2009�4 KPS Consortium Bhd (143816-V) • Annual Report 2009
Corporate Governance Statement (cont’d.)
4.0 Accountability And Audit
4.� Financial Reporting The Board is aware of its responsibilities to shareholders and the requirement to present a balanced and comprehensive assessment of the Group’s financial position, by means of the annual and quarterly reports and other published information. In this regard, the Board is primarilyresponsibleforthepreparationofafinancialstatementtopresentafairandbalanced reportofthefinancialstateofaffairsoftheGroup.
Before releasing to the Bursa Malaysia Securities Berhad, the quarterly financial results are reviewedby theAuditCommitteeandapprovedby theBoardofDirectors. Thedetailsof the CompanyandtheGroup’sfinancialpositionsareincludedintheFinancialStatementssectionof theAnnualReport.
4.2 Internal Control TheDirectorsacknowledgetheirresponsibilitiesfortheinternalcontrolsystemintheCompany and the Group, covering not only financial controls but also controls relating to operational, complianceandriskmanagement. Thesystemof internal controls involveseachkeybusiness unit and its management, including the Board, and is designed to meet the business units’ particularneeds,andtomanagetheriskstowhichtheyareexposed.Thesystem,byitsnature, canonlyprovidereasonableandnotabsoluteassuranceagainstmaterialmisstatement, lossor fraud.Theconceptofreasonableassurancerecognisesthecostingaspect,wherebythecostof controlproceduresisnottoexceedtheexpectedbenefits.
TheBoardrecognisesthatriskscannotbefullyeliminated.Assuch,thesystems,processesand proceduresbeingputinplaceareaimedatminimizingandmanagingthem.Ongoingreviewsare continuously being carried out to ensure that the effectiveness, adequacy and integrity of the systemofinternalcontrolsinsafeguardingtheCompany’sassets.
4.3 Audit Committee The Audit Committee meets periodically with senior financial management staff and the external auditors to review theCompany’sand theGroup’s financial reporting, thenatureand scopeofauditreviews,andtheeffectivenessofthesystemsofinternalcontrolandcompliance.
The terms of reference of the Audit Committee have recently been revised to conform to the ListingRequirementsoftheBMSB.ThetermsofreferenceandactivitiesoftheAuditCommittee duringthefinancialyearended31December2009areprovidedseparatelyinthisAnnualReport.
4.4 Relationship with Auditors TheCompany’sexternalauditors,SJGrantThorntonreporttomembersoftheCompanyontheir findings which are included as part of the Company’s financial reports with respect to each year’sauditonthestatutoryfinancialstatements. Indoingso,theCompanyhasestablisheda transparentarrangementwiththeauditorstomeettheirprofessionalrequirements.Fromtime to time, theauditorshighlight to theAuditCommitteeandBoardofDirectorsonmatters that requiretheBoard’sattention.
KPS Consortium Bhd (143816-V) • Annual Report 2009 KPS Consortium Bhd (143816-V) • Annual Report 2009 �5
Corporate Governance Statement (cont’d.)
5.0 Statement On The Extent Of Compliance With The Best Practices In Corporate Governance Set Out In Part 2 Of The Malaysian Code On Corporate Governance
Save as disclosed below, the Group has substantially complied with the Best Practices of the Code throughoutthefinancialyear: a) The Board does not have a formal schedule of matters specifically reserved to it for decision. However,ithasbeenthepracticefortheBoardtodeliberateonmattersthatinvolveoverallGroup strategyanddirection,acquisitionanddivestmentpolicy, approvalofmajorcapital expenditure, consideration of significant financial matters and the review of the financial and operating performanceoftheGroup.
TheBoardhasnotdevelopedpositiondescriptions for theBoardand theGroupChiefExecutive Officer.Thisismainlyduetothecurrentset-upoftheBoardandthevariousBoardCommitteesthat areinplacewhichissufficetofacilitatethesmoothfunctioningoftheGroup.
b) TheBoard,throughvariousmanagementcommittees,hasbeenabletoidentifybusinessrisksand ensuretheimplementationofappropriatemeasurestomanagetheserisks.Nevertheless,theBoard isof theview thatamorestructuredriskmanagementprocesswouldneed tobeestablished to betteridentify,monitorandmanagethebusinessrisksaffectingtheGroup.
6.0 Directors’ Responsibility Statement On Annual Audited Accounts
TheBoardofDirectorsisrequiredunderParagraph15.26(a)oftheListingRequirementsoftheBMSB to issue a statement explaining their responsibility in the preparation of the annual financial statements.
The Directors are required by the Companies Act, 1965 to prepare financial statements for each financialyearwhichgiveatrueandfairviewofthestateofaffairsoftheCompanyandoftheGroup asattheendofthefinancialyearandoftheprofitandlossoftheCompanyandoftheGroupforthe financialyear.
Inpreparingthosefinancialstatements,theDirectorsarerequiredto:-
a) useappropriateaccountingpoliciesandconsistentlyapplythem; b) makejudgementsandestimatesthatarereasonableandprudent;and c) state whether applicable accounting standards have been followed, subject to any material departuresbeingdisclosedandexplainedinthefinancialstatements.
TheDirectorsareresponsibleforkeepingproperaccountingrecords,whichdisclose,withreasonable accuracyatanytime,thefinancialpositionoftheCompanyandoftheGroupandtoenablethemto ensurethattheaccountscomplywiththeCompaniesAct,1965.TheDirectorshadalsoensuredthat properinternalcontrolshadbeenimplemented.
TheDirectorsare satisfied that inpreparing the financial statementsof theGroup for the financial yearended31December2009, theGrouphasusedtheappropriateaccountingpoliciesandapplied them consistently and prudently. The Directors are of the opinion that all relevant approved accountingstandardshavebeenfollowedandconfirmthatthefinancialstatementshavebeenprepared onagoingconcernbasis.
KPS Consortium Bhd (143816-V) • Annual Report 2009�6 KPS Consortium Bhd (143816-V) • Annual Report 2009
Other Information Required Pursuant to Part A,Appendix 9C of the BMSB Listing Requirements
InconformancewiththeBursaMalaysiaSecuritiesBerhadListingRequirements,thefollowinginformationisprovided:
• Utilisation of Proceeds Noproceedswereraisedfromanycorporateproposalduringthefinancialyear.
• Share buybacks Duringthefinancialyear,therewerenosharebuybacksbytheCompany.
• Option, Warrants and Convertible Securities TheCompanyhasnotissuedanyoptions,warrantsorconvertiblesecuritiesduringthefinancialyear.
• American Depository Receipt (“ADR”) / Global Depository Receipt (“GDR”) Duringthefinancialyear,theCompanydidnotsponsoranyADRorGDRprogramme.
• Sanctions and/or Penalties Therewerenosanctionsand/orpenaltiesimposedontheCompanyanditssubsidiaries,Directorsor managementstaffbytherelevantregulatorybodiesduringthefinancialyear.
• Non-Audit Fee Therewasnonon-auditfeepayabletotheexternalauditorsbytheCompanyanditssubsidiariesforthe financialyearended31December2009.
• Variance from Profit Forecast or Unaudited Results Previously Made There were no variances exceeding 10% from the unaudited results previously released by the Company.
• Profit Guarantee Duringthefinancialyear,therewerenoprofitguaranteesgivenbytheCompany.
• Material Contracts Therewerenomaterialcontracts(notbeingcontractsenteredintointheordinarycourseofbusiness) subsistingas ator entered into since the endof theprevious financial year,by theCompanyor its subsidiaries,whichinvolvedtheinterestsoftheDirectorsandmajorshareholders.• Revaluation of landed properties TheGroupdoesnothavearevaluationpolicyforitslandedproperties.
• Recurrent related party transactions of a revenue nature Therewerenorecurrentrelatedpartytransactionsofarevenuenatureduringtheyear.
• Corporate Social Responsibility The Group looks after the welfare of the employees such as providing lodging and food for the employees. The Group heeds the save the environment by involving in recycling of papers for the productionofjumbotoiletrollsandserviette.Thefactoriespreserveenvironmentandnaturebymake gooduseofwastewood,oilpalmwaste(bio-slab)andsawdust.
TheGroupemphasizesonEnvironment,HealthandSafetyandprovidessafetymeasurementstothe factorymembers.
KPS Consortium Bhd (143816-V) • Annual Report 2009 KPS Consortium Bhd (143816-V) • Annual Report 2009 �7
Audit Committee
�. Members
ThecurrentmembersoftheCommitteeandtheirrespectivedesignationsareasfollows:
• MrFaunCheeYarn Chairman/IndependentandNon-ExecutiveDirector
• MrTanKongAng Member/IndependentandNon-ExecutiveDirector
• MrLimChoonLiat Member/IndependentandNon-ExecutiveDirector
The Audit Committee consists of three (3) members all of whom are Independent Non-Executive directors.TheCompanyhascompliedwithParagraph15.09(1)(b)ofBursaMalaysiaSecuritiesBerhad’s ListingRequirements,whichrequirestheAuditCommitteemembersmustbenon-executivedirectors, withamajorityofthembeingindependentdirectors.
2. Terms of Reference
ThetermsofreferenceoftheAuditCommitteehadbeenrevisedtoconformtotheListingRequirements oftheBMSB.
Composition
TheAuditCommitteeshallbeappointedfromamongtheirmembersandshouldconsistofnofewer than three (3) members and must be all Non-Executive Directors of whom the majority must be IndependentDirectors.
Atleastone(1)memberoftheCommittee:-
i) mustbeamemberoftheMalaysianInstituteofAccountants(“MIA”);or
ii) ifheisnotamemberoftheMIA,hemusthaveatleast3years’workingexperienceand:-
• hemusthavepassedtheexaminationsspecifiedinPart1ofthe1stScheduleoftheAccountants Act1968;or
• hemustbe amemberofoneof the associationsof accountants specified inPart II of the1st ScheduleoftheAccountantsAct1967
• fulfilssuchotherrequirementsasprescribedorapprovedbytheExchange.
NoalternatedirectorshallbeappointedasamemberoftheCommittee.
The Chairman of the Committee shall be an Independent Non-Executive Director appointed by the Board.
IntheeventofanyvacancyintheAuditCommitteeresultinginthenumberofmembersbeingreduced tobelowthree,theCompanymustfillthevacancywithinthree(3)months. The terms of office and performance of the Audit Committee and each of its members shall be reviewedbytheBoardatleastonceeverythree(3)years.
KPS Consortium Bhd (143816-V) • Annual Report 2009�8 KPS Consortium Bhd (143816-V) • Annual Report 2009
Audit Committee (cont’d.)
3. Audit Committee Meetings Attendance
TheAuditCommitteehadconductedfour(4)meetingsforthefinancialyearended31December2009. Details of attendance of the Audit Committee members during this financial period are set out as below:
Name ofCommittee Member
MrLauFookMeng(Resignedon26/2/2009) MrLeeWhayHoong(Resignedon26/5/2009) MrFaunCheeYarn MrTanKongAng(Appointedon26/5/2009) MrLimChoonLiat(Appointedon26/5/2009)
No. of meetings attended/held during member’s tenure
1/11/14/43/33/3
4. Activities Of The Audit Committee
The principal activities undertaken by the Audit Committee during the financial period were summarizedasfollows:
(a) Reviewedthequarterlyfinancialresultsandannouncementsforthefinancialquarterspriortothe BoardofDirectorsforconsiderationandapproval;
(b) Reviewedtheauditedfinancialstatementsforthefinancialyearended31December2009;
(c) Reviewedtheexternalauditors’reportsforthefinancialyearended31December2009inrelation toauditandaccountingissuesarisingfromtheaudit;
(d) Reviewedtheexternalauditors’auditplanfortheyearended31December2009;
(e) Considered the nomination of external auditors for recommendation to the Board for reappointment;
(f) Reviewed the internal audit plan, findings, reports and management implementation of audit recommendations;
(g) Reviewed thedisclosure statementsonCorporateGovernance,AuditCommitteeReport and the StatementonInternalControlandrecommendedtotheBoardforadoption;
(h) Deliberated the disclosure requirements for corporate social responsibility and identified the managementactionplan.
5. Internal Audit Function
TheinternalauditfunctionisessentialinassistingtheAuditCommitteeinreviewingthestateofthe systemofinternalcontrolmaintainedbythemanagement.
TheCompanyoutsourceditsinternalauditfunctiontoaninternalauditconsultingcompany.Theaudit teammembersare independentof theactivitiesauditedby them. The internalauditors reviewand assesstheGroup’ssystemofinternalcontrolandreporttotheCommitteefunctionally.
TheCommitteeapprovestheannualinternalauditplanbeforethecommencementoftheinternalaudit reviewsforeachfinancialyear.Duringthefinancialyear,theinternalauditorsconductedreviewson theoperationsoftheGroupandpresentedtheirreportstotheAuditCommittee.Areasofimprovement identifiedwerecommunicatedtothemanagementforfurtheraction.
KPS Consortium Bhd (143816-V) • Annual Report 2009 KPS Consortium Bhd (143816-V) • Annual Report 2009 �9
Audit Committee (cont’d.)
6. Authority
TheCommitteeisauthorisedbytheBoard:-
(i) Toinvestigateanymatterwithinitstermsofreference;
(ii) Tohavetheresourceswhicharerequiredtoperformitsduties;
(iii) TohavefullandunrestrictedaccesstoanyinformationpertainingtotheCompany;
(iv) Tohavedirectcommunicationchannelswiththeexternalauditorsandperson(s)carryingoutthe internalauditfunctionoractivity(ifany);
(v) Toobtainindependentprofessionalorotheradvice;and
(vi) To convene meetings with the external auditors, the internal auditors or both excluding the attendanceofotherdirectorsandemployees,wheneverdeemednecessary.
7. Functions
ThefunctionsoftheCommitteeareasfollows:-
(a) TheCommitteeshallreview,appraiseandreporttotheBoardon:
• thediscussionwiththeexternalauditors,priortothecommencementofaudit,theauditplan which states the nature and scope of the audit and to ensure co-ordination of audit where morethanoneauditfirmisinvolved;
• the review with the external auditors, his evaluation of the system of internal controls, his managementletterandmanagement’sresponse;
• thediscussionofproblemsandreservationsarisingfromtheexternalaudits,theauditreport andanymatterstheexternalauditorsmaywishtodiscuss;
• the assistance given by the employees of the Group to the external and internal auditors;
• any related party transaction and conflict of interest situation that may arise within the Group or Company, including any transaction, procedure or course of conduct that raises questionsofmanagementintegrity.
(b) ToreviewwhereappropriatewhetherthereisareasontobelievethattheGroup’sexternalauditors isnotsuitableforre-appointment;
(c) Toconsideranyquestionofresignationordismissaloftheexternalauditors;
(d) ToreviewquarterlyreportingandyearendfinancialstatementsoftheGroupbeforesubmission totheBoard,focusingparticularlyon:-
• changesinorimplementationofmajoraccountingpolicy;
• significantadjustmentsarisingfromtheaudit;
• thegoingconcernassumption;and
• compliancewithaccountingstandardsandotherlegalrequirements.
KPS Consortium Bhd (143816-V) • Annual Report 200920 KPS Consortium Bhd (143816-V) • Annual Report 2009
Audit Committee (cont’d.)
7. Functions (cont’d.)
(e) Toreviewthefollowinginrespectofinternalauditfunction:-
• Adequacyofthescope,functions,competencyandresourcesoftheInternalAuditDepartment andthatithasthenecessaryauthoritytocarryoutitswork;
• Internalauditprogrammes;
• Themajorfindingsofinternalauditinvestigationsandmanagement’sresponses,andensure thatappropriateactionsaretakenontherecommendationsoftheInternalAuditDepartment;
• Appraisal or assessments of the performance of the senior staff of the Internal Audit Department;
• Approval of any appointment or termination of senior staff member of the Internal Audit Department;
• Resignationsofseniorinternalauditstaffmembersandprovidingtheresigningstaffmember anopportunitytosubmithis/herreasonforresignation;
(f) Toconsiderthemajorfindingsofinternalauditinvestigationsandmanagement’sresponse;
(g) Torecommendthenominationandappointmentofexternalauditorsaswellastheauditfee;
(h) TopromptlyreportanymattersresultinginbreachoftheBursaSecuritiesListingRequirements totheBoard.WheretheCommitteeisoftheopinionthatsuchmatterreportedbyittotheBoard hasnotbeensatisfactorilyresolved, theCommitteeshallpromptlyreportsuchmatter toBursa Securities;and
(i) Anyother function thatmaybemutuallyagreeduponby theCommitteeand theBoard,which wouldbebeneficialtotheCompanyandensuretheeffectivedischargeoftheCommittee’sduties andresponsibilities.
AttendanceAtMeetings
TheCommitteeshallmeetatleastfour(4)timesayearandsuchadditionalmeetingsastheChairman shalldecide inordertofulfill itsduties. Inaddition,theChairmanmaycallameetingoftheAudit Committee if a request is made by any committee member, any Executive Director, or the external auditors.
Inordertoformaquorum,themajorityofmemberspresentmustbeindependentdirectors.
FrequencyOfMeetings
Meetingsshallbeheldnotlessthanfour(4)timesayeartoreviewthequarterlyresultsandyear-end financialstatements.Othermeetingsmaybeheldasandwhenrequired.
KPS Consortium Bhd (143816-V) • Annual Report 2009 KPS Consortium Bhd (143816-V) • Annual Report 2009 2�
Statement on Internal Control
It is a requirement of the Malaysian Code of Corporate Governance that the Board of Directors shouldmaintain a sound system of internal controls to safeguard shareholders’ investments and the Group’sassets.
Pursuanttoparagraph15.26(b)oftheMainMarketListingRequirementsandStatementonInternalControl:Guidance for Directors of Public-Listed Companies, the Board of Directors are pleased to present theStatementonInternalControloftheGroupcomprisingKPSConsortiumBerhadanditssubsidiariesforthefinancialyearended31December2009.
BOARD RESPONSIBILITYTheBoardofDirectorsBoardaffirmsitsresponsibilityinmaintainingasoundsystemofinternalcontrolandriskmanagementprocedureswithintheGroupandforreviewingitsadequacyandintegrity.However,theBoardrecognisesthatreviewingoftheGroup’ssystemofinternalcontrolsisaconcertedandcontinuingprocess,designedtomanageratherthaneliminatetheriskoffailuretoachievebusinessobjectives.Hence,allinternalcontrolscanonlyprovidereasonableandnotabsoluteassuranceagainstmaterialmisstatementorloss.Instrivingforcontinuousimprovement,theBoardwillputinplaceappropriateactionplans,whennecessary,tofurtherenhancetheGroup’ssystemsofinternalcontrol.
INTERNAL CONTROLTheinternalcontrolssystemisestablishedafterconsideringtheoverallcontrolenvironmentoftheGroup.Thesystemisdesignedtoachieveproperbalancebetweenrisksundertakenandthepotentialreturnstoshareholders.ThekeyelementsoftheGroup’ssystemofinternalcontrolsareasdescribedbelow:
• KeyresponsibilitiesandlinesofaccountabilitywithintheGrouparedefined,withclearreportinglines uptotheSeniorManagementoftheGroupandtotheBoardofDirectors.TheGroup’sdelegationof authority sets out the decisions that need to be taken and the appropriate authority levels of ManagementincludingmattersthatrequireBoardapproval.
• TheGroup’smanagementmonitorsandreviewsthefinancialresultsandforecastsforallbusinesses withintheGroupandformulatesactionplansforoperationalandfinancialperformanceimprovement.
• Key policies and procedures are outlined in the Group. These policies are communicated to lien management to ensure that the control procedures, including those relating to authorisation, monitoringandreconciliationprocessesarefollowed.
• At theBoard level,key financialandoperatingperformancesof theGroupare reviewed. Quarterly, discussionswith themanagementon theprogressofbusinessoperationsandsignificant issuesare heldbytheBoardandinternalauditfindingsandreportsarereviewedbytheAuditCommitteebefore presentingtotheBoard.
INTERNAL AUDITTheGrouphadengagedanindependentprofessionalservicesfirmtocarryouttheInternalAuditfunction.Theobjectiveoftheinternalauditfunctionistoreviewtheadequacyandintegrityoftheinternalcontrolsystemsofkeybusinessunits.
KPS Consortium Bhd (143816-V) • Annual Report 200922 KPS Consortium Bhd (143816-V) • Annual Report 2009
Statement on Internal Control (cont’d.)
TheAuditCommitteereviewsandapprovestheannualinternalauditplanbeforetheInternalAuditorscarryouttheirfunctions.AllauditfindingsarereportedtotheCommitteeandareasofimprovementandauditrecommendationsidentifiedarecommunicatedtothemanagementforfurtheraction.
Thecostincurredfortheinternalauditfunctioninrespectofthefinancialyearended31December2009wasRM40,000.
RISK MANAGEMENTRisk management practice ensures that significant risks are continuously identified and managedeffectively.Currently,theGroupreliesonthemanagementtoassessthekeybusinessrisksoftheGroupandtoimplementmeasurestoassisttheBoardindischargingitsriskmanagementresponsibilities.
CONCLUSIONThereisnosignificantbreakdownorweaknessesinthesystemofinternalcontroloftheGroupthathaveresultedmateriallossesincurredbytheGroupforthefinancialyearended31December2009.TheBoardbelievesthatthecurrentreviewframeworkandthesystemsofinternalcontrolthathasbeeninplacefortheyearunderreviewarereasonableforthepresentlevelofoperations.Nonetheless,theGroupwillcontinuetotakethenecessarymeasurestoensurethatthesystemofinternalcontrolisfunctioningeffectively.
TheBoardofDirectorshasapprovedthisstatementforissuance.
KPS Consortium Bhd (143816-V) • Annual Report 2009 KPS Consortium Bhd (143816-V) • Annual Report 2009 23
Chairman/Group Managing Director’s Statement
OnbehalfoftheBoardofDirectors,IampleasedtopresenttheAnnualReportandAuditedAccountsoftheGroupandoftheCompanyforthefinancialyearended31December2009.
Overview of Group Results
Operating Results
Forthefinancialyearended31Dec2009,Group’sturnoverwasRM311.5million(2008:RM289.7million).Werecordedapre-taxprofitofRM9.4millionascomparedtoRM6.3millioninthepreviousyear.
AtCompanylevel,noturnoverintermofdividendincomefromsubsidiarieswasrecorded.
Review of Operations
TheGroupsperformanceareexplainedunderthevariousactivityreportsbelow:
PaperMilling
The Group’s tissue mill registered external revenue of RM12.6 million compared with previous year ofRM11.1million.ThisdivisionregisteredhigheroperatingprofitbeforetaxandfinancecostofRM2.6millionascomparedtoprofitofRM2.1millioninyear2008.
PaperConvertingandTradingofWoodfreePaper
ThisdivisionrecordedturnoverofRM41.2millionascomparedtoRM41.3millionpreviously.ThisdivisionshowedaprofitbeforetaxandfinancecostofRM0.5millionascomparedtoaprofitofRM1.4millioninthepreviousyear2008.ThelowerprofitisduetoprovisionforstockimpairmentRM1.0million.
PlywoodandBuildingMaterialsTradingandTimberManufacturing
ThePlywoodandBuildingMaterialsDivisionregisteredlowerturnoverofRM233.9million(2008:RM213.0million)andoperatingprofitbeforetaxandfinancecostofRM6.9millioncomparedwithoperatingprofitofRM4.7million.Operatingprofitmarginimprovedforyear2009comparedwithyear2008.
Theyear2009Saleswereaffectedinthe4thquarterduetofinancialcrisisandeconomicrecession.
KPS Consortium Bhd (143816-V) • Annual Report 200924 KPS Consortium Bhd (143816-V) • Annual Report 2009
Chairman/Group Managing Director’s Statement (cont’d.)
Others – trading of paper products and general household products
TurnoverforthisdivisionwasRM23.6millioninyear2009comparedwithRM24.0millionforthepreviousyear.ThisdivisionmadeaprofitbeforetaxationofRM0.87millioncomparedwithRM0.33millionin2008.
Dividend
TheBoardisunabletoproposeanydividend.
Outlook and Prospects
Thefutureoutlookformostofthedivisionsareexpectedtoregisterslightlyhigherrevenueduetotheworldeconomic recovery and mitigated by efforts of the Malaysian Government to boost domestic economy.AftertaxprofitsshouldshowimprovementsduetoeffortsbytheManagementtocontrolcostsandimproveoperatingmargins.
Acknowledgement
ThelastfewyearshaveproventheresilienceoftheCompanyandIwouldliketothanktheshareholdersfortheirunwaveringsupportsofar.
TheBoardwouldliketothankMrLeeWhayHoongwhoresignedon26May2009respectivelyforhispastcontributiontotheGroup.Wewishhimeverysuccessinhisfutureendeavours.
We owe a similar gratitude to our customers and business associates for their unwavered supportthroughout thedifficult timesof the last fewyears. Iwouldalso like toexpressourappreciation toallGovernmentagenciesandregulatoryauthoritiesfortheirassistanceandguidance.
Finallyandaboveall,onbehalfoftheBoard,Iwishtoofferourheartfeltthankstoallourstafffortheirdedication and loyalty over the past year and their steadfastness and resilience in facing the newchallenges.
Koh Poh SengChairman/ Group Managing Director
KPS Consortium Bhd (143816-V) • Annual Report 2009 KPS Consortium Bhd (143816-V) • Annual Report 2009 25
KPS CONSORTIUM BERHAD(IncorporatedinMalaysia)
REPORTS AND FINANCIAL STATEMENTS
3� December 2009
CONTENTS
• Directors’Report
• StatementbyDirectors
• StatutoryDeclaration
• IndependentAuditors’Report
• BalanceSheets
• IncomeStatements
• StatementsofChangesinEquity
• CashFlowStatements
• NotestotheFinancialStatements
PAGES
26
30
30
3�
33
35
36
37
40
KPS Consortium Bhd (143816-V) • Annual Report 200926 KPS Consortium Bhd (143816-V) • Annual Report 2009
Directors’ Report
TheDirectorshavepleasureinpresentingtheirreporttogetherwiththeauditedfinancialstatementsoftheGroupandoftheCompanyforthefinancialyearended31December2009.
PRINCIPAL ACTIVITIES
TheprincipalactivityoftheCompanyisinvestmentholding.
TheprincipalactivitiesofthesubsidiarycompaniesaredisclosedinNote12totheFinancialStatements.
Therehavebeennosignificantchanges inthenatureoftheactivitiesoftheCompanyanditssubsidiarycompaniesduringthefinancialyear.
FINANCIAL RESULTS
CompanyRM
Profit for the financial year
Attributable to:- Equity holders of the Company Minority interests
2,354,806
2,354,806-
2,354,806
GroupRM
7,422,845
7,450,477(27,632)
7,422,845
DIVIDENDS
TherewerenodividendspaidordeclaredbytheCompanysincetheendofthepreviousfinancialyear.
RESERVES AND PROVISIONS
Therewerenomaterialtransferstoorfromreservesorprovisionsduringthefinancialyear.
ISSUE OF SHARES AND DEBENTURES
Therewerenosharesordebenturesissuedduringthefinancialyear.
KPS Consortium Bhd (143816-V) • Annual Report 2009 KPS Consortium Bhd (143816-V) • Annual Report 2009 27
Directors’ Report (cont’d.)
INFORMATION ON THE FINANCIAL STATEMENTS
Before the financial statements of the Group and of the Company were made out, the Directors tookreasonablesteps:-
(a) toascertainthatactionhadbeentakeninrelationtothewritingoffofbaddebtsandthemakingof allowancefordoubtfuldebtsandsatisfiedthemselvesthatallknownbaddebtshadbeenwrittenoff andadequateallowancehadbeenmadefordoubtfuldebts;and
(b) toensurethatanycurrentassetswhichwereunlikelytoberealisedintheordinarycourseofbusiness includingtheirvaluesasshownintheaccountingrecordsoftheGroupandoftheCompanyhavebeen writtendowntoanamountwhichtheymightbeexpectedsotorealise.
Atthedateofthisreport,theDirectorsarenotawareofanycircumstances:-
(a) whichwouldrendertheamountswrittenoffforbaddebtsortheamountoftheallowancefordoubtful debtsinthefinancialstatementsoftheGroupandoftheCompanyinadequatetoanysubstantialextent; or
(b) whichwouldrender thevaluesattributedtocurrentassets in thefinancialstatementsof theGroup andoftheCompanymisleading;or
(c) whichhavearisenwhichrenderadherencetotheexistingmethodofvaluationofassetsorliabilitiesof theGroupandoftheCompanymisleadingorinappropriate.
Nocontingentorotherliabilityhasbecomeenforceableorislikelytobecomeenforceablewithintheperiodoftwelvemonthsaftertheendofthefinancialyearwhich,intheopinionoftheDirectors,willormayaffecttheabilityoftheGroupandoftheCompanytomeetitsobligationsasandwhentheyfalldue.
Atthedateofthisreport,theredoesnotexist:-
(a) any charge on the assets of the Group and of the Company which has arisen since the end of the financialyearwhichsecurestheliabilityofanyotherperson;or
(b) anycontingentliabilityoftheGroupandoftheCompanywhichhasarisensincetheendofthefinancial year.
OTHER STATUTORY INFORMATION
TheDirectorsstatethat:-
Atthedateofthisreport,theyarenotawareofanycircumstancesnototherwisedealtwithinthisreportorthefinancialstatementswhichwouldrenderanyamountstatedinthefinancialstatements.
IntheopinionoftheDirectors:-
(a) the results of operations of the Group and of the Company during the financial year were not substantially affected by any item, transaction or event of a material and unusual nature; and
(b) therehasnotarisenintheintervalbetweentheendofthefinancialyearandthedateofthisreport anyitem,transactionoreventofamaterialandunusualnaturelikelytoaffectsubstantiallytheresults ofoperationsoftheGroupandoftheCompanyforthecurrentfinancialyearinwhichthisreportis made.
KPS Consortium Bhd (143816-V) • Annual Report 200928 KPS Consortium Bhd (143816-V) • Annual Report 2009
DIRECTORS OF THE COMPANY
TheDirectorsinofficesincethedateofthelastreportareasfollows:-
KohPohSeng(Chairman/GroupManagingDirector)LauFookMeng(ExecutiveDirector)FaunCheeYarn(IndependentNon-ExecutiveDirector)TanKongAng(IndependentNon-ExecutiveDirector)(appointedon26.5.2009)LimChoonLiat(IndependentNon-ExecutiveDirector)(appointedon26.5.2009)LeeWhayHoong(IndependentNon-ExecutiveDirector)(resignedon26.5.2009)
InaccordancewithArticle80oftheCompany’sArticlesofAssociation,Mr.LauFookMengwillretirefromtheBoardattheforthcomingAnnualGeneralMeetingandbeingeligibleofferhimselfforre-election.
AccordingtotheRegisterofDirectors’Shareholdings,theinterestsofDirectorsinofficeattheendofthefinancialyearinsharesintheCompanyduringthefinancialyearwereasfollows:-
Directors’ Report (cont’d.)
At31.12.2009
Direct interestKoh Poh Seng 60,590,525
Sold
(34,000)
Bought
Ordinary Shares of RM1 Each
10,000
At1.1.2009
60,614,525
ByvirtueofMrKohPohSeng’sinterestintheCompany,heisalsodeemedtohaveinterestinthesharesofallthesubsidiarycompaniestotheextentthattheCompanyhasaninterestunderSection6AoftheCompaniesAct,1965.
Otherthanthosedisclosedabove,nootherDirectorsattheendofthefinancialyearheldanyinterestinsharesoftheCompanyoritsrelatedcorporationsduringthefinancialyear.
KPS Consortium Bhd (143816-V) • Annual Report 2009 KPS Consortium Bhd (143816-V) • Annual Report 2009 29
At31.12.2009
Direct interestKoh Poh Seng 60,590,525
Sold
(34,000)
Bought
Ordinary Shares of RM1 Each
10,000
At1.1.2009
60,614,525
Directors’ Report (cont’d.)
DIRECTORS’ BENEFITS
Duringandattheendofthefinancialyear,noarrangementssubsistedtowhichtheCompanyisaparty,withtheobjectorobjectsofenablingDirectorsoftheCompanytoacquirebenefitsbymeansoftheacquisitionofsharesintheCompanyoranyotherbodycorporate.
Since the endof theprevious financial year, noDirectorhas receivedorbecomeentitled to receive anybenefit (otherthanasdisclosedinNote22totheFinancialStatements)byreasonofacontractmadebytheCompanyorarelatedcorporationwiththeDirectororwithafirmofwhichheisamember,orwithacompanyinwhichhehasasubstantialfinancialinterest.
AUDITORS
MessrsSJGrantThorntonhaveexpressedtheirwillingnesstocontinueinoffice.
OnbehalfoftheBoard
................................................................. )KOHPOHSENG ) ) ) ) ) ) ) DIRECTORS ) ) )................................................................. )LAUFOOKMENG ) KualaLumpur19April2010
KPS Consortium Bhd (143816-V) • Annual Report 200930 KPS Consortium Bhd (143816-V) • Annual Report 2009
IntheopinionoftheDirectors,thefinancialstatementssetoutonpages33to85aredrawnupinaccordancewithFinancialReportingStandardsandtheCompaniesAct,1965inMalaysiasoastogiveatrueandfairviewofthefinancialpositionoftheGroupandoftheCompanyasat31December2009andofitsfinancialperformanceandcashflowsoftheGroupandoftheCompanyforthefinancialyearthenended.
OnbehalfoftheBoard
............................................................... ..................................................…............KOHPOHSENG LAUFOOKMENG KualaLumpur19April2010
Statement by Directors
I,LauFookMeng,beingtheDirectorprimarilyresponsibleforthefinancialmanagementofKPSConsortiumBerhad, do solemnly and sincerely declare that to the best of my knowledge and belief, the financialstatementssetoutonpages33to85arecorrectandImakethissolemndeclarationconscientiouslybelievingthesametobetrueandbyvirtueoftheprovisionsoftheStatutoryDeclarationsAct,1960.
Subscribedandsolemnlydeclaredby )theabovenamedatKualaLumpurin )theFederalTerritorythisdayof )19April2010 ) ............................................................................ LAU FOOK MENG Beforeme:
CommissionerforOaths
Statutory Declaration
PESU
RUHJAYA SUMPAH
MA L A Y S I A
W.490S. ARULSAMY
16 - Tingkat Bawah Jalan Pudu, 55100 Kuala Lumpur.
KPS Consortium Bhd (143816-V) • Annual Report 2009 KPS Consortium Bhd (143816-V) • Annual Report 2009 3�
Report on the Financial Statements
WehaveauditedthefinancialstatementsofKPSConsortiumBerhad,whichcomprisethebalancesheetsasat31December2009andtheincomestatements,statementsofchangesinequityandcashflowstatementsoftheGroupandoftheCompanyforthefinancialyearthenended,andasummaryofsignificantaccountingpoliciesandotherexplanatorynotes,assetoutonpages33to85.
Directors’ResponsibilitiesfortheFinancialStatements
ThedirectorsoftheCompanyareresponsibleforthepreparationandfairpresentationofthesefinancialstatements in accordance with Financial Reporting Standards and the Companies Act, 1965 in Malaysia.This responsibility includes: designing, implementing and maintaining internal control relevant to thepreparationandfairpresentationoffinancialstatementsthatarefreefrommaterialmisstatement,whetherdue to fraud or error; selecting and applying appropriate accounting policies; and making accountingestimatesthatarereasonableinthecircumstances.
Auditors’Responsibilities
Ourresponsibilityistoexpressanopiniononthesefinancialstatementsbasedonouraudit.WeconductedourauditinaccordancewithapprovedstandardsonauditinginMalaysia.Thosestandardsrequirethatwecomplywithethicalrequirementsandplanandperformtheaudittoobtainreasonableassurancewhetherthefinancialstatementsarefreefrommaterialmisstatement.
Anaudit involvesperformingprocedurestoobtainauditevidenceabout theamountsanddisclosures inthefinancialstatements.Theproceduresselecteddependonourjudgement,includingtheassessmentofrisksofmaterialmisstatementofthefinancialstatements,whetherduetofraudorerror.Inmakingthoseriskassessments,weconsiderinternalcontrolrelevanttotheCompany’spreparationandfairpresentationofthefinancialstatementsinordertodesignauditproceduresthatareappropriateinthecircumstances,butnotforthepurposeofexpressinganopinionontheeffectivenessoftheCompany’sinternalcontrol.AnauditalsoincludesevaluatingtheappropriatenessofaccountingpoliciesusedandthereasonablenessofaccountingestimatesmadebytheDirectors,aswellasevaluatingtheoverallpresentationofthefinancialstatements.
Webelievethattheauditevidencewehaveobtainedissufficientandappropriatetoprovideabasisforourauditopinion.
Opinion
Inouropinion,thefinancialstatementshavebeenproperlydrawnupinaccordancewithFinancialReportingStandardsandtheCompaniesAct,1965inMalaysiasoastogiveatrueandfairviewofthefinancialpositionoftheGroupandoftheCompanyasat31December2009andoftheirfinancialperformanceandcashflowsforthefinancialyearthenended.
Independent Auditors’ Report
KPS Consortium Bhd (143816-V) • Annual Report 200932 KPS Consortium Bhd (143816-V) • Annual Report 2009
Independent Auditors’ Report (cont’d.)
Report on Other Legal and Regulatory Requirements
InaccordancewiththerequirementsoftheCompaniesAct,1965inMalaysia,wealsoreportthefollowing:-
a) Inouropinion,theaccountingandotherrecordsandtheregistersrequiredbytheActtobekeptby theCompany and its subsidiary companies ofwhich wehave acted as auditorshavebeenproperly keptinaccordancewiththeprovisionsoftheAct.
b) WearesatisfiedthattheFinancialStatementsofthesubsidiarycompaniesthathavebeenconsolidated with the Company’s financial statements are in form and content appropriate and proper for the purposesofthepreparationofthefinancialstatementsoftheGroupandwehavereceivedsatisfactory informationandexplanationsrequiredbyusforthosepurposes.
c) The auditors’ reports on the financial statements of the subsidiary companies did not contain any qualificationoranyadversecommentmadeunderSection174(3)oftheAct.
Other Matters
ThisreportismadesolelytothemembersoftheCompany,asabody,inaccordancewithSection174oftheCompaniesAct,1965inMalaysiaandfornootherpurpose.Wedonotassumeresponsibilitytoanyotherpersonforthecontentofthisreport.
SJ GRANT THORNTON DATO’ N. K. JASANI(NO.AF:0737) CHARTEREDACCOUNTANTCHARTEREDACCOUNTANTS (NO:708/03/12(J/PH))
KualaLumpur 19April2010
KPS Consortium Bhd (143816-V) • Annual Report 2009 KPS Consortium Bhd (143816-V) • Annual Report 2009 33
Balance Sheetsasat31December2009
2008RM
SHARE CAPITALSHARE PREMIUMACCUMULATED LOSSES
MINORITY INTERESTS
Total equity
NON-CURRENT LIABLITIESBorrowingsDeferred taxationFinance creditors
REPRESENTED BY:-
NON-CURRENT ASSETSProperty, plant and equipmentPrepaid land lease paymentsInvestment propertiesInvestment in subsidiary companiesGoodwill on consolidation
Total non-current assets
CURRENT ASSETSInventoriesTrade receivablesOther receivablesAmount due from subsidiary companiesTax recoverableFixed deposits with licensed banksCash and bank balances
Total current assets
2009RM
2008RM
CompanyGroup
2009RM
147,827,1585,400,842
(3,148,611)
150,079,389
25,126
150,104,515
- 81,000
302,717
150,488,232
38,039,605 2,341,414 4,461,684
- 43,151,039
87,993,742
32,866,280 67,388,105
6,684,168 -
25,561 11,846,256
9,832,245
128,642,615
147,827,158 5,400,842
(10,599,088)
142,628,912
52,758
142,681,670
559,489 88,000
210,291
143,539,450
39,291,148 2,413,644 4,562,334
- 43,151,039
89,418,165
29,419,085 57,907,641
2,623,288 -
29,309 11,154,761
8,080,800
109,214,884
147,827,158 5,400,842
(29,730,849)
123,497,151
-
123,497,151
- - -
123,497,151
- - -
119,646,201 -
119,646,201
- -
21,042 13,574,513
- -
74,365
13,669,920
147,827,158 5,400,842
(32,085,655)
121,142,345
-
121,142,345
- - -
121,142,345
- - -
117,204,492 -
117,204,492
- -
36,913 13,949,126
- -
19,953
14,005,992
Note
5
678
910111213
14151612
17
KPS Consortium Bhd (143816-V) • Annual Report 200934 KPS Consortium Bhd (143816-V) • Annual Report 2009
2008RM
CURRENT LIABLITIESTrade payablesOther payablesAmount due to subsidiary companiesAmount due to a DirectorTax payableBorrowings
Total current liabilities
NET CURRENT ASSETS
2009RM
2008RM
CompanyGroup
2009RM
14,163,756 3,255,887
- -
702,762 48,025,720
66,148,125
62,494,490
150,488,232
11,465,410 3,904,265
- 26,198
217,510 39,480,216
55,093,599
54,121,285
143,539,450
- 104,430
9,714,540 - - -
9,818,970
3,850,950
123,497,151
- 105,607
9,962,532 - - -
10,068,139
3,937,853
121,142,345
Note
18191220
6
Balance Sheetsasat31December2009(cont’d.)
Theaccompanyingnotesformanintegralpartofthefinancialstatements.
KPS Consortium Bhd (143816-V) • Annual Report 2009 KPS Consortium Bhd (143816-V) • Annual Report 2009 35
Income StatementsfortheFinancialYearEnded31December2009
2008RM
Revenue
Cost of sales
Gross profit
Other income
Distribution costs
Administrative expenses
Finance costs
Other expenses
Profit/(loss) before taxation
Taxation
Profit/(loss) for the financial year
Attributable to:- Equity holders of the Company Minority interests
Earnings per share attributable to equity holders of the Company
2009RM
2008RM
CompanyGroup
2009RM
311,541,921
(282,334,693)
29,207,228
3,655,411
(7,237,149)
(6,285,886)
(1,620,714)
(8,302,247)
9,416,643
(1,993,798)
7,422,845
7,450,477 (27,632)
7,422,845
5.25
289,724,807
(265,642,812)
24,081,995
2,313,189
(6,211,020)
(6,414,236)
(2,373,065)
(5,040,159)
6,356,704
(1,171,790)
5,184,914
5,180,125 4,789
5,184,914
3.65
-
-
-
4,552,264
-
(204,471)
-
(1,992,987)
2,354,806
-
2,354,806
2,354,806 -
2,354,806
-
-
-
-
-
(187,897)
-
(7,525)
(195,422)
-
(195,422)
(195,422) -
(195,422)
Note
21
22
23
24
Theaccompanyingnotesformanintegralpartofthefinancialstatements.
KPS Consortium Bhd (143816-V) • Annual Report 200936 KPS Consortium Bhd (143816-V) • Annual Report 2009
Statements of Changes in EquityfortheFinancialYearEnded31December2009
Tota
leq
uit
yR
M
Gro
up
Bal
ance
at
1 J
anu
ary
20
08
Pro
fit
for
the
fin
anci
al y
ear
Bal
ance
at
31
Dec
emb
er 2
00
8
Pro
fit
for
the
fin
anci
al y
ear
Bal
ance
at
31
Dec
emb
er 2
00
9
Com
pan
y
Bal
ance
at
1 J
anu
ary
20
08
Loss
for
the
fin
anci
al y
ear
Bal
ance
at
31
Dec
emb
er 2
00
8
Pro
fit
for
the
fin
anci
al y
ear
Bal
ance
at
31
Dec
emb
er 2
00
9
Dis
trib
uta
ble
<--------- N
on
-dis
trib
uta
ble
------->
<-------------- A
ttri
bu
tab
le t
o e
qu
ity
hold
ers
of
the
Com
pan
y ------------->
13
7,4
96
,75
6
5,1
84
,91
4
14
2,6
81
,67
0
7,4
22
,84
5
15
0,1
04
,51
5
Min
ori
tyin
tere
sts
RM
47
,96
9
4,7
89
52
,75
8
(27
,63
2)
25
,12
6
Tota
lR
M
137,4
48
,78
7
5,1
80
,12
5
142,6
28
,91
2
7,4
50
,47
7
150,0
79
,38
9
121,3
37
,76
7
(1
95
,42
2)
121,1
42
,34
5
2,3
54
,80
6
123,4
97
,15
1
Acc
um
ula
ted
loss
es RM
(15,7
79,2
13)
5,1
80,1
25
(10,5
99,0
88)
7,4
50,4
77
(3,1
48,6
11)
(31,8
90,2
33)
(195,4
22)
(32,0
85,6
55)
2,3
54,8
06
(29,7
30,8
49)
Shar
ep
rem
ium
RM
5,4
00,8
42
-
5,4
00,8
42
-
5,4
00,8
42
5,4
00,8
42
-
5,4
00,8
42
-
5,4
00,8
42
Shar
eca
pit
alR
M
14
7,8
27
,158
-
14
7,8
27
,158
-
14
7,8
27
,158
14
7,8
27
,158
-
14
7,8
27
,158
-
14
7,8
27
,158
Th
eac
com
pan
yin
gn
ote
sfo
rma
ni
nte
gra
lp
art
of
the
fin
anci
als
tate
men
ts.
KPS Consortium Bhd (143816-V) • Annual Report 2009 KPS Consortium Bhd (143816-V) • Annual Report 2009 37
Cash Flow StatementsfortheFinancialYearEnded31December2009
2008RM
CASH FLOWS FROM OPERATING ACTIVITIES
Profit/(Loss) before taxation
Adjustments for:-Amortisation of prepaid land lease paymentsAllowance for slow moving inventoriesBad debts written offDepreciation of property, plant and equipmentDepreciation of investment propertiesLoss on disposal of property, plant and equipmentLoss on disposal of other investmentsInterest expensesInventories written offImpairment loss of investment in subsidiariesProperty, plant and equipment written offReversal of investment properties costAllowance for doubtful debts - current year - no longer requiredAllowance for slow moving inventories no longer requiredAllowance for diminution in value of other investments no longer requiredGain on disposal of property, plant and equipmentInterest income Impairment loss of investment in subsidiaries no longer required
Operating profit/(loss) before working capital changes
2009RM
2008RM
CompanyGroup
2009RM
9,416,643
72,230 45,126
2,988,934
2,709,949 100,650
29,815 -
1,252,221 1,077,945
- 390
-
2,946,898 (1,525,541)
(1,110,566)
-
(1,672) (160,871)
-
17,842,151
6,356,704
72,228 48,675
325,033
2,440,873 94,638
15,504 8,441
2,006,519 456,393
- 97,534 11,061
3,926,348 (827,998)
(187,424)
(10,220)
(199) (253,233)
-
14,580,877
2,354,806
- - -
- -
- - - -
1,982,510 - -
10,476 (128,045)
-
- - - -
(4,424,219)
(204,472)
(195,422)
- - -
- -
- - - - - - -
7,525 -
-
- - - -
-
(187,897)
KPS Consortium Bhd (143816-V) • Annual Report 200938 KPS Consortium Bhd (143816-V) • Annual Report 2009
2008RM
Changes in working capital:-InventoriesReceivablesPayablesSubsidiary companiesBill payablesDirectors
Cash generated from/(used in) operations
Interest paid Interest receivedTaxes paid
Net cash from/(used in) operating activities
CASH FLOWS FROM INVESTING ACTIVITIES Purchase of property, plant and equipment Purchase of investment propertiesProceeds from disposal of property, plant and equipmentProceeds from disposal of other investments
Net cash used in investing activities
CASH FLOWS FROM FINANCING ACTIVITIES Drawndown of term loanRepayment of term loanRepayment of finance creditors
Net cash used in financing activities
2009RM
2008RM
CompanyGroup
2009RM
(3,459,700) (17,951,635)
1,993,213 -
8,752,451 (26,198)
7,150,282
(1,252,221) 160,871
(1,511,798)
4,547,134
(1,110,375) -
96,467
-
(1,013,908)
- (766,436) (323,850)
(1,090,286)
(1,009,814) 13,310,412
(875,196) -
(18,869,892) 26,198
7,162,585
(2,006,519) 253,233
(897,172)
4,512,127
(4,997,289) (580,894)
19,199
3,583
(5,555,401)
498,788 (813,418) (202,721)
(517,351)
- 15,871 (1,177)
244,190 - -
54,412
- - -
54,412
- -
-
-
-
- - -
-
- (44,438) 28,176
199,421 - -
(4,738)
- - -
(4,738)
- -
-
-
-
- - -
-
Note
A
Cash Flow StatementsfortheFinancialYearEnded31December2009(cont’d.)
KPS Consortium Bhd (143816-V) • Annual Report 2009 KPS Consortium Bhd (143816-V) • Annual Report 2009 39
Cash Flow StatementsfortheFinancialYearEnded31December2009(cont’d.)
2008RM
CASH AND CASH EQUIVALENTSNet increase/(decrease)Brought forward
Carried forward
2009RM
2008RM
CompanyGroup
2009RM
2,442,940 19,235,561
21,678,501
(1,560,625) 20,796,186
19,235,561
54,412 19,953
74,365
(4,738) 24,691
19,953
Note
B
NOTES TO THE CASH FLOW STATEMENTS
A. PROPERTY, PLANT AND EQUIPMENT
During the financial year, the Group acquired property, plant and equipment properties with an aggregate cost of RM1,583,406 (2008: RM5,292,289) of which RM473,031 (2008: RM295,000) was acquiredbymeansofhirepurchase.CashpaymentsofRM1,110,375(2008:RM4,997,289)weremade bytheGrouptopurchasetheproperty,plantandequipment.
B. CASH AND CASH EQUIVALENTS
Cashandcashequivalentsincludedinthecashflowstatementscomprisethefollowingbalancesheets items:-
2008RM
Cash and bank balancesFixed deposits with licensed banks
2009RM
2008RM
CompanyGroup
2009RM
9,832,245 11,846,256
21,678,501
8,080,800 11,154,761
19,235,561
74,365 -
74,365
19,953 -
19,953
AsdisclosedinNote17totheFinancialStatements,thefixeddepositswithlicensedbankshavebeenpledgedtobanksforbankingfacilitiesgrantedtotheGroupandhence,arenotavailableforgeneraluse.
Theaccompanyingnotesformanintegralpartofthefinancialstatements.
KPS Consortium Bhd (143816-V) • Annual Report 200940 KPS Consortium Bhd (143816-V) • Annual Report 2009
Notes to the Financial Statements31December2009
�. BASIS OF PREPARATION OF THE FINANCIAL STATEMENTS ThefinancialstatementsoftheGroupandoftheCompanyhavebeenpreparedinaccordancewiththe CompaniesAct,1965inMalaysiaandFinancialReportingStandardsissuedbyMalaysianAccounting StandardsBoard(“MASB”).
2. FINANCIAL RISK MANAGEMENT POLICIES
TheGroup’s financial riskmanagementpolicyseeks toensure thatadequate financial resourcesare availableforthedevelopmentoftheGroup’sbusinesseswhilstmanagingitsrisks.TheGroupoperates withinpoliciesthatareapprovedbytheBoardandtheGroup’spolicyisnottoengageinspeculative transactions.
ThemainareasoffinancialrisksfacedbytheGroupandthepolicyinrespectofthemajorareasof treasuryactivityaresetoutasfollows:
2.� Foreign Currency Risk
TheGroupisexposedtoforeigncurrencyriskasaresultofitsnormaloperatingactivities,both external and intra-Group where the currency denomination differs from the local currency, Ringgit Malaysia (RM). The Group’s and the Company policy is to minimise the exposure of foreigncurrencyrisktotransactionriskbymatchinglocalcurrencyincomeagainstlocalcurrency costs.
2.2 Credit Risk
The credit risk is controlled by the application of credit approvals, limits and monitoring procedures.Aninternalcreditreviewisconductedifthecreditriskismaterial.
2.3 Market Risk
Forkeyproductpurchases,theGroupestablishesfloatingandfixedpricelevelsthattheGroup and the Company’s considers acceptable and enters into physical supply agreements, where necessary, toachieve these levels.TheGroupdoesnot facesignificantexposure fromtherisk fromchangesinpricelevel.
2.4 Liquidity and Cash Flow Risks
TheGroupseekstoachieveabalancebetweencertaintyoffundingevenindifficulttimesforthe marketsortheGroupandaflexible,cost-effectiveborrowingstructure.Thisistoensurethatat theminimum,allprojectednetborrowingneedsarecoveredbycommittedfacilities.Also, the objectivefordebtmaturityistoensurethattheamountofdebtmaturinginanyoneyearisnot beyondtheGroup’smeanstorepayandrefinance.
2.5 Interest Rate Risk
TheGroup’sexposuretointerestrateriskforchangesininterestratesprimarilytoinvestment portfolioinfixeddepositsandcashequivalentswithfinancialinstitution.TheGroupmanagesits interestraterisksbyplacingsuchbalancesonvaryingmaturitiesandinterestrateterms.
TheGroup’sdebts includebankoverdrafts,short-termandlong-termborrowings.TheGroup’s interest rate management objective is to manage the interest expenses consistent with maintaininganacceptablelevelofexposuretointerestratefluctuation.Inordertoachievethis objective,theGrouptargetsamixoffixedandfloatingdebtbasedonassessmentofitsexisting exposureanddesiredinterestrateprofile.
KPS Consortium Bhd (143816-V) • Annual Report 2009 KPS Consortium Bhd (143816-V) • Annual Report 2009 4�
Notes to the Financial Statements31December2009(cont’d.)
3. SIGNIFICANT ACCOUNTING POLICIES
3.� Accounting convention
The financial statements of the Group and of the Company are prepared under the historical cost convention, unless otherwise indicated in the summary of the significant accounting policies.
The financial statements are presented in Ringgit Malaysia (RM) which is the Group’s and the Company’sfunctionalcurrency.
3.2 Adoption of Revised Financial Reporting Standards (“FRSs”)
The followingare thestandardsand IC Interpretations thatarenotyeteffectiveandhavenot beenearlyadoptedbytheGroupandtheCompany:-
(1) AmendmentstoFRS1 -
(2) FRS1(#) -
(3) AmendmentstoFRS1(*) -
(4) AmendmentstoFRS2 -
(5) AmendmentstoFRS2(#) -
(6) FRS3(#) - (7) FRS4 - (8) AmendmenttoFRS5 -
(9) AmendmentstoFRS5(#) -
(10)FRS7 - (11)AmendmenttoFRS7 -
(12)AmendmenttoFRS7(*) -
First-timeAdoptionofFinancialReportingStandards.Amendments relating to cost of an investment in asubsidiary,jointlycontrolledentityorassociate
First-timeAdoptionofFinancialReportingStandards
Limited Exemption from Comparative FRS 7Disclosures for First-Time Adopters. Amendmentrelatingtotransitionprovisionsforfirsttimeadopter
ShareBasedPayment.Amendmentsrelatingtovestingconditionsandcancellations
Share Based Payment. Amendments Relating to thescopeofthestandard
BusinessCombinations
InsuranceContracts
Non-current Assets Held for Sale and DiscontinuedOperations. Amendment relating to disclosures ofnon-current assets (or disposal groups) classified asheldforsaleordiscontinuedoperations
Non-current Assets Held for Sale and DiscontinuedOperations. Amendment relating to the inclusion ofnon-currentassetsasheldfordistributiontoownersinthestandard
FinancialInstruments:Disclosures
Financial Instruments: Disclosures. Amendmentrelatingtofinancialassets
Improving Disclosures about Financial Instruments.Amendments relating to the fair value measurementusing fair valuehierarchyanddisclosureof liquidityrisk
KPS Consortium Bhd (143816-V) • Annual Report 200942
Notes to the Financial Statements31December2009(cont’d.)
KPS Consortium Bhd (143816-V) • Annual Report 2009
3. SIGNIFICANT ACCOUNTING POLICIES (CONT’D.)
3.2 Adoption of Revised Financial Reporting Standards (“FRSs”) (cont’d.)
The followingare thestandardsand IC Interpretations thatarenotyeteffectiveandhavenot beenearlyadoptedbytheGroupandtheCompany(cont’d.):-
(13)FRS8 - (14)AmendmenttoFRS8 -
(15)FRS101 -
(16)AmendmenttoFRS107 -
(17)AmendmenttoFRS108 -
(18)AmendmentstoFRS110 -
(19)AmendmenttoFRS116 -
(20)AmendmenttoFRS117 - (21)AmendmenttoFRS118 -
(22)AmendmenttoFRS119 -
(23)AmendmenttoFRS120 -
(24)FRS123 - (25)AmendmentstoFRS123 -
(26)AmendmentstoFRS127 -
(27)FRS127(#) - (28)AmendmenttoFRS128 -
OperatingSegments
Operating Segments. Amendment relating todisclosureinformationaboutsegmentassets
PresentationofFinancialStatements(Revised)
Statements of Cash Flows. Amendment relating toclassificationofexpendituresonunrecognisedassets
AccountingPolicies,ChangesinAccountingEstimatesand Errors. Amendment relating to selection andapplicationofaccountingpolicies
Events After the Reporting Period. Amendmentrelating to reason for dividend not recognised as aliabilityattheendofthereportingperiod
Property,PlantandEquipment.Amendmentrelatingtoderecognitionofasset
Leases.Amendmentrelatingtoclassificationofleases
Revenue. Amendment relating to Appendix of thisstandardandrecognitionandmeasurement
EmployeeBenefits.Amendmentrelatingtodefinition,curtailmentandsettlements
AccountingforGovernmentGrantsandDisclosureofGovernment Assistance. Amendment relating todefinitionandgovernment loanatbelow-marketrateofinterest
BorrowingCosts
BorrowingCosts.Amendmentrelatingtoexclusionofincidentalcosttoborrowing
Consolidated and Separate Financial Statements.Amendments relating to cost of an investment in asubsidiary,jointlycontrolledentityorassociate
ConsolidatedandSeparateFinancialStatements.
Investments in Associates. Amendment relating toimpairmentlossesinapplicationoftheequitymethodandthescopeofthisstandard
KPS Consortium Bhd (143816-V) • Annual Report 2009 KPS Consortium Bhd (143816-V) • Annual Report 2009 43
Notes to the Financial Statements31December2009(cont’d.)
(29)AmendmenttoFRS129 -
(30)AmendmenttoFRS131 -
(31)AmendmenttoFRS132 -
(32)AmendmenttoFRS132 -
(33)AmendmenttoFRS132(^) -
(34)AmendmenttoFRS134 -
(35)AmendmenttoFRS136 -
(36)AmendmenttoFRS138 -
(37)AmendmentstoFRS138(#) -
(38)FRS139 -
(39)AmendmenttoFRS139 -
(40)AmendmenttoFRS140 -
(41) ICInterpretation9 - (42)AmendmentstoIC - Interpretation9(#)
(43) ICInterpretation10 -
(44) ICInterpretation11 - (45) ICInterpretation12(#) -
Financial Reporting in Hyperinflationary Economies.Amendmentrelatingtochangingoftermsused
Interests in Joint Ventures. Amendment relating toadditional disclosure required for joint venture thatdoesnotapplyFRS131
Financial Instruments: Presentation. Amendmentrelatingtoputtablefinancialinstruments
Financial Instruments: Presentation. Amendmentrelatingtoeffectivedateandtransition.
Financial Instruments: Presentation. Amendmentsrelatingtoclassificationofrightsissues.
Interim Financial Reporting. Amendment relating todisclosureofearningspershare
Impairment of Assets. Amendment relating to thedisclosureofrecoverableamount
IntangibleAssets.Amendmentrelatingtorecognitionofanexpense
IntangibleAssets.AmendmentsrelatingtotherevisiontoFRS3
Financial Instruments:Recognition andMeasurement
FinancialInstruments:RecognitionandMeasurement.Amendment relating to eligible hedged items,reclassification of financial assets and embeddedderivatives
InvestmentProperty.Amendmentrelatingtoinabilitytodeterminefairvaluereliably
ReassessmentofEmbeddedDerivatives
ReassessmentofEmbeddedDerivatives.AmendmentsrelatingtothescopeoftheICandrevisiontoFRS3
InterimFinancialReportingandImpairment
FRS2-GroupandTreasuryShareTransactions
ServiceConcessionArrangement
3. SIGNIFICANT ACCOUNTING POLICIES (CONT’D.)
3.2 Adoption of Revised Financial Reporting Standards (“FRSs”) (cont’d.)
The followingare thestandardsand IC Interpretations thatarenotyeteffectiveandhavenot beenearlyadoptedbytheGroupandtheCompany(cont’d.):-
KPS Consortium Bhd (143816-V) • Annual Report 200944
Notes to the Financial Statements31December2009(cont’d.)
KPS Consortium Bhd (143816-V) • Annual Report 2009
(46) ICInterpretation13 -
(47) ICInterpretation14 -
(48) ICInterpretation15(#) -
(49) ICInterpretation16(#) -
(50) ICInterpretation17(#) -
CustomerLoyaltyProgrammes
FRS 119 - The Limit on a Defined Benefit Asset,MinimumFundingRequirementsandtheirInteraction
AgreementsfortheConstructionofRealEstate
HedgesofaNetInvestmentinaForeignOperation
DistributionsofNon-CashAssetstoOwners
AlloftheaboveAmendments,ICInterpretationsandFRSswillbeeffectiveforaccountingperiod beginningonorafter1January2010,otherthanFRS8,thosemarkedwith(^),(#)and(*)which will be applicable to accounting period beginning on or after 1 July 2009, 1 March 2010, 1 July2010and1January2011respectively.TheexistingFRS1,3,127aswellasFRS201
2004
willbewithdrawnupontheadoptionofthenewrequirementsthattakeeffecton1July2010.
FRS1,2,4,5,120,128,129and131,ICInterpretations9,10,11,12,13,14,15,16and17are notexpectedtoberelevanttotheoperationsoftheGroupandoftheCompany.TheDirectors anticipatethattheotherFRS,amendmentstoFRSandICInterpretationswillbeadoptedinthe annualfinancialstatementsoftheGroupandoftheCompanyforthefinancialyearcommencing 1 January 2010 and that the adoption of these new/revised FRS, amendments to FRS and IC InterpretationswillhavenomaterialimpactonthefinancialstatementsoftheGroupandofthe Companyintheperiodforinitialapplicationexceptforthefollowing:-
FRS3BusinessCombination
Therevisedstandardcontinuestoapplytheacquisitionmethodtobusinesscombinations,with somesignificantchanges.Allpaymentstopurchaseabusinessaretoberecordedatfairvalue at theacquisitiondate,withcontingentpaymentsclassifiedasdebtsubsequently re-measured throughtheincomestatement.Thereisachoicetomeasurethenon-controllinginterestinthe acquireeat fairvalueorat thenon-controlling interest’sproportionateshareof theacquiree’s netassets.Allacquisition-relatedcostsshouldbeexpensed.
FRS7-FinancialInstruments:Disclosures
FRS7andtheconsequentialamendmenttoFRS101PresentationofFinancialStatementsrequire disclosureofinformationaboutthesignificanceoffinancialinstrumentsfortheGroup’sandthe Company’s financial position and performance, the nature and extent of risks arising from financialinstrumentsandtheobjectives,policiesandprocessesformanagingcapital.
FRS8OperatingSegments
FRS 8, which replaces FRS 1142004
Segment Reporting, requires the identification of operating segmentsbasedon internal reports thatare regularly reviewedby theGroup’schiefoperating decisionmakerinordertoallocateresourcestothesegmentsandtoassesstheirperformance. Currently, theGroup identifies twosetsofsegments (businessandgeographical)usingarisks and rewards approach, with the Group’s system of internal financial reporting to key managementpersonnelservingonlyasthestartingpointfortheidentificationofsuchsegments. As a result, following the adoption of FRS 8, the identification of the Group’s reportable segmentsmaychange.
3. SIGNIFICANT ACCOUNTING POLICIES (CONT’D.)
3.2 Adoption of Revised Financial Reporting Standards (“FRSs”) (cont’d.)
The followingare thestandardsand IC Interpretations thatarenotyeteffectiveandhavenot beenearlyadoptedbytheGroupandtheCompany(cont’d.):-
KPS Consortium Bhd (143816-V) • Annual Report 2009 KPS Consortium Bhd (143816-V) • Annual Report 2009 45
Notes to the Financial Statements31December2009(cont’d.)
3. SIGNIFICANT ACCOUNTING POLICIES (CONT’D.)
3.2 Adoption of Revised Financial Reporting Standards (“FRSs”) (cont’d.)
The followingare thestandardsand IC Interpretations thatarenotyeteffectiveandhavenot beenearlyadoptedbytheGroupandtheCompany(cont’d.):-
FRS123BorrowingCosts
FRS123eliminatestheoptionavailableunderthepreviousversionofFRS123torecogniseall borrowingcostsimmediatelyasanexpense.TheGroupshallcapitaliseborrowingcoststhatare directlyattributabletotheacquisition,constructionorproductionofaqualifyingassetaspart ofthecostofthatasset.
FRS127–ConsolidatedandSeparateFinancialStatements
Therevisedstandardrequiredtheeffectsofalltransactionswithnon-controllingintereststobe recordedinequityifthereisnochangeincontrolandthesetransactionswillnolongerresultin goodwill or gains and losses.The standard also specifies the accountingwhen control is lost. Anyremaininginterestintheentityisremeasuredtofairvalue,andagainorlossisrecognised inprofitorloss.Lossesarerequiredtoallocatetonon-controllinginterests,evenifitresultsin thenon-controllinginteresttobeinadeficitposition.
FRS139-FinancialInstruments:RecognitionandMeasurement
FRS139establishesprinciplesforrecognisingandmeasuringfinancialassets,financialliabilities andsomecontractstobuyandsellnon-financialitems.Byvirtueoftheexemptioninparagraph 103ABofFRS139,theimpactonthefinancialstatementsuponfirstadoptionofthisstandard asrequirebyparagraph30(b)ofFRS108,AccountingPolicies,ChangesinAccountingEstimates andErrorsisnotdisclosed,ifany.
3.3 Significant Account Estimates and Judgements
Estimates, assumptionsconcerning the futureand judgementsaremade in thepreparationof the financial statements. They affect the application of the Group’s accounting policies and reportedamountsof assets, liabilities, incomeand expenses, anddisclosuresmade. Estimates andunderlyingassumptionsareassessedonanon-goingbasisandarebasedonexperienceand relevantfactors,includingexpectationsoffutureeventsthatarebelievedtobereasonableunder thecircumstances.Actualresultmaydifferfromtheseestimates.
3.3.1 Keysourcesofestimationuncertainty
The key assumptions concerning the future and other key sources of estimation uncertainty at the balance sheet date, that have significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial yeararediscussedbelow:-
Impairment of goodwill
TheGroupdetermineswhethergoodwillisimpairedatleastonceannually.Thisrequires the estimation of the value in use of the cash-generating units to which goodwill are allocated. Estimating the value in use requires the Group to make an estimate of the expectedfuturecashflowsfromthecash-generatingunitandalsotochooseasuitable discountrateinordertocalculatethepresentvalueofthosecashflows.
KPS Consortium Bhd (143816-V) • Annual Report 200946
Notes to the Financial Statements31December2009(cont’d.)
KPS Consortium Bhd (143816-V) • Annual Report 2009
3. SIGNIFICANT ACCOUNTING POLICIES (CONT’D.)
3.3 Significant Account Estimates and Judgements (cont’d.)
3.3.1 Keysourcesofestimationuncertainty(cont’d.)
Deferred tax assets
Deferred taxassetsare recognised for alldeductible temporarydifferences,unutilised taxlosses,unabsorbedcapitalallowancesandunusedtaxcreditstotheextentthatitis probablethattaxableprofitwillbeavailableagainstwhichallthedeductibletemporary differences, unutilised tax losses and unabsorbed capital allowances can be utilised. Significantmanagementjudgementisrequiredtodeterminetheamountofdeferredtax assetsthatcanberecognised,baseduponthe likelytimingandleveloffuturetaxable profitstogetherwithfuturetaxplanningstrategies.
Income taxes/deferred tax liabilities
TheGroupisexposedtoincometaxesinnumerousjurisdictions.Significantjudgement isinvolvedindeterminingtheGroup-wideprovisionforincometaxes.Therearecertain transactions and computations for which the ultimate tax determination is uncertain during the ordinary course of business. The Group recognised tax liabilities based on estimatesofwhetheradditionaltaxeswillbedue.Wherethefinaltaxoutcomeofthese mattersisdifferentfromtheamountsthatwereinitiallyrecognised,suchdifferencewill impact the income tax and deferred tax provisions in the period in which such determinationismade.
Depreciation of property, plant and equipment and investment properties
Property,plantandequipmentaredepreciatedinastraight-linebasisovertheiruseful life.Managementestimatedtheusefullifeoftheseassetstobewithin3to50yearsfor property, plant and equipment and50 year for investmentproperties.Changes in the expected level of usage and technological developments could impact the economic usefullifeandtheresidualvaluesoftheseassets,thereforefuturedepreciationcharges couldberevised.
Impairment of property, plant and equipment, investment properties, prepaid land lease prepayment and investment in subsidiary companies
TheGroupcarriedout the impairment testbasedonavarietyof estimation including thevalue-in-useofthecash-generatingunittowhichtheassetsareallocated.Estimating the value-in-use requires the Group to make an estimate of the expected future cash flowsfromcash-generatedunitandalsotochooseasuitablediscountrate inorderto calculatethepresentvalueofthosecashflows.
KPS Consortium Bhd (143816-V) • Annual Report 2009 KPS Consortium Bhd (143816-V) • Annual Report 2009 47
Notes to the Financial Statements31December2009(cont’d.)
3. SIGNIFICANT ACCOUNTING POLICIES (CONT’D.)
3.3 Significant Account Estimates and Judgements (cont’d.)
3.3.2 Criticaljudgementmadeinapplyingaccountingpolicies
The following is the judgement made by management in the process of applying the Group’s accounting policies that have the most significant effect on the amounts recognisedinthefinancialstatements.
Classification between investment properties and owner-occupied properties
TheGroupdetermineswhetherapropertyqualifiesasaninvestmentproperty,andhas developedcriteriainmakingthatjudgement.Investmentpropertyisapropertyheldto earnrentalsorforcapitalappreciationorboth.Therefore,theGroupconsiderswhether aproperty generates cash flows largely independently of theother assetsheldby the Group.
Somepropertiescompriseaportionthatisheldtoearnrentalsorforcapitalappreciation andanotherportionthatisheldforuseintheproductionorsupplyofgoodsorservices orforadministrativepurposes.Iftheseportionscouldbesoldseparately(orleasedout separatelyunderafinancelease),theGroupaccountsfortheportionsseparately.Ifthe portionscouldnotbesoldseparately,thepropertyisaninvestmentpropertyonlyifan insignificantportionisheldforuseintheproductionorsupplyofgoodsorservicesor foradministrativepurposes.
Judgement is made on an individual property basis to determine whether ancillary servicesaresosignificant thatapropertydoesnotqualifyasan investmentproperty.
3.4 Subsidiary companies
A subsidiary company is a company in which the Group or the Company has the power to exercise control over the financial and operating policies so as to obtain benefits therefrom.
Investmentinsubsidiarycompaniesisstatedatcost.Whereanindicationofimpairmentexists, thecarryingamountofthesubsidiarycompaniesisassessedandwrittendownimmediatelyto theirrecoverableamount
3.5 Basis of consolidation The Group financial statements consolidate the audited financial statements of the Company andallof itssubsidiarycompanies,whichhavebeenprepared inaccordancewiththeGroup’s accountingpolicies. All intercompany transactions, balances and unrealised gains on transactions between group companies are eliminated; unrealised losses are also eliminated on consolidation unless cost cannotberecovered.
ThefinancialstatementsoftheCompanyanditssubsidiarycompaniesarealldrawnuptothe samereportingdate.
KPS Consortium Bhd (143816-V) • Annual Report 200948
Notes to the Financial Statements31December2009(cont’d.)
KPS Consortium Bhd (143816-V) • Annual Report 2009
3. SIGNIFICANT ACCOUNTING POLICIES (CONT’D.)
3.5 Basis of consolidation (cont’d.) Acquisitionof subsidiary companies is accounted forusing thepurchasemethod.The costof anacquisitionismeasuredasthefairvalueoftheassetsgiven,equityinstrumentsissuedand liabilities incurred or assumed at the date of exchange, plus costs directly attributable to the acquisition. Identifiable assets acquired and liabilities and contingent liabilities assumed in a businesscombinationaremeasuredinitiallyattheirfairvaluesattheacquisitiondate,irrespective oftheextentofanyminorityinterest. Any excess of the cost of the business combination over the group’s interest in the net fair valueoftheidentifiableassets,liabilitiesandcontingentliabilitiesrepresentsgoodwill.Goodwill isaccountedforinaccordancewiththeaccountingpolicyforgoodwillstatedinNote3.6.
Minorityinterestsrepresenttheportionofprofitorlossandnetassetsinsubsidiarycompanies not held by the Group. They are presented in the consolidated balance sheet within equity, separatelydisclosedintheconsolidatedincomestatement.
Anyexcessofthegroup’sinterestinthenetfairvalueoftheidentifiableassets, liabilitiesand contingentliabilitiesoverthecostofbusinesscombinationisrecognisedasincomeonthedate ofacquisition.
Subsidiary companies are consolidated from the date on which control is transferred to the Groupandarenolongerconsolidatedfromthedatethatcontrolceases.
The gain or loss on disposal of a subsidiary company is the difference between net disposal proceedsandtheGroup’sshareofitsnetassetstogetherwithanyunamortisedorunimpaired balanceofgoodwillonacquisitionandexchangedifferences.
3.6 Goodwill
Goodwill represents the excess of the cost of acquisition over the Group’s interest in the fair valueof the identifiableassets, liabilitiesandcontingent liabilitiesofasubsidiarycompanyat thedateofacquisition.
Goodwill arising on the acquisition of subsidiary companies is presented separately in the balancesheet.
Following initial recognition, goodwill is measured at cost less any accumulated impairment losses.Goodwill is reviewed for impairment, annuallyormore frequently if eventsor changes incircumstancesindicatethatthecarryingvaluesmaybeimpaired.
For the purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated to each of the Group’s cash-generating units, or groups of cash-generating units, that are expected to benefit from the synergies of the combination, irrespective of whether other assets or liabilities of the Group are assigned to those units or groupofunits.Eachunitorgroupofunitstowhichthegoodwillissoallocated:-
- RepresentsthelowestlevelwithintheGroupatwhichthegoodwillismonitoredforinternal managementpurposes;and
- IsnotlargerthanasegmentbasedoneithertheGroup’sprimaryortheGroup’ssecondary reportingformat.