(79082-V)

ANNUAL REPORT

2000

SMPC/4971/SA

SMPC METAL INDUSTRIES BHD. (79082 V)

CONTENTS

Corporate Information

2

Corporate Mission

3

Corporate Structure

4

Financial Highlights

5

Chairman’s Statement/ Penyata Pengerusi Audit Committee Financial Statements

6–8 9 10–41 1

Properties Owned by SMPC Metal Industries Bhd

Annual

42

Shareholdings Statistics

43–44

Notice of Annual General Meeting

45–46

Proxy Form

Report 2000

SMPC METAL INDUSTRIES BHD. (79082 V)

CORPORATE INFORMATION CHAIRMAN Dato’ Mohd Taufik bin Abdullah VICE-CHAIRMAN Daisuke Kadono MANAGING DIRECTOR Machendran a/l Pitchai Chetty DIRECTORS Ramakrishnan a/l Thangasamy Chettiar Dhanabalan a/l M. Pitchai Chetty Vijayan a/l O.M.V Devan Makhtar bin Mohamed Nagarajan a/l Thambiah Tye Lean Tee @ Tan Lean Tee SECRETARIES Nagarajan a/l Thambiah (MIA No. PA 1565) Kulwant Kaur a/p Tara Singh (MAICSA 7011885)

2 Annual Report 2000

AUDITORS Arthur Andersen & Co. Penthouse, 11th Floor Kompleks Mutiara Jalan Anson 10400 Penang PRINCIPAL BANKERS Bumiputra-Commerce Bank Berhad HSBC Bank Malaysia Berhad Overseas Union Bank Ltd RHB Bank Berhad Southern Bank Berhad Standard Chartered Bank Malaysia Berhad REGISTERED OFFICE 11th Floor, Bangunan FOP Jalan Anson 10400 Penang Tel No: 04-2281966 Fax No: 04-2279544 SHARE REGISTRARS Securities Services (Holdings) Sdn Bhd (36869-T) 11th Floor, Bangunan FOP Jalan Anson 10400 Penang Tel No: 04-2281966 Fax No: 04-2279544

SMPC METAL INDUSTRIES BHD. (79082 V)

CORPORATE MISSION

1.

To position SMPC as a leading growthoriented company.

2.

To seek new business opportunities in the iron and steel industry and to create increased value for our shareholders.

3.

To pursue excellence and expertise with emphasis on quality products and superior customer service. 3 Annual

4.

5.

To be seen as a good employer in bringing out the best in our employees.

To be a good corporate citizen.

Report 2000

SMPC METAL INDUSTRIES BHD. (79082 V)

CORPORATE STRUCTURE

SMPC Steel Service Centre Sdn. Bhd.

Syarikat Perkilangan Besi Gaya Sdn. Bhd. Besi Gaya (Klang) Sdn. Bhd.

STEEL SERVICE DIVISION • Shearing • Reshearing • Slitting • Slitted Flat Bars

WIRE ROD DIVISION • Drawing • Straightening • Cutting • Annealing • Profile Bending • Steel Strapping

SMPC Metal Industries Bhd. 4 Annual

SMPC Marketing Sdn. Bhd.

MARKETING DIVISION • Building Materials • Hardware Items

Report 2000

METAL RECYCLING DIVISION (Ferrous and Non-Ferrous)

Progerex Sdn. Bhd.

Edit Systems (M) Sdn. Bhd.

JP Container Services Sdn. Bhd.

• Precompression • Compressed Scrap • Shearing • Shredding

INFORMATION TECHNOLOGY • Educational Center • Corporate Training • Software Consultancy

CONTAINER SERVICES DIVISION • Container Repairs • Container Refurbishment

SMPC METAL INDUSTRIES BHD. (79082 V)

FINANCIAL HIGHLIGHTS

1996

1997

1998

1999

2000

TURNOVER (RM million)

157.4

236.0

244.0

207.6 215.2

PROFIT/(LOSS) BEFORE TAX (RM million)

11.2

13.3

4.8

TOTAL ASSETS (RM million)

185.8

217.5

230.0

EARNINGS/(LOSS) PER SHARE (sen)

29.8

53.5

16.5

(40.7)

0.4

197.3 201.1 (195.0)

4.1

Turnover (RM Million) 1996

157.4

1997

236.0

Profit/(Loss) before Tax (RM Million) 1998

244.0 1996

1999

11.2

207.6 1997

2000

13.3

215.2

5 Annual

1998

4.8

Report 2000

1999

– 40.7

2000

0.4

Total Assets (RM Million) 1996

185.8

217.5

1997

Earnings/(Loss) per share (sen) 1998

230.0 29.8

1996 1999

197.3

2000

201.1

1997

1998

53.5

16.5

1999

– 195.0

2000

4.1

SMPC METAL INDUSTRIES BHD. (79082 V)

CHAIRMAN’S STATEMENT / PENYATA PENGERUSI On behalf of the Board of Directors, I am pleased to present the Annual Report of SMPC Metal Industries Bhd for the financial year ended 31 January, 2000.

Saya bagi pihak Lembaga Pengarah dengan sukacitanya membentangkan Laporan Tahunan dan Laporan Akaun SMPC Metal Industries Bhd bagi tahun kewangan berakhir 31 Januari 2000.

Financial Results

Hasil Kewangan

I am happy to report that the Group posted a profit after tax of RM814,000 compared with a loss of RM39 million for the previous financial year. Group turnover was registered at RM215 million as against RM208 million for the previous financial year. This represented a 3% increase in turnover.

Saya amat bangga melaporkan bahawa Kumpulan telah mencatatkan keuntungan selepas cukai sebanyak RM814,000 berbanding dengan kerugian sebanyak RM39 juta bagi tahun kewangan sebelumnya. Perolehan Kumpulan telah meningkat kepada RM215 juta berbanding RM208 juta pada tahun kewangan sebelumnya. Ini adalah peningkatan sebanyak 3% di dalam perolehan.

The SMPC Group has made an impressive turnaround in revenue and corporate earnings due to its proactive and pragmatic business approach to change and adapt to its competitive business environment.

Kumpulan SMPC berjaya memperolehi hasil dan pendapatan korporat yang memberangsangkan menerusi pendekatan perniagaan yang proaktif dan pragmatik untuk menukar dan menyesuaikan Kumpulan dengan persekitaran perniagaan yang sengit.

The total assets of the Group stood at RM201.1 million compared with RM197.3 million for the preceding year.

Jumlah keseluruhan aset Kumpulan dicatatkan sebanyak RM201.1 juta berbanding RM197.3 juta pada tahun sebelumnya.

Dividends

Dividen

The Board of Directors have decided not to recommend any dividend payment for the financial year ended 31 January, 2000.

Lembaga Pengarah mencadangkan tiada pengagihan dividen untuk tahun kewangan berakhir 31 Januari 2000.

SECTORAL PERFORMANCE

PRESTASI SEKTOR

Steel Service Division

Bahagian Perkhidmatan Waja

SMPC Steel Service Centre Sdn Bhd posted a pretax profit of RM381,000 compared with a pretax loss of RM36 million for the previous period.

SMPC Steel Service Sdn Bhd telah mencatatkan perolehan sebelum cukai sebanyak RM381,000 berbanding kerugian sebelum cukai sebanyak RM36 juta pada tahun sebelumnya.

Turnover stood at RM87 million as against RM81 million for the financial year ended 31 January, 1999. The optimistic outlook of the manufacturing sector which recorded a growth in 1999 will have a positive impact on the future results of the division.

Perolehan dicatatkan pada RM87 juta berbanding RM81 juta pada tahun kewangan berakhir 31 Januari 1999. Sektor perkilangan yang menunjukkan peningkatan yang meyakinkan pada tahun 1999 akan memberi kesan positif kepada keputusan bahagian pada masa hadapan.

Wire Rod Division

Bahagian Pendawaian

Syarikat Perkilangan Besi Gaya Sdn Bhd registered a turnover of RM17.8 million compared with RM24 million for the previous financial year. The Company posted a pretax loss of RM648,000 as against a pretax loss of RM3.6 million.

Syarikat Perkilangan Besi Gaya Sdn Bhd mencatatkan perolehan sebanyak RM17.8 juta berbanding dengan RM24 juta pada tahun kewangan sebelumnya. Kerugian sebelum cukai adalah sebanyak RM648,000 berbanding dengan kerugian sebelum cukai sebanyak RM3.6 juta pada tahun sebelumnya.

6 Annual Report 2000

SMPC METAL INDUSTRIES BHD. (79082 V)

The cyclical effects of the construction sector and sluggish demand patterns brought about by the prolonged economic recession which started in 1997 have bottomed out and the Company is optimistic of its future growth.

Kesan kitaran daripada sektor pembinaan dan corak permintaan yang lembab berpunca dari kesan kegawatan ekonomi yang berpanjangan yang bermula pada tahun 1997 telah berakhir dan syarikat beroptimistik dengan peningkatan pada masa hadapan.

Marketing Division

Bahagian Pemasaran

SMPC Marketing Sdn Bhd posted a turnover of RM32 million as against RM30 million for the previous financial year. The pretax profit of RM522,000 was impressive against a pretax loss of RM1.8 million for the previous period.

SMPC Marketing Sdn Bhd mencatatkan perolehan sebanyak RM32 juta berbanding RM30 juta pada tahun sebelumnya. Keuntungan sebelum cukai sebanyak RM522,000 adalah memberangsangkan berbanding dengan kerugian sebelum cukai sebanyak RM1.8 juta pada tempoh sebelumnya.

The buildings materials sector has picked up momentum in tandem with improved economic conditions.

Sektor bahan-bahan pembinaan telah menunjukkan peningkatan yang seiring dengan keadaan ekonomi yang semakin pulih.

Metal Recycling Division

Bahagian Kitar Semula Besi

Progerex Sdn Bhd posted a pretax profit of RM1.1 million as against RM2.7 million for the previous period. Turnover was registered at RM88 million compared with RM86.3 million previously.

Progerex Sdn Bhd mencatatkan keuntungan sebelum cukai sebanyak RM1.1 juta berbanding dengan RM2.7 juta pada tempoh sebelumnya. Perolehan dicatatkan pada RM88 juta berbanding dengan RM86.3 juta sebelumnya.

The demand for ferrous and non-ferrous steel items have been encouraging and this sector is confident of improved market conditions in the future.

Permintaan bagi barang-barang waja ‘ferus’ dan ‘bukan ferus’ amat menggalakkan dan sektor ini yakin dengan perkembangan pasaran pada masa hadapan.

Education Services Division

Bahagian Perkhidmatan Pendidikan

Edit Systems (M) Sdn Bhd posted a pretax loss of RM300,000 in its first year of operations. The IT Education and Training centre is confident of increased student intake for its career and non-career programmes in Information Technology in the current year.

Edit Systems (M) Sdn. Bhd. mencatatkan kerugian sebelum cukai sebanyak RM300,000 pada tahun pertama kendaliannya. Pusat Latihan dan Pendidikan Teknologi Maklumat yakin dengan pertambahan bilangan pengambilan pelajar untuk program-program kerjaya dan bukan kerjaya di dalam Teknologi Maklumat pada tahun semasa.

Future Outlook

Pandangan Masa Hadapan

The year 2000 should see a stronger and more broad based recovery of the Malaysian economy, with significant growth in the manufacturing and construction sectors of the economy.

Tahun 2000 sepatutnya menyaksikan asas pemulihan ekonomi Malaysia yang lebih kukuh dan luas, dengan pertumbuhan yang besar di dalam sektor perkilangan dan pembinaan.

The main source of growth is expected to be from domestic demand, stimulated by measures put in place by the government to revive the economy. The external sector is also expected to exert a net expansionary impact as regional economies begin their recovery process. Overall, steel consumption will grow, spurred by the implementation of fiscal measures, such as the RM5 billion Infrastructure Development Fund.

Punca utama pertumbuhan adalah dijangka dari permintaan tempatan yang didorong oleh ukuran yang dilaksanakan oleh kerajaan untuk memulihkan kembali ekonomi. Sektor luaran juga dijangka akan berkembang maju disebabkan proses pemulihan ekonomi serantau yang telah bermula. Pada keseluruhannya, penggunaan besi akan meningkat, yang dipacu oleh perlaksanaan ukuran-ukuran fiskal, seperti Dana Pembangunan Prasarana sebanyak RM5 bilion.

7 Annual Report 2000

SMPC METAL INDUSTRIES BHD. (79082 V)

Barring any unforeseen circumstances the Board of Directors are optimistic that with the proposed injection of new capital and new business including continued prudent management, the Group will achieve positive growth in earnings and shareholders returns for the financial year ending 2001.

Tertakluk kepada sebarang keadaan yang tidak dijangka, Lembaga Pengarah berkeyakinan dengan cadangan suntikan modal dan perniagaan yang baru termasuk pengurusan bijak yang berterusan, Kumpulan akan mencapai pertumbuhan positif di dalam perolehan dan pulangan ke atas pemegang-pemegang saham pada tahun kewangan berakhir 2001.

Appreciation

Penghargaan

On behalf of the Board of Directors, I would like to take this opportunity to express our deepest gratitude to all the staff of SMPC group who have worked hard. It is certainly heart warming to witness our employees putting in their undivided effort to turn the SMPC group around despite the financial crisis and the ever changing business environment.

Bagi pihak Lembaga Pengarah, saya ingin mengambil peluang ini untuk merakamkan setinggi-tinggi penghargaan kepada semua kakitangan kumpulan SMPC yang telah bekerja keras. Kami amat terharu menyaksikan pekerja-pekerja kami berusaha bersungguh-sungguh untuk memulihkan kumpulan SMPC walaupun wujud krisis kewangan dan persekitaran perniagaan yang sentiasa bertukar.

I also wish to thank the shareholders, customers, financial institutions and the government authorities for their continuing support and confidence in the Group.

Saya juga ingin mengucapkan terima kasih kepada para pemegang saham, pelanggan, institusi-institusi kewangan dan pihak badan berkuasa kerajaan di atas sokongan yang berterusan dan keyakinan yang diberi kepada Kumpulan.

8 Annual Report 2000

DATO’ MOHD TAUFIK BIN ABDULLAH Chairman/Pengerusi

SMPC METAL INDUSTRIES BHD. (79082 V)

AUDIT COMMITTEE Members Nagarajan a/l Thambiah (Chairman of Committee, Independent Non-Executive Director) Daisuke Kadono (Independent Non-Executive Vice-Chairman) [Appointed w.e.f. 11.11.1999] Tye Lean Tee @ Tan Lean Tee (Independent Non-Executive Director) Machendran a/l Pitchai Chetty (Executive Director) Vijayan a/l O.M.V. Devan (Executive Director) [Appointed w.e.f. 31.3.2000] Shinetsu Sato (Independent Non-Executive Vice-Chairman) [Resigned w.e.f. 5.11.1999]

Terms of Reference The primary objective of the Audit Committee is to assure the shareholders of the Company that the Directors of the Company have complied with specified financial standards and required disclosure policies developed and administered by the KLSE.

Functions The functions of the Committee shall be: (i)

(ii) (iii)

to review with the external auditors the scope of their audit plan, the system of internal accounting controls, the audit reports and any findings and action to be taken. The Committee should also select external auditors for appointment by the Board each year. to review the scope and results of the internal audit procedures. to review any related party transactions that may arise within the Company or Group.

9 Annual Report 2000

Frequency of Meetings Meetings shall be held not less than twice a year. The external auditors may request a meeting if they consider it necessary.

Reporting Procedures The Secretary shall circulate the minutes of meetings of the Committee to all members of the Board.