DISCCOMP BERHAD (55420-P) Incorporated In Malaysia
ANNUALREPORT
2010
ANNUALREPORT
2010
Content Corporate Information
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Organisation Structure
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Corporate Structure
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Directors’ Profile
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Chairman’s Statement
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Tribute to the late Dato’ Norman Lim Khoon Hock
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Statement on Corporate and Social Responsibility
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Corporate Governance Statement
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Audit Committee Report
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Statement on Internal Control
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Financial Statements
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Statement of Shareholdings
69
Recurrent Related Party Transactions of a Revenue or Trading Nature
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Notice of Annual General Meeting
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Statement Accompanying Notice of Annual General Meeting
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Form of Proxy Request Form
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CORPORATE INFORMATION
BOARD OF DIRECTORS DATO’ LIM KHOON HENG Non-Executive Chairman DATO’ LIM LOONG HENG Managing Director SIAW HUM KIOW Executive Director Nicholas Lim Kean Hoong Non-Independent Non-Executive Director FAKRI BIN HJ ABDULLAH Non-Executive Director TAI KEAT CHAI Independent Non-Executive Director LEOW BOCK LIM Independent Non-Executive Director AUDIT COMMITTEE
PRINCIPAL BANKERS
Tai Keat Chai (Chairman) Leow Bock Lim Nicholas Lim Kean Hoong
RHB BANK BERHAD UNITED OVERSEAS BANK (MALAYSIA) BERHAD MALAYAN BANKING BERHAD CIMB BANK BERHAD
NOMINATION COMMITTEE
AUDITORS
Tai Keat Chai (Chairman) Leow Bock Lim Fakri Bin Hj Abdullah
ONG BOON BAH & CO B-10-1, Megan Avenue 1 189, Jalan Tun Razak 50400 Kuala Lumpur Tel No: +603-2163 0292 Fax No: +603-2163 0316
REMUNERATION COMMITTEE Tai Keat Chai (Chairman) Leow Bock Lim Dato’ Lim Loong Heng SECRETARY PAN KOW BAH (LS 0008906) REGISTERED OFFICE Wisma Lim Kim Chuan Lot 50A, Jalan 1/89B 3 ½ Miles Off Jalan Sungai Besi 57100 Kuala Lumpur Tel No: +603-7983 3333 Fax No: +603-7980 3333 E-mail:
[email protected]
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REGISTRAR SECTRARS SERVICES SDN BHD 28-1, Jalan Tun Sambanthan 3 Brickfields 50470 Kuala Lumpur Tel No: +603-2274 6133 Fax No: +603-2274 1016 WEBSITE http://www.disccomp.com.my STOCK EXCHANGE LISTING ACE Market of Bursa Malaysia Securities Berhad (Industrial Product Sector) Stock Name: Discomp Stock Code: 0006
2010 AnnualReport
ORGANISATION STRUCTURE
BOARD OF DIRECTORS Non-Executive Chairman Dato’ Lim Khoon Heng Managing Director Dato’ Lim Loong Heng Executive Director Siaw Hum Kiow Non-Independent Non-Executive Director Nicholas Lim Kean Hoong Non-Executive Director Fakri Bin Hj Abdullah Independent Non-Executive Directors Tai Keat Chai Leow Bock Lim
REMUNERATION COMMITTEE
NOMINATION COMMITTEE
Tai Keat Chai (Chairman) Leow Bock Lim Dato’ Lim Loong Heng
Tai Keat Chai (Chairman) Leow Bock Lim Fakri Bin Hj Abdullah
AUDIT COMMITTEE Tai Keat Chai (Chairman) Leow Bock Lim Nicholas Lim Kean Hoong
DISCCOMP BERHAD (55420-P)
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Corporate Structure
DISCCOMP GROUP 100%
51% PINEAPPLE COMPUTER UTARA SDN BHD
DISCCOMP BERHAD
SC-PNP EDARAN SDN BHD
92.16%
100% SC MULTIMEDIA PRODUCT SDN BHD
100% ESY INK TECHNOLOGY SDN BHD
PINEAPPLE COMPUTER SYSTEMS SDN BHD
100% PINEAPPLE COMPUTERS & ACCESSORIES SDN BHD
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2010 AnnualReport
51% PINE SYSTEM TECHNOLOGY SDN BHD
Directors’ Profile
DATO’ LIM KHOON HENG, PATRICK (Non-Executive Chairman and Director) 58 years of age, Malaysian DSSA Chairman, since 8 January 2001, now holding a non-executive and non-independent position. He was appointed as the Chief Executive Officer and Group Managing Director of Chuan Huat Resources Berhad (“CHRB”) on 2 May 1997. He is the Managing Director of Chuan Huat Hardware (Sdn.) Berhad since 14 December 1976. He is responsible for the operation management and strategic planning of the CHRB Group. He was conferred with the DSSA award which carries the title of “Dato” by the Sultan of Selangor on 13 March 1999. He has been appointed as the Deputy President of the Malaysia Hardware, Machinery & Building Materials Dealers’ Association and the Advisor of the Metal Dealers Association (Selangor and Kuala Lumpur). He was awarded the Outstanding Entrepreneurship Award on 29 July 2010 in the Asia Pacific Entrepreneurship Awards 2010 (APEA 2010). Dato’ Lim Khoon Heng is also the Group Managing Director / Chief Executive Officer in CHRB. He attended five out of five Board Meetings held in the financial year ended 31 December 2010. DATO’ LIM LOONG HENG, MARK (Managing Director and member of the Remuneration Committee) 56 years of age, Malaysian DIMP Managing Director, since 12 December 2000, now holding an executive and non-independent position. He is also the Deputy Managing Director of Chuan Huat Resources Berhad (“CHRB”) Group, a post he held since 2 May 1997 and a Director of Chuan Huat Hardware (Sdn.) Berhad since 3 January 1977. He was attached to Schinger Ltd in UK as an Assistant Accountant for two years prior to his appointment to the Board of Directors of Chuan Huat Hardware Holdings Sdn. Bhd. He currently takes charge of corporate planning matters of the CHRB Group. He is responsible for setting up the IT Division of the CHRB Group and for securing the OEM deal with Emtec as well as instrumenting the tie up with local hypermarkets to market and distribute computer media, peripherals and accessories. He was conferred with the DIMP award which carries the title of “Dato” by the Sultan of Pahang on 26 February 2005. Dato’ Lim Loong Heng is also the Deputy Managing Director in CHRB. He attended five out of five Board Meetings held in the financial year ended 31 December 2010. SIAW HUM KIOW (Executive Director) 50 years of age, Malaysian Director, since 20 August 2001, now holding an executive and non-independent position.
He is an Operating Director of Marketing for IT Division of the Group since 1999. He holds a Diploma in Civil Engineering. He has over fourteen years working experience in trading of IT related accessories. Prior to joining the Group in 1998, he was attached with Suwibynn (M) Sdn Bhd as Sales Executive for five years and Goldtronics (M) Sdn Bhd as Assistant Sales Manager for five years. Mr. Siaw Hum Kiow attended five out of five Board Meetings held in the financial year ended 31 December 2010.
DISCCOMP BERHAD (55420-P)
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Directors’ Profile
NICHOLAS LIM KEAN HOONG (Non-Independent and Non-Executive Director) 30 years of age Malaysian Director, holding a Non-Independent and Non-executive position and was appointed on 25 February 2011. He has joined the Chuan Huat Group in June 2006 as the Manager responsible for the operation and marketing of the steel services centre division of Chuan Huat Group. He is an Executive Director of CH Reinforcing Steel (M) Sdn Bhd and Bars & Mesh Industries Sdn Bhd since July 2009. He holds a Bachelor’s Degree in Computer Science and Management Studies (Hons) from Nottingham University. Nicholas Lim Kean Hoong is also the Executive Director in Chuan Huat Resources Berhad. He was appointed as an alternate director to Dato’ Lim Khoon Hock on 31 May 2010 and has attended three out of five Board Meetings held in the financial year ended 31 December 2010. He ceased to be alternate director on the demised of Dato’ Lim Khoon Hock on 17 December 2010.
TAI KEAT CHAI (Director, member of Audit Committee, Remuneration Committee and Nomination Committee) 57 years of age, Malaysian Director, since 25 September 2001, now holding a non-executive and independent position. He is qualified as a Fellow of the Institute of Chartered Accountants in England & Wales and is also a member of the Malaysian Institute of Accountants. He worked at KPMG, London as an Audit Senior between 1977 and 1978, after which he returned to Malaysia and commenced working with PricewaterhouseCoopers in Kuala Lumpur. In 1981, he joined Alliance Investment Bank Berhad where he worked in corporate finance for 7 years before he ventured into stockbroking, during which time he worked in SJ Securities Sdn Bhd, A.A Anthony Securities Sdn Bhd and ECM Libra Investment Bank Berhad. He is presently a director of Fiscal Corporate Services Sdn Bhd. Mr. Tai Keat Chai is also an Independent Non-Executive Director in Chuan Huat Resources Berhad, Cuscapi Berhad, MIDF Amanah Investment Bank Berhad, Imaspro Corporation Berhad, Opensys (M) Berhad and SILK Holdings Berhad. He attended five out of five Board Meetings held in the financial year ended 31 December 2010.
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2010 AnnualReport
Directors’ Profile
LEOW BOCK LIM (Director, member of Audit Committee, Remuneration Committee and Nomination Committee) 69 years of age, Malaysian Director, since 25 September 2001, now holding a non-executive and independent position. He is an associate of The Institute of Chartered Secretaries and Administrators and an associate of the Institute of Canadian Bankers. He is a retired banker who has had over 35 years of working experience in various local and foreign banks. He began his banking career with the OCBC Bank in 1960. In 1962, he left to join United Malayan Banking Corporation Berhad as an operations officer. Between 1966 and 1970, he held various operational and treasury positions in The Chase Manhattan Bank. In 1971 and 1972, he served as the chief operating officer of the Oriental Bank Berhad. Between 1973 and 1977, he was the treasury head of The Bank of Nova Scotia. He joined the Security Pacific Asian Bank in 1978 and was its country head for 12 years. In 1994, he joined Alliance Bank Berhad as its Senior Vice President and served as its head of treasury and international banking prior to his retirement in 2000. Mr. Leow Bock Lim is also an Independent Non-Executive Director in Chuan Huat Resources Berhad and Voir Holdings Berhad. He attended five out of five Board Meetings held in the financial year ended 31 December 2010.
FAKRI BIN HJ ABDULLAH (Non-executive Director and member of Nomination Committee) 52 years of age, Malaysian Director, since 12 December 1994, now holding a non-executive position.
He holds an Advanced Diploma in Business Management from Republic of Korea. He is currently the Chairman and Managing Director for Abdullah’s Corporation Sdn Bhd, a company involved in general contracting and tyre rethreading manufacturing base in Kelantan, Managing Partner of Kelma Enterprise which is involved in projects development and Marfin Enterprise which is a general contractor. He is actively involve in the Malay Chamber of Commerce Malaysia State of Kelantan and also the Kelantan Entrepreneur Development Foundation and holds a position of Senior Committee member since 1998. He is also the chairman for NGO’s – Kelantan Manufacturer’s Association (KELMA), MAYC PCD Division and PIBG Sek. Keb. Langgar in Kelantan. Encik Fakri Bin Hj Abdullah attended four out of five Board Meetings held in the financial year ended 31 December 2010.
Family Relationship Except for Dato’ Lim Khoon Heng and Dato’ Lim Loong Heng who are brothers while Nicholas Lim Kean Hoong is the nephew to both Dato’ Lim Khoon Heng and Dato’ Lim Loong Heng, none of the other Directors are related to one another, nor with any major shareholders. Conviction for Offences None of the Directors have been convicted of any offence (excluding traffic offences) within the last 10 years.
DISCCOMP BERHAD (55420-P)
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Chairman’s Statement
On behalf of the Board of Directors of Disccomp Berhad, I am pleased to present the Group and Company’s Annual Report and the Audited Financial Statements for the financial year ended 31 December 2010. OPERATION REVIEW Despite the overall slowdown in the global economy, as well as the domestic economy, the Group managed to grow the business by opening another retail outlet in Kuantan, East Coast Mall and also achieving a record participation of over 20 major IT fairs during the year. By staying focus on the core business of printers and consumables and maintaining a strong relationship with major principals, the group continues to see an increase in the sales turnover for the year. FINANCIAL PERFORMANCE The Group managed to increase its revenue by another 18% to RM44.5 million from RM37.5 million in the previous year, whilst the profit before tax was also increased by another 118% to RM1.7 million as compared to RM0.79 million in the previous year.
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2010 AnnualReport
Chairman’s Statement
BUSINESS OUTLOOK The overall IT (InformationTechnolgy) industry is looking very exciting and challenging, especially with the recent launch of I Pad2 and other major brand tablets into the market which we believe will open up more demand for other related products, such as accessories and internet services. This situation will augurs well for the group as it has the expertise and network ready to tap the market. DIVIDEND The Board does not recommend any payment of dividend for the financial year ended 31 December 2010. APPRECIATION With great sadness, I wish to inform the demise of one of the founding members of the company, Dato’ Norman Lim Khoon Hock on the 17 December 2010 and on behalf of the Board of Directors, extend our heartfelt condolences to the family. His untiring contribution, vision, leadership, will always be remembered and cherished. I also wish to express my sincere appreciation and thanks to our staff, valued customers, suppliers, bankers and all others who have contributed towards the success of the Company and also to my fellow Board members for their valuable advice and guidance.
DATO’ LIM KHOON HENG Chairman
DISCCOMP BERHAD (55420-P)
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TRIBUTE TO THE LATE DATO’ NORMAN LIM KHOON HOCK
W
e, the Board of Directors, management and staff would like to extend our deepest condolences to the family of the late Dato’ Norman Lim Khoon Hock, who has passed away on 17 December 2010. Dato’ Norman who had been a Director of Disccomp Berhad since 2001 would be best remembered for his wisdom and dedications that has provided invaluable contributions for every milestone in the growth of the Disccomp Group. We would like to express our heartfelt deep gratitude, appreciations and sincere thanks to our beloved and well-respected Dato’ Norman. We would forever cherish the irreplaceable memories of Dato’ Norman’s leadership and his natural abilities in making every one of us feel like a true member of the Disccomp Team.
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Statement On Corporate And Social Responsibility
Disccomp Berhad and its subsidiaries (“the Group”) has long recognised and acknowledged the importance of a corporate culture that emphasises good corporate citizenship. As such the Group is committed and endeavours on ongoing basis, to integrate Corporate Social Responsibility (”CSR”) practices into its day to day business operations. The Group aims not only to increase the stakeholder value through its core business but also of its responsibilities for the betterment of the community and the environment. The CSR contributions of the Group includes:ENVIRONMENT The Group complies to environmental laws and regulations. The Group has put in continuous effort to ensure it operates in an environmental friendly condition. During the year, the Group was not penalised for any instance of non-compliance with environment laws and regulations. COMMUNITY The Group plays its role as a socially responsible corporate citizen in the community whenever the need arises. The Group is active and aware on community welfare by supporting needy social objectives in the communities in which its businesses operate and its employees live and work. During the year, the Group has given donations for various charitable causes and to certain needy bodies, such as donations for various community and charitable organisations. WORKPLACE The Group recognises the importance of ensuring a conducive and safe environment for employees to work in. The Group has through its Occupational, Safety and Health committee is actively ensuring safety, health and welfare of all employees are not being compromised. Consistent education, training, counselling or industrial accident prevention programmes are being held to ensure a high level of awareness of safety requirements being disseminated to all employees at all levels. The Group constantly upgrades the employees’ skill, knowledge and experiences which would enhance the individual employee’s competency. Monthly contributions are made to Human Resource Development Fund to support the Government effort to encourage corporate bodies to invest in training and skills upgrading for employees. The Group have also organised out-door activities to promote teamwork and create a harmonious environment for employees and their family members. This includes activities such as social events, sports activities and company trips.
DISCCOMP BERHAD (55420-P)
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Corporate Governance Statement
The Board of Directors of Disccomp Berhad (“Board”) is fully committed to the maintenance of high standards of corporate governance by supporting and implementing the prescriptions of the principles and best practices set out in Parts 1 and 2 of the Malaysian Code on Corporate Governance (“the Code”) respectively. The Board has directed and managed the business and affairs of the Group towards enhancing business prosperity and corporate accountability with the ultimate objective of realising long term shareholders’ values whilst taking into account the interests of other stakeholders. The Board is pleased to provide the following statements, which outlines the main corporate governance practices that were in place throughout the financial year unless otherwise stated. COMPLIANCE STATEMENT The Group has complied throughout the year ended 31 December 2010 with all the best practices of corporate governance set out in Part 2 of the Code. PRINCIPLES STATEMENTS The following statement sets out how the Group has applied the principles in Part 1 of the Code. The principles are dealt with under the following headings: (A) Board of Directors, (B) Directors’ remuneration, (C) Shareholders and (D) Accountability and audit. A. BOARD OF DIRECTORS
(a) Board responsibilities The Group is controlled and led by a dynamic Board. It has a balanced board composition with effective independent directors. The Board acknowledges the pivotal role played by the Board in the stewardship of its direction and operations, and ultimately the enhancement of long-term shareholder value. To fulfil this role, the Board is responsible for the overall corporate governance of the Group, including its strategic direction, establishing goals for management and monitoring the achievement of these goals.
(b) Division of roles and responsibilities between the Chairman and Managing Director There is a distinct and clear division of the roles and responsibilities between the Chairman of the Board and the Managing Director (“MD”) to ensure that there is a proper balance of power and authority. The Chairman is primarily responsible for the effective conduct of the Board and ensuing that all Directors have full and timely access to all relevant information necessary for informed decision making. The Chairman encourages active participation by Board members and provides reasonable time for discussion of issues raised at meetings in order to reflect the consensus of the whole Board and not the views of any individual or group. The MD has overall responsibilities over the operational and business units, organisational effectiveness and implementation of Board policies, directives, strategies and decisions.
(c) Board meetings The Board ordinarily meets at least four (4) times a year at quarterly intervals with additional meetings convened when urgent and important decisions need to be taken between the scheduled meetings. During the year ended 31 December 2010, the Board met on five (5) occasions; where it deliberated upon and considered a variety of matters including the Group’s financial results, corporate proposals, the business plan and direction of the Group.
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2010 AnnualReport
Corporate Governance Statement
A. BOARD OF DIRECTORS (cont’d)
(c) Board meetings (cont’d) The attendance record of each Director was as follows :
Numbers of Meeting attended Dato’ Lim Khoon Heng Dato’ Lim Loong Heng Dato’ Lim Khoon Hock (Demised on 17 December 2010) Nicholas Lim Kean Hoong (Alternate to Dato Lim Khoon Hock) Siaw Hum Kiow Fakri Bin Hj Abdullah Tai Keat Chai Leow Bock Lim
5/5 5/5 *2/5 *3/5 5/5 4/5 5/5 5/5
*Note: During the financial year ended 31 December 2010, Dato’ Lim Khoon Hock was unfit to attend the Board Meeting and his son Mr. Nicholas Lim Kean Hoong attended during his absent. Mr. Nicholas Lim Kean Hoong was appointed as an alternate director to Dato’ Lim Khoon Hock on 31 May 2010. Mr. Nicholas Lim Kean Hoong was subsequent appointed as an Non-Executive Non-Independent Director on 25 February 2011. The Board receives documents on matters requiring its consideration prior to and in advance of each meeting. The Board papers providing updates on operational, financial and corporate developments as well as minutes of meetings of the Board are circulated prior to the meeting are comprehensive and encompass both quantitative and qualitative factors so that informed decisions are made. All proceedings from the Board meetings are minuted and signed by the Chairman of the meeting. The Board has full access to senior management and the advice and services of the Company Secretary, who are responsible for ensuring that Board meeting procedures are followed and that applicable rules and regulations are complied with. In addition, the Directors may also seek independent professional advice, at the Company’s expense, if required. The Directors may also consult with the Group Managing Director and other Board members prior to seeking any independent professional advice.
(d) Board balance During the financial year, the Board has seven members, two Executive Directors and five Non-Executive Directors. Following the demised of Dato’ Lim Khoon Hock on 17 December 2010, the Board was reduce to six until the appointment of Mr. Nicholas Lim Kean Hoong to the Board on 25 February 2011. A brief profile of each Director can be found in the Directors’ Profile. The concept of independence adopted by the Board is in tandem with the definition of an independent Director in Chapter 1, Part A, Rule 1.01 of the Listing Requirements of Bursa Securities Malaysia Berhad (“Bursa Securities”) for the ACE Market. The key elements for fulfilling the criteria are the appointment of an independent Director who is not a member of management (a non-executive director) and who is free of any relationship which could interfere with the exercise of independent judgement or the ability to act in the best interests of the Group. The Board complied with Chapter 15, Part B, Rule 15.02 of the Listing Requirements of Bursa Securities for the ACE Market which requires that at least two (2) directors or onethird of the Board, whichever is the higher, are independent directors.
DISCCOMP BERHAD (55420-P)
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Corporate Governance Statement
A. BOARD OF DIRECTORS (cont’d)
(d) Board balance (cont’d) The Directors, with their different backgrounds and specialisations, collectively bring with them a wide range of experience and expertise in areas such as finance, corporate affairs, marketing and operations. The Executive Directors in particular are responsible for implementing the policies and decisions of the Board, overseeing the operations as well as co-ordinating the development and implementation of business and corporate strategies. The Independent Non-Executive Directors bring to bear objective and independent judgement to the decision making of the Board and provide a capable check and balance for the Executive Directors. The Non-Executive Directors contribute significantly in areas such as policy and strategy, performance monitoring, allocation of resources as well as improving governance and controls. Together with the Executive Directors who have intimate knowledge of the business, the Board is constituted of individuals who are committed to business integrity and professionalism in all its activities. As and when a potential conflict of interest arises, it is a mandatory practice for the Directors concerned to declare their interests and abstain from the deliberation. There is a clear division of responsibilities at the head of the Group to ensure a balance of authority and power. The Board is satisfied that the current Board composition fairly reflects the investment of minority shareholders in the Group.
(e) Supply of information The members of the Board in their individual capacity have full and timely access to information with board papers distributed in advance of meetings for the discharge of their duties and responsibilities. Prior to the meetings of the Board, board papers which include the agenda and reports relevant to the issues of the meetings covering the areas of strategic, financial, operational and regulatory compliance matters, were circulated to all the directors. The Board meet, review and approve all corporate announcements, including the announcement of the quarterly financial results, prior to releasing them to Bursa Securities. Besides direct access to management staff, external professional advisers as well as company secretary are also made available to render their independent views and advice to the Board.
(f) Board committee
i.
Audit Committee The Audit Committee of the Board has been in place since 2001. It presently comprises two (2) Independent Non-Executive Directors and one (1) Non-Independent Non-Executive Director. A brief report on Audit Committee can be found in the “Audit Committee Report”.
ii. Nomination Committee The Board has on 23 April 2003 established a Nomination Committee, which comprised the following members: Name of directors Tai Keat Chai (Chairman) Leow Bock Lim Fakri Bin Hj Abdullah
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Designation Independent Non-Executive Director Independent Non-Executive Director Non-Executive Director
2010 AnnualReport
Corporate Governance Statement
A. BOARD OF DIRECTORS (cont’d)
(f) Board committee (cont’d) The Nomination Committee is empowered by the Board for recommending board appointments and assessment of directors on an ongoing basis. The Committee also keeps under review the Board structure, size and composition as well as considering the Board succession planning. There was no meeting conducted during the financial year ended 31 December 2010 as there is currently no necessity to appoint any new members to the Board since the establishment of Nomination Committee. The Board is of the opinion that the present mix of experience and expertise is adequate, optimal and sufficiently capable in overseeing and ensuring that the strategies of the Group are thoroughly deliberated, considered and properly implemented.
iii. Remuneration Committee The Board has on 23 April 2003 established a Remuneration Committee, which comprised the following members: Name of directors Tai Keat Chai (Chairman) Leow Bock Lim Dato’ Lim Loong Heng
Designation Independent Non-Executive Director Independent Non-Executive Director Managing Director
The remuneration committee is responsible for recommending the remuneration packages of executive directors to the Board. None of the executive directors participated in any way in determining their individual remuneration. The Board as a whole determines the remuneration of non-executive director with individual directors abstaining from decisions in respect of their individual remuneration.
(g) Directors’ Training The Board recognises the need to broaden the Board’s perspectives, skills and knowledge and to keep abreast with the development in the corporate environment. In line with this aspiration, many of the Board members have allocated time to further improve their knowledge by attending relevant seminars and programmes. The training programme or seminars attended by some of the Directors and senior management of Group for the financial year ended 31 December 2010 includes:i. ii. iii.
The All New Year 2010 Edition Quarterly Interim Financial Reporting and the Various New Standards Interpretations and Amendments to Various Financial Reporting Standards (“FRS”) Impact of proposed GST on Malaysia Companies 2011 Budget Seminar – Highlights & Implications
The Board is regularly updated on the latest updates and/or amendments on the Listing Requirements and other regulatory requirements in discharging their roles, duties and responsibilities.
(h) Retirement and re-election The Articles of Association provide that an election of Directors shall take place each year. The Directors to retire in each year are the directors who have been longest in office since their appointment or reappointment. A retiring director is eligible for re-appointment. The Articles of Association also provide that the Board members shall retire once at least in each three (3) years and shall be eligible for re-election. These provide an opportunity for the shareholders to renew their mandates. The election of each director is voted on separately. To assist shareholders in their decision, sufficient information such as personal profile, meeting’s attendance and the shareholdings in the Company of each director standing for election are disclosed under the Directors Profile and Analysis of shareholdings. Directors over seventy (70) years of age are required to submit themselves for re-appointment annually in accordance with Section 129(6) of the Companies Act, 1965. DISCCOMP BERHAD (55420-P)
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Corporate Governance Statement
B. DIRECTORS’ REMUNERATION
(a) Remuneration Procedure The practised policy on directors’ remuneration by the Remuneration Committee is to provide the remuneration packages necessary to attract, retain and motivate directors of the quality required to manage the business of the Group and to align the interest of the directors with those of the shareholders. Information prepared by independent consultants and survey data on the remuneration practices of comparable companies are taken into consideration in determining the remuneration packages. There was one (1) meeting convened during the financial year ended 31 December 2010.
(b) Details of the directors’ remuneration The aggregate remuneration of directors who served during the financial year ended 31 December 2010 are as follows: Element of remuneration
Executive Directors
Non-Executive Directors
Total
Salaries & other emoluments Fees
114,643 -
- 56,000
114,643 56,000
114,643
56,000
170,643
The number of directors whose remuneration fall into the respective bands are as follows: Band of remuneration 0 – 50,000 50,000 – 100,000
Executive Directors
Non-Executive Directors
Total
- 1
3 -
3 1
C. SHAREHOLDERS The Company recognises the importance of communicating with its shareholders and does this through the annual report, Annual General Meeting, Company’s website and analyst meetings. The policy of the Company is to maintain an active dialogue with its shareholders with the intention of giving shareholders a clear and concise picture of the Company’s performance and position as possible. The key elements of the Company’s dialogue with its shareholders is the opportunity to gather views of, and answer questions from, both private and institutional shareholders on all issues relevant to the Company at the Annual General Meeting. At the Annual General Meeting, the shareholders are encouraged to ask questions both about the resolutions being proposed or about the Group’s operations in general. Additionally, a press conference is usually held immediately after the Annual General Meeting where the Group Managing Director advises the press of the resolutions passed, and answers questions on the Group’s operation. The Executive Directors are also present at the press conference to clarify and explain any issue. The Company also responded to fund managers, institutional investors, investment analysts and members of media upon request, to brief them on key events of the Company. Investors’ and analysts’ feedback is sought to ensure principal issues are being effectively communicated and shareholders’ objectives are known.
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2010 AnnualReport
Corporate Governance Statement
D. ACCOUNTABILITY AND AUDIT
(a) Financial reporting The Board aims to provide and present a balanced and meaningful assessment of the Group’s financial performance and prospects at the end of the financial year, primarily through the annual financial statements, quarterly announcements of results to shareholders as well as the Group’s Chairman statement and review of operations in the annual report. The Board is assisted by the Audit Committee to oversee the Group’s financial reporting processes and the quality of its financial reporting.
(b) Directors’ responsibility statement in respect of the preparation of the audited financial statements The Board is responsible for ensuring that the financial statements of the Group give a true and fair view of the state of affairs of the Group and of the Company as at the end of the accounting period and of their profit or loss and cash flow for the period then ended. In preparing the financial statements, the Directors have (1) ensured that applicable approved accounting standards in Malaysia and the provisions of the Companies Act, 1965 have been applied, and (2) selected and applied consistently suitable accounting policies and made reasonable and prudent judgements and estimates. The directors also have a general responsibility for taking such steps as are reasonably open to them to safeguard the assets of the Group and to prevent and detect fraud and other irregularities.
(c) Directors’ responsibility statement in respect of the state of internal controls The Board acknowledges its responsibility for the internal control system in the Company and the Group, covering not only financial controls but also controls relating to operational, compliance and risk management. The system of internal control involves each key business unit and its management, including the Board, and is designed to meet the business unit particular need and to manage the risks to which they are exposed. The system, by its nature, can only provide reasonable and not absolute assurance against material misstatement, loss or fraud. The concept of reasonable assurance recognises the costing aspect, whereby the cost of control procedures is not to exceed the expected benefits. The Board recognises that risks cannot be completely eliminated. As such, the systems, processes and procedures being put in place are aimed at minimising and managing them. Ongoing reviews are continuously carried out to ensure the effectiveness, adequacy and integrity of the system of internal controls in safeguarding the Company’s assets.
(d) Relationship with the Auditors The Board has established a formal and transparent relationship with the auditors. The Audit Committee recommends the appointment of the external auditors and their remuneration. The appointment of external auditors is subject to the approval of shareholders in general meeting whilst their remuneration is authorised by shareholders to be fixed by the Board. Key features underlying the relationship of the Audit Committee with the auditors including the role of both the external and internal auditors are further described in the Audit Committee Report. A summary activity of the Audit Committee during the year, including the evaluation of the independent audit process, are set out in the Audit Committee Report.
DISCCOMP BERHAD (55420-P)
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Corporate Governance Statement
ADDITIONAL COMPLIANCE INFORMATION
(a) Statement on material contracts involving directors’ or major shareholders’ interest There is no material contracts subsisting as at 31 December 2010 or entered into since the end of the previous financial year, by the Company or its subsidiaries, which involved the interests of the Directors or major shareholders other than those disclosed under the notes to the account on Related Party Transactions of a revenue or trading nature. The Company is also seeking shareholders’ mandate on Recurrent Related Party Transactions of a revenue or trading nature for transactions to be entered by the Company or its subsidiaries with Related Parties in the forthcoming Annual General Meeting. The details of Recurrent Related Party Transactions of a revenue or trading nature for transactions to be entered by the Company or its subsidiaries with Related Parties are included in the Circular to Shareholders dated 2 June 2011 which is enclosed together with this Annual Report.
(b) Non-audit fee As at the date of this statement, there is no non-audit fee incurred and paid to external auditors.
(c) Utilisation of Proceeds There were no proceeds raised from any corporate proposals as at the date of this statement.
(d) Shares Buy-Back There were no shares buy-back during the financial year ended 31 December 2010.
(e) Options, Warrants or Convertible Securities Exercised The Company has not issued any options, warrants or convertible securities in respect of the financial year ended 31 December 2010.
(f) American Depository Receipt (“ADR”) or Global Depository Receipt (“GDR”) The Company has not sponsored any ADR or GDR programme for the financial year ended 31 December 2010.
(g) Sanctions and/or Penalties The Company and its subsidiaries, Directors and management have not been imposed with any sanctions and/or penalties by any regulatory bodies.
(h) Profit Guarantee The Company did not issue any profit forecast or profit guarantee for the financial year 31 December 2010.
(i) Revaluation Policy The Company has not adopted a regular revaluation policy on landed properties.
18
2010 AnnualReport
AUDIT COMMITTEE REPORT
I. MEMBERSHIP
The present members of the Audit Committee comprise:
Name
Designation
Tai Keat Chai (Chairman) Leow Bock Lim Nicholas Lim Kean Hoong
Independent Non-Executive Director Independent Non-Executive Director Non-Independent Non-Executive Director
Note : Dato’ Lim Khoon Hock was demised on 17 December, 2010 and Mr Nicholas Lim Kean Hoong was appointed as the member of the Committee on 25 Feburary, 2011.
II. MEETING AND ATTENDANCE
During the year ended 31 December 2010, the Committee held five (5) meetings, which were appropriately structured through the use of agendas, and the attendance details of the members were as follows:
Name
Tai Keat Chai 5/5 Leow Bock Lim 5/5 Dato’ Lim Khoon Hock (Demised on 17 December 2010) *2/5 Nicholas Lim Kean Hoong *3/5
Note : During the financial year ended 31 December 2010, Dato’ Lim Khoon Hock was unfit to attend the Board Meeting and his son Mr. Nicholas Lim Kean Hoong attended during his absent. Mr. Nicholas Lim Kean Hoong was appointed as an alternate director to Dato’ Lim Khoon Hock on 31 May 2010. Mr. Nicholas Lim Kean Hoong was subsequent appointed as an Non-Executive Non-Independent Director on 25 February 2011.
The Company Secretary and the Finance General Manager were also present by invitation at all the meetings, whilst the internal and external auditors also attended when invited to do so.
No. of meetings attended
III. SUMMARY OF ACTIVITIES
The main activities undertaken by the Committee during the year included the following: -
reviewed the quarterly reports of the Company prior to their submission to the Board and public release;
-
reviewed the audited financial statements of the Company prior to their submission to the Board for its consideration and approval;
-
reviewed the external auditor’s scope of work and audit plans for the year;
-
reviewed with the external auditors the results of the audit, the audit report and the management letter, including management’s response;
-
reviewed and discussed on the internal audit reports to assess the effectiveness of the system of internal controls in the areas audited;
-
reviewed the related party transactions entered by the Group;
-
evaluated and recommended the re-appointment of the external auditor.
DISCCOMP BERHAD (55420-P)
19
Audit Committe Report
IV. INTERNAL AUDIT FUNCTION
The Company outsourced its internal audit functions to a professional services firm, which is tasked with the aim of assisting the Committee to discharge its duties and responsibilities.
The firm has conducted ongoing review of the adequacy and effectiveness of the system of internal control. Some internal control weaknesses were identified during the financial year under review, all of which have been or are being addressed by the management. None of these weaknesses has resulted in any material loss that would require disclosure in the Group’s financial statement.
V. TERMS OF REFERENCE
Objectives
The primary objectives of the Audit Committee include the following: a) to safeguard the interests of all shareholders including the minority shareholders; b) to assist in discharging the responsibilities of the Board of Directors as they relate to the Company’s management and internal controls, accounting policies and financial reporting; and c) to provide, by way of regular meetings, a line of communication between the Board, and the internal and external auditors.
Membership
The Committee shall be appointed by the Board from amongst its members and shall consist of no fewer than three members, all the members must be non-executive directors of which the majority shall comprise independent directors. The chairman of the Audit Committee shall be an independent director.
Authority
The powers of the Audit Committee include the following: (a) Explicit authority to investigate any matters within its terms of reference; (b) The resources which it needs to perform its duties; (c) Full access to any information which it requires in the course of performing its duties; (d) Unrestricted access to the chief executive officer and the chief financial officer; (e) Direct communication channels with external auditors and internal auditors (if any); (f) Be able to obtain independent professional or other advice in the performance of its duties at the cost of the Company; and (g) Be able to invite outsiders with relevant experience to attend its meetings if necessary.
20
2010 AnnualReport
Audit Committe Report
V. TERMS OF REFERENCE (cont’d)
Meetings
The Committee shall meet at least four (4) times a year, and as many times as it deems necessary.
The majority of members present shall be independent directors in order to form a quorum.
The Company Secretary of the Company shall act as the Secretary of the Committee, and shall draw up an agenda for circulation together with the relevant support papers at least one week prior to each meeting to the members.
The Company Secretary shall also be responsible for keeping the minutes of the meetings, which shall be circulated to the members of the Board as well.
The Committee shall meet at least once a year with the management and the internal and external auditors in separate sessions without the presence of any executive Board member.
Functions The functions of the Audit Committee include the review of the following: (a) The nomination of the external auditor; (b) The adequacy of existing external audit arrangements, with particular emphasis on the scope and quality of the audit; (c) The effectiveness of the internal audit function (if any); (d) The effectiveness of the internal control and management information systems; (e) The financial statements of the Company with both the external auditors and management; (f) The external auditors’ audit report; (g) Any management letter sent by the external auditors to the Company and the management’s response to such letter; (h) Any letter of resignation from the Company’s external auditors; (i) The assistance given by the Company’s officers to the external auditors; (j) All areas of significant financial risk and the arrangements in place to contain those risks to acceptable levels; and (k) All related party transactions and potential conflict of interest situations.
DISCCOMP BERHAD (55420-P)
21
Statement On Internal Control
INTRODUCTION The Board is committed to maintain a sound system of internal control in the Group and is pleased to outline the nature and scope of internal control of the Group during the year. The Group’s system of internal control includes the establishment of an appropriate control environment and framework as well as reviewing its adequacy and integrity. The system of internal control covers, inter-alia, financial, operational and compliance controls and risk management procedures. BOARD RESPONSIBILITY The Board acknowledges its responsibility for maintaining a sound system of internal controls and risk management practices to good corporate governance. However, the Board recognizes that reviewing the effectiveness of the Group’s system of internal control is a concerted and continuous process, designed to manage rather than to eliminate the risk of failure to achieve business objectives. In pursuing these objectives, internal controls can only provide reasonable and not absolute assurance against material misstatement or loss. The Board confirms that there is an ongoing process for identifying, evaluating and managing the significant risks faced by the Group that has been in place for the financial year under review and up to the date of approval of the annual report and financial statements. RISK MANAGEMENT FRAMEWORK The Board is aware that a sound system of internal control should be embedded in the operations of the Group and form part of its culture. The system of internal control not only covers financial controls but also operational and compliance controls and risk management. It involves key management in each business, including the Board and is designed to meet the Group’s particular needs, manage the risks they are exposed to and ensure compliance with the applicable laws and regulations. Key commercial and financial risks are reviewed together with other more general risks as those relating to compliance with laws and regulations. These monitoring, reviewing and reporting process have been and are aimed to give assurance that the structure of controls and operations is appropriate to the Group’s operations and that there is an acceptable level of risks throughout the Group’s business. The above risk management framework facilitates the ability of the Board and management to manage risks within the risk parameters and risk standards. Continuous effort is made to improve policies, processes, people and structure within the Group. Besides improving the management of existing risks, the framework also manages potential risks in the light of changes in risk profile experience by the industry and the Group. KEY PROCESSES The key processes that the Board has established in reviewing the adequacy and integrity of the system of internal controls are as follows: • An operational structure with defined lines of responsibility or delegation of authority is in place. A process of hierarchical reporting has been established which provides for a documented and auditable trail of accountability. • A documented delegation of authority with clear lines of responsibility in identifying the approving authority of various transactions. • Detailed budgeting process established requiring all business units to prepare budget and business plan on an annual basis.
22
2010 AnnualReport
Statement On Internal Control
KEY PROCESSES (cont’d) • Effective reporting systems which expose significant variances against budget and plan are in place to monitor performance; key variances are followed-up by the management and reported to the Board on a quarterly basis. • Regular and comprehensive information provided to management, covering financial performance and key business indicators, such as staff utilization and cash flow performance. • Regular visits to operating units by members of the Board and senior management. INTERNAL AUDIT The Group has engaged a professional consulting firm to provide outsourced internal audit services, which provides support to the Audit Committee in discharging it’s duties with respect to the adequacy and integrity of the system of internal controls within the Group. During the year under review, internal auditor carried out audit based on the internal audit plan approved by the Audit Committee. The audit findings are deliberated and resolved with the management. The Audit Committee on behalf of the Board, reviews internal control issues identified and recommendations from reports by the internal and external auditors on a regular basis. Some internal control weaknesses were identified during the financial year under review, all of which have been or are being addressed by the management. None of these weaknesses has resulted in any material loss that would require disclosure in the Group’s Annual Report.
DISCCOMP BERHAD (55420-P)
23
24 2010 AnnualReport
Financial Statements Directors’ Report
26
Statement By Directors
30
Statutory Declaration
30
Independent Auditors’ Report
31
Statements Of Financial Position
33
Statements Of Comprehensive Income
35
Statements Of Changes In Equity
37
Statements Of Cash Flows
39
Notes To The Financial Statements
40
25 DISCCOMP BERHAD (55420-P)
25
Directors’ Report
The Directors have pleasure in presenting their report and the audited financial statements of the Group and of the Company for the financial year ended 31 December 2010. PRINCIPAL ACTIVITIES The principal activities of the Company are distribution of printing consumables and computers accessories and investment holding. The principal activities of the subsidiary companies are shown in Note 5 to the financial statements. There have been no significant changes in the activities of the Company and of its subsidiary companies during the financial year as disclosed in Note 5 to the financial statements. RESULTS
GROUP RM
COMPANY RM
Net profit for the financial year
1,255,147
1,097,793
Attributable to: Equity holders of the Company Minority interests
1,108,974 146,173
1,097,793 -
1,255,147
1,097,793
DIVIDENDS The Directors do not recommend any dividend for the financial year ended 31 December 2010. RESERVES AND PROVISIONS There were no material transfers to or from reserves or provisions during the financial year other than those as disclosed in the financial statements. SHARE CAPITAL There was no increase in the issued and paid-up capital of the Company during the financial year. DIRECTORS The Directors who have held office since the date of the last report are: Dato’ Lim Khoon Heng Dato’ Lim Loong Heng Dato’ Lim Khoon Hock (Demised on 17.12.2010) Fakri Bin Hj Abdullah Siaw Hum Kiow Tai Keat Chai Leow Bock Lim Nicholas Lim Kean Hoong (Appointed on 25.02.2011)
26
2010 AnnualReport
Directors’ Report
DIRECTORS (cont’d) In accordance with the Company’s Articles of Association, Mr. Tai Keat Chai, Mr. Leow Bock Lim and Nicholas Lim Kean Hoong retire by rotation at the forthcoming Annual General Meeting of the Company, and being eligible, offer themselves for re-election. DIRECTORS’ BENEFITS Since the end of the previous financial year, no Director of the Company has received or become entitled to receive any benefit (other than those disclosed in the financial statements) by reason of a contract made by the Company or a related corporation with any Director or with a firm of which a Director is a member, or with a company in which a Director has a substantial financial interest, except as disclosed in Note 27 to the financial statements. Neither during nor at the end of the financial year, was the Company a party to any arrangement whose object is to enable the Directors to acquire benefits by means of the acquisition of shares in or debentures of the Company or any other body corporate. DIRECTORS’ INTERESTS According to the register of Directors’ shareholdings, the interests of Directors in office at the end of the financial year in shares in the Company during the financial year were as follows:
Number of ordinary shares of RM0.50 each As at As at 1.1.2010 Additions Disposals 31.12.2010
Direct Interests Dato’ Lim Khoon Heng Dato’ Lim Loong Heng Fakri Bin Hj Abdullah Siaw Hum Kiow Tai Keat Chai
200,000 200,000 1,529,412 200,000 50,000
- - - 47,600 -
- - - - -
200,000 200,000 1,529,412 247,600 50,000
950,000 950,000
- -
(390,000) (390,000)
560,000 560,000
Indirect Interests Dato’ Lim Khoon Heng # Dato’ Lim Loong Heng #
The Directors’ shareholdings in the ultimate holding company, Chuan Huat Resources Berhad, were as follows:
Number of ordinary shares of RM0.50 each As at As at 1.1.2010 Additions Disposals 31.12.2010
Direct Interests Dato’ Lim Khoon Heng Dato’ Lim Loong Heng Siaw Hum Kiow
13,350,890 13,350,887 22,000
4,450,296 4,450,295 -
- - (22,000)
17,801,186 17,801,182 -
6,377,357 6,377,357
2,920,264 2,920,264
- -
9,297,621 9,297,621
Indirect Interests Dato’ Lim Khoon Heng # Dato’ Lim Loong Heng #
# Indirect interest held through Lim Kim Chuan & Sons Holdings Sdn Bhd
DISCCOMP BERHAD (55420-P)
27
Directors’ Report
DIRECTORS’ INTERESTS (cont’d) Other than as disclosed above, the Directors of the Company do not have any other interest in shares in the Company or its related companies during the financial year. OTHER STATUTORY INFORMATION Before the statements of financial position and statements of comprehensive income of the Group and of the Company were made out, the Directors took reasonable steps: (a) to ascertain that proper action had been taken in relation to the writing off of bad debts and the making of allowance for doubtful debts and satisfied themselves that all known bad debts had been written off and that adequate allowance had been made for doubtful debts; and (b) to ensure that any current assets which were unlikely to realise in the ordinary course of business their values as shown in the accounting records had been written down to an amount which they might be expected so to realise. At the date of this report, the Directors are not aware of any circumstances: (a) which would render it necessary to write off any debts or to make an allowance for doubtful debts in the financial statements of the Group and of the Company; or (b) which would render the values attributed to the current assets in the financial statements of the Group and of the Company misleading; or (c) which have arisen which render adherence to the existing method of valuation of assets or liabilities of the Group and of the Company misleading or inappropriate; and (d) not otherwise dealt with in this report or the financial statements which would render any amount stated in the financial statements of the Group and of the Company misleading. At the date of this report, there does not exist: (a) any charge on the assets of the Group and of the Company which has arisen since the end of the financial year which secures the liabilities of any other person; or (b) any contingent liability of the Group and of the Company which has arisen since the end of the financial year. No contingent or other liability has become enforceable or is likely to become enforceable within the period of twelve months after the end of the financial year which, in the opinion of the Directors, will or may affect the ability of the Group and of the Company to meet their obligations as and when they fall due. In the opinion of the Directors: (a) except as disclosed in the financial statements, the results of the Group’s and of the Company’s operations during the financial year were not substantially affected by any item, transaction or event of a material and unusual nature; and (b) there has not arisen in the interval between the end of the financial year and the date of this report any item, transaction or event of a material and unusual nature likely to affect substantially the results of the operations of the Group and of the Company for the financial year in which this report is made.
28
2010 AnnualReport
Directors’ Report
AUDITORS The auditors, Ong Boon Bah & Co, have expressed their willingness to continue in office.
Signed in accordance with a resolution of the Directors dated 28 April 2011.
DATO’ LIM LOONG HENG Director
SIAW HUM KIOW Director
Kuala Lumpur
DISCCOMP BERHAD (55420-P)
29
Statement by Directors
Pursuant To Section 169(15) Of The Companies Act, 1965
We, DATO’ LIM LOONG HENG and SIAW HUM KIOW, being two of the Directors of DISCCOMP BERHAD, do hereby state that, in the opinion of the Directors, the financial statements set out on pages 33 to 68 are drawn up in accordance with the provisions of the Companies Act, 1965 and applicable Financial Reporting Standards in Malaysia so as to give a true and fair view of the financial position of the Group and of the Company as at 31 December 2010 and of their financial performance and cash flows for the year then ended. Signed in accordance with a resolution of the Directors dated 28 April 2011
DATO’ LIM LOONG HENG SIAW HUM KIOW Director Director Kuala Lumpur
Statutory Declaration
Pursuant To Section 169(16) Of The Companies Act, 1965
I, DATO’ LIM LOONG HENG, being the Director primarily responsible for the financial management of DISCCOMP BERHAD, do solemnly and sincerely declare that the financial statements set out on pages 33 to 68 are, in my opinion, correct and I make this solemn declaration conscientiously believing the same to be true and by virtue of the provisions of the Statutory Declarations Act, 1960. Subscribed and solemnly declared by the abovenamed DATO’ LIM LOONG HENG at Kuala Lumpur in the Federal Territory on 28 April 2011.
DATO’ LIM LOONG HENG Before me
Commissioner for Oaths Kuala Lumpur
30 2010 AnnualReport
ONG BOON BAH & CO CHARTERED ACCOUNTANTS
INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF DISCCOMP BERHAD (Incorporated in Malaysia) Company No: 55420 P Report on the Financial Statements We have audited the financial statements of DISCCOMP BERHAD, which comprise the statements of financial position as at 31 December 2010 of the Group and of the Company, and the statements of comprehensive income, statements of changes in equity and statements of cash flows of the Group and of the Company for the financial year then ended, and a summary of significant accounting policies and other explanatory information, as set out on pages 33 to 68. Directors’ Responsibility for the Financial Statements The Directors of the Company are responsible for the preparation of financial statements that give a true and fair view in accordance with Financial Reporting Standards and the Companies Act, 1965 in Malaysia, and for such internal control as the Directors determine are necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. Auditors’ Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with approved standards on auditing in Malaysia. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on our judgement, including the assessment of risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the entity’s preparation of financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the Directors, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the financial statements have been properly drawn up in accordance with Financial Reporting Standards and the Companies Act, 1965 in Malaysia so as to give a true and fair view of the financial position of the Group and of the Company as of 31 December 2010 and of their financial performance and cash flows for the year then ended. Report on Other Legal and Regulatory Requirements In accordance with the requirements of the Companies Act, 1965 in Malaysia, we also report on the following: (a) in our opinion, the accounting and other records and the registers required by the Act to be kept by the Company and by its subsidiary companies have been properly kept in accordance with the provisions of the Act. (b) we are satisfied that the accounts of the subsidiary companies that have been consolidated with the Company’s financial statements are in form and content appropriate and proper for the purposes of the preparation of the consolidated financial statements of the Group and we have received satisfactory information and explanations required by us for those purposes.
DISCCOMP BERHAD (55420-P)
31
ONG BOON BAH & CO CHARTERED ACCOUNTANTS
INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF DISCCOMP BERHAD (cont’d) (Incorporated in Malaysia) Company No: 55420 P Report on Other Legal and Regulatory Requirements (cont’d) (c) the audit reports on the accounts of the subsidiary companies did not contain any qualification or any adverse comment made under Section 174(3) of the Act. OTHER REPORTING RESPONSIBILITIES The supplementary information set out in Note 30 on page 68 is disclosed to meet the requirement of Bursa Malaysia Securities Berhad and is not part of the financial statements. The Directors are responsible for the preparation of the supplementary information in accordance with Guidance on Special Matter No. 1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants (“MIA Guidance”) and the directive of Bursa Malaysia Securities Berhad. In our opinion, the supplementary information is prepared, in all material respects, in accordance with the MIA Guidance and the directive of Bursa Malaysia Securities Berhad. Other Matters This report is made solely to the members of the Company, as a body, in accordance with Section 174 of the Companies Act, 1965 in Malaysia and for no other purpose. We do not assume responsibility to any other person for the content of this report.
ONG BOON BAH & CO WONG SOO THIAM AF: 0320 1315/12/12(J) Chartered Accountants Chartered Accountants Kuala Lumpur 28 April 2011
32
2010 AnnualReport
STATEMENTS OF FINANCIAL POSITION as at 31 December 2010
Note ASSETS Non-current assets Property, plant and equipment 4 Subsidiary companies 5 Investments 6 Goodwill 7
GROUP 2010 2009 RM RM 1,545,883 - - -
1,545,883 1,585,034
1,581,113 - 3,921 -
COMPANY 2010 2009 RM RM 489,501 1,527,828 - -
515,617 1,557,391 -
2,017,329 2,073,008
Current assets Inventories 8 Trade receivables 9 Other receivables, deposits and prepayments 10 Amount due from subsidiary companies 11 Tax recoverable Fixed deposits with licensed banks 12 Cash and bank balances
- - 4,042,560 3,619,431 1,574 62,872 - 7,657 8,537,620 6,230,000 8,500,000 6,200,000 4,370,509 3,553,654 1,805,589 2,459,714
25,857,927 24,305,793 16,335,559 15,250,330
TOTAL ASSETS
27,403,810 25,890,827 18,352,888 17,323,338
EQUITY AND LIABILITIES Equity attributable to equity holders of the Company Share capital Capital reserves Accumulated losses
13 14
Total shareholders’ funds Minority interests Total equity
4,799,888 6,627,291 5,490,395 4,804,827
257,200 23,578
824,750 37,075
2,657,941 3,027,149 1,706,632 2,101,703
24,250,000 24,250,000 24,250,000 24,250,000 878,117 878,117 - (1,901,980) (2,946,598) (6,108,762) (7,142,199) 23,226,137 22,181,519 18,141,238 17,107,801 1,016,738 881,590 - -
24,242,875 23,063,109 18,141,238 17,107,801
The accompanying notes form an intergral part of the financial statements
DISCCOMP BERHAD (55420-P)
33
STATEMENTS OF FINANCIAL POSITION (cont’d) as at 31 December 2010
Note
GROUP 2010 2009 RM RM
COMPANY 2010 2009 RM RM
Current liabilities Trade payables 15 Other payables and accruals 16 Finance lease liabilities 17 Tax liabilities
1,402,600 1,052,054 1,506,467 1,507,484 21,009 29,182 - -
17,179 95,332 - 5,135
131,127 5,773 -
2,930,076 2,588,720
117,646
136,900
Non-current liabilities Finance lease liabilities Deferred tax liabilities
17 18
Total liabilities TOTAL EQUITY AND LIABILITIES
8,709 222,150
29,718 209,280
- 94,004
78,637
230,859
238,998
94,004
78,637
3,160,935 2,827,718
211,650
215,537
27,403,810 25,890,827 18,352,888 17,323,338
The accompanying notes form an intergral part of the financial statements
34
2010 AnnualReport
STATEMENTS OF COMPREHENSIVE INCOME for the financial year ended 31 December 2010
Note
2010 RM
GROUP 2009 RM
19
44,525,620
37,518,743
4,151,469
4,678,014
Other operating income Changes in inventories of finished goods and work-in-progress Purchases of finished goods Employee benefits expense 20 Depreciation of property, plant and equipment Administrative expenses Finance costs 21
271,955
244,293
430,205
503,752
Revenue
COMPANY 2010 2009 RM RM
(1,827,362) 2,207,233 (567,550) (205,151) (31,615,589) (29,671,949) (1,022,435) (2,296,738) (4,686,139) (4,470,474) (632,910) (826,430) (373,451) (4,552,526) (3,906)
(436,064) (4,584,252) (11,372)
1,738,602 (483,455)
796,158 (358,348)
1,495,953 (398,160)
645,129 (174,507)
Net profit for the financial year
1,255,147
437,810
1,097,793
470,622
Attributable to: Equity holders of the Company Minority interests
1,108,974 146,173
365,783 72,027
1,097,793 -
470,622 -
Profit for the financial year
1,255,147
437,810
1,097,793
470,622
Other comprehensive income, net of tax
-
-
-
-
Total comprehensive income for the financial year
1,255,147
437,810
1,097,793
470,622
Profit before tax from operations Tax expense
Earnings per share attributable to equity holders of the Company (sen)
22 23
24
2.29
(69,941) (121,132) (792,031) (1,082,058) (854) (5,128)
0.75
The accompanying notes form an integral part of the financial statements.
DISCCOMP BERHAD (55420-P)
35
36
- 24,250,000
Capitalisation of bonus issue by a subsidiary company
Balance at 31 December 2009
Balance at 31 December 2010
2010 AnnualReport
24,250,000
-
-
24,250,000
878,117
-
-
878,117
-
878,117
849,998
-
-
(1,901,980)
-
1,108,974
(3,010,954)
(64,356)
(2,946,598)
(849,998)
-
365,783
23,226,137
-
1,108,974
22,117,163
(64,356)
22,181,519
-
-
365,783
21,815,736
The accompanying notes form an intergral part of the financial statements
Dividends paid to minority shareholders
Total comprehensive income for the financial year
-
-
Disposal of subsidiary companies
Effect of adopting FRS 139
-
Total comprehensive income for the financial year
(2,462,383)
1,016,738
(11,025)
146,173
881,590
-
881,590
-
(197,666)
72,027
1,007,229
28,119
Balance at 1 January 2009
24,250,000
Minority interests RM
Non distributable Share Capital Accumulated capital reserves losses Total RM RM RM RM
24,242,875
(11,025)
1,255,147
22,998,753
(64,356)
23,063,109
-
(197,666)
437,810
22,822,965
Total equity RM
Consolidated Statements of Changes in Equity
for the financial year ended 31 December 2010
Statement of Changes in Equity for the financial year ended 31 December 2010
Share capital RM
Balance at 1 January 2009 24,250,000
Accumulated losses RM
Total equity RM
(7,612,821)
16,637,179
-
470,622
470,622
Balance at 31 December 2009 24,250,000
(7,142,199)
17,107,801
-
(64,356)
(64,356)
24,250,000 Total comprehensive income for the financial year -
(7,206,555)
17,043,445
1,097,793
1,097,793
Balance at 31 December 2010 24,250,000
(6,108,762)
18,141,238
Total comprehensive income for the financial year
Effect of adopting FRS 139
The accompanying notes form an integral part of the financial statements. DISCCOMP BERHAD (55420-P)
37
Consolidated STATEMENT OF Cash FlowS for the financial year ended 31 December 2010
Note CASH FLOWS FROM OPERATING ACTIVITIES
2010 RM
2009 RM
Profit before taxation 1,738,602 Adjustments for non-cash items 25(a) 571,322
796,158 969,911
Operating profit before working capital changes 2,309,924 1,766,069 Decrease /(Increase) in inventories 1,557,320 (2,618,557) Increase in trade and other receivables (392,067) (1,526,490) Increase in trade and other payables 349,529 983,797 Cash generated from/(used in) operations 3,824,706 (1,395,181) Interest paid (3,905) (11,372) Tax paid (409,287) (346,239) Net cash inflow/(outflow) from operating activities
3,411,514 (1,752,792)
CASH FLOWS FROM INVESTING ACTIVITIES Proceeds from disposal of property, plant and equipment Proceeds from disposal of investments Purchase of property, plant and equipment Net cash inflow from disposal of subsidiary companies Interest received Dividend paid to minority interests
430 4,294 38,533 (338,561) (235,656) - 70,471 87,005 126,632 (11,025) -
Net cash outflow from investing activities
(257,857)
(20)
CASH FLOWS FROM FINANCING ACTIVITIES Repayment of finance lease liabilities Increase in fixed deposit pledged
(29,182) (7,620)
(78,769) -
Net cash outflow from financing activities
(36,802)
(78,769)
Net increase/(decrease) in cash and cash equivalents 3,116,855 (1,831,581) Cash and cash equivalents at beginning of the financial year 9,753,654 11,585,235 Cash and cash equivalents at end of the financial year
25(b) 12,870,509 9,753,654
The accompanying notes form an integral part of the financial statements.
38
2010 AnnualReport
STATEMENT OF CASH FLOWS
for the financial year ended 31 December 2010
Note CASH FLOWS FROM OPERATING ACTIVITIES Profit before taxation Adjustments for non-cash items
2010 RM
1,495,953 25(a) (911,117)
Operating profit before working capital changes Decrease/(Increase) in inventories Decrease in trade and other receivables (Decrease)/Increase in trade and other payables
2009 RM 645,129 122,419
584,836 492,020 347,212 (21,617)
767,548 (49,451) 13,253 31,894
Cash generated from operations 1,402,451 Interest paid (854) Tax paid (120,000)
763,244 (5,128) (163,144)
Net cash inflow from operating activities
594,972
1,281,597
CASH FLOWS FROM INVESTING ACTIVITIES Purchase of property, plant and equipment Proceeds from disposal of property, plant and equipment Proceeds from disposal of subsidiary companies Advance to subsidiary companies Dividend received Interest received
(43,825) (89,761) - 5,000 - 135,742 (468,129) (2,136,937) 750,000 351,250 87,005 125,464
Net cash inflow/(ouflow) from investing activities
325,051 (1,609,242)
CASH FLOWS FROM FINANCING ACTIVITIES Advances from/(Repayment to) subsidiary companies Repayment of finance lease liabilities
45,000 (390,189) (5,773) (35,012)
Net cash inflow/(outflow) from financing activities
39,227
(425,201)
Net increase/(decrease) in cash and cash equivalents 1,645,875 (1,439,471) Cash and cash equivalents at beginning of the financial year 8,659,714 10,099,185 Cash and cash equivalents at end of the financial year
25(b) 10,305,589 8,659,714
The accompanying notes form an integral part of the financial statements.
DISCCOMP BERHAD (55420-P)
39
Notes to the Financial Statements 31 December 2010
1. SIGNIFICANT ACCOUNTING POLICIES
(a) Basis of preparation The financial statements comply with the provision of the Companies Act, 1965 and applicable Financial Reporting Standards (“FRSs”) in Malaysia. At the beginning of the current financial year, the Group and the Company adopted new and revised FRSs which are mandatory for financial periods beginning on or after 1 January 2010 as described fully in Note 2. The financial statements of the Group and the Company have been prepared on a historical cost basis unless otherwise indicated in these summary of significant accounting policies. The financial statements are presented in Ringgit Malaysia (RM).
(b) Subsidiary companies and basis of consolidation
(i) Investment in subsidiary companies Subsidiary companies are entities over which the Group has the ability to control the financial and operating policies so as to obtain benefits from their activities. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Group has such power over another entity. In the Company’s separate financial statements, investments in subsidiary companies are stated at cost less impairment losses. On disposal of such investments, the difference between net disposal proceeds and their carrying amount is included in income statement.
(ii) Basis of consolidation The consolidated financial statements comprise the financial statements of the Company and its subsidiary companies as at the balance sheet date. The financial statements of the subsidiary companies are prepared for the same reporting date as the Company. Subsidiary companies are consolidated from the date of acquisition, being the date on which the Group obtains control, and continue to be consolidated until the date that such control ceases. In preparing the consolidated financial statements, intragroup balances, transactions and unrealised gains or losses are eliminated in full. Uniform accounting policies are adopted in the consolidated financial statements for like transactions and events in similar circumstances. Acquisitions of subsidiary companies are accounted for using the purchase method. The purchase method of accounting involves allocating the cost of the acquisition to the fair value of the assets acquired and liabilities and contingent liabilities assumed at the date of acquisition. The cost of an acquisition is measured as the aggregate of the fair values, at the date of exchange, of the assets given, liabilities incurred or assumed, and equity instruments issued, plus any costs directly attributable to the acquisition. Any excess of the cost of the acquisition over the Group’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities represents goodwill. Any excess of the Group’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities over the cost of acquisition is recognised immediately in income statement. Minority interests represent the portion of profit or loss and net assets in subsidiary companies not held by the Group. It is measured at the minorities’ share of the fair value of the subsidiary companies’ identifiable assets and liabilities at the acquisition date and the minorities’ share of changes in the subsidiary companies’ equity since then.
40
2010 AnnualReport
Notes to the Financial Statements
31 December 2010
1 SIGNIFICANT ACCOUNTING POLICIES (cont’d)
(c) Goodwill Goodwill acquired in a business combination is initially measured at cost. Following the initial recognition, goodwill is measured at cost less any accumulated impairment losses. Goodwill is not amortised but instead, it is reviewed for impairment, annually or more frequently if events or changes in circumstances indicate that the carrying value may be impaired. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold. The policy for the recognition and measurement of impairment losses for goodwill is in accordance with Note 1(f) to the financial statements.
(d) Property, plant and equipment All items of property, plant and equipment are initially recorded at cost. Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognised. All other repairs and maintenance are charged to the statement of comprehensive income during the financial year in which they are incurred. Subsequent to initial recognition, property, plant and equipment are stated at cost less accumulated depreciation and any accumulated impairment losses. The policy for the recognition and measurement of impairment losses is in accordance with Note 1(c). Depreciation of property, plant and equipment is provided for on a straight-line basis to write off the cost of each asset to its residual value over the estimated useful life, at the following annual rates: Machinery and factory equipment Furniture, fittings and office equipment Motor vehicles Renovation
10% 10% 20% 20%
The residual values, useful life and depreciation method are reviewed at each financial year-end to ensure that the amount, method and period of depreciation are consistent with previous estimates and the expected pattern of consumption of the future economic benefits embodied in the items of property, plant and equipment. An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. The difference between the net disposal proceeds, if any, and the net carrying amount is recognised in the statement of comprehensive income.
(e) Impairment of non-financial assets The carrying amounts of assets, other than inventories are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, the asset’s recoverable amount is estimated to determine the amount of impairment loss. The recoverable amount of an asset or cash-generating unit (“CGU”) is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. For the purpose of impairment testing, assets are grouped together into the smallest groups of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or group of assets. An impairment loss is recognised in the statement of comprehensive income if the carrying amount of an asset or its CGU exceeds its recoverable amount. Impairment losses recognised in respect of CGU are to reduce the carrying amount of the other assets in the unit (groups of units) on a pro rata basis.
DISCCOMP BERHAD (55420-P)
41
Notes to the Financial Statements 31 December 2010
1. SIGNIFICANT ACCOUNTING POLICIES (cont’d)
(e) Impairment of non-financial assets (cont’d) Impairment losses, if any, recognised in prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised. Reversals of impairment losses are credited to the statement of comprehensive income in the year in which the reversals are recognised.
(f) Financial instruments Arising from adoption of FRS 139, Financial Instruments: Recognition and Measurement, with effect from 1 January 2010, financial instruments are categorised and measured using accounting policy as mentioned below. Before 1 January 2010, different accounting policies are applied.
Financial assets Financial assets are recognised in the statement of financial position when, and only when, the Group and the Company become a party to the contractual provisions of the financial instrument. When financial assets are recognised initially, they are measured at fair value, plus, in the case of financial assets not at fair value through profit or loss, directly attributable transaction costs. The Group and the Company determine the classification of their financial assets at initial recognition, and the categories include loans and receivables and available- for-sale financial assets.
(i) Loans and receivables Financial assets with fixed or determinable payments that are not quoted in an active market are classified as loans and receivables. Subsequent to initial recognition, loans and receivables are measured at amortised cost using the effective interest method. Gains and losses are recognised in profit or loss when the loans and receivables are derecognised or impaired, and through the amortisation process. Loans and receivables are classified as current assets, except for those having maturity dates later than 12 months after the reporting date which are classified as non-current.
(ii) Available-for-sale financial assets Available-for-sale financial assets are financial assets that are designated as available for sale or are not classified in any of the preceding categories. Investments in equity instruments that do not have a quoted market price in an active market and whose fair value cannot be reliably measured are measured at cost. Other financial assets categorised as available-for-sale are subsequently measured at their fair values with the gain or loss recognised in other comprehensive income, except for impairment losses, foreign exchange gains and losses arising from monetary items and gains and losses of hedged items attributable to hedge risks of fair value hedges which are recognised in the profit or loss. On derecognition, the cumulative gain or loss recognised in other comprehensive income is reclassified from equity into profit or loss. Interest income calculated using the effective interest method is recognised in profit or loss. Dividends on an available-for-sale equity instrument is recognised in profit or loss when the Group’s and the Company’s right to receive payment is established.
42
2010 AnnualReport
Notes to the Financial Statements
31 December 2010
1. SIGNIFICANT ACCOUNTING POLICIES (cont’d)
(f) Financial instruments (cont’d) All financial assets, except for those measured at fair value through profit or loss, are subject to review for impairment as described in Note 1(f).
Financial liabilities Financial liabilities are classified according to the substance of the contractual arrangements entered into and the definitions of a financial liability. Financial liabilities, within the scope of FRS 139, are recognised in the statement of financial position when, and only when, the Group and the Company become a party to the contractual provisions of the financial instrument. Financial liabilities are classified as either financial liabilities at fair value through profit or loss or other financial liabilities. The Group and the Company have not designated any financial liabilities as at fair value through profit or loss. The Group’s and the Company’s financial liabilities include trade payables, other payables and loans and borrowings. Trade and other payables are recognised initially at fair value plus directly attributable transaction costs and subsequently measured at amortised cost using the effective interest method. Loans and borrowings are recognised initially at fair value, net of transaction costs incurred, and subsequently measured at amortised cost using the effective interest method. Borrowings are classified as current liabilities unless the Group and the Company has an unconditional right to defer settlement of the liability for at least 12 months after the reporting date. For other financial liabilities, gains and losses are recognised in profit or loss when the liabilities are derecognised, and through the amortisation process. A financial liability is derecognised when the obligation under the liability is extinguished. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amounts is recognised in profit or loss.
(g) Impairment of financial assets All financial assets are assessed at each reporting date whether there is any objective evidence of impairment as a result of one or more events having an impact on the estimated future cash flows of the asset. Losses expected as a result of future events, no matter how likely, are not recognised. For an equity instrument, a significant or prolonged decline in the fair value below its cost is an objective evidence of impairment. An impairment loss in respect of loans and receivable is recognised in profit or loss and is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows discounted at the asset’s original effective interest rate. The carrying amount of the assets is reduced through the use of an allowance account. An impairment loss in respect of available-for-sale financial assets is recognised in the profit or loss and is measured as the difference between the asset’s acquisition cost (net of any principal repayment and amortisation) and the asset’s current fair value, less any impairment loss previously recognised. Where a decline in the fair value of an available-for-sale financial asset has been recognised in the other comprehensive income, the cumulative loss in other comprehensive income is reclassified from equity and recognised to profit or loss.
DISCCOMP BERHAD (55420-P)
43
Notes to the Financial Statements 31 December 2010
1. SIGNIFICANT ACCOUNTING POLICIES (cont’d)
(h) Inventories Inventories are stated at the lower of cost and net realisable value and are determined using the weighted average basis. Cost of raw materials comprise purchase and in the case of finished goods and work-inprogress comprises the original purchase price plus costs incurred in bringing the inventories to their present location and conditions. Net realisable value is the estimated selling price in the ordinary course of business less the costs of completion and applicable variable selling expenses.
(i) Leases
(i) Classification A lease is recognised as a finance lease if it transfers substantially to the Group all the risks and rewards incident to ownership. All leases that do not transfer substantially all the risks and rewards are classified as operating leases.
(ii) Finance leases Assets acquired by way of finance leases are stated at an amount equal to the lower of their fair values and the present value of the minimum lease payments at the inception of the leases, less accumulated depreciation and impairment losses. The corresponding liability is included in the statement of financial position as borrowings. In calculating the present value of the minimum lease payments, the discount factor used is the interest rate implicit in the lease, when it is practicable to determine; otherwise, the Company’s incremental borrowing rate is used. Any initial direct costs are also added to the carrying amount of such assets. Lease payments are apportioned between the finance costs and the reduction of the outstanding liability. Finance costs, which represent the difference between the total leasing commitments and the fair value of the assets acquired, are recognised in the statement of comprehensive income over the term of the relevant lease so as to produce a constant periodic rate of charge on the remaining balance of the obligations for each accounting period. The depreciation policy for leased assets is consistent with that for depreciable property, plant and equipment as described in Note 1(b).
(iii) Operating leases Operating lease payments are recognised as an expense in statement of comprehensive income on a straight-line basis over the term of the relevant lease. The aggregate benefit of incentives provided by the lessor is recognised as a reduction of rental expense over the lease term on a straight-line basis.
(j) Income taxes Income tax on the profit or loss for the year comprises current and deferred tax. Current tax is the expected amount of income taxes payable in respect of the taxable profit for the year and is measured using the tax rates that have been enacted at the balance sheet date.
44
2010 AnnualReport
Notes to the Financial Statements
31 December 2010
1. SIGNIFICANT ACCOUNTING POLICIES (cont’d)
(j) Income taxes (cont’d) Deferred tax is provided for, using the liability method on temporary differences of the reporting date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes. In principle, deferred tax liabilities are recognised for all taxable temporary differences and deferred tax assets are recognised for all deductible temporary differences, unused tax losses and unused tax credits to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, unused tax losses and unused tax credits can be utilised. Deferred tax is not recognised if the temporary difference arises from goodwill or negative goodwill or from the initial recognition of an asset or liability in a transaction which is not a business combination and at the time of the transaction, affects neither accounting profit nor taxable profit. Deferred tax is measured at the tax rates that are expected to apply in the period when the asset is realised or the liability is settled, based on tax rates that have been enacted or substantively enacted at the reporting date. Deferred tax is recognised as an income or an expense and included in the statement of comprehensive income for the period, except when it arises from a transaction which is recognised directly in equity, in which case the deferred tax is also recognised directly in equity, or when it arises from a business combination that is an acquisition, in which case the deferred tax is included in the resulting goodwill or the amount of any excess of the acquirer’s interest in the net fair value of the acquiree’s identifiable assets, liabilities and contingent liabilities over the cost of the combination. Revenue, expense and asset are recognised net of the amount of sales tax except where receivables and payables that are stated with the amount of sales tax included. The net amount of sales tax recoverable from, or payable to the taxation authority is included as part of receivables or payables in the statement of financial position.
(k) Employee benefits
(i) Short-term benefits Wages, salaries, bonuses and social security contributions are recognised as expenses in the year in which the associated services are rendered by the employees of the Group. Short-term accumulating compensated absences such as paid annual leave are recognised when services are rendered by employees that increase their entitlement to future compensated absences. Short-term nonaccumulating compensated absences such as sick leave are recognised when the absences occur.
(ii) Defined contribution plans Defined contribution plans are post-employment plans under which the Group pays fixed contributions into separate entities or funds and will have no legal or constructive obligation to pay further contributions if any of the funds do not hold sufficient assets to pay all employees benefits relating to employee services in the current and preceding financial years. The Group’s and the Company’s contributions to defined contribution plans are charged to the statement of comprehensive income in the year to which they relate. Once the contributions have been paid, the Group and the Company has no further payment obligations.
DISCCOMP BERHAD (55420-P)
45
Notes to the Financial Statements 31 December 2010
1. SIGNIFICANT ACCOUNTING POLICIES (cont’d)
(l) Foreign currencies
(i) Functional and presentation currency Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary economic environment in which the entity operates (the “functional currency”). The consolidated financial statements are presented in Ringgit Malaysia, which is also the Company’s functional currency.
(ii) Foreign currency transactions In preparing in the financial statements of the individual entities, transactions in currencies other than the entity’s functional currency (foreign currencies) are recorded in the functional currencies using the exchange rates prevailing at the dates of the transactions. At each balance sheet date, monetary items denominated in foreign currencies are translated at the rates prevailing on the balance sheet date. Non-monetary items carried at fair value that are denominated in foreign currencies are translated at the rates prevailing on the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not translated. Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary economic environment in which the entity operates (the “functional currency”). The consolidated financial statements are presented in Ringgit Malaysia, which is also the Company’s functional currency. Exchange differences arising on the settlement of monetary items, and on the translation of monetary items, are included in the income statement for the year.
(m) Revenue recognition Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the Company, and the revenue can be measured reliably.
(i) Sale of goods Revenue from sale of goods is measured at the fair value of the consideration received or receivable, net of sales tax returns and discounts and is recognised in the statement of comprehensive income when significant risks and rewards of ownership has been transferred to the buyer. Revenue is not recognised to the extent where there are significant uncertainties regarding recovery of the consideration due, associated costs or the possible return of goods.
(ii) Rental income Rental income is accounted for on a straight-line basis over the lease terms. The aggregate costs of incentives provided to lessees are recognised as a reduction of rental income over the lease term on a straight-line basis.
(iii) Dividend income Dividend income is recognised when the Group’s or the Company’s right to receive payment is established.
(iv) Management fees Management fees are recognised when services are rendered.
46
2010 AnnualReport
Notes to the Financial Statements
31 December 2010
1. SIGNIFICANT ACCOUNTING POLICIES (cont’d)
(n) Cash and cash equivalents Cash and cash equivalents consist of cash in hand, balances and deposits with banks and highly liquid investments which have an insignificant risk of changes in value. For the purpose of the statements of cash flows, cash and cash equivalents are presented net of bank overdrafts and pledged deposits. Cash and cash equivalents (other than bank overdrafts) are categorised and measured as loans and receivables in accordance with policy note 1(g).
(o) Share capital and share issuance expenses An equity instrument is any contract that evidences a residual interest in the assets of the Group and the Company after deducting all of its liabilities. Ordinary shares are equity instruments. Ordinary shares are recorded at the proceeds received, net of directly attributable incremental transaction costs. Ordinary shares are classified as equity. Dividends on ordinary shares are recognised in equity in the period in which they are declared.
(p) Contingencies A contingent liability or asset is a possible obligation or asset that arises from past events and whose existence will be confirmed only by the occurrence or non- occurrence of uncertain future event not wholly within the control of the Group. Contingent liabilities and assets are not recognised in the statements of financial position of the Group.
(q) Segment reporting In the previous year, a segment was a distinguishable component of the Group that was engaged either in providing products or services (business segment), or in providing products or services within a particular economic environment (geographical segment) which was subject to risks and rewards that were different from those of other segments. Following the adoption of FRS 8, Operating Segments, an operating segment is a component of the Group that engages in business activities from which it may earn revenues and incur expenses, including revenues and expenses that relate to transactions with any of the Group’s other component. An operating segment’s operating results are reviewed regularly by the chief operating decision maker, which in this case is the Chief Executive Officer of the Group, to make decisions about resources to be allocated to the segment and assess its performance, and for which discrete financial information is available.
DISCCOMP BERHAD (55420-P)
47
Notes to the Financial Statements 31 December 2010
2. CHANGES IN ACCOUNTING POLICIES AND EFFECTS ARISING FROM ADOPTION OF NEW AND REVISED FRSs The accounting policies adopted are consistent with those of the previous financial year except as follows: On 1 January 2010, the Group and the Company adopted the following new and amended FRSs and IC Interpretations mandatory for annual financial periods beginning on or after 1 January 2010. FRS 7 FRS 8 FRS 101 FRS 123 FRS 139 Amendments to FRS 1 and FRS 127 Amendments to FRS 2 Amendments to FRS 7 Amendments to FRS 132 IC Interpretation 9 IC Interpretation 10 IC Interpretation 11 IC Interpretation 14 Amendments to IC Interpretation 9 Improvements to FRSs 2009
Financial Instruments: Disclosures Operating Segments Presentation of Financial Statements (revised) Borrowing Costs Financial Instruments: Recognition and Measurement First-time Adoption of Financial Reporting Standards and Consolidated and Separate Financial Statements: Cost of an Investment in a Subsidiary, Jointly Controlled Entity or Associate Share-based Payment - Vesting Conditions and Cancellations Financial Instruments: Disclosures Financial Instruments: Presentation Reassessment of Embedded Derivatives Interim Financial Reporting and Impairment FRS 2 – Group and Treasury Share Transactions FRS 119 – The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction Reassessment of Embedded Derivatives Improvements to FRSs (2009)
The Group and the Company has opted for early adoption of the revised FRS 3 Business Combinations and FRS 127 Consolidated and Separate Financial Statements which are effective for financial periods beginning on or after 1 July 2010. FRS 4 Insurance Contracts, IC Interpretation 13 Customer Loyalty Programmes and TR i-3 Presentation of Financial Statements of Islamic Financial Institutions will also be effective for financial periods beginning on or after 1 January 2010. These FRSs are, however, not applicable to the Group or the Company. Adoption of the above standards and interpretations did not have any effect on the financial performance or position of the Group and of the Company except for those discussed below:
(a) FRS 7 Financial Instruments: Disclosures Prior to 1 January 2010, information about financial instruments was disclosed in accordance with the requirements of FRS 132 Financial Instruments: Disclosure and Presentation. FRS 7 introduces new disclosures to improve the information about financial instruments. It requires the disclosure of qualitative and quantitative information about exposure to risks arising from financial instruments, including specified minimum disclosures about credit risk, liquidity risk and market risk, including sensitivity analysis to market risk. The Group and the Company have applied FRS 7 prospectively in accordance with the transitional provisions. Hence, the new disclosures have not been applied to the comparatives. The new disclosures are included throughout the Group’s and the Company’s financial statements for the year ended 31 December 2010.
48
2010 AnnualReport
Notes to the Financial Statements
31 December 2010
2. CHANGES IN ACCOUNTING POLICIES AND EFFECTS ARISING FROM ADOPTION OF NEW AND REVISED FRSs (cont’d)
(b) FRS 101 Presentation of Financial Statements (Revised) The revised FRS 101 introduces changes in the presentation and disclosures of financial statements. The revised Standard separates owner and non-owner changes in equity. The statement of changes in equity includes only details of transactions with owners, with all non-owner changes in equity presented as a single line. The Standard also introduces the statement of comprehensive income, with all items of income and expense recognised in profit or loss, together with all other items of recognised income and expense recognised directly in equity, either in one single statement, or in two linked statements. The Group and the Company have elected to present this statement as one single statement. In addition, a statement of financial position is required at the beginning of the earliest comparative period following a change in accounting policy, the correction of an error or the classification of items in the financial statements. The revised FRS 101 was adopted retrospectively by the Group and the Company.
(c) FRS 139 Financial Instruments: Recognition and Measurement FRS 139 establishes principles for recognising and measuring financial assets, financial liabilities and some contracts to buy and sell non-financial items. The Group and the Company have adopted FRS 139 prospectively on 1 January 2010 in accordance with the transitional provisions. The effects arising from the adoption of this Standard has been accounted for by adjusting the opening balance of retained earnings as at 1 January 2010. Comparatives are not restated. The details of the changes in accounting policies and the effects arising from the adoption of FRS 139 are discussed below:
(i) Investments in equity securities Prior to the adoption of FRS 139, investments in non-current equity securities, other than investments in subsidiaries and associates were stated at cost less allowance for diminution in value which is other than temporary. With the adoption of FRS 139, quoted investments in non-current equity securities, other than investments in subsidiaries and associates are now categorised and measured as availablefor-sale as detailed in note 1(g).
(ii) Impairment of trade receivables Prior to 1 January 2010, provision for doubtful debts was recognised when it was considered uncollectible. Upon the adoption of FRS 139, an impairment loss is recognised when there is objective evidence that an impairment loss has been incurred. The amount of the loss is measured as the difference between the receivable’s carrying amount and the present value of the estimated future cash flows discounted at the receivable’s original effective interest rate.
(iii) Inter-company loans During the current and prior years, the Company granted interest-free or low- interest loans and advances to its subsidiaries. Prior to 1 January 2010, these loans and advances were recorded at cost in the Company’s financial statements. Upon the adoption of FRS 139, the interest-free or low-interest loans or advances are recorded initially at a fair value that is lower than cost. Subsequent to initial recognition, the loans and advances are measured at amortised cost.
DISCCOMP BERHAD (55420-P)
49
Notes to the Financial Statements 31 December 2010
2. CHANGES IN ACCOUNTING POLICIES AND EFFECTS ARISING FROM ADOPTION OF NEW AND REVISED FRSs (cont’d)
(c) FRS 139 Financial Instruments: Recognition and Measurement (cont’d) The following are effects arising from the above changes in accounting policies:
Increase/(derease) As at As at 31 December 1 January 2010 2010 RM RM Statement of financial position Group and Company Other receivables Accumulated losses
- -
(64,356) (64,356)
(d) FRS 8, Operating Segments As of 1 January 2010, the Group determines and presents operating segments based on the information that internally is provided to the Chief Executive Officer, who is the Group’s chief operating decision maker. This change in accounting policy is due to the adoption of FRS 8. Previously operating segments were determined and presented in accordance with FRS 114, Segment Reporting. Comparative segment information has been re-presented. Since the change in accounting policy only impacts presentation and disclosure aspects, there is no impact on earnings per share.
(e) FRS 117, Leases The Group has adopted amendment to FRS 117. The Group has reassessed and determined that all leasehold land of the Group which are in substance are finance leases and has reclassified the leasehold land to property, plant and equipment. The change in accounting policy has been made retrospectively in accordance with the transitional provisions of the amendment. The reclassification does not affect the basic and diluted earnings per ordinary share for the current and prior periods. At the date of authorisation of these financial statements, the following new FRSs, Amendments to FRSs and IC Interpretations were issued but not yet effective and have not been applied by the Company: Effective for financial periods beginning on or after 1 March 2010: Amendments to FRS 132
Classification of Right Issues
Effective for financial periods beginning on or after 1 July 2010: FRS 1 Amendments to FRS 2 Amendments to FRS 5 Amendments to FRS 138 IC Interpretation 12 IC Interpretation 16 IC Interpretation 17 Amendments to IC Interpretation 9 50
First-time Adoption of Financial Reporting Standards Share-based Payment Non-current Assets Held for Sale and Discontinued Operations Intangible Assets Service Concession Arrangements Hedges of a Net Investment in a Foreign Operation Distributions of Non-cash Assets to Owners Reassessment of Embedded Derivatives 2010 AnnualReport
Notes to the Financial Statements
31 December 2010
2. CHANGES IN ACCOUNTING POLICIES AND EFFECTS ARISING FROM ADOPTION OF NEW AND REVISED FRSs (cont’d) Effective for financial periods beginning on or after 1 January 2011: Amendments to FRS 1 Amendments to FRS 2 Amendments to FRS 7 IC Interpretation 4 IC Interpretation 18 Improvements to FRSs 2010
Limited Exemption from Comparative FRS 7 Disclosures for First-time Adopters and Additional Exemptions for First-time Adopters Group Cash-settled Share-based Payment Transactions Improving Disclosures about Financial Instruments Determining whether an Arrangement contains a Lease Transfers of Assets from Customers Improvements to FRSs (2010)
Effective for financial periods beginning on or after 1 July 2011: IC Interpretation 19 Amendments to IC Interpretation 14
Extinguishing Financial Liabilities with Equity Instruments Prepayments of a Minimum Funding Requirement
Effective for financial periods beginning on or after 1 January 2012: FRS 124 IC Interpretation 15
Related Party Disclosures (revised) Agreements for the Construction of Real Estate
The above new FRSs, Amendments to FRSs and IC Interpretations are expected to have no significant impact on the financial statements of the Group and of the Company upon their initial application.
3. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal to the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below.
(i) Depreciation of property, plant and equipment The cost of property, plant and equipment is depreciated on a straight-line basis over the assets’ estimated economic useful lives. Management reviews the remaining useful lives of property, plant and equipment at the end of each financial year and ensures consistency with previous estimates and patterns of consumptions of the economic benefits that embodies the items in these assets. Changes in useful lives of property, plant and equipment may result in revision of future depreciation charges.
3. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS (cont’d)
DISCCOMP BERHAD (55420-P)
51
Notes to the Financial Statements 31 December 2010
(ii) Impairment of assets Assets are tested for impairment when indications of potential impairment exist. Indicators of impairment which could trigger an impairment review include evidence of obsolescence or physical damage, significant fall in market values, significant underperformance relative to historical or projected future operating results, significant changes in the use of assets or the strategy of the business, significant adverse industry or economic changes. Recoverable amounts of assets are based on management’s estimates and assumptions of the net realisable value, cash flows arising from the future operating performance and revenue generating capacity of the assets and CGUs, and future market conditions. Changes in circumstances may lead to changes in estimates and assumptions, and change the recoverable amounts of assets and impairment losses needed.
(iii) Impairment of loans and receivables The Group and the Company assesses at each reporting date whether there is any objective evidence that a financial asset is impaired. To determine whether there is objective evidence of impairment, the Group and the Company considers factors such as the probability of insolvency or significant financial difficulties of the debtor and default or significant delay in payments.
4. PROPERTY, PLANT AND EQUIPMENT Machinery and factory Motor equipment vehicles RM RM GROUP
Furniture, fittings and office equipment RM
Renovation RM
Total RM
2010 COST At 1 January 2010 Additions Disposals Written off
241,937 - - -
1,505,538 - - -
1,932,116 224,993 (5,750) (1,515)
966,239 113,568 - -
4,645,830 338,561 (5,750) (1,515)
At 31 December 2010
241,937
1,505,538
2,149,844
1,079,807
4,977,126
LESS: ACCUMULATED DEPRECIATION At 1 January 2010 Charge for the year Disposals Written off
218,686 3,894 - -
1,387,210 43,402 - -
763,253 193,150 (5,750) (1,175)
695,568 133,005 - -
3,064,717 373,451 (5,750) (1,175)
At 31 December 2010
222,580
1,430,612
949,478
828,573
3,431,243
19,357
74,926
1,200,366
251,234
1,545,883
CARRYING AMOUNTS At 31 December 2010
4. PROPERTY, PLANT AND EQUIPMENT (cont’d)
52
2010 AnnualReport
Notes to the Financial Statements
31 December 2010
Machinery and factory Motor equipment vehicles RM RM GROUP
Furniture, fittings and office equipment RM
Renovation RM
Total RM
2009 COST At 1 January 2009 Additions Disposals Written off
4,077,960 - (3,836,023) -
1,505,538 - - -
1,787,998 190,676 (16,850) (29,708)
1,128,183 44,980 - (206,924)
8,499,679 235,656 (3,852,873) (236,632)
241,937
1,505,538
1,932,116
966,239
4,645,830
3,223,118 3,895 (3,008,327) -
1,272,333 114,877 - -
625,203 167,278 (8,317) (20,911)
712,530 150,014 - (166,976)
5,833,184 436,064 (3,016,644) (187,887)
218,686
1,387,210
763,253
695,568
3,064,717
827,686 (827,686)
- -
- -
- -
827,686 (827,686)
-
-
-
-
-
23,251
118,328
1,168,863
270,671
1,581,113
At 1 January 2010 Additions
26,944 -
906,408 -
582,420 40,027
193,282 3,798
1,709,054 43,825
At 31 December 2010
26,944
906,408
622,447
197,080
1,752,879
At 31 December 2009
LESS: ACCUMULATED DEPRECIATION At 1 January 2009 Charge for the financial year Disposals Written off At 31 December 2009
LESS: ACCUMULATED IMPAIRMENT LOSSES At 1 January 2009 Disposals At 31 December 2009 CARRYING AMOUNTS At 31 December 2009 COMPANY 2010 COST
LESS: ACCUMULATED DEPRECIATION At 1 January 2010 Charge for the financial year
5,390 2,694
905,656 249
98,911 59,868
183,480 7,130
1,193,437 69,941
At 31 December 2010
8,084
905,905
158,779
190,610
1,263,378
18,860
503
463,668
6,470
489,501
CARRYING AMOUNTS At 31 December 2010
DISCCOMP BERHAD (55420-P)
53
Notes to the Financial Statements 31 December 2010
4. PROPERTY, PLANT AND EQUIPMENT (cont’d) Machinery and factory Motor equipment vehicles RM RM COMPANY (cont’d)
Furniture, fittings and office equipment RM
Renovation RM
Total RM
2009 COST At 1 January 2009 Additions Disposals At 31 December 2009
3,258,299 - (3,231,355)
906,408 - -
492,659 89,761 -
193,282 - -
4,850,648 89,761 (3,231,355)
26,944
906,408
582,420
193,282
1,709,054
2,406,364 2,695 (2,403,669)
863,361 42,295 -
48,471 50,440 -
157,778 25,702 -
3,475,974 121,132 (2,403,669)
5,390
905,656
98,911
183,480
1,193,437
827,686 (827,686)
- -
- -
- -
827,686 (827,686)
-
-
-
-
-
21,554
752
483,509
9,802
515,617
LESS: ACCUMULATED DEPRECIATION At 1 January 2009 Charge for the financial year Disposals At 31 December 2009
LESS: ACCUMULATED IMPAIRMENT LOSSES At 1 January 2009 Disposals At 31 December 2009
CARRYING AMOUNTS At 31 December 2009
The carrying amounts of property, plant and equipment acquired under finance lease: Motor vehicles
54
GROUP 2010 2009 RM RM 35,518
2010 AnnualReport
64,233
COMPANY 2010 2009 RM RM -
2
Notes to the Financial Statements
31 December 2010
5. SUBSIDIARY COMPANIES
COMPANY 2010 2009 RM RM
Unquoted shares at cost Accumulated impairment losses
1,790,102 (262,274)
1,790,102 (232,711)
1,527,828
1,557,391
The subsidiary companies are as follows: Country of Holding Name of Company Incorporation In Equity 2010 2009 % % SC Multimedia Product Sdn Bhd Malaysia 100 100
Principal Activities Ceased operation
SC-PNP Edaran Sdn Bhd Malaysia 100 100
Retailers and suppliers of computer hardware, software, accessories and services
Pineapple Computer Systems Sdn Bhd Malaysia 92 92
Retailing in computers and related accessories
Esy Ink Technology Sdn Bhd
Ceased operation
Malaysia
100 100
Pineapple Computers & Malaysia # 100 # 100 Accessories Sdn Bhd
Retailing in computers and related accessories
Pine System Technology Sdn Bhd Malaysia 51 51
Dealers of computer hardware, software and related products
Pineapple Computer Utara Sdn Bhd Malaysia 51 51
Retailing and distribution of full range of computer peripherals and accessories
# Holding in equity by subsidiary companies 6. INVESTMENTS At cost: Unquoted shares Accumulated impairment losses Quoted unit trusts in Malaysia Accumulated impairment losses Total Market value of quoted unit trusts
GROUP 2010 2009 RM RM
COMPANY 2010 2009 RM RM
570,000 (570,000) - - - - -
570,000 (570,000) - 3,921 - 3,921 3,921
570,000 (570,000) - - - - -
570,000 (570,000) -
-
4,318
-
-
DISCCOMP BERHAD (55420-P)
55
Notes to the Financial Statements 31 December 2010
7. GOODWILL
2010 RM
GROUP
Cost Accumulated impairment losses
47,827 (47,827) -
2009 RM 47,827 (47,827) -
8. INVENTORIES At cost: Raw materials Finished goods Goods in transit Less: Allowance of obsolete inventories
GROUP 2010 2009 RM RM
COMPANY 2010 2009 RM RM
36,106 4,933,987 26,660
109,083 6,295,959 222,249
36,106 296,624 -
109,083 715,667 -
(196,865) 4,799,888
- 6,627,291
(75,530) 257,200
824,750
9. TRADE RECEIVABLES Trade receivables Allowance for doubtful debts
GROUP 2010 2009 RM RM 5,565,679 (75,284) 5,490,395
4,868,761 (63,934) 4,804,827
COMPANY 2010 2009 RM RM 23,578 - 23,578
37,075 37,075
Trade receivables are non-interest bearing and are generally on 30 to 90 days (2009: 30 to 90 days) terms. They are recognised at their original invoices amounts which represent their fair values on initial recognition. The Group has no significant concentration of credit risk that may arise from exposures to a single customer or to groups of customers. Ageing analysis of trade receivables The ageing analysis of the Group and the Company trade receivables are as follows:
GROUP 2010 2009 RM RM
COMPANY 2010 2009 RM RM
Neither past due nor Impaired
5,480,930
4,655,966
23,581
28,185
1 to 90 days past due not impaired 91 to 180 days past due not impaired
4,507 4,958
124,948 23,913
- (3)
3,690 5,200
9,465 5,490,395
148,861 4,804,827
(3) 23,578
8,890 37,075
56
2010 AnnualReport
Notes to the Financial Statements
31 December 2010
9. TRADE RECEIVABLES (cont’d) Trade receivables that are neither past due nor impaired are creditworthy debtors with good payment records with the Group and the Company. None of the Group and the Company trade receivables that are neither past due nor impaired have been renegotiated during the financial year. The Group and the Company has trade receivables amounting to RM80,388 (2009: RM191,052) and Nil (2009: RM5,200) that are past due at the reporting date but not impaired. 10. OTHER RECEIVABLES, DEPOSITS AND PREPAYMENTS Other receivables Deposits Prepayments
GROUP 2010 2009 RM RM 2,015,356 283,876 358,709 2,657,941
2,298,517 236,832 491,800 3,027,149
COMPANY 2010 2009 RM RM 1,545,005 2,952 158,675 1,706,632
2,044,504 2,952 54,247 2,101,703
11. AMOUNTS DUE FROM SUBSIDIARY COMPANIES The amounts due from subsidiary companies which arose mainly from advances and payments made on behalf is unsecured, interest free and is repayable in cash on demand. 12. FIXED DEPOSITS WITH LICENSED BANKS The deposits of the Group and of the Company carry interest rates ranging from 2.15% to 3.20% (2009: 1.8% to 2.0%) per annum and have maturity periods range from 7 days to 15 months (2009: 7 days to 15 months). Deposits with licensed banks amounting to RM37,620 (2009: RM30,000) are pledged for banking facilities granted to a subsidiary company. 13. SHARE CAPITAL Authorised: 100,000,000 Ordinary shares of RM0.50 each
50,000,000
50,000,000
Issued and fully paid: 48,500,000 Ordinary shares of RM0.50 each
24,250,000
24,250,000
DISCCOMP BERHAD (55420-P)
GROUP AND COMPANY 2010 2009 RM RM
57
Notes to the Financial Statements 31 December 2010
14. CAPITAL RESERVES Details of capital reserves as at 31 December are as follows: Accretion arising from additional investment in subsidiary companies Capitalised for bonus issue by a subsidiary company
2010 RM 28,119 849,998 878,117
GROUP
2009 RM
28,119 849,998 878,117
15. TRADE PAYABLES The normal trade credit term granted to the Group ranges from 30 days to 60 days (2009: 30 days to 60 days). 16. OTHER PAYABLES AND ACCRUALS Other payables Accruals
GROUP 2010 2009 RM RM 439,938 1,066,529 1,506,467
56,066 1,451,418 1,507,484
COMPANY 2010 2009 RM RM 882 94,450 95,332
50,980 80,147 131,127
17. FINANCE LEASE LIABILITIES Minimum lease payments: - within one year - between one and five years Finance charges Portion due within one year Non-current portion
GROUP 2010 2009 RM RM 23,508 9,750 33,258 (3,540) 29,718 (21,009) 8,709
33,088 33,258 66,346 (7,446) 58,900 (29,182) 29,718
The present value of payments are repayable as follows: GROUP 2010 2009 RM RM Within one year Between one and five years
21,009 8,709 29,718
COMPANY 2010 2009 RM RM - - - - - - -
COMPANY 2010 2009 RM RM
29,182 29,718 58,900
The finance lease liabilities carry interest rates is 4.52% (2009: 2.8% to 7.9%) per annum.
58
2010 AnnualReport
6,627 6,627 (854) 5,773 (5,773) -
- - -
5,773 5,773
Notes to the Financial Statements
31 December 2010
18. DEFERRED TAX LIABILITIES At 1 January Net recognised in profit or loss (Note 23) At 31 December
GROUP 2010 2009 RM RM
COMPANY 2010 2009 RM RM
209,280
190,206
78,637
63,367
12,870 222,150
19,074 209,280
15,367 94,004
15,270 78,637
The Group movements of deferred tax liabilities and assets during the financial year prior to offsetting comprise the following: GROUP Deferred tax liabilities: Accelerated capital allowances RM At 1 January 2009 Recognised in profit or loss
(190,206) (19,074)
At 31 December 2009 Recognised in profit or loss
(209,280) (12,870)
At 31 December 2010
(222,150)
Deferred tax assets: Unabsorbed capital allowances RM
Unutilised tax losses RM
Total RM
At 1 January 2009 Recognised in profit or loss
82,903 (81,442)
12,661 (12,661)
95,564 (94,103)
At 31 December 2009 Recognised in profit or loss
1,461 -
- -
1,461 -
At 31 December 2010
1,461
-
1,461
At 31 December 2010 Net recognised in profit or loss
(12,870)
Net deferred tax liabilities
(222,150)
At 31 December 2009 Net recognised in profit or loss
(19,074)
Net deferred tax liabilities
(209,280)
DISCCOMP BERHAD (55420-P)
59
Notes to the Financial Statements 31 December 2010
18. DEFERRED TAX LIABILITIES (cont’d) Deferred tax assets not accounted for: - Unutilised tax losses - Unabsorbed capital allowances
1,087,696 233,890
1,117,443 199,044
1,321,586
1,316,487
The tax effect on deferred assets not accounted for
330,397
329,122
2010 RM
GROUP
2009 RM
The unutilised tax losses and unabsorbed capital allowances of the Group are available indefinitely for offsetting against future taxable profits of the respective entities within the Group, subject to no substantial change in shareholdings of those entities under the Income Tax Act, 1967 and guidelines issued by the tax authority. 19. REVENUE
GROUP 2010 2009 RM RM
COMPANY 2010 2009 RM RM
Sale of goods Dividend income from a subsidiary company
44,525,620
37,518,743
3,151,469
4,323,014
-
-
1,000,000
355,000
44,525,620
37,518,743
4,151,469
4,678,014
20. EMPLOYEE BENEFITS EXPENSE
GROUP 2010 2009 RM RM
COMPANY 2010 2009 RM RM
Salaries, wages and bonus Defined contribution plans Other benefits
3,260,106 389,411 1,036,622
3,259,950 396,214 814,310
417,502 47,802 167,606
589,646 68,536 168,248
4,686,139
4,470,474
632,910
826,430
Included in employee benefits expense of the Group and of the Company is Directors’ remuneration as disclosed in Note 22(b). 21. FINANCE COSTS Interest expenses on finance lease
60
GROUP 2010 2009 RM RM 3,906
2010 AnnualReport
11,372
COMPANY 2010 2009 RM RM 854
5,128
Notes to the Financial Statements
31 December 2010
22. PROFIT BEFORE TAX FROM OPERATIONS (a) Profit before tax from operations is arrived at: After charging: Depreciation of property, plant and equipment Directors’ remuneration Auditors’ remuneration: - current year - prior year Impairment losses on: - subsidiary companies - investment in unquoted shares Allowance for doubtful debts Bad debts written off Rental of premises paid to: - holding company - others Loss on disposal of: - subsidiary companies - investment in quoted shares Property, plant and equipment written off Booth rental Rental of: - credit card machine Inventories written off Allowance of obsolete inventories
GROUP 2010 2009 RM RM
COMPANY 2010 2009 RM RM
373,451 170,643
436,064 167,283
69,941 56,000
121,132 56,000
24,400 (800)
24,200 (250)
8,800 1,600
8,000 800
- - 11,351 -
- 141,750 29,154 39,660
29,563 - - -
141,750 39,601
180,000 660,209
180,000 534,983
180,000 -
180,000 -
- - 340 -
22,309 1,442 48,745 7,800
- - - -
93,758 -
- 73,218
3,600 411,324
- -
254,602
196,865
-
75,530
-
-
-
1,000,000
355,000
430 373
29,990 -
- -
5,000 -
- 48,000
- 36,000
171,600 48,000
171,600 36,000
87,005 -
125,464 1,168
87,005 -
125,464 -
-
-
102,000
102,000
-
3,360
-
-
- -
- 9,500
- -
48,088 -
-
2,427
-
-
And crediting: Dividend income from a subsidiary company Gain on disposal of: - property, plant and equipment - investment Rental income from: - subsidiary companies - a related company Interest income from: - repo - fixed deposits Management fees received from subsidiary companies Reversal of: - allowance for doubtful debts - impairment loss on investment in subsidiary companies - bad debts written off - impairment loss on investment in quoted shares
DISCCOMP BERHAD (55420-P)
61
Notes to the Financial Statements 31 December 2010
22. PROFIT BEFORE TAX FROM OPERATIONS (cont’d) (b) The aggregate of remuneration receivable by Directors of the Company during the financial year were categorised as follows: Executive Directors: Salaries and other emoluments Defined contribution plans Other related expenses
GROUP 2010 2009 RM RM
COMPANY 2010 2009 RM RM
101,759 12,264 620
98,759 11,904 620
- - -
-
Non-executive Directors: Fees
56,000
56,000
56,000
56,000
170,643
167,283
56,000
56,000
23. TAX EXPENSES The major components of income tax expense for the years ended 31 December 2010 and 2009 are: Statement of comprehensive income: Current tax: - current year - prior year
GROUP 2010 2009 RM RM
COMPANY 2010 2009 RM RM
496,994 (26,409)
320,687 18,587
406,514 (23,271)
135,533 23,704
Deferred tax (Note 18): - originating and reversal of temporary differences
470,585
339,274
383,243
159,237
12,870
19,074
15,367
15,270
483,455
358,348
398,160
174,507
The numerical reconciliation between the average effective tax rate and the applicable tax rate are as follows: GROUP COMPANY 2010 2009 2010 2009 RM RM RM RM Profit before tax from operations 1,738,602 796,158 1,495,953 645,129 Applicable tax rate Expenses not deductible for tax purposes Income not subject to tax Utilisation of unutilised business losses and capital allowances Prior year Deferred tax assets not recognised Changes in unrecognised temporary differences Deferred tax liabilities
% 25 22 -
% 25 40 (12)
% 25 11 -
% 25 17 (13)
(19) (2) 1 - 1
(17) 2 5 2 -
(5) (2) - 1 -
(8) 4 2 -
Average effective tax rate
28
45
30
27
62
2010 AnnualReport
Notes to the Financial Statements
31 December 2010
24. EARNINGS PER SHARE Basic and diluted earnings per share is calculated by dividing the profit for the financial year attributable to equity holders of the Company by the weighted average number of ordinary shares in issue during the financial year. Profit for the financial year attributable to owners of the Company (RM) Weighted average number of ordinary shares in issue Basic and diluted earnings per share (sen)
GROUP 2010 1,108,974 48,500,000 2.29
2009 365,783 48,500,000 0.75
25. STATEMENTS OF CASH FLOWS (a) Adjustments for non-cash items, interests and dividends: Depreciation of property, plant and equipment Interest expense (Gain)/Loss on disposal of: - property, plant and equipment - subsidiary companies - investment in quoted shares Property, plant and equipment written off Impairment losses on: - investment in unquoted shares - subsidiary companies Allowance for doubtful debts Reversal of: - allowance for doubtful debts - impairment loss on investment in subsidiary company - bad debts written off - impairment loss on investment in unquoted shares Interest income Inventories written off Bad debts written off Dividend income Allowance of obsolete inventories
GROUP 2010 2009 RM RM
COMPANY 2010 2009 RM RM
373,451 3,905
436,064 11,372
69,941 854
121,132 5,128
(430) - (373) 340
(29,990) 22,309 1,442 48,745
- - - -
(5,000) 93,758 -
- - 11,351
141,750 - 29,154
- 29,563 -
141,750 -
-
(3,360)
-
-
- -
- (9,500)
- -
(48,088) -
- (87,005) 73,218 - - 196,865
(2,427) (126,632) 411,324 39,660 - -
- (87,005) - - (1,000,000) 75,530
(125,464) 254,602 39,601 (355,000) -
571,322
969,911
(911,117)
122,419
DISCCOMP BERHAD (55420-P)
63
Notes to the Financial Statements 31 December 2010
25. STATEMENTS OF CASH FLOWS (cont’d) (b) Cash and cash equivalents at the end of the financial year
GROUP 2010 2009 RM RM
COMPANY 2010 2009 RM RM
Deposits with licensed banks Cash and bank balances
8,537,620 4,370,509
6,230,000 3,553,654
8,500,000 1,805,589
6,200,000 2,459,714
Deposit pledged (Note 12)
12,908,129
9,783,654
10,305,589
8,659,714
(37,620)
(30,000)
-
-
12,870,509
9,753,654
10,305,589
8,659,714
26. RELATED PARTY TRANSACTIONS The related parties of the Group and of the Company comprise the following: Related parties being companies in which Directors of the Group or the Company has the ability, directly or indirectly, to control the party or exercise significant influence over the party in making financial and operating decisions, or vice versa, or where the Group and or the Company and the party are subject to common control or common significant influence. Related parties may be individuals or other entities. -
key management personnel includes the Company’s Executive and Non-Executive Directors and are defined as those persons having authority and responsibility for planning, directing and controlling the activities of the Group or the Company either directly or indirectly. Executive and Non-Executive Directors compensation is disclosed in Note 25(b).
In addition to the related party information disclosed elsewhere in the financial statements, the following significant transactions took place at terms agreed between the parties during the financial year: (a) Sale of goods Subsidiary companies: SC-PNP Edaran Sdn Bhd Pineapple Computer Systems Sdn Bhd Pineapple Computers & Accessories Sdn Bhd Pine Systems Technology Sdn Bhd
COMPANY 2010 2009 RM RM 949,261 757,002 480,350 790,494
1,588,256 824,535 891,012 987,155
8,709
9,170
(b) Purchase of goods Subsidiary company: SC-PNP Edaran Sdn Bhd
64
2010 AnnualReport
Notes to the Financial Statements
31 December 2010
26. RELATED PARTY TRANSACTIONS (cont’d) (c) Others Rental of premises paid to: - holding company, Chuan Huat Hardware Holdings Sdn Bhd
GROUP 2010 2009 RM RM
COMPANY 2010 2009 RM RM
180,000
180,000
180,000
180,000
- -
- -
141,600 30,000
141,600 30,000
48,000
36,000
48,000
36,000
SC-PNP Edaran Sdn Bhd Pineapple Computer Systems Sdn Bhd Pine System Technology Sdn Bhd
- - -
- - -
42,000 48,000 12,000
42,000 48,000 12,000
Water and electricity received from a related company, Keyline Consulting Sdn Bhd
21,600
15,600
21,600
15,600
Dividend income received from a subsidiary company, Esy Ink Technology Sdn Bhd SC-PNP Edaran Sdn Bhd
- -
- -
- 1,000,000
355,000 -
Rental income received from: Subsidiary companies: SC-PNP Edaran Sdn Bhd Pineapple Computer Systems Sdn Bhd Related company: Keyline Consulting Sdn Bhd Management fees received from subsidiary companies:
In the opinion of the Directors, the above related party transactions have been entered into in the normal course of business and have been established under terms that are not more favourable than those arranged with independent third parties. 27. SEGMENTAL INFORMATION As the Group is principally involved in the trading and distribution of full range of computer peripherals and accessories within Malaysia, therefore there is no segment information has been presented
DISCCOMP BERHAD (55420-P)
65
Notes to the Financial Statements 31 December 2010
28. CORPORATE INFORMATION (a) The Company is a public limited liability company incorporated and domiciled in Malaysia and listed on the ACE Market of Bursa Malaysia Securities Berhad. (b) The registered office of the Company is located at Wisma Lim Kim Chuan, Lot 50A, Jalan 1/89B, 3½ Miles, Off Jalan Sungai Besi, 57100 Kuala Lumpur and its principal place of business is located at Wisma Disccomp, Lot 135, Jalan 1/89B, 3½ Miles, Off Jalan Sungai Besi, 57100 Kuala Lumpur. (c) The principal activities of the Company are distribution of printing consumables and computers accessories and investment holding. (d) The Company is a subsidiary company of Chuan Huat Hardware Holdings Sdn Bhd, a company incorporated in Malaysia. The Directors regard Chuan Huat Resources Berhad, a quoted company incorporated in Malaysia and listed on the Main Market of Bursa Malaysia Securities Berhad, as its ultimate holding company. (e) The financial statements of the Group and the Company were authorised for issue by the Board of Directors in accordance with a resolution of the Directors on. 29. FINANCIAL INSTRUMENTS
Financial risk management objectives and policies The Group’s financial risk management policy seeks to ensure that adequate financial resources are available for the development of the Group’s businesses whilst managing its risks. The Group operates within clearly defined guidelines that are approved by the Board and the Group’s policy is not to engage in speculative transactions. The following sections provide details regarding the Group’s and Company’s exposure to the above mentioned financial risks and the objectives, policies and processes for the management of these risks. (a) Foreign currency risk The Group is not exposed to significant foreign currency risk as the majority of the Group’s transactions, assets and liabilities are denominated in Ringgit Malaysia, foreign currency denominated assets and liabilities together with expected future cash flows from highly probable purchases and sales give rise to foreign exchange exposures. (b) Interest rate risk The Group is exposed to minimal interest rate risk as the Group does not have interest bearing borrowings. The investments in financial assets are short-term in nature and have been mostly placed in short-term deposits with licensed financial institutions. The information on maturity dates and interest rates of financial assets and liabilities are disclosed in their respective notes. (c) Credit risk Credit risk is the risk of loss that may arise on outstanding financial instruments should a counterparty default on its obligations. The Group’s and the Company’s exposure to credit risk arises primarily from trade and other receivables and loan and advances to related companies. For other financial assets (including cash and bank balances), the Group and the Company minimise credit risk by dealing exclusively with high credit rating counterparties.
66
2010 AnnualReport
Notes to the Financial Statements
31 December 2010
29. FINANCIAL INSTRUMENTS (cont’d)
Financial risk management objectives and policies (cont’d) (c) Credit risk (cont’d) Management has a credit policy in place and the exposure to credit risk is monitored on an ongoing basis. Normally credit evaluations are performed on customers requiring credit over a certain amount. As at the end of the reporting dates, the maximum exposure to credit risk arising from receivables is represented by the carrying amounts in the statement of financial position. Management has taken reasonable steps to ensure that receivables that are neither past due nor impaired are stated at their realisable values. A significant portion of these receivables are regular customers that have been transacting with the Group. The Group uses ageing analysis to monitor the credit quality of the receivables. Any receivables having significant balances past due more than 90 days, which are deemed to have higher credit risk, are monitored individually. Deposits with banks that are neither past due nor impaired are placed with reputable financial institutions with high credit ratings and no history of default. The Company provides unsecured loan and advance to subsidiaries. The Company monitors the results of the subsidiaries regularly. As at the end of the reporting date, the maximum exposure to credit risk is represented by its carrying amounts in the statement of financial position. As at the end of the reporting date, there was no indication that the loan and advance to the subsidiaries are not recoverable. The Company does not specifically monitor the ageing of the advance to the subsidiaries. Nevertheless, this advance has been overdue for less than a year. (d) Market risk The Group’s principal exposure to market risk arises mainly from the changes in equity prices. The Group manages disposal of its investments to optimise returns on realisation. (e) Liquidity and cash flow risks Liquidity risk is the risk that the Group or the Company will encounter difficulty in meeting financial obligations due to shortage of funds. The Group’s and the Company’s exposure to liquidity risk arises primarily from its various payables, loan and borrowings. The Group’s and the Company’s objective is to maintain a balance between continuity of funding and flexibility through the use of credit facilities. Fair values The carrying amounts of financial assets and liabilities of the Group and of the Company as at the reporting date approximated their fair values. No disclosure is made for unquoted shares because of the lack of market information and the assumptions used in valuation models to value these investments cannot be reasonably determined. The following methods and assumptions are used to estimate the fair value of each class of financial instruments: (a) Deposits, cash and bank balances The carrying amount of cash and cash equivalents approximate fair value due to the relatively short term maturity of these instruments.
DISCCOMP BERHAD (55420-P)
67
Notes to the Financial Statements 31 December 2010
29. FINANCIAL INSTRUMENTS (cont’d) Fair values (cont’d) (b) Marketable securities The fair values of publicly traded instruments are estimated based on the quoted market prices. (c) Trade and other receivables and payables The carrying amounts of trade receivables and payables subject to normal trade credit terms approximate their fair values. The carrying amount of other receivables and payables is reasonable approximation of fair value due to their short term nature. (d) Amount due from subsidiary companies The carrying amount of amount due from subsidiary companies is reasonable estimates of fair value because of the short maturity. 30. DISCLOSURE OF REALISED AND UNREALISED PROFITS On 25 March 2010, Bursa Malaysia Securities Berhad (Bursa Malaysia) issued a directive to all listed issuers pursuant to Paragraph 2.06 and 2.23 of the Bursa Malaysia Main Market Listing Requirements. The directive requires all listed issuers to disclose the breakdown of the unappropriated profits or accumulated losses as at the end of the reporting period, into realised and unrealised profits or losses. On 20 December 2010, Bursa Malaysia further issued guidance on the disclosure and the format required. The breakdown of the retained profits of the Group and of the Company as at 31 December 2010, into realised and unrealised profits, pursuant to the directive, is as follows: Total accumulated losses of Disccomp Berhad and its subsidiaries - Realised - Unrealised
GROUP RM
COMPANY RM
(1,671,081) 69,101
(6,014,758) (94,004)
Less: Consolidation adjustments
(1,601,980) (300,000)
(6,108,762) -
Total retained profits as per statements of financial positions
(1,901,980)
(6,108,762)
The determination of realised and unrealised profits is complied based on Guidance of Special Matter No. 1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, issued by the Malaysian Institute of Accountants on 20 December 2010. The disclosure of realised and unrealised profits above is solely for complying with the disclosure requirements stipulated in the directive of Bursa Malaysia and should not be applied for any other purposes. 31. COMPARATIVE FIGURES Arising from the adoption of FRS 101 (revised), presentation of financial statements, income statements, balance sheets and cash flow statement for the year ended 31 December 2009 has been re-presented as statement of comprehensive income, statement of financial position and statement of cash flows respectively.
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2010 AnnualReport
Statement of Shareholdings as at 3 May 2011
Authorised Share Capital : Issued and Paid-Up Capital : Class of Shares : Voting Rights :
RM 50,000,000.00 divided into 100,000,000 shares of 50 sen each RM 24,250,000.00 divided into 48,500,000 shares of 50 sen each Ordinary shares of RM0.50 each On show of hands - one (1) vote On a poll - one (1) vote for each share held
ANALYSIS OF SHAREHOLDERS Size of Shareholdings
No. of No. of Shareholders % Shares Held
%
Less Than 100 100 - 1,000 1,001 - 10,000 10,001 - 100,000 100,001 - Less Than 5% Of Issued Shares 5% And Above Of Issued Shares
3 481 359 109 23 1
0.31 49.28 36.78 11.17 2.36 0.10
20 225,880 1,550,300 3,464,200 12,289,012 30,970,588
0.47 3.20 7.14 25.34 63.86
Total
976
100.00
48,500,000
100.00
SUBSTANTIAL SHAREHOLDERS AS AT 3 MAY 2011 Direct Interest Name No. of Shares % Chuan Huat Hardware Holdings Sdn Bhd
30,970,588
63.85
Deemed Interest No. of Shares % -
-
DIRECTORS’ SHAREHOLDINGS AS AT 3 MAY 2011
Direct Interest Name No. of Shares % Dato’ Lim Khoon Heng Dato’ Lim Loong Heng Nicholas Lim Kean Hoong Fakri Bin Hj Abdullah Siaw Hum Kiow Tai Keat Chai Leow Bock Lim
200,000 200,000 - 1,529,412 247,600 50,000 -
0.41 0.41 - 3.15 0.51 0.10 -
Deemed Interest No. of Shares % 31,920,588(a) 31,920,588(b) - - - - -
65.82 65.82 -
Note: (a)
Deemed interest by virtue of their interest in Chuan Huat Resources Berhad and Lim Kim Chuan & Sons Holdings Sdn Bhd pursuant to Section 6A of the Companies Act, 1965.
(b) Deemed interest by virtue of his interests in Chuan Huat Resources Berhad and Lim Kim Chuan & Sons Holdings Sdn Bhd pursuant to Section 6A of the Companies Act, 1965 and by virtue of his spouse’s (Datin Cheong Yoke Ha) shareholding in Disccomp Berhad.
DISCCOMP BERHAD (55420-P)
69
Statement of Shareholdings as at 3 May 2011
List Of 30 Largest Shareholders As At 3 May 2011 No. Name No. Of Shares Held
%
1
CHUAN HUAT HARDWARE HOLDINGS SDN BHD 30,970,588
2
WAN ZAKI BIN WAN MUDA
2,010,100
4.14
3
TENGKU AZIZAH BINTI HAJI NIK MOHD SALLEH 1,536,400
3.17
4
FAKRI BIN ABDULLAH 1,529,412
3.15
5
YAP RAYMOND 1,452,400
2.99
6
CHONG MOAN LAM @ CHEONG MOON LAM
1,407,600
2.90
7
YAP TECK FUI
748,400
1.54
8
MAYBAN SECURITIES NOMINEES (TEMPATAN) SDN BHD PLEDGED SECURITIES ACCOUNT FOR LIM KIM CHUAN & SONS HOLDINGS SDN BHD
560,000
1.15
9
CIMSEC NOMINEES (TEMPATAN) SDN BHD CIMB BANK FOR KONG KOK KEONG (MQ0001)
500,000
1.03
10
KHONG CHOOK CHONG
233,300
0.48
11
AFFIN NOMINEES (TEMPATAN) SDN BHD PLEDGED SECURITIES ACCOUNT FOR SIAW HUM KIOW
200,000
0.41
12
CHEONG YOKE HA
200,000
0.41
13
HEW KWEE WON
200,000
0.41
14
LIM KHOON HENG
200,000
0.41
15
LIM LOONG HENG
200,000
0.41
16
MAYBAN SECURITIES NOMINEES (TEMPATAN) SDN BHD PLEDGED SECURITIES ACCOUNT FOR GOH HAN CHUAN (REM 893)
180,000
0.37
17
ANG YEOW NAM
163,300
0.34
18
KOH THIAN SENG
163,300
0.34
19
WOO WAI MUN
154,000
0.32
20
YEO PEK HIANG
139,400
0.29
21
CHEN THIAM KWEE @ TAN THIAM KWEE
138,100
0.28
22
AU WENG KEONG
137,500
0.28
23
LOOI SIEW WAH
122,500
0.25
24
TEH ENG BEW
113,300
0.23
25
SIN YONG GUAN INDUSTRIES SDN BHD
100,000
0.21
26
ONG POH ENG
97,200
0.20
27
HEW CHEE WAH
81,800
0.17
28
HO KIM LEONG
81,700
0.17
29
LI SIEW ENG
81,700
0.17
30
TENAHMAN SDN BHD
81,700
0.17
43,783,700
90.28
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2010 AnnualReport
63.86
Recurrent Related Party Transactions Of a Revenue Or Trading Nature At the Annual General Meeting held on 29 June 2010, the Company had obtained shareholders’ mandate to allow the Group to enter into recurrent related party transactions of revenue or trading nature in the ordinary course of business which are necessary for the day-to-day operations of the Group. In accordance with Rule 10.09 and Guidance Note 8 of the Listing Requirements of Bursa Securities for the ACE Market, the details of the recurrent related party transactions conducted during the financial year ended 31 December 2010 pursuant to the shareholders’ mandate are disclosed as follows: Party within Disccomp Group involved Transacting in RRPT parties Nature of transactions Related Parties
Aggregate value RM’000
Disccomp CHRB • Rental of Wisma Disccomp, being a Group premise owned by CHRB Group at RM15,000 per month
Dato’ Lim Khoon Heng 180 Dato’ Lim Loong Heng Nicholas Lim Kean Hoong Hew Kwee Won CHRB CHHH
Disccomp PCS • Supply of computers, computer peripherals and accessories
Dato’ Lim Khoon Heng 757 Dato’ Lim Loong Heng Nicholas Lim Kean Hoong Siaw Hum Kiow Hew Kwee Won CHRB CHHH
Disccomp PCA • Supply of computers, computer peripherals and accessories
Dato’ Lim Khoon Heng 480 Dato’ Lim Loong Heng Nicholas Lim Kean Hoong Siaw Hum Kiow Hew Kwee Won CHRB CHHH
Disccomp PST • Supply of computers, computer peripherals and accessories
Dato’ Lim Khoon Heng 790 Dato’ Lim Loong Heng Nicholas Lim Kean Hoong Siaw Hum Kiow Hew Kwee Won CHRB CHHH
DISCCOMP BERHAD (55420-P)
71
Recurrent Related Party Transactions Of a Revenue Or Trading Nature Party within Disccomp Group involved Transacting in RRPT parties Nature of transactions Related Parties
Aggregate value RM’000
PST SC-PNP • Supply of computers, computer peripherals and accessories
Dato’ Lim Khoon Heng Dato’ Lim Loong Heng Nicholas Lim Kean Hoong Siaw Hum Kiow Hew Kwee Won CHRB CHHH
SC-PNP PCS • Supply of computers, computer PCA peripherals and accessories PST
Dato’ Lim Khoon Heng 10,001 Dato’ Lim Loong Heng 2,464 Nicholas Lim Kean Hoong 4,218 Siaw Hum Kiow Hew Kwee Won CHRB CHHH
Abbreviations:CHHH CHRB CHRB Group Disccomp LKC & Sons PCA PCS PST SC-PNP
72
- - - - - - - - -
Chuan Huat Hardware Holdings Sdn Bhd Chuan Huat Resources Berhad CHRB and its subsidiary companies Disccomp Berhad Lim Kim Chuan & Sons Holdings Sdn Bhd Pineapple Computers & Accessories Sdn Bhd Pineapple Computer Systems Sdn Bhd Pine System Technology Sdn Bhd SC-PNP Edaran Sdn Bhd
2010 AnnualReport
48
Recurrent Related Party Transactions Of a Revenue Or Trading Nature The relationship of the interested related parties with Disccomp are as follows:-
• CHHH - • CHRB • Dato’ Lim Khoon Heng - • Dato’ Lim Loong Heng
CHRB holds 100% interest in CHHH, which in turn holds 63.85% interest in Disccomp
• Nicholas Lim Kean Hoong
Dato’ Lim Khoon Heng and Dato’ Lim Khoon Hock are major shareholders of CHRB and LKC & Sons and are deemed major shareholders of Disccomp by virtue of their interest in CHRB. They are brothers and are the children of Hew Kwee Won, who are Related Parties.
Dato’ Lim Khoon Heng, Dato’ Lim Loong Heng and Nicholas Lim Kean Hoong are directors of Disccomp, CHRB and LKC & Sons.
Nicholas Lim Kean Hoong is the nephew of Dato’ Lim Khoon Heng and Dato’ Lim Loong Heng • Hew Kwee Won -
Hew Kwee Won is deemed major shareholders of Disccomp (by virtue of her interest in CHRB) and CHRB (by virtue of her interest in LKC & Sons and her childrens’ shareholdings in CHRB). Hew Kwee Won is director and shareholder of LKC & Sons, who is a Related Party.
She is the mother’s of Dato’ Lim Khoon Heng and Dato’ Lim Loong Heng and the grandmother of Nicholas Lim Kean Hoong who are Related Parties. • LKC & Sons - LKC & Sons holds 1.15% direct interest in Disscomp and is also a major shareholder of CHRB and is deemed a major shareholder of Disccomp by virtue of its interest in CHRB. Hew Kwee Won, Dato’ Lim Khoon Heng and Dato’ Lim Loong Heng, who are Related Parties, are directors and major shareholder of LKC & Sons. • Siaw Hum Kiow - Siaw Hum Kiow holds 0.51% direct interest in Disccomp and is also a director of Disccomp, PCS, SCPNP, PST, PCA.
DISCCOMP BERHAD (55420-P)
73
Notice of Annual General Meeting
NOTICE IS HEREBY GIVEN THAT the Thirty-First Annual General Meeting of Disccomp Berhad will be held at Bukit Jalil Golf & Country Resort, Perdana 3, Jalan 3/155B, Bukit Jalil, 57000 Kuala Lumpur on Tuesday, 28 June 2011 at 9.30 a.m. for the following purposes: AGENDA AS ORDINARY BUSINESS 1.
To receive and adopt the Audited Financial Statements for the financial year ended 31 December 2010 and the Reports of the Directors and Auditors thereon.
Resolution 1
2.
To approve the payment of Directors’ Fees amounting to RM56,000 for the financial year ended 31 December 2010.
Resolution 2
3.
To elect the following Director who was appointed during the year retiring under Article 75 of the Articles of Association :-
(a) Nicholas Lim Kean Hoong
Resolution 3
4.
To re-elect the following Directors retiring under the provisions of the Articles of Association of the Company: (i) Dato’ Lim Loong Heng (ii) Tai Keat Chai (iii) Leow Bock Lim
Resolution 4 Resolution 5 Resolution 6
To re-appoint Messrs. Ong Boon Bah & Co. as Auditors of the Company for the ensuing year and to authorise the Directors to fix their remuneration.
Resolution 7
5.
AS SPECIAL BUSINESS 6.
To consider and if thought fit, to pass the following Resolutions:
6.1 AUTHORITY TO ISSUE AND ALLOT SHARES PURSUANT TO SECTION 132D OF THE COMPANIES ACT, 1965 (“THE ACT”)
“THAT subject always to the Companies Act, 1965, the Articles of Association of the Company and the approvals of the relevant governmental/regulatory authorities, pursuant to Section 132D of the Act, the Directors be and are hereby authorised to issue and allot shares in the Company from time to time, upon such terms and conditions for such purposes as the Directors may in their absolute discretion deem fit, provided that the aggregate number of shares to be issued pursuant to this resolution does not exceed ten percent (10%) of the issued share capital of the Company for the time being AND THAT such authority shall continue in force until the conclusion of the next Annual General Meeting of the Company.”
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2010 AnnualReport
Resolution 8
Notice of Annual General Meeting
AGENDA (cont’d) AS SPECIAL BUSINESS (cont’d) 6.2. PROPOSED SHAREHOLDERS’ MANDATE FOR NEW AND EXISTING RECURRENT RELATED PARTY TRANSACTIONS OF A REVENUE OR TRADING NATURE (“PROPOSED SHAREHOLDERS’ MANDATE”)
“THAT subject always to the provisions of the Companies Act, 1965, the Memorandum and Articles of Association of the Company, the Listing Requirements of Bursa Malaysia Securities Berhad (“Bursa Securities”) for the ACE Market and the regulations, guidelines and guidance notes issued from time to time by Bursa Securities or any other regulatory authorities, approval be and is hereby given for the Company and its subsidiary companies (“Disccomp Group”) to enter into recurrent related party transactions of a revenue or trading nature in the ordinary course of business, which are necessary for the day-to-day operations of the Company with the related parties mentioned therein, as specified in Section 2.3.2 of the Company’s Circular to Shareholders dated 2 June 2011 (“Circular”) provided that:
(i)
(ii) disclosure is made in the annual report of the aggregate value of transactions conducted pursuant to the shareholders’ mandate during the financial year and in the annual reports for subsequent financial years during which the shareholders’ mandate is in force based on the type of the recurrent transactions made and the names of the related parties involved in each type of the recurrent transaction made and their relationship with the Company.
Resolution 9
the transactions are in the ordinary course of business and are on normal commercial terms which are not more favourable to the related parties than those generally available to the public and are not to the detriment of the minority shareholders of the Company; and
AND THAT authority conferred by this resolution shall take effect immediately upon the passing of this resolution and the shareholders’ mandate shall continue to be in force until: (a) the conclusion of the next Annual General Meeting (“AGM”) of the Company at which the ordinary resolution is passed, at which time it will lapse, unless by a resolution passed at a general meeting, the authority is renewed; (b)
the expiration of the period within which the next AGM of the Company after that date is required to be held pursuant to Section 143(1) of the Act (but shall not extend to such extension as may be allowed pursuant to Section 143(2) of the Act); or
(c) revoked or varied by resolution passed by the shareholders in general meeting before the next AGM of the Company, Whichever is the earlier.
DISCCOMP BERHAD (55420-P)
75
Notice of Annual General Meeting
AGENDA (cont’d) AS SPECIAL BUSINESS (cont’d) 6.2. PROPOSED SHAREHOLDERS’ MANDATE FOR NEW AND EXISTING RECURRENT RELATED PARTY TRANSACTIONS OF A REVENUE OR TRADING NATURE (“PROPOSED SHAREHOLDERS’ MANDATE”) (cont’d)
AND THAT authority be and is hereby given to the Directors of the Company and its subsidiaries to complete and do all such acts and things (including executing such documents as may be required) to give effect to such transactions as authorised by this Ordinary Resolution.
AND THAT the estimates given on the recurrent related party transactions specified in Section 2.3.2 of the Circular to Shareholders dated 2 June 2011 being provisional in nature, the Directors and/or any of them be and are hereby authorised to agree to the actual amount or amounts thereof provided always that such amount or amounts comply with the reviewed procedures set out in Section 2.4 of the Circular to Shareholders dated 2 June 2011.”
7.
To transact any other ordinary business of which due notice shall have been given in accordance with the Companies Act, 1965 and the Company’s Articles of Association.
BY ORDER OF THE BOARD PAN KOW BAH [LS 0008906] Secretary Kuala Lumpur Date: 2 June 2011
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2010 AnnualReport
Notice of Annual General Meeting
Notes: 1.
A member of the Company entitled to attend and vote is entitled to appoint a proxy to attend and vote in his/her stead. A proxy may but need not be a member of the Company and the provisions of Section 149(1)(b) of the Companies Act, 1965 shall not apply to the Company. The instrument appointing a proxy shall be in writing under the hand of the appointor or his attorney duly authorised in writing or if such appointor is a corporation, under its common seal or the hand of its attorney or an officer duly authorised.
2.
Where a member of the Company is an authorised nominee as defined under the Central Depository Act, it may appoint two (2) or more proxies in respect of each Securities Account it holds with ordinary shares of the Company standing to the credit of the said Securities Account.
3.
Where a member appoints more than one (1) proxy, the appointment shall be invalid unless he specifies the proportions of his/her holdings to be represented by each proxy.
4.
To be valid, this proxy form duly completed must be deposited at the Company’s Registered Office at Wisma Lim Kim Chuan, Lot 50A, Jalan 1/89B, 3 ½ Miles, Off Jalan Sungai Besi, 57100 Kuala Lumpur not less than 48 hours before the time fixed for holding the meeting or any adjournment thereof.
Explanatory Notes To Special Business : (i) Ordinary Resolution 8
The proposed Ordinary Resolution under item 6.1 of the Agenda, if passed, will give a renewed mandate to the Directors of the Company pursuant to Section 132D of the Companies Act, 1965 (“Renewed Mandate”). The Renewed Mandate, unless revoked or varied at a general meeting, will expire at the conclusion of the next Annual General Meeting of the Company.
As at the date of this Notice, the Directors have not utilised the mandate granted to the Directors at the last Annual General Meeting held on 29 June 2010 and the said mandate will lapse at the conclusion of the Thirty-First Annual General Meeting.
The Renewed Mandate will enable the Directors to take swift action in case of a need for corporate execise in the event business opportunities arise which involve the issue of new shares, and to avoid delay and cost in convening general meeting to apporve such issue of shares.
(ii) Ordinary Resolution 9
The proposed Ordinary Resolution 9 under item 6.2 of the Agenda, if passed, will allow the Company and/ or its subsidiaries to enter into Recurrent Related Party Transactions of a revenue or trading nature which are necessary for the day to day operations which shall expire at the next Annual General Meeting.
The class of related parties, the nature of the transactions, the rationale and the methods of determining the transaction prices with the related parties, are detailed out in the Circular to Shareholders dated 2 June 2011.
DISCCOMP BERHAD (55420-P)
77
Notice of Annual General Meeting
STATEMENT ACCOMPANYING THE NOTICE OF ANNUAL GENERAL MEETING PURSUANT TO RULE 8.29(2) OF THE LISTING REQUIREMENTS OF BURSA MALAYSIA SECURITIES BERHAD Director appointed during the year and retiring under Article 75 of the Articles of Association and standing for election is : (a) Nicholas Lim Kean Hoong PROFILE He has joined the Chuan Huat Group in June 2006 as the Manager responsible for the operation and marketing of the steel services centre division of Chuan Huat Group. He is an Executive Director of CH Reinforcing Steel (M) Sdn Bhd and Bars & Mesh Industries Sdn Bhd since July 2009. He holds a Bachelor’s Degree in Computer Science and Management Studies (Hons) from Nottingham University. He has no interest in the securities of Disccomp Berhad and its subsidiaries. Nicholas Lim Kean Hoong is also the Executive Director in Chuan Huat Resources Berhad. He was appointed as an alternate director to Dato’ Lim Khoon Hock on 31 May 2010 and has attended three out of five Board Meetings held in the financial year ended 31 December 2010. He is the son of Datin Cheong Yoke Ha, a major shareholder of Chuan Huat Resources Berhad and he is also the nephew of Dato’ Lim Khoon Heng and Dato’ Lim Loong Heng, who are the directors’ and major shareholders of Chuan Huat Resources berhad.
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2010 AnnualReport
No of ordinary shares CDS account no.
DISCCOMP BERHAD
(Company No. 55420-P) (Incorporated in Malaysia under the Companies Act, 1965) PROXY FORM
I/We ______________________________________________________________________________________________________ NRIC No./Passport No./Company No.__________________________________________________________________________ CDS Account No./Name of beneficial owner* __________________________________________________________________ Of ________________________________________________________________________________________________________ being a member(s) of Disccomp Berhad, hereby appoint ________________________________________________________ NRIC No./Passport No./Company No. _________________________________________________________________________ Of _______________________________________________________________________________________________________ or failing him/her, the Chairman of the Meeting as my/our proxy(ies) to vote for me/us and on my/our behalf at the ThirtyFirst Annual General Meeting of the Company to be held at Bukit Jalil Golf & Country Resort, Perdana 3, Jalan 3/155B, Bukit Jalil, 57000 Kuala Lumpur on Tuesday, 28 June 2011 at 9.30 a.m. and at every adjournment thereof. RESOLUTIONS Resolution No. 1
FOR
AGAINST
To adopt the Directors’ and Auditors’ Reports and Audited Financial Statements
Resolution No. 2
To approve the payment of Directors’ fees
Resolution No. 3
To elect Director – Nicholas Lim Kean Hoong
Resolution No. 4
To re-elect Director – Dato’ Lim Loong Heng
Resolution No. 5
To re-elect Director – Tai Keat Chai
Resolution No. 6
To re-elect Director – Leow Bock Lim
Resolution No. 7
To re-appoint Messrs Ong Boon Bah & Co. as auditors
Resolution No. 8
Authority to issue and allot shares in general pursuant to Section 132D of the Companies Act, 1965
Resolution No. 9
Proposed Shareholders’ Mandate for New and Renewal of Existing Recurrent Related Party Transactions of a Revenue or Trading Nature
* To be completed by authorised nominees. Please indicate with a “√” in the appropriate box whether you wish your vote to be cast for or against the resolution. In the absence of specific direction, your proxy will vote or abstain as he/she thinks fit. However, if more than one proxy is appointed, please specify the number of shares represented by each proxy, failing which the appointment shall be invalid.
___________________________________________ Signature(s) / Common Seal of Shareholder(s) Dated this ____ day of _____________________, 2011.
Properties of share held
Name of proxy 1: Name of proxy 2: Total number of shares held
Notes:1.
A member of the Company entitled to attend and vote is entitled to appoint a proxy to attend and vote in his/her stead. A proxy may but need not be a member of the Company and the provisions of Section 149(1)(b) of the Companies Act, 1965 shall not apply to the Company. The instrument appointing a proxy shall be in writing under the hand of the appointor or his attorney duly authorised in writing or if such appointor is a corporation, under its common seal or the hand of its attorney or an officer duly authorised.
2.
Where a member of the Company is an authorised nominee as defined under the Central Depository Act, it may appoint two (2) or more proxies in respect of each Securities Account it holds with ordinary shares of the Company standing to the credit of the said Securities Account.
3.
Where a member appoints more than one (1) proxy, the appointment shall be invalid unless he specifies the proportions of his/her holdings to be represented by each proxy.
4.
To be valid, this proxy form duly completed must be deposited at the Company’s Registered Office at Wisma Lim Kim Chuan, Lot 50A, Jalan 1/89B, 3 ½ Miles, Off Jalan Sungei Besi, 57100 Kuala Lumpur not less than 48 hours before the time fixed for holding the meeting or any adjournment thereof.
(FRONT) Please send me a copy of the DISCCOMP BERHAD Annual Report 2010. Sila hantar satu salinan Laporan Tahunan 2010 DISCCOMP BERHAD kepada saya. ANNUAL REPORT 2010 Name / Nama
:
____________________________________________________________
____________________________________________________________
Address / Alamat
:
____________________________________________________________
____________________________________________________________
NRIC No. / No. K.P.
:
____________________________________________________________
Company No. / No. Syarikat
:
____________________________________________________________
Signature of Shareholder / Tandatangan Pemegang Saham
_____________________________________________
ANNUAL REPORT 2010 The Annual Report 2010 is in a CD-ROM format. Printed copy of the Annual Report shall be provided to the shareholders within 4 market days from the date of receipt of the verbal or written request. The request must be directed to: Wisma Lim Kim Chuan Lot 50A, Jalan 1/89B 3 ½ Miles, Off Jalan Sungai Besi 57100 Kuala Lumpur Contact person : Telephone No. : Facsimile No. : E-mail :
Mr. Simon Lee/Ms. Carmen Chan +603-7983 3333 +603-7980 3333
[email protected]
(BACK)
Affix stamp here
DISCCOMP BERHAD (55420-P) Wisma Lim Kim Chuan Lot 50A, Jalan 1/89B 3 ½ Miles, Off Jalan Sungai Besi 57100 Kuala Lumpur Malaysia
DISCCOMP BERHAD (55420-P) Incorporated In Malaysia
ANNUALREPORT
2010
ANNUALREPORT
2010
