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MAGNA PRIMA BERHAD369519-P
2002a n n u a l r e p o r t
Corporate Information
Chairman’s Letter to Shareholders
Board of Directors and Profile
Corporate Structure
C o n t e n t s
Senior Management
Terms and Reference of the Audit Committee
Statement on Corporate Governance
Statement on Internal Control
Financial Statements
Summary of Landed Properties
Analysis by Size of Shareholdings
Explanation of Variance
Notice of Annual General Meeting
Statement Accompanying Notice of Annual General Meeting
Letter from Shareholder Nominating Auditors
Proxy Form
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2 Magna pr ima Berhad Annual Report 2002
Corporate Information
AUDIT COMMITTEE
Kamil A. Rahman
Chairman
Feisal bin Sheikh Hussein (resigned 28 November 2002)
T. A. Rahman bin T. Andak
N. Chanthiran a/l Nagappan
Ng Yak Hee
NOMINATION COMMITTEE
T. A. Rahman bin T. Andak
Chairman
Feisal bin Sheikh Hussein (resigned 28 November 2002)
Ahmad Ghazali bin Md KassimKamil A. RahmanN. Chanthiran a/l Nagappan
REMUNERATION COMMITTEE
N. Chanthiran a/l Nagappan
Chairman
Feisal bin Sheikh Hussein (resigned 28 November 2002)
T. A. Rahman bin T. AndakKamil A. Rahman
JOINT COMPANY SECRETARIES
Ahmad Shahab bin Hj.Din
(MAICSA 0689340)
Yuen Yoke Ping
(MAICSA 7014044)
REGISTERED OFFICE
No.2, 2nd Floor, Jalan Prima 5,
Metro Prima,
52100 Kuala Lumpur.
Tel:03-6277 5555
Fax:03-6275 5182
Email:
SHARE REGISTRAR
Malaysian Share Registration
Services Sdn Bhd (378993-D)
7th Floor, Exchange Square
Bukit Kewangan
Jalan Raja Chulan
50200 Kuala Lumpur
Tel: 603-2026 8099
Fax: 603-2026 3736
AUDITORS
Folks DFK & Co.
Public Accountants
SOLICITORS
Nordin Torji & Yussof Ahmad
Sim Hazlina & Co.
JT Chong Associates
PRINCIPAL BANKERS
Malayan Banking Berhad
Bumiputra Commerce Bank Berhad
AmMerchant Bank Berhad
STOCK EXCHANGE LISTING
Kuala Lumpur Stock Exchange
Second Board
Listed Since 16 January 1997
KLSE Code: 7617
BOARD OF DIRECTORS
Y.Bhg. Dato’ Abd Gani bin Yusof
Executive Chairman
Ahmad Ghazali bin Md. KassimExecutive Director
Ng Yak HeeExecutive Director
Chua Lee BoonExecutive Director
Feisal bin Sheikh HusseinIndependent Non-Executive Director
(resigned 28 November 2002)
T. A. Rahman bin T. AndakIndependent Non-Executive Director
Kamil A. RahmanIndependent Non-Executive Director
N. Chanthiran a/l NagappanIndependent Non-Executive Director
Chairman’s Letter
Annual Report 2002 Magna Pr ima Berhad 3
“ The continuous effort forthe improvement ofoperational efficiency andfurther finance costs savingswill see further improvementin the results of the Group inthe coming year.”Dato’ Abd Gani bin Yusof– Executive Chairman
Chairman’s Letter to Shareholders
Dear Fellow Shareholders,
On behalf of the Board of Directors, it is my
great pleasure to present to you the Annual
Report and Audited Financial Statements of
Magna Prima Berhad for the year ended 31
December 2002. Last year remained to be a
challenging year for the Group, nevertheless,
I am pleased to report that the Group has
managed to achieve commendable results.
FINANCIAL REVIEW
For the year under review, the Group has
increased its turnover by 18% from RM114
million to RM135 million. As a result of our
continuous commitment to the improvement
of productivity and operational efficiency,
operational expenses has been reduced by
20%. A further reduction in bank borrowings
of approximately RM23 million has also led
to significant reduction in finance costs by
approximately 25% from RM8.5 million to
RM6.4 million. These initiatives have resulted
in significant improvements in profit from
operations from a loss of RM5 million in 2001
to a profit of RM0.2 million this year. The
major contributor to the year’s profit was
from the sales of properties under the Metro
Prima development project. The continuous effort for the improvement of operational efficiency and further
finance costs savings will see further improvement in the results of the Group in the coming year.
PROPERTY DEVELOPMENT
Our property development activities have focussed on the development of Phases 2 & 3 in Metro Prima, an urban
renewal project located at the northern fringe of Kuala Lumpur. The project consists of Vista Magna medium cost
apartments cum shopoffices and Mutiara Magna low and low-medium cost apartments which are scheduled for
completion by end 2003 and 2004 respectively. In addition, the development will also include a RM106 million
shopping complex with an estimated net lettable area of 40,000 sq. metres (400,000 sq. feet). This new landmark
4 Magna pr ima Berhad Annual Report 2002
Chairman’s Letter to Shareholders (cont’d)
will house Jaya Jusco as its anchor tenant and is expected to attract shoppers from the Sungai Buloh-Selayang-
Kepong neighbourhood centres. It will also act as a catalyst for further growth and appreciation of property
values in Metro Prima.
CONSTRUCTION
The major project for the construction arm in 2002 was the construction of a new hospital in Alor Setar, which
carries a sub-contract value of RM82 million. Apart from this, the Group has managed to secure a 3-year extension
of its operating contract for Bahau quarry which will provide additional guaranteed revenue until December 2005.
Previous work on the supply of rock materials and related ancillary services for the Sungai Selangor Dam and Jus
Dam in Melaka have also been successfully completed during the year.
OUTLOOK AND PROSPECTS
Moving forward, new property development projects have also been initiated. These include, among others, the
development of terrace houses in Seremban and detached houses in Mentakab, which is also part of the strategic
plan of the Group to amplify their presence in other states of Malaysia.
Annual Report 2002 Magna Pr ima Berhad 5
Chairman’s Letter to Shareholders (cont’d)
Being the major economic contributor to the national economy, the construction and property development
industries are expected to benefit from the Government’s economic initiatives. Magna Prima will continue to play
a significant role in this sector.
ACKNOWLEDGEMENT
I would like to express my gratitude to fellow
Directors for their contribution and commitment.
Encik Feisal bin Sheikh Hussein retired from the
board in November 2002. I take this opportunity
to once again bid him farewell and wish him all
the best in his future endeavours. On behalf of
the Board, I would like to thank all shareholders,
financiers, government departments, purchasers of
property in Magna Prima and business associates
for their support and confidence. Last but not
least, I also thank the management and staff for
the dedication and effort towards making Magna
Prima our pride and success.
DATO’ ABD GANI YUSOF
Executive Chairman
29 May 2003
6 Magna pr ima Berhad Annual Report 2002
Board of Directors and Profile
Dato’ Abd Gani bin YusofExecutive Chairman
Dato’ Abd. Gani bin Yusof, 49, was appointed a Director ofMPB on 7 November 1996 and is Executive Chairman. He wasappointed Director of MPK and MR on 1 March 1995 and 15June 1995 respectively. He chairs the Directors’ ManagementCommittee of MPB.
In 1980, he graduated from University Sains Malaysia with aBachelor of Science (Hon.) in Housing, Building and Planning.After graduation, he joined Peremba Berhad, a propertydevelopment company as a Technical Executive. He leftPeremba Berhad in 1988 as a Project Manager. From 1988 to1991, he was the General Manager of United Engineers (M)Berhad and was involved in the implementation of severalinfrastructure works in the country including the North-SouthExpressway. Subsequently, he was promoted to be a ProjectDirector in 1991 to 1992. Following that, he was appointed asManaging Director of Linkedua (M) Berhad (233673-W) for theduration 1993 to 1995. At the same time, he was also theManaging Director of Prolink Development Sdn Bhd (252945-M). Both Linkedua (Malaysia) Berhad and ProlinkDevelopment Sdn Bhd which are subsidiaries of RenongBerhad (90894-P) were involved in the construction of theSecond Link in Johor and the development of the Nusajayatownship in the vicinity of the aforementioned causewayrespectively.
Ahmad Ghazali bin Md. KassimExecutive Director
Ahmad Ghazali bin Md Kassim, aged 51, was appointed asa Director of MPB on 7 November 1996. He has been aDirector of MPB and MPK since 1994 and 1992 respectively.He sits on the Directors’ Management Committee of MPB andthe Nomination Committee. He is Executive Director forFinance & Corporate Services of MPB. He obtained a Master inBusiness Administration degree from University of SouthernCalifornia in 1987. He is a Fellow of the EconomicDevelopment Institute of World Bank and an advisor to the
International Program of the School of Business at Universityof Southern California. He served with Bank PembangunanMalaysia Berhad for almost 17 years until 1992 where his lastposition was General Manager (Operations). In 1992, he setup Magna Resources Sdn Bhd (242362-V) to provide financialand corporate services. Within the same year, he acquired a23% shareholding in Zelleco Construction Sdn Bhd (263750-M)("Zelleco") and subsequently became a Board Member of theCompany. Zelleco was subsequently restructured with theparticipation of the Malaysian Resources Corporation Berhad(7994-D) ("MRCB"). In 1994, he acquired a 35% stake inSouthern Integrated Agriculture Project Sdn Bhd (208542-M)"(SIAP") and in 1996 a subsidiary of SIAP, Johore Tenggara OilPalm Berhad (17867-T) ("JTOP") was listed on the Main Boardof the KLSE.
Ng Yak HeeExecutive Director
Ng Yak Hee, aged 58, was appointed to the Board of MPBon 7 November 1996 and is an Executive Director(Technical). He obtained his Bachelor Degree (Hons) in CivilEngineering from University Malaya in 1970. He is aprofessional Engineer with the Board of Engineers, Malaysiaand a corporate member of the Institutes of Civil EngineersMalaysia, Australia and United Kingdom. He has more than26 years of experience in the field of engineeringconsultancy, project management and construction works. Hestarted out with Minconsult Sdn Bhd (058835-P)("Minconsult") and served for 5 years, initially as an engineerand subsequently a resident engineer. He later worked inWan Mohamed & Khoo Sdn Bhd (40213-X) ("WMK") for 10years as the Director responsible for Roads and Bridges. In1987 he joined UM Engineering & Construction Pty Ltd-Australia ("UM") as its Contracts Manager. Prior to returningto Malaysia in 1992, he joined Airplan-GHD Join Venture("AGHD") for a year. Upon his return to Malaysia, he joinedRanhill Bersekutu Sdn Bhd (072416-T) ("RB") as its TechnicalDirector. He left RB in December 1994. Save for IJM whichwas a construction company, Minconsult, WMK, AGHD and
Sitting from left : Kamil A. Rahman, Dato’ Abd Gani bin Yusof, N. Chanthiran Nagappan and Ahmad Ghazali bin Md. Kassim. Standing from left : T.A. Rahman bin T. Andak, Chua Lee Boon and Ng Yak Hee.
Annual Report 2002 Magna Pr ima Berhad 7
Board of Directors and Profiles (cont’d)
RB were firms involved in the businesses of providingengineering consultancy services for infrastructure andbuilding projects among which were the Malaysia-SingaporeSecond Crossing, Light Rapid Transit 2, National SportsComplex and other major projects. Currently, he is still theExecutive Director of MPC, DE, MPK-M, MQ and CO. Ng is amember of MPB’s Directors’ Management Committee as wellas the Audit Committee.
Chua Lee BoonExecutive Director
Chua Lee Boon, aged 54, was appointed a Director of MPBon 7 November 1996. He is a Director of DE, KM and MIand is the Executive Director (Projects) of MPB. He sits onthe Directors’ Management Committee. He obtained hisBachelor Degree (Hons) in Civil Engineering from Universityof Malaya in 1973. He is a professional Engineer with theBoard of Engineers, Malaysia and a corporate member withthe Institute of Engineers, Malaysia, the Institute of CivilEngineering, United Kingdom and the Institute of Highwaysand Transportation, United Kingdom. He has more than 30years of experience in engineering construction, projectmanagement and engineering consultancy. He started workas an Engineer with Jabatan Kerja Raya (JKR) in 1973 inKedah. He was a Structural Design Engineer in the HeadOffice in JKR, K.L in 1974 and a year later in 1975 hebecame a District Engineer in Terengganu. In 1976 until1983, he was the Assistant Director of Roads for the State ofPahang. From 1984 to February 1992, he was the Director ofOperations in the Malaysian Highway Authority ("MHA"),responsible for all the engineering aspects of the North SouthExpressway and the New Klang Valley Expresswayprogramme. Upon his retirement from MHA in 1992, hejoined Pengurusan Lebuhraya Bhd (154459-T) as SeniorManager in the Business Development Department. In 1994,he joined Hyder Consulting Sdn Bhd (179134-V) (formerlyknown as Acer Consultants Sdn Bhd) ("Hyder") as director ofthe Civil & Structure Division.
T. A. Rahman bin T. AndakIndependent Non-Executive Director
T. A. Rahman bin T. Andak, aged 52, was appointed aDirector of MPB on 24 Jun 1996. Following listing of theCompany, he became an independent and non-executiveDirector. He is on the Audit Committee and theRemuneration Committee and chairs the NominationCommittee. He is also on the Board of a Subsidiary, DE. Hegraduated from Universiti Pertanian Malaysia with a Diplomain Agriculture in 1973. Following the attainment of hisDiploma in Agriculture, he has had over 23 years ofexperience in the agriculture field specialising in landscapework and agricultural projects. From 19980 – 1989, he wasthe Operations Manager with Permint Suterasemai Sdn Bhd("Permint") for 10 years. Permint was involved in thebusiness of silk worm rearing, silk fabric production andlandscaping activities. He later joined Eastern Empress SilkSdn Bhd as a Management Consultant for a year from 1990.He was self-employed from 1992 – 1994 and was involved inthe distribution and cultivation of fruits. He rejoined Permintin 1994 as a Project Manager before leaving the firm in 1995.He is currently the General Manager of Alpha Scapes (M)Sdn Bhd (369540-M), a landscaping and project managementcompany which he joined on 1 August 1996.
N. Chanthiran a/l NagappanIndependent Non-Executive Director
N. Chanthiran a/l Nagappan, aged 39, was appointed tothe Board of Magna Prima Berhad on 5 March 2002 as anindependent non-executive Director. He is in the AuditCommittee as well as the Nomination Committee and chairsthe Remuneration Committee. He holds a Bachelor’s Degree(Hons) in Accounting from University of Malaya and is aMember of the Malaysian Institute of Certified PublicAccountants and the Malaysian Institute of Accountants. He isalso qualified as a Certified Financial Planner and is aCertified Risk Professional. He is currently the sole proprietorof the accounting practise Messrs Chanthiran & Co and alsolectures on Corporate Finance and Corporate Recoveries. Hehas vast experience in financial advisory, receivership,liquidation and restructuring as he had served in thecorporate finance industry for 13 years, as Assistant Managerin Arab-Malaysian Merchant Bank Berhad and ProjectFinance Manager in Sadec Asia Pacific Sdn Bhd andAssociate Director (Corporate Finance) in Mustapha Raj Sdn.Bhd. He is an Associate Director of HC Corporate AdvisorySdn Bhd and a Director of MR Tax Consultants Sdn. Bhd.
Kamil A. RahmanIndependent Non-Executive Director
Kamil bin Datuk Haji Abdul Rahman, aged 54, is anotherindependent non-executive director and was appointed on 5 March 2002. En. Kamil chairs the Audit Committee andESOS Committee and sits on the Remuneration Committeeand the Nomination Committee. His area of specialisation isin corporate governance and corporate finance.
He graduated with a Bachelor of Commerce degree from theUniversity of Otago, New Zealand and subsequently qualifiedas a Chartered Accountant of the Institute of CharteredAccountants of New Zealand. He is also a Fellow CharteredSecretary of the Institute of Chartered Secretaries andAdministrators, United Kingdom, a Chartered Accountant ofthe Malaysian Institute of Accountants and a Fellow of theInstitute of Company Secretaries, Malaysia.
He is currently the Executive Chairman of Marska Sdn. Bhd.which is an investment holding company with interests inand associated companies dealing in corporate finance, ITand project management consultancy. His previous positionswere as Executive Director of Commerce InternationalMerchant Bankers Berhad and Senior Vice President of Bankof Commerce (M) Berhad. He is also a Director of PancaranIkrab Berhad, Khind Holdings Berhad, Global CarriersBerhad, Hotline Furniture Berhad, WDM Holdings Berhadand the Malaysia South Africa Business Council (a companylimited by guarantee).
All Directors of Magna Prima Berhad listed above areMalaysian citizens. They each do not have family ties withthe others on the Board nor with any major shareholder orthe management. None of the Directors has been penalizedfor any offence within the past 6 years (other than minortraffic offences, if any)
NB – The following references apply :MPB – Magna Prima Berhad MR – Magna Reality Sdn BhdMPC – Magna Prima MPK-M – Magna Park (Mentakab)
Construction Sdn Bhd Sdn Bhd (formerly knownas Kelana Molek Sdn Bhd)
DE – Dunia Epik Sdn Bhd MQ – Magna Quarry Services Sdn Bhd (formerly known asMagna-Idaman Sdn Bhd)
MPK – Magna Park Sdn Bhd CO – Crest Overseas Sdn Bhd
8 Magna pr ima Berhad Annual Report 2002
Corporate Structure
100%MAGNA REALTY SDN BHDInvestment Holding
100%MAGNA PRIMACONSTRUCTION SDN BHD
PROPERTYDEVELOPMENT
CIVIL ENGINEERING,BUILDING, QUARRY SERVICES
GENERALCONSTRUCTION
TRADING
91%MAGNA PARK SDN BHD
100%MAGNA PARK (SEREMBAN) SDN BHD
100%CREST OVERSEASSDN BHD
100%DUNIA EPIK SDN BHD
100%PRIMA HARDWARE SDN BHD
67%MAGNA QUARRYSERVICES SDN BHD(formerly known asMagna-Idaman Sdn Bhd)
100%MAGNA PARK(MENTAKAB)SDN BHD(formerly known asKelana Molek Sdn Bhd)
369519-P
Annual Report 2002 Magna Pr ima Berhad 9
Senior Management
MAGNA PRIMA BERHAD
Rosnan bin RosliSenior Manager, Finance & Corporate Serivces
Othman bin Hj. MohammadHuman Resource & Admin Manager
Sakri bin BasriBusiness Development Manager
Puad bin YaakubSenior Project Manager
MAGNA PARK SDN BHD
Zulkafli bin AbdullahExecutive Director
Norhanum binti NordinExecutive Director, Finance
Mohammad Nasir bin Mohd. NoorConstruction Manager
Siti Sarbiah binti Mohamad SaidCommercial Services Manager
Adzhar Mohammad NordinCredit Admin Manager
Crissy Lee Pooi LingAccounts Manager
Ahmad Kassim bin DaudProperty Manager
MAGNA PRIMA CONSTRUCTION SDN BHD
Yusof bin ZakariaSenior Project Manager
Chua Hock EimAssistant General Manager, Contracts
Hew Ah TuckSenior Plant Manager
Au Yong ChaiPlant Manager
Ho Fong SengSenior Project Manager
Devaprasad Jason A/L N. SamuelSenior Project Manager
Ang Tang PewSenior Quantity Surveyor
Chuah Suh NuoAccountant
DUNIA EPIK SDN BHD
Khoo Pek AiGeneral Manager, Finance
Ong Beng SoonSenior Project Manager
10 Magna pr ima Berhad Annual Report 2002
Terms and Reference of the Audit Committee
1. COMPOSITION
The Audit Committee shall be appointed by the Board of Directors and shall consist of at least three and amaximum of five directors. The majority of the members are independent of senior management and operationalfunctions and unencumbered by any relationship that might, in the opinion of the Board of Directors, beconsidered to be conflict of interest.
All members of the Audit Committee including the Chairman shall hold office only as long as they serve asDirectors of the Company. The members of the Audit Committee shall elect a Chairman from among theirmembers who is not an executive director or employee of the Company or any related corporation. Should anymember of the Audit Committee cease to be a Director of the Company, his membership in the Audit Committeewould cease forthwith.
If a member resigns or ceases to be a member resulting in the numbers being reduced to below three, the Boardshall, within three months, appoint such members to make up the minimum of three members.
2. OBJECTIVES
The primary objectives of the Audit committee are to:-• maintain, a direct line of communication between the Board, external auditors, management and internal
auditors through regularly scheduled meetings
• avail to the external and internal auditors private and confidential audiences at any time they desire withor without prior knowledge of management
• review existing practice and recommend to Management to formalise an ethics code for all executives andstaff of the Group.
3. AUTHORITY
The Committee is authorised by the Board to:
• investigate any activity within its terms of reference• obtain resources, which are reasonably required to enable performance of its duties• have free access to all information and documents it requires for the purpose of discharging its functions
and responsibilities• maintain direct communication channels with the external auditors and the Internal Audit Department• procure the service of external independent professional advice when deemed necessary• convene meetings with the external auditors, without the attendance of the management, whenever
deemed necessary.
4. MEETINGS
The Committee shall meet at least five times a year. Additional meetings may be called at the Chairman’sdiscretion. The Committee has the discretion to invite relevant personnel including external auditors and otheradvisors, if deemed necessary. The quorum for each meeting shall be two members.
Minutes of each meeting shall be kept and distributed to each member of the Committee and also members ofthe Board. The Committee Chairman shall report to the Board on activities of the committee.
5. SECRETARY
The Company Secretary shall be the secretary of the committee and be responsible for drawing up agendas inconsultation with the Chairman. The agenda, together with relevant documentation shall be circulated to theCommittee members, one week prior to each meeting.
Annual Report 2002 Magna Pr ima Berhad 1111
Audit Committee (cont’d)
The secretary shall be responsible for recording attendance, keeping minutes of meetings and circulating minutes ofmeetings to the Committee members and members of the Board of Directors.
6. DUTIES AND RESPONSIBILITIES
The duties and responsibilities of the Committee are to:• review all financial information for publication, including quarterly and annual financial statements prior to
submission to the Board of Directors. The review shall focus on:- changes in accounting policies and practices- major judgmental areas- significant audit adjustments from the external auditors- compliance with accounting standards- compliance with KLSE and other regulatory and legal requirements
• discuss with the external auditor, the nature, scope and approach of the audit of the financial statements
• discuss with the external auditor on areas of concern arising from the audit of the financial statements
• assess the adequacy and effectiveness of the accounting procedures and the internal controls systems ofthe Company by reviewing management letters from external and internal auditors
• discuss problems and reservations arising from the interim and final audits and any matters the auditorsmay wish to discuss in the absence of the management, where necessary
• review the internal audit plan and processes, consider the major findings of internal audit and recommendactions and steps to be taken by management in response to the findings
• review the relevance and adequacy of the scope, functions and resources of internal audit and thenecessary authority to carry out the function
• determine extent of cooperation and assistance given by employees
• review any related party transactions and conflict of interest situations that may arise within the Company
• consider the appointment of the external auditors, the terms of reference of their appointment and anyquestions on resignation and dismissal before recommendation to the Board
• undertake such other responsibilities as may be agreed to by the Committee and the Board
• report its activities, significant results and findings.
THE AUDIT COMMITTEE
The Audit Committee was established on 13th January 1997 to act as a committee of the Board of Directors.
1. MEMBERS
Members of the Audit Committee during the financial year ended 31 December 2002 are as follows:
Members Status
Kamil A.Rahman * (Chairman) Independent Non-Executive DirectorFeisal Sheikh Hussein** Independent Non-Executive DirectorNg Yak Hee Non Independent Executive DirectorsT.A.Rahman T.Andak Independent Non-Executive DirectorN.Chanthiran Nagappan * Independent Non-Executive Director
*Appointed on 28 November 2002** Resigned on 28 November 2002
12 Magna pr ima Berhad Annual Report 2002
Audit Committee (cont’d)
2. MEETINGS
The Audit Committee convened eleven meetings during the financial year. The meetings were appropriatelystructured through the use of agendas and meeting papers, which were distributed to members with sufficientnotification.
Members No. of meetings No. of meetings attendedheld during tenure
Kamil A.Rahman (Chairman) 9 8Feisal Sheikh Hussein 11 8Ng Yak Hee 11 8T.A.Rahman T.Andak 11 9N.Chanthiran Nagappan 9 9
The Executive Director for Finance & Corporate Services and the General Manager, Group Corporate Financewere present by invitation in all meetings. Representatives of the external auditors as well as the Group InternalAuditor also attended the meetings upon invitation.
3. SUMMARY OF ACTIVITIES
During the year under review, the Audit Committee carried out the following duties in accordance with its termsof reference:• reviewed the quarterly unaudited financial results and audited financial statements prior to submission to the
Board for consideration and approval• reviewed the external auditors’ scope of work and audit plan for the year• reviewed and discussed the external auditors’ audit plan for the year• reviewed and discussed the external auditors’ audit report and areas of concern• considered the appointment and the terms of reference of the external auditors• reviewed the internal audit plan, considered the major findings of internal audit and recommended actions
to be taken by the management in response to the findings• assessed the adequacy and effectiveness of the accounting procedures and internal control systems of the
Company by reviewing the management letters from the external and internal auditors• reviewed the relevance and adequacy of the scope, functions and resources of internal audit and the
necessary authority to carry out the function• reviewed related party transactions• reported to the Board on its activities and significant findings and results.
4. INTERNAL AUDIT FUNCTIONS
During the year under review, the Internal Audit Department carried out the following activities:
• presented and obtained approval from the Audit Committee, the internal audit plan, strategy and scope ofwork
• reviewed and analysed key business processes and provided recommendations for improvements• monitored and ensured implementation of corrective action plans by the management• monitored compliance with policies and procedures and reviewed the adequacy and effectiveness of the
internal control structure of the Company• conducted a series of risk assessment workshops with the Group’s business units and departments• carried out investigation assignments.
Annual Report 2002 Magna Pr ima Berhad 13
Statement on Corporate Governance
The Malaysian Code on Corporate Governance is aimed at providing guidelines for companies especially public
listed companies to observe good corporate governance in their business practice.
The Magna Prima Group fully subscribes to good corporate governance and is committed in ensuring that it is
managed with integrity, transparency and accountability. These have always been recognised by the Group as its
key responsibility in achieving its objectives of enhancing stakeholders’ value and protecting the assets of the Group.
The Board will continue to take appropriate actions to ensure compliance of the Malaysian Code on Corporate
Governance in order to further improve best practices of the Group.
BOARD OF DIRECTORS
The Board
An experienced and effective Board consisting of members with a wide range of technical, financial, corporate and
management skills and experience leads and control the Group. The Board is responsible for the overall
management of the Group and in ensuring that the Group is managed with integrity, transparency and
accountability.
Board Balance
The Board with a balanced composition of executive and non-executive directors, currently comprises seven
members, four Executive Directors and three Independent Non Executive Directors.
The composition of the Board is as follows:
Directors Executive Independent Non-
Director Executive Director
Dato’ Abd Gani Yusof ✓
Ahmad Ghazali Md. Kassim ✓
Ng Yak Hee ✓
Chua Lee Boon ✓
T.A. Rahman T. Andak ✓
Kamil A. Rahman ✓
N. Chanthiran Nagappan ✓
14 Magna pr ima Berhad Annual Report 2002
Statement on Corporate Governance (cont’d)
Board Meetings
During the year, fourteen Board meetings were held and details of attendance by the Directors are as disclosed below:-
Directors No. of Meetings Attended %
Executive Directors
Dato’ Abd Gani Yusof 9/14 64
Ahmad Ghazali Md. Kassim 11/14 78
Ng Yak Hee 12/14 85
Chua Lee Boon 11/14 78
Non-Executive Directors
Feisal Sheikh Hussein ** 8/14 57
T.A.Rahman T.Andak 12/14 85
Kamil A.Rahman * 10/10 100
N.Chanthiran Nagappan* 8/10 80
Notes
* Appointed on 5 March 2002
**Resigned on 28 November 2002
Supply of Information
All Board members are supplied with information on a timely manner. Board reports are circulated prior to
Board meetings and the reports provide, amongst others, financial and corporate information, significant
operational, financial and corporate issues, performance of the Company and of the Group and management
proposals which require the approval of the Board.
The Directors have access to all information within the Group as a full Board or in their individual capacity
in discharging their duties and responsibilities. They also have direct access to the advice and the service of
the Company Secretaries, the external auditors and other independent professionals at all times.
The Company Secretaries appointed by the Board are qualified professionals under the Companies Act and
are individuals who are competent to provide strong and positive support to the Board.
Appointments to the Board
The Board has established a Nomination Committee, which has the primary responsibility to assess the suitability
of proposed board members and to recommend such appointments to the Board. The objective of the
establishment of this Committee is to ensure independent assessment of appointments to the Board. The
Annual Report 2002 Magna Pr ima Berhad 15
committee is also responsible for annual assessment of the mix skills and experience possessed by Board members
to ensure effectiveness of the Board, the committees of the Board, and the contribution of individual Directors.
The Nomination Committee comprises three Independent Non-executive Directors and one Executive Director.
During the financial year 2002, the committee met once with all members present.
Directors Training
All the Directors have completed their Mandatory Accreditation Programme ("MAP") conducted by the
Research Institute of Investment Analysts Malaysia. The Directors will continue to undertake other relevant
training programmes to further enhance their skills and knowledge.
Re-election
In accordance with Company’s Articles of Association, at least one third of the Directors are required to retire
by rotation at each Annual General Meeting and can offer themselves for re-election at the Annual General
Meeting. The Directors shall also retire from office at least once in three years but shall be eligible for re-
election.
THE AUDIT COMMITTEE
The Board is also assisted by the Audit Committee whose members, terms of reference and activities for the
year under review are stated on pages 10 and 11 of the Annual Report.
DIRECTORS’ REMUNERATION
The Remuneration Committee
The Remuneration Committee reviews and recommends to the Board the remuneration package of the
executive directors and senior management of the Group with the main aim of providing the level of
remuneration sufficient to attract and retain key personnel needed to run the Group successfully. Mr.
N.Chanthiran Nagappan chairs the committee comprising totally non-executive directors. Other members
include En. Kamil A. Rahman and En.T A Rahman T Andak.
Details of Directors’ remuneration in 2002 are as follow:-
Annual Remuneration Executive Non-Executive
Up to RM50,000 - 4RM200,000 - RM250,000 1 -RM250,001 - RM300,000 3
Statement on Corporate Governance (cont’d)
16 Magna pr ima Berhad Annual Report 2002
Statement on Corporate Governance (cont’d)
SHAREHOLDERS
Investment and Shareholders CommunicationIt has always been the company’s practice to maintain good relationship with its shareholders. Major corporate
developments and happenings in the Company have always been promptly announced to all shareholders, in
line with KLSE’s objectives of ensuring transparency and good corporate governance practice.
The financial performance of the Group, major corporate developments and other relevant information are
promptly disseminated to shareholders and investors via announcements of its quarterly performance, annual
report and corporate announcements to KLSE.
During the Annual General Meeting, shareholders are usually given a presentation on the performance and
major activities of the Group during the year under review, whereby the shareholders have opportunity to
enquire and comment on the Company’s performance and operations.
ACCOUNTABILITY AND AUDIT
Financial Reporting
In its financial reporting via quarterly announcements of results, annual financial statements and annual report
presentations including the Chairman’s Statement and Review of Operations, the Board of Directors always
provides a comprehensive assessment of the Group’s performance and prospects for the benefits of
shareholders, investors and interested parties. The Audit Committee also assists the Board in overseeing the
financial reporting processes of the Group and quality of its financial reporting.
Directors responsibility in financial reporting
The Board of Directors is responsible for the preparation of the annual financial statements of the Group and
to ensure that the financial statements give a true and fair view of the state of affairs of the Group and its result
and cash flow for the financial year.
The Board of Directors has ensured that the financial statement have been prepared in accordance with
applicable approved accounting standards in Malaysia, the requirements of the Companies Act 1965 and other
regulatory provisions. In preparing the financial statements, the Board of Directors has ascertained that
reasonable prudent judgement and estimates have been consistently applied and the accounting policies
adopted have been complied with.
The Directors have a general responsibility of taking reasonable steps as to safeguard the assets of the Group
and to prevent and detect any irregularities.
Relationship with the Auditors
Through the Audit Committee of the Board, the Group has established transparent and appropriate
relationship with the Group’s auditors, both internal and external. The Audit Committee also meets the
external auditors at least once a year without the presence of the management.
Annual Report 2002 Magna Pr ima Berhad 17
Statement on Internal Control
The Board of Directors is pleased to submit herewith the Statement on Internal Control of the Group.
Board’s Responsibility
The Board acknowledges that it is responsible for the Group’s system of internal control to safeguard
shareholders’ investment and the Group’s assets and for the continuing review of its adequacy and integrity.
For the year under review, the Group has in place a system of internal control and has established an on-
going process of reviewing, identifying, evaluating and managing significant risks faced by the Group.
The system of internal control and the process of risk management are reviewed regularly by the Board with
the assistance of the Audit Committee, Internal Audit Department and all relevant personnel of the Group
through a combination of key processes.
It must be noted that the system of internal control is designated to manage rather than to eliminate the risk
of failure to achieve business objectives and can only provide reasonable and not absolute against material
misstatement or loss.
Key Process of Controls
• The Board meets regularly to monitor and review the overall performance of the Group, to consider
the findings and recommendations of committees and to consider and approve measures to be taken
and changes in policies and procedures necessary to address risks and to enhance the system of
internal control.
• The Audit Committee which among other things is given the responsibility of assisting the Board in
the on-going evaluation of the system of internal control meets regularly to approve internal and
external audit plans and to consider the findings and recommendations of the internal and external
auditors and members of the Group’s management with a view to regularly enhance the system of
internal control.
• The Board is further assisted by a Management Committee comprising all executive members of the
Board that schedules weekly meetings with the management staff of each business unit of the Group
to closely monitor among other things, operational, project implementation, new business prospects,
human resource and financial issues and to identify risks and control issues that may require further
action.
• The Group has in place an Internal Audit Department to assist the Audit Committee to carry out
reviews of the risk identification procedures, the operations of internal controls and the review of
key business activities of the Group on the basis of audit plans that are drawn up based on the risk
profiles of the business units and that are approved by the Audit Committee.
• The Group has in place an organisation structure with proper segregation of duties and reporting
procedures and all heads of business units and departments are accountable for ensuring the
effective implementation of established policies and procedures.
• The Group has a policy on the level of authorisation required and the financial limits for each level
of authority in respect of revenue and capital expenditure.
18 Magna pr ima Berhad Annual Report 2002
Statement on Internal Control (cont’d)
• The Audit Committee with the assistance of the Internal Audit Department has also set in place an
on-going process of further formalising the risk management systems and has conducted a series of
risk assessment workshops with the Group’s business units and department.
• In connection with the on-going process of developing the risk management system and system of
internal control, the Internal Audit Department is in the process of compiling laid down controls into
manuals to facilitate implementation, on-going review and ensure continuity of the control.
• Regular financial reports, operational reports and internal audit reports are made available for the
review of the Board and its committees.
• A subsidiary of the Group, Magna Prima Construction Sdn Bhd which holds an ISO9002 certification,
is subject to regular annual audits by the internal and SIRIM auditors to ensure its systems and
documentation procedures continue to meet ISO9002 certifications.
Issues of internal control arising from annual audits have been reported to the Audit Committee which has or
will institute measures to be taken by the appropriate personnel to address such issues.
The Board is of the opinion that based on the current level of activities, the Group’s system of internal control
is adequate and accords with the guidance provided by KLSE’s Statement of Internal Controls : Guidance for
Directors of Public Limited Companies’.
Directors’ Report
Consolidated Balance Sheet
Consolidated Income Statement
Consolidated Statement of Changes in Equity
Consolidated Cash Flow Statement
Balance Sheet
Income Statement
Statement of Changes in Equity
Cash Flow Statement
Notes to the Financial Statements
Statement by Directors
Statutory Declaration
Report of the Auditors to the Members
F i n a n c i a lS t a t e m e n t s
20
24
25
26
27
28
29
30
31
32
62
62
63
20 Magna Pr ima Berhad Annual Report 2002
Directors Report
The directors have pleasure in submitting their report together with the audited financial statements of theCompany and of the Group for the financial year ended 31st December 2002 and the auditors' report thereon.
PRINCIPAL ACTIVITIES
The principal activities of the Company is that of an investment holding company and provision of managementservices. The principal activities of the subsidiary companies are set out in Note 11 to the financial statements. Therehave been no significant changes in the nature of these activities during the year.
FINANCIAL RESULTS Group Company
RM RM
Profit after taxation 341,694 138,524
Minority interests (90,993) -
Net profit for the year 250,701 138,524
RESERVES AND PROVISIONS
There were no material transfers made to or from reserves or provisions accounts during the year other than thosedisclosed in the financial statements.
DIVIDEND
No dividends have been paid, declared or proposed since the end of the previous financial year.
DIRECTORS
The names of the directors in office since the date of the last directors' report on 30th April 2002 are as follows:-
Dato’ Abd Gani Bin YusofAhmad Ghazali Bin Md. KassimT. A. Rahman Bin T. AndakNg Yak HeeChua Lee BoonKamil Hj Abdul RahmanN. Chanthiran a/l NagappanFeisal Bin Sheikh Hussein (Resigned on 28.11.2002)
In accordance with Article 100 of the Company's Articles of Association, Ahmad Ghazali Bin Md. Kassim and NgYak Hee retire at the forthcoming Eighth Annual General Meeting and being eligible, offer themselves for re-election.
Particulars of directors' interest in shares in the Company and its related corporations as shown in the Register ofDirectors' Shareholdings are as follows:-
Annual Report 2002 Magna Pr ima Berhad 21
Directors’ Report (cont’d)
DIRECTORS (CONT’D)
DIRECTORS IN OFFICE AT THE END OF THE FINANCIAL YEAR
Number of ordinary shares of RM1.00 each As at During the year As at
Shareholdings in the Company 01.01.2002 Acquired Disposed 31.12.2002
Dato' Abd Gani Bin Yusof- Direct interest 5,559,313 - - 5,559,313
Ahmad Ghazali Bin Md. Kassim - Direct interest 711,269 - - 711,269 - Indirect interest 3,286,107 - - 3,286,107
Ng Yak Hee - Direct interest 730,930 - - 730,930
Chua Lee Boon- Direct interest 485,930 - - 485,930
Ng Yak Hee & Chua Lee Boon- Indirect interest 4,063,384 - - 4,063,384
Shareholdings in subsidiary company, Number of ordinary shares of RM1.00 each Magna Park Sdn Bhd As at During the year As at
01.01.2002 Acquired Disposed 31.12.2002
Dato' Abd Gani Bin Yusof andAhmad Ghazali Bin Md. Kassim- Indirect interest 675,000 - - 675,000
By virtue of his interest in the shares of the Company, Dato' Abd Gani Bin Yusof is deemed to be interested in theshares of all other subsidiary companies that are held by the Company.
Except as disclosed above, no other directors held any interest in the shares in the Company and its relatedcorporations.
As at the end of the financial year and during the year, there did not subsist any arrangement to which the Companywas a party, whereby the directors or their nominees might acquire benefits by means of the acquisition ofshares in, or debentures of, the Company or any other body corporate other than any benefits that may arise fromthe following:-
(a) The Company's proposed acquisition of the entire paid-up share capital of MH Projects Sdn Bhd via a VoluntaryOffer and which is to be satisfied by the issuance of new ordinary shares of RM1.00 each of the Company tothe vendors as detailed in Note 34(a) to the financial statements. Dato' Abd Gani Bin Yusof is a deemedsubstantial shareholder of one of the vendors.
(b) The Company's Employee Share Option Scheme as detailed in Note 34(b) to the financial statements and ofwhich Dato' Abd Gani Bin Yusof, Ahmad Ghazali Bin Md. Kassim, Ng Yak Hee and Chua Lee Boon shall eachbe entitled to options of up to a maximum 400,000 new ordinary shares of RM1.00 each in the Company.
Since the end of the previous financial year, no director has received or become entitled to receive any benefits(other than a benefit included in the aggregate amount of remuneration received or due and receivable by thedirectors and as shown in the financial statements) by reason of a contract made by the Company or a relatedcorporation with the director or his nominees or with a firm of which he is a member or with a company in whichhe has a substantial financial interest other than by virtue of transactions entered into in the ordinary course ofbusiness and any benefits that may be derived from the arrangements mentioned in the preceeding paragraphs.
22 Magna pr ima Berhad Annual Report 2002
Directors’ Report (cont’d)
OTHER STATUTORY INFORMATION
(a) Before the financial statements of the Company and of the Group were made out, the directors took reasonablesteps:-
(i) to ascertain that proper action had been taken in relation to the writing off of bad debts and the makingof provision for doubtful debts and satisfied themselves that all known bad debts had been written offand that adequate provision had been made for doubtful debts; and
(ii) to ensure that any current assets which were unlikely to realise their value as shown in the accountingrecords in the ordinary course of business have been written down to an amount which they might beexpected so to realise.
(b) As at the date of this report, the directors are not aware of any circumstances:-
(i) which would render the amount written off for bad debts and provision made for doubtful debts in theCompany and the Group inadequate to any substantial extent;
(ii) which would render the values of current assets in the financial statements of the Company and of theGroup misleading; and
(iii) which have arisen which render adherence to the existing method of valuation of assets and liabilities ofthe Company and of the Group misleading or inappropriate.
(c) As at the date of this report, there does not exist:-
(i) any charge on the assets of the Company and of the Group which has arisen since the end of the financialyear which secures the liabilities of any other person; and
(ii) any contingent liability in respect of the Company and of the Group which has arisen since the end ofthe financial year.
(d) In the opinion of the directors:-
(i) no contingent or other liability has become enforceable or is likely to become enforceable within theperiod of twelve months after the end of the financial year which will or may affect the ability of theCompany and of the Group to meet their obligations when they fall due;
(ii) the results of the Company's and of the Group's operations during the financial year were notsubstantially affected by any item, transaction or event of a material and unusual nature; and
(iii) no item, transaction or event of a material and unusual nature has arisen in the interval between the endof the financial year and the date of this report which is likely to affect substantially the results ofoperations of the Company and of the Group for the financial year in which this report is made otherthan as disclosed in Note 34 to the financial statements.
(e) As at the date of this report, the directors are not aware of any circumstances not otherwise dealt with in thisreport or the financial statements of the Company and of the Group which would render any amount stated inthe financial statements misleading.
Annual Report 2002 Magna Pr ima Berhad 23
Directors’ Report (cont’d)
AUDITORS
The auditors, Messrs. Folks DFK & Co., have indicated that they do not wish to seek re-appointment.
Signed in accordance with a resolution of the directors,
DATO' ABD GANI BIN YUSOFDirector
KAMIL HJ ABDUL RAHMANDirector
Kuala Lumpur
Dated: 28 April 2003
24 Magna pr ima Berhad Annual Report 2002
Consolidated Balance Sheet as at 31st December 2002
2002 2001NOTES RM RM
SHARE CAPITAL 4 33,300,000 33,300,000
RESERVES 5 5,427,678 5,979,793
SHAREHOLDERS' FUNDS 38,727,678 39,279,793
MINORITY INTERESTS 2,352,750 2,261,757
LONG TERM AND DEFERRED LIABILITIESDeferred taxation 6 1,143,400 1,273,800
Hire purchase creditors 7 1,042,676 1,891,629
Trade creditor 8 1,604,629 2,208,847
Term loans (secured) 9 7,630,073 2,925,874
Other bank borrowing (unsecured) 21 - 700,000
52,501,206 50,541,700
Represented by :-
PROPERTY, PLANT AND EQUIPMENT 10 16,973,179 26,342,493
JOINT VENTURES 12 6,052,651 9,265,784
INVESTMENTS 13 425,000 425,000
REAL PROPERTY ASSETS 14 1,678,695 1,664,653
CURRENT ASSETSInventories 15 7,758,108 12,455,567 Gross amount due from customers for contract work 16 3,419,112 3,051,656 Development properties 17 94,769,317 92,710,540 Debtors 18 40,944,183 44,719,285 Deposits, cash and bank balances 19 6,331,440 6,579,958
153,222,160 159,517,006
CURRENT LIABILITIESCreditors 20 84,603,729 80,845,307 Bank borrowings 21 33,626,043 56,309,724 Taxation 7,620,707 9,518,205
125,850,479 146,673,236
NET CURRENT ASSETS 27,371,681 12,843,770
52,501,206 50,541,700
The notes on pages 32 to 61 form an integral part of these financial statements.
Annual Report 2002 Magna Pr ima Berhad 25
Consolidated Income Statement for the year ended 31st December 2002
2002 2001NOTES RM RM
REVENUE 22 134,950,109 113,884,856
COST OF SALES 23 (125,136,816) (104,990,108)
GROSS PROFIT 9,813,293 8,894,748
OTHER OPERATING INCOME 1,899,973 962,921
DISTRIBUTION EXPENSES (410,711) (855,307)
ADMINISTRATION EXPENSES (3,452,050) (4,551,217)
OTHER OPERATING EXPENSES (1,228,144) (924,279)
PROFIT FROM OPERATIONS 6,622,361 3,526,866
FINANCE COSTS (6,396,919) (8,516,268)
SHARE OF RESULTS OF JOINT VENTURE ENTITIES (290,015) 8,878,042
(LOSS)/PROFIT BEFORE TAXATION 24 (64,573) 3,888,640
TAXATION 25 406,267 (3,741,814)
PROFIT AFTER TAXATION 341,694 146,826
MINORITY INTERESTS (90,993) (91,899)
NET PROFIT FOR THE YEAR 250,701 54,927
EARNINGS PER SHARE (SEN) 26 0.8 0.2
The notes on pages 32 to 61 form an integral part of these financial statements.
26 Magna pr ima Berhad Annual Report 2002
Consolidated Statement of Changes in Equity for the year ended 31st December 2002
Share Share Capital Reserve on RetainedCapital Premium Reserve Consolidation Profit Total
RM RM RM RM RM RM
Balance at 31st December 2000 33,300,000 2,272,804 29,994 908,090 2,973,432 39,484,320
Amount credited to income statement - - - (259,454) - (259,454)
Net profit for the year - - - - 54,927 54,927
Balance at 31st December 2001 33,300,000 2,272,804 29,994 648,636 3,028,359 39,279,793
Amount credited to income statement - - - (259,454) - (259,454)
Shares issue expenses - (543,362) - - - (543,362)Net profit for the year - - - - 250,701 250,701
Balance at 31st December 2002 33,300,000 1,729,442 29,994 389,182 3,279,060 38,727,678
The notes on pages 32 to 61 form an integral part of these financial statements.
Annual Report 2002 Magna Pr ima Berhad 27
Consolidated Cash Flow Statement for the year ended 31st December 2002
2002 2001RM RM
CASH FLOWS FROM OPERATING ACTIVITIES(Loss)/Profit before taxation (64,573) 3,888,640 Adjustments for:- Depreciation 4,328,789 6,201,842 Gain on disposal of property, plant and equipment (108,426) -Plant and equipment written off 337,132 13,214 Share of joint venture loss/(profit) 290,015 (8,878,042)Loss on disposal of property, plant and equipment 57,914 524,026 Interest income (344,630) (325,969)Interest expense 6,396,919 8,516,268 Reserve on consolidation recognised (259,454) (259,454)Allowance for doubtful debts - 100,000 Bad debts written off 507,856 76,873 Write back of provision for expenses no longer required (804,542) -
Operating profit before working capital changes 10,337,000 9,857,398 Decrease/(Increase) in inventories 4,697,459 (12,405,644)(Increase)/Decrease in gross amount due from
customers for contract work (367,456) 2,049,359 (Increase)/Decrease in development properties and real property assets (2,072,819) 15,439,424 Decrease in trade and other debtors 3,672,846 1,753,187 Increase/(Decrease) in trade and other creditors 4,455,648 (5,664,268)
Cash generated from operations 20,722,678 11,029,456 Taxation paid (2,027,231) (652,557)Interest received 344,630 325,969 Interest paid (6,396,919) (8,516,268)
Net cash from operating activities 12,643,158 2,186,600
CASH FLOWS FROM INVESTING ACTIVITIESPurchase of property, plant and equipment [Note 27(a)] (574,442) (163,273)Net proceeds from disposal of property, plant and equipment 5,868,627 18,450,831 Receipts from joint venture entities 2,923,118 -Real Property Gains Tax paid (67,580) -Placement of fixed deposits (734,902) -
Net cash from investing activities 7,414,821 18,287,558
CASH FLOWS FROM FINANCING ACTIVITIESPayment of hire purchase liabilities (1,818,555) (5,753,825)Term and bridging loans repaid (9,319,147) (11,051,365)Net repayment of short term bank borrowings (5,895,762) (618,504)Shares issue expenses (543,362) -
Net cash used in financing activities (17,576,826) (17,423,694)
NET INCREASE IN CASH AND CASH EQUIVALENTS 2,481,153 3,050,464 Cash and cash equivalents at beginning of year (8,834,644) (11,885,108)
CASH AND CASH EQUIVALENTS AT ENDOF YEAR [Note 27(b)] (6,353,491) (8,834,644)
The notes on pages 32 to 61 form an integral part of these financial statements.
28 Magna pr ima Berhad Annual Report 2002
Balance Sheet as at 31st December 2002
2002 2001NOTES RM RM
SHARE CAPITAL 4 33,300,000 33,300,000
RESERVES 5 2,572,518 2,977,356
SHAREHOLDERS' FUNDS 35,872,518 36,277,356
LONG TERM AND DEFERRED LIABILITIESDeferred taxation 6 16,100 16,100 Other bank borrowing (unsecured) 21 - 700,000
35,888,618 36,993,456
Represented by :-
PROPERTY, PLANT AND EQUIPMENT 10 116,845 126,190
SUBSIDIARY COMPANIES 11 30,750,998 30,750,998
CURRENT ASSETSDebtors 18 7,073,314 8,167,615 Deposits, cash and bank balances 19 4,442 10,599
7,077,756 8,178,214
CURRENT LIABILITIESCreditors 20 790,966 681,021 Bank borrowings 21 1,078,447 1,274,209 Taxation 187,568 106,716
2,056,981 2,061,946
NET CURRENT ASSETS 5,020,775 6,116,268
35,888,618 36,993,456
The notes on pages 32 to 61 form an integral part of these financial statements.
Annual Report 2002 Magna Pr ima Berhad 29
Income Statement for the year ended 31st December 2002
2002 2001NOTES RM RM
REVENUE 22 500,000 500,000
OTHER OPERATING INCOME 88,833 -
ADMINISTRATION EXPENSES (344,716) (345,911)
OTHER OPERATING EXPENSES (8,371) (16,944)
PROFIT BEFORE TAXATION 24 235,746 137,145
TAXATION 25 (97,222) (77,000)
NET PROFIT FOR THE YEAR 138,524 60,145
The notes on pages 32 to 61 form an integral part of these financial statements.
30 Magna pr ima Berhad Annual Report 2002
Statement of Changes in Equity for the year ended 31st December 2002
Share Share RetainedCapital Premium Profit Total
RM RM RM RM
Balance at 31st December 2000 33,300,000 2,272,804 644,407 36,217,211
Net profit for the year - - 60,145 60,145
Balance at 31st December 2001 33,300,000 2,272,804 704,552 36,277,356
Shares issue expenses - (543,362) - (543,362)
Net profit for the year - - 138,524 138,524
Balance at 31st December 2002 33,300,000 1,729,442 843,076 35,872,518
The notes on pages 32 to 61 form an integral part of these financial statements.
Annual Report 2002 Magna Pr ima Berhad 31
Cash Flow Statement for the year ended 31st December 2002
2002 2001RM RM
CASH FLOWS FROM OPERATING ACTIVITIESProfit before taxation 235,746 137,145 Adjustments for:- Depreciation 19,239 18,385
Operating profit before working capital changes 254,985 155,530 (Increase)/Decrease in other debtors (435) 90,096 Increase/(Decrease) in other creditors 468,982 (177,598)
Cash generated from operations 723,532 68,028 Taxation paid (16,370) (19,124)
Net cash from operating activities 707,162 48,904
CASH FLOWS FROM INVESTING ACTIVITYPurchase of property, plant and equipment [Note 27(a)] (9,894) (1,220)
CASH FLOWS FROM FINANCING ACTIVITIESRepayment from subsidiary companies 735,699 252,347 Repayment of short term bank borrowings (895,762) (297,034)Shares issue expenses (543,362) -
Net cash used in financing activities (703,425) (44,687)
NET (DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS (6,157) 2,997 Cash and cash equivalents at beginning of year 10,599 7,602
CASH AND CASH EQUIVALENTS AT END OF YEAR [Note 27(b)] 4,442 10,599
The notes on pages 32 to 61 form an integral part of these financial statements.
32 Magna pr ima Berhad Annual Report 2002
Notes to the Financial Statements at 31st December 2002
1. GENERAL INFORMATION
Magna Prima Berhad, a company incorporated and domiciled in Malaysia, is a public company limited byshares, and is listed on the Second Board of the Kuala Lumpur Stock Exchange ("KLSE").
The principal activities of the Company during the year is that of an investment holding company and provisionof management services. The principal activities of the subsidiary companies are set out in Note 11 to thefinancial statements.
Its registered office and principal place of business is located at No. 2, Jalan Prima 5, Metro Prima, 52100 KualaLumpur.
The financial statements were authorised for issue by the Board of Directors in accordance with a resolutionof the directors on 28th April 2003.
2. FINANCIAL INSTRUMENTS
(a) A financial instrument is any contract that gives rise to both a financial asset of one enterprise and afinancial liability or equity instrument of another enterprise.
Financial assets of the Group include quoted investments, trade and other debtors, deposits with licensedbanks, and cash and bank balances.
Financial liabilities of the Group include trade and other creditors, hire purchase creditors and bankborrowings.
The Group's accounting policies and methods adopted in respect of its financial instruments and furtherinformation thereof are disclosed in the individual accounting policy statements or notes to the financialstatements associated with the respective financial instrument.
(b) The Group's financial instruments are subject to a variety of financial risks including credit risk, interestrate risk, market risk, liquidity and cashflow risks.
The Group's overall financial risk management objective is to seek to address and control the risks towhich the Group is exposed and to minimise or avoid the incidence of loss that may result from itsexposure to such risks and to enhance returns where appropriate.
The Board is primarily responsible for the management of these risks and to formulate policies andprocedures for the management thereof. The risks are managed by regular risk reviews, internal controlsystems, on-going formulation and adherence to financial risk policies and mitigated by insurancecoverage where appropriate.
(i) Credit Risk
Credit risk is the risk of financial loss attributable to default on obligations by parties contractingwith the Group. The Group's main exposure to credit risk is in respect of its trade debtors.
Credit risk is addressed by a management committee that sets policies, carries out evaluation andinstitutes mitigating actions.
In respect of construction and engineering activities, potential clients are subject to a creditevaluation process. Existing clients' risk profiles are reviewed regularly to avoid any financial lossand where appropriate, further contract works may be suspended and legal actions are taken toattempt recoveries and mitigate losses. For property development activities, vacant possession andtitles to properties sold are withheld until full payment has been made by purchasers of propertiesdeveloped by the Group.
Annual Report 2002 Magna Pr ima Berhad 33
Notes to the Financial Statements (cont’d)
2. FINANCIAL INSTRUMENTS (CONT’D)
(ii) Interest Rate Risk
The Group has interest rate risk in respect of its borrowings and deposits with licensed bank.
Bank borrowings are subject to interest based on floating rates while hire purchase financing andinterest bearing deposits are based on fixed rates.
Market interest rates movements are monitored with a view to ensuring that the most competitiverates are secured and where appropriate borrowings arrangements and interest bearinginstruments are restructured or reduced.
(iii) Market Risk
Market risk is the risk that the value of the financial instruments will fluctuate due to changes inmarket prices.
In this respect, the Group is exposed to the risk of fluctuation in the market price of quoted sharesinvested by the Group.
The Group does not engage in speculative investments and its investment in the quoted shares isheld for long term.
(iv) Liquidity and Cash Flow Risks
Liquidity or funding risk is the risk of the inability to meet commitments associated with financialinstruments while cash flow risk is the risk of uncertainty of future cash flow amount associatedwith a monetary financial instrument.
Liquidity and cash flow risks are addressed by annual and continuous review and forwardplanning of cash flow in relation to business plans to ensure a balanced and prudent portfolio ofcash and other liquid assets and credit facilities is maintained. The proper management of interestrate and credit risks have the effect of further minimising the incidence and effects of liquidity andcash flow risks.
3. SIGNIFICANT ACCOUNTING POLICIES
All significant accounting policies set out below are consistent with those applied in the previous year.
(a) Basis of Preparation
The financial statements of the Company and of the Group have been prepared under the historical costconvention unless as otherwise indicated in this summary of significant accounting policies and complywith applicable approved Accounting Standards in Malaysia.
The Group has chosen to apply the Malaysian Accounting Standards Board Standard 21 on BusinessCombinations ("MASB 21") prospectively as allowed for under the transitional provision of MASB 21 inthe preparation of the financial statements of the Group. Accordingly, business combinations effectedprior to 1st January 2002 have not been restated to comply with MASB 21.
(b) Basis of Consolidation
The consolidated financial statements incorporate the financial statements of the Company and all itssubsidiary companies made up to the end of the financial year. Subsidiary companies are thosecompanies in which the Group has power to exercise control over the financial and operating policiesso as to obtain benefits from their activities. All inter-company transactions are eliminated onconsolidation and the consolidated financial statements reflect external transactions only. Dunia Epik SdnBhd, Magna Prima Construction Sdn Bhd and Magna Realty Sdn Bhd are consolidated using the mergermethod of accounting in accordance with Malaysian Accounting Standard No. 2 on Accounting forAcquisitions and Mergers, the applicable accounting standard during the first period of theirconsolidation. The consolidation of all other subsidiary companies are based on the acquisition method.
34 Magna pr ima Berhad Annual Report 2002
Notes to the Financial Statements (cont’d)
3. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
(b) Basis of Consolidation (cont’d)
(i) Under the merger method of accounting, the results of subsidiary companies are presented as ifthe companies have been combined throughout the current and comparative accounting periods.The cost of investment in the Company's books is recorded at the nominal value of shares issued.
Where the nominal value of the share capital issued as purchase consideration is greater than thenominal value of the share capital of the subsidiary companies acquired, the difference arising isdeducted against consolidated reserve.
The excess of the nominal value of the share capital of the subsidiary companies acquired overthe nominal value of the share capital issued as purchase consideration is taken to merger reserve.
(ii) Under the acquisition method of accounting, the results of the subsidiary companies acquired ordisposed of during the year are included from the date of acquisition or up to the date of disposal.At the date of acquisition, the fair value of the subsidiary companies' net assets are determinedand these values are reflected in the consolidated financial statements.
The difference between the acquisition cost and their fair values is reflected as goodwill or reserveon consolidation as appropriate. Goodwill arising on consolidation is amortised over its estimateduseful economic life or written off in the year of acquisition to the consolidated income statementunder other operating expenses where it is deemed to have no continuing benefit. Reserve onconsolidation is credited to the consolidated income statement under other operating income overthe period it is estimated to accrue.
Minority interest is measured at the minority's share of the post acquisition fair values of the identifiableassets and liabilities of the subsidiary company.
(c) Investments
Investments in subsidiary companies are stated at cost. Where an indication of impairment exists, thecarrying amount of the investment is assessed and allowance is made for impairment where appropriatebased on the recoverable amount.
Investments in other non-current investments are stated at cost and an allowance for diminution in valueis made where, in the opinion of the directors, there is a decline other than temporary in the value ofsuch investments. Such a decline is recognised as an expense in the income statement.
On disposal of an investment, the difference between net disposal proceeds and its carrying amount ischarged or credited to the income statement.
(d) Property, Plant and Equipment and Depreciation
Property, plant and equipment are stated at cost less accumulated depreciation.
Freehold land is not amortised. Leasehold land is amortised over the lease period of 50 years. All otherproperty, plant and equipment are depreciated on the straight line basis so as to write off the costs ofthe assets over their estimated useful lives.
The principal annual rates used are as follows :-
Buildings 2% - 10%Plant and machinery 10%Furniture, fittings and equipment 10% - 20%Motor vehicles 20%Container store and cabin 10% - 20%Office renovation 10%
Where the carrying amount of an asset exceeds its estimated recoverable amount, the asset is writtendown to the estimated recoverable amount.
Annual Report 2002 Magna Pr ima Berhad 35
Notes to the Financial Statements (cont’d)
3. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
(e) Revenue Recognition
Revenue from construction contracts is recognised as detailed in Note 3(g).
Revenue from property development is recognised as detailed in Note 3(h).
Revenue from sale of goods and provision of services incidental to construction contracts is recognisedwhen the goods are delivered and services are rendered respectively.
Rental income is recognised on an accrual basis over the period of the tenancy.
Income from investment is recognised when the right to receive payment has been established.
All intra group revenue are eliminated on consolidation.
(f) Inventories
Completed properties held for sale are stated at the lower of cost and net realisable value. Cost isdetermined based on the specific identification method and includes cost of land and construction,proportion of overheads and interest incurred during construction.
(g) Construction Contracts
(i) Revenue and Expense Recognition
When the outcome of a construction contract can be estimated reliably, contract revenue andcontract cost are recognised over the period of the contract as revenue and expense respectivelyusing the percentage of completion method, determined by reference to the proportion thatcontract costs incurred todate bear to the estimated total contract costs.
When the outcome of a construction contract cannot be ascertained reliably, contract revenue isrecognised only to the extent of contract costs incurred that is estimated to be recoverable andcontract costs are recognised as an expense in the period in which they are incurred.
When it is estimated that the total contract costs will exceed total contract revenue, the expectedloss is recognised as an expense immediately.
(ii) Gross Amount Due From/(To) Customers for Contract Work
Amount due from/(to) customers for contract work is the net amount of costs incurred plusrecognised profits less recognised losses and progress billing for all contracts in progress.
Contract costs incurred todate include costs directly related to the contract or attributable tocontract activities in general and costs specifically chargeable to the customers under the terms ofthe contract.
(h) Property Development Activities
(i) Real Property Assets
Real property assets consisting of land held for future development are stated at cost of acquisitionincluding all related costs incurred subsequent to the acquisition on activities necessary to preparethe land for its intended use.
Such assets are transferred to development properties when significant development work has beenundertaken and the development is expected to be completed within the normal operating cycle.
36 Magna pr ima Berhad Annual Report 2002
Notes to the Financial Statements (cont’d)
3. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
(h) Property Development Activities (cont’d)
(ii) Development Properties
Development properties represent properties on which development work has been undertakenand is expected to be completed within the normal operating cycle. Development properties arestated at cost, and where appropriate, include attributable profits less foreseeable losses andprogress billings. Cost consists of land and other direct expenditure and related overheadsincurred. Overheads include borrowing costs relating to the financing of the land anddevelopment.
(iii) Revenue Recognition
Revenue from property development is recognised as follows:-
(a) Revenue from completed property is recognised based on the contracted sales value ofsuch properties.
(b) Revenue from uncompleted properties is recognised on the percentage of completionmethod in respect of all property units that have been contracted for sale. The stage ofcompletion is determined by reference to the surveys of work performed.
(iv) Profit/Loss Recognition
Profits from property development is recognised using the percentage of completion method,determined by surveys of work performed. Foreseeable losses from property development areprovided for in full.
(i) Accounting for Joint Ventures
The Group carried out construction contracts on a joint venture basis through unincorporated jointlycontrolled entities over which there is contractually agreed sharing of control by the Group with one ormore parties.
The Group's interest in jointly controlled entities are accounted for in the consolidated financialstatements by the equity method of accounting. Under equity method of accounting, the Group's shareof results of the jointly controlled entities for the period is included in its financial statements based onthe results of the jointly controlled entities for the corresponding period. The Group's investments injointly controlled entities are carried in the balance sheet at an amount that reflects its share of the netassets of the jointly controlled entities. Where an indication of impairment exists, the carrying amount ofthe investment is assessed and written down to its recoverable amount.
(j) Hire Purchase Arrangements
Assets acquired under hire purchase arrangements are capitalised as plant and equipment based on thecost of the assets and the corresponding obligations are taken up as hire purchase creditors.
The interest element is charged to the income statement over the period of the hire purchasearrangements.
(k) Debtors
Debtors are stated at anticipated realisable value. Bad debts are written off as and when ascertained andallowance is made for any debts considered to be doubtful of collection.
Annual Report 2002 Magna Pr ima Berhad 37
Notes to the Financial Statements (cont’d)
3. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
(l) Provisions
A provision is recognised when it is probable that an outflow of resources embodying economic benefitswill be required to settle a present obligation (legal or constructive) as a result of a past event and areliable estimate can be made of the amount.
(m) Deferred Taxation
Provision is made under the liability method for taxation deferred in respect of all timing differencesexcept where it is reasonably expected that the tax effects of such deferrals will continue in theforeseeable future. Where timing differences result in a debit balance, this is recognised only where thereis a reasonable certainty of realisation.
(n) Cash and Cash Equivalents
Cash and cash equivalents in the cash flow statement comprise cash and bank balances, deposits withlicensed banks, bank overdrafts and highly liquid investments that are readily convertible to knownamounts of cash and which are subject to an insignificant risk of changes in value.
4. SHARE CAPITAL
Group and Company2002 2001
RM RMOrdinary shares of RM1.00 each
Authorised 50,000,000 50,000,000
Issued and fully paid 33,300,000 33,300,000
5. RESERVES
Group Company2002 2001 2002 2001
RM RM RM RM
Share premium 1,729,442 2,272,804 1,729,442 2,272,804 Capital reserve 29,994 29,994 - -
Reserve on consolidation 389,182 648,636 - -
Retained profit 3,279,060 3,028,359 843,076 704,552
5,427,678 5,979,793 2,572,518 2,977,356
(a) With the exception of retained profit, all other reserves are not distributable by way of cash dividends.
(b) Shares issue expenses of RM543,362 (2001 : RM Nil) is written off against share premium during the year.
(c) Capital reserve represents the transfer from retained profit arising from bonus issue of shares fromretained profit of a subsidiary company in 1998.
38 Magna pr ima Berhad Annual Report 2002
Notes to the Financial Statements (cont’d)
5. RESERVES (CONT’D)
(d) Reserve on consolidation
Group2002 2001
RM RM
At beginning of year 648,636 908,090 Amount credited to income statement (259,454) (259,454)
At end of year 389,182 648,636
Reserve on consolidation is credited to the consolidated income statement over five years, being theperiod it is estimated to accrue.
(e) Subject to agreement with the Inland Revenue Board, the Company has estimated tax credit balance ofRM392,200 (2001 : RM295,000) under Section 108 of the Income Tax Act, 1967 to frank payment of cashdividends out of its retained profit as at 31st December 2002 in full.
The Company has a tax exempt income of RM269,210 (2001: RM269,210) arising from the waiver of taxon income earned for the financial year ended 31st December 1999 pursuant to the Income Tax(Amendment) Act 1999, and is available for distribution as tax exempt dividend.
6. DEFERRED TAXATION Group Company
2002 2001 2002 2001RM RM RM RM
At beginning of year 1,273,800 369,800 16,100 16,100 Transfer (to)/from income statement (130,400) 904,000 - -
At end of year 1,143,400 1,273,800 16,100 16,100
(a) Deferred tax liabilities are arrived at as follows:-
Group Company2002 2001 2002 2001
RM RM RM RM
Tax effects of :(i) Excess of capital allowances
over depreciation 1,572,400 2,593,800 16,100 16,100 (ii) Other timing difference 868,500 1,919,200 - -(iii) Unutilised capital allowances (1,300) (535,600) - -(iv) Unabsorbed tax losses (1,296,200) (2,703,600) - -
1,143,400 1,273,800 16,100 16,100
All timing differences of the Group and the Company have been accounted for in arriving at the deferredtax liabilities above.
Annual Report 2002 Magna Pr ima Berhad 39
Notes to the Financial Statements (cont’d)
6. DEFERRED TAXATION (CONT’D)
(b) The tax effects of deferred tax benefits not recognised in the financial statements are as follows:-
Group2002 2001
RM RM
Unabsorbed tax losses 997,900 1,166,900 Unutilised capital allowances 2,200 -
1,000,100 1,166,900
7. HIRE PURCHASE CREDITORS Group
2002 2001RM RM
Outstanding hire purchase instalments- payable within one year 2,252,219 2,906,575 - payable between two to five years 1,607,304 2,891,982 - payable after five years 20,688 -
3,880,211 5,798,557 Future finance charge on hire purchase (1,092,197) (1,664,688)
Outstanding hire purchase principal 2,788,014 4,133,869 Amount payable within one year [included in current liabilities - creditors (Note 20)] (1,745,338) (2,242,240)
Amount payable after one year(included in long term and deferred liabilities) 1,042,676 1,891,629
8. TRADE CREDITOR Group
2002 2001RM RM
Amount repayable within one year(included in current liabilities - trade creditors) 1,565,000 1,365,000
Amount repayable between two to four years(included in long term and deferred liabilities) 1,604,629 2,208,847
3,169,629 3,573,847
The above represents the balance of the consideration due to a third party in respect of the acquisition ofleasehold land for development by a subsidiary company.
No interest is payable on the outstanding balance during the year.
40 Magna pr ima Berhad Annual Report 2002
Notes to the Financial Statements (cont’d)
9. TERM LOANS (SECURED) Group
2002 2001RM RM
RM203,000 term loan drawndown in 1995 and repayable by 84 monthly instalments commencing April 1995. 4,574 45,918
RM2,000,000 term loan drawndown in 1997/1998 and repayable by 120 monthly instalments commencing August 1998. 650,576 772,476
RM8,500,000 term loan drawndown in 1997 and repayable by 4 quarterly instalments commencing March 2001. - 8,500,000
RM25,000,000 bridging loan partially drawndown between 1997 and 1999 and repayable by 4 quarterly instalments commencing March 2001. - 22,405,690
RM150,000 term loan drawndown in 1998 and repayable by 84 monthly instalments commencing January 1998. - 78,862
RM112,500 term loan drawndown in 1998 and repayable by 84 monthly instalments commencing January 1998. - 63,245
RM103,500 term loan drawndown in 1998 and repayable by 84 monthly instalments commencing January 1998. 45,626 56,556
RM16,100,000 bridging loan fully drawndown in 1999 and repayable by 4 quarterly instalments commencing March 2000. - 3,124,040
RM2,500,000 term loan drawndown in 2000 and repayable by 84 monthly instalments commencing September 2001. - 2,500,000
RM30,146,815 restructured term loan repayable over 42 months commencing September 2002. 27,526,864 -
28,227,640 37,546,787
Amount repayable within one year(included in current liabilities - bank borrowings - Note 21) (20,597,567) (34,620,913)
Amount repayable after one year(included in long term and deferred liabilities ) 7,630,073 2,925,874
(a) The RM8,500,000 term loan, and RM25,000,000 and RM16,100,000 bridging loans attributable to asubsidiary company are secured by way of a deed of assignment over all the rights, title, interest andbenefit in and to a privatisation agreement for the property development project of the subsidiarycompany, assignment of proceeds from sale of properties in the said development project and fixed andfloating charges over all the assets of the subsidiary company. The remaining term loans other than therestructured term loan are secured by way of legal charges over the landed properties and certain plantand machinery of the respective subsidiary companies.
Term loans of RM2,000,000, RM8,500,000 and RM2,500,000 and the bridging loans of RM25,000,000 andRM16,100,000 are guaranteed by the Company.
The term and bridging loans bear interest at rates ranging from 0.5% to 3.0% (2001 : 0.5% to 3.0%) perannum above the lending financial institutions' base lending rates.
Annual Report 2002 Magna Pr ima Berhad 41
Notes to the Financial Statements (cont’d)
9. TERM LOANS (SECURED) (CONT’D)
(b) The outstanding sum under the RM8,500,000 term loan and RM25,000,000 bridging loan which have fallendue were restructured during the year as further detailed in Note 9(c). The outstanding sum under theRM16,100,000 bridging loan which has also fallen due was settled in full during the year as part of therestructuring of the aforesaid loans.
(c) The outstanding sum under the RM8,500,000 term loan and RM25,000,000 bridging loan were restructuredinto a term loan of 42 months tenure during the year. The repayment of the restructured term loan is asfollows :-
(i) The amount repayable over the first 28 months is based on portion of collections estimated from salesof certain development properties of the subsidiary company.
(ii) The outstanding balance at the end of the 28 months is repayable by 14 equal monthly instalments.
The restructured term loan bears interest at the rate of 2% per annum above the base lending rate of thelending bank.
In addition to the existing securities on the RM8,500,000 term loan and RM25,000,000 bridging loan, therestructured term loan is further secured by a legal assignment to be created over certain unsoldcompleted properties of the subsidiary company.
10. PROPERTY, PLANT AND EQUIPMENT
(a) Summary:- Accumulated Net Book Depreciation
Cost Depreciation Value Charge RM RM RM RM
Group 2002
Leasehold land - long lease 29,799 2,363 27,436 656 Buildings 2,121,238 229,386 1,891,852 48,386 Plant and machinery 32,359,985 19,441,353 12,918,632 3,778,408 Furniture, fittings and equipment 2,373,510 1,273,039 1,100,471 261,290 Motor vehicles 2,914,057 2,389,198 524,859 162,987 Container store and cabin 428,043 323,330 104,713 30,125 Office renovation 569,626 164,410 405,216 46,937
Total 40,796,258 23,823,079 16,973,179 4,328,789
Group 2001
Freehold land 1,979,602 - 1,979,602 - Leasehold land - long lease 105,376 7,230 98,146 1,128 Buildings 2,789,229 276,763 2,512,466 84,100 Plant and machinery 42,813,482 22,906,096 19,907,386 5,423,379 Furniture, fittings and equipment 2,452,523 1,221,859 1,230,664 275,461 Motor vehicles 2,676,720 2,539,170 137,550 304,181 Container store and cabin 404,943 300,147 104,796 44,954 Office renovation 489,356 117,473 371,883 68,639
Total 53,711,231 27,368,738 26,342,493 6,201,842
42 Magna pr ima Berhad Annual Report 2002
Notes to the Financial Statements (cont’d)
10. PROPERTY, PLANT AND EQUIPMENT (CONT’D)Accumulated Net Book Depreciation
Cost Depreciation Value Charge RM RM RM RM
Company 2002
Furniture, fittings and equipment 154,043 68,980 85,063 15,224 Office renovation 40,145 8,363 31,782 4,015
Total 194,188 77,343 116,845 19,239
Company 2001
Furniture, fittings and equipment 144,149 53,756 90,393 14,370 Office renovation 40,145 4,348 35,797 4,015
Total 184,294 58,104 126,190 18,385
(b) The reconciliation of cost and depreciation of property, plant and equipment at the beginning and at theend of the year is as follows:-
At beginning At end Group of year Additions Disposals Written off of year 2002 RM RM RM RM RM
Cost
Freehold land 1,979,602 - (1,979,602) - - Leasehold land - long lease 105,376 - (75,577) - 29,799
Buildings 2,789,229 130,575 (798,566) - 2,121,238 Plant and machinery 42,813,482 1,520 (9,260,705) (1,194,312) 32,359,985 Furniture, fittings and equipment 2,452,523 202,660 (13,650) (268,023) 2,373,510
Motor vehicles 2,676,720 600,517 (362,180) (1,000) 2,914,057 Container store and cabin 404,943 31,600 - (8,500) 428,043
Office renovation 489,356 80,270 - - 569,626
Total 53,711,231 1,047,142 (12,490,280) (1,471,835) 40,796,258
Accumulated Depreciation
Leasehold land - long lease 7,230 656 (5,523) - 2,363
Buildings 276,763 48,386 (95,763) - 229,386Plant and machinery 22,906,096 3,778,408 (6,316,471) (926,680) 19,441,353 Furniture, fittings and equipment 1,221,859 261,290 (10,028) (200,082) 1,273,039
Motor vehicles 2,539,170 162,987 (311,960) (999) 2,389,198 Container store and cabin 300,147 30,125 - (6,942) 323,330
Office renovation 117,473 46,937 - - 164,410
Total 27,368,738 4,328,789 (6,739,745) (1,134,703) 23,823,079
Net Book Value 26,342,493 16,973,179
Annual Report 2002 Magna Pr ima Berhad 43
Notes to the Financial Statements (cont’d)
10. PROPERTY, PLANT AND EQUIPMENT (CONT’D)At beginning At end
of year Additions of year RM RM RM
Company 2002
Cost Furniture, fittings and equipment 144,149 9,894 154,043 Office renovation 40,145 - 40,145
Total 184,294 9,894 194,188
Accumulated Depreciation Furniture, fittings and equipment 53,756 15,224 68,980 Office renovation 4,348 4,015 8,363
Total 58,104 19,239 77,343
Net Book Value 126,190 116,845
(c) Property, plant and equipment include the following assets acquired under hire purchase arrangements:-
Accumulated Net BookGroup Cost Depreciation Value2002 RM RM RM
Plant and machinery 13,590,306 6,888,051 6,702,255 Motor vehicles 643,360 148,405 494,955
14,233,666 7,036,456 7,197,210
Group2001
Plant and machinery 15,862,039 6,538,217 9,323,822 Motor vehicles 272,513 224,544 47,969
16,134,552 6,762,761 9,371,791
Company2002 - - -
Company2001 - - -
(d) Property, plant and equipment include the following assets pledged to financial institutions as securitiesfor term and bridging loans granted to certain subsidiary companies as disclosed in Note 9 to the financialstatements:-
Accumulated Net BookGroup Cost Depreciation Value2002 RM RM RM
Leasehold land - long lease 29,799 2,363 27,436 Buildings 2,121,238 229,386 1,891,852 Furniture, fittings and equipment 734,857 375,107 359,750 Motor vehicles 830,940 491,634 339,306 Office renovation 304,008 74,004 230,004
Total 4,020,842 1,172,494 2,848,348
44 Magna pr ima Berhad Annual Report 2002
Notes to the Financial Statements (cont’d)
10. PROPERTY, PLANT AND EQUIPMENT (CONT’D)
Accumulated Net BookGroup Cost Depreciation Value2001 RM RM RM
Freehold land 1,979,602 - 1,979,602 Leasehold land - long lease 105,376 7,230 98,146 Buildings 2,789,229 276,763 2,512,466 Plant and machinery 8,059,380 3,852,262 4,207,118 Furniture, fittings and equipment 616,981 292,534 324,447 Motor vehicles 626,546 566,202 60,344 Office renovation 223,738 53,629 170,109
Total 14,400,852 5,048,620 9,352,232
Company2002 - - -
Company2001 - - -
11. SUBSIDIARY COMPANIESGroup
2002 2001RM RM
Unquoted shares - at cost- ordinary shares 30,749,998 30,749,998 - redeemable preference shares 1,000 1,000
30,750,998 30,750,998
Details of the subsidiary companies, all of which are incorporated in Malaysia are as follows:-
Direct Subsidiary Principal Effective EquityCompanies Activities Interest (%)
2002 2001Dunia Epik Sdn Bhd Earthworks, drainage works, specialist
engineering and building construction 100% 100%
Magna Prima Specialist crushing services and Construction Sdn Bhd professional turnkey quarry services,
construction and trading activities 100% 100%
Magna Realty Sdn Bhd Investment holding 100% 100%
Prima Hardware Sdn Bhd* Dormant 100% 100%(formerly known asMagna Utara Sdn Bhd)
Indirect SubsidiaryCompanies
Magna Park (Mentakab) Sdn Bhd Property development 100% 100%[formerly known as
`Kelana Molek Sdn Bhd]`(held by Dunia Epik Sdn Bhd)
Annual Report 2002 Magna Pr ima Berhad 45
Notes to the Financial Statements (cont’d)
11. SUBSIDIARY COMPANIES (CONT’D)
Indirect Subsidiary Principal Effective EquityCompanies Activities Interest (%)
2002 2001Magna Park Sdn Bhd Property development 91% 91%(held by Magna Realty Sdn Bhd)
Crest Overseas Sdn Bhd Provision of quarry rock (held by Magna Prima blasting services 100% 100%Construction Sdn Bhd) (ceased operations in 2001)
Magna-Idaman Sdn Bhd Subcontractor in quarry(held by Magna Prima operation 67% 67%Construction Sdn Bhd) (ceased operations in 2001)
* Not audited by Folks DFK & Co.
12. JOINT VENTURESGroup
2002 2001RM RM
Current account with joint venture entities (2,923,118) -Accumulated share of profit 8,975,769 9,265,784
6,052,651 9,265,784
Details of the joint ventures carried out through jointly controlled entities in Malaysia are as follows:-
Principal EffectiveJoint Venture Entity Legal Form Activity Interest (%)
2002 2001
Konsortium Marimas Joint venture Civil works' 75% 75%- Magna Prima agreement contractors
Konsortium Marimas Joint venture Supply, 56% 56%- Magna Prima agreement installation and
maintenance ofequipment
Jayarena Joint venture Civil works' 70% 30%- Dunia Epik JV agreement contractor
46 Magna pr ima Berhad Annual Report 2002
Notes to the Financial Statements (cont’d)
12. JOINT VENTURES (CONT’D)
(a) The Group's proportionate interest in the joint venture entities are analysed as follows:-
Group2002 2001
RM RM
Gross amount due from customers for contract work 396,667 4,729,539 Debtors 7,013,571 43,719,907 Fixed deposits with a licensed bank 2,681,991 2,832,668 Bank balances 8,177 217,082 Creditors (5,349,088) (12,887,760)Bank borrowings - (29,345,652)
4,751,318 9,265,784 Due from other joint venture partners 1,301,333 -
Net Assets 6,052,651 9,265,784
(b) The Group's proportionate share of results of the joint venture entities are as follows:-
Group2002 2001
RM RM
Revenue 6,108,107 100,677,951
Cost of sales (6,706,149) (91,937,451)
Gross (loss)/profit (598,042) 8,740,500
Other operating income 308,091 137,542
Operating expenses (64) -
Net (loss)/profit for the year (290,015) 8,878,042
13. INVESTMENTSGroup
2002 2001RM RM
Quoted shares :-At cost 1,525,000 1,525,000 Less : Allowance for diminution in value (1,100,000) (1,100,000)
425,000 425,000
Market value 200,000 190,000
Annual Report 2002 Magna Pr ima Berhad 47
Notes to the Financial Statements (cont’d)
14. REAL PROPERTY ASSETSGroup
2002 2001RM RM
At cost:-Leasehold land 1,549,596 1,549,596 Development expenditure 129,099 115,057
1,678,695 1,664,653
15. INVENTORIES Group
2002 2001RM RM
At cost :-Completed properties held for sale 7,758,108 12,455,567
These properties are charged as securities for term loans as disclosed in Note 9 to the financial statements.
16. GROSS AMOUNT DUE FROM CUSTOMERS FOR CONTRACT WORK Group
2002 2001RM RM
Contract costs 87,084,386 24,279,492 Recognised losses (507,055) (2,000,280)
86,577,331 22,279,212 Progress billings including retention sum of RM4,634,929(2001: RM284,670) (83,158,219) (19,227,556)
3,419,112 3,051,656
17. DEVELOPMENT PROPERTIESGroup
2002 2001RM RM
At cost:Leasehold land 24,890,524 25,722,880 Development expenditure 196,284,962 273,048,257
221,175,486 298,771,137 Waiver of interest previously charged to development expenditure - (738,724)Portion transferred to income statement (45,226,905) (128,916,809)Completed properties transferred to inventories (88,290) (12,455,567)Portion transferred to real property assets - (1,664,653)
175,860,291 154,995,384 Estimated profit accrued on uncompleted development properties 59,587 1,915,894 Less: Progress billings (81,150,561) (64,200,738)
94,769,317 92,710,540
48 Magna pr ima Berhad Annual Report 2002
Notes to the Financial Statements (cont’d)
18. DEBTORSGroup Company
2002 2001 2002 2001RM RM RM RM
Trade debtors 34,063,779 37,381,705 - -
Less : Allowance for doubtful debts - (100,000) - -
34,063,779 37,281,705 - -
Other debtors, deposits and prepayments 6,880,404 7,437,580 310,213 309,778 Amount owing by subsidiary companies - - 6,763,101 7,857,837
40,944,183 44,719,285 7,073,314 8,167,615
(a) Bad debts of the Group written off against allowance for doubtful debts during the year amounted toRM100,000 (2001 : RM Nil).
(b) Included in other debtors, deposits and prepayments is the balance of outstanding proceeds fromdisposal of plant and machinery by certain subsidiary companies amounting to RM2,008,965 (2001 :RM5,157,612).
(c) Amount owing by subsidiary companies are unsecured and have no fixed terms of repayment. Includedin the amount owing by subsidiary companies is an amount of RM1,100,983 (2001 : RM1,974,209)representing short term advances to certain subsidiary companies. Interest is recovered from thesubsidiary companies proportionately based on the actual amount incurred on the borrowing by theCompany. Other balances owing by subsidiary companies are interest free.
19. DEPOSITS, CASH AND BANK BALANCES Group Company
2002 2001 2002 2001RM RM RM RM
Deposits with a licensed bank 734,902 24,800 - -
Cash and bank balances 5,596,538 6,555,158 4,442 10,599
6,331,440 6,579,958 4,442 10,599
(a) The Group's deposits of RM734,902 (2001 : RM Nil) with a licensed bank are pledged to the bank assecurities for bank facilities granted by the bank to a subsidiary company.
(b) Cash and bank balances of the Group include bank balances of RM2,932,935 (2001: RM3,815,103) whichare maintained in designated Housing Development Accounts pursuant to the Housing DevelopmentRegulations (Control and Licensing) Act 1966 and Housing Developers Regulations 1991 in connectionwith property development undertaken by a subsidiary company and the utilisation of which is restrictedto that property development.
Annual Report 2002 Magna Pr ima Berhad 49
Notes to the Financial Statements (cont’d)
20. CREDITORSGroup Company
2002 2001 2002 2001RM RM RM RM
Trade creditors 67,484,155 60,513,269 - -
Other creditors and accruals 15,374,236 18,089,798 790,966 321,984 Hire purchase creditors (Note 7) 1,745,338 2,242,240 - -
Amount owing to a subsidiary company - - - 359,037
84,603,729 80,845,307 790,966 681,021
(a) Included in other creditors and accruals is remuneration owing to directors of RM50,872 (2001 :RM177,542) for the Group and RM32,000 (2001 : RM132,542) for the Company.
(b) Amount owing to a subsidiary company is unsecured, interest free and has no fixed terms of repayment.
21. BANK BORROWINGS Group Company
2002 2001 2002 2001RM RM RM RM
Secured:-Term loans 20,597,567 34,620,913 - - Bank overdraft 11,950,029 - - -
Unsecured:-Bank overdrafts - 15,414,602 - - Short term loans - 5,000,000 - - Short term advances 1,078,447 1,974,209 1,078,447 1,974,209
33,626,043 57,009,724 1,078,447 1,974,209
Amount of short term advances repayable after one year [included in long term and deferred liabilities - other bankborrowing - Note 21(b)] - (700,000) - (700,000)
33,626,043 56,309,724 1,078,447 1,274,209
(a) The contractual terms and security arrangements of the term loans are detailed in Note 9 to the financialstatements.
The Group's secured bank overdraft is secured by a pledge of fixed deposits as disclosed in Note 19 tothe financial statements and guaranteed by the Company. The unsecured bank borrowings of the Groupare guaranteed by the Company. These bank borrowings bear interest at the rate of 1.5% (2001 : 1.5%)per annum above the base lending rates of the lending banks.
(b) The repayment terms of the unsecured short term advances were restructured in the previous financialyear into 24 monthly instalments. Accordingly, portion of the advances repayable after one year has beenclassified as long term liability as at the previous year end.
50 Magna pr ima Berhad Annual Report 2002
Notes to the Financial Statements (cont’d)
22. REVENUE
Revenue comprises :-Group Company
2002 2001 2002 2001RM RM RM RM
Value of construction and quarrying works 62,949,493 39,008,602 - -Sale of development properties 64,206,291 72,376,748 - -Sale of completed properties 6,052,483 - - -Rental of properties 36,000 36,000 - -Hire of plant 924,854 319,092 - -Subcontract fees 570,415 1,213,883 - -Trading and other income 210,573 930,531 500,000 500,000
134,950,109 113,884,856 500,000 500,000
23. COST OF SALES
Cost of sales comprises the following :-Group
2002 2001RM RM
Contract costs recognised as contract expenses 61,341,956 48,384,335 Cost of development properties sold 59,009,111 56,279,316 Cost of completed properties and trading goods sold 4,785,749 326,457
125,136,816 104,990,108
24. (LOSS)/PROFIT BEFORE TAXATION Group Company
2002 2001 2002 2001RM RM RM RM
(Loss)/Profit before taxation includes:-Interest income 344,630 325,969 - -Rental income 95,330 148,040 - -Gain on disposal of plant and equipmentand property net of Real Property Gains Tax of RM66,680 (2001 : RM Nil) 108,426 - - -
Reserve on consolidation recognised 259,454 259,454 - - Write back of provision for expenses no longer required 804,542 - - -
And is arrived at after charging:-Auditors' remuneration - current year 102,610 83,960 20,000 15,000 - underprovision in prior year 18,340 1,500 5,000 3,000
Depreciation 4,328,789 6,201,842 19,239 18,385 Directors' remuneration- Salaries and other emoluments [Note 24(a)] 1,319,796 1,367,558 (1,000) 34,835
Bad debts written off 507,856 76,873 5,620 -Professional fee paid to a firm in which adirector of the Company has an interest - 36,200 - -
Annual Report 2002 Magna Pr ima Berhad 51
Notes to the Financial Statements (cont’d)
24. (LOSS)/PROFIT BEFORE TAXATION (CONT’D)
Group Company2002 2001 2002 2001
RM RM RM RM
Hire of machineries 144,592 296,117 - -Rental of premises 251,274 149,720 5,250 3,187 Bank interest 4,502,902 6,071,697 - -Other interest 987,554 957,451 - -Hire purchase interest 906,463 1,487,120 - -Loss on disposal of plant and equipment and property net of Real Property Gains Tax of RM900 (2001 : RM Nil) 57,914 524,026 - -
Plant and equipment written off 337,132 13,214 - -Tax penalties 238,802 367,059 - -Penalty imposed by KLSE - 9,000 - 9,000 Allowance for doubtful debts - 100,000 - -Retrenchment benefits - 112,344 - -
(a) The details of the directors' remuneration during the year are as follows :-
Salary and EPF allowances Bonus contribution Allowance Total
RM RM RM RM RM2002
Executive Directors - Company 864,000 18,000 88,560 36,000 1,006,560 - Subsidiary companies 166,998 11,280 25,458 - 203,736
1,030,998 29,280 114,018 36,000 1,210,296
Non Executive Directors- Company - - - 109,500 109,500
1,030,998 29,280 114,018 145,500 1,319,796
2001
Executive Directors - Company 885,000 18,000 78,120 36,000 1,017,120 - Subsidiary companies 267,126 11,280 32,532 - 310,938
1,152,126 29,280 110,652 36,000 1,328,058
Non Executive Directors- Company - - - 39,500 39,500
1,152,126 29,280 110,652 75,500 1,367,558
52 Magna pr ima Berhad Annual Report 2002
Notes to the Financial Statements (cont’d)
24. (LOSS)/PROFIT BEFORE TAXATION (CONT’D)
(b) The number of directors whose remuneration falls within the following bands are as follows :-2002 2001
Non NonExecutive Executive Executive Executive
Range of Remuneration Directors Directors Directors Directors
Directors of the Company- Up to RM50,000 - 4 - 2- RM200,000 to RM250,000 1 - - -- RM250,000 to RM300,000 3 - 4 -
Directors of the Subsidiary Companies- Up to RM50,000 1 - - -- RM100,000 to RM150,000 - - 1 -- RM150,000 to RM200,000 1 - 1 -
25. TAXATION Group Company
2002 2001 2002 2001RM RM RM RM
Malaysian taxation- current year 206,000 2,857,000 94,500 77,000 - (over) / underprovision in prior years (481,867) (19,186) 2,722 -
Transfer (from)/to deferred taxation (130,400) 904,000 - -
(406,267) 3,741,814 97,222 77,000
(a) The Group incurred a current year's tax charge despite its loss for the year mainly due to losses of certainsubsidiary companies and for which there is no group relief against profits of other subsidiary companies
The effective taxation charge for the Company is higher than that based on the statutory rate of tax duemainly to certain expenses that are not tax deductible.
(b) The following are estimated unabsorbed tax losses and unutilised capital allowances, which are availablefor set off against future taxable income :-
Group2002 2001
RM RM
Unabsorbed tax losses 8,193,440 13,823,300 Unutilised capital allowances 12,660 1,913,180
8,206,100 15,736,480
26. EARNINGS PER ORDINARY SHARE
The basic earnings per share is calculated based on the Group's net profit for the year of RM250,701 and onthe weighted average number of ordinary shares in issue during the financial year of 33,300,000.
The comparative basic earnings per share is calculated based on the Group's net profit for the year of RM54,927and on the weighted average number of ordinary shares in issue during that financial year of 33,300,000.
Annual Report 2002 Magna Pr ima Berhad 53
Notes to the Financial Statements (cont’d)
27. NOTES TO CASH FLOW STATEMENTS
(a) Purchase of property, plant and equipment
Property, plant and equipment were acquired by the following means :-
Group Company2002 2001 2002 2001
RM RM RM RM
Cash payments 574,442 163,273 9,894 1,220 Hire purchase financing 472,700 - - -
Aggregate - at cost 1,047,142 163,273 9,894 1,220
Property, plant and equipment acquired by hire purchase financing are reflected as cash flow fromfinancing activities based on the principal amount of instalments made.
(b) Cash and cash equivalents at end of yearGroup Company
2002 2001 2002 2001RM RM RM RM
Deposits with a licensed bank (Note 19) - 24,800 - -
Cash and bank balances (Note 19) 5,596,538 6,555,158 4,442 10,599
Bank overdrafts (Note 21) (11,950,029) (15,414,602) - -
(6,353,491) (8,834,644) 4,442 10,599
28. CONTINGENT LIABILITIES Group Company
2002 2001 2002 2001RM RM RM RM
Guarantees given to financial institutions for facilities granted to subsidiary companies- secured on assets of subsidiary companies - - 56,844,315 74,049,000 - unsecured - - 1,500,000 27,500,000
Guarantees given to financial institutions for facilities granted to joint venture entity- secured on assets of joint venture entity 19,700,000 30,700,000 19,700,000 30,700,000
Guarantees given to trade creditors of subsidiary companies for credit facilities granted to subsidiary companies- unsecured - - 3,100,000 1,725,000
Limit of guarantee 19,700,000 30,700,000 81,144,315 133,974,000
Amount utilised 15,668,350 26,476,860 66,334,331 94,187,498
Bank guarantees and performance bonds- secured on assets of subsidiary companies 5,087,001 2,144,106 - - - unsecured 375,000 2,696,135 - -
Portion of late payment interest claimed by trade creditor and hire purchase creditorsunder appeal and not recognised in the financial statements 1,481,175 1,173,537 - -
22,611,526 32,490,638 66,334,331 94,187,498
54 Magna pr ima Berhad Annual Report 2002
Notes to the Financial Statements (cont’d)
29. SEGMENT REPORTING
The Group's segmental information is reported based on the Group's major business segments as follows :-
(a) Construction and engineering - provision of civil engineering services including construction ofbuildings, earthworks, drainage works, road works and quarrying works.
(b) Properties - development of mixed properties for sale
No segmental information is provided on a geographical basis as the Group's activities are carried outpredominantly in Malaysia.
All intersegment transactions have been entered into in the ordinary course of business and have beenestablished on the terms and conditions that are not materially different from those transacted with unrelatedthird parties.
2002 2001Construction Construction
and and Engineering Properties Group Engineering Properties Group
RM RM RM RM RM RM
RevenueTotal revenue 65,409,445 70,294,774 135,704,219 50,235,885 72,412,748 122,648,633 Intersegment revenue (754,110) - (754,110) (8,763,777) - (8,763,777)
External revenue 64,655,335 70,294,774 134,950,109 41,472,108 72,412,748 113,884,856
ResultsSegment result (External) (1,639,966) 2,157,318 517,352 (6,874,548) 2,252,056 (4,622,492)
Unallocated corporate income 95,756 818
Unallocated corporate expenses (387,666) (367,728)
Profit/(Loss) from operations 225,442 (4,989,402)
Share of results of joint venture entities (290,015) - (290,015) 8,878,042 - 8,878,042
(Loss)/Profit before taxation (64,573) 3,888,640
Taxation 406,267 (3,741,814)
Profit after taxation 341,694 146,826 Minority interest (90,993) (91,899)
Net profit for the year 250,701 54,927
Annual Report 2002 Magna Pr ima Berhad 55
Notes to the Financial Statements (cont’d)
29. SEGMENT REPORTING (CONT’D)
2002 2001Construction Construction
and and Engineering Properties Group Engineering Properties Group
RM RM RM RM RM RMOther information
Segment assets 49,931,806 121,392,890 171,324,696 62,673,610 124,376,317 187,049,927 Investment in joint ventures 6,052,651 - 6,052,651 9,265,784 - 9,265,784
Unallocated corporate assets 974,338 899,225
Consolidated total assets 178,351,685 197,214,936
Segment liabilities 53,303,382 74,227,569 127,530,951 62,761,148 81,684,416 144,445,564 Unallocated corporate liabilities 9,740,306 11,227,822
Consolidated total liabilities 137,271,257 155,673,386
Capital expenditure 427,751 609,497 1,037,248 79,357 82,696 162,053 Unallocated capital expenditure 9,894 1,220
1,047,142 163,273
Depreciation 4,106,425 199,976 4,306,401 5,999,118 184,339 6,183,457 Unallocated depreciation 22,388 18,385
4,328,789 6,201,842
Non-cash expenses other than depreciation 839,368 - 839,368 190,087 - 190,087
Unallocated non-cash expenses other than depreciation 5,620 -
844,988 190,087
30. SIGNIFICANT INTERCOMPANY TRANSACTIONS Group
2002 2001RM RM
Contract works and hiring of machineries between subsidiary companies 21,309,951 26,309,897
Management fee received from subsidiary company 500,000 500,000
Rental of premises charged between subsidiary companies 60,000 98,500
Sale of motor vehicle between subsidiary companies 33,000 -
The above transactions were carried out on terms not materially different from those transacted with unrelatedthird parties.
56 Magna pr ima Berhad Annual Report 2002
Notes to the Financial Statements (cont’d)
31. SIGNIFICANT RELATED PARTY TRANSACTIONSGroup
2002 2001RM RM
Sale of various types of properties developed by the Group to directors of subsidiary companies :-
- Ahmad Shahab Bin Din 73,999 -
- Norhanum Bt. Nordin - 191,324
Professional fee paid to Nordin Torji & Yusof Ahmad, a legal firm of which Feisal Bin Sheikh Hussein, a director of the Company, has an interest - 36,200
Rental of office paid to Fook Hua Holdings Sdn Bhd, a substantial shareholder of the Company 84,000 84,000
Certified value of contract work charged by Jayarena - Dunia Epik JV of which Dunia Epik Sdn Bhd is a member 5,652,671 951,642
Certified value of contract work charged to MH Projects Sdn Bhd, a company in which Dato' Abd Gani Bin Yusof, a director and substantial shareholder of the Company, has substantial interest 15,511,061 -
The balances of indebtedness from and to related parties included in the financial statements are as follows :-
Group Company2002 2001 2002 2001
RM RM RM RMAmount included in debtors :-
MH Projects Sdn Bhd 12,172,961 - - -
Amount included in creditors :-
Assar Quarry Products Sdn Bhd(a shareholder of a subsidiary company) 59,408 59,408 - -
Nordin Torji & Yusof Ahmad - 31,200 - -Jayarena - Dunia Epik JV 3,058,308 951,642 - -
The directors are of the opinion that the above transactions were carried out on terms not materially differentfrom those transacted with unrelated third parties.
32. EMPLOYEES INFORMATION
Group Company2002 2001 2002 2001
RM RM RM RM
Staff costs 9,263,875 8,341,823 160,429 112,856
The number of persons employed by the Group and the Company at the end of the financial year were 268and 13 (2001: 193 and 8) respectively.
Annual Report 2002 Magna Pr ima Berhad 57
Notes to the Financial Statements (cont’d)
33. MATERIAL LITIGATION
A police report was lodged on 23rd October 2000 that a sum of RM22,100,000, as detailed below, waswithdrawn from the bank accounts of two subsidiary companies on 16th October 2000 without properauthorisation from the Board of the respective subsidiary companies.
Subsidiary companies RM
Magna Prima Construction Sdn Bhd 16,684,300 Dunia Epik Sdn Bhd 5,415,700
22,100,000
The withdrawals were made by a former director of the Company who was also a former director of therespective subsidiary companies.
On 1st November 2000, the Company and the two subsidiary companies, as joint plaintiffs, instituted a legalsuit against a third party corporation and six other individuals including the said former director for certaininjunctive reliefs and recovery of the sum of RM22,100,000. Injunctive orders ("Court Injunction") have sincebeen granted by the Court restraining the defendants, amongst others, from disposing their assets within thejurisdiction of the Court pending the trial of the suit. The orders had been served on the defendants except forthe said former director.
The amount of RM22,100,000 had been written off in full in 2000 because the prospect of recovery of the saidsum cannot be ascertained and will be recognised as income when and to the extent there is realisation.
The legal suit is pending full trial and is currently under case management before the Court. Significantdevelopments relating to the suit since the end of the previous financial year are as follows: -
(a) The plaintiffs have on 2nd April 2002 instituted a new suit similar in nature and claim with the aforesaidlegal suit, against the abovementioned former director following the plaintiffs' inability to serve theinjunctive orders on the said former director. The writ of summons and statement of claim were servedon the said defendant by way of substituted service on 13th August 2002. On 30th August 2002, theplaintiffs entered Judgement in Default of Appearance against the said defendant.
(b) The plaintiffs obtained a charging order dated 27th August 2002 from the Court against certain sharesof the Company held by the third party corporation; hence preventing the third party corporation fromdisposing the said shares.
(c) A stockbroking company ("Intervener") being a party interested over certain shares of the Company heldby two defendants via a legal charge, and which has filed application in the Court for an order to varyor set aside the injunctive orders obtained by the plaintiffs was granted by the Court to join in the suit asa defendant on 2nd January 2003. The hearing of the application by the Intervener is pending.
34. SIGNIFICANT EVENTS DURING THE YEAR/SUBSEQUENT EVENTS
(a) (i) The Company had on 28th February 2002 served a Notice of Voluntary Offer to the Board ofDirectors of MH Projects Sdn Bhd ("MHP") to acquire 5,000,000 ordinary shares of RM1.00 each inMHP ("the Offer Shares") representing the entire issued and paid-up share capital of MHP at an offerprice of RM10.00 per share. The total consideration of RM50,000,000 is to be satisfied by the issuanceof new ordinary shares of RM1.00 each in the Company ("MPB shares") to be credited as fully paid-up at an issue price of RM2.25 per MPB share.
On 26th June 2002, the Company served a notice to the Board of Directors of MHP to revise the offerprice for the Offer Shares from RM10.00 to RM9.00. The revised consideration of RM45,000,000 is tobe satisfied by the issuance of 4 new MPB shares to be credited as fully paid-up at an issue price ofRM2.25 per MPB share for every one share held in MHP.
The Voluntary Offer is conditional upon the Company securing more than 50% of the voting rightsin MHP and approvals from the relevant authorities and the shareholders of the Company.
58 Magna pr ima Berhad Annual Report 2002
Notes to the Financial Statements (cont’d)
34. SIGNIFICANT EVENTS DURING THE YEAR/SUBSEQUENT EVENTS (CONT’D)
The shareholders of MHP are Prima Ventures Sdn Bhd ("PVSB") and Metro Giant Group Sdn Bhd("MGG") which hold 85.6% and 14.4% of the equity in MHP respectively. Dato' Abd Gani Bin Yusof,a director and a substantial shareholder of the Company, is also a director and a deemed substantialshareholder of MHP by virtue of his deemed interest in PVSB. PVSB and MGG have given theirundertakings to dispose their entire shareholdings in MHP to the Company upon all relevantapprovals being obtained from the relevant authorities.
PVSB and parties acting in concert will hold more than 33% equity interest of the Company assumingfull acceptances for the Voluntary Offer and has applied to the Securities Commission for anexemption ("Proposed Exemption") from having to undertake the mandatory offer to the rest of theshareholders of the Company to acquire the remaining MPB shares not already owned by PVSB andparties acting in concert at the same offer price of RM2.25 per MPB share pursuant to Malaysian Codeon Take-Overs and Mergers.
The above proposals have been approved by the Foreign Investment Committee ("FIC") vide its letterdated 29th July 2002. The proposals are currently under the consideration of the SecuritiesCommission ("SC").
(ii) In connection with the Voluntary Offer, the Company entered into a Heads of Agreement ("HOA")with PVSB on 4th December 2002 to acquire 4,280,000 ordinary shares of RM1.00 each in MHPrepresenting 85.6% of the issued and paid-up share capital of MHP from PVSB at a purchaseconsideration of RM38,520,000 to be fully satisfied by the issuance of 17,120,000 new MPB shares atan issue price of RM2.25 per MPB share ("Proposed Acquisition"). The Proposed Acquisition is subjectto approvals by the relevant authorities and shareholders of the Company, and waiver by MGG inrespect of its pre-emption right over PVSB's shares in MHP.
Based on the HOA , the Company and PVSB shall enter into a Shares Sale Agreement within 3months from the date of the HOA or at a subsequent date as may be mutually extended by bothparties. On 21st March 2003, the Company announced that the HOA has been mutually extended fora further period of 6 months until 3rd September 2003 and the Shares Sale Agreement shall beentered within 6 months from the date of extension or at a subsequent date as may be mutuallyextended by both parties.
Upon completion of the Proposed Acquisition, the Company is obliged to extend a mandatory offerto MGG, the remaining shareholder of MHP, to acquire the remaining 720,000 ordinary shares in MHPheld by MGG, at the same offer price made to PVSB. Accordingly, the Voluntary Offer detailed inNote 34(a)(i) to the financial statements is expected to become a mandatory offer and a notice ofmandatory offer shall be served to the Board of MHP upon completion of the Proposed Acquisition.
(iii) On 31st March 2003, the Company announced that it has been informed by MHP vide its letter dated28th March 2003 that MHP has been served with a notice of winding up under Section 218 of theCompanies Act, 1965 by MGG.
(iv) On 4th April 2003, the Company filed an action in the High Court of Kuala Lumpur against MGG forspecific performance of MGG's undertaking to sell its entire shareholding in MHP to the Company.
(b) On 15th May 2002, the Company proposed a restricted issue ("Restricted Issue") of up to 5,111,363 newMPB shares of RM1.00 each to participating trade creditors of certain subsidiary companies of theCompany at an issue price to be determined and an employee share option scheme ("ESOS") of up to10% of the enlarged issued and paid-up share capital of the Company.
The above proposals were approved by the FIC and the SC vide their letters dated 29th July 2002 and30th December 2002 respectively. The proposals were approved by the shareholders of the Company atan Extraordinary General Meeting ("EGM") held on 28th April 2003.
(c) The proposed increase in the authorised share capital of the Company from RM50,000,000 toRM100,000,000 by the creation of additional 50,000,000 new MPB shares of RM1.00 each to facilitate theproposals disclosed in Note 34(a) and Note 34(b) to the financial statements was approved by theshareholders of the Company at the EGM held on 28th April 2003.
Annual Report 2002 Magna Pr ima Berhad 59
Notes to the Financial Statements (cont’d)
35. FINANCIAL INSTRUMENTS - OTHER DISCLOSURES
(a) Effective Interest Rate and Maturity Profile
The effective interest rates and maturity profile of financial instruments exposed to interest rate risks areas follows:
Maturity profileEffective Within 1 to More than
interest rate Total 1 year 5 years 5 years% RM RM RM RM
Group2002
Financial assetsBank balances (HousingDevelopment Accounts) 1.44 - 2.20 * 2,932,935 2,932,935 - -
Fixed deposits with licensed bank 3.20 734,902 734,902 - -
Financial liabilitiesTerm and bridging loans 6.90 - 8.40 28,227,640 20,597,567 7,630,073 - Bank overdrafts 7.90 11,950,029 11,950,029 - - Short term loans and advances 7.90 1,078,447 1,078,447 - -
Hire purchase creditors 7.24 - 14.55 2,788,014 1,745,338 1,026,707 15,969
Group2001
Financial assetsBank balances (HousingDevelopment Accounts) 1.43 - 2.98 * 3,815,103 3,815,103 - -
Fixed deposits with licensed bank 3.20 24,800 24,800 - -
Financial liabilitiesTerm and bridging loans 6.90 - 9.40 37,546,787 34,620,913 2,619,526 306,348 Bank overdrafts 7.90 15,414,602 15,414,602 - - Short term loans and advances 7.90 6,974,209 6,274,209 700,000 -
Hire purchase creditors 8.59 - 16.50 4,133,869 2,242,240 1,891,629 -
(* Effective rate of return)
Company2002
Financial liabilityShort term advances 7.90 1,078,447 1,078,447 - -
Company2001
Financial liabilityShort term advances 7.90 1,974,209 1,274,209 700,000 -
60 Magna pr ima Berhad Annual Report 2002
Notes to the Financial Statements (cont’d)
35. FINANCIAL INSTRUMENTS - OTHER DISCLOSURES (CONT’D)
b) Fair Values
(i) The fair values of current financial assets and liabilities of the Group and the Company at the balancesheet date approximated to their carrying amount in the balance sheet due to the short term natureof these financial instruments.
(ii) There is no significant difference between the fair values of long term bank borrowings and theircarrying amount at the balance sheet date.
(iii) The carrying amount and the corresponding fair values of the hire purchase creditors and long termtrade creditor at the balance sheet date are as follows:-
Group Group2002 2001
Carrying Fair Carrying Fairamount value amount value
RM RM RM RM
Hire purchase creditors 2,788,014 3,303,786 4,133,869 4,815,543
Long term trade creditor 3,169,629 2,778,078 3,573,847 3,038,218
The fair values of hire purchase and long term trade creditors represent their present values of futurecontractual cash flows discounted at rates appropriate to those instruments.
(iv) The fair value of the Group's quoted investment is based on its quoted market value at the balancesheet date as disclosed in Note 13 to the financial statements. The carrying amount of the quotedinvestment has not been reduced to its fair value because the investment is held for long term andthe directors are of the opinion that the decline in the value of the investment is temporary in nature.
36. COMPARATIVE FIGURES
(a) Certain comparative figures have been reclassified to conform with the current year's presentation, astabulated below:-
As reported As restated2001 Reclassification 2001
RM RM RM
Cash Flow - Group
Items:-
Bad debts written off - 76,873 76,873
Interest income (96,896) (229,073) (325,969)
Annual Report 2002 Magna Pr ima Berhad 61
Notes to the Financial Statements (cont’d)
36. COMPARATIVE FIGURES (CONT’D)
As reported As restated2001 Reclassification 2001
RM RM RM
Operating profit before working capital changes 10,009,598 (152,200) 9,857,398
Decrease in trade and other debtors 1,830,060 (76,873) 1,753,187
Cash generated from operations 11,258,529 (229,073) 11,029,456
Profit before taxation - Group
Profit before taxation includes :-Interest income 96,896 229,073 325,969
(b) In addition, the presentation and classification of certain items in the current year's financial statementshave been changed or modified to comply with the requirements of the following applicable approvedaccounting standards which came into effect during the year :-
(i) MASB 22, Segment Reporting
(ii) MASB 24, Financial Instruments : Disclosure and Presentation
62 Magna pr ima Berhad Annual Report 2002
Statement by Directors
In the opinion of the Directors, the financial statements set out on pages 24 to 61 are drawn up in accordance withapplicable approved Accounting Standards in Malaysia so as to give a true and fair view of the state of affairs of theGroup and of the Company as at 31st December 2002 and of the results of operations and cash flows of the Groupand of the Company for the year ended on that date.
Signed at Kuala Lumpur this 28 April 2003
On behalf of the Board,
DATO’ ABD GANI BIN YUSOFDirector
KAMIL HJ ABDUL RAHMANDirector
I, AHMAD CHAZALI BIN MD. KASSIM, being the Director primarily responsible for the financial management ofMAGNA PRIMA BERHAD, do solemnly and sincerely declare that to the best of my knowledge and belief, thefinancial statements set out in pages 24 to 61 are correct, and I make this solemn declaration conscientiously believingthe same to be true, and by the virtue of the provisions of the Statutory Declaration Act,1960.
Subscribed and solemnly declared )by the abovenamed AHMAD )CHAZALI BIN MD. KASSIM at )Kuala Lumpur in the Federal )Territory this 28 April 2003 )
Before me,
Statutory Declaration
Annual Report 2002 Magna Pr ima Berhad 63
Report of the Auditors to the Members of Magna Prima Berhad
We have audited the financial statements of the Group and Company set out on pages 24 to 61 of MAGNA PRIMABERHAD. The preparation of the financial statements are the responsiblity of the Company's directors. Ourresponsibility is to express an opinion on the financial statements based on our audit.
We conducted our audit in accordance with approved Standards on Auditing in Malaysia. These standards requirethat we plan and perform the audit to obtain all the information and explanation, which we considered necessary toprovide us with sufficient evidence to give reasonable assurance that the financial statements are free of materialmisstatement. An audit includes examining, on a test basis, evidence relevant to the amounts and disclosures in thefinancial statements. An audit also includes an assessment of the accounting principles used and significant estimatesmade by the directors as well as evaluating the overall adequacy of the presentation of information in the financialstatements.
We believe our audit provides a reasonable basis for our opinion.
In our opinion:-
a) the financial statements are properly drawn up in accordance with the provisions of the Companies Act, 1965and applicable approved Accounting Standards in Malaysia so as to give a true and fair view of:-
(i) the matters required by Section 169 of the Companies Act, 1965 to be dealt with in the financialstatements of the Group and of the Company;
(ii) the state of affairs of the Group and of the Company at 31st December 2002 and of the results of theoperations and cash flows of the Group and of the Company for the year ended on that date;
and
b) the accounting and other records and the registers required by the Companies Act, 1965 to be kept by theCompany and its subsidiary companies of which we have acted as auditors have been properly kept inaccordance with the provisions of the said Act.
We have considered the financial statements and the auditors' report thereon of the subsidiary company of which wehave not acted as auditors, as indicated in Note 11 to the financial statements.
We are satisfied that the financial statements of the subsidiaries that have been consolidated with the Company'sfinancial statements are in form and content appropriate and proper for the purposes of the preparation of theconsolidated financial statements and we have received satisfactory information and explanations required by us forthose purposes.
The auditors' reports on the financial statements of the subsidiary companies were not subject to any qualificationand did not include any adverse comment made under Subsection (3) of Section 174 of the Companies Act, 1965.
FOLKS DFK & CO.NO : AF 0502CHARTERED ACCOUNTANTS
OOI CHEE KUNNO : 996/03/04(J/PH)PARTNER
Kuala Lumpur
Date : 28 April 2003
64 Magna pr ima Berhad Annual Report 2002
Summary of Landed Properties
Description Land / Age of Net BookRegistered and Built-up Properties / ValueOwner Location Existing Use Tenure Area (sq.ft.) Buildings RM
Magna Park 146, Jalan Persisiran 1 unit Freehold 3,360/ 7 years 178,026Sdn Bhd Perling 2, Taman Perling 2 storey 1,680
Skudai, Johor Bahru Shop OfficeHS (D) 115551, for
PTD 32040 commercialMukim Pulai, rental
Daerah Johor BaharuJohor
Dunia Epik H.S.(D) 6614 Semi-Detached Leasehold 3,249 11 years 121,440Sdn Bhd PT .4211 Mukim House (Expiring
Mentakab, Daerah on 2028)Temerloh
No.19, Jalan PJU 1/37 Shop Office for FreeholdDataran Prima Commercial
47301, Petaling RentalJaya
Ground Floor (19-01) Shop Office 1,282 5 years 410, 088Level 1 (19-02) Subsidiaries 1,487 269,790Level 2 (19-03) Business 1,480 269,790Level 3 (19-04) Premises 1,480 269,790Level 4 (19-05) 1,487 269,790
Annual Report 2002 Magna Pr ima Berhad 65
Analysis by Size of Shareholdings as at April 30 2003
Size of No. of % of No. of % ofShareholdings Shareholders Shareholders Shares Held Shareholdings
Less Than 100 - - - -
100 to 1,000 948 52.96 944,520 2.84
1,001 to 10,000 706 39.44 2,695,271 8.09
10,001 to 100,000 106 5.92 3,085,731 9.27
100,001 to Less Than 5% 26 1.45 11,584,750 34.79
5% and above 4 0.23 14,989,728 45.01
TOTAL 1,790 100.00 33,300,000 100.00
LIST OF THIRTY (30) LARGEST SHAREHOLDERS AS AT APRIL 30, 2003
Nos. Names Shareholdings %
1 DATO’ ABD GANI BIN YUSOF 5,559,313 16.69
2 CONCRETE PANEL CONSTRUCTION SDN BHD 4,063,384 12.20
3 MAYBAN SECURITIES NOMINEES (TEMPATAN) SDN BHD 3,286,107 9.87(A/C FOR AHMAD GHAZALI BIN MD KASSIM)
4 FOOK HUA HOLDINGS SDN BHD 2,080,924 6.25
5 LEU LEANG @ LIEW YONG CHOY 1,606,939 4.83
6 TAN CHAI TIAM 1,441,000 4.33
7 HSBC NOMINEES (TEMPATAN) SDN BHD 1,329,682 3.99(HRBS SG FOR CHUA SUYA HONG @ CHUA LEE HOON)
8 AFFIN-UOB NOMINEES (TEMPATAN) SDN BHD 892,000 2.68(A/C FOR TANG CHEE MENG)
9 LOW YIT HO 834,000 2.50
10 NG YAK HEE 730,930 2.19
11 AHMAD GHAZALI BIN MD KASSIM 711,269 2.14
12 LIEW YUEAH CIN 600,000 1.80
13 CHUA LEE BOON 485,930 1.46
14 LEE SZE WEE 464,000 1.39
15 CITICORP NOMINEES (TEMPATAN) SDN BHD 210,000 0.63(A/C FOR DATO’ NOOR AZMAN @ NOOR HIZAM BIN MOHD NURDIN)
16 CHUA CHIN HEAN 200,000 0.60
17 MAYBAN SECURITIES NOMINEES (TEMPATAN) SDN BHD 200,000 0.60(ASEAM CREDIT SDN BHD FOR FOOK HUA HOLDINGS SDN BHD)
18 TOP GREEN ENTITY SDN BHD 200,000 0.60
19 CITICORP NOMINEES (ASING) SDN BHD 183,000 0.55(CBHK PBGSGP FOR KINGSBURG HOLDINGS LIMITED)
20 PRB NOMINEES (TEMPATAN) SDN BHD 157,000 0.47(A/C FOR RUBBER INDUSTRY SMALLHOLDERS DEVELOPMENT AUTHORITY)
21 KUALA LUMPUR CITY NOMINEES (TEMPATAN) SDN BHD 155,000 0.47(A/C FOR TANG CHEE MENG)
66 Magna pr ima Berhad Annual Report 2002
Analysis by Size of Shareholdings (cont’d)
Nos. Names Shareholdings %
22 KUALA LUMPUR CITY NOMINEES (TEMPATAN) SDN BHD 150,000 0.45(A/C FOR CHIANG YEE HONG)
23 TASEC NOMINEES (ASING) SDN BHD 150,000 0.45(MEESPIERSON ASIA LIMITED FOR SAVERN FINANCE LIMITED)
24 TENGKU UZIR BIN TENGKU UBAIDILLAH 148,000 0.44
25 MERCSEC NOMINEES (ASING) SDN BHD 143,000 0.43(A/C FOR REGIS BEAUCHESNE)
26 LIEW YEEH HUI 131,000 0.39
27 CHUA HOCK CHIN 118,000 0.35
28 LEONG SHIP SHAM MOY 117,000 0.35
29 LIEW AH KAU @ LIEW KONG YONG 117,000 0.35
30 TAN KIM ENG 110,000 0.33
LIST OF DIRECTORS’ SHAREHOLDINGS AS AT APRIL 30, 2003
Nos. Names Shareholdings %
1. DATO’ ABD GANI BIN YUSOF 5,559,313 16.69
2. AHMAD GHAZALI BIN MD KASSIM 711,269 2.14
3. NG YAK HEE 730,930 2.19
4. CHUA LEE BOON 485,930 1.46
5. T. A. RAHMAN BIN T. ANDAK - -
6. KAMIL BIN DATUK HJ ABDUL RAHMAN - -
7. N. CHANTHIRAN A/L NAGAPPAN - -
Annual Report 2002 Magna Pr ima Berhad 67
Explanation of Variance
EXPLANATION OF VARIANCE BY MORE THAN 10% BETWEEN THE GROUP’S UNAUDITED RESULTS RELEASEDON 26 FEBRUARY 2003 AND THE AUDITED RESULTS FOR THE YEAR ENDED 31 DECEMBER 2002
The audited profit after taxation and minority interests for the year ended 31 December 2002 is RM250,701 comparedto the unaudited of the same of RM333,459 as announced on 26 February 2003. Explanations on the variance andreconciliation thereof is shown in Table 1 and 2 below.
TABLE 1 : COMPARISON BETWEEN UNAUDITED AND AUDITED RESULTS
PARTICULARS UNAUDITED AUDITED DIFFERENCERM RM RM
Profit before taxation (274,023) (64,573) 209,450Taxation 693,102 406,267 (286,835)Profit after taxation
before minority interest 419,079 341,694 (77,385)Minority interest (85,620) (90,993) (5,373)Profit after taxation
and minority interest 333,459 250,701 (82,758)
TABLE 2 : EXPLANATIONS AND RECONCILIATION BETWEEN UNAUDITED AND AUDITED RESULTS
DESCRIPTION RM
UNAUDITED PROFIT AFTER TAXATION AND MINORITY INTEREST 333,459ADJUSTMENTS:1) Movement in deferred tax (397,600)2) Adjustment to contract cost 5,047,1853) Adjustment to revenue from construction contract (4,983,448)4) Interest expense over taken up 3,6215) Decrease in share of profit of joint venture entity (47,314)6) Over provision of taxation 248,0147) Accrual of tax penalty (11,883)8) Bad debts written off (100,388)9) Adjustment to minority interest (5,373)10) Adjustment to estimated profit accrued on development properties based
on updated budget on the project 182,77711) Others (18,349)AUDITED PROFIT AFTER TAXATION AND MINORITY INTEREST 250,701
68 Magna pr ima Berhad Annual Report 2002
Notice of Annual General Meeting
NOTICE IS HEREBY GIVEN that the Eighth Annual General Meeting of Magna Prima Berhad will be held at the
Ground Floor, No. 2, Jalan Prima 5, Metro Prima, 52100 Kuala Lumpur on Monday, 23 June 2003 at 10.00 a.m. for
the following purposes:
1. To receive the audited accounts for the year ended 31 December 2002 and the Reports of the Directors and
Auditors thereon. Resolution 1
2. To re-elect the following Directors who retire in accordance with Article 100 of the Company’s Articles of
Association: -
Ahmad Ghazali bin Md Kassim Resolution 2
Ng Yak Hee Resolution 3
3. To appoint Auditors of the Company and to authorise the Directors to fix their remuneration.
(Messrs Folks DFK & Co. are not seeking re-appointment. The Company has received notice from a shareholder
nominating Messrs Anuarul Azizan Chew & Co. as Auditors) Resolution 4
4. To approve payment of Directors’ fees for the year ended 31 December 2002 Resolution 5
5. As Special Business:
As SPECIAL BUSINESS, to consider and, if thought fit, pass the following ordinary resolutions: -
a) Proposed Renewal of Shareholders’ Mandate for Recurrent Related Party Transactions.
"That, subject to the Companies Act, 1965 ("Act"), the Memorandum and Articles of Association of the
Company and the Listing Requirements of the Kuala Lumpur Stock Exchange, approval be and is hereby
given to the Company to enter into all transactions involving the Related Parties as specified in Section __
of the Circular to Shareholders dated 29 May 2003 provided that such transactions are:
(i) recurrent transactions of a revenue or trading nature;
(ii) necessary for the day-to-day operations;
(iii) carried out in the ordinary course of business on normal commercial terms which are not more
favourable to the Related Parties than those generally available to the public; and
(iv) are not to the detriment of the minority shareholders.
And that the Mandate, unless revoked or varied by the Company in a general meeting, shall continue in
force until next Annual General Meeting of the Company or the expiration of the period within which the
next Annual General Meeting is required to be held pursuant to Section 143(1) of the Act (but shall not
extend to such extensions as may be allowed pursuant to Section 143(2) of the said Act);
And further that the Directors of the Company be authorised to complete and do all such acts and things
(including executing all such documents as may be required) as they may consider expedient or necessary
to give effect to the Mandate. Resolution 6
b) "That pursuant to Section 132D of the companies act, 1965, and subject to the approvals of the relevant
government and/or regulatory authorities, the Directors be and are hereby empowered to issue shares in
the Company, at any time, at such price, upon such terms and conditions and for such purposes and to such
person or persons whomsoever as the Directors may, in their absolute discretion, deem fit, provided that
the aggregate number of shares issued pursuant to this resolution in any one financial year does not exceed
10% of the issued share capital of the Company for the time being and that the Directors be and are also
empowered to obtain the approval from the Kuala Lumpur Stock Exchange for the listing of and quotation
for the additional shares so issued and that such authority shall continue in force until the conclusion of the
next Annual General Meeting of the Company." Resolution 7
Annual Report 2002 Magna Pr ima Berhad 69
Notice of Annual General Meeting (cont’d)
By order of the Board
AHMAD SHAHAB BIN HJ. DIN (MAICSA 0689340)
YUEN YOKE PING (MAICSA 7014044)
Joint Company Secretaries
Kuala Lumpur
29 May 2003
Note:
1. A member of the Company who is entitled to attend and vote at this Meeting is entitled to appoint a proxy or proxies
to attend and vote on his behalf.
2. A proxy need not be a member of the Company.
3. Where the member of the Company appoints two or more proxies, the appointment shall be invalid unless the
member specifies the proportion of his shareholding to be represented by each proxy.
4. If the proxy is executed by a corporation, the Form of Proxy must be under its common seal or the hand of an
officer or attorney duly authorised.
5. The instrument appointing the proxy must be deposited at the Registered Office of the Company at No. 2, 2nd Floor,
Jalan Prima 5, Metro Prima, 52100 Kuala Lumpur, not less than forty-eight (48) hours before the time set for
holding the Meeting or adjourned Meeting.
6. Explanatory Notes on special business:
The Ordinary Resolution 6 under item 4 if passed, will authorise the Company and each of its subsidiaries to enter
into recurrent related party transactions of revenue or trading nature which are necessary for its day to day
operation. The recurrent related party transactions are in the ordinary course of business and which are on terms
not more favourable to the related party than those generally available to the public. This authority unless revoked
or varied at a general meeting, will expire at the next Annual General Meeting of the Company. Please refer to the
Circular to Shareholders dated 29 May 2003 with regard to Ordinary Resolution 5.
The Ordinary Resolution 7 proposed under item 4, if passed, will give the Directors of Company, from the date of
the above General Meeting, authority to issue and allot ordinary shares from the unissued capital of the Company
being for such purposes as the Directors consider would be in the interest of the Company. This authority will,
unless revoked or varied by the Company in General Meeting expire at the conclusion of the next Annual General
Meeting of the expiration of the period within which the next Annual General Meeting is required by law to be
held, whichever is the earlier.
70 Magna pr ima Berhad Annual Report 2002
Statement Accompanying Notice of Annual General Meeting(PURSUANT TO PARAGRAPH 8.28 (2) OF THE LISTING REQUIREMENTS OF THE KUALA LUMPUR STOCK EXCHANGE)
1. Directors who are standing for re-election at the 8th Annual General Meeting of the Company
Pursuant to Article 100 of the Company’s Articles of Association
Ahmad Ghazali bin Md Kassim
Ng Yak Hee
2. Details of attendance of Directors at Board Meetings
There were fourteen (14) Board meetings held during the financial year ended 31 December 2002. Details of
attendance of the Directors are set out on page 12 of the Annual Report.
3. Date, Place and Time of Board Meetings
The date, place and time of Board meetings held during the financial year ended 31 December 2002 were as
follows: -
Date of Meeting Place Time
15 January 2002 No. 2, 2nd Floor 3.00 p.m.
Jalan Prima 5, Metro Prima
52100 Kuala Lumpur
24 January 2002 No. 2, 2nd Floor 11.00 a.m.
Jalan Prima 5, Metro Prima
52100 Kuala Lumpur
27 February 2002 No. 2, 2nd Floor 10.00 a.m.
Jalan Prima 5, Metro Prima
52100 Kuala Lumpur
28 February 2002 No. 2, 2nd Floor 2.30 p.m.
Jalan Prima 5, Metro Prima
52100 Kuala Lumpur
12 April 2002 No. 2, 2nd Floor 3.00 p.m.
Jalan Prima 5, Metro Prima
52100 Kuala Lumpur
30 April 2002 No. 2, 2nd Floor 10.00 a.m.
Jalan Prima 5, Metro Prima
52100 Kuala Lumpur
31 May 2002 No. 2, 2nd Floor 10.00 a.m.
Jalan Prima 5, Metro Prima
52100 Kuala Lumpur
Annual Report 2002 Magna Pr ima Berhad 71
Statement Accompanying Notice of Annual General Meeting (cont’d)
14 Jun 2002 No. 2, 2nd Floor 3.00 p.m.
Jalan Prima 5, Metro Prima
52100 Kuala Lumpur
13 August 2002 No. 2, 2nd Floor 3.00 p.m.
Jalan Prima 5, Metro Prima
52100 Kuala Lumpur
29 August 2002 No. 2, 2nd Floor 10.30 a.m.
Jalan Prima 5, Metro Prima
52100 Kuala Lumpur
5 September 2002 No. 2, 2nd Floor 2.30 p.m.
Jalan Prima 5, Metro Prima
52100 Kuala Lumpur
22 October 2002 No. 2, 2nd Floor 3.00 p.m.
Jalan Prima 5, Metro Prima
52100 Kuala Lumpur
6 November 2002 No. 2, 2nd Floor 10.00 a.m.
Jalan Prima 5, Metro Prima
52100 Kuala Lumpur
28 November 2002 No. 2, 2nd Floor 11.00 a.m.
Jalan Prima 5, Metro Prima
52100 Kuala Lumpur
4. Further details of the Directors who are standing for re-election
Details of the Directors who are standing for re-election are set out in the Directors’ Profile appearing on pages
6 and 7 of the Annual Report.
72 Magna pr ima Berhad Annual Report 2002
Letter from Shareholder Nominating Auditors
Mr. Ang Tang Pew (I/C No. 590307-10-5847)No. 238, Lorong 20, Sungai Jarom42600 Jenjarom, Kuala LangatSelangor
20 May 2003
The Board of DirectorsMagna Prima BerhadNo. 2, 2nd FloorJalan Prima 5Metro Prima52100 Kuala Lumpur
Dear Sirs
NOTICE OF NOMINATION OF AUDITORS
I, the undersigned, being a registered shareholder of Magna Prima Berhad, hereby give noticepursuant to section 172(11) of the Companies Act, 1965 of my nomination of Messrs Anuarul AzizanChew & Co. for appointment as new Auditors of the company in place of Messrs Folks DFK & Co. atthe forthcoming Annual General Meeting of the company.
I propose that the following resolution be considered at that meeting:-
" As Messrs Folks DFK & Co. are not seeking re-appointment as auditors, their retirement be and ishereby accepted with thanks for their past services and in place thereof, Messrs Anuarul Azizan Chew& Co. having consented to act, be and are hereby appointed as Auditors of the company for the yearended 31 December 2003, to hold office until the conclusion of the next Annual General Meeting andthat authority be and is hereby given for the Directors to determine their remuneration. "
Yours faithfully
ANG TANG PEW
Proxy Form
I/We, of
being a member / members of Magna Prima Berhad hereby appoint
of
or falling him/her, CHAIRMAN OF THE MEETING as my/our proxy to vote for me/us on my/our behalf at the Eigth AnnualGeneral Meeting of the Company to be held at Ground Floor, No. 2, Jalan Prima 5, Metro Prima, 52100 Kuala Lumpur on 23June 2003 at 10.00 am and at any adjournment thereof.
Resolutions No. For Against
To receive the audited accounts for the year ended 31 December 2002 and the Reports of the Directors and Auditors thereon. No.1
To re-elect the following Directors who retire in Accordance withArticle 100 of the Company’s Articles Of Association:-
Ahmad Ghazali bin Md Kassim No.2
Ng Yak Hee No. 3
To appoint Anuarul Azizan Chew & Co. as Auditors of the Company and to authorise the Directors to fix their remuneration. No. 4
Directors’ fees for the year ended 31 December 2002 No. 5
As Special Business
Renewal of shareholders’ mandate for recurrent related party transactions No. 6
Grant of authority pursuant to Section 132D of the Companies Act, 1965 No. 7
Please indicate with an "X" in the space provided, how you wish your vote to be cast. If you do not do so, the proxy mayvote or abstain at his/her discretion)
……………………………………………… ………………………….. NO. OF SHARES HELDSignature/Common Seal Date
Notes:
1. A member of the Company entitled to attend and vote at this Meeting is entitled to appoint a proxy or proxies to attend and vote on hisbehalf.
2. A proxy need not be a member of the Company.
3. Where the member of the Company appoints two or more proxies, the appointment shall be invalid unless the member specifies theproportion of his shareholding to be represented by each proxy.
4. If the proxy is executed by a corporation, the Form of Proxy must be under its common seal or the hand of an officer or attorney dulyauthorised.
5. The instrument appointing the proxy must be deposited at the Registered Office of the Company at No. 2, 2nd Floor, Jalan Prima 5, MetroPrima, 52100 Kuala Lumpur, not less than forty-eight (48) hours before the time set for holding the Meeting or adjourned Meeting.
(369519-P)(Incorporated in Malaysia)