Annual Report Faber 2007 F ABER GROUP BERHAD (5067-M )
FABER GROUP BERHAD A Member of UEM Group 20th Floor, Menara 2 Faber Towers, Jalan Desa Bahagia. Taman Desa, Off Jalan Kelang Lama 58100 Kuala Lumpur www.fabergroup.com.my
Tel: +60 3 7628 2888 Fax: +60 3 7628 2828
FABER GROUP BERHAD INCORPORATED IN MALAYSIA (Company No. 5067-M) Annual Report 2007 Faber Group Berhad has strategically positioned itself to become a leading integrated facilities management organisation as well as a formidable property developer with operations spanning the nation. With our well-balanced financial position, the Group is strongly steering a straight course while taking on new adventures and overcoming all obstacles and barriers. Drawing upon our inherent strengths, and led by a strong management team that is experienced in navigating through a competitive environment and implementing in-depth strategies, we are creating a winning combination that will sustain our momentum and ensure we continue to be a progressive force moving forward. sustaining momentum
corporate vision corporate mission corporate values to be a leading to promote •professionalism regional player in awareness and • service integrated raise the standard excellence and facilities solutions in facilities customer maintenance satisfaction • customer focus
QUALITY Objectives QQuality policy E – Effective System Committed to EXCELLENCE X – Excellent Practice C – Continuous Improvement E – Ethics & Integrity L – Learning Culture 2007 annual report faber group berhad
CONTENTS
CORPORATE REVIEW AN OVERVIEW OF FABER GROUP • 4 Message from The Chairman • 8 5-Year Group Financial Highlights • 9 Group Financial Summary • 10 Group Quarterly Performance • 11 Corporate Structure • 12 Corporate Profile
CORPORATE INFORMATION • 14 Corporate Information • 16 Board of Directors • 18 Board of Directors’ Profile • 24 Group Management • 25 Group Management’s Profile
OPERATIONS REVIEW • 29 Overview • 30 Facilities Management Healthcare • 34 Facilities Management Non-Healthcare • 38 Property Development • 44 People & Organisational Development • 46 Corporate Social Responsibility • 48 Employee Care • 52 Excelling in the Quest for Quality • 54 Group Corporate Calendar • 60 Group Financial Calendar • 61 Faber in The News • 62 Statement on Corporate Governance • 73 Statement on Internal Control • 77 Audit and Risk Committee Report • 84 Statement of Directors’ Responsibility in Respect of Audited Financial Statements
FINANCIAL REVIEW • 85 Financial Statements • 180 Share Price Movement • 180 Analysis of Shareholdings • 183 Properties Held by The Group • 184 Other Information • 185 Recurrent Related Party Transactions • 187 Notice of The 45th Annual General Meeting • 190 Statement Accompanying the Notice of The 45th Annual General Meeting • Proxy Form • Group Directory realising opportunities
By being market focused against an environment of change, we continue to build a strong presence while pressing ahead towards good progress to deliver premium returns and success in the years ahead. message from the chairman
Dear Shareholders, The year 2007 saw Faber Group Berhad effectively sustaining the momentum built up by our expansionary measures over 2006 on the Malaysian and the international fronts. In addition, we also implemented initiatives to strengthen our core businesses and undertook measures to dispose of our non-core assets. Today, we are in a much stronger position and are primed to move on to the next level of growth in Facilities Management Healthcare and Non-Healthcare as well as in Property Development. From the operational and financial perspectives, we have made steady progress registering our third consecutive year of improved performance. 4 FABER GROUP BERHAD 2007 annual report www.fabergroup.com.my
Dato’ Anwar bin Aji Chairman On behalf of the Board of Directors, I am by 3.3% to RM99.4 million in FY2007 pleased to present the Annual Report and from RM96.2 million recorded in FY2006. Audited Financial Statements of Faber Group Berhad (“the Group”) for the Overall, the Group registered Earnings financial year ended 31 December 2007. Before Interest, Taxation, Depreciation and Amortisation (“EBITDA”) of RM127.5 million, an increase of RM6.3 million or SUPPORTIVE OPERATING ENVIRONMENT 5.2% against FY2006’s figure as a result of Despite the challenges of an unstable global the flow-through from higher revenue and economy, the Malaysian economy expanded improved performance by all operating by 6% in 2007 on the back of resilient divisions. The Group also continued to domestic demand. Higher public expenditure sustain the momentum on 2007’s other key 5 on Ninth Malaysia Plan projects, the launch financial performance indicators: Group FABER GROUP BERHAD 2007 annual report of economic corridors in the southern and Shareholders’ Fund increased by 13.2% to northern regions, the exemption on real RM296.3 million in FY2007; Earnings per www.fabergroup.com.my property gains tax and other unprecedented Share rose to 16.0 sen from 12.8 sen the measures to attract foreign investors did preceding year; and at the end of 2007, the much to increase business and consumer Group recorded Net Tangible Assets of confidence and contribute towards sustained RM290.7 million against RM254.4 million economic activity. in FY2006.
Against this economic backdrop, the Group foresee opportunities for growth in relation ENHANCED SHAREHOLDER VALUE to facilities management healthcare and The Group is committed to enhancing non-healthcare, and property development. shareholder value over the long-term. As a Today, a very much-rejuvenated Faber Group result of the Group’s improved performance, has made the most of its debt restructuring the Board is proposing a final dividend of exercise and is sustaining the momentum in 3% less 26% taxation on 363,001,000 these sectors. ordinary shares for FY2007. This is equivalent to a distribution of RM8.1 million to our shareholders. IMPROVED FINANCIAL PERFORMANCE For financial year (“FY”) 2007, Group revenue increased by 13.3% to RM669.7 SUSTAINING OPERATIONAL MOMENTUM million against RM591.0 million in the As part of the Group’s strategic reorientation preceding year. This marks the third of businesses in 2006, we began to focus consecutive year in which the Group has on strengthening and growing our core registered revenue growth. The RM78.7 businesses as well as further million increase in revenue was achieved “internationalising” them. We saw the primarily on the back of strong performances merits of enhancing shareholder value by the Group’s Facilities Management through increased contributions from Healthcare Division and its Property focused business operations and enhanced Development Division. Profit before Tax rose overseas operations. message from the chairman (cont’d.)
FACILITIES MANAGEMENT Rimbunan and two new projects in Taman In 2007, the Group continued this Danau Desa are in the pipeline for 2008. momentum through a focus on improving service quality and operational efficiency. In The launch of Taman Hill Top Perdana, a relation to Faber Medi-Serve Sdn Bhd in residential development located in Kota particular, every effort was made to enhance Kinabalu, Sabah is targeted to take place in the key areas of service quality and cost the second quarter of 2008. The project efficiency in relation to our concession boasts semi-detached homes and link- operations. Going forward, we will continue bungalows with built-up areas of between to maintain high standards to ensure we are 2,973 square feet and 3,090 square feet. in a position of strength when the time 6 comes for the concession’s renewal. All in all, the prospects for the property FABER GROUP BERHAD business bode well for the Group and we 2007 annual report In line with the Group’s aim to drive business anticipate that the Division will continue to growth and development, we undertook garner double-digit growth over the next five www.fabergroup.com.my several initiatives to enhance our standing as years. Going forward, the Group will continue an international player and a concessionaire its quest to secure new land banks or with a proven track record in facilities participate in joint venture development in management. Our efforts saw us making prime locations. further inroads into our existing international markets and striking strategic alliances on the Indian sub-continent and in the Middle HOTELS East. In the year under review, Faber Hotels Holdings Sdn Bhd (“FHSB”), a wholly- owned subsidiary of the Group entered into PROPERTY DEVELOPMENT a conditional Share Sale Agreement with Our Property Development business continues Berjaya Land Berhad for the disposal of its to grow as a result of the Group’s ability to 100% equity interest in Faber Labuan Sdn meet market demand for development Bhd (“FLSB”). FLSB owns 70% interest in projects integrating the right balance of Vimas Joint Venture Company Limited that price, locality and design. We are expecting owns and operates the five-star, 299-room to complete and hand over the 410 units Sheraton Hanoi Hotel & Tower in Hanoi, high-end Casa Desa condominium project in Vietnam. The disposal of FLSB for US$68.22 Taman Desa, Kuala Lumpur by mid-2008. million (RM221.8 million) will allow the Group to unlock the value of our investment At Laman Rimbunan located in Kepong, in the Hotel Division. With the disposal of Kuala Lumpur, several phases of this mixed the only remaining hotel owned by the development comprising three-storey shop Group following 2004’s debt restructuring offices and terrace houses were delivered exercise, we will now end the chapter of our ahead of time. The initial phases received long involvement in the hotel business and encouraging response and we expect the will focus on growing our core businesses in upcoming phases to fare equally well. Facilities Management Healthcare and Non- Launches for four new phases at Laman Healthcare as well as Property Development. EFFECTIVE CORPORATE GOVERNANCE IN APPRECIATION The Group upholds the values of integrity, On behalf of the Board of Directors, my transparency and accountability in the sincere appreciation goes to our shareholders, highest regard. As a Government Linked customers, bankers, advisors, business Company, these values guide us in our partners, regulatory bodies and government mission to run businesses that personify the agencies for their continuing support and highest standards and most effective faith in the Group. I extend my utmost processes that create value for our gratitude to our management and staff for shareholders. In ensuring the effectiveness their worthy contributions. Our return to of the Board of Directors, the Group profitability would not have been possible continues to implement a Board Effectiveness without their professionalism and dedication. Assessment programme, build Directors’ 7 capabilities and intensify performance We wish to thank Dato’ Ikmal Hijaz bin FABER GROUP BERHAD 2007 annual report management. Hashim and Dato’ (Dr) Mohamed Ishak @ Ishak bin Haji Mohamed Ariff, for their www.fabergroup.com.my invaluable guidance and worthy contributions THE JOURNEY AHEAD as directors of Faber and wish them every Going forward, we remain optimistic about success in their new endeavours. We bid a the Group’s future. Despite the uncertainties hearty welcome to our new directors, Dato’ surrounding the global economy, we will Rosli bin Sharif and Mr. Oh Kim Sun who continue to take the appropriate steps to set bring on board many years of experience our house in order, build upon our core serving the UEM Group. We look forward to strengths and sustain the momentum of our their contributions. current efforts. We are hopeful that domestic demand will continue to help spur our core As we move forward into another year, rest businesses in Facilities Management assured that the Group remains committed Healthcare and Non-Healthcare. In Property to pursuing all relevant opportunities. On Development, we anticipate that this sector our part we will work to sustain the Group’s will continue to enjoy demand on existing growth and profitability as well as enhance developments and new property launches. shareholders’ value. As we pursue new heights of success, we look forward to the continuous support of all our stakeholders.
Thank you.
Dato’ Anwar bin Aji Chairman 5-year group financial highlights
Turnover Shareholders’ Funds Profit/(Loss) Before Tax RM Million RM Million RM Million
800 300 500 261.8 231.4 296.3
199.9 400 700 200 469.3 669.7 300 609.4 600 591.0 100 561.5 200 502.2 96.2 500 0 99.4
100 64.6
8 400 -100 0
FABER GROUP BERHAD -100 2007 annual report 300 -200 -200 200 -300 www.fabergroup.com.my -300
100 -400 -434.2 -400 -471.0 0 -500 -500 03 04 05 06 07 03 04 05 06 07 03 04 05 06 07
Net Tangible Assets/ Total Assets Earnings/(Loss) Per Share (Liabilities) Per Share RM Million Sen Sen
1,500 250 100 85 83 80 80
200 202 1476.3 50 1,200 150
100 0
900 890.0 50 851.1 -50 16 13 12 773.7
701.4 0
-100 600 -50
-100 -150
300 -150
-200 -212 -200 -230
0 -250 -250 03 04 05 06 07 03 04 05 06 07 03 04 05 06 07 group financial summary
CONSOLIDATED BALANCE SHEET AS AT 31 DECEMBER IN RM MILLION 2003 2004 2005 2006 2007 ASSETS Non-current assets 1,025.8 394.0 413.7 378.0 158.7 Current assets 450.5 307.3 360.0 473.1 519.8 Assets of disposal group/Non-current asset classified as held for sale ————211.5 TOTAL ASSETS 1,476.3 701.4 773.7 851.1 890.0
EQUITY AND LIABILITIES Equity attributable to equity holders of the Company Share capital 208.0 234.8 278.0 298.0 363.0 Share premium 46.0 72.8 116.0 116.0 116.0 Redeemable Convertible Preference Shares - 200.0 200.0 180.0 115.0 Irredeemable Convertible Unsecured Loan Stock 140.0 86.3 — — — 9 Other reserves 31.2 31.0 32.4 26.1 13.5 FABER GROUP BERHAD Accumulated losses (859.5) (425.0) (394.9) (358.3) (311.2) 2007 annual report (434.2) 199.9 231.4 261.8 296.3 106.4 Minority interests 73.4 65.2 65.8 82.1 www.fabergroup.com.my Total equity (360.8) 265.1 297.2 343.9 402.7 Non-current liabilities 1,621.3 275.5 301.2 272.9 208.4 Current liabilities 215.8 160.7 175.2 234.3 211.8 Liabilities directly associated with assets classified as held for sale ————67.1 Total liabilities 1,837.1 436.3 476.5 507.2 487.3 TOTAL EQUITY AND LIABILITIES 1,476.3 701.4 773.7 851.1 890.0
Net tangible asset/(liabilities) per share (sen) (211.9) 82.7 80.2 85.4 80.1 Current ratio (times) 2.1 1.9 2.1 2.0 2.5 Liquidity ratio (times) 0.7 0.8 0.7 0.8 1.0 Gearing ratio (times) (3.7) 1.3 1.3 1.0 0.7
CONSOLIDATED PROFIT & LOSS ACCOUNT AS AT 31 DECEMBER IN RM MILLION 2003 2004 2005 2006 2007 CONTINUING OPERATIONS Revenue 561.5 609.4 502.2 591.0 669.7 Earnings/(loss) before interest, taxation, depreciation and amortisation (355.8) 554.0 110.2 121.2 127.5 Profit/(loss) before tax (471.0) 469.3 64.6 96.2 99.4 Income tax expense 0.0 (28.3) (22.2) (24.9) (25.4) Profit/(loss) for the year from continuing operations Discontinued Operations (471.0) 441.0 42.3 71.3 74.0 Profit/(loss) for the year from discontinued operation — — — (6.6) 3.3 Profit/(loss) for the year (471.0) 441.0 42.3 64.7 77.3
Attributable to: Equity holders of the company (468.8) 432.9 30.0 36.7 52.0 Minority interests (2.2) 8.0 12.3 28.0 25.3 (471.0) 441.0 42.3 64.7 77.3
Earnings/(loss) per share (230.0) 202.2 12.0 12.8 16.0 Earnings before interest, taxation, depreciation and amortisation as a percentage of revenue (%) (63) 91 22 21 19 Pre-tax profit/(loss) as a percentage of revenue (%) (84) 77 13 16 15 Pre-tax profit/(loss) as a percentage of shareholders’ funds at year end (%) 108 235 28 37 34 group quarterly performance
revenue by segment profit before taxation by segment RM ’000 RM ’000 3,247 4,024 5,244 -2,070 59,247 56,539 57,924 -12,948 454,301 206,106
facilities facilities property hotel others management management development services 10 healthcare non-healthcare FABER GROUP BERHAD 2007 annual report FOR THE YEAR ENDED 31 DECEMBER 2007 QUARTER RM’000 1ST 2ND 3RD 4TH TOTAL www.fabergroup.com.my Revenue 156,646 165,992 176,602 170,435 669,675 Operating expenses (128,129) (134,229) (141,199) (145,435) (548,992) Earnings before interest, taxation, depreciation and amortisation and exceptional items 29,843 33,303 36,388 27,970 127,504 Profit/(loss) before taxation 23,505 26,925 29,780 19,235 99,445 Profit/(loss) attributable to shareholders 10,991 12,596 16,832 11,543 51,962 Earnings per share (sen) 3.7 3.9 5.0 3.4 16.0
BY SEGMENT QUARTER RM’000 1ST 2ND 3RD 4TH TOTAL Revenue Facilities Management Healthcare 108,263 110,886 111,699 123,453 454,301 Facilities Management Non-Healthcare 1,841 1,117 1,677 (611) 4,024 Property Development 45,099 52,476 61,834 46,697 206,106 Others 1,443 1,513 1,392 896 5,244 Total 156,646 165,992 176,602 170,435 669,675
Discontinued Operations – Hotels 12,920 11,946 15,171 19,210 59,247 Group 169,566 177,938 191,773 189,645 728,922
Profit Before Taxation Facilities Management Healthcare 14,197 12,798 15,495 14,049 56,539 Facilities Management Non-Healthcare 22 104 46 (2,242) (2,070) Property Development 11,279 16,317 19,035 11,293 57,924 Others (1,993) (2,294) (4,796) (3,865) (12,948) Total 23,505 26,925 29,780 19,235 99,445
Discontinued Operations – Hotels (280) (1,031) 798 3,760 3,247 Group 23,225 25,894 30,578 22,995 102,692 corporate structure Key Operating Companies in Faber Group Berhad
facilities management property development 11 division division FABER GROUP BERHAD 2007 annual report
HEALTHCARE www.fabergroup.com.my
100% 100% Faber Healthcare Management Sdn Bhd Faber Development Holdings Sdn Bhd
57%* 100% Faber Medi-Serve Sdn Bhd Faber Union Sdn Bhd
60% 100% Healthtronics (M) Sdn Bhd Country View Development Sdn Bhd
100% 100% Cermin Cahaya Sdn Bhd Faber Grandview Development (Sabah) Sdn Bhd 55% Fresh Linen Services Sdn Bhd 55% Rimbunan Melati Sdn Bhd * Faber Group Berhad also holds 13% of Faber Medi-Serve Sdn Bhd
NON-HEALTHCARE
100% Faber Facilities Sdn Bhd
100% Faber Facilities Management Sdn Bhd
100% Faber Facilities Solution Sdn Bhd
51% Faber Star Facilities Management Limited
51% Faber Sindoori Management Services Private Limited corporate profile
Faber Group Berhad (“Faber” or “the Group”), a member of the UEM Group, is listed on the Main Board of Bursa Malaysia Securities Berhad under the Trading & Services Sector. From a Malaysian hospitality concern some 44 years ago, Faber has, following a successful restructuring exercise and strategic initiatives, today grown into a leading player in the Integrated Facilities Management Services and Property Development sectors. 12 FABER GROUP BERHAD 2007 annual report www.fabergroup.com.my
In 2006, as part of a further strategic FACILITIES MANAGEMENT HEALTHCARE reorientation of its businesses, Faber began DIVISION a process of disposing of non-core assets Creating Next Generation Environments For Wellness while strengthening and growing its core Faber Medi-Serve Sdn Bhd (“FMS”), the businesses as well as expanding its Group’s 70% owned subsidiary, is one of international footprint. Today, the Group Malaysia’s largest healthcare support continues to sustain the momentum built up services companies providing comprehensive by its recent expansionary measures and is housekeeping and engineering services to more than 400 Government and private primed to move up to the next level of growth hospitals and healthcare institutions. These in the Integrated Facilities Management services range from Facilities Engineering (Healthcare and Non-Healthcare) and Maintenance, Biomedical Engineering Property Development sectors. Maintenance, Clinical Waste Management, Linen and Laundry to Cleansing and Janitorial services.
Having set new industry benchmarks in Malaysia, FMS has spread its wings to operate beyond Malaysia’s borders with a presence established in the United Arab Emirates (“UAE”). 13 FABER GROUP BERHAD 2007 annual report
www.fabergroup.com.my
FACILITIES MANAGEMENT NON-HEALTHCARE DIVISION PROPERTY DEVELOPMENT DIVISION Building Value Together Prime Location. Quality Finishing A wholly owned subsidiary of the Group, Faber Facilities Sdn Bhd (“FFSB”) provides Faber Development Holdings Sdn Bhd professionally administered facilities management service programmes for commercial (“FDH”) is the Group’s wholly owned property and residential properties in the public and private sectors. FFSB’s comprehensive development arm. An established and Integrated Facilities Management Solutions (“IFMS”) offering includes Facilities reputable developer, FDH has differentiated Management and Administration; Building Services (M&E) Maintenance; Housekeeping itself from the competition over the years by Management; Security, Safety and Health Management; Financial and Tenancy undertaking the development of properties Management; and Asset Management. focusing on prime location, competitive pricing and quality finishings. Backed by a In the first 20 years of its operations, FFSB provided specialised IFMS for all properties portfolio of completed projects, FDH is developed by the Group. In 2005, the company was restructured and its business scope actively sourcing strategic land banks for expanded to include properties in both the public and private sectors. Today, FFSB’s acquisition or joint venture development in Malaysian portfolio includes eight residential and commercial properties located in Kuala prime locations. Lumpur primarily in the vicinity of Taman Desa and one in Penang. On the international front, FFSB is rapidly expanding its portfolio through forming strategic alliances with Going forward, FDH will continue to deliver renowned partners in India and the UAE. on its promise of innovative and value- added products. Property development will continue to remain one of Faber’s core businesses and a major revenue earner. corporate information
BOARD OF DIRECTORS GROUP MANAGEMENT DATO’ ANWAR BIN AJI FABER GROUP BERHAD Chairman/Non-Independent Non-Executive Adnan bin Mohammad Managing Director ADNAN BIN MOHAMMAD Managing Director FABER MEDI-SERVE SDN BHD Syed A Hamid Syed A Rahman DATUK ZAINAL ABIDIN BIN ALIAS Chief Executive Officer Senior Independent Non-Executive FABER FACILITIES SDN BHD DATUK MOHAMED ZAIN BIN S. Sunthara Moorthy S. Subramaniam MOHAMED YUSUF Chief Executive Officer Independent Non-Executive 14 FABER DEVELOPMENT HOLDINGS DATO’ ROSLI BIN SHARIF SDN BHD FABER GROUP BERHAD Non-Independent Non-Executive 2007 annual report Khalid Abd Majid OH KIM SUN Senior General Manager www.fabergroup.com.my Independent Non-Executive
ELAKUMARI A/P KANTILAL REGISTERED OFFICE Non-Independent Non-Executive 20th Floor, Menara 2 PUASA BIN OSMAN Faber Towers Independent Non-Executive Jalan Desa Bahagia, Taman Desa YM RAJA AZMI BIN RAJA NAZUDDIN Off Jalan Kelang Lama Non-Independent Non-Executive 58100 Kuala Lumpur Tel +6 03 7628 2888 Fax +6 03 7628 2828 COMPANY SECRETARY www.fabergroup.com.my SURIATI BINTI ASHARI (LS0009029) AUDIT & RISK COMMITTEE AUDITORS Oh Kim Sun^ ERNST AND YOUNG Chairman/Independent Non-Executive CHARTERED ACCOUNTANTS Level 23A Menara Milenium Datuk Zainal Abidin bin Alias Jalan Damanlela Senior Independent Non-Executive Pusat Bandar Damansara Datuk Mohamed Zain bin Mohamed Yusuf 50490 Kuala Lumpur Independent Non-Executive Tel +6 03 7495 8000 Fax +6 03 2095 5332 Elakumari A/P Kantilal* Non-Independent Non-Executive YM Raja Azmi bin Raja Nazuddin* SHARE REGISTRAR 15 Non-Independent Non-Executive SYMPHONY SHARE REGISTRARS FABER GROUP BERHAD SDN BHD 2007 annual report Level 26, Menara Multi Purpose INVESTMENT COMMITTEE Capital Square www.fabergroup.com.my Dato’ Anwar bin Aji No. 8, Jalan Munshi Abdullah Chairman/Non-Independent Non-Executive 50100 Kuala Lumpur Tel +6 03 2721 2222 Datuk Mohamed Zain bin Mohamed Yusuf Fax +6 03 2721 2530/2721 2531 Independent Non-Executive
YM Raja Azmi bin Raja Nazuddin Non-Independent Non-Executive PRINCIPAL BANKER
Adnan bin Mohammad CIMB BANK BERHAD Managing Director ALLIANCE BANK MALAYSIA BERHAD
PUBLIC BANK BERHAD NOMINATION & REMUNERATION COMMITTEE PRINCIPAL SOLICITORS Datuk Mohamed Zain bin Mohamed Yusuf Chairman/Independent Non-Executive SHEARN DELAMORE & CO
Datuk Zainal Abidin bin Alias Senior Independent Non-Executive STOCK EXCHANGE LISTING YM Raja Azmi bin Raja Nazuddin MAIN BOARD OF BURSA MALAYSIA Non-Independent Non-Executive SECURITIES BERHAD
^ member of the Malaysian Institute of Certified Public Accountants * member of the Malaysian Institute of Accountants board of directors
16 FABER GROUP BERHAD 2007 annual report www.fabergroup.com.my
From Left to Right: Dato’ Anwar bin Aji Chairman/ Non-Independent Non-Executive Director
Adnan bin Mohammad Managing Director 17 FABER GROUP BERHAD 2007 annual report
www.fabergroup.com.my
From Left to Right: 1. Datuk Zainal Abidin bin Alias 3. Dato’ Rosli bin Sharif 5. Elakumari A/P Kantilal 7. YM Raja Azmi bin Senior Independent Non-Independent Non-Independent Raja Nazuddin Non-Executive Director Non-Executive Director Non-Executive Director Non-Independent Non-Executive Director 2. Datuk Mohamed Zain bin 4. Oh Kim Sun 6. Puasa bin Osman Mohamed Yusuf Independent Non-Executive Independent Non-Executive Independent Director Director Non-Executive Director board of directors’ profile
DATO’ ANWAR BIN AJI Aged 57, Malaysian Non-Independent Non-Executive Chairman
Dato’ Anwar was appointed to the Board of Directors of Faber Group Berhad (“FGB”) and as Chairman of FGB on 22 October 2001. He is also the Chairman of the Investment Committee of FGB.
He graduated from University of Malaya with Honours in Economics in 1973 and obtained his 18 Masters in International Studies from Ohio University, United States of America in 1982. He FABER GROUP BERHAD started his career with the Government and had held various posts in the Ministry of Trade and 2007 annual report Industry, the Prime Minister’s Department and the Ministry of Finance. He joined Khazanah Nasional Berhad in 1994 and left in May 2004. His directorship in other public companies www.fabergroup.com.my includes Edaran Otomobil Nasional Bhd, CIMB Islamic Bank Berhad, CIMB Wealth Advisor Berhad, CIMB-Principal Asset Management Berhad and SPJ Corporation Berhad.
Dato’ Anwar has no family relationship with any Director and/or major shareholder of FGB, no conflict of interest with FGB, never been charged for any offence within the past 10 years and does not hold any shares in FGB and its subsidiaries.
He attended all 12 of the Board of Directors’ Meetings held during the financial year. ADNAN BIN MOHAMMAD Aged 47, Malaysian Managing Director
Adnan was appointed as Director and Managing Director of FGB on 1 April 2007. He is also a Member of the Investment Committee of FGB.
He holds a Bachelor of Business Administration (Finance) from University of Missouri, Kansas City, United States of America and a Diploma in Banking Studies from MARA Institute of Technology. He is a member of the Management Institute of Malaysia and Harvard Club of Malaysia. 19 FABER GROUP BERHAD He started his career with Malayan Banking Berhad and later served Bank Rakyat Berhad in 2007 annual report 1989 before moving to Bumiputera Merchant Bankers Berhad as a Corporate Banking Officer in 1990. He later left the banking industry and joined Projek Lebuhraya Utara-Selatan Berhad www.fabergroup.com.my (“PLUS”) where he rose from Project Finance Assistant Manager to Senior General Manager of Finance Division.
He has from 2001 to 2005 served in various capacities within the UEM Group, including Managing Director of TIMEdotNet Berhad, Chief Operating Officer of Intria Berhad, Managing Director of Park May Berhad and Chief Executive Officer of E-Idaman Sdn Bhd. Encik Adnan was the Chief Operating Officer of UEM Builders Berhad from April 2005 until his appointment as Managing Director of FGB, on 1 April 2007.
Other than FGB, he has no directorship in other public company. He has no family relationship with any Director and/or major shareholder of FGB, no conflict of interest with FGB, never been charged for any offence within the past 10 years and does not hold any shares in FGB and its subsidiaries.
He attended all 9 of the Board of Directors’ Meetings meeting during the financial year after his appointment as Managing Director of FGB. DATUK ZAINAL ABIDIN BIN ALIAS DATUK MOHAMED ZAIN BIN MOHAMED YUSUF Aged 64, Malaysian Aged 68, Malaysian Senior Independent Non-Executive Director Independent Non-Executive Director
Datuk Zainal was appointed to the Board of Directors Datuk Mohamed Zain was appointed to the Board of of FGB on 22 October 2001 and subsequently as Directors of FGB on 22 October 2001. He is also a Senior Independent Non-Executive Director on 23 May Member of the Audit and Risk Committee, the 20 Nomination and Remuneration Committee and 2003. He is also a Member of the Audit and Risk FABER GROUP BERHAD Investment Committee of FGB. 2007 annual report Committee, and the Nomination and Remuneration Committee of FGB. He holds a Bachelor of Economics with Honours from University of Western Australia. He was with the Shell www.fabergroup.com.my He holds a Bachelor of Arts (History), with Honours Group of Companies and during this time, had attended various Senior Management Courses overseas from University of Malaya. He was with the Malaysian as well as the Harvard Senior Management Programme Diplomatic and Administrative Service in 1967 and in the mid-80s. retired in 1999 as Ambassador to Indonesia. He had served in various capacities in the Ministry of Foreign From 1986 to 1988, he was the Marketing Consultant Affairs as well as in various Malaysian Embassies to Shell International based in London, United Kingdom. He was the first person of Malaysian abroad, namely in Washington D.C., Jakarta, New nationality to be appointed as Marketing Director of Delhi, Hong Kong and Tokyo. He was also the Shell Marketing Companies in Malaysia at the end of Malaysia’s Ambassador to Kuwait (concurrently 1989. He was subsequently elevated to the Board of accredited as Malaysia’s Ambassador to Bahrain, Qatar, Directors of the Shell Group as Executive Director, both The United Arab Emirates and Oman), Thailand and in the upstream and downstream companies as well as 18 other Shell joint-venture companies. In 1996, he The Republic of Indonesia. In the Ministry of Foreign resigned as Director of Shell Refining Company Affairs, he had also served as ASEAN Director General (Federation of Malaya) Berhad, a company listed on the for Malaysia and as the Chief of Protocol. Other than Main Board of the Kuala Lumpur Stock Exchange. He FGB, he has no directorship in other public company. also served as a Director on the Board of Directors of Insas Berhad from March 1997 to January 2000. He was also a Director of MBF Finance Berhad (“MBF Datuk Zainal has no family relationship with any Finance”) from May 1999 to December 2001. He Director and/or major shareholder of FGB, no conflict resigned on the completion of the restructuring of MBF of interest with FGB, never been charged for any Finance with the take over by AmFinance Berhad. He offence within the past 10 years and does not hold any is presently the Chairman of Confoil (M) Sdn Bhd and shares in FGB and its subsidiaries. Malacca Securities Sdn Bhd. He is also currently the Chairman of Malaysia Australia Business Council. His directorship in other public companies includes He attended all 11 out of the 12 of the Board of PJBumi Berhad and Mission Biofuels Ltd, a company Directors’ Meetings held during the financial year. listed on the Australian Stock Exchange.
Datuk Mohamed Zain has no family relationship with any Director and/or major shareholder of FGB, no conflict of interest with FGB, never been charged for any offence within the past 10 years and does not hold any shares in FGB and its subsidiaries.
He attended all 12 of the Board of Directors’ Meetings held during the financial year. DATO’ ROSLI BIN SHARIF OH KIM SUN Aged 53, Malaysian Aged 59, Malaysian Non-Independent Non-Executive Director Independent Non-Executive Director
Dato’ Rosli is the Senior Director of International Oh was appointed to the Board of Directors of FGB and Business (West Asia) of UEM Group. Previously, he was as Chairman of the Audit and Risk Committee of FGB Managing Director of Cement Industries of Malaysia on 28 September 2007. Oh is a Member of the 21 Berhad (“CIMA”). Malaysian Institute of Certified Public Accountants FABER GROUP BERHAD (“MICPA”). 2007 annual report He is a fellow of the Association of Charted Certified Accountants (“ACCA”) with over 20 years of experience An accountant by training, he began his career in www.fabergroup.com.my in both the public and private sectors. He has worked 1972 with Coopers & Lybrand in London. He has over with the Accountant General’s Office holding positions 35 years of experience in finance and have held including as an accountant with the Department of positions as Finance Director of Taiko Plantations Sdn Civil Aviation and the State Treasurer of Negeri Bhd, Financial Controller of ICI Malaysia and Finance Sembilan. Manager (Secondment) of ICI Headquarters in London responsible for Northern Europe. Oh led a successful He was involved in construction-related activities and management buyout of ICI’s Malaysian operations in held positions of General Manager and Finance Director 1994 and was appointed Group Executive Director of in several private limited companies prior to joining Chemical Company of Malaysia Berhad until 2003. CIMA in 1998 as Group Finance Manager. He succesfully completed the Senior Executive His directorships in other public companies include Development Program at Banff School of Advanced UEM World Berhad, Pharmaniaga Berhad, Nikko Management, Canada in 1995. Electronics Berhad and Linkedua (Malaysia) Berhad. He is also a Director of IMPAX Laboratories Inc., a Dato’ Rosli has no family relationship with any Director company listed on National Association of Securities and/or major shareholder of FGB, no conflict of interest Dealers Automated Quotations (“NASDAQ”). with FGB, never been charged for any offence within the past 10 years and does not hold any shares in FGB Oh has no family relationship with any Director and/or and its subsidiaries. major shareholder of FGB, no conflict of interest with FGB, never been charged for any offence within the Dato’ Rosli attended 3 out of the 5 Board of Directors’ past 10 years and does not hold any shares in FGB Meetings held during the financial year after his and its subsidiaries. appointment as Director of FGB. He attended all 2 of the Board of Directors’ Meetings held during the financial year after his appointment as Director of FGB. ELAKUMARI A/P KANTILAL PUASA BIN OSMAN Aged 51, Malaysian Aged 63, Malaysian Non-Independent Non-Executive Director Independent Non-Executive Director
Elakumari was appointed to the Board of Directors of Puasa was appointed to the Board of Directors of FGB FGB on 22 October 2001 and also a Member of the on 19 June 2003. 22 Audit and Risk Committee of FGB. He holds a Master in Business Administration from FABER GROUP BERHAD 2007 annual report She holds a Master of Science in Finance and Ohio University, United States of America. His previous Accounting from the University of East Anglia, United working experience include serving in various Kingdom and Bachelor of Accounting from Universiti managerial positions in Bank Pertanian Malaysia in the www.fabergroup.com.my Kebangsaan Malaysia. She is also a Member of the Department of Personnel and Training, Branch Malaysian Institute of Accountants since 1984. She Operations, Retail Banking and Credit Operations. began her career as an Officer in the Accountant General’s Office in 1981 with the first posting to the Other than FGB, he has no directorship in other public Ministry of Agriculture and subsequently as the Senior company. He has no family relationship with any Officer in the Monitoring of Government Owned Director and/or major shareholder of FGB, no conflict Enterprises Division in the Ministry of Finance. She of interest with FGB, never been charged for any joined Khazanah as a Senior Manager in 1994 and was offence within the past 10 years and does not hold any promoted to General Manager in 2000. In 2004, she shares in FGB and its subsidiaries. assumed the position of Director in the Investments Division of Khazanah. Her directorships in other public He attended all 12 of the Board of Directors’ Meetings companies include TIME dotCom Berhad and TIME held during the financial year. Engineering Berhad.
She has no family relationship with any Director and/or major shareholder of FGB, no conflict of interest with FGB, never been charged for any offence within the past 10 years and does not hold any shares in FGB and its subsidiaries.
She attended 11 out of the 12 Board of Directors’ Meetings held during the financial year. YM RAJA AZMI BIN RAJA NAZUDDIN Aged 40, Malaysian Non-Independent Non-Executive Director
Raja Azmi, Senior Director of Corporate Development Division of UEM was appointed to the Board of Directors on 28 August 2006. He is also a Member of 23 the Audit and Risk Committee, Nomination and FABER GROUP BERHAD Remuneration Committee and Investment Committee of 2007 annual report FGB.
www.fabergroup.com.my He holds a Master of Business Administration from the University of Bath, United Kingdom and is a member of the Malaysian Institute of Certified Public Accountants and the Malaysian Institute of Accountants.
He started his career in 1987 with Coopers & Lybrand Malaysia before moving to Malaysian Tobacco Company Berhad in 1994. He joined Perodua Manufacturing Sdn Bhd as Accounts Manager in January 1999. He served as Commercial Manager in Haworth Malaysia Sdn Bhd in May 2000 and Senior Finance Manager in Tronoh Mines Malaysia Berhad in September 2001. In January 2003, he joined Sapura Telecommunications Berhad as Group Financial Controller and in May 2004, he was appointed the Chief Financial Officer of Tronoh Consolidated Malaysia before assuming his current position on 1 August 2005.
His directorship in other public companies includes Time Engineering Berhad. He has no family relationship with any Director and/or major shareholder of FGB, no conflict of interest with FGB, never been charged for any offence within the past 10 years and does not hold any shares in FGB and its subsidiaries.
He attended 10 out of the 12 Board of Directors’ Meetings held during the financial year. group management
24 FABER GROUP BERHAD 2007 annual report www.fabergroup.com.my
From Left to Right: Adnan bin Mohammad Syed A Hamid Syed A Rahman S. Sunthara Moorthy A/L Khalid Abd Majid Managing Director Chief Executive Officer S. Subramaniam Senior General Manager Faber Group Berhad Faber Medi-Serve Sdn Bhd Chief Executive Officer Faber Development Holdings Faber Facilities Sdn Bhd Sdn Bhd group management’s profile
Adnan bin Mohammad S. Sunthara Moorthy A/L S. Subramaniam Managing Director Chief Executive Officer Faber Facilities Sdn Bhd (please refer biodata on page 19 of profile board of director) Sunthara Moorthy, aged 45, is the Chief Executive Officer Faber Facilities Sdn Bhd (“FFSB”). He is a fellow member of the Syed A Hamid Syed A Rahman Association of Chartered Certified Chief Executive Officer Accountants, and also a registered member Faber Medi-Serve Sdn Bhd of the Malaysian Institute of Accountants.
Syed A Hamid Syed A Rahman, aged 50, is He started his career in accounting and the Chief Executive Officer of Faber Medi- audit practice in various firms in London, Serve Sdn Bhd (“FMS”). He holds a United Kingdom prior to joining Faber 25 Bachelor in Engineering (Civil) from Group Berhad (“FGB”) in August 1995 as FABER GROUP BERHAD Universiti Teknologi Mara, Malaysia. He Group Accountant. 2007 annual report started his career in 1983 with GKM-C Itoh Fudo Joint Venture before moving to In December 1996, he was appointed as www.fabergroup.com.my Perunding Bersatu Engineers Sdn Bhd in Head of Finance of FMS. Subsequently, he 1987. took the position as Head of UEM Property and Environmental Division in August 2000 He joined the UEM Group in 1989 as while concurrently holding the position of Construction Manager of Pengurusan the Chief Financial Officer of FMS. Lebuhraya Berhad after which he was promoted to Regional Construction Manager In May 2004, he was appointed as the in 1994. Head of Business Development of FGB and subsequently as the Chief Financial Officer Following that, in 1997, he was transferred of FGB in January 2005. He was appointed to Time Automation & Management Services as Chief Executive Officer of FFSB on Sdn Bhd as Chief Executive Officer and 1 December 2007. subsequently to Projek Penyelenggaraan Lebuhraya Berhad (‘PROPEL’) in 1999. He was from September 1999 until June 2007, Khalid Abd Majid the Managing Director of PROPEL until his Senior General Manager appointment as Chief Executive Officer of Faber Development Holdings Sdn Bhd FMS on 1 July 2007. Khalid Abd Majid, aged 43, is the Senior General Manager of Faber Development Holdings Sdn Bhd (“FDH”). He holds a Bachelor’s Degree in Civil Engineering from Footscray Institute of Technology (Currently known as Victoria University of Technology, Victoria, Australia).
He started his career in 1990 as an engineer with Emkay Associates Sdn Bhd. He joined Faber Development Holdings Sdn Bhd, property arm of Faber Group Berhad in May 1991 as Project Executive after which he was promoted to several positions.
He was last promoted to General Manager in 2001 before holding the current position in July 2007. expanding growth
We’re always looking towards developing new business opportunities by penetrating into untapped markets, both locally and regionally, to further increase our profitability and revenue. overview operations review
facilities management page 30 healthcare
facilities management page 34 non-healthcare
property page 38 development Financial year (“FY”) 2007 was the year in which Faber Group Berhad (“the Group”) built upon the success of our turnaround initiatives to make further advances on the financial and operational fronts. We strengthened our core Facilities Management Healthcare (“FMH”), Facilities Management Non-Healthcare (“FM Non-Healthcare”) and Property Development businesses, while taking measures to exit our traditional Hotel operations as it did not align with our new focus. 29 FABER GROUP BERHAD 2007 annual report The FMH Division continued to be the major contributor to Group earnings garnering 70% of revenue, while the Property Development Division was the second major contributor garnering www.fabergroup.com.my 30% of revenue. FM Non-Healthcare business is undergoing a gestation period and is confident that it will re-shape and strengthen itself as the Group prepares for the next level of growth.
On the home-front, all our businesses strengthened their reach, making good progress in existing projects while exploring new opportunities. Beyond Malaysia’s shores, we further expanded our international footprint and now have various operations throughout the region. Strategic joint ventures played a prominent part in helping the Group enhance its global reach and we will continue to pursue new opportunities.
All in all, the Group was quick to take advantage of the abundant opportunities in the integrated facilities management services and property development sectors and we will continue to sustain the momentum in these core operations even as we move forward domestically and abroad.
The Group also leveraged on the Government Linked Companies Transformation (“GLCT”) initiatives to implement more effective operational processes while ensuring the roll out of more transparent procurement processes and other initiatives that further built up our integrity and accountability. We will continue to leverage on the GLCT initiatives to help us steer our businesses forward. facilities operations review management healthcare Creating Next Generation Environments for Wellness Faber Medi-Serve Sdn Bhd (“FMS”) is in the business of providing Integrated Facilities Management Services (“IFMS”) to the healthcare sector. Commonly termed as Healthcare Support Services, the company’s IFMS offering covers five core services, namely Facilities Engineering Maintenance Services (“FEMS”), Bio-Medical Engineering Maintenance Services (“BEMS”), Cleansing and Janitorial Services (“CLS”), Linen and Laundry Services (LLS) as well as Clinical Waste Management Services (“CWMS”). Today, FMS serves local and overseas government and private hospitals by maintaining the efficiency of engineering assets and bio-medical equipment to extend its service life and ensuring comfort and hygienic environment through proper waste collection and disposal, clean healthcare facilities and timely laundry and delivery services. 30 FABER GROUP BERHAD 2007 annual report www.fabergroup.com.my
FMS continues to lead Malaysia’s rapidly FINANCIAL REVIEW growing healthcare support industry through In FY2007, the healthcare support industry setting new standards and revolutionising faced a challenging operating environment. the way healthcare institutions manage their Against this backdrop, FMS posted revenue businesses. As a Healthcare Support Services of RM454.3 million for FY2007, an 8% company, FMS today serves more than 400 increase over revenue of RM419.2 million Government and private hospitals and posted in FY2006. Consolidated profit healthcare institutions in Malaysia making it before tax (“PBT”) came in at RM56.6 the nation’s foremost healthcare support million, also reflecting an 8% increase over services operator. FMS has also spread its PBT of RM52.5 million in FY2006. wings beyond Malaysia’s borders and today operates in the United Arab Emirates The company’s improved financial performance (“UAE”). came on the back of growth in its existing concession business as well as through the diversification of its customer base into non- concession activities, both locally and abroad. Concession revenues were given a boost as a result of the incorporation of Variation Orders for new installed facilities; recognition 20 07
revenue profit before taxation (RM million) (RM million)
500 379.1 419.2 454.3 60 58.1 52.5 56.6
50 400
40 300 30 200 20
100 10
0 0 ‘05 ‘06 ‘07 ‘05 ‘06 ‘07 operations review
of the full year’s revenue from the new Located at the Kuala Ketil Industrial Estate hospitals established in 2006 namely Sarikei, in the Baling district, Kedah, this RM8.9 Kunak, Kuala Penyu, Dalat and Pitas; as million plant will serve all Government well as the establishment of new replacement hospitals in Perlis, Kedah and Penang. The hospitals in Sungai Petani and Alor Star. On plant commenced washing loads in top of this, concession income rose due to September 2007, is currently processing up higher delivery of clean linen and collection of to six tonnes of linen per day. clinical waste as well as reimbursable works. In order to meet the growth demand for In FY2007, FMS also continued to service clinical waste management services, FMS contracts for non-concession businesses in has begun constructing a new incineration the UAE and the Prince Court Medical plant next to the existing incineration plant Centre (“PCMC”) in Kuala Lumpur. These at Kamunting (“KIP”). Upon completion of 32 contracts cover the provision of both the new KIP in mid-2008, both the existing FABER GROUP BERHAD Facilities Engineering Maintenance Services and new incinerator will have a combined 2007 annual report (“FEMS”) and Bio-Medical Engineering incinerating capacity of 18 tonnes of Maintenance Services (“BEMS”). clinical waste per day as compared to the www.fabergroup.com.my current 6 tonnes per day. FMS will be able to tap into the new technology installed at OPERATIONAL PERFORMANCE the new KIP to generate steam for the use FMS started out in 1996 with a concession of FMS’ laundry plant located within the to provide Integrated Hospital Support and complex. This initiative is expected to Facilities Management services to 71 contribute RM130,000 in natural gas Ministry of Health (“MoH”) hospitals in savings per year. Perlis, Kedah, Penang, Perak, Sarawak and Sabah. Since then, FMS has taken on The year also saw air pollution control several more Government hospitals under its equipment (“APCE”) being installed at both wing. In 2007, the total number of the KIP and Lok Kawi Incinerator Plant Government hospitals managed by FMS (“LKIP”). The testing and commissioning for stood at 78. the APCE at both plants proceeded smoothly and the equipment is currently The increase in the number of Government fully operational. Emission results for both hospitals under FMS’ portfolio has enlarged plants achieved compliance to strict DOE the total number of asset maintenance base standards. With the new APCE, the to more than 190,000 valued at over throughput of the plant has been increased RM2.3 billion. This increase has directly by 8%. increase total work orders by 19% to 1.1 million as compared to FY2006. Along with continues improvement initiatives, ratio of GOING FORWARD proactive works has been increased to 74%. FMS’ top priority now is to gear up its efforts for the extension of the 15-year To keep its competitive edge and to meet concession period which will end in 2011. increasing demand, FMS continues to make FMS is going all out to ensure that the investments in its plant and machinery. On highest priority is given to enhancing the top of the Sejingkat Laundry Plant in healthcare delivery system of the concession Kuching, Sarawak that serves some 12 business. Beyond the concession, FMS has nearby hospitals, and the Kamunting also embarked on several other growth Laundry Plant, FMS’ largest laundry facility, initiatives as demand for healthcare support FMS invested in a state of the art laundry services grows elsewhere on the home-front plant in Kuala Ketil situated in the northern and in the international markets. Going region of the Peninsular. forward, FMS will set its sights on becoming “the partner in integrated support services”. 33 FABER GROUP BERHAD 2007 annual report
www.fabergroup.com.my facilities operations review management non-healthcare Building Value Together Faber Facilities Sdn Bhd (“FFSB”) is in the business of providing professionally administered facilities management service programmes for commercial and residential properties in the public and private sectors. FFSB’s comprehensive Integrated Facilities Management Solutions (“IFMS”) offering includes Facilities Management and Administration; Building Services (M&E) Maintenance; Housekeeping Management; Security, Safety and Health Management; Financial and Tenancy Management; and Asset Management. FFSB is seen as a leading player in the IFMS business especially for high-profile projects. 34 FABER GROUP BERHAD 2007 annual report www.fabergroup.com.my
With over two decades of industry experience FINANCIAL PERFORMANCE and adherence to the highest industry In FY2007, FFSB posted revenue of RM4.0 standards, FFSB has not only helped million against revenue of RM7.3 million in maintain but also helped enhance the value FY2006 and loss before tax of RM2.0 of properties through its comprehensive million against RM1.9 million posted IFMS programme. In Malaysia, FFSB’s previously. The decrease in revenue was portfolio includes eight residential and attributed mainly to the reduction of commercial properties located in Kuala management fees from facilities Lumpur (primarily in the vicinity of Taman management of residential properties. Desa) and one in Penang. On the international front, FFSB also undertakes IFMS on the Indian subcontinent for the OPERATIONAL REVIEW 15-storey Tolstoy House in New Delhi (its Over the course of 2007, FFSB continued maiden overseas venture) and is continuing to expand its portfolio and international to expand its portfolio through forming footprint through several contracts secured strategic alliances with renowned partners in by Faber Star Facilities Management Ltd, India and the United Arab Emirates (“UAE”). the joint venture company formed by FFSB 20 07
revenue profit before taxation (RM million) (RM million)
8 7.9 7.3 4.0 1.00 1.0 (1.9) (2.0)
0.38 6
-0.24 4 -0.86
2 -1.48
0 -2.10 ‘05 ‘06 ‘07 ‘05 ‘06 ‘07 operations review
36 FABER GROUP BERHAD 2007 annual report www.fabergroup.com.my and Singa Real Estates Ltd of India in GOING FORWARD March 2006. The contracts included a RM2 Going forward, FFSB with over two decades million per annum contract to provide IFMS of experience in managing service delivery for one hospital in Northern India for the and customer expectations, will adapt to Fortis Healthcare Group and two contracts any changes in market conditions by for commercial complexes belonging to the developing new operational strategies. FFSB Ansal Group of India. The latter contracts will also continue to forge alliances with its cover the provision of IFMS for Ansal Plaza stakeholders to create opportunities for in Greater Noida (with estimated annual retaining the existing business post- revenue of RM4.8 million for the first year) handover to the property owners. and the Ansal Plaza in Jalalandar (with estimated annual revenue of RM1 million). FFSB will also enhance its internal capability 37 in mechanical and engineering (“M&E”) June 2007 saw FFSB signing a joint maintenance to increase its participation in FABER GROUP BERHAD 2007 annual report venture agreement with Apollo Sindoori Hotel M&E tenders and to secure more business Ltd to form Faber Sindoori Management from commercial facilities and office www.fabergroup.com.my Services Private Limited. The new joint complexes with multi-faceted M&E systems. venture company will provide healthcare Even as FFSB ventures into several new support services and non-healthcare support projects, it will cope with operational and services in the domain of biomedical administrative demands by capitalising on engineering and maintenance services the centralisation of several supporting (‘BEMS’), facilities engineering maintenance functions at the Group-level. services (‘FEMS’), cleaning and housekeeping, janitorial services and hospital On the Indian subcontinent, FFSB plans to support services as well as Management bid for more jobs from the Apollo Hospitals Information Services for Apollo hospitals Group and the private sector through Faber throughout India. In its first year of Sindoori Management Services Private operations, the new company will undertake Limited. Through Faber Star Facilities housekeeping services for 15 hospitals as Management Ltd, FFSB is looking to well as FEMS and BEMS for nine hospitals. maintain more residential and commercial The housekeeping activities are expected to properties as well as shopping malls while generate an estimated annual revenue of bidding for more jobs from the Fortis RM12 million, while FEMS and BEMS will Healthcare Group. FFSB will also garner RM9 million for the company. aggressively seek new facilities management businesses to strengthen the Group’s core On the home-front, FFSB has received a businesses and will continue to incorporate Letter of Intent from Cahaya Jauhar Sdn the name “Faber” in all overseas joint Bhd for the management of the Johor State venture companies as part of its brand- New Administrative Centre (“JSNAC”) which building exercise. comprises Dataran Mahkota, Dewan Negeri Johor, Kompleks Menteri Besar & Setiausaha In Dubai, FFSB will bid for facilities and Kerajaan and office buildings (C2S & C3S). bio-medical engineering maintenance contracts for hospitals with its local partners, through the joint venture company, Faber LLC incorporated on 7 January 2008. property operations review development
Prime Location. Quality Finishing Our property development business, spearheaded by Faber Development Holdings Sdn Bhd (“FDH”), continues to thrive as a result of FDH’s ability to meet market demand for properties that integrate the right mix of locality, price and design.
38 FABER GROUP BERHAD 2007 annual report www.fabergroup.com.my
Prime location, competitive pricing and OPERATIONAL PERFORMANCE innovative design, are the hallmarks of a In the first quarter of 2007, FDH through Faber property. When discerning buyers wholly owned subsidiary, Faber Union Sdn purchase a Faber property, they are not just Bhd (“FUSB”), completed and handed over buying another commercial or residential the Danau Villa luxury residential project to property, but that they are making a value- purchasers. Comprising 64 units of semi- added investment. detached link houses spread over 5.65 acres of a lakefront parcel in Taman Danau Desa, Kuala Lumpur, the Danau Villa project FINANCIAL REVIEW received overwhelming response from The Group’s Property Development Division discerning house buyers. The development registered a 26% or RM43.1 million increase comprises three-story homes offering lavish in revenue to RM206.1 million against floor space with built-up areas ranging from RM163.0 million posted in FY2006. Profit 3,014 square feet to 3,662 square feet. before tax grew by 13% to RM57.9 million Originally priced between RM0.7 million in FY2007 in comparison to RM51.4 million and RM1.1 million per unit, the value of the posted in the preceding year. The improved properties has since appreciated by 40%. results were attributable to the higher work- in-progress and take-up rates for residential and commercial developments. 20 07
revenue profit before taxation (RM million) (RM million)
250 81.0 163.0 206.1 60 18.7 51.4 57.9
50 200
40 150 30 100 20
50 10
0 0 ‘05 ‘06 ‘07 ‘05 ‘06 ‘07 operations review
Another development in Taman Desa is the guarded community comprising 148 units of Casa Desa condominium consisting of 410 three-storey terrace houses and 8 units of units of high-rises and low-rises with built- two-storey shop houses. At the time of up areas ranging from 916 square feet to writing, the development has achieved 95% 2,881 square feet and selling prices of sales and is expected to be handed over to between RM210,000 and RM689,800 per purchasers in the fourth quarter of 2008. unit. Construction works on this freehold condominium, which is strategically located within a mature neighbourhood with ample GOING FORWARD facilities and amenities, were 90% completed 2008 holds much promise for the Groups’ in December 2007. FUSB expects to hand Property Development Division with several over the condominium to purchasers by new property projects soon to be launched. mid-2008. In the first quarter of 2008, RMSB will launch Phase 3 called Matahari of Laman 40 FDH’ s 55% owned subsidiary, Rimbunan Rimbunan comprising 193 units of 22’ x Melati Sdn Bhd (“RMSB”), continues to 75’ three-storey terrace houses. The FABER GROUP BERHAD make strong headway at its Laman development is expected to garner good 2007 annual report Rimbunan development located in Kepong, response as it will be the last phase of Kuala Lumpur. The year saw several phases terrace houses in Laman Rimbunan within www.fabergroup.com.my of this mixed-development consisting of the guarded community. RMSB is also shop offices and three-storey terrace houses planning to launch 160 units of a gated receiving encouraging response. and guarded project comprising three-storey semi-detached homes and 88 units of Laman Rimbunan sits on 100.81 acres of medium-cost apartments within 2008. land approximately 10 kilometres away from the Kuala Lumpur City Centre. Located at In the second quarter of 2008, FUSB will the heart of the flourishing Kepong be launching Taman Hill Top Perdana, a township, the neighbourhood is served by a 4.81-acre residential development located in network of expressways. With a vast array of Luyang at the very heart of Kota Kinabalu, amenities almost at owners’ doorsteps and Sabah. The project comprises 34 units of the ease of access to major destinations in three-storey semi-detached houses with the Klang Valley, it is seen as the ideal built-up areas of 2,973 square feet to community to live in and is one of Kepong’s 3,090 square feet. Priced from RM869,060 most sought-after investments. When upwards, the properties are targeted at the completed, the entire development will niche high-end market. As with all of comprise 150 units of three-storey shop Faber’s property development projects, offices; 584 units of three-storey terrace Taman Hill Top Perdana will offer buyers the houses nestled within a guarded community right mix of prime location, innovative surrounded by perimeter fencing and design and superior finishing. providing easy access to the nearby Metropolitan Park; 160 units of gated and Two other new projects are also expected to guarded three-storey semi-detached houses; be launched within the vicinity of Taman 88 units of medium-cost apartments; and Danau Desa in 2008. These will include a 360 units of low-cost apartments. gated and guarded development comprising 40 semi-detached homes and six bungalows In late 2007, RMSB completed and handed as well as a 176-unit high-end condominium over 50 units of three-storey shop offices project. Both of these niche developments called Rimbunan Avenue and 243 units 3 are situated by the Tasik Desa lakeside and storey terrace house called Melati. Both of are expected to receive encouraging these Rimbunan Avenue and Melati were response due to their prime location. the Phase 1A of Laman Rimbunan, where the later is the first residential phase within Going forward, the Property Development the guarded community. Another 100 units Division will continue to explore opportunities of the three-storey shop offices are expected to secure new land banks or participate in to be completed in 2008. joint venture development. The Division will also focus on completing its ongoing projects Due to overwhelming response to its initial and will undertake strategic marketing for launches, RMSB has launched Phase 2 new launches that will contribute positively called Mawar which is also part of the to Group revenue. 41 FABER GROUP BERHAD 2007 annual report
www.fabergroup.com.my delivering expertise
People are our greatest asset and through training and development we unleash their potential and productivity that continue to add value as the Group reaches greater heights. people & organisational development
Our employees are our greatest asset. As at the end of FY2007, the Group’s workforce stood at 8,049 employees with our Facilities Management Healthcare Division comprising 96% of this total; Facilities Management Non-Healthcare Division at 1.1%, Property Development Division at 0.8%, Corporate Office at 0.8% and Food and Nutritional Services at 1.3%.
ORGANISATIONAL DEVELOPMENT tasked with ensuring all employee competency 44 The Group recognises that a knowledge- levels were assessed and that the necessary training was provided to bridge the FABER GROUP BERHAD based workforce will steer us closer towards 2007 annual report achieving our business objectives and we identified competency gaps. An allocation of continue to enhance the competency of our 5% of the total annual basic salary was set www.fabergroup.com.my employees as well as inculcate new skills aside as a training budget. among them for increased productivity. For the year under review, the Group FY2007 saw the Group continuing effectively invested some 40% or RM2.06 to undertake structured training and million of the allocated training budget for development initiatives as part of our the purposes of Management, Executive and commitment to nurture, improve and develop Non-executive training as well as for the our employees’ talents and capabilities. The Group’s Emerging Leadership & Continuing Group Human Resource Department was Education Programmes.
Manpower Strength Manpower Strength by Segment 2007 by Segment 2006
1.3% 0.4% 0.8% 0.9% 0.8% 0.8% 1.1% 1.1%
96.0% 96.8%
Facilities Management Healthcare
Facilities Management Non-Healthcare
Property Development
Corporate
Food and Nutritional Services MOTIVATING AND REWARDING EMPLOYEES The Quarterly Employees’ Recognition Award The Group’s employees are constantly continues to be one of the highlights of encouraged to excel in their roles and each quarter and one which employees responsibilities through various initiatives. eagerly look forward to. Deserving employees Programmes such as “Faber Points” that are singled out, acknowledged and rewarded encourage employees to organise activities for their outstanding performance at these in enhancing efficiency leading to positive events. Top management also takes the financial impact and fostering “esprit-de- opportunity to communicate pertinent corps”. information to all employees at this event as we believe an informed workforce is a An Employees’ Suggestion Scheme serves as productive workforce. a mechanism to solicit constructive feedback 45 as well as creative suggestions from To inculcate a balanced lifestyle among all employees. A committee comprising senior employees, the Group continues to provide FABER GROUP BERHAD 2007 annual report and middle-management staff has been support for employee recreational activities tasked with reviewing all suggestions via an through the Sports Club. Mainly indoor and www.fabergroup.com.my online portal and recommending feasible outdoor activities are organised for ones for implementation. Employees whose employees over the course of the year. suggestions are chosen are recognised and rewarded accordingly. Our people, our greatest asset, expressed their support and appreciation of the Group’s efforts as an “Employer of Choice” via a climate survey ranking which saw Faber’s employee satisfaction rating shoot up to 84% from 79% previously.
TRAINING EXPENDITURE DISTRIBUTION 2007
Management Executive Non-Executive Emerging Leadership Programme 0.3% 3.3% 0.3% 1.7% 5.9% 1.7% 5.1% 3.7% 3.7% 26.0% 6.5% 8.7% 8.7%
82.1% 13.0% 82.6% 82.6% 2.0%
58.0% corporate social responsibility
Corporate social responsibility (“CSR”) continues to be an important tenet of the Group’s operating philosophy. As a corporate entity, we endeavour to be looked upon as a responsible corporate citizen by all our stakeholders, be they our customers, our business partners, employees and the many communities that we operate in. Our intent to give back to society and be a responsible company in the fabric of Malaysian society saw us contributing to specific areas of CSR in 2007. 46 FABER GROUP BERHAD As part of the Group’s efforts to build of skilled manpower to meet the demands 2007 annual report stronger partnerships and provide enhanced of the growing healthcare industry. The value to our customers in the healthcare course is also double-pronged in that it is www.fabergroup.com.my sector, we sponsored a haemodialysis industry driven to attract potential candidates machine for use by the public at the Melaka while the private sector companies offer Putra Specialist Hospital’s haemodialysis industrial training to assess the potential of centre as well as sponsored a health future employees. The first student intake is programme for senior citizens. We also made targeted for July 2008. The collaboration financial contributions to the Pertubuhan will start with a twelve-month industrial Kanak-Kanak Kanser Malaysia for their training attachment at FMS. ongoing research and treatment of children with cancer as well as undertook numerous Steadfast in our determination to prepare sponsorships reinforcing the Group’s credo today’s youth to become tomorrow’s leaders, to give back to society. These included we once again ran the UEM Group’s Young sponsorship to upgrade the spastic children’s Executive Scheme (“YES”). YES equips day centre and to build therapeutic gardens young graduates with invaluable skills and at hospitals managed by Faber Medi-Serve experience in a real working environment, Sdn Bhd (“FMS”). making their skills more marketable. In 2007, 53 graduates were assigned to Key to the Group’s contributions to healthcare various posts within the Group’s operations, and education was our tie-up with the out of which 17 of these graduates have Ministry of Higher Education (“MOHE”) in been offered permanent employment by the November 2007. This collaboration serves Group’s companies. Another key component to develop skilled workforce especially of the Group’s training initiatives is the in the areas of Facilities Engineering Vendor Development Programme (“VDP”). Maintenance (“FEMS”) through MOHE’s Running since 1997, the VDP has been community colleges and Bio-Medical realigned with the Red Book on procurement Engineering Maintenance Services (“BEMS”) guidelines and best practices to provide through a selected MOHE Polytechnic. Faber companies an opportunity to grow their is bringing into play its skills, knowledge businesses and compete in global markets. and hands-on experience to ensure the All vendors have to pass a strict selection highest standards of care and cleanliness in procedure and meet predefined performance relation to hospital facilities and equipment. targets as well as undergo constant This initiative will provide an ongoing flow monitoring to assess their quality. Since the inception of the VDP, 50 vendors have Through the UEM Group of Companies, benefited from the programme. In 2007, we the Group continued its strong stance of identified another four vendors for environmental education for children through integration into the programme. working together with government and international bodies such as the United Looking towards training schoolchildren in Nations Environment Programme (“UNEP”) ICT education and capability building, the and local bodies such as the Yayasan Anak Group also sponsored a new computer lab Warisan Alam. 2007 also saw us going set-up at one of the nation’s needy schools. beyond our shores to Kenya to support the The physically disabled were not forgotten campaign by the Ministry of the Environment either – three sewing machines to help the through Yayasan Budi Penyayang. This disabled learn new skills were presented to initiative saw Malaysian children staging the a club for the disabled in Klang. We also eco-play “Tears of Trees” at the UNEP 47 supported study programmes and Governing Council Conference in Nairobi, FABER GROUP BERHAD competitions including the Yayasan Pelajar Kenya. We continued to run our 3R 2007 annual report Islam Malaysia’s “Anugerah Pelajar Islam (“Reduce, Reuse and Recycle”) programme Piala Perdana Menteri”. in phases as well as implemented energy www.fabergroup.com.my saving programmes at the plants and buildings we manage.
Our CSR efforts see us undertaking a wide spread of initiatives. To celebrate the nation’s success in undertaking the North Pole Expedition, the Group contributed to a print document titled “Into 90˚ North” capturing this feat of Malaysian determination and bravado. Our management and employees came together in sincerity and compassion to impact the community around us through sponsoring poor and needy families during Hari Raya Aidil Fitri, providing aid and volunteering immediate post-disaster relief during the cleaning up efforts to flood victims and supporting disaster relief efforts. We also continued to build bonds with local government and regulatory agencies as well as our business peers nationwide through support of their annual dinners, publications and social activities.
Going forward, the Group through its varied CSR programmes will continue to build bridges with the many communities surrounding us while setting new benchmarks of excellence in professional standards and human capital development in the business segments we operate in. employee care
25 may, 30 august & 26 may 2007 48 6 december 2007 Bowling – Tajul Azwa Challenge Trophy held FABER GROUP BERHAD Employee Briefing & Presentation of Awards at Ampang Bowling, IOI Mall Puchong. 2007 annual report in recognition of employees who performed excellently and staff birthday celebration. www.fabergroup.com.my
16 june 2007 30 june 2007 Futsal – Wong Weng Peng Challenge Trophy Netball Challenge Trophy held at Bukit Jalil held at Score Arena, Jalan Kuchai Lama, Family Park, Kuala Lumpur. Kuala Lumpur.
30 june 2007 23 & 25 july 2007 Beach Volleyball Challenge Trophy held at Darts Competition held at Faber Towers, Bukit Jalil Family Park, Kuala Lumpur. Kuala Lumpur. 26 & 27 july 2007 26 & 27 july 2007 Congkak Competition held at Faber Towers, Carrom Competition held at Faber Towers, 49 Kuala Lumpur. Kuala Lumpur. FABER GROUP BERHAD 2007 annual report
www.fabergroup.com.my
28 july 2007 4 august 2007 Larian Faber at Faber Towers, Kuala Lumpur. Faber Annual Dinner held at Sheraton Hotel & Towers Subang.
30 october 2007 Faber Hari Raya & Deepavali Open House held at Faber Towers, Kuala Lumpur. evolving innovations
The journey to excellence is a never-ending road and we have to constantly develop high quality solutions and improve our standards that exceed our customers’ expectations. EXCELling in the quest for Quality
In line with our commitment for operational excellence, the Group undertakes continual improvement programmes that lays the foundation for the sustained growth of our businesses. The various quality concepts and principles that we apply in our daily operations have helped us bolster our current business processes, produce better products and services as well as increase customer satisfaction.
52 In FY2007, we continued to undertake “Committed to Excellence” while our Quality FABER GROUP BERHAD various quality-centric and continual Objectives are summed up by the word 2007 annual report improvement programmes that helped us “EXCEL” which advocates the following: retain our competitive edge. In September E – Effective System www.fabergroup.com.my 2007, Faber Medi-Serve Sdn Bhd (“FMS”) X – Excellent Practice successfully renewed its ISO 9001:2000 C – Continuous Improvement certification for another three years until E – Ethics and Integrity 2010. This was followed by Faber L – Learning Culture. Development Holdings Sdn Bhd (“FDH”) which obtained certification renewal in Due recognition of our quality improvement September 2007 while the Group efforts came in the form of FMS clinching successfully obtained certification renewal fourth place in the Financial, Insurance, in January 2008. On top of this, Kesan Property and Business Services category at Suci Sdn Bhd (“KSSB”), a newly the coveted 2006 National Occupational incorporated Company which focuses on Safety and Health Awards. The award was food and nutritional services for the presented by the Prime Minister at the healthcare sector, embarked on steps to Berjaya Times Square Hotel and Convention obtain MS1480:2007 (HACCP) and Center on 6 February 2007. FMS was also MS1500:2004 (Halal) certification. awarded the Gold Award at the National Innovative and Creative Circles Convention In conjunction with the Group’s ISO 2007 organised by the National Productivity 9001:2000 certification renewal, we have Centre and the Practice Solution Award enhanced and revised our Quality Policy and under the Non-listed Company Category at Quality Objectives to better reflect our the National Awards for Management ongoing quest for quality. Our Quality Policy Accounting (“NAf MA”) 2007. The NAf MA now calls for the Group to uphold the tenet awards presented by the Chartered Institute of Management Accountants (“CIMA”) and in line with FMS’ Safety, Health and Malaysian Institute of Accountants (“MIA”) Environment policy and set its sights on recognises best practices by Malaysian becoming “the partner in Integrated Support companies that lead to value creation and Services”. excellent business performance. Continual improvements in quality cannot The year under review also saw the Group be achieved without first enhancing complementing our existing continual employee knowledge and upgrading improvement programmes with the top-down employee skills or making business and Six Sigma approach. The Group undertook technological changes. As such, the Group five Six Sigma projects with total annual is committed to allocating substantial savings of RM2.66 million. During the tenure training budgets to build a competent and 53 of these projects, selected team leaders effective workforce that is focused on FABER GROUP BERHAD underwent structured training and coaching achieving a common vision and mission in 2007 annual report to complete projects which had a direct line with the Group’s corporate values. www.fabergroup.com.my impact on their KPIs. Project team leaders who complete their projects with a minimum RM500,000 cost savings will be eligible for a Green Belt, whereas project team leaders with a minimum RM1.5 million cost savings will be eligible for a Black Belt.
The Group through FMS has also adopted the “5S” management tool which focuses on establishing an organised and systematic work environment that adheres to standards and processes using the five principles of “Sort, Set in order, Shine, Standardise and Sustain”. FMS Ipoh renewed its 5S certificate in January 2007 while FMS Teluk Intan successfully received its 5S certification in December 2007. The 5S management tool is now in full swing at all FMS offices located in general hospitals as well as at selected medium-sized hospitals and plants. The Group also implemented the 3R (“Reduce, Reuse and Recycle”) Programme, an offshoot initiative of the 5S programme which falls group corporate calendar
25 and 26 january 2007 Faber Medi-Serve Sdn Bhd (“FMS”) won the 2nd Runner-Up in the UEM Group Competitive Business Simulation Challenge.
3 and 4 february 2007 Faber Development Holdings Sdn Bhd (“FDH”) re-launched its 54 410 units of Casa Desa Condominium in Taman Desa Kuala FABER GROUP BERHAD Lumpur. The unit price ranges from RM210,000 to 2007 annual report RM689,800 with built-up area ranging from 916 sq. ft. to 2,881 sq. ft. www.fabergroup.com.my
6 february 2007 FMS Perak Region clinched 4th Place in 2006 National Occupational Safety and Health Awards under Business Services Category.
28 february 2007 FMS entered into a Joint Venture Agreement (“JVA”) with Brufors Technical Services in the ratio of 70:30 respectively to undertake the provision of Building and Facilities Maintenance Services, Bio-medical Engineering Maintenance Services, Cleansing and Janitorial Services, Linen and Laundry Services, Clinical Waste Management and Central Management Information Services in Brunei Darussalam.
13 march 2007 FGB held an Analyst and Media Briefing at Kuala Lumpur Golf and Country Club announcing its 4th Quarter 2006 results and corporate developments within Faber Group of Companies. 11 april 2007 The FGB Board of Directors made a site visit to FMS Ipoh Hospital Support Services and its Laundry and Incineration plants in Kamunting.
22 may 2007 FGB held its 44th Annual General Meeting (“AGM”) at Sime Darby Convention Centre, Kuala Lumpur. The highlight of the 55 AGM was the declaration of dividends by FGB’s Board after FABER GROUP BERHAD 2007 annual report 22 years since the Group paid dividend to its shareholders in 1985. www.fabergroup.com.my
27 to 29 may 2007 Faber Group of Companies participated in the World Islamic Economic Forum (“WIEF”) 2007 under the UEM Group banner at the Putra World Trade Centre Kuala Lumpur.
19 june 2007 A group of analysts and media representatives made a familarisation visit to FMS’s Incineration and Laundry plants at Kamunting.
26 june 2007 Faber Facilities Sdn Bhd (“FFSB”) entered into a JVA with Apollo Sindoori Hotels Limited (“ASHL”) in India to undertake the provision of Healthcare and Non-Healthcare Support Services in Bio-medical Engineering Maintenance Services, Facility Engineering Maintenance Services, Cleansing, Housekeeping, Janitorial Services, Hospital Support Services and Management Information Services. FFSB will hold 51% interest in the new JVC while the remaining 49% will be held by ASHL. group corporate calendar (cont’d.)
18 july 2007 FGB Board of Directors made a site visit to witness the on-going projects in Laman Rimbunan.
19 july 2007 A group of analysts and media representatives made a site 56 visit on the on-going projects in Laman Rimbunan. FABER GROUP BERHAD 2007 annual report www.fabergroup.com.my
27 july 2007 Faber Group of Companies won five awards during the Malam Anugerah Kumpulan UEM 2007.
• Sri Sumbangsih Award for Executive won by Puan Shahdee Ahmad from FMS.
• Sri Wijaya Award won by FGB.
• Sri Cemerlang Award for People and Organisational Development category won by FGB.
• Sri Cemerlang Award for Systems and Processes Improvement category won by FGB.
• Sri Cemerlang for Image and Perception Improvement category won by FMS. 31 july 2007 Faber Group of Companies participated in the launching of the Northern Corridor Economic Region (“NCER”) under the UEM Group banner.
7 august 2007 Faber Group of Companies together with other companies in UEM Group at the KL Rate Race, an annual charity race 57 jointly organised by the Edge and Bursa Malaysia Securities FABER GROUP BERHAD 2007 annual report Malaysia Berhad.
www.fabergroup.com.my
14 and 16 august 2007 Catalyst, the team from FMS was awarded the 3-star Gold Award ie. the highest category of gold award at the National Innovative and Creative Circle (“ICC”) organised by the National Productivity Corporation at Persada Johor International Convention Centre.
29 to 31 august 2007 FMS through its subsidiary Healthtronics (M) Sdn Bhd sponsored the 6th annual Hospital Management Asia Awards held at the Dusit Resort Hotel, Pattaya, Thailand. A total of 46 presenters and moderators from 14 countries in Asia, Europe and USA participated in the event together with 282 entries contesting for the Asian Hospital Management Awards.
31 august 2007 Faber Group of Companies took part in the Merdeka Parade under the UEM Group banner, celebrating the country’s 50th Independence Day Parade at the Dataran Merdeka Kuala Lumpur. group corporate calendar (cont’d.)
6 october 2007 FMS and Radicare (M) Sdn Bhd jointly hosted a “Majlis Berbuka Puasa” with officials from Ministry of Health (“MoH”) and Sistem Hospital Awasan Taraf Sdn Bhd (“SIHAT”) at Kuala Lumpur.
2 november 2007 Faber Group of Companies together with UEM Group of 58 companies co-host in organising the UEM Group Corporate FABER GROUP BERHAD Hari Raya Open House at Kuala Lumpur. 2007 annual report www.fabergroup.com.my
14-19 november 2007 FMS participated in the Brunei Health Expo 2007 held at the International Convention Centre, Bandar Seri Begawan Brunei Darussalam.
22 november 2007 FGB Board of Directors made a visit to Prince Court Medical Centre (“PCMC”), one of the key private hospitals serviced by FMS in Facilities Engineering Maintenance Services (“FEMS”) and Bio-Medical Engineering Maintenance Services (“BEMS”).
26 november 2007 FMS participated in the 1st Bio-medical Engineering Association of Malaysia (“BEAM”) Grand Annual Dinner held at the Saujana Resort Kuala Lumpur. 30 november 2007 FGB announced its collaboration with the Ministry of Higher Education (“MOHE”) for its Corporate Social Responsibility Flagship programme focusing on Education and Human Capital Development in line with the GLC Transformation Programme.
10 december 2007 FGB through its wholly owned subsidiary, Faber Hotels Holdings Sdn Bhd entered into a conditional Share Sale Agreement with 59 Berjaya Land Berhad to dispose of its 100% equity interest in FABER GROUP BERHAD Faber Labuan Sdn Bhd (“FLSB”) for a total cash consideration 2007 annual report of USD68.22 million. FLSB was an investment holding company with 70% equity interest in Vimas Joint Venture www.fabergroup.com.my Company Limited that owns and operates the five-star, 299- room Sheraton Hanoi Hotel and Towers in Hanoi, Vietnam.
13 december 2007 FMS was awarded the National Award for Management Accounting (“NAfMA”) 2007: Practice Solution Award under the non-listed company category. The Malaysian Institute of Accountants (“MIA”) and the Chartered Institute of Management Accountants (“CIMA”) were the joint organisers and Awarding Bodies of (“NAfMA”) which recognises best practices in Management Accounting by companies in Malaysia that lead to value creation and excellent business performance.
28 december 2007 MOHE officials visited FMS Hospital Support Services office in Ipoh to have an in-sight on the services provided by FMS.
29 january 2008 FGB held an Extraordinary General Meeting at Sime Darby Convention Centre Kuala Lumpur to seek its shareholders’ approval on the conditional Share Sale Agreement between FLSB and Berjaya Land Berhad signed on 10 December 2007. group financial calendar
Financial Year Ended 31 December 2007 Announcement of Quaterly Results
60 FABER GROUP BERHAD 24 May 2007 27 August 2007 2007 annual report www.fabergroup.com.my First Quarter 2007 Second Quarter 2007 Unaudited Unaudited
15 November 2007 28 February 2008
Third Quarter 2007 Fourth Quarter 2007 Unaudited Audited
statement on corporate governance
62 FABER GROUP BERHAD 2007 annual report www.fabergroup.com.my
The Board of Directors remains fully committed to achieving and maintaining high standards of corporate governance and effective application of the principles and best practices set out in the Malaysian Code on Corporate Governance throughout Faber Group Berhad (“FGB”) and its subsidiary companies (“Faber Group”).
Faber Group has continuously and consciously cultivated the highest level of integrity in the affairs of its Board of Directors, Management and employees culminating in positive interaction with its stakeholders.
Therefore, the Board is pleased to set out below the statement, which outlines the main corporate governance practices of Faber Group. EFFECTIVENESS OF THE BOARD OF STEWARDSHIP RESPONSIBILITIES OF THE DIRECTORS BOARD OF DIRECTORS BOARD BALANCE The Board has assumed the following six The Board has the ultimate and overall specific responsibilities which facilitate the responsibility for corporate governance, discharge of the Board’s stewardship strategic direction, financial and organisational responsibilities pursuant to the Best Practices matters of Faber Group. as set out in the Malaysian Code on Corporate Governance:
The Board currently consists of the Chairman • Reviewing and adopting a strategic plan (Non-Executive), the Managing Director and for Faber Group. seven (7) other Non-Executive members. Four (4) of the Non-Executive Directors are • Overseeing the conduct of Faber Group’s 63 independent as defined by the Listing business to evaluate whether the business is being properly managed. FABER GROUP BERHAD Requirement (“LR”) of Bursa Malaysia 2007 annual report Securities Berhad (“Bursa Securities”). • Identifying principal risks and ensuring None of the directors have any personal the implementation of appropriate systems www.fabergroup.com.my vested interest in FGB. to manage these risks.
The Board is of the opinion that its current • Succession planning, including appointing, composition and size constitute an effective training, fixing the compensation of and Board to Faber Group. Furthermore, the where appropriate, replacing Senior strong representation of high caliber Management. Independent Non-Executive Directors, • Developing and implementing an investor provides the necessary balance. The role of relations programme or shareholder the Independent Non-Executive Directors is communications policy for Faber Group. important in ensuring that the strategies proposed by Management are fully discussed • Reviewing the adequacy and the integrity and deliberated, and the interests of the of Faber Group’s internal control systems shareholders, employees, customers, suppliers and management information systems, and other stakeholders are taken into including the systems for compliance consideration. with applicable laws, regulations, rules, directives and guidelines. The Board has maintained its mix of Directors from diverse professional backgrounds with a wide range of experience including expertise ROLE AND RESPONSIBILITIES OF THE in finance and corporate affairs. This provides CHAIRMAN AND THE MANAGING DIRECTOR a collective range of skills, expertise and (“MD”) experience, which is vital for the successful The role and responsibilities of the Chairman direction of Faber Group. A brief profile of and the MD are clearly defined, documented each Director is presented on pages 18 to and approved by the Board. Each has clear 23 of the Annual Report. scope of duties and responsibilities that ensures a more equitable distribution of accountabilities, this distinction also reinforces the check and balance proposition. statement on corporate governance (cont’d.)
The Chairman of the Board is a Non-Executive APPOINTMENT TO THE BOARD Director and together with the Board, is BOARD APPOINTMENT PROCESS responsible for setting the policy framework The Nomination and Remuneration Committee within which Management is to work. His is responsible for recommendation of main responsibility is to lead and manage appointment to the Board. Any new the work of the Board in order to ensure that nomination received is forwarded to the it operates effectively and fully discharges Board for assessment and endorsement. The its legal and regulatory responsibilities. He duties and responsibilities of the Nomination serves as the main liaison person between and Remuneration Committee are outlined the Board and Management. Together with on pages 66 and 67 of this report. the other Non-Executive and Independent Directors, he leads the discussion on the 64 strategies and policies recommended by BOARD ASSESSMENT FABER GROUP BERHAD Management. He also chairs the meetings 2007 annual report of the Board, Extraordinary General Meeting As prescribed by the Government Linked and Annual General Meeting. Companies Transformation Manuals, www.fabergroup.com.my particularly ‘the Green Book’, the Board The MD is primarily responsible for overseeing appointed Messrs Ernst & Young (“EY”) to the day-to-day operations. He is accountable carry out a Board Effectiveness Assessment for leading the Management team, (“BEA”) on the Board of FGB and a number implementing the policies/decisions approved of non-wholly-owned subsidiary companies by the Board, building a dynamic corporate of FGB, namely Faber Medi-Serve Sdn Bhd, culture and acting as Faber Group’s official Healthtronics (M) Sdn Bhd and Rimbunan spokesperson. He is also responsible for Melati Sdn Bhd. mapping the medium to longer term strategies including policies and decisions for the The BEA was aimed to assist FGB Board to Board’s deliberation and approval and raise effectiveness in the following areas: making sure that they are carried through • to structure high-performing Board. their desired outcomes and address any shortcomings identified. He carries the • to ensure effective day-to-day Board primary responsibility for ensuring operations and interactions. management competency including effective • to fulfil the Board’s fundamental roles succession planning to sustain continuity. and responsibilities at best practice level.
At the onset of each financial year, the The Chairman of FGB was designated as the Board considers and approves a set of Key Director to lead the BEA and the Board in Performance Indicators (“KPIs”) and the effort to raise its effectiveness. expectations on the basis of the Scorecard for the MD, which is then cascaded down to The BEA has been completed in 2007 and Head Of Companies and Senior Management during the year, action plans recommended of Faber Group. This serves as a yardstick by EY were implemented. These action against which his performance will be plans include, inter-alia, review of the Terms measured, evaluated and rewarded. of Reference of the Board and Board Committees, conduct of the annual performance evaluation (as a whole and peer review) of Board and Board Committees and ratings of Board papers. RE-ELECTION SUPPLY OF INFORMATION In accordance with the Articles of Association, The Board has full and unrestricted access all members of the Board shall retire from to all information pertaining to Faber office at least once in three (3) years but Group’s business and affairs to enable it to shall be eligible for re-election. discharge its duties effectively. Further, the Board also expects timely information and advice to be furnished on all material DIRECTORSHIPS IN OTHER COMPANIES information. Pursuant to the LR of Bursa Securities, each member of the Board holds not more Every Director has unhindered access to the than ten (10) directorships in any public advice and services of the Company companies and not more than fifteen (15) Secretary, whose terms of appointment 65 directorships in non-public listed companies. permit her removal and appointment only by the Board as a whole. FABER GROUP BERHAD This ensures that their commitment, resources 2007 annual report and time are focused to enable them to discharge their duties effectively. The The Board of Directors terms of reference www.fabergroup.com.my directorships of each director are set out in also provide the opportunity to seek the Profile of Directors set out on pages 18 independent professional advice, where to 23 of the Annual Report. necessary, at the expense of the respective companies within Faber Group.
BOARD MEETINGS To ensure effective management of Faber Group, the Board meetings are convened regularly during the year. Additional meetings are also convened on an ad-hoc basis with formal agenda for the Board to deliberate on urgent issues that require immediate decision-making. Agenda for each Board Meeting is forwarded to each member of the Board well in advance of the Board meeting.
A total of twelve (12) Board meetings were held during the financial year ended 31 December 2007. The details of the Directors’ attendance are as follows:-
Name of Director Status No. of Meetings Attended Dato’ Anwar bin Aji Non-Independent, Non-Executive Chairman 12/12 Datuk Zainal Abidin bin Alias Senior Independent, Non-Executive Director 11/12 Datuk Mohamed Zain bin Independent, Non-Executive Director 12/12 Mohamed Yusuf Elakumari a/p Kantilal Non-Independent, Non-Executive Director 11/12 Puasa bin Osman Independent, Non-Executive Director 12/12 YM Raja Azmi bin Raja Nazuddin Non-Independent, Non-Executive Director 10/12 Adnan bin Mohammad Managing Director 9/9 (appointed with effect from 1 April 2007) Dato’ Rosli bin Shariff Non-Independent, Non-Executive Director 3/5 (appointed with effect from 28 June 2007) statement on corporate governance (cont’d.)
Name of Director Status No. of Meetings Attended Oh Kim Sun Independent, Non-Executive Director 2/2 (appointed with effect from 28 September 2007) Noorizah binti Hj. Abd. Hamid Managing Director 3/3 (resigned with effect from 1 April 2007) Dato’ Ikmal Hijaz bin Hashim Non-Independent, Non-Executive Director 5/7 (resigned with effect from 28 June 2007) Dato’ (Dr.) Mohamed Ishak @ Independent, Non-Executive Director 6/7 66 Ishak bin Haji Mohamed Ariff (resigned with effect from 1 August 2007) FABER GROUP BERHAD 2007 annual report www.fabergroup.com.my BOARD COMMITTEES Nomination and Remuneration Committee The Board has delegated certain specific The Nomination and Remuneration Committee responsibilities to the Board Committees, comprises of three (3) Non-Executive namely the Audit and Risk Committee, Directors, a majority of whom are independent Nomination and Remuneration Committee and is made up of the following members:- and Investment Committee which operates Name of Director Status with clearly defined terms of reference Datuk Mohamed Zain Independent, primarily to assist the Board in the execution bin Mohamed Yusuf Non-Executive of its duties and responsibilities. The Minutes (Chairman)* Director of the respective Committee Meetings is submitted to the Board for notation and Datuk Zainal Abidin Senior deliberations by the Board. The Chairman of bin Alias Independent, the various committees will report to the Non-Executive Board the outcome of the Committee Director meetings and are incorporated in the YM Raja Azmi bin Non-Independent, minutes of the full Board meeting. Although Raja Nazuddin Non-Executive the Board has granted authority to the Director committees to deliberate and decide on certain operational matters, the ultimate * Datuk Mohamed Zain bin Mohamed responsibility for final decision on all Yusuf was appointed as Chairman of the matters lies with the entire Board. Nomination and Remuneration Committee on 28 September 2007, in place of Audit and Risk Committee Dato’ Dr. Mohamed Ishak @ Ishak bin The full Audit and Risk Committee (“ARC”) Haji Mohamed Ariff who resigned as report including its membership, composition, Director of FGB on 1 August 2007. roles and responsibilities are laid down on pages 77 to 83 of the Annual Report. The terms and reference of the Nomination • Advise the Board on the performance of and Remuneration Committee are as follows: the Executive Directors, MD, Chief Executive Officer and other special • Examine the size of the Board with a grade staff and an assessment of his/her view to determine the number of entitlement to performance related pay. Directors on the Board in relation to its effectiveness. • Review the history of and proposals for the remuneration package of the • Review annually its required mix of Company’s Committees. skills and experience and other qualities, including core competencies, which non- The Nomination and Remuneration Committee executive Directors should bring to the has met six (6) times during the financial Board. year ended 31 December 2007: 67 • Recommend suitable orientation, Name of Director Number of FABER GROUP BERHAD educational and training programmes to Meetings 2007 annual report continuously train and equip the Attended Directors. www.fabergroup.com.my Datuk Mohamed Zain bin 4/5 • Ensure that the appointment of any Mohamed Yusuf Executive Director or MD of FGB shall Datuk Zainal Abidin bin Alias 6/6 be for a fixed term not exceeding three years at any one time with power to re- YM Raja Azmi bin 5/6 appoint, remove or dismiss thereafter. Raja Nazuddin Dato’ Dr. Mohamed Ishak @ 4/4 • Recommend to the Board, candidates Ishak bin Haji Mohamed Ariff for all directorships proposed by the MD, (resigned with effect from and within the bounds of practicality, by 1 August 2007) any other senior executive or any director or shareholder and to recommend Investment Committee to the Board candidates to fill the Audit, FGB established a committee of the Board Nomination, Remuneration and other known as Investment Committee made up of Board Committees. the following members:-
• Assess annually the effectiveness of the Name of Director Status Board as a whole, the committees of the Dato’ Anwar bin Aji Non-Independent, Board and the contribution of each (Chairman) Non-Executive individual Director based on the process implemented by the Board. Datuk Mohamed Zain Independent, bin Mohamed Yusuf Non-Executive • Set, review, recommend and advise the Director policy framework on all elements of the YM Raja Azmi bin Non-Independent, remuneration such as reward structure, Raja Nazuddin Non-Executive fringe benefits and other terms of Director employment of Executive Directors, MD, the Chief Executive Officer and other Adnan bin Mohammad Managing Director (appointed with effect special grade staff having regard to the from 3 May 2007) overall Faber Group’s policy guidelines/ framework. statement on corporate governance (cont’d.)
The objectives of the Investment Committee The Investment Committee met six (6) are, inter-alia, as follows: times during the year ended 31 December 2007: • to assist the Board of Directors of FGB in evaluating all investment proposals Name of Director Number of including acquisitions and disposals of Meetings assets, or investments into new and/or Attended existing businesses including venture Dato’ Anwar bin Aji 6/6 capital, locally and abroad. (Chairman) • to review the viability of proposals/ Datuk Mohamed Zain bin 5/6 projects/investments at the initial project Mohamed Yusuf 68 assessment stage and to provide YM Raja Azmi bin 6/6 appropriate directions with investment Raja Nazuddin FABER GROUP BERHAD concept proposals. 2007 annual report Adnan bin Mohammad 4/5 • to review, recommend and act on any (appointed with effect from other investment proposals and matters 3 May 2007) www.fabergroup.com.my related thereto, as mandated by the Noorizah binti Hj. Abd. Hamid 1/1 Board. (resigned with effect from 3 May 2007)
In accordance with its Terms of Reference, the Investment Committee shall comprise a DIRECTORS’ REMUNERATION minimum of three (3) Directors, one of whom shall be from the majority/substantial Directors’ remuneration is determined at shareholder of FGB. levels which enable Faber Group to attract and retain Directors with the relevant Principal duties and responsibilities of the experience and expertise needed to manage Investment Committee include: Faber Group effectively.
• Review and recommend to the Board the investment policies and strategies.
• Review investment matters within the joint venture companies within the Faber Group to provide check and balance in respect of investment matters undertaken by the said companies.
• Review other investment matters as the Board deems appropriate and in the best interest of Faber Group. The breakdown of the remuneration of the Directors of FGB payable as well as subsidiary companies of FGB where they are a Board member for the financial year ended 31 December 2007, by category are shown below:
Executive Non-Executive Director Director Total (RM’000) (RM’000) (RM’000) Fees* 90 606 696 Allowance 16 135 151 Salaries 450 — 450 Bonus 307 — 307 CEPF 113 — 113 69 Estimated Value Benefits-in-kind 58 63 121 FABER GROUP BERHAD 2007 annual report Employee Equity Scheme 162 — 162 Total 1,196 # 804 2,000 www.fabergroup.com.my Notes: * These fees and allowances are Directors’ fees and meeting allowances payable by the subsidiary companies of FGB. Based on Faber Group’s policy, Directors’ fees and meeting allowances receivable by employees of FGB from its subsidiary companies have to be paid directly to the company that employed them. # Remuneration of Managing Directors of FGB, namely, Noorizah Hj. Abd. Hamid from 1.1.2007 to 1.4.2007 and Adnan bin Mohammad from 1.4.2007 to 31.12.2007 of RM674,934 and RM414,683 respectively.
The number of directors whose total remuneration during the year fall within the following band are as follows:
Non-Executive Range of directors’ remuneration Director Executive Director Total Below – RM50,000 4 — 4 RM50,001 – RM100,000 3 — 3 RM100,001 – RM150,000 2 — 2 RM150,001 – RM200,000 1 — 1 RM400,001 – RM450,000 — 1 1 RM650,001 – RM700,000 — 1 1
DIRECTORS’ CONTINUAL PROFESSIONAL DEVELOPMENT All Directors have and successfully completed the Mandatory Accreditation Programme. During the year, the Directors have attended various seminars and training programmes to gain insights into the latest regulatory and industry developments in relation to the Faber Group’s businesses. statement on corporate governance (cont’d.)
INVESTOR RELATIONS AND Faber Group’s performance and the current SHAREHOLDERS COMMUNICATIONS issues faced by the business. These The Board acknowledges the need for briefings enable a direct dialogue to be shareholders to be informed of all material established on the affairs of Faber Group matters affecting Faber Group. It recognises with the investing community. and practices transparency and accountability to its shareholders and A key element of effective communication investors through formal channels of with shareholders and investors is the communication. In addition to various prompt and timely dissemination of announcements made during the year, the information in relation to Faber Group. timely release of quarterly financial reports Disclosures of information requiring 70 provides shareholders with an overview of immediate release as specified by Bursa Faber Group’s performance and operations. Securities have been complied with. Faber FABER GROUP BERHAD The Annual Report communicates Group has consistently released its quarterly 2007 annual report comprehensive and adequate details of the financial results within the Bursa Securities financial results and activities undertaken deadlines. www.fabergroup.com.my by Faber Group. Faber Group views the timeliness, accuracy Annual General Meetings and Extraordinary and reliability of information disseminated General Meetings provide a means of to the shareholders, stakeholders and communicating with shareholders where investment community as crucial. In this they are at liberty to raise questions. The regard and for the purpose of maintaining Chairman and the Board members of FGB better control over disclosure, the MD of and the Management of Faber Group are FGB has been designated as the spoke- prepared to answer any queries and person of Faber Group. undertake to provide sufficient clarification on issues and concerns raised by the The website at www.fabergroup.com.my also shareholders. The External Auditors and provides an avenue for shareholders and independent advisors are also present to members of the public to access information provide their professional and independent pertaining to Faber Group. The website is clarifications, if required. A press updated regularly. Further to the website, conference is held immediately after general timely announcements are also made to meetings to allow the Directors and the Bursa Securities on corporate proposals, Management to meet members of the media meetings, announcements, financial to clarify or explain enquiries on Faber reporting and all other announcements that Group. are required pursuant to the LR of Bursa Securities. Faber Group recognised the need for an independent third party assessment. Primary contact for Investor Relations Matters: Towards achieving this end, the Masela Ibrahim Management conducts dialogues and Deputy General Manager briefings with the financial analysts, brokers Corporate Communication Department and institutional fund managers and Contact Details: investors on Faber Group’s financial results, Telephone No: 03-76282848 performance and business development. Email: [email protected] This is to ensure that the investing public receives a balanced and complete view of CORPORATE SOCIAL RESPONSIBILITY • Collaboration with Ministry of Higher (“CSR”) Education (“MOHE”) for its Corporate Faber Group is committed to the communities Social Responsibility Flagship programme in the environment it operates. It recognises focusing on Education and Human that for long-term sustainability, its strategic Capital Development to develop skilled orientation will need to look beyond the workforce especially in the areas of financial parameters. Hence, Faber Group Facilities Engineering Maintenance supports important causes such as donation Services (“FEMS”) and Bio-Medical to the needy and community services. Engineering Maintenance Services (“BEMS”). MOHE is currently working During the year under the review, Faber closely with Faber Group to develop the Group has initiated several CSR related modules for Diploma in Facilities 71 projects: Maintenance and Management, and a Diploma in Bio-Medical Engineering FABER GROUP BERHAD • Contribution of RM100,000 for new Maintenance, of which the targeted 2007 annual report computer lab set-up in one of the needy completion date are in May 2008, schools. whilst the first student intake will be in www.fabergroup.com.my • Contribution via UEM Group to Ministry July 2008. of Natural Resources & Environment to help enhance the awareness of environmental protection campaign and ACCOUNTABILITY AND AUDIT other initiatives. The Board is committed to providing a clear, balanced and comprehensive account • Sponsorship of a Haemodialysis Machine on the financial position of Faber Group for Putra Specialist Hospital, Melaka for through quarterly and half yearly the poor. announcements of its results as well as •Sponsorship for ‘Program Khas Pemberian through the Chairman’s review and statement Sumbangan Sambutan Hari Raya Aidil of operations in FGB’s Annual Report. Fitri’ for the poor.
• Joint sponsorship with UEM Group for DIRECTORS’ RESPONSIBILITY IN RESPECT ‘Tears of Trees’ eco play by Yayasan OF THE PREPARATION OF THE ANNUAL Budi Penyayang at UNEP Governing FINANCIAL STATEMENTS Council Conference in Nairobi, Kenya. The Directors are required under the • Sponsorship of health programme for the provisions of the Companies Act 1965 to elderly. ensure that the financial statements are • Donation in cash and employees’ prepared in accordance with applicable volunteering in flood relief exercise in Financial Reporting Standards in Malaysia. the East Coast of Peninsular Malaysia in The Board is responsible for ensuring that a joint effort with UEM Group. the financial statements gives a true and fair view of the state of affairs of FGB and Faber Group at the end of the financial year 31 December 2007 and the profit and loss and cash flow for the period. statement on corporate governance (cont’d.)
In preparing the financial statements, the RELATIONSHIP WITH THE AUDITORS Directors have applied suitable accounting The Board, through the ARC maintains a policies and applied them consistently. The transparent and professional relationship Directors have also ensured that all with the internal and external auditors. The applicable accounting standards have been ARC has been explicitly accorded the followed and prepare the financial authority to communicate directly with both statements on a going concern basis. the internal and External Auditors. Currently, Messrs Ernst & Young provides independent The ARC assists the Board in overseeing the and professional external auditing services financial reporting process and reviews the to Faber Group. quarterly results and annual accounts before 72 it is approved by the Board of Directors and The full report of the ARC outlining its role released to Bursa Securities. in relation to the Internal and External FABER GROUP BERHAD Auditors is set out on pages 75 to 76 of 2007 annual report this Annual Report. STATEMENT OF INTERNAL CONTROL www.fabergroup.com.my The Board has overall responsibility for the system of internal control which includes STATEMENT OF COMPLIANCE WITH BEST financial controls, operational and compliance PRACTICES controls and risk management to ensure The Board considers that it has complied that shareholders’ investments, customers’ with Best Practices set in accordance with interests and company’s assets are the Malaysian Code of Corporate Governance. safeguarded.
The Directors’ Statement of Internal Control set out on pages 73 to 76 of this Annual Report provides an overview of the state of internal controls within Faber Group. statement on internal control
RESPONSIBILITY OF THE BOARD Risk Management Policy The Board of Directors is responsible for The objective of the Risk Management 73 Policy is to put in place adequate and Faber Group Berhad (“FGB”) and its FABER GROUP BERHAD subsidiary companies (“Faber Group”)’s effective risk management process, provide 2007 annual report system of internal control to safeguard the reasonable assurance to the Board of shareholders’ interest and Faber Group’s Directors and increase shareholders’ value www.fabergroup.com.my assets as prescribed by the Malaysian Code and assertion on the state of risks and on Corporate Governance. controls.
The Board acknowledges that the system of The key objectives of Faber Group’s risk internal controls is designed to manage management are as follows: rather than eliminate the risk of failure to • Optimise return and protect the interests achieve business objectives and can only of stakeholders provide reasonable and not absolute assurance against material misstatement, • Safeguard Faber Group’s assets and loss and fraud. maintain its reputation • Improve Faber Group’s operating The Board has established an on-going performance process for identifying, evaluating and managing the significant risks faced by • Fulfil Faber Group’s strategic objectives Faber Group. This process includes updating • Reduce risks of material misstatement the system of internal controls when there in the financial statements are changes to business environment or regulatory requirements. The Board has Risk Management Process established procedures to implement the The Risk Management Framework provides a recommendations of the ‘Statement of systematic approach on how to identify, Internal Control: Guidance for Directors of evaluate and manage Faber Group’s risks. Public Listed Companies’ for the Group. The key elements of the process are:
• Risk identification and reviewing existing ENTERPRISE WIDE RISK MANAGEMENT risks and establishing internal controls (“EWRM”) to manage the identified risks. Risk Management is regarded as an integral • Risk monitoring and review where Faber part of management process and iterative Group needs to monitor the risks on an process of continual improvement. Faber ongoing basis and in a consistent Group has developed a Risk Management manner. Framework Manual since 2004 to facilitate a systematic approach to risk management. statement on internal control (cont’d.)
•Presentation of key risks to the Risk people in Faber Group. In recognising the Management Steering Committee importance of control environment in the (“RMSC”) on half yearly basis for their overall governance process, the Board of review and discussion. FGB has instituted the following:
•Presentation of the significant risks, • Appointment of four (4) Independent the internal controls in place and Directors who are to ensure that management action plans to manage the strategies proposed are fully discussed risks to the Audit and Risk Committee and evaluated. (“ARC”) and Board every half yearly • Appointment of Board Committees, for recommendation and approval including the ARC to assist the Board to respectively. oversee the overall management of 74 principal areas of risk and evaluate the FABER GROUP BERHAD adequacy and effectiveness of the risk INTERNAL CONTROL PROCESSES 2007 annual report management and internal control Control Self-Assessment (“CSA”) systems. Whilst the Investment Committee www.fabergroup.com.my The CSA process has been established to and Nomination & Remuneration create increased appreciation of risks and Committee have been delegated with control towards achieving Faber Group’s specific responsibilities with terms of business objectives. This is achieved by reference, these committees have the empowering the employees to take full authority to examine all matters within ownership and accountability of the their scope of responsibility and report respective controls within their area of back to the Board with their responsibility. The Internal Audit Department, recommendations for the Board’s acting as a facilitator, regularly reviews the decision. results of the CSA via the E-confess, a computerised system database of the CSA Code of Ethics and Conduct result, monitoring and following up on areas • Faber Group has a Code of Ethics and that requires improvement. The E-confess is Conduct that sets out principles and currently undergoing enhancement and will standards of good practice relating to be renamed as Facility Manager’s (“FM”) lawful and ethical dealings in the Performance Measurement. conduct of its business.
Another subsidiary, Faber Facilities Sdn Bhd • Employees are required to uphold the has also embarked on the implementation of highest integrity in discharging their the CSA for their facility management duties and in their dealings with operations, which will be completed in 2008. customers, employees and regulators in the communities in which Faber Group Other Key Internal Control Elements operates. This code is communicated to The Board recognises the importance of key all employees upon recruitment. internal control elements to provide discipline and firm structure to Faber Organisational Structure Group. The control environment sets the • The organisational structure of Faber tone of Faber Group. It is the foundation of Group is clear and detailed, defining the all other components of internal control, roles and responsibilities to the various providing the discipline and structure. It committees of the Board, Management influences the control consciousness of the of the Corporate Office and subsidiary companies. • Appointment of Managing Director Human Resources Management (“MD”)/Chief Executive Officer (“CEO”) • Formal appraisals are conducted in the management of the subsidiary periodically guided by Key Performance companies within Faber Group. The Indicator Scorecard System where MD/CEO’s appointment, roles and strategy is translated into operational responsibilities, and authority limits are terms and is used as a Performance set by the respective Board. Measurement Tool.
• Emphasis is given on training and Policies and Procedures development to enhance the quality, • Establishment of a clear Faber Group’s ability and competencies of the vision, mission and strategic direction. employees of Faber Group. • Clear delegation of authority are defined 75 in the Discretionary Authority Limit, Internal Audit Department (“IAD”) FABER GROUP BERHAD which sets the limit for operating and • Review of the internal control system is 2007 annual report capital expenditure for each level of carried out on regular basis by IAD. management within Faber Group. Results of such reviews are reported www.fabergroup.com.my regularly to the ARC. The work of IAD is •Written Policies and Procedures are based on areas of priority as identified established at all level within Faber in the Risk Assessment Exercise, which Group. These policies and procedures is described in detail under EWRM above are reviewed regularly and updated when and in accordance with the Annual necessary. Audit Plan approved by the ARC. The • Establishment of Performance Monitoring ARC holds regular meetings to deliberate and Budgetary System as tools for on findings and recommendations for Management to monitor performance improvements by both the Internal and and measure against the strategic plan External Auditors on the state of the approved by the Board, covering all key internal control system, and report back financial and operational indicators. A to the Board. Internal control weaknesses detailed budgeting process is established identified during the financial period requiring all key operating companies in under review have been or are being Faber Group to prepare budgets annually, addressed by Management. None of the which are discussed and approved by weaknesses has resulted in any material the Board. Effective reporting system on loss that would require disclosure in actual performance against approved Faber Group’s financial statement. budgets is in place and significant • Review of the establishment of a RMSC variances are followed up by Management. involved in the assessment and •Availability of a computerised financial management of risks at varying degree system that produces monthly at various levels. management financial statements and quarterly forecast performances which allows Management to focus on areas of concern. statement on internal control (cont’d.)
REVIEW OF THE STATEMENT BY EXTERNAL RPG 5 does not require the External AUDITORS Auditors to consider whether the Directors’ The External Auditors, Messrs Ernst & Young Statement on Internal Control covers all have reviewed and affirmed this Statement risks and controls, or to form an opinion on of Internal Control for inclusion in the annual the effectiveness of Faber Group’s risk and report of FGB for the financial year ended control procedures. The Guide also does not 31 December 2007. require the External Auditors to consider whether the processes described to deal The External Auditors conducted the review with material internal control aspects of any in accordance with the “Recommended significant matter disclosed in the annual Practice Guide 5: Guidance for Auditors on report will, in fact, mitigate the risks 76 the Review of Director’s Statement on identified or remedy the potential problems. Internal Control” (“RPG 5”) issued by the FABER GROUP BERHAD Malaysia Institute of Accountants. The Based on their review, the External Auditors 2007 annual report review has been conducted to assess have reported to the Board that nothing had whether the Statement on Internal Control is come to their attention that caused them to www.fabergroup.com.my both supported by the documentation believe that the Statement on Internal Control prepared by or for the Directors and is inconsistent with their understanding of appropriately reflects the process the the process the Board has adopted in the Directors had adopted in reviewing the review of the adequacy and integrity of adequacy and integrity of the system of internal control of Faber Group. internal controls of Faber Group. audit and risk committee report
MEMBERSHIP The Audit and Risk Committee (“ARC”) members comprised wholly of non-executive directors 77 with the majority of the members being independent. The members during the financial year FABER GROUP BERHAD ended 31 December 2007 are as follows:- 2007 annual report
Oh Kim Sun # Chairman www.fabergroup.com.my Independent Non-Executive Director (appointed on 28 September 2007)
Datuk Zainal Abidin bin Alias Member Senior Independent Non-Executive Director
Datuk Mohamed Zain bin Mohamed Yusuf Member Independent Non-Executive Director
Elakumari a/p Kantilal* Member Non-Independent Non-Executive Director
YM Raja Azmi bin Raja Nazuddin* Member Non-Independent Non-Executive Director
Dato’ (Dr.) Mohamed Ishak @ Ishak bin Chairman Haji Mohamed Ariff Independent Non-Executive Director (resigned on 1 August 2007)
# Member of the Malaysian Institute of Certified Public Accountants * Member of the Malaysian Institute of Accountants
Faber Group Berhad (“FGB”) and its subsidiary companies (“Faber Group”) have complied fully with Para 15.10 of the Listing Requirement (“LR”) of Bursa Malaysia Securities Berhad (“Bursa Securities”), which requires all ARC members to be non-executive directors and the majority of the ARC to be Independent Directors. audit and risk committee report (cont’d.)
MEETINGS The ARC met on a scheduled basis at least once every quarter. Minutes of each meeting are distributed to each member of the Committee. The Chairman of the ARC reports on each ARC meeting to the Board of FGB. During the financial year ended 31 December 2007, the ARC held meetings on 5 January 2007, 21 February 2007, 23 March 2007, 21 May 2007, 14 August 2007 and 12 November 2007, a total of six (6) meetings. The ARC papers for the meetings were distributed to the members with sufficient notification. The details of the attendance of the ARC members are as follows;
NUMBER OF COMMITTEE MEETINGS
COMPOSITION OF ARC HELD ATTENDED 78 Oh Kim Sun (Chairman) 1 1 (appointed on 28 September 2007) FABER GROUP BERHAD 2007 annual report Datuk Zainal Abidin bin Alias (Member) 6 6 Datuk Mohamed Zain bin Mohamed Yusuf 6 6 www.fabergroup.com.my (Member) Elakumari a/p Kantilal (Member) 6 4 YM Raja Azmi bin Raja Nazuddin (Member) 6 5 Dato’ (Dr.) Mohamed Ishak @ Ishak bin 5 5 Haji Mohamed Ariff (Chairman) (resigned on 1 August 2007)
The Managing Director, General Manager of Internal Audit of FGB, Senior Management of subsidiary companies and representatives from the External Auditors attended these meetings upon invitation. The Company Secretary shall be the secretary of the Committee.
SUMMARY OF ACTIVITIES OF THE standards approved by the COMMITTEE Malaysian Accounting Standards The ARC met six times during the financial Board. year ended 31 December 2007. The activities of the ARC for the financial year were as 2. Reviewed the unaudited quarterly follows:- financial results and announcements to Bursa Securities before A. Financial Results and Corporate recommending to the Board for Governance approval. 1. Reviewed the annual report and the audited financial statements 3. Attended relevant briefings and of FGB prior to submission to the seminars conducted internally Board for their consideration and within the UEM Group and external approval. The review was to parties and/or professional ensure that the audited financial associations to keep abreast with statements were drawn up in the latest practice, development accordance with the provision of and updates pertaining to duties Companies Act, 1965 and the and responsibilities and functions applicable approved accounting of an ARC. 4. Reviewed recurrent related party 6. Reviewed the staffing requirements transactions of a revenue or of the IAD and the core trading in nature to ascertain as competencies of the internal to whether they are undertaken at auditors to ensure that internal arm’s length basis on normal audit can be carried out effectively commercial terms not detrimental and efficiently. to minority shareholders. 7. Assessed and determined the 5. Reviewed the application of performance rating of the General corporate governance principles Manager IAD. The remuneration, and the Group’s compliance with annual increment and performance the best practices set out under related incentives of the General the Malaysian Code on Corporate Manager IAD was decided by the 79 Governance for the purpose of ARC. FABER GROUP BERHAD preparing the Corporate Governance 2007 annual report Statement and Statement on C. External Audit Internal Control pursuant to the 1. Reviewed with the External www.fabergroup.com.my LR of Bursa Securities. Auditors:
• their audit plan, audit strategy B. Internal Audit and Risk Management and scope of work for the 1. Reviewed the annual audit plan year. to ensure adequate scope and comprehensive coverage over the • the results of the annual audit activities of Faber Group. audit, their audit report and management letter together 2. Reviewed the effectiveness of with Management’s response the audit process, resource to the findings of the External requirements for the year and Auditors. assessed the performance of the Internal Audit Department (“IAD”). 2. Assessed the independence and objectivity of the External Auditors 3. Reviewed and deliberated the during the year and prior to the audit report produced by the IAD appointment of the External and those conducted by the UEM Auditors for non-audit services. Group Management, Improvement & Assurance Services Division. 3. Evaluated the performance and effectiveness of the External 4. Monitored the corrective actions Auditors and made on the outstanding audit issues to recommendations to the Board of ensure that all the key risks and Directors on their appointment control lapses have been addressed. and remuneration.
5. Reviewed the audit methodology 4. Have a minimum of two meetings of the IAD in assessing and rating annually with the External risks of auditable areas and Auditors without the presence of ensure that all high and critical the Management. risk areas are given focus. audit and risk committee report (cont’d.)
TERMS OF REFERENCE OF ARC have at least 3 years’ working A. Objectives experience and fulfills the The primary function of the ARC is to requirements as prescribed assist the Board to implement and under the LR of Bursa support the following oversight Securities. objectives for FGB: C. Meetings 1. Fulfil its fiduciary responsibilities Meetings shall be held not less than relating to FGB’s accounting four (4) times a year. A quorum shall policies and internal controls, consist of three (3) members of which financial reporting practices and two are independent directors. business ethics policies. 80 The Secretary of the Committee shall FABER GROUP BERHAD 2. Evaluate the internal and external attend each ARC and record the 2007 annual report audit process including the review proceedings of meeting. of the adequacy of scope, www.fabergroup.com.my functions and reporting of internal D. Authority and external auditors. The Committee shall have the authority to: 3. Maintain through regularly schedule meetings, a direct line 1. Investigate any matter within its of communication between the term of reference. Board, External Auditors, 2. Obtain resources which are Management and Internal Auditors. required to perform its duties.
4. Undertake such additional duties 3. Access to any information, as may be appropriate when records, properties and personnel necessary and to assist the Board. of Faber Group. 4. Communicate with the External B. Composition Auditors and persons carrying out 1. The ARC shall be appointed by the Internal Audit Function or the Board of Directors and shall activity if any. consist of not less than three (3) members, all of whom shall be 5. Obtain independent professional Non-Executive Directors. The or other advice and to invite majority of the ARC members outsiders with relevant experience shall be independent directors. to attend the ARC meetings (if required) and to brief the ARC 2. At least one (1) member of the thereof. ARC: 6. Convene meeting with External (i) Must be a member of the Auditors, without the presence of Malaysian Institute of Management. Accountants: or 7. Access to reports on findings and (ii) If he/she is not a member of recommendations from IAD in the Malaysian Institute of respect of any fraud or irregularities Accountants, he/she must discovered and referred to IAD by the Management. E. Duties and Responsibilities 2. External Audit In fulfilling its objectives, the ARC shall • Review with the External undertake the following responsibilities Auditors their audit plan, and duties: scope of their audits, their 1. Internal Audit and Risk evaluation of the system of Management internal controls and their audit report. • Approve the Internal Audit Charter or its equivalent, • Assess the performance of the which defines the independent External Auditors and make purpose, authority, scope and recommendations to the responsibility of IAD in FGB. Board of Directors on their appointment and remuneration. •Review the adequacy of 81 scope, functions, competency • Recommend to the Board the FABER GROUP BERHAD and resources of IAD and that annual appointment of a 2007 annual report it has necessary authority to suitable accounting firm to act carry out its work. as External Auditor, negotiate www.fabergroup.com.my on the annual audit fee and/or • Review the Internal Audit and additional fee, consider any Risk Management Programme, letter of resignation or processes, the results of the dismissal and evaluate the Internal Audit and Risk basis of billings, if requested. Management Programme Amongst the factors to be processes or investigations considered for the appointment undertaken, whether or not are the adequacy of the appropriate action is taken on experience and resources of the recommendations of IAD. the firm, the persons assigned • Review the Internal Audit and to the audit and the Risk Management reports, recommended audit fee which highlight the operational payable thereof. risks, recommendation and •Discuss with the External Management’s action plan. Auditors before the audit • Approve any appointment or commences the nature and termination of senior members scope of the audit, the annual of the IAD. audit plan and ensure co- • Be informed of resignations of ordination where more than senior members of the IAD one audit firm is involved. and provide the resigning staff • Review the independence and member an opportunity to objectivity of the External submit his reason for resigning. Auditors and their services, • Act upon the Board of including non-audit services. Directors’ request to investigate • Discuss problems and and report on any issues or reservations arising from the concerns with regards to the interim and final audits and Management of Faber Group. any matter the auditor may • Consider the major findings of wish to discuss in the absence internal investigation and of the Management when Management’s response. necessary. audit and risk committee report (cont’d.)
• Review the External Auditor’s • Act upon the Board of Management Letter, Directors’ request to investigate Management Response and and report on any issues or Audit Report. concerns in regard to the • Review the assistance and Management of Faber Group. cooperation given by FGB and FGB’s Officers to the External and Internal Auditors. INTERNAL AUDIT FUNCTION The IAD assists the ARC in the discharge of 3. Financial Reporting its duties and responsibilities. Its role is to Review the quarterly interim provide independent and reasonable results and annual audited assurance that the systems of internal 82 financial statement of FGB, controls are adequate and effective. FABER GROUP BERHAD before recommending to the 2007 annual report Board for deliberation, focusing The ARC is strongly supported by an in- particularly on: house IAD. The principal roles of the IAD www.fabergroup.com.my • Any changes in accounting are:- policies and practices. •To ensure that a sound internal control • Significant adjustments arising system is in place and the system is from the audit. functioning adequately and its integrity • The going concern assumption. is maintained. • Compliance with accounting •To provide independent and objective standards and other legal evaluation of the operational systems requirements. with the view to add value and improve 4. Related Party Transactions Faber Group’s operational efficiency, Review any related party effectiveness and economy. transactions and conflict of •To ensure that a systematic and interest situation that may arise disciplined approach in evaluating and within Faber Group including any improving the effectiveness of risk transaction, procedure or course management, control and governance of conduct that raised the process is adopted. question of Management integrity.
5. Others During the year under review, the IAD •Promptly report to Bursa underwent an external Quality Assessment Securities matters, which Review (“QAR”) to ensure its work practices result in a breach of the LR. are in accordance with the International Standards for the Professional Practice of • Consider and evaluate other Internal Auditing. matters as judged appropriate by the ARC or as authorised by the Board and as required by the general requirements set up by local authorities or any other government authorities. As at 31 December 2007, IAD has 7 auditors of various mix of expertise and experiences as tabulated below:
EXPERTISE/RESOURCES WITHIN IAD Category % Finance & Accounting 84 Economics/Social Studies 16 AUDIT PROFESSIONALS Category % Master in Business Administration (MBA) 14 Certified Internal Auditor (CIA) 28 CIA/CSSA/ACCA/CPA internship 44 83 CIMA 14 FABER GROUP BERHAD 2007 annual report For the financial year ended 31 December 2007, the staff related cost of IAD was RM560,000.00. www.fabergroup.com.my statement of directors’ responsibility in respect of audited financial statements
The Directors are required by the Companies Act, 1965 to prepare 84 financial statements for each financial year that give a true and fair FABER GROUP BERHAD 2007 annual report view of the state of affairs of the Company and the Group at the end of the financial year, and of their results and cash flows for www.fabergroup.com.my the financial year then ended.
In preparing the financial statements the The Directors have the responsibility to Directors have:- ensure that the Company and the Group keep accounting records which disclose with • Considered the provision of the reasonable accuracy the financial position of Companies Act, 1965 the Company and the Group and which • Considered the application of applicable enable them to ensure the financial Financial Reporting Standards statements comply with the Companies Act, 1965. • Adopted and consistently applied appropriate accounting policies The Directors have general responsibility for • Made judgement and estimates that are taking such steps that are reasonably open prudent and reasonable. to them to safeguard the assets of the Company and the Group and to prevent and detect fraud and other irregularities. financial statements
85 FABER GROUP BERHAD 2007 annual report
www.fabergroup.com.my
86 Directors’ Report 89 Statement by Directors 89 Statutory Declaration 90 Report of the Auditors 91 Income Statements 92 Balance Sheets 94 Consolidated Statement of Changes in Equity 95 Statement of Changes in Equity 96 Cash Flow Statements 99 Notes to the Financial Statements directors’ report
The directors have pleasure in presenting their report together with the audited financial statements of the Group and of the Company for the financial year ended 31 December 2007.
PRINCIPAL ACTIVITIES The principal activities of the Company are investment holding and provision of management services to its subsidiaries.
The principal activities of the subsidiaries are described in Note 45 to the financial statements.
There have been no significant changes in the nature of the principal activities during the financial year except for the discontinuance of the hotels segment as disclosed in Note 11 to the financial statements.
RESULTS Group Company 86 RM’000 RM’000 FABER GROUP BERHAD 2007 annual report Profit after tax from continuing operations 74,052 33,198 Profit for the year from discontinued operations 3,241 — www.fabergroup.com.my Profit for the year 77,293 33,198
Attributable to: Equity holders of the Company 51,962 33,198 Minority interests 25,331 —
77,293 33,198
There were no material transfers to or from reserves or provisions during the financial year other than as disclosed in the financial statements.
In the opinion of the directors, the results of the operations of the Group and of the Company during the financial year were not substantially affected by any item, transaction or event of a material and unusual nature other than the effects arising from changes in the estimated useful lives of certain plant and equipment resulting in the reduction in the Group’s profit for the year by RM2,074,860 as disclosed in Note 2.5 to the financial statements.
DIVIDENDS The Company paid a first and final dividend in respect of the financial year ended 31 December 2006, of 2% less 27% taxation on 338,001,000 ordinary shares, amounting to a dividend payable of RM4,935,000 (1.46 sen net per ordinary share) on 27 June 2007.
At the forthcoming Annual General Meeting, a final dividend in respect of the financial year ended 31 December 2007, of 3% less 26% taxation on 363,001,000 ordinary shares, amounting to a dividend payable of RM8,059,000 (2.22 sen net per ordinary share) will be proposed for shareholder’s approval. The financial statements for the current financial year do not reflect this proposed dividend. Such dividend, if approved by the shareholders, will be accounted for in equity as an appropriation of retained earnings in the financial year ending 31 December 2008. DIRECTORS The names of the directors of the Company in office since the date of the last report and at the date of this report are:
Dato’ Anwar bin Aji Datuk Zainal Abidin bin Alias Datuk Mohamed Zain bin Mohamed Yusuf Elakumari a/p Kantilal Puasa bin Osman Raja Azmi bin Raja Nazuddin Adnan bin Mohammad (appointed on 1 April 2007) Dato’ Rosli bin Sharif (appointed on 28 June 2007) Oh Kim Sun (appointed on 28 September 2007) Noorizah Hj Abd Hamid (resigned on 1 April 2007) Dato’ Ikmal Hijaz bin Hashim (resigned on 28 June 2007) Dato’ (Dr) Mohamed Ishak @ Ishak bin Haji Mohamed Ariff (resigned on 1 August 2007) 87 DIRECTORS’ BENEFITS FABER GROUP BERHAD 2007 annual report Neither at the end of the financial year, nor at any time during that year, did there subsist any arrangement to which the Company was a party, whereby the directors might acquire benefits by means of acquisition of shares in (including www.fabergroup.com.my Redeemable Convertible Preference Shares (“RCPS”) or Redeemable Secured Loan Stocks (“RSLS”)) or debentures of the Company or any other body corporate.
Since the end of the previous financial year, no director has received or become entitled to receive a benefit (other than benefits included in the aggregate amount of emoluments received or due and receivable by the directors as shown in Note 9 to the financial statements or the fixed salary of a full time employee) by reason of a contract made by the Company or a related corporation with any director or with a firm of which the director is a member, or with a company in which the director has a substantial financial interest.
DIRECTORS’ INTERESTS According to the register of directors’ shareholdings, none of the directors holding office at the end of the financial year had any interest in shares and options over shares or interest in RCPS and RSLS of the Company or its related corporations during the financial year.
ISSUE OF SHARES During the financial year, the Company increased its issued and paid-up ordinary share capital from RM298,001,000 to RM363,001,000 by way of the conversion of RM65,000,000 in nominal value of 8-year RCPS into 65,000,000 new ordinary shares of Company of RM1.00 each. The new ordinary shares issues during the year ranked pari passu in all respects with the existing ordinary shares of the Company.
OTHER STATUTORY INFORMATION (a) Before the income statements and balance sheets of the Group and of the Company were made out, the directors took reasonable steps:
(i) to ascertain that proper action had been taken in relation to the writing off of bad debts and the making of provision for doubtful debts and satisfied themselves that all known bad debts had been written off and that adequate provision had been made for doubtful debts; and
(ii) to ensure that any current assets which were unlikely to realise their values as shown in the accounting records in the ordinary course of business had been written down to an amount which they might be expected so to realise. directors’ report (cont’d.)
OTHER STATUTORY INFORMATION (cont’d.) (b) At the date of this report, the directors are not aware of any circumstances which would render:
(i) the amount written off for bad debts or the amount of the provision for doubtful debts inadequate to any substantial extent; and
(ii) the values attributed to the current assets in these financial statements misleading.
(c) At the date of this report, the directors are not aware of any circumstances which have arisen which would render adherence to the existing methods of valuation of assets or liabilities of the Group and of the Company misleading or inappropriate.
(d) At the date of this report, the directors are not aware of any circumstances not otherwise dealt with in this report or the financial statements of the Group and of the Company which would render any amount stated in the financial statements misleading.
(e) As at the date of this report, there does not exist:
88 (i) any charge on the assets of the Group or of the Company which has arisen since the end of the financial FABER GROUP BERHAD year which secures the liabilities of any other person; or 2007 annual report (ii) any contingent liability of the Group or of the Company which has arisen since the end of the financial www.fabergroup.com.my year.
(f) In the opinion of the directors:
(i) no contingent or other liability has become enforceable or is likely to become enforceable within the period of twelve months after the end of the financial year which will or may affect the ability of the Group or of the Company to meet their obligations when they fall due; and
(ii) no item, transaction or event of a material and unusual nature has arisen in the interval between the end of the financial year and the date of this report which is likely to affect substantially the results of the operations of the Group and of the Company for the financial year in which this report is made other than as disclosed in Note 47 to the financial statements.
SIGNIFICANT EVENTS Significant events are disclosed in Note 46 to the financial statements.
SUBSEQUENT EVENT Subsequent event is disclosed in Note 47 to the financial statements.
AUDITORS The auditors, Ernst & Young, have expressed their willingness to continue in office.
Signed on behalf of the Board in accordance with a resolution of the directors dated 28 February 2008.
Dato’ Anwar bin Aji Adnan bin Mohammad statement by directors pursuant to section 169(15) of the companies act, 1965
We, Dato’ Anwar bin Aji and Adnan bin Mohammad, being two of the directors of Faber Group Berhad, do hereby state that, in the opinion of the directors, the accompanying financial statements set out on pages 91 to 179 are drawn up in accordance with the provisions of the Companies Act, 1965 and applicable Financial Reporting Standards in Malaysia so as to give a true and fair view of the financial position of the Group and of the Company as at 31 December 2007 and of the results and the cash flows of the Group and of the Company for the year then ended.
Signed on behalf of the Board in accordance with a resolution of the directors dated 28 February 2008.
Dato’ Anwar bin Aji Adnan bin Mohammad
89 FABER GROUP BERHAD 2007 annual report
www.fabergroup.com.my statutory declaration pursuant to section 169(16) of the companies act, 1965
I, Adnan bin Mohammad, being the Director primarily responsible for the financial management of Faber Group Berhad, do solemnly and sincerely declare that the accompanying financial statements set out on pages 91 to 179 are in my opinion correct, and I make this solemn declaration conscientiously believing the same to be true and by virtue of the provisions of the Statutory Declarations Act, l960.
Subscribed and solemnly declared by the abovenamed Adnan bin Mohammad at Kuala Lumpur in the Federal Territory on 28 February 2008. Adnan bin Mohammad
Before me, report of the auditors to the members of faber group berhad (incorporated in malaysia)
We have audited the accompanying financial statements set out on pages 91 to 179. These financial statements are the responsibility of the Company’s directors.
It is our responsibility to form an independent opinion, based on our audit, on the financial statements and to report our opinion to you, as a body, in accordance with Section 174 of the Companies Act, 1965 and for no other purpose. We do not assume responsibility to any other person for the content of this report.
We have conducted our audit in accordance with applicable Approved Standards on Auditing in Malaysia. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by the directors, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.
In our opinion: (a) the financial statements have been properly drawn up in accordance with the provisions of the Companies Act, 90 1965 and applicable Financial Reporting Standards in Malaysia so as to give a true and fair view of: FABER GROUP BERHAD (i) the financial position of the Group and of the Company as at 31 December 2007 and of the results and 2007 annual report the cash flows of the Group and of the Company for the year then ended; and
(ii) the matters required by Section 169 of the Companies Act, 1965 to be dealt with in the financial www.fabergroup.com.my statements; and
(b) the accounting and other records and the registers required by the Act to be kept by the Company and by its subsidiaries of which we have acted as auditors have been properly kept in accordance with the provisions of the Act.
We have considered the financial statements and the auditors’ reports thereon of the subsidiaries of which we have not acted as auditors, as indicated in Note 45 to the financial statements, being financial statements that have been included in the consolidated financial statements.
We are satisfied that the financial statements of the subsidiaries that have been consolidated with the financial statements of the Company are in form and content appropriate and proper for the purposes of the preparation of the consolidated financial statements and we have received satisfactory information and explanations required by us for those purposes.
The auditors’ reports on the financial statements of the subsidiaries were not subject to any qualification and did not include any comment required to be made under Section 174(3) of the Act.
Ernst & Young Kua Choo Kai No. AF 0039 No. 2030/03/08(J) Chartered Accountants Partner
Kuala Lumpur, Malaysia 28 February 2008 income statements for the year ended 31 december 2007
Group Company
Restated Note 2007 2006 2007 2006 RM’000 RM’000 RM’000 RM’000
Continuing Operations Revenue 3 669,675 591,001 64,499 28,580 Cost of sales 4 (471,742) (410,570) — —
Gross profit 197,933 180,431 64,499 28,580 Other income 5 6,821 10,801 2,834 3,582 Administrative expenses (31,552) (34,059) (835) (873) Selling and marketing expenses (1,444) (2,795) — — Other expenses (64,477) (50,476) (11,893) (8,998)
Operating profit 107,281 103,902 54,605 22,291 Finance costs 6 (7,836) (7,670) (5,924) (5,697) 91 FABER GROUP BERHAD Profit before tax 7 99,445 96,232 48,681 16,594 2007 annual report Income tax expense 10 (25,393) (24,939) (15,483) (6,742) www.fabergroup.com.my Profit for the year from continuing operations 74,052 71,293 33,198 9,852
Discontinued Operations Profit/(loss) for the year from discontinued operation 11 3,241 (6,638) — —
Profit for the year 77,293 64,655 33,198 9,852
Attributable to: Equity holders of the Company 51,962 36,674 33,198 9,852 Minority interests 25,331 27,981 — —
77,293 64,655 33,198 9,852
Earning per share attributable to equity holders of the Company (sen) Basic, for profit from continuing operations 12 15.0 15.1 Basic, for profit/(loss) from discontinued operations 12 1.0 (2.3)
Basic, for profit for the year 12 16.0 12.8
Diluted, for profit from continuing operations 12 11.1 9.3 Diluted, for profit/(loss) from discontinued operations 12 0.7 (1.4)
Diluted, for profit for the year 12 11.8 7.9
The accompanying notes form an integral part of the financial statements. balance sheets as at 31 december 2007
Group Company
Note 2007 2006 2007 2006 RM’000 RM’000 RM’000 RM’000
ASSETS Non-current assets Property, plant and equipment 14 91,261 288,887 469 442 Land held for property development 15(a) 49,946 43,823 — — Prepaid land lease payments 16 2,980 20,362 — — Intangible assets 17 5,551 7,383 9 37 Investments in subsidiaries 18 — — 62,624 62,114 Other investments 19 1,171 897 672 398 Trade and other receivables 21 2,982 11,763 — — Deferred tax assets 32 4,834 4,888 — — 92 158,725 378,003 63,774 62,991 FABER GROUP BERHAD Current assets 2007 annual report Property development costs 15(b) 65,902 94,155 — — Inventories 20 23,270 19,822 — — www.fabergroup.com.my Trade and other receivables 21 212,112 184,352 252,704 284,928 Marketable securities 23 368 196 — — Cash and cash equivalents 24 218,185 174,587 82,914 31,898
519,837 473,112 335,618 316,826 Assets of disposal group/Non-current asset classified as held for sale 11 211,424 — — —
731,261 473,112 335,618 316,826
TOTAL ASSETS 889,986 851,115 399,392 379,817
The accompanying notes form an integral part of the financial statements. balance sheets (cont’d.) as at 31 december 2007
Group Company
Note 2007 2006 2007 2006 RM’000 RM’000 RM’000 RM’000
EQUITY AND LIABILITIES Equity attributable to equity Share capital 33 363,001 298,001 363,001 298,001 Share premium 33 115,985 115,985 115,985 115,985 Other capital reserves 34 115,000 180,000 115,000 180,000 Other reserves 35 13,542 26,077 1,266 1,005 Accumulated losses (311,243) (358,270) (540,016) (568,279)
296,285 261,793 55,236 26,712 Minority interests 37 106,389 82,105 — — Total equity 402,674 343,898 55,236 26,712 93 Non-current liabilities FABER GROUP BERHAD Retirement benefit obligations 25 2,166 1,281 — — 2007 annual report Provisions 26 642 6,419 — — Borrowings 27 197,900 253,501 190,055 187,014 www.fabergroup.com.my Deferred tax liabilities 32 7,685 11,682 — —
208,393 272,883 190,055 187,014
Current liabilities Retirement benefit obligations 25 388 276 — — Provisions 26 1,905 907 — — Borrowings 27 1,938 24,485 — — Trade and other payables 31 204,923 195,311 153,502 165,799 Income tax payable 2,656 13,355 599 292
211,810 234,334 154,101 166,091 Liabilities directly associated with assets classified as held for sale 11 67,109 — — —
278,919 234,334 154,101 166,091
Total liabilities 487,312 507,217 344,156 353,105
TOTAL EQUITY AND LIABILITIES 889,986 851,115 399,392 379,817
The accompanying notes form an integral part of the financial statements. consolidated statement of changes in equity for the year ended 31 december 2007
Attributable to Equity Holders of the Company
<------Non-Distributable Reserves ------> Other Share Share Capital Other Accumulated Minority Total Capital Premium Reserves Reserves Losses Total Interests Equity (Note 33) (Note 33) (Note 34) (Note 35) (Note 37) RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
At 1 January 2006 278,001 115,985 200,000 32,351 (394,944) 231,393 65,812 297,205 Foreign currency translation recognised directly in equity — — — (7,912) — (7,912) (3,871) (11,783) Profit for the year ————36,674 36,674 27,981 64,655 Share options under Employee Equity Scheme (“EES”) 94 recognised in the FABER GROUP BERHAD income statement — — — 1,638 — 1,638 — 1,638 2007 annual report Total recognised income and expense for the year — — — (6,274) 36,674 30,400 24,110 54,510 www.fabergroup.com.my Conversion of RCPS 20,000 — (20,000) ————— Dividend paid to minority shareholders of subsidiary companies ——————(7,817) (7,817)
At 31 December 2006 298,001 115,985 180,000 26,077 (358,270) 261,793 82,105 343,898
At 1 January 2007 298,001 115,985 180,000 26,077 (358,270) 261,793 82,105 343,898 Foreign currency translation recognised directly in equity ———(13,285) — (13,285) 3,871 (9,414) Profit for the year ————51,962 51,962 25,331 77,293 Share options under Employee Equity Scheme (“EES”) recognised in the income statement ———750 — 750 1,264 2,014 Total recognised income and expense for the year ———(12,535) 51,962 39,427 30,466 69,893 Acquisition of subsidiary ——————490490 Conversion of RCPS 65,000 — (65,000) ————— Dividend (Note 13) ————(4,935) (4,935) — (4,935) Dividend paid to minority shareholders of subsidiary companies ——————(6,672) (6,672)
At 31 December 2007 363,001 115,985 115,000 13,542 (311,243) 296,285 106,389 402,674
The accompanying notes form an integral part of the financial statements. statement of changes in equity for the year ended 31 december 2007
<------Non-distributable reserves ------>
Other Share Share Capital Other Accumulated Total Capital Premium Reserves Reserves Losses Equity RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 (Note 33) (Note 33) (Note 34) (Note 35)
At 1 January 2006 278,001 115,985 200,000 — (578,131) 15,855 Profit for the year ————9,852 9,852 Conversion of RCPS 20,000 — (20,000) — — — Shares options under EES recognised in income statement — — — 1,005 — 1,005
At 31 December 2006 298,001 115,985 180,000 1,005 (568,279) 26,712 95 At 1 January 2007 298,001 115,985 180,000 1,005 (568,279) 26,712 FABER GROUP BERHAD Profit for the year ————33,198 33,198 2007 annual report Conversion of RCPS 65,000 — (65,000) — — — Dividends (Note 13) ————(4,935) (4,935) www.fabergroup.com.my Shares options under EES recognised in income statement ———261—261
At 31 December 2007 363,001 115,985 115,000 1,266 (540,016) 55,236
The accompanying notes form an integral part of the financial statements. cash flow statements for the year ended 31 december 2007
Group Company
Restated 2007 2006 2007 2006 RM’000 RM’000 RM’000 RM’000
Cash Flows From Operating Activities Cash receipts from customers 676,584 570,609 14,093 4,818 Cash payments to suppliers (281,221) (203,522) — — Cash payments to employees and for expenses (246,598) (240,304) (17,492) (8,461)
Cash generated from/(used in) operations 148,765 126,783 (3,399) (3,643) Interest paid (817) (3,048) — — Taxes paid (40,524) (24,892) (15,176) (6,450) Net cash generated from discontinued operations 21,827 9,809 — —
Net cash flow generated from/(used in) operating 96 activities (Note 38) 129,251 108,652 (18,575) (10,093) FABER GROUP BERHAD 2007 annual report Cash Flows From Investing Activities Proceeds from disposal of property, plant and www.fabergroup.com.my equipment 287 324 49 71 Investment in subsidiary — — (510) — Other investment (400) — (400) — Interest received 4,860 3,670 1,137 1,042 Dividend received 8 — 57,849 23,037 Purchase of land held for property development (8,303) (6,036) — — Purchase of property, plant and equipment (Note a) (27,125) (17,127) (177) (191) Payment of intangible assets (62) (632) (20) (69) Purchase of property, plant and equipment, representing net cash used in discontinued operations (Note a) (924) (761) — — Net repayments/(advances) for related companies balances — — 19,481 (10,326)
Net cash flow (used in)/generated from investing activities (31,659) (20,562) 77,409 13,564
The accompanying notes form an integral part of the financial statements. cash flow statements (cont’d.) for the year ended 31 december 2007
Group Company
Restated 2007 2006 2007 2006 RM’000 RM’000 RM’000 RM’000
Cash Flows From Financing Activities Proceeds from issuance of ordinary shares to minority interests 490 — — — Repayment of Balance Sum owed to Jeram Bintang Sdn Bhd (“JBSB”) (2,883) (3,487) (2,883) (3,487) Repayment of shareholders loan to minority shareholder of a subsidiary (531) (1,063) — — Repayment of hire purchase obligations (457) — — — Drawdown of other secured bank loans — 2,582 — — Dividends paid (4,935) — (4,935) — Dividend paid to minority shareholders of subsidiaries (6,672) (7,817) — — Preference dividend paid to minority shareholders 97 of a subsidiary (1,700) (1,792) — — FABER GROUP BERHAD Repayment of secured bank loans (19,400) (23,647) — — 2007 annual report Repayment of secured bank loans, representing net cash used in discontinued operations (8,567) (7,544) — — www.fabergroup.com.my
Net cash flow used in financing activities (44,655) (42,768) (7,818) (3,487)
Net increase/(decrease) in cash and cash equivalents 52,937 45,322 51,016 (16) Net foreign exchange difference (478) (424) — — Cash and cash equivalents at beginning of year 174,587 129,689 31,898 31,914
Cash and cash equivalents at end of year (Note 24) 227,046 174,587 82,914 31,898
The accompanying notes form an integral part of the financial statements. cash flow statements (cont’d.) for the year ended 31 december 2007
Group Company
Restated 2007 2006 2007 2006 RM’000 RM’000 RM’000 RM’000
(a) Plant and equipment during the year were acquired by way of: Cash – Continuing operations 27,125 17,127 177 191 – Discontinued operations 924 761 — — Hire purchase 1,056 — — —
29,105 17,888 177 191
(b) Cash and cash equivalents 98 Cash and bank balances 47,334 73,064 2,009 1,948 FABER GROUP BERHAD Fixed deposits with licenced banks 42,147 17,502 — — 2007 annual report Fixed deposits with other financial institutions 128,704 84,021 80,905 29,950 Cash and bank balances classified as held for sale www.fabergroup.com.my (Note 11) 8,861 — — —
227,046 174,587 82,914 31,898
As disclosed in Note 24 to the financial statements, certain fixed deposits with licensed banks of the Group amounting to RM9,149,000 (2006: RM4,478,000) have been pledged to banks for banking facilities granted to certain subsidiaries and hence, not available for general use.
The accompanying notes form an integral part of the financial statements. notes to the financial statements 31 december 2007
1. CORPORATE INFORMATION The Company is a public limited liability company, incorporated and domiciled in Malaysia, and is listed on the Main Board of Bursa Malaysia Securities Berhad.
The registered office of the Company is located at 20th Floor, Menara 2, Faber Towers, Jalan Desa Bahagia, Taman Desa, Off Jalan Klang Lama, 58100 Kuala Lumpur.
The principal activities of the Company are investment holding and provision of management services to its subsidiaries.
The principal activities of the subsidiaries are described in Note 45.
There have been no significant changes in the nature of the principal activities during the financial year except for the discontinuance of the hotels segment as disclosed in Note 11.
The financial statements were authorised for issue by the Board of Directors in accordance with a resolution of the directors on 28 February 2008. 99 FABER GROUP BERHAD 2007 annual report 2. SIGNIFICANT ACCOUNTING POLICIES
2.1 Basis of Preparation www.fabergroup.com.my The financial statements comply with the provisions of the Companies Act, 1965 and applicable Financial Reporting Standards in Malaysia. At the beginning of the current financial year, the Group and the Company adopted all new and revised Financial Reporting Standards (“FRS”) which are mandatory for its operations for financial periods beginning on or after 1 January 2007 as described in Note 2.3.
The financial statements of the Group and of the Company have also been prepared on a historical basis.
The financial statements are presented in Ringgit Malaysia (RM) and all values are rounded to the nearest thousand (RM’000) except when otherwise indicated.
2.2 Summary of Significant Accounting Policies (a) Subsidiaries and Basis of Consolidation (i) Subsidiaries Subsidiaries are entities over which the Group has the ability to control the financial and operating policies so as to obtain benefits from their activities. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Group has such power over another entity.
In the Company’s separate financial statements, investments in subsidiaries are stated at cost less impairment losses. On disposal of such investments, the difference between net disposal proceeds and their carrying amounts is included in profit or loss. notes to the financial statements (cont’d.) 31 december 2007
2. SIGNIFICANT ACCOUNTING POLICIES (cont’d.) 2.2 Summary of Significant Accounting Policies (cont’d.) (a) Subsidiaries and Basis of Consolidation (cont’d.) (ii) Basis of consolidation The consolidated financial statements comprise the financial statements of the Company and its subsidiaries as at the balance sheet date. The financial statements of the subsidiaries are prepared for the same reporting date as the Company.
Subsidiaries are consolidated from the date of acquisition, being the date on which the Group obtains control, and continue to be consolidated until the date that such control ceases. In preparing the consolidated financial statements, intragroup balances, transactions and unrealised gains or losses are eliminated in full. Uniform accounting policies are adopted in the consolidated financial statements for like transactions and events in similar circumstances.
Acquisitions of subsidiaries are accounted for using the purchase method. The purchase method of accounting involves allocating the cost of the acquisition to the fair value of the assets acquired and liabilities and contingent liabilities assumed at the date of acquisition. The cost of 100 an acquisition is measured as the aggregate of the fair values, at the date of exchange, of the assets given, liabilities incurred or assumed, and equity instruments issued, plus any costs FABER GROUP BERHAD 2007 annual report directly attributable to the acquisition. Any excess of the cost of the acquisition over the Group’s interest in the net fair value of the www.fabergroup.com.my identifiable assets, liabilities and contingent liabilities represents goodwill. Any excess of the Group’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities over the cost of acquisition is recognised immediately in profit or loss.
Minority interests represent the portion of profit or loss and net assets in subsidiaries not held by the Group. It is measured at the minorities’ share of the fair value of the subsidiaries’ identifiable assets and liabilities at the acquisition date and the minorities’ share of changes in the subsidiaries’ equity since then.
(b) Intangible Assets (i) Goodwill Goodwill acquired in a business combination is initially measured at cost being the excess of the cost of business combination over the Group’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities. Following the initial recognition, goodwill is measured at cost less any accumulated impairment losses. Goodwill is not amortised but instead, it is reviewed for impairment, annually or more frequently if events or changes in circumstances indicate that the carrying value may be impaired. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold.
(ii) Other Intangible Assets Intangible assets acquired separately are measured on initial recognition at cost. The cost of intangible assets acquired in a business combination is their fair values as at the date of acquisition. Following initial recognition, intangible assets are carried at cost less any accumulated amortisation and any accumulated impairment losses. The useful lives of intangible assets are assessed to be either finite or indefinite. Intangible assets with finite lives are amortised on a straight-line basis over the estimated economic useful lives and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortisation period and the amortisation method for an intangible asset with a finite useful life are reviewed at least at each balance sheet date. 2. SIGNIFICANT ACCOUNTING POLICIES (cont’d.) 2.2 Summary of Significant Accounting Policies (cont’d.) (b) Intangible Assets (cont’d.) (ii) Other Intangible Assets (cont’d.) Intangible assets with indefinite useful lives are not amortised but tested for impairment annually or more frequently if the events or changes in circumstances indicate that the carrying value may be impaired either individually or at the cash-generating unit level. The useful life of an intangible asset with an indefinite life is also reviewed annually to determine whether the useful life assessment continues to be supportable.
(iii) Development Expenditure Expenditure incurred on projects to design and develop the operating systems for the provision of the hospital support services is capitalised and deferred only when the Group can demonstrate the technical feasibility of completing the intangible asset so that it will be available for use or sale, its intention to complete and its ability to use or sell the asset, how the asset will generate future economic benefits, the availability of resources to complete the project and the ability to measure reliably the expenditure during the development. Development expenditure which does 101 not meet these criteria is expensed when incurred. FABER GROUP BERHAD Development expenditure, considered to have finite useful lives, are stated at cost less any 2007 annual report impairment losses and are amortised using the straight-line basis over the concession period of the hospital support services of fifteen (15) years, commencing 28 October 1996. Impairment www.fabergroup.com.my is assessed whenever there is an indication and the amortisation period and method are also reviewed at least at each balance sheet date. The remaining amortisation period for development expenditure is five (5) years.
(iv) Software and Licences Software and licences that do not form an integral part of the related hardware has been reclassified as intangible assets. Software and licences, considered to have finite useful lives, are stated at cost less any impairment losses and are amortised using the straight-line basis over the commercial lives of the underlying products between seven (7) and fifteen (15) years. Impairment is assessed whenever there is an indication of impairment and amortisation period and method are also reviewed at least at each balance sheet date.
(c) Property, Plant and Equipment and Depreciation All items of property, plant and equipment are initially recorded at cost. Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognised. All other repairs and maintenance are charged to the income statement during the financial period in which they are incurred.
Subsequent to recognition, property, plant and equipment are stated at cost less accumulated depreciation and any accumulated impairment losses. notes to the financial statements (cont’d.) 31 december 2007
2. SIGNIFICANT ACCOUNTING POLICIES (cont’d.) 2.2 Summary of Significant Accounting Policies (cont’d.) (c) Property, Plant and Equipment and Depreciation (cont’d.) Capital work-in-progress is not depreciated as these assets are not available for use. Capital work-in- progress relates to the installation of new machinery. Depreciation of other property, plant and equipment is provided for on a straight-line basis to write off the cost of each asset to its residual value over the estimated useful life, at the following annual rates: Hotel building and improvements 29 years Buildings 2% – 10% Plant and equipment 5% – 20% Motor vehicles 20% Furniture and fittings 10% – 20% Hotel operating equipment 8 years Crockery, glassware, cutlery and linen 10% Computer equipment 3 – 5 years
102 The residual values, useful life and depreciation method are reviewed at each financial year-end to FABER GROUP BERHAD ensure that the amount, method and period of depreciation are consistent with previous estimates and 2007 annual report the expected pattern of consumption of the future economic benefits embodied in the items of property, plant and equipment. www.fabergroup.com.my An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. The difference between the net disposal proceeds, if any and the net carrying amount is recognised in profit or loss and the unutilised portion of the revaluation surplus on that item is taken directly to retained earnings.
(d) Land Held for Property Development and Property Development Costs (i) Land Held for Property Development Land held for property development consists of land where no development activities have been carried out or where development activities are not expected to be completed within the normal operating cycle. Such land is classified within non-current assets and is stated at cost less any accumulated impairment losses.
Land held for property development is reclassified as property development costs at the point when development activities have commenced and where it can be demonstrated that the development activities can be completed within the normal operating cycle.
(ii) Property Development Costs Property development costs comprise all costs that are directly attributable to development activities or that can be allocated on a reasonable basis to such activities.
When the financial outcome of a development activity can be reliably estimated, property development revenue and expenses are recognised in the income statement by using the stage of completion method. The stage of completion is determined by the proportion that property development costs incurred for work performed to date bear to the estimated total property development costs.
Where the financial outcome of a development activity cannot be reliably estimated, property development revenue is recognised only to the extent of property development costs incurred that is probable will be recoverable, and property development costs on properties sold are recognised as an expense in the period in which they are incurred. 2. SIGNIFICANT ACCOUNTING POLICIES (cont’d.) 2.2 Summary of Significant Accounting Policies (cont’d.) (d) Land Held for Property Development and Property Development Costs (cont’d.) (ii) Property Development Costs (cont’d.) Any expected loss on a development project, including costs to be incurred over the defects liability period, is recognised as an expense immediately.
Property development costs not recognised as an expense are recognised as an asset, which is measured at the lower of cost and net realisable value.
The excess of revenue recognised in the income statement over billings to purchasers is classified as accrued billings within trade receivables and the excess of billings to purchasers over revenue recognised in the income statement is classified as progress billings within trade payables.
(e) Construction Contracts Where the outcome of a construction contract can be reliably estimated, contract revenue and contract costs are recognised as revenue and expenses respectively by using the stage of completion method. The stage of completion is measured by reference to the proportion of contract costs incurred for work 103 performed to date to the estimated total contract costs. FABER GROUP BERHAD 2007 annual report Where the outcome of a construction contract cannot be reliably estimated, contract revenue is
recognised to the extent of contract costs incurred that it is probable will be recoverable. Contract www.fabergroup.com.my costs are recognised as expenses in the period in which they are incurred.
When it is probable that total contract costs will exceed total contract revenue, the expected loss is recognised as an expense immediately.
When the total of costs incurred on construction contracts plus, recognised profits (less recognised losses), exceeds progress billings, the balance is classified as amount due from customers on contracts. When progress billings exceed costs incurred plus, recognised profits (less recognised losses), the balance is classified as amount due to customers on contracts.
(f) Impairment of Non-Financial Assets The carrying amounts of the assets, other than construction contract assets, property development costs, inventories and deferred tax assets are reviewed at each balance sheet date to determine whether there is any indication of impairment. If any such indication exists, the asset’s recoverable amount is estimated to determine the amount of impairment loss.
For goodwill, assets that have an indefinite useful life and intangible assets that are not yet available for use, the recoverable amount is estimated at each balance sheet date or more frequently when indicators of impairment are identified.
For the purpose of impairment testing of these assets, recoverable amount is determined on an individual asset basis unless the asset does not generate cash flows that are largely independent of those from other assets. If this is the case, recoverable amount is determined for the cash-generating unit (CGU) to which the asset belongs to. Goodwill acquired in a business combination is, from the acquisition date, allocated to each of the Group’s CGUs, or groups of CGUs, that are expected to benefit from the synergies of the combination, irrespective of whether other assets or liabilities of the Group are assigned to those units or groups of units. notes to the financial statements (cont’d.) 31 december 2007
2. SIGNIFICANT ACCOUNTING POLICIES (cont’d.) 2.2 Summary of Significant Accounting Policies (cont’d.) (f) Impairment of Non-Financial Assets (cont’d.) An asset’s recoverable amount is the higher of an asset’s or CGU’s fair value less costs to sell and its value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. Where the carrying amount of an asset exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. Impairment losses recognised in respect of a CGU or groups of CGUs are allocated first to reduce the carrying amount of any goodwill allocated to those units or groups of units and then, to reduce the carrying amount of the other assets in the unit or groups of units on a pro-rata basis.
An impairment loss is recognised in profit or loss in the period in which it arises. Impairment loss on goodwill is not reversed in a subsequent period. An impairment loss for an asset other than goodwill is reversed if, and only if, there has been a change in the estimates used to determine the asset’s recoverable amount since the last impairment loss was recognised. The carrying amount of an 104 asset other than goodwill is increased to its revised recoverable amount, provided that this amount does not exceed the carrying amount that would have been determined (net of amortisation or FABER GROUP BERHAD 2007 annual report depreciation) had no impairment loss been recognised for the asset in prior years. A reversal of impairment loss for an asset other than goodwill is recognised in profit or loss. www.fabergroup.com.my (g) Inventories Inventories are stated at lower of cost and net realisable value.
(i) Property Held for Resale Property held for resale is stated at the lower of cost and net realisable value. Cost is determined on the specific identification basis and include cost associated with the acquisition of land, direct costs and appropriate proportions of common costs.
(ii) Food, Beverage and Consumables Food, beverage and consumables are stated at the lower of cost (determined on the weighted average basis) and net realisable value. Cost of inventories comprise cost of purchase of inventories.
Net realisable value represents the estimated selling price less all estimated costs to completion and the estimated costs necessary to make the sale.
(h) Financial Instruments Financial instruments are recognised in the balance sheet when the Group has become a party to the contractual provisions of the instrument.
Financial instruments are classified as liabilities or equity in accordance with the substance of the contractual arrangement. Interest, dividends, gains and losses relating to a financial instrument classified as a liability, are reported as expense or income. Distributions to holders of financial instruments classified as equity are charged directly to equity. Financial instruments are offset when the Group has a legally enforceable right to offset and intends to settle either on a net basis or to realise the asset and settle the liability simultaneously. 2. SIGNIFICANT ACCOUNTING POLICIES (cont’d.) 2.2 Summary of Significant Accounting Policies (cont’d.) (h) Financial Instruments (cont’d.) (i) Cash and Cash Equivalents For the purposes of the cash flow statements, cash and cash equivalents include cash on hand, bank balances, fixed deposits pledged to financial institutions, bank overdrafts and deposits at call which have an insignificant risk of changes in value.
(ii) Other Non-Current Investments Non-current investments other than investments in subsidiaries are stated at cost less impairment losses. Impairment losses are recognised for all declines other than temporary in the value of the investments and is recognised as an expense in the period which the decline occurred. On disposal of an investment, the difference between net disposal proceeds and its carrying amount is recognised in profit or loss.
(iii) Marketable Securities Marketable securities are carried at the lower of cost and market value, determined on an 105 aggregate basis. Cost is determined on the weighted average basis while market value is FABER GROUP BERHAD determined based on quoted market values. Increases or decreases in the carrying amount of 2007 annual report marketable securities are credited or charged to the income statement. On disposal of marketable
securities, the difference between net disposal proceeds and the carrying amount is recognised www.fabergroup.com.my in profit or loss.
(iv) Receivables Receivables are carried at anticipated realisable values. Bad debts are written off when identified. An estimate is made for doubtful debt based on a review of all outstanding amounts as at the balance sheet date.
(v) Payables Payables are stated at cost which is the fair value of the consideration to be paid in the future for goods and services received.
(vi) Interest Bearing Loans and Borrowings All loans and borrowings are initially recognised at the fair value of the consideration received less directly attributable transaction costs. After initial recognition, interest bearing loans and borrowings are subsequently measured at amortised cost using the effective interest method.
(vii) Irredeemable Convertible Preference Shares (“ICPS”) and Redeemable Preference Shares (“RPS”) The ICPS and RPS are recorded at the amount of proceeds received, net of transaction costs.
The ICPS and RPS are classified as non-current liabilities in the balance sheet and the associated preferential dividends are recognised as finance costs in profit or loss in the period in which they are incurred.
(viii) Redeemable Secured Loan Stocks (“RSLS”) The RSLS is recorded at the amount of proceeds received, net of transaction costs.
The RSLS is classified as non-current liability in the balance sheet and the interests on this instrument is recognised as finance costs in profit or loss in the period in which they are incurred. notes to the financial statements (cont’d.) 31 december 2007
2. SIGNIFICANT ACCOUNTING POLICIES (cont’d.) 2.2 Summary of Significant Accounting Policies (cont’d.) (h) Financial Instruments (cont’d.) (ix) Equity Instruments Ordinary shares and redeemable convertible preference shares are classified as equity. Dividends on ordinary shares are recognised in equity in the period in which they are declared.
The transaction costs of an equity transaction are accounted for as a deduction from equity, net of tax. Equity transaction costs comprise only those incremental external costs directly attributable to the equity transaction which would otherwise have been avoided.
(x) Derivative Financial Instruments Derivative financial instruments are not recognised in the financial statements.
(i) Leases (i) Classification A lease is recognised as a finance lease if it transfers substantially to the Group all the risks 106 and rewards incidental to ownership. Leases of land and buildings are classified as operating or FABER GROUP BERHAD finance leases in the same way as leases of other assets and the land and buildings elements 2007 annual report of a lease of land and buildings are considered separately for the purposes of lease classification. All leases that do not transfer substantially all the risks and rewards are classified as operating www.fabergroup.com.my leases, with the following exceptions:
Land held for own use under an operating lease, the fair value of which cannot be measured separately from the fair value of a building situated thereon at the inception of the lease, is accounted for as being held under a finance lease, unless the building is also clearly held under an operating lease.
(ii) Finance leases – the Group as lessee Assets acquired by way of hire purchase or finance leases are stated at an amount equal to the lower of their fair values and the present value of the minimum lease payments at the inception of the leases, less accumulated depreciation and impairment losses. The corresponding liability is included in the balance sheet as borrowings. In calculating the present value of the minimum lease payments, the discount factor used is the interest rate implicit in the lease, when it is practicable to determine; otherwise, the Company’s incremental borrowing rate is used. Any initial direct costs are also added to the carrying amount of such assets.
Lease payments are apportioned between the finance costs and the reduction of the outstanding liability. Finance costs, which represent the difference between the total leasing commitments and the fair value of the assets acquired, are recognised in the profit or loss over the term of the relevant lease so as to produce a constant periodic rate of charge on the remaining balance of the obligations for each accounting period.
The depreciation policy for lease assets is in accordance with that for depreciable property, plant and equipment as described in Note 2.2(c). 2. SIGNIFICANT ACCOUNTING POLICIES (cont’d.) 2.2 Summary of Significant Accounting Policies (cont’d.) (i) Leases (cont’d.) (iii) Operating Leases – the Group as lessee Operating lease payments are recognised as an expense on a straight-line basis over the term of the relevant lease. The aggregate benefit of incentives provided by the lessor is recognised as a reduction of rental expense over the lease term on a straight-line basis.
In the case of a lease of land and buildings, the minimum lease payments or the up-front payments made are allocated, whenever necessary, between the land and the buildings elements in proportion to the relative fair values for leasehold interests in the land element and buildings element of the lease at the inception of the lease. The up-front payment represents prepaid lease payments and are amortised on a straight-line basis over the lease term.
Land use rights of a foreign subsidiary are recorded based on the actual value of the right to use land and water surface which were contributed by the Vietnamese partner on the basis of Article 3 of Investment License No. 578/GP, in accordance with Certificate of Land Use Right No. 00623/QSDD dated 29 August 2003 issued by the Hanoi’s People Committee. 107 Land use rights are capitalised and amortised to the income statement on a straight-line basis FABER GROUP BERHAD over the duration of the land use right’s life of thirty (30) years. 2007 annual report
All other prepaid lease payments are amortised on a straight-line basis over the shorter of the www.fabergroup.com.my unexpired period of the lease or 50 years.
(j) Borrowing Costs Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale. Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalisation.
All other borrowing costs are recognised in profit or loss in the period in which they are incurred.
(k) Income Tax Income tax on the profit or loss for the year comprises current and deferred tax. Current tax is the expected amount of income taxes payable in respect of the taxable profit for the year and is measured using the tax rates that have been enacted at the balance sheet date.
Deferred tax is provided for, using the liability method. In principle, deferred tax liabilities are recognised for all taxable temporary differences and deferred tax assets are recognised for all deductible temporary differences, unused tax losses and unused tax credits to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, unused tax losses and unused tax credits can be utilised. Deferred tax is not recognised if the temporary difference arises from goodwill or negative goodwill or from the initial recognition of an asset or liability in a transaction which is not a business combination and at the time of the transaction, affects neither accounting profit nor taxable profit. notes to the financial statements (cont’d.) 31 december 2007
2. SIGNIFICANT ACCOUNTING POLICIES (cont’d.) 2.2 Summary of Significant Accounting Policies (cont’d.) (k) Income Tax (cont’d.) Deferred tax is measured at the tax rates that are expected to apply in the period when the asset is realised or the liability is settled, based on tax rates that have been enacted or substantively enacted at the balance sheet date. Deferred tax is recognised as income or an expense and included in the profit or loss for the period, except when it arises from a transaction which is recognised directly in equity, in which case the deferred tax is also recognised directly in equity, or when it arises from a business combination that is an acquisition, in which case the deferred tax is included in the resulting goodwill or the amount of any excess of the acquirer’s interest in the net fair value of the acquiree’s identifiable assets, liabilities and contingent liabilities over the cost of combination.
(l) Provisions Provisions are recognised when the Group has a present obligation as a result of a past event and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and a reliable estimate of the amount can be made. Provisions are reviewed at each 108 balance sheet date and adjusted to reflect the current best estimate. Where the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, where FABER GROUP BERHAD 2007 annual report appropriate, the risks specific to the liability. Where discounting is used, the increase in the provision due to the passage of time is recognised as finance cost. www.fabergroup.com.my (m) Employee Benefits (i) Short Term Benefits Wages, salaries, bonuses and social security contributions are recognised as an expense in the year in which the associated services are rendered by employees. Short term accumulating compensated absences such as paid annual leave are recognised when services are rendered by employees that increase their entitlement to future compensated absences, and short term non- accumulating compensated absences such as sick leave are recognised when the absences occur.
(ii) Defined Contribution Plans Defined contribution plans are post-employment benefit plans under which the Group pays fixed contributions into separate entities or funds and will have no legal or constructive obligation to pay further contributions if any of the funds do not hold sufficient assets to pay all employee benefits relating to employee services in the current and preceding financial years. Such contributions are recognised as an expense in the profit or loss as incurred. As required by law, companies in Malaysia make such contributions to the Employees Provident Fund (“EPF”). Some of the Group’s foreign subsidiaries also make contributions to their respective countries’ statutory pension schemes.
(iii) Defined Benefit Plan The Group operates an unfunded, defined benefit Retirement Benefit Scheme (“the Scheme”) for its eligible employees. The Group’s obligation under the Scheme, calculated using the Projected Unit Credit Method, is determined based on actuarial computations by independent actuaries, through which the amount of benefit that employees have earned in return for their service in the current and prior years is estimated. That benefit is discounted in order to determine its present value.
Actuarial gains and losses are recognised as income or expense over the expected average remaining working lives of the participating employees when the cumulative unrecognised actuarial gains or losses for the Scheme exceed 10% of the higher of the present value of the defined benefit obligation and the fair value of plan assets. Past service costs are recognised immediately to the extent that the benefits are already vested, and otherwise are amortised on a straight-line basis over the average period until the amended benefits become vested. 2. SIGNIFICANT ACCOUNTING POLICIES (cont’d.) 2.2 Summary of Significant Accounting Policies (cont’d.) (m) Employee Benefits (cont’d.) (iii) Defined Benefit Plan (cont’d.) The amount recognised in the balance sheet represents the present value of the defined benefit obligations adjusted for unrecognised actuarial gains and losses and unrecognised past service costs, and reduced by the fair value of plan assets. Any asset resulting from this calculation is limited to the net total of any unrecognised actuarial losses and past service costs, and the present value of any economic benefits in the form of refunds or reductions in future contributions to the plan.
(iv) Termination Benefits Termination benefits are payable when employment is terminated before the normal retirement date or whenever an employee accepts voluntary redundancy in exchange for these benefits. The Group recognises termination benefits as a liability and an expense when it is demonstrably committed to either terminate the employment of current employees according to a detailed plan without possibility of withdrawal or providing termination benefits as a result of an offer made 109 to encourage voluntary redundancy. In the case of an offer made to encourage voluntary FABER GROUP BERHAD redundancy, the measurement of termination benefits is based on the number of employees 2007 annual report expected to accept the offer. Benefits falling due more than twelve months after balance sheet
date are discounted to present value. www.fabergroup.com.my
(n) Foreign Currencies (i) Functional and Presentation Currency The individual financial statements of each entity in the Group are measured using the currency of the primary economic environment in which the entity operates (“the functional currency”). The consolidated financial statements are presented in Ringgit Malaysia (RM), which is also the Company’s functional currency.
(ii) Foreign Currency Transactions In preparing the financial statements of the individual entities, transactions in currencies other than the entity’s functional currency (foreign currencies) are recorded in the functional currencies using the exchange rates prevailing at the dates of the transactions. At each balance sheet date, monetary items denominated in foreign currencies are retranslated at the rates prevailing on the balance sheet date. Non-monetary items carried at fair value that are denominated in foreign currencies are retranslated at the rates prevailing on the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated.
Exchange differences arising on the settlement of monetary items, and on the retranslation of monetary items, are included in profit or loss for the period except for exchange differences arising on monetary items that form part of the Group’s net investment in foreign operation. Exchange differences arising on monetary items that form part of the Group’s net investment in foreign operation, where that monetary item is denominated in either the functional currency of the reporting entity or the foreign operation, are initially taken directly to the foreign currency translation reserve within equity until the disposal of the foreign operations, at which time they are recognised in profit or loss. Exchange differences arising on monetary items that form part of the Group’s net investment in foreign operation, where that monetary item is denominated in a currency other than the functional currency of either the reporting entity or the foreign operation, are recognised in profit or loss for the period. Exchange differences arising on monetary items that form part of the Company’s net investment in foreign operation, regardless of the currency of the monetary item, are recognised in profit or loss in the Company’s financial statements or the individual financial statements of the foreign operation, as appropriate. notes to the financial statements (cont’d.) 31 december 2007
2. SIGNIFICANT ACCOUNTING POLICIES (cont’d.) 2.2 Summary of Significant Accounting Policies (cont’d.) (n) Foreign Currencies (cont’d.) (ii) Foreign Currency Transactions (cont’d.) Exchange differences arising on the translation of non-monetary items carried at fair value are included in profit or loss for the period except for the differences arising on the translation of non-monetary items in respect of which gains and losses are recognised directly in equity. Exchange differences arising from such non-monetary items are also recognised directly in equity.
(iii) Foreign Operations The results and financial position of foreign operations that have a functional currency different from the presentation currency (RM) of the consolidated financial statements are translated into RM as follows: – Assets and liabilities for each balance sheet presented are translated at the closing rate prevailing at the balance sheet date; – Income and expenses for each income statement are translated at average exchange rates for 110 the year, which approximates the exchange rates at the dates of the transactions; and FABER GROUP BERHAD – All resulting exchange differences are taken to the foreign currency translation reserve within 2007 annual report equity. www.fabergroup.com.my Goodwill and fair value adjustments arising on the acquisition of foreign operations on or after 1 January 2006 are treated as assets and liabilities of the foreign operations and are recorded in the functional currency of the foreign operations and translated at the closing rate at the balance sheet date. Goodwill and fair value adjustments which arose on the acquisition of foreign subsidiaries before 1 January 2006 are deemed to be assets and liabilities of the parent company and are recorded in RM at the rates prevailing at the date of acquisition.
The principal exchange rates used for every unit of foreign currency ruling at the balance sheet date used are as follows:
2007 2006 RM RM
United States Dollars 3.32 3.53 Philippines Peso (100 units) 0.81 0.72 United Arab Emirates Dirham 0.90 0.98 Indian Rupees 0.08 0.08
(o) Revenue Recognition Revenue is recognised when it is probable that the economic benefits associated with the transaction will flow to the Group and the revenue can be measured reliably. The following specific recognition criteria must also be met before revenue is recognised:
(i) Revenue from services rendered Hospital Support Services The Group provides hospital support services for the period of 15 years commencing 28 October 1996 in the Northern zone encompassing the states of Perlis, Kedah, Pulau Pinang and Perak, Sabah zone and Sarawak zone, respectively. The services provided are clinical waste management, cleansing, laundry and linen, facilities engineering maintenance and biomedical engineering maintenance.
These services are provided as a fixed-priced contract.
Revenue from fixed-price contracts is generally recognised in the period the services are provided, using a straight-line basis over the term of the contract. 2. SIGNIFICANT ACCOUNTING POLICIES (cont’d.) 2.2 Summary of Significant Accounting Policies (cont’d.) (o) Revenue Recognition (cont’d.) (i) Revenue from services rendered (cont’d.) Non-concession hospital support services The Group provides facilities management services which include cleansing, laundry and linen and facilities engineering maintenance to non-concession customers. These services are provided on a time and material basis or as a fixed-priced contract, with contract terms generally ranging from one (1) year to three (3) years.
Revenue from time and material contracts, typically from facilities engineering maintenance and bio-medical engineering maintenance is recognised at the contractual rates as labour hours are delivered and direct expenses incurred.
(ii) Sale of Properties Revenue from sale of property development is accounted for by the percentage of completion method as described in Note 2.2(d). 111 (iii) Construction Contracts FABER GROUP BERHAD Revenue from construction contracts is accounted for by the stage of completion method as 2007 annual report described in Note 2.2(e). www.fabergroup.com.my (iv) Land Sale Land sales arising from joint venture project are calculated on a proportion of total contract value which sales considerations received to date bear to total sales consideration receivable for those contracts.
Land sales arising from outright sales are recognised upon the transfer of risks and rewards.
(v) Management Fees Management fees for services provided to Group companies are recognised on an accrual basis.
(vi) Revenue from Hotel Operations Revenue from rental of hotel rooms, sale of food and beverage and other related income are recognised on an accrual basis.
(vii) Revenue from Catering Contracts Revenue from services rendered in respect of sale of food and beverages and other ancillary services is recognised net of discounts in the income statement as and when services are rendered or goods sold.
(viii) Rental Income Rental income is recognised on a straight-line basis over the term of the lease.
(ix) Interest Income Interest income is recognised on an accrual basis using the effective interest method.
(x) Dividend Dividend income is recognised when the Group’s right to receive payment is established. notes to the financial statements (cont’d.) 31 december 2007
2. SIGNIFICANT ACCOUNTING POLICIES (cont’d.) 2.2 Summary of Significant Accounting Policies (cont’d.) (p) Non-Current Assets (or Disposal Groups) Held for Sale and Discontinued Operation Non-current assets (or disposal groups) are classified as held for sale if their carrying amount will be recovered principally through a sale transaction rather than through continuing use. This condition is regarded as met only when the sale is highly probable and the asset (or disposal group) is available for immediate sale in its present condition subject only to terms that are usual and customary.
Immediately before classification as held for sale, the measurement of the non-current assets (or all the assets and liabilities in a disposal group) is brought up-to-date in accordance with applicable FRSs. Then, on initial classification as held for sale, non-current assets or disposal groups (other than investment properties, deferred tax assets and financial assets) are measured in accordance with FRS 5 that is at the lower of carrying amount and fair value less costs to sell. Any differences are included in profit or loss.
A component of the Group is classified as a discontinued operation when the criteria to be classified 112 as held for sale have been met or it has been disposed of and such a component represents a separate major line of business or geographical area of operations, is part of a single co-ordinated FABER GROUP BERHAD 2007 annual report major line of business or geographical area of operations or is a subsidiary acquired exclusively with a view to resale. www.fabergroup.com.my (q) Affiliated Company An affiliated company represents companies within the United Engineers (Malaysia) Berhad Group, a corporate shareholder of Faber Group Berhad.
2.3 Changes in Accounting Policies, Effects and Changes in Comparatives Arising from Adoption of New and Revised FRSs On 1 January 2007, the Group and the Company adopted the following revised FRSs and amendment to FRSs:
Amendment to FRS 1192004 Actuarial Gains and Losses, Group Plans and Discloses Employee Benefits
FRS 124 Related Party Transactions
The MASB has also issued FRS 6: Exploration for and Evaluation of Mineral Resources which will be effective for annual periods beginning on or after 1 January 2007. This FRS is, however, not applicable to the Group or the Company.
The adoption of the revised FRSs and Amendment to FRS do not have significant financial impact on the Group and the Company other than inclusion of additional disclosures pursuant to FRS 124. 2. SIGNIFICANT ACCOUNTING POLICIES (cont’d.) 2.4 Standards and Interpretations Issued but Not Yet Effective At the date of authorisation of these financial statements, the following FRSs, amendments to FRSs and Interpretations were issued but not yet effective and have not been applied by the Company:
Effective for financial periods beginning on FRSs, Amendments to FRS and Interpretations or after
FRS 139 Financial Instruments: Recognition and Measurement Deferred
IC Interpretation 1 Changes in Existing Decommissioning, Restoration 1 July 2007 and Similar Liabilities
IC Interpretation 2 Members’ Shares in Co-operative Entities and 1 July 2007 Similar Instruments 113 IC Interpretation 5 Rights to Interests Arising from Decommissioning, 1 July 2007 FABER GROUP BERHAD Restoration and Environmental Rehabilitation Funds 2007 annual report IC Interpretation 6 Liabilities Arising from Participating in a Specific 1 July 2007 Market – Waste Electrical and Electronic Equipment www.fabergroup.com.my
IC Interpretation 7 Applying the Restatement Approach under FRS 129 2004 1 July 2007 – Financial Reporting in Hyperinflationary Economies
IC Interpretation 8 Scope of FRS 2 1 July 2007
Amendment to FRS 107 Cash Flow Statements 1 July 2007
Amendment to FRS 111 Construction Contracts 1 July 2007
Amendment to FRS 112 Income taxes 1 July 2007
Amendment to FRS 118 Revenue 1 July 2007
Amendment to FRS 120 Accounting for Government Grants and Disclosure 1 July 2007 of Government Assistance
Amendment to FRS 121 The Effects of Changes in Foreign Exchange Rates – Net Investment in a Foreign Operations 1 July 2007
Amendment to FRS 134 Interim Financial Reporting 1 July 2007
Amendment to FRS 137 Provisions, Contingent Liabilities and Contingent Assets 1 July 2007 notes to the financial statements (cont’d.) 31 december 2007
2. SIGNIFICANT ACCOUNTING POLICIES (cont’d.) 2.4 Standards and Interpretations Issued but Not Yet Effective (cont’d.) The above new and revised FRS, amendment to FRS and Interpretations are expected to have no significant impact on the financial statements of the Group and the Company upon their initial application except for the following:
(a) Amendment to FRS 121: The Effects of Changes in Foreign Exchange Rates – Net Investment in a Foreign Operation This amendment requires that where an entity has a monetary item that forms part of its net investment in a foreign operation, the exchange differences arising from such monetary items should always be recognised in equity in the consolidated financial statements and should not be dependent on the currency of the monetary item. Prior to this amendment, exchange differences arising on a monetary item that forms part of the Group’s net investment in a foreign operation are recognised in equity in the consolidated financial statements only when that monetary item is denominated either in the functional currency of the reporting entity or the foreign operation. The Group will apply this amendment from financial periods beginning 1 January 2008. As it is not possible to reasonably estimate the exchange rates applicable to such monetary items for future periods, the directors are 114 therefore unable to determine if the initial adoption of this amendment will have a material impact FABER GROUP BERHAD on the consolidated financial statements for the financial year ending 31 December 2008. 2007 annual report The Group and the Company are exempted from disclosing the possible impact, if any, to the financial www.fabergroup.com.my statements upon the initial application of FRS 139.
2.5 Changes in Estimates The revised FRS 116: Property, Plant and Equipment requires the review of the residual value and remaining useful life of an item of property, plant and equipment at least at each financial year end. The Group revised the residual values and the estimated useful lives of computers from seven to five years with effect from 1 January 2007. The revisions were accounted for prospectively as a change in accounting estimates and as a result, the depreciation charges of the Group for the current financial year have been increased by RM2,074,860.
2.6 Significant Accounting Judgements and Estimates (a) Judgements In the process of preparing these financial statements, there were no significant judgements made in applying the accounting policies of the management which may have significant effects of the amounts recognised in the financial statements.
(b) Key Sources of Estimation Uncertainty The key assumptions concerning the future and other key sources of estimation uncertainty at the balance sheet date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below:
(i) Revenue Recognition Within total consolidated revenue for the year ended 31 December 2007, management has estimated that RM16,848,660 is attributable to work performed on instruction from the respective hospitals under the Hospital Support Services Agreement. These work done are variations from the original Hospital Support Services Agreement either for new hospitals, replacement hospitals, additions to existing hospitals and/or extensions of current services in the present hospitals.
The actual values of the variation orders have to be agreed by the Ministry of Health (“MOH”) following approvals from Sistem Hospital Awasan Taraf Sdn Bhd (“SIHAT”), the external party certifying the work done and the Director of each hospital concerned. As such, there is a significant time lag between the final contract from MOH and the commencement of work done by the Group. 2. SIGNIFICANT ACCOUNTING POLICIES (cont’d.) 2.6 Significant Accounting Judgements and Estimates (cont’d.) (b) Key Sources of Estimation Uncertainty (cont’d.) (i) Revenue Recognition (cont’d.) Management estimates are based on their previous experience with MOH and the following assumptions: (a) The rates adopted for each of the required services are the pre-approved rates from MOH; (b) For cleansing services, management has estimated the total floor areas of the facilities from the floor plans provided for the areas, which have commenced operations; (c) For facilities engineering maintenance and biomedical engineering maintenance services, management has estimated the respective hospital’s assets values for facilities maintenance; and (d) The associated costs incurred for the services provided are incurred in the period and charged to the profit and loss account.
Historically, MOH has honoured its commitment to enter into a formal agreement for these variations. It is therefore appropriate to recognise revenue on these transactions for the current 115 financial year. FABER GROUP BERHAD 2007 annual report (ii) Depreciation of Property, Plant and Equipment The cost of property, plant and equipment amounting to RM206,026,000 is depreciated on a straight-line basis over the assets’ useful lives. Management estimates the useful lives of these www.fabergroup.com.my property, plant and equipment to be within 5 to 15 years. These are common life expectancies applied, given the tenure of the Hospital Support Services Agreement. Changes in the expected level of usage, technological developments and the non-renewal of the Hospital Support Services agreement would adversely impact the economic useful lives and the residual values of these assets, therefore future depreciation charges could be revised.
(iii) Property Development The Group recognises property development revenue and expenses in the income statement by using the stage of completion method. The stage of completion is determined by the proportion that property development costs incurred for work performed to date bear to the estimated total property development costs.
Significant judgement is required in determining the stage of completion, the extent of the property development costs incurred, the estimated total property development revenue and costs, as well as the recoverability of the development projects. In making the judgement, the Group evaluates by relying on past experience and the work of specialists.
(iv) Income Taxes Significant estimation is involved in determining the provision for income taxes. There are certain transactions and computations for which the ultimate tax determination is uncertain during the ordinary course of business. The Group recognises liabilities for expected tax issues based on estimates of whether additional taxes will be due. Where the final tax outcome of these matters is different from the amounts that were initially recognised, such differences will impact the income tax and deferred tax provisions in the period in which such determination is made.
(v) Deferred Tax Assets Deferred tax assets are recognised for all unused tax losses and unabsorbed capital allowances to the extent that it is probable that taxable profit will be available against which the losses can be utilised. Significant management judgement is required to determine the amount of deferred tax assets that can be recognised, based upon the likely timing and level of future taxable profits together with future tax planning strategies. The deferred tax assets amounting to RM2,169,000 is mainly related to two property development companies, Rimbunan Melati Sdn Bhd and Faber Union Sdn Bhd, which management estimates they are probable to generate future levels of taxable profits. Further details are contained in Note 32. notes to the financial statements (cont’d.) 31 december 2007
3. REVENUE Group Company
Restated 2007 2006 2007 2006 RM’000 RM’000 RM’000 RM’000
Sale of properties 205,930 151,781 — — Services rendered: – facilities management 454,301 419,369 — — – non-healthcare facilities management 4,159 7,178 — — – management fees 473 1,503 6,650 5,543 Construction contracts 64 11,060 — — Revenue from catering services 4,740 — — — Rental income from properties — 110 — — Gross dividend income – subsidiaries — — 57,849 23,037 116 – others 8 — — — FABER GROUP BERHAD 2007 annual report 669,675 591,001 64,499 28,580 www.fabergroup.com.my 4. COST OF SALES Group
Restated 2007 2006 RM’000 RM’000
Property development costs (Note 15(b)) 136,616 94,851 Construction contracts costs 270 6,578 Services rendered: – facilities management 331,062 305,733 – non-healthcare facilities management 609 3,408 Catering services 3,185 —
471,742 410,570
5. OTHER INCOME Included in other income are:
Group Company
Restated 2007 2006 2007 2006 RM’000 RM’000 RM’000 RM’000
Interest income 4,860 3,670 1,137 1,042 Bad debt recovered 137 1,650 — — Gain on disposal of joint development profit entitlement — 2,273 — — Gain on disposal of plant and equipment 107 51 49 36 Write back of accruals 830 1,857 830 1,778 6. FINANCE COSTS Group Company Restated 2007 2006 2007 2006 RM’000 RM’000 RM’000 RM’000
Interest expense on: – RSLS 5,924 5,697 5,924 5,697 – Loan from corporate shareholder of a subsidiary 154 118 — — – ICPS 1,700 1,792 — — – Hire purchase 36 — — — – Bank borrowings 663 2,930 — —
8,477 10,537 5,924 5,697 Less: Interest capitalised in qualifying assets: – Property development costs (Note 15(b)) (641) (2,867) — —
7,836 7,670 5,924 5,697 117 FABER GROUP BERHAD 2007 annual report Borrowing costs capitalised in the qualifying assets during the financial year arose on the general borrowing pool and have been calculated by applying a capitalisation rate of 8% (2006: 8%) per annum to expenditure on such assets. www.fabergroup.com.my
7. PROFIT BEFORE TAX The following amounts have been included at arriving at profit before tax: Group Company Restated 2007 2006 2007 2006 RM’000 RM’000 RM’000 RM’000
Employee benefits expenses (Note 8) 189,957 170,939 6,651 5,678 Non-executive directors’ remuneration excluding benefits-in-kind (Note 9) 978 839 512 403 Auditors’ remuneration: – statutory 215 126 30 20 – underprovision in prior year 64 — 10 — – others 12 70 — — Operating leases: 4,962 4,793 481 441 – minimum lease payments of land and buildings 4,070 4,054 481 441 – minimum lease payments of plant and machineries 892 739 — — Amortisation of prepaid land lease payments (Note 16) 78 78 — — Amortisation of intangible assets (Note 17) 1,686 1,510 48 32 Bad debts written off — 981 — 472 Depreciation of property, plant and equipment (Note 14) 18,459 15,724 150 169 Impairment of land held for property development (Note 15(a)) 1,940 2,561 — — Impairment of property development costs (Note 15(b)) — 316 — — Land held for property development written off (Note 15(a)) 240 132 — — Loss on disposal of property, plant and equipment 215 2,679 — — notes to the financial statements (cont’d.) 31 december 2007
7. PROFIT BEFORE TAX (cont’d.) Group Company
Restated 2007 2006 2007 2006 RM’000 RM’000 RM’000 RM’000
Net unrealised foreign exchange loss 4,153 4,247 — — Realised loss on foreign exchange — — 1 — Provisions (Note 26) 1,767 1,365 — — Property, plant and equipment written off 48 — — — Provision/(reversal) for doubtful debts 130 4,511 (175) 552 Provision for diminution in investment 126 (4) 126 — Reversal for diminution in marketable securities (172) — — — Reversal of provision for doubtful debts — (17) — — Provision for legal claims 2,142 — — — 118 Write down of inventories 559 1,798 — — FABER GROUP BERHAD 2007 annual report 8. EMPLOYEE BENEFITS EXPENSES Group Company www.fabergroup.com.my Restated 2007 2006 2007 2006 RM’000 RM’000 RM’000 RM’000
Wages and salaries 142,354 133,132 5,237 3,955 Social security contributions 1,869 1,711 28 20 Contributions to defined contribution plans 19,514 17,514 693 441 Increase in liability for defined benefit plan (Note 25) 1,081 1,155 — — Share options granted under EES 2,014 1,638 261 1,005 Other benefits 23,125 15,789 432 257
189,957 170,939 6,651 5,678
Included in employee benefits expense of the Group and of the Company are executive directors’ remuneration excluding benefits-in-kind amounting to RM3,793,000 (2006: RM3,536,000) and RM1,032,000 (2006: RM1,576,000) respectively as further disclosed in Note 9. 9. DIRECTORS’ REMUNERATION Group Company
Restated 2007 2006 2007 2006 RM’000 RM’000 RM’000 RM’000
Directors of the Company Executive Salaries and other emoluments 450 466 450 466 Bonus 307 126 307 126 Contributions to defined contribution plans 113 90 113 90 Share options granted under EES 162 894 162 894 Benefits-in-kind 58 73 58 73
1,090 1,649 1,090 1,649
Non-Executive 119 Fees 606 538 392 322 FABER GROUP BERHAD Allowances 135 94 120 81 2007 annual report Benefits-in-kind 63 66 63 66 www.fabergroup.com.my 804 698 575 469
Other Directors Executive Salaries and other emoluments 1,523 1,259 — — Bonus 546 244 — — Contributions to defined contribution plans 337 238 — — Allowances 181 156 — — Share options granted under EES 174 63 — — Benefits-in-kind 104 93 — —
2,865 2,053 — —
Non-Executive Fees 214 186 — — Allowances 23 21 — —
237 207 — —
Total 4,996 4,607 1,665 2,118
Total excluding benefits-in-kind 4,771 4,375 1,544 1,979 notes to the financial statements (cont’d.) 31 december 2007
9. DIRECTORS’ REMUNERATION (cont’d.) Group Company
Restated 2007 2006 2007 2006 RM’000 RM’000 RM’000 RM’000
Analysis excluding benefits-in-kind: Total executive directors’ remuneration excluding benefits-in-kind (Note 8) 3,793 3,536 1,032 1,576 Total non-executive directors’ remuneration excluding benefits-in-kind (Note 7) 978 839 512 403
Total directors’ remuneration excluding benefits-in-kind (Note 42) 4,771 4,375 1,544 1,979
120 The number of directors of the Company whose total remuneration during the year fell within the following bands FABER GROUP BERHAD is analysed below: 2007 annual report No. of Directors www.fabergroup.com.my 2007 2006
Executive directors: RM400,001 – RM450,000 1 — RM650,001 – RM700,000 1 — RM1,500,001 – RM2,000,000 — 1
Non-executive directors: Below RM50,000 4 3 RM50,001 – RM100,000 3 3 RM100,001 – RM150,000 2 2 RM150,001 – RM200,000 1 1 10. INCOME TAX EXPENSE Group Company
Restated 2007 2006 2007 2006 RM’000 RM’000 RM’000 RM’000
Continuing operations Current income tax: Malaysian income tax 31,295 41,697 15,483 6,742
Overprovision in prior years: Malaysian income tax (1,959) (9,786) — —
29,336 31,911 15,483 6,742
Deferred tax (Note 32): – Relating to origination and reversal of 121 temporary differences (265) (4,812) — — FABER GROUP BERHAD – Relating to changes in tax rates (102) (430) — — 2007 annual report – Overprovision in prior years (3,576) (1,730) — — www.fabergroup.com.my (3,943) (6,972) — —
Total income tax expenses from continuing operations 25,393 24,939 15,483 6,742
Discontinued operations Current income tax: Malaysian income tax (Note 11) 6 4 — —
Total income tax expense 25,399 24,943 15,483 6,742
Domestic current income tax is calculated at the statutory tax rate of 27% (2006: 28%) of the estimated assessable profit for the year. The domestic statutory tax rate will be reduced to 26% from the current year’s rate of 27%, effective year of assessment 2008 and to 25% effective year of assessment 2009. The computation of deferred tax as at 31 December 2007 has reflected these changes.
Taxation for other jurisdictions is calculated at the rates prevailing in the respective jurisdictions. notes to the financial statements (cont’d.) 31 december 2007
10. INCOME TAX EXPENSE (cont’d.) A reconciliation of income tax expense applicable to profit/(loss) before taxation at the statutory income tax rate to income tax expense at the effective income tax rate of the Group and of the Company is as follows:
2007 2006 RM’000 RM’000
Group Profit/(loss) before taxation: Continuing operations 99,445 96,232 Discontinued operations (Note 11) 3,247 (6,634)
102,692 89,598
Taxation at Malaysian statutory tax rate of 27% (2006: 28%) 27,727 25,087 Income not subject to tax (95) (1,513) 122 Income not subject to tax – land sale (i) (3,248) — FABER GROUP BERHAD Expenses not deductible for tax purposes 4,037 7,819 2007 annual report Deferred tax recognised at different tax rates 38 178 Foreign income not subject to tax (28) — www.fabergroup.com.my Utilisation of previously unrecognised tax losses and capital allowances (5) (657) Deferred tax assets not recognised during the year – Malaysian subsidiaries 808 1,457 – Foreign subsidiary 1,944 4,760 Effects of changes in tax rates on opening balance of deferred tax (102) (430) Effects on reduced statutory tax rate on the first RM500,000 assessable profits (142) (242) Deferred tax over provided in prior years (3,576) (1,730) Income tax over provided in prior years (1,959) (9,786)
Income tax expense for the year 25,399 24,943
(i) Income not subject to tax – land sale This is in relation to the elimination of inter-company gain on the disposal of land held for property development between subsidiaries companies where the tax liability had been paid in previous year.
2007 2006 RM’000 RM’000
Company Profit before taxation 48,681 16,594
Taxation at Malaysian statutory tax rate of 27% (2006: 28%) 13,144 4,646 Expenses not deductible for tax purposes 2,119 2,153 Effect of utilisation of previously unrecognised tax losses and unabsorbed capital allowances — (294) Deferred tax assets not recognised during the year 220 237
Income tax expense for the year 15,483 6,742 10. INCOME TAX EXPENSE (cont’d.) Tax savings during the financial year arising from:
Group Company
2007 2006 2007 2006 RM’000 RM’000 RM’000 RM’000
Utilisation of unutilised tax losses brought forward from previous year (5) (300) — — Utilisation of unabsorbed capital allowances brought forward from previous year — (357) — (294)
Prior to the year of assessment 2008, Malaysian companies adopted the full imputation system. In accordance with the Finance Act 2007 which was gazetted on 28 December 2007, companies shall not be entitled to deduct tax on dividend paid, credited or distributed to its shareholders, and such dividends will be exempted from tax in the hands of the shareholders (“single tier system”). However, there is a transitional period of six 123 years, expiring on 31 December 2013, to allow companies to pay franked dividends to their shareholders under FABER GROUP BERHAD limited circumstances. Companies also have an irrevocable option to disregard the 108 balance and opt to pay 2007 annual report dividends under the single tier system. The change in the tax legislation also provides for the 108 balance to
be locked-in as at 31 December 2007 in accordance with Section 39 of the Finance Act 2007. www.fabergroup.com.my
The Company has not elected for the irrevocable option to disregard the 108 balance. Accordingly, during the transitional period, the Company may utilise the credit in the 108 balance as at 31 December 2007 to distribute cash dividend payments to ordinary shareholdings as defined under the Finance Act 2007, subject to availability of profits for distribution.
11. DISCONTINUED OPERATIONS AND DISPOSAL GROUP CLASSIFIED AS HELD FOR SALE On 10 December 2007, Faber Hotel Holdings Sdn Bhd (“FHHSB”) a wholly-owned subsidiary of the Company entered into a conditional Share Sale Agreement with Berjaya Land Berhad for the disposal of its 100% equity interest in Faber Labuan Sdn Bhd (“FLSB”) comprising two (2) ordinary shares of RM1.00 each (“FLSB Shares”) for a total cash consideration of USD68.22 million (or RM228.54 million). FLSB is an investment holding company, which contributed 70% of the legal capital of Vimas Joint Venture Company Limited (“Vimas”). Vimas has been reported as part of the Hotel segment previously. The proposed disposal will also enable the FGB Group to streamline its operations and focus its resources on the FGB Group’s existing core businesses of healthcare facilities management and property development.
The proposed disposal was subsequently completed on 18 February 2008. As at 31 December 2007, the assets and liabilities of FLSB Group have been presented on the consolidated balance sheets as a disposal group held for sale and results from the subsidiaries are presented separately on the consolidated income statements as discontinued operations. notes to the financial statements (cont’d.) 31 december 2007
11. DISCONTINUED OPERATIONS AND DISPOSAL GROUP CLASSIFIED AS HELD FOR SALE (cont’d.) An analysis of the result of discontinued operations is as follows:
Group
2007 2006 RM’000 RM’000
Revenue 59,247 46,806 Expenses (56,000) (53,440)
Profit/(loss) before tax of discontinued operations (Note 10) 3,247 (6,634) Income tax expense (Note 10) (6) (4)
Profit/(loss) for the year from discontinued operations 3,241 (6,638)
124 The following amounts have been included in arriving at profit/(loss) before tax of discontinued operations: FABER GROUP BERHAD Group 2007 annual report 2007 2006 www.fabergroup.com.my RM’000 RM’000
Auditors’ remuneration – statutory audit 56 56 Amortisation of intangible assets (Note 17) 39 40 Amortisation of prepaid land lease payments (Note 16) 1,034 1,059 Depreciation of property, plant and equipment 14,835 15,719 Property, plant and equipment written off 257 — Employee benefits expenses 10,110 8,275 Directors’ remuneration 834 559 Operating leases: – minimum lease payments of land and buildings 57 61 Management fees to hotel operator 4,874 3,780 Write back of accrual (170) (184) Interest expense on bank borrowings (Note 38) 4,572 5,039 Other income (170) (201)
The cash flows attributed to the discontinued operations are as follows:
Group
2007 2006 RM’000 RM’000
Operating cash flows 21,827 9,809 Investing cash flows (924) (761) Financing cash flows (8,567) (7,544)
Total cash flows 12,336 1,504 11. DISCONTINUED OPERATIONS AND DISPOSAL GROUP CLASSIFIED AS HELD FOR SALE (cont’d.) The major classes of assets and liabilities of FLSB Group classified as held for sale as the consolidated balance sheets as at 31 December 2007 are as follows:
Carrying amounts as at 31.12.2007 RM’000
Assets Property, plant and equipment (Note 14) 181,113 Prepaid land lease payments (Note 16) 15,249 Intangible assets (Note 17) 158 Inventories 344 Trade and other receivables 5,699 Cash and bank balances (Note 24) 8,861 125 Assets of disposal group classified as held for sale 211,424 FABER GROUP BERHAD 2007 annual report
Liabilities www.fabergroup.com.my Trade and other payables 13,783 Borrowings 53,326
Liabilities directly associated with assets classified as held for sale 67,109
The financial statements of Vimas for the year ended 31 December 2007 have been prepared on the assumption that the subsidiary will continue to operate as a going concern. The accumulated losses of Vimas as at the balance sheet date was USD33,866,523 (RM112,270,910) and its current liabilities exceeded its current assets by USD13,718,916 (RM45,479,582) as at that date. In view thereof, the subsidiary’s ability to continue to operate as a going concern is dependent upon achieving future profitable operations and/or the continuing support from its shareholders. The shareholders of the foreign subsidiary have confirmed their commitment to continue to provide financial support so that it can meet its liabilities as they fall due.
(a) Property, plant and equipment The net carrying amount of property, plant and equipment of the FLSB Group pledged as securities for borrowings (Note d) are as follows:
Group
2007 2006 RM’000 RM’000
Buildings 174,222 190,762 Plant and equipment, furniture and fittings 6,891 8,548
181,113 199,310 notes to the financial statements (cont’d.) 31 december 2007
11. DISCONTINUED OPERATIONS AND DISPOSAL GROUP CLASSIFIED AS HELD FOR SALE (cont’d.) (b) Prepaid land lease payments Leasehold land with an aggregate carrying value of RM15,249,000 (2006: RM17,304,000) are pledged as securities for borrowings (Note d).
(c) Inventories Inventories comprise food and beverage carried at cost.
(d) Borrowings The salient terms of the borrowings which comprise two secured foreign term loans are:
The two secured term loans obtained from the Bank for Foreign Trade of Vietnam by Vimas are repayable via seventeen (17) semi-annual instalments commencing from 30 September 2005 and bear interest at the higher of 4% per annum or Singapore Interbank Offered Rate (“Sibor”) 6 months plus 2.5%, which in 2007, averaged at 5.27% (2006: 5.95%). The term loans are denominated in USD and the balance outstanding as at 31 December 2007 was USD16,086,000 (2006: USD17,526,000) of which 126 USD1,820,000 (2006: USD1,440,000) is due within the next twelve months. FABER GROUP BERHAD The loans are guaranteed by an equity pledge agreement dated 12 September 2003 between a subsidiary, 2007 annual report Faber Labuan Sdn Bhd and Ho Tay Corporation (the “Owners”), as the pledgors, and Bank for Foreign Trade of Vietnam, as the pledgee. Thus, the secured loan is secured against Faber Labuan Sdn Bhd’s investment www.fabergroup.com.my in Vimas Joint Venture Company Limited (“Vimas”). The loans are also guaranteed by another equity pledge agreement dated 6 September 2004 between the same parties.
The term loans from the bank for Foreign Trade of Vietnam are also guaranteed by a mortgage agreement dated 12 September 2004 between Vimas as the mortgagor, and the Bank for Foreign Trade of Vietnam as the mortgagee. The loans are also guaranteed by second mortgage agreement dated 6 September 2004 between the same parties. According to this agreement, Vimas mortgaged the land use right and the right, title and interest of Vimas’s assets as security for the loan.
(e) Tax losses Group
2007 2006 RM’000 RM’000
Unused tax losses 79,615 72,662
Vietnamese regulations relating to the implementation of the Enterprise Income Tax Law permit the enterprises for the purposes of taxable profits to carry forward all losses within five years.
The Company is eligible to carry tax losses forward to offset against profits arising within five years from the year in which the loss was incurred.
There has been no tax assessment performed by the Tax authority for the Company during the year or for previous years. The Company has not registered its tax losses carried forward method with the tax authority.
(f) Deferred Income Tax No deferred tax asset has been recognised because there is not sufficient certainty that future taxable profits will be available against the deferred tax asset which could be utilised by the Company. 12. EARNINGS PER SHARE (a) Basic Basic earnings per share amounts are calculated by dividing profit for the year attributable to ordinary equity holders of the Company by the weighted average number of ordinary shares in issue during the financial year held by the Company.
Group
2007 2006 RM’000 RM’000
Profit from continuing operations attributable to ordinary equity holders of the Company 48,721 43,312 Profit/(loss) from discontinued operations attributable to ordinary equity holders of the Company 3,241 (6,638) Profit attributable to ordinary equity holders of the Company 51,962 36,674 127 FABER GROUP BERHAD ’000 ’000 2007 annual report
Weighted average number of ordinary shares in issue 325,138 286,713 www.fabergroup.com.my
Sen Sen
Basic earning per share for: Profit from continuing operations 15.0 15.1 Profit/(loss) from discontinued operations 1.0 (2.3)
Profit for the year 16.0 12.8
(b) Diluted For the purpose of calculating diluted earnings per share, the profit for the year attributable to ordinary equity holders of the Company and the weighted average number of ordinary shares in issue during the financial year have been adjusted for the dilutive effects of all potential ordinary shares, i.e. RCPS.
Group
2007 2006 RM’000 RM’000
Profit from continuing operations attributable to ordinary equity holders of the Company 48,721 43,312 Profit/(loss) from discontinued operations attributable to ordinary equity holders of the Company 3,241 (6,638)
Profit attributable to ordinary equity holders of the Company 51,962 36,674 notes to the financial statements (cont’d.) 31 december 2007
12. EARNINGS PER SHARE (cont’d.) (b) Diluted (cont’d.) Group
2007 2006 ’000 ’000
Weighted average number of ordinary shares in issue 325,138 286,713 Effects of dilution: RCPS 115,000 180,000
Adjusted weighted average number of ordinary shares in issue and issuable 440,138 466,713
Sen Sen
Diluted earning per share for: 128 Profit from contiuning operations 11.1 9.3 FABER GROUP BERHAD Profit/(loss) from discontinued operations 0.7 (1.4) 2007 annual report Profit for the year 11.8 7.9 www.fabergroup.com.my
There have been no other transactions involving ordinary shares or potential ordinary share between reporting date and the date of completion of these financial statements.
13. DIVIDENDS The Company paid a first and final dividend in respect of the financial year ended 31 December 2006, of 2% less 27% taxation on 338,001,000 ordinary shares, amounting to a dividend payable of RM4,935,000 (1.46 sen net per ordinary share) on 27 June 2007.
At the forthcoming Annual General Meeting, a final dividend in respect of the financial year ended 31 December 2007, of 3% less 26% taxation on 363,001,000 ordinary shares, amounting to a dividend payable of RM8,059,000 (2.22 sen net per ordinary share) will be proposed for shareholder’s approval. The financial statements for the current financial year do not reflect this proposed dividend. Such dividend, if approved by the shareholders, will be accounted for in equity as an appropriation of retained earnings in the financial year ending 31 December 2008. 14. PROPERTY, PLANT AND EQUIPMENT Plant, Equipment, Furniture, Fittings and Capital Motor Work-in- Buildings Vehicles Progress Total RM’000 RM’000 RM’000 RM’000
Group At 31 December 2007 Cost At 1 January 2007 238,403 195,391 5,926 439,720 Additions 922 22,081 6,102 29,105 Disposals (195) (1,650) — (1,845) Transfer — 9,668 (9,668) — Written off 129 – Continuing operations (Note 7) — (226) — (226) FABER GROUP BERHAD – Discontinued operations (Note 11) (406) — — (406) 2007 annual report Exchange differences (14,091) (731) — (14,822)
Reclassified as held for sale (Note 11) (223,995) (11,325) — (235,320) www.fabergroup.com.my
At 31 December 2007 638 213,208 2,360 216,206
Accumulated Depreciation At 1 January 2007 38,726 112,107 — 150,833 Charge for the year – Continuing operations (Note 7) 711 17,748 — 18,459 – Discontinued operations (Note 11) 13,651 1,184 — 14,835 Disposals (64) (1,386) — (1,450) Written off – Continuing operations (Note 7) — (178) — (178) – Discontinued operations (Note 11) (149) — — (149) Exchange differences (2,925) (273) — (3,198) Reclassified as held for sale (Note 11) (49,773) (4,434) — (54,207)
At 31 December 2007 177 124,768 — 124,945
Net Carrying Amount At 31 December 2007 461 88,440 2,360 91,261
At 31 December 2006 Cost At 1 January 2006 253,621 191,370 439 445,430 Additions 761 11,368 5,759 17,888 Disposals — (6,778) — (6,778) Transfer — 272 (272) — Exchange differences (15,979) (841) — (16,820)
At 31 December 2006 238,403 195,391 5,926 439,720 notes to the financial statements (cont’d.) 31 december 2007
14. PROPERTY, PLANT AND EQUIPMENT (cont’d.) Plant, Equipment, Furniture, Fittings and Capital Motor Work-in- Buildings Vehicles Progress Total RM’000 RM’000 RM’000 RM’000
Group (cont’d.) Accumulated Depreciation At 1 January 2006 26,592 99,177 — 125,769 Charge for the year 14,476 16,967 — 31,443 Disposals — (3,826) — (3,826) Exchange differences (2,342) (211) — (2,553)
130 At 31 December 2006 38,726 112,107 — 150,833 FABER GROUP BERHAD 2007 annual report Net Carrying Amount At 31 December 2006 199,677 83,284 5,926 288,887 www.fabergroup.com.my
Plant, Equipment, Furniture, Fittings and Motor Vehicles RM’000
Company At 31 December 2007 Cost At 1 January 2007 4,014 Additions 177 Disposals (217)
At 31 December 2007 3,974
Accumulated Depreciation At 1 January 2007 3,572 Charge for the year (Note 7) 150 Disposals (217)
At 31 December 2007 3,505
Net carrying amount 469 14. PROPERTY, PLANT AND EQUIPMENT (cont’d.) Plant, Equipment, Furniture, Fittings and Motor Vehicles RM’000
Company (cont’d.) At 31 December 2006 Cost At 1 January 2006 3,980 Additions 191 Disposals (157)
At 31 December 2006 4,014 131 FABER GROUP BERHAD Accumulated Depreciation 2007 annual report At 1 January 2006 3,525
Charge for the year (Note 7) 169 www.fabergroup.com.my Disposals (122)
At 31 December 2006 3,572
Net carrying amount 442
(a) The net carrying amount of property, plant and equipment of the Group pledged as securities for borrowings (Note 27) are as follows:
Group
2007 2006 RM’000 RM’000
Buildings — 190,762 Plant and equipment, furniture and fittings 87,175 80,986
87,175 271,748
(b) Property, plant and equipment of the Group and of the Company amounting to RM31,590,000 (2006: RM23,427,000) and RM2,990,000 (2006: RM2,990,000) respectively have been fully depreciated and are still in use. notes to the financial statements (cont’d.) 31 december 2007
14. PROPERTY, PLANT AND EQUIPMENT (cont’d.) (c) During the financial year, the Group acquired property, plant and equipment at aggregate costs of RM29,105,000 (2006: RM17,888,000) of which RM1,056,000 (2006: Nil) were acquired by means of hire purchase and finance lease arrangements. Net carrying amounts of property, plant and equipment held under hire purchase and finance lease arrangements are as follows:
Group
2007 2006 RM’000 RM’000
Equipment 882 —
Details of the terms and conditions of the hire purchase and finance lease arrangements are disclosed in Note 28. 132 15. LAND HELD FOR PROPERTY DEVELOPMENT AND PROPERTY DEVELOPMENT COSTS FABER GROUP BERHAD 2007 annual report (a) Land Held for Property Development Leasehold Development www.fabergroup.com.my Land Expenditure Total RM’000 RM’000 RM’000
Group At 31 December 2007 At cost At 1 January 2007 26,651 21,621 48,272 Additions — 8,303 8,303 Transfer to development expenditure (607) 607 — Written off (Note 7) — (240) (240)
At 31 December 2007 26,044 30,291 56,335
Accumulated Impairment Losses At 1 January 2007 51 4,398 4,449 Impairment losses for the year (Note 7) — 1,940 1,940
At 31 December 2007 51 6,338 6,389
Carrying Amount at 31 December 2007 25,993 23,953 49,946
At 31 December 2006 At cost At 1 January 2006 40,805 23,111 63,916 Additions 123 5,781 5,904 Transfer to property development costs (Note 15(b)) (14,277) (7,139) (21,416) Written off (Note 7) — (132) (132)
At 31 December 2006 26,651 21,621 48,272 15. LAND HELD FOR PROPERTY DEVELOPMENT AND PROPERTY DEVELOPMENT COSTS (cont’d.) (a) Land Held for Property Development (cont’d.) Leasehold Development Land Expenditure Total RM’000 RM’000 RM’000
Accumulated Impairment Losses At 1 January 2006 51 1,837 1,888 Impairment losses for the year (Note 7) — 2,561 2,561
At 31 December 2006 51 4,398 4,449
Carrying Amount at 31 December 2006 26,600 17,223 43,823
(b) Property development costs Freehold Leasehold Development 133 Land Land Expenditure Total FABER GROUP BERHAD RM’000 RM’000 RM’000 RM’000 2007 annual report
Group www.fabergroup.com.my At 31 December 2007 Cumulative property development costs At 1 January 2007 6,404 52,320 165,932 224,656 Transfer to development expenditure — (472) 472 — Costs incurred during the year ——108,363 108,363 Reversal of completed projects — (2,424) (36,530) (38,954)
At 31 December 2007 6,404 49,424 238,237 294,065
Cumulative costs recognised in income statement At 1 January 2007 (1,467) (11,285) (117,749) (130,501) Recognised during the year (Note 4) (2,232) (22,963) (111,421) (136,616) Reversal of completed projects — 2,424 36,530 38,954
At 31 December 2007 (3,699) (31,824) (192,640) (228,163)
Property development costs at 31 December 2007 2,705 17,600 45,597 65,902 notes to the financial statements (cont’d.) 31 december 2007
15. LAND HELD FOR PROPERTY DEVELOPMENT AND PROPERTY DEVELOPMENT COSTS (cont’d.) (b) Property development costs (cont’d.) Freehold Leasehold Development Land Land Expenditure Total RM’000 RM’000 RM’000 RM’000
Group (cont’d.) At 31 December 2006 Cumulative property development costs At 1 January 2006 6,404 11,896 69,048 87,348 Costs incurred during the year — 26,147 93,196 119,343 Transfer from land held for property development (Note 15(a)) — 14,277 7,139 21,416 Unsold units transferred to inventories — — (3,451) (3,451) 134 At 31 December 2006 6,404 52,320 165,932 224,656 Cumulative costs recognised in FABER GROUP BERHAD 2007 annual report income statement At 1 January 2006 — (151) (35,183) (35,334) www.fabergroup.com.my Recognised during the year (Note 4) (1,467) (10,818) (82,566) (94,851) Impairment losses for the year (Note 7) — (316) — (316)
At 31 December 2006 (1,467) (11,285) (117,749) (130,501)
Property development costs at 31 December 2006 4,937 41,035 48,183 94,155
(i) Included in property development costs incurred during the financial year is:
Group
2007 2006 RM’000 RM’000
Interest expense (Note 6) 641 2,867
(ii) During the year, a subsidiary of the Group, Country View Development Sdn Bhd, carried out a review of the recoverable amount of its land held for property development. The review led to the recognition of impairment losses of RM1,940,000 (included in “Administrative Expenses” as disclosed in Note 7).
(iii) Land held for property development and property development costs of a subsidiary, namely Rimbunan Melati Sdn Bhd, with carrying value of RM50,596,000 (2006: RM51,675,000) are pledged as security for its borrowings (Note 27). 16. PREPAID LAND LEASE PAYMENTS Group
2007 2006 RM’000 RM’000
At 1 January 20,362 22,779 Amortisation during the year – Continuing operations (Note 7) (78) (78) – Discontinued operations (Note 11) (1,034) (1,059) Exchange differences (1,021) (1,280) Reclassified as held for sale (Note 11) (15,249) —
At 31 December 2,980 20,362
Analysed as: Long term leasehold land 2,980 3,058 135 Short term leasehold land — 17,304 FABER GROUP BERHAD 2007 annual report 2,980 20,362 www.fabergroup.com.my
Leasehold land with an aggregate carrying value of RM2,980,000 (2006: RM20,362,000) are pledged as securities for borrowings (Note 27).
17. INTANGIBLE ASSETS Development expenditure Software Total RM’000 RM’000 RM’000
Group Cost At 1 January 2006 12,153 9,623 21,776 Additions — 632 632 Exchange differences — (22) (22)
At 31 December 2006 and 1 January 2007 12,153 10,233 22,386 Additions — 62 62 Exchange differences — (19) (19) Reclassified as held for sale (Note 11) — (296) (296)
At 31 December 2007 12,153 9,980 22,133 notes to the financial statements (cont’d.) 31 december 2007
17. INTANGIBLE ASSETS (cont’d.) Development expenditure Software Total RM’000 RM’000 RM’000
Group (cont’d.) Accumulated amortisation At 1 January 2006 7,331 6,128 13,459 Amortisation during the year 819 731 1,550 Exchange differences — (6) (6)
At 31 December 2006 and 1 January 2007 8,150 6,853 15,003 Amortisation during the year – Continuing operations (Note 7) 819 867 1,686 – Discontinued operations (Note 11) — 39 39 Exchange differences — (8) (8) Reclassified as held for sale (Note 11) — (138) (138)
136 At 31 December 2007 8,969 7,613 16,582 FABER GROUP BERHAD 2007 annual report Net carrying amount At 31 December 2007 3,184 2,367 5,551 www.fabergroup.com.my
At 31 December 2006 4,003 3,380 7,383
Software RM’000
Company Cost At 1 January 2006 121 Additions 69
At 31 December 2006 190
At 1 January 2007 190 Additions 20
At 31 December 2007 210
Accumulated amortisation At 1 January 2006 121 Amortisation (Note 7) 32
At 31 December 2006 153
At 1 January 2007 153 Amortisation (Note 7) 48
At 31 December 2007 201
Net carrying amount At 31 December 2007 9
At 31 December 2006 37 18. INVESTMENTS IN SUBSIDIARIES Company
2007 2006 RM’000 RM’000
Unquoted shares at cost 260,801 260,291 Less: Accumulated impairment losses (198,177) (198,177)
62,624 62,114
Details of the subsidiaries are listed in Note 45.
Acquisition of subsidiaries On 2 March 2007, the Company acquired 100% equity interest in Kesan Suci Sdn Bhd (“KSSB”), consisting of 2 ordinary shares of RM1.00 each for a cash consideration of RM2.00. KSSB is a newly incorporated joint venture vehicle to undertake the preparation and submission of proposals for food catering services for all 137 hospitals under the Ministry of Health Malaysia as well as for private hospitals or any other food-related FABER GROUP BERHAD establishments. 2007 annual report
On 28 June 2007, the Company, Matang Holdings Berhad (“Matang”) and Advent (M) Sdn Bhd (“Advent”) www.fabergroup.com.my completed the subscription of the following number of shares in KSSB: • 509,998 ordinary shares of RM1.00 each by the Company, • 290,000 ordinary shares of RM1.00 each by Matang Holdings Berhad, and • 200,000 ordinary shares of RM1.00 each by Advent (M) Sdn Bhd.
Following the completion of the above share subscription and 2 ordinary shares of RM1.00 each already held by the Company, KSSB became a 51% subsidiary of the Company.
The cost of acquisition comprised of the following:
RM’000
Purchase consideration satisfied by cash 510
The acquired subsidiary has contributed the following results to the Group:
2007 RM’000
Revenue 4,740 Loss for the year (1,760) notes to the financial statements (cont’d.) 31 december 2007
18. INVESTMENTS IN SUBSIDIARIES (cont’d.) Acquisition of subsidiaries (cont’d.) The assets and liabilities arising from the acquisition are as follows:
Fair value Acquiree’s recognised on carrying acquisition amount RM’000 RM’000
Cash and bank balances 1,000 1,000
Fair value of net assets 1,000 Less: Minority interests (490)
Group’s share of net assets 510 Goodwill on acquisition —
138 Total cost of acquisition 510 FABER GROUP BERHAD 2007 annual report The cash outflow on acquisition is as follows: www.fabergroup.com.my 2007 RM’000
Purchase consideration satisfied by cash, representing total cash outflow of the Company 510 Cash and cash equivalents of subsidiary acquired (510)
Net cash outflow of the Group —
19. OTHER INVESTMENTS Group Company
2007 2006 2007 2006 RM’000 RM’000 RM’000 RM’000
Unquoted shares at cost 3,922 3,522 798 398 Less: Accumulated impairment loss (2,751) (2,625) (126) —
1,171 897 672 398
Included in Other Investment is the Company’s investment in Ekovest-Faber Sdn Bhd amounting to RM400,000 paid for the subscription of shares (Note 46 (e)). The Directors have included this investment in Other Investment as the Company is unable to exercise significant influence as the structure of the joint venture is still under negotiations. 20. INVENTORIES Group
2007 2006 RM’000 RM’000
Cost Food and beverage 52 395 Consumables 3,503 1,931
3,555 2,326
Net realisable value Consumables 17,169 14,482 Properties held for sale 2,546 3,014 19,715 17,496 139 23,270 19,822 FABER GROUP BERHAD 2007 annual report
The amount of write-down of inventories recognised as an expense is RM559,000 (2006: RM1,798,000) which www.fabergroup.com.my is recognised in cost of sales.
21. TRADE AND OTHER RECEIVABLES Group Company
2007 2006 2007 2006 RM’000 RM’000 RM’000 RM’000
Current Trade receivables Third parties 156,507 111,880 — — Amount due from related parties: Affiliated companies 4 — — — Corporate shareholders of a subsidiary — 1,000 — — Accrued billings in respect of property development costs 40,984 48,861 — — Construction contracts: Due from customers (Note 22) — 1,100 — —
197,495 162,841 — — Less: Provision for doubtful debts: Third parties (2,859) (2,859) — —
Trade receivables, net 194,636 159,982 — —
Total trade receivables carried forward 194,636 159,982 — — notes to the financial statements (cont’d.) 31 december 2007
21. TRADE AND OTHER RECEIVABLES (cont’d.) Group Company
2007 2006 2007 2006 RM’000 RM’000 RM’000 RM’000
Current (cont’d.) Trade receivables (cont’d.) Total trade receivables brought forward 194,636 159,982 — —
Other receivables Amount due from related parties: Subsidiaries — — 980,268 1,011,108 Affiliated companies 1,021 1,046 — —
1,021 1,046 980,268 1,011,108 Deposits 5,107 5,025 113 113 140 Prepayments 1,061 2,854 — — FABER GROUP BERHAD Tax recoverable 6,581 6,098 155 155 2007 annual report Sundry receivables 9,979 15,490 1,887 3,446 www.fabergroup.com.my 23,749 30,513 982,423 1,014,822
Less: Provision for doubtful debts: Third parties (5,452) (6,143) (407) (582) Subsidiaries — — (729,312) (729,312) Affiliated companies (821) — — —
(6,273) (6,143) (729,719) (729,894)
Other receivables, net 17,476 24,370 252,704 284,928
Total 212,112 184,352 252,704 284,928
Non-current Trade receivables Amount due from a corporate shareholder of a subsidiary — 7,580 — —
Other receivables Amount due from related party – Affiliated company 2,982 4,183 — —
Total non-current trade and other receivables 2,982 11,763 — — 21. TRADE AND OTHER RECEIVABLES (cont’d.) (a) Credit Risk The Group’s primary exposure to credit risk arises through its trade receivables. The Group’s trading terms with its customers are mainly on credit. The credit period is generally for a period of one month, extending up to forty five days for major customers. Each customer has a maximum credit limit. The Group seeks to maintain strict control over its outstanding receivables and has a credit control department to minimise credit risk. Overdue balances are reviewed regularly by senior management. Trade receivables are non- interest bearing.
In view of the aforementioned and the fact that the Group’s trade receivables relate to a large number of diversified customers, there is no significant concentration of credit risk except for a subsidiary, Faber Medi- Serve Sdn Bhd.
As at 31 December 2007, Faber Medi-Serve Sdn Bhd, has a significant concentration of credit risk in the form of outstanding balances due from the Government of Malaysia representing approximately 50% (2006: 56%) of the total Group’s trade receivables. 141 Included in trade receivables of the Group is an overdue debt of RM6,853,000 (2006: RM941,000) due FABER GROUP BERHAD from a third party. Notwithstanding that the debt is overdue, the directors, after considering all available 2007 annual report information, are of the view that the debt can be collected in the normal course of business.
www.fabergroup.com.my (b) Included in trade receivables of the Group is RM1,449,000 (2006: RM101,000) being sums retained by stakeholders in relation to completed development projects of a subsidiary.
Stakeholders sum are unsecured, interest-free and have no fixed terms of repayment.
(c) Amounts Due From Related Parties (Current) Amounts due from all related parties are non-interest bearing and repayable on demand. All related parties receivables are unsecured and are to be settled in cash.
(d) Amounts Due From Related Parties - Affiliated Company (Non-current) The sums are amount owing from Opus International (M) Berhad for office rental at Faber Towers. These outstanding sums are to be settled via monthly instalment payment over 42 months. The amount is interest free and unsecured.
(e) Amount due form related parties – Corporate shareholder of a subsidiary (Non-current) In the prior year, the amount due from the corporate shareholder of a subsidiary relate to the undue portion of the sale proceeds of the Development Agreement between the Corporate Shareholder and the subsidiary. The amount is interest free and unsecured. The amount is due on September 2008 but the corporate shareholders had repaid the full amount on 24 January 2007.
Further details on related party transactions are disclosed in Note 42.
Other information on financial risks of other receivables are disclosed in Note 43. notes to the financial statements (cont’d.) 31 december 2007
22. DUE FROM/(TO) CUSTOMERS ON CONTRACTS Group
2007 2006 RM’000 RM’000
Construction costs incurred to date 69,033 68,932 Attributable profits 15,772 15,772
84,805 84,704 Less: Progress billings (84,805) (83,641)
— 1,063
Due from customer on contract (Note 21) — 1,100 142 Due to customer on contract (Note 31) — (37) FABER GROUP BERHAD — 1,063 2007 annual report www.fabergroup.com.my In prior year, Rimbunan Melati Sdn Bhd, a subsidiary of the Group had entered into an agreement with the Government of Malaysia (“GOM”) for the construction of a new base for the Federal Reserve Unit of the Royal Malaysian Police Force (“FRU Project”) for a contract value of RM81.00 million. The consideration has been settled by the transfer of a leasehold land amounting to RM48.30 million to the Company and cash of RM32.70 million. In addition to the above, the GOM had awarded additional works of RM3.8 million.
As at 31 December 2006, the FRU project had been handed over to GOM and the Company had provided the maintenance bond of RM4.05 million (Note 27) to GOM for the duration of the defects liability period of 24 months expiring in March 2008.
23. MARKETABLE SECURITIES Group
2007 2006 RM’000 RM’000
Shares quoted in Malaysia, at fair value 368 196
Market value of quoted shares 368 196 24. CASH AND CASH EQUIVALENTS Group Company
2007 2006 2007 2006 RM’000 RM’000 RM’000 RM’000
Cash on hand and at banks 47,334 73,064 2,009 1,948 Deposits with: – licensed banks 42,147 17,502 — — – other financial institutions 128,704 84,021 80,905 29,950
Cash and bank balances 218,185 174,587 82,914 31,898
(a) Included in cash at bank of the Group are the following amounts of:
(i) RM26,660,000 (2006: RM47,456,000) held pursuant to Section 7A of the Housing Development (Control and Licensing) Act 1966 and are restricted from use in other operations; 143 (ii) RM120,000 (2006: RM1,481,000) placed in a sinking fund account for the purpose of expenditure FABER GROUP BERHAD incurred on repair and maintenance on properties managed by certain subsidiaries. 2007 annual report
(b) Included in the fixed deposits of the Group are RM NIL (2006: RM4,035,000) placed in a sinking fund www.fabergroup.com.my account. The sinking funds are maintained for the purposes of expenditure to be incurred on repair and maintenance on properties managed by certain subsidiaries.
(c) Deposits with licensed banks of the Group amounting to RM9,149,000 (2006: RM4,478,000) are on lien for bank guarantee facilities granted to certain subsidiaries. As at 31 December 2007, the subsidiaries have utilised guarantee facilities amounting to RM8,714,000 (2005: RM9,047,000) (Note 27).
(d) Deposits with licensed banks of the Group amounting to RM408,000 (2006: RM362,000) are pledged as securities for borrowings (Note 27).
(e) For the purpose of the cash flow statements, cash and cash equivalents comprise the followings as at the balance sheet date:
Group Company
2007 2006 2007 2006 RM’000 RM’000 RM’000 RM’000
Cash and bank balances 218,185 174,587 82,914 31,898 Cash and bank balances classified as held for sale (Note 11) 8,861 — — —
Total cash and cash equivalents 227,046 174,587 82,914 31,898
Other information on financial risks of cash and cash equivalents are disclosed in Note 43. notes to the financial statements (cont’d.) 31 december 2007
25. EMPLOYEE BENEFITS Retirement Benefit Obligations Certain subsidiaries operate an unfunded, defined benefit Retirement Benefit Scheme (“the Scheme”) for its eligible employees. Under the Scheme, eligible employees are entitled to retirement benefits on attainment of the retirement age of 55, on medical incapacity or on death. The present value of defined benefit obligation was based on the actuarial valuation report by independent actuary, Mercer Zainal Consulting dated 6 March 2006.
The amounts recognised on the balance sheet are determined as follows:
Group
2007 2006 RM’000 RM’000
Present value of unfunded defined benefit obligations 2,335 2,110 144 Add/(less): Unrecognised transition liability 219 (553) Net liability 2,554 1,557 FABER GROUP BERHAD 2007 annual report www.fabergroup.com.my Analysed as: Current 388 276
Non-current: Later than 1 year but not later than 2 years 358 195 Later than 2 years 1,808 1,086
2,166 1,281
2,554 1,557
The amount recognised in the income statement are as follows:
Group
2007 2006 RM’000 RM’000
Current service costs 232 243 Interest cost 137 136 Transitional liability recognised 712 776
Total included in employee benefits expense (Note 8) 1,081 1,155
Of the Group’s charge for the year, RM1,081,000 (2006: RM1,155,000) has been included in other expenses. 25. EMPLOYEE BENEFITS (cont’d.) Retirement Benefit Obligations (cont’d.) Movements in the net liability in the current year were as follows:
Group
2007 2006 RM’000 RM’000
At 1 January 1,557 481 Recognised in income statement (Note 8) 1,081 1,155 Contributions paid (84) (79)
At 31 December 2,554 1,557
Principal actuarial assumptions used:
2007 2006 145 %%FABER GROUP BERHAD 2007 annual report Discount rate 6.5 6.5 Expected rate of salary increases 5.0 5.0 www.fabergroup.com.my
Assumptions regarding future mortality are based on published statistics and mortality tables.
26. PROVISIONS Late Sinking Delivery Fund Charges Total Group RM’000 RM’000 RM’000
At 31 December 2007 At 1 January 2007 5,837 1,489 7,326 Additional provision (Note 7) 11 1,756 1,767 Utilisation of provision (5,619) (927) (6,546)
At 31 December 2007 229 2,318 2,547
Current 149 1,756 1,905
Non-current: Later than 5 years 80 562 642
229 2,318 2,547 notes to the financial statements (cont’d.) 31 december 2007
26. PROVISIONS (cont’d.) Late Sinking Delivery Fund Charges Total Group (cont’d.) RM’000 RM’000 RM’000
At 31 December 2006 At 1 January 2006 6,196 582 6,778 Additional provision (Note 7) 458 907 1,365 Utilisation of provision (817) — (817)
At 31 December 2006 5,837 1,489 7,326
Current — 907 907
146 Non-current: Later than 5 years 5,837 582 6,419 FABER GROUP BERHAD 2007 annual report 5,837 1,489 7,326 www.fabergroup.com.my
(a) Sinking Fund Under the provision of the Housing Development (Control and Licensing) Act 1966 (Act 118) & Regulations, the purchasers are required to contribute to the sinking fund upon the dates they take vacant possession and all the funds accumulated into the sinking fund shall be held by the vendor in trust for the purchaser.
On April 2007, the Building and Common Property (Maintenance and Management) Act 2007 (the “Act”) came into force. As a result, all management fund and special accounts belonging to the properties maintained by the vendor must be reflected in the books of the respective properties. Hence, the provision for sinking fund have been transferred to the books of the respective properties during the year.
(b) Late Delivery Charges Provision for late delivery charges is in respect of certain property development projects undertaken by certain subsidiaries. The provision is recognised for expected liquidated damages claims based on the terms of the applicable sale and purchase agreements. 27. BORROWINGS Group Company 2007 2006 2007 2006 RM’000 RM’000 RM’000 RM’000
Short term borrowings Secured: Term loans — 3,902 — — Foreign term loans — 5,085 — — Hire purchase (Note 28) 286 — — — Bridging loan — 15,498 — —
286 24,485 — —
Unsecured: Irredeemable Cumulative Non-voting Convertible Preference Shares (Note 36) 1,120 — — — 147 Loan from a corporate shareholder of a subsidiary 532 — — — FABER GROUP BERHAD 2007 annual report 1,652 — — —
Total short term borrowings 1,938 24,485 — — www.fabergroup.com.my
Long term borrowings Secured: Foreign term loans — 56,808 — — Hire purchase (Note 28) 349 — — — Redeemable Secured Loan Stocks (Note 29) 154,045 148,121 154,045 148,121 Balance Sum due to Jeram Bintang Sdn Bhd (“JBSB”) (Note 30) 36,010 38,893 36,010 38,893
190,404 243,822 190,055 187,014
Unsecured: Redeemable Preference Shares (Note 36) 7,496 7,496 — — Irredeemable Cumulative Non-voting Convertible Preference Shares (Note 36) — 1,120 — — Loan from a corporate shareholder of a subsidiary — 1,063 — —
7,496 9,679 — —
Total long term borrowings 197,900 253,501 190,055 187,014
Total Borrowings Term loans — 3,902 — — Bridging loan — 15,498 — — Foreign term loans — 61,893 — — Hire purchase 635 — — — Redeemable Secured Loan Stocks 154,045 148,121 154,045 148,121 Balance Sum due to JBSB 36,010 38,893 36,010 38,893 Redeemable Preference Shares 7,496 7,496 — — Irredeemable Cumulative Non-voting Convertible Preference Shares 1,120 1,120 — — Loan from a corporate shareholder of a subsidiary 532 1,063 — —
199,838 277,986 190,055 187,014 notes to the financial statements (cont’d.) 31 december 2007
27. BORROWINGS (cont’d.) The salient terms of the borrowings are:
(a) Foreign Term Loans (Secured) In prior year, the two secured term loans obtained from the Bank for Foreign Trade of Vietnam by Vimas Joint Venture Company Limited are repayable via seventeen (17) semi-annual instalments commencing from 30 September 2005 and bear interest at the higher of 4% per annum or Sibor 6 months plus 2.5%, which in 2007, averaged at 5.27% (2006: 5.95%). The term loans are denominated in USD and the balance outstanding as at 31 December 2006 is USD16,086,000 (2006: USD17,526,000) of which USD1,820,000 (2006: USD1,440,000) is due within the next twelve months.
The loans are guaranteed by an equity pledge agreement dated 12 September 2003 between a subsidiary, Faber Labuan Sdn Bhd and Ho Tay Corporation (the “Owners”), as the pledgors, and Bank for Foreign Trade of Vietnam, as the pledgee. Thus, the secured loan is secured against Faber Labuan Sdn Bhd’s investment in Vimas Joint Venture Company Limited (“Vimas”). The loans are also guaranteed by another equity pledge agreement dated 6 September 2004 between the same parties.
148 The term loans from the Bank for Foreign Trade of Vietnam are also guaranteed by a mortgage agreement FABER GROUP BERHAD dated 12 September 2004 between Vimas as the mortgagor, and the Bank for Foreign Trade of Vietnam 2007 annual report as the mortgagee. The loans are also guaranteed by second mortgage agreement dated 6 September 2004 between the same parties. According to this agreement, Vimas mortgaged the land use right and the right, www.fabergroup.com.my title and interest of Vimas’s assets as security for the loan.
These loans have been reclassified as held for sale in Note 11 as at 31 December 2007.
(b) Bridging and Term Loan (Secured) During the year, Rimbunan Melati Sdn Bhd (“RMSB”) has fully settled the term loan and bridging loan. RMSB is in the process of applying for a discharge.
The secured bridging loan, term loan and the BG facilities of the subsidiary were secured by the following:
(i) First legal charge over a piece of leasehold land belonging to a subsidiary held under Geran 33388 for Lot 55311 in Mukim Batu, Daerah Kuala Lumpur, Wilayah Persekutuan measuring approximately 100.816 acres (Note 15); and
(ii) A fixed and floating debenture over the subsidiary’s present and future assets.
The subsidiary was also bound to redeem sold units/parcels of the leasehold land mentioned in Note (b)(i) above development subject to the following terms and the minimum aggregate redemption sums set out above:
(i) for each sold unit/parcel and the selling prices forms part of the first RM20,000,000 sales value, no redemption sum shall be payable to the Lender for the redemption of such sold unit/parcel from the Lender;
(ii) for each sold unit/parcel and the selling price forms part of the next RM80 million sales value (i.e. the sold unit/parcel that the selling price forms part of the sales between RM20 million and RM100 million), the redemption sum payable to the Lender for that sold unit/parcel shall be 10% of the selling price of that sold unit/parcel; and
(iii) for each sold unit/parcel and the selling price forms part of the sales values of RM100 million and above, the redemption sum payable to the Lender shall be 20% of the selling price of that sold unit/parcel. 27. BORROWINGS (cont’d.) (c) Syndicated Banking Facilities (Secured) The outstanding balances of a subsidiary’s secured Syndicated Banking Facilities, which comprise overdraft, revolving credit, bank guarantee and combined trade facilities are as follows:
2007 2006 RM’000 RM’000
Letter of credit — 6,841 Bank guarantees 4,036 3,219 Bank guarantees issued for Performance Bonds to GOM (Note 41) 20,869 19,684
The Syndicated Banking Facilities are secured by a Debenture and a Deed of Assignment of Proceeds dated 27 December 1996 by way of the following:
(i) A first fixed charge over all sums paid or may from time to time become due and payable to the subsidiary (“the Proceeds”) by the GOM pursuant to the Concession Agreement dated 28 October 149 1996, all its uncalled capital, its present and future goodwill, patents, trademarks, licences and FABER GROUP BERHAD concessions and all its present and future plant, equipment and machinery, motor vehicles and 2007 annual report furniture and fittings; and
(ii) A first floating charge over all the present and future lands undertakings and other properties and www.fabergroup.com.my assets of the company both movable and immovable, not otherwise charged in (c)(i) above.
(d) Loan From a Corporate Shareholder of a Subsidiary The loan from a minority shareholder of a subsidiary company, Healthtronics (M) Sdn Bhd (“HLT”) is unsecured, and bears interest at 1% (2006: 1%) above the Base Lending Rate (“BLR”) per annum. The BLR for year 2007 is 6.75% (2006: 6.25%) per annum. The repayment of the loan shall be subordinated to the payment of the dividends on the ICPS (Note 36(c)) to the ICPS shareholders but shall rank pari passu to the payment of dividends on the ordinary shares, the proportion of which shall be approved by the Board of Directors of the subsidiary. HLT has projected to repay the loan in the next financial year, hence it has been disclosed as short term borrowings.
Other information on financial risks of borrowings are disclosed in Note 43.
28. HIRE PURCHASE AND FINANCE LEASE LIABILITIES Group
2007 2006 RM RM
Future minimum lease payments: Not later than 1 year 321 — Later than 1 year and not later than 2 years 216 — Later than 2 years and not later than 5 years 164 —
Total future minimum lease payments 701 — Less: Future finance charges (66) —
Present value of finance lease liabilities 635 — notes to the financial statements (cont’d.) 31 december 2007
28. HIRE PURCHASE AND FINANCE LEASE LIABILITIES (cont’d.) Group
2007 2006 RM RM
Analysis of present value of finance lease liabilities: Not later than 1 year 286 — Later than 1 year and not later than 2 years 197 — Later than 2 years and not later than 5 years 152 —
635 — Less: Amount due within 12 months (Note 27) (286) —
Amount due after 12 months (Note 27) 349 —
150 The Group has finance leases and hire purchase contracts for various items of property, plant and equipment FABER GROUP BERHAD (see Note 14). These leases have terms of renewal but no purchase options and escalation clauses. Renewals 2007 annual report are at the option of the specific entity that holds the lease. There are no restrictions placed upon the Group by entering into these leases and no arrangements have been entered into for contingent rental payments. www.fabergroup.com.my Other information on financial risks of hire purchase and finance lease liabilities are disclosed in Note 43.
29. REDEEMABLE SECURED LOAN STOCKS (“RSLS”) On 30 September 2004, the Company issued RM185,528,000 nominal value of RSLS of RM1 each as partial settlement to Jeram Bintang Sdn Bhd pursuant to its Debt Restructuring Scheme.
The RSLS comprise RM135,564,000 of RSLS issued and 4% coupon compounded annually up to maturity amounting to RM49,964,000 nominal value payable in the form of RSLS annually in arrears at each anniversary date.
The salient terms of the RSLS are as follows:
(i) The RSLS shall be redeemed for cash on the maturity date, which is 8 years from the date of issuance of 30 September 2004.
(ii) The RSLS are secured by a charge over: – 30,599,998 issued and paid-up ordinary shares of RM1 each in Faber Medi-Serve Sdn Bhd (“FMS”) by Faber Healthcare Management Sdn Bhd; and –2 issued and paid-up ordinary shares of RM1 each in FMS by the Company.
The Security Interest created to secure the Balance Sum due to Jeram Bintang Sdn Bhd, (Note 30) shall rank in priority and security over the Security Interest to secure the RSLS. The RSLS constitute unsubordinated obligations of the Company. 29. REDEEMABLE SECURED LOAN STOCKS (“RSLS”) (cont’d.) (iii) The RSLS bear coupon at the rate of 4% per annum compounded annually. The coupon payment is made in the form of RSLS payable annually in arrears at each anniversary date as follows:
At end of year from Amount date of issue RM’000
1 5,423 2 5,639 3 5,865 4 6,100 5 6,344 6 6,597 7 6,861 8 7,135 49,964 151 FABER GROUP BERHAD 30. BALANCE SUM DUE TO JERAM BINTANG SDN BHD 2007 annual report On 30 September 2004, following the completion of its Debt Restructuring, the Company acknowledged the www.fabergroup.com.my Balance Sum of RM51,442,000 due to Jeram Bintang Sdn Bhd.
The Balance Sum is interest free and is repayable over a period of 8 years from the date of completion of the restructuring scheme. The Balance Sum is secured as follows:
(i) assignment of dividends receivable from FMS on 315,000 ordinary shares held by Intensive Quest Sdn Bhd (“IQSB”) in FMS amounting to RM24 million by the Company;
(ii) assignment of net profits from the development of Casa Palma land amounting to RM15.33 million by Faber Union Sdn Bhd;
(iii) assignment of a share of the Group’s portion of net profits from the joint venture in respect of the development of Taman Sri Desa land amounting to RM3.207 million by Faber Union Sdn Bhd;
(iv) assignment of net profits from the development of Faber Grandview land amounting to RM1.81 million by Faber Grandview Development (Sabah) Sdn Bhd;
(v) assignment of net profits from the development of Country View land amounting to RM7.093 million by Country View Development Sdn Bhd;
(vi) charge over 30,599,998 issued and paid-up ordinary shares of RM1.00 each in FMS by Faber Healthcare Management Sdn Bhd; and
(vii) charge over 2 issued and paid-up ordinary shares of RM1.00 each in FMS by the Company.
During the year ended 31 December 2007, the Group and Company paid RM2,883,000 as partial settlement of the Balance Sum due to Jeram Bintang Sdn Bhd (2006: RM3,486,000). notes to the financial statements (cont’d.) 31 december 2007
31. TRADE AND OTHER PAYABLES Group Company
2007 2006 2007 2006 RM’000 RM’000 RM’000 RM’000
Trade payables Third parties 52,763 42,530 — — Affiliated companies 11,996 36,156 — — Progress billings in respect of property development costs 5,225 9,800 — — Construction contracts: Due to customers (Note 22) — 37 — —
69,984 88,523 — —
Other payables 152 Amounts due to related parties: – Subsidiaries — — 150,232 161,591 FABER GROUP BERHAD – Related companies — 18 — — 2007 annual report – Affiliated companies 204 — — — – Corporate shareholder of subsidiaries 424 773 — — www.fabergroup.com.my – ICPS dividends payable to minority shareholder of a subsidiary 1,792 1,792 — —
2,420 2,583 150,232 161,591 Accruals 85,083 80,933 2,812 3,378 Deposits refundable 3,222 3,472 — — Deposit received for disposal of Faber Labuan 22,748 — — — Sundry payables 21,466 19,800 458 830
134,939 106,788 153,502 165,799
204,923 195,311 153,502 165,799
(a) Trade payables Trade payables are non-interest bearing and the normal trade credit terms granted to the Group range from 30 to 90 days (2006: 30 to 90 days).
Included in trade payables at 31 December 2007 are retention sums of RM19,104,000 (2006: RM14,882,000) relating to construction work-in-progress.
Retention sums are unsecured, interest-free and are expected to be paid as follows:
Group
2007 2006 RM’000 RM’000
Current 2,716 2,686 1-2 years 16,120 8,543 2-3 years 268 3,653
19,104 14,882 31. TRADE AND OTHER PAYABLES (cont’d.) (b) Amounts Due To Related Parties Amounts due to all related parties are non-interest bearing and are repayable on demand. The amounts are unsecured and are to be settled in cash.
(c) Deposit received for disposal of Faber Labuan This is the deposit received from Berjaya Land Berhad pursuant to the Share Sale Agreement for the disposal of the entire Sale Shares of Faber Labuan Sdn Bhd as set out in Note 11.
Further details on related party transactions are disclosed in Note 42.
Other information on financial risks of other payables are disclosed in Note 43.
32. DEFERRED TAXATION Group 153 2007 2006 RM’000 RM’000 FABER GROUP BERHAD 2007 annual report
At 1 January 6,794 13,766 www.fabergroup.com.my Recognised in income statement (Note 10) (3,943) (6,972)
At 31 December 2,851 6,794
Presented after appropriate offsetting as follows: Deferred tax assets (4,834) (4,888) Deferred tax liabilities: Subject to income tax 7,685 11,682
2,851 6,794
The components and movements of deferred tax liabilities and assets during the financial year prior to offsetting are as follows:
Deferred Tax Liabilities of the Group:
Property, Plant and Intangible Equipment Linen Assets Total RM’000 RM’000 RM’000 RM’000
At 1 January 2007 9,963 2,973 1,081 14,017 Recognised in the income statement 760 776 (279) 1,257
At 31 December 2007 10,723 3,749 802 15,274
At 1 January 2006 11,072 2,730 1,360 15,162 Recognised in the income statement (1,109) 243 (279) (1,145)
At 31 December 2006 9,963 2,973 1,081 14,017 notes to the financial statements (cont’d.) 31 december 2007
32. DEFERRED TAXATION (cont’d.) Deferred Tax Assets of the Group:
Tax Losses and Unabsorbed Capital Accruals for Other Allowance Direct Cost Payables Total RM’000 RM’000 RM’000 RM’000
At 1 January 2007 (47) (1,051) (6,125) (7,223) Recognised in the income statement 47 (261) (4,986) (5,200)
At 31 December 2007 — (1,312) (11,111) (12,423)
At 1 January 2006 (75) (372) (949) (1,396) 154 Recognised in the income statement 28 (679) (5,176) (5,827) At 31 December 2006 (47) (1,051) (6,125) (7,223) FABER GROUP BERHAD 2007 annual report
Deferred Tax Liabilities of the Company: www.fabergroup.com.my Accelerated Capital Allowance RM’000
At 1 January 2006/31 December 2007 47
Deferred Tax Assets of the Company:
Tax Losses and Unabsorbed Capital Allowance RM’000
At 1 January 2006/31 December 2007 (47)
Deferred tax assets have not been recognised in respect of the following items:
Malaysian Companies
Group Company
2007 2006 2007 2006 RM’000 RM’000 RM’000 RM’000
Unused tax losses 47,616 45,470 8,016 8,016 Unabsorbed capital allowance 3,894 3,620 488 318 Unused investment tax allowance 561 561 — — Provisions 2,387 1,816 2,341 1,695
54,458 51,467 10,845 10,029 32. DEFERRED TAXATION (cont’d.) The unutilised tax losses and unabsorbed capital allowances of the Group amounting to RM45,230,000 (2006: RM46,956,000) and RM3,580,000 (2006: RM3,545,000) respectively are available indefinitely for offsetting against future taxable profits of the respective entities within the Group, subject to no substantial change in shareholdings of those entities under the Income Tax Act, 1967 and guidelines issued by the tax authority.
The unutilised tax losses and unabsorbed capital allowances of the Company are available for offsetting against future taxable profits subject to no substantial change in shareholdings under the Income Tax Act, 1967 and guidelines issued by the tax authority.
33. SHARE CAPITAL AND SHARE PREMIUM Number of ordinary <------Amount ------> shares of Share Total RM1 each Capital Share Share Capital (Issued Capital 155 (Issued and and Fully Share and Share FABER GROUP BERHAD Fully paid up) paid up) Premium Premium 2007 annual report ’000 RM’000 RM’000 RM’000 www.fabergroup.com.my At 1 January 2006 278,001 278,001 115,985 393,986 Ordinary shares issued during the year: Conversion of RCPS 20,000 20,000 — 20,000
At 31 December 2006 and 1 January 2007 298,001 298,001 115,985 413,986 Ordinary shares issued during the year: Conversion of RCPS 65,000 65,000 — 65,000
At 31 December 2007 363,001 363,001 115,985 478,986
Number of Ordinary Shares of RM1 Each Amount
2007 2006 2007 2006 ’000 ’000 RM’000 RM’000
Authorised share capital At 1 January/31 December 3,000,000 3,000,000 3,000,000 3,000,000
The holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at meetings of the Company. All ordinary shares rank equally with regard to the Company’s residual assets. notes to the financial statements (cont’d.) 31 december 2007
33. SHARE CAPITAL AND SHARE PREMIUM (cont’d.) (a) Ordinary Shares Issued Pursuant to Conversion of RCPS During the financial year, the Company issued 65,000,000 new ordinary shares of RM1 each at an issue price of RM1 each per ordinary share amounting to RM65 million pursuant to the conversion of RM65,000,0000 nominal value of 8-year Redeemable Convertible Preference Shares (“RCPS”) into 65,000,000 new ordinary share of RM1.00 each of Company in accordance to the Subscription Agreement constituting up to RM200,000,000 of RM1.00 nominal value of 8-year RCPS between the Company and Jeram Bintang Sdn Bhd (“JBSB”) dated 17 September 2004. The conversion of the 65,000,000 RCPS by JBSB is in respect of the conversion rights attached to the RCPS for the period commencing from the 30 September 2005 and ending on the fourth anniversary of the Issue Date.
The new ordinary shares issued and allotted upon conversion of the RCPS rank pari passu in all respects with the existing shares in issue at the conversion date, except that they will not be entitled to any dividends, rights, allotments and/or other distribution the record date of which is prior to such conversion date. 156 34. OTHER CAPITAL RESERVES FABER GROUP BERHAD 2007 annual report Group and Company
RCPS www.fabergroup.com.my RM’000 (Note 36)
At 1 January 2006 200,000 Conversion into ordinary shares (Note 33) (20,000)
At 31 December 2006 180,000 Conversion into ordinary shares (Note 33(a)) (65,000)
At 31 December 2007 115,000
The balance arises from the partial settlement of the amount owing to Jeram Bintang Sdn Bhd pursuant to the Debt Restructuring Scheme in financial year ended 31 December 2004. Further information is disclosed in Note 36(a).
35. OTHER RESERVES Foreign Share Currency Options Translation under EES Reserve Reserve Total RM’000 RM’000 RM’000
Group At 1 January 2006 32,351 — 32,351 Foreign currency translation (7,912) — (7,912) Share options granted under EES recognised in income statement (Note 8) — 1,638 1,638
At 31 December 2006 24,439 1,638 26,077 35. OTHER RESERVES (cont’d.) Foreign Share Currency Options Translation under EES Reserve Reserve Total RM’000 RM’000 RM’000
Group (cont’d.) At 1 January 2007 24,439 1,638 26,077 Foreign currency translation (13,285) — (13,285) Share options granted under EES recognised in income statement — 750 750
At 31 December 2007 11,154 2,388 13,542
Share Options 157 under EES FABER GROUP BERHAD Reserve 2007 annual report Company RM’000
www.fabergroup.com.my At 1 January 2006 — Share options granted under EES recognised in income statement (Note 8) 1,005
At 31 December 2006 1,005
At 1 January 2007 1,005 Share options granted under EES recognised in income statement (Note 8) 261
At 31 December 2007 1,266
(a) Foreign Currency Translation Reserve The foreign currency translation reserve is used to record exchange differences arising from the translation of the financial statements of foreign operations whose functional currencies are different from that of the Group’s presentation currency. It is also used to record the exchange differences arising from monetary items which form part of the Group’s net investment in foreign operations, where the monetary item is denominated in either the functional currency of the reporting entity or the foreign operation.
(b) Share Options Under EES Reserve In conjunction with UEM Group Berhad’s (“UEM”) (formerly known as United Engineers (Malaysia) Berhad) group wide restructuring scheme in the financial year ended 31 December 2003, UEM undertook an Employee Equity Scheme (“EES”) comprising up to 282,050,000 ordinary shares of RM1.00 each in UEM World Berhad (“EES Shares”) for eligible employees of United Engineers (Malaysia) Berhad and its subsidiaries and certain of its associates (“UEM Group”) and Khazanah to participate in the EES to, amongst others, meet the 25% public spread requirement for UEM World Berhad (“UEM World”) under the Listing Requirements of Bursa Malaysia Securities Berhad (“Bursa Securities”).
As an associate of UEM, eligible employees of Faber Group Berhad and its group of companies participated in the EES.
Other reserves represent the allocation of the Employee Equity Scheme for eligible employees of the Group by UEM. notes to the financial statements (cont’d.) 31 december 2007
36. PREFERENCE SHARES <------Group ------> <------Company ------>
Number of Shares Amount Number of Shares Amount
2007 2006 2007 2006 2007 2006 2007 2006 ’000 ’000 RM’000 RM’000 ’000 ’000 RM’000 RM’000
Nominal value-issued and fully paid (a) RCPS of RM1.00 each At 1 January 180,000 200,000 180,000 200,000 180,000 200,000 180,000 200,000 Conversion into ordinary shares (Note 33) (65,000) (20,000) (65,000) (20,000) (65,000) (20,000) (65,000) (20,000)
158 At 31 December 115,000 180,000 115,000 180,000 115,000 180,000 115,000 180,000 FABER GROUP BERHAD 2007 annual report Classified as Other www.fabergroup.com.my Capital Reserves within Equity (Note 34) 115,000 180,000 115,000 180,000
(b) RPS of RM1.00 each At 1 January/ 31 December (Note 27) 7,496 7,496 7,496 7,496 — — — —
(c) ICPS of RM0.50 each: At 1 January and 31 December 2,240 2,240 1,120 1,120 — — — —
Classified as Borrowings (Note 27) 8,616 8,616 — — 36. PREFERENCE SHARES (cont’d.) (a) 8-year Redeemable Convertible Preference Shares (“RCPS”) On 30 September 2004, the Company issued 200 million of RM1.00 nominal value of RCPS to JBSB as partial settlement of the amount owing to JBSB pursuant to the Debt Restructuring scheme.
The salient terms of the RCPS are as follows:
(i) The RCPS are convertible into fully paid ordinary shares of the Company during the period from 30 September 2004 (being the date of issue) to 28 September 2012 at the rate of RM1.00 nominal value of RCPS for one (1) new fully paid ordinary share of RM1.00 each as follows:
Maximum Amount From 30 September 2004 (date of issue) Convertible RM’000
30 September 2004 to 29 September 2005 (converted) * 20,000 30 September 2005 to 29 September 2006 (converted) * 20,000 159 30 September 2006 to 29 September 2007 (converted) * 20,000 FABER GROUP BERHAD 30 September 2007 to 29 September 2008 (converted) * 25,000 2007 annual report 30 September 2008 to 29 September 2009 25,000
30 September 2009 to 29 September 2010 30,000 www.fabergroup.com.my 30 September 2010 to 29 September 2011 30,000 30 September 2011 to 28 September 2012 30,000
200,000
* JBSB exercised their conversion rights attached to the RCPS for the period commencing from the 30 September 2004 and ending on the fourth anniversary of the Issue Date. During the year, 65 million (2006: 20 million) nominal value RM1 RCPS were converted into new ordinary shares of RM1 of the Company.
(ii) No dividends are payable on the RCPS.
(iii) The tenure of the RCPS is eight (8) years. The maturity date of the RCPS is the eighth anniversary from the date of issue of the RCPS i.e 28 September 2012.
(iv) Redemption of the RCPS is at 100% of its nominal value and is only allowed at the sole option of the Company at any time during the tenure of the RCPS. Any RCPS not redeemed or converted shall on maturity date be automatically converted into ordinary shares of the Company.
(v) The RCPS carry no right to attend and vote at any general meeting of the Company, unless the meeting is convened for the purpose of reducing capital or winding up or sanctioning the sale of the principal undertaking of the company or where the proposition to be submitted to the meeting directly affects the rights of the RCPS holders. notes to the financial statements (cont’d.) 31 december 2007
36. PREFERENCE SHARES (cont’d.) (b) Redeemable Preference Shares (“RPS”) A subsidiary, Rimbunan Melati Sdn Bhd had issued 16,659,091 Non-voting Non-cumulative Redeemable Preference shares of RM1.00 each to its shareholders. The above amount is attributable to the minority shareholder of the subsidiary. The RPS have no voting rights and entitled to a fixed non-cumulative preferential dividends at a rate of 5% per annum. The RPS have no fixed term of redemption.
(c) Irredeemable Cumulative Non-voting Convertible Preference Shares (“ICPS”) A subsidiary, Healthtronics Sdn Bhd had issued 1.68 million of RM1.00 each of ICPS (Class A) shares to its holding company, Faber Medi-Serve Sdn Bhd and 2.24 million of RM0.50 each of ICPS (Class B) to its minority shareholder pursuant to a Shareholders Agreement dated 21 May 2002.
The above amount is attributable to the ICPS (Class B) held by the minority shareholder.
The ICPS (Class B) carry a net dividend of RM0.80 per ICPS (Class B) effective from financial year 2004 payable on a cumulative basis until full conversion. The ICPS (Class B) has a tenure of 6 years maturing 160 on 31 December 2008. Upon maturity, the ICPS (Class B) shall be converted on the basis of two ICPS (Class B) for one new ordinary share of Healthtronics Sdn Bhd. The ICPS (Class B) are not redeemable for FABER GROUP BERHAD 2007 annual report cash. www.fabergroup.com.my 37. MINORITY INTERESTS The minority shareholders’ share of loss in the subsidiary companies is limited to their share of the paid-up capital of the subsidiary companies. The balance of the loss will be borne by the Group until such time that the subsidiary companies are able to generate profits. The minority share of the loss for the financial year and cumulative loss which are borne by the Group are RM6,953,000 (2006: RM4,784,000) and RM11,931,000 (2006: RM4,978,000) respectively.
38. NET CASH GENERATED FROM OPERATIONS Group
2007 2006 RM’000 RM’000
Cash Flows From Operating Activities Profit/(loss) before tax from: Continuing operations 99,445 96,232 Discontinued operations (Note 11) 3,247 (6,634) Adjustments for: Depreciation of property, plant and equipment – Continuing operations (Note 7) 18,459 15,724 – Discontinued operations (Note 11) 14,835 15,719 Amortisation of intangible assets – Continuing operations (Note 7) 1,686 1,550 – Discontinued operations (Note 11) 39 — Amortisation of prepaid land lease payments – Continuing operations (Note 7) 78 78 – Discontinued operations (Note 11) 1,034 1,059 Property, plant and equipment written off – Continuing operations (Note 7) 48 — – Discontinued operations (Note 11) 257 — 38. NET CASH GENERATED FROM OPERATIONS (cont’d.) Group
2007 2006 RM’000 RM’000
Cash Flows From Operating Activities (cont’d.) Impairment of land held for property development (Note 15(a)) 1,940 2,561 Impairment of property development cost (Note 15(b)) — 316 Share options granted under EES (Note 8) 2,014 1,638 Increase in liability for defined benefit plan (Note 25) 1,081 1,155 Bad debts written off — 981 Bad debts recovered (137) (1,650) Dividend income (8) — Provisions (Note 26) 1,767 1,365 Provision for legal claims 2,142 — Provision for doubtful debts 130 4,511 Provision for diminution in investment 126 (4) 161 Reversal for diminution in marketable securities (172) — FABER GROUP BERHAD Reversal of provision for doubtful debts — (17) 2007 annual report Interest income (4,860) (3,670) Write back of accruals www.fabergroup.com.my – Continuing operations (Note 5) (830) (1,857) – Discontinued operations (Note 11) (170) (184) Write down of inventories 559 1,798 Land held for property development written off (Note 15(a)) 240 132 Net unrealised foreign exchange loss 4,153 4,247 Gain on disposal of property, plant and equipment (107) (51) Loss on disposal of property, plant and equipment 215 2,679 Gain on disposal of joint development profit entitlement — (2,273) Interest expense on: – RSLS 5,924 5,697 – Loan from shareholder of a subsidiary 154 118 – ICPS 1,700 1,792 – Hire purchase 36 — – Bank borrowings – Continuing operations (Note 7) 22 63 – Discontinued operations (Note 11) 4,572 5,039
Operating profit before working capital changes 159,619 148,114 Increase/(decrease) in property development cost 28,894 (15,769) Increase in inventory (4,351) (3,668) Increase in receivables (24,188) (39,182) Decrease in retirement benefit obligations (84) (79) Increase in payables 15,274 52,215
Cash generated from operations 175,164 141,631 Interest paid – Continuing operations (817) (3,048) – Discontinued operations (Note 11) (4,572) (5,039) Taxes paid (40,524) (24,892)
Net cash generated from operations 129,251 108,652 notes to the financial statements (cont’d.) 31 december 2007
38. NET CASH GENERATED FROM OPERATIONS (cont’d.) Company
2007 2006 RM’000 RM’000
Cash Flows From Operating Activities Profit before tax from: Continued operations 48,681 16,594 Adjustments for: Depreciation of property, plant and equipment (Note 14) 150 169 Amortisation of intangible assets (Note 17) 48 32 Share options granted under EES (Note 35) 261 1,005 Bad debts written off — 472 Provision/(reversal) for doubtful debts (175) 552 Interest income (1,137) (1,042) Provision for diminution in investment 126 — 162 Write back of accruals (830) (1,778) FABER GROUP BERHAD Gain on disposal of property, plant and equipment (49) (36) 2007 annual report Dividend income received from a subsidiary (57,849) (23,037) Interest expense on RSLS 5,924 5,697 www.fabergroup.com.my Operating loss before working capital changes (4,850) (1,372) Decrease/(increase) in receivables 1,559 (2,397) (Decrease)/increase in payables (108) 126
Cash used in operations (3,399) (3,643) Taxes paid (15,176) (6,450)
Net cash used in operations (18,575) (10,093)
39. OPERATING LEASE ARRANGEMENTS The Group has entered into non-cancellable operating lease agreements for the use of land, buildings and certain plant and machineries. These leases have an average life of between 3 and 5 years with no renewal or purchase option included in the contracts.
The Group also leases various plant and machinery under cancellable operating lease agreements. The Group is required to give a six-month notice for the termination of those agreements. The future aggregate minimum lease payments under non-cancellable operating leases contracted for as at the balance sheet date but not recognised as liabilities and the total of future aggregate minimum sublease receipts expected to be received under non- cancellable subleases, are as follows:
Group Company
2007 2006 2007 2006 RM’000 RM’000 RM’000 RM’000
Future minimum rental payments of premises: Not later than 1 year 2,108 2,967 481 441 Later than 1 year and not later than 2 years 1,010 2,188 — — Later than 2 years and not later than 5 years 138 233 — —
3,256 5,388 481 441 39. OPERATING LEASE ARRANGEMENTS (cont’d.) Group Company
2007 2006 2007 2006 RM’000 RM’000 RM’000 RM’000
Future minimum rental payments of equipment: Not later than 1 year 854 772 — — Later than 1 year and not later than 2 years 746 739 — — Later than 2 years and not later than 5 years 1,101 189 — —
2,701 1,700 — —
40. CAPITAL COMMITMENTS Group 2007 2006 163 RM’000 RM’000 FABER GROUP BERHAD 2007 annual report Capital expenditure Approved and contracted for: www.fabergroup.com.my Purchase of property, plant and equipment 17,582 17,438
Approved but not contracted for: Purchase of property, plant and equipment 726 726
41. CONTINGENT LIABILITIES Group Company
2007 2006 2007 2006 RM’000 RM’000 RM’000 RM’000
Secured: (a) Performance bond extended to Government of Malaysia in respect of security for the due performance of the contract awarded for the FRU project 4,050 4,050 — —
(b) Performance bond extended to Government of Malaysia in respect of security for the due performance of the Hospital Support Services Concession Agreement dated 28 October 1996 20,869 19,684 — —
(c) Performance bond to General Authority for Health Services for the Emirate of Abu Dhabi 2,055 2,620 — —
(d) Bank guarantee issued to authorities 4,664 4,996 — — notes to the financial statements (cont’d.) 31 december 2007
41. CONTINGENT LIABILITIES (cont’d.) Group Company
2007 2006 2007 2006 RM’000 RM’000 RM’000 RM’000
Unsecured: (a) Guarantees issued to financial institutions — — — 1,852
(b) Litigation Claim for negligence — 108 — 1 Claim for alleged wrongful termination of sale and purchase (i) — 26,179 — — Claim for alleged wrongful termination of employment contract (ii) 216 427 — 211 Claim for alleged wrongful termination of 164 employment contract (iii) 2,132 2,132 — — Claim for alleged non-payment of debts (iv) 314 1,484 — — FABER GROUP BERHAD 2007 annual report 2,662 30,330 — 212 www.fabergroup.com.my (i) Nova Hill Sdn Bhd (“NHSB”) vs. FUSB (KLHC Suit No. S7(S1)S4-22-379-1992) This is a dispute between FUSB, a wholly-owned subsidiary of Faber Development Holdings Sdn Bhd (“FDHSB”) which in turn is a wholly-owned subsidiary of the Company, and the defendant, which is the vendor of the land under HS (D) 4764 P.T. 1834 which is now described as Geran 10869 Lot 35283, Mukim and District of Kuala Lumpur (the “Faber Land”) and NHSB, the plaintiff, which is the buyer of the Faber Land, in respect of an alleged wrongful termination of the sale of the Faber Land for the proposed development of Casa Palma Condominium. The claim made by the plaintiff on 22 July 1992 was for a total sum of RM26,179,000.
The Company’s lawyers have filed an application for security for cost on the grounds that NHSB is a nominal company and has not shown any evidence that it would be able to satisfy an order of cost if the decision is in favour of FUSB. The Court took cognisance that the application for security for cost has to be heard before the commencement of the trial. The Court dismissed the application for security for cost with no order to cost. On 24 September 2002, the trial date from 14 – 17 October 2002 was vacated to 21 – 23 October 2002 and was again fixed to continue the trial on 7 and 8 November 2002. On 8 November 2002, the Plaintiff’s case was concluded, whilst the Defendant’s (“FUSB”) case began on 27 and 28 January 2003, and continued with the witness on 24 June and 21 July 2003. The Learned Judge directed both parties to file their respective submission by 6 October 2003 and due to the plaintiff’s response to the defendant’s submission, a reply was filed on 22 October 2003. The Judge heard submissions on 11 December 2003 and was fixed for decision on 12 January 2004 of which was adjourned to 14 January 2004 wherein the Plaintiff’s claim was dismissed with cost.
The High Court had fixed the notice of review on taxation of cost for hearing on 23 May 2006. On the said date, the Court adjourned the matter to 29 June 2006 and cost was awarded to FUSB for the sum of RM73,500. In the interim the Court of Appeal had also fixed for hearing of the notice of taxation on 26 May 2006 on the Bill of Cost for appeal to set-aside the default judgment in the Court of Appeal. On the said date i.e. 26 May 2006, the court again awarded FUSB a sum of RM23,671 as cost. FUSB solicitors have filed in the necessary allovation and are still awaiting the extraction of the same to be served on the plaintiff.
The Plaintiff had filed a Notice of Appeal to the Court of Appeal on 12 February 2004. The Appeal came up for hearing on 24 September 2007 wherein the Court after hearing submissions dismissed the Plaintiff’s Appeal with cost to be taxed. Our lawyers are in the process of filing the allocatur. 41. CONTINGENT LIABILITIES (cont’d.) (ii) Jaffa Sany bin Md Ariffin vs. FHHSB: Industrial Court 19-4-1028/04 The matter relates to the dismissal of Jaffa Sany wherein reference was made under Section 20 of the Industrial Relations Act 1967 relating to the said dismissal of the said employee by the Company. The Company is challenging the reference in the High Court in respect of the above suit. As such the Industrial proceeding is stayed at the present pending the outcome of the High Court Application by the Company. No pleadings have been filed as yet.
The matter is fixed for mention on the 15 May 2008 pending the outcome of the High Court proceedings.
(iii) Persatuan Kebangsaan Pekerja-Pekerja Hotel, Bar & Restoran Semenanjung Malaysia (“Union”) vs. Hotel Merlin Kuala Lumpur (M) Sdn Bhd (“HMKL”), FGB, Kuala Reman Estates Berhad (“KREB”) (Court of Appeal, Appeal Suit No. W-04-22-04) (KLHC Originating Motion R1-25-37-96) The Union appealed to the Court of Appeal against the High Court’s refusal to grant leave to commence certiorari proceedings against the decision of the Industrial Court in Award No. 88 of 1996, dismissing the claims of Union.
The appeal was allowed by the Court of Appeal on 28 September 2000 and leave was granted. The matter 165 was remitted back to the High Court to hear the application for an order of certiorari against the Industrial FABER GROUP BERHAD Court’s decision. The High Court however, dismissed the Union’s application on 9 February 2004, against 2007 annual report which decision, the Union has appealed to the Court of Appeal under Civil Appeal No. W-04-224-04 on 3 March 2004. The Record of Appeal was filed on 2 June 2004 and the matter has been fixed for hearing www.fabergroup.com.my on 12 February 2008, wherein the Court of Appeal allowed the Union’s application.
The matter was called up for hearing on 12 February 2008, in respect of the Appellant’s application for leave to file a supplementary Appeal Record wherein the Court of Appeal had allowed the Appellant’s application.
The Union has also filed an application under Section 33A of the Industrial Relations Act, 1967 under Case No 1/1-196/96 by referring certain question of law to the High Court in respect of Award No. 88 of 1996. This application was unanimously dismissed by the Industrial Court on 10 August 2007 (Award No. 1684 of 2007), by reason that the Union had failed to meet the conditions set out in Section 33A (1)(c) and (d) of the Industrial Relation Act, 1967.
(iv) (a) Faber Union Sdn Bhd v Goodaim Realty Sdn Bhd (KLHC R3-12-2-90-1996 & Court of Appeal W-08- 182-97) This is a case on late delivery wherein the Session Court awarded RM69,584 plus interest wherein we are appealing against the decision to the High Court to recover the sum paid together with interest i.e. RM78,381.
The matter is now fixed for hearing of our appeal on 23 September 2008.
(b) Syarikat Letrik Winlite Sdn Bhd vs Road Builders (M) Sdn Bhd & Faber Hotels Holdings Sdn Bhd (KLHC 1-52-16755-03) This is a suit claiming for the retention sum of RM180,000 after parties agreed earlier for the issuance of ICULS of RM973,015.00 as full outstanding and owing sum during the year 2000 Restructuring exercise conducted by Faber Group Berhad.
(c) Goh Hock Guan vs Faber Union Sdn Bhd (KLHC D3-24-337-2005) This is Suit seeking for exparte injunction against Messrs Goh Hock Guan for the possible presentation of winding up proceeding upon service of 218 notice for an purported outstanding rental and service charges owing by Faber Union Sdn Bhd. The amount are for rentals amounting to RM42,483.00 and RM13,119.50 for service charges.
We have obtained the injunction on 26 September 2005. The hearing is now adjourned to 22 May 2008. Payment into Court has been also made on the said sum. notes to the financial statements (cont’d.) 31 december 2007
42. RELATED PARTY DISCLOSURES (a) In addition to the transactions detailed elsewhere in the financial statements, the Group and the Company had the following transactions with related parties during the financial year:
Group Company
2007 2006 2007 2006 RM’000 RM’000 RM’000 RM’000
Management fee expense/(income) from affiliated companies – UEM Group Management Sdn Bhd 214 156 214 156 – Vistajati Holdings Sdn Bhd (296) (282) — —
Property development related work – UEM Builders Berhad 20,771 48,838 — — 166 – United Engineers (Malaysia) Berhad 1,176 392 — — Property development related work FABER GROUP BERHAD 2007 annual report – minority shareholder 1,905 — — — Fees paid to MOG, a minority shareholder www.fabergroup.com.my of FMS: Retainer fees 1,500 1,500 — — Interest paid/payable to minority shareholder of subsidiary 154 118 — — Management fees from subsidiaries — — (6,177) (4,040) Professional fees from a subsidiary — — (646) (401) Revenue from sales of land to a minority shareholder of Rimbunan Melati — 22,227 — — Affiliated companies: – Rendering of services 4,911 4,390 171 107 – Sale of properties (1,368) (88) — — Rentals paid to minority shareholder 180 180 — — Management fees from a substantial shareholder (474) (1,503) (474) (1,503)
Facilities management received from a substantial shareholder (37) (37) — — Rental paid to a substantial shareholder 2,778 2,130 481 441
(i) The property development related contracts with affiliated companies were made according to the published prices and conditions offered by these related parties to their major customers, except that a longer credit period of up to six months is normally granted.
(ii) The technical fees related contracts with minority shareholder were made according to the published prices and conditions offered by this related party to their major customers, except that a longer credit period of up to six months is normally granted.
(iii) The interest expense arose from the loan from a minority shareholder of a subsidiary company, Healthtronics (M) Sdn Bhd. Further details are disclosed in Note 27(d). 42. RELATED PARTY DISCLOSURES (cont’d.) (iv) The rendering of services to subsidiaries and related companies were made according to the published prices and conditions offered to the major customers of the Group and the Company, except that a longer credit period of up to six months is normally granted.
Information regarding outstanding balances arising from related party transactions as at 31 December 2007 are disclosed in Notes 21 and 31.
(b) Compensation of key management personnel The remuneration of directors and other members of key management during the year was as follows:
Group Company
2007 2006 2007 2006 RM’000 RM’000 RM’000 RM’000
Short-term employee benefits 4,377 3,090 1,269 995 Contributions to defined contribution plans 508 328 113 90 167 Share options granted under EES 349 957 162 894 FABER GROUP BERHAD 2007 annual report 5,234 4,375 1,544 1,979
www.fabergroup.com.my
Included in total key management personnel are:
Group Company
2007 2006 2007 2006 RM’000 RM’000 RM’000 RM’000
Directors remuneration (Note 9) 4,771 4,375 1,544 1,979
43. FINANCIAL INSTRUMENTS (a) Financial Risk Management Objectives and Policies The Group’s financial risk management policy seeks to ensure that adequate financial resources are available for the development of the Group’s businesses whilst managing its interest rate risks (both fair value and cash flow), foreign currency risk, liquidity risk and credit risk. The Board reviews and agrees policies for managing each of these risks and they are summarised below. It is, and has been throughout the year under review, the Group’s policy that no trading in derivative financial instruments shall be undertaken.
(b) Interest Rate Risk Cash flow interest rate risk is the risk that the future cash flows of a financial instrument will fluctuate because of changes in market interest rates. Fair value interest rate risk is the risk that the value of a financial instrument will fluctuate due to changes in market interest rates. As the Group has no significant interest-bearing financial assets, the Group’s income and operating cash flows are substantially independent of changes in market interest rates. The Group’s interest-bearing financial assets are mainly short term in nature and have been mostly placed in fixed deposits or occasionally, in short term commercial papers.
The Group’s interest rate risk arises primarily from interest-bearing borrowings. Borrowings at floating rates expose the Group to cash flow interest rate risk. Borrowings obtained at fixed rates expose the Group to fair value interest rate risk. The Group manages its interest rate exposure by maintaining a mix of fixed and floating rate borrowings. notes to the financial statements (cont’d.) 31 december 2007
43. FINANCIAL INSTRUMENTS (cont’d.) (b) Interest Rate Risk (cont’d.) The following tables set out the carrying amounts, the weighted average effective interest rates (WAEIR) as at the balance sheet date and the remaining maturities of the Group’s and the Company’s financial instruments that are exposed to interest rate risk: Note WAEIR Within 1 1-2 2-3 3-4 4-5 More than %Year Years Years Years Years 5 Years Total RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
At 31 December 2007 Group Fixed rate RSLS 29 4.00—————(154,045) (154,045) RPS 36 5.00—————(7,496) (7,496) ICPS 36 160.00 (1,120) —————(1,120) Hire purchase and finance lease liabilities 28 2.97 (286) (197) (65) (54) (33) — (635) 168 Amount due to corporate shareholder FABER GROUP BERHAD 2007 annual report of a subsidiary 27 7.00 (532) —————(532) www.fabergroup.com.my Floating rate Cash and bank balances 24 3.13 170,851—————170,851
Company Fixed rate RSLS 29 4.00—————(154,045) (154,045)
Floating rate Cash and bank balances 24 3.34 80,905—————80,905
At 31 December 2006 Group Fixed rate RSLS 29 4.00—————(148,121) (148,121) RPS 36 5.00—————(7,496) (7,496) ICPS 36 160.00 — — (1,120) — — — (1,120) Amount due to corporate shareholder of a subsidiary 27 7.00—————(1,063) (1,063)
Floating rate Cash and bank balances 24 3.13 101,523—————101,523 Term loans 27 6.23 (5,085) (5,050) (6,380) (9,087) (9,709) (30,484) (65,795) Bridging loan 27 8.00 (15,498) —————(15,498)
Company Fixed rate RSLS 27 4.00—————(148,121) (148,121)
Floating rate Cash and bank balances 24 3.34 29,950—————29,950 43. FINANCIAL INSTRUMENTS (cont’d.) (b) Interest Rate Risk (cont’d.) Interest on financial instruments subject to floating interest rates is contractually repriced at intervals of less than 6 months except for term loans and floating rate loans which are repriced annually. Interest on financial instruments at fixed rates are fixed until the maturity of the instrument. The other financial instruments of the Group and the Company that are not included in the above tables are not subject to interest rate risks.
(c) Foreign Currency Risk The Group is exposed to transactional currency risk primarily through sales and purchases that are denominated in a currency other than the functional currency of the operations to which they relate.
The currencies giving rise to this risk are primarily United States Dollars (USD) and United Arab Emirates Dirham (AED Dirham). Foreign exchange exposures in transactional currencies other than functional currencies of the operating entities are kept to an acceptable level.
The Group maintains a natural hedge, whenever possible, by borrowing in the currency of the country in 169 which the investments are located or by borrowing in currencies that match the future revenue stream to FABER GROUP BERHAD be generated from its investments. 2007 annual report
The net unhedged financial assets and financial liabilities of the Group companies that are not denominated www.fabergroup.com.my in their functional currencies are as follows:
Functional Currency of Group Companies Philippines AED USD Peso Dirham RM’000 RM’000 RM’000
At 31 December 2007 Ringgit Malaysia Receivables — 155 6,943 Payables ——72
At 31 December 2006 Ringgit Malaysia Receivables 3,290 — 2,171 Payables 11,472 — —
(d) Liquidity Risk The Group manages its debt maturity profile, operating cash flows and the availability of funding so as to ensure that refinancing, repayment and funding needs are met. As part of its overall liquidity management, the Group maintains sufficient levels of cash or cash convertible investments to meet its working capital requirements. In addition, the Group strives to maintain available banking facilities at a reasonable level to its overall debt position. As far as possible, the Group raises committed funding from both capital markets and financial institutions and balances its portfolio with some short term funding so as to achieve overall cost effectiveness. notes to the financial statements (cont’d.) 31 december 2007
43. FINANCIAL INSTRUMENTS (cont’d.) (e) Credit Risk The Group’s credit risk is primarily attributable to trade receivables. The Group trades only with recognised and creditworthy third parties. It is the Group’s policy that all customers who wish to trade on credit terms are subject to credit verification procedures. In addition, receivable balances are monitored on an ongoing basis and the Group’s exposure to bad debts is not significant. For transactions that are not denominated in the functional currency of the relevant operating unit, the Group does not offer credit terms without the specific approval of the Head of Credit Control. Since the Group trades only with recognised and creditworthy third parties, there is no requirement for collateral.
The credit risk of the Group’s other financial assets, which comprise cash and cash equivalents, marketable securities and non-current investments, arises from default of the counterparty, with a maximum exposure equal to the carrying amount of these financial assets.
As at 31 December 2007, the Group has a significant concentration of credit risk in the form of outstanding balances arising from amount due from the government to a subsidiary, Faber Medi-Serve Sdn 170 Bhd representing approximately 50% (2006: 56%) of the total trade receivables. FABER GROUP BERHAD 2007 annual report (f) Fair Values The carrying amounts of financial assets and liabilities of the Group and of the Company at the balance www.fabergroup.com.my sheet date approximated their fair values except for the following: Group
2007 2006 RM’000 RM’000
Hire purchase and finance lease liabilities Carrying amount (Note 28) 625 — Fair value 569 —
44. SEGMENT INFORMATION (a) Reporting Format The primary segment reporting format is determined to be business segments as the Group’s risks and rates of return are affected predominantly by differences in the products and services produced. Secondary information is reported geographically. The operating businesses are organised and managed separately according to the nature of the products and services provided, with each segment representing a strategic business unit that offers different products and serves different markets.
(b) Business Segments The Group is organised into four major business segments:
(i) Property development – the development of residential and commercial properties.
(ii) Facilities management healthcare – provision of hospital support services.
(iii) Facilities management non-healthcare – provision of facilities management.
(iv) Hotels and resorts – management and operations of hotels. As disclosed in Note 11, the Group has discontinued its hotel and resorts operation, which have been disclosed as a separate segment.
Other business segment includes investment holding which is not of sufficient size to be reported separately. 44. SEGMENT INFORMATION (cont’d.) (c) Geographical Segments The Group’s geographical segments are based on the location of the Group’s assets. Sales to external customers disclosed in geographical segments are based on the geographical location of its customers. The Group’s four business segments operate in two geographical areas:
(i) Malaysia – the operations in this area are principally facilities management healthcare, facilities management non-healthcare, property development and investment holding.
(ii) Vietnam – the operations in this area are principally through Vimas, which owns a hotel in Vietnam.
(d) Allocation Basis and Transfer Pricing Segment results, assets and liabilities include items directly attributable to a segment as well as those that can be allocated on a reasonable basis. Unallocated items comprise mainly corporate assets, liabilities and expenses.
Transfer prices between business segments are set on an arm’s length basis in a manner similar to transactions with third parties. Segment revenue, expenses and results include transfers between business 171 segments. These transfers are eliminated on consolidation. FABER GROUP BERHAD 2007 annual report <------Continuing Operations ------> Discontinued operations Facilities Management www.fabergroup.com.my Non- Properties Healthcare Healthcare Others Elimination Total Hotels Group At 31 December 2007 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
Revenue External sales 206,106 4,024 454,301 5,244 — 669,675 59,247 728,922 Inter-segment sales ———80,855 (80,855) — — —
Total revenue 206,106 4,024 454,301 86,099 (80,855) 669,675 59,247 728,922
Results Segment results 57,924 (2,070) 58,450 57,331 (64,354) 107,281 7,819 115,100 Finance costs ——(1,911) (5,925) — (7,836) (4,572) (12,408)
Profit/(loss) before taxation 57,924 (2,070) 56,539 51,406 (64,354) 99,445 3,247 102,692 Income tax expense (12,353) 15 (13,697) (19,520) 20,162 (25,393) (6) (25,399)
Profit/(loss) after taxation 45,571 (2,055) 42,842 31,886 (44,192) 74,052 3,241 77,293
Assets Segment assets 431,799 69,289 291,085 835,929 (949,540) 678,562 211,424 889,986
Liabilities Segment liabilities 169,905 586,216 103,403 1,153,317 (1,592,638) 420,203 67,109 487,312 notes to the financial statements (cont’d.) 31 december 2007
44. SEGMENT INFORMATION (cont’d.) <------Continuing Operations ------> Discontinued operations Facilities Management Non- Properties Healthcare Healthcare Others Elimination Total Hotels Group At 31 December 2007 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
Other segment information Capital expenditure 53 55 27,596 539 — 28,243 924 29,167 Depreciation 203 67 17,996 193 — 18,459 14,835 33,294 Amortisation 45 — 1,669 50 — 1,764 1,073 2,837 Non-cash expenses other than depreciation, amortisation, impairment losses 172 and interest 4,463 10 2,700 1,120 — 8,293 — 8,293 FABER GROUP BERHAD 2007 annual report At 31 December 2006 Revenue www.fabergroup.com.my External sales 162,949 7,347 419,183 1,522 — 591,001 46,806 637,807 Inter-segment sales — — — 42,927 (42,927) — — —
Total revenue 162,949 7,347 419,183 44,449 (42,927) 591,001 46,806 637,807
Results Segment results 51,405 (1,577) 54,421 43,457 (43,804) 103,902 (1,595) 102,307 Finance costs (26) — (1,947) (5,697) — (7,670) (5,039) (12,709)
Profit/(loss) before taxation 51,379 (1,577) 52,474 37,760 (43,804) 96,232 (6,634) 89,598 Income tax expense (10,160) (57) (14,729) (12,488) 12,495 (24,939) (4) (24,943)
Profit/(loss) after taxation 41,219 (1,634) 37,745 25,272 (31,309) 71,293 (6,638) 64,655
Assets Segment assets 362,873 74,745 259,527 693,117 (539,147) 851,115 — 851,115
Liabilities Segment liabilities 135,329 589,763 94,470 579,107 (891,452) 507,217 — 507,217
Other segment information Capital expenditure 117 153 17,292 197 — 17,759 761 18,520 Depreciation 270 51 15,104 299 — 15,724 15,719 31,443 Amortisation 46 3 1,508 31 — 1,588 1,099 2,687 Non-cash expenses other than depreciation, amortisation, impairment losses and interest 4,609 2,987 2,861 1,593 — 12,050 — 12,050 44. SEGMENT INFORMATION (cont’d.) Geographical Segment: The Group operates mainly in Malaysia except for a subsidiary, Vimas which operates a hotel in Vietnam.
Total Revenue from External Customers Segment Assets Capital Expenditure
2007 2006 2007 2006 2007 2006 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
Malaysia 669,675 591,001 678,562 625,027 28,243 17,759 Vietnam 59,247 46,807 211,424 226,088 924 761
Consolidated 728,922 637,808 889,986 851,115 29,167 18,520
45. SUBSIDIARIES 173 Details of subsidiaries are as follows: FABER GROUP BERHAD Proportion 2007 annual report of Ownership Interest and www.fabergroup.com.my Issued and Voting Power Country of Paid-Up Name of subsidiaries Incorporation Share Capital 2007 2006 Principal Activities RM % %
Held by the Company: Faber Hotels Holdings Sdn Bhd Malaysia 95,279,551 100 100 Investment holding
Faber Development Holdings Malaysia 28,260,006 100 100 Investment holding Sdn Bhd
Faber Facilities Sdn Bhd Malaysia 200,000 100 100 Facilities maintenance and investment holding
Faber Healthcare Management Malaysia 2 100 100 Investment holding Sdn Bhd
TC Parking Sdn Bhd Malaysia 20,002 100 100 Investment holding
Renown Alliance Sdn Bhd Malaysia 2 100 100 Investment holding
Faber Haulage Sdn Bhd Malaysia 610,002 100 100 Investment holding
Merlion Credit Corporation Bhd Malaysia 6,000,000 100 100 Dormant
Merlino Enterprises Sdn Bhd Malaysia 450,000 100 100 In members liquidation
Sate Yaki Sdn Bhd Malaysia 5,000,000 60 60 In members liquidation
Intensive Quest Sdn Bhd Malaysia 500,000 63 63 In members liquidation notes to the financial statements (cont’d.) 31 december 2007
45. SUBSIDIARIES (cont’d.) Proportion of Ownership Interest and Issued and Voting Power Country of Paid-Up Name of subsidiaries Incorporation Share Capital 2007 2006 Principal Activities RM % %
Held by the Company (cont’d.): Belaire Investments South Africa Rand100 100 100 Ceased operations (Proprietary) Ltd *
Kesan Suci Sdn Bhd Malaysia 1,000,000 51 —Provision of food catering services
174 Held by Faber Healthcare Management Sdn Bhd: Sehat Technologies Sdn Bhd Malaysia 500,000 51 51 Ceased operation FABER GROUP BERHAD 2007 annual report Faber Medi-Serve Sdn Bhd Malaysia 54,000,010 70 70 Provision of hospital support www.fabergroup.com.my services
Held by Faber Medi-Serve Sdn Bhd: Cermin Cahaya Sdn Bhd Malaysia 2 100 100 Provision of cleaning services
Healthtronics (M) Sdn Bhd Malaysia 200,000 60 60 Provision of biomedical engineering maintenance services and electronic facilities engineering maintenance services
Fresh Linen Services Sdn Bhd Malaysia 700,000 55 55 Provision of laundry processing activities
Held by Healthronics (M) Sdn Bhd: Healthronics Inc * Philippines Peso130,000 100 100 Ceased operations
Held by Faber Development Holdings Sdn Bhd: Faber Union Sdn Bhd Malaysia 50,000,000 100 100 Property development
Rimbunan Melati Sdn Bhd Malaysia 5,000,000 55 55 Property development
Faber Grandview Development Malaysia 4,500,000 100 100 Property development (Sabah) Sdn Bhd
Faber Heights Management Malaysia 2 100 100 Property development Sdn Bhd
Country View Development Malaysia 1,200,000 100 100 Property development Sdn Bhd 45. SUBSIDIARIES (cont’d.) Proportion of Ownership Interest and Issued and Voting Power Country of Paid-Up Name of subsidiaries Incorporation Share Capital 2007 2006 Principal Activities RM % %
Held by Faber Development Holdings Sdn Bhd (cont’d): Mont Hill Sdn Bhd Malaysia 2 100 100 Dormant
Mutiara Unik (M) Sdn Bhd Malaysia 2 100 100 Dormant
Held by Mutiara Unik (M) Sdn Bhd: Jiwa Unik Sdn Bhd Malaysia 100,000 51 51 Dormant 175 Held by Faber Facilities Sdn Bhd: FABER GROUP BERHAD Faber Facilities Management Malaysia 1,000,000 100 100 Facilities maintenance 2007 annual report Sdn Bhd
www.fabergroup.com.my Faber Facilities Solution Sdn Bhd Malaysia 100,000 100 100 Facilities maintenance
Faber Star Facilities Management India Rs50,000 51 — Facilities management in Limited** India
Held by Faber Hotels Holdings Sdn Bhd: Faber Labuan Sdn Bhd Malaysia 2 100 100 Investment holding
Merlin Tower Hotel Sdn Bhd Malaysia 8,000,003 100 100 Dormant
Fraser’s Hill Merlin Hotel Sdn Bhd Malaysia 2,000,000 51 51 Ceased operations
Held by Faber Labuan Sdn Bhd: Vimas Joint Venture Vietnam US$30,000,000 70 70 Hotel proprietor Company Limited*
Held by Faber Haulage Sdn Bhd: Firstgain Holdings Sdn Bhd Malaysia 1,000,000 100 100 Ceased operations
Hasil Lintang Sdn Bhd Malaysia 50,000 100 100 Ceased operations
* Audited by member firms of Ernst & Young Global in the respective countries ** Audited by firms other than Ernst & Young notes to the financial statements (cont’d.) 31 december 2007
46. SIGNIFICANT EVENTS (a) On 22 March 2006, Faber Facilities Sdn Bhd (“FFSB”), a wholly-owned subsidiary company of FGB, entered into a Joint Venture Agreement (“JVA”) with Singa Real Estates Limited (“SREL”) in which the parties have agreed to, inter-alia, establish a joint venture for the purpose of undertaking facilities management services business in India, namely in the State of Delhi, Haryana, Uttar Pradesh, Maharashtra, Rajasthan and Punjab.
FFSB and SREL had on 1 August 2006 incorporated a limited company in India, namely Faber Star Facilities Management Limited (“Faber Star”).
FFSB presently holds 25,500 equity shares of Rs10.00 in Faber Star representing 51% of the issued and paid-up share capital of Faber Star. The remaining 24,500 equity shares of Rs10.00 in Faber Star representing 49% of the issued and paid-up share capital of Faber Star is held by SREL and its nominees.
On 18 January 2007, both FFSB and SREL have fulfilled their obligations as set out in the JVA.
176 (b) On 8 May 2006, the Company announced that Faber Union Sdn Bhd (“FUSB”), a wholly-owned subsidiary had entered into a Joint Venture Development Agreement (“JVDA”) with UEM in relation to the proposed FABER GROUP BERHAD 2007 annual report development of all that piece of land (“the UEM Land”) held under C.L. 015346282, District of Kota Kinabalu, State of Sabah (related party transaction) (“Project”). www.fabergroup.com.my The effective date of commencement of the Project and the sales launch in respect of the UEM Land shall be within one year from the date of the JVDA or upon obtaining the necessary approval for the launching of the sales for the Project, whichever is the later and FUSB is to complete the Project within thirty-six months from the day of the said delivery of vacant possession of the UEM Land or from the date of issue of the Development Order whichever is the later.
In consideration of UEM agreeing and allowing FUSB to carry out and complete the construction Works of the Project and rendering its management services pursuant to the JVDA, FUSB shall pay UEM a sum of RM3,921,600 on the following basis:
Payment % Amount RM’000
1st 10 392 2nd 30 1,176 3rd 30 1,176 4th 30 1,176
As at 31 December 2007, the first and second payments have been paid and are reflected in property development costs.
FUSB had on 20 November 2007 obtained the Housing Developers’ License and Sales and Advertising Permit from the Ministry of Local Housing of Sabah. 46. SIGNIFICANT EVENTS (cont’d.) (c) Faber Medi-Serve Sdn Bhd (“FMS”) had on 28 February 2007 entered into a Joint Venture Agreement (“JVA-BTS”) with Brufors Technical Services (“BTS”) to undertake the provision of building and facilities maintenance services, bio-medical engineering maintenance services, cleansing and janitorial services, linen and laundry services, clinical waste management and central management information services (“the Brunei Project”) via a joint venture company in Brunei Darussalam.
FMS and BTS (collectively “the Parties”) have agreed to incorporate a company (“the JVCo-Brunei”) registered in Brunei Darussalam for the Brunei Project and the participation of the Parties in the equity structure of the JVCo-Brunei shall be FMS (70%) and BTS (30%).
Pursuant to the JVA-BTS, the authorised capital of the JVCo-Brunei is Brunei Dollars (“BND”) 100,000.00 only divided into 100,000 ordinary shares of BND1.00 each and the initial issued and paid-up capital of the JVCo-Brunei is BND1,000.00 only dividend into 1,000 ordinary shares of BND1.00 each of which both may be increased from time to time.
On 15 June 2007, FGB released an announcement on the fulfillment of the conditions precedents in 177 connection with the JVCo-Brunei and on the solicitors of FMS and BTS finalising the necessary with regard FABER GROUP BERHAD to the incorporation and registration of the joint venture company in Negara Brunei Darussalam, namely 2007 annual report Faber Brufors Maintenance Sdn Bhd (“Faber Brufors Maintenance”). FGB had on 15 November 2007
received the notification from FMS’s solicitors on the incorporation of Faber Brufors Maintenance with effect www.fabergroup.com.my from 1 November 2007.
As at 31 December 2007, the subscription of shares has yet to be completed.
(d) On 21 March 2007, FMS entered into a Joint Venture Agreement (“JVA-PFPL & Faber L&L”) with Prima Fabrics Pty Ltd (“PFPL”) and Faber Linen and Laundry Pty Ltd (“Faber L&L”) in relation to the collaboration on an exclusive basis in respect of operating a laundry plant in Australia for the purposes of providing linen and laundry services (“the Australia Project”). The entry by FMS into the JVA-PFPL & Faber L&L was contemplated in the Memorandum of Understanding dated 31 August 2006 entered into between FMS and PFPL.
Under the terms of the JVA-PFPL & Faber L&L, both FMS and PFPL will hold 60% and 40% respectively in the issued and paid-up share capital of Faber L&L, a company incorporated in the state of New South Wales, Australia and designated as the joint venture company for the purposes of the Australia Project.
The initial issued and paid-up share capital of Faber L&L shall be AUD250,000.00 only divided into 250,000 ordinary shares issued at AUD1.00 each, which may be increased from time to time.
In accordance to the provisions of the JVA-PFPL & Faber L&L, the Parties have determined for the conditions precedent to the JVA-PFPL & Faber L&L to be met within a period of 4 months from the date of the JVA-PFPL & Faber L&L or such other period as the Parties may mutually agree in writing. The Parties had on 1 August 2007 agreed to extend further the time for fulfillment of the conditions precedent as set out in the JVA-PFPL & Faber L&L until 20 September 2007. Following the above, the Parties had on 26 September 2007 agreed to extend further the time for fulfillment of the conditions precedent as set out in the JVA-PFPL & Faber L&L from 20 September 2007 to 30 November 2007.
In view of the non-fulfillment of conditions precedent of the JVA by 30 November 2007, particularly with regard to the procurement of contract(s) for the Australia Project for Faber L&L in a form that is acceptable to FMS, the JVA-PFPL & Faber L&L has lapsed and become null and void. notes to the financial statements (cont’d.) 31 december 2007
46. SIGNIFICANT EVENTS (cont’d.) (e) On 26 June 2007, FGB announced the entry by Faber Facilities Sdn Bhd (“FFSB”), a wholly-owned subsidiary company of FGB into a Joint Venture Agreement (“JVA-ASHL”) with Apollo Sindoori Hotels Limited (“ASHL”) in relation to collaboration in inter-alia, bio-medical and facility engineering maintenance services, cleansing services, housekeeping services, janitorial services and hospital support services (other than catering and food & beverage services) and management information services (other than patient information) and other mutually agreed objectives by way of a proposed joint venture company in India (“the India-JVCo”).
In accordance to the provisions of the JVA-ASHL, ASHL had on 27 August 2007 procured the incorporation of the India-JVCo, namely Faber Sindoori Management Services Private Limited (“Faber Sindoori”).
The issued and paid-up share capital of the India-JVCo shall be held by FFSB and ASHL (collectively “the Parties”) in the ratio of 51:49 respectively and the same shall be maintained by the Parties at all times.
In accordance with the provisions of the JVA-ASHL, the conditions precedent to the JVA-ASHL are to be 178 met within a period of 4 months from the date of the JVA-ASHL of 25 June 2007 i.e. 24 October 2007 or such other period as the Parties may mutually agree in writing. However, the Parties had on 25 October FABER GROUP BERHAD 2007 annual report 2007 agreed to extend further the time for fulfillment of the conditions precedent as set out in the JVA- ASHL for a further period of 98 days until 31 January 2008. www.fabergroup.com.my On 6 January 2008, FFSB entered into a Supplemental Agreement with ASHL to vary inter-alia, the provisions on the subscription of shares by FFSB in Faber Sindoori to reflect the variations of the value of the housekeeping business initially transferred to Faber Sindoori as at 31 January 2008 and the eventual transfer value of the remaining housekeeping business. FGB had on 15 February 2008 released an announcement that FFSB, ASHL and Faber Sindoori had on even date met all the Conditions Precedent in accordance to the provisions of the JVA-ASHL.
(f) On 28 June 2007, FGB, Matang and Advent completed the subscription of the following number of shares in KSSB: •509,998 ordinary shares of RM1.00 each by FGB, •290,000 ordinary shares of RM1.00 each by Matang, and •200,000 ordinary shares of RM1.00 each by Advent.
Following the completion of the above share subscription and 2 ordinary shares of RM1.00 each already held by FGB, KSSB had on 28 June 2007 became a 51% subsidiary company of FGB.
The above subscription of shares in KSSB is pursuant to the Joint Venture cum Shareholders’ Agreement (‘JVcSA- MatangAdvent’) entered into by FGB with Matang Holdings Berhad (‘Matang’) and Advent (M) Sdn Bhd (‘Advent’) on 20 December 2006 to undertake as joint venture partners, the preparation and submission of proposals and operations of food catering services. 46. SIGNIFICANT EVENTS (cont’d.) (g) On 9 October 2007, Ekovest and FGB completed the subscription of the following number of shares in Ekovest-Faber: • 599,998 ordinary shares of RM1.00 each by Ekovest, and • 400,000 ordinary shares of RM1.00 each by FGB.
Following the above shares subscriptions and 2 ordinary shares of RM1.00 already held by Ekovest, Ekovest and FGB respectively hold 60% and 40% of the issued and paid-up share capital of Ekovest-Faber. Ekovest-Faber is the joint venture vehicle, to implement and undertake to apply to the Government of Malaysia to undertake as joint venture partners, the concession for the design, construction, completion and maintenance of an institution known as the National Institute for Natural Products, Vaccines and Biologicals.
(h) In December 2007, FGB completed the incorporation of FABER L.L.C (“FLLC”) in the Emirate of Dubai underwhich the authorised share capital and paid-up capital of FLLC is Dirhams (“Dhs”) 600,000.00 divided into 600 equity shares of Dhs1,000.00 each. 179 FGB presently holds 294 equity shares of Dhs1,000.00 in FLLC representing 49% of the issued and paid- FABER GROUP BERHAD up share capital of FLLC. The remaining 306 equity shares of Dhs1,000.00 in FLLC representing 51% of 2007 annual report the issued and paid-up share capital of FLLC is held by His Excellency Khalid Ali Al Bustani. www.fabergroup.com.my
47. SUBSEQUENT EVENT On 10 December 2007, Faber Hotels Holdings Sdn Bhd (“FHHSB”), a wholly-owned subsidiary company of FGB, entered into a Share Sale Agreement with Berjaya Land Berhad (“BLAND”) for the disposal of FHHSB’s entire shareholding in Faber Labuan Sdn Bhd (“FLSB”) comprising 2 ordinary shares of RM1.00 each at a total consideration of USD68.22 million. FLSB is an investment holding company which contributed 70% of the legal capital of Vimas Joint Venture Company Limited which is a joint venture company established in Vietnam between FLSB and Hotay Company Limited.
On 18 February 2008, CIMB Investment Bank Berhad had on behalf of the Company, released an announcement to Bursa Securities Malaysia Berhad on the completion of the abovementioned disposal on even date. share price movement
SHARE PRICE MOVEMENT FOR THE PERIOD FROM 6 APRIL 2007 TO 25 MARCH 2008
1.70 1.60 1.50 1.40 1.30 1.20
Price per unit 1.10 1.00 0.90 0.80 180 5/22/2007 7/3/2007 8/14/2007 9/26/2007 11/9/2007 12/24/2007 2/13/2008 FABER GROUP BERHAD 2007 annual report HIGHEST PRICE during this period is 1.86 on 31 July 2007 LOWEST PRICE during this period is 0.75 on 10 March 2008 www.fabergroup.com.my HIGHEST VOLUME during this period is 262,231 on 17 April 2007
analysis of shareholdings
ANALYSIS OF SHAREHOLDERS AS PER RECORD OF DEPOSITORS AS AT 31 MARCH 2008 Authorised Share Capital : RM3,000,000,000.00 (Divided into 2,800,000,000 ordinary shares of RM1.00 each and 200,000,000 preference shares of RM1.00 each) Issued and fully paid : RM478,001,053 (Divided into 363,001,053 ordinary shares of RM1.00 each and 115,000,000 preference shares of RM1.00 each)
Preference Shares (not listed) Class of shares : Redeemable Convertible Preference Share of RM1.00 each No. of shareholders : 1 namely Jeram Bintang Sdn Bhd Voting rights : Voting rights are not general but restricted to issues that affect the rights and interest of preference shareholders
Ordinary Shares Class of shares : Ordinary Share of RM1.00 each No. of shareholders : 25,278 Voting rights : 1 vote per ordinary share
NO. OF HOLDERS HOLDINGS TOTAL HOLDINGS PERCENTAGE
983 Less than 100 42,723 0.01 17,117 100 – 1,000 6,687,790 1.84 5,820 1,001 – 10,000 23,300,875 6.42 1,197 10,001 – 100,000 35,748,499 9.85 159 100,001 to less than 5% of issued shares 95,948,898 26.43 2 5% and above of issued shares 201,272,268 55.45
25,278 Total 363,001,053 100.00 CATEGORY OF SHAREHOLDERS AS PER RECORD OF DEPOSITORS AS AT 31 MARCH 2008
SIZE OF NO. OF HOLDERS PERCENTAGE NO. OF SHARES PERCENTAGE HOLDINGS MALAYSIAN FOREIGN MALAYSIAN FOREIGN MALAYSIAN FOREIGN MALAYSIAN FOREIGN
Individual 19,366 769 76.61 3.04 60,636,153 5,463,147 16.70 1.50 Body Corporate Banks/Finance Companies 47 1 0.19 * 1,061,947 881 0.29 * Investments Trust/ 1 — * — 262 — * — Foundations/Charities Other Types of Companies 244 23 0.97 0.09 222,259,440 2,609,719 61.23 0.72 Government Agencies/Institutions 5 — 0.02 — 40,128 — 0.01 — Nominees 2,053 2,769 8.12 10.95 42,559,605 28,369,771 11.72 7.82 Total 21,716 3,562 85.91 14.09 326,557,535 36,443,518 89.96 10.04 181 NOTE: * INSIGNIFICANT FABER GROUP BERHAD 2007 annual report
30 LARGEST SHAREHOLDERS OF ORDINARY SHARES AS PER RECORD OF DEPOSITORS AS AT 31 MARCH 2008 www.fabergroup.com.my
NO. SHAREHOLDERS NO. OF SHARES PERCENTAGE
1. UEM Group Berhad 116,272,268 32.03 2. Universal Trustee (Malaysia) Berhad 85,000,000 23.42 3. UEM Group Berhad 8,195,657 2.26 4. ECML Nominees (Asing) Sdn Bhd 7,980,400 2.20 DMG & Partners Securities Pte Ltd For Keen Capital Investments Ltd (N2-60391) 5. Amanah Raya Nominees (Tempatan) Sdn Bhd 5,308,700 1.46 Public Smallcap Fund 6. HDM Nominees (Asing) Sdn Bhd 5,007,800 1.38 DBS Vickers Secs (S) Pte Ltd For Tan Ju Hong 7. Mayban Nominees (Tempatan) Sdn Bhd 3,699,800 1.02 Mayban Trustees Berhad For Public Aggressive Growth Fund (N14011940110) 8. Amanah Raya Nominees (Tempatan) Sdn Bhd 3,552,300 0.98 Public Far-East Property & Resorts Fund 9. RCI Ventures Sdn Bhd 2,822,000 0.78 10. Taisei Corporation 2,385,000 0.66 11. Mayban Nominees (Tempatan) Sdn Bhd 2,342,300 0.65 Mayban Trustees Berhad For Public Balanced Fund (N14011950210) 12. Mayban Securities Nominees (Asing) Sdn Bhd 1,856,900 0.51 OCBC Securities Private Limited For Tan Ju Hong 13. Kenanga Nominees (Tempatan) Sdn Bhd 1,854,000 0.51 Pledged Securities Account For Chong Bui Ling 14. Tan Chee Sing 1,800,000 0.50 15. Lim Soon Huat 1,731,800 0.48 16. Chang Cheng Huat 1,621,500 0.45 17. Tengku Uzir Bin Tengku Ubaidillah 1,501,600 0.41 analysis of shareholdings (cont’d.)
NO. SHAREHOLDERS NO. OF SHARES PERCENTAGE
18. Road Builder (M) Sdn Bhd 1,490,925 0.41 19. Ekovest Berhad 1,394,541 0.38 20. David Chiu 1,283,000 0.35 21. Cimsec Nominees (Tempatan) Sdn Bhd 1,266,025 0.35 CIMB For Kasuci Prima Sdn Bhd (PB) 22. Syarikat Pemasaran Sejati Sdn Bhd 1,227,951 0.34 23. Seloga Jaya Sdn Bhd 1,184,947 0.33 24. Amanah Raya Nominees (Tempatan) Sdn Bhd 1,087,000 0.30 Public Islamic Sector Select Fund 25. Mayban Nominees (Tempatan) Sdn Bhd 1,000,000 0.28 Pledged Securities Account For Lau Kwai 26. AIBB Nominees (Tempatan) Sdn Bhd 850,000 0.23 Pledged Securities Account For Teh Yean Teong 27. UOBM Nominees (Asing) Sdn Bhd 809,200 0.22 182 DMG & Partners Securities Pte Ltd For Ngan Tang Joo FABER GROUP BERHAD 28. Lim Seng Chee 744,300 0.21 2007 annual report 29. Citigroup Nominees (Asing) Sdn Bhd 692,300 0.19 CBNY For DFA Emerging Markets Small Cap Series www.fabergroup.com.my 30. AIBB Nominees (Tempatan) Sdn Bhd 654,500 0.18 Pledged Securities Account For Cheong Chen Yue
Total 266,616,714 73.45
Direct and Indirect Interest of the Directors in the Ordinary Shares of the listed issuer as per the Register of Directors’ Shareholdings (maintained under Section 134 of the Companies Act, 1965) as at 31 March 2008
NO. OF ORDINARY SHARES OF RM1.00 EACH DIRECTORS DIRECT PERCENTAGE INDIRECT PERCENTAGE
Dato’ Anwar bin Aji ———— Datuk Zainal Abidin bin Alias ———— Datuk Mohamed Zain bin Mohamed Yusuf ———— Dato’ Rosli bin Sharif ———— Oh Kim Sun ———— Elakumari a/p Kantilal ———— Puasa bin Osman ———— YM Raja Azmi bin Raja Nazuddin ———— Adnan bin Mohammad ————
As at 31 March 2008, none of the Directors of Faber has any direct and/or indirect interest in any related corporation of Faber.
Substantial Shareholders of Ordinary Shares as per the Register of Substantial Shareholders as at 31 March 2008
NO. OF ORDINARY SHARES OF RM1.00 EACH SUBSTANTIAL SHAREHOLDERS DIRECT PERCENTAGE INDIRECT PERCENTAGE
UEM Group Berhad 124,467,925 34.29 — — Khazanah Nasional Berhad# — — 124,467,925 34.29 Universal Trustee (Malaysia) Berhad 85,000,000 23.42 — —
# DEEMED INTERESTED BY VIRTUE OF ITS SUBSTANTIAL INTEREST IN UEM GROUP BERHAD properties held by the group
Last Date of Gross Net BookRevaluation Approx. Built-Up Tenure Approx. Value as at or If None; Description Land Area (Sq. Existing (Expiry Age 31.12.2007 Date of Location and Address of Properties Area Meters) Use Date) (Years) (RM’000) Acquisition
FACILITIES MANAGEMENT DIVISION
FABER MEDI-SERVE SDN BHD Lot No. 65 Incinerator plant 5.87 3,332.0 Incinerator Leasehold 11 1,452 14.11.2002 Kamunting Industrial with single-storey acres for clinical (7.12.2097) Estate administration waste and Kamunting, Perak block plus laundry laundry plant with double- plant storey administration block and ancillary facilities Lot No. 37 Laundry plant with 2.24 2,471.7 Laundry Leasehold 11 1,004 19.5.2003 183 Kuala Ketil double-storey acres plant (26.3.2056) Industrial Estate administration 60 years FABER GROUP BERHAD 2007 annual report Mukim of Tawar block and ancillary District of Baling facilities Kedah www.fabergroup.com.my
Lot No. 131 Incinerator and 0.51 1,980.7 Incinerator Leasehold 7 523 10.4.2000 (CL215359890) laundry plant acres for clinical (13.12.2042) & Lot No. 132 with double-storey waste and (CL215359907) administration block plant for SEDCO Industrial Estate and ancillary facilities laundry Lok Kawi, Sabah plant
PROPERTY DEVELOPMENT DIVISION
COUNTRY VIEW DEVELOPMENT SDN BHD CL015027237 Vacant land for 4.78 — Vacant Leasehold — 477 2006 Kota Kinabalu development of acres land 999 years Sabah condominiums known (2.12.2920) as Lucky Heights
FABER GRANDVIEW DEVELOPMENT (SABAH) SDN BHD Taman Grandview Vacant land for 5.66 — Vacant Leasehold — NIL 2006 Off Mile 1.5 development acres land 999 years Jalan Utara (4.9.2881) Sandakan, Sabah
RIMBUNAN MELATI SDN BHD Lot 55311 PT 11133 Vacant land for 33.31 — Vacant Leasehold — 49,469 3.02.2005 Jalan 1/34A mixed development acres land 99 years Kepong Entrepreneurs (25.11.2103) 52100 Kuala Lumpur
HOTEL DIVISION
VIMAS JOINT VENTURE CO LTD K5, Nghi Tam Village A 299-room hotel 26,921 29,192 Hotel Leasehold 13 188,972 6.10.2005 Hanoi, Vietnam known as Sheraton sq. meters building 30 years Hanoi Hotel & Tower other information
UTILISATION OF PROCEEDS There were no proceeds raised by FGB from any corporate proposals during the financial year ended 31 December 2007.
SHARES BUY-BACKS There were no share buy-backs during the financial year ended 31 December 2007.
EMPLOYEES SHARE OPTION SCHEME (“ESOS”) There were no ESOS undertaken by FGB during the financial year ended 31 December 2007.
OPTIONS, WARRANTS OR CONVERTIBLE SECURITIES EXERCISED During the financial year ended 31 December 2007, Jeram Bintang Sdn Bhd (“JBSB”) converted 65,000,000 Redeemable 184 Convertible Preference Shares (“RCPS”) of RM1.00 each into 65,000,000 Ordinary Shares of RM1.00 each. FABER GROUP BERHAD AMERICAN DEPOSITORY RECEIPT (“ADR”) OR GLOBAL DEPOSITORY RECEIPT (“GDR”) 2007 annual report FGB has not sponsored any ADR or GDR programme for the financial year ended 31 December 2007. www.fabergroup.com.my
SANCTIONS AND/OR PENALTIES (ONLY FOR PENALTIES MADE PUBLIC) There were no sanctions and/or penalties imposed on the FGB Group, its Directors or Management by relevant regulatory bodies.
NON-AUDIT FEES No non-audit fees was paid and payable by the FGB Group to its auditors or a firm or company affiliated to the auditors’ firm for the financial year ended 31 December 2007.
VARIATION IN RESULTS There is no material variance between the audited results and the previously announced unaudited results for the financial year ended 31 December 2007.
PROFIT GUARANTEE FGB did not issue any profit forecast or profit guarantee for the financial year ended 31 December 2007.
MATERIAL CONTRACTS There were no material contracts entered into by the FGB Group which involve its Directors’ and major shareholders’ interests either still subsisting at the end of the financial year 31 December 2007 or entered into since the end of the previous financial year. recurrent related party transactions
The shareholders of FGB had at the 43rd Annual General Meeting and the 44th AGM held on 2 May 2006 and 22 May 2007 respectively, granted their approval for FGB and its subsidiary companies (‘the Faber Group’) to enter into the categories of recurrent related party transactions (‘Recurrent Related Party Transactions’) of a revenue or trading nature which are necessary for its day-to-day operations and are in the ordinary course of business, on terms not more favourable to the Related Parties than those generally available to the public and with those related parties as set out in the Circulars to Shareholders dated 10 April 2006 and 30 April 2007 (‘the Shareholders’ Mandate’).
Pursuant to paragraph 10.09, Part E of the Listing Requirements of Bursa Malaysia Securities Berhad, disclosure is to be made in the annual report on the aggregate value of transactions conducted pursuant to the Shareholders’ Mandate where:
• the consideration; value of the assets, capital outlay or costs of the aggregated transactions is equal to or exceeds RM1 million; or
• any one of the percentage ratios of such aggregated transactions is equal to or exceeds 1%, whichever is the lower. 185 For the financial year ended 31 December 2007, the aggregate value of transactions conducted by the Faber Group pursuant to the Shareholders’ Mandate where the consideration of the aggregated transactions exceeds RM1 million FABER GROUP BERHAD 2007 annual report are as follows:
AGGREGATE www.fabergroup.com.my VALUE OF TRANSACTIONS FGB GROUP OR FOR FINANCIAL THE SUBSIDIARY NATURE OF YEAR ENDED RRPT COMPANIES RECURRENT NATURE OF RELATIONSHIP 31 DECEMBER NO. OF FGB TRANSACTION RELATED PARTY AS AT 31 DECEMBER 2007 2007 (RM’000)
1. Faber Group’s Construction UEM Builders UEM Builders is a 20,771 property related works Berhad (‘UEM 51.7% owned subsidiary development Builders’) company of UEM World companies Berhad (‘UEM World’)¥.
2. Faber Group’s Property UEM Group FGB is a 34.29% owned 1,176 property development Berhad (‘UEM’) associated company of development related works UEM. companies
3. Rimbunan Construction Metro Kajang Cekap Corporation 1,905 Melati Sdn Bhd related works Sdn Bhd (‘Metro Berhad, a wholly owned (‘RMSB’) Kajang’) and its subsidiary company of subsidiary Metro Kajang is a major companies shareholder of RMSB holding 45% of the equity interest of RMSB. The remaining issued and paid-up share capital of RMSB is held by Faber Development Holdings Sdn Bhd. recurrent related party transactions (cont’d.)
AGGREGATE VALUE OF TRANSACTIONS FGB GROUP OR FOR FINANCIAL THE SUBSIDIARY NATURE OF YEAR ENDED RRPT COMPANIES RECURRENT NATURE OF RELATIONSHIP 31 DECEMBER NO. OF FGB TRANSACTION RELATED PARTY AS AT 31 DECEMBER 2007 2007 (RM’000)
4. Faber Provision of Medlux Overseas MOG is a major 1,500 Medi-Serve management and (Guernsey) Limited shareholder of FMS Sdn Bhd technical services (‘MOG’) holding 30% direct (‘FMS’) and its interest in FMS. subsidiary companies
186 5. Faber Group Staff training and UEM Group UEMG is a wholly owned 1,142 FABER GROUP BERHAD development for Management Sdn subsidiary company of 2007 annual report Faber Group Bhd (‘UEMG’) UEM§. www.fabergroup.com.my 6. FMS Supply of Pharmaniaga PLSB is a wholly owned 1,558 chemicals and Logistics Sdn Bhd subsidiary company of consumables (‘PLSB’) Pharmaniaga Berhad, which in turn is a 28.96% owned associate company of UEM World¥.
7. Faber Group’s Sale of property Any Related Party — 1,368 property units by Faber who may wish to development Group’s property purchase properties companies development developed by Faber companies Group’s property development companies
8. Faber Group Rental of office JBSB Group JBSB holds 115,000,000 2,778 space in Faber Redeemable Convertible Towers and rental Preference Shares of of ancillary RM1.00 each in FGB facilities from pursuant to the Jeram Bintang Restructuring Scheme of Sdn Bhd (‘JBSB’) FGB. and its subsidiary companies (‘JBSB Group’)
NOTES: § FGB is a 34.29% owned associate company of UEM. ¥ UEM World is a 50.8% subsidiary company of UEM. notice of annual general meeting
NOTICE IS HEREBY GIVEN THAT THE 45TH ANNUAL GENERAL MEETING OF THE COMPANY WILL BE HELD AT THE BALLROOM, 1ST FLOOR, SIME DARBY CONVENTION CENTRE, 1A, JALAN BUKIT KIARA 1, 60000 KUALA LUMPUR ON TUESDAY, 20 MAY 2008 AT 10.00 AM FOR THE PURPOSE OF TRANSACTING THE FOLLOWING BUSINESSES:
AGENDA 1. To receive the Audited Financial Statements of the Company for the financial year ended 31 December 2007 together with the Directors’ and Auditors’ reports therein.
2. To approve the payment of a final dividend of RM0.03 per Ordinary share of RM1.00 each less 26% taxation in respect of the financial year ended 31 December 2007. Ordinary Resolution 1
3. To approve the fees payable to Directors for the financial year ended 31 December 2007. Ordinary Resolution 2
4. To re-elect the following Directors who are retiring in accordance with Article 66 of the Company’s Articles of Association and being eligible, they have offered themselves 187 for re-election: FABER GROUP BERHAD • Datuk Zainal Abidin bin Alias Ordinary Resolution 3 2007 annual report • Elakumari A/P Kantilal Ordinary Resolution 4 • Puasa bin Osman Ordinary Resolution 5 www.fabergroup.com.my
5. To re-elect the following Directors who are retiring in accordance with Article 70 of the Company’s Articles of Association and being eligible, they have offered themselves for re-election: • Dato’ Rosli bin Sharif Ordinary Resolution 6 • Oh Kim Sun Ordinary Resolution 7
6. To re-appoint Messrs Ernst & Young as Auditors to hold office until the conclusion of the next annual general meeting and to authorise the Directors to fix their remuneration. Ordinary Resolution 8
As Special Business To consider and, if thought fit, to pass the following resolutions: 7. Authority to Allot Shares Pursuant to Section 132D of the Companies Act, 1965 “THAT, pursuant to Section 132D of the Companies Act, 1965, the Articles of Association of the Company and the approvals of the relevant governmental/regulatory authorities, the Directors be and are hereby authorised to issue shares in the Company at any time and upon such terms and conditions and for such purposes as the Directors may, in their absolute discretion deem fit, provided that the aggregate number of shares issued pursuant to this resolution does not exceed 10% of the issued share capital of the Company for the time being AND THAT the Directors be and are also empowered to obtain the approval for the listing of and quotation for the additional shares so issued on Bursa Malaysia Securities Berhad AND THAT such authority shall continue in force until the conclusion of the next Annual General Meeting of the Company.” Ordinary Resolution 9 notice of annual general meeting (cont’d.)
8. Proposed Renewal of Shareholders’ Mandate for Existing Recurrent Related Party Transactions and Mandate for Additional Recurrent Related Party Transactions (“the Proposed Shareholders’ Mandate”) “THAT the mandate granted by the Shareholders of the Company on 22 May 2007 pursuant to paragraph 10.09 of the Listing Requirements of Bursa Malaysia Securities Berhad, authorising the Company and its subsidiaries (“the FGB Group”) to enter into the recurrent transactions of a revenue or trading nature which are necessary for the FGB Group’s day-to-day operations as set out in section 2.1.4 (A) of the Circular to Shareholders dated 28 April 2008 (“the Circular”) with the related parties mentioned therein, be and is hereby renewed AND THAT a mandate be and is hereby granted by the Shareholders of the Company for the FGB Group to enter into the additional recurrent transactions of a revenue or trading nature as set out in section 2.1.4 (B) of the Circular provided that the transactions are in the ordinary course of business and on normal commercial terms which are not more favourable to the related parties than those generally available to the public and are not to the detriment of the 188 minority shareholders of the Company; AND THAT the authority conferred by such renewed and granted mandate shall FABER GROUP BERHAD continue to be in force until: 2007 annual report • the conclusion of the next AGM of the Company following this 45th AGM at which www.fabergroup.com.my the mandate is given, at which time it will lapse, unless by a resolution passed at the AGM, the mandate is again renewed; • the expiration of the period within which the next AGM is required to be held pursuant to Section 143 (1) of the Companies Act, 1965 (but shall not extend to such extension as may be allowed pursuant to Section 143 (2) of the Companies Act, 1965); or •revoked or varied by resolution passed by the Shareholders in general meeting,
whichever is the earlier.
AND THAT the Directors of the Company be and are hereby authorised to do all such acts and things as they may consider expedient or necessary to give effect to the Proposed Shareholders’ Mandate.” Ordinary Resolution 10
9. Proposed Amendments to the Articles of Association of the Company (“the Proposed Amendments to Articles”) “THAT the proposed amendments to the Articles of Association of the Company as set out in Appendix II of the Circular to Shareholders dated 28 April 2008 be and are hereby approved.
AND THAT the Directors and the Company Secretary of the Company be and are hereby authorised to do all such acts and things as they may consider expedient or necessary to give full effect to the Proposed Amendments to Articles including to assent to any conditions, modifications, variations and/or amendments as may be required by the relevant authorities.” Special Resolution 11
10. To transact any other business for which due notice shall have been given. NOTICE OF ENTITLEMENT AND PAYMENT OF FINAL DIVIDEND NOTICE IS HEREBY GIVEN THAT a final dividend of RM0.03 per Ordinary share of RM1.00 each less 26% taxation in respect of the financial year ended 31 December 2007, if approved by the shareholders at the 45th AGM, will be payable on 27 June 2008 to the shareholders whoes names appear on the Company’s Register of Members and/or Record of Depositors at the close of business on 28 May 2008.
A depositor shall qualify for entitlement to the dividend only in respect of: a) shares deposited into the depositor’s securities account before 12.30 p.m. on 26 May 2008 (in respect of shares which are exempted from mandatory deposit); b) shares transferred into the depositor’s securities account before 4.00 p.m. on 28 May 2008 in respect of transfers; and c) shares bought on the Bursa Malaysia Securities Berhad (“Bursa Securities”) on a cum entitlement basis according to the Rules of the Bursa Securities.
By Order Of The Board 189 SURIATI BINTI ASHARI (LS0009029) FABER GROUP BERHAD Company Secretary 2007 annual report
Kuala Lumpur www.fabergroup.com.my 28 April 2008
EXPLANATORY NOTES ON SPECIAL BUSINESS: Resolution pursuant to Section 132D of the Companies Act, 1965 The proposed Resolution 9, if passed, would enable the Directors to issue up to a maximum of 10% of the issued and paid up share capital of the Company as at the date of this Annual General Meeting for such purposes as the Directors consider would be in the best interest of the Company. This authority unless revoked or varied by the Company at a general meeting will expire at the next annual general meeting.
Resolution pertaining to the Proposed Shareholders’ Mandate Detailed information on the Recurrent Party Transactions in relation to the Proposed Shareholders’ Mandate for Existing Recurrent Related Party Transactions and Mandate for Additional Recurrent Related Party Transactions is set out in tne Circular to Shareholders of the Company dated 28 April 2008 which was dispatched together with the Company’s Annual Report 2007.
Resolution on the Proposed Amendments to Articles The Proposed Amendments to Articles is to incorporate the amendments made to the Listing Requirements of Bursa Malaysia Securities Berhad, where applicable, as well as for administrative purposes.
Detailed information on the Proposed Amendments to Articles is set out in Appendix II of the Circular to Shareholder of the Company dated 28 April 2008.
NOTES: Any member of the Company entitled to attend and vote at this Meeting is also entitled to appoint a proxy to attend and vote on a show of hands or on a poll in his stead. A proxy need not be a member of the Company.
Where a member appoints more than one proxy, the appointment shall be invalid unless he specifies the proportion of his shareholding to be represented by each proxy.
An instrument appointing a proxy, in case of an individual, shall be signed by the appointer or by his attorney duly authorised in writing and in the case of a corporation shall be given under its Common Seal or signed on its behalf by an attorney or officer of the corporation so authorised.
The instrument appointing a proxy must be deposited at the Registered Office of the Company not less than 48 hours before the time set for holding the Annual General Meeting or any adjournment thereof. statement accompanying the notice of the 45th annual general meeting
Pursuant to Paragraph 8.28 (2) of the Bursa Malaysia Securities Berhad Listing Requirements, appended hereunder are:
1. The names of the Directors who are standing for re-election:
Directors retiring by rotation pursuant to Article 66 of the Articles of Association • Datuk Zainal Abidin bin Alias • Elakumari A/P Kantilal • Puasa bin Osman
Directors retiring pursuant to Articles 70 of the Articles Associations • Dato’ Rosli bin Sharif • Oh Kim Sun
Further details of the Directors who are standing for re-election are set out in the section on Directors’ Profile 190 in the Annual Report. FABER GROUP BERHAD 2007 annual report www.fabergroup.com.my proxy form
NO. OF SHARES HELD I/We (full name in block letters) ______
(CDS Account number) ______of (address) ______
______being a member/members of Faber Group Berhad hereby appoint (full name) ______
______of (address) ______
______or failing him/her, the Chairman of the Meeting, as my/our proxy to vote for me/us and on my/our behalf at the Forty- Fifth (45th) Annual General Meeting of the Company to be held at the Ballroom, 1st Floor, Sime Darby Convention Centre, 1A, Jalan Bukit Kiara 1, 60000 Kuala Lumpur on Tuesday, 20 May 2008 at 10.00 am and at any adjournment thereof.
My/Our proxy is to vote as indicated below:
RESOLUTIONS FOR AGAINST FABER GROUP BERHAD 2007 annual report Ordinary Resolution 1 Approval of Payment of Dividend www.fabergroup.com.my Ordinary Resolution 2 Approval of Fees Payable to Directors
Ordinary Resolution 3 Re-election of Director in accordance with Article 66
Ordinary Resolution 4 Re-election of Director in accordance with Article 66
Ordinary Resolution 5 Re-election of Director in accordance with Article 66
Ordinary Resolution 6 Re-election of Director in accordance with Article 70
Ordinary Resolution 7 Re-election of Director in accordance with Article 70
Ordinary Resolution 8 Re-appointment of Auditors
Ordinary Resolution 9 Authority to Allot Shares pursuant to Section 132D of the Companies Act, 1965
Ordinary Resolution 10 Proposed Renewal of Shareholders’ Mandate for Existing Recurrent Related Party Transactions and Mandate for additional Recurrent Related Party Transactions
Special Resolution 11 Proposed Amendments to Articles of Association
Please indicate with “X” how you wish your vote to be cast. If no instruction as to voting is given, the proxy will vote or abstain at his/her discretion.
———————————————————— Dated this ______day of ______2008 Signature/Common Seal of Shareholder(s)
NOTES Any member of the Company entitled to attend and vote at this Meeting is also entitled to appoint a proxy to attend and vote on a show of hands or on a poll in his stead. A proxy need not be a member of the Company. Where a member appoints more than one proxy, the appointment shall be invalid unless he specifies the proportion of his shareholding to be represented by each proxy. An instrument appointing a proxy, in case of an individual, shall be signed by the appointer or by his attorney duly authorised in writing and in the case of a corporation shall be given under its Common Seal or signed on its behalf by an attorney or officer of the corporation so authorised. The instrument appointing a proxy must be deposited at the Registered Office of the Company not less than 48 hours before the time set for holding the Annual General Meeting or any adjournment thereof. Affix Stamp
The Company Secretary FABER GROUP BERHAD (5067-M) 20th Floor, Menara 2 Faber Towers Jalan Desa Bahagia, Taman Desa Off Jalan Kelang Lama 58100 Kuala Lumpur group directory
CORPORATE OFFICE FRESH LINEN SERVICES FABER FACILITIES SOLUTION RIMBUNAN MELATI SDN BHD FABER GROUP BERHAD SDN BHD SDN BHD 19th Floor, Menara 2 20th Floor, Menara 2 Kilang A, Plot 66 & 67 Lot 113, 1st Floor, Faber Towers Faber Towers Faber Towers Lot 775, Blok 8, MTLD Jalan Desa Bahagia, Taman Desa Jalan Desa Bahagia, Taman Desa Jalan Desa Bahagia, Taman Desa Demak Laut Industrial Park Off Jalan Kelang Lama Off Jalan Kelang Lama Off Jalan Kelang Lama 93990 Kuching, Sarawak 58100 Kuala Lumpur 58100 Kuala Lumpur 58100 Kuala Lumpur Tel:+60 82 433 034 Tel : +60 3 7628 2888 Tel:+60 3 7628 2888 Tel:+60 3 7628 2888 Fax : +60 82 433 016 Fax : +60 3 7625 5722 Fax : +60 3 7628 2809 Fax : +60 3 7628 2828 www.faberfacilities.com.my www.faberdevelopment.com.my www.fabergroup.com.my OVERSEAS OFFICE ADMAC – FABER OVERSEAS OFFICE REGIONAL OFFICE Engineering Department FABER L.L.C. FABER GRANDVIEW FACILITIES MANAGEMENT Psychiatry Hospital 208, 2nd Floor DEVELOPMENT (SABAH) HEALTHCARE DIVISION Sheikh Khalila Medical City Al Nasriyah Building SDN BHD FABER MEDI-SERVE SDN BHD Airport Road, P.O. Box 127236 Baghdad Street, Al Qusais Lot No. 888, Taman Grandview 10th Floor, Menara 2 Abu Dhabi, U.A.E P.O. Box 232283 Mile 11⁄2, Sim-Sim Highway Faber Towers Tel:00971 2611 3340 Dubai, U.A.E 90000 Sandakan, Sabah Jalan Desa Bahagia, Taman Desa Fax : 00971 2632 6325 Tel : +971 4 2674 845 Tel/Fax : +60 89 216 220 Off Jalan Kelang Lama Fax : +971 4 2674 855 www.faberdevelopment.com.my 58100 Kuala Lumpur ADMAC – FABER Tel:+60 3 7620 0000 Engineering Maintenance FABER STAR FACILITIES COUNTRY VIEW DEVELOPMENT Fax : +60 3 7621 5549 Technical Building MANAGEMENT LTD SDN BHD www.mediserve.com.my Madinat Zayed Hospital (New) 910, Naurang House Mile 31⁄2, Jalan Tuaran Western Region, P.O. Box 50018 21, Kasturba Gandhi Marg Lorong Tenejal 1 REGIONAL OFFICE Abu Dhabi, U.A.E New Delhi 110001 Lucky Heights Condominium Tel/Fax : 00971 2884 6691 Tel:91 11 2335 3550 88450 Kota Kinabalu, Sabah FMS REGIONAL OFFICE Fax : 91 11 6630 2893 Tel/Fax : +60 88 423 211 (KEDAH/PERLIS/PENANG) ADMAC – FABER www.faberdevelopment.com.my No. 222, Jalan Shahab 4 Engineering Maintenance FABER SINDOORI MANAGEMENT Kompleks Shahab Perdana Mirfa Hospital, Western Region SERVICES PRIVATE LIMITED Jalan Sultanah Sambungan P.O. Box 77161 No. 15, (Old No. 42) FOOD AND NUTRITIONAL 05150 Alor Setar Abu Dhabi, U.A.E Gandhi Mandapam Road SERVICES Kedah Darul Aman Tel/Fax : 00971 2883 3218 Kotturpuram, Chennai – 600085 KESAN SUCI SDN BHD Tel:+60 4 734 0910 Tel:91 44 2447 1212 Fax : +60 4 734 0912 Lot 201C, 2nd Floor ADMAC – FABER Fax : 91 44 2447 1500 Podium Block, Faber Towers Engineering Maintenance Jalan Desa Bahagia FMS REGIONAL OFFICE (PERAK) Liwa Hospital, Western Region 1st Floor, Bangunan KWSP Taman Desa P.O. Box 57540 PROPERTY DEVELOPMENT Off Jalan Kelang Lama Jalan Greentown Abu Dhabi, U.A.E DIVISION 30450 Ipoh, Perak Darul Ridzuan 58100 Kuala Lumpur Tel:+60 5 242 2066 FABER DEVELOPMENT Tel:+60 3 7628 2828 Fax : +60 5 241 4056 HOLDINGS SDN BHD Fax : +60 3 7628 2767 FACILITIES MANAGEMENT 19th Floor, Menara 2 NON-HEALTHCARE DIVISION FMS REGIONAL OFFICE (SABAH) Faber Towers OUTLET OFFICES Lot 6 & 7 FABER FACILITIES SDN BHD Jalan Desa Bahagia, Taman Desa JABATAN DIETETIK DAN SAJIAN, Lorong Grace Square 2 Lot 113, 1st Floor, Faber Towers Off Jalan Kelang Lama HOSPITAL SUNGAI BULOH Jalan Pantai Sembulan Jalan Desa Bahagia, Taman Desa 58100 Kuala Lumpur Jalan Hospital 88100 Kota Kinabalu, Sabah Off Jalan Kelang Lama Tel : +60 3 7628 2888 47000 Sungai Buloh Tel : +60 88 257 592 58100 Kuala Lumpur Fax : +60 3 7628 2809 Selangor Darul Ehsan Fax : +60 88 253 584 Tel:+60 3 7628 2888 www.faberdevelopment.com.my Tel:+60 3 6157 0962 Fax : +60 3 7625 5722 Fax : +60 3 6157 1374 FMS REGIONAL OFFICE www.faberfacilities.com.my FABER UNION SDN BHD (SARAWAK) 19th Floor, Menara 2 JABATAN DIETETIK DAN SAJIAN, 6th Floor, Menara Grand FABER FACILITIES Faber Towers HOSPITAL AMPANG Lot 42, Section 46 MANAGEMENT SDN BHD Jalan Desa Bahagia, Taman Desa Jalan Mewah Utara Persiaran Lucky Lot 113, 1st Floor, Faber Towers Off Jalan Kelang Lama Pandan Mewah Jalan Ban Hock Jalan Desa Bahagia, Taman Desa 58100 Kuala Lumpur 68000 Ampang 93100 Kuching, Sarawak Off Jalan Kelang Lama Tel : +60 3 7628 2888 Selangor Darul Ehsan Tel : +60 82 243 006 58100 Kuala Lumpur Fax : +60 3 7628 2809 Tel:+60 3 4296 6210 Fax : +60 82 242 875 Tel:+60 3 7628 2888 www.faberdevelopment.com.my Fax : +60 3 4280 6211 Fax : +60 3 7625 5722 HEALTHTRONICS (M) SDN BHD www.faberfacilities.com.my Suite (P3-03), Building Information Centre Lot 2, Jalan 51A/243 46100 Petaling Jaya, Selangor Tel:+60 3 7625 2525 Fax : +60 3 7625 2828 Annual Report Faber 2007 F ABER GROUP BERHAD (5067-M )
FABER GROUP BERHAD A Member of UEM Group 20th Floor, Menara 2 Faber Towers, Jalan Desa Bahagia. Taman Desa, Off Jalan Kelang Lama 58100 Kuala Lumpur www.fabergroup.com.my
Tel: +60 3 7628 2888 Fax: +60 3 7628 2828
FABER GROUP BERHAD INCORPORATED IN MALAYSIA (Company No. 5067-M) Annual Report 2007