Providing Nourishm ent th e Worl d Over • annual report 2007
CAB CAKARAN CORPORATION BERHAD (583661-W) Plot 21, Lorong Jelawat 4, Seberang Jaya Industrial Park Seberang Jaya, 13700 Perai, Penang, Malaysia Tel: 604-398 2233 Fax: 604-398 0137/398 0370 E-mail: [email protected] www.cab.com.my Contents
Notice of Annual General Meeting 2 - 3
Statement Accompanying the 3 - 4 Notice of Annual General Meeting
Corporate Information 6
Corporate Structure of the Group 7
Summary of Past Five Years 8 Group Financial Results
Board of Directors’ Profile 9 - 12
Chairman’s Statement 13 - 17
Performance Review by 18 - 20 Group Managing Director
Statement on Corporate Governance 21 - 27
Statement on Internal Control 28 - 29
Audit Committee Report 30 - 32
Other Information Required by the 33 - 34 Listing Requirements of Bursa Malaysia Securities Berhad (“Bursa Securities”)
Financial Statements 35 - 104
List of Properties Owned by the Group 105 - 116
Analysis of Shareholdings 117 - 118
Proxy Form Enclosed Notice of Annual General Meeting
NOTICE IS HEREBY GIVEN that the Sixth Annual General Meeting of CAB Cakaran Corporation Berhad (“CAB” or “the Company”) will be held at Semangkok Room, Level 2, Sunway Hotel, No. 11 Lebuh Tenggiri Dua, Pusat Bandar Seberang Jaya, 13700 Prai, Penang on Thursday, March 27, 2008 at 10.00 am for the following purposes:-
AGENDA
AS ORDINARY BUSINESS: 1. To receive the Audited Financial Statements of the Company for the year ended September 30, 2007 (Resolution 1) together with the reports of the Directors and Auditors thereon. 2. To re-elect the following Directors retiring under Article 97(1) of the Articles of Association of the Company, and who, being eligible, have offered themselves for re-election:- a. Mr. Chuah Ah Bee; (Resolution 2) b. Mr. Kim Lim Chong; and (Resolution 3) c. Encik Ahmad Fazil Bin Haji Hashim (Resolution 4) 3. To re-elect Mr Chuah Hoon Phong retiring under Article 104 of the Articles of Association of the Company. (Resolution 5) 4. To consider and if thought fit, to pass the following ordinary resolution pursuant to Section 129(6) of the Companies Act, 1965 (the”Act”):-
“That pursuant to Section 129(6) of the Act, Y.T.M. Tunku Dato’ Dr. Ismail Ibni Almarhum Tunku Mohd (Resolution 6) Jewa, be re-appointed as Director of the Company to hold office until the conclusion of the next Annual General Meeting of the Company.” 5. To re-appoint Messrs. Deloitte KassimChan as Auditors of the Company and to authorize the Board of (Resolution 7) Directors to fix their remuneration.
AS SPECIAL BUSINESS: To consider and if thought fit, to pass the following ordinary resolutions:- 6. To approve the payment of Directors’ Fees of RM140,000.00 for the financial year ended September (Resolution 8) 30, 2007. 7. Authority to Issue Shares
“That pursuant to Section 132D of the Companies Act, 1965 and approvals from the Bursa Malaysia (Resolution 9) Securities Berhad and other relevant governmental/regulatory authorities where such authority shall be necessary, the Board of Directors be authorised to issue and allot shares in the Company from time to time until the conclusion of the next Annual General Meeting and upon such terms and conditions and for such purposes as the Board of Directors may, in their absolute discretion, deem fit provided that the aggregate number of shares to be issued shall not exceed ten per centum (10%) of the issued share capital of the Company for the time being, and that the Board of Directors be also empowered to obtain the approval for the listing of and quotation for the additional shares so issued on the Bursa Malaysia Securities Berhad.” 8. To transact any other business of which due notice shall have been given in accordance with the (583661 W)
Companies Act, 1965.
By Order of the Board,
TAN CHOONG KHIANG (MAICSA 7018448) Secretary
Penang CAB CAKARAN CORPORATION BERHAD Date : March 5, 2008
2 Notice of Annual General Meeting (cont’d)
NOTES:
A member of the Company entitled to attend and vote is entitled to appoint two (2) or more proxies to attend and vote in his place. A proxy may but need not be a member of the Company and the provisions of Section 149(1)(b) of the Companies Act, 1965 shall not apply to the Company.
If a member appoints two (2) or more proxies, the appointments shall be invalid unless he specifies the proportions of his holdings to be represented by each proxy.
The instrument appointing the proxy shall be in writing, executed by or on behalf of the appointor. In the case of a corporate member, the instrument appointing a proxy must be either under its Common Seal or under the hand of its officer or attorney duly authorised.
The instrument appointing a proxy must be deposited at the registered office of the Company at 3rd Floor, Wisma Wang, 251-A Jalan Burma, 10350 Penang at least forty-eight (48) hours before the time for holding the Meeting or any adjournments thereof.
Explanatory Note On Special Business:
1. The proposed ordinary Resolution No. 8, if passed, will authorize the payment of Directors’ fees for the financial year ended September 30, 2007 amounting to RM140,000.
2. The proposed ordinary Resolution No. 9, if passed, will empower the Directors of the Company to issue and allot shares in the Company from time to time and for such purposes of the Directors consider would be in the best interest of the Company. This authority will, unless revoked or varied by the Company in general meeting, will expire at the next Annual General Meeting of the Company.
Statement Accompanying Notice of Annual General Meeting
Pursuant to Paragraph 8.28(2) of the Listing Requirements of Bursa Malaysia Securities Berhad: (583661 W)
(i) The details of the four (4) Directors seeking re-election are set out in their respective profiles which appear in the Board of Directors’ Profile on pages 9 to 11 of the Annual Report
(ii) The details of the one (1) Director seeking re-appointment is set out in his profile which appears in the Board of Directors’ Profile on page 10 of the Annual Report
(iii) The details of their respective interests in the securities of the Company are set out in the Analysis of Shareholdings which appear on page 117 to 118 of the Annual Report. CAB CAKARAN CORPORATION BERHAD
3 Statement Accompanying Notice of Annual General Meeting (cont’d)
DIRECTORS STANDING FOR RE-ELECTION/RE-APPOINTMENT
The Directors standing for re-election/re-appointment at the Sixth Annual General Meeting of the Company to be held at Semangkok Room, Sunway Hotel, No. 11 Lebuh Tenggiri Dua, Pusat Bandar Seberang Jaya, 13700 Prai, Penang on Thursday, March 27, 2008 at 10.00 am are as follows:-
Name of Directors Details of attendance at Board Details of individual Directors and Meetings held during the financial other disclosure requirements year ended September 30, 2007 Mr Chuah Ah Bee Attended all five (5) Board Meetings Refer to Page 9 of this Annual Report Mr Kim Lim Chong Attended all five (5) Board Meetings Refer to Page 11 of this Annual Report Encik Ahmad Fazil Bin Haji Hashim Attended all five (5) Board Meetings Refer to Page 11 of this Annual Report Y.T.M. Tunku Dato’ Dr Ismail Attended all five (5) Board Meetings Refer to Page 11 of this Annual Report Ibni Almarhum Tunku Mohammad Jewa
BOARD MEETINGS HELD DURING THE FINANCIAL YEAR ENDED SEPTEMBER 30, 2007 AND DETAILS OF DIRECTORS’ ATTENDANCE
Details of attendance of Directors at the Board Meetings held during the financial year ended September 30, 2007 are as follows:-
Name No. of Meetings attended Mr. Chuah Ah Bee 5/5 Mdm. Chan Kim Keow 5/5 Dato’ Haji Zakaria Bin Hashim 5/5 Mr. Loo Choo Gee 5/5 Mr. Chew Chee Khong - Appointed on 1st February 2007 3/3 Mr. Chuah Hoon Phong - Appointed on 29th May 2007 1/1 Mr. Kim Lim Chong 5/5 Y.T.M. Tunku Dato’ Dr. Ismail Ibni Almarhum Tunku Mohd Jewa 5/5 En. Ahmad Fazil Bin Haji Hashim 5/5 Mr. Khoo Chee Kong - Resigned on 1st February 2007 2/2 Mr. Leow Chan Khiang - Retired on 18th April 2007 3/3
PLACE, DATE AND TIME OF THE BOARD OF DIRECTORS’ MEETINGS
The information on place, date and time of the Board of Directors’ Meetings held during the financial year ended (583661 W)
September 30, 2007 are as follows:-
Date Time Venue November 29, 2006 11.00 am Plot 21, Lorong Jelawat 4, Seberang Jaya Industrial Park, Seberang Jaya, 13700 Perai January 25, 2007 11.00 am Plot 21, Lorong Jelawat 4, Seberang Jaya Industrial Park, Seberang Jaya, 13700 Perai February 26, 2007 2.00 pm Plot 21, Lorong Jelawat 4, Seberang Jaya Industrial Park, Seberang Jaya, 13700 Perai May 29, 2007 11.00 am Plot 21, Lorong Jelawat 4, Seberang Jaya Industrial Park, Seberang Jaya, 13700 Perai August 29, 2007 11.00 am Plot 21, Lorong Jelawat 4, Seberang Jaya Industrial Park, Seberang Jaya, 13700 Perai
FURTHER DETAILS OF INDIVIDUALS WHO ARE STANDING FOR RE-ELECTION/RE-APPOINTMENT AS DIRECTORS CAB CAKARAN CORPORATION BERHAD Further details of the Director standing for re-election/re-appointment at the Sixth Annual General Meeting are set out in Pages 9 to 11 and their shareholdings information are listed in Page 117 of this Annual Report. 4 (583661 W)
CAB CAKARAN CORPORATION BERHAD
5 Corporate Information
BOARD OF DIRECTORS RISK MANAGEMENT COMMITTEE Datuk Haji Zakaria Bin Hashim Kim Lim Chong Non-Executive Chairman Chairman (Independent Non-Executive Director) Chuah Ah Bee Ahmad Fazil Bin Haji Hashim Group Managing Director Member (Independent Non-Executive Director) Chan Kim Keow Y.T.M. Tunku Dato’ Dr. Ismail Ibni Almarhum Executive Director Tunku Mohd Jewa Loo Choo Gee Member (Senior Independent Non-Executive Director) Executive Director Chuah Ah Bee Chew Chew Khong Member (Group Managing Director) Executive Director COMPANY SECRETARY Chuah Hoon Phong Tan Choong Khiang Executive Director (MAICSA 7018448) Kim Lim Chong Independent Non-Executive Director REGISTERED OFFICE Ahmad Fazil Bin Haji Hashim 3rd Floor, Wisma Wang Independent Non-Executive Director 251-A Jalan Burma Y.T.M. Tunku Dato’ Dr. Ismail Ibni Almarhum 10350 Penang Tunku Mohd Jewa Telephone Number : 04-228 8155 Senior Independent Non-Executive Director Facsimile Number : 04-269 2386 AUDIT COMMITTEE AUDITORS Kim Lim Chong Messrs. Deloitte KassimChan Chairman (Independent Non-Executive Director) Chartered Accountants Ahmad Fazil Bin Haji Hashim 4th Floor, Wisma Wang Member (Independent Non-Executive Director) 251-A Jalan Burma Y.T.M. Tunku Dato’ Dr. Ismail Ibni Almarhum 10350 Penang Tunku Mohd Jewa PRINCIPAL BANKERS Member (Senior Independent Non-Executive Director) Malayan Banking Berhad NOMINATION COMMITTEE Hong Leong Bank Berhad Ahmad Fazil Bin Haji Hashim United Overseas Bank (Malaysia) Berhad Chairman (Independent Non-Executive Director) EON Bank Berhad Kim Lim Chong SHARE REGISTRAR Member (Independent Non-Executive Director) PFA Registration Services Sdn. Bhd. Y.T.M. Tunku Dato’ Dr. Ismail Ibni Almarhum Level 13, Uptown 1 Tunku Mohd Jewa No. 1, Jalan SS 21/58 Member (Senior Independent Non-Executive Director) Damansara Uptown REMUNERATION COMMITTEE 47400 Petaling Jaya Ahmad Fazil Bin Haji Hashim Selangor Darul Ehsan Chairman (Independent Non-Executive Director) Telephone Number : 03-7718 6000 (583661 W)
Chuah Ah Bee Facsimile Number : 03-7722 2311 Member (Group Managing Director) STOCK EXCHANGE LISTING Y.T.M. Tunku Dato’ Dr. Ismail Ibni Almarhum Bursa Malaysia Securities Berhad Tunku Mohd Jewa Main Board Member (Senior Independent Non-Executive Director) Stock Code : 7174 ESOS COMMITTEE Stock Name : CAB Chuah Hoon Phong Chairman (Executive Director) Chuah Ah Bee Member (Group Managing Director) Y.T.M. Tunku Dato’ Dr. Ismail Ibni Almarhum Tunku Mohd Jewa CAB CAKARAN CORPORATION BERHAD Member (Senior Independent Non-Executive Director) Kim Lim Chong 6 Member (Independent Non-Executive Director) Corporate Structure of the Group
Integrated Poultry Farming and Processing Value-added Food Products Manufacturing and Trading CAB Cakaran Sdn. Bhd. (“CABC”) 100% 100% CAB Cakaran Breeding Farm 100% Like’s Store Sdn. Bhd. (“LSSB”) Sdn. Bhd. (“CABB”) MJ Global Sdn. Bhd. (“MJ Global”) 100% Jimat Jaya Sdn. Bhd. (“JJSB”) 100% Likes Marketing Sdn. Bhd. (“LMSB”) 100% Ladang Ternakan Asun Sdn. Bhd. (“LTASB”) 100% HK Foods (M) Sdn. Bhd. 75% Jimat Jaya Pemasaran Sdn. Bhd. (“JJP”) 100% Protheme Pte. Ltd. 51% CAB Cakaran (Langkawi) Sdn. Bhd. (“CABL”) 70% Bukit Perak GPS Farm Sdn. Bhd. (“BPGPS”) 67.9% Jaya Gading Farm Sdn. Bhd. 55% Others CAB Cakaran (Timur) Sdn. Bhd. (“CABT”) 55% Antik Kualiti Sdn. Bhd. (“AKSB”) 100% Shin Hong Breeding Farm 50% Kyros Properties Sdn. Bhd. (“KPSB”) 100% Sdn. Bhd. (“SHBF”)
Marine Products Manufacturing N. T. Huat Kee Fisheries Sdn. Bhd. (“NTHK”) 75%
Restaurants and Franchising Kyros International Sdn. Bhd. (“KISB”) 100% (583661 W)
Kyros Food Industries Sdn. Bhd. (“KFI”) 100% Kyros Kebab Sdn. Bhd. (“KKSB”) 100% Kyros Kebab Overseas Ventures Sdn. Bhd. 70.96% (“KKOV”) Shanghai Kyros Kebab Co. Ltd (“SKK”) 51% CAB CAKARAN CORPORATION BERHAD
7 Summary of Past Five Years Group Financial Results
Financial Years Ended 2003 2004 2005 2006 2007 September 30 RM 000 RM 000 RM 000 RM 000 RM 000 Revenue 155,686 212,793 350,941 339,893 442,934 Profit (Loss) Before Taxation 9,773 11,979 14,698 (11,536) 1,626 Profit(Loss) After Taxation After Minority Interests (MI) 7,801 9,441 10,109 (10,726) 619 Share Capital 31,520 40,004 41,652 65,876 65,890 Shareholders’ Equity 49,984 70,820 80,372 69,345 77,481 Net Earnings Per Share (sen) 12.37 12.34 12.24 (8.31) 0.47 Return On Equity (ROE) 15.6% 13.3% 12.6% N/A 0.80% Gross Dividend (%) N/A 5.0% 7.0% N/A N/A
Notes:
• The financial summary for the financial year ended September 30, 2003 was prepared based on the audited financial statements of CAB and its subsidiaries on the assumption that the Group had been in existence throughout the three (3) financial years and the financial summary for the financial years ended September 30, 2004 to September 30, 2007 was prepared based on the audited consolidated financial statements of the Group.
• Net Earnings Per Share was computed on the profit after taxation after MI divided by weighted average number of ordinary shares in issue.
450 15 400 12 350 9 300 6 250 3 200 0
150 (RM’000) -3
Revenue (RM’000) 100 -6 50 -9 Profit (Loss) Before Taxation 0 -12 2003 2004 2005 2006 2007 2003 2004 2005 2006 2007
12 15 (583661 W) 9 12
6 9
3 6
0 3
-3 0
-6 -3
-9 -6 Net Earning Per Share (sen) Minority Interests (MI) (RM’000) Profit(Loss) After Taxation -12 -9 2003 2004 2005 2006 2007 2003 2004 2005 2006 2007 CAB CAKARAN CORPORATION BERHAD
8 Board of Directors’ Profile
Standing Left to Right Datuk Haji Zakaria Bin Hashim, aged 62, a Malaysian, • Loo Choo Gee is the Chairman of CAB and was appointed to the Board of CAB on August 11, • Chuah Hoon Phong 2003. He is a Chartered Quantity Surveyor (Fellow Royal Institution Chartered • Ahmad Fazil Bin Haji Hashim Surveyors, Fellow Institution of Surveyors, Malaysia) and obtained his Diploma • Kim Lim Choong in Quantity Surveying from Maktab Teknik, Kuala Lumpur in 1970 and Advance • Chew Chee Khong Diploma in Quantity Surveying from the Thames Polytechnic London, United Kingdom in 1972. He is also a founding partner of Messrs. Zakaria-Lee and Sitting Left to Right Partners Sdn Bhd, a consultant chartered quantity surveying firm established in • Chan Kim Keow (Madam) 1980. He is the Vice Chairman of the Commonwealth Association of Professional • Chuah Ah Bee Centres, President of the Federation of Consultants from Islamic Countries, • Datuk Haji Zakaria Bin Hashim Chairman of the National Consumer Advisory Council, Ministry of Domestic • Y.T.M. Tunku Dato’ Dr Ismail Ibni Almarhum Tunku Trade and Consumer Affairs and Board Member of the National Accreditation Mohammad Jewa Board under the Ministry of Education.
Chuah Ah Bee, aged 57, a Malaysian, is the Managing Director of CAB and was appointed to the Board of CAB on (583661 W) August 11, 2003. He is also a member of the Remuneration Committee of CAB and was appointed as a member of ESOS Committee on August 25, 2005. He is the founder of the Group and has more than 30 years of experience in the poultry industry. He was the Vice Chairman of the Penang & Province Wellesley Farmers’ Association from 1995 to 2003 and was appointed as the Chairman of the same Association from 2004. He is also the Chairman of Persatuan Penjual- Penjual Ayam Itik Pulau Pinang since 1990 and a life member of Penang & Province Wellesley Farmers’ Association since 1980. CAB CAKARAN CORPORATION BERHAD
9 Board of Directors’ Profile (cont’d)
Chan Kim Keow (Madam), aged 50, a Malaysian, is an Executive Director of CAB and was appointed to the Board of CAB on August 11, 2003. She is one of the founding members of the CAB Group and is instrumental in assisting her husband, Chuah Ah Bee in the day-to-day operations of the Group.
Loo Choo Gee, aged 44, a Malaysian, is an Executive Director of CAB and was appointed to the Board of CAB on August 11, 2003. He joined the Group as Branch Manager in 1996 and he has more than 20 years experience in the poultry industry. He has been the Secretary of Persatuan Penternak dan Pengusaha Ayam, Kedah Darul Aman/ Perlis Indera Kayangan since 2000 and a committee member of the Committee of Unit Broiler of Federation of Livestock Farmers’ Association of Malaysia, representing the Kedah Darul Aman/Perlis Indera Kayangan region since 2001. He has also been the Secretary of Penang Farmers’ Association since 2007.
Chew Chee Khong, aged 51, a Malaysian, is an Executive Director of CAB and was appointed to the Board of CAB on February 1, 2007. He obtained his Bachelor Degree of Economics with Honours from the University of Malaya in 1980 and his Chartered Institute of Management Accountants (“CIMA”) qualifications in 1983. He began his career in the banking industry and has held various positions in both commercial and merchant banks over a period of 15 years. Prior to joining Denko Industrial Corporation Berhad as the Group General Manager in 1994, he was a Senior Manager of Corporate Banking in Utama Merchant Bank Berhad. In 1996, he ventured into business and is one of the founding members of Kyros Kebab fast food chain.
Chuah Hoon Phong, aged 29, a Malaysian, is an Executive Director of CAB and was appointed to the Board of CAB on May 29, 2007 and on the same date, he also resigned as an Alternate Director to Madam Chan Kim Keow. He obtained his Advanced Diploma in Business Studies from International College, Penang in 2000. He joined the Group as a Marketing Manager in 2000 and was subsequently promoted as a Chief Operating Officer of the Group’s food processing division in October 2002. (583661 W)
CAB CAKARAN CORPORATION BERHAD
10 Board of Directors’ Profile (cont’d)
Y.T.M. Tunku Dato’ Dr Ismail Ibni Almarhum Tunku Mohammad Jewa, aged 71, a Malaysian, is an Independent Non-Executive Director of CAB and was appointed to the Board of CAB on October 6, 2003. He was also appointed as the Senior Independent Non-Executive Director on February 22, 2006 and serves as the member of the Audit Committee, Nomination Committee, Remuneration Committee and Employee Share Option Scheme Committee of CAB. He obtained his Bachelor of Arts Degree from University of Malaya, Kuala Lumpur in 1967, Masters in Educations Degree from the Pennsylvania State University, the USA in 1972, PhD in Educational Administration from University of Malaya, Kuala Lumpur in 1979 and Post Doctoral Special Auditor from Harvard University, the USA in 1984. He is a leading academician with an array of working experience. He began his career as a teacher with the Ministry of Education in 1961. He was the Senior Assistant of Sekolah Abdullah Munshi in Penang in 1968 and was promoted to Principal in 1969. He was the Dean of Educational Studies in University Sains Malaysia from 1979 to 1992 and also the Professor of Educational Administration in University Sains Malaysia from 1988 to 1995. He has been the President of the State of Penang Family Planning Association since 1979. He is the Independent Non-Executive Chairman of P.I.E. Industrial Berhad and the Independent Non-Executive Director of Oriental Holdings Berhad, Luster Industries Berhad and SLP Resources Berhad.
Kim Lim Chong, aged 61, a Malaysian, is an Independent Non-Executive Director of CAB and was appointed to the Board of CAB on October 6, 2003. He is also the Chairman of the Audit Committee and a member of the Employee Share Option Scheme Committee and Nomination Committee of CAB. He obtained his Bachelor Degree in Accounting from Curtin University of Technology, Western Australia in 1970. He is a member of both the Malaysian Institute of Accountants and the Australian Society of Certified Practising Accountants. He is an Accountant by profession having worked for the Municipal Council of Penang as the Director of Finance and Perak Carbide Corporation Berhad (“PCCB”) as an Accountant. In February 2003, he was appointed to the Board of Multi-Usage Holdings Berhad (“MUH”), a company listed on the Second Board of the Bursa Securities as an Independent Non-Executive Director and Chairman of Audit Committee. He is also the Chairman of Nominating Committee, the ESOS Committee and a member of Remuneration Committee of MUH.
Ahmad Fazil Bin Haji Hashim, aged 52, a Malaysian, is an Independent Non-Executive Director of CAB and was appointed to the Board of CAB on September 1, 2004. He serves as a member of the Audit (583661 W) Committee and appointed as the Chairman of the Nomination Committee and Remuneration Committee of CAB on August 25, 2005. He obtained his Diploma in Technical Teaching from Gaya Teacher College, Kota Kinabalu in 1978. He was posted as teacher to Sekolah Menengah Kerajaan Majakir, Papar Sabah in 1978, Sekolah Menengah Jitra, Alor Star in 1980, Sekolah Menengah Tunku Abdul Rahman, Alor Star, Kedah in 1982 and Sekolah Menengah Keat Hwa, Alor Star in 1986. He was seconded to the Road Safety Council under the Ministry of Road Transport Malaysia from 1987 to 1992. In 1992, he set up his own business under the name of Baris Enterprise, a sole-proprietorship involved in the printing and publication of activities. In 1993, he set up IBF International, a sole-proprietorship involved in event management services. CAB CAKARAN CORPORATION BERHAD
11 Board of Directors’ Profile (cont’d)
Notes:-
(i) Family Relationships and Major Shareholders
Directors Relationship Major Shareholder Chuah Ah Bee Husband of Chan Kim Keow and father of Chuah Hoon Phong Yes Chan Kim Keow Wife of Chuah Ah Bee and mother of Chuah Hoon Phong Yes Chuah Hoon Phong Son of Chuah Ah Bee and Chan Kim Keow No
Save as disclosed, none of the Directors has family relationship with any other Directors or major shareholders of the Company.
(ii) Directors’ Shareholdings Details of the Directors’ shareholdings in the Company are provided in the Analysis of Shareholdings Section in this Annual Report.
(iii) No Conflict of Interest All Directors of the Company do not have any conflict of interest with the Company.
(iv) Non-Conviction of Offences All the Directors have not been convicted with any offences other than traffic offences in the past 10 years.
(v) Attendance at Board Meetings [Please refer to Statement Accompanying Notice of AGM] (583661 W)
CAB CAKARAN CORPORATION BERHAD
12 Chairman’s Statement
Dear Shareholders,
On behalf of the Board of Directors of CAB, it is my privilege to present to you the Annual Report and Audited Financial Statements of CAB for the financial year ended September 30, 2007.
Overview on Group Financial Performance
The year under review remain challenging for companies in the poultry-related industries due to rising feed and raw material costs. Nevertheless the integrated poultry farming and processing division has shown a 27% increased in its revenue with its profit before taxation increased from RM0.290 million in financial year ended September 30, 2006 to RM7.713 million in financial year ended September 30, 2007. Its value added products manufacturing and trading division has more than doubled its revenue from RM8.204 million to RM19.860 million with its loss before taxation reduced from RM2.520 million in prior year to RM1.682 million in (583661 W) current financial year. Other divisions continues to face competitive selling prices of its products coupled with rising and higher feed and raw material costs. This has inevitably affected the Group’s financial performance for the year under review.
The Group registered revenue of RM442.934 million in the current financial year as compared to RM339.893 million in prior year, representing an increase of 30.3%. With the higher revenue recorded, the Group registered a profit before taxation of RM1.626 million as compared to loss before taxation of RM11.536 million in the prior year. CAB CAKARAN CORPORATION BERHAD
13 Chairman’s Statement (cont’d)
Corporate Developments
During the financial year ended September 30, 2007, the Group had undergone the following developments and milestones:
• On January 8, 2007, Likes Marketing Sdn Bhd (LMSB), acquired 510 ordinary shares of SGD1.00 each, representing 51% equity interest in Protheme Pte Ltd (PPL), for a total purchase consideration of SGD510. On July 3, 2007, LMSB subscribed for additional 50,490 ordinary shares of SGD1.00 each in PPL for a total purchase consideration of SGD50,490 and the Group equity interest in PPL remains unchanged at 51%.
• On January 18, 2007, the Company’s wholly-owned subsidiary, Likes Marketing Sdn Bhd increased its issued and paid
(583661 W) up capital from RM2.00 to RM200,00.00 by allotting additional 199,998 ordinary shares of RM1.00 each. Consequently,
its authorized capital of RM100,000.00 consisting of 100,000 ordinary shares of RM1.00 each had also be increased to RM500,000.00 consisting of 500,000 ordinary shares of RM1.00 each.
• On July 23, 2007, the Company announced that its wholly-owned subsidiary, CAB Cakaran Sdn Bhd had acquired and invested in the entire issued and paid up capital of Bukit Perak GPS Farm Sdn Bhd of two (2) ordinary shares of RM1.00 each for a cash consideration of RM2.00.
• On August 14, 2007, the Company announced that its wholly-owned subsidiary, CAB Cakaran Sdn Bhd had on the same date, disposed off its entire equity interest of 200,000 ordinary shares of RM1.00 each in CAB Cakaran (Timur) Sdn Bhd (CABT) to its 55% owned subsidiary, Jaya Gading Farm Sdn Bhd for a cash consideration of RM553,556.40 to be satisfied wholly via internally generated funds. Consequently, CABT is now a 55% owned subsidiary of the Group. CAB CAKARAN CORPORATION BERHAD
14 Chairman’s Statement (cont’d)
Corporate Developments (cont’d)
During the financial year ended September 30, 2007, the Group had undergone the following developments and milestones: (cont’d)
• On September 27, 2007, the Company announced that its wholly-owned subsidiary, Kyros International Sdn Bhd and its 51% owned subsidiary, Kyros Kebab Overseas Ventures Sdn Bhd, had on the same date, entered into the Share Sale Agreement to dispose off their respective investment in Kyros Bakery & Confectionery Sdn Bhd , Souvlaki Star Sdn Bhd, Daging Salai Sdn Bhd and Kyros Kebab (S) Pte Ltd for a total cash consideration of RM6.00.
• On September 28, 2007, the Company announced that its wholly-owned subsidiary, Kyros International Sdn Bhd, had on the same date, entered into a Conditional Share Sale Agreement to dispose off its entire investment in Kyros Properties Sdn Bhd for a cash consideration of RM2.00.
Subsequent to September 30, 2007, the Group had also undertaken the following events:
• On October 10, 2007, CAB Cakaran (Timur) Sdn Bhd (CABT) increased its issued and paid up capital from 200,000 ordinary shares of RM1.00 each to 700,000 ordinary shares of RM1.00 each. The immediate holding company of CABT, Jaya Gading Farm Sdn Bhd subscribed for the entire additional 500,000 ordinary shares of RM1.00 each in CABT for a cash consideration of RM500,000.00. Accordingly, the Group equity interest in CABT remains unchanged.
• On February 22, 2008, the Company announced that its wholly-owned subsidiary, CAB Cakaran Sdn. Bhd. (CABC) had subscribed for additional 2,377,998 of ordinary shares of RM1.00 each in Bukit Perak GPS Farm Sdn. Bhd. (BPGPS). In consequence thereof, BPGPS became a 67.9% subsidiary of CABC.
Our Grant Parent Stock farm located in Bukit Perak was officially opened by YAB Menteri Besar of Kedah Darul Aman, Dato’ Seri Mahadzir Bin Khalid on September 30 , 2007. The first closed chicken house was completed in October 2007. The first supply of its grant parent chicks was delivered to the farm during the week of October 2007. It will start its first batch of production of parent stock chicks in June 2008.
Award & Accreditation
CAB Group was awarded Industry Achievement Award - Organisation and Most (583661 W) Popular Booth during the Livestocks Exhibition held in Kuala Lumpur Convention Centre in October 2007.
Corporate Social Responsibilities
Whilst in pursuit of its corporate goals, CAB has been mindful of its corporate social responsibility towards the community. The Board together with the management is planning and organizing some corporate social activities to be included in its corporate calendar for the next financial year. The Board recognizes the importance of these activities on customers, employees, shareholders, communities and environment in all aspects of their operations. CAB CAKARAN CORPORATION BERHAD
15 Chairman’s Statement (cont’d)
Dividend
The Board of Directors did not recommend any dividend for the financial year ended September 30, 2007.
Corporate Governance
Further to the appointment of KPMG as the Group internal auditors to carry out internal audit functions and Enterprise Risk Management (ERM) frameworks for the Group. KPMG is to liaise and work closely with the Internal Audit Manager. Since their appointment, KPMG has carried out the first cycle of its internal audit covering the risk area of Withdrawal of “Halal Accreditation” and Product Contamination. Their findings have been reported to the Member of Audit Committee and Board of Directors and the Board noted their recommendations and will take necessary actions accordingly. The second cycle of the internal audit will be conducted in March 2008 covering the risk area of Credit Risk and Inadequacy of Insurance Coverage. KPMG has also identified a 3-year internal audit strategy for financial year ended September 30, 2007 to 2009 under their Management Assurance Plan developed based on risk information provided under Enterprise Risk Management (ERM) methodology.
The Halal and Quality Division (“HQD”) met only once during the current financial year under review.
Prospects
With the launching of the North Corridor Economic Region (NCER), its shows the government commitments in strengthening the agriculture and agro based industry and in particular the poultry industry in the Northern region, the Board is optimistic that the Group will benefit immensely with the initiatives provided by the federal government and the state government of Kedah, through its investment arm, Perbadanan Kemajuan Negeri Kedah, our joint venture partner, where our Grant Parent Stock farming activities is made possible through their support and participation. It is hope that NCER will provide the Group many more opportunities and contribute positively to the earnings of the poultry division. (583661 W)
CAB CAKARAN CORPORATION BERHAD
16 Chairman’s Statement (cont’d)
Acknowledgements
On behalf of the Board of Directors, I would like to express our appreciation to all our employees for their dedication and strong commitment towards the growth and continued success of the Group. My gratitude also goes to our valued customers, business associates, suppliers and regulatory bodies. Thank you for your continuing support and confidence in the Group.
Finally, I wish to extend my personal thanks to my fellow Board members for their continuing support and contributions. I also wish to welcome Mr Chuah Hoon Phong who was appointed on May 29, 2007. I am confident that his invaluable contributions will help spur the Group to greater heights of success.
On behalf of the Board, I would also like to wish Mr Leow Chan Khiang who retired during the current financial year under review, many success and all the best in his future endeavours.
Datuk Haji Zakaria bin Hashim Chairman Date : February 26, 2008 (583661 W)
CAB CAKARAN CORPORATION BERHAD
17 Performance Review by Group Managing Director
On behalf of the management of the Group, I am pleased to report the performance of the Group for the financial year ended September 30, 2007.
Performance Review of the Group
The Group registered a revenue of RM442.934 million for the financial year ended September 30, 2007, representing an inecrease of 30.3% over the prior year’s revenue of RM339.893 million. With the higher revenue recorded , the Group experienced a profit before taxation of RM1.626 million as compared to the loss before taxation of RM11.536 million in the prior year. The improved performance was contributed by improved sales and profit in all divisions of the Group.
During the year under review, the management continued to explore various management initiatives to enhance the Group’s overall competitiveness especially in reducing the operating costs of the Group as well as revamping the Group’s business structure to improve the operation efficiency. (583661 W)
CAB CAKARAN CORPORATION BERHAD
18 Performance Review by Group Managing Director (cont’d)
Performance Review by Business Segments
(i) Integrated Poultry Farming and Processing The Group’s integrated poultry farming and processing division contributed a revenue of RM383.398 million, representing an increase of 27% over the prior year’s revenue of RM301.832 million. The higher revenue was attributed largely to higher production output and better pricing and margin of its poultry and poultry related products.
In tandem with the higher revenue recorded, its profit before taxation has also increased from RM0.290 million in prior year to RM7.713 million in the current financial year. This was due mainly to the higher ex-farm price of broilers.
(ii) Marine Products Manufacturing The Group’s marine products manufacturing division contributed revenue of RM41.806 million, representing an increase of 40.4% over the prior year’s revenue of RM29.768 million. The higher revenue has also resulted in a lower loss before taxation in the current financial year under review.
Despite improved performance in sales and loss of the division, the management anticipates that the division will continue to face some tough challenges ahead and with measures taken to cut its operating costs and improve its production efficiency, the management is confident that the division will improve its performance further and return to profitability in the next financial year.
(iii) Restaurants & Franchising The Group’s restaurants & franchising division contributed a marginal increase in its revenue of RM4.293 million for the financial year under review, compare to the revenue of RM4.173 million recorded in prior year. However, the loss before taxation was reduced from RM3.614 million in prior year to RM2.116 million in the current financial year due to lower operating costs. The management will continue to take pro active measures to improve the division’s overall efficiency and costs savings.
(iv) Trading & Value-added Products Manufacturing The Group’s trading & value-added products manufacturing division contributed revenue of RM19.860 million, representing an increase of 142% over the prior year’s revenue of RM8.204 million. In view of the higher revenue, the division loss before taxation was reduced from RM2.520 million in prior year to RM1.682 million in the current financial year under review. This was mainly attributed to higher sales and better pricing and profit. (583661 W)
CAB CAKARAN CORPORATION BERHAD
19 Performance Review by Group Managing Director
Looking Forward
With the launching of the Grant Parent Stock farm on September 30, 2007, the Group will benefit as a complete and fully integrated poultry provider with the extension and expansion of its upstream activities. The Group will benefit significantly in cost savings as well as generating higher revenue and profit for the Group in the years to come.
Appreciation
On behalf of the management, I would like to express my sincere appreciation and gratitude to all employees of the Group for their hard work, dedication, commitment and contributions to enable the Group to achieve good financial results. My thanks to my fellow Board members for their continuous guidance and support throughout the year. Last but not least, my sincere appreciation to our shareholders for their confidence and support extended over the years.
Thank you.
Chuah Ah Bee Group Managing Director Date : February 26, 2008 (583661 W)
CAB CAKARAN CORPORATION BERHAD
20 Statement on Corporate Governance
The Board of Directors continues with its commitment to achieve and maintain the highest standards of corporate governance throughout the Group. The Board views corporate governance as synonymous with three key concepts, namely transparency, accountability and corporate performance.
The Board is entirely committed to the maintenance of high standards of corporate governance by supporting and implementing prescriptions of the principles and best practices set out in parts 1 and 2 respectively of the Malaysian Code of Corporate Governance (“the Code”). Though the Board has already in compliance with many aspects of the Code, it would continuously review the group’s corporate governance processes and would strive to make appropriate adjustments to reflect its position as a good corporate citizen. The key intention is to adopt the substance behing good corporate governance and not merely the form, with the aim of ensuring board effectiveness in enhancing shareholder value.
The Board is pleased to provide the following statements which outline the main corporate governance practices that were in place throughout the financial year, unless otherwise stated.
PRINCIPLES STATEMENTS
The following statement sets out how the Company has applied the principles in part 1 of the Code. The principles are dealt with under the following headings: Board of Directors, Directors’ Remuneration, Shareholders, and Accountability and Audit.
BOARD OF DIRECTORS
Board Responsibilities
The Board is responsible for the overall corporate governance of the Group, including the strategic direction, risk management and establishes the vision and strategic objectives of the Group for development which includes management development, succession planning and policies to ensure all procedures within the Group are to be carried out in a systematic and orderly manner to ease the decision-making process.
Meetings
The Board meets at least four (4) times a year at quarterly intervals with additional meetings convened when urgent and important decisions need to be taken between the scheduled meetings. Meeting agenda includes review and approve the quarterly financial results before announcements, business reviews, macro strategies and other major corporate matters arising such as acquisitions, mergers and disposals (if any). Senior management team from different business units are also invited to participate at the Board meetings to enable all Board members to have equal access to the latest updates and developments of business operations of the Group presented by the senior management team. All proceedings from the Board meetings are minuted and signed by the Chairman of the meetings.
During the financial year ended September 30, 2007, the Board met on five (5) times, where it deliberated upon and (583661 W) considered various important matters including the approval of annual budgets of the Group, approval for quarterly financial results for announcements, consideration and approval for major investments and acquisitions, strategic decisions and directions of the Group.
Details of Directors’ meeting attendances are provided in the Attendance on Board Meetings, page 4 in this Annual Report. CAB CAKARAN CORPORATION BERHAD
21 Statement on Corporate Governance (cont’d)
BOARD OF DIRECTORS (cont’d)
Board Committees
The Board of Directors delegates certain responsibilities to the Board Committees as follows:-
(i) Audit Committee; (ii) Remuneration Committee; (iii) Nomination Committee; (iv) ESOS Committee; and (v) Risk Management Committee
These committees are formed in order to enhance business and operational efficiency as well as efficacy. The Chairman of these committees report to the Board the outcome (including their recommendations) of the Committees meetings for the Board’s considerations and approvals and extracts of such reports are incorporated in the minutes of the Board meetings.
Board Balance and Board Effectiveness
As at the date of this statement, the Board consists of nine (9) members; comprising one (1) Independent Non-Executive Chairman, three (3) Independent Non-Executive Directors with one (1) of them is Senior Independent Non-Executive Director and five (5) Executive Directors. A brief profile of each Director is presented in the Profile of Directors section of this Annual Report.
The concept of independence adopted by the Board is in tandem with the definition of an independent director in paragraph 1.01 of the Listing Requirements of the Bursa Malaysia Securities Berhad (“Listing Requirements”) and Practice Note 13/2002 of the Listing Requirements. The key elements for fulfilling the criteria are the appointment of independent Directors who are not members of management (Non-Executive) and who are free of any relationship which could interfere with the exercise of independent judgement or the ability to act in the best interests of the Company. The Board complies with paragraph 15.02 of the Listing Requirements which requires that at least two (2) directors or one third of the Board of Directors of the Company, whichever is higher, are Independent Directors.
The Directors, with their different backgrounds and specialisation, collectively bring with them many years of experience and expertise in areas such as financial, marketing and operations. The executive Directors are responsible for implementing the policies and decisions of the Board, overseeing the operations as well as co-ordinating the development and implementation of business and corporate strategies of the Group.
The Independent Non-Executive Directors bring to bear objective and independent judgement to the decision making of the Board and provide a capable check and balance for the Executive Directors. Together with the Executive Directors who have intimate knowledge of their respective fields and businesses, the Board is constituted of individual who are committed to business integrity and professionalism in all its activities and have a proper understanding and competence to deal with the current and emerging business related issues locally and internationally. (583661 W) The roles of the Chairman and the Group Managing Director are distinct and separate and each has a clearly accepted division of duties and responsibilities so as to ensure a balance of power and authority. The Chairman is responsible for running the Board and ensures that all Directors receive sufficient relevant information on financial and non-financial matters of the Group so as to enable them to participate actively and effectively in Board meetings. The Group Managing Director is responsible to carry out the implementation of Board policies and decisions as well as to oversee the day-to- day management of the Group.
The Board is satisfied that the current Board composition fairly reflects the interests of all shareholders in the Company. CAB CAKARAN CORPORATION BERHAD
22 Statement on Corporate Governance (cont’d)
BOARD OF DIRECTORS (cont’d)
Supply of Information
The Board recognises that the decision making process is highly contingent on the quality of information furnished. As such, all Directors have unrestricted access to any information pertaining to the Company and the Group.
The Chairman ensures that all Directors have full and timely access to information with Board papers distributed in advance of meetings. This ensures that all Directors have sufficient time to appreciate issues to be deliberated at the Board meetings and expedites the decision making process effectively.
Every Director has also unhindered access to the advice and services of the Company Secretary. The Board believes that the current Company Secretary is capable of carrying out his duties of ensuring the effective functioning of the Board. In the any event that the Company Secretary fails to fulfill his functions effectively, the terms of appointment permit his removal and appointment of a successor only by the Board as a whole.
The Audit Committee, Remuneration Committee and Nomination Committee play a pivotal role in channeling pertinent operational and assurance related issues to the Board. The Committees partly function as a filter to ensure that only pertinent matters are tabled and deliberated at the Board level. The Board collectively, determine whether as a full Board or in their individual capacity, to take independent professional advice, where necessary and under appropriate circumstances, in furtherance of their duties, at the Company’s expense.
Appointment to the Board
Nomination Committee
The Nomination Committee currently comprises the following:-
Name Position Ahmad Fazil Bin Haji Hashim Chairman (Independent Non-Executive Director) Kim Lim Chong Member (Independent Non-Executive Director) Y.T.M. Tunku Dato’ Dr. Ismail Ibni Almarhum Tunku Mohd Jewa Member (Senior Independent Non-Executive Director)
The Nomination Committee consists entirely of Non-Executive Directors, all of whom are independent.
The Nomination Committee is empowered by the Board and its terms of reference include bringing to the Board recommendations on the appointment of new directors besides assessing the effectiveness of Board Committees and the Board, as a whole. The Nomination Committee is also entrusted to systematically assess the contribution of each Director (583661 W) due for retirement before recommending to the Board for their re-election.
The Board, through the Nomination Committee, appraises the composition of the Board and believes that the current composition brings the required mix of skills and core competencies required for the Board to discharge its duties effectively. New appointees will be considered and evaluated by the Nomination Committee. The Nomination Committee will then recommend the candidates to be approved and appointed by the Board. The Company Secretary will ensure that all appointments are properly made, and that legal and regulatory obligations are met. CAB CAKARAN CORPORATION BERHAD
23 Statement on Corporate Governance (cont’d)
BOARD OF DIRECTORS (cont’d)
Directors’ Training
The Board through the Nomination Committee ensures that it recruits to the Board only individuals of sufficient caliber, knowledge and experience to fulfill the duties of a Director appropriately. All Directors have completed the Mandatory Accreditation Programme prescribed by the Bursa Malaysia. Directors are encouraged to attend various external professional programmes deemed necessary to ensure that they are kept abreast on various issues facing the changing business environment within which the Group operates. The Directors will continue to undergo other relevant training programmes such as Continuing Education Program (CEP) and other Training Programme to be determined by the Board from time to time to enhance their skills and knowledge where relevant.
Re-election
The Articles of Association provide that all Directors of the Company are subject to retirement. At least one-third of the Directors for the time being, of if their number is not three (3) or a multiple of three (3), then the number nearest to, but not more than one-third of the total shall retire from office at the Annual General Meeting, provided always that all Directors shall retire from office at least once in every three (3) years. A retiring Director shall be eligible for re-election. This provides an opportunity for shareholders to renew their mandates.
The election of each Director is voted on separately. To assist shareholders in their decision, sufficient information such as personal profile, meetings attendance and their shareholdings in the Group of each Director standing for election are furnished in the Annual Report accompanying the Notice of Annual General Meeting.
Directors over seventy (70) years of age are required to submit themselves for re-appointment annually in accordance with Section 129(6) of the Companies Act, 1965.
DIRECTORS’ REMUNERATION
Remuneration Committee
The Remuneration Committee currently comprises the following:-
Name Position Ahmad Fazil Bin Haji Hashim Chairman (Independent Non-Executive Director) Chuah Ah Bee Member (Group Managing Director) Y.T.M. Tunku Dato’ Dr. Ismail Ibni Almarhum Tunku Mohd Jewa Member (Senior Independent Non-Executive Director) (583661 W)
The Remuneration Committee consists largely of Non-Executive Directors, the majority of whom is independent.
The Remuneration Committee is responsible for, inter-alia recommending to the Board the remuneration framework for Directors as well as the remuneration packages of Executive Directors. The term of reference of the Remuneration Committee is set out in the Remuneration Committee section of this Annual Report.
The Executive Directors did not participate directly in the way in determining their individual remuneration. The Board as a whole determines the remuneration of Non-Executive Directors with individual Directors abstaining from decisions in respect of their individual remuneration. In deciding an appropriate level of fees and benefits of each Non-Executive Directors, the Board considered the responsibility and time commitments taking into account the number of Board meetings, special meetings and the time required for reading Board and other papers, as well as the membership and chairmanship of Board Committees. CAB CAKARAN CORPORATION BERHAD
24 Statement on Corporate Governance (cont’d)
DIRECTORS’ REMUNERATION (cont’d)
The policy practised on Directors’ remuneration by the Remuneration Committee is to provide the remuneration packages necessary to attract, retain and motivate Directors of the quality required to manage the business of the Group and to align the interest of the Directors with those of the shareholders.
Further details of Directors’ remuneration are set out below and in the Notes to the financial statements.
Details of the Directors’ Remuneration
With effect from January 16, 2006, the Non-Executive Directors are paid a meeting allowance for each Board meeting they attend. Details of the nature and amount of each major element of the remuneration of each Director of the Company for the financial year ended September 30, 2007 are as follows:-
Salaries & Other Benefits- Bonuses Fees emoluments in-kind RM RM RM RM Executive Directors - Company* – – – – - Subsidiaries** 1,497,534 – 111,420 101,696
Subtotal 1,497,534 – 111,420 101,696
Non-Executive Directors - Company* – 140,000 12,000 – - Subsidiaries – 3,600 –
Total 1,497,534 140,000 127,020 101,696
* Subject to shareholders’ approval at the forthcoming Annual general Meeting.
The Number of Directors whose remuneration falls into the following bands comprises:-
Range of remuneration Number of Directors RM Executive Non-Executive 50,000 and below – 4 50,001 to 100,000 – 1 100,001 to 150,000 1 – 150,001 to 200,000 2 – 200,001 to 250,000 1 – (583661 W) 250,001 to 300,000 1 – 300,001 to 350,000 – – 350,001 to 400,000 – – 400,001 to 450,000 – – 450,001 to 500,000 – – 500,001 to 550,000 1 – CAB CAKARAN CORPORATION BERHAD
25 Statement on Corporate Governance (cont’d)
SHAREHOLDERS
The policy of the Company is to maintain an active dialogue with its shareholders with the intention of giving its shareholders as clear and complete information of the Company’s financial performance and position as possible.
The key elements of the Company’s dialogue with its shareholders is the opportunity to gather views of, and answer questions from, both the individual and institutional investors on all aspects relevant to the Company at the AGM. It is also a requirement for the Company to send the Notice of the AGM and related circular to its shareholders at least twenty one (21) days before the meeting. At the AGM, shareholders are encouraged to ask questions both about the resolutions being proposed or about the Group’s operations in general to seek more information. Where it did not possible to provide immediate answers, the Chairman will undertake to furnish the shareholders with a written answer after the AGM.
The Company also participated in analysts’ briefing. Press conferences were also held to brief members of the media on key events of the Group.
The Company’s website, www.cab.com.my provides a comprehensive avenue for information dissemination, such as dedicated sections on corporate information including financial information, press releases and company news.
The Company is also committed to a policy to provide a detailed and complete disclosure of corporate information and in this respect the Company follows the disclosure guidelines and regulations of Bursa Securities. The release of material information will be made publicly via Bursa Securities, and other means. Members of the public can also obtain the full financial results and the Company’s announcements from the Bursa Securities’ website.
The Board has also appointed the Senior Independent Non-Executive Director,Y.T.M. Tunku Dato’ Dr Ismail Ibni Almarhum Tunku Mohammad Jewa as to whom concerns pertaining the Group may be conveyed by shareholders and the public. At all times, investors and shareholders may contact the Company Secretary for information on the Company.
ACCOUNTABILITY AND AUDIT
Financial Reporting
The Board aims to provide and present a balanced and meaningful assessment of the Group’s financial performance and prospects at the end of the financial year, primarily through the annual financial statements and quarterly announcements of financial results as well as the Chairman and Group Managing Director’s statements in the Annual Report. The Board is assisted by the Audit Committee to oversee the Group’s financial reporting processes and the completeness of its financial reporting.
Directors’ responsibility statement in respect of the preparation of the audited financial statements.
The Board is responsible for ensuring that the financial statements of the Group give a true and fair view of the state of affairs of the Group and of the Company as at the end of the financial year and of their results and cashflows for the (583661 W) financial year then ended. In preparing the financial statements, the Directors have ensured that applicable approved accounting standards in Malaysia and the provisions of the Companies Act, 1965 have been applied.
In preparing the financial statements, the Directors have selected and applied consistently suitable accounting policies and made reasonable and prudent judgements and estimates where applicable.
The Directors also have a general responsibility for taking steps as are reasonably open to them to safeguard the assets of the Group and to prevent and detect fraud and other irregularities. CAB CAKARAN CORPORATION BERHAD
26 Statement on Corporate Governance (cont’d)
ACCOUNTABILITY AND AUDIT (cont’d)
State of internal control
The Statements on Internal Control set out in that particular section of this Annual Report provides an overview on the state of internal controls within the Group.
Relationship with External Auditors
The external auditors of the Company fulfill an essential role on behalf of Company shareholders in giving an assurance to the shareholders and others on the reliability of the financial statements of the Company and the Group.
The external auditors have an obligation to bring to the attention of the Board of Directors, the Audit Committee and Company management any significant defects in the Group’s systems of reporting, internal control and compliance with approved accounting standards and regulatory requirements. The external auditors of the Company are invited to attend at least two (2) meetings of the Audit Committee a year.
The key features underlying the relationship of the Audit Committee with external auditors are included in the Audit Committee’s terms of reference as detailed in Audit Committee section of this Annual Report.
Statement on the compliance with the best practices of the Code
The Board is committed to achieve high standards of corporate governance throughout the Group and high level of integrity and ethics in its business dealings. The Board has taken steps to ensure that the Group has implemented as far as possible the Best Practices as set out in the Code. The Board considers that all other Best Practices have been implemented in accordance with the Code. (583661 W)
CAB CAKARAN CORPORATION BERHAD
27 Statement on Internal Control
Introduction
Pursuant to paragraph 15.27(b) of the Listing Requirements of Bursa Malaysia Securities Berhad, the Board of Directors of public listed companies shall include in their Annual Reports a “statement about the state of internal control of the listed issuer as a group”. The Board is committed to maintaining a sound system of internal control in the Group and is pleased to provide the following, which outlines the nature and scope of internal control of the Group during the financial year.
Board responsibility
The Board is ultimately responsible for the Group’s system of internal control and for reviewing its adequacy and integrity. In view of the inherent limitations in any system of internal control, this system is designed to manage rather than to eliminate the risk of failure to achieve corporate objectives. Accordingly it can only provide reasonable but not absolute assurance against material misstatement or loss. The system of internal control covers, inter-alia, financial, budgetary, organisational, operational and compliance controls.
Internal control and risk assessment
The Board and the management of the Company and the Group continue to strengthen the Group’s control environment and processes taking into consideration the key risks in their review of strategic and business plans of the Group. Management of the Group is responsible for the identification and evaluation of significant risks applicable to their respective areas of business together with the design and implementation of suitable internal controls. These risks may be associated with a variety of internal or external sources including control breakdowns, disease outbreaks, disruption in information systems, competition, natural catastrophe and regulatory requirements.
During the financial year, the Board is supported by an additional committee namely Risk Management Committee (“RMC”) of which was established on May 29, 2006 and chaired by Mr Kim Lim Chong, the chairman of Audit Committee, to assist the Board in overseeing the risk management efforts within the Group. Subsequent thereof, RMC reviewed the proposal for engagement of the professional firms on the guidelines of establishing and formalising the risk management framework across the Group as the Board recognises that having a formal risk management framework in place is essential to ensure proper management of the risks that may impede the achievement of the Group’s goals and objectives. As such, three professional firms had been selected for proposal presentation during the Board of Directors’ Meeting held on November 29, 2006 and Messrs. KPMG was appointed by the Board to provide the Enterprise Risk Management and Internal Audit Services to the Group on January 26, 2007. KPMG has since conducted its first cycle of internal audit and reported their findings to the Audit Committee and Board Members. An internal audit manager was also appointed in April 2007 and his responsibilities are to identify internal audit control weaknesses and systems and to recommend ways to improve them. He is also responsible for writing up a formal standard operation procedures (SOP) of the Group. In addition, he will be working closely with KPMG on issues relating to Risk Management and internal audit. (583661 W)
CAB CAKARAN CORPORATION BERHAD
28 Statement on Internal Control (cont’d)
Other elements of internal control
Some other key elements of internal control of the Group are as follows:-
(i) A formal organisational structure which defines the functions and responsibilities and segregation of duties of the key management team of the Group;
(ii) Annual budgets, strategies and business plans for the entire Group are reviewed by the management and approved by the Board of Directors;
(iii) Regular supervisory checks are performed to ensure strict adherence to operations, administration and accounting procedures of the Group;
(iv) Centralisation of procurement functions for major purchases and maintenance expenditures to ensure adherence to approval procedures of the Group;
(v) Centralisation of accounting and disbursement functions to ensure compliance with the procedures and approval authority of the Group; and
(vi) Adherence to health, safety, environmental and quality standards of the Group as enforced by the regulatory authorities.
Internal control review
During the financial year ended September 30, 2007 up to the date of this Annual Report, no significant control weaknesses were identified in the Group. However, a number of other minor internal control weaknesses were identified during the period, all of which have been, or are being addressed. These weaknesses have not been specifically disclosed as they are not expected to result in any material loss, contingency or uncertainty that would require disclosure in the Company’s Annual Report.
This statement has been reviewed by the Audit Committee and recommended for approval by the Board of Directors and had been reviewed by the external auditors in compliance with paragraph 15.24 of the Bursa Securities’ Listing Requirements. (583661 W)
CAB CAKARAN CORPORATION BERHAD
29 Audit Committee Report
The Audit Committee currently comprises the following:-
Name Position Kim Lim Chong Chairman (Independent Non-Executive Director) Ahmad Fazil Bin Haji Hashim Member (Independent Non-Executive Director) Chew Chee Khong - Resigned on February 1, 2008 Member ( Non Independent Executive Director) Y.T.M. Tunku Dato’ Dr Ismail Ibni Almarhum Tunku Mohd Jewa Member (Senior Independent Non-Executive Director)
TERMS OF REFERENCE
The Committee is governed by the following terms of reference:-
Membership
The Committee shall be appointed by the Board from among its members and shall consist of not less than three members of whom all Audit Committee members must be Non-Executive Directors with a majority of them being Independent Directors. An Independent Director shall be the one who fulfills the requirements as provided in the Listing Requirements of Bursa Securities.
At least one member of the Committee must be a member of the Malaysian Institute of Accountants, or if he is not a member of the Malaysian Institute of Accountants, must have at least three (3) years working experience and either have passed the examinations specified in Part I of the First Schedule of the Accountants Act, 1967, or a member of one of the associations of accountants specified in Part II of the First Schedule of the Accountants Act, 1967 or fulfils such other requirements as prescribed or approved by Bursa Malaysia Securities Berhad.
The members of the Committee shall elect a Chairman from among their number who is Independent Non-Executive Director. All members of the Committee, including the Chairman, will hold office until otherwise determined by the Board. No alternate director shall be appointed as a member of the Committee.
If the number of members is reduced to below three, due to whatsoever reasons, the Board shall within three (3) months of that event, appoint such number of new members as may be required to make up the minimum number of three members.
Authority
The Committee is authorised by the Board to investigate any activity within its terms of reference and shall have the resources required to perform its duties. The Committee has full and unrestricted access to all information and documents (583661 W) relevant to its activities as well as to the internal and external auditors and employees of the Group.
The Committee is authorised by the Board to obtain external legal, independent or other professional advice and be able to convene meetings with the external auditors, the internal auditors or both, excluding the attendance of other directors and employees of the Company, whenever deemed necessary.
It shall also have the power to establish Sub-Audit Committee(s) to carry out certain investigations on behalf of the Committee in such manner, as the Committee shall deemed fit and necessary. CAB CAKARAN CORPORATION BERHAD
30 Audit Committee Report (cont’d)
Duties and Responsibilities
The duties and responsibilities of the Audit Committee are:-
• to review with the external auditors the audit plans, evaluation on the internal controls and their audit reports and to consider adequacy of Management’s actions taken on external audit reports;
• to discuss with the external auditors before the audit commences, the nature and scope of the audit;
• to review the assistance given by the employees of the Company to the external auditors;
• to review the external auditors management letter and management’s response;
• to nominate a person or persons as the external auditors of the Company, the fees thereof, assess reappointment of existing external auditors and consider resignation of external auditors;
• to review the internal audit programs and results of the internal audit process and where necessary to ensure that appropriate action is taken on the recommendations of the internal audit function;
• to review the adequacy of the scope, functions, competency and resources of the internal audit functions;
• to review any related party transactions and conflict of interest situation that may arise within the Company or Group and to monitor any inter-company transaction or any transactions between the Company and any related parties outside the Group;
• to review the quarterly and year-end financial statements of the Company and the Group prior to presentation to the Board for approval; focusing particularly on the changes in and implementation of major accounting policy and compliance with accounting standards and other legal requirements;
• to review and evaluate the adequacy and effectiveness of the Group’s accounting policies, procedures and internal controls; and
• to perform such other duties if any as may be agreed to by the Committee and the Board.
Attendance, Quorum and Frequency of Meetings
The Director of Finance, the Head of Internal Audit and representatives of the external auditors shall normally attend meetings. Other Board members and employees shall attend meetings only at the invitation of the Committee. However, the Committee should meet with the external auditors without executive Board members present at least twice a year.
The Company Secretary shall be the secretary of the Committee. (583661 W) In order to form a quorum for a Committee meeting, the majority of members present must be independent Directors.
The Committee shall meet not less than four (4) times a year. The external auditors may request for a meeting if they consider it necessary. CAB CAKARAN CORPORATION BERHAD
31 Audit Committee Report (cont’d)
Reporting Procedures
The Committee is authorised to regulate its own procedure and in particular the calling of meetings, the notice to be given of such meetings, the voting and proceeding thereat, the keeping of minutes and the custody, production and inspection of such meetings.
The Minutes of the meetings shall be circulated by the Secretary of the Committee to the Committee members and all the other Board members.
MEETINGS
The Committee met five (5) times during the financial year ended September 30, 2007. The Group General Manager - Finance & Administration, Internal Audit Manager and Accounting Manager of the Group and external auditors upon invitation of the Committee attended the Committee meetings to assist in its deliberations.
During the financial year ended September 30, 2007, there was no specific issue arising from the audit of the financial statements of the Group that would require discussions without the presence of the executive board member.
Details of attendance of each members at the Committee meetings during the financial year ended September 30, 2007 are as follows:-
No. of Meetings held Attendance Kim Lim Chong 5 5 Chew Chee Khong 5 5 ( Resigned February 1, 2008) Ahmad Fazil Bin Haji Hashim 5 5 Y.T.M. Tunku Dato’ Dr. Ismail Ibni Almarhum Tunku Mohd Jewa 5 5
ACTIVITIES OF THE AUDIT COMMITTEE DURING THE FINANCIAL YEAR ENDED SEPTEMBER 30, 2007.
During the financial year ended September 30, 2007, the Audit Committee carried out the following activities in the discharge of its functions and duties:
(i) Reviewed the unaudited interim financial results, annual audited financial statements of the Group and management letters of the external auditors;
(ii) Reviewed with the external auditors on the financial reporting requirements of the Group so as to comply with Approved Accounting Standards and Listing Requirements of Bursa Securities; (583661 W) (iii) Reviewed with internal auditor on their audit findings and approved for adoption of their recommendations;
(iv) Reviewed the internal audit plan and reports so as to assess the state of the internal control system of the Group;
(v) Reviewed the related party transactions of the Group;
(vi) Reviewed the statutory payments of the Group to ensure compliance with the relevant statutory requirements; and
(vii) Reviewed the re-appointment of external auditors for the ensuing year.
(viii) Reviewed and verified the allocation of ESOS Options for the financial year ended September 30, 2007 in compliance with the Listing Requirements of Bursa Malaysia Securities Berhad. CAB CAKARAN CORPORATION BERHAD (ix) Reviewed all capital expenditure irrespective of completed or pending completion and the cash flow situation of the Group; 32 Other Information Required by the Listing Requirements of Bursa Malaysia Securities Berhad (“Bursa Securities”)
MATERIAL CONTRACTS
There were no material contracts entered into by the Company and its subsidiaries involving Directors’ and major shareholders’ interests either still subsisting as at the end of the financial year or entered into since the end of the previous financial year.
NON-AUDIT FEES
There were no non-audit fees paid to the external auditors by the Group for the financial year ended September 30, 2007.
SHARE BUYBACKS
The Company did not enter into any share buyback transactions during the financial year ended September 30, 2007.
VARIATIONS OF RESULTS
The Company had on November 30, 2007 announced to Bursa Malaysia Securities Berhad that the Group’s audited results for the financial year ended September 30, 2007 recorded a profit after taxation after minority interest of RM619,000 as compared to the Group’s unaudited results of a profit after taxation after minority interest of RM78,000 which was announced on November 30, 2007.
The reconciliation of the differences in audited results and unaudited results are as follows:-
Notes RM Unaudited Profit after taxation after minority interest 78,000 Add: Over provision of taxation 176,000 Over provision of deferred tax 208,000 Expenses over accrued 63,000 Profit share by minority interest wrongly reclassified 224,000 671,000 to income statement previously 749,000 Less: Under provision of doubtful debt 14,000 Revaluation deficit wrongly set off with pre-acquired revaluation reserve 114,000 Property, plant and equipment written off 1,000 Unrealised profit under taken 1,000 130,000 Audited Profit after taxation after minority interest 619,000 (583661 W)
PROFIT GUARANTEE
There was no profit guarantee given by the Company or its subsidiaries for the financial year ended September 30, 2007.
REVALUATION POLICY ON LANDED PROPERTIES
Certain landed properties of the Group were revalued by the Directors on September 30, 2007 based on valuations carried out by an independent firm of professional valuer. The valuations were based on market values using comparison method of valuation, comparison and cost method of valuations, depreciated replacement cost method of valuation, and market values for the existing use using depreciated replacement cost method of valuation. CAB CAKARAN CORPORATION BERHAD
33 Other Information Required by the Listing Requirements of Bursa Malaysia Securities Berhad (“Bursa Securities”) (cont’d)
IMPOSITION OF SANCTIONS/PENALTIES
There were no public sanctions and/or public penalties imposed on the Company and its subsidiaries, directors or management by relevant regulatory bodies during the financial year ended September 30, 2007.
OPTIONS, WARRANTS OR CONVERTIBLE SECURITIES
There were no options, warrants or convertible securities exercised during the financial year ended September 30, 2007 save for the share options as follows:-
No. of options over ordinary shares of RM0.50 each Exercise price per ordinary Balance as of Balance as of Date of Offer share 1.10.2006 Granted Exercised Lapsed 30.9.2007 RM 26.7.2004 0.53 1,432,300 - (23,000) (63,000) 1,346,300 19.10.2004 0.53 117,900 - (4,700) (17,900) 95,300 1.9.2005 0.53 248,000 - - (46,500) 201,500 15.6.2006 0.60 1,153,000 - - (131,000) 1,022,000
2,951,200 - (27,700) (258,400) 2,665,100
According to Section 169(11) of the Companies Act, 1965, the Company is required to disclose the name of persons to whom any option has been granted during the financial year. Pursuant to Section 169A of the Companies Act, 1965, the Company has applied and has been granted exemption by the Companies Commission of Malaysia from having to disclose the name of employees who have been granted options below 200,000. There was no employee who has been granted options of 200,000 or above during the current financial year.
AMERICAN DEPOSITORY RECEIPT (ADR) OR GLOBAL DEPOSITORY RECEIPT (GDR) PROGRAMME
The Company did not sponsor any ADR or GDR programs during the financial year ended September 30, 2007. (583661 W)
CAB CAKARAN CORPORATION BERHAD
34 Financial Statements
Directors’ Report 36 - 41
Report of the Auditors 42
Income Statements 43
Balance Sheets 44
Statements of Changes in Equity 45 - 47
Cash Flow Statements 48 - 49
Notes to the Financial Statements 50 - 102
Statement by Directors 103
Declaration by the Director Primarily 104 Responsible for the Financial Management of the Company Directors’ Report
The directors of CAB CAKARAN CORPORATION BERHAD have pleasure in submitting their report and the audited financial statements of the Group and of the Company for the financial year ended September 30, 2007.
PRINCIPAL ACTIVITIES
The Company is principally involved in investment holding and provision of management services. The principal activities of the subsidiaries are as stated in Note 13 to the financial statements. There have been no significant changes in the nature of the activities of the Group and of the Company during the financial year.
RESULTS OF OPERATIONS The Group The Company RM RM Profit/(loss) after tax for the year 216,225 (122,934)
Attributable to: Equity holders of the parent 619,035 (122,934) Minority interests (402,810) –
216,225 (122,934)
In the opinion of the directors, the results of operations of the Group and of the Company during the financial year have not been substantially affected by any item, transaction or event of a material and unusual nature except for the change in accounting policies as mentioned in Note 29 to the financial statements.
DIVIDENDS
No dividend has been paid or declared by the Company since the end of the previous financial year. The directors also do not recommend any dividend payment in respect of the current financial year.
RESERVES AND PROVISIONS
There were no material transfers to or from reserves or provisions during the financial year other than those disclosed in the financial statements.
ISSUE OF SHARES AND DEBENTURES (583661 W) During the financial year, the issued and paid-up ordinary share capital of the Company was increased from RM65,875,700 to RM65,889,550 by way of an issue of 27,700 ordinary shares of RM0.50 each for cash pursuant to the Employees’ Share Option Scheme of the Company at an exercise price of RM0.53 per ordinary share.
The resultant premium arising from the shares issued pursuant to the exercise of Employees’ Share Option Scheme of RM831 has been credited to the share premium account.
The new ordinary shares rank pari passu with the then existing ordinary shares of the Company.
The Company has not issued any debentures during the financial year. CAB CAKARAN CORPORATION BERHAD
36 Directors’ Report (cont’d)
EMPLOYEES’ SHARE OPTION SCHEME
Under the Company’s Employees’ Share Option Scheme (“ESOS”) which became effective on July 16, 2004, options to subscribe for unissued new ordinary shares of RM0.50 each in the Company were granted to eligible directors and employees of the Company and its subsidiaries.
The salient features of the ESOS are as follows:
(a) the maximum number of new ordinary shares to be issued pursuant to the exercise of the options which may be granted under the scheme shall not exceed fifteen percent of the issued and paid-up share capital of the Company or such maximum percentages as may be allowed by the relevant authorities at any point of time throughout the duration of the scheme;
(b) any employee of the Group shall be eligible to participate in the scheme if, as of the date of the offer, the employee:
(i) is at least eighteen years of age;
(ii) is employed full time by and on the payroll of a company in the Group; and
(iii) is confirmed in writing as a full time employee and has been in the employment of the Group for a period of at least one year of continuous service prior to the date of offer, including service during the probation period;
(c) any director of the Group shall be eligible to participate in the scheme if, as of the date of the offer, such director:
(i) is at least eighteen years of age;
(ii) has been appointed as a director of a company within the Group for a period of at least three months; and
(iii) where the eligible director is a director of the Company, such entitlement under the scheme must have been approved by the shareholders of the Company in general meeting;
(d) the actual number of options which may be offered to an eligible employee shall be at the discretion of the Option Committee provided that the options so offered shall be in multiples of and not less than one hundred shares subject to the maximum allowable allotment;
(e) the option price shall be fixed based on the higher of the following:
(i) the five days weighted average market price of the ordinary shares of the Company, as quoted on Bursa Malaysia Securities Berhad, immediately preceding the date of offer with a discount of not more than ten percent; or
(ii) the par value of the ordinary shares of the Company; and (583661 W) (f) the scheme shall be in force for a period of five calendar years from the effective date and may be extended or renewed and the options granted may be exercised at any time within the option period. CAB CAKARAN CORPORATION BERHAD
37 Directors’ Report (cont’d)
EMPLOYEES’ SHARE OPTION SCHEME (cont’d)
The share options granted and exercised during the financial year are as follows:
No. of options over ordinary shares of RM0.50 each Exercise price per Balance Balance ordinary as of as of Date of offer share 1.10.2006 Granted Exercised Lapsed 30.9.2007 RM
26.7.2004 0.53 1,432,300 – (23,000) (63,000) 1,346,300 19.10.2004 0.53 117,900 – (4,700) (17,900) 95,300 1.9.2005 0.53 248,000 – – (46,500) 201,500 15.6.2006 0.60 1,153,000 – – (131,000) 1,022,000
2,951,200 – (27,700) (258,400) 2,665,100
OTHER FINANCIAL INFORMATION
Before the income statements and balance sheets of the Group and of the Company were made out, the directors took reasonable steps:
(a) to ascertain that proper action had been taken in relation to the writing off of bad debts and the making of allowance for doubtful debts, and have satisfied themselves that all known bad debts had been written off and that adequate allowance had been made for doubtful debts; and
(b) to ensure that any current assets which were unlikely to realise their book values in the ordinary course of business have been written down to their estimated realisable values.
At the date of this report, the directors are not aware of any circumstances:
(a) which would render the amount written off for bad debts or the amount of allowance for doubtful debts in the financial statements of the Group and of the Company inadequate to any substantial extent; or
(b) which would render the values attributed to current assets in the financial statements of the Group and of the Company misleading; or
(c) which have arisen which render adherence to the existing method of valuation of assets or liabilities of the Group and of the Company misleading or inappropriate; or (583661 W) (d) not otherwise dealt with in this report or financial statements which would render any amount stated in the financial statements of the Group and of the Company misleading.
At the date of this report, there does not exist:
(a) any charge on the assets of the Group and of the Company which has arisen since the end of the financial year and secures the liability of any other person; or
(b) any contingent liability of the Group and of the Company which has arisen since the end of the financial year other than those disclosed in Note 38 to the financial statements.
No contingent or other liability has become enforceable or is likely to become enforceable within the period of twelve
CAB CAKARAN CORPORATION BERHAD months after the end of the financial year which, in the opinion of the directors, will or may substantially affect the ability of the Group and of the Company to meet their obligations as and when they fall due. 38 Directors’ Report (cont’d)
OTHER FINANCIAL INFORMATION (cont’d)
In the opinion of the directors, 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 operations of the Group and of the Company for the succeeding financial year other than the changes in accounting policies as disclosed in Note 3 to the financial statements.
SIGNIFICANT EVENTS DURING THE FINANCIAL YEAR
During the financial year:
(a) a direct subsidiary, Likes Marketing Sdn. Bhd. acquired 51,000 ordinary shares of S$1 each in Protheme Pte. Ltd., representing 51% of the equity interest in Protheme Pte. Ltd., for a total purchase consideration of S$51,000 (equivalent to RM115,213);
(b) Likes Marketing Sdn. Bhd. increased its issued and paid-up share capital from 2 ordinary shares of RM1 each to 200,000 ordinary shares of RM1 each. The Company subscribed for the entire additional 199,998 ordinary shares of RM1 each in Likes Marketing Sdn. Bhd., for a total cash consideration of RM199,998. Accordingly, the Group’s equity interest in Likes Marketing Sdn. Bhd. remains unchanged;
(c) a direct subsidiary, CAB Cakaran Sdn. Bhd. acquired 2 ordinary shares of RM1 each in Bukit Perak GPS Farm Sdn. Bhd., representing 100% of the equity interest in Bukit Perak GPS Farm Sdn. Bhd., for a total purchase consideration of RM2. The acquisition was completed on July 23, 2007;
(d) CAB Cakaran Sdn. Bhd. disposed off its entire equity interest of 200,000 ordinary shares of RM1 each, representing 100% of the issued and paid-up share capital of a subsidiary, CAB Cakaran (Timur) Sdn. Bhd. to another subsidiary, Jaya Gading Farm Sdn. Bhd. for a total sales consideration of RM553,556. Upon completion of the aforesaid disposal on July 30, 2007, CAB Cakaran (Timur) Sdn. Bhd. becomes a 55% owned subsidiary of the Group;
(e) a direct subsidiary, Kyros International Sdn. Bhd. entered into three separate Share Sale Agreements with external parties for the disposals of the subsidiaries as follows:
(i) 85,000 ordinary shares of RM1 each, representing 85% equity interest in Daging Salai Sdn. Bhd., for a total sales consideration of RM1;
(ii) 400,000 ordinary shares of RM1 each, representing 100% equity interest in Kyros Bakery & Confectionery Sdn. Bhd., for a total sales consideration of RM2; and
(iii) 51,000 ordinary shares of RM1 each, representing 51% equity interest in Souvlaki Star Sdn. Bhd., for a total sales consideration of RM1. (583661 W) The disposals were completed on September 27, 2007, on which date controls of Daging Salai Sdn. Bhd., Kyros Bakery & Confectionery Sdn. Bhd. and Souvlaki Star Sdn. Bhd. were passed to the acquirers, resulting in a gain on disposals to the Group amounting to RM4;
(f) an indirect subsidiary, Kyros Kebab Overseas Ventures Sdn. Bhd. entered into a Share Sale Agreement with an external party for the disposal of 51,000 ordinary shares of S$1 each, representing 51% equity interest in Kyros Kebab (S) Pte. Ltd., for a total sales consideration of S$1 (equivalent to approximately RM2). The disposal was completed on September 27, 2007, on which date control of Kyros Kebab (S) Pte. Ltd. was passed to the acquirer, resulting in a gain on disposal to the Group amounting to RM2; and
(g) Kyros International Sdn. Bhd. also entered into a conditional Share Sale Agreement with external parties for the disposal of its entire equity interest of 100,000 ordinary shares of RM1 each, representing 100% equity interest in
Kyros Properties Sdn. Bhd., for a total sales consideration of RM2. The disposal transaction has not been completed as CAB CAKARAN CORPORATION BERHAD of September 30, 2007. Upon completion of the disposal transaction, there would be a gain on disposal of subsidiary amounting to RM2. 39 Directors’ Report (cont’d)
SIGNIFICANT EVENTS SUBSEQUENT TO THE BALANCE SHEET DATE
Significant events subsequent to the balance sheet date are disclosed in Note 38 to the financial statements.
DIRECTORS
The following directors served on the Board of the Company since the date of the last report:
Datuk Haji Zakaria Bin Hashim Chuah Ah Bee Chan Kim Keow Y.T.M. Tunku Dato’ Dr. Ismail Ibni Almarhum Tunku Mohd Jewa Kim Lim Chong Ahmad Fazil Bin Haji Hashim Loo Choo Gee Chew Chee Khong (appointed on January 25, 2007) Chuah Hoon Phong (appointed on May 29, 2007) Khoo Chee Kong (resigned on February 1, 2007) Leow Chan Khiang (retired on May 29, 2007) Chuah Hoon Phong (alternate director to Chan Kim Keow) (retired on May 29, 2007)
DIRECTORS’ INTERESTS
The shareholdings in the Company of those who were directors at the end of the financial year, as recorded in the Register of Directors’ Shareholdings kept by the Company under Section 134 of the Companies Act, 1965, are as follows:
No. of ordinary shares of RM0.50 each Balance as Balance as Shares in the Company of 1.10.2006 Bought Sold of 30.9.2007
Direct interest: Datuk Haji Zakaria Bin Hashim 1,378,900 – (1,268,500) 110,400 Chuah Ah Bee 44,894,894 591,700 – 45,486,594 Loo Choo Gee 3,843,125 1,418,600 – 5,261,725 Chan Kim Keow 17,734,500 – – 17,734,500 Y.T.M. Tunku Dato’ Dr. Ismail Ibni Almarhum Tunku Mohd Jewa 45,000 – – 45,000 Kim Lim Chong 45,000 – – 45,000 Ahmad Fazil Bin Haji Hashim 5,000 – – 5,000 (583661 W) Chew Chee Khong 30,000 – (30,000) – Chuah Hoon Phong 6,574,150 22,000 (635,400) 5,960,750
Indirect interest: Chuah Ah Bee 24,308,650 22,000 (635,400) 23,695,250 Chan Kim Keow 51,469,044 613,700 (635,400) 51,447,344 Chuah Hoon Phong 447,650 198,500 – 646,150 Kim Lim Chong 65,000 – (10,000) 55,000 CAB CAKARAN CORPORATION BERHAD
40 Directors’ Report (cont’d)
DIRECTORS’ INTERESTS (cont’d)
In addition to the above, the following directors are deemed to have interest in the shares of the Company to the extent as follows:
No. of options over ordinary shares of RM0.50 each Balance as Balance as Options over shares in the Company of 1.10.2006 Granted Exercised of 30.9.2007
Direct interest: Datuk Haji Zakaria Bin Hashim 87,500 – – 87,500 Chew Chee Khong 50,000 – – 50,000 Chuah Hoon Phong 100,000 – (20,000) 80,000
By virtue of his interest in the shares of the Company, Mr. Chuah Ah Bee is also deemed to have beneficial interests in the shares of all the subsidiaries of the Company to the extent that the Company has interests.
DIRECTORS’ BENEFITS
Since the end of the previous financial year, none of the directors of the Company has received or become entitled to receive any benefit (other than those disclosed as directors’ remuneration and directors’ benefits-in-kind in the financial statements) by reason of a contract made by the Company or a related corporation with the director or with a firm of which he is a member, or with a company in which he has a substantial financial interest except for any benefits which may be deemed to have arisen by virtue of the transactions mentioned in Note 33 to the financial statements.
During and at the end of the financial year, no arrangement subsisted to which the Company was a party whereby directors of the Company might acquire benefits by means of the acquisition of shares in, or debentures of, the Company or any other body corporate except for options over shares granted by the Company to eligible employees including certain directors of the Company to subscribe for shares in the Company pursuant to the Company’s Employees’ Share Option Scheme.
AUDITORS
The auditors, Messrs. Deloitte KassimChan, have indicated their willingness to continue in office.
Signed on behalf of the Board in accordance with a resolution of the Directors, (583661 W)
DATUK HAJI ZAKARIA BIN HASHIM CHUAH AH BEE Chairman Managing Director
Penang, January 29, 2008 CAB CAKARAN CORPORATION BERHAD
41 Report of the Auditors to the Members of CAB CAKARAN CORPORATION BERHAD (Incorporated in Malaysia)
We have audited the accompanying balance sheets as of September 30, 2007 and the related statements of income, changes in equity and cash flows for the year then ended. 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 these 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 towards any other person for the content of this report.
We conducted our audit in accordance with approved standards on auditing in Malaysia. These 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 financial statements presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion:
(a) the financial statements are properly drawn up in accordance with the provisions of the Companies Act, 1965 and the applicable Malaysian Accounting Standards Board approved accounting standards in Malaysia so as to give a true and fair view of:
(i) the state of affairs of the Group and of the Company as of September 30, 2007 and of their results and cash flows for the year ended on that date; and
(ii) the matters required by Section 169 of the Act to be dealt with in the financial statements and consolidated financial statements; and
(b) the accounting and other records and the registers required by the Act to be kept by the Company and by the subsidiaries have been properly kept in accordance with the provisions of the Act.
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 as required by us for these purposes.
The auditors’ reports on the financial statements of the subsidiaries were not subject to any qualification and did not include any comments made under Sub-section (3) of Section 174 of the Act.
DELOITTE KASSIMCHAN AF 0080 Chartered Accountants (583661 W)
LEE CHENG HEOH 2225/04/08(J) Partner
Penang, January 29, 2008 CAB CAKARAN CORPORATION BERHAD
42 Income Statements for the year ended September 30, 2007
The Group The Company 2007 2006 2007 2006 Note RM RM RM RM
Revenue 5 442,934,247 339,892,588 180,000 20,915,000 Cost of sales (419,333,962) (326,084,087) – –
Gross profit 23,600,285 13,808,501 180,000 20,915,000 Investment revenue 1,761,856 1,346,495 – – Other income 303,361 556,363 – 356 Other gains and losses (386,696) (5,445,204) – (9,264,000) Distribution costs (3,494,542) (2,379,916) – – Administrative expenses (14,431,989) (14,443,315) (321,973) (490,752) Finance costs (5,371,433) (4,648,693) – – Other expenses (354,424) (330,450) – –
Profit/(loss) before tax 1,626,418 (11,536,219) (141,973) 11,160,604 Tax (expense)/income 6 (1,410,193) 358,477 19,039 (3,789,582)
Profit/(loss) for the year 7 216,225 (11,177,742) (122,934) 7,371,022
Attributable to: Equity holders of the parent 619,035 (10,725,698) (122,934) 7,371,022 Minority interests (402,810) (452,044) – –
216,225 (11,177,742) (122,934) 7,371,022
Earnings/(loss) per share: Basic 8 0.47 sen (8.31 sen) (583661 W)
CAB CAKARAN CORPORATION BERHAD The accompanying notes form an integral part of the financial statements. 43 Balance Sheets as of September 30, 2007
The Group The Company 2007 2006 2007 2006 Note RM RM RM RM ASSETS Non-current assets Property, plant and equipment 9 110,388,495 118,401,155 – – Investment properties 10 19,920,095 – – – Prepaid lease payments on leasehold land 11 6,476,471 7,209,068 – – Goodwill 12 6,872,760 6,872,760 – – Investments in subsidiaries 13 – – 41,661,141 41,461,143 Other investment 14 – – – – Agricultural expenditure 15 177,324 177,324 – –
Total non-current assets 143,835,145 132,660,307 41,661,141 41,461,143 Current assets Investment in quoted shares 16 – 58,668 – – Inventories 17 20,537,898 27,521,113 – – Trade and other receivables 18 62,524,403 57,891,474 24,412,998 24,754,596 Current tax assets 400,585 1,143,516 6,703 – Other assets 19 4,971,744 3,211,746 1,000 1,000 Short-term deposits with a licensed bank 20 2,539,755 3,088,444 – – Cash and bank balances 21 3,589,358 2,193,346 7,384 7,433
94,563,743 95,108,307 24,428,085 24,763,029 Non-current assets classified as held for sale 22 1,246,985 – – –
Total current assets 95,810,728 95,108,307 24,428,085 24,763,029
Total assets 239,645,873 227,768,614 66,089,226 66,224,172 EQUITY AND LIABILITIES Capital and reserves Share capital 23 65,889,550 65,875,700 65,889,550 65,875,700 Reserves 24 11,591,560 3,469,582 146,464 268,567
Equity attributable to equity holders of the parent 77,481,110 69,345,282 66,036,014 66,144,267 Minority interests 13,502,791 12,575,617 – –
Total equity 90,983,901 81,920,899 66,036,014 66,144,267
(583661 W) Non-current liabilities
Borrowings 25 16,909,303 20,476,916 – – Deferred tax liabilities 26 7,462,693 7,663,242 – –
Total non-current liabilities 24,371,996 28,140,158 – – Current liabilities Trade and other payables 27 40,808,467 40,609,093 53,212 63,568 Borrowings 25 82,972,346 76,431,193 – – Current tax liabilities 509,163 667,271 – 16,337
Total current liabilities 124,289,976 117,707,557 53,212 79,905
Total liabilities 148,661,972 145,847,715 53,212 79,905 CAB CAKARAN CORPORATION BERHAD Total equity and liabilities 239,645,873 227,768,614 66,089,226 66,224,172 44 The accompanying notes form an integral part of the financial statements. Statements of Changes in Equity for the year ended September 30, 2007 – RM Total – 240,510 – – 3,619,808 – (1,970,180) – (2,170,771) RM Minority Interests – – 717,999 717,999 – (722,997) (722,997) RM Parent to Equity Holders of Attributable – 240,510 – (20,677) (41,462) (62,139) – 219,833 (41,462) 178,371 – 3,619,808 – (1,970,180) – – RM Earnings Retained – – (10,725,698) (10,725,698) (452,044) (11,177,742) – (7,434,970) – – – (2,170,771) (2,170,771) – – RM Reserve Translation – (20,677) – – – – – – RM Goodwill Negative – 4,900,732 968 20,579,120 80,372,290 13,074,121 93,446,411 – 240,510 – – 240,510 (20,677) – – 240,510 (20,677) (10,725,698) (10,505,865) (493,506) (10,999,371) – – – (1,970,180) – – – – 3,171,062 (19,709) 247,681 69,345,282 12,575,617 81,920,899 RM Reserve Revaluation – – – – – – – – – RM Share Premium (583661 W) – – – – – – – – –
RM Share Capital 41,651,750 13,239,720 21,581,800 (14,146,830) 65,875,700 70,548 CAB CAKARAN CORPORATION BERHAD October 1, 2005 on acquisition of subsidiary differences expenses recognised directly in equity income and expenses ordinary shares 5,284,300 ordinary shares 2,642,150 977,658 negative goodwill arising from acquisition of subsidiary in subsidiaries from minority shareholders September 30, 2006 Balance as of Negative goodwill arising Currency translation Net income and Loss for the year Total recognised Bonus issue of 43,163,600 Exercise of share options for Amortisation of Dividends (Note 28) Minority interest Purchase of shares Balance as of The Group 45 Statements of Changes in Equity (cont’d) for the year ended September 30, 2007 RM Total – 14,681 RM Minority Interests – 209,442 209,442 – 78,450 78,450 RM Parent to Equity Holders of Attributable – 6,393,226 970,377 7,363,603 – (644,998) (87,363) (732,361) – – – 28,368 15,230 43,598 – 5,776,596 1,186,136 6,962,732 – 14,681 RM Earnings Retained – 4,896,578 1,725,516 15,424 1,740,940 – – – – – 619,035 619,035 (402,810) 216,225 – RM Reserve Translation – (19,709) 5,144,259 71,070,798 12,591,041 83,661,839 – – – – – 28,368 – 28,368 – – 28,368 619,035 6,395,631 783,326 7,178,957 – RM Goodwill Negative – 3,171,062 (19,709) 247,681 69,345,282 12,575,617 81,920,899 – (3,171,062) – – – – – – RM Reserve Revaluation – – 6,393,226 – (644,998) – – – – 5,748,228 – – 5,748,228 RM Share Premium (583661 W) – – – – – – – – –
RM Share Capital 65,875,700 70,548 65,875,700 70,548 CAB CAKARAN CORPORATION BERHAD October 1, 2006 accounting policies (Note 29) revaluation of properties on revaluation surplus of revalued properties during the year liabilities arising from the change in tax rates tax liabilities resulting from the abolishment of capital gains tax differences income and expenses for 27,700 ordinary sharesordinary 27,700 for 13,850 831 expenses recognised directly in equity The Group (cont’d) Balance as of Effect of change in As restated Surplus arising from Deferred tax liabilities Reversal of deferred tax Reversal of deferred Currency translation Net income and Profit for the year Total recognised Exercise of share options 46 Statements of Changes in Equity (cont’d) for the year ended September 30, 2007 – RM RM Total Total 14,681 (122,934) 7,371,022 3,619,808 (2,170,771) 66,144,267 66,144,267 57,324,208 66,036,014 RM Minority Interests – – RM – 1,121 1,121 – 109,574 109,574 – 17,729 17,729 75,085 198,019 198,019 (122,934) RM 7,371,022 2,432,738 (2,170,771) (7,434,970) Parent to Equity Holders of Attributable Retained Earnings – – – RM – – – RM 831 Earnings Retained 70,548 70,548 71,379 977,658 13,239,720 (14,146,830) – – – RM Share Premium Reserve Translation – – – – – – – 8,659 5,763,294 77,481,110 13,502,791 90,983,901 RM RM 13,850 2,642,150 Goodwill Negative 65,875,700 65,875,700 21,581,800 41,651,750 65,889,550 Share Capital – – – RM Reserve Revaluation – – – 28 Note RM Share Premium The accompanying notes form an integral part of the financial statements. part of the an integral The accompanying notes form (583661 W) – – –
RM Share Capital CAB CAKARAN CORPORATION BERHAD recognised income and expenses ordinary shares recognised income and expenses ordinary shares arising from acquisition of a subsidiary shares by a subsidiary interest in a subsidiary September 30, 2007 65,889,550 71,379 5,748,228 Balance as of September 30, 2007 Loss for the year, representing total Exercise of share options for 27,700 Balance as of October 1, 2006 Dividend Balance as of September 30, 2006 Profit for the year, representing total Exercise of share options for 5,284,300 Bonus issue of 43,163,600 ordinary shares Balance as of October 1, 2005 The Group (cont’d) Minority interest Issue of additional Accretion in minority Balance as of The Company 47 Cash Flow Statements for the year ended September 30, 2007
The Group The Company 2007 2006 2007 2006 RM RM RM RM CASH FLOWS FROM OPERATING ACTIVITIES Profit/(loss) for the year 216,225 (11,177,742) (122,934) 7,371,022 Adjustments for: Depreciation of property, plant and equipment 7,712,523 7,227,238 – – Interest expense 4,950,157 4,275,868 – – Tax expense/(income) recognised in profit or loss 1,410,193 (358,477) (19,039) 3,789,582 Deficit on revaluation of properties 607,874 – – – Property, plant and equipment written off 236,619 262,919 – – Allowance for doubtful debts 218,878 2,407,907 – – Amortisation of prepaid lease payments on leasehold land 127,250 143,850 – – Loss/(gain) on disposal of property, plant and equipment 71,124 (142) – – Bad debts written off 21,801 4,556 – – Impairment loss on non-current assets classified as held for sale 20,331 – – – Loss on dilution of interest in a subsidiary 17,729 – – – Fair value adjustment on investment properties (395,000) – – – Gain on disposal of investment in quoted shares (97,096) – – – Interest income (93,987) (94,914) – – Waiver of amount owing to a director of a subsidiary (55,000) – – – Reversal of previous revaluation deficit on properties (30,482) – – – Unrealised gain on foreign exchange (23,081) (76,196) – – Gross dividend income from quoted investment in Malaysia (3,656) (6,998) – – Gain on disposal of subsidiaries (6) – – – Goodwill written off – 2,527,165 – – Amortisation of goodwill – 1,919,658 – – Diminution in value of other investment – 217,436 – – Deposit written off – 3,136 – – Amortisation of negative goodwill – (1,970,180) – – Gross dividend income from unquoted investment – (6,000) – – Impairment loss on investment in a subsidiary – – – 9,264,000 Gross dividend income from a subsidiary – – – (20,735,000)
14,912,396 5,299,084 (141,973) (310,396) (583661 W)
Movements in working capital: (Increase)/decrease in: Inventories 6,983,215 (6,453,145) – – Trade and other receivables (4,834,310) 26,456,836 (60,000) (87,000) Other assets (1,735,848) (2,222,625) – – Increase/(decrease) in: Trade and other payables 262,155 (17,812,059) (10,356) (237,054) Effect of exchange rates changes on working capital 49,700 (58,562) – –
Cash generated from/(used in) operations 15,637,308 5,209,529 (212,329) (634,450) Income tax refunded 258,616 – – – Income tax paid (1,743,719) (2,784,485) (4,001) (32,582) CAB CAKARAN CORPORATION BERHAD Net cash generated from/(used in) operating activities 14,152,205 2,425,044 (216,330) (667,032) 48 Cash Flow Statements (cont’d) for the year ended September 30, 2007
The Group The Company 2007 2006 2007 2006 Note RM RM RM RM CASH FLOWS FROM INVESTING ACTIVITIES Proceeds from disposal of property, plant and equipment 494,894 546,252 – – Proceeds from disposal of quoted shares 155,764 – – – Interest received 89,535 95,491 – – Dividend received from quoted investment in Malaysia 2,632 5,206 – – Acquisition of subsidiaries 13 1,121 (4,450,186) (199,998) – Proceeds from disposal of subsidiaries 13 6 – – – Payments for property, plant and equipment 30 (10,427,504) (11,550,576) – – Dividend received from unquoted investment – 4,320 – – Purchase of shares from minority interests of subsidiaries – (490,925) – – Dividends received from a subsidiary – – 8,866,000 10,076,000 Repayment of advances by subsidiaries – – 2,215 4,498,073 Advances to subsidiaries – – (8,466,617) (8,295,292)
Net cash (used in)/generated from investing activities (9,683,552) (15,840,418) 201,600 6,278,781
CASH FLOWS FROM FINANCING ACTIVITIES Increase in bank borrowings 7,949,089 12,228,509 – – Proceeds from long-term loans 2,232,250 4,142,580 – – Proceeds from hire-purchase refinancing 322,828 730,500 – – Proceeds from issue of share to minority interest 109,574 – – – Proceeds from issue of shares for share options exercised 14,681 3,619,808 14,681 3,619,808 Repayment of long-term loans (5,192,623) (4,449,385) – – Interest paid (4,984,636) (4,423,908) – – Short-term deposits pledged as security (2,539,755) – – – Repayment of hire-purchase payables (2,001,037) (1,633,405) – – Net repayment of advances to directors (9,217) (96,895) – – Dividends paid – (2,170,771) – (2,170,771) Repayment of finance lease payable – (12,954) – – Net repayment of advances to a subsidiary – – – (7,060,408)
Net cash (used in)/generated from financing activities (4,098,846) 7,934,079 14,681 (5,611,371) (583661 W)
Net increase/(decrease) in cash and cash equivalents 369,807 (5,481,295) (49) 378 Cash and cash equivalents at beginning of year 30 (6,619,048) (1,135,712) 7,433 7,055
Cash and cash equivalents at end of year 30 (6,249,241) (6,617,007) 7,384 7,433 CAB CAKARAN CORPORATION BERHAD The accompanying notes form an integral part of the financial statements. 49 Notes to the Financial Statements September 30, 2007
1. GENERAL INFORMATION
The Company is principally involved in investment holding and provision of management services. The principal activities of the subsidiaries are as stated in Note 13. There have been no significant changes in the nature of the activities of the Group and of the Company during the financial year.
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 at 3rd Floor, Wisma Wang, 251-A, Jalan Burma, 10350 Penang, Malaysia. The principal place of business of the Company is at Plot 21, Lorong Jelawat 4, Seberang Jaya Industrial Park, Seberang Jaya, 13700 Perai, Malaysia.
The financial statements of the Group and of the Company were authorised for issue by the Board of Directors in accordance with a resolution of the directors on January 29, 2008.
2. BASIS OF PREPARATION OF FINANCIAL STATEMENTS
The financial statements of the Group and the Company have been prepared in accordance with the provisions of the Companies Act, 1965 and the applicable Malaysian Accounting Standards Board (“MASB”) approved accounting standards in Malaysia.
3. SIGNIFICANT ACCOUNTING POLICIES
Basis of accounting
The financial statements of the Group and the Company have been prepared in Ringgit Malaysia (“RM”) and have been prepared under the historical cost convention, unless otherwise indicated in the accounting policies stated below.
During the financial year, the Group and the Company adopted all the new and revised Financial Reporting Standards (“FRS”) and Issues Committee (“IC”) Interpretations issued by MASB that are relevant to their operations and effective for the Group’s and the Company’s financial period beginning on October 1, 2006.
The adoption of these new and revised FRSs and IC Interpretations has no material effect on the financial statements of the Group and of the Company except for those disclosed in Note 29.
The new standards, amendments to published standards and interpretations to existing standards that were issued but are not yet effective to the Group and the Company and have not been early adopted by the Group and the Company are as follows: (583661 W)
(a) FRS 107 Cash Flow Statements (effective for accounting periods beginning on or after July 1, 2007). The Group and the Company will apply this standard from financial periods beginning on October 1, 2007;
(b) FRS 112 Income Taxes (effective for accounting periods beginning on or after July 1, 2007). The Group and the Company will apply this standard from financial periods beginning on October 1, 2007;
(c) FRS 118 Revenue (effective for accounting periods beginning on or after July 1, 2007). The Group and the Company will apply this standard from financial periods beginning on October 1, 2007;
(d) Amendment to Financial Reporting Standard FRS 121 The Effects of Changes in Foreign Exchange Rates – Net Investment in a Foreign Operation (effective for accounting periods beginning on or after July 1, 2007). The
CAB CAKARAN CORPORATION BERHAD Group will apply this standard from financial periods beginning on October 1, 2007;
50 Notes to the Financial Statements (cont’d) September 30, 2007
3. SIGNIFICANT ACCOUNTING POLICIES (cont’d)
Basis of accounting (cont’d)
(e) FRS 134 Interim Financial Reporting (effective for accounting periods beginning on or after July 1, 2007); The Company will apply this standard from financial periods beginning on October 1, 2007;
(f) FRS 137 Provisions, Contingent Liabilities and Contingent Assets (effective for accounting periods beginning on or after July 1, 2007). The Group and the Company will apply this standard from financial periods beginning on October 1, 2007;
(g) FRS 139 Financial Instruments: Recognition and Measurement (effective date yet to be determined by MASB). This new standard establishes principles for recognising and measuring financial assets, financial liabilities and some contracts to buy and sell non–financial items. Hedge accounting is permitted only under strict circumstances. The Group and the Company will apply this standard when effective;
(h) IC Interpretation 1 Changes in Existing Decommissioning, Restoration and Similar Liabilities (effective for accounting periods beginning on or after July 1, 2007). This Interpretation addresses how the effect of the changes in the measurement of an existing decommissioning, restoration and similar liability that result from changes in the estimated timing or amount of the outflow of resources embodying economic benefits required to settle the obligation, or change in the discount rate, shall be accounted for. The Group and the Company will apply this interpretation from financial periods beginning on October 1, 2007; and
(i) IC Interpretation 8 Scope of FRS 2 (effective for accounting periods beginning on or after July 1, 2007). This interpretation set out that the scope of FRS 2 shall also applies to transactions in which the entity cannot identify specifically some or all of the goods or services received. The Group and the Company will apply this standard from financial periods beginning on October 1, 2007.
The impact of FRS 139 on the financial statements upon its initial application is not disclosed by virtue of the exemption given by this FRS. FRS 107, FRS 112, Amendment to Financial Reporting Standard FRS 121, FRS 118, FRS 134 and FRS 137, and IC Interpretations 1 and 8 are expected to have no significant impact on the financial statements of the Group and of the Company upon their initial application.
The standards that are not yet effective and not relevant to the Group’s and the Company’s operations are as follows:
(a) FRS 6 Exploration for and Evaluation of Mineral Resources (effective for accounting periods beginning on or after January 1, 2007);
(b) FRS 111 Construction Contracts (effective for accounting periods beginning on or after July 1, 2007);
(c) FRS 120 Accounting for Government Grants and Disclosure of Government Assistance (effective for accounting periods beginning on or after July 1, 2007); (583661 W)
(d) IC Interpretation 2 Members’ Shares in Co-operative Entities and Similar Instruments (effective for accounting periods beginning on or after July 1, 2007);
(e) IC Interpretation 5 Rights to Interests arising from Decommissioning, Restoration and Environmental Rehabilitation Funds (effective for accounting periods beginning on or after July 1, 2007);
(f) IC Interpretation 6 Liabilities arising from Participating in a Specific Market - Waste Electrical and Electronic Equipment (effective for accounting periods beginning on or after July 1, 2007); and
(g) IC Interpretation 7 Applying the Restatement Approach under IAS 29 Financial Reporting in Hyperinflationary Economies (effective for accounting periods beginning on or after July 1, 2007). CAB CAKARAN CORPORATION BERHAD
51 Notes to the Financial Statements (cont’d) September 30, 2007
3. SIGNIFICANT ACCOUNTING POLICIES (cont’d)
Basis of consolidation
The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Group (its subsidiaries). Control is achieved where the Group has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities.
Subsidiaries are consolidated using the purchase method of accounting. The Group has taken advantage of the exemption provided by FRS 3 Business Combinations to apply this standard prospectively. Accordingly, business combinations entered into prior to January 1, 2006 have not been restated to comply with this standard.
Under the purchase method of accounting, subsidiaries are fully consolidated from the date on which control is transferred to the Group and are de-consolidated from the date that control ceases. The cost of an acquisition is measured as fair value of the assets given, equity instruments issued and liabilities incurred or assumed at the date of exchange, plus costs directly attributable to the acquisition.
Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date, irrespective of the extent of the minority interest. The excess of the cost of acquisition over the fair value of the Group’s share of the identifiable net assets acquired at the date of acquisition is reflected as goodwill. If the cost of acquisition is less than the fair value of the net assets of the subsidiary acquired, the difference is recognised directly in the income statements.
Minority interests represent that portion of the profit or loss and net assets of a subsidiary attributable to equity interests that are not owned, directly or indirectly through subsidiaries, by the parent. 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 that date.
All intra-group transactions, balances and resulting unrealised gains are eliminated on consolidation. Unrealised losses are eliminated on consolidation unless costs cannot be recovered.
Revenue recognition
Revenue is measured at the fair value of the consideration received or receivable. Revenue is reduced for estimated customer returns, rebates and other similar allowances.
Revenue from the sale of goods is recognised when all the following conditions are satisfied:
(a) the Group has transferred to the buyer the significant risks and rewards of ownership of the goods;
(b) the Group retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold; (583661 W)
(c) the amount of revenue can be measured reliably;
(d) it is probable that the economic benefits associated with the transaction will flow to the Group; and
(e) the costs incurred or to be incurred in respect of the transaction can be measured reliably.
Franchise income are generally recognised from the acceptance and commencement of the franchise under agreement entered into by the franchisees. Royalty income are recognised on an accrual basis in accordance with the substance of the relevant agreements.
Dividend income is recognised when the shareholder’s right to receive payment is established. CAB CAKARAN CORPORATION BERHAD Rental income is accrued on a time basis, by reference to the agreements entered. Interest revenue is recognised using 52 the effective interest method. Management fee and other operating income are recognised on an accrual basis. Notes to the Financial Statements (cont’d) September 30, 2007
3. SIGNIFICANT ACCOUNTING POLICIES (cont’d)
Borrowing costs
All interests and other costs incurred in connection with borrowings are expensed as incurred.
Income tax
Income tax expense represents the sum of the tax currently payable and deferred tax.
The tax currently payable is based on taxable profit for the year. Taxable profit differs from profit as reported in the income statements because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Group’s and the Company’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the balance sheet date.
Deferred tax is recognised on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences, and deferred tax assets are generally recognised for all deductible temporary differences, unused tax losses and unused tax credits to the extent that it is probable that taxable profits will be available against which those deductible temporary differences, unused tax losses and unused tax credits can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from the initial recognition of assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset is realised, based on tax rates (and tax laws) that have been enacted or substantively enacted by the balance sheet date.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income tax levied by the same taxation authority and the Group intends to settle its current tax assets and liabilities on a net basis.
Current and deferred tax are recognised as an expense or income in profit or loss, except when they relate to items credited or debited directly to equity, in which case the tax is also recognised directly in equity. In the case of a business combination, the tax effect is taken into account in calculating goodwill or determining the excess of the acquirer’s interest in the net fair value of the acquiree’s identifiable assets, liabilities and contingent liabilities over cost.
Foreign currencies
The financial statements of the Group and of the Company are presented in the currency of the primary economic environment in which the Company operates (its functional currency). The financial statements are presented in RM, which is the Company’s functional and presentation currency. (583661 W)
In preparing the financial statements of the Group and of the Company, transactions in currencies other than the Company’s functional currency (foreign currencies) are recorded at the rates of exchange prevailing at the dates of the transactions. At each balance sheet date, monetary items denominated in foreign currencies are retranslated at the rates prevailing at the balance sheet date.
For the purpose of presenting consolidated financial statements, the assets and liabilities of the Group’s foreign operations are expressed in presentation currency using exchange rates prevailing at the balance sheet date. Income and expense items are translated at the average exchange rates for the period, unless exchange rates fluctuated significantly during that period, in which case the exchange rates at the dates of the transactions are used. Exchange differences arising, if any, are classified as equity and transferred to the Group’s translation reserve. Such exchange differences are recognised in profit or loss in the period in which the operation is disposed of. CAB CAKARAN CORPORATION BERHAD Goodwill and fair value adjustments arising on the acquisition of a foreign operation are treated as assets and liabilities of the foreign operation and translated at the closing rate. 53 Notes to the Financial Statements (cont’d) September 30, 2007
3. SIGNIFICANT ACCOUNTING POLICIES (cont’d)
Employee benefits
(a) Short-term benefits
Wages, salaries, bonuses and social security contributions are recognised as expenses in the year in which the associated services are rendered by the employees of the Group. Short–term accumulating compensated absences such as paid annual leave are recognised when services are rendered by employees that increase their entitlement to future compensated absences, and short–term non–accumulating compensated absences such as sick leave are recognised when the absences occur.
(b) Defined contribution plans
As required by law, the Group make contributions to the relevant pension schemes, the employees’ provident fund and central provident fund. Such contributions are recognised as expenses in the income statements as incurred.
(c) Share-based compensation
The Company has an Employees’ Share Option Scheme whereby options to subscribe for ordinary shares in the Company were granted by the Company to eligible employees, including directors of the Group.
Prior to October 1, 2006, no compensation expense was recognised in income statements for share options granted. The Group and the Company recognised an increase in share capital and share premium, only if applicable, when the options were exercised. Upon the adoption of FRS 2 Share-based Payment, the total fair value of share options granted to employees is recognised as an employee cost with a corresponding increase in the share option reserve within equity over the vesting period.
The Group has applied FRS 2 Share-based Payment in accordance with its transitional provisions which allow this change in accounting policy to be applied to share options that were granted after December 31, 2004 but had not yet vested on October 1, 2006. The adoption of FRS 2 Share-based Payment has no material effect on the financial statements of the Group and of the Company for the current year and previous year.
Property, plant and equipment
Property, plant and equipment are stated at cost or valuation less accumulated depreciation and accumulated impairment losses.
Land and buildings stated at valuation are revalued at regular intervals of at least once in every five years by the directors based on the valuation reports of independent professional valuers with additional valuations in the intervening years where market conditions indicate that the carrying values of the revalued assets differ materially from the market values. (583661 W)
An increase in the carrying amount arising from revaluation of property, plant and equipment is credited to the revaluation reserve account as revaluation surplus. Any deficit arising from revaluation is charged against the revaluation reserve account to the extent of a previous surplus held in the revaluation reserve account for the same asset. In all other cases, a decrease in carrying amount is charged to income statements. An increase in revaluation directly related to a previous decrease in carrying amount for that same asset that was recognised as an expense, is credited to income statements to the extent that it offsets the previously recorded decrease. On disposal of revalued assets or crystallisation of deferred tax liabilities on revalued assets, the amounts in revaluation reserve account relating to such assets are transferred to retained earnings accounts.
The carrying amounts of property, plant and equipment are reviewed at each balance sheet date to determine whether there is any indication of impairment. An impairment loss is recognised whenever the carrying amount of an
CAB CAKARAN CORPORATION BERHAD item of property, plant and equipment exceeds its recoverable amount. The impairment loss is charged to the income statements unless it reverses a previous revaluation in which case it is treated as a revaluation decrease. 54 Notes to the Financial Statements (cont’d) September 30, 2007
3. SIGNIFICANT ACCOUNTING POLICIES (cont’d)
Property, plant and equipment (cont’d)
Freehold land and construction-in-progress are not depreciated. All other property, plant and equipment are depreciated on a straight line method in order to write off the cost of each asset to its residual value over its estimated useful life.
The annual depreciation rates are as follows:
Buildings 5 to 63 years Plant, machinery and equipment 2% – 50% Electrical installation 10% & 12% Office equipment 10% – 50% Furniture, fixtures and fittings 10% – 50% Motor vehicles 10% – 50% Renovation 10% – 20%
At each balance sheet date, the residual values, useful lives and depreciation method of the property, plant and equipment are reviewed, and the effects of any changes are recognised prospectively.
Investment properties
Investment properties, comprising freehold land, leasehold land and buildings are held for long-term to earn rentals and/or for capital appreciation or both, and are not occupied by the Group.
Investment properties are measured initially at cost, including transactions costs. Subsequent to initial recognition, investment properties are stated at fair value, representing open market value determined annually by external valuers. Fair value is based on active market prices, adjusted, if necessary, for any difference in the nature, location, or condition of the specific asset. Gains or losses arising from changes in the fair value of investment properties are included in income statements for the period in which they arise.
On disposal of an investment property, or when it is permanently withdrawn from use and no future economic benefits are expected from its disposal, it shall be derecognised. The difference between the net disposal proceeds and the carrying amount is recognised in income statements in the period of the retirement or disposal.
Leases
A lease is recognised as a finance lease if it transfers substantially to the Group all the risks and rewards incidental to ownership. Leases of land and buildings are classified as operating or finance leases in the same way as leases of other assets and the land and buildings elements of a lease of land and buildings are considered separately for the (583661 W) purposes of lease classification. All leases that do not transfer substantially all the risks and rewards are classified as operating leases, with the following exceptions:
Property held under operating leases that would otherwise meet the definition of an investment property is classified as an investment property on a property-by-property basis and, if classified as investment property, is accounted for as if held under a finance lease.
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. CAB CAKARAN CORPORATION BERHAD
55 Notes to the Financial Statements (cont’d) September 30, 2007
3. SIGNIFICANT ACCOUNTING POLICIES (cont’d)
Leases (cont’d)
(a) The Group as lessee under finance leases
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 sheets 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 Group’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 leased assets is in accordance with that for depreciable property, plant and equipment.
(b) The Group as lessee under operating leases
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.
(c) The Group as lessor under operating leases
Assets leased out under operating leases are presented on the balance sheets according to the nature of the assets. Rental income from operating leases is recognised on a straight line basis over the term of the relevant lease. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised on a straight line basis over the lease term.
Goodwill (583661 W) Goodwill arising on the acquisition of a subsidiary represents the excess of the cost of acquisition over the Group’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities of the subsidiary recognised at the date of acquisition. Goodwill is initially recognised as an asset at cost and is subsequently measured at cost less any accumulated impairment losses.
For the purpose of impairment testing, goodwill is allocated to each of the Group’s cash-generating units expected to benefit from the synergies of the combination. Cash-generating units to which goodwill has been allocated are tested for impairment annually, or more frequently when there is indication that the unit may be impaired. If the recoverable amount of the cash-generating unit is less than the carrying amount of the unit, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro-rata on the basis of the carrying amount of each asset in the unit. An impairment loss recognised for goodwill is not reversed in a subsequent period. CAB CAKARAN CORPORATION BERHAD
56 Notes to the Financial Statements (cont’d) September 30, 2007
3. SIGNIFICANT ACCOUNTING POLICIES (cont’d)
Investments in subsidiaries
Subsidiaries are those companies in which the Group has power to exercise control over the financial and operating policies so as to obtain benefits from their activities.
Investments in subsidiaries, which are eliminated on consolidation, are stated at cost in the Company’s financial statements. Where there is an indication of impairment in the value of the assets, the carrying amount of the investment is assessed and written down immediately to its recoverable amount.
Other investments
Investment in quoted shares are stated at the lower of cost and market value. Cost is determined on the weighted average basis while market value is determined based on quoted market values. Increases or decreases in the carrying amount of quoted investment is recognised in profit or loss.
Other investment stated at nominal value as in unquoted shares is stated at cost less allowance for diminution in value of investment to recognise any decline, other than a temporary decline, in the value of the investment.
Agricultural expenditure
Agricultural expenditure represents pre-cropping costs incurred on land preparation, construction of drains, roads and irrigation, fertilisation, plant and planting, labour and any general overheads directly attributable to the development of the timber trees.
Timber crops are stated at the lower of cost of development, less the timber assets harvested or market valuation.
Inventories
Inventories are valued at the lower of cost and net realisable value.
Cost of raw materials (determined on first-in, first-out basis) consists of the original purchase price plus cost of bringing the inventories to their present location.
Cost of parent stocks and broiler chicken (determined on specific identification basis) consists of the original purchase price of birds plus growing costs which include cost of feeds and consumables, direct labour and a proportion of farm overheads.
Cost of eggs (determined on weighted average basis) consists of cost of livestocks, feeds, direct labour and a proportion of farm overheads. (583661 W) Cost of finished goods (determined on first-in, first-out basis) consists of cost of livestocks/raw materials, direct labour and a proportion of production overheads.
Goods-in-transit is stated at cost.
Net realisable value represents the estimated selling price in the ordinary course of business less selling and distribution costs and all other estimated costs to completion.
Receivables
Receivables are stated at nominal value as reduced by the appropriate allowances for estimated irrecoverable amounts. Allowance for doubtful debts is made based on estimates of possible losses which may arise from non-
collection of certain receivable accounts. CAB CAKARAN CORPORATION BERHAD
57 Notes to the Financial Statements (cont’d) September 30, 2007
3. SIGNIFICANT ACCOUNTING POLICIES (cont’d)
Non-current assets held for sale
Non-current assets 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 is available for immediate sale in its present condition. Management must be committed to the sale, which should be expected to qualify for recognition as completed sale within one year from the date of classification.
Immediately before classification as held for sale, the measurement of the non-current assets is brought up-to-date in accordance with applicable FRSs. Then, on initial classification as held for sale, non-current 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.
Share capital
Ordinary shares are classified as equity. 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.
Borrowings
All borrowings are initially recognised at the nominal value of the consideration received less directly attributable transaction costs. After initial recognition, interest bearing borrowings are subsequently measured at amortised cost using the effective interest method.
Payables
Payables are stated at the nominal value of the consideration to be paid in the future for goods and services received.
Cash and cash equivalents
Cash and cash equivalents comprise cash and bank balances, demand deposits which are not pledged, bank overdrafts and highly liquid investments which are readily convertible to known amount of cash and which are subject to an insignificant risk of changes in value.
Financial instruments
Financial instruments carried on the balance sheets include cash and bank balances, investments, receivables, payables and borrowings. The particular recognition methods adopted are disclosed in the individual accounting policy statements associated with each item. (583661 W) Financial instruments are classified as liabilities or equity in accordance with the substance of the contractual arrangement. Interests, dividends, gains and losses relating to a financial instrument classified as 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 and the Company have a legally enforceable right to set off the recognised amounts and intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously.
Contingent liabilities
A contingent liability is disclosed, unless the possibility of an outflow of resources embodying economic benefits is remote. CAB CAKARAN CORPORATION BERHAD
58 Notes to the Financial Statements (cont’d) September 30, 2007
4. CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY
In the application of the Group’s and the Company’s accounting policies, which are described in Note 3, management is required to make judgements, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.
There are no 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.
5. REVENUE
The Group The Company 2007 2006 2007 2006 RM RM RM RM Sales of goods 442,850,858 339,795,070 – – Royalty income 83,389 97,518 – – Management fee – – 180,000 180,000 Gross dividend income from a subsidiary – – – 20,735,000
442,934,247 339,892,588 180,000 20,915,000
6. TAX EXPENSE/(INCOME)
The Group The Company 2007 2006 2007 2006 RM RM RM RM Current tax 1,536,319 341,916 – 3,793,000 Deferred tax (Note 26): Relating to the origination and reversal of temporary differences 687,075 (470,319) – – Reversal of deferred tax liabilities arising from the abolishment of capital gains tax (936,000) – – – (583661 W) Effect on cumulative crystallisation resulting from the reduction in tax rates (196,854) – – – Reduction in opening deferred tax resulting from the change in tax rates (130,000) – – – Reversal upon disposal of revalued properties (978) – – –
959,562 (128,403) – 3,793,000 Under/(over)provision in prior years: Current tax 534,631 (277,074) (19,039) (3,418) Deferred tax (84,000) 47,000 – –
1,410,193 (358,477) (19,039) 3,789,582 CAB CAKARAN CORPORATION BERHAD
59 Notes to the Financial Statements (cont’d) September 30, 2007
6. TAX EXPENSE/(INCOME) (cont’d)
The estimated amount of benefits arising from previously unused tax capital allowances and unused tax losses that are used to reduce current tax expense of the Group are RM446,000 (2006: RM88,000) and RM2,000 (2006:RM28,000) respectively.
A numerical reconciliation of tax expense/(income) at the applicable tax rate to tax expense/(income) at the effective tax rate is as follows:
The Group The Company 2007 2006 2007 2006 RM RM RM RM Accounting profit/(loss) 1,626,418 (11,536,219) (141,973) 11,160,604
Tax at the applicable tax rate of 27% (2006:28%) 439,000 (3,230,000) (38,000) 3,125,000 Tax effects of: Expenses that are not deductible in determining taxable profit 714,540 1,817,597 38,000 2,693,000 Income that are not taxable in determining taxable profit (130,000) (692,000) – (2,025,000) Profit from pioneer business (12,000) (31,000) – – Tax savings from the claim of: Double deduction on expenses (4,000) (4,000) – – Reinvestment allowances – (264,000) – – Effect of different tax rates 365,000 602,000 – – Effect of reduction in tax rates (1,263,000) – – – Net deferred tax assets not recognised in current year 854,000 1,844,000 – – Reversal of deferred tax liabilities upon disposal of revalued properties (978) – – – Estimated benefits arising from unrecognised deferred tax assets that are used to reduce deferred tax expense: Unused tax capital allowances and unused tax losses 2,000 (365,000) – – Others (5,000) 194,000 – –
959,562 (128,403) – 3,793,000 Under/(over)provision in prior years 450,631 (230,074) (19,039) (3,418) (583661 W) Tax expense/(income) 1,410,193 (358,477) (19,039) 3,789,582
The Group is operating in the jurisdictions of Malaysia, Republic of Singapore and People’s Republic of China. The applicable domestic statutory income tax rates are 20% and 27% (2006:20% and 28%) for Malaysia, 18% (2006:20%) for Republic of Singapore and 33% (2006:33%) for People’s Republic of China. The applicable tax rate of 27% (2006:28%) used in the above numerical reconciliation of tax of the Group and of the Company is determined based on the statutory income tax rate prevailing for the Company.
The Malaysian corporate income tax for small and medium scale companies with paid-up capital of RM2.5 million and below are subject to income tax at the rate of 20% on chargeable income of up to RM500,000. For chargeable income in excess of RM500,000, the corporate income tax rate was 28% for the year of assessment 2006 and 27% for the year of assessment 2007. In September 2007, the Malaysian government announced in the yearly budget a reduction in
CAB CAKARAN CORPORATION BERHAD this corporate income tax rate to 26% for the year of assessment 2008 and 25% for the year of assessment 2009.
60 Notes to the Financial Statements (cont’d) September 30, 2007
6. TAX EXPENSE/(INCOME) (cont’d)
A subsidiary has been granted pioneer status by the Ministry of International Trade and Industry Malaysia for the breeding of chicken. Under this incentive, 100% of the subsidiary’s statutory income from the breeding of chicken is exempted from income tax for a period of five years commencing October 14, 2004.
Another subsidiary has been granted approval in principle for pioneer status for food production industry under the Promotion of Investment Act, 1986 for the production and sale of processed food products. Under this incentive, 70% of the subsidiary’s statutory income from the production and sale of processed food products will be exempted from income tax for a period of five years. The production day has not been fixed as of September 30, 2007.
As of September 30, 2007, the Group has the following amounts which are available for set off against future taxable income:
The Group 2007 2006 RM RM Unused tax losses 10,964,000 12,415,000 Unused tax capital allowances 7,813,000 7,774,000 Unused reinvestment allowances 3,823,000 2,668,000 Unused allowance for increased export 1,155,000 1,170,000
As of September 30, 2007, the Group has the following amounts for which no deferred tax is recognised in the financial statements:
The Group 2007 2006 RM RM Unused tax losses 10,964,000 11,845,000 Unused tax capital allowances 6,914,000 5,941,000 Unused reinvestment allowances 3,823,000 2,668,000 Unused allowance for increased export 1,155,000 1,170,000
The above tax benefits are subject to agreement by the relevant tax authorities.
Out of the total unused tax losses of the Group of approximately RM10,964,000 (2006:RM12,415,000), a total amount of approximately RM1,550,000 (2006:RM1,315,000) is available for set off against future taxable income of a subsidiary of not exceeding five years as follows: (583661 W) The Group 2007 2006 RM RM Expiring on September 30, 2008 7,000 7,000 2009 231,000 237,000 2010 435,000 445,000 2011 611,000 626,000 2012 266,000 –
1,550,000 1,315,000 CAB CAKARAN CORPORATION BERHAD
61 Notes to the Financial Statements (cont’d) September 30, 2007
7. PROFIT/(LOSS) FOR THE YEAR
Profit/(loss) for the year has been arrived at:
The Group The Company 2007 2006 2007 2006 RM RM RM RM After charging: Depreciation of property, plant and equipment 7,712,523 7,227,238 – – Interest on: Short-term borrowings 3,216,339 2,606,903 – – Long-term loans 1,349,989 1,326,652 – – Hire-purchase 446,454 350,594 – – Finance lease – 388 – – Others: Current year – 40,537 – – Overprovision in prior years (62,625) (49,206) – – Rental of: Premises 1,476,616 1,838,770 – – Cold room 571,158 764,265 – – Land and poultry farm 538,061 243,892 – – Machinery and equipment 167,724 177,562 – – Motor vehicles 18,313 18,798 – – Directors’ remuneration: Directors of the Company: Fee 140,000 139,000 140,000 139,000 Contribution to employees’ provident funds 111,420 159,480 – – Other emoluments 1,513,134 1,432,664 12,000 7,000 Directors of subsidiaries: Fee – 11,454 – – Contribution to employees’ provident fund/central provident fund 98,226 94,846 – – Other emoluments 886,076 865,946 – – Deficit on revaluation of properties 607,874 – – – Audit fee: Current year 220,052 173,746 21,500 20,000 Under/(over)provision in prior years 19,973 3,517 1,000 (463)
(583661 W) Property, plant and equipment written off 236,619 262,919 – –
Allowance for doubtful debts 218,878 2,407,907 – – Amortisation of prepaid lease payments on leasehold land 127,250 143,850 – – Realised loss on foreign exchange 91,155 48,835 – – Loss on disposal of property, plant and equipment 71,124 – – – Bad debts written off 21,801 4,556 – – Impairment loss on non-current assets classified as held for sale 20,331 – – – Loss on dilution of interest in a subsidiary 17,729 – – – Preliminary expenses 1,343 – – – Goodwill written off (included under other gains CAB CAKARAN CORPORATION BERHAD and losses) – 2,527,165 – – 62 Notes to the Financial Statements (cont’d) September 30, 2007
7. PROFIT/(LOSS) FOR THE YEAR (cont’d)
Profit/(loss) for the year has been arrived at: (cont’d)
The Group The Company 2007 2006 2007 2006 RM RM RM RM After charging: (cont’d) Amortisation of goodwill (included under other gains and losses) – 1,919,658 – – Diminution in value of other investment – 217,436 – – Deposit written off – 3,136 – –
And crediting: Rental income on: Land and poultry farm 1,550,203 1,127,143 – – Premises 157,610 179,920 – – Cold room 10,288 13,428 – – Fair value adjustment on investment properties 395,000 – – – Gain on disposal of investment in quoted shares in Malaysia 97,096 – – – Interest income on short-term deposits 93,987 94,914 – – Waiver of amount owing to a director of a subsidiary 55,000 – – – Reversal of previous revaluation deficit on properties 30,482 – – – Unrealised gain on foreign exchange 23,081 76,196 – – Gross dividend income from: Quoted investment in Malaysia 3,656 6,998 – – Unquoted investment – 6,000 – – A subsidiary – – – 20,735,000 Gain on disposal of subsidiaries 6 – – – Amortisation of negative goodwill (included under other gains and losses) – 1,970,180 – – Gain on disposal of property, plant and equipment – 142 – – Impairment loss on investment in a subsidiary (included under other gains and lossess) – – – 9,264,000
Employee benefits expense recognised as an expense during the financial year is as follows: (583661 W) The Group The Company 2007 2006 2007 2006 RM RM RM RM Contribution to employees’ provident fund/central provident fund 1,389,230 1,231,181 – – Other employee benefits expense 19,341,464 16,694,194 155,104 148,410
20,730,694 17,925,375 155,104 148,410
Employee benefits expense of the Group and of the Company include directors’ remuneration, salaries, bonuses, contribution to employees’ provident fund/central provident fund and all other staff related expenses. CAB CAKARAN CORPORATION BERHAD
63 Notes to the Financial Statements (cont’d) September 30, 2007
7. PROFIT/(LOSS) FOR THE YEAR (cont’d)
Details of remuneration of executive directors, who are the key management personnel of the Group, are as follows:
The Group 2007 2006 RM RM Directors of the Company: Fee – – Contribution to employees’ provident funds 111,420 159,480 Other emoluments 1,501,134 1,425,664 Directors of subsidiaries: Fee – 11,454 Contribution to employees’ provident fund/central 98,226 94,846 provident fund Other emoluments 886,076 865,946
2,596,856 2,557,390
8. EARNINGS/(LOSS) PER SHARE
The Group 2007 2006 RM RM Net profit/(loss) attributable to ordinary equity holders of the parent 619,035 (10,725,698)
2007 2006 Units Units Number of ordinary shares in issue as of October 1 131,751,400 83,303,500 Effect of exercise of employees’ share options 19,516 2,618,482 Effect of bonus issue – 43,163,600
Weighted average number of ordinary shares for calculating basic earnings/(loss) per share 131,770,916 129,085,582
Basic earnings/(loss) per share 0.47 sen (8.31 sen)
The diluted earnings/ (loss) per share is not shown for 2007 and 2006 as the effect of the conversion of employees’ share options to ordinary shares would be antidilutive. (583661 W)
CAB CAKARAN CORPORATION BERHAD
64 Notes to the Financial Statements (cont’d) September 30, 2007 – – – – – RM End of year – – – 20,350,000 – – – 23,684,000 – 16,447 – – 30,101,000 – 552,378 – 106,035 RM Currency translation differences – (403) 10,111,766 RM Revaluations/ reclassification – (14,015,251) – (4,684,385) – 20,350,000 – 23,684,000 – (7,420,000) – 30,101,000 – 733,585 (4,759) 36,888,381 – 88,908 – 16,860 (447) 2,134,380 – 12,442 (1,709) 1,627,810 – 196,107 (11,591) 3,281,627 – (2,208,422) RM Transfer as held for sale – – – (5,227) (12,619,869) – (1,320,000) (9,390,000) – – – – RM write-off Disposals/ – – (20,476) – – – – – RM Additions – – – – 5,507,518 (1,770,936) – 40,500 – 256,984 (75,302) – 144,685 (154,615) – 1,457,444 (718,328) (183,094) – 869,184 (459,523) – 1,262,195 (5,317) RM properties Transfer to investment – – – RM (583661 W)
of year 422,970 7,680,000 (260,000) 1,936,285 1,627,007 9,556,147 2,687,450 1,057,579 Beginning 18,716,622 (4,701,371) 14,896,861 (10,192,000) 12,857,812 (295,570) 62,854 12,470,000 (1,760,000) 24,749,865 (2,335) 2,549,371 (392,928) (330,617) (26,556,909) 32,422,973 141,081,571 (17,211,276) 12,150,735 (3,597,425) (1,838,938) (1,711,934) (18,909) 128,853,824 - at cost - at 2003 valuation - at 2007 valuation buildings - at cost - at 2003 valuation - at 2007 valuation - at cost - at 2003 valuation - at 2007 valuation equipment fittings in-progress Freehold land Freehold land and Buildings Plant, machinery and Electrical installation Office equipment Furniture, fixtures and Motor vehicles Renovation Construction- PROPERTY, PLANT AND EQUIPMENT The Group Cost unless stated otherwise 2007: CAB CAKARAN CORPORATION BERHAD 9. 65 Notes to the Financial Statements (cont’d) September 30, 2007 RM End of year –– 18,716,622 14,896,861 –– 12,857,812 12,470,000 –– 24,749,865 7,680,000 – 422,970 – 1,057,579 (20) 9,556,147 RM 119 1,936,285 5,634 32,422,973 2,744 1,627,007 7,051 2,687,450 15,528 141,081,571 Currency difference translation – – – – – RM 45,622 63,837 31,480 48,631 subsidiaries Acquisition of – 1,402,000 – –– 6,358,000 – – – –– 409,179 – 8,977,260 RM Transfers – – – – – 2,223,712 – – 261,652 – (4,057,260) RM write-off Disposals/ – – – RM 53,603 81,338 (120,674) Additions RM 62,093 of year 940,712 4,174,127 (583661 W)
6,212,742 287,070 1,658,3071,632,119 236,814 (22,792) 8,502,0673,273,429 1,420,160 426,041 (775,239) (1,067,702) 15,786,499 1,528,123 22,119,406 406,747 23,921,881 6,740,942 (435,891) 1,571,896 618,511 Beginning 119,156,116 15,354,965 (2,422,298) - at cost - at 2003 valuationbuildings - at cost 14,896,861 - at 2003 valuation- at cost 12,470,000 - at 2003 valuationequipment 7,680,000 fittings Freehold land Freehold land and Buildings Plant, machinery and Electrical installation Office equipment Furniture, fixtures and Motor vehicles Renovation Construction-in-progress PROPERTY, PLANT AND EQUIPMENT (cont’d) The Group (cont’d) Cost unless stated otherwise 2006: CAB CAKARAN CORPORATION BERHAD 9. 66 Notes to the Financial Statements (cont’d) September 30, 2007 – – – RM End of year – – – 16,447 – – 91,436 RM Currency translation differences – – (436) 1,363,790 – (1,589) 982,967 – (333) 4,233,162 – (8,674) 1,126,335 RM Revaluations/ reclassification – (1,862,305) – (32,329) (3,816) 10,651,192 – – – – RM Transfer as held for sale – (316) (1,111,543) – (284,155) (1,805,545) – – RM write-off Disposals/ RM the year Charge for – 1,225,139 (371,270) (43,528) (3,686,423) – 3,470,457 (1,578,279) – 50,151 – 336,571 (60,880) – 175,928 (147,814) – 964,026 (412,273) (74,763) – 331,374 (369,272) RM properties Transfer to investment RM (583661 W)
41,285 of year 549,189 (1,060) 563,730 956,442 1,759,847 (50,262) 380,115 2,892,529 1,668,018 (20,745) 215,032 8,795,159 1,088,535 3,756,505 1,172,907 Beginning 22,680,416 (72,067) 7,712,523 (2,939,788) (402,762) (8,498,145) (14,848) 18,465,329 buildings - at cost - at 2003 valuation - at cost - at 2003 valuation equipment fittings Freehold land and Buildings Plant, machinery and Electrical installation Office equipment Furniture, fixtures and Motor vehicles Renovation PROPERTY, PLANT AND EQUIPMENT (cont’d) The Group (cont’d) Accumulated depreciation 2007: CAB CAKARAN CORPORATION BERHAD 9. 67 Notes to the Financial Statements (cont’d) September 30, 2007
9. PROPERTY, PLANT AND EQUIPMENT (cont’d)
The Group (cont’d)
Currency Beginning Charge for Disposals/ translation End Accumulated of year the year write-off differences of year depreciation RM RM RM RM RM 2006: Freehold land and buildings - at cost 46,328 502,861 – – 549,189 - at 2003 valuation 1,290,551 469,296 – – 1,759,847 Buildings - at cost 1,598,688 1,293,841 – – 2,892,529 - at 2003 valuation 1,452,986 215,032 – – 1,668,018 Plant, machinery and equipment 6,184,683 2,894,519 (289,076) 5,033 8,795,159 Electrical installation 13,035 28,250 – – 41,285 Office equipment 783,434 316,267 (11,321) 155 1,088,535 Furniture, fixtures and fittings 822,636 197,199 (64,877) 1,484 956,442 Motor vehicles 3,123,686 908,311 (275,519) 27 3,756,505 Renovation 1,487,411 401,662 (722,002) 5,836 1,172,907
16,803,438 7,227,238 (1,362,795) 12,535 22,680,416
Accumulated impairment losses 2007: Plant, machinery and equipment – – – – – Office equipment – – – – – Furniture, fixtures and fittings – – – – – Renovation – – – – –
– – – – – (583661 W) 2006: Plant, machinery and equipment 33,854 – (34,754) 900 – Office equipment 2 – (2) – – Furniture, fixtures and fittings 49,990 – (51,319) 1,329 – Renovation 160,144 – (164,399) 4,255 –
243,990 – (250,474) 6,484 – CAB CAKARAN CORPORATION BERHAD
68 Notes to the Financial Statements (cont’d) September 30, 2007
9. PROPERTY, PLANT AND EQUIPMENT (cont’d)
The Group 2007 2006 RM RM Net book value: Freehold land - at cost – 18,716,622 - at 2003 valuation – 14,896,861 - at 2007 valuation 20,350,000 – Freehold land and buildings - at cost – 12,308,623 - at 2003 valuation – 10,710,153 - at 2007 valuation 23,684,000 – Buildings - at cost – 21,857,336 - at 2003 valuation – 6,011,982 - at 2007 valuation 30,101,000 – Plant, machinery and equipment 26,237,189 23,627,814 Electrical installation 460,942 381,685 Office equipment 770,590 847,750 Furniture, fixtures and fittings 644,843 670,565 Motor vehicles 5,878,604 5,799,642 Renovation 2,155,292 1,514,543 Construction-in-progress 106,035 1,057,579
110,388,495 118,401,155
The land and buildings of the Group were revalued by the directors on September 30, 2007, based on valuations carried out by Sr Tan Kok Yew, BKM, B. Surv. (Hons.) Prop. Mgmt., MBA, MISM, APEPS, a registered valuer of Intra Harta Consultants (North) Sdn. Bhd., an independent firm of professional valuer. The valuations were based on market values using comparison method of valuation, comparison and cost methods of valuation, depreciated replacement cost method of valuation, and market values for the existing use using depreciated replacement cost method of valuation.
Had these assets been carried at historical cost, the carrying amounts of the revalued landed properties of the Group will be as follows:
The Group 2007 2006 (583661 W) RM RM Cost: Freehold land 9,115,008 4,668,283 Freehold land and buildings 22,707,727 8,006,285 Buildings 17,273,185 8,718,354
49,095,920 21,392,922 Accumulated depreciation: Freehold land and buildings 3,653,688 3,061,399 Buildings 1,967,782 2,947,935
(5,621,470) (6,009,334) CAB CAKARAN CORPORATION BERHAD Carrying amount 43,474,450 15,383,588 69 Notes to the Financial Statements (cont’d) September 30, 2007
9. PROPERTY, PLANT AND EQUIPMENT (cont’d)
As of September 30, 2007, certain property, plant and equipment of the Group with a total carrying value of RM22,285,709 (2006:RM37,249,669) are charged to local banks as securities for credit facilities granted to the Group as mentioned in Note 25.
As of September 30, 2007, the net carrying amounts of property, plant and equipment of the Group acquired under hire-purchase arrangements of which instalments are still outstanding are as follows:
The Group 2007 2006 RM RM Plant, machinery and equipment 7,133,619 6,473,853 Motor vehicles 2,282,814 1,848,914
9,416,433 8,322,767
As of September 30, 2007, certain motor vehicles of the Group with a total carrying value of RM381,785 (2006: RM375,250) are registered in the names of certain directors who hold them in trust for certain subsidiaries.
10. INVESTMENT PROPERTIES
The Group 2007 2006 RM RM At fair value: At beginning of year – – Transfer from property, plant and equipment 17,139,209 – Fair value adjustment at beginning of year 1,780,539 – Transfer from prepaid lease payments on leasehold land 605,347 – Fair value adjustment at end of year 395,000 –
At end of year 19,920,095 –
The investment properties as of September 30, 2007 are as follows:
The Group 2007 2006 RM RM (583661 W)
Freehold land 16,681,000 – Freehold land and buildings 2,275,000 – Long leasehold land and buildings 370,000 – Short leasehold land 180,000 – Short leasehold land and buildings 414,095 –
19,920,095 –
The fair values of the Group’s investment properties as of September 30, 2007 have been arrived at on the basis of valuations carried out by Sr Tan Kok Yew, BKM, B. Surv. (Hons.) Prop. Mgmt., MBA, MISM, APEPS, a registered valuer of Intra Harta Consultants (North) Sdn. Bhd., an independent firm of professional valuer that is not related to the Group.
CAB CAKARAN CORPORATION BERHAD The valuations were arrived at by reference to market evidence of transaction prices for similar properties.
70 Notes to the Financial Statements (cont’d) September 30, 2007
10. INVESTMENT PROPERTIES (cont’d)
The rental income earned by the Group from their investment properties during the financial year are RM1,165,088 (2006:Nil). Direct operating expenses incurred by the Group on the investment properties during the financial year amounted to RM252,778 (2006:Nil).
As of September 30, 2007, the unexpired lease periods of the leasehold land of the Group which are included under investment properties are 10, 39, 43 and 887 years.
As of September 30, 2007, certain investment properties of the Group with a total carrying value of RM10,289,000 (2006:Nil) are charged as security for credit facilities obtained as mentioned in Note 25.
11. PREPAID LEASE PAYMENTS ON LEASEHOLD LAND
The Group 2007 2006 RM RM At beginning of year 7,209,068 7,096,718 Addition during the year – 256,200 Transfer to investment properties (605,347) – Amortisation during the year (127,250) (143,850)
At end of year 6,476,471 7,209,068
The prepaid lease payments on leasehold land as of September 30, 2007 are as follows:
The Group 2007 2006 RM RM Long leasehold land 4,386,904 4,898,488 Short leasehold land 2,089,567 2,310,580
6,476,471 7,209,068
As of September 30, 2007, the unexpired lease periods of the leasehold land of the Group which are included under prepaid lease payments on leasehold land are 47, 59, 60 and 86 years.
As of September 30, 2007, certain prepaid lease payments on leasehold land of the Group with a total carrying value of RM6,230,080 (2006:RM7,209,068) are charged as security for the credit facilities obtained as mentioned in Note 25. (583661 W)
12. GOODWILL The Group 2007 2006 RM RM At beginning of year 6,872,760 9,346,289 Goodwill arising from the acquisition of subsidiaries – 1,964,856 Addition in goodwill from the purchase of additional shares from minority shareholder of a subsidiary – 8,438 Amortisation during the year – (1,919,658) Write-off during the year – (2,527,165) CAB CAKARAN CORPORATION BERHAD At end of year 6,872,760 6,872,760 71 Notes to the Financial Statements (cont’d) September 30, 2007
13. INVESTMENTS IN SUBSIDIARIES
The Company 2007 2006 RM RM Unquoted shares, at cost 50,925,141 50,725,143 Less: Impairment loss (9,264,000) (9,264,000)
41,661,141 41,461,143
The subsidiaries are as follows: Country of Effective Direct subsidiaries incorporation equity interest Principal activities 2007 2006 CAB Cakaran Sdn. Bhd. Malaysia 100% 100% Breeding of broiler chicken, processing and marketing of chicken, and trading of broiler chicken, poultry feeds and other farm consumables HK Foods (M) Sdn. Bhd. Malaysia 75% 75% Processing, exporting, wholesaling and distributing of frozen marine and value added products Kyros International Sdn. Bhd. Malaysia 100% 100% Investment holding and fast food franchising business Likes Marketing Sdn. Bhd. Malaysia 100% 100% Distributing and marketing of food products N.T. Huat Kee Fisheries Sdn. Bhd. Malaysia 75% 75% Processing of fresh and frozen fishes, prawns and other marine products and distribution of marine products Indirect subsidiaries
Antik Kualiti Sdn. Bhd. Malaysia 100% 100% Cultivation of timber crops Bukit Perak GPS Farm Sdn. Bhd. Malaysia 100% – Breeding of grand parent stocks to produce breeder eggs CAB Cakaran Breeding Farm Sdn. Bhd. Malaysia 100% 100% Breeding of parent stocks to produce broiler eggs (583661 W)
CAB Cakaran (Langkawi) Sdn. Bhd. Malaysia 70% 70% Processing and marketing of chicken and frozen foods CAB Cakaran (Timur) Sdn. Bhd. Malaysia 55% 100% Breeding of broiler chicken Daging Salai Sdn. Bhd. Malaysia – 85% Processing and selling of barbecued meat, however, ceased operations on October 1, 2006 Jaya Gading Farm Sdn. Bhd. Malaysia 55% 55% Poultry farming, trading in poultry and other related business and distributing and marketing of food products CAB CAKARAN CORPORATION BERHAD
72 Notes to the Financial Statements (cont’d) September 30, 2007
13. INVESTMENTS IN SUBSIDIARIES (cont’d)
The subsidiaries are as follows: (cont’d)
Country of Effective Indirect subsidiaries (cont’d) incorporation equity interest Principal activities 2007 2006 Jimat Jaya Pemasaran Sdn. Bhd. Malaysia 100% 100% Processing and marketing of chicken Jimat Jaya Sdn. Bhd. Malaysia 100% 100% Marketing of chicken Kyros Bakery & Confectionery Malaysia – 100% Manufacturing of Sdn. Bhd. bakery products Kyros Food Industries Sdn. Bhd. Malaysia 100% 100% Processing of meat products and trading Kyros Kebab Overseas Ventures Malaysia 70.96% 70.96% Investment holding Sdn. Bhd. Kyros Kebab Sdn. Bhd. Malaysia 100% 100% Fast food restaurants operator and provision of management services Kyros Kebab (S) Pte. Ltd. Republic of – 36.19% Master franchisee and Singapore restaurants operator, however, inactive since February 2005 Kyros Properties Sdn. Bhd. Malaysia 100% 100% Investment holding and letting of properties Ladang Ternakan Asun Sdn. Bhd. Malaysia 100% 100% Renting of property, plant and equipment Like’s Store Sdn. Bhd. Malaysia 100% 100% Processing and wholesaling of chicken products and frozen foods MJ Global Sdn. Bhd. Malaysia 100% 100% Processing and distributing of food products Protheme Pte. Ltd. Republic of 51% – Distributing and marketing of Singapore food products Shanghai Kyros Kebab Co., Ltd. People’s 36.6% 36.6% Master franchisee and Republic of restaurants operator, China however, ceased operations in December 2006 Shin Hong Breeding Farm Sdn. Bhd. Malaysia 50% 50% Breeding of parent stocks and hatching of eggs (583661 W) into day old chicks Souvlaki Star Sdn. Bhd. Malaysia – 51% Retailing of fast food, however, inactive since January 2004
The Group considers Shin Hong Breeding Farm Sdn. Bhd. as a subsidiary as the Group has power to exercise control through a casting vote given to the managing director of the Company who is the Chairman of this subsidiary.
During the financial year ended September 30, 2007, CAB Cakaran Sdn. Bhd. acquired 2 ordinary shares of RM1 each in Bukit Perak GPS Farm Sdn. Bhd., representing 100% of the equity interest in Bukit Perak GPS Farm Sdn. Bhd., for a total purchase consideration of RM2. The acquisition was completed on July 23, 2007. CAB CAKARAN CORPORATION BERHAD
73 Notes to the Financial Statements (cont’d) September 30, 2007
13. INVESTMENTS IN SUBSIDIARIES (cont’d)
During the financial year ended September 30, 2006, CAB Cakaran Sdn. Bhd. acquired the existing 80,000 and 10,000 ordinary shares of RM1 each, representing 40% and 5% of the issued and paid-up share capital of a subsidiary, CAB Cakaran (Timur) Sdn. Bhd. from the minority shareholder, for total purchase considerations of RM423,748 and RM52,943 respectively. Upon completion of the aforesaid acquisitions on October 1, 2005 and June 30, 2006 respectively, CAB Cakaran (Timur) Sdn. Bhd. becomes a wholly owned subsidiary to the Group.
During the financial year ended September 30, 2007, CAB Cakaran Sdn. Bhd. disposed off its entire equity interest of 200,000 ordinary shares of RM1 each, representing 100% of the issued and paid-up share capital of CAB Cakaran (Timur) Sdn. Bhd. to another subsidiary, Jaya Gading Farm Sdn. Bhd. for a total sales consideration of RM553,556. Upon completion of the aforesaid disposal on July 30, 2007, CAB Cakaran (Timur) Sdn. Bhd. becomes a 55% owned subsidiary of the Group.
During the financial year ended September 30, 2006, CAB Cakaran Sdn. Bhd. acquired 550,000 ordinary shares of RM1 each in Jaya Gading Farm Sdn. Bhd., representing 55% of the equity interest in Jaya Gading Farm Sdn. Bhd., for a total purchase consideration of RM2,805,000. The acquisition was completed on January 23, 2006.
On January 8, 2007, Likes Marketing Sdn. Bhd. acquired 510 ordinary shares of S$1 each, representing 51% equity interest in Protheme Pte. Ltd., for a total purchase consideration of S$510 (equivalent to RM1,166). On July 3, 2007, Likes Marketing Sdn. Bhd. subscribed for additional 50,490 ordinary shares of S$1 each in Protheme Pte. Ltd., for a total purchase consideration of S$50,490 (equivalent to approximately RM114,047); and the Group’s equity interest in Protheme Pte. Ltd. remains unchanged at 51%.
On September 27, 2007, Kyros International Sdn. Bhd. entered into three separate Share Sale Agreements with external parties for the disposals of the subsidiaries as follows:
a. 85,000 ordinary shares of RM1 each, representing 85% equity interest in Daging Salai Sdn. Bhd., for a total sales consideration of RM1; b. 400,000 ordinary shares of RM1 each, representing 100% equity interest in Kyros Bakery & Confectionery Sdn. Bhd., for a total sales consideration of RM2; and c. 51,000 ordinary shares of RM1 each, representing 51% equity interest in Souvlaki Star Sdn. Bhd., for a total sales consideration of RM1.
The disposals were completed on September 27, 2007, on which date controls of Daging Salai Sdn. Bhd., Kyros Bakery & Confectionery Sdn. Bhd. and Souvlaki Star Sdn. Bhd. were passed to the acquirers, resulting in a gain on disposals to the Group amounting to RM4.
On September 27, 2007, Kyros Kebab Overseas Ventures Sdn. Bhd. entered into a Share Sale Agreement with an external party for the disposal of 51,000 ordinary shares of S$1 each, representing 51% equity interest in Kyros Kebab (S) Pte. Ltd., for a total sales consideration of S$1 (equivalent to approximately RM2). The disposal was completed on
(583661 W) September 27, 2007, on which date control of Kyros Kebab (S) Pte. Ltd. was passed to the acquirer, resulting in a gain
on disposal to the Group amounting to RM2.
On September 27, 2007, Kyros International Sdn. Bhd. also entered into a conditional Share Sale Agreement with external parties for the disposal of its entire equity interest of 100,000 ordinary shares of RM1 each, representing 100% equity interest in Kyros Properties Sdn. Bhd., for a total sales consideration of RM2. The disposal transaction has not been completed as of September 30, 2007. Upon completion of the disposal transaction, there would be a gain on disposal of subsidiary amounting to RM2.
The acquired subsidiaries have contributed the following results to the Group: The Group 2007 2006 RM RM CAB CAKARAN CORPORATION BERHAD Revenue 186,894 41,426,021 74 (Loss)/profit for the year (276,945) 210,787 Notes to the Financial Statements (cont’d) September 30, 2007
13. INVESTMENTS IN SUBSIDIARIES (cont’d)
If the acquisition of subsidiaries had occurred at beginning of year, the Group’s revenue and profit/(loss) for the year are as follows: The Group 2007 2006 RM RM Revenue 442,934,247 339,892,588 Profit/(loss) for the year 216,225 (11,177,742)
The assets and liabilities arising from the acquisitions are as follows: The Group 2007 2006 RM RM Property, plant and equipment – 9,157,260 Inventories – 383,329 Trade and other receivables – 5,879,879 Current tax assets 2,289 71,374 Other assets – 81,600 Cash and bank balances – 40,704 Trade and other payables – (8,345,395) Borrowings – (4,805,182) Deferred tax liabilities – (868,016)
2,289 1,595,553 Minority interests (1,121) (717,999)
Group’s share of net assets 1,168 877,554 Goodwill on consolidation – 1,964,856 Total purchase considerations (inclusive of direct attributable expenses) 1,168 2,842,410 Cash and cash equivalents of subsidiaries acquired (2,289) 1,607,776
Net cash (inflow)/outflow of the Group (1,121) 4,450,186
The disposals of subsidiaries had the following effects on the financial position of the Group as of the end of the year: The Group 2007 2006 RM RM (583661 W)
Total disposal proceeds, representing net assets disposed: Cash and bank balances 6 – Gain on disposal to the Group (6) –
– – Cash and cash equivalents of subsidiaries disposed (6) –
Net cash inflow to the Group (6) – CAB CAKARAN CORPORATION BERHAD
75 Notes to the Financial Statements (cont’d) September 30, 2007
14. OTHER INVESTMENT
The Group 2007 2006 RM RM Unquoted shares, at cost – 217,436 Less: Diminution in value – (217,436)
– –
15. AGRICULTURAL EXPENDITURE
The Group 2007 2006 RM RM Clearing and preparation of land 105,509 105,509 Seeding 71,815 71,815
177,324 177,324
The agricultural expenditure was incurred on a parcel of the Group’s freehold land.
16. INVESTMENT IN QUOTED SHARES
The Group 2007 2006 RM RM Quoted shares in Malaysia, at cost – 58,668
Market value – 141,706
17. INVENTORIES
The Group 2007 2006 RM RM Raw materials: (583661 W) Feeds and consumables 1,664,805 115,370 Meats and dressings 751,059 244,722 Medicine and chemicals 579,973 404,478 Unprocessed marine products 550,816 605,055 Packing materials 380,484 1,214,772 Others 21,226 21,375
3,948,363 2,605,772
Work-in-progress: Parent stocks 6,282,425 8,111,405 Eggs 1,549,916 1,540,051
CAB CAKARAN CORPORATION BERHAD Broiler chicken 424,768 227,504
8,257,109 9,878,960 76 Notes to the Financial Statements (cont’d) September 30, 2007
17. INVENTORIES (cont’d)
The Group 2007 2006 RM RM
Finished goods: Processed marine products 4,549,851 6,299,840 Processed chicken 2,209,192 8,071,933 Trading products 1,110,141 245,525 Frozen food 317,317 217,424 Others 30,005 44,799
8,216,506 14,879,521
Goods-in-transit 115,920 156,860
20,537,898 27,521,113
18. TRADE AND OTHER RECEIVABLES
The Group The Company 2007 2006 2007 2006 RM RM RM RM Trade receivables 65,343,970 60,004,715 – – Less: Allowance for doubtful debts (3,728,830) (3,607,831) – –
61,615,140 56,396,884 – –
Amount owing by subsidiaries – – 24,412,998 15,888,596
Other receivables 1,431,504 1,999,867 – – Less: Allowance for doubtful debts (522,241) (505,277) – –
909,263 1,494,590 – –
Dividend receivables – – – 8,866,000
62,524,403 57,891,474 24,412,998 24,754,596
The foreign currency exposure profile of trade receivables is as follows: (583661 W)
The Group 2007 2006 RM RM Ringgit Malaysia 57,729,118 49,979,613 United States Dollar 2,605,356 4,888,699 Pound Sterling 1,241,829 1,491,878 Renminbi 38,837 36,580 Singapore Dollar – 114
61,615,140 56,396,884 CAB CAKARAN CORPORATION BERHAD
77 Notes to the Financial Statements (cont’d) September 30, 2007
18. TRADE AND OTHER RECEIVABLES (cont’d)
Included in trade receivables of the Group are amounts owing by related parties as follows:
The Group 2007 2006 RM RM YWT Contract Farming (a) 1,224,202 – Jaya Gading Marketing Sdn. Bhd. (b) 62,549 62,270 Perusahaan Ayam R-Mahad Sdn. Bhd. (c) – 237
(a) An entity which is owned by a son of a director of a subsidiary, Mr. Yap Kim Hwah.
(b) A company in which a director of this company and who have an interest is the brother-in-law of Mr. Yap Kim Hwah and Mr. Yap Kim Soon who are directors of a subsidiary.
(c) A company in which a director of a subsidiary, Cik Rohani Binti Ahmad is also a director and has an interest in this company.
Trade receivables of the Group comprise amounts receivable for the sale of goods. The credit periods granted by the Group on sale of goods range from 7 to 120 days (2006:7 to 120 days).
The amount owing by subsidiaries are as follows:
The Company 2007 2006 RM RM CAB Cakaran Sdn. Bhd. 12,304,890 5,398,273 Kyros Food Industries Sdn. Bhd. 9,116,731 9,118,946 Kyros International Sdn. Bhd. 1,588,377 28,377 Jimat Jaya Sdn. Bhd. 1,218,000 1,218,000 N.T. Huat Kee Fisheries Sdn. Bhd. 185,000 125,000
24,412,998 15,888,596
The amount owing by N.T. Huat Kee Fisheries Sdn. Bhd. arose mainly from management fee receivable. The other amounts owing by other subsidiaries arose mainly from unsecured advances which are interest free and have no fixed term of repayment.
(583661 W) The foreign currency exposure profile of other receivables is as follows:
The Group The Company 2007 2006 2007 2006 RM RM RM RM Ringgit Malaysia 834,703 1,494,590 – – Singapore Dollar 74,560 – – –
909,263 1,494,590 – –
Other receivables of the Group arose mainly from expenses paid on behalf of franchisees for the setting up of new outlets and unsecured advances which are interest free and have no fixed term of repayment. CAB CAKARAN CORPORATION BERHAD
78 Notes to the Financial Statements (cont’d) September 30, 2007
19. OTHER ASSETS
The Group The Company 2007 2006 2007 2006 RM RM RM RM Refundable deposits 757,588 772,679 1,000 1,000
Prepaid expenses 4,413,228 2,626,374 – – Less: Allowance for doubtful debts (199,072) (187,307) – –
4,214,156 2,439,067 – –
4,971,744 3,211,746 1,000 1,000
20. SHORT-TERM DEPOSITS WITH A LICENSED BANK
The short–term deposits with a licensed bank of the Group as of September 30, 2007 carry interests at rates of 3.1% and 3.7% (2006:3.2%) per annum and will mature in October 2007 and June 2008.
As of September 30, 2007, the short-term deposits with a licensed bank of the Group of RM2,539,755 (2006:Nil) are charged to the bank as securities for credit facilities granted to certain subsidiaries as mentioned in Note 25.
21. CASH AND BANK BALANCES
The foreign currency exposure profile of cash and bank balances is as follows:
The Group The Company 2007 2006 2007 2006 RM RM RM RM Ringgit Malaysia 3,299,220 2,069,009 7,384 7,433 United States Dollar 239,433 39,432 – – Singapore Dollar 49,049 – – – Renminbi 1,656 84,905 – –
3,589,358 2,193,346 7,384 7,433
22. NON-CURRENT ASSETS CLASSIFIED AS HELD FOR SALE (583661 W) The Group 2007 2006 RM RM Freehold land and buildings 463,906 – Buildings 695,079 – Motor vehicle 108,331 –
Carrying amount before classification 1,267,316 – Less: Impairment loss (20,331) –
Carrying amount at end of year 1,246,985 – CAB CAKARAN CORPORATION BERHAD
79 Notes to the Financial Statements (cont’d) September 30, 2007
22. NON-CURRENT ASSETS CLASSIFIED AS HELD FOR SALE (cont’d)
During the financial year ended September 30, 2006, a subsidiary entered into a sale and purchase agreement with an external party for the disposal of certain freehold land and buildings for a total sales consideration of RM550,000. Upon adoption of FRS 5 Non-current Assets Held for Sale and Discontinued Operations at beginning of year, these freehold land and buildings were reclassified as non-current assets classified as held for sale. The disposal transaction has not been completed as of September 30, 2007. Upon completion of the disposal transaction, there would be a gain on disposal of non-current assets held for sale of RM86,094.
During the financial year, another subsidiary entered into a sale and purchase agreement with an external party for the disposal of certain buildings for a total sales consideration of RM700,000. The disposal transaction has not been completed as of September 30, 2007. Upon completion of the disposal transaction, there would be a gain on disposal of RM4,921.
During the financial year, the subsidiary committed with another external party for the disposal of a motor vehicle for a sales consideration of RM88,000. An impairment loss of RM20,331 has been recognised upon classification of this asset as held for sale. The disposal transaction has not been completed as of September 30, 2007.
As of September 30, 2007, the freehold and buildings of the Group classified as non-current assets classified as held for sale with a carrying value of RM463,906 are pledged to a local bank as security for credit facilities granted to a subsidiary as mentioned in Note 25.
As of September 30, 2007, the motor vehicle classified as held for sale with a carrying value of RM88,000 (2006:Nil) is pledged as security for hire-purchase facility obtained as mentioned in Note 25.
23. SHARE CAPITAL
The Company 2007 2006 No. of shares RM No. of shares RM Authorised: Ordinary shares of RM0.50 each 200,000,000 100,000,000 200,000,000 100,000,000
Issued and fully paid: Ordinary shares of RM0.50 each: At beginning of year 131,751,400 65,875,700 83,303,500 41,651,750 Issued during the year: Exercise of share options 27,700 13,850 5,284,300 2,642,150 Bonus issue – – 43,163,600 21,581,800 (583661 W)
At end of year 131,779,100 65,889,550 131,751,400 65,875,700
During the financial year, the issued and paid-up ordinary share capital of the Company was increased from RM65,875,700 to RM65,889,550 by way an issue of 27,700 ordinary shares of RM0.50 each for cash pursuant to the Employees’ Share Option Scheme of the Company at an exercise price of RM0.53 per ordinary share.
The resultant premium arising from the shares issued under the exercise of share options of RM831 has been credited to the share premium account.
The new ordinary shares rank pari passu with the then existing ordinary shares of the Company.
Under the Company’s Employees’ Share Option Scheme (“ESOS”) which became effective on July 16, 2004, options
CAB CAKARAN CORPORATION BERHAD to subscribe for unissued new ordinary shares of RM0.50 each in the Company were granted to eligible directors and employees of the Company and its subsidiaries. 80 Notes to the Financial Statements (cont’d) September 30, 2007
23. SHARE CAPITAL (cont’d)
The salient features of the ESOS are as follows:
a. the maximum number of new ordinary shares to be issued pursuant to the exercise of the options which may be granted under the scheme shall not exceed fifteen percent of the issued and paid-up share capital of the Company or such maximum percentages as may be allowed by the relevant authorities at any point of time throughout the duration of the scheme;
b. any employee of the Group shall be eligible to participate in the scheme if, as of the date of the offer, the employee:
i. is at least eighteen years of age;
ii. is employed full time by and on the payroll of a company in the Group; and
iii. is confirmed in writing as a full time employee and has been in the employment of the Group for a period of at least one year of continuous service prior to the date of offer, including service during the probation period;
c. any director of the Group shall be eligible to participate in the scheme if, as of the date of the offer, such director:
i. is at least eighteen years of age;
ii. has been appointed as a director of a company within the Group for a period of at least three months; and
iii. where the eligible director is a director of the Company, such entitlement under the scheme must have been approved by the shareholders of the Company in general meeting;
d. the actual number of options which may be offered to an eligible employee shall be at the discretion of the Option Committee provided that the options so offered shall be in multiples of and not less than one hundred shares subject to the maximum allowable allotment;
e. the option price shall be fixed based on the higher of the following:
i. the five days weighted average market price of the ordinary shares of the Company, as quoted on Bursa Malaysia Securities Berhad, immediately preceding the date of offer with a discount of not more than ten percent; or
ii. the par value of the ordinary shares of the Company; and
f. the scheme shall be in force for a period of five calendar years from the effective date and may be extended or renewed and the options granted may be exercised at any time within the option period. (583661 W) The share options granted and exercised during the financial year are as follows:
No. of options over ordinary shares of RM0.50 each Exercise price Balance Balance Date of per ordinary as of as of offer share 1.10.2006 Granted Exercised Lapsed 30.9.2007 RM 26.7.2004 0.53 1,432,300 – (23,000) (63,000) 1,346,300 19.10.2004 0.53 117,900 – (4,700) (17,900) 95,300 1.9.2005 0.53 248,000 – – (46,500) 201,500 15.6.2006 0.60 1,153,000 – – (131,000) 1,022,000 CAB CAKARAN CORPORATION BERHAD 2,951,200 – (27,700) (258,400) 2,665,100 81 Notes to the Financial Statements (cont’d) September 30, 2007
23. SHARE CAPITAL (cont’d)
The fair values of ordinary shares at exercise dates, for ESOS exercised during the financial year are as follows:
Exercise price per Fair values of No. of options Consideration Date of offer ordinary share ordinary shares exercised received RM RM RM 2007: 26.7.2004 0.53 0.56 & 0.57 23,000 12,190 19.10.2004 0.53 0.56 4,700 2,491
27,700 14,681
2006: 26.7.2004 0.80 1.00 – 1.40 2,474,000 1,979,200 26.7.2004 0.53 0.65 – 0.85 1,961,500 1,039,595 19.10.2004 0.80 1.02 – 1.40 287,700 230,160 19.10.2004 0.53 0.65 & 0.85 147,100 77,963 1.9.2005 0.80 1.00 – 1.40 262,000 209,600 1.9.2005 0.53 0.65 – 0.85 113,000 59,890 15.6.2006 0.60 0.65 39,000 23,400
5,284,300 3,619,808
24. RESERVES
The Group The Company 2007 2006 2007 2006 RM RM RM RM Non-distributable as cash dividends: Revaluation reserve 5,748,228 – – – Share premium 71,379 70,548 71,379 70,548 Translation reserve 8,659 (19,709) – – Negative goodwill – 3,171,062 – – Distributable as cash dividends: Retained earnings 5,763,294 247,681 75,085 198,019
11,591,560 3,469,582 146,464 268,567
(583661 W) The revaluation reserve of the Group is used to record increase and decrease in revaluation of non-current assets, as described in the accounting policies. The amount arose from the revaluation of landed properties, net of related deferred tax liabilities.
Share premium of the Group and of the Company arose from allotment of ordinary shares at premium net of share issue expenses and bonus issue.
Exchange differences arising on translation of foreign controlled entities, are taken to translation reserve of the Group, as described in the accounting policies.
Negative goodwill of the Group represents the difference between the consideration paid for the acquisition of subsidiaries and the value of attributable net assets acquired at the date of acquisition, net of amortisation. CAB CAKARAN CORPORATION BERHAD Based on estimated tax credits available and the prevailing tax rate applicable to dividends, the retained earnings of 82 the Company is available for distribution by way of cash dividends without incurring additional tax liability. Notes to the Financial Statements (cont’d) September 30, 2007
25. BORROWINGS
The Group 2007 2006 RM RM Secured: Bankers’ acceptance 34,872,000 25,823,000 Long-term loans 16,831,058 20,085,671 Bank overdrafts 8,116,830 6,782,842 Hire-purchase payables 5,725,320 5,680,298 Unsecured: Bankers’ acceptance 29,775,000 30,415,000 Bank overdrafts 1,721,769 5,115,955 Long-term loans 1,601,583 1,307,343 Trade loans 1,238,089 1,698,000
99,881,649 96,908,109 Less: Current portion (82,972,346) (76,431,193)
Non-current portion 16,909,303 20,476,916
The long-term loans are as follows:
The Group 2007 2006 RM RM Amount outstanding: Secured 16,831,058 20,085,671 Unsecured 1,601,583 1,307,343
18,432,641 21,393,014 Less: Current portion (5,520,278) (5,030,557)
Non-current portion 12,912,363 16,362,457
The non-current portion of long-term loans is repayable as follows:
The Group 2007 2006 (583661 W) RM RM Later than one year and not later than two years 4,174,194 4,845,491 Later than two years and not later than five years 6,520,051 8,172,763 Later than five years 2,218,118 3,344,203
12,912,363 16,362,457 CAB CAKARAN CORPORATION BERHAD
83 Notes to the Financial Statements (cont’d) September 30, 2007
25. BORROWINGS (cont’d)
The hire-purchase payables are as follows:
The Group 2007 2006 RM RM Total outstanding 6,462,242 6,508,001 Less: Interest-in-suspense outstanding (736,922) (827,703)
Principal outstanding 5,725,320 5,680,298 Less: Current portion (1,728,380) (1,565,839)
Non-current portion 3,996,940 4,114,459
The non-current portion of hire-purchase payables is repayable as follows:
The Group 2007 2006 RM RM Later than one year and not later than two years 1,626,667 1,360,537 Later than two years and not later than five years 2,370,273 2,753,922
3,996,940 4,114,459
The bankers’ acceptance of the Group bear interests at rates ranging from 0.75% to 2% (2006:0.75% to 1.75%) per annum above the lending banks’ cost of funds. The long-term loans of the Group bear interests at rates ranging from 0.8% to 1.75% (2006:0.8% to 2.5%) per annum above the lending banks’ base lending rates and fixed rates ranging from 3.75% to 7.75% (2006:3.75% to 7.75%) per annum. The bank overdrafts of the Group bear interests at rates ranging from 0.5% to 2% (2006:0.5% to 2%) per annum above the lending banks’ base lending rates. The trade loans of the Group bear interests at a rate of 0.75% (2006:0.75%) above the EXIM Bank’s funding rate.
The effective interest rates per annum as of September 30, 2007 are as follows:
The Group 2007 2006 % % Bankers’ acceptance 3.29 – 5.75 3.52 – 6.1 Long-term loans 3.75 – 8.5 3.75 – 9
(583661 W) Bank overdrafts 6.75 – 8.75 6.75 – 8.75
Hire-purchase payables 4.92 – 10.47 5.01 – 10.47 Trade loans 4.25 – 4.5 4.25
The bankers’ acceptance of the Group as of September 30, 2007 are repayable within October 2007 to January 2008. The terms for hire-purchase of the Group range from 3 to 7 years. The trade loans of the Group as of September 30, 2007 are repayable within November 2007 to January 2008.
The secured short-term borrowings together with the secured long–term loans of the Group are secured, either singly or collectively as follows:
a. legal charges over certain landed properties and plant, machinery and equipment of the Group; CAB CAKARAN CORPORATION BERHAD b. legal charges over certain landed properties belonging to certain directors, a brother of certain directors of a subsidiary and a company in which the directors are also directors of the Company; 84 Notes to the Financial Statements (cont’d) September 30, 2007
25. BORROWINGS (cont’d)
The secured short-term borrowings together with the secured long–term loans of the Group are secured, either singly or collectively as follows: (cont’d)
c. a charge of short-term deposits of a subsidiary;
d. guarantees by certain directors of the Group for RM2,000,000;
e. joint guarantees by certain directors of the Group and certain former directors of a subsidiary for RM7,400,000;
f. corporate guarantees by a subsidiary for RM14,934,853; and
g. corporate guarantees by the Company for RM85,643,179.
The Group’s hire-purchase payables are secured by the financial institutions’ charge over the assets under hire- purchase. Certain of the Group’s hire-purchase payables are also guaranteed by the Company for RM150,855.
The unsecured short-term borrowings and unsecured long-term loans are guaranteed by the Company for RM62,500,000 and are covered by a negative pledge over the assets of a subsidiary.
26. DEFERRED TAX LIABILITIES
The Group 2007 2006 RM RM At beginning of year 7,663,242 7,218,545 Reversal of deferred tax liabilities upon adoption of FRS 140 15,739 –
7,678,981 7,218,545 Recognised directly in equity: Deferred tax liabilities on revaluation surplus of revalued properties during the year 732,361 – Reversal of deferred tax liabilities on revaluation surplus – arising from the change in tax rates (209,442) Reversal of deferred tax liabilities arising from the abolishment of capital gains tax (78,450) Acquisition of subsidiaries – 868,016 Transfer from/(to) income statements (Note 6): (583661 W)
Relating to the origination and reversal of temporary differences 603,075 (423,319) Reversal of deferred tax liabilities arising from the abolishment of capital gains tax (936,000) – Effect on cumulative crystallisation resulting from the reduction in tax rates (196,854) – Reduction in opening deferred tax resulting from the change in tax rates (130,000) – Realisation of deferred tax liabilities upon disposal of properties (978) –
At end of year 7,462,693 7,663,242 CAB CAKARAN CORPORATION BERHAD
85 Notes to the Financial Statements (cont’d) September 30, 2007
26. DEFERRED TAX LIABILITIES (cont’d)
The deferred tax liabilities are in respect of the followings:
The Group 2007 2006 RM RM Tax effects of: Temporary differences arising from: Property, plant and equipment 4,502,300 4,090,100 Receivables (214,000) (229,800) Others (16,000) (2,000) Revaluation surplus of revalued properties 3,453,393 4,519,942 Unused tax capital allowances (233,000) (513,000) Unused tax losses (30,000) (202,000)
Net 7,462,693 7,663,242
As of September 30, 2007, deferred tax assets have not been recognised in respect of the followings:
The Group 2007 2006 RM RM Tax effects of: Unused tax losses 2,618,000 2,567,400 Unused tax capital allowances 1,399,000 1,236,000 Allowance for increased export 300,000 328,000 Temporary differences arising from: Receivables 120,000 148,000 Property, plant and equipment (1,297,000) (1,137,400) Inventories – 14,000 Payables – (2,000) Others 132,000 183,000
Net 3,272,000 3,337,000 (583661 W)
CAB CAKARAN CORPORATION BERHAD
86 Notes to the Financial Statements (cont’d) September 30, 2007
27. TRADE AND OTHER PAYABLES
The foreign currency exposure profile of trade and other payables is as follows:
The Group The Company 2007 2006 2007 2006 RM RM RM RM Trade payables: Ringgit Malaysia 30,112,550 30,298,226 – – United States Dollar 144,831 1,986,451 – – Singapore Dollar 20,262 18,509 – – Renminbi – 100,879 – –
30,277,643 32,404,065 – – Amount owing to directors: Singapore Dollar 22,916 – – – Ringgit Malaysia 2,000 90,530 2,000 35,000 Renminbi 1,397 – – –
26,313 90,530 2,000 35,000 Other payables: Ringgit Malaysia 7,739,591 5,665,192 – 5,718 Singapore Dollar 7,549 – – – Renminbi – 280 – –
7,747,140 5,665,472 – 5,718 Accrued expenses: Ringgit Malaysia 2,743,902 2,400,889 51,212 22,850 Renminbi 13,469 35,839 – – Singapore Dollar – 12,298 – – 2,757,371 2,449,026 51,212 22,850
40,808,467 40,609,093 53,212 63,568
Trade payables of the Group comprise amounts outstanding for trade purchases. The credit periods granted to the Group for trade purchases range from 14 to 120 days (2006:15 to 90 days).
Included in trade payables of the Group is an amount of RM195,507 (2006:Nil) owing to YWT Contract Farming, an entity which is owned by a son of a director of a subsidiary, Mr. Yap Kim Hwah. (583661 W)
CAB CAKARAN CORPORATION BERHAD
87 Notes to the Financial Statements (cont’d) September 30, 2007
27. TRADE AND OTHER PAYABLES (cont’d)
The amount owing to directors is as follows:
The Group The Company 2007 2006 2007 2006 RM RM RM RM Directors of the Company: Ahmad Fazil Bin Haji Hashim 2,000 8,000 2,000 8,000 Datuk Haji Zakaria Bin Hashim – 9,000 – 9,000 Y.T.M. Tunku Dato’ Dr. Ismail Ibni Almarhum Tunku Mohd Jewa – 9,000 – 9,000 Kim Lim Chong – 6,000 – 6,000 Khoo Chee Kong – 3,000 – 3,000 Directors of subsidiaries: Irene Fong Fui Lee 22,916 – – – Lee Chan Nga 1,397 – – – Lee Eng Kok – 55,000 – – Yap Kim Hwah – 530 – –
26,313 90,530 2,000 35,000
The amount owing to directors of the Company arose mainly from remuneration payable. The amount owing to directors of subsidiaries arose mainly from unsecured advances which are interest free and have no fixed term of repayment.
Included in other payables of the Group are amounts owing to related parties as follows:
The Group 2007 2006 RM RM Syarikat Sin Long Heng Breeding Farm Sdn. Bhd. (a) 2,160 2,722 Abdul Rahman Bin Abdullah (b) – 26,000
(a) A company in which certain directors of a subsidiary, Mr. Tan Ah Ba @ Tan Chye Khoon and Mr. Tan Chye Hee are also directors and have interests in this company.
(b) A shareholder of a subsidiary.
The amount owing to Syarikat Sin Long Heng Breeding Farm Sdn. Bhd. comprises amount payable for purchase of (583661 W) property, plant and equipment. The amount owing to Mr. Abdul Rahman Bin Abdullah arose mainly from unsecured advances which are interest free and have no fixed term of repayment.
Other payables of the Group arose mainly from amounts outstanding for acquisition of property, plant and equipment and other ongoing costs, and amounts collected from franchisees for the setting up of new outlets. CAB CAKARAN CORPORATION BERHAD
88 Notes to the Financial Statements (cont’d) September 30, 2007
28. DIVIDENDS
The Group and the Company 2007 2006 RM RM Declared and paid in respect of the financial year ended September 30, 2005: First and final dividend of 2.5 sen gross per ordinary share, less tax – 1,550,551 Special dividend of 1 sen gross per ordinary share, less tax – 620,220
– 2,170,771
29. CHANGE IN ACCOUNTING POLICIES
The adoption of new and revised FRSs and IC Interpretations as set out in Note 3 has no material impact on the financial statements of the Group and of the Company except for the adoption of the following FRSs:
a. FRS 3 Business Combinations and FRS 136 Impairment of Assets
Prior to October 1, 2006, goodwill was amortised on a straight line basis over its estimated useful life of five years and at each balance sheet date, the Group assessed if there was any indication of impairment of the cash- generating unit in which the goodwill is attached to. The adoption of FRS 3 and FRS 136 has resulted in the Group ceasing annual goodwill amortisation. Goodwill is now carried at cost less accumulated impairment losses and is tested for impairment annually, or more frequently if events or changes in circumstances indicate that it may be impaired.
In accordance with the transitional provisions of FRS 3, the Group has applied the revised accounting policy for goodwill prospectively from October 1, 2006. The transitional provisions of FRS 3 also required the Group to eliminate the carrying amount of the accumulated amortisation at October 1, 2006 against the carrying amount of goodwill. The net carrying amount of goodwill as of October 1, 2006 of RM6,872,760 ceased to be amortised thereafter.
Prior to October 1, 2006, negative goodwill was amortised evenly over the economic useful life of the assets. Under FRS 3, any excess of the Group’s interest in the net fair value of the acquiree’s identifiable assets, liabilities and contingent liabilities over cost of the acquisitions, after reassessment, is now recognised immediately in profit or loss. In accordance with transitional provisions of FRS 3, the negative goodwill as of October 1, 2006 of RM3,171,062 was derecognised with a corresponding increase in retained earnings.
b. FRS 5 Non-current Assets Held for Sale and Discontinued Operations
(583661 W) Prior to October 1, 2006, non-current assets held for sale were neither classified nor presented as currents assets. Upon adoption of FRS 5, non-current assets held for sale are classified as currents assets and are stated at the lower of carrying amount and fair value less costs to sell.
c. FRS 101 Presentation of Financial Statements
Prior to October 1, 2006, minority interests at the balance sheet date were presented in the consolidated balance sheet separately from liabilities and equity. Upon adoption of the FRS 101, minority interests are now presented within equity. In the consolidated income statement, minority interests are presented as an allocation of the profit or loss for the year. In the consolidated statement of changes in equity, total recognised income and expenses for the year are presented, showing separately the amounts attributable to equity holders of the parent and to minority interests. CAB CAKARAN CORPORATION BERHAD
89 Notes to the Financial Statements (cont’d) September 30, 2007
29. CHANGE IN ACCOUNTING POLICIES (cont’d)
d. FRS 117 Leases
Prior to October 1, 2006, leasehold land held for own use was classified as property, plant and equipment and was stated at valuation less accumulated depreciation and impairment losses. The adoption of the FRS 117 has resulted in a change in the accounting policy relating to the classification of leases of land and buildings. Leases of land and buildings are classified as operating or finance leases in the same way as leases of other assets and the land and buildings elements of a lease of land and buildings are considered separately for the purpose of lease classification. Leasehold land held for own use is now classified as operating lease and where necessary, the minimum lease payments or the up-front payments made are allocated 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.
The Group have applied the change in accounting policy in respect of leasehold land in accordance with the transitional provisions of FRS 117. At October 1, 2006, the unamortised amount of leasehold land is retained as the surrogate carrying amount of prepaid lease payments as allowed by the transitional provisions. The reclassification of the Group’s leasehold land as prepaid lease payments has been accounted for retrospectively and comparative figures have been restated where RM7,209,068 was reclassified from property, plant and equipment to prepaid lease payments on leasehold land of the Group.
e. FRS 140 Investment Property
The definition of investment properties under FRS 140 has resulted in identification of additional assets of the Group that meet the definition of investment properties. These properties are now classified into a separate asset category on the balance sheets. Previously, investment properties were included in property, plant and equipment.
Investment properties are now stated at fair value, representing open market value determined by external valuers. Gains or losses arising from changes in the fair values of investment properties are included in income statements for the period in which they arise. Previously, investment properties were included within property, plant and equipment and stated at valuation less accumulated depreciation and impairment losses. Revaluation was carried out at least once every five years and any revaluation increase is taken to equity as a revaluation surplus.
In accordance with the transitional provisions of FRS 140, this change in accounting policy is applied prospectively and the comparatives as of September 30, 2006 are not restated.
The effects of change in accounting policies in adopting FRS 3 and FRS 140 have been accounted for by restating the following opening balances of consolidated balance sheet as of October 1, 2006 as follows:
As previously Change in reported accounting policies As restated (583661 W) RM RM RM The Group Negative goodwill 3,171,062 (3,171,062) – Retained earnings 247,681 4,896,578 5,144,259 Minority interests 12,575,617 15,424 12,591,041 Deferred tax liabilities 7,663,242 15,739 7,678,981 CAB CAKARAN CORPORATION BERHAD
90 Notes to the Financial Statements (cont’d) September 30, 2007
29. CHANGE IN ACCOUNTING POLICIES (cont’d)
The effects of change in accounting policies in adopting FRS 3, FRS 5 and FRS 140 have been applied prospectively, and the change has had no impact on amounts reported on consolidated income statement for the year ended September 30, 2006 or prior periods. The effects on the consolidated income statement for the year ended September 30, 2007 are as follows:
RM The Group Amortisation of goodwill no longer required 682,967 Fair value adjustment on investment properties 395,000 Amortisation of negative goodwill no longer required (1,729,670) Impairment loss on non–current assets classified as held for sale (20,331)
Decrease in profit for the year (672,034)
Decrease in basic earnings per share (sen) (0.51 sen)
30. CASH AND CASH EQUIVALENTS
During the financial year, the Group acquired property, plant and equipment with an aggregate cost of RM12,150,735 (2006:RM15,611,165) of which RM1,723,231 (2006:RM4,060,589) was financed by means of hire-purchase and the balance of RM10,427,504 (2006:RM11,550,576) was cash payment.
Cash and cash equivalents at beginning of year have been restated for the effect of exchange rates changes as follows:
The Group The Company 2007 2006 2007 2006 RM RM RM RM Cash and cash equivalents as previously reported (6,617,007) (1,135,626) 7,433 7,055 Effect of exchange rates changes (2,041) (86) – –
Cash and cash equivalents at beginning of year as restated (6,619,048) (1,135,712) 7,433 7,055
Cash and cash equivalents at end of year comprise the following:
The Group The Company 2007 2006 2007 2006 (583661 W)
RM RM RM RM Cash and bank balances 3,589,358 2,193,346 7,384 7,433 Short-term deposits with a licensed bank 2,539,755 3,088,444 – – Bank overdrafts (9,838,599) (11,898,797) – –
(3,709,486) (6,617,007) 7,384 7,433 Less: Short-term deposits pledged as security (2,539,755) – – –
(6,249,241) (6,617,007) 7,384 7,433 CAB CAKARAN CORPORATION BERHAD
91 Notes to the Financial Statements (cont’d) September 30, 2007
31. FINANCIAL INSTRUMENTS
a. Financial risk management objectives and policies
The operations of the Group are subject to a variety of financial risks, including foreign currency risk, interest rate risk, market risk, credit risk, liquidity risk and cash flow risk.
Various risk management policies are made and approved for observation in the day-to-day operations for the controlling and management of the risks associated with financial instruments.
i. Foreign currency risk
The Group has exposure to foreign currency risk as a result of transactions, receivables and payables in foreign currencies arising from normal operating activities. The Group does not speculate in foreign currencies.
ii. Interest rate risk
The Group’s exposure to changes in interest rate risk relate primarily to financing through long-term loans and short-term borrowings. The Group does not enter into any interest rate risk management transactions.
iii. Market risk
The Group has in place policies to manage the Group’s exposure to fluctuation in the prices of livestocks, feeds and other key raw materials used in the operations. The Group enters into contracts with suppliers to establish determinable prices for parent stocks, feeds and other key raw materials used.
iv. Credit risk
The Group is exposed to credit risk mainly from trade receivables. The Group extends credit to its customers based upon careful evaluation of the customers’ financial condition and credit history. The Group also ensures a number of customers so as to limit high credit concentration in a customer or customers from a particular market.
v. Liquidity risk
The Group practises prudent liquidity risk management to minimise the mismatch of financial assets and liabilities and to maintain sufficient credit facilities for contingent funding requirement of working capital.
vi. Cash flow risk
The Group reviews their cash flow position regularly to manage their exposure to fluctuations in future cash flows associated with their monetary financial instruments. (583661 W)
b. Off balance sheet derivative financial instruments
The Group enters into various financial derivative transactions to control and manage financial risks arising from its operations. The use of derivative instruments is to manage its exposures to fluctuations in foreign exchange rates. These instruments are not recognised in the financial statements on inception.
c. Foreign currency forward contracts
In order to hedge its exposure to foreign exchange risks, the Group enters into foreign currency forward contracts. Gains and losses on foreign exchange contracts designated as hedges of identified exposure are offset against the foreign exchange gains and losses on the hedged financial assets and liabilities. CAB CAKARAN CORPORATION BERHAD
92 Notes to the Financial Statements (cont’d) September 30, 2007
31. FINANCIAL INSTRUMENTS (cont’d)
c. Foreign currency forward contracts (cont’d)
Where the instrument is used to hedge against anticipated future transactions, gains and losses are not recognised until the transaction occurs.
At the balance sheet date, the Group had contracted to buy the following amount under forward contracts:
The Group Average exchange rates 2007 2006 2007 2006 RM RM RM RM Euro 3,548,733 6,571,809 4.7850 4.7092 Pound Sterling 156,120 556,285 6.8724 6.8428 United States Dollar 118,936 1,354,216 3.4310 3.6617
All of these contracts outstanding as of September 30, 2007 are maturing within October 2007 to August 2008. No significant gain or loss was expected to arise from such contracts.
d. Credit risk
The maximum credit risk associated with recognised financial assets is the carrying amounts shown in the balance sheets.
e. Fair values
The estimated fair values of the Group’s financial instruments as of September 30, 2007 are as follows:
i. Investment in quoted shares
The fair value of investment in quoted shares in Malaysia was determined based on its market value as of balance sheet date as disclosed in Note 16.
ii. Long-term loans and hire-purchase payables
The carrying amounts approximate fair values. The fair values of these financial liabilities are estimated using discounted cash flow analysis based on current borrowing rates for similar types of borrowings arrangements.
iii. Cash and cash equivalents, trade and other receivables, inter-company indebtedness, trade and other
payables, amount owing to directors and short-term borrowings (583661 W)
The carrying amounts approximate fair values because of the short maturity of these instruments.
iv. Off balance sheet item The Group 2007 2006 Carrying Fair Carrying Fair amount value amount value RM RM RM RM Foreign currency forward contract – 3,866,202 – 8,456,539
The fair value of foreign currency forward contract is calculated by reference to the current rate for contracts CAB CAKARAN CORPORATION BERHAD with similar maturity profiles. 93 Notes to the Financial Statements (cont’d) September 30, 2007
31. FINANCIAL INSTRUMENTS (cont’d)
v. Contingent liabilities
It was not practical to estimate reliably the fair value of contingent liability in respect of claims arising from dispute over acquisition of certain landed properties due to the uncertainties of timing, costs or eventual outcome.
The fair value of contingent liabilities in respect of corporate guarantees given by the Company to certain local banks is RM83,496,268 (2006:RM76,102,077). This fair value is determined based on the amount that would be payable to the banks for credit facilities granted to and utilised by subsidiaries at the balance sheet date.
32. DIRECTORS’ BENEFITS-IN-KIND
The Group and the Company 2007 2006 RM RM Estimated cash value of benefits-in-kind provided to directors 101,696 89,800
33. RELATED PARTY TRANSACTIONS
Significant transactions between the Group and its related parties during the financial year were as follows:
The Group The Company 2007 2006 2007 2006 RM RM RM RM With subsidiaries: CAB Cakaran Sdn. Bhd. Management fee received – – 60,000 60,000 Kyros International Sdn. Bhd. Management fee receivable – – 60,000 60,000 N.T. Huat Kee Fisheries Sdn. Bhd. Management fee receivable – – 60,000 60,000 With a director of a subsidiary: Lee Eng Kok Waiver of amount owing to director 55,000 – – – With other related parties: (583661 W) YWT Contract Farming (a) Purchases 20,112,909 – – – Sales 17,540,002 – – – Jaya Gading Marketing Sdn. Bhd. (b) Sales 633,169 444,354 – – Commission paid – 25,934 – – CAB CAKARAN CORPORATION BERHAD
94 Notes to the Financial Statements (cont’d) September 30, 2007
33. RELATED PARTY TRANSACTIONS (cont’d)
Significant transactions between the Group and its related parties during the financial year were as follows: (cont’d)
The Group The Company 2007 2006 2007 2006 RM RM RM RM
With other related parties: (cont’d) Syarikat Sin Long Heng Breeding Farm Sdn. Bhd. (c) Purchase of property, plant and equipment 150,000 – – – Purchases 15,367 5,220 – – Sales – 10,384 – – Chuah Ah Bee Sdn. Bhd. (d) Rental paid 35,100 29,600 – – Kebun Ngohoch (P.W.) Sdn. Bhd. (d) Rental received 1,200 – – – Perusahaan Ayam R-Mahad Sdn. Bhd. (e) Sales – 1,180,251 – – Unisetali Sdn. Bhd. (f) Purchases – 19,283 – –
(a) An entity which is owned by a son of a director of a subsidiary, Mr. Yap Kim Hwah.
(b) A company in which a director of this company and who have an interest is the brother-in-law of Mr. Yap Kim Hwah and Mr. Yap Kim Soon, who are directors of a subsidiary.
(c) A company in which certain directors of a subsidiary, Mr. Tan Ah Ba @ Tan Chye Khoon and Mr. Tan Chee Hee are also directors and have interests in this company.
(d) Companies in which certain directors of the Company, Mr. Chuah Ah Bee and Madam Chan Kim Keow are also directors and have interests in this company.
(e) A company in which a director of a subsidiary, Cik Rohani Binti Ahmad is also director and has an interest in this company.
(f) A company in which a director of a subsidiary, Mr. Yap Kim Hwah is also director and has an interest in this company.
(583661 W) The directors of the Group are of the opinion that the above transactions have been entered into in the normal course of business and have been established under normal commercial terms that are no less favourable than those arranged with independent third parties. CAB CAKARAN CORPORATION BERHAD
95 Notes to the Financial Statements (cont’d) September 30, 2007
34. CAPITAL COMMITMENTS
As of September 30, 2007, the Group has the following commitments in respect of capital expenditure on property, plant and equipment:
The Group 2007 2006 RM RM Approved and contracted for 9,103,318 9,443,757
35. OPERATING LEASE ARRANGEMENTS
The Group have entered into operating lease agreements to lease out certain of its investment properties. The future minimum lease payments receivable under operating leases contracted for as of the balance sheet date but not recognised as receivables, are as follows:
The Group 2007 2006 RM RM Not later than one year 45,000 – Later than one year and not later than five years 8,150 –
53,150 –
The Group has entered into operating lease agreements for the use of premises, office equipment and machinery. The future aggregate minimum lease payments under operating leases contracted for as of the balance sheet date but not recognised as liabilities are as follows:
The Group 2007 2006 RM RM Premises: Not later than one year 988,598 1,618,252 Later than one year and not later than five years 981,538 992,368
1,970,136 2,610,620
Office equipment: Not later than one year 14,400 14,400 (583661 W) Later than one year and not later than five years 30,400 44,800
44,800 59,200
Machinery: Not later than one year 16,569 20,307 Later than one year and not later than five years – 5,200
16,569 25,507 CAB CAKARAN CORPORATION BERHAD
96 Notes to the Financial Statements (cont’d) September 30, 2007
36. CONTINGENT LIABILITIES/ LOSS
The Group The Company 2007 2006 2007 2006 RM RM RM RM Unsecured: Claims arising from dispute over acquisition of certain landed properties – 68,000 – – Corporate guarantees given by the Company to local banks and third parties for credit facilities granted to certain subsidiaries – – 83,496,268 76,102,077
37. SEGMENT REPORTING
Business segments
For management purposes, the Group is organised into the following business segments:
a. investment holding (including letting of properties and renting of property, plant and equipment);
b. agricultural/poultry farming/food processing (including cultivation of timber crops, breeding of grand parent stocks to produce breeder eggs, breeding of parent stocks and hatching of eggs into day old chicks, breeding of broiler chicken, processing and marketing of chicken, and trading of poultry feeds and other farm consumables);
c. marine products manufacturing (including processing of fresh and frozen fishes, prawns and other marine products);
d. fast food business (including manufacturing of bakery products, fast food restaurants operator, master franchisees and restaurants operators, and retailing of fast food); and
e. trading/value added products manufacturing (including processing, exporting, wholesaling, distributing and marketing of frozen marine and value added products, chicken products, barbequed meat and other food products and trading).
Inter-segment revenue are charged under normal commercial terms that are no less favourable than those arranged with independent third parties. (583661 W)
CAB CAKARAN CORPORATION BERHAD
97 Notes to the Financial Statements (cont’d) September 30, 2007 – RM 216,225 400,585 1,761,856 1,626,418 2,539,755 (5,371,433) (1,410,193) 239,645,873 Consolidated – 442,934,247 – 20,331 RM Eliminations – RM Trading/ value added food products manufacturing – RM business Fast food – RM Marine products manufacturing – RM poultry processing Agricultural/ farming/food – 380,165,152 41,330,128 3,487,339 17,951,628 – 12,386,586 2,073,784– 1,291,833 515,099 2,407,892 (6,009,360) 21,111 12,150,735 240,945 305,583 91,287 1,174,025 RM 23,244 5,034,64720,331 788,839 460,323 1,051,239 481,481 7,839,773 holding 208,200208,200 3,233,086 383,398,238 41,805,810 475,682 4,292,737 805,398 19,859,674 1,908,046 (6,630,412) (6,630,412) 442,934,247 (583661 W)
(393,870) 10,514,905 (1,225,950) (2,167,722) (1,123,578) (367,790) 5,235,995 5,423,390 183,862,291 19,956,124 3,590,775 23,516,737 356,216 236,705,533 Investment amortisation expense non-current assets classified as held for sale SEGMENT REPORTING (cont’d) The Group 2007: Revenue External revenue Inter-segment revenue Total revenue Results Segment results Finance costs Investment revenue Profit before tax Tax expense Profit for the year Other information Capital additions Depreciation and Impairment loss on Other non-cash expenses Assets Segment assets Income producing assets Income tax assets Consolidated total assets CAB CAKARAN CORPORATION BERHAD 37.
98 Notes to the Financial Statements (cont’d) September 30, 2007 – RM 358,477 1,346,495 (4,648,693) 7,971,856 (11,536,219) (11,177,742) 99,881,649 148,661,972 Consolidated – 40,808,467 – 339,892,588 RM Eliminations RM Trading/ value added food products manufacturing RM business Fast food RM Marine products manufacturing RM poultry processing Agricultural/ farming/food – 300,107,515 29,304,692 3,873,217 6,607,164 RM 70,036 33,297,699 3,334,508 880,861 3,225,363 holding (583661 W)
7,972,638 1,916,398 (2,474,404) (3,329,648) (2,065,893) (10,253,112) (8,234,021) 20,946,200 301,832,466 29,767,767 4,173,313 8,203,508 (25,030,666) 339,892,588 Investment liabilities SEGMENT REPORTING (cont’d) The Group (cont’d) 2007: (cont’d) Liabilities Segment liabilities Borrowings Income tax liabilities Consolidated total 2006: Revenue External revenue Inter-segment revenueTotal revenue 20,946,200Finance costs Investment revenue 1,724,951Loss before tax Tax income 463,075Loss for the year 300,096 1,596,344 (25,030,666) Results Segment results CAB CAKARAN CORPORATION BERHAD 37. 99 Notes to the Financial Statements (cont’d) September 30, 2007 RM 3,147,112 1,143,516 8,330,513 96,908,109 227,768,614 145,847,715 Consolidated –– 1,970,180 – 2,527,165 – 217,436 2,678,518 RM (4,542) 9,290,746 Eliminations – – – RM Trading/ value added food products manufacturing – RM 89,660 business Fast food – – – 217,436 RM Marine products manufacturing – – RM poultry processing Agricultural/ farming/food – 8,965,309 480,984 375,284 5,909,636 (120,048) 15,611,165 – – 1,606,584 131,545 699,434 240,955 RM 80,040 33,646,020 5,150,128 913,539 1,819,366 (1,000,000) 40,609,093 holding (583661 W)
1,673,6052,437,505 296,575 6,239,928 173,080,327 23,285,440 2,624,655 19,409,477 (1,161,841) 223,477,986 Investment amortisation expense 1,569,808 5,537,943 797,072 726,802 663,663 negative goodwill other investment liabilities SEGMENT REPORTING (cont’d) The Group (cont’d) 2006: (cont’d) Other information Capital additions Depreciation and Amortisation of Goodwill written off Diminution in value of Other non-cash expenses Assets Segment assets Income producing assets Income tax assets Consolidated total assets Liabilities Segment liabilities Borrowings Income tax liabilities Consolidated total CAB CAKARAN CORPORATION BERHAD 37. 100 Notes to the Financial Statements (cont’d) September 30, 2007
37. SEGMENT REPORTING (cont’d)
Geographical segments
The Group’s operations are located in Malaysia, People’s Republic of China and Republic of Singapore. The Group’s fast food franchising business is located in Malaysia, People’s Republic of China and Republic of Singapore. All the other operations are located in Malaysia.
The following is an analysis of the Group’s revenue by geographical market, irrespective of the origin of the goods/services:
The Group 2007 2006 RM RM Malaysia 403,223,600 311,338,519 United States of America 26,592,834 9,923,728 Europe 11,032,346 17,555,301 Indonesia 696,160 – Republic of Singapore 187,006 – People’s Republic of China 125,532 1,075,040 Others 1,076,769 –
442,934,247 339,892,588
The following is an analysis of the carrying amount of segment assets and capital additions by the geographical area in which the assets are located:
The Group 2007 2006 Carrying Carrying amount of amount of segment Capital segment Capital assets additions assets additions RM RM RM RM Malaysia 236,481,356 12,110,736 223,095,279 15,544,848 Republic of Singapore 222,521 38,896 – – People’s Republic of China 1,656 1,103 382,707 66,317
236,705,533 12,150,735 223,477,986 15,611,165 (583661 W)
CAB CAKARAN CORPORATION BERHAD
101 Notes to the Financial Statements (cont’d) September 30, 2007
38. SUBSEQUENT EVENTS
Subsequent to September 30, 2007,
a. a subsidiary, Bukit Perak GPS Farm Sdn. Bhd. is committed to purchase property, plant and equipment for a total purchase consideration of RM750,355;
b. subsidiary, CAB Cakaran (Timur) Sdn. Bhd. increased its issued and paid-up share capital from 200,000 ordinary shares of RM1 each to 700,000 ordinary shares of RM1 each. The immediate holding company of CAB Cakaran (Timur) Sdn. Bhd., Jaya Gading Farm Sdn. Bhd. subscribed for the entire additional 500,000 ordinary shares of RM1 each in CAB Cakaran (Timur) Sdn. Bhd., for a total cash consideration of RM500,000. Accordingly, the Group’s equity interest in CAB Cakaran (Timur) Sdn. Bhd. remains unchanged;
c. a subsidiary, CAB Cakaran Sdn. Bhd. entered into three sale and purchase agreements for the purchase of certain parcel of land and building for a total purchase consideration of RM1,480,000;
d. a subsidiary, Jimat Jaya Sdn. Bhd. entered into a sale and purchase agreement for the disposal of certain land and buildings for a total sales consideration of RM1,660,000; and
e. the Company is additional contingently liable to an extent of RM200,000 in respect of additional corporate guarantee given to a third party for credit facility granted to a subsidiary. (583661 W)
CAB CAKARAN CORPORATION BERHAD
102 Statement by Directors
The directors of CAB CAKARAN CORPORATION BERHAD state that, in their opinion, the accompanying balance sheets, and the related statements of income, changes in equity and cash flows, are drawn up in accordance with the provisions of the Companies Act, 1965 and the applicable MASB approved accounting standards in Malaysia, so as to give a true and fair view of the state of affairs of the Group and of the Company as of September 30, 2007 and of their results and cash flows for the year ended on that date.
Signed in accordance with a resolution of the Directors,
DATUK HAJI ZAKARIA BIN HASHIM CHUAH AH BEE CHAIRMAN MANAGING DIRECTOR
Penang, January 29, 2008 (583661 W)
CAB CAKARAN CORPORATION BERHAD
103 Declaration by the Director Primarily Responsible for the financial management of the company
I, CHEW CHEE KHONG, the director primarily responsible for the financial management of CAB CAKARAN CORPORATION BERHAD, do solemnly and sincerely declare that the accompanying balance sheets, and the related statements of income, changes in equity and cash flows, are, in my opinion, correct, and I make this solemn declaration conscientiously believing the same to be true, and by virtue of the provisions of the Statutory Declarations Act, 1960.
Subscribed and solemnly declared by the abovenamed CHEW CHEE KHONG at GEORGETOWN in the State of PENANG on January 29, 2008 CHEW CHEE KHONG
Before me, GOVINDASAMY A/L G. MUTTUSAMY, PJM COMMISSIONER FOR OATHS (583661 W)
CAB CAKARAN CORPORATION BERHAD
104 List of Properties
Location/Address Description of Land/Built- Approximate Tenure Net Book Date of Property/ up Area Age of Value Valuation Existing Use (Sq. m.) Building as at 30 (Year) September 2007 Lot No. P.T. 30911, Title No. A parcel of 324.00/ 8 Leasehold 446,391 30.09.2007 H.S.(D) 91786, Mukim of industrial land 429.36 interest Sungai Buloh, District of erected upon it an 99 years Petaling, State of Selangor/ end unit 1½-storey expiring on 65, Jalan PS 1/7, Bandar terraced factory/ 7 December Pinggiran Subang, Seksyen Bakery processing 2093 U5, 40150 Shah Alam, factory Selangor Darul Ehsan
Lot No. 16471, Title No. A parcel of 3,150.05/ 3 Leasehold 7,429,709 30.09.2007 PN 24529, Mukim of Batu, industrial land 2,923.32 interest District of Kuala Lumpur, erected upon it 99 years Wilayah Persekutuan a double-storey expiring Kuala Lumpur/No. 12, office cum a single- on 16 June Jalan Segambut Lentang, storey factory 2067 Segambut Industrial Area, 51200 Kuala Lumpur
Lot No. 16473, Title No. PN A parcel of 1,369.35/ 19 Leasehold 2,221,622 30.09.2007 10, Mukim of Batu, District industrial land 908.54 interest of Kuala Lumpur, State erected upon 99 years of Wilayah Persekutuan, it a 1½-storey expiring Kuala Lumpur/8, Jalan detached factory/ on 16 June Segambut Lentang, Food processing 2067 Segambut Industrial Area, factory 51200 Kuala Lumpur
Lot No. 1789, Title No. A parcel of 15,469.00/- – Grant in 155,000 30.09.2007 GRN 917, Mukim of agricultural land/ perpetuity Titi Tinggi, District of Vacant land Perlis, State of Perlis/ Situated along Jalan Kaki Bukit, within Kampung Tasoh, Kaki Bukit, Perlis
Lot No. P.T. 47584, Title No. A parcel of building 1,100.00/ 8 Leasehold 414,095 30.09.2007 H.S.(D) 7960/95, Town of land erected upon 595.31 interest (583661 W)
Sungai Petani, District of it a 2½-storey semi- 60 years Kuala Muda, State of Kedah/ detached factory expiring on Plot 13, Jalan PKNK 1/10, 5 May 2050 Eastern Parade Industrial Park, 08000 Sungai Petani, Kedah
Lot Nos. 3033 and 3637, Title Two parcels of 13,669.40/ 4 Grant in 2,500,000 30.09.2007 Nos. H.S.(M) 86 and H.S.(M) land zoned for Farm perpetuity 87 respectively, Mukim of residential use/ 5,434.65 Gurun, District of Kuala Muda, Breeder farm Other State of Kedah/Situated 440.25 off Jalan Padang Lembu - Pendang, Gurun, Kedah CAB CAKARAN CORPORATION BERHAD
105 List of Properties (cont’d)
Location/Address Description of Land/Built- Approximate Tenure Net Book Date of Property/ up Area Age of Value Valuation Existing Use (Sq. m.) Building as at 30 (Year) September 2007 Lot No. 4047, Title No. GM A parcel of 23,949.70/ 9 - 12 Grant in 590,000 30.09.2007 2118, Mukim of Gurun, agricultural land Poultry farm perpetuity District of Kuala Muda, used for poultry 5,860.31 State of Kedah/Situated farming/ Other off Jalan Gurun - Padang Poultry farm 172.05 Lembu, Gurun, Kedah
Lot Nos. 4096 and 4099, Two parcels of 43,780.97/ 3 Grant in 5,050,000 30.09.2007 Title Nos. GM 1446 and GM agricultural land Breeder farm perpetuity 1206 respectively, Mukim for residential use/ 13,377.60/ of Gurun, District of Kuala Breeder Farm Other Muda, State of Kedah/ 872.48 Situated off Jalan Jeniang - Padang Lembu, Gurun, Kedah
Lot Nos. 1280 to 1283, Four parcels of 520.00/ 18 Grant in 1,660,000 30.09.2007 Title Nos. GM 205 to GM building land 1,501.28 perpetuity 208 respectively, Mukim of erected upon it Pumpong, District of Kota four adjoining Setar, State of Kedah/ units of 3-storey 11A-14A, Jalan Gangsa, shophouse/ Off Seberang Jalan Putra, Branch Office 05150 Alor Star, Kedah
Lot No. 350, Title No. GM A parcel of 58,845.59/ 12 Grant in 1,070,000 30.09.2007 2045, Mukim of Jabi, District agricultural land Poultry farm perpetuity of Pokok Sena, State of used for poultry 4,786.57 Kedah/Situated along Jalan farming/ Other Kebun 500, Pokok Sena, Kedah Poultry farm 310.71
Lot No. 356, Title No. GM A parcel of 14,795.00/- – Grant in 180,000 30.09.2007 2050, Mukim of Jabi, District agricultural land/ perpetuity of Pokok Sena, State of Vacant land Kedah/Situated off Jalan Kebun 500, within Kampung Bukit Berangan, Kebun 500, Pokok Sena, Kedah (583661 W) Lot Nos. 1732 and 1733, Two parcels of 24,920.30/ 5 - 7 Grant in 850,000 30.09.2007 Title Nos. GM 1061 and GM agricultural land Poultry farm perpetuity 1062 respectively, Mukim used for poultry 6,331.68 of Jabi, District of Pokok farming/ Other Sena, State of Kedah/ Poultry farm 412.48 Situated within Charok Tok Kun, off Jalan Pokok Sena, Pokok Sena, Kedah CAB CAKARAN CORPORATION BERHAD
106 List of Properties (cont’d)
Location/Address Description of Land/Built- Approximate Tenure Net Book Date of Property/ up Area Age of Value Valuation Existing Use (Sq. m.) Building as at 30 (Year) September 2007 Lot Nos. P.T. 1105 to P.T. Four parcels 67,416.00/ – Grant in 1,060,000 30.09.2007 1108, Title Nos. H.S.(M) of agricultural - perpetuity 3/1997 to H.S.(M) 6/1997 land zoned for respectively, Mukim of residential use/ Binjal, District of Kubang Vacant land Pasu, State of Kedah/ Situated along Jitra - Bukit Kayu Hitam Highway, within Paya Asun, Jitra, Kedah
Lot Nos. 1464 and 1465, Two parcels of 32,148.20/- – Grant in 354,000 30.09.2007 Title Nos. GM 77 and GM agricultural land/ perpetuity 78 respectively, Mukim of Vacant land Binjal, District of Kubang Pasu, State of Kedah/ Situated off Jitra - Bukit Kayu Hitam Highway, within Paya Asun, Jitra, Kedah
Lot Nos. 1199 and 1200, Two parcels of 72,389.00/ 9 Grant in 1,663,000 30.09.2007 Title Nos. GM 1118 and GM agricultural land Poultry farm perpetuity 1119 respectively, Mukim of used for poultry 5,631.81 Gelung, District of Kubang farming/ Other 197.61 Pasu, State of Kedah/ Poultry farm Situated along Jalan Kampung Bemban, Kubang Pasu, Kedah
Lot No. 2179, Title No. GM Two parcels of 33,270.00/ 5 - 13 Grant in 1,143,000 30.09.2007 1186, Mukim of Kubang Pasu agricultural land/ Poultry farm perpetuity and Lot No. 2291, Title No. Poultry farm 7,499.67 GM 1612, Mukim of Hosba, Other 520.47 all within District of Kubang Pasu, State of Kedah/ Situated along Jalan Alor Janggus, within Kampung Alor Janggus, Kubang (583661 W) Pasu, Kedah
H.S.(M) 262, Mukim of A parcel of 23,200.50/- – Grant in 230,000 30.09.2007 Hosba, District of Kubang agricultural land/ perpetuity Pasu, State of Kedah/ Vacant land Situated off Jalan Kampung Bemban, Kubang Pasu, Kedah CAB CAKARAN CORPORATION BERHAD
107 List of Properties (cont’d)
Location/Address Description of Land/Built- Approximate Tenure Net Book Date of Property/ up Area Age of Value Valuation Existing Use (Sq. m.) Building as at 30 (Year) September 2007 Lot No. 39, Title No. GM 1133, A parcel of 84,641/- – Grant in 1,950,000 30.09.2007 Mukim of Hosba, District of agricultural land/ perpetuity Kubang Pasu, State of Kedah/ Plantation of Situated off Jitra - Bukit Sentang tree Kayu Hitam Highway, within Kampung Tengah, Napoh, Jitra, Kedah
Lot No. 2346, Title No. GM A parcel of 20,070.00/ 14 Grant in 700,000 30.09.2007 1180, Mukim of Kubang agricultural land Poultry farm perpetuity Pasu, District of Kubang used for poultry 4,370.96 Pasu, State of Kedah/ farming/ Other 355.74 Situated along Jalan Alor Poultry farm Janggus, within Kampung Alor Janggus, Kubang Pasu, Kedah
Lot No. 18, Title No. GRN A parcel of 263,045.90/- – Grant in 2,160,000 30.09.2007 36443, Mukim of Terap, agricultural perpetuity District of Kulim, State of land planted Kedah/Situated off Jalan with oil palm/ Kulim - Serdang, within Vacant land Kaki Bukit Relau, Terap, Kulim, Kedah
Lot No. 64, Title No. GM 586 A parcel of 21,260.00/- – Grant in 235,000 30.09.2007 (formerly SP 51865), Mukim agricultural perpetuity of Kuala Selama, District of land zoned for Bandar Baru, State of Kedah/ residential use/ Situated off Jalan Kuala Vacant land Selama - Mahang, within Kampung Kuala Dingin, Kuala Selama, Kedah
Lot Nos. 1108 and 1133, Two parcels of 53,336.00/ 11 Grant in 1,270,000 30.09.2007 Title Nos. GM 177 and GM agricultural land Poultry farm perpetuity 200 respectively, Mukim used for poultry 7,827.23 (583661 W)
of Relau, District of Bandar farming/ Other Baharu, State of Kedah/ Poultry farm 416.75 Situated along Jalan Relau - Sungai Kecil Hilir, within Kampung Sungai Rambai, Pekan Sungai Kecil Hilir, Serdang, Kedah CAB CAKARAN CORPORATION BERHAD
108 List of Properties (cont’d)
Location/Address Description of Land/Built- Approximate Tenure Net Book Date of Property/ up Area Age of Value Valuation Existing Use (Sq. m.) Building as at 30 (Year) September 2007 Lot Nos. 1523, 1524 and Three parcels of 20,522.59/- – Grant in 1,000,000 30.09.2007 1526, Title Nos. GM 428, GM first grade lands/ perpetuity 429 and GM 430 respectively, Vacant land Mukim 1, District of Seberang Perai Utara, State of Penang/ Situated along Jalan Pasir Gebu, within Bakau Tua, Penaga, Kepala Batas, Penang
Lot No. 4420, Title No. GRN A parcel of first 8,626.00/ 16 Grant in 500,000 30.09.2007 53207, Mukim 12, District grade land used for Poultry farm perpetuity of Seberang Perai Utara, poultry farming/ 2,426.34 State of Penang/Situated Poultry farm along Tasek Kubang Menerong, Tasek Gelugor, Kepala Batas, Seberang Perai Utara, Penang
Lot No. 1030, Title No. GM A parcel of 28,783.22/- – Grant in 720,000 30.09.2007 280, Mukim 13, District of agricultural land/ perpetuity Seberang Perai Utara, State Vacant land of Penang/Situated along Jalan Lahar Yooi - Kampung Acheh, within Padang Cempadak, Seberang Perai Utara, Penang
Lot No. P.T. 3824, Title No. A parcel of 9,248.00/ 10 Leasehold 5,069,567 30.09.2007 H.S.(D) 31357, Mukim 1, industrial land 3,630.05 interest District of Seberang Perai erected upon 60 years Tengah, State of Penang/ it a 2½-storey expiring on Plot 21, Lorong Jelawat 4, detached factory 6 December Seberang Jaya Industrial cum office/ 2054 with Park, Seberang Jaya, 13700 Head office cum remaining Prai, Penang hatchery centre term about 46 years (583661 W)
Lot No. 2547, Title No H.S.(M) A parcel of first 3,430.00/ 5 Grant in 1,500,000 30.09.2007 822, Mukim 10, District of grade land erected 1,860,09 perpetuity Seberang Perai Tengah, upon it a car wash State of Penang/Lot 2547, and accessories Jalan Song Ban Kheng, 14000 workshop/ Bukit Mertajam, Penang Rented out CAB CAKARAN CORPORATION BERHAD
109 List of Properties (cont’d)
Location/Address Description of Land/Built- Approximate Tenure Net Book Date of Property/ up Area Age of Value Valuation Existing Use (Sq. m.) Building as at 30 (Year) September 2007 Lot No. 6019, Title No. H.S.(M) A parcel of building 115.00/ 10 Grant in 480,000 30.09.2007 1367, Mukim 11, District of land erected 336.69 perpetuity Seberang Perai Tengah, upon it an end State of Penang/No. 166, unit three-storey Jalan Tembikai, Taman shopoffice/ Padang Lallang, 14000 Rented out Bukit Mertajam, Penang
Lot No. P.T. 30399 and Two parcels of 18084.80/– – Grant in 2,040,000 30.09.2007 P.T. 30400, Title Nos industrial land/ perpetuity H.S.(D) 447/95 and H.S.(D) Vacant land 448/95, Bandar Sungai Petani, District of Kuala Muda, State of Kedah
Lot No. 1623, Title No. GRN A parcel of 49,699.44/ 5 - 12 Grant in 6,070,000 30.09.2007 40215, Mukim 14, District land used as a Poultry farm perpetuity of Seberang Perai Tengah, breeding farm 13,804.18 State of Penang/No. 227, Other Kampung Nenas, Kuala 1,899.75 Tasek, Permatang Tinggi, 14100 Bukit Mertajam, Penang
Lot No. 1683, Title No. GM A parcel of first 11,306.92/– – Grant in 720,000 30.09.2007 863, Mukim 14, District of grade land zoned perpetuity Seberang Perai Tengah, for residential use/ State of Penang/Situated Vacant land off Jalan Bukit Tengah - Simpang Ampat main road, Permatang Tinggi, Simpang Ampat, Seberang Perai, Penang
Lot No. 262, Title No. GM A parcel of first 11,784.44/– – Grant in 320,000 30.09.2007 976, Mukim 16, District of grade land/ perpetuity Seberang Perai Tengah, Vacant land (583661 W)
State of Penang/Situated off Jalan Che Hussain, Simpang Ampat, Seberang Perai, Penang CAB CAKARAN CORPORATION BERHAD
110 List of Properties (cont’d)
Location/Address Description of Land/Built- Approximate Tenure Net Book Date of Property/ up Area Age of Value Valuation Existing Use (Sq. m.) Building as at 30 (Year) September 2007 Lot Nos. 19, 22, 1121, 1334, Fourteen parcels 54,517.46/– – Grant in 1,057,000 30.09.2007 1335, 1336 to 1341 and of hill lands/ perpetuity 1344 to 1346, Title Nos. GM Vacant land 446, GM 1129, GM 776, GM 1095, GM 1096, GM 785 to GM 790 and GM 791 to GM 793 respectively, Mukim 17, District of Seberang Perai Tengah, State of Penang/ Situated off Jalan Berapit, Berapit Village, Bukit Mertajam, Penang
Lot 1990 & 1991 Title Nos. A parcel of 70,729/ 12 Grant in 1,740,000 30.09.2007 GM 242/243, Mukim land used for 4,817.67 perpetuity Serdang, District of Bandar residential/ Baharu, State of Kedah Breeder Farm
Lot Nos. 281, 835, 840, 844 Five parcels of 56,061.10/– – Grant in 2,250,000 30.09.2007 and 845, Title Nos. GM 295, agricultural land/ perpetuity GM 296, GM 407, GM 410 and Vacant land GM 411 respectively, Mukim 19, District of Seberang Perai Tengah, State of Penang/ Situated off Jalan Ara Kuda, within Kampung Tun Sardon, Ara Kuda, Seberang Perai, Penang
Lot Nos. 22466 and 22467, Two parcels of 80,633.00/– – Grant in 650,000 30.09.2007 Title Nos. GRN 40429 and agricultural land/ perpetuity GRN 40430 respectively, Vacant land Mukim of Belanja, District of Kinta, State of Perak/ Situated within Belanja, Pekan Siputeh, Perak (583661 W)
Lot Nos. 6078, 6079 and Three parcels of 51,470.00/ 5 - 7 Grant in 1,158,985 23.12.2002 6695, Title Nos. GM 3065, agricultural land/ Poultry farm perpetuity 01.08.2005 GM 3047 and GRN 48421 Poultry farm 10,410.60 respectively, Mukim of Other Sayung, District of Kuala 317.35 Kangsar, State of Perak * CAB CAKARAN CORPORATION BERHAD
111 List of Properties (cont’d)
Location/Address Description of Land/Built- Approximate Tenure Net Book Date of Property/ up Area Age of Value Valuation Existing Use (Sq. m.) Building as at 30 (Year) September 2005 Lot No. 507 & 508, Title Nos. A parcel of 11,123.78/ 16 Grant in 4,700,000 30.09.2007 GM474 and GM475 industrial land 6,728.55 perpetuity respectively, Mukim 9, erected upon it District of Seberang Perai a double-storey Selatan, State of Penang/ office cum factory No. 2235, Jalan Dato and other ancillary Keramat, 14300 Nibong buildings/ Tebal, Seberang Perai Seafood Processing Selatan, Pulau Pinang Factory
Lot 1798 Title No. GM 1299, A parcel of 15,830.47 – Grant in 1,900,000 30.09.2007 Mk 9, District of Seberang vacant land perpetuity Perai Selatan, State of Penang
Lot Nos. P.T. 30397 and P.T. Two contiguous 16,923/- – Grant in 1,860,000 30.09.2007 30398, Title Nos. H.S.(D) parcel of vacant perpetuity 445/95 and H.S.(D) 446/95 industrial land respectively, Town of Sungai Petani, District of Kuala Muda, Kedah/Situated within Bukit Makmur Industrial Park, Sungai Petani, Kedah
Lot Nos. 1852 and 1853, Title Two parcels of 12,850.00/ 12 Grant in 312,000 30.09.2007 Nos. GM 1048 and GM 1049 agricultural land/ Poultry farm perpetuity respectively, Mukim of Poultry farm 1,497.55 Kubang Pasu, District of Others Kubang Pasu, Kedah/ 50.17 Situtated along Jalan Alor Janggus within Kampung Alor Janggus, Kubang Pasu, Kedah
Lot 4100 HS(M) 78/90, A parcel of 18,967.66/ 2 Leasehold 2,289,182 30.09.2007 Mukim Gurun, District of land used for 6689.00 interest Kuala Muda, State of Kedah breeder farm 60 years (583661 W)
expiring on 21.07.2017
Lot Nos 1512 & 3037, Grant Two parcels of land 168,264.33/ 17 - 22 Grant in 10,285,000 30.09.2007 38752 & 7314, Mukim 11, for residential use/ 24,140.41 perpetuity Province Wellesley breeder farms South, Penang CAB CAKARAN CORPORATION BERHAD
112 List of Properties (cont’d)
Location/Address Description of Land/Built- Approximate Tenure Net Book Date of Property/ up Area Age of Value Valuation Existing Use (Sq. m.) Building as at 30 (Year) September 2005 Lot Nos. 43, 49, 368, 373, Sixteen parcels of 91,667.21/ 17 - 22 Grant in 8,920,000 30.09.2007 256, 255, 251, 252, 253, 249, land for residential 15,063.73 perpetuity 257, 258, 246, 247, 248 & use/breeder farms 250, Mukim Grant No. 120, 121, 152, 153, 154, 155, 156, 157, 158, 159, 169, 161, 173, 174, 175 & 179, respectively, Mukim 6, Province Wellesley South, Penang
Lot No. 1758, GM No. 471, Tenanted farm 2,100.29/– 15 – 80,000 30.09.2007 District of Kubang Pasu, State of Kedah
Lot No. 3653, Title No. GRN One parcel of 662.85/– – Grant in 5,000 30.09.2007 47907, Mukim of 14, District agricultural land perpetuity of Seberang Prai Tengah, State of Penang
Lot No. 2199, Title No. GM One parcel of 35,399.99/– – Grant in 760,000 30.09.2007 1789, Mukim of 13, District agricultural land perpetuity of Seberang Perai Utara, State of Penang
Lot No. 1877, Mukim of 16, Tenanted farm 2,846.56 3 - 8 – 164,000 30.09.2007 District of Seberang Prai Tengah, State of Penang
Lot 315, Mukim of 19, Tenanted farm 8,873.66 5 - 8 – 300,000 30.09.2007 Seberang Perai Tengah, State of Penang
Lot No. 1445 & 1446, Title Tenanted farm 3,161.22/– 3 - 7 – 153,000 30.09.2007 No. GM 766 & 767, Mukim of 20, District of Seberang Perai Tengah, State of Penang
Title No. GM 148, Mukim 10, Workshop erected 299.13 3 – 60,000 30.09.2007 (583661 W) District of Seberang Perai on Lot 137 Tengah, State of Penang
Lot No. 206, Mukim of Processing Plant 468.23 3 – 214,000 30.09.2007 Kedawang, 07000 Langkawi, Kedah Darul Aman
Lot 4, Title No. GM 380, A parcel of 24,129 – Grant in 830,000 30.09.2007 Mukim Ijuk, District of Kuala vacant land perpetuity Selangor, State of Selangor Darul Ehsan
Lot 1910, Title No. GRN A parcel of 19,880 – Grant in 420,000 30.09.2007
47766, Mukim Batu, District vacant land perpetuity CAB CAKARAN CORPORATION BERHAD of Kuala Langat, State of Selangor Darul Ehsan 113 List of Properties (cont’d)
Location/Address Description of Land/Built- Approximate Tenure Net Book Date of Property/ up Area Age of Value Valuation Existing Use (Sq. m.) Building as at 30 (Year) September 2007 Lot 1911, Title No. GRN A parcel of 19,880 – Grant in 420,000 30.09.2007 47767, Mukim Batu, District vacant land perpetuity of Kuala Langat, State of Selangor Darul Ehsan
Lot 6567N, Title No. PN A parcel of 233 - Leasehold 370,000 30.09.2007 135499, Mukim Bandar agricultural land interest Ipoh (U), District of Kinta, 999 years State of Perak Darul Ridzuan expiring on 07.07.2895 with remaining term about 888 years
Parcel No. 17-17A, Storey No. 1 unit of aprtment 92.15 – – 150,000 30.09.2007 17, Prima Saujana erected on Lot Nos. 19045 & 19046, Title No. H.S.(D) 18230 & 18231, Mukim Batu, District of Gombak, State of Selangor Darul Ehsan
Parcel No. 13-17A, Storey No. 1 unit of aprtment 92.15 – – 145,000 30.09.2007 13, Prima Saujana erected on Lot. Nos. 19045 & 19046, Title No. H.S.(D) 18230 & 18231, Mukim Batu, District of Gombak, State of Selangor Darul Ehsan
P.T. Nos. 816, H.S.(M) 637, A parcel of 18,211.34 – Grant in 110,000 30.09.2007 Mukim Sungai Karang, agricultural land/ perpetuity District of Kuantan, vacant land State of Pahang
P.T. No. 1732, H.S.(M) 1474, A parcel of 23,826.44 – Grant in 160,000 30.09.2007
(583661 W) Mukim Sungai Karang, agricultural land/ perpetuity District of Kuantan, vacant land State of Pahang
Lot No. 2495, GM 3374, A parcel of 21,360.40 – Grant in 136,000 30.09.2007 Mukim Sungai Karang, agricultural land/ perpetuity District of Kuantan, vacant land State of Pahang
Lot No. 7897, H.S.(M) 508, A parcel of vacant 6,070.11 – Grant in 88,000 30.09.2007 Mukim Kuala Kuantan, land zoned for perpetuity District of Kuantan, residential use/ State of Pahang vacant land CAB CAKARAN CORPORATION BERHAD
114 List of Properties (cont’d)
Location/Address Description of Land/Built- Approximate Tenure Net Book Date of Property/ up Area Age of Value Valuation Existing Use (Sq. m.) Building as at 30 (Year) September 2007 Lot No. 8390, GM 12888, A parcel of vacant 7,434.94 – Grant in 134,000 30.09.2007 Mukim Kuala Kuantan, land zoned for perpetuity District of Kuantan, residential use/ State of Pahang vacant land
Lot No. 5000, H.S.(M) 2214, A parcel of 36,421.68 – Grant in 200,000 30.09.2007 Mukim Kuala Kuantan, agricultural land/ perpetuity District of Kuantan, vacant land State of Pahang
Lot No. 766, GM 28, Mukim of A parcel of 23,118.43 – Grant in 165,000 30.09.2007 Lepar, District of Pekan, agricultural land/ perpetuity State of Pahang vacant land
Lot No. 1384, GM 655, A parcel of 36,180.67 – Grant in 245,000 30.09.2007 Mukim of Lepar, District of agricultural land/ perpetuity Pekan, State of Pahang vacant land
Lot No. 1385, GM 844, A parcel of 27,540.51 – Grant in 197,000 30.09.2007 Mukim of Lepar, District of agricultural land/ perpetuity Pekan, State of Pahang vacant land
Lot No. 1721, GM 3367, A parcel of 14,560.27/ 13 Grant in 337,000 30.09.2007 Mukim of Sungai Karang, agricultural land/ 3,562.73 perpetuity District of Kuantan, poultry farm State of Pahang
Lot No. 1731, H.S.(M) 1475, A parcel of 20,082.37/ 13 Grant in 537,000 30.09.2007 Mukim of Sungai Karang, agricultural land 5,023.10 perpetuity District of Kuantan, used for poultry State of Pahang farming/ poultry farm
Lot No. 1669, GM3345, A parcel of 20,730.39/ 13 Grant in 400,000 30.09.2007 Mukim of Sungai Karang, agricultural land 3,880.29 perpetuity District of Kuantan, used for poultry State of Pahang farming/ poultry farm (583661 W)
Lot No. 1725, GM3350, A parcel of 20,760.39/ 13 Grant in 420,000 30.09.2007 Mukim of Sungai Karang, agricultural land Farm perpetuity District of Kuantan, used for poultry 4,393.67 State of Pahang farming/ Other poultry farm 42.74
Lot No. 545, H.S.(M) 21841, Vacant land zoned 7,891.15/ 13 Grant in 178,000 30.09.2007 Mukim Kuala Kuantan, for residential use 206.25 perpetuity District of Kuantan, State of Pahang CAB CAKARAN CORPORATION BERHAD
115 List of Properties (cont’d)
Location/Address Description of Land/Built- Approximate Tenure Net Book Date of Property/ up Area Age of Value Valuation Existing Use (Sq. m.) Building as at 30 (Year) September 2007 Lot No. 3205, GM 3252, A parcel of 40,266.75/ 9 - 12 Grant in 933,000 30.09.2007 Mukim of Kuala Kuantan, agricultural land/ 4,795.48 perpetuity District of Kuantan, poultry farm State of Pahang
Lot No. 3351, GRN 6567, A parcel of 80,913.50/ 9 - 12 Grant in 1,552,000 30.09.2007 Mukim of Kuantan, District agricultural land 4,166.99 perpetuity of Kuantan, State of Pahang used for poultry farming/ poultry farm
Lot No. 1870, Title No. GM A parcel of 35,950.67/ 9 Grant in 463,000 30.09.2007 339, Mukim Hulu Jabur, agricultural land/ 5,477.90 perpetuity District of Kemaman, poultry farm State of Terengganu
Lot No. 103, GRN 4803, A parcel of 56,200.04/ 12 Grant in 1,296,000 30.09.2007 Mukim of Hulu Jabur, agricultural land/ Farm perpetuity District of Kemamam, poultry farm 11,477.90 State of Terengganu Other 184.32
Lot No. 1750, PM10, A parcel of 34,100.63 – Leasehold 180,000 30.09.2007 Mukim of Lepar, District of agricultural interest Pekan, State of Pahang land used for 60 years fish breeding expiring on 26.01.2047 with remaining term about 41 years
Lot 542, Title No HSD 30 years lease used 1,932.15 1 month Leasehold 1,015,000 30.09.2007 2/1985, Mukim of Padang for Grant Parent interest Peliang, District of Stock farming 99 years Pendang, State of Kedah expiring on 19.08.2084
(583661 W) with remaining term about 76 years
* Asset held for sale CAB CAKARAN CORPORATION BERHAD
116 Analysis of Shareholdings
SHARE CAPITAL AS AT FEBRUARY 15, 2008
Authorised : RM 100,000,000.00 Issued and Fully paid-up : RM 65,889,550 Class of Share : Ordinary Shares of RM 0.50 each Voting Right : One voting right for one ordinary share
DISTRIBUTION OF SHAREHOLDERS AS AT FEBRUARY 15, 2008
Holdings No. of Holders Total Shareholdings % 1 - 99 30 1,600 0.001 100 - 1,000 105 76,725 0.058 1,001 - 10,000 1,494 6,998,700 5.310 10,001 - 100,000 765 24,286,706 18.429 100,001 - 6,588,954 (*) 93 37,140,675 28.184 6,588,955 and above (**) 3 63,274,694 48.015
Total 2,490 131,779,100 100.000
* Less than 5% of issued shares ** 5% and above of issued shares
THIRTY LARGEST (30) SECURITIES ACCOUNT HOLDERS AS AT FEBRUARY 15, 2008
Name Shareholdings % 1 Chuah Ah Bee 25,059,244 19.016 2 Chan Kim Keow 17,254,500 13.093 3 Cimsec Nominees (Tempatan) Sdn. Bhd. 12,000,000 9.106 Qualifier: CIMB Bank for Chuah Ah Bee (PB-retail Banking) 4 Chuah Ah Bee 8,470,950 6.428 5 Mayban Nominees (Tempatan) Sdn. Bhd. 4,681,925 3.552 Qualifier: Pledged Securities Account for Loo Choo Gee 6 Chuah Hoon Phong 4,589,800 3.482 7 EB Nominees (Tempatan) Sendirian Berhad 2,500,000 1.897 Qualifier: Pledged Securities Account for Tan Chee Hee (PRA) 8 Cheng Mooh Tat 1,808,100 1.372 9 Tan Ah Baa @ Tan Chye Khoon 1,750,000 1.327 (583661 W) 10 Chuah Hoon Phong 1,350,000 1.024 11 Goh Bee Leng 1,282,850 0.973 12 Seah Mok Khoon 800,000 0.607 13 Ng Honk Ling 619,800 0.470 14 Lee Wei Lim 507,150 0.384 15 Ong Wee Chin 503,900 0.382 16 Chan Kim Keow 490,000 0.371 17 Loo Choo Gee 480,000 0.364 18 Lee Cheong Keat @ Lee Chong Keat 477,200 0.362 19 Lee Sek Tah 450,000 0.341 20 Tan Mok Kew 420,950 0.319
21 TA Nominees (Tempatan) Sdn. Bhd. 405,000 0.307 CAB CAKARAN CORPORATION BERHAD Qualifier: Pledged Securities Account for Foo Yin Kang 117 Analysis of Shareholdings (cont’d)
THIRTY LARGEST (30) SECURITIES ACCOUNT HOLDERS AS AT FEBRUARY 15, 2008 (cont’d)
Name Shareholdings % 22 Ng Lian Hock 401,000 0.304 23 Tan Theng Ong 339,500 0.257 24 Lim Ju Hock 330,000 0.250 25 Mayban Securities Nominees (Tempatan) Sdn. Bhd. 330,000 0.250 Qualifier: Pledged Securities Account for Tan Sok Hui (REM 116) 26 Public Nominees (Tempatan) Sdn. Bhd. 320,600 0.243 Qualifier: Pledged Securities Account for Ong Kah Huat (E-Tai) 27 Khor Ah Yeam 299,900 0.227 28 Chuah Teh Chai 278,250 0.211 29 Tio Sian Hooi 276,650 0.209 30 Khor Kim Seah 275,850 0.209
SUBSTANTIAL SHAREHOLDERS AS AT FEBRUARY 15, 2008
Shareholdings Name Direct % 1. Chuah Ah Bee 45,530,194 34.55 2. Chan Kim Keow 17,744,500 13.47 3 Chuah Hoon Phong 5,982,750 4.54
DIRECTORS’ SHAREHOLDINGS AS AT FEBRUARY 15, 2008
Direct Indirect No. of units No. of units Name held % held % 1. Chuah Ah Bee 45,530,194 34.55 – – 2. Chan Kim Keow 17,744,500 13.47 – – 3. Loo Choo Gee 5,420,425 4.11 – – 4. Chuah Hoon Phong 5,982,750 4.54 667,5501 0.50 5. Datuk Haji Zakaria Bin Hashim 110,400 0.08 – – 6. Kim Lim Chong 45,000 0.03 65,0001 0.05 7. Tunku Dato’ Dr Ismail Ibni Almarhum Tunku Mohd Jewa 45,000 0.03 – –
(583661 W) 8. Ahmad Fazil Bin Haji Hashim 5,000 * – –
9. Chew Chee Khong – – – –
NOTES:
* Negligible
1. Other interest of his spouse by virtue of Section 134 (12)(C) of the Companies Act, 1965 CAB CAKARAN CORPORATION BERHAD
118 Proxy Form
CAB CAKARAN CORPORATION BERHAD No. of Ordinary Shares Held (Company No. 583661-W) (Incorporated in Malaysia)
I/We ...... (*NRIC No./Company No...... ) of ...... being a Member/Members of the above company hereby appoint ...... (*NRIC No./Passport No...... ) of ...... or failing him ...... (*NRIC No./Passport No...... ) of ...... or failing him, the Chairman of the Meeting as my/our proxy, to vote for me/us on my/our behalf at the Sixth Annual General Meeting of the Company, to be held at Semangkok Room, Sunway Hotel, Level 2, No. 11, Lebuh Tenggiri Dua, Pusat Bandar Seberang Jaya, 13700 Perai on Thursday, March 27, 2008 at 10 a.m. and at any adjournment thereof.
I/We hereby indicate with an “X” in the space provided how I/We wish my/our votes to be cast. (Unless otherwise instructed, the proxy may vote, as he thinks fit)
RESOLUTIONS FOR AGAINST 1. To receive the Audited Financial Statements of the Company for the year ended September 30, 2007 together with the reports of the Directors and Auditors thereon. To re-elect the following Directors retiring in accordance with Article 97(1) of the Articles of Association of the Company:- 2. a) Mr. Chuah Ah Bee 3. b) Mr. Kim Lim Chong 4. c) Encik Ahmad Fazil bin Haji Hashim 5. To re-apppoint Mr Chuah Hoon Phong retiring in accordance with Article 104 of the Articles of Association of the Company. 6. To re-appoint Y.T.M. Tunku Dato’ Dr. Ismail Ibni Almarhum Tunku Mohd Jewa as Director of the Company. 7. To re-appoint Messrs. Deloitte KassimChan as Auditors of the Company. 8. To approve the payment of Directors’ Fees of RM140,000.00 for year ended September 30, 2007. 9. To authorize Directors to allot and issue shares pursuant to Section 132D of The Companies Act, 1965.
The Proportions of my holdings to be represented by my *proxy/proxies are as follows:-
First named Proxy - % Second named Proxy - %
100.00 %
In case of a vote taken by a show of hands, the First Proxy shall vote on *my/our behalf. * Strike out whichever is not desired.
Signature of Shareholder(s) ......
Signed this ...... day of ...... 2008.
Notes: A member of the Company entitles to attend and vote is entitled to appoint one (1) or more proxies to attend and vote in his place. A proxy may but need not be a member and the provisions of Section 149(1)(b) of the Companies Act, 1965 shall not apply to the Company.
If a Member appoints more than one (1) proxy, the appointments shall be invalid unless he specifies the proportions of his holdings to be represented by each proxy.
The instrument appointing the proxy shall be in writing, executed by or on behalf of the appointor. In the case of a corporate member, the instrument appointing a proxy must be either under its common seal or under the hand of its officer or attorney duly authorized.
The instrument appointing a proxy must be deposited at the Registered Office, 3rd Floor, Wisma Wang, 251-A Jalan Burma, 10350 Penang at least 48 hours before the time for holding the Meeting or any adjournments thereof. fold here
fold here
To STAMP HERE The Secretary CAB Cakaran Corporation Berhad (583661W) 3rd Floor, Wisma Wang, 251-A Jalan Burma, 10350 Penang, Malaysia.
fold here Providing Nourishm ent th e Worl d Over • annual report 2007
CAB CAKARAN CORPORATION BERHAD (583661-W) Plot 21, Lorong Jelawat 4, Seberang Jaya Industrial Park Seberang Jaya, 13700 Perai, Penang, Malaysia Tel: 604-398 2233 Fax: 604-398 0137/398 0370 E-mail: [email protected] www.cab.com.my