corporate - Boniabonia.listedcompany.com/misc/ar2004.pdf · Company. He started his career with a leather manufacturer in Singapore in 1974. Todate, he has gained over 27 years’

corporate

2 Corporate Information

3 Corporate Structure

5 Profile Of Directors

17 Statement On Corporate Governance

26 Audit Committee Report

30 Additional Compliance Information

31 Statement On Internal Control

32 Directors’ Responsibility Statement

33 Chairman’s Statement

36 Penyata Pengerusi

39

43 Five-Year Group Financial Highlights

44 Event Highlights

financial statements49 Directors’ Report

55 Statement By Directors

55 Statutory Declaration

56 Report Of The Auditors

57 Balance Sheets

58 Income Statements

59 Statements Of Changes In Equity

61 Cash Flow Statements

63 Notes To The Financial Statements

108 Analysis Of Shareholdings

110 List Of Properties

112 Notice Of Annual General Meeting

114 Statement Accompanying The Notice Of Annual General Meeting

proxy form

DETTAGLIO - INSPIRATION FROM NATURE

Dettaglio means 'detail' in Italian. As with all things in life, the details ofmany things may be significant to some and insignificant to others.

Not so at Bonia! For such intricate and fine details are given extra attention,care and prominence. Very much like the individual pieces of a jigsawpuzzle which mean nothing on its own, but once pieced together, the wholepicture is fully appreciated and admired.

Be it for business or social undertaking, good governance of detail in thegrand scheme of things is instrumental to generate fruitful and positivereturns.

At Bonia, we pride ourselves at the dedication and perseverance we placeinto all our work, crafting fine quality items with choice designs whichcustomers take pride in, anytime.

Learning from Nature, we are inspired to portray its essence for life, via various details!

naturedetail inspired

by

c o n t e n t sA N N U A L R E P O R T 2 0 0 4

2

BOARD OF DIRECTORS

Chiang Sang Sem(Group Executive Chairman)

Chiang Fong Yee (Alternate Director to Mr Chiang Sang Sem)

Chiang Heng Kieng (Group Managing Director)

Chiang Sang Bon (Executive Director)

Chong Chin Look (Group Finance Director)

Chiang Fong Tat (Executive Director)

Datuk Nik Hussain Bin Nik Ali (Independent Non-Executive Director)

Datuk Ng Peng Hay (Independent Non-Executive Director)

Dato’ Shahbudin Bin Imam Mohamad (Non-Independent Non-Executive Director)

Lim Fong Boon (Independent Non-Executive Director)

AUDIT COMMITTEE

Datuk Ng Peng Hay (Chairman)

Chong Chin Look (Member)

Lim Fong Boon (Member)

NOMINATION COMMITTEE

Datuk Ng Peng Hay (Chairman)

Lim Fong Boon (Member)

Chiang Heng Kieng (Member)

COMPANY SECRETARIES

Ting Oi LingTeoh Kok Jong

AUDITORS

BDO BinderChartered Accountants

REGISTERED OFFICE

Suite 13A-2 Menara Uni Asia1008 Jalan Sultan Ismail50250 Kuala LumpurTel: 03 - 2697 7611Fax: 03 - 2697 7311

SHARE REGISTRAR

Bina Management (M) Sdn BhdLot 10 The Highway CentreJalan 51/20546050 Petaling JayaSelangor Darul EhsanTel: 03 - 7784 3922Fax: 03 - 7784 1988

STOCK EXCHANGE LISTING

Second Board of Bursa Malaysia Securities Berhad

corporate information

3

ANNUAL REPORT 2004

corporate structure

PROPERTYDEVELOPMENT

MANUFACTURING

PROPERTY INVESTMENT

100%De Marts Marketing Sdn BhdDesigning, promoting and marketing of fashionable ladies’ footwear

investment holding and management company

100%CB Holdings (Malaysia) Sdn BhdProperty investment

100%Long Bow Manufacturing Sdn BhdManufacturing and marketing of leather goods

100%Luxury Parade Sdn BhdProperty investment

60%Mcore Sdn BhdMarketing and distribution of fashionable leather goods

49%BBA International Co LtdMarketing and distribution of fashionable leather goods

100%Jetbest Enterprise Pte LtdWholesaling, retailing, importing and exportingof leather goods and accessories

100%Armani Context Sdn BhdInterior design, advertising and promotion

100%Active World Pte LtdWholesaling and retailing of fashionableleather goods and apparels

100%Future Classic Sdn BhdDesigning, promoting and marketingof fashionable leather goods

100%Daily Frontier Sdn BhdMarketing, distribution and export of fashionable goods and accessories

100%Eclat World Sdn BhdDesigning, promoting and marketingof fashionable men‘s footwear

RETAILING100%CB Marketing Sdn BhdDesigning, promoting and marketingof fashionable leather goods

100%CB Franchising Sdn BhdFranchising of leather goods and apparels

100%Dominion Directions Sdn BhdMarketing and distribution of men’s apparel and accessories

100%SB Directions Sdn BhdMarketing and distribution of fashionable accessories

70%VR Directions Sdn BhdMarketing and distribution of men’s apparel and accessories

70%Pasti Anggun Sdn BhdProperty development

40%Makabumi Sdn BhdDormant

100%BCB Properties Sdn BhdProperty development

100%Ataly Industries Sdn BhdManufacturing of leather fashion accessories

5

ANNUAL REPORT 2004

MR CHIANG SANG SEM aged 51, Malaysian

He is the founder of Bonia. He was appointed to the Board on 16 June 1994 as Executive Chairmanof the Company and holds the post of Executive Chairman in several subsidiary and relatedcompanies of the Company. His involvement in the leather industry spans a period of over 30 years.He possesses in-depth knowledge, skills and expertise in all aspects of the leatherwear trade. He isresponsible for the overall business development and formulating the Group’s strategic plans andpolicies. To ensure that the Group is very much in line with the trend of the fashion andtechnological changes in the leatherwear and fashion accessories industry, he travels extensively toItaly, France, Germany, Japan, Hong Kong, Taiwan and China. He does not have any otherdirectorships of public companies.

His brothers, Chiang Sang Bon, Chiang Heng Kieng and his sons, Chiang Fong Yee and Chiang FongTat, are also members of the Board.

MR CHIANG FONG YEEaged 27, Malaysian

He was appointed to the Board on 18 February 2004 as AlternateDirector to Mr Chiang Sang Sem, the Group Executive Chairman.

He obtained his Bachelor Degree in Marketing and Statistic fromMiddlesex University in the United Kingdom in 1999. He joinedthe Group in February 2000 as Marketing Executive andsubsequently he was promoted to the position of AssistantBusiness Development Manager of leatherwear division inOctober 2002. He is responsible for the development andimplementation of the marketing strategy and product distributionfunctions of the leatherwear division. He also holds directorshipin several private companies in the Group and other privatelimited companies. He does not have any other directorships ofpublic companies.

His father, Chiang Sang Sem, his uncles, Chiang Sang Bon, ChiangHeng Kieng and his brother, Chiang Fong Tat, are also members ofthe Board.

profile of directors

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ANNUAL REPORT 2004

MR CHIANG HENG KIENGaged 42, Malaysian

He was appointed to the Board on 16 June 1994 and is the Managing Director of the Company andof its several other subsidiary and related companies. He is a member of the NominationCommittee. He is extensively and directly involved in day-to-day management, decision-makingand operations of the Group. He is also responsible for the development and implementation ofthe marketing strategy and product distribution functions of the Group. He is the Vice President ofthe Malaysian Retailer-Chains Association. He does not have any other directorships of publiccompanies.

His brothers, Chiang Sang Sem, Chiang Sang Bon and his nephews, Chiang Fong Yee and ChiangFong Tat, are also members of the Board.

MR CHIANG SANG BONaged 49, Malaysian

He was appointed to the Board on 16 June 1994 and is the Executive Director of theCompany. He started his career with a leather manufacturer in Singapore in 1974.Todate, he has gained over 27 years’ vast experience in technical skills inmanufacturing of leatherwear. In his current capacity, he is responsible for the overallfactory and production operations. He is also in-charge of product quality control. Hedoes not have any other directorships of public companies.

His brothers, Chiang Sang Sem, Chiang Heng Kieng and his nephews, Chiang FongYee and Chiang Fong Tat, are also members of the Board.


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ANNUAL REPORT 2004

MR CHONG CHIN LOOKaged 41, Malaysian

He was appointed to the Board on 20 June 1994. He is the Finance Directorof the Company and holds a position of Financial Controller of the Groupsince 1992. He is responsible for the overall financial and corporatefunctions of the Group. He graduated with a Bachelor of Economics degreewith a major in Business Administration from the University of Malaya in1987. He is also a member of The Malaysian Institute of Certified PublicAccountants (MICPA) and a Chartered Accountant with the MalaysianInstitute of Accountants (MIA). Prior to his current position, he was attachedto KPMG Peat Marwick, an international firm of Chartered Accountants,where he gained four and a half years experience in auditing, accounting,taxation and management consultancy. He is also a member of both theAudit Committee and ESOS Option Committee of the Company. Hecurrently holds directorships in several subsidiaries of the Company. Hedoes not have any other directorships of public companies.

MR CHIANG FONG TATaged 26, Malaysian

He was appointed to the Board on 30 August 2004 as Executive Director. Hegraduated with a Bachelor (Hons) Degree in Marketing and Managementfrom Middlesex University in the United Kingdom in 2000. He joined theGroup in July 2000 as Marketing Executive. He was subsequently promotedto the position of Brand Manager in menswear and accessories division inOctober 2002. He is responsible for product sourcing, research anddevelopment, budgetary control and planning of menswear and accessoriesdivision.

He currently holds directorships in several private companies in the Groupand other private limited companies. He does not have any otherdirectorships of public companies.

His father, Chiang Sang Sem, his uncles, Chiang Sang Bon, Chiang HengKieng and his brother, Chiang Fong Yee, are also members of the Board.


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ANNUAL REPORT 2004

DATUK NIK HUSSAIN BIN NIK ALID.J.M.K., P.M.K., aged 73, Malaysian

He was appointed to the Board on 20 June 1994. He is anIndependent Non-Executive Director of the Company. He is aBarrister at Law (London) and a Senior Partner of Nik Hussain andPartners. He has also served in the government service for some18 years as Assistant District Officer, Magistrate, President SessionCourt, Senior Federal Counsel and Deputy ParliamentaryDraughtsman. His last post with the Government was from 1971to 1974 as the Registrar of Companies. During his tenure of officein the Government, he was a member of the former Capital IssuesCommittee and the Foreign Investment Committee. Presently, healso sits on the Board of Muda Holdings Berhad.

DATUK NG PENG HAYD.M.S.M., D.S.M., P.J.K., aged 52, Malaysian

He was appointed to the Board on 20 June 1994. He is an Independent Non-Executive Director, theChairman of the Audit Committee, Nomination Committee and ESOS Option Committee of theCompany. He was the Senator of Dewan Negara from March 1987 to April 1993 and the MalaccaState Assemblyman from 1982 to 1986. He is currently the Investment Coordinator of the MalaccaState Development Corporation, Chairman of the Malacca 7th Branch of the Malaysian ChineseAssociation (MCA) and he sits on the Board of Directors of the Malacca Chinese Chamber ofCommerce and Industry. He also holds directorships in Sinmah Resources Berhad, KomarkcorpBerhad and Ta Win Holdings Berhad.


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ANNUAL REPORT 2004

DATO’ SHAHBUDIN BIN IMAM MOHAMADD.S.A.P., D.I.M.P., S.A.P., J.S.M., P.J.K., aged 62, Malaysian

He was appointed to the Board on 1 March 1998. He is a Non-Independent Non-Executive Director of the Company. He is therepresentative of Permodalan Nasional Berhad (PNB) on the Boardof Directors of the Company. He has served in the governmentservice in various capacities for some 31 years. His last post withthe Government was from 1996 to 1997 as the Deputy SecretaryGeneral (Operation), Ministry of Finance prior to his retirement in1997. He also serves as Director in MWE Holdings Berhad.

MR LIM FONG BOONaged 55, Malaysian

He was appointed to the Board on 20 June 1994. He is an Independent Non-Executive Director anda member of the Audit Committee, Nomination Committee and ESOS Option Committee of theCompany. He has been a district councilor of Tanjung Malim since 1987, the Managing Partner ofHin Lee Goldsmith since 1978 and also the Managing Director of Tanma Holdings Sdn Bhd, aproperty investment holding company since 1980. He does not have any other directorships ofpublic companies.


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ANNUAL REPORT 2004

Notes:

1. Save as disclosed above, none of the directors have:

(a) any family relationship with any Directors and/or substantial shareholders of the Company,

(b) any conflict of interest with the Company,

(c) any conviction for offences (other than traffic offences) within the past ten (10) years.

2. The respective Directors’ interests in the Company are detailed in page 108 of the AnnualReport.

3. There were four (4) Board Meetings held during the financial year ended 30 June 2004. Thedetails of attendance of the Directors are as follows:

Name Attendance

Chiang Sang Sem 4 out of 4

Chiang Heng Kieng 3 out of 4

Chiang Sang Bon 4 out of 4

Chong Chin Look 4 out of 4

Datuk Nik Hussain Bin Nik Ali 3 out of 4

Datuk Ng Peng Hay 4 out of 4

Dato’ Shahbudin Bin Imam Mohamad 4 out of 4

Lim Fong Boon 4 out of 4

Chiang Fong Yee (Appointed on 18 February 2004) 2 out of 2

Chiang Fong Tat (Appointed on 30 August 2004) Not Applicable

4. The date and time of the Board Meetings held at the Boardroom, Bonia Headquarters, No. 62,Jalan Kilang Midah, Taman Midah, Cheras, 56000 Kuala Lumpur are as follows:

Date Time

22 August 2003, Friday 10.00 a.m.

18 November 2003, Tuesday 3.30 p.m.

18 February 2004, Wednesday 11.00 a.m.

18 May 2004, Tuesday 11.00 a.m.


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ANNUAL REPORT 2004

The Board of Bonia Corporation Berhad has considered the manner in whichit has applied the Principles of the Malaysian Code on Corporate Governance(“the Code”) and the extend to which it has complied with the Best Practicesof the Code, the analysis of which is reported in this Statement.

THE BOARD OF DIRECTORS

The Board has overall responsibility for the corporate governance, strategicdirection and overseeing the investments of the Group.

The Board meets at least four (4) times a year, with additional meetingsconvened as and when necessary. Four (4) Board meetings were held duringthe financial year ended 30 June 2004. The details of attendance of theDirectors at the Board Meetings are set out on page 15.

Board Balance

The Board is composed of ten (10) Directors, five (5) Executive Directors, one (1) Alternate Director,three (3) of whom are Independent Non-Executive Directors within the meaning of Chapter 1.01 ofthe Listing Requirements of Bursa Malaysia Securities Berhad (“Listing Requirements”) and one (1)Non-Independent Non-Executive Director. The Board therefore fulfilled the Listing Requirementsunder Paragraph 15.02, which states that one-third (1/3) of the Board members must beIndependent Directors.

A brief profile of each Director is presented on pages 5 to 15.

The Company is led by an experienced Board under a Chairman who is an Executive Director. Theroles of the Chairman and the Managing Director are separated and each has a clearly accepteddivision of responsibilities to ensure balance of power and authority. The Board has within it,professionals drawn from varied backgrounds, bringing in-depth and diversity in experience,expertise and perspectives to the Group’s business operations. The Board is ensured of a balanceand independent view at all Board deliberations largely due to the presence of its Independent Non-Executive Directors and are independent from the Management and major shareholders of theCompany. The Independent Directors are also free from any business dealing and otherrelationships that could materially interfere with the exercise of their independent judgement.Together with the Executive Directors who have intimate knowledge of the Group‘s businesses, theBoard is constituted of individuals who are committed to business integrity and professionalism inall their activities.

statement on corporate governance

19

ANNUAL REPORT 2004

THE BOARD OF DIRECTORS (Cont’d)

Supply of Information

The Directors are provided with relevant agenda and timely information, suchas quarterly financial results, progress report of the Group’s businesses,corporate development, regulatory and audit reports to enable them todischarge their duties and responsibilities.

All Directors have access to the advice and services of the CompanySecretaries, the external auditors and other independent professionals incarrying out their duties.

Board Committees

(i) Audit Committee

The objective of the Audit Committee is to assist the Board to review the adequacy andintegrity of internal control system and management information system of the Company andthe Group. The composition terms of reference and summary of activities of the AuditCommittee are set out on pages 27 to 29 of the Annual Report.

(ii) Nomination Committee

The Nomination Committee currently comprises the following members:

Name Status of Directorship Independent

Datuk Ng Peng Hay Non-Executive Director (Chairman) Yes

Chiang Heng Kieng Managing Director (Member) No

Lim Fong Boon Non-Executive Director (Member) Yes

The responsibilities of the Nomination Committee are to identify skill andexpertise that are relevant to the effective functioning of the Board, to reviewthe Board structure, size and composition, to select and propose suitablecandidates for appointment to the Board. The Nomination Committee alsoassesses the contribution of each individual Director and recommends theBoard to fill the seat in the respective Committees. Besides, the NominationCommittee shall annually review its required mix of skills and experience andother qualities, including core competencies which Non-Executive Directorsshould bring to the Board.


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ANNUAL REPORT 2004


Board Committees (Cont’d)

(iii) Option CommitteeExecutives’ Share Option Scheme (ESOS)

The ESOS Option Committee was established on 26 February 2002 to administer the Group’sESOS which became effective on 4 March 2002, in accordance with its Bye-Laws indetermining the participation eligibility option offers and share allocations and to attend suchother matters as may be required. The ESOS Option Committee comprises the followingmembers:

Name Status of Directorship Independent

Datuk Ng Peng Hay Non-Executive Director (Chairman) Yes

Chong Chin Look Finance Director (Member) No

Lim Fong Boon Non-Executive Director (Member) Yes

There were four (4) Meetings held during the financial year ended 30 June 2004 and attendedby all the members of the ESOS Option Committee.

Appointment to the Board

The Nomination Committee is responsible for making recommendation for appointment to theBoard. Upon appointment, the Director will undergo an orientation and familiarisation programme,including visits to the Group’s businesses and meetings with senior management as appropriate, tofacilitate their understanding of the Group’s businesses.

Training sessions have been held for Directors of the Group to keep them abreast of current andregulatory issues.


22


Re-election of Directors

Any Director appointed during the year is required under theCompany’s Articles of Association, to retire and seek re-electionby shareholders at the next Annual General Meeting (AGM) to beheld following their appointments. The Articles also require thatone-third (1/3) of the Directors including the Managing Director, ifany, to retire by rotation and seek re-election at each AGM andthat each Director shall submit himself for re-election at least oncein every three (3) years.

Directors over seventy (70) years of age are required to submitthemselves for re-appointment annually in accordance withSection 129(6) of the Companies Act, 1965.

Directors’ Training

All Directors have successfully completed the MandatoryAccreditation Programme (MAP) conducted by the ResearchInstitute of Investment Analysis Malaysia (now known as BursaMalaysia Training Sdn Bhd), an affiliated company of BursaMalaysia Securities Berhad. The Board believes that Directorsshould receive continuous relevant programme training from timeto time to further enhance their knowledge in the latest statutoryand/or regulatory requirements in compliance with Practice NoteNo. 15/2003 of the Listing Requirements of Bursa MalaysiaSecurities Berhad on the Continuing Education Programme.


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ANNUAL REPORT 2004


Directors’ Remuneration

The Code states that Directors’ remuneration should be of a sufficient level to attract and retain highcalibre Directors to successfully run the Company. For Non-Executive Directors, their remunerationshould reflect their respective levels of experience, expertise and responsibilities.

Non-Executive Directors are paid attendance allowance for each Board Meeting and/or AuditCommittee Meeting they attended. Directors’ fees are paid to Executive and Non-ExecutiveDirectors upon approval granted by the shareholders at the Annual General Meeting. ExecutiveDirectors are not paid attendance allowance.

Aggregate remuneration of the Directors is categorised into appropriate components:

OtherFees Salaries Bonuses Emoluments Total

Category RM’000 RM’000 RM’000 RM’000 RM’000

Executive Directors * 209 666 188 156 1,219

Non-Executive Directors 120 - - - 120

* inclusive of remuneration paid by the subsidiary companies.

The number of Directors whose total remuneration falls within the following bands:

Range of Remuneration Executive Directors Non-Executive Directors

Below RM50,000 4

RM100,001 to RM150,000 1

RM300,001 to RM350,000 2

RM400,001 to RM450,000 1


24

RELATIONSHIP WITH SHAREHOLDERS

Dialogue between the Company and Investors

The Company recognises the important of keeping shareholders and investors informed of theGroup’s business and corporate developments. Such information is disseminated through pressreleases, press conferences, the Company’s annual reports, circulars to shareholders, quarterlyfinancial results and various announcements made from time to time.

The Group has extablished a website at www.bonia.com which shareholders and members of thepublic can access for pertinent and updated information of the Group. Alternatively the Group’slatest announcement can be obtained through the Bursa Malaysia Securities Berhad’s website atwww.bursamalaysia.com .

The Annual General Meeting (AGM) remains the principal forum for dialogue with shareholders. Itis a crucial mechanism in shareholders communication for the Company. At the Company’s AGM,shareholders have direct access to the Board and are given the opportunity to ask questions duringthe open question and answer session prior to the motion moving for the Company’s and theGroup’s Audited Financial Statements and Directors’ Report for the financial year. The shareholdersare encouraged to ask questions both about the resolutions being proposed or about the Group’soperations in general.

ACCOUNTABILITY AND AUDIT

Financial Reporting

The Board aims to provide and present a balanced and meaningful assessment of the Group’sfinancial performance and prospects, primarily through the financial statements and the Chairman’sStatement in the Annual Report and quarterly financial statements.

The Group’s quarterly, half yearly and annual financial results announcements which are releasedto shareholders within the stipulated time frame reinforce the Board’s commitment to ensureaccurate and timely dissemination of financial and corporate announcements for greateraccountability and transparency.

The Directors consider that in preparing the financial statements, the Group has used appropriateaccounting policies, consistently applied and supported by reasonable and prudent judgements andestimates. All accounting standards which the Board considers to be applicable have beenfollowed, subject to any explanations and material departures disclosed in the notes to the financialstatements.

The Directors’ Responsibility Statement made pursuant to Paragraph 15.27(a) of the ListingRequirements of Bursa Malaysia Securities Berhad is set out on page 32 of the Annual Report.


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ANNUAL REPORT 2004

ACCOUNTABILITY AND AUDIT (Cont’d)

Internal Control

The Board acknowledges their responsibilities for the Company’s system of internal controlscovering not only financial controls but also operational and compliance controls as well as riskmanagement. A Statement on Internal Control of the Group is set out on page 31 of the AnnualReport.

Relationship with the Auditors

Through the Audit Committee, the Company has established a transparent and appropriaterelationship with the Group’s auditors. In the course of audit of the Group’s operations, the auditorshighlighted to the Audit Committee and the Board, matters that need the Board’s attention.

COMPLIANCE WITH THE CODE

Save for the exceptions set out below, the Group is in substantial compliance, throughout thefinancial year, with the Principles and Best Practices of the Code.

Pursuant to Best Practices Provision AA I, the Board is expected, in discharge of its stewardshipresponsibilities, to identify principal risks and ensure implementation of appropriate systems tomanage these risks. The need for proper risk assessment which is critical component of a soundsystem of internal controls is essential.

At present, the Group has at least in place, an effective internal control system which has ensuredthe followings:

• Effectiveness and efficiency of the Group’s operations• Reliability of financial information• Compliance with laws and regulations

Nevertheless, the Board is of the view that a morestructured approach to formalise the existing process bywhich risks are identified, assessed, controlled andreviewed, and the Board’s involvement in the process,should be undertaken. In formulating this process, theBoard will be guided by the “Guidance for Directors ofPublic Listed Companies” issued by an industry Task Forceestablished by the Bursa Malaysia Securities Berhad onInternal Control in December 2000. The Guidance willassist the Board in evaluating the adequacy and integrity ofthe Group’s system of internal controls.


26

The Board of Directors of Bonia Corporation Berhad is pleased to present the Report of the AuditCommittee for the financial year ended 30 June 2004.

MEMBERS AND MEETINGS

The composition of the Audit Committee is as listed below.

There were four (4) Audit Committee Meetings held during the financial year ended 30 June 2004.The details of attendance of the Audit Committee members are as follows:

Name Status of Directorship Independent Attendance

Datuk Ng Peng Hay Non-Executive Director Yes 4 out of 4(Chairman)

Chong Chin Look Finance Director No 4 out of 4(A member of the MalaysianInstitute of Accountants)

Lim Fong Boon Non-Executive Director Yes 4 out of 4

The date and time of the Audit Committee Meetings held at theBoardroom, Bonia Headquarters, No. 62, Jalan Kilang Midah, TamanMidah, Cheras, 56000 Kuala Lumpur:

Date Time

22 August 2003 (Friday) 9.45 am

18 November 2003 (Tuesday) 3.00 pm

18 February 2004 (Wednesday) 10.45 am

18 May 2004 (Tuesday) 10.45 am

The Managing Director, the Executive Directors, any other Boardmembers, managers or any other senior executive may attend themeetings upon the invitation by the Committee. The Committee shallat least meet with the external auditors once a year.

audit committee report

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ANNUAL REPORT 2004

TERMS OF REFERENCE

Membership

The Audit Committee shall be appointed by the Board from amongst the Directors and shall consistof not less than three (3) members, a majority of whom shall be Independent Directors and at leastone (1) member of the Committee must be a member of the Malaysian Institute of Accountants orpossesses such other qualifications and/or experience as approved by Bursa Malaysia SecuritiesBerhad.

Quorum

The quorum shall be two (2) and the majority of whom must be Independent Directors.

Reporting Procedures

The Chairman of the Committee shall be an Independent Director appointed by the Board. He shallreport on each meeting of the Committee to the Board.

The Company Secretary shall be responsible for drawing up the agenda and circulating it, supportedby explanatory documentation to the Committee members prior to each meeting. The Secretaryshall also be responsible for keeping minutes of meetings of the Committee and circulating them tothe Committee members and to the other members of the Board.

Frequency of Meetings

Meetings shall be held not less than four (4) times a year. The presence of the external auditors willbe requested if required and the external auditors may also request a meeting if they consider it isnecessary.

Authority

The Committee is authorised by the Board to investigate any activity within its terms of referenceand shall have unrestricted access to both the internal and external auditors and to all employeesof the Group. The Committee is also authorised to obtain external legal advice or other independentprofessional advice as necessary.


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TERMS OF REFERENCE (Cont’d)

Functions

The functions of the Committee shall be:

(a) to review with the external auditors:

• the audit plan;• the evaluation of the system of internal accounting controls;• the scope and results of audit procedures;• the audit report;• the assistance given by the Company’s officers to the auditors;• the financial statements of the Company and the Group and thereafter to submit them to

the Board of Directors of the Company;• any related party transactions that may arise within the Company or the Group;

(b) to consider and recommend to the Board the nomination of external auditors;

(c) to review the internal audit plan, consider significant finding and management’s response andreport to the Board together with such other functions as may be agreed to by the Committeeand the Board;

(d) to review the quarterly, half yearly and annual financial statements of the Company beforesubmission to the Board, focusing particularly on:

• public announcement of results and dividend payment;• any changes in accounting policies and practices;• significant adjustments resulting from audit;• the going concern assumptions;• compliance with accounting standards and regulatory requirements;

(e) to carry out such other responsibilities, functions or assignments as may be defined jointly bythe Committee and the Board of Directors from time to time;

(f) in compliance with Paragraph 15.17 of the Listing Requirements of Bursa Malaysia SecuritiesBerhad (“Listing Requirements”), where the Committee is of the view that a matter reported byit to the Board has not been satisfactory resolved resulting in a breach of the ListingRequirements, the Committee must promptly report such matter to the Bursa MalaysiaSecurities Berhad.


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ANNUAL REPORT 2004

audit committee reportACTIVITIES OF THE INTERNAL AUDIT FUNCTION

The Company does not have an Internal Audit Department but has appointed an externalprofessional firm of qualified accountants to undertake this function. The internal audit function isindependent of the activities or operations of its auditees. The firm undertakes the audit of theGroup’s operating units; reviewing the units’ compliance to internal control procedures;highlighting weaknesses and making appropriate recommendations for improvement. The firmreports directly to the Audit Committee and the Board.

ACTIVITIES OF THE AUDIT COMMITTEE

During the financial year, the Audit Committee has:

(a) reviewed the unaudited quarterly and year-to-date financial results before recommending tothe Board for consideration and approval, and release to Bursa Malaysia Securities Berhad;

(b) reviewed the external auditors’ scope of work and audit plan for the financial year;

(c) reviewed and approved the Audit Committee Report for the financial year ended 30 June 2004to be presented in the Annual Report by the Board;

(d) reviewed the internal audit reports presented and considered the major findings of internalaudit in the Group’s operating subsidiaries and associated companies through the review ofinternal audit report tabled and management responses thereto and ensuring significantfindings are adequately addressed by the management;

(e) reported to the Board on its activities and significant findings and results.

30

additional compliance information pursuant to Paragraph 9.25 of the Listing Requirements of Bursa Malaysia Securities Berhad

Utilisation of ProceedsThere were no fund raising exercises implemented during the financial year.

Share BuybacksDuring the financial year, there were no share buybacks by the Company.

Options, Warrants or Convertible SecuritiesDuring the financial year, no options, warrants or convertible securities were issued by theCompany.

American Depository Receipt (ADR) or Global Depository Receipt (GDR) ProgrammeDuring the financial year, the Company did not sponsor any ADR or GDR programme.

Imposition of Sanctions/PenaltiesThere were no sanctions and/or penalties imposed on the Company and its subsidiaries, Directorsor management by the relevant regulatory bodies.

Non-audit FeesDuring the financial year, there were no non-audit fees paid to the external auditors.

Variation in ResultsDuring the financial year, there were no variance of results which differ by 10% or more from anyprofit estimate / forecast / projection / unaudited results announced.

Profit GuaranteesDuring the financial year, there were no profit guarantees given by the Company.

Material ContractsDuring the financial year, there were nomaterial contracts on the Company and itssubsidiaries involving Directors’ and majorshareholders’ interests.

Contract Relating to LoansThere were no contracts relating to loansby the Company.

Revaluation of Landed PropertiesThe Company does not have a revaluationpolicy on landed properties.

Recurrent Related Party TransactionsThere were no recurrent related partytransactions during the financial yearunder review.

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ANNUAL REPORT 2004

The Board has overall responsibility for the Group’s system of internal controls and for reviewing itseffectiveness whilst the role of the management is to implement the Board’s policies on risk andcontrol. The system of internal control is designed to manage rather than eliminate the risk of failureto achieve business objectives and can only provide reasonable and not absolute assurance againstmaterial misstatement or loss.

The Board confirms that there is a continuous process to identify and manage the significant risksof the Group and this has been in place during the financial year under review and up to the dateof adoption of this Annual Report. The process is regularly reviewed by the Board and is generallyin accordance with the guidance as contained in the publication – Statement of Internal Control:Guidance for Directors of Public Listed Companies.

The key elements of the Group’s internal control system are described below:

• There is a clearly defined delegation of responsibilities only to the Audit Committee of theBoard and the management of the holding company and operating units who ensure thatappropriate risk management and control procedures are in place. The Group’s managementoperates a risk management process that identifies the key risks by line of business and keyfunctional activities.

• There is a clearly defined framework for investment appraisal covering the acquisition ordisposal of any business, application of capital expenditure and approval on borrowing. Postimplementation reviews are conducted and reported to the Board.

• Budgets, containing financial and operating targets, capital expenditure proposals andperformance indicators, are reviewed and approved by the Executive Directors and managersof the respective subsidiary companies.

• Performance reports are regularly provided to the directors and discussed at Board meetings.The Board regularly receives from the management covering area such as quarterly financialreview, business development and other corporate matters.

• Comprehensive management accounts and reports are prepared monthly for effectivemonitoring and decision-making.

• Regular scheduled management meetings are held and attended by all Executive Directors todiscuss and report on operational performance, business strategy, key operating statistics, legaland regulatory matters of each business unit where plans and targets are established forbusiness planning and budgeting process.

The Board is aware of the importance of maintaining a control conscious culture and embeddingstrong control features throughout the Group. As such, the Group’s organisation structure identifiesthe head of each business unit, their subordinates and superiors. This structure enables a clear lineupward reporting to the Board. The Board formally communicates its objectives and expectationthroughout the Group through various formal documents such as memorandum, email, and alsocommunicated via informal regular business meeting between the Executive Board members whoare actively involved in the day-to-day operation of the Group and all business unit heads.

In addressing the importance of a sound system of internal control, the Boardhas decided to outsource the internal audit function of the Group, where anindependent audit firm appointed were to assist the Group in the internal auditfunction, risk management and corporate governance activities.

statement on internal control

32

The Directors are required by the Companies Act, 1965 to prepare financial statements for eachfinancial year which give a true and fair view of the state affairs of the Company and of the Groupand their results and cash flows for the financial year. In preparing the financial statements for thefinancial year ended 30 June 2004, the Directors have:

• selected suitable accounting policies and then applied them consistently;• made judgements and estimates that are reasonable and prudent;• ensured that applicable accounting standard have been followed, subject to any material

departures disclosed and explained in the financial statements.

The Directors are responsible for ensuring that the Company keeps proper accounting records andwhich disclose with reasonable accuracy at any time the financial position of the Company and ofthe Group and to enable them to ensure that the financial statements comply with the CompaniesAct, 1965.

The Directors have a general responsibility for taking such steps as are reasonably open to them tosafeguard the assets of the Company and of the Group and to prevent and detect fraud and otherirregularities.

directors’ responsibility statement

33

ANNUAL REPORT 2004

ON BEHALF OF THE BOARD OF DIRECTORS, IT IS MY PLEASURE TO PRESENT THE ANNUALREPORT AND AUDITED FINANCIAL STATEMENTS OF BONIA CORPORATION BERHAD FORTHE FINANCIAL YEAR ENDED 30 JUNE 2004.

FINANCIAL PERFORMANCE

For the year under review, the Group achieved an increase in revenue of 26% over thecorresponding previous year to RM150.5 million. This was principally due to revenue gains frompart realisation of our property project in Taman Connaught, Cheras, Kuala Lumpur amounting toRM11.9 million coupled with the strong growth of 15% from our retailing division.

The Group’s profit before taxation increased to RM12.4 million from RM5.9 million in the previousyear as a result of contribution from our property development amounting to RM2.0 millioncoupled with lower provisions for impairment of assets as well as lower finance costs after therestructuring of some short-term borrowings.

ECONOMIC REVIEW

The global economic recovery in the second half of 2003 continued on firmer note into the first halfof 2004, especially in Malaysia, as evidenced by the real GDP growth of 7.6% in the first quarterof 2004 which continued to grow strongly to 8% in the second quarter of 2004 as against 4.6% forboth the corresponding quarters of 2003.

The services sector continued its good performance and expanded at the fastest rate surging to 7.4%growth in the second quarter after rising 6.2% in the previous quarter. The services sector representsthe largest component of GDP with a share of 57%.

This remarkable growth was attributed to an across-the-board expansion in all its sub-sectors whichincluded the wholesale and retail trade, hotels and restaurants with a growth of 10% in the secondquarter as against 5.8% in the first quarter of 2004, despite the outbreak of bird flu which started atbeginning of the year.

The various stimulus packages highlighted in the budget for 2004 included various tax incentives,such as tax reduction for certain expenses, reduction in import & export duties on selected goodsand low interest rates, have generally improve consumer spending power, increase export earningsand consequently stimulate the economic growth.

chairman’s statement

34

OPERATIONAL REVIEW

Retailing

Having concentrated on setting up a choice business network across the Asia Pacific markets duringthe financial year under review, our business strategy has been intensified with more focus andefforts being taken to put our various house labels into international markets for greater exposureand recognition.

This strategy definitely entails even higher quality products being promoted to various keyinternational markets, better customer service, premier locations at much sought-after and high-traffic shopping complexes, together with intensive advertising and promotional activities.

On the international market, the Group has embarked on an aggressive business plan to ventureand set up retail outlets in key fashion cities within Asia. During the year under review, a numberof outlets have been opened in high-traffic and key fashion-conscious Asian cities such as Bangkok,Ho Chi Minh City, Singapore, Taipei and Tokyo.

In Singapore, we opened another exclusive boutique located within Changi Airport at Terminal 2departure lounge. We have experienced tremendously good response from this boutique, withvarious customers from all over the world. On the home front, we have a total of 30 boutiquesacross the nation and over 200 counters within the major department stores.

During the financial year, we opened a new Bonia accessories kiosk at the KLIA departure hall.Besides opening new boutiques, we also continuously embark on upgrading most of the outlets andfor some, it also means expansion to bigger floor area to ensure that customers enjoy a morecomfortable and conducive shopping ambience.

Property Development

During the year under review, the Group saw the propertydevelopment cum disposal of the land at TamanConnaught, Cheras, Kuala Lumpur, which contributedpositively to the Group’s revenue and earnings arising fromrealisation of the project. The same project is expected tocontribute positively for the coming financial years, whichwill further ease our cash flow and reduce the gearing levelof the Group.


35

ANNUAL REPORT 2004

CORPORATE DEVELOPMENT

Investment in Thailand

The Company had on 16 February 2004 subscribed 24,500 ordinary shares of 100 Thai Baht eachrepresenting 49% equity interest in BBA International Co., Ltd. ("BBA") for a cash consideration of2,450,000 Thai Baht or its equivalent RM235,935. BBA was incorporated in Thailand on 2 October2003 with its core business in retailing and marketing of fashionable goods and accessories. Duringthe year, we opened 8 outlets at strategic location within the Central Departmental Stores ofBangkok and we have experienced very good response to our products.

Venturing into Middle East

The Group has always been looking for opportunities in the lucrative Middle Eastern markets. On2 June 2004, the Group entered into a Memorandum of Understanding (MoU) with our SaudiArabia partner, The Azizia Panda Trading Company Limited (“Azizia”), a wholly owned subsidiaryof The Savola Group for the purpose of studying the feasibility and suitability of the Bonia brandsfor the Saudi Arabia market. Subsequently, a Distributorship Agreement was signed on 8 October2004, appointing Azizia for the distribution of the Group’s products in the Saudi Arabia market.

FUTURE PROSPECTS

Given Malaysia’s strong economic performance during the first half of the year, allied to a generallyencouraging external environment, the economic growth is expected to surpass the earlier forecastand likely to hit the 7% mark this year. The services sector, including the retailing and tourismsector, is seen as the key engine of growth in 2004, which bodes well for the Group.

With the economy under the good hands of our Prime Minister, YAB Dato’ Seri Abdullah Bin HajiAhmad Badawi, and the reinforcement of political and social stability, consumer confidence andbusiness sentiments have been tremendously boosted. Barring unforeseen circumstances, the Boardof Directors expects the performance of the Group to be satisfactory for the next financial year.

DIVIDEND

The Board of Directors is pleased to recommend a first and final dividend of 5% less income tax of28% for the financial year ended 30 June 2004.

APPRECIATION

On behalf of the Board of Directors, I wish to thank all our valued customers, shareholders, businessassociates, government authorities and bankers for their confidence in and continued support to theGroup. I also would like to thank all our staff for their dedication, commitment and contribution,without which, none of this would be possible.

CHIANG SANG SEMChairman

13 October 2004


36

penyata pengerusiBAGI PIHAK LEMBAGA PENGARAH BONIA CORPORATION BERHAD, DENGANSUKACITANYA, SAYA MEMBENTANGKAN LAPORAN TAHUNAN DAN PENYATA KEWANGANSYARIKAT BAGI TAHUN KEWANGAN BERAKHIR 30 JUN 2004.

PRESTASI KEWANGAN

Bagi tahun yang dilaporkan, Kumpulan telah mencapai peningkatan hasil sebanyak 26% kepadaRM150.5 juta berbanding dengan tahun yang lepas. Pencapaian ini khasnya disebabkan olehperolehan daripada projek hartanah di Taman Connaught, Cheras, Kuala Lumpur yangmenyumbangkan hasil sebanyak RM11.9 juta dan juga diiringi pertumbuhan yang menggalakkandari bahagian peruncitan sebanyak 15%.

Keuntungan sebelum cukai tahun ini berganjak ke RM12.4 juta berbanding RM 5.9 juta pada tahunsebelumnya, ini adalah akibat daripada sumbangan dari pembangunan hartanah yang berjumlahRM2.0 juta di samping peruntukan yang lebih rendah untuk gangguan aset dan juga kos kewanganyang lebih rendah berikutan penyusunan semula sesetengah pinjaman jangka masa pendek.

LAPORAN EKONOMI

Ekonomi dunia telahpun pulih pada pertengahan tahun kedua 2003 dan kian kukuh pertengahantahun pertama 2004, terutamanya di Malaysia, di mana Keluaran Dalam Negara Kasar (KDNK)telah meningkat ke 7.6% pada suku tahun yang pertama tahun 2004 dan terus berganjak ke 8%pada suku tahun yang kedua tahun 2004 berbanding dengan 4.6% pada kedua-dua tempoh yangsama pada tahun 2003.

Sektor perkhidmatan terus melanjutkan prestasi yang baik dan berkembang dengan kadarmendadak kepada 7.4% pada suku tahun yang kedua selepas meningkat ke tahap 6.2% padatempoh yang sebelumnya. Sektor perkhidmatan mewakili komponan yang terbesar dalam KDNKdengan bahagian sebanyak 57%.

Pertumbuhan yang pesat ini adalah disebabkan olehperkembangan dalam semua sektor sampingan yangtermasuk perniagaan borong, peruncitan, hotel danrestoran dengan pertumbuhan sebanyak 10% dalamsuku tahun kedua tahun 2004 berbandingkan 5.8%pada suku tahun pertama tahun 2004. Pertumbuhanini dicapai walaupun terdapatnya jangkitan penyakitselsema burung yang berleluasa pada awal tahun ini.

Dalam belanjawan tahun 2004, beberapa pakejperangsang telah diperkenalkan, termasuk beberapainsentif cukai seperti pemotongan cukai atassesetengah perbelanjaan tertentu, pemotongan dutiimpot dan ekspot atas barang-barangan terpilih danjuga kadar faedah yang rendah; telahpunmeningkatkan daya pembelian pengguna, meningkat pendapatan ekspot dan seterusnyamemerangsangkan pertumbuhan ekonomi.

37

ANNUAL REPORT 2004

penyata pengerusiLAPORAN OPERASI

Peruncitan

Pada tahun yang dilaporkan, demi menumpukan perhatian ataspembentukan rangkaian niaga merangkumi Asia Pasifik, perniagaankami telah mengambil langkah-langkah yang intensif dengan lebihtumpuan dan usaha diambil untuk memperkenalkan pelbagai jenamainduk kepada pasaran antarabangsa demi eskposi dan pengakuan yanglebih luas.

Strategik ini memerlukan produk-produk yang berkualiti tinggi supaya dapat diperkenalkan dibeberapa pasaran antarabangsa yang utama, perkhidmatan pelanggan yang lebih memuaskan,lokasi yang prima di pusat-pusat membeli-belah yang pesat dan berikutan dengan pengiklanan danaktiviti-aktiviti promosi yang intensif.

Di pasaran antarabangsa, Kumpulan kami telah memulakan rancangan perniagaan yang agresifdan berjejak langkah seterusnya mendirikan tempat-tempat niaga di beberapa bandaraya fesyenutama di seluruh Asia. Pada tahun yang dilaporkan, beberapa buah tempat niaga telah dibuka dibandaraya-bandaraya utama yang berperpadatan tinggi dan berfesyen di Asia seperti Bangkok,Bandar Ho Chi Minh, Singapura, Taipei dan juga Tokyo.

Di Singapura, kami telah membuka satu lagi butik eksklusif yang bertapak di balai kelepasanTerminal 2, Lapangan Terbang Changi. Butik tersebut mendapat sambutan yang baik daripelanggan–pelanggan yang datang dari seluruh dunia. Di tanahair pula, kami memiliki 30 buahbutik di seluruh negara dan juga lebih daripada 200 buah kuanter di kebanyakan gudang pasarayayang utama.

Pada tahu kewangan ini, kami telah mendirikan satu kiosk assesori Bonia baru di balai kelepasanLapangan Terbang Antarabangsa Kuala Lumpur (KLIA). Selain dari membuka butik-butik baru, kamijuga meningkatkan kebanyakan tempat niaga dan untuk setengah-tengahnya juga berikutanmemperluaskan kawasan yang sedia ada agar para pelanggan dapat menikmati suasana yang lebihselesa serta menyenangkan ketika membeli-belah.

Pembangunan Hartanah

Pada tahun yang dilaporkan, Kumpulan telahmendapat sumbangan hasil dan keuntungan yangpositif daripada pembangunan hartanah danpenjualan projek atas tanah di Taman Connaught,Cheras, Kuala Lumpur. Projek yang sama dijangkaakan mendatangkan pemulangan yang positif padatahun kewangan yang akan datang, yang mana akanmelegakan aliran kewangan dan mengurangkantahap pinjaman Kumpulan.

38

penyata pengerusiPERKEMBANGAN KORPORAT

Pelaburan Di Negara Thailand

Pada 16 Februari 2004, Syarikat telah melanggani 24,500 saham biasa yang mewakili 49%daripada ekuiti BBA International Co., Ltd. ("BBA") dengan nilai 100 Thai Baht setiap satu sahamsecara tunai sebanyak 2,450,000 Thai Baht atau bersamaan RM235,935. BBA telah diperbadankandi Negara Thailand pada 2 Oktober 2003, di mana tumpuan utama perniagaannya ialah peruncitandan pemasaran barangan dan assesori berfesyen.

Pada tahun yang sama, kami telah melancarkan 8 buah tempat niaga di lokasi yang strategik diCentral Departmental Stores, Bangkok dan barangan kami telah mendapat sambutan yang baik.

Menjejak Langkah Ke Timur Tengah

Kumpulan sentiasa mengalu-alukan peluang untuk mejelajahi pasaran Timur Tengah. Pada 2 Jun2004, Kumpulan the menandatangani satu Memorandum Kesefahaman (MoU) dengan rakan niagaArab Saudi kami, iaitu The Azizia Panda Trading Company Limited (“Azizia”), satu anak syarikatdimiliki penuh oleh The Savola Group, bertujuan mengkaji kemungkinan dan kesesuaian jenamaBonia di pasaran Arab Saudi. Pada 8 Oktober 2004, satu perjanjian pengagihan ditandatanganidemi melantik Azizia menjadi pengagih produk-produk Kumpulan di pasaran Arab Saudi.

PROSPEK MASA DEPAN

Memandangkan prestasi ekonomi Malaysia yang kukuh disaksikan pada pertengahan tahun yangpertama berikutan suasana luar yang menggalakkan, pertumbuhan ekonomi dijangka melebihiramalan yang dibuat pada peringkat awal dan akan mencapai 7% tahun ini. Sektor perkhidmatantermasuk peruncitan dan sektor pelancongan adalah daya tolakan utama tahun 2004 yang akanmenguntungkan Kumpulan kami.

Ekonomi negara di bawah pimpinan yang cekap oleh Perdana Menteri YAB Dato’ Seri Abdullah BinHaji Ahmad Badawi, di samping penguatkuasaan politik dan suasana sosial berjalan denganlancar, akan kian kukuh and stabil. Dengan itu, keyakinan para pengguna dan sentimen positifperdagangan dapat diperkukuhkan. Jika tidak berlaku sebarang keadaan di luar jangkaan, makaLembaga Pengarah menjangka prestasi tahun kewangan yang akan datang adalah memuaskan.

DIVIDEN

Lembaga Pengarah dengan sukacitanya mengesyorkan dividen pertama dan akhir sebanyak 5%tolak 28% cukai pendapatan bagi tahun kewangan berakhir 30 Jun 2004.

PENGHARGAAN

Bagi pihak Lembaga Pengarah, saya ingin merakamkan penghargaan kami kepada para pelangganyang dihargai, para pemegang saham, rakan-rakan perniagaan, pihak berkuasa kerajaan dan pihakbank demi keyakinan dan juga sokongan yang berlanjutan yang diberikan kepada Kumpulan kami.Di samping itu, saya juga ingin mengucapkan ribuan terima kasih kepada kakitangan kami keranaberdekikasi, berkomitmen tinggi dan sumbangan mereka yang tidak ternilai. Tanpa kerjasamamereka, segala yang kami harungi tidak akan menjadi kenyataan.

CHIANG SANG SEMPengerusi

13 Oktober 2004

39

ANNUAL REPORT 2004

40

41

ANNUAL REPORT 2004

43

ANNUAL REPORT 2004

five-year group financial highlights

Total Shareholders’ Equity (RM'000)

2000 2001 2002 2003 20040

10,000

20,000

30,000

40,000

50,000

60,000

70,000

Net Basic EPS (sen)

0

2

4

6

8

10

12

14

16

18

20

2000 2001 2002 2003 2004

Gross Dividend (sen)

2000 2001 2002 2003 20040

1

2

3

4

5

6

2000 2001 2002 2003 20040

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

Revenue (RM'000) Profit before Tax (RM'000)

2000 2001 2002 2003 20040

2,000

4,000

6,000

8,000

10,000

12,000

14,000

Profit after Tax and Minority Interests (RM'000)

2000 2001 2002 2003 20040

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

30 June 2000 30 June 2001 30 June 2002 30 June 2003 30 June 2004

Revenue (RM'000) 74,672 82,381 93,034 119,196 150,499

Profit before Tax (RM'000) 4,041 4,233 4,969 5,865 12,455

Profit after Tax and Minority Interests (RM'000) 2,521 2,828 2,407 2,345 7,502

Total Shareholders’ Equity (RM'000) 47,616 48,932 58,458 59,692 66,088

Net Basic EPS (sen) 9.0 8.5 6.8 5.8 18.6

Gross Dividend (sen) 3.0 5.0 5.0 5.0 5.0

44

THE FINANCIAL YEAR ENDED 30 JUNE 2004 WITNESSED ANUMBER OF MEMORABLE AND SIGNIFICANT EVENTSUNDERTAKEN BY THE GROUP.

BONIA 30TH ANNIVERSARY

Bonia celebrated its 30th anniversary on 9 December 2003 with alavish affair at JW Marriott Hotel, Kuala Lumpur. Members of theSelangor and Perlis royal families were special guests alongsideselected groups of business partners from Brunei, China, HongKong, Japan, Indonesia, Singapore, Taiwan, Thailand andVietnam. Guests were treated to a gala nine-course Chinese dinnerand entertained by a guest violinist and a spectacular fashionshow featuring Bonia and Bonia Uomo 2004 collection. Asexplained by our Italian designer Pierpaolo Simonut of StudioPelletteria Allessandra of Italy, the international trend forleatherwear fashion in the 2004 spring and summer seasons is“strongly influenced by a new feeling, a season of paradoxes”,meaning there are no clear rules or fashion statements to follow orcreate.

The 2004 Collection plays with textures in combination ofopposite elements conveying the shine and matte looks; the wetand dry feel; and classic and sport elements. The trend is to focuson monochromatic and tone-on-tone colours. Ethnic influencesare still present for multi-coloured graphics, mixtures of flowersand foliage print on natural fibres.

FRANCHISING MIDDLE EAST EXHIBITION 2004

The Group always seeks various opportunities to tap into theMiddle East markets. The participation in the ‘Franchising MiddleEast Exhibition 2004’ held in Dubai, United Arab Emirates (UAE)recently has affirmed Bonia commitment in this region. TheMiddle East is currently enjoying the world’s fastest franchisegrowth rate of 27% annually. We have received positive enquiriesregarding our products and also the franchising businessopportunities from representatives of organisations from the UAE,Saudi Arabia, Bahrain, Egypt, Qatar, Pakistan, Kuwait and otherswithin the region.

Consequent to the contacts gathered during the exhibition, aMemorandum of Understanding (MoU) was signed on 2 June2004 between the Company and The Azizia Panda TradingCompany Ltd in the Kingdom of Saudi Arabia to establish a join-venture team, with the purpose of studying the feasibility andsuitability of Bonia brands for Saudi Arabia.

event highlights

45

ANNUAL REPORT 2004

CUSTOMER EXCELLENCE

On 13 April 2004, the Group held an intensive three-dayconference cum workshop for its frontliner staff in efforts to makethem more customers-conscious. The Group intended to motivateall its staff to realise the importance of choice customer serviceand the fine techniques each should practise when initiating asales transaction with a customer. In line with this trainingsession, the Group also embarked on a drive to incorporateinternational service standards and personalised services to ourcustomers, with the best way being through all our frontliners. Theconference covered topics like ‘Paradigm Shift for Challenges ofthe 21st Century’ and ‘Keys in Achieving Successful CustomerSatisfaction’.

The conference was attended by some 300 staff nationwide,where the Group also presented the long service awards to staffmembers who have been with the Company for 15 years.

SHOWCASE MALAYSIA IN CHINA 2004

Bonia was honoured to be invited to the “Showcase Malaysia” inChina held from 28 to 31 May 2004 in conjunction with theofficial visit of our Prime Minister, Dato' Seri Abdullah Bin HajiAhmad Badawi to China to commemorate the 30th Anniversary ofSino-Malaysia Diplomatic Relations. “Showcase Malaysia” inChina was precisely intended to enhance the awareness of thepeople in China of Malaysia’s capabilities in meeting many of theirconsumer and industrial needs. The products and services beingshowcased were by no means reflective of all that Malaysia has tooffer.

event highlights

46

BONIA 2004/2005 COLLECTION ENTITLED “DETTAGLIO”

The Bonia & Bonia Uomo 2004/2005 Collections were introducedto over 500 guests and business clientele, from both Malaysia andoverseas, gathered at the Mandarin Oriental Hotel, Kuala Lumpur,on 8 September 2004 to preview the fashion predictions andtrends, as set by Bonia.

Riding on the theme of ‘Dettaglio’, (pronounced as De-tha-l’yo),an Italian word which means ‘Detail’, BONIA’s 2004/2005 has sixcollections of over 30 designs of handbags, and the assortmentcovers hand carry and sling bags.

Details / Dettaglio revolves around the wonder and beauty ofnatural material, emphasizing the detailed workmanship that canbe featured in the stitching and weaving, some using silverfinishing and other various small details that can be worked into aproduct.

At first glance, the designs may look simple; however, there will be some complicated details to benoted, possibly on the surface of the bags or tucked into a corner of the product’s design. In turn,the products come with additional compartments or stand alone items, for keys, cardholders, pensand even hand-phones.

Made from quality imported leather and fabric, the main colours for the new season continue tofeature the warm tones of black, brown, beige, orange, yellow, green and even pink. There are loadsof small-sized leather items like wallets, key holders and lipstick holders.

For ladies’ shoes, there are 30 collections with 120 designs to choose from. The details are seen inthe material, sole and heel. Materials focus around different grains of leather, embossed textures onthe surface of vinyl and weaving of jacquard. The centre sole is made of leather with embossed‘BONIA’ logo and this projects a genuine leather feel. The heels are very unique, with leatherribbons on it and leather wrapped with different colour tones from light to dark tones.

The types of shoes available are: comfort court, slip-ons, sandals and loafers. Bonia ladies’ shoesare made from imported quality leather.

For Bonia Uomo 2004/2005 Collection, men’s shoes come in two ranges and both are made fromleather. The colours are in natural tone, with a focus on warm movement of lines and shapes withmore refined detailing and color coordination.

While stitching details are emphasized, shirts vary from stripes to jacquards and the colours rangefrom aquamarine to quarry (silvery grey) to sun orange. Fabrics are mainly cotton, linen and woolmix, with cuttings taking a slightly more relaxed look.

event highlights

47

ANNUAL REPORT 2004

“BONIA NATURAL” BOUTIQUE AT SURIA KLCC

In recent months, many of our boutiques within the cityradius have undergone upgrading in order to provide amore spacious, comfortable and conducive shoppingambience for customers, besides enhancing retailcompetitiveness. We are definitely committed to sourcingfor prime retail space, in order to keep up with the pace ofthe retail world. In addition, we are always developingmore innovative products, which bear the stamp of qualitymaterials and fine craftsmanship, these being the hallmarkof BONIA.

Hence, the birth of our “BONIA NATURAL” boutique, which is just opened on 8 September 2004in conjunction with our 2004/2005 Collection launching. This is a good example of productdifferentiation to provide an entirely different shopping experience to match the calibre ofconsumers who frequent such a prime location.

GDS INTERNATIONAL SHOE FAIRS 2004

“Success across the board, great praise for the new trade fair concept from all quarters”, this wasthe summing-up given by the organiser of the recently concluded GDS International Shoe Fairs2004 in Dusseldorf, Germany. The bi-annual premier international shoe fair was a grand affairinvolving more than 1,520 exhibitors from around the world on 80,000 square meters of exhibitionarea and 42,000 trade visitors. Bonia has taken up a sizeable exhibition booth showcasing ourSpring and Summer 2005 collections during the event. A fair bit of interest and curiosity wasgenerated in our products and brand image. We have received many positive enquiries regardingour brand and products from visitors around the world, particularly from the Middle East, Germanyand Italy. The fair was definitely a good starting point and exposure to create awareness of Boniabrand in Middle Eastern countries and Europe.

event highlights

49

ANNUAL REPORT 2004

The Directors have pleasure in submitting their report and the audited financial statements of the Group and ofthe Company for the financial year ended 30 June 2004.

PRINCIPAL ACTIVITIES

The Company is principally an investment holding and management company. The principal activities of thesubsidiary companies are set out in Note 8 to the financial statements.

There have been no significant changes in the nature of the principal activities of the Group and of the Companyduring the financial year.

RESULTS

Group CompanyRM’000 RM’000

Profit after taxation 7,966 1,388Minority interests (464) -

Net profit for the financial year 7,502 1,388

DIVIDENDS

Dividends paid since the end of the previous financial year were as follows:

RM’000

In respect of the financial year ended 30 June 2003:A first and final dividend of 5 sen, less tax, paid on 28 February 2004 (including dividend

amounted to RM4,572 paid on shares issued on the exercise of options under ESOS) 1,454

The Directors recommended a first and final dividend of 5 sen per ordinary share, less income tax, amounting toRM1,454,000 in respect of the current financial year, which is subject to the approval of the shareholders at theforthcoming Annual General Meeting of the Company.

RESERVES AND PROVISIONS

There were no material transfers to or from reserves or provisions during the financial year other than those asdisclosed in the financial statements.

ISSUE OF SHARES AND DEBENTURES

During the financial year, the issued and paid-up share capital of the Company was increased fromRM40,253,000 to RM40,419,000 by the issue of 166,000 ordinary shares of RM1.00 each at an issue price ofRM1.13 each for cash by virtue of the exercise of options pursuant to the Executives’ Share Option Scheme.

All the new ordinary shares issued rank pari passu in all respect with the then existing shares of the Company.

The Company did not issue any debentures during the financial year.

directors’ report

50

EXECUTIVES’ SHARE OPTION SCHEME

The Executives’ Share Option Scheme (“ESOS”) of the Company came into effect on 4 March 2002. The ESOS shall bein force for a period of 5 years until 3 March 2007 (“the option period”). The main features of the ESOS are as follows:

(a) Eligible Directors and executives are those who are confirmed employees of the Group and have served fulltime for at least one year of continuous service before the date of offer and age eighteen (18) and above.

(b) The maximum number of options offered under the ESOS shall not exceed 10% of the total issued and paid-up share capital of the Company at any point in time during the existence of the ESOS.

(c) The option price for the new shares under the ESOS is determined based on the average of the mean marketquotation of the shares as quoted and shown in the Daily Official List issued by the Bursa MalaysiaSecurities for the five market days immediately preceding the date of offer, or at the par value of the shareof RM1.00, whichever is higher.

(d) The Directors and executives to whom the options have been granted have no right to participate, by virtueof these options, in any share issue of any other company within the Group.

The outstanding offered options to take up unissued ordinary shares of RM1.00 each and the option prices areas follows:

— Number of options over ordinary shares of RM1.00 each —Balance Granted Lapsed Exercised Balance

Option as at during the during the during the as atDate of offer price 1.7.2003 year year year 30.6.2004

RM

16 October 2002 1.13 694,000 (31,000) (166,000) 497,00022 May 2004 1.00 - 3,036,000 (7,000) - 3,029,000

The Company has been granted exemption by the Companies Commission of Malaysia from having to disclosethe names of option holders who have been granted with number of options below 100,000 ordinary shares ofRM1.00 each.

The list of executives with number of options granted of 100,000 and above over ordinary shares of RM1.00 eachwere as follows:

Number of options overordinary shares of RM1.00

each in the CompanyOption As at As at

Date of offer Name of option holder price 1.7.2003 Exercised 30.6.2004RM

16 October 2002 Chiang Sang Sem 1.13 30,000 - 30,00016 October 2002 Chiang Heng Kieng 1.13 59,000 - 59,00016 October 2002 Chong Chin Look 1.13 43,000 - 43,000

Number of options overordinary shares of RM1.00

each in the CompanyOption As at

Date of offer Name of option holder price Granted Exercised 30.6.2004RM

22 May 2004 Chiang Sang Sem 1.00 162,000 - 162,00022 May 2004 Chiang Heng Kieng 1.00 162,000 - 162,00022 May 2004 Chiang Sang Bon 1.00 127,000 - 127,00022 May 2004 Chong Chin Look 1.00 127,000 - 127,000

directors’ report

51

ANNUAL REPORT 2004

DIRECTORS

The Directors who held office since the date of the last report are as follows:

Chiang Sang SemChiang Heng KiengChiang Sang BonChong Chin LookDatuk Nik Hussain bin Nik AliDatuk Ng Peng HayDato’ Shahbudin bin Imam MohamadLim Fong BoonChiang Fong Yee (Appointed as Alternate Director to Mr. Chiang Sang Sem w.e.f 18 February 2004)Chiang Fong Tat (Appointed on 30 August 2004)

In accordance with Article 96 of the Company’s Articles of Association, Mr. Chiang Sang Bon, Mr. Chiang HengKieng and Dato’ Shahbudin bin Imam Mohamad retire from the Board by rotation at the forthcoming AnnualGeneral Meeting and, being eligible, offer themselves for re-election.

In accordance with Article 90 of the Company’s Articles of Association, Mr. Chiang Fong Tat retires from the Boardby rotation at the forthcoming Annual General Meeting and, being eligible, offers himself for re-election.

Datuk Nik Hussain bin Nik Ali retires in accordance with Section 129(2) of the Companies Act, 1965. The Boardrecommends that Datuk Nik Hussain bin Nik Ali be re-appointed as Director of the Company pursuant to Section129(6) of the Companies Act, 1965, to hold office until the conclusion of the next Annual General Meeting.

DIRECTORS’ INTEREST

Except as stated below, no other Director holding office at the end of the financial year had any beneficial interestin the ordinary shares of the Company and related companies during the financial year ended 30 June 2004, asrecorded in the Register of Directors’ Shareholdings kept by the Company under Section 134 of the CompaniesAct, 1965:

— Number of ordinary shares of RM1.00 each —Balance Balance

as at as at1.7.2003 Bought Sold 30.6.2004

Shares in the Company

Direct interest

Chiang Sang Sem 29,000* - - 29,000Chiang Sang Bon 43,000* - - 43,000

Indirect interest

Chiang Sang Sem 16,175,664 - - 16,175,664Datuk Nik Hussain bin Nik Ali 1,105,233 - - 1,105,233

directors’ report

52

DIRECTORS’ INTEREST (Cont’d)

— Number of ordinary shares of RM1.00 each —Balance Balance

as at as at1.7.2003 Granted Exercised 30.6.2004

Share option in the Company

Direct interest

Chiang Sang Sem 30,000 162,000 - 192,000Chiang Heng Kieng 59,000 162,000 - 221,000Chong Chin Look 43,000 127,000 - 170,000Chiang Sang Bon - 127,000 - 127,000Chiang Fong Yee - 78,000 - 78,000Chiang Fong Tat - 78,000 - 78,000

* Exercise of option granted under ESOS.

By virtue of Section 6A of the Companies Act, 1965, Mr. Chiang Sang Sem is deemed to have an interest in sharesof the subsidiary companies to the extent the Company has an interest.

DIRECTORS’ BENEFITS

Since the end of the previous financial year, none of the Directors have received or become entitled to receive abenefit (other than a benefit included in the aggregate amount of emoluments received or due and receivable bythe Directors as disclosed in the financial statements) by reason of a contract made by the Company or a relatedcorporation with the Director or with a firm of which the Director is a member or with a company in which theDirector has a substantial financial interest except for benefits which may be deemed to have derived by virtueof the significant related party transactions as disclosed in Note 39 to the financial statements.

There were no arrangements during and at the end of the financial year, to which the Company is a party, whichhad the object of enabling Directors of the Company to acquire benefits by means of the acquisition of shares inor debentures of the Company or any other body corporate.

OTHER STATUTORY INFORMATION REGARDING THE GROUP AND THE COMPANY:

(I) AS AT THE END OF THE FINANCIAL YEAR

(a) Before the income statements and balance sheets of the Group and of the Company were made out,the Directors took reasonable steps:

(i) to ascertain that proper action had been taken in relation to the writing off of bad debts and themaking of provision for doubtful debts and have satisfied themselves that all known bad debtshad been written off and that adequate provision had been made for doubtful debts; and

(ii) to ensure that any current assets which were unlikely to realise their book values in the ordinarycourse of business had been written down to their estimated realisable values.

(b) In the opinion of the Directors, the results of the operations of the Group and of the Company duringthe financial year have not been substantially affected by any item, transaction or event of a materialand unusual nature.

directors’ report

53

ANNUAL REPORT 2004

OTHER STATUTORY INFORMATION REGARDING THE GROUP AND THE COMPANY (Cont’d):

(II) FROM THE END OF THE FINANCIAL YEAR TO THE DATE OF THIS REPORT

(c) The Directors are not aware of any circumstances:

(i) which would render the amount written off for bad debts or the amount of the provision fordoubtful debts in the financial statements of the Group and of the Company inadequate to anymaterial extent; or

(ii) which would render the values attributed to current assets in the financial statements of theGroup and of the Company misleading; and

(iii) which have arisen which would render adherence to the existing method of valuation of assetsor liabilities of the Group and of the Company misleading or inappropriate.

(d) In the opinion of the Directors:

(i) there has not arisen any item, transaction or event of a material and unusual nature likely to affectsubstantially the results of the operations of the Group and of the Company for the financial yearin which this report is made; and

(ii) no contingent or other liability has become enforceable, or is likely to become enforceable,within the period of twelve months after the end of the financial year which will or may affectthe ability of the Group and of the Company to meet their obligations as and when they fall due.

(III) AS AT THE DATE OF THIS REPORT

(e) There are no charges on the assets of the Group and of the Company which have arisen since the endof the financial year to secure the liabilities of any other person.

(f) There are no contingent liabilities of the Group and of the Company which have arisen since the endof the financial year.

(g) The Directors are not aware of any circumstances not otherwise dealt with in the report or financialstatements which would render any amount stated in the financial statements of the Group and of theCompany misleading.

SIGNIFICANT EVENTS DURING THE FINANCIAL YEAR

(i) On 4 December 2003, the Company acquired the entire equity interest in Future Classic Sdn. Bhd.(“FCSB”), comprising 2 ordinary shares of RM1.00 each, for a total cash consideration of RM2.00.

Subsequently, FCSB increased its issued and paid-up share capital from RM2.00 to RM100,000 via anallotment of 99,998 ordinary shares of RM1.00 each at par as additional working capital and were fullysubscribed by the Company.

(ii) On 16 February 2004, the Company subscribed 24,500 ordinary shares of 100 Thai Baht representing 49%equity interest in BBA International Co., Ltd., a company incorporated in Thailand, for a cash considerationof 2,450,000 Thai Baht or its equivalent of RM235,935.

(iii) On 19 May 2004, the Company signed a Memorandum of Understanding with Azizia Panda TradingCompany Ltd, a limited liability company incorporated under the laws of Kingdom of Saudi Arabia, in apartnership to introduce and develop the housename of the Company in the Kingdom of Saudi Arabia.

directors’ report

54

EVENTS SUBSEQUENT TO THE BALANCE SHEET DATE

(i) On 1 July 2004, the Company acquired the entire equity interest in Armani Context Sdn. Bhd. comprising2 ordinary shares of RM1.00 each for a total cash consideration of RM2.00.

(ii) On 5 July 2004, the Company acquired the entire equity interest in Daily Frontier Sdn. Bhd. comprising 2ordinary shares of RM1.00 each for a total cash consideration of RM2.00.

(iii) On 16 August 2004, the Company’s wholly-owned subsidiary, Dominion Directions Sdn. Bhd. (“DDSB”)disposed of 37,500 ordinary shares of RM1.00 each representing 5% equity interest in VR Directions Sdn.Bhd. (“VRDSB”) to an existing shareholder of VRDSB, for a total cash consideration of RM37,500. DDSB’sequity interest in VRDSB was reduced from 75% to 70% after the disposal.

(iv) On 30 August 2004, the Company made an announcement to propose the following:

(a) To increase its authorised share capital of the Company from RM50,000,000 comprising 50,000,000ordinary shares of RM1.00 each to RM100,000,000 comprising 100,000,000 ordinary shares ofRM1.00 each by the creation of 50,000,000 ordinary shares of RM1.00 each.

(b) A proposed rights issue of up to 23,246,000 3-year warrants 2004/2007 (“Warrants”) on the basis of 1Warrant for every 2 ordinary shares of RM1.00 each in the Company held at an issue price of RM0.10per Warrant.

(c) Amendments to its existing ESOS in view of the revised Bursa Malaysia Listing Requirements. Theproposed amendments, amongst others, comprise the following:

• the total number of new shares to be issued by the Company under the ESOS shall not exceed inaggregate 15% of the issued and paid-up share capital of the Company at any one time; and

• the grant of ESOS to Non-Executive Directors of the Company.

(d) The above amendments to be made to the Memorandum and Articles of Association of the Company.

The proposals are subject to and conditional upon approvals from the shareholders and relevant regulatorybodies.

AUDITORS

The auditors, BDO Binder, have expressed their willingness to continue in office.

Signed on behalf of the Board of Directors in accordance with a resolution of the Directors.

Chiang Sang SemExecutive Chairman

Chiang Heng KiengManaging Director

Kuala Lumpur

13 October 2004

directors’ report

55

ANNUAL REPORT 2004

In the opinion of the Directors, the financial statements set out on pages 57 to 107 have been drawn up inaccordance with applicable 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 at 30 June 2004 and of their results for the financialyear then ended; and

(ii) the cash flows of the Group and of the Company for the financial year ended 30 June 2004.

On behalf of the Board,

Chiang Sang SemExecutive Chairman

Chiang Heng KiengManaging Director

Kuala Lumpur

13 October 2004

statement by directors

I, Chong Chin Look, being the Director primarily responsible for the financial management of Bonia CorporationBerhad, do solemnly and sincerely declare that the financial statements set out on pages 57 to 107 are, to thebest of my knowledge and belief, correct and I make this solemn declaration conscientiously believing the sameto be true and by virtue of the provisions of the Statutory Declarations Act, 1960.

Subscribed and solemnly )declared by the abovenamed at )Kuala Lumpur this )13 October 2004 )

Before me:

A. T. Velu (No. W-240)Commissioner for OathsKuala Lumpur

statutory declaration

56

We have audited the financial statements set out on pages 57 to 107. These financial statements are theresponsibility of the Company’s Directors. Our responsibility is to express an opinion on the financial statementsbased on our audit.

We conducted our audit in accordance with approved standards on auditing in Malaysia. These standardsrequire that we plan and perform the audit to obtain reasonable assurance about whether the financial statementsare free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amountsand disclosures in the financial statements. An audit also includes assessing the accounting principles used andsignificant estimates made by the Directors, as well as evaluating the overall financial statement presentation.We believe that our audit provides a reasonable basis for our opinion.

In our opinion:

(a) the financial statements have been properly drawn up in accordance with applicable approved accountingstandards in Malaysia and the provisions of the Companies Act, 1965 so as to give a true and fair view of:

(i) the matters required by Section 169 of the Companies Act, 1965 to be dealt with in the financialstatements of the Group and of the Company; and

(ii) the state of affairs of the Group and of the Company as at 30 June 2004 and of their results and cashflows for the financial year then ended;

and

(b) the accounting and other records and the registers required by the Act to be kept by the Company and itssubsidiary companies of which we have acted as auditors have been properly kept in accordance with theprovisions of the said Act.

We have considered the financial statements and the auditors’ reports of the subsidiary companies of which wehave not acted as auditors as indicated in Note 8 of the financial statements, being financial statements that havebeen included in the consolidated financial statements.

We are satisfied that the financial statements of the subsidiary companies that have been consolidated with theCompany’s financial statements are in form and content appropriate and proper for the purposes of thepreparation of the consolidated financial statements and we have received satisfactory information andexplanations required by us for those purposes.

The auditors’ reports on the financial statements of the subsidiary companies were not subject to any qualificationand did not include any comment made under Section 174(3) of the Act.

BDO BinderAF : 0206Chartered Accountants

Tan Lye Chong1972/08/05 (J)Partner

Kuala Lumpur

13 October 2004

report of the auditorsto the Members of Bonia Corporation Berhad

57

ANNUAL REPORT 2004

Group Company2004 2003 2004 2003

ASSETS EMPLOYED NOTE RM’000 RM’000 RM’000 RM’000

PROPERTY, PLANT AND EQUIPMENT 6 31,318 32,379 17,704 18,096PROPERTY DEVELOPMENT EXPENDITURE 7 28,388 37,837 - -INVESTMENT IN SUBSIDIARY COMPANIES 8 - - 45,369 45,269INVESTMENT IN ASSOCIATED COMPANIES 9 209 - 236 -INTEREST IN JOINT VENTURE 10 516 516 - -INVESTMENT PROPERTIES 11 6,230 6,260 - -LONG TERM INVESTMENTS 12 3,131 195 3,000 -INTANGIBLE ASSETS 13 9,357 9,923 - -DEFERRED TAX ASSETS 29 314 299 - -

CURRENT ASSETS

Inventories 14 28,098 24,246 - -Trade receivables 15 30,258 13,720 - -Other receivables, deposits and prepayments 16 16,254 11,596 754 4Amounts owing by subsidiary companies 17 - - 24,536 2,731Amount owing by an associated company 18 185 183 185 183Tax recoverable 22 309 - -Fixed deposits with licensed banks 19 5,423 2,469 3,000 -Cash and bank balances 20 3,556 2,196 11 13

83,796 54,719 28,486 2,931

LESS: CURRENT LIABILITIES

Trade payables 21 7,029 6,075 - -Other payables and accruals 22 15,301 12,275 510 400Hire-purchase and lease creditors 23 367 366 - -Amounts owing to subsidiary companies 17 - - 6,086 5,560Bank borrowings 24 31,583 32,354 2,020 1,843Bank overdrafts 26 6,111 14,622 547 963Tax liabilities 2,331 2,229 137 88

62,722 67,921 9,300 8,854

NET CURRENT ASSETS/(LIABILITIES) 21,074 (13,202) 19,186 (5,923)

100,537 74,207 85,495 57,442

FINANCED BY

SHARE CAPITAL 27 40,419 40,253 40,419 40,253RESERVES 28 25,669 19,439 14,607 14,651

SHAREHOLDERS’ EQUITY 66,088 59,692 55,026 54,904MINORITY INTERESTS 1,114 650 - -

NON-CURRENT AND DEFERRED LIABILITIES

Hire-purchase and lease creditors 23 685 696 - -Term loans 25 32,517 13,089 30,457 2,519Deferred tax liabilities 29 133 80 12 19

100,537 74,207 85,495 57,442

balance sheetsas at 30 June 2004

The attached notes form an integral part of the financial statements.

58

Group Company2004 2003 2004 2003

NOTE RM’000 RM’000 RM’000 RM’000

Revenue 30 150,499 119,196 3,493 6,272

Cost of sales (75,509) (59,870) - -

Gross profit 74,990 59,326 3,493 6,272

Other operating income 1,497 2,120 281 -

Marketing and distribution expenses (28,435) (20,499) - -

General and administration expenses (30,724) (29,578) (1,554) (1,428)

Profit from operations 17,328 11,369 2,220 4,844

Finance costs (4,846) (5,504) (518) (492)

Share of loss in associated companies (27) - - -

Profit before tax 31 12,455 5,865 1,702 4,352

Tax expense 32 (4,489) (3,380) (314) (925)

Profit after tax 7,966 2,485 1,388 3,427

Minority interests (464) (140) - -

Net profit for the financial year 7,502 2,345 1,388 3,427

Gross dividend per ordinary share (sen) 33 5.0 5.0 5.0 5.0

Earnings per share (sen) 34

- Basic 18.58 5.84

- Diluted 18.49 5.83

income statementsfor the financial year ended 30 June 2004


59

ANNUAL REPORT 2004

Ordinary Foreignshare Share Capital exchange Retained

capital premium reserve reserve profits TotalRM’000 RM’000 RM’000 RM’000 RM’000 RM’000

GROUP

Balance as at 1 July 2002 40,000 1,722 382 1,628 14,726 58,458

Issue of shares pursuant to the Executives’ Share Option Scheme 253 33 - - - 286

Addition in capital reserve- arising from acquisition

of subsidiary companies - - 78 - - 78- arising from additional

investment in an existingsubsidiary company - - 152 - - 152

- - 230 - - 230

Translation loss - - - (178) - (178)

Net loss not recognised in the income statement - - - (178) - (178)

Net profit for the financial year - - - - 2,345 2,345

Dividends (Note 33) - - - - (1,449) (1,449)

Balance as at 1 July 2003 40,253 1,755 612 1,450 15,622 59,692

Issue of shares pursuant to the Executives’ Share Option Scheme 166 22 - - - 188

Translation gain - - - 160 - 160

Net gain not recognised in the income statement - - - 160 - 160

Net profit for the financial year - - - - 7,502 7,502

Dividends (Note 33) - - - - (1,454) (1,454)

Balance as at 30 June 2004 40,419 1,777 612 1,610 21,670 66,088

statements of changes in equityfor the financial year ended 30 June 2004


60

Ordinaryshare Share Retained

capital premium profits TotalRM’000 RM’000 RM’000 RM’000

COMPANY

Balance as at 1 July 2002 40,000 1,722 10,918 52,640

Issue of shares pursuant to the Executives’ Share Option Scheme 253 33 - 286

Net profit for the financial year - - 3,427 3,427

Dividends (Note 33) - - (1,449) (1,449)

Balance as at 1 July 2003 40,253 1,755 12,896 54,904

Issue of shares pursuant to the Executives’ ShareOption Scheme 166 22 - 188

Net profit for the financial year - - 1,388 1,388

Dividends (Note 33) - - (1,454) (1,454)

Balance as at 30 June 2004 40,419 1,777 12,830 55,026

statements of changes in equityfor the financial year ended 30 June 2004


61

ANNUAL REPORT 2004

Group Company2004 2003 2004 2003

RM’000 RM’000 RM’000 RM’000CASH FLOWS FROM OPERATING ACTIVITIES

Profit before tax 12,455 5,865 1,702 4,352

Adjustments for:

Share of loss in associated companies 27 - - -Amortisation of trademarks 6 27 - -Bad debts written off 2 28 - 8Depreciation of property, plant and equipment 4,304 3,069 392 368Dividend income - - (1,525) (4,400)Gain on disposal of property, plant and equipment (70) (114) - -Impairment loss of investment properties 30 1,026 - -Impairment loss on development expenditure - 2,883 - -Impairment loss on goodwill 560 663 - -Impairment loss on property, plant and equipment 2,369 279 - -Interest expense 3,342 3,538 512 487Interest income (1,045) (1,600) (245) -Loss on disposal of property, plant and equipment - 252 - 4Preliminary expenses written off 2 - - -Property, plant and equipment written off - 134 - -Loss on disposal of investment properties - 112 - -Long term investment written down 66 - - -

Operating profit before changes in working capital 22,048 16,162 836 819

Decrease in property development expenditure 9,449 - - -(Increase)/Decrease in inventories (3,800) 4,413 - -(Increase)/Decrease in trade receivables (16,480) 137 - -Increase in other receivables, deposits and

prepayments (5,005) (2,380) (747) (4)Increase/(Decrease) in trade payables 935 (1,956) - -Increase in other payables and accruals 2,965 3,714 108 44

Cash generated from operations 10,112 20,090 197 859

Interest received 947 1,504 - -Preliminary expenses paid (2) - - -Tax paid (3,613) (3,028) (125) (56)

Net cash from operating activities 7,444 18,566 72 803

cash flow statementsfor the financial year ended 30 June 2004

62

Group Company2004 2003 2004 2003

RM’000 RM’000 RM’000 RM’000CASH FLOWS FROM INVESTING ACTIVITIES

Interest received 98 96 245 - Dividend received - - 1,378 3,560Uplift/(Placement) of fixed deposits pledged 737 (86) - - Increase in interest in joint venture - (2) - - Acquisition of additional shares in subsidiary

companies - - (100) (1,508)Increase in investment (3,000) - (3,000) -Investment in an associated company (236) - (236) -Acquisition of a subsidiary company (Note 35) - 70 - (88)Proceeds from disposal of property, plant and

equipment 139 758 - 2Proceeds from disposal of investment properties - 1,214 - - Purchase of property, plant and equipment (Note 36) (5,282) (2,604) - (14)Payment for trademarks - (1) - -

Net cash (used in)/from investing activities (7,544) (555) (1,713) 1,952

CASH FLOWS FROM FINANCING ACTIVITIES

Interest paid (3,342) (3,538) (512) (487)Repayment to subsidiary companies - - - (6,107)Advance to an associated company (2) (3) (2) (3)Advance received from subsidiary companies - - 526 6,388Advance to subsidiary companies - - (21,804) -Dividend paid (1,454) (1,449) (1,454) (1,449)Proceeds from issue of shares 188 286 188 286Net drawdown/(Repayment) of term loans 17,869 (6,995) 28,113 (1,729)Addition/(Net repayment) of bankers’ acceptance

and trust receipts 771 (755) - - Repayment of hire-purchase and lease creditors (398) (519) - -

Net cash from/(used in) financing activities 13,632 (12,973) 5,055 (3,101)

NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS 13,532 5,038 3,414 (346)

CASH AND CASH EQUIVALENTS AT BEGINNING OF THE FINANCIAL YEAR (12,344) (17,398) (950) (604)

FOREIGN EXCHANGE DIFFERENCES ON OPENING BALANCES 30 16 - -

CASH AND CASH EQUIVALENTS AT END OF THE FINANCIAL YEAR (Note 37) 1,218 (12,344) 2,464 (950)

cash flow statementsfor the financial year ended 30 June 2004


63

ANNUAL REPORT 2004

1. GENERAL INFORMATION

The Company is a public limited liability company, incorporated and domiciled in Malaysia and listed onthe Second Board of Bursa Malaysia Securities.

The registered office of the Company is located at Suite 13A-2, Menara Uni.Asia, 1008 Jalan Sultan Ismail,50250 Kuala Lumpur.

The principal place of business of the Company is located at No. 62, Jalan Kilang Midah, Taman Midah,Cheras, 56000 Kuala Lumpur.

The financial statements are presented in Ringgit Malaysia.

2. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES

The Board of Directors recognises the importance of financial risk management in the overall managementof the Group’s business. A sound risk management system will not only mitigate financial risk but will beable to create opportunities if risk elements are properly managed.

The Group’s overall financial risk management objective is to ensure that the Group creates value for itsshareholders while minimising potential adverse effects on the performance of the Group. Financial riskmanagement is carried out through risk reviews, internal control systems and adherence to the Group’sfinancial risk management policies, set out as follows:

Liquidity and cash flow risks

The Group is actively managing its operating cash flow to ensure all commitments and funding needs aremet. As part of the overall liquidity management, it is the Group’s policy to ensure continuity in servicingits cash obligations in the future by way of forecasting its cash commitments and to maintain sufficient levelsof cash or cash equivalents to meet its working capital requirements. In addition, the Group also maintainavailable banking facilities sufficient to meet its operational needs.

Credit risk

Credit risk, which is the risk of counter parties defaulting, is controlled by the application of creditapprovals, limit and monitoring procedures. Credit evaluations are performed on all customers requiringcredit and strictly limiting the Group’s associations to parties with high credit worthiness. Trade receivablesare monitored on an ongoing basis to ensure that the Group is exposed to minimal credit risk.

Foreign currency exchange risk

The Group is exposed to currency risk as a result of the Group’s transactions with foreign trade receivablesand trade payables. The Group monitors the movement in foreign currency exchange rates closely to ensuretheir exposures are minimised. The Group uses derivative financial instruments such as foreign exchangecontracts to hedge certain exposure, but it does not trade in financial instruments.

Interest rate risk

The Group’s income and operating cash flow are substantially independent of changes in market interestrates. Interest rate exposure arises from the Group’s borrowings and is managed through the use of fixedand floating rate debts. The Group does not use derivative financial instruments to hedge its risk.

notes to the financial statements30 June 2004

64

3. PRINCIPAL ACTIVITIES

The Company is principally an investment holding and management company. The principal activities ofthe subsidiary companies are set out in Note 8 to the financial statements.

There have been no significant changes in the nature of the principal activities of the Group and of theCompany during the financial year.

4. BASIS OF PREPARATION OF THE FINANCIAL STATEMENTS

The financial statements of the Group and of the Company have been prepared in accordance withapplicable approved accounting standards in Malaysia and the provisions of the Companies Act, 1965.

5. SIGNIFICANT ACCOUNTING POLICIES

5.1 Basis of accounting

The financial statements of the Group and of the Company have been prepared under the historicalcost convention unless otherwise indicated in the significant accounting policies.

The preparation of financial statements in conformity with applicable approved accounting standardsin Malaysia and the provisions of the Companies Act, 1965 requires the Directors to make estimatesand assumptions that affect the reported amounts of assets and liabilities and disclosure of contingentliabilities at the date of the financial statements and the reported amounts of revenues and expensesduring the reporting period. Actual results could differ from those estimates.

5.2 Basis of consolidation

The consolidated financial statements incorporate the financial statements of the Company and all itssubsidiary companies made up to the end of the financial year. Inter-company transactions andbalances are eliminated on consolidation and the consolidated financial statements reflect externaltransactions only.

All the subsidiaries are consolidated using the acquisition method of accounting except for CBHoldings (Malaysia) Sdn. Bhd., CB Marketing Sdn. Bhd. and Ataly Industries Sdn. Bhd., which wereconsolidated using the merger method of accounting in accordance with Malaysian AccountingStandard No. 2, “Accounting for Acquisitions and Mergers”, being the generally accepted accountingprinciples prevailing at that time.

Under the acquisition method of accounting, the results of subsidiary companies acquired or disposedof are included from the effective date of acquisition or up to the effective date of disposal. At the dateof acquisition, the fair values of the subsidiary companies’ net assets are determined and these valuesare reflected in the consolidated financial statements. The excess of the cost of acquisition over thefair value of the Group’s share of the subsidiary companies’ identifiable net assets at the date ofacquisition is reflected as goodwill on consolidation.

Under the merger method of accounting, the results of the subsidiary companies are presented as ifthe merger had been effected throughout the current and previous financial periods. Onconsolidation, the difference between the carrying value of the investment in these subsidiarycompanies over the nominal value of the shares acquired is taken to merger reserve.

Goodwill arising on consolidation is stated at cost and is subject to yearly review by the Directors andwill be written down when it is determined that there is an impairment in the carrying value ofinvestment in subsidiary companies.

Minority interest is measured at the minorities’ share of the post-acquisition fair values of theidentifiable assets and liabilities of the acquiree.


65

ANNUAL REPORT 2004

5. SIGNIFICANT ACCOUNTING POLICIES (Cont’d)

5.3 Investments

(i) Subsidiary companies

A subsidiary company is a company in which the Group has power to exercise control over thefinancial and operating policies so as to obtain benefits from its activities.

Investments in subsidiary companies which are eliminated on consolidation are stated at cost lessimpairment losses, if any.

(ii) Associated company

An associated company is a company in which the Group and the Company have a long termequity interest and where the Group and the Company is in a position to exercise significantinfluence over the financial and operating policies of the investee company.

The Company’s investment in associated companies is stated at cost less impairment losses, ifany.

Investment in associated companies is accounted for in the consolidated financial statementsusing the equity method of accounting. The Group’s interest in associated companies is stated atcost plus adjustments to reflect changes in the Group’s share of profits and losses in theassociated companies.

Goodwill or negative goodwill arising on acquisition represents the difference between the costof investment and the Group’s share of the fair value of net assets of the associated companies atthe date of acquisition.

Goodwill on acquisition is stated at cost less impairment losses, if any. Negative goodwill arisingon acquisition is not recognised as income.

The Group’s share of results and reserves in the associated companies acquired or disposed ofare included in the consolidated financial statements from the effective date of acquisition or upto the effective date of disposal.

(iii) Other investments

Other long term investments are stated at cost. Such investments are written down when theDirectors are of the opinion that there is a permanent diminution in their value.

5.4 Property, plant and equipment and depreciation

Property, plant and equipment are stated at cost less accumulated depreciation and impairment losses,if any.

Freehold land is not depreciated. Long term leasehold land and buildings are amortised over the termof the respective lease period which ranges from 50 to 100 years.

Properties under construction will only be depreciated upon completion.

During the financial year, the Group and the Company revised the estimated useful lives of theproperty, plant and equipment to better reflect their usage. The revision has the effect of reducing theprofit before tax and the net book value of property, plant and equipment of the Group and theCompany by RM861,748 and RM29,578 respectively.


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5.4 Property, plant and equipment and depreciation (Cont’d)

Depreciation on other property, plant and equipment is calculated on a straight line basis to write offthe costs of the assets on a straight line basis over their estimated useful lives. The principal annualdepreciation rates are as follows:

Freehold buildings 2%Plant and machinery 15% - 20%Furniture, fittings and counter fixtures 10% - 33.33%Office equipment 10% - 50%Renovation 10% - 33.33%Electrical installations 10%Motor vehicles 20%

5.5 Property development expenditure

Property development expenditure are stated at cost less impairment losses, if any.

Development properties comprise property development cost that are directly attributable to thedevelopment activities or that can be allocated on a reasonable basis to such activities. They comprisethe costs of land under development, construction costs and other related development costs commonto the whole project including administrative overheads and borrowings costs.

Development properties on which development activities have commenced or where it can bedemonstrated that the development activities can be completed within the normal operating cycle areclassified as current assets.

When the outcome of a development activity can be estimated reliably, property development revenueand expenses are recognised in the income statement by reference to the stage of completion ofdevelopment activity at the balance sheet date.

When the outcome of a development activity cannot be reliably estimated, the property developmentrevenue shall be recognised only to the extent of property development costs incurred that is probableto be recoverable and property development costs on the development units sold are recognised as anexpense in the period in which they are incurred.

Any expected loss on a development activity is recognised as an expense immediately.

5.6 Impairment of assets

The carrying amounts of the Group’s and of the Company’s assets, other than inventories, deferred taxassets and financial assets (other than investments in subsidiary companies, associated companies andinterest in joint venture), are reviewed at each balance sheet date to determine whether there is anyindication of impairment. If any such indication exists, the asset’s recoverable amount is estimatedand an impairment loss is recognised whenever the recoverable amount is less than the carryingamount of the asset.

An impairment loss is recognised in the income statement immediately except for the impairment ona revalued asset where the impairment loss is recognised directly against the revaluation reserveaccount to the extent of the surplus credited from the previous revaluation for the same asset with theexcess of the impairment loss charged out to the income statement.


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ANNUAL REPORT 2004


5.6 Impairment of assets (Cont’d)

All reversal of an impairment loss is recognised as income immediately in the income statement exceptfor the reversal of an impairment loss on a revalued asset where the reversal of the impairment loss istreated as a revaluation increase and credited to the revaluation reserve account of the same asset.

The impairment loss in respect of goodwill is not reversed unless the loss was caused by a specificexternal event of an exceptional nature that is not expected to recur, and subsequent external eventshave occurred that reverse the effect of the specific event. In respect of other assets, an impairmentloss is reversed if there has been a change in estimates used to determine the recoverable amount.

An impairment loss is only reversed to the extent that the asset’s carrying amount does not exceed thecarrying amount that would have been determined, net of depreciation or amortisation, if noimpairment loss had been recognised.

5.7 Interest in joint venture

Interest in joint venture comprises relevant development expenditure and the Group’s share of profitand loss attributable to development work performed, less progress billings received and receivable.

Profits from joint venture are recognised based on the percentage of completion method and fullallowance is made for foreseeable losses, if any.

5.8 Investment properties

Investment properties are those properties in respect of which construction work and developmenthave been completed, not occupied substantially for use by, or in the operations of the Group and areheld for investment potential and rental income. They are accounted for as long term investments andare stated at cost less impairment losses, if any.

5.9 Intangible assets

Cost of acquiring trademarks is capitalised and is charged to the income statement over seven years inequal instalments. Cost of renewing trademarks is treated as an expense and is charged to the incomestatement in the period in which it is incurred.

5.10 Inventories

Inventories of raw materials, work-in-progress and finished goods are stated at the lower of cost(determined on a first-in, first-out basis) and net realisable value.

Costs of raw materials and consumables comprise the original cost of purchase plus the cost ofbringing the inventories to their present location and condition.

Costs of work-in-progress and finished goods comprise the cost of raw materials, direct labour and aproportion of manufacturing overheads.

5.11 Receivables

Receivables are carried at anticipated realisable value. Known bad debts are written off and specificallowance is made for debts considered to be doubtful of collection.


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5.12 Payables

Payables are stated at costs which is the fair value of the consideration to be paid in the future for goodsand services received.

5.13 Assets acquired under hire-purchase and lease arrangements

Assets financed by hire-purchase and leasing arrangements which transfer substantially all the risksand rewards of ownership to the Group and the Company are capitalised as property, plant andequipment and the corresponding obligations are treated as liabilities. The property, plant andequipment are depreciated on the same basis as owned assets.

Finance charges are allocated to the income statement over the period of the agreements to give aconstant periodic rate of charge on the remaining hire-purchase and lease liabilities.

5.14 Provisions

Provisions are recognised when there is a present obligation, legal or constructive, as a result of a pastevent, when it is probable that an outflow of resources embodying economic benefits will be requiredto settle the obligation and a reliable estimate can be made of the amount of the obligation.

5.15 Employee benefits

5.15.1 Short term employee benefits

Wages, salaries, social security contributions, paid annual leave, paid sick leave, bonuses andnon-monetary benefits are recognised as an expense in the financial year when employeeshave rendered their services to the Group.

Short term accumulating compensated absences such as paid annual leave are recognised asan expense when employees render services that increase their entitlement to futurecompensated absences. Short term non-accumulating compensated absences such as sickleave are recognised when the absences occur.

Bonuses are recognised as an expense when there is a present, legal or constructive obligationto make such payments, as a result of past events and when a reliable estimate can be madeof the amount of the obligation.

5.15.2 Defined contribution plans

The Company and subsidiary companies incorporated in Malaysia make contributions to astatutory provident fund and foreign subsidiary companies make contributions to theirrespective countries’ statutory pension schemes and recognise the contribution payable:

(a) after deducting contributions already paid as a liability; and

(b) as an expense in the financial year in which the employees render their services.

5.15.3 Termination benefits

Termination benefits are payments due to employees as a result of the termination ofemployment before the normal retirement date or to encourage voluntary redundancy.

They are recognised as a liability and an expense when the Group has a detailed formal planfor termination with no realistic possibility of withdrawal. In the case of voluntary redundancy,the benefits are accounted for based on the number of employees expected to accept the offer.


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ANNUAL REPORT 2004


5.16 Income tax

Income tax in the financial statements for the financial year comprises current tax expense anddeferred tax.

5.16.1 Current tax expense

Current tax expense includes all domestic and foreign taxes which are based on taxableprofits.

5.16.2 Deferred tax

Deferred tax, which includes deferred tax liabilities and assets, is provided for under theliability method at the current tax rate in respect of all temporary differences between thecarrying amount of an asset or liability in the balance sheet and its tax base including unusedtax losses and capital allowances.

A deferred tax asset is recognised only to the extent that it is probable that taxable profit willbe available against which the deductible temporary differences can be utilised. The carryingamount of a deferred tax asset is reviewed at each balance sheet date. If it is no longerprobable that sufficient taxable profit will be available to allow the benefit of part or all of thatdeferred tax asset to be utilised, the carrying amount of the deferred tax asset will be reducedaccordingly. When it becomes probable that sufficient taxable profit will be available, suchreductions will be reversed to the extent of the taxable profit.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to set offcurrent tax assets against current tax liabilities and when the deferred tax assets and deferredtax liabilities relate to the same taxation authority.

5.17 Foreign currency transactions and translations

(a) Transactions and balances in foreign currencies

Transactions in foreign currencies are converted into Ringgit Malaysia at the rates of exchangeruling on transaction dates. Monetary assets and liabilities denominated in foreign currencies atthe balance sheet date are translated into Ringgit Malaysia at the approximate rates of exchangeat the balance sheet date.

All gains or losses arising from translating foreign monetary assets and liabilities are taken up inthe income statement.

(b) Translation of foreign currency financial statements

For consolidation purposes, the assets and liabilities of foreign entities are translated into RinggitMalaysia at the rates ruling at the balance sheet date. Income statement items are translated ataverage rate for the period. The translation differences arising therefrom are taken up andreflected in the foreign exchange translation reserve.

(c) The principal closing rates used in the translation of foreign currency amounts are:

2004 2003RM RM

1 US Dollar 3.8000 3.80001 Euro 4.6710 4.37081 Singapore Dollar 2.2112 2.15811 Renminbi 0.4700 0.45911 Hong Kong Dollar 0.4870 0.48731 Korea Won - 0.00321 Swiss Franc 3.0690 -1 Thai Baht 0.0920 -


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5.18 Revenue recognition

Revenue from sale of goods is recognised upon delivery of products and customer’s acceptance.

Revenue from sale of property development project is recognised based on stage of completion. Thestage of completion is determined based on the proportion that costs incurred to date bear to theestimated total property development costs.

Revenue from progressive sale of land is recognised when risk and rewards of ownership have beentransferred.

Royalty and rental income are recognised on accrual basis.

Interest income earned is recognised on accrual basis.

Dividend income is recognised when the shareholder’s right to receive payment is established.

5.19 Cash and cash equivalents

Cash and cash equivalents include cash and bank balances, bank overdrafts, deposits and other shortterm, highly liquid investments which are readily convertible to cash and which are subject toinsignificant risk of changes in value.

5.20 Segment information

Segment information is presented in respect of the Group’s business and geographical segments. Theprimary reporting segment information is in respect of business segments as the Group’s risk andreturns are affected predominantly by differences in the products it produces, while the secondaryinformation is reported geographically.

A segment with a majority of operating income earned from providing product or services to externalcustomers and whose operating income, results or assets are 10 percent or more of all the segments isreported separately.

Segment results, assets and liabilities include items directly attributable to a segment as well as thosethat can be allocated on a reasonable basis.

Segment capital expenditure is the total cost incurred during the period to acquire segment assets thatare expected to be used for more than one period.


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ANNUAL REPORT 2004


5.21 Borrowing costs

Costs incurred on borrowings to finance a qualifying asset is capitalised until the asset is ready for theirintended use after which such expense is charged to the income statement.

5.22 Financial instruments

5.22.1 Financial instruments recognised on the balance sheets

(a) Ordinary shares

Ordinary shares are recorded at the nominal value and proceeds in excess of the nominalvalue of share issued, if any, are accounted for as share premium. Both ordinary sharesand share premium are classified as equity. Cost incurred directly attributable to theissuance of shares are accounted for as a deduction from share premium. Otherwise,they are charged to the income statement.

Dividends to shareholders are recognised in equity in the period in which they aredeclared.

(b) Other borrowings

Other interest bearing borrowings are recorded at the amount of proceeds received, netof transaction cost.

(c) Other financial instruments

The accounting policies for other financial instruments recognised on the balance sheetare disclosed in the individual policy associated with each item.

5.22.2 Financial instruments not recognised on the balance sheets

Foreign currency forward contracts

Foreign currency forward contracts are used to hedge foreign currency exposures as a result ofreceipts and payments in foreign currency. Any gains or losses arising from contracts enteredinto as hedges of anticipated future transactions are deferred until the dates of suchtransactions at which time they are included in the measurement of such transactions.

All others gains or losses relating to hedged instruments are recognised in the incomestatement in the same period as the exchange differences on the underlying hedged items.


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6. PROPERTY, PLANT AND EQUIPMENT

Group Balance Balanceas at Written Translation as at

2004 1 July Additions Disposals off adjustments 30 JuneRM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Cost

Freehold land 3,002 - - - - 3,002Freehold buildings 17,966 - - - - 17,966Long term leasehold land 277 - - - - 277Long term leasehold

buildings 6,437 - - - - 6,437Plant and machinery 4,253 87 (426) (34) - 3,880Furniture, fittings and

counter fixtures 12,935 3,829 (122) (3,605) 41 13,078Office equipment 7,104 704 (43) (704) 57 7,118Office equipment under

hire-purchase and lease 586 - - - - 586Renovation 3,000 484 (399) (12) 52 3,125Electrical installations 435 66 - (1) - 500Motor vehicles 900 65 (185) - - 780Motor vehicles under

hire-purchase and lease 995 435 (57) - - 1,373Properties under

construction 855 - - - - 855

58,745 5,670 (1,232) (4,356) 150 58,977

ChargeBalance for the Balance

as at financial Written Translation as at1 July year Disposals off adjustments 30 June

RM’000 RM’000 RM’000 RM’000 RM’000 RM’000Accumulated depreciation

Freehold buildings 1,730 359 - - - 2,089Long term leasehold land 41 3 - - - 44Long term leasehold

buildings 887 85 - - - 972Plant and machinery 4,064 92 (426) (34) - 3,696Furniture, fittings and

counter fixtures 9,642 2,478 (102) (3,605) 34 8,447Office equipment 5,578 693 (27) (704) 55 5,595Office equipment under

hire-purchase and lease 71 117 - - - 188Renovation 2,728 183 (399) (12) 50 2,550Electrical installations 273 41 - (1) - 313Motor vehicles 861 44 (182) - - 723Motor vehicles under

hire-purchase and lease 212 209 (27) - - 394

26,087 4,304 (1,163) (4,356) 139 25,011


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ANNUAL REPORT 2004

6. PROPERTY, PLANT AND EQUIPMENT (Cont’d)

ImpairmentBalance loss for the Balance

as at financial as at1 July year 30 June

RM’000 RM’000 RM’000Impairment loss

Freehold buildings - 120 120Long term leasehold buildings - 1,673 1,673Properties under construction 279 576 855

279 2,369 2,648

AcquisitionGroup Balance of Balance

as at subsidiary Written Reclassi- Translation as at2003 1 July Additions company Disposals off fication adjustments 30 June

RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000Cost

Freehold land 3,002 - - - - - - 3,002Freehold buildings 18,067 5 - (106) - - - 17,966Long term leasehold

land 277 - - - - - - 277Long term leasehold

buildings 6,805 - - (368) - - - 6,437Plant and machinery 4,248 46 - (5) (36) - - 4,253Furniture, fittings and

counter fixtures 12,586 1,870 58 (58) (1,530) 2 7 12,935Office equipment 7,855 411 5 (981) (204) - 18 7,104Office equipment

under hire-purchase and lease 296 290 - - - - - 586

Renovation 3,577 184 63 (472) (364) (2) 14 3,000Electrical installations 584 88 - - (237) - - 435Motor vehicles 1,400 - 4 (504) - - - 900Motor vehicles


Properties underconstruction 855 - - - - - - 855

59,655 3,786 130 (2,494) (2,371) - 39 58,745


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Charge AcquisitionBalance for the of Balance

as at financial subsidiary Written Reclassi- Translation as at1 July year company Disposals off fication adjustments 30 June

RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000Accumulated

depreciation

Freehold buildings 1,394 360 - (24) - - - 1,730Long term leasehold

land 38 3 - - - - - 41Long term leasehold

buildings 825 85 - (23) - - - 887Plant and machinery 3,999 106 - (5) (36) - - 4,064Furniture, fittings and

counter fixtures 9,564 1,513 - (27) (1,416) 1 7 9,642Office equipment 6,258 447 - (949) (195) - 17 5,578Office equipment


Renovation 3,010 290 22 (241) (364) (1) 12 2,728Electrical installations 464 35 - - (226) - - 273Motor vehicles 1,158 31 1 (329) - - - 861Motor vehicles under

hire-purchase and lease 57 155 - - - - - 212

26,794 3,069 23 (1,598) (2,237) - 36 26,087

ImpairmentBalance loss for the Balance

as at financial as at1 July year 30 June

RM’000 RM’000 RM’000Impairment loss

Properties under construction - 279 279


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ANNUAL REPORT 2004


Company Balance Balanceas at as at

2004 1 July Additions Disposal 30 JuneRM’000 RM’000 RM’000 RM’000

Cost

Freehold land 2,530 - - 2,530Freehold building 16,900 - - 16,900Furniture, fixtures and fittings 112 - - 112Office equipment 187 - - 187

19,729 - - 19,729

Balance Charge for Balanceas at the financial as at1 July year Disposal 30 June

RM’000 RM’000 RM’000 RM’000Accumulated depreciation

Freehold building 1,510 338 - 1,848Furniture, fixtures and fittings 50 17 - 67Office equipment 73 37 - 110

1,633 392 - 2,025

Company Balance Balanceas at as at

2003 1 July Additions Disposal 30 JuneRM’000 RM’000 RM’000 RM’000

Cost

Freehold land 2,530 - - 2,530Freehold building 16,895 5 - 16,900Furniture, fixtures and fittings 112 - - 112Office equipment 188 9 (10) 187

19,725 14 (10) 19,729

Balance Charge for Balanceas at the financial as at1 July year Disposal 30 June

RM’000 RM’000 RM’000 RM’000Accumulated depreciation

Freehold building 1,172 338 - 1,510Furniture, fixtures and fittings 39 11 - 50Office equipment 58 19 (4) 73

1,269 368 (4) 1,633


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Group Company2004 2003 2004 2003

RM’000 RM’000 RM’000 RM’000Net book value

Freehold land 3,002 3,002 2,530 2,530Freehold buildings 15,757 16,236 15,052 15,390Long term leasehold land 233 236 - -Long term leasehold buildings 3,792 5,550 - -Plant and machinery 184 189 - -Furniture, fittings and counter fixtures 4,631 3,293 45 62Office equipment 1,523 1,526 77 114Office equipment under hire-purchase and lease 398 515 - -Renovation 575 272 - -Electrical installations 187 162 - -Motor vehicles 57 39 - -Motor vehicles under hire-purchase and lease 979 783 - -Properties under construction - 576 - -

31,318 32,379 17,704 18,096

Group Company2004 2003 2004 2003

RM’000 RM’000 RM’000 RM’000

Net book value of property, plant and equipment pledged as securities for banking facilities granted:

Freehold land 3,002 3,002 2,530 2,530Freehold buildings 15,479 16,149 15,052 15,390Long term leasehold land 233 236 - -Long term leasehold buildings 1,450 1,485 - -Properties under construction - 576 - -

20,164 21,448 17,582 17,920

During the financial year, the Group and the Company revised the estimated useful lives of the property,plant and equipment to better reflect their usage. The revision has the effect of reducing the profit beforetax and the net book value of property, plant and equipment of the Group and the Company by RM861,748and RM29,578 respectively.

In respect of a subsidiary company, Luxury Parade Sdn. Bhd., the properties under construction have beenwritten down to its estimated realisable value based on the estimated net selling price.


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ANNUAL REPORT 2004

7. PROPERTY DEVELOPMENT EXPENDITURE

Group2004 2003

RM’000 RM’000

Freehold land - at cost 14,669 20,415Development expenditure 13,719 17,422

28,388 37,837

Certain freehold land has been pledged as securities for borrowings granted to a third party.

8. INVESTMENT IN SUBSIDIARY COMPANIES

Company2004 2003

RM’000 RM’000

Unquoted shares - at cost 45,369 45,269

The subsidiary companies are as follows:

Group’seffective interest

Country of 2004 2003Name of company incorporation % % Principal activities

CB Marketing Sdn. Bhd. Malaysia 100 100 Designing, promoting and marketing of fashionable leather goods

CB Holdings (Malaysia) Malaysia 100 100 Property investmentSdn. Bhd.

Ataly Industries Sdn. Bhd. Malaysia 100 100 Manufacturing of leather fashion accessories

Luxury Parade Sdn. Bhd. Malaysia 100 100 Property investment

Eclat World Sdn. Bhd. Malaysia 100 100 Designing, promoting and marketing of fashionable men’s footwear

CB Franchising Sdn. Bhd. Malaysia 100 100 Franchising of leather goods and apparels

BCB Properties Sdn. Bhd. Malaysia 100 100 Property development

Pasti Anggun Sdn. Bhd. Malaysia 70 70 Property development

Long Bow Manufacturing Malaysia 100 100 Manufacturing and marketing of Sdn. Bhd. leather goods

De Marts Marketing Sdn. Bhd. Malaysia 100 100 Designing, promoting and marketing of fashionable ladies’ footwear

Mcore Sdn. Bhd. Malaysia 60 60 Marketing and distribution of fashionable leather goods


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8. INVESTMENT IN SUBSIDIARY COMPANIES (Cont’d)

Group’seffective interest

Country of 2004 2003Name of company incorporation % % Principal activities

Future Classic Sdn. Bhd. Malaysia 100 - Designing, promoting and marketing of fashionable leather goods

* Active World Pte. Ltd. Singapore 100 100 Wholesaling and retailing of fashionable leather goods and apparels

* Jetbest Enteprise Pte. Ltd. Singapore 100 100 Wholesaling, retailing, importing and exporting of leather goods and accessories

* Dominion Directions Sdn. Bhd. Malaysia 100 100 Marketing and distribution of men’s apparel and accessories

Subsidiary company of Dominion Directions Sdn. Bhd.

* VR Directions Sdn. Bhd. Malaysia 75 75 Marketing and distribution of men’s apparel and accessories

* SB Directions Sdn. Bhd. Malaysia 100 100 Dormant

* Subsidiary companies not audited by BDO Binder.

During the financial year, the Company acquired 100% equity interest in Future Classic Sdn. Bhd. (“FCSB”)comprising 2 ordinary shares of RM1.00 each for a cash consideration of RM2.00.

FCSB subsequently increased its issued and paid-up share capital from RM2.00 to RM100,000 via anallotment of 99,998 ordinary shares of RM1.00 each at par and were fully subscribed by the Company.

The effect of the acquisition of subsidiary company, Future Classic Sdn. Bhd., on the financial results of theGroup during the financial year is shown below:

2004RM’000

Revenue 993Cost of sales (604)

Gross profit 389Other operating income 13Operating cost (365)

Profit from operations 37Taxation (10)

Increase in Group’s net profit 27


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ANNUAL REPORT 2004

8. INVESTMENT IN SUBSIDIARY COMPANIES (Cont’d)

The effect of the acquisition of subsidiary company, Future Classic Sdn. Bhd., on the financial position ofthe Group at the end of the financial year is as follows:

2004RM’000

Property, plant and equipment 33Inventories 761Trade receivables 467Cash and bank balances 31Trade payables (315)Other payables and accruals (54)Tax liability (2)Deferred tax liabilities (8)

Increase in Group’s share of net assets 913

9. INVESTMENT IN ASSOCIATED COMPANIES

Group Company2004 2003 2004 2003

RM’000 RM’000 RM’000 RM’000

Unquoted shares - at cost 236 * 236 *Share of post acquisition retained earnings and

reserves less losses (27) - - -

209 * 236 *

Group2004 2003

RM’000 RM’000

The Group’s investment in associated companies is represented by:

Group’s share of net assets 209 *

* RM40

The details of the associated companies are as follows:

Percentage ofCountry of Equity Interest

Name of Company Incorporation 2004 2003 Principal Activity

Makabumi Sdn. Bhd. Malaysia 40% 40% DormantBBA International Co., Ltd. Thailand 49% - Marketing and distribution of

fashionable leather goods

During the financial year, the Company acquired 49% equity interest in BBA International Co., Ltd., acompany incorporated in Thailand, for a cash consideration of 2,450,000 Thai Baht or its equivalent ofRM235,935.

The results of BBA International Co., Ltd. has been accounted for based on the unaudited financialstatements for the financial period ended 31 July 2004 while the financial results of Makabumi Sdn. Bhd.is not being equity accounted as it is dormant and the amounts involved are not significant.


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10. INTEREST IN JOINT VENTURE

Group2004 2003

RM’000 RM’000

Development costs 3,399 3,399Less: Impairment loss (2,883) (2,883)

516 516

In respect of a subsidiary company, BCB Properties Sdn. Bhd., certain development costs have been writtendown to its estimated realisable value.

Development costs represent expenditure incurred to develop a mixed commercial centre on the landbelonging to the joint venture partner pursuant to a joint venture agreement entered into between asubsidiary company and a third party. The agreement provides that the subsidiary company shall bear allthe cost of the development in return for 80% of the total gross sales of all the completed units.

There are no outstanding capital commitment and contingent liabilities relating to the Group’s interest injoint venture.

11. INVESTMENT PROPERTIES

Group2004 2003

RM’000 RM’000Cost

Shoplots:- Freehold 3,009 3,009

- Long term leaseholdAs at beginning of financial year 5,193 6,677Disposal during the year - (1,484)

As at end of financial year 5,193 5,193

8,202 8,202


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ANNUAL REPORT 2004

11. INVESTMENT PROPERTIES (Cont’d)

Group2004 2003

RM’000 RM’000Impairment losses

Shoplots:- Freehold

As at beginning of financial year (959) (493)Addition during the year (30) (466)

As at end of financial year (989) (959)

- Long term leaseholdAs at beginning of financial year (983) (581)Addition during the year - (560)Disposal during the year - 158

As at end of financial year (983) (983)

(1,972) (1,942)

Carrying value

Shoplots:- Freehold 2,020 2,050- Long term leasehold 4,210 4,210

6,230 6,260

The indicative market values of the investment properties as provided by an independent professional valuerbased on valuations carried out on 23 August 2004 are used in determining the recoverable amount of theinvestment properties.

All the investment properties are charged to banks for term loan facilities granted to the Group.

12. LONG TERM INVESTMENTS

Group Company2004 2003 2004 2003

RM’000 RM’000 RM’000 RM’000At cost

Unquoted:

Subordinated bonds 3,000 - 3,000 -Club memberships 131 195 - -

3,131 195 3,000 -

The investment in unquoted subordinated bonds is in relation to the term loan VIII obtained during thefinancial year as detailed in Note 25.


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13. INTANGIBLE ASSETS

Group2004 2003

RM’000 RM’000Goodwill on consolidation

Cost

As at beginning of financial year 10,571 10,441Arising from acquisition of subsidiary companies - 26Arising from additional investment in an existing subsidiary company - 104

10,571 10,571Impairment loss

As at beginning of financial year (663) - Impairment loss during the financial year (560) (663)

(1,223) (663)

9,348 9,908

The impairment of goodwill in a subsidiary company is recognised during the financial year to reflect therecoverable amounts based on its value in use.

Group2004 2003

RM’000 RM’000Trademarks

Cost

As at beginning of financial year 944 938Addition during the year - 1Translation adjustment - 5

944 944Amortisation

As at beginning of financial year (929) (897)Amortisation during the financial year (6) (27)Translation adjustment - (5)

(935) (929)

9 15

Total intangible assets 9,357 9,923


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ANNUAL REPORT 2004

14. INVENTORIES

Group2004 2003

RM’000 RM’000At cost

Raw materials 1,692 1,859Work-in-progress 680 204Finished goods 25,591 22,172Consumables 135 11

28,098 24,246

15. TRADE RECEIVABLES

Group2004 2003

RM’000 RM’000

Trade receivables 30,534 13,999Less: Allowance for doubtful debts (276) (279)

30,258 13,720

The allowance for doubtful debts is net of bad debts written off as follows:

Group2004 2003

RM’000 RM’000

Bad debts written off 3 69

The credit terms of trade receivables range from 30 to 120 days from date of invoice except for tradereceivable arising from the sale of land, amounting to RM11,871,200 (2003: Nil) which has a credit termsof one year from the date of this financial year end.

The currency profile of trade receivables of the Group is as follows:

Group2004 2003

RM’000 RM’000

Ringgit Malaysia 27,945 12,110US Dollar 121 36Singapore Dollar 2,457 1,694Hong Kong Dollar 11 159

30,534 13,999


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16. OTHER RECEIVABLES, DEPOSITS AND PREPAYMENTS

Group Company2004 2003 2004 2003

RM’000 RM’000 RM’000 RM’000

Other receivables, deposits and prepayments 16,254 11,704 754 4Less: Allowance for doubtful debts - (108) - -

16,254 11,596 754 4

The allowance for doubtful debts is net of bad debts written off as follows:

Group2004 2003

RM’000 RM’000

Bad debts written off 108 -

Included in the deposits of the Group is a deposit of RM3,500,000 (2003: RM3,500,000) paid to a thirdparty pursuant to a joint venture agreement entered between a subsidiary company and the third party.

Included in the prepayments of the Group and of the Company is a prepaid interest of RM738,493 (2003: Nil) paid to a finance institution in respect of a borrowing amounting to RM30,000,000 (2003: Nil).

17. AMOUNTS OWING BY/TO SUBSIDIARY COMPANIES

Company

The amounts owing by/to subsidiary companies represent mainly rental receivable and advances which areunsecured, have no fixed terms of repayment and interest-free except for advances to one of the Company’ssubsidiary, Pasti Anggun Sdn. Bhd. which bears interest at 7.75% to 7.90% per annum.

18. AMOUNT OWING BY AN ASSOCIATED COMPANY

Group and Company

The amount owing by an associated company represents advances which are unsecured, interest-free andhave no fixed terms of repayment.

19. FIXED DEPOSITS WITH LICENSED BANKS

Group Company2004 2003 2004 2003

RM’000 RM’000 RM’000 RM’000

Fixed deposits 5,423 2,469 3,000 -

Included in the fixed deposits with licensed banks of the Group is RM1,649,888 (2003: RM2,387,383)pledged to licensed banks as securities for banking facilities granted to certain subsidiary companies.


85

ANNUAL REPORT 2004

20. CASH AND BANK BALANCES

The currency profile of cash and bank balances is as follows:

Group Company2004 2003 2004 2003

RM’000 RM’000 RM’000 RM’000

Ringgit Malaysia 1,164 713 11 13US Dollar 7 5 - - Euro 10 7 - - Singapore Dollar 2,351 1,470 - - Renminbi 14 1 - - Hong Kong Dollar 6 - - - Others 4 - - -

3,556 2,196 11 13

21. TRADE PAYABLES

Group

The credit terms of trade payables range from 30 to 90 days from date of invoice.

The currency profile of trade payables of the Group is as follows:

Group2004 2003

RM’000 RM’000

Ringgit Malaysia 6,000 5,149US Dollar 5 29Euro 13 -Singapore Dollar 872 835Hong Kong Dollar 139 62

7,029 6,075

22. OTHER PAYABLES AND ACCRUALS

Included in other payables and accruals is an amount of RM6,899,288 (2003: RM6,899,288) relating to thedeposit received pursuant to the Sale and Purchase Agreement and Supplemental Agreement entered intobetween a subsidiary company of the Company and a third party on 25 May 2000 and 24 September 2003respectively for the disposal of a parcel of land.


86

23. HIRE-PURCHASE AND LEASE CREDITORS

Group2004 2003

RM’000 RM’000

Minimum hire-purchase and lease payments:- not later than one year 435 406- later than one year and not later than five years 747 805

1,182 1,211Less: Future interest charges (130) (149)

Present value of hire-purchase and lease liabilities 1,052 1,062

Repayable as follows:

Current liabilities:- not later than one year 367 366

Non-current liabilities:- later than one year and not later than five years 685 696

1,052 1,062

24. BANK BORROWINGS

Group Company2004 2003 2004 2003

RM’000 RM’000 RM’000 RM’000Secured

Bankers’ acceptance 11,623 11,085 - -Revolving credits 4,900 4,900 - -Term loans (Note 25) 2,900 5,320 2,020 1,843

19,423 21,305 2,020 1,843Unsecured

Bankers’ acceptance 11,710 9,869 - -Trust receipts - 730 - -Revolving credits 450 450 - -

12,160 11,049 - -

Total 31,583 32,354 2,020 1,843


87

ANNUAL REPORT 2004

24. BANK BORROWINGS (Cont’d)

Certain bank borrowings of the Group and of the Company are secured by first fixed charges over certainfreehold and leasehold land and buildings of the Company and subsidiary companies.

Group2004 2003

% %

Weighted average effective interest rate per annum:

Bankers’ acceptance 3.27 2.10Revolving credits 7.00 6.90Trust receipts 8.40 8.40

25. TERM LOANS

Group Company2004 2003 2004 2003

RM’000 RM’000 RM’000 RM’000Secured

Term loan I is repayable by 120 equal monthly instalments of RM5,671 each commencing July 1999 148 197 - -

Term loan II is repayable by 120 equal monthly instalments of RM12,305 each commencing March 1997 413 524 - -

Term loan III is repayable as follows:- 4 monthly instalments of RM16,887 each

commencing January 1998- 176 monthly instalments of RM19,543 each

commencing May 1998 642 816 - -

Term loan IV is repayable as follows:- 3 monthly instalments of RM36,694 each

commencing February 1998- 177 monthly instalments of RM40,956 each

commencing May 1998 1,356 1,718 - -

Term loan V is repayable as follows:- 7 monthly instalments of RM10,026 each

commencing October 1997- 173 monthly instalments of RM12,252 each

commencing May 1998 381 492 - -

Term loan VI is repayable by three annual instalments of RM4.0 million each and a final instalment of RM2.0 million commencing 1 November 2003 after the loan has been restructured - 10,300 - -

Term loan VII is repayable by 72 equal monthly instalments of RM180,007 each commencingNovember 1999 2,477 4,362 2,477 4,362

5,417 18,409 2,477 4,362


88

25. TERM LOANS (Cont’d)

Group Company2004 2003 2004 2003

RM’000 RM’000 RM’000 RM’000Unsecured

Term loan VIII is repayable by 1 final instalment of RM30,000,000 at the end of 5 years from 3 June 2004 30,000 - 30,000 -

35,417 18,409 32,477 4,362

Repayable as follows:

Current liabilities:- within one year (Note 24) 2,900 5,320 2,020 1,843

Long term liabilities- more than one year and less than five years 32,517 13,089 30,457 2,519

35,417 18,409 32,477 4,362

Term loans I, II, III, IV and V are secured by means of a first fixed charge over investment properties of asubsidiary company and guaranteed by the Company.

Term loan VI is secured by a first fixed charge over a freehold land of a subsidiary company and guaranteedby the Company.

Term loan VII is secured by means of a first legal charge on a freehold land and building of the Company.

Term loan VIII is unsecured and obtained from a financial institution where a condition is imposed on theCompany to subscribe for the Subordinated bonds issued pursuant to the Primary Collateralised LoanObligations Transactions and shall be limited to 10% of the principal amount of the term loan.

The weighted average effective interest rates per annum of the term loans are:

Group Company2004 2003 2004 2003

% % % %

Term loan I 7.75 8.25 - -Term loan II 7.75 8.15 - -Term loan III 8.25 8.25 - -Term loan IV 8.25 8.25 - -Term loan V 8.25 8.25 - -Term loan VI 8.25 8.25 - -Term loan VII 7.75 7.75 7.75 7.75Term loan VIII 7.90 - 7.90 -


89

ANNUAL REPORT 2004

26. BANK OVERDRAFTS

Group Company2004 2003 2004 2003

RM’000 RM’000 RM’000 RM’000

Secured 3,106 6,788 547 963Unsecured 3,005 7,834 - -

6,111 14,622 547 963

Certain bank overdrafts of the Group and of the Company are secured by first fixed charges over certainfreehold and leasehold land and buildings of the Company and subsidiary companies.

27. SHARE CAPITAL

Group and Company2004 2003

Number Numberof shares of shares

’000 RM’000 ’000 RM’000

Ordinary shares of RM1.00 each:

Authorised 50,000 50,000 50,000 50,000

Issued and fully paid:

Balance as at 1 July 40,253 40,253 40,000 40,000- Issue pursuant to the Executives’

Share Option Scheme 166 166 253 253

Balance as at 30 June 40,419 40,419 40,253 40,253

During the financial year, the issued and paid-up share capital of the Company was increased fromRM40,253,000 to RM40,419,000 by the issue of 166,000 ordinary shares of RM1.00 each at an issue priceof RM1.13 each for cash by virtue of the exercise of options pursuant to the Executives’ Share OptionScheme.

In the previous financial year, the Company increased its issued and fully paid-up share capital fromRM40,000,000 to RM40,253,000 by way of the allotment and issuance of 253,000 new ordinary shares ofRM1.00 each at an issue price of RM1.13 per share for cash pursuant to the Executives’ Share OptionScheme.

All the new ordinary shares issued rank pari passu in all respects with the then existing shares of theCompany.


90

27. SHARE CAPITAL (Cont’d)

The Executives’ Share Option Scheme (“ESOS”) of the Company came into effect on 4 March 2002. TheESOS shall be in force for a period of 5 years until 3 March 2007 (“the option period”). The main featuresof the ESOS are as follows:

(a) Eligible Directors and executives are those who are confirmed employees of the Group and haveserved full time for at least one year of continuous service before the date of offer and age eighteen(18) and above.

(b) The maximum number of options offered under the ESOS shall not exceed 10% of the total issued andpaid-up share capital of the Company at any point in time during the existence of the ESOS.

(c) The option price for the new shares under the ESOS is determined based on the average of the meanmarket quotation of the shares as quoted and shown in the Daily Official List issued by the BursaMalaysia Securities for the five market days immediately preceding the date of offer, or at the par valueof the share of RM1.00, whichever is higher.

(d) The Directors and executives to whom the options have been granted have no right to participate, byvirtue of these options, in any share issue of any other company within the Group.

The details of the options over ordinary shares of the Company are as follows:

- Number of options over ordinary shares of RM1.00 each -Balance Granted Lapsed Exercised Balance

Option as at during the during the during the as atDate of offer price 1.7.2003 year year year 30.6.2004

RM2004

16 October 2002 1.13 694,000 - (31,000) (166,000) 497,00022 May 2004 1.00 - 3,036,000 (7,000) - 3,029,000

2003

16 October 2002 1.13 - 970,000 (23,000) (253,000) 694,000


91

ANNUAL REPORT 2004

27. SHARE CAPITAL (Cont’d)

Details of the share options exercised during the financial year and their fair value of shares issued at theexercise date are as follows:

Number Optionof shares exercise - Fair value of shares issued -

Exercise date issued price Consideration Per share TotalRM RM RM RM

July 2003 98,000 1.13 110,740 1.40 - 1.70 151,900October 2003 19,000 1.13 21,470 1.24 - 1.49 25,935November 2003 7,000 1.13 7,910 1.27 - 1.50 9,695February 2004 7,000 1.13 7,910 1.35 - 1.58 10,255March 2004 35,000 1.13 39,550 1.34 - 1.50 49,700

166,000 187,580 247,485

Ordinary share capital - at par 166,000Share premium 21,580

187,580

28. RESERVES

Group Company2004 2003 2004 2003

RM’000 RM’000 RM’000 RM’000

Non-distributable

Share premium 1,777 1,755 1,777 1,755Capital reserve 612 612 - -Foreign exchange reserve 1,610 1,450 - -

3,999 3,817 1,777 1,755Distributable

Retained profits 21,670 15,622 12,830 12,896

25,669 19,439 14,607 14,651

The increase in the share premium account arose from the issuance of 166,000 new ordinary shares ofRM1.00 each at an issue price of RM1.13 per ordinary share, pursuant to the Executives’ Share OptionScheme.

The Company has sufficient tax credit under Section 108 of the Income Tax Act, 1967 and tax exemptaccount to frank in full the payment of dividends out of all its retained profits as at 30 June 2004 withoutincurring any additional tax liabilities.


92

29. DEFERRED TAX

(a) The deferred tax assets and liabilities are made up of the following:

Group Company2004 2003 2004 2003

RM’000 RM’000 RM’000 RM’000

Balance as at 1 July (219) (72) 19 -

Recognised in the income statement (Note 32) 38 (147) (7) 19

(181) (219) 12 19

Presented after appropriate offsetting as follows:

Group Company2004 2003 2004 2003

RM’000 RM’000 RM’000 RM’000

Deferred tax assets (314) (299) - -Deferred tax liabilities 133 80 12 19

(181) (219) 12 19

(b) The movements of deferred tax assets and liabilities during the financial year prior to offsetting are asfollows:

Deferred tax assets

Group2004 2003

RM’000 RM’000

Balance as at 1 July 342 175

Recognised in the income statementsDepreciation in excess of capital allowances 40 22Arising from unabsorbed tax losses - 58Arising from unutilised capital allowances - 262Utilisation of unabsorbed tax losses - (76)Utilisation of unutilised capital allowances (27) (99)

13 167

355 342


93

ANNUAL REPORT 2004

29. DEFERRED TAX (Cont’d)

Deferred tax liabilities

Group Company2004 2003 2004 2003

RM’000 RM’000 RM’000 RM’000

Balance as at 1 July 123 103 19 -

Recognised in the income statementsTemporary differences arising from

accelerated capital allowances 63 72 (7) 19Deferred income (12) (52) - -

51 20 (7) 19

174 123 12 19

(c) The components of deferred tax assets and liabilities as at the end of the financial year comprise taxeffect of:

Deferred tax assets

Group2004 2003

RM’000 RM’000

Depreciation in excess of capital allowances 62 22Arising from unabsorbed tax losses 58 58Arising from unutilised capital allowances 262 262Utilisation of unutilised capital allowances (27) -

355 342

Deferred tax liabilities

Group Company2004 2003 2004 2003

RM’000 RM’000 RM’000 RM’000

Capital allowances in excess of depreciation 180 117 12 19Arising from- deferred income - 6 - -- crystallisation of deferred income (6) - - -

174 123 12 19


94

29. DEFERRED TAX (Cont’d)

(d) Deferred tax assets have not been recognised in respect of the following items:

Group2004 2003

RM’000 RM’000

Unabsorbed business losses 2,347 2,137

The unabsorbed business losses are available indefinitely to offset against future taxable profits of thesubsidiary companies in which those items arose.

Deferred tax asset has not been recognised in respect of these items as they may not be used to offsettaxable profits of other subsidiary companies in the Group and they have arisen in subsidiarycompanies that have a recent history of losses.

30. REVENUE

Group Company2004 2003 2004 2003

RM’000 RM’000 RM’000 RM’000

Sales of goods 138,123 118,618 - -Rental income 505 578 1,968 1,872Progressive sale of land 11,871 - - -Dividend income- gross - - 525 3,000- tax exempt - - 1,000 1,400

150,499 119,196 3,493 6,272


95

ANNUAL REPORT 2004

31. PROFIT BEFORE TAX

Group Company2004 2003 2004 2003

RM’000 RM’000 RM’000 RM’000

Profit before tax is arrived at after charging:

Amortisation of trademarks 6 27 - -Auditors’ remuneration:- statutory

- current year 127 116 13 13- under provision in prior years 7 10 2 -

- non statutory 2 2 - -Bad debts written off 2 28 - 8Depreciation of property, plant and equipment 4,304 3,069 392 368Directors’ remuneration:- Fee

- payable by the Company 240 240 240 240- payable by the subsidiary companies 242 136 - -

- Emoluments other than fees- payable by the Company 14 14 14 14- payable by the subsidiary companies 2,508 2,352 - -

Impairment loss on investment properties 30 1,026 - -Interest expense on:- term loans 732 665 455 432- overdrafts 1,086 1,371 57 55- others 1,524 1,502 - -Long term investment written down 66 - - -Preliminary expenses written off 2 - - -Rental of premises 5,892 4,204 - -Loss on disposal of property, plant and equipment - 252 - 4Loss on disposal of investment property - 112 - -Impairment loss on property, plant and equipment 2,369 279 - -Impairment loss on development expenditure - 2,883 - -Property, plant and equipment written off - 134 - -Impairment loss on goodwill 560 663 - -

And crediting:

Bad debts recovered - 12 - -Gain on disposal of property, plant and equipment 70 114 - -Dividend income from subsidiary company- gross - - 525 3,000- tax exempt - - 1,000 1,400Interest income from:- subsidiary companies - - 240 -- fixed deposit 98 96 5 -- others 947 1,504 - -Rental income receivable from:- subsidiary companies - - 1,968 1,872- others 423 397 - -Realised gain on foreign currency transactions 91 87 5 -


96

32. TAX EXPENSE

Group Company2004 2003 2004 2003

RM’000 RM’000 RM’000 RM’000

Current tax expense based on profit for the financial year:

Malaysian income tax 4,300 3,361 327 956Foreign income tax 99 237 - -

4,399 3,598 327 956Deferred tax (Note 29) 38 (147) (7) 19

4,437 3,451 320 975Under/(Over) provision in prior years 52 (71) (6) (50)

4,489 3,380 314 925

The numerical reconciliation between the average effective tax rate and the applicable tax rate are asfollows:

Group Company2004 2003 2004 2003

% % % %

Company and subsidiary companiesAverage applicable tax rate 28 28 28 28

Tax effect in respect of:Depreciation on non-qualifying

property, plant and equipment 3 8 6 2Non-allowable expenses- impairment 5 20 - - - others 2 26 1 1Deferred tax assets recognised - (8) - - Tax exempt dividend - - (16) (9)Lower tax rates in foreign jurisdiction (1) (1) - - Reduction in statutory tax rate on chargeable

income up to RM500,000 (2003: RM100,000) (2) (1) - - Income not subject to tax at group level 2 7 - - Effect of previously unrecognised tax losses (1) (20) - -

36 59 19 22Over provision in prior years - (1) - (1)

Average effective tax rate 36 58 19 21

Tax savings of the Group are as follows:

Group2004 2003

RM’000 RM’000

Arising from utilisation of current tax losses 84 8Arising from utilisation of previously unrecognised tax losses 27 15

The Group has unabsorbed tax losses and unutilised capital allowances of approximately RM2,554,000 (2003: RM2,344,000) and RM100,000 (2003: RM98,000) respectively.


97

ANNUAL REPORT 2004

33. DIVIDENDS

Group/Company2004 2003

RM’000 RM’000

First and final dividend of 5 sen gross, less income tax, per ordinary shares 1,454 1,449

A first and final dividend of 5 sen per ordinary share, less income tax, amounting to RM1,449,000 in respectof the financial year ended 30 June 2003 was paid during the financial year. An additional dividendamounted to RM4,572 was paid in respect of shares issued on the exercise of options under ESOS.

A final dividend in respect of the financial year ended 30 June 2004 of 5 sen per ordinary share, less tax,amounting to RM1,454,000 has been proposed by the Directors after the balance sheet date forshareholders’ approval at the forthcoming Annual General Meeting. The financial statements for the currentfinancial year do not reflect this proposed dividend. This dividend, if approved by shareholders will beaccounted for as an appropriation of retained profits in the financial year ending 30 June 2005.

34. EARNINGS PER ORDINARY SHARE

Basic earnings per ordinary share:

The basic earnings per ordinary share for the financial year has been calculated based on the consolidatedprofit after tax and minority interests divided by the weighted average number of ordinary sharesoutstanding during the financial year.

2004 2003

Consolidated profit after tax and minority interests (RM’000) 7,502 2,345

Weighted average number of ordinary shares outstanding (’000) 40,377 40,127

Basic earnings per ordinary share (sen) 18.58 5.84

Diluted earnings per ordinary share:

The diluted earnings per ordinary share for the financial year has been calculated based on the consolidatedprofit after tax and minority interests divided by the weighted average number of ordinary shares whichwould be issued on conversion of all dilutive potential ordinary shares into ordinary shares.

The weighted average number of ordinary shares outstanding plus the weighted average number of ordinaryshares which would be issued on conversion of all dilutive potential ordinary shares into ordinary shares iscalculated as follows:

2004 2003’000 ’000

Weighted average number of ordinary shares outstanding 40,377 40,127Weighted average number of ordinary shares deemed to have been

issued for no consideration upon exercise of ESOS 207 78

Weighted average number of ordinary shares for diluted earnings per share 40,584 40,205

Diluted earnings per ordinary share (sen) 18.49 5.83


98

35. ACQUISITION OF A SUBSIDIARY COMPANY

During the financial year, the Group acquired 100% equity interest of Future Classic Sdn. Bhd. for a cashconsideration of RM2.00.

During the last financial year, the Group acquired 100% equity interest in Jetbest Enterprise Pte. Ltd. and60% equity interest in Mcore Sdn. Bhd.

The fair value of the assets acquired and liabilities assumed were as follows:

Group2004 2003

RM’000 RM’000

Property, plant and equipment - 107Inventories - 1,006Trade receivables - 196Other receivables, deposits and prepayments - 489Cash and bank balances * 158Trade payables - (1,240)Other payables and accruals - (593)Minority interest - 17

Net assets acquired * 140Goodwill/(Capital reserve) on acquisition - (52)

Purchase consideration * 88Discharged by issue of shares - -

Balance of consideration paid by cash * 88Less: Cash and cash equivalents acquired * (158)

Inflow on acquisition, net of cash and cash equivalents acquired - (70)

* RM2

36. PURCHASE OF PROPERTY, PLANT AND EQUIPMENT

During the financial year, the Group and the Company made the following cash payments to purchaseproperty, plant and equipment:

Group Company2004 2003 2004 2003

RM’000 RM’000 RM’000 RM’000

Purchase of property, plant and equipment (Note 6) 5,670 3,786 - 14Financed by hire-purchase and lease arrangements (388) (1,182) - -

Cash payments on purchase of property, plant and equipment 5,282 2,604 - 14


99

ANNUAL REPORT 2004

37. CASH AND CASH EQUIVALENTS

Cash and cash equivalents included in the cash flow statements comprise the following balance sheetamounts:

Group Company2004 2003 2004 2003

RM’000 RM’000 RM’000 RM’000

Cash and bank balances 3,556 2,196 11 13Fixed deposits with licensed banks 5,423 2,469 3,000 -Bank overdrafts (6,111) (14,622) (547) (963)

2,868 (9,957) 2,464 (950)Less: Fixed deposits pledged to licensed banks (1,650) (2,387) - -

1,218 (12,344) 2,464 (950)

38. SEGMENTAL REPORTING

(i) Business segments

The Group’s operation comprises the following business segments:

Retailing : Designing, promoting and marketing of fashionable apparels, accessories and leather goods

Manufacturing : Manufacturing and marketing of fashionable leather goods Investment and property development : Rental and development of commercial properties

2004 InvestmentManu- and property Consoli-

Retailing facturing development Elimination dationRM’000 RM’000 RM’000 RM’000 RM’000

RevenueExternal sales 138,098 20 12,381 - 150,499Inter-segment sales 23,754 8,004 3,956 (35,714) -

Total 161,852 8,024 16,337 (35,714) 150,499

ResultsProfit from operations 17,415 374 1,831 (2,292) 17,328Finance cost (4,846)Share of results of associated

company (27)

Profit before tax 12,455Tax expense (4,489)

Profit after tax 7,966Minority interests (464)

Net profit for the financial year 7,502


100

38. SEGMENTAL REPORTING (Cont’d)

(i) Business segments (Cont’d)

2004 InvestmentManu- and property Consoli-


Other informationSegment assets 112,755 11,005 151,869 (112,915) 162,714Tax recoverable - 22 - - 22Deferred tax assets 45 269 - - 314Investment in associated companies 209 - - - 209

Total assets 163,259

Segment liabilities 60,582 4,933 102,475 (74,397) 93,593Tax liabilities 2,138 7 186 - 2,331Deferred tax liabilities 126 - 19 (12) 133

Total liabilities 96,057

Capital expenditure 5,089 345 236 - 5,670Depreciation 3,608 236 460 - 4,304Amortisation of trademark 6 - - - 6Impairment losses on property,

plant and equipment - - 2,369 - 2,369Impairment losses on goodwill - - 560 - 560Impairment loss on investment

properties - - 30 - 30Non-cash expenses other than

depreciation 66 - - - 66

2003

RevenueExternal sales 118,528 91 577 - 119,196Inter-segment sales 21,875 7,237 6,496 (35,608) -

Total 140,403 7,328 7,073 (35,608) 119,196

ResultsProfit from operations 16,662 503 2,494 (8,290) 11,369Finance cost (5,504)Share of results of associated

company -

Profit before tax 5,865Tax expense (3,380)

Profit after tax 2,485Minority interests (140)

Net profit for the financial year 2,345


101

ANNUAL REPORT 2004

38. SEGMENTAL REPORTING (Cont’d)

(i) Business segments (Cont’d)

InvestmentManu- and property Consoli-


Other informationSegment assets 96,990 9,074 125,430 (89,974) 141,520Tax recoverable 6 123 180 - 309Deferred tax assets - 299 - - 299Investment in associated companies - - - - -

Total assets 142,128

Segment liabilities 54,335 3,170 74,763 (52,791) 79,477Tax liabilities 2,121 - 108 - 2,229Deferred tax liabilities 55 - 19 6 80

Total liabilities 81,786

Capital expenditure 3,612 160 14 - 3,786Depreciation 2,416 223 430 - 3,069Amortisation of trademark 27 - - - 27Impairment losses on property,

plant and equipment - - 279 - 279Impairment losses on goodwill - - 663 - 663Impairment loss on development

expenditure - - 2,883 - 2,883Impairment loss on investment

properties - - 1,026 - 1,026Non-cash expenses other than

depreciation 402 - 124 - 526

(ii) Geographical segments

The Group operates mainly in Malaysia and Singapore. In determining the geographical segments ofthe Group, revenue is based on the geographical location of customers. Total assets and capitalexpenditure are based on the geographical location of assets:

Revenue Segment assets Capital expenditure2004 2003 2004 2003 2004 2003

RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Malaysia 121,891 94,130 151,340 132,482 4,839 3,009Singapore 22,181 21,184 10,109 7,953 750 631Others 6,427 3,882 1,265 1,085 81 146

150,499 119,196 162,714 141,520 5,670 3,786

Inter segment pricing is determined on an arm’s length basis.


102

39. SIGNIFICANT RELATED PARTY TRANSACTIONS

Group Company2004 2003 2004 2003

RM’000 RM’000 RM’000 RM’000

(i) Transactions with Directors:

Directors’ fee payable to:

- Chiang Sang Sem, Chiang Sang Bon, Chiang Heng Kieng and Chong Chin Look 209 204 120 120

- Datuk Ng Peng Hay, Datuk Nik Hussain bin Nik Ali, Dato’ Shahbudin bin Imam Mohamad, Lim Fong Boon, Chiang Heng Pang, Chiang Boon Tian, Khoo Ju Pak, Chew Siew Moy, Chan Fook Hong,Lee Poh Seong, Chiang Fong Yee, Leong Tat Yan, Chiang Sang Yau, Chong See Moi, Chiang Fong Tatand Lim Kwee Lian 273 172 120 120

Directors’ emoluments other than fee payable to:

- Chiang Sang Sem, Chiang Sang Bon, Chiang Heng Kieng and Chong Chin Look 1,010 1,132 14 14

- Chiang Heng Pang, Chiang Boon Tian, Khoo Ju Pak, Chew Siew Moy, Chiang Sang Yau, Chan Fook Hong, Lee Poh Seong, Yong Siew Moi, Chiang Fong Yee, Lee Chong Eng,Leong Tat Yan, Chiang Fong Tat, Chong See Moi and Lim Kwee Lian 1,512 1,234 - -

(ii) Inter-company transactions:

Company2004 2003

RM’000 RM’000

Interest income receivable from subsidiary companies 240 -Rental income received from subsidiary companies 1,968 1,872Gross dividends received from subsidiary companies 1,525 4,400

The above transactions are entered into in the ordinary course of business and have been establishedunder negotiated terms.


103

ANNUAL REPORT 2004

40. CAPITAL COMMITMENTS

Group2004 2003

RM’000 RM’000

Authorised and contracted for:

Properties under construction 1,108 1,108Property, plant and equipment 764 764

1,872 1,872

41. CONTINGENT LIABILITIES

Group

Secured

The carrying value of a parcel of freehold land included in the property development expenditure of theGroup amounting to RM6,146,000 has been charged to a financial instituition for borrowing facilitiesgranted to a third party. The total borrowing facilities granted to the third party amounted to RM15,700,000,of which RM13,548,814 has been utilised as at 30 June 2004. Consequently, the Group is contingentlyliable to an amount of RM13,548,814 being amount utilised by the third party.

Company

Unsecured

2004 2003RM’000 RM’000

Corporate guarantees 99,077 120,336

The Company is contingently liable for the following banking facilities utilised by the subsidiary companies

- secured 16,896 37,159- unsecured 20,294 22,908

37,190 60,067


104

42. FINANCIAL INSTRUMENTS

(a) Interest rate risk

The table below summarises the carrying amount of the Group’s and the Company’s financial assetsand liabilities, categorised by their maturity dates, which represent the Group’s and the Company’sexposure to interest rate risk:

Group Later thanNot later 1 year and

than not later than1 year 5 years Total

RM’000 RM’000 RM’000Financial assetFixed deposits 5,423 - 5,423

Financial liabilitiesBankers’ acceptance 23,333 - 23,333Revolving credits 5,350 - 5,350Hire-purchase and lease creditors 367 685 1,052Bank overdrafts 6,111 - 6,111Term loans 2,900 32,517 35,417

38,061 33,202 71,263

Company

Financial assetFixed deposits 3,000 - 3,000

Financial liabilitiesBank overdrafts 547 - 547Term loans 2,020 30,457 32,477

2,567 30,457 33,024

The effective interest rates per annum of the financial assets and liabilities of the Group and theCompany are as follows:

Group Company2004 2003 2004 2003

% % % %Financial assetFixed deposits 3.18 4.02 2.56 -

Financial liabilitiesBankers’ acceptance 3.27 2.10 - -Revolving credits 7.00 6.90 - -Hire-purchase and lease creditors 8.40 8.40 - -Bank overdrafts 7.50 8.44 6.75 8.25Term loans 8.10 7.37 7.90 7.75


105

ANNUAL REPORT 2004

42. FINANCIAL INSTRUMENTS (Cont’d)

(b) Foreign currency risk

During the financial year, the Company entered into foreign currency forward contracts to manageexposures to currency risk for payables where the payables are denominated in a currency other thanthe functional currency of the Company.

The notional amount and maturity date of the forward foreign exchange contracts outstanding as at 30June 2004 are as follows:

Purchase contracts used to hedge anticipated purchases

Contract RM UnrecognisedCurrency Maturity amount equivalent gain

RM

US Dollar within 2 months 40,256 152,973 - Euro within 1 month 17,421 81,208 165

The unrecognised gain as at 30 June 2004 on the open contracts are deferred and will be recognisedwhen the related purchases are transacted, at which time they are included in the measurement of thetransactions.

(c) Fair values

The carrying amounts of the financial instruments of the Group and of the Company as at balancesheet date approximate their fair values except as set out below:

Group CompanyCarrying Fair Carrying Fairamount value amount valueRM’000 RM’000 RM’000 RM’000

As at 30 June 2004

Long term investments 3,131 #1 3,000 #1Amount owing by- subsidiary companies - - 24,536 #2- associated company 185 #2 185 #2Amount owing to subsidiary companies - - 6,086 #2

As at 30 June 2003

Long term investments 195 #1 - #1Amount owing by- subsidiary companies - - 2,731 #2- associated company 183 #2 183 #2Amount owing to subsidiary companies - - 5,560 #2

#1 It is not practical to estimate the fair value of the long term unquoted investments because of thelack of quoted market prices and the inability to estimate fair value without incurring excessivecosts. The Directors believe that the carrying amount represents the recoverable value.

#2 It is also not practical to estimate the fair value of amounts owing by/to subsidiary companies andassociated companies. This is principally due to the lack of fixed repayment terms and theinability to estimate fair value without incurring excessive costs. However, the Company doesnot anticipate the carrying amounts recorded at the balance sheet date to be significantlydifferent from the values that would eventually be received or settled.


106

42. FINANCIAL INSTRUMENTS (Cont’d)

(d) Credit risk

As at 30 June 2004, the Group has trade receivables of RM181,551 which have been outstanding formore than 90 days. Based on the Group’s historical experience in the collection of trade receivables,the Directors have made the necessary allowance for doubtful debts in the financial statements. Otherthan as mentioned, the Group has no significant concentration of credit risk. The maximum exposuresto credit risk are represented by the carrying amounts of the financial assets in the balance sheets.

In respect of the deposits, cash and bank balances placed with major financial institutions in Malaysiaand Singapore, the Directors believe that the possibility of non performance by these financialinstitutions is remote on the basis of their financial strength.

43. NUMBER OF EMPLOYEES AND STAFF COSTS

Group Company2004 2003 2004 2003

The number of employees, including Executive Directors, at the end of the financial year 659 543 10 12

The total expenses recognised in the income statement are as follows:

Group Company2004 2003 2004 2003RM RM RM RM

Salaries and wages 14,642,938 12,758,228 134,733 117,035Defined contribution retirement plan 2,039,259 1,820,595 14,848 12,356Termination benefits 102,267 - - -Others 4,332,037 2,820,304 983 872

21,116,501 17,399,127 150,564 130,263

44. SIGNIFICANT EVENTS DURING THE FINANCIAL YEAR

(i) On 4 December 2003, the Company acquired the entire equity interest in Future Classic Sdn. Bhd.(“FCSB”), comprising 2 ordinary shares of RM1.00 each, for a total cash consideration of RM2.00.

Subsequently, FCSB increased its issued and paid-up share capital from RM2.00 to RM100,000 via anallotment of 99,998 ordinary shares of RM1.00 each at par as additional working capital and werefully subscribed by the Company.

(ii) On 16 February 2004, the Company subscribed 24,500 ordinary shares of 100 Thai Baht representing49% equity interest in BBA International Co., Ltd, a company incorporated in Thailand, for a cashconsideration of 2,450,000 Thai Baht or its equivalent of RM235,935.

(iii) On 19 May 2004, the Company signed a Memorandum of Understanding with Azizia Panda TradingCompany Ltd, a limited liability company incorporated under the laws of Kingdom of Saudi Arabia, ina partnership to introduce and develop the housename of the Company in the Kingdom of SaudiArabia.


107

ANNUAL REPORT 2004

45. EVENTS SUBSEQUENT TO THE BALANCE SHEET DATE

(i) On 1 July 2004, the Company acquired the entire equity interest in Armani Context Sdn. Bhd.comprising 2 ordinary shares of RM1.00 each for a total cash consideration of RM2.00.

(ii) On 5 July 2004, the Company acquired the entire equity interest in Daily Frontier Sdn. Bhd.comprising 2 ordinary shares of RM1.00 each for a total cash consideration of RM2.00.

(iii) On 16 August 2004, the Company’s wholly-owned subsidiary, Dominion Directions Sdn. Bhd.(“DDSB”) disposed of 37,500 ordinary shares of RM1.00 each representing 5% equity interest in VRDirections Sdn. Bhd. (“VRDSB”) to an existing shareholder of VRDSB, for a total cash consideration ofRM37,500. DDSB’s equity interest in VRDSB was reduced from 75% to 70% after the disposal.

(iv) On 30 August 2004, the Company made an announcement to propose the following:

(a) To increase its authorised share capital of the Company from RM50,000,000 comprising50,000,000 ordinary shares of RM1.00 each to RM100,000,000 comprising 100,000,000ordinary shares of RM1.00 each by the creation of 50,000,000 ordinary shares of RM1.00 each.

(b) A proposed rights issue of up to 23,246,000 3-year warrants 2004/2007 (“Warrants”) on the basisof 1 Warrant for every 2 ordinary shares of RM1.00 each in the Company held at an issue priceof RM0.10 per Warrant.

(c) Amendments to its existing ESOS in view of the revised Bursa Malaysia Listing Requirements. Theproposed amendments, amongst others, comprise the following:

• the total number of new shares to be issued by the Company under the ESOS shall notexceed in aggregate 15% of the issued and paid-up share capital of the Company at any onetime; and

• the grant of ESOS to Non-Executive Directors of the Company.

(d) The above amendments to be made to the Memorandum and Articles of Association of theCompany.

The proposals are subject to and conditional upon approvals from the shareholders and relevantregulatory bodies.

46. COMPARATIVE FIGURES

Certain comparative figures of the financial statements have been reclassified to conform with the currentyear’s presentation as follows:

Amount aspreviously Amount asreported Reclassification restatedRM’000 RM’000 RM’000

Group

Balance sheet

Deferred tax assets 342 (43) 299Deferred tax liabilities (123) 43 (80)

Cash flow statement

Net cash from operating activities 18,580 (14) 18,566Net cash used in investing activities (569) 14 (555)

47. AUTHORISATION FOR ISSUE OF FINANCIAL STATEMENTS

These financial statements were authorised for issue by the Board of Directors on 13 October 2004.


108

SHARE CAPITAL

Authorised Share Capital : RM50,000,000.00Issued and Fully Paid-up Share Capital : RM40,472,000.00Class of Shares : Ordinary Shares of RM1.00 eachVoting Rights : One Vote per Ordinary Share

DISTRIBUTION OF SHAREHOLDINGS

No. of % of % of IssuedSize of Shareholdings Shareholders Shareholders No. of Shares Share Capital

Less than 100 26 1.08 571 0.00100 to 1,000 889 36.75 863,059 2.131,001 to 10,000 1,327 54.86 4,863,278 12.0210,001 to 100,000 158 6.53 4,295,529 10.62100,001 to 2,023,599 16 0.66 8,398,366 20.752,023,600* and above 3 0.12 22,051,197 54.48

Total 2,419 100.00 40,472,000 100.00

* Denotes 5% of the issued share capital of the Company

SUBSTANTIAL SHAREHOLDERS

Name No. of Shares %

1. Bonia Holdings Sdn Bhd 16,165,664 39.952. Permodalan Nasional Berhad 7,323,333 18.093. Sudisama Sdn Bhd 2,532,000 6.26

DIRECTORS’ SHAREHOLDINGS

Name Direct % Indirect %

1. Chiang Sang Sem 44,000 0.11 16,175,664 39.972. Chiang Fong Yee - - - -3. Chiang Heng Kieng - - - -4. Chiang Sang Bon 43,000 0.11 - -5. Chong Chin Look - - - -6. Chiang Fong Tat - - - -7. Datuk Nik Hussain Bin Nik Ali - - 1,105,233 2.738. Datuk Ng Peng Hay - - - -9. Dato’ Shahbudin Bin Imam Mohamad - - - -10. Lim Fong Boon - - - -

analysis of shareholdingsas at 28 October 2004

109

ANNUAL REPORT 2004

LIST OF THIRTY LARGEST SHAREHOLDERS

Name No. of Shares %

1. AmSec Nominees (Tempatan) Sdn Bhd 9,727,864 24.04[AmFinance Berhad for Bonia Holdings Sdn Bhd]

2. Permodalan Nasional Berhad 7,323,333 18.093. AllianceGroup Nominees (Tempatan) Sdn Bhd 5,000,000 12.35

[Bonia Holdings Sdn Bhd] 4. Sudisama Sdn Bhd 1,333,000 3.295. Chiang Sang Yau 1,239,333 3.066. Sudisama Sdn Bhd 1,199,000 2.967. Bonia Holdings Sdn Bhd 804,000 1.998. Bonia Holdings Sdn Bhd 633,800 1.579. Nik Hatmah Binti Nik Hassan 630,000 1.5510. Nissin Sdn Bhd 475,233 1.1711. Mayban Securities Nominees (Tempatan) Sdn Bhd 465,000 1.15

[Lau Hock Lee]12. Chan Fook Hong 390,000 0.9613. Chin Chin Seong 220,000 0.5414. Yong Tian Yang 217,000 0.5415. Chew Siong Yew 189,000 0.4716. Chan Fook Hong 178,000 0.4417. Tan Khai Teck 160,000 0.4018. Chiang Sang Yau 155,000 0.3819. Rajadevan a/l Vamadevan 110,000 0.2720. Leong Kam Chee 100,000 0.2521. Ng Choon Hua 100,000 0.2522. Kwan Yoong Yu 98,266 0.2423. Lau Ka Sui Enterprise Sendirian Berhad 90,300 0.2224. Lim Sang Hee 87,000 0.2125. Leong Low Pew 86,000 0.2126. PRB Nominees (Tempatan) Sdn Bhd 81,666 0.20

[Rubber Industry Smallholders Development Authority]27. Yong Lee Seong 81,503 0.2028. Affin Nominees (Tempatan) Sdn Bhd 60,000 0.15

[Chew Siong Yew] 29. Liew Yoon Yee 60,000 0.1530. TCL Nominees (Tempatan) Sdn Bhd 60,000 0.15

[E Pian]

Total 31,354,298 77.47

analysis of shareholdingsas at 28 October 2004

110

Age of Land Net Book DateExisting Building Area Value of

Location of Property Description Tenure Use (Year) (Sq Ft) RM'000 Acquisition

ATALY INDUSTRIES SDN BHD

HS(D) No. 55365 Lot No. 21085 Industrial Freehold Office cum 24 15,600 729 31/8/91No. 60, Jalan Kilang Midah Building WarehouseTaman Midah, Cheras56000 Kuala Lumpur

CT No. 28834 PT No. 20501 2-storey Freehold Rented Out 22 1,540 109 21/5/92No. 29, Jalan Budiman Terrace House Taman Midah, Cheras56000 Kuala Lumpur

HS(D) No. 27879-27880, 27882-27885 Apartment Freehold Rented Out 18 1,285 84 27/2/93Lot No. 19536 & 19537, 19539-195422G, Jasmine Court100, Jalan Midah TimurTaman Midah, Cheras56000 Kuala Lumpur

BONIA CORPORATION BERHAD

Grant No. 50053 6-storey Office Freehold Office cum 6 24,374 17,582 1/12/98Lot No. 50644 cum Warehouse Warehouse No. 62, Jalan Kilang MidahTaman Midah, Cheras56000 Kuala Lumpur

CB HOLDINGS (MALAYSIA) SDN BHD

QT No. 85228 Lot No. 2794 Shopping Freehold Rented Out 10 432 170 17/5/93UG-51, Upper Ground Floor Complex Lot Plaza Phoenix Batu 6, Jalan Cheras56000 Kuala Lumpur

PN No. 1339 Lot No. 385 Shopping Leasehold Rented Out 18 1,806 2,340 29/8/94Unit 2B, 3.04 & 3.05 Complex Lot (ExpiringKOMTAR Shopping Complex in 2084)10000 Pulau Pinang

PN No. 1339 Lot No. 385 Office Lot Leasehold Office 18 1,134 312 31/12/94Unit C2, 4.03B (ExpiringKOMTAR Shopping Complex in 2092)10000 Pulau Pinang

LONG BOW MANUFACTURING SDN BHD

Lot No. PT 428 HS (M) 387 Industrial Land Leasehold Office cum 18 135,100 1,373 7/2/89Lot 18, Merlimau Industrial Estate and Building (Expiring FactoryPhase ll 77300 Merlimau in 2085)Melaka

Lot No. PT 683 HS (D) 1499 Single-Storey Freehold Hostel 12 3,199 85 12/6/92No. 1483, Jalan Jasin Semi-detachedTmn Bunga Muhibbah House77300 Merlimau, Melaka

list of propertiesheld by the Group as at 30 June 2004

111

ANNUAL REPORT 2004

Age of Land Net Book DateExisting Building Area Value of

Location of Property Description Tenure Use (Year) (Sq Ft) RM'000 Acquisition

LUXURY PARADE SDN BHD

HS(D) No. 72947 PT No. 3865 6-storey Leasehold Rented Out 6 1,920 1,750 10/1/95No. 3, Jalan 8/146, The Metro Centre Shop-lot (Expiring (Partially)Bandar Tasik Selatan in 2087)57000 Sungai BesiKuala Lumpur

HS(D) No. 72948 PT No. 3866 6-storey Leasehold Rented Out 6 1,920 1,750 10/1/95No. 5, Jalan 8/146, The Metro Centre Shop-lot (Expiring (Partially)Bandar Tasik Selatan in 2087)57000 Sungai BesiKuala Lumpur

HS(D) No. 59989-59990 Shopping Freehold Rented Out 6 1,020 1,220 16/1/95PT 12201-12202 Complex LotUnit No. G61 The SummitPersiaran KewajipanUSJ 1, UEP-Subang Jaya46700 Subang JayaSelangor Darul Ehsan

HS(D) No. 182 PT SEK 4 Shopping Freehold Rented Out 6 1,038 800 19/3/95Unit No. G0.07, Complex LotPlaza Bukit Mertajam566, Jalan Arumugam Pillai14000 Bukit MertajamPulau Pinang

HS(D) No. 55098 PT 4 Shopping Leasehold Rented Out 7 1,098 710 26/5/95Unit No. 1.48, Level 3 Complex Lot (ExpiringPlaza Uncang Emas in 2086)No. 85, Jalan Loke Yew55200 Kuala Lumpur

Unit No. GF-13 Shopping Leasehold Under N.A. 495 - 3/4/96Bayan Bay Shopping Mall Complex Lot (99 years) ConstructionPulau Pinang(Reclaimed Land)

PASTI ANGGUN SDN BHD

HS(D) No. 102556 PT 8200, Residential/ Freehold Projects N.A. 890,854 28,388 12/7/96HS(D) No. 102557 PT 8201, Commercial UnderHS(D) No. 102558 PT 8202 & Land ConstructionHS(D) No. 102559 PT 8203Mukim of PetalingDistrict of Wilayah PersekutuanWilayah Persekutuan

list of propertiesheld by the Group as at 30 June 2004

112

NOTICE IS HEREBY GIVEN THAT the Thirteenth Annual General Meeting of the Companywill be held at Level 14, West Tower, Bronx V Meeting Room, Berjaya Times Square Hotel &Convention Center, No. 1, Jalan Imbi, 55100 Kuala Lumpur on Wednesday, 22 December2004 at 11.00 a.m. for the following purposes:

1. To receive and adopt the audited Financial Statements for the financial year ended 30June 2004 together with the Reports of the Directors and Auditors thereon.

2. To declare a first and final dividend of 5% less Income Tax for the financial year ended30 June 2004.

3. To approve the payment of Directors’ fees for the financial year ended 30 June 2004.

4. To re-appoint Datuk Nik Hussain Bin Nik Ali pursuant to Section 129 (6) of theCompanies Act, 1965, as Director of the Company to hold office until the conclusionof the next Annual General Meeting.

5. To re-elect the following Directors who retire pursuant to Article 96 of the Articles ofAssociation of the Company:

(i) Mr Chiang Heng Kieng

(ii) Mr Chiang Sang Bon

(iii) Dato’ Shahbudin Bin Imam Mohamad

6. To re-elect Mr Chiang Fong Tat who retires pursuant to Article 90 of the Articles ofAssociation of the Company.

7. To re-appoint Messrs BDO Binder as Auditors of the Company and to authorise theDirectors to fix their remuneration.

8. As SPECIAL BUSINESS – To consider and if thought fit, to pass the following resolutionwith or without modifications as Ordinary Resolution of the Company:

AUTHORITY TO ISSUE SHARES

“THAT, pursuant to Section 132D of the Companies Act, 1965 and subject to theapprovals of the relevant governmental and/or regulatory authorities, the Directors beand are hereby empowered to issue shares (other than bonus or rights issue) in theCompany from time to time and upon such terms and conditions, for such purposes asthe Directors may deem fit provided that the aggregate number of shares issued in anyone financial year of the Company (other than by way of bonus or rights issue) does notexceed ten per centum (10%) of the issued share capital of the Company for the timebeing and that the Directors be and are also empowered to obtain approval from BursaMalaysia Securities Berhad the listing of and quotation for the additional shares soissued and that such authority shall continue in force until the conclusion of the nextAnnual General Meeting.”

9. To transact any other ordinary business of which due notice shall have been received.

Ordinary Resolution 1










notice of annual general meeting

113

ANNUAL REPORT 2004

NOTICE OF DIVIDEND PAYMENT

NOTICE IS HEREBY GIVEN THAT, subject to the approval of the shareholders at the Thirteenth Annual GeneralMeeting, the First and Final Dividend of 5% less Income Tax in respect of the financial year ended 30 June 2004shall be paid on 19 January 2005 to the shareholders registered in the Record of Depositors at the close ofbusiness on 31 December 2004.

A Depositor shall qualify for the entitlement to the dividend only in respect of:

a) Shares transferred into the Depositor’s Securities Account before 4.00 p.m. on 31 December 2004 in respectof ordinary transfers;

b) Shares bought on the Bursa Malaysia Securities Berhad on a cum entitlement basis accordingly to the Rulesof the Bursa Malaysia Securities Berhad.

By Order of the Board

TING OI LINGTEOH KOK JONGCompany Secretaries

Kuala Lumpur25 November 2004

Notes:

1. A member is entitled to appoint a proxy (or in the case of a corporation, to appoint a representative) to attend and votein his place. A proxy need not be a member of the Company.

2. The Proxy Form must be signed by the appointor or his attorney duly authorised in writing or in the case of acorporation, executed under its common seal or attorney duly authorised in that behalf.

3. All proxies must be deposited at the Company’s Registered Office situated at Suite 13A-2, Menara Uni Asia, 1008 JalanSultan Ismail, 50250 Kuala Lumpur not less than forty-eight (48) hours before the time for holding the Meeting or at anyadjournment thereof.

Explanatory Note On Special Business

The Proposed Ordinary Resolution 10, if passed, is to empower the Directors to issue shares in the Company upto an amount not exceeding in total 10% of the issued share capital of the Company for such purposes as theDirectors consider would be in the interest of the Company. This would avoid any delay and cost involved inconvening a general meeting to approve such an issue of shares. This authority will, unless revoked or varied bythe Company at a General Meeting, expire at the conclusion of the next Annual General Meeting or theexpiration of the period within which the next Annual General Meeting is required by law to be held, whicheveris the earlier.

notice of annual general meeting

114

1. The Directors who are standing for re-appointment or re-election at the Thirteenth Annual GeneralMeeting

a) The Director standing for re-appointment pursuant to Section 129(6) of the Companies Act, 1965 is:

(i) Datuk Nik Hussain Bin Nik Ali

b) The Directors standing for re-election pursuant to Article 96 of the Company’s Articles of Associationare:

(i) Mr Chiang Heng Kieng(ii) Mr Chiang Sang Bon(iii) Dato’ Shahbudin Bin Imam Mohamad

c) The Director standing for re-election pursuant to Article 90 of the Company’s Articles of Associationis:

(i) Mr Chiang Fong Tat

The profiles of the above Directors are set out in the section entitled “Profile of Directors” on pages 7 to 13.Their respective shareholdings in the Company and its subsidiaries are set out in the section entitled“Analysis of Shareholdings” on page 108.

2. The details of attendance of the Directors at the Board Meetings

The details of attendance of each Director at the Board Meetings are set out on page 15 .

3. The date, time and place of the Annual General Meeting

The Thirteenth Annual General Meeting of the Company will be held as follows:

Date Time Place

22 December 2004 11.00 a.m. Level 14, West TowerWednesday Bronx V Meeting Room

Berjaya Times Square Hotel & Convention Center No. 1, Jalan Imbi, 55100 Kuala Lumpur

statement accompanying the notice of annual general meetingpursuant to Paragraph 8.28(2) of the Listing Requirements of Bursa Malaysia Securities Berhad

PROXY FORM

I/We ______________________________________________________________________________________________(BLOCK LETTERS)

of _________________________________________________________________________________________________

being a member/members of BONIA CORPORATION BERHAD hereby appoint _______________________________

___________________________________________________________ (I/C No.: ____________________________ ) of

___________________________________________________________________________________________________

___________________________________________________________________________________________________

or failing him, the Chairman of the Meeting as my/our proxy to vote for and on my/our behalf at the ThirteenthAnnual General Meeting of the Company to be held on Wednesday, 22 December 2004 and at any adjournmentthereof, as indicated below:

No. Resolutions For Against

1. Adoption of Financial Statements and Reports Ordinary Resolution 1 [ ] [ ]

2. Declaration of First and Final Dividend Ordinary Resolution 2 [ ] [ ]

3. Approval for the payment of Directors’ fees Ordinary Resolution 3 [ ] [ ]

4. Re-appointment of Datuk Nik Hussain Bin Nik Ali as Director Ordinary Resolution 4 [ ] [ ]pursuant to Section 129(6) of the Companies Act, 1965

5. Re-election of Directors pursuant to Article 96 of the Articles of Association of the Company:

(i) Mr Chiang Heng Kieng Ordinary Resolution 5 [ ] [ ]

(ii) Mr Chiang Sang Bon Ordinary Resolution 6 [ ] [ ]

(iii) Dato’ Shahbudin Bin Imam Mohamad Ordinary Resolution 7 [ ] [ ]

6. Re-election of Mr Chiang Fong Tat as Director pursuant to Ordinary Resolution 8 [ ] [ ]Article 90 of the Articles of Association of the Company

7. Re-appointment of Auditors, BDO Binder Ordinary Resolution 9 [ ] [ ]

8. Special Business - Authority to Issue Shares Ordinary Resolution 10 [ ] [ ]

Please indicate with a ( √ ) in the appropriate box against the resolution how you wish your vote to be cast. If nospecific direction as to voting is given, the proxy will vote or abstain at his discretion.

No. of Shares

Signature/Company Seal: _______________________ Date: ___________________________

Notes:1. A member is entitled to appoint a proxy (or in the case of a corporation, to appoint a representative) to attend and vote in his place. A

proxy need not be a member of the Company.2. The Proxy Form must be signed by the appointor or his attorney duly authorised in writing or in the case of a corporation, executed under

its common seal or attorney duly authorised in that behalf. 3. All proxies must be deposited at the Company’s Registered Office situated at Suite 13A-2, Menara Uni Asia, 1008 Jalan Sultan Ismail,

50250 Kuala Lumpur not less than forty-eight (48) hours before the time for holding the Meeting or at any adjournment thereof.

THE COMPANY SECRETARY

BONIA CORPORATION BERHAD (223934-T)

SUITE 13A-2 MENARA UNI ASIA

1008 JALAN SULTAN ISMAIL

50250 KUALA LUMPUR

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