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Msiniaga AnnualReport 2004
Msiniaga AnnualReport 2004
Ismail Sulaiman
(1926 - 2004)
Some are born great, some achieve greatness, and some have
greatness thrust upon them.
(William Shakespeare)
CONTENTS
CORPORATE PRODUCTS:
• A comprehensive range of hardware
BACKGROUND
• Complete systems, database &
Mesiniaga provides comprehensive solutions applications software
in IT products and services, from simple • Workgroup, imaging & document
networking solutions to turnkey projects. This management packages
involves planning and development to full • Network & Structured Cabling products
implementation, system documentation, user • E-business Suites
education and assistance, systems and
network management and system
maintenance. Mesiniaga represents IBM, and SUPPORT:
several leading industry names like Cisco We provide services for all IBM PC products
Systems, Lotus, Microsoft, Tivoli and others. and major third party offerings:
• Hardware maintenance for:
• Personal computers such as IBM and
SERVICES Compaq
As a one-stop IT provider, we see our job as • Networking products such as IBM,
one of making our clients’ jobs easier by Cisco Systems & 3Com.
providing a menu of services from which they • Printers such as HP & Lexmark
can pick and choose including: • Other Peripherals
• Systems installation, implementation, • Networking Systems Maintenance:
deployment & integration • Novell Netware
• Network & systems management • Microsoft Windows NT
• Industry-specific application development Mesiniaga remains a leading service provider
• Workgroup application development for IBM, Lexmark and other principals.
• Executive end-user education
• Project management, relocation and
migration OUR KEY PILLARS:
• Business process, analysis & study "TO BE A PROFESSIONAL COMPANY AND TO
• Support, maintenance & operations & BE A COMPANY OF PROFESSIONALS."
facilities management
We tap on our rich expertise and experience
to deliver value. The many awards and
industry certifications which Mesiniaga has
received are testimony to the superior quality
of our resources, talent, culture and business
processes. This allows us to promise the best,
deliver on our promises and achieve excellent
results.
1982: Mesiniaga was conceived as IBM’s response to the spirit of the New Economic Policy to
encourage Bumiputra entrepreneurship and to nurture a skilled workforce.
Start-up capital: RM500,000. Start-up employee strength: 50
1999: Listed on the Main Board of Bursa Malaysia
2000: Included in the Kuala Lumpur Composite Index (KLCI)
2003: Certified as a Cisco Gold Partner – the first Malaysian and Bumiputera company to be
awarded this honour
2004: Mesiniaga boldly ventured into the Infrastructure and Asset Management Space with the
formation of Navigis Sdn, Bhd, a subsidiary company to tap opportunities and establish
a presence in an exciting emerging market
BOARD OF DIRECTORS
▼
to the holding company
MESINIAGA MSC
SDN. BHD.
100% MESINIAGA Provision of human resources
▼
MESINIAGA
TECHNIQUES to the holding company
▼
Provision of IT SERVICES
Maintenance Services SDN. BHD. SDN. BHD.
100% 100%
Sales of
▼
VA DYNAMICS
networking cables
SDN. BHD. and related
51% products
ADVANTAGE
Development &
▼
SYSTEMS SJA INFOTECH
Maintenance of
SDN. BHD. SDN. BHD. Web Sites
30% 35%
▼
Provision of Data
Connectivity and
Communication PWR
services. POWERLAN Management Advisory &
▼
▼
Provision of management training & consulting
services to the public & private sectors in strategic
planning, strategic management implementation,
management training & development, strategic sales &
marketing consulting & human resource management
consulting
The year 2004 was dominated by prevailing develop applications from function specific
trends such as convergence and continued to complex workflow solutions, integrate
focus on particular niched areas such as systems together and provide nationwide
mobility, storage and security. There was comprehensive maintenance services
continued effort to bridge the digital divide through 31 service locations throughout the
and to encourage IT utilisation in SMEs. country.
Another factor that was conducive for the
economy was the attraction of higher-end Innovation and staying ahead of the
foreign investment as well as reverse competition has been a key component of
investment with Malaysian companies Mesiniaga’s success. The latest initiative
expanding overseas, exporting local has been the formation of Navigis Sdn Bhd,
expertise and content to foreign markets. a strategic Mesiniaga subsidiary to deliver
infrastructure and asset management
Within this rapidly changing IT framework, offerings. The Infrastructure Management
Mesiniaga has chalked up yet another space in Malaysia is an emerging one,
strong performance this year. We continued offering much potential to those who are
to solidly execute our business plans and quick and ready to capture the market. We
pursue greater growth in key markets while believe that the timely formation of Navigis
increasing revenue. I am pleased to report will surely see it become the market pioneer
that in the year under review, we had a and industry trendsetter in bringing world
record turnover of RM297.4 million, a class Infrastructure Management solutions
growth of 10% over 2003, yielding a pre tax to this growing market.
profit of RM 23.5 million. Mesiniaga has
been profitable over the last 23 years and I In 2004, we actively collaborated with our
am confident that we will continue to alliance partners in order to advance and
develop as a leading systems integrator and accelerate our growth opportunities. We
solutions provider in Malaysia. worked hard to capitalise on the global
experience and expertise of our partners to
Highly regarded for our dynamic grow the business and reap mutual
capabilities in developing comprehensive, benefits. For this effort, Mesiniaga
integrated IT answers, we readily offer continues to receive the recognition and
solutions with price and performance acknowledgement of international business
advantages to our customers and partners. partners for successfully delivering on
Mesiniaga has consistently proven that we world class-standards.
can design and build enterprise-wide IT
infrastructure, implement network and 2004 saw us being selected again as IBM’s
services solutions for service providers, Business Partner of the Year. This
“
marketplace.
INNOVATION AND STAYING AHEAD OF THE
COMPETITION HAS BEEN A KEY COMPONENT OF The government sector will still be one of the
”
MESINIAGA’S SUCCESS. areas of our focus. With the Prime Minister,
Dato’ Seri Abdullah Ahmad Badawi pushing
for greater efficiency, effectiveness, service
consecutive win recognises our outstanding and transparency in the government, we will
performance in achieving revenue quota and position ourselves as a strategic partner to
has once again earned us a place in the the government, extolling how IT can be a
exclusive IBM Platinum Club Award 2003. In key enabler in delivering on the above
addition, we were chosen for the Top mentioned criteria. Our leverage comes from
Contributor Award for 2003 in the following the fact that we have a strong customer base
categories: IBM Server and Storage, IBM and many success stories in the public sector.
Global Services and IBM Systems Integrator. Our reputable track record puts us in a prime
We are proud of our alliance with IBM and position to tap new opportunities in this
will continue to collaborate strategically with sector.
them to develop market winning business
solutions to our clients. We will capitalise on new developments and
innovations to our advantage. These include
Mesiniaga has also been recertified as Cisco’s the emergence of wi-max as a new standard
largest local Gold Certified Partner reflecting for wireless connectivity, the growth of
our strong commitment and performance. We shared services and Business Process
are the first Malaysian IT company to achieve Outsourcing as a growing revenue source, as
certification and recertification speaks well as opportunities from the telco space to
positively of our quality as a leading network further drive the business and accelerate our
connectivity provider and a specialist in growth in new and existing markets.
marketing, designing, servicing and We are excited by the opportunities that we
supporting Cisco solutions. We will continue
to work closely with Cisco to achieve strong
and sustained growth and development in the
years to come.
“
greater productivity and a competitive edge.
LOOKING AHEAD, WE WILL CONTINUE TO DRIVE
This is more than a solutions based approach;
FORWARD AGGRESIVELY AND PURSUE GREATER
It is a strategic means to connect with our
”
GROWTH AND MARKET SHARE. customers, understand their needs and deliver
value to them. It is about bringing our
offerings to people, empowering them to be
see in the solutions market, and accordingly
truly powerful in their respective industries.
we will streamline marketing and sales
efforts to provide a better focus and training
As always, we emphasise this people
on solutions-driven products. We want to
approach within the company. It is our goal to
create new business units that will focus on
fully develop our staff to their utmost
Service Providers and Solution Sourcing and
potential so they may continuously improve
Development. We aim to give our clients
and increase their competence to better serve
solutions and capabilities unmatched by
the Mesiniaga business. Our people are the
others, thus making Mesiniaga their trusted
backbone of our company and we will
and logical choice.
continue to look at human resource
development as a major cornerstone that
As always, our business strategy incorporates
contributes directly towards overall
the forging of strong partnerships with our
operational effectiveness and productivity.
business partners. We plan to establish
One area of immediate concern will be on the
ourselves as a premier Microsoft Certified
anticipated shortage of trained and qualified
Support Centre. We also have recently
professionals for the IT industry. On our part,
launched the Business Productivity Centre
we will continue to provide training and
(BPC). The BPC is an exciting new
development to our own Project Management
development. It is the only such facility in
teams to enable them to undergo certification
Malaysia and third in the Asia Pacific region.
as professionals recognised globally for
Housing various best-of-breed solutions and
excellence in service and expertise.
manned by trained specialists, this resource
centre provides valuable insight for
In line with our commitment to corporate
businesses to unlock thier potential and
citizenship and responsibility, Mesiniaga has
provide the enablers to boost efficiency,
also initiated and is participating actively with
effectiveness and profitablity.
various local colleges in certified programmes
that will help prepare the next generation of IT
Together with Microsoft, we are bringing to
graduates for the local and international arena.
customers a unique proposition: a proposition
While 2004 brought significant progress for I would also like to extend my grateful
your company; we will look back to this year appreciation to my colleagues on the Board
with sadness when we recall the passing of and the Senior Management Team. Their
our founding father, the late Ismail Sulaiman. expertise, experience and professionalism
Ismail was a pioneer of the Malaysian ICT have been crucial in helping to formulate a
industry and has contributed in innumerable clear growth strategy that has helped in
ways towards the growth and development bringing in the results and facing the
of the industry. Moreover, as the founder of challenges in the year under review.
Mesiniaga, he fully embodied the Mesiniaga
spirit and vision and spearheaded the Last but not least, I would like to thank our
company into exciting new territory, taking it shareholders for your support and trust. The
from a mere idea to a now vibrant and Mesiniaga Board is fully committed towards
successful company. We recognise his safeguarding shareholder value and we will
invaluable contribution and mourn his uphold sound business practices to ensure the
passing as a great loss to all of us. best returns possible for you. With your
continued faith in Mesiniaga, I am confident
On behalf of the Board, I would like to that we can take advantage of the many
gratefully acknowledge the hard work and challenges and opportunities ahead and we
dedication of our staff at all levels and convey look forward to another successful year in 2005.
my thanks to them. Our people’s aspirations
and dedication to professionalism in
everything that they do is always a winning Dato’ Dr. Mohamad Zawawi Ismail
factor and we will to continue to reward good
performance as a reflection of our
appreciation.
27.0
26.7
350 30
26.4
297.4
269.7
23.5
300 248.4 25
230.4
21.1
229.4
250
20
200
15
150
10
100
50 5
0 0
00 01 02 03 04 00 01 02 03 04
120 60
55.1
105.2
49.5
95.1
46.9
46.0
100 50
45.5
85.3
72.3
80 40
59.9
60 30
40 20
20 10
0 0
00 01 02 03 04 00 01 02 03 04
200 200
159.8
159.8
144.8
144.8
132.9
131.8
150 150
119.1
119.1
100.5
100.5
100 100
50 50
0 0
00 01 02 03 04 00 01 02 03 04
2004
“
The dedication and support from this (Mesiniaga) Business Partner (BP)
sets them apart from other resellers.
- IBM ”
In support of Pusat Darah Mesiniaga’s quality was Corporate Reseller category. In expressing our appreciation to
Negara's (PDN) appeal, reflected at the IBM 'Partner We also won the Asia Pacific customers for their support and
Mesiniagans came forward in World' event when the Business Partners (BP) partnerships over the years,
full force to participate in the company clinched the IBM Excellence Award. Mesiniaga held its first customer
company’s Blood Donation Stellar Award 2003, Asia appreciation night, graced by
Drive held on February 26, Pacific region in the Best YB. Dato’ Dr Jamaludin Jarjis,
2004. Minister of Science, Technology,
and Innovation.
For the second year running, Mesiniaga bagged five much coveted Business For outstanding performance in
Mesiniaga was recertified as a prestigious awards including Partner award; proving our achieving revenue quota, we
Cisco GOLD certified partner the much coveted IBM oustanding performance and were included in the exclusive
in Malaysia. Business Partner of The Year sales contribution as an IBM Platinum Club Award 2003.
Award 2003. This is the IBM Partner. We were chosen as the Top
second consecutive year that Contributor Award for 2003 in
the company was awarded the the following categories: IBM
Server and Storage, IBM Global
Services and IBM Systems
Integrator.
Dato’ Wan Abdullah Voon Seng Chuan Joseph Tan Jeok Siak
Mohamad Non-Executive Director Alternate Director to
Non-Executive Director Voon Seng Chuan
(Alternate Director to Voon Seng Chuan)
(Ceased on 03.11.04)
(Not in picture)
MONTH JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC
Low 4.96 4.76 4.32 4.08 4.02 3.70 3.70 3.66 3.66 3.60 3.50 3.50
High 5.15 5.00 5.00 4.60 4.48 4.16 4.14 3.90 4.00 3.80 3.80 3.80
Close 5.00 4.82 4.54 4.32 4.18 3.70 3.86 3.68 3.74 3.60 3.80 3.54
Ringgit
5.50
Low
5.00
High
4.50
Close
4.00
3.50
3.00
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
All meetings were held at the Conference independent judgements to bear on all issues
Room, 11th Floor, Menara Mesiniaga, 1A, presented at the Directors’ meetings which
Jalan SS16/1, 47500 Subang Jaya, Selangor among others incorporate issues on
Darul Ehsan. The Directors exercised strategies, performance and resources.
Board Balance
The Board consists of two Executive Directors and eight Non-Executive Directors, five of whom
are Independent Non-Executive Directors.
As at 31st December 2004, the representation of the members of the Board is as follows:-
The composition exceeded the listing also engage independent professional advice
requirements of Bursa Malaysia, which at the Company’s expense.
requires that at least one third of the Board
should comprise of independent directors. Appointments to the Board
There were no new directors appointed to the
There is a clear division of responsibility Board during the year.
between the Chairman and the Chief
Executive Officer to ensure that there is a
balance of power and authority. Re-election
In accordance with the Company’s Articles of
Together, the Directors bring a wide range of Association, at least one third of the Directors
business, commercial and financial shall retire and be eligible for re-election by
experience relevant to the Company. A brief rotation at each Annual General Meeting. All
description on the background of each Directors are to retire from office at least
Director is presented in the Directors’ Profile once every three years.
column on page 12 to 16.
Directors’ Training
Supply of Information All Board Members have attended the
The Board is provided with written reports mandatory accreditation programme
and supporting information ahead of organised by Bursa Malaysia. With the
meetings of the Board and in sufficient time introduction of the Continuing Education
to enable the Directors to obtain further Programme (CEP) in 2003, the Directors have
explanations, where necessary, in order to be been pursuing training under the CEP to keep
sufficiently well informed before the meeting. themselves abreast with the relevant changes
in laws and regulations, the business
At each Directors Meeting, a special briefing environment and its challenges as well as to
on the Company’s operations by the equip themselves with the knowledge and the
Company’s Senior Managers by rotation was know-how in managing and producing a
also presented. The Special Briefings by the more effective and efficient Board in line with
Senior Managers were to allow the Board good corporate governance practice.
Members to actively and effectively
participate in determining the Company’s
direction. DIRECTORS’ REMUNERATION
The remuneration of Executive Directors is
All Directors have access to the service of the determined by the Remuneration Committee,
Company Secretary and if so required, could which is headed by Nor Hayati Mohd. Kasim.
Below RM 50,000 0 9*
RM 50,000 to RM 99,999 0 0
RM 100,000 to RM 149,999 0 0
RM 150,000 to RM 199,999 0 0
RM 200,000 to RM 249,999 0 0
RM 250,000 to RM 299,999 0 0
RM 300,000 to RM 349,999 0 0
RM 350,000 to RM 399,999 1 0
RM 400,000 to RM 449,999 0 0
RM 450,000 to RM 499,999 0 0
RM 500,000 to RM 549,999 0 0
RM 550,000 to RM 599,999 1 0
Internal Control
The Directors acknowledge their responsibility
for the Company’s system of internal controls
which covers financial, operational and
compliance controls, as well as risk
management. The internal control system is
designed and maintained to ensure that the
risks faced by the business in pursuit of its
objectives are identified and managed at
known acceptable levels.
The Directors are required by the Companies The Directors are responsible for ensuring
Act, 1965 to prepare financial statements for that the Company maintains adequate
each financial year which give a true and fair accounting records which disclose with
view of the state of affairs of the Company as reasonable accuracy the financial position of
at the end of the financial year, and of the the Company to enable them to ensure that
income statement and cash flow of the the financial statements comply with the
Company for the financial year. requirements of the Companies Act, 1965.
The Directors consider that, in preparing the The Directors are responsible for taking such
financial statements of the Company for the steps as are reasonably open to them to
year ended 31st December 2004, the safeguard the assets of the Company.
concern basis.
The Committee shall be appointed by the (3) To review the internal audit programme
Board of Directors of Mesiniaga from amongst and monitor its implementation.
their members and shall consist of not less
than 3 members, a majority of whom shall be (4) To review the internal audit reports and
Independent Directors. follow-up on the action taken to
implement the recommendation of the
The chairman of the Committee shall be an internal auditor.
Independent Director.
(5) To review the year-end financial
Frequency of Meetings statements, prior to the approval by the
Board of Directors.
Meetings shall be held not less than four
times a year and as when required during the (6) To review and approve for the release of
financial year. The quorum for a meeting the quarterly results.
shall be at least two Independent Directors.
(7) To review the related party transactions
Secretary and conflict of interest situations within
the company or group.
The Secretary of the Audit Committee shall be
the Head of Internal Audit of the company. All (8) Perform other related duties as directed
meetings shall be minuted. by the Board of Directors.
Meetings Held
Date Zaiton Mohd. Hassan Chung Thian Sinn Nor Hayati Mohd. Kasim
26/02/2004 ✔ ✔ ✔
28/04/2004 ✔ ✔ ✔
05/08/2004 ✔ ✔ ✔
18/08/2004 ✔ ✔ ✔
02/11/2004 ✔ ✔ ✔
✔ Attended
7. Review with the external auditor, the 7. Provide full co-operation to the external
audit plan, evaluation of the system of auditors in carrying out their audit.
internal controls, audit report and
assistance given by the company’s 8. Any other functions as instructed by the
officers to the auditors. Audit Committee and the Board of
Directors.
8. Independent meetings with the external
auditor.
The Board has an overall responsibility for the The key elements of the framework of the
Company’s system of internal controls, which Company’s internal controls are as follows:
includes the establishment of an appropriate
control environment and framework for risk • Defined lines of authority, responsibility
management, financial, organisational and and accountability within the Company;
operational controls within the Company.
• Documented internal procedures;
The Company’s system of internal controls is
designed to manage risks. The Board places • The existence of an Internal Audit
greater emphasis on items of material Department to provide the Board with
significance in an effort to manage risks and assurance regarding the adequacy and
hence to achieve overall corporate objectives. integrity of internal control systems within
The internal controls are designed to provide the Company. The Internal Audit
reasonable assurance that significant effects Department performs ongoing reviews of
of the risks to the Company are minimised. In processes and activities within the
pursuing business objectives, internal controls Company and reports to the Audit and
can only provide reasonable and not absolute Examination Committee of Directors
assurance against material errors, losses, (AECD). The AECD has full access to both
fraud or occurrence of unforeseeable internal and external auditors.
circumstances.
The Board, acknowledging that risk
The implementation of the risk management management is an ongoing process, remains
framework on an enterprise-wide basis is committed towards the establishment of a
currently on going and involves assessing the sound system of internal control and
degree of significant risks identified, therefore, recognises that the system must
evaluating the effectiveness of the controls in continuously evolve to support the growth
place and the requirement for additional and dynamics of the Company’s business. As
controls on a regular basis. Risk management such, the Board, in striving for continuous
is carried out through regular discussions improvement, will put in place appropriate
with, and feedback from the management of action plans when necessary to further
the Company via on-going presentation to the enhance the Company’s system of internal
Risk Management Committee (“RMC”). control.
Thereafter, the RMC shall form an opinion as
to the adequacy of the controls affecting risks,
which are of material significance to the
Company. The Board of Directors
Mesiniaga Berhad
The RMC meets four (4) times a year to
review the controls required to manage risks.
A report on the adequacy of the controls on
significant risks is presented to the Board.
No funds were raised by the Company from The Company has not provided any Profit
any corporate proposal during the financial Guarantee.
year.
MATERIAL CONTRACTS
SHARE BUY BACK
There were no material contracts by the
During the financial year, the Company did Company and its subsidiaries involving
not enter into any share buy back Directors or substantial shareholders’ interest
transactions. during the financial year.
VARIATION IN RESULT
STATEMENTS
The Directors have pleasure in submitting their report together with the audited financial
statements of the Group and of the Company for the financial year ended 31 December 2004.
PRINCIPAL ACTIVITIES
The Company is principally involved in the sale and service of information technology products
and related services. The principal activities of the subsidiaries are described in Note 13 to the
financial statements.
There have been no significant changes in the activities of the Group and of the Company during
the financial year.
FINANCIAL RESULTS
Group Company
RM'000 RM'000
DIVIDENDS
The dividends on ordinary shares paid by the Company since 31 December 2003 are as follows:
RM'000
In respect of the financial year ended 31 December 2003,
as shown in the Directors’ Report of that year:
- final gross dividend of 13 sen per share,
less income tax of 28%, paid on 24 June 2004 5,653
- final gross dividend of 3 sen per share, tax exempt, paid on 24 June 2004 1,812
7,465
The Directors now recommend the payment of a final gross dividend of 13 sen per share, less
income tax, amounting to RM5,653,627 and a final gross dividend of 3 sen per share, tax exempt,
amounting to RM1,812,060 subject to the approval of the members at the forthcoming Annual
General Meeting, which will be paid on 6 July 2005 to shareholders registered on the Company’s
Register of Members at the close of business on 13 June 2005.
All material transfers to or from reserves and provisions during the financial year are shown in
the financial statements.
SHARE CAPITAL
During the financial year, 79,000 new ordinary shares of RM1.00 each were issued by the
Company for cash by virtue of the exercise of options pursuant to the Company’s Employees’
Share Option Scheme at the following issue prices:
4.65 19
4.25 29
3.69 29
3.44 2
79
The new ordinary shares issued during the financial year rank pari passu in all respects with the
existing ordinary shares of the Company.
The Company’s Employees’ Share Option Scheme (“ESOS”) was approved by the shareholders
on 17 September 1999 and became effective on 7 February 2001 for a period of five years.
Details of the ESOS are set out in Note 23(a) to the financial statements.
The Company has been granted exemption by the Companies Commission of Malaysia from
having to disclose in this Report the names of the persons to whom options have been granted
during the financial year and details of their holdings pursuant to Section 169 (11) of the
Companies Act, 1965 except for information of employees who were granted options of 50,000
shares and above.
However, no employees of the Company and its subsidiaries were granted options of 50,000
shares and above during the financial year.
DIRECTORS
The Directors who have held office during the period since the date of the last report are as
follows:
DIRECTORS' BENEFITS
During and at the end of the financial year, no arrangements subsisted to which the Company is
a party, with the object or objects of enabling Directors of the Company to acquire benefits by
means of the acquisition of shares in, or debentures of, the Company or any other body
corporate.
Since the end of the previous financial year, no Director has received or become entitled to
receive a benefit (other than the Directors’ remuneration disclosed in Note 6 to the financial
statements) by reason of a contract made by the Company or a related corporation with the
Director or with a firm of which he is a member, or with a company in which he has a substantial
financial interest.
2
Including interests held under his nominee accounts with Bumiputra Commerce Trustee Berhad
and Citicorp Nominees (Tempatan) Sdn. Bhd.
3
Including interests held under his nominee account with Bumiputra Commerce Nominees (T)
Sdn. Bhd.
Other than those disclosed above, according to the Register of Directors’ Shareholdings, none of
the other Directors in office at the end of the financial year held any interest in shares and options
over shares in the Company and its related corporations during the financial year.
Before the income statements and balance sheets of the Group and of the Company were made
out, the Directors took reasonable steps:
(a) to ascertain that proper action had been taken in relation to the writing off of bad debts and
the making of allowance for doubtful debts and satisfied themselves that all known bad debts
had been written off and that adequate allowance had been made for doubtful debts; and
(b) to ensure that any current assets, other than debts, which were unlikely to realise in the
ordinary course of business their values as shown in the accounting records of the Group and
the Company had been written down to an amount which they might be expected so to realise.
At the date of this report, the Directors are not aware of any circumstances:
(a) which would render the amounts written off for bad debts or the amount of the allowance
for doubtful debts in the financial statements of the Group and the Company inadequate to
any substantial extent; or
(b) which would render the values attributed to current assets in the financial statements of the
Group and the Company misleading; or
(c) which have arisen which render adherence to the existing method of valuation of assets or
liabilities of the Group and the Company misleading or inappropriate.
No contingent or other liability has become enforceable or is likely to become enforceable within
the period of twelve months after the end of the financial year which, in the opinion of the
Directors, will or may substantially affect the ability of the Group and the Company to meet their
obligations when they fall due.
(a) any charge on the assets of the Group and the Company which has arisen since the end of
the financial year which secures the liability of any other person; or
(b) any contingent liability of the Group and the Company which has arisen since the end of the
financial year.
At the date of this report, the Directors are not aware of any circumstances not otherwise dealt
with in this report or the financial statements which would render any amount stated in the
financial statements misleading.
(a) the results of the Group's and the Company's operations during the financial year were not
substantially affected by any item, transaction or event of a material and unusual nature;
and
(b) there has not arisen in the interval between the end of the financial year and the date of this
report any item, transaction or event of a material and unusual nature likely to affect
substantially the results of the operations of the Group and the Company for the financial
year in which this report is made.
AUDITORS
In accordance with a resolution of the Board of Directors dated 14th April 2005.
WAN MOHAMED FUSIL BIN WAN MAHMOOD MOHD PUZI BIN AHAMAD
DIRECTOR DIRECTOR
We, Wan Mohamed Fusil bin Wan Mahmood and Mohd Puzi bin Ahamad, two of the Directors of
Mesiniaga Berhad, state that, in the opinion of the Directors, the financial statements set out on
pages 34 to 68 are drawn up so as to give a true and fair view of the state of affairs of the Group
and of the Company as at 31 December 2004 and of the results and cash flows of the Group and
of the Company for the financial year ended on that date in accordance with the MASB approved
accounting standards in Malaysia and the provisions of the Companies Act, 1965.
In accordance with a resolution of the Board of Directors dated 14th April 2005.
WAN MOHAMED FUSIL BIN WAN MAHMOOD MOHD PUZI BIN AHAMAD
DIRECTOR DIRECTOR
STATUTORY DECLARATION
PURSUANT TO SECTION 169 (16) OF THE COMPANIES ACT, 1965
I, Mohd Puzi bin Ahamad, the Director primarily responsible for the financial management of
Mesiniaga Berhad, do solemnly and sincerely declare that the financial statements set out on
pages 34 to 68 are, in my opinion, correct and I make this solemn declaration conscientiously
believing the same to be true, and by virtue of the provisions of the Statutory Declarations Act,
1960.
Subscribed and solemnly declared by the abovenamed, Mohd Puzi bin Ahamad, at Subang Jaya
in Malaysia on 14th April 2005 before me.
We have audited the financial statements set out on pages 34 to 68. These financial statements
are the responsibility of the Company’s Directors. It is our responsibility to form an independent
opinion, based on our audit, on these financial statements and to report our opinion to you, as a
body, in accordance with Section 174 of the Companies Act, 1965 and for no other purpose. We
do not assume responsibility to any other person for the content of this report.
We conducted our audit in accordance with approved auditing standards in Malaysia. Those
standards require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit includes examining,
on a test basis, evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant estimates made by
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 prepared in accordance with the provisions of the
Companies Act, 1965 and MASB approved accounting standards in Malaysia so as to give
a true and fair view of:
(i) the matters required by Section 169 of the Companies Act, 1965 to be dealt with in the
financial statements; and
(ii) the state of affairs of the Group and of the Company as at 31 December 2004 and of
the results and cash flows of the Group and of the Company for the financial year
ended on that date;
and
(b) the accounting and other records and the registers required by the Act to be kept by the
Company and the subsidiaries have been properly kept in accordance with the provisions of
the Act.
We are satisfied that the financial statements of the subsidiaries that have been consolidated with
the Company's financial statements are in form and content appropriate and proper for the
purposes of the preparation of the consolidated financial statements and we have received
satisfactory information and explanations required by us for those purposes.
Our auditors’ reports on the financial statements of the subsidiaries were not subject to any
qualification and did not include any adverse comment made under subsection (3) of Section 174
of the Act.
Group Company
Note 2004 2003 2004 2003
RM'000 RM'000 RM'000 RM'000
Net profit for the financial year 16,054 18,621 16,889 18,394
Group Company
Note 2004 2003 2004 2003
RM'000 RM'000 RM'000 RM'000
NON-CURRENT ASSETS
Property, plant and equipment 12 55,107 49,485 55,065 49,403
Investment in subsidiaries 13 0 0 1,200 1,130
Investment in associates 14 6,308 6,338 6,600 6,635
Deferred tax assets 15 185 237 0 0
CURRENT ASSETS
Inventories 16 24,938 26,551 22,849 24,648
Receivables, deposits
and prepayments 17 164,090 136,200 162,165 133,240
Tax recoverable 987 814 794 794
Deposits with a licensed
financial institution 18 10,037 4,958 8,500 3,650
Cash, bank balances and deposits 18 7,401 4,859 6,081 3,257
Represented by:
36 | MESINIAGA BERHAD
At 1 January 2003 60,168 60,168 3,392 6,346 40 62,987 132,933
Final dividends:
(79244-V)
- 31 December 2002 11 0 0 0 0 0 (7,437) (7,437)
Net profit for the financial year 0 0 0 0 0 18,621 18,621
Issue of shares pursuant to ESOS 23 155 155 488 0 0 0 643
Group Company
Note 2004 2003 2004 2003
RM'000 RM'000 RM'000 RM'000
Group Company
Note 2004 2003 2004 2003
RM'000 RM'000 RM'000 RM'000
Purchase of property,
plant and equipment (3,370) (6,726) (3,359) (6,697)
Interest received 109 283 65 253
Proceeds from disposal of
interest in a subsidiary 0 14 0 14
Purchase of shares
in a new subsidiary 13 0 0 (70) 0
Dividends received
from a subsidiary 0 0 220 257
NET INCREASE/(DECREASE) IN
CASH AND CASH EQUIVALENTS
DURING THE FINANCIAL YEAR 6,714 (10,533) 6,767 (11,951)
1 GENERAL INFORMATION
The Company is principally involved in the sale and service of information technology
products and related services. The principal activities of the subsidiaries are described in
Note 13 to the financial statements. There have been no significant changes in the activities
of the Group and of the Company during the financial year.
The average number of employees during the financial year was 622 (2003: 484) employees
in the Group and 498 (2003: 449) employees in the Company.
The Company is a limited liability company, incorporated and domiciled in Malaysia and
listed on the Main Board Of Bursa Malaysia Securities Berhad (‘Bursa Securities’).
The address of the registered office and the principal place of business of the Company is
as follows:
As at the end of the financial year, all assets and liabilities of the Company are denominated
in Ringgit Malaysia except otherwise disclosed.
2 BASIS OF PREPARATION
The financial statements of the Group and of the Company have been prepared under the
historical cost convention, modified by the revaluation of freehold land and building.
The financial statements comply with the MASB approved accounting standards in Malaysia
and the provisions of the Companies Act, 1965.
The preparation of financial statements in conformity with the provisions of the Companies
Act, 1965 and the MASB approved accounting standards in Malaysia requires the use of
estimates and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial statements, and the
reported amounts of revenues and expenses during the reported financial year. Although
these estimates are based on the Directors’ best knowledge of current events and actions,
actual results may differ from those estimates.
The following accounting policies have been used consistently in dealing with items which
are considered material in relation to the financial statements.
The consolidated financial statements include the financial statements of the Company,
all its subsidiaries and its associates made up to the end of the financial year.
Subsidiaries are those companies in which the Group has power to exercise control
over the financial and operating policies so as to obtain benefits from their activities.
Subsidiaries are consolidated using the acquisition method of accounting. Under the
acquisition method of accounting, the results of subsidiaries are consolidated from the
date on which control is transferred to the Group and are no longer consolidated from
the date that control ceases. The cost of acquisition is the amount of cash paid and the
fair value at the date of acquisition of other purchase consideration given by the
acquirer. At the date of acquisition, the fair values of the subsidiaries’ net assets are
determined and these values are reflected in the consolidated financial statements. The
difference between the cost of acquisition over the Group’s share of the fair value of the
identifiable net assets of the subsidiary acquired at the date of acquisition is reflected
as goodwill or reserve on consolidation. See accounting policy Note (b) on goodwill.
Minority interest is measured at the minorities’ share of the post acquisition fair values
of the identifiable assets and liabilities of the acquiree. Separate disclosure is made of
minority interest.
The gain or loss on disposal of a subsidiary is the difference between net disposal
proceeds and the Group’s share of its net assets together with any unamortised
balance of goodwill on acquisition.
(b) Goodwill
Goodwill represents the excess of the cost of acquisition of subsidiaries and associates
acquired over the Group’s share of the fair value of their identifiable net assets at the
date of acquisition.
Goodwill on acquisition is amortised using the straight line method over its estimated
useful life or 20 years, whichever is shorter. At each balance sheet date, the Group
assesses whether there is any indication of impairment. If such indications exist, an
analysis is performed to assess whether the carrying amount of the asset is fully
recoverable. A write down is made if the carrying amount exceeds the recoverable
amount. See accounting policy Note (e) on impairment of assets.
Reserve on consolidation represents the excess of the fair value of identifiable net
assets acquired over the cost of acquisition. In the Group’s balance sheet, reserve on
consolidation is treated as a permanent item.
Property, plant and equipment are initially stated at cost. Freehold land and buildings
are subsequently shown at valuation, based on the valuation by independent
professional valuers once in every five years, less subsequent depreciation. All other
property, plant and equipment are stated at historical cost less accumulated
depreciation.
Surpluses arising on revaluation are credited to the revaluation reserve. Any deficit
arising from revaluation is charged against the revaluation reserve to the extent of a
previous surplus held in the revaluation reserve for the same asset. In all other cases,
a decrease in carrying amount is charged to the income statement.
Freehold land is not depreciated as it has an infinite life. Other property, plant and
equipment are depreciated on a straight line basis so as to write off the cost of each
asset over their estimated useful lives at the following annual rates:
Buildings 2%
Machines 25% to 50%
Office equipment, furniture and fittings 12.5% to 50%
Depreciation on capital work-in-progress commences when the asset is ready for its
intended use.
At each balance sheet date, the Group assesses whether there is any indication of
impairment. If such indications exist, an analysis is performed to assess whether the
carrying amount of the asset is fully recoverable. A write down is made if the carrying
amount exceeds the recoverable amount. See accounting policy Note (e) on
impairment of assets.
Gains and losses on disposal are determined by comparing proceeds with carrying
amount and are included in profit/(loss) from operations. On disposal of revalued
assets, amounts in revaluation reserve relating to those assets are transferred to
retained earnings.
Repairs and maintenance are charged to the income statements during the period in
which they are incurred. The cost of major renovations is included in the carrying
amount of the asset when it is probable that future economic benefits in excess of the
originally assessed standard of performance of the existing asset will flow to the Group.
Major renovations are depreciated over the remaining useful life of the related asset.
(d) Investments
On disposal of an investment, the difference between net disposal proceeds and its
carrying amount is charged/credited to the income statement.
Property, plant and equipment and other non-current assets are reviewed for
impairment losses whenever events or changes in circumstances indicate that the
carrying amount may not be recoverable. Impairment loss is recognised for the
amount by which the carrying amount is the higher of an asset’s net selling price and
value in use. For the purposes of assessing impairment, assets are grouped at the
lowest level for which there are separately identifiable cash flows.
The impairment loss is charged to the income statement unless it reverses a previous
revaluation in which case it is charged to the revaluation surplus. Any subsequent
increase in recoverable amount is recognised in the income statement unless it
reverses an impairment loss on a revalued asset in which case it is taken to revaluation
surplus.
(f) Associates
Associates are companies in which the Group exercises significant influence, but
which it does not control. Significant influence is the power to participate in the
financial and operating policy decisions of the associates but not control over those
policies. Investments in associates are accounted for in the consolidated financial
statements by the equity method of accounting.
Equity accounting involves recognising in the income statement the Group’s share of
the results of associates for the financial year. The Group’s investments in associates
are carried in the balance sheet at an amount that reflects its share of the net assets of
the associates and includes goodwill (net of accumulated amortisation) on acquisition.
Equity accounting is discontinued when the carrying amount of the investment in an
associate reaches zero, unless the Group has incurred obligations or guaranteed
obligations in respect of the associate.
Unrealised gains on transactions between the Group and its associates are eliminated to
the extent of the Group’s interest in the associates; unrealised losses are also eliminated
unless the transaction provides evidence on impairment of the asset transferred.
(g) Inventories
Inventories are stated at the lower of cost and net realisable value. Net realisable value
is the estimate of the selling price in the ordinary course of business, less the costs of
completion and selling expenses. Cost, which includes purchase price and other
import charges, is determined on a weighted average basis.
Trade receivables are carried at invoiced amount less an estimate made for doubtful
debts based on a review of outstanding amounts at the financial year end.
Known bad debts are written off and specific allowance is made for any considered to
be doubtful of collection.
The principal closing rates used in translation of foreign currency amounts are as
follows:
Leases of property, plant and equipment where the Group assumes substantially all
the benefits and risks of ownership are classified as finance leases.
Finance leases are capitalised at the estimated present value of the underlying lease
payments at the date of inception. Each lease payment is allocated between the
liability and finance charges so as to achieve a constant rate on the finance balance
outstanding. The corresponding rental obligations, net of finance charges, are
included in payables. The interest element of the finance charges is charged to the
income statement over the lease period.
Property, plant and equipment acquired under finance leases are depreciated over the
estimated useful life of the asset. Where there is no reasonable certainty that the
ownership will be transferred to the Group, the asset is depreciated over the shorter of
the lease term and its estimated useful life.
Wages, salaries, bonuses and other employee benefits are accrued in the period
in which the associated services are rendered by employees and Executive
Directors of the Group.
The liability in respect of a defined benefit plan is the present value of the defined
benefit obligation at the balance sheet date minus the fair value of plan assets,
together with adjustments for actuarial gains/losses and past service cost. The
Company determines the present value of the defined benefit obligation and the
fair value of the plan assets with sufficient regularity such that the amounts
recognised in the financial statements do not differ materially from the amounts
that would be determined at the balance sheet date.
The defined benefit obligation, calculated using the projected unit credit method,
is determined by independent actuaries, considering the estimated future cash
outflows using market yields at balance sheet date of government securities and
corporate bonds, which have terms of maturity approximating the terms of the
related liability.
Actuarial gains and losses arise from experience adjustments and changes in
actuarial assumptions. The amount of net actuarial gains and losses recognised
in the income statement is determined by the corridor method in accordance with
MASB 29 and is charged or credited to income over the average remaining
service lives of the related employees participating in the defined benefit plan.
Details of the Group’s Employee Share Option Scheme are set out in Note 23 (a)
to the financial statements. The Group does not make a charge to the income
statement in connection with share options granted. When the share options are
exercised, the proceeds received, net of any transaction costs, are credited to
share capital and share premium.
Current tax expense is determined according to the tax laws of each jurisdiction in
which the Group operates and includes all taxes based upon the taxable profits,
including real property gains taxes payable on disposal of properties.
Deferred tax is recognised in full, using the liability method, on temporary differences
arising between the amounts attributed to assets and liabilities for tax purposes and
their carrying amounts in the financial statements.
Deferred tax assets are recognised to the extent that is probable that taxable profit will
be available against which the deductible temporary differences or unused tax losses
can be utilised.
Tax rates enacted or substantively enacted by the balance sheet date are used to
determine deferred tax.
Revenue comprises the invoiced value for the sale of goods and services, net of
rebates and discounts, after eliminating sales within the Group. Revenue from the sale
of goods is recognised upon delivery of goods sold or when significant risks and
rewards of ownership of goods are transferred to the buyer. Revenue from rendering
of services is based on the stage of completion determined by reference to services
performed to date as a percentage of total services to be performed.
(n) Dividends
Dividends are recognised when the Group’s right to receive payment is established.
For the purposes of the cash flow statements, cash and cash equivalents comprise
cash in hand, bank balances, demand deposits, bank overdrafts and short term, highly
liquid investments that are readily convertible to known amounts of cash and which
are subject to an insignificant risk of changes in value.
(i) Description
A financial instrument is any contract that gives rise to both a financial asset of
one enterprise and a financial liability or equity instrument of another enterprise.
A financial asset is any asset that is cash, a contractual right to receive cash or
another financial asset from another enterprise, a contractual right to exchange
financial instruments with another enterprise under conditions that are
potentially favourable, or an equity instrument of another enterprise.
The historical cost carrying amounts of trade receivables and trade payables
subject to normal trade credit terms approximate their fair values. The carrying
amounts of other receivables and other payables are reasonable estimates of fair
value because of their short maturity. The carrying amounts of deposits, cash and
bank balances approximate their fair values due to the relatively short term
maturity of these instruments.
The face values, less any estimated credit adjustments, for financial assets and
financial liabilities with a maturity of less than one year are assumed to
approximate their fair values.
(i) Classification
Ordinary shares are classified as equity. Other shares are classified as equity
and/or liability according to the economic substance of the particular instrument.
External cost directly attributable to the issue of new shares are shown as a
deduction, net of tax, in equity from the proceeds.
(r) Borrowings
Borrowings are initially recognised based on the proceeds received, net of transaction
costs incurred. In subsequent periods, borrowings are stated at amortised cost using the
effective yield method; any difference between proceeds (net of transaction costs) and the
redemption value is recognised in the income statement over the period of the borrowings.
The Group’s activities expose it to a variety of financial risks, including foreign currency
exchange risk, interest rate risk, credit risk, liquidity and cash flow risk. The Group’s overall
financial risk management objective is to ensure that the Group creates value for its
shareholders. Financial risk management is carried out through risk reviews, internal control
systems, insurance programmes and adherence to Group financial risk management
policies. The management regularly reviews these risks.
The Group is exposed to various currencies, mainly United States Dollar, New Zealand
Dollar, Singapore Dollar and Brunei Dollar. Foreign currency denominated assets and
liabilities together with expected cash flows from anticipated transactions
denominated in foreign currencies give rise to foreign exchange exposures. Foreign
currency exposures are kept to an acceptable level.
Interest rate exposure arises mainly from the Group’s deposits. The Group’s income
and operating cash flows are substantially independent of changes in market interest
rates.
Credit risk arises when sales are made on deferred credit terms. The Group controls
these risks by application of credit approvals, limits and monitoring procedures. Trade
receivables are monitored on an ongoing basis via regular updates and management
reporting procedures.
Concentrations of credit risk with respect to trade receivables are limited due to the
Group’s large number of customers. The Group’s historical experience in collection of
trade receivables falls within the recorded allowances. Due to these factors,
management believes that no additional credit risk beyond amounts allowed for
collection loss is inherent in the Group’s trade receivables.
The Group practices prudent liquidity risk management to minimise the mismatch of
financial assets and liabilities. The Group maintains sufficient level of cash to meet its
working capital requirements. The Group also maintains sufficient level of banking
facilities for contingent funding of working capital.
5 REVENUE
Group Company
2004 2003 2004 2003
RM'000 RM'000 RM'000 RM'000
Sale of:
- hardware 219,223 184,835 211,188 177,063
- software 31,162 29,112 31,162 29,112
- services 46,995 55,794 46,385 54,728
6 STAFF COST
Group Company
2004 2003 2004 2003
RM'000 RM'000 RM'000 RM'000
Wages, salaries, bonus and
other employment benefits 28,457 26,708 28,157 25,841
Defined contribution retirement plan
(Note 21) 3,515 3,153 2,883 3,047
Defined benefit retirement plan
(Note 21) 441 498 441 498
Details of the defined contribution and defined benefit plans of the Group and Company are
set out in Note 21 to the financial statements.
The aggregate amount of emoluments received and receivable by Directors of the Group
and Company during the financial year is as follows:
Group Company
2004 2003 2004 2003
RM'000 RM'000 RM'000 RM'000
Non-executive Directors
- fees 152 160 152 160
- defined benefit retirement plan 1 30 1 30
- others 8 76 8 76
- estimated money value of
benefits-in-kind 0 11 0 11
Executive Directors
- salaries and bonus 909 796 730 662
- defined contribution retirement plan 102 97 87 80
- defined benefit retirement plan 462 383 462 383
- estimated money value of
benefits-in-kind 107 91 107 83
Group Company
2004 2003 2004 2003
RM'000 RM'000 RM'000 RM'000
8 FINANCE COST
Group and Company
2004 2003
RM'000 RM'000
Interest expenses on:
- bank overdraft 50 28
- short term borrowings 720 108
- lease financing 15 23
785 159
9 TAXATION
Group Company
2004 2003 2004 2003
RM'000 RM'000 RM'000 RM'000
Current tax:
Current year - Malaysian income tax 7,325 8,065 7,136 7,690
Overaccrual in prior years (net) 0 (38) 0 0
The explanation of the relationship between tax expense and profit from ordinary activities
before taxation is as follows:
Group Company
2004 2003 2004 2003
% % % %
Numerical reconciliation between the
average effective tax rate and the
Malaysian tax rate
9 TAXATION (CONT’D)
Group Company
2004 2003 2004 2003
% % % %
- previously unrecognised tax losses
and capital allowances 0 (0.06) 0 0
- overaccrual in prior years (net) 0 (0.14) 0 0
Included in the tax expense of the Group are tax savings from utilisation of tax losses and
unabsorbed capital allowances as follows:
Group
2004 2003
RM'000 RM'000
Tax savings as a result of the utilisation of tax losses/
unabsorbed capital allowances brought forward for which the
related credit is recognised during the year:
The amount of unutilised tax losses and unabsorbed capital allowances for which no
deferred tax assets is recognised in the balance sheet is as follows:
Group
2004 2003
RM'000 RM'000
1,478 459
Subject to the agreement by the tax authorities, the Company has sufficient tax credits
available under Section 108(6) of the Malaysian Income Tax Act, 1967 to frank the payment of
net dividends out of all its retained earnings as at 31 December 2004 if paid out as dividends.
In addition, the Company has tax exempt income as at 31 December 2004 arising from the
Income Tax (Amendment) Act, 1999, relating to tax on income earned in 1999 being waived
and first tier exempt dividend income amounting to approximately RM2,828,580 and
RM832,500 (2003: RM4,640,520 and RM832,500) respectively available for distribution as tax
exempt dividends to shareholders. This tax exempt income is subject to agreement by the
tax authorities.
Basic earnings per share of the Group is calculated by dividing the net profit
attributable to shareholders by the weighted average number of ordinary shares in
issue during the financial year.
Group
2004 2003
For the diluted earnings per share calculation, the weighted average number of
ordinary shares in issue is adjusted to assume conversion of all dilutive potential
ordinary shares. The Company has one category of dilutive potential ordinary shares,
being share options granted to employees.
In the diluted earnings per share calculation in respect of share options granted to
employees, a calculation is done to determine the number of shares that could have been
acquired at market price (determined as the average annual share price of the Company’s
shares) based on the monetary value of the subscription rights attached to outstanding
share options. This calculation serves to determine the ‘bonus’ element to the ordinary
shares outstanding for the purpose of computing the dilution. No adjustment is made to
net profit attributable to the shareholders for the share options calculation.
Group
2004 2003
11 DIVIDENDS
7,465 7,437
The Directors has recommended the payment of a final gross dividend of 13 sen per share,
less income tax, amounting to RM5,653,627 and a final gross dividend of 3 sen per share,
tax exempt, amounting to RM1,812,060 subject to the approval of the members at the
forthcoming Annual General Meeting.
The financial statements do not reflect the proposed final dividends for the financial year
ended 31 December 2004, which will only be accrued as a liability in the financial year
ending 31 December 2005, after approval by the shareholders.
52 | MESINIAGA BERHAD
2004
(79244-V)
Cost/Valuation
At 1 January 2004 3,874 11,059 6,478 26,373 4,594 20,886 73,264
Revaluation surplus 0 6,399 0 0 0 0 6,399
Additions 0 0 370 0 0 3,000 3,370
Assets written off 0 0 0 0 0 (508) (508)
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
Accumulated depreciation
At 1 January 2004 0 0 78 5,805 2,863 15,033 23,779
Charge for the financial year 0 0 150 527 696 2,774 4,147
Assets written off 0 0 0 0 0 (508) (508)
2003
Cost/Valuation
At 1 January 2003 3,874 11,059 620 26,373 4,594 17,710 2,311 66,541
Additions 0 0 0 0 0 3,179 3,547 6,726
Assets written off 0 0 0 0 0 (3) 0 (3)
Transfers 0 0 5,858 0 0 0 (5,858) 0
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
Accumulated depreciation
At 1 January 2003 0 0 36 5,277 2,158 12,194 0 19,665
Charge for the financial year 0 0 42 528 705 2,842 0 4,117
Assets written off 0 0 0 0 0 (3) 0 (3)
54 | MESINIAGA BERHAD
2004
(79244-V)
Cost/Valuation
At 1 January 2004 3,874 11,059 6,478 26,373 4,594 19,867 72,245
Revaluation surplus 0 6,399 0 0 0 0 6,399
Additions 0 0 370 0 0 2,989 3,359
Assets written off 0 0 0 0 0 (436) (436)
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
Accumulated depreciation
At 1 January 2004 0 0 78 5,805 2,863 14,096 22,842
Charge for the financial year 0 0 150 527 696 2,723 4,096
Assets written off 0 0 0 0 0 (436) (436)
2003
Cost/Valuation
At 1 January 2003 3,874 11,059 620 26,373 4,594 16,720 2,311 65,551
Additions 0 0 0 0 0 3,150 3,547 6,697
Assets written off 0 0 0 0 0 (3) 0 (3)
Transfers 0 0 5,858 0 0 0 (5,858) 0
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
Accumulated depreciation
At 1 January 2003 0 0 36 5,277 2,158 11,356 0 18,827
Charge for the financial year 0 0 42 528 705 2,743 0 4,018
Assets written off 0 0 0 0 0 (3) 0 (3)
The freehold land and building were revalued on 30 September 2003 by Mr P’ng Soo Theng,
Registered Valuer with the Board of Valuers, Appraisers and Estate Agents, a Fellow of the
Royal Institution of Chartered Surveyors UK, a Member of the Institute of Surveyors
Malaysia and a partner with CH Williams Talhar & Wong Sdn. Bhd., which was subsequently
updated on 30 September 2004.
The book values of freehold land and buildings were adjusted to reflect the revaluations and
the resultant surpluses were credited to revaluation reserve.
The net book values of the revalued freehold land and building had these assets been
carried at cost less accumulated depreciation is as follows:
Group and Company
2004 2003
RM'000 RM'000
Included in property, plant and equipment of the Group and Company are machines
acquired under finance lease agreements, with net book value of RM134,000 (2003:
RM295,000).
13 INVESTMENT IN SUBSIDIARIES
Company
2004 2003
RM'000 RM'000
1,200 1,130
Details of the subsidiaries, all of which are incorporated in Malaysia, are as follows:
Group’s
effective interest
Name of company Principal activities 2004 2003
% %
Mesiniaga Techniques Provision of human resources
Sdn. Bhd. to the holding company 100 100
Navigis Sdn Bhd was incorporated during the financial year and the purchase consideration
of RM70,000 was made via cash. The details of assets acquired and cash flow arising from
the investment is as follows:
Company
RM’000
Cost of acquisition 70
14 INVESTMENT IN ASSOCIATES
Group
2004 2003
RM'000 RM'000
6,308 6,338
Company
2004 2003
RM'000 RM'000
6,600 6,635
Details of the associates, all of which are incorporated in Malaysia, are as follows:
Group’s
effective interest
Name of company Principal activities 2004 2003
% %
PWR Powerlan (Malaysia) Dormant
Sdn. Bhd. # 30 30
Deferred tax assets and liabilities are offset when there is a legally enforceable right to set
off current tax assets against current tax liabilities and when the deferred taxes relate to the
same tax authority. The following amounts, determined after appropriate offsetting, are
shown in the balance sheets:
Group Company
2004 2003 2004 2003
RM'000 RM'000 RM'000 RM'000
124 93 176 90
16 INVENTORIES
Group Company
2004 2003 2004 2003
RM'000 RM'000 RM'000 RM'000
At cost:
Equipment 21,479 23,093 21,479 23,093
Spare parts 1,069 551 1,069 551
Supplies 162 369 32 369
Cables 1,420 984 0 0
Group Company
2004 2003 2004 2003
RM'000 RM'000 RM'000 RM'000
0 0 1,039 970
26 443 26 443
Group Company
2004 2003 2004 2003
RM'000 RM'000 RM'000 RM'000
The amounts due from subsidiaries and associates are unsecured, interest free and have no
fixed terms of repayment.
Bank balances are deposits held at call with banks and earn no interest.
The Group and Company’s effective weighted average interest rates of deposits at the end
of the financial year is 2.68% (2003: 3.18%) per annum.
Deposits of the Group and Company as at 31 December 2004 are time deposits, which have
an average maturity period of 20 days (2003: 30 days).
The Group and Company’s effective weighted average interest rate of bank overdraft at the
end of the financial year is 7.25% (2003: Nil) per annum.
19 PAYABLES
Group Company
2004 2003 2004 2003
RM'000 RM'000 RM'000 RM'000
19 PAYABLES (CONT’D)
Group Company
2004 2003 2004 2003
RM'000 RM'000 RM'000 RM'000
Amounts due to subsidiaries and associates are unsecured, interest free and have no fixed
terms of repayment.
21,467 0
21,467 0
The Company and its subsidiaries, which are all incorporated in Malaysia, contribute
to the Employees Provident Fund, the national defined contribution plan. Once the
contributions have been paid, the Group has no further payment obligations.
The Group operates a funded defined benefit plan, which is an approved defined
benefit plan under Section 150 of the Income Tax Act, 1967. The defined benefit plan
is only applicable for eligible employees who have completed at least 15 years of
service at the time of retirement and are employed prior to 2 July 2002.
The assets of the funded plan are held in separate trustee administered funds.
The latest actuarial valuation of the plan as at 31 December 2004 was carried out on
14 February 2005.
The movements during the year in the amounts recognised in the balance sheet are as
follows:
Group Company
2004 2003 2004 2003
RM'000 RM'000 RM'000 RM'000
Group Company
2004 2003 2004 2003
RM'000 RM'000 RM'000 RM'000
At 31 December
Present value of
funded obligations 3,993 3,060 3,993 3,060
Fair value of plan assets (964) (850) (964) (850)
Group Company
2004 2003 2004 2003
RM'000 RM'000 RM'000 RM'000
The principle actuarial assumptions used in respect of the Company’s defined benefit
plan are as follows:
Group Company
2004 2003 2004 2003
% % % %
At 31 December
This represents future instalments, under finance lease agreements, repayable as follows:
43 173
Future finance charges on finance leases (5) (20)
38 153
The finance lease liability is effectively secured as the rights to the leased assets revert to
the lessor in the event of default.
2004 ANNUAL REPORT | 63
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
23 SHARE CAPITAL
Group and Company
2004 2003
RM'000 RM'000
Ordinary shares of RM1.00 each:
Authorised: 100,000 100,000
During the financial year, 79,000 new ordinary shares of RM1.00 each were issued by the
Company for cash by virtue of the exercise of options pursuant to the Company’s
Employees’ Share Option Scheme at the following issue prices:
4.65 19
4.25 29
3.69 29
3.44 2
79
The new ordinary shares issued during the financial year rank pari passu in all respects with
the existing ordinary shares of the Company.
The Company’s Employees’ Share Option Scheme (“ESOS”) was approved by the
shareholders on 17 September 1999 and became effective on 7 February 2001 for a
period of five years.
• The total number of ordinary shares to be issued by the Company under the ESOS
shall not exceed 10% of the total issued and paid-up ordinary share capital of the
Company.
• The option price under the ESOS is set at a discount of not more than ten (10)
percent on the weighted average market price of the shares of the Company for the
five (5) market days immediately preceding the Date of Offer. The Exercise Price per
new share shall in no event be less than its par value.
• Eligible participants of the ESOS are full-time and confirmed employees of the
Group who have served the Group for one (1) continuous year on or prior to the
Date of Offer. An Executive Director of the Company shall only be eligible to
participate in the Scheme if he is holding a full-time executive position and the
specific allotment to be made to the Executive Director has been approved by the
Company in a members’ general meeting.
During the financial year, 985,000 options were granted at an exercise price of RM3.44
per share.
The movements during the financial year in the number of options over the ordinary
shares of the Company are as follows:
2004 2003
'000 '000
Fair value
of shares at Exercise Number of shares
Exercise date shares issue date price 2004 2003
RM/share RM/share '000 '000
79 155
The fair value of shares issued on the exercise of options is the mean market price at which
the Company’s shares were traded on Bursa Malaysia Securities Berhad on the day prior to
the exercise of the options.
The Company has been granted exemption by the Companies Commission of Malaysia
from having to disclose in this Report the names of the persons to whom options have been
granted during the year and details of their holdings pursuant to Section 169 (11) of the
Companies Act, 1965, except for information of employees who were granted options of
50,000 shares and above.
However, no employees of the Company and its subsidiaries were granted options of 50,000
shares and above during the year.
24 FINANCIAL INSTRUMENTS
The carrying values of financial assets and financial liabilities of the Group and the
Company at balance sheet date approximated their fair values.
(b) The following methods and assumptions are used to estimate the fair values of each
class of financial instruments:
The historical cost carrying amounts of trade receivables and trade payables
subject to normal trade credit terms approximate their fair values. The carrying
amounts of other receivables and other payables are reasonable estimates of fair
value because of their short maturity term.
(ii) Deposits, cash and bank balances, short term borrowings and bank overdraft
The carrying amounts of deposits, cash and bank balances, short term
borrowings and bank overdraft approximate their fair values due to the relatively
short maturity term of these instruments.
In addition to related party disclosures mentioned elsewhere in the financial statements, set
out below are other significant related party transactions.
(a) A general mandate has been obtained from shareholders vide a Circular dated 7 May
2004 for recurrent related party transactions with the following related parties:
(ii) IBM Malaysia Sdn Bhd, a subsidiary of IBM World Trade Corporation
(b) The related party transactions described below were carried out on terms and
conditions obtainable in transactions with unrelated parties.
Receivables:
26 SEGMENTAL REPORTING
The Group is primarily engaged in one business segment, namely the sales and services of
information technology products in Malaysia. Accordingly, there are no differing risks and
returns in the sales of products and provision of services by its business segment.
As at 31 December 2004, the contingent liabilities arising in the ordinary course of business
of the Group and Company are as follows:
The financial statements have been approved for issue in accordance with a resolution of
the Board of Directors on 14 April 2005.
4th Floor, Unit 08-04, Shoplot Retention 99 Years Nil Five 275
Lot No. 8 Jalan 4/146 Store Leasehold (5) Years
Bandar Tasik Selatan expiring on
Wilayah Persekutuan 29.06.2087
Kuala Lumpur
5th Floor, Unit 08-05, Shoplot Retention 99 Years Nil Five 284
Lot No. 8 Jalan 4/146 Store Leasehold (5) Years
Bandar Tasik Selatan expiring on
Wilayah Persekutuan 29.06.2087
Kuala Lumpur
Lot 1047, Sek. 13, Commercial Land Office Freehold Nil Five 9,935
Daerah Timur Laut, comprising a Building (5) Years
Georgetown, 4-storey
Pulau Pinang Office Building
(Mutiara Mesiniaga,
No. 56, Jalan Larut,
10050 Georgetown,
Pulau Pinang)
SHAREHOLDING STRUCTURE
as at 31st March 2005
Direct
No. Names Shareholdings %
Direct Deemed
No. Names Shareholdings Interest %
30 Largest Shareholders
as at 31st March 2005
NOTICE IS HEREBY GIVEN that the Twenty Third Annual General Meeting of the Company will
be held at The Auditorium, Menara Mesiniaga, 1A, Jalan SS16/1, 47500 Subang Jaya on Thursday
9th June 2005 at 2.30 p.m. for the following purposes:
Agenda
1. To receive and adopt the Audited Accounts for the year ended 31st December
2004 together with the Reports of Directors and Auditors thereon. Resolution 1
2. To approve a First and Final Gross Dividend of 13% less tax and 3% tax
exempt, for the year ended 31st December 2004. Resolution 2
3. To approve Directors’ Fees for the year ended 31st December 2004. Resolution 3
“THAT pursuant to Section 132D of the Companies Act, 1965 the Directors be
and are hereby authorised to issue shares in the Company at any time until
the conclusion of the next Annual General Meeting and upon such terms and
conditions and for such purposes as the Directors may, in their absolute
discretion, deem fit provided that the aggregate number of shares to be
issued pursuant to this resolution does not exceed 10% of the Issued Share
Capital of the Company for the time being, subject always to the approval of
all the relevant regulatory bodies for such issue and allotment.” Resolution 8
Note:
1. A member entitled to attend and vote at the Meeting is entitled to appoint a proxy to attend and vote in his stead. A proxy
need not be a member of the Company.
2. The instrument appointing a proxy shall be in writing under the hand of the appointer or his attorney duly authorised in
writing or if such appointer is a corporation under its common seal or the hand of its attorney.
3. All forms of proxy should be deposited at the Company’s Share Registrar’s Office at Symphony Share Registrars Sdn.
Bhd., Level 26, Menara Multi-Purpose, Capital Square, No. 8, Jalan Munshi Abdullah, 50100 Kuala Lumpur not less than
48 hours before the time set for holding the meeting or any adjournment thereof.
4. The proposed Ordinary Resolution No. 8 under item 6 if passed, will authorise the Directors of the Company to allot and
issue up to ten per cent (10%) of the issued capital of the Company for time being for such purposes as the Directors
consider would be in the interest of the Company. This authority unless revoked or varied by the Company in general
meeting will expire at the next Annual General Meeting of the Company.
1. As stated in the Notice of Annual General Meeting on page 72 of this Annual Report, the
Directors standing for re-election are:
Details of the Directors standing for re-election are as stated in the Directors’ profile column
in pages 14 to 16.
3. Details of Board Meetings and the attendance of Directors at those meetings are as stated
on page 18.
4. The Twenty Third Annual General Meeting of the Company will be held at The Auditorium,
Menara Mesiniaga, 1A, Jalan SS16/1, 47500 Subang Jaya on Thursday 9th June 2005 at
2.30 p.m.
NOTICE IS HEREBY GIVEN that subject to the approval of the shareholders at the forthcoming
Annual General Meeting, a first and final dividend of 13% less tax and 3% tax exempt will be paid on
6th July 2005 to shareholders whose names appear in the Record of Depositors on 13th June 2005.
a) Securities transferred into the Depositor’s Securities account before 4.00 p.m. on
13th June 2005 in respect of ordinary transfer; and
b) Shares bought on Bursa Malaysia Securities Berhad on a cum entitlement basis according
to the Rules of Bursa Malaysia Securities Berhad.
I/We
of
of
or failing him
of
as my/our proxy to vote for me/us and on my/our behalf at the Twenty Third Annual General Meeting of the Company,
to be held on Thursday, 9th June 2005 at 2.30 p.m. and at any adjournment thereof. The proxy is to vote on the
resolutions set out in the Notice of Meeting as indicated, with an "X" in the appropriate space. If no specific direction as
to voting is given, the proxy will vote or abstain from voting at his discretion.
1
2
3
4
5
6
7
8
Signature of Shareholder
Note:
A member entitled to attend and vote at the Meeting is entitled to appoint a proxy to attend and vote in his stead. A proxy need not be
a member of the Company. The instrument appointing a proxy shall be in writing under the hand of the appointer or his attorney duly
authorised in writing or if such appointer is a corporation under its common seal or the hand of its attorney. All forms of proxy should
be deposited at the Company’s Share Registrar Office at Symphony Share Registrars Sdn. Bhd., Level 26, Menara Multi-Purpose, Capital
Square, No. 8, Jalan Munshi Abdullah, 50100 Kuala Lumpur not less than 48 hours before the time set for holding the meeting or any
adjournment thereof.
Fold here
STAMP
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MESINIAGA BERHAD 79244V
Menara Mesiniaga, 1A, Jalan SS16/1, 47500 Subang Jaya, Selangor Darul Ehsan.
Tel: 603-5635 8828 Fax: 603-5636 3838 Web: http//www.mesiniaga.com.my