Professional Documents
Culture Documents
Page 1 of 66
Corporate Information
Board of Directors
Audit Committee
Company Secretary
Auditors
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Registered Office
Registrar
Principal Bankers
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L & M CORPORATION (M) BHD (314763-P)
1. To receive and consider the Financial Statement for the year Resolution 1
ended 31 December 2001 and the Directors’ and Auditors’
Reports thereon.
2. To re-elect Mr. Gan Boon Koo @ Gan Boon Kiu who retires in Resolution 2
accordance with Article 102 of the Company’s Articles of
Association.
3. To re-elect Dato’ Shahabudin Bin Shafie who retires in Resolution 3
accordance with Article 107 of the Company’s Articles of
Association.
4. To re-elect Dato’ Seri Dr. Abdul Shukor Bin Abdullah who Resolution 4
retires in accordance with Article 107 of the Company’s
Articles of Association.
5. To re-appoint Messrs Deloitte KassimChan as Auditors of the Resolution 5
Company for the ensuing year and to authorise the Directors to
fix their remuneration.
6. Special Business: Resolution 6
6.1 Ordinary Resolution – Authority to allot and issue
shares pursuant to S132D of the Companies Act, 1965
Kuala Lumpur
Dated this 24 May 2002
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Notes:
1) A member entitled to attend and vote at the above meeting is entitled to appoint a
proxy/proxies to attend and vote on his/her behalf. A proxy may but need not be a member of
the Company and the provisions of Section 149(1)(b) of the Companies Act, 1965 shall not apply
to the Company.
2) Where a member appoints two or more proxies, the appointment shall be invalid unless he
specifies the proportions of his shareholdings to be represented by each proxy.
3) The instrument appointing a proxy shall be in writing under the hands of the appointer or his
attorney duly authorised in writing or if the appointor is a corporation, either its Common Seal
or under the hand of his attorney.
4) The Proxy Form must be deposited at the Registered Office, 12th Floor (Right Wing), Menara
Kemayan, 160 Jalan Ampang, 50450 Kuala Lumpur not less than forty-eight (48) hours before
the time set for holding the meeting or adjourned meeting.
Ordinary Resolution - Authority to issue and allot shares pursuant to Section 132(D) of the
Companies Act, 1965
The Proposed Resolution 6, if passed, will empower the Directors of the Company, from the
date of the above Annual General Meeting, to issue shares in the Company up to and not
exceeding in total ten percent (10%) of the issued share capital of the Company for the
time being for such purposes as they consider would be in the best interest of the
Company. This authority, unless revoked or varied at a general meeting, will expire at the
next annual general meeting of the Company.
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CORPORATE GOVERNANCE STATEMENT
The Board of Directors of L&M Corporation (M) Berhad is committed to the maintenance of
high standards of corporate governance by implementing the prescription of the principles
and best practices set out in Parts 1 and 2 of the Malaysian Code on Corporate Governance
respectively.
The Board is pleased to provide the following statements, which outline the main corporate
governance practices that were in place throughout the financial year, unless otherwise
stated.
The Board of Directors would like to express their deepest condolences to the family of the
former Executive Chairman Allahyarham YBhg Dato’ Raja Ariffin Bin Raja Sulaiman who has
passed away on 3rd March 2002.
The new Executive Chairman was appointed to the Board on 11th March 2002.
Since the last Annual Report, three(3) directors resigned from the Board on 13th September
2001, 30th November 2001 and 15th May 2002 respectively. One (1) independent director was
appointed to the Board on 5th October 2001.
a) Composition
The present Board of Directors consists of one (1) Executive Chairman and three (3)
Non-Executive Directors, two (2) of whom are independent. With this composition, the
Company has thus complied with the KLSE Listing Requirements on board composition.
b) Board Meetings
During the financial year ended 31st December 2001, the Board met a total of six (6)
times. Details of attendance are as follows:-
Board*
Meeting
Directors Status Attendance
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Tan Sri Dato’ Haji Mohd Ramli Independent
Bin Kushairi Non-Executive Director 5/6
* (The Board Meetings attendance indicated the number of meetings attended by the respective
Directors over the number of meetings held during their respective tenure as Director.)
The agenda and issues discussed were prepared and circulated before each meeting.
Minutes of the meetings are maintained by the Company Secretary.
All Directors have access to the advice of the Company Secretary, independent
professional advisors and external auditors in appropriate circumstances at the expense
of the Company.
According to the Articles of the Association of the Company, at each annual general
meeting, one third (1/3) of the Board members retire and offer themselves for re-
election. In practice, this means that every director will stand for re-election at least
once every three (3) years.
The Nominating Committee has been established in March 2002 as disclosed in the
Accountability and Audit section, item (d) (vi) of this statement.
d) Directors’ Remuneration
i) Aggregate remuneration of Directors who served during the financial year
Categorized into appropriate components is set below.
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ii) Number of Directors who served during financial year whose
remuneration falls into the following bands:-
Below 50,000 - 2
50,001 to 100,000 - -
100,001 to 150,000 - 1
150,001 to 200,000 - -
200,001 to 250,000 1 -
250,001 to 300,000 2 -
300,001 to 350,000 1 -
The Remuneration Committee has been established in February 2002 as disclosed in the
Accountability and Audit section, item (d) (v) of this statement.
e) Directors’ Training
All directors have attended the KLSE’s Mandatory Accreditation Programme (“MAP”).
The Company will formulate a directors’ continuing education programme to assist
them in effectively discharging their fiduciary duties and responsibilities.
SHAREHOLDERS
b) General Meetings
The Company’s Annual General Meeting (“AGM”) serves as a principal forum for
dialogue with shareholders. Extraordinary General Meetings (“EGM”) are held as and
when required.
a) Financial Reporting
The directors are responsible to ensure that the financial statements prepared are
drawn up in accordance with the provisions of the Companies Act 1965 and applicable
accounting standards in Malaysia. In presenting the financial statements, the Company
has used appropriate accounting policies, consistently applied and supported by
reasonable judgments and estimates.
The quarterly financial results were reviewed by the Audit Committee and approved by
the Board of Directors before releasing to the KLSE. The details of the Company and the
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Group financial statements for the financial year ended 31st December 2001 can be
found from page 21 to page 59.
The Board of Directors will appoint a new member who shall be a member of
the Malaysian Institute of Accountants to fill the vacancy in the Audit
Committee within a period of three (3) months from 15th May 2002 in order to
comply with KLSE Listing Requirements.
Its terms of reference are stated in the Audit Committee Report disclosed in
page 13 of the Annual Report.
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(d) Compliance Statement
The Group has complied, throughout the financial year ended 31st December 2001, with
all the best practices of corporate governance set out in Part 2 of the Code except for
the following:
(i) The Company and one of its subsidiary company are currently under a corporate
and debts restructuring scheme governed by Section 176 of the Companies Act
1965. In view of this, the Board has not adopted any strategic plan as the
strategic plan can only be delineated when the said scheme is successfully
implemented.
(ii) In view of the said corporate and debts restructuring scheme, the Board has not
implemented any succession planning for the Company. Nevertheless, the Board
will consider to put in place a comprehensive succession planning once the said
scheme is successfully implemented.
(iii) The Company is currently operating under severe financial constraint that has
refrained the Company from developing and implementing an investors relations
programme or shareholder communications policy for the Company.
However, the Board is committed to ensure that the shareholders and other
stakeholders are well informed through General Meetings, issuance of Annual
Report and the various disclosures and announcements made to KLSE.
(vi) A Nominating Committee was formed in March 2002 with specific terms of
reference, mainly to propose new nominees to the Board and to assess the
performance of Directors on a regular basis. The Nominating Committee consist
of two (2) Independent Non-Executive Directors.
(vii) The Board does not have a formal schedule of matters specifically reserved to it
for decision. However, during the year the Board has actively deliberated on
matters involving the Group’s corporate and debts restructuring scheme and all
the significant financial matters as well as the review of the financial and
operating performance of the Group.
(viii) The Board has not formalised the position and job description of the Board
members. In this context, the Board will be actively looking into this matter
and will take relevant steps to comply with this practice.
(ix) The Board has not formalised the risk management system of the Company. The
identification and management of risk were carried intuitively by management
during their day to day operations. Nevertheless, the Board is of the view that a
more structured risk management process would need to be established once
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the Group’s corporate and debts restructuring scheme has been successfully
implemented.
(x) The Internal Audit Function of the Company has not been established. However,
the internal control mechanism is embedded in the various work processes and
procedures at appropriate levels in the Company. The Board will establish the
Internal Audit Function in order to enhance the existing corporate governance
practice of the Company.
Other Information
a) Conflict of Interest
None of the Directors have any family relationship with other Directors and/or major
shareholders of L&M Corporation (M) Bhd, nor any personal interest in any business
arrangements involving the Company. All Directors have had no convictions for any
offenses within the past ten (10) years.
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b) Material Contract Awarded to Directors and Substantial Shareholders
None of the Directors and major shareholders have any material contract with Company
and/or its subsidiaries during the financial year under review.
d) Non-Audit Fees
During the year under review, no non-audit fees was paid to the external auditors of
the company .
e) Utilisation of Proceeds
No proceeds were raised by the Company as the corporate and debts restructuring
exercise has not been implemented yet.
i) Variation in Results
There was no variation in the audited results as compared to the unaudited results
announced.
j) Profit Guarantee
During the year, there was no profit guarantee given by the Company.
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CHAIRMAN STATEMENT
On behalf of the Board of Directors, I am pleased to present the Financial Statement and the
Annual Report for the financial year ended 31st December 2001.
FINANCIAL REVIEW
The consolidated revenue of L&M Corporation (M) Berhad and its subsidiaries (the Group) for
the financial year under review has declined to RM87.1 million compared to RM132.0 million
in the previous year. The decline in revenue was mainly due to the inability of the Group to
bid for new projects as it is currently undergoing a Corporate And Debts Restructuring Scheme
governed by Section 176 of the Companies Act 1965. Despite the decline in revenue, the
Group managed to achieve a gross profit of RM7.37 million. However as a result of the
allowance for doubtful receivable and bad receivable written off of RM3.90 million and the
restructuring expenses of RM0.72 million incurred for the year, the Group reported a net loss
from operations of RM3.9 million as opposed to a profit of RM9.7 million in the previous year.
From the perspective of the Group net worth, it shows a net liabilities per share of 651 sen
and 670 sen for the financial year 2000 and 2001 respectively.
OPERATIONS REVIEW
The substantial downsizing of personnel undertaken by the Group in the previous year has not
in any event adversely affected its operations. In fact, it has managed to undertake and
completed the construction of two warehouses with the contract sum of RM32 million at Port
Tanjung Pelepas as planned. Through negotiation with the employers namely PTP
Management Sdn Bhd and Port Tanjung Pelepas Sdn Bhd, the defect liability period for those
completed projects at Port Tanjung Pelepas i.e. the construction of port operating facilities
and the two warehouses completed in December 2000 and in May 2001 respectively, were
both shortened by six months to end on 31st December 2001. This is a comprehensive and
effective approach adopted by the management to curb any potential contractual defect
liabilities that may arise in the future from these completed projects.
BOARD CHANGES
On behalf of the Board of Directors, the management and staff, I would like to express our
deepest condolences to the family of our former Executive Chairman Allahyarham YBhg Dato’
Raja Ariffin Bin Raja Sulaiman who has recently demised. We wish to express our deepest
gratitude for his exemplary contribution to the Group.
YBhg Dato’ Aripin Bin Mokhtar, Mr. Teo Leong Peng and Encik Mohamed Jamal Bin Mohd Ramli
have resigned from the Board effectively on 13th September 2001, 30th November 2001 and
15th May 2002 respectively. I wish to thank YBhg Dato’ Aripin Bin Mokhtar, Mr. Teo Leong Peng
and Encik Mohamed Jamal Bin Mohd Ramli for their support and invaluable contribution
rendered by them during their tenure as Directors of the Company.
I would also like to welcome YBhg Dato’ Seri Dr. Abdul Shukor Bin Abdullah who was
appointed to the Board on 5th October 2001.
RESTRUCTURING
On 3rd September 2001, the proposal for the Corporate And Debts Restructuring Scheme was
submitted to the Securities Commission (“SC”), the Foreign Investment Committee (“FIC”)
and the Ministry of International Trade And Industry (“MITI”).
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The approvals from FIC and MITI were obtained on 31st October 2001 and 21st February 2002
respectively, whereas the approval from SC is still pending. In these regards, the Board and
the management are making every endeavour to ensure all necessary approvals are obtained
for the successful implementation of the Proposed Corporate And Debts Restructuring
Scheme.
In view of the above, the Group will continue to focus primarily on the successful
implementation of the Proposed Corporate And Debts Restructuring Scheme to put the Group
on stable financial footing in preparation for any opportunity that may arise from the
Government pump-priming measures.
The prospects of the group shall to a large extent depend on the successful implementation of
the proposed corporate and debts restructuring exercise.
ACKNOWLEDGMENT
On behalf of the members of the Board, I would like to record our gratitude and appreciation
to our business partners, customers, financiers, suppliers, sub-contractors and the
Government authorities for their continued support and confidence in the Group. We also
wish to extend our deep appreciation and gratitude to the management and staff for their
commitment and perseverance in discharging their duties and responsibilities during these
trying times.
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Audit Committee Report
Constitution
The Audit Committee of the Board of Directors (“the Committee”) was established by the
Board of Directors in March 1996. The Terms of Reference of the Audit Committee are set out
in page 13 to 15 of this Annual Report.
Composition
The Executive Director, Encik Mohamed Jamal Bin Mohd Ramli who is also a member of the
Malaysian Institute of Accountants has resigned from the Board of Directors and the Audit
Committee Board with effect from 15th May 2002. Henceforth, the members of the Audit
Committee are reduced from three (3) to two (2) accordingly. The present two (2) Audit
Committee members are Independent Non-Executive Directors. The Board of Directors will
appoint a new member who shall be a member of the Malaysian Institute of Accountants to
fill the vacancy in the Audit Committee within a period of three (3) months from 15th May
2002 in order to comply with the KLSE Listing Requirements.
Members
Members of the Board who had served on the Audit Committee between 1st January 2001 to
the date of the Annual Report were as follows:
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Meetings For 2001
The Audit Committee had convened a total of six (6) meetings during the financial year and
the attendance of the members were as follows:
Members Meeting **
Attendance
Tan Sri Dato’ Haji Mohd Ramli 4/6
Bin Kushairi
Dato’ Seri Dr. Abdul Shukor 1/1
Bin Abdullah
Mohamed Jamal Bin Mohd Ramli 1/1
** (The Meeting Attendance indicated the number of meetings attended by the respective Members over
the number of meetings held during their respective tenure as Member)
The members of Senior Management including the Executive Director and representative from
external auditors (for deliberation on the Annual Financial Statements) have attended the
Audit Committee meetings.
Pursuant to the Kuala Lumpur Stock Exchange (KLSE) Second Board Listing Requirements, an
Audit Committee is required to be established by the Company.
The Audit Committee shall be appointed by the Board of Directors amongst their members
and shall composed of not fewer than three (3) members of whom a majority shall not be:-
ii) a spouse, parent, brother, sister, son or adopted son or daughter of an Executive
Director of the Company or any related corporation; or
iii) any person having a relationship which in the opinion of the Board of Directors would
interfere with the exercise of independent judgment in carrying out the functions of
an Audit Committee.
The Board shall at all times ensure that the composition of the Audit Committee is in
compliance with the KLSE Listing Requirements whereby at least one (1) member of the Audit
Committee shall be a member of Malaysian Institute of Accountants.
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The members of the Audit Committee shall elect a Chairman amongst themselves who is an
Independent Director of the Company. All members of the Audit Committee; including the
Chairman, will hold office only so long as they serve as Director of the Company.
Where the members of the Audit Committee for any reason be reduced to below three (3),
the Board of Directors shall within three (3) months of that event, appoint such number of
new members as may be required to make up the minimum number of three (3) members. No
alternate Director of the Board shall be appointed as a member of the Audit Committee.
The Board shall review the terms of office and performance of the Audit Committee and
each of its members at least once (1) every three (3) years.
It is the objectives of the Audit Committee to assure the Shareholders of the Company that
the Directors of the Company have complied with the specified financial standards and
required disclosure policies developed and administered by the KLSE. In addition, the Audit
Committee is also determined to ensure consistency with the KLSE’s commitment to
encourage high standard of corporate disclosure. The Audit Committee will endeavour to
adopt certain practices aimed at maintaining appropriate standards of corporate
responsibilities, integrity and accountability to all the Company’s Shareholders.
The duties and responsibilities of the Audit Committee includes the following:-
a) Oversee all matters relating to external audit including the review of the audit plan
and audit report
c) Review the quarterly results and year end financial statements, prior to the approval
by the Board of Directors, focusing particularly on:-
d) Review of the assistance and cooperation given by the Company’s officers to the
external and internal auditors
e) Review any related party transactions and conflict of interest situation that may arise
within the Company or the Group including any transaction, procedure or course of
conduct that may affect the management integrity;
g) Review the appointment and performance of external auditors, audit fees and their
resignation or dismissal as the case may be before making the necessary
recommendations to the Board of Directors for decision making.
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Powers of the Audit Committee
The Audit Committee does not reserve the power to make decision on behalf of the Board of
Directors. Nevertheless, the Audit Committee may make recommendations to the Board of
Directors for the necessary approvals
In carrying out their duties and responsibilities, the Audit Committee will in principle have
full, free and unrestricted access to all the Company’s records, property and personnel.
The Audit Committee shall have the resources that are required to perform its duties. The
Audit Committee can obtain, at the expense of the Company, external legal or other
independent professionals advise it considers necessary.
Where the Audit Committee is of the view that a matter reported by it to the Board has
not been satisfactorily resolved resulting in a breach of the KLSE Listing Requirements,
the Audit Committee shall promptly report such matter to the KLSE.
Meetings
The Audit Committee will meet at least four (4) times a year although such additional
meetings may be called at any time at the discretion of the Chairman.
The quorum for the Meeting shall be two and the majority of members present must be
Independent Directors to form a quorum of each meeting. In addition, a member of the Audit
Committee who is also a member of the Malaysian Institute of Accountants shall be present at
all times. In the absence of the Chairman, the members presents shall elect a Chairman who
is an Independent Director for the meeting from amongst the members present.
The internal and/or external auditor has the right to appear and be heard at any meeting of
the Audit Committee and shall appear before the Committee when required by the
Committee. Upon the request of the auditor(s), the Chairman of the Audit Committee shall
also convene a meeting of the Committee to consider any matters the auditor(s) believes
should be brought to the attention of the Board of Directors or the Shareholders.
The Company Secretary shall be the Secretary to the Committee. The proceedings of the
Audit Committee shall be recorded and the minutes of meetings shall be circulated to
members of the Board.
The Audit Committee had convened a total of six (6) meetings during the financial year with
the Secretary in attendance. The Executive Director was present at five (5) of the said
meetings by invitation and one (1) meeting as member of the Audit Committee. The
representative from external auditors were present at three (3) of the said meetings by
invitation.
During the financial year, the Audit Committee had reviewed the audited financial statements
of the Company and of the Group with the present of the external auditors. The Audit
Committee had satisfied themselves that the said audited financial statements were drawn up
in accordance with the provisions of the Companies Act 1965 and the applicable accounting
standards approved by the Malaysian Accounting Standards Board.
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The Audit Committee had discussed and reviewed the Group’s quarterly results with the
Executive Director and the Senior Management in the present of the Company Secretary
before tabling the said results to the Board of Directors for approvals.
After each Audit Committee meeting, the Chairman reported to the Board of Directors on the
proceedings at the meeting. In addition, the Chairman also conveyed the Audit Committee’s
recommendations for the audited financial statements or the quarterly results as the case
may be, to be adopted and approved by the Board of Directors before releasing to KLSE.
During the financial year, the internal audit function has not been established. However the
internal control mechanism was embedded in various work processes and procedures at
appropriate levels in the Company. In this context, the Audit Committee was satisfied with
the state of internal control of the Company. The Audit Committee will recommend to the
Board of Directors to establish the internal control function in order to enhance the existing
corporate governance practice of the Company.
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DIRECTORS’ PROFILE
Dato’ Shahabudin Bin Shafie
Executive Chairman, aged 60, Malaysian
Dato’ Shahabudin Bin Shafie was appointed to the Board of Directors of LMCM on 11
of March 2002. He graduated from College of Agriculture with Diploma in Agriculture
in 1965. In 1968 he was awarded by the United States Government the East West
Center scholarship to further his studies for his B.Sc and M.Sc degree at the University
of Hawaii. In 1982/83, he was awarded the Hubert H. Humphrey Fellowship at Cornell
University. He also attended the Advance Management Program at Harvard University
in 1991.
He started his career as a Risda Field Officer in 1965 and retired as the Director
General of the same organisation in 1997. During his employment with Risda, he held
various designations; State Director, Director of the Extension Division, Director of
the Procurement Division, Director of Training and Deputy Director General until his
appointment as the Director General in 1995.
He is also a Director of Gula Padang Terap Bhd and Ladang Petri Tenggara Sdn Bhd.
He is a council member of the Malaysian Estate Owner’s Association, Council Member
of the Malaysian Rubber Produces’ Council and a board member of the Malaysian
Rubber Board.
He has no family relationship with any other director/major shareholder of LMCM and
has no conflict of interest with LMCM. He has not been convicted for any offences
within the past 10 years.
Tan Sri Dato’ Mohd Ramli bin Kushairi was appointed to the Board of Directors of
LMCM on 13th March 1996. He is the Chairman and shareholder of South Malaysia
Industries Berhad, MEDA Inc. Berhad, and Petrotechnical Inspection (Malaysia) Sdn
Bhd. He is also a Director of DMIB Berhad, Gamuda Berhad, and Masscorp Berhad. He
is a member of the Board of the National Productivity Corporation, and the Malaysian
Standards and Accreditation Council. He is the Chairman of the Standards Committee
of the Council. He is also a member of the Malaysian Business Council. He was
conferred the Darjah Panglima Setia Mahkota (PSM) by Seri Paduka Baginda Yang Di
Pertuan Agong Ke XI Sultan Salahuddin Abdul Aziz Shah on 5th June 1999.
Tan Sri Ramli is the past Vice-President of Dewan Perniagaan Melayu Malaysia (DPMM),
and past Secretary-General of the National Chamber of Commerce and Industry
Malaysia (NCCIM), and the Asean-Chambers of Commerce and Industry (ACCI). He also
served as UMNO Liaison Secretary for Federal Territory from 1980 to 1982. He began
his career in the public service in 1961 as Assistant Secretary at Bank Negara Malaysia.
He was the Executive Secretary of the Federation of Malaysian Manufacturers from
1970 to 1974, and Group Managing Director of Kumpulan Fima Berhad from 1974 to
1983. Tan Sri Dato’ Haji Mohd Ramli graduated with a Bachelor of Arts (Honours)
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degree in Social Science from Hull University, United Kingdom and did post-graduate
work at King’s College, London University, United Kingdom.
At LMCM, Tan Sri Ramli also serves as the Chairman of the Audit Committee,
Nominating Committee and Remuneration Committee.
Prior to his appointment to the Board, he was the General Manager (Accounts and
Finance) with Larut Consolidated Berhad for about two years from 1997 until 1999.
Between 1989 to 1997, he was the General Manager (Corporate Affairs) of Projek
Penyelenggaraan Lebuhraya Berhad (“PROPEL”) where he was responsible for the
financial management, accounting and corporate affairs of the Company.
Dato’ Seri Dr Abdul Shukor Bin Abdullah was appointed to the Board of Directors of
LMCM on 10 May 2001. He graduated from University of Malaya with a Bachelor of Arts
(Hons) in 1966 and completed the Diploma of Education from the same university in
1967. He obtained his Master of Education in 1979 from Harvard University, USA and
Doctorate in Education (Ed.D), Administration Planning & Social Policy (Management)
in 1985 from the same university and Advance Management Programme from Oxford
University (1997).
Dato’ Seri Dr Abdul Shukor Bin Abdullah held various positions during his 35 years
service with the government. He started his career as an educationist as Senior
Assistant of SMK Parit Buntar, Perak in 1967. In 1971 he was made Principal of SM
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Sultan Tajul Ariffin, Kuala Kangsar, Perak. In 1972, he was the Educational Officer of
Boarding School Unit under Ministry of Education and followed by as the Principal for
SM Science Sungai Petani from 1973 to 1978.
Dato’ Seri Dr. Abdul Shukor also serves as a member of the Audit Committee,
Nominating Committee and Remuneration Committee of LMCM.
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STATEMENT ON DIRECTORS’ RESPONSIBILITY
st
in reletion to the audited financial statements for the year ended 31 December 2001
The Directors are required by the Compaies Act, 1965 to prepare financial statements
For each financial year which give a true and fair view of the state of affairs of the
Company and of the Group as at the end of the financial year and of the profit and
loss of the Company and of the Group of the financial year.
b) make judgements and estimates that are reasonable and prudent ; and
The Directors are responsible for keeping proper accounting records which disclose,
with reasonable accuracy at any time, the financial position of the Company and of
the Group and to enable them to ensure that the accounts comply with Companies
Act, 1965.
The Directors are satisfied that in preparing the financial statements of the Group for
the year ended 31st December 2001, the Group has used the appropriate accounting
policies and applied them consistently and prudently. The Directors are of the opinion
that all relevant approved accounting standards have been followed and confirm that
the financial statements have been prepared on a going concern basis.
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L & M CORPORATION (M) BERHAD
(Incorporated in Malaysia)
AND ITS SUBSIDIARY COMPANIES
FINANCIAL STATEMENTS
CONTENTS
PAGE(S)
Directors’ report 25
Income statements 33
Balance sheets 34
Statement by directors 60
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DIRECTORS’ REPORT
The directors of L & M CORPORATION (M) BERHAD, have pleasure in submitting their report
and the audited financial statements of the Group and of the Company for the financial year
ended 31st December, 2001.
PRINCIPAL ACTIVITIES
The subsidiary companies are principally involved in the trading of building materials and
provision of ground engineering, soil improvement, instrumentation and testing works and
other construction related services.
There have been no significant changes in the nature of the activities of the Group and of the
Company during the financial year.
RESULTS OF OPERATIONS
The results of operations of the Group and of the Company for the financial year are as
follows:
In the opinion of the directors, the results of operations of the Group and of the Company
during the financial year have not been substantially affected by any item, transaction or
event of a material and unusual nature.
DIVIDENDS
No dividend has been paid or declared by the Company since the end of the previous financial
year. The directors also do not recommend any dividend payment in respect of the current
financial year.
There were no material transfers to or from reserves or provisions during the financial year
other than those disclosed in the Financial Statements.
The Company has not issued any new shares or debentures during the financial year.
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SHARE OPTIONS
The Company has established an Executive Share Option Scheme (ESOS), which was approved
by the shareholders at an Extraordinary General Meeting held on 17th February, 1998 and
final approval was obtained from the Registrar of Companies on 10th March, 1998. The
scheme is for eligible employees and executive directors of the Company and its subsidiary
companies and shall continue to be in force for a period of five (5) years from 10th March,
1998.
Options to subscribe for ordinary shares of RM1.00 each which have yet to be exercised as at
31st December, 2001 are as follows:
RM2.10 36,000
RM1.66 8,000
Before the income statements and the 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
receivables and the making of allowance for doubtful receivables, and have satisfied
themselves that all known bad receivables had been written off and adequate
provision for doubtful receivables has been made in the financial statements; and
(b) to ensure that any current assets which were unlikely to realise their book values in
the ordinary course of business have been written down to their estimated realisable
values.
The Group and the Company have capital deficiencies of RM136,736,266 and RM77,257,326,
respectively, as at 31st December, 2001, which arose as a result of losses incurred over the
years, and current liabilities exceeding current assets by RM161,272,135 and RM82,066,418
for the Group and the Company respectively. However, the financial statements of the Group
and of the Company have been prepared on the basis of accounting principles applicable to a
going concern. This going concern basis presumes that the proposed group restructuring
scheme will be successfully implemented after relevant approvals have been obtained, and
the Group and the Company will be able to operate profitably in the foreseeable future and
will continue to receive financial support from its shareholders, bankers and creditors and
consequently, the realisation of assets and settlement of liabilities will occur in the ordinary
course of business.
Other than the matter mentioned above, at the date of this report, the directors are not
aware of any circumstances:
(a) which would render the amount of bad receivables written off or the allowance for
doubtful receivables in the financial statements of the Group and of the Company
inadequate to any substantial extent; or
(b) which would render the values attributed to current assets in the financial statements
of the Group and of the Company misleading; or
Page 26 of 66
(c) which have arisen which render adherence to the existing method of valuation of
assets or liabilities of the Group and of the Company misleading or inappropriate; or
(d) not otherwise dealt with in this report or financial statements which would render
any amount stated in the financial statements of the Group and of the Company
misleading.
(a) any charge on the assets of the Group and of 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 of the Company which has arisen since the
end of the financial year other than as mentioned in Note 7 to the Financial
Statements.
In the opinion of the directors, no item, transaction or event of a material and unusual nature
has arisen in the interval between the end of the financial year and the date of this report
which is likely to affect substantially the results of operations of the Group and of the
Company for the succeeding financial year.
DIRECTORS
The following directors served on the Board of the Company since the date of the last report:
In accordance with Article 102 of the Company's Articles of Association, Encik Mohamed Jamal
Bin Mohd Ramli retires by rotation and does not seek for re-election.
Dato’ Seri Dr. Abdul Shukor Bin Abdullah and Dato’ Shahabudin Bin Shafie, who were
appointed to the Board since the last Annual General Meeting, retire under Article 107 of the
Company’s Articles of Association and, being eligible, offer themselves for re-election.
DIRECTORS' INTERESTS
None of the directors in office as at 31st December, 2001 held shares or have any beneficial
interest in the shares of the Company or its related companies during the financial year.
Under the Company’s Articles of Association, the directors are not required to hold shares in
the Company.
Page 27 of 66
DIRECTORS' BENEFITS
Since the end of the previous financial year, none of the directors of the Company has
received or become entitled to receive any benefit (other than the benefits included in the
aggregate of emoluments received or due and receivable by directors as disclosed in the
financial statements or the fixed salary of a full-time employee of the Company) by reason of
a contract made by the Company or a related corporation with the director or with a firm of
which the director is a member or with a company in which the director has a substantial
financial interest.
During and at the end of the financial year, no arrangement subsisted to which the Company
was a party whereby directors of the Company might acquire benefits by means of the
acquisition of shares in, or debentures of, the Company or any body corporate.
On 29th May, 2000, the Company and one of its subsidiary companies, L&M Geotechnic Sdn.
Bhd., (collectively referred to as “the Scheme Companies”) obtained a Restraining and Stay
Order (“RO”) pursuant to Section 176(10) of the Companies Act, 1965 for the purpose of
implementing a proposed group restructuring scheme. The RO restrained and stayed all legal
proceedings against the Scheme Companies for an initial period of 90 days effective from 29th
May, 2000. The said RO expired on 29th August, 2000 and was further extended to expire on
30th September, 2002 to enable the proposed group restructuring scheme to be implemented.
Proposed transfer of listing status of the Company to a new holding company, Eastern
Atlas Berhad (“EAB”), by way of share swap of five (5) ordinary shares in the Company
for one (1) ordinary share in EAB;
II Proposed Hive-up
Proposed disposal by the Company of the entire equity interest in L&M Geotechnic
Sdn Bhd (“LMG”) and LMI Engineering Sdn Bhd (formerly known as L&M
Instrumentation Sdn Bhd) to EAB;
Proposed rights issue on the basis of seven (7) new ordinary shares, together with
seven (7) free new warrants attached, for every one (1) existing ordinary share held
in EAB;
Page 28 of 66
IV Proposed Composite Scheme of Arrangement
Proposed settlement of amounts due to lenders and creditors of the Company, LMG
and lenders under corporate guarantee by the Company, through part cash
settlement, part waiver and part debt restructure. The latter will satisfied by way of
issuing new ordinary shares of RM1.00 each in EAB, 5-year Redeemable Convertible
Secured Loan Stocks (“RCSLS”) and 5-year Irredeemable Convertible Unsecured Loan
Stocks (“ICULS”); and
V Proposed Acquisitions
Proposed acquisitions of the entire interest in Kayman Integrated Sdn. Bhd., Satujaya
Sdn. Bhd. and Vistashine Sdn. Bhd.
The creditors had approved their related schemes under the Proposed Composite Scheme of
Arrangements during the respective court-convened creditors meetings held on 17th, January,
2001. In September 2001, the Company has submitted the proposed group restructuring
scheme to the relevant authorities for their approvals and has received approvals from the
Foreign Investment Committee and Ministry of International Trade and Industry on 31st
October, 2001 and 21st February, 2002, respectively. The proposed group restructuring
scheme will be implemented after all the necessary regulatory and corporate approvals are
obtained.
The Company is also an affected listed issuer pursuant to Practice Note 4/2001 of the Kuala
Lumpur Stock Exchange (“KLSE”) Listing Requirements. Pursuant to this Practice Note, the
Company had announced to the KLSE of the plan to regularise its financial position. In this
connection, there are no major changes to the status of the Company’s plan to regularise its
financial position with regard to the proposed group restructuring scheme other than as
mentioned above.
AUDIT COMMITTEE
In compliance with the listing requirements of the Kuala Lumpur Stock Exchange (KLSE), the
audit committee was established and the directors who served on the audit committee are as
follows:
The functions of the audit committee as stipulated in the KLSE listing requirements include
discussion and review with the management, internal auditors and external auditors of the
Company, the scope and results of the internal and statutory audits, financial and operating
results, internal controls, accounting policies and other significant matters, including the
annual financial statements which accompany this report.
Page 29 of 66
AUDITORS
The auditors, Messrs. Deloitte KassimChan, have indicated their willingness to continue in
office.
Kuala Lumpur,
18th April, 2002
Page 30 of 66
REPORT OF THE AUDITORS TO
THE MEMBERS OF L & M CORPORATION (M) BERHAD
(Incorporated in Malaysia)
We have audited the accompanying balance sheets as of 31st December, 2001 and the related
statements of income, cash flows and changes in equity for the year ended on that date.
These financial statements are the responsibility of the Company’s Directors. Our
responsibility is to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with approved standards on auditing in Malaysia. These
standards require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and significant
estimates made by the directors, as well as evaluating the overall financial statements
presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion:
(a) the financial statements are properly drawn up in accordance with the provisions of the
Companies Act, 1965 and the applicable approved accounting standards in Malaysia so
as to give a true and fair view of:
(i) the state of affairs of the Group and of the Company as of 31st December, 2001
and of the results and the cash flows of the Group and of the Company for the
year ended on that date; and
(ii) the matters required by Section 169 of the Act to be dealt with in the financial
statements and consolidated financial statements; and
(b) the accounting and other records and the registers required by the Act to be kept by
the Company and by the subsidiary companies have been properly kept in accordance
with the provisions of the Act.
We are satisfied that the financial statements of the subsidiary companies that have been
consolidated with the financial statements of the Company are in form and content
appropriate and proper for the purposes of the preparation of the consolidated financial
statements, and we have received satisfactory information and explanations as required by us
for these purposes.
The auditors’ reports on the financial statements of the subsidiary companies were not
subject to any qualification and did not include any comment made under sub-section (3) of
Section 174 of the Act.
(Forward)
Page 31 of 66
Without qualifying our opinion, we draw attention to Note 2 to the Financial Statements. The
Group and the Company have capital deficiencies of RM136,736,266 and RM77,257,326,
respectively, as at 31st December, 2001, which arose as a result of losses incurred over the
years, and current liabilities exceeding current assets by RM161,272,135 and RM82,066,418
for the Group and the Company respectively. However, the financial statements of the Group
and of the Company have been prepared on the basis of accounting principles applicable to a
going concern. This going concern basis presumes that the proposed group restructuring
scheme, as mentioned in Note 3 to the Financial Statements, will be successfully
implemented after relevant approvals have been obtained, and the Group and the Company
will be able to operate profitably in the foreseeable future and will continue to receive
financial support from its shareholders, bankers and creditors and consequently, the
realisation of assets and settlement of liabilities will occur in the ordinary course of business.
The financial statements of the Group and of the Company for the preceding financial year
were audited by another firm of auditors and are presented here merely for comparative
purposes.
DELOITTE KASSIMCHAN
AF 0080
Chartered Accountants
ROSITA TAN
1874/9/02 (J)
Partner
Page 32 of 66
L & M CORPORATION (M) BERHAD
(Incorporated in Malaysia)
AND ITS SUBSIDIARY COMPANIES
INCOME STATEMENTS
FOR THE YEAR ENDED 31st DECEMBER, 2001
Page 33 of 66
L & M CORPORATION (M) BERHAD
(Incorporated in Malaysia)
AND ITS SUBSIDIARY COMPANIES
BALANCE SHEETS
AS OF 31ST DECEMBER, 2001
CURRENT ASSETS
Contract work-in-progress 13 - 6,480,443 - -
Trade receivables 14 3,936,222 59,405,210 - -
Other receivables, deposits
and prepayments 15 643,038 5,658,274 - 253,503
Amount owing by
subsidiary companies 11 - - 8,466,788 9,893,593
Cash on hand and at banks 5,005,730 1,171,820 597,962 371,538
CURRENT LIABILITIES
Provision for liabilities and
charges 16 76,325,754 76,325,754 76,325,754 76,325,754
Trade payables 16,287,784 37,658,411 - -
Other payables and accruals 17 & 20 17,065,400 56,102,541 491,412 2,036,820
Bank borrowings 18 42,335,646 42,376,778 14,314,002 14,314,002
Term loans - current portion 19 18,497,546 18,497,546 - -
Tax liabilities 344,995 344,995 - -
(Forward)
Page 34 of 66
The Group The Company
2001 2000 2001 2000
Note(s) RM RM RM RM
Represented by:
Page 35 of 66
L & M CORPORATION (M) BERHAD
(Incorporated in Malaysia)
AND ITS SUBSIDIARY COMPANIES
The Group
Non-distributable reserve
Accumulated
Issued Share Merger Loss Total/Net
Capital Premium Reserve
RM RM RM RM RM
Balance as of 31.12.2000
20,401,000 912,965 (3,213,636) (150,932,073) (132,831,744)
Balance as of 31.12.2001
20,401,000 912,965 (3,213,636) (154,836,595) (136,736,266)
Page 36 of 66
The Company
Non-
distributable
reserve
Share Accumulated
Premium Loss Total/Net
Issued Capital
RM RM RM RM
Page 37 of 66
L & M CORPORATION (M) BERHAD
(Incorporated in Malaysia)
AND ITS SUBSIDIARY COMPANIES
(Increase)/Decrease in:
Contract work-in-progress 6,480,443 (5,129,602) - -
Inventories - 3,830,053 - -
Trade receivables 53,010,595 (21,989,723) - -
Other receivables, deposits and
prepayments 2,902,123 11,376,155 17,945 1,456,615
Amount owing by subsidiary companies
- - 1,426,805 (2,426,043)
(Forward)
Page 38 of 66
The Group The Company
2001 2000 2001 2000
RM RM RM RM
Increase/(Decrease) in:
Trade payables (21,370,626) (30,046,054) - -
Other payables and accruals (39,863,071) (4,543,026) (1,545,408) 1,426,713
(Forward)
Page 39 of 66
The Group The Company
2001 2000 2001 2000
RM RM RM RM
* During the financial year, purchase of property, plant and equipment is made up as follows:
The Group
2001 2000
RM RM
Page 40 of 66
L & M CORPORATION (M) BERHAD
(Incorporated in Malaysia)
AND ITS SUBSIDIARY COMPANIES
The registered office of the Company is located at 12th Floor (Right Wing) Menara
Kemayan, 160 Jalan Ampang, 50450 Kuala Lumpur.
The financial statements of the Group and of the Company have been approved by
the Board of Directors for issuance on 18th April, 2002.
The financial statements of the Group and of the Company have been prepared in
accordance with the provisions of the Companies Act, 1965 and the applicable
approved accounting standards of the Malaysian Accounting Standards Board.
The financial statements of the Group and of the Company have also been prepared
on the basis of accounting principles applicable to a going concern. This going
concern basis presumes that the proposed group restructuring scheme, as mentioned
in Note 3, will be successfully implemented after relevant approvals have been
obtained, and the Group and the Company will be able to operate profitably in the
foreseeable future and will continue to receive financial support from its
shareholders, bankers and creditors and consequently, the realisation of assets and
settlement of liabilities will occur in the ordinary course of business.
On 29th May, 2000, the Company and one of its subsidiary companies, L&M
Geotechnic Sdn. Bhd., (collectively referred to as “the Scheme Companies”)
obtained a Restraining and Stay Order (“RO”) pursuant to Section 176(10) of the
Companies Act, 1965 for the purpose of implementing a proposed group restructuring
scheme. The RO restrained and stayed all legal proceedings against the Scheme
Companies for an initial period of 90 days effective from 29th May, 2000. The said RO
expired on 29th August, 2000 and was further extended to expire on 30th September,
2002 to enable the proposed group restructuring scheme to be implemented.
Page 41 of 66
The proposed group restructuring scheme generally comprise:
II Proposed Hive-up
Proposed rights issue on the basis of seven (7) new ordinary shares, together
with seven (7) free new warrants attached, for every one (1) existing ordinary
share held in EAB;
V Proposed Acquisitions
The creditors had approved their related schemes under the Proposed Composite
Scheme of Arrangements during the respective court-convened creditors meetings
held on 17th, January, 2001. In September 2001, the Company has submitted the
proposed group restructuring scheme to the relevant authorities for their approvals
and has received approvals from the Foreign Investment Committee and Ministry of
International Trade and Industry on 31st October, 2001 and 21st February, 2002,
respectively. The proposed group restructuring scheme will be implemented after all
the necessary regulatory and corporate approvals are obtained.
The Company is also an affected listed issuer pursuant to Practice Note 4/2001 of the
Kuala Lumpur Stock Exchange (“KLSE”) Listing Requirements. Pursuant to this
Practice Note, the Company had announced to the KLSE of the plan to regularise its
financial position. In this connection, there are no major changes to the status of the
Company’s plan to regularise its financial position in respect of the proposed group
restructuring scheme as mentioned above.
Page 42 of 66
4. SIGNIFICANT ACCOUNTING POLICIES
Basis of Accounting
The financial statements of the Group and of the Company have been prepared under
the historical cost convention.
Basis of Consolidation
Subsidiary companies 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. The results of the subsidiary company acquired or disposed during the
financial year are included in the financial statements of the Group from the
effective date of acquisition or to the date of disposal respectively. Subsidiary
companies are consolidated using the merger method of accounting in accordance
with Malaysian Accounting Standard No. 2, Accounting for Acquisition and Merger.
When the merger method is used, the cost of investment in the Company’s books is
recorded as the nominal value of the shares issued and the difference between the
carrying value of the investment and the nominal value of the shares transferred is
treated as a reduction of reserves. The results of the companies being merged are
included for the full financial year.
Revenue
Sale of goods are recognised upon delivery of products and when the risks and
rewards of ownership has passed. Trading revenue represents gross invoiced value of
goods sold less trade discounts and allowances.
Income Tax
The tax effects of transactions are recognised, using the 'liability' method, in the year
such transactions enter into the determination of net income regardless of when they
are recognised for tax purposes. However, where timing differences would give rise to
net future tax benefits, the tax effects are recognised generally on actual realisation.
Property, plant and equipment are stated at cost less accumulated depreciation.
Property, plant and equipment, except for freehold land which is not depreciated,
are depreciated on a straight-line method at rates calculated to write off the cost of
the assets over their estimated useful lives. The annual rates used are as follows:
Buildings 2%
Page 43 of 66
Plant and machineries 10 - 20%
Office equipment, furniture and fittings 10 -15%
Motor vehicles 20%
Investments
Investment in quoted shares are stated at the lower of cost and market value.
Investment in unquoted shares are stated at cost less allowance for diminution in
value to recognise decline, other than a temporary decline, in the value of the
investments.
Construction Contracts
Where the outcome of a construction contract can be estimated reliably, revenue and
costs are recognised by reference to the stage of completion of the contract activity
at the balance sheet date, as measured by the proportion that contract costs incurred
for work performed todate bear to the estimated total contract costs. Variation in
contract work, claims and incentive payments are included to the extent that they
have been agreed with the customers.
When it is probable that total contract costs will exceed total contract revenue, the
expected loss is recognised as an expense immediately as an allowance for
foreseeable loss.
Receivables
Trade and other receivables are stated at nominal value as reduced by the
appropriate allowance for estimated irrecoverable amounts. Allowance for doubtful
receivables is made based on estimates of possible losses which may arise from non-
collection of certain receivable accounts.
The Group and the Company adopt the indirect method in the preparation of the cash
flow statement.
Page 44 of 66
Cash equivalents are short-term, highly liquid investments with maturities of three
months or less from the date of acquisition and are readily convertible to cash with
insignificant risk of changes in value.
Revenue:
Construction contracts 87,142,205 130,292,987 - -
Trading of building
materials - 1,750,675 - -
87,142,205 132,043,662 - -
Cost of sales:
Construction contracts 79,775,657 96,751,588 - -
Trading of building
materials - 15,718,599 - -
79,775,657 112,470,187 - -
Page 45 of 66
6. PROFIT/(LOSS) FROM OPERATIONS
After charging:
Allowance for doubtful
receivables
- trade 1,745,593 8,232,579 - -
- other receivables 1,444,902 - 235,558 -
Depreciation of property,
plant and equipment
(Note 10) 1,690,645 6,459,518 - -
(Forward)
Page 46 of 66
The Group The Company
2001 2000 2001 2000
RM RM RM RM
Directors' remuneration:
- Emoluments 1,226,602 1,270,009 - -
Restructuring expenses 716,503 1,442,666 - 761,712
Bad receivables
written off:
- Trade 712,800 19,480,064 - -
- Former subsidiary
companies - 41,601,847 - 9,667,318
- Subsidiary companies - - - 2,463,704
Deposits written off 668,211 - - -
Retrenchment benefits 168,410 1,189,957 - -
Rental of premises 117,000 274,711 - -
Auditors’ remuneration 35,000 107,393 10,000 30,000
Loss on disposal of
property, plant and
equipment 1,102 46,964 -
Inventory written down - 6,557,543 -
Property, plant and
equipment written off - 97,845 -
And crediting:
Bad receivables recovered
823,743 - -
Gain on disposal of
property, plant and
equipment 649,028 259,048 -
Allowance for doubtful
receivables no longer
required – Amount owing
by subsidiary companies
- - 159,004
Interest income - 244,985 -
Gain on sale of investments
- 11,712
Employee Information:
Staff costs 4,212,332 6,038,192 -
Staff costs included salaries, ex-gratia, contributions to employees provident fund and
any other staff related expenses. The total number of employees of the Group and of
the Company at year end were 62 (98 in 2000) and nil (nil in 2000).
Page 47 of 66
7. FINANCE COSTS
Interest on:
Other borrowings:
- current - 4,617,278 - 173,545
- underprovision in
prior year 1,353,833 - - -
Hire-purchase 216,033 436,597 - -
Bank overdrafts - 1,512,505 - 429,450
As mentioned in Note 3, the Company and one of its subsidiary companies, L&M
Geotechnic Sdn. Bhd., are undertaking a proposed group restructuring scheme. In
accordance with the proposed Composite Scheme of Arrangements, finance costs on
existing bank borrowings and term loans were deemed waived effective from the
period commencing June 2000. Consequently, finance costs waived for the period 1st
June, 2000 to 31st December, 2001, amounted to about RM6,938,000 and
RM1,762,000 for the Group and the Company respectively.
8. INCOME TAX
Income tax position of the Group and of the Company are as follows:
No income tax expense has been made in the financial statements of the Group for
2001 as the Group incurred an operating loss.
No income tax expense has been made in the financial statements of the Company for
2001 due to certain income not taxable for tax purposes. No provision for income tax
has been made for the Company in 2000 as the Company incurred an operating loss.
Page 48 of 66
9. EARNINGS/(LOSS) PER SHARE
The Group
2001 2000
RM RM
Basic
Net profit/(loss) attributable to ordinary shareholders
(3,904,522) 9,733,095
* It is assumed that the 15,000 new ordinary shares of RM1.00 each issued in 2000
pursuant to the Executive Share Option Scheme, have been issued at the end of
year 2000.
Page 49 of 66
Company No. 314763-P
The Group
Office
equipment,
Motor
Freehold Plant and furniture and
vehicles
land Buildings machineries fittings Total
RM RM RM RM RM RM
COST
Balance at 1.1.2001 5,539,325 18,587,772 19,382,493 2,978,946 1,554,410 48,042,946
Additions - - - 14,020 101,623 115,643
Disposals - - (1,876,304) - (237,085) (2,113,389)
ACCUMULATED DEPRECIATION
Balance at 1.1.2001 - 855,838 18,051,314 1,810,488 838,510 21,556,150
Current depreciation - 260,969 874,113 383,838 219,820 1,738,740
Disposals - - (1,864,025) - (97,415) (1,961,440)
Page 50 of 66
The net book values of property, plant and equipment under hire-purchase
arrangements are as follows:
The Group
2001 2000
RM RM
463,692 996,917
As at 31st December, 2001, the freehold land and building of a subsidiary company with
net book value amounting RM23,010,290 (RM23,271,259 in 2000) was pledged as security
for certain term loan facilities as mentioned in Note 19.
Included in property, plant and equipment of the Group are the following fully
depreciated property, plant and equipment which are still in use:
The Group
2001 2000
RM RM
At cost:
Plant and machinery 12,354,879 10,926,350
Motor vehicles 471,783 240,875
Office equipment, furniture and fittings 340,752 322,292
13,167,414 11,489,517
During the financial year, depreciation expenses are charged to the following:
The Group
2001 2000
RM RM
1,738,740 6,532,626
Page 51 of 66
11. INVESTMENT IN SUBSIDIARY COMPANIES
The Company
2001 2000
RM RM
Effective
Percentage
of Ownership Principal Activities
2001 2000
% %
Page 52 of 66
* In 2000, these subsidiary companies have been put into winding up proceedings and
their assets and liabilities have therefore been excluded from the consolidated
balance sheet. The dates of the petition for winding up were filed and the
corresponding court orders are as follows:
The Company
2001 2000
RM RM
Amount owing by subsidiary companies are unsecured, interest–free and have no fixed
terms of repayment.
The Group
2001 2000
RM RM
At cost:
Quoted shares in Malaysia 17,600 17,600
Unquoted shares 20,000 20,000
Page 53 of 66
13. CONTRACT WORK-IN-PROGRESS
The Group
2001 2000
RM RM
- 362,246,627
Less: Progress billings on contract - (355,766,184)
The contract work-in-progress was fully charged to the income statement in the current
financial year.
30,532,227 85,497,867 - -
Less: Allowance for
doubtful
receivables (26,596,005) (26,092,657) - -
Page 54 of 66
15. OTHER RECEIVABLES, DEPOSITS AND PREPAYMENTS
Other receivables:
- former subsidiary
company (Note 11) 9,684,168 - 9,684,168 -
- third party 1,687,447 1,180,334 218,708 206,576
11,371,615 1,180,334 9,902,876 206,576
Deposits 383,643 4,477,940 - 46,927
This represents provision for liabilities under corporate guarantees given by the Company
to the lenders and creditors of the former subsidiary companies which are under winding
up proceedings as mentioned in Note 11.
Amount owing to
former subsidiary
companies 12,000,000 16,387,610 - -
Other payables 1,693,518 3,522,119 111,259 1,343,414
Accruals 3,207,000 5,766,738 380,153 693,406
Provisions - 29,733,288 - -
Hire-purchase payables
- current portion (Note
20) 164,882 692,786 - -
Page 55 of 66
18. BANK BORROWINGS
The Company
The Company has revolving credit, bank overdraft and other credit facilities totaling
RM14.31 million (RM14.31 million in 2000). These facilities are unsecured and bear
interest at rates ranging from 1.5% to 2.5% (1.5% to 2.5% in 2000) above the base lending
rates or cost of funds.
Subsidiary Companies
One of the subsidiary companies has revolving credit, bank overdraft and credit facilities
totaling RM28.02 million (RM28.06 million in 2000). These facilities are unsecured and
bear interest at rates ranging from 1.25% to 1.5% (1.25% to 1.5% in 2000) above the base
lending rates or cost of funds.
The Group
2001 2000
RM RM
Non-current portion - -
One of the subsidiary companies has a term loan facilities amounting to RM18,497,546
which bear interest at rates ranging from 0.75% to 3% (0.75% to 3% in 2000) above the
base lending rates or cost of funds. The loans are secured by a fixed charge on the
freehold land and building of the said subsidiary company (Note 10) and a corporate
guarantee by the Company.
Page 56 of 66
20. HIRE-PURCHASE PAYABLES
Total principal
outstanding: 378,363 1,351,538 - -
Less: Portion due
within one year
(Note 17) (164,882) (692,786) - -
The interest rates implicit in these obligations range from 5.9% to 15.08% per annum
(12.34% to 15.08% per annum in 2000) and the non-current portion is repayable as
follows:
The Group The Company
2001 2000 2001 2000
RM RM RM RM
2002 - 253,344 - -
2003 119,188 218,085 - -
2004 70,315 148,413 - -
2005 18,006 38,910 - -
2006 5,972 - - -
213,481 658,752 - -
Page 57 of 66
As mentioned in Note 4, timing differences which would give rise to net future tax
benefits are recognised generally on actual realisation. Deferred tax benefits not
provided for in the financial statements are as follows:
The Group
Deferred Assets/(Liabilities)
2001 2000
RM RM
The carryforward tax losses and unabsorbed capital allowances are subject to the
agreement of the Inland Revenue Board.
2001 2000
RM RM
Authorised:
Ordinary shares of RM1.00 each:
At beginning of year/end of year 60,000,000 60,000,000
Page 58 of 66
The details of options granted to eligible employees and Executive Directors of the
Group to subscribe for shares which were outstanding as at 31st December, 2001 are as
follows:
Cash and cash equivalents included in the cash flow statements comprise the following
balance sheet amounts:
No segmental analysis is prepared as the Group operates within one industry and in
Malaysia only.
In 2000, certain former subsidiary companies have been put under winding up
proceedings. The directors have obtained legal opinion confirming that the Group has
lost effective control over the financial and operating policies of these subsidiary
companies from the respective dates the winding up petitions were filed (see Note 11)
Page 59 of 66
The effects of the deconsolidation on loss of effective control over these former
subsidiary companies on the results of the Group are as follows:
The Group
2000
RM
The net cash inflow in respect of the loss of effective control over these subsidiary
companies amounted to RM16,276,215 representing the bank overdrafts of these
subsidiary companies at their dates of loss of effective control.
Page 60 of 66
L & M CORPORATION (M) BERHAD
(Incorporated in Malaysia)
STATEMENT BY DIRECTORS
The directors of L & M CORPORATION (M) BERHAD, state that, in their opinion, the
accompanying balance sheets and the related statements of income, cash flows and changes in
equity, are drawn up in accordance with the provisions of the Companies Act, 1965 and the
applicable approved accounting standards in Malaysia so as to give a true and fair view of the
state of affairs of the Group and of the Company as of 31st December, 2001 and of the results
and the cash flows of the Group and the Company for the year ended on that date.
Kuala Lumpur,
18th April, 2002
I, MOHAMED JAMAL BIN MOHD RAMLI, the Director primarily responsible for the financial
management of L & M CORPORATION (M) BERHAD, do solemnly and sincerely declare that the
accompanying balance sheets and the related statements of income, cash flows and changes in
equity 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.
Before me,
Page 61 of 66
STATEMENT OF SHAREHOLDINGS
As at 28 March 2002
DISTRIBUTION OF SHAREHOLDERS
% of
Size of shareholdings No. of % of No. of issued
shareholders shareholders shares shares
Less than 1,000 1 0.05 500 0.00
1,000 – 10,000 1,974 96.36 4,232,000 20.74
10,001 to 100,000 62 2.97 1,664,000 8.16
100,001 to 1,020,050 8 0.38 2,653,000 13.00
1,020,051 and above 5 0.24 11,851,500 58.10
Total 2,089 100.00 20,401,000 100.00
Page 62 of 66
(Pledged Securities A/C for Chin Hoi @ Chin Pek Hoi)
23. Tan Peng Wah 45,000 0.22
24. See Leong Chye @ Sze Leong Chye 42,000 0.21
25. TA Nominees (Tempatan) Sdn Bhd 41,000 0.20
(Pledged Securities A/C for Chua Eng Ho WAA @ Chua Ebg
Wah)
26. Mayban Nominees (Asing) Sdn Bhd 40,000 0.20
(Nomura Singapore Limited for Soon Lee Mega Mart)
27. Chin Ah Kan @ Chin Yew Fan 39,000 0.19
28. Ang Cheng Sew 35 ,000 0.17
29. Yap Pin Ho 35,000 0.17
30. Yeo Soo Kay @ Yeo Song Nian 34,000 0.17
TOTAL 15,337,500 75.18
SUBSTANTIAL SHAREHOLDERS
(as per Register of Substantial Shareholders as at 28 March 2002)
* By virtue of direct interest of 3,191,500 and indirect interest held through Mayban
Nominees (Tempatan) Sdn Bhd (358,500), HLG Nominee (Tempatan) Sdn Bhd
(1,695,000) and HDM Nominees (Tempatan) Sdn Bhd (358,500).
Direct Indirect
Page 63 of 66
Property
Location
Description
Land Area
1.96 acres
Freehold
Age of Building
4 years
1.12.95 (A)
Page 64 of 66
L & M CORPORATION (M) BHD (314763-P)
PROXY FORM
I/We ______________________________________________________________________________
of ________________________________________________________________________________
being a member/members of L & M CORPORATION (M) BHD hereby appoint
___________________________________________________________________________________
of ________________________________________________________________________________
or failing whom, the Chairman of the meeting, as my/our proxy to vote for me/us and on
my/our behalf at the Seventh Annual General Meeting of the Company, to be held at
Tournament Room. Ground Floor, Kuala Lumpur Golf & Country Club, No. 10, Jalan 1/70D, Off
Jalan Bukit Kiara, 60000 Kuala Lumpur on 17th May 2002 at 10.00 a.m. and at any adjournment
thereof.
2 To re-elect Mr. Gan Boon Koo @ Gan Boon Kiu, a director retire
by rotation in accordance with the Article 102 of the Articles of
Association
(Should you desire to direct your Proxy as to how to vote on the Resolutions set out in the Notice
of Meeting, please indicate with an “X” in the appropriate space. Unless otherwise instructed,
the proxy may vote or abstain from voting at his discretion.)
Page 65 of 66
Notes:
1) A member entitled to attend and vote at the above meeting is entitled to appoint a proxy/proxies
to attend and vote on his/her behalf. A proxy may but need not be a member of the Company and
the provisions of Section 149(1)(b) of the Companies Act, 1965 shall not apply to the Company.
2) Where a member appoints two or more proxies, the appointment shall be invalid unless he
specifies the proportions of his shareholdings to be represented by each proxy.
3) The instrument appointing a proxy shall be in writing under the hands of the appointer or his
attorney duly authorised in writing or if the appointor is a corporation, either its Common Seal or
under the hand of his attorney.
4) The Proxy Form must be deposited at the Registered Office, 12th Floor (Right Wing), Menara
Kemayan, 160 Jalan Ampang, 50450 Kuala Lumpur not less than forth-eight (48) hours before the
time set for holding the meeting or adjourned meeting.
Ordinary Resolution - Authority to issue and allot shares pursuant to Section 132(D) of the
Companies Act, 1965
The Proposed Resolution 5, if passed, will empower the Directors of the Company, from the date
of the above Annual General Meeting, to issue shares in the Company up to and not exceeding in
total ten percent (10%) of the issued share capital of the Company for the time being for such
purposes as they consider would be in the best interest of the Company. This authority, unless
revoked or varied at a general meeting, will expire at the next annual general meeting of the
Company.
Page 66 of 66