UPA AnnualReport2012 PDF
UPA AnnualReport2012 PDF
UPA AnnualReport2012 PDF
Statement Accompanying Notice of Annual General Meeting Corporate Information Profile of Directors Chairmans Statement Audit Committee Report Statement on Risk Management and Internal Control Statement on Corporate Governance Financial Highlights Reports and Financial Statement Analysis of Shareholdings Particulars of Properties Proxy Form
5 6 7 9 10 11 8
12 14 17 18 68 70 71
13 16
67 69
NOTICE IS HEREBY GIVEN THAT the Seventeenth Annual General Meeting of the Company will be held at Congress I, Palace of the Golden Horses, Jalan Kuda Emas, MINES Resort City, 43300 Seri Kembangan, Selangor Darul Ehsan on Friday, 28 June 2013 at 11:30 a.m. for the following purposes: ORDINARY BUSINESS : 1. To receive and adopt the Report of the Directors and the Audited Financial Statements for the nancial year ended 31 December 2012 and the Report of the Auditors thereon. 2. To approve the payment of a First and Final Dividend of 8% (less 25% Income Tax) in respect of the nancial year ended 31 December 2012. 3. To approve the payment of Directors Fees of RM163,000.00 for the nancial year ended 31 December 2012. 4. To re-appoint Mr. Ma Huak Huang, the Director who retires in accordance with Section 129 of the Companies Act, 1965. 5. To re-elect Mr. Chua Ngeun Seong, the Director who retires in accordance with Article 87.1 of the Company's Articles of Association. 6. To re-appoint Messrs KPMG as the Auditors of the Company for the ensuing year and to authorise the Directors to x their remuneration. AS SPECIAL BUSINESS: To consider and if thought t, pass with or without modication, the following resolutions: Ordinary Resolution 7. Proposed Retention of Independent Director THAT authority be and is hereby given to Mr. Yeo Wee Thow @ Yeo Ngo Tee who has served as an Independent Non-Executive Director of the Company for a cumulative term of more than nine (9) years, to continue to act as an Independent Non-Executive Director of the Company. 8. Authority to issue shares pursuant to Section 132D of the Companies Act, 1965 THAT pursuant to Section 132D of the Companies Act, 1965 and approvals from Bursa Malaysia Securities Berhad and other relevant governmental/ regulatory authorities where such authority shall be necessary, the Board of Directors of the Company be and are hereby authorised to issue and allot shares in the Company from time to time until the conclusion of the next Annual General Meeting and upon such terms and conditions and for such purposes as the Board of Directors may, in their absolute discretion, deem t provided that the aggregate number of shares to be issued shall not exceed ten per centum (10%) of the issued share capital of the Company for the time being, and that the Board of Directors be and are also empowered to obtain the approval for the listing of and quotation for the additional shares so issued on Bursa Malaysia Securities Berhad. 9. Proposed renewal of Share Buy-Back Authority THAT subject always to the Companies Act, 1965 (Act), the provisions of the Memorandum and Articles of Association of the Company, the Listing Requirements of Bursa Malaysia Securities Berhad (Bursa Securities), and the approvals of all relevant governmental and/ or the relevant authorities, the Company be authorised, to buy-back such amount of ordinary shares of RM1.00 each in the Company as may be determined by the Directors of the Company from time to time through Bursa Securities upon such terms and conditions as the Directors may deem t and expedient in the interest of the Company provided that:(i) The aggregate number of shares bought back does not exceed 10% of the total issued and paid-up share capital of the Company at any point of time; (Resolution 8) (Resolution 7) (Resolution 6)
NOTICE OF DIVIDEND ENTITLEMENT AND PAYMENT NOTICE IS HEREBY GIVEN THAT a rst and nal dividend of 8% (less 25% income tax) for the nancial year ended 31 December 2012, if approved, will be paid on 24 July 2013 to Depositors whose names appear in the Record of Depositors at the close of business on 10 July 2013. A depositor shall qualify for the dividend entitlement only in respect of: (a) shares transferred into the Depositors Securities Account before 4.00 p.m. on 10 July 2013 in respect of ordinary transfers; or (b) shares bought on the Bursa Malaysia Securities Berhad on a cum entitlement basis according to the Rules of the Bursa Malaysia Securities Berhad. By Order of the Board CHOK KWEE WAH (MACS 00550) TAN KEAN WAI (MAICSA 7056310) Company Secretaries Petaling Jaya 6 June 2013
7.
Explanatory Notes 8. Item 1 of the Agenda This item is meant for discussion only as the provision of Section 169 (1) of the Companies Act, 1965 does not require shareholders approval for the Audited Financial Statements. Henceforth, this item is not put forward for voting. 9. Ordinary Resolution 6 In line with Recommendation 3.3 of the Malaysian Code on Corporate Governance 2012, the Nomination Committee has assessed the independence of Mr. Yeo Wee Thow @ Yeo Ngo Tee, who has served as Independent Non-Executive Director of the Company for a cumulative term of more than nine years, and upon its recommendation, the Board of Directors has recommended him to continue to act as an Independent Non-Executive Director of the Company based on the following justications:i) Mr. Yeo Wee Thow @ Yeo Ngo Tee has fullled the criteria under the denition of Independent Director as stated in the Listing Requirements of Bursa Malaysia Securities Berhad, and hence, he would be able to provide an element of objectivity, independent judgement and balance of the Board; ii) He performed his duty diligently and in the best interest of the Company; iii) He, having been with the Company for more than nine years, is familiar with the Groups business operations and has devoted sufcient time and attention to his professional obligations for an informed and balanced decision making process. 10. Ordinary Resolution 7 The proposed ordinary resolution No. 7, if passed, will empower the Directors of the Company to allot and issue shares up to an aggregate amount not exceeding in total 10% (ten per centum) of the issued share capital of the Company for time being and for such purposes as the Directors consider would be in the interest of the Company. In order to avoid any delay and costs involved in convening a general meeting, it is thus appropriate to seek shareholders approval. This authority unless revoked or varied by the Company in general meeting will expire at the next Annual General Meeting of the Company. The Company has not issued any new shares pursuant to Section 132D of the Companies Act 1965 under the general authority which was approved at the Sixteenth Annual General Meeting (AGM) held on 29 June 2012 and which will lapse at the conclusion of the Seventeenth AGM to be held on 28 June 2013. The authority will provide exibility to the Company for allotment of shares for any possible fund raising activities, including but not limiting to further placing of shares, for the purpose of funding future investment(s), acquisition(s) and/or working capital. 11. Special Resolution 8 The proposed ordinary resolution No. 8, if passed, will empower the Company to purchase and/or hold the Companys shares up to ten percent (10%) of the issued and paid-up share capital of the Company by utilizing the funds allocated which shall not exceed the total retained prots and/or share premium account of the Company. This authority unless renewed, revoked or varied at a general meeting, will expire at the conclusion of the next Annual General Meeting. Further information on the Proposed Renewal of Share Buy-Back Authority is set out in the Circular to Shareholders dated 6 June 2013 which is despatched together with the Companys 2012 Annual Report.
(Pursuant to Paragraph 8.27 ( 2 ) of the Main Market Listing Requirement of Bursa Malaysia Securities Berhad)
ELECTION OF DIRECTORS No individual is seeking election as a Director of UPA at the forthcoming Seventeenth Annual General Meeting.
BOARD MEETINGS A total of six (6) Board Meetings were held during the nancial year and the details of attendance by each of the Directors are given as below: Name of Directors Chua Ah Lak Kok Kam Moi Chua Ngeun Lok Chua Ngeun Seong Ma Huak Huang Yeo Wee Thow @ Yeo Ngo Tee No of meetings attended 5/6 6/6 6/6 6/6 6/6 5/6
All Directors have complied with the minimum attendance at Board Meeting as stipulated in the Bursa Malaysia Listing Requirements during the nancial year.
DATE, TIME AND PLACE OF THE SEVENTEENTH ANNUAL GENERAL MEETING Date Time Place : 28 June 2013 : 11.30am : Congress I Palace of the Golden Horses, Jalan Kuda Emas, MINES Resort City, 43300 Seri Kembangan, Selangor Darul Ehsan.
Corporate Information
BOARD OF DIRECTORS Chua Ah Lak Kok Kam Moi Chua Ngeun Lok Chua Ngeun Seong Ma Huak Huang Chairman (Senior Independent & Non-Executive Director) Managing Director Executive Director Executive Director Non-Independent Non-Executive Director
Yeo Wee Thow @ Yeo Ngo Tee Independent & Non-Executive Director
COMPANY SECRETARIES
Chok Kwee Wah (MACS 00550) Tan Kean Wai (MAICSA 7056310)
AUDITORS
KPMG Chartered Accountant KPMG Tower 8 First Avenue, Bandar Utama 47800 Petaling Jaya Selangor Darul Ehsan Bina Management (M) Sdn Bhd (50164-V) Lot 10, The Highway Centre Jalan 51/205 46050 Petaling Jaya Selangor Darul Ehsan Tel : 03-77843922 Fax : 03-77841988 Lot 10, The Highway Centre Jalan 51/205 46050 Petaling Jaya Selangor Darul Ehsan Tel : 03-77843922 Fax : 03-77841988 Public Bank Berhad Malayan Banking Berhad CIMB Bank Berhad HSBC Bank Malaysia Berhad United Overseas Bank (M) Bhd Bursa Malaysia Securities Berhad Main Market
REGISTRAR
REGISTERED OFFICE
PRINCIPAL BANKERS
STOCK EXCHANGE
Profile of Directors
MR. CHUA AH LAK CHAIRMAN SENIOR INDEPENDENT & NON-EXECUTIVE Mr. Chua Ah Lak, Malaysian, aged 64, was appointed as Independent & Non Executive Director of UPA Corporation Bhd on 3 January 2005. He holds Honours Degree in Chemical Engineering from Adelaide University, Australia and MBA from University of Malaya, Malaysia. He retired from Nylex Group on 31 October 2004 after serving as Chief Executive Ofcer of Nylex (Malaysia) Berhad and a director of Nylexs Board. He is the Chairman of the Audit Committee, Nomination Committee as well as Remuneration Committee. MR. KOK KAM MOI MANAGING DIRECTOR Mr. Kok Kam Moi, Malaysian, aged 65, was appointed as Managing Director of UPA Corporation Bhd on 6 January 1997. He is the co-founder of the UPA Group with Mr. Chua Ngeun Lok. Mr Kok has more than 30 years of experience in printing industry. After obtaining his qualication in Commercial Art in 1971, he ventured into general printing before specializing in rebuilding of printing machinery. His vast experience in printing industry and technical knowhow has contributed to the success of the Machinery Division. The Machinery Division deals with rebuilding of Web printing machinery, Sheet fed printing machinery and book binding machinery. Under his guidance in the past 20 years, UPA Machinery Sdn Bhd, a subsidiary of the Group, has grown to be one of the biggest printing equipment rebuilding factory in South East Asia. Mr. Kok is involved in the Groups business development and oversees the machinery Division of the Group. He is a member of Remuneration Committee. MR. CHUA NGEUN LOK EXECUTIVE DIRECTOR
Mr. Chua Ngeun Lok, Malaysian, aged 62, was appointed as Executive Director of UPA Corporation Bhd on 6 January 1997. He is the co-founder of the UPA Group with Mr. Kok Kam Moi. Mr. Chua has more than 30 years experience in the printing industry. After obtaining his qualications in Commercial Art in 1972, he ventured into general printing before specializing in paper products manufacturing. His creative skills have contributed to the many innovative products manufactured by UPA. Under his guidance in the past 30 years, UPA Press Sdn Bhd, a subsidiary of the Group, has grown to be the biggest diary and notebook manufacturer in Malaysia. He had been intensively involved in the development of the Company to become one of the leading paper products manufacturers in Asia. He is currently the Vice President of Selangor and Federal Territory Chinese Printing Presses Association and Exco Member of K.L. Selangor Chinese Chamber of Commerce. Mr. Chua is involved in the Groups business development and oversees the nancial management of the Group. He is the brother of Mr. Chua Ngeun Seong, the Executive Director of UPA Corporation Berhad. Mr. Chua is a member of the Remuneration Committee.
IR. CHUA NGEUN SEONG EXECUTIVE DIRECTOR Ir. Chua Ngeun Seong, Malaysian, aged 65, was appointed to the Board of UPA Corporation Bhd on 6 January 1997. Thereafter he was made Executive Director on 1st June 1998. He holds a Diploma in Mechanical Engineering from Council of Engineering Institutions UK and he is also a Registered Professional Engineer in Malaysia. He has 40 years working experience in engineering as well as general management encompassing project planning, design, installation, test and commissioning of palm oil mills, palm kernel crushing plant, palm oil renery plants, cocoa butter substitute speciality fats plant, steam boilers, power generation plants and other related machine and equipment. He also has more than 15 years of working experience in plastic sheets extrusion and calendaring. Ir. Chua sits on the Board of two of UPA Corporation Bhds subsidiaries as well as several other private limited companies. He is the Director of UPA Holdings Sdn Bhd which is the ultimate holding company and substantial shareholder of UPA Corporation Bhd and is also the brother of Mr. Chua Ngeun Lok, the Executive Director of UPA Corporation Bhd.
MR. MA HUAK HUANG NON-INDEPENDENT & NON-EXECUTIVE Mr. Ma Huak Huang, Malaysian, aged 74 was appointed to the Board of UPA Corporation Bhd on 6 January 1997. He is a self-made entrepreneur with more than 30 years experience in the eld of agriculture chemical and feedstuff. Mr. Ma is a member of Audit Committee, Remuneration Committee as well as Nomination Committee. He sits on the Board of several of UPA Corporation Bhds subsidiaries as well as other private limited companies. He is also the Director of UPA Holdings Sdn Bhd, the ultimate holding company and substantial shareholder of UPA Corporation Bhd. He is also the brother-in-law of Mr. Kok Kam Moi.
MR. YEO WEE THOW @ YEO NGO TEE INDEPENDENT & NON-EXECUTIVE Mr. Yeo Wee Thow, Malaysian, ages 64, was appointed an Independent and NonExecutive Director of UPA Corporation Bhd on 29 June 2001. He is a member of Malaysian Institute of Accountants, a fellow member of the Association of Chartered Certied Accountants (UK) and an associate member of the Institute of Chartered Secretaries and Administrators (UK). He owns a public accounting rm in Kuala Lumpur which was set up in 1979. Mr. Yeo is a member of Audit Committee, Nomination Committee as well as Remuneration Committee.
SAVE AS DISCLOSED ABOVE, NONE OF THE DIRECTORS HAS : 1) any other family relationship with any Director and/or substantial shareholder of the Company. 2) any other conict of interest with the Company. 3) any conviction of offences for the past ten years other than trafc offences. PLEASE REFER TO THE ANALYSIS OF SHAREHOLDINGS ON PAGE 68 AND 69 FOR THE DETAILS OF THE DIRECTORS SHAREHOLDINGS IN THE COMPANY
Chairmans Statement
To all our valued shareholders, I am pleased to present you the Annual Report and Audited Financial Statements of UPA Corporation Berhad for the nancial year ended 31 December 2012. BUSINESS REVIEW For the nancial year ended 31 December 2012, the Group recorded total revenue of RM122.83 million as compared to RM127.47 million recorded in the preceding nancial year. The prot before tax however increased to RM15.85 million as compared to RM12.69 million in the previous nancial year. The nancial year 2012 proved to be a very challenging year for the Group with the adverse market condition. For UPA Press Sdn. Bhd., the export market in USA had shown some encouraging recovery while the European market still remained gloomy. UPA Machinery Sdn. Bhd. on the other hand registered a better result with RM0.34 million loss as compared to RM5.02 million loss in the previous nancial year. Macro Plastic Sdn. Bhd. is set to kick-start its project in Northern Bangkok. The building of the plant had been completed and the rst production line had been installed and commissioned. PROSPECT The Management team acknowledges the need to be cautious on various factors internally as well as externally which can affect the operational efciency and protability of the Group. The implementation of minimum wage will affect the protability of the Group but it will be partially mitigated by improving the productivity of the work force. The Group had on 31 March 2013 entered into an agreement to dispose of its 35.5% equity interest in The Malaya Press Sdn. Bhd. (3379-P). The core business of The Malayan Press Sdn. Bhd. is in publishing textbooks and other reading material for SRJKC schools. The disposal would allow UPA to stay focused into its core business. The Group had also started the initial work on the 5 acre land owned by its wholly owned subsidiary company Danau Cekal Sdn. Bhd. Currently it is in the process of land conversion from agricultural to industrial as well as sub-division of the land. CORPORATE SOCIAL RESPONSIBILITY The Group had in the nancial year 2012 made donation to charitable groups and also had contributed to the numerous conference and sport activities of various organizations. The
Group will continue to promote and creating awareness among the employees on the occupational hazard and safety at the work place. DIVIDEND The Board is pleased to recommend a rst and nal dividend of 8% (less income tax) per share for the nancial year ended 31 December 2012 for the approval of the shareholders at the forthcoming annual general meeting. ACKNOWLEDGEMENT On behalf of the Board, I would like to take this opportunity to extend my sincere gratitude and appreciation to all our employees, valued shareholders, customers, suppliers and business associates for their dedication, assistance and support throughout the years. Last but not least, I would like to thank my fellow members of the Board for their advice, invaluable assistance, support and contribution extended to the Board all these years. Thank you.
COMPOSITION The Audit Committee was established on 7 January 1997. The committee comprises of the following members as at the end of nancial year 2012: Meetings attended 1. Chua Ah Lak (CHAIRMAN) Senior Independent & Non-Executive Director 2. Yeo Wee Thow @ Yeo Ngo Tee Independent & Non-Executive Director 3. Ma Huak Huang Non-Independent & Non-Executive Director 4/4 4/4 4/4
Mr. Yeo Wee Thow @ Yeo Ngo Tee is a member of the Malaysian Institute of Accountants (MIA). The composition of the Audit Committee complies with the Bursa Malaysia Listing Requirements. TERM OF REFERENCE Composition The Committee should be appointed by the Board and the following requirements must be met : a. members of the Committee should be from among the current Boards members b. should comprise no fewer than three (3) members c. Independent Directors must form the majority d. All members of the committee should be Non-Executive Directors e. Members of the Committee should consist of at least one member who is a member of Malaysian Institute of Accountants f. Chairman of the Committee must be an Independent Director
g. Review on the Groups compliance with the accounting standards set by the Malaysian Accounting Standards Board. h. Review on the Groups compliance with the Bursa Malaysia Listing Requirements. i. Review on the Groups status of compliance with the Malaysian Code on Corporate Governance.
g. Alternate Director is not eligible to be appointed Authority Meetings a. A minimum number of four (4) meetings should be held during a nancial year The Audit Committee is empowered to : a. have authorities to investigate any matter within its term of reference
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INTERNAL AUDIT FUNCTION The principal roles of the appointed external consultant on internal audit are to assist the Audit Committee in assessing risks faced by the Group, recommend possible measures to mitigate the identied risks, review the adequacy of effective system of controls for the operation of the Group. The major ndings of the internal audit reports will be reported directly to the Audit Committee meetings in order to formulate appropriate corrective measures.
Introduction The preparation of this statement is in compliance with paragraph 15.26 (b) of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad which requires the Board of Directors of public listed companies to include in its Annual Report a statement about the state of internal control of the listed issuer as a group. The Board of Directors is committed to maintaining sound internal control in the Group and is pleased to provide the following Statement on Risk Management and Internal Control for the nancial year ended 31 December 2012. Board responsibility The Board of Directors is responsible for the Groups system of internal controls covering not only nancial controls but also operational and compliance controls as well as risk management. The internal control system involves each business and key management from each business, including the Board, and is designed to meet the Groups particular needs and to manage the risks to which it is exposed. This system, by its nature, can only provide reasonable but not absolute assurance against material loss or against the Group failing to achieve its objectives. The Board has established a process for identifying, evaluating and managing signicant risks faced by the Group. This process has been in place throughout the year is reviewed by the Board and accords with Internal Control Guidelines. Risk management The Board has delegated its authority to the Management to review and determine the level of risk tolerance. The process requires management to identify and assess all types of risks in terms of likelihood and magnitude of impact as well as to identify and evaluate the adequacy and application of mechanisms in place to manage, mitigate, avoid or eliminate these risks. The Board believes that maintaining a sound system of internal control is founded on a clear understanding and appreciation of the following key elements of the Groups risk management framework : A risk management structure which outlines the lines of reporting and responsibility at the Board, Audit Committee, Risk Management Committee and management levels have been established.
In furtherance to the Boards commitment to maintain sound systems of risk management and internal control, the Board continues to maintain and implement a strong control structure and environment for the proper conduct of the Groups business operations as follows :
The Board meets at least quarterly and has set a schedule of matters which is required to be brought to its attention for discussion, thus ensuring that it maintains full and effective supervision over appropriate controls. The Executive Directors lead the presentation of board papers and provides comprehensive explanation of pertinent issues. In arriving at any decision, upon recommendation by the Management, a thorough deliberation and discussion by the Board is a prerequisite. In addition, the Board is kept updated on the Groups activities and its operations on a regular basis. An organizational structure with formally dened lines of responsibility and delegation of authority is in place. A process of hierarchical reporting has been established which provides for a documented and auditable trail of accountability. A documented delegation of authority with clear lines of accountability and responsibility serves as a tool of reference in identifying the approving authority for various transactions including matters that require Boards approval. The Groups performance is reviewed on a quarterly basis. The Groups strategic direction is also reviewed regularly taking into account changes in market conditions and signicant business risks. The Financial Guidelines dene the policies and procedures for day-to-day operations and act as guidelines as to the proper measures to be undertaken in a given set of circumstances. Internal audit function The Group has outsourced the internal audit function to a professional rm of consultants, which provides the Board with the assurance it requires regarding the adequacy and effectiveness of internal control systems. Internal audit independently reviews the control processes implemented by the management, and report to the Audit Committee. Internal audit also reviews the internal controls in the key activities of the Groups businesses on the basis of an annual internal audit
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The Board of Directors of UPA values the importance of good corporate governance which it believes will be able to protect and enhance the interest of the shareholders. The Board is pleased to provide the following statement on how the Group applied the principles of good governance and the extent of compliance with the best practices as set out in the Malaysian Code on Corporate Governance. BOARD OF DIRECTORS The Group is headed by an experienced Board comprising of professionals and entrepreneurs with diverse knowledge and experience in business, nancial, management and engineering background. The Board leads the Group by providing directions and guidance to the management and staff in order to achieve its corporate goals and objectives. As at the end of nancial year 2012, the Board consists of six (6) members of which three (3) are Executive Directors while the other three (3) are Non-Executive Directors. Out of the three (3) Non-Executive Directors, two (2) are also functioning as Independent Directors. One of the Independent Directors namely Mr. Chua Ah Lak is also appointed as Senior Independent Director. The current composition satises the requirement of Listing Requirement and the Board considers its current size as adequate and capable to lead the Group through efcient and effective discussion and decision makings. The three Executive Directors are individually responsible for the Groups three main division respectively namely manufacturing of printed and paper related products; reconditioning and refurbishment of printing and printing related machinery; and manufacturing of PVC & PET rigid lms and PVC & PET shrinkable lm. The three Non-Executive Directors do not participate in the day-to-day management of the Group, instead their functions are to provide independent views, assessment and advice on various management proposals. A brief prole of each of the Directors is presented on page7 to 8. BOARD MEETINGS AND SUPPLY OF INFORMATION There were six (6) Board Meetings held during the nancial year and the details on the attendance of all the Directors at the Board Meetings are disclosed in the Statement Accompanying the Notice of Annual General Meeting in page 2. Board meetings are conducted by the guidance of pre-set agenda. The agenda and other related documents are circulated to the Directors before the meeting so as to give sufcient time to the Directors to make better preparation and to participate effectively in the meeting. The Executive Directors will each present their report on the performance of their respective divisions before the Board. Proposal for future plans concerning each of the division or the Group as a whole will be discussed, examined and evaluated by the Board. The Board had full access to all information within the Group and may further asks for further information or advices from the auditors, Company Secretary, management staff or other independent professional advisors, if necessary.
Technical Textile Innovation 22 to 24 and Application, China Oct. 2012 International Trade Fair The Audit Committees oversight role on Financial reporting Mr. Kok Kam Moi Drupa Printing Technology and Exhibition Conference, Dusseldorf Print Technology Malaysia Mr. Chua Ngeun Lok Hewlett-Packard World Conference on Digital Printing Drupa Printing Technology and Exhibition Conference, Dusseldorf 6 Nov. 2012 31 May 2012 2 Aug. 2012 29 May 2012 31 May 2012
Seminar on town planning, 12 Dec. strata Management bill, 2012 land development Mr. Chua Ngeun Seong The 26th International Exhibition on Plastic and Rubber Industries 18 Apr. 2012
24th Malaysian 19 Jul. International Machinery Fair 2012 Mr. Ma Huak Huang Mr. Yeo Wee Thow Duties of the Audit Committee Transfer pricing seminar 2012 Budget 2013, highlights on tax changes and its implication on business 3 Oct. 2012 12 Sep. 2012 31 Oct. 2012
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The Directors remuneration which include the benet-in-kind for the nancial year 2012 categorised into band of RM50,000 are as follow : Range of Remuneration (RM) 50,000 and below 50,001 to 100,000 100,001 to 150,000 150,001 to 200,000 200,001 to 250,000 250,001 to 300,000 300,001 to 350,000 350,001 to 400,000 400,001 to 450,000 450,001 to 500,000 FINANCIAL REPORTING All quarterly result and year end nancial statement are rst presented to the Audit Committee and then reviewed by the Board before they are released to the Bursa Malaysia Securities Bhd. In presenting its nancial statement and quarterly results, the Directors aim to present a balanced and understandable assessment of the Groups nancial position and prospect. The Board will ensure that the Company uses appropriate accounting procedures for the preparation of the nancial statement in order to give true and fair views of the affair of the Company. The Board is assisted by the Audit Committee in the preparation of these nancial reports. RISK MANAGEMENT and INTERNAL CONTROL The Statement On Risk Management and Internal Control furnished on page 12 to 13 of the annual report provides an overview on the state of internal control within the Group. Executive Director 3 Non-Executive Director 2 1 -
Month January
December 320,000
*including transaction cost None of these purchased shares were resold or cancelled by the Company as at 9 May 2013. Option, Warrants or convertible Securities No option, warrant or convertible securities were issued by the Group during the nancial year ended 31 December 2012. American Depository Receipt (ADR) or Global Depository Receipt (GDR) programme The company did not sponsor any ADR or GDR programme during the nancial year.
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90.0
60.0
20.0 18.0
RM (Million) 19.1
18.6
18.7 15.8
30.0
08
09
10
11 20
166.4
20
Shareholders' Fund
RM (Million) 200.0 180.0 160.0 140.0 120.0 100.0 80.0 60.0 149.9 157.9 169.3 177.6
20
20
20
12
08
09
10
11 20
14.1
20
40.0 20.0
RM (Million) 16.0 15.0 14.0 13.0 12.0 11.0 10.0 9.0 8.0 7.0 6.0 5.0 4.0 3.0 2.0 1.0 14.4 14.1 13.4
08
09
10
11
20
20
20
20
20
12
20
20
RM (Sen) 11 10 9 8 7 6 8 8 (Proposed) 10 10 10
08
09
00
20
4 3 2 1
08
09
10
11
20
20
20
20
20
12
20
20
20
20
11
12
20
8.8
12
Directors report
The Directors have pleasure in submitting their report and the audited nancial statements of the Group and of the Company for the nancial year ended 31 December 2012. Principal activities The Company is principally engaged in investment holding and provision of management services, whilst the principal activities of the subsidiaries are as stated in Note 27 to the nancial statements. There has been no signicant change in the nature of these activities during the nancial year. Results Group RM'000 Prot/(Loss) for the year attributable to: Owners of the Company Non-controlling interests 13,470 (26) 13,444 1,970 1,970 Company RM'000
Reserves and provisions There were no material transfers to or from reserves and provisions during the nancial year under review except as disclosed in the nancial statements. Dividends Since the end of the previous nancial year, the Company paid a rst and nal dividend of 8 sen per ordinary share less tax at 25% totalling RM4,677,000 (6 sen net per ordinary share) in respect of the year ended 31 December 2011 on 24 July 2012. The Directors recommend a rst and nal dividend of 8 sen per ordinary share less tax at 25% totalling RM4,658,000 (6 sen net per ordinary share) for the nancial year ended 31 December 2012. Directors of the Company Directors who served since the date of the last report are: Chua Ah Lak Chua Ngeun Lok Kok Kam Moi Ma Huak Huang Chua Ngeun Seong Yeo Wee Thow @ Yeo Ngo Tee
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Number of Ordinary Shares of RM1 each The Company - UPA Corporation Bhd. Chua Ah Lak Chua Ngeun Lok Kok Kam Moi Ma Huak Huang Chua Ngeun Seong Yeo Wee Thow @ Yeo Ngo Tee - direct interest - deemed interest - direct interest - deemed interest - direct interest - deemed interest - direct interest - deemed interest - direct interest - deemed interest - direct interest - deemed interest At 1-1-2012 336,720 111,600 862,846 42,192,145 1,153,572 40,848,589 312,535 42,347,274 420,096 42,274,895 984,900 1,075,200 Bought 120,000 120,000 Sold 120,000 At 31-12-2012 336,720 111,600 862,846 42,192,145 1,153,572 40,848,589 312,535 42,347,274 420,096 42,394,895 984,900 1,075,200
By virtue of their interests in the shares of the Company, Chua Ngeun Lok, Kok Kam Moi, Ma Huak Huang and Chua Ngeun Seong are also deemed interested in the shares of the subsidiaries during the nancial year to the extent that UPA Corporation Bhd. has an interest.
ii) any contingent liability in respect of the Group or of the Company that has arisen since the end of the nancial year. No contingent liability or other liability of any company in the Group has become enforceable, or is likely to become enforceable within the period of twelve months after the end of the nancial year which, in the opinion of the Directors, will or may substantially affect the ability of the Group and of the Company to meet their obligations as and when they fall due. In the opinion of the Directors, except for those disclosed in the nancial statements, the nancial performance of the Group and of the Company for the nancial year ended 31 December 2012 have not been substantially affected by any item, transaction or event of a material and unusual nature nor has any such item, transaction or event occurred in the interval between the end of that nancial year and the date of this report. Signicant events during the year The signicant event during the nancial year is as disclosed in Note 29 to the nancial statements. Signicant events subsequent to reporting date The signicant event subsequent to reporting date is as disclosed in Note 30 to the nancial statements. Auditors The auditors, Messrs KPMG, have indicated their willingness to accept re-appointment.
ii) any current assets which were unlikely to be realised in the ordinary course of business have 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: i) that would render the amount written off for bad debts, or the amount of the provision for doubtful debts, in the Group and in the Company inadequate to any substantial extent, or
ii) that would render the value attributed to the current assets in the nancial statements of the Group and of the Company misleading, or
20
Note Asset Property, plant and equipment Investment in subsidiaries Investment in associates Investment properties Deferred tax assets Total non-current assets Other investments Inventories Trade and other receivables Current tax assets Cash and cash equivalents Total current assets Total assets Equity Share capital Reserves Retained earnings Equity attributable to owners of the Company Non-controlling interest Total equity Liabilities Borrowings Deferred tax liabilities Total non-current liabilities Borrowings Provision for warranty Current tax liabilities Trade and other payables Total current liabilities Total liabilities Total equity and liabilities
1.1.2011 RM'000 62,040 4,716 66,756 1,252 9,388 130 4,778 15,548 82,304 79,582 (2,166) 4,343 81,759 81,759 545 545 545 82,304
3 4 5 6 7 8 9 10
11
12
13
14
Revenue Cost of sales Gross prot Other income Selling and distribution expenses Administrative expenses Other expenses Results from operating activities Finance income Finance costs Operating prot Share of prot of equity accounted associates, net of tax Prot before tax Income tax expense Prot for the year Foreign currency translation for foreign operations Total comprehensive income for the year Prot/(Loss) for the year attributable to: Owners of the Company Non-controlling interest Prot for the year Total comprehensive income attributable to: Owners of the Company Non-controlling interest Total comprehensive income Basic earnings per ordinary share (sen)
15
8,775 8,775
1,970 1,970
7,719 7,719
1,970 1,970
7,719 7,719
22
Total RM'000
At 1 January 2011 Total comprehensive income for the year Cancellation of uncalled share capital by a subsidiary Changes in ownership investment in a subsidiary Dividends to owners of the Company - 2010 nal 22
79,582 -
(57) 14 -
(2,166) -
At 31 December 2011 / 1 January 2012 Total comprehensive income for the year Acquisition of treasury shares Additional of share capital by a subsidiary 28 Changes in ownership investment in a subsidiary Dividends to owners of the Company - 2011 nal Share of loss of non-controlling interest At 31 December 2012 28 22 -
79,582 79,582
Note 12.1
178,608
At 1 January 2011 Total comprehensive income for the year Dividends to owners of the Company - 2010 nal 22
79,582 -
(2,166) -
At 31 December 2011 / 1 January 2012 Total comprehensive income for the year Dividends to owners of the Company - 2011 nal Share buyback At 31 December 2012 22
79,582 79,582
Note 12.1
24
2012 RM'000
(ii)
2012 RM'000
(i)
43,425
26
The Group and Company have early adopted the amendments to MFRS 101, Presentation of Financial Statements which are effective for annual periods beginning on or after 1 July 2012. The early adoption of the amendments to MFRS 101 has no impact on the financial statements other than the presentation format of the statement of profit or loss and other comprehensive income. The following are accounting standards, amendments and interpretations of the MFRS framework that have been issued by the Malaysian Accounting Standards Board (MASB) but have not been adopted by the Group and the Company:
MFRSs, Interpretations and amendments effective for annual periods beginning on or after 1 January 2013
MFRS 10, Consolidated Financial Statements MFRS 11, Joint Arrangements MFRS 12, Disclosure of Interests in Other Entities MFRS 13, Fair Value Measurements MFRS 119, Employee Benefits (2011) MFRS 127, Separate Financial Statements (2011) MFRS 128, Investment in Associates and Joint Ventures (2011) IC Interpretation 20, Stripping Costs in the Production Phase of a Surface Mine Amendments to MFRS 7, Financial Instruments: Disclosures Offsetting Financial Assets and Financial Liabilities Amendments to MFRS 1, First-time Adoption of Malaysian Financial Reporting Standards Government Loans Amendments to MFRS 1, First-time Adoption of Malaysian Financial Reporting Standards (Annual Improvements 2009-2011 Cycle) Amendments to MFRS 101, Presentation of Financial Statements (Annual Improvements 2009-2011 Cycle) Amendments to MFRS 116, Property, Plant and Equipment (Annual Improvements 2009-2011Cycle)
28
2. Significant accounting policies The accounting policies set out below have been applied consistently to the periods presented in the financial statements and in preparing the opening MFRS statements of financial position of the Group and of the Company at 1 January 2011 (the transition date to MFRS framework), unless otherwise stated. (a) Basis of consolidation (i) Subsidiaries Subsidiaries are entities, including unincorporated entities, controlled by the Company. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases. Control exists when the Company has the ability to exercise its power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. In assessing control, potential voting rights that presently are exercisable are taken into account. Investments in subsidiaries are measured in the Companys statement of financial position at cost less impairment losses, unless the investment is classified as
30
Financial assets
(a) Financial assets at fair through profit or loss
value
Fair value through profit or loss category comprises financial assets that are held for trading, including derivatives (except for a derivative that is a financial guarantee contract or a designated and effective hedging instrument) or financial assets that are specifically designated into this category upon initial recognition. Derivatives that are linked to and must be settled by delivery of unquoted equity instruments whose fair values cannot be reliably measured are measured at cost. Other financial assets categorised as fair value through profit or loss are subsequently measured at their fair values with the gain or loss recognised in profit or loss. (b) Loans and receivables Loans and receivables category comprises debt instruments that are not quoted in an active market. Financial assets categorised as loans and receivables are subsequently measured at amortised cost using the effective interest method. All financial assets, except for those measured at fair value through profit or loss, are subject to review for impairment (see note 2(i)(i)).
Financial liabilities
All financial liabilities are subsequently measured at amortised cost other than those categorised as fair value through profit or loss. Fair value through profit or loss category comprises financial liabilities that are derivatives or financial liabilities that are specifically designated into this
32
Depreciation methods, useful lives and residual values are reviewed, and adjusted as appropriate at the end of the reporting period. (e) Leased assets (i) Finance lease Leases in terms of which the Group or the Company assumes substantially all the risks and rewards of ownership are classified as finance leases. Upon initial recognition, the leased asset is measured at an amount equal
34
(k) Employee benefits (i) Short-term employee benefits Short-term employee benefit obligations in respect of salaries, annual bonuses, paid annual leave and sick leave are measured on an undiscounted basis and are expensed as the related service is provided. A liability is recognised for the amount expected to be paid under short-term cash bonus or profit-sharing plans if the Group has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimated reliably. (ii) State plans The Groups contribution to the statutory pension funds are charged to profit or loss in the year to which they relate. Once the contributions have been paid, the Group has no further payment obligations.
36
38
Group Apartment RM'000 85 85 85 18,629 3,451 72,507 2,309 18,591 38 3,341 184 (70) (4) 69,265 3,387 (145) 1,860 449 4,462 275 (26) (6) 4,705 18,489 102 3,006 335 63,850 5,415 1,620 240 4,189 284 (11) 2,000 2,000 1,501 3,501
Leasehold land RM'000 22,907 22,907 1,944 24,851 6,854 6,809 45 6,809 -
Cost
120,955 8,376 (11) 129,320 7,823 (241) (10) 136,892
At 31 December 2012
At 31 December 2011 / 1 January 2012 Charge for the year Disposals Write off Impairment loss
Carrying amounts
20,265 19,920 21,519 5,735 5,833 5,975 56 54 52 13,300 12,933 12,498 354 439 421 23,946 24,309 22,252 859 1,004 1,339 1,232 1,209 1,171 2,000 3,501 65,987 67,701 68,488
At 1 January 2011
At 31 December 2012
The gross capital contribution amounting to RM4,452,000 (31.12.2011: RM4,452,000, 1.1.2011: RM4,559,000) was for working capital purposes.
Country of incorporation 31.12.2012 Sharp Litho Sdn. Bhd.* # Acta UPA Sdn. Bhd.* # The Malaya Press Sdn.Bhd.* Web-Tech Colors Co. Ltd. @ UPA Machinery Co. Ltd. @ 31.12.2011 Sharp Litho Sdn. Bhd.* # Acta UPA Sdn. Bhd.* # The Malaya Press Sdn. Bhd.* Web-Tech Colors Co. Ltd. @ UPA Machinery Co. Ltd. @ Malaysia Malaysia Malaysia China Thailand Country of incorporation 1.1.2011 Sharp Litho Sdn. Bhd. Acta UPA Sdn. Bhd. The Malaya Press Sdn. Bhd. Web-Tech Colors Co. Ltd. Malaysia Malaysia Malaysia China Thailand
UPA Machinery Co. Ltd. Thailand 46.0 1,161 (1,237) * These associates were held directly by the Company. # Equity accounted based on unaudited management accounts for the year ended 31 December 2012 (31.12.2011: 31 December 2011). Equity accounted based on audited accounts for the period ended 31 August 2012 (31.12.2011: year ended 31 March 2011). @ Equity accounted based on audited accounts for the year ended 31 December 2012 (31.12.2011: 31 December 2011). The Group has not equity accounted for the results of Web-Tech Colors Co. Ltd., loss for the year of RM544,000 (2011: attributable prot for the year of RM166,000), UPA Machinery Co. Ltd.s loss for the year of RM170,000 (2011: RM250,000) and Acta UPA Sdn Bhd.s loss for the year of RM1,000 (2011: RM1,000). The accumulated losses not recognised as at end of the reporting period for Web-Tech Colors Co. Ltd., UPA Machinery Co. Ltd. and Acta UPA Sdn. Bhd. is RM3,818,000 (2011: RM3,274,000), RM552,000 (2011: RM382,000) and RM51,000 (2011: RM50,000) respectively since the Groups investment in the associates has been fully written down and the Group has no obligation in respect of these losses. 6. Investment properties Group 31.12.2012 RM000 Freehold land At 1 January Changes in fair value recognised in prot or loss At 31 December 18,344 18,344 31.12.2011 RM000 13,897 4,447 18,344 1.1.2011 RM000 13,897 13,897
40
Security
The freehold land have been charged to licensed banks for credit facilities granted to certain subsidiaries as set out in Note 13. 7. Deferred tax assets/(liabilities)
31.12.2012 31.12.2011 1.1.2011 31.12.2012 31.12.2011 1.1.2011 31.12.2012 31.12.2011 1.1.2011 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000
Group Property, plant and equipment Allowances Fair value adjustment in business combination #
# Relates to deferred taxation on restructuring of the UPA Group pursuant to its Restructuring and Listing Scheme in 1996. 8. Other investments Group and Company 31.12.2012 RM'000 Quoted shares In Malaysia Fair value through prot or loss Market values of quoted investment 9. Inventories Group 31.12.2012 RM'000 Raw materials Work-in-progress Manufactured inventories Printing and other machines held for trading Machine spare parts 23,992 912 8,230 10,396 221 43,751 31.12.2011 RM'000 21,404 771 7,480 10,414 40,069 1.1.2011 RM'000 16,635 1,097 9,896 14,327 41,955 1,550 1,550 144 144 1,252 1,252 31.12.2011 RM'000 1.1.2011 RM'000
Included in inventories are machines of RM1,103,000 (31.12.2011: RM2,531,113, 1.1.2011: RM3,732,992) carried at net realisable value.
42
10.1 Subsidiaries
The amounts due from subsidiaries are unsecured, interest free and repayable on demand.
10.2 Associates
The amounts due from associates are unsecured, interest free and repayable on demand. The balances is net of impairment of RM2,618,000 (31.12.2011: RM2,218,000, 1.1.2011: RM1,000,000).
10.3 Deposits
Included in deposits is RM615,000 paid to acquire agriculture land(Note 28) and RM265,000 to acquire machinery by two subsidiaries. The deposits are net of impairment of Nil (31.12.2011: RM70,000, 1.1.2011: RM70,000). 11. Cash and cash equivalents Group 31.12.2012 RM'000 Cash and bank balances Deposits with licensed banks 21,425 22,000 43,425 31.12.2011 RM'000 16,350 25,000 41,350 1.1.2011 RM'000 16,563 19,000 35,563 31.12.2012 RM'000 1,972 1,972 Company 31.12.2011 RM'000 4,254 5,500 9,754 1.1.2011 RM'000 4,778 4,778
44
13.1 Security
The term loans are secured by way of legal charges over: (i) certain factory building (see Note 3); and (ii) the freehold land classied as investment properties (see Note 6).
72 128 200
65 120 185
99 102 201
93 99 192
Company
31.12.2011 RM'000 1.1.2011 RM'000
675 -
605 -
545 -
14.1 The amount due to a director is unsecured, interest free and repayable on demand. 14.2 The amount due to associates is unsecured, interest free and repayable on demand. 15. Revenue Group 2012 RM'000 Revenue - sale of goods - serving of machineries - commission - dividends - management fees 121,147 1,634 43 10 122,834 124,558 2,362 522 12 20 127,474 2,173 410 2,583 9,918 420 10,338 2011 RM'000 Company 2012 RM'000 2011 RM'000
46
130 17
120 -
44 -
25 -
62 1,908
56 1,976
163
163
18. Finance income Group 2012 RM'000 Interest income of nancial assets that are not at fair value through prot or loss: Deposits with licensed banks 19. Finance costs Group 2012 RM'000 Interest expense of nancial liabilities that are not at fair value through prot or loss: - Term loans - Finance lease liabilities - Trust receipts and bankers acceptances 252 11 377 640 161 9 486 656 2011 RM'000 722 543 128 41 2011 RM'000 Company 2012 RM'000 2011 RM'000
48
Basic earnings per ordinary share is not diluted as there is no potential ordinary share in issue at the end of the reporting period.
Sen per share (net of tax) 2012 Final 2011 ordinary 2011 Final 2010 ordinary 6.0 7.5
After the reporting period, the following dividends were proposed by the Directors. These dividends will be recognised in subsequent nancial period upon approval by the owners of the Company at the forthcoming Annual General Meeting. Sen per share (net of tax) Final 2012 ordinary 23. Operating segments The Group has two segments, as described below, which are the Groups strategic business units. These strategic business units are managed separately due to their differences in terms of products, types of customers and market segments. For each of the strategic business units, the Groups chief operating decision makers reviews internal management reports on a quarterly basis. The following summary describes the operations of each operating segments: (a) Manufacturing (b) Machine trading Manufacturing of paper-based products and plastic products Selling, reconditioning and servicing of printing and printing related machines 6.0 Total amount RM'000 4,658
Other non-reportable segments comprise operations related to the holding of properties and trading of plastic products. Performance is measured based on prot before tax as included in the internal management reports that are reviewed by the Groups chief operating decision makers. Segment prot is used to measure performance as management believes that such information is the most relevant in evaluating the results of these segments relative to other entities that operate in within these industries. Segment assets The total of segment assets is measured based on all assets of a segment, as included in the internal management reports that are reviewed by the Groups chief operating decision makers. Segment liabilities Segment liabilities information is neither included in the internal management reports nor provided regularly to the Groups chief operating decision makers. Hence, no disclosure is made on segment liabilities. Segment capital expenditure Segment capital expenditure is the total cost incurred during the nancial period to acquire property, plant and equipment, and intangible assets other than goodwill.
50
Segment prot/(loss) Included in the measure of segment prot/(loss) are: Revenue from external customers Inter-segment revenue Write down of inventories Impairment of property, plant and equipment Share of prot of associates Depreciation of property, plant and equipment Finance income Finance costs Tax expense Segment assets
Included in the measure of segment assets are: Additions to non-current assets other than nancial instruments and deferred tax assets
4,421
8,174
103
202
4,524
8,376
Reconciliations of reportable segment prot or loss 2012 RM'000 Prot or loss Total prot or loss for reportable segments Other non-reportable segments Elimination of inter-segment (loss)/prot Share of prot of associates not included in reportable segments Consolidated prot before tax 13,905 986 (40) 996 15,847 2011 RM'000 6,997 5,358 177 154 12,686
Reconciliations of reportable segment revenues, assets and other material items Additions to non-current assets RM'000 4,524 3,503 (204) 7,823 8,376 8,376
External revenue RM'000 2012 Total reportable segments Other non-reportable segments Investment in associates Investment properties Elimination of inter-segment transactions or balances Consolidated total 2011 Total reportable segments Other non-reportable segments Investment in associates Investment properties Elimination of inter-segment transactions or balances Consolidated total 122,143 2,821 (2,130) 122,834 126,868 606 127,474
Depreciation RM'000 (6,974) (107) 169 (6,912) (6,704) (106) 152 (6,658)
Segment assets RM'000 183,929 16,390 7,834 18,344 (4,944) 221,553 167,178 17,261 8,435 18,344 (1,141) 210,077
Revenue RM'000
24. Contingencies Group 31.12.2012 31.12.2011 RM'000 RM'000 Guarantee given to a nancial institution in respect of machine sales Corporate guarantee to banks in respect of banking facilities granted to subsidiaries 25. Financial instruments 25.1 Categories of nancial instruments The table below provides an analysis of nancial instruments categorised as follows: (a) Loans and receivables (L&R) (b) Fair value through prot or loss (FVTPL): - Held for trading (HFT) (c) Financial liabilities measured at amortised cost (FL) 1.1.2011 RM'000 Company 31.12.2012 31.12.2011 RM'000 RM'000 1.1.2011 RM'000
1,680
2,880
4,080
107,484
114,538
114,538
52
144 33,311 41,350 74,805 144 4,392 9,754 14,290 (22,076) (8,022) (30,098) (605)
33,311 41,350 74,661 4,392 9,754 14,146 (22,076) (8,022) (30,098) (605)
1,252 38,384 35,563 75,199 1,252 9,388 4,778 15,418 (21,171) (8,263) (29,434) (545)
38,384 35,563 73,947 9,388 4,778 14,166 (21,171) (8,263) (29,434) (545)
Fair value through prot or loss - Held for trading Held to maturity investments - Loans and receivables - Financial liabilities measured at amortised cost
25.3 Financial risk management The Group has exposure to the following risks from nancial instruments: Credit risk Liquidity risk Market risk 25.4 Credit risk Credit risk is the risk of a nancial loss to the Group if a customer or counterparty to a nancial instrument fails to meet its contractual obligations. The Groups exposure to credit risk arises principally from its receivables from customers and investment securities. The Companys exposure to credit risk arise principally from its receivables from subsidiaries and investment securities. Receivables
Risk management objectives, policies and processes for managing the risk
Management has a credit policy in place and the exposure to credit risk is monitored regularly. Credit evaluations are performed on certain customers requiring credit over a certain amount. The Group and the Company does not require collateral in respect of receivables.
54
The credit period granted to trade receivables ranges from 30 to 90 days. Trade receivables are deemed past due when the counterparty failed to make payment when contractually due. Individual impairment is recognised when it is no longer probable that the amount owing from customers will be recoverable. The movements in the allowance for impairment losses of trade receivables were: Group 2012 RM'000 At 1 January Impairment loss recognised Impairment loss reversed Impairment written off At 31 December 1,752 451 (364) (178) 1,661 2011 RM'000 1,990 139 (377) 1,752
The allowance account in respect of trade receivables is used to record impairment losses. Unless the Group is satised that recovery of the amount is possible, the amount considered irrecoverable is written off against the receivable directly.
Impairment losses
As at the end of the reporting period, there was no indication that the advances to the subsidiaries are not recoverable. The Company does not specically monitor the ageing of the advances to the subsidiaries.
Financial guarantees
Impairment losses
At the end of the reporting period, there was no indication that any subsidiary would default on repayment. 25.5 Liquidity risk Liquidity risk is the risk that the Group will not be able to meet its nancial obligations as they fall due. The Groups exposure to liquidity risk arises principally from its various payables and borrowings. The Group maintains a level of cash and cash equivalent and bank facilities deemed adequate by management to ensure, as far as possible, that it will have sufcient liquidity to meet its liabilities when they fall due. It is not expected that the cash ows included in the maturity analysis could occur signicantly earlier, or at signicantly different amounts.
56
Group (RM equivalent) 31.12.2012 Cash and bank balances Other receivables Trade receivables Trust receipts Trade and other payables Net exposure 31.12.2011 Cash and bank balances Trade receivables Trust receipts Trade payables Net exposure
Group (RM equivalent) 1.1.2011 Cash and bank balances Trade receivables Trust receipts Trade payables Net exposure
58
60
2012 RM'000 Associates Dividends Sales of text book Sales of machine Purchases Management fees Other income (1,984) (79) 455 (10) (59)
Related party transactions have been entered into in the normal course of business under normal trade terms. Information regarding outstanding balances arising from related party transactions as at 31 December 2012 is disclosed in Note 10 and Note 14. 27. Subsidiaries in the Group The principal activities of the subsidiaries in the Group and the interest of UPA Corporation Bhd. are as follows: Effective ownership interest Name of Subsidiary UPA Press Sdn. Bhd.* UPA Machinery Sdn. Bhd.* UPA Plastik Sdn. Bhd.@ Macro Plastic Sdn. Bhd.* and its subsidiary: Wangsa Seputih Sdn. Bhd.@ Sukiwa Corporation Sdn. Bhd.@ and its subsidiary: Danau Cekal Sdn. Bhd.@ UPA Products Sdn. Bhd.@ Country Acres Sdn. Bhd. @ * @ # Principal activities Manufacturing of paper products Selling, reconditioning and servicing of printing and printing related machines Marketing of plastic products Manufacturing and trading of plastic products 100 70 100 100 Property investment Dormant Dormant 100 100 100 Property investment Investment holding and property investment 100 100 100 99 99 100 100 95 100 100 95 100
31.12.2012 (%) 31.12.2011 (%) 1.1.2011 (%)
Subsidiary incorporated in Malaysia and audited by KPMG. Subsidiary incorporated in Malaysia and audited by another rm of accountants. Subsidiary incorporated in Thailand and audited by another rm of accountants.
29. Events during the year During the year, the Group wholly-owned subsidiary, Macro Plastic Sdn. Bhd. disposed 125,000 ordinary shares of Macroplas Industries Co. Ltd. (MICL) representing 25% of the issued and paid-up share capital of MICL for a total consideration of RM325,000. Subsequently, MICL has increased its paid-up capital from RM 1,298,750 to RM3,548,750.
30. Events subsequent to reporting date In March 2013, the Group entered into an agreement to dispose of its 35.5% equity interest in The Malaya Press Sdn. Bhd. (TMP) comprising 162,800 ordinary shares of RM1.00 each for a consideration of RM7,099,993. The proceeds from the disposal shall be used for the Group general working capital purpose.
31. Capital management The Groups objective when managing capital is to maintain a strong capital base and safeguard the Groups ability to continue as a going concern, so as to maintain investor, creditor and market condence and to sustain future development of the business. The Directors regard share capital and retained earnings as the Groups capital base and monitor the adequacy of capital on an on-going basis. Under the requirement of Bursa Malaysia Practice Note No. 17/2005, the Company is required to maintain a consolidated shareholders equity equal to or not less than the 25 percent of the issued and paid-up capital (excluding treasury shares) and such shareholders equity is not less than RM40 million. The Company has complied with this requirement. The Directors are not aware of any non-compliance with external capital requirements that may be imposed on the Group or the Company. There were no changes in the Groups approach to capital management during the nancial year.
32. Explanation of transition to MFRSs As stated in Note 1(a), these are the rst nancial statements of the Group and of the Company prepared in accordance with MFRSs. The accounting policies set out in Note 2 have been applied in preparing the nancial statements of the Group and of the Company for the nancial year ended 31 December 2012, the comparative information presented in these nancial statements for the nancial year ended 31 December 2011 and in the preparation of the opening MFRS statement of nancial position at 1 January 2011 (the Groups date of transition to MFRSs). The transition to MFRSs does not have nancial impact to the separate nancial statements of the Company.
62
The determination of realised and unrealised prots is based on the Guidance of Special Matter No.1, Determination of Realised and Unrealised Prots or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, issued by the Malaysian Institute of Accountants on 20 December 2010.
In the opinion of the Directors, the nancial statements set out on pages 21 to 62 are drawn up in accordance with Malaysia Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act, 1965 in Malaysia so as to give a true and fair view of the nancial position of the Group and of the Company as of 31 December 2012 and of their nancial performance and cash ows for the nancial year then ended. In the opinion of the Directors, the information set out in Note 33 on page 63 to the nancial statements has been compiled in accordance with the Guidance on Special Matter No.1, Determination of Realised and Unrealised Prots or Losses in the Context of Disclosures Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, issued by the Malaysian Institute of Accountants, and presented based on the format prescribed by Bursa Malaysia Securities Berhad. Signed on behalf of the Board of Directors in accordance with a resolution of the Directors:
64
I, Wong Kok Wah, the ofcer primarily responsible for the nancial management of UPA Corporation Bhd., do solemnly and sincerely declare that the nancial statements set out on pages 21 to 62 are, to the best of my knowledge and belief, 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 in Kuala Lumpur on 26 April 2013.
Before me:
Report on the Financial Statements We have audited the nancial statements of UPA Corporation Bhd., which comprise the statements of nancial position as at 31 December 2012 of the Group and of the Company, and the statements of prot or loss and other comprehensive income, changes in equity and cash ows of the Group and of the Company for the year then ended, and a summary of signicant accounting policies and other explanatory information, as set out on pages 21 to 62.
Auditors Responsibility
Our responsibility is to express an opinion on these nancial statements based on our audit. We conducted our audit in accordance with approved standards on auditing in Malaysia. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the nancial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the nancial statements. The procedures selected depend on our judgement, including the assessment of risks of material misstatement of the nancial statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the entitys preparation of nancial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entitys internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the nancial statements. We believe that the audit evidence we have obtained is sufcient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the nancial statements give a true and fair view of the nancial position of the Group and the Company as of 31 December 2012 and of its nancial performance and cash ow for the year then ended in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standard and the requirements of the Companies Act, 1965 in Malaysia. Report on Other Legal and Regulatory Requirements In accordance with the requirements of the Companies Act, 1965 in Malaysia, we also report the following: a) In our opinion, the accounting and other records and the registers required by the Act to be kept by the Company and its subsidiaries of which we have acted as auditors have been properly kept in accordance with the provisions of the Act. b) We have considered the accounts and the auditors report of all the subsidiaries of which we have not acted as auditors, which are indicated in Note 27 to the nancial statements. c) We are satised that the accounts of the subsidiaries that have been consolidated with the Companys nancial statements are in form and content appropriate and proper for the purposes of the preparation of the nancial statements of the Group and we have received satisfactory information and explanations required by us for those purposes. d) The audit reports on the accounts of the subsidiaries did not contain any qualication or any adverse comment made under Section 174(3) of the Act.
66
KPMG Firm Number: AF 0758 Chartered Accountants Petaling Jaya, Selangor Date: 26 April 2013
Siew Chin Kiang @ Seow Chin Kiang Approval Number: 2012/11/14(J) Chartered Accountant
Analysis Of Shareholdings
as at 9 May 2013
: : : : RM 100,000,000 RM 79,581,840 (inclusive of 1,950,240 treasury shares) Ordinary share of RM 1.00 each One voting right for each ordinary share
Authorised share capital Issued and fully paid up share capital Class of share Voting right
DISTRIBUTION OF SHAREHOLDERS AS AT 9 MAY 2013 Holdings Less than 100 100 to 1,000 1,001 to 10,000 10,001 to 100,000 100,001to less than 5% of the issued shares 5% and above of the issued shares Total 30 LARGEST SHAREHOLDERS AS AT 9 MAY 2013 Name 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. UPA Holdings Sdn Bhd Mastercraft Products Sdn Bhd EB Nominees (Tempatan) Sdn Bhd - Pledged securities account for Mohamed Zameel Bin Mohamed Hussain Kok Kam Moi CIMSEC Nominees (Tempatan) Sdn Bhd - Pledged securities account for Chu Soong Tau CIMSEC Nominees (Tempatan) Sdn Bhd - Pledged securities account for Raja Nong Chik B. Raja Zainal Abidin Yeo Wee Thow @ Yeo Ngo Tee CIMSEC Nominees (Tempatan) Sdn Bhd - Pledged securities account for Chua Ngeun Lok K.L. Union Trading (Papers) Sdn Bhd Malaysia Nominees (Tempatan) Sendirian Berhad - Great Eastern Life Assurance (Malaysia) Berhad (LPF) Chua Ngeun Lok Abdul Ghani bin Abdul Aziz Chu Soong Tau Lee Seow Chang Lim Seng Heng Lee Mui Kien Chang Ching Chau @ Tew King Chang Ng Seow Sing Quality Synthetics (M) Sdn Bhd No. of share 40,775,089 3,365,296 1,792,500 1,153,572 800,000 785,400 774,900 554,846 524,960 508,320 504,000 500,000 500,000 480,880 443,179 437,148 434,400 420,000 420,000 % 52.52 4.33 2.31 1.49 1.03 1.01 1.00 0.71 0.68 0.65 0.65 0.64 0.64 0.62 0.57 0.56 0.56 0.54 0.54 No. of holders 328 159 1,789 288 59 1 2,624 % 12.50 6.06 68.18 10.98 2.24 0.04 100.00 Total holdings 19,147 87,888 5,826,623 8,137,082 22,785,771 40,775,089 77,631,600 % 0.02 0.11 7.51 10.48 29.36 52.52 100.00
68
SUBSTANTIAL SHAREHOLDER AS AT 9 MAY 2013 (as per Register of Substantial Shareholders) No. of ordinary shares held Direct UPA Holdings Sdn Bhd Kok Kam Moi Chua Ngeun Lok Chua Ngeun Seong Ma Huak Huang 40,775,089 1,153,572 1,058,846* 420,096** 312,535 % 52.52 1.49 1.36 0.54 0.40 Indirect 40,848,589# 42,192,145# 42,590,895# 42,346,274# % 52.62 54.35 54.86 54.55
Name 1. 2. 3. 4. 5.
Note : * ** #
including 554,846 ordinary shares held under CIMSEC Nominees (Tempatan) Sdn Bhd including 218,496 ordinary shares held under Citigroup Nominees (Tempatan) Sdn Bhd Deemed interested by virtue of Section 6A (4) and Section 122 A of the Companies Act, 1965
DIRECTORS' SHAREHOLDING AS AT 9 MAY 2013 (as per Register of Directors' shareholding) No. of ordinary shares held Direct Chua Ah Lak Kok Kam Moi Chua Ngeun Lok Chua Ngeun Seong Ma Huak Huang Yeo Wee Thow @ Yeo Ngo Tee 336,720 1,153,572 1,058,846* 420,096** 312,535 984,900 % 0.43 1.49 1.36 0.54 0.40 1.27 Indirect 131,600## 40,848,589# 42,192,145# 42,590,895# 42,346,274# 1,075,200# % 0.17 52.62 54.35 54.86 54.55 1.39
Name 1. 2. 3. 4. 5. 6.
Note : * ** # ##
including 554,846 ordinary shares held under CIMSEC Nominees (Tempatan) Sdn Bhd including 218,496 ordinary shares held under Citigroup Nominees (Tempatan) Sdn Bhd Deemed interested by virtue of Section 6A (4) and Section 122 A of the Companies Act, 1965 Deemed interested by virtue of Section 122A of the Companies Act, 1965
The analysis of sharholdings is based on the issued and paid up share capital of the company after deducting 1,950,240 ordinary shares bought back by the company and held as Treasury Shares as at 9 May 2013.
Particulars Of Properties
at 31 December 2012
Tenure (expiry of lease) Description of existing use Land Area / built-up area (sq. metres) Date of revaluation /acquisition Estimated Age of Building (years) Net Book Value RM
Proprietor
Location
Lot 27678 Mukim Of Kuala Lumpur, Sdn Bhd Wilayah Persekutuan Lot 27678, Simpang Salak South Industrial Area, Batu 5 1/2, Jalan Sungai Besi, Kuala Lumpur. Building Land Factory and 3 storey Ofce Building -/7,000 10,049/20-4-1996/20-4-1996/39 1,627,143 2,338,584
Leasehold 20- Land on which a 4-2071 factory and 3 storey ofce building was built Leasehold 3 storey shop-lot 11-11-2076 and ofce building
P.T. No 19514 Mukim Of Petaling. Wilayah Persekutuan 52, Jalan Mega Mandung, Batu 5, Jalan Kelang Lama, Kuala Lumpur No. 12-1A Jalan 3/116B, Kuchai Enterpreneurs Park Off Jalan Kuchai Lama, Kuala Lumpur P.T. No 3473 Mukim Of Petaling, Selangor. Lot 3, Jalan 6/1, Seri Kembangan Industrial Estate Seri Kembangan Selangor Darul Ehsan. ( Building only ) HS (D) 62387 Lot 8228 Mukim Of Petaling, Daerah Kuala Lumpur Wilayah Persekutuan. HS (D) 381 PT28165, Mukim Of Kuala Lumpur, Daerah Kuala Lumpur Wilayah Persekutuan. P.T. No 3473 Mukim Of Petaling, Selangor. Lot 3, Jalan 6/1, Seri Kembangan Industrial Estate, Seri Kembangan, Selangor Darul Ehsan. ( Land Only ) Lot 5811 Mukim Of Petaling, Selangor. Lot 5813 Mukim Of Petaling, Selangor. HS (M) 13714 P.T. No 3746 Mukim Of Petaling, Selangor. Building
126/388
20-4-1996/-
34
582,779
Freehold
One unit of apartment for staff accommodation. Factory for manufacturing of plastic products
-/87
20-4-1996/-
23
52,888
Leasehold 10-1-2089
-/9,000
20-4-1996/-
18
5,766,807
Ofce -/1,486 Leasehold Land on which a 2 11-11-2065 storey factory and ofce building was built 10,445/ 8,500 20-4-1996/-/2005 14 43 998,000 8,242,919
-/2005
19
5,665,549
Leasehold 10-1-2089
16,214/-
20-4-1996/-
4,020,389
Sukiwa Corporation Sdn Bhd Danau Cekal Sdn Bhd UPA Machinery Sdn Bhd
Freehold
Vacant Land
30,882/-
30-04-2009/-
10,969,000
20,764/10,302/-
30-04-2009/12-12-2005/-
7.375,000 4,461,578
Factory
-/5,000
26-11-2008
4,105,340
70
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Proxy Form
CDS Account No.: Number of shares held:
I/We............................................................................................................................................................................................................................................................................................................................................................................................................... of ................................................................................................................................................................................................................................................................................................................................................................................................................ being a *member/ members of UPA CORPORATION BHD, hereby appoint ......................................................................................................................................................................................................
.............................................................................................................................................................................................................................................................................................................................................................................................................................................
of .......................................................................................................................................................................................................................................................................................................................................................................................... and/or failing him/ her, ................................................................................................................................................................................................................................................................................................................................................................. of ........................................................................................................................................................................................................................................................................................................................................................................................................... or the Chairman of the Meeting as *my/ our proxy to attend and vote for *me/ us on *my/ our behalf at the Seventeenth Annual General Meeting of the Company to be held at Congress I, Palace of the Golden Horses, Jalan Kuda Emas, MINES Resort City, 43300 Seri Kembangan, Selangor Darul Ehsan on Friday, 28 June 2013 at 11:30 a.m. and at any adjournment thereof:No. 1. 2. 3. 4. 5. 6. 7. 8. Resolutions Declaration of First and Final Dividend Payment of Directors Fees Re-appointment of Mr. Ma Huak Huang as Director Re-election of Mr. Chua Ngeun Seong as Director Re-appointment of Auditors and authorising Directors to x their remuneration Proposed retention of Mr. Yeo Wee Thow @ Yeo Ngo Tee as Independent Director Authority to issue shares pursuant to Section 132D Proposed Renewal of Share Buy-Back Authority For Against
The proportion of *my/our holding to be represented by my/our *proxy/proxies are as follows: First Named Proxy % Second Named Proxy % 100% In case of a vote taken by show of hands, the rst named proxy shall vote on *my/our behalf.
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Signature of Shareholder Telephone No. .................................................................................................................. Dated this....................................................................... day of June 2013
NOTES: i. ii. iii. iv. v. vi. vii. A member entitled to attend and vote at this meeting is entitled to appoint a proxy to attend and to vote in his stead. There shall be no restriction as to the qualication of the proxy. The instrument appointing a proxy shall be in writing signed by the appointor or his attorney duly authorised in writing, or if the appointor is a corporation, either under its common seal or signed by an ofcer or attorney duly authorised. Where the member of the Company appoints two (2) proxies, the appointment shall be invalid unless the member species the proportion of his shareholding to be represented by each proxy. Only members registered in the Record of Depositors as at 21 June 2013 shall be eligible to attend, speak and vote at this meeting or appoint proxy to attend and vote for his/her behalf. Where the member of the Company is an authorised nominee as dened under the Securities Industry (Central Depositories) Act 1991, it may appoint at least one (1) proxy in respect of each securities account it holds. Shareholders attention is hereby drawn to the Main Market Listing Requirements of the Bursa Malaysia Securities Berhad, which allows a member of the Company which is an exempt authorised nominee, as dened under the Securities Industry (Central Depositories) Act, 1991, who holds ordinary shares in the Company for multiple benecial owners in one securities amount (omnibus account) to appoint multiple proxies in respect of each omnibus account it holds. The instrument appointing the proxy and the power of attorney or other authority, if any, under which it is signed or a notarially certied copy thereof must be deposited at the Registered Ofce of the Company at Lot 10, The Highway Centre, Jalan 51/205, 46050 Petaling Jaya, Selangor Darul Ehsan not less than forty-eight (48) hours before the time appointed for holding the meeting or adjourned meeting.
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Lot 10, The Highway Centre Jalan 51/205 46050 Petaling Jaya Selangor Darul Ehsan