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T a k a s o R e s o u r c e s B e r h a d 4 4 0 5 0 3 - K A n n u a l R e p o r t 2 0 1 1
Contents2 Notice of Annual General Meeting
4 Statement Accompanying The Notice OfFourteenth Annual General Meeting
5 Corporate Information
6 Corporate Structure
7 Five Year Financial Highlights 8 Board of Directors
11 Additional Compliance Information
14 Audit Committee Report
18 Statement On Corporate Governance
24 Statement Of Internal Control
26 Directors Responsibility Statement
27 Executive Chairmans Statement
30 Export Markets
31 Financial Statements
112 List of Properties
113 Analysis of Shareholdings
116 Analysis Of Warrant A (Takaso-WA) Holdings
118 Analysis Of Warrant B (Takaso-WB) Holdings
Proxy Form
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2
the Company and the approvals of the relevant regulatory authorities, the Directors
be and are hereby empowered pursuant to Section 132D of the Companies Act,
1965, to issue new ordinary shares of RM0.25 each in the Company from time
to time and upon such terms and conditions to such persons and for such
purposes as the Directors may deem fit PROVIDED THAT the aggregate number of
new ordinary shares to be issued pursuant to this resolution does not exceed ten
percent (10%) of the total issued share capital of the Company and that such
authority shall unless revoked or varied by an ordinary resolution by the shareholders
of the Company in general meeting, commence upon the passing of this resolution
until the conclusion of the next annual genera l meeting of the Company
AND THAT the Directors are further authorised to do all such things and uponsuch terms and conditions as the Directors may deem fit and expedient in the
best interest of the Company to give effect to the issuance of new ordinary shares
under this resolution including making such applications to Bursa Malaysia
Securities Berhad for the listing of and quotation for the new ordinary shares to
be issued pursuant to this resolution. (Ordinary Resolution 6)
(Please refer Explanatory Note 2)
7. To transact any other ordinary business where due notice has been given in
accordance with the Companies Act, 1965.
By order of the Board,
TAN BEE HWEE (MAICSA 7021024)
LAM SOOK CHING (MAICSA 7006942)
Secretaries
Melaka
29 November 2011
Notice of Annual General Meeting
NOTICE IS HEREBY GIVEN THAT the Forteenth Annal General Meeting of the Company will be held at the Registered Office of
the Company at K55 Jalan Kesang, Kawasan Perindstrian Tanjng Agas, 84000 Ledang, Johor Darl Taim on Wednesday, 21
December 2011, at 2.30 p.m. for the following prposes:-
AGENDA
AS ORDINARY BuSINESS:-
1. To receive the Audited Financial Statements of the Company and of the Group for
the financial year ended 31 July 2011 together with the Directors and Auditors
Reports thereon. (Please refer Explanatory Note 1)
2. To approve the payment of Directors fees of RM62,000 for the financial year
ended 31 July 2011. (Ordinary Resolution 1)
3. To approve the payment of Directors fees of not exceeding RM150,000 for thefinancial year ending 31 July 2012. (Ordinary Resolution 2)
4. To re-elect the following Directors who retire in accordance with Article 92 and
Article 98 of the Companys Articles of Association and being eligible, offered
themselves for re-election:-
(i) Tee Tze Chern, JP (Article 92) (Ordinary Resolution 3)
(ii) Wong Koon Wai (Article 98) (Ordinary Resolution 4)
5. To re-appoint Messrs. BDO as Auditors of the Company for the financial year
ending 31 July 2012 and to authorise the Board of Directors to fix their
remuneration. (Ordinary Resolution 5)
AS SPECIAL BuSINESS:-
To consider and if thought fit, to pass the following resolution with or without
modifications as an Ordinary Resolution:-
6. Proposed Issance of New Ordinary Shares of RM0.25 Each Prsant to Section
132D of the Companies Act, 1965
THAT subject always to the Companies Act, 1965, the Articles of Association of
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NOTES:
1. A member of the Company who is entitled to attend and vote at the meeting is
entitled to appoint more than two (2) proxies to attend and vote instead of him/
her. Where a member appoints two (2) or more proxies, the appointment shall be
invalid unless he/she specifies the proportion of his/her shareholdings to be
represented by each proxy. A proxy may but need not be a member of the
Company and a member may appoint any person to be his/her proxy without
limitation and the provisions of Section 149(1)(a),(b),(c) and (d) of the Companies
Act, 1965 shall not apply to the Company.
2. Where a member is an authorised nominee, it may appoint more than one (1)
proxy in respect of each securities account it holds with ordinary shares of the
Company standing to the credit of the said securities account.
3. The instrument appointing a proxy shall be in writing by the appointor or an
attorney duly authorised in writing or, if the appointor is a corporation, whetherunder its seal or by an officer or attorney duly authorised.
4. The instrument appointing a proxy and the power of attorney or other authority, if
any, under which it is signed or a notarially certified copy of that power or
authority shall be deposited at the Registered Office of the Company at K55 Jalan
Kesang, Kawasan Perindustrian Tanjung Agas, 84000 Ledang, Johor Darul Tazim
not less than forty-eight (48) hours before the time for holding the meeting or at
any adjournment thereof.
5. In respect of deposited securities, only members whose names appear in the
Record of Depositors on 14 December 2011 (General Meeting Record of
Depositors) shall be eligible to attend the meeting.
ExPLANATORY NOTES ON ORDINARY AND SPECIAL BuSINESS:-
1. Item 1 of the Agenda
This Agenda item is meant for discussion only as the provision of Section 169(1)of the Companies Act, 1965 does not require a formal approval of the shareholders
for the Audited Financial Statements. Hence, this Agenda item is not put forward
for voting.
2. Item 6 of the Agenda
Ordinary Resolution 6 proposed under item 6 of the Agenda is for the purpose of
granting a renewal of a general mandate and if passed, will give the Directors
authority to issue and allot new ordinary shares of up to an amount not exceeding
ten percent (10%) of the issued share capital of the Company for such purposes
as the Directors would consider to be in the best interest of the Company. This
authority will commence from the date of this Annual General Meeting and, unless
earlier revoked or varied by the shareholders of the Company at a subsequent
general meeting, will expire at the next annual general meeting of the Company.
The mandate will provide flexibility to the Company for the allotment of shares not
exceeding ten percent (10%) of its existing paid-up share capital to raise funds
for future investments, acquisitions and/or working capital requirements.
As at the date of this Notice, no new shares have been issued pursuant to the
mandate obtained at the last Annual General Meeting of the Company held on 27
December 2010.
2011 ANNuAL REPORT OF THE COMPANY:
The 2011 Annual Report of the Company is in CD-ROM format. A printed copy of theAnnual Report shall be provided to the shareholders within four (4) market days from
the date of receipt of the verbal or written request. Shareholders who wish to receive
the printed copy of the Annual Report and who require assistance with viewing the
CD-ROM, kindly contact Ms. Lily Tee at Tel. No. 06-9510988 or fax the request form
for a printed copy of Annual Report at Fax No. 06-9516333 or send the request form
to K55 Jalan Kesang, Kawasan Perindustrian Tanjung Agas, 84000 Ledang, Johor Darul
Tazim. You may also e-mail your request to lily_tee@takaso.com for a printed copy of
the Annual Report.
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Statement Accompanying The Notice Of FourteenthAnnual General Meeting1. Details of Directors Standing for Re-Election and Re-Appointment
Details of the Directors who are retiring and standing for re-election at the Fourteenth Annual General Meeting of the Company are set out in the Directors profile appearing
on pages 8 to 10 of this Annual Report.
2. Directors Standing for Re-election and Re-appointment
a. Tee Tze Chern, JP (Article 92)
b. Wong Koon Wai (Article 98)
3. Details of Attendance of Directors at Board Meetings
A total of six (6) Board of Directors Meetings were held during the financial year ended 31 July 2011, details of Directors attendance at Board meetings are set out in
the Corporate Governance Statements appearing on page 11 of this Annual Report.
4. Date, Time and Place of the Annal General Meeting
Date : Wednesday, 21 December 2011
Time : 2.30 p.m.
Place : The Registered Office of the Company
K55 Jalan Kesang
Kawasan Perindustrian Tanjung Agas
84000 Ledang, Johor Darul Tazim
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T a k a s o R e s o u r c e s B e r h a d 4 4 0 5 0 3 - K A n n u a l R e p o r t 2 0 1 1
Corporate Information
REMuNERATION COMMITTEE
Chairman
Tee Te Chern, JPMember
Tan Ooi Jin
Wong Koon Wai
REGISTERED OFFICE AND
PRINCIPAL PLACE OF BuSINESS
K55 Jalan Kesang
Kawasan Perindustrian Tanjung Agas
84000 Ledang, Johor Darul Tazim
Tel : +606 9510 988
Fax : +606 9516 333
Email : takaso@takaso.com
SHARE REGISTRAR
Symphony Share Registrars Sdn Bhd
Level 6 Symphony House
Block D13 Pusat Dagangan Dana 1
Jalan PJU 1A/46, 47301 Petaling Jaya
Selangor Darul Ehsan
Tel : +603 7841 8000
Fax : +603 7841 8151
COMPANY SECRETARIES
Teo Soon Mei (MAICSA 7018590)(Resigned w.e.f. 15.04.2011)
Tan Bee Hwee (MAICSA 7021024)(Appointed w.e.f. 15.04.2011)
Lam Sook Ching (MAICSA 7006942)(Appointed w.e.f. 15.04.2011)
BOARD OF DIRECTORS
Dato Tee How Ct, PIS, DPTJ
Chairman(Resigned w.e.f. 14.12.2010)
Tee Te Chern, JP
Executive Chairman(Re-designated as Executive Chairman w.e.f. 27.12.2010)
Chin Boon Kim
Executive Director(Appointed w.e.f. 23.09.2010)
Tnk Makhlad Bin Tnk Mohamed Jamil
Independent Non-Executive Director
Tan Ooi Jin
Independent Non-Executive Director(Appointed w.e.f. 14.09.2010)
Ale Ng Khang Hi
Independent Non-Executive Director(Resigned w.e.f. 28.09.2010)
To Peng Koon
Independent Non-Executive Director(Resigned w.e.f. 08.06.2011)
Wong Koon Wai
Independent Non-Executive Director(Appointed w.e.f. 29.06.2011)
AuDIT COMMITTEE
Chairman
Wong Koon Wai
MemberTnk Makhlad Bin Tnk Mohamed Jamil
Tan Ooi Jin
NOMINATION COMMITTEE
Chairman
Tnk Makhlad Bin Tnk Mohamed Jamil
Member
Tan Ooi Jin
Wong Koon Wai
AuDITORS
BDO (AF0206)
Chartered AccountantsSuite 18-04, Level 18 Menara MAA
No. 15 Jalan Dato Abdullah Tahir
80300 Johor Bahru, Johor Darul Tazim
Tel : +607 331 9815
Fax : +607 331 9817
PRINCIPAL BANKERS
HSBC Bank Malaysia Berhad
Malayan Banking Berhad
CIMB Bank Berhad
STOCK ExCHANGE LISTINGMain Market Consumer Products
Bursa Malaysia Securities Berhad
Stock Name and Stock Code : TAKASO (7071)
: TAKASO-WA (7071WA)
: TAKASO-WB (7071WB)(Listed on the Malaysian stock exchange since 1999)
WEBSITE
www.takaso.com
INVESTOR RELATIONS
Mr. Tee Tze Chern, JP
(Executive Chairman)
Tel : +606 9510 988
Fax : +606 9516 333
Email : francis_tee@takaso.com
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Corporate Structure
TAKASO MARKETING SDN. BHD.(Company No. 413226-A)
TAKASO RuBBER PRODuCTS SDN. BHD.(Company No. 87327-V)
Manufacturing of rubber products and baby products and trading in babyaccessories, apparels and milk powder.
100%
100%100%
100%
100%
100%
A pioneer manufacturer and exporter of condomsand babycare accessories such as baby feedingbottle, soothers and teats in Malaysia.
JAPLO HEALTHCARE SDN. BHD.(Company No. 499674-H)
Distributing and retailing of baby products.
Dormant.
Dormant.
Trading of industrial cable support system
Marketing of rubber products and baby products.
TAKASO INTERNATIONAL SDN. BHD.(Formerly known as Secret Universal Sdn. Bhd.)
(Company No. 961749-X)
TAKASO TRADING SDN. BHD.(Formerly known as Romantic Family Planning Sdn. Bhd.)
(Company No. 499673-M)
TAKASO INDuSTRIES PTE. LTD.(Company Registration No. 201133079-W)
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7
Five Year Financial Highlights
07
19
,045
16
,844
08 09 10 11
Revenue(RM000)
0
6
12
18
24
30
36
28
,157
24
,523
21
,886
07
(1
,536)
(2
,163)
08 09 10 11
Loss Before Tax(RM000)
(4
,116)
(709) (
2,5
83)
07 08 09 10 11
Loss For TheFinancial Year(RM000)
07
0.
32
0.2
7
08 09 10 11
Net Tangible AssetsPer Share(RM)
0.
43
0.
41
0.
35
07 08 09 10 11
Net Loss Per ShareRM (Sen)
(1
,536)
(2
,163)
(3
,984)
(931) (
2,4
77)
(3
.73)
(5
.25)
(9
.67)
(2
.26)
(6
.01)
-20
-15
-10
-5
0
-20
-15
-10
-5
0
0
0.1
0.2
0.3
0.4
0.5
0.6
-50
-40
-30
-20
-10
0
2007 2008 2009 2010 2011
Revenue RM000 28,157 24,523 21,886 19,045 16,844
Loss Before Tax RM000 (4,166) (709) (2,583) (1,536) (2,163)
Net Loss For The Financial Year RM000 (3,984) (931) (2,477) (1,536) (2,163)
Net Tangible Assets Per Share RM 0.43 0.41 0.35 0.32 0.27
Net Loss Per Share RM(sen) (9.67) (2.26) (6.01) (3.73) (5.25)
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Board of Directors
TEE TzE CHERN, JP
Aged 46, Malaysian
Executive Chairman, Chairman of
Remuneration Committee
Mr. Tee Tze Chern, JP was appointed to
the Board as the Managing Director on 22
December 1998 and was re-designated as
Executive Chairman on 27 December
2010 following the resignation of Dato
Tee How Cut as Chairman of the Board of
Directors on 14 December 2010. Mr. Tee
is also Chairman of the RemunerationCommittee of the Company.
Mr. Tee graduated from the Rubber
Research Institute with a Diploma in
1992. He has been a member of the
Association of Overseas Technical
Scholarship Malaysia since 1990 and a
member of the Malaysian Institute of
Management since 1992. He has over 19
years of experience in the baby products
and condom industry. He has previously
been invited to sit in SIRIMs Technical
Committee on Standard Specificationsunder the ISO division in mechanical
contraceptive in 1990.
Mr. Tee Tze Chern, JP sits on the board
of several private limited companies.
Trainings attended by Mr. Tee during the
financial year ended 31 July 2011 are as
follows:-
- Sustainability Program for Corporate
Malaysia.
- Seminar Hari Harta Intelek Negara2011.
- Marketing and Branding Conference
2011.
CHIN BOON KIM
Aged 38, Malaysian
Executive Director
Mr. Chin Boon Kim was appointed to the
Board as the Executive Director on 23
September 2010. After completing his
secondary education, he began his career
with Eli Trading Co. in 1992 and his last
posting before leaving the company was
as the Operations Manager overseeing to
Eli Tradings operations and logistics.During his tenure with Eli Trading, he
contributed to the companys expansion
and was in charge of its new branch
office.
Mr. Chin started his own company in
2001 specialising in total nationwide end-
to-end logistics solutions from transportation
to manpower and warehousing and he
brings with him a wealth of operational
and management experience with a vast
networking resources in its related
industries.
He does not hold any other directorships
in public companies.
Trainings attended by Mr. Chin during the
financial year ended 31 July 2011 are asfollows:-
- Mandatory Accreditation Programme for
Directors of Public Listed Companies
conducted by Bursatra Sdn. Bhd.
- Half-day Program on the Corporate
Governance Guide: Towards Boardroom
Excellence in Mandarin.
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TuNKu MAKHLAD BIN
TuNKu MOHAMED JAMIL
Aged 66, Malaysian
Independent Non-Executive Director
Member of Audit Committee and
Chairman of Nomination Committee
Tunku Makhlad Bin Tunku Mohamed
Jamil was appointed to the Board as an
Independent Non-Executive Director on
11 February 2010. He is a member of
the Companys Audit Committee and
Chairman of the Nomination Committee.
Tunku Makhlad is a Graduate member ofthe Chartered Institute of Transport. He
has a diploma in Automobile Engineering
in Association with The Institute of Road
Transport Engineers, London (U.K.) and a
post-diploma in Transport Management
from the Willesden College of Technology,
London (U.K.).
Tunku Makhlad was a Production Executive
attached to the Associated Motor Industry
Sdn. Bhd. of the Sime Darby Group from
1976 till 1981 before joining MalaysiaAirlines Berhad (MAS) as Transport
Administrator in 1981. He was promoted
to the post of Transport Controller from
1994 until his resignation from MAS in
2000. His last employment was with
Jimah Energy Venture Sdn. Bhd. as the
Senior Executive overseeing to Public
Relations and Protocol at the Jimah Power
TAN OOI JIN
Aged 36, Malaysian
Independent Non-Executive Director
Member of Audit Committee, Nomination
Committee and Remuneration Committee
Mr. Tan Ooi Jin was appointed to the
Board as an Independent Non-Executive
Director on 14 September 2010. He is a
member o f the Company s Aud i t
Committee, Nomination Committee and
Remuneration Committee.
A former ASEAN scholar, he holds a LL.B.(Honours) from the University of Newcastle-
upon-Tyne, UK. He completed his
certificate in legal practice in 2002 and
was called to the Bar in November 2003.
He has been a member of the Bar Council
of Malaysia since 2003.
Mr. Tan is currently a partner of Messrs.
Feroz & Co., a legal entity that specialises
in corporate, commercial, cross-border
transactions and ICT matters. He started
his legal career in a medium-sized firmwith an international affiliation focusing
Plant in Port Dickson, Negeri Sembilan
prior to his retirement in December
2010.
He does not hold any other directorships
in public companies.
Training attended by Tunku Makhladduring the financial year ended 31 July
2011 is as follows:-
- What Directors Should Know about the
Investor Mindset
on corporate and ICT matters. He left the
firm as a partner. While there, Mr. Tan
gained recognition and was listed in the
independent publication Asia Pacific
Legal 500 in three practice areas in
2 0 0 8 w h i c h i n c l u d e d I T a n d
telecommunications. He also advises the
Technopreneurs Association of Malaysiaand its members on legal issues.
Mr. Tan has been involved in the listing
of various companies in Malaysia, London
and Hong Kong and is familiar with the
rules and requirements of regulators. He
currently sits on the Board of Tejari
Technologies Berhad and The Media
Shoppe Berhad as well as a private
company involved in circuit manufacturing
and whose ultimate holding company is
listed on the NASDAQ, New York, America.
Training attended by Mr. Tan during the
financial year ended 31 July 2011 is as
follows:-
- Sustainability Program for Corporate
Malaysia
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Notes:-
FAMILY RELATIONSHIP
Mr. Tee Tze Chern, JP and Ms. Lily Tee are siblings. Ms. Lily Tee sits on the Board
of the following subsidiaries of the Company alongside Mr. Tee Tze Chern:-
- Takaso Rubber Products Sdn. Bhd.
- Takaso Marketing Sdn. Bhd.
- Japlo Healthcare Sdn. Bhd.
Save as disclosed above, none of the other Directors of the Company has any
relationship with any directors or substantial shareholders of the Company.
CONFLICT OF INTEREST
None of the Directors have any conflict of interest with the Company.
CONVICTION OF OFFENCES
A fine of RM100,000.00 was imposed by the Securities Commission (SC) on the
following persons for failure to comply with all the relevant requirements relating to the
mandatory offer pursuant to Practice Note 2.9.7 of the Malaysian Code on Take-Overs
and Mergers 1998 (the Code):-
a) Dato Tee How Cut, PIS, DPTJ (the former Chairman of the Company);
b) Mr. Tee Tze Chern, JP (the Executive Chairman of the Company);
c) Datin Teo Beng Ha (a former Director of the Company);
d) Madam Tee Bee Leng, PJK (a former Director of the Company); and
e) Parties acting in concert with it.
SC had on 22 December 2006 filed a civil suit against Up & Famous Sdn. Bhd.
(UFSB), the former substantial shareholder of the Company, and parties acting in
concert with it (hereinafter referred to as the Defendants) in KL High Court Originating
Motion on D1-25-27-2006, Suruhanjaya Sekuriti v Up & Famous Sdn Bhd & 6 others.
The Kuala Lumpur High Court made the following Orders on 7 August 2009:-
(i) Within 21 days of being ordered to do so, each of the Defendants, whether by
themselves or by their servants or agents, circulate the offer and compensation
Board of Directors (continued)
WONG KOON WAI
Aged 36, Malaysian
Independent Non-Executive Director
Chairman of Audit Committee, Member
of Nomination Committee and
Remuneration Committee
Mr. Wong Koon Wai was appointed to the
Board as an Independent Non-Executive
Director on 29 June 2011. He is Chairman
of the Companys Audit Committee and a
member of both the Nomination Committee
and Remuneration Committee of the
Company.
Mr. Wong Koon Wai graduated from the
Royal Melbourne Institute of Technology
(RMIT) University in Melbourne, Australia
in 1999 with a Bachelor of Business
(majoring in Accountancy). He is a
member of the Malaysian Institute of
Accountants (MIA) and CPA Australia.
He began his career in audit and assurance
in 2000. In 2003, he joined Crowe
Horwath and was promoted to Senior
Manager in 2008. During his eight (8)
years service with Crowe Horwath, he was
involved in the audit and assurance service
for a wide range of industries. He was
also involved in special audits, listingexercises, mergers and acquisitions as
well as fund-raising exercises. He is
currently the financial controller of a
private company.
He does not hold any other directorships
in public companies.
Following his appointment to the Board
on 29 June 2011 till the end of the
financial year, Mr. Wong did not attend
any training but has registered himself forthe Mandatory Accreditation Programme
for Directors of Public Listed Companies
conducted by Bursatra Sdn. Bhd.
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documents in the form of Exhibit A15 attached to the Affidavit affirmed by Md
Noor Bin Abd Rahim and filed in support of the Motion dated 21 December 2006
(subject to updating of current information) to all the shareholders of TRB;
(ii) Within 21 days of the deadline imposed in the said offer and compensation
document, the Defendants pay the respective portions to all the shareholders of
TRB who are entitled to receive proceeds of the compensation scheme as listed
in Exhibit A22 attached to the Affidavit affirmed by the said Md Noor Bin Abd
Rahim;
(iii) In the event any Defendant fails to comply with the Orders referred to in
Paragraphs (i) and (ii) above within the specified period, SC be entitled to take
execution proceedings under the Rules of the High Court, 1980, and/or seek leave
of this Honourable Court to punish such Defendant for contempt of Court for
failure to comply with orders of the Court.
(iv) The costs of these proceedings shall be borne by the Defendants on the normal
basis and such costs to be taxed.
Pursuant to the Order of Kuala Lumpur High Court made on 7 August 2009, UFSB,
on behalf of itself and the parties acting in concert with it, circulated the Offer and
Compensation Document in accordance with Paragraph 1 of the court order made on
28 August 2009 to all the shareholders of the Company.
UFSB had on 18 November 2009 and 19 November 2009 respectively to complete the
acquisition of 4,500 TRB shares at the price of RM1.06 per share from the qualified
shareholders of TRB pursuant to the Restricted Unconditional Mandatory offer by UFSB
to qualified shareholders of TRB.
Other than as disclosed, none of the other Directors of the Company have been convicted
of any offences within the past ten (10) years other than traffic offences, if any.
Sanctions and/or Penalties
There were no sanctions and/or penalties imposed on the Group and its subsidiaries,
Directors or management by any regulatory bodies other than those disclosed in the
conviction of offences.
Shareholding in the Company and Sbsidiaries of the Company.
The direct and indirect interest in securities in the Company and subsidiaries of the
Company of those who are directors of the Company according to the Register of
Directors shareholdings are set out on page 114 of this Annual Report.
Board Meetings
A total of six (6) Board Meetings were held during the financial year ended 31 July
2011 and the attendance of each Director is as follows:-
Total no. of Meetingsheld dring Directors
Board Member tenre in office Meetings Attended_______________________________________________________________________________
Dato Tee How Ct, PIS, DPTJ 3 3(Resigned w.e.f. 14.12.2010)
Tee Te Chern JP 6 5(Re-designated as Executive Chairman w.e.f. 27.12.2010)
Ale Ng Khang Hi 2 2(Resigned w.e.f. 28.09.2010)
To Peng Koon 5 5(Resigned w.e.f. 08.06.2011)
Tnk Makhlad Bin Tnk Mohamed Jamil 6 6
Chin Boon Kim 4 3(Appointed w.e.f. 23.09.2010)
Tan Ooi Jin 5 5(Appointed w.e.f. 14.09.2010)
Wong Koon Wai 1 1(Appointed w.e.f. 29.06.2011)_______________________________________________________________________________
Additional ComplianceInformation
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Material Contracts
There were no material contracts entered into by the Company and its subsidiaries
involving Directors and major shareholders interests still subsisting at the end of the
financial year.
Options, Warrants or Convertible Secrities
No options were issued by the Company or exercised during the financial year ended
31 July 2011.
The Company had issued a total of 5,883,992 Existing Warrants at an exercise price
of RM1.00 and as at its financial year end on 31 July 2011, none of the Existing
Warrants were exercised and 5,883,992 Existing Warrants were outstanding.
Subsequent to the Companys financial year end, the number of Existing Warrants, also
referred to as TAKASO-WA, was on 11 August 2011 adjusted to 6,529,131 at anexercise price of RM0.89 in consequent to the Rights Issue of Shares with Warrants
Exercise, more information found under Utilisation of Proceeds.
Recrrent Related Party Transaction of a Revene Natre
There were no material recurrent related party transaction of a revenue during the
financial year other than those disclosed in Note 28 to the financial statements.
Share By-Backs
The Company does not have a share buy-back programme in place.
Depository Receipt
During the financial year, the Company did not sponsor any depository receiptprogramme.
Profit Garantee
During the financial year, the Company did not provide any profit guarantee.
Variation of Reslts
There were no profit estimates, forecasts or projections or unaudited financial results
released by the Company which differed by ten percent (10%) or more from the audited
results for the financial year ended 31 July 2011.
utilisation of Proceeds
Rights Issue - 21 November 2003
A revision in the utilisation of proceeds arising from the rights issue of 5,884,000 new
TRB Shares with 5,884,000 free detachable warrants at an issue price of RM1.00 per
share has been duly passed and approved at the Extraordinary General Meeting held on
27 December 2004.
The construction of two (2) units of logistics warehouses at Tangkak, Johor costing
RM2.2 million has been revised to central region of Peninsular Malaysia. The Board ofDirectors of the Company has approved a further extension of the timeframe for
utilisation of the abovesaid proceeds until the Company can identify a suitable
warehouse located at central region of Peninsular Malaysia.
As at the financial year end on 31 July 2011, management has yet to identify a
suitable warehouse that meets the Groups current operational needs.
Rights Issue - 13 September 2011
The Company had embarked on a Rights Issue of Shares with Warrants which was
completed on 13 September 2011 following the listing and quotation for 94,033,811
Rights Shares of RM0.25 each together with 56,420,285 Warrants (these new warrants
are known as TAKASO-WB) on the Main Market of Bursa Securities Berhad on 13September 2011 (Rights Issue of Shares with Warrants Exercise). The said Rights
Issue of Shares with Warrants Exercise was approved at the Companys Extraordinary
General Meeting held on 28 April 2010.
Total proceeds raised from the Rights Issue of Shares with Warrants Exercise was
RM32.912 million and will be utilised as follows:-
Additional Compliance Information (continued)
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Manner of Utilisation RM (000)_______________________________________________________________________________
As Working Capital
- Overseas expansion 6,500- Operating expenses 11,312
- New business investment 9,500_________
27,312
Capital Expenditure 3,000
Repayment of borrowings 2,000
Expenses in relation to the Rights Issue of Shares with Warrants Exercise 600
_________
32,912__________________
Non-Adit Fees
The amount of non-audit fees paid to external auditors by the Group for the financial
year ended 31 July 2011 was RM18,000.
Corporate Social Responsibility (CSR)
The Group is committed to operate its business in a socially responsible manner
towards its employees, the wider environment, the community and the marketplace. The
following are the Groups CSR activities conducted during the financial year ended 31
July 2011:-
1) CSR in the Community
Every year in the month of March, this year being of no exception, the Group had
organised an annual blood donation campaign in collaboration with the local
Hospital Pakar Sultanah Fatimah, Muar, to boost the nations blood bank. This
yearly effort has been recognised by the Hospital and it is hoped the annualcampaign can help to foster awareness of the spirit of love, care and giving to the
community.
The Groups continued efforts to reach out to the community include supporting and
sponsoring the following programmes:-
a) Being the main sponsor for the HIV/AIDS Awareness campaign held at Dataran
Pahlawan, Melaka Megamall for the CSR Month.
b) Sponsoring the I care, do you? Health Awareness Campaign organised by the
First Aid Society of Universiti Tunku Abdul Rahman Perak Campus.
c) Supply of food aid to children welfare homes.
d) Supply of diapers to old folks public nursing homes.
2) CSR at the Workplace
Safety is our priority at work. The on-going in-house safety training is conducted for
all our employees. The Health and Safety Audit Committee performs on-going fire
hazard internal audit at every six (6) monthly intervals in our factory.
In addition, management constantly conducts various structural training and
coaching sessions to improve and upgrade the level of our employees knowledge
and competency at work.
3) CSR towards the Environment
The Groups current pursuit is to ensure that all residual schedule wastes are
properly stored and disposed of in accordance with the Akta Alam Sekeliling (1974)
(Malaysia) to reduce environment contamination. The Group also promotes
environmentally conscious work practices and our internal policy dictates strict
compliance to the environment regulations.
4) CSR in the Marketplace
The Group believes that in order to achieve sustainable business interests and to
be able to respond to the increasing demands from our customers and stakeholders,
we have to implement socially responsible business conduct that protects the
interest of our customers, shareholders, suppliers, consumers and public at large.
The Company is committed to conduct its business with integrity while in compliance
with all applicable laws. We also seek our suppliers to conform to the highest
standards of business practices in the marketplace to comply with the requirements
of our vendors. Audit will be performed by the Group on our suppliers and the audit
trail and data on material used by suppliers will be provided to the Group to ensure
that products meet the safety and other standards and requirements.
In addition, the Group has applied risk management standards on the products
based on the requirements of EN ISO 14971.
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The Audit Committee for the financial year ended 31 July 2011 comprised the following members:-
1. MEMBERS AND MEETING ATTENDANCE
Membership of the Audit Committee and details of members attendance at the five (5) meetings during the financial year ended 31 July 2011 are as follows:-
Adit Committee Member Composition Total no. of Meetings held Meetings Attended
dring Directors Tenre in Office_____________________________________________________________________________________________________________________________________________________________
To Peng Koon Chairman/Independent Non-Executive Director 4 4
(Resigned w.e.f. 08.06.2011)
Wong Koon Wai Chairman/Independent Non-Executive Director 1 1
(Appointed w.e.f. 29.06.2011)
Ale Ng Khang Hi Member/Independent Non-Executive Director 1 1
(Resigned w.e.f. 28.09.2010)
Tnk Makhlad Bin Tnk Mohamed Jamil Member/Independent Non-Executive Director 5 5
Tan Ooi Jin Member/Independent Non-Executive Director 3 3
(Appointed as Director on
14.09.2010 and as member w.e.f. 03.11.2010)_____________________________________________________________________________________________________________________________________________________________
Mr. Wong Koon Wai is a member of the Malaysian Institute of Accountants (MIA) and CPA Australia. The composition of the Audit Committee during the financial year
complied with the Terms of Reference of the Audit Committee which is, the committee shall comprise not less than three (3) members and a majority of whom shall be
independent directors and at least one (1) member of the Audit Committee has the required financial background and experience.
The Executive Chairman, Chief Financial Officer, General Manager and representatives of the external auditors are normally invited to attend Audit Committee meetings while
the internal auditors attend twice a year, at a six (6) monthly interval. Other Board members may attend the meeting upon invitation by the Audit Committee. The Minutesof the Audit Committee meetings are extended to all members of the Board of Directors and significant issues are discussed at Board meetings held subsequent to the
Audit Committee meetings.
2. MEETINGS
The Audit Committee shall meet regularly, with due notice of issues to be discussed, and shall record its conclusions in discharging its duties and responsibilities. Meetings
shall be held not less than four (4) times a year and additional meetings shall be called as the Chairman decides in order to fulfill its duties.
Audit Committee Report
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The Company Secretary or any person appointed by the Audit Committee shall act
as Secretary of the Audit Committee and shall be responsible, in conjunction with
the Chairman, for drawing up the agenda and other supporting explanatory
documentation for circulation to the Audit Committee members prior to each
meeting. The Secretary will also be responsible for keeping the minutes of
meetings of the Audit Committee and circulating them to the Audit Committee
members and other members of the Board of Directors.
The Chairman of the Audit Committee shall engage on a continuous basis with
senior management such as the Chairman, the Executive Director, Chief Financial
Officer, the General Manager and Head of Internal Audit and the external auditors
in order to be kept informed of matters affecting the Group. The Chairman of the
Audit Committee shall also convene a meeting of the Audit Committee to consider
any matters that the external auditors or internal auditors believe should be
brought to the attention of the Directors or shareholders. At least twice a year, the
Audit Committee shall meet with the external auditors without the presence of anyexecutive directors or employees of the Company.
3. TERMS OF REFERENCE
A summary of the key functions, roles and responsibilities as spelt out in the
Terms of Reference of the Audit Committee is as follows:-
Athority
The Audit Committee is empowered and authorised by the Board of Directors at
the cost of the Company:-
(a) to investigate any matters within its terms of reference and shall have
unrestricted access to both the internal and external auditors and to all
employees of the Group;
(b) to have the resources in order to perform its duties as set out in its terms of
reference;
(c) to have full and unrestricted access to any information pertaining to the
Company and the Group;
(d) to have direct communication channels with the external auditors and internal
auditors;
(e) to obtain external legal or other independent professional advice where
necessary;
(f) to invite outsiders with relevant experience to attend its meetings, wheneverdeemed necessary; and
(g) to convene meetings with the external auditors, the internal auditors or both
excluding the attendance of other directors and employees of the Company,
whenever deemed necessary.
Notwithstanding anything contrary hereinbefore stated, the Committee does not
have executive powers and shall report to the Board of Directors on matters
pertaining to the Company and the Group that it has considered and its
recommendations thereon.
Dties
Duties of the Committee are as follow:-
a) To consider and report the same to the Board of Directors of the Company
the appointment, nomination, resignation and dismissal of external auditors
and their respective audit fees;
b) To discuss with the external auditors before the commencement of their audit,
the nature and scope of the audit, competency and resources of the external
auditors and to ensure co-ordination where more than one audit firm is
involved.
c) To discuss problems and reservations arising from the interim and final audits
and any matters the auditors may wish to discuss (in the absence of
management);
d) To do the following in relation to the internal audit function and report the
same to the Board of Directors of the Company:-
1) to review the adequacy of the scope, functions, competency and
resources of the internal audit function and whether it has the necessary
authority to carry out its work;
2) to review the internal audit processes and results of the internal audit
plan processes or investigation undertaken and where necessary, ensure
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that appropriate actions are taken on the recommendations of the
internal audit function;
3) to review any appraisal or assessment of the performance of members ofthe internal audit function and their respective audit fees;
4) to approve any appointment or termination of senior staff members of
the internal audit function; and
5) to take cognisance of resignations of internal audit staff members and
provide the resigning staff member an opportunity to submit his reasons
for resigning.
e) To review the effectiveness of the management information system;
f) To review the quarterly results and annual financial statements of the
Company and the Group with both the external auditors and management and
report the same to the Board of Directors of the Company focusing particularly
on:-
1) any change in or implementation of accounting policies and practices;
2) significant adjustment arising from the audit;
3) any unusual events;
4) the going concern assumption; and
5) compliance with accounting standards and other legal requirements.
g) To review the following and report the same to the Board of Directors of the
Company:-
1) with the external auditors, the audit plan;
2) with the external auditors, their evaluation of the system of internal
controls;
3) with the external auditors, their audit report; and
4) the assistance given by the employees of the Company and the Group to
the external auditors.
h) To review and discuss any management letter sent by the external auditors to
the Company and managements response to such letter;
i) To consider the report, major findings and managements response thereto on
any internal investigations carried out by the internal auditors;
j) To review all areas of significant financial risk and the arrangements in placeto contain those risks to acceptance levels;
k) To consider and review any related party transactions and potential conflict
of interest situations that may arise within the Company and the Group
including any transaction, procedure or course of conduct that raises questions
of management integrity;
l) To review and report the same to the Board of Directors of the Company
whether there is reason (supported by grounds) to believe that the Companys
external auditors are not suitable for re-appointment;
m) To review the allocation of options pursuant to the Share Issuance Scheme
and make such statement to be included in the annual report of the Company
in relation to a share issuance scheme for employees; and
n) Any such other functions as may be agreed by the Committee and the
Board.
Responsibility
Where the Committee is of the view that a matter reported by it to the Board of
Directors of the Company has not been satisfactorily resolved resulting in a breach
of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad or
any serious offence involving fraud and dishonesty committed by the Company or
the Group, the Committee has the responsibility to promptly report such matters
to Bursa Malaysia Securities Berhad or any other relevant authorities.
4. SuMMARY OF ACTIVITIES DuRING THE YEAR
During the financial year ended 31 July 2011, activities undertaken by the Audit
Committee include:-
(a) Review of the quarterly unaudited financial statements of the Group;
(b) Review of inter-company transactions and/or any related party transactions or
conflict of interest situations that arose within the Group or in the
Company;
Audit Committee Report (continued)
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(c) Review of the annual audited financial statements of the Group and the
Company for the financial year ended 31 July 2010;
(d) Review of the Audit Planning Memorandum by the external auditors for auditof the financial year ending 31 July 2011;
(e) Review of the external auditors report in relation to its audit and accounting
issues;
(f) Discussion with the external auditors without the presence of the Executive
Directors and employees of the Company;
(g) Review of the action plan for internal audit of the Group, the audit findings
and the follow-up internal audit reports from the internal auditor;
(h) Review of the internal auditors effectiveness, competence and independence;
(i) Review of the terms of reference of the audit committee;
(j) Discussion and consideration of the utilisation of proceeds arising from the
rights issue (2003) of 5,884,000 new TRB Shares with 5,884,000 free
detachable warrants at an issue price of RM1.00 per share;
(k) Review of the Groups latest business development and operations;
(l) Review of the Statement of Directors Responsibility for the financial year
ended 31 July 2010;
(m) Review of the Statement on Internal Control for the financial year ended 31
July 2010;
(n) Review of the Audit Committee Report for the financial year ended 31 July
2010;
(o) Review of the Statement on Corporate Governance for the financial year ended
31 July 2010.
(p) Review of the Statement on Corporate Social Responsibilities for the financial
year ended 31 July 2010;
(q) Review of the inter-companies balances for the financial year ended 31 July
2010;
(r) Review of the risk profile update and impact report from the external
consultants;
(s) Review of the litigations and claims against the subsidiaries companies of theCompany;
(t) Review of the forecast consolidated financial statements of the Company;
and
(u) Review of the proposed corporate exercise of the Company in relation to the
Rights Issue of Shares with Warrants.
5. REVIEW OF SHARE ISSuANCE SCHEME (SIS)
The SIS has expired on 26 February 2006 pursuant to Bye-Laws 17 of the SIS
thus, no review was conducted by the Audit Committee during the year.
6. INTERNAL AuDIT FuNCTION AND RISK MANAGEMENT
The Group has outsourced its internal audit function to a professional services firm
which reports directly to the Audit Committee, assisting the Committee in
discharging its duties and responsibilities.
The Statement on Internal Control is furnished on pages 24 and 25 of this Annual
Report and provides an overview of the state of internal controls within the
Group.
The scope of internal audit encompasses the examination and evaluation of the
adequacy and effectiveness of the Companys governance, system of internal
control structure and the quality of performance in carrying out assigned
responsibilities to achieve the Companys stated goals and objectives.
The internal auditors also performed ad hoc appraisals, inspection, investigations,
examinations and reviews that may be requested by the Committee or senior
management from time to time.
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Statement On Corporate Governance
The Board of Directors is pleased to report to the shareholders on the manner the
Group has applied the principles and the extent of its compliance with the Best
Practices of Corporate Governance as set out in Part I and Part II of the Malaysian
Code on Corporate Governance (the Code) pursuant to Paragraph 15.25 of the Main
Market Listing Requirements (LR) of Bursa Malaysia Securities Berhad.
The Board considers that it has, to the best of its ability and knowledge, complied with
the Best Practices on Corporate Governance as set out in Part 2 of the Malaysian Code
on Corporate Governance.
BOARD OF DIRECTORS
i. Composition and Board Balance
The Board comprises five (5) Directors, three of whom are Independent Non-
Executive Directors, a list of the entire Board is found on page 5 of this Annual
Report while their respective profiles are on pages 8 to 10.
The Independent Non-Executive Directors bring with them objective and independent
judgement to facilitate a balanced leadership and decision-making process and
also, provides for an effective check and balance to safeguard the interests of the
minority shareholders and other stakeholders and to uphold high standards of
conduct and integrity.
The Board considers the current size and composition of its Directors with a
diverse mix of experience, skills and expertise ranging from accounting, legal,
logistics and general management to be optimum and provides the Board with not
only essential commercial skills needed for sound management decisions but also,
invaluable practical and operational experience to professionally manage the
Group.
ii. Board Responsibility
The Board is responsible for the overall corporate governance of the Group. The
Board retains full and effective control of the management of the Company and
its overall responsibilities include strategic formulations, planning, succession
planning and execution of the Groups objectives as well as monitoring managements
implementation of its decisions. It is the responsibility of the Board to conscientiously
weigh and balance the interests of its shareholders and stakeholders with its own
objectives during decision making process.
The Executive Chairman and together with the Executive Director of the Company,oversee to the running of the business and implementation of the policies and
strategies adopted by the Board. The Independent Non-Executive Directors engage
proactively with management and both the external and internal auditors to address
matters concerning the management and oversight of the Groups business and
operations.
The Board has set up and delegated certain responsibilities to three (3) Board
Committees that operate within clearly defined terms of reference. The Board
Committees are the Audit Committee, the Remuneration Committee and the
Nomination Committee.
iii. Spply of Information
Board meetings for the ensuing financial year are scheduled in advance before the
end of each financial year so as to enable the Directors to plan ahead and fit the
coming years Board meetings into their schedule. Board meetings are scheduled
at quarterly intervals and additional meetings will be held if necessary. Board
meetings are conducted in accordance with a structured formal agenda which
includes, review of various aspects of the Groups operations, financial performance,
business plan, strategic decisions, any major investments, findings from both the
external and internal auditors and any other proposals or other significant matters
that require the expeditious direction of the Board.
The Board members assess the viability of business propositions and corporate
proposals and the principal risks that may have significant impact on the Groups
business or its financial position and the mitigating factors. During the year, theBoard held a total of six (6) meetings and the attendance of each Director is set
out in page 11 of this Annual Report. Board meetings are chaired by the
Executive Chairman who has the responsibility of ensuring that each agenda item
is adequately reviewed and thoroughly deliberated within a reasonable timeframe.
A full set of the Board papers for each meeting including financial reports and
notices are submitted to the Directors about a week prior to meetings to provide
them with sufficient time to evaluate the matters to be discussed and to enable
a more informed decision-making process. The Board is also aware of the decisions
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and salient issues deliberated by board committees through the minutes of these
committees.
The Directors have a duty to declare immediately to the Board should they haveany interest in transactions to be entered into directly or indirectly with the
Company or the Group. The interested Directors would serve notice to the Board
and thereupon, abstain from deliberations and decisions of the Board on the
transaction concerned. In the event a corporate proposal is required to be approved
by shareholders, the interested Directors would also abstain from voting in respect
of their shareholdings relating to that corporate proposal and would further
undertake to ensure that persons connected to them similarly abstain from voting
on the resolutions.
Senior Management as well as the internal and external auditors of the Company
may be invited to attend Board meetings to provide the Board with their views and
explanations on certain agenda being tabled to the Board and to furnish clarification
on issues that may be raised by the Directors. The Directors have direct access to
Senior Management and has complete and unimpeded access information relating
to the Group in the discharge of their duties. The Directors also have the liberty
to engage independent professional advice if necessary at the Companys
expense.
Every Board member has ready and unrestricted access to the advice and the
services of the Company Secretary in ensuring the effective functioning of the
Board. The Directors are also regularly updated and advised by the Company
Secretary on new statutory and regulatory requirements issued by regulatory
authorities, and the resultant implications to the Company and the Directors in
relation to their duties and responsibilities.
iv. Appointments to the Board
Nomination Committee
The Nomination Committee of the Company comprises entirely of Independent
Non-Executive Directors. The role of the Nomination Committee is to review and
assess the proposed appointment of Directors and thereupon, recommends to the
Board for approval. However, the Board makes all decisions on appointments after
considering those recommendations. The Nomination Committee would also ensure
that the Board has an appropriate balance of expertise and ability.
Another objective of this Committee is to assess the effectiveness of the Board as
a whole and the contribution of each individual director on an on-going basis. The
Nomination Committee will review annually the required mix of skills, experience
and other qualities including core competencies which Non-Executive Directors
should bring to the Board, identify areas for improvement and review the succession
plan for senior management in the Group.
Other responsibilities of this Committee are defined in the Terms of Reference of
the Nomination Committee.
v. Directors Training
A familiarisation programme has been put in place for new Directors which include
visits to the Groups business and meetings with senior management, where
appropriate, to facilitate better understanding of the Groups business and
operations.
The Board acknowledged that the Directors of the Company, through their varied
experience and qualifications, have provided the desired contribution and support
to the functions of the Board for the year ended 2011. The Board has empowered
the Directors of the Company to determine their own training requirements and will
evaluate and determine the training needs of its Directors on an on-going basis to
assist them in discharging their responsibilities.
During the year, all board members save for the newest member to the Board, Mr.
Wong Koon Wai, have attended seminars and briefings during the financial year as
set out in their respective profiles on pages 8 to 10 of this Annual Report.
vi. Re-election
In accordance with Companys Articles of Association, at least one-third (1/3) of
the directors for the time being shall be subject to retirement by rotation at the
Companys annual general meeting. All retiring directors shall be eligible for re-
election. In any case, each director shall submit themselves for re-election at
regular interval and at least once every three (3) years.
Directors appointed by the Board during the financial period before an annual
general meeting are subject to retirement and shall be eligible for re-election by
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the shareholders at the Companys next annual general meeting to be held
following their appointments.
Details of the retiring Directors are disclosed in the Statement Accompanying theNotice of Annual General Meeting on page 4 of this Annual Report.
COMMITTEES OF THE BOARD
The Board Committees of the Company are as follows:-
a) The Adit Committee
The Audit Committees role is to review the adequacy and competency of the
Groups internal control system including systems for compliance with applicable
laws, regulations, rules, directives and guidelines.
The Audit Committee assists and supports the Boards responsibility to oversee theGroups operations by providing a means for review of the Groups processes for
producing financial data, its internal controls, and that it is independent of the
Groups external and internal auditors. The Audit Committee will discuss with
management and the external auditors the accounting principles and standards
that were applied and their judgment of the items that may affect the financial
statements. It is the policy of the Audit Committee to meet with the external
auditors at least twice a year to discuss their audit plan, audit findings and the
Companys financial statements. These meetings are held without the presence of
the Executive Directors and staff of the Company.
The Terms of Reference of the Audit Committee are set out under the Audit
Committee Report on pages 15 and 16 of this Annual Report.
b) The Nomination Committee
The Nomination Committee held a total of five (5) meetings during the financial
year and details of members attendance at meetings are as follows:-
Total no. of Meetings
held dring Directors
Nomination Committee Member tenre in office Meetings Attended__________________________________________________________________________
To Peng Koon (Chairman) 4 4(Resigned w.e.f. 08.06.2011)
Tnk Makhlad Bin
Tnk Mohamed Jamil (Chairman) 5 5(Re-designated as Chairman of
Nomination Committee w.e.f. 29.06.2011)
Ale Ng Khang Hi (Member) 2 2(Resigned w.e.f. 28.09.2010)
Tan Ooi Jin (Member) 2 2(Appointed as Director on 14.09.2010 a
nd as member w.e.f. 03.11.2010)
Wong Koon Wai (Member) 0 0(Appointed w.e.f. 29.06.2011)__________________________________________________________________________
Statement On Corporate Governance (continued)
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c) The Remneration Committee
The Remuneration Committee has a total of three (3) members comprising two (2)
Independent Non-Executive Directors and the Executive Chairman who is alsoChairman of the Remuneration Committee.
The Remuneration Committee met once during the financial year and details of
members attendance at meetings are as follows:-
Total no. of Meetings
held dring Directors
Remneration Committee Member tenre in office Meetings Attended__________________________________________________________________________
Tee Tze Chern, JP (Chairman) 1 1
To Peng Koon (Member) 1 1
(Resigned w.e.f. 08.06.2011)
Alex Ng Khang Hui (Member) 1 1
(Resigned w.e.f. 28.09.2010)
Tan Ooi Jin (Member) 0 0(Appointed as Director on 14.09.2010 and
as member w.e.f. 03.11.2010)
Wong Koon Wai (Member)
(Appointed w.e.f. 29.06.2011) 0 0__________________________________________________________________________
The Remuneration Committee of the Company has set up a remuneration policy
framework and makes recommendations to the Board on the remuneration and
other terms of employment for the Executive Directors. The terms of reference of
the Remuneration Committee are clearly defined by the Board to its members.
The component parts of remuneration of directors of the Company are structured
so as to link rewards to corporate and individual performance in the case of
executive directors. In the case of non-executive directors, the levels of remuneration
are reflected by the experience and level of responsibilities.
The Executive Directors will abstain from participating in the discussion with
respect to their own remuneration. The determination of remuneration of Non-
Executive Directors is a matter for the Board as a whole. The individual concerned
will abstain from discussion and decision of his own remuneration.
The remuneration of non-executive directors comprises fees while the remuneration
package of executive directors comprised basic salary, fees and bonus.
The Remuneration Committee meets at least once a year to conduct the annualreview of the overall remuneration policy for Directors whereupon recommendations
are submitted to the Board for approval. The Company adopted the peer evaluation
or self-evaluation process to evaluate the performance of the Directors of the
Company.
Breakdown of the remuneration of the Directors of the Company for the financial
year ended 31 July 2011 is as follows:-
Eective Non-EectiveDirectors Directors Total
(RM000) (RM000) (RM000)__________________________________________________________________________
Salaries & Other Emoluments 271 - 271
Bonus - - -
Fees 27 35 62
Meeting/Committee Allowance 3.5 11.37 14.87__________________________________________________________________________
Total 301.50 46.37 347.87__________________________________________________________________________
The number of Directors, include those Directors who resigned during the financial
year, whose remuneration falls into the following bands are as follows:-
Nmber of DirectorsEective Non-Eective
Range of Remneration per annm Directors Directors__________________________________________________________________________
Below 50,000 0 6
RM100,001 to RM150,000 1 0
RM150,001 to RM200,000 1 0__________________________________________________________________________
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RELATIONSHIP WITH SHAREHOLDERS AND INVESTORS
One of the key elements of good corporate governance is being transparent and
accountable to all stakeholders. Underlying the transparency and accountabilityobjectives is the provision of clear, relevant, timely, comprehensive and readily
assessable information to all stakeholders.
i) Shareholders Commnication and Investor Relations
The Group values its dialogues with investors. The investor relations activities of
the Company form an important channel of communication with shareholders,
investors and the investment community broadly. The shareholders and investors
of the Company can obtain information of the Groups performance and major
developments from its Annual Reports, which is disseminated to shareholders
either in hard copy or in CD-ROM media, as well as from the Companys website
(www.takaso.com) for all announcements, press release, products information and
to make enquiries.
The Executive Chairman of the Company, Mr. Tee Tze Chern, JP, is responsible
for the Companys investor relations functions. This reflects the commitment of the
Group to maintain good investor relations and to provide views and information on
the Group that is appropriate and substantive to investors.
ii) Annal General Meeting and Etraordinary General Meeting
The main forum for dialogue with shareholders of the Company is the Companys
Annual General Meeting (the AGM) and the Extraordinary General Meeting
(EGM).
The AGM represents the primary platform for direct two-way interactions between
shareholders, Directors and senior management of the Company. During AGMs,
shareholders are encouraged to raise questions which the Directors and senior
management are at hand to address. Notice of the AGM together with the Annual
Report are sent out not less than twenty-one (21) days from the date of the
meeting and explanatory notes or statement to facilitate better understanding and
evaluation of issues involved, will accompany items under special business of the
meeting.
In between AGMs, if a transaction or decision arises that requires shareholders
approval, the Board will convene an EGM and the appropriate notice of meeting
would be issued together with a circular explaining the intended agenda and
purpose of the meeting to facilitate understanding and evaluation.
ACCOuNTABILITY AND AuDIT
i) Financial Reporting
The Board aims to present a balanced, clear and meaningful assessment of the
Groups financial position and prospects in all their reports to shareholders,
investors, and relevant Regulatory Authorities. The Board is assisted by the Audit
Committee to oversee the Groups financial reporting processes and the quality of
financial reporting. The Audit Committee also reviews the appropriateness of the
Companys and the Groups accounting policies and the changes to these
policies.
The Responsibility Statement by the Directors on the annual audited financial
statements of the Company and the Group is set out on page 26.
ii) Internal Control
The Board acknowledges its overall responsibility to maintain a sound and reliable
systems of internal control within the Group covering financial, operational and
compliance aspects of the Group. The internal control systems of individual
business units of the Group are managed by the management and operational team
of the respective business units. The system of internal controls is designed to
meet the Groups needs and to manage risks to which it is exposed. There is a
continuous process of managements risk assessment, internal controls reviews and
internal audit assessments on major subsidiaries within the Group. The purpose of
Statement On Corporate Governance (continued)
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this continuous process is to ensure that the Groups assets are safeguarded in the
interest of preserving the investment of shareholders.
The internal audit function is outsourced to external consultants. The outsourcedinternal auditors meet and report to the Audit Committee at least twice a year to
present their reports and to discuss their findings on the adequacy and integrity
of the internal control systems of the Group.
The Board has through the Audit Committee reviewed the adequacy and integrity
of the Groups system of internal controls and the Boards Statement of Internal
Control are on pages 24 and 25 of this Annual Report.
iii) Relationship with Aditors
The Groups independent external auditors are essential for the shareholders in
ensuring the reliability of the Groups financial statements and in providing
assurance of that reliability to users of these financial statements. The AuditCommittee will meet with the external auditors at least twice a year, or more if
deemed necessary, to discuss their audit plan, audit findings and the financial
statements of the Company without the presence of the Executive Directors and
staff of the Company. In addition, the external auditors are invited to attend the
annual general meetings of the Company and would be at hand to answer
shareholders questions on the conduct of the audit and the preparation and
content of the audit report.
An appropriate relationship is maintained with the Groups auditors through the
Audit Committee. The Audit Committee has been explicitly accorded the power to
communicate directly with both the external and internal auditors. A full Audit
Committee Report and its Terms of Reference detailing its role in relation to the
auditors, is set out on pages 14 to 17 of this Annual Report.
Terms of engagement of the services provided by the external auditors are reviewed
by the Audit Committee and approved by the Board. In reviewing the terms of
engagement for the services to be provided by the external auditors, the Audit
Committee ensures that the independence and objectivity of the external auditors
are not compromised.
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Statement Of Internal Control
The Board of Directors of the Takaso Group of Companies is committed to maintain a
sound system of internal control within the Group and is pleased to provide the
following statement, made in pursuance to paragraph 15.26(b) of the Main Market
Listing Requirements of Bursa Malaysia Securities Berhad, which outlines the natureand scope of internal control of the Group during the financial year ended 31 July
2011.
RESPONSIBILITY
The Board acknowledges its overall responsibility for the Groups system of internal
controls which includes the establishment of an appropriate control environment and
framework as well as reviewing its adequacy and integrity. The system of internal
control covers inter alia, risk management procedures, financial, operational and
compliance controls. Because of the inherent limitation in any system of internal
control, it could only provide reasonable and not absolute assurance against any
material misstatement and loss as it is designed to manage rather than eliminate the
risk of failure to achieve the policies and objectives of the Group.
The Group has had in place an on-going process for identifying, monitoring and
managing the significant risks affecting the achievement of its business objectives
throughout the period. The Board regularly reviews this process and is of the view that
the system of internal controls that has been instituted throughout the Group is sound
and adequate to safeguard shareholders investment.
KEY FEATuRES OF INTERNAL CONTROL SYSTEM
The key elements of the Groups existing system of internal control measures are
described below:-
a clearly defined organisation structure with the l ines of responsibility and
delegated authority to the management and operating units;
the Executive Directors, SeniorManagement and Head of Departments meet
regularly to discuss key risks affecting the corporate, operational, financial and
compliance aspects of the Group and the relevant actions taken to address,
manage and mitigate any risks or potential risks which have been identified
accordingly;
the Groups quarterly financial results are reviewed and approved by the Audit
Committee and the Board;
its major subsidiary, Takaso Rubber Products Sdn. Bhd., was certified with ISOStandards carrying the current version of ISO 9001:2008 and ISO 13485:2003
in its manufacturing processes. Internal quality audit was performed annually prior
to the annual surveillance audit conducted by the external certification bodies;
Management conducts an assessment of staff training needs annually to ensure
that staff is armed with the necessary skills to perform their responsibilities
diligently. A structured KPI performance appraisal has been instituted to appraise
each employees capabilities and achievements.
the existence ofa formal reporting framework for staff toreporton operational
performances and the status of control activities periodically; and
the outsourced internalauditfunction toassessthe adequacyandintegrityof theGroups system of internal controls periodically in accordance with the approved
internal audit plan.
RISK MANAGEMENT FRAMEWORK
The Enterprise Risk Management (ERM) framework contains a risk profile that is
reflective of the latest operating environment within the Group. Principal risks identified
therein are managed by the management team via routine management meeting and
operation reviews with the development and implementation of relevant strategies.
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INTERNAL AuDIT FuNCTION
The Groups internal audit function is outsourced to external consultants. The outsourced
internal auditors assist the Board and the Audit Committee in providing an independentassessment on the adequacy and integrity of the Groups internal control system.
The annual internal audit plan which reflects the risk profile of the Groups business
and operation units, is tabled for the review and approval of the Audit Committee. The
outsourced internal auditors report directly to the Audit Committee on its audit activities
and the outcome of internal audit assessments including follow-up review on the
implementation status of managements actions to address the internal audit findings
highlighted.
The effectiveness of the system of internal controls of the Company and the Group is
reviewed by the Audit Committee during its quarterly meetings. The review covers the
financial, operational and compliance controls. The Audit Committee assists the Board
in its review of the effectiveness of the internal control and risk management processesof the Group. Minutes of the Audit Committee meetings are circulated to the Directors
for notation and if necessary, action by the Board.
The cost incurred in relation to the internal audit function during the financial year
ended 31 July 2011 was RM36,000.
REVIEW OF THE STATEMENT BY ExTERNAL AuDITORS
The external auditors have reviewed this Statement of Internal Control for inclusion in
the Annual Report of the Group for the financial year ended 31 July 2011 in
accordance with Recommended Practice Guidance 5 Guidance for Auditors on the
Review of Directors Statement on Internal Control. They have reported to the Boardthat nothing has come to their attention that causes them to believe that the Statement
is inconsistent with their understanding of the processes adopted by the Board in
reviewing the adequacy and integrity of the system of internal controls.
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26
Directors Responsibility Statement
This Directors responsibility statement is issued, as required under paragraph 15.27(a)
of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad, in
respect of the preparation of the audited financial statements of the Group and of the
Company for the financial year ended 31 July 2011.
The Directors are required by law to prepare financial statements for each financial year
that give a true and fair view of the state of affairs of the Group and of the Company
as at the end of the financial year and of the results and cashflow of the Group and
of the Company for the year ended.
In preparing the financial statements for the financial year ended 31 July 2011, the
Directors have:-
adopted the applicable accounting standards issued bytheMalaysian Accounting
Standards Board and applied them consistently;
madeestimatesandjudgmentswhich arereasonable and fair;
ensuredthatapplicable accountingstandardshavebeen followed; and
preparedthefinancialstatementsonthegoingconcern basis.
The Directors are responsible for keeping proper accounting records which disclose with
reasonable accuracy, at any time, the financial positions of the Group and of the
Company thus ensuring that the financial statements comply with the Companies Act,
1965. Further thereto, the Directors are also responsible for taking reasonable steps to
safeguard the assets of the Group to prevent and detect fraud and other irregularities.
The Directors confirm that they have complied with these requirements and have a
reasonable expectation that the Group has adequate resources to continue its operation
for the future and to continue to adopt a going concern basis in preparing the financialstatements. The Directors also confirmed that the annual audited financial statements
of the Company are properly drawn up to give a true and fair view of the state of affairs
of the Group for the financial year ended 31 July 2011.
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Executive Chairmans Statement
Dear Shareholders,
On behalf of the Board of
Directors of Takaso Resources
Berhad, I am pleased topresent herewith the Groups
Annual Report for the
financial year ended 31 July
2011.
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FINANCIAL RESuLTS
Group revenue for the financial year ended 31 July 2011 was RM16.8 million, 11.6%
lower than the revenue of RM19.0 million achieved the year before. The Group endedthe financial year with a loss before tax of RM2.2 million compared to the previous
years loss of RM1.5 million.
The drop in revenue was primarily because of lower exports due to reduced orders from
the Middle East countries following the political crisis besieging the region and the
customers in Europe in the wake of the financial crisis roiling the Eurozone.
In addition, cost of production has risen considerably as material costs, especially latex,
and packaging material, have been increasing incessantly. The shortage of labour has
also led to a higher rate of overtime. All these combined factors resulted in a net loss
for the year.
CORPORATE ExERCISES
During the year under review the Company had successfully undertaken the following
key corporate exercises which had received the prior approval of the members at the
Extraordinary General Meeting of the Company held on 28 April 2011:-
(i) reduction of the par value of the existing ordinary shares of RM1.00 each in the
Company to RM0.25 each which was sanctioned by the High Court on 13 July
2011.
(ii) completed the listing and quotation for 94,033,811 Rights Shares together with
56,420,285 Warrants on the Main Market of Bursa Securities Berhad on 13
September 2011.
Total proceeds raised from this special exercise was RM32.912 million, the
manner in which the proceeds is to be utilised is spelt out under Utilisation of
Proceeds on page 12.
As a consequence of the Rights Issue of Shares with Warrants, holders of the
warrants issued in 2003 and maturing on 13 November 2013 (TAKASO-WA) were
issued with an additional 645,139 bringing the total TAKASO-WA in circulation to
6,529,131 Warrants. The exercise price of TAKASO-WA was also revised downwards
from RM1.00 to RM0.89.
INDuSTRY OuTLOOK AND FuTuRE PROSPECTS OF THE GROuP
Being export orientated with major distributors based in the Middle East and Europe,
the Group foresees a challenging outlook so long as the respective political crisis and
debt crisis of its customers remained unresolved. However, steps have already started
to reduce dependency on these two major markets by venturing into Asian countries.
As a start, the Group has in August 2011 executed a Memorandum of Understanding
with Yakin Hakikat (Thailand) Ltd. Part. to secure an exclusive distribution in
Thailand.
Inflation is expected to continue trending upwards and the Group is monitoring the
situation closely and will try to increase its selling prices to sustain margins while
balancing this with ensuring its competitiveness is not compromised.
On the local front, domestic demand is expected to remain due to the Governments
push towards a high income nation. Notwithstanding this, demand for the Groups
products is affected by rising energy costs and higher food prices which if, on the
uptrend in the coming year, will see demand for the Groups products dampening.
Management expects the coming year to be an even more challenging year in the light
of natural disasters hitting the surrounding regions such as the floods in Thailand and
earthquake and tsunami in Japan, political tensions in the Middle East and North
Africa, the European debt crisis, worldwide food crisis and a slowing global economy.
Going forward, management will emphasise on the following to bring the Group back
to profitability:-
Executive Chairmans Statement (continued)
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extend my heartfelt appreciation to the shareholders, all customers, business associates
and all other stakeholders and the Government of Malaysia who have each supported
and believed in us throughout the years and I look forward to your continued support
and trust in the years ahead.
Last but not least, my gratitude goes to our dedicated employees, whose steadfast
commitment to deliver value and quality products and services which is the backbone
and growth of the Group.
TEE TzE CHERN, JP
Executive Chairman
upgrading and improving its plant and machinery inorder to achieve optimal
output and capacity.
re-structuring, revamping and beefingup its salesand marketing team andidentifying and appointing new members who have the ability and capacity to
contribute in all aspects of th Groups Operations.
identifyingandventuringinto morenewmarketsespeciallyintheAsianregion.
developing new marketingstrategiesand implementing incentive schemes for our
distributers to strive harder for the sales of our products.
sourcingfornewbusinessopportunitiesthatfitintoourbusinessmodelwhichmay
contribute to the future growth of the Group.
CORPORATE SOCIAL RESPONSIBILITY
The Group remains committed in operating its business in a socially responsible manner
in respect to its employees, the wider environment, the community and the
marketplace.
The Groups CSR towards its employees is in the form of maintaining and providing the
staff with a conducive working environment bearing in mind staff welfare and well
being. This also includes providing them with the necessary training to equip their
knowledge and to enable progression up the career path as well as to train them on
health and safety issues.
CSR activities towards the community at large during the year includes organising its
annual blood donation drive in March 2011 in collaboration with Hospital Pakar Sulit
Fatimah, Muar, reaching out to the community by supporting and sponsoring varioushealth awareness campaigns and supplying of food to children welfare homes and old
folks public nursing homes.
APPRECIATION
I wish to take this opportunity to express my sincere appreciation and thanks to my
fellow Board of Directors for their constant support and contribution. I also wish to
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1. Malaysia
2. Indonesia3. Iran
4. Phillippines
5. Greece
6. Romania
7. China
8. Oman
9. Saudi Arabia
10. Yemen
11. Taiwan
12. Singapore13. Syria
14. Spain
15. Australia
16. UAE
17. Bangladesh
18. Turkey
19. United Kingdom
20. Nigeria
21. Iraq
22. Russia23.