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KHIND HOLDINGS BERHAD (380310-D)

Manufacturer & Marketer for

KHIND HOLDINGS BERHAD annual report 2010

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KHIND HOLDINGS BERHAD annual report 2010

KHIND HOLDINGS BERHAD annual report 2010

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Khind makes it a part of everyday business

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KHIND HOLDINGS BERHAD annual report 2010

KHIND HOLDINGS BERHAD annual report 2010

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KHIND HOLDINGS BERHAD annual report 2010

contents

Contents 7 Chairman and Group CEO's Joint Statement 8 - 11 Corporate Structure Corporate Information Profile of Board of Directors Statement on Corporate Governance Statement of Corporate Responsibility Statement on Internal Control Report on Audit Committee Financial Calendar Financial Statements Statistics on Shareholdings Directors' Shareholdings List of Properties Held by the Group Investors' Information Khind Group Offices and Address Notice of Annual General Meeting Statement Accompanying the Notice of AGM Proxy Form 12 13 14 - 17 18 - 23 24 - 26 27 28 - 29 30 31 - 91 92 - 93 94 95 96 97 98 - 101

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Chairman and Group Chief Executive Officer Joint Statement

Dear Shareholders, Your Board is honoured to share with you the Company and Group performance for the financial year ended December 31, 2010.

A Year of moderate improvement In 2010 Malaysia continued to feel the after-effects of the 2009 contagion albeit at a more measured scale, that led to a slightly better performance across all sectors of the economy. The Malaysian economy experienced a return to growth, recording an expansion of 7.2% in terms of gross domestic product (GDP) following the downturn in 2009. Against a gradually improving domestic and global recovery, your Company was able to turn in a modest performance given that it was impacted by slower recovering consumer confidence in the country, while maneuvering through some unexpected political shocks that affected the Middle East region where it exports a large majority of its products. In a year of fair growth, the Company also continued to remain relevant to consumers in the country and around the globe. The strategy of investing in Blue Ocean Products (BOP) remained a commitment to ensuring that the Company was able to compete in an increasingly competitive and crowded space. Consumer Electrical Appliances Sector performance in 2010 Overall, capital spending in the sector was led largely by the foreign multinational companies (MNCs) in the electrical and electronics (E&E) industries. While the percentage of approved investment in the E&E industries declined to 28.7% of the total manufacturing investment amount from 32.3% (source: Economic Report 2010 ­ Bank Negara Malaysia) E&E exports particularly semiconductors rose significantly in the first half, benefiting from inventory restocking in the global electronics industry. Moving into the latter half of the year, the moderation in regional demand led to the softening of electronics exports which resulted in a slower uptake of product inventory. Nevertheless, in Group revenue for the period ended December 31, 2010 was RM196.02 million, representing a 6.8% increase over 2010 performance Domestically, consumer spending was also sustained by fairly liberal access to credit as a result of an accommodative monetary environment that prevailed during the year. Against this backdrop, the country recorded a better growth of 6.3% in 2010 (2009: -0.5%) in terms of private spending. Despite the moderation in the global economy in the second half-year, local consumer demand conditions remained robust throughout the year, driven largely by private sector activity. Household consumption increased at a faster pace, while private investment rebounded strongly to record double-digit growth. All these factors contributed to the Group's overall performance in 2010. As a consequence of a more positive economic condition, headline inflation also averaged 1.7% in 2010 (2009: 0.6%). Much of the inflationary increases were linked to higher food and commodity prices and adjustments to subsidised items. This resulted in the consumer electrical appliances sector performing more positively under the year in review. The E&E output growth was also supported by the revival of global corporate information technology (IT) investments, and better than expected consumer spending on electronics, thus causing higher demand for semiconductors and audio-visual products, particularly in the first half of 2010. the manufacturing sector, foreign direct investment (FDI) was still very much focused on the E&E sector as many global and domestic companies upgraded or re-tooled towards higher value added activities and greater product sophistication.

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the previous corresponding year of RM183.60 million. The moderate increase was mainly attributable to marginally better demand domestically and globally for the Group's products. While revenue remained relatively flat, group profit before tax recorded a 13.6% increase to RM12.75 million as compared with RM11.22 million for December 31, 2009. The positively better performance was ascribed to selling higher margin products, continued cost effectiveness programmes, and more aggressive marketing strategies to increase product share in the market place. From a sectoral performance perspective, domestic revenue contributed approximately 70% to total group revenue performance, while the remaining 30% from export sales. In this context, the Group's performance domestically was spearheaded by the introduction of a greater number of BOP. In terms of its export performance, the Group turned in a fair showing for its Singapore operation, while the Middle East region was impacted by the unforeseen political upheaval in many of the countries it does business in. Operations review Cost effectiveness programmes that were implemented in previous financial years continued to be executed across all operational aspects within the Group. Consistently positive reinforcement of the Group's mantra of managing costs to ensure better margins meant that all operational and manufacturing procedures were reviewed regularly to strip unwanted costs out of the entire value chain within the Group ­ from manufacturing, to administration to marketing to distribution. As a result of the on-going diligence by the Group's employees, bottom-line performance continued to be impacted positively. Furthermore, the Group invested into the future capacity building operations by investing in strategic acquisitions.

These acquisitions were mainly in real estate properties. The Group announced on June 1 that it had invested in a 65,340 square feet (6,070 square metres) piece of freehold land within Setia City 1, a future commercial development located in Shah Alam, Selangor. The RM7.84 million investment in the land was to facilitate the expansion and construction of the Group's proposed new headquarters in the future. The Group also purchased two (2) units of a three storey (3-storey) semi-detached factory lot at I-Parc Bukit Jelutong, Shah Alam for RM6.59 million in January 2010 to support its Bukit Jelutong warehousing and distribution operations. In Kuching, Sarawak, the Group announced in May, that it had also acquired a piece of leasehold land measuring 59,125 square feet (5,496 square metres) that would be utilised for the expansion of its business and operations in the state. On the Middle East front, notwithstanding the uncertain political climate in some of the countries around the region, the Group remained committed to its Dubai regional headquarters in the United Arab Emirates (UAE). The Group invested in providing housing accommodation for its expanding workforce with the purchase of two (2) units of condominiums amounting to Dirhams 1,050,000 (approximately RM823,000). All these investments into landed assets are preparation for the Group's future expansion requirements, and given the significantly lower market valuations for many of these acquisitions, also represented good buys - was a a positive move to help the Group manage its future capacity building ability in a financially prudent and planned manner. On the human resource front, the Group remained committed to upgrading the skills set of its employees, and provide motivational and positive reinforcement programmes for all its executives. retreats throughout the country. Since 2004, the Management had committed to a series of team building These team building retreats were to strengthen team work, provide constant

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motivation and support to employees, encourage a sense of belonging and shared objectives. A total of 175 employees participated in four (4) team building retreats in 2010. To facilitate better time management and productivity, the Group also invested in FlexHR, a human resource management information system software that provided better time and scheduling management of employee productivity. Marketing Review The Group invested a sum of approximately RM11.7million in building brand and product awareness promotion activities in the local and global market during the year. This investment was utilized through a combination of promotional initiatives such as trade-related incentive programmes; business-to-business trade events; and consumer awareness campaigns. The Group also successfully hosted its third (3rd) nationwide trade dealer convention which witnessed the introduction of 13 new BOP products under the Khind and Mistral brands. Attendance by some 600 domestic dealers and 20 overseas suppliers was highly encouraging and allowed the Group's trade partners to experience first-hand some of the new products launched.

Mistral product. Additionally, the Group engaged three (3) different product managers to step up the on-going research and development of new BOP products with the aim of remaining relevant to the needs of consumers. Giving back to the community at large ­ Corporate Responsibility (CR) Since its inception, the Company and Group have always sought to give back to society where possible. In 2010, more effort, resource and time were committed to Corporate Responsibility (CR) initiatives that allowed the Company and its employees to be actively engaged in. Some of these included: flood and earthquake disaster relief assistance; employees volunteering at The Kechara Soup Kitchen, an urban soup kitchen providing free meals for the less fortunate within Kuala Lumpur; sponsorship of the music and arts, specifically the Hands Percussion ensemble and E-major Symphony on "Lawuita" the musical concert; and local community-based volunteer tuition programmes ­ all aimed at providing a positive influence to various communities, and encourage a spirit of compassion, volunteerism and good will among employees within the Khind Group. Your Board is pleased that the positive CR achievements in

To ensure better product penetration, the Group also restructured its sales teams to further concentrate on BOP products and its two key brands ­ Khind and Mistral. The BOP sales team was established to specifically "push the acceptance" of the Group's new products among trade partners, while a Mistral sales team was reignited to aggressively build market share for the brand's air-moving and cooling products. All in all, the brand specific teams established allowed for greater focus on driving product penetration and awareness in the market place and providing a clearer focus to sales team targets. At the retail front, more promoters were engaged at high traffic outlets to step up promotional inputs and to encourage consumers to consider purchasing a Khind or

2010 have left an indelible impression among the various stakeholders that the Khind Group is not only focused on financial performance and returns, but understands its role within the community that it operates. 2011 - Celebrating 50 Years of continued success Khind celebrates its 50th Anniversary in 2011. A significant and important milestone in the Company's history as the five decades represent the Company's longevity and determination to be a leading player in its industry. From its humble beginning in 1961, the Company has certainly achieved much success and overcome adversity to arrive at its 50th year of doing business. However, recognising that business environments change constantly, the Group

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must also continuously evolve to meet the needs of the market place in the future, and enhance earnings potential in the long run. In this regard, the Group announced in January 2011 that it had acquired a cluster of industrial specialist electrical and power distribution businesses that will add value from a revenue perspective, and also knowledge and skills offering to an industrial customer base. Your Board is hopeful that these synergistic acquisitions will propel the Khind Group up the value chain within the electrical and electronics industry, while expanding its earnings stream. Moving ahead, as part of the upcoming 50th Anniversary celebrations the Group intends to celebrate and commemorate its achievements. Your Board encourages all stakeholders to join in the future celebrations to be announced in 2011. Note of Appreciation While the Company and Group's growth was moderate in 2010, the Board would like to recognise the contributions of everyone associated with the Khind Group. From longstanding employees who continue to serve the Group with distinction; to truly remarkable trade partnerships with local and international dealers; to our loyal consumers who purchase our products; to regulatory authorities who help facilitate the progress of our business; and to members of the Community who help us in their own way - the Board places on record its kind appreciation to each and every one of you. We are encouraged by your support and look forward to celebrating our 50th Anniversary with you.

CHENG KING FA CHAIRMAN CHENG PING KEAT GROUP CHIEF EXECUTIVE OFFICER (CEO)

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Corporate Structure

KHIND HOLDINGS BERHAD (380310-D)

100% Khind-Mistral Industries Sdn Bhd (213282-V) Manufacture and sale of electrical home appliances and wiring accessories 100% Khind Middle East FZE (01020) Trading in home appliances

100% Khind-Mistral (M) Sdn Bhd (442421-A) Trading in electrial products 100% Khind-Mistral (Borneo) Sdn Bhd (234614-W) Trading in electrical home appliances and wiring accessories 100% Mistral (Singapore) Pte Ltd (200106472H) Trading in electrical products 100% Khind Customer Service Sdn Bhd (109015-W) Providing general repair and rework services and renting of commercial properties 100% Indesico (M) Sdn Bhd (811092-W) Trading in electrical home appliances 100% Khind-Mistral (Sabah) Sdn Bhd (177741-V) Renting of properties and motor vehicles 100% Khind Components Sdn Bhd (196021-P) Dormant 100% Khind Technology Centre Sdn Bhd (429363-P) Dormant 100% Khind Home Appliances Sdn Bhd (429595-W) Dormant 100% Khind Industries Sdn Bhd (173304-D) Dormant

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Corporate Information

Registered Office : Level 18, The Gardens North Tower Mid Valley City Lingkaran Syed Putra 59200 Kuala Lumpur Tel: 603-2264 8888 Fax: 603-2282 2733 Website Address : www.khind.com / www.khind.ae www.mistral.com.my / www.mistral.com.sg www.indesico.com.my Email Address : [email protected] Share Registrars : Tricor Investor Services Sdn Bhd Level 17, The Gardens North Tower Mid Valley City, Lingkaran Syed Putra 59200 Kuala Lumpur Tel: 603-2264 3883 Fax: 603-2282 1886 Company Secretaries : Kuan Hui Fang (MIA 16876) Tan Ai Peng (MAICSA 7018419) Stock Exchange Securities : Main Market of Bursa Malaysia Securities Berhad Stock Code : 7062 External Auditors : KPMG Chartered Accountants (AF 0758) Internal Auditors : BDO Governance Advisory Sdn Bhd Principal Bankers: DBS Bank Ltd EON Bank Berhad Hong Leong Bank Berhad Kuwait Finance House (M) Berhad Malayan Banking Berhad Public Bank Berhad RHB Bank Berhad Standard Chartered Bank Malaysia Berhad United Overseas Bank Limited Solicitors : Halim, Hong & Quek Ong & Partnership Shearn Delamore & Co Khor, Anuar & Khong

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Profile of Board of Directors

MR. CHENG KING FA - Malaysian

- Founder/Chairman

Mr. Cheng King Fa, aged 72, is the Founder of the KHIND group, which commenced as a small family business 50 years ago. Under his vision and guidance, the business has grown into one of Malaysia's leading local electrical products manufacturer. With 50 years' experience in the electrical industry, he provides invaluable advice to the Group on production, marketing, new product research and development. Mr. KF Cheng was appointed as the Executive Chairman of the Group on 20 April 1998 prior to the Company's listing on the Second Board of Bursa Malaysia Securities Berhad on 12 August 1998. On 1 March 2005, he was re-designated as Founder /Chairman. Mr. KF Cheng has no convictions for any offence within the past ten years and no conflict of interest with KHIND, other than those disclosed in the 2010 financial statements in respect of related party transactions. In 2010, he attended all the five meetings held by the Board. He is the father of Mr. Cheng Ping Keat.

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MR. CHENG PING KEAT - Malaysian

- Group Chief Executive Officer

Mr. Cheng Ping Keat, aged 50, was appointed Executive Director of KHIND on 20 April 1998. He graduated with a Bachelor of Commerce degree from the University of Melbourne, Australia in 1984. Post graduation, he had a short stint in audit, accountancy and receivership, both locally and abroad. He joined the KHIND Group in September 1987. In 1996, he obtained his Master of Business Administration from Bath University, U.K. Mr. PK Cheng was appointed and designated as the Group Chief Executive Officer of the KHIND Group on 18 November 2003. He is responsible for the overall strategic planning and operations relating to manufacturing, marketing, financial, export management and brand building for the KHIND Group. Mr. PK Cheng has no convictions for any offence within the past ten years and no conflict of interest with KHIND, other than those disclosed in the 2010 financial statements in respect of related party transactions. In 2010, he attended all the five meetings of the Board. He is the son of Mr Cheng King Fa.

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MR. KAMIL BIN DATUK HJ. ABDUL RAHMAN - Malaysian

- Senior Independent Non-Executive Director - Chairman of Audit Committee - Member of Nomination and Remuneration Committee

Mr. Kamil A. Rahman, aged 62, was appointed as an Independent Non-Executive Director of KHIND on 30 July 2001. At the same time, he became an independent member of the KHIND Audit Committee. His area of specialization is in corporate governance, corporate finance and risk management. Mr. Kamil was appointed as the Chairman of the Audit Committee on 5 August 2008 and as the Senior Independent Director on 31 March 2009. He is also a member of the Nomination and Remuneration Committee. Mr. Kamil graduated with a Bachelor of Commerce degree from the University of Otago, New Zealand and subsequently qualified as a Chartered Accountant of the Institute of Chartered Accountants of New Zealand. He is also a Fellow Chartered Secretary of the Institute of Chartered Secretaries and Administrators, United Kingdom, and a Chartered Accountant of the Malaysian Institute of Accountants. Mr. Kamil's previous senior positions were Senior Vice President of the Bank of Commerce (M) Berhad and Executive Director of Commerce International Merchant Bankers Berhad. He is also a Director of Malaysian Merchant Marine Berhad, Global Carriers Berhad, *Putera Capital Berhad, *Bukit Katil Resources Berhad, *WDM Holdings Berhad (*not listed on Bursa Malaysia), and the Malaysia South Africa Business Council (a company limited by guarantee). Mr. Kamil has no family relationship with any Director and or major shareholder of the Company, no conflict of interest with KHIND and no convictions for any offence within the past ten years. He attended all the five meetings of the Board in 2010.

MR. MD. AZMI BIN LOP YUSOF - Malaysian

- Independent Non-Executive Director - Member of Nomination and Remuneration Committee

Mr. Md. Azmi bin Lop Yusof, aged 56, was appointed as a Non-independent Non-Executive Director of KHIND on 20 April 1998. He obtained a Diploma in Agriculture from Kolej Pertanian Malaysia in 1975 and graduated with a degree in Agricultural Business from Louisiana State University, USA in 1979. He is a former State Assemblyman for Terengganu and also sits on the board of some private limited companies. On 26 February 2008, Mr. Md. Azmi was re-designated as an Independent NonExecutive Director. Mr. Md. Azmi has no family relationship with any Director but is a shareholder of KHIND. He is also a member of the Nomination and Remuneration Committee. He has no conflict of interest with KHIND and no convictions for any offence within the past ten years. He attended all the five meetings of the Board in 2010.

MR. LEE AH LAN @ LEE KEOK HOOI - Malaysian

- Non-Independent Non-Executive Director - Member of the Audit Committee - Member of the Nomination and Remuneration Committee

Mr. Lee Keok Hooi, aged 64, was appointed as a Non-independent Non-Executive Director of KHIND on 26 March 1999. He holds a Bachelor of Commerce degree in Accounting from the University of Western Australia and is a Chartered Accountant (Malaysia) and a CPA (Australia). Mr. Lee is a member of the Audit Committee and the Nomination and Remuneration Committee. Mr. Lee is the Group Executive Chairman and Managing Director of Hock Sin Leong

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Group Berhad - a company listed on the Main Market of Bursa Malaysia Securities Berhad, and a premier home-grown consumer electrical and electronic products player. He has been involved in the group activities since 1976. He is also a member of the Nomination and Remuneration Committee of KHIND. Mr. Lee has no family relationship with any Director and/or major shareholder of KHIND and has no convictions for any offence within the past ten years. He attended four of the five meetings of the Board held in 2010. Mr. Lee does not have any conflict of interest with KHIND, other than that disclosed in the 2010 financial statements pertaining to related party transactions.

General Manager/Director of Nylex in 1980. He was promoted to the position of Managing Director in 1985 and when he left at the end of June 1994 to found Vistage Malaysia, he was appointed and served as non-executive Deputy Chairman of the Nylex Malaysia Group of Companies up to October 1999. Mr. Wong is currently the Senior Independent Non-Executive Director of Sunway Holdings Berhad and Chairman of its Audit Committee as well as a Member of the Nomination and Remuneration Committees. He was appointed to the National Branding Taskforce of the Ministry of Trade and Industry since 2006 and also served on the Technical Evaluation Panel for the Annual Prime Minister's Award. He has served on the Board of Trustees of Scientex Foundation since 2008 and was a Member of the Board of Trustees of the Malaysian Rubber Export Promotion Council from 2000 to 2002. He also served as a Council Member with Federation of Malaysian Manufacturers ("FMM") from 1985 to 1997, held positions with the Young Presidents' Organization-Malaysia Chapter from 1988 to 1993 and also was involved in the Lions Club of Shah Alam from 1976 to 1980. He is also a Board Member of Transparency International Malaysia since 2006 until to date. In January 2011, he was appointed by FMM to be the Chairman of the FMM Branding & IPR Committee. Mr. Wong has no family relationship with any Director and/or major shareholder of KHIND and no convictions for any offence within the past ten years. He attended two of the remaining three meetings of the Board since his appointment on 19 July 2010. Mr. Wong does not have any conflict of interest with KHIND.

MR. WONG CHIN MUN - Malaysian

- Independent Non-Executive Director - Chairman of the Nomination and Remuneration Committee - Member of the Audit Committee

Mr. Wong Chin Mun, aged 66, was appointed as an Independent Non-Executive Director of KHIND on 19 July 2010. He holds degrees in Bachelor of Business (Secretarial Administration) and (Accounting) from Curtin University of Western Australia and has a Teacher's Certificate from the Ministry of Education, Malaysia. He is a Fellow of the Australian Society of Certified Practising Accountants and Associate of Malaysian Institute of Accountants. On 19 July 2010, Mr. Wong was also appointed as an Independent Member of the Audit Committee and the Nomination and Remuneration Committee. On 1 March 2011, Mr. Wong became the Chairman of the Nomination and Remuneration Committee. Mr. Wong is currently the Chairman of Vistage Malaysia Sdn. Bhd., which has the rights for the Vistage System from Vistage International Inc., USA, aimed at assisting chief executive officers and entrepreneurs of small, medium enterprise to proactively manage change and grow their businesses. He joined Nylex Malaysia Berhad ("Nylex") as Financial Controller/Company Secretary in January 1976 and became the first local

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Statement on Corporate Governance

The Board of Directors of Khind Holdings Berhad recognizes the importance of good corporate governance throughout the Group as a fundamental process of discharging its responsibilities to protect and enhance shareholders' value and financial performance of the Group. The Board is committed to the maintenance of high standards of corporate governance by adopting and implementing the prescription of the principles and best practices set out in Malaysia Code of Corporate Governance, revised 2007 (The "Code"). BOARD OF DIRECTORS BOARD COMPOSITION AND BALANCE The Board currently comprises six (6) members, of whom two (2) are of Executive capacity and three (3) out of four (4) Non-Executive Directors are independent. This is in compliance with the Paragraph 15.02 of the Listing Requirements of Bursa Securities, that at least two (2) Directors or one-third (1/3) of the Board, whichever is higher, are Independent Directors. All Independent Non-Executive Directors are independent of management and free of any relationship that could interfere with the exercise of their independent judgment. The Executive Directors are responsible for determining and implementing financial and operational decisions. The role of Independent Non-Executive Directors is crucial in ensuring that the strategies proposed by the management are fully deliberated and examined. They fulfill a pivotal role in corporate accountability as they provide unbiased and independent views, advices and judgements on issues pertaining to the shareholders, employees, customers, suppliers and the various communities in which the Group conduct its business. In totality, the Directors share a wide exposure in the legal, business, financial and technical fields. This blend of knowledge and experience is vital to determine an objective outlook of the Group. A brief profile of each Director is set out in pages 14 to 17 of the Annual Report. In accordance with Part 2 AA, VII of the Code, Mr. Kamil Bin Datuk Hj. Abdul Rahman has been appointed as the Senior Independent Non-Executive Director. BOARD MEETINGS During the year, four (4) Ordinary Board Meeting and one (1) Special Board Meeting were held and the attendance record of the Board members is reflected as follows:DIRECTORS' BOARD MEETINGS IN YEAR 2010 Directors Total Number of Meetings Attended by Directors 5/5 5/5 5/5 4/5 2/2 2/3 5/5

1. 2. 3. 4. 5. 6. 7.

Mr. Cheng King Fa Mr. Cheng Ping Keat Mr. Kamil bin Datuk Hj. Abdul Rahman Mr. Lee Ah Lan @ Lee Keok Hooi Mdm. Tan Lay Kuan @ Tan Lay Wah (resigned on 27.5.2010) Mr. Wong Chin Mun (appointed on 19.7.2010) Mr. Md. Azmi bin Lop Yusof

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Statement on Corporate Governance (Continued)

SUPPLY OF INFORMATION TO THE BOARD All Directors have full access to information concerning the Company and the Group. The agenda for every Board Meeting, together with a comprehensive set of board papers are furnished to all Directors for their perusal in advance of the Board Meeting date. This is to ensure sufficient time is given to enable the Directors to review and consider the agenda items to be deliberated at the Board Meetings. The Board papers include, amongst others, quarterly financial reports, year-end financial statements of the Group, annual budget, other major operational financial and legal issues. Corporate plans and annual budgets, acquisitions and disposals of undertakings and properties with a substantial value, major investments and financial decisions, including key policies and procedures and delegated authority limits are subject to Board approval. All deliberations in relation to matters discussed and the conclusions are recorded. The Directors are provided with non-financial indicators like customer service performance, safety & health compliance, market information when dealing with such matters on the agenda. The Directors have unrestricted access to advice and services of the company secretary, senior management and independent professional advisers including the external auditors, at the Company's expense. The Directors can utilize the professional services when necessary to fulfill their duties and specific responsibilities as enumerated in Best Practices Provisions AAI of the code. BOARD COMMITTEES The Board delegates certain responsibility to Board Committees which operate within clear defined terms of reference. They are mainly the Audit Committee and the Nomination and Remuneration Committee. Prior to the establishment of these committees, their functions were assumed by the Board as a whole. The Chairman of the two (2) Committees will report to the Board the outcome of their Committee decisions. a) Audit Committee The Audit Committee was appointed by the Board and established on 10 August 1998 to assist its duty of maintaining a sound system of internal controls and risk management to safeguard shareholders' interest and the Company's assets. A full Audit Committee report enumerating its membership, its role and its activities during the year is set out in pages 28 to 29 of this annual report. b) Nomination and Remuneration Committee The Nomination and Remuneration Committee which was established on 15 November 2001 comprises three (3) Independent Non-Executive Directors and one (1) Non-Independent Non-Executive Directors. The Committee is responsible for developing the remuneration packages and benefits-in-kind of Executive Directors and making recommendation to the Board for approval. The remuneration of the Non-Executive Directors is decided by the entire Board. The Board has complied with the Code to review the remuneration of Directors such that the Group attracts and retain the right Director mix to run the Company successfully. The Committee is also responsible to make appropriate recommendations to the Board on matters of renewal, extension, retirement, appointment and re-appointment of directors as well as review annually the mix of skills experience and competencies of the Board. The Committee is finalising the process of assessment on the effectiveness of the Board, the committee members and contribution of each individual director, including Independent Non-Executive Directors, as well as the Chief Executive Officer (CEO). This process also includes developing a job description and limits to management responsibility for directors including CEO The members of the Nomination and Remuneration Committee who served during the financial year are: Chairman Wong Chin Mun (appointed on 1.3.2011) Members Tan Lay Kuan @ Tan Lay Wah (resigned on 27.5.2010) Lee Ah Lan @ Lee Keok Hooi Md. Azmi bin Lop Yusof Kamil bin Datuk Haji Abdul Rahman

(Independent and Non-Executive Director)

(Independent and Non-Executive Director) (Non-independent and Non-Executive Director) (Independent and Non-Executive Director) (Senior Independent and Non-Executive Director)

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