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企业有限公司HAI-O ENTERPRISE BERHAD (22544-D)
根据一九六五年公司法令在马来西亚注册成立(Incorporated in Malaysia under the Companies Act, 1965)
We Delivered
ANNUAL REPORT
2008二零零八常年报告书
Room 803, 8th Floor, Sun Kompleks, Jalan Bukit Bintang, 55100 Kuala Lumpur, Malaysia.Tel : 03 - 2142 2611 Fax : 03 - 2142 2840 www.hai-o.com.my [email protected]
ANN
UAL REPORT 2008HAI-O EN
TERPRISE BERHAD (22544-D
)
企业有限公司 HAI-O ENTERPRISE BERHAD (22544-D)
根据一九六五年公司法令在马来西亚注册成立(Incorporated in Malaysia under the Companies Act, 1965)
玻璃市Perlis
槟城Penang
吡叻Perak
雪兰莪Selangor
柔佛Johor
北马 North Malaysia
Hai-O Chain Store’s Network 海鸥连锁店网络
Corporate Profi leEstablished in 1975, Hai-O has since become a famous household name offering a wide range of Chinese
medicines, medicated tonic and healthcare products. Providing superior quality healthcare products at a
reasonable price is our business policy.
Hai-O was listed on the Second Board of Bursa Malaysia Securities Berhad in 1996, being the fi rst traditional
healthcare company on the stock exchange. The company had then successfully transferred to the Main
Board of Bursa Malaysia on 8th October 2007.
The principal business of the company involves wholesaling, retailing, multi-level marketing, pharmaceutical
factory and modern Chinese Medicinal Clinics. For the past three decades, Hai-O had honed its expertise by
building extensive and effi cient distribution network and strong marketing strategies in Malaysia.
1. ALOR STAR 亚罗士打 Tel: 04-7775815
2. AYER ITAM 阿依淡 Tel: 04-8288606
3. CHAI LENG PARK 北海才能园 Tel: 04-3990710
4. JALAN BURMAH 车水路 Tel: 04-2265909
5. QUEENSBAY 巴六拜皇后园广场 Tel: 04-6432200
6. IPOH 怡保 Tel: 05-2547733
7. TELUK INTAN 安顺 Tel: 05-6218173
8. KUANTAN 关丹 Tel: 09-5667022
9. KLANG 巴生 Tel: 03-33431167
10. JALAN SULTAN 苏丹街 Tel: 03-20703282
11. SUN COMPLEX 太阳大厦 Tel: 03-21417700
12. TAMAN PERTAMA 第一花园 Tel: 03-92848961
13. SETAPAK 文良港 Tel: 03-40226053
14. JINJANG 增江 Tel: 03-62589081
15. PJ SS2 八打灵 Tel: 03-78778088
16. SERDANG 沙登 Tel: 03-89433536
17. METRO KAJANG 美景广场 Tel: 03-87344001
18. TAMAN MUDA AMPANG 安邦太子园 Tel: 03-42966941
19. USJ SUBANG 梳邦 Tel: 03-56387239
20. KEPONG 甲洞 Tel: 03-62776097
21. ENDAH PARADE 恩达广场 Tel: 03-95430951
22. MCC CITY 马中商城 Tel: 03-92837787
23. DESA AMAN PURI 甲洞逸富园 Tel: 03-62803195
24. PUSAT BANDAR RAWANG 万挠镇 Tel: 03-60927880
25. SUNGAI LONG 加影双溪龙 Tel: 03-90758889
26. PEARL POINT 旧巴生路珍城 Tel: 03-79822946
27. ONE UTAMA 万达 Tel: 03-77241015
28. CARREFOUR MIDVALLEY 谷中城广场 Tel: 03-22872136
29. CARREFOUR SUBANG JAYA 梳邦再也家乐福 Tel: 03-33438889
30. JUCSO BUKIT TINGGI 2 JUSCO武吉丁宜2 Tel: 03-33262408
31. GIANT BANDAR PUTERI PUCHONG 蒲种公主城大人超市 Tel: 03-80600637
32. CARREFOUR JALAN PEEL 蕉赖家乐福 Tel: 03-33438889
33. PANDAMARAN 班达马兰 Tel: 03-33232045
34. JLN IPOH 怡保路 Tel: 03-62502887
35. KAPAR INDAH 加埔7支 Tel: 03-32913651
36. SELAYANG JAYA 士拉央 Tel: 03-61387908
中马 Central Malaysia
南马 South Malaysia
东海岸 East Coast
37. TITI 知知港 Tel: 06-6111768
38. SEREMBAN 芙蓉 Tel: 06-7627903
39. JUSCO SEREMBAN 2 JUSCO芙蓉2 Tel: 06-6015422
40. MELAKA 马六甲 Tel: 06-2836935
41. BATU BERENDAM 马六甲巴株安南 Tel: 06-3178262
42. LUKUT 芦骨 Tel: 06-6515519
43. KLUANG 居銮 Tel: 07-7721773
44. BATU PAHAT 巴株巴辖 Tel: 07-4310451
45. JOHOR BAHRU 新山 Tel: 07-3325377
46. SEGAMAT 昔加末 Tel: 07-9321262
47. MUAR ASTAKA 麻坡 Tel: 06-9532842
48. MUAR LEGENDA 麻坡凯荣 Tel: 06-9510714
49. PLAZA TASEK 皇后广场 Tel: 07-5543925
50. GIANT PLENTONG JB 避兰东大人超市 Tel: 07-3591636
51. CARREFOUR SUTERA MALL, J.B 五福城广场家乐福 Tel: 03-33438889
52. JOHOR JAYA 柔佛再也 Tel: 07-3575332
53. KULAI 古来 Tel: 07-6621398
54. TAMAN PERLING 新山柏龄花园 Tel: 07-2345941
55. TAMAN UNIVERSITY 新山大学城 Tel: 07-5202566
56. TANGKAK 东甲 Tel: 06-9785127
彭亨Pahang
森美兰N. Sembilan
登嘉楼Terengganu
吉兰丹Kelantan
吉打Kedah
马六甲Melaka
www.hai-o.com.my • ANNUAL REPORT 2008 1
Audit Committee Report
2 Notice Of Annual General Meeting
10 Group Corporate Structure
11 Corporate Information
12 Board Of Directors
14 Profi le Of The Board Of Directors
22 Group Financial Highlights
24 Chairman’s Statement
34 Managing Director’s Statement
47 Corporate Social Responsibility
51 Audit Committee Report
56 Statement On Corporate Governance
61 Statement On Internal Control
63 Additional Corporate Disclosure
66 Financial Statements
144 Analysis Of Shareholdings
147 Top 10 Properties
• Form Of Proxy
CONTENTS
HAI-O ENTERPRISE BERHAD (22544-D) • (INCORPORATED IN MALAYSIA)2
ud t Co ttee epo t
NOTICE OF ANNUAL GENERAL MEETING
AGENDA
1. To receive and adopt the audited Financial Statements for the fi nancial year ended 30 April 2008 and the Reports of the Directors and Auditors thereon.
2. To re-elect Mr. Lim Chin Luen who retires by rotation pursuant to Article 102(1) of the Company’s Articles of Association.
3. To pass the following resolutions in accordance with Section 129(6) of the Companies Act, 1965 :-
i) “ That Tan Sri Osman S Cassim, retiring pursuant to Section 129(6) of the Companies Act, 1965, be and is hereby re-appointed Director of the Company to hold offi ce until the next Annual General Meeting.”
ii) “ That Dato’ Abdul Rani Bin Mohd. Razalli, retiring pursuant to Section 129(6) of the Companies Act, 1965, be and is hereby re-appointed Director of the Company to hold offi ce until the next Annual General Meeting.”
iii) “ That Dr. M.K. Rajakumar A/L M.R.K. Nayar, retiring pursuant to Section 129(6) of the Companies Act, 1965, be and is hereby re-appointed Director of the Company to hold offi ce until the next Annual General Meeting.”
iv) “ That Mr. Tan Kai Hee, retiring pursuant to Section 129(6) of the Companies Act, 1965, be and is hereby re-appointed Director of the Company to hold offi ce until the next Annual General Meeting.”
4. To approve Directors’ fees for the fi nancial year ended 30 April 2008.
5. To declare a fi nal dividend of 32% less 25% tax for the fi nancial year ended 30 April 2008.
6. To re-appoint Messrs BDO Binder as Auditors of the Company and to authorise Directors to fi x their remuneration.
Resolution 1
Resolution 2
Resolution 3
Resolution 4
Resolution 5
Resolution 6
Resolution 7
Resolution 8
Resolution 9
NOTICE IS HEREBY GIVEN that the 33rd Annual General Meeting of the Company will be held at Banquet Hall, 2nd Floor, The Federal Hotel Kuala Lumpur, No. 35, Jalan Bukit Bintang, 55100 Kuala Lumpur on Wednesday, 29 October 2008 at 11.30 a.m. to transact the following business:-
www.hai-o.com.my • ANNUAL REPORT 2008 3
AS SPECIAL BUSINESS :-
7. To consider and if thought fi t, to pass the following resolutions :-
Ordinary Resolution 1 Authority to allot and issue shares pursuant to Section 132D of the Companies Act, 1965 “ That the Directors be and are hereby empowered, pursuant to Section 132D of the Companies
Act, 1965, to issue shares in the Company at any time and upon such terms and conditions and for such purpose as the Directors may, in their absolute discretion deem fi t, provided that the aggregate number of the shares issued pursuant to this resolution does not exceed 10% of the issued share capital of the Company as at the date of this Annual General Meeting and that the Directors be and are also empowered to obtain the approval for the listing of and quotation for the additional shares so issued on Bursa Malaysia Securities Berhad and that such authority shall continue in force until the conclusion of the next Annual General Meeting of the Company.”
Ordinary Resolution 2 Proposed Share Buy-Back by the Company “ That subject to the rules, regulations and orders made pursuant to the Companies Act, 1965
(“the Act”), provisions of the Memorandum and Articles of Association of the Company and the Listing Requirements of Bursa Malaysia Securities Berhad (“Bursa Securities”) and any other relevant authorities, the Board be and is hereby authorised to purchase the Company’s issued and paid-up ordinary shares of RM1.00 each (“Hai-O Shares”) through Bursa Securities (“Proposed Share Buy-Back”) subject to the following:-
i) the maximum number of Hai-O Shares which may be purchased and/or held as treasury shares by the Company at any point of time pursuant to the Proposed Share Buy-Back shall not exceed ten percent (10%) of the total issued and paid-up share capital of the Company;
ii) the maximum fund to be allocated by the Company for the purpose of purchasing the Hai-O Shares shall not exceed the aggregate of the retained profi ts and/or the share premium account of the Company;
iii) the authority conferred by this resolution will be effective immediately upon the passing of this Resolution and will expire at the conclusion of the next annual general meeting of the Company, unless earlier revoked or varied by ordinary resolution of the shareholders of the Company in a general meeting or the expiration of the period within which the next annual general meeting after that date is required by the law to be held, whichever occurs fi rst, but not so as to prejudice the completion of purchase(s) by the Company before the aforesaid expiry date and, in any event, in accordance with the provisions of the Listing Requirements of Bursa Securities or any other relevant authorities; and
iv) upon completion of the purchase(s) of the Hai-O Shares by the Company, the Board be and is hereby authorised to retain the Hai-O Shares so purchased as treasury shares, of which may be distributed as dividends to shareholders and/or re-sold on Bursa Securities and/or subsequently cancelled and in other manner as prescribed by the Act, rules, regulations and orders made pursuant to the Act and the requirements of Bursa Securities and any other relevant authorities for the time being in force.
AND that the Board be and is hereby authorised to take all such steps as are necessary or expedient to implement or to effect the purchase(s) of the Hai-O Shares with full power to assent to any condition, modifi cation, variation and/or amendment as may be imposed by the relevant authorities and to take all such steps as they may deem necessary or expedient in order to implement, fi nalise and give full effect in relation thereto.”
8. To transact any other business for which due notice shall have been given in accordance with the Company’s Articles of Association and the Companies Act, 1965.
Resolution 10
Resolution 11
NOTICE OF ANNUAL GENERAL MEETING (CONT’D)
Co t d
HAI-O ENTERPRISE BERHAD (22544-D) • (INCORPORATED IN MALAYSIA)4
ud t Co ttee epo t
NOTICE OF DIVIDEND ENTITLEMENT AND PAYMENT
NOTICE IS ALSO HEREBY GIVEN that subject to the approval of the shareholders at the 33rd Annual General Meeting to be held on 29 October 2008, a fi nal dividend of 32% less 25% tax per ordinary share of RM1.00 each in respect of the fi nancial year ended 30 April 2008 will be paid on 10 December 2008. The entitlement date for the dividend payment is 1 December 2008.
A Depositor shall qualify for the entitlement to the dividend only in respect of :-
(a) Securities transferred into the Depositor’s Securities Account before 4.00 p.m. on 1 December 2008 in respect of the transfers; and
(b) Securities bought on Bursa Malaysia Securities Berhad on a cum entitlement basis according to the rules of Bursa Malaysia Securities Berhad.
By Order of the Board
Chen Yut Meng (MACS 01131)
Nancy Ng Ah Pang (LS 01448)
Company Secretaries
Kuala Lumpur6 October 2008
NOTICE OF ANNUAL GENERAL MEETING (CONT’D)
Notes :1. A member entitled to attend and vote at the above meeting is entitled to appoint not more than two (2) proxies to
attend and vote instead of him. A proxy may but need not be a member of the Company.
2. Where a member appoints two (2) proxies, the appointment shall be invalid unless he specifi es the proportions of his holding(s) to be represented by each proxy.
3. The instrument appointing a proxy shall be in writing under the hand of the appointer or his attorney duly authorised in writing, or if the appointer is a corporation, either under its Common Seal or attorney duly authorised in writing.
4. The Form of Proxy must be deposited at the Registered Offi ce of the Company at Room 803, 8th Floor, Sun Kompleks, Jalan Bukit Bintang, 55100 Kuala Lumpur, not less than forty-eight (48) hours before the time appointed for holding the meeting.
Explanatory Notes on Special BusinessResolution 10 (Ordinary Resolution 1)Resolution pursuant to Section 132D of the Companies Act, 1965
In line with the Company’s plan for the expansion, the Company is actively looking into prospective areas so as to broaden the operating base and earning potential of the Company. As the expansion may involve the issue of new shares, the Directors, under present circumstances, would have to call for a general meeting to approve the issue of new shares even though the number involved is less than 10% of the issued capital. In order to avoid any delay and cost involved in convening a general meeting to approve such issue of shares, it is thus considered appropriate that the Directors be now empowered to issue shares in the Company up to an amount not exceeding in total 10% of the issued share capital of the Company as at the date of this Annual General Meeting for such purpose as they consider would be in the interest of the Company. This authority, unless revoked or varied at a general meeting, will expire at the next Annual General Meeting of the Company.
Resolution 11 (Ordinary Resolution 2)Resolution pertaining to Proposed Share Buy-Back by the Company
The Ordinary Resolution proposed, if passed, will empower the Company to purchase and/or hold up to ten percent (10%) of the issued and paid-up share capital of the Company. This authority will, unless revoked or varied by the Company at a General Meeting, expire at the next Annual General Meeting. For further information on the Proposed Share Buy-Back, please refer to the Share Buy-Back Statement dated 6 October 2008 accompanying the Annual Report 2008.
www.hai-o.com.my • ANNUAL REPORT 2008 5
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STATEMENT ACCOMPANYING NOTICE OF ANNUAL GENERAL MEETING
1) Director who are standing for re-election or re-appointment at the 33rd Annual General Meeting of the Company
i) The Director retiring by rotation pursuant to Article 102(1) of the Company’s Articles of Association and seeking re-election is :
- Lim Chin Luen
ii) The Directors who are over the age of seventy years and seeking re-appointment pursuant to Section 129(6) of the Companies Act, 1965 are :-
- Tan Sri Osman S Cassim - Dato’ Abdul Rani Bin Mohd. Razalli - Dr. M.K. Rajakumar A/L M.R.K. Nayar - Tan Kai Hee
The details of fi ve Directors seeking re-election or re-appointment are set out in the Directors’ profi les which appear from page 14 to page 20 of the Annual Report.
2) Details of attendance of Directors at Board Meetings
Details of attendance of Directors at Board Meetings held during the fi nancial year ended 30 April 2008 are set out on page 64 of the Annual Report.
3) Place, Date and Time of the 33rd Annual General Meeting :-
Place : Banquet Hall, 2nd Floor, The Federal Hotel Kuala Lumpur, No. 35,Jalan Bukit Bintang, 55100 Kuala Lumpur
Date : 29 October 2008 (Wednesday)
Time : 11.30 a.m.
Pursuant to paragraph 8.28 (2) of the Listing Requirements of Bursa Malaysia Securities Berhad
HAI-O ENTERPRISE BERHAD (22544-D) • (INCORPORATED IN MALAYSIA)6
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1. 接纳及讨论本年度至2008年4月30日的核讫帐目,董事及稽查师报告。
2. 重新委任遵照公司102(1)条文退任的林钟龙先生为本公司的董事。
3. 会议考虑如适当可通过下列普通决案:
i) 重新委任依循1965年公司法令第129(6)条文退任的 Tan Sri Osman S Cassim 为本公司董事,任期至下届股东常年大会。
ii) 重新委任依循1965年公司法令第129(6)条文退任的 Dato’Abdul Rani bin Mohd Razalli 为本公司董事,任期至下届股东常年大会。
iii) 重新委任依循1965年公司法令第129(6)条文退任的 Dr.M.K. Rajakumar A/L M.R.K. Nayar 为本公司董事,任期至下届股东常年大会。
iv) 重新委任依循1965年公司法令第129(6)条文退任的陈凯希先生为本公司董事,任期至下届股东常年大会。
4. 核准本年度2008年4月30日董事费。
5. 建议分发本年度至2008年4月30日年终股息32%唯须扣除所得税25%。
6. 重新委任Messrs. BDO Binder为本公司的稽查师,及授权董事部决定其酬金。
7. 会议考虑如适当可通过下列普通议决案:
授权董事遵照1965年公司法令132D节发行股票“ 遵照1965年公司法令第132D节,根据董事会的判断并决定在任何时间内以适当的条件和用途发
行公司股票,以作为某项用途。但根据此议决案发出的股票累积总数,不得超过公司已发出股本的10%。同时董事们也获授权申请批准,以使这一批发出的额外股票在马来西亚股票交易所有限公司上市。同时此授权将继续有效至公司下一届常年大会结束。”
通知书
www.hai-o.com.my • ANNUAL REPORT 2008 7
ud t Co ttee epo t
通知书
建议更新股票购回授权“ 在1965年公司法令(“法令”)本公司章程条文及马来西亚股票交易所有限公司的规定和任何
其他相关当局所制定的准则、条例与规则之下,本公司董事会兹获得授权通过马来西亚股票交易所有限公司购回本公司已发行和缴足普通股(“海鸥股票”),但这需符合下述条件:
i) 本公司所可能购买或持有的海鸥股票的 大数量将是不超过或相等于目前本公司已发行和缴足股票资本的10%;
ii) 本公司分配以用作购买海鸥股票的 高资金额不超过本公司的累积保留盈利及或股票溢价帐项;
iii) 此决议案所授予的授权在此决议案通过后立即生效,及直到下一次常年股东大会完成而到期,除非公司在股东大会上以决议案加以提早撤回或改变,或在法律规定须召开的日期过后的下一次常年股东大会之期限到期,视何者先发生,但不至于损害到在上述日期到期之前由本公司完成的购买,及无论如何,都必须依照马来西亚股票交易所有限公司的规定和任何其他相关当局所发出的指导方针及条文;
iv) 在本公司完成购买海鸥股票之后,董事会获得授权以保有这些海鸥股票以当作库存股票,可以通过股息方式派发给股东,及/或在马来西亚股票交易所重新出售,及/或之后加以注消,及根据法令规定,和必须根据马来西亚股票交易所规定之准则与此相关之官方规定之条例加以处理。
董事会兹获得授权以采取所有必要的或有用的步骤,全权同意相关当局所实施的任何条件,修改及/或修正,去执行或使海鸥股票的购回实现,及采取所有他们认为是必要的或有用的步骤,以便执行、完成及使之全面生效。”
8. 进行其他议项,唯须根据本公司章程及1965年公司法令的通知程序。
通知书本年度至2008年4月30日年终股息32%唯须扣除所得税25%,如被批准将在2008年12月10日发予已于2008年
12月1日登记在公司股东名册上之股东。
仅在以下情况的存票者方有资格获享股息:-
(a) 以转移方式于2008年12月1日下午4时或之前将股票过户至其证券户口者(b) 依据马来西亚股票交易所有限公司条例,以附属权利方式于马来西亚股票交易所有限公司购置之股票。
受董事会之命曾月明女士黄莲丝女士公司秘书吉隆坡2008年10月6日
HAI-O ENTERPRISE BERHAD (22544-D) • (INCORPORATED IN MALAYSIA)8
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1. 每一名有权出席及投票的股东均可委任不超过2名代表出席股东常年大会并参与投票。股东代表无须为本公司股东。2. 若股东委任2名代表,委任书必须注明各别代表委托的股份,否则其委任书将失效。3. 授权委任书必须为书面,并由他的适当书面授权的代理人签名或者如果委托人为一家公司,则必须在公司的印章下
由一名获适当授权的公司代表签名。4. 授权委任书必须于召开会议前四十八小时内送达公司注册处位于 Room 803, 8th Floor, Sun Kompleks, Jalan Bukit
Bintang, 55100 Kuala Lumpur.
议决案10(普通议决案1)遵照一九六五年公司法领第一三二D条文议决案。
配合公司的扩充计划,公司在积极探寻具景的业务领域,籍以扩大营业基础和盈利潜力。鉴于扩充计划或涉及新股的发行,董事们在目前情况下须召开一次大会,以商讨批准股票的发行,即使涉及的新股票数目少于已发出股本的10%。为避免任何拖延,以及召开大会以批准这些股票发行所牵涉的费用。因此被认为适当的做法是董事们获授权在符合公司利益的用途下发行公司股票,但发出的股票不超过公司已发出股本的10%。此一授权,除非遭撤回或在大会上另有变动,将在公司的下一届常年大会满期。
议决案11(普通议决案2)
此普通议决案,如获得通过,将授权本公司购买及/或持有 高至本公司的十巴仙(10%)已发行或缴足资本。此授权除非在股东大会上被公司撤回或改变,不然会在下一次常年股东大会到期。
请参阅志期2008年10月6日的股票购回声明,以获取进一步的资讯。
附随股东常年大会通知书声明
1) 在33届股东常年大会寻求被重新委任的董事
i. 遵照公司章程第102(1)条文退任并寻求被重新委任的董事:- · 林钟龙先生
ii. 以下四位董事年龄超越70岁,依循公司法令第129(6)节退任并寻求被重新委任:- · Tan Sri Osman S. Cassim · Dato’ Abdul Rani Bin Mohd Razalli · Dr. M.K. Rajakumar A/L M.R.K. Nayar · 陈凯希先生
有关以上五位董事的详细资料请参阅常年报告书第12页至20页的董事部简介。
2) 董事会议
在本财务年度里,各董事出席董事会议的详情在本常年报告书第64页里披露。
3) 第33届股东常年大会的召开地点,日期和时间: 日期: 2008年10月29日(星期三) 地点: Banquet Hall, 2nd Floor, The Federal Hotel Kuala Lumpur No. 35, Jalan Bukit Bintang, 55100, Kuala Lumpur 时间: 上午11时30分
通知书
www.hai-o.com.my • ANNUAL REPORT 2008 9
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We deliver...
We are committed to promoting healthcare
culture and improving human’s well-being.
Mission企业理念
弘扬保健文化,创造幸福生活.
Vision企业使命We aim to become the premier healthcare company
in Malaysia and thereby bringing the greatest value
and pride to our customers, business partners,
employees and shareholders.
我们致力成为马来西亚 卓越的保健企业,
为顾客、商业夥伴,员工及股东带来 高的价值与荣耀.
HAI-O ENTERPRISE BERHAD (22544-D) • (INCORPORATED IN MALAYSIA)10
DIRECT SELLING
DIVISION
Hai-O Marketing Sdn. Bhd.
Hai-O Medicine Sdn. Bhd. Kinds Resource Sdn. Bhd. Grand Brands (M) Sdn. Bhd. Chop Aik Seng Sdn. Bhd.
RETAIL DIVISION
WHOLESALE
DIVISION
HAI-O ENTERPRISE BERHAD
Hai-O Raya Bhd. Peking Tongrentang (M) Sdn. Bhd. Sanjiu Hai-O TCM (M) Sdn. Bhd. Hai-O Polaris (M) Sdn. Bhd.
MANUFACTURING
DIVISION
SG Global Biotech Sdn. Bhd. QIS Research Laboratory Sdn. Bhd.
OTHERS Seagull Advertising Sdn. Bhd. Hai-O Credit & Leasing Sdn. Bhd.
Sri Pangkor Credit & Leasing Sdn. Bhd. Hai-O Properties Sdn. Bhd. Hai-O Energy (M) Sdn. Bhd.
(formerly known as Ten Plus Three Trade Centre Sdn Bhd)
Subsidiary Company Joint Venture Company
GROUP CORPORATE STRUCTUREOF MAIN OPERATING COMPANIES AS AT 6 OCTOBER 2008
www.hai-o.com.my • ANNUAL REPORT 2008 11
BOARD OF DIRECTORS
Tan Sri Osman S. CassimChairman, Independent & Non-Executive Director
Dr. M.K. Rajakumar A/L M.R.K. NayarVice Chairman, Independent & Non-Executive Director
Tan Kai HeeManaging Director
Dato’ Abdul Rani Bin Mohd RazalliNon-Independent & Non-Executive Director
Tan Keng SongExecutive Director
Lim Chin LuenIndependent & Non-Executive Director
Quek Ah BaIndependent & Non-Executive Director
AUDIT COMMITTEE
Quek Ah BaChairman, (Independent & Non-Executive Director)
Dr. M.K. Rajakumar A/L M.R.K. NayarMember, (Independent & Non-Executive Director)
Lim Chin LuenMember, (Independent & Non-Executive Director)
COMPANY SECRETARIES
Chen Yut Meng (MACS 001131)Nancy Ng Ah Pang (LS 01448)
AUDITORS
BDO Binder (AF 0206)Chartered Accountants
SHARE REGISTRAR
PFA Registration Services Sdn Bhd (19234-W)(A wholly owned subsidiary of Tricor Services (Malaysia) Sdn Bhd)
Level 17, The Gardens North TowerMid Valley CityLingkaran Syed Putra59200 Kuala Lumpur, Malaysia.Tel : 03-2264 3883Fax : 03-2282 1886E-mail : [email protected]
PRINCIPAL BANKERS
OCBC Bank (Malaysia) Berhad (295400-W)HSBC Bank Malaysia Berhad (127776-V)Bank of China (Malaysia) Berhad (511251-V)RHB Bank Berhad (6171-M)Public Bank Berhad (6463-H)
REGISTERED OFFICE
Room 803, 8th Floor, Sun KompleksJalan Bukit Bintang, 55100 Kuala Lumpur.Tel : 03-2142 2611 Fax : 03-2142 2840
BUSINESS OFFICE
Wisma Hai-O, Lot 11995,Batu 2, Jalan Kapar, 41400 Klang,Selangor Darul Ehsan, Malaysia.Tel : 03-3342 3322 Fax : 03-3342 8285Website URL : www.hai-o.com.myE-mail : [email protected]
STOCK EXCHANGE LISTING
Main Board of Bursa Malaysia Securities BerhadStock Name / Code: HAIO 7668ISIN : MYL766800006
CORPORATE INFORMATION AS AT 6 OCTOBER 2008
HAI-O ENTERPRISE BERHAD (22544-D) • (INCORPORATED IN MALAYSIA)12
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1. Tan Sri Osman S. Cassim
2. Tan Kai Hee
3. Dr. M.K. Rajakumar A/L M.R.K. Nayar
4. Dato’ Abdul Rani Bin Mohd Razalli
5. Lim Chin Luen
6. Quek Ah Ba
7. Tan Keng Song
8. Tan Keng Kang
(resigned on 18 Sept 2008)
52 34
6 7
1
8
BOARD OF DIRECTORS
www.hai-o.com.my • ANNUAL REPORT 2008 13
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We care...
Corporate Values
Social Responsibility
取之社会, 用之社会
Excellent Service
至诚服务, 以客为尊
Attitude
诚信进取,精益求精
Growing
持续成长, 共同分享
Unity
群策群力,和衷共济
Loyalty
忠于职守, 敬业乐业
Learning
自强不息,终身学习
企业价值
HAI-O ENTERPRISE BERHAD (22544-D) • (INCORPORATED IN MALAYSIA)14
Audit Committee Report
Y. Bhg. Tan Sri Osman S. Cassim(Aged 78 – Malaysian)Chairman, Independent & Non Executive Director
Y. Bhg. Tan Sri Osman was educated at Anderson School, Ipoh and later graduated with a Bachelor of Arts (Honours) from University of Malaya in Singapore. In 1970 and 1984, he attended the Advanced Management Programmes conducted respectively by the New Zealand Administrative Staff College, Wellington and the Harvard Business School in Boston.
Tan Sri Osman has extensive experience in the public sector having served as a member of the Malaysian Administrative and Diplomatic Service for 30 years. Among the posts he held during this tenure were Secretary-General in the Ministry of Labour, the Ministry of Information, and Ministry of Home Affairs. Tan Sri Osman served as Director-General of the Public Services Department Malaysia from 1980 up to his retirement in 1985. In 1985, he was appointed National Executive for Malaysia and Brunei of the General Electric Technical Services Co. Inc. (USA) and subsequently in 1988 as National Advisor to the General Electric International (USA) until 1993. He is a member of the Court of Fellows of the Malaysia Institute of Management and is currently its Vice President. Tan Sri Osman had served as a board member and chairman of Southern Bank Berhad since October 1990 up to his retirement on 18 February 2005.
He was appointed to the board and as Chairman on 31 January 2005.
He has no family relationship with any other director/ major shareholder of Hai-O.
He has attended 8 Board of Directors’ meetings during the fi nancial year ended 30 April 2008.
In the past ten years, he has not been convicted of any offence.
PROFILE OF THE BOARD OF DIRECTORS
www.hai-o.com.my • ANNUAL REPORT 2008 15
Audit Committee Report
Tan Kai Hee(Aged 71 - Malaysian)Managing Director - Non Independent Director
Mr. Tan is one of the founders, main policy and decision-makers of the Company. Mr. Tan as a well-known businessman has more than 30 years of commercial experience in the trading business. Mr. Tan attended China Market Study Tour Program conducted by Beijing International MBA at Peking University in August 2006.
Apart from managing the Company business, he is also an active social worker involved in charitable community works for the past 33 years, and he is presently holding several positions in the Chinese societies. He is the Advisor of the Advisory Mission for Economy and Social Development of Yunnan Province, China; Council Member of the China Market Advisory Council, Tourism Malaysia; Trading Services Chairman of the Malaysia China Business Council (MCBC); Secretary General of the Malaysia-China Friendship Association (PPMC); Chairman of Commerce Committee of The Associated Chinese Chambers of Commerce & Industry of Malaysia (ACCCIM); Honorary President of the Malaysia-China Chamber of Commerce (MCCC); President of the Malaysia-China Medicine & Health Product Association; Advisor of the Federation of Chinese Physicians and Medicine Dealers Association of Malaysia (FCPMDAM) and Vice President of the Klang Chinese Chamber of Commerce and Industry (KCCCI). He also holds directorship in Hai-O Raya Bhd, and several private limited companies.
Mr. Tan was appointed to the board on 30 August 1975. He is a member of the Remuneration Committee, Investment Committee and Employees’ Share Option Scheme Committee.
Mr. Tan is the father of Ms. Tan Keng Song and Mr. Tan Keng Kang.
He has attended 8 Board of Directors’ meetings during the fi nancial year ended 30 April 2008.
In the past ten years, he has not been convicted of any offence.
PROFILE OF THE BOARD OF DIRECTORS (CONT’D)
HAI-O ENTERPRISE BERHAD (22544-D) • (INCORPORATED IN MALAYSIA)16
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PROFILE OF THE BOARD OF DIRECTORS (CONT’D)
Academician Dr. M.K. Rajakumar A/L M.R.K. NayarMBBS (Mal), A.M.F.A. SC., FAFP (Mal), FCFP (S’pore), FHK, CFP, FRACGP, FRCGP (UK), FRCP Edin.
(Aged 76 – Malaysian)Vice Chairman,Independent & Non Executive Director
Dr. M.K. Rajakumar graduated from University of Malaya, Singapore in 1956. He is a past President of the Malayan Medical Association and of the Malaysian Scientifi c Association.
He was appointed to the Board on 6 September 1996. He is also a member of the Audit Committee, Nomination Committee, Remuneration Committee, Employees’ Share Option Scheme Committee and Investment Committee.
He has no family relationship with any other director/major shareholder of Hai-O.
Dr. M.K. Rajakumar has attended 8 Board of Directors’ meetings during the fi nancial year ended 30 April 2008.
In the past ten years, he has not been convicted of any offence.
www.hai-o.com.my • ANNUAL REPORT 2008 17
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Tan Keng Song(Aged 34 - Malaysian)Executive Director - Non Independent Director
Ms. Tan Keng Song graduated from University of Western Australia in 1997 with a Bachelor Degree in Commerce, majoring in Management and Marketing. Prior joining Hai-O, she was a Business Development Executive in one of the leading automobile corporation in Malaysia, UMW Group and in charged of System Development and Training for 3 years. She joined Hai-O Raya Bhd, a retail division of Hai-O Group on 12 June 2000, as MIS Executive in charge of Point of Sales and Management System (POS) for all the retail outlets throughout Malaysia.
On 1 January 2001, she was promoted as Group MIS Executive, in charged of group IT and MIS division. Currently she is assigned as the Group Offi ce Support and Service Manager leading the Business Administration, Human Resource and Management Information System of Hai-O Group.
She was appointed to the Board on 26 December 2001 and is a member of the Employees’ Share Option Scheme Committee and Investment Committee. She also holds directorship in several private limited companies.
Ms. Tan Keng Song is the daughter of Mr. Tan Kai Hee, who is the Managing Director of Hai-O Enterprise Bhd and, sister to Mr. Tan Keng Kang.
She had attended 8 Board of Directors’ meetings during the fi nancial year ended 30 April 2008.
In the past ten years, she has not been convicted of any offence.
PROFILE OF THE BOARD OF DIRECTORS (CONT’D)
HAI-O ENTERPRISE BERHAD (22544-D) • (INCORPORATED IN MALAYSIA)18
Audit Committee Report
Y. Bhg. Dato’ Abdul Rani bin Mohd Razalli(Aged 78 - Malaysian)Non Independent & Non Executive Director
Y. Bhg. Dato’ Abdul Rani obtained his Senior Cambridge Certifi cate in 1952. Subsequently, he joined the Government Service in 1953 and was attached to the Government Royal Custom & Excise, Malaysia for 32 years. He retired from Government Service in 1985 as the Deputy Director General of Customs, Malaysia. After his retirement from the Government Service, he ventured into commercial business in the fi elds of warehousing, freight forwarding, transportation, shipping agency and manufacturing as well as acting as advisor and consultant. He also sits on the board of several other private limited companies.
He was appointed to the Board as Executive Director on 4 January 1995. He was re-designated as Non Executive and Non Independent Director on 16 June 2003. He is a member of the Investment Committee.
He has no family relationship with any other director/major shareholder of Hai-O.
He has attended 8 Board of Directors’ meetings during the fi nancial year ended 30 April 2008.
In the past ten years, he has not been convicted of any offence.
PROFILE OF THE BOARD OF DIRECTORS (CONT’D)
www.hai-o.com.my • ANNUAL REPORT 2008 19
Audit Committee Report
Lim Chin Luen(Aged 64 – Singaporean)Independent & Non Executive Director
Mr. Lim was involved in the dealing of Chinese traditional medicine and herbal products business for more than 15 years. Apart from his appointment in Hai-O, he currently operates his own nourishing food and noodles stores in Singapore.
He was appointed to the Board on 16 December 1997. Mr. Lim is also a member of the Remuneration Committee, Audit Committee, Nomination Committee and Employees’ Share Option Scheme Committee.
He has no family relationship with any other director/major shareholder of Hai-O.
Mr. Lim has attended 8 Board of Directors’ meetings during the fi nancial year ended 30 April 2008.
In the past ten years, he has not been convicted of any offence.
PROFILE OF THE BOARD OF DIRECTORS (CONT’D)
HAI-O ENTERPRISE BERHAD (22544-D) • (INCORPORATED IN MALAYSIA)20
Audit Committee Report
Quek Ah Ba(Aged 65 - Malaysian)Independent & Non Executive Director
Mr. Quek Ah Ba has worked as an Accountant and Operational Manager in various organisations in his working career and has been in service in two of the Securities fi rms, Noone & Co Sdn Bhd (1980 - 1983), C.S. Securities Sdn Bhd (1986 - 1989). Mr. Quek became a member of Australia Society of Accountants (A.S.A.) in 1973. He is also an associate member of CPA (Australia).
Mr. Quek was appointed to the board on 26 December 2001. He is also Chairman of the Audit Committee and a member of the Nomination Committee.
He has no family relationship with any other director/major shareholder of Hai-O.
Mr. Quek has attended 8 Board of Directors’ meetings during the fi nancial year ended 30 April 2008.
In the past ten years, he has not been convicted of any offence.
PROFILE OF THE BOARD OF DIRECTORS (CONT’D)
www.hai-o.com.my • ANNUAL REPORT 2008 21
Audit Committee Report
The Ideal Solution to your needs
满足您需求的完美方案
HAI-O ENTERPRISE BERHAD (22544-D) • (INCORPORATED IN MALAYSIA)22
Audit Committee Report
Year ended 30 April 2004@ 2005@ 2006@ 2007@ 2008 (RM’000) (RM’000) (RM’000) (RM’000) (RM’000)
CONSOLIDATED INCOME STATEMENTRevenue 121,014 141,494 146,798 189,346 373,822 Profi t before taxation 6,383 10,309 15,127 30,607 67,716 Taxation (2,224) (4,514) (4,349) (8,494) (18,598)Net Profi t for the year 4,159 5,795 10,778 22,113 49,118
Attributable to:- Equity holders to the Company 3,887 5,507 10,183 21,384 48,535 Minority interest 272 288 595 729 583 Net Profi t for the year 4,159 5,795 10,778 22,113 49,118
CONSOLIDATED BALANCE SHEETAssetsProperty, plant and equipment* 50,373 49,353 46,002 45,370 44,269 Investment in associated companies 190 51 - - - Other Investment 1,832 2,521 5,985 5,534 2,741 Trade receivables-non current 627 501 1,512 1,583 1,373 Deferred tax assets - - 301 1,080 1,684 Goodwill on consolidation 646 365 306 274 85 Net current assets 56,542 65,507 71,587 95,123 153,958 TOTAL ASSETS 110,210 118,298 125,693 148,964 204,110
EQUITY AND LIABILITIESEquity attributable to equity holdersShare capital 65,748 65,773 66,329 68,814 83,088 Share premium 1,384 1,384 - 600 1,826 Reserves & Retained Earnings 15,406 18,612 24,230 38,494 61,949 Treasury shares (1,922) (3,875) (1,165) (2,243) (6,291)Shareholders’ equity 80,616 81,894 89,394 105,665 140,572 Minority interest 4,282 4,619 4,619 5,215 5,500 TOTAL EQUITY 84,898 86,513 94,013 110,880 146,072
LiabilitiesNon-current liabilities 423 523 125 58 64 Current Liabilities 24,889 31,262 31,555 38,026 57,974 TOTAL LIABILITIES 25,312 31,785 31,680 38,084 58,038
TOTAL EQUITY AND LIABILITIES 110,210 118,298 125,693 148,964 204,110
RATIOSReturn on Shareholders’ Fund (%) 4.82% 6.72% 11.39% 20.24% 34.53%Return on Total Assets (%) 3.53% 4.66% 8.10% 14.36% 23.78%Earnings per share (sen) 6.04# 8.72# 16.39# 27.07^ 60.41^Gross dividend per share (sen) 5 6 8 18 40Net assets per share** (sen) 126 132 137 157 176
Note: @ Restated as a result of adopting the new and revised accounting standard. * Including the Investment properties and prepaid lease payment for land. # Calculated based on weighted average number of shares in issue. ^ Calculated based on weighted average number of shares in issue after adjusting for the Bonus Issue in fi nancial year 2008 ** Attributable to ordinary equity holders of the company.
GROUP FINANCIAL HIGHLIGHTS
www.hai-o.com.my • ANNUAL REPORT 2008 23
Audit Committee Report
04 05 06 07 08
80,6
16
81,8
94
89,3
94 105,
665
140,
572
Shareholders’ Equity (RM ‘000)
04 05 06 07 08
6.04 8.72
16.3
9
27.0
7
60.4
1
Earnings Per Share(Sen)
04 05 06 07 08
4.82
%
6.72
% 11.3
9%
20.2
4% 34.5
3%
Return on Shareholders’ Fund(%)
GROUP FINANCIAL HIGHLIGHTS(CONT’D)
04 05 06 07 08
Gross Dividend Per Share(Sen)
04 05 06 07 08
40
18
8
6
56,
383
10,3
09
15,1
27
30,6
07
67,7
16
Profi t Before Taxation(RM ‘000)
04 05 06 07 08
Revenue(RM ‘000)
04 05 06 07 08
126
132 13
7
157 17
6
Net Assets Per Share(Sen)
373,
822
121,
014
141,
494
146,
798
189,
346
HAI-O ENTERPRISE BERHAD (22544-D) • (INCORPORATED IN MALAYSIA)24
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On behalf of Hai-O’s Board of Directors, it is with
great pleasure that I present our Annual Report and
commendable fi nancial statements of the Group and
Company for the fi nancial year ended 30 April 2008.
CHAIRMAN’S STATEMENT
www.hai-o.com.my • ANNUAL REPORT 2008 25
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INTRODUCTION
For FY2008, I am pleased to report that Hai-O Group registered yet another record-breaking revenue and after tax profi t of RM 373.82 million and RM 48.54 million respectively, against RM 189.35 million and RM 21.38 million respectively for the corresponding period of FY2007. The principal subsidiary, the multi-level marketing (MLM) division had a tremendous growth this year in terms of revenue and profi t, which contributed over 70% of the Group’s profi t. In addition, higher margins had also contributed to the higher profi t for the Group, mainly contributed from the strengthening of the Malaysian Ringgit against the US Dollar which had reduced the import purchase costs, the success of promoting house brand products and higher members’ sales from the retail division.
I am also pleased to announce that Hai-O had offi cially been transferred from the Second Board to the Main Board of Bursa Malaysia Securities Berhad on 8 October 2007. The transfer to the Main Board is expected to better refl ect the current status of the operation of the Group, and enhance the standing and attractiveness of Hai-O Group amongst investors.
SHARE BUY BACK
During the FY2008, the Company had purchased 1,413,700 Hai-O shares from the open market.
As a reward to shareholders, on 26 June 2008, the Company had declared a distribution of one (1) treasury share for every twenty fi ve (25) existing ordinary shares of RM 1.00 each (“Share Dividend”) to the shareholders. A total of 3,225,542 treasury shares were distributed to entitled shareholders in relation to this Share Dividend on 11 August 2008.
As of 16 September 2008, the date prior to the printing of this Annual Report, the treasury shares held by the Company amounted to 486,944 shares. The Company has announced on 3 September 2008 that it is seeking a renewal mandate from shareholders pertaining to share buy back in the forthcoming AGM to be held in October 2008.
EMPLOYEES SHARE OPTION SCHEME (ESOS)
During the FY2008, the Company had further issued 1,969,000 Options pursuant to ESOS to the entitled employees at Option price of RM 2.70 per share. A total of 499,000 Options had been exercised during the year under reviewed.
The ESOS was established and implemented on 21 December 1998 and will expire on 20 December 2008.
CORPORATE DEVELOPMENT
To better refl ect the scale and current operation, the Company had on 22 June 2007 via RHB Investment Bank Berhad announced that the company proposed to undertake the following :
a) A bonus issue on the basis of One (1) new ordinary share for every fi ve (5) existing ordinary shares held (“Proposed Bonus Issue”) and
b) A transfer of the listing and quotation for the entire issued and paid-up capital of Hai-O from the Second Board to the Main Board of Bursa Malaysia Securities Berhad (Bursa Securities) (“Proposed Transfer Listing”).
The Proposed Bonus Issue and Proposed Transfer Listing are not inter-conditional.
CHAIRMAN’S STATEMENT (CONT’D)
Hai-O’s Main Board transfer appreciation dinner. Forbes Asia ‘s “Best Under a Billion” award presentation in year 2007.
HAI-O ENTERPRISE BERHAD (22544-D) • (INCORPORATED IN MALAYSIA)26
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CHAIRMAN’S STATEMENT (CONT’D)
The Securities Commission had approved the Proposed Transfer Listing on 17 July 2007. The Company had subsequently obtained the approval from Bursa Securities and Shareholders for the Proposed Bonus Issue on 15 August 2007 and 23 August 2007 respectively. A total of 13.412,342 Hai-O shares had been issued pursuant to the Bonus Issue.
The Company had successfully transferred its listing status from the Second Board to Main Board of Bursa Securities on 8 October 2007.
CHANGES IN THE COMPOSITION OF THE GROUP
As part of the process in streamlining the Group operations and reallocating the resources to more profi table business segment, the Company had disposed off a non-profi table subsidiary company, Teik Seang Wine Merchants Sdn. Bhd. for a total consideration of RM 783,780.00 on 29 August 2007.
During the year under review, the Group had acquired/subscribed the following Companies for new business opportunities :-
i) Acquired Hai-O (Hong Kong) Investment Limited (“Hai-O (HK)”) for a cash consideration of HKD 1,000 on 25 September 2007. The paid-up share capital of Hai-O (HK) was then increased to HKD 2,380,000 @HKD 1.00 per share presently.
ii) Subscribed Mengniu Marketing (M) Sdn Bhd for a total cash consideration of RM 2.00 on 25 September 2007.
iii) Subscribed for additional 999,998 ordinary shares of RM 1.00 in Hai-O Energy (M) Sdn Bhd (“Hai-O Energy”) for a cash consideration of RM 999,998.00 on 17 December 2007. Hai-O Energy has embarked on its business which principally involved in the design, research and manufacture of devices in connection to heat transmission, energy saving technology and related products.
Launching of a book entitled “Hai-O Flying High”. Investment & Trade Forum in Xian, China.
Hai-O Marketing’s 15th anniversary celebration dinner.
www.hai-o.com.my • ANNUAL REPORT 2008 27
ud t Co ttee epo t
New levels of Excellence
CHAIRMAN’S STATEMENT (CONT’D)
DIVIDEND
The Group is adhering to its dividend policy by paying not less than 50% of Profi t After Tax as dividends to shareholders.
For FY2008, in addition to the interim dividend of 8 sen gross per share ( less tax 26%) amounting to RM 4.748 million paid on 28 March 2008, the Board is pleased to recommend a fi nal dividend of 32 sen less tax of 25%, which is subject to the approval of shareholders at the forthcoming Annual General Meeting. This is equivalent to a total of gross, 40 sen cash dividend proposed in respect of the fi nancial year 2008.
AWARDS & RECOGNITION
Hai-O was once again picked as one of the companies in the 2008 edition of “OSK Top Malaysian Small Cap Companies” (The 100 Jewels) handbook. This handbook, released by OSK Holdings Bhd. is a compilation of research reports on its top 100 picks of small-cap (small-capitalized) companies in a publication targeted at fund managers. Its aim was to identify undervalued stocks of small cap companies with sound fundamentals, proven track records and growth potential that could likely be the “stars” of tomorrow. We are proud and honored to be ranked among the “Top 100 Jewels” once more.
Hai-O Enterprise was one of the 9 Malaysian companies that made it to the “Forbes Asia 2007 Best Under A Billion List” with sales under USD 1 billion. We are among 200 companies drawn from over 22,500 listed companies in the Asia-Pacifi c region. According to Forbes, each of the listed companies is screened for consistent profi tability and growth over 3 years, resulting in an honor roll of high-powered outfi ts that far outperform the market.
Hai-O Enterprise emerged as one of the Top 100 winners in the KPMG Shareholder Value Award 2007, the Company was ranked 55th as published in The EDGE Malaysia on 18 August 2008. The KPMG Shareholder Value Award is an annual award where all listed companies in Bursa Securities are evaluated in terms of value creation to their shareholders in the year of review. This award is designed to promote corporate excellence through enhancing levels of disclosure and setting exemplary best practices. Companies were ranked according to economic profi t (EP), a fi nancial indicator which integrates a company’s income statement, balance sheet and market expectations to provide an estimate of true economic earnings after covering the cost of capital.
MLM’s incentive trip to Umrah, Mekah for qualifi ed distributors. MLM’s incentive trip to Korea for qualifi ed distributors.
HAI-O ENTERPRISE BERHAD (22544-D) • (INCORPORATED IN MALAYSIA)28
Audit Committee Report
PROSPECT OF THE COMPANY
The recent rise in fuel and food prices, coupled with higher infl ation rate are expected to continue to affect the domestic market, weakening the purchasing power of consumers. Moreover, the expected increase in import purchase price due to weakening of Ringgit Malaysia against US Dollar, higher transportation and operating costs will further take a toll on our profi t margin. The Group is taking necessary action to refocus its resources on its core business, emphasize more on house brand products and carry out more sales promotion, and to intensify distributors recruitment activities.
Business challenges are inevitable in today’s ever highly competitive and challenging global business arena. However, I am happy to say that our dedicated management team has continuously put in relentless efforts in ensuring the smooth running of our daily operations, continue to improve and working towards betterment by undertaking effective measures to overcome challenges and obstacles. Facing a challenging business environment, the Company will strive to achieve satisfactory performance for the next fi nancial year.
In tandem with the increased business volume, Hai-O had on 21 December 2007 acquired land and 8 main block of buildings measuring 28 acres located at Lot 940, 941, 3202, 3203, 3204, 3205, 3206 & 6274, Mukim Kapar, 3 1/4 mile, Jalan Kapar, Klang for a total cost consideration of RM 45 million. The acquisition was fi nanced by internal generated fund of RM 25 million and bank borrowing of RM 20 milion. The said land & buildings will provide a platform for Hai-O’s future expansion, especially in catering to higher production capacity, warehousing and business volume in the coming years. The acquisition was completed in May 2008.
All the eight main buildings are leased back to the vendor, BATA (Malaysia) Sdn Bhd. for a period of 3 years with an option given to the tenants upon expiration of the tenancy to renew the tenancy for a further 3 years (“the First Renewal Term”) and an option to renew the tenancy for a further term of 3 years (“the Second Renewal Term”) upon the expiration of the First Renewal Term. The tenant was granted with Rent free for 1st year of the term. Thereafter, it will be charged at an annual rental of approximately RM 2.5 million for the remaining two (2) years of the tenancy term.
CHAIRMAN’S STATEMENT (CONT’D)
Bio-Aura Billboard along the highway.
Signing ceremony for the Manufacturing Agreement. Signing ceremony for purchase of Land & Building from BATA.
www.hai-o.com.my • ANNUAL REPORT 2008 29
Audit Committee Report
INVESTORS RELATIONS
Thanks to our effective investor relationship (IR) activities, we saw many positive changes in investors’ perception towards Hai-O. We have numbers of research houses tracking us now and we welcome more institutional investors to become our valued shareholders and their participation in the Hai-O family is duly acknowledged and valued by our Board.
We appreciate discussions with investors and welcome their keen interest in the Group’s performance. The Board also recognizes shareholders’ needs to be informed. In addition to the Annual General Meeting, which is the principal channel of communication with shareholders, the Directors and senior management have also taken the initiative to organize regular press conferences, regular updates on our Website’s Investor Relations section, dialogues and company visits to fund managers, institutional investors and analysts to keep them updated on the Company’s business operations, fi nancial performance, major developments as well as our future growth.
As part of the efforts in continuing to enhance investors relations, the Company had also participated in the Investors Relations Incentive Programme (IRIP) which is fully subsidised by Capital Markets Development Fund (CMDF) and administered by Bursa Malaysia. This programme is designed to assist listed companies set up an IR function and for those who already have an IR function to enhance it and also assist listed companies in embarking on an online IR programme. Via the participation in IRIP, Hai-O is expected to gain more prominence among investors.
CHAIRMAN’S STATEMENT (CONT’D)
APPRECIATION
I would like to take this opportunity to express my sincere appreciation and gratitude to all our existing shareholders for maintaining the trust, support and confi dence in building a good relationship with various parties.
To our customers, business associates, suppliers, bankers, business analyst and fund managers, we would like to thank them for their valued support for making the year 2008 a successful year for all of us. I would also like to thank the management and staff of Hai-O Group of Companies who have played an important role in contributing to the continuous growth of the company.
Thank You.
Tan Sri Osman S. CassimChairman
HAI-O ENTERPRISE BERHAD (22544-D) • (INCORPORATED IN MALAYSIA)30
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致词
我很荣幸的向各位报告,海鸥集团在2008财政年的营业额表现又刷新纪录,取得营业额3亿7382万令吉和税后盈利4854万令吉的佳绩,而相比之下2007财政年的表现则分别为1亿8935万令吉和2138万令吉,分别增长97%和127%。集团主要子公司,即多层次行销部门,无论在营业额和盈利均获得巨幅成长,为集团盈利带来70%的贡献。此外,较高的盈利赚幅亦也是推高集团盈利表现的原因之一,尤其是令吉兑美元的强势汇率降低进口成本,自立品牌的成功推广以及零售部门有效推动海鸥之友会员的销售。
同时,我也很欣慰地宣布,海鸥已经迈入了一个发展的新里碑:海鸥于2007年10月8日正式从第二交易板转升至主要交易板。转板后预料将更好的反映出本集团的营业和财务现况,更进一步加强海鸥集团在投资者心中的地位和吸引力。
2008年财政年间,本公司已经在公开市场购回141万3700股普通股。
为回馈股东,本公司在2008年6月26日宣布每25股面值1.00令吉的普通股配送1股库存股予股东作为股息。截至2008年8月11日,总计322万5542股的库存股在这项股息计划下配送予符合资格的股东。
截至2008年9月16日,此年报付梓前,本公司持有的库存股总计为486,944股。公司已经在2008年9月3日宣布将在会2008年10月间举行的常年股东大会上寻求股东授权更新回购公司股票的权力。
2008财政年间,本公司根据雇员认股计划,以每股2.70令吉的价格,进一步发行196万9000股的认股权予合格雇员。在受检讨的本财政年内,已有49万9000股的认购权被行使。
雇员认股计划于1998年12月21日制定及执行,并将于2008年12月20日届满。
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致词
为了更好的反映出目前的营业规模,海鸥在2007年6月22日透过兴业投资银行宣布下以下举措:
a) 以每5股送1股为基础发行红股,及b) 从第二交易板转至主要交易板
红股派发和转板计划并非互相制约的。
证卷监督委员会于2007年7月17日批准了公司转板的申请。海鸥接着分别在2007年8月15日和8月23日获得大马股票交易所和股东们通过上述红股派发计划。在这红股计划下,公司共分发了13,412,342红股。
海鸥于2007年10月8日成功实现从第二交易板转至主要交易板。
作为将集团营运合理化及将资源重新分配至更有盈利性业务过程的一部份,公司在2007年8月29日以78万3780令吉,脱售了一个非盈利子公司,德祥酒厂。
在本财务年度内,集团也进行了以下的结构变动:-
i) 2007年9月11日海鸥宣布收购一家设立在香港的投资公司,以开拓中国商机。此项收购于2007年9月25日正式完成。之后,海鸥(香港)投资有限公司的缴足资本增加至238万港元。
ii) 于2007年9月25日以2令吉成立“Mengniu Marketing (M) Sdn Bhd”。
iii) 2007年12月17日,Hai-O Energy (M) Sdn Bhd的缴足资本从2令吉扩大至100万令吉以充开发热管、能源节约技术及有关项目的资金。
本集团仍遵循将不少于50%的税后盈利作为股息分发予股东的股息政策。
2008财政年,除了在2008年3月28日分发每股8仙,总值4748万令吉的中期股息(减税26%)之外,董事部很荣幸的推荐32%终期股息(须减税25%),这建议有待股东于即将举行的常年股东大会上通过。这等于全年每股40仙的现金股息。
HAI-O ENTERPRISE BERHAD (22544-D) • (INCORPORATED IN MALAYSIA)32
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致词
海鸥再一次被OSK投资银行评选为2008年“OSK 佳大马小型资本企业百强手册”(百珠争辉)的公司之一,这本由OSK投资银行发行的投资手册,是一本涵盖首选100家小型资本公司的完善分析报告,并以基金经理为主要读者群的指标性读物,主旨在于发掘出一些有著厚实基础,优良纪录、极具成长潜能,有潜能成为“明日之星”的态势,且价值被低估的小型资本股票。我们再一次为入选“百珠争辉”榜单感到荣誉和骄傲。
令人振奋的是,海鸥企业成功脱颖而出,荣幸获选成为全球著名财经杂志《福布斯》2007亚洲200 佳中小上市企业排行榜《Forbes Asia 2007 Best Under A Billion List》上榜公司之一,成为10亿美元以下销售额的精英企业之一。这排行榜是从亚太地区的2万2500家候选上市企业名单中选出的,其中大马共有9家企业上榜。据《福布斯》透露,每一家上榜公司都经由过去3年来获利能力和成长率的严格评选,符合标准才金榜提名。
海鸥企业亦崛起成为100家赢得2007年毕马威股东价值奖的获得者之一,本公司名列第55,得奖名单已在志期2008年8月18日的THE EDGE商业周刊刊出。
毕马威股东价值奖是一项年度性的大奖活动,主要是供所有在大马股票交易所挂牌的公司的股东在受检讨的一年,评估出为股东创造 佳价值的公司的活动。这项活动旨在透过加强公布水平及设立示范性的操作来促进企业的卓越价值。上榜的公司皆根据其经济盈利,即一项综合公司损益表,资产负债表和市场预期的财务指标,以提供一个涵盖资金成本后的真实经济赚利预测。
近,燃油和食品价格双双调涨,并挟持著高通膨率的情势,预料将持续影响国内市场购兴,削弱消费者的购买力。此外,马币汇率下跌及进口采购成本上扬,运输和营运成本走高的趋势,将进一步影响赚幅。本集团将采取必要的步骤专注在核心业务上,扩大力度著重自立品牌产品及举办更多的促销活动,并加强分销商的征募活动。
在全球竞争日愈激烈下,商业挑战是无可避免的。不过,我仍然很高兴的说,在这艰巨的环境下,我们的管理层将更努力和积极采取有效的措施,开源节流,以确保我们的日常营运顺畅,业务持续提升及改善。
在营业额增长的同时,海鸥在2007年12月21日以4,500万令吉,收购了一块位于巴生加甫路三又四分一英里处,面积达28英亩,区号为940、941、3202、3203、3204、3205、3206和6274的土地及建筑物。此项收购以现金2500万及银行贷款2000万方式支付。上述土地及建筑物将为海鸥未来的扩允提供一个平台,尤其是应付未来生产力的提高、和仓库量的需求。这项资产收购程序于2008年5月中完成。
目前所有的8间建筑物租回给原有业主,BATA (M) Sdn Bhd,租约为期3年。租户有权在租约期满后选择另3年期限的租约(首选择期)。在首选择期满后,租户有权再更新另3年的租约(第二选择期)。在租约期内,租户享有1年免租,之后2年的租金约每年250万零吉。
www.hai-o.com.my • ANNUAL REPORT 2008 33
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致词
感谢我们有效的投资者关系活动,我们看见投资者对海鸥的看法出现更多正面的转变。现在,我们的表现继续受到数家分析研究机构长期跟监和观察,我们长期以来投诸的努力和辛勤付出没有被埋没。我们欢迎更多的机构投资者成为我们 有价值的股东。
我们感谢与投资者的对话及欢迎你们持续关注本集团的表现。董事部亦认知到股东知情权的需求。除了权充与股东之间主要沟通渠道的常年股东大会之外,诸位董事及高级管理层亦主动召开新闻发布会、即时更新我们网页上投资者关系版块的资讯,安排与基金经理、机构投资者和分析员之间对话会及各项参访活动,让他们更掌握本公司的营运、财务表现、主要发展及未来成长等各项活动的 新信息。
持续加强投资者关系努力的当中,本公司亦参与了由资金市场发展基金赞助及由大马股票交易所管理的《投资者关系奖励计划》。这项计划专门设计用作协助上市公司建立投资者关系功能与联系,对于已经建立投资者关系者,则进一步加强其运作,协助他们著手参与一项线上投资者关系计划。透过参与上述计划,海鸥预料将受到更多投资者的关注。
我亦藉此机会向各位股东表达我诚挚的谢意和感恩,感谢各位给予我们高度信赖、支持和信心。
我谨此向我们的尊贵的顾客、商业伙伴、供应商、银行伙伴、商业分析员及基金经理们表达由衷谢意,谢谢您们的宝贵支持,使我们2008年创造辉煌业绩。我亦真心感激我们海鸥管理层和雇员们的辛勤付出,您们在公司的持续成长中扮演了 重要的角色, 让我们一起再展翅高飞,取得更佳的业绩。
谢谢。
丹斯里奥斯曼•卡欣主席
HAI-O ENTERPRISE BERHAD (22544-D) • (INCORPORATED IN MALAYSIA)34
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MANAGING DIRECTOR’S STATEMENT
Dear valued shareholders,I am very happy to announce that we had another good year in
FY2008. We again delivered a superb year-on-year growth rate
of almost 100% in revenue and 127% growth in profi t after tax
this fi nancial year, thus, accomplishing our commitment to you,
our shareholders to deliver long term sustainable growth.
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MANAGING DIRECTOR’S STATEMENT (CONT’D)
ECONOMIC & BUSINESS ENVIRONMENT
The world economy is facing numerous challenging and uncertainties. The global economy has been affected by sharp increased in the oil price as well as commodity and food price. The subprime mortgage loan crisis in US has affected not only its local economy but globally.
Although economy outlook in Asian, especially India and China remain favorable, infl ationary pressure may affect their domestic demand. This Global development would also affect Malaysia being an open economy and highly export oriented country.
Notwithstanding, the Malaysia economy remains strong, and will continue to record sustainable growth, the strong fundamental, diversifi ed and resources-based economy, coupled with the increased in domestic demand had resulted in the Gross Domestic Product (GDP) achieved a growth of 6.7% for the fi rst half of 2008. The Services sector continued to be the main catalyst to the growth, registering a growth of 7.9% in fi rst quarter and 7.6% in the second quarter of 2008. The growth was driven by strong expansion in the Wholesale and Retail Trade sub-sector which increased by 12.6%.
The recent Budget 2009 proposed various strategies to further strengthen our economic resilience to mitigate the adverse impact of an increasingly challenging of external environment. A number of programmes to
improve the country’s business environment should help ensure economic growth remains robust. Among the broad range of measures, the proposed measures to alleviate consumers’ diminishing purchasing power with lower marginal tax rate, more tax rebate for employees welfare etc, will help to increase the disposable income for “People” which will mitigate the negative impact to the current challenging business environment.
In addition, the prevailing political uncertainties in Malaysia is also a key factor concerned by investors. Holding back some infrastructure spending and mega projects by Government had affected the domestic demand. Hence, a series of downgrade of corporate earnings are expected to be happened.
According to Frost & Sullivan, the Malaysian healthcare sector has been expanding at modest but relatively stable annual growth rates of 8% to 12% over the past few years supported by higher healthcare spending by the government and the private sector. The country’s ageing population and growing personal wealth are main drivers of the steady growth in the Malaysian healthcare sector. Growing awareness among Malaysians of the importance of healthcare and lifestyle changes will further boost healthcare spending in Malaysia. Going forward, both the pharmaceutical and private healthcare segments face common challenges such as growing competition and the risk of a global economy slowdown.
MLM’s incentive trip to Korea for qualifi ed distributors.
MLM’s incentive trip to Umrah, Mekah for qualifi ed distributors.
HAI-O ENTERPRISE BERHAD (22544-D) • (INCORPORATED IN MALAYSIA)36
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MANAGING DIRECTOR’S STATEMENT (CONT’D)
FINANCIAL OVERVIEW
For the fi nancial year under review, Hai-O Group recorded a thumbs-up fi nancial performance by posting more than 127% growth in profi t after tax of RM 48.54 million (2007: RM 21.38 million), backed by a higher revenue of RM 373.82 million (2007: RM 189.35 million), an increase of 97.4%. The improvement in revenue was attributable to effective marketing strategies that successfully penetrate into the non-traditional market for our MLM division.
The Group’s FY2008 fi nancial position remains intact. As about 70% of the group business is dealing in cash term, thus it had generated total annual net cash from operations about RM 53 million for fi nancial year under review. The Group’s net cash position and short term investment soared further to RM 80 million as of 30 April 2008 (2007: RM 39 million). Shareholders’ fund had also increased to RM 140.6 million with net asset per share of RM 1.76 due to resilient earning growth.
BUSINESS DIVISION OVERVIEW
Multi-Level Marketing
Another wonderful year for the MLM division (Hai-O Marketing), it is the largest contributor to the Group’s sales and profi t. This FYE 30 April 2008, the MLM division had contributed a staggering turnover of RM 281.59 mi l l ion and operat ing prof i t of RM 46.79 mi l l ion respectively, representing an increase of 182% in sales and 237% in profi t as compared to the previous fi nancial
year. Effective training programs are identifi ed as one of the key contributors of the favorable increase in sales, having cultivated a “Sense of Belonging” and the “Hai-O, My Choice for Life” culture among Hai-O MLM distributors. Aggressive member recruitment scheme and A&P sponsorships of 3 episodes of the “Jom Heboh” TV programme on TV3 had created awareness and impact among the MLM industry and had attracted many new members into Hai-O MLM. Currently, we have an average of about 2,000 new members joining Hai-O MLM on a monthly basis, and year-to-date, we have over 70,000 distributors and of which 20% are actively involved in the business. Efforts to put up more corporate billboards along several major highways and advertisements in various lifestyle magazines are also key in creating greater awareness. Continuous launching of new products have contributed additional sales to the MLM division.
Currently, Hai-O Marketing has total of 43 outlets inclusive of 30 stockists and 13 branches to strive for greater customer focus, to bring the image and products of Hai-O closer to customers through an expansion of our existing distribution channel and enhanced service support. Hai-O Marketing plans to open another 5 to 8 new stockists for the coming fi nancial year in Peninsular Malaysia especially Southern Part and East Coast. In order to complement the existing fl agship “Beauty” products, Hai-O Marketing has plan to launch a new skincare series products in the coming fi nancial year. The inclusion of these new products will provide additional opportunities for distributors to market wider range of “Beauty” products.
Some products of MLM division.
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MANAGING DIRECTOR’S STATEMENT (CONT’D)
Also, Hai-O Marketing has introduced an Online Stockist / Distributor System enabling stockists and distributors to manage their business more effi ciently. With the online system, distributors’ sales and commission tracking information can be made available immediately once a transaction is completed by either the distributor or the distributor’s downline. With such a fi erce competition in the Network Marketing business, it is critical that we have a system that is capable of providing relevant and up-to-date information instantly in order to achieve greater effi ciency and productivity.
We believe Hai-O Marketing will continue to grow due largely to the aggressive and entrepreneurial spirit of the distributor force. And last but not least, we are in the midst of setting up a MLM operation in regional markets such as Indonesia, this will provide a greater opportunity for new and existing distributors to expand their business network.
Wholesale
Our wholesale division is the second largest contributor to the Group for this fi nancial year under review. It contributed 13% to Group sales and 24% to Group operating profi t. 2007 was the year when Pu-er tea prices took a tumble. There was speculative craze in the Pu-er tea market and speculators were not limited to the Chinese in China but also to Hong Kong and Taiwan. Reports by the Chinese media on the ability of Pu-er tea to appreciate in value over time eventually led to excessive hype and heavy speculation. This led to a signifi cant rise in Pu-er prices beyond what it could reasonably sustain. As a result, the price had been adjusted to the fundamental value and it will take some time to recover to meet to the balance of market demand and supply. We remain cautious and will continue to promote the tea especially target on the consumption market.
Other main products such as medicated tonic and health food also registered growth in sales and profi t. Overall, effective marketing strategies and A&P activities such as advertising on 8TV, NTV7 and ASTRO and the sponsorship of “Star Idol” on NTV7 had created brand awareness and product exposures among family and teen viewers.
Retailing
Revenue from our retailing division (Hai-O Raya) increased marginally to RM 39.34 million for FYE 30 April 2008, and operating profi t had increased by 21% to RM 2 million. Profi t margin improved due to new marketing strategy focusing on the sale of house-branded products. There will be more house-branded products launching this year, and will also focus on further developing the house-brand image. The aggressive promotion of the Hai-O Raya Customer Loyalty Program also contributed to the increase in sales. Hai-O Raya Customer Loyalty Program is an in-house “Customer Membership” program whereby members can enjoy exclusive discounts and privileges. We also organize Member’s Privileges Sales event twice a year, and had been receiving very good response from our valued members. Currently, Hai-O Raya has over 70,000 active members who provide constant revenue to it, which accounts for almost 50% of sales to the retailing division.
In order to tap into the younger generation of customers from high traffi c fl ow shopping centres, Hai-O Raya has added 2 new retail outlets in Jusco Seberang Prai City Shopping Centre, Bandar Perda, Bukit Mertajam, Penang and Carrefour Sutera Mall, Taman Sutera Utama, Skudai, Johor. Currently, Hai-O Raya has a total of 56 outlets throughout Malaysia and will continue to look for strategic locations to establish new outlets.
Some products of wholesale and retail division
HAI-O ENTERPRISE BERHAD (22544-D) • (INCORPORATED IN MALAYSIA)38
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Joint Venture Companies
Peking Tongrentang (M) Sdn. Bhd.
A joint venture company between Hai-O and Beijing Tongrentang Co. Ltd, which is the largest producer of traditional Chinese medicine in China. It is also one of the oldest and most respected practitioners in traditional Chinese medicine. It is a well known name widely among Chinese and Asians worldwide. Through the joint venture, Hai-O is able to tap into the wealth of experience and knowledge accumulated by Beijing Tongrentang from its more than 330 years of operation, and deliver to our customers in Malaysia the best available clinical and pharmaceutical services in traditional Chinese medicine.
Peking Tongrentang (M) Sdn. Bhd. opened its 3rd outlet in SS2, Petaling Jaya on 1 April 2008. The grand opening ceremony was offi ciated by Transport Minister, Datuk Ong Tee Keat and People’s Republic of China Ambassador to Malaysia, Cheng Yonghua.
MANAGING DIRECTOR’S STATEMENT (CONT’D)
Manufacturing
Sales contribution from this division is relatively small in relation to the Group’s turnover. It had recorded external sales of about RM 1.2 million and operating profi t of RM 0.45 million for the year under review. The new set-up, QIS Research Laboratory Sdn. Bhd. has kick started operations in the year under review. It is a full service analytical laboratory, complied with the requirements of the Department of Standards Malaysia (DSM), offering a wide range of testing services in the areas of the microbiology and chemical analysis in traditional medicine and food products.
On 30 January 2008, SG Global Biotech Sdn. Bhd. (“SG Global”) secured an exclusive fi ve-year contract to manufacture a natural sweetener under the brand name, Greenlite, from PureCircle Sdn. Bhd. (“PureCircle”). SG Global will be responsible for manufacturing a zero-calorie natural sweetener using Stevia rebaudiana for PureCircle. PureCircle is the world’s largest producer of natural high-density sweetener from stevia plants. It has been listed on London Stock Exchange’s Alternative Investment Market in December 2007.
One of the Hai-O new retail outlet.
www.hai-o.com.my • ANNUAL REPORT 2008 39
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MANAGING DIRECTOR’S STATEMENT (CONT’D)
PROSPECT
Our transfer to the Main Board of Bursa Malaysia signifi es a next step forward for us in this new millennium. Hai-O started out with just RM 168,000 way back in 1975, and for the past 33 years has grown steadily to a multi-million Ringgit company it is today. Looking back, the journey was no bed of roses, the Company came face-to-face with many ups and downs over the years, yet we weathered through the tough times and each time bounced back stronger than before. Over the years, we have nurtured a culture of a wholesome lifestyle within and outside the Company, like the seagull that lives in harmony with nature. Hai-O also “lives” in harmony with its community; our promotion of a wholesome lifestyle is best refl ected through our corporate social responsibility and through our range of consumer products.
Hai-O’s fi nancially sound foundation is partly due to its strong earnings and cash fl ow, our comprehensive and ever expanding range of branded health products. This results in our adherence to the policy of paying out 50% dividends to our shareholders.
We encourage more people who work with us both inside and out to be part of the Hai-O family. And with the acquisition of BATA’s 28 acres of land in Jalan Kapar, Klang, this will open up new possibilities for our future business expansion. We hope to increase our MLM distributor base, retail customer base and wholesale customer base. Our MLM division’s stellar performance is showing that it has the capability to do much better in years to come.
A donation to Beijing Foreign Studies University’s Center of Malay
Language Studies.
Hai-O’s team-building exercise cum treasure hunt event.
HAI-O ENTERPRISE BERHAD (22544-D) • (INCORPORATED IN MALAYSIA)40
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MANAGING DIRECTOR’S STATEMENT (CONT’D)
Human Resources
At Hai-O, we recognize the human capital is our most important asset. Our human resource culture centered on 3 core values: Sense of Belonging, Teamwork and Equal Opportunity. We encourage our staff to excel and value their careers in Hai-O as their own undertaking. In Hai-O, we all work together as a team and strive to inculcate a sense of ownership to our company. We provide equal opportunity to our staff to make contributions and in return to enjoy a rewarding career. With such philosophy in mind, Hai-O is committed to bringing out the best in our staff and to build the success together.
For Board of Directors & Senior Management:As part of the CEP (Continuous Education Program) for our directors, the training department organized a seminar entitled “Risk Management”, conducted by Dr. Malick Sy, a well-known International business consultant and trainer. Topics discussed include the real challenges in implementing enterprise-wide Operational Risk Management and the methods to overcome some of these challenges, an insight to various Good Operational Risk Management Practices, and ways of managing Operational Risk from formally defi ning Operations Processes.
The directors and managers were also given a seminar on, “Due Diligence – Is Your Company Creating Shareholder Value?” with the aim of gaining the insight into the best practices of strategic fi nancial and marketing management that helps to maximize shareholders’ value in a prudent and ethical approach.
Another seminar entitled, “Director’s Responsibility, Code of Ethics & Case Study” was organized with the aim in creating an environment that fosters the development of conscientious ethically-minded people who are committed to integrity and fairness. Areas covered include confi dentiality, confl ict of interest, and insider information.
For Mid-Level Management, Sales Personnel and Others:We conducted numerous product trainings (by our qualifi ed in-house Chinese physicians) for our wholesale and retail sales team, enabling them to gain better product knowledge and its competitive advantage so that they can serve our customer better. We have conducted a “Customer Care” workshop for the wholesale division. The workshop gives staff who are involved in customer service the core skills to build customer relationships, create a positive business image and recognize customers’ demands.
ACKNOWLEDGMENT
On behalf of the Board of Directors, please allow me to express my sincerest gratitude and appreciation to our valued customers, suppliers, shareholders, business associates and bankers for their continued support and trust. A big thank you is also extended to the government and relevant authorities and offi cers for their assistance.
We are very lucky to be supported by an incredible group of men & women who run our operating units on all levels, without them, we wouldn’t have been where we are today. Therefore, from the bottom of my heart, you all have my thanks.
Tan Kai HeeManaging Director
Training held for the directors and management.
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致词
世界经济正面临著许多挑战及充斥著不确定性。全球经济已经受到油价、原料及食物价格飙涨的冲击。美国爆发的次级房贷危机不仅重创当地经济,同时更为全球经济发展带来负面影响。
虽然亚洲区域的经济前景,特别是印度和中国仍持续看好,但通货膨涨的压力亦可能会影响其内部需求。马来西亚作为一个开放经济体及高度出口导向的国家,亦难免会受到这股经济发展浪潮所影响。
尽管如此,马来西亚经济势头仍持续强劲,并将继续取得持续性成长,这个以强劲,多元化及天然资源为基础的经济体,加上国内需求的增长,使国内生产总值在2008年上半年取得了6.7%的成长率,这主要是服务业的带动。服务业在第一季和第二季分别取得7.9%和7.6%的增长。这主要来自批发与零售领域所取得的12.6%增长的贡献。
新近发布的2009年财政预算案,倡议数项举措加强我国经济的弹力,以因应及缓和外部环境持续增加的负面影响。在这些举措之中,以针对持续下降的消费者购买力,政府调降个人所得税税幅,增加对雇员福利税务回扣等等,将有助于提高人民的可支配所得,进而对我们的经济带来正面影响。
此外,马来西亚笼罩著政治不确定性亦为投资者所关注,政府暂缓执行一些基建工程和大型发展计划已经冲击到国内需求。因此,一系列调低企业获利率的评估分析将会纷纷出炉。
根据 Frost & Sullivan 公司的市调统计,马来西亚保健领域一路呈现稳健成长,受到政府和私人领域的持续性投入,过去数年年成长率介于8%至12%之间。我国老年人口的增长及个人财富的增长是带动保健领域稳健成长的两股动力。大马人对于保健需求的注重及生活习惯的改变将进一步刺激对保健领域的消费。再者,制药和私人保健业则同样面对竞争加剧和全球经济放缓的风险等负面因素挑战。
在受检讨的本财政年度,海鸥集团营业额创新高纪录达3亿7382万令吉(2007年为1亿8935万令吉),增长97.4%,而税后盈利增长127%至4854万令吉(2007年为2138万令吉),取得了本年度优越的财务表现。营业额的增长可归因于多层次行销部成功渗透非传统市场的有效行销策略所致。
本集团2008财政年的财务地位仍然坚固。本集团约70%的业务是以现金交易,因此在受检讨的本财年度,从业务中取得的全年净现金值达到5300万令吉。截至2008年4月30日,本集团的净现金及短期投资进一步攀高至8000万令吉(2007年为3900万令吉)。股东基金亦同时扬升至1亿4060万令吉,每股资产净值为1.76令吉。
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致词
对多层次直销部门(海鸥直销)来说,今年又是一个精彩的好年头,造成它成为集团营业额和盈利的 大贡献者。截至2008年4月30日财政年,多层次直销部分别为集团带来2亿8159万令吉营业额及4679万令吉的营业利润,相对去年同时,营业额及利润分别取得182% 和237%的增长率。海鸥直销所培养出来的“归宿感”及“海鸥,我生命中的选择”文化所达致的有效的培训计划,已被视为缔造巨大营业额的重要贡献之一。积极的新晋会员引荐计划,以及赞助TV3电视台的著名节目 JOM HEBOH 三期的广宣计划,已经在多层次直销业引起注目和正面影响。目前,平均每月有2000名新会员加入海鸥多层次直销团队,迄今,我们已经有7万名传销商,其中约2万名活跃于商业之中。在南北大道投放多个广告看板及在多份休闲杂志中投放平面广告的努力,也是引起巨大关于的功臣之一。持续性推出新产品的计划也为多层次直销部门的业绩带来了额外的贡献。
目前,海鸥直销拥有43间分行包括30间存货中心和13间分店来服务广大客户的需要,同时透过扩充我们现有的分销渠道及加强终端客户服务支援的努力,把海鸥的产品及形象更近距离地投送予消费者。海鸥直销计划下一个财政年内,在马来半岛南部和东海岸新设5至8间存货中心。为了进一步加强既有的“Beauty”旗舰品牌产品系列,海鸥直销已策划在下一个财政年度推出新的护肤系列产品。这些新产品将给予传销商更大的机会在市场推广“Beauty”产品。
此外,海鸥直销新近推介的线上提货/直销商系统,将使存货商和传销商更方便的管理他们的业务。有了网上系统的便利,无论是直系传销商或其下线,一旦一桩生意成交,传销商的销售额、所属直销事业组织及佣金纪录资讯等等都可以即时查询获得。在网络营销生意竞争激烈的当下,我们拥有一个有能力提供恰当的及即时讯息,以达到更大效率性和生产力的网络商务系统更形重要。
鉴于传销商的积极性及企业家精神,我们相信海鸥直销将持续发展和成长。 后,我们正在进行著在诸如印度尼西亚等区域市场设立多层次直销业务的努力,这将为传销商提供一个更大的商机去扩允他们的商业网络。
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我们的批发部是本财政年度的第二大贡献者。它为集团营业额贡献13%,并为集团营业利润带来24%的贡献。2007年是普洱茶价格滑跌的一年。普洱茶市场充斥著热络的投机炒作,投机者不仅限于中国人,还有来自香港和台湾的投机客投入阵营。中国媒体针对普洱茶其功能的集中报导及其愈陈愈香,价格越高的属性更进一步激化投机炒作风潮,促使普洱茶价格超越理性的狂飙。 终过高的价格无法承接,又回落到基础价值,且将需要一些时间复元到供需平衡的水平。我们对普洱茶市场发展情势保持谨慎,并将持续推广普洱茶业务,将焦点著重於消售市场。
其它的主要产品包括滋补药品及保健食品的销售额及利润亦取得可观成长。总体而言,有效的行销策略及广宣活动,诸如在8TV、NTV7和ASTRO投放的电视广告及赞助NTV7“明星偶像”活动等等,已为在家庭及青少年观众群中创造了极大的品牌关注,对批发部门的销售增长产生正面的作用。
致词
截至2008年4月30日财政年,来自我们零售部门(海鸥中心)的营业额呈现小幅增长至3934万令吉,营业利润则提升21%至200万令吉。利润率增长主要受惠于专注自立品牌产品销售的新市场策略。今年我们将会推出更多新的自立品牌产品,并将更进一步塑造及提升自立品牌形象。海鸥之友客户忠诚系统的积极促销活动也为销售额的提升作出不小的贡献。海鸥中心客户忠诚计划是一个内部“客户会员制”计划,凡会员皆可享受特别优惠及殊营。我们每年均组织两次会员特别优待促销活动,皆得到我们尊贵的客户极其热烈的反应。目前,海鸥中心拥有超过7万名海鸥之友活跃会员,是零售部门的主要消费群,占零售部近50%的营业额份额。 海鸥中心也在各高人流率的购物商场设立新零售点吸引年青一代的目光垂注,如在槟城北赖嘉世客购物中心和柔佛古来家乐福新设两个专区以迎合年青消费者的需求。目前,海鸥中心在全国拥有56间分行,并将持续物色新的策略性地点开展新的店面。
HAI-O ENTERPRISE BERHAD (22544-D) • (INCORPORATED IN MALAYSIA)44
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致词
海鸥和中国 大的传统中药生产商和中药铺百年老字号北京同仁堂联营的北京同仁堂(马)私人有限公司。北京同仁堂誉冠中国及全球,广为华人所熟悉,海鸥透过联营,成功衔接上北京同仁堂300多年来积攒的品牌价格和中医药的知识财富,并为我们的消费者带来优质中医药服务。
北京同仁堂(马)私人有限公司已2008年4月1日在八打灵再也SS2区开设第三间分行,并邀请到我国交通部长拿督翁诗杰和驻马来西亚中国大使程永华阁下联合剪彩开幕。
制造部门对集团总营业额的贡献相对较小。在受检讨的本财政年,该部门取得120万令吉的对外销售及45万令吉的营运利润。新设立的QIS研究化验室私人有限公司也在受检讨的本财政年内开始投入营运,这是一个全方位的分析性化验室,提供全列系的传统药物和食品微生物和化学分析化验服务。该化验室亦奉行品质保证计划及大马标准局的各项规范和章程,以确保分析结果的正确性和准确性。
2008年1月30日,SG Global Biotech Sdn Bhd 从 Pure Circle Sdn Bhd 获得了5年的独家合同,生产GREENLITE 品牌天然甜味剂。SG Global 负责生产以PureCircle提供的甜菊素为原料的低热量天然甜味剂。PureCircle是从甜菊科植物提炼的天然高纯度甜味剂全球 大生产商,2007年12月于伦敦股票交易所替代投资市场上市。
我们转升至主要交易板挂牌是我们的新跨越。回溯海鸥在1975年以16万8000令吉创业,在33年一路走来,至今已成长为一个市值过亿令吉的公司。回首来时路并非一路平坦,公司这些年来曾经面对许多波浪起伏,虽然历尽许多艰辛绝境,仍能克服挑战,绝处逢生,迅速回弹。公司这些年已在内内外外历练出促进身心健康,充满生气勃勃的生活信息,如同海鸥与大自然和谐共处,海鸥亦与社区和谐共处,我们极力推崇的这种生活信念,就是我们戮力完善化所肩负的企业社会责任。
海鸥坚实的财务基础得益于其强劲的赚利,良好的流动资金,以及业务多元化、覆盖面广的一系列著名品牌保健产品库的支持。这些优势支持我们秉承支付50%股息予股东的政策。
我们欢迎更多新朋友与我们结伴同行,欢迎您们成为海鸥大家庭的一份子。随著我们成功购并了BATA公司在巴生加埔路的28英亩地段,为我们公司开创了一个拓展的新平台。我们希望未来更扩大现有的多层次直销商、零售和批发客户的基础。我们的多层次直销部门的卓越表现反映出它有更雄厚的能力来年挑战卓越,跨越颠峰。
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致词
在海鸥,我们体认到人力资本是我们 重要的资产。我们的人力资源文化聚焦于三个核心价值:归宿感、团队精神和机会均等。我们鼓励员工发挥卓越,将海鸥当作自己事业来打并。在海鸥,我们团结合作,创造向心力。我们提供均等的机会予员工,让他们作出贡献,享受回馈。有了这样的职场哲学,海鸥承诺为员工创造更好价值,共同铸造非凡成就。
作为我们董事终身学习计划的一部份,培训部门组织了由国际知名商务顾问及讲师 Malick Sy 博士主讲的“风险管理”课程,讲及在实施企业范围内的业务风险管理和挑战及克服问题的方法,并深入了解各种良好的操作风险管理的做法,以及如何管理操作风险和确定业务进程。
董事们也参加了一项名为“尽忠职守:你的公司是否为股东创造 大价值?”的培训,课程著重于策略财务及行销管理实际运用的深刻理解,及如何在审慎的和道德兼具之下,优化战略财务和营销管理以创造更高的股东价值。
另一项名为“董事责任,道德操作及个案研究”的培训,则侧重于如何促进一个良好道德操守发展的环境,其所涵盖的领域包括沟通、保密、利益冲突、礼物和内部消息。
我们为我们的批发和零售的销售团队进行了多次产品培训(由我们内部中医师讲授),使他们能够更好的掌握产品知识和了解产品的竞争优势,使他们能为我们的客户带来更好的服务。我们也为批发部举办了“客户服务”讲习班,讲习班让工作人员了解到如何建立客户关系的客服核心技能,如何创造一个正面的企业形象,以及如何因应顾客的需求。
我谨代表董事部,向我们尊贵的客户,供应商,股东和商业伙伴和银行家给予的持续支持和信任,献上 诚挚的感谢和赞赏。并对不吝提供协助支持我们工作的政府部门和有关机构、单位、局署和相关官员,致予万二分谢意。
我们很幸运,能够拥有一群极出色的员工为我们各层级的经营单位努力付出,辛勤奉献,没有他们,我们便不会有今天的成就,因此,我打从心底里衷心的感谢您们。
海鸥集团董事经理
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CORPORATE SOCIAL RESPONSIBILITY社会责任
Our commitment to being a deeply responsible company contributing positively to our communities is so important to Hai-O that it’s one of the seven guiding principles of our corporate values. We work together with staffs, suppliers, business partners and others to help build stronger local communities, to create a great workplace, to promote diversity and to be responsive to our customers’ health and wellness needs. Each year, Hai-O’s group-wide corporate philanthropy and sponsorships are channeled to a mix of organizations, educational & cultural causes and the less-fortunate.
Orphanage Visits On 26 May 2007, the Hai-O Sports Club (Kelab Muhibbah), the company’s sports recreation club for its employees paid a visit to the Good Samaritan Home orphanage in Southern Park, Klang. The Sports Club presented a donation of RM 3,000 and sponsored some food items to the orphanage.
2007年5月26日,海鸥亲善会参访巴生 Good Samaritan 孤儿院,捐赠3000令吉及提供食品予院童们。
Our MLM division, Hai-O Marketing also contributed to the needy by organizing visits to several orphanages within the Klang Valley, and donations totaling up to RM 100,000 were given to Rumah Bakti Ulu Kelang, PEYAKIN (Pertubuhan Kebajikan Anak-Anak Yatim/Miskin), Rumah Anak Yatim & Saudara Baru Shifa’ and Rumah Anak Kesayanganku.
我们的多层次直销部门,海鸥直销亦组织数次巴生区孤儿院的参访活动,捐赠了100,000令吉予RUMAH BAKTI ULU KLANG,PEYAKIN、RUMAH ANAK YATIM & SAUDARA BARU SHIFA’ 和RUMAH ANAK KESAYANGANKU等多家孤儿院及贫孤儿童福利团体。
Donations During the Hai-O: Flying High luncheon held on 10 November 2007, Hai-O Enterprise pledged a donation of RM 100,000 to the Beijing Foreign Studies University as a funding to promote its Center of Malay Language Studies.
2007年11月10日海鸥高飞午宴活动中,海鸥企业捐助10万令吉予北京外国语大学,作为其马来语学习中心的推广经费。
On that same occasion, Hai-O Group also pledged a donation of RM 100,000 to The Writers’ Association of Chinese Medium of Malaysia in supporting the latter’s “2008 Revitalization of Malaysian-Chinese Literature, Nurturing the Wisdom of Youths Movement”. Furthermore, Hai-O Group also collaborated with The Writers’ Association of Chinese Medium of Malaysia to establish the “Hai-O Annual Literature Awards” in a move to encourage outstanding Malaysian-Chinese writers, and to continuously improve the standard of Malaysian-Chinese literature.
同一个场合中,海鸥集团再捐赠10万令吉予大马华文作家协会,以支持其2008年马华文学复兴运动,并和作家协会合作创设海鸥年度文学奖,以发掘及奖励杰出的马华作家,更臻提升大马华文文学创作水平。
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For Our Emplyees In early 2008, Hai-O’s warehouse staff were each given newly designed company polo shirts and shoe vouchers. The new company polo shirts symbolizes the spirit of uniformity and unity, and the shoe vouchers are to enable our warehouse staff to purchase appropriate safety shoes for their work in the warehouse, encouraging them to observe personal safety while at work.
2008年初,海鸥仓库部员全体员工获得派发新设计的衫衣及鞋子礼券。新设计的衫衣融合了团结一致的精神,鞋子礼券则让仓库部的员工们可以购买较安全舒适的工作鞋以确保工作时不受伤,并贯彻注意工作安全的预防意识。
Health Awareness In our commitment to serve the community in creating greater public awareness on health, Hai-O on a yearly basis actively organizes health talks for the public. On 25 August 2007, Hai-O and China Press organized a health seminar on Rheumatoid at the China Press Assembly Hall in Bangsar, Kuala Lumpur. The speaker of the seminar is Leng Benjia from Gansu Provincial Institute of Tibetan Medicine. As rheumatoid is quite a common disease in Malaysia, this seminar with Mr. Leng has helped the public obtain a better understanding of the said disease and ways to prevent it.
On 22 December 2007, Peking Tongrentang (M) Sdn. Bhd. in collaboration with Sin Chew Daily organized a health seminar featuring Beijing Tongrentang’s Professor Li Guangjun, the seminar was held at the Sin Chew Daily Activity Centre and it’s opened to the public. Professor Li shared many insights on personal healthcare to the participants during the seminar, and also provided useful information on the prevention of stroke.
2007年12月22日,北京同仁堂(马)私人有限公司与星洲日报联办健康讲座,由李广均教授主讲个人保健课题,为听众带来了许多关于预防中风的有用信息。
CORPORATE SOCIAL RESPONSIBILITY (CONT’D)
社会责任
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CORPORATE SOCIAL RESPONSIBILITY (CONT’D)
社会责任
Blood Donation On 25 May 2008, Hai-O organized a blood donation campaign at Klang Parade shopping mall in Klang. The 1-day event received warm reception from the public, and it managed to collect an encouraging 151 packets of donors’ blood. We are deeply moved by the kindness of Malaysians.
2008年5月25日,海鸥在巴生广场购物中心举办一场捐向运动。这项一天的活动获得民众热烈响应,总共收集了151袋血浆,使我们深受大马人民的爱心所感动。
China Winter Storms 中国雪灾Year 2008 is a year plagued with numerous natural disasters, one of the more severe ones such as the Chinese winter storms which occurred between 25 January 2008 and 6 February 2008 that affected large portions of southern and central China. The snow storm caused extensive damage, it was estimated that about 223,000 homes were destroyed and 862,000 others were damaged. Hai-O donated RM 200,000 to the China winter storm relief fund.
2008年是一个充满天灾的年头,其中一场较重的灾害乃是发生于2008年1月25日至2月5日的中国雪灾,受灾区涵盖整个华南和华中地区。雪灾造成大面积的财物和人命损失,估计约22万3000栋住房被摧毁,86万2000户受创。海鸥向中国雪灾赈灾基金捐赠了20万令吉善款。
Myanmar Cyclone 缅甸热带气旋纳吉斯Cyclone Nargis (also known as Very Severe Cyclonic Storm Nargis), was a strong tropical cyclone that caused the worst natural disaster in the recorded history of Myanmar. The cyclone made landfall in the country on 2 May 2008, causing catastrophic destruction and at least 130,000 fatalities with thousands more people still missing. The Hai-O Foundation, the Group’s philanthropy arm donated RM 50,000 to the “Myanmar Cyclone Disaster Relief Aid” launched by Sin Chew Daily.
三级热带气旋纳吉斯肆虐缅甸中南部地区,造成缅甸有史以来 惨重的自然灾害。纳吉斯于5月2日登陆缅甸,酿成巨灾,导致13万人死亡,数以千人的人口失踪。海鸥基金会,集团的慈善事业臂膀,捐助了5万令吉予星洲日报组建的缅甸风灾救援行动。
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Sichuan Earthquake 四川大地震The 2008 Sichuan earthquake, which measured at 7.9 on the Richter scale occurred on 12 May 2008 in Sichuan province of China. The earthquake has severely caused tens of thousands of deaths and left hundreds of thousands homeless. Hai-O Group once again responded to this call for help.
And in 26 June 2008, the Hai-O Group participated in the Sichuan Earthquake Disaster Charity Night entitled “Earthquake is ruthless, but Malaysians have love.” at the Mines International Exhibition & Convention Centre in Seri Kembangan, Selangor. The charity dinner was fi rst mooted by Phoenix Television of Hong Kong. A large group of Hai-O employees were present at the event in helping out with the registration and ushering of thousands of guests. The participants, throughout the night donated and witnessed the donation by local communities and organizations.
The organizers successfully handed over RM 7 million, which was collected on the charity night, to Cheng Yonghua, Chinese ambassador to Malaysia. It was by far the largest single charity donation of Malaysia to the earthquake victims of Sichuan Province. Hai-O Group through Hai-O Foundation donated in excess of RM 1 million that night. We are indeed very proud to be a part of this charity event.
2008年5月12日中国四川省汶县发生黎克特制7.9级大地震,造成数万人死亡,数以千计名灾黎无家可归。海鸥集团再一次发挥“人饥己饥,人溺己溺”精神,数名有爱心及责任感的员工在5月16日发动内部捐款运动,这些善款稍后均移交予驻马来西亚中国大使馆。
2008年6月26日,海鸥集团联合多个华人团体在绿野国际会展中心举行四川地震赈灾晚会,获得香港凤凰卫视现场直播。海鸥集团派出大批员工担任现场的接待工作,除了个人和组织、单位进行现场捐款,还有歌曲、诗朗诵、合唱,每个节目都有力地演绎着“地震无情,大马有爱”的主题,让人深切地感受到大马华人的心灵脉动。
赈灾晚会当晚共筹获700万令吉,并移交予程永华大使,成为大马捐助四灾震灾 大一笔款项。海鸥集团透过海鸥基金会损出100万令吉,我们为有幸参与这场慈善活动感到无上光荣。
CORPORATE SOCIAL RESPONSIBILITY (CONT’D)
社会责任
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AUDIT COMMITTEE REPORT
The Audit Committee of Hai-O Enterprise Bhd (“Audit Committee”) presently comprises three (3) Directors of the Board. The details of attendance of each member of the committee for the meetings held during the financial year are as follows:
Number of Meetings Number of Meetings Held during the Attended during the financial year ended financial year endedName of Member Designation Directorship 30 April 2008 30 April 2008
Quek Ah Ba Chairman Independent 5 5 Non-Executive Director
Dr. M.K. Rajakumar Member Independent 5 5 A/L M.R.K. Nayar Non-Executive Director
Lim Chin Luen Member Independent 5 5 Non-Executive Director
Tan Keng Song Member Executive Director 1 1(Appointed on 15th June 2007)
(Resigned on 27th September 2007)
TERMS OF REFERENCE
The Audit Committee was formed by the Board on 7 September 1996 and its terms of reference are amended to meet the requirements of the Listing Requirements of Bursa Malaysia Securities Bhd.
COMPOSITION OF THE AUDIT COMMITTEE
The Audit Committee shall be made up of at least three (3) Directors who must be non-executive directors, with a majority of them being Independent Directors. No Alternate Director shall be appointed as a member of Audit Committee. At least one member of the Audit Committee: -
1) must be a member of the Malaysian Institute of Accountants; or
2) if he/she is not a member of Malaysian Institute of Accountants, he/she must have at least 3 years’ working experience and: -
(a) he/she must have passed the examinations specifi ed in Part I of the 1st Schedule of the Accountants Act 1967; or
(b) he/she must be a member of one of the association of accountants specifi ed in Part II of the 1st Schedule of the Accountants Act 1967; or
3) fulfi lls such other requirements as prescribed or approved by Bursa Malaysia Securities Bhd.
Note: The Listing Requirements of Bursa Malaysia Securities Bhd prescribed that the following qualifi cations are also acceptable: -
(a) a degree/master/doctorate in accounting or fi nance and at least 3 years’ post qualifi cation experience in accounting or fi nance; or
(b) at least 7 years’ experience being a chief fi nancial offi cer of a corporation or having the function of being primarily responsible for the management of the fi nancial affairs of a corporation.
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TERM OF OFFICE
The Board of Directors must review the term of offi ce and performance of the Audit Committee and each of its members at least once every three (3) years to determine whether such Audit Committee and members have carried out their duties in accordance with their terms of reference.
RETIREMENT AND RESIGNATION
In the event of any vacancy in an Audit Committee resulting in the non-compliance of subparagraphs 15.10(1) of the Listing Requirements of Bursa Malaysia Securities Bhd, the vacancy must be fi lled within three (3) months.
CHAIRMAN OF THE AUDIT COMMITTEE
The members of the Audit Committee shall elect a Chairman from among themselves who shall be an Independent Non-Executive Director.
SECRETARY OF THE AUDIT COMMITTEE
The Company Secretary shall be the Secretary of the Audit Committee. The Secretary shall be responsible, in conjunction with the Chairperson, for drawing up the agenda and circulating it prior to each meeting. The Secretary shall also be responsible for keeping the minutes of the meeting and circulating them to the Audit Committee members.
AUTHORITY OF THE AUDIT COMMITTEE
The Audit Committee is authorized by the Board to:
1) have authority to investigate any matter within its terms of reference;
2) have the resources which are required to perform its duties;
3) have full and unrestricted access to any information pertaining to the company;
4) have direct communication channels with the external auditors and person(s) carrying out the internal audit function or activity;
5) be able to obtain independent professional or other advice; and
6) be able 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.
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AUDIT COMMITTEE REPORT (CONT’D)
FUNCTIONS OF THE AUDIT COMMITTEE
The Audit Committee shall, amongst others, discharge the following functions:-
1) review the following and report the same to the Board of Directors of the company:-
(a) with the external auditors, the audit plan;
(b) with the external auditors, their evaluation of the system of internal controls;
(c) with the external auditors, their audit report;
(d) the external auditors’ management letter and management response;
(e) the assistance given by employees of the company to the external auditors;
(f) the quarterly results and year end fi nancial statements, prior to the approval by the Board of Directors, focusing particularly on:-i) changes in or implementation of major accounting policy changes;ii) signifi cant and unusual events; andiii) compliance with accounting standards and other legal requirements;
(g) any related party transaction and confl ict of interest situation that may arise within the company or group including any transaction, procedure or course of conduct that raises questions of management integrity;
(h) any letter of resignation from the external auditors of the Company;
(i) whether there is reason (supported by grounds) to believe that the company’s external auditors are not suitable for re-appointment;
(j) recommend the nomination of a person or persons as external auditors;
(k) the internal audit functions :-
i) the adequacy of the scopes, functions, competency and resources of the internal audit functions and that it has the necessary authority to carry out its work;
ii) the internal audit programme, processes, the result of the internal audit programme, processes or investigation undertaken and whether or not appropriate action is taken on the recommendations of the internal audit function;
iii) review any appraisal or assessment of the performance of the head of the internal audit function;iv) approve any appointment or termination of head of the Group Internal Audit; and
(l) consider the major fi ndings of internal investigations and management’s response.
2) to supervise and direct any special projects and investigations.
3) to carry out such other functions as may be agreed to by the Audit Committee and the Board of Directors.
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REPORTING OF BREACHES TO THE BURSA MALAYSIA SECURITIES BHD
Where an Audit 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 Listing Requirements of Bursa Malaysia Securities Bhd, the Audit Committee shall promptly report such matter to the Bursa Malaysia Securities Bhd.
QUORUM OF AUDIT COMMITTEE
In order to form a quorum in respect of a meeting of the Audit Committee, the majority of members present must be Independent Directors.
FREQUENCY AND ATTENDANCE OF MEETINGS
Meetings shall be held at least 4 times a year. Notice of meeting shall be circulated to the members one week in advance. Additional meetings may be called at any time at the Audit Committee’s discretion.
The Head of Finance, the Group Accountant and the Head of Group Internal Audit, a representative from operations management, and a representative of the external auditors may attend meetings by invitation. Other Directors and employees may attend any particular audit committee meeting only at the Audit Committee’s invitation, specifi c to the relevant meeting.
The external auditors may request a meeting if they consider necessary. Upon request of auditors, the Chairman of the Audit Committee shall convene a meeting of the Committee to consider any matter the auditors believe should be brought to the attention of the Directors or shareholders.
Minutes of the Committee Meetings were circulated to the Committee members and made available to other members of the Board.
SUMMARY OF ACTIVITIES
During the fi nancial year ended 30 April 2008, the activities of the Audit Committee included:-
1) reviewed the unaudited quarterly fi nancial results announcements before they were approved by the Board;
2) reviewed the audited fi nancial statements for fi nancial year ended 30 April 2008 before they were approved by the Board;
3) reviewed and discussed with the external auditors on their scope of work, the result of their examination, the auditors’ report and management letters in relation to the audit and accounting issues arising from the audit, as well as new developments on accounting standards and regulatory requirements;
4) evaluated the performance of the external auditors and made recommendations to the Board on their appointment and fees;
AUDIT COMMITTEE REPORT (CONT’D)
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AUDIT COMMITTEE REPORT (CONT’D)
5) reviewed and approved annual audit plan of the Group for the fi nancial year ended 30 April 2008;
6) reviewed the audit programs, resource requirements, and staffi ng requirements for the year and assessed the performance of the Group Internal Audit Division;
7) reviewed the processes undertaken by the internal auditors to ensure all high and critical risk areas are audited annually;
8) reviewed the internal audit report, audit recommendations made and management response to these recommendations and reviewed the follow-up audits to ensure that appropriate actions are taken and recommendations of internal auditors are implemented.
SUMMARY OF INTERNAL AUDIT ACTIVITIES
The Group Internal Audit Division, which reports directly to the Audit Committee, is established to assist the Audit Committee in the discharge of its duties and responsibilities. Its role is to undertake independent regular and systematic reviews of the operation of the companies to ensure proper systems of internal controls is in place. It also evaluates the processes by which signifi cant risks are identifi ed, assessed and managed to ensure instituted controls are appropriate, effectively applied and achieve acceptable risk exposures consistent with the Company’s risk management policy.
Throughout the financial year, audit assignments were carried out on the Group and its subsidiary companies. These assignments were carried out in accordance with the annual audit plan or as special ad-hoc audit at management’s request.
The resulting reports of the audit undertaken were presented to the Audit Committee and forwarded to the management concerned for action.
During the fi nancial year, there was no material internal control failure that was reported that would have resulted in any signifi cant loss to the Group.
EMPLOYEE SHARE OPTION SCHEME
In compliance with the Listing Requirements of Bursa Malaysia Securities Bhd, Appendix 9C, Paragraph 9.25 in furtherance of the Committee’s obligations under Paragraph 8.21A, which come into effect on 10 February 2004, the Audit Committee, through the Group Internal Audit Division, has verified the allocation of options pursuant to the criteria set out in the Employee Share Option Scheme.
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STATEMENT ON CORPORATE GOVERNANCE
The Board of Directors of Hai-O Enterprise Berhad (“The Board”) recognises the importance of the Malaysian Code of Corporate Governance (“The Code”), which sets out the principles and the best practices on corporate governance. In line with this, the Board is committed to ensuring that the principles of Corporate Governance and Best Practices are observed and practiced throughout the Hai-O Group of companies (“The Group”) so that the operations of the Group are conducted with integrity and professionalism to safeguard shareholders’ investment and enhance shareholders’ value.
BOARD OF DIRECTORS
a) Composition of the Board and Board Balance
The Board currently consists of seven (7) members, comprising of two (2) Executive Directors and fi ve (5) Non-Executive Directors, of whom four (4) are Independent Directors. Thus, this complies with Paragraph 15.02 of the Listing Requirements of Bursa Malaysia Securities Bhd (“Bursa Malaysia”) that one-third (1/3) of the Board are Independent Directors. All the Independent Directors are independent of management and majority shareholders and are free from any business or other relationship that could materially interfere with the exercise of their independent judgment.
The functions of Executive and Non-Executive Directors are separate and clearly defi ned. Generally, the Executive Directors are to manage the Group’s daily operations and to implement the operational and corporate decisions. The Non-Executive Directors are to provide the company with unbiased, independent views and decisions, after taking into consideration the interest of the shareholders, employees and business associates. The expertise of the Independent Non-Executive Directors complements the knowledge and experience of the Executive Directors in the formulation of company strategies and policies. Where a potential confl ict of interest may arise, it is a mandatory practice for the director concerned to declare his interest and abstain from the decision making process.
There is also a clear distinction of responsibilities between the Chairman and the Managing Director to maintain a balance of authority and accountability. The Chairman provides overall leadership to the Board, without limiting the principle of collective responsibility for Board’s decisions. The Managing Director, on the other hand, has the principal responsibility to formulate the business strategies and to implement the corporate decisions as well as to manage the overall business operations.
The Board’s composition represents a mix of knowledge, skill and expertise relevant to the activities of the Group. A brief profile of each Director is presented on page 14 to page 20.
b) Responsibilities of the Board
The Board retains full and effective control of the Group. This includes the responsibility for determining the Group’s overall strategic directions as well as development and control of the Group. Key matters, such as approval of annual and quarterly fi nancial results, corporate and fi nancial planning, acquisitions and disposals of major capital expenditures, entry into new business ventures, budgets and long term plans are the prerogative of the Board.
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STATEMENT ON CORPORATE GOVERNANCE (CONT’D)
c) Board Meetings & Supply of Information
The Board meets at least once every three (3) months. Additional meetings may be convened to resolve any major and ad hoc matters requiring immediate attention. During the financial year ended 30 April 2008, the Board met eight (8) times. Senior Management staff may be invited to attend board meetings to provide the Board with detailed explanations and clarifications.
Relevant information and documents are provided to the Board members prior to the Board meetings to enable them to duly discharge their duties.
The Board has unrestricted access to all staff for any information pertaining to the Group’s affairs. In addition, the Board has access to the advice and services of the Company Secretary who is responsible for ensuring that the Board meeting procedures are followed and that applicable rules and regulations are being complied with. The Board may also seek independent advice whenever the need arises.
d) Appointment & Re-election of Directors
The Board has delegated the Nomination Committee the responsibility for considering the appointment of directors, identifying and selecting potential new directors and proposing to the Board the appointment of new Directors.
All of the members of the Nomination Committee are Independent, Non-Executive Directors:
• Dr. M.K. Rajakumar A/L M.R.K. Nayar• Lim Chin Luen• Quek Ah Ba
One third (1/3) of the Directors shall retire from office at each Annual General Meeting (“AGM”) and they can offer themselves for re-election. Directors who are appointed by the Board are subject to election by the shareholders at the next AGM held following their appointments.
Directors over seventy (>70) years of age are required to submit themselves for re-appointment annually in accordance with Section 129(6) of the Companies Act, 1965.
e) Director’s Training
The Board acknowledges that continuous education is critical for its members to gain insight into the state of economy, technological advances, regulatory updates and management strategies. All the Directors of the company have completed the Mandatory Accreditation Programme (“MAP”) in accordance with the Listing Requirements of the Bursa Malaysia Securities Bhd. The Directors will continue to undergo other relevant training programs and the Continuing Education Program (CEP) to further enhance their acknowledge in the latest statutory and regulatory developments as well as to keep abreast with developments in the business environment to enable them to discharge their responsibilities more effectively.
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DIRECTORS’ REMUNERATION
a) Level and Make-up of Remuneration
The Board has set up a Remuneration Committee whose members are majority Non-Executive Directors. Members of the Remuneration Committee are: -
• Dr. M.K. Rajakumar A/L M.R.K. Nayar• Lim Chin Luen• Tan Kai Hee
The level of remuneration is structured to attract, retain and motivate the Directors in order to run the company successfully. The remuneration scheme is linked closely with the performance, service seniority, experience and responsibilities.
b) Procedure
The Remuneration Committee, meets as and when required, has responsibility for determining all aspect of remuneration and terms and conditions of service of the Executive Directors. The Remuneration Committee’s primary responsibility is to ensure that the remuneration package of the Executive Directors are based on the Group’s results and the individual director’s performance.
The determination of the remuneration of Non-Executive Directors is a matter for the Board as a whole.
The Directors’ fees, both Executive and Non-Executive are approved by the shareholders at the Annual General Meeting (“AGM”).
c) Disclosure
The details of the remuneration of Directors for the year ended 30 April 2008 are as follows:
Directors Directors’ Fees Emoluments Benefi t-In-Kinds Total (RM) (RM) (RM) (RM)
Executive Directors 109,967 2,589,505 34,668 2,734,140Non-Executive Directors 80,000 519,209 5,000 604,209
Grand Total 189,967 3,108,714 39,668 3,338,349
The aggregate remuneration of Directors fall within the following bands are as follows: -
Range of Remuneration Executive Directors Non-Executive Directors
RM 50,001 – RM100,000 3RM 150,001 – RM 200,000 2RM 250,001 – RM 300,000 1 RM 300,001 – RM 350,000 1 RM 2,100,001 – RM 2,150,000 1
STATEMENT ON CORPORATE GOVERNANCE (CONT’D)
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STATEMENT ON CORPORATE GOVERNANCE (CONT’D)
SHAREHOLDERS AND INVESTORS
The Board recognises the importance of the right of shareholders, stakeholders and general public to be well informed on the activities and performance of the Group and to make their own evaluation and investment decision.
The Group has maintained an active and constructive communication policy that enables the Board and management to communicate effectively with its shareholders.
The key element of the Company’s dialogue with its shareholders is the opportunity to gather views and answer questions on all issues relevant to the Company at the AGM. The notice of the AGM and related papers are sent to shareholders with adequate time notice before the meeting. All shareholders are invited and encouraged to attend the company’s AGM and to participate in the proceedings. At the AGM, the shareholders are encouraged to ask questions about the resolutions being proposed as well as to seek clarifi cation on the Group’s business and performance. Shareholders are also informed and invited to attend any Extraordinary General Meetings through circulars and notice of meeting, if there is any.
The company has also established a website www.hai-o.com.my to which the shareholders can access for corporate information.
ACCOUNTABILITY AND AUDIT
a) Financial Reporting
The Board aims to provide and present a clear, balanced and comprehensive assessment of the Group’s fi nancial performance and prospects at the end of the fi nancial year, primarily through the annual fi nancial statements, as well as through quarterly and half yearly announcement of results to shareholders. The Board, with the assistance of the Audit Committee, takes due care and reasonable steps to ensure that its quarterly and annual fi nancial statements are presented with accuracy, adequacy and comply with the requirements of approved accounting standards before announcing to shareholders and the general public.
b) Statement of Internal Control
The Board acknowledges that it is responsible for the Group’s system of internal controls covering not only fi nancial controls but also operational and compliance controls as well as risk management. The internal control system is designed to manage, rather than eliminate, the risk of failure to achieve business objectives and can only provide reasonable, and not absolute assurance against material misstatement or loss.
The Statement of Internal Control set out on page 61 of this Annual Report provides an overview of the state of internal controls within the Group.
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c) Relationship with the Auditors
Through the Audit Committee, the Board has established transparent and appropriate relationship with the company’s internal and external auditors.
The company’s independent external auditors fi ll an essential role for the shareholders by enhancing the reliability of the company’s fi nancial statements and giving assurance of that reliability to users of these fi nancial statements.
A report of the Audit Committee and its terms of reference are provided on pages 51 to 55.
RESPONSIBILITY STATEMENT BY THE BOARD
The Directors are responsible for ensuring that the annual fi nancial statements of the Group are drawn up in accordance with the requirements of the applicable approved accounting standards in Malaysia, the provisions of the Companies Act, 1965 and the Listing Requirements of Bursa Malaysia Securities Bhd.
They are to ensure that the annual fi nancial statements of the Group give a true and fair view in the state of affairs of the Group at the end of the fi nancial year and the results and cash fl ows for the year then ended.
In preparing the fi nancial statements, the Directors have:
• applied the appropriate and relevant accounting policies on a consistent basis;• made judgments and estimates that are reasonable and prudent;• prepared the fi nancial statements on a going concern basis;• ensured that proper accounting records are kept so as to enable the preparation of the fi nancial statements with
reasonable accuracy; and• adopted approved accounting standards in Malaysia.
The Directors are also making reasonable steps to safeguard the assets of the Group to prevent and detect other irregularities.
STATEMENT ON CORPORATE GOVERNANCE (CONT’D)
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STATEMENT ON INTERNAL CONTROLFOR FINANCIAL YEAR ENDED 30 APRIL 2008
INTRODUCTION
In line with the Malaysian Code on Corporate Governance that requires listed companies to maintain a sound system of internal control to safeguard shareholders’ investments and the Group’s assets, the Board of Directors is pleased to provide this Statement of Internal Control pursuant to the Bursa Malaysia Securities Bhd Listing Requirements.
RESPONSIBILITIES
The Board acknowledges that it is responsible for the Group’s system of internal controls covering not only fi nancial controls but also operational and compliance controls as well as risk management. The internal control system is designed to manage, rather than eliminate, the risk of failure to achieve business objectives and can only provide reasonable, and not absolute assurance against material misstatement or loss.
RISK MANAGEMENT FRAMEWORK
The Group has in place an on-going process for identifying, evaluating, monitoring and managing signifi cant risks that may affect the achievement of business objectives throughout the year under review. This process is reviewed by the Directors via the assistance of the Group’s Internal Audit Division.
In establishing and reviewing the system of internal control, Corporate Risk Scorecard System is adopted. This system takes into consideration of the materiality of relevant risks and the likelihood of a loss being incurred. It also sets out the various key controls and process requirements across all functions. It is updated, whenever needed, taking into consideration the changing risk profi les as dictated by changes in the business environment, strategies and functional activities from time to time.
All business units are required to document the controls and processes for managing the risks in their functional areas and to assess its effectiveness using the system.
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STATEMENT ON INTERNAL CONTROL (CONT’D)
KEY ELEMENTS OF INTERNAL CONTROL
Key elements of the Group’s system of internal control include the following: -
1) An on-going process for identifying, evaluating and managing signifi cant risks faced by the Group; which has been in place for the year under review and reviewed by the Directors ;
2) A clear documentation of the risk management principles and procedures, which have been disseminated to all key employees. A risk management process is in place to ensure that all key risks within the Group are being clearly identifi ed within the framework of its line of business and key functional activities ;
3) A regular review of the performance of the Group by the Directors at its meetings to ensure it is in line with the Group’s overall objectives ;
4) A comprehensive annual budget is prepared by each business unit and approved by the Board. Operating results are being closely monitored by management against budget and key performance indicators;
5) The implementation of Code of Conducts for the Group and it is agreed and signed by each employee to indicate that he/she understands and will abide by the code. This Code serves to guide all the staff to conduct in the utmost professional manner in dealing with the company matters;
6) A regular review of the high-risk area of business processes by the Group’s Internal Audit Division, which reports directly to the Audit Committee, to assess the effectiveness of internal controls and to high-light any signifi cant risk that may adversely affect the Group ;
7) Whenever necessary, the Audit Committee reviews and discusses with key management on the actions taken on issues brought up by the Group’s Internal Audit Division and the external auditors.
The Board takes cognizance of the importance of the system of internal control and the Group is aware that its business operations is being conducted in compliance with the Listing Requirements of the Bursa Malaysia Securities Bhd.
REVIEW OF THE STATEMENT BY THE EXTERNAL AUDITORS
The external auditors have reviewed this Statement of Internal Control for the inclusion in this annual report of the company for the fi nancial year ended 30 April 2008 and had reported to the Board that nothing has come to their attention that causes them to believe that the statement is inconsistent with their understanding of the process adopted by the Board in reviewing the adequacy and integrity of the system of internal control.
www.hai-o.com.my • ANNUAL REPORT 2008 63
ud t Co ttee epo t
ADDITIONAL CORPORATE DISCLOSURE
SHARE BUY BACK
During the fi nancial year ended 30 April 2008, the details of the shares purchased by the Company were as follows :-
Shares purchased during the fi nancial year.
Transaction date Units Price (RM) Average Consideration paid Lowest Highest RM RM
May 2007 173,400 2.22 2.34 2.28 395,883Jun 2007 17,400 2.29 2.40 2.35 40,832Aug 2007 144,800 2.69 3.00 2.91 420,659Sep 2007 210,000 2.57 3.24 2.81 590,283Oct 2007 100,200 2.86 3.10 3.02 303,082Nov 2007 120,700 3.04 3.28 3.20 385,787Dec 2007 36,200 2.96 3.14 3.05 110,319Jan 2008 42,000 2.96 3.26 3.08 129,375Feb 2008 116,000 2.91 2.98 2.98 345,740Mar 2008 427,600 2.72 3.14 2.91 1,244,451Apr 2008 25,400 3.18 3.24 3.22 81,698
1,413,700 4,048,109
All the shares so purchased during the fi nancial year were retained as treasury shares. No resale of treasury share during the year. As at 30 April 2008, a total of 3,123,886 ordinary shares were held as treasury shares. There has been no cancellation of the treasury shares by the Company during the fi nancial year ended 30 April 2008.
UTILISATION OF PROCEEDS
During the fi nancial year, there were no proceeds raised by the Company from any corporate proposals.
OPTIONS, WARRANTS OR CONVERTIBLE SECURITIES
No options warrant or convertible securities were granted to any person to any parties during the fi nancial year apart from the issue of options pursuant to the Employees’ Share Option Scheme (ESOS). The details of options issued and exercised during the year are as follows:-
-----------------Options over ordinary shares of RM1.00 each---------------- Option Price No. of Options No. of Options Balance as atDate of offer RM Granted Exercised 30.4.2008
19.12.2007 2.70 1,969,000 (499,000) 1,470,000
AMERICAN DEPOSITORY RECEIPT (ADR) GLOBAL DEPOSITORY RECEIPT (GDR)
During the fi nancial year, the Company did not sponsor any ADR or GDR programme.
SANCTIONS AND / OR PENALTIES
There were no sanctions and / or penalties imposed on the Company and its subsidiaries, Directors or Management by the relevant regulatory bodies during the fi nancial year.
NON-AUDIT FEES
There is no non-statutory and professional fees paid to the external auditors, BDO Binder by the Company and its subsidiary for the fi nancial year ended 30 April 2008.
HAI-O ENTERPRISE BERHAD (22544-D) • (INCORPORATED IN MALAYSIA)64
ud t Co ttee epo t
REVALUATION POLICY ON LANDED PROPERTIES
The Group does not adopt a policy on regular revaluation of its landed properties. However, a revaluation will be carried out should the directors are of the opinion that there is a material difference between the book value with the realizable value of the subject property.
VARIATION IN RESULTS
There was no material variance between the results for the fi nancial year and the unaudited results previously announced.
PROFIT GUARANTEE
No profi t guarantee was given by the Company in respect of the fi nancial year.
MATERIAL CONTRACTS INVOLVING DIRECTORS AND MAJOR SHAREHOLDERS’ INTEREST
There were no material contracts of the Company and its subsidiaries, involving directors’ and major shareholders’ interests, still subsisting at the end of the fi nancial year.
RECURRENT RELATED PARTY TRANSACTIONS
Details of transactions with related parties undertaken by the Group during the fi nancial year are disclosed in Note 34 of the Financial Statements.
DETAILS OF ATTENDANCE OF DIRECTORS AT BOARD MEETING
There were eight (8) Board of Directors Meetings held during the fi nancial year ended 30 April 2008. The detail of attendance of the Board as follows:-
Name of Directors Number of Board Meetings Attended by Directors
Tan Sri Osman S. Cassim 8/8 meetingsTan Kai Hee 8/8 meetingsDato’Abdul Rani bin Mohd Razalli 8/8 meetingsDr. M.K. Rajakumar M.R.K. Nayar 8/8 meetingsLim Chin Luen 8/8 meetingsQuek Ah Ba 8/8 meetingsTan Keng Song 8/8 meetingsTan Keng Kang 6/8 meetings
FAMILY RELATIONSHIP OF DIRECTORS AND /OR MAJOR SHAREHOLDERS
There is no family relationship among the directors and / or major shareholders except that :-- Mr. Tan Kai Hee and Madam Tan Siow Eng are husband and wife ;- Ms. Tan Keng Song and Mr. Tan Keng Kang are the daughter and son of Mr. Tan Kai Hee and Madam Tan Siow Eng.
CONFLICT OF INTEREST WITH THE COMPANY
None of the Directors have any confl ict of interest with the Company.
CONVICTION FOR OFFENCES
None of the Directors have been convicted of any offences within the past 10 years other than traffi c offences, if any.
ADDITIONAL CORPORATE DISCLOSURE (CONT’D)
66 Directors’ Report
74 Statement By Directors
74 Statutory Declaration
75 Independent Auditors Report
77 Balance Sheets
79 Income Statements
80 Statements Of Changes In Equity
82 Cash Flow Statements
84 Notes To The Financial Statements
Financial Statements
HAI-O ENTERPRISE BERHAD (22544-D) • (INCORPORATED IN MALAYSIA)66
DIRECTORS’ REPORT
The Directors have pleasure in submitting their report and the audited fi nancial statements of the Group and of the
Company for the fi nancial year ended 30 April 2008.
PRINCIPAL ACTIVITIES
The Company is principally engaged in the wholesaling and retailing of herbal medicines and healthcare products and
investment holding. The principal activities of the subsidiaries are set out in Note 11 to the fi nancial statements.
There have been no signifi cant changes in the nature of these activities during the fi nancial year.
RESULTS
Group Company
RM RM
Profi t for the fi nancial year attributable to:
Equity holders of the Company 48,535,332 27,043,214
Minority interest 582,623 -
49,117,955 27,043,214
DIVIDENDS
Dividends paid since the end of the previous fi nancial year were as follows:
(i) fi nal dividend of 13% gross, less tax, amounting to RM7,604,759 in respect of the previous fi nancial year as
approved by the shareholders at the Annual General Meeting held on 30 October 2007, was paid on 12 December
2007.
The amount paid of RM7,604,759 is in excess of the dividend of RM6,530,449 proposed in last year’s directors’
report. The difference of RM1,074,310 was in respect of additional shares issued arising from the bonus issue
and the exercise of the option under the Employees’ Share Option Scheme (“ESOS”) subsequent to the end of
previous fi nancial year, but prior to the closing date of the entitlement to dividend.
(ii) an interim dividend of 8% gross, less tax, amounting to RM4,747,700 in respect of current fi nancial year was
declared on 19 February 2008 and paid on 28 March 2008.
The Directors proposed a fi nal dividend of 32% gross, less tax, amounting to RM18,935,583 in respect of the fi nancial
year ended 30 April 2008, subject to the approval of members at the forthcoming Annual General Meeting. This
dividend, upon approval by the shareholders, will be accounted for as an appropriation of retained earnings in the
fi nancial year in which it is declared.
RESERVES AND PROVISIONS
There were no material transfers to or from reserves or provisions during the fi nancial year other than those as
disclosed in the fi nancial statements.
www.hai-o.com.my • ANNUAL REPORT 2008 67
DIRECTORS’ REPORT
(CONT’D)
ISSUE OF SHARES AND DEBENTURES
During the fi nancial year, the Company increased its issued and paid-up share capital from RM68,814,000 to
RM83,088,342 by way of:
(a) issuance of 862,000 new ordinary shares of RM1.00 each by virtue of the exercise of the ESOS; and
(b) issuance of 13,412,342 new ordinary shares of RM1.00 each by way of bonus issue on the basis of one new
ordinary share of RM1.00 each for every 5 existing ordinary shares of RM1.00 each held, by way of capitalising
RM13,412,342 from retained earnings of the Company on 14 September 2007.
The abovementioned shares rank pari passu in all respects with the then existing shares of the Company. There were
no other issues of shares during the fi nancial year.
There were no issues of debentures during the fi nancial year.
EMPLOYEES’ SHARE OPTION SCHEME
No options were granted to any person to take up unissued shares of the Company during the fi nancial year apart
from the issue of options pursuant to the ESOS.
The ESOS which became effective on 21 December 1998 is made available to eligible employees of the Group.
At an Extraordinary General Meeting held on 28 February 2003, the Company’s shareholders approved the proposed
amendments to the Bye-Laws of its existing ESOS. The main features of the ESOS are as follows:-
(a) The total maximum number of new shares which may be made available under the ESOS (including any shares
already allotted pursuant to the exercise of any options) shall not at any time exceed ten percent (10%) of the
total number of shares comprised in the issued and paid-up share capital of the Company.
(b) Eligible employees are those full time employees (including executive directors) of the Company within the Group
who as at the date of offer are at least eighteen (18) years old; confi rmed and is employed by and on the payroll
of a company/companies within the Group with at least one (1) year of continuous service in the Group; and
any foreign employee who is employed by and on the payroll of a company/companies within the Group and
whose contribution is vital to the Company and have completed at least two (2) years of service or if such foreign
employee is serving under a limited term contract, the contract should be for a duration of at least three (3)
years.
(c) The options holder may, in any year, exercise up to such a maximum number of shares in the Option Certifi cate as
determined by the ESOS Committee and as specifi ed in the Option Certifi cate, options exercisable in a particular
year but not exercised in that year can be carried forward and be exercised in the subsequent years.
(d) The maximum entitlement of an eligible employee under the ESOS shall be determined and subject to the
following:-
(i) not more than fi fty percent (50%) of the shares available under the ESOS should be allocated, in aggregate,
to executive directors and senior management; and
(ii) not more than ten percent (10%) of the shares available under the ESOS should be allocated to any individual
eligible employee who, singly or collectively through his/her associates holds twenty percent (20%) or more
of the issued and paid-up share capital of the Company.
HAI-O ENTERPRISE BERHAD (22544-D) • (INCORPORATED IN MALAYSIA)68
EMPLOYEES’ SHARE OPTION SCHEME (CONTINUED)
(e) The option price shall be determined by the ESOS Committee, based on the weighted average market price of
the Company’s ordinary shares as shown in the Daily Offi cial List issued by the Bursa Malaysia Securities for the
fi ve (5) trading days preceding the respective dates of the offer and may be set at a discount of not more than ten
percent (10%).
(f) The duration of the option was extended to another fi ve years from 21 December 2003 to 20 December 2008. The
option granted may be exercised on any working day before the expiry of the term on 20 December 2008 upon
giving notice in writing to the Company.
(g) The actual number of shares which may be offered to any eligible employee shall be at the discretion of the ESOS
Committee. The number of shares to be offered shall be in multiples of one thousand (1,000) new shares and shall
not exceed the maximum allowable allotment of such eligible employee.
(h) Employees to whom the options have been granted are not eligible to participate in any other employees’ share
option scheme that may be established by the Company or the Group subsequent hereto.
(i) The shares shall on issue and allotment rank pari passu in all respects with the then existing issued shares of the
Company.
The Companies Commission of Malaysia had granted an exemption to the Company from having to disclose the
name of the eligible employees who have been granted with options during the fi nancial year and the number of
options granted to them in accordance with Section 169 (11)(a) of the Companies Act, 1965 except for eligible
employees who have been granted with options to purchase 100,000 and more ordinary shares during the fi nancial
year. This information has been separately fi led with the Companies Commission of Malaysia. Save as disclosed in
the Directors’ interest on page 6, none of the eligible employee had been granted with options to purchase 100,000
and more ordinary shares during the fi nancial year.
The movements in the Company’s unissued shares under ESOS during the fi nancial year are as follows:-
---------------------------- Options over ordinary shares of RM1.00 each ----------------------------
Date of offer
Option Price
/RM
Balance as at
1.5.2007 Granted Forfeited Exercised
Balance as at
30.4.2008
16.12.2003 1.43# 364,000 - (27,000) (337,000) -
09.01.2004 1.00 30,000 - (4,000) (26,000) -
19.12.2007 2.70 - 1,969,000 - (499,000) 1,470,000
# Price adjusted for the effect of the bonus and right issue
SHARE BUY-BACK
At the various general meetings of shareholders held previously, the shareholders of the Company authorised the
directors of the Company to buy back the Company’s own shares based on the following terms:-
(i) The number of shares to be purchased shall not exceed ten percent (10%) of the issued and paid-up share
capital of the Company at any given point in time.
(ii) The share buy-back will be fi nanced through internally generated fund and/or external borrowings. The funds
to be allocated by the Company for the share buy-back will be made wholly out of retained profi ts and/or share
premium account. The amount to be utilised shall not exceed the total audited retained profi ts and share
premium account of the Company.
DIRECTORS’ REPORT
(CONT’D)
www.hai-o.com.my • ANNUAL REPORT 2008 69
SHARE BUY-BACK (CONTINUED)
(iii) The Company may retain the shares so purchased as treasury shares, or to cancel the shares purchased or a
combination of both as defi ned under Section 67A of the Companies Act, 1965. The purchased shares held as
treasury shares may either be distributed as share dividends, resold on Bursa Malaysia Securities in accordance
with the relevant rules of Bursa Malaysia Securities or subsequently cancelled. The distribution of treasury
shares as share dividends may be applied as a reduction of retained profi ts or share premium account of the
Company subject to applicable prevailing laws.
During the fi nancial year, the details of shares purchased were as follows:-
No. of -------------------- Unit cost -------------------- Total
shares Lowest Highest Average consideration
RM RM RM RM
Share purchased
May 2007 173,400 2.22 2.34 2.28 395,883
June 2007 17,400 2.29 2.40 2.35 40,832
August 2007 144,800 2.69 3.00 2.91 420,659
September 2007 210,000 2.57 3.24 2.81 590,283
October 2007 100,200 2.86 3.10 3.02 303,082
November 2007 120,700 3.04 3.28 3.20 385,787
December 2007 36,200 2.96 3.14 3.05 110,319
January 2008 42,000 2.96 3.26 3.08 129,375
February 2008 116,000 2.91 2.98 2.98 345,740
March 2008 427,600 2.72 3.14 2.91 1,244,451
April 2008 25,400 3.18 3.24 3.22 81,698
1,413,700 4,048,109
All the shares so purchased during the fi nancial year were retained as treasury shares as defi ned in the Companies
Act, 1965.
DIRECTORS
The Directors who held offi ce since the date of last report are:-
Tan Sri Osman S Cassim (Chairman)
Dr. M.K. Rajakumar A/L M.R.K. Nayar (Vice Chairman)
Tan Kai Hee (Managing Director)
Tan Keng Song
Tan Keng Kang
Dato’ Abdul Rani Bin Mohd. Razalli
Quek Ah Ba
Lim Chin Luen
DIRECTORS’ REPORT
(CONT’D)
HAI-O ENTERPRISE BERHAD (22544-D) • (INCORPORATED IN MALAYSIA)70
DIRECTORS’ INTERESTS
Except as stated below, no other Directors holding offi ce at the end of the fi nancial year had any benefi cial interests
in the ordinary shares of the Company and its related corporations during the fi nancial year ended 30 April 2008 as
recorded in the Register of Directors’ Shareholdings kept by the Company under Section 134 of the Companies Act
1965:
------------------ Number of Ordinary Shares of RM1.00 each ------------------
Balance as at Bonus Balance as at
1.5.2007 Bought Sold issue 30.4.2008
Shares in the Company
Direct interests
Tan Kai Hee 6,488,493 - - 1,297,698 7,786,191
Dato’ Abdul Rani Bin Mohd. Razalli 47,812 - - 9,562 57,374
Dr. M.K. Rajakumar A/L M.R.K. Nayar 33,600 - - 6,720 40,320
Lim Chin Luen 662,963 50,000 - 142,592 855,555
Quek Ah Ba 27,565 - - 5,513 33,078
Tan Keng Song 930,105 110,000 - 186,021 1,226,126
Tan Keng Kang 677,900 80,000 - 135,580 893,480
Indirect interests
Tan Kai Hee 10,304,758 190,000 - 2,060,950 12,555,708
Tan Keng Song 15,863,146 80,000 - 3,172,627 19,115,773
Tan Keng Kang 16,115,351 110,000 - 3,223,068 19,448,419
Shares in subsidiaries
Hai-O Raya Bhd.
Direct interests
Tan Kai Hee 34,000 - - - 34,000
Tan Keng Song 7,000 - - - 7,000
Lim Chin Luen 3,000 - - - 3,000
Quek Ah Ba 3,000 - - - 3,000
Tan Keng Kang 6,000 - - - 6,000
Indirect interests
Tan Kai Hee 87,000 - - - 87,000
Tan Keng Song 114,000 - - - 114,000
Tan Keng Kang 115,000 - - - 115,000
Samariatan Sdn. Bhd.
Direct interests
Lim Chin Luen 8,000 - - - 8,000
DIRECTORS’ REPORT
(CONT’D)
www.hai-o.com.my • ANNUAL REPORT 2008 71
DIRECTORS’ INTERESTS (CONTINUED)
----------------- Options over Ordinary Shares of RM1.00 each -----------------
Balance Balance
As at as at
1.5.2007 Granted Exercised Forfeited 30.4.2008
Share options in the Company
Tan Keng Song - 150,000 (110,000) - 40,000
Tan Keng Kang - 150,000 (80,000) - 70,000
By virtue of their interests in the shares of the Company, Tan Kai Hee, Tan Keng Song and Tan Keng Kang are also
deemed to be interested in the shares of the subsidiaries to the extent the Company has an interest.
DIRECTORS’ BENEFITS
Since the end of the previous fi nancial year, none of the Directors have received or become entitled to receive any benefi t
(other than a benefi t included in the aggregate amount of emoluments received or due and receivable by the Directors as
shown in the fi nancial statements) by reason of a contract made by the Company or a related corporation with the Director
or with a fi rm of which the Director is a member, or with a company in which the Director has a substantial fi nancial interest
other than any benefi t which may be deemed to have arisen by virtue of the remuneration received and receivable by the
Directors from the subsidiaries in their capacity as directors of those subsidiaries.
There were no arrangements during and at the end of the fi nancial year, to which the Company is a party, which had the
object of enabling Directors to acquire benefi ts by means of the acquisition of shares in or debentures of the Company or
any other body corporate except for the share options granted pursuant to the Company’s ESOS as mentioned in Note 20
to the fi nancial statements.
OTHER STATUTORY INFORMATION REGARDING THE GROUP AND THE COMPANY
(I) AS AT THE END OF THE FINANCIAL YEAR
(a) Before the income statements and balance sheets of the Group and of the Company were made out, the
Directors took reasonable steps:
(i) to ascertain that proper action had been taken in relation to the writing off of bad debts and the making
of provision for doubtful debts and satisfi ed themselves that all known bad debts had been written off
and that adequate provision had been made for doubtful debts; and
(ii) to ensure that any current assets which were unlikely to realise their book values in the ordinary course
of business had been written down to their estimated realisable values.
(b) In the opinion of the Directors, the results of the operations of the Group and of the Company during the
fi nancial year have not been substantially affected by any item, transaction or event of a material and
unusual nature.
DIRECTORS’ REPORT
(CONT’D)
HAI-O ENTERPRISE BERHAD (22544-D) • (INCORPORATED IN MALAYSIA)72
OTHER STATUTORY INFORMATION REGARDING THE GROUP AND THE COMPANY (CONTINUED)
(II) FROM THE END OF THE FINANCIAL YEAR TO THE DATE OF THIS REPORT
(c) The Directors are not aware of any circumstances:
(i) which would render the amount written off for bad debts or the amount of the provision for doubtful
debts in the fi nancial statements of the Group and of the Company inadequate to any material extent;
or
(ii) which would render the values attributed to current assets in the fi nancial statements of the Group and
of the Company misleading; and
(iii) which have arisen which would render adherence to the existing method of valuation of assets or
liabilities of the Group and of the Company misleading or inappropriate.
(d) In the opinion of the Directors:
(i) there has not arisen any item, transaction or event of a material and unusual nature likely to affect
substantially the results of the operations of the Group and of the Company for the fi nancial year in
which this report is made; and
(ii) no contingent or other liability has become enforceable, or is likely to become enforceable, within the
period of twelve months after the end of the fi nancial year which will or may affect the ability of the
Group or of the Company to meet their obligations as and when they fall due.
(III) AS AT THE DATE OF THIS REPORT
(e) There are no charges on the assets of the Group and of the Company which have arisen since the end of the
fi nancial year to secure the liabilities of any other person.
(f) There are no contingent liabilities in respect of the Group and of the Company which have arisen since the
end of the fi nancial year.
(g) The Directors are not aware of any circumstances not otherwise dealt with in the report or fi nancial
statements which would render any amount stated in the fi nancial statements of the Group and of the
Company misleading.
SIGNIFICANT EVENTS DURING THE FINANCIAL YEAR
The signifi cant events during the fi nancial year are disclosed in Note 41 to the fi nancial statements.
EVENTS SUBSEQUENT TO BALANCE SHEET DATE
The events subsequent to balance sheet date are disclosed in Note 42 to the fi nancial statements.
DIRECTORS’ REPORT
(CONT’D)
www.hai-o.com.my • ANNUAL REPORT 2008 73
AUDITORS
The auditors, BDO Binder, have expressed their willingness to continue in offi ce.
Signed on behalf of the Board in accordance with a resolution of the Directors.
.................................................................... ....................................................................
Tan Kai Hee Tan Keng Song
Director Director
Kuala Lumpur
25 August 2008
DIRECTORS’ REPORT
(CONT’D)
HAI-O ENTERPRISE BERHAD (22544-D) • (INCORPORATED IN MALAYSIA)74
STATEMENT BY DIRECTORS
In the opinion of the Directors, the fi nancial statements set out on pages 77 to 143 have been drawn up in accordance
with applicable approved Financial Reporting Standards in Malaysia and the provisions of the Companies Act, 1965
so as to give a true and fair view of the state of affairs of the Group and of the Company as at 30 April 2008 and of the
results of the operations of the Group and of the Company and of the cash fl ows of the Group and of the Company
for the fi nancial year then ended.
On behalf of the Board,
.................................................................... ....................................................................
Tan Kai Hee Tan Keng Song
Director Director
Kuala Lumpur
25 August 2008
STATUTORY DECLARATION
I, Tan Kai Hee, being the Director primarily responsible for the fi nancial management of Hai-O Enterprise Berhad,
do solemnly and sincerely declare that the fi nancial statements set out on pages 77 to 143 are, to the best of my
knowledge and belief, correct and I make this solemn declaration conscientiously believing the same to be true and
by virtue of the provisions of the Statutory Declarations Act, 1960.
Subscribed and solemnly )
declared by the abovenamed )
at Kuala Lumpur this )
25 August 2008 )
Before me:
S.Ideraju (No.W-451)
Pesuruhjaya Sumpah
Kuala Lumpur, Malaysia
www.hai-o.com.my • ANNUAL REPORT 2008 75
INDEPENDENT AUDITORS REPORTTO THE MEMBERS OF HAI-O ENTERPRISE BERHAD
Report on the Financial Statements
We have audited the fi nancial statements of Hai-O Enterprise Berhad, which comprise the balance sheets as at 30
April 2008 of the Group and of the Company, and the income statements, statements of changes in equity and cash
fl ow statements of the Group and of the Company for the year then ended, and a summary of signifi cant accounting
policies and other explanatory notes, as set out on pages 77 to 143.
Directors’ Responsibility for the Financial Statements
The Directors of the Company are responsible for the preparation and fair presentation of these fi nancial statements
in accordance with Financial Reporting Standards and the provisions of the Companies Act, 1965 in Malaysia. This
responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and
fair presentation of fi nancial statements that are free from material misstatement, whether due to fraud or error;
selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the
circumstances.
Auditors’ Responsibility
Our responsibility is to express an opinion on these fi nancial statements based on our audit. We conducted our audit
in accordance with approved standards on auditing in Malaysia. Those standards require that we comply with ethical
requirements and plan and perform the audit to obtain reasonable assurance whether the fi nancial statements are free
from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the fi nancial
statements. The procedures selected depend on our judgement, including the assessment of risks of material
misstatement of the fi nancial statements, whether due to fraud or error. In making those risk assessments, we
consider internal control relevant to the Company’s preparation and fair presentation of the fi nancial statements in
order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Company’s internal control. An audit also includes evaluating the appropriateness
of accounting policies used and the reasonableness of accounting estimates made by the Directors, as well as
evaluating the overall presentation of the fi nancial statements.
We believe that the audit evidence we have obtained is suffi cient and appropriate to provide a basis for our audit
opinion.
Opinion
In our opinion, the fi nancial statements have been properly drawn up in accordance with Financial Reporting Standards
and the provisions of the Companies Act, 1965 in Malaysia so as to give a true and fair view of the fi nancial position
of the Group and of the Company as of 30 April 2008 and of their fi nancial performance and cash fl ows for the year
then ended.
HAI-O ENTERPRISE BERHAD (22544-D) • (INCORPORATED IN MALAYSIA)76
Report on Other Legal and Regulatory Requirements
In accordance with the requirements of the Companies Act, 1965 in Malaysia, we also report the following:
(a) In our opinion, the accounting and other records and the registers required by the Act to be kept by the Company
and its subsidiaries of which we have acted as auditors have been properly kept in accordance with the provisions
of the Act.
(b) We have considered the fi nancial statements and the auditors’ reports of all the subsidiaries of which we have
not acted as auditors, which we indicated in Note 11 to the fi nancial statements.
(c) We are satisfi ed that the fi nancial statements of the subsidiaries that have been consolidated with the Company’s
fi nancial statements are in form and content appropriate and proper for the purposes of the preparation of the
fi nancial statements of the Group and we have received satisfactory information and explanations required by us
for those purposes.
(d) The audit reports on the fi nancial statements of the subsidiaries did not contain any qualifi cation or any adverse
comment made under Section 174(3) of the Act.
Other Matters
This report is made solely to the members of the Company, as a body, in accordance with Section 174 of the
Companies Act, 1965 in Malaysia and for no other purpose. We do not assume responsibility to any other person for
the content of this report.
BDO Binder Gan Hock Soon
AF : 0206 2853/07/10 (J)
Chartered Accountants Partner
Kuala Lumpur
25 August 2008
INDEPENDENT AUDITORS REPORT (CONT’D)
TO THE MEMBERS OF HAI-O ENTERPRISE BERHAD
www.hai-o.com.my • ANNUAL REPORT 2008 77
BALANCE SHEETSAS AT 30 APRIL 2008
Group Company
2008 2007 2008 2007
Note RM RM RM RM
ASSETS
Non-current assets
Property, plant and equipment 7 21,596,819 22,004,741 11,140,814 11,088,393
Plant and equipment on lease 8 - - - -
Investment properties 9 20,921,870 21,580,190 22,445,848 23,092,460
Prepaid lease payments for land 10 1,750,501 1,784,562 81,600 83,200
Investment in subsidiaries 11 - - 15,723,845 13,724,199
Investment in associates 12 - - - -
Investment in jointly controlled entities 13 - - 1,115,399 1,111,205
Other investments 14 2,741,412 5,533,761 736,560 3,040,021
Trade and other receivables 15 1,372,630 1,582,936 - -
Deferred tax assets 16 1,683,930 1,080,402 - -
Goodwill on consolidation 17 84,930 273,833 - -
Total non-current assets 50,152,092 53,840,425 51,244,066 52,139,478
Current assets
Inventories 18 41,374,508 33,927,296 23,288,097 17,396,430
Trade and other receivables 15 25,726,842 14,699,895 17,497,455 23,347,976
Tax recoverable 167,107 202,046 - -
Other investments 14 13,423,881 18,621,605 2,888,000 4,426,670
Deposits with licensed banks 19 21,264,966 10,792,067 201,398 3,450,684
Cash and bank balances 52,000,924 16,880,384 26,259,784 6,822,917
Total current assets 153,958,228 95,123,293 70,134,734 55,444,677
TOTAL ASSETS 204,110,320 148,963,718 121,378,800 107,584,155
EQUITY AND LIABILITIES
Equity attributable to equity holders
of the Company
Share capital 20 83,088,342 68,814,000 83,088,342 68,814,000
Reserves 21 57,484,408 36,851,222 17,557,567 18,416,499
Total equity attributable to equity holders
of the Company 140,572,750 105,665,222 100,645,909 87,230,499
Minority interest 5,499,583 5,214,496 - -
TOTAL EQUITY 146,072,333 110,879,718 100,645,909 87,230,499
HAI-O ENTERPRISE BERHAD (22544-D) • (INCORPORATED IN MALAYSIA)78
Group Company
2008 2007 2008 2007
Note RM RM RM RM
LIABILITIES
Non-current liabilities
Borrowings (interest bearing) 22 - - 667,335 389,040
Deferred tax liabilities 16 64,294 57,623 161,931 248,724
Total non-current liabilities 64,294 57,623 829,266 637,764
Current liabilities
Trade and other payables 24 39,351,888 23,537,935 13,139,757 12,475,217
Provisions 25 5,616,748 3,886,350 - -
Borrowings (interest bearing) 22 5,214,000 7,396,275 5,397,352 7,003,159
Tax liabilities 7,791,057 3,205,817 1,366,516 237,516
Total current liabilities 57,973,693 38,026,377 19,903,625 19,715,892
TOTAL LIABILITIES 58,037,987 38,084,000 20,732,891 20,353,656
TOTAL EQUITY AND LIABILITIES 204,110,320 148,963,718 121,378,800 107,584,155
The accompanying notes form an integral part of the fi nancial statements.
BALANCE SHEETS (CONT’D)
AS AT 30 APRIL 2008
www.hai-o.com.my • ANNUAL REPORT 2008 79
INCOME STATEMENTSFOR THE FINANCIAL YEAR ENDED 30 APRIL 2008
Group Company
2008 2007 2008 2007
Note RM RM RM RM
Revenue 26 373,822,575 189,346,178 146,142,735 83,476,987
Cost of sales (247,743,220) (119,597,737) (87,853,036) (49,281,080)
Gross profi t 126,079,355 69,748,441 58,289,699 34,195,907
Other operating income 4,956,263 3,941,870 2,639,500 2,449,393
Marketing and distribution costs (33,540,804) (23,097,789) (6,374,844) (5,776,596)
Administration expenses (28,698,317) (18,471,575) (16,385,330) (9,625,337)
Other operating expenses (688,755) (1,185,212) (265,265) (461,863)
Finance costs (391,562) (328,440) (412,269) (302,980)
Share of losses of associates - - - -
Profi t before tax 27 67,716,180 30,607,295 37,491,491 20,478,524
Tax expense 28 (18,598,225) (8,493,543) (10,448,277) (4,508,097)
Net profi t for the fi nancial year 49,117,955 22,113,752 27,043,214 15,970,427
Attributable to:-
Equity holders of the Company 48,535,332 21,383,862 27,043,214 15,970,427
Minority interest 582,623 729,890 - -
49,117,955 22,113,752 27,043,214 15,970,427
Earnings per ordinary share attributable to
equity holders of the Company (sen):-
Basic 29 60.41 27.07
Diluted 29 60.28 26.93
Gross dividend per ordinary share (sen):- 30
Interim dividend 8.00 5.00 8.00 5.00
Proposed fi nal dividend 32.00 13.00 32.00 13.00
40.00 18.00 40.00 18.00
The accompanying notes form an integral part of the fi nancial statements.
HAI-O ENTERPRISE BERHAD (22544-D) • (INCORPORATED IN MALAYSIA)80
STATEMENTS OF CHANGES IN EQUITYFOR THE FINANCIAL YEAR ENDED 30 APRIL 2008
----
----
----
----
----
----
--
Att
rib
uta
ble
to
eq
uit
y h
old
ers
of
the
Co
mp
an
y
----
----
----
----
----
----
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No
n d
istr
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leD
istr
ibu
tab
le
Sh
are
Sh
are
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are
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Ex
ch
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on
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RM
RM
RM
RM
RM
RM
RM
RM
RM
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Ba
lan
ce a
t 3
0 A
pril 2
00
66
6,3
29
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-6
28
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1(1
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4,9
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69
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22
2,9
31
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28
9,3
94
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84
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8,8
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94
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38
Issu
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f o
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sh
are
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nt
to e
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ise
of
ES
OS
2
,48
5,0
00
59
9,8
50
--
--
3,0
84
,85
0-
3,0
84
,85
0
Pu
rch
ase
of
Co
mp
an
y’s
ow
n s
ha
res
--
--
(1,0
78
,08
6)
--
(1,0
78
,08
6)
-(1
,07
8,0
86
)
Re
alis
atio
n o
f e
xch
an
ge
fl u
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n r
ese
rve
on
dis
po
sal o
f a
s
ub
sid
iary
, re
pre
sen
ting
inco
me
re
cog
nis
ed
dire
ctly
in e
qu
ity-
--
605
--
-6
05
-6
05
Ne
t p
rofi t
fo
r th
e fi
na
nci
al y
ea
r-
--
--
-2
1,3
83
,86
22
1,3
83
,86
27
29
,89
02
2,1
13
,75
2
To
tal r
eco
gn
ise
d in
com
e a
nd
exp
en
se f
or
the
fi n
an
cia
l ye
ar
--
-6
05
--
21
,38
3,8
62
21
,38
4,4
67
72
9,8
90
22
,11
4,3
57
Div
ide
nd
pa
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o m
ino
rity
sh
are
ho
lde
rs o
f su
bsi
dia
rie
s-
--
--
--
-(1
02
,63
5)
(10
2,6
35
)
Min
ority
sh
are
ho
lde
rs o
f d
isp
ose
d s
ub
sid
iary
--
--
--
--
(31
,61
9)
(31
,61
9)
Fin
al d
ivid
en
d in
re
spe
ct o
f la
st fi
na
nci
al y
ea
r -
--
--
-(3
,78
7,9
72
)(3
,78
7,9
72
)-
(3,7
87
,97
2)
Inte
rim
div
ide
nd
in r
esp
ect
of
curr
en
t fi n
an
cia
l ye
ar
--
--
--
(3,3
32
,31
5)
(3,3
32
,31
5)
-(3
,33
2,3
15
)
Ba
lan
ce a
t 3
0 A
pril 2
00
76
8,8
14
,00
0
59
9,8
50
-6
29
,46
6(2
,24
2,9
93
)6
69
,67
2
37
,19
5,2
27
10
5,6
65
,22
25
,21
4,4
96
11
0,8
79
,71
8
Issu
e o
f o
rdin
ary
sh
are
s p
urs
ua
nt
to:
- e
xerc
ise
of
ES
OS
86
2,0
00
99
3,2
10
--
--
-1
,85
5,2
10
-1
,85
5,2
10
- B
on
us
issu
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3,4
12
,34
2-
--
--
(13
,41
2,3
42
)-
--
Pu
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ase
of
Co
mp
an
y’s
ow
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ha
res
--
--
(4,0
48
,10
9)
--
(4,0
48
,10
9)
-(4
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f ca
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,
r
ep
rese
ntin
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xpe
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re
cog
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dire
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in e
qu
ity-
--
--
(12
,48
0)
12
,48
0-
--
Ne
t p
rofi t
fo
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e fi
na
nci
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r-
--
--
- 4
8,5
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24
8,5
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25
82
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34
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17
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5
To
tal r
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ise
d in
com
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exp
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or
the
fi n
an
cia
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ar
--
--
-(1
2,4
80
)4
8,5
47
,81
24
8,5
35
,33
25
82
,62
34
9,1
17
,95
5
Div
ide
nd
pa
id t
o m
ino
rity
sh
are
ho
lde
rs o
f S
ub
sid
iarie
s-
--
--
--
-(2
96
,53
6)
(29
6,5
36
)
Acq
uis
itio
n o
f a
dd
itio
n in
tere
st in
a s
ub
sid
iary
f
rom
min
ority
inte
rest
--
--
--
--
(1,0
00
)(1
,00
0)
Sh
are
s o
ptio
ns
gra
nte
d u
nd
er
ES
OS
--
91
7,5
54
--
--
91
7,5
54
-9
17
,55
4
Re
serv
e r
ea
lise
d u
po
n e
xerc
ise
of
ES
OS
-2
32
,53
4(2
32
,53
4)
--
--
--
-
Fin
al d
ivid
en
d in
re
spe
ct o
f la
st fi
na
nci
al y
ea
r (N
ote
30
)-
--
--
-(7
,60
4,7
59
)(7
,60
4,7
59
)-
(7,6
04
,75
9)
Inte
rim
div
ide
nd
in r
esp
ect
of
curr
en
t fi n
an
cia
l ye
ar
(No
te 3
0)
--
--
--
(4,7
47
,70
0)
(4,7
47
,70
0)
-(4
,74
7,7
00
)
Ba
lan
ce a
t 3
0 A
pril 2
00
88
3,0
88
,34
21
,82
5,5
94
68
5,0
20
62
9,4
66
(6,2
91
,10
2)
65
7,1
92
59
,97
8,2
38
14
0,5
72
,75
05
,49
9,5
83
14
6,0
72
,33
3
Th
e a
cco
mp
an
yin
g n
ote
s f
orm
an
in
teg
ral p
art
of
the fi
nan
cia
l sta
tem
en
ts.
www.hai-o.com.my • ANNUAL REPORT 2008 81
STATEMENTS OF CHANGES IN EQUITY (CONT’D)
FOR THE FINANCIAL YEAR ENDED 30 APRIL 2008
Non distributable Distributable
Share
Share Share options Treasury Capital Retained Total
capital premium reserve shares reserve earnings equity
Company RM RM RM RM RM RM RM
Balance at 30 April 2006 66,329,000 - - (1,164,907) 210 11,209,292 76,373,595
Issue of ordinary shares pursuant
to exercise of ESOS 2,485,000 599,850 - - - - 3,084,850
Purchase of Company’s own shares - - - (1,078,086) - - (1,078,086)
Net profi t for the fi nancial year,
representing total recognised
income and expense for the
fi nancial year - - - - - 15,970,427 15,970,427
Final dividend in respect of last
fi nancial year - - - - - (3,787,972) (3,787,972)
Interim dividend in respect of
current fi nancial year - - - - - (3,332,315) (3,332,315)
Balance at 30 April 2007 68,814,000 599,850 - (2,242,993) 210 20,059,432 87,230,499
Issue of ordinary shares
pursuant to:
- exercise of ESOS 862,000 993,210 - - - - 1,855,210
- Bonus issue 13,412,342 - - - - (13,412,342) -
Purchase of Company’s
own Shares - - - (4,048,109) - - (4,048,109)
Profi t for the fi nancial year,
representing total recognised
income and expense for the
fi nancial year - - - - - 27,043,214 27,043,214
Share options granted under ESOS - - 917,554 - - - 917,554
Reserve realised upon exercise
of ESOS - 232,534 (232,534) - - - -
Final dividend in respect of last
fi nancial year (Note 30) - - - - - (7,604,759) (7,604,759)
Interim dividend in respect of
current fi nancial year (Note 30) - - - - - (4,747,700) (4,747,700)
Balance at 30 April 2008 83,088,342 1,825,594 685,020 (6,291,102) 210 21,337,845 100,645,909
The accompanying notes form an integral part of the fi nancial statements.
HAI-O ENTERPRISE BERHAD (22544-D) • (INCORPORATED IN MALAYSIA)82
CASH FLOW STATEMENTSFOR THE FINANCIAL YEAR ENDED 30 APRIL 2008
Group Company
2008 2007 2008 2007
Note RM RM RM RM
CASH FLOWS FROM OPERATING ACTIVITIES
Profi t before tax 67,716,180 30,607,295 37,491,491 20,478,524
Adjustments for:-
Allowance for doubtful debts 27 90,942 860,023 57,576 371,914
Allowance for doubtful debts no longer required 27 - (42,407) - (33,707)
Amortisation of prepaid lease payments for land 10 34,061 33,578 1,600 1,600
Bad debts written off 27 217,601 19,897 - -
Depreciation of property, plant and equipment 7 1,767,289 1,812,930 673,285 713,653
Depreciation of investment properties 7 429,696 440,829 520,989 522,687
Dividend income (448,683) (168,697) (20,742,770) (8,924,916)
Gain on disposal of a subsidiary 11.2 (126,343) - (183,780) (9,958)
Gain on disposal of other investments 27 (986,936) (973,234) (854,627) (729,068)
Impairment losses on investment in jointly
controlled entity 27 - - - 148,795
Impairment loss on goodwill 17 189,303 - - -
Interest expense 391,562 328,440 412,269 302,980
Interest income (868,813) (471,298) (206,831) (203,724)
Inventories written off 27 630,168 306,168 162,212 300,000
Inventories written down 27 847,490 - 447,161 -
Loss on disposal of subsidiaries 11.2 - 190,614 - -
Net gain on disposal of property,
plant and equipment (19,992) (52,349) (9,959) (26,246)
Property, plant and equipment written off 7 373,459 95,720 207,106 15,190
Current year provisions 25 4,356,407 2,617,539 - -
Over provision in prior year 25 (949,551) - - -
Waiver of debts 27 (594,741) (930,910) (594,741) (930,910)
Share options granted under ESOS 917,554 - 338,316 -
Operating profi t before working capital changes 73,966,653 34,674,138 17,719,297 11,996,814
Increase in inventories (8,951,678) (5,725,449) (6,501,040) (6,663,636)
(Increase)/decrease in trade and other receivables (11,482,464) 5,578,993 5,792,945 (2,610,550)
Increase/(decrease) in trade and other payables 16,408,694 500,261 1,259,281 (3,855,355)
Cash generated/(used in) from operations 69,941,205 35,027,943 18,270,483 (1,132,727)
Interest paid (950) (488) (950) (488)
Payments for sales campaign, trip and tour incentive 25 (1,676,458) (395,418) - -
Tax paid (14,499,245) (6,829,095) (4,000,977) (2,839,797)
Net cash from/(used in) operating activities 53,764,552 27,802,942 14,268,556 (3,973,012)
www.hai-o.com.my • ANNUAL REPORT 2008 83
CASH FLOW STATEMENTS (CONT’D)
FOR THE FINANCIAL YEAR ENDED 30 APRIL 2008
Group Company
2008 2007 2008 2007
Note RM RM RM RM
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of additional interest in a subsidiary
from minority interest (1,400) - - -
Disposal of jointly controlled entities, net of cash
and cash equivalent disposed - (957) - -
Disposal of subsidiaries, net of cash and
cash equivalent disposed 11 783,760 300,513 - -
Dividend received 379,757 148,435 15,337,677 7,595,903
Interest received 868,813 471,298 206,831 203,724
Acquisitions of subsidiaries - - (2,024,602) -
Purchase of property, plant and equipment 32 (1,826,983) (1,929,451) (96,029) (267,119)
Purchase of other investments (34,671,565) (27,599,876) (22,494,045) (8,244,218)
Proceeds from disposal of other investments 43,648,574 17,328,223 27,190,803 9,321,313
Proceeds from disposal of subsidiaries - - 783,780 280,000
Proceeds from disposal of property, plant
and equipment 62,712 231,885 20,746 64,940
Net cash from/(used in) investing activities 9,243,668 (11,049,930) 18,925,161 8,954,543
CASH FLOWS FROM FINANCING ACTIVITIES
Net of repayment of term loan - (165,848) - -
Net (repayment)/drawdown of bill payables - (351,073) - -
Net (repayment)/drawdown of
bankers’ acceptances (2,182,275) 3,339,275 (1,641,275) 3,350,275
Proceeds from issue of shares 1,855,210 3,084,850 1,855,210 3,084,850
Purchase of Company’s own shares (4,048,109) (1,078,086) (4,048,109) (1,078,086)
Net repayment of hire-purchase creditors - - (408,184) (131,871)
Interest paid (390,612) (327,952) (411,319) (302,492)
Dividend paid (12,352,459) (7,120,287) (12,352,459) (7,120,287)
Dividend paid to minority shareholders
of subsidiaries (296,536) (102,635) - -
Net cash used in fi nancing activities (17,414,781) (2,721,756) (17,006,136) (2,197,611)
NET INCREASE IN CASH AND CASH
EQUIVALENTS 45,593,439 14,031,256 16,187,581 2,783,920
CASH AND CASH EQUIVALENTS AT BEGINNING
OF FINANCIAL YEAR 27,672,451 13,641,195 10,273,601 7,489,681
CASH AND CASH EQUIVALENTS AT END OF
FINANCIAL YEAR 33 73,265,890 27,672,451 26,461,182 10,273,601
The accompanying notes form an integral part of the fi nancial statements.
HAI-O ENTERPRISE BERHAD (22544-D) • (INCORPORATED IN MALAYSIA)84
NOTES TO THE FINANCIAL STATEMENTS30 APRIL 2008
1. CORPORATE INFORMATION
The Company is a public limited liability company, incorporated and domiciled in Malaysia, and listed on the Main
Board of Bursa Malaysia Securities Berhad.
The registered offi ce of the Company is located at Room 803, 8th Floor, Sun Kompleks, Jalan Bukit Bintang, 55100
Kuala Lumpur.
The principal places of business of the Company are located at Wisma Hai-O, Lot 11995, Batu 2, Jalan Kapar,
41400 Klang, Selangor Darul Ehsan.
The fi nancial statements are presented in Ringgit Malaysia (RM), which is also the Company’s functional
currency.
The fi nancial statements were authorised for issue in accordance with a resolution by the Board of Directors on 25
August 2008.
2. PRINCIPAL ACTIVITIES
The Company is principally engaged in the wholesaling and retailing of herbal medicines and healthcare products and
investment holding. The principal activities of the subsidiaries are set out in Note 11 to the fi nancial statements.
There have been no signifi cant changes in the nature of these activities during the fi nancial year.
3. BASIS OF PREPARATION OF THE FINANCIAL STATEMENTS
The fi nancial statements of the Group and of the Company have been prepared in accordance with applicable
approved Financial Reporting Standards (‘FRS’) in Malaysia and the provisions of the Companies Act, 1965.
4. SIGNIFICANT ACCOUNTING POLICIES
4.1 Basis of accounting
The fi nancial statements of the Group and of the Company have been prepared under the historical cost
convention except as otherwise stated in the fi nancial statements.
The preparation of fi nancial statements requires the Directors to make estimates and assumptions that affect
the reported amounts of assets, liabilities, revenue and expenses and disclosure of contingent assets and
contingent liabilities. In addition, the Directors are also required to exercise their judgement in the process
of applying the accounting policies. The areas involving such judgements, estimates and assumptions are
disclosed in Note 6 to the fi nancial statements. Although these estimates and assumptions are based on
the Directors’ best knowledge of events and actions, actual results could differ from those estimates.
4.2 Basis of consolidation
The consolidated fi nancial statements incorporate the fi nancial statements of the Company and all its
subsidiaries made up to the end of the fi nancial year using the purchase method of accounting.
Under the purchase method of accounting, the cost of business combination is measured at the aggregate
of fair values at the date of exchange, of assets given, liabilities incurred or assumed, and equity instruments
issued plus any costs directly attributable to the business combination.
www.hai-o.com.my • ANNUAL REPORT 2008 85
4. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
4.2 Basis of consolidation (continued)
At the acquisition date, the cost of business combination is allocated to identifi able assets, liabilities and
contingent liabilities in the business combination which are measured initially at their fair values at the
acquisition date. The excess of the cost of business combination over the Group’s interest in the net fair
value of the identifi able assets, liabilities and contingent liabilities is recognised as goodwill. If the cost of
business combination is less than the interest in the net fair value of the identifi able assets, liabilities and
contingent liabilities, the Group will:
(a) reassess the identifi cation and measurement of the acquiree’s identifi able assets, liabilities and
contingent liabilities and the measurement of the cost of the combination; and
(b) recognise immediately in profi t or loss any excess remaining after that reassessment.
When a business combination includes more than one exchange transaction, any adjustment to the fair
values of the subsidiary’s identifi able assets, liabilities and contingent liabilities relating to previously held
interests of the Group is accounted for as a revaluation.
Subsidiaries are consolidated from the acquisition date, which is the date on which the Group effectively
obtains control, until the date on which the Group ceases to control the subsidiaries. Control exists when the
Group has the power to govern the fi nancial and operating policies of an entity so as to obtain benefi ts from
its activities. In assessing control, potential voting rights that are exercisable are taken into account.
Intragroup balances, transactions and unrealised gains and losses on intragroup transactions are eliminated
in full. Intragroup losses may indicate an impairment that requires recognition in the consolidated fi nancial
statements. If a subsidiary uses accounting policies other than those adopted in the consolidated fi nancial
statements for like transactions and events in similar circumstances, appropriate adjustments are made to
its fi nancial statements in preparing the consolidated fi nancial statements.
The gain or loss on disposal of a subsidiary, which is the difference between the net disposal proceeds
and the Group’s share of its net assets as of the date of disposal including the carrying amount of goodwill
and the cumulative amount of any exchange differences that relate to the subsidiary, is recognised in the
consolidated income statement.
Minority interest is that portion of the profi t or loss and net assets of a subsidiary attributable to equity
interests that are not owned, directly or indirectly through subsidiaries, by the Group. It is measured at the
minority’s share of the fair value of the subsidiaries’ identifi able assets and liabilities at the acquisition date
and the minority’s share of changes in the subsidiaries’ equity since that date.
Where losses applicable to the minority in a subsidiary exceed the minority’s interest in the equity of that
subsidiary, the excess and any further losses applicable to the minority are allocated against the Group’s
interest except to the extent that the minority has a binding obligation and is able to make additional investment
to cover the losses. If the subsidiary subsequently reports profi ts, such profi ts are allocated to the Group’s
interest until the minority’s share of losses previously absorbed by the Group has been recovered.
Minority interest is presented in the consolidated balance sheet within equity and is presented in the
consolidated statement of changes in equity separately from equity attributable to equity holders of the
Company.
Minority interest in the results of the Group is presented in the consolidated income statement as an allocation
of the total profi t or loss for the fi nancial year between minority interest and equity holders of the Company.
NOTES TO THE FINANCIAL STATEMENTS (CONT’D)
30 APRIL 2008
HAI-O ENTERPRISE BERHAD (22544-D) • (INCORPORATED IN MALAYSIA)86
4. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
4.3 Property, plant and equipment and depreciation
All items of property, plant and equipment are initially measured at cost. Cost includes expenditure that is
directly attributable to the acquisition of the asset.
Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as
appropriate, only when the cost is incurred and it is probable that the future economic benefi ts associated
with the asset will fl ow to the Group and the cost of the asset can be measured reliably. The carrying
amount of parts that are replaced is derecognised. The costs of the day-to-day servicing of property, plant
and equipment are recognised in the income statement as incurred. Cost also comprises the initial estimate
of dismantling and removing the asset and restoring the site on which it is located for which the Group is
obligated to incur when the asset is acquired, if applicable.
Each part of an item of property, plant and equipment with a cost that is signifi cant in relation to the total cost
of the asset and which has different useful life, is depreciated separately.
After initial recognition, property, plant and equipment are stated at cost less any accumulated depreciation
and any accumulated impairment losses.
Depreciation is calculated to write off the cost or valuation of the assets to their residual values on a straight
line basis over their estimated useful lives. The principal depreciation periods and rates are as follows:
Motor vehicles 20%
Furniture and offi ce equipment 10% - 20%
Electrical fi ttings 10%
Renovation 10%
Plant and machinery 20%
Laboratory equipment 10%
Fire-fi ghting system 10%
Warehouse fi ttings 10%
Freehold land is not depreciated.
At each balance sheet date, the carrying amount of an item of property, plant and equipment is assessed
for impairment when events or changes in circumstances indicate that its carrying amount may not be
recoverable.
The residual values, useful lives and depreciation method are reviewed at each fi nancial year end to
ensure that the amount, method and period of depreciation are consistent with previous estimates and the
expected pattern of consumption of the future economic benefi ts embodied in the items of property, plant
and equipment.
The carrying amount of an item of property, plant and equipment is derecognised on disposal or when no
future economic benefi ts are expected from its use or disposal. The difference between the net disposal
proceeds, if any, and the carrying amount is included in profi t or loss and the revaluation surplus related to
those assets, if any, is transferred directly to retained earnings.
NOTES TO THE FINANCIAL STATEMENTS (CONT’D)
30 APRIL 2008
www.hai-o.com.my • ANNUAL REPORT 2008 87
4. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
4.4 Assets acquired under leases and hire-purchase agreements
(a) Finance leases and hire-purchase
Assets acquired under fi nance leases and hire-purchase which transfer substantially all the risks and
rewards of ownership to the Group are recognised initially at amounts equal to the fair value of the
leased assets or, if lower, the present value of the minimum lease payments, each determined at the
inception of the lease. The discount rate used in calculating the present value of the minimum lease
payments is the interest rate implicit in the leases, if this is practicable to determine; if not, the Group’s
incremental borrowing rate is used. Any initial direct costs incurred by the Group are added to the
amount recognised as an asset. The assets are capitalised as property, plant and equipment and the
corresponding obligations are treated as liabilities. The property, plant and equipment capitalised are
depreciated on the same basis as owned assets.
The minimum lease payments are apportioned between the fi nance charges and the reduction of the
outstanding liability. The fi nance charges are recognised in profi t or loss over the period of the lease
term so as to produce a constant periodic rate of interest on the remaining lease and hire-purchase
liabilities.
(b) Operating leases
Lease payments under operating leases are recognised as an expense on a straight line basis over
the lease term.
(c) Leases of land and buildings
For leases of land and buildings, the land and buildings elements are considered separately for the
purpose of lease classifi cation and these leases are classifi ed as operating or fi nance leases in the
same way as leases of other assets.
The minimum lease payments including any lump-sum upfront payments made to acquire the interest
in the land and buildings, are allocated between the land and the buildings elements in proportion to
the relative fair values of the leasehold interests in the land element and the buildings element of the
lease at the inception of the lease.
Leasehold land that normally has an indefi nite economic life and where the lease does not transfer
substantially all the risk and rewards incidental to ownership is treated as an operating lease. The
lump-sum upfront payments made on entering into or acquiring leasehold land are accounted for as
prepaid lease payments and are amortised over the lease term on a straight line basis.
The buildings element is classifi ed as a fi nance or operating lease in accordance with Note 4.4(a)
or Note 4.4(b). If the lease payment cannot be allocated reliably between these two elements, the
entire lease is classifi ed as a fi nance lease, unless it is clear that both elements are operating leases,
in which case the entire lease is classifi ed as an operating lease.
For a lease of land and buildings in which the amount that would initially be recognised for the land
element is immaterial, the land and buildings are treated as a single unit for the purpose of lease
classifi cation and is accordingly classifi ed as a fi nance or operating lease. In such a case, the
economic life of the buildings is regarded as the economic life of the entire leased asset.
NOTES TO THE FINANCIAL STATEMENTS (CONT’D)
30 APRIL 2008
HAI-O ENTERPRISE BERHAD (22544-D) • (INCORPORATED IN MALAYSIA)88
4. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
4.5 Assets leased out under lease and hire-purchase agreements
(a) Finance leases and hire-purchase
Assets leased out under fi nance leases and hire-purchase arrangements which transfer substantially
all the risks and rewards of ownership to customers are stated in the balance sheet as fi nance lease
and hire-purchase receivables after deducting unearned fi nance income.
Finance income is credited to the income statement over the period of the agreements to give a
constant periodic rate of return on the remaining fi nance lease and hire-purchase receivables.
(b) Operating lease
Leases other than a fi nance lease are classifi ed as operating leases. Assets leased out under operating
lease are included in plant and equipment on lease in the balance sheet and outstanding amounts
owing by customers are stated in the balance sheet as lease rental receivables. Depreciation of plant
and equipment on lease is calculated to write off the cost of each asset on a straight line basis over
the period of the respective lease.
Lease rental income is recognised on a straight line basis over the respective lease term.
4.6 Investment properties
Investment properties are properties which are held to earn rentals or for capital appreciation or for both.
Investment properties are initially measured at cost, which includes transaction costs. After initial recognition,
investment properties are stated at cost less accumulated depreciation and impairment losses.
Depreciation is charged to the income statement on a straight line basis over the estimated useful lives of
the investment properties. The estimated useful lives of the buildings are between 32 to 50 years.
Investment properties are derecognised when either they have been disposed of or when they are
permanently withdrawn from use and no future economic benefi t is expected from their disposal. The gains
or losses arising from the retirement or disposal of investment property is determined as the difference
between the net disposal proceeds, if any, and the carrying amount of the asset and is recognised in profi t
or loss in the period of the retirement or disposal.
4.7 Investments
(a) Subsidiaries
A subsidiary is an entity in which the Group and the Company has power to control the fi nancial and
operating policies so as to obtain benefi ts from its activities. The existence and effect of potential
voting rights that are currently exercisable or convertible are considered when assessing whether the
Group has such power over another entity.
An investment in subsidiary, which is eliminated on consolidation, is stated in the Company’s separate
fi nancial statements at cost less impairment losses, if any. On disposal of such an investment, the
difference between the net disposal proceeds and its carrying amount is included in profi t or loss.
NOTES TO THE FINANCIAL STATEMENTS (CONT’D)
30 APRIL 2008
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4. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
4.7 Investments (continued)
(b) Associates
An associate is an entity over which the Group and the Company has signifi cant infl uence and that is
neither a subsidiary nor an interest in a joint venture. Signifi cant infl uence is the power to participate
in the fi nancial and operating policy decisions of the investee but is not control or joint control over
those policies.
In the Company’s separate fi nancial statements, an investment in associate is stated at cost less
impairment losses, if any.
An investment in associate is accounted for in the consolidated fi nancial statements using the equity
method of accounting. The investment in associate in the consolidated balance sheet is initially
recognised at cost and adjusted thereafter for the post acquisition change in the Group’s share of net
assets of the investment.
The interest in the associate is the carrying amount of the investment in the associate under the
equity method together with any long-term interest that, in substance, form part of the Group’s net
interest in the associate.
The Group’s share of the profi t or loss of the associate during the fi nancial year is included in the
consolidated fi nancial statements, after adjustments to align the accounting policies with those of the
Group, from the date that signifi cant infl uence commences until the date that signifi cant infl uence
ceases. Distributions received from the associate reduce the carrying amount of the investment.
Adjustments to the carrying amount may also be necessary for changes in the Group’s proportionate
interest in the associate arising from changes in the associate’s equity that have not been recognised
in the associate’s profi t or loss. Such changes include those arising from the revaluation of property,
plant and equipment and from foreign exchange translation differences. The Group’s share of those
changes is recognised directly in equity of the Group.
When the Group’s share of losses in the associate equals or exceeds its interest in the associate,
the carrying amount of that interest is reduced to nil and the Group does not recognise further losses
unless it has incurred legal or constructive obligations or made payments on its behalf.
The most recent available fi nancial statements of the associate are used by the Group in applying
the equity method. Where the reporting dates of the fi nancial statements are not coterminous, the
share of results is arrived at using the latest audited fi nancial statements for which the difference in
reporting dates is no more than three months. Adjustments are made for the effects of any signifi cant
transactions or events that occur between the intervening period.
Upon disposal of an investment in associate, the difference between the net disposal proceeds and
its carrying amount is included in profi t or loss.
(c) Jointly controlled entities
A jointly controlled entity is a joint venture that involves the establishment of a corporation, partnership
or other entities over which there is contractually agreed sharing of joint control over the economic
activity of the entity. Joint control exists when strategic fi nancial and operational decisions relating to
the activity require the unanimous consent of all the parties sharing control.
In the Company’s separate fi nancial statements, an investment in jointly controlled entities is stated
at cost less impairment losses, if any.
NOTES TO THE FINANCIAL STATEMENTS (CONT’D)
30 APRIL 2008
HAI-O ENTERPRISE BERHAD (22544-D) • (INCORPORATED IN MALAYSIA)90
4. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
4.7 Investments (continued)
(c) Jointly controlled entities (continued)
The investment in jointly controlled entity is accounted for in the consolidated fi nancial statements by
proportionate consolidation method of accounting. The Group combine its share of the joint ventures’
individual assets and liabilities, income and expenses and cash fl ows with the similar items, line by
line, in the Group’s fi nancial statements.
Upon disposal of such investment, the difference between the net disposal proceeds and its carrying
amount is included in profi t or loss.
(d) Other investments
Non-current investments other than investments in subsidiaries, associates, jointly controlled entities
and investment properties are stated at cost and an allowance for diminution in value is made
where in the opinion of the Directors, there is a decline other than temporary in the value of such
investments.
All current investments are carried at the lower of cost and market value, determined on an aggregate
portfolio basis by category of investments.
Upon disposal of such investment, the difference between net disposal proceeds and its carrying
amount is recognised in profi t or loss.
4.8 Goodwill
Goodwill acquired in a business combination is recognised as an asset at the acquisition date and is initially
measured at cost being the excess of the cost of business combination over the Group’s interest in the net
fair value of the identifi able assets, liabilities and contingent liabilities. After initial recognition, goodwill is
measured at cost less accumulated impairment losses, if any. Goodwill is not amortised but instead tested
for impairment annually or more frequently if events or changes in circumstances indicate that the carrying
value may be impaired.
Goodwill arising on acquisition of an associate is the excess of cost of investment over the Group’s share of
the net fair value of net assets of the associates’ identifi able assets, liabilities and contingent liabilities at the
date of acquisition.
Goodwill relating to the associate is included in the carrying amount of the investment and is not amortised.
The excess of the Group’s share of the net fair value of the associate’s identifi able assets, liabilities and
contingent liabilities over the cost of investment is included as income in the determination of the Group’s
share of the associate’s profi t or loss in the period in which the investment is acquired.
4.9 Impairment of non-fi nancial assets
The carrying amounts of assets, except for fi nancial assets (the fi nancial assets in this context do not include
investment in subsidiaries, associates and jointly controlled entities), inventories and deferred tax assets are
reviewed at each balance sheet date to determine whether there is any indication of impairment. If any such
indication exists, the asset’s recoverable amount is estimated.
Goodwill is tested annually for impairment or more frequently if events or changes in circumstances indicate
that the goodwill might be impaired.
NOTES TO THE FINANCIAL STATEMENTS (CONT’D)
30 APRIL 2008
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4. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
4.9 Impairment of non-fi nancial assets (continued)
The recoverable amount of an asset is estimated for an individual asset. Where it is not probable to estimate
the recoverable amount of the individual asset, the impairment test is carried out on the cash generating unit
(CGU) to which the asset belongs. Goodwill acquired in a business combination is from the acquisition date,
allocated to each of the Group’s CGU or groups of CGU that are expected to benefi t from the synergies of
the combination giving rise to the goodwill irrespective of whether other assets or liabilities of the acquiree
are assigned to those units or groups of units.
The recoverable amount of an asset or CGU is the higher of its fair value less cost to sell and its value in
use.
In estimating the value in use, the estimated future cash infl ows and outfl ows to be derived from continuing
use of the asset and from its ultimate disposal are discounted to their present value using a pre-tax discount
rate that refl ects current market assessments of the time value of money and the risks specifi c to the asset
for which the future cash fl ow estimates have not been adjusted. An impairment loss is recognised in the
income statement when the carrying amount of the asset or the CGU, including the goodwill or intangible
asset, exceeds the recoverable amount of the asset or the CGU. The total impairment loss is allocated, fi rst,
to reduce the carrying amount of any goodwill allocated to the CGU and then to the other assets of the CGU
on a pro-rata basis of the carrying amount of each asset in the CGU.
The impairment loss is recognised in the income statement immediately except for the impairment on a
revalued asset where the impairment loss is recognised directly against the revaluation reserve to the extent
of the surplus credited from the previous revaluation for the same asset with the excess of the impairment
loss charged to the income statement.
An impairment loss on goodwill is not reversed in subsequent periods. An impairment loss for other assets is
reversed if, and only if, there has been a change in the estimates used to determine the assets’ recoverable
amount since the last impairment loss was recognised.
An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the
carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss
had been recognised.
Such reversals are recognised as income immediately in the income statement except for the reversal of an
impairment loss on a revalued asset where the reversal of the impairment loss is treated as a revaluation
increase and credited to the revaluation reserve account of the same asset. However, to the extent that an
impairment loss on the same revalued asset was previously recognised in profi t or loss, a reversal of that
impairment loss is also recognised in profi t or loss.
4.10 Inventories
Inventories are stated at the lower of cost and net realisable value.
Cost is determined on the weighted average basis. The cost of consumables and raw materials comprises
all costs of purchase plus the cost of bringing the inventories to their present location and condition. The
cost of work-in-progress and fi nished goods includes the cost of raw materials, direct labour, other direct cost
and a proportion of production overheads based on normal operating capacity of the production facilities.
Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs
of completion and the estimated costs necessary to make the sale.
NOTES TO THE FINANCIAL STATEMENTS (CONT’D)
30 APRIL 2008
HAI-O ENTERPRISE BERHAD (22544-D) • (INCORPORATED IN MALAYSIA)92
4. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
4.11 Financial instruments
4.11.1 Financial instruments recognised on the balance sheets
Financial instruments are recognised on the balance sheet when the Group has become a party to the
contractual provisions of the instrument.
Financial instruments are classifi ed as liabilities or equity in accordance with the substance of the contractual
arrangement. Interest, dividends and losses and gains relating to a fi nancial instrument or a component that
is a fi nancial liability shall be recognised as income or expense in profi t or loss. Distributions to holders of an
equity instrument are debited directly to equity, net of any related tax effect. Financial instruments are offset
when the Group has a legally enforceable right to offset and intends to settle on a net basis or to realise the
asset and settle the liability simultaneously.
(a) Receivables
Receivables including amounts owing by subsidiaries, associates and jointly controlled entities, are
carried at anticipated realisable value. Known bad debts are written off and specifi c allowance is
made for debts considered to be doubtful of collection.
Receivables are not held for trading purposes.
(b) Cash and cash equivalents
Cash and cash equivalents include cash and bank balances, deposits with fi nancial institutions and
other short term, highly liquid investments which are readily convertible to cash and which are subject
to insignifi cant risk of changes in value. For the purpose of cash fl ow statement, cash and cash
equivalents are presented net of bank overdrafts and pledged deposits.
(c) Payables
Payables, including amounts owing to subsidiaries, associates and jointly controlled entities
are recognised at fair value of the consideration to be paid in the future for goods and services
received.
(d) Interest bearing loans and borrowings
All loans and borrowings are recognised at the fair value of the consideration received less directly
attributable transaction costs.
(e) Equity instruments
Ordinary shares are recorded at the nominal value and proceeds in excess of the nominal value
of shares issued, if any, are accounted for as share premium. Both ordinary shares and share
premium are classifi ed as equity. Transaction costs of an equity transaction are accounted for as
a deduction from equity, net of any related income tax benefi t. Otherwise, they are charged to the
income statement.
Dividends to shareholders are recognised in equity in the period in which they are declared.
If the Company reacquires its own equity instruments, the consideration paid, including any attributable
transaction costs is deducted from equity as treasury shares until they are cancelled. No gain or
loss is recognised in profi t or loss on the purchase, sale, issue or cancellation of the Company’s
own equity instruments. Where such shares are issued by resale, the difference between the sales
consideration and the carrying amount is shown as a movement in equity. When the treasury shares
are distributed as share dividend, the cost of the treasury shares will be reduced against the share
premium account or the distributable reserves, or both.
NOTES TO THE FINANCIAL STATEMENTS (CONT’D)
30 APRIL 2008
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4. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
4.11 Financial instruments (continued)
4.11.2 Financial instruments not recognised on the balance sheets
There are no fi nancial instruments not recognised on the balance sheets.
4.12 Income taxes
Income taxes include all domestic and foreign taxes on taxable profi t. Income taxes also include other taxes,
such as withholding taxes, which are payable by a foreign subsidiary, associate or jointly controlled entity on
distributions to the Group and Company.
Taxes in the income statement comprises current tax and deferred tax.
(a) Current tax
Current tax is the amount of income taxes payable or receivable in respect of the taxable profi t or loss
for a period.
Current tax for the current and prior periods are measured at the amount expected to be recovered
from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are
those that have been enacted or substantially enacted by the balance sheet date.
(b) Deferred tax
Deferred tax is recognised in full using the liability method on temporary differences arising between
the carrying amount of an asset or liability in the balance sheet and its tax base.
Deferred tax is recognised for all temporary differences, unless the deferred tax arises from goodwill
or the initial recognition of an asset or liability in a transaction which is not a business combination
and at the time of transaction, affects neither accounting profi t nor taxable profi t.
A deferred tax asset is recognised only to the extent that it is probable that taxable profi t will be
available against which the deductible temporary differences, unused tax losses and unused tax
credits can be utilised. The carrying amount of a deferred tax asset is reviewed at each balance
sheet date. If it is no longer probable that suffi cient taxable profi t will be available to allow the benefi t
of part or all of that deferred tax asset to be utilised, the carrying amount of the deferred tax asset
will be reduced accordingly. When it becomes probable that suffi cient taxable profi t will be available,
such reductions will be reversed to the extent of the taxable profi t.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current
tax assets against current tax liabilities and when the deferred income taxes relate to the same
taxation authority.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the year
when the asset is realised or the liability is settled, based on tax rates and tax laws that have been
enacted or substantively enacted by the balance sheet date.
NOTES TO THE FINANCIAL STATEMENTS (CONT’D)
30 APRIL 2008
HAI-O ENTERPRISE BERHAD (22544-D) • (INCORPORATED IN MALAYSIA)94
4. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
4.13 Provisions
Provisions are recognised when there is a present obligation, legal or constructive, as a result of a past
event, when it is probable that an outfl ow of resources embodying economic benefi ts will be required to settle
the obligation and a reliable estimate can be made of the amount of the obligation.
Where the effect of the time value of money is material, the amount of a provision will be discounted to its
present value at a pre-tax rate that refl ects current market assessments of the time value of money and the
risks specifi c to the liability.
4.14 Employee benefi ts
4.14.1 Short term employee benefi ts
Wages, salaries, social security contributions, paid annual leave, paid sick leave, bonuses and non-monetary
benefi ts are recognised as an expense in the year when employees have rendered their services to the
Group.
Short term accumulating compensated absences such as paid annual leave are recognised as an expense
when employees render services that increase their entitlement to future compensated absences. Short
term non-accumulating compensated absences such as sick leave are recognised when the absences
occur.
Bonuses are recognised as an expense when there is a present, legal or constructive obligation to make
such payments, as a result of past events and when a reliable estimate can be made of the amount of the
obligation.
4.14.2 Defi ned contribution plans
The Company and subsidiaries incorporated in Malaysia make contributions to a statutory provident fund
and foreign subsidiaries make contributions to their respective countries’ statutory pension schemes. The
contributions are recognised as a liability after deducting any contribution already paid and as an expense in
the period in which the employees render their services.
4.14.3 Share-based payments
The Group operates an equity-settled share-based compensation plan, allowing the employees of the Group
to acquire ordinary shares of the Company at predetermined prices.
The total fair value of share options granted to employees is recognised as an expense with a corresponding
increase in the share options reserve within equity over the vesting period and taking into account the
probability that the options will vest.
The fair value of share options is measured at grant date, taking into account, if any, the market vesting
conditions upon which the options were granted but excluding the impact of any non-market vesting
conditions. Non-market vesting conditions are included in assumptions about the number of options that are
expected to become exercisable on vesting date.
At each balance sheet date, the Group revises its estimates of the number of options that are expected to
become exercisable on vesting date. It recognises the impact of the revision of original estimates, if any, in
profi t or loss, and a corresponding adjustment to equity over the remaining vesting period. The equity amount
is recognised in the share options reserve until the options are exercised, upon which it will be transferred to
share premium, or until the options expires, upon which it will be transferred directly to retained earnings.
The proceeds received net of any directly attributable transaction costs are credited to equity when the
options are exercised.
NOTES TO THE FINANCIAL STATEMENTS (CONT’D)
30 APRIL 2008
www.hai-o.com.my • ANNUAL REPORT 2008 95
4. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
4.14 Employee benefi ts (continued)
4.14.3 Share-based payments (continued)
The Group has adopted the transitional provision for “FRS 2: Share-Based Payments” in respect of equity
instruments granted after 31 December 2004 and not vested on 1 January 2006. Accordingly, the above is
applicable only to all the options granted by the Company after 31 December 2004.
4.15 Foreign currencies
4.15.1 Functional currency
The separate fi nancial statements of each entity in the Group are measured using the functional currency,
which is the currency of the primary economic environment in which the entity operates.
4.15.2 Foreign currency transactions and translations
A foreign currency transaction is recorded, on initial recognition in the functional currency, by applying to the
foreign currency amount the spot exchange rate between the functional currency and the foreign currency
at the date of the transaction.
At each balance sheet date, foreign currency monetary items are translated using the exchange rate at that
date. Non-monetary items that are measured in terms of historical cost in a foreign currency is translated
using the exchange rate at the date of the transaction. Non-monetary items that are measured at fair value in
a foreign currency are translated using the exchange rates at the date when the fair value was determined.
Exchange differences arising on the settlement of monetary items or on translating monetary items at rates
different from those at which they were translated on initial recognition during the period or in previous
fi nancial statements are recognised in profi t or loss in the period in which they arise.
Exchange differences arising on a monetary item that forms part of the Company’s net investment in a foreign
operation shall be recognised in profi t or loss in the fi nancial statements of the Company or the individual
fi nancial statements of the foreign operation, as appropriate. In the consolidated fi nancial statements, such
exchange differences are recognised initially in the exchange translation reserve except for a monetary item
that is denominated in a currency other than the functional currency of either the Company or the foreign
operation, which exchange differences is recognised in profi t or loss in the consolidated fi nancial statements.
On the disposal of the foreign operation, the cumulative amount of the exchange differences relating to the
foreign operation is recognised in profi t or loss when the gain or loss on disposal is recognised.
The results and fi nancial position of an entity whose functional currency is not the currency of a hyperinfl ationary
economy shall be translated into a different presentation currency using the following procedures:
(a) assets and liabilities for each balance sheet presented (i.e. including comparatives) shall be translated
at the closing rate at the date of that balance sheet;
(b) income and expenses for each income statement (i.e. including comparatives) shall be translated at
exchange rates at the dates of the transactions; and
(c) all resulting exchange differences shall be recognised as a separate component of equity.
Any goodwill arising on the acquisition of a foreign operation and any fair value adjustments to the carrying
amounts of assets and liabilities arising on the acquisition of a foreign operation is treated as assets and
liabilities of the foreign operation and is translated at the exchange rate at the balance sheet date.
NOTES TO THE FINANCIAL STATEMENTS (CONT’D)
30 APRIL 2008
HAI-O ENTERPRISE BERHAD (22544-D) • (INCORPORATED IN MALAYSIA)96
4. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
4.16 Revenue recognition
Revenue is measured at the fair value of the consideration received or receivable net of discounts and
rebates.
Revenue is recognised to the extent that it is probable that the economic benefi ts associated with the
transaction will fl ow to the Group, and the amount of revenue and the cost incurred or to be incurred in
respect of the transaction can be reliably measured and specifi c recognition criteria have been met for each
of the Group’s activities as follows:
(a) Sale of goods
Revenue from sale of goods is recognised when signifi cant risk and rewards of ownership of the goods
has been transferred to the customer and where the Group retains neither continuing managerial
involvement over the goods, which coincides with delivery of goods and services and acceptance by
customers.
(b) Services
Revenue in respect of the rendering of services is recognised when the stage of completion at the
balance sheet date and the cost incurred can be reliably measured. The stage of completion is
determined by the services performed to date as a percentage of total services to be performed.
(c) Finance income
Finance income from hire-purchase and fi nance leases is recognised upon commencement of the
hire-purchase agreement or the lease agreement, on the sum of digit method over the period of the
agreement. Lease rental income from operating leases is recognised on a straight line basis over the
lease term.
(d) Dividend income
Dividend income is recognised when the right to receive payment is established.
(e) Interest income
Interest income is recognised on an accrual basis.
(f) Rental income
Rental income is accounted for on a straight line basis over the lease term of an ongoing lease.
5. ADOPTION OF NEW FRS AND AMENDMENT TO FRS
5.1 New FRS and amendments to FRS adopted
(a) FRS 6 Exploration for and Evaluation of Mineral Resources is mandatory for annual periods beginning
on or after 1 January 2007. FRS 6 is not relevant to the Group’s operations.
NOTES TO THE FINANCIAL STATEMENTS (CONT’D)
30 APRIL 2008
www.hai-o.com.my • ANNUAL REPORT 2008 97
5. ADOPTION OF NEW FRS AND AMENDMENT TO FRS
5.1 New FRS and amendments to FRS adopted (continued)
(b) FRS 1192004
Amendment to FRS 1192004
Employee Benefi ts – Actuarial Gains and Losses, Group
Plans and Disclosures is mandatory for annual periods beginning on or after 1 January 2007.
This amendment permits any systematic method that results in recognition of actuarial gains and
losses in the period in which they occur provided that the same basis is applied to both, gains and
losses and the basis is applied consistently from period to period.
As the Group does not participate in any multi-employer plans, the adoption of this amendment has
not resulted in signifi cant changes in accounting policies of the Group.
(c) FRS 124 Related Party Disclosures is mandatory for fi nancial periods beginning on or after 1 October
2006.
This FRS does not have any material impact to the Group, other than additional disclosure on key
management personnel remuneration and disclosure on related party transactions.
5.2 New FRS and amendments to FRS not adopted
The Group has not adopted FRS 139 Financial Instruments: Recognition and Measurement and the
consequential amendments resulting from FRS 139 which effective date is deferred to a date to be announced
by the MASB. FRS 139 establishes the principles for the recognition and measurement of fi nancial assets
and fi nancial liabilities including circumstances under which hedge accounting is permitted. By virtue of the
exemption provided under paragraph 103AB of FRS139, the impact of applying FRS 139 on its fi nancial
statements upon fi rst adoption of the standard as required by paragraph 30(b) of FRS 108 is not disclosed.
The Group has also not adopted the following FRS and amendments that have been issued as at the date
of authorisation of these fi nancial statements but are not yet effective for the Group. The Directors do not
anticipate that the application of these standards when they are effective will have a material impact on the
results and the fi nancial position of the Group:
(a) FRS which are effective for annual periods beginning on or after 1 July 2007
FRS 107 Cash Flow Statements
FRS 111 Construction Contracts
FRS 112 Income Taxes
FRS 118 Revenue
FRS 120 Accounting for Government Grants and Disclosure of Government Assistance
FRS 134 Interim Financial Reporting
FRS 137 Provisions, Contingent Liabilities and Contingent Assets
These amendments align the MASB’s FRS with the equivalent International Accounting Standards
(“IAS”), both in terms of form and content. The adoption of these standards will only impact the
form and content of disclosures presented in the fi nancial statements. The Group will apply this
amendment for its annual period beginning 1 May 2008.
NOTES TO THE FINANCIAL STATEMENTS (CONT’D)
30 APRIL 2008
HAI-O ENTERPRISE BERHAD (22544-D) • (INCORPORATED IN MALAYSIA)98
5. ADOPTION OF NEW FRS AND AMENDMENT TO FRS (CONTINUED)
5.2 New FRS and amendments to FRS not adopted (continued)
(b) Framework for the Preparation and Presentation of Financial Statements (‘Framework’) which is
effective for annual periods beginning on or after 1 July 2007.
The Framework sets out the concepts that underlie the preparation and presentation of fi nancial
statements for external users. It is not an MASB approved accounting standard and hence does
not defi ne standards for any particular measurement or disclosure issue. The Group will apply this
Framework for its annual period beginning 1 May 2008.
(c) Amendments and IC Interpretations which are effective for annual periods beginning on or after 1 July
2007
Amendment to FRS 121
The Effects of Changes in
Foreign Exchange Rates –
Net Investment in a Foreign
Operation
This amendment results in exchange differences arising from a
monetary item that forms part of the Group’s net investment in
a foreign operation to be recognised in equity irrespective of the
currency in which the monetary item is denominated and if whether
the monetary item results from a transaction with the Company or
any of its subsidiaries. Previously, exchange differences arising
from such transactions between the Company and its subsidiaries
would be accounted for in the income statement or in equity
depending on the currency of the monetary item. The Group will
apply this amendment for its annual period beginning 1 May 2008.
IC Interpretation 1
Changes in Existing
Decommissioning, Restoration
and Similar Liabilities
IC Interpretation 1 is not relevant to the Group’s operations.
IC Interpretation 2
Members’ Shares in Co-operative
Entities and Similar Instruments
IC Interpretation 2 is not relevant to the Group’s operations.
IC Interpretation 5
Rights to Interests arising from
Decommissioning, Restoration
and Environmental Rehabilitation
Funds
IC Interpretation 5 is not relevant to the Group’s operations.
IC Interpretation 6
Liabilities arising from
Participating in a Specifi c Market
– Waste Electrical and Electronic
Equipment
IC Interpretation 6 is not relevant to the Group’s operations.
IC Interpretation 7
Applying the Restatement Approach
under FRS 1192004
Financial
Reporting in Hyperinfl ationary
Economies
IC Interpretation 7 is not relevant to the Group’s operations.
IC Interpretation 8
Scope of FRS 2 : Share-Based
Payment
This interpretation applies to transactions in which goods or
services are received, including transactions in which the entity
cannot identify specifi cally some or all of the goods or services
received. Where the fair value of the share-based payment is
in excess of the identifi able goods or services received, it is
presumed that additional goods or services have been or will
be received. The whole fair value of the share based payment
will be charged to income statement. The Group will apply this
interpretation from its annual periods beginning 1 May 2008.
NOTES TO THE FINANCIAL STATEMENTS (CONT’D)
30 APRIL 2008
www.hai-o.com.my • ANNUAL REPORT 2008 99
6. SIGNIFICANT ACCOUNTING ESTIMATES AND JUDGEMENTS
6.1 Critical judgements made in applying accounting policies
The following are the judgements made by management in the process of applying the Group’s accounting
policies that have the most signifi cant effect on the amounts recognised in the fi nancial statements. .
Classifi cation between investment properties and property, plant and equipment
The Group has developed certain criteria based on FRS 140 Investment Property in making judgement
whether a property qualifi es as an investment property. Investment property is a property held to earn
rentals or for capital appreciation or both.
Some properties comprise a portion that is held to earn rentals or for capital appreciation and another portion
that is held for use in the production or supply of goods or services or for administrative purposes. If these
portions could be sold separately (or leased out separately under a fi nance lease), the Group would account
for the portions separately. If the portions could not be sold separately, the property is an investment
property only if an insignifi cant portion is held for use in the production or supply of goods or services or for
administrative purposes. Judgment is made on an individual property basis to determine whether ancillary
services are so signifi cant that a property does not qualify as investment property.
During the fi nancial year, the Group has transferred part of its investment property for own use purposes.
Accordingly, a portion of the investment property is transferred and classifi ed as property, plant and
equipment.
6.2 Key sources of estimation uncertainty
The following are key assumptions concerning the future and other key sources of estimation uncertainty at
the balance sheet date that have a signifi cant risk of causing a material adjustment to the carrying amounts
of assets and liabilities within the next fi nancial year.
(a) Impairment of goodwill on consolidation
The Group determines whether goodwill on consolidation is impaired at least on an annual basis.
This requires an estimation of the value-in-use of the subsidiaries to which goodwill is allocated.
Estimating a value-in-use amount requires management to make an estimate of the expected future
cash fl ows from the subsidiaries and also to choose a suitable discount rate in order to calculate
the present value of those cash fl ows. Further details are disclosed in Note 17 to the fi nancial
statements.
(b) Depreciation
The Group depreciates the property, plant and equipment over their estimated useful lives and after
taking into account their estimated residual values, using the straight line method. The estimated
useful lives applied by the Group as disclosed in Note 4.3 to the fi nancial statements refl ect the
Directors’ estimate of the periods that the Group expects to derive future economic benefi ts from
the use of the Group’s property, plant and equipment. Changes in the expected level of usage and
technological developments could impact the economic useful lives and the residual values of these
assets, therefore future depreciation charges could be revised.
NOTES TO THE FINANCIAL STATEMENTS (CONT’D)
30 APRIL 2008
HAI-O ENTERPRISE BERHAD (22544-D) • (INCORPORATED IN MALAYSIA)100
6. SIGNIFICANT ACCOUNTING ESTIMATES AND JUDGEMENTS (CONTINUED)
6.2 Key sources of estimation uncertainty (continued)
(c) Deferred tax assets
Deferred tax assets are recognised for all unused tax losses and unabsorbed capital allowances
to the extent that it is probable that taxable profi t will be available against which the tax losses and
capital allowances can be utilised. Signifi cant management judgement is required to determine the
amount of deferred tax assets that can be recognised, based upon the likely timing and level of future
taxable profi ts together with future tax planning strategies.
(d) Income taxes
Signifi cant judgment is involved in determining the provision for income taxes. There are certain
transactions and computations for which the ultimate tax determination is uncertain during the ordinary
course of business. Where the fi nal tax outcome of these matters is different from the amounts that
were initially recognised, such differences will impact the income tax and deferred tax provisions in
the period in which such determination is made.
(e) Allowance for doubtful debts
The policy for assessing the impairment of the trade receivables of the Group is based on the ongoing
evaluation of the collectability and ageing analysis of the trade receivables and on the management’s
judgment. A considerable amount of judgment is required in assessing the ultimate realisation of
these receivables, including creditworthiness and the past collection history of each customer. If the
fi nancial condition of any customer of the Group were to deteriorate, resulting in an impairment of its
ability to make payment, additional allowance may be required.
The Company has recognised additional allowance for doubtful debts against amounts due from
those subsidiaries in net liabilities position. In making the judgment, the Company evaluates the
recoverability based on past experience on the probability of collections from these subsidiaries.
7. PROPERTY, PLANT AND EQUIPMENT
Group
2008Balance
as at 1.5.2007 Additions Disposals
Disposal of a
subsidiary
Depreciation charge for the
fi nancial year
Written off
Transfer from
investment properties
(Note 9)
Balance as at
30.4.2008Carrying amount RM RM RM RM RM RM RM RM
Freehold land 2,170,747 - - (98,407) - - 81,485 2,153,825Buildings 14,539,711 - - (153,556) (383,812) - 147,139 14,149,482Motor vehicles 789,477 714,419 (3) - (325,020) - - 1,178,873Furniture and offi ce equipment 2,409,204 664,747 (39,094) (6,214) (596,602) (158,105) - 2,273,936Electrical fi ttings 156,459 99,519 (2,127) - (52,489) (10,470) - 190,892Renovation 1,026,764 267,324 (1,496) (174,472) (204,884) - 913,236Plant and machinery 636,337 35,251 - (21,884) (196,877) - - 452,827Laboratory equipment 267,227 45,723 - - (32,005) - - 280,945Fire fi ghting system - - - - - - - -Warehouse fi ttings 8,815 - - - (6,012) - - 2,803
22,004,741 1,826,983 (42,720) (280,061) (1,767,289) (373,459) 228,624 21,596,819
NOTES TO THE FINANCIAL STATEMENTS (CONT’D)
30 APRIL 2008
www.hai-o.com.my • ANNUAL REPORT 2008 101
7. PROPERTY, PLANT AND EQUIPMENT (CONTINUED)
-------------------------------- At 30.4.2008 -----------------------------
CostAccumulated depreciation
Accumulated impairment
lossesCarrying amount
RM RM RM RM
Freehold land 2,153,825 - - 2,153,825
Buildings 16,806,161 (2,609,676) (47,003) 14,149,482
Motor vehicles 2,784,718 (1,605,845) - 1,178,873
Furniture and offi ce equipment 7,911,955 (5,638,019) - 2,273,936
Electrical fi ttings 756,859 (565,967) - 190,892
Renovation 2,893,753 (1,980,517) - 913,236
Plant and machinery 1,663,485 (1,210,658) - 452,827
Laboratory equipment 431,216 (150,271) - 280,945
Fire fi ghting system 10,000 (10,000) - -
Warehouse fi ttings 60,116 (57,313) - 2,803
35,472,088 (13,828,266) (47,003) 21,596,819
Group
2007Balance
as at 1.5.2006 Additions Disposals
Depreciation charge for
the fi nancial year
Written off
Balance as at
30.4.2007
Carrying amount RM RM RM RM RM RM
Freehold land 2,170,747 - - - - 2,170,747
Buildings 14,914,020 - - (374,309) - 14,539,711
Motor vehicles 683,787 395,740 (5) (288,875) (1,170) 789,477
Furniture and offi ce equipment 2,467,601 678,025 (54,165) (662,032) (20,225) 2,409,204
Electrical fi ttings 236,608 39,072 (47,416) (51,623) (20,182) 156,459
Renovation 1,113,025 285,608 (77,644) (224,867) (54,143) 1,041,979
Plant and machinery 548,257 245,959 - (173,094) - 621,122
Laboratory equipment 19,096 277,547 (306) (29,110) - 267,227
Fire fi ghting system - - - - - -
Warehouse fi ttings 10,335 7,500 - (9,020) - 8,815
22,163,476 1,929,451 (179,536) (1,812,930) (95,720) 22,004,741
-------------------------------- At 30.4.2007 -----------------------------
CostAccumulated depreciation
Accumulated impairment
lossesCarrying amount
RM RM RM RM
Freehold land 2,170,747 - - 2,170,747
Buildings 16,812,578 (2,225,864) (47,003) 14,539,711
Motor vehicles 2,156,004 (1,366,527) - 789,477
Furniture and offi ce equipment 9,133,951 (6,724,747) - 2,409,204
Electrical fi ttings 1,042,117 (885,658) - 156,459
Renovation 3,128,018 (2,086,039) - 1,041,979
Plant and machinery 1,663,118 (1,041,996) - 621,122
Laboratory equipment 394,533 (127,306) - 267,227
Fire fi ghting system 10,000 (10,000) - -
Warehouse fi ttings 60,116 (51,301) - 8,815
36,571,182 (14,519,438) (47,003) 22,004,741
NOTES TO THE FINANCIAL STATEMENTS (CONT’D)
30 APRIL 2008
HAI-O ENTERPRISE BERHAD (22544-D) • (INCORPORATED IN MALAYSIA)102
7. PROPERTY, PLANT AND EQUIPMENT (CONTINUED)
Transfer Company Depreciation from
Balance charge for investment Balance2008 as at the fi nancial properties Written as at
1.5.2007 Additions Disposals year (Note 9) off 30.4.2008Carrying amount RM RM RM RM RM RM RM
Freehold land 1,257,372 - - - 81,485 - 1,338,857Buildings 8,278,022 - - (218,211) 44,138 - 8,103,949Motor vehicles 4 - - - - - 4Motor vehicles under hire-purchase 582,330 665,275 - (265,982) - - 981,623Furniture and offi ce equipment 695,733 152,701 (10,787) (169,023) - (27,429) 641,195Electrical fi ttings 8,104 - - (2,370) - - 5,734Renovation 266,828 - - (17,699) - (179,677) 69,452Plant and machinery - - - - - - -
11,088,393 817,976 (10,787) (673,285) 125,623 (207,106) 11,140,814
--------------------- At 30.4.2008 -------------------
Accumulated Carrying
Cost depreciation amount
RM RM RM
Freehold land 1,338,857 - 1,338,857
Buildings 9,631,421 (1,527,472) 8,103,949
Motor vehicles 4 - 4
Motor vehicles under hire-purchase 2,230,236 (1,248,613) 981,623
Furniture and offi ce equipment 2,328,138 (1,686,943) 641,195
Electrical fi ttings 183,767 (178,033) 5,734
Renovation 334,971 (265,519) 69,452
Plant and machinery 72,900 (72,900) -
16,120,294 (4,979,480) 11,140,814
Company
2007
Balance
as at
1.5.2006 Additions Disposals
Depreciation
charge for
the fi nancial
year
Written
off
Balance
as at
30.4.2007
Carrying amount RM RM RM RM RM RM
Freehold land 1,257,372 - - - - 1,257,372
Buildings 8,494,536 - - (216,514) - 8,278,022
Motor vehicles 2,008 - (4) (2,000) - 4
Motor vehicles under hire-purchase 484,437 333,741 - (235,848) - 582,330
Furniture and offi ce equipment 747,550 149,108 (5,440) (195,205) (280) 695,733
Electrical fi ttings 15,520 - - (7,416) - 8,104
Renovation 367,178 - (33,250) (52,190) (14,910) 266,828
Plant and machinery 4,480 - - (4,480) - -
11,373,081 482,849 (38,694) (713,653) (15,190)11,088,393
NOTES TO THE FINANCIAL STATEMENTS (CONT’D)
30 APRIL 2008
www.hai-o.com.my • ANNUAL REPORT 2008 103
7. PROPERTY, PLANT AND EQUIPMENT (CONTINUED)
--------------------- At 30.4.2007 -------------------
Accumulated Carrying
Cost depreciation amount
RM RM RM
Freehold land 1,257,372 - 1,257,372
Buildings 9,577,098 (1,299,076) 8,278,022
Motor vehicles 275,603 (275,599) 4
Motor vehicles under hire-purchase 1,396,007 (813,677) 582,330
Furniture and offi ce equipment 2,466,193 (1,770,460) 695,733
Electrical fi ttings 183,767 (175,663) 8,104
Renovation 642,550 (375,722) 266,828
Plant and machinery 72,900 (72,900) -
15,871,490 (4,783,097) 11,088,393
8. PLANT AND EQUIPMENT ON LEASE
Group Depreciation
Balance charge for Balance
2008 as at the fi nancial as at
1.5.2007 Addition year 30.4.2008
Carrying amount RM RM RM RM
Plant and machinery - - - -
Lift system - - - -
Computer - - - -
Offi ce equipment - - - -
Furniture and fi ttings - - - -
- - - -
--------------------- At 30.4.2008 -------------------
--------------------- At 30.4.2008 -------------------
Accumulated Carrying
Cost depreciation amount
RM RM RM
Plant and machinery 449,300 (449,300) -
Lift system 750,000 (750,000) -
Computer 1,003,480 (1,003,480) -
Offi ce equipment 196,408 (196,408) -
Furniture and fi ttings 63,066 (63,066) -
2,462,254 (2,462,254) -
NOTES TO THE FINANCIAL STATEMENTS (CONT’D)
30 APRIL 2008
HAI-O ENTERPRISE BERHAD (22544-D) • (INCORPORATED IN MALAYSIA)104
8. PLANT AND EQUIPMENT ON LEASE (CONTINUED)
Group Depreciation
Balance charge for Balance
2007 as at the fi nancial as at
1.5.2006 Addition year 30.4.2007
Carrying amount RM RM RM RM
Plant and machinery - - - -
Lift system - - - -
Computer - - - -
Offi ce equipment - - - -
Furniture and fi ttings - - - -
- - - -
--------------------- At 30.4.2007 ---------------------
Accumulated Carrying
Cost depreciation amount
RM RM RM
Plant and machinery 449,300 (449,300) -
Lift system 750,000 (750,000) -
Computer 1,003,480 (1,003,480) -
Offi ce equipment 196,408 (196,408) -
Furniture and fi ttings 63,066 (63,066) -
2,462,254 (2,462,254) -
9. INVESTMENT PROPERTIES
Group
2008
Balance
as at
1.5.2007
Depreciation
charge for
the fi nancial
year
Transfer to
property,
plant and
equipment
(Note 7)
Balance
as at
30.4.2008
Carrying amount RM RM RM RM
Freehold land 2,300,878 - (81,485) 2,219,393
Buildings 19,279,312 (429,696) (147,139) 18,702,477
21,580,190 (429,696) (228,624) 20,921,870
----------------------------- At 30.4.2008 ------------------------------
Accumulated
Accumulated impairment Carrying
Cost depreciation losses amount
RM RM RM RM
Freehold land 2,219,393 - - 2,219,393
Buildings 22,308,736 (3,428,613) (177,646) 18,702,477
24,528,129 (3,428,613) (177,646) 20,921,870
NOTES TO THE FINANCIAL STATEMENTS (CONT’D)
30 APRIL 2008
www.hai-o.com.my • ANNUAL REPORT 2008 105
9. INVESTMENT PROPERTIES (CONTINUED)
Group Depreciation
Balance charge for Balance
2007 as at the fi nancial as at
1.5.2006 year 30.4.2007
Carrying amount RM RM RM
Freehold land 2,300,878 - 2,300,878
Buildings 19,720,141 (440,829) 19,279,312
22,021,019 (440,829) 21,580,190
----------------------------- At 30.4.2007 ------------------------------
Accumulated
Accumulated Impairment Carrying
Cost depreciation losses amount
RM RM RM RM
Freehold land 2,300,878 - - 2,300,878
Buildings 22,466,060 (3,009,102) (177,646) 19,279,312
24,766,938 (3,009,102) (177,646) 21,580,190
Company
2008
Balance
as at
1.5.2007
Depreciation
charge for
the fi nancial
year
Transfer to
property,
plant and
equipment
(Note 7)
Balance
as at
30.4.2008
Carrying amount RM RM RM RM
Freehold land 2,784,777 - (81,485) 2,703,292
Buildings 20,307,683 (520,989) (44,138) 19,742,556
23,092,460 (520,989) (125,623) 22,445,848
------------------- At 30.4.2008 -------------------
Accumulated Carrying
Cost depreciation amount
RM RM RM
Freehold land 2,703,292 - 2,703,292
Buildings 23,389,485 (3,646,929) 19,742,556
26,092,777 (3,646,929) 22,445,848
Company Depreciation
Balance charge for Balance
2007 as at the fi nancial as at
1.5.2006 year 30.4.2007
Carrying amount RM RM RM
Freehold land 2,784,777 - 2,784,777
Buildings 20,830,370 (522,687) 20,307,683
23,615,147 (522,687) 23,092,460
NOTES TO THE FINANCIAL STATEMENTS (CONT’D)
30 APRIL 2008
HAI-O ENTERPRISE BERHAD (22544-D) • (INCORPORATED IN MALAYSIA)106
9. INVESTMENT PROPERTIES (CONTINUED)
------------------- At 30.4.2007 -------------------
Accumulated Carrying
Cost depreciation amount
RM RM RM
Freehold land 2,784,777 - 2,784,777
Buildings 23,443,808 (3,136,125) 20,307,683
26,228,585 (3,136,125) 23,092,460
The fair values for the investment properties of the Group and of the Company as at 30 April 2008 was estimated
at RM29,415,667 and RM30,542,846 respectively by a professional valuer using the Comparison Method. Recent
transactions and asking prices of similar properties in the locality are analysed for comparison purposes, adjusted
for differences in characteristics to arrive at the market value.
10. PREPAID LEASE PAYMENTS FOR LAND
Group
2008
Balance
as at
1.5.2007
Amortisation
charge for
the fi nancial
year
Balance
as at
30.4.2008
Carrying amount RM RM RM
Leasehold land 1,784,562 (34,061) 1,750,501
------------------- At 30.4.2008 -------------------
Accumulated Carrying
Cost amortisation amount
RM RM RM
Leasehold land 2,107,440 (356,939) 1,750,501
2007
Balance
as at
1.5.2006
Amortisation
charge for
the fi nancial
year
Balance
as at
30.4.2007
Carrying amount RM RM RM
Leasehold land 1,818,140 (33,578) 1,784,562
------------------- At 30.4.2007 -------------------
Accumulated Carrying
Cost amortisation amount
RM RM RM
Leasehold land 2,107,440 (322,878) 1,784,562
NOTES TO THE FINANCIAL STATEMENTS (CONT’D)
30 APRIL 2008
www.hai-o.com.my • ANNUAL REPORT 2008 107
10. PREPAID LEASE PAYMENTS FOR LAND (CONTINUED)
Company
2008
Balance
as at
1.5.2007
Amortisation
charge for
the fi nancial
year
Balance
as at
30.4.2008
Carrying amount RM RM RM
Leasehold land 83,200 (1,600) 81,600
------------------- At 30.4.2008 -------------------
Accumulated Carrying
Cost amortisation amount
RM RM RM
Leasehold land 96,000 (14,400) 81,600
2007
Balance
as at
1.5.2006
Amortisation
charge for
the fi nancial
year
Balance
as at
30.4.2007
Carrying amount RM RM RM
Leasehold land 84,800 (1,600) 83,200
------------------- At 30.4.2007 -------------------
Accumulated Carrying
Cost amortisation amount
RM RM RM
Leasehold land 96,000 (12,800) 83,200
11. INVESTMENT IN SUBSIDIARIES
Company
2008 2007
RM RM
Equity contribution in subsidiaries 575,044 -
Unquoted shares - at cost 16,575,461 15,150,859
Less: Impairment losses (1,426,660) (1,426,660)
15,723,845 13,724,199
NOTES TO THE FINANCIAL STATEMENTS (CONT’D)
30 APRIL 2008
HAI-O ENTERPRISE BERHAD (22544-D) • (INCORPORATED IN MALAYSIA)108
11. INVESTMENT IN SUBSIDIARIES (CONTINUED)
The details of subsidiaries are as follows:
Interest in
equity held by
Country of Company Subsidiaries
Name of company incorporation 2008 2007 2008 2007 Principal activities
% % % %
Hai-O I. Sdn. Bhd.*
(formerly known as
Adil Mewah Sdn. Bhd.)
Malaysia 100.00 100.00 - - Dormant
Dawin Trading Sdn. Bhd.* Malaysia 92.50 92.50 - - Dormant
Grand Brands (M) Sdn. Bhd. Malaysia 100.00 100.00 - - General importer, exporter
and commission agent
Hai-O Medicine Sdn. Bhd. Malaysia 100.00 100.00 - - Dealing in Chinese herbs
and medicines
Hai-O Properties Sdn. Bhd.* Malaysia 100.00 100.00 - - Investment holding
Hai-O Raya Bhd. Malaysia 56.63 56.60 - - Retail chain stores
Hai-O (PG) Sdn. Bhd.* Malaysia 95.29 95.29 - - Rental of property
Hai-O Credit & Leasing Sdn. Bhd. Malaysia 100.00 100.00 - - Leasing of machinery and
equipment and
investment holding
Hai-O Marketing Sdn. Bhd. Malaysia 100.00 100.00 - - Multi level direct marketing
SG Global Biotech Sdn. Bhd. Malaysia 100.00 100.00 - - Manufacturing of
pharmaceutical products
Kinds Resource Sdn. Bhd. Malaysia 100.00 100.00 - - Trading in Chinese herbs
MCC City Sdn. Bhd. Malaysia 100.00 100.00 - - Dormant
Sea Gull Advertising Sdn. Bhd. Malaysia 100.00 100.00 - - Advertising services
Teik Seang Wine
Merchants Sdn. Bhd.
Malaysia - 100.00 - - Production and distribution
of alcoholic and non -
alcoholic drinks
Hai-O Energy (M) Sdn. Bhd.*
(formerly known as Ten Plus
Three Trade Centre Sdn. Bhd.)
Malaysia 100.00 100.00 - - Heat transmission and
energy saving
technology
NOTES TO THE FINANCIAL STATEMENTS (CONT’D)
30 APRIL 2008
www.hai-o.com.my • ANNUAL REPORT 2008 109
11. INVESTMENT IN SUBSIDIARIES (CONTINUED)
Interest in
equity held by
Country of Company Subsidiaries
Name of company incorporation 2008 2007 2008 2007 Principal activities
% % % %
Vintage Wine Sdn. Bhd.* Malaysia 100.00 100.00 - - Import and trading of wine
Samariatan Sdn. Bhd. Malaysia 66.40 66.40 - - Investment holding
Hai-O Polaris (M) Sdn. Bhd. Malaysia 55.00 55.00 - - Trading of time piece
Mengniu Marketing (M) Sdn.
Bhd*
Malaysia 100.00 - - - Has not commence
business during the year
Hai-O (Hong Kong)
Investment Limited *
Hong Kong 100.00 - - - Investment holding
Subsidiaries of Hai-O
Properties Sdn. Bhd.
Tyher Tea & Arts Culture
Sdn Bhd* (formerly known as
Anekajaya Sdn Bhd)
Malaysia - - 100.00 100.00 Dormant
Hai-O Development Sdn. Bhd.* Malaysia - - 100.00 100.00 Dormant
Subsidiary of
Samariatan Sdn. Bhd.
Chop Aik Seng Sdn. Bhd. Malaysia - - 100.00 100.00 Dealing in tea and
other beverages
Subsidiary of
Chop Aik Seng Sdn. Bhd.
Chop Aik Seng
Trading Sdn. Bhd.
Malaysia - - 100.00 100.00 Dormant
Subsidiary of
Hai-O Credit &
Leasing Sdn. Bhd.
Sri Pangkor Credit &
Leasing Sdn. Bhd.
Malaysia - - 100.00 100.00 Licensed money lender
and insurance agent
Subsidiary of
Hai-O Marketing Sdn. Bhd
.
Hai-O Marketing
(Philippines) Inc.*
Philippines - - 100.00 100.00 Dormant
NOTES TO THE FINANCIAL STATEMENTS (CONT’D)
30 APRIL 2008
HAI-O ENTERPRISE BERHAD (22544-D) • (INCORPORATED IN MALAYSIA)110
11. INVESTMENT IN SUBSIDIARIES (CONTINUED)
Interest in
equity held by
Country of Company Subsidiaries
Name of company incorporation 2008 2007 2008 2007 Principal activities
% % % %
Subsidiary of
SG Global Biotech Sdn. Bhd.
QIS Research Laboratory Malaysia - - 100.00 100.00 Research and
Sdn. Bhd. laboratory services
* Subsidiaries not audited by Messrs. BDO Binder
11.1 Acquisition of new subsidiaries and additional shares in a subsidiary
(a) On 20 July 2007, the Company acquired an additional 1,000 ordinary shares of RM1.00 each in
the share capital of Hai-O Raya Bhd. from a minority shareholder for a total cash consideration of
RM1,400.
(b) On 25 September 2007, the Company acquired 1,000 ordinary shares of HKD1.00 each in the share
capital of Hai-O (Hong Kong) Investment Limited for a total cash consideration of HKD1,000 or
equivalent to RM400.
Subsequently, on 25 September 2007 and 10 December 2007, the Company subscribed for additional
9,000 and 2,370,000 ordinary shares of HKD1.00 each respectively in the share capital of Hai-O
(Hong Kong) Investment Limited for a total cash consideration of HKD9,000 and HKD2,370,000 or
equivalent to RM3,960 and RM1,018,802 respectively.
(c) On 25 September 2007, the Company subscribed for 2 ordinary shares of RM1.00 each in the share
capital of Mengniu Marketing (M) Sdn Bhd for a total cash consideration of RM2.
(d) On 17 December 2007, the Company subscribed for additional 999,998 ordinary shares of RM1.00
each in the share capital of Hai-O Energy (M) Sdn. Bhd. (formerly known as Ten Plus Three Trade
Centre Sdn. Bhd.) for a total cash consideration of RM999,998.
The effect of the acquisition of new subsidiaries on the fi nancial results of the group for the fi nancial year
ended 30 April 2008 is as follows:-
2008
RM
Operating income 1,341
Operating costs (86,238)
Decrease in Group net assets (84,897)
NOTES TO THE FINANCIAL STATEMENTS (CONT’D)
30 APRIL 2008
www.hai-o.com.my • ANNUAL REPORT 2008 111
11. INVESTMENT IN SUBSIDIARIES (CONTINUED)
11.1 Acquisition of new subsidiaries and additional shares in a subsidiary (continued)
The acquisition has no material fi nancial effect on the cash fl ows of the Group for the fi nancial year ended
30 April 2008.
In the previous fi nancial year, the Group subscribed for 2 ordinary shares of RM1.00 each via its wholly
owned subsidiary, SG Global Biotech Sdn. Bhd. (formerly known as Hai-O Pharmaceutical (M) Sdn. Bhd.) in
the share capital of QIS Research Laboratory Sdn. Bhd. for a cash consideration of RM2 on 16 May 2006.
Subsequently on 16 June 2006 and 21 November 2006, the Group subscribed for additional 349,998 and
150,000 new ordinary shares of RM1.00 each respectively in the share capital of QIS Research Laboratory
Sdn. Bhd. for a cash consideration of RM349,998 and RM150,000 respectively.
The effect of the acquisition of QIS Research Laboratory Sdn. Bhd. on the fi nancial results of the Group for
the fi nancial year ended 30 April 2007 is as follows:-
2007
RM
Revenue 13,750
Operating income 15,286
Operating costs (252,238)
Decrease in Group net assets (223,202)
The acquisition has no fi nancial effect on the cash fl ows of the Group for the fi nancial year ended 30 April
2007.
11.2 Disposal of subsidiaries
During the year, the Group disposed of its entire 100.00% equity interest in Teik Seang Wine Merchants
Sdn. Bhd. (“Teik Seang Wine”) for a total consideration of RM783,780.
The effect of the above disposal of Teik Seang Wine on the fi nancial results of the Group for the fi nancial
year ended 30 April 2008 are as follows:-
Up to the date
of disposals
2008
RM
Revenue 284,029
Other operating income 150
Operating costs (348,004)
Loss before tax (63,825)
Tax expense -
Net loss for the fi nancial year (63,825)
Gain on disposal of a subsidiary 126,343
Increase in Group profi t 62,518
NOTES TO THE FINANCIAL STATEMENTS (CONT’D)
30 APRIL 2008
HAI-O ENTERPRISE BERHAD (22544-D) • (INCORPORATED IN MALAYSIA)112
11. INVESTMENT IN SUBSIDIARIES (CONTINUED)
11.2 Disposal of subsidiaries (continued)
The effect of disposal of Teik Seang Wine on the fi nancial position and cash fl ow of the Group are as
follows:-
At date of
disposals
2008
RM
Property, plant and equipment 280,061
Inventories 26,808
Other receivables, deposits and prepayments 357,280
Tax recoverable 10,670
Cash and bank balances 20
Deferred tax liabilities (17,402)
Net assets disposed 657,437
Gain on disposals of a subsidiary 126,343
Net proceeds received 783,780
Less: Cash and cash equivalents of a subsidiary disposed (20)
Cash fl ow on disposal, net of cash and cash equivalents disposed 783,760
In the previous fi nancial year, the Group disposed of the following subsidiaries:-
(a) Disposal of its entire 62.00% equity interest in Add One Promotions Sdn. Bhd. (“Add One”), via its
wholly-owned subsidiary, Sea Gull Advertising Sdn. Bhd. for a total consideration of RM31,000.
(b) Disposal of its entire 100.00% equity interest in Hai-O Informtech Sdn. Bhd. (“Informtech”) for a total
consideration of RM280,000.
The effect of the above disposal of Add One and Informtech on the fi nancial results of the Group for the
fi nancial year ended 30 April 2007 are as follows:-
Up to the date
of disposals
2007
RM
Revenue 10,633
Other operating income 843
Operating costs (9,773)
Profi t before tax 1,703
Tax expense (451)
Net profi t for the fi nancial year 1,252
Loss on disposal of subsidiary companies (190,614)
Decrease in Group profi t (189,362)
NOTES TO THE FINANCIAL STATEMENTS (CONT’D)
30 APRIL 2008
www.hai-o.com.my • ANNUAL REPORT 2008 113
11. INVESTMENT IN SUBSIDIARIES (CONTINUED)
11.2 Disposal of subsidiaries (continued)
The effect of disposal of Add One and Informtech on the fi nancial position and cash fl ow of the Group are as
follows:-
At date of
disposals
2007
RM
Trade receivables 12,540
Other receivables, deposits and prepayments 1,142,572
Cash and bank balances 10,487
Trade payables (274)
Other payables and accruals (664,261)
Goodwill on consolidation 31,564
Exchange fl uctuation reserve 605
Minority interest (31,619)
Net assets disposed 501,614
Loss on disposals of subsidiaries (190,614)
Net proceeds received 311,000
Less: Cash and cash equivalents of subsidiaries disposed (10,487)
Cash fl ow on disposal, net of cash and cash equivalents disposed 300,513
12. INVESTMENT IN ASSOCIATES
Group Company
2008 2007 2008 2007
RM RM RM RM
Unquoted shares-at cost 624,000 1,114,000 - -
Less: Impairment losses - (143,636) - -
624,000 970,364 - -
Group’s share of post acquisition
Losses (624,000) (970,364) - -
- - - -
Hai-O Enterprise (Thailand) Co. Ltd. has been struck off during the fi nancial year. The winding up of Hai-Enterprise
(Thailand) Co. Ltd. does not have any signifi cant fi nancial effect on the Group for the current fi nancial year.
NOTES TO THE FINANCIAL STATEMENTS (CONT’D)
30 APRIL 2008
HAI-O ENTERPRISE BERHAD (22544-D) • (INCORPORATED IN MALAYSIA)114
12. INVESTMENT IN ASSOCIATES (CONTINUED)
The details of associates are as follows:
Effective
Country of equity interest
Name of company Incorporation 2008 2007 Principal activities
% %
Indirect
Hai-O Enterprise (Thailand) Co. Ltd.* Thailand - 49.00 Wound up
Hai-O Enterprise (C.M.) Sdn. Bhd. Malaysia 48.00 48.00 Investment holding
The unrecognised amounts of share of losses of associates are as follows:
Group Company
2008 2007 2008 2007
RM RM RM RM
Balance as at 1 May 2007/2006 894,829 585,534 - -
Loss during the fi nancial year 12,803 309,295 - -
Balance as at 30 April 2008/2007 907,632 894,829 - -
* Associates not audited by Messrs. BDO Binder and management account of the associates are used
The summarised fi nancial information of the associates are as follows:
Group
2008 2007
RM RM
Assets and liabilities
Current assets 724,984 787,917
Non-current assets 39,010 48,715
Total assets 763,994 836,632
Group
2008 2007
RM RM
Current liabilities 436,687 484,653
Non-current liabilities 2,256,500 2,254,500
Total liabilities 2,693,187 2,739,153
Results
Revenue 27,672 998,474
(Loss)/Profi t for the fi nancial year (26,672) 934,486
NOTES TO THE FINANCIAL STATEMENTS (CONT’D)
30 APRIL 2008
www.hai-o.com.my • ANNUAL REPORT 2008 115
13. INVESTMENT IN JOINTLY CONTROLLED ENTITIES
Group Company
2008 2007 2008 2007
RM RM RM RM
Equity contribution in a jointly
controlled entity - - 4,194 -
Unquoted shares, at cost - - 1,260,000 1,260,000
Less: Impairment losses - - (148,795) (148,795)
- - 1,115,399 1,111,205
The details of the jointly controlled entities are as follows:
Effective
Country of equity interest
Name of company Incorporation 2008 2007 Principal activities
% %
Peking Tongrentang (M) Sdn. Bhd. Malaysia 40.00 40.00 Providing traditional
Chinese physician
services and retail
of traditional
Chinese medicine
Sanjiu Hai-O TCM (M) Sdn. Bhd. Malaysia 50.00 50.00 Providing traditional
Chinese physician
services and retail
of traditional
Chinese medicine
The Group’s aggregate share of the assets, liabilities and income and expenses of the jointly controlled entities are
as follows:
Group
2008 2007
RM RM
Assets and liabilities
Current assets 1,369,869 1,263,937
Non-current assets 933,144 926,037
Total assets 2,303,013 2,189,974
Group
2008 2007
RM RM
Current liabilities 424,103 458,041
Non-current liabilities 23,960 13,200
Total liabilities 448,063 471,241
Results
Revenue 1,402,289 1,323,145
Expenses including fi nance cost and tax expense (1,212,690) (1,108,255)
NOTES TO THE FINANCIAL STATEMENTS (CONT’D)
30 APRIL 2008
HAI-O ENTERPRISE BERHAD (22544-D) • (INCORPORATED IN MALAYSIA)116
14. OTHER INVESTMENTS
Group Company
2008 2007 2008 2007
RM RM RM RM
(a) Non current investments
Quoted shares in Malaysia - at cost 2,716,429 4,032,481 738,517 3,065,702
Less: Allowance for diminution in value (201,396) (225,099) (1,957) (25,681)
2,515,033 3,807,382 736,560 3,040,021
Unquoted shares - at cost 717,779 717,779 - -
Less: Allowance for diminution in value (491,400) (491,400) - -
226,379 226,379 - -
KLIBOR Callable Range Accrual Investment - 1,500,000 - -
2,741,412 5,533,761 736,560 3,040,021
Market value of quoted shares in Malaysia 3,422,186 5,147,210 784,521 3,866,090
(b) Short term investments
Quoted unit trusts in Malaysia 11,535,881 17,733,605 1,000,000 3,538,670
Unquoted unit trust in Malaysia 1,000,000 - 1,000,000 -
Unquoted unit trust in overseas 888,000 888,000 888,000 888,000
13,423,881 18,621,605 2,888,000 4,426,670
Market value of quoted unit trusts in Malaysia 11,350,085 18,062,768 1,061,336 3,644,524
15. TRADE AND OTHER RECEIVABLES
Group Company
2008 2007 2008 2007
RM RM RM RM
Trade receivables
Third parties 19,033,014 13,076,684 6,768,730 8,024,901
Subsidiaries - - 5,657,957 10,371,211
Hire-purchase receivables
- not later than one year 528,389 496,906 - -
- later than one year and not later than fi ve years 1,228,344 1,271,799 - -
- later than fi ve years 31,194 134,100 - -
1,787,927 1,902,805 - -
Less: Unearned interest charges (205,613) (241,553) - -
Carrying value of hire-purchase receivables 1,582,314 1,661,252 - -
Finance lease receivables
- not later than one year 147,966 137,628 - -
- later than one year and not later than fi ve years 219,318 340,146 - -
367,284 477,774 - -
Less: Unearned interest charges (97,049) (133,631) - -
Carrying value of fi nance lease receivables 270,235 344,143 - -
NOTES TO THE FINANCIAL STATEMENTS (CONT’D)
30 APRIL 2008
www.hai-o.com.my • ANNUAL REPORT 2008 117
15. TRADE AND OTHER RECEIVABLES (CONTINUED)
Group Company
2008 2007 2008 2007
RM RM RM RM
Carrying value of fi nance lease receivables 270,235 344,143 - -
Loan receivables
- not later than one year 86,146 282,035 - -
- later than one year and not later than fi ve years 73,449 86,405 - -
159,595 368,440
21,045,148 15,450,519 12,426,687 18,396,112
Less: Allowance for doubtful debts, net of bad
debts written off of RM644,788
(2007:RM1,165,581) for the Group and
RM638,014 (2007:RM395,189) for the Company (591,350) (1,152,419) (481,644) (1,062,082)
20,453,808 14,298,100 11,945,043 17,334,030
Other receivables
Amounts owing by related parties:
- Subsidiaries - - 277,974 5,207,813
- Associates 3,259,923 3,257,923 1,003,423 1,003,423
- Jointly controlled entities 157,416 - 21,703 30,943
3,417,339 3,257,923 1,303,100 6,242,179
Other receivables 425,126 452,926 199,700 183,147
Deposits 5,633,023 1,186,174 4,832,006 407,277
Prepayments 574,986 486,038 352,029 315,766
6,633,135 2,125,138 5,383,735 906,190
10,050,474 5,383,061 6,686,835 7,148,369
Less: Allowance for doubtful debts
- Third parties (146,887) (140,407) (131,000) (131,000)
- Associates (3,257,923) (3,257,923) (1,003,423) (1,003,423)
(3,404,810) (3,398,330) (1,134,423) (1,134,423)
Other receivables, net 6,645,664 1,984,731 5,552,412 6,013,946
27,099,472 16,282,831 17,497,455 23,347,976
Current:-
Trade receivables
- Third parties 19,033,014 13,076,684 6,768,730 8,024,901
- Subsidiaries - - 5,657,957 10,371,211
Less: Allowance for doubtful debts
- Third parties (591,350) (1,152,419) (481,644) (1,062,082)
18,441,664 11,924,265 11,945,043 17,334,030
Carrying value of hire-purchase receivables not
later than one year 439,784 407,818 - -
Carrying value of fi nance lease receivables
not later than one year 113,584 101,046 - -
Loan receivables 86,146 282,035 - -
Trade receivables, net 19,081,178 12,715,164 11,945,043 17,334,030
NOTES TO THE FINANCIAL STATEMENTS (CONT’D)
30 APRIL 2008
HAI-O ENTERPRISE BERHAD (22544-D) • (INCORPORATED IN MALAYSIA)118
15. TRADE AND OTHER RECEIVABLES (CONTINUED)
Group Company
2008 2007 2008 2007
RM RM RM RM
Other receivables
Amounts owing by related parties:
Subsidiaries - - 277,974 5,207,813
An associate 3,259,923 3,257,923 1,003,423 1,003,423
Less: Allowance for doubtful debts (3,257,923) (3,257,923) (1,003,423) (1,003,423)
2,000 - - -
Jointly controlled entities 157,416 - 21,703 30,943
159,416 - 299,677 5,238,756
Other receivables 425,126 452,926 199,700 183,147
Less: Allowance for doubtful debts, net of bad
debts written off of RM743 (2007:
RM217,333)
for the Group (146,887) (140,407) (131,000) (131,000)
278,239 312,519 68,700 52,147
Deposits 5,633,023 1,186,174 4,832,006 407,277
Prepayments 574,986 486,038 352,029 315,766
Other receivables, net 6,645,664 1,984,731 5,552,412 6,013,946
25,726,842 14,699,895 17,497,455 23,347,976
Non current:-
Carrying value of hire-purchase receivables:-
- later than one year and not later than fi ve years 1,114,245 1,122,396 - -
- later than fi ve years 28,285 131,038 - -
1,142,530 1,253,434 - -
Carrying value of fi nance lease receivables:-
- later than one year and not later than fi ve years 156,651 243,097 - -
Carrying value of loan receivables:-
- later than one year and not later than fi ve years 73,449 86,405 - -
1,372,630 1,582,936 - -
27,099,472 16,282,831 17,497,455 23,347,976
(a) The credit terms of trade receivables range from 7 days to 120 days.
(b) Amounts owing by subsidiaries
Amounts owing by subsidiaries represent balances arising from normal trade transactions, advances and
payments made on behalf of the subsidiaries which are unsecured, have no fi xed terms of repayment and
are interest-free.
(c) Amount owing by an associate
Amount owing by an associate represents balances arising from normal trade transactions and payments
made on behalf of the associate which are unsecured, interest-free and have no fi xed terms of repayment
except for normal trade transactions which are subject to a credit term of 90 days from date of invoice.
NOTES TO THE FINANCIAL STATEMENTS (CONT’D)
30 APRIL 2008
www.hai-o.com.my • ANNUAL REPORT 2008 119
15. TRADE AND OTHER RECEIVABLES (CONTINUED)
(d) Amounts owing by jointly controlled entities
The amounts owing by jointly controlled entities represent balances arising from normal trade transactions
and payments made on behalf of the jointly controlled entities which are unsecured, interest-free and have
no fi xed terms of repayment except for normal trade transactions which is subject to a credit term of 90 days
from date of invoice.
16. DEFERRED TAX
(a) The deferred tax assets/(liabilities) are made up of the following:-
Group Company
2008 2007 2008 2007
RM RM RM RM
Balance as at 1 May 2007/2006 1,022,779 301,496 (248,724) (179,253)
Disposal of a subsidiary 17,402 - - -
Recognised in the income
statements (Note 28)
- current year 594,031 864,405 76,441 5,256
- under/(over) provision in prior years (14,576) (143,122) 10,352 (74,727)
579,455 721,283 86,793 (69,471)
Balance as at 30 April 1,619,636 1,022,779 (161,931) (248,724)
Presented after appropriate offsetting:
Deferred tax assets, net 1,683,930 1,080,402 - -
Deferred tax liabilities, net (64,294) (57,623) (161,931) (248,724)
1,619,636 1,022,779 (161,931) (248,724)
(b) The components and movements of deferred tax assets and liabilities during the fi nancial year prior to
offsetting are as follows:
Group Company
2008 2007 2008 2007
RM RM RM RM
Deferred tax assets
Balance as at 1 May 2007/2006 1,700,239 1,050,836 138,474 240,475
Disposal of a subsidiary (1,569) - - -
Recognised in the income statement
Provisions/allowances 731,564 715,861 116,502 10,522
Inventories (57,172) 114,757 - -
Allowance for doubtful debts (1,300) (57,815) - (59,115)
Change in tax rate (47,130) (82,225) (15,649) (11,427)
Unabsorbed industrial building allowances (1,569) (41,175) - (41,981)
624,393 649,403 100,853 (102,001)
Balance as at 30 April 2,323,063 1,700,239 239,327 138,474
NOTES TO THE FINANCIAL STATEMENTS (CONT’D)
30 APRIL 2008
HAI-O ENTERPRISE BERHAD (22544-D) • (INCORPORATED IN MALAYSIA)120
16. DEFERRED TAX (CONTINUED)
(b) The components and movements of deferred tax assets and liabilities during the fi nancial year prior to
offsetting are as follows: (continued)
Group Company
2008 2007 2008 2007
RM RM RM RM
Deferred tax liabilities
Balance as at 1 May 2007/2006 677,460 749,340 387,198 419,728
Disposal of a subsidiary (18,971) - - -
Recognised in the income statement
Property, plant and equipment 92,890 (45,447) 45,721 (2,466)
Change in tax rate (47,952) (26,433) (31,661) (30,064)
44,938 (71,880) 14,060 (32,530)
Balance as at 30 April 703,427 677,460 401,258 387,198
(c) The components of deferred tax assets and liabilities as at the end of the fi nancial year comprise the tax
effects of:-
Group Company
2008 2007 2008 2007
RM RM RM RM
Deferred tax assets
Inventories 248,513 305,685 - -
Unabsorbed industrial building allowances - 1,569 - -
Provisions/allowances 2,074,550 1,391,685 239,327 138,474
Allowance for doubtful debts - 1,300 - -
2,323,063 1,700,239 239,327 138,474
Deferred tax liabilities
Property, plant and equipment
- Excess of capital allowance over
corresponding depreciation 703,427 677,460 401,258 387,198
(d) The amount of temporary differences for which no deferred tax assets have been recognised in the balance
sheet are as follows:-
Group
2008 2007
RM RM
Provisions/allowances 170,000 272,000
Unutilised tax losses 812,000 843,000
Unabsorbed capital allowances 217,000 205,000
1,199,000 1,320,000
NOTES TO THE FINANCIAL STATEMENTS (CONT’D)
30 APRIL 2008
www.hai-o.com.my • ANNUAL REPORT 2008 121
16. DEFERRED TAX (CONTINUED)
(d) The amount of temporary differences for which no deferred tax assets have been recognised in the balance
sheet are as follows:- (continue)
Deferred tax assets have not been recognised in respect of these items as it is not probable that taxable
profi t of certain subsidiaries will be available against which the deductible temporary differences can be
utilised.
The deductible temporary differences do not expire under current tax legislation unless there is a substantial
change in shareholders of those dormant subsidiaries of more than 50%. If there is such a change, the
unused tax losses carry forward amounting to RM174,000 will not be available to those subsidiaries.
17. GOODWILL ON CONSOLIDATION
Group
2008 2007
RM RM
Balance as at 1 May 2007/2006 273,833 781,381
Less: Acquisition of a subsidiary 400 -
Disposal of subsidiaries - (197,418)
Disposal of a jointly controlled entity - (144)
Effect of adopting FRS 3 - (309,986)
Balance as at 30 April 274,233 273,833
Accumulated amortisation
Balance as at 1 May 2007/2006 - 309,986
Less: Effect of adopting FRS 3 - (309,986)
Balance as at 30 April - -
Less: Impairment losses (189,303) -
Carrying value as at 30 April 84,930 273,833
The recoverable amount was determined based on a value in use calculation using cash fl ow projections based on
fi nancial budgets prepared by the management covering a fi ve-year period. The discount rate applied to the cash
fl ow projections were 12.86% based on the weighted average cost of capital of the Group.
18. INVENTORIES
Group Company
2008 2007 2008 2007
RM RM RM RM
Raw materials 286,611 292,265 - -
Work-in-progress 8,627 16,840 - -
Packaging materials 334,105 292,974 - -
Finished goods and trading goods 40,745,165 33,325,217 23,288,097 17,396,430
41,374,508 33,927,296 23,288,097 17,396,430
NOTES TO THE FINANCIAL STATEMENTS (CONT’D)
30 APRIL 2008
HAI-O ENTERPRISE BERHAD (22544-D) • (INCORPORATED IN MALAYSIA)122
19. DEPOSITS WITH LICENSED BANKS
Group and
Company
2008 2007
% %
Effective annual interest rate 2.70 - 3.20 2.50 - 3.30
The deposits of the Group and of the Company have a range of maturity of 7 to 365 days (2007: 7 to 365 days).
20. SHARE CAPITAL
Group and Company
2008 2007
Number Number
of shares RM of shares RM
Ordinary shares of RM1.00 each:-
Authorised 100,000,000 100,000,000 100,000,000 100,000,000
Issued and fully paid:
Balance as at 1 May 2007/2006 68,814,000 68,814,000 66,329,000 66,329,000
Bonus issue 13,412,342 13,412,342 - -
Exercise of ESOS 862,000 862,000 2,485,000 2,485,000
Balance as at 30 April 83,088,342 83,088,342 68,814,000 68,814,000
Employees’ Share Option Scheme
The ESOS which became effective on 21 December 1998 is made available to eligible employees of the Group.
At an Extraordinary General Meeting held on 28 February 2003, the Company’s shareholders approved the
proposed amendments to the By-Laws of its existing ESOS. The main features of the ESOS are as follows:-
(a) The total maximum number of new shares which may be made available under the ESOS (including any
shares already allotted pursuant to the exercise of any options) shall not at any time exceed ten percent
(10%) of the total number of shares comprised in the issued and paid-up share capital of the Company.
(b) Eligible employees are those full time employees (including executive directors) of the Company within the
Group who as at the date of offer are at least eighteen (18) years old; confi rmed and is employed by and on
the payroll of a company/companies within the Group with at least one (1) year of continuous service in the
Group; and any foreign employee who is employed by and on the payroll of a company/companies within the
Group and whose contribution is vital to the Company and have completed at least two (2) years of service
or if such foreign employee is serving under a limited term contract, the contract should be for a duration of
at least three (3) years.
(c) The options holder may, in any year, exercise up to such a maximum number of shares in the Option
Certifi cate as determined by the ESOS Committee and as specifi ed in the Option Certifi cate, options
exercisable in a particular year but not exercised in that year can be carried forward and be exercised in the
subsequent years.
NOTES TO THE FINANCIAL STATEMENTS (CONT’D)
30 APRIL 2008
www.hai-o.com.my • ANNUAL REPORT 2008 123
20. SHARE CAPITAL (CONTINUED)
Employees’ Share Option Scheme (continued)
(d) The maximum entitlement of an eligible employee under the ESOS shall be determined and subject to the
following:-
(i) not more than fi fty percent (50%) of the shares available under the ESOS should be allocated, in
aggregate, to executive directors and senior management; and
(ii) not more than ten percent (10%) of the shares available under the ESOS should be allocated to
any individual eligible employee who, singly or collectively through his/her associates holds twenty
percent (20%) or more of the issued and paid-up share capital of the Company.
(e) The option price shall be determined by the ESOS Committee, based on the weighted average market price
of the Company’s ordinary shares as shown in the Daily Offi cial List issued by the Bursa Malaysia Securities
for the fi ve (5) trading days preceeding the respective dates of the offer and may be set at a discount of not
more than ten percent (10%).
(f) The duration of the option was extended to another fi ve years from 21 December 2003 to 20 December 2008.
The option granted may be exercised on any working day before the expiry of the term on 20 December
2008 upon giving notice in writing to the Company.
(g) The actual number of shares which may be offered to any eligible employee shall be at the discretion of the
ESOS Committee. The number of shares to be offered shall be in multiples of one thousand (1,000) new
shares and shall not exceed the maximum allowable allotment of such eligible employee.
(h) Employees to whom the options have been granted are not eligible to participate in any other employees’
share option scheme that may be established by the Company or the Group subsequent hereto.
(i) The shares shall on issue and allotment rank pari passu in all respects with the then existing issued shares
of the Company.
The movements in the Company’s unissued shares under ESOS during the fi nancial year are as follows:-
Date of offer ----------- Option over Ordinary Shares of RM1.00 each -----------
Exercise Balance Balance
price as at as at
2008 RM/Share 1 May Granted (Forfeited) (Exercised) 30 April
16 December 2003 1.43* 364,000 - (27,000) (337,000) -
9 January 2004 1.00 30,000 - (4,000) (26,000) -
19 December 2007 2.70 - 1,969,000 - (499,000) 1,470,000
2007
16 December 2003 1.43* 1,864,000 - (105,000) (1,395,000) 364,000
9 January 2004 1.00 1,367,000 - (247,000) (1,090,000) 30,000
* Price adjusted for the effect of the bonus and right issue.
NOTES TO THE FINANCIAL STATEMENTS (CONT’D)
30 APRIL 2008
HAI-O ENTERPRISE BERHAD (22544-D) • (INCORPORATED IN MALAYSIA)124
20. SHARE CAPITAL (CONTINUED)
Employees’ Share Option Scheme (continued)
During the fi nancial year, the Company issued 862,000 ordinary shares of RM1.00 each pursuant to the shares
exercised under the ESOS and the fair value of shares issued at the exercise date are follows:
Number Option Fair value of
<------ share issued ------>of shares exercise
issued price Consideration Per share Total
RM RM RM RM
2008
May 2007 77,000 1.00 - 1.43 107,100 2.29 176,330
June 2007 84,000 1.00 - 1.43 118,830 2.83 237,720
July 2007 57,000 1.00 - 1.43 74,630 2.98 169,860
August 2007 145,000 1.43 207,350 2.72 394,400
January 2008 237,000 2.70 639,900 2.96 701,520
February 2008 235,000 2.70 634,500 2.93 688,550
March 2008 2,000 2.70 5,400 2.85 5,700
April 2008 25,000 2.70 67,500 3.20 80,000
862,000 1,855,210 2,454,080
Ordinary share capital - at par 862,000
The abovementioned shares rank pari passu in all respects with the then existing shares of the Company.
The fair value of share options granted during the fi nancial year was estimated by an external professional valuer
using the Black-Scholes option pricing model, taking into account the terms and conditions upon which the options
were granted. The fair value of share options measured at grant date and the assumptions are as follows:
2008
Fair value of share options at grant date 19 December 2007 (RM) 0.466
Weighted average share price (RM) 3.06
Exercise price (RM) 2.70
Expected volatility (%) 32.00
Expected life (years) 1.00
Risk-free rate of interest (%) 3.54
Expected dividend yield (%) 8.00
Bonus Issue
The Company issued 13,412,342 new ordinary shares of RM1.00 each by way of bonus issue on the basis of one
new ordinary share of RM1.00 each for every 5 existing ordinary shares of RM1.00 each held, by way of capitalising
RM13,412,342 from retained earnings of the Company on 14 September 2007.
The abovementioned shares rank pari passu in all respects with the then existing shares of the Company. There
were no other issues of shares during the fi nancial year.
NOTES TO THE FINANCIAL STATEMENTS (CONT’D)
30 APRIL 2008
www.hai-o.com.my • ANNUAL REPORT 2008 125
20. SHARE CAPITAL (CONTINUED)
Share Buy-Back
The shareholders of the Company, at the various general meetings of shareholders held previously, authorised
the directors to buy back the Company’s own shares. This will enable the Company to utilise its surplus fi nancial
resources to purchase its own shares and to stabilise the supply and demand and market prices of the Company’s
shares.
All the shares so purchased during the fi nancial year were retained as treasury shares as defi ned in the Companies
Act, 1965.
Of the total 83,088,342 (2007: 68,814,000) issued and fully paid ordinary shares of RM1.00 each as at 30 April 2008,
3,123,886 (2007: 1,710,186) ordinary shares of RM1.00 each amounting to RM6,291,102 (2007: RM2,242,993) are
held as treasury shares by the Company. The number of outstanding shares in issue after the share buy-back is
79,964,456 (2007: 67,103,814) ordinary shares of RM1.00 each as at 30 April 2008.
21. RESERVES
Group Company
2008 2007 2008 2007
RM RM RM RM
Non – distributable:
Share premium 1,825,594 599,850 1,825,594 599,850
Share options reserve 685,020 - 685,020 -
Exchange translation reserve 629,466 629,466 - -
3,140,080 1,229,316 2,510,614 599,850
Distributable:
Treasury shares (6,291,102) (2,242,993) (6,291,102) (2,242,993)
Capital reserve 657,192 669,672 210 210
Retained earnings 59,978,238 37,195,227 21,337,845 20,059,432
54,344,328 35,621,906 15,046,953 17,816,649
57,484,408 36,851,222 17,557,567 18,416,499
(a) Exchange translation reserve
The exchange translation reserve is used to record foreign currency exchange differences arising from the
translation of the fi nancial statements of foreign operations whose functional currencies are different from
that of the Group’s presentation currency. It is also used to record the exchange differences arising from
monetary items which form part of the Group’s net investment in foreign operations, where the monetary
item is denominated in either the functional currency of the reporting entity or the foreign operation.
(b) Share options reserve
The share options reserve represents the equity-settled share options granted to employees. This reserve
is made up of the cumulative value of services received from employees recorded on grant date of share
options.
When the options are exercised, the amount from the share options reserve is transferred to share premium.
When the share options expire, the amount from the share options reserve is transferred to retained
earnings.
NOTES TO THE FINANCIAL STATEMENTS (CONT’D)
30 APRIL 2008
HAI-O ENTERPRISE BERHAD (22544-D) • (INCORPORATED IN MALAYSIA)126
21. RESERVES (CONTINUED)
(c) Capital reserve
The capital reserves represent gain arising from disposal of property, plant and equipment and quoted
investment.
Subject to the agreement of the Inland Revenue Board, the Company has suffi cient tax credit under Section
108 of the Income Tax Act, 1967 and tax exempt income to frank and distribute the payment of net dividends
out of its entire capital reserves as at 30 April 2008 without incurring additional tax liability.
(d) Retained earnings
Subject to the agreement of the Inland Revenue Board, the Company has suffi cient tax credit under Section
108 of the Income Tax Act, 1967 and tax exempt income to frank and distribute the payment of net dividends
out of its entire retained profi ts as at 30 April 2008 without incurring additional tax liability.
Effective 1 January 2008, the Company is also given the option to make an irrevocable election to move
to single tier system or continue to use its tax credit under section 108 of the Income Tax Act 1967 for the
purpose of dividend distribution until the tax credit is fully utilised or latest by 31 December 2013.
22. BORROWINGS (INTEREST BEARING)
Group Company
2008 2007 2008 2007
RM RM RM RM
Current liabilitiesBankers’ acceptances - unsecured 5,214,000 7,396,275 5,128,000 6,769,275
Hire-purchase liabilities due to a subsidiary (Note 23) - - 269,352 233,884
5,214,000 7,396,275 5,397,352 7,003,159
Non-current liabilities Hire-purchase liabilities due to a subsidiary (Note 23) - - 667,335 389,040
- - 667,335 389,040
Total borrowingsBankers’ acceptances - unsecured 5,214,000 7,396,275 5,128,000 6,769,275
Hire-purchase liabilities due to a subsidiary (Note 23) - - 936,687 622,924
5,214,000 7,396,275 6,064,687 7,392,199
Group Company
2008 2007 2008 2007
% % % %
Average effective annual interest rate:-
Bankers’ acceptances 3.68 3.76 3.68 3.67
The bankers’ acceptances of the subsidiaries are guaranteed by the Company.
NOTES TO THE FINANCIAL STATEMENTS (CONT’D)
30 APRIL 2008
www.hai-o.com.my • ANNUAL REPORT 2008 127
23. HIRE-PURCHASE LIABILITIES DUE TO A SUBSIDIARY
Company
2008 2007
RM RM
Minimum hire-purchase payments:-
- not later than one year 333,120 272,505
- later than one year but not later than fi ve years 750,916 431,714
1,084,036 704,219
Less: Future interest charges (147,349) (81,295)
Carrying value of hire-purchase liabilities 936,687 622,924
Repayable as follows:
Current liabilities
- not later than one year 269,352 233,884
Non-current liabilities
- later than one year but not later than fi ve years 667,335 389,040
667,335 389,040
936,687 622,924
Information on fi nancial risks of hire-purchase liabilities due to a subsidiary is disclosed in Note 37 to the fi nancial
statements.
24. TRADE AND OTHER PAYABLES
Group Company
2008 2007 2008 2007
RM RM RM RM
Trade payables
Third parties 8,861,663 9,473,021 3,957,788 5,233,873
Subsidiaries - - 286,196 486,402
8,861,663 9,473,021 4,243,984 5,720,275
Other payables
Amounts owing to related parties:
- Subsidiaries - - 2,700,993 2,418,854
- Jointly controlled entity 151,603 - - -
Other payables 3,340,127 1,998,829 169,361 894,416
Deposits 3,546,834 2,909,647 1,150,686 804,276
Accruals 23,451,661 9,156,438 4,874,733 2,637,396
30,490,225 14,064,914 8,895,773 6,754,942
39,351,888 23,537,935 13,139,757 12,475,217
(a) Trade payables
The credit terms of trade payables of the Group and the Company range from 30 to 150 days from date of
invoice.
NOTES TO THE FINANCIAL STATEMENTS (CONT’D)
30 APRIL 2008
HAI-O ENTERPRISE BERHAD (22544-D) • (INCORPORATED IN MALAYSIA)128
24. TRADE AND OTHER PAYABLES (CONTINUED)
(b) Amounts owing to subsidiaries
Amounts owing to subsidiaries represent balances arising from normal trade transactions, advances and
payments made on behalf which are unsecured, interest-free and have no fi xed terms of repayment except
for normal trade transactions which is subject to a credit term of 90 days from date of invoice.
(c) Amount owing to a jointly controlled entity
Amount owing to a jointly controlled entity represents advances and payments on behalf which are unsecured,
bear interest at 2% per annum and payable on demand.
25. PROVISIONS
Group
2008 2007
RM RM
Commission 119,452 119,452
Development fund - 271,767
Trip and tour incentives 1,557,202 695,131
Sales campaign 3,140,000 2,800,000
Others 800,094 -
5,616,748 3,886,350
-------------------------------------------------------- Group ---------------------------------------------------
Trip and
Development tour Sales
Commission fund incentives campaign Others Total
RM RM RM RM RM RM
Balance as at 1 May 2007 119,452 271,767 695,131 2,800,000 - 3,886,350
Current year provision - - 906,313 2,650,000 800,094 4,356,407
Over provision in prior year - (271,767) - (677,784) - (949,551)
Payment made during
the fi nancial year - - (44,242) (1,632,216) - (1,676,458)
Balance as at 30 April 2008 119,452 - 1,557,202 3,140,000 800,094 5,616,748
26. REVENUE
Group Company
2008 2007 2008 2007
RM RM RM RM
Sale of goods 371,774,644 187,129,138 123,183,959 71,964,202
Rendering of services 368,367 271,926 - 2,638
Hire-purchase and lease rental income 135,968 124,519 - -
Interest income 21,058 - - -
Gross dividends 251,440 162,539 20,742,770 8,924,916
Rental income 1,258,454 1,637,134 2,216,006 2,584,189
Others 12,644 20,922 - 1,042
373,822,575 189,346,178 146,142,735 83,476,987
NOTES TO THE FINANCIAL STATEMENTS (CONT’D)
30 APRIL 2008
www.hai-o.com.my • ANNUAL REPORT 2008 129
27. PROFIT BEFORE TAX
Group Company
2008 2007 2008 2007
Note RM RM RM RM
Profi t before tax is arrived at after charging:
Allowance for doubtful debts 90,942 860,023 57,576 371,914
Amortisation of prepaid lease
payments for land 10 34,061 33,578 1,600 1,600
Auditors’ remuneration:-
Statutory:-
- current year 135,282 137,180 30,000 30,000
- under provision in prior years 20,000 20 20,000 -
Bad debts written off 217,601 19,897 - -
Depreciation of:-
- property, plant and equipment 7 1,767,289 1,812,930 673,285 713,653
- investment properties 7 429,696 440,829 520,989 522,687
Directors’ remuneration payable to :-
- directors of the Company:-
- fees 189,967 189,800 120,000 120,000
- emoluments other than fee 3,108,714 2,047,513 1,690,768 1,148,355
- directors of the subsidiaries
- fees 107,083 111,665 - -
- emoluments other than fee 1,427,439 1,101,876 - -
- directors of a jointly controlled entity:-
- fees 15,200 15,200 - -
Impairment loss on goodwill 17 189,303 - - -
Impairment loss on investment
in jointly controlled entities - - - 148,795
Interest expense:-
- bank overdrafts 950 488 950 488
- bankers’ acceptances and trust receipts 390,612 321,838 349,361 263,146
- hire-purchase - - 61,958 39,346
- term loans - 6,114 - -
Inventories written off 630,168 306,168 162,212 300,000
Inventories written down 847,490 - 447,161 -
Loss on disposal of:-
- subsidiaries - 190,614 - -
- property, plant and equipment 1,005 - - -
Property, plant and equipment written off 7 373,459 95,720 207,106 15,190
Provision for:-
- trip and tour incentives 25 906,313 310,592 - -
- sales campaign 25 2,650,000 2,306,947 - -
- others 25 800,094 - - -
Realised loss on foreign exchange 7,489 7,653 583 7,652
Rental of premises 2,270,881 2,353,220 127,467 410,893
Share options granted under ESOS 917,554 - 338,316 -
NOTES TO THE FINANCIAL STATEMENTS (CONT’D)
30 APRIL 2008
HAI-O ENTERPRISE BERHAD (22544-D) • (INCORPORATED IN MALAYSIA)130
27. PROFIT BEFORE TAX (CONTINUED)
Group Company
2008 2007 2008 2007
Note RM RM RM RM
And crediting:
Allowance for doubtful debts
no longer required - 42,407 - 33,707
Bad debts recovered 8,967 128,218 6,617 -
Gain on disposal of other investments 986,936 973,234 854,627 729,068
Gain on disposal of property,
plant and equipment 20,997 52,349 9,959 26,246
Gain on disposal of a subsidiary 32 126,343 - 183,780 9,958
Gross dividend income from:-
- quoted shares in Malaysia 448,683 168,697 111,924 107,470
- unquoted subsidiary - - 20,554,846 8,817,446
- a jointly controlled entity - - 76,000 -
Interest income 868,813 471,298 206,831 203,724
Management fees received from
- subsidiaries - - 411,414 418,914
- jointly controlled entity 21,600 21,600 36,000 36,000
- others 47,100 - - -
Over provision for:-
- sales campaign 25 677,784 - - -
- development fund 25 271,767 - - -
Rental income 1,595,533 1,975,726 2,216,006 2,584,189
Realised gain on foreign exchange 19,476 15,730 - -
Waiver of debts 594,741 930,910 594,741 930,910
The estimated monetary value of benefi ts-in-kind received by the Directors otherwise than in cash from the Group
and the Company amounted to RM39,668 (2007: RM37,219).
28. TAX EXPENSE
Group Company
2008 2007 2008 2007
RM RM RM RM
Current tax expense based on profi t for
the fi nancial year:
-Income tax 19,295,148 9,406,625 10,526,523 4,650,000
-Deferred tax (Note 16) (594,031) (864,405) (76,441) (5,256)
18,701,117 8,542,220 10,450,082 4,644,744
(Over)/Under provision in prior years
-Income tax (117,468) (191,799) 8,547 (211,374)
-Deferred tax (Note 16) 14,576 143,122 (10,352) 74,727
(102,892) (48,677) (1,805) (136,647)
18,598,225 8,493,543 10,448,277 4,508,097
NOTES TO THE FINANCIAL STATEMENTS (CONT’D)
30 APRIL 2008
www.hai-o.com.my • ANNUAL REPORT 2008 131
28. TAX EXPENSE (CONTINUED)
The Malaysian income tax is calculated at the statutory tax rate of 26% (2007: 27%) of the estimated taxable profi t
for the fi scal year. The Malaysian statutory tax rate has been reduced to 26% from the previous year’s rate of 27%
for the fi scal year of assessment 2008 and to 25% for fi scal year of assessment 2009 onwards. The computation
of deferred tax as at 30 April 2008 has refl ected these changes.
The numerical reconciliation between the average effective tax rate and the applicable tax rate of the Group and of
the Company are as follows:
Group Company
2008 2007 2008 2007
% % % %
Applicable tax rate 26.0 27.0 26.0 27.0
Tax effects in respect of:
Non-allowable expenses 2.4 6.4 2.8 2.2
Utilisation of previously unrecognised
deferred tax assets (0.1) - - -
Reduction in deferred tax resulting from
reduction in tax rates - (0.2) - (0.1)
Income not subject to tax (0.5) (4.6) (0.7) (6.4)
Reduction in statutory tax rate on fi rst RM500,000
of chargeable income of certain subsidiaries (0.3) (0.6) - -
27.5 28.0 28.1 22.7
Under/(over) provision in prior years (0.1) (0.2) (0.2) (0.7)
Average effective tax rate 27.4 27.8 27.9 22.0
Tax savings of the Group is as follows:
Group
2008 2007
RM RM
Arising from utilisation of previously unrecognised tax
Losses and capital allowances 32,000 -
29. EARNINGS PER SHARE
(a) Basic
Basic earnings per ordinary share for the fi nancial year is calculated by dividing the profi t for the fi nancial year
attributable to ordinary equity holders of the Company by the weighted average number of ordinary shares
outstanding during the fi nancial year after adjusting for the bonus issues and the treasury shares as disclosed in
Note 20 to the fi nancial statements. The preceding year comparative fi gures have been adjusted accordingly.
Group
2008 2007
RM RM
Profi t attributable to equity holders of the Company 48,535,332 21,383,862
Weighted average number of ordinary shares in issue 80,338,548 78,987,027
NOTES TO THE FINANCIAL STATEMENTS (CONT’D)
30 APRIL 2008
HAI-O ENTERPRISE BERHAD (22544-D) • (INCORPORATED IN MALAYSIA)132
29. EARNINGS PER SHARE (CONTINUED)
(a) Basic (continued)
Group
2008 2007
Sen Sen
Basic earnings per ordinary share 60.41 27.07
(b) Diluted
Diluted earnings per ordinary share for the fi nancial year is calculated by dividing the profi t for the fi nancial
year attributable to ordinary equity holders of the Company by the weighted average number of ordinary
shares outstanding during the fi nancial year adjusted for the effects of dilutive potential ordinary shares.
Group
2008 2007
RM RM
Profi t attributable to equity holders of the Company 48,535,332 21,383,862
Weighted average number of ordinary shares in issue 80,338,548 78,987,027
Effect of dilutive share options 179,807 402,720
Adjusted weighted average number of ordinary
shares applicable to diluted earnings per share 80,518,355 79,389,747
Group
2008 2007
Sen Sen
Diluted earnings per ordinary share 60.28 26.93
30. DIVIDENDS
Group/Company
2008 2007
RM RM
Gross fi nal dividend of 32% (2007: 13%) per share, less tax 19,772,800 7,604,759
Gross interim dividend of 8% (2007: 5%) per share, less tax 4,747,700 3,332,315
24,520,500 10,937,074
As approved by the shareholders at the Annual General Meeting held on 30 October 2007, a fi rst and fi nal dividend
of 13% gross, less tax, amounting to RM7,604,759 in respect of the previous fi nancial year was paid on 12
December 2007.
The amount paid of RM7,604,759 is in excess of the dividend of RM6,530,449 proposed in last year’s directors’
report. The difference of RM1,074,310 was in respect of additional shares issued arising from the bonus issue and
the exercise of the option under the ESOS subsequent to the end of previous fi nancial year, but prior to the closing
date of the entitlement to dividend.
NOTES TO THE FINANCIAL STATEMENTS (CONT’D)
30 APRIL 2008
www.hai-o.com.my • ANNUAL REPORT 2008 133
30. DIVIDENDS (CONTINUED)
An interim dividend of 8% gross, less tax, amounting to RM4,747,700 in respect of current fi nancial year was
declared on 19 February 2008 and paid on 28 March 2008.
The proposed fi nal dividend of 32% gross, less tax, amounting to RM18,935,583 in respect of the current fi nancial
year has yet to be approved by the shareholders. This dividend, upon approval by the shareholders, will be
accounted for as an appropriation of retained earnings in the fi nancial year ending 30 April 2009.
31. EMPLOYEE BENEFITS
Group Company
2008 2007 2008 2007
RM RM RM RM
Wages, salaries and bonuses 15,971,873 13,853,516 5,516,779 4,432,517
Defi ned contribution plan 1,533,552 1,360,705 484,107 388,606
Other employee benefi ts 1,140,506 1,122,609 441,531 417,111
Staff incentive 2,630,049 1,843,562 898,881 580,633
21,275,980 18,180,392 7,341,298 5,818,867
32. PURCHASE OF PROPERTY, PLANT AND EQUIPMENT
During the fi nancial year, the Group and the Company made the following cash payments to purchase property,
plant and equipment:-
Group Company
2008 2007 2008 2007
RM RM RM RM
Purchase of property, plant and equipment
(Note 7) 1,826,983 1,929,451 817,976 482,849
Financed by hire-purchase arrangements - - (721,947) ( 215,730)
Cash payments on purchase of property, plant
and equipment 1,826,983 1,929,451 96,029 267,119
33. CASH AND CASH EQUIVALENTS
Cash and cash equivalents included in the cash fl ow statements comprise the following balance sheet amounts:
Group Company
2008 2007 2008 2007
RM RM RM RM
Deposits with licensed banks 21,264,966 10,792,067 201,398 3,450,684
Cash in hand and at bank 52,000,924 16,880,384 26,259,784 6,822,917
73,265,890 27,672,451 26,461,182 10,273,601
NOTES TO THE FINANCIAL STATEMENTS (CONT’D)
30 APRIL 2008
HAI-O ENTERPRISE BERHAD (22544-D) • (INCORPORATED IN MALAYSIA)134
34. RELATED PARTY DISCLOSURES
(a) Identities of related parties
Parties are considered to be related to the Group if the Group has the ability, directly or indirectly, to control
the party or exercise signifi cant infl uence over the party in making fi nancial and operating decisions, or vice
versa, or where the Group and the party are subject to common control or common signifi cant infl uence.
Related parties may be individuals or other entities.
The Company has controlling related party relationship with its direct and indirect subsidiaries.
(b) In addition to the transactions detailed elsewhere in the fi nancial statements, the Group and the Company
had the following transactions with related parties during the fi nancial year:
Group Company
2008 2007 2008 2007
RM RM RM RM
Subsidiaries:
Sales - - 88,316,399 40,006,040
Purchases - - 2,158,979 1,418,504
Rental income - - 901,881 911,985
Management fees received - - 411,414 415,914
Advertising expenses - - 3,297,255 2,512,219
Jointly controlled entities:
Sales 814,953 892,115 - 194,198
Purchases 369,475 527,849 - -
Rental income 139,180 147,928 139,180 147,928
Management fees received 36,000 36,000 36,000 36,000
Professional fees received - 24,000 - -
Commission received - 54,455 - -
Accounting fees received 20,000 20,000 20,000 -
The related party transactions described above have been established under negotiated terms.
(c) Compensation of key management personnel
The remuneration of Directors and other key management personnel during the fi nancial year was as
follows:
Group Company
2008 2007 2008 2007
RM RM RM RM
Short term employee benefi ts 4,655,207 3,314,747 1,756,744 1,229,835
Contribution to defi ned contribution plans 193,196 151,307 54,024 38,520
Share options granted under share
options scheme 345,772 - 178,012 -
5,194,175 3,466,054 1,988,780 1,268,355
NOTES TO THE FINANCIAL STATEMENTS (CONT’D)
30 APRIL 2008
www.hai-o.com.my • ANNUAL REPORT 2008 135
34. RELATED PARTY DISCLOSURES (CONTINUED)
Executive Directors of the Group and the Company and other key management personnel have been granted the
following number of options under the ESOS:
Group Company
2008 2007 2008 2007
As at 1 May 2007/2006 - 553,000 - 553,000
Granted 742,000 - 382,000 -
Exercised (227,000) (503,000) (122,000) (503,000)
Lapsed - (50,000) - (50,000)
As at 30 April 515,000 - 260,000 -
The terms and conditions of the share options are detailed in Note 20.
35. SEGMENT INFORMATION
(a) Reporting format
The primary reporting segment information is in respect of business segments as the Group’s risks and
returns are affected predominantly by differences in the products it produces.
As the Group’s operation and location of customers are predominantly in Malaysia, no segment information
is presented on geographical segments.
(b) Business segments
The Group’s operations comprise the following main business segments:-
Wholesale : Wholesaling and trading in herbal medicines and healthcare products,
herbs and tea.
Multi level marketing : Operating multi level direct marketing of healthcare and beauty
products.
Retail : Retail chain stores.
Manufacturing : Manufacturing, producing and distributing pharmaceutical products,
alcoholic and non-alcoholic drinks.
Others : Businesses involving leasing of machinery and equipment, licensed
money lender, insurance agent, advertising services, rental income,
trading of clocks and investment holding.
(c) Allocation basis and inter-segment pricing
Segment results, assets and liabilities include items that are directly attributable to a segment as well as
those that can be allocated on a reasonable basis. Unallocated items comprise mainly income tax and
related tax assets and tax liabilities.
Segment capital expenditure is the total cost incurred during the period to acquire segment assets that are
expected to be used for more than one period.
Inter-segment pricing is determined based on negotiated terms.
NOTES TO THE FINANCIAL STATEMENTS (CONT’D)
30 APRIL 2008
HAI-O ENTERPRISE BERHAD (22544-D) • (INCORPORATED IN MALAYSIA)136
35. SEGMENT INFORMATION (CONTINUED)
The following table provides an analysis of the Group’s revenue, results, assets, liabilities and other information by
business segment:-
Multi-
level Manufac- Elimi- Consoli-
2008 Wholesale marketing Retail turing Others nation dated
RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
Revenue
External sales 49,366 281,587 39,340 1,199 2,331 - 373,823
Inter-segment sales 118,715 - 152 2,594 6,568 (128,029) -
Total revenue 168,081 281,587 39,492 3,793 8,899 (128,029) 373,823
RESULT
Segment result 37,121 46,792 1,999 454 1,590 (20,718) 67,238
Interest income 207 531 105 - 26 - 869
Interest expense (388) - - (3) - - (391)
Profi t before tax 67,716
Tax expense (18,598)
Profi t after tax 49,118
Minority interest (583)
Net profi t for the fi nancial year 48,535
Other information
Segment assets 137,179 65,794 19,321 2,918 11,198 (34,151) 202,259
Unallocated corporate assets 1,851
Total assets 204,110
Segment liabilities 25,228 27,756 8,090 586 5,459 (16,936) 50,183
Unallocated corporate liabilities 7,855
Total liabilities 58,038
Capital expenditure 834 104 641 109 139 - 1,827
Amortisation of prepaid lease
payments for land 2 32 - - - - 34
Depreciation of:
- property, plant and equipment 850 167 454 251 45 - 1,767
- investment properties 365 65 - - - - 430
Non-cash expenses other than
depreciation and amortisation 2,016 4,828 282 56 250 189 7,621
NOTES TO THE FINANCIAL STATEMENTS (CONT’D)
30 APRIL 2008
www.hai-o.com.my • ANNUAL REPORT 2008 137
35. SEGMENT INFORMATION (CONTINUED)
Multi-
level Manufac- Elimi- Consoli-
2007 Wholesale marketing Retail turing Others nation dated
RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
Revenue
External sales 48,473 99,685 37,571 1,055 2,562 - 189,346
Inter-segment sales 57,805 8 104 2,442 5,039 (65,398) -
Total revenue 106,278 99,693 37,675 3,497 7,601 (65,398) 189,346
RESULT
Segment result 21,581 13,870 1,647 330 2,187 (9,088) 30,527
Interest income 204 100 91 - 14 - 409
Interest expense (321) - (6) (2) - - (329)
Profi t before tax 30,607
Tax expense (8,493)
Profi t after tax 22,114
Minority interest (730)
Net profi t for the fi nancial year 21,384
Other information
Segment assets 123,788 33,919 19,260 3,461 8,719 (41,466) 147,681
Unallocated corporate assets 1,282
Total assets 148,963
Segment liabilities 25,658 20,904 8,964 591 4,390 (25,686) 34,821
Unallocated corporate liabilities 3,263
Total liabilities 38,084
Capital expenditure 562 188 530 639 11 - 1,930
Amortisation of prepaid lease
payments for land 2 32 - - - - 34
Depreciation of:
- property, plant and equipment 878 239 437 221 38 - 1,813
- investment properties 380 62 - - - (1) 441
Non-cash expenses other than
depreciation and amortisation 697 3,131 5 6 154 (93) 3,900
37. FINANCIAL INSTRUMENTS
(a) Financial risk management objectives and policies
The operations of the Group are subject to a variety of risks, including credit risk, foreign currency risk,
interest rate risk, liquidity and cash fl ow risk.
NOTES TO THE FINANCIAL STATEMENTS (CONT’D)
30 APRIL 2008
HAI-O ENTERPRISE BERHAD (22544-D) • (INCORPORATED IN MALAYSIA)138
37. FINANCIAL INSTRUMENTS (CONTINUED)
(a) Financial risk management objectives and policies (continued)
(i) Credit risk
The Group is exposed to credit related losses in the event of non-performance by counterparties.
However, the Group has in place a policy to mitigate this risk by careful evaluation of customers’
fi nancial condition and credit history.
The Group has no signifi cant concentration of credit risk. The maximum exposures to credit risk are
represented by the carrying amounts of the fi nancial assets in the balance sheets.
(ii) Foreign currency risk
The Group has signifi cant purchases from overseas, thus exposing it to foreign currency risk.
The Group will monitor changes in the exchange rate and, where appropriate, enter into forward
foreign currency exchange contracts to limit its exposure on foreign currency payables. There is no
formal hedging policy with regards to foreign currency exposure.
The fi nancial assets and liabilities of the Group and the Company that are not denominated in their
functional currencies are as follows:
Group
2008 2007
RM RM
Financial assets and liabilities not held in functional currency:
Trade payables
US Dollar 1,991,462 1,426,913
Euro 43,056 -
Pound Sterling 221,382 -
2,255,900 1,426,913
Company
2008 2007
RM RM
Trade payables
US Dollar 888,478 374,489
(iii) Interest rate risk
The Group’s primary interest rate risk relates to interest-earning deposits and interest-bearing
borrowings from fi nancial institutions. Threre is no formal hedging policy with respect to interest rate
exposure.
NOTES TO THE FINANCIAL STATEMENTS (CONT’D)
30 APRIL 2008
www.hai-o.com.my • ANNUAL REPORT 2008 139
37. FINANCIAL INSTRUMENTS (CONTINUED)
(iii) Interest rate risk (continued)
The following tables set out the carrying amounts, the average effective interest rates as at the balance
sheet date and the remaining maturities of the Group’s and the Company’s fi nancial instruments that are
exposed to interest rate risk:
Average
effective More
interest Within 1 - 2 2 - 3 3 - 4 4 - 5 than
rate 1 year years years years years 5 years Total
Group Note % RM RM RM RM RM RM RM
As at 30 April 2008
Fixed rates
Hire-purchase receivables 15 3.50 - 8.00 439,784 385,448 317,662 257,419 153,716 28,285 1,582,314
Deposits with licensed banks 19 2.70 - 3.20 21,264,966 - - - - - 21,264,966
Bankers acceptances 22 3.68 5,214,000 - - - - - 5,214,000
As at 30 April 2007
Fixed rates
Hire-purchase receivables 15 3.50 - 8.00 407,818 331,063 298,759 261,550 231,024 131,038 1,661,252
Deposits with licensed banks 19 2.50 - 3.30 10,792,067 - - - - - 10,792,067
Bankers acceptances 22 3.76 7,396,275 - - - - - 7,396,275
Weighted
average
effective More
interest Within 1 - 2 2 - 3 3 - 4 4 - 5 than
rate 1 year years years years years 5 years Total
Company Note % RM RM RM RM RM RM RM
As at 30 April 2008
Fixed rates
Deposits with licensed banks 19 2.70 - 3.20 201,398 - - - - - 201,398
Bankers’ acceptances 22 3.68 5,128,000 - - - - - 5,128,000
Hire-purchase liabilities
due to a subsidiary 23 7.42 - 8.30 269,352 222,378 189,160 182,702 73,095 - 936,687
As at 30 April 2007
Fixed rates
Deposits with licensed banks 19 2.50 - 3.30 3,450,684 - - - - - 3,450,684
Bankers’ acceptances 22 3.67 6,769,275 - - - - - 6,769,275
Hire-purchase liabilities
due to a subsidiary 23 7.42 - 8.30 233,884 165,824 108,776 65,485 48,955 - 622,924
NOTES TO THE FINANCIAL STATEMENTS (CONT’D)
30 APRIL 2008
HAI-O ENTERPRISE BERHAD (22544-D) • (INCORPORATED IN MALAYSIA)140
37. FINANCIAL INSTRUMENTS (CONTINUED)
(a) Financial risk management objectives and policies (continued)
(iv) Liquidity and cash fl ow risk
The Group and the Company monitor and maintain a level of cash and cash equivalents and bank
facilities deemed adequate by management to fi nance the Group and the Company’s operations and
to mitigate the effects of fl uctuations in cash fl ows.
(b) Fair values
The carrying amounts of the fi nancial instruments of the Group and of the Company as at the balance sheet
date approximate their fair values except as set out below:
Group Company
Carrying Fair Carrying Fair
amount value amount value
RM RM RM RM
As at 30 April 2008
Quoted investments 14,050,914 14,772,271 1,736,560 1,845,857
Unquoted investments 2,114,379 # 1,888,000 #
As at 30 April 2007
Quoted investments 21,540,987 23,209,978 6,578,691 7,510,614
Unquoted investments 2,614,379 # 888,000 #
# It is not practical to estimate the fair value of the long term unquoted investments because of the lack
of quoted market prices and the inability to estimate fair value without incurring excessive costs. The
directors believe that the carrying amount represents the recoverable value.
The following methods and assumptions are used to determine the fair values of fi nancial instruments:-
(i) The carrying values of the fi nancial assets and liabilities maturing within 12 months are stated
at approximately their fair values due to the relatively short term maturity of these fi nancial
instruments.
(ii) The fair values of quoted investments are based on quoted market prices at the balance sheet
date.
38. CAPITAL COMMITMENTS
Group and
Company
2008 2007
RM RM
Approved and contracted for in respect of capital expenditure 40,500,000 -
NOTES TO THE FINANCIAL STATEMENTS (CONT’D)
30 APRIL 2008
www.hai-o.com.my • ANNUAL REPORT 2008 141
39. CONTINGENT LIABILITIES - UNSECURED
Company
2008 2007
RM RM
Corporate guarantee in respect of banking facilities granted to subsidiaries 86,000 627,000
40. MATERIAL LITIGATION
By a Writ of Summon and Statement of Claim dated 13 January 1995 (“Suit 34”), Nguang Chan Liquor Trade and
Nguang Chan (M) Sdn Bhd (Collectively known as “ the Nguang Chan Group”) instituted an action and sought an
injunction against the Company to restrain publication of alleged defamatory statements made against the Nguang
Chan Group as well as against slander of a product named Zhan Qiao Pai Ling Zhi (“the Product”). The High Court
has dismissed the Nguang Chan Group’s application for injunction with cost on 19 December 1995.
The directors of the Company are of the opinion that, based on legal advise, the Company has a good case to
establish that the Nguang Chan Group’s present claim is without merit. The Company is entitled to protect its
Product and that its actions against what appear to be clear counterfeits cannot be the subject matter of complaint
by the Nguang Chan Group.
By a Writ of Summon and Statement of Claim dated 23 May 1997 (“Suit 400”), the Company and Shandong
Medicine & Health Products Import & Export Corp., Changyu Pioneer Wine Co. and Yantai Native Product Import &
Export Corp. (“the Chinese Parties”) has fi led an action against the Nguang Chan Group and Golden Spring Spirits
Agency claiming for damages for infringement of the Product.
On 5 August 1997, the High Court has ordered to hear both Suits 34 and 400 together and further ordered that the
outcome of the Suit 400 shall bind Suit 34.
The Company has made several applications seeking for further discovery, production and inspection of documents
against the Nguang Chan Group. Order in terms of the these applications were given by the High Court on 23 April
2001. However, the Nguang Chan Group had thereafter appealed to the Court of Appeal against this decision.
The Court of Appeal heard the appeal on 14 March 2006 wherein Nguang Chan Group’s appeal was allowed. The
Company has appealed against the Court of Appeal’s decision to the Federal Court. The application for leave to
appeal was fi xed for hearing on 22 August 2006.
The application was heard as scheduled. The Federal Court has adjourned the application to a date to be fi xed with
directions to the Court of Appeal to deliver its written decisions to the Federal Court.
On Suit 34 and Suit 400, the High Court has fi xed the date for case management on 18 September 2006. The High
Court has fi xed for trial on 11 June 2007, 12 June 2007, 16 July 2007 and 17 July 2007. The High Court has vacated
the Trial Dates to 3 October 2007 and 4 October 2007 with a mention date fi xed on 17 September 2007. The trial
had been vacated to enable the matters to be transferred to the newly established Intellectual Property Court on 17
September 2007 and the learned judge of the Intellectual Property Court has fi xed for trial on 11 February 2009 and
12 February 2009.
Based on legal advice, the Board of Directors of the Company is of the opinion that the Company and the Chinese
Parties have a good case in claiming common law proprietary rights if the Company and the Chinese Parties can
successfully show that the Chinese Parties are instrumental in the manufacture, production and export to the
Company of the Infringing Product.
NOTES TO THE FINANCIAL STATEMENTS (CONT’D)
30 APRIL 2008
HAI-O ENTERPRISE BERHAD (22544-D) • (INCORPORATED IN MALAYSIA)142
41. SIGNIFICANT EVENTS DURING THE FINANCIAL YEAR
(a) On 17 July 2007, the Company obtained approval from the Securities Commission on the Proposed Transfer
from the Second Board to the Main Board of Bursa Malaysia Securities Berhad (“Bursa Securities”). The
Company had also obtained approval from Bursa Securities and the Shareholders for the Proposed Bonus
Issue of One (1) new ordinary share for every fi ve (5) existing ordinary shares held, on 15 August 2007 and
23 August 2007 respectively. The Proposed Bonus Issue was completed on 14 September 2007 of which
13,412,342 bonus shares were issued. On 8 October 2007, the entire enlarged issued and paid-up share
capital was transferred from the Second Board to the Main Board of Bursa Securities.
(b) On 20 July 2007, the Company acquired an additional 1,000 ordinary shares of RM1.00 each in the share
capital of Hai-O Raya Bhd. from a minority shareholder for a total cash consideration of RM1,400.
(c) On 29 August 2007, the Company disposed of its entire 100% equity interest in a subsidiary, Teik Seang Wine
Merchants Sdn. Bhd. comprising 600,000 ordinary shares of RM1.00 each for a total consideration of RM783,780.
(d) On 25 September 2007, the Company acquired 1,000 ordinary shares of HKD1.00 each in the share capital of
Hai-O (Hong Kong) Investment Limited for a total cash consideration of HKD1,000 or equivalent to RM440.
Subsequently, on 25 September 2007 and 10 December 2007, the Company subscribed for additional 9,000
and 2,370,000 ordinary shares of HKD1.00 each respectively in the share capital of Hai-O (Hong Kong)
Investment Limited for a total cash consideration of HKD9,000 and HKD2,370,000 or equivalent to RM3,960
and RM1,018,802 respectively.
(e) On 25 September 2007, the Company subscribed for 2 ordinary shares of RM1.00 each in the share capital
of Mengniu Marketing (M) Sdn Bhd for a total cash consideration of RM2.
(f) On 17 December 2007, the Company subscribed for additional 999,998 ordinary shares of RM 1.00 each in
Hai-O Energy (M) Sdn Bhd (formerly known as Ten Plus Three Trade Centre Sdn Bhd) (“Hai-O Energy”), a
wholly owned subsidiary company, for a total cash consideration of RM999,998. The Company is principally
involved in the design, research and manufacture of devices in connection to heat transmission, energy
saving technology and related products.
(g) On 21 December 2007, the Company announced the acquisition of land and building measuring an aggregate
area of approximately 1,245,746 square feet located in the Mukim of Kapar, Daerah Klang, Negeri Selangor
by the Company from Bata (Malaysia) Sdn Bhd (“Bata”) for a total consideration of RM45,000,000 . During
the fi nancial year, the Company paid 10% deposit of RM4.5 million to Bata.
42. EVENTS SUBSEQUENT TO BALANCE SHEET DATE
(a) On 15 May 2008, the Company had made full settlement of the remaining balance of the purchase
consideration amounting to RM40.5 million to Bata through internally generated fund of RM20.5 million and
bank borrowing of RM20 million on the acquisition of land and building.
(b) On 22 May 2008, the Company’s 66.4% owned subsidiary, Samariatan Sdn. Bhd., had disposed of its entire
100% equity interest in Chop Aik Seng Trading Sdn. Bhd., which comprising 100,000 ordinary shares of RM1
each via its wholly owned subsidiary, Chop Aik Seng Sdn. Bhd. for a total consideration of RM20,000.
(c) The Company had on 31 July 2008, completed the formation of PT. Hai-O Indonesia. The Company
subscribed for 80% or 80,000 shares of the paid-up share capital of Hai-O Indonesia for a total investment
cost of USD80,000 or equivalent to Rupiah 743,040,000.
(d) On 26 June 2008, the Company had declared a distribution of one (1) treasury share for every twenty fi ve
(25) existing ordinary shares of RM1.00 each (“Share Dividend”), in respect of the fi nancial year ended 30
April 2009, held by shareholders whose names appear in the record of depositors of the Company at the
close of business on 31 July 2008.
A total of 3,225,542 treasury shares were distributed to entitled shareholders in relation to this Share Dividend.
NOTES TO THE FINANCIAL STATEMENTS (CONT’D)
30 APRIL 2008
www.hai-o.com.my • ANNUAL REPORT 2008 143
43. COMPARATIVE FIGURES
The following comparative fi gures have been reclassifi ed to be consistent with current year’s presentation:
As previously As
reported Reclassifi cation restated
Balance Sheet RM RM RM
Group
Trade and other payables 21,603,037 1,934,898 23,537,935
Provisions 5,821,248 (1,934,898) 3,886,350
Company
Trade and other payables 11,842,624 632,593 12,475,217
Provision 632,593 (632,593) -
Cash fl ows
Group
Current year provisions 4,507,461 (1,889,922) 2,617,539
Over provision in prior year (236,360) 236,360 -
Increase/(decrease) in trade and other payables 126,915 373,346 500,261
Payments for sales campaign, trip and tour incentive (1,675,634) 1,280,216 (395,418)
Company
Current year provisions 597,413 (597,413) -
Over provision in prior year (52,816) 52,816 -
Increase/(decrease) in trade and other payables (3,954,156) 98,801 (3,855,355)
Payments for sales campaign, trip and tour incentive (445,796) 445,796 -
NOTES TO THE FINANCIAL STATEMENTS (CONT’D)
30 APRIL 2008
HAI-O ENTERPRISE BERHAD (22544-D) • (INCORPORATED IN MALAYSIA)144
Authorised Share Capital : RM100,000,000Paid-up & Issued Share Capital : RM 84,164,342Class of Share : Ordinary shares of RM 1.00 eachVoting Right : 1 Vote per share
DISTRIBUTION OF SHAREHOLDERS AS AT 05 SEPTEMBER 2008
Size of Holdings
No. Of
Shareholders
% Of
Shareholders
No. Of
Shares
% Of
Shares
Less than 100 549 15.41 20,407 0.02
100 - 1,000 314 8.82 114,402 0.14
1,001 - 10,000 1,934 54.31 7,095,625 8.47
10,001 - 100,000 651 18.28 17,148,155 20.46
100,001 and less than 5% of issued shares 111 3.12 47,000,093 56.09
5% and above of issued shares 2 0.06 12,416,716 14.82
Total Shares Issued Excludes Treasury Shares 3,561 100.00 83,795,398 100.00
Note: Treasury Shares No. Of Shares BoughtName/Qualifi er As at 05-09-2008HAI-O ENTERPRISE BHD 368,944
THIRTY LARGEST SHAREHOLDERS AS AT 05 SEPTEMBER 2008
Name
No. Of
Shares
% Of
Shares
1. Tan Kai Hee 8,097,638 9.66
2. Excellant Communication Sdn Bhd 4,319,078 5.15
3. Akintan Sdn Bhd 3,795,169 4.53
4. Tan Siow Eng 3,399,485 4.06
5. Kenanga Nominees (Tempatan) Sdn BhdPledged Securities Account For Chia Kee Siong
3,191,312 3.81
6.
Malaysia Nominees (Tempatan) Sendirian BerhadPledged Securities Account For Akintan Sdn Bhd (02-00210-001)
2,096,640 2.50
7. Malaysia Nominees (Tempatan) Sendirian BerhadGreat Eastern Life Assurance (Malaysia) Berhad (LPF)
1,653,433 1.97
8. Daritan Sdn Bhd 1,336,517 1.60
9. Oon Chong Eong 1,185,600 1.42
ANALYSIS OF SHAREHOLDINGSAS AT 05 SEPTEMBER 2008
www.hai-o.com.my • ANNUAL REPORT 2008 145
Name
No. Of
Shares
% Of
Shares
10. Chin Chin Sing @ Tan Cheng Beng 1,151,176 1.37
11. Tan Keng Song 1,129,571 1.35
12. Tan Keng Kang 1,002,019 1.20
13. Oon Chong Eong 977,600 1.17
14. Huang,Chin-Chueh 934,941 1.12
15. Lim Chin Luen 889,777 1.06
16. Huang Shunyao 780,296 0.93
17. Tan Kee Hock 754,278 0.90
18. Leong @ Wong Nam Meng 753,475 0.90
19. Tan Puah Khin @ Tan Puan Hee 700,006 0.83
20. Chen Tam Chai 589,784 0.70
21. Mayban Nominees (Tempatan) Sdn BhdMayban Trustees Berhad For MAAKL Value Fund (950290)
574,579 0.69
22. Ea Nio @ Yee Soh Yeow 553,904 0.66
23. DB (Malaysia) Nominee (Tempatan) Sendirian BerhadICapital. Biz Berhad
530,400 0.63
24. Mayban Nominees (Tempatan) Sdn BhdMalaysia Trustees Berhad For AMB Smallcap Trust Fund (240165)
516,753 0.62
25. Citigroup Nominess (Asing) Sdn BhdExempt An For Merrill Lynch Pierce Fenner & Smith Incorporated (Foreign)
510,640 0.61
26. Png Tee Jue @ Fang Shye Yong 508,892 0.61
27. Lien Siao-Yen 505,772 0.60
28. Kenanga Nominees (Tempatan) Sdn BhdPledged Securities Account For Lee Yoke Fong
492,918 0.59
29. Soh Choo @ Soh Ai Choo 446,954 0.53
30. HSBC Nominees (Tempatan) Sdn BhdHSBC (M) Trustee Bhd For MAAKL Progress Fund (4082)
424,320 0.51
TOTAL 43,802,927 52.28
ANALYSIS OF SHAREHOLDINGS
(CONT’D)
HAI-O ENTERPRISE BERHAD (22544-D) • (INCORPORATED IN MALAYSIA)146
ANALYSIS OF SHAREHOLDINGS
(CONT’D)
SUBSTANTIAL SHAREHOLDERS AS AT 05 SEPTEMBER 2008
Direct Holdings Indirect Holdings
Name No. of Shares % of Shares No. of Shares % of Shares
1. Akintan Sdn Bhd 5,891,809 7.03 -
2. Tan Kai Hee 8,097,638 9.66 13,172,335 (note a) 15.72
3. Tan Siow Eng 3,500,419 4.18 17,769,554 (note b) 21.20
4. Excellant Communication Sdn Bhd 4,319,078 5.15 - -
5. Tan Keng Song 1,316,771 1.57 19,953,202 (note c) 23.81
6. Tan Keng Kang 1,002,019 1.20 20,267,954 (note d) 24.18
7. Phan Van Denh 124,800 0.15 21,145,173 (note e) 25.23
DIRECTORS’ INTEREST AS AT 05 SEPTEMBER 2008
Direct Holdings Indirect Holdings
Name No. of Shares % of Shares No. of Shares % of Shares
1. Tan Sri Osman S Cassim - - - -
2. Tan Kai Hee 8,097,638 9.66 13,172,335 (note a) 15.72
3. Dato’ Abdul Rani Bin Mohd Razalli 59,668 0.07 - -
4. Dr. MK Rajakumar MRK Nayar 41,932 0.05 - -
5. Lim Chin Luen 889,777 1.06 - -
6. Quek Ah Ba 34,401 0.04 - -
7. Tan Keng Song 1,316,771 1.57 19,953,202 (note c) 23.81
8. Tan Keng Kang 1,002,019 1.20 20,267,954 (note d) 24.18
a) Deemed interested by virtue of his substantial interest in Akintan Sdn Bhd and Daritan Sdn Bhd and through the direct and indirect of her family members in Hai-O respectively.
b) Deemed interested by virtue of her substantial interest in Akintan Sdn Bhd and Daritan Sdn Bhd, and through the direct and indirect of her family members in Hai-O respectively.
c) Deemed interested through the direct and indirect interest of her family members in Hai-O respectively.
d) Deemed interested through the direct and indirect interest of his family members in Hai-O respectively.
e) Deemed interested through the direct and indirect interest of her husband, Tan Keng Kang.
www.hai-o.com.my • ANNUAL REPORT 2008 147
TOP 10 PROPERTIESAS AT 30 APRIL 2008
Land Net Book Value Date of Area Existing Expire as at 30/04/08
Location Description Acquisition (sq.ft.) Tenure Use Age Date RM
Geran 7155/M1Sun Kompleks, Jalan Bukit Bintang55100 Kuala Lumpur
Shoplots,Offi ce lot - groundfl oor, 1st, 6th, 8th,9th fl oor &241 number ofcar park bays at2nd, 3rd, 4th, 5th& 6th Flr
22 Aug 1995 60,210 Freehold Shoplots, Offi ces & Car park
bays
30 years - 16,263,256
HS(M) 9019 Lot P.T. 11995Mukim of Kapar, 1 1/2 Miles41400 Klang, Selangor
Factory/ Warehouse &6 storey building
05 June 1982 &20 Sept 1997
100,796 Freehold Offi ce &Warehouse
25 years &
11 years
- 11,793,155
Garden City BusinessCentre PT 15752 Unit No. C01/2 - C12/2Phase 2B Taman DagangJalan Ampang Kuala Lumpur
12 units of offi ce lots(2nd fl oor)
20 Oct 1995 18,708 Leasehold for
99 years
Offi ces 13 years 20 Oct 2084 3,101,594
GM 2645 Lot No. 4953Mukim Kapar Sungai Binjai Road, Batu 5 Meru Klang, Selangor
Industrial land
17 Mar 1995 3 acres Freehold Vacant 13 years - 1,588,775
Lot 2708 & 2709 Centre Park Jalan Tun Ahmad ZaidiAdruce Kuching, Sarawak
2 units of 4 storeyshop-lot
04 Apr 1997 12,160 Leasehold for
60 years
Offi ce &Warehouse
11 years 23 Jul 2057 1,388,333
Garden City BusinessCentre PT 15752 Unit No. C01/3 - C03/3Mukim Ampang District Ulu Langat Selangor
3 units of offi ce lots(3rd fl oor)
26 Oct 1998 4,677 Leasehold for
99 years
Offi ces 13 years 20 Oct 2084 823,023
Lot 409 Geran 19663Section 21 District of Klang (78 Jalan Nanas41400 Klang, Selangor)
4 storey terraceshophouses
06 Mar 1984 1,799 Freehold Shops 25 years - 609,762
Lot 410 Geran 19664Section 21 District of Klang (80 Jalan Nanas41400 Klang, Selangor)
4 storey terraceshophouses
06 Mar 1984 1,799 Freehold Shops 25 years - 609,762
Lot 2411 Block 5Miri Concession, Miri-Pujut RoadMiri, Sarawak
3 storey terraceshophouse
15 Nov 1999 1,690 Leaseholdfor
50 years
Shops 9 years 21 Jan 2050 533,000
Lot 411 Geran 19665Section 21 District of Klang (82 Jalan Nanas41400 Klang, Selangor)
4 storey terraceshophouses
06 Mar 1984 1,600 Freehold Shops 25 years - 495,700
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FORM OF PROXY
I/We, ___________________________________________________________________________________________
of ______________________________________________________________________________________________
being a member of HAI-O ENTERPRISE BERHAD (22544-D), hereby appoint _________________________________
of ______________________________________________________________________________________________
or failing him/her __________________________________________________________________________________
of ______________________________________________________________________________________________
as my/our proxy, to vote on my/our behalf at the 33rd Annual General Meeting of the Company to be held at Banquet
Hall, 2nd Floor, The Federal Hotel Kuala Lumpur, No. 35, Jalan Bukit Bintang, 55100 Kuala Lumpur on Wednesday, 29
October 2008 at 11.30 a.m. and at any adjournment thereof in the manner indicated below in respect of the following
Resolutions:-
Resolutions For Against
Resolution 1 Adoption of Reports and Accounts.
Resolution 2 Re-election of Mr. Lim Chin Luen as Director.
Resolution 3 Re-appointment of Tan Sri Osman S Cassim as Director pursuant to
Section 129(6) of the Companies Act 1965.
Resolution 4 Re-appointment of Dato’ Abdul Rani bin Mohd Razalli as Director
pursuant to Section 129(6) of the Companies Act 1965.
Resolution 5 Re-appointment of Dr. M.K. Rajakumar A/L M.R.K. Nayar as Director
pursuant to Section 129(6) of the Companies Act 1965.
Resolution 6 Re-appointment of Mr. Tan Kai Hee as Director pursuant to Section
129(6) of the Companies Act 1965.
Resolution 7 Approval of Directors’ fees.
Resolution 8 Declaration of fi nal dividend of 32% less 25% tax.
Resolution 9 Re-appointment of Messrs. BDO Binder as Auditors of the Company and
to authorise Directors to fi x their remuneration.
Resolution 10 Authority to allot and issue shares pursuant to Section 132D of the
Companies Act 1965.
Resolution 11 Proposed Share Buy-Back by the Company
Please indicate with an “X” in the appropriate spaces how you wish your votes to be cast. If you do not indicate how you
wish your proxy to vote on any Resolution, the proxy will vote or abstain from voting at his/her discretion.
Dated : ____________________ __________________________
Signature of Shareholder(s)
Notes :
1. A member entitled to attend and vote at the above meeting is entitled to appoint not more than two (2) proxies to attend and vote instead of him. A proxy
may but need not be a member of the Company.
2. Where a member appoints two (2) proxies, the appointment shall be invalid unless he specifi es the proportions of his holding(s) to be represented by
each proxy.
3. The instrument appointing a proxy shall be in writing under the hand of the appointer or his attorney duly authorised in writing, or if the appointer is a
corporation, either under its Common Seal or attorney duly authorised in writing.
4. The Form of Proxy must be deposited at the Registered Offi ce of the Company at Room 803, 8th Floor, Sun Kompleks, Jalan Bukit Bintang, 55100 Kuala
Lumpur, not less than forty-eight (48) hours before the time appointed for holding the meeting.
No. of Shares held
Please fold along this line (1)
Please fold along this line (1)
HAI-O ENTERPRISE BERHAD (22544-D)
(Incorporated in Malaysia under the Companies Act, 1965)
The Company Secretary
Registered Offi ce
Room 803, 8th Floor,
Sun Kompleks,
Jalan Bukit Bintang, 55100,
Kuala Lumpur.
Stamp
投票授权委任书投票授权委任书
本人/我们, _______________________________________________________________________________________
来自地址 ________________________________________________________________________________________
为上述公司股东,在此委任 __________________________________________________________________________
来自地址 ________________________________________________________________________________________
或他/她弃权将委任 ________________________________________________________________________________
来自地址 ________________________________________________________________________________________
本人/我们的投票授权人,代表本人/我们在二零零八年十月二九日上午十一時三十分在Banquet Hall 2nd Floor, The
Federal Hotel Kuala Lumpur, No 35, Jalan Bukit Bintang, 55100 Kuala Lumpur 举行的三十三届股东常年大会和其连续会
议中投下下列的议案:
有关议案如下 附议 非议
议决案 1 接纳董事报告及已稽查账目。
议决案 2 重新委任董事林钟龙先生。
议决案 3 重新委任依循1965年公司法令第129(6)条文退任的Tan Sri Osman S.Cassim 为
董事。
议决案 4 重新委任依循1965年公司法令第129(6)条文退任的 Dato’ Abdul Rani bin Mohd
Razalli 为董事。
议决案 5 重新委任依循1965年公司法令第129(6)条文退任的 Dr.M.K. Rajakumar A/L
M.R.K.Nayar 为董事。
议决案 6 重新委任依循1965年公司法令第129(6)条文退任的陈凱希为董事。
议决案 7 批准董事费。
议决案 8 提议分派每股32%之年终股息,须扣税25%。
议决案 9 重新委任Messrs. BDO Binder为本公司的稽查師以及授权董事部决定其酬金。
议决案 10 特別事务议程:根据1965年公司法令132D条文下发行股票的授权。
议决案 11 特別事务议程:建议更新股票回购授权。
请在空格已“x”行使您的投票权,若您沒有指示您的授权人投票,则授权人将以他的判断行使投票权或弃权。
日期 : ____________________ __________________________
股东签名
附注:附注:
1. 每一名有权出席及投票的股东均可委任不超过2名代表出席股东常年大会并参与投票。股东代表无须为本公司的股东。
2. 若股东委任2名代表,委任书必须注明各别代表委托的股份,否则其委任书将失效。
3. 授权委任书必须为书面,并由他的适当书面授权的代理人签名或者如果委托人为一家公司,则须在公司的印章下或由一名获适当授权
的公司代表签名。
4. 授权委任书须于召开会议前四十八小時内送达公司注冊处位于 Room 803, 8th Floor, Sun Kompleks, Jalan Bukit Bintang, 55100 Kuala
Lumpur。
拥有股票单位拥有股票单位
Please fold along this line (1)
Please fold along this line (1)
HAI-O ENTERPRISE BERHAD (22544-D)
(Incorporated in Malaysia under the Companies Act, 1965)
The Company Secretary
Registered Offi ce
Room 803, 8th Floor,
Sun Kompleks,
Jalan Bukit Bintang, 55100,
Kuala Lumpur.
Stamp
玻璃市Perlis
槟城Penang
吡叻Perak
雪兰莪Selangor
柔佛Johor
北马 North Malaysia
Hai-O Chain Store’s Network 海鸥连锁店网络
Corporate Profi leEstablished in 1975, Hai-O has since become a famous household name offering a wide range of Chinese
medicines, medicated tonic and healthcare products. Providing superior quality healthcare products at a
reasonable price is our business policy.
Hai-O was listed on the Second Board of Bursa Malaysia Securities Berhad in 1996, being the fi rst traditional
healthcare company on the stock exchange. The company had then successfully transferred to the Main
Board of Bursa Malaysia on 8th October 2007.
The principal business of the company involves wholesaling, retailing, multi-level marketing, pharmaceutical
factory and modern Chinese Medicinal Clinics. For the past three decades, Hai-O had honed its expertise by
building extensive and effi cient distribution network and strong marketing strategies in Malaysia.
1. ALOR STAR 亚罗士打 Tel: 04-7775815
2. AYER ITAM 阿依淡 Tel: 04-8288606
3. CHAI LENG PARK 北海才能园 Tel: 04-3990710
4. JALAN BURMAH 车水路 Tel: 04-2265909
5. QUEENSBAY 巴六拜皇后园广场 Tel: 04-6432200
6. IPOH 怡保 Tel: 05-2547733
7. TELUK INTAN 安顺 Tel: 05-6218173
8. KUANTAN 关丹 Tel: 09-5667022
9. KLANG 巴生 Tel: 03-33431167
10. JALAN SULTAN 苏丹街 Tel: 03-20703282
11. SUN COMPLEX 太阳大厦 Tel: 03-21417700
12. TAMAN PERTAMA 第一花园 Tel: 03-92848961
13. SETAPAK 文良港 Tel: 03-40226053
14. JINJANG 增江 Tel: 03-62589081
15. PJ SS2 八打灵 Tel: 03-78778088
16. SERDANG 沙登 Tel: 03-89433536
17. METRO KAJANG 美景广场 Tel: 03-87344001
18. TAMAN MUDA AMPANG 安邦太子园 Tel: 03-42966941
19. USJ SUBANG 梳邦 Tel: 03-56387239
20. KEPONG 甲洞 Tel: 03-62776097
21. ENDAH PARADE 恩达广场 Tel: 03-95430951
22. MCC CITY 马中商城 Tel: 03-92837787
23. DESA AMAN PURI 甲洞逸富园 Tel: 03-62803195
24. PUSAT BANDAR RAWANG 万挠镇 Tel: 03-60927880
25. SUNGAI LONG 加影双溪龙 Tel: 03-90758889
26. PEARL POINT 旧巴生路珍城 Tel: 03-79822946
27. ONE UTAMA 万达 Tel: 03-77241015
28. CARREFOUR MIDVALLEY 谷中城广场 Tel: 03-22872136
29. CARREFOUR SUBANG JAYA 梳邦再也家乐福 Tel: 03-33438889
30. JUCSO BUKIT TINGGI 2 JUSCO武吉丁宜2 Tel: 03-33262408
31. GIANT BANDAR PUTERI PUCHONG 蒲种公主城大人超市 Tel: 03-80600637
32. CARREFOUR JALAN PEEL 蕉赖家乐福 Tel: 03-33438889
33. PANDAMARAN 班达马兰 Tel: 03-33232045
34. JLN IPOH 怡保路 Tel: 03-62502887
35. KAPAR INDAH 加埔7支 Tel: 03-32913651
36. SELAYANG JAYA 士拉央 Tel: 03-61387908
中马 Central Malaysia
南马 South Malaysia
东海岸 East Coast
37. TITI 知知港 Tel: 06-6111768
38. SEREMBAN 芙蓉 Tel: 06-7627903
39. JUSCO SEREMBAN 2 JUSCO芙蓉2 Tel: 06-6015422
40. MELAKA 马六甲 Tel: 06-2836935
41. BATU BERENDAM 马六甲巴株安南 Tel: 06-3178262
42. LUKUT 芦骨 Tel: 06-6515519
43. KLUANG 居銮 Tel: 07-7721773
44. BATU PAHAT 巴株巴辖 Tel: 07-4310451
45. JOHOR BAHRU 新山 Tel: 07-3325377
46. SEGAMAT 昔加末 Tel: 07-9321262
47. MUAR ASTAKA 麻坡 Tel: 06-9532842
48. MUAR LEGENDA 麻坡凯荣 Tel: 06-9510714
49. PLAZA TASEK 皇后广场 Tel: 07-5543925
50. GIANT PLENTONG JB 避兰东大人超市 Tel: 07-3591636
51. CARREFOUR SUTERA MALL, J.B 五福城广场家乐福 Tel: 03-33438889
52. JOHOR JAYA 柔佛再也 Tel: 07-3575332
53. KULAI 古来 Tel: 07-6621398
54. TAMAN PERLING 新山柏龄花园 Tel: 07-2345941
55. TAMAN UNIVERSITY 新山大学城 Tel: 07-5202566
56. TANGKAK 东甲 Tel: 06-9785127
彭亨Pahang
森美兰N. Sembilan
登嘉楼Terengganu
吉兰丹Kelantan
吉打Kedah
马六甲Melaka
企业有限公司HAI-O ENTERPRISE BERHAD (22544-D)
根据一九六五年公司法令在马来西亚注册成立(Incorporated in Malaysia under the Companies Act, 1965)
We Delivered
ANNUAL REPORT
2008二零零八常年报告书
Room 803, 8th Floor, Sun Kompleks, Jalan Bukit Bintang, 55100 Kuala Lumpur, Malaysia.Tel : 03 - 2142 2611 Fax : 03 - 2142 2840 www.hai-o.com.my [email protected]
ANN
UAL REPORT 2008HAI-O EN
TERPRISE BERHAD (22544-D
)
企业有限公司 HAI-O ENTERPRISE BERHAD (22544-D)
根据一九六五年公司法令在马来西亚注册成立(Incorporated in Malaysia under the Companies Act, 1965)