annual report 2000 - morningstar, inc
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KIM ENG HOLDINGS LIMITED
(Incorporated in the Republic of Singapore)AND ITS SUBSIDIARIES
Kim Eng Annual Report 2000 5
corporate information
SINGAPOREKim Eng Securities(Private) Limited(Member of the SingaporeExchange Securities TradingLimited)9 Temasek Boulevard#39-00 Suntec Tower TwoSingapore 038989
MALAYSIAKE-ZAN Securities Sdn Bhd(Member of the Kuala LumpurStock Exchange)
Main OfficeWisma KE-ZAN64 Bishop Street10200 PenangMalaysia
Research OfficeSuite 16-02, 16th FloorKompleks AntarabangsaJalan Sultan Ismail50250 Kuala LumpurMalaysia
INDONESIAPT Kim Eng Securities(Member of the JakartaStock Exchange)9th Floor Deutsche BankBuilding
Jl. Imam Bonjol No. 80JakartaIndonesia
BOARD OF DIRECTORSMrs Gloria Lee Kim YewChairperson
Ronald AnthonyOoi Thean YatManaging Director
Lau Wai KwokGee Gek LengAlan Wang Yu Huei
Dr Maurice BakerGordon Seow Li MingProf. Tan Teck Meng
COMPANY SECRETARYGee Gek Leng
REGISTERED OFFICE9 Temasek Boulevard#39-00 Suntec Tower TwoSingapore 038989Tel (65) 336 9090Fax (65) 339 6003
SHARE REGISTRARBarbinder & Co Pte Ltd8 Cross Street #11-00PWC BuildingSingapore 048424
AUDITORSFoo, Kon & Tan47 Hill Street #05-01Chinese Chamberof Commerce& Industry BuildingSingapore 179365
HONG KONGKim Eng Securities(Hong Kong) Limited(Exchange Participant ofHong Kong Exchangesand Clearing Limited)8th Floor, Alexandra House16-20 Chater RoadCentral, Hong Kong
NEW YORKKim Eng Securities USA, Inc(Member of the NationalAssociation of SecuritiesDealers, Inc)406 East 50th StreetNew York NY 10022 USA
LONDONKim Eng Securities(London) Limited(Member of the Securitiesand Futures Authority Limited)6th Floor, 20 St. Dunstan’s HillLondon EC3R 8HYUnited Kingdom
PHILIPPINESATR-Kim Eng Securities, Inc.(Member of the PhilippineStock Exchange)17th Floor Tower One &Exchange PlazaAyala Triangle, Ayala AvenueMakati City, Philippines
THAILANDKim Eng Securities(Thailand) Limited(Member of the StockExchange of Thailand)Thaniya Plaza 10th Floor52 Silom Road, Bangkok10500 Thailand
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2 Kim Eng Annual Report 2000
We had a record year, achieving group profit before tax of S$104.4 million and groupafter tax profit of S$85.6 million. Our strategy to diversify into the region stood us ingood stead during the year as we benefited from the swift economic recovery in SouthEast Asia. All our major operating subsidiaries and associated companies made meaningfulcontributions to the Group’s bottom line. In addition to a 8% First and Final OrdinaryDividend, we are pleased to propose to reward our loyal shareholders with a specialdividend of 15%.
We may have celebrated a good year but we can ill afford to be complacent. A financialrevolution is unfolding before us. The road ahead is paved with uncertainty, being linedwith rapidly changing technology, globalisation of world economies and liberalisationof financial markets in Asia.
Financial sector reforms were first mooted in Singapore before the Asian financial crisisin 1997. Since then, radical changes have been recommended and implemented ata punishing pace. The Singapore Exchange (SGX) was born out of the merger anddemutualisation of the Stock Exchange of Singapore and the Singapore InternationalMercantile Exchange in December 1999 with the aim of producing a world-class capitalmarkets infrastructure. Commission rates on securities transactions on the SGX werepartially liberalised from 1 January 2000. Settlement of trades on the SGX was reducedfrom five trading days to three trading days from trade date with effect from 15 March2000. Membership in the SGX has been liberalised from 1 July 2000. Commission rateswill be fully negotiable from 1 October 2000. At the same time, competition within theindustry for clients and resources will exert considerable pressure on the cost of doingbusiness.
Elsewhere, in the region, Malaysia is also pushing ahead with its own financial sectorrestructuring plans. In Hong Kong, the Stock Exchange of Hong Kong and the HongKong Futures Exchange have been demutualised and merged with the Hong KongSecurities Clearing Company to form Hong Kong Exchanges and Clearing Limited.Commission rates in Malaysia and Thailand will be reduced from September 2000.
The Internet has generated alternative channels of information and hitherto unconventionalavenues of doing business. It has taken hold in the more developed markets in the regionand is fast becoming a way of life.
chairperson’s statement
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Chairperson’s Statement 2
Group Structure 4
Corporate Information 5
Financials 7
Shareholding Statistics 53
Corporate Governance 54Report
contents
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8 Kim Eng Annual Report 2000
directors’ report
The directors submit this annual report to the members together with the audited financial statements of the
Company and of the Group for the financial year ended 31st March 2000.
1. NAMES OF DIRECTORS
The directors in office at the date of this report are:
Mrs Gloria Lee Kim Yew
Ronald Anthony Ooi Thean Yat
Lau Wai Kwok
Gee Gek Leng
Tan Sri Dr Maurice Baker
Gordon Seow Li-Ming
Wang Yu Huei
Professor Tan Teck Meng
Chan Keng Loke
2. PRINCIPAL ACTIVITIES
The principal activity of the Company is that of an investment holding company. The principal activities of
its subsidiaries consist of those of stockbrokers, sharebrokers and dealers in stocks, shares and investments of
all kinds, acting as nominees for beneficial shareholders, investment holding, investment advisers, property
investment, money lending, margin financing, and management of internal funds. There have been no
significant changes in the nature of these activities during the financial year.
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KIM ENG HOLDINGS LIMITED
(Incorporated in the Republic of Singapore)AND ITS SUBSIDIARIES
Kim Eng Annual Report 2000 9
3. ACQUISITION OR DISPOSAL OF SUBSIDIARIES
During the financial year, the Company acquired the following subsidiaries:
Equity %Name of acquired in net interestsubsidiary Consideration tangible assets acquired
P.T. Kim Eng Securities $193,600 $1,425,923 40%[formerly known as P.T. KES Sinar Mas Securitiesand formerly a 40% owned associated company]
KE Swan & Co. Pte Ltd $2 $2 100%
KE Strategic Pte Ltd $2 $2 100%
There was no disposal of subsidiary during the financial year.
4. FINANCIAL RESULTSThe Company The Group
$ $
Profit after taxation but before minority interests
and extraordinary item 27,757,066 85,691,403
Minority interests – (102,412)
Profit for the year from ordinary activities 27,757,066 85,588,991
Extraordinary item (Note 18 to the financial statements) (96,288) (6,916)
Profit attributable to members of the company 27,660,778 85,582,075
Retained profits brought forward 113,258,012 171,099,981
Transfer to other reserves – (85,706)
Profits available for appropriation 140,918,790 256,596,350
Proposed dividends:
Special dividend of 15% less tax at 25.5% (16,103,437) (16,103,437)
First and final ordinary dividend of 8% less tax at 25.5% (8,588,500) (8,588,500)
(24,691,937) (24,691,937)
Retained profits carried forward 116,226,853 231,904,413
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10 Kim Eng Annual Report 2000
5. RESERVES OR PROVISIONS
The following transfers to or from reserves or provisions were made during the financial year:The Group
$
a Revaluation reserve
Balance at beginning 1,511,286
Loss on revaluation of an associated company’s seats in exchanges during the year (433,213)
Balance at end 1,078,073
b Reserve funds
Balance at beginning 43,959,385
Transfer from profit and loss account 77,700
Balance at end 44,037,085
c (Goodwill)/reserve arising on consolidation
Balance at beginning (8,023,201)
Adjustment against goodwill on waiver of debts of a subsidiary by a third party 9,761,000
Reserve on acquisition of a subsidiary 1,232,323
Goodwill on acquisition of associated company (6,197)
Amortisation of goodwill by associated company 51,352
Balance at end 3,015,277
d Exchange fluctuation reserve
Balance at beginning 112,864
Transfer from profit and loss account on disposal of an associated company 8,006
Translation differences during the year (1,254,059)
Balance at end (1,133,189)
e Provision for diminution in value of investments
Balance at beginning 18,578,168
Provision for the year 568
Provision no longer required (5,862,675)
Provision written off (451)
Exchange difference on translation (5,715)
Balance at end 12,709,895
directors’ report (cont’d)
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KIM ENG HOLDINGS LIMITED
(Incorporated in the Republic of Singapore)AND ITS SUBSIDIARIES
Kim Eng Annual Report 2000 11
The Group$
f Provision for doubtful debts – trade
Balance at beginning 65,219,246
Provision for the year 25,785,226
Provision no longer required (23,589,862)
Exchange difference on translation (566,363)
Balance at end 66,848,247
g Provision for doubtful debts – others
Balance at beginning 1,291,740
Provision for the year 98,632
Provision no longer required (798,739)
Exchange difference on translation (10,556)
Balance at end 581,077
6. ISSUE OF SHARES OR DEBENTURES
During the financial year, no shares were issued by the Company.
During the financial year, the following subsidiaries issued shares:
Name of company No. and class of shares issued Purposes and terms
KE Swan & Co Pte Ltd 2 ordinary shares Subscribers’ shares paid for
of S$1 each fully paid in cash and at par
KE Strategic Pte Ltd 2 ordinary shares Subscribers’ shares paid for
of S$1 each fully paid in cash and at par
No debentures were issued by the Company or Group during the financial year.
7. ARRANGEMENTS TO ACQUIRE SHARES OR DEBENTURES
During and at the end of the financial year, neither the Company nor any of its subsidiaries was a party to any
arrangement the object of which was to enable the directors to acquire benefits through the acquisition of shares
in or debentures of the Company or of any other corporate body.
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8. DIRECTORS’ INTEREST IN SHARES OR DEBENTURES
According to the Register of Directors’ Shareholdings kept by the Company under Section 164 of the Companies
Act, Cap. 50, none of the directors who held office at the end of the financial year was interested in shares of the
Company and its related corporations except as follows:Shares of $0.25 each registered
in the name of director
As at As at1.4.1999 31.3.2000
The Company
Kim Eng Holdings Limited
Mrs Gloria Lee Kim Yew 45,891,770 45,891,770
Ronald Anthony Ooi Thean Yat 85,544,928 85,544,928
Lau Wai Kwok 5,215,696 5,215,696
Gee Gek Leng 300,000 300,000
Wang Yu Huei 2,200 2,200
Professor Tan Teck Meng 25,000 25,000
Chan Keng Loke 150,000 350,000
9. DIVIDENDS
The following dividends were paid, declared or proposed during the financial year:
A first and final dividend of 8% less tax at 26% was paid
during the financial year under review in respect of the previous
financial year and shown in the previous Directors’ Report $ 8,530,859
The directors propose that:
a a special dividend of 15% less tax at 25.5% be paid
in respect of the financial year under review $16,103,437
b a first and final ordinary dividend of 8% less tax at 25.5% be paid
in respect of the financial year under review $ 8,588,500
10. BAD OR DOUBTFUL DEBTS
a Before the profit and loss account and balance sheet of the Company were made out, the directors had taken
reasonable steps to ascertain that proper action had been taken in relation to the writing off of bad debts and
to the provision for doubtful debts and had satisfied themselves that all known bad debts had been written off
and that adequate provision had been made for doubtful debts.
b At the date of this report, the directors are not aware of any circumstances which would render the amount
written off for bad debts or the amount of the provision for doubtful debts in the group of companies
inadequate to any substantial extent.
directors’ report (cont’d)
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KIM ENG HOLDINGS LIMITED
(Incorporated in the Republic of Singapore)AND ITS SUBSIDIARIES
Kim Eng Annual Report 2000 13
11. CURRENT ASSETS
a Before the profit and loss account and balance sheet of the Company were made out, the directors had also
taken reasonable steps to ascertain 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 or had been
adequately provided for.
b At the date of this report, the directors are not aware of any circumstances which would render the values
attributed to current assets in the consolidated financial statements misleading.
12. CHARGE ON ASSETS OR EXISTENCE OF CONTINGENT LIABILITY
As at the date of this report:
i no charge on the assets of the Company and of the subsidiaries has been made since the end of the financial
year to secure the liabilities of any other person; and
ii no contingent liability of the Company and of the subsidiaries has arisen since the end of the financial year.
13. CONTINGENT OR OTHER LIABILITY ENFORCEABLE AFTER YEAR END
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 financial year which, in the opinion of the directors, will or may substantially
affect the ability of the Company and of the Group to meet their obligations as and when they fall due.
14. OTHER CIRCUMSTANCES
At the date of this report, the directors are not aware of any circumstances not otherwise dealt with in the report
or financial statements of the Company and of the Group which would render any amount stated in the financial
statements misleading.
15. ITEM, TRANSACTION, EVENT OF A MATERIAL AND UNUSUAL NATURE
In the opinion of the directors, the results of the operations of the Company and of the Group for the financial
year have not been substantially affected by any item, transaction or event of a material and unusual nature.
16. SUBSEQUENT EVENTS
In the opinion of the directors, no item, transaction or event of a material and unusual nature has arisen since
the end of the financial year which is likely to affect substantially the results of the operations of the Company
and of the Group for the financial year in which this report is made.
17. DIRECTORS’ BENEFITS
Since the end of the previous financial year, no director has received or has become entitled to receive a benefit
under a contract which is required to be disclosed under Section 201(8) of the Companies Act, Cap. 50, except
that all the directors, other than Professor Tan Teck Meng, Tan Sri Dr Maurice Baker and Gordon Seow Li-Ming,
are under the employment of one of its subsidiaries.
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14 Kim Eng Annual Report 2000
18. SHARE OPTIONS GRANTED
No options were granted during the financial year to take up unissued shares of the Company or of its
subsidiaries.
19. SHARE OPTIONS EXERCISED
No shares were issued by virtue of the exercise of options.
20. UNISSUED SHARES UNDER OPTION
There were no unissued shares under option at the end of the financial year.
21. AUDIT COMMITTEE
The Audit Committee of the Board of Directors comprises three members, all of whom are non-executive
directors.
The members of the Committee at the date of this report are:
Professor Tan Teck Meng (Chairman)
Gordon Seow Li-Ming
Tan Sri Dr Maurice Baker
The Committee held three meetings since the last Directors’ Report and performed the functions specified in
Section 201B(5) of the Companies Act, Cap. 50. In performing its functions, the Committee reviewed the overall
scope of the external audit and the assistance given by the Company’s officers to the external auditors. It met
with the Company’s external auditors and the internal auditors to discuss the results of their examinations and
evaluation of the Company’s system of internal controls. The Committee also reviewed the financial statements
of the Company and of the Group for the financial year ended 31st March 2000 as well as the auditors’ report
thereon.
The Committee recommends to the Board of Directors the nomination of Foo, Kon & Tan, Certified Public
Accountants, as external auditors at the forthcoming Annual General Meeting of the Company.
22. AUDITORS
The auditors, Foo, Kon & Tan, Certified Public Accountants, have expressed their willingness to accept
re-appointment.
On behalf of the Directors
RONALD ANTHONY OOI THEAN YAT
GEE GEK LENG
30 June 2000
directors’ report (cont’d)
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KIM ENG HOLDINGS LIMITED
(Incorporated in the Republic of Singapore)AND ITS SUBSIDIARIES
Kim Eng Annual Report 2000 15
In the opinion of the directors, the accompanying balance sheets, profit and loss accounts and the consolidated cash
flow statement, together with the notes thereon, are drawn up so as to give a true and fair view of the state of affairs
of the Company and of the Group as at 31st March 2000 and of the results of the business of the Company and of the
Group and cash flows of the Group for the financial year ended on that date and at the date of this statement there
are reasonable grounds to believe that the Company will be able to pay its debts as and when they fall due.
On behalf of the Directors
RONALD ANTHONY OOI THEAN YAT
GEE GEK LENG
30 June 2000
statement by directors
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16 Kim Eng Annual Report 2000
to the members of KIM ENG HOLDINGS LIMITED
(Incorporated in the Republic of Singapore)
auditors’ report
We have audited the accompanying balance sheets of Kim Eng Holdings Limited and of the Group as at 31st March
2000, the profit and loss accounts and consolidated cash flow statement for the financial year then ended. These
financial statements are the responsibility of the Company’s directors. Our responsibility is to express an opinion on
these financial statements based on our audit.
We conducted our audit in accordance with Singapore Standards on Auditing. Those Standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting principles used and significant estimates made
by the directors, as well as evaluating the overall financial statement presentation. We believe that our audit provides
a reasonable basis for our opinion.
In our opinion:
a the financial statements and consolidated financial statements are properly drawn up in accordance with the
provisions of the Companies Act, Cap. 50 and Statements of Accounting Standard and so as to give a true and
fair view of:
i the state of affairs of the Company and of the Group as at 31st March 2000 and of the results of the Company
and of the Group and of the cash flows of the Group for the financial year then ended on that date; and
ii the other matters required by Section 201 of the Act to be dealt with in the financial statements and
consolidated financial statements;
b the accounting and other records, and the registers required by the Act to be kept by the Company and by those
subsidiaries incorporated in the Republic of Singapore of which we are the auditors have been properly kept in
accordance with the provisions of the Act.
We have considered the financial statements and auditors’ reports of all subsidiaries of which we have not acted
as auditors, being financial statements included in the consolidated financial statements. The names of these
subsidiaries are stated in Note 4 to the financial statements.
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KIM ENG HOLDINGS LIMITED
(Incorporated in the Republic of Singapore)AND ITS SUBSIDIARIES
Kim Eng Annual Report 2000 17
We are satisfied that the financial statements of the subsidiaries that have been consolidated with the financial
statements of the Company are in a form and content appropriate and proper for the purposes of the preparation
of the consolidated financial statements, and we have received satisfactory information and explanations as
required by us for those purposes.
The auditors’ reports on the financial statements of the subsidiaries were not subject to any qualification and in
respect of subsidiaries incorporated in the Republic of Singapore did not include any comment made under Section
207(3) of the Act.
Foo, Kon & Tan
Certified Public Accountants
(Partner-in-charge : Kon Yin Tong)
Singapore
30 June 2000
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18 Kim Eng Annual Report 2000
The Company The Group2000 1999 2000 1999
NOTE $ $ $ $
NON-CURRENT ASSETS
Fixed assets 3 – – 74,933,336 74,117,295
Interest in subsidiaries 4 226,661,203 233,921,193 – –
Interest in associated companies 5 40,282,497 44,695,398 82,383,915 76,536,127
Investment in Singapore
Exchange Limited 6 – – 250,002 –
Investments/Seats
in other exchanges 7 – – 13,500 1,920,012
Long-term investments 8 5,731,000 575,000 5,731,000 615,001
272,674,700 279,191,591 163,311,753 153,188,435
CURRENT ASSETS 9 219,340,119 194,080,495 782,407,578 615,595,740
Less:
CURRENT LIABILITIES 10 31,293,771 15,519,879 339,107,439 233,298,505
Net current assets 188,046,348 178,560,616 443,300,139 382,297,235
NON-CURRENT LIABILITIES
Unsecured bonds 11 (100,000,000) (100,000,000) (100,000,000) (100,000,000)
Deferred taxation 12 – – (6,872) (6,926)
360,721,048 357,752,207 506,605,020 435,478,744
Represented by:
SHARE CAPITAL 13 144,102,347 144,102,347 144,102,347 144,102,347
SHARE PREMIUM 69,322,446 69,322,446 69,322,446 69,322,446
CAPITAL RESERVES 14 31,069,402 31,069,402 14,471,709 14,904,922
OTHER RESERVES 15 116,226,853 113,258,012 277,823,586 207,149,029
Share capital and reserves 360,721,048 357,752,207 505,720,088 435,478,744
MINORITY INTERESTS – – 884,932 –
360,721,048 357,752,207 506,605,020 435,478,744
The annexed notes form an integral part of and should be read in conjunction with these financial statements
31st March 2000
balance sheets
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KIM ENG HOLDINGS LIMITED
(Incorporated in the Republic of Singapore)AND ITS SUBSIDIARIES
Kim Eng Annual Report 2000 19
The Company The Group2000 1999 2000 1999
NOTE $ $ $ $
Turnover 2 42,410,855 54,136,191 214,013,474 72,722,314
Operating profit before taxation 16 36,324,070 50,380,273 84,827,994 12,253,160Share of profit of
associated companies – – 19,611,252 9,038,248
Profit before taxation 36,324,070 50,380,273 104,439,246 21,291,408Taxation 17 (8,567,004) (8,591,014) (18,747,843) (7,294,812)
Profit after taxation but beforeminority interests andextraordinary item 27,757,066 41,789,259 85,691,403 13,996,596
Minority interests – – (102,412) 53,957
Profit for the year fromordinary activities 27,757,066 41,789,259 85,588,991 14,050,553
Extraordinary item 18 (96,288) 131,770 (6,916) (89,958)
Profit attributableto members of the Company 27,660,778 41,921,029 85,582,075 13,960,595
Retained profits brought forward 113,258,012 79,999,612 171,099,981 167,704,234Transfer (to)/from capital reserves 14 – (131,770) – 89,958Transfer to other reserves 15 – – (85,706) (2,123,947)
Profits available for appropriation 140,918,790 121,788,871 256,596,350 179,630,840
Proposed dividends:Special dividend of 15%
less tax at 25.5% (1999 - Nil) (16,103,437) – (16,103,437) –First and final ordinary dividend of 8%
(1999 - 8%) less tax at25.5% (1999 - 26%) (8,588,500) (8,530,859) (8,588,500) (8,530,859)
(24,691,937) (8,530,859) (24,691,937) (8,530,859)
Retained profits carried forward 15 116,226,853 113,258,012 231,904,413 171,099,981
Retained inCompany 116,226,853 113,258,012Subsidiaries 70,430,638 21,422,099Associated companies 45,246,922 36,419,870
231,904,413 171,099,981
Earnings per share (cents)(basic and diluted) includingextraordinary item 19 14.85 cents 2.42 cents
Earnings per share (cents)(basic and diluted) excludingextraordinary item 19 14.85 cents 2.44 cents
The annexed notes form an integral part of and should be read in conjunction with these financial statements
profit & loss accountsfor the financial year ended 31st March 2000
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20 Kim Eng Annual Report 2000
2000 1999$ $
Cash Flows from Operating Activities
Profit before taxation 104,439,246 21,291,408
Adjustments for:
Amortisation of Seat in Exchange 1,687,707 1,710,011
Depreciation of fixed assets 3,536,369 3,531,708
Profit on disposal of fixed assets (192,461) (11,688)
Fixed assets written off 388,425 66
Provision for diminution in value of investments 568 119,304
Provision for diminution in value of investments no longer required (5,862,675) (1,412,157)
Provision for doubtful debts (net) – trade 2,195,364 3,051,547
– others – 1,291,740
Provision for doubtful debts no longer required (net)
– others (700,107) –
Interest income (23,533,960) (18,057,932)
Interest expense 8,271,175 14,043,713
Share of profits of associated companies (19,611,252) (9,038,248)
Exchange differences (303,440) 3,137,451
Operating profit before working capital changes 70,314,959 19,656,923
Increase in operating receivables (102,402,630) (31,286,319)
Increase in operating payables 109,369,707 63,512
Decrease/(increase) in investments 19,768,793 (16,497,228)
Increase/(decrease) in trust account creditors 2,109,149 (822,885)
Cash generated from/(used in) operations 99,159,978 (28,885,997)
Payment of income tax (5,102,961) (6,929,815)
Interest paid (11,554,127) (10,757,902)
Interest received 26,065,333 15,725,662
Net cash generated from/(used in) operating activities 108,568,223 (30,848,052)
Cash Flows from Investing Activities
Dividends received 15,500,251 18,837,635
Acquisition of additional shares in associated companies – (16,814,980)
Proceeds from disposal of shares in associated company 366,712 –
Proceeds from disposal of fixed assets 700,131 40,268
Purchase of fixed assets (5,281,037) (1,043,768)
Acquisition of unquoted long-term investments (5,156,000) (575,000)
Proceeds from disposal of interest in subsidiary net of cash (Note B) – 431,809
Acquisition of subsidiary net of cash balance acquired (Note C) 3,855,798 (42,353,052)
Net cash generated from/(used in) investing activities 9,985,855 (41,477,088)
Total carried forward 118,554,078 (72,325,140)
for the financial year ended 31st March 2000
consolidated cash flow statement
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KIM ENG HOLDINGS LIMITED
(Incorporated in the Republic of Singapore)AND ITS SUBSIDIARIES
Kim Eng Annual Report 2000 21
2000 1999$ $
Total brought forward 118,554,078 (72,325,140)
Cash Flows from Financing Activities
Payment of dividend (8,530,859) (8,579,703)
Repayment of loan by associated companies 26,080,643 17,163,352
Net cash generated from financing activities 17,549,784 8,583,649
Net increase/(decrease) in cash and cash equivalents 136,103,862 (63,741,491)
Cash and cash equivalents at beginning (Note A) 264,510,905 328,252,396
Cash and cash equivalents at end (Note A) 400,614,767 264,510,905
NOTE:
A. Cash and Cash Equivalents
Cash and cash equivalents consist of fixed deposits, cash and bank balances including trust account balances net of
bank borrowings. Cash and cash equivalents in the above consolidated cash flow statement comprise the following
balance sheet amounts:
2000 1999$ $
Fixed deposits 370,055,685 293,883,805
Cash and bank balances 22,493,479 6,921,224
Trust account bank balances 9,358,147 7,248,998
Bank borrowings (1,292,544) (43,543,122)
400,614,767 264,510,905
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B. Disposal of a subsidiary
The net assets/liabilities disposed of on disposal of shares in a subsidiary comprise the following:
2000 1999$ $
Fixed assets – 686,372
Seats in stock exchange – 275,600
Quoted investments – 5,229
Trade debtors – 1,211,162
Other debtors – 500,195
Cash and bank balances – 268,223
Trade creditors – (1,158,422)
Other creditors – (269,147)
Net assets of subsidiary at date of disposal – 1,519,212
Minority interest – (729,222)
– 789,990
Loss on disposal of subsidiary – (89,958)
Proceeds – 700,032
Cash and cash equivalents in subsidiary disposed of – (268,223)
– 431,809
for the financial year ended 31st March 2000
consolidated cash flow statement (cont’d)
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KIM ENG HOLDINGS LIMITED
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Kim Eng Annual Report 2000 23
C. Acquisition of a subsidiary
During the financial year, the net assets/liabilities acquired on acquisition of shares in a subsidiary comprise the
following:
2000 1999$ $
Fixed assets 47,726 3,895,443
Investment/Seats in stock exchange 12,300 2,973,932
Quoted investments 553,123 2,837,120
Trade debtors 12,180,917 4,828,077
Other debtors 52,339 26,177,381
Cash and bank balances 2,325,619 3,578
Fixed deposits 1,723,779 11,623,240
Trade creditors (13,253,420) (1,382,109)
Other creditors (77,575) (551,838)
Bank borrowings – (48,859,870)
Net assets of subsidiary at date of acquisition 3,564,808 1,544,954
(Less)/add:
(Reserve)/goodwill on acquisition (1,232,323) 3,575,046
Minority interest (712,961) –
Amount previously included in “Investment in associated company” (1,425,924) –
Cash paid on acquisition 193,600 5,120,000
Cash and cash equivalents of subsidiary acquired (4,049,398) 37,233,052
(3,855,798) 42,353,052
The annexed notes form an integral part of and should be read in conjunction with these financial statements
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24 Kim Eng Annual Report 2000
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a Accounting convention
The financial statements of the Company which is incorporated in the Republic of Singapore, expressed inSingapore dollars, are prepared in accordance with the historical cost convention.
b Consolidation
The accounting financial year of the Company and its subsidiaries ends on 31st March.
Consolidated financial statements include the financial statements of subsidiaries, details of which are givenin Note 4 to the financial statements. Intercompany transactions and balances are eliminated on consolidatedand the consolidated financial statements reflect external transactions and balances only. The results ofsubsidiaries acquired or disposed of are included or excluded from the consolidated profit and loss accountfrom the effective date of acquisition or disposal.
c Goodwill/reserve arising on consolidation
Goodwill/reserve arising on consolidation represents the excess/deficit of the consideration paid over thefair value of net tangible assets of subsidiaries or associated companies acquired at the date of acquisition.It is not available for distribution as dividends and is recorded directly in other reserves. Reserve or goodwillarising on the acquisition of foreign subsidiaries or associated companies are expressed in Singapore dollarsat the date of acquisition. Subsequent adjustments to the initial recognition of fair values of assets andliabilities acquired are adjusted directly to goodwill/reserve arising on consolidation up to the end of the firstannual accounting period commencing after the acquisition. After this date, any adjustments are recognisedin the profit and loss account of the current period.
d Taxation
The liability method of tax effect accounting is adopted by the Group. Deferred taxation, if material, isprovided at current taxation rate on significant timing differences existing at the end of the financial year.
Deferred tax assets are not recognised unless they are offset by deferred tax liabilities or there is reasonablecertainty of their realisation in future periods.
e Fixed assets and depreciation
Fixed assets are stated at cost less accumulated depreciation. Depreciation is computed utilising the straight-line method to write off the cost of these assets over their estimated useful lives as follows:
31st March 2000
notes to the financial statements
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KIM ENG HOLDINGS LIMITED
(Incorporated in the Republic of Singapore)AND ITS SUBSIDIARIES
Kim Eng Annual Report 2000 25
Freehold buildings and improvements 1.5 – 31.5 years
Leasehold properties Life of lease, subject to a maximum of 99 years
Motor vehicles 5 years
Office equipment 3 – 10 years
Furniture and fittings 3 – 10 years
Computer and related equipment 3 – 6 years
Electrical fittings 10 years
No depreciation is provided on freehold land. Fully depreciated fixed assets are retained in the books of
accounts until they are no longer in use.
The carrying amount of fixed assets are reviewed yearly in order to assess whether the carrying amounts need
to be written down to their recoverable amounts.
f Interest in subsidiaries
A subsidiary is defined as a company in which the Group has a long-term equity interest of more than 50% or
over whose financial and operating policy decisions the Group controls.
Investments in subsidiaries are stated at cost. Provision is made for other than temporary diminution in value
on an individual subsidiary basis.
g Interest in associated companies
An associated company is defined as a company, not being a subsidiary, in which the Group has a long-term
interest of 20% to 50% of the equity and over whose financial and operating policy decisions the Group
exercises significant influence.
Investments in associated companies at company level are stated at cost. Provision is made for other than
temporary diminution in value on an individual associated company basis.
The Group’s share of the results of the associated companies, based on the latest available financial
statements, is included in the consolidated profit and loss account. The Group’s share of the post-acquisition
profits and reserves of associated companies is reflected in the book values of the investments in the
consolidated balance sheet. Any goodwill on acquisition is written off directly to reserves.
Where financial statements of associated companies with different reporting dates are used, adjustments
are made for the effects of any significant events or transactions between the Group and the associated
companies that occur between the date of the associated companies’ financial statements and the Company’s
balance sheet date.
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26 Kim Eng Annual Report 2000
g Interest in associated companies (cont’d)
Where the associated companies adopt different accounting policies, adjustments are made to the associated
companies’ financial statements when they are equity accounted for to comply with the Group’s policies if
the differences are significant to the Company or the Group.
h Investments/Seats in Foreign Exchanges
Investment in Singapore Exchange Limited
In accordance with the Bye-Laws of the Stock Exchange of Singapore Limited, the seat in the Stock Exchange
of Singapore Limited was stated at its written down value of $1. The investment in Singapore Exchange
Limited is similarly stated.
The seats in the Singapore International Monetary Exchange Limited were stated at cost. It has been
exchanged for an investment in Singapore Exchange Limited which is similarly stated. The investment and
seats in the Jakarta Stock Exchange and Stock Exchange of Thailand Limited are stated at cost, and cost less
amortisation respectively.
Provisions are made for other than temporary diminution in value, if any, for these investments.
i Unquoted investments
Unquoted investments held on a long-term basis or as current assets are stated at cost. Provision is made for
other than temporary diminution in value, if any, on an individual investment basis.
j Quoted investments
Quoted investments held on long-term basis or as current assets are stated at the lower of cost and market
value on an individual investment basis.
k Debtors
Specific provisions are made for accounts considered doubtful and a general provision is made on total
debtors.
l Income recognition
i a Dividend income receivable from subsidiaries and associated companies is recognised on accrual basis.
b Dividend income from other investments is recognised on receipt basis.
ii Interest income is recognised on the accrual basis except for interest income on late payment and interest
income on outstanding amounts where recoverability is not certain which is recognised on a receipt basis.
iii Brokerage and similar income is recognised when the underlying transaction is contracted.
31st March 2000
notes to the financial statements (cont’d)
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KIM ENG HOLDINGS LIMITED
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Kim Eng Annual Report 2000 27
m Operating leases
Rentals under operating leases are charged to the profit and loss account on a straight-line basis over the
lease term.
n Pension
A subsidiary operates a defined contribution pension scheme covering the majority of that subsidiary’s
employees. Contributions are accounted for as they become payable.
o Conversion of foreign currencies
i Monetary assets and liabilities in foreign currencies except for foreign currency assets and liabilities
hedged by forward exchange contracts are translated into Singapore dollars at rates of exchange closely
approximating those ruling at balance sheet date. Foreign currency assets and liabilities hedged by forward
exchange contracts are translated into Singapore dollars at the contracted forward exchange rates at the
date of transaction and hedged monetary assets and liabilities are not retranslated at balance sheet date.
Other transactions in foreign currencies are converted at rates closely approximating those ruling at
transaction dates. Exchange differences are taken to the profit and loss account except that where a
monetary item in substance forms part of the company’s net investment in the foreign subsidiaries and
associated companies, exchange differences arising from such a monetary item are taken directly to
exchange fluctuation reserve to the extent that the net investment is represented by net assets in the foreign
entity until the disposal of the investments.
ii For inclusion in the consolidated financial statements, financial statements of foreign subsidiaries and
associated companies are translated into Singapore dollars at the Company’s financial year end exchange
rates. All exchange differences due to such currency translations are recorded in an exchange fluctuation
reserve. Exchange fluctuation reserves are not available for distribution as dividends.
2. PRINCIPAL ACTIVITIES AND TURNOVER
The principal activity of the Company is that of investment holding. The principal activities of the subsidiaries
consist of those of stockbrokers, sharebrokers and dealers in stocks, shares and investments of all kinds, acting
as nominees for beneficial shareholders, investment holding, investment advisers, property investment, money
lending, margin financing and management of internal funds.
Turnover of the Company represents mainly dividend income as well as interest income. Turnover of the
subsidiaries represents mainly net income on brokerage as well as profit on share trading, underwriting
commission, placement fees, share registration fees, dividends received, interest income, rental income and
service fees. Transactions within the group are excluded. Turnover excludes applicable goods and services
tax and is detailed as follows:
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28 Kim Eng Annual Report 2000
2. PRINCIPAL ACTIVITIES AND TURNOVER (cont’d)2000 1999
The Company $ $
Interest income 4,044,389 8,110,854
Dividend income 38,366,466 46,025,337
42,410,855 54,136,191
The Group
Net brokerage income 156,101,194 46,739,446
Profit on share trading 30,777,015 4,127,289
Underwriting commission 680,502 489,779
Placement fees 1,972,125 106,411
Share registration fees 11,203 79,240
Dividend income 484,167 700,668
Interest income 23,533,960 18,057,933
Rental income 16,660 67,293
Service fees 436,648 131,105
Facility fee income – 2,223,150
214,013,474 72,722,314
31st March 2000
notes to the financial statements (cont’d)
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KIM ENG HOLDINGS LIMITED
(Incorporated in the Republic of Singapore)AND ITS SUBSIDIARIES
Kim Eng Annual Report 2000 29
3. FIXED ASSETS
Notes:
a The Company has no fixed assets.
b The freehold land comprise:
Location Area
406 East 50th Street, 167 sq. metres
New York,
United States of America
Precha Village 1,984 sq. metres
Srinakarin Road,
Bangkeaw, Bangpee District,
Samutprakan Province,
Thailand
c The freehold buildings and improvements comprise:
Location Description Area
406 East 50th Street, Office building 446 sq. metres
New York, on freehold land
United States of America (Note b)
d The leasehold properties comprise:
Location Description Area Tenure
45 Lowndes Square, 1 residential 84 sq. metres originally 75 years
London, apartment commencing 5th
United Kingdom September 1984
but now extended for
another 150 years from
10th December 1998
9 Temasek Boulevard, 9 office units 3,563 sq. metres 99 years commencing
Suntec Tower Two, 1st March 1989
Singapore
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30 Kim Eng Annual Report 2000
31st March 2000
notes to the financial statements (cont’d)
3. FIXED ASSETS (cont’d)Freehold
Freehold buildings and Leaseholdland improvements properties
The Group $ $ $
Cost
Balance at 1.4.1999 1,600,748 3,732,684 64,227,468
Additions 338,525 158,117 130,180
Disposals – (472,450) –
Fixed assets written off – – –
Adjustment on acquisition of a subsidiary – – –
Exchange differences (12,481) (32,685) –
Balance at 31.3.2000 1,926,792 3,385,666 64,357,648
Accumulated depreciation
Balance at 1.4.1999 – 1,053,133 2,878,949
Depreciation for the year – 171,156 696,588
Released on disposals – (31,496) –
Fixed assets written off – – –
Adjustment on acquisition of a subsidiary – – –
Exchange differences – (10,240) –
Balance at 31.3.2000 – 1,182,553 3,575,537
Depreciation for 1999 – 172,827 694,908
Net book value
At 31.3.2000 1,926,792 2,203,113 60,782,111
At 31.3.1999 1,600,748 2,679,551 61,348,519
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KIM ENG HOLDINGS LIMITED
(Incorporated in the Republic of Singapore)AND ITS SUBSIDIARIES
Kim Eng Annual Report 2000 31
Furniture ComputerMotor Office and and related Electrical
vehicles equipment fittings equipment fittings Total$ $ $ $ $ $
2,734,780 3,900,219 5,932,955 9,132,593 1,261,310 92,522,757
937,800 994,017 456,947 2,265,451 – 5,281,037
(412,764) (87,728) (65,968) (238,709) – (1,277,619)
– (12,119) (5,047) (557,283) – (574,449)
50,604 21,884 – 28,712 – 101,200
(128) (38,067) (26,449) (84,480) – (194,290)
3,310,292 4,778,206 6,292,438 10,546,284 1,261,310 95,858,636
2,147,097 2,171,381 3,211,302 6,565,623 377,977 18,405,462
219,450 499,398 487,222 1,343,790 118,765 3,536,369
(368,821) (83,737) (47,186) (238,709) – (769,949)
– (6,921) (5,047) (174,056) – (186,024)
30,174 9,087 – 14,213 – 53,474
710 (22,848) (20,700) (60,954) – (114,032)
2,028,610 2,566,360 3,625,591 7,449,907 496,742 20,925,300
379,122 382,560 473,800 1,302,360 126,131 3,531,708
1,281,682 2,211,846 2,666,847 3,096,377 764,568 74,933,336
587,683 1,728,838 2,721,653 2,566,970 883,333 74,117,295
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32 Kim Eng Annual Report 2000
4. INTEREST IN SUBSIDIARIES2000 1999
The Company $ $
Unquoted equity investments, at cost 116,709,217 112,565,213
Amounts owing by subsidiaries 109,951,986 121,355,980
226,661,203 233,921,193
Amounts owing by subsidiaries represent advances and are unsecured, interest-free and are not expected to be
repaid within one year.
The subsidiaries are as follows:Country of Effectiveincorporation/ percentage of Cost of investment
Name Principal activities place of business equity held held by the Company2000 1999 2000 1999
% % $ $
Kim Eng Stockbrokers, sharebrokers Singapore 100 100 64,042,509 64,042,509
Securities and dealers in stocks,
(Private) shares and investments
Limited of all kinds
* Kim Eng Acting as nominees for Singapore 100 100 – –
Securities beneficial shareholders
Nominees
Pte. Ltd.
* Kim Eng Dormant Singapore 100 100 – –
Research
Pte. Ltd.
Kim Eng Property investment Singapore 100 100 8,000,000 8,000,000
Properties
Pte Ltd
**@ Kim Eng Property investment United States 100 100 – –
Properties of America
USA, Inc
Kim Eng Futures brokers and Singapore 100 100 5,000,000 5,000,000
Futures advisers and dealers
Pte Ltd in futures contracts
Kim Eng Money lending and Singapore 100 100 2 2
Finance margin financing
(Singapore)
Pte Ltd
31st March 2000
notes to the financial statements (cont’d)
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KIM ENG HOLDINGS LIMITED
(Incorporated in the Republic of Singapore)AND ITS SUBSIDIARIES
Kim Eng Annual Report 2000 33
Country of Effectiveincorporation/ percentage of Cost of investment
Name Principal activities place of business equity held held by the Company2000 1999 2000 1999
% % $ $
** Kim Eng Margin financing Hong Kong 100 100 1,253,487 1,253,487
Finance and management
(Hong Kong) of surplus funds
Limited
** Kim Eng Dormant Hong Kong 100 100 1 1
Investment
Limited
** Kim Eng Dealing in securities United States 100 100 4,256,119 4,256,119
Securities of America
USA, Inc.
** Kim Eng Dealing in securities United 100 100 1,844,033 1,844,033
Securities Kingdom
(London)
Limited
** Kim Eng Dealing in securities Thailand 100 100 28,169,062 28,169,062
Securities
(Thailand)
Limited
*** P.T. Kim Eng Dealing in securities Indonesia 80 40 4,144,000 –
Securities
[formerly known
as P.T. KES Sinar
Mas Securities,
an associated
company]
KE Swan & Co. Dormant Singapore 100 – 2 –
Pte Ltd
KE Strategic Dormant Singapore 100 – 2 –
Pte Ltd
116,709,217 112,565,213
* These are subsidiaries of Kim Eng Securities (Private) Limited.
** These subsidiaries are audited by affiliated firms of Grant Thornton International.
*** This subsidiary is audited by another firm.
@ This is a subsidiary of Kim Eng Properties Pte Ltd.
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34 Kim Eng Annual Report 2000
5. INTEREST IN ASSOCIATED COMPANIES
The Company The Group2000 1999 2000 1999
$ $ $ $
Unquoted equity investments, at cost 35,754,108 40,167,009 35,754,108 40,167,009
Quoted equity investment, at cost
(market value $48,287,295;
1999 - $24,335,730) 4,528,389 4,528,389 4,528,389 4,528,389
Share of revaluation reserve – – 1,078,073 1,511,286
Share of post acquisition statutory
reserve funds – – 65,785 65,785
Ø Share of other post acquisition
retained reserves – – 45,246,922 36,419,870
Exchange difference on translation – – 2,070,424 248,729
Goodwill on acquisition – – (6,359,786) (6,404,941)
40,282,497 44,695,398 82,383,915 76,536,127
Ø Included in the other post acquisition retained reserves is an amount of $19,801,584 (1999 - $20,070,627)
which is not distributable as cash dividends.
The associated companies are as follows:Country of Effectiveincorporation/ percentage of
Name Principal activities place of business equity held2000 1999
% %
KE-ZAN Holdings Berhad Investment holding Malaysia 47 47
* KE-ZAN Securities Sdn. Bhd. Dealing in securities Malaysia 47 47
* KE-ZAN Futures Sdn. Bhd. Dormant Malaysia 47 47
** K.E. Malaysian Capital Investment advisers Malaysia 28 –
Partners Sdn. Bhd.
*** KE-ZAN Nominees Acting as nominees Malaysia 47 47
(Tempatan) Sdn. Bhd. for beneficial shareholders
*** KE-ZAN Nominees Acting as nominees Malaysia 47 47
(Asing) Sdn. Bhd. for beneficial shareholders
P.T. Kim Eng Securities
(formerly known as
P.T. KES Sinar
Mas Securities) Dealing in securities Indonesia – 40
31st March 2000
notes to the financial statements (cont’d)
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KIM ENG HOLDINGS LIMITED
(Incorporated in the Republic of Singapore)AND ITS SUBSIDIARIES
Kim Eng Annual Report 2000 35
The associated companies are as follows:Country of Effectiveincorporation/ percentage of
Name Principal activities place of business equity held2000 1999
% %
Kim Eng Holdings Investment holding Hong Kong 50 50
(Hong Kong) Limited
+ Kim Eng Securities Dealing in securities Hong Kong 50 50
(Hong Kong) Limited
+ Kim Eng Capital Investment advisers Hong Kong 50 50
(Hong Kong) Limited
+ Kim Eng Futures Futures contracts brokers Hong Kong 50 50
(Hong Kong) Limited
++ Kim Eng Nominees Nominees services Hong Kong 50 50
(Hong Kong) Limited
ATR-Kim Eng Investment holding Philippines 43 43
Capital Partners, Inc.
@ ATR-Kim Eng Dealing in securities Philippines 43 43
Securities Inc.
@ ATR-Kim Eng Stock trading Philippines 43 43
Direct Investments Inc.
@ ATR-Kim Eng Dormant Philippines 43 43
Derivatives Inc.
@@ ATR-Kim Eng Fixed Dormant Philippines 30 –
Income Inc.
Clarendon Pacific Dormant Singapore 50 50
Property Pte Ltd
NNKE & Partners Limited Consultancy services Thailand – 50
* These are wholly owned subsidiaries of KE-ZAN Holdings Berhad.
** This is a subsidiary of KE-ZAN Holdings Berhad.
*** These are wholly owned subsidiaries of KE-ZAN Securities Sdn. Bhd.
+ These are wholly owned subsidiaries of Kim Eng Holdings (Hong Kong) Limited.
++ This is a wholly owned subsidiary of Kim Eng Securities (Hong Kong) Limited.
@ These are wholly owned subsidiaries of ATR-Kim Eng Capital Partners Inc.
@@ This is a subsidiary of ATR-Kim Eng Capital Partners Inc.
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6. INVESTMENT IN SINGAPORE EXCHANGE LIMITED
Prior to 1st December 1999, the Group had one share each in the Stock Exchange of Singapore Limited
(“SES”) and Securities Clearing and Computer Services (Pte) Ltd (“SCCS”), stated at a value of $2. The Group’s
investment and seat in Singapore International Monetary Exchange Limited (“SIMEX”) comprisng one share
and three seats in SIMEX, was stated at cost of $250,000.
On 1st December 1999, SES merged with SIMEX to form the Singapore Exchange Limited (“SGX”). All seats
and existing shares held by member companies in SES, SCCS and SIMEX were reduced by cancellation and
exchanged for an equivalent equity investment in SGX. The shares in SGX are stated at the carrying value of
$250,002.
7. INVESTMENTS/SEATS IN OTHER EXCHANGES2000 1999
The Group $ $
Stock Exchanges
Stock Exchange of Singapore Limited – 1
Stock Exchange of Thailand, at cost 6,705,376 6,705,376
Accumulated amortisation as at beginning/
date of acquisition of subsidiary (4,995,365) (3,731,444)
Amortisation during the year (1,687,707) (1,710,011)
Exchange differences on translation (22,304) 446,090
– 1,710,011
Jakarta Stock Exchange (Indonesia), at cost 12,300 –
Exchange differences on translation 1,200 –
13,500 –
Futures Exchange
The Singapore International Monetary Exchange Limited,
at cost (Note 6) – 210,000
13,500 1,920,012
31st March 2000
notes to the financial statements (cont’d)
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KIM ENG HOLDINGS LIMITED
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Kim Eng Annual Report 2000 37
8. LONG-TERM INVESTMENTSThe Company The Group
2000 1999 2000 1999$ $ $ $
Unquoted equity investments, at cost 5,156,000 – 5,156,000 40,001
Unquoted bonds, at cost 575,000 575,000 575,000 575,000
5,731,000 575,000 5,731,000 615,001
9. CURRENT ASSETSThe Company The Group
2000 1999 2000 1999NOTE $ $ $ $
Investments 20 – – 21,652,738 35,000,587
Trade debtors 21 – – 309,111,136 184,327,547
Loan to a subsidiary 22 2,008,341 24,899,969 – –
Amount owing by associated
companies – advances 5,227,861 31,308,504 5,227,861 31,308,504
Dividends receivable 29,581,573 21,383,881 6,248,174 14,990,281
Deposits, prepayments
and other debtors 23 1,763,687 43,697 38,260,358 41,914,794
Fixed deposits 179,443,329 116,049,345 370,055,685 293,883,805
Cash and bank balances 1,315,328 395,099 22,493,479 6,921,224
Trust account bank balances – – 9,358,147 7,248,998
219,340,119 194,080,495 782,407,578 615,595,740
The advances owing by associated companies are unsecured, interest-free [except for advances totalling $5,227,861
(1999 - $31,026,019) to one associated company which bears interest at 7.5% (1999 - 7.5% to 9.25%) per annum]
and have no fixed terms of repayment.
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10. CURRENT LIABILITIESThe Company The Group
2000 1999 2000 1999NOTE $ $ $ $
Trade creditors 3,386,444 3,376,630 277,860,607 156,159,799
Other creditors 944,182 944,182 4,740,767 7,023,325
Provision for taxation 2,271,208 2,668,208 21,163,437 10,792,402
Proposed dividends 24,691,937 8,530,859 24,691,937 8,530,859
Borrowings from
financial institutions 24 – – 1,292,544 43,543,122
Trust account creditors – – 9,358,147 7,248,998
31,293,771 15,519,879 339,107,439 233,298,505
11. UNSECURED BONDS
The Company and The Group 2000 1999$ $
Unsecured bonds, principal amount 100,000,000 100,000,000
The $100,000,000 5.5% unsecured bonds due 2002 are constituted by a trust deed dated 18th September 1997.
The bonds were offered by way of placement to persons falling within the ambit of Sections 106C and/or 106D
of the Companies Act, Chapter 50 in bearer form with interest coupons attached and in the denomination of
$250,000 each. They were issued at 99.468% of the principal amount. The bonds bear interest at the fixed rate
of 5.5% per annum payable annually in arrears each year up to and including the year 2002. The discount on
the issue was written off to profit and loss account in the financial year 1998.
The bonds constitute direct, unconditional and unsecured obligations of the Company ranking pari passu as a
single class without any preference or priority among themselves and ranking pari passu with all other present
and future unsecured obligations (other than subordinated obligations and priorities created by law or trust deed)
of the Company from time to time outstanding.
Unless previously redeemed or purchased and cancelled the bonds will be redeemed at par on 18 September
2002.
As long as $10 million principal amount of the bonds remain outstanding:
31st March 2000
notes to the financial statements (cont’d)
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(Incorporated in the Republic of Singapore)AND ITS SUBSIDIARIES
Kim Eng Annual Report 2000 39
a the adjusted total capital and reserves as defined in the trust deed must not be less than $180 million;
b the consolidated total liabilities as defined in the trust deed shall not exceed four times the adjusted total
capital and reserves as defined in the trust deed;
c the total borrowings as defined in the trust deed shall not exceed three times the adjusted total capital and
reserves as defined in the trust deed; and
d the restrictions as defined in the trust deed in the creation of any mortgage, charge, pledge or other security
over any part of assets, properties or undertakings must be observed.
As long as any part of the bond remains outstanding, the profit before interest and tax of the Company must be
at least one and a half times the interest expense of the Company in accordance with the trust deed.
12. DEFERRED TAXATIONThe Company The Group
2000 1999 2000 1999$ $ $ $
Balance at beginning – – 6,926 12,844
Transfer to
profit and loss account (Note 17) – – – (6,926)
Exchange difference on translation – – (54) 1,008
Balance at end – – 6,872 6,926
The balance is due to tax on
excess of capital allowances
over book depreciation
of qualifying fixed assets – – 6,872 6,926
No deferred taxation has been provided on foreign dividend income not remitted to Singapore as the Company
has no intention of remitting this income. Deferred taxation, if provided, on the cumulative foreign dividend
income not remitted would amount to approximately $9,319,000 (1999 - $8,000,000).
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13. SHARE CAPITAL
The Company and The Group 2000 1999No. of shares $ No. of shares $
Authorised:
Ordinary shares of $0.25 each 800,000,000 200,000,000 800,000,000 $200,000,000
Issued and fully paid:
Ordinary shares of $0.25 each 576,409,388 144,102,347 576,409,388 $144,102,347
14. CAPITAL RESERVESThe Company The Group
2000 1999 2000 1999$ $ $ $
i Gain on disposal of quoted/
unquoted equity investments
Balance at beginning 31,069,402 30,937,632 13,393,636 13,483,594
Transfer from/(to)
profit and loss account:
Gain/(loss) on disposal of shares
in a subsidiary – 131,770 – (89,958)
Balance at end 31,069,402 31,069,402 13,393,636 13,393,636
ii Revaluation reserve
Balance at beginning – – 1,511,286 1,511,286
Loss on revaluation of an
associated company’s seats in
exchanges during the year – – (433,213) –
Balance at end – – 1,078,073 1,511,286
Total capital reserves at end 31,069,402 31,069,402 14,471,709 14,904,922
Total transfer from/(to)
profit and loss account – 131,770 – (89,958)
These reserves are not available for distribution as dividends.
31st March 2000
notes to the financial statements (cont’d)
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Kim Eng Annual Report 2000 41
15. OTHER RESERVESThe Company The Group
2000 1999 2000 1999$ $ $ $
i Reserve funds
Balance at beginning – – 43,959,385 42,085,385
Transfer from profit and
loss account – – 77,700 1,874,000
Balance at end – – 44,037,085 43,959,385
ii (Goodwill)/reserve arising on consolidation
Balance at beginning – – (8,023,201) (3,423,961)
Adjustment against goodwill
on waiver of debts of a subsidiary
by a third party – – 9,761,000 –
Reserve/(goodwill) on acquisition
of a subsidiary – – 1,232,323 (3,575,046)
Reserve written off on disposal
of interest in a subsidiary – – – (12,504)
Goodwill on acquisition of
associated company – – (6,197) (1,443,035)
Reserve on acquisition of additional
shares in an associated company – – – 423,440
Amortisation of goodwill by
associated company – – 51,352 7,905
Balance at end – – 3,015,277 (8,023,201)
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15. OTHER RESERVES (cont’d)The Company The Group
2000 1999 2000 1999$ $ $ $
iii Exchange fluctuation reserve
Balance at beginning – – 112,864 (6,520,428)
Transfer from profit and loss
account on disposal of :
– a subsidiary – – – 262,451
– an associated company – – 8,006 –
Translation differences
during the year – – (1,254,059) 6,370,841
Balance at end – – (1,133,189) 112,864
iv Retained profits 116,226,853 113,258,012 231,904,413 171,099,981
Total other reserves at end of year 116,226,853 113,258,012 277,823,586 207,149,029
Total transfer from
profit and loss account
(excluding retained profits) – – 85,706 2,123,947
The reserve funds are set up in compliance with the rules of various exchanges. They are not available for
distribution as dividends.
31st March 2000
notes to the financial statements (cont’d)
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Kim Eng Annual Report 2000 43
16. OPERATING PROFIT BEFORE TAXATIONThe Company The Group
2000 1999 2000 1999$ $ $ $
The operating profit before taxation has been arrived at
After charging:
Auditors’ remuneration:
Auditors of the Company
– audit fee
– current year 16,000 14,000 74,100 61,900
– underprovision
in respect of prior year 2,000 – 2,000 –
– non-audit fee 13,776 4,000 35,476 28,380
Other firms of auditors
audit fee – – 121,563 80,565
non-audit fee – – 17,180 19,601
Amortisation of Seat in Exchange (Note 7) – – 1,687,707 1,710,011
Bad debts – trade – – 2,590,644 –
Depreciation of fixed assets (Note 3) – – 3,536,369 3,531,708
Directors’ remuneration:
Directors of the Company
– directors’ fee 80,000 70,000 80,000 70,000
– other emoluments – – 11,345,932 4,698,079
Other directors of subsidiaries
– other emoluments – – 1,086,674 1,194,719
Exchange loss 240,582 – – –
Fixed assets written off – – 388,425 66
Interest expense
– bank overdraft – 127 138,041 2,074
– bank loan – – 2,617,264 5,213,952
– bonds 5,500,000 5,500,000 5,500,000 5,500,000
– others – – 15,870 3,327,687
Loss on disposal of fixed assets – – 8,700 7,154
Provision for diminution in value of
quoted equity investments (Note 20) – – 568 119,304
Provision for doubtful debts
– trade (Note 21) – – 25,785,226 3,533,992
– non-trade (Note 23) – – 98,632 1,291,740
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16. OPERATING PROFIT BEFORE TAXATION (cont’d)The Company The Group
2000 1999 2000 1999$ $ $ $
and crediting:
Bad debts recovered – trade – – 9,258 39,961
Exchange gain – 2,135,520 1,711,719 3,206,356
Gross dividend from
– unquoted subsidiaries 31,320,000 8,694,541 – –
– unquoted associated company 1,122,870 18,439,472 – –
– quoted associated company 5,923,596 18,891,324 – –
– other quoted equity investments – – 484,167 700,668
Interest income
– fixed deposits 3,098,485 5,629,045 5,915,793 11,978,856
– unquoted associated companies 883,402 2,476,295 883,402 2,477,778
– bonds 55,000 – 55,000 –
– margin clients/term loans – – 14,275,084 1,428,740
– others 7,502 5,514 2,404,681 2,172,559
Profit on disposal of fixed assets – – 201,161 18,842
Provision for diminution in value of investment
no longer required (Note 20) – – 5,862,675 1,412,157
Provision for doubtful debts no longer required
– trade (Note 21) – – 23,589,862 482,445
– non-trade (Note 23) – – 798,739 –
Operating profit for the Group includes the profit/(loss) of:
a Subsidiaries acquired during 1999
– Kim Eng Securities (Thailand) Limited – – 16,506,448 (2,861,302)
[formerly known as Nithipat Capital
& Securities Company Limited]
– Kim Eng Finance (Singapore) Pte Ltd – – 1,632,860 –
[commenced operations only in 2000]
b Subsidiary disposed of during 1999
– Kim Eng Securities Philippines, Inc. – – – (112,413)
c Subsidiary acquired during 2000
– P.T. Kim Eng Securities – – 321,534 –
[formerly known as P.T. KES Sinar Mas
Securities and formerly a 40%
owned associated company]
31st March 2000
notes to the financial statements (cont’d)
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Kim Eng Annual Report 2000 45
17. TAXATIONThe Company The Group
2000 1999 2000 1999$ $ $ $
Current taxation:
Singapore
(including tax deducted at source) 8,567,004 8,591,014 14,735,858 6,024,298
Foreign – – 625,197 390,320
Associated companies – – 3,449,971 899,627
Deferred taxation (Note 12) – – – (6,926)
Overprovision of current taxation
in respect of prior year – – (63,183) (12,507)
8,567,004 8,591,014 18,747,843 7,294,812
The tax expense of the Company is less than the amount determined by applying the Singapore statutory rate of
income tax to profit before taxation. This is mainly because no taxation has been provided on foreign dividend
income not remitted to Singapore as the Company has no intention of remitting this income.
The tax expense of the Group is less than the amount determined by applying the Singapore statutory rate of
income tax to profit before taxation due to utilisation of unabsorbed tax losses carried forward in a foreign
subsidiary, lower overseas tax rates and unremitted foreign dividend income. Subject to agreement with the
relevant tax authorities, the Group has unabsorbed tax losses as at 31st March 2000 of $47,004,000 available
for offset against future taxable profit provided that the provisions of the relevant countries’ tax legislations are
complied with.
18. EXTRAORDINARY ITEMThe Company The Group
2000 1999 2000 1999$ $ $ $
Gain/(loss) on disposal of shares
in a subsidiary – 131,770 – (89,958)
Loss on disposal of shares in an
associated company (96,288) – (6,916) –
There is no taxation or minority interest applicable to the above items.
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46 Kim Eng Annual Report 2000
19. EARNINGS PER SHARE
The Group
The basic earnings per share figures are calculated based on the profit attributable to members of the company,
as well as profit before extraordinary item of $85,582,075 (1999 - $13,960,595) and $85,588,991 (1999 -
$14,050,553), respectively, divided by the weighted average number of shares during the financial year of
576,409,388 (1999 - 576,409,388) ordinary shares in issue.
There are no factors giving rise to a dilution in earnings per share.
20. INVESTMENTS2000 1999
The Group $ $
Quoted equity investments, at cost
[market value $23,837,987 (1999 - $41,844,790)] 26,493,685 52,105,214
Quoted debentures, at cost
[market value $Nil (1999 - $675,652)] – 699,813
Quoted bonds, at cost
[market value $2,105,320 (1999 - $Nil)] 2,105,320 –
Unquoted equity investments, at cost 763,628 773,727
Unquoted bonds, at cost 5,000,000 –
Provision for diminution in value of investments
Balance at beginning 18,578,168 19,484,561
Provision for the year 568 119,304
Provision no longer required (5,862,675) (1,412,157)
Provision written off (451) –
Exchange difference on translation (5,715) 51,254
Adjustment on acquisition of a subsidiary – 341,833
Adjustment on disposal of a subsidiary – (6,628)
Balance at end (12,709,895) (18,578,167)
21,652,738 35,000,587
31st March 2000
notes to the financial statements (cont’d)
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Kim Eng Annual Report 2000 47
21. TRADE DEBTORS2000 1999
The Group $ $
Trade debtors 375,959,383 249,546,793
Provision for doubtful debts
Balance at beginning 65,219,246 39,551,278
Provision for the year 25,785,226 3,533,992
Provision no longer required (23,589,862) (482,445)
Provision utilised – (1,552,797)
Exchange difference on translation (566,363) 4,321,115
Adjustment on acquisition of a subsidiary – 20,077,802
Adjustment on disposal of a subsidiary – (229,699)
Balance at end (66,848,247) (65,219,246)
309,111,136 184,327,547
22. LOAN TO A SUBSIDIARY
The loan of $2,008,341 to a subsidiary, bears interest at 0.6% to 1.7% (1999 - Nil) per annum, is unsecured and
is repayable on demand.
The loan to another subsidiary, amounting to $24,899,969 in the financial year ended 31st March 1999, was
fully repaid during the year.
23. DEPOSITS, PREPAYMENT AND OTHER DEBTORSThe Company The Group
2000 1999 2000 1999$ $ $ $
Deposits – – 2,120,019 1,183,286
Prepayments 1,732,064 16,495 2,697,092 761,665
Staff loans – – 376,845 711,616
Loans to financial institutions – – 31,383,700 170,200
Bills discounted and others 31,623 27,202 2,263,779 40,379,767
1,763,687 43,697 38,841,435 43,206,534
Provision for doubtful debts
Balance at beginning – – 1,291,740 –
Provision for the year – – 98,632 1,291,740
Provision no longer required – – (798,739) –
Exchange difference
on translation – – (10,556) –
Balance at end – – (581,077) (1,291,740)
1,763,687 43,697 38,260,358 41,914,794
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24. BORROWINGS FROM FINANCIAL INSTITUTIONS2000 1999
The Group $ $
Bank overdrafts – unsecured 1,292,544 692,040
Short-term loans from finance company – unsecured – 42,851,082
1,292,544 43,543,122
25. CONTINGENT LIABILITIES (UNSECURED)The Company The Group
2000 1999 2000 1999$ $ $ $
Guarantees given to banks
in connection with facilities
given to subsidiaries 60,000,000 75,000,000 – –
Banker’s guarantees issued to:
Singapore Exchange Limited/
The Stock Exchange
of Singapore Limited and
Central Depository (Pte) Ltd – – 100,000 100,000
Guarantees given to banks
in connection with facilities
given to an associated company 18,338,400 23,002,750 18,338,400 23,002,750
78,338,400 98,002,750 18,438,400 23,102,750
For one of the foreign subsidiaries, the revenue authorities in that jurisdiction are reviewing the method of
recharging expenses to Kim Eng Holdings Limited. Negotiations are presently at an early stage and it is not
possible to assess the likely outcome and to quantify the contingent liability, if any.
26. COMMITMENTS
The Group
a Operating lease commitment
Rental and lease expenses for all operating leases for the financial year amounted to $1,104,830
(1999 - $731,754).
At balance sheet date, the Group was committed to making the following payments in respect of operating
leases for rental of office premises:2000 1999
$ $
Within one year 1,123,938 1,524,194
Between one and five years 585,747 1,447,123
After five years – –
31st March 2000
notes to the financial statements (cont’d)
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Kim Eng Annual Report 2000 49
2000 1999$ $
b Underwriting commitment
Underwriting commitment contracted for
but not provided in the financial statements – 2,732,400
Fulfilled subsequent to year end – (2,732,400)
– –
2000 1999$ $
c Forward foreign exchange contracts 460,106 12,642,011
The forward contracts are entered into in the normal course of the Group’s businesses and are not entered
into for speculative purposes.
2000 1999$ $
d Capital commitment
Capital expenditure contracted but not provided for
in the financial statements 3,217,417 636,180
e Other commitments
i One of the subsidiaries of the Group has committed to pay debts of its former parent company,
amounting to approximately S$481,240 (Baht 10.6 million) should that former parent company be
unable to pay these debts.
ii One of the subsidiaries of the Group has committed to acquire shares amounting to approximately
$4,576,998 to hold as unquoted long-term investments.
2000 1999$ $
iii Foreign exchange options purchased 17,185,000 –
Foreign exchange options written 17,387,500 –
The positions in the options were liquidated subsequent to year end at approximately $35,000 below the
premium paid for the options. The premium paid has been written off to the profit and loss account.
Had these positions been marked-to-market at balance sheet date, the loss on marking to market would have
been approximately $264,000.
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27. FINANCIAL INFORMATION BY SEGMENTS
The Group operates principally in the business of stockbroking, securities trading, money lending, margin
financing and investment holding.
The terms of inter-segment turnover are established by negotiation between the parties. Segment assets exclude
trust account bank balances and investment in net assets of associated companies. Operating profit before
taxation excludes share of profits of the associated companies.
a GeographicalSingapore Hong Kong Thailand Others Elimination Total
2000 $’000 $’000 $’000 $’000 $’000 $’000
Turnover in relation
to third parties 157,730 12,464 41,386 2,433 – 214,013
Inter-segment turnover 40,067 – – 3,755 (43,822) –
Total revenue 197,797 12,464 41,386 6,188 (43,822) 214,013
Operating profit
before taxation and
inter-segment profit 45,405 22,357 16,507 559 – 84,828
Inter-segment profit 197 – – – (197) –
Group operating profit
before taxation 45,602 22,357 16,507 559 (197) 84,828
Segment assets 746,396 163 71,119 36,299 – 853,977
Investment in net assets
of associated companies 82,384
936,361
1999
Turnover in relation
to third parties 49,547 3,626 17,579 1,970 – 72,722
Inter-segment turnover 47,992 – – 4,668 (52,660) –
Total revenue 97,539 3,626 17,579 6,638 (52,660) 72,722
Operating profit
before taxation and
inter-segment profit 18,365 (2,768) (2,861) (483) – 12,253
Inter-segment profit 72 – – – (72) –
Group operating profit
before taxation 18,437 (2,768) (2,861) (483) (72) 12,253
Segment assets 519,911 43,862 104,293 16,933 – 684,999
Investment in net assets
of associated companies 76,536
761,535
31st March 2000
notes to the financial statements (cont’d)
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Kim Eng Annual Report 2000 51
b IndustryMoney
Stock- lending,broking margin
and financing andsecurities investment
trading holding Elimination Total2000 $’000 $’000 $’000 $’000
Turnover in relation to
third parties 195,493 18,520 – 214,013
Inter-segment turnover 3,387 40,435 (43,822) –
Total revenue 198,880 58,955 (43,822) 214,013
Operating profit before taxation
and inter-segment profit 63,689 21,139 – 84,828
Inter-segment profit 197 – (197) –
Group operating profit
before taxation 63,886 21,139 (197) 84,828
Segment assets 510,701 343,276 – 853,977
Investment in net assets of
associated companies 82,384
936,361
1999
Turnover in relation to third parties 60,640 12,082 – 72,722
Inter-segment turnover 4,298 48,362 (52,660) –
Total revenue 64,938 60,444 (52,660) 72,722
Operating profit before taxation
and inter-segment profit 11,940 313 – 12,253
Inter-segment profit 72 – (72) –
Group operating profit
before taxation 12,012 313 (72) 12,253
Segment assets 405,143 279,856 – 684,999
Investment in net assets of
associated companies 76,536
761,535
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28. DISCLOSURE OF DIRECTORS’ REMUNERATION
Number of directors in remuneration bands as required by the Listing Manual of the Singapore Exchange
Securities Trading Limited are as follows:
2000 1999
$500,000 and above 5 4
$250,000 to $499,999 1 3
Below $250,000 3 3
9 10
29. EFFECT OF FLUCTUATIONS IN FOREIGN EXCHANGE RATES
The financial statements of foreign subsidiaries and associated companies have been translated at the following
exchange rates at 31st March 2000 (Singapore dollar equivalent to one unit of foreign currency):
Hong Kong Dollar : 0.2208
Indonesian Rupiah : 0.000225
Malaysian Ringgit : 0.4528
Philippine Peso : 0.0424
Sterling Pound : 2.7380
Thai Baht : 0.0454
United States Dollar : 1.7180
Fluctuation in exchange rates may have a material impact on the subsequent carrying value of some assets.
31st March 2000
notes to the financial statements (cont’d)
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Kim Eng Annual Report 2000 53
shareholding statisticsas at 15th August 2000
Authorised Share Capital – $200,000,000
Issued and Fully Paid-up Capital – $144,102,347
Class of Shares – Ordinary shares of 25¢ each
Voting Rights – 1 vote per share
ANALYSIS OF SHAREHOLDERSSize of Number of % of Number % ofHoldings shareholders shareholders of Shares shareholdings
1 – 1,000 3,492 15.56 2,654,831 00.46
1,001 – 10,000 15,770 70.28 72,831,295 12.64
10,001 – 1,000,000 3,154 14.06 112,166,335 19.46
1,000,001 and above 23 00.10 388,756,927 67.44
22,439 100.00 576,409,388 100.00
LIST OF TWENTY LARGEST SHAREHOLDERSNumber of % of
Shareholder’s Name Shares shareholdings
1 DBS Nominees Pte Ltd 76,191,053 13.22
2 Ooi Thean Yat Ronald Anthony 63,544,928 11.02
3 United Overseas Bank Nominees Pte Ltd 60,651,400 10.52
4 Gloria Lee 45,891,770 7.96
5 Oversea Chinese Bank Nominees Pte Ltd 31,153,320 5.40
6 HSBC (Singapore) Nominees Private Limited 25,184,800 4.37
7 Ooi Thean Seng Douglas 24,165,000 4.19
8 Overseas Union Bank Nominees Pte Ltd 20,581,460 3.57
9 Keppel Bank Nominees Pte Ltd 5,991,800 1.04
10 Kim Eng Securities (Pte) Ltd 5,811,000 1.01
11 Lau Wai Kwok 5,215,696 0.91
12 UOB Securities Pte Ltd 4,479,000 0.78
13 Citibank Nominees Singapore Pte Ltd 3,391,000 0.59
14 Raffles Nominees Pte Ltd 2,859,300 0.50
15 Vickers Ballas & Co Pte Ltd 2,743,200 0.48
16 OCBC Securities Private Ltd 2,086,000 0.36
17 Josephine Rebekah Warland 1,500,000 0.26
18 Hong Leong Finance Nominees Pte Ltd 1,339,000 0.23
19 Phillip Securities Pte Ltd 1,254,100 0.22
20 Far Ocean Sea Products Pte Ltd 1,225,000 0.21
385,258,827 66.84
SUBSTANTIAL SHAREHOLDERSName Interest
Ooi Thean Yat, Ronald Anthony 85,544,928
Lee Kim Yew, Gloria, Mrs 45,891,770
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corporate governance report
Kim Eng Holdings Limited adopts corporate governance practices in conformity with the principles and best
practices set out in the Best Practice Guide issued by the Stock Exchange of Singapore Ltd.
Board of Directors
Other than the executive directors, four independent directors sit on the Board of Directors.
The Board supervises the management of the business and affairs of the Group. It reviews and approves the Group’s
major investment, credit and funding proposals. It also reviews the financial performance of the Group.
Audit Committee
The Audit Committee comprises three members, all of whom are non-executive directors. The members of the Audit
Committee are:
Professor Tan Teck Meng (Chairman)
Gordon Seow Li-Ming
Tan Sri Dr Maurice Baker
The Audit Committee held 4 meetings during the year and performed the following functions:
• Reviewed the external auditors’ audit plan and the results of their examination and evaluation of the Group’s
internal control procedures
• Reviewed the scope of the internal audit plan and the results of internal audit procedures
• Reviewed the half-yearly and annual results of the Company and the Group before submission to the Board and
announcement to the public
• Reviewed the half-yearly and annual financial statements and the auditors’ report thereon before submission to
the Board
• Made recommendations to the Board on the reappointment of the external auditors
Securities Transactions
The Company has adopted a set of Guidelines on Dealing in the Company’s Securities pursuant to the SGX Best
Practices Guide which is applicable to all directors and employees of the Group in relation to dealings in the
Company’s securities.
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