nck-annualreport 2001 (415kb).pdf

7/29/2019 NCK-AnnualReport 2001 (415KB).pdf

1/79


2/79

Annual Report 2001

1N C K C O R P O R AT I O N B E R H A D ( 1 3 2 2 4 8 - V ) I n c o r p o r a t e d I n M a l a y s i a(Special Administrators Appointed)

C O N T E N T S

Notice of Annual General Meeting 2

Statement Accompanying Notice of Annual General Meeting 3

Corporate Structure 5

Corporate Information 6

Profile of the Board of Directors 7

Audit Committee Report 10

Corporate Governance Statement 13

Statement of Directors Responsibilities 18

Chairmans Statement 20

Directors Report 22

Statement by Directors and Statutory Declaration 28

Report of the Auditors 29

Balance Sheets 31

Income Statements 32

Statement of Changes in Equity 33

Consolidated Cash Flow Statement 34

Cash Flow Statement 35

Notes to the Financial Statements 36

Shareholding Statistics 66

Properties Owned by the Group 69

Form of Proxy


3/79

Annual Report 2001


NOTICE OF ANNUAL GENERAL MEETING

NOTICE IS HEREBY GIVEN THAT the Sixteenth Annual General Meeting of the Company will be held at theConference Room, 3rd Floor, Wisma NCK 3, Lot 45A, Section 92A, Batu 31/2, Jalan Sungei Besi, 57100 Kuala

Lumpur on Wednesday, 26 December 2001 at 10.00 a.m. to transact the following businesses:-

AGENDA

ORDINARY BUSINESS

1. To receive and adopt the Audited Accounts of the Company for the year ended 30 June2001 and the Reports of the Directors and Auditors thereon.

2. To approve the payment of Directors fees in respect of the financial year ended 30 June2001.

3. To re-elect Mr Yap Tat Meng who retires by rotation in accordance with Article 105 ofthe Articles of Association of the Company and being eligible offer himself for re-election.

4. To re-elect Madam Yong Shin Ming who retires in accordance with Article 88 of theArticles of Association of the Company and being eligible offer herself for re-election.

5. To consider and if thought fit, to pass the following resolution pursuant to Section 129(6)of the Companies Act, 1965:-

THAT Mr Ng Choo Kwan who is over the age of seventy (70) years and retiring inaccordance with Section 129(2) of the Companies Act, 1965 be and is hereby re-electeda Director of the Company and to hold office until the conclusion of the next AnnualGeneral Meeting.

6. To re-appoint Messrs Ong Boon Bah & Co. as the Companys Auditors and to authorise

the Directors to fix their remuneration.

By Order of the Board

YEOH CHONG KEAT (MIA 2736)VOO YIN LING (MAICSA 7016194)Secretaries

Kuala Lumpur

28 November 2001

NOTES ON THE APPOINTMENT OF PROXY

(i) A member of the Company entitled to attend and vote at the Meeting is entitled to appoint a proxy or proxies to attend and vote inhis stead. A proxy may but need not be a member of the Company. If the Proxy is not a member of the Company, then the proxyshall be an advocate or an approved company auditor or a person approved by the Registrar of Companies.

(ii) The instrument appointing a proxy shall be in writing under the hand of the appointer or his attorney duly authorised in writing, orif the appointer is a corporation, either under seal or under the hand of an officer or attorney duly authorised.

(iii) A member shall be entitled to appoint more than one proxy (subject always to a maximum of two (2) proxies at each meeting) toattend and vote at the same meeting. A member who appoints two (2) proxies shall specify the proportion of his shareholdings tobe represented by each proxy.

(iv) The instrument appointing a proxy and the power of attorney (if any) under which it is signed or a notarially certified copy thereof

must be deposited at the Registered Office of the Company at 4 th Floor, Wisma NCK 3, Lot 45A, Section 92A, Batu 31/2, JalanSungei Besi, 57100 Kuala Lumpur or the Companys Share Registrar office at Level 13, Uptown 1, No. 1, Jalan SS21/58, DamansaraUptown, 47400 Petaling Jaya, Selangor Darul Ehsan not less than forty-eight (48) hours before the time for holding this meetingor at any adjournment thereof.

(Resolution 1)

(Resolution 3)

(Resolution 4)

(Resolution 5)

(Resolution 6)

(Resolution 2)


4/79

Annual Report 2001


1. NAME OF INDIVIDUALS WHO ARE STANDING FOR RE-ELECTION

a) Mr Yap Tat Mengb) Madam Yong Shin Ming

Mr Yap Tat Meng is retiring by rotation pursuant to Article 105 of the Companys Articles of Association.

Madam Yong Shin Ming is retiring by rotation pursuant to Article 88 of the Companys Articles of Association.

2. DETAILS OF ATTENDANCE OF DIRECTORS AT BOARD MEETINGS

Board Meeting

For the year ended 30 June 2001, there were only three meetings held. Upon the appointment of SpecialAdministrators on 16 April 2001, there were no more Board Meetings held.

Name Attendance

Mr Ng Choo Kwan 3

Mr Ng Cheng Kiat 2

Mr Siow Chau @ Siau Chan Leong 3

Mr Ng Kiat Bee 1

Mr Ng Kiat Beng 0

YBhg Dato Dr Yahya Bin Omar 1(Resigned w.e.f. 12 June 2001)

Mr Yap Tat Meng 1(Appointed w.e.f. 14 August 2000)

Madam Yong Shin Ming 0(Appointed w.e.f. 11 June 2001)

3. DATE, TIME AND PLACE OF THE BOARD MEETINGS

STATEMENT ACCOMPANYING NOTICEOF ANNUAL GENERAL MEETING

(Pursuant to Paragraph 8.28(2) of the Listing Requirements of the KLSE)

TYPE OF MEETING DATE TIME PLACE

Board of Directors Friday, 14 July 2000 3.00 p.m. Conference Room, 3 rd Floor,Meeting (3/00) Wisma NCK 3, Lot 45A, Section

92A, Batu 31/2, Jalan Sungei Besi,57100 Kuala Lumpur

Board of Directors Tuesday, 8 August 2000 10.30 a.m. Co nfere nc e R oo m, 3 rd Floor,Meeting (4/00) Wisma NCK 3, Lot 45A, Section


Board of Directors Friday, 23 February 2001 3.00 p.m. Confe rence Room, 3 rd Floor,Meeting (1/01) Wisma NCK 3, Lot 45A, Section



5/79

Annual Report 2001


4. FURTHER DETAILS OF INDIVIDUALS WHO ARE STANDING FOR

RE-ELECTION AS DIRECTORS

A) Mr Yap Tat Meng

Age 39

Nationality Malaysian

Position in the Company Independent Non-Executive Director

Qualification Senior Associate Member of the Institute of Bankers (AIBM)

Working Experience and Occupation Mr Yap was appointed to the Board on 14 August 2000.Currently, he is running the Investment Consultancy Practice.He is also the Chairman of Audit Committee of NCKCorporation Berhad (Special Administrators Appointed). Hewas also the Vice President in Corporate Banking Division

of Credit Industrial et Commercial (an international bankincorporated in France). He has been in the banking andfinance institute for the past 20 years.

Other directorships of public companies None

Securities holdings in the Companyand its subsidiaries None

Family relationship with any directorand or major shareholder of the Company None

Conflict of Interest with the Company None

List of convictions for offenceswithin the past 10 years other than

traffic offences or negative statement None

B) Madam Yong Shin Ming

Age 42

Nationality Malaysian

Position in the Company Independent Non-Executive Director

Qualification Member of the Institute of Accountant (RA) and FellowMember of the Chartered Association of Certified Accountant,UK (FCCA)

Working Experience and Occupation Madam Yong was appointed to the Board on 11 June 2001.She is currently work as a consultant. Prior to that, she was

with a medium-sized firm in London as Chartered CertifiedAccountant, as Accountant of Hong Leong Credit (M) Bhd,Zalik Securities Sdn Bhd and a Finance Manager of HalimSecurities Sdn Bhd

Other directorships of public companies None

Securities holdings in the Companyand its subsidiaries None

Family relationship with any directorand or major shareholder of the Company None

Conflict of Interest with the Company None

List of convictions for offences within

the past 10 years other than trafficoffences or negative statement None

STATEMENT ACCOMPANYING NOTICEOF ANNUAL GENERAL MEETING (contd)

(Pursuant to Paragraph 8.28(2) of the Listing Requirements of the KLSE)


6/79

Annual Report 2001


CORPORATE STRUCTURE

NCK CORPORATION BERHAD(Special Administrators Appointed)

100%

Ng Choo Kwan &

Son Realty Sdn Bhd

75%

NCK Metal Sdn Bhd(Special Administrators Appointed)

60%

Minajaya Sdn Bhd

100%

NCK Wire Products

Sdn Bhd(Special Administrators Appointed)

100%

NCK Aluminium

Extrusion Sdn Bhd(Special Administrators Appointed)

100%

Ng Choo Kwan & Sons

Hardware Sdn Berhad(Special Administrators Appointed)

35%

Fook Chuan Trading

Sdn Bhd(Special Administrators Appointed)

100%

NCK Development

Sdn Bhd

51%

Fook Chuan Hardware

Sdn Bhd

100%

Hock Hup

Developments

(Sendirian) Bhd

100%

Besi Lindung Sdn Bhd

65%

NCK-Astarlite Sdn Bhd

(wound up by an order

of the High Court on

18/09/2001)

85%

Pavbloc Sdn Bhd

100%

NCK Marketing

Sdn Bhd

51%Ng Choo Kwan (MT)

Sdn Bhd

70%

Australian Parquet

Manufacturing (M)

Sdn Bhd

50%

Khazanah Wangsa

Sdn Bhd

100%

Nusantara Kukuh

Sdn Bhd

51%

Perumahan NCK

Sdn Bhd

100%

NCK Technology

Sdn Bhd

90%

One-Two Marketing

(East-Coast) Sdn Bhd

85%

One-Two Marketing

Sdn Bhd

100%

Australian Parquet

Marketing (M) Sdn Bhd

100%

Hasrat Teguh Sdn Bhd

100%

Super Bangunan

Sdn Bhd

69%

Kenangan Panorama

Sdn Bhd

60%

Wang Dynasty

Restaurant Sdn Bhd

65%

C. T. Yap Enterprise

Sdn Bhd

100%

Multi-Success Builder

Sdn Bhd

100%Ratu Hasrat Sdn Bhd


7/79

Annual Report 2001


SPECIAL ADMINISTRATORS

YBHG DATO NORDIN BIN BAHARUDDIN

MR ADAM PRIMUS VARGHESE BIN ABDULLAH

MADAM WONG LAI WAH

BOARD OF DIRECTORS

MR NG CHOO KWAN (Executive Chairman)

MR SIOW CHAU @ SIAU CHAN LEONG (Executive Deputy Chairman)

MR NG CHENG KIAT (Group Managing Director / Chief Executive Officer)

YBHG DATO DR YAHYA BIN OMAR(resigned w.e.f. 12.06.2001)

MR NG KIAT BEE

MR NG KIAT BENGMR YAP TAT MENG (appointed w.e.f. 14.08.2000)

MADAM YONG SHIN MING (appointed w.e.f. 11.06.2001)

AUDIT COMMITTEE

MR YAP TAT MENG (Chairman of the Committee/Independent Non-Executive Director)

MR NG CHENG KIAT (Group Managing Director/ Chief Executive Officer)

MADAM YONG SHIN MING (Independent Non-Executive Director)

COMPANY SECRETARIES

MR YEOH CHONG KEAT MIA 2736

MS VOO YIN LINGMAICSA 7016194

AUDITORS

MESSRS ONG BOON BAH & CO

REGISTERED OFFICE

4th Floor, Wisma NCK 3Lot 45A, Section 92A, Batu 31/2

Jalan Sungei Besi

57100 Kuala LumpurTel: 03-79812299 Fax: 03-79818492

REGISTRAR

PFA Registration Services Sdn BhdLevel 13, Uptown 1

1, Jalan SS 21/58, Damansara Uptown47400 Petaling Jaya, Selangor Darul Ehsan

Tel: 03-77254888 Fax: 03-77222311

STOCK EXCHANGE LISTING

Main Board of the Kuala Lumpur Stock Exchange

CORPORATE INFORMATION


8/79

Annual Report 2001


NG CHOO KWAN

- Executive Chairman

Mr Ng Choo Kwan, aged 80, a Malaysian, was appointed to the Board of NCK Corporation Berhad (SpecialAdministrators Appointed) on 10 December 1992. He is the founder of NCK Group with 40 years of experience inthe hardware and building material industry. He also sits on the Board of various other private companies givingadvice and guidance. He does not have any other directorships of public companies.

Mr Ng Choo Kwan is the father of Mr Ng Cheng Kiat, Mr Ng Kiat Bee, Mr Ng Kiat Beng and father in-law ofMr Siow Chau @ Siau Chan Leong. He has no conflict of interest with the Company except as disclosed in thefinancial statements of NCK Corporation Berhad (Special Administrators Appointed) and had no convictions foroffences within the past 10 years.

He attended all the three Board Meetings of the Company held in the financial year ended 30 June 2001.

SIOW CHAU @ SIAU CHAN LEONG- Executive Deputy Chairman

Mr Siow Chau @ Siau Chan Leong, aged 57, a Malaysian, was appointed to the Board of NCK Corporation Berhad(Special Administrators Appointed) on 10 December 1992. He joined NCK Group in 1976. He is one of the pioneerstaff of the Group and has been in the hardware and building material industry for the past 33 years. He has vastbusiness contacts and is in charge of the trading activities of various subsidiaries of the Group. Currently, he alsosits on the Board of UCP Resources Berhad and several private limited companies.

Mr Siow Chau @ Siau Chan Leong is the son in-law of Mr Ng Choo Kwan. He has no conflict of interest with theCompany except as disclosed in the financial statements of NCK Corporation Berhad (Special AdministratorsAppointed) and had no convictions for offences within the past 10 years.

He attended all the three Board Meetings of the Company held in the financial year ended 30 June 2001.

NG CHENG KIAT

- Group Managing Director/Chief Executive Officer

Mr Ng Cheng Kiat, aged 48, a Malaysian, was appointed to the Board of NCK Corporation Berhad (SpecialAdministrators Appointed) on 10 December 1992. He joined NCK Group in 1975 and he is a member of AuditCommittee of NCK Corporation Berhad (Special Administrators Appointed). He has been in the hardware industryfor the past 26 years and has assisted in the expansion of the Groups business especially in corporate activities. Heholds a MBA in Finance from University of Hull, United Kingdom and is a member of the Malaysian Institute ofManagement. He is also an associate member of the Institute of Personnel Management and an associate memberof the Institute of Training and Development. Currently, he sits on the Board of UCP Resources Berhad and several

private limited companies.Mr Ng Cheng Kiat is the son of Mr Ng Choo Kwan. He has no conflict of interest with the Company except asdisclosed in the financial statements of NCK Corporation Berhad (Special Administrators Appointed) and had noconvictions for offences within the past 10 years.

Of the three Board Meetings of the Company held in the financial year ended 30 June 2001, Mr Ng Cheng Kiatattended all except for one for which he had extended his apologies.

Pursuant to contract of service dated 15 July 1993, Mr Cheng Kiat does not retire in accordance with Paragraph7.28 of the KLSE Listing Requirements.

PROFILE OF THE BOARD OF DIRECTORS


9/79

Annual Report 2001


MR NG KIAT BEE

- Executive Director

Mr Ng Kiat Bee, aged 46, a Malaysian, was appointed to the Board of NCK Corporation Berhad (SpecialAdministrators Appointed) on 8 December 1994. He joined NCK Group in 1973. He is currently the ExecutiveDirector of NCK Corporation Berhad (Special Administrators Appointed) and he has 25 years of experience inbuilding materials industry. Apart from being a Board Member of NCK, he also sits on the Board of several otherprivate limited companies.

Mr Ng Kiat Bee is the son of Mr Ng Choo Kwan. He has no conflict of interest with the Company except asdisclosed in the financial statements of NCK Corporation Berhad (Special Administrators Appointed) and had noconvictions for offences within the past 10 years.

Of the three Board Meetings of the Company held in the financial year ended 30 June 2001, Mr Ng Kiat Beeattended all except for two for which he had extended his apologies.

MR NG KIAT BENG

- Executive Director

Mr Ng Kiat Beng, aged 45, a Malaysian, was appointed to the Board of NCK Corporation Berhad (SpecialAdministrators Appointed) on 10 December 1992. He joined the NCK Group in 1975 and is currently the ExecutiveDirector of NCK Corporation Berhad (Special Administrators Appointed). He has been in the hardware industry forthe past 24 years and he is in charge of promoting sales to the Eastern Region of Peninsular Malaysia. Apart frombeing a Board member of NCK, he is an alternate director to Mr Ng Cheng Kiat in UCP Resources Berhad and sitson the Board of several other private companies.

Mr Ng Kiat Beng is the son of Mr Ng Choo Kwan. He has no conflict of interest with the Company except asdisclosed in the financial statements of NCK Corporation Berhad (Special Administrators Appointed) and had no

convictions for offences within the past 10 years.

He failed to attend all the three Board Meetings of the Company held in the financial year ended 30 June 2001 forwhich he had extended his apologies.

YAP TAT MENG

- Independent Non-Executive Director

Mr Yap Tat Meng, aged 39, a Malaysian, was appointed to the Board of NCK Corporation Berhad (SpecialAdministrators Appointed) on 14 August 2000 as an Independent Non-Executive Director. He is also the Chairmanof the Audit Committee of NCK Corporation Berhad (Special Administrators Appointed). He is a Senior AssociateMember of the Institute of Bankers (AIBM). He was also the Vice President in Corporate Banking Division of

Credit Industriel et Commercial (an international bank incorporated in France). He has been in the banking andfinance institute for the past 20 years. Currently, he is running an Investment Consultancy Practice. He does nothave any other directorships of public companies.

Mr Yap Tat Meng does not have any family relationship with any director and/or major shareholders of the Company.He has no conflict of interest with the Company and had no convictions for offences within the past 10 years.

As he was only appointed on 14 August 2000, he attended one Board Meeting of the Company held in the financialyear ended 30 June 2001.

PROFILE OF THE BOARD OF DIRECTORS (contd)


10/79

Annual Report 2001


YONG SHIN MING

- Independent Non-Executive Director

Madam Yong Shin Ming, aged 42, a Malaysian, was appointed to the Board of NCK Corporation Berhad (SpecialAdministrators Appointed) on 11 June 2001 as an Independent Non-Executive Director. She is also a member ofAudit Committee of NCK Corporation Berhad (Special Administrators Appointed). She is a member of MalaysiaInstitute of Accountant (RA) and fellow member of The Chartered Association of Certified Accountants, UK (FCCA).Currently, she worked as a consultant. Prior to that, she was with a medium-sized firm in London as CharteredAccountant. She had also served as an Accountant of Hong Leong Credit (M) Bhd, Zalik Securities Sdn Bhd andFinance Manager of Halim Securities Sdn Bhd. She does not have any other directorships of public companies.

Madam Yong Shin Ming does not have any family relationship with any director and/or major shareholders of theCompany. She has no conflict of interest with the Company and had no convictions for offences within the past 10years.

No Board Meetings were held after her appointment on 11 June 2001.

A total of three Board of Directors Meeting were held at the Conference Room, 3rd Floor, Wisma NCK 3, Lot 45A,Section 92A, Batu 31/2, Jalan Sungei Besi, 57100 Kuala Lumpur during the financial year ended 30 June 2001.Details of attendance of Directors standing for re-election are as follow :-

PROFILE OF THE BOARD OF DIRECTORS (contd)

NAME OF DIRECTORS NO OF MEETINGS DATE AND TIME

ATTENDED

Mr Ng Choo Kwan 3 - Friday, 14 July 2000 at 3.00 p.m.- Tuesday, 8 August 2000 at 10.30 a.m.- Friday, 23 February 2001 at 3.00 p.m.

Mr Siow Chau @ 3 - Friday, 14 July 2000 at 3.00 p.m.Siau Chan Leong - Tuesday, 8 August 2000 at 10.30 a.m.

- Friday, 23 February 2001 at 3.00 p.m.

Mr Ng Cheng Kiat 2 - Friday, 14 July 2000 at 3.00 p.m.- Friday, 23 February 2001 at 3.00 p.m.

Mr Ng Kiat Bee 1 - Friday, 23 February 2001 at 3.00 p.m.

Mr Ng Kiat Beng 0 -

Mr Yap Tat Meng 1 - Friday, 23 February 2001 at 3.00 p.m.

Madam Yong Shin Meng 0 -


11/79

Annual Report 2001


1) COMPOSITION OF AUDIT COMMITTEE

CHAIRMAN

Mr Yap Tat Meng (Independent Non-Executive Director)

MEMBER

Madam Yong Shin Ming (Independent Non-Executive Director)

Mr Ng Cheng Kiat (Group Managing Director/Chief Executive Officer)

SECTRETARY

Ms Voo Yin Ling

2) TERMS OF REFERENCE

i) COMPOSITION

The Committee shall be appointed by the Board and shall consist of not less than 3 members of whom amajority (including the Chairman) shall be Independent Non-Executive Directors.

ii) MEETINGS

The Committee shall meet not less than 3 times a year. The External Auditors, Internal Auditors ormanagement may request a meeting if they consider one is necessary.

iii) AUTHORITY

The Audit Committee shall be granted the authority to investigate any activity of the Company and itssubsidiaries and all employees shall be directed to co-operate as requested by members of the Committee.

The Committee is also authorised to obtain outside legal or other independent professional advice frompersons with relevant experience and expertise as it considers necessary.

iv) FUNCTIONS

The duties of the Committee shall be :-

To recommend the appointment of the External Auditors, the audit fee, and any questions of resignationor dismissal;

To discuss with the External Auditors before the audit commences the nature and scope of the audit, andto ensure co-ordination where more than one audit firm is involved;

To review the quarterly and annual financial statements before submission to the Board, focusingparticularly on :-

- any changes in accounting policies and practices

- major judgemental areas resulting from the audits

- significant adjustments resulting from the audits

- the going concern assumption

- compliance with accounting standards

- compliance with stock exchange and legal requirements

AUDIT COMMITTEE REPORT


12/79

Annual Report 2001


To discuss problems and reservations arising from the interim and final audits, and any matters the Auditorsmay want to discuss (in the absence of management where necessary);

To review the internal programme, consider the findings of internal audit investigations and managementsresponse, and ensure co-ordination between the Internal and External Auditors;

To keep under review the effectiveness of internal control systems and in particular, review the ExternalAuditors management letter and managements response.

To appoint and accept resignation of the Head of Internal Audit. In order to safeguard the independenceof the Internal Audit function, the Head of Internal Audit reports directly to the Audit Committee and canonly be removed from his position by the Audit Committee on grounds of gross negligence;

To ensure that the Internal Audit Department be adequately resourced to carry out its function;

To ensure that the Internal Audit Department be given wide authority to access any documents and conduct

investigations within the Group on any matters pertaining to Internal Control and Corporate Governance;

To consider any related party transactions that may arise within the company or group;

To consider risk assessment and other topics, as defined.

REPORTING PROCEDURES

The Secretary shall circulate the minutes of meetings of the Committee to all members of the Board.

3) NUMBER OF AUDIT COMMITTEE MEETINGS HELD IN THE FINANCIAL

YEAR AND ATTENDANCE OF EACH MEMBER.

The Audit Committee met 5 times in the period. The details of the meeting is listed below :-

AUDIT COMMITTEE REPORT (contd)

ATTENDANCE TOTAL NUMBER MEETING ATTENDED

OF MEETING BY DIRECTORS

Mr Yap Tat Meng(Independent Non-Executive Director) 5 5

YBhg Dato Dr Yahya Bin Omar(Independent Non-Executive Director)- resigned w.e.f. 12 June 2001 5 4

Mr Ng Cheng Kiat(Group Managing Director/Chief Executive Officer) 5 3

Madam Yong Shin Ming(Independent Non-Executive Director- Appointed w.e.f. 11 June 2001 0 0


13/79

Annual Report 2001


4) SUMMARY OF ACTIVITIES OF THE AUDIT COMMITTEE

During the year, the Audit Committee reviewed and appraised the annual audit plan and audit reports preparedby the Internal Auditors. The Committee also appraised the adequacy of actions taken by the Management inresolving the reported audit issues and in implementing suggested improvement measures.

On quarterly basis and financial year end the Committee reviewed the financial statements prepared by theManagement for proper approval by the Board on its announcements. Any significant issues resulting fromthe audit of the financial statements by the External Auditors were noted by the Committee.

The Committee, at the conclusion of each meeting, recommended the Management to improve on internalcontrols, procedures and systems of the Company, where deemed appropriate.

5) SUMMARY OF ACTIVITIES OF THE GROUP INTERNAL AUDIT DEPARTMENT

The Group Internal Audit Department is headed by an Internal Audit Manager who is a qualified accountantregistered with the Malaysian Institute of Accountants. The Internal Audit Department is responsible in providingindependent assessment for adequate, efficient and effective internal control systems in anticipating potentialrisks exposures over key business processes within the Group.

Throughout the financial year, audit assignments, namely compliance and operational audits, investigationand follow up were carried out on subsidiaries and associate companies. Areas audited included inventory,assets management, purchasing, credit monitoring, operations, cash collections and human resourcemanagement. These were carried out in accordance with the annual audit plan or as special ad-hoc audit atManagements request. The resulting reports of the audits undertaken were presented to the Audit Committeeand forwarded to the Management concerned for attention and necessary actions.

The Management is responsible for ensuring that corrective actions on reported weaknesses as recommendedis taken within the required timeframe. The management is also responsible for ensuring that a written reporton action planned or completed is sent to the Chairman of the Audit Committee, Operation Directors and theHead of Internal Audit.

AUDIT COMMITTEE REPORT (contd)


14/79

Annual Report 2001


CORPORATE GOVERNANCE STATEMENT

Adoption of the Malaysian Code on Corporate Governance

In March 2000, the Finance Committee on Corporate Governance issued the Malaysian Code on CorporateGovernance (Code). The Code sets out principles and best practices on structures and processes that companiesmay use in their operations towards achieving the optimal governance framework.

The Code recommends listed companies include in their Annual Report a narrative statement of how they haveapplied the principles set out in the Code to their particular circumstances. It also recommends that listed companiesreport the extent which they have complied with the best practices described by the Code and to explain anycircumstances justifying departure from such best practices.

The Board of Directors are committed to ensuring the highest standards of corporate governance are practicedthroughout the Group as a fundamental part of discharging their responsibility to protect and enhance shareholdersvalue.

To this end, the Board fully supports the recommendations of the Code. The Kuala Lumpur Stock Exchange (KLSE)listing requirements have also been amended to require the Board of Directors to make statements in the AnnualReport in relation to a listed issuers compliance with the Code.

Set out below is a description of how the Group has applied the principles set out in the Code. Except for thematters referred to immediately below in paragraph 1) to 2), the Board of Directors have substantially compliedwith the best practices provisions set out in the Code throughout the 12 months ended 30 June 2001:

1) A Nomination Committee consisting of Independent Directors will be set up in the 2002 Financial Year.

2) A Remuneration Committee consisting of Independent Directors will also be set up in the 2002 Financial Year.

Below describes how the Group has applied the principles as set out in Part 1 of the Code.

A) Directors

1) The Board

The Board consist of 7 members including 2 Independent Non-Executive Directors and 5 ExecutiveDirectors. A brief background of each Director is presented on pages 7, 8 and 9:

During the 12 months ended 30 June 2001, the Board met 3 times. The details of attendance of Directorsat Board Meeting is presented on page 3.

In April 2001, Special Administrators were appointed to NCK Corporation Bhd (Special AdministratorsAppointed) pursuant to the Pengurusan Danarharta Nasional Act, 1998. As a result, the powers of theBoard have been suspended.

2) Board Balance

The Board has currently 7 members, comprising of 5 Executive Directors and 2 Independent Non-ExecutiveDirectors. Together the Directors have a wide range of business and financial experience relevant to thedirection of the Group. A brief description of the background of each Director is presented on pages 7, 8and 9.

There is a clear division of responsibilities between the Chairman and the Group Managing Director toensure that there is a balance of power and authority.


15/79

Annual Report 2001


There is also balance in the Board because of the presence of Independent Non-Executive Directors. Therole of Independent Non-Executive Directors is particularly important in ensuring that the long term

interest of shareholders, employees, customers, suppliers and the many communities in which the Groupconducts business are being looked after.

Madam Yong Shin Ming who is a qualified Accountant acts as Senior Independent Non- Executive Director.Any concerns regarding the Group may be conveyed to her.

While the Company has a holding company, the investment of minority shareholders is fairly reflectedthrough Board represen tation via the Independent Directors.

3) Supply of Information

All Directors have access to monthly Management Accounts of the Group and are briefed by the GroupAccountant on a regular basis, in sufficient time, before Board Meetings.

In addition, there is a schedule of matters reserved specifically for the Boards decision. The Board haveapproved a procedure for Directors, whether as a full Board or in their individual capacity to takeindependent advice, where necessary, in the furtherance of their duties and at the Groups expense.

All Directors have access to the services of the Company Secretary.

4) Appointment to the Board

As an integral element of the process of appointing new Directors, the Board ensures that there is anorientation and education program for new Board Members.

5) Re-election

In accordance with the Companys Articles of Association, all Directors who are appointed by the Boardare subject to election by shareholders at the first opportunity after their appointment. The Articles alsoprovide that at least one third of the remaining Directors be subject to re-election by rotation at eachAnnual General Meeting.

B) Directors Remuneration

1) The level and make up of remuneration

The determination of the remuneration of the Executive Directors is a matter for the Board and is basedon the performance of the respective Executive Directors. Fees payable to Non-Executive Directors is

determined by the Board after considering comparable organizations. The Company reimburses reasonableexpenses incurred by these Directors in the course of their duties as Directors.

2) Procedure

Directors do not participate in decisions on their own remuneration packages.

The determination of the remuneration of Executive Directors is a matter for the Board as a whole. Feespayable to Non-Executive Directors is determined by the Board after considering comparable organisations.

3) Disclosure

The details of the remuneration of each Director during the 12 months period are shown on page 18.

CORPORATE GOVERNANCE STATEMENT (contd)


16/79

Annual Report 2001


C) Shareholders

1) Dialogue between companies and investors

Directors will meet with Stakeholders at each general meeting.

2) The AGM

Notice of the Annual General Meeting and related papers are sent out to shareholders at least 14 daysbefore date of the meeting.

At each Annual General Meeting, the Board presents the progress and performance of the business andencourages shareholders to participate in the question and answer session. Executive Directors and, whereappropriate, the Chairman of the Audit Committee are available to respond to shareholders questionsduring the meeting. Where appropriate, the Board will undertake to provide a written answer to any

significant question that cannot be readily answered on the spot.

D) Accountability and audit

1) Financial Reporting.

In presenting the annual financial statements and quarterly announcements to shareholders, the Directorsaim to present a balanced and understandable assessment of the Groups position and prospects. Thestatement of Directors pursuant to Section 169 of the Companies Act 1965 is set out on page 28 of thisAnnual Report.

2) Internal Control

The Directors acknowledge their responsibility for the Groups system of internal controls covering notonly financial controls but also operational and compliance controls as well as risk management. The internalcontrol system involves each business and key management from each business, including the Board, anddesigned to meet the Groups particular needs and to manage the risks to which it is exposed. The system, byits nature, can only provide reasonable but not absolute assurance against misstatement or loss.

The Group is in the process of reviewing the adequacy and integrity of the Groups system of internalcontrols and expects to complete this review by the end of financial year 2002.

The key elements of the Groups internal controls system are described below:

q Clearly defined delegation of responsibilities to committees of the full Board and to operating units,including authorisation levels for all aspects of the business which are set out in an authority matrix.

q Clearly documented internal procedures.

q Regular internal audit visits which monitor compliance with procedures and assess the integrity offinancial information.

q Regular and comprehensive information provided to management, covering financial performanceand key business indicators, such as staff utilisation and cash flow performance.

q A detailed budgeting process where operating units prepare budgets for the coming year which areapproved both at operating unit level and by the Special Administrators and full Board.

q Monthly monitoring of results against budget, with major variances being followed up andmanagement action taken, where necessary.

q Regular visits to operating units by members of the Board, senior management and the SpecialAdministrators.



17/79

Annual Report 2001


3) Relationship with the auditors.

The role of the Audit Committee in relation to the external auditors is stated in the Audit Committeesterms of reference on pages 10 and 11.

The Board is also of the view that they have substantially complied with Part 2 Best Practices Provisions of

the Code.

PART 2 AA Board of Directors

1) Principle responsibilities of the Board

In April 2001, Special Administrators were appointed to NCK Corporation Bhd (Special AdministratorsAppointed) pursuant to the Pengurusan Danarharta Nasional Act 1998. As a result the powers of the Boardhave been suspended.

2) Chairman & CEO

There is separation in the role of Chairman and the CEO to ensure check and balance.

3) Board Balance

One third of the Board consist of Independent Directors.

PART 2 AA IV,V,VI,VII

The roles of Chairman and CEO are separated. The Board has also identified a senior Independent Non Executive

Director- Madam Yong Shin Ming in the annual report to whom concerns from shareholders and the public may beconveyed.

One third of the Board consist of Independent Non-Executive Directors.

PART 2 AA VIII,IX,X,XI,XI,XII,XIII

A Nomination Committee consisting of Independent Directors will be set up in the 2002 Financial Year.

All newly appointed Directors will undergo an orientation and education program.

PART 2 AA XIV

The Board and Audit Committee meets regularly with due notices of issues to be discussed. Details of the numberof Board and Audit Committee meetings are on pages 9 and 11 respectively.

PART 2 AA XV

There is a formal schedule of matters reserved specifically for the Boards decision.

PART 2 AA XVI

The Board as a whole develop with the CEO the corporate objectives which the CEO is responsible for meeting.

PART 2 AA XVII,XVIII

All Directors have access to monthly Management Accounts of the Group and are briefed by the Group Accountanton a regular basis, in sufficient time, before Board and Audit Committee Meetings.



18/79

Annual Report 2001


PART 2 AA XIX

All Directors have access to all information within the company whether as a full board or in their individualcapacity, in furtherance of their duties.

PART 2 AA XX

The Board have approved a procedure for Directors, whether as a full Board or in their individual capacity to takeindependent advice, where necessary, in the furtherance of their duties and at the Groups expense.

PART 2 AA XXI, XXII

All Directors have access to the services of a qualified and experienced Company Secretary.

PART 2 AA XXIII

The Board has appointed an Audit Committee with its terms of reference as set out on pages 10 and 11.

A Nomination Committee will be set up in the 2002 Financial Year.

PART 2 AA XXIV

A Remuneration Committee will Shareholders, Stakeholders and general public at each general meeting.

PART 2 BB I, II, III, IV, V, VI, VII, VIII

The terms of reference of the Audit Committee are on pages 10 and 11.

PART 2 CC

Shareholders

The relationship between the Board and Shareholders.

Directors will meet with Shareholders, Stakeholders and general public at each general meeting.

The Board acknowledges that it has collective responsibility for the preparation of the Annual Audited

Accounts.

The Directors acknowledge their responsibility for the Groups system of internal controls covering not onlyfinancial controls but also operational and compliance controls as well as risk management. The internal

control system involves each business and key management from each business, including the Board, and

designed to meet the Groups particular needs and to manage the risks to which it is exposed. The system, by

its nature, can only provide reasonable but not absolute assurance against misstatement or loss.

The Group is in the process of reviewing the adequacy and integrity of the Groups system of internal controls

and expects to complete this review by the end of financial year 2002.

In accordance with a resolution of the Board of Directors dated 12 November 2001.

Mr Ng Choo Kwan Mr Ng Cheng Kiat



19/79

Annual Report 2001


The Directors are required by law to prepare financial statements for each financial year which give a true and fairview of the state of affairs of the Group and of the Company as at the end of financial year end and of the results and

cash flows of the Group and of the Company for the financial year.

The Directors are satisfied that in preparing the financial statements of the Group for the year ended 30 June 2001,the Group has used the appropriate accounting policies and applied them consistently and prudently. The Directorsalso consider that all relevant accounting standards have been followed in the preparation of these financial statements.

ADDITIONAL COMPLIANCE INFORMATION

1. DIRECTORS REMUNERATION

The details of the remuneration for Directors of the Company comprising remuneration received/receivablefrom the Company and subsidiary companies during the financial year ended 30 June 2001 are as follows :-

Aggregate remuneration of Directors categorised into appropriate components :-

STATEMENT OF DIRECTORSRESPONSIBILITIES

(Pursuant to Paragraph 15.27(a) of the Listing Requirements of the KLSE)

Emoluments Bonus Benefits in Kind Fees Total

RM RM RM RM RM

Non-Executive Directors - - - 7,500 7,500

Executive Directors 874,840 - - - 874,840

The number of Directors of the Company whose total remuneration fall within the following bands :-

Number of Directors

Range of remuneration Executive Non-Executive

Below RM50,000 - -

RM50,001 to RM100,000 - -

RM100,001 to RM150,000 3 -

RM150,001 to RM200,000 1 -

RM200,001 to RM250,000 - -

RM250,001 to RM300,000 - -

RM300,001 to RM350,000 1 -

2. TOTAL NUMBER OF BOARD MEETINGS HELD DURING THEFINANCIAL YEAR

There were three Board Meetings of the Company held in the financial year ended 30 June 2001.


20/79

Annual Report 2001


3. PENALTIES IMPOSED ON NCK CORPORATION BERHAD (SPECIAL

ADMINISTRATORS APPOINTED) AND ITS SUBSIDIARIES FROM 1 JULY 2001

TO 30 JUNE 2001

Among the NCK Group, two (2) subsidiaries were penalised RM50.00 each by the Registrar of Companiesunder Section 369 of the Companies Act, 1965.

4. MATERIAL CONTRACTS

Besides the following material contract, there were no other material contracts of the Company and subsidiariesinvolving directors and substantial shareholders, either still subsisting at the end of the financial year or enteredinto since the end of the previous financial year:-

Settlement Agreement dated 14 April 2001 between Ng Choo Kwan & Sons Hardware Sdn Berhad (Special

Administrators Appointed) (NCKH). UCP Geotechnics (M) Sdn Bhd (UCP Geotechnics) and UCPManufacturing (M) Sdn Bhd (UCP Manufacturing) for settlement of RM2,188,852.22 (Total Debts) consistingof RM1,397,410.38 (Outstanding Debts) being principal and interest owing to NCKH as at 30 June 2000and RM791,441.81 (Assigned Debts) being partial principal sum owing by UCP Geotechnics and UCPManufacturing to Fook Chuan Trading Sdn Bhd assigned to NCKH by a Deed of Assignment of Debt of evendate.

UCP Geotechnics and UCP Manufacturing proposed to jointly settle the Total Debts in the following manner:-

a) UCP Geotechnics shall sell, transfer and/or assign to the Company and/or its nominee(s) the three units ofshop offices at Parcel No. 3/Lot 6-G, No. 3A/Lot 28-G and No. 5/Lot 30-G, Sri Desa Entrepreneurs Parkfor the consideration sum of RM340,000.00 only for each unit, the total consideration beingRM1,020,000.00 (the First Consideration Sum) and

b) UCP Manufacturing shall sell, transfer and/or assign to the Company and/or its nominee(s) the twoIndustrial Lots at IL-1943 and Lot IL-1944, Bukit Beruntung Selangor for the consideration sum ofRM698,335.00 and RM478,918.00 respectively, the total consideration being RM1,177,253.00 only (theSecond Consideration Sum).

The total of the First and Second Consideration Sum shall be RM2,197,253.00 only (Total ConsiderationSum). The difference between the Total Consideration Sum and the Total Debts amounted to RM8,400.78only (the difference) shall be settled by NCKH to UCP Manufacturing and UCP Geotechnics by settingoff the same against the payment for goods supplied by NCKH to them from the date thereof.

STATEMENT OF DIRECTORSRESPONSIBILITIES (contd)

(Pursuant to Paragraph 15.27(a) of the Listing Requirements of the KLSE)


21/79

Annual Report 2001


On behalf of the Board of Directors, I hereby present the Annual Report and Financial Statements of the Group forthe financial year ended 30 June 2001.

FINANCIAL RESULTS

For the financial year ended 30 June 2001, the Group registered a loss before taxation of RM154.18 million on aGroup turnover of RM154.88 million. The group turnover of RM154.88 million is a significant decrease ofapproximately 31% from that of the previous year of RM223.48 million. This drop in Group turnover is attributedto the severe liquidity conditions experienced by the Group and the unfavourable conditions in the constructionindustry during the financial period under review.

The Groups loss before taxation of RM154.18 million is significantly higher than the RM75.67 million registeredfor the previous year. The Group has made substantial provisions for doubtful debts, stock obsolescence, writedowns on book values of property plant & equipment, provisions for foreseeable losses on land & development

expenditure and provision for diminution in value of quoted investments during the financial period under review.These provisions have in total accounted for approximately RM81.28 million of the current year losses beforetaxation registered by the Group.

APPOINTMENT OF SPECIAL ADMINISTRATORS

Pengurusan Danaharta Nasional Berhad (Danaharta) had on 16 April 2001 appointed YBhg Dato Nordin BinBaharuddin, Mr Adam Primus Varghese Bin Abdullah and Madam Wong Lai Wah of Messrs Ernst & Young asSpecial Administrators of the Company pursuant to Section 24 of the Pengurusan Danaharta Nasional Berhad Act1998 (Danaharta Act).

Danaharta had on 11 October 2001 further appointed the abovenamed YBhg Dato Nordin bin Baharuddin, MrAdam Primus Varghese Bin Abdullah and Madam Wong Lai Wah as Special Administrators to 5 subsidiary companiesnamely NCK Metal Sdn Bhd, Ng Choo Kwan & Sons Hardware Sdn Berhad, Fook Chuan Trading Sdn Bhd, NCKAluminium Extrusion Sdn Bhd and NCK Wire Products Sdn Bhd pursuant to Section 24 of the Danaharta Act.

With these appointments, the Special Administrators assume control of the assets and affairs of the Company andthe 5 subsidiary companies mentioned above. The powers of the Management and the Board of Directors have beensuspended and only the Special Administrators can deal with the assets of the Company and the 5 subsidiaries.

A 12 months moratorium takes effect from the dates of appointment and during this period no creditors may takeany action against the Company or the 5 subsidiaries.

The Special Administrators are presently carrying out a review on the Company to determine the best manner toregularise its financial condition. Thereafter, the Special Administrators will prepare a workout proposal whichmust be examined by an Independent Advisor and Danaharta. Pursuant to Section 46 of the Danaharta Act, the

workout proposal once duly approved by Danaharta, will be submitted to the secured creditors, if any, for theirconsideration and approval. The workout proposal once approved pursuant to Sections 45 and 46 of the DanahartaAct, will then be implemented. Relevant regulatory approvals must also be obtained.

CHAIRMANS STATEMENT


22/79

Annual Report 2001


DIVIDEND

The Board is not recommending any dividend for the financial year under review.

PROSPECTS

The prospects of the Company and of the Group are dependent upon the general economic outlook and the successfuland timely implementation of the Companys and the Groups critical initiatives. These critical initiatives includeamongst others, briefings for interested parties to sudmit offers to acquire the businesses and / or assets of theCompany and the Group.

The Special Administrators are currently reviewing the offers / proposals submitted to them and will thereafterprepare a workout proposal which must be examined by an Independent Advisor and Danaharta.

However should the Company and the Group fail to achieve within the anticipated time frame, its critical initiatives,

which are dependent upon the yet to be proposed workout plan, the assets of the Company and the Group wouldhave to be written down to its estimated realisable value and further provisions made for foreseeable liabilities.

DIRECTORATE

The Board is pleased to welcome Madam Yong Shin Ming who joined the Board as an Independent Non-ExecutiveDirector on 11 June 2001.

We would also thank YBhg Dato Dr Yahya Bin Omar, who resigned from the Board on 12 June 2001 for hiscontribution to the Group during his tenure of office.

APPRECIATION

On behalf of the Board, I wish to extend my appreciation to our shareholders, bankers and business associates fortheir continued support of the Group. To the Management and staff, thank you for your hard work and dedication tothe Group.

NG CHOO KWAN

EXECUTIVE CHAIRMAN

CHAIRMANS STATEMENT (contd)


23/79

Annual Report 2001


The Directors hereby submit their report and the audited financial statements of the Group and of the Company forthe financial year ended 30th June, 2001.

PRINCIPAL ACTIVITIES

The principal activities of the Company consist of investment holding and the provision of management services.The principal activities of its subsidiary companies are shown in Note 4 to the financial statements.

There have been no significant changes in the activities of the Company and of its subsidiary companies during thefinancial year.

FINANCIAL RESULTS

Group Company

RM RM

Loss before share in results of associated companies (152,835,282) (71,610,121)Share in results of associated companies (1,349,352) -

Loss before taxation (154,184,634) (71,610,121)Taxation (560,087) (194,268)

Loss after taxation (154,744,721) (71,804,389)

RESERVES AND PROVISIONS

There were no material transfers to or from reserves or provisions during the financial year other than as disclosed

in the financial statements.

SPECIAL ADMINISTRATORS

The Special Administrators appointed by Pengurusan Danaharta Nasional Berhad are:

YBhg Dato Nordin Bin Baharuddin (Appointed on 16.4.2001)

Mr Adam Primus Varghese Bin Abdullah (Appointed on 16.4.2001)

Madam Wong Lai Wah (Appointed on 16.4.2001)

DIRECTORS

The Directors who served since the date of the last report are:

Ng Choo Kwan

Ng Cheng Kiat

Siow Chau @ Siau Chan Leong

Ng Kiat Beng

Ng Kiat Bee

YBhg Dato Dr Yahya bin Omar (Resigned on 12.6.2001)

Yap Tat Meng

Yong Shin Ming (Appointed on 11.6.2001)

DIRECTORS REPORT


24/79

Annual Report 2001


DIRECTORS BENEFITS

Since the end of the previous financial year, no Director of the Company has received or become entitled to receiveany benefit (other than those disclosed in the financial statements) by reason of a contract made by the Company ora related corporation with any Director or with a firm of which a Director is a member or with a company in whicha Director has a substantial financial interest except for the benefits which may be deemed to have arisen by virtueof transactions between the Company and its related companies and companies in which Directors of the Companyare substantial shareholders as disclosed in Note 32 to the financial statements.

Except for the share options granted pursuant to the Employees Share Option Scheme, neither during nor at the endof the financial year, was the Company a party to any arrangement whose object is to enable Directors to acquirebenefits by means of the acquisition of shares in or debentures of the Company or any other body corporate.

DIRECTORS INTERESTS

The Directors interest in the shares of the Company are as follows:

Number of ordinary shares

of RM1.00 each

As at As at

1.7.2000 Additions Disposals 30.6.2001

Ng Choo Kwan- direct 10,000 - - 10,000- deemed interest * 17,200,312 - - 17,200,312

Ng Cheng Kiat- deemed interest * 17,200,312 - - 17,200,312

* Deemed interested by virtue of their shareholdings in Ng Choo Kwan Holdings Sdn Bhd.

The Directors interest in the shares of its related companies are as follows:


of RM1.00 each

As at As at

1.7.2000 Additions Disposals 30.6.2001

Direct interest in shares

Ng Choo Kwan (MT) Sdn Bhd

Siow Chau @ Siau Chan Leong 10,000 - - 10,000

Fook Chuan Hardware Sdn Bhd

Ng Choo Kwan 49,000 - - 49,000

Ng Cheng Kiat 39,200 - - 39,200

Siow Chau @ Siau Chan Leong 24,500 - - 24,500

Ng Kiat Beng 39,200 - - 39,200

Ng Kiat Bee 39,200 - - 39,200

DIRECTORS REPORT (contd)


25/79

Annual Report 2001



of RM1.00 each

As at As at1.7.2000 Additions Disposals 30.6.2001

Indirect interest in shares

Fook Chuan Hardware Sdn Bhd

Ng Choo Kwan 39,201 - - 39,201

Perumahan NCK Sdn Bhd

Siow Chau @ Siau Chan Leong 1,440,000 - - 1,440,000

By virtue of their interests in the shares in the Company, Mr Ng Choo Kwan and Mr Ng Cheng Kiat are deemedinterested in shares in the subsidiary companies to the extent that the Company has an interest.

Other than as disclosed above, the Directors of the Company do not have any other interest in the shares of theCompany or its subsidiary companies.

Mr Ng Choo Kwan being over the age of seventy years, retires pursuant to Section 129(2) of the Companies Act1965 and seeks re-election as a Director under the provision of Section 129(6) of the said Act to hold office untilthe next Annual General Meeting.

The Director due to retire by rotation in accordance with Article 105 of the Articles of Association of the Companyis Mr Yap Tat Meng and, being eligible, offers himself for re-election.

In accordance with Article 88 of the Articles of Association of the Company, Madam Yong Shin Ming retires and,being eligible, offers herself for re-election.

EMPLOYEES SHARE OPTION SCHEME

The Companys Employees Share Option Scheme (ESOS) was approved by the Securities Commission on 5thMay, 1998 and shareholders at an Extraordinary General Meeting held on 24th December, 1998.

The principal features of the Scheme are as follows:-

i) The eligible persons are local full-time employees (including Executive Chairman and Executive Directors) ofthe Company and its wholly owned subsidiaries, who are at least eighteen (18) years of age and confirmedemployees with at least one (1) year of continuous service, including the service during the probation period asat the Offer Date.

ii) The maximum number of new shares to be offered and allotted under the Scheme shall not in aggregateexceed ten percent (10%) of the total issued and paid-up share capital of the Company at any point of timeduring the existence of the Scheme, which expires on 21st February, 2004.

iii) The offer price for 1 share of RM1.00 each shall be the average of the mean market quotation of the shares ofthe Company as shown in the Daily Official List issued by the Kuala Lumpur Stock Exchange for the five (5)market days immediately preceding the Offer Date or the par value of the shares of the Company, whicheveris the higher.

iv) The shares to be allotted upon any exercise of the option will, upon allotment, rank pari passu in all respectswith the existing shares of the Company.

The person to whom the options have been granted have no right to participate by virtue of the options in any shareissue of any other company.



26/79

Annual Report 2001


The movement in the number of options granted and exercised pursuant to the ESOS during the financial year areas follows:

Option Balance Balance

price as at as at

Granted on per share 1.7.2000 Granted Exercised 30.6.2001

(RM)

3.3.1999 1.43 2,067,000 - - 2,067,000

OTHER STATUTORY INFORMATION

Before the balance sheets and income statements of the Group and of the Company were made out, the Directorstook reasonable steps:

(a) to ascertain the action taken in relation to the writing off of bad debts and the making of provision for doubtfuldebts and satisfied themselves that all known bad debts had been written off and that adequate provision hadbeen made for doubtful debts; and

(b) to ensure that any current assets, other than debts, which were unlikely to realise in the ordinary course ofbusiness their values as shown in the accounting records have been written down to an amount which theymight be expected so to realise.

At the date of this report, the Directors are not aware of any circumstances:

(a) which would render the amounts written off for bad debts or the amount of the provision for doubtful debts inthe financial statements of the Group and of the Company inadequate to any substantial extent; or

(b) which would render the values attributed to the current assets in the financial statements of the Group and ofthe Company misleading; or

(c) which have arisen which render adherence to the existing method of valuation of assets or liabilities of theGroup and of the Company misleading or inappropriate; or

(d) not otherwise dealt with in this report or the financial statements which would render any amount stated in thefinancial statements of the Group and of the Company misleading.

At the date of this report, there does not exist:

(a) any charge on the assets of the Group and of the Company which has arisen since the end of the financial yearwhich secures the liabilities of any other person; or

(b) any contingent liability of the Group and of the Company which has arisen since the end of the financial year.

No contingent or other liability has become enforceable or is likely to become enforceable within the period oftwelve months after the end of the financial year which, in the opinion of the Directors, will or may substantiallyaffect the ability of the Group and of the Company to meet their obligations as and when they fall due.



27/79

Annual Report 2001


In the opinion of the Directors:

(a) other than as disclosed in the financial statements, the results of the Groups and of the Companys operationsduring the financial year were not substantially affected by any item, transaction or event of a material andunusual nature; and

(b) other than as disclosed in the financial statements, there has not arisen in the interval between the end of thefinancial year and the date of this report any item, transaction or event of a material and unusual nature likelyto affect substantially the results of the operations of the Group and of the Company for the financial year inwhich this report is made.

SIGNIFICANT EVENTS

On 16th April, 2001, Pengurusan Danaharta Nasional Berhad had appointed YBhg Dato Nordin Bin Baharuddin,Mr Adam Primus Varghese Bin Abdullah and Madam Wong Lai Wah of Messrs Ernst & Young as SpecialAdministrators of NCK Corporation Berhad pursuant to Section 24 of the Pengurusan Danaharta Nasional BerhadAct 1998.

By virtue of the appointment, the Special Administrators assume control of the assets and affairs of the Company.The powers of the management and Board of Directors are suspended and a twelve months moratorium has beenplaced upon the Company with effect from the date of appointment of Special Administrators.

All legal suits against the Company are subject to Section 41 of the Pengurusan Danaharta Nasional Berhad Act1998 (as amended Danaharta, (Special Administrators)) wherein a moratorium is in existence wherein noproceedings and no execution or other legal process may be commenced or continued except with the prior consentof Danaharta.

On 2nd May, 2001, the Special Administrators held a briefing for interested parties to submit offers to acquire the

businesses and/or assets of the Company.

The interested parties had submitted their proposals on 16th May, 2001. The Special Administrators of the Companyare currently reviewing the offers/proposals submitted to them and thereafter, will prepare a workout proposalwhich must be examined by an Independent Adviser and Danaharta. Pursuant to Section 46 of the PengurusanDanaharta Nasional Berhad Act 1998 (Danaharta Act), the workout proposal once duly approved by Danaharta,will be submitted to the secured creditors, if any, for their consideration and approval. The workout proposal onceapproved pursuant to Section 45 and 46 of the Danaharta Act, will then be implemented. Relevant regulatoryapprovals must also be obtained.

SUBSEQUENT EVENTS

On 11th October, 2001, Pengurusan Danaharta Nasional Berhad had appointed YBhg Dato Nordin Bin Baharuddin,Mr Adam Primus Varghese Bin Abdullah and Madam Wong Lai Wah of Messrs Ernst & Young as SpecialAdministrators to 5 subsidiary companies namely NCK Metal Sdn Bhd, Ng Choo Kwan & Sons Hardware SdnBhd, Fook Chuan Trading Sdn Bhd, NCK Aluminium Extrusion Sdn Bhd and NCK Wire Products Sdn Bhd pursuantto Section 24 of the Pengurusan Danaharta Nasional Berhad Act 1998 .

By virtue of the appointment, the Special Administrators assume control of the assets and affairs of theabovementioned 5 subsidiary companies. The powers of the management and the Board of Directors are suspendedand a twelve months moratorium has been placed upon the above subsidiary companies with effect from the dateof appointment of Special Administrators.

All legal suits against the above subsidiary companies are subject to Section 41 of the Pengurusan DanahartaNasional Berhad Act 1998 (as amended Danaharta, (Special Administrators)) wherein a moratorium is in existence

wherein no proceedings and no execution or other legal process may be commenced or continued except with theprior consent of Danaharta.



28/79

Annual Report 2001


AUDITORS

The auditors, Ong Boon Bah & Co, have indicated their willingness to continue in office.

On behalf of the Board,

NG CHOO KWAN

Director

NG CHENG KIAT

Director

Kuala Lumpur

26th October 2001



29/79

Annual Report 2001


We, NG CHOO KWAN and NG CHENG KIAT, being two of the Directors of NCK CORPORATION BERHAD,do hereby state that, in the opinion of the Directors, the financial statements set out on pages 31 to 65 are drawn up

in accordance with applicable approved accounting standards issued by the Malaysian Accounting Standards Board(MASB) so as to give a true and fair view of the state of affairs of the Group and of the Company as at 30th June,2001 and of the results, changes in equity and cash flows of the Group and of the Company for the financial yearended on that date.

On behalf of the Board

NG CHOO KWAN NG CHENG KIAT

Director Director

Kuala Lumpur

26th October 2001

STATEMENT BY DIRECTORS

I, NG CHENG KIAT, the Director primarily responsible for the financial management of NCK CORPORATIONBERHAD, do solemnly and sincerely declare that the financial statements set out on pages 31 to 65 are, to the bestof my knowledge and belief, correct and I make this solemn declaration conscientiously believing the same to betrue and by virtue of the provisions of the Statutory Declarations Act, 1960.

Subscribed and solemnly declared by the abovenamed NG CHENG KIAT at Kuala Lumpur in the Federal Territoryon 26th October 2001.

NG CHENG KIAT

Before me

T. THARUMARAJAH, PPNNo: W 096Commissioner for OathsKuala Lumpur

STATUTORY DECLARATION


30/79


31/79

Annual Report 2001


We have not acted as auditors for the subsidiary company, Nusantara Kukuh Sdn Bhd. We have considered thefinancial statements of the subsidiary company and the auditors report thereon.

We are satisfied that the financial statements of the subsidiary companies that have been consolidated with theCompanys financial statements are in form and content appropriate and proper for the purposes of the preparationof the consolidated financial statements and we have received satisfactory information and explanations as requiredby us for those purposes.

The auditors reports on the financial statements of the subsidiary companies were not subject to any qualificationand did not include any comment under Subsection (3) of Section 174 of the Companies Act, 1965.

ONG BOON BAH & CO

AF: 0320

Public Accountants

WONG SOO THIAM

1315/11/02(J)

Partner of the Firm

Kuala Lumpur

26th October 2001

REPORT OF THE AUDITORS (contd)

TO THE MEMBERS OF NCK CORPORATION BERHAD (Special Administrators Appointed)


32/79

Annual Report 2001


BALANCE SHEETS

AS AT 30TH JUNE, 2001

GROUP COMPANY

Note 2001 2000 2001 2000

RM RM RM RM

PROPERTY,PLANT AND EQUIPMENT 3 109,509,983 123,278,867 327,686 535,180

SUBSIDIARY COMPANIES 4 - - 27,270,757 90,683,992

ASSOCIATED COMPANIES 5 15,697,773 17,097,108 - -

LAND AND DEVELOPMENTEXPENDITURE - non current portion 7 40,068,750 48,419,522 - -

INVESTMENTS 6 5,857,493 17,557,105 229,660 251,280

INTANGIBLE ASSETS - 34,343 - -

CURRENT ASSETSLand and development expenditure 7 6,776,064 19,842,393 - -

Amount due from contract customers 8 3,175,698 13,314,696 - -Stocks 9 28,218,119 37,548,112 - -Trade debtors 10 57,932,457 118,877,572 - -Other debtors, deposit and prepayments 11 7,530,885 15,041,361 6,802,392 6,222,833Fixed deposits with licensed banks 12 35,838,766 14,223,425 - -Cash and bank balances 4,595,091 3,177,006 50,101 101,199

144,067,080 222,024,565 6,852,493 6,324,032

CURRENT LIABILITIESTrade creditors 33,585,414 49,577,413 - -Other creditors and accruals 13 23,803,122 19,864,788 12,624,249 10,033,154Amount due to directors 14 3,430,327 3,430,327 - -

Short term borrowings 15 567,602,169 505,517,392 51,916,509 45,817,103Taxation 4,513,810 3,693,115 - -

632,934,842 582,083,035 64,540,758 55,850,257

NET CURRENT LIABILITIES (488,867,762) (360,058,470) (57,688,265) (49,526,225)

(317,733,763) (153,671,525) (29,860,162) 41,944,227

Financed by :

SHARE CAPITAL 16 37,360,005 37,360,005 37,360,005 37,360,005

RESERVES 17 (363,393,039) (208,648,318) (67,220,167) 4,584,222

SHAREHOLDERS FUNDS (326,033,034) (171,288,313) (29,860,162) 41,944,227

TERM LOANS 18 5,298,174 12,050,189 - -

DEFERRED CREDITORS 19 2,442,997 5,008,499 - -

DEFERRED TAXATION 20 558,100 558,100 - -

(317,733,763) (153,671,525) (29,860,162) 41,944,227

Net tangible liabilities per share (sen) 26 (872.68) (459.50)

The accompanying notes form an integral part of the financial statements.


33/79

Annual Report 2001


GROUP COMPANY

Note 2001 2000 2001 2000

RM RM RM RM

Revenue 21 154,876,476 223,483,226 194,490 237,587

Cost of sales 21 (151,567,966) (217,969,635) - -

Gross profit 3,308,510 5,513,591 194,490 237,587

Other operating income 10,159,329 9,615,501 - 1,748

Distribution expenses (39,219) (237,343) - -

Administration expenses (13,781,640) (15,281,200) (2,014,622) (1,646,908)

Other operating expenses (74,709,941) (26,369,556) (59,156,773) (1,824,959)

Loss from operations (75,062,961) (26,759,007) (60,976,905) (3,232,532)Finance costs 22 (59,391,687) (46,352,300) (10,611,596) (7,904,884)

Loss before exceptional items (134,454,648) (73,111,307) (71,588,501) (11,137,416)

Exceptional items 23 (18,380,634) (830,309) (21,620) (830,309)

Loss before share in results of

associated companies (152,835,282) (73,941,616) (71,610,121) (11,967,725)

Share in results of associated companies (1,349,352) (1,732,379) - -

Loss before taxation 24 (154,184,634) (75,673,995) (71,610,121) (11,967,725)

Taxation 25 (560,087) (42,064) (194,268) -

Loss after taxation (154,744,721) (75,716,059) (71,804,389) (11,967,725)

Loss per share (sen) 26 (414.20) (203.08)


INCOME STATEMENTS

FOR THE FINANCIAL YEAR ENDED 30TH JUNE, 2001


34/79

Annual Report 2001


GROUP

Share Share Reserve on Accumulated

capital premium consolidation loss TotalRM RM RM RM RM

Balance at 30th June, 1999 37,052,005 3,178,697 12,744,534 (154,318,295) (101,343,059)

Issuance of shares 308,000 132,440 440,440

Reserve on consolidation 5,330,365 5,330,365

As previously reported 14,375,365 14,375,365

Prior year adjustment (Note 29) (9,045,000) (9,045,000)

As restated 5,330,365 5,330,365

Net loss for the financial year (75,716,059) (75,716,059)




COMPANY

Share Share Accumulated

capital premium profit/(loss) Total

RM RM RM RM

Balance at 30th June, 1999 37,052,005 3,178,697 13,240,810 53,471,512

Issuance of shares 308,000 132,440 440,440


Balance at 30th June, 2000 37,360,005 3,311,137 1,273,085 41,944,227


Balance at 30th June, 2001 37,360,005 3,311,137 (70,531,304) (29,860,162)


STATEMENTS OF CHANGES IN EQUITY



35/79

Annual Report 2001


CONSOLIDATED CASH FLOW STATEMENT


Note 2001 2000

RM RM

CASH FLOWS FROM OPERATING ACTIVITIES

Loss before taxation (154,184,634) (75,673,995)

Adjustments for non cash items, interests and dividends 27(a) 148,945,637 69,861,862

Operating loss before working capital changes (5,238,997) (5,812,133)

Increase in land and development expenditure (8,903,863) (3,759,228)

Decrease in amount due from contract customers 7,846,034 5,773,472

Decrease in inventories 11,212,737 13,210,229

Decrease in trade and other receivables 14,658,410 24,568,143

Decrease in trade and other payables (27,845,222) (24,709,441)

Cash (used in)/generated from operations (8,270,901) 9,271,042Tax paid - (372,521)

Interest paid (1,912,591) (1,172,587)

Interest received 2,103,806 1,948,911

Net cash (outflow)/inflow from operating activities (8,079,686) 9,674,845

CASH FLOWS FROM INVESTING ACTIVITIES

Decrease in land and development expenditure

- non current portion 8,350,772 1,286,479

Purchase of property, plant and equipment 27(b) (522,479) (1,197,903)

Purchase of subsidiary company 27(c) - (25,610,924)

Purchase of quoted investments - (14,706)Proceeds from disposal of property, plant and equipment 7,463,913 7,846,160

Proceeds from disposal of quoted and unquoted investments 4,811,055 26,300

Proceeds from disposal of subsidiary companies 27(d) - 3,698

Proceeds from disposal of club membership 274,520 -

Placement of fixed deposits (747,471) (101,555)

Deferred expenditure incurred - (21,140)

Dividend received 35,973 7,654

Net cash inflow/(outflow) from investing activities 19,666,283 (17,775,937)

CASH FLOWS FROM FINANCING ACTIVITIESRepayment of hire purchase and lease creditors (507,002) (3,734,894)

Proceeds from issuance of shares - 440,440

Net cash outflow from financing activities (507,002) (3,294,454)

Net increase/(decrease) in cash and cash equivalents 11,079,595 (11,395,546)

Cash and cash equivalents at beginning of the financial year (105,447,513) (94,051,967)

Cash and cash equivalents at end of the financial year 27(g) (94,367,918) (105,447,513)



36/79

Annual Report 2001


Note 2001 2000RM RM

CASH FLOWS FROM OPERATING ACTIVITIES

Loss before taxation (71,610,121) (11,967,725)

Adjustments for non cash items, interests and dividends 28(a) 69,798,989 9,699,676

Operating loss before working capital changes (1,811,132) (2,268,049)

(Increase)/Decrease in trade and other receivables (783,000) 20,687,161

Increase in amount due from subsidiary companies (2,526,240) (12,389,605)

Decrease in trade and other payables (2,145,771) (1,675,714)

Increase in amount due to subsidiary companies 7,011,903 18,947,030

Cash (used in)/generated from operations (254,240) 23,300,823

Interest received - 43,097

Net cash (outflow)/inflow from operating activities (254,240) 23,343,920

CASH FLOWS FROM INVESTING ACTIVITIES

Purchase of property, plant and equipment (21,707) (49,500)

Purchase of subsidiary company - (24,001,313)

Proceeds from disposal of property, plant and equipment - 700

Proceeds from disposal of quoted and unquoted investments - 26,300

Proceeds from disposal of subsidiary companies - 1,500Dividend received 173 173

Net cash outflow from investing activities (21,534) (24,022,140)

CASH FLOWS FROM FINANCING ACTIVITY

Proceeds from issuance of shares - 440,440

Net cash inflow from financing activity - 440,440

Net decrease in cash and cash equivalents (275,774) (237,780)

Cash and cash equivalents at beginning of the financial year (2,349,135) (2,111,355)

Cash and cash equivalents at end of the financial year 28(b) (2,624,909) (2,349,135)


CASH FLOWS STATEMENT



37/79


38/79

Annual Report 2001


(c) ASSOCIATED COMPANIES

Investments in associated companies are accounted for in the consolidated financial statements by theequity method of accounting. Associated companies are companies in which the Group exercises significantinfluence. Significant influence is the power to participate in the financial and operating policy decisionsof the associated companies but not control over those policies.

Equity accounting involves recognising in the income statement the Groups share of the results ofassociated companies for the financial year. The Groups investments in associated companies are carriedin the balance sheet at an amount that reflects its share of the net assets of the associated companies andincludes goodwill on acquisition. Equity accounting is discontinued when the carrying amount of theinvestment in an associated company reaches zero, unless the Group has incurred obligation or guaranteedobligation in respect of the associated company.

Where necessary, in applying the equity method, adjustments are made to the financial statements of

associated companies to ensure consistency of accounting policies within the Group.

(d) INVESTMENTS

Investment in subsidiary and associated companies and other investments are stated at cost and provisionis made where, in the opinion of the Directors, there is a permanent diminution in value.

(e) PROPERTY, PLANT AND EQUIPMENT AND DEPRECIATION

Property, plant and equipment are stated at cost less accumulated depreciation and accumulated impairmentlosses.

Freehold land and capital work-in-progress are not depreciated. Leasehold land is amortised over theperiod of the respective leases which range from 37 years to 99 years. Depreciation on other property,plant and equipment is provided on the straight line basis to write off the cost of each asset over itsestimated useful life.

The principal annual depreciation rates used are:-

Buildings 2%

Motor vehicles 20%

Plant, machinery and equipment 10% - 20%

Furniture, fittings, office equipment and renovation 5% - 20%

Property, plant and equipment are written down to recoverable amount if, in the opinion of the Directors,

it is permanently less than their carrying value.

(f) LAND AND DEVELOPMENT EXPENDITURE

Land and development expenditure consist of land under development, development expenditure andportion of profit attributable to development work performed todate, less applicable progress billings,provision for foreseeable losses and decline in value. Land held for development are stated at cost.Development expenditure is stated at cost.

Provision for foreseeable losses are made for property development projects based on loss estimated toarise upon the completion of the projects which are already in progress.

NOTES TO THE FINANCIAL STATEMENTS (contd)

30TH JUNE, 2001


39/79

Annual Report 2001


Interest cost incurred on the development of property projects are capitalised and included as part ofdevelopment expenditure. However, capitalisation of interest costs is suspended during extended periods

in which active development is interrupted.

Development expenditure is charged to income statements where the Directors are of the opinion that theamount is not recoverable in the foreseeable future.

(g) AMOUNT DUE FROM CONTRACT CUSTOMERS

The amount due from contract customers for contract works represents cost of contract works incurredand profit attributable to contract works performed to date net of foreseeable losses less progress billings.

Provision for foreseeable losses is made based on the loss estimated to arise over the duration of thecontract after allowing for costs to the extent that such costs are not recoverable under the terms of thecontract.

(h) STOCKS

Stocks are valued at the lower of cost and net realisable value. Provision is made for all deteriorated,damaged, obsolete or slow-moving stocks. Cost is determined principally on a weighted average basis.The cost of raw materials comprise the original purchase price plus cost incurred in bringing the stocks totheir present locations and conditions. The cost of finished goods comprise the cost of raw materials,direct labour, direct charge and a proportion of production overheads.

Stock of development properties are stated at lower of cost and net realisable value.

(i) DEFERRED TAXATION

Provision is made, on the liability method, for taxation deferred by capital allowances and other timingdifferences, except where the tax effects of such timing differences are not expected to reverse in theforeseeable future.

Deferred tax benefit is only recognised when there is a reasonable expectation of realisation in the nearfuture.

(j) PROVISION FOR BAD AND DOUBTFUL DEBTS

Specific provision are made for doubtful debts which have been individually reviewed and identified asbad or doubtful. In addition, general provisions are made to cover possible losses which are not specificallyidentified.

(k) FINANCE LEASES/HIRE PURCHASE

Property, plant and equipment acquired under finance lease and hire purchase are capitalised in the financialstatements and are depreciated in accordance with the policy set out in Note 2(e) above. The correspondingoutstanding obligations due under the finance lease and hire purchase after deducting finance charges areincluded as liabilities in the financial statements. Finance charges are allocated to the income statementsover the periods of the respective agreements.

NOTES TO THE FINANCIAL STATEMENTS (contd)

30TH JUNE, 2001


40/79

Annual Report 2001


(l) FOREIGN CURRENCIES

Transactions in foreign currencies are converted

nck-annualreport 2001 (415kb).pdf

Documents