Contents: To be a leading organisation in the manufacturing and supply of accessories, products and services in the transportation industry.

Transcription

1 Annual ReportDrive:

2 Vision: To be a leading organisation in the manufacturing and supply of accessories, products and services in the transportation industry. Mission: 1. To continuously bring about innovations and quality products in order to ensure customer loyalty and pride, and to achieve customer expansion. 2. To build a Jackspeed community that provides opportunities for growth through continuous personal development and training. 3. To safeguard all stakeholders interests and maximise returns through enhancement of values. Contents: Corporate Profi le: 1 Chairman s Message: 2 Board of Directors: 4 Key Management: 6 Operations Review: 8 Corporate Information: 10 Financial Highlights: 12

3 Jackspeed Corporation Limited Annual Report Corporate Profile: Established in 1993, Jackspeed Corporation Limited has established itself as a recognised brand name in the industry as a manufacturer of automotive leather trim, with one production facility each in Singapore, Malaysia, Thailand and Indonesia. Among its clients are the Ford Group in Thailand, Naza Automotive Manufacturing Sdn. Bhd. and Honda in Malaysia. Jackspeed was listed on the mainboard of the Singapore Exchange since November In addition to the manufacture of custom-fit automotive leather trim for car seats, it also provides leather wrapping for other automotive interior products such as steering wheels, consoles, gear-shift knobs and hand brakes. Customisation of leather, PVC and fabric seats is also possible with us as we have a wide range of colours and designs to choose from. Besides serving the automotive industry, we also cater to specialised industries such as marine and aerospace where we provide leather upholstery for pleasure crafts, helicopters and planes for private client. Jackspeed achieved several international certifications including ISO/TS 16949, the 14th Europe Award for quality, ISO (for environmental management), OHSAS certification (for occupational health and safety management system) and TUV Kraftfahrt Gmbh (for air bag safety). In addition, Jackspeed received numerous awards in recognition of its strength in design and high product and service quality standards. Most recent accolades include the Enterprise 50 and the Singapore Promising Brand Award in Jackspeed is an Approved Vendor of ST Aerospace Engineering Pte Ltd, a Preferred Partner of Hawker Pacific Asia Pte Ltd and an Authorised Vendor for AirAsia Berhad. Drive: Vision 1

4 Chairman s Message: On behalf of the Board of Directors, it is my pleasure in presenting you the Group s Annual Report for the financial year ended 28 February. Against the backdrop of a competitive operating environment, the Group has turned in a satisfactory report card with marked improvement in performance in most business segments compared to the year before. While we actively aligned our resources to achieve greater efficiencies and enhance our core competencies, our key priority continued to be the execution of our growth strategies. Our four drivers of growth remain pivotal in our push forward: local automotive market penetration, overseas automotive market expansion, automotive Original Equipment Manufacturer (OEM) market development, and expansion into the non-automotive market sector. While extending our reach into the region, we have maintained our leadership position in our key markets. As market sentiments continue to improve, the Group has emerged stronger and well-positioned to benefit from the economic upturn. The recent trend of leading auto-makers moving production facilities to the region s developing economies such as Malaysia and Thailand augurs well for the Group. In tandem with this trend, the Group has strategically located its operations in close proximity with these markets in order to more efficiently cater to the needs of its customers. In response to the increased demand from these markets for automotive parts, accessories, leather wrappings and interior parts, the Group has ramped up production in all its business segments. High quality products that meet stringent environmental, health and safety standards, coupled with competitive pricing, attentive service and timely delivery, has placed Jackspeed in a position of market leadership. Today, Jackspeed is an established brandname synonymous with premium quality leather interior products for the automotive, aviation and marine industries. We create customised automotive leather trim designs using the most advanced production techniques. Our proven track record has garnered us strong brand equity, continues to boost sales and supports our marketing efforts and growth strategies.

5 Jackspeed Corporation Limited Annual Report Chairman s Message: FINANCIAL REVIEW In the year under review, the Group focused on growing the business and increasing our market share while sustaining strategic partnerships and strong client relationships. The targets we set in financial year ( FY ) were met in FY. The Group achieved a net profit of $2.47 million. This represents a 24.6% increase from last year s $1.98 million net profit. Our profit before income tax also rose by about $0.88 million or 33.5%, from $2.62 million in FY to $3.50 million in FY. The increase in profit is a direct result of the increase in Group revenue and our ability to manage increasing costs and operating expenses. Group Earnings per Share (EPS) increased from 1.82 cents in FY to 1.88 cents in FY while net asset value per share rose from cents in FY to cents in FY. DIVIDENDS In line with the Group s improved earnings, the Board is pleased to recommend a final gross dividend of 0.6 cent per share to be approved at the forthcoming Annual General Meeting. This is in addition to the interim gross dividend of 0.3 cent per share announced in October, bringing a total dividend yield of about 4%. POSITIVE OUTLOOK In the year under review, we have made significant inroads in exploring new markets and opportunities with the aim of expanding into the region s high potential markets and eventually extending our reach into the global arena. Our foray into the European market has yielded positive results. In the current year, we will continue to capitalise on the growth of this market by expanding our operations, seeking further business development and growing the market share of our distributors. In the region s markets of Malaysia and Thailand, sentiments continue to improve and the general economy is on an upturn. Capitalising on this trend, the Group will focus on the OEM markets to serve the robust automotive industry. Generally, the Group aims to aggressively increase its order books in all segments of its businesses in order to achieve optimum utilisation of its increased production capacity. The Group is committed to creating long-term sustainable and valuable returns for our stakeholders by developing and refining our growth strategies, prudent cost management and meeting the challenges of our operating environments. In the current year, we will continue to align our resources to more efficiently achieve our growth targets while maintaining a high standard of corporate governance. While we hone our ability to anticipate market trends and needs, we will continue with our efforts to be innovative and creative in our products and services. ACKNOWLEDGMENTS Finally, allow me to take this opportunity to express my most sincere gratitude to our customers, business associates and stakeholders for their continued support. To our management and staff, I would like to thank them for their commitment and hard work that continues to push the Group to greater heights and success. JACKSON LIEW HAM CHOW Chairman and CEO 3

6 Board of Directors: LIEW HAM CHOW has been our Executive Director since 1994 and he has been our Chairman and Chief Executive Officer since As CEO, he is in charge of the operations of our Group, and is responsible for the overall performance of our Group, as well as charting and reviewing of the corporate direction and business strategies of our Group. Since the early eighties, Mr Liew has been involved in the automotive business, having set up Jackson Vehicle Service Centre in 1983 and Jackspeed Automobile Service Centre in 1986, both of which started as workshops for the repair and maintenance of motor vehicles. Mr Liew was one of our founding shareholders in 1993 and steered our Company onto the path of the automotive leather trim business. Since 1993, our Company has grown from about nine staff in a flatted factory in Singapore to about 780 staff with production facilities in Singapore, Malaysia, Thailand and Indonesia. Mr Liew has been awarded a honorary degree in Bachelor of Science (Business Administration) from Kennedy- Western University, Cheyenne, Wyoming, the USA. Mr Liew is one of the winners of The Entrepreneur of the Year 2003 award organized by the Rotary Club of Singapore and ASME. CHIEN MING CHEN was appointed as the Chief Operating Officer on 11 August and he has been our Executive Director since Mr Chien has more than 17 years experience in automotive industry and is currently in charge of the Group s administration, sales and production activities, as well as purchase of raw materials for the Group. Prior to joining Jackspeed Manufacturer Malaysia in July 1997 as a General Manager, Mr Chien was a senior manager in Newton Enterprise Co., Ltd, a Taiwanese company whose principal business was the production and supply of automotive leather trim from 1994 to He was a production manager of Golden Showcase Sdn Bhd, a company involved in automotive leather trim business between 1996 and Mr Chien obtained a degree in Bachelor of Science in Electrical Engineering from Chung- Yuan Christian University, Taiwan. 4

7 Jackspeed Corporation Limited Annual Report Board of Directors: VOO JUN HING was appointed as our Executive Director and Chief Financial Officer of the Group on 11 October and 11 August respectively. Mr Voo has more than 15 years of experience in finance and management and is responsible for the Group s finance, accounts, statutory compliance and overall corporate governance. Prior to his appointment, he was the General Manager in charge of Singapore operations covering the administration, human resource, purchasing and production functions. Mr Voo joined our Group in 2000 as our Administration and Human Resource Manager before being promoted to our General Manager of the Malaysia subsidiary. Mr Voo worked at a Malaysia licensed tax firm, Taxplan Management Services Sdn Bhd as a senior tax supervisor between 1989 and He then moved on in 1993 to setup his own management consultancy firm, Vincent Management Consultancy Services, to provide tax, management and accounting consultancy services to companies in Malaysia. Mr Voo obtained a Diploma in Business Studies from Southern College, Johor Bahru, Malaysia and a Higher Stage Group Diploma in Accounting from London Chamber of Commerce and Industry, and has been admitted as an Accounting Administrator of the Malaysian Association of Accounting Administrators. CHANG YEH HONG was appointed as an Independent Director of our Company on 9 October He is presently the managing director of Nordic Corporation Pte Ltd and its related companies. Prior to this appointment, Mr Chang has stepped down as Executive Director of Technics Group Holdings Limited, in charge of finance and corporate development. He has over 18 years of experience in banking with Standard Chartered Bank and Citibank, holding local, regional and global positions. Prior to 2002, he was the regional managing director of Asia Pacific with Citibank and global head of a product group with Standard Chartered Bank. Chang Yeh Hong holds a Bachelor of Arts degree majoring in Economics from the National University of Singapore and has completed the International Executive Management Programme in INSEAD Fountainbleau, France and the Business Financial Management Programme with Manchester Business School, UK. LEE SUET FERN was appointed as an Independent Director of our Company on 9 October She is a practising advocate and solicitor of the Supreme Court of Singapore and works at Stamford Law Corporation as senior director. She qualified as a barrister-at-law at Gray s Inn, London and graduated from Cambridge University with a double first in law. 5

8 Key Management: LIEW SAN CHOW is our General Manager in charge of our Indonesia operations, covering administration, human resource and production functions. He joined our Group in 1996 as a Production Manager in charge of the dayto-day operations for the production of automotive leather trim. Prior to joining our Group, he was working in Jackspeed Automobile Service Centre as a manager supervising the daily operations for the repair and servicing of cars since Liew San Chow has received formal education up to secondary school level. KHOO SOO FANG is our Financial Controller responsible for overseeing and supervising the Finance Department as well as monitoring the performance of our subsidiaries. Prior to joining us in 2001, Khoo Soo Fang was an audit assistant at Messrs Foo, Kon & Tan from 1990 to She then moved on in September 1991 to work as an accountant at Coop International Pte Ltd. In 1994, she joined Glenn Industries (Asia) Pte Ltd as an accountant and from 1997 to 2001, she was the finance manager at Yenom Holdings Pte Ltd. Khoo Soo Fang obtained a Bachelor of Accounting degree from the Nanyang Technological University in She is also a member of the Institute of Certified Public Accountants of Singapore. PANG PUI FUN is our Assistant General Manager in charge of Singapore operations. Before this appointment, Pang Pui Fun was our Group Purchasing Manager responsible for the sourcing, negotiating and purchasing of raw materials and machinery from both our local and overseas suppliers for use in our production facilities. Pang Pui Fun joined our Group in 1995 as an Administrative Assistant. Prior to joining us, she was a quality assurance auditor in Avex Systems Pte Ltd, an electronics company, from 1993 to Pang Pui Fun has obtained an Advanced Diploma in Business Management from the Management Development Institute of Singapore. 6

9 Jackspeed Corporation Limited Annual Report Drive: Performance 7

10 Operations Review: Developments for the Group in FY have been significant and are consistent with our growth strategies. DISTRIBUTOR SEGMENT Group turnover rose by 22% or $5.88 million to reach $32.82 million in FY as compared to $26.94 million in FY. The distributor segment remained the Group s largest revenue provider. This market segment recorded an increase of 5.1% from $20.49 million in FY to $21.53 million in FY, contributing approximately 65% of total Group revenue. A majority of our distributor segment revenue came from our European operations where sales from the European market grew by more than 40%, from $9.88 million in FY to $13.91 million in FY. The increasing lifestyle preference in Europe for car leather seats over fabric-covered car seats has contributed to the segment s improved performance. Distributors in Europe have noted that by partnering Jackspeed, they can effectively respond to the growing clientele demand for custom-made car leather trims. Singapore, on the other hand, experienced a decline in revenue, from $10.83 million in FY to $8.26 million in FY, nevertheless, still remaining profitable. RISING OEM SEGMENT The OEM segment was the Group s second largest revenue contributor. It achieved sales of $8.42 million in FY compared to $3.53 million in FY, recording the highest sales growth of 138.5%. The growth in our OEM segment is credited to the improved operations of our Malaysian subsidiary with turnover increasing from $3.84 million in FY to $5.47 million in FY. During the financial year, we bagged a three-year RM 55 million contract from Naza Automotive Manufacturing Sdn Bhd ( NAM ). Under this contract, we will provide leather trims for NAM s new Multi-Purpose Vehicle ( MPV ) projects for three years starting in November. Securing the contract will boost Group sales in Malaysia as NAM is the only car manufacturer that produces MPVs which are gaining popularity in the country. In FY, we acquired and managed 100% of our Thailand subsidiary. Hence, this year s results also took into account the full contributions of the fast growing Thailand OEM segment as compared to last year. NON-AUTOMOTIVE SECTOR Since the Group established Jackspeed Aviation and Marine in May 2003, we have completed a number of refurbishment projects for corporate and private aircrafts. Our non-automotive segment increased by $0.15 million from $0.24 million in FY to $0.39 million in FY. In the year under review, the Group was granted ISO9001:2000 Aviation Certification. This internationally recognised certification, coupled with our existing Approved Vendor and Preferred Partner status with ST Aerospace Engineering Pte Ltd, Hawker Pacific Asia Pte Ltd and AirAsia Berhad, will help us gain more contracts from the aviation industry players. At present, the aviation industry is undergoing expansion with burgeoning budget airlines in Southeast Asia. We believe this latest development will provide the Group with more opportunities to offer our premium quality products and services to the aviation industry. PRODUCTION FACILITY FY also marked the completion of our new production facility in Gurun, Kedah, Malaysia. Setting up the production is our response to the growth potential of the OEM markets in the region. The facility, which was completed in the fourth quarter of, is expected to increase our already doubled production capacity by more than 30%. HEALTHY CASH FLOW The Group s cash flow position improved with the current ratio up from 2.6 to 2.7 times. Cash flow is healthy, with $3.3 million in net cash flow from operating activities in FY. This is a significant increase from last year s $1.5 million. The improved performance is attributed to better operating profits, a shorter trade cycle, lower interest cost and the absence of associate losses. As a result of our Group s improved cash flow this year, we were able to reduce our bank borrowings from $6.00 million in FY to $2.82 million in FY. The Group is well-positioned to take on the challenges of our operating environment and continue to deliver quality products and total customer satisfaction that will generate positive returns for all our stakeholders, business associates and employees. In the current year, we will ensure that our product innovation and technology growth map will focus on meeting the market s ever-changing demands and needs. 8

11 Jackspeed Corporation Limited Annual Report Drive: Control 9

12 Corporate Information: BOARD OF DIRECTORS: Liew Ham Chow (Chairman and Chief Executive Officer) Chien Ming-Chen (Executive Director and Chief Operating Officer) Voo Jun Hing (Executive Director and Chief Financial Officer) Chang Yeh Hong (Independent Director) Lee Suet Fern (Independent Director) JOINT COMPANY SECRETARIES: Low Mei Mei Maureen, ACIS, LLB (Hons) (London) Khoo Soo Fang, CPA REGISTERED OFFICE: 47 Loyang Drive Singapore Tel: (65) Fax: (65) Website: SHARE REGISTRAR AND SHARE TRANSFER OFFICE: M&C Services Private Limited 138 Robinson Road #17-00 The Corporate Office Singapore AUDITORS: Chio Lim & Associates (member of Horwath International) 18 Cross Street #09-01 Marsh & McLennan Centre Singapore PRINCIPAL BANKERS: Malayan Banking Berhad DBS Bank Ltd United Overseas Bank Limited Oversea-Chinese Banking Corporation Limited Hong Leong Bank Berhad 10

13 Jackspeed Corporation Limited Annual Report Drive: Results 11

14 Financial Highlights: Profi t before income tax $ million Profi t after income tax $ million $ million FY2002 FY2003 FY FY Revenue Profi t before income tax Profi t after income tax

15 Financial Contents Corporate Governance Report 14 Report of the Directors 24 Statement of Directors 27 Auditorsʼ Report 28 Balance Sheets 29 Consolidated Income Statement 30 Statement of Changes in Equity 31 Consolidated Cash Flow Statement 32 Notes to the Financial Statements 33 Statistics of Shareholdings 55 Notice of Annual General Meeting 56 Proxy Form

16 Annual Report Jackspeed Corporation Limited CORPORATE GOVERNANCE BOARD MATTERS The Board s Conduct Of Its Affairs Principle 1: Every company should be headed by an Effective Board to lead and control of the Company. The Board consists of five members, comprising two independent non-executive directors and three executive directors. Together, the directors bring a wide range of business, legal and financial experience relevant to the Group. Liew Ham Chow Chairman and Chief Executive Officer Chien Ming-Chen Executive Director and Chief Operating Officer Voo Jun Hing Executive Director and Chief Financial Officer (appointed on 11 October ) Neo Gim Kiong Executive Director (resigned on 31 August ) Chang Yeh Hong Independent Director Lee Suet Fern Independent Director The Board meets regularly to discuss and address Board matters. The Company s Articles of Association provide for the Board to convene meetings via teleconferencing and electronic means. During the year, the Board met twice. The details of attendance by individual Directors in the year are as follows: Number of meetings held while a member Number of meetings attended Liew Ham Chow 2 2 Chien Ming-Chen 2 2 Voo Jun Hing - - Neo Gim Kiong 2 1 Chang Yeh Hong 2 2 Lee Suet Fern 2 2 The Board is entrusted with the responsibility of the overall management of the Company. The principal functions of the Board are: a) Approving policies, strategies and financial objectives of the Company and monitoring the performance of Management; b) Overseeing the processes for evaluating the adequacy of internal controls, risk management, financial reporting and compliance; c) Approving nominations of board directors, committee members and key personnel; d) Approving annual budgets, funding requirements, expansion programme, capital investment, major acquisitions and divestments proposals. The Company has adopted internal guidelines setting forth matters, such as annual budget and transactions relating to investment, financing, legal and corporate secretarial which require the Board s approval. The Board will review the guidelines on a periodical basis to ensure their relevance to the operations of the Company. Board members are also encouraged to attend seminars and receive training to improve themselves in the discharge of their duties as directors. The Company works closely with professionals to provide its directors with changes to relevant laws, regulations and accounting standards. 14

17 Jackspeed Corporation Limited Annual Report CORPORATE GOVERNANCE Board Composition And Balance Principle 2: There should be a strong and independent element on the Board, which is able to exercise objective judgement on corporate affairs independently, in particular, from Management. No individual or small group of individuals should be allowed to dominate the Board s decision. The Company endeavours to maintain a strong and independent element on the Board. The independent directors have confirmed that they do not have any relationship with the Company or its related companies or its officers that could interfere, or be reasonably perceived to interfere, with the exercise of the director s independent business judgement with a view to the best interests of the Company. The Nominating Committee ( NC ) has reviewed and determined that the said directors are independent. The independence of each director is reviewed annually by the NC. The Board is of the opinion that its current size of five board members is appropriate, taking into account the nature and scope of the Company s operations. Together, the board members possess a balanced field of core competencies to lead the Company. Details of the Board members qualifications and experience are presented in this Annual Report under the heading Board of Directors. Chairman And Chief Executive Officer Principle 3: There should be a clear division of responsibilities at the top of the Company the working of the Board and the executive responsibility of the Company s business which will ensure a balance of power and authority, such that no one individual represents a consideration concentration of power. The Chairman and Chief Executive Officer of the Company is Mr. Liew Ham Chow. The Board, after careful consideration, is of the opinion that the need to separate the roles of the Chairman and Chief Executive Officer is not necessary for the time being. The presence of a strong independent element and the participation of the independent directors ensure that the Chairman and the Chief Executive Officer does not have unfettered powers of decision. The Chairman s duties and responsibilities include:- a) scheduling of meetings to enable the Board to perform its duties responsibly; b) preparing the agenda of meetings; c) ensuring the proper conduct of meetings and accurate documentation of the proceedings; d) ensuring the smooth and timely flow of information between the Board and Management; e) ensuring compliance with internal polices and guidelines of the Company. In addition to the above duties, the Chairman will assume duties and responsibilities as may be required from time to time. Board Membership Principle 4: There should be a formal and transparent process for the appointment of new directors to the Board. As a principle of good corporate governance, all directors should be required to submit themselves for re-nomination and re-election at regular intervals. The Nominating Committee ( NC ) is established comprising three members, the majority of whom are nonexecutive independent directors. 15

18 Annual Report Jackspeed Corporation Limited CORPORATE GOVERNANCE Chairman Member Member : Lee Suet Fern : Chang Yeh Hong : Liew Ham Chow The NC is established for the purposes of ensuring that there is a formal and transparent process for all board appointments. It has adopted written terms of reference defining its membership, administration and duties. The NC met twice during the year and was attended by all members. The duties of the NC are as follow: a) To make recommendations to the Board on all board appointments; b) To re-nominate directors having regard to the director s contribution and performance; c) To determine annually whether or not a director is independent; d) To make recommendation to the Board the performance criteria and appraisal process to be used for the evaluation of the individual directors as well as the effectiveness of the board as a whole, which criteria and process shall be subject to board s approval The Articles of Association of the Company currently require one-third of the directors to retire and subject themselves to re-election by the shareholders in every Annual General Meeting. In addition, all directors of the Company shall retire from office at least once every three years. The details of the board members qualifications and experience including the year of initial appointment and election are presented in this Annual Report under the heading Board of Directors. Board Performance Principle 5: There should be a formal assessment of the effectiveness of the Board as a whole and the contribution by each director to the effectiveness of the Board. The Board acknowledges that it is a good practice for the Company to have a formal assessment of the effectiveness of the Board as a whole and the contributions made by each director to the effectiveness of the Board. However, after reviewing the size of the Board and the frequency of the meetings conducted, the NC is of the view that it is not necessary for the Company to have a formal assessment of the effectiveness of the Board and the individual directors. The NC feels that since the size of the Board is relatively small at five members and that the Board meets regularly, there is no need for a formal assessment. The NC is of the opinion that the Board and each member of the Board has been effective during the year due to the active participation of each board member in each meeting. Access To Information Principle 6: In order to fulfill their responsibilities, board members should be provided with complete, adequate and timely information prior to board meetings and on an on-going basis. The Board is furnished with board papers prior to any board meeting. These papers are issued in sufficient time to enable the directors to obtain additional information or explanations from the Management, if necessary. The board papers include minutes of the previous meeting, reports relating to investment proposals, budgets, financial results announcements, reports from committees, internal and external auditors. The directors may communicate directly with the Management team and the Company Secretary on all matters whenever they deem necessary. The Company Secretary attends board meetings and is responsible for recording of the proceedings. 16

19 Jackspeed Corporation Limited Annual Report CORPORATE GOVERNANCE The Company currently does not have a formal procedure for directors to seek independent and professional advice for the furtherance of their duties. However, directors may, on a case-to-case basis, propose to the Board for such independent and professional advice, the cost of which may be borne by the Company. REMUNERATION MATTERS Procedures For Developing Remuneration Policies Principle 7: There should be a formal and transparent procedure for fixing the remuneration packages of individual directors. No director should be involved in deciding his own remuneration. The Remuneration Committee ( RC ) is established comprising three members, the majority of whom are nonexecutive independent directors. Chairman Member Member : Chang Yeh Hong : Lee Suet Fern : Liew Ham Chow The members of the RC have some expertise in the field of executive compensation. The RC may seek professional advice where necessary. The RC is established for the purposes of ensuring that there is a formal and transparent procedure for fixing the remuneration packages of individual directors. The overriding principle is that no director should be involved in deciding his own remuneration. It has adopted written terms of reference that defines its membership, roles and functions and administration. The RC met once during the year and was attended by all members. The duties of the RC are as follow: a) To review and recommend to the Board in consultation with senior management a framework of remuneration for executive directors, chief executive officer ( CEO ) and senior management staff; b) To review the remuneration packages of all managerial staff that are related to any of the executive directors or CEO; and c) To recommend to the Board in consultation with senior management and the Chairman of the Board, the Executive s and Employees Share Option Schemes or any long-term incentive scheme when applicable. Level of Mix of Remuneration Principle 8: The level of remuneration should be appropriate to attract, retain and motivate the directors needed to run the company successfully but companies should avoid paying more for this purpose. A proportion of the remuneration especially that of executive directors should be linked to performance. The remuneration of the Executive Directors is based on service agreements. The independent directors are paid a director s fee for their efforts and time spent, responsibilities and contribution to the Board, subject to approval by shareholders at the Annual General Meeting. Disclosure on Remuneration Principle 9: Each company should provide clear disclosure of its remuneration policy, level and mix of remuneration, and the procedures for setting remuneration, in the Company s annual report. 17

20 Annual Report Jackspeed Corporation Limited CORPORATE GOVERNANCE Remuneration of Directors and Top Executives of the Company Remuneration Band up to S$250,000 Remuneration Band FY FY Name of Directors >=S$ 250,000 % < S$ 250,000 % >=S$ 250,000 % < S$ 250,000 % Liew Ham Chow Salary - Salary 88 Salary - Salary 97 Fee - Fee - Fee - Fee - Bonus - Bonus - Bonus - Bonus - Other Benefits - Other Benefits 12 Other Benefits - Other Benefits 3 Chien Ming Chen Salary - Salary 100 Salary - Salary 100 Fee - Fee - Fee - Fee - Bonus - Bonus - Bonus - Bonus - Other Benefits - Other Benefits - Other Benefits - Other Benefits - Voo Jun Hing * Salary - Salary 82 Salary - Salary 79 Fee - Fee - Fee - Fee - Bonus - Bonus 12 Bonus - Bonus 21 Other Benefits - Other Benefits 6 Other Benefits - Other Benefits - Neo Gim Kiong ** Salary - Salary 79 Salary - Salary 100 Fee - Fee - Fee - Fee - Bonus - Bonus - Bonus - Bonus - Other Benefits - Other Benefits 21 Other Benefits - Other Benefits - Chang Yeh Hong Salary - Salary - Salary - Salary - Fee - Fee # 100 Fee - Fee 100 Bonus - Bonus - Bonus - Bonus - Other Benefits - Other Benefits - Other Benefits - Other Benefits - Lee Suet Fern Salary - Salary - Salary - Salary - Fee - Fee # 100 Fee - Fee 100 Bonus - Bonus - Bonus - Bonus - Other Benefits - Other Benefits - Other Benefits - Other Benefits - * Voo Jun Hing was appointed as a director on 11/10/. ** Neo Gim Kiong resigned as a director on 31/8/. # Fees are subjected to the approval of the Shareholders at the AGM for FY. 18

21 Jackspeed Corporation Limited Annual Report CORPORATE GOVERNANCE FY FY Names of Executive Officers < S$ 250,000 % < S$ 250,000 % Liew San Chow a Salary 85 Salary 86 General Manager Fee - Fee - (Indonesia operations) Bonus 15 Bonus 14 Other Benefits - Other Benefits - Khoo Soo Fang Salary 82 Salary 71 Financial Controller Fee - Fee - Bonus 18 Bonus 29 Other Benefits - Other Benefits - Pang Pui Fun Salary 83 Salary 85 Assistant General Manager Fee - Fee - a Liew San Chow resigned as a director on 1/8/2003. Bonus 17 Bonus 15 Other Benefits - Other Benefits - The remuneration of the Directors and certain executive officer is reviewed by the RC and is disclosed in the Annual Report. ACCOUNTABILITY AND AUDIT Accountability Principle 10: The Board is accountable to the shareholders while the Management is accountable to the Board. For the financial performance reporting via the SGXNET announcement to SGX-ST and the Annual Report to the shareholders, the Board has a responsibility to present a fair assessment of the Group s financial position including the prospects of the Group. The Board ensures that the Management maintains a sound system of internal control to safeguard the shareholders investment and the Group s assets. The Management will provide all members of the Board with a monthly management report and board papers are given prior to any board meeting to facilitate effective discussion and decision making. Audit Committee Principle 11: The Board should establish an Audit Committee ( AC ) with written terms of reference which clearly set out its authority and duties. The Audit Committee comprises of three members, the majority of whom are non-executive independent directors. Chairman : Chang Yeh Hong Member : Lee Suet Fern Member : Voo Jun Hing (appointed on 11 October ) Member : Neo Gim Kiong (resigned on 31 August ) The AC is established to assist the Board with discharging its responsibility to safeguard the Company s assets, maintain adequate accounting records and develop and maintain effective systems of internal control. The Board is of the opinion that the members of the AC possess the necessary qualifications and experience in discharging their duties. The details of the Board member s qualifications and experience are presented in this Annual Report under the heading Board of Directors. 19

22 Annual Report Jackspeed Corporation Limited CORPORATE GOVERNANCE The terms of reference of the AC are : a) To review the audit plan, system of internal accounting controls and the audit report in conjunction with both the internal and external auditors; b) To review the assistance given by the Company s officers to both the internal and external auditors; c) To review the independence and objectivity of the external auditors annually; d) To nominate external auditors for re-appointment; e) To review the financial statements of the Company including half-year and full-year results and the respective announcements before submission to the Board of Directors; f) To give due consideration to the requirements of Stock Exchange Listing Rules; g) To review interested person transactions. In discharging the above duties, the AC confirms that it has full access to and co-operation from Management and is given full discretion to invite any director or executive director to attend its meetings. In addition, the AC has also been given reasonable resources to enable it to perform its functions properly. The AC has conducted an annual review of the volume of non-audit services to satisfy itself that the nature and extent of such services will not prejudice the independence and objectivity of the auditors before recommending their re-nomination to the Board. During the year, the AC met twice and the details of attendance are as follow: Number of meetings held while a member Number of meetings attended Chang Yeh Hong 2 2 Lee Suet Fern 2 2 Voo Jun Hing - - Neo Gim Kiong 2 1 Internal control Principle 12: The Board should ensure that the Management maintains a sound system of internal controls to safeguard the shareholders investments and the company s assets. The Board believes that, in the absence of any evidence to the contrary, the system of internal controls maintained by the Company s management provides reasonable assurance against material financial misstatements or loss and includes the safeguarding of assets, the maintenance of proper accounting records, the reliability of financial information, compliance with appropriate legislation, regulation and best practice and the identification and management of business risks. The Board notes that no system of internal control can provide absolute assurance against the occurrence of material errors, poor judgment in decision-making, human error, fraud or other irregularities. Internal Audit Principle 13: The Company should establish an internal audit function that is independent of the activities it audits. The Company outsourced its internal control function to a firm of consultants to carry out internal audit review using a risk-based approach. The internal auditors report to the AC and are independent of the activities it audits. The internal auditors assist the AC to independently review the system of internal control as established by the Management of the Company and its subsidiaries which provides the Board with much assurance it requires 20

23 Jackspeed Corporation Limited Annual Report CORPORATE GOVERNANCE regarding the adequacy and integrity of the Group s system of internal control. The internal auditors review the internal controls in the key activities of the business based on a three-year internal audit strategy and a detailed internal audit plan approved by the AC. The internal auditors adopt a risk-based approach and prepare its audit strategy and plan based on the risk profiles of the Group. Recommendations for improvements noted by the internal auditors are followed up for implementation by the Management. During the financial year ended 28 February, the internal auditors carried out one cycle of internal audit to test the existence and effectiveness of the system of internal control of the Company as well as a significant subsidiary. The AC considers report from internal auditors before reporting and making recommendations to the Board in strengthening risk management, internal control and governance system. Communication with Shareholders Principle 14: Companies should engage in regular, effective and fair communication with shareholders. The Company endeavours to communicate regularly, effectively and fairly with its shareholders. The Board ensures that materials and information helpful to shareholders is released on a timely basis. All announcements are communicated to the shareholders through SGXNET. Principle 15: Companies should encourage greater shareholder participation at AGMs, and allow shareholders the opportunity to communicate their views on various matters affecting the Company. The Annual General Meeting is the principal forum for dialogue with shareholders. There is an open question and answer session at which shareholders may raise questions or share their views regarding the proposed resolutions and the Company s businesses and affairs. In addition, the Chairman of the respective committees and the external auditors will be present at the AGM to address any queries from the shareholders. SECURITIES TRANSACTIONS The Company has set out guidelines to the directors and key employees of the group to prohibit dealings in the Company s securities while in possession of price sensitive information and during the period commencing one month before the announcement of the Company s half year and full year results and ending on the date of announcement of the results. All directors and executives of the Company are also advised to observe insider trading laws at all times even when dealing in the Company s securities within the permitted trading period. 21

24 Annual Report Jackspeed Corporation Limited CORPORATE GOVERNANCE INTERESTED PERSON TRANSACTIONS The Company has set out procedures governing all interested person transactions to ensure that they are carried out on an arm s length basis, on normal commercial terms and will not be prejudicial to the interests of the Company and its shareholders. For the financial year under review, the Group entered into interested person transactions with Jackson Vehicle Service Pte Ltd, Jackspeed Automobile (S) Pte Ltd and Stamford Law Corporation. Name of Interested Persons Aggregate value of all interested person transactions during the financial year under review (excluding transactions less than $$100,000 and transactions conducted under shareholders mandate pursuant to Rule 920) Aggregate value of all interested person transactions conducted under shareholders mandate pursuant to Rule 920 (excluding transactions less than S$100,000) Jackspeed Vehicle Service Pte Ltd - - Jackson Automobile (S) Pte Ltd - - Stamford Law Corporation - - BUSINESS RISK MANAGEMENT The Group s market has seen the expansion of activities into more geographical areas, especially in countries where the automotive markets have been assessed to have good potential. We have further expanded our potential market segment by penetrating into the OEM market, where previously, majority of our revenue comes from the car distributor market. We further expect the establishment of new offices and factories in strategic locations. We also continuously seek opportunities to expand both our markets, products and services. INVENTORY RISK MANAGEMENT The Group s sales still comprise a significant portion to the car distributor market, where sales of our products are dependent of the consumer demand of our customer s vehicles, amongst other factors. In order to manage our inventory risk, we seek to understand our car distributor market customers well, by evaluating the markets they operate in, and their modus operandi. We will be able to manage the inventory by having the most practicable level of inventory for certain customers, and at times, we will only place orders for raw materials upon firm orders from customers. HUMAN RESOURCE MANAGEMENT The Company recognises the importance of people and employees morale within the organization. It has in place a systematic process in ensuring that the employees are competitively rewarded and incentives and bonus are accorded based on the performance of the companies within the Group and the grade of the employees. PRODUCTION AND QUALITY RISK The Group adopts the ISO/TS16949 standards and has in place, a production process that will minimize errors and ensure the delivery of quality products to our customers. We have also training system and methods in place for new production workers to ensure that they are qualified to adhere to our stringent systems. 22

25 Jackspeed Corporation Limited Annual Report CORPORATE GOVERNANCE SAFETY AND EMERGENCY RISK MANAGEMENT The Group place strong emphasis on the fire and safety aspects in our daily operations. We have a fire and safety committee that ensure proper prevention and at the same time, the readiness of staff from various departments in handling emergencies. In addition to the ISO14001 certification, we have in place the OHSAS management system as a tool for all staff. MATERIAL CONTRACTS During the financial year under review, the company and its subsidiaries did not enter into any material contract involving the interests of the directors and controlling shareholders. FINANCIAL RISK MANAGEMENT a) Foreign Exchange Risk The Group enters into foreign currency forward contracts in the normal course of business to manage its exposure against foreign currency fluctuations on sale and purchase transactions denominated in foreign currencies. b) Credit Risk Credit risks arise from terms with our customers. The Group monitors the exposure of our credit risks on an on going basis and we have in place, a system that will manage the customer s credit risk exposure. Advance payments and cash terms are requested for new customers while customers with good credit standing do enjoy some terms. Credit Risk on balances of cash and cash equivalents is low as they are placed with reputable financial institutions. c) Liquidity Risk The Group s financing activities are managed mainly centrally by maintaining an adequate level of cash and cash equivalents to finance the Group s operations. Long-term borrowing is a preferred source of financing to ensure continuity of funding. The Group also ensures availability of bank credit lines to address any short term funding requirement. The Group s surplus funds are also manage centrally by placing with reputable financial institutions. d) Interest Rate Risk The Group s exposure to the risk of changes in interest rates arises mainly from the Group s bank borrowings, lease commitments and cash deposits placed with financial institutions. For interest income from cash deposits, the Group managed the interest rate risks by placing cash deposits with reputable financial institutions on varying maturities and interest rate terms. For interest expenses on the Group s borrowings, the Group mitigates interest exposure by fixing interest rates over longer duration through long term borrowings. 23

26 Annual Report Jackspeed Corporation Limited REPORT OF THE DIRECTORS The directors of the company are pleased to present their report together with the audited financial statements of the company and of the group for the financial year ended 28 February. 1 DIRECTORS The directors of the company in office at the date of this report are: Executive directors Chien Ming Chen Liew Ham Chow Voo Jun Hing (Appointed on 11 October ) Non-executive Independent directors Chang Yeh Hong Lee Suet Fern 2 ARRANGEMENTS TO ENABLE DIRECTORS TO ACQUIRE BENEFITS BY MEANS OF THE ACQUISITION OF SHARES AND DEBENTURES Neither at the end of the financial year nor at any time during the financial year did there subsist any arrangement whose object is to enable the directors of the company to acquire benefits by means of the acquisition of shares or debentures in the company or any other body corporate. 3 DIRECTORS' INTERESTS IN SHARES AND DEBENTURES The directors of the company holding office at the end of the financial year had no interests in the share capital of the company and related corporations as recorded in the register of directors' shareholdings kept by the company under section 164 of the Companies Act, Cap 50 except as follows: Name of directors At beginning of year or date of appointment if later At end of year 24 Ordinary shares of $0.06 each Liew Ham Chow 50,345,600 51,645,600 Chien Ming Chen 4,579,000 4,619,000 Chang Yeh Hong 200, ,000 Lee Suet Fern 200, ,000 Voo Jun Hing 980, ,000 By virtue of section 7 of the Companies Act, Cap. 50, Liew Ham Chow is deemed to have an interest in the company and in all the related corporations of the company. The directors interests as at 21 March were the same as those at the end of the year. 4 CONTRACTUAL BENEFITS OF DIRECTORS Since the beginning of the financial year, no director has received or become entitled to receive a benefit which is required to be disclosed under section 201(8) of the Companies Act, Cap 50, by reason of a contract made by the company or a related corporation with the director or with a firm of which he is a member, or with a company in which he has a substantial financial interest except as disclosed in the financial statements. There were certain transactions (shown in the financial statements) with corporations in which certain directors have an interest.

27 Jackspeed Corporation Limited Annual Report REPORT OF THE DIRECTORS 5 OPTIONS TO TAKE UP UNISSUED SHARES During the financial year, no option to take up unissued shares of the company or any corporation in the group was granted. 6 OPTIONS EXERCISED During the financial year, there were no shares of the company or any corporation in the group issued by virtue of the exercise of an option to take up unissued shares. 7 UNISSUED SHARES UNDER OPTION At the end of the financial year, there were no unissued shares of the company or any corporation in the group under option. 8 AUDIT COMMITTEE The members of the audit committee at the date of this report are as follows: Chang Yeh Hong (Chairman) Lee Suet Fern Voo Jun Hing The audit committee performs the functions specified by section 201B (5) of the Companies Act. Among others, it performed the following functions: Reviewed with the external auditors the external audit plan; Reviewed with the external auditors their evaluation of the company s internal accounting control, and their report on the financial statements and the assistance given by the company s officers to them; Reviewed with the internal auditors the scope and results of the internal audit procedures; Reviewed the financial statements of the group and the company prior to their submission to the directors of the company for adoption; and Reviewed the interested person transactions (as defined in Chapter 9 of the Listing Manual of SGX). Other functions performed by the audit committee are described in the report on corporate governance included in the annual report. The audit committee has recommended to the board of directors that the auditors, Chio Lim & Associates, be nominated for re-appointment as auditors at the next annual general meeting of the company. 9 AUDITORS The auditors, Chio Lim & Associates, have expressed their willingness to accept re-appointment. 25