ANNUAL REPORT KAMDAR GROUP (M) BHD ( A)

Transcription

1 ANNUAL REPORT 2010 KAMDAR GROUP (M) BHD ( A)

2 Contents Corporate Information Notice of Annual General Meeting Directors Profile Corporate Structure Chairman s Statement Corporate Governance Statement Audit Committee s Report Statement of Internal Controls Other Disclosure Requirements Pursuant to the Listings Requirements of Bursa Securities Directors Report Statement by Directors Statutory Declaration Independent Auditors Report Statements of Financial Position Statements of Comprehensive Income Statements of Changes in Equity Statements of Cash Flows Notes to the Financial Statements Group s Landed Properties Analysis of Shareholdings Form of Proxy

3 Corporate Information BOARD OF DIRECTORS Bipinchandra A/L Balvantrai Executive Chairman Hamendra A/L B.M. Kamdar Deputy Chairman/ Executive Director Kamal Kumar Kishorchandra Kamdar Managing Director Jayesh R Kamdar A/L Rajnikant Chief Executive Officer/ Executive Director Paresh R. Kamdar Chief Operating Officer/ Executive Director Chia Lee Hoon Group Financial Controller/ Executive Director (resigned w.e.f ) Datuk Emam Mohd Haniff bin Emam Mohd Hussain Senior Independent Non-Executive Director Dato Dr. Shanmughanathan A/L Vellanthurai Independent Non-Executive Director Harjeet Singh A/L Sardara Singh Independent Non-Executive Director (resigned w.e.f ) Rajnikant A/L B.M Kamdar Alternate Director to Paresh R. Kamdar Liang Ah Frank Liang - Independent Non-Executive Director (appointed w.e.f ) Rajesh Kumar A/L Gejinder Nath - Independent Non-Executive Director (appointed w.e.f ) AUDIT COMMITEE Chairman Datuk Emam Mohd Haniff bin Emam Mohd Hussain Members Dato Dr. Shanmughanathan A/L Vellanthurai Liang Ah Frank Liang REMUNERATION COMMITEE Chairman Dato Dr. Shanmughanathan A/L Vellanthurai Members Datuk Emam Mohd Haniff bin Emam Mohd Hussain Hamendra A/L B.M. Kamdar NOMINATION COMMITTEE Chairman Dato Dr. Shanmughanathan A/L Vellanthurai Members Datuk Emam Mohd Haniff bin Emam Mohd Hussain Liang Ah Frank Liang COMPANY SECRETARIES Lim Seck Wah (MAICSA NO.: ) M. Chandrasegaran A/L S. Murugasu (MAICSA NO.: ) REGISTERED OFFICE Level 15-2, Bangunan Faber Imperial Court Jalan Sultan Ismail Kuala Lumpur Tel: Fax: PRINCIPAL BANKERS Affin Bank Berhad Ambank (M) Berhad Bank Islam Malaysia Berhad Bank Muamalat Malaysia Berhad CIMB Bank Berhad Hong Leong Bank Berhad HSBC Bank Malaysia Berhad Malayan Banking Berhad OCBC Bank (Malaysia) Berhad Public Bank Berhad RHB Bank Berhad Standard Chartered Bank Malaysia Berhad United Overseas Bank (M) Berhad SOLICITORS Shahrizat Rashid & Lee Soo Thien Ming & Nashrah Lim Soh & Goonting Stella Soo Geok Choo & Co Syarikat Ng & Annuar AUDITORS SJ Grant Thornton Chartered Accountants STOCK EXCHANGE LISTING Main Board of Bursa Securities Bursa Securities refers to Bursa Malaysia Securities Berhad STOCK CODE: 8672 SHARE REGISTRAR MEGA CORPORATE SERVICES SDN. BHD. (Company No.: H) Level 15-2, Bangunan Faber Imperial Court Jalan Sultan Ismail Kuala Lumpur Tel No. : Fax No. :

4 Notice Of Annual General Meeting NOTICE IS HEREBY GIVEN that the Ninth Annual General Meeting of the members of the Company will be held at Dynasty Grand Ballroom, Dynasty Hotel Kuala Lumpur, Level 5, 218 Jalan Ipoh, Kuala Lumpur on Tuesday, 28 June 2011 at a.m. for the following purposes:- AGENDA AS ORDINARY BUSINESS 1. To receive the Audited Financial Statements for the financial year ended 31 st December 2010 together with the Directors' and Auditors' Reports thereon. Please refer to Note A. 2. To approve the payment of Directors fees for the year ended 31 December Resolution 1 3. To re-elect the following director retiring pursuant to Article 102 of the Company s Articles of Association: Bipinchandra A/L Balvantrai Resolution 2 4. To re-elect the following directors retiring pursuant to Article 109 of the Company s Articles of Association: a. Liang Ah Frank Liang b. Rajesh Kumar A/L Gejinder Nath 5. To re-appoint Messrs SJ Grant Thornton as Auditors of the Company and to authorise the Directors to fix their remuneration. Resolution 3 Resolution 4 Resolution 5 AS SPECIAL BUSINESS To consider, and if thought fit, to pass the following Resolution: ORDINARY RESOLUTION 1. AUTHORITY TO ISSUE SHARES BY THE COMPANY PURSUANT TO SECTION 132D OF THE COMPANIES ACT, 1965 THAT pursuant to Section 132D of the Companies Act, 1965, and subject to the approvals of the relevant governmental and/or regulatory authorities, the Directors be and are hereby empowered to issue, new shares in the Company from time to time upon such terms and conditions and for such purposes as the Directors may deem fit provided that the aggregate number of shares issued pursuant to this resolution does not exceed 10% of the issued share capital of the Company as at the date of this Annual General Meeting and that such authority shall continue in force until the conclusion of the next Annual General Meeting of the Company and THAT the Directors be and are hereby also authorised to obtain the approval from Bursa Securities for the listing and quotation of the additional shares so issued. Resolution 6 2. SPECIAL RESOLUTION PROPOSED AMENDMENT TO ARTICLE 161 OF THE COMPANY S ARTICLES OF ASSOCIATION THAT the existing Article 161 of the Company s Articles of Association be deleted in its entirety and to be substituted with the following :- Proposed New Article 161 Any dividend, interest or other money payable in cash in respect of shares may be paid by direct crediting, cheque or warrant, sent via electronic means or post directed to the registered address of the holder. Every direct crediting or such cheque or warrant shall be made payable to the order of the person to whom it is sent, and the payment of any such cheque or warrant or the payment by direct crediting or such other electronic means to the bank account provided by the holder shall operate as a good discharge of the Company s obligation in respect of the dividend represented thereby, notwithstanding that it may subsequently appear that the same has been stolen or that the endorsement thereon has been forged. Every such cheque or warrant sent or payment by direct crediting or such other electronic means shall be at the risk of the person entitled to the dividend thereby represented. Special Resolution 03

5 Notice Of Annual General Meeting 3. To transact any other business which may properly be transacted at an Annual General Meeting for which due notice shall have been given. By order of the Board LIM SECK WAH (MAICSA ) M. CHANDRASEGARAN A/L S. MURUGASU (MAICSA ) Company Secretaries Dated this: 6 June 2011 Kuala Lumpur Notes A. This Agenda item is meant for discussion only as the provision of Section 169(1) of the Companies Act, 1965 and the Company s Articles of Association do not require a formal approval of the shareholders and hence, is not put forward for voting. B. Jayesh R Kamdar A/L Rajnikant who is due for retirement in accordance with Article 102 of the Company s Articles of Association and being eligible for re-election, does not wish to seek for re-election. C. Dato Dr. Shanmuganathan A/L Vellanthurai who is due for retirement in accordance with Article 102 of the Company s Articles of Association and being eligible for re-election, does not wish to seek for re-election. 1. A member entitled to attend and vote at the Meeting is entitled to appoint a proxy to attend and vote in his/her stead. A member may appoint up to two proxies to attend the same meeting provided that he specifies the proportion of his shareholding to be represented by each proxy. A proxy may but need not be a member of the Company and a member may appoint any person to be his proxy and the provisions of Section 149(1)(a) & (b) of the Companies Act, 1965 shall not apply. 2. Where a member is an authorised nominee as defined under the Security Industry (Central Depositories) Act, 1991, it may appoint at least one (1) proxy in respect of each Securities account it holds with ordinary shares of the Company standing to the credit of the said securities account. 3. The instrument appointing a proxy shall be in writing under the hand of the appointer or his attorney duly authorized in writing or, if the appointer is a corporation, either under the Corporation s Common Seal or under the hand of an officer or attorney so authorized. 4. The Form of Proxy must be deposited at the Registered Office of the Company at Level 15-2, Bangunan Faber Imperial Court, Jalan Sultan Ismail, Kuala Lumpur not less than 48 hours before the time set for holding the meeting or any adjournment thereof. 5. Explanatory Notes To Special Businesses 5.1 Resolution Pursuant to Section 132D of the Companies Act, 1965 The proposed Ordinary Resolution no. 6 is a renewal of the mandate given to the Company by the shareholders at the previous Annual General Meeting held on 29 June 2010, if duly passed, will give the Directors of the Company the flexibility to issue and allot new shares in the Company up to an amount not exceeding in total 10% of the issued share capital of the Company for such purposes as the Directors consider would be in the interest of the Company. This authority, unless revoked or varied at a general meeting, will expire at the conclusion of next Annual General Meeting of the Company. The Company continues to consider opportunities to broaden its earnings potential. If any of the expansion/ diversification proposals involves the issue of new shares, the Directors, under certain circumstance when the opportunity arises, would have to convene a general meeting to approve the issue of new shares even though the number involved may be less than 10% of the issued capital. In order to avoid any delay and costs involved in convening a general meeting to approve such issue of shares, it is thus considered appropriate that the Directors be empowered to issue shares in the Company, up to any amount not exceeding in total 10% of the issued share capital of the Company for the time being, for such purposes. The renewed authority for allotment of shares will provide flexibility to the Company for the allotment of shares for the purpose of funding future investment, working capital and/ or acquisitions. No shares have been issued and allotted by the Company since obtaining the said authority from its shareholders at the last Annual General Meeting held on 29 June Special Resolution 04 The proposed Special Resolution on the Proposed Amendment to Article 161 of the Articles of Association of the Company is to comply with Bursa Malaysia Securities Berhad s Listing Requirements for the Main Market.

6 Directors Profile BIPINCHANDRA A/L BALVANTRAI Executive Chairman Mr. Bipinchandra, a Malaysian, aged 52, has over 31 years experience in the textile and textile-related industries. After completing his General Certificate in Education Ordinary Level in 1976, he joined Globe Textiles Sdn Bhd as a Sales Executive in He joined Kamdar Sdn. Bhd. ( KSB ) in 1980 and became a director in He is currently responsible for the Group s procurement and sourcing of merchandise, locally as well as internationally. He was re-designated as Executive Chairman of KGMB on 21 April He is also a director of KSB, Pusat Membeli-Belah Kamdar (Penang) Sdn. Bhd. ( PMBK (Penang) ), Kesar Sdn. Bhd. ( Kesar ), Kamdar Stores Sdn. Bhd. ( KStores ), Kamdar Holdings Sdn. Bhd. ( KH ) under the KGMB Group and director of Kamdar Properties Sdn. Bhd. ( KPSB ). He is not a member of any board committee. He does not hold any directorships in any other public companies. He holds 56,278,884 shares in KGMB and also has an indirect interest of 955,171 shares via his wife s shareholding in KGMB. He is a sibling to Hamendra A/L B.M. Kamdar and Rajnikant A/L B.M Kamdar. He has no conflict of interest with KGMB and has no convictions for offences within the past ten years except for the traffic offences. HAMENDRA A/L B.M. KAMDAR Deputy Chairman/ Executive Director Mr. Hamendra, a Malaysian, aged 59, has over 36 years experience in the textile and textile-related industries. After completing his Senior Cambridge in 1970, he joined Kesar as a Sales Executive in 1972 and in 1976 became a director of Kesar. He is currently responsible for the export and wholesale operations of KGMB, and the distribution of merchandise within the KGMB Group. He was appointed as an Executive Director of KGMB on 10 November 2004 and resigned on 26 February 2007, subsequently, he was appointed as an Alternate Director to Bipinchandra A/L Balvantrai on 3 August He ceased to be Alternate Director and was appointed as Executive Director on 5 June 2008, subsequently he was redesignated to Deputy Chairman of KGMB on 12 January He is also a director of KSB, Pusat Membeli-Belah Kamdar Sdn. Bhd. ( PMBK ), PMBK (Penang), Kesar and Mint Saga (M) Sdn. Bhd. ( MS ) under the KGMB Group. He is a member of the Remuneration Committee. He does not hold any directorships in any other public companies. He holds 14,704,714 shares in KGMB and also has an indirect interest of 1,868,610 shares via his wife s shareholding in KGMB. He is a sibling to Bipinchandra A/L Balvantrai and Rajnikant A/L B.M Kamdar. He has no conflict of interest with KGMB and has no convictions for offences within the past ten years except for the traffic offences. KAMAL KUMAR KISHORCHANDRA KAMDAR Managing Director Mr. Kamal Kumar, a Malaysian, aged 41. He graduated with an LLB (Hons) degree from Leicester University, and completed the Barrister at Law at Middle Temple, United Kingdom. He was previously a manager of KSB. He is also a director of several private limited companies. He was appointed as a Non-Independent Non-Executive Director of KGMB on 16 February 2005 and redesignated to Executive Director on 5 June 2008 and was subsequently redesignated to Managing Director on 27 May He is not a member of any board committee. He holds 24,738,715 shares in KGMB. He has family relationship with other directors and major shareholders of KGMB. He has no conflict of interest with KGMB and has no convictions for offences within the past ten years except for the traffic offences. JAYESH R KAMDAR A/L RAJNIKANT Chief Executive Officer/ Executive Director Mr. Jayesh, a Malaysian, aged 40. He graduated in 1992 with a degree in Bachelor of Sciences (Hons) Accounting & Finance from the University of Hull and joined the corporate finance department of Commerce International Merchant Bankers Berhad ( CIMB ) in He left CIMB to join the KGMB Group in 1994 and is currently responsible for the KGMB Group s accounting and corporate activities. He was appointed as a Chief Executive Officer of KGMB on 10 November He is also currently a director of KSouth under the KGMB Group. He is not a member of any board committee. He does not hold any directorships in any other public companies. He holds 4,622,376 shares in KGMB. He is a son to Rajnikant A/L B.M Kamdar and a sibling to Paresh R. Kamdar. He has no conflict of interest with KGMB and has no convictions for offences within the past ten years except for the traffic offences. 05

7 Directors Profile (Cont d) PARESH R. KAMDAR Chief Operating Officer/ Executive Director Mr. Paresh, a Malaysian, aged 35. He graduated in 1997 with a degree in Bachelors of Arts in Economics & Finance from the Royal Melbourne Institute of Technology, Australia and joined the KGMB Group immediately after graduation. He is currently responsible for the daily operations of all the retail outlets of KGMB Group. He was appointed as an Executive Director & Chief Operating Officer of KGMB on 10 November He is also currently a director of KSouth under the KGMB Group. He is not a member of any board committee. He does not hold any directorships in any other public companies. He holds 4,325,700 shares in KGMB. He is a son to Rajnikant A/L B.M Kamdar and a sibling to Jayesh R Kamdar A/L Rajnikant. He has no conflict of interest with KGMB and has no convictions for offences within the past ten years except for the traffic offences. DATUK EMAM MOHD HANIFF BIN EMAM MOHD HUSSAIN Senior Independent Non-Executive Director Datuk Emam Mohd Haniff, a Malaysian, aged 69. He graduated with a Bachelor of Arts (Hons) degree from the University of Malaya in 1966 and, in the same year, joined the Ministry of Foreign Affairs (Wisma Putra). Since then he has held various positions both in the Ministry as well as in Malaysian diplomatic missions abroad, culminating in his appointment as Malaysia s Ambassador to Pakistan ( ), Ambassador to the Philippines ( ), and High Commissioner to Singapore ( ). He retired from the Malaysian Diplomatic Service upon reaching the then mandatory age of 55 in He was appointed as an Independent Non-Executive Director of KGMB on 16 February He is the Chairman of the Audit Committee, a member of the Remuneration and Nomination Committees. He currently sits on the boards of Edaran Digital Systems Berhad and Lion Corporation Berhad. He does not hold any shares in KGMB. He has no family relationship with other directors or major shareholders of KGMB. He has no conflict of interest with KGMB and has no convictions for offences within the past ten years except for the traffic offences. DATO DR. SHANMUGHANATHAN A/L VELLANTHURAI Independent Non-Executive Director Dato Dr. Shanmughanathan, a Malaysian, aged 45. He graduated with Bachelors in Accountancy, specialising in Malaysian Taxation from University Utara Malaysia in He joined Ernst & Young as a tax assistant in 1993 and had been promoted to Senior Tax Consultant by the time he left the firm in In October 1997, he was appointed by the Ministry of Finance as Company Auditor and set up his own audit firm, Shan & Co with the approval of the Ministry of Finance. He graduated with a Masters in Business Administration from University Putra Malaysia in He subsequently received his doctorate from Bircham International University in He was appointed as an Independent Non-Executive Director of KGMB on 16 February He is a member of the Audit Committee and the Chairman of the Remuneration and Nomination Committees. He does not hold any shares in KGMB. He has no family relationship with other directors or major shareholders of KGMB. He has no conflict of interest with KGMB and has no convictions for offences within the past ten years except for the traffic offences. RAJNIKANT A/L B.M KAMDAR Alternate Director to Paresh R. Kamdar Mr. Rajnikant, a Malaysian, aged 63, has over 41 years in the textile and textile-related industries and is currently the Central Retail Operations Manager. He is also a director of KSB, PMBK (Penang), Kesar and KH under the KGMB Group. After completing his Senior Cambridge in 1966, he joined M. J. Chandrakant as a Sales Executive in 1967, and in 1982, became a director of TerryCot Pte Ltd in Singapore, whose principal activities were importing and exporting textile and textile-related products. In 1990, he joined KSB, and in 2003 was promoted to his present position where he is assisted in his duties by the various branch managers. He was appointed as an Alternate Director to Paresh R. Kamdar on 10 November He is not a member of any board committee. He does not hold any directorships in any other public companies. He holds 15,267,401 shares in KGMB and also has an indirect interest of 955,171 shares via his wife s shareholding in KGMB. He is a sibling to Bipinchandra A/L Balvantrai and Hamendra A/L B.M. Kamdar. He is father to Jayesh R Kamdar A/L Rajnikant and Paresh R. Kamdar. He has no conflict of interest with KGMB and has no convictions for offences within the past ten years except for the traffic offences. 06

8 Directors Profile (Cont d) 9. LIANG AH FRANK LIANG Independent Non-Executive Director Mr. Liang Ah Frank Liang, a Malaysian, aged 65. He completed SC/MCE from English College, Johor Bharu. He was appointed as a Director of Suria Pembekal Umm Sdn Bhd from 1974 until In 2005, he worked at Business Series Sdn Bhd (Consortium) as a Director / Corporate Advisor until He was appointed as an Independent Non-Executive Director of KGMB on 18 May He is a member of the Audit and Nomination Committees. He does not hold any shares in KGMB. He has no family relationship with other directors or major shareholders of KGMB. He has no conflict of interest with KGMB and has no convictions for offences within the past ten years except for the traffic offences. 10. RAJESH KUMAR A/L GEJINDER NATH Independent Non-Executive Director Mr. Rajesh Kumar A/L Gejinder Nath, a Malaysian, aged 43. He graduated with a Bachelor of Letters and Law (Hons) from University of London in In 1995, he was admitted to the Malaysian Bar. He has since been in active practice covering a vast scope of litigation matters pertaining to civil, commercial and corporate litigation, construction claims and disputes, industrial relations and appellate matters. He is currently a partner of Messrs. Vicknaraj, R.D. Ratnam, Rajesh Kumar & Associates. He is also a member of the Malaysian BAR Council Disciplinary Tribunal. He was appointed as an Independent Non-Executive Director of KGMB on 18 May He is not a member of any board committee. He does not hold any shares in KGMB. He has no family relationship with other directors or major shareholders of KGMB. He has no conflict of interest with KGMB and has no convictions for offences within the past ten years except for the traffic offences. 07

9 Corporate Structure 100% Kamdar Sdn. Bhd. 100% Pusat Membeli-belah Kamdar Sdn. Bhd. 100% Beauty Gallant Sdn. Bhd. 100% Pusat Membeli-belah Kamdar (Penang) Sdn. Bhd. Kamdar Group (M) Berhad 100% Kamdar (South) Sdn. Bhd. 45% 100% Kesar Sdn. Bhd. 100% Mayfair Fabric & Linen (Pty) Ltd) Orisea Trade Sdn. Bhd. 100% Kamdar Holdings Sdn. Bhd. 100% Kamdar Stores Sdn. Bhd. 100% Mint Saga (M) Sdn. Bhd. 100% Kamdar (B) Sdn. Bhd. 70% Kamdar (Bru) Sdn. Bhd. 08

10 Chairman s Statement On behalf of the Board of Directors, I am pleased to present to you the Annual Report and Audited Financial Statements of Kamdar Group (M) Berhad (Kamdar or the Group) for the year ended 31 December FINANCIAL REVIEW In 2010, Kamdar has achieved more than satisfactory growth in the face of an ever-challenging environment of inflation coupled with economic turbulence. Kamdar s growth was a commendable feat coming out from the economic downturn that had impacted economies worldwide. For the year ended 31 December 2010, Kamdar achieved consolidated revenue of million, a growth of 7% higher over the previous year s figure of million. This represents a milestone of sorts, having crossed 200 million. While profit before taxation went from 26 million achieved in the previous year to 19.5 million in the current financial year, in reality there is a growth in profit before tax due to trading activities and rental income (i.e. excluding exceptional items) from million to million. BUSINESS REVIEW The year 2011 will still remain a very challenging year for retailers as we deal with increasing cost in doing business. The increase in commodity and food prices will definitely cause Malaysia s inflation to increase in the near future. However, we believe that the economic recovery experienced is likely to remain sustainable. In Kamdar, we believe that customers spending will continue to remain positive. Kamdar with its established brand name, merchandise differentiation and middle-income customers market focus will maintain if not improve its position within the retail market. We believe that our business will continue to grow in line with the economy. INVESTMENTS IN IT AND SYSTEMS SOLUTIONS In 2011, Kamdar will be investing in a new integrated ERP system. While this will involve significant investment in human resources and training as well, we believe this will bode well for the company s future growth and expansion. This will also lead to streamlining in the various purchasing and distribution processes and more efficient inventory control. Given the complex and comprehensive scope of these implementations, we envisage that it would take at least six months or so before we are able to be fully acquainted and comfortable with the new integration system and have it fully functional. ACKNOWLEDGEMENT Kamdar bids farewell to the following directors. On behalf of the Board, I would like to thank them for their years of service and contribution to the growth and development of Kamdar. Mr Jayesh R Kamdar has tendered his resignation as Chief Executive Officer of Kamdar effective from 30th June He has also opted not to seek re-election as director and will be retiring upon conclusion of the Ninth Annual General Meeting ( AGM ) on 28 June Dato Dr Shanmughanathan A/L Vellanthurai has also opted not to seek re-election as director and will be retiring upon conclusion of the Ninth Annual General Meeting ( AGM ) on 28 June Mr Harjeet Singh A/L Sardara Singh has resigned as an independent director. Ms Chia Lee Hoon has stepped down as a director of Kamdar but remains as its Chief Financial Officer. On behalf of the Board, I would like to welcome our new directors, namely Mr Liang Ah Frank Liang and Mr Rajesh Kumar A/L Gejinder Nath. I would also like to extend my appreciation to and thank the management and our staff at all levels and positions for their contributions, efforts and dedication in continuing to help grow Kamdar in this challenging year. Further, Kamdar would like to express gratitude to our valued customers, business partners, bankers, advisors, government authorities and shareholders for their continuous support and confidence in Kamdar and what it stands for. God Bless.. Bipinchandra Balvantrai Executive Chairman 09

11 Corporate Governance Statement The Board of Directors ( the Board ) of Kamdar Group (M) Berhad is committed to a corporate culture that emphasises good corporate governance and practices throughout the Company and its subsidiaries ( the Group ). The Group will continue to endeavor to comply with all the key Principles and Best Practices of the Malaysian Code on Corporate Governance ( the Code ) in its effort to observe high standards of transparency, accountability and integrity. The Group believes that good corporate governance will help to realise long-term Shareholders value, whilst taking into account the interest of other stakeholders. The Board is pleased to disclose below, a description of the application of the principles of good governance and the extent to which the Group has complied with the best practices advocated by the Code. BOARD OF DIRECTORS The Company is led and managed by an experienced Board, comprising members with a wide range of experience in relevant fields such as textile and furnishing fabrics, entrepreneurship, economics, marketing, finance, accounting, legal and public service. The Directors bring a broad range of skills, experiences and knowledge required to successfully direct and supervise the Group s business activities. A brief profile of each Director are set out in the Directors Profile of this Annual Report. Board Composition and Balance The Board consists of an Executive Chairman, a Deputy Executive Chairman, a Managing Director ( MD ), three (3) Executive Directors (inclusive of one (1) Alternate Director) and four (4) Independent Non-Executive Directors. The roles of the Executive Chairman of the Board and MD are segregated. The Chairman is primarily responsible for the proper conduct and working of the Board whilst the MD is responsible for the day-to-day running of the business and implementation of Board policies and decisions. The four (4) Independent Non-Executive Directors of the Company are independent of management and free from any business relationship which could materially interfere with the exercise of their judgement. They present a good mix of industry specific knowledge plus broad business and commercial experience. They provide guidance, unbiased, fully balanced and independent views, advice and judgement to many aspects of the Group s strategy so as to safeguard the interests of minority shareholders and to ensure that the highest standards of conduct and integrity were maintained by the Group. The Board has also appointed Datuk Emam Mohd Haniff bin Emam Mohd Hussain as the Senior Independent Director to whom concerns may be conveyed. Board Responsibilities The Board retains full and effective control of the Group and has developed corporate objectives and position descriptions including the limits to management s responsibilities, which the Executive Directors are aware and are responsible for meeting. The Board has a formal schedule of matters reserved to itself for decision, which includes the overall Group strategy and direction, investment policy, major capital expenditures, consideration of significant financial matters and review of the financial and operating performance of the Group. The Board understands the principal risks of all aspects of the business that the Group is engaged in recognising that business decisions require the incurrence of risk. To achieve a proper balance between risks incurred and potential returns to shareholders, the Board ensures that there are in place systems that effectively monitor and manage these risks with a view to the long term viability of the Group. As certain Board functions are delegated to management, the Board ensures management is of the highest calibre and has in place programmes to train and develop management and also provide for the orderly succession of management. The Company has in place a policy to enable the Group to communicate effectively with its shareholders, other stakeholders and the public generally. The policy ensures that it effectively interprets the operations of the Group to the shareholders and accommodates feedback from shareholders, which should be factored into the Group s business decisions. Supply of Information Prior to Board meetings, an agenda together with the relevant documents and information are distributed to all Directors. The MD and/or other relevant Board members will provide comprehensive explanation of pertinent issues and recommendations by the management. The issues would then be deliberated and discussed thoroughly by the Board prior to decision-making. Apart from the above, the Board members are updated on the Company s activities and its operations on a regular basis. All Directors have access to all information of the Company on a timely basis in an appropriate form and quality necessary to enable them to discharge their duties and responsibilities. All Directors have access to the advice and services of the Company Secretary and to obtain independent professional advice, whenever necessary, at the expense of the Company. 10

12 Corporate Governance Statement (Cont d) Board Meetings There were five (5) Board of Directors Meetings held during the financial year ended 31 December Details of the attendance of the Directors at the Board of Directors Meetings are as follows: Name of Director Attendance (a) Mr. Bipinchandra A/L Balvantrai 5/5 (b) Mr. Jayesh R Kamdar A/L Rajnikant 5/5 (c) Mr. Paresh R. Kamdar 5/5 (d) Mr. Rajnikant A/L B.M Kamdar (Alternate to Mr. Paresh R. Kamdar) 0/5 (e) Mr. Kamal Kumar Kishorchandra Kamdar 4/5 (f ) Datuk Emam Mohd Haniff Bin Emam Mohd Hussain 5/5 (g) Dato Dr. Shanmughanathan A/L Vellanthurai 5/5 (h) Mr. Hamendra A/L B.M. Kamdar 4/5 (i) Mr. Liang Ah Frank Liang (appointed w.e.f ) - (j) Mr. Rajesh Kumar A/L Gejinder Nath (appointed w.e.f ) - (k) Mr. Harjeet Singh A/L Sardara Singh (resigned w.e.f ) 4/5 (l) Ms. Chia Lee Hoon (resigned w.e.f ) 5/5 Appointments to the Board A Nomination Committee has been established by the Board comprising exclusively of Independent Non-Executive Directors as follows: 1. Dato Dr Shanmughanathan A/L Vellanthurai Chairman (Independent Non-Executive Director) 2. Datuk Emam Mohd Haniff Bin Emam Mohd Hussain Member (Senior Independent Non-Executive Director) 3. Mr Liang Ah Frank Liang Member (Independent Non-Executive Director) The Committee is generally responsible to assess: i. the effectiveness of the Board as a whole, the Committees of the Board and the contribution of each individual Director. ii. the size of the Board and review the mix of skills and experience and other qualities of the Board members required for the Board to function completely and efficiently. iii. and recommend new nominees for appointment to the Board for the Board s final decision-making. The Board is entitled to the services of the Company Secretary who would ensure that all appointments are properly made upon obtaining all necessary information from the Directors. The Nomination Committee met twice during the financial year ended 31 December Re-election In accordance with the provisions of the Articles of Association of the Company, one-third (1/3) of the Board of Directors for the time being or if their number is not three (3) or multiples of three (3), then the number nearest to one-third (1/3) shall retire from office at each Annual General Meeting and shall be eligible for re-election. Directors over seventy (70) years of age are subject for re-appointment annually in accordance with Section 129(6) of the Companies Act Directors Training All the Directors of the Company have attended the Mandatory Accreditation Programme conducted by Bursa Malaysia Training Sdn Bhd within the stipulated timeframe required in the Listing Requirements. As the Continuous Education Programme (CEP) has been repealed by Bursa Malaysia with effect from 01 January 2005, the Board of Directors have adopted a training programme deemed appropriate for the Directors. During the year, the Board Members have attended the directors training as detailed below:- Name of Director Training attended Reason for non - compliance (a) Mr. Bipinchandra A/L Balvantrai 1 day Note 2 (b) Mr. Jayesh R Kamdar A/L Rajnikant - Note 1 (c) Mr. Paresh R. Kamdar - Note 1 (d) Mr. Kamal Kumar Kishorchandra Kamdar - Note 1 (e) Datuk Emam Mohd Haniff Bin Emam Mohd Hussain ½ day Note 3 (f) (g) Dato Dr. Shanmughanathan A/L Vellanthurai Mr. Rajnikant A/L B.M Kamdar 2 days - Note 4 Note 1 (h) Mr. Hamendra A/L B.M. Kamdar - Note 1 (i) Mr. Liang Ah Frank Liang (appointed w.e.f ) (j) Mr. Rajesh Kumar A/L Gejinder Nath (appointed w.e.f ) (k) Mr. Harjeet Singh A/L Sardara Singh (resigned w.e.f ) - Note 1 (l) Ms. Chia Lee Hoon (resigned w.e.f ) 2 days Note 5 Note 1: Had an exceptionally committed schedule for 2010, however, they will continue to undergo further training from time to time. 11

13 Corporate Governance Statement (Cont d) Mode of training Seminar Seminar Title of training The Regulatory Framework and Directors Duties 2010 What Directors Need To Know Sustainability Programme For Corporate Governance Number of hours/days spent 1 day Note 2 ½ day Note 3 Seminar National Tax Conference days Note 4 Seminar Financial Instruments : FRS 139, FRS 132, FRS 7 & IFRS 9 Practical Approach 2 days Note 5 Throughout the year, directors also received updates and briefings, particularly on regulatory, industry and legal developments, including information on significant changes in business and procedures instituted to mitigate such risks. Directors Remuneration A Remuneration Committee has been established by the Board comprising a majority of Non-Executive Directors as follows: 1. Dato Dr Shanmughanathan A/L Vellanthurai Chairman (Independent Non-Executive Director). 2. Datuk Emam Mohd Haniff bin Emam Mohd Hussain Member (Senior Independent Non-Executive Director). 3. Hamendra A/L B.M. Kamdar Member (Deputy Chairman/ Executive Director) The Remuneration Committee shall ensure that the levels of remuneration are sufficient to attract and retain Directors of the quality required to manage the business of the Group. The Remuneration Committee is entrusted under its terms of reference to assist the Board, amongst others, to recommend to the Board the remuneration of the executive directors. In the case of non-executive directors, the level of remuneration shall reflect the experience and level of responsibilities undertaken by the non-executive directors concerned. The Remuneration Committee met once during the financial year ended 31 December 2010 to review the remuneration of the Directors. Details of Directors remuneration of the Group for the financial year ended 31 December 2010 are as follows: Executive Directors () Non -Executive Directors () Directors fees 75, ,000 Salaries 3,143,000 - Other emoluments 468,317 8,500 Benefits in Kind 112,750 - Total 3,799, ,500 The number of Directors whose remuneration fall into the following bands are as follows:- Range of Remuneration () Executive Non -Executive 50,000 and below , , , , , , , , , , , , , , , , , , , , , ,

14 Corporate Governance Statement (Cont d) SHAREHOLDERS Dialogue with Investors Recognising the importance of timely dissemination of information to shareholders and other stakeholders, the Board is committed to ensuring that the shareholders and other stakeholders are well informed of major developments of the Company and the information is communicated to them through the following: i. ii. iii. the Annual Report; the various disclosures and announcements made to Bursa Malaysia Securities Berhad including the Quarterly Results and Annual Results; and the website at which shareholders as well as members of the public are invited to access for the latest information on the Group. General Meetings The Company s Annual General Meeting ( AGM ) serves as a principle forum for dialogue with shareholders. Shareholders are encouraged to meet and communicate with the Board at the AGM and to vote on all resolutions. Extraordinary General Meetings is held as and when required. ACCOUNTABILITY AND AUDIT Financial Reporting The Directors are responsible to present a true and fair assessment of the Group s position and prospects in the annual reports and quarterly reports. The quarterly financial results were reviewed by the Audit Committee and approved by the Board of Directors prior to submission to Bursa Malaysia Securities Berhad. A statement by the Directors of their responsibilities in the preparation of financial statements is set out in the ensuing section. Statement of Directors Responsibility for Preparing Financial Statements The Board is responsible to ensure that the financial statements are properly drawn up in accordance with the provisions of the Companies Act, 1965 and approved accounting standards in Malaysia so as to give a true and fair view of the state of affairs of the Group as at the end of the financial year and of the results and cash flows of the Group for the financial year then ended. The Directors are satisfied that in preparing the financial statements of the Group for the year ended 31 December 2010, the Group has adopted suitable accounting policies and applied them consistently, prudently and reasonably. The Directors also consider that all applicable approved accounting standards have been followed in the preparation of the financial statements, subject to any material departures being disclosed and explained in the notes to the financial statements. The financial statements have been prepared on the going concern basis. The Directors are responsible for ensuring that the Group keeps sufficient accounting records to disclose with reasonable accuracy, the financial position of the Group and which enable them to ensure that the financial statements comply with the Companies Act, Internal Control The Board has an overall responsibility in maintaining a sound internal control system that provides reasonable assurance of effective and efficient operations and compliance with internal procedures and guidelines. The Statement on Internal Control is set out in this Annual Report. Relationship with the Auditors The Board has established a formal and transparent arrangement for maintaining appropriate relationships with the external auditors in seeking professional advice and ensuring compliance with the appropriate accounting standards. The Audit Committee met with the external auditors to discuss their audit plan, audit findings and the financial statements. To this effect, the Audit Committee Chairman met the out-sourced Internal Audit service provider without the presence of Management during the financial year. COMPLIANCE STATEMENT The group has complied with the principles as set out in parts 1 and 2 respectively of the code. 13

15 Audit Committee Report 1. COMPOSITION Chairman Datuk Emam Mohd Haniff bin Emam Mohd Hussain (Senior Independent Non- Executive Director) Members Dato Dr. Shanmughanathan A/L Vellanthurai (Independent Non- Executive Director) Mr Liang Ah Frank Liang (Independent Non- Executive Director) 2. TES OF REFERENCE 2.1 Members The Board shall appoint the committee comprising of no fewer than three (3) non-executive directors, a majority of whom shall be independent. At least one member of the audit committee must be: i) A member of the Malaysian Institute of Accountants, or ii) If he is not a member of the Malaysian Institute of Accountants, he must have at least 3 years working experience and; either - he must have passed the examination specified in Part I of the 1st Schedule of the Accountants Act, 1967; or - he must be a member of one of the associations of accountants specified in Part II of the 1st Schedule of the Accountants Act,1967; iii) Fulfills such other requirements as prescribed or approved by the Exchange. The Chairman of the Audit Committee should be an Independent Non-Executive director and be elected amongst the members of the Committee. No alternate director shall be appointed as a member of the Committee. In the event that the Audit Committee is reduced to less than (3) members, the vacancy shall be filled within 3 months. 2.2 Responsibilities and Duties The duties and responsibilities of the Audit Committee shall be: to consider the nomination of external auditors, the audit fees and any question of resignation or dismissal; to oversee all matters pertaining to audit including the review of the audit plan and report; to review the adequacy of existing external audit arrangements, with particular emphasis on the scope and quality of the audit; to discuss problems and reservations arising from the interim and final results, and any matters the external auditors may wish to discuss (in the absence of management where necessary); to review the quarterly interim results, half-year, annual financial statements and audit report, focusing on : any changes in accounting and operating policies and practices; significant adjustment arising from the audit; adequacy of disclosure of all information in the financial statements essential to a true and fair representation of the financial affairs of the Company and its subsidiary companies; and compliance with applicable approved accounting standards and business practices to review any management letter sent by the external auditors to the Company and the management s response to such letter; to discuss with the external auditors their evaluation of the quality and effectiveness of the internal control and management information systems; to review the adequacy of the scope, functions, resources and competency of the internal audit function and that it has the necessary authority to carry out its work; to review the internal audit programme, processes, the results of the internal audit programme, processes or investigation undertaken and whether or not appropriate action is taken on the recommendations of the internal audit function; to review and approve the annual audit plan proposed by Internal Auditors;

16 Audit Committee Report (Cont d) 2. TES OF REFERENCE (CONT D) 2.2 Responsibilities and Duties (Cont d) - to review the co-operation or assistance given by the Company s officers to both external and internal auditors; - to review all areas of significant financial risk and the arrangements in place to contain those risks to acceptable levels; - to review all related party transactions and potential conflict of interests situations; and - to consider other matters, act upon the Board of Directors request to investigate and report on any issues or concerns in regard to management of the Group, as defined. 2.3 Rights and Authority of the Audit Committee The Company must ensure that whenever necessary and reasonable for the performance of its duties, the Audit Committee shall, in accordance with the procedures to be determined by the Board and at the cost of the Company to: - investigate any matters within its terms of reference; - have adequate resources which it needs to perform its duties; - have full access to any information which it requires in the course of performing its duties; - have unrestricted access to the chief executive officer and the chief financial officer; - have direct communication channels with the external and internal auditors (if any) and convene meetings with external auditors and internal auditors or both, excluding the attendance of other directors and employees of the Company; - have access to independent professional or other advice in the performance of its duties at the cost of the Company; and - be able to invite outside professionals with relevant experience and expertise to attend its meetings, if necessary MEETINGS The Committee shall convene at least four (4) regular meetings a year and such additional meetings as the Chairman shall determine. The Chairman shall convene a meeting of the Committee, if so requested by any member of the Committee, the Management of the Group, the internal auditors or the external auditors. The external auditors shall have the right to appear and be heard at any meetings of the Committee and appear before the Committee upon request by the Committee. The Head of Internal Audit and a representative of the external auditors shall attend all meetings of the Committee. Other members of the Board may attend meetings of the Committee upon its invitation. The quorum for any meeting of the Committee shall be two (2) members present in person, both of whom present shall be independent Non-Executive directors. ATTENDANCE OF MEETINGS There were five (5) meetings held during the year Details of the attendance of the committee members are as follows: Name of Director Attendance (a) Datuk Emam Mohd Haniff Bin Emam Mohd Hussain 5/5 (b) Dato Dr. Shanmughanathan A/L Vellanthurai 5/5 (c) Mr. Harjeet Singh A/L Sardara Singh 4/5 (resigned w.e.f ) (d) Mr. Liang Ah Frank Liang (appointed w.e.f ) - 15

17 Audit Committee Report (Cont d) SUMMARY OF ACTIVITIES OF THE AUDIT COMMITTEE DURING THE YEAR 2010 During the financial year, the activities of the Committee included:- Reviewing the quarterly financial result announcements of the Group prior to seeking the Board of Directors approval; Reviewing the audit strategy and plan of the External Auditors; Reviewing External Auditors reports in relation to audit and accounting issues arising from the audit, and updates of new developments on accounting standards issued by the Malaysian Accounting Standards Board; Reviewing the annual financial statements of the Group and the Company; and Reviewing the internal audit reports and the recommendations on audit findings. INTERNAL AUDIT FUNCTIONS The Group s internal audit functions are outsourced to, CG Infocomm Sdn Bhd, an independent professional consulting firm, which reports to the Audit Committee and assists the Board of Directors in monitoring and managing risks and internal controls. The Audit Committee approves the internal audit plan tabled during the Audit Committee meeting during the financial year. The scope of internal audit covers the audits on risk management, internal control, governance and compliance activities of the Group. The reviews were carried out in conformance with the International Standards for the Professional Practice of Internal Auditing issued by The Institute of Internal Auditors. The costs incurred for the internal audit function and risk management consultancy for the financial year 2010 is 58,557. The approach adopted by the Group is of a risk based approach to assess and review the implementation and monitoring of controls of the subsidiary companies. The audit encompasses the following activities: Review and assess the risk management and governance structure of the Group. Review and appraise the soundness, adequacy and application of accounting, financial and other key controls promoting effective control in the Group. Ascertain the extent to which the Group s assets are safeguarded. Ascertain the level of compliance to the Group policy and procedures. Recommend improvements to the existing systems of risk management, internal control and governance. 16

18 Statement Of Internal Control Introduction The Board of Directors of Kamdar Group (M) Berhad ( the Board ) is committed in maintaining a sound system of internal controls throughout the Group and is pleased to provide the following statement which outlines the nature and scope of internal control of the Group during the year under review. This Statement on Internal Control is made in accordance with the Malaysian Code on Corporate Governance and paragraph (b) of the Bursa Malaysia Securities Berhad Listing Requirements, which requires Malaysian public listed companies to make a statement about their state of internal control, as a Group, in their annual report. The Board believes the practice of good corporate governance is an important continuous process and not just a matter to be covered as compliance in its Annual Report. Hence, the Board endeavours to maintain an adequate system of internal control that is designed to manage, rather than eliminate risk, and to improve the governance process of the Group. Board Responsibility The Board acknowledges its overall responsibility for the internal control system to cover the financial, compliance and operational controls of the Group. The Board also recognizes its responsibility for reviewing the adequacy and integrity of the system of internal control to safeguard shareholders investment and the Group s assets. However, it should be noted that such a system is designed to manage rather than eliminate the risk of failure to achieve business objectives and can only provide reasonable and not absolute assurance against material misstatement or loss. Risk Management Framework The Board maintains the Group s risk management policy and framework to continually update and identify the various risk factors that could have a potentially significant impact on the Group s mid to long term business objectives. The Board, throughout the current financial year, has identified, evaluated and managed the significant risks faced by the Group through monitoring of the Group s operational efficiency and profitability at its Board Meetings. Internal Audit Function CG Infocomm Sdn Bhd ( CG ), an independent professional firm, supports the Audit Committee, and by extension, the Board, by providing independent assurance on the effectiveness of the Group s system of internal control. In particular, CG appraises and contributes towards improving the Group s risk management and control systems and reports to the Audit Committee on a quarterly basis. In assessing the adequacy and effectiveness of the system of internal control and financial control procedures of the Group, the Audit Committee reports to the Board on its activities, significant audit results or findings and the necessary recommendations or actions needed to be taken by management to rectify those issues. The internal audit work plan, which reflects the risk profile of the Group s major business sectors is routinely reviewed and approved by the Audit Committee. The scope of CG s function covered the audit and review of governance, risk assessment, compliance, operational and financial control across all business units. CG refers to the requirements of The International Professional Practices Framework (IPPF) issued by The Institute of Internal Auditors. Key Process The Board confirms that there was an on-going process for identifying, evaluating and managing significant risks of the Group for the financial year under review. The Board has assigned to the Audit Committee the duty of reviewing and monitoring the effectiveness of the Group s internal control system. The embedded control system is designed to facilitate achievement of the Group s business objectives. It comprises the underlying control environment, control process, communication and monitoring systems. The Group s key internal control processes were assessed based on the principles of Committee of Sponsoring Organisation of the Treadway Commission (COSO) Internal Controls Integrated Framework as follows: Control Environment The Group has established clear organization structures with reporting lines of responsibilities clearly indicated throughout its outlets nationwide. There is adequate upper level managerial support wherein, the Directors are directly and actively involved in business operations. Reporting lines lead upwards from Branch and Regional Managers to the Senior Management team at Headquarters. This set forth sound integrity, ethical values and good corporate governance as standard conduct from senior management. Management also made regular visits to its branches to obtain first-hand knowledge and to better understand individual branch environment. 17