(b) a first interim dividend of 10.0% per share less tax paid on 18 November 2005, amounting to RM21,203,000 in respect of the financial year under review; and (c) a second interim dividend of 10.0% per share less tax paid on 11 January 2006,
amounting to RM21,284,000 in respect of the financial year under review.
The Directors have proposed a final dividend of 12% per share less tax, amounting to RM25,578,000 making the total for the year 32% per share less tax, amounting to RM68,065,000.
These financial statements do not reflect the final dividend which will be accounted for in the shareholders’ equity as an appropriation of retained profit in the year ending 31 December 2006.
DIRECTORS
The Directors of the Company in office since the date of the last report and at the date of this report are:
Y. Bhg. Gen. (R) Tan Sri Dato’ Mohd Ghazali Hj. Che Mat Y. Bhg. Tan Sri Dato’ Lodin Wok Kamaruddin
Y. Bhg. Lt. Gen. (R) Dato’ Mohd Yusof Din Tuan Hj. Johari Muhamad Abbas
Y. Bhg. Dato’ (Dr.) Megat Abdul Rahman Megat Ahmad Y. Bhg. Datuk Azzat Kamaludin
DIRECTORS’ BENEFITS
Neither at the end of the financial year, nor at any time during that year, did there subsist any arrangement to which the Company was a party, whereby the Directors might acquire benefits by means of the acquisition of shares in or debentures of the Company or any other body corporate, other than those arising from the share options granted under the Boustead Holdings Berhad Employees’ Share Option Scheme, the option to subscribe for shares of Boustead Petroleum Sdn Bhd and the option granted by the holding corporation, Lembaga Tabung Angkatan Tentera.
Since the end of the previous financial year, no Director has received or become entitled to receive a benefit (other than benefits included in the aggregate amount of emoluments received or due and receivable by the Directors as shown in Note 3 to the financial statements or the fixed salary of a full time employee of the Company) by reason of a contract made by the Company or a related corporation with any Director or with a firm of which the Director is a member or with a company in which he has a substantial financial interest, except as disclosed in Note 35 to the financial statements.
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DIRECTORS’ INTERESTS
According to the register of Directors’ shareholding, the interests of Directors in office at the end of the financial year in shares, warrants and options over shares of the Company and its related corporations were as follows:
At At
1/1/05 Acquired Sold 31/12/05 Boustead Holdings Berhad
Shares of RM0.50 each
Y. Bhg. Tan Sri Dato’ Lodin Wok
Kamaruddin 3,600,000 6,500,000 (7,200) 10,092,800
Tuan Hj. Johari Muhamad Abbas 66,666 –– –– 66,666
Shares of RM1.00 each Boustead Properties Berhad
Tuan Hj. Johari Muhamad Abbas 42,500 –– –– 42,500
Y. Bhg. Datuk Azzat Kamaludin 5,000 –– –– 5,000
Affin Holdings Berhad
Y. Bhg. Gen. (R) Tan Sri Dato’
Mohd Ghazali Hj. Che Mat 91,708 –– –– 91,708
Y. Bhg. Tan Sri Dato’ Lodin Wok
Kamaruddin 8,714 –– –– 8,714
Tuan Hj. Johari Muhamad Abbas 27,000 –– –– 27,000
Y. Bhg. Datuk Azzat Kamaludin 110,000 –– –– 110,000
Johan Ceramics Berhad
Y. Bhg. Dato’ (Dr.) Megat Abdul
Rahman Megat Ahmad 2,000 –– –– 2,000
Affin Holdings Berhad – Warrants (W1/W2/W3) Number of Units
Y. Bhg. Tan Sri Dato’ Lodin Wok
Kamaruddin 1,500 –– –– 1,500
Tuan Hj. Johari Muhamad Abbas 8,378 –– *(3,378) 5,000
Y. Bhg. Datuk Azzat Kamaludin 22,500 –– –– 22,500
*expired during the year 082 Directors’ Report
At At 1/1/05 Granted Exercised 31/12/05 Boustead Holdings Berhad
Options over Ordinary Shares of RM0.50 each
Y. Bhg. Tan Sri Dato’ Lodin Wok
Kamaruddin 400,000 –– –– 400,000
In addition, Y. Bhg. Tan Sri Dato’ Lodin Wok Kamaruddin was granted a five-year option by Lembaga Tabung Angkatan Tentera (LTAT) to acquire 9,500,000 Boustead Holdings Berhad shares of RM0.50 each from LTAT at RM1.61 per share. The option which expired on 22 November 2005 has been fully exercised.
In recognition of Y. Bhg. Tan Sri Dato’ Lodin Wok Kamaruddin’s contributions to the Boustead Group, in particular in the negotiations leading up to acquisition of BP Malaysia Sdn Bhd (BPM) and to enhance his commitment as Chairman and shareholder of BPM specifically and the Boustead Group generally, the Company’s Board of Directors had offered him an option to acquire existing ordinary shares of RM1.00 each of up to five percent (5%) of the enlarged issued and paid up capital of Boustead Petroleum Sdn Bhd (formerly known as Boustead Mint Sdn Bhd). The option comprising 4,087,500 ordinary shares of RM1 each will be issued for cash at par together with holding costs of 6% per annum charegeable on a monthly rest basis. The option will expire within two years from the date of granting.
ISSUE OF SHARES
During the financial year, the Company’s issued and paid up share capital was increased from RM289,770,144 to RM296,045,144 through the issuance of 12,550,000 ordinary shares of RM0.50 for cash at exercise prices of ranging from RM0.94 to RM1.50 per ordinary share. The new ordinary shares issued during the financial year rank pari passu with the ordinary shares existing then.
Directors’ Report 083
EMPLOYEES’ SHARE OPTION SCHEME
The Boustead Holdings Berhad Employees’ Share Option Scheme (ESOS) is governed by the by-laws approved by the shareholders at the Extraordinary General Meeting held on 27 April 2001. This Scheme replaces the previous ESOS that expired on 13 June 2001.
The ESOS was implemented on 23 July 2001 and is to be in force for a period of 5 years from the date of implementation.
The main features of the Scheme are disclosed in Note 26 to the financial statements.
OTHER STATUTORY INFORMATION
(a) Before the income statements and balance sheets of the Group and of the Company were made out, the Directors took reasonable steps:
(i) to ascertain that proper action had been taken in relation to the writing off of bad debts and the making of provision for doubtful debts and satisfied themselves that all known bad debts had been written off and that adequate provision had been made for doubtful debts; and
(ii) to ensure that any current assets which were unlikely to realise their value as shown in the accounting records in the ordinary course of business had been written down to an amount which they might be expected so to realise.
(b) At the date of this report, the Directors are not aware of any circumstances which would render:
(i) the amount written off for bad debts or the amount of the provision for doubtful debts in the financial statements of the Group and the Company inadequate to any substantial extent; and
(ii) the values attributed to the current assets in the financial statements of the Group and of the Company misleading.
(c) At the date of this report, the Directors are not aware of any circumstances which have arisen which render adherence to the existing method of valuation of assets or liabilities of the Group and of the Company misleading or inappropriate.
(d) At the date of this report, the Directors are not aware of any circumstances not otherwise dealt with in this report or financial statements of the Group and of the Company which would render any amount stated in the financial statements misleading.
(e) As at the date of this report, there does not exist:
(i) any charge on the assets of the Group or of the Company which has arisen since the end of the financial year which secures the liabilities of any other person; or
084 Directors’ Report
(ii) any contingent liability of the Group or of the Company which has arisen since the end of the financial year.
(f) In the opinion of the Directors:
(i) no contingent liability or other liability has become enforceable or is likely to become enforceable within the period of twelve months after the end of the financial year which will or may affect the ability of the Group or of the Company to meet their obligations as and when they fall due; and
(ii) no item, transaction or event of a material and unusual nature has arisen in the interval between the end of the financial year and the date of this report which is likely to affect substantially the results of the operations of the Group or of the Company for the financial year in which this report is made.
SUBSEQUENT EVENT
Mutiara Rini Sdn Bhd, a wholly owned Subsidiary of Boustead Properties Berhad had on 14 February 2006 entered into a sale and purchase agreement (SPA) with Lembaga Tabung Angkatan Tentera (LTAT) for the disposal of a 26-storey office tower to be erected on a freehold development land situated at Mutiara Damansara at a total consideration of RM168 million. The proposed disposal to LTAT is conditional upon the approval of shareholders of Boustead Properties Berhad.
SIGNIFICANT EVENTS
(a) On 12 December 2005, the Company announced its intention to acquire from Affin Bank Berhad 36,000,001 ordinary shares of RM1.00 each representing approximately 27.7% equity interest in PSC-Naval Dockyard Sdn Bhd (PSCND) for a cash consideration of RM150.12 million. The purchase consideration will be paid in three (3) equal annual instalments of RM50.04 million each, together with a holding cost of 5% per annum until full payment. The proposed acquisition is conditional upon the approval of shareholders of the Company.
(b) On 16 September 2005, the Company entered into a share sale agreement (SPA) with Limaran Logistics Sdn Bhd (Limaran) to acquire 40,000,000 ordinary shares of RM1.00 each representing approximately 30% of the issued and paid-up share capital of PSCND for a cash consideration of approximately RM166.5 million.
Subsequently on 2 December 2005, the Company agreed with Limaran to terminate the SPA, and instead entered into a conditional share sale agreement (SSA) to acquire the entire equity interest in Limaran comprising 2 ordinary shares of RM1.00 each for a cash consideration of RM2. The SSA was completed on 31 December 2005.
Directors’ Report 085
SIGNIFICANT EVENTS (CONT’D)
(c) On 22 March 2005, the Company announced to Bursa Malaysia its intention to embark on an asset backed securitisation exercise (ABS Programme) involving the sale of the Group’s beneficial interests in certain plantation assets to a Special Purpose Vehicle (SPV) for an indicative cash consideration of RM756 million and the proposed leaseback from the SPV of these plantation assets. The ABS Programme which was approved by shareholders at an Extraordinary General Meeting convened on 22 June 2005, was duly completed on 22 November 2005 and the final consideration of RM742 million was received through proceeds raised from the issuance of RM442 million of Sukuk Al-Ijarah, or Islamic bonds and a RM300 million Musyarakah facility by the SPV.
(d) On 30 September 2005, the Group through its Subsidiary Boustead Petroleum Sdn Bhd (formerly known as Boustead Mint Sdn Bhd) acquired 58,310,000 ordinary shares of RM1.00 each representing 70% of the issued and paid-up share capital of BP Malaysia Sdn Bhd (now renamed Boustead Petroleum Marketing Sdn Bhd) for a cash consideration of RM409 million. On even date, Tegas Pertini Sdn Bhd subscribed and paid for 43% of the enlarged issued and paid-up share capital of Boustead Petroleum Sdn Bhd pursuant to the Subscription & Shareholders Agreement dated 5 September 2005.
(e) During the year, the Group subscribed for 51% of the issued and paid up capital of Idaman Pharma Manufacturing Sdn Bhd comprising 510,000 ordinary shares of RM1 each at par for cash.
086 Directors’ Report
AUDITORS
The auditors, Ernst & Young, have expressed their willingness to continue in office.
Signed on behalf of the Board in accordance with a resolution of the Directors.
GEN. (R) TAN SRI DATO’ MOHD GHAZALI HJ. CHE MAT
Kuala Lumpur
28 February 2006 TAN SRI DATO’ LODIN WOK KAMARUDDIN
Directors’ Report 087
STATEMENT BY DIRECTORS
We, GEN. (R) TAN SRI DATO’ MOHD GHAZALI HJ. CHE MAT and TAN SRI DATO’ LODIN WOK KAMARUDDIN, being two of the Directors of BOUSTEAD HOLDINGS BERHAD do hereby state that, in the opinion of the Directors, the financial statements set out on pages 92 to 159 are drawn up in accordance with applicable MASB Approved Accounting
Standards in Malaysia and the provisions of the Companies Act, 1965, so as to give a true and fair view of the financial position of the Group and of the Company as at 31 December 2005 and of the results and the cash flows of the Group and of the Company for the year ended on that date.
Signed on behalf of the Board in accordance with a resolution of the Directors
GEN. (R) TAN SRI DATO’ MOHD GHAZALI HJ. CHE MAT
Kuala Lumpur
28 February 2006 TAN SRI DATO’ LODIN WOK KAMARUDDIN
088 Statement by Directors and Statutory Declaration
STATUTORY DECLARATION PURSUANT TO SECTION 169(16) OF THE COMPANIES ACT, 1965 I, DANIEL EBINESAN, being the Officer responsible for the financial management of BOUSTEAD HOLDINGS BERHAD do solemnly and sincerely declare that the financial statements set out on pages 92 to 159 are in my opinion correct and I make this solemn declaration conscientiously believing the same to be true, and by virtue of the provisions of the Statutory Declarations Act, 1960.
Subscribed and solemnly declared by the above named in Kuala Lumpur on 28 February 2006.
Before me
ZAINALABIDIN BIN NAN DANIEL EBINESAN
Commissioner for Oaths Kuala Lumpur