annual report 2000 - morningstar, inc

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KIM ENG HOLDINGS LIMITED

(Incorporated in the Republic of Singapore)AND ITS SUBSIDIARIES

Kim Eng Annual Report 2000 5

corporate information

SINGAPOREKim Eng Securities(Private) Limited(Member of the SingaporeExchange Securities TradingLimited)9 Temasek Boulevard#39-00 Suntec Tower TwoSingapore 038989

MALAYSIAKE-ZAN Securities Sdn Bhd(Member of the Kuala LumpurStock Exchange)

Main OfficeWisma KE-ZAN64 Bishop Street10200 PenangMalaysia

Research OfficeSuite 16-02, 16th FloorKompleks AntarabangsaJalan Sultan Ismail50250 Kuala LumpurMalaysia

INDONESIAPT Kim Eng Securities(Member of the JakartaStock Exchange)9th Floor Deutsche BankBuilding

Jl. Imam Bonjol No. 80JakartaIndonesia

BOARD OF DIRECTORSMrs Gloria Lee Kim YewChairperson

Ronald AnthonyOoi Thean YatManaging Director

Lau Wai KwokGee Gek LengAlan Wang Yu Huei

Dr Maurice BakerGordon Seow Li MingProf. Tan Teck Meng

COMPANY SECRETARYGee Gek Leng

REGISTERED OFFICE9 Temasek Boulevard#39-00 Suntec Tower TwoSingapore 038989Tel (65) 336 9090Fax (65) 339 6003

SHARE REGISTRARBarbinder & Co Pte Ltd8 Cross Street #11-00PWC BuildingSingapore 048424

AUDITORSFoo, Kon & Tan47 Hill Street #05-01Chinese Chamberof Commerce& Industry BuildingSingapore 179365

HONG KONGKim Eng Securities(Hong Kong) Limited(Exchange Participant ofHong Kong Exchangesand Clearing Limited)8th Floor, Alexandra House16-20 Chater RoadCentral, Hong Kong

NEW YORKKim Eng Securities USA, Inc(Member of the NationalAssociation of SecuritiesDealers, Inc)406 East 50th StreetNew York NY 10022 USA

LONDONKim Eng Securities(London) Limited(Member of the Securitiesand Futures Authority Limited)6th Floor, 20 St. Dunstan’s HillLondon EC3R 8HYUnited Kingdom

PHILIPPINESATR-Kim Eng Securities, Inc.(Member of the PhilippineStock Exchange)17th Floor Tower One &Exchange PlazaAyala Triangle, Ayala AvenueMakati City, Philippines

THAILANDKim Eng Securities(Thailand) Limited(Member of the StockExchange of Thailand)Thaniya Plaza 10th Floor52 Silom Road, Bangkok10500 Thailand

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2 Kim Eng Annual Report 2000

We had a record year, achieving group profit before tax of S$104.4 million and groupafter tax profit of S$85.6 million. Our strategy to diversify into the region stood us ingood stead during the year as we benefited from the swift economic recovery in SouthEast Asia. All our major operating subsidiaries and associated companies made meaningfulcontributions to the Group’s bottom line. In addition to a 8% First and Final OrdinaryDividend, we are pleased to propose to reward our loyal shareholders with a specialdividend of 15%.

We may have celebrated a good year but we can ill afford to be complacent. A financialrevolution is unfolding before us. The road ahead is paved with uncertainty, being linedwith rapidly changing technology, globalisation of world economies and liberalisationof financial markets in Asia.

Financial sector reforms were first mooted in Singapore before the Asian financial crisisin 1997. Since then, radical changes have been recommended and implemented ata punishing pace. The Singapore Exchange (SGX) was born out of the merger anddemutualisation of the Stock Exchange of Singapore and the Singapore InternationalMercantile Exchange in December 1999 with the aim of producing a world-class capitalmarkets infrastructure. Commission rates on securities transactions on the SGX werepartially liberalised from 1 January 2000. Settlement of trades on the SGX was reducedfrom five trading days to three trading days from trade date with effect from 15 March2000. Membership in the SGX has been liberalised from 1 July 2000. Commission rateswill be fully negotiable from 1 October 2000. At the same time, competition within theindustry for clients and resources will exert considerable pressure on the cost of doingbusiness.

Elsewhere, in the region, Malaysia is also pushing ahead with its own financial sectorrestructuring plans. In Hong Kong, the Stock Exchange of Hong Kong and the HongKong Futures Exchange have been demutualised and merged with the Hong KongSecurities Clearing Company to form Hong Kong Exchanges and Clearing Limited.Commission rates in Malaysia and Thailand will be reduced from September 2000.

The Internet has generated alternative channels of information and hitherto unconventionalavenues of doing business. It has taken hold in the more developed markets in the regionand is fast becoming a way of life.

chairperson’s statement

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Chairperson’s Statement 2

Group Structure 4

Corporate Information 5

Financials 7

Shareholding Statistics 53

Corporate Governance 54Report

contents

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directors’ report

The directors submit this annual report to the members together with the audited financial statements of the

Company and of the Group for the financial year ended 31st March 2000.

1. NAMES OF DIRECTORS

The directors in office at the date of this report are:

Mrs Gloria Lee Kim Yew

Ronald Anthony Ooi Thean Yat

Lau Wai Kwok

Gee Gek Leng

Tan Sri Dr Maurice Baker

Gordon Seow Li-Ming

Wang Yu Huei

Professor Tan Teck Meng

Chan Keng Loke

2. PRINCIPAL ACTIVITIES

The principal activity of the Company is that of an investment holding company. The principal activities of

its subsidiaries consist of those of stockbrokers, sharebrokers and dealers in stocks, shares and investments of

all kinds, acting as nominees for beneficial shareholders, investment holding, investment advisers, property

investment, money lending, margin financing, and management of internal funds. There have been no

significant changes in the nature of these activities during the financial year.

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3. ACQUISITION OR DISPOSAL OF SUBSIDIARIES

During the financial year, the Company acquired the following subsidiaries:

Equity %Name of acquired in net interestsubsidiary Consideration tangible assets acquired

P.T. Kim Eng Securities $193,600 $1,425,923 40%[formerly known as P.T. KES Sinar Mas Securitiesand formerly a 40% owned associated company]

KE Swan & Co. Pte Ltd $2 $2 100%

KE Strategic Pte Ltd $2 $2 100%

There was no disposal of subsidiary during the financial year.

4. FINANCIAL RESULTSThe Company The Group

$ $

Profit after taxation but before minority interests

and extraordinary item 27,757,066 85,691,403

Minority interests – (102,412)

Profit for the year from ordinary activities 27,757,066 85,588,991

Extraordinary item (Note 18 to the financial statements) (96,288) (6,916)

Profit attributable to members of the company 27,660,778 85,582,075

Retained profits brought forward 113,258,012 171,099,981

Transfer to other reserves – (85,706)

Profits available for appropriation 140,918,790 256,596,350

Proposed dividends:

Special dividend of 15% less tax at 25.5% (16,103,437) (16,103,437)

First and final ordinary dividend of 8% less tax at 25.5% (8,588,500) (8,588,500)

(24,691,937) (24,691,937)

Retained profits carried forward 116,226,853 231,904,413

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5. RESERVES OR PROVISIONS

The following transfers to or from reserves or provisions were made during the financial year:The Group

$

a Revaluation reserve

Balance at beginning 1,511,286

Loss on revaluation of an associated company’s seats in exchanges during the year (433,213)

Balance at end 1,078,073

b Reserve funds


Transfer from profit and loss account 77,700


c (Goodwill)/reserve arising on consolidation

Balance at beginning (8,023,201)

Adjustment against goodwill on waiver of debts of a subsidiary by a third party 9,761,000

Reserve on acquisition of a subsidiary 1,232,323

Goodwill on acquisition of associated company (6,197)

Amortisation of goodwill by associated company 51,352


d Exchange fluctuation reserve

Balance at beginning 112,864

Transfer from profit and loss account on disposal of an associated company 8,006

Translation differences during the year (1,254,059)

Balance at end (1,133,189)

e Provision for diminution in value of investments


Provision for the year 568

Provision no longer required (5,862,675)

Provision written off (451)

Exchange difference on translation (5,715)


directors’ report (cont’d)

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The Group$

f Provision for doubtful debts – trade


Provision for the year 25,785,226

Provision no longer required (23,589,862)



g Provision for doubtful debts – others


Provision for the year 98,632

Provision no longer required (798,739)


Balance at end 581,077

6. ISSUE OF SHARES OR DEBENTURES

During the financial year, no shares were issued by the Company.

During the financial year, the following subsidiaries issued shares:

Name of company No. and class of shares issued Purposes and terms

KE Swan & Co Pte Ltd 2 ordinary shares Subscribers’ shares paid for

of S$1 each fully paid in cash and at par

KE Strategic Pte Ltd 2 ordinary shares Subscribers’ shares paid for

of S$1 each fully paid in cash and at par

No debentures were issued by the Company or Group during the financial year.

7. ARRANGEMENTS TO ACQUIRE SHARES OR DEBENTURES

During and at the end of the financial year, neither the Company nor any of its subsidiaries was a party to any

arrangement the object of which was to enable the directors to acquire benefits through the acquisition of shares

in or debentures of the Company or of any other corporate body.

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8. DIRECTORS’ INTEREST IN SHARES OR DEBENTURES

According to the Register of Directors’ Shareholdings kept by the Company under Section 164 of the Companies

Act, Cap. 50, none of the directors who held office at the end of the financial year was interested in shares of the

Company and its related corporations except as follows:Shares of $0.25 each registered

in the name of director

As at As at1.4.1999 31.3.2000

The Company

Kim Eng Holdings Limited

Mrs Gloria Lee Kim Yew 45,891,770 45,891,770

Ronald Anthony Ooi Thean Yat 85,544,928 85,544,928

Lau Wai Kwok 5,215,696 5,215,696

Gee Gek Leng 300,000 300,000

Wang Yu Huei 2,200 2,200

Professor Tan Teck Meng 25,000 25,000

Chan Keng Loke 150,000 350,000

9. DIVIDENDS

The following dividends were paid, declared or proposed during the financial year:

A first and final dividend of 8% less tax at 26% was paid

during the financial year under review in respect of the previous

financial year and shown in the previous Directors’ Report $ 8,530,859

The directors propose that:

a a special dividend of 15% less tax at 25.5% be paid

in respect of the financial year under review $16,103,437

b a first and final ordinary dividend of 8% less tax at 25.5% be paid

in respect of the financial year under review $ 8,588,500

10. BAD OR DOUBTFUL DEBTS

a Before the profit and loss account and balance sheet of the Company were made out, the directors had taken

reasonable steps to ascertain that proper action had been taken in relation to the writing off of bad debts and

to the provision for doubtful debts and had satisfied themselves that all known bad debts had been written off

and that adequate provision had been made for doubtful debts.

b At the date of this report, the directors are not aware of any circumstances which would render the amount

written off for bad debts or the amount of the provision for doubtful debts in the group of companies

inadequate to any substantial extent.


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11. CURRENT ASSETS

a Before the profit and loss account and balance sheet of the Company were made out, the directors had also

taken reasonable steps to ascertain that any current assets which were unlikely to realise their book values

in the ordinary course of business had been written down to their estimated realisable values or had been

adequately provided for.

b At the date of this report, the directors are not aware of any circumstances which would render the values

attributed to current assets in the consolidated financial statements misleading.

12. CHARGE ON ASSETS OR EXISTENCE OF CONTINGENT LIABILITY

As at the date of this report:

i no charge on the assets of the Company and of the subsidiaries has been made since the end of the financial

year to secure the liabilities of any other person; and

ii no contingent liability of the Company and of the subsidiaries has arisen since the end of the financial year.

13. CONTINGENT OR OTHER LIABILITY ENFORCEABLE AFTER YEAR END

No contingent or other liability has become enforceable or is likely to become enforceable within the period of

twelve months after the end of the financial year which, in the opinion of the directors, will or may substantially

affect the ability of the Company and of the Group to meet their obligations as and when they fall due.

14. OTHER CIRCUMSTANCES

At the date of this report, the directors are not aware of any circumstances not otherwise dealt with in the report

or financial statements of the Company and of the Group which would render any amount stated in the financial

statements misleading.

15. ITEM, TRANSACTION, EVENT OF A MATERIAL AND UNUSUAL NATURE

In the opinion of the directors, the results of the operations of the Company and of the Group for the financial

year have not been substantially affected by any item, transaction or event of a material and unusual nature.

16. SUBSEQUENT EVENTS

In the opinion of the directors, no item, transaction or event of a material and unusual nature has arisen since

the end of the financial year which is likely to affect substantially the results of the operations of the Company

and of the Group for the financial year in which this report is made.

17. DIRECTORS’ BENEFITS

Since the end of the previous financial year, no director has received or has become entitled to receive a benefit

under a contract which is required to be disclosed under Section 201(8) of the Companies Act, Cap. 50, except

that all the directors, other than Professor Tan Teck Meng, Tan Sri Dr Maurice Baker and Gordon Seow Li-Ming,

are under the employment of one of its subsidiaries.

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18. SHARE OPTIONS GRANTED

No options were granted during the financial year to take up unissued shares of the Company or of its

subsidiaries.

19. SHARE OPTIONS EXERCISED

No shares were issued by virtue of the exercise of options.

20. UNISSUED SHARES UNDER OPTION

There were no unissued shares under option at the end of the financial year.

21. AUDIT COMMITTEE

The Audit Committee of the Board of Directors comprises three members, all of whom are non-executive

directors.

The members of the Committee at the date of this report are:

Professor Tan Teck Meng (Chairman)

Gordon Seow Li-Ming


The Committee held three meetings since the last Directors’ Report and performed the functions specified in

Section 201B(5) of the Companies Act, Cap. 50. In performing its functions, the Committee reviewed the overall

scope of the external audit and the assistance given by the Company’s officers to the external auditors. It met

with the Company’s external auditors and the internal auditors to discuss the results of their examinations and

evaluation of the Company’s system of internal controls. The Committee also reviewed the financial statements

of the Company and of the Group for the financial year ended 31st March 2000 as well as the auditors’ report

thereon.

The Committee recommends to the Board of Directors the nomination of Foo, Kon & Tan, Certified Public

Accountants, as external auditors at the forthcoming Annual General Meeting of the Company.

22. AUDITORS

The auditors, Foo, Kon & Tan, Certified Public Accountants, have expressed their willingness to accept

re-appointment.

On behalf of the Directors

RONALD ANTHONY OOI THEAN YAT

GEE GEK LENG

30 June 2000


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In the opinion of the directors, the accompanying balance sheets, profit and loss accounts and the consolidated cash

flow statement, together with the notes thereon, are drawn up so as to give a true and fair view of the state of affairs

of the Company and of the Group as at 31st March 2000 and of the results of the business of the Company and of the

Group and cash flows of the Group for the financial year ended on that date and at the date of this statement there

are reasonable grounds to believe that the Company will be able to pay its debts as and when they fall due.

On behalf of the Directors

RONALD ANTHONY OOI THEAN YAT

GEE GEK LENG

30 June 2000

statement by directors

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to the members of KIM ENG HOLDINGS LIMITED

(Incorporated in the Republic of Singapore)

auditors’ report

We have audited the accompanying balance sheets of Kim Eng Holdings Limited and of the Group as at 31st March

2000, the profit and loss accounts and consolidated cash flow statement for the financial year then ended. These

financial statements are the responsibility of the Company’s directors. Our responsibility is to express an opinion on

these financial statements based on our audit.

We conducted our audit in accordance with Singapore Standards on Auditing. Those Standards require that we plan

and perform the audit to obtain reasonable assurance about whether the financial statements are free of material

misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the

financial statements. An audit also includes assessing the accounting principles used and significant estimates made

by the directors, as well as evaluating the overall financial statement presentation. We believe that our audit provides

a reasonable basis for our opinion.

In our opinion:

a the financial statements and consolidated financial statements are properly drawn up in accordance with the

provisions of the Companies Act, Cap. 50 and Statements of Accounting Standard and so as to give a true and

fair view of:

i the state of affairs of the Company and of the Group as at 31st March 2000 and of the results of the Company

and of the Group and of the cash flows of the Group for the financial year then ended on that date; and

ii the other matters required by Section 201 of the Act to be dealt with in the financial statements and

consolidated financial statements;

b the accounting and other records, and the registers required by the Act to be kept by the Company and by those

subsidiaries incorporated in the Republic of Singapore of which we are the auditors have been properly kept in

accordance with the provisions of the Act.

We have considered the financial statements and auditors’ reports of all subsidiaries of which we have not acted

as auditors, being financial statements included in the consolidated financial statements. The names of these

subsidiaries are stated in Note 4 to the financial statements.

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We are satisfied that the financial statements of the subsidiaries that have been consolidated with the financial

statements of the Company are in a form and content appropriate and proper for the purposes of the preparation

of the consolidated financial statements, and we have received satisfactory information and explanations as

required by us for those purposes.

The auditors’ reports on the financial statements of the subsidiaries were not subject to any qualification and in

respect of subsidiaries incorporated in the Republic of Singapore did not include any comment made under Section

207(3) of the Act.

Foo, Kon & Tan

Certified Public Accountants

(Partner-in-charge : Kon Yin Tong)

Singapore

30 June 2000

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The Company The Group2000 1999 2000 1999

NOTE $ $ $ $

NON-CURRENT ASSETS

Fixed assets 3 – – 74,933,336 74,117,295

Interest in subsidiaries 4 226,661,203 233,921,193 – –

Interest in associated companies 5 40,282,497 44,695,398 82,383,915 76,536,127

Investment in Singapore

Exchange Limited 6 – – 250,002 –

Investments/Seats

in other exchanges 7 – – 13,500 1,920,012

Long-term investments 8 5,731,000 575,000 5,731,000 615,001

272,674,700 279,191,591 163,311,753 153,188,435

CURRENT ASSETS 9 219,340,119 194,080,495 782,407,578 615,595,740

Less:

CURRENT LIABILITIES 10 31,293,771 15,519,879 339,107,439 233,298,505

Net current assets 188,046,348 178,560,616 443,300,139 382,297,235

NON-CURRENT LIABILITIES

Unsecured bonds 11 (100,000,000) (100,000,000) (100,000,000) (100,000,000)

Deferred taxation 12 – – (6,872) (6,926)

360,721,048 357,752,207 506,605,020 435,478,744

Represented by:

SHARE CAPITAL 13 144,102,347 144,102,347 144,102,347 144,102,347

SHARE PREMIUM 69,322,446 69,322,446 69,322,446 69,322,446

CAPITAL RESERVES 14 31,069,402 31,069,402 14,471,709 14,904,922

OTHER RESERVES 15 116,226,853 113,258,012 277,823,586 207,149,029

Share capital and reserves 360,721,048 357,752,207 505,720,088 435,478,744

MINORITY INTERESTS – – 884,932 –

360,721,048 357,752,207 506,605,020 435,478,744

The annexed notes form an integral part of and should be read in conjunction with these financial statements

31st March 2000

balance sheets

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NOTE $ $ $ $

Turnover 2 42,410,855 54,136,191 214,013,474 72,722,314

Operating profit before taxation 16 36,324,070 50,380,273 84,827,994 12,253,160Share of profit of

associated companies – – 19,611,252 9,038,248

Profit before taxation 36,324,070 50,380,273 104,439,246 21,291,408Taxation 17 (8,567,004) (8,591,014) (18,747,843) (7,294,812)

Profit after taxation but beforeminority interests andextraordinary item 27,757,066 41,789,259 85,691,403 13,996,596

Minority interests – – (102,412) 53,957

Profit for the year fromordinary activities 27,757,066 41,789,259 85,588,991 14,050,553

Extraordinary item 18 (96,288) 131,770 (6,916) (89,958)

Profit attributableto members of the Company 27,660,778 41,921,029 85,582,075 13,960,595

Retained profits brought forward 113,258,012 79,999,612 171,099,981 167,704,234Transfer (to)/from capital reserves 14 – (131,770) – 89,958Transfer to other reserves 15 – – (85,706) (2,123,947)

Profits available for appropriation 140,918,790 121,788,871 256,596,350 179,630,840

Proposed dividends:Special dividend of 15%

less tax at 25.5% (1999 - Nil) (16,103,437) – (16,103,437) –First and final ordinary dividend of 8%

(1999 - 8%) less tax at25.5% (1999 - 26%) (8,588,500) (8,530,859) (8,588,500) (8,530,859)

(24,691,937) (8,530,859) (24,691,937) (8,530,859)

Retained profits carried forward 15 116,226,853 113,258,012 231,904,413 171,099,981

Retained inCompany 116,226,853 113,258,012Subsidiaries 70,430,638 21,422,099Associated companies 45,246,922 36,419,870

231,904,413 171,099,981

Earnings per share (cents)(basic and diluted) includingextraordinary item 19 14.85 cents 2.42 cents

Earnings per share (cents)(basic and diluted) excludingextraordinary item 19 14.85 cents 2.44 cents


profit & loss accountsfor the financial year ended 31st March 2000

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2000 1999$ $

Cash Flows from Operating Activities

Profit before taxation 104,439,246 21,291,408

Adjustments for:

Amortisation of Seat in Exchange 1,687,707 1,710,011

Depreciation of fixed assets 3,536,369 3,531,708

Profit on disposal of fixed assets (192,461) (11,688)

Fixed assets written off 388,425 66

Provision for diminution in value of investments 568 119,304

Provision for diminution in value of investments no longer required (5,862,675) (1,412,157)

Provision for doubtful debts (net) – trade 2,195,364 3,051,547

– others – 1,291,740

Provision for doubtful debts no longer required (net)

– others (700,107) –

Interest income (23,533,960) (18,057,932)

Interest expense 8,271,175 14,043,713

Share of profits of associated companies (19,611,252) (9,038,248)

Exchange differences (303,440) 3,137,451

Operating profit before working capital changes 70,314,959 19,656,923

Increase in operating receivables (102,402,630) (31,286,319)

Increase in operating payables 109,369,707 63,512

Decrease/(increase) in investments 19,768,793 (16,497,228)

Increase/(decrease) in trust account creditors 2,109,149 (822,885)

Cash generated from/(used in) operations 99,159,978 (28,885,997)

Payment of income tax (5,102,961) (6,929,815)

Interest paid (11,554,127) (10,757,902)

Interest received 26,065,333 15,725,662

Net cash generated from/(used in) operating activities 108,568,223 (30,848,052)

Cash Flows from Investing Activities

Dividends received 15,500,251 18,837,635

Acquisition of additional shares in associated companies – (16,814,980)

Proceeds from disposal of shares in associated company 366,712 –

Proceeds from disposal of fixed assets 700,131 40,268

Purchase of fixed assets (5,281,037) (1,043,768)

Acquisition of unquoted long-term investments (5,156,000) (575,000)

Proceeds from disposal of interest in subsidiary net of cash (Note B) – 431,809

Acquisition of subsidiary net of cash balance acquired (Note C) 3,855,798 (42,353,052)

Net cash generated from/(used in) investing activities 9,985,855 (41,477,088)

Total carried forward 118,554,078 (72,325,140)

for the financial year ended 31st March 2000

consolidated cash flow statement

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2000 1999$ $

Total brought forward 118,554,078 (72,325,140)

Cash Flows from Financing Activities

Payment of dividend (8,530,859) (8,579,703)

Repayment of loan by associated companies 26,080,643 17,163,352

Net cash generated from financing activities 17,549,784 8,583,649

Net increase/(decrease) in cash and cash equivalents 136,103,862 (63,741,491)

Cash and cash equivalents at beginning (Note A) 264,510,905 328,252,396

Cash and cash equivalents at end (Note A) 400,614,767 264,510,905

NOTE:

A. Cash and Cash Equivalents

Cash and cash equivalents consist of fixed deposits, cash and bank balances including trust account balances net of

bank borrowings. Cash and cash equivalents in the above consolidated cash flow statement comprise the following

balance sheet amounts:

2000 1999$ $

Fixed deposits 370,055,685 293,883,805

Cash and bank balances 22,493,479 6,921,224

Trust account bank balances 9,358,147 7,248,998

Bank borrowings (1,292,544) (43,543,122)

400,614,767 264,510,905

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B. Disposal of a subsidiary

The net assets/liabilities disposed of on disposal of shares in a subsidiary comprise the following:

2000 1999$ $

Fixed assets – 686,372

Seats in stock exchange – 275,600

Quoted investments – 5,229

Trade debtors – 1,211,162

Other debtors – 500,195

Cash and bank balances – 268,223

Trade creditors – (1,158,422)

Other creditors – (269,147)

Net assets of subsidiary at date of disposal – 1,519,212

Minority interest – (729,222)

– 789,990

Loss on disposal of subsidiary – (89,958)

Proceeds – 700,032

Cash and cash equivalents in subsidiary disposed of – (268,223)

– 431,809

for the financial year ended 31st March 2000

consolidated cash flow statement (cont’d)

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C. Acquisition of a subsidiary

During the financial year, the net assets/liabilities acquired on acquisition of shares in a subsidiary comprise the

following:

2000 1999$ $

Fixed assets 47,726 3,895,443

Investment/Seats in stock exchange 12,300 2,973,932

Quoted investments 553,123 2,837,120

Trade debtors 12,180,917 4,828,077

Other debtors 52,339 26,177,381

Cash and bank balances 2,325,619 3,578

Fixed deposits 1,723,779 11,623,240

Trade creditors (13,253,420) (1,382,109)

Other creditors (77,575) (551,838)

Bank borrowings – (48,859,870)

Net assets of subsidiary at date of acquisition 3,564,808 1,544,954

(Less)/add:

(Reserve)/goodwill on acquisition (1,232,323) 3,575,046

Minority interest (712,961) –

Amount previously included in “Investment in associated company” (1,425,924) –

Cash paid on acquisition 193,600 5,120,000

Cash and cash equivalents of subsidiary acquired (4,049,398) 37,233,052

(3,855,798) 42,353,052


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1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

a Accounting convention

The financial statements of the Company which is incorporated in the Republic of Singapore, expressed inSingapore dollars, are prepared in accordance with the historical cost convention.

b Consolidation

The accounting financial year of the Company and its subsidiaries ends on 31st March.

Consolidated financial statements include the financial statements of subsidiaries, details of which are givenin Note 4 to the financial statements. Intercompany transactions and balances are eliminated on consolidatedand the consolidated financial statements reflect external transactions and balances only. The results ofsubsidiaries acquired or disposed of are included or excluded from the consolidated profit and loss accountfrom the effective date of acquisition or disposal.

c Goodwill/reserve arising on consolidation

Goodwill/reserve arising on consolidation represents the excess/deficit of the consideration paid over thefair value of net tangible assets of subsidiaries or associated companies acquired at the date of acquisition.It is not available for distribution as dividends and is recorded directly in other reserves. Reserve or goodwillarising on the acquisition of foreign subsidiaries or associated companies are expressed in Singapore dollarsat the date of acquisition. Subsequent adjustments to the initial recognition of fair values of assets andliabilities acquired are adjusted directly to goodwill/reserve arising on consolidation up to the end of the firstannual accounting period commencing after the acquisition. After this date, any adjustments are recognisedin the profit and loss account of the current period.

d Taxation

The liability method of tax effect accounting is adopted by the Group. Deferred taxation, if material, isprovided at current taxation rate on significant timing differences existing at the end of the financial year.

Deferred tax assets are not recognised unless they are offset by deferred tax liabilities or there is reasonablecertainty of their realisation in future periods.

e Fixed assets and depreciation

Fixed assets are stated at cost less accumulated depreciation. Depreciation is computed utilising the straight-line method to write off the cost of these assets over their estimated useful lives as follows:

31st March 2000

notes to the financial statements

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Freehold buildings and improvements 1.5 – 31.5 years

Leasehold properties Life of lease, subject to a maximum of 99 years

Motor vehicles 5 years

Office equipment 3 – 10 years

Furniture and fittings 3 – 10 years

Computer and related equipment 3 – 6 years

Electrical fittings 10 years

No depreciation is provided on freehold land. Fully depreciated fixed assets are retained in the books of

accounts until they are no longer in use.

The carrying amount of fixed assets are reviewed yearly in order to assess whether the carrying amounts need

to be written down to their recoverable amounts.

f Interest in subsidiaries

A subsidiary is defined as a company in which the Group has a long-term equity interest of more than 50% or

over whose financial and operating policy decisions the Group controls.

Investments in subsidiaries are stated at cost. Provision is made for other than temporary diminution in value

on an individual subsidiary basis.

g Interest in associated companies

An associated company is defined as a company, not being a subsidiary, in which the Group has a long-term

interest of 20% to 50% of the equity and over whose financial and operating policy decisions the Group

exercises significant influence.

Investments in associated companies at company level are stated at cost. Provision is made for other than

temporary diminution in value on an individual associated company basis.

The Group’s share of the results of the associated companies, based on the latest available financial

statements, is included in the consolidated profit and loss account. The Group’s share of the post-acquisition

profits and reserves of associated companies is reflected in the book values of the investments in the

consolidated balance sheet. Any goodwill on acquisition is written off directly to reserves.

Where financial statements of associated companies with different reporting dates are used, adjustments

are made for the effects of any significant events or transactions between the Group and the associated

companies that occur between the date of the associated companies’ financial statements and the Company’s

balance sheet date.

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g Interest in associated companies (cont’d)

Where the associated companies adopt different accounting policies, adjustments are made to the associated

companies’ financial statements when they are equity accounted for to comply with the Group’s policies if

the differences are significant to the Company or the Group.

h Investments/Seats in Foreign Exchanges

Investment in Singapore Exchange Limited

In accordance with the Bye-Laws of the Stock Exchange of Singapore Limited, the seat in the Stock Exchange

of Singapore Limited was stated at its written down value of $1. The investment in Singapore Exchange

Limited is similarly stated.

The seats in the Singapore International Monetary Exchange Limited were stated at cost. It has been

exchanged for an investment in Singapore Exchange Limited which is similarly stated. The investment and

seats in the Jakarta Stock Exchange and Stock Exchange of Thailand Limited are stated at cost, and cost less

amortisation respectively.

Provisions are made for other than temporary diminution in value, if any, for these investments.

i Unquoted investments

Unquoted investments held on a long-term basis or as current assets are stated at cost. Provision is made for

other than temporary diminution in value, if any, on an individual investment basis.

j Quoted investments

Quoted investments held on long-term basis or as current assets are stated at the lower of cost and market

value on an individual investment basis.

k Debtors

Specific provisions are made for accounts considered doubtful and a general provision is made on total

debtors.

l Income recognition

i a Dividend income receivable from subsidiaries and associated companies is recognised on accrual basis.

b Dividend income from other investments is recognised on receipt basis.

ii Interest income is recognised on the accrual basis except for interest income on late payment and interest

income on outstanding amounts where recoverability is not certain which is recognised on a receipt basis.

iii Brokerage and similar income is recognised when the underlying transaction is contracted.

31st March 2000

notes to the financial statements (cont’d)

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m Operating leases

Rentals under operating leases are charged to the profit and loss account on a straight-line basis over the

lease term.

n Pension

A subsidiary operates a defined contribution pension scheme covering the majority of that subsidiary’s

employees. Contributions are accounted for as they become payable.

o Conversion of foreign currencies

i Monetary assets and liabilities in foreign currencies except for foreign currency assets and liabilities

hedged by forward exchange contracts are translated into Singapore dollars at rates of exchange closely

approximating those ruling at balance sheet date. Foreign currency assets and liabilities hedged by forward

exchange contracts are translated into Singapore dollars at the contracted forward exchange rates at the

date of transaction and hedged monetary assets and liabilities are not retranslated at balance sheet date.

Other transactions in foreign currencies are converted at rates closely approximating those ruling at

transaction dates. Exchange differences are taken to the profit and loss account except that where a

monetary item in substance forms part of the company’s net investment in the foreign subsidiaries and

associated companies, exchange differences arising from such a monetary item are taken directly to

exchange fluctuation reserve to the extent that the net investment is represented by net assets in the foreign

entity until the disposal of the investments.

ii For inclusion in the consolidated financial statements, financial statements of foreign subsidiaries and

associated companies are translated into Singapore dollars at the Company’s financial year end exchange

rates. All exchange differences due to such currency translations are recorded in an exchange fluctuation

reserve. Exchange fluctuation reserves are not available for distribution as dividends.

2. PRINCIPAL ACTIVITIES AND TURNOVER

The principal activity of the Company is that of investment holding. The principal activities of the subsidiaries

consist of those of stockbrokers, sharebrokers and dealers in stocks, shares and investments of all kinds, acting

as nominees for beneficial shareholders, investment holding, investment advisers, property investment, money

lending, margin financing and management of internal funds.

Turnover of the Company represents mainly dividend income as well as interest income. Turnover of the

subsidiaries represents mainly net income on brokerage as well as profit on share trading, underwriting

commission, placement fees, share registration fees, dividends received, interest income, rental income and

service fees. Transactions within the group are excluded. Turnover excludes applicable goods and services

tax and is detailed as follows:

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2. PRINCIPAL ACTIVITIES AND TURNOVER (cont’d)2000 1999

The Company $ $

Interest income 4,044,389 8,110,854

Dividend income 38,366,466 46,025,337

42,410,855 54,136,191

The Group

Net brokerage income 156,101,194 46,739,446

Profit on share trading 30,777,015 4,127,289

Underwriting commission 680,502 489,779

Placement fees 1,972,125 106,411

Share registration fees 11,203 79,240

Dividend income 484,167 700,668

Interest income 23,533,960 18,057,933

Rental income 16,660 67,293

Service fees 436,648 131,105

Facility fee income – 2,223,150

214,013,474 72,722,314

31st March 2000


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3. FIXED ASSETS

Notes:

a The Company has no fixed assets.

b The freehold land comprise:

Location Area

406 East 50th Street, 167 sq. metres

New York,

United States of America

Precha Village 1,984 sq. metres

Srinakarin Road,

Bangkeaw, Bangpee District,

Samutprakan Province,

Thailand

c The freehold buildings and improvements comprise:

Location Description Area

406 East 50th Street, Office building 446 sq. metres

New York, on freehold land

United States of America (Note b)

d The leasehold properties comprise:

Location Description Area Tenure

45 Lowndes Square, 1 residential 84 sq. metres originally 75 years

London, apartment commencing 5th

United Kingdom September 1984

but now extended for

another 150 years from

10th December 1998

9 Temasek Boulevard, 9 office units 3,563 sq. metres 99 years commencing

Suntec Tower Two, 1st March 1989

Singapore

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31st March 2000


3. FIXED ASSETS (cont’d)Freehold

Freehold buildings and Leaseholdland improvements properties

The Group $ $ $

Cost

Balance at 1.4.1999 1,600,748 3,732,684 64,227,468

Additions 338,525 158,117 130,180

Disposals – (472,450) –

Fixed assets written off – – –

Adjustment on acquisition of a subsidiary – – –

Exchange differences (12,481) (32,685) –

Balance at 31.3.2000 1,926,792 3,385,666 64,357,648

Accumulated depreciation

Balance at 1.4.1999 – 1,053,133 2,878,949

Depreciation for the year – 171,156 696,588

Released on disposals – (31,496) –

Fixed assets written off – – –

Adjustment on acquisition of a subsidiary – – –

Exchange differences – (10,240) –

Balance at 31.3.2000 – 1,182,553 3,575,537

Depreciation for 1999 – 172,827 694,908

Net book value

At 31.3.2000 1,926,792 2,203,113 60,782,111

At 31.3.1999 1,600,748 2,679,551 61,348,519

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Furniture ComputerMotor Office and and related Electrical

vehicles equipment fittings equipment fittings Total$ $ $ $ $ $

2,734,780 3,900,219 5,932,955 9,132,593 1,261,310 92,522,757

937,800 994,017 456,947 2,265,451 – 5,281,037

(412,764) (87,728) (65,968) (238,709) – (1,277,619)

– (12,119) (5,047) (557,283) – (574,449)

50,604 21,884 – 28,712 – 101,200

(128) (38,067) (26,449) (84,480) – (194,290)

3,310,292 4,778,206 6,292,438 10,546,284 1,261,310 95,858,636

2,147,097 2,171,381 3,211,302 6,565,623 377,977 18,405,462

219,450 499,398 487,222 1,343,790 118,765 3,536,369

(368,821) (83,737) (47,186) (238,709) – (769,949)

– (6,921) (5,047) (174,056) – (186,024)

30,174 9,087 – 14,213 – 53,474

710 (22,848) (20,700) (60,954) – (114,032)

2,028,610 2,566,360 3,625,591 7,449,907 496,742 20,925,300

379,122 382,560 473,800 1,302,360 126,131 3,531,708

1,281,682 2,211,846 2,666,847 3,096,377 764,568 74,933,336

587,683 1,728,838 2,721,653 2,566,970 883,333 74,117,295

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4. INTEREST IN SUBSIDIARIES2000 1999

The Company $ $

Unquoted equity investments, at cost 116,709,217 112,565,213

Amounts owing by subsidiaries 109,951,986 121,355,980

226,661,203 233,921,193

Amounts owing by subsidiaries represent advances and are unsecured, interest-free and are not expected to be

repaid within one year.

The subsidiaries are as follows:Country of Effectiveincorporation/ percentage of Cost of investment

Name Principal activities place of business equity held held by the Company2000 1999 2000 1999

% % $ $

Kim Eng Stockbrokers, sharebrokers Singapore 100 100 64,042,509 64,042,509

Securities and dealers in stocks,

(Private) shares and investments

Limited of all kinds

* Kim Eng Acting as nominees for Singapore 100 100 – –

Securities beneficial shareholders

Nominees

Pte. Ltd.

* Kim Eng Dormant Singapore 100 100 – –

Research

Pte. Ltd.

Kim Eng Property investment Singapore 100 100 8,000,000 8,000,000

Properties

Pte Ltd

**@ Kim Eng Property investment United States 100 100 – –

Properties of America

USA, Inc

Kim Eng Futures brokers and Singapore 100 100 5,000,000 5,000,000

Futures advisers and dealers

Pte Ltd in futures contracts

Kim Eng Money lending and Singapore 100 100 2 2

Finance margin financing

(Singapore)

Pte Ltd

31st March 2000


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Country of Effectiveincorporation/ percentage of Cost of investment

Name Principal activities place of business equity held held by the Company2000 1999 2000 1999

% % $ $

** Kim Eng Margin financing Hong Kong 100 100 1,253,487 1,253,487

Finance and management

(Hong Kong) of surplus funds

Limited

** Kim Eng Dormant Hong Kong 100 100 1 1

Investment

Limited

** Kim Eng Dealing in securities United States 100 100 4,256,119 4,256,119

Securities of America

USA, Inc.

** Kim Eng Dealing in securities United 100 100 1,844,033 1,844,033

Securities Kingdom

(London)

Limited

** Kim Eng Dealing in securities Thailand 100 100 28,169,062 28,169,062

Securities

(Thailand)

Limited

*** P.T. Kim Eng Dealing in securities Indonesia 80 40 4,144,000 –

Securities

[formerly known

as P.T. KES Sinar

Mas Securities,

an associated

company]

KE Swan & Co. Dormant Singapore 100 – 2 –

Pte Ltd

KE Strategic Dormant Singapore 100 – 2 –

Pte Ltd

116,709,217 112,565,213

* These are subsidiaries of Kim Eng Securities (Private) Limited.

** These subsidiaries are audited by affiliated firms of Grant Thornton International.

*** This subsidiary is audited by another firm.

@ This is a subsidiary of Kim Eng Properties Pte Ltd.

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5. INTEREST IN ASSOCIATED COMPANIES


$ $ $ $

Unquoted equity investments, at cost 35,754,108 40,167,009 35,754,108 40,167,009

Quoted equity investment, at cost

(market value $48,287,295;

1999 - $24,335,730) 4,528,389 4,528,389 4,528,389 4,528,389

Share of revaluation reserve – – 1,078,073 1,511,286

Share of post acquisition statutory

reserve funds – – 65,785 65,785

Ø Share of other post acquisition

retained reserves – – 45,246,922 36,419,870

Exchange difference on translation – – 2,070,424 248,729

Goodwill on acquisition – – (6,359,786) (6,404,941)

40,282,497 44,695,398 82,383,915 76,536,127

Ø Included in the other post acquisition retained reserves is an amount of $19,801,584 (1999 - $20,070,627)

which is not distributable as cash dividends.

The associated companies are as follows:Country of Effectiveincorporation/ percentage of

Name Principal activities place of business equity held2000 1999

% %

KE-ZAN Holdings Berhad Investment holding Malaysia 47 47

* KE-ZAN Securities Sdn. Bhd. Dealing in securities Malaysia 47 47

* KE-ZAN Futures Sdn. Bhd. Dormant Malaysia 47 47

** K.E. Malaysian Capital Investment advisers Malaysia 28 –

Partners Sdn. Bhd.

*** KE-ZAN Nominees Acting as nominees Malaysia 47 47

(Tempatan) Sdn. Bhd. for beneficial shareholders

*** KE-ZAN Nominees Acting as nominees Malaysia 47 47

(Asing) Sdn. Bhd. for beneficial shareholders

P.T. Kim Eng Securities

(formerly known as

P.T. KES Sinar

Mas Securities) Dealing in securities Indonesia – 40

31st March 2000


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The associated companies are as follows:Country of Effectiveincorporation/ percentage of

Name Principal activities place of business equity held2000 1999

% %

Kim Eng Holdings Investment holding Hong Kong 50 50

(Hong Kong) Limited

+ Kim Eng Securities Dealing in securities Hong Kong 50 50

(Hong Kong) Limited

+ Kim Eng Capital Investment advisers Hong Kong 50 50

(Hong Kong) Limited

+ Kim Eng Futures Futures contracts brokers Hong Kong 50 50

(Hong Kong) Limited

++ Kim Eng Nominees Nominees services Hong Kong 50 50

(Hong Kong) Limited

ATR-Kim Eng Investment holding Philippines 43 43

Capital Partners, Inc.

@ ATR-Kim Eng Dealing in securities Philippines 43 43

Securities Inc.

@ ATR-Kim Eng Stock trading Philippines 43 43

Direct Investments Inc.

@ ATR-Kim Eng Dormant Philippines 43 43

Derivatives Inc.

@@ ATR-Kim Eng Fixed Dormant Philippines 30 –

Income Inc.

Clarendon Pacific Dormant Singapore 50 50

Property Pte Ltd

NNKE & Partners Limited Consultancy services Thailand – 50

* These are wholly owned subsidiaries of KE-ZAN Holdings Berhad.

** This is a subsidiary of KE-ZAN Holdings Berhad.

*** These are wholly owned subsidiaries of KE-ZAN Securities Sdn. Bhd.

+ These are wholly owned subsidiaries of Kim Eng Holdings (Hong Kong) Limited.

++ This is a wholly owned subsidiary of Kim Eng Securities (Hong Kong) Limited.

@ These are wholly owned subsidiaries of ATR-Kim Eng Capital Partners Inc.

@@ This is a subsidiary of ATR-Kim Eng Capital Partners Inc.

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6. INVESTMENT IN SINGAPORE EXCHANGE LIMITED

Prior to 1st December 1999, the Group had one share each in the Stock Exchange of Singapore Limited

(“SES”) and Securities Clearing and Computer Services (Pte) Ltd (“SCCS”), stated at a value of $2. The Group’s

investment and seat in Singapore International Monetary Exchange Limited (“SIMEX”) comprisng one share

and three seats in SIMEX, was stated at cost of $250,000.

On 1st December 1999, SES merged with SIMEX to form the Singapore Exchange Limited (“SGX”). All seats

and existing shares held by member companies in SES, SCCS and SIMEX were reduced by cancellation and

exchanged for an equivalent equity investment in SGX. The shares in SGX are stated at the carrying value of

$250,002.

7. INVESTMENTS/SEATS IN OTHER EXCHANGES2000 1999

The Group $ $

Stock Exchanges

Stock Exchange of Singapore Limited – 1

Stock Exchange of Thailand, at cost 6,705,376 6,705,376

Accumulated amortisation as at beginning/

date of acquisition of subsidiary (4,995,365) (3,731,444)

Amortisation during the year (1,687,707) (1,710,011)

Exchange differences on translation (22,304) 446,090

– 1,710,011

Jakarta Stock Exchange (Indonesia), at cost 12,300 –

Exchange differences on translation 1,200 –

13,500 –

Futures Exchange

The Singapore International Monetary Exchange Limited,

at cost (Note 6) – 210,000

13,500 1,920,012

31st March 2000


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8. LONG-TERM INVESTMENTSThe Company The Group

2000 1999 2000 1999$ $ $ $

Unquoted equity investments, at cost 5,156,000 – 5,156,000 40,001

Unquoted bonds, at cost 575,000 575,000 575,000 575,000

5,731,000 575,000 5,731,000 615,001

9. CURRENT ASSETSThe Company The Group

2000 1999 2000 1999NOTE $ $ $ $

Investments 20 – – 21,652,738 35,000,587

Trade debtors 21 – – 309,111,136 184,327,547

Loan to a subsidiary 22 2,008,341 24,899,969 – –

Amount owing by associated

companies – advances 5,227,861 31,308,504 5,227,861 31,308,504

Dividends receivable 29,581,573 21,383,881 6,248,174 14,990,281

Deposits, prepayments

and other debtors 23 1,763,687 43,697 38,260,358 41,914,794

Fixed deposits 179,443,329 116,049,345 370,055,685 293,883,805

Cash and bank balances 1,315,328 395,099 22,493,479 6,921,224

Trust account bank balances – – 9,358,147 7,248,998

219,340,119 194,080,495 782,407,578 615,595,740

The advances owing by associated companies are unsecured, interest-free [except for advances totalling $5,227,861

(1999 - $31,026,019) to one associated company which bears interest at 7.5% (1999 - 7.5% to 9.25%) per annum]

and have no fixed terms of repayment.

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10. CURRENT LIABILITIESThe Company The Group

2000 1999 2000 1999NOTE $ $ $ $

Trade creditors 3,386,444 3,376,630 277,860,607 156,159,799

Other creditors 944,182 944,182 4,740,767 7,023,325

Provision for taxation 2,271,208 2,668,208 21,163,437 10,792,402

Proposed dividends 24,691,937 8,530,859 24,691,937 8,530,859

Borrowings from

financial institutions 24 – – 1,292,544 43,543,122

Trust account creditors – – 9,358,147 7,248,998

31,293,771 15,519,879 339,107,439 233,298,505

11. UNSECURED BONDS

The Company and The Group 2000 1999$ $

Unsecured bonds, principal amount 100,000,000 100,000,000

The $100,000,000 5.5% unsecured bonds due 2002 are constituted by a trust deed dated 18th September 1997.

The bonds were offered by way of placement to persons falling within the ambit of Sections 106C and/or 106D

of the Companies Act, Chapter 50 in bearer form with interest coupons attached and in the denomination of

$250,000 each. They were issued at 99.468% of the principal amount. The bonds bear interest at the fixed rate

of 5.5% per annum payable annually in arrears each year up to and including the year 2002. The discount on

the issue was written off to profit and loss account in the financial year 1998.

The bonds constitute direct, unconditional and unsecured obligations of the Company ranking pari passu as a

single class without any preference or priority among themselves and ranking pari passu with all other present

and future unsecured obligations (other than subordinated obligations and priorities created by law or trust deed)

of the Company from time to time outstanding.

Unless previously redeemed or purchased and cancelled the bonds will be redeemed at par on 18 September

2002.

As long as $10 million principal amount of the bonds remain outstanding:

31st March 2000


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a the adjusted total capital and reserves as defined in the trust deed must not be less than $180 million;

b the consolidated total liabilities as defined in the trust deed shall not exceed four times the adjusted total

capital and reserves as defined in the trust deed;

c the total borrowings as defined in the trust deed shall not exceed three times the adjusted total capital and

reserves as defined in the trust deed; and

d the restrictions as defined in the trust deed in the creation of any mortgage, charge, pledge or other security

over any part of assets, properties or undertakings must be observed.

As long as any part of the bond remains outstanding, the profit before interest and tax of the Company must be

at least one and a half times the interest expense of the Company in accordance with the trust deed.

12. DEFERRED TAXATIONThe Company The Group

2000 1999 2000 1999$ $ $ $

Balance at beginning – – 6,926 12,844

Transfer to

profit and loss account (Note 17) – – – (6,926)

Exchange difference on translation – – (54) 1,008

Balance at end – – 6,872 6,926

The balance is due to tax on

excess of capital allowances

over book depreciation

of qualifying fixed assets – – 6,872 6,926

No deferred taxation has been provided on foreign dividend income not remitted to Singapore as the Company

has no intention of remitting this income. Deferred taxation, if provided, on the cumulative foreign dividend

income not remitted would amount to approximately $9,319,000 (1999 - $8,000,000).

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13. SHARE CAPITAL

The Company and The Group 2000 1999No. of shares $ No. of shares $

Authorised:

Ordinary shares of $0.25 each 800,000,000 200,000,000 800,000,000 $200,000,000

Issued and fully paid:

Ordinary shares of $0.25 each 576,409,388 144,102,347 576,409,388 $144,102,347

14. CAPITAL RESERVESThe Company The Group

2000 1999 2000 1999$ $ $ $

i Gain on disposal of quoted/

unquoted equity investments

Balance at beginning 31,069,402 30,937,632 13,393,636 13,483,594

Transfer from/(to)

profit and loss account:

Gain/(loss) on disposal of shares

in a subsidiary – 131,770 – (89,958)

Balance at end 31,069,402 31,069,402 13,393,636 13,393,636

ii Revaluation reserve

Balance at beginning – – 1,511,286 1,511,286

Loss on revaluation of an

associated company’s seats in

exchanges during the year – – (433,213) –

Balance at end – – 1,078,073 1,511,286

Total capital reserves at end 31,069,402 31,069,402 14,471,709 14,904,922

Total transfer from/(to)

profit and loss account – 131,770 – (89,958)

These reserves are not available for distribution as dividends.

31st March 2000


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15. OTHER RESERVESThe Company The Group

2000 1999 2000 1999$ $ $ $

i Reserve funds

Balance at beginning – – 43,959,385 42,085,385

Transfer from profit and

loss account – – 77,700 1,874,000

Balance at end – – 44,037,085 43,959,385

ii (Goodwill)/reserve arising on consolidation

Balance at beginning – – (8,023,201) (3,423,961)

Adjustment against goodwill

on waiver of debts of a subsidiary

by a third party – – 9,761,000 –

Reserve/(goodwill) on acquisition

of a subsidiary – – 1,232,323 (3,575,046)

Reserve written off on disposal

of interest in a subsidiary – – – (12,504)

Goodwill on acquisition of

associated company – – (6,197) (1,443,035)

Reserve on acquisition of additional

shares in an associated company – – – 423,440

Amortisation of goodwill by

associated company – – 51,352 7,905

Balance at end – – 3,015,277 (8,023,201)

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15. OTHER RESERVES (cont’d)The Company The Group

2000 1999 2000 1999$ $ $ $

iii Exchange fluctuation reserve

Balance at beginning – – 112,864 (6,520,428)

Transfer from profit and loss

account on disposal of :

– a subsidiary – – – 262,451

– an associated company – – 8,006 –

Translation differences

during the year – – (1,254,059) 6,370,841

Balance at end – – (1,133,189) 112,864

iv Retained profits 116,226,853 113,258,012 231,904,413 171,099,981

Total other reserves at end of year 116,226,853 113,258,012 277,823,586 207,149,029

Total transfer from

profit and loss account

(excluding retained profits) – – 85,706 2,123,947

The reserve funds are set up in compliance with the rules of various exchanges. They are not available for

distribution as dividends.

31st March 2000


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16. OPERATING PROFIT BEFORE TAXATIONThe Company The Group

2000 1999 2000 1999$ $ $ $

The operating profit before taxation has been arrived at

After charging:

Auditors’ remuneration:

Auditors of the Company

– audit fee

– current year 16,000 14,000 74,100 61,900

– underprovision

in respect of prior year 2,000 – 2,000 –

– non-audit fee 13,776 4,000 35,476 28,380

Other firms of auditors

audit fee – – 121,563 80,565

non-audit fee – – 17,180 19,601

Amortisation of Seat in Exchange (Note 7) – – 1,687,707 1,710,011

Bad debts – trade – – 2,590,644 –

Depreciation of fixed assets (Note 3) – – 3,536,369 3,531,708

Directors’ remuneration:

Directors of the Company

– directors’ fee 80,000 70,000 80,000 70,000

– other emoluments – – 11,345,932 4,698,079

Other directors of subsidiaries

– other emoluments – – 1,086,674 1,194,719

Exchange loss 240,582 – – –

Fixed assets written off – – 388,425 66

Interest expense

– bank overdraft – 127 138,041 2,074

– bank loan – – 2,617,264 5,213,952

– bonds 5,500,000 5,500,000 5,500,000 5,500,000

– others – – 15,870 3,327,687

Loss on disposal of fixed assets – – 8,700 7,154

Provision for diminution in value of

quoted equity investments (Note 20) – – 568 119,304

Provision for doubtful debts

– trade (Note 21) – – 25,785,226 3,533,992

– non-trade (Note 23) – – 98,632 1,291,740

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16. OPERATING PROFIT BEFORE TAXATION (cont’d)The Company The Group

2000 1999 2000 1999$ $ $ $

and crediting:

Bad debts recovered – trade – – 9,258 39,961

Exchange gain – 2,135,520 1,711,719 3,206,356

Gross dividend from

– unquoted subsidiaries 31,320,000 8,694,541 – –

– unquoted associated company 1,122,870 18,439,472 – –

– quoted associated company 5,923,596 18,891,324 – –

– other quoted equity investments – – 484,167 700,668

Interest income

– fixed deposits 3,098,485 5,629,045 5,915,793 11,978,856

– unquoted associated companies 883,402 2,476,295 883,402 2,477,778

– bonds 55,000 – 55,000 –

– margin clients/term loans – – 14,275,084 1,428,740

– others 7,502 5,514 2,404,681 2,172,559

Profit on disposal of fixed assets – – 201,161 18,842

Provision for diminution in value of investment

no longer required (Note 20) – – 5,862,675 1,412,157

Provision for doubtful debts no longer required

– trade (Note 21) – – 23,589,862 482,445

– non-trade (Note 23) – – 798,739 –

Operating profit for the Group includes the profit/(loss) of:

a Subsidiaries acquired during 1999

– Kim Eng Securities (Thailand) Limited – – 16,506,448 (2,861,302)

[formerly known as Nithipat Capital

& Securities Company Limited]

– Kim Eng Finance (Singapore) Pte Ltd – – 1,632,860 –

[commenced operations only in 2000]

b Subsidiary disposed of during 1999

– Kim Eng Securities Philippines, Inc. – – – (112,413)

c Subsidiary acquired during 2000

– P.T. Kim Eng Securities – – 321,534 –

[formerly known as P.T. KES Sinar Mas

Securities and formerly a 40%

owned associated company]

31st March 2000


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17. TAXATIONThe Company The Group

2000 1999 2000 1999$ $ $ $

Current taxation:

Singapore

(including tax deducted at source) 8,567,004 8,591,014 14,735,858 6,024,298

Foreign – – 625,197 390,320

Associated companies – – 3,449,971 899,627

Deferred taxation (Note 12) – – – (6,926)

Overprovision of current taxation

in respect of prior year – – (63,183) (12,507)

8,567,004 8,591,014 18,747,843 7,294,812

The tax expense of the Company is less than the amount determined by applying the Singapore statutory rate of

income tax to profit before taxation. This is mainly because no taxation has been provided on foreign dividend

income not remitted to Singapore as the Company has no intention of remitting this income.

The tax expense of the Group is less than the amount determined by applying the Singapore statutory rate of

income tax to profit before taxation due to utilisation of unabsorbed tax losses carried forward in a foreign

subsidiary, lower overseas tax rates and unremitted foreign dividend income. Subject to agreement with the

relevant tax authorities, the Group has unabsorbed tax losses as at 31st March 2000 of $47,004,000 available

for offset against future taxable profit provided that the provisions of the relevant countries’ tax legislations are

complied with.

18. EXTRAORDINARY ITEMThe Company The Group

2000 1999 2000 1999$ $ $ $

Gain/(loss) on disposal of shares

in a subsidiary – 131,770 – (89,958)

Loss on disposal of shares in an

associated company (96,288) – (6,916) –

There is no taxation or minority interest applicable to the above items.

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19. EARNINGS PER SHARE

The Group

The basic earnings per share figures are calculated based on the profit attributable to members of the company,

as well as profit before extraordinary item of $85,582,075 (1999 - $13,960,595) and $85,588,991 (1999 -

$14,050,553), respectively, divided by the weighted average number of shares during the financial year of

576,409,388 (1999 - 576,409,388) ordinary shares in issue.

There are no factors giving rise to a dilution in earnings per share.

20. INVESTMENTS2000 1999

The Group $ $

Quoted equity investments, at cost

[market value $23,837,987 (1999 - $41,844,790)] 26,493,685 52,105,214

Quoted debentures, at cost

[market value $Nil (1999 - $675,652)] – 699,813

Quoted bonds, at cost

[market value $2,105,320 (1999 - $Nil)] 2,105,320 –

Unquoted equity investments, at cost 763,628 773,727

Unquoted bonds, at cost 5,000,000 –

Provision for diminution in value of investments

Balance at beginning 18,578,168 19,484,561

Provision for the year 568 119,304

Provision no longer required (5,862,675) (1,412,157)

Provision written off (451) –

Exchange difference on translation (5,715) 51,254

Adjustment on acquisition of a subsidiary – 341,833

Adjustment on disposal of a subsidiary – (6,628)

Balance at end (12,709,895) (18,578,167)

21,652,738 35,000,587

31st March 2000


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21. TRADE DEBTORS2000 1999

The Group $ $

Trade debtors 375,959,383 249,546,793


Balance at beginning 65,219,246 39,551,278

Provision for the year 25,785,226 3,533,992

Provision no longer required (23,589,862) (482,445)

Provision utilised – (1,552,797)

Exchange difference on translation (566,363) 4,321,115

Adjustment on acquisition of a subsidiary – 20,077,802

Adjustment on disposal of a subsidiary – (229,699)

Balance at end (66,848,247) (65,219,246)

309,111,136 184,327,547

22. LOAN TO A SUBSIDIARY

The loan of $2,008,341 to a subsidiary, bears interest at 0.6% to 1.7% (1999 - Nil) per annum, is unsecured and

is repayable on demand.

The loan to another subsidiary, amounting to $24,899,969 in the financial year ended 31st March 1999, was

fully repaid during the year.

23. DEPOSITS, PREPAYMENT AND OTHER DEBTORSThe Company The Group

2000 1999 2000 1999$ $ $ $

Deposits – – 2,120,019 1,183,286

Prepayments 1,732,064 16,495 2,697,092 761,665

Staff loans – – 376,845 711,616

Loans to financial institutions – – 31,383,700 170,200

Bills discounted and others 31,623 27,202 2,263,779 40,379,767

1,763,687 43,697 38,841,435 43,206,534


Balance at beginning – – 1,291,740 –

Provision for the year – – 98,632 1,291,740

Provision no longer required – – (798,739) –

Exchange difference

on translation – – (10,556) –

Balance at end – – (581,077) (1,291,740)

1,763,687 43,697 38,260,358 41,914,794

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24. BORROWINGS FROM FINANCIAL INSTITUTIONS2000 1999

The Group $ $

Bank overdrafts – unsecured 1,292,544 692,040

Short-term loans from finance company – unsecured – 42,851,082

1,292,544 43,543,122

25. CONTINGENT LIABILITIES (UNSECURED)The Company The Group

2000 1999 2000 1999$ $ $ $

Guarantees given to banks

in connection with facilities

given to subsidiaries 60,000,000 75,000,000 – –

Banker’s guarantees issued to:

Singapore Exchange Limited/

The Stock Exchange

of Singapore Limited and

Central Depository (Pte) Ltd – – 100,000 100,000

Guarantees given to banks

in connection with facilities

given to an associated company 18,338,400 23,002,750 18,338,400 23,002,750

78,338,400 98,002,750 18,438,400 23,102,750

For one of the foreign subsidiaries, the revenue authorities in that jurisdiction are reviewing the method of

recharging expenses to Kim Eng Holdings Limited. Negotiations are presently at an early stage and it is not

possible to assess the likely outcome and to quantify the contingent liability, if any.

26. COMMITMENTS

The Group

a Operating lease commitment

Rental and lease expenses for all operating leases for the financial year amounted to $1,104,830

(1999 - $731,754).

At balance sheet date, the Group was committed to making the following payments in respect of operating

leases for rental of office premises:2000 1999

$ $

Within one year 1,123,938 1,524,194

Between one and five years 585,747 1,447,123

After five years – –

31st March 2000


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2000 1999$ $

b Underwriting commitment

Underwriting commitment contracted for

but not provided in the financial statements – 2,732,400

Fulfilled subsequent to year end – (2,732,400)

– –

2000 1999$ $

c Forward foreign exchange contracts 460,106 12,642,011

The forward contracts are entered into in the normal course of the Group’s businesses and are not entered

into for speculative purposes.

2000 1999$ $

d Capital commitment

Capital expenditure contracted but not provided for

in the financial statements 3,217,417 636,180

e Other commitments

i One of the subsidiaries of the Group has committed to pay debts of its former parent company,

amounting to approximately S$481,240 (Baht 10.6 million) should that former parent company be

unable to pay these debts.

ii One of the subsidiaries of the Group has committed to acquire shares amounting to approximately

$4,576,998 to hold as unquoted long-term investments.

2000 1999$ $

iii Foreign exchange options purchased 17,185,000 –

Foreign exchange options written 17,387,500 –

The positions in the options were liquidated subsequent to year end at approximately $35,000 below the

premium paid for the options. The premium paid has been written off to the profit and loss account.

Had these positions been marked-to-market at balance sheet date, the loss on marking to market would have

been approximately $264,000.

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27. FINANCIAL INFORMATION BY SEGMENTS

The Group operates principally in the business of stockbroking, securities trading, money lending, margin

financing and investment holding.

The terms of inter-segment turnover are established by negotiation between the parties. Segment assets exclude

trust account bank balances and investment in net assets of associated companies. Operating profit before

taxation excludes share of profits of the associated companies.

a GeographicalSingapore Hong Kong Thailand Others Elimination Total

2000 $’000 $’000 $’000 $’000 $’000 $’000

Turnover in relation

to third parties 157,730 12,464 41,386 2,433 – 214,013

Inter-segment turnover 40,067 – – 3,755 (43,822) –

Total revenue 197,797 12,464 41,386 6,188 (43,822) 214,013

Operating profit

before taxation and

inter-segment profit 45,405 22,357 16,507 559 – 84,828

Inter-segment profit 197 – – – (197) –

Group operating profit

before taxation 45,602 22,357 16,507 559 (197) 84,828

Segment assets 746,396 163 71,119 36,299 – 853,977

Investment in net assets

of associated companies 82,384

936,361

1999

Turnover in relation

to third parties 49,547 3,626 17,579 1,970 – 72,722

Inter-segment turnover 47,992 – – 4,668 (52,660) –

Total revenue 97,539 3,626 17,579 6,638 (52,660) 72,722

Operating profit

before taxation and

inter-segment profit 18,365 (2,768) (2,861) (483) – 12,253

Inter-segment profit 72 – – – (72) –


before taxation 18,437 (2,768) (2,861) (483) (72) 12,253

Segment assets 519,911 43,862 104,293 16,933 – 684,999

Investment in net assets

of associated companies 76,536

761,535

31st March 2000


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b IndustryMoney

Stock- lending,broking margin

and financing andsecurities investment

trading holding Elimination Total2000 $’000 $’000 $’000 $’000

Turnover in relation to

third parties 195,493 18,520 – 214,013

Inter-segment turnover 3,387 40,435 (43,822) –

Total revenue 198,880 58,955 (43,822) 214,013

Operating profit before taxation

and inter-segment profit 63,689 21,139 – 84,828

Inter-segment profit 197 – (197) –


before taxation 63,886 21,139 (197) 84,828

Segment assets 510,701 343,276 – 853,977

Investment in net assets of

associated companies 82,384

936,361

1999

Turnover in relation to third parties 60,640 12,082 – 72,722

Inter-segment turnover 4,298 48,362 (52,660) –

Total revenue 64,938 60,444 (52,660) 72,722

Operating profit before taxation

and inter-segment profit 11,940 313 – 12,253

Inter-segment profit 72 – (72) –


before taxation 12,012 313 (72) 12,253

Segment assets 405,143 279,856 – 684,999

Investment in net assets of

associated companies 76,536

761,535

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28. DISCLOSURE OF DIRECTORS’ REMUNERATION

Number of directors in remuneration bands as required by the Listing Manual of the Singapore Exchange

Securities Trading Limited are as follows:

2000 1999

$500,000 and above 5 4

$250,000 to $499,999 1 3

Below $250,000 3 3

9 10

29. EFFECT OF FLUCTUATIONS IN FOREIGN EXCHANGE RATES

The financial statements of foreign subsidiaries and associated companies have been translated at the following

exchange rates at 31st March 2000 (Singapore dollar equivalent to one unit of foreign currency):

Hong Kong Dollar : 0.2208

Indonesian Rupiah : 0.000225

Malaysian Ringgit : 0.4528

Philippine Peso : 0.0424

Sterling Pound : 2.7380

Thai Baht : 0.0454

United States Dollar : 1.7180

Fluctuation in exchange rates may have a material impact on the subsequent carrying value of some assets.

31st March 2000


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shareholding statisticsas at 15th August 2000

Authorised Share Capital – $200,000,000

Issued and Fully Paid-up Capital – $144,102,347

Class of Shares – Ordinary shares of 25¢ each

Voting Rights – 1 vote per share

ANALYSIS OF SHAREHOLDERSSize of Number of % of Number % ofHoldings shareholders shareholders of Shares shareholdings

1 – 1,000 3,492 15.56 2,654,831 00.46

1,001 – 10,000 15,770 70.28 72,831,295 12.64

10,001 – 1,000,000 3,154 14.06 112,166,335 19.46

1,000,001 and above 23 00.10 388,756,927 67.44

22,439 100.00 576,409,388 100.00

LIST OF TWENTY LARGEST SHAREHOLDERSNumber of % of

Shareholder’s Name Shares shareholdings

1 DBS Nominees Pte Ltd 76,191,053 13.22

2 Ooi Thean Yat Ronald Anthony 63,544,928 11.02

3 United Overseas Bank Nominees Pte Ltd 60,651,400 10.52

4 Gloria Lee 45,891,770 7.96

5 Oversea Chinese Bank Nominees Pte Ltd 31,153,320 5.40

6 HSBC (Singapore) Nominees Private Limited 25,184,800 4.37

7 Ooi Thean Seng Douglas 24,165,000 4.19

8 Overseas Union Bank Nominees Pte Ltd 20,581,460 3.57

9 Keppel Bank Nominees Pte Ltd 5,991,800 1.04

10 Kim Eng Securities (Pte) Ltd 5,811,000 1.01

11 Lau Wai Kwok 5,215,696 0.91

12 UOB Securities Pte Ltd 4,479,000 0.78

13 Citibank Nominees Singapore Pte Ltd 3,391,000 0.59

14 Raffles Nominees Pte Ltd 2,859,300 0.50

15 Vickers Ballas & Co Pte Ltd 2,743,200 0.48

16 OCBC Securities Private Ltd 2,086,000 0.36

17 Josephine Rebekah Warland 1,500,000 0.26

18 Hong Leong Finance Nominees Pte Ltd 1,339,000 0.23

19 Phillip Securities Pte Ltd 1,254,100 0.22

20 Far Ocean Sea Products Pte Ltd 1,225,000 0.21

385,258,827 66.84

SUBSTANTIAL SHAREHOLDERSName Interest

Ooi Thean Yat, Ronald Anthony 85,544,928

Lee Kim Yew, Gloria, Mrs 45,891,770

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corporate governance report

Kim Eng Holdings Limited adopts corporate governance practices in conformity with the principles and best

practices set out in the Best Practice Guide issued by the Stock Exchange of Singapore Ltd.

Board of Directors

Other than the executive directors, four independent directors sit on the Board of Directors.

The Board supervises the management of the business and affairs of the Group. It reviews and approves the Group’s

major investment, credit and funding proposals. It also reviews the financial performance of the Group.

Audit Committee

The Audit Committee comprises three members, all of whom are non-executive directors. The members of the Audit

Committee are:

Professor Tan Teck Meng (Chairman)

Gordon Seow Li-Ming


The Audit Committee held 4 meetings during the year and performed the following functions:

• Reviewed the external auditors’ audit plan and the results of their examination and evaluation of the Group’s

internal control procedures

• Reviewed the scope of the internal audit plan and the results of internal audit procedures

• Reviewed the half-yearly and annual results of the Company and the Group before submission to the Board and

announcement to the public

• Reviewed the half-yearly and annual financial statements and the auditors’ report thereon before submission to

the Board

• Made recommendations to the Board on the reappointment of the external auditors

Securities Transactions

The Company has adopted a set of Guidelines on Dealing in the Company’s Securities pursuant to the SGX Best

Practices Guide which is applicable to all directors and employees of the Group in relation to dealings in the

Company’s securities.

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annual report 2000 - morningstar, inc

Documents