The accounting board of Malaysia is Malaysian Accounting Standard Board. Based on SME Corporation Malaysia, MASB is a statutory body launched by the Financial Reporting Act 1997 with the sole authority to set the legally obligatory financial reporting standards in Malaysia. The standard that issued by MASB is Malaysian Financial Reporting Standards (MFRS). This framework should be applied by all the companies other than Private companies for the financial year begin.
The United States follows Financial Accounting Standard Board (FASB). Financial Accounting Standards Board is to be designed to develop the Generally Accepted Accounting Principles (GAAP) within the United States. Those standards are generally accepted by the Securities and Exchange Commission (SEC) of United States that has the statutory authority to established the publish listed companies' financial accounting and reporting as stated under Securities Exchange Act of 1934.
Management Discussion & Analysis (MD&A)
There are not compulsory required to include this sections in the accounting and financial statements or reporting of the public listed companies in Malaysia. However, there is a compulsory requirements for public listed companies to publish the accounting and financial statements or reports as stated in the FASB.
Revaluation to the properties of companies
In Malaysia, the revaluation to the companies' assets is allowed and stated in the published materials of the companies. However, the annually financial statements of United States' companies are not allowed to make revaluation to the assets as there is only using historical cost or book value as the normal accounting basis that stated in the FASB.
Inventory Accounting Methods
There are a differences in the inventory methods that applied by the public companies in reproducing its accounting and financial statements to determine the value of inventory in the financial statements. In general, there are three common methods to value the inventory. There are FIFO (first in, first out), LIFO (last in, first out), and average cost.
This three inventory methods are most frequently used by the U.S companies to value the inventory. However, the LIFO are not encouraged been used by the Malaysia companies.
Forms that needed to be filled by public listed companies :
Malaysia
United States
Form 11
Notice of Resolution
Form 10-K for annual reports
Form 24
Return of Allotment of Shares
Form 25
Statement Containing Particulars of Shares Allotted Otherwise Than For Cash
Form 27
Notice of Redemption of Redeemable Preference Shares
Form 28
Notice of Increase in Share Capital
Form 44
Notice of Situation of Registered Office and Office Hours and Particulars of Changes
Form 49
Return Giving Particulars in Register of Directors, Managers and Secretaries and Changes of Particulars
Liabilities
Accounting to the standards stated in the MASB, the liabilities that reporting in the periodical report should be separate into the different categories. However, the U.S companies only needed to report one amount in the balance sheet as required in the GAAP.
The Regulation of the Companies
There are few legal regulation of the companies that needed to be followed by the public listed companies in Malaysia are Companies Act 1965, Securities Commission 1995, Financial Reporting Act 1997 and Income Tax Act 1967, Bursa Malaysia Berhad and Central Bank of Malaysia in order to establish the accounting and financial statements or reports.
On the other hands, United State listed companies follows GAAP have to prepare their companies' financial statement. The regulation of the companies need to be followed by U.S listed companies is Securities Exchange Commission (SEC).
2.0 Financial Statements
2.1 Financial Statements of Fajarbaru Builder Group Bhd.
FAJARBARU BUILDER GROUP BHD
CONSOLIDATED STATEMENTS OF EARNINGS
For the Years Ended June 30, 2012, 2011, 2010, 2009, and 2008
2012
2011
2010
2009
2008
RM
RM
RM
RM
RM
Revenue
140,675,092
181,047,003
165,943,999
184,633,817
87,607,979
Other income
3,905,962
3,325,675
4,900,270
1,778,980
9,775,308
Project expenses
-159,019,683
-154,739,748
-129,446,533
-160,684,971
-77,660,547
Staff costs
-8,685,577
-6,995,726
-5,802,638
-4,737,815
-4,318,779
Depreciation
-1,114,945
-800,519
-801,135
-602,022
-591,372
Other expenses
-3,062,014
-3,008,541
-1,688,347
-2,459,689
-1,015,149
Profit/Loss from operations
-27,301,165
18,828,144
33,105,616
17,928,300
13,797,440
Finance costs
-962,461
-116,359
-61,754
-173,401
-146,535
Profit/Loss before taxation
-28,263,626
18,711,785
33,043,862
17,754,899
13,650,905
Taxation
6,984,470
-5,007,961
-8,427,168
-3,397,211
1,030,267
Profit/Loss for the year
-21,279,156
13,703,824
24,616,694
14,357,688
14,681,172
Profit attributable to:
Owners of the parent
-21,279,156
13,603,960
24,683,626
14,390,500
14,252,635
Non-controlling interest
-
99,864
-66,932
-32,812
428,537
-21,279,156
13,703,824
24,616,694
14,357,688
14,681,172
Earnings per share attributable to equity holders of the Company (sen):
Basic, for (loss)/profit for the year
-12.15
8.19
16.18
12.05
16.76
Diluted, for (loss)/profit for the year
-11.42
7.57
14.68
8.86
16.76
FAJARBARU BUILDER GROUP BHD
CONSOLIDATED BALANCE SHEETS
30 June, 2012, 2011, 2010, 2009, and 2008
2012
2011
2010
2009
2008
RM
RM
RM
RM
RM
Assets
Non-current assets
Property, plant and equipment
12,966,944
9,959,595
5,784,355
5,088,701
6,515,658
Investment properties
1,331,405
1,335,734
1,205,633
-
-
Land held for property development
122,982,715
58,187,844
45,262,348
45,262,348
45,262,348
Trade receivables/Retention sums
87,150
4,837,008
6,414,676
5,667,299
1,075,000
Intangible assets
208,202
208,202
208,202
208,202
208,202
Deferred tax assets
-
-
-
-
700,000
Total non-current assets
137,576,416
74,528,383
58,875,214
56,226,550
53,761,208
Current assets
Trade and other receivables
33,843,215
48,773,529
22,688,877
30,766,746
40,452,754
Other current assets
1,528,006
1,321,655
-
-
-
Tax recoverable
1,741,067
150,728
81,086
13,945
31,201
Cash and cash equivalents
74,212,285
94,882,763
124,535,455
88,753,795
33,518,742
Total current assets
111,324,573
145,128,675
147,305,418
119,534,486
74,002,697
Total assets
248,900,989
219,657,058
206,180,632
175,761,036
127,763,905
Equity and liabilities
Equity attributable to owners of the parent
Share capital
94,474,003
86,345,538
83,105,338
68,698,463
45,098,775
Share premium
3,628,459
3,313,468
10,279,378
6,512,547
6,898,973
Treasury shares
-1,116,581
-5,894,477
-10,395,891
-5,738,240
-
Warrant reserve
1,196,354
1,250,801
2,149,909
2,149,909
-
Other reserve
-85,947
-140,394
-2,149,909
-2,149,909
-
Employee Share Option Reserve
97,222
240,120
112,800
-
-
Retained profits
37,436,813
58,475,130
50,798,575
32,093,005
17,646,647
135,630,323
143,590,186
133,900,200
101,565,775
69,644,395
Non-controlling interest
-
-
16,397,450
16,464,382
16,497,194
Total equity
135,630,323
143,590,186
150,297,650
118,030,157
86,141,589
Non-current liabilities
Trade payables
5,419,464
4,743,334
-
-
-
Other payables
-
-
-
80,388
166,365
Hire purchase payables
-
-
-
-
1,583
Deferred tax liabilities
630,349
8,085,304
7,655,415
7,655,415
7,545,881
Loans and borrowings
45,782,222
-
-
-
-
Total non-current liabilities
51,832,035
12,828,638
7,655,415
7,735,803
7,713,829
Current liabilities
Trade and other payables
49,177,284
38,368,554
30,725,775
48,204,489
33,852,544
Other current liabilities
10,000,000
24,382,129
13,315,736
-
-
Bank borrowings
-
-
-
-
46,592
Tax payable
163,569
487,551
4,186,056
1,790,587
9,351
Loans and borrowings
2,097,778
-
-
-
-
Total current liabilities
61,438,631
63,238,234
48,227,567
49,995,076
33,908,487
Total liabilities
113,270,666
76,066,872
55,882,982
57,730,879
41,622,316
Total equity and liabilities
248,900,989
219,657,058
206,180,632
175,761,036
127,763,905
FAJARBARU BUILDER GROUP BHD
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Years Ended June 30, 2012, 2011, 2010, 2009, and 2008
2012
2011
2010
2009
2008
RM
RM
RM
RM
RM
Operating activities
Profit/Loss before taxation
-28,263,626
18,711,785
33,043,862
17,754,899
13,650,905
Adjustments for:
Depreciation on property, plant and equipment
1,110,616
796,192
796,808
602,022
591,372
Depreciation on investment properties
4,329
4,327
4,327
-
-
Interest expense
-
-
-
12,435
47,098
Grant of equity-settled share options to employee
101,603
321,167
136,960
-
-
Gain on disposal of property, plant and equipment
-11,949
-9,999
-1,528
69,400
-
Impairment loss on land held for development
-
612,348
-
1,216,535
-
Impairment loss on receivables
-
-
71,594
-
-
Interest income
-3,531,624
-3,095,176
-2,190,742
-1,778,980
-930,276
Finance costs
962,461
116,359
61,754
-
-
Accrual for bonus
-
-
-
737,500
415,787
Write off of property, plant and equipment
-
5,242
-
-
-
Operating (loss)/profit before working capital changes
-29,628,190
17,462,245
31,923,035
18,613,811
13,774,886
Changes in working capital:
Trade and other receivables
21,138,689
-25,864,976
6,717,938
5,093,709
-9,002,711
Trade and other payables
11,468,214
6,356,379
-5,608,613
13,528,468
-2,243,496
Other current assets
-206,351
-1,321,655
-
-
-
Other current liabilities
-14,382,129
18,453,023
1,365,247
-
-
Cash (used in)/generated from operations
-11,609,767
15,085,016
34,397,607
37,235,988
2,528,679
Interest paid
-
-
-
-12,435
-47,098
Taxes paid
-2,384,806
-8,346,219
-6,098,840
-789,185
-
Taxes refunded
-
-
-
-
415,289
Net cash (used in)/generated from operating activities
-13,994,573
6,738,797
28,298,767
36,434,368
2,896,870
Investing activities
Acquisition of non-controlling interest
-
16,048,407
-
-
-
Additions to investment properties -
-
-134,428
669,000
-
-
Interest received
2,073,107
2,855,527
2,190,742
1,778,980
930,276
Net cash outflow on acquisition of subsidiary
-
-13,532,844
-
-
-
Proceeds from disposal of property, plant and equipment
11,950
10,000
4,025
50,000
-
Profit guarantee received
-
5,000,000
2,794,635
3,726,180
-
Purchase of property, plant and equipment
-2,745,649
-4,976,675
-1,494,959
-511,000
-1,278,446
Purchase of land held for property development
-66,167,188
-
-
-
-
Net cash used in investing activities
-66,827,780
-26,826,827
2,825,443
5,044,160
-348,170
Financing activities
Finance cost paid
-945,815
-35,000
-61,754
-
-
Payment of dividend
-
-10,179,578
-8,789,171
-3,670,322
-910,172
Payment of hire purchase payables
-
-
-
-48,175
-54,911
Proceeds from issuance of shares, net of transaction cost
544,465
1,754,200
23,038,560
23,213,262
5,450,789
Proceeds from private placements
13,396,395
-
-
-
-
Acquisition of treasury shares
-874,370
-4,175,584
-9,770,185
-5,738,240
-
Proceeds from exercise of employee share options
151,200
3,071,300
240,000
-
-
Drawdown of borrowings
47,880,000
-
-
-
-
Net cash generated from/(used in) financing activities
60,151,875
-9,564,662
4,657,450
13,756,525
4,485,706
Net increase/decrease in cash and cash equivalents
-20,670,478
-29,652,692
35,781,660
55,235,053
7,034,406
Cash and cash equivalents at beginning of year
94,882,763
124,535,455
88,753,795
33,518,742
26,484,336
Cash and cash equivalents at end of year
74,212,285
94,882,763
124,535,455
88,753,795
33,518,742
2.2 Financial Statements of Hock Seng Lee Bhd
HOCK SENG LEE BHD
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Years Ended June 30, 2012, 2011, 2010, 2009, and 2008
2012
2011
2010
2009
2008
RM'000
RM'000
RM'000
RM'000
RM'000
Revenue
603,267
581,515
488,276
375,021
309,069
Cost of sales
-473,488
-455,388
-379,449
-287,576
-241,200
Gross profit
129,779
126,127
108,827
87,445
67,869
Other income
687
1,065
1,638
823
625
Administrative expenses
-14,729
-14,498
-14,175
-14,187
-12,742
Results from operating activities
115,737
112,694
96,290
74,081
55,752
Finance income
5,995
4,372
2,515
1,488
738
Finance expense
-583
-468
-386
-
-32
Net finance income
5,412
3,904
2,129
1,488
706
Profit before tax
121,149
116,598
98,419
75,569
56,458
Income tax expense
-30,455
-29,330
-24,980
-19,246
-14,619
Profit/Total comprehensive income for the period
90,694
87,268
73,439
56,323
41,839
Profit attributable to:
Owners of the Company
90,692
87,265
74,435
56,324
41,839
Non-controlling interests
2
3
4
-1
-
Profit for the period
90,694
87,268
73,439
56,323
41,839
Profit/Total comprehensive income attributable to:
Owners of the Company
90,692
87,265
74,435
56,324
41,839
Non-controlling interests
2
3
4
-1
-
Profit/Total comprehensive income for the period
90,694
87,268
73,439
56,323
41,839
Earnings per share from continuing operations
Basic earnings per ordinary share (sen)
16.37
15.81
13.40
10.25
7.56
Diluted earnings per ordinary share (sen)
16.37
15.81
13.40
10.25
7.56
HOCK SENG LEE BHD
CONSOLIDATED BALANCE SHEETS
30 December, 2012, 2011, 2010, 2009, and 2008
2012
2011
2010
2009
2008
RM'000
RM'000
RM'000
RM'000
RM'000
Assets
Non-current assets
Property, plant and equipment
113,906
112,647
96,175
71,131
49,335
Investment properties
4,565
-
-
-
-
Land held for property development
154,738
94,014
87,344
66,721
72,153
Total non-current assets
273,209
206,661
183,519
137,852
121,488
Current assets
Cash and cash equivalents
198,769
183,721
89,702
76,360
56,942
Trade and other receivables
229682
241669
268709
226,935
196,308
Inventories
17,034
23,246
13,077
10,982
6,036
Property development costs
38,313
27,845
27,013
25,626
20,834
Total current assets
483,798
476,481
398,501
339,903
280,120
Total assets
757,007
683,142
582,020
477,755
401,608
Equity
Share capital
116,535
116,535
116,535
116,535
116,535
Capital redemption reserves
2,165
2,165
2,165
2,165
2,165
Retained earnings
386,901
322,222
247,369
193,967
144,237
Treasury shares
-25,672
-31,672
-21,029
-20,706
-20,296
Total equity attributable to owners of the Company
479,929
409,250
345,040
291,961
242,641
Non-controlling interest
-
206
203
199
-
Total equity
479,929
409,456
345,243
292,160
242,641
Liabilitoes
Non-current liabilities
Deferred tax liabilities
15,517
15,930
14,067
10,368
6,531
Total non-current liabilities
15,517
15,930
14,067
10,368
6,531
Current liabilities
Trade and other payables
253,606
249,713
217,297
170,609
148,864
Current tax liabilities
7,955
8,043
5,413
4,618
3,572
Total current liabilities
261,561
257,756
222,710
175,227
152,436
Total liabilities
277,078
273,686
236,777
185,595
158,967
Total equity and liabilities
757,007
683,142
582,020
477,755
401,608
HOCK SENG LEE BHD
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Years Ended December 31, 2012, 2011, 2010, 2009, and 2008
2012
2011
2010
2009
2008
RM'000
RM'000
RM'000
RM'000
RM'000
Cash flows from operating activities
Profit before taxation from continuing operations
121,149
116,598
98,419
75,569
56,458
Adjustments for:-
Non-cash items
10,287
7,844
7,109
5,554
4,505
Non-operating items
-5,688
-3,838
-2,410
-2,035
-803
Operating profit before changes in working capital
125,748
120,604
103,118
79,088
60,160
Changes in working capital
Change in Inventories
8,088
-8,712
3,925
-4,718
-3,052
Change in property development costs
-3,364
-2,320
1,161
1,418
-175
Change in receivables, prepayment and other financial assets
-21,316
19,213
-81,022
-31,768
-58,183
Change in payables
3,417
32,171
46,996
22,882
64,851
Cash generated from operations
112,573
160,956
74,178
66,902
63,601
Overdraft interest capitalised
-
-32
Income taxes paid
-30,956
-24,836
-20,118
-14,363
-13,717
Net cash from operating activities
81,617
136,120
54,060
52,539
49,852
Cash flows from investing activities
Acquisition of property, plant & equipment
-11,975
-17,360
-22,991
-29,118
-18,213
Proceeds from disposal of property, plant & equipment
695
1,609
1,712
2,315
426
Acquisition of investment property
-4,579
-
-
-
-
Land held for property development
-35,800
-6,670
-1,715
-1,005
-587
Interest received
5,312
3,374
1,529
1,491
655
Acquisition of shares by a subsidiary from non-controlling interest
-200
-
-
-
-
Issue of shares by a subsidiary to minority interests
-
-
-
200
-
Net cash used in investing activities
-46,547
-19,047
-21,465
-26,117
-17,719
Cash flows from financing activities
Purchase of treasury shares
-4,131
-10,643
-8,571
-410
-3,189
Dividend paid to owners of the Company
-15,890
-12,412
-10,682
-6,594
-13,103
Net cash used in financing activities
-20,021
-23,055
-19,253
-7,004
-16,292
Net increase in cash and cash equivalents
15,049
94,018
13,342
19,418
15,841
Cash and cash equivalents, beginning of year
183,270
89,252
75,910
56,492
40,651
Cash and cash equivalents, end of year
198,219
183,270
89,252
75,910
56,492
2.3 Financial Statements of TSR Capital Bhd
TSR CAPITAL BHD
CONSOLIDATED STATEMENTS OF EARNINGS
For the Years Ended December 31, 2012, 2011, 2010, 2009, and 2008
2012
2011
2010
2009
2008
RM'000
RM'000
RM'000
RM'000
RM'000
Revenue
108,421
118,597
184,052
173,566
280,344
Cost of sales
-94,837
-142,805
-168,361
-155,400
-285,838
Gross profit
13,584
24,208
15,691
18,166
-5,494
Other income
4,604
1,906
2,082
1,981
3,163
Administration expenses
-12,957
-10,068
-14,534
-13,812
-11,074
Finance costs
-1,638
-133
-506
-868
-462
Profit/(Loss) before taxation
3593
32503
2733
5467
-13,867
Income tax expenses
-1155
-95
-1311
-558
50
Profit for the period
2,438
-32,598
1,422
4,909
-13,817
Attributable to:
Equity holders of the Company
2,570
-32,587
1,409
4,771
-14,270
Non-controlling interests
-132
-11
13
138
453
Profit for the period
2,438
-32,598
1,422
4,909
-13,817
Earnings per share (sen)
Basic
2.3
-28.8
1.2
4.2
-12.9
Diluted
2
-25.2
1.1
3.7
N/A
TSR CAPITAL BHD
CONSOLIDATED BALANCE SHEETS
As at December 31, 2012, 2011, 2010, 2009, and 2008
2012
2011
2010
2009
2008
RM'000
RM'000
RM'000
RM'000
RM'000
Non-Current Assets
Property, plant and equipment
8,093
8,435
33,240
10,273
9,567
Investment Properties
91,198
93,728
-
-
-
Prepaid lease payments
-
-
-
-
334
Other assets
-
-
-
-
5,301
Deferred tax assets
5,42
542
411
376
162
Property development expenditure
-
-
35,977
7,920
716
Land held for future development
30,338
26,084
4,613
18,907
18,907
Trade receivables
821
128
1,041
-
-
Total non-current assets
130,992
128,917
75,282
37,476
34987
Current assets
Amount due from contract customers
14,613
21,088
56,126
50,320
40,585
Inventories
4,985
3,959
5,906
9,212
6,077
Property development costs
1,538
7,152
-
-
-
Trade receivables
22,900
25,616
29,204
54,995
43,864
Accrued billings
10,696
2,789
-
-
-
Other receivables
24,140
9,617
15,446
19,474
16,703
Tax refundable
1,850
1,753
1,269
1,572
2,482
Fixed deposits with licensed banks
18,449
5,575
17,830
47,961
24,816
Cash and bank balances
13,225
14,981
39,529
16,309
43,835
Total current assets
112,396
92,530
165,310
199,843
178,362
Total assets
243388
221447
240,592
237,319
213349
Equity
Share capital
113,300
113,300
113,300
113,300
113,300
Share premium
26,653
26,653
26,653
26,653
26,653
Retained earnings
-
-
14,061
11,867
9,645
Accumulated loss
-15,834
-18,404
-
-
-
Equity attributable to Equity holders of the Company
124,119
121,549
154,014
151,820
149,598
Non-controlling interests
-142
-10
511
792
789
Total equity
123,977
121,539
154,525
152,612
150,387
Non-current liabilities
Long-term bank borrowings
30,764
12,889
1,149
643
482
Trade payables
10,624
19,036
17,086
-
-
Total non-current liabilities
41,388
31,925
18,235
643
482
Current liabilities
Short-term bank borrowings
5,755
987
981
895
983
Amount due to contract customers
1,819
5,071
-
-
-
Trade payables
46,949
45,543
31,920
44,857
47,276
Other payables
22,609
16,378
34,923
38,310
13,607
Current tax payables
891
4
8
2
614
Total current liabilities
78,023
67,983
67,832
84,064
62,480
Total liabilities
119,411
99,908
86,067
84,707
62,962
TOTAL EQUITY AND LIABILITIES
243388
221,447
240,592
237,319
213,349
TSR CAPITAL BHD
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Year Ended December 31, 2012, 2011, 2010, 2009, and 2008
2012
2011
2010
2009
2008
RM'000
RM'000
RM'000
RM'000
RM'000
CASH FLOWS FROM OPERATING ACTIVITIES
Profit/ Loss before taxation
3,593
-32,503
2,663
5,467
-13,867
Adjustments for:
Non-cash & non-operating items
1,253
2,509
1,833
1,028
11,387
Operating profit before working capital changes
4,846
-29,994
4,496
6,495
-2,480
Net change in current assets
-12,488
49,562
20,009
-16,213
29,758
Net change in current liabilities
4,161
-4,244
2,547
10,051
-9,683
Cash generated from operations
-3,481
15,324
27,052
333
17,595
Non-operating items
-2,004
-845
-1,090
-565
-1,685
Net cash used in operating activities
-5,485
14,479
2,5962
-232
15,910
CASH FLOWS FROM INVESTING ACTIVITIES
Interest received
664
447
922
1,141
776
Purchase of property, plant and equipment
-903
-217
-378
-1,601
-1,851
Proceeds from disposal of property, plant and equipment
470
483
173
184
311
Proceeds from disposal of investment properties
2,100
-
-
-
-
Purchase of investment properties
-3,459
-41,243
-30,582
-
-
Purchase of land held for future development
-4,254
-21,471
-
-
-
Acquisition of shares in existing subsidiaries from non-controlling interests
-
-388
-225
-
-
Additions of fixed deposits pledged to financial institutions
-1,012
-6
-5
-
-
Net cash generated from investing activities
-6,394
-62,395
-30,095
-276
-764
CASH FLOWS FROM FINANCING ACTIVITIES
Repayment of hire purchase obligations
-1,012
-1,176
-1,084
-1,189
-1,194
Procceds from issuance of shares
10,300
Drawdown of term loan
22,997
12,072
-
-
-
Dividend paid
-
-
-1,699
-2,684
-3,014
Net cash used in financing activities
21,985
10,896
-2,783
-3,873
6,092
Net in cash and cash equivalents
10,106
-37,020
-6,916
-4,381
21,238
Cash and cash equivalents, beginning of year
20,334
57,354
64,270
68,651
47,413
Cash and cash equivalents, end of year
30,440
20,334
57,354
64,270
68,651
3.0 Companies Background, Activities, and MD&A information
3.1 Fajarbaru Builder Group Bhd.
Fajarbaru Builder Group Bhd is a public listed company in Bursa Malaysia under construction sectors. Currently, this company not only operating its core business, construction, it also investing in some subsidiaries form the various sectors such as manufacturing ready-mix concrete, trading construction materials, and property development.
The origin of the company is starting their business on 6 May 1976 as a private limited company, Fajarbaru Builder Sdn Bhd under the Companies Act 1965. Currently, the Fajarbaru Builder Sdn Bhd is also one of its' core subsidiary.
The core operating activities of the origin companies are civil works, building construction and turnkey contractor and other construction works on contract basis. This company is also a Class A contractor that registered under Pusat Khidmat Kontraktor (PKK), Class G7 contractor that registered under Construction Industry Development Board (CIDB), and as a turnkey contractor that registered with Petroliam Nasional Berhad. Both of this types of license enable the company to tender any size of the public or private projects.
Currently, the Group is a one stop construction agency that capable to undertake a wide range of constructions projects. This capacity of the Group enable the efficiency and effective of the business activities such as cost and time saving because of internalization. Besides that, qualitative and quantitative managements of the Group can be controlled easily within the process of construction activities only within the Group.
The results of operating of Fajarbaru Builder Group Bhd showed an uncertainty trends in the net earnings for the period of 2008 to 2012. That is a decreasing trends for the period 2008 to 2009. This might to the financial crisis occurs during that period of time. Then, the net earnings for the period of 2009 to 2010 showed an increasing trends. This is because of the injections of the government to the properties and public infrastructure development projects during the periods of time that also give significant effects to the business of the construction firms. The decreasing trends occurred for the net earnings of 2010 to 2012. During the recent few years, the government budget to develop many projects on public infrastructure. This types of projects normally are long term projects, so the return to the firms during the starting period of time might not be so favorable for this moments. The chairmen of the company also predicted that the return for the coming year 2013 will be favorable as stated in Annual Report 2012.
Based on the consolidated statements of cash flows, there are all negative net cash flows for year 2012 from three sources (operating, financing and investing). This showed that the companies currently wish to make long-term investments. This can seem from the purchase of land the held for properties developments. Besides that, the companies has a good liquidity managements because according to the amount stated in the balance sheet, the cash and cash equivalent of the company still in a healthy level, that is able to pay-off the current liabilities for that financial year.
3.2 Hock Seng Lee Bhd
Hock Seng Lee Berhad (HSL) is a well-developed construction company based in the Sarawak that fully integrated marine engineering, civil engineering and building construction activities or projects of Sarawak. This company also capable to dig up the complex infrastructure works such as bridge, road, flyover construction, flood mitigation, rural water supply and marine structures. Since HSL starting their business, many areas of Sarawak have been transformed into modern infrastructures such as modern housing, resorts, commercial/shopping centers, industrial estates, international seaports, airports and highways.
The origins of HSL is operated by three eldest brothers of the Yii family (Yii Chi Hau, Yu Chee Lieng and Yu Jih Tung) in the mid-1960s. The principal operating activities are sand dredging and land fill operation. After that, the company was named, Hock Seng Lee, after the first timber dredging vessel to operate the partnership company. The company named Hock Seng Lee is because the sounds like "good business" in the local Hokkien dialect.
Then, the company was incorporated in January 1979 with the company named Hock Seng Lee Development Company Sendirian Berhad. Over the past thirty few years after incorporated, its core business activities has been diversified into a wide range of civil engineering and construction works such as prestigious road works and new township developments projects. On 10 June 1996, HSL was listed on the Main Market of Bursa Malaysia under the construction sectors. Since HSL listed in Bursa Malaysia, it is one of the company that frequently winning the shareholder value awards.
Nowadays, HSL Berhad has over 700 full time employees in the company and thirty per cent of them hold tertiary or technical qualifications. The headquarters of HSL is located in Kuching and can be classified as electronic office environment that attached with an advanced computer network, fully computerized accounting system and a wide range of customized computer software to support the tendering activities, job costing and project management.
According to the consolidated statements of earnings, the results of operating of HSL Bhd showed an increasing trends in the net earnings for the period of 2008 to 2012. That is give a good sign of investments to the investors that the company has a stability growth in the business. The chairmen of the company and also the investment companies such as OSK also predicted that the return for the coming year 2013 will be favorable. This is common predictions as to HSL Bhd because this companies is one of the companies that frequently winning the award of shareholder value of Bursa Malaysia.
Based on the consolidated statements of cash flows, there are all positive net cash flows for the year of 2008 to 2012. This showed that the company has the capacity to generate positive net cash flows each year. However, the net cash used in investing and financing activities are all showed negative value for the period of 5 years. This types of negative cash flows might not be giving negative signal to investors because as we know that most of the cash outflows in this two categories are used in investing long-term investments such as treasury shares, lands held for properties development. So, the potential investors might perceived this type of cash outflows as the investment that give favorable return in the future. Besides that, the companies has a healthy liquidity levels because the assets and liabilities of the firms are mostly in the range of optimization.
3.3 TSR Capital Bhd
TSR Capital Berhad is a public listed construction company that listed in the Main Market of Bursa Malaysia. The core business of TSR are construction foundation engineering, soil improvement, construction and civil engineering works. Besides that, TSR also involved in the manufacturing, investment, development, project management, and properties management activities. The headquarter of the company is located in Kuala Lumpur, Malaysia.
Based on the information regarding to the discussion of the meeting that provided in the annual report of the companies, I know that the companies from the construction faced increasing uncertainties in business during the starting period of my study, 2008 due to the spill-over effect of the US sub-prime crisis that occurred during that period of time. However, the company still remain optimistic mind set to the economic condition of market Malaysia because of the stronger and the healthy financial landscape based on the solid economic fundamentals. Therefore the company belief that the economics of Malaysia is decupled from the financial turmoil of U.S.
According to the consolidated statements of earnings, the results of operating of HSL Bhd showed uncertainty trends in the net earnings for the period of 2008 to 2012. There are an increasing for the period of 2008 to 2009, a decreasing for the period of 2009 to 2011 and an increasing trends for the periods of 2011 to 2012. The uncertainty trends from 2008 to 2010 might due to the economy downturn for the period of time. However, the chairman of the company predicted that the company can gain favorable return in the coming year that generated from the current long-term investment.
Based on the consolidated statements of cash flows, there is a positive net cash flows generated in 2012 since continued three financial years generated negative cash and cash equivalents from 2009 to 2011. This positive net cash flows might motivate the potential to invest to the company because according to the financials theory, there are a time considered to generate the return form an investments. So, the company might start to receive some periodical return that generates from the previous investments.
The liquidity policies that applied in this company is more to borrowing to generates the business activities. This can showed by the various types of payables that stated in the balance sheets under the section of current liabilities.
4.0 Valuation and Discussion
4.1 Fajarbaru Builder Group Bhd
FAJARBARU BUILDER GROUP
Common-Size Income Statements (Percent)
2012
2011
2010
2009
2008
Revenue
100.00%
100.00%
100.00%
100.00%
100.00%
Other income
2.777%
1.837%
2.953%
0.964%
11.158%
Project expenses
-113.040%
-85.469%
-78.006%
-87.029%
-88.646%
Staff costs
-6.174%
-3.864%
-3.497%
-2.566%
-4.930%
Depreciation
-0.793%
-0.442%
-0.483%
-0.336%
-0.675%
Other expenses
-2.177%
-1.662%
-1.017%
-1.332%
-1.159%
Profit/Loss from operations
-19.407%
10.400%
19.950%
9.710%
15.749%
Finance costs
-0.684%
-0.064%
-0.037%
-0.094%
-0.167%
Profit/Loss before taxation
-20.091%
10.335%
19.913%
9.616%
15.582%
Taxation
4.965%
-2.766%
-5.078%
-1.840%
1.176%
Net Earnings
-15.126%
7.569%
14.834%
7.776%
16.758%
FAJARBARU BUILDER GROUP BHD
COMMON-SIZE BALANCE SHEETS (PERCENT)
2012
2011
2010
2009
2008
Assets
Non-current assets
Property, plant and equipment
5.210%
4.534%
2.805%
2.895%
5.100%
Investment properties
0.535%
0.608%
0.585%
-
-
Land held for property development
49.410%
26.490%
21.953%
25.752%
35.427%
Trade receivables/Retention sums
0.035%
2.202%
3.111%
3.224%
0.841%
Intangible assets
0.084%
0.095%
0.101%
0.118%
0.163%
Deferred tax assets
-
-
-
-
0.548%
Total non-current assets
55.274%
33.929%
28.555%
31.990%
42.079%
Current assets
Trade and other receivables
13.597%
22.204%
11.004%
17.505%
31.662%
Other current assets
0.614%
0.602%
-
-
-
Tax recoverable
0.700%
0.069%
0.039%
0.008%
0.024%
Cash and cash equivalents
29.816%
43.196%
60.401%
50.497%
26.235%
Total current assets
44.726%
66.071%
71.445%
68.010%
57.921%
Total assets
100.000%
100.000%
100.000%
100.000%
100.000%
Equity and liabilities
Equity attributable to owners of the parent
Share capital
37.956%
39.309%
40.307%
39.086%
35.299%
Share premium
1.458%
1.508%
4.986%
3.705%
5.400%
Treasury shares
-0.449%
-2.683%
-5.042%
-3.265%
-
Warrant reserve
0.481%
0.569%
1.043%
1.223%
-
Other reserve
-0.035%
-0.064%
-1.043%
-1.223%
-
Employee Share Option Reserve
0.039%
0.109%
0.055%
-
-
Retained profits
15.041%
26.621%
24.638%
18.259%
13.812%
54.492%
65.370%
64.943%
57.786%
54.510%
Non-controlling interest
-
-
7.953%
9.367%
12.912%
Total equity
54.492%
65.370%
72.896%
67.154%
67.422%
Non-current liabilities
Trade payables
2.177%
2.159%
-
-
-
Other payables
-
-
-
0.046%
0.130%
Hire purchase payables
-
-
-
-
0.001%
Deferred tax liabilities
0.253%
3.681%
3.713%
4.356%
5.906%
Loans and borrowings
18.394%
-
-
-
-
Total non-current liabilities
20.824%
5.840%
3.713%
4.401%
6.038%
Current liabilities
Trade and other payables
19.758%
17.467%
14.902%
27.426%
26.496%
Other current liabilities
4.018%
11.100%
6.458%
-
-
Bank borrowings
-
-
-
-
0.036%
Tax payable
0.066%
0.222%
2.030%
1.019%
0.007%
Loans and borrowings
0.843%
-
-
-
-
Total current liabilities
24.684%
28.790%
23.391%
28.445%
26.540%
Total liabilities
45.508%
34.630%
27.104%
32.846%
32.578%
Total Equity and Liabilities
100.000%
100.000%
100.000%
100.000%
100.000%
FAJARBARU BUILDER GROUP BHD
CONSOLIDATED STATEMENTS OF CASH FLOWS (PERCENT)
For the Year Ended December 31, 2012, 2011, 2010, 2009, and 2008
2012
2011
2010
2009
2008
Operating activities
Profit/Loss before taxation
201.961%
277.672%
116.768%
48.731%
471.229%
Adjustments for:
Depreciation on property, plant and equipment (Note 12)
-7.936%
11.815%
2.816%
1.652%
20.414%
Depreciation on investment properties (Note 13)
-0.031%
0.064%
0.015%
-
-
Interest expense
-
-
-
0.034%
1.626%
Grant of equity-settled share options to employee
-0.726%
4.766%
0.484%
-
-
Gain on disposal of property, plant and equipment
0.085%
-0.148%
-0.005%
0.190%
-
Impairment loss on land held for development
-
9.087%
-
3.339%
-
Impairment loss on receivables
-
-
0.253%
0.000%
0.000%
Interest income
25.236%
-45.931%
-7.741%
-4.883%
-32.113%
Finance costs
-6.877%
1.727%
0.218%
-
-
Accrual for bonus
-
-
-
2.024%
14.353%
Write off of property, plant and equipment
-
0.078%
-
-
-
Operating (loss)/profit before working capital changes (balance carried forward)
211.712%
259.130%
112.807%
51.089%
475.509%
Changes in working capital:
Trade and other receivables
-151.049%
-383.822%
23.739%
13.981%
-310.774%
Trade and other payables
-81.948%
94.325%
-19.819%
37.131%
-77.446%
Other current assets
1.475%
-19.613%
-
-
-
Other current liabilities
102.769%
273.833%
4.824%
-
-
Cash (used in)/generated from operations
82.959%
223.853%
121.552%
102.200%
87.290%
Interest paid
-
-
-
-0.034%
-1.626%
Taxes paid
17.041%
-123.853%
-21.552%
-2.166%
-
Taxes refunded
-
-
-
-
14.336%
Net cash (used in)/generated from operating activities
100.000%
100.000%
100.000%
100.000%
100.000%
Investing activities
Acquisition of non-controlling interest
-
-59.822%
-
-
-
Additions to investment properties -
-
0.501%
23.678%
-
-
Interest received
-3.102%
-10.644%
77.536%
35.268%
-267.190%
Net cash outflow on acquisition of subsidiary
-
50.445%
-
-
-
Proceeds from disposal of property, plant and equipment
-0.018%
-0.037%
0.142%
0.991%
-
Profit guarantee received
-
-18.638%
98.910%
73.871%
-
Purchase of property, plant and equipment
4.109%
18.551%
-52.911%
-10.131%
367.190%
Purchase of land held for property development
99.012%
-
-
-
-
Net cash used in investing activities
100.000%
100.000%
100.000%
100.000%
100.000%
Financing activities
Finance cost paid
-1.572%
0.366%
-1.326%
-
-
Payment of dividend
-
106.429%
-188.712%
-26.681%
-20.290%
Payment of hire purchase payables
-
-
-
-0.350%
-1.224%
Proceeds from issuance of shares, net of transaction cost
0.905%
-18.340%
494.660%
168.744%
121.515%
Proceeds from private placements
22.271%
-
-
-
-
Acquisition of treasury shares
-1.454%
43.656%
-209.775%
-41.713%
-
Proceeds from exercise of employee share options
0.251%
-32.111%
5.153%
-
-
Drawdown of borrowings
79.599%
-
-
-
-
Net cash generated from/(used in) financing activities
100.000%
100.000%
100.000%
100.000%
100.000%
Net (decrease)/increase in cash and cash equivalents
-27.853%
-31.252%
28.732%
62.234%
20.986%
Cash and cash equivalents at beginning of year
127.853%
131.252%
71.268%
37.766%
79.014%
Cash and cash equivalents at end of year
100.000%
100.000%
100.000%
100.000%
100.000%
4.2 Hock Seng Lee Bhd
HOCK SENG LEE BHD
COMMON-SIZE INCOME STATEMENTS (PERCENT)
2012
2011
2010
2009
2008
Revenue
100.000%
100.000%
100.000%
100.000%
100.000%
Cost of sales
78.487%
78.311%
77.712%
76.683%
78.041%
Gross profit
21.513%
21.689%
22.288%
23.317%
21.959%
Other income
0.114%
0.183%
0.335%
0.219%
0.202%
Administrative expenses
-2.442%
-2.493%
-2.903%
-3.783%
-4.123%
Results from operating activities
19.185%
19.379%
19.720%
19.754%
18.039%
Finance income
0.994%
0.752%
0.515%
0.397%
0.239%
Finance expense
-0.097%
-0.080%
-0.079%
0.000%
-0.010%
Net finance income
0.897%
0.671%
0.436%
0.397%
0.228%
Profit before tax
20.082%
20.051%
20.156%
20.151%
18.267%
Income tax expense
-5.048%
-5.044%
-5.116%
-5.132%
-4.730%
Net Earnings
15.034%
15.007%
15.040%
15.019%
13.537%
Other comprehensive income, net of tax
0.000%
0.000%
0.000%
0.000%
0.000%
Profit/Total comprehensive income for the period
15.034%
15.007%
15.040%
15.019%
13.537%
HOCK SENG LEE BHD
Common-Size Balance Sheets (Percent)
2012
2011
2010
2009
2008
Assets
Non-current assets
Property, plant and equipment
15.047%
16.490%
16.524%
14.889%
12.284%
Investment properties
0.603%
0.000%
0.000%
0.000%
0.000%
Land held for property development
20.441%
13.762%
15.007%
13.966%
17.966%
Total non-current assets
36.091%
30.252%
31.531%
28.854%
30.250%
Current assets
Cash and cash equivalents
26.257%
26.894%
15.412%
15.983%
14.179%
Trade and other receivables
30.341%
35.376%
46.168%
47.500%
48.881%
Inventories
2.250%
3.403%
2.247%
2.299%
1.503%
Property development costs
5.061%
4.076%
4.641%
5.364%
5.188%
Total current assets
63.909%
69.748%
68.469%
71.146%
69.750%
Total assets
100.000%
100.000%
100.000%
100.000%
100.000%
Equity and Liabilities
Equity
Share capital
15.394%
17.059%
2
