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INS
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Insas Berhad (Company No. 4081-M)
Suite 23.02 Level 23, The Gardens South Tower, Mid Valley City, Lingkaran Syed Putra, 59200 Kuala Lumpur. Telephone : 603 22829311 Facsimile : 603 22848500
INSAS BERHAD (Company No. 4081-M)
11A N N U A L R E P O R T 2 0 1 1 L A P O R A N T A H U N A N
InsasCov_FA.indd 1 11/16/11 3:14 PM
Contents2 Corporate Information
3 Profile of Directors
5 Chief Executive Officer’s Statement
7 Statement on Corporate Governance
14 Statement on Internal Control
19 Audit Committee Report
24 Five Years Group Financial Highlights
25 Directors’ Report and Financial Statements
138 Supplementary Infomation
139 List of Properties
140 Analysis of Shareholdings
142 Statement of Directors’ Interest in the Company and its Related Corporations
143 Notice of Annual General Meeting
146 Statement Accompanying Notice of the 49th Annual General Meeting
147 Statement in Relation to the Proposed Renewal of Authority to Purchase its Own Shares by the Company
Form of Proxy
a n n u a l r e p o r t
I N S A S B E R H A D
2 CORPORATE INFORMATION
PRINCIPAL PLACE OF BUSINESSSuite 23.02, Level 23The Gardens South TowerMid Valley CityLingkaran Syed Putra59200 Kuala LumpurTel : 03-2282 9311Fax : 03-2284 8500
PRINCIPAL AUDITORSJ Grant Thornton (AF 0737)(Member Firm of Grant Thornton International Ltd)Chartered AccountantsLevel 11, Sheraton Imperial CourtJalan Sultan Ismail50250 Kuala Lumpur
PRINCIPAL BANKERSAffin Investment Bank BerhadCredit Suisse, AG SingaporeCitibank, N.A.Goldman Sachs (Asia) L.L.CHong Leong Bank BerhadMalayan Banking BerhadOCBC Bank (Malaysia) BerhadPublic Bank BerhadRHB Bank BerhadUnited Overseas Bank (Malaysia) Berhad
SOLICITORSRaslan LoongShearn Delamore & CoTan Pheck San & CoJames Monteiro Advocates & Solicitors
SHARE REGISTRARSMegapolitan Management Services Sdn BhdNo. 45-5, The BoulevardMid Valley CityLingkaran Syed Putra59200 Kuala LumpurTel : 03-2284 8311Fax : 03-2282 4688
STOCK EXCHANGE LISTINGMain Market of Bursa Malaysia Securities Berhad
SECTORFinance
STOCK CODE3379
BOARD OF DIRECTORS
YAM Tengku Puteri Seri Kemala Pahang Tengku Hajjah Aishah bte Sultan Haji Ahmad Shah DK(II), SIMPChairperson;Independent Non-Executive Director
Dato’ Thong Kok KheeExecutive Deputy Chairman/Chief Executive Officer
Dr Tan Seng ChuanExecutive Director
Dato’ Wong Gian KuiNon-Independent Non-Executive Director
Soon Li YenNon-Independent Non-Executive Director
Oh Seong LyeIndependent Non-Executive Director
AUDIT COMMITTEE
YAM Tengku Puteri Seri Kemala PahangTengku Hajjah Aishah bte Sultan HajiAhmad Shah DK(II), SIMPChairperson;Independent Non-Executive Director
Soon Li YenNon-Independent Non-Executive Director
Oh Seong LyeIndependent Non-Executive Director
COMPANY SECRETARIES
Chow Yuet KuenYau Jye Yee
REGISTERED OFFICE
No. 45-5, The BoulevardMid Valley CityLingkaran Syed Putra59200 Kuala LumpurTel : 03-2284 8311Fax : 03-2282 4688
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I N S A S B E R H A D
3PROFILE OF THE BOARD OF DIRECTORS
Y.A.M. TENGKU PUTERI SERI KEMALA PAHANG TENGKU HAJJAH AISHAH BTE SULTAN HAJI AHMAD SHAH, DK(II), SIMP
Aged 54, is a Malaysian citizen and an Independent Non-Executive Director. Y.A.M. Tengku Aishah was appointed as the Chairperson of Insas Berhad on 12 November 1986.
She graduated with a Diploma in Business Administration from Dorset Institute, UK in 1980 and has been a Director of TAS Industries Sdn Bhd since 15 August 1990. TAS Industries Sdn Bhd is an investment holding and property development company in Kuala Lumpur. Y.A.M. Tengku Aishah is also an Independent Non-Executive Chairperson of Inari Berhad.
She has no family relationship with any Director or major shareholder of Insas Berhad and has no conflict of interest with Insas Berhad. She has not been convicted for any offences within the past 10 years.
DATO’ THONG KOK KHEE
Aged 57, is a Malaysian citizen and the Executive Deputy Chairman cum Chief Executive Officer. Dato’ Thong was appointed to the Board as Executive Deputy Chairman on 28 February 2007 and subsequently became the Executive Deputy Chairman cum Chief Executive Officer on 30 January 2009. Prior to this, Dato’ Thong was Chief Executive Officer of Insas Berhad from 10 March 1993 until 29 November 2004.
A graduate from the London School of Economics, UK, Dato’ Thong had worked in the financial services industry from 1979 up to 1988. He worked for Standard Chartered Merchant Bank Asia Limited in Singapore between October 1982 to June 1988 and his last held position was the Director of its Corporate Finance Division. Dato’ Thong is also a Non-Independent Non-Executive Director of Inari Berhad, Formis Resources Berhad and Ho Hup Construction Company Bhd.
He is a substantial shareholder of Insas Berhad. He has no conflict of interest with Insas Berhad and has not been convicted for any offences within the past 10 years.
DATO’ WONG GIAN KUI
Aged 52, is a Malaysian citizen and a Non-Independent Non-Executive Director. Dato’ Wong was appointed to the Board as an Executive Director on 11 September 1992, and as Managing Director from November 2000 to January 2009. He was re-designated as a Non-Independent Non-Executive Director of Insas Berhad on 30 January 2009.
He is an accountant by profession and has been a member of the Malaysian Institute of Accountants since 1988 and of the Malaysian Institute of Certified Public Accountants since 1985. Prior to joining Insas Berhad, Dato’ Wong was previously attached to Harun, Oh & Wong, a member of Horwath International firm of public accountants in Malaysia from 1981 to 1990 and Stoy Hayward London, Chartered Accountants from 1990 to 1991. Dato’ Wong is also a Non-Independent Non-Executive Director of Inari Berhad.
He has no family relationship with any Director or major shareholder of Insas Berhad and has no conflict of interest with Insas Berhad. He has not been convicted for any offences within the past 10 years.
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I N S A S B E R H A D
4
DR TAN SENG CHUAN
Aged 56, is a Malaysian citizen and an Executive Director. Dr Tan was appointed to the Board of Insas Berhad on 18 March 1997.
He graduated with First Class Honours in Mechanical Engineering from Imperial College, England in 1978. Dr Tan also obtained a Masters and Ph.D in Engineering Science in 1981 and 1983 respectively from Harvard University, USA. Dr Tan has vast experience in the information technology (IT) industry. He had worked on leading edge software and hardware development projects with many companies in the global IT industry prior to joining Insas Berhad in 1997 where he currently heads the Technology Division. Dr Tan is also the Managing Director of Inari Berhad.
He has no family relationship with any Director or major shareholder of Insas Berhad and has no conflict of interest with Insas Berhad. He has not been convicted for any offences within the past 10 years.
MR OH SEONG LYE
Aged 63, is a Malaysian citizen and an Independent Non-Executive Director. Mr Oh was appointed to the Board of Insas Berhad on 18 March 2009.
Mr Oh is a London-trained Chartered Accountant. He is a Fellow of the Institute of Chartered Accountants in England and Wales, a member of the Malaysian of Institute Accountants and a member of the Institute of Certified Public Accountants of Singapore. He holds a Master of Business Administration degree from United Business Institutes, a Brussels-based business school.
After a year of post-qualifying experience in London, he worked for a “big-four” accounting firm and a foreign bank in Kuala Lumpur before starting his accounting practice in 1978 and has been in public practice ever since. He was the executive chairman and international liaison partner when his firm was a member of Horwath International until 1992. His firm was the external auditors and tax agents for two major banks, several other financial institutions and insurance companies and other substantial private enterprises.
He had also personally undertaken large receivership and liquidation assignments, and conducted, together with foreign partners, market and financial feasibility studies for several organizations involved in the hospitality business and tourism industry. He was previously a director of two Bursa Malaysia Public Listed Companies and was also the founder/promoter and first Honorary Secretary of a national manufacturing association and a past Hononary Secretary-General of a national tourism-related association. Mr Oh is also an Independent Non-Executive Director of Inari Berhad.
He has no family relationship with any Director or major shareholder of Insas Berhad and has no conflict of interest with Insas Berhad. He has not been convicted for any offences within the past 10 years.
MS SOON LI YEN
Aged 43, is a Malaysian citizen and a Non-Independent Non-Executive Director. Ms Soon was appointed to the Board of Insas Berhad on 06 March 2009.
She is an accountant by profession and prior to joining Insas Berhad in August 1995, she worked for Coopers & Lybrand as Audit Senior from 1991 to 1995. Ms Soon graduated from the Royal Melbourne Institute of Technology with a Bachelor of Business in Accounting in 1991. She is a member of Malaysian Institute of Accountants and Certified Public Accountants of Australia and has extensive experience in auditing, accounting, financial planning and financial related work.
She has no family relationship with any Director or major shareholder of Insas Berhad and has no conflict of interest with Insas Berhad. She has not been convicted for any offences within the past 10 years.
PROFILE OF THE BOARD OF DIRECTORS
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I N S A S B E R H A D
5CHIEF EXECUTIVE OFFICER’S STATEMENT
For the financial year ended 30 June 2011, the Group
achieved consolidated profits before tax of RM104
million as compared to RM61 million in the previous
year. The pre-tax profit for the previous financial year
have been restated upwards from RM53 million to RM61
million as a result of the adoption of fair value accounting
policy for investment properties in the financial year
ended 30 June 2011.
All operating divisions performed satisfactorily during
the financial year. Currently, we have investments
in financial assets, real estate investments and
development, structured finance, stock broking and
corporate finance advisory services, technology,
high fashion retail, food & beverage and car rental
businesses. Most operating divisions achieved improved
performances. However, whilst our corporate finance
advisory services performed well, our stock broking
firm continues to face an increasingly challenging
environment with low trading volumes and eroding
margins from intensified competition, especially with
new licenses granted to foreign firms. At the same time,
our operating costs continue to rise as we have to keep
upgrading our trading platform.
During the financial year, one notable event was the
approval obtained from Bursa Malaysia Securities
Berhad to list our associate company, Inari Berhad,
on the ACE Market. Inari Berhad was officially listed
on 19 July 2011. The principal business of Inari Group
is producing wireless microwave telecommunication
product, wireless broadcast card and electronic
manufacturing services. We expect Inari Group to
continue to perform well in the forseeable future.
The current financial year however started with very
ominous developments from Europe in terms of the
Greek sovereign debt crisis, and to lesser extent, similar
potential crisis in Italy, Portugal and Spain. The failure of
Dexia Bank sparked intense fears of another contagion
banking crisis from major European banks. At the same
time, increasingly negative news started to emerge from
China about an economic slowdown and potential high
loan loss provisions for Chinese banks. Added together,
financial markets fell sharply and trillions were lost in
the months of August and September 2011. Currently,
the European situation is still unclear and with a very
high degree of uncertainty. Given this background, with
such high volatility and lack of visibility in the global
environment, we believe that the business prospects
have become very challenging and have turned for the
worse. Accordingly, we will have to take steps to scale
back our investments and conserve cash to prepare for
the possibility of a recession.
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I N S A S B E R H A D
6
Corporate Social Responsibility
Social and conservation priorities remain an integral
part of the Group’s operating policy. In the course of
the last financial year, the Group continues to adopt
environmentally friendly practices such as recycle,
reuse and reduce wastages by conserving the use of
materials and energy at workplace. The Group is also
focused on reaching out to the community. In support
of this objective, the Group’s operating companies
provided monetary contributions and supported welfare
and accommodation facilities to various charitable and
religious organisations in the country.
Appreciation
On behalf of the Board of Directors, I wish to thank our
staff for their dedication, support and commitment in
carrying out their duties over the past year.
I would also like to record my sincere appreciation to
our valued shareholders, customers, bankers, business
partners and the regulatory bodies for their continued
support and cooperation extended to the Group.
Last but not the least, I wish to extend my deepest
gratitude to our Board of Directors for their invaluable
guidance and wise counsel to the Group in the last one
year.
Dato’ Thong Kok KheeExecutive Deputy Chairman / Chief Executive Officer
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I N S A S B E R H A D
7STATEMENT ON CORPORATE GOVERNANCE
1. INTRODUCTION
Corporate governance set out the framework and process which corporations, through their Board of Directors and senior management, regulate their businesses activities. These principles aim to balance sound business operations with compliance to relevant laws, guidelines and regulations.
The Board of Directors (“the Board”) of Insas Berhad is fully committed to maintaining the highest standards of corporate governance throughout the Group. To this end, the Board has adopted a set of Corporate Governance guidelines to govern its conduct within the spirit of the Malaysian Code on Corporate Governance (“the Code”) and the Bursa Malaysia Securities Berhad’s Listing Requirements. The Board believes that high standards of corporate governance is the key to building an organisation of high integrity and corporate accountability with the ultimate objective of enhancing long-term shareholders value and returns to its stakeholders.
The Board is pleased to set out below the manner in which it has applied the principles of corporate governance and the extent of compliance with the best practices set out in the Code throughout the financial year and where there are deviations, the alternative measures undertaken pursuant to the Bursa Malaysia Securities Berhad’s Listing Requirements.
2. BOARD OF DIRECTORS
a) Principal Responsibilities
The Board has overall stewardship responsibility for supervising the Group’s affairs within a framework of acceptable risks and in compliance with the relevant laws, guidelines and regulations. The Board concentrates principally on financial performance, critical and material business issues and specific areas such as management of risks, the Group’s system of internal controls, succession planning for senior management and investors and shareholders communication policies. The Board is also accountable for the corporate governance, setting strategic direction of the Group and overseeing the investments and businesses of the Group.
b) Composition
The establishment of an active, dynamic and independent Board is paramount in improving corporate governance practices. The current Board composition provides an effective combination of industry and professional experience, skills and expertise for the direction of the existing businesses and new corporate ventures undertaken by the Group. The Board is made up of an appropriate balance of Executives and Non-Executive Directors with diverse experience required for the effective stewardship of the Group and independence in decision making at Board level.
The Board comprises six members, namely the Chief Executive Officer (cum Executive Deputy Chairman), an Executive Director, two Non-Independent Non-Executive Directors and two Independent Non-Executive Directors including the Chairperson. The current Board composition complies with the Bursa Malaysia Securities Berhad’s Listing Requirements which requires a minimum of two directors or one third of the Board to be independent members. A brief profile of each of the directors is presented on page 3 of the Annual Report.
The Chief Executive Officer is responsible to the Board for the management and performance of the Group’s businesses within the framework of the Group’s policies, reserved powers and routine reporting requirements.
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I N S A S B E R H A D
8
2. BOARD OF DIRECTORS (CONT’D)
b) Composition (cont’d)
There is a clear division of responsibilities on the differing roles of the Chairperson and the Executive Directors to ensure a balance of authority and power. The Chairperson heads the Board and is responsible for ensuring the Board meets regularly and ensure its effectiveness and standards of conduct. She has authority over the general agenda for each Board meeting to ensure that all Directors are provided with relevant information on a timely basis. The general agenda may include minutes of prior meetings of the Board, review of the Group’s period financial reports, proposal papers from the management, matters requiring the Board’s deliberation and approval and other reports. The Executive Directors take on primary responsibility for managing the Group’s businesses and resources. They have overall responsibility for the operational activities of the Group and implementation of the Board’s strategies, policies and decisions.
The Board recognises the importance and contribution of its Independent Non-Executive Directors. The Independent Non-Executive Directors provide independent assessment and judgment on corporate proposals undertaken by the Group. They fulfill a pivotal role in bringing corporate accountability and independent, unbiased judgment and advice to bear on the Board’s deliberation and decision-making. The role of Independent Non-Executive Directors is particularly important in ensuring that the strategies proposed by the Executive Directors and management team are discussed and examined fully and to take into account long-term interest of all parties affected by the Group’s business activities. The Independent Non-Executive Directors are independent of the management and the major shareholders.
c) Board Meetings
The Board has five scheduled meetings annually, with additional meetings held as and when urgent issues and important matters arise that are required to be taken between the scheduled meetings. There were five Board meetings held during the financial year ended 30 June 2011. All the Board meetings were held at The Boardroom at Suite 23.02, Level 23, The Gardens South Tower, Mid Valley City, Lingkaran Syed Putra, 59200 Kuala Lumpur.
The date and time of the Board meetings were as follows :-
Date of Meetings Time25 August 2010 4.00 p.m.14 October 2010 12.30 p.m.29 November 2010 12.00 noon24 February 2011 12.00 noon30 May 2011 12.00 noon
Details of attendance of the Directors at the Board meetings are as follows :-
Directors Attendance and number of meetings during the financial year
YAM Tengku Puteri Seri Kemala Pahang Tengku Hajjah Aishah bte Sultan Haji Ahmad Shah,DK(II), SIMP
3/5
Dato’ Thong Kok Khee 5/5Dato’ Wong Gian Kui 5/5Dr Tan Seng Chuan 5/5Oh Seong Lye 5/5Soon Li Yen 5/5
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I N S A S B E R H A D
9
2. BOARD OF DIRECTORS (CONT’D)
d) Supply of Information
The Board has full and timely access to information concerning the Group. An agenda and board reports containing information relevant to the business for consideration at the meeting are circulated prior to the Board meetings to enable the Directors to obtain information and explanation to enable them to discharge their duties and responsibilities competently and in a well-informed manner. Senior management and key operation managers are informed of the guidelines on the preparation of board papers, in particular on its contents and format, to ensure a systematic and comprehensive presentation of information at all times. The board papers and reports provide updates of periodical information on the Group’s financial performance, operational matters and corporate developments.
Board proceedings, deliberations and conclusions of the Board at every Board meeting are duly recorded in the Board minutes and all minutes are signed by the Chairperson of the meeting in compliance with Section 156 of the Companies Act, 1965. All Directors have the right and duty to make further enquiries whenever they consider it necessary.
The Board has access to the advice and services of the Company Secretary and senior management employees of the Group who are responsible to the Board for ensuring that all Board procedures are followed and that applicable laws and regulations are complied with. The Board may also obtain independent professional advice at the Company’s expense in furtherance of their duties.
The Board is also regularly updated and advised by the Company Secretary of any corporate announcement released to Bursa Malaysia Securities Berhad, impending restriction in dealing with the securities of the Company prior to the announcement of financial results and corporate proposals and new regulations, guidelines or directives issued by the Bursa Malaysia Securities Berhad, the Securities Commission and other relevant regulatory authorities.
e) Appointment and Re-election
There is no Nomination Committee in the Group but the Board has the service of the Company Secretary to ensure that the appointments of new directors to the Board are properly made with an established and transparent procedure and in compliance with the rules of the relevant authorities. Any appointment of additional director is made as and when it is deemed necessary by the existing Board with due consideration given to the mix and range of expertise and experience required for an effective Board.
In accordance with the Company’s Articles of Association, all Directors who are appointed by the Board are subject to re-election by the shareholders at the following Annual General Meeting after their appointment. The Articles also provide that the Directors are subject to re-election by rotation at least once in every three years. Reappointments are not automatic and the Directors who retire are to submit themselves for re-election by shareholders at the Company’s Annual General Meeting.
Details of directors seeking re-election at the forthcoming annual general meeting are disclosed in the Statement Accompanying Notice of the Annual General Meeting.
f) Training and Continuing Board Development
All the Directors have attended and completed the Mandatory Accreditation Programme (MAP) in compliance with the Bursa Malaysia Securities Berhad’s Listing Requirements.
The Directors did not attend any external seminars or training programs during the financial year. This was due to the Directors’ inability to attend the desired or selected training programs due to their work commitments. The Directors are mindful that they have to keep abreast with current developments and new/revised statutory and regulatory requirements in order for them to discharge their duties effectively. The Directors are committed to keep themselves updated on both local and international affairs and to changes in regulations affecting the Group through advisories from regulatory bodies, the Company Secretary and the management and through their own resources.
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I N S A S B E R H A D
10
2. BOARD OF DIRECTORS (CONT’D)
g) Remuneration
The remuneration of the Directors are linked to performance, service seniority, experience and scope of responsibilities and industry market rate so as to ensure that the Group attracts, motivates and retains Directors with the necessary skills and experience needed to run the Group effectively.
In line with this, the remuneration for the Executive Directors is aligned to individual and corporate performance. For the Non-Executive Directors, the level of remuneration will commensurate with the level of experience and responsibility undertaken by them.
The remuneration of the Executive Directors comprises fees, salaries and allowances and other customary benefits made available by the Group. The remuneration of the Non-Executive Directors comprises fees, salaries, allowances and other customary benefits. The aggregate annual Directors’ fees for the Independent Non-Executive Directors as recommended by the Board are to be approved by shareholders at the Annual General Meeting.
The details of the remuneration of Directors of the Company for the financial year categorised into appropriate components are as follows :
Fees
RM
Salaries & other emoluments
RM
Benefits in kind
RM
Total
RMExecutive Directors – 3,305,514* 50,700 3,356,214Non-Executive Directors- current year- overprovision in previous years
43,980(61,920)
––
13,700–
57,680(61,920)
* This includes the aggregate remuneration of two Non-Independent Non-Executive Directors of
the Company who are Executive Directors of certain subsidiary companies.
The remuneration of the Directors are further analysed by applicable bands of RM50,000 which comply with the disclosure requirements under the Bursa Malaysia Securities Berhad’s Listing Requirements. The Board is of the view that the transparency and accountability aspect of corporate governance which is applicable to Directors’ Remuneration are appropriately served by the band disclosure.
The aggregate remuneration of Directors analysed into the appropriate bands are as follows :
Range of remuneration Executive Non-ExecutiveBelow RM50,000 2RM150,001 to RM200,000 1RM350,001 to RM400,000 1 RM550,001 to RM600,000 1RM2,200,001 to RM2,250,000 1
3. INVESTOR RELATIONS AND COMMUNICATION WITH SHAREHOLDERS
The Board recognises the importance of maintaining effective communication with shareholders, stakeholders and the public on all material business matters affecting the Company and the Group. In addition to the announcements on the quarterly results and other corporate news, press releases and announcements for public dissemination are made periodically to capture any significant corporate event or product launch that would be of interest to investors and members of the public. The Board places emphasis on timely and equitable dissemination of information to shareholders and investors to keep them informed of the Group’s performance, corporate strategy and major developments.
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11
3. INVESTOR RELATIONS AND COMMUNICATION WITH SHAREHOLDERS (CONT’D)
Announcements to the Bursa Malaysia Securities Berhad on corporate proposals, quarterly results and annual reports and other public announcements are accessible to shareholders through Bursa Malaysia’s website at http://www.bursamalaysia.com.
Shareholders are presented a review of financial performance for the financial year at each Annual General Meeting. The Company’s Annual General Meeting has always been well attended and is the principal forum for dialogue and interaction with the shareholders. It has always been the practice for the Chairperson to invite the shareholders to raise any questions that they may have in relation to the Group’s activities, financial performance and prospects and the shareholders’ comments and suggestions noted by the Board for consideration.
Key investor relation activities such as dialogues with financial and research analysts and investors are held to provide constructive communications on matters concerning the Group.
The Company’s website at http://www.insas.net provides an easy and convenient avenue for shareholders and investors to gain access to the Group’s corporate information and news and events.
4. BOARD COMMITTEE
To ensure the effective discharge of its fiduciary duties, the Board has delegated specific responsibilities to the Audit Committee, which operates within clearly defined terms of reference. The Audit Committee members are thus able to deliberate in greater detail and examine the issues within their terms of reference in compliance with the Code.
The Audit Committee has been established to assist the Board in execution of its responsibilities. The Audit Committee meets periodically to carry out its functions and duties pursuant to its terms of reference. Other Board members are also invited to attend the meetings when the needs arise. The Audit Committee meets with the internal auditors quarterly and with the external auditors at least once a year.
The details of the composition, terms of reference and the activities of the Audit Committee are set out in the Audit Committee Report.
5. ACCOUNTABILITY AND AUDIT
a) Statement of the Board of Directors’ Responsibility for Preparing the Financial Statements
The Board is collectively responsible for ensuring that the financial statements give a true and fair view of the state of affairs of the Group and the Company as at 30 June 2011 and of its performance and cash flows for the financial year ended on that date.
The Director are pleased to announce that in preparing the financial statements for the financial year
ended 30 June 2011, the Group and the Company have:a) ensured compliance with the requirements of the applicable Financial Reporting Standards issued
by the Malaysian Accounting Standards Board and the provisions of the Companies Act, 1965 in Malaysia;
b) adopted and consistently applied the appropriate and relevant accounting policies; andc) exercised judgments and estimates that are prudent and reasonable.
The Directors are also responsible for ensuring that the Group and the Company keep proper accounting records. In addition, the Directors have overall responsibilities for proper safeguarding of the assets of the Group and the Company and taking such reasonable steps for the prevention and detection of fraud and other irregularities.
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12
5. ACCOUNTABILITY AND AUDIT (CONT’D)
b) Financial Reporting
The Board has taken reasonable steps to provide a balanced and understandable assessment of the Group’s financial performance and prospects, primarily through the annual report and quarterly financial statements.
The Board has also empowered the Audit Committee to review the Group’s financial reports to ensure conformity with the applicable Financial Reporting Standards and the provisions of the Companies Act, 1965 in Malaysia before the financial statements are recommended to the Board for consideration and approval for release to the public.
c) Internal Control
The Board recognises the importance of maintaining a sound system of internal controls to safeguard the shareholders’ investment and the Group’s assets.
The information on the Group’s internal control is set out in the Statement on Internal Control on page 14 of the Annual Report.
d) Relationship with External Auditors
Through the Audit Committee, the Group has established a transparent and formal relationship with the Company’s external auditors in seeking professional advice and ensuring compliance with the applicable Financial Reporting Standards and statutory requirements.
The Group’s external auditors report to the Audit Committee on any weaknesses in the Group’s internal control system, any non-compliance of financial reporting standards and communication of fraud that have come to their attention in the course of their audit.
The Group’s external auditors also fulfill an essential role to the shareholders of the Company and other users of the financial statements by enhancing the reliability of the financial statements.
e) Audit Fees
The total of the statutory and non-statutory audit fees (excluding expenses and service taxes) charged by the external auditors for the financial year ended 30 June 2011 amounted to RM305,000 (2010 : RM308,650).
f) Non-Audit Fees
The total of the non-audit fees (excluding expenses and service taxes) charged for the financial year ended 30 June 2011 by the external auditors for services performed for the Group amounted to RM70,000 (2010 : RM147,400).
6. OTHER INFORMATION
a) Share buybacks
During the financial year, the Company bought back a total of 3,761,700 of its issued shares from the open market. The details of the cumulative shares bought back are set out in Note 28 of the audited financial statements on page 96 of the Annual Report.
b) Share, Share Options, Warrants and Convertible Securities There were no shares issued during the financial year. There were no share options exercised into
ordinary shares, warrants or convertible securities during the financial year.
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6. OTHER INFORMATION (CONT’D)
c) Depository Receipt Programme
The Company did not sponsor any depository receipt programme during the financial year.
d) Sanctions and/or penalties
There were no sanctions and/or penalties imposed on the Group, its directors or management by the relevant regulatory bodies.
e) Variation in results
There is no material deviation between the profit after taxation and non-controlling interests in the announced unaudited consolidated income statement and the audited consolidated income statement for the financial year ended 30 June 2011.
There was no profit estimate, forecast or projection issued by the Group and the Company during the financial year.
f) ProfitGuarantee
There was no profit guarantee given by the Group and the Company during the financial year under review.
g) Material Contracts
There were no material contracts entered into by the Group involving directors and substantial shareholders during the financial year.
h) Revaluation policy
There was no revaluation conducted on the Group’s properties held under property, plant and equipment, land held for development and inventories during the financial year.
The Group adopted the fair value accounting policy for its investment properties during the financial year. The fair value of the investment properties were determined by independent professional valuer, financial institutions’ valuers and on recorded transaction values used for similar properties in the location concerned based on current prices in the active market for similar properties. The details of these properties are set out in the List of Properties on Page 139 of this Annual Report.
i) Corporate Social Responsibility
Social and conservation priorities remain an integral part of the Group’s operating policy. During the financial year, the Group continues to adopt environmentally friendly practices such as recycle, reuse and reduce wastages by conserving the use of materials and energy at workplace. The Group is also focused on reaching out to the community. To support this objective, the Group’s operating companies made monetary contributions and provided welfare and accommodation facilities to certain charitable and religious organisations in the country.
COMMITMENT
The Board will continuously review its principles and practices in corporate governance in its efforts to achieve the highest standards of corporate governance throughout the Group.
This Statement is made in accordance with the resolution of the Board of Directors dated 20 October 2011.
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I N S A S B E R H A D
14
Introduction
This Statement is made pursuant to the Bursa Malaysia Securities Berhad’s Listing Requirements Paragraph 15.26(b) which requires the Board of Directors of public listed companies to make a statement about the state of internal control of the listed entity as a Group in the Annual Report.
The Board of Directors of Insas Berhad (“the Board”) is committed to maintain a sound system of internal controls and risk management practices to safeguard shareholders’ investment and the Group’s assets. The Board is pleased to provide the Statement on Internal Control which outlines the key elements of the internal control system within the Group during the financial year.
Acknowledgement of responsibility for risk and internal controls
The Board affirms its overall responsibility for the Group’s system of internal controls which includes the establishment of appropriate control environment as well as review the adequacy and integrity of the Group’s internal controls, risk management practices and management information systems. In view of the inherent limitations in any system of internal controls, the system is designed to manage rather than eliminate the risk of failure to achieve its corporate objectives. Accordingly, it can only provide reasonable but not absolute assurance against material errors, misstatement, financial losses or fraud. The system of internal controls includes inter alia, financial, operational, information technology, organisation, compliance and risk management controls.
Also, the Group’s system of internal controls involves all management and employees of the Group from each business unit. The Board is responsible for determining key strategies and policies for significant risks and controls issues, whilst the management team and functional key employees of the Group’s operating units are responsible to implement the Board’s policies effectively by designing, executing, monitoring and managing the internal control processes.
The Board confirms that there is an ongoing process, for identifying, evaluating and managing the significant risks faced by the Group throughout the financial year, which is regularly reviewed by the Board through its Audit Committee, which dedicates separate time for discussion of this matter.
Risk Management
The Group has an ongoing risk management process for identifying, evaluating, managing and reviewing significant risks faced by the businesses in the Group. The risk management process involves all business and functional units of the Group in identifying the significant risks affecting the achievement of business objectives and the effectiveness of controls in place to manage them.
The Board recognises that risk management is an integral part of the system of internal controls and good management practice that is critical to the Group’s continued profitability and for enhancement of shareholders’ value.
The significant business risks faced by the respective business units and key issues pertaining to operational and external environment are reviewed by the management team of each business unit. The responsibility of managing these risks lies with the respective head of units. Key risks relating to the business units’ operations are addressed at periodic management meetings.
The Board undertakes ongoing reviews of key commercial and financial risks facing the Group’s main businesses together with more general risks such as those relating to compliance with law and regulations.
The Group has an on-going credit risk management process undertaken by the respective units’ management team to identify, assess and evaluate principal credit risks and to ensure that appropriate risk treatments are in place to mitigate these risks affecting the achievement of the Group’s objectives.
Management reports the monitoring of the risks to the Executive Deputy Chairman/Chief Executive Officer, whose main roles is to assess, on behalf of the Board of Directors, the key risk inherent in the business and the system of controls that are in place to manage these risks. Changes in the business, operations and the external environment that result in significant risks will be reported to the Audit Committee and the Board accordingly.
STATEMENT ON INTERNAL CONTROL
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Key Elements of the Group’s System of Internal Controls
The framework of the Group’s internal control systems and the key procedures include:-
1. Management and direction of the Group’s businesses
The Chief Executive Officer (“CEO”) is empowered to manage the businesses of the Group and is accountable for the conduct and performance of the Group’s businesses within agreed business strategies. The CEO reports to the Board on significant changes in the businesses and external environments which are relevant to the businesses. The CEO also implements the Board’s expectations of the system of internal controls.
2. Investment and capex appraisals
The CEO and the key management team review material investments and the performance of significant projects undertaken by the Group and make appropriate recommendations and evaluations to be brought to the Board’s attention.
Proposals for substantial and major capital expenditure of the Group are reviewed and approved by the Board.
3. Financial and operational review and reporting
The key management team reviews and reports on significant operational, financial, risk management and legal issues of key operating subsidiaries and ensure that remedial actions are taken by the management of the subsidiaries concerned to address deficiencies that arise.
The CEO and the key management team attend management and operational meetings to review financial and operations reports and to monitor the performance and profitability of the Group’s businesses. Any deviation in corporate strategy and business objectives are deliberated and necessary action will be instituted. The CEO practices an ‘open door’ policy whereby matters arising are promptly highlighted and immediately dealt with.
4. Scheduled Board meetings
The Board meets quarterly and at other scheduled intervals when necessary to maintain full and effective supervision of the Group’s activities and operations. The General Manager – Finance will lead the presentation of board papers and provide comprehensive explanations of pertinent issues and the Board will go through thorough deliberation and discussion before arriving at any decision which has a bearing on the Group.
The Board reviews the financial and operating information and key performance indicators of strategic business
units and legal and regulatory matters on a quarterly basis.
5. Audit Committee
The Board has the assistance of the Audit Committee whose principal duty is to review and monitor the effectiveness of the Group’s system of internal control. The Audit Committee meets with the Group’s principal external auditors to review the audit findings arising from the statutory audit of the financial statements and their tests on the system of internal control.
6. Organisational Structure
The Group has an organisational structure which defines the responsibilities and appropriate level of empowerment at various authorisation levels. This is to facilitate quality and timely decision-making process at the appropriate level in the organisation hierarchy.
7. Centralised support functions
The Group also has in place key support functions, which are managed centrally at its Corporate Office. These comprise Group Secretarial and Share Registration, Legal, Human Resource, IT, Finance, Treasury and Tax compliance functions. These support functions ensure consistency and compliance in the setting and application of policies and procedures relating to these functions thus reducing duplication of efforts and thereby providing synergy to the Group.
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Key Elements of the Group’s System of Internal Controls (Cont’d)
8. Definedaccountabilityandauthorisationlevels
The senior employees and management team of key subsidiary companies are responsible for:-- the conduct and performance of their respective business units;- identification and evaluation of significant risks applicable to their respective businesses together with the
design and institution of suitable internal controls; and- meeting defined reporting deadlines and ensuring compliance with policies, procedure and regulatory
requirements;
9. Budgeting Process
Detailed budgeting process and development of business strategies whereby key operating subsidiaries prepare budgets for the coming year, which are approved at the operating level. Key performance indicators are set for each of these operating subsidiaries and the performance are monitored via reporting system which highlights significant variances against budgets for investigation and follow-up by the management of the respective operating subsidiaries.
10. Specificcreditriskmanagement
The Board, through the relevant management team, adopted a prudent approach with regard to the management of credit risks. Procedures on credit application, review and approval of high value loans by the subsidiary company in the money lending business are undertaken by designated senior management to ensure credit risk is contained and the loans are properly and adequately securitised. Procedures for recovery for loans exceeding their credit limit are also in place.
11. Human resource management
The Board considers the integrity of employees at all levels to be of utmost importance, and this is pursued through its comprehensive and structured recruitment, appraisal and reward program. The Group also has ongoing training and development programs to ensure the Group attracts, motivates and retains competent and skilled employees.
Corporate values and code of conduct, which emphasise on the importance of key values such as loyalty, integrity, professionalism and cohesiveness are communicated to all employees and are set out in the Group’s Employee Handbook.
12. Annual statutory audit
The external auditors provide assurance in the form of their annual statutory audit of the financial statements of the Group. Areas for improvement identified during the course of the statutory audit by the external auditors are brought to the attention of the Audit Committee through management letters or are deliberated at the Audit Committee meetings.
13. Internal audit
The Board has the support of an internal audit function, which was established in financial year ended 30 June 2009. The internal audit function provides assurance on the adequacy, efficiency and effectiveness of the system of internal controls within the Group. The works of the internal audit function are focused towards the areas of priority identified in accordance to the annual audit plan approved by the Audit Committee.
The internal audit function independently reviews the internal control processes implemented by the management. At least once every quarter, they will report to the Audit Committee their findings and to highlight significant issues and exceptions, if any, identified during the course of their review together with the appropriate corrective actions to the Audit Committee.
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Key Elements of the Group’s System of Internal Controls (Cont’d)
The Board does not regularly review the system of internal control of its associate companies as the Board does not have any direct control over their operations. Notwithstanding this, the Group’s interest is served through representation on the boards of the respective associate companies and receipt and review of monthly management accounts and inquiry thereon. Where practical, the Group would request for functional, operating and other financial information prepared in accordance with reporting standards that are acceptable to the Group in assessing the performance of these entities with the objective of safeguarding the investment of the Group.
The Group’s interest in its foreign jointly controlled entities is served through the representation on the board of the jointly controlled entities wherein there is contractually agreed sharing of control between each venturer. The Group obtains and reviews the management financial statements of the jointly controlled entities on a regular basis with enquiries duly responded and detailed management information furnished by their management. The financial statements of the foreign jointly controlled entities are also subjected to independent annual statutory audits.
Internal Audit Function
The Board recognised that an internal audit function is necessary to provide independent assessment on the Group’s system of internal controls and in the assessment of potential risks exposures in key business processes and in controlling the proper conduct of businesses within the Group.
During the financial year ended 30 June 2009, the Board established an internal audit function as an independent appraisal function following the formal adoption of the Internal Audit Charter by the Audit Committee. The internal audit function reports to the Audit Committee, whose authority is sufficient to ensure a broad range of audit coverage and adequate consideration of effective action on internal audit findings and recommendations. The internal audit function aims to provide the Audit Committee with independent and objective advices on the effectiveness of the internal controls within the Group’s businesses and operations.
The scope of the internal audit function encompass examining and evaluating the adequacy and effectiveness of the Group’s system of internal controls and the quality of operating performance against established standards in carrying out assigned responsibilities. The scope of the examination and the evaluation performed includes the review of:
a) the reliability and integrity of financial and operating information and the means used to identify, measure, classify and report information;
b) the internal controls established to ensure compliance to internal policies and procedures, relevant laws, guidelines and regulations that could have a significant impact on Group’s operations;
c) the means of safeguarding the Group’s assets and verifying their existence; andd) the efficiency which resources are utilised and employed.
The activities of the internal audit function during the year were as follows:
On selected operating units within the Group: a) assessed and reviewed the policies and procedures for credit risk management;b) reviewed the adequacy of the terms and conditions of the agreements entered into between the Group and
the customers to ensure the Group’s interest is protected;c) physical verification of the Group’s operating assets and its maintenance;d) reviewed the safekeeping of important documents and assets; ande) verification of the physical standing of the assets against their records.
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Internal Audit Function (Cont’d)
The activities of the internal audit function during the year were as follows: (Cont’d)
On the stock broking unit:a) performed readiness audit and site inspection for new branch offices set up during the year;b) follow-up audit on the new branch offices to ensure smooth operations of the branch offices with proper
segregation of duties and clear line of reporting as well as assessed the adequacy of their internal controls and policies and procedures to identify and prevent violations;
c) reviewed the timeliness and accuracy of the ARMADA reporting submitted to Bursa Malaysia Securities Berhad;d) reviewed the process of credit risk management, records keeping and reporting of customers’ accounts position
and other related internal controls of the credit control and margin departments;e) reviewed to ensure that processes have been established for acceptance of new deals/customers, maintaining
confidentially of customers’ information as well as compliance to other internal policies and regulatory requirements relating to the corporate finance department;
f) reviewed the operations of the EDP system to ensure the various internal controls are in place; andg) reviewed the acquisitions, disposals and overall accountability of fixed assets.
The cost incurred by the internal audit function in respect of the financial year ended 30 June 2011 were as follows : RMStaff cost 126,535Reimbursements on traveling and accomodation, medical and other out of pocket expenses 4,106 Total 130,641
Effectiveness of Internal Control
The Board reviews the effectiveness of the system of internal controls of the Group at periodic Board meetings and the effectiveness of the Group’s system of internal controls will continue to be reviewed, enhanced and updated in line with the changes in the operating environment.
The Board is of the view that the current system of internal controls that have been put in place throughout the Group is sufficient to safeguard the Group’s assets and prevent any material loss to the Group. The Board is pleased to report that there were no significant internal control deficiencies or weaknesses that resulted in material losses or contingencies to the Group during the financial year that would require disclosure in the Annual Report.
This Statement is made in accordance with a resolution of the Board of Directors dated 20 October 2011 and has been reviewed by the external auditors as required under the Bursa Malaysia Securities Berhad’s Listing Requirements Paragraph 15.23.
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19AUDIT COMMITTEE REPORT
The Audit Committee
The Audit Committee comprises three members of whom two are Independent Non-Executive Directors.
The members of the Audit Committee during the financial year ended 30 June 2011 are as follows:
YAM Tengku Puteri Seri Kemala Pahang Tengku Hajjah Aishah bte Sultan Haji Ahmad Shah, DK(II), SIMPChairperson / Independent Non-Executive Director
Mr. Oh Seong LyeIndependent Non-Executive Director
Ms. Soon Li YenNon-Independent Non-Executive Director
Terms of Reference of the Audit Committee
1. Objective
The principal objective of the Audit Committee is to assist the Board of Directors in fulfilling its fiduciary duties and responsibilities by reviewing the financial reporting process, the system of internal control, the audit process and the Group’s process for monitoring compliance with laws and regulations, in particular to :-
a) ensure transparency, integrity and accountability of the Group’s activities so as to safeguard the rights and interests of the shareholders;
b) assist the Board in discharging its fiduciary duties and responsibilities in relation to management of principal risks and compliance with statutory, legal and regulatory requirements;
c) evaluate and monitor the financial reporting process and provide assurance that the financial information provided by the management is relevant, reliable and timely;
d) ensure the adequacy and integrity of the Group’s system of internal controls in carrying out the Group’s operations;
e) ensure regular scheduled meetings are held between the Board, the senior management and the internal and external auditors as a forum for communication between these parties;
f) ensure the independence of the Company’s external auditors and its ability to conduct its audit without any restriction;
g) review the adequacy of the scope, functions, competency and resources of the internal audit function and that it has the necessary authority to carry out its work; and
h) undertake any other duties as may be appropriate and necessary to assist the Board.
2. Composition
The Audit Committee shall be appointed by the Board from amongst their number and shall consist of no fewer than three (3) members. The members of the Audit Committee shall elect a Chairman from among their number, who shall be an Independent Non-Executive Director. No alternate director shall be appointed as a member of the Audit Committee. In the event of a vacancy in the Audit Committee, the Board shall appoint a new member within three (3) months to fill up the vacancy.
At least one member of the Audit Committee must be:-a) a member of the Malaysian Institute of Accountants; or b) if he is not a member of the Malaysian Institute of Accountants, he must have at least 3 years’ working
experience and – (i) he must have passed the examinations specified in Part I of the First Schedule of the Accountants
Act 1967; or(ii) he must be a member of one of the associations of accountants specified in Part II of the First
Schedule of the Accountants Act 1967; or
The Company will ensure the composition of the Audit Committee shall comply with other requirements as prescribed or approved by the Bursa Malaysia Securities Berhad from time to time.
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Terms of Reference of the Audit Committee (Cont’d)
3. Authority
The Audit Committee is empowered by the Board of Directors to :
a) investigate any matters within its terms of reference;b) have full and unrestricted access to all information and documents in relation to the Group; c) have direct communication channels with the external auditors, the internal auditors and to all employees
of the Group;d) have the resources which are required to perform its duties ;e) obtain or secure external, legal or other independent professional advice and the attendance of external
parties with relevant experience and expertise, at the Group’s expenses if it considers necessary; and f) have the right to convene meetings with the external auditors, the internal auditors or both excluding
the attendance of other directors and employees of the Group and may extend invitation to other non-member directors and employees of the Group to attend to a specific meeting, whenever it considers necessary.
4. Meetings and Attendance The Audit Committee shall meet at least 5 times a year or at a frequency to be decided by the Audit Committee.
It shall convene meetings with the external auditors, the internal auditors or both, excluding the attendance of other directors and employees of the Group, whenever deemed necessary. The Audit Committee may invite other Directors and employees to be present to assist in resolving and clarifying matters raised. The General Manager – Finance and other senior management employee shall normally attend the meetings. At least once a year, the Audit Committee shall meet with the external auditors.
The Chairman may also convene a meeting of the Audit Committee if requested to do so by any member, the management or the external auditors to consider any matters within the scope of its duties and responsibilities.
The quorum for each meeting shall be at least 2 members.
To ensure critical issues are highlighted to all the Board members in a timely manner, where possible, the Audit Committee meetings are convened prior to the Board meetings. The issues raised at the Audit Committee meetings will be further deliberated at Board level if necessary. Minutes of the Audit Committee will be circulated to the Board at the next scheduled meeting.
Five (5) Audit Committee meetings were held during the financial year ended 30 June 2011 as follows:-.
Date of Meetings Time25 August 2010 2.00 p.m.14 October 2010 10.30 a.m.29 November 2010 10.30 a.m.24 February 2011 10.30 a.m. 30 May 2011 10.30 a.m.
Attendance at the Audit Committee meetings held during the financial year ended 30 June 2011 were as follows:-
Name of Members Attendance and number of meetings YAM Tengku Puteri Seri Kemala Pahang Tengku Hajjah Aishah bte Sultan Haji Ahmad Shah, DK(II), SIMP
3/5
Mr Oh Seong Lye 5/5Ms Soon Li Yen 5/5
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Terms of Reference of the Audit Committee (Cont’d)
5. Voting and proceeding at meetings
The decision of the Audit Committee shall be by a majority of votes and the determination by a majority of members shall for purposes be deemed a determination of the Audit Committee. In case of an equality of votes, the Chairman of the meeting shall have a second or casting vote.
6. Secretary, keeping of minutes and custody, production and inspection of minutes
The Company Secretary shall be the secretary to the Audit Committee and shall be responsible in drawing up the agenda and circulating it to the members of the Audit Committee prior to each meeting. The Company Secretary shall also be responsible for keeping minutes of the meetings and circulate them to the members of the Audit Committee and to the other members of the Board where issues can be further deliberated where necessary.
The minutes of the meetings shall be signed by the Chairman of the meeting at which the proceedings were held or by the Chairman of the next succeeding meeting.
The minutes of proceedings of the Audit Committee shall be kept by the Company Secretary at the registered office of the Company, and shall be open to the inspection of any member of the Audit Committee or any member of the Board.
7. Duties and Responsibilities
In fulfilling its purpose, the Audit Committee undertakes the following duties and responsibilities:-
a) To oversee matters relating to external audit including the review of the audit plan in particular the adequacy of existing external audit arrangements with emphasis on the scope, quality and findings of the audit, the auditors’ management letters and the management’s response thereto and the Auditors’ Report;
b) To evaluate the standards of the system of internal controls and financial reporting including review with the Group’s external and internal auditors, their evaluation of the system of internal controls and ensure the Group’s external and internal auditors’ recommendations regarding major management and internal control weaknesses are implemented;
c) To review the adequacy of the scope, function, competency and resources of the internal audit function and that it has the necessary authority to carry out its work;
d) To review and consider the scope and results of the internal audit programs and its procedures;
e) To consider any significant audit findings reported by the internal audit function and management’s responses thereto and review whether appropriate actions are taken by management on the internal audit recommendations;
f ) To review the quarterly and annual financial statements before submission to the Board, with special focus on any changes in or implementation of major accounting policies and practices, significant adjustments resulting from the audit, significant and unusual events and compliance with all relevant accounting standards and statutory and regulatory disclosure requirements;
g) To review the assistance and cooperation given by the officers and employees to the external and internal auditors;
h) To review any related party transaction and conflict of interest that may arise within the Group including any transaction, procedure or course of conduct that raise question on the management’s integrity;
i) To consider the appointment of the external auditors, the auditors’ remuneration and any matters pertaining to resignation or dismissal of the external auditors;
j) To promptly report to the Bursa Malaysia Securities Berhad any matters reported by the Audit Committee to the Board which have not been satisfactorily resolved resulting in a breach of the Main Market Listing Requirements;
k) To consider other functions or duties as authorised by the Board.
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SummaryofActivitiesoftheAuditCommitteeduringthefinancialyear The major activities undertaken by the Audit Committee in the discharge of its duties during the financial year were as follows:- Financial results, Financial statements and Announcements a) Reviewed the Group’s quarterly financial results including the announcement pertaining thereto, before
recommending to the Board for their approval and release of the Group’s results to Bursa Malaysia Securities Berhad;
b) Reviewed the Group’s annual audited financial statements before recommending them for consideration and
approval by the Board; c) Discussed and reviewed the Group’s compliance, in particular the quarterly and annual audited financial
statements with the Main Market Listing Requirements of Bursa Malaysia Securities Berhad, the provisions of the Companies Act, 1965 and the applicable approved Financial Reporting Standards in Malaysia and the changes in existing accounting standards or implementation of new accounting standards on the Group’s financial statements;
Internal audit d) Reviewed with the internal auditors, their annual audit plan and audit programs for the year ensuring the
principal risk areas and key processes were adequately identified and covered in the plan;
e) Reviewed the internal audit reports issued by the internal audit function and the recommendations and improvements provided by the internal auditors and corrective actions taken by the management in addressing and resolving issues and ensured that all issues were adequately addressed on a timely basis;
f) Reviewed the results of ad-hoc investigations performed by the internal auditors and the actions taken relating to those investigations;
g) Reviewed the adequacy of resources and the competencies of staff within the internal audit department to execute the audit plan and audit programs applied in the execution of the internal auditors’ work;
h) Reviewed with the internal auditors to ensure that an effective system of internal controls is in place within
the key processes and to ensure with reasonable assurance to minimise the occurrence of fraud and material misstatement or error;
External audit i) Reviewed the external auditors’ scope of work and audit plan for the Group;
j) Reviewed with the external auditors the results of their audit, the Auditors’ Report and internal control recommendations in respect of control weaknesses noted in the course of their audit;
Risks and Controls k) Evaluate the overall adequacy and effectiveness of the system of internal controls through the review of the
results performed by the internal and external auditors and discussion with key senior management.
l) Reviewed and monitored the credit risk and allowance for doubtful debts is adequate with regards to the Group’s receivables in particular from its money lending business;
Others
m) Reviewed the related party transactions of the Group during the financial year and its disclosure in the Group’s financial statements and ensured that the transactions were undertaken on the Group’s normal commercial terms and that the internal control procedures with regards to the transactions were adequate, and if any conflict of interest situation could have arise that raises questions of the management’s integrity.
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Internal Audit Function The Audit Committee obtains reasonable assurance on the effectiveness of the system of internal controls via the internal audit function, which shall be responsible for the regular review and appraisal of the effectiveness of the risk management, system of internal controls and governance processes within the Group. The internal audit function was performed by the in-house internal audit department set up in the financial year ended 30 June 2009. The activities of the internal audit function during the financial year are included under the Statement on Internal Control.
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Directors’ Report andFinancial Statements
2011 2010* 2009* 2008 2007 RM'000 RM'000 RM'000 RM'000 RM'000
Revenue 235,861 426,093 241,865 233,500 212,185
ProfitBeforeTaxation 104,028 61,024 88,849 23,144 77,350
ProfitAfterTaxationand non-controlling interests 101,406 53,312 74,231 16,566 74,377
Total Assets 1,249,933 1,315,074 1,185,498 1,016,033 1,080,067
Shareholders' Funds 933,639 835,916 797,065 727,735 743,619 Number of Shares In Issue, net of treasury shares (in Thousands) 683,567 687,329 667,070 596,572 598,513
Net Earnings Per Share (in Sen) 14.78 7.89 12.11 2.77 12.37
Net Assets Per Share (in Sen) 137 122 119 109 107 Note * : The comparative figures for Year 2010 and Year 2009 have been restated due to the change inaccounting policy for investment properties to be stated at fair value.
Turnover (RM’mil)
ProfitbeforeTaxation(RM’mil)
financialyear
financialyearfinancialyear
Shareholders’ Funds (RM’mil)
Total Assets (RM’mil)
50 100 150 200 250 300 350 400 450
2011
2010
2009
2008
2007
236
426
242
234
212
20 40 60 80 100 120
2011
2010
2009
2008
2007
104
61
89
23
77
financialyear
200 400 600 800 1000
2011
2010
2009
2008
2007
934
836
797
728
744
500 1000 1500
2011
2010
2009
2008
2007
1,250
1,185
1,016
1,080
1,315
FIVE YEARS GROUP FINANCIAL HIGHLIGHTS
Directors’ Report 26
Statement by Directors and Statutory Declaration 31
Independent Auditors’ Report 32
Statements of Financial Position 34
Income Statements 36
Statements of Comprehensive Income 37
Statements of Changes in Equity 38
Statements of Cash Flow 41
Notes to the Financial Statements 45
Directors’ Report andFinancial Statements
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26 DIRECTORS’ REPORT
The Directors hereby submit their report together with the audited financial statements of the Group and of the Company for the financial year ended 30 June 2011.
PRINCIPAL ACTIVITIES
The principal activities of the Company are investment holding and the provision of management services. The principal activities of its subsidiary companies, associate companies and jointly controlled entities are disclosed in Note 55 to 57 to the financial statements.
There have been no significant changes in the nature of these activities during the financial year.
FINANCIAL RESULTS Group Company RM’000 RM’000 Profit for the financial year 100,737 15,470 Attributable to : Owners of the Parent 101,406 15,470Non-controlling interests (669) –
100,737 15,470
DIVIDENDS
There were no dividends proposed, declared or paid by the Company since the end of the previous financial year.
RESERVES AND PROVISIONS
There were no material transfers to or from reserves or provisions during the financial year other than those disclosed in the Notes to the financial statements.
SHARE CAPITAL AND DEBENTURES
There were no shares or debentures issued during the financial year.
INFORMATION ON THE FINANCIAL STATEMENTS
Before the income statements, statements of comprehensive income and statements of financial position of the Group and of the Company were made out, the Directors took reasonable steps:
(a) to ascertain that action had been taken in relation to the writing off of bad debts and the making of allowance for doubtful debts and satisfied themselves that all bad debts had been written off and adequate allowance had been made for doubtful debts; and
(b) to ensure that any current assets which were unlikely to be realised in the ordinary course of business including their value as shown in the accounting records of the Group and of the Company have been written down to an amount which they might be expected so to realise.
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INFORMATION ON THE FINANCIAL STATEMENTS (CONT’D)
At the date of this report, the Directors are not aware of any circumstances:
(a) which would render the amount written off for bad debts or the amount of the allowance for doubtful debts in the financial statements of the Group and of the Company inadequate to any substantial extent; or
(b) which would render the values attributed to current assets in the financial statements of the Group and of the Company misleading; or
(c) which have arisen which render adherence to the existing method of valuation of assets or liabilities of the Group and of the Company misleading or inappropriate.
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 affect the ability of the Group and of the Company to meet its obligations as and when they fall due other than those disclosed in the Notes to the financial statements.
At the date of this report, there does not exist:
(a) any charge on the assets of the Group and of the Company which has arisen since the end of the financial year which secures the liability of any other person; or
(b) any contingent liability of the Group and of the Company which has arisen since the end of the financial year.
SIGNIFICANT EVENTS DURING THE FINANCIAL YEAR
Significant events during the financial year are disclosed in Note 58 to the financial statements.
SIGNIFICANT EVENT SUBSEQUENT TO REPORTING DATE
Significant event subsequent to the reporting date is disclosed in Note 59 to the financial statements.
OTHER STATUTORY INFORMATION
The Directors state that:
At the date of this report, they are not aware of any circumstances not otherwise dealt with in this report or the financial statements which would render any amount stated in the financial statements misleading.
In their opinion:
(a) the results of the Group’s and of the Company’s operations during the financial year were not substantially affected by any item, transaction or event of a material and unusual nature other than those disclosed in the Notes to the financial statements; and
(b) there has not arisen in the interval between the end of the financial year and the date of this report any item, transaction or event of a material and unusual nature likely to affect substantially the results of the operations of the Group and of the Company for the financial year in which this report is made.
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DIRECTORS
The Directors in office since the date of the last report are:
Y.A.M. Tengku Puteri Seri Kemala Pahang Tengku Hajjah Aishah bte Sultan Haji Ahmad Shah, DK(II), SIMPDato’ Thong Kok Khee Dato’ Wong Gian Kui Dr. Tan Seng Chuan Ms. Soon Li YenMr. Oh Seong Lye
In accordance with Article 96 of the Company’s Articles of Association, Dato’ Wong Gian Kui and Dr. Tan Seng Chuan retire at the forthcoming Annual General Meeting and, being eligible, offer themselves for re-election.
The shareholdings in the Company and in its related corporations of those who were Directors at the end of the financial year are as follows:
Number of ordinary shares of RM1 eachInterest in the Company At At 1.7.2010 Bought Sold 30.6.2011 Direct interest Y.A.M. Tengku Puteri Seri Kemala Pahang Tengku Hajjah Aishah bte Sultan Haji Ahmad Shah, DK(II), SIMP 119,600 – – 119,600Dato’ Thong Kok Khee 2,337,920 – – 2,337,920Dato’ Wong Gian Kui 387,920 – – 387,920
Deemed interest Dato’ Thong Kok Khee 154,004,889 – – 154,004,889Dato’ Wong Gian Kui 1,031,680 – – 1,031,680
Number of ordinary shares of RM1 eachInterest in subsidiary companies At Wound At 1.7.2010 Bought Sold up * 30.6.2011 Insas Properties Sdn Bhd
Direct interestDato’ Wong Gian Kui 80,000 – – – 80,000
Segar Raya Development Sdn Bhd
Direct interestDato’ Wong Gian Kui 129,999 – – – 129,999
Deemed interestDato’ Wong Gian Kui 80,000 – – – 80,000
Premium Yield Sdn BhdDeemed interest
Dato’ Wong Gian Kui 49,999 – – – 49,999
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DIRECTORS (CONT’D)
Number of ordinary shares of RM1 eachInterest in subsidiary companies At Wound At 1.7.2010 Bought Sold up * 30.6.2011
Dellmax Worldwide Sdn Bhd
Deemed interestDato’ Wong Gian Kui 35,000 – – – 35,000
Contibina Sdn Bhd
Deemed interestDato’ Thong Kok Khee 80,000 – – (80,000) –
Gryphon Asset Management Sdn Bhd
Deemed interestDato’ Thong Kok Khee 500,000 – – – 500,000 Number of ordinary sharesMicromodule Pte Ltd At At 1.7.2010 Bought Sold 30.6.2011
Dr Tan Seng Chuan 315,161 – – 315,161
* Company under voluntary liquidation during the financial year
By virtue of Dato’ Thong Kok Khee’s interest in the shares of the Company, he is also deemed interested in the shares of its related corporations to the extent that the Company has an interest under Section 6A of the Companies Act, 1965.
Other than as disclosed above, none of the other Directors in office at the end of the financial year had any interest in shares, options and debentures of the Company or its related corporations during the financial year.
DIRECTORS’ BENEFITS
During and at the end of the financial year, no arrangement subsisted to which the Company is a party, with the object or objects of enabling Directors of the Company to acquire benefits by means of acquisition of shares in or debentures of the Company or any other body corporate.
Since the end of the previous financial year, no Director has received or become entitled to receive any benefit (other than benefits as disclosed in the Notes to the financial statements) by reason of a contract made by the Company or a related corporation with the Director or with a firm of which the Director is a member, or with a company in which the Director has a substantial financial interest.
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30
AUDITORS
The Auditors, Messrs SJ Grant Thornton, have expressed their willingness to continue in office.
Signed on behalf of the Board in accordance with the resolution of the Board of Directors dated 20 October 2011.
Y.A.M. TENGKU PUTERI SERI KEMALA PAHANGTENGKU HAJJAH AISHAH BTE SULTAN HAJIAHMAD SHAH, DK(II), SIMPDirector
DATO’ THONG KOK KHEEDirector
Kuala Lumpur20 October 2011
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31STATEMENT BY DIRECTORS
We, Y.A.M. Tengku Puteri Seri Kemala Pahang Tengku Hajjah Aishah bte Sultan Haji Ahmad Shah, DK(II), SIMP and Dato’ Thong Kok Khee, being two of the Directors of Insas Berhad, do hereby state that in the opinion of the Directors, the accompanying financial statements are drawn up in accordance with the provisions of the Companies Act, 1965 and Financial Reporting Standards in Malaysia so as to give a true and fair view of the financial position of the Group and of the Company as at 30 June 2011, the financial performance and the cash flows of the Group and of the Company for the financial year then ended.
The supplementary information set out on page 138 has been prepared in accordance with the Guidance on Special Matter No. 1, Determination of Realised and Unrealised Profits and Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants.
Signed on behalf of the Board in accordance with a resolution of the Board of Directors dated 20 October 2011.
Y.A.M. TENGKU PUTERI SERI KEMALA PAHANG TENGKU HAJJAH AISHAH BTE SULTAN HAJI AHMAD SHAH, DK(II), SIMP DATO’ THONG KOK KHEE Kuala Lumpur20 October 2011
STATUTORY DECLARATION
I, Dato’ Thong Kok Khee, being the Director primarily responsible for the financial management of Insas Berhad, do solemnly and sincerely declare that to the best of my knowledge and belief, the accompanying financial statements are correct and I make this solemn declaration conscientiously believing the same to be true and by virtue of the provisions of the Statutory Declarations Act, 1960.
Subscribed and solemnly declared by )the abovenamed at Petaling Jaya in )Selangor this day of )20 October 2011 ) DATO’ THONG KOK KHEE
Before me:
NG SAY HUNG (B185)Commissioner for OathsPetaling Jaya, Selangor
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32 INDEPENDENT AUDITORS’ REPORTTO THE MEMBERS OF INSAS BERHAD
Report on the Financial Statements
We have audited the financial statements of Insas Berhad, which comprise the statements of financial position of the Group and of the Company as at 30 June 2011 and the income statements, the statements of comprehensive income, statements of changes in equity and statements of cash flows of the Group and of the Company for the financial year then ended, and a summary of significant accounting policies and other explanatory notes, as set out on pages 34 to 137.
Directors’ Responsibility for the Financial Statements
The Directors of the Company are responsible for the preparation of financial statements that give a true and fair view in accordance with Financial Reporting Standards and the Companies Act, 1965 in Malaysia, and for such internal control as the Directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
Auditors’ Responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with approved standards on auditing in Malaysia. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on our judgement, including the assessment of risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the entity’s preparation of financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the Directors, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the financial statements have been properly drawn up in accordance with Financial Reporting Standards and the Companies Act, 1965 in Malaysia so as to give a true and fair view of the financial position of the Group and of the Company as at 30 June 2011 and of their financial performance and cash flows for the financial year then ended.
Report on Other Legal and Regulatory Requirements
In accordance with the requirements of the Companies Act, 1965 in Malaysia, we also report the following:-
a) In our opinion, the accounting and other records and the registers required by the Act to be kept by the Company and its Malaysia subsidiary companies of which we have acted as auditors have been properly kept in accordance with the provisions of the Act.
b) We have considered the financial statements and the auditors’ reports of all the subsidiary companies of which we have not acted as auditors, as disclosed in Note 55 to the financial statements.
c) We are satisfied that the financial statements of the subsidiary companies that have been consolidated with the Company’s financial statements are in form and content appropriate and proper for the purposes of the preparation of the financial statements of the Group and we have received satisfactory information and explanations required by us for those purposes.
d) The auditors’ reports on the financial statements of the subsidiary companies did not contain any qualification or any adverse comment made under Section 174 (3) of the Act.
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33
Other Reporting Responsibilities
The supplementary information set out in page 138 is disclosed to meet the requirement of Bursa Malaysia Securities Berhad and is not part of the financial statements. The Directors are responsible for the preparation of the supplementary information in accordance with Guidance on Special Matter No. 1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure Persuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants (“MIA Guidance”) and the directive of Bursa Malaysia Securities Berhad. In our opinion, the supplementary information is prepared in all material respect in accordance with the MIA Guidance and the directive of Bursa Malaysia Securities Berhad.
Other Matters
This report is made solely to the members of the Company, as a body, in accordance with Section 174 of the Companies Act, 1965 in Malaysia and for no other purpose. We do not assume responsibility to any other person for the content of this report.
SJ GRANT THORNTON (NO. AF: 0737) CHARTERED ACCOUNTANTS
JOHN LAU TIANG HUA, DJN CHARTERED ACCOUNTANT(NO: 1107/03/12(J))PARTNER Kuala Lumpur 20 October 2011
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34 STATEMENTS OF FINANCIAL POSITION
Group Company (Restated) (Restated) Note 2011 2010 2009 2011 2010 RM'000 RM'000 RM'000 RM'000 RM'000ASSETS Non-current assets Property, plant and equipment 6 39,551 62,460 66,527 468 581 Prepaid land lease payments 7 – 4,781 4,893 – – Investment properties 8 102,745 90,751 77,521 – – Land held for development 9 37,576 37,576 37,576 – – Available for sale investments 10 50,419 43,194 53,016 345 345 Held to maturity investments 11 41,585 53,260 44,689 – – Subsidiary companies 12(a) – – – 162,689 162,689 Associate companies 13(a) 41,728 17,084 16,830 1,184 1,184 Jointly controlled entities 14 40,498 24,122 – – – Intangible assets 15 17,986 19,644 21,313 – – Goodwill 16 – – 184 – – Deferred tax assets 17 3,674 4,644 1,570 – – Total non-current assets 375,762 357,516 324,119 164,686 164,799 Current assets Property development costs 18 5,073 6,955 42,298 – – Inventories 19 18,849 33,584 20,245 – – Trade receivables 20 179,056 171,960 169,288 – – Accrued billings 21 – 5,918 9,602 – – Amount due from subsidiary companies 12(b) – – – 644,808 632,924 Amount due from associate companies 13(b) 17,484 21,497 4,761 116 114 Other receivables, deposits and prepayments 22 32,436 29,469 36,646 9,796 9,909 Tax recoverable 2,478 2,293 4,366 746 550 Held to maturity investments 11 13,709 5,943 19,768 – – Financial assets at fair value through profit or loss 23 98,379 71,643 93,077 – – Deposits with licensed banks and financial institutions 24 442,304 525,999 430,611 – – Cash and bank balances 25 56,410 73,704 30,717 336 507 866,178 948,965 861,379 655,802 644,004 Non-current assets classified as held for sale 26 7,993 8,593 – – – Total current assets 874,171 957,558 861,379 655,802 644,004 TOTAL ASSETS 1,249,933 1,315,074 1,185,498 820,488 808,803
AS AT 30 JUNE 2011
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Group Company (Restated) (Restated) Note 2011 2010 2009 2011 2010 RM’000 RM’000 RM’000 RM’000 RM’000
EQUITY AND LIABILITIES EQUITY Equity attributable to owners of the Parent Share capital 27 693,334 693,334 693,334 693,334 693,334 Treasury shares 28 (4,887) (2,963) (11,312) (4,887) (2,963) Reserves 29 69,051 56,471 79,281 54,489 54,489 Retained earnings 176,141 89,074 35,762 26,208 10,738 933,639 835,916 797,065 769,144 755,598 Non-controlling interests 7,784 19,549 20,328 – – TOTAL EQUITY 941,423 855,465 817,393 769,144 755,598 LIABILITIES Non-current liabilities Redeemable convertible preference shares 30 – 4,611 – – – Loans and borrowings 31 – 6,260 3,314 – – Hire purchase payables 32 9,640 9,418 8,232 – – Deferred tax liabilities 17 8,273 6,886 6,366 104 104
Total non-current liabilities 17,913 27,175 17,912 104 104
Current liabilities Derivative financial liabilities 33 8,023 – – – – Trade payables 179,018 198,495 210,746 – – Progress billings – – 63 – – Amount due to subsidiary companies 12(b) – – – 48,922 52,707 Amount due to an associate company 13(b) – – 10,304 – – Other payables and accruals 34 51,625 40,589 48,596 2,318 394 Loans and borrowings 31 51,459 192,544 80,259 – – Tax payable 472 806 225 – – Total current liabilities 290,597 432,434 350,193 51,240 53,101 TOTAL LIABILITIES 308,510 459,609 368,105 51,344 53,205 TOTAL EQUITY AND LIABILITIES 1,249,933 1,315,074 1,185,498 820,488 808,803
The accompanying notes form an integral part of the financial statements.
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36
Group Company (Restated) Note 2011 2010 2011 2010 RM'000 RM'000 RM'000 RM'000
Revenue 35 235,861 426,093 4,888 438 Cost of sales 36 (180,698) (349,821) – – Gross profit 55,163 76,272 4,888 438 Other income 37 84,563 46,844 18,653 9,648 Administration expenses 38 (15,138) (21,907) (7,408) (4,527) Other operating expenses 39 (46,004) (48,097) – (8,412) Finance costs 40 (4,635) (4,922) – (169) Exceptional items 41 2,497 13,049 – 13,049 Share of profit less losses of associate companies 10,922 265 – – Share of profit less losses of jointly controlled entities 16,660 (480) – – Profit before taxation 104,028 61,024 16,133 10,027 Taxation 42 (3,291) (131) (663) 9 Profit for the financial year 100,737 60,893 15,470 10,036
Attributable to : Owners of the Parent 101,406 53,312 15,470 10,036 Non-controlling interests (669) 7,581 – – Profit for the financial year 100,737 60,893 15,470 10,036 Earnings per share (sen) - Basic 43 14.78 7.89
INCOME STATEMENTSFOR THE FINANCIAL YEAR ENDED 30 JUNE 2011
The accompanying notes form an integral part of the financial statements.
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37STATEMENTS OF COMPREHENSIVE INCOMEFOR THE FINANCIAL YEAR ENDED 30 JUNE 2011
Group Company (Restated) 2011 2010 2011 2010 RM’000 RM’000 RM’000 RM’000 Profit for the financial year 100,737 60,893 15,470 10,036 Other comprehensive income/(loss): Transfer of fair value gain on available for sale investment upon disposal (323) – – – Unrealised gain on fair value changes on available for sale investments 9,003 – – – Foreign currency translation (2,941) (11,481) – – Total other comprehensive income/(loss) for the financial year, net of tax 5,739 (11,481) – – Total comprehensive income for the financial year, net of tax 106,476 49,412 15,470 10,036 Attributable to : Owners of the Parent 107,226 42,407 15,470 10,036 Non-controlling interests (750) 7,005 – – Total comprehensive income for the financial year 106,476 49,412 15,470 10,036
The accompanying notes form an integral part of the financial statements.
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38
Attributable to owners of the Parent Non-Distributable Distributable Available for sale investments Exchange Non- Share Share fair value Reserve translation Treasury Retained controlling Total capital premium reserve fund reserve shares earnings Total interests equityGroup RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 Balance at 1 July 2009 - As previously stated 693,334 66,394 – 1,200 11,687 (11,312) 13,436 774,739 20,328 795,067 - Effects of changes in accounting policy for investment properties (Note 63) – – – – – – 22,326 22,326 – 22,326 As restated 693,334 66,394 – 1,200 11,687 (11,312) 35,762 797,065 20,328 817,393 Total comprehensive income/(loss) for the financial year – – – – (10,905) – 53,312 42,407 7,005 49,412 Transactions with owners:- Repurchase of shares – – – – – (3,556) – (3,556) – (3,556) Acquisition of equity interest in a subsidiary company from non-controlling interest – – – – – – – – (75) (75) Repayment of advances to non-controlling interests – – – – – – – – (1,907) (1,907) Share dividends paid to owners of the Parent (Note 46) – (11,905) – – – 11,905 – – – – Dividends paid to non-controlling interests – – – – – – – – (5,802) (5,802) Total transactions with owners – (11,905) – – – 8,349 – (3,556) (7,784) (11,340) Balance at 30 June 2010 (restated) 693,334 54,489 – 1,200 782 (2,963) 89,074 835,916 19,549 855,465
STATEMENTS OF CHANGES IN EQUITYFOR THE FINANCIAL YEAR ENDED 30 JUNE 2011
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Attributable to owners of the Parent Non-Distributable Distributable Available for sale investments Exchange Non- Share Share fair value Reserve translation Treasury Retained controlling Total capital premium reserve fund reserve shares earnings Total interests equityGroup RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
Balance at 30 June 2010 - As previously reported 693,334 54,489 – 1,200 924 (2,963) 59,898 806,882 19,549 826,431 - Effects of changes in accounting policy for investment properties (Note 63) – – – – (142) – 29,176 29,034 – 29,034 As restated 693,334 54,489 – 1,200 782 (2,963) 89,074 835,916 19,549 855,465 - Effects of adopting FRS 139 (Note 4(a)) – – 6,760 – – – (14,339) (7,579) – (7,579) 693,334 54,489 6,760 1,200 782 (2,963) 74,735 828,337 19,549 847,886 Total comprehensive income/(loss) for the financial year – – 8,680 – (2,860) – 101,406 107,226 (750) 106,476 Transactions with owners:- Repurchase of shares – – – – – (1,924) – (1,924) – (1,924) Acquisition of equity interests in a subsidiary company (Note 47(c )) – – – – – – – – 2,830 2,830 Capital repayment to non-controlling interests – – – – – – – – (80) (80) Dilution of equity interest in subsidiary companies (Note 49) – – – – – – – – (12,044) (12,044) Disposal of equity interests in subsidiary companies (Note 48) – – – – – – – – (1,721) (1,721) Total transactions with owners – – – – – (1,924) – (1,924) (11,015) (12,939) Balance at 30 June 2011 693,334 54,489 15,440 1,200 (2,078) (4,887) 176,141 933,639 7,784 941,423
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Attributable to owners of the Parent Non-distributable Distributable Share Share Treasury Retained capital premium shares earnings Total Company RM'000 RM'000 RM'000 RM'000 RM'000 Balance at 1 July 2009 693,334 66,394 (11,312) 702 749,118 Total comprehensive income for the financial year – – – 10,036 10,036 Transactions with owners:- Repurchase of shares – – (3,556) – (3,556) Share dividends paid to owners of the Parent (Note 46) – (11,905) 11,905 – – Total transactions with owners – (11,905) 8,349 – (3,556)
Balance at 30 June 2010 693,334 54,489 (2,963) 10,738 755,598 Total comprehensive income forthefinancialyear – – – 15,470 15,470 Transaction with owners :- Repurchase of shares – – (1,924) – (1,924) Total transaction with owners – – (1,924) – (1,924) Balance at 30 June 2011 693,334 54,489 (4,887) 26,208 769,144
The accompanying notes form an integral part of the financial statements.
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Group Company (Restated) 2011 2010 2011 2010 RM'000 RM'000 RM'000 RM'000
CASH FLOWS FROM OPERATING ACTIVITIES Profit before taxation 104,028 61,024 16,133 10,027 Adjustments for: Accretion of discount on held to maturity investments (385) (721) – –Impairment of available for sale investments – 5,767 – –Impairment of financial assets at fair value through profit or loss – 26 – – Impairment of held to maturity investments 167 – – –Allowance for doubtful debts 3,536 474 – –Allowance for doubtful debts no longer required (155) (362) – (192)Allowance for obsolete inventories 594 270 – –Amortisation of development expenditure 25 44 – –Amortisation of available for sale investment – 21 – –Amortisation of prepaid land lease payments 21 112 – – Amortisation of intangible assets 1,646 1,636 – –Amortisation of premium on held to maturity investments 40 44 – –Amount due from a subsidiary company written off – – – 12 Bad debts written off – 1,227 – 258 Debts waived by a subsidiary company – – – (5,042)Depreciation of property, plant and equipment 7,307 18,840 111 130 Gain on disposal of investment properties – (11) – –Gain on capital repayment by an associate company – (13,049) – (13,049)Gain on redemption of held to maturity investments (732) – – – Gain on disposal of available for sale investments (106) – – –Goodwill written off 284 184 – –Fair value gain on derivatives (4,995) – – – Fair value gain on investment properties (11,192) (7,465) – – Impairment loss on investment in a subsidiary company – – – 8,400 Intangible asset written off – 11 – –Inventories written off 1 8 – –Loss on disposal of an associate company 73 – – –Available for sale investment written off – 70 – – Net gain on disposal of property, plant and equipment (804) (896) – –Property, plant and equipment written off 86 41 6 – Share of profits of associate companies (10,922) (265) – –Share of (profits)/losses of jointly controlled entities (16,660) 480 – –Transfer from available for sale investments reserve (323) – – –Unrealised foreign exchange (gain)/loss (10,017) 7,868 (14,806) (807)Writeback of impairment of financial assets at fair value through profit or loss (20,126) (17,186) – – Writeback of impairment of held to maturity investments – (142) – –
STATEMENTS OF CASH FLOWSFOR THE FINANCIAL YEAR ENDED 30 JUNE 2011
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Group Company (Restated) 2011 2010 2011 2010 RM’000 RM’000 RM’000 RM’000
CASH FLOWS FROM OPERATING ACTIVITIES (CONT’D)
Writeback of impairment of available for sale investments – (3,000) – – Writeback of impairment of inventories – (35) – – Writeback of allowance for inventories loss – (7) – – Writeback of allowance for obsolete inventories (153) – – – Dividend income (2,515) (4,368) – – Interest expenses 4,635 4,922 – 169 Interest income (10,647) (11,164) (3,847) (3,607)Gain on disposal of subsidiary companies (Note 48) (2,209) – – – Gain on deemed disposal of subsidiary companies (Note 49) (288) – – –
Operating profit/(loss) before working capital changes 30,214 44,398 (2,403) (3,701)
Changes in working capital:- Property development costs (1,338) 35,343 – – Inventories 2,735 (13,709) – – Financial assets at fair value through profit or loss (2,404) 36,848 – – Receivables (29,831) (21,922) 113 85 Accrued billings 5,918 3,684 – – Payables 25,597 (12,804) 1,929 (527)Progress billings – (63) – – Amount due from/to associate companies 14,682 (27,040) (2) (10,309)Amount due from/to subsidiary companies – – 1,026 13,322 Net cash generated from/(used in) operations 45,573 44,735 663 (1,130)Interest received 10,647 11,164 1,100 764 Interest paid (4,635) (4,922) (5) (115)Tax refund – 1,959 – 365 Tax paid (1,532) (1,939) (3) – Net cash generated from/(used in) operating activities 50,053 50,997 1,755 (116)
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Group Company (Restated) 2011 2010 2011 2010 RM’000 RM’000 RM’000 RM’000
CASH FLOWS FROM INVESTING ACTIVITIES Purchase of property, plant and equipment (Note A) (5,455) (9,328) (4) (453)Proceeds from disposal of property, plant and equipment 1,792 1,871 – – Subscription of shares in associate companies (2,020) – – –Capital repayment by an associate company – 13,049 – 13,049 Subscription of shares in a subsidiary company (Note 12(a)) – – – (30,000)Acquisition of equity interest in a subsidiary company from a non-controlling interest – (75) – –Purchase of investment properties – (17,110) – –Proceeds from disposal of investment properties – 2,217 – –Purchase of available for sale investments – (14,173) – –Purchase of held to maturity investments (13,508) – – –Proceeds from disposal of available for sale investments 8,644 5,894 – –Proceeds from redemption and disposal of held to maturity investments 18,400 20,337 – –Payment for intangible asset (13) (22) – –Dividends received 2,305 4,067 – – Proceeds from disposal of non-current assets classified as held for sale 1,843 – – –Investment in jointly controlled entities – (22,903) – –Net cash inflow from acquisition of equity interest in subsidiary companies (Note 47(c )) 1,799 – – –Net cash outflow on disposal of equity interest in subsidiary companies (Note 48) (960) – – –Net cash outflow on dilution of equity interest in subsidiary companies (Note 49) (10,511) – – –
Net cash generated from/(used in) investing activities 2,316 (16,176) (4) (17,404)
CASH FLOWS FROM FINANCING ACTIVITIES Dividends paid to non-controlling interests of subsidiary companies – (5,802) – – Decrease/(increase) in fixed deposits pledged 112,296 (190,716) – –Increase in cash and bank balances pledged (1,484) (17,258) – – Net cash used in share buyback (1,924) (3,556) (1,924) (3,556)Drawdown of loans and borrowings 456,141 354,233 – –Repayment of loans and borrowings (597,006) (230,214) – (4,000)Repayment of advances to non-controlling interests – (1,907) – – Capital repayment to non-controlling interests (80) – – – Subscription of redeemable convertible preference shares in a subsidiary company by non-controlling interests – 4,611 – – Repayment of hire purchase payables (4,707) (4,367) – (8) Net cash used in financing activities (36,764) (94,976) (1,924) (7,564)
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Group Company (Restated) 2011 2010 2011 2010 RM’000 RM’000 RM’000 RM’000
CASH AND CASH EQUIVALENTS Net changes 15,605 (60,155) (173) (25,084)Brought forward 168,337 229,495 507 25,591 Exchange differences (11) (1,003) 2 – Carried forward (Note B) 183,931 168,337 336 507
NOTES TO STATEMENTS OF CASH FLOWS A. PROPERTY, PLANT AND EQUIPMENT
Group During the financial year, the Group acquired property, plant and equipment with an aggregate cost of
RM9,252,000 (2010:RM15,799,000) of which RM3,797,000 (2010:RM6,471,000) was acquired by means of hire purchase arrangements. Cash payments for the acquisition of property, plant and equipment amounted to RM5,455,000 (2010:RM9,328,000).
Company During the financial year, the Company acquired property, plant and equipment with an aggregate cost of
RM4,000 (2010:RM453,000) via cash.
B. CASH AND CASH EQUIVALENTS COMPRISE OF:
Group Company (Restated) 2011 2010 2011 2010 RM’000 RM’000 RM’000 RM’000
Bank overdrafts (864) (694) – –Cash and bank balances 56,410 73,704 336 507 Deposits with licensed banks and financial institutions 442,304 525,999 – – 497,850 599,009 336 507
Less: Cash and bank balances pledged (18,812) (17,328) – –Remisiers’ deposits and clients’ trust monies (171,563) (177,504) – –Fixed deposits pledged (123,544) (235,840) – – 183,931 168,337 336 507
The accompanying notes form an integral part of the financial statements.
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45NOTES TO THE FINANCIAL STATEMENTS
1. BASIS OF PREPARATION
(a) Statement of compliance
ThefinancialstatementsoftheGroupandoftheCompanyhavebeenpreparedinaccordancewiththeprovisionsoftheCompaniesAct,1965andFinancialReportingStandards(“FRSs”)issuedbytheMalaysianAccountingStandardsBoard(“MASB”).Atthebeginningof thecurrentfinancialyear, theGroupandtheCompanyhaveadoptedthenewandrevisedFRSsthatwereeffectiveforfinancialperiodsbeginningonorbefore1July2010asdescribeinNote4tothefinancialstatements.
(b) Basis of measurement
ThefinancialstatementsoftheGroupandoftheCompanyhavebeenpreparedunderthehistoricalcostconvention,unlessotherwiseindicatedinthesummaryofsignificantaccountingpolicies.
(c) Functional and presentation currencies
ThefinancialstatementsarepresentedinRinggitMalaysia,whichistheCompany’sfunctionalcurrency.All financial informationpresented is inRinggitMalaysiaandall valuesare rounded to thenearestthousandexceptwhenotherwisestated.
(d) The use of estimates and judgements
The preparation of financial statements in conformitywithFRSs require the use of certain criticalaccountingestimatesandassumptionsthataffectthereportedamountsofassetsandliabilitiesanddisclosureofcontingentassetsandliabilitiesatthedateofthefinancialstatements,andthereportedamountsofrevenuesandexpensesduringthereportedperiod.ItalsorequiresthemanagementandDirectorstoexercisetheir judgement intheprocessofapplyingtheCompany’saccountingpolicies.Althoughtheseestimatesandjudgementsarebasedonthemanagement’sandDirectors’bestknowledgeofcurrenteventsandactions,actualresultsmaydeferfromthoseestimates.
Estimatesandunderlyingassumptionsare reviewedonanongoingbasis.Revisions toaccounting
estimatesarerecognisedintheperiodinwhichtheestimateisrevisedandinanyfutureperiodsaffected.
Theestimatesandassumptionsthathaveasignificantriskofcausingamaterialadjustmenttothecarryingamountsofassetsandliabilitiesandthereportedamountsofrevenueandexpensesareoutlinedbelow:-
(i) Depreciation of property, plant and equipment
Property,plantandequipmentaredepreciatedonastraight-linebasisovertheirusefullives.TheGroupestimatestheusefullivesofproperty,plantandequipmentbasedontheperiodoverwhichtheassetsareexpectedtobeavailableforuse.Theestimatedusefullivesofproperty,plantandequipmentarereviewedonaperiodicalbasisandareupdatedifexpectationsdifferfrompreviousestimatesduetophysicalwearandtear,technicalorcommercialobsolescenceandlegalorotherlimitsontheuseoftherelevantassets.Inaddition,theestimationoftheusefullivesofproperty,plantandequipmentarebasedontheinternalevaluationandexperiencewithsimilarassets.Areductionintheestimatedusefullivesoftheproperty,plantandequipmentwouldincreasetherecordedexpensesanddecreasethenon-currentassets.
TheGroupdoesnotexpectanymaterialdifferencethatwouldariseontheestimationoftheusefullivesofproperty,plantandequipmentandthecurrentevaluationoftheusefullivesofproperty,plantandequipmentrepresentafairestimationoftheusefullivesoftheGroup’sproperty,plantandequipment.
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1. BASIS OF PREPARATION (CONT’D)
(d) The use of estimates and judgements (Cont’d)
(ii) Classificationbetweeninvestmentpropertiesandproperty,plantandequipment
TheGrouphasdeveloped certain criteria basedonFRS140 InvestmentProperty inmakingjudgementwhetherapropertyqualifiesasaninvestmentproperty.Investmentpropertyisapropertyheldtoearnrentalsorforcapitalappreciationorboth.
Somepropertiescompriseaportionthat isheldtoearnrentalsorforcapitalappreciationandanotherportionthatisheldforadministrationpurposes.Ifthepropertyisnottobesoldseparately,theproperty isan investmentpropertyonly ifan insignificantportion isheld foradministrativepurpose.
(iii) Propertydevelopmentrevenueandcosts
TheGrouprecognisespropertydevelopmentrevenueandcostsintheincomestatementsusingthestageofcompletionmethod.Thestageofcompletionisdeterminedbytheproportionthatpropertydevelopmentcostsincurredforworkperformedtodatebeartotheestimatedtotalpropertydevelopmentcosts.
Significantjudgementisrequiredindeterminingthestageofcompletion,theextentofthepropertydevelopment costs incurred, theestimated total propertydevelopment revenueandcosts,aswellastherecoverabilityofthepropertydevelopmentcosts.Inmakingthejudgement,theGroupevaluatesbasedonpastexperienceandbyrelyingontheworkoftherelatedprojectarchitectsandspecialists.
A10%differenceintheestimatedtotalpropertydevelopmentrevenueorcostswouldresultinapproximately0.77%(2010:1.63%)varianceintheGroup’srevenueand0.68%(2010:1.88%)varianceintheGroup’scostofsales.
(iv) Impairmentofassets
(a) Non-financialassets
Thecarryingamountsofnon-financialassetsarereviewedateachreportingdatetodeterminewhether there isany indicationof impairment. Ifanysuch indicationexists, theasset’srecoverableamountisestimatedtodeterminetheamountoftheimpairmentloss.For thepurposeofimpairmenttestingofnon-financialassets,recoverableamountisdeterminedonanindividualassetbasisunlesstheassetdoesnotgeneratecashflowsthatarelargelyindependentofthosefromotherassets.Ifthisisthecase,recoverableamountisdeterminedforthecash-generatingunit(“CGU”)towhichtheassetbelongsto.
Anon-financialasset’srecoverableamountisthehigherofanasset’sorCGU’sfairvaluelesscoststosellanditsvalueinuse.Inassessingvalueinuse,theestimatedfuturecashflowsarediscountedtotheirpresentvalueusingapre-taxdiscountratethatreflectscurrentmarketassessmentsofthetimevalueofmoneyandtherisksspecifictotheasset.
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1. BASIS OF PREPARATION (CONT’D)
(d) The use of estimates and judgements (Cont’d)
(iv) Impairmentofassets(Cont’d)
(b) Financial assets
(i) Loansandreceivablesandotherfinancialassetscarriedatamortisedcost
TheGroupassessesateachreportingdatewhetherthereisanyobjectiveevidencethatafinancialassetisimpaired.Todetermineifafinancialassetisimpaired,theGroupconsidersfactorssuchasprobabilityofinsolvencyorsignificantorprolongedfinancialdifficultiesofthedebtoranddefaultandsignificantdelayinpayments.
Wherethereisobjectiveevidenceofimpairment,theamountandtimingoffuturecashflowsareestimatedbasedonhistoricallossexperienceforassetswithsimilarcreditriskcharacteristics.
(ii) Availableforsaleinvestments
TheGroupreviewsitsavailableforsaleinvestmentsateachreportingdatetoassesswhethertheyareimpaired.TheGroupalsorecordsimpairmentchargesonavailableforsaleequityinvestmentswhentherehasbeenasignificantorprolongeddeclinein the fair valuebelow their cost.Thedeterminationof ‘significant’or ‘prolonged’requiresjudgement.TheGroupevaluates,amongstotherfactors,historicalsharepricemovementsandthedurationandextenttowhichthefairvalueofaninvestmentislessthanitscost.
(v) Incometaxes
Significantestimationisinvolvedindeterminingthegroup-wideprovisionforincometaxes.Therearecertaintransactionsandcomputationsforwhichtheultimatetaxdeterminationisuncertainduringtheordinarycourseofbusiness.TheGrouprecognisesliabilitiesforexpectedtaxissuesbasedonestimatesofwhetheradditionaltaxeswillbedue.Wherethefinaltaxoutcomeofthesemattersisdifferentfromtheamountsthatwereinitiallyrecognised,suchdifferenceswillimpacttheincometaxanddeferredtaxprovisionsintheperiodinwhichsuchdeterminationismade.
(vi) Deferredtaxassets
Deferredtaxassetsarerecognisedforalldeductibletemporarydifferences,unutilisedbusiness
lossesandunabsorbedcapitalallowancestotheextentthatitisprobablethattaxableprofitwillbeavailableagainstwhichallthedeductibletemporarydifferences,unutilisedbusinesslossesandunabsorbedcapitalallowancescanbeutilised.Significantmanagementjudgementisrequiredtodeterminetheamountofdeferredtaxassetsthatcanberecognised,baseduponthelikelytimingandleveloffuturetaxableprofitstogetherwithfuturetaxplanningstrategies.
(vii) Productliabilityclaim
Oneoftheassociatecompanies(2010:oneofthesubsidiarycompanies)providedwarrantyformanufacturingdefectsonitsproductssold.Theproductwarrantywillbeineffectbasedontheassociatecompany’s(2010:subsidiarycompany’s)normalwarrantyperiodor1yearfromthedatetheproductsweresoldandshippedtoitscustomers,whicheverwaslonger.Basedontheproposedinsurancepremiumchargedbytheinsurer,theassociatecompany(2010:subsidiarycompany)providedforproductliabilityclaimcalculatedat1.10%onitsannualrevenuefromthesaleofitsproducts.
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1. BASIS OF PREPARATION (CONT’D)
(d) The use of estimates and judgements (Cont’d)
(vii) Productliabilityclaim(Cont’d)
As the productsmanufacturedby the associate company (2010 : subsidiary company)wereconstantly upgraded for technologydevelopments, the level ofmanufacturingdefects for theupgradedand/ornewproductsmaynotnecessaryreflectpasttrendsandinsuchcircumstances,theoriginalbasisusedtocalculatetheamountforproductliabilityclaimmayberevisedwhenappropriate.
(viii) Fairvalueoffinancialinstruments
Themanagementusesvaluationtechniquesinmeasuringthefairvalueoffinancialinstructionswhereactivemarket quotesarenot available. Details of theassumptionsusedaregiven inthenotes regarding financial assets and liabilities. In applying the valuation techniques, themanagementmakesmaximumuseofmarketinputs,andusesestimatesandassumptionsthatare,asfaraspossible,consistwithobservabledatathatmarketparticipantswoulduseinpricingtheinstrument.Whereapplicabledataisnotobservable,themanagementusesitsbestestimateabouttheassumptionsthatmarketparticipantswouldmake.Theseestimatesmayvaryfromtheactualpricesthatwouldbeachievedinanegotiatedtransactionatthereportingdate.
(ix) Classificationoffinancialinstruments
Heldtomaturityinvestments
TheGroupclassifiesfinancialassetsasheldtomaturityinvestmentswhenithasapositiveintentionandabilitytoholdtheinvestmentstomaturity.
Financialassetsatfairvaluethroughprofitorloss
TheGroupclassifiesportfolioquotedinvestmentswhichwasmanagedandprincipallyheldforshorttermprofitmakingasfinancialassetsatfairvaluethroughprofitorloss.
Loansandreceivables
TheGroupclassifiesnon-derivativefinancialassetswithfixedordeterminablepaymentsthatarenotquotedinanactivemarketasloansandreceivables.
Availableforsaleinvestments
TheGroupclassifiesnon-derivativefinancialassetsasavailableforsaleinvestmentswhenaninstrumentcannotbeclassifiedinanyoftheabovecategories.
(x) Classificationofleases
InapplyingtheclassificationofleasesinFRS117,themanagementconsidersitsleasesofmotorvehiclesasfinance leasearrangements. Insomecases, the lease transaction isnotalwaysconclusive,andthemanagementusesjudgementindeterminingwhethertheleaseisafinanceleasearrangementthattransferssubstantiallyalltherisksandrewardsincidentaltoownership.
(xi) Fairvalueofderivativesfinancialinstruments
Thefairvaluesofoutstandingderivativetransactionsarebasedonfairvaluesobtainedfrommajorfinancialinstitutions.Changesintheunderlyingassumptionscouldmateriallyimpacttheincomestatements.
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2. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
TheGroupandtheCompanyareexposedtofinancialrisksarisingfromtheiroperationsandtheuseoffinancialinstruments.Thekeyfinancialrisksareforeigncurrencyexchangerisk,interestraterisk,marketrisk,creditriskandliquidityrisks.Financialriskmanagementiscarriedoutthroughriskreviews,internalcontrolsystemsandadherencetotheGroupfinancialriskmanagementpractices.TheBoardregularlyreviewstheserisksandapprovesthetreasurypoliciescoveringthemanagementoftheserisks.ItisnottheGroup’spolicytoengageinspeculativetransactions.
ThemainareasoffinancialrisksfacedbytheGroupandthepolicyinrespectofthemajorareasoftreasuryactivityaresetoutasfollows:-
(a) Interest rate risk
TheGroupfinancesitsoperationsthroughoperatingcashflowsandborrowings.InterestrateexposuresarisefromtheGroup’sborrowingsandplacementofdepositswithlicensedbanksandfinancialinstitutions.ItistheGroup’spolicytomanageitsinterestcostsbyobtainingthemostfavourableinterestratesonitsborrowings.SurplusfundsoftheGroupareplacedwithlicensedbanksandfinancialinstitutionsonshorttermdepositstogenerateinterestincome.
(b) Credit risk
TheGroupseekstoinvestcashassetssafelyandprofitably.TheGroupcontrolscreditriskbyapplicationofcreditevaluationsandapprovals,creditlimitsandmonitoringprocedures.Tradeandloanreceivablesaremonitoredonanongoingbasisviamanagementreportingproceduresandwherenecessary,loanreceivablesarerequiredtodepositsufficientassetsascollateralandadheretocreditlimitswithinthefairvaluesofassetsplacedascollateral.TheGroupdoesnothaveanysignificantexposuretoanyindividualcustomernordoesithaveanymajorconcentrationofcreditriskrelatedtoanyfinancialinstruments.
(c) Foreigncurrencyexchangerisk
TheGroupisexposedtoforeigncurrencyexchangeriskasaresultofitsnormaloperatingandinvestingactivitieswherebypurchasesandsalesaretransactedincurrenciesotherthanthefunctionalcurrenciesoftheGroup.TheGroupmaintainsanaturalhedge,wheneverpossible,bymatchinglocalcurrencyincomeagainstlocalcurrencyexpendituretominimiseforeignexchangeexposure.Wherenecessary,theGroupentersintoforwardforeigncurrencyexchangecontractstohedgetheriskexposureonthereceivablesandpayables.TheGroupalsomaintainsgrossprofitmarginlevelsthatissufficienttoabsorbthecostofpurchasesdenominatedinforeigncurrencies.
(d) Liquidity risks
TheGroupactivelymanagesitsoperatingcashflowsandtheavailabilityoffundingsoastoensurethatallfinancingandfundingneedsaremet.Aspartofitsoverallprudentliquiditymanagement,theGroupmaintainssufficient levelsofcashorcashconvertible instrumentstomeet itsworkingcapitalrequirements.CertainsubsidiarycompanieswithintheGroupmaintainreasonableamountofcommittedcreditandbankingfacilitiestomeettheiroperatingneeds.
(e) Market risk
TheGroup facesexposure to the risk fromchanges in thedebtandequityprices, inparticular theGroup’sexposurefromchangesinmarketpriceonitsquotedsecuritiesandotherlongtermquotedinvestments.TheriskoflossinvalueoftheGroup’squotedsecuritiesandinvestmentsareminimisedthroughthoroughanalysisbeforemakinginvestmentsandcontinuousmonitoringoftheperformanceoftheinvestments.
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3. SIGNIFICANT ACCOUNTING POLICIES
(a) Basis of consolidation
The consolidated financial statements incorporate the financial statements of theCompanyand itssubsidiarycompaniesasdisclosedinNote55tothefinancialstatementsmadeuptotheendofthefinancialyear.ThesubsidiarycompaniesareconsolidatedusingpurchasemethodexceptforM&ASecuritiesSdnBhd,whichisconsolidatedusingthemergermethodofaccountinginaccordancewiththeprovisionsofMalaysianAccountingStandardsNo.2.
Underthemergermethodofaccounting,theresultsofthesubsidiarycompaniesareaccountedonafullyearbasisirrespectiveofthedateofmerger.Thedifferencebetweenthenominalvalueofsharesissuedasconsiderationformergerandnominalvalueofsharecapitalofthesubsidiarycompaniesistakentomergerreserve,whichinturnistransferredtotheincomestatements.
FollowingtheadoptionofFRSNo.3,BusinessCombinations,theGroupwillcomplywiththerequiredcriteriastipulatedinthesaidstandardtoconsolidatethefinancialstatementsusingpurchasemethodforfutureacquisitionofsubsidiarycompanies.
Underthepurchasemethodofaccounting,theresultsofthesubsidiarycompaniesacquiredordisposedoffareincludedfromthedateofacquisitionoruptothedateofdisposal.Atthedateofacquisition,thefairvalueofthesubsidiarycompanies’netassetsaredeterminedandreflectedintheGroup’sfinancialstatements.Theexcessofthepurchaseconsiderationpaidforthesharesinthesubsidiarycompaniesoverthefairvalueoftheunderlyingnetassetsofthesubsidiarycompaniesacquiredrepresentsgoodwillarisingonconsolidation.ThegoodwillonconsolidationisaccountedforinaccordancewiththeaccountingpolicyforgoodwillstatedinNote3(k)tothefinancialstatements.
Allsignificantinter-companytransactions,balancesandtheresultingunrealisedgainsareeliminatedonconsolidationandtheconsolidatedfinancialstatementsreflectexternaltransactionsonly.Unrealisedlossesareeliminatedonconsolidationunlesscostcannotberecovered.
Anyexchangedifferencesarisingontranslationofinter-companyindebtednessaretakentotheequityintheconsolidatedfinancialstatements.
Uniformaccountingpoliciesareadoptedbythesubsidiarycompaniesfortransactionsandeventsinsimilarcircumstances.ThefinancialstatementsoftheCompanyanditssubsidiarycompaniesarealldrawnuptothesamereportingdate.
Thetotalassetsandliabilitiesofsubsidiarycompaniesareincludedintheconsolidatedstatementoffinancialpositionandtheinterestofnon-controllinginterestsinthenetassetsisstatedseparately.
(b) Property, plant and equipment
(i) Recognition, measurement and derecognition
Property,plantandequipmentarestatedatcostlessaccumulateddepreciationandimpairmentlosses.ThepolicyfortherecognitionandmeasurementofimpairmentlossesisinaccordancewithNote3(l)(ii)tothefinancialstatements.
Whensignificantpartsofanitemofproperty,plantandequipmenthavedifferentusefullives,theyareaccountedforasseparateitems(majorcomponents)ofproperty,plantandequipment.
Restorationcostrelatingtoanitemofproperty,plantandequipmentiscapitalisedonlyifsuchexpenditure is expected to increase the future benefits from the existing property, plant andequipmentbeyonditspreviouslyassessedstandardofperformance.
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3. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
(b) Property, plant and equipment (Cont’d)
(i) Recognition, measurement and derecognition (Cont’d)
Costofpropertiesunderconstructionincludesattributableborrowingcostincurredtofinancetheseassetsuptothedatewhenthesepropertiesarecompletedandreadyforuse.
Anitemofproperty,plantandequipmentisderecognisedupondisposalorwhennofutureeconomicbenefitsareexpectedfromitsuse.Thedifferencebetweenthenetdisposalproceeds,ifanyandthenetcarryingamountisrecognisedintheincomestatements.
(ii) Depreciation
Freehold landhasanunlimiteduseful life and therefore is not depreciated.Propertiesunderconstructionarealsonotdepreciateduntiltheseassetsarefullycompletedandbroughtintouse.
Depreciationofotherproperty,plantandequipmentiscalculatedonastraightlinebasistowriteoffthecostofeachassettoitsresidualvalueovertheestimatedusefullifeatthefollowingannualrates:-
Freeholdbuildings 2% Plant,machinery,motorvehiclesandrenovation 10–33% Officefurniture,fittingsandequipment 10–50% Leaseholdbuilding Overtheperiodof45years
Thedepreciableamount isdeterminedafterdeducting the residualvalue.The residualvalue,depreciationmethodandusefullivesarereviewedateachfinancialyearendtoensurethattheamount,methodandperiodofdepreciationareconsistentwithpreviousestimatesandtheexpectedpatternofconsumptionofthefutureeconomicbenefitsembodiedintheitemsofproperty,plantandequipment.
(c) Prepaid land lease payments
LeaseholdlandthathasanindefiniteeconomiclifewithtitlethatisnotexpectedtopasstotheGroupbyendoftheleasetermisclassifiedasoperatinglease.Theupfrontpaymentsfortherighttousethe leasehold landoverapredeterminedperiodareaccountedforasprepaid land leasepayments.Prepaidlandleasepaymentsarestatedatcostlessaccumulatedamortisationandimpairmentlosses.TheGroup’sprepaidlandleasepaymentsareamortisedonastraightlinebasisovertheleasetermof45years.ThepolicyfortherecognitionandmeasurementofimpairmentlossesisinaccordancewithNote3(l)(ii)tothefinancialstatements.
(d) Investmentproperties
Investmentpropertiesarepropertieswhichareownedorheldunderaleaseholdinteresttoearnrentalincomeorforcapitalappreciationorforboth.Theseincludelandheldforacurrentlyundeterminedfutureuse.
Investment properties are initiallymeasured at cost. The cost of investment properties includesexpenditurethatisdirectlyattributabletotheacquisitionoftheassets.Subsequenttoinitialrecognition,investmentpropertiesarestatedatfairvalue,whichisdeterminedbytheDirectorsbyreferencetomarketevidenceoftransactionpricesforsimilarpropertiesandvaluationperformedbyregisteredindependentvaluershavinganappropriaterecognisedprofessionalqualificationandrecentexperienceinthelocationandcategoryofthepropertiesbeingvalued.Gainorlossesarisingfromchangesinthefairvalueofinvestmentpropertiesareincludedintheincomestatementsinthefinancialyearinwhichtheyarise.
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3. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
(d) Investmentproperties(Cont’d)
Investmentpropertiesarederecognisedwheneithertheyhavebeendisposedofforwhentheinvestmentpropertyispermanentlywithdrawnfromuseandnofutureeconomicbenefitisexpectedfromitsdisposal.Anygainsorlossesonretirementordisposalofaninvestmentpropertyarerecognisedintheincomestatementsinthefinancialyearinwhichtheyarise.
Investmentpropertiesunderconstructionaremeasuredatcost.Thesepropertiesaremeasuredatfair
valueuponthembeingbroughtintouse.
Priorto1July2010,investmentpropertiesarestatedatcostlessdepreciationandimpairmentlosses.Duringthefinancialyear,theCompanychangeditsaccountingpolicyforinvestmentpropertiestobestatedatfairvalue.ThischangeinaccountingpolicyhasbeenaccountedforretrospectivelyandtheeffectsofthischangearedisclosedinNote63tothefinancialstatements.
(e) Landheldfordevelopment
LandheldfordevelopmentconsistsofcostoflandonwhichnosignificantdevelopmentactivitieshavebeencarriedoutorwheredevelopmentactivitiesisnotexpectedtobecompletedwithintheGroup’snormaloperatingcycle.Suchlandisclassifiedwithinnon-currentassetsandisstatedatcostlessanyaccumulatedimpairmentlosses.ThepolicyfortherecognitionandmeasurementofimpairmentlossesisinaccordancewithNote3(l)(ii)tothefinancialstatements.
Included in landheld fordevelopment iscostassociatedwith theacquisitionof landandall relatedcostsincurredonactivitiesnecessarytoputthelandinaconditionreadyfordevelopment.Landheldfordevelopment istransferredtopropertydevelopmentcostswithincurrentassetat thepointwhendevelopmentactivitiescommenceandwhereitcanbedemonstratedthatthedevelopmentactivitiescanbecompletedwiththeGroup’snormaloperatingcycle.
(f) Financial assets
FinancialassetsarerecognisedwhentheGroupandtheCompanybecomeapartytothecontractualprovisionsofthefinancialinstrument.
Financialassetsaremeasuredinitiallyatfairvalueplustransactioncosts,exceptforfinancialassetscarriedatfairvaluethroughprofitorloss,whicharemeasuredinitiallyatfairvalue.Allfinancialassetsexceptforthoseatfairvaluethroughprofitorlossaresubjecttoreviewofimpairmentlossatthereportingdate.
Afinancialasset isderecognisedwhenthecontractualrighttoreceivecashflowsfromthefinancialassethasexpiredorwhenthefinancialassetsandallsubsequentrisksandrewardsaretransferred.Onderecognitionofafinancialassetinitsentirety,thedifferencebetweenthecarryingamountandthesumoftheconsiderationreceivedandanycumulativegainorlossthathavebeenrecognisedinothercomprehensiveincomeisrecognisedintheincomestatements.
TheGroupandtheCompanydeterminetheclassificationoftheirfinancialassetsatinitialrecognition,
andthecategoriesincludefinancialassetsatfairvaluethroughprofitandloss,loansandreceivables,heldtomaturityinvestmentsandavailableforsaleinvestments.
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3. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
(f) Financial assets (Cont’d)
(i) Financialassetsatfairvaluethroughprofitorloss
Financialassetsareclassifiedasfinancialassetsatfairvaluethroughprofitorlossiftheyareheldfortradingoraredesignatedassuchuponinitialrecognition.Financialassetsheldfortradingarefinancialassetsacquiredprincipallyforthepurposeofsellinginthenearfuture.
FinancialassetsheldfortradingincludederivativesenteredintobytheGroupthatdonotmeetthehedgeaccountingcriteria.
Subsequenttoinitialrecognition,financialassetsatfairvaluethroughprofitorlossaremeasuredatfairvalue.Anygainsorlossesarisingfromchangesinfairvaluearerecognisedintheincomestatements. Netgainsor lossesonfinancialassetsat fairvalue throughprofitor lossdonotincludeexchangedifferences,interestanddividendincome.Exchangedifferences,interestanddividendincomeonfinancialassetsatfairvaluethroughprofitorlossarerecognisedseparatelyintheincomestatementsaspartofotherlossesorotherincome.
Financialassetsatfairvaluethroughprofitorlossthatareheldprimarilyfortradingpurposesarepresentedascurrentwhereasfinancialassetsthatarenotheldfortradingpurposesarepresentedasnon-currentbasedonthesettlementdate.
(ii) Loansandreceivables
Loansandreceivablesarenon-derivativefinancialassetswithfixedanddeterminablepaymentsthatarenotquotedinanactivemarket.TheGroup’sandtheCompany’sloansandreceivablescompriseofreceivables,depositsandcashandbankbalances.
Subsequenttoinitialrecognition,loansandreceivablesaremeasuredatamortisedcostusingtheeffectiveinterestmethodlessallowanceforimpairmentloss.Discountingisomittedwheretheeffectofdiscountingisimmaterial.Gainsandlossesarerecognisedintheincomestatementswhentheloansandreceivablesarederecognisedorimpaired,andthroughtheamortisationprocess.
Loansandreceivablesareclassifiedascurrentassets,exceptforthosehavingmaturitydateslaterthantwelvemonthsafterthereportingdatewhichareclassifiedasnon-current.
(iii) Heldtomaturityinvestments
Financialassetsthatarenon-derivativeinnaturewithfixedanddeterminablepaymentsandfixedmaturityareclassifiedasheldtomaturityinvestmentswhentheGroupandtheCompanyhavetheintentionandabilitytoholdtheinvestmentstomaturity.
Subsequenttoinitialrecognition,heldtomaturityinvestmentsaremeasuredatamortisedcostusingtheeffectiveinterestmethod.Gainsandlossesarerecognisedinincomestatementswhentheheldtomaturityinvestmentsarederecognisedorimpaired,andthroughtheamortisationprocess.
Heldtomaturityinvestmentsareclassifiedasnon-currentassets,exceptforthosehavingmaturitywithintwelvemonthsafterthereportingdatewhichareclassifiedascurrent.
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3. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
(f) Financial assets (Cont’d)
(iv) Availableforsaleinvestments
Availableforsaleinvestmentsarenon-derivativefinancialassetsthataredesignatedasavailableforsaleorarenotclassified inanyothercategoriesoffinancialassets.TheGroup’sand theCompany’savailableforsaleinvestmentscompriseofinvestmentsinunquotedsharesandclubmemberships.
Availableforsaleinvestmentsaremeasuredatfairvaluesubsequenttotheinitialrecognition.Anygainsor lossesfromchanges in fairvalueof thefinancialassetsarerecognised inothercomprehensiveincomeandreportedwithintheavailableforsalereservewithinequity,exceptforimpairmentlosses,foreignexchangedifferencesonmonetaryassetsandinterestcalculatedusingtheeffectiveinterestmethodwhicharerecognisedintheincomestatements.Whentheassetisdisposedoforisdeterminedtobeimpaired,thecumulativegainorlosspreviouslyrecognisedinothercomprehensiveincomeisreclassifiedfromequitytotheincomestatementsandpresentedasareclassificationadjustmentwithinothercomprehensiveincome.
Interest income calculated using the effective interestmethod is recognised in the incomestatements.Dividends on an available for sale equity investment are recognised in incomestatementswhentheGroup’sandtheCompany’srightstoreceivepaymentareestablished.
Availableforsaleinvestmentswhosefairvaluecannotbereliablymeasuredaremeasuredatcostlessimpairmentloss.
Availableforsaleinvestmentsareclassifiedasnon-currentassetsunlesstheyareexpectedtoberealisedwithintwelvemonthsafterthereportingdate.
Regularwaypurchasesorsalesarepurchasesorsalesoffinancialassetsthatrequiredeliveryofassetswithintheperiodgenerallyestablishedbyregulationorconventioninmarketplaceconcerned.Allregularwaypurchasesandsalesoffinancialassetsarerecognisedorderecognisedonthetradedatei.e.thedatethattheGroupandtheCompanycommittopurchaseorselltheasset.
(g) Subsidiary companies
SubsidiarycompaniesarethosecompanieswhichtheGrouphaspowertoexercisecontroloverthefinancialandoperatingpoliciessoastoobtainbenefitsfromitsactivities.
Investmentinsubsidiarycompanies,whichareeliminatedonconsolidation,arestatedatcostintheCompany’sfinancialstatementslessimpairmentlosses.Whereanindicationofimpairmentexists,thecarryingamountoftheinvestmentisassessedandwrittendowntoitsrecoverableamount.Thepolicyfor the recognitionandmeasurementof impairment losses is inaccordancewithNote3(l)(ii) to thefinancialstatements.
Onthedisposalofinvestmentinsubsidiarycompanies,thedifferencebetweennetdisposalproceedsandtheircarryingamountsisrecognisedintheincomestatement.
(h) Associate companies Associatecompaniesareentities inwhich theGrouphassignificant influenceand that isneithera
subsidiarycompanynoraninterestinajointventure.Significantinfluenceisthepowertoparticipateinthefinancialandoperatingpolicydecisionsoftheinvesteebutnotincontrolorjointcontroloverthosepolicies.
Investmentsinassociatecompaniesareaccountedforintheconsolidatedfinancialstatementsusingtheequitymethodofaccounting.
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3. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
(h) Associate companies (Cont’d)
Undertheequitymethod,theinvestmentinassociatecompanyiscarriedintheconsolidatedstatementoffinancialpositionatcostadjustedforpost-acquisitionchangesintheGroup’sshareofnetassetsoftheassociatecompany.TheGroup’sshareofthenetprofitorlossoftheassociatecompanyisrecognisedintheconsolidatedincomestatement.Wheretherehasbeenachangerecogniseddirectlyintheequityoftheassociatecompany,theGrouprecognisesitsshareofsuchchangesinequity.Inapplyingtheequitymethod,unrealisedgainsandlossesontransactionbetweentheGroupandtheassociatecompanyareeliminatedtotheextentoftheGroup’sinterestintheassociatecompany.Aftertheapplicationoftheequitymethod,theGroupdetermineswhetheritisnecessarytorecogniseanyadditionalimpairmentlosseswithrespecttotheGroup’snetinvestmentintheassociatecompany.TheassociatecompanyisequityaccountedforfromthedatetheGroupobtainssignificantinfluenceuntilthedatetheGroupceasestohavesignificantinfluenceovertheassociatecompany.
Goodwillrelatingtoanassociatecompanyis includedinthecarryingamountoftheinvestmentandisnotamortised.Anyexcessof theGroup’sshareof thenet fairvalueof theassociatecompany’sidentifiableassetsandliabilitiesoverthecostoftheinvestmentisexcludedfromthecarryingamountoftheinvestmentandisinsteadincludedasincomeinthedeterminationoftheGroup’sshareoftheassociatecompany‘sprofitorlossintheperiodinwhichtheinvestmentisacquired.
WhentheGroup’sshareoflossesinanassociatecompanyequalsorexceedsitsinterestintheassociatecompany, theGroupdoesnot recognise further losses, unless it has incurredobligationsormadepaymentsonbehalfoftheassociatecompanies.
Themostrecentavailableauditedand/ormanagementfinancialstatementsoftheassociatedcompaniesareusedbytheGroupinapplyingequitymethodofaccounting.
In theCompany’s separate financial statements, investments inassociate companiesare statedatcostlessimpairmentlosses.ThepolicyfortherecognitionandmeasurementofimpairmentlossesisinaccordancewithNote3(l)(ii)tothefinancialstatements.
Onthedisposalofsuchinvestments,thedifferencebetweennetdisposalproceedsandtheircarryingamountsisrecognisedintheincomestatements.
(i) Jointly controlled entities
JointlycontrolledentitiesarejointventurethatinvolvestheestablishmentofaseparateentityinwhichtheGroupandeachventurehaveinterestandinwhichthereiscontractuallyagreedsharingofcontrol.TheGroup’sinterestinjointlycontrolledentitiesisaccountedforintheconsolidatedfinancialstatementsusingtheequitymethodofaccounting.
Undertheequitymethodofaccounting,theGroup’sshareofprofitsorlossesofjointlycontrolledentitiesduringthefinancialyearisincludedintheconsolidatedincomestatement.TheGroup’sinterestinjointlycontrolledentitiesiscarriedintheconsolidatedstatementoffinancialpositionatcostplustheGroup‘sshareofpost-acquisitionunappropriatedprofitsoraccumulatedlossesandotherreservesandgoodwillonacquisition.
UnrealisedprofitsorlossesarisingfromtransactionsbetweentheGroupanditsjointlycontrolledentitiesarerecognisedonlytotheextentofthatportionofthegainorlosswhichisattributabletotheinterestsofotherventures.Unrealisedlossesarerecognisedinfullwhenthetransactionprovidesevidenceofareductioninthenetrealisablevalueofcurrentassetsoranimpairmentloss.
Ondisposalofsuchinvestment,thedifferencebetweennetdisposalproceedsandthecarryingamountisincludedintheincomestatements.
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3. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
(j) Intangible assets
Intangibleassetsacquiredseparatelyaremeasuredatcostoninitialrecognition.Thecostofintangibleassetsacquiredinabusinesscombinationistheirfairvalueasatthedateofacquisition.Followinginitialrecognition, intangibleassetsarecarriedatcost lessanyaccumulatedamortisationandimpairmentlosses.
Theusefullivesofintangibleassetsareassessedtobeeitherfiniteorinfinite.Intangibleassetswithfinitelivesareamortisedonastraight-linebasisovertheirestimatedeconomicusefullivesandassessedforimpairmentwheneverthereisanindicationtheintangibleassetmaybeimpaired.Theamortisationperiodandamortisationmethodforanintangibleassetwithafiniteusefullifearereviewedatleastateachreportingdate.
Intangibleassetswithinfiniteusefullivesarenotamortisedbuttestedforimpairmentannuallyormorefrequentlyiftheeventsorchangesincircumstancesindicatethatthecarryingvaluemaybeimpairedeither individuallyorat thecash-generatingunit level.Theuseful lifeofan intangibleassetwithaninfinitelifeisalsoreviewedannuallytodeterminewhethertheusefullifeassessmentcontinuestobesupportable.
(i) Intangible assets – Stock broking dealer’s license
Thestockbrokingdealer’slicensewasacquiredbyM&ASecuritiesSdnBhd,awholly-ownedsubsidiarycompanyoftheCompanytooperateabranchofficeinKualaLumpurandisrecognisedasanintangibleassetinthestatementsoffinancialposition.
The intangible asset is statedat cost less accumulatedamortisationand impairment losses.Theintangibleasset isamortisedonastraight linebasisoveraperiodof20years,beingtheestimatedlifeoftheasset.ThecarryingvalueisreviewedannuallybytheDirectorstoensureitisnotinexcessoftherecoverablevalue.Therecoverableamountisassessedonthebasisoftheexpectedcashflowswhichwillbereceivedfromtheemploymentoftheintangibleasset.ThepolicyfortherecognitionandmeasurementofimpairmentlossesisinaccordancewithNote3(l)(ii)tothefinancialstatements.
(ii) Intangibleassets-Developmentexpenditure
Intangibleassetarisingfromdevelopmentorfromthedevelopmentphaseofaninternalprojectisrecognisedifallofthefollowinghavebeendemonstrated:
-thetechnicalfeasibilityofcompletingtheintangibleassetsothatitwillbeavailableforuseor sale;
-theintentiontocompletetheintangibleassetanduseorsellit;
-theabilitytouseorselltheintangibleasset;
-howtheintangibleassetwillgenerateprobablefutureeconomicbenefits;
-theavailabilityofadequatetechnical,financialandotherresourcestocompletethedevelopment andtouseorselltheintangibleasset;and
-theabilitytomeasurereliablytheexpenditureattributabletotheintangibleassetduringits development.
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3. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
(j) Intangible assets (Cont’d)
(ii) Intangibleassets-Developmentexpenditure(Cont’d)
Theamountinitiallyrecognisedforexpenditureincurredondevelopmentactivitiesisthesumoftheexpenditureincurredfromthedatewhentheintangibleassetfirstmeetstherecognitioncriterialistedabove.Expenditureincurredondevelopmentactivitiesthatdonotmeetthesecriteriaareexpensedtotheincomestatementswhenincurred.
Theexpenditureondevelopmentactivitiesarestatedatcostlessaccumulatedamortisationandimpairmentlosses.Thisexpenditureistobeamortisedonastraightlinebasisoveritsexpectedusefullivesofbetween2to3years.
(iii) Intangible assets - Trademarks and patents
ThepolicyformeasurementandrecognitionofimpairmentlossesisinaccordancewithNote3(l)(ii)tothefinancialstatements.
Theinitialcostincurredonthesearch,applicationforregistrationandcertificationfortherightstouseatrademarkandpatentsiscapitalised,andisstatedatcostlessaccumulatedamortisationandimpairmentlosses.Thetrademarkisassessedtohaveafiniteusefullifeandisamortisedonastraight-linebasisover10years,beingthevalidityperiodthecertificateofregistrationofthetrademarkandpatentsistobegranted.
ThepolicyformeasurementandrecognitionofimpairmentlossesisinaccordancewithNote3(l)(ii)tothefinancialstatements.
(k) Goodwill
GoodwillrepresentstheexcessofthecostofacquisitionovertheGroup’sinterestinthefairvalueoftheidentifiableassets,liabilitiesandcontingentliabilitiesofasubsidiarycompanyatthedateofacquisition.
Goodwillarisingontheacquisitionofsubsidiarycompaniesispresentedseparatelyintheconsolidatedstatementoffinancialpositionwhilegoodwillarisingon theacquisitionofassociatecompaniesandjointlycontrolledentitiesisincludedinthecarryingamountoftheinvestmentinassociatecompanyand/orjointlycontrolledentities.
Negativegoodwillrepresentstheexcessofthefairvalueoftheunderlyingnetassetsofthesubsidiarycompaniesacquiredoverthepurchaseconsiderationpaidforthesharesinthesubsidiarycompanies.WiththeadoptionofFRS3BusinessCombinationsbeginning1January2006,negativegoodwill isrecognisedimmediatelyintheincomestatements.
Goodwillonconsolidationisstatedatcostlessimpairmentlosses.Goodwillistestedforimpairmentannuallyormorefrequentlyifeventsorchangesincircumstancesindicatethatthegoodwillmaybeimpaired.For thepurposeof impairment testing, goodwill is allocated to eachof theGroup’s cashgeneratingunitsthatareexpectedtobenefitfromsynergiesofthebusinesscombination.
An impairment loss is recognised in the incomestatementswhen the carryingamountof the cashgenerating unit including goodwill exceeds the recoverable amount of the cash generating unit.Recoverableamountofthecashgeneratingunitisthehigherofthecashgeneratingunit’sfairvaluelesscosttosellanditsvalueinuse.Inassessingvalueinuse,theestimatedfuturecashflowsarediscountedtotheirpresentvalueusingapre-taxdiscountratethatreflectscurrentmarketassessmentsofthetimevalueofmoneyandtherisksspecifictotheasset.
Thetotalimpairmentlossisallocatedfirsttoreducethecarryingamountofgoodwillallocatedtothecashgeneratingunitandthentotheotherassetsofthecashgeneratingunitproportionatelyonthebasisofthecarryingamountofeachassetinthecashgeneratingunit.
Impairmentlossrecognisedongoodwillisnotreversedintheeventofanincreaseinrecoverableamountinsubsequentperiods.
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3. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
(l) Impairment of assets
(i) Impairmentoffinancialassets
TheGroupandtheCompanyassessateachreportingdatewhetherthereisanyobjectiveevidencethatafinancialassetsisimpaired.
(i) Tradeandotherreceivablesandotherfinancialassetscarriedatamortisedcost
Todeterminewhetherthereisobjectiveevidencethatanimpairmentlossonfinancialassetshasbeenincurred,theGroupandtheCompanyconsiderfactorssuchastheprobabilityofinsolvencyorsignificantfinancialdifficultiesofthereceivablesanddefaultorsignificantdelayinpayments.Forcertaincategoriesoffinancialassets,suchastradereceivables,assets thatareassessednot tobe impaired individuallyaresubsequentlyassessed forimpairmentonacollectivebasisbasedonsimilarriskcharacteristics.ObjectiveevidenceofimpairmentforaportfolioofreceivablescouldincludetheGroup’sandtheCompany’spastexperienceofcollectingpayments,anincreaseinthenumberofdelayedpaymentsintheportfolioovertheaveragecreditperiodandtheobservablechangesinnationalorlocaleconomicconditionsthatcorrelatewithdefaultinreceivables.
Ifanysuchevidenceexists,theamountofimpairmentlossismeasuredasthedifferencebetweentheasset’scarryingamountandthepresentvalueofestimatedfuturecashflowsdiscountedatthefinancialasset’soriginaleffectiveinterestrate.Theimpairmentlossisrecognisedintheincomestatements.
Thecarryingamountofthefinancialassetisreducedbytheimpairmentlossdirectlyforallfinancialassetswiththeexceptionoftradereceivables,wherethecarryingamountisreducedthroughtheuseofanallowanceaccount.Whenatradereceivablebecomesuncollectible,itiswrittenoffagainsttheallowanceaccount.
Ifinasubsequentperiod,theamountoftheimpairmentlossdecreasesandthedecreasecanberelatedobjectivelytoaneventoccurringaftertheimpairmentwasrecognised,thepreviouslyrecognisedimpairmentlossisreversedtotheextentthatthecarryingamountoftheassetdoesnotexceeditsamortisedcostatthereversaldate.Theamountofreversalisrecognisedintheincomestatements.
(ii) Availableforsaleinvestments
Significantorprolongeddeclineinfairvaluebelowcost,significantfinancialdifficultiesoftheissuerorobligorandthedisappearanceofanactivetradingmarketareconsiderationstodeterminewhetherthereisobjectiveevidencethatnoncurrentinvestmentsclassifiedasavailableforsaleinvestmentsareimpaired.
Ifanavailableforsaleinvestmentisimpaired,anamountcomprisingthedifferencebetweenitscost(netofanyprincipalpaymentandamortisation)anditscurrentfairvalue,lessanyimpairmentlosspreviouslyrecognisedinincomestatements,istransferredfromequitytotheincomestatements.
Impairmentlossesonavailableforsaleequityinvestmentsarenotreversedintheincomestatementsinthesubsequentperiods.Increaseinfairvalue,ifany,subsequenttoimpairmentlossisrecognisedinothercomprehensiveincome.Foravailableforsaledebtinvestments,impairmentlossesaresubsequentlyreversedintheincomestatementsifanincreaseinthefairvalueoftheinvestmentcanbeobjectivelyrelatedtoaneventoccurringaftertherecognitionoftheimpairmentlossintheincomestatements.However,anysubsequentrecoveryinthefairvalueofanimpairedavailableforsaleinvestmentisrecognisedinothercomprehensiveincome.
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3. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
(l) Impairment of assets (Cont’d)
(ii) Impairmentofnonfinancialassets
Ateachreportingdate,theGroupandtheCompanyreviewthecarryingamountsofitsnon-financialassetstodeterminewhetherthereisanyindicationofimpairment.
If any such indication exists, orwhenannual impairment testing for a non-financial asset isrequired,therecoverableamountisestimatedandanimpairmentlossisrecognisedwhenevertherecoverableamountofthenon-financialassetislessthanitscarryingamount.Anasset’srecoverableamountisthehigherofitsfairvaluelesscoststosellanditsvalueinuse.
Inassessingvalueinuse,theestimatedfuturecashflowsexpectedtobegeneratedbytheassetarediscountedtotheirpresentvalueusingapre-taxdiscountratethatreflectscurrentmarketassessmentsofthetimevalueofmoneyandtherisksspecifictothenon-financialasset.
Animpairmentlossisrecognisedintheincomestatements.
Anassessmentismadeateachreportingdateastowhetherthereisanyindicationthatpreviouslyrecognisedimpairmentlossesforanon-financialassetmaynolongerexistormayhavedecreased.Ifsuchindicationexists,therecoverableamountisestimated.Apreviouslyrecognisedimpairmentlossisreversedonlyiftherehasbeenachangeintheestimatesusedtodeterminethenon-financialassetrecoverableamountsincethelastimpairmentlosswasrecognised.Ifthatisthecase,thecarryingamountoftheassetisincreasedtoitsrecoverableamount.Thatincreasecannotexceedthecarryingamountthatwouldhavebeendetermined,netofdepreciation,hadnoimpairmentlossberecognisedpreviously.
Allreversalsofimpairmentlossesarerecognisedasincomeintheincomestatements.Aftersuchareversal,thedepreciationchargeisadjustedinfutureperiodstoallocatetherevisedcarryingamountoftheasset,lessanyresidualvalue,onasystematicbasisoveritsremainingusefullives.
(m) Non-currentassetsclassifiedasheldforsaleanddiscontinuedoperations
AcomponentoftheGroupisclassifiedasdiscontinuedoperationwhenthecriteriatobeclassifiedasheldforsalehavebeenmetorithasbeendisposedoffandsuchacomponentrepresentsaseparatemajorlineofbusinessorgeographicalareaofoperations,ispartofasingleco-ordinatedmajorlineofbusinessorgeographicalareaofoperationsorisasubsidiarycompanyacquiredexclusivelywithaviewforresale.
Disposalgroupsornon-currentassetsareclassifiedasheldforsale if theircarryingamountwillberecoveredprincipallythroughasaletransactionratherthanthroughcontinuinguse.Thisconditionisregardedasmetonlywhenthesaleishighlyprobableandtheassetisavailableforimmediatesaleinitspresentconditionsubjectonlytotermsthatareusualorcustomary.
Immediatelybeforetheinitialrecognitionofthedisposalgrouportheassetclassifiedasheldforsale,thecarryingamountsoftheassetsaremeasuredinaccordancewithapplicableFRSs.Uponclassificationasheldforsale,thedisposalgroupandnon-currentassetsismeasuredatthelowerofcarryingamountandfairvaluelesscoststosellandisnotdepreciated.Anydifferencesarerecognisedintheincomestatements.
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3. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
(n) Propertydevelopmentcost
Propertydevelopmentcostscomprisecostoflandandallrelatedcoststhataredirectlyattributabletodevelopmentactivitiesorthatcanbeallocatedonareasonablebasistosuchactivities.
Whenthefinancialoutcomeofadevelopmentactivitycanbereliablyestimated,propertydevelopmentrevenueandexpenditurearerecognisedintheincomestatementsbyusingthestageofcompletionmethod. Thestageofcompletion isdeterminedby theproportion thatpropertydevelopmentcostsincurredforworkperformedtodatebeartotheestimatedtotalpropertydevelopmentcosts.Inapplyingthismethod,onlythosecoststhatreflectactualdevelopmentworkperformedareincludedaspropertydevelopmentcostsincurred.
Where the financial outcomeof a development activity cannot be reliably estimated, developmentrevenueisrecognisedonlytotheextentofpropertydevelopmentcostsincurredthatisprobablewillberecoverable,andpropertydevelopmentcostsonpropertiessoldarerecognisedasanexpenseintheperiodinwhichtheyareincurred.
Anyexpectedlossonadevelopmentproject,includingcoststobeincurredoverthedefectliabilityperiodisrecognisedasanexpenseimmediately.
Theexcessofrevenuerecognisedinincomestatementsoverbillingstopurchasersisclassifiedasaccruedbillingsandtheexcessofbillingstopurchasersoverrevenuerecognisedintheincomestatementsisclassifiedasprogressbillingswithintheconsolidatedstatementoffinancialposition.
(o) Inventories
Inventoriescomprisingrawmaterial,work-in-progress,finishedgoods,goodspurchasedforresaleandcompleteddevelopmentpropertiesheldforsalearestatedatthelowerofcostandnetrealisablevalue.
Costisdeterminedusingfirstinfirstoutmethod,weightedaveragecostmethodorbyspecificidentification.Thecostofrawmaterialscomprisescostsofpurchase.Thecostoffinishedgoodsandwork-in-progresscomprisecostofrawmaterials,directlabor,otherdirectcostsandappropriateproportionsofproductionoverheadsbasedonnormaloperatingcapacity.Thecostofcompleteddevelopmentpropertiesheldforsaleunderinventoriescomprisescostassociatedwiththeacquisitionoflandandconstructioncosts,otherdirectcostsandappropriateproportionofcommoncosts.
Netrealisablevalueistheestimatedsellingpriceintheordinarycourseofbusinesslesstheestimatedcostsofcompletionandtheestimatedcostsincurredinmarketing,sellinganddistribution.
(p) Cashandcashequivalents
Cashandcashequivalentscompriseofcashinhandandbankbalances,bankoverdraftanddepositsplacedwithlicensedbanksandfinancialinstitutionsthatarefreefromencumbrancesandshorttermhighlyliquidinvestmentswhichhaveaninsignificantriskofchangesinvalue.
TheGrouphasexcluded remisiers’ deposits and clients’monies held in trust by the stock brokingsubsidiarycompaniesandcashandfixeddepositspledgetolicensedbanksandfinancialinstitutionsfromitscashandcashequivalents.
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3. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
(q) Financial liabilities
Financialliabilitiesareclassifiedaccordingtothesubstanceofthecontractualarrangementsenteredintoandthedefinitionsofafinancialliability.
FinancialliabilitiesarerecognisedinthestatementsoffinancialpositionwhentheGroupandtheCompanybecomeapartytothecontractualprovisionsofthefinancialinstrument.Financialliabilitiesareclassifiedaseitherfinancialliabilitiesatfairvaluethroughprofitorlossorotherfinancialliabilities.
(i) Financialliabilitiesatfairvaluethroughprofitorloss
Financialliabilitiesatfairvaluethroughprofitorlossincludefinancialliabilitiesheldfortradingandfinancialliabilitiesdesignateduponinitialrecognitionasatfairvaluethroughprofitorloss.
FinancialliabilitiesheldfortradingincludederivativesenteredintobytheGroupthatdonotmeetthehedgeaccountingcriteria.
(ii) Otherfinancialliabilities
TheGroup’sandtheCompany’sotherfinancialliabilitiesincludetradepayables,otherpayables,hirepurchasepayablesandloansandborrowings.
Tradeandotherpayablesarerecognisedinitiallyatfairvalueplusdirectlyattributabletransactioncostsandsubsequentlymeasuredatamortisedcostusingtheeffectiveinterestmethod.
Loansandborrowingsarerecognisedinitiallyatfairvalue,netoftransactioncostsincurred,andsubsequentlymeasuredatamortisedcostusing theeffective interestmethod.BorrowingsareclassifiedascurrentliabilitiesunlesstheGroupandtheCompanyhaveunconditionalrightstodefersettlementoftheliabilityforatleast12monthsafterthereportingdate.
Forotherfinancialliabilities,gainsorlossesarerecognisedinincomestatementswhentheliabilitiesarederecognised,andthroughtheamortisationprocess.
Afinancial liability isderecognisedwhentheobligationunder the liability isextinguished. Whenanexistingfinancialliabilityisreplacedbyanotherfromthesamelenderonsubstantiallydifferentterms,orthetermsofanexistingliabilityaresubstantiallymodified,suchanexchangeormodificationistreatedasaderecognitionoftheoriginalliabilityandtherecognitionofanewliability,andthedifferenceintherespectivecarryingamountsisrecognisedintheincomestatements.
(r) Derivativefinancialinstruments
Derivativesareinitiallyrecognisedatfairvalueatthedateaderivativecontractisenteredintoandaresubsequentlyremeasuredtotheirfairvalueattheendofeachreportingdate.Theresultinggainorlossisrecognisedintheincomestatementsimmediately.
Fairvaluechangesonderivativesthatarenotdesignatedordonotqualifyforhedgeaccountingarerecognisedinincomestatementswhenthechangesarise.
Aderivativewithapositive fairvalue isrecognisedasafinancialassetwhereasaderivativewithanegativefairvalueisrecognisedasafinancialliability.Aderivativeispresentedasanon-currentassetoranon-currentliabilityiftheremainingmaturityoftheinstrumentismorethan12monthsanditisnotexpectedtoberealisedorsettledwithin12months.Otherderivativesarepresentedascurrentassetsorcurrentliabilities.
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3. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
(s) Equity
Ordinarysharesareclassifiedasequitywhicharerecordedatthenominalvalueandproceedsinexcessofthenominalvalueofsharesissued,ifany,areaccountedforassharepremium.Bothordinarysharesandsharepremiumareclassifiedasequity.Dividendsonordinarysharesarerecognisedinequityintheperiodinwhichtheyaredeclared.
The transactioncostofanequity transactionwhichcompriseonly those incrementalexternalcostsdirectlyattributabletotheequitytransactionareaccountedforasadeductionfromsharepremium,netoftax,fromtheproceeds.
When issued shares of theCompany are repurchased, the consideration paid, including directlyattributablecostsispresentedasachangeinequity.Repurchasedsharesthathavenotbeencancelledareclassifiedastreasurysharesandpresentedasadeductionfromequity.Nogainorlossisrecognisedintheincomestatementsonthesale,reissuanceorcancellationoftreasuryshares.
Whentreasurysharesaredistributedassharedividends,thecostofthetreasurysharesisappliedinthereductionofthesharepremiumaccountordistributablereserves,orboth.
(t) Non-controlling interests
Non-controllinginterestsintheconsolidatedstatementoffinancialpositionconsistoftheirshareofthefairvaluesof identifiableassetsand liabilitiesof theacquireeandadvancesreceivedfromthenon-controllinginterests.
Non-controllinginterestsarepresentedintheconsolidatedstatementoffinancialpositionandstatementsofchangesinequitywithinequity,separatelyfromequityattributabletotheownersoftheParent.Non-controlling interests in theresultsof theGroup ispresentedonthefaceof theconsolidated incomestatementasanallocationofthetotalprofitorlossfortheperiodbetweenthenon-controllinginterestsandtheownersoftheparent.
Wherelossesapplicabletothenon-controllinginterestsexceedthenon-controllinginterestintheequityofasubsidiarycompany,theexcessandanyfurtherlossesapplicabletothenon-controllinginterestarechargedagainsttheGroup’sinterestexcepttotheextentthatthenon-controllinginterestshasabindingobligationto,andisableto,makeadditionalinvestmenttocoverthelosses.Ifthesubsidiarycompanysubsequentlyreportsprofits,theGroup’sinterestisallocatedallsuchprofitsuntilthenon-controllinginterests’shareoflossespreviouslyabsorbedbytheGrouphasbeenrecovered.
(u) Compoundfinancialinstruments
ThecompoundfinancialinstrumentsissuedbytheGroupcompriseredeemableconvertiblepreferenceshares(“RCPS”)thatmaybeconvertedtoordinarysharesattheoptionoftheholders,andthenumberofsharestobeissueddoesnotvarywithchangesintheirfairvalue.
TheRCPSwasrecognisedasacomponentof liabilityat its fairvalue inthestatementsoffinancialposition,netoftransactioncosts.TheRCPSdividendswererecognisedasinterestexpenseinincomestatementsusingtheeffectiveinterestratemethod.
(v) Hirepurchasepayables
Thecostofproperty,plantandequipmentacquiredunderhirepurchasearrangementsarecapitalised.Thedepreciationpolicyontheseproperty,plantandequipmentissimilartothatoftheGroup’sproperty,plantandequipmentdepreciationpolicy.Outstandingobligationdueunderthehirepurchasearrangementsafterdeductingfinanceexpensesareincludedasliabilitiesinthefinancialstatements.Financechargesonhirepurchaseagreementsareallocated to incomestatementsover theperiodof the respectiveagreements.
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3. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
(w) Provisionforliabilities
ProvisionforliabilitiesarerecognisedwhentheGrouphasapresentlegalorconstructiveobligationasaresultofapasteventanditisprobablethatanoutflowofresourcesembodyingeconomicbenefitswillberequiredtosettletheobligationsandareliableestimateoftheamountcanbemade.Provisionsarereviewedateachreportingdateandadjustedtoreflectthecurrentbestestimate.Wheretheeffectofthetimevalueofmoneyismaterial,theamountofprovisionisthepresentvalueoftheexpenditureexpectedtoberequiredtosettletheobligation.
(x) Contingentliabilities
Acontingentliabilityisapossibleobligationthatarisesfrompasteventsandwhoseexistencewillonlybeconfirmedbytheoccurrenceornon-occurrenceofoneormoreuncertainfutureeventsnotwhollywithinthecontroloftheGroup.Itcanalsobeapresentobligationarisingfrompasteventsthatisnotrecognisedbecauseitisnotprobablethatoutflowofeconomicresourceswillberequiredortheamountofobligationcannotbemeasuredreliably.Acontingentliabilityisnotrecognisedbutisdisclosedinthenotestothefinancialstatements.Whenachangeintheprobabilityofanoutflowoccurssuchthattheoutflowisprobableandcanbemeasuredreliably,theywillthenberecognisedasaprovision.
(y) Financial guarantee contracts
PriortotheimplementationofFRS139inthepreviousfinancialyear,wheretheCompanyentersintofinancialguaranteecontractstoguaranteetheindebtednessofothercompanieswithintheGroup,theCompanytreatstheguaranteeasacontingentliabilityuntilsuchtimeasitbecomesprobablethattheCompanywillberequiredtomakeapaymentundertheguarantee.
With the implementationofFRS139 in thecurrentfinancialyear,financialguaranteecontractsarerecognisedinthestatementsoffinancialposition,initiallyasaliabilityatfairvalue,netoftransactioncosts.Subsequenttoinitialrecognition,financialguaranteecontractsarerecognisedasexpensesintheincomestatementsovertheperiodoftheguarantee.IfthedebtorfailstomakepaymentrelatingtofinancialguaranteecontractwhenitisdueandtheCompany,astheissuer,isrequiredtoreimbursetheholdertheassociatedloss,theliabilityismeasuredatthehigherofthebestestimateoftheexpenditurerequiredtosettlethepresentobligationatthereportingdateandtheamountinitiallyrecognisedlesscumulativeamortisation.
(z) Incometaxanddeferredtax
Incometaxontheincomestatementsforthefinancialyearcomprisescurrentanddeferredtax.Currenttaxistheexpectedamountofincometaxespayableinrespectofthetaxableprofitforthefinancialyearandismeasuredusingthetaxratesthathavebeenenactedatthereportingdate.
Currenttaxisrecognisedintheincomestatementsexcepttotheextentthatthetaxrelatestoitemsrecognisedoutsidetheincomestatements,eitherinothercomprehensiveincomeordirectlyinequity.
Deferredtaxisprovidedfor,usingtheliabilitymethod,ontemporarydifferencesatthereportingdatebetweenthetaxbasesofassetsandliabilitiesandtheircarryingamountsinthefinancialstatements.Inprinciple,deferredtaxliabilitiesarerecognisedforalltaxabletemporarydifferencesanddeferredtaxassetsarerecognisedforalldeductibletemporarydifferences,unusedtaxlossesandunusedtaxcreditstotheextentthatitisprobablethattaxableprofitwillbeavailableagainstwhichthedeductibletemporarydifferences,unusedtaxlossesandunusedtaxcreditscanbeutilised.Deferredtaxisnotrecognisedifthetemporarydifferencesarisefromgoodwillornegativegoodwillorfromtheinitialrecognitionofanassetorliabilityinatransactionwhichisnotabusinesscombinationandatthetimeofthetransaction,affectsneitheraccountingprofitnortaxableprofit.
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3. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
(z) Incometaxanddeferredtax(Cont’d)
Deferredtaxismeasuredatthetaxratesthatareexpectedtoapplyintheperiodwhentheassetisrealisedortheliabilityissettled,basedontaxratesthathavebeenenactedorsubstantivelyenactedatthereportingdate.Deferredtaxisrecognisedintheincomestatements,exceptwhenitarisesfromatransactionwhichisrecogniseddirectlyinequity,inwhichcasethedeferredtaxisalsochargedorcrediteddirectlyinequity,orwhenitarisesfromabusinesscombinationthatisanacquisition,inwhichcasethedeferredtaxisincludedintheresultinggoodwillornegativegoodwill.
Deferredtaxassetsanddeferredtaxliabilitiesareoffset,ifalegallyenforceablerightexiststosetoffcurrenttaxassetsagainstcurrenttaxliabilitiesandthedeferredtaxesrelatetothesametaxableentityandthesametaxauthorities.
(aa) Revenuerecognition
(i) Saleofgoodsandtradingactivities
Revenuefromsaleofgoodsandtradingactivitiesismeasuredatthefairvalueoftheconsiderationreceivableandisrecognisedupondeliveryofproductandcustomeracceptance,ifany,netofdiscountandsalesreturns.Revenueisnotrecognisedtotheextentwheretherearesignificantuncertaintiesregardingrecoveryoftheconsiderationdue,associatedcostsorthepossiblereturnofgoods.
(ii) Saleofdevelopmentproperties
Revenue from sale of development properties represents the proportionate sales value ofdevelopmentpropertiessoldattributabletothepercentageofdevelopmentworkperformedduringthefinancialyear.
(iii) Sale of securities
Revenuefromsaleofsecuritiesarerecognisedbasedonthecontractedvalue.
(iv) Revenuefrombrokingactivities
Revenuefrombrokingactivitiesarerecogniseduponexecutionofcontracts.Brokerageincomeisaccountedforbeforeremisiers’commissionanddealers’incentives.
(v) Rentalincome
Rentalincomefrominvestmentpropertyisrecognisedinincomestatementsonastraight-linebasisoverthespecifictenureoftherespectiveleases.Theaggregatecostofincentivesprovidedtolesseeisrecognisedasareductionofrentalincomeovertheleasetermonastraight-linebasis.
(vi) Dividendincome
Dividendincomeisrecognisedwhentherighttoreceivepaymenthasbeenestablishedandnosignificantuncertaintyexistedwithregardtoitsreceipt.
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3. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
(aa) Revenuerecognition(Cont’d)
(vii) Interestincome
Interestincomeisrecognisedonaccrualsbasisunlessrecoverabilityisindoubt,inwhichcasetherecognitionofinterestissuspended.Subsequenttosuspension,interestisrecognisedonreceiptbasis.
Interest income from investments in bonds, loan stocks and dual currency investments arerecognisedonatimeproportionbasisthattakesintoaccounttheeffectiveyieldoftheassets.
(viii) Revenuefromservicesandfeeincome
Revenuefromservicesarerecognisedwhenservicesarerenderedandinvoiceissued.Revenueisrecognisednetofsalesandservicetax,whereapplicable.
Feefromadvisoryandcorporatefinanceactivities,revenueonfeeincomefromsaleofcustomisedgoodsandservicesandcontractmaintenancearerecognisedoncompletionofeachstageofengagement.
(ix) AllotherrevenuesarerecognisedwhentherighttoreceivepaymentisestablishedandtotheextentthatitisprobablethattheeconomicbenefitswillflowtotheGroupandtherevenuecanbereliablymeasured.
(bb) Foreign currencies
(i) Functional and presentation currency
TheindividualfinancialstatementsofeachentityintheGrouparemeasuredusingthecurrencyoftheprimaryeconomicenvironmentinwhichtheentityoperates(“thefunctionalcurrency”).TheconsolidatedfinancialstatementsarepresentedinRinggitMalaysia,whichisalsothefunctionalcurrencyoftheCompany.
(ii) Foreign currency transaction and balances
Inpreparingthefinancialstatementsoftheindividualentities,transactionsincurrenciesotherthantheentity’sfunctionalcurrency(foreigncurrencies)arerecordedinthefunctionalcurrenciesusingtheexchangeratesprevailingatthedatesofthetransactions.Ateachreportingdate,monetaryassetsandliabilitiesdenominatedinforeigncurrenciesaretranslatedattheratesprevailingonthe reportingdate. Non-monetary itemscarriedat fair value thataredenominated in foreigncurrenciesaretranslatedattheratesprevailingonthedatewhenthefairvaluewasdetermined.Non-monetaryitemsdenominatedinforeigncurrenciesthataremeasuredathistoricalcostaretranslatedusingtheexchangeratesatthedatesofinitialtransaction.
Exchangedifferencesarisingonthesettlementofmonetaryitemsandonthetranslationofmonetaryitemsareincludedintheincomestatementsfortheperiod.Exchangedifferencesarisingonthetranslationofnon-monetaryitemscarriedatfairvalueareincludedintheincomestatementsfortheperiodexceptforthedifferencesarisingonthetranslationofnon-monetaryitemsinrespectofwhichgainsandlossesarerecogniseddirectlyinequity.Exchangedifferencesarisingfromsuchnon-monetaryitemsarealsorecogniseddirectlyinequity.
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3. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
(bb) Foreign currencies (Cont’d)
(iii) Foreign operations
Forthepurposesofconsolidation,netassetsoftheforeignsubsidiarycompaniesaretranslatedintoRinggitMalaysiaattheexchangeraterulingatthereportingdate.Incomeandexpensesoftheforeignsubsidiarycompaniesaretranslatedataverageexchangeratesforthefinancialyear,whichapproximatestheexchangeratesatthedateofthetransactions.Allresultingexchangedifferencesarisingfromthesetranslationsarerecognisedinothercomprehensiveincomeandaccumulatedunderexchangetranslationreserves inequity.TheexchangetranslationreserveisreclassifiedfromequitytotheconsolidatedincomestatementoftheGroupondisposaloftheforeignoperation.
Goodwillandfairvalueadjustmentsarisingontheacquisitionofaforeignentityonorafter1January2006aretreatedasassetsandliabilitiesoftheforeignentityandarerecordedinthefunctionalcurrencyoftheforeignoperationsandtranslatedattheclosingrateatthereportingdate.Goodwillandfairvalueadjustmentsthataroseintheacquisitionofforeignsubsidiarycompaniesbefore1January2006aredeemedtobeassetsandliabilitiesoftheparentcompanyandarerecordedinRinggitMalaysia(“RM”)attheratesprevailingatthedateofacquisition.
(cc) Operating leases
Leasesofassetswheresubstantiallyalltherisksandrewardsofownershipoftheassetsremainwiththelessorareaccountedforasoperatingleases.Operatingleasepaymentsarerecognisedasanexpenseintheincomestatementsonastraight-linebasisoverthetermoftherelevantlease.
Whenanoperatingleaseisterminatedbeforetheleaseperiodhasexpired,anypaymentrequiredtobemadetothelessorbywayofpenaltyisrecognisedasanexpenseintheincomestatementsimmediately.Theaggregatebenefitofincentivesprovidedbythelessor,ifany,isrecognisedasareductionofrentalexpenseonastraight-linebasisoverthetermofthelease.
(dd) Borrowingcosts
Allborrowingcostsareexpensedtotheincomestatementsusingtheeffectiveinterestmethod,intheperiodinwhichtheyareincurredexcepttotheextentthattheyarecapitalisedaspartofthecostofaqualifyingasset if thecost isdirectlyattributabletotheacquisition,constructionorproductionofthequalifyingasset.
Capitalisationofborrowingcostscommenceswhentheactivitiestopreparethequalifyingassetforitsintendeduseorsaleareinprogressandtheexpenditureandborrowingcostsareincurred.Borrowingcostsarecapitaliseduntiltheassetissubstantiallycompletedforitsintendeduseorsale.Capitalisationofborrowingcostsissuspendedorceasedwhensubstantiallyalltheactivitiesnecessarytopreparethequalifyingassetforitsintendeduseorsaleareinterruptedorcompleted.
(ee) Employeebenefits
(i) Shorttermemployeebenefits
Wages,salaries,allowances,bonuses,incentivesandsocialsecuritycontributionsarerecognisedasanexpenseinthefinancialyearinwhichtheassociatedservicesarerenderedbyemployeesoftheGroup.Shorttermaccumulatingcompensatedabsencessuchaspaidannualleavearerecognisedwhenservicesarerenderedbyemployeesthat increasetheirentitlementtofuturecompensatedabsences.Shorttermnon-accumulatingcompensatedabsencessuchassickleavearerecognisedwhentheabsencesoccur.
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3. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
(ee) Employeebenefits(Cont’d)
(ii) Definedcontributionplan
Definedcontributionplansarepost-employmentbenefitplansunderwhichtheGrouppaysfixedcontributionsintoseparateentitiesorfundsandwillhavenolegalorconstructiveobligationtopayfurtherifanyofthefundsdonotholdsufficientassetstopayallemployeebenefitsrelatingtoemployeeservicesinthecurrentandprecedingfinancialyears.
Suchcontributionisrecognisedasanexpenseintheincomestatementsasincurred.Asrequiredby law,companies inMalaysiamakecontributions to theEmployeesProvidentFund (“EPF”).SomeoftheGroup’sforeignsubsidiariesmakecontributionstotheirrespectivecountriesstatutorypensionschemes.
(ff) Segmental reporting
TheGrouppreparessegmentalreportingwhereintheoperatingsegmentsareidentifiedonthebasisofinternalreportsontheoperatingsegmentsoftheGroupthatareregularlyreviewedbytheGroup’schiefoperatingdecisionmakerinordertoallocateresourcestothesegmentandtoassessitsperformance.
Inidentifyingtheoperatingsegments,themanagementgenerallyfollowstheGroup’sclassificationofoperatingsegments,whichrepresentthemainproductsandservicesprovidedbytheGroup.Eachoftheseoperatingsegmentsismanagedseparatelyaseachofthesesegmentsrequiresdifferenttechnologiesandresources.Allintersegmenttransfersarecarriedoutatnegotiatedbasis.
4. ADOPTION OF FRSs
TheaccountingpoliciesadoptedbytheGroupandtheCompanyareconsistentwiththoseofthepreviousfinancialyearandinconformitywiththeapplicableFRSs,theapprovedaccountingstandardsforentitiesotherthanprivateentitiesissuedbytheMASB,exceptfortheadoptionofthefollowingnewandrevisedFRSs,AmendmentstoFRSsandIssuesCommitteeInterpretations(“ICInterpretations”)issuedbytheMASBthatbecomeeffectiveandarerelevanttotheGroupandtheCompanyforthefinancialyearbeginning1July2010:-
(a) Adoptionofnewand/orrevisedFRSs,amendmentstoFRSsandICInterpretationsbytheGroupand the Company
At thebeginningof thefinancialyear, theGroupand theCompanyhadadopted the followingnew/revisedStandardsandICInterpretationswhicharerelevanttotheGroupandtheCompanythathavebeenissuedbytheMASB:-
Effectiveforfinancialperiodbeginningonorafter1January2010
AmendmenttoFRS5 Non-currentAssetsHeldforSaleandDiscontinuedOperations.Amendmentrelatingtodisclosuresofnon-currentassets(ordisposalgroups)classifiedasheldforsaleordiscontinuedoperations
FRS7 FinancialInstruments:DisclosuresAmendmentstoFRS7 Financial Instruments :Disclosures.Amendments relating to financial
assetsAmendmenttoFRS8 OperatingSegments.Amendmentrelatingtodisclosureinformationabout
segmentassetsFRS101 PresentationofFinancialStatementsAmendmenttoFRS107 Statement of Cash Flows.Amendment relating to classification of
expendituresonunrecognisedassets
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4. ADOPTION OF FRSs (CONT’D)
(a) Adoptionofnewand/orrevisedFRSs,amendmentstoFRSsandICInterpretationsbytheGroupand the Company (Cont’d)
At thebeginningof thefinancialyear, theGroupand theCompanyhadadopted the followingnew/revisedStandardsandICInterpretationswhicharerelevanttotheGroupandtheCompanythathavebeenissuedbytheMASB:-(Cont’d)
Effectiveforfinancialperiodbeginningonorafter1January2010(Cont’d)
AmendmenttoFRS108 Accounting Policies, Changes inAccounting Estimates and Errors.Amendmentrelatingtoselectionandapplicationofaccountingpolicies
AmendmenttoFRS110 EventsAfter theReportingPeriod.Amendment relating to reason fordividendnotrecognisedasaliabilityattheendofthereportingperiod
AmendmenttoFRS116 Property,PlantandEquipment.Amendmentrelatingtoderecognitionofasset
AmendmenttoFRS117 Leases.AmendmentrelatingtoclassificationofleasesAmendmenttoFRS118 Revenue.AmendmentrelatingtoAppendixofthisstandardandrecognition
andmeasurementAmendmenttoFRS119 EmployeeBenefits.Amendment relating to definition, curtailment and
settlementsFRS123 BorrowingCostsAmendmenttoFRS123 BorrowingCosts.AmendmentrelatingtocomponentsofborrowingcostsAmendmenttoFRS127 ConsolidatedandSeparateFinancialStatements.Amendmentrelatingto
costofaninvestmentinaSubsidiary,JointlyControlledEntityorAssociateAmendmenttoFRS128 Investment inAssociates.Amendment relating to impairment losses in
applicationoftheequitymethodandthescopeofthisstandardAmendmenttoFRS131 InterestsinJointVentures.Amendmentrelatingtoadditionaldisclosure
requiredforjointventurethatdoesnotapplyFRS131AmendmentstoFRS132 Financial Instruments : Presentation.Amendment relating to puttable
financialinstrumentsAmendmenttoFRS134 InterimFinancialReporting.Amendmentrelatingtodisclosureofearnings
pershareAmendmenttoFRS136 ImpairmentofAssets.Amendmentrelatingtothedisclosureofrecoverable
amountAmendmenttoFRS138 IntangibleAssets.AmendmentrelatingtorecognitionofanexpenseFRS139 FinancialInstruments:RecognitionandMeasurementAmendmenttoFRS140 InvestmentProperty.Amendmentrelatingtoinabilitytodeterminefairvalue
reliablyICInterpretation9 ReassessmentofEmbeddedDerivativesAmendmentsto ICInterpretation9 ReassessmentofEmbeddedDerivativesICInterpretation10 InterimFinancialReportingandImpairmentICInterpretation11 FRS2–GroupandTreasuryShareTransactionsICInterpretation13 CustomerLoyaltyProgrammes
Effectiveforfinancialperiodbeginningonorafter1March2010
AmendmentstoFRS132 FinancialInstruments:Presentation.Amendmentsrelatingtoclassificationofrightsissues
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4. ADOPTION OF FRSs (CONT’D)
(a) Adoptionofnewand/orrevisedFRSs,amendmentstoFRSsandICInterpretationsbytheGroupand the Company (Cont’d)
At thebeginningof thefinancialyear, theGroupand theCompanyhadadopted the followingnew/revisedStandardsandICInterpretationswhicharerelevanttotheGroupandtheCompanythathavebeenissuedbytheMASB:-(Cont’d)
Effectiveforfinancialperiodbeginningonorafter1July2010
FRS3 BusinessCombinationsAmendmentstoFRS5 Non-currentAssetsHeldforSaleandDiscontinuedOperations.Amendment
relatingtotheinclusionofnon-currentassetsasheldfordistributiontoownersinthestandards
FRS127 ConsolidatedandSeparateFinancialStatementsAmendmentstoFRS138 IntangibleAssets.AmendmentsrelatingtotherevisiontoFRS3AmendmentstoIC ReassessmentofEmbeddedDerivatives.Amendmentsrelatingtothe Interpretation9 scopeoftheICIntandrevisiontoFRS3ICInterpretation17 DistributionsofNon-cashAssetstoOwners
TheadoptionoftheaboveFRSs,amendmentstoFRSsandICIntepretationsdonothaveanysignificantfinancialeffectonthefinancialstatementsoftheGroupandoftheCompanyintheperiodofinitialapplicationexceptforapplicationofFRS7,FRS101andFRS139ofwhichtheeffectsaresummarisedasbelow:-
(a) FRS 7 : Financial Instruments : Disclosures
FRS7requiresdisclosuresinthefinancialstatementsthatenableuserstoevaluatethesignificanceoffinancial instrumentsontheentity’sfinancialpositionandperformance,andthenatureandextentofrisksarisingfromfinancialinstrumentstowhichanentityisexposedduringtheperiodandatthereportingdate,andhowtheentitymanagesthoserisks.Theprinciples inthisFRScomplementtheprinciplesforpresenting,recognisingandmeasuringfinancialinstrumentsinFRS132FinancialInstruments:PresentationandFRS139FinancialInstruments:RecognitionandMeasurements.
FRS7introducesnewdisclosuresofqualitativeandquantitativeinformationaboutexposuretorisksarisingfromfinancialinstruments,includingsensitivityanalysisandmarketrisk.TheGroupandtheCompanyhaveappliedFRS7prospectivelyinaccordancewiththetransitionalprovisions.Hencethenewdisclosureshavenotbeenappliedtothecomparatives.ThenewdisclosuresareincludedthroughouttheGroup’sandtheCompany’sfinancialstatementsforthefinancialyearended30June2011.
(b) FRS101:PresentationofFinancialStatements
TherevisedFRS101introduceschangesinthepresentationanddisclosuresoffinancialstatements.The revisedStandard separates owner andnon-owner changes in equity. The statement ofchangesinequityincludesdetailsoftransactionswithowners,withallnon-ownerschangesinequitypresentedasasinglelinelabeledastotalcomprehensiveincome.
TheStandardalsointroducesthestatementofcomprehensiveincome;presentingall itemsofincomeandexpense recognised inprofitor loss, togetherwithallother itemsof incomeandexpenserecogniseddirectlyinequity,eitherinonesinglestatement,orintwolinkedstatements.TheGroupandtheCompanyhaveelectedtopresentthisstatementintwolinkedstatements.
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4. ADOPTION OF FRSs (CONT’D)
(a) Adoptionofnewand/orrevisedFRSs,amendmentstoFRSsandICInterpretationsbytheGroupand the Company (Cont’d)
TheadoptionoftheaboveFRSs,amendmentstoFRSsandICIntepretationsdonothaveanysignificantfinancialeffecton thefinancialstatementsof theGroupandof theCompany in theperiodof initialapplicationexceptforapplicationofFRS7,FRS101andFRS139ofwhichtheeffectsaresummarisedasbelow:-(cont’d)
(b) FRS101:PresentationofFinancialStatements(Cont’d)
Inaddition,theadoptionoftheStandardhasresultedintheconsolidatedbalancesheetnowbeingrenamedasconsolidatedstatementoffinancialposition.Astatementoffinancialpositionisrequiredatthebeginningoftheearliestcomparativeperiodfollowingachangeinaccountingpolicy,thecorrectionofanerrorortheclassificationoftermsinthefinancialstatements.TherevisedFRS101alsorequiredGrouptomakenewdisclosurestoenableusersofthefinancialstatementstoevaluatetheGroup’sobjectives,policiesandprocessesformanagingcapitalasdiscloseinNote61tothefinancialstatements.
TherevisedFRS101wasadoptedretrospectivelybytheGroupandtheCompany.
(c) FRS 139 : Financial Instruments – Recognition and Measurement
FRS139setsoutthenewrequirementsfortheclassification,recognitionandmeasurementoftheGroup’sandoftheCompany’sfinancialassetsandliabilities.
Financial instruments are recorded initially at fair value. Subsequentmeasurement of thefinancialinstrumentsinthestatementsoffinancialpositionreflectsthedesignationofthefinancialinstruments.Thedesignationdependsonthenatureofthefinancialassetsandliabilitiesandthepurposeforwhichthefinancialassets/liabilitieswereacquired/incurred.SetoutbelowarethechangesinclassificationsoffinancialassetsandliabilitiesoftheGroupandoftheCompanyasaresultofadoptingFRS139:-
(i) Financialassetsatfairvaluethroughprofitorloss
PriortotheadoptionofFRS139,quotedsecuritiesintendedforshortterminvestmentswereaccountedforatthelowerofcostandmarketvalue.WiththeapplicationofFRS139,shorttermquotedequityinvestmentarenowmeasuredatfairvalueonthedateoftransactionandsubsequentlyre-measuredatfairvaluewithchangesinfairvaluerecognisedintheincomestatements.
(ii) Loansandreceivables
PriortotheadoptionofFRS139,loansandreceivablesweremeasuredatinvoicedamountlessallowancefordoubtfuldebtsandsubjecttoimpairment.WiththeadoptionofFRS139,loansandreceivablesarenowmeasuredatfairvalueplustransactioncostsandsubsequentlyatamortisedcostusingeffectiveinterestmethodandsubjecttoimpairment.
Gainsorlossesarisingfromderecognitionoftheloansandreceivables,effectiveinterestrateamortisationandimpairmentlossesarerecognisedintheincomestatements.
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4. ADOPTION OF FRSs (CONT’D)
(a) Adoptionofnewand/orrevisedFRSs,amendmentstoFRSsandICInterpretationsbytheGroupand the Company (Cont’d)
TheadoptionoftheaboveFRSs,amendmentstoFRSsandICIntepretationsdonothaveanysignificantfinancialeffecton thefinancialstatementsof theGroupandof theCompany in theperiodof initialapplicationexceptforapplicationofFRS7,FRS101andFRS139ofwhichtheeffectsaresummarisedasbelow:-(cont’d)
(c) FRS 139 : Financial Instruments – Recognition and Measurement (Cont’d)
(iii) Heldtomaturityinvestments
InvestmentswhichhavefixedordeterminablepaymentsandfixedmaturityaredesignatedasheldtomaturityinvestmentswhentheGroupandtheCompanyhavetheintentionandability tohold the investments tillmaturity. Such investmentsare initially recognisedatfairvalueincludingtransactioncostsandsubsequentlymeasuredatamortisedcostusingeffectiveinterestmethodandsubjecttoimpairment.
Any changes in relation to amortisation and impairment are recognised in the incomestatements.
(iv) Availableforsaleinvestments
PriortotheadoptionofFRS139,non-currentinvestmentswereaccountedforatcostlessimpairment.Upon the adoption of FRS139, available for sale investments are initiallymeasuredatfairvalueplustransactioncostsandsubsequentlyatfairvalue.Investmentsthatdonothaveaquotedmarketpriceinanactivemarketandwhosefairvaluecannotbe reliablymeasured,aremeasuredatcost.Changes in fairvalueofavailable forsaleinvestmentsmeasuredatfairvaluearerecognisedinothercomprehensiveincome,togetherwiththerelatedcurrencytranslationdifferences,untiltheinvestmentsaredisposedoruntiltheinvestmentsaredeterminedtobeimpaired,atwhichtimethecumulativegainorlossespreviouslyreportedinothercomprehensiveincomeareincludedinincomestatements.
(v) Financialliabilities
TheGroupandtheCompanydonotdesignatefinancialliabilitiesthroughprofitorloss.
TheGroupand theCompanycarryonlyfinancial liabilitiesmeasuredatamortisedcostwhichincludetradeandotherpayablesandloansandborrowings.UnderFRS139,thesefinancialliabilitiesaremeasuredinitiallyatfairvalueandsubsequentlycarriedatamortisedcostusingtheeffectiveinterestmethod.
(vi) Derivativeassets/liabilities
PriortotheadoptionofFRS139,allderivativefinancialinstrumentswererecognisedinthefinancialstatementsonlyuponsettlement.UpontheadoptionofFRS139,thederivativesheldbytheGroupasat1July2010arerecognisedattheirfairvaluetotaling–RM14,339,000andareclassifiedasderivativefinancialliabilitiesinthefinancialstatementsofthesubsidiarycompaniesandassociatedcompaniesconcerned.
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4. ADOPTION OF FRSs (CONT’D)
(a) Adoptionofnewand/orrevisedFRSs,amendmentstoFRSsandICInterpretationsbytheGroupand the Company (Cont’d)
TheadoptionoftheaboveFRSs,amendmentstoFRSsandICIntepretationsdonothaveanysignificantfinancialeffecton thefinancialstatementsof theGroupandof theCompany in theperiodof initialapplicationexceptforapplicationofFRS7,FRS101andFRS139ofwhichtheeffectsaresummarisedasbelow:-(cont’d)
(d) FRS123BorrowingCosts(Revised)
FRS123 (Revised) eliminates the option available under the previous version of FRS123to recognise all borrowing costs immediately as an expense.The revised standard requirescapitalisationofborrowingcoststhataredirectlyattributabletotheacquisition,constructionorproductionofaqualifyingassetaspartofthecostofthatasset.
Asatthereportingdate,RM1,056,000andRM1,222,000ofborrowingcostshavebeencapitalisedonfreeholdlandandbuildingheldunderproperty,plantandequipmentandpropertydevelopmentcostrespectively.
(e) ICInterpretation10InterimFinancialReportingandImpairment
Thisinterpretationprohibitsthereversalofanimpairmentlossrecognisedinapreviousinterimperiodinrespectofgoodwilloraninvestmentineitheranequityinstrumentclassifiedasavailable-for-saleorafinancialassetcarriedatcost.UpontheadoptionofthisInterpretationasof1January2010,theGrouphaschangeditsaccountingpolicyrelatingtothereversalofimpairmentlossesongoodwillorthesefinancialassetsrecognisedinthepriorinterimperiod.InaccordancewiththetransitionalprovisionsoftheInterpretation,theGrouphasappliedtheInterpretationtogoodwillandtoinvestmentsinequityinstrumentsorinfinancialassetscarriedatcostprospectivelyfromthedateatwhichtheGroupfirstappliedFRS136ImpairmentofAssetsandthemeasurementcriteriaofFRS139FinancialInstruments:RecognitionandMeasurementrespectively.
(f) FRS 3 Business Combination
Therevisedstandardcontinuestoapplytheacquisitionmethodtobusinesscombinations,withsomesignificantchanges.Allpaymentstopurchaseabusinessaretoberecordedatfairvalueattheacquisitiondate,withcontingentpaymentsclassifiedasdebtsubsequentlyre-measuredthroughtheincomestatement.Thereisachoicetomeasurethenon-controllinginterestintheacquireeatfairvalueoratthenon-controllinginterest’sproportionateshareoftheacquiree’snetassets.Allacquisition-relatedcostsshouldbeexpensed.
(g) FRS 127 Consolidated and Separate Financial Statements
Therevisedstandardrequirestheeffectsofalltransactionswithnon-controllingintereststoberecordedinequityifthereisnochangeincontrolandthesetransactionswillnolongerresultingoodwillorgainsandlosses.Thestandardalsospecifiestheaccountingwhencontrolislost.Anyremaininginterestintheentityisremeasuredtofairvalue,andagainorlossisrecognisedinincomestatement.Lossesarerequiredtoallocatetonon-controllinginterests,evenifitresultsinthenon-controllinginteresttobeinadeficitposition.
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4. ADOPTION OF FRSs (CONT’D)
(a) Adoptionofnewand/orrevisedFRSs,amendmentstoFRSsandICInterpretationsbytheGroupand the Company (Cont’d)
TheadoptionoftheaboveFRSs,amendmentstoFRSsandICIntepretationsdonothaveanysignificantfinancialeffecton thefinancialstatementsof theGroupandof theCompany in theperiodof initialapplicationexceptforapplicationofFRS7,FRS101andFRS139ofwhichtheeffectsaresummarisedasbelow:-(cont’d)
(h) ICInterpretation17DistributionsofNon-cashAssetstoOwners
Thisinterpretationprovidesguidanceonaccountingforarrangementswherebyanentitydistributesnon-cashassetstoshareholderseitherasadistributionofreservesorasdividends.TheCompanyshouldmeasurethedividendpayableatthefairvalueoftheassetstobedistributedwhenthedividendisappropriatelyauthorisedandisnolongeratthediscretionoftheCompany.Onsettlementofthedividend,thedifferencebetweenthedividendpaidandthecarryingamountoftheassetsdistributedisrecognisedinincomestatement.Ifthedividendremainsunpaidattheendofthefinancialyearend,thedividendpayablecarryingamountisreviewedwithanychangesrecognisedinequity.
InaccordancewiththetransitionalprovisionsforthefirsttimeadoptionofFRS139,theeffectsarisingfromtheadoptionofthisStandardhasbeenaccountedforprospectivelyandthecomparativesperiodresultsarenotrestated.Accordingly,thechangeshavebeenaccountedforbyadjustingand/orreclassifyingthefollowingopeningbalancesinthestatementsoffinancialpositionasat1July2010:-
Balance as at Effect of Balance as at 30.6.2010 adoption 30.6.2010 Aspreviouslystated ofFRS139 Asreclassified RM’000 RM’000 RM’000
Reclassificationofbalances: Non-current assets Longterminvestments 96,454 (96,454) –Availableforsaleinvestments – 43,194 43,194Heldtomaturityinvestments – 53,260 53,260 Current assets Shortterminvestments 5,943 (5,943) –Marketablesecurities 71,643 (71,643) –Heldtomaturityinvestments – 5,943 5,943Financialassetsatfairvalue throughprofitorloss – 71,643 71,643
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4. ADOPTION OF FRSs (CONT’D)
(a) Adoptionofnewand/orrevisedFRSs,amendmentstoFRSsandICInterpretationsbytheGroupand the Company (Cont’d)
InaccordancewiththetransitionalprovisionsforthefirsttimeadoptionofFRS139,theeffectsarisingfromtheadoptionofthisStandardhasbeenaccountedforprospectivelyandthecomparativesperiodresultsarenotrestated.Accordingly,thechangeshavebeenaccountedforbyadjustingand/orreclassifyingthefollowingopeningbalancesinthestatementsoffinancialpositionasat1July2010:-
Balance as at Effect of Balance as at 30.6.2010 adoption 1.7.2010 Asreclassified ofFRS139 Asrestated RM’000 RM’000 RM’000Restatement of opening balancesasat1.7.2010:Non-current assets Availableforsaleinvestments 43,194 6,760 49,954Associatecompanies 17,084 (1,321) 15,763 Current liabilities Derivativefinancialliabilities – 13,018 13,018 EquityAvailableforsaleinvestmentreserves – 6,760 6,760Retainedearnings 89,074 (14,339) 74,735
(b) Newand/orrevisedFRSs,amendmentstoFRSsandICInterpretationsthatareissuedbutnotyeteffective
TheGroupand theCompanyhavenot early adopted the followingnew/revisedStandardsand ICIntepretationswhichareapplicabletotheGroupandtheCompanythathavebeenissuedbytheMASBbutnotyeteffectiveasatthedateofthisreport:-
Effectiveforfinancialperiodbeginningonorafter30August2010
Amendmentto ICIntepretation15 AgreementsfortheConstructionofRealEstate
Effectiveforfinancialperiodsbeginningonorafter1January2011
AmendmentstoFRS2 GroupCash-settledShare-basedPaymentTransactionsAmendmentstoFRS3 BusinessCombinations.Amendmentsrelatingtomeasurementofnon-
controllinginterestsandun-replacedandvoluntarilyreplacedshare-basedpaymentawards
AmendmentstoFRS7 ImprovingDisclosuresaboutFinancialInstrumentsAmendmentstoFRS101 PresentationofFinancialStatements.Amendmentsrelatingtoclarification
ofstatementofchangesinequityAmendmentstoFRS121 TheEffectsofChangesinForeignExchangeRates.Amendmentrelating
totransitionrequirementsforamendmentsarisingasaresultofFRS127ConsolidatedandSeparateFinancialStatements
AmendmentstoFRS128 InvestmentsinAssociates.AmendmentrelatingtotransitionrequirementsforamendmentsarisingasaresultofFRS127ConsolidatedandSeparateFinancialStatements
AmendmentstoFRS131 Investments in Joint Ventures.Amendment relating to transitionrequirementsforamendmentsarisingasaresultofFRS127ConsolidatedandSeparateFinancialStatements
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4. ADOPTION OF FRSs (CONT’D)
(b) Newand/orrevisedFRSs,amendmentstoFRSsandICInterpretationsthatareissuedbutnotyeteffective(Cont’d)
TheGroupand theCompanyhavenot early adopted the followingnew/revisedStandardsand ICIntepretationswhichareapplicabletotheGroupandtheCompanythathavebeenissuedbytheMASBbutnotyeteffectiveasatthedateofthisreport:-(Cont’d)
Effectiveforfinancialperiodsbeginningonorafter1January2011(Cont’d)
AmendmentstoFRS132 Financial Instruments : Presentation.Amendment relating to transitionrequirementsforcontingentconsiderationfromabusinesscombinationthatoccurredbeforetheeffectivedateoftherevisedFRS(consequentialamendmentsarisingfromImprovementstoFRSs(2010)–FRS3)
AmendmentstoFRS134 InterimFinancialReporting.Amendmentrelatingtosignificanteventsandtransactions
AmendmentstoFRS139 Financial Instruments :Recognition andMeasurements.Amendmentsrelatingtoeligiblehedgeditems,reclassificationoffinancialassetsandembeddedderivatives
ICInterpretation4 DeterminingWhetheranArrangementcontainsaLeaseAmendmentstoIC Interpretation13 CustomerLoyaltyProgrammes(ImprovementstoFRS(2010))
Effectiveforfinancialperiodsbeginningonorafter1July2011
ICInterpretation19 ExtinguishingFinancialLiabilitieswithequityinstruments
Effectiveforfinancialperiodsbeginningonorafter1January2012
FRS124 RelatedPartyDisclosuresICInterpretation15 AgreementsfortheConstructionofRealEstate
TheamendmentstoFRSsandICInterpretationsthatareeffectiveforfinancialperiodsbeginningonorafter1July2011willbeadoptedintheannualfinancialstatementsoftheGroupandoftheCompanyforthefinancialyearcommencing1July2011.Otherthanchangesindisclosurerequirements,theadoptionoftheseamendmentstoFRSsandICInterpretationsarenotexpectedtohaveanymaterialfinancialimpactonthefinancialstatementsoftheGroupandoftheCompanyuponinitialapplication.
5. PRINCIPAL ACTIVITIES AND GENERAL INFORMATION
TheprincipalactivitiesoftheCompanyareinvestmentholdingandtheprovisionofmanagementservices.Theprincipalactivitiesofitssubsidiarycompanies,associatecompaniesandjointlycontrolledentitiesaredisclosedinNote55to57tothefinancialstatements.TherewerenosignificantchangesintheGroup’sactivitiesduringthefinancialyearotherthanthedilutionoftheGroup’sinterestincertainsubsidiarycompaniestoassociatecompaniesduringthefinancialyear.
TheCompanyisapubliclimitedliabilitycompany,incorporatedanddomiciledinMalaysia,andislistedontheMainMarketofBursaMalaysiaSecuritiesBerhad.TheregisteredofficeoftheCompanyislocatedatNo.45-5,TheBoulevard,MidValleyCity,LingkaranSyedPutra,59200KualaLumpur.TheprincipalplaceofbusinessoftheCompanyislocatedatSuite23.02,Level23,TheGardensSouthTower,MidValleyCity,LingkaranSyedPutra,59200KualaLumpur.
ThefinancialstatementswereauthorisedforissuebytheBoardofDirectorsinaccordancewitharesolutionoftheDirectorson20October2011.
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6. PROPERTY,PLANTANDEQUIPMENT
Group
Office Plant furniture, Landand and Motor fittingsand2011 buildings machinery vehicles Renovation equipment Total RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
Cost Atbeginningoffinancialyear 21,788 45,760 35,081 6,928 17,004 126,561Additions – 383 5,120 1,857 1,892 9,252Disposals – – (3,912) (30) (18) (3,960)Acquisitionofsubsidiarycompanies – – 7,459 237 4,770 12,466Disposalofsubsidiarycompanies – – (131) (159) (5,204) (5,494)Exchangedifferences – 507 104 26 34 671Deconsolidationofsubsidiarycompanies (7,968) (36,353) (135) (3,902) (5,459) (53,817)Writtenoff – – (42) (416) (920) (1,378)
Atendoffinancialyear 13,820 10,297 43,544 4,541 12,099 84,301
Accumulated depreciation Atbeginningoffinancialyear 3,068 28,947 16,130 3,764 12,192 64,101Chargeforthefinancialyear 283 955 4,831 472 766 7,307Disposals – – (2,930) (29) (13) (2,972)Acquisitionofsubsidiarycompanies – – 2,227 172 4,572 6,971Disposalofsubsidiarycompanies – – (15) (123) (4,552) (4,690)Exchangedifferences – 511 32 24 31 598Deconsolidationofsubsidiarycompanies (405) (20,256) (45) (2,212) (2,355) (25,273)Writtenoff – – (32) (348) (912) (1,292)
Atendoffinancialyear 2,946 10,157 20,198 1,720 9,729 44,750 Net carrying amount asat30June2011 10,874 140 23,346 2,821 2,370 39,551
Analysisoflandandbuildings:-
Short term Freehold Freehold leasehold2011 land building buildings Total RM’000 RM’000 RM’000 RM’000
Cost Atbeginningoffinancialyear 1,530 12,290 7,968 21,788Deconsolidationofsubsidiarycompanies – – (7,968) (7,968)
Atendoffinancialyear 1,530 12,290 – 13,820 Accumulated depreciation Atbeginningoffinancialyear – 2,700 368 3,068Chargeforthefinancialyear – 246 37 283Deconsolidationofsubsidiarycompanies – – (405) (405) Atendoffinancialyear – 2,946 – 2,946 Net carrying amount asat30June2011 1,530 9,344 – 10,874
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6. PROPERTY,PLANTANDEQUIPMENT(CONT’D)
Group (Cont’d)
Office Plant furniture, Landand and Motor fittingsand2010 buildings machinery vehicles Renovation equipment Total RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
CostAtbeginningoffinancialyear 21,788 40,925 32,104 5,855 15,566 116,238Additions – 5,278 7,579 1,149 1,793 15,799Disposals – (8) (4,600) (7) (95) (4,710)Exchangedifferences – (435) (2) (19) (54) (510)Writtenoff – – – (50) (206) (256)
Atendoffinancialyear 21,788 45,760 35,081 6,928 17,004 126,561
Accumulated depreciationAtbeginningoffinancialyear 2,645 18,459 15,337 2,541 10,729 49,711Chargeforthefinancialyear 423 10,918 4,490 1,253 1,756 18,840Disposals – (2) (3,696) (1) (36) (3,735)Exchangedifferences – (428) (1) (18) (53) (500)Writtenoff – – – (11) (204) (215)
Atendoffinancialyear 3,068 28,947 16,130 3,764 12,192 64,101
Net carrying amount asat30June2010 18,720 16,813 18,951 3,164 4,812 62,460
Analysisoflandandbuildings:-
Short term Freehold Freehold leasehold2010 land building buildings Total RM’000 RM’000 RM’000 RM’000
Cost Atbeginningandendoffinancialyear 1,530 12,290 7,968 21,788 Accumulated depreciation Atbeginningoffinancialyear – 2,454 191 2,645Chargeforthefinancialyear – 246 177 423 Atendoffinancialyear – 2,700 368 3,068 Net carrying amount asat30June2010 1,530 9,590 7,600 18,720
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6. PROPERTY,PLANTANDEQUIPMENT(CONT’D)
Company
Furniture Motor and Computer Office2011 vehicle Renovation fittings equipment equipment Total RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
Cost Atbeginningoffinancialyear 185 116 905 194 294 1,694Additions – – – 3 1 4Writtenoff – – (327) (96) (95) (518) Atendoffinancialyear 185 116 578 101 200 1,180 Accumulated depreciation Atbeginningoffinancialyear 185 29 548 146 205 1,113Chargeforthefinancialyear – 22 52 19 18 111Writtenoff – – (324) (95) (93) (512) Atendoffinancialyear 185 51 276 70 130 712 Net carrying amount asat30June2011 – 65 302 31 70 468
2010
Cost Atbeginningoffinancialyear 185 7 603 193 253 1,241Additions – 109 302 1 41 453 Atendoffinancialyear 185 116 905 194 294 1,694 Accumulated depreciation Atbeginningoffinancialyear 176 6 495 124 182 983Chargeforthefinancialyear 9 23 53 22 23 130 Atendoffinancialyear 185 29 548 146 205 1,113 Net carrying amount asat30June2010 – 87 357 48 89 581
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6. PROPERTY,PLANTANDEQUIPMENT(CONT’D)
(a) Thenetcarryingamountofproperty,plantandequipmentpledgedtolicensedbanksforbankingfacilitiesgrantedtotheGroupareasfollows:-
Group 2011 2010 RM’000 RM’000 Plantandmachinery – 3,912 Freeholdlandandbuildings 10,874 11,120 Shorttermleaseholdbuildings – 1,824 10,874 16,856
(b) Thenetcarryingamountofproperty,plantandequipmentacquiredunderhirepurchasearrangementsareasfollows:-
Group 2011 2010 RM’000 RM’000
Motorvehicles 21,506 17,238 Plantandmachinery – 1,267 21,506 18,505
7. PREPAIDLANDLEASEPAYMENTS
Group 2011 2010 RM’000 RM’000
Cost Atbeginningoffinancialyear 4,985 4,985Deconsolidationofsubsidiarycompanies (4,985) – Atendoffinancialyear – 4,985 Accumulated amortisation Atbeginningoffinancialyear 204 92Amortisedduringthefinancialyear 21 112Deconsolidationofsubsidiarycompanies (225) – Atendoffinancialyear – 204 Net carrying amount – 4,781
Analysedas:- Shorttermleaseholdland – 4,781
IncludedinprepaidlandleasepaymentsinthepreviousfinancialyearwasnetcarryingamountofRM1,736,000
pledgedtoalicensedbankforbankingfacilitiesgrantedtoasubsidiarycompany.
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8. INVESTMENT PROPERTIES
Group Leasehold Long term land and Freehold leasehold buildings Freehold land and land and under land buildings buildings construction Total
2011 RM’000 RM’000 RM’000 RM’000 RM’000 Atbeginningoffinancialyear -atvaluation(restated) 10,240 35,913 40,655 – 86,808-atcost – – – 3,943 3,943 10,240 35,913 40,655 3,943 90,751Fairvaluegain 490 4,802 5,900 - 11,192Transfertonon-currentassets classifiedasheldforsale – – – (1,243) (1,243)Exchangedifferences – 1,722 323 – 2,045 Atendoffinancialyear -atvaluation 10,730 42,437 46,878 – 100,045-atcost – – – 2,700 2,700 Net carrying amount asat30June2011 10,730 42,437 46,878 2,700 102,745
2010 Atbeginningoffinancialyear -atvaluation(restated) 9,260 22,108 35,460 – 66,828-atcost – – – 10,693 10,693 9,260 22,108 35,460 10,693 77,521Additions – 11,509 5,601 – 17,110Fairvaluegain 980 4,862 1,623 – 7,465Disposals – (175) (2,031) – (2,206)Transfertonon-currentassets classifiedasheldforsale – (1,650) – (6,750) (8,400)Exchangedifferences – (741) 2 – (739) Atendoffinancialyear -atvaluation 10,240 35,913 40,655 – 86,808-atcost – – – 3,943 3,943 Net carrying amount asat30June2010 10,240 35,913 40,655 3,943 90,751
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8. INVESTMENT PROPERTIES (CONT’D)
(a) Priorto1July2010,investmentpropertiesarestatedatcostlessdepreciationandimpairmentlosseswiththeexceptionofleaseholdlandandbuildingsunderconstructionwhichisnotdepreciated.Duringthefinancialyear,theCompanychangeditsaccountingpolicyforinvestmentpropertiestobestatedatfairvalue.ThischangeinaccountingpolicyhasbeenaccountedforretrospectivelyandtheeffectsofthischangearedisclosedinNote63tothefinancialstatements.
Thefairvalueoftheinvestmentpropertiesweredeterminedbyindependentprofessionalvaluer,financialinstitutions’ valuers and on recorded transaction values used for similar properties in the locationconcernedbasedoncurrentpricesintheactivemarketforsimilarproperties.
(b)ThecarryingamountofinvestmentpropertiespledgedtolicensedbanksforbankingfacilitiesgrantedtotheGroupareasfollows:-
Group (Restated) 2011 2010 RM’000 RM’000
Freeholdlandandbuildings 41,958 35,473Longtermleaseholdlandandbuildings 46,878 40,655 88,836 76,128
(c) TherentalincomeandassociateddirectoperatingexpensesoftheinvestmentpropertiesaredisclosedinNote35and39tothefinancialstatements.
9. LAND HELD FOR DEVELOPMENT
Group 2011 2010 RM’000 RM’000
Atbeginningandendoffinancialyear Leaseholdland,atcost 25,558 25,558 Developmentcostandincidentalexpenses 12,018 12,018 37,576 37,576
IncludedindevelopmentcostandincidentalexpensesisinterestandfinancingcostofRM11,989,000(2010:RM11,989,000).
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10.AVAILABLEFORSALEINVESTMENTS
Group Company 2011 2010 2011 2010 RM’000 RM’000 RM’000 RM’000
UnquotedinvestmentinMalaysia,atcost 1,575 1,575 – –
QuotedsecuritiesinMalaysia-atcost – 33,296 – –-atvaluation 47,219 – – –QuotedsecuritiesoutsideMalaysia-atvaluation – 7,188 – –Otherinvestments,atcost 1,825 1,825 345 345 50,619 43,884 345 345Add/(Less):Exchangedifferences – (490) – –Accumulatedamortisation (200) (200) – –
50,419 43,194 345 345
Marketvalueofquotedsecurities-inMalaysia 47,219 40,056 – –-outsideMalaysia – 6,698 – – 47,219 46,754 – –
11. HELDTOMATURITYINVESTMENTS
Group 2011 2010 RM’000 RM’000
Non-current (maturity later than 1 year) Unquotedcorporatebonds,atcost -inMalaysia 1,000 1,000-outsideMalaysia 41,259 54,026
42,259 55,026Add/(Less): Accretionofdiscounts (686) (1,823) Amortisationofpremiums 12 57
41,585 53,260
Current(maturitywithin1year)UnquotedcorporatebondsoutsideMalaysia,atcost 13,754 5,947
Add/(Less): Accretionofdiscounts (32) (1) Amortisationofpremiums 6 1 Exchangedifferences (19) (4)
13,709 5,943
55,294 59,203
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11. HELDTOMATURITYINVESTMENTS(CONT’D)
TheGroup’sinvestmentsinunquotedcorporatebondsoutsideMalaysiahavebeenchargedtoalicensedfinancialinstitutionforcreditfacilitiesgrantedtocertainsubsidiarycompanies.
Theeffectiveinterestrateperannumforheldtomaturityinvestmentsare3.41%to13.0%(2010:3.41%to13.0%).
12. SUBSIDIARYCOMPANIES
Company 2011 2010 RM’000 RM’000
(a) Unquotedshares,atcost 212,469 182,469
Add/(Less): Subscriptionofsharesinasubsidiarycompany – 30,000 Accumulatedimpairmentlosses (49,780) (49,780) 162,689 162,689
TheCompany’sequityinterestinsubsidiarycompanies,theirrespectiveprincipalactivitiesandcountriesofincorporationareshowninNote55tothefinancialstatements.
(b) Amountduefrom/(to)subsidiarycompanies
Company 2011 2010 RM’000 RM’000
Amountduefromsubsidiarycompanies 649,427 637,543 Less:Allowancefordoubtfuldebts (4,619) (4,619)
644,808 632,924
Theamountduefrom/(to)subsidiarycompaniesareinterestbearing(exceptforcertainadvanceswhichareinterestfree)andarerepayableondemand.
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13. ASSOCIATE COMPANIES
Group Company (Restated) 2011 2010 2011 2010 RM’000 RM’000 RM’000 RM’000
(a)Unquotedshares,atcost 22,343 8,737 1,184 1,184 Add: Group’sshareofpostacquisition profitslesslosses 19,256 8,358 – – Group’sshareofexchange translationreserve 129 (11) – –
41,728 17,084 1,184 1,184
Representedby:- Shareofnetassets 40,829 15,717 Goodwillonacquisition 899 1,367 41,728 17,084
TheGroup’sandtheCompany’sequityinterestintheassociatecompanies,theirrespectiveprincipalactivitiesandcountriesofincorporationareshowninNote56tothefinancialstatements.
(b)Theamountduefrom/(to)associatecompaniesareinterestfreeandisrepayableondemand.
(c) ThesummarisedfinancialinformationoftheassociatedcompaniesnotadjustedfortheproportionofownershipinterestsheldbytheGroupareasfollows:-
Group (Restated) 2011 2010 RM’000 RM’000
Assets and liabilities Non-currentassets 133,064 63,752Currentassets 229,781 66,802Non-currentliabilities (12,115) (7,147)Currentliabilities (251,183) (79,441)
Netassets 99,547 43,966
Results Revenue 288,584 119,201Profitforthefinancialyear 31,681 9,614
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14. JOINTLYCONTROLLEDENTITIES
Group 2011 2010 RM’000 RM’000
(a) Unquotedshares,atcost 28,917 28,917 Group’sshareofpostacquisitionprofitlesslosses 16,180 (480) Group’sshareofexchangetranslationreserve (4,599) (4,315)
40,498 24,122
TheGroup’s equity interest in the jointly controlled entities, their respective principal activities andcountriesofincorporationareshowninNote57tothefinancialstatements.
(b) ThesummarisedfinancialinformationofthejointlycontrolledentitiesnotadjustedfortheproportionofownershipinterestsheldbytheGroupareasfollows:-
Group 2011 2010 RM’000 RM’000
Assets and liabilities Non-currentassets 150,927 104,103Currentassets 8,514 8,912Non-currentliabilities (60,538) (61,260)Currentliabilities (17,906) (3,511)
Netassets 80,997 48,244
Results Revenue 6,375 5,671Profit/(Loss)forthefinancialyear 33,320 (961)
(c) Thejointlycontrolledentitiesdonothaveanycontingentliabilitiesasat30June2011and30June2010.
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15. INTANGIBLE ASSETS
Group Stockbroking Development Trademarks dealer’s expenditure and2011 license capitalised patents Total RM’000 RM’000 RM’000 RM’000
CostAtbeginningoffinancialyear 45,500 165 104 45,769Additions – – 13 13 Atendoffinancialyear 45,500 165 117 45,782
Accumulated amortisationAtbeginningoffinancialyear 13,565 140 20 13,725Chargeforthefinancialyear 1,628 25 18 1,671 Atendoffinancialyear 15,193 165 38 15,396
Accumulated impairment lossesAtbeginningandendoffinancialyear 12,400 – – 12,400
Net carrying amount asat30June2011 17,907 – 79 17,986
2010
CostAtbeginningoffinancialyear 45,500 165 93 45,758Additions – – 22 22Writtenoff – – (11) (11) Atendoffinancialyear 45,500 165 104 45,769 Accumulated amortisation Atbeginningoffinancialyear 11,937 96 12 12,045Chargeforthefinancialyear 1,628 44 8 1,680 Atendoffinancialyear 13,565 140 20 13,725 Accumulated impairment losses Atbeginningandendoffinancialyear 12,400 – – 12,400
Net carrying amount asat30June2010 19,535 25 84 19,644
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15. INTANGIBLE ASSETS (CONT’D)
Impairment testing of stock broking dealer’s license
Thestockbrokingdealer’slicensehadbeenallocatedtotheKualaLumpurbranchofthestockbrokingsubsidiarycompany’scashgeneratingunit(“CGU”),areportablesegmentforimpairmenttesting.TherecoverableamountoftheKualaLumpurbranchCGUhasbeendeterminedbasedonvalueinusecalculationusingcashflowprojectionsapprovedbythemanagementofthestockbrokingsubsidiarycompany.Thediscountrateappliedtothecashflowprojectionsis9%.TherecoverableamountoftheKualaLumpurbranchCGUiscomparedtothetotalcarryingamountofthedealer’slicense.
KeyassumptionsusedinvalueinusecalculationofKualaLumpurBranchCGU
Thekeyassumptionsonwhichthemanagementofthestockbrokingsubsidiarycompanyhasbaseditscashflowprojectionstoundertakeimpairmenttestingofthestockbrokingdealer’slicenseare:
(a) Budgeted gross brokerage rate and gross margin rate
ThisisdeterminedbasedontheCGU’spastperformanceandthemanagement’sexpectationforthemarketdevelopment.
(b) Operational costs
Otheroperationalcostsareexpected to increase in linewithexpected inflationorexpansionof thebranch’sstockbrokingbusiness.
16. GOODWILL
Group 2011 2010 RM’000 RM’000
Atbeginningoffinancialyear – 184Add: Goodwillarisingfromacquisitionofasubsidiarycompany(Note47(c)) 284 –Less:Writtenoffduringthefinancialyear (284) (184)
Atendoffinancialyear – –
ThegoodwillrepresentstheexcessofthepurchaseconsiderationpaidforthesharesinthesubsidiarycompaniesovertheGroup’sinterestinthefairvalueoftheidentifiablenetassetsofthesubsidiarycompaniesacquired.
Thecarryingamountofgoodwillwaswrittendowntonil.
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17. DEFERREDTAXASSETS/(LIABILITIES)
Group Company (Restated) 2011 2010 2011 2010 RM’000 RM’000 RM’000 RM’000
Atbeginningoffinancialyear (2,242) (4,796) (104) –Recognisedintheincome statements(Note42) (1,591) 2,554 – (104)Exchangedifferences (2) – – –Acquisitionofsubsidiarycompanies (Note47(c)) (49) – – –Deconsolidationofsubsidiarycompanies(Note49) (715) – – – Atendoffinancialyear (4,599) (2,242) (104) (104)
Presentedasfollows:- Deferredtaxassets 3,674 4,644 – –Deferredtaxliabilities (8,273) (6,886) (104) (104) (4,599) (2,242) (104) (104)
Thecomponentsofdeferredtaxassetsandliabilitiesduringthefinancialyearareasfollows:-
Deferredtaxassets
Group Temporary Unabsorbed differencesbetween Unutilised capital depreciation and taxlosses allowances capitalallowances Total RM’000 RM’000 RM’000 RM’000
2011
Atbeginningoffinancialyear 3,274 564 806 4,644Recognisedintheincomestatements (260) 295 39 74Acquisitionofsubsidiarycompanies 107 6 – 113Deconsolidationofsubsidiarycompanies (123) (229) (806) (1,158)Exchangedifferences 1 – – 1 Atendoffinancialyear 2,999 636 39 3,674
2010 Atbeginningoffinancialyear 1,398 156 16 1,570Recognisedintheincomestatements 1,876 408 790 3,074
Atendoffinancialyear 3,274 564 806 4,644
Theunutilisedtaxlossesandunabsorbedcapitalallowancesareavailableforoffsetagainstfuturetaxableprofits.Theutilisationofthedeferredtaxassetsisdependentonfuturetaxableprofitsinexcessoftheprofitsarisingfromthereversalofexistingtaxabletemporarydifferences.
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17. DEFERREDTAXASSETS/(LIABILITIES)(CONT’D)
Thecomponentsofdeferredtaxassetsandliabilitiesduringthefinancialyearareasfollows:-(cont’d)
Deferredtaxliabilities
Group Fairvalue Temporary gainon differencesbetween investment depreciationand properties capitalallowances Total RM’000 RM’000 RM’000
2011
Atbeginningoffinancialyear(Restated) 6,072 814 6,886Recognisedintheincomestatements 1,393 272 1,665Acquisitionofsubsidiarycompanies – 162 162Deconsolidationofsubsidiarycompanies – (443) (443)Exchangedifferences – 3 3 Atendoffinancialyear 7,465 808 8,273
2010 Atbeginningoffinancialyear(Restated) 5,390 976 6,366Recognisedintheincomestatements(Restated) 682 (162) 520 Atendoffinancialyear(Restated) 6,072 814 6,886
Company Temporary differencesbetween depreciation and capitalallowances Total RM’000 RM’000
2011
Atbeginningandendoffinancialyear 104 104
2010 Atbeginningoffinancialyear – –Recognisedintheincomestatement 104 104 Atendoffinancialyear 104 104
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17. DEFERREDTAXASSETS/(LIABILITIES)(CONT’D)
Asatreportingdate,theGrouphasdeferredtaxassetsnotrecognisedinthefinancialstatementsasfollows:-
Group 2011 2010 RM’000 RM’000
Temporarydifferencesbetweendepreciationandcapitalallowances 328 298Unutilisedtaxlosses (23,003) (24,258)Unabsorbedcapitalallowances (1,656) (1,747) (24,331) (25,707)
Theaboveunutilised tax lossesandunabsorbedcapitalallowancesareavailable foroffsetagainst futuretaxableprofits.DeferredtaxassetsinrespectoftheseitemshavenotbeenrecognisedasitwasnotcertainthatfuturetaxableprofitwillbeavailableagainstwhichtheGroupcanutilisethebenefits.
18. PROPERTYDEVELOPMENTCOSTS
Group Freehold Leasehold Development land land cost Total RM’000 RM’000 RM’000 RM’000
2011 Accumulatedcostatbeginning offinancialyear 8,917 12,147 139,778 160,842Costsincurredduringthefinancialyear – 4 7,997 8,001Accumulatedcostsrecognisedas expenseinincomestatements (8,125) (10,169) (136,261) (154,555)Unsoldunitstransferredtoinventories (792) (1,982) (6,441) (9,215) Atendoffinancialyear – – 5,073 5,073
2010 Accumulatedcostatbeginning offinancialyear 8,917 12,106 98,001 119,024Costsincurredduringthefinancialyear – 41 41,777 41,818Accumulatedcostsrecognisedas expenseinincomestatements (8,125) (9,817) (124,380) (142,322)Unsoldunitstransferredtoinventories (792) (1,172) (9,601) (11,565) Atendoffinancialyear – 1,158 5,797 6,955
IncludedinpropertydevelopmentcostsincurredisinterestexpensesofRM1,222,000(2010:RM1,222,000).
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19. INVENTORIES
Group 2011 2010 RM’000 RM’000
Atcost,Unsoldunitsofapartmentsandhouses 10,598 11,565Consumables 23 23Electronic,multimediaandcomputerdevices,componentsandperipherals 3,578 16,645Paintingworks 32 –Wines 4,228 4,826 18,459 33,059
Atnetrealisablevalue, Electronic,multimediaandcomputerdevices,componentsandperipherals 277 391Wines 113 134 390 525
18,849 33,584
Duringthefinancialyear,theamountofinventoriesrecognisedasanexpenseinthecostofsaleoftheGroupwasRM1,645,000(2010:RM1,836,000).Thereversalofwrite-downofinventorieswasmadeduringthefinancialyearwhentherelatedinventoriesweresoldabovetheircarryingamounts.
20. TRADERECEIVABLES
Group 2011 2010 RM’000 RM’000
Tradereceivables 255,839 246,069Less:Allowanceforimpairment (76,783) (74,109)
179,056 171,960
Tradereceivablesarerecognisedattheiroriginalinvoiceamountswhichrepresenttheirfairvaluesoninitialrecognition.
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20. TRADERECEIVABLES(CONT’D)
TheageinganalysisoftheGroup’stradereceivablesisasfollows:
Group 2011 2010 RM’000 RM’000
Neitherpastduenorimpaired 80,159 51,690
1to30dayspastduenotimpaired 1,322 6,20431to60dayspastduenotimpaired 413 1,76161to90dayspastduenotimpaired 657 2,19591to120dayspastduenotimpaired 1,518 2,609Morethan121dayspastduenotimpaired 94,987 107,501
Impaired 76,783 74,109 255,839 246,069
Tradereceivablethatisneitherpastduenorimpairedarecreditworthydebtorswithinsignificantlossesnoted.ThesetradereceivablesamountingtoRM75,308,000(2010:RM19,204,000)aresecuredinnature.
TradereceivablesthatarepastduebutnotimpairedamountingtoRM92,836,000(2010:RM106,778,000)aresecuredinnature.TheremainingbalanceoftradereceivablesofRM6,061,000(2010:RM13,492,000)thatarepastduebutnotimpairedareunsecuredinnatureandthemanagementisoftheviewitisrecoverableanditrelatestoanumberofindependentcustomersfromwhomthereisnorecenthistoryofdefault.
TradereceivablesthatareimpairedamountingtoRM76,783,000(2010:RM74,109,000)relatetoreceivablesthatareinsignificantfinancialdifficultiesandhavedefaultedonrepayments.Thesereceivablesarenotsecuredbyanycollateral.
Themovementoftheallowanceaccountusedtorecordtheimpairmentisasfollows:
Group 2011 2010 RM’000 RM’000
Atbeginningoffinancialyear 74,109 74,801Chargeforthefinancialyear 2,868 474Acquisitionofasubsidiarycompany 17 –Writtenoffagainsttradereceivables (28) (938)Exchangedifferences (28) (58)Reversal/Writebackduringthefinancialyear (155) (170)
Atendoffinancialyear 76,783 74,109
21. ACCRUED BILLINGS
Group 2011 2010 RM’000 RM’000
Revenuerecognisedasincometo-date 116,568 151,362Less:Progressbillingsto-date (116,568) (145,444)
Accruedbillingsinrespectofpropertydevelopmentactivities – 5,918
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22. OTHERRECEIVABLES,DEPOSITSANDPREPAYMENTS
Group Company 2011 2010 2011 2010 RM’000 RM’000 RM’000 RM’000
Sundryreceivables 25,991 24,011 9,072 9,183Depositspaid 4,681 4,098 697 698Prepayments 2,432 1,360 27 28 33,104 29,469 9,796 9,909Less:Allowanceforimpairment (668) – – –
32,436 29,469 9,796 9,909
TheGroup’sandCompany’ssundryreceivablesarecreditworthydebtorswithinsignificantlossesnotedandarerepayableondemand.TheGroup’sandtheCompany’sdepositspaidarenotimpaired.
Themovementoftheallowanceaccountusedtorecordtheimpairmentisasfollows:
Group Company 2011 2010 2011 2010 RM’000 RM’000 RM’000 RM’000
Atbeginningoffinancialyear – 192 – 192Chargeforthefinancialyear 668 – – –Reversal/Writebackduringthe financialyear – (192) – (192) Atendoffinancialyear 668 – – –
23. FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS
Group 2011 2010 RM’000 RM’000
Quotedsecurities,atmarketvalue -inMalaysia 41,744 50,697 -outsideMalaysia 56,534 21,530 98,278 72,227Add/(Less):Exchangedifferences 101 (584) 98,379 71,643
TheGroup’s financial assets at fair value through profit or loss amounting toRM37,130,000 (2010:RM17,021,000)arepledgedtocertainlicensedbanksandfinancialinstitutionsforbankingfacilitiesgrantedtotheGroup.
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24. DEPOSITSWITHLICENSEDBANKSANDFINANCIALINSTITUTIONS
Group 2011 2010 RM’000 RM’000
Depositsplacedwith:- -licensedbanks 319,236 225,080 -otherlicensedfinancialinstitutions 123,068 300,919
442,304 525,999
Includedunderdepositsplacedwithlicensedbanksandfinancialinstitutionsare:
(a) fixeddepositsofRM123,544,000(2010:RM235,840,000)whichhavebeenpledgedtolicensedbanksandfinancialinstitutionsassecurityforbankingandcreditfacilitiesgrantedtotheGroup.
(b) remisiers’ and dealers’ deposits and clients’ trustmonies received of RM162,858,000 (2010:RM173,824,000).
Theeffectiveinterestrateperannumfordepositswithlicensedbanksandfinancialinstitutionsare0.001%to
5.00%(2010:0.001%to5.00%).
25. CASH AND BANK BALANCES
IncludedinthecashandbankbalancesoftheGroupare:
(a) anamountofRM8,705,000(2010:RM3,680,000)whichrepresentsremisiers’anddealers’depositsandclients’trustmoniesreceived.
(b) anamountofRM2,893,000(2010:RM7,519,000)maintainedpursuanttoSection7AoftheHousingDevelopment(ControlandLicensing)Act,1966andarerestrictedfromuseinotheroperations.Thewithdrawalof funds fromthehousingdevelopmentaccountsare restricted topropertydevelopmentcostsincurredinrespectofthedevelopmentprojects.
(c) anamountofRM18,812,000(2010:RM17,328,000)pledgedtocertain licensedbanksandfinancialinstitutionsforbankingfacilitiesgrantedtotheGroup.
26. NON-CURRENTASSETSCLASSIFIEDASHELDFORSALE
Thenon-currentassetsclassifiedasheldforsaleareasfollows:-
Group (Restated) 2011 2010 RM’000 RM’000
Investmentproperties Freeholdlandandbuildings,atvaluation – 1,650Leaseholdlandandbuildingsunderconstruction 7,993 6,750 7,993 8,400Availableforsaleinvestments Clubmemberships,atcost – 193
7,993 8,593
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26. NON-CURRENTASSETSCLASSIFIEDASHELDFORSALE(CONT’D)
Inthepreviousfinancialyear,certaininvestmentpropertiesandavailableforsaleinvestmentsoftheGroupwerereclassifiedtonon-currentassetsclassifiedasheldforsaledueto:-
(a) Awholly-ownedsubsidiarycompanyentered intoseveralSaleandPurchaseAgreementswith thirdpartiesforthedisposalofthecertainfreeholdandleaseholdlandandbuildingsownedbythewholly-ownedsubsidiarycompanyforatotaldisposalproceedofRM12,156,000.
(b) Thedirectorsofawholly-ownedsubsidiarycompanyviaacircularresolution,resolvedtodisposeclubmembershipswithacarryingamountofRM193,000toprospectivebuyers.
Duringthefinancialyear,thefreeholdlandandbuildingsandclubmembershipsweredisposedataconsiderationofRM1,650,000andRM193,000respectively.
Duringthefinancialyear,theGrouphasreclassifiedcertainleaseholdinvestmentpropertiestonon-currentassetsclassifiedasheldforsaleduetoseveralSaleandPurchaseAgreementssignedwiththirdpartiesforthedisposalofthesepropertiesforatotaldisposalproceedofRM2,380,000.
27. SHARE CAPITAL
Group and Company Numberofshares(in‘000) Amount 2011 2010 2011 2010 RM’000 RM’000
Authorised:OrdinarysharesofRM1each Atbeginningandendoffinancialyear1,500,000 1,500,000 1,500,000 1,500,000
Issuedandfullypaidup: OrdinarysharesofRM1each Atbeginningandendoffinancialyear 693,334 693,334 693,334 693,334
TheholdersoftheordinarysharesareentitledtoreceivedividendsasandwhendeclaredbytheCompany.AllordinarysharescarryonevotepersharewithoutrestrictionsandrankequallywithregardtotheCompany’sresidualassets.
28. TREASURYSHARES
Group and Company Numberofshares(in‘000) Amount 2011 2010 2011 2010 RM’000 RM’000
Atbeginningoffinancialyear 6,005 26,264 2,963 11,312Sharesrepurchasedclassifiedas treasuryshares 3,762 6,299 1,924 3,556Distributionoftreasuryshares – (26,558) – (11,905)
Atendoffinancialyear 9,767 6,005 4,887 2,963
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28. TREASURYSHARES(CONT’D)
TheshareholdersoftheCompanyhadbyanordinaryresolutionpassedattheAnnualGeneralMeetingheldon21December2010,approvedtheCompany’splantopurchaseitsownsharesuptoamaximumof69,333,363ordinarysharesofRM1eachrepresentingapproximately10%ofthetotalissuedandfullypaidupsharecapitaloftheCompany.
TheDirectorsoftheCompanyareoftheopinionthatthesharebuy-backisinthebestinterestsoftheCompanyanditsshareholders.
Duringthefinancialyear,theCompanyboughtbackitsissuedordinarysharesfromtheopenmarketasfollows:-
No. of Total Purchase price per share shares cost Highest Lowest Average RM RM RM RM
2011
Atbeginningoffinancial year 6,005,152 2,962,729 0.86 0.24 0.49Purchasesduring thefinancialyear -September2010 216,900 111,318 0.52 0.50 0.51-October2010 200,000 104,256 0.52 0.52 0.52-November2010 300,000 162,679 0.55 0.53 0.54-December2010 150,000 84,613 0.56 0.56 0.56-February2011 23,500 12,073 0.50 0.50 0.50-March2011 1,734,500 848,197 0.51 0.47 0.49-April2011 661,500 355,298 0.54 0.53 0.54-May2011 274,500 143,498 0.53 0.51 0.52-June2011 200,800 102,897 0.52 0.50 0.51 Atendoffinancialyear 9,766,852 4,887,558 0.86 0.24 0.50
Thesharebuy-backtransactionswerefinancedbyinternalgeneratedfundsoftheGroup.ThesharesboughtbackarebeingheldastreasurysharesinaccordancewiththeprovisionofSection67AoftheCompaniesAct,1965.
29. RESERVES
Group Company (Restated) 2011 2010 2011 2010 RM’000 RM’000 RM’000 RM’000
Non-distributable: Reservefund 1,200 1,200 – –Sharepremium 54,489 54,489 54,489 54,489Availableforsaleinvestments fairvaluereserve 15,440 – – –Exchangetranslationreserve (2,078) 782 – –
69,051 56,471 54,489 54,489
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29. RESERVES (CONT’D)
ThereservefundismaintainedincompliancewiththeprovisionsoftheRulesofBursaMalaysiaSecuritiesBerhadRelatingtoParticipatingOrganisationsandisnotdistributable.
SharepremiumrepresentstheexcessoftheconsiderationreceivedoverthenominalvalueofsharesissuedbytheCompany.ItisnottobedistributedbywayofcashdividendsanditsutilisationshallbeinthemannerassetoutinSection60(3)oftheCompaniesAct,1965.
Theavailableforsaleinvestmentsfairvaluereserverepresentsthecumulativefairvaluechangesofavailableforsaleinvestmentsuntiltheyaredisposedoforimpaired.
TheexchangetranslationreserverepresentsexchangedifferencesarisingfromthetranslationofthefinancialstatementsofforeignoperationswhosefunctionalcurrenciesaredifferentfromthatoftheGroup’spresentationcurrency.
30. REDEEMABLECONVERTIBLEPREFERENCESHARES(“RCPS”)
Group Numberofshares(in‘000) Amount 2011 2010 2011 2010 RM’000 RM’000
Issued and fully paid up: RCPSofRM0.01each Issuedduringthefinancialyear – 1,215 – 12SharepremiumofRM3.785pershare – – – 4,599
– 1,215 – 4,611
Inthepreviousfinancialyear,InariTechnologySdnBhd(“InariTech”),a51%indirectsubsidiarycompanyallottedandissued1,215,000RCPSofRM0.01pershareatapremiumofRM3.785eachinaccordancetoasubscriptionagreemententeredintobyInariTech,theshareholdersofInariTechandtheholderoftheRCPS.
TheRCPSwasclassifiedasacomponentofliabilityinthestatementoffinancialpositioninaccordancewiththeprovisionsofFRS132FinancialInstruments:DisclosureandPresentation.
ThesalienttermsoftheRCPSwereasfollows:
(a) EachRCPSmaybeconverted,attheoptionoftheholders,atanytimeafterthedateofissuanceintoone(1)fullypaidordinarysharesofthesubsidiarycompany.
(b) EachRCPSshallautomaticallybeconverted intoone(1)ordinaryshareof thesubsidiarycompanyuponthelastregulatoryapprovalrequiredbeingobtainedinrespectofanInitialPublicOffering(“IPO”)oftheordinarysharesofthesubsidiarycompanyonanystockexchangeorupontheimplementationofatradesaleatsuchpriceand/orinsuchmannerasmaybeapprovedbytheshareholdersofthesubsidiarycompanyandtheRCPSholders.
(c) TheRCPSholdersareentitledtoreceiveanannualdividendinpriorityandpreferencetoanycashornon-cashdividendsdeclaredorpaidinrespectofordinarysharesoranyotherclassofsharesofthesubsidiarycompanytoanamountequivalentto8%ofeachfinancialyear’sdistributableprofits.ThedividendpayabletotheholderoftheRCPSisrecognisedasfinancecostinprofitorloss.
TheRCPSwasconvertedintoordinarysharesinInariTechduringthefinancialyearasdescribedinNote58tothefinancialstatements.
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31. LOANSANDBORROWINGS
Group 2011 2010 RM’000 RM’000
Current – secured Bankoverdrafts 864 694Termloans 48,595 189,850Revolvingcreditfacilities 2,000 2,000 51,459 192,544Non-current – secured Termloans – 6,260 51,459 198,804
Thematuritiesoftheloansandborrowingsasatreportingdateareasfollows:
Group 2011 2010 RM’000 RM’000
Ondemandorwithin1year 51,459 192,544Morethan1yearandlessthan2years – 2,141Morethan2yearsandlessthan5years – 4,119 51,459 198,804
TheloansandborrowingsoftheGrouparesecuredagainstthefollowing:
(i) fixedchargeovercertainlandedpropertiesoftheGroup;(ii) certainquotedandunquotedsecurities,fixeddepositsandbankbalancesoftheGroup;(iii) corporateguaranteeoftheCompany;(iv) adeedofassignmentovercertainlandedpropertiesoftheGroup;and(v) assignmentofrentalproceedsfromcertainlandedpropertiesoftheGroup.
Theeffectiveinterestratesperannumasatthereportingdateontheloansandborrowingswereasfollows:
Group 2011 2010
Bankoverdrafts 7.80%-9.10% 7.55%-8.55%Termloans 0.07%-6.71% 0.07%-8.25%Revolvingcreditfacilities 4.35%-5.60% 4.35%-4.80%
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32. HIREPURCHASEPAYABLES
Group 2011 2010 RM’000 RM’000
Payablewithin1year 6,472 5,514Payableafter1yearbutnotlaterthan5years 10,504 10,569Payableafter5years 15 – 16,991 16,083Less:Interestinsuspense (1,758) (2,033) Presentvalueofhirepurchasepayables 15,233 14,050
Presentvalueofhirepurchasepayables -within1year(Note34) 5,593 4,632-after1yearbutnotlaterthan5years 9,625 9,418-after5years 15 – 15,233 14,050
Thehirepurchasepayableswithin1financialyearhavebeenincludedunderotherpayablesandaccruals.
Theeffectiveinterestrateperannumforhirepurchasepayablesare3.0%to6.27%(2010:2.16%to4.75%).
33. DERIVATIVE FINANCIAL LIABILITIES
Group 2011 2010 RM’000 RM’000
Negativefairvalueon: Currencyforwardscontractsandoptions 2,618 –Otherequityrelatedcontracts 5,405 – 8,023 –
Asatthereportingdate,thecontractedunderlyingprincipalamountoftheGroup’scurrenciesforwardcontractsandoptionsandtheequityrelatedcontractsareRM73,295,000(2010:Nil).
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34. OTHERPAYABLESANDACCRUALS
Theotherpayablesandaccrualsconsistofthefollowings:-
Group Company 2011 2010 2011 2010 RM’000 RM’000 RM’000 RM’000
Hirepurchasepayables(Note32) 5,593 4,632 – –Accruedexpenses 9,837 14,961 270 337Depositsreceived 3,300 5,393 – –Accruedinterestexpenses 859 491 – 5Otherpayables 32,036 15,112 2,048 52 51,625 40,589 2,318 394
35. REVENUE
Significantcategoriesofrevenuerecognisedduringthefinancialyearareasfollows:-
Group Company 2011 2010 2011 2010 RM’000 RM’000 RM’000 RM’000
Manufactureofelectronicand telecommunicationproducts, partsandservices 14,042 154,793 – –Saleoffinancialassetsatfairvalue throughprofitorloss 149,650 135,814 – –Propertydevelopmentrevenue 18,379 69,095 – –Saleofgoodsandservices 11,130 18,158 – –Saleofproperties 1,650 – – –Interestincome 10,078 16,142 – –Carrental 9,836 9,313 – –Brokeragecommissions 9,370 6,849 – –Rentalincomefromlettingout ofproperties 3,505 2,549 – –Dividendincome 177 2,309 4,622 –Management,advisoryand consultancyfeesincome 4,509 4,715 266 438Others 3,535 6,356 – –
235,861 426,093 4,888 438
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36. COSTOFSALES
Includedincostofsalesareamongstotheritemsthefollowings:-
Group Company 2011 2010 2011 2010 RM’000 RM’000 RM’000 RM’000
Amortisationofdevelopmentexpenditure 25 44 – –Amortisationofprepaidlandlease payments 4 42 – –Allowanceforobsoleteinventories 594 270 – –Depreciationofproperty,plantand equipment 5,659 16,749 – –Hireofequipment 12 551 – –Property,plantandequipmentwrittenoff 10 – – –Rentalofmotorvehicles 21 6 – –Rentalofpremises 150 94 – –Writebackofallowanceforinventoriesloss – (7) – –Writebackofimpairmentofinventories – (35) – –Writebackofallowanceforobsolete inventories (153) – – –
37. OTHER INCOME
Includedinotherincomeareamongstotheritemsthefollowings:-
Group Company 2011 2010 2011 2010 RM’000 RM’000 RM’000 RM’000
Accretionofdiscountsonheldto maturityinvestments 385 721 – –Allowancefordoubtfuldebtsno longerrequired 155 362 – 192Debtswaivedbyasubsidiarycompany – – – 5,042Fairvaluegainonderivatives 4,995 – – –Fairvaluegainoninvestmentproperties 11,192 7,465 – –Gainondisposalofproperty,plant andequipment 804 923 – –Gainondisposalofinvestmentproperties – 11 – –Gainondisposalofavailablefor saleinvestment 106 – – –Gainonredemptionofheldtomaturity investments 732 – – –Gainonexchangedifferences -realised 12,160 647 – –-unrealised 17,139 1,473 14,806 807Grossdividendsfromfinancialassets atfairvaluethroughprofitorloss -quotedinMalaysia 1,072 1,828 – – -quotedoutsideMalaysia 896 231 – –Grossdividendsfromavailablefor saleinvestmentsquotedinMalaysia 547 – – –
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37. OTHER INCOME (CONT’D)
Includedinotherincomeareamongstotheritemsthefollowings(Cont’d):-
Group Company 2011 2010 2011 2010 RM’000 RM’000 RM’000 RM’000
Interestincomefrom: -fixeddeposits 7,088 4,513 1,100 764-associatecompany 457 – – –-subsidiarycompanies – – 2,747 2,843-loansandreceivables (563) 1,656 – –-financialassetsatfairvaluethroughprofitorloss – 576 – –-heldtomaturityinvestments 3,382 4,312 – –-others 283 107 – –Transferfromavailableforsale investmentsreserve 323 – – –Writebackofimpairmentofavailable forsaleinvestments – 3,000 – –Writebackofimpairmentoffinancialassetsatfairvaluethroughprofitorloss 20,126 17,186 – –Writebackofimpairmentofheldto maturityinvestments – 142 – –
38. ADMINISTRATION EXPENSES
Includedinadministrationexpensesareamongstotheritemsthefollowings:-
Group Company 2011 2010 2011 2010 RM’000 RM’000 RM’000 RM’000
Auditors’remuneration:- SJ Grant Thornton Statutoryauditfees -currentfinancialyear 155 168 25 21-underprovisioninpriorfinancialyears 2 7 – 1Specialaudits -currentfinancialyear 1 20 – 20Otherexternalauditors Statutoryauditfees -currentfinancialyear 63 57 – –-underprovisioninpriorfinancialyears 2 1 – –Baddebtswrittenoff – 258 – 258Depreciationofproperty,plant andequipment 219 806 111 130Leaserentalpayabletoasubsidiary company – – 34 34Lossondisposalofproperty,plant andequipment – 10 – –Property,plantandequipmentwrittenoff 6 1 6 –Rentalofpremises 807 791 300 300
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39. OTHER OPERATING EXPENSES
Includedinotheroperatingexpensesareamongstotheritemsthefollowings:-
Group Company 2011 2010 2011 2010 RM’000 RM’000 RM’000 RM’000
Impairmentoffinancialassetsat fairvaluethroughprofitorloss – 26 – –Impairmentofavailableforsale investments – 5,767 – –Impairmentofheldtomaturityinvestments 167 – – –Allowancefordoubtfuldebts 3,536 474 – –Amortisationofintangibleassets 1,646 1,636 – –Amortisationofavailableforsale investment – 21 – –Amortisationofpremiumonheldto maturityinvestments 40 44 – –Amortisationofprepaidlandleasepayments 17 70 – –Amountduefromasubsidiarycompany writtenoff – – – 12Auditors’remuneration:- Otherexternalauditors Statutoryauditfees -currentfinancialyear 82 57 – –Availableforsaleinvestmentwrittenoff – 70 – –Baddebtswrittenoff – 969 – –Depreciationofproperty,plantand equipment 1,429 1,285 – –Directoperatingexpensesarisingfrom investmentproperties: -rentalgeneratingproperties 592 930 – – -non-rentalgeneratingproperties 73 18 – –Goodwillwrittenoff 284 184 – –Hireofequipment 419 344 – –Impairmentlossoninvestmentina subsidiarycompany – – – 8,400Inventorieswrittenoff 1 8 – –Intangibleassetwrittenoff – 11 – –Lossonexchangedifferences -realised 807 3,864 – –-unrealised 7,122 9,341 – –Lossondisposalofanassociatecompany 73 – – –Lossondisposalofproperty,plantand equipment – 17 – –Property,plantandequipmentwrittenoff 70 40 – –Rentalofmotorvehicle 5 55 –Rentalofpremises 134 32 – –
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40. FINANCECOSTS
Financecostscompriseofthefollowingexpenses:-
Group Company 2011 2010 2011 2010 RM’000 RM’000 RM’000 RM’000
Interestexpenses-subsidiarycompanies – – – 77-interestontermloansand bankers’acceptancefacilities 3,429 3,370 – –-bankoverdraft 186 90 – –-revolvingcreditfacilities 104 181 – 92-minorityshareholders’advances – 100 – –-dividendspayabletoRCPSholder – 400 – –-hirepurchasepayables 916 781 – – 4,635 4,922 – 169
41. EXCEPTIONAL ITEMS
Group Company 2011 2010 2011 2010 RM’000 RM’000 RM’000 RM’000
Gainoncapitalrepaymentbyan associatecompany – 13,049 – 13,049Gainondisposalofsubsidiarycompanies 2,209 – – –Gainondeemeddisposalof subsidiarycompanies 288 – – – 2,497 13,049 – 13,049
42. TAXATION
Group Company (Restated) 2011 2010 2011 2010 RM’000 RM’000 RM’000 RM’000
Incometax: Provisionforcurrentfinancialyear -Malaysiaincometax 1,534 2,390 660 –-Overseasincometax 154 178 – –Under/(Over)provisioninprevious financialyears 12 117 3 (113) Deferredtax: Transfer(from)/todeferred taxation(Note17) 1,329 (2,499) – 104Under/(Over)provisioninprevious financialyear(Note17) 262 (55) – –
3,291 131 663 (9)
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42. TAXATION (CONT’D)
TheMalaysianBudget2008introducedasingletierincometaxsystemwitheffectfromyearofassessment2008.CompanieswithoutSection108taxcreditwillautomaticallymovetothenewsingletierdividendsystemon1January2008whilstcompanieswithsuchcreditaregivenanirrevocableoptiontoelectforaswitchtothenewsystemduringthetransitionalperiodofsixyears.Allthecompanieswillbeinthenewsystemon1January2014.
Underthenewsystem,taxonprofitsofcompaniesisafinaltaxanddividenddistributedwillbeexemptedfromtaxinthehandsofshareholders.
TheCompanyhasavailableSection108taxcreditandhasnotopttoswitchovertothesingletiersystem.TheCompanymayusetheavailableSection108taxcreditforpurposeofdividenddistributionduringthetransitionalperiodofsixyears.
Thereconciliationofincometaxexpensesonprofitbeforetaxationwiththeapplicablestatutoryincometaxrateisasfollows:-
Group Company (Restated) 2011 2010 2011 2010 RM’000 RM’000 RM’000 RM’000
Profitbeforetaxation 104,028 61,024 16,133 10,027
IncometaxattheMalaysianstatutory taxrateof25%(2010:25%) 26,007 15,256 4,033 2,507
Taxeffectinrespectof:
Doubledeductionofexpenses – (30) – –Non-allowableexpenses 2,539 7,301 638 2,322Incomenotsubjecttotax (23,609) (18,841) (4,001) (4,725)Effectofdifferenttaxratesin othercountries (698) 267 – –Overseastaxpaidondividendincome 154 178 – –Taxsavingsfromutilisationof capitalallowances (113) (291) – –Taxsavingsfromutilisationoftaxlosses (2,818) (3,856) – –Deferredtaxationnotrecognisedinthe financialstatements 1,555 85 (10) –
Taxexpensesforcurrentfinancialyear 3,017 69 660 104Under/(Over)provisionfortaxationin precedingfinancialyears 12 117 3 (113)Under/(Over)provisionfordeferred taxationinprecedingfinancialyears 262 (55) – –
Taxexpenseforthefinancialyear 3,291 131 663 (9)
Unutilisedtaxlossescarriedforward subjecttoagreementofthe taxauthorities 104,012 111,293 – –
Unabsorbedcapitalallowancescarried forwardsubjecttoagreementofthe taxauthorities 9,168 8,079 – –
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43. EARNINGS PER SHARE
Basic earnings per share
EarningspershareforthefinancialyearhasbeencalculatedbasedontheGroup’sprofitforthefinancialyearattributabletotheownersoftheParentofRM101,406,000(2010:RM53,312,000)dividedbytheweightedaveragenumberofordinarysharesinissueduringthefinancialyearof685,895,000ordinaryshares(2010:675,437,000ordinaryshares),aftertakingintoconsiderationthemovementofsharesboughtbackbytheCompany.
Diluted earnings per share
Dilutedearningspershareisnotcomputedastherewerenodilutivepotentialequityinstrumentsinissuethatgavedilutedeffecttotheearningspershare.
44. DIRECTORS’ REMUNERATION
TheaggregateremunerationpaidandpayabletotheDirectorsoftheCompanyforthefinancialyear,categorisedintotheappropriatecomponentsareasfollows:
Group Company 2011 2010 2011 2010 RM’000 RM’000 RM’000 RM’000
ExecutiveDirectors:- Salariesandotheremoluments 2,647 2,820 350 360 Definedcontributionplan 107 116 81 48 Fees – – – – Benefits-in-kind 35 35 35 35 2,789 2,971 466 443
Non-ExecutiveDirectors:- Salariesandotheremoluments 480 791 – 36 Definedcontributionplan 71 59 – 4 Fees -currentfinancialyear 44 65 44 65 -overprovisioninpreviousyears (62) – (62) – Benefits-in-kind 29 36 29 14 562 951 11 119 3,351 3,922 477 562
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45. STAFF COSTS
Group Company 2011 2010 2011 2010 RM’000 RM’000 RM’000 RM’000
Salaries,wagesandallowances 18,010 45,641 2,629 1,980Socialsecuritycost 122 342 17 16Definedcontributionplan 1,716 3,259 342 288Otherstaffrelatedexpenses 73 401 – – 19,921 49,643 2,988 2,284
IncludedinstaffcostoftheGroupandoftheCompanyareexecutiveandnon-executivedirectors’remunerationamountingtoRM3,287,000(2010:RM3,851,000)andRM413,000(2010:RM513,000)respectivelyasdisclosedinNote44tothefinancialstatements.
46. DIVIDENDS
Group and Company 2011 2010 RM’000 RM’000
Distributionof26,558,148treasurysharesassharedividendsbyway ofonetreasuryshareforeverytwentyfiveordinarysharesheldin theCompany – 11,905
47. INFORMATIONONTHEACQUISITIONOFSUBSIDIARYCOMPANIESDURINGTHEFINANCIALYEARANDSUMMARYEFFECTOFACQUISITIONOFSUBSIDIARYCOMPANIES
(a) DetailsofthesubsidiarycompaniesacquiredbytheGroupduringthefinancialyearwereasfollows:-
(i) On26January2011,InsasTechnologyBerhad,awholly-ownedsubsidiarycompany,hadsubscribedfor637,500newordinarysharesofRM1each,representing51%equityinterestintheenlargedsharecapitalinJ&CPacificSdnBhd(“J&C”)foracashconsiderationofRM1,912,500.J&Cwasincorporatedon14April1997asaprivatelimitedcompanyundertheCompaniesAct,1965.TheprincipalactivityofJ&Cisprovisionoftotalcommunicationservices,solutionsandproducts.
(ii) On15April2011,InsasPacificRent-A-CarSdnBhd,anindirectwholly-ownedsubsidiarycompany,hadentered intoaShareSaleAgreementwith theexisting shareholdersofRosetLimousinesServicesPteLtd(“Roset”),fortheproposedacquisitionofanadditional15,303ordinaryshares,representing10%oftheordinarysharecapitalinRosetforacashconsiderationofS$15,303.Uponthecompletionoftheacquisition,Rosetbecomesa51%ownedsubsidiarycompanyoftheGroup.
Roset isaprivate limitedcompany incorporated inSingaporeon1June2004. TheprincipalactivitiesofRosetistheprovisionofpremiumlimousinesservices.
(iii) On22October2010,theCompanyacquiredanadditional25%equityinterestinNobleBuildersSdnBhd(“NobleBuilders”)fromthenon-controllinginterestsforacashconsiderationofRM1.Asaresultofthisacquisition,NobleBuildersbecameawholly-ownedsubsidiaryoftheCompany.Therewasnofinancialimpactarisingfromtheacquisitionoftheadditional25%equityinterestinNobleBuildersastheGrouphasfullyaccountedforitsshareofpostacquisitionlossesinNobleBuilderspriortotheacquisition.
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47. INFORMATIONONTHEACQUISITIONOFSUBSIDIARYCOMPANIESDURINGTHEFINANCIALYEARANDSUMMARYEFFECTOFACQUISITIONOFSUBSIDIARYCOMPANIES(CONT’D)
(b) TheeffectoftheacquisitionofJ&CandRosetonthefinancialresultsoftheGroupduringthefinancialyearwereasfollows:-
Group 2011 RM’000 Revenue 2,242 Costofsales (1,246)
Grossprofit 996Otherincome 103
Administrationexpenses (736) Otheroperatingexpenses (514) Financecosts (28)
Lossbeforetaxation (179) Taxation (53)
Lossaftertaxation (232)
Attributableto: OwnersoftheParent (119) Non-controllinginterest (113)
Iftheacquisitionhadtakenplaceatthebeginningofthefinancialyear,theGroup’sprofit,netoftaxandnon-controllinginterests,wouldhavebeenRM101,503,000andtheGroup’srevenuewouldhavebeenRM242,132,000.
(c) ThefairvalueofassetsacquiredandliabilitiesassumedfromtheacquisitionofJ&CandRosetareasfollows:-
Group 2011 RM’000
Netassetsacquired:- Property,plantandequipment 5,495Deferredtaxassets 113Inventories 10Tradereceivables 1,665Otherreceivables,depositsandprepayments 296Taxrecoverable 138Depositswithlicensedbanks 813Cashandbankbalances 2,935Tradepayables (929)Otherpayablesandaccruals (1,438)Hirepurchasepayables (3,160)Deferredtaxliabilities (162)Non-controllinginterests (2,830)
Goodwill 284 3,230
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47. INFORMATIONONTHEACQUISITIONOFSUBSIDIARYCOMPANIESDURINGTHEFINANCIALYEARANDSUMMARYEFFECTOFACQUISITIONOFSUBSIDIARYCOMPANIES(CONT’D)
(c) ThefairvalueofassetsacquiredandliabilitiesassumedfromtheacquisitionofJ&CandRosetareasfollows:-(cont’d)
Less:CostofinvestmentinRosetaccountedusingthe equitymethodofaccounting (1,015)ShareofpostacquisitionprofitlesslossesofRoset (266) Purchaseconsideration 1,949Less:Cashandcashequivalentsacquired (3,748)
Cashinflowonacquisition (1,799)
48. INFORMATIONONTHEDISPOSALOFSUBSIDIARYCOMPANIESDURINGTHEFINANCIALYEARANDSUMMARYEFFECTOFDISPOSALOFSUBSIDIARYCOMPANIES
(a) DetailsofthesubsidiarycompaniesdisposedbytheGroupduringthefinancialyearwereasfollows:-
On3May2011, theCompanyannounced that ITBhad signedaShareSaleAgreementwithMintWirelessLimited(“Mint”)on30April2011fortheproposedsaleandpurchaseof637,500ordinarysharesofRM1eachrepresenting51%ofequityinterestinJ&CforatotalsaleconsiderationofRM4millionorA$1,311,475tobesatisfiedbyMintviatheissuanceof43,715,833newordinarysharesrepresenting19.29%equity interest inMintat theissuepriceofA$0.3perordinaryshare.On17June2011,theCompanyannouncedthatITBhadcompleteditsdisposaloftheabovetransactionsandaccordingly,J&Cceasedtobeanindirect51%ownedsubsidiarycompanyoftheGroup.
(b) ThedetailsofnetassetsdisposedandcashflowasatthedateofdisposalofJ&Cduringthefinancialyearwereasfollows:-
Group 2011 RM’000 Property,plantandequipment 804Inventories 901Tradereceivables 1,195Otherreceivables,depositsandprepayments 817Taxrecoverable 163Depositswithlicensedbank 821Cashandbankbalances 139Tradepayables (603)Otherpayablesandaccruals (725)Non-controllinginterests (1,721)
Group’sshareofnetassetsdisposed 1,791Gainondisposalofsubsidiarycompanies 2,209
Disposalproceeds 4,000Less:Disposalinformofordinarysharesswap (4,000)Less:Cashandcashequivalentsdisposed (960)
Netcashoutflowondisposalofequityinterestinsubsidiarycompanies (960)
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49. INFORMATIONONTHEDEEMEDDISPOSALOFSUBSIDIARYCOMPANIESDURINGTHEFINANCIALYEARANDSUMMARYEFFECTOFDEEMEDDISPOSALOFSUBSIDIARYCOMPANIES
ThedetailsofnetassetsdisposedandcashflowasatthedateofdisposalofInariTechnologySdnBhd(“InariTech”)andSimfoniBistariSdnBhd(“Simfoni”)wereasfollows:-
Group 2011 RM’000 Property,plantandequipment 28,544Prepaidlandleasepayments 4,760Deferredtaxassets 1,158Inventories 13,961Tradereceivables 20,694Otherreceivables,depositsandprepayments 850Depositsplacedwithlicensedbanks 550Cashandbankbalances 8,491Tradepayables (9,727)Otherpayablesandaccruals (20,298)Hirepurchasepayables (1,067)Amountduetoarelatedcompany (10,669)Taxpayables (502)Loansandborrowings (7,168)Deferredtaxliabilities (443)Redeemableconvertiblepreferenceshares (4,611)Non-controllinginterests (12,044)
Group’sshareofnetassetsdisposed 12,479Add/(Less): ShareofpostacquisitionprofitslesslossesofInariTech (1,536)
10,943Gainondeemeddisposalofsubsidiarycompanies 288 Disposalproceeds 11,231 Less:ExchangeforordinarysharesinInariBerhad (12,701)Less:Cashandcashequivalentsdisposed (9,041)
Netcashoutflowondeemeddisposalofequityinterestinsubsidiarycompanies (10,511)
Detailsonthedisposalof InariTechandSimfoniaredisclosed inNote58(a), (b)and(c) to thefinancialstatements.
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50. CONTINGENTLIABILITIES
Group Company 2011 2010 2011 2010 RM’000 RM’000 RM’000 RM’000
Unsecured:-Guaranteestosecurebankingand creditfacilitiesgrantedto subsidiarycompanies – – 46,357 42,993Invoicesunderdispute 178 178 – – 178 178 46,357 42,993
Thecorporateguaranteesdonothaveadeterminableeffectonthetermsofthecreditfacilities due to thebanksandfinancialinstitutionsrequiringparentcompanyguaranteeasapre-conditionforapprovingthecreditfacilitiesgrantedtothesubsidiarycompanies.Theactualtermsofthecreditfacilitiesarelikelytobethebestindicatorof“atmarket”termsandhencethefairvalueofthecreditfacilitiesareequaltothecreditfacilitiesamountreceivedbythesubsidiarycompanies.Assuch,thereisnovalueonthecorporateguarantee to berecognisedinthefinancialstatements.
51. CAPITAL COMMITMENTS
Group 2011 2010 RM’000 RM’000
Authorisedandcontractedfor -Acquisitionofinvestmentproperties 2,940 1,050-Acquisitionofproperty,plantandequipment – 5,247-Acquisitionofderivativefinancialinstruments 73,295 –-Acquisitionofinvestmentsinquotedandunquoted sharesandsecurities 5,000 19,229
81,235 25,526
52. OPERATING LEASE COMMITMENTS
(a) Operating lease commitments - as lessee
TheGrouphasentered intocommercial leaseoncertainofficeequipments.These leaseshaveanaveragetenureofbetween1and2yearswithrenewaloption.
Futureminimumrentalspayableundernon-cancellableoperatingleasesatthereportingdateareasfollows:
Group 2011 2010 RM’000 RM’000
Notlaterthan1year 162 312 Laterthan1yearbutnotlaterthan5years 6 173
168 485
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52. OPERATING LEASE COMMITMENTS
(b) Operating lease commitments - as lessor
TheGrouphasenteredintocommercialandresidentialpropertyleasesonitsinvestmentproperties.Thesenon-cancellableleaseshaveremainingleasetermsofbetween1and2years.Allleasesincludeaclausetoenableupwardrevisionoftherentalchargeuponrenewaloftheleasebasedonprevailingmarketrates.
Futureminimumrentalsreceivableundernon-cancellableoperatingleasesatthereportingdateareasfollows:
Group 2011 2010 RM’000 RM’000
Notlaterthan1year 644 1,206Laterthan1yearbutnotlaterthan5years 174 368 818 1,574
(c) Finance lease commitment
The futureminimum leasepaymentsunderfinance leasesaredisclosed inNote32 to thefinancialstatements.
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53. SEGMENTAL INFORMATION
(a) Operating Segments
Financial Property Investment Information servicesand investment holding Retail technology credit & and and trading and related leasing development trading carrental services Eliminations Group RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
2011
Revenue Externalrevenue 23,535 19,682 157,558 11,859 23,227 – 235,861Inter-segmentrevenue 1,224 3,877 5,496 444 899 (11,940) –
Totalsegmentrevenue 24,759 23,559 163,054 12,303 24,126 (11,940) 235,861
ResultsInterestincome 1,060 708 11,990 – 773 (3,884) 10,647Financecosts (4,067) (7,427) (1,843) (1,133) (220) 10,055 (4,635)Depreciationand amortisation (2,326) (301) (315) (4,688) (1,409) – (9,039)Shareofprofitslesslosses ofassociatecompanies – – 2,783 2,469 5,670 – 10,922Shareofprofitslesslosses ofjointlycontrolledentities – 16,660 – – – – 16,660Taxation (136) (1,742) (1,220) (53) (140) – (3,291)Othernon-cashexpenses(i) (2,680) – (5,801) (391) (3,798) – (12,670)Segmentprofit 3,123 15,856 61,065 3,407 17,286 – 100,737
AssetsInvestmentsinassociate companies – – 5,097 14,707 21,924 – 41,728Investmentsinjointly controlledentities – 40,498 – – – – 40,498Additionstonon-current assets(ii) 3,152 5 13,921 4,356 16,060 – 37,494Segmentassets 488,468 108,838 531,747 50,550 70,330 – 1,249,933
LiabilitiesSegmentliabilities 182,610 11,345 92,697 18,043 3,815 – 308,510
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53. SEGMENTAL INFORMATION (CONT’D)
(a) Operating Segments (Cont’d)
Financial Property Investment Information servicesand investment holding Retail technology credit & and and trading and related leasing development trading carrental services Eliminations Group RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
2010
RevenueExternalrevenue 24,070 73,021 147,032 10,771 171,199 – 426,093Inter-segmentrevenue 8,154 4,971 4,124 537 9,991 (27,777) –
Totalsegmentrevenue 32,224 77,992 151,156 11,308 181,190 (27,777) 426,093
ResultsInterestincome 3,770 352 10,906 – 182 (4,046) 11,164Financecosts (3,317) (3,502) (2,129) (989) (1,246) 6,261 (4,922)Depreciationand amortisation (2,072) (292) (308) (4,392) (13,633) – (20,697)Shareofprofitslesslosses ofassociatecompanies – – 692 (427) – – 265Shareoflossesofjointly controlledentities – (480) – – – – (480)Taxation 1,743 (835) (356) – (683) – (131)Othernon-cashexpenses(i) (1,827) – (12,857) (361) (6,265) – (21,310)Segmentprofit 13,978 1,395 31,849 456 13,215 – 60,893
AssetsInvestmentsinassociate companies – 393 4,265 12,426 – – 17,084Investmentsinjointly controlledentities – 24,122 – – – – 24,122Additionstonon-current assets(ii) 1,072 29,032 31,687 7,575 6,655 – 76,021Segmentassets 462,422 159,900 533,720 45,654 113,378 – 1,315,074
LiabilitiesSegmentliabilities 186,608 13,802 194,352 14,948 49,899 – 459,609
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53. SEGMENTAL INFORMATION (CONT’D)
(a) Operating Segments (Cont’d)
Segmentrevenue,expensesandresultsincludetransfersbetweensegments.Thepriceschargedonintersegmenttransactionsareonnegotiatedbasis.Thesetransactionsareeliminatedonconsolidation.
TheGroupisorganisedintofivemainoperatingsegments.ThemainoperatingsegmentsoftheGroupandtheirrespectivebusinessactivitiesare:-
Operatingsegment Businessactivities
Financialservicesandcredit&leasing Stockbrokinganddealinginsecurities,provisionof corporatefinanceandadvisoryservices,creditandleasing andgrantingofloansandotherrelatedfinancingactivities, provisionofshareregistrationservices,management servicesandnomineeagents.
Propertyinvestmentanddevelopment Propertydevelopment,propertyholdingandinvestments andprojectandpropertymanagement. Investmentholdingandtrading Investmentholdingandtradingofquotedsecuritiesand otherrelatedfinancialinstruments. Retailtradingandcarrental Carsandlimousinesforhire/rental,winemerchant,retail andtradingofhighfashionwear,leathergoodsandother lifestyle-relatedproductsandoperatingfoodandbeverages outlets. Informationtechnologyrelatedservices Producewirelessmicrowavetelecommunicationproducts, wirelessbroadcastcardandelectronicmanufacturing services,design,manufacturing,distributionandsales ofsmartcards,semi-conductorproductsandequipment, manufactureanddistributionofcomputerperipherals, designanddevelopmentofsoftwareandwebapplications andprovisionofcommunicationandnetworkingservices, provisionofsalesandservicesformobilewirelessandfixed linebroadbandsolutionsanddevicesandrelatedperipherals, saleofdataandmultimediaproductsandservices,provision ofsecurepaymentgatewayservicesfore-commerce community,computerhardwaredealersandmaintenance, saleofmultimediaandelectronicproductsandITconsultancy services.
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53. SEGMENTAL INFORMATION (CONT’D)
(a) Operating Segments (cont’d)
(i) Othermaterialnon-cashexpensesconsistofthefollowingitems:-
2011 2010 RM’000 RM’000
Impairmentofavailableforsaleinvestments – 5,767Impairmentoffinancialassetsatfairvaluethroughprofitorloss – 26Impairmentofheldtomaturityinvestments 167 –Availableforsaleinvestmentwrittenoff – 70Allowancefordoubtfuldebts 3,536 474Allowanceforobsoleteinventories 594 270Baddebtswrittenoff – 1,227Goodwillwrittenoff 284 184Intangibleassetswrittenoff – 11Inventorieswrittenoff 1 8Lossondisposalofproperty,plantandequipment – 27Lossondisposalofanassociatecompany 73 –Property,plantandequipmentwrittenoff 86 41Realisedlossonexchangedifferences 807 3,864Unrealisedlossonexchangedifferences 7,122 9,341 12,670 21,310
(ii) Additionstonon-currentassetsconsistof:-
2011 2010 RM’000 RM’000
Property,plantandequipment 9,252 15,799Investmentproperties – 17,110Availableforsaleinvestments – 14,173Heldtomaturityinvestments 13,508 –Intangibleassets 13 22Associatecompanies 14,721 –Jointlycontrolledentities – 28,917 37,494 76,021
(b) Geographical Information
Revenueandnon-currentassetsinformationbasedonthegeographicallocationofthecustomersandassetsrespectivelyareasfollows:
Non-current Revenue assets RM’000 RM’000
2011 Malaysia 93,233 260,025Overseas* 142,628 112,063
235,861 372,088
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53. SEGMENTAL INFORMATION (CONT’D)
(b) Geographical Information (Cont’d)
Revenueandnon-currentassetsinformationbasedonthegeographicallocationofthecustomersandassetsrespectivelyareasfollows:(Cont’d)
Non-current Revenue assets RM’000 RM’000
2010 Malaysia 270,406 204,020Overseas* 155,687 148,852
426,093 352,872
*OverseascountriescomprisedpredominantlyofSingapore,HongKongandtheBritishVirginIslands.
Non-current assets informationpresentedabove consist of the following itemsaspresented in theconsolidatedstatementoffinancialposition:-
2011 2010 RM’000 RM’000
Property,plantandequipment 39,551 62,460Prepaidlandleasepayments – 4,781Investmentproperties 102,745 90,751Landheldfordevelopment 37,576 37,576Availableforsaleinvestments 50,419 43,194Heldtomaturityinvestments 41,585 53,260Associatecompanies 41,728 17,084Jointlycontrolledentities 40,498 24,122Intangibleassets 17,986 19,644 372,088 352,872
(c) Information about major customer
TheGroupdoesnothaveanyrevenuefromasingleexternalcustomerwhichrepresents10%ormoreoftheGroup’srevenue.
54. RELATEDPARTYDISCLOSURES
(a) Outstandingbalancesarisingfromrelatedpartytransactions
TheoutstandingbalancesarisingfromrelatedpartytransactionsasatthereportingdateweredisclosedinNote12(b)and13(b)tothefinancialstatements.
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54. RELATEDPARTYDISCLOSURES(CONT’D)
(b) TheGrouphasthefollowingtransactionswiththefollowingrelatedpartiesatnegotiatedtermsagreedbetweenthepartiesduringthefinancialyear:-
Group 2011 2010 RM’000 RM’000
DesignandprintingcostspaidtoCatalystCreatives,afirm relatedtoaDirectoroftheCompany 149 145 Feeschargedby/(chargedto)SyarikatAgensiPekerjaanERServices SdnBhd,acompanyrelatedtocertainDirectorsoftheCompany:- -recruitmentandhumanresourcesadministrationservicesfees 27 36 -secretarialfees – (1) -rentalofofficepremises (15) (14) Purchasesfrom/(Salesto)VanskeeEnterprise(S)PteLtd,acompany relatedtocertaindirectorsandaminorityshareholderofa subsidiarycompany:- -purchaseofrawmaterial 7 55 -saleofgoodsandservices (56) (34) PurchasesofrawmaterialfromVanskeeEnterpriseCo.Ltd.,acompany relatedtocertaindirectorsandaminorityshareholderofa subsidiarycompany 13 238 SaleofgoodsandservicestoCeedtecSdnBhd,acompanyrelatedtoa directorandaminorityshareholderofanassociatecompany (2010:asubsidiarycompany) (240) (16) Refurbishmentandmaintenanceworksprovidedtocompanies relatedtodirectorsoftheCompanyandasubsidiarycompany -ImmobillaireHoldingsSdnBhd 41 29 -BaktihanSdnBhd 97 26 -MetroSierraSdnBhd 111 13 -TitanExpressSdnBhd 1 10 -AccrocrestDevelopmentSdnBhd 19 154 Interestexpensepaidandpayabletominorityshareholdersof anassociatecompany(2010:asubsidiarycompany) -HoPhonGuan – 31 -MacronionSdnBhd – 69 Saleofmanufacturedproductsandelectronicmanufacturingservices toAvagoTechnologiesLimited,acompanyrelatedtoashareholder ofanassociatecompany(2010:asubsidiarycompany) 158,109 154,623
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54. RELATEDPARTYDISCLOSURES(CONT’D)
(c) TheCompanyhasthefollowingtransactionswiththefollowingrelatedpartiesduringthefinancialyear:-
Company 2011 2010 RM’000 RM’000
Managementfeeschargedtosubsidiarycompanies* 266 438
Debtswaivedbyasubsidiarycompany,TrueBlueSdnBhd – 5,042 Dividendsreceivedfromsubsidiarycompanies: -InsasTechnologyBerhad 1,450 –-M&ASecuritiesSdnBhd 3,172 – Interestexpensespaidandpayabletoasubsidiarycompany, M&ASecuritiesSdnBhd – 77 Secretarialandretainerfeespaidandpayabletoasubsidiary company,MegapolitanManagementServicesSdnBhd 61 64 Leaserentalpaidandpayabletoasubsidiarycompany, InsasPacificRent-A-CarSdnBhd 34 34 Interestchargedtosubsidiarycompanies* 2,747 2,843
*Thetransactionsaredisclosedinaggregateasitisimmaterialtodiscloseindividually.
(d) RemunerationofKeyManagementPersonnel
Theremunerationofdirectorsandothermembersofkeymanagementduringthefinancialyearwereasfollows:-
Group Company 2011 2010 2011 2010 RM’000 RM’000 RM’000 RM’000
Salaries,allowancesandbonus 4,675 5,424 350 360Definedcontributionplan 332 331 81 48Fees – 140 – –Socialsecuritycost 5 2 – –Benefits-in-kind 61 78 35 35 5,073 5,975 466 443
Includedinthetotalcompensationofkeymanagementpersonnelwere:-
Group Company 2011 2010 2011 2010 RM’000 RM’000 RM’000 RM’000
ExecutiveDirectors’ remuneration(Note44) 2,789 2,971 466 443
OthermembersofkeymanagementpersonnelcomprisepersonsotherthantheExecutiveDirectorsof
theGroupandoftheCompany,havingauthorityandresponsibilityforplanning,directingandcontrollingtheactivitiesoftheGroupeitherdirectlyorindirectly.
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55. LISTOFSUBSIDIARYCOMPANIES
%Effectiveequity interest Country ofNameofcompanies 2011 2010 Principalactivities incorporation Cellar-OneSdnBhd 100 100 Winemerchant Malaysia Cellar-1(S)PteLtd* 100 100 Generaltradingincluding Singapore tradingofalcoholicand non-alcoholicbeverages ContibinaSdnBhd – 60 Companyhadbeenwound upduringthefinancialyear Malaysia
DellmaxWorldwideSdnBhd 58.5 58.5 Investmentholding Malaysia DeltaCrestSdnBhd* 100 100 Propertyinvestment Malaysia DesaJuaraSdnBhd 100 100 Propertydevelopment Malaysia FilmontDevelopment 100 100 Investmentholding, Malaysia SdnBhd propertydevelopmentand projectmanagement
GryphonAsset 66 66 Fundmanagementand Malaysia ManagementSdnBhd investmentholding
HastanasDevelopment 72 72 Propertydevelopment Malaysia SdnBhd InsasConstructionSdnBhd 100 100 Construction,landscaping, Malaysia renovationandotherrelatedworks
InsasCorporateServices 100 100 Provisionofmanagement Malaysia SdnBhd servicesandinvestmentholding
InsasCredit&Leasing 100 100 Credit,leasingandotherrelated Malaysia SdnBhd financingactivities
InsasMobileSdnBhd 100 100 Dormant Malaysia
InsasPlazaSdnBhd 100 100 Investmentholding, Malaysia investmenttrading,property investmentandtrading,project andpropertymanagementand commissionagent
InsasProjectManagement 100 100 Propertyandprojectmanagement Malaysia SdnBhd andconsultants
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55. LISTOFSUBSIDIARYCOMPANIES(CONT’D)
%Effectiveequity interest Country ofNameofcompanies 2011 2010 Principalactivities incorporation
InsasPropertiesSdnBhd 90 90 Investmentholdingand Malaysia propertyinvestment
InsasProperty 90 90 Propertyandprojectmanagement Malaysia ManagementSdnBhd
InsasTechnologyBerhad 100 100 Investmentholdingand Malaysia provisionofinformation technologyconsultancy services,provisionof managementservicesand tradingofelectronicand telecommunicationsrelated products InsasTechnologyPteLtd* 100 100 Investmentholding Singapore InsasPacificRent-A-Car 100 100 Carrentalservices Malaysia SdnBhd
JiaSdnBhd 100 100 Restaurantoperator Malaysia (temporaryceasedoperations) LangdaleE3PteLtd* 100 100 Providetelecommunication Singapore services,electronic componentssourcingand saleanddistributionofmobile wirelessandfixedline broadbandsolutions,devices andrelatedperipherals
LangdaleSystemsSdnBhd 100 100 Computertradingandsoftware Malaysia consultation
Lifestyle-OneSdnBhd 100 100 Investmentholding Malaysia M&AFuturesSdnBhd 100 100 Futuresbroking Malaysia M&AFinancialServicesInc. 100 100 Investmentholdingandprovision BritishVirgin ofcreditandrelatedfinancing Islands activities
M&ANominee(Asing) 100 100 Nomineeagentandregistration Malaysia SdnBhd* services
M&ANominee (Tempatan)SdnBhd* 100 100 Nomineeagentandregistration Malaysia services
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55. LISTOFSUBSIDIARYCOMPANIES(CONT’D)
%Effectiveequity interest Country ofNameofcompanies 2011 2010 Principalactivities incorporation
M&AResearch 100 100 Managementand Malaysia SdnBhd investmentresearchservices
M&ASecurities 100 100 Stockbrokinganddealinginsecurities Malaysia SdnBhd* andprovisionofcorporatefinance andadvisoryservices
M&ASecurities(HK) 93 93 Stockbroking(temporary HongKong Limited* ceasedoperations)
MagxoSdnBhd 100 100 Mobilevirtualnetworkoperations Malaysia MegapolitanNominees 100 100 Nomineeagentandregistration Malaysia (Tempatan)SdnBhd services
MegapolitanManagement 100 100 Provisionofcorporatesecretarial, Malaysia ServicesSdnBhd shareregistrationandmanagement services
MediaLangLimited* 100 100 Saleofmultimediaandelectronic HongKong products
MontaniaDevelopment 100 100 Propertyinvestment Malaysia SdnBhd
MicromodulePteLtd* 52.4 52.4 Design,manufacture,distribute,sales, Singapore maintenanceandothersupporting activitiesrelatedtomanufactureof equipment,subassemblies,semi andfinishedproductsforalltypesof semiconductorproductsand equipment
MontegoAssetsLimited 100 100 Investmentholdingandtrading BritishVirgin Islands
Montego(S)PteLtd* 100 100 Investmentholding, Singapore investmenttradingand investmentandrentalof properties
NobleBuildersSdnBhd 100 75 Propertyinvestmentandtheme Malaysia restaurant(inactive)
PanAsianAssetsInc. 100 100 Investmenttrading BritishVirgin Islands
ParkfairDevelopment 63 63 Investmentholding Malaysia SdnBhd
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55. LISTOFSUBSIDIARYCOMPANIES(CONT’D)
%Effectiveequity interest Country ofNameofcompanies 2011 2010 Principalactivities incorporation
Premium-OneSdnBhd 100 100 Restaurantoperator Malaysia (ceasedoperations)
PremiumRealtySdnBhd 100 100 Investmentholdingandproperty Malaysia investment
PremiumYieldSdnBhd 72 72 Investmentholding Malaysia
RosetLimousinesServices 51 41 Provisionofpremiumlimousines Singapore PteLtd* services
SegarRayaDevelopment 60.3 60.3 Realpropertyandhousing Malaysia SdnBhd developer
SouthgroupInvestments 100 100 Investmentholding HongKong Limited*
TerajuUsahaSdnBhd 100 100 Provisionofconsultancyand Malaysia advisoryservicesand commissionagent
TopacresSdnBhd 100 100 Investmentholding Malaysia TrueBlueSdnBhd 100 100 Investmentholding Malaysia ValenciaHomesSdnBhd 90 90 Propertydevelopment Malaysia
VigcashlimitedLLC 100 100 Provisionofsecurepaymentgateway Mongolia servicesfore-commerce communities(inactive)
VigSysSdnBhd 100 100 Manufactureanddistributionofmobile Malaysia wirelessandfixedlinebroadband solutions,devicesandrelated peripherals
VigTechLabsSdnBhd 100 100 Designanddevelopmentofsoftware Malaysia andwebapplicationsandprovision ofcommunicationandnetworking services
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55. LISTOFSUBSIDIARYCOMPANIES(CONT’D)
%Effectiveequity interest Country ofNameofcompanies 2011 2010 Principalactivities incorporation
XotapointSdnBhd 100 100 Provisionofvoicecallservices Malaysia (temporaryceasedbusiness), provisionofsalesandservicesfor mobilewirelessandfixedline broadbandsolutionsanddevices andrelatedperipherals,dataand multimediaproductsandservices andprovisionofsmartcardsoftware
andsystemintegration
XotaCommunicationsSdnBhd100 100 Provisionofvoicecallservicesand Malaysia tradinginallrelatedproducts (temporaryceasedbusiness) andtheprovisionofinformation technologyconsultancyservices
* CompaniesnotauditedbySJGrantThornton.
56. LISTOFASSOCIATECOMPANIES
%Effectiveequity interest Country ofNameofcompanies 2011 2010 Principalactivities incorporation
BrickfieldsPropertiesPty 25 25 Propertydevelopment Australia Ltd* (ceasedoperations)
CentreplusSdnBhd 35 35 Improvingandleasingoflandedproperty Malaysia
CoolInspirationsSdnBhd 43.4 – Investmentholdingand Malaysia propertyinvestment
DiffusionFashionsSdnBhd 43.4 43.4 Retailerofhighfashionproducts Malaysia
DomeCafeSdnBhd 43.4 43.4 Restaurantoperator Malaysia
GleneaglesMedical 20 20 Developmentandinvestment Malaysia Centre(KualaLumpur) inmedicalcenters SdnBhd* Good-LifeFoodsSdnBhd – 22.1 Restaurantoperator Malaysia
IslandCafeSdnBhd 36 36 Restaurantoperator Malaysia
LifestyleFoodsSdnBhd 43.4 37.7 Foodandbeveragerestaurant Malaysia
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56. LISTOFASSOCIATECOMPANIES(CONT’D)
%Effectiveequity interest Country ofNameofcompanies 2011 2010 Principalactivities incorporation
MeliumHoldingsSdnBhd 43.4 43.4 Investmentholding Malaysia
MeliumSdnBhd 43.4 43.4 Retailerofhighfashionproducts Malaysia
MeliumAseanaSdnBhd 43.4 43.4 RetailerofAsianmadeproducts Malaysia
ErmenegildoZegna 21.2 21.2 Retailerofhighfashionproducts Malaysia MalaysiaSdnBhd*
FancyConnections 30.3 30.3 Dormant MalaysiaSdnBhd
InariBerhad 44.1 – Investmentholding Malaysia
InariTechnologySdnBhd 44.1 51 Producewirelessmicrowave Malaysia telecommunicationproducts, wirelessbroadcastcardand toprovideelectronic manufacturingservices
SengenicsSdnBhd* 20 – Providemicroarrayproducts Malaysia andassociatedservicesfor cutting-edgegenetic-based researchandclinical diagnostics
SimfoniBistariSdnBhd 44.1 100 Investmentholding,property Malaysia investmentandlettingout ofproperties
WinfieldsDevelopment 40 40 Investmentholdingandrental Malaysia SdnBhd ofproperties
WinfieldsDevelopmentPteLtd* 40 40 Investmentholdingandtrading Singapore andrentalofproperties
* CompaniesnotauditedbySJGrantThornton.
57. LISTOFJOINTLYCONTROLLEDENTITIES
%Effectiveequity interest Country ofNameofentitles 2011 2010 Principalactivities incorporation
ChantreyHouseLLP* 50 50 Investmentholding UnitedKingdom EcclestonBelgraviaLLP* 49.8 49.8 Improvingandleasingoflanded UnitedKingdom property
* EntitiesnotauditedbySJGrantThornton.
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58. SIGNIFICANTEVENTSDURINGTHEFINANCIALYEAR
(a) On5August2010,InsasTechnologyBerhad(“ITB”),awholly-ownedsubsidiarycompany’sdiluteditsequityinterestinInariTechnologySdnBhd(“InariTech”)from51%to42.43%followingtheconversionof1,515,000RedeemableConvertiblePreferenceShares(“RCPS”)heldbytheRCPSholdersinInariTechinto1,515,000ordinarysharesinInariTech.
TheconversionoftheRCPSwasmadeinaccordancewiththetermsandconditionscontainedinthesubscriptionagreementsenteredintobetweenInariTechanditsshareholdersandtheRCPSholders.
(b) On20September2010, ITBand theothershareholdersof InariTechhadentered intoaSaleandPurchaseAgreementwithInariBerhad(“Inari”)forthedisposaloftheircombined100%equityinterestinInariTechtoInariforatotalconsiderationofRM24,160,860,whichweresatisfiedinfullbytheallotmentof241,608,600ordinarysharesofRM0.10eachinInariinproportionoftheirrespectiveshareholdingsinInariTech.Arisingthereof,InariTechbecomeawhollyownedsubsidiarycompanyofInari,andInaribecomea42.43%associatecompanyoftheGroup.
InariwasincorporatedinMalaysiaon5May2010asapubliclimitedcompanyundertheCompaniesAct,1965.TheprincipalactivityofInariisinvestmentholding.
(c) On21September2010,ITBenteredintoaSaleandPurchaseAgreementtodisposeits100%equityinterestinSimfoniBistariSdnBhd(“Simfoni”)toInariforatotalcashconsiderationofRM1,000,000.Inaddition,InariundertakestorepaytheamountowingbySimfonitoITBofRM10,000,000bywayofissuanceof7,000,000newordinaryshareinInaritoITBatanissuepriceofRM0.35perInarishareandthebalanceowingofRM7,550,000istoberepayableoveraperiodof12monthssubjecttointerestpaymentof8%perannumuntilthedateoffullrepayment.
SimfoniwasincorporatedinMalaysiaon18February2003asaprivatelimitedcompanyunderCompaniesAct,1965.TheprincipalactivitiesofSimfoniareinvestmentholding,propertyinvestmentandlettingoutofproperties.
Uponthecompletionoftransactions(a),(b)and(c)above,ITBholds44.05%equityinterestinInari,InariTechandSimfoni.Thepurposeofthetransactionsstatedin(a),(b)and(c)weretostreamlinethecorporatestructureofInaritofacilitateInaritoundertakeaninitialpublicoffering(“IPO”)andlistingandquotationofitssharesontheACEMarketofBursaMalaysiaSecuritiesBerhad.
On24February2011,theBoardofDirectorsoftheCompanyannouncedthatBursaMalaysiaSecuritiesBerhadhadvideitsletterdated23February2011approvedInari’sapplicationforadmissiontotheOfficialListontheACEMarket.
InariwaslistedontheACEMarketon19July2011.
(d) On22October2010, theCompany increased itsequity interest inNobleBuildersSdnBhd(“NobleBuilders”)from75%to100%viatheacquisitionof250,000ordinarysharesofRM1.00eachinNobleBuildersfromthenon-controllinginterestsforaconsiderationofRM1.00.NobleBuilderswasincorporatedinMalaysiaon11May1993anditsprincipalactivitieswereinpropertyinvestmentandfoodandbeveragesbusiness.NobleBuildersisnowadormantcompany.
(e) On21December2010,theCompanyannouncedthatContibinaSdnBhd(“Contibina”),a60%indirect
subsidiarycompany,hadon17December2010commencedMembers’VoluntaryWinding–uppursuanttoSection254(1)(b)oftheCompaniesAct1965.Contibinawasincorporatedon19August1994withanissuedandpaidupsharecapitalofRM200,000comprising200,000ordinarysharesofRM1.00each.
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58. SIGNIFICANTEVENTSDURINGTHEFINANCIALYEAR (CONT’D)
(e) (Cont’d)
Thewinding-upofContibinawasinitiatedasithasceasedbusinessoperationsinyear1997.Contibinahadsinceremaineddormantandhasnointentiontocarryonbusinessactivitiesinthefuture.
On10June2011,aReturnbyLiquidator relating toFinalMeetingwas lodgedwith theCompaniesCommissionofMalaysiaandtheOfficialReceiver.PursuanttoSection272(5)oftheCompaniesAct,1965,Contibinawillbedissolvedontheexpirationofthree(3)monthsafterthelodgmentdate.
(f) On26January2011,theCompanyannouncedthatITBhadsubscribedfor637,500newordinarysharesofRM1.00(“thesubscription”)representing51%equityinterestinJ&CPacificSdnBhd(“J&C”)foratotalsubscriptionpriceofRM1,912,500.
Withthesubscription,J&Cbecomesa51%indirectsubsidiarycompanyoftheCompany.J&Cwasincorporatedon14April1997asaprivatelimitedcompanyundertheCompaniesAct1965.TheauthorisedandpaidupsharecapitalofJ&CisRM500,000comprising500,000ordinarysharesofRM1.00each.TheprincipalactivityofJ&Cisprovisionoftotalcommunicationservices,solutionsandproducts.
(g) On2March2011, theCompanyannounced that ITBhadsubscribed for20,000ordinarysharesof
RM1.00eachrepresenting20%equityinterestinSengenicsSdnBhd(“Sengenics”)foratotalsubscriptionpriceofRM20,000and2,000,000redeemableconvertiblepreferencesharesofRM0.01eachforatotalsubscriptionpriceofRM2,000,000.Sengenicsbecamea20%associatecompanyoftheGroup.
SengenicsisaprivatelimitedcompanyincorporatedinMalaysiawithitsprincipalactivitiesaretoprovidemicroarray products and associated services for cutting-edge genetic-based research and clinicaldiagnostics.SengenicshasbeenawardedBioNexusStatusbytheMalaysianBiotechnologyCorporationSdnBhdon16November2010toconductcommercialisationofcytogeneticandmoleculardiagnosticproductsandservicesandtoundertakerelatedresearchanddevelopmentactivities.
(h) On15April2011,theCompanyannouncedthatInsasPacificRent-A-CarSdnBhd(“IPRAC”),anindirectwholly-ownedsubsidiarycompany,hadenteredintoaShareSaleAgreement(“theAgreement”)withtheothertwoshareholdersofRosetLimousinesServicesPteLtd(“Roset”)fortheproposedacquisitionbyIPRACof15,303ordinarysharesrepresentinganadditional10%ofthesharecapitalinRosetforacashconsiderationofS$15,303.
Uponthecompletionoftheproposedacquisition,Rosetwillbecomea51%ownedsubsidiarycompanyoftheGroup.Theacquisitionwascompletedduringthefinancialyear.
(i) On3May2011, theCompanyannounced that ITBhad signedaShareSaleAgreementwithMintWirelessLimited(“Mint”)on30April2011fortheproposedsaleandpurchaseof637,500ordinarysharesofRM1eachrepresenting51%ofequityinterestinJ&CforatotalsaleconsiderationofRM4millionorA$1,311,475tobesatisfiedbyMintviatheissuanceof43,715,833newordinarysharesrepresenting19.29%equityinterestinMintattheissuepriceofA$0.3perordinaryshare.
On17June2011,theCompanyfurtherannouncedthatITBhadcompleteditsdisposaloftheabovetransactionsandaccordingly,J&Cceasedtobeanindirect51%ownedsubsidiarycompanyoftheGroup.
MintisatechnologybasedcompanylistedontheAustralianSecuritiesExchangeanditscorebusinessesarethedevelopmentofinnovativepaymentsolutionsandconsumertechnologyproductsandservices.
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59. SIGNIFICANTEVENTSUBSEQUENTTOREPORTINGDATE
On19September2011,theCompanyannouncedthatTopacresSdnBhd(“Topacres”),awhollyownedsubsidiarycompanyenteredintoaShareholders’AgreementwithNostalgicPropertiesSdnBhd(“Nostalgic”),RedZoneDevelopmentSdnBhd(“RedZone”)andMacrodonSdnBhd(“Macrodon”)toregulatetheirrelationshipasshareholdersinMacrodonwhichwillundertakethebusinessofpropertydevelopment.
MacrodonisaprivatelimitedcompanyincorporatedinMalaysiaon11February2009.Macrodonispresentlyadormantcompanyanditsintendedprincipalactivityisinpropertydevelopment.
Topacres,NostalgicandRedZoneintendstocarryoutthebusinessofpropertydevelopmentthroughMacrodonandtheshareholdingofMacrodoncomprisesTopacres40%,Nostalgic30%andRedZone30%.TheintendedpaidupsharecapitalofMacrodonisRM10,000,000comprisingRM250,000ordinarysharesofRM1.00eachandRM9,750,000redeemablepreferencesharesofRM0.01eachatanissuepriceofRM1.00each.
60. FINANCIALINSTRUMENTS
(a) Financial risk management and policies
TheGroupandtheCompanyareexposedtofinancialrisksarisingfromtheuseoffinancialinstruments.TheGroup’s and theCompany’s financial riskmanagement policy seeks to ensure that adequatefinancialresourcesareavailableforthedevelopmentoftheGroup’sandoftheCompany’sbusinesswhilstmanagingitsinterestrate,credit,foreigncurrencyexchange,liquidityandmarketrisks.TheGroupandtheCompanyoperatewithinguidelinesapprovedbytheBoardandtheGroup’sandtheCompany’spolicyisnottoengageinspeculativetransactions.
ThemainareasoffinancialrisksfacedbytheGroupandtheCompanyandthepolicyinrespectofthemajorareasoftreasuryactivityaresetoutasfollows:-
(i) Interest rate risk
InterestrateriskistheriskthatthefairvalueorfuturecashflowsoftheGroup’sandtheCompany‘sfinancialinstrumentswillfluctuatebecauseofchangesinmarketinterestrates.
TheGroupand theCompanyarenotsignificantlyexposed to interest rate riskexcept for thefloatingrateborrowingsanddepositsplacedwithlicensedbanksandfinancialinstitutions.TheGroup’sheldtomaturityinvestmentsandhirepurchasepayablesaremainlyfixedratesecuritiesandarenotexposedtointerestraterisk.
TheinterestrateprofilesoftheGroup’sandtheCompany’sfinancialassetsandfinancialliabilitiesthatareexposedtointerestrateriskaresetoutasfollows:-
Floating Fixed Effectiveinterest rates rates rate during the instruments instruments Total financialyear2011 RM’000 RM’000 RM’000 %perannumGroup
Financial assets Heldtomaturity investments – 55,294 55,294 3.41%-13.0%Depositsplacedwith licensedbanksand financialinstitutions 442,304 – 442,3040.001%-5.00%
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60. FINANCIALINSTRUMENTS(CONT’D)
(a) Financial risk management and policies (Cont’d)
(i) Interest rate risk
Floating Fixed Effectiveinterest rates rates rate during the instruments instruments Total financialyear2011 RM’000 RM’000 RM’000 %perannum
Group
Financial liabilities Loansandborrowings 51,459 – 51,459 0.07%-9.10%Hirepurchasepayables – 15,233 15,233 3.0%-6.27% Company Financial assets Amountduefrom subsidiarycompanies – 259,389 259,389 1.80%-2.75%
TheGroup’sexposuretointerestrateriskfora1%increase/(decrease)ininterestrateonthefinancialassetsandliabilitieswithfloatinginterestratesatthereportingdatewouldresult inacorrespondingeffecttotheprofitforthefinancialyearasfollows:-
Profitforthe financialyear RM’000Group 2011Variablerates-increaseby1% 3,908-decreaseby1% (3,908)
Theassumedmovementininterestrateof1%fortheinterestratesensitivityanalysisisbasedontheprudentestimateofthecurrentmarketenvironment.
(ii) Credit risk
CreditriskistheriskofafinanciallosstotheGroupandtheCompanyifacustomerorcounterpartytoafinancialinstrumentfailstomeetitscontractualobligations.TheGroupandtheCompanydonothavesignificantconcentrationofcreditriskwithanysinglecounterparty.
TheGroup‘sandtheCompany’smaximumexposuretocreditriskisrepresentedbythecarryingamountoftradeandotherreceivablesandamountduefromsubsidiarycompaniesandrelatedcompaniesinthestatementsoffinancialposition.
Thecreditriskforcashandcashequivalentsareconsiderednegligiblesincethecounterpartiesarereputablebankswithhighcreditrating.
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60. FINANCIALINSTRUMENTS(CONT’D)
(a) Financial risk management and policies (Cont’d)
(ii) Credit risk (Cont’d)
Tradeandotherreceivables
TheGroup’snormaltradecredittermstotradereceivablesrangesfrom30to90days(2010:30to90days)exceptforasubsidiarycompanywhosecredittermsis3marketdaysaccordingtotheBursaMalaysiaFixedDeliveryandSettlementSystemTradingRules.TheGroup’snormalcreditterminrelationtorentalreceivablesis7days(2010:7days).Othercredittermsareassessedandapprovedonacase-by-casebasis.Asatthereportingdate,themanagementisoftheopinionthatallnecessaryimpairmentthatisrequiredhasbeenprovidedforandthetradereceivablesthathavenotbeenimpairedarecreditworthydebtorswherebyimpairmentisnotneeded.
Otherreceivablesareneitherpastduenorimpairedasthesebalancesaredeemedrecoverable.
Intercompanyadvances
TheCompanyprovidesadvances to its subsidiary companiesandcontrols thecredit risk viamonitoringprocedures.
Asatthereportingdate,therewasnoindicationofdefaultonpaymentforadvancesgrantedtothesubsidiarycompaniesandadequateimpairmenthasbeenaccountedforthoseimpairedbalancesduefromthesubsidiarycompanies.
Investmentsandotherfinancialassets
TheGroup and theCompany hold securities and deposits placedwith sound credit ratingcounterpartiesandfinancialinstitutions.
As at the reporting date, therewasno indication that any investments anddeposits are notrecoverable.
Financial guarantees ThemaximumexposuretocreditriskisdisclosedinNote50tothefinancialstatements.
TheCompanyprovidesunsecuredfinancialguaranteestobanksinrespectofbankingfacilitiesgrantedtocertainsubsidiarycompaniesandmonitoredtheresultsofrepaymentsbysubsidiarycompaniesclosely.Asatthereportingdate,therewasnoindicationthatanysubsidiarycompanywillbedefaultonpayment.
(iii) Foreigncurrencyexchangerisk
Foreigncurrencyexchangeriskistheriskthatthefairvalueorfuturecashflowsofafinancialinstrumentwillfluctuatebecauseofchangesinforeignexchangerates.
TheGroupand theCompanyareexposed to foreigncurrency riskon theirsales,purchases,investmentsandborrowingsthataredenominatedinacurrencyotherthantherespectivefunctionalcurrenciesoftheGroupentities.ThecurrenciesgivingrisetothisriskareprincipallyHongKongDollar,AustralianDollar,SingaporeDollar,USDollar,SterlingPoundandEuroDollar.
TheGroupisalsoexposedtocurrencytranslationriskarisingfromitsnetassetsoftherespectiveforeignsubsidiarycompanies.
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60. FINANCIALINSTRUMENTS(CONT’D)
(a) Financial risk management and policies (Cont’d)
(iii) Foreigncurrencyexchangerisk(Cont’d)
ThenetunhedgedfinancialassetsandliabilitiesofcompanieswithintheGroupandtheCompanythatarenotdenominatedintheirrespectivefunctionalcurrenciesareasfollows:-
Hong US Singapore Euro Sterling Australian Kong Other Dollar Dollar Dollar Pound Dollar Dollar currencies Total RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
2011Group
Heldtomaturityinvestments 37,881 5,483 2,220 – 8,707 – – 54,291Tradereceivables 372 834 1,261 450 7 – – 2,924Otherreceivables,deposits andprepayments 491 506 229 14 474 31 – 1,745Financialassetsatfairvalue throughprofitorloss 18,238 5,875 – – 14,153 13,930 4,439 56,635Depositswithlicensedbanks andfinancialinstitutions 1,840 11,654 8,660 41,790 47,978 4,183 604 116,709Cashandcashequivalents (17,548) 15,154 7,278 86 39,454 840 450 45,714Loansandborrowings (36,136) (6,061) (4,378) – (1,520) – (695) (48,790)Derivativefinancialliabilities (4,168) (1,312) – (23) – (2,520) – (8,023)Tradepayables (169) (298) (622) – – – – (1,089)Otherpayablesandaccruals (189) (1,892) (127) (7) – (24) – (2,239)
Netfinancialassets 612 29,943 14,521 42,310 109,253 16,440 4,798 217,877
Company Cashandbankbalances – – – – 11 – – 11Amountduefromsubsidiary companies 3,887 30,208 10,581 28,984 61,792 9,804 11,419 156,675Amountduetosubsidiary companies – – – – – (41,300) – (41,300)
Netfinancialassets/(liabilities) 3,887 30,208 10,581 28,984 61,803 (31,496) 11,419 115,386
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60. FINANCIALINSTRUMENTS(CONT’D)
(a) Financial risk management and policies (Cont’d)
(iii) Foreigncurrencyexchangerisk(Cont’d)
A5%strengtheningofRMagainstthefollowingmajorforeigncurrenciesatthereportingdatewouldincrease/(decrease)theGroup’sandtheCompany’sprofitforthefinancialyearandequitybytheamountsshownbelowwithallothervariableheldconstant:-
Group’sprofit Company’sprofit for the for the financialyear financialyear RM’000 RM’000
2011
USD/RM -strengthened5% 31 194SGD/RM -strengthened5% 1,497 1,510Euro/RM -strengthened5% 726 529GBP/RM -strengthened5% 2,116 1,449AUD/RM -strengthened5% 5,463 3,090HKD/RM -strengthened5% 822 (1,575)
Theassumedmovementinforeigncurrencyexchangerateof5%fortheforeigncurrencyexchangeratesensitivityanalysisisbasedontheprudentestimateofthecurrentmarketenvironment.
(iv) Liquidityrisks
LiquidityriskistheriskthattheGroupandtheCompanyareunabletomeetitsfinancialobligationswhentheyfalldueduetoshortageoffunds.TheGroup’sandtheCompany’sliquidityriskexposuremainlyarisefromvariouspayables,derivativeliabilities,loansandborrowingsandamountsduetosubsidiaryandrelatedcompanies.
TheGroupandtheCompanymonitorandmaintainsufficientlevelofcashandcashequivalenttoensureadequatefinancingoftheGroup’soperations.TheGroupalsoensurestheavailabilityoffundingthroughadequateamountofcommittedcreditfacilities.
ThenormaltradecredittermsgrantedtotheGrouprangesfrom30to90days (2010 :30 to90days)exceptforasubsidiarycompanywhosecredittermsis3marketdaysaccordingtotheBursaMalaysiaFixedDeliveryandSettlementSystemTradingRules.
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60. FINANCIALINSTRUMENTS(CONT’D)
(a) Financial risk management and policies (Cont’d)
(iv) Liquidityrisks(Cont’d)
The tablebelowsummarised thematurityprofileof theGroup’sand theCompany’s financialliabilitiesbasedoncontractualundiscountedrepaymentobligations:-
Less than 1 to 5 After 1 year years 5 years Total RM’000 RM’000 RM’000 RM’000
2011
Group
Financial liabilitiesDerivativefinancialliabilities 8,023 – – 8,023Tradeandotherpayables 225,050 – – 225,050Loansandborrowings 51,459 – – 51,459Hirepurchasepayables 6,472 10,504 15 16,991 Company Financial liabilities Amountdueto subsidiarycompanies 48,922 – – 48,922Otherpayables 2,318 – – 2,318
(v) Marketrisk
MarketriskistheriskthatthefairvalueorfuturecashflowsoftheGroup’sfinancialinstrumentswillfluctuatebecauseofchangesinmarketpriceofquotedsecuritiesheldasavailableforsaleinvestmentsandfinancialassets/liabilitiesatfairvaluethroughprofitorloss.
Group 2011 RM’000
Availableforsaleinvestments -quotedsecuritiesinMalaysia 47,219 -quotedsecuritiesoutsideMalaysia –
47,219
Financialassetsatfairvaluethroughprofitorloss -quotedsecuritiesinMalaysia 41,744 -quotedsecuritiesoutsideMalaysia 56,635
98,379
Derivativefinancialliabilities 8,023
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60. FINANCIALINSTRUMENTS(CONT’D)
(a) Financial risk management and policies (Cont’d)
(v) Marketrisk(Cont’d)
Ifpricesofquotedsecuritieschangeby5%withothervariablesheldconstant,theeffectsofthechangeonprofitforthefinancialyearandequitywillbeasbelow:-
Profitforthe Equityforthe financialyear financialyear RM’000 RM’000
Group2011 Availableforsaleinvestments -increaseby5% – 2,361-decreaseby5% – (2,361) Financialinstrumentsatfairvaluethroughprofitorloss -increaseby5% 4,518 –-decreaseby5% (4,518) –
Theassumedmovementinmarketpriceofquotedsecuritiesof5%forthemarketpricesensitivityanalysisisbasedontheprudentestimateofthecurrentmarketenvironment.
(b) Fairvaluesoffinancialinstruments
Fairvalueistheamountatwhichthefinancialinstrumentscouldbeexchangedinacurrenttransactionbetweenknowledgeablewillingpartiesinanarm’slengthtransaction,otherthaninaforcedandliquidationsale.
FinancialassetsandliabilitiesoftheGroupthatarenotcarriedatfairvalueorwhosecarryingamountsarenotapproximationoffairvalueatthereportingdateareasfollows:
Group Carrying Fair amount value Note RM’000 RM’000
2011
Financial assetsAvailableforsaleinvestments -UnquotedinvestmentsinMalaysia 10 1,575 * -Otherinvestments 10 1,625 *Heldtomaturityinvestments 11 55,294 *
* Fairvalueinformationhasnotbeendisclosedandiscarriedatcostbecausefairvaluecannotbemeasuredreliably.
Other than theabove, the remainingfinancial instruments in thestatementof financialpositionarecarriedatfairvalueorifnotcarriedatfairvalue,theircarryingamountsarereasonableapproximationoffairvalueduetotheirrelativelyshorttermnatureandtheinsignificantimpactofdiscounting.
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60. FINANCIALINSTRUMENTS(CONT’D)
(b) Fairvaluesoffinancialinstruments(Cont’d)
Thefollowingmethodsandassumptionssummarisedareusedtodeterminedthefairvaluesofeachclassoffinancialinstruments:-
(i) Quotedsecurities
Thefairvalueofquotedsecuritiesisdeterminedbyreferencetotheirpublishedmarketclosingpriceorthequotedclosingbidpriceatthereportingdate.
(ii) Unquotedsecurities/investmentsandunquotedcorporatebonds
Unquotedsecurities/investmentsarevaluedbytakingintothefutureperformance,riskprofilesandeconomicassumptionsuchasthegeographicaljurisdictionsoftheinvesteeoperates.
Unquotedcorporatebondsarevaluedbyusingdiscountedfuturecashflowmethodbasedonvariousassumptions,includingcurrentandexpectedfuturecreditlosses,marketinterestratesandinflationlevel.
(iii) Financialassetsandliabilitieswithshorttermmaturity
Thecarryingamountsofthesefinancialassetsandliabilitiesatthereportingdatearereasonableapproximationoffairvaluesduetotheirshorttermnatureandthereforehaveinsignificantimpactondiscounting.
(iv) Otherfixedinterestratesfinancialassetsandliabilities
Thefairvalueofthesefinancialassetsandliabilitiesareestimatedbydiscountedfuturecashflowatmarketincrementallendingrateforsimilarborrowingarrangementsatthereportingdate.
(v) Financialguarantees
Fairvalueisdeterminedbasedonprobabilityweighteddiscountedcashflowmethod.Theprobabilitywasestimatedbytakingintoaccountthelikelihoodoftheguaranteedpartydefaultinpaymentwithintheguaranteedperiodtogetherwithitsestimatedlossexposure.
(vi) Derivatives
Thefairvaluesofoutstandingderivativetransactionsisobtainedfrommajorfinancialinstitutions.
61. CAPITALMANAGEMENT Theprimaryobjectiveofcapitalmanagementistoensurethatanentitymaintainsastrongcreditratingand
healthycapitalratiosinordertosupportitsbusinessandmaximiseshareholdervalue.
TheGroupandtheCompanymanageitscapitalstructuretosafeguarditsabilitytocontinueasagoingconcerninordertomaintaininvestor,creditorsandmarketconfidenceandtosustainfuturebusinessdevelopment.TheGroup’sandtheCompany’soverallstrategyremainsunchangedfromthepreviousfinancialyear.TherewerenoexternallyimposedcapitalrequirementsthattheGroupandtheCompanyneedtobeincompliancewithforthefinancialyearended30June2011and2010,exceptforthestockbrokingsubsidiarycompanywhichissupervisedbytheSecuritiesCommissionandBursaMalaysiaSecuritiesBerhadandisrequiredtomaintainanumberofminimumcapitaladequacyrequirements,whichthestockbrokingsubsidiarycompanyhascompliedwith.
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61. CAPITALMANAGEMENT(CONT’D)
TheGroupandtheCompanymonitorcapitalusingagearingratio,whichisderivedbydividingtheamountofborrowingsoverequity.TheGroup’sandtheCompany’spolicyistokeepthegearingratiowithinmanageableratio.
TheGroup’s and theCompany’s gearing ratio for the financial year ended30 June2011and2010are
summarisedasbelow:-
Group Company 2011 2010 2011 2010 RM’000 RM’000 RM’000 RM’000
Totalinterestbearingborrowings 66,692 212,854 – –
Totalequityattributableto ownersoftheParent 933,639 835,916 769,144 755,598
Gearingratio 0.07 0.25 n/a n/a
62. COMPARATIVEFIGURES
Thefollowingcomparativefigureshavebeenrestatedtoconformwithcurrentfinancialyear’spresentationasfollows:-
As previously As
reported restated RM’000 RM’000
Income statements Group Revenue 423,287 426,093Otherincome 40,342 46,844Administrativeexpenses (24,699) (21,907)Otheroperatingexpenses (35,476) (48,097)Exceptionalitems 5,337 13,049Shareofprofitslesslossesofassociatecompanies (76) 265Taxation 551 (131)ProfitattributabletoowneroftheParent 46,462 53,312
Company Administrativeexpenses (12,939) (4,527)Otheroperatingexpenses – (8,412)
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63. CHANGEINACCOUNTINGPOLICYANDPRIORYEARADJUSTMENT
Duringthefinancialyear,theGroupchangeditsaccountingpolicyforinvestmentpropertiestobestatedatfairvalue.Gainandlossesarisingfromchangesinfairvaluesofinvestmentpropertiesareincludedintheincomestatementsinthefinancialyearinwhichtheyarise.InaccordancetoFRS108:AccountingPolicies,ChangesinAccountingEstimatesandErrors,thischangeinaccountingpolicyhavebeenappliedretrospectivelyandtheopeningbalancesinthestatementsoffinancialpositionasat1July2009and1July2010havebeenrestatedasbelow:-
Group Balance as at Effects Balance 30.6.2009 ofchanges asat Aspreviously inaccounting 1.7.2009 reported policy As restated RM’000 RM’000 RM’000
Statementsoffinancialposition
Non-current assets Investmentproperties 51,495 26,026 77,521Associatecompanies 15,140 1,690 16,830 Equity Retainedearnings 13,436 22,326 35,762 Non-current liabilities Deferredtaxliabilities 976 5,390 6,366
Balance as at Effects Balance 30.6.2010 ofchanges asat Aspreviously inaccounting 1.7.2010 reported policy As restated RM’000 RM’000 RM’000
Statementsoffinancialposition
Non-current assets Investmentproperties 58,092 32,659 90,751Associatecompanies 15,064 2,020 17,084 Current assets Non-currentassetsclassifiedasheldforsale 8,166 427 8,593 Equity Reserves 56,613 (142) 56,471Retainedearnings 59,898 29,176 89,074 Non-current liabilities Deferredtaxliabilities 814 6,072 6,886
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REALISED AND UNREALISED PROFITS AND LOSSES On25March2010and20December2010,BursaMalaysiaSecuritiesBerhad(“BursaMalaysia”)issueddirectivestoalllistedissuerspursuanttoParagraphs2.06and2.23ofBursaMalaysiaMainMarketListingRequirements.Thedirectiverequiresalllistedissuerstodisclosethebreakdownoftheunappropriatedprofitoraccumulatedlossesasattheendofthereportingperiod,intorealisedorunrealisedprofitsorlosses.
ThebreakdownoftheGroup’sandtheCompany’sretainedearningsintorealisedandunrealisedprofitsasat30June2011areanalysedasfollows:-
Group Company As at As at 30.6.2011 30.6.2011 RM’000 RM’000
TotalretainedprofitsoftheCompanyanditssubsidiarycompanies -Realised 34,901 11,506-Unrealised 60,980 14,702 95,881 26,208
Totalshareofretainedprofitsfromassociatecompanies -Realised 16,558 –-Unrealised 2,698 – 19,256 – Totalshareofretainedprofitsfromjointlycontrolledentities -Realised 267 –-Unrealised 15,913 – 16,180 – Add:Consolidatedadjustments 44,824 –
Totalretainedprofitsasperconsolidatedstatementoffinancialpositions 176,141 26,208
Thedetermination of realised andunrealised profits is complied basedonGuidanceofSpecialMatterNo. 1,DeterminationofRealisedandUnrealisedProfitsorLossesintheContextofDisclosurepursuanttoBursaMalaysiaSecuritiesBerhad ListingRequirements, issued by theMalaysian Institute ofAccountants on 20December2010. Thedisclosureof realisedandunrealisedprofitsabove issolely forcomplyingwith thedisclosurerequirementsstipulatedinthedirectiveofBursaMalaysiaandshouldnotbeappliedforanyotherpurposes.
SUPPLEMENTARY INFORMATION - 30 JUNE 2011
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Location Description/Existinguse
Area Tenure Approximateage of
buildings(years)
Date ofacquisition
Date ofvaluation
CarryingvalueRM'000
M&ABuilding52A,JalanSultanIdrisShah,30000Ipoh,Perak
10storeycommercialbuildingleasedoutandforuseasofficepremise
10,484sqfeet(Landarea)
Freehold 13 18-Jan-1995 – 10,874
6,Jalan31/70A,DesaSriHartamas,50480KualaLumpur
4storeyshophouseleasedout
1,760sqfeet(Landarea)
Freehold 14 31-Oct-2001 30-Jun-2011 3,200
Block45&47,TheBoulevardOffices,MidValleyCity,LingkaranSyedPutra,59200KualaLumpur
2blocksof11storeyshopofficesleasedoutandforuseasoffice
premise
54,277sqfeet Leasehold(unexpiredleaseperiodof91
years)
9 17-Jun-2002 30-Jun-2011 40,200
21,PlazaCrystalville1,Jalan23/70A,DesaSriHartamas,50480KualaLumpur
3storeyshopofficeleasedout
4,497sqfeet Freehold 10 3-Jan-2000 30-Jun-2011 3,300
LotNo.A02-A07,B09-B15&D33-D36,HS(D)122463-122466,122467-122469&122471-122480,No.PT10987-10990,10991-10993&10995-11004,MukimAmpang,DaerahUluLangat,Selangor.
17unitsof4storeyshopofficesunder
construction
23,800sqfeet(Landarea)
Leasehold(unexpiredleaseperiodof92
years)
Notapplicable 11-Mar-200530-Jun-2005&31-Oct-2005
– 10,693
R-3A-1,D'AmanRiaApartment,JalanPJU1A/41,47301PetalingJaya,Selangor.
1unitapartmentforlease 1,133sqfeet Freehold 8 22-Jun-2007 30-Jun-2011 290
8A,OrangeGroveRoad,#11-03D'GroveVilla,Singapore.
Apartmentforlease 2,701sqfeet Freehold 18 14-Feb-1996 30-Jun-2011 14,473
5,DraycottDrive,TheARCatDraycott,#15-02Singapore.
Apartmentforlease 1,270sqfeet Freehold 3 27-Nov-2008 30-Jun-2011 8,055
21,ClaymoreRoad,TheTateResidences,#07-02Singapore.
Apartmentforlease 1,894sqfeet Freehold 1 24-Feb-2010 30-Jun-2011 12,930
FlatA,23rdFloor,YorkPlace22,JohnstonRoad,HongKong.
Apartmentforlease 670sqfeet Leasehold(unexpiredleaseperiodof61
years)
1 31-Jul-2009 30-Jun-2011 6,678
HS(D)11371,No.PT14461,BukitTinggiResort,MukimandDistrictofBentung,Pahang.
Vacantlandfordevelopment
130acres Freehold Notapplicable 24-Oct-1995 – 37,576
LotNo.51979,GeranNo.43962,Mukim&DistrictofKualaLumpur.
Vacantlandfordevelopment
24,380sqfeet Freehold Notapplicable 18-May-2004 30-Jun-2011 10,730
LotNo.43927,PN40549,MukimAmpang,DaerahUluLangat,Selangor.
27unitsofapartmentsheldforsale&forlease
2.94acres(Landarea)
Leasehold(unexpiredleaseperiodof94
years)
1 9-Mar-2006 – 7,387
HS(D)95438,95500,95501&238326,PTNo.29364,29426,29427&9776,MukimSungaiBuloh,DistrictofPetaling,Selangor.
4unitsofzero-lotbungalowsheldforsale
25,572sqfeet Freehold 1 20-Jul-2005 – 3,211
No.G-F,BlockEmerald,KondominiumMahkotawira,JalanDatoKhongKamTak,Ipoh,Perak.
1unitapartment 1,331sqfeet Freehold 14years 26-Mar-1997 30-Jun-2011 190
LIST OF PROPERTIESHELD BY INSAS BERHAD GROUP AS AT 30 JUNE 2011
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AuthorisedCapital : RM1,500,000,000 Issuedandfullypaid-upCapital : RM679,554,681(excluding13,778,952Treasuryshares) ClassofShares : OrdinarysharesofRM1.00eachfullypaid VotingRights : OnevoteperRM1.00share
ANALYSISBYSIZEOFHOLDINGS Size of Holdings No. of No. of shares Shareholders % ofRM1.00each % Lessthan100 828 2.39 38,555 0.01100-1,000 1,592 4.60 595,051 0.091,001-10,000 25,210 72.86 82,825,510 12.1910,001-100,000 6,497 18.78 155,172,499 22.83100,001-33,977,734 472 1.36 351,614,425 51.7433,977,735andabove 2 0.01 89,308,641 13.14 34,601 100.00 679,554,681 100.00 THIRTYLARGESTSHAREHOLDERS
No. of Shares Name ofRM1.00each %
1 M&ANominee(Asing)SdnBhd 46,800,000 6.89 - AngloAsiaInvestmentsLimitedfor
M&AInvestmentsInternationalLimited
2 Dato'ThongKokYoon 42,508,641 6.26 3 M&ANominee(Asing)SdnBhd 33,701,162 4.96 -AngloAsiaInvestmentsLimited
4 M&ANominee(Asing)SdnBhd 27,128,192 3.99 -M&AInvestmentsPteLtd
5 M&AInvestmentsInternationalLimited 21,655,920 3.19 6 M&ANominee(Tempatan)SdnBhd 21,320,000 3.14 -BaktihanSdnBhd
7 M&ANominee(Asing)SdnBhd 19,000,134 2.80 -M&AInvestmentsInternationalLimited
8 M&ANominee(Asing)SdnBhd 16,276,000 2.40 -ArmadaleHoldingsLimited
9 HSBCNominees(Asing)SdnBhd 12,614,300 1.86 -ExemptAnforTheBankofNewYorkMellon(MellonAcct)
10 M&ANominee(Asing)SdnBhd 11,451,408 1.69 -ClearwindHoldingsLimited
11 ImmobillaireHoldingsSdnBhd 10,059,643 1.48 12 GanThianChin 8,718,100 1.28 13 KimPohHoldingsSdnBhd 6,240,000 0.92
14 AlliancegroupNominees(Tempatan)SdnBhd 4,660,920 0.69 -PledgedSecuritiesAccountforLohKuanFong(8078549)
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THIRTYLARGESTSHAREHOLDERS
No. of Shares Name ofRM1.00each %
15 M&ANominee(Tempatan)SdnBhd 4,646,611 0.68 -TitanExpressSdnBhd
16 CitigroupNominees(Asing)SdnBhd 4,573,808 0.67 -CBNYforDimensionalEmergingMarketsValueFund
17 CitigroupNominees(Asing)SdnBhd 3,442,240 0.51 -ExemptAnforOCBCSecuritiesPrivateLimited(ClientA/C-NR)
18 CimsecNominees(Asing)SdnBhd 3,332,312 0.49 -ExemptAnforCIMBSecurities(Singapore)PteLtd(RetailClients)
19 KenangaNominees(Tempatan)SdnBhd 2,674,268 0.39 -PledgedSecuritiesAccountforChinKiamHsung
20 MKWJayaSdnBhd 2,638,960 0.39
21 PublicNominees(Tempatan)SdnBhd 2,549,032 0.38 -PledgedSecuritiesAccountforTanGeokLian(KLC/JFA)
22 Dato'ThongKokKhee 2,337,920 0.34
23 EnterlightInvestmentsPteLtd 2,213,500 0.33
24 DatinTanFewTeng 2,146,416 0.32
25 PerakTradersHoldingsSdnBhd 2,127,008 0.31
26 CitigroupNominees(Asing)SdnBhd 1,649,688 0.24 -CBNYforDFAEmergingMarketsSmallCapSeries
27 MaybanNominees(Asing)SdnBhd 1,562,952 0.23 -PledgedSecuritiesAccountforSanTuanSam
28 PublicNominees(Tempatan)SdnBhd 1,514,700 0.22 -PledgedSecuritiesAccountforLeeHockLeong(E-PDG/SAN)
29 HLBNominees(Tempatan)SdnBhd 1,503,796 0.22 -PledgedSecuritiesAccountforLohKuanFong
30 MaybanSecuritiesNominees(Tempatan)SdnBhd 1,475,900 0.22 -PledgedSecuritiesAccountforLimTienHok(REM175-MARGIN)
322,523,531 47.46
SUBSTANTIAL SHAREHOLDERS No. of Shares NameofShareholders ofRM1.00each %
1. Dato'ThongKokKhee* 156,342,809 23.012. M&AInvestmentsInternationalLimited 122,128,606 17.973. Dato'ThongKokYoon** 72,748,676 10.71
* Directinterestanddeemedinterestbyvirtueofhisspouse'sinterestintheCompanyandhissubstantialinterestinM&AInvestmentsInternationalLimited,ImmobillaireHoldingsSdnBhdandBaktihanSdnBhdpursuanttoSection6AoftheCompaniesAct,1965.
** Directinterestanddeemedinterestbyvirtueofhisspouse'sinterestintheCompanyandhisinterestinTitanExpressSdnBhd,PerakTradersHoldingsSdnBhdandBaktihanSdnBhdpursuanttoSection6AoftheCompaniesAct,1965.
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142 STATEMENT OF DIRECTORS’ INTEREST IN THE COMPANY AND ITS RELATED CORPORATIONS AS AT 28 OCTOBER 2011
No. of SharesThe Company – Insas Berhad Direct Interest Deemed Interest
Number % Number %1. Y.A.M.TengkuPuteri Seri Kemala PahangTengku
HajjahAishahbteSultanHajiAhmadShah,DK(II),SIMP119,600 0.02 – –
2. Dato’ThongKokKhee 2,337,920 0.34 154,004,889(1) 22.213. Dato’WongGianKui 387,920 0.06 1,031,680(2) 0.154. Dr.TanSengChuan – – – –5. Ms.SoonLiYen – – – –6. Mr.OhSeongLye – – – –Subsidiary Company – Insas Properties Sdn Bhd No. of Shares1. Dato’WongGianKui 80,000 10.00 – –SubsidiaryCompany–SegarRayaDevelopmentSdnBhd No. of Shares1. Dato’WongGianKui 129,999 13.00 80,000(2) 8.00SubsidiaryCompany–PremiumYieldSdnBhd No. of Shares1. Dato’WongGianKui – – 49,999(2) 5.00SubsidiaryCompany–DellmaxWorldwideSdnBhd No. of Shares1. Dato’WongGianKui – – 35,000(3) 35.00Subsidiary Company – Gryphon Asset Management Sdn Bhd No. of Shares1. Dato’ThongKokKhee – – 500,000(4) 25.00Subsidiary Company – Micromodule Pte Ltd No. of Shares1. Dr.TanSengChuan 315,161 1.71 – –
ByvirtueofDato’ThongKokKhee’sinterestinthesharesoftheCompany,heisalsodeemedinterestedinthesharesofitsrelatedcorporationstotheextentthattheCompanyhasaninterestunderSection6AoftheCompaniesAct,1965.
Otherthanstatedabove,noneoftheotherDirectorsoftheCompanyhadanydirectanddeemedinterestintheCompanyoritsrelatedcorporations.
Notes:(1) Deemedinterestedbyvirtueofhisspouse’sinterestandsubstantialinterestinM&AInvestmentsInternationalLtd,ImmobillaireHoldings
SdnBhdandBaktihanSdnBhd.(2) Deemedinterestedbyvirtueofhisspouse’sinterestintheCompany.(3) DeemedinterestedbyvirtueofhisinterestinTrueAcresSdnBhdandhisspouse’sinterestintheCompany.(4) DeemedinterestedbyvirtueofhisindirectinterestinMaxcourtEnterpriseSdnBhd.
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NOTICEISHEREBYGIVENthattheForty-NinthAnnualGeneralMeetingoftheCompanyshallbeheldatDewanBerjaya,BukitKiaraEquestrian&CountryResort,JalanBukitKiara,OffJalanDamansara,60000KualaLumpuronTuesday,20thDecember2011at11.30a.m.forthefollowingpurposes:-
AGENDA
1. Toreceive,considerandadopttheAuditedFinancialStatementsoftheCompanyfortheyearended30June2011andtheReportsoftheDirectorsandAuditorsthereon.
2. ToapprovethepaymentofDirectors’feesofRM64,320fortheyearended30June2011.
3. Tore-electthefollowingDirectorsretiringpursuanttoArticle96oftheCompany’sArticlesofAssociation:-
3.1Dato’WongGianKui
3.2DrTanSengChuan
4. Tore-appointMessrs.SJGrantThorntonasAuditorsoftheCompanyandtoauthorisetheDirectorstofixtheirremuneration.
SPECIAL BUSINESS
5. Toconsiderandifthoughtfit,passwithorwithoutmodificationsthefollowingResolution:
As Ordinary Resolution
AUTHORITYTOISSUEANDALLOTSHARESPURSUANTTOSECTION132DOFTHECOMPANIESACT,1965
“THAT,subjectalwaystotheCompaniesAct,1965,theArticlesofAssociationoftheCompanyandtheapprovalsoftherelevantgovernmental/regulatoryauthorities,theDirectorsbeandareherebyempowered,pursuanttoSection132DoftheCompaniesAct,1965,toissueandallotsharesintheCompanyfromtimetotimeanduponsuchtermsandconditionsandforsuchpurposesastheDirectorsmaydeemfitprovidedthattheaggregatenumberofsharesissuedpursuanttothisresolutiondoesnotexceed10percentoftheissuedsharecapitaloftheCompanyforthetimebeingandthatsuchauthorityshallcontinueinforceuntiltheconclusionofthenextAnnualGeneralMeetingoftheCompanyandthattheDirectorsbeandarealsoempoweredtoobtaintheapprovalfromtheBursaMalaysiaSecuritiesBerhadforthelistingandquotationfortheadditionalsharessoissued.”
6. Toconsiderandifthoughtfit,passwithorwithoutmodificationsthefollowingResolution:
As Ordinary Resolution
PROPOSEDRENEWALOFAUTHORITYTOPURCHASEITSOWNSHARESBYTHECOMPANY
“THAT, subject always to theCompaniesAct, 1965 (“theAct”), rules, regulations andordersmadepursuanttotheAct,provisionsoftheCompany’sMemorandumandArticlesofAssociationandBursaMalaysiaSecuritiesBerhad (“BursaSecurities”)MainMarketListingRequirementsandanyotherrelevantauthority,theDirectorsoftheCompanybeandareherebyauthorisedtomakepurchasesofordinarysharesofRM1.00eachintheCompany’sissuedandpaid-upordinarysharecapitalthroughtheBursaSecuritiesandtotakeallsuchstepsasarenecessary(includingtheopeningandmaintainingofadepositoryaccountundertheSecuritiesIndustry(CentralDepositories)Act,1991)andenterintoanyagreements,arrangementsandguaranteeswithanypartyorpartiestoimplement,finaliseandgivefulleffecttotheaforesaidpurchasewithfullpowerstoassenttoanyconditions,modifications,revaluations,variationsand/oramendments(ifany)asmaybeimposedbytherelevantauthoritiesfromtimetotimeandtodoallsuchactsandthingsasthesaidDirectorsmaydeemfitandexpedientinthebestinterestsoftheCompany,subjectfurthertothefollowing:-
NOTICE OF ANNUAL GENERAL MEETING
Resolution 1
Resolution 2
Resolution 3
Resolution 4
Resolution 5
Resolution6
Resolution 7
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NOTICE OF ANNUAL GENERAL MEETING (CONT’D)
(i) themaximumnumberofordinaryshareswhichmaybepurchasedandheldbytheCompanyshallbeequivalenttotenpercentum(10%)ofthetotalissuedandpaid-upsharecapitaloftheCompanyforthetimebeing;
(ii) themaximumfundstobeallocatedbytheCompanyforthepurposeofpurchasingtheordinarysharesshallnotexceedthetotalretainedprofitsorsharepremiumreserveoftheCompanyorboth;
(iii) theapprovalconferredbythisresolutionwillcommenceimmediatelyuponthepassingofthisresolutionandwillexpireattheconclusionofthenextannualgeneralmeetingof theCompanyfollowingthepassingof thisresolution(unlessearlierrevokedorvariedbyordinaryresolutionoftheshareholdersoftheCompanyinageneralmeeting)butnotsoastoprejudicethecompletionofpurchasebytheCompanybeforetheaforesaidexpirydateand,inanyevent,inaccordancewiththeprovisionsoftheAct,therulesandregulationsmadepursuanttheretoandtheguidelinesissuedbytheBursaSecuritiesand/oranyotherrelevantauthority;and
(iv) uponcompletionof thepurchase(s)of theordinarysharesoranypart thereofbytheCompany,theDirectorsoftheCompanybeandareherebyauthorisedtocancelallthesharessopurchasedorretainallthesharesastreasurysharesforfuturere-saleorfordistributionasdividendtotheshareholdersoftheCompanyorretainpartthereofastreasurysharesandcancellingthebalance,andinanyothermannerasprescribedbytheAct,rules,regulationsandordersmadepursuanttotheActandtherequirementsoftheBursaSecuritiesandanyotherrelevantauthorityforthetimebeinginforce.”
7. TotransactanyotherbusinessoftheCompanyofwhichduenoticeshallhavebeengiveninaccordancewiththeCompany’sArticlesofAssociationandtheCompaniesAct,1965.
ByOrderOfTheBoard
ChowYuetKuenYauJyeYeeSecretaries
KualaLumpur25November2011
ExplanatoryNotestoOrdinaryResolution6
TheCompanyisactivelylookingintoprospectiveareastobroadenitsoperatingbaseandearningpotentialoftheCompanywhichmayinvolvetheissueofnewshares.InordertoavoidanydelayandcostsinvolvedinconveningageneralmeetingoftheCompanytoapprovesuchissueofshares,theproposedadoptionofOrdinaryResolution6istoempowertheDirectorsoftheCompanytoissueandallotsharesuptoanamountnotexceedingintotal10%oftheissuedsharecapitaloftheCompanyforthetimebeingforsuchpurpose.Thisauthority,unlessrevokedorvariedatageneralmeeting,willexpireatthenextAnnualGeneralMeetingoftheCompany.
TheGeneralMandatesoughtforissueofsharesupto10%oftheissuedcapitaloftheCompanyisarenewaltotheGeneralMandatewhichwasapprovedbyshareholdersatthelastAnnualGeneralMeetingheldon21December2010.AsatthedateofthisNotice,theCompanyhasnotissuedanynewsharesunderthisGeneralMandatewhichwilllapseattheconclusionoftheAnnualGeneralMeeting.
TherenewaloftheGeneralMandatewillprovideflexibilitytotheCompanyforanypossiblefundraisingactivitiesincludingbutnotlimitedtoissuanceofnewsharesforfundinginvestmentproject(s),workingcapitaland/oracquisitions.
NOTICE OF ANNUAL GENERAL MEETING
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NOTICE OF ANNUAL GENERAL MEETING (CONT’D)
ExplanatoryNotestoOrdinaryResolution7
TheproposedOrdinaryResolution7ifpassedwillempowertheDirectorstopurchasetheCompany’ssharesofupto10%oftheissuedandpaid-upcapitaloftheCompanybyutilisingthefundsallocatedoutofthesharepremiumaccountand/orretainedprofitoftheCompany.Thisauthority,unlessrevokedorvariedatageneralmeeting,willexpireattheconclusionofthenextAnnualGeneralMeetingoftheCompany.ForfurtherinformationontheProposedShareBuy-Back,kindlyrefertotheStatementinRelationtotheProposedRenewalofAuthoritytoPurchaseitsOwnSharesbytheCompanyonPage147to150oftheAnnualReport2011.
Notes:-
(i) A member entitled to attend and vote at the meeting is entitled to appoint not more than two proxies to attend and vote in his stead. Where a member appoints two (2) proxies, he shall specify the proportion of his shareholdings to be represented by each proxy.
(ii) AmemberoftheCompanywhoisanauthorisednomineeasdefinedundertheSecuritiesIndustry(CentralDepositories)Act1991mayappointatleastone(1)proxyinrespectofeachsecuritiesaccount.
(iii) A proxy need not be a member of the Company. (iv) Inthecaseofacorporatemember,theinstrumentappointingaproxyshallbeunderitsCommonSealorunderthehandofadulyauthorised
officerorattorney.(v) TheinstrumentappointingaproxymustbedepositedattheCompany’sRegisteredOfficesituatedatNo45-5,TheBoulevard,MidValleyCity,
LingkaranSyedPutra,59200KualaLumpurnotlessthan48hoursbeforethetimeappointedforholdingthemeetingoratanyadjournmentthereof.
NOTICE OF ANNUAL GENERAL MEETING
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146 STATEMENT ACCOMPANYING NOTICE OF THE 49TH ANNUAL GENERAL MEETING (PURSUANT TO PARA 8.27(2) OF THE LISTING REQUIREMENTS OF THE BURSA MALAYSIA SECURITIES BERHAD)
1. TheDirectorswhoarestandingforre-electionatthe49thAnnualGeneralMeetingoftheCompanypursuanttotheCompany’sArticlesofAssociationare:-
Article96
(a) Dato’WongGianKui
(b) DrTanSengChuan
2. TheprofileoftheDirectorsstandingforre-electionaresetoutinpage3and4oftheAnnualReport.
3. ThesecuritiesholdingsoftheDirectorsstandingforre-electionareasfollows:-
(a) Dato’WongGianKui
Ordinaryshares : Directinterest-387,920
Deemedinterest-1,031,680
(b) DrTanSengChuan : Nil
4. DetailsoftheBoardMeetingsheldinthefinancialyearended30June2011:-
Atotaloffive(5)BoardMeetingswereheldduringthefinancialyearended30June2011attheBoardroom,Suite23.02,Level23,TheGardensSouthTower,MidValleyCity,LingkaranSyedPutra,59200KualaLumpur.ThedateandtimeoftheBoardMeetingsanddetailsofattendanceoftheDirectorsaresetoutintheStatementofCorporateGovernanceappearingonpage8oftheAnnualReport.
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147STATEMENT ACCOMPANYING NOTICE OF THE 49TH ANNUAL GENERAL MEETING
TheBursaMalaysiaSecuritiesBerhad(“BursaSecurities”)takesnoresponsibilityforthecontentsofthisStatement,makesnorepresentationastoitsaccuracyorcompletenessandexpresslydisclaimsanyliabilitywhatsoeverforanylosshowsoeverarisingfromorinrelianceuponthewholeoranypartofthecontentsofthisStatement.
1. INTRODUCTION
On21October2011,theCompanyannounceditsintentiontoseektheapprovalfromtheshareholdersforrenewalofauthorityfortheCompanytopurchaseand/orholditsownordinarysharesofRM1.00each(“Shares”)uptoamaximumoftenpercent(10%)oftheissuedandfullypaid-upsharecapitaloftheCompanyforthetimebeing(“Proposed Share Buy-Back”).
2. THEPROPOSEDSHAREBUY-BACK
TheProposedShareBuy-BackissubjecttocompliancewithSection67AoftheCompaniesAct,1965(“Act”),ListingRequirements of theBursaSecurities (“Listing Requirements”) and any prevailing laws, rules,regulations,orders,guidelinesandrequirementsissuedbytherelevantauthoritiesatthetimeofpurchase.
Basedontheissuedandpaid-upsharecapitaloftheCompanyasat28October2011of693,333,633Shares,thenumberofsharesthatcanbepurchasedbytheCompanyisupto69,333,363Sharesrepresentingupto10%oftheissuedandpaid-upordinarysharecapitaloftheCompanyinclusiveof13,778,952SharesthathavebeenpurchasedandretainedasTreasuryShares.Assuch,thebalancethatcanbepurchasedbytheCompanyis55,554,411Shares.
PursuanttoChapter12oftheListingRequirements,theProposedShareBuy-Backmustbemadewhollyoutofretainedprofitsand/orthesharepremiumaccountofthelistedcompany.Basedonthelatestannualauditedaccountsasat30June2011,thesharepremiumaccountandtheretainedprofitoftheCompanywereRM54,489,000andRM26,208,000respectively.TheBoardthereforeproposestoallocateasumuptotheaggregateofthesharepremiumaccountandretainedprofitfortheProposedShareBuy-Back,whichshallbefundedbyinternalgeneratedfundsoftheGroupand/orexternalborrowings.IntheeventthattheCompanyintendstofundtheProposedShareBuy-Backviaexternalborrowings,theCompanywouldensurethereissufficientfundstorepaytheexternalborrowingsandthattherepaymentwouldhavenomaterialimpactonthecashflowoftheGroup.
3. RATIONALE FOR, POTENTIAL ADVANTAGES AND DISADVANTAGES OF THE PROPOSED SHARE BUY-BACK
TheProposedShareBuy-BackwillenabletheCompanytoutiliseitsfinancialresourcestopurchaseitsownSharesfromthemarket.TheCompanymay,throughthisscheme,beabletoreducetheliquidityofSharesinthemarketwhichgenerallywillhaveapositiveimpactonthemarketpriceofShares.
TheDirectorsmayatitsdiscretionretainthepurchasedSharesasTreasuryShares,orforresaleontheBursaSecuritieswiththeintentionofrealizingapotentialgain,ortodistributetheTreasurySharestotheshareholdersasdividendstoserveasarewardtotheshareholders.TheDirectorscouldalsooptforthepurchasedSharestobecancelled,orretainpartthereofasTreasurySharesandcancellingthebalance,andtotreattheSharesinanymannerasprescribedbytheAct,rules,regulationsandordersmadepursuanttotheAct,therequirementsofBursaSecuritiesandanyotherrelevantauthorities.
TheProposedShareBuy-BackwillneverthelessreducethefinancialresourcesoftheGroupandmayresultintheGroupforegoingotherinvestmentopportunitiesthatmayemergeinthefuture.
TheBoardwillbemindfuloftheinterestoftheCompanyanditsshareholdersinimplementingtheProposedShareBuy-Back.
STATEMENT IN RELATION TO THE PROPOSED RENEWAL OF AUTHORITY TO PURCHASE ITS OWN SHARES BY THE COMPANY
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4. EFFECTSOFTHEPROPOSEDSHAREBUY-BACK
4.1 On Share Capital
Therewillbenoeffectontheissuedandfullypaid-upsharecapitaloftheCompanyifthepurchasedSharesareretainedasTreasuryShares.
Intheeventthatthe69,333,363Sharesrepresentingapproximately10%oftheissuedandfullypaid-upsharecapitaloftheCompanyarepurchasedandcancelled,theeffectonthesharecapitaloftheCompanyareillustratedasfollows:-
No. of Shares Issuedandfullypaid-upsharecapitalasat28October2011 693,333,633 AssumedtheSharespurchasedandcancelled (69,333,363)* Resultantissuedandfullypaid-upsharecapital 624,000,270
* Inclusiveofthe13,778,952SharesalreadypurchasedandretainedasTreasurySharesasat28October2011.
4.2 On Earnings
TheeffectoftheProposedShareBuy-BackonearningsandearningspershareoftheGroupwilldependonthequantumofSharespurchased,thepurchasepriceandtheeffectivefundingcostthereon.
4.3 OnNetAssets(“NA”)
TheeffectoftheProposedShareBuy-BackontheNApershareoftheGroupwilldependonthequantumofSharespurchasedandthepurchasepriceoftheSharesatthetimeofbuyback.
4.4 OnWorkingCapital
TheProposedShareBuy-BackwillreducetheworkingcapitaloftheCompany,thequantumofwhichwilldepend,amongstothers,thequantumofSharespurchasedandthepurchasepriceoftheShares.
4.5 On Public Shareholding Spread
Thepublic shareholding spreadof theCompanyasat 28October 2011 is approximately 69.09%.AssumingtheProposedShareBuy-BackiscarriedoutinfullandthereisnochangeinsharesheldbySubstantialShareholders,Directorsandpersonsconnectedtothem,theproformapublicshareholdingspreadoftheCompanywouldbereducedtoapproximately66.33%.
4.6 OnShareholdingsofSubstantialShareholdersandDirectors
TheeffectoftheProposedShareBuy-BackontheshareholdingoftheSubstantialShareholdersandDirectorsoftheCompanybasedontheRegisterofSubstantialShareholdersandRegisterofDirectors’shareholdingrespectivelyasat28October2011areasfollows:-
No. of ordinary shares held Asat28October2011(1) After the Proposed Share Buy-Back(2)
Direct % Indirect % Direct % Indirect % Substantial Shareholders Dato’ThongKokKhee 2,337,920 0.34 154,004,889(3) 22.66 2,337,920 0.37154,004,889(3) 24.68
STATEMENT IN RELATION TO THE PROPOSED RENEWAL OF AUTHORITY TO PURCHASE ITS OWN SHARES BY THE COMPANY
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No. of ordinary shares held Asat28October2011(1) After the Proposed Share Buy-Back(2)
Direct % Indirect % Direct % Indirect % Substantial Shareholders (continue) M&AInvestments InternationalLimited 122,128,606 17.97 – –122,128,606 19.57 – – Dato’ThongKokYoon 42,508,641 6.26 30,240,035(4) 4.45 42,508,641 6.81 30,240,035(4) 4.85
Directors Y.A.M.TengkuPuteriSeri KemalaPahangTengku HajjahAishah bteSultan HajiAhmadShah, DK(II),SIMP 119,600 0.02 – – 119,600 0.02 – – Dato’ThongKokKhee 2,337,920 0.34 154,004,889(3) 22.66 2,337,920 0.37154,004,889(3) 24.68 Dato’WongGianKui 387,920 0.06 1,031,680(5) 0.15 387,920 0.06 1,031,680(5) 0.17 Dr.TanSengChuan – – – – – – – – Ms.SoonLiYen – – – – – – – – Mr.OhSeongLye – – – – – – – –
Notes:-
(1) Calculatedbasedon679,554,681Shares,afteradjustingfor13,778,952SharesalreadypurchasedandretainedasTreasurySharesasat28October2011.
(2) Assuming theProposedShareBuy-Backareundertaken in full and themaximumof 69,333,363Shares sopurchasedrepresentingamaximumoftenpercent(10%)oftheissuedandfullypaid-upsharecapitaloftheCompanyasat28October2011areretainedasTreasurySharesand/orcancelled.
(3) Deemedinterestbyvirtueofhisspouse’sinterestandsubstantialinterestinM&AInvestmentsInternationalLimited,ImmobillaireHoldingsSdnBhdandBaktihanSdnBhd.
(4) Deemedinterestbyvirtueofhisspouse’sinterestintheCompany,TitanExpressSdnBhd,PerakTradersHoldingsSdnBhdandBaktihanSdnBhd.
(5) Deemedinterestbyvirtueofhisspouse’sinterestintheCompany.
5. IMPLICATIONRELATINGTOTHEMALAYSIANCODEONTAKE-OVERSANDMERGERS1998(“CODE”)
ThedirectandindirectshareholdingsofSubstantialShareholders,namelyDato’ThongKokKheeandDato’ThongKokYoonandpersonsconnectedtothemnamelyDatinYeohKweeSeeandDatinTanFewTeng,beingtheirrespectivespousesandM&AInvestmentsInternationalLimited,ImmobillaireHoldingsSdnBhdandBaktihanSdnBhd(collectively“MajorShareholders”)asat28October2011areapproximately30.56%oftheissuedandfullypaid-upsharecapitaloftheCompanyafteradjustingfor13,778,952SharesalreadypurchasedandretainedasTreasuryShares. In theevent that theProposedShareBuy-Backofup toapproximatelytenpercent(10%) iscarriedout in full, theircollectiveshareholdings in theCompanywillbe increasedtoapproximately33.28%oftheissuedandfullypaid-upsharecapitaloftheCompanyifthenumberofordinarysharesheldbythemremainunchanged.
STATEMENT IN RELATION TO THE PROPOSED RENEWAL OF AUTHORITY TO PURCHASE ITS OWN SHARES BY THE COMPANY
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5. IMPLICATIONRELATINGTOTHEMALAYSIANCODEONTAKE-OVERSANDMERGERS1998(“CODE”)(CONT’D)
PursuanttotheCode,apersonwhoholdsmorethanthirtythreepercent(33%)ofthevotingsharesoftheCompanyshallundertakeamandatorygeneralofferfortheremainingordinarysharesoftheCompanynotalreadyownedbythesaidperson.Accordingly,iftheProposedShareBuy-Backisimplementedinfull,theMajorShareholderswouldthereforetriggeramandatorygeneralofferpursuanttotheCode.
Asatthedatehereof,theCompanyhasyettodecideonthepercentageofitsownSharestobepurchasedundertheProposedShareBuy-Back.However,theCompanywillensurethenumberofSharestobepurchasedundertheProposedShareBuy-BackwillnotresultintheMajorShareholdersholdingcollectivelymorethan33%ofthevotingsharesintheCompanytherebytriggeringamandatorygeneraloffer.
6. DIRECTORS’ANDSUBSTANTIALSHAREHOLDERS’INTEREST
Savefortheproportionateincreaseinthepercentageshareholdingsand/orvotingrightsofalltheshareholdersintheCompanyasaconsequenceoftheProposedShareBuy-Back,noneoftheDirectorsandSubstantialShareholdersandpersonsconnectedtothemhaveanyinterest,directlyorindirectly,intheProposedShareBuy-Backand,ifany,theresaleoftheTreasuryShares.
7. DIRECTORS’ RECOMMENDATION
YourDirectorsareoftheopinionthattheProposedShareBuy-BackisinthebestinterestoftheCompanyandaccordinglyrecommendthatyouvoteinfavouroftheordinaryresolutiontobetabledattheforthcomingForty-NinthAnnualGeneralMeeting.
8. FURTHER INFORMATION
ShareholdersarerequestedtorefertotheCompany’sStatementsofChangesinEquityforthefinancialyearended30June2011andtheNote28tothefinancialstatementsforfurtherinformationonthepurchasesmadebytheCompanyofitsownSharesduringtheaforesaidfinancialyear.
STATEMENT IN RELATION TO THE PROPOSED RENEWAL OF AUTHORITY TO PURCHASE ITS OWN SHARES BY THE COMPANY
I/We______________________________________________________________________________________ I.C.No./CompanyNo.___________________________CDSAccountNo.______________________________ of________________________________________________________________________________________ beingamember/membersofINSASBERHADherebyappoint________________________________________ I.C.No.____________________of_____________________________________________________________ orfailinghim/her,_______________________________________________I.C.No.______________________ of________________________________________________________________________________________ orfailingwhom,theChairpersonofthemeeting,asmy/ourproxytovoteforme/usandonmy/ourbehalfattheForty-NinthAnnualGeneralMeetingoftheCompanytobeheldatDewanBerjaya,BukitKiaraEquestrian&CountryResort,JalanBukitKiara,OffJalanDamansara,60000KualaLumpuronTuesday,20December2011at11.30a.m.oratanyadjournmentthereofinthemannerindicatedbelow:-
For Against
RESOLUTION1–ToreceiveandadopttheAuditedFinancialStatements
RESOLUTION2–ToapprovethepaymentofDirectors’Fees
RESOLUTION3–Tore-electDato’WongGianKuiasDirector
RESOLUTION4–Tore-electDr.TanSengChuanasDirector
RESOLUTION5–Tore-appointMessrs.SJGrantThorntonasAuditors
RESOLUTION6–Toapprovetheauthoritytoissueandallotshares
RESOLUTION7–ToapprovetherenewalauthoritytopurchaseitsownsharesbytheCompany
(Pleaseindicatewithan“X”inthespaceprovidedwhetheryouwishyourvotetobecastfororagainsttheResolution.Intheabsenceofspecificdirections,yourProxywillvoteorabstainashethinksfit.)
Datedthis______dayof_________________,2011
………………………………………………….SignatureofShareholder(s)/CommonSeal
NOTES:
Amemberentitledtoattendandvoteatthemeetingisentitledtoappointnotmorethantwoproxiestoattendandvoteinhisstead.Whereamemberappointstwo(2)proxies,heshallspecifytheproportionofhisshareholdingstoberepresentedbyeachproxy.AmemberoftheCompanywhoisanauthorisednomineeasdefinedundertheSecuritiesIndustry(CentralDepositories)Act1991mayappointatleastone(1)proxyinrespectofeachsecuritiesaccount.AproxyneednotbeamemberoftheCompany.Inthecaseofacorporatemember,theinstrumentappointingaproxyshallbeunderitsCommonSealorunderthehandofadulyauthorisedofficerorattorney.
TheinstrumentappointingaproxymustbedepositedattheCompany’sRegisteredOfficesituatedatNo45-5,TheBoulevard,MidValleyCity,LingkaranSyedPutra,59200KualaLumpurnotlessthanforty-eight(48)hoursbeforethetimeappointedforholdingthemeetingoratanyadjournmentthereof.
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FORM OF PROXYFORTY-NINTH ANNUAL GENERAL MEETING
No.ofSharesheld
INSAS BERHAD(CompanyNo.4081-M)
The Company SecretaryINSAS BERHAD (4081–M)No. 45-5, The BoulevardMid Valley CityLingkaran Syed Putra59200 Kuala LumpurMalaysia
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Insas Berhad (Company No. 4081-M)
Suite 23.02 Level 23, The Gardens South Tower, Mid Valley City, Lingkaran Syed Putra, 59200 Kuala Lumpur. Telephone : 603 22829311 Facsimile : 603 22848500
INSAS BERHAD (Company No. 4081-M)
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