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REPORT ON CORPORATE SOCIAL RESPONSIBILITY (cont’d)
Think Green (cont’d)
The standard of the bank’s forestry policy has beenadopted to assess our performance in the followingareas:
• Legality• Maintenance of High Conservation Value Forest
(‘HCVFs’) and/or HCVs• Indigenous Peoples’ Customary Rights
A HCVF study was conducted by an independentconsultant, Ecosol Consultancy Sdn Bhd in conjunctionof HSBC’s verification of our forestry policy. The Groupintroduced a requirement that before entering newcoupe, land clearing exercise involves careful planningand demarcation of areas to be left for protection suchas riparian buffer zones, steep areas, cultural valuesand local community “reserves”; identification of floraand fauna to be preserved and taking precautionary ormitigation measures to protect these flora and faunaand to conserve biodiversity. This practice will be carriedout in compliance with the policy before the entry tocoupes in future.
Care is taken to ensure that all activities are carried outin our reforestation operations with minimal risk to theenvironment through the practice of reduced impactlogging (‘RIL’). The Group’s RIL involved modification ofexcavator to use the hydraulic arm as a “spar” where awire rope is passed through to retract a felled tree/logfrom a distance. The modified excavator will optimiseits mobility by working from a narrow cleared terrace ortrack to retrieve the logs while bumps are constructedto slow down the rain water flow. The RIL method ofharvesting employed by our logging contractors isbased on the excavator ‘high-lead’ cable yardingsystem. This helps to reduce the machinery impact, soilcompaction, erosion and damage to residual vegetation.
Our forest workers attended training sessions ofSarawak Timber Association Training (‘STAT’) under agovernment approved programme in the field of treefelling, log extraction, log loading, clear-felling sitepreparation, mechanical site preparation, and tree,timber and log identification. The tractor and chainsawoperators are trained in the skid trail construction anddirectional felling.
The induction of Environmental Management System(‘EMS’) at our plywood mill to collate and audit data toreport on areas that affect safety, the environment andenvironmental laws and regulations, including landprotection and forest rehabilitation, wastemanagement, recycling, reuse and eco-efficiency,conservation of water, energy usage and emissions isanother effort towards reducing negative impact on theenvironment. Plywood mill adopts internationalenvironmental management standard ISO 14001 as abenchmark in assessing, enhancing and maintainingthe environmental integrity of EMS. We are happy toreport that all systems fully complied with ISO 14001requirements in every quarterly internal audit in thepast year.
Another initiative that is continually implemented andimproved is treating the waste water of palm oil millbefore its discharge to the watercourse, e.g. river ordrain through the biological treatment system. Weadopt standard from Department of EnvironmentSarawak and it is the policy of the Group to ensure thatsite preparation in oil palm plantation was carried outwith minimal impact on biodiversity. The overall testedparameters result, which was carried out by ESILaboratory Sdn Bhd, for waste water monitoring in 2010was satisfactorily.
The biomass co-gen power plant commissioned in 2008is another initiative towards reducing global warming.The wood residue is converted into renewable energy bythe plant which is capable of generating up to 11.4megawatts of electricity, providing the power to run theplywood mill and sawmill. Out of installed capacity of11.4 megawatts of electricity, the power plant generated7.5 megawatts of electricity for our plywood mill andsawmill’s consumption. The excess steam power isreserved for additional new dryer installed in December2010 which has started its operation.
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REPORT ON CORPORATE SOCIAL RESPONSIBILITY (cont’d)
ENVIRONMENTAL MANAGEMENT (cont’d)
Think Green (cont’d)
Besides, we also inculcate awareness among staff onthe global warming issue and the Group’s initiative onthe energy and water conservation. Practices such aspaper re-cycling, air-conditioner units set at optimumtemperature and automatically switching off at 5pm arepart of the awareness drives.
Green Trails
Constructing of walkway at Bukit Lima Forest Park forwalking and jogging paths is a part of the Group’s efforttowards promoting local community, staff andassociates to appreciate the natural environmentthrough walking or jogging through the forest.
Certified Eco-Wood
As an industry leader, we remain committed to thecontinuous improvement of forest stewardship andmaintain our internationally-recognised third partycertifications.
We take pride in our reputation when we signed a 20-year agreement with the Forestry Tasmania, anAustralian government agency for the monthly supplyof 15,000m³ of planted eucalyptus billets from re-growth forests to each of the two veneer mills, locatedat Huon and Smithton, Tasmania. These two (2) millshave created new jobs for the local community, andmore importantly enable the Group to produceenvironmentally friendly eco-products from theirProgramme for the Endorsement of Forest Certification(‘PEFC’) certified forests that are envisaged in ourmission statement. PEFC is a European certificationprogramme for sustainable forest management. Basedon standards developed by independent environmentalprotection organisations and the forest industry, ourcustomers and society at large can rest assured thatthe wood used comes from sustainable managedforests. Ta Ann’s value-added eco-products include
eco-OA Flooring, eco-Marine, eco-Container Flooring,eco-Stepboard and etc whose quality meets the JapanAgricultural Standard (‘JAS’) standard and are wellaccepted by the Japanese and European markets.
Besides, our plywood mill also passed the twice yearlysurveillance audits for the ‘CE marking’ for its product,another European product marking and certificationsystem that guarantees our products comply with allapplicable European product safety, health andenvironmental requirements within the CE markingsystem. Plywood division further secured certificationfrom an independent certifying body, Bureau Veritas onits container plywood production. With this certification,Ta Ann’s container flooring is recognised to haveattained the quality and standard requirement set by thecertifying body. These achievements are the result ofour active pursuit of manufacturing products that areenvironmentally friendly.
Forest Management and Sustainability
Regenerating our forests through tree planting is oneof our efforts towards promoting a greenerenvironment. In 1999 when Ta Ann Group was formed,we set out as one of our mission to establish asustainable resource base for producing products thatare eco-friendly. Through concerted efforts of theplantation management and staff over these years, wehave planted over 30,000 hectares of acacia,kelampayan and other local tree species, which shallbecome the base of our renewable forest resources tosustain the manufacturing of products that areenvironmentally friendly.
The Group’s commitment towards forest sustainabilityis reflected in our progress in sustainable forestmanagement in the forest concession area held by oursubsidiary, Borlin Sdn Bhd. The implementation ofsustainable forest management would be a step-wiseapproach towards gaining forest managementcertification with the Malaysian Timber CertificationCouncil, in collaboration with WWF.
Ta Ann achieved another environmental milestone whenit signed a memorandum of understanding (‘MoU’) withWWF-Malaysia in Global Forest and Trade Network(‘GFTN’) on 8 December 2009 and became the firstpublic-listed company in Sarawak to supportresponsible forestry. The collaboration with WWF-Malaysia through the GFTN program signals a new erafor the Group to strengthen our commitment inproducing legal and sustainable timber.
AWARDS & RECOGNITION
12 3
4
9
6
5 6 7 8
1011
12
13
6, 7 & 8 SGS TLTV - Verification Origin standard for Tanjong Manis Holdings Sdn. Bhd., Raplex Sdn. Bhd. & Pasin Sdn. Bhd.
9 Japanese Agricultural Standards (JAS) Certification
1 Certificate for Factory Approval- Container Floorings
2 CE Marking System Certification
3 Plywood Division. PEFC (English Version) (Programme for the Endorsement of Forest Certification
4 & 5 SGS TLTV - Chain of Custody standard for Lik Shen Sawmill Sdn. Bhd. & Ta Ann Plywood Sdn. Bhd.
10 EWPAA - Chain of Custody
certificate for Ta Ann Tasmania Pty Ltd
11 SCCI Overall Excellence Award 2010
12 & 13 ISO:14001 Certification
43ANNU A L R E P O R T 2 0 1 0ANNU A L R E P O R T 2 0 1 0
44 TA A NN H O L D I N G S B E R H A D 4 1 9 2 3 2 - KTA A NN H O L D I N G S B E R H A D 4 1 9 2 3 2 - K
GROUP EVENT HIGHLIGHTS- CORPORATE EVENT
19 FebruaryA Lunar New Year visit by the Chief Executive Officer (“CEO”) of HSBC, En. Mukhtar Hussain and his high powerteam to Ta Ann headquarters.
2 - 5 FebruaryTa Ann Forestry Policy Audit led by the SGS group, Mr. SalahudinYaacob (second from the right) on all operational units of Ta Anngroup.
14 AprilAnnual inspection visit by Ta Ann directors tothe Group’s oil palm estates.
22 February“Lao Shang” at Ta Ann headquarters to welcome the start of the Golden Tiger Year.
29 AprilThe Group’s sponsorship toward “Perhimpunan Belia 2010”, a campaign involving development of the youths ofthe State.
February
April
45ANNU A L R E P O R T 2 0 1 0ANNU A L R E P O R T 2 0 1 0
GROUP EVENT HIGHLIGHTS- CORPORATE EVENT (cont’d)
1 JulyThe Group participated in the School Sponsorship Programme2010 by sponsoring local schools 12,500 copies of “The Star”newspaper aiming to inculcate a passion for learning and readingamong students.
27 MayTa Ann’s 13th Annual General Meetingwas held at Tanahmas Hotel, Sibu.
2 MaySponsoring and participating in the Sarawak Jubilee Park Half Marathon 2010, an annual sporting event jointlyorganised by Sibu Marathon Sports Club and Sibu Municipal Council.
May
June
July
23 - 24 JuneDeputy Chief of Responsible Asia Forest and Trade Program(“RAFT”), Dr. Cole Genge (right) and WWF representatives wenton an observation visit to Pasin reforestation area.
46 TA A NN H O L D I N G S B E R H A D 4 1 9 2 3 2 - KTA A NN H O L D I N G S B E R H A D 4 1 9 2 3 2 - K
GROUP EVENT HIGHLIGHTS- CORPORATE EVENT (cont’d)
22 JulyAn educational tour of Ta Ann’s oil palm estates and plywoodmill operations by 20 Japanese students from Nagisai HighSchool, Hiroshima to have first hand experience of oil palmplantation and plywood mill operations.
27 AugustA proposed 1 for 5 bonus issue of up to 42,926,224 new ordinaryshares was approved in the Ta Ann’s Extraordinary GeneralMeeting held at Tanahmas Hotel, Sibu.
21 JulyFund managers from Equity Capital Market of CIMB andPermodalan Nasional Berhad went on a tour of Naman Plantationand CPO mill in Sibu to see for themselves peat soil oil palmplanting and CPO processing.
14 - 15 July Annual Survelliance for TLTV-VO on upstream forestry operations and TLTV-CoC on s awmill operation by SGS, alegality verification programme pursued by the Group for its timber licensed areas and downstream timberproducts.
July (cont’d)
August
47ANNU A L R E P O R T 2 0 1 0ANNU A L R E P O R T 2 0 1 0
GROUP EVENT HIGHLIGHTS- CORPORATE EVENT (cont’d)
10 OctoberTa Ann Golf Invitational 2010, an annual golfing event organisedfor local and overseas business associates was held at Golf Clubin Sibu.
18 - 21 October Member of Parliament from Tasmania,Australia, The Hon. Paul Harriss (second fromthe left) visited forest and logging sites,plantation and mills of Ta Ann Group to havean on-site experience of the activities andpractices carried out by the Group. Followinghis close observations, Mr. Harriss expressedhis satisfaction with the Group’s forestry anddownstream processing practices.
26 September The Group, being a STA member, witnessed the handoverceremony which marked the completion of Sibu Bukit Lima ForestPark walkway (old section) repair work, sponsored by STA.
20 October The SGS-International team led by Mr. Abdullah Din carried out audit verification of TLTV-CoC on Ta Ann PlywoodSdn Bhd.
September
October
48 TA A NN H O L D I N G S B E R H A D 4 1 9 2 3 2 - K
2 - 5 DecemberThe Group was a sponsor to the “Community OutreachProgramme 2010”, a medical community outreach programmeorganised by Kuching Specialist Hospital (KPJ), for the reach-outcommunity project at Pulau Bruit, Daro, Sarawak.
8 DecemberA group of 26 officers from the local government agency, StatisticsDepartment visited plywood mill in Sibu.
12 DecemberSibu Plywood mill visit by Tasmanian Deputy Premier, The Hon.Lara Giddings (centre) on the processing of eco plywood productsmade from veneer imported from Tasmania, Australia.
15 December The CEOs of World Wide Fund for Nature (“WWF”) together withHeart of Borneo Network Initiative representatives visited ourplywood mill in Sibu and Eddy Co-Variance Tower at Namanplantation in conjunction with their official visit to Borneo.
12 November Sarawak Chamber of Commerce and Industry (“SCCI”) Annual CorporateReport Awards 2010 prizing ceremony was held during their 59th AnniversaryDinner in Kuching. Ta Ann Group was awarded as winner for the “OverallExcellence Reporting”.
GROUP EVENT HIGHLIGHTS- CORPORATE EVENT (cont’d)
November
December
49ANNU A L R E P O R T 2 0 1 0
GROUP EVENT HIGHLIGHTS- SOCIAL EVENT
3 April Ta Ann Bowling Competition 2010 for all staff to promote commitment to work-life balance, organised by Ta AnnRecreation Club.
11 April HIV/AIDS Awareness Outreach Programme, a health campaignjointly organised by Ta Ann and the Ministry of HealthDepartment (Sibu) to raise awareness among workers, washeld at Naman Oil Palm Plantation Estate, Sibu.
23 April - 5 May Inter Badminton Competition 2010 held at Sibu, a friendlybadminton match among Ta Ann staff to promote healthy lifestylewhile strengthening internal bridges.
22 May5th Anniversary Early Bird Morning Run washeld at Sibu Stadium with participation fromover 500 Group employees and associates.
April
May
50 TA A NN H O L D I N G S B E R H A D 4 1 9 2 3 2 - K
10 - 12 SeptemberIn conjunction with Hari Raya Puasa, a road trip to Similajau NationalPark, Bintulu was organised by Ta Ann Recreation Club andparticipated by Ta Ann staff and their family members who relaxed andenjoyed themselves with activities like hitting the beach, BBQ, zoovisiting and jungle trekking.
9 October Friendly Football Match 2010, an outdoor game jointly organised with WTK Group and CIMB Bank.
September
October
November
8 - 9 October “Finance for Non-Finance Personnel” workshop was held atTanahmas Hotel, Sibu and attended by Ta Ann’s employees to gainan insight into principles and concepts of financial accounting.
6 November A friendly bowling competition was organised by Ta Ann Recreation Club at Sibu Bowling Centre for inmates ofMethodist Children’s Home and Ta Ann staff and family members.
2 November Ta Ann employees participated in Sibu Ping Pong Game Competition 2010 held in Sibu and emerged champion inthe Female Team category.
GROUP EVENT HIGHLIGHTS- SOCIAL EVENT (cont’d)
GROUP EVENT HIGHLIGHTS- SOCIAL EVENT (cont’d)
17 November “Hwai An Methodist Church Fund Raising Run”, a charity runsponsored and participated by the Group to raise fund for thechurch building.
20 December Ta Ann staff and family celebrating Christmas together at TanahmasHotel, Sibu.
12 - 14 October / 15 - 17 December “Basic Forest Fire Suppression and Safety Training Course”under the Occupational Safety and Health (“OSH”) campaignswere held at various reforestation camps to instill awareness,impart knowledge on the basics of controlling and suppressingforest fires and to train the workers on the proper effectiveprocedures in combating wild fires.
November (cont’d)
December
13 NovemberThe Group organised a Naman Plantation Evening Run, held atNaman estate, Sibu participated by headquarters staff, Namanestate management and field staff to lend support to themonthly run event held at the estate.
51ANNU A L R E P O R T 2 0 1 0
FINANCIAL REVIEWby Group Financial Controller
52 TA A NN H O L D I N G S B E R H A D 4 1 9 2 3 2 - K
(I) INCOME STATEMENT
2010 2009 ChangeRM’000 RM’000 %
Revenue 827,278 666,635 24
Gross Profit 207,307 169,866 22
Other Operating Income 5,208 17,484 -70Distribution Costs (63,897) (54,447) 17Administrative Expenses (29,529) (24,882) 19Other Operating Expenses (10,556) (2,153) 390Finance Income 3,114 751 315Finance Expense (12,788) (10,352) 24
Operating Profit 98,859 96,267 3
Share of Loss After Tax of Associates 0 (78) -
Profit Before Tax 98,859 96,189 3
Tax Expense (26,556) (23,211) 14
Profit For The Year 72,303 72,978 -1
Gross Profit Margin 25% 25% -
Operating Profit Margin 12% 14% -14
Net Profit Margin 9% 11% -18
Revenue increase was mainly contributed by sale of veneer and plywood (increased by RM103 million) andsale of FFB, CPO and kernel (higher by RM82 million).
Gross profit margin was maintained at 2009’s level of 25%. Lower other operating income, (unrealised netexchange loss in 2010 against unrealised exchange gain of RM12 million in 2009) and higher distribution,administrative and other operating costs, resulted in a lower operating profit margin.
FINANCIAL REVIEWby Group Financial Controller (cont’d)
53ANNU A L R E P O R T 2 0 1 0
(I) INCOME STATEMENT (cont’d)
Revenue Contribution By Division
Revenue Contribution By DivisionPercentage
2010 Contribution 2009 ChangeRM’000 % RM’000 %
a) Logging DivisionSale of logs 135,798 16% 146,842 -8Contract Revenue 1,759 0% 7,839 -78
137,557 16% 154,681 -11
b) Plywood DivisionSale of veneer and plywood 399,989 48% 296,675 35
c) Sawmilling DivisionSale of sawn timber and moulding products 24,943 3% 25,602 -3
d) Oil Palm DivisionSale of fresh fruits bunches 41,102 5% 15,765 161Sale of CPO 196,988 24% 148,830 32Sale of Kernel 22,072 3% 13,306 66
260,162 32% 177,901 46
e) Property Development 3,747 1% 9,574 -61
f) Tree PlantingSale of seeds & seedlings 565 0% 1,027 -45
g) Others 315 0% 1,175 -73
827,278 100% 666,635 24
Profit Before Tax Contribution By Division
Percentage2010 Contribution 2009 Change
RM’000 % RM’000 %
a) Logging Division 56,368 57 51,802 9b) Plywood Division (43,230) -44 5,149 >-100c) Sawmilling Division 3,310 4 2,173 52d) Oil Palm Division 81,107 82 35,694 127e) Property Development 1,249 1 1,309 -5f) Tree Planting 55 0 62 -11
98,859 100 96,189 3
FINANCIAL REVIEWby Group Financial Controller (cont’d)
54 TA A NN H O L D I N G S B E R H A D 4 1 9 2 3 2 - K
(I) INCOME STATEMENT (cont’d)
Performance of Operating Subsidiaries in Year 2010
Net Profit/ Net(Loss) Profit/(Loss)
Revenue For the Year MarginSubsidiaries RM’000 RM’000 %
Hariwood Sdn. Bhd. 55,693 (1,204) -2Pasin Sdn. Bhd. 29,135 627 2Woodley Sdn. Bhd. 30,114 7,768 26Raplex Sdn. Bhd. 78,292 25,647 33Questate Sdn. Bhd. 150,996 14,154 9Tg. Manis Sdn. Bhd. 29,082 6,877 24Ta Ann Plywood Sdn. Bhd. 536,857 52,041 10Ta Ann Tasmania Pty Ltd 110,890 (28,812) -26Lik Shen Sawmill Sdn. Bhd. 28,158 2,758 10Borneo Tree Seeds & Seedlings Supplies Sdn. Bhd. 1,023 348 34Multi Maximum Sdn. Bhd. 32,756 4,406 13Ta Ann Pelita Silas Plantation Sdn. Bhd. 5,714 (1,587) -28Ta Ann Pelita Igan Plantation Sdn. Bhd. 6,909 4,095 59Manis Oil Sdn. Bhd. 219,060 4,161 2Zumida Sdn. Bhd. 0 (52) n/aMega Bumimas Sdn. Bhd. 192 124 65Ta Ann Plantation Sdn. Bhd. 544 140 26Tabes Sdn. Bhd. 11,681 710 6Tanahead Sdn. Bhd. 3,747 1,082 29
(II) BALANCE SHEET
Analysis of Major Balance Sheet Items
1. Total Assets
Total assets of the Group grew by RM86.766 million principally in property, plant and equipment,plantation development expenditure and cash and cash equivalent.
2010 2009 ChangeAsset Type RM’000 RM’000 %
Property, plant and equipment 810,559* 798,594 2Prepaid lease payments 4,824 5,093 -5Plantation development expenditure 276,237+ 231,767 19Other intangible assets 81,276 89,831 -10Goodwill 14,060 10,941 29Inventories 175,200 196,806 -11Trade & other receivables 54,108 40,721 33Cash & cash equivalent 143,160 98,551 45Others 6,357 6,711 -5
Total 1,565,781 1,479,015 6
FINANCIAL REVIEWby Group Financial Controller (cont’d)
55ANNU A L R E P O R T 2 0 1 0
(II) BALANCE SHEET (cont’d)
Analysis of Major Balance Sheet Items (cont’d)
1. Total Assets (cont’d)
* Property, plant and equipment increase was mainly for the following purposes:
RM
Sibu Plywood Mill- factory extension 2.8 million- addition of plant and machinery 2.9 million
Oil Palm Division- infrastructure and land development cost 15.9 million- acquisition of motor vehicles and machinery 9.2 million- acquisition of land 21.8 million
Reforestation Division- land development cost 7.3 million
The increase was partially offset by the depreciation charge and PPE disposal of RM51.4 million.
+ Plantation Development Expenditure increase was due to the following:RM
Additional new planting and maintenance/upkeep cost for immature planted areas 44.4 millionIncrease in tree planted area and maintenance cost for planted areas 5.7 million
2. EQUITY
Total equity of the Group grew by 8% from RM778.036 million at the beginning of the year to RM840.536 million,mainly due to an increase in retained earnings, after payment of dividends. A bonus issue of 1 for 5 was madeduring the year enlarging the share capital from 214.631 million shares to 257.517 million shares.
Equity comprises the following:2010 2009 Change
RM’000 RM’000 %
Share capital 257,517 214,631 20Share premium 1,783 44,669 -96Forex translation reserve 12,434 6,800 83Retained earnings 543,273 485,613 12Minority interest 26,433 27,227 -3Treasury shares (904) (904) 0
840,536 778,036 8
FINANCIAL REVIEWby Group Financial Controller (cont’d)
56 TA A NN H O L D I N G S B E R H A D 4 1 9 2 3 2 - K
3. BORROWINGS
2010 2009 ChangeBy type of facility RM’000 RM’000 %
Finance leases 25,142 33,334 -25Term loans 262,775 212,693 24Bankers’ Acceptances 67,309 91,878 -27Revolving credit 63,000 48,000 31USD denominated loans 9,207 13,710 -33AUD denominated loans 28,471 37,992 -25AUD denominated bank overdraft 0 1,449 -100Yen denominated loans 15,099 18,664 -19ECR 12,246 0 100
483,249 457,720 6
Borrowings were for the financing of the operating activities and capital expenditure for the following divisions:
2010 2009 ChangeRM’000 RM’000 %
Plywood division 218,222 236,702 -8Oil Palm division 240,326 191,933 25Sawmilling division 3,187 3,868 -18Logging division 9,600 13,942 -31Property development division - 3,060 -100Tree planting division 11,914 8,215 45
483,249 457,720 6
4. Ratio Analysis
2010 2009
Liquidity• Current Ratio 1.08 0.90Leverage• Gearing 59.4% 61.0%Profitability• ROA 4.6% 4.9%• ROE 9.2% 9.9%• EPS 29 sen* 29 sen*Dividend• Gross Dividend per share 8 sen 3 sen• Dividend yield 1.7% 0.6%• Share price as at Dec 2010 RM4.80 RM4.81Net assets per share RM3.16 RM3.50
* Adjusted for bonus issue
57ANNU A L R E P O R T 2 0 1 0
FINANCIAL REVIEWby Group Financial Controller (cont’d)
5. Conclusion
Revenue rose in the year under review, with a 46% jump in revenue from oil palm sector and 35% increase inplywood sales, whereas profit contribution came mainly from oil palm sector and logging division. The effectof Ringgit strengthening on export proceeds and Australian dollar appreciation on cost of imported veneeraffected the profitability of the plywood division.
In the year under review, the Group continued to pursue the following financial policy and strategy:
• Strong capital base in capital management;• Natural hedging of export proceeds to mitigate the forex fluctuation;
• Trade and plantation development financing to give flexibility to the Group on funding management andto maintain cash reserve for possible investment opportunities; and
• Close monitoring of interest rate and forex movement for timely action to minimise exposure.
For the year 2011, a similar policy/strategy will be followed. The improvement in overall operationalexpectation for 2011 will have a positive bearing on financial performance.
58 TA A NN H O L D I N G S B E R H A D 4 1 9 2 3 2 - K
STATEMENT ONCorporate Governance
The Board of Directors subscribes to the principles and best practices prescribed in the Malaysian Code ofCorporate Governance (Revised 2007) (the 'Code'). The Code essentially aims to set out the principles and bestpractices on structure and processes that companies may use in their operations towards achieving the optimalgovernance framework.
The Board is committed to ensuring that the highest standard of corporate governance founded on core valuessuch as accountability, transparency and integrity is practised throughout the Group as a fundamental part ofdischarging its responsibilities to protect and enhance shareholder value and the financial performance of Ta AnnGroup.
The Company has complied with the Best Practices as recommended by Part 2 of the Code. Set out below is astatement of how the Group has applied the Principles of the Code; as set out in Part 1 of the Code.
BOARD OF DIRECTORS
Ta Ann Group is led and controlled by an effective and well balanced Board, whose members are of diversebackground and vast experience; the structure of composition of which is consistent with the Bursa MalaysiaSecurities Berhad Listing Requirements (‘Listing Requirements’) and the Code. The Board has the overallresponsibility for corporate governance, strategic direction, resource management and Group performance. Detailsof the individual skill and experience of Directors are included in pages 9 to 15.
The Board meets at least four times a year, with additional meetings convened as necessary. During the financialyear ended 31 December 2010, five (5) Board meetings were held, where it deliberated upon and considered avariety of matters, including approving the Group’s financial results, performance review, annual operational,financial and capital budgets and investment discussions. Details of attendance of Directors are set out at page228. In addition, various Board committees, namely, the Audit Committee, the Remuneration Committee, theNomination Committee, the ESOS committee and the Risk Management Committee have been established anddelegated with specific responsibilities to assist the Board in discharging some of its functions.
BOARD BALANCE
The Board has seven (7) members, comprising three (3) Executive Directors and four (4) Non-Executive Directors,three (3) of whom are independent. The Board complies with paragraph 15.02 of the Listing Requirements ofBursa Securities which requires that at least two (2) Directors or one-third of the Board, whichever is higher, areIndependent Directors. Together, the Directors have a wide range of technical, management, legal, accountingand financial experience. This mix of skills and exposure is vital for the effective functioning of the Board.
There is a clear division of responsibility between the Executive Chairman and the Chief Executive Officer. TheExecutive Chairman is responsible for corporate affairs and development and ensuring Board effectiveness, whilethe Chief Executive Officer is the overall in charge of operation and the implementation of Board’s policies anddecisions.
59ANNU A L R E P O R T 2 0 1 0
STATEMENT ONCorporate Governance (cont’d)
BOARD BALANCE (cont’d)
The concept of independence adopted by the Board is in line with the definition of an Independent Director inSection 1.01 of the List Requirements of Bursa Securities and PN No. 13. The key element for fulfilling the criteriais that the Independent Director appointed must not be a member of the management (i.e. a Non-ExecutiveDirector) and must be free of any relationship which could interfere in the exercise of independent judgment orthe ability to act in the best interests of the Company. The presence of Independent Non-Executive Directors, whodo not engage in the day-to-day management nor participate in any business dealings of the Group, provides aneffective independent and balanced view onto the Board. Although all the Directors have an equal responsibilityfor the Group's operation, the role of the Independent Non-Executive Directors is particularly important in ensuringindependence of judgment and objectivity are exercised in Board room deliberations, taking into account the longterm interest, not only of the Group but also of the shareholders, employees, buyers, suppliers and thecommunities in which the Group conducts business.
The Directors discharge their duties as effective Board members, act on well-informed basis, in good faith, withdue diligence and with personal dedication of time and aspiration to bring the Group to a greater height.
The Code recommends the identification of a Senior Independent Non-Executive Director to whom concerns maybe conveyed. The Board has identified Datuk Abang Haji Abdul Karim as the Senior Independent Non-ExecutiveDirector. Being the Chairman of Audit Committee, he is most appropriate spokesperson for all Independent Non-Executive Directors as well as the conduit for minority shareholders or the public to convey their concerns, if any.
The Board is satisfied that the current Board composition fairly reflects the interests of minority shareholders inthe Company.
SUPPLY OF INFORMATION
The Board has full and unrestricted access to Senior Management and timely, appropriate and accurate financialand qualitative information and other relevant information pertaining to products and product quality, marketshare, customer satisfaction and such like, for the discharge of its duties.
All Directors are provided with an agenda and a set of Board papers prior to the Board meetings. This is issuedin sufficient time (a week before the meeting) to enable the Directors to obtain further explanations, wherenecessary, in order to be properly briefed before the meeting.
In addition, there is a schedule of matters reserved specifically for the Board's decision, including the approval ofcorporate plans, annual budgets, review of performance against target set, acquisitions and disposals ofundertakings and properties of a substantial value, major investments, changes to management and controlstructure of the Group including key procedures and policies and delegated authority limits.
All the Directors have access to the advice and services of the company secretaries and where necessary, in thefurtherance of their duties, obtain independent professional advice at the Company's expense. Directors are alsobriefed ahead on any proposed material announcements to be made to Bursa Securities and served notices onthe closed period for trading in the Company’s shares in accordance with the Listing Requirements.
60 TA A NN H O L D I N G S B E R H A D 4 1 9 2 3 2 - K
STATEMENT ONCorporate Governance (cont’d)
APPOINTMENT TO THE BOARD
The Code endorses, as good practice, a formal procedure for appointments to the Board, with a NominationCommittee making recommendations to the Board.
The Nomination Committee is empowered by the Board and its terms of reference to ensure that there areappropriate procedures in place for the nomination, selection, training and evaluation of Directors and thatsuccession plans are in place. The Nomination Committee assesses the effectiveness of the Board as a whole,the Board Committees and contribution of each individual Director, including the Independent Non-ExecutiveDirectors and the Group Managing Director on an annual basis. All assessments and evaluations carried out bythe Nomination Committee in discharging its duties are documented in the minutes of meeting.
The Board through the Nomination Committee’s annual appraisal process, believes that the Board possesses therequired mix of skills, experience and other qualities of the Board, including core competencies brought byIndependent Non-Executive Directors to the Board which enables it to discharge its duties in an effective manner.Furthermore, the Board continuously reviews its size and composition with particular consideration on its impacton the effective functioning of the Board.
The Board appoints its members through a formal and transparent selection process which is consistent with theArticles of Association of the Company. This process has been reviewed, approved and adopted by the Board. Allnew appointees will be considered and evaluated by the Nomination Committee for the candidates’ ability todischarge responsibilities as expected from them. The Committee will then recommend the candidates to beapproved and appointed by the Board. The company secretaries will ensure that all appointments are properlymade and that legal and regulatory obligations are met.
DIRECTORS’ TRAINING
As an integral element of the process of appointing new Directors, there is an orientation and educationprogramme for new Board members.
To keep abreast with new developments in the business environment and to effectively discharge their duties asDirectors of the Board, the Directors are encouraged to attend seminars and training programmes organised bythe regulatory authorities and professional bodies.
All Directors have successfully completed the Mandatory Accreditation Programme. In 2010, the Directors attendedthe following seminars:
DIRECTORS COURSE DATE OF ATTENDANCE
Datuk Abdul Hamed Balancing Financial Reporting Conformance 26 November 2010Bin Haji Sepawi For Sustainable Value Creation
Dato Wong Kuo Hea CEO and Board Succession Planning 26 October 2010
Sa’id Bin Haji Dolah Balancing Financial Reporting Conformance 26 November 2010For Sustainable Value Creation
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STATEMENT ONCorporate Governance (cont’d)
DIRECTORS’ TRAINING (cont’d)
DIRECTORS COURSE DATE OF ATTENDANCE
Datuk Abang Haji Abdul 6th Asia Pacific Audit and Governance Summit 2010 29 & 30 June 2010Karim Bin Tun Abang Haji Openg
Dato’ Awang Bemee Bin Balancing Financial Reporting Conformance 26 November 2010Awang Ali Basah For Sustainable Value Creation
Chia Chu Fatt Investigative Audit and Forensic Accounting 25 November 2010
Pui Chin Jang Balancing Financial Reporting Conformance 26 November 2010@ Pui Chin Yam For Sustainable Value Creation
RE-APPOINTMENT AND RE-ELECTION OF DIRECTORS
Pursuant to Section 129 (2) of the Companies Act, 1965, Directors who are over the age of seventy (70) years shallretire at every Annual General Meeting and may offer themselves for re-appointment to hold office until the nextAnnual General Meeting.
In accordance with the Company's Articles of Association, all Directors who are appointed by the Board are subjectto election by shareholders at the first Annual General Meeting of the Company after their appointment.The Articles of Association also provide that one third of the Directors are to retire by rotation and subject to re-election at each Annual General Meeting and that all Directors including the Group Managing Director, are subjectto re-election at least once in every three (3) years. The election of each Director is voted on separately.
To assist the shareholders in their decision, sufficient information such as personal profile and meetingsattendance of each Director standing for re-election is furnished in a separate statement accompanying the Noticeof the Annual General Meeting.
BOARD COMMITTEES
Various Board Committees have been established to assist the Board in discharging its fiduciary duties.
(a) Audit Committee
The Audit Committee has three (3) members, which comprises of Independent Non-Executive Directors.
The functions of the Committee include reviewing of audit findings of the external and internal auditorstogether with management’s response thereon, deliberation on financial statements and reviews ofaccounting policy and allocation of share options under Employees’ Share Option Scheme. The Committeehas full access to both internal and external auditors and is empowered to conduct investigations of anyactivities within its terms of reference. A more detailed discussion of the Audit Committee’s functions can befound in the Audit Committee section on page 71 to 75 of this report.
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STATEMENT ONCorporate Governance (cont’d)
BOARD COMMITTEES (cont’d)
(a) Audit Committee (cont’d)
The Board reviews the term of office and performance of the Audit Committee and each of its members atleast once every three (3) years to determine whether the Committee and its members have carried out theirduties in accordance with their terms of reference.
(b) Nomination Committee
The Nomination Committee has three (3) members, comprising entirely of Non-Executive Directors, of whomthe majority shall be independent.
The Nomination Committee is currently made up of the following Directors:
Chairman Datuk Abang Haji Abdul Karim Bin Tun Abang Haji Openg Senior Independent Non-Executive Director
Members Dato’ Awang Bemee Bin Awang Ali Basah Independent Non-Executive Director
Pui Chin Jang @ Pui Chin YamNon-Independent Non-Executive Director
The terms of reference approved for the Committee are as follows:
• To screen and propose new nominees for the Board on an on-going basis; • To review the mix of skills and experience of the Directors and other qualities including core competencies
required for the Board; • To assess the effectiveness of the Board as a whole, the committees of the Board and the contributions
of each individual Director; and • To recommend to the Board, directors to fill the seats on the various Board committees.
(c) Remuneration Committee
The Remuneration Committee has four (4) members, of whom the majority composition is made up ofIndependent Non-Executive Directors.
The Remuneration Committee is currently made up of the following Directors:
Chairman Dato’ Awang Bemee Bin Awang Ali Basah Independent Non-Executive Director
Members Datuk Abang Haji Abdul Karim Bin Tun Abang Haji Openg Senior Independent Non-Executive Director
Pui Chin Jang @ Pui Chin Yam Non-Independent Non-Executive Director
Dato Wong Kuo Hea Group Managing Director
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STATEMENT ONCorporate Governance (cont’d)
BOARD COMMITTEES (cont’d)
(c) Remuneration Committee (cont’d)
The terms of reference approved for the Committee are as follows:
• To review and report to the Board on compensation and personnel policies; • To review and recommend to the Board the remuneration package of Executive Directors in all forms;
and • The determination of remuneration packages of Non-Executive Directors shall be a matter for the Board
as a whole.
(d) ESOS Committee
The Employees’ Share Option Scheme (ESOS) Committee has four (4) members, comprising of:
Chairman Datuk Abdul Hamed Bin Haji Sepawi Non-Independent Executive Chairman
Members Dato Wong Kuo Hea Group Managing Director
Sa’id Bin Haji Dolah Non-Independent Executive Director
Augustine Siaw Meng Kun Company Secretary/Financial Controller
The Committee administers the implementation of the ESOS in accordance with the by-laws of the scheme.
(e) Risk Management Committee
The Risk Management Committee has five (5) members, comprising of Directors and Senior Managementstaff who are involved in operational matters of the Company.
The Risk Management Committee is currently made up of:
Chairman Datuk Abdul Hamed Bin Haji Sepawi Non-Independent Executive Chairman
Members Dato Wong Kuo Hea Group Managing Director
Um Myung Sub Senior General Manager
Augustine Siaw Meng Kun Company Secretary/Financial Controller
Tong Hie Tung @ Tong Hing Yung Advisor
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STATEMENT ONCorporate Governance (cont’d)
BOARD COMMITTEES (cont’d)
(e) Risk Management Committee (cont’d)
The Risk Management Committee assists the Board in fulfilling its corporate governance responsibilities bymonitoring and reviewing the corporate policies for identifying and managing relevant risks associated withthe business of the Group, and the adequacy of management’s practices and procedures in implementingthese policies.
The Board periodically reviews the Committee’s terms of reference and operating procedures. TheCommittees are required to report to the Board on all their deliberations and recommendations and suchreports are incorporated in the minutes of the Board meeting.
DIRECTORS’ REMUNERATION
The objective of the Group's policy on Directors' remuneration is to attract and retain directors of calibre neededto run the Group successfully.
The Remuneration Committee recommends to the Board the framework of the Executive Directors' remunerationand their remuneration package. The remuneration of these Directors however are determined by the Board asa whole.
In formulating the remuneration policy and package, the Remuneration Committee takes into consideration theresponsibility and job function, remuneration packages of comparable companies in the same industry, andindividual and corporate performance.
The remuneration package for the Executive Chairman, Group Managing Director and other Directors consists ofthe following:
• Salaries
Their salaries are consistent with the Group’s remuneration policy; taking into account the responsibility,function and the performance of each individual Director, competitive to a comparable role in a similarorganisation.
An annual review is conducted on these remuneration packages and salaries are adjusted to reflectperformances, increased responsibilities, job function and market trends.
• Fees
Directors’ fees are determined by the Board as a whole and subject to the shareholders’ approval at theAnnual General Meeting.
• Allowances for Non-Executive Directors
Allowances are paid to Non-Executive Directors in accordance with their increased responsibilities andinvolvement in the Board Committees and special functions assigned to the Directors.
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STATEMENT ONCorporate Governance (cont’d)
DIRECTORS’ REMUNERATION (cont’d)
• Bonus and Other Benefits
Bonus and incentives are paid to the Executive Directors, in line with the Group’s remuneration policy,depending on the financial performance of the Group.
Other benefits include allowances, vehicles, telecommunication facilities, club membership, annual holidaytrip, medical and insurance coverage.
• Retirement Benefits
Besides the mandatory contribution to Employees Provident Fund, retirement benefits based on a definedretirement scheme are payable to all eligible employees including the Executive Directors.
• Service Contracts
In line with the Group’s policy, contracts of service are executed between the Executive Directors and thecompanies in the Group to formalise the terms of employment.
A summary of the remuneration of the Directors for the financial year ended 31 December 2010 distinguishingbetween Executive and Non-Executive Directors in aggregate, with categorisation into appropriatecomponents and the number of Directors whose remuneration falls into each successive band of RM50,000are set out below:
Fee Salary EPF Bonus Allowance Total(RM) (RM) RM RM RM RM
Executive Directors
Datuk Abdul Hamed 116,400 854,640 169,339 429,160 20,000 1,589,539Bin Haji Sepawi
Dato Wong Kuo Hea 143,400 1,303,560 242,267 541,390 39,500 2,270,117Sa’id Bin Haji Dolah 87,000 156,600 53,130 185,600 19,000 501,330
Non-Executive Directors
Pui Chin Jang @ Pui Chin Yam 114,000 - 16,970 - 27,000 157,970Datuk Abang Haji Abdul Karim 156,000 - 26,172 - 61,500 243,672Bin Tun Abang Haji Openg
Dato’ Awang Bemee 174,000 - 27,198 - 52,500 253,698Bin Awang Ali Basah
Chia Chu Fatt 96,000 - 13,932 - 20,000 129,932
TOTAL 886,800 2,314,800 549,008 1,156,150 239,500 5,146,258
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STATEMENT ONCorporate Governance (cont’d)
DIRECTORS’ REMUNERATION (cont’d)
• Service Contracts (cont’d)
Number of Directors
Range of Director’s Annual Executive Non-Executive TotalRemuneration (RM) Directors Directors
100,001 - 150,000 - 1 1150,001 - 200,000 - 1 1200,001 - 250,000 - 1 1250,001 - 300,000 - 1 1500,001 - 550,000 1 - 11,550,001 - 1,600,000 1 - 12,250,001 - 2,300,000 1 - 1
DIALOGUE BETWEEN COMPANIES AND INVESTORS
The Group values dialogue with investors and therefore the Group keeps an on-going channel of communicationswith investors, stakeholders and the public generally. The Executive Chairman, Executive Directors andmanagement personnel hold periodic briefings with research analysts, funds managers and investors to explainthe Group's strategy, performance and major development. Whilst the Company endeavours to provide as muchinformation as possible to its shareholders and stakeholders, it is mindful of the legal and regulatory frameworkgoverning the release of material and price sensitive information. In addition to various announcements madeduring the year, the timely release of quarterly financial results provides shareholders with an overview of theGroup's performance and operation. Copies of the announcement are supplied to shareholders and members ofthe public upon request.
ANNUAL GENERAL MEETING
The Company has been using the Annual General Meeting, usually held in May/June each year as a means ofcommunicating with shareholders. At each Annual General Meeting, the Board presents the progress andperformance of the Group and encourages shareholders to pose questions to the Board pertaining to the Group.
Each item of special business included in the notice of meeting is accompanied by a full explanation of the effectof a proposed resolution. Separate resolutions are proposed for substantially separate issues at the meeting.
FINANCIAL REPORTING
The Chairman of the Board addresses shareholders on the review of the Group’s operation for the financial yearand outlines the prospect of the Group for the subsequent financial year.
A press conference is held immediately after the Annual General Meeting where the Chairman briefs the pressabout the resolutions passed and answers questions relating to the Group. The Group Managing Director and theExecutive Director are also present at the press conference to clarify and explain any issue.
The Company’s website at www.taann.com.my contains vital information about the Group which is updated on aregular basis and shareholders are able to put questions to the Company through the website.
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STATEMENT ONCorporate Governance (cont’d)
FINANCIAL REPORTING (cont’d)
In presenting the annual financial statements, the Directors aim to present a balanced and comprehensibleassessment of the Group's position and prospects to the shareholders, investors and regulatory authorities. Thisis done through releases of quarterly results accompanying press releases. A statement of responsibility byDirectors for preparing the financial statements is set out on page 70.
INTERNAL CONTROL & RISK MANAGEMENT
The Board has the overall responsibility of monitoring a sound internal control system that cover effective andefficient operations, compliances with law and regulations and risk management. This is to safeguardshareholders’ investments and the Group’s assets apart from assuring financial controls.
Detailed information on internal control is set out in the Statement on Internal Control on pages 76 to 78.
Risk management is given equal priority by establishing policies to identify, evaluate and manage the Company’scorporate risk profile to mitigate any possible effects arising thereupon.
RELATIONSHIP WITH THE AUDITORS
The Company has established a transparent and appropriate relationship with the Company's auditors throughthe Audit Committee to discuss their audit plans, audit findings and the financial statements. Professional adviceof the auditors are sought to ensure compliance with the accounting standards.
The auditors are invited to attend the Annual General Meeting of the Company. The presence of the auditorsenables shareholders to seek clarification on the conduct of the audit and the preparation and content of the auditreport of the Group.
ADDITIONAL COMPLIANCE INFORMATION
The following information is presented in compliance with the Bursa Malaysia Securities Berhad ListingRequirements:
SHARE BUYBACKS
At the Annual General Meeting (“AGM”) held on 27 May 2010, the shareholders renewed the authority for theCompany to purchase any or hold its own shares up to 21,463,000 ordinary shares of RM1.00 each, representingan amount not exceeding 10% of the issued and paid-up share capital of the Company.
As at the end of the financial period, a total of 199,400 shares were held as treasury shares. No share buyback,resale of treasury shares or share cancelled was made in the financial year, nor was there any share buybacktransaction, resale of treasury sales or share cancelled entered into subsequent to the balance sheet date and upto the date of this report.
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STATEMENT ONCorporate Governance (cont’d)
OPTIONS, WARRANTS OR CONVERTIBLE SECURITIES
The Company has not issued any options, warrants or convertible securities during the financial period.
AMERICAN DEPOSITORY RECEIPT (“ADR”) OR GLOBAL DEPOSITORY RECEIPT (“GDR”) PROGRAMME
During the financial period, the Company did not sponsor any ADR or GDR programme.
IMPOSITION OF SANCTIONS AND PENALTIES
There were no sanctions or penalties imposed on the Company and its subsidiaries, directors or management bythe relevant regulatory bodies during the financial period.
NON-AUDIT FEES
The amount of non-audit fees paid to the external auditors by the Group and by the Company for the year amountedto RM 75,300 and RM 57,000 respectively.
PROFIT GUARANTEE
During the financial period, there was no profit guarantee given by the Company.
MATERIAL CONTRACTS
There was no material contract (not being contracts entered into during the ordinary course of business) enteredinto by the Company or its subsidiary companies involving directors or major shareholders, either subsisting atthe end of the financial year ended 31 December 2010 or entered into since the end of the previous financial year,other than the contracts disclosed in Appendix B, page 34 of the accompanying Statement/Circular toShareholders.
RECURRENT RELATED PARTY TRANSACTIONS
At the Company’s Annual General Meeting held on 27 May 2010, the shareholders renewed the mandate for theCompany and its subsidiary companies to enter into recurrent related party transactions of revenue or tradingnature, which are necessary for its day-to-day operations and in the ordinary course of its business.
Aggregate value and type of significant related party transactions are indicated on pages 197 to 200 of this AnnualReport. At the forthcoming 14th Annual General Meeting to be held on 27 May 2011, the Company will proposerenewal of shareholder mandate in respect of recurrent related party transactions of a revenue or trading naturetogether with extension of the scope of the mandate to include expected transactions with new related parties.
VARIATION IN RESULTS
During the year, there was no profit forecast issued by the Company and its subsidiary companies.
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REVALUATION POLICY
The Group does not adopt a revaluation on property, plant and equipment except for a revaluation of leaseholdland and building (including wharf and jetty) in 1999 for the purpose of the listing of the Company on the BursaSecurities, as disclosed in Note 2 to the financial statements.
UTILISATION OF PROCEEDS
The amount of RM30 million out of the proceeds raised from the Initial Public Offer in conjunction with the listingof the Company on the Main Market of the Bursa Malaysia Securities Berhad on 23 November 1999 has been fullyutilised for the reforestation project of the Group.
Up to 31 December 2010, a total cost of RM125 million was incurred for the reforestation project.
STATEMENT ONDirectors’ ResponsibilitiesThe Directors are required by the Companies Act 1965, to prepare financial statements for each financial yearwhich have been made out in accordance with the applicable approved accounting standards of the MalaysianAccounting Standards Board (MASB) so as to give a true and fair view of the financial state of affairs of the Companyand the Group at the end of the financial year, including the statements of comprehensive income, statements ofcash flows and statements of financial position for the year ended.
In preparing the financial statements, the Directors have
(i) selected appropriate accounting policies, which are applied consistently;
(ii) made judgments and estimates that are reasonable and prudent;
(iii) ensured that all applicable accounting standards have been followed; and
(iv) prepared financial statements on a going concern basis as the Directors have a reasonable expectation, havingmade enquiries, that the Company and the Group have adequate resources to continue in operationalexistence for the foreseeable future.
The Directors are responsible for ensuring that the Company and the Group keep accounting records whichdisclose with reasonable accuracy the financial position of the Company and the Group and which enable them toensure that the financial statements comply with the Companies Act 1965.
The Directors have overall responsibilities for taking such steps as are reasonably open to them to safeguard theassets of the Group to prevent and detect fraud and other irregularities.
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AUDIT COMMITTEE
Chairman:
Datuk Abang Haji Abdul Karim Bin Tun Abang Haji Openg
Members:
Dato’ Awang Bemee Bin Awang Ali BasahChia Chu Fatt
TERMS OF REFERENCE
1. Appointment/Composition
The members of the Committee shall be appointed by the Board and their period of appointment shall beconcurrent with their tenure in the Board. No alternate director shall be appointed as a member of theCommittee. The Audit Committee shall consist of not less than three (3) members all of whom shall be Non-Executive Directors with a majority of them being Independent Directors who shall not be:-
(a) Executive Directors of the Company or any related corporation;
(b) A spouse, parent, brother, sister, son or adopted son or daughter or adopted daughter of an ExecutiveDirector of the Company or of any related corporation; or
(c) Any person having a relationship which, in the opinion of the Board of Directors, would interfere with theexercise of independent judgment in carrying out the functions of the Audit Committee.
At least one (1) member of the Committee must be a member of the Malaysian Institute of Accountants or ifhe is not a member of the Malaysian Institute of Accountants, he must have at least three (3) years’ working experience and:
(a) he must have passed the examinations specified in Part I of the 1st Schedule of the Accountants Act 1967;or
(b) he must be a member of one (1) of the associations of accountants specified in Part II of the 1st Scheduleof the Accountants Act 1967; or
(c) he fulfils such other requirements as prescribed or approved by Bursa Malaysia Securities Berhad.
A quorum for each meeting shall be two (2) members, all of whom must be Independent Directors. TheChairman of the Committee shall be appointed by the members of the Committee among their number andshall be an Independent Non-Executive Director.
The Board shall, within three (3) months of a vacancy occurring in the Audit Committee which results in thenumber of members reduced to below three (3), appoint such number of new members as may be requiredto make up the minimum number of three (3) members.
The Board shall review the term of office and performance of an Audit Committee and each of its membersat least once every three (3) years to determine whether such Audit Committee and members have carriedout their duties in accordance with their terms of reference.
AUDIT COMMITTEE (cont’d)
TERMS OF REFERENCE (cont’d)
2. Authority
The Committee is authorised by the Board to investigate any activity within its terms of reference. It is alsoauthorised to seek any information relevant to its activities it requires from any employee and all employeesare directed to co-operate with any request made by the Committee.
The Committee is authorised by the Board to obtain outside legal or other independent professional adviceand to secure the attendance of outsiders with relevant experience and expertise if it considers this necessary.
3. The functions of the Committee shall be:
(a) to review
(i) with the external auditor, the audit plan; (ii) with the external auditor, his evaluation of the system of internal controls; (iii) with the external auditor, scope of their audits and their audit reports; (iv) the assistance given by the employees of the Company and Group to the external auditor; (v) the adequacy of the scope, functions, competency and resources of the internal audit functions and
that it has the necessary authority to carry out its work; (vi) the internal audit programme, processes, the results of the internal audit programme, processes or
investigation undertaken and whether or not appropriate action is taken on the recommendations ofthe internal audit function;
(vii) any appraisal or assessment of the performance of members of the internal audit functions; (viii) the quarterly results and year end financial statements, prior to the approval by the Board of
Directors, focusing particularly on:-
• changes in or implementation of major accounting policy changes; • significant and unusual events; and • compliance with applicable approved accounting standards in Malaysia and other legal
requirements; (ix) any related party transaction and conflict of interest situation that may arise within the Company or
Group including any transaction, procedure or course of conduct that raises questions ofmanagement integrity;
(x) the adequacy and effectiveness of risk management, internal control and governance systems; (xi) any letter of resignation from the external auditors of the Company; and (xii) whether there is reason (supported by grounds) to believe that the Company’s external auditor is not
suitable for reappointment; and
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AUDIT COMMITTEE (cont’d)
TERMS OF REFERENCE (cont’d)
3. The functions of the Committee shall be: (cont’d)
(b) to assess the performance of the external auditors and to recommend to the Board the nomination of aperson or persons as external auditors and the external audit fee;
(c) approve the appointment or termination of senior staff members of the internal audit functions;
(d) take cognizance of resignation of internal audit staff members and provide resigning staff an opportunityto submit the reasons for resigning; and
(e) to consider any other matters as appropriate and within its terms of reference or as authorised by the Board.
4. Meetings
Meetings shall be held not less than four (4) times a year. In addition, the Chairman may call a meeting of theCommittee if a request is made by any Committee members, the Company’s Executive Chairman/GroupManaging Director or the internal or external auditors. Meetings will be attended by the members of theCommittee and the Company Secretary who shall act as the Secretary of the Committee.
Participants may be invited from time to time to attend the meetings depending on the nature of the subjectunder review. These participants may include Directors, General Managers, Division Heads, representativesfrom the Finance Department, internal auditors and external auditors. The Committee shall have the authorityto convene meetings with external auditors, internal auditors or both, excluding the attendance of otherDirectors and employees of the Company whenever deemed necessary. However, at least twice a year, theCommittee shall meet with the external auditors without the Executive board members present.
5. Reporting Procedure
The Secretary shall maintain minutes of the proceedings of the meetings and circulate such minutes to allmembers of the Board. During the financial year ended 31 December 2010, the Audit Committee held a totalof five (5) meetings on the following dates:
23 February 2010
14 April 2010
27 May 2010
27 August 2010
26 November 2010
AUDIT COMMITTEE (cont’d)
TERMS OF REFERENCE (cont’d)
5. Reporting Procedure (cont’d)
The detail of attendance by each member of the Committee is as follows:
Number of Meetings Attended
Datuk Abang Haji Abdul Karim Bin Tun Abang Haji Openg 5/5
Dato’ Awang Bemee Bin Awang Ali Basah 5/5
Chia Chu Fatt 5/5
Summary of Activities of the Audit Committee
In line with the terms of reference for the Audit Committee, the following activities were carried out by theCommittee during the financial year ended 31 December 2010:
(a) Review of audit plans for the year prepared by the internal and external auditors;
(b) Review of five (5) audit reports for the Company and the Group prepared by the internal auditors, theirmajor findings and recommendations and appraise the adequacy of management’s response thereto;
(c) Review of the quarterly financial results and the audited financial statements of the Company and theGroup prior to submission to the Board for consideration and approval;
(d) Review of transactions with related parties by the Company and the Group;
(e) Meeting with external auditors without the presence of the management;
(f) Review or appraise the performance of the external auditors before recommending their re-nominationto the Board;
(g) Assess the performance of the internal auditors and review of resource requirements of the Groupinternal audit function; and
(h) Met with the external auditors twice during the year in the absence of management.
Internal Audit Function
The internal audit function for the Group is carried out by the Internal Audit Department.
Internal audit is responsible for the independent assessment of the adequacy, effectiveness and efficiency ofthe internal control systems in place, in anticipating the risks exposures over key business processes so asto provide reasonable assurance that such systems continue to operate satisfactorily and effectively.
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AUDIT COMMITTEE (cont’d)
TERMS OF REFERENCE (cont’d)
5. Reporting Procedure (cont’d)
Internal Audit Function (cont’d)
The attainment of such objective involves the following main activities being carried out by the internalauditors:
(a) Reviewing and appraising the soundness, adequacy and application of accounting, financial, operationaland other controls, recommending improvement in control and promoting effective control in theCompany and its subsidiaries at reasonable cost;
(b) Ascertaining the extent of compliance with established policies, procedures and statutory requirements;
(c) Ascertaining the extent to which the Company’s and Group’s assets are accounted for and safeguardedfrom losses.
(d) Appraising the reliability and usefulness of data and information generated for management;
(e) Reviewing the management of risks exposures over key business processes by the Company and itssubsidiaries;
(f) Reviewing together with the Risk Management Division, the risk governance framework and the riskmanagement processes of the Company and the Group;
(g) Attending year-end stock counts at all operating units; and
(h) Reviewing related party transactions carried out by the Company and its subsidiaries.
The total costs incurred for the Group internal audit function in respect for the financial year ended 31 December 2010 amounted to RM 393,426.86.
STATEMENT ON INTERNAL CONTROL
INTRODUCTION
Paragraph 15.26(b) of the Listing Requirements of Bursa Securities requires the Board of Directors of public listedcompanies to include in the Annual Report a “statement about the state of internal control of the listed issuer asa group”. The Board is committed to maintaining a sound system of internal control in the Group and is pleasedto provide the following statement, which outlines the nature and scope of internal control of the Group duringthe year.
BOARD RESPONSIBILITY
The Board of Directors is responsible for Ta Ann Group’s system of internal control including the establishmentof an appropriate control environment and framework as well as reviewing its adequacy and integrity. The systemof internal control not only covers financial controls but organisational, operational and compliance controls andrisk management procedures. Because of the limitations that are inherent in any system of internal control, thissystem is designed to manage, rather than eliminate, the risk of failure to achieve corporate objectives.Accordingly, it can only provide reasonable but not absolute assurance against material misstatement or loss.
The Board confirms that there is an on-going process for identifying, evaluating and managing significant risksfaced by the Group. The Board through its Audit Committee, regularly reviews the results of this process. TheBoard confirms that this process is in place for the year under review and that it accords with the Statement onInternal Control: Guidance for Directors of Public Listed Companies (the ‘Internal Control Guidance’) publishedby the Task Force on Internal Control in June 2001.
The Board has established key policies on the Group’s risk management and internal control systems.
RISK MANAGEMENT FRAMEWORK
The Board fully supports the contents of the Internal Control Guidance and with the assistance of the internalauditors, it reviews the existing principal risks within the various operating businesses with the aim ofstrengthening the risk management functions across the Group. A Risk Management Committee is establishedby the Board to enhance risk management capabilities by overseeing the principal risks faced by the Group andthe overall management thereof. An enterprise-wide risk management framework has been formalized andimplemented by the Board.
Each operating unit in the Group is responsible for the identification and assessment of the significant risksapplicable thereto. A business planning and budgeting exercise is undertaken each year to establish plan andbudget against which performance is measured. Key risks to each business unit are identified during the businessplanning process and scored for likelihood of the risks occurring, the magnitude of impact, the controleffectiveness and the action plans taken to mitigate those risks to the desired level.
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STATEMENT ON INTERNAL CONTROL (cont’d)
RISK MANAGEMENT FRAMEWORK (cont’d)
The above exercise is monitored by the Risk Management Committee and reviewed by the Audit Committee toensure the adequacy and integrity of the system of internal control. Emphasis is placed on reviewing and updatingthe significant risks affecting the business and business continuity including resource sustainability, and policiesand procedures by which these risks are managed.
The Board undertakes review of key commercial and financial risks in the Group’s businesses as well as generalrisks such as those relating to compliance with laws and regulations and considers the recommendations madeby the Audit Committee and the auditors. The monitoring arrangements in place give reasonable assurance thatthe structure of controls and operations is appropriate to the Group.
INTERNAL AUDIT FUNCTIONS
The Group has in place an internal audit function, which provides the Board with much of the assurance it requiresregarding the adequacy and effectiveness of risk management, internal control and governance systems. Theinternal audit function is in accordance with the Guidelines on Internal Audit Function released by the industrytask force in July 2002.
Internal audit independently reviews the risk identification and control procedures implemented by theManagement, and reports to the Audit Committee on a quarterly basis. Internal audit also reviews the internalcontrols on the key activities of the Group’s businesses and presents an annual internal audit plan to the AuditCommittee for prior approval before carrying out the review and audit. The internal audit function adopts a risk-based approach and prepares its audit strategy and plan based on the risk profiles of the major business units ofthe Group.
The Audit Committee reviews the results of the risk monitoring and compliance procedure, and ensures that anappropriate mix of techniques is used to obtain the level of assurance required by the Board. The Audit Committeeconsiders reports from internal audit and from the Management, before reporting and making recommendationsto the Board in strengthening the risk management, internal control and governance systems. The Committeepresents its findings to the Board on a quarterly basis or earlier as appropriate.
OTHER RISK AND CONTROL PROCESSES
Apart from risk management and internal audit, the Board has put in place an organisational structure withformally defined lines of responsibility and delegation of authority. A process of hierarchical reporting has beenestablished which provides for a documented and auditable trail of accountability. The procedures include theestablishment of limits of authority and authorisation procedure. These procedures are applied across Groupoperations and provide for continuous assurance to be given at increasingly higher levels of management and,finally to the Board. The process is now facilitated by internal audit, which also provides a degree of assurance asto the operations and validity of the systems of internal control. Planned corrective actions are independentlymonitored for timely completion.
STATEMENT ON INTERNAL CONTROL (cont’d)
OTHER RISK AND CONTROL PROCESSES (cont’d)
Monthly financial and operational meetings are held by senior management to review Group operations whichincludes analysing monthly performance and variances, assessing the impact of any changes in operating andexternal environments, introducing such necessary revision to operational strategy and action plan anddetermining the target for the following month. Through such meetings, the Management continually monitorsand measures the performance against budget to ensure that planned objectives are achieved.
Directors, in particular Executive Directors, make regular inspection visits to the operating units to obtain first-hand account of the efficiency and effectiveness of the Group’s strategy, mode of operation, and control. Withdirect contact and communication with the operational staff, a more effective control is implemented.
The Group Chief Executive Officer also reports to the Board on significant changes in the business and the externalenvironment. The Group Financial Controller provides the Board with quarterly financial information, whichincludes key financial and risk indicators. This also includes, among others, the monitoring of results againstbudget, with variances being followed up and management action taken, where necessary. Where areas forimprovement in the system are identified, the Board considers the recommendations made by the Audit Committeeand the Management before approving the same for implementation.
THE BOARD’S COMMITMENT
The Board remains committed towards maintaining a sound system of internal control and believes that a balancedachievement of the Group’s business objectives and operational efficiency can be attained.
There were no material losses incurred during the current financial year as a result of weaknesses in internalcontrol. The process in identifying, evaluating and managing the significant risks faced by the Group is on-goingas a part of a continuous improvement programme.
Pursuant to paragraph 15.23 of the Listing Requirements of Bursa Securities, the external auditors have reviewedthis statement for inclusion in the Annual Report of the Group for the year ended 31 December 2010 and reportedto the Board that nothing has come to their attention that causes them to believe that this statement is inconsistentwith their understanding of the process adopted by the Board in reviewing the adequacy and integrity of the systemof internal controls.
78 TA A NN H O L D I N G S B E R H A D 4 1 9 2 3 2 - K
FINANCIALSTATEMENTS
Directors’ Report 80Statements of Financial Position 86Statements of Comprehensive Income 88Statements of Changes in Equity 90Statements of Cash Flows 92Notes to the Financial Statements 95Statements by Directors 194Statutory Declaration 194Independent Auditors’ Report 195
80 T A A N N H O L D I N G S B E R H A D 4 1 9 2 3 2 - K
DIRECTORS’ REPORTfor the Year Ended 31 December 2010
The Directors have pleasure in submitting their report and the audited financial statements of the Group and ofthe Company for the year ended 31 December 2010.
PRINCIPAL ACTIVITIES
The Company is principally engaged in investment holding, letting of premises and provision of managementservices to its subsidiaries, while the principal activities of the subsidiaries are as stated in Note 6 to the financialstatements. There have been no significant changes in the nature of these activities during the financial year.
RESULTS
Group Company RM RM
Profit for the year attributable to:Owners of the Company 74,979,543 13,653,605 Minority interest ( 2,676,653) -
72,302,890 13,653,605
RESERVES AND PROVISIONS
There were no material transfers to or from reserves and provisions during the year under review, except asdisclosed in the financial statements.
DIVIDENDS
Since the end of the previous financial year, the Company paid:
(i) a first interim dividend of 3 sen per ordinary share of RM1.00 each less tax at 25% totaling RM4,824,714(equivalent to RM2.25 sen net per share) in respect of year ended 31 December 2010 on 15 July 2010;
(ii) a second interim ordinary dividend of 5 sen per ordinary share of RM1.00 each comprising 2 sen per ordinaryshare less 25% (equivalent to 1.5 sen net per ordinary share) and 3 sen per ordinary share of tax exemptdividend totaling RM11,579,312 in respect of the year ended 31 December 2010 on 14 January 2011.
The Directors do not recommend any final dividend to be paid in respect of the year ended 31 December 2010.
81A N N U A L R E P O R T 2 0 1 0
DIRECTORS’ REPORTfor the Year Ended 31 December 2010 (cont’d)
DIRECTORS OF THE COMPANY
Directors who served since the date of the last report are:
Datuk Abdul Hamed Bin Haji Sepawi Dato Wong Kuo Hea Pui Chin Jang @ Pui Chin Yam Sa’id Bin Haji Dolah Datuk Abang Haji Abdul Karim Bin Tun Abang Haji Openg Dato’ Awang Bemee Bin Awang Ali Basah Chia Chu Fatt
DIRECTORS’ INTERESTS IN SHARES
The holdings and deemed holdings of the Directors holding office at year end, including the interests of theirspouses or children who themselves are not Directors of the Company (referred to as “others” in the tabulationbelow), in the shares of the Company and of its related corporations (other than wholly-owned subsidiaries of theCompany) as recorded in the Register of Directors’ Shareholdings are as follows:
Number of ordinary shares of RM1.00 each At Bonus At
1.1.2010 issue Bought Sold 31.12.2010
Direct interest in the Company
Datuk Abdul Hamed Bin 20,102,152 4,020,430 - - 24,122,582Haji Sepawi
Dato Wong Kuo Hea 6,184,419 1,254,703 89,100 - 7,528,222 Pui Chin Jang @ Pui Chin Yam 1,185,921 237,184 - - 1,423,105 Sa’id Bin Haji Dolah 120 24 - - 144 Datuk Abang Haji Abdul Karim Bin Tun Abang Haji Openg 6,000 1,200 - - 7,200
Dato’ Awang Bemee Bin Awang Ali Basah 9,000 1,800 - - 10,800
Chia Chu Fatt 10,000 2,000 - - 12,000
Deemed interest in the Company
Datuk Abdul Hamed Bin Haji Sepawi 55,464,760 11,134,691 348,900 ( 16,200) 66,932,151 Dato Wong Kuo Hea - Own 59,077,360 11,861,051 426,300 ( 39,400) 71,325,311 - Others 2,150,300 444,760 73,500 - 2,668,560
Pui Chin Jang @ Pui Chin Yam 3,369,394 662,278 50,000 (108,000) 3,973,672
82 T A A N N H O L D I N G S B E R H A D 4 1 9 2 3 2 - K
DIRECTORS’ REPORTfor the Year Ended 31 December 2010 (cont’d)
DIRECTORS’ INTERESTS IN SHARES (cont’d)
Number of ordinary shares of RM1.00 each At Bonus At
1.1.2010 issue Bought Sold 31.12.2010
Deemed interest in Borneo Tree Seeds & Seedlings Supplies Sdn. Bhd.:
Datuk Abdul Hamed Bin Haji Sepawi ) Dato Wong Kuo Hea ) 1,220,000 - - - 1,220,000
Deemed interest in Multi Maximum Sdn. Bhd.:
Datuk Abdul Hamed Bin Haji Sepawi ) Dato Wong Kuo Hea ) 850,000 - - - 850,000
Deemed interest in Ta Ann Pelita Silas Plantation Sdn. Bhd.:
Datuk Abdul Hamed Bin Haji Sepawi ) Dato Wong Kuo Hea ) 4,572,456 - 958,729 - 5,531,185
Deemed interest in Ta Ann Pelita Igan Plantation Sdn. Bhd.:
Datuk Abdul Hamed Bin Haji Sepawi ) Dato Wong Kuo Hea ) 17,632,125 - - - 17,632,125
Deemed interest in Zumida (Padi) Sdn. Bhd.:
Datuk Abdul Hamed Bin Haji Sepawi ) Dato Wong Kuo Hea ) 170,000 - - - 170,000
Deemed interest in Ta Ann Pelita Durin Plantation Sdn. Bhd.:
Datuk Abdul Hamed Bin Haji Sepawi ) Dato Wong Kuo Hea ) 1 - - - 1
83A N N U A L R E P O R T 2 0 1 0
DIRECTORS’ REPORTfor the Year Ended 31 December 2010 (cont’d)
DIRECTORS’ INTERESTS IN SHARES (cont’d)
Number of ordinary shares of RM1.00 each At Bonus At
1.1.2010 issue Bought Sold 31.12.2010
Deemed interest in Igan Oil Mill Sdn. Bhd.:
Datuk Abdul Hamed Bin Haji Sepawi ) Dato Wong Kuo Hea ) 2 - - - 2
Deemed interest in Daro Oil Mill Sdn. Bhd.:
Datuk Abdul Hamed Bin Haji Sepawi ) Dato Wong Kuo Hea ) 2 - - - 2
Deemed interest in Europalm Sdn. Bhd.:
Datuk Abdul Hamed Bin Haji Sepawi ) Dato Wong Kuo Hea ) - - 2,000,000 - 2,000,000
Deemed interest in Eagle Forest Sdn. Bhd.:
Datuk Abdul Hamed Bin Haji Sepawi ) Dato Wong Kuo Hea ) - - 300,000 - 300,000
Number of ordinary shares of AUD1.00 each At Bonus At
1.1.2010 issue Bought Sold 31.12.2010
Deemed interest in Ta Ann Tasmania Pty. Ltd.:
Datuk Abdul Hamed Bin Haji Sepawi ) Dato Wong Kuo Hea ) 27,500,000 - 400,000 - 27,900,000
84 T A A N N H O L D I N G S B E R H A D 4 1 9 2 3 2 - K
DIRECTORS’ REPORTfor the Year Ended 31 December 2010 (cont’d)
DIRECTORS' BENEFITS
Since the end of the previous financial year, no Director of the Company has received nor become entitled toreceive any benefit (other than a benefit included in the aggregate amount of emoluments received or due andreceivable by Directors as shown in the financial statements or the fixed salary of full time employees of theCompany and of its related corporations) 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 asubstantial financial interest, other than certain Directors who may be deemed to derive a benefit by virtue ofthose transactions, contracts and agreements for the provision of services, tenancy of premises, levying of roadtolls and the conduct of normal trading and other businesses between the Company as well as its subsidiariesand companies in which the Directors have or are deemed to have significant financial interests (see also Note 36to the financial statements).
There were no arrangements during and at the end of the financial year which had the object of enabling Directorsof the Company to acquire benefits by means of the acquisition of shares in or debentures of the Company or anyother body corporate.
ISSUE OF SHARES AND DEBENTURES
There were neither changes in the authorised, issued and paid-up capital of the Company, nor issuances ofdebentures by the Company, during the year.
OPTIONS GRANTED OVER UNISSUED SHARES
No options were granted to any person to take up unissued shares of the Company during the year.
OTHER STATUTORY INFORMATION
Before the statements of comprehensive income and statements of financial position of the Group and of theCompany were made out, the Directors took reasonable steps to ascertain that:
i) all known bad debts have been written off and adequate provision made for doubtful debts, and
ii) all current assets have been stated at the lower of cost and net realisable value.
At the date of this report, the Directors are not aware of any circumstances:
i) that would render the amount written off for bad debts, or the amount of the provision for doubtful debts, inthe Group and in the Company inadequate to any substantial extent, or
ii) that would render the value attributed to the current assets in the financial statements of the Group and ofthe Company misleading, or
iii) which have arisen which render adherence to the existing method of valuation of assets or liabilities of theGroup and of the Company misleading or inappropriate, or
iv) not otherwise dealt with in this report or the financial statements, that would render any amount stated inthe financial statements of the Group and of the Company misleading.
85A N N U A L R E P O R T 2 0 1 0
DIRECTORS’ REPORTfor the Year Ended 31 December 2010 (cont’d)
OTHER STATUTORY INFORMATION (cont’d)
At the date of this report, there does not exist:
i) any charge on the assets of the Group or of the Company that has arisen since the end of the financial yearand which secures the liabilities of any other person, or
ii) any contingent liability in respect of the Group or of the Company that has arisen since the end of the financialyear.
Except as disclosed in Note 35 to the financial statements, no contingent liability or other liability of any companyin the Group has become enforceable, or is likely to become enforceable within the period of twelve months afterthe end of the financial year which, in the opinion of the Directors, will or may substantially affect the ability of theGroup and of the Company to meet their obligations as and when they fall due.
In the opinion of the Directors, the results of the operations of the Group and of the Company for the financialyear ended 31 December 2010 have not been substantially affected by any item, transaction or event of a materialand unusual nature nor has any such item, transaction or event occurred in the interval between the end of thatfinancial year and the date of this report.
AUDITORS
The auditors, Messrs KPMG, have indicated their willingness to accept re-appointment.
Signed on behalf of the Board of Directors in accordance with a resolution of the Directors:
Dato Wong Kuo Hea
Datuk Abang Haji Abdul KarimBin Tun Abang Haji Openg
Kuching,
Date: 19 April 2011
86 T A A N N H O L D I N G S B E R H A D 4 1 9 2 3 2 - K
Gro
up
Com
pany
1.
1.20
091.
1.20
0931
.12.
2010
31.1
2.20
09(r
esta
ted)
31.1
2.20
1031
.12.
2009
(res
tate
d)N
ote
RM
RM
RM
RM
RM
RM
Asse
ts
Prop
erty
, pla
nt a
ndeq
uipm
ent
380
9,02
7,29
879
8,59
4,24
972
5,70
8,86
511
,679
,302
13,0
89,9
4214
,602
,172
Plan
tatio
n de
velo
pmen
tex
pend
iture
427
6,23
7,10
423
1,76
7,08
519
4,00
2,92
0-
--
Prep
aid
leas
e pa
ymen
ts5
4,82
3,75
65,
092,
511
5,36
1,26
6-
--
Inve
stm
ent i
n su
bsid
iari
es6
--
-22
7,76
5,21
023
6,20
2,57
523
6,20
2,57
5In
vest
men
t in
asso
ciat
es7
--
169,
174
398,
525
398,
525
398,
525
Def
erre
d ta
x as
sets
880
1,27
863
0,90
44,
985,
000
--
-Tr
ade
and
othe
rre
ceiv
able
s9
2,29
0,56
35,
442,
159
3,10
2,71
31,
564,
454
72,1
21,0
7758
,577
,069
Goo
dwill
1014
,059
,713
10,9
41,0
4811
,510
,320
--
-O
ther
inta
ngib
le a
sset
s11
81,2
76,3
5689
,830
,909
98,0
07,4
78-
--
Tota
l non
-cur
rent
ass
ets
1,18
8,51
6,06
81,
142,
298,
865
1,04
2,84
7,73
624
1,40
7,49
132
1,81
2,11
930
9,78
0,34
1
Inve
ntor
ies
1217
5,19
9,97
219
6,80
5,61
413
0,61
8,90
4-
--
Prop
erty
, pla
nt a
ndeq
uipm
ent
31,
531,
731
--
--
-Sh
ort t
erm
inve
stm
ent
13-
--
10,6
23,5
34-
-Pr
oper
ty d
evel
opm
ent
cost
s14
2,39
1,18
92,
448,
413
6,42
1,56
8-
--
Trad
e an
d ot
her
rece
ivab
les
928
,187
,944
21,3
28,3
0838
,199
,616
225,
656,
323
95,0
04,2
8250
,018
,937
Prep
aym
ents
and
othe
r as
sets
15
23,6
29,2
2013
,951
,111
-16
0,62
827
2,64
322
7,50
8C
urre
nt ta
x as
sets
3,16
4,48
33,
631,
439
4,42
4,20
62,
180,
528
1,67
3,38
01,
680,
363
Cas
h an
d ba
nk b
alan
ces
1614
3,16
0,45
198
,551
,425
87,3
99,5
889,
235,
162
8,19
1,28
05,
831,
067
Tota
l cur
rent
ass
ets
377,
264,
990
336,
716,
310
267,
063,
882
247,
856,
175
105,
141,
585
57,7
57,8
75
Tota
l ass
ets
1,56
5,78
1,05
81,
479,
015,
175
1,30
9,91
1,61
848
9,26
3,66
642
6,95
3,70
436
7,53
8,21
6
STATEMENTS OF FINANCIAL POSITIONat 31 December 2010
87A N N U A L R E P O R T 2 0 1 0
STATEMENTS OF FINANCIAL POSITIONAT 31 December 2010 (cont’d)
Gro
up
Com
pany
1.
1.20
09
1.1.
2009
31.1
2.20
1031
.12.
2009
(res
tate
d)31
.12.
2010
31.1
2.20
09(r
esta
ted)
Not
eR
MR
MR
MR
MR
MR
M
Equi
ty
Shar
e ca
pita
l17
257,
517,
444
214,
631,
118
214,
631,
118
257,
517,
444
214,
631,
118
214,
631,
118
Res
erve
s17
556,
585,
150
536,
177,
899
450,
064,
414
54,2
33,3
5994
,923
,036
72,2
72,1
52
Tota
l equ
ity a
ttri
buta
ble
to e
quity
hol
ders
of
the
Com
pany
814,
102,
594
750,
809,
017
664,
695,
532
311,
750,
803
309,
554,
154
286,
903,
270
Min
ority
inte
rest
26,4
33,5
2827
,226
,663
27,9
47,5
56-
--
Tota
l equ
ity84
0,53
6,12
277
8,03
5,68
069
2,64
3,08
831
1,75
0,80
330
9,55
4,15
428
6,90
3,27
0
Liab
ilitie
s
Oth
er p
ayab
les
18-
3,43
6,60
58,
977,
342
--
-B
orro
win
gs19
263,
971,
776
225,
143,
312
192,
975,
750
13,1
38,0
0010
,282
,500
12,2
06,6
96D
efer
red
taxa
tion
874
,225
,673
62,5
17,9
9565
,273
,240
1,32
3,57
9-
-Em
ploy
ee b
enef
its20
8,74
9,66
07,
017,
222
5,84
2,54
02,
163,
245
1,74
6,65
11,
390,
334
Def
erre
d in
com
e21
29,9
20,0
7630
,767
,560
20,0
54,2
61-
--
Tota
l non
-cur
rent
liab
ilitie
s37
6,86
7,18
532
8,88
2,69
429
3,12
3,13
316
,624
,824
12,0
29,1
5113
,597
,030
Trad
e an
d ot
her
paya
bles
18
119,
309,
842
128,
686,
376
127,
609,
561
149,
819,
039
101,
882,
953
65,2
26,8
34B
orro
win
gs19
219,
276,
903
232,
576,
930
191,
262,
429
11,0
69,0
003,
487,
446
1,81
1,08
2Em
ploy
ee b
enef
its20
2,55
9,99
52,
376,
898
859,
358
--
-D
efer
red
inco
me
211,
446,
539
1,41
9,35
266
5,43
7-
--
Cur
rent
tax
paya
ble
5,78
4,47
27,
037,
245
3,74
8,61
2-
--
Tota
l cur
rent
liab
ilitie
s34
8,37
7,75
137
2,09
6,80
132
4,14
5,39
716
0,88
8,03
910
5,37
0,39
967
,037
,916
Tota
l lia
bilit
ies
725,
244,
936
700,
979,
495
617,
268,
530
177,
512,
863
117,
399,
550
80,6
34,9
46
Tota
l equ
ity a
nd li
abili
ties
1,56
5,78
1,05
81,
479,
015,
175
1,30
9,91
1,61
848
9,26
3,66
642
6,95
3,70
436
7,53
8,21
6
The
note
s on
pag
es 9
5 to
193
are
an
inte
gral
par
t of t
hese
fina
ncia
l sta
tem
ents
.
88 T A A N N H O L D I N G S B E R H A D 4 1 9 2 3 2 - K
STATEMENTS OF COMPREHENSIVE INCOMEfor the Year Ended 31 December 2010
Group Company2010 2009 2010 2009
Note RM RM RM RM
Revenue 22(a) 827,277,765 666,635,156 30,677,791 44,132,021Cost of sales/operations 22(b) (619,970,359) (496,769,426) - -
Gross profit 207,307,406 169,865,730 30,677,791 44,132,021
Other operating income 5,207,679 17,483,943 2,623,544 737,279Distribution costs ( 63,896,525) ( 54,446,973) - -Administrative expenses ( 29,528,416) ( 24,881,737) (15,257,974) ( 9,468,479)Other operating expenses ( 10,556,313) ( 2,153,489) - -
Results from operating activities 23 108,533,831 105,867,474 18,043,361 35,400,821
Finance income 24 3,113,568 750,960 545,556 -Finance expense 25 ( 12,788,363) ( 10,351,614) ( 4,353,269) ( 845,078)Net finance costs ( 9,674,795) ( 9,600,654) ( 3,807,713) ( 845,078)
Operating profit 98,859,036 96,266,820 14,235,648 34,555,743
Share of results of equityaccounted associates, net of tax - ( 77,506) - -
Profit before tax 98,859,036 96,189,314 14,235,648 34,555,743
Tax expense 27 ( 26,556,146) ( 23,211,332) ( 582,043) ( 7,080,145)
Profit for the year 72,302,890 72,977,982 13,653,605 27,475,598
Other comprehensive income, net of tax
Foreign currency translationdifferences for foreignoperations 6,601,578 16,544,899 - -
Total comprehensive income for the year 78,904,468 89,522,881 13,653,605 27,475,598
89A N N U A L R E P O R T 2 0 1 0
STATEMENTS OF COMPREHENSIVE INCOMEfor the Year Ended 31 December 2010 (cont’d)
Group Company2010 2009 2010 2009
Note RM RM RM RM
Profit attributable to:
Owners of the Company 74,979,543 74,393,300 13,653,605 27,475,598Minority interests ( 2,676,653) ( 1,415,318) - -
Profit for the year 72,302,890 72,977,982 13,653,605 27,475,598
Total comprehensive income attributable to
Owners of the Company 80,612,886 90,938,199 13,653,605 27,475,598Minority interests ( 1,708,418) ( 1,415,318) - -
Total comprehensive income for the year 78,904,468 89,522,881 13,653,605 27,475,598
Basic/Diluted earnings perordinary share (sen) as originally reported 28 - 34.69
Basic/Diluted earnings perordinary share (sen)after bonus issue 28 29.14 28.91
The notes on pages 95 to 193 are an integral part of these financial statements.
90 T A A N N H O L D I N G S B E R H A D 4 1 9 2 3 2 - K
Attr
ibut
able
to s
hare
hold
ers
of th
e Co
mpa
ny
Non
-dis
trib
utab
leFo
reig
nex
chan
ge
Dist
ribu
tabl
eSh
are
Shar
etr
ansl
atio
nTr
easu
ryRe
tain
edM
inor
ityTo
tal
Capi
tal
prem
ium
rese
rve
shar
esea
rnin
gsTo
tal
inte
rest
equi
tyGr
oup
RMRM
RMRM
RMRM
RMRM
At 1
Jan
uary
200
921
4,63
1,11
844
,669
,124
( 9,7
44,6
33)
( 90
4,45
6)41
6,04
4,37
966
4,69
5,53
227
,947
,556
692,
643,
088
Tota
l com
preh
ensi
ve
inco
me
for t
he ye
ar-
--
-74
,393
,300
74,3
93,3
00( 1
,415
,318
)72
,977
,982
Divi
dend
s to
sha
reho
lder
s of
the
Com
pany
(Not
e 29
)-
--
-(
4,8
24,7
14)
( 4
,824
,714
)-
( 4
,824
,714
)Fo
reig
n ex
chan
ge tr
ansl
atio
n di
ffere
nces
--
16,5
44,8
99-
-16
,544
,899
-16
,544
,899
Subs
crip
tion
of s
hare
s by
min
ority
inte
rest
--
--
--
694,
425
694,
425
At 3
1 De
cem
ber 2
009
214,
631,
118
44,6
69,1
246,
800,
266
( 90
4,45
6)48
5,61
2,96
575
0,80
9,01
727
,226
,663
778,
035,
680
Tota
l com
preh
ensi
ve in
com
e fo
r the
year
--
--
74,9
79,5
4374
,979
,543
( 2,6
76,6
53)
72,3
02,8
90D
ivide
nds
to s
hare
hold
ers
of th
e Co
mpa
ny (N
ote
29)
--
--
( 16,
404,
026)
( 16,
404,
026)
-( 1
6,40
4,02
6)Fo
reig
n ex
chan
ge
tran
slat
ion
diffe
renc
es-
-5,
633,
343
--
5,63
3,34
396
8,23
56,
601,
578
Acqu
isiti
on o
f min
ority
inte
rest
-
--
-( 9
15,2
83)
(
915
,283
)91
5,28
3-
Issu
e of
ord
inar
y sha
re42
,886
,326
(42,
886,
326)
--
--
--
At 3
1 De
cem
ber 2
010
257,
517,
444
1,78
2,79
812
,433
,609
( 904
,456
)54
3,27
3,19
981
4,10
2,59
426
,433
,528
840,
536,
122
( N
ote
17)
( N
ote
17)
( N
ote
17)
(Not
e 17
)
The
note
s on
pag
es 9
5 to
193
are
an
inte
gral
par
t of t
hese
fina
ncia
l sta
tem
ents
.
STATEMENTS OF CHANGES IN EQUITYfor the Year Ended 31 December 2010
91A N N U A L R E P O R T 2 0 1 0
STATEMENT OF CHANGES IN EQUITYfor the Year Ended 31 December 2010 (cont’d)
Non
-Dis
trib
utab
leDi
stri
buta
ble
Shar
eSh
are
Trea
sury
Dee
med
Ret
aine
dca
pita
lpr
emiu
msh
ares
dist
ribu
tions
earn
ings
Tota
lR
MR
MR
MR
MR
MR
M
Com
pany
At 1
Jan
uary
200
921
4,63
1,11
844
,669
,124
( 9
04,4
56)
-28
,507
,484
286,
903,
270
Tota
l com
preh
ensi
ve in
com
efo
r th
e ye
ar-
--
-27
,475
,598
27,4
75,5
98D
ivid
ends
to s
hare
hold
ers
(Not
e 29
)-
--
-(
4,8
24,7
14)
( 4
,824
,714
)
At 3
1 D
ecem
ber
2009
/1
Janu
ary
2010
214,
631,
118
44,6
69,1
24(
904
,456
)-
51,1
58,3
6830
9,55
4,15
4
At 1
Jan
uary
201
0
- as
pre
viou
sly
stat
ed21
4,63
1,11
844
,669
,124
( 9
04,4
56)
-51
,158
,368
309,
554,
154
- ef
fect
of a
dopt
ing
FRS
139
--
--
3,31
9,18
63,
319,
186
At 1
Jan
uary
201
0, re
stat
ed21
4,63
1,11
844
,669
,124
( 9
04,4
56)
-54
,477
,554
312,
873,
340
Tota
l com
preh
ensi
ve in
com
efo
r th
e ye
ar-
--
-13
,653
,605
13,6
53,6
05D
ivid
ends
to S
hare
hold
ers
(Not
e 29
)-
--
-(
16,4
04,0
26)
( 16
,404
,026
)Is
sue
of o
rdin
ary
shar
es42
,886
,326
( 42
,886
,326
)-
--
Dee
med
dis
trib
utio
ns b
y su
bsid
iari
es-
--
1,62
7,88
4-
1,62
7,88
4
At 3
1 D
ecem
ber
2010
257,
517,
444
1,78
2,79
8(
9
04,4
56)
1,62
7,88
451
,727
,133
311,
750,
803
(Not
e 17
)(N
ote
17)
(Not
e 17
)(N
ote
17)
(Not
e 17
)
The
note
s on
pag
es 9
5 to
193
are
an
inte
gral
par
t of t
hese
fina
ncia
l sta
tem
ents
.
92 T A A N N H O L D I N G S B E R H A D 4 1 9 2 3 2 - K
STATEMENTS OF CASH FLOWSfor the Year Ended 31 December 2010
Group Company2010 2009 2010 2009
Note RM RM RM RM
Cash flows from operating activities
Profit before tax 98,859,036 96,189,314 14,235,648 34,555,743
Adjustments for:Amortisation of plantationdevelopment expenditure 4 5,658,349 4,173,670 - -
Amortisation of prepaid lease payments 5 265,176 264,430 - -Amortisation of goodwill 10 569,272 569,272 - -Amortisation of intangible assets 11 8,675,909 8,672,603 - -Deferred income recognised as income 21 ( 1,427,695) ( 1,163,420) - -Impairment loss in subsidiary - 3,062,466 -Depreciation of property,plant and equipment 3.2 42,628,028 40,616,220 1,435,786 1,526,754
Dividend income - - ( 21,500,000) ( 35,077,704)Retirement benefits 23 1,551,265 1,112,362 416,594 358,127Finance income 24 ( 3,113,568) ( 750,960) ( 545,556) -Finance expense 25 12,788,363 10,351,614 4,353,269 845,078(Gain)/loss on disposal ofproperty, plant and equipment ( 275,981) ( 325,737) 391 ( 16,330)
Share of results of equityaccounted associates - 77,506 - -
Unrealised foreign exchange loss/(gain) 1,583,172 ( 11,905,990) ( 1,076,434) ( 172,000)
Operating profit beforechanges in working capital 167,761,326 147,880,884 382,164 2,019,668
Inventories 22,247,778 ( 62,571,842) - -Receivables, deposits andprepayments ( 13,858,510) 2,387,149 128,011 ( 21,153)
Payables and accruals ( 19,018,486) ( 1,221,837) 1,036,844 170,955Property development costs 66,372 3,981,643 - -
Cash generated from/(used in)operations 157,198,480 90,455,997 1,547,019 2,169,470
Interest paid ( 3,459,354) ( 1,877,317) - -Income tax paid ( 19,189,248) ( 16,800,619) ( 79,213) ( 53,163)Retirement benefits paid 20 ( 84,665) ( 59,951) - ( 1,810)
Net cash from/(used in)operating activities 134,465,213 71,718,110 1,467,806 2,114,497
93A N N U A L R E P O R T 2 0 1 0
STATEMENTS OF CASH FLOWS for the Year Ended 31 December 2010 (cont’d)
Group Company2010 2009 2010 2009
Note RM RM RM RM
Cash flows from investing activities
Acquisition of prepaid lease payments ( 21,847,500) ( 2,083,117) - -Acquisition of other intangible assets ( 222,867) ( 330,646) - -Advance from an associate - 800,000 - -Plantation developmentexpenditure incurred ( 44,363,650) ( 37,811,217) - -
Purchase of property, plant andequipment [Note (i)]* ( 32,042,850) ( 50,785,058) ( 25,727) ( 21,067)
Proceeds from disposal ofproperty, plant and equipment 321,418 2,969,161 190 22,873
Proceeds from issuance of sharesto minority interest 723,658 694,425 - -
Interest received 3,113,568 750,960 - -Dividends received - - 19,875,000 28,057,704Increase in pledged deposits ( 170,791) ( 28,426) - -
Net cash (used in)/from investing activities ( 94,489,014) ( 85,823,918) 19,849,463 28,059,510
Cash flows from financing activities
Amount due from/to subsidiaries - - ( 25,937,713) ( 14,026,982)Repayment finance leaseliabilities ( 16,011,992) ( 17,859,713) ( 59,946) ( 75,831)
Finance lease interest paid ( 1,593,804) ( 1,721,258) - ( 6,092)Net proceeds from short-term loans 35,925,386 62,711,175 11,573,434 -Other interest paid ( 1,199,009) ( 539) - ( 510,702)Dividends paid ( 4,824,714) ( 12,865,903) ( 4,824,714) ( 12,865,903)Term loan interest paid ( 6,536,196) ( 6,752,500) ( 1,024,448) ( 328,284)
Net cash from/(used in) financing activities 5,759,671 23,511,262 ( 20,273,387) ( 27,813,794)
94 T A A N N H O L D I N G S B E R H A D 4 1 9 2 3 2 - K
STATEMENTS OF CASH FLOWS for the Year Ended 31 December 2010 (cont’d)
Group Company2010 2009 2010 2009
RM RM RM RM
Net increase in cash and cash equivalents 45,735,870 9,405,454 1,043,882 2,360,213Effect of exchange rate fluctuations on cash held 151,377 268,945 - -Cash and cash equivalents at 1 January 95,905,855 86,231,456 8,191,280 5,831,067
Cash and cash equivalents at31 December [Note (ii)] 141,793,102 95,905,855 9,235,162 8,191,280
Notes
(i) Purchase of property, plant and equipment
Group Company2010 2009 2010 2009
RM RM RM RM
Aggregate cost of property,plant and equipment acquiredduring the year* 39,862,370 67,398,459 25,727 21,067
Amount paid using internal funds ( 32,042,850) ( 50,785,058) ( 25,727) ( 21,067)
Acquired as finance lease assets 7,819,520 16,613,401 - -
* Net of costs capitalised (e.g. depreciation, interest expense, retirement benefits and amortisation ofintangible assets).
(ii) Cash and cash equivalents
Cash and cash equivalents included in the cash flow statements comprise the following balance sheetamounts:
Group Company2010 2009 2010 2009
RM RM RM RM
Deposits (excluding pledged deposits) 68,998,839 47,194,993 8,179,385 7,800,000Cash and bank balances 72,794,263 50,159,874 1,055,777 391,280Bank overdraft - ( 1,449,012) - -
141,793,102 95,905,855 9,235,162 8,191,280
The notes on pages 95 to 193 are an integral part of these financial statements.
95A N N U A L R E P O R T 2 0 1 0
NOTES TO THE FINANCIAL STATEMENTS
Ta Ann Holdings Berhad is a public limited liability company, incorporated and domiciled in Malaysia and is listedon the Main Market of Bursa Malaysia Securities Berhad. The address of its registered office is No. 6, JalanRawang, 96000 Sibu, Sarawak.
The consolidated financial statements as at and for the year ended 31 December 2010 comprise the Companyand its subsidiaries (together referred to as the Group) and the Group’s interest in associates.
The Company is principally engaged in investment holding, letting of premises and provision of managementservices to its subsidiaries, while the other Group entities are primarily involved in the manufacture and sale oftimber products, tree planting and cultivation of oil palms.
The financial statements were approved by the Board of Directors on 19 April 2011.
1. Basis of preparation
(a) Statement of compliance
The financial statements of the Group and of the Company have been prepared in accordance withFinancial Reporting Standards, generally accepted accounting principles and the Companies Act, 1965in Malaysia. These financial statements also comply with the applicable disclosure provisions of theListing Requirements of Bursa Malaysia Securities Berhad.
The Group has not applied the following accounting standards, amendments and interpretations thathave been issued by Malaysian Accounting Standards Board but are only effective for annual periodsbeginning on or after the respective dates indicated herein:
Standard / Amendment / Interpretation Effective date
Amendments to FRS 132, Financial Instruments: Presentation – Classification of Right Issues 1 March 2010
FRS 1, First-time Adoption of Financial Reporting Standards 1 July 2010FRS 3, Business Combinations (revised) 1 July 2010FRS 127, Consolidated and Separate Financial Statements (revised) 1 July 2010Amendments to FRS 2, Share-based Payment 1 July 2010Amendments to FRS 5, Non-current Assets Held for Sale and Discontinued Operations 1 July 2010Amendments to FRS 138, Intangible Assets 1 July 2010Amendments to IC Interpretation 9, Reassessment of Embedded Derivatives 1 July 2010IC Interpretation 12, Service Concession Agreements 1 July 2010IC Interpretation 16, Hedges of a Net Investment in a Foreign Operation 1 July 2010IC Interpretation 17, Distribution of Non-cash Assets to Owners 1 July 2010Amendment to FRS 1, First-time Adoption of Financial Reporting Standards- Limited Exemption from Comparative FRS 7 Diclosures for First-time Adopters- Additional Exemption for First-time Adopters 1 January 2011Amendments to FRS 2, Group Cash-settled Share-based Payment Transactions 1 January 2011Amendments to FRS 7, Improving Disclosures about Financial Instruments 1 January 2011IC Interpretation 4, Determining Whether an Arrangement Contains a Lease 1 January 2011IC Interpretation 18, Transfers of Assets from Customers 1 January 2011Improvements to FRSs (2010) 1 January 2011
96 T A A N N H O L D I N G S B E R H A D 4 1 9 2 3 2 - K
NOTES TO THE FINANCIAL STATEMENTS (cont’d)
1. Basis of preparation (cont’d)
(a) Statement of compliance (cont’d)
Standard / Amendment / Interpretation Effective date
Amendments to IC Interpretation 14, Prepayments of a Minimum Funding Requirement 1 July 2011IC Interpretation 19, Extinguishing Financial Liabilities with Equity Instruments 1 July 2011FRS 124, Related Party Disclosures 1 January 2012IC Interpretation 15, Agreements for the Construction of Real Estate 1 January 2012
The Group plans to adopt from the annual periods:
(a) beginning 1 January 2011 the standards, amendments and interpretation that are effective for annualperiods beginning on or before 1 January 2011; and
(b) beginning 1 January 2012 the standards, amendments and interpretations that are effective forannual periods beginning after 1 January 2011,
except those assessed as being presently not applicable to it. The latter includes Amendments to FRS132, FRS 1 (revised), Amendments to FRS 2, Amendments to IC Interpretation (ICI) 9, ICI 12, ICI 16 andICI 17 which are not applicable to the Group.
The initial application of a standard, an amendment or an interpretation, which will be appliedprospectively or which required extended disclosures, is not expected to have any financial impacts tothe current and prior periods financial statements for the current and prior periods upon their firstadoption.
IC Interpretation 4 provides guidance on determining whether certain arrangements are, or contain,
leases that are required to be accounted for in accordance with FRS 117, Leases. Where an arrangementis within the scope of FRS 117, the Group applies FRS 117 in determining whether the arrangement is afinance or an operating lease.
The adoption of IC Interpretation 4 will result in a change in accounting policy which will be appliedretrospectively in accordance with FRS 108, Accounting Policies, Changes in Accounting Estimates andErrors in which certain arrangements are to be accounted for as a finance lease.
97A N N U A L R E P O R T 2 0 1 0
NOTES TO THE FINANCIAL STATEMENTS (cont’d)
1. Basis of preparation (cont’d)
(a) Statement of compliance (cont’d)
The revised FRS 124 simplifies the definition of related party, clarifies its intended meaning and eliminatesinconsistences from the definition. The changes from current practice among others include a partialexemption from disclosures for government-related entities. It requires disclosure of related partytransactions between government-related entities only if the transactions are individually or collectivelysignificant.
Prior to the issuance of the revised FRS 124, no disclosure is required in financial statements of state-controlled entities of transactions with other state-controlled entities. The partial exemption from disclosuresfor government-related activities as required in the revised FRS 124 are intended to put users on notice thatsuch related party transactions have occurred and to give an indication of their extent.
Improvements to FRSs (2010) contain amendments to ten FRSs and one Interpretation. IASB started theannual improvements process since 2008 to cater for amendments that are considered non-urgent butnecessary. The objective of the annual improvements project is to enhance the quality of existing IFRSs andthis is achieved by amending existing IFRSs to clarify guidance and wordings or to correct for relatively minorunintended consequence, conflicts or oversights.
IC Interpretation 19 provides guidance on accounting for debt for equity swaps. Equity instruments issued toa creditor to extinguish all or a part of a financial liability would be “consideration paid” in accordance withparagraph 41 of FRS 139. The equity instruments would be measured initially at the fair value of those equityinstruments unless that fair value cannot be reliably measured, in which case the equity instruments shouldbe measured to reflect the fair value of the financial liability extinguished. Any difference between the carryingamount of the financial liability and the initial measurement of the equity instruments would be recognisedas a gain or loss in profit or loss.
The adoption of IC Interpretation 19 will result in a change in accounting policy which will be appliedretrospectively in accordance with FRS 108, Accounting Policies, Changes in Accounting Estimates and Errors.
The amendments to IC Interpretation 14 remove the unintended consequences arising from the treatment ofprepayments when there is a minimum funding requirement. The amendments result in prepayments ofcontributions in certain circumstances being recognised as an asset rather than an expense. Any adjustmentresulting from the application of the amendments is recognised in the retained earnings at the beginning ofthe earliest comparative period presented since the Group first adopted IC Interpretation 14, FRS 119 – TheLimit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction.
The amendments to FRS 127 are not expected to have material impacts to the Group.
98 T A A N N H O L D I N G S B E R H A D 4 1 9 2 3 2 - K
NOTES TO THE FINANCIAL STATEMENTS
1. Basis of preparation (cont’d)
(b) Basis of measurement
The financial statements have been prepared on the historical cost basis except as explained in Note 2.
(c) Functional and presentation currency
These financial statements are presented in Ringgit Malaysia (RM), which is the Company’s functionalcurrency.
(d) Use of estimates and judgements
The preparation of financial statements in conformity with FRSs requires management to makejudgements, estimates and assumptions that affect the application of accounting policies and the reportedamounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accountingestimates are recognised in the period in which the estimate is revised and in any future periods affectedthereby.
There are no significant areas of estimation uncertainty and critical judgements in applying accountingpolicies that have significant effect on the amounts recognised in the financial statements other thanthose disclosed in the following notes:
• Note 3 - Impairment of property, plant and equipment • Note 8 - Unrecognised deferred tax assets • Note 10 - Assessment of the fair value of goodwill • Note 20 - Employee benefits
2. SIGNIFICANT ACCOUNTING POLICIES
The accounting policies set out below have been consistently applied to the periods presented in thesefinancial statements, and have been applied consistently by the Group entities, other than those disclosed inthe following notes:
• Note 2(c) - Financial instruments • Note 2(g) - Leased assets • Note 2(k) - Receivables • Note 2(s) - Borrowing costs • Note 2(v) - Operating segments
NOTES TO THE FINANCIAL STATEMENTS (cont’d)
99A N N U A L R E P O R T 2 0 1 0
NOTES TO THE FINANCIAL STATEMENTS
2. SIGNIFICANT ACCOUNTING POLICIES (cont’d)
(a) Basis of consolidation
(i) Subsidiaries
Subsidiaries are entities, including unincorporated entities, controlled by the Group. Control existswhen the Group has the ability to exercise its power to govern the financial and operating policies ofan entity so as to obtain benefits from its activities. In assessing control, potential voting rights thatpresently are exercisable are taken into account. Subsidiaries are consolidated using the purchasemethod of accounting.
Under the purchase method of accounting, the financial statements of subsidiaries are included inthe consolidated financial statements from the date that control commences until the date thatcontrol ceases.
Investments in subsidiaries are stated in the Company’s balance sheet at cost less impairmentlosses, unless the investment is classified is held for sale.
(ii) Changes in Group composition
The Group treats all changes in group composition as equity transactions between the Group and itsminority interest holders. Any difference between the Group’s share of net assets before and afterthe change, and any consideration received or paid, is adjusted to or against Group reserves.
(iii) Minority interest
Minority interest at the end of reporting period, being the portion of the net identifiable assets ofsubsidiaries attributable to equity interests that are not owned by the Company, whether directly orindirectly through subsidiaries, is presented in the consolidated statement of financial position andstatement of changes in equity within equity, separately from equity attributable to the owners of theCompany. Minority interest in the results of the Group is presented on the face of the consolidatedstatement of comprehensive income as an allocation of the comprehensive income for the yearbetween minority interest and the owners of the Company.
Where losses applicable to the minority exceed the minority’s interest in the equity of a subsidiary,the excess, and any further losses applicable to the minority, are charged against the Group’s interestexcept to the extent that the minority has a binding obligation to, and is able to, make additionalinvestment to cover the losses. If the subsidiary subsequently reports profits, the Group’s interest isallocated with all such profits until the minority’s share of losses previously absorbed by the Grouphas been recovered.
(iv) Associates
Associates are entities, including unincorporated entities, in which the Group has significantinfluence, but not control, over the financial and operating policies.
NOTES TO THE FINANCIAL STATEMENTS (cont’d)
NOTES TO THE FINANCIAL STATEMENTS (cont’d)
2. SIGNIFICANT ACCOUNTING POLICIES (cont’d)
(a) Basis of consolidation (cont’d)
(iv) Associates (cont’d)
Investments in associates are accounted for in the consolidated financial statements using the equitymethod less any impairment losses, unless it is classified as held for sale (or included in a disposalgroup that is classified as held for sale). The consolidated financial statements include the Group’sshare of the income and expenses of the equity accounted associates, after adjustments to align theaccounting policies with those of the Group, from the date that significant influence commences untilthe date that significant influence ceases.
When the Group’s share of losses exceeds its interest in an equity accounted associate, the carryingamount of that interest (including any long-term investments) is reduced to nil and the recognitionof further losses is discontinued except to the extent that the Group has an obligation to make orhas made, payments on behalf of the investee.
Investment in associates is stated in the Company’s statements of financial position at cost lessimpairment losses, unless the investment is classified as held for sale.
(v) Transactions eliminated on consolidation
Intra-group balances and transactions, and any unrealised income and expenses arising from intra-group transactions, are eliminated in preparing the consolidated financial statements.
Unrealised gains arising from transactions with equity accounted investees are eliminated againstthe investment to the extent of the Group’s interest in the investees. Unrealised losses are eliminatedin the same way as unrealised gains, but only to the extent that there is no evidence of impairmentto the underlying assets.
(b) Foreign currency
(i) Foreign currency transactions
Transactions in foreign currencies are translated to the respective functional currencies of groupentities at the exchange rates at the transaction dates.
Monetary assets and liabilities denominated in foreign currencies at the end of reporting periods areretranslated to the functional currency at the exchange rates at that date. The foreign currency gain orloss on monetary items is the difference between the amortised cost in the functional currency andthe amortised cost in foreign currency translated at the exchange rate at the end of the reporting period.
Non-monetary assets and liabilities denominated in foreign currencies are not retranslated at theend of the reporting date except for those measured at fair value, which are retranslated to thefunctional currency at the exchange rates at the date that the fair value was determined.
Foreign currency differences arising on retranslation are recognized in profit or loss, except fordifferences arising on the retranslation of available-for-sale equity instruments or a financialinstrument designated as a hedge of currency risk, which are recognised in other comprehensiveincome.
T A A N N H O L D I N G S B E R H A D 4 1 9 2 3 2 - K100
NOTES TO THE FINANCIAL STATEMENTS (cont’d)
2. SIGNIFICANT ACCOUNTING POLICIES (cont’d)
(b) Foreign currency (cont’d)
(ii) Operations denominated in functional currencies other than Ringgit Malaysia
The assets and liabilities of operations in functional currencies other than Ringgit Malaysia (“RM”)are translated to RM at the exchange rates at the end of reporting date. The income and expensesof foreign operations are translated to RM at the exchange rates at the dates of transactions.
Foreign currency differences are recognised other comprehensive income and accumulated in theforeign currency translation reserve (FCTR). When a foreign operation is disposed of, in part or infull, the relevant amount in the FCTR is transferred to profit or loss as part of the profit or loss ondisposal.
When settlement of monetary item receivable from or payable to a foreign operation is neitherplanned nor likely in the foreseeable future, foreign exchange gains and losses arising from such amonetary item are considered to form part of net investment of a foreign operation and arerecognised in other comprehensive income, and are presented within equity in the FCTR.
(c) Financial instruments
Arising from the adoption of FRS 139, Financial Instruments: Recognition and Measurement, with effectfrom 1 January 2010, financial instruments are categorised and measured using the accounting policiesas mentioned below. Before 1 January 2010, different accounting policies were applied. Significantchanges to the accounting policies are discussed in Note 39.
(i) Initial recognition and measurement
A financial instrument is recognised in the financial statements when, and only when, the Group orthe Company becomes a party to the contractual provisions of the instrument.
A financial instrument is recognised initially at its fair value plus, in the case of a financial instrumentnot at fair value through profit or loss, transaction costs that are directly attributable to the acquisitionor issue of the financial instrument.
An embedded derivative is recognised separately from the host contract and accounted for as aderivative if, and only if, it is not closely related to the economic characteristics and risks of the hostcontract and the host contract is not categorised at fair value through profit or loss. The host contract,in the event an embedded derivative is recognised separately, is accounted for in accordance withthe policy applicable to the nature of the host contract.
A N N U A L R E P O R T 2 0 1 0 101
NOTES TO THE FINANCIAL STATEMENTS (cont’d)
2. SIGNIFICANT ACCOUNTING POLICIES (cont’d)
(c) Financial instruments (cont’d)
(ii) Financial instrument categories and subsequent measurement
The Group and the Company categorise financial instruments as follows:
Financial assets
(a) Financial assets at fair value through profit or loss
Fair value through profit or loss category comprises financial assets that are held for trading,including derivatives (except for a derivative that is a designated and effective hedging instrument)or financial assets that are specifically designated into this category upon initial recognition.
Derivatives that are linked to and must be settled by delivery of unquoted equity instrumentswhose fair values cannot be reliably measured are measured at cost.
Other financial assets categorised as fair value through profit or loss are subsequently measuredat their fair values with the gain or loss recognised in profit or loss.
(b) Held-to-maturity investments
Held-to-maturity investments category comprises debt instruments that are quoted in an activemarket and the Group or the Company has the positive intention and ability to hold to maturity.
Financial assets categorised as held-to-maturity investments are subsequently measured atamortised cost using the effective interest method.
(c) Loans and receivables
Loans and receivables category comprises debt instruments that are not quoted in an activemarket, trade and other receivables and cash and cash equivalents.
Financial assets categorised as loans and receivables are subsequently measured at amortised costusing the effective interest method.
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NOTES TO THE FINANCIAL STATEMENTS (cont’d)
2. SIGNIFICANT ACCOUNTING POLICIES (cont’d)
(c) Financial instruments (cont’d)
(ii) Financial instrument categories and subsequent measurement (cont’d)
(d) Available-for-sale financial assets
Available-for-sale category comprises investment in equity and debt securities instruments thatare not held for trading.
Investments in equity instruments that do not have a quoted market price in an active marketand whose fair value cannot be reliably measured are measured at cost. Other financial assetscategorised as available-for-sale are subsequently measured at their fair values with the gain orloss recognized in other comprehensive income, except for impairment losses, foreign exchangegains and losses arising from monetary items and gains and losses of hedged items attributableto hedge risks of fair value hedges which are recognised in profit or loss. On derecognition, thecumulative gain or loss recognised in other comprehensive income is reclassified from equityinto profit or loss. Interest calculated for a debt instrument using the effective interest methodis recognised in profit or loss.
All financial assets, except for those measured at fair value through profit or loss, are subject toreview for impairment [see note 2n(i)].
Financial liabilities
All financial liabilities are subsequently measured at amortised cost other than those categorisedas fair value through profit or loss.
. Fair value through profit or loss category comprises financial liabilities that are held for trading,
derivatives (except for a derivative that is a financial guarantee contract or a designated and effectivehedging instrument) or financial liabilities that are specifically designated into this category uponinitial recognition.
Derivatives that are linked to and must be settled by delivery of unquoted equity instruments whosefair values cannot be reliably measured are measured at cost.
Other financial liabilities categorised as fair value through profit or loss are subsequently measuredat their fair values with the gain or loss recognised in profit or loss.
(iii) Financial guarantee contracts
A financial guarantee contract is a contract that requires the issuer to make specified payments toreimburse the holder for a loss it incurs because a specified debtor fails to make payment when duein accordance with the original or modified terms of a debt instrument.
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NOTES TO THE FINANCIAL STATEMENTS (cont’d)
2. SIGNIFICANT ACCOUNTING POLICIES (cont’d)
(c) Financial instruments (cont’d)
(iii) Financial guarantee contracts (cont’d)
Financial guarantee contracts are classified as deferred income and are amortised to profit or lossusing a straight-line method over the contractual period or, when there is no specified contractualperiod, recognised in profit or loss upon discharge of the guarantee. When settlement of a financialguarantee contract becomes probable, an estimate of the obligation is made. If the carrying value ofthe financial guarantee contract is lower than the obligation, the carrying value is adjusted to theobligation amount and accounted for as a provision.
(iv) Regular way purchase or sale of financial assets
A regular way purchase or sale is a purchase or sale of a financial asset under a contract whoseterms require delivery of the asset within the time frame established generally by regulation orconvention in the marketplace concerned.
A regular way purchase or sale of financial assets is recognised and derecognised, as applicable,using trade date accounting. Trade date accounting refers to:
(a) the recognition of an asset to be received and the liability to pay for it on the trade date, and
(b) derecognition of an asset that is sold, recognition of any gain or loss on disposal and therecognition of a receivable from the buyer for payment on the trade date.
(v) Derecognition
A financial asset or part of it is derecognised when, and only when the contractual rights to the cashflows from the financial asset expire or the financial asset is transferred to another party withoutretaining control or substantially all risks and rewards of the asset. On derecognition of a financialasset, the difference between the carrying amount and the sum of the consideration received(including any new asset obtained less any new liability assumed) and any cumulative gain or lossthat had been recognised in equity is recognised in the profit or loss.
A financial liability or a part of it is derecognised when, and only when, the obligation specified in thecontract is discharged or cancelled or expires. On derecognition of a financial liability, the differencebetween the carrying amount of the financial liability extinguished or transferred to another partyand the consideration paid, including any non-cash assets transferred or liabilities assumed, isrecognised in the profit or loss.
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NOTES TO THE FINANCIAL STATEMENTS (cont’d)
2. SIGNIFICANT ACCOUNTING POLICIES (cont’d)
(d) Property, plant and equipment
(i) Recognition and measurement
Items of property, plant and equipment are stated at cost/valuation less accumulated depreciationand accumulated impairment losses, if any.
It is the Group’s policy to state its property, plant and equipment at cost. However, certain buildings(including wharf and jetty) and prepaid lease payments were revalued in 1999 for the sole purpose ofthe listing of the Company on the Main Market of Bursa Malaysia Securities Berhad. No latervaluation has been performed for these assets. Other property, plant and equipment and additionsto the revalued assets subsequent to their revaluation are stated in the financial statements at cost.
Cost includes expenditure that is directly attributable to the acquisition of the assets and any othercosts directly attributable to bringing the assets to working condition for their intended use, and thecosts of dismantling and removing the items and restoring the site on which they are located. Thecost of self-constructed assets also includes the cost of materials and direct labour. Purchasedsoftware that is integral to the functionality of the related equipment is capitalised as part of thatequipment.
The cost of property, plant and equipment recognised as a result of a business combination is basedon fair value at acquisition date.
When significant parts of an item of property, plant and equipment have different useful lives, theyare accounted for as separate items (major components) of property, plant and equipment.
Gains and losses on disposal of an item of property, plant and equipment are determined bycomparing the proceeds from disposal with the carrying amount of property, plant and equipmentand are recognised net within “other income” or “administrative expenses” respectively in profit orloss.
(ii) Subsequent costs
The cost of replacing part of an item of property, plant and equipment is recognised in the carryingamount of the item if it is probable that the future economic benefits embodied within the part willflow to the Group, and its cost can be measured reliably. The carrying amount of the replaced part isderecognised to profit or loss. The costs of the day-to-day servicing of property, plant and equipmentare recognised in profit or loss as incurred.
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NOTES TO THE FINANCIAL STATEMENTS (cont’d)
2. SIGNIFICANT ACCOUNTING POLICIES (cont’d)
(d) Property, plant and equipment (cont’d)
(iii) Depreciation
Depreciation is calculated over the depreciable amount, which is the cost of an asset, or other amountsubstituted for cost less its residual value.
Depreciation is recognised in the profit or loss on a straight-line basis over the estimated useful lifeof each part of an item of property, plant and equipment. Leased assets are depreciated over theshorter of the lease term and their useful lives unless it is reasonably certain that the Group willobtain ownership by the end of the lease term.
Infrastructure incurred on land owned by Group entities planted with oil palms are amortised on astraight-line basis over the lease terms of the land and, in the case of those planted on land licensedfrom the State Government of Sarawak for planted forest purposes, over the remaining term of thelicences. Land improvement expenditure on land planted with oil palms is amortised on a straight-line basis over 25 years, the expected useful life of the oil palms.
Infrastructure and land improvement expenditure on land planted with trees (reforestation land) arenot amortised but will be charged at the time of harvest of the trees to the profit or loss based, interalia, on the area harvested and the estimated number of cycles of planting and harvesting on thereforestation land before the licences expire.
Property, plant and equipment under construction are not depreciated until the assets are ready fortheir intended use.
The estimated useful lives of the other assets for the current and comparative periods are as follows:
Factories, buildings and quarters 10, 14, 50 years Furniture, fittings and equipment 21⁄2, 10, 14, 20 years Plant and machinery 5, 10, 14, 20 years Motor vehicles 5 years Wharf, jetty and ferry 10, 14, 50 years
Depreciation methods, useful lives and residual values are reviewed, and adjusted as appropriate atthe end of the reporting period.
(e) Plantation development expenditure
(i) Reforestation (tree planting) expenditure
Expenditure on planted forest project in the form of planting and upkeep of trees up to the time ofharvest is capitalised in the statement of financial position as reforestation (tree planting) expenditureand will only be charged to the profit or loss at the time of harvest based on the trees/area harvested.
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NOTES TO THE FINANCIAL STATEMENTS (cont’d)
2. SIGNIFICANT ACCOUNTING POLICIES (cont’d)
(e) Plantation development expenditure (cont’d)
(ii) Oil palm plantation expenditure
New planting expenditure incurred on planting, upkeep of immature oil palms and interest incurredduring the pre-maturity period (pre-cropping costs) are capitalised as oil palm plantation expenditure.Upon maturity, all subsequent maintenance expenditure is charged to profit or loss and thecapitalised pre-cropping cost is amortised on a straight-line basis over 25 years, the expected usefullife of the oil palm trees. Replanting expenditure is similarly capitalised and amortised on the above-mentioned basis.
(f) Land held for property development
Land held for property development consists of land or such portions thereof on which no developmentactivities have been carried out or where development activities are not expected to be completed withinthe normal operating cycle. Such land is classified as a non-current asset and is stated at cost, lessaccumulated impairment losses, if any.
Land held for property development is reclassified as property development costs at the point whendevelopment activities have commenced and where it can be demonstrated that the development activitiescan be completed within the normal operating cycle.
Cost associated with the acquisition of land includes the purchase price of the land, professional fees,stamp duties, commissions, conversion fees and other direct development expenditure and relatedoverheads.
(g) Leased assets
(i) Finance lease
Leases in terms of which the Group assumes substantially all the risks and rewards of ownershipare classified as finance leases. Upon initial recognition, the leased asset is measured at an amountequal to the lower of its fair value and the present value of the minimum lease payments. Subsequentto initial recognition, the asset is accounted for in accordance with the accounting policy applicableto that asset [see Note 2 (d)].
Minimum lease payments made under finance leases are apportioned between the finance expenseand the reduction of the outstanding liability. The finance expense is allocated to each period duringthe lease term so as to produce a constant periodic rate of interest on the remaining balance of theliability. Contingent lease payments are accounted for by revising the minimum lease payments overthe remaining term of the lease when the lease adjustment is confirmed.
A N N U A L R E P O R T 2 0 1 0 107
NOTES TO THE FINANCIAL STATEMENTS (cont’d)
2. SIGNIFICANT ACCOUNTING POLICIES (cont’d)
(g) Leased assets (cont’d)
(ii) Operating lease
Leases, where the Group or the Company does not assume substantially all the risks and rewardsof ownership are classified as operating leases and, except for property interest held under operatinglease, the leased assets are not recognised on the Group’s statement of financial position. Propertyinterest held under an operating lease, which is held to earn rental income or for capital appreciationor both, is classified as investment property.
In the previous years, a leasehold land that normally had an indefinite economic life and title wasnot expected to pass to the lessee by the end of the lease term was treated as an operating lease.The payment made on entering into or acquiring a leasehold land that was accounted for as anoperating lease represents prepaid lease payments, except for leasehold land classified asinvestment property.
The Group has adopted the amendment made to FRS 117, Leases in 2010 in relation to theclassification of lease of land. Leasehold land which in substance is a finance lease has beenreclassified and measured as such retrospectively.
Payments made under operating leases are recognised in profit or loss on a straight-line basis overthe term of the lease unless another systematic basis is more representative of the time pattern inwhich economic benefits from the leased asset are consumed. Lease incentives received arerecognised in profit or loss as an integral part of the total lease expense, over the term of the lease.Contingent rentals are charged to profit or loss in the reporting period in which they are incurred.
(h) Intangible assets
(i) Goodwill
Goodwill arises on business combinations and is measured at cost less any accumulated impairmentlosses. In respect of equity accounted investees, the carrying amount of goodwill is included in thecarrying amount of the investment and an impairment loss on such an investment is not allocated toany asset, including goodwill, that forms part of the carrying amount of the equity accounted investee.
For acquisitions prior to 1 January 2006, goodwill represents the excess of the cost of the acquisitionover the Group’s interest in the fair values of the net identifiable assets and liabilities.
With the adoption of FRS 3 beginning 1 January 2006, goodwill represents the excess of the cost ofthe acquisition over the Group’s interest in the net fair value of the identifiable assets, liabilities andcontingent liabilities of the acquire.
Any excess of the Group’s interest in the net fair value of the acquiree’s identifiable assets, liabilitiesand contingent liabilities over the cost of acquisition is recognised immediately in the profit or loss.
Goodwill is tested for impairment annually and whenever there is an indication that it may be impaired.
Goodwill with finite useful life is amortised on a straight-line basis over its estimated useful life.
T A A N N H O L D I N G S B E R H A D 4 1 9 2 3 2 - K108
NOTES TO THE FINANCIAL STATEMENTS (cont’d)
2. SIGNIFICANT ACCOUNTING POLICIES (cont’d)
(h) Intangible assets (cont’d)
(ii) Other intangible assets
Intangible assets, other than goodwill, that are acquired by the Group are stated at cost lessaccumulated amortisation and accumulated impairment losses, if any.
Timber concession
Timber concession is the cost of the rights conferred upon certain subsidiaries to extract timberfrom licensed areas, which will expire on specified dates.
Licence for planted forest
Licence for planted forest represents rights granted to a subsidiary to plant trees on licensed area,which will expire in November 2057.
Land purchase option
Land purchase option is granted to a subsidiary to purchase a plot of leasehold land in Tasmania,Australia, upon which a veneer mill has been constructed. The option expires in 2016, if not exercisedby then.
Wood purchase option
This comprises option granted under an agreement entitling a subsidiary to purchase timber fromForestry Tasmania of Australia.
As the agreement contains a number of extension clauses that enable the agreement to be extendedindefinitely, this asset is considered to have an indefinite useful life.
(iii) Subsequent expenditure
Subsequent expenditure on capitalised intangible assets is capitalised only when it increases thefuture economic benefits embodied in the specific asset to which it relates. All other expenditure isrecognised in profit or loss as incurred.
(iv) Amortisation
Intangible assets with finite useful lives are amortised to the profit or loss from the date that theyare available for use on a straight-line basis over their estimated useful lives, as follows:
• timber concession 13 and 14 years• licence for planted forest 60 years• land purchase option 10 years
A N N U A L R E P O R T 2 0 1 0 109
NOTES TO THE FINANCIAL STATEMENTS (cont’d)
2. SIGNIFICANT ACCOUNTING POLICIES (cont’d)
(i) Inventories
Inventories are measured at the lower of cost and net realisable value.
The cost of inventories is based on the weighted average cost formula, except for consumables whichare valued on the first-in first-out cost. Cost includes expenditure incurred in acquiring the inventories,production or conversion costs and other costs incurred in bringing them to their existing location andcondition. In the case of work-in-progress, manufactured inventories and nursery inventories, costincludes an appropriate share of production overheads based on normal operating capacity.
Net realisable value is the estimated selling price in the ordinary course of business, less the estimatedcosts of completion and estimated costs necessary to make the sale.
The fair value of inventory acquired in business combination is determined based on its estimated sellingprice in the ordinary course of business less estimated costs of completion and sale, and a reasonableprofit margin based on the effort required to complete and sell the inventories.
Nursery inventories consist of oil palm and tree seedlings remaining in the nursery for eventual fieldplanting.
(j) Property development costs
Property development costs comprise costs associated with the acquisition of land and all costs that aredirectly attributable to development activities or that can be allocated on a reasonable basis to suchactivities.
Property development cost not recognised as an expense is recognised as an asset and is stated at thelower of cost and net realisable value.
(k) Receivables
Prior to 1 January 2010, receivables were initially recognised at their costs and subsequently stated atcost less allowance for doubtful receivables.
Following the adoption of FRS 139, trade and other receivables are categorised and measured as loansand receivables in accordance with note policy 2(c).
(l) Plantation contract work-in-progress
Plantation contract work-in-progress represents the gross unbilled amount expected to be collectedfrom customers for contract work performed to date. It is measured at cost plus profit recognised to dateless progress billings and recognised losses. Cost includes all expenditure related directly to specificprojects and an allocation of fixed and variable overheads incurred in the Group’s contract activities basedon normal operating capacity.
Plantation contract work-in-progress is presented as part of receivables, deposits and prepayments inthe statement of financial position. If payments received from customers exceed the income recognised,then the difference is presented as other payables in the statement of financial position.
T A A N N H O L D I N G S B E R H A D 4 1 9 2 3 2 - K110
NOTES TO THE FINANCIAL STATEMENTS (cont’d)
2. SIGNIFICANT ACCOUNTING POLICIES (cont’d)
(m) Cash and cash equivalents
Cash and cash equivalents consist of cash in hand, balances and deposits with licensed banks and financecompanies and highly liquid investments which have an insignificant risk of changes in value. For thepurpose of the cash flow statements, cash and cash equivalents are presented net of bank overdraftsand pledged deposits.
Cash and cash equivalents (other than bank overdrafts) are categorised and measured as loans andreceivables in accordance with policy Note 2(c).
(n) Impairment
(i) Financial assets
All financial assets (except for investment in subsidiaries and associates) are assessed at eachreporting date whether there is any objective evidence of impairment as a result of one or moreevents having an impact on the estimated future cash flows of the asset. Losses expected as a resultof future events, no matter how likely, are not recognised. For an equity instrument, a significant orprolonged decline in the fair value below its cost is an objective evidence of impairment.
An impairment loss in respect of loans and receivables is recognised in profit or loss and is measuredas the difference between the asset’s carrying amount and the present value of estimated futurecash flows discounted at the asset’s original effective interest rate. The carrying amount of the assetis reduced through the use of an allowance account.
An impairment loss in respect of available-for-sale financial assets is recognised in the profit or lossand is measured as the difference between the asset’s acquisition cost (net of any principalrepayment and amortisation) and the asset’s current fair value, less any impairment loss previouslyrecognised. Where a decline in the fair value of an available-for-sale financial asset has beenrecognised in the other comprehensive income, the cumulative loss in other comprehensive incomeis reclassified from equity and recognised to profit or loss.
An impairment loss in respect of unquoted equity instrument that is carried at cost is recognised inprofit or loss and is measured as the difference between the asset’s carrying amount and the presentvalue of estimated future cash flows discounted at the current market rate of return for a similarfinancial asset.
Impairment losses recognised in profit or loss for an investment in an equity instrument is notreversed through the profit or loss.
If, in a subsequent period, the fair value of a debt instrument increases and the increase can beobjectively related to an event occurring after the impairment loss was recognised in profit or loss,the impairment loss is reversed, to the extent that the asset’s carrying amount does not exceed whatthe carrying amount would have been had the impairment not been recognised at the date theimpairment is reversed. The amount of the reversal is recognised in the profit or loss.
A N N U A L R E P O R T 2 0 1 0 111
NOTES TO THE FINANCIAL STATEMENTS (cont’d)
2. SIGNIFICANT ACCOUNTING POLICIES (cont’d)
(n) Impairment (cont’d)
(ii) Non-financial assets
The carrying amounts of non-financial assets (except for inventories) are reviewed at the end of eachreporting period to determine whether there is any indication of impairment.
If any such indication exists, then the asset’s recoverable amount is estimated. For the purpose ofimpairment testing, assets are grouped together into the smallest group of assets that generatescash inflows from continuing use that are largely independent of the cash inflows of other assets orgroups of assets (the “cash-generating unit”). The goodwill acquired in business combination, forthe purpose of impairment testing, is allocated to cash-generating units that are expected to benefitfrom synergies of the combination.
The recoverable amount of an asset or cash-generating unit is the greater of its value in use and itsfair value less costs to sell. In assessing value in use, the estimated future cash flows are discountedto their present value using a pre-tax discount rate that reflects current market assessments of thetime value of money and the risks specific to the asset.
An impairment loss is recognised if the carrying amount of an asset or its cash-generating unitexceeds its recoverable amount.
Impairment losses are recognised in the profit or loss. Impairment losses recognised in respect ofcash-generating units are allocated first to reduce the carrying amount of any goodwill allocated tothe units and then to reduce the carrying amount of the other assets in the unit (groups of units) ona pro rata basis.
An impairment loss in respect of goodwill is not reversed. In respect of other assets, impairmentlosses recognised in prior periods are assessed at the end of each reporting period for any indicationsthat the loss has decreased or no longer exists. An impairment loss is reversed if there has been achange in the estimates used to determine the recoverable amount since the last impairment losswas recognised. An impairment loss is reversed only to the extent that the asset’s carrying amountdoes not exceed the carrying amount that would have been determined, net of depreciation oramortisation, if no impairment loss had been recognised. Reversals of impairment losses are creditedto profit or loss in the year in which the reversals are recognised.
T A A N N H O L D I N G S B E R H A D 4 1 9 2 3 2 - K112
NOTES TO THE FINANCIAL STATEMENTS (cont’d)
2. SIGNIFICANT ACCOUNTING POLICIES (cont’d)
(o) Equity instrument
(i) Issue expenses
Costs directly attributable to the issue of instruments classified as equity are recognised as adeduction from equity.
(ii) Preference share capital
Preference share capital is classified as equity if it is non-redeemable or is redeemable but only atthe Company’s option, and any dividends are discretionary. Dividends thereon are recognised asdistributions within equity.
Preference share capital is classified as a liability if it is redeemable on a specific date or at the optionof the shareholders, or if dividend payments are not discretionary. Dividends thereon are recognisedas interest expense in the profit or loss.
(iii) Repurchase of share capital
When share capital recognised as equity is repurchased, the amount of the consideration paid,including directly attributable costs, is recognised as a deduction from equity. Repurchased sharesthat are not subsequently cancelled are classified as treasury shares and are presented as adeduction from total equity.
(p) Employee benefits
(i) Short term employee benefits
Short-term employee benefit obligations in respect of salaries, annual bonuses, paid annual leaveand sick leave are measured on an undiscounted basis and are expensed as the related service isprovided.
A liability is recognised for the amount expected to be paid under short-term cash bonus or profit-sharing plans if the Group has a present legal or constructive obligation to pay this amount as aresult of past service provided by the employee and the obligation can be estimated reliably.
(ii) State plans
The Group’s contributions to statutory pension funds are charged to profit or loss in the year to whichthey relate. Once the contributions have been paid, the Group has no further payment obligations.
A N N U A L R E P O R T 2 0 1 0 113
NOTES TO THE FINANCIAL STATEMENTS (cont’d)
2. SIGNIFICANT ACCOUNTING POLICIES (cont’d)
(p) Employee benefits (cont’d)
(iii) Defined benefit plans
The Group’s net obligation in respect of defined benefit retirement plans is calculated separately foreach plan by estimating the amount of future benefit that employees have earned in return for theirservice in the current and prior periods; that benefit is discounted to determine its present value.Any unrecognised past service costs and the fair value of any plan assets are deducted. The discountrate is the yield at the end of the reporting period on high quality corporate bonds that have maturitydates approximating the terms of the Group’s obligations and that are denominated in the samecurrency in which the benefits are expected to be paid. The calculation is performed annually by aqualified actuary using the projected unit credit method. When the calculation results in a benefit tothe Group, the recognised asset is limited to the net total of any unrecognised past service costs andthe present value of economic benefits available in the form of any future refunds from the plan orreductions in future contributions to the plan. In order to calculate the present value of economicbenefits, consideration is given to any minimum funding requirements that apply to any plan in theGroup. An economic benefit is available to the Group if it is realisable during the life of the plan, orany settlement of the plan liabilities.
When the benefits of a plan are improved, the portion of the increased benefit relating to past serviceby employees is recognised in profit or loss on a straight-line basis over the average period until thebenefits become vested. To the extent that the benefits vest immediately, the expense is recognisedimmediately in profit or loss.
The Group recognises all actuarial gains and losses arising from defined benefit plans in othercomprehensive income and all expenses related to defined benefit plans in personnel expenses inprofit or loss.
(q) Provisions
A provision is recognised if, as a result of a past event, the Group has a present legal or constructiveobligation that can be estimated reliably, and it is probable that an outflow of economic benefits will berequired to settle the obligation. Provisions are determined by discounting the expected future cash flowsat a pre-tax rate that reflects current market assessments of the time value of money and the risksspecific to the liability. The unwinding of the discount is recognised as finance cost.
T A A N N H O L D I N G S B E R H A D 4 1 9 2 3 2 - K114
NOTES TO THE FINANCIAL STATEMENTS (cont’d)
2. SIGNIFICANT ACCOUNTING POLICIES (cont’d)
(q) Provisions (cont’d)
Contingent liabilities
Where it is not probable that an outflow of economic benefits will be required, or the amount cannot beestimated reliably, the obligation is disclosed as a contingent liability, unless the probability of outflow ofeconomic benefits is remote. Possible obligations, whose existence will only be confirmed by theoccurrence or non-occurrence of one or more future events, are also disclosed as contingent liabilitiesunless the probability of outflow of economic benefits is remote.
(r) Revenue and other income
(i) Goods sold
Revenue from sale of goods is measured at the fair value of the consideration received or receivable,net of returns and allowances, trade discounts and volume rebates. Revenue is recognised when thesignificant risks and rewards of ownership have been transferred to the buyers, recovery of theconsideration is probable, the associated costs and possible return of goods can be estimated reliably,and there is no continuing management involvement with the goods.
(ii) Contract income
Revenue from logging contracts, for which the remuneration is based on volume of logs extracted,is recognised in the profit or loss when the logs extracted have been delivered to pre-agreed locations.
Contract revenue includes the initial amount agreed in the contract plus any variations in contractwork, claims and incentive payments to the extent that it is probable that they will result in revenueand can be measured reliably. As soon as the outcome of a tree planting contract can be estimatedreliably, contract revenue and expenses are recognised in the profit or loss in proportion to the stageof completion of the contact.
The stage of completion is assessed by reference to surveys of work performed. When the outcomeof a construction contract cannot be estimated reliably, contract revenue is recognised only to theextent of contract costs incurred that are likely to be recoverable. An expected loss on a contract isrecognised immediately in the profit or loss.
(iii) Dividend income
Dividend income is recognised in profit and loss on the date that the Group’s or the Company’s whenright to receive payment is established, which in the case of quoted securities is the ex-dividend date.
(iv) Management fees
Management fees are charged monthly by the Company to its subsidiaries based on servicesrendered.
A N N U A L R E P O R T 2 0 1 0 115
NOTES TO THE FINANCIAL STATEMENTS (cont’d)
2. SIGNIFICANT ACCOUNTING POLICIES (cont’d)
(r) Revenue and other income (cont’d)
(v) Government grants
Government grants is recognised initially as deferred income at fair value when there is reasonableassurance that it will be received and that the Group will comply with the conditions associated withthe grant.
Grants that compensate the Group for expenses incurred are recognised in the profit or loss on asystematic basis in the same periods in which the expenses are recognised.
Grants that compensate the Group for the cost of an asset are recognised in the profit or loss on asystematic basis over the useful life of the asset.
(vi) Property development income
Revenue from property development is recognised using the percentage of completion method.
The stage of completion is measured by reference to the proportion that property development costsincurred bear to the estimated total costs for the property development. Where foreseeable lossesare anticipated, full provision for these losses is made in the financial statements.
(vii) Interest income
Interest income is recognised as it accrues using the effective interest method in profit or loss exceptfor interest income arising from temporary investment of borrowings taken specifically for thepurpose of obtaining a qualifying asset which is accounted for in accordance with the accountingpolicy on borrowing costs.
(s) Borrowing costs
Borrowing costs that are not directly attributable to the acquisition, construction or production of aqualifying asset are recognised in profit or loss using the effective interest method.
Before 1 January 2010, all borrowing costs were recognised in profit or loss using the effective interestmethod in the period in which they are incurred.
Following the adoption of revised FRS 123, Borrowing Costs, borrowing costs directly attributable to theacquisition, construction or production of qualifying assets, which are assets that necessarily take asubstantial period of time to get ready for their intended use or sale, are capitalised as part of the costof those assets.
The capitalisation of borrowing costs as part of the cost of a qualifying asset commences whenexpenditure for the asset is being incurred, borrowing costs are being incurred and activities that arenecessary to prepare the asset for its intended use or sale are in progress. Capitalisation of borrowingcosts is suspended or ceases when substantially all the activities necessary to prepare the qualifyingasset for its intended use or sale are interrupted or completed.
Investment income earned on the temporary investment of specific borrowings pending their expenditureon qualifying assets is deducted from the borrowing costs eligible for capitalisation.
T A A N N H O L D I N G S B E R H A D 4 1 9 2 3 2 - K116
NOTES TO THE FINANCIAL STATEMENTS (cont’d)
2. SIGNIFICANT ACCOUNTING POLICIES (cont’d)
(t) Tax expense
Tax expense comprises current and deferred tax. Tax expense is recognised in the profit or loss exceptto the extent that it relates to a business combination or items recognised directly in equity, in which caseit is recognised in equity or other comprehensive income.
Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted orsubstantively enacted by the end of the reporting period, and any adjustment to tax payable in respect ofprevious years.
Deferred tax is recognised using the liability method, providing for temporary differences between thecarrying amounts of assets and liabilities in the statement of financial position and their tax bases.Deferred tax is not recognised for the following temporary differences: the initial recognition of goodwill,the initial recognition of assets or liabilities in a transaction that is not a business combination and thataffects neither accounting nor taxable profit or loss). Deferred tax is measured at the tax rates that areexpected to be applied to the temporary differences when they reverse, based on the laws that have beenenacted or substantively enacted by the end of reporting period.
A deferred tax asset is recognised to the extent that it is probable that future taxable profits will beavailable against which temporary differences can be utilised. Deferred tax assets are reviewed at eachreporting date and are reduced by the extent that it is no longer probable that the related tax benefit willbe realised.
(u) Earnings per share
The Group presents basic and diluted earnings per share data for its ordinary shares (EPS).
Basic EPS is calculated by dividing the profit or loss attributable to ordinary shareholders of the Companyby the weighted average number of ordinary shares outstanding during the period.
Diluted EPS is determined by adjusting the profit or loss attributable to ordinary shareholders and theweighted average number of ordinary shares outstanding for the effects of all dilutive potential ordinaryshares, which comprise share options granted to employees.
(v) Operating segments
In the previous years, a segment was a distinguishable component of the Group that was engaged eitherin providing products or services (business segment), or in providing products or services within aparticular economic environment (geographical segment) which was subject to risks and rewards thatwere different from those of other segments.
Following the adoption of FRS 8, Operating Segments, an operating segment is a component of the Groupthat engages in business activities from which it may earn revenues and incur expenses, includingrevenues and expenses that relate to transactions with any of the Group’s other components. An operatingsegment’s operating results are reviewed regularly by the chief operating decision maker, which in thiscase is the Chief Executive Officer of the Group, to make decisions about resources to be allocated to thesegment and assess its performance, and for which discrete financial information is available.
A N N U A L R E P O R T 2 0 1 0 117
3. PROPERTY, PLANT AND EQUIPMENT 3. PROPERTY, PLANT AND EQUIPMENT (cont’d)
Furniture, fittingPlantation and equipment Plant and machinery Motor vehicles
Long-term Short-term Factories, Infrastructure land Under Wharf, Under Under Assetsleasehold leasehold buildings and logging improvement Outright Hire jetty Outright Finance Outright finance under
land land and quarters roads expenditure purchase purchase and ferry purchase leases purchase leases construction TotalGroup RM RM RM RM RM RM RM Group RM RM RM RM RM RM RM
Cost Cost
At 1 January 2009 83,586,892 4,061,310 164,633,008 73,858,458 76,346,570 28,727,077 - At 1 January 2009 6,372,620 247,161,346 161,799,068 47,307,106 17,806,315 57,838,632 969,498,402Additions 2,083,116 - 750,902 4,341,030 9,058,973 2,057,474 - Additions - 3,923,879 272,000 3,103,879 1,486,799 42,691,606 69,769,658Disposals - - ( 540,289) - - ( 788,985) - Disposals - ( 519,330) ( 206,263) ( 1,373,574) - ( 2,290,513) ( 5,718,954)Transfers - - 9,716,053 728,817 - 1,190,428 - Transfers 92,880 147,157,736 (133,458,244) 9,428,945 6,774,343 ( 37,777,545) 3,853,413Reclassification ( 5,743,793) 5,743,793 - - - - - Reclassification - - - - - - -Effect of movements Effect of movementsin exchange rate ( 78,763) 224,444 11,209,541 3,240,342 - 209,739 - in exchange rate - 34,212,710 - 282,230 - 1,230,363 50,530,606
At 31 December 2009/ At 31 December 2009/1 January 2010 79,847,452 10,029,547 185,769,215 82,168,647 85,405,543 31,395,733 - 1 January 2010 6,465,500 431,936,341 28,406,561 58,748,586 26,067,457 61,692,543 1,087,933,125
Additions 801,167 - 156,238 1,144,147 11,782,122 1,340,161 182,400 Additions - 1,229,048 600,000 3,282,841 6,490,649 15,923,262 42,932,035Disposals - - ( 221,172) - - ( 440,039) - Disposals ( 28,000) ( 1,614,844) 300,000 ( 1,617,052) ( 85,902) ( 545) ( 3,707,554)Acquisition of a Acquisition of asubsidiary (Note 38) 21,847,500 - - - - - - subsidiary (Note 38) - - - - - - 21,847,500
Transfers 997,104 ( 6,169,444) 8,521,314 41,698,928 - 1,566,714 356,600 Transfers - 8,252,771 ( 702,950) 4,778,043 ( 4,971,889) ( 59,538,698) ( 5,211,507)Reclassification - - - - - - - Reclassification - - - - - - -Effect of movements Effect of movements in exchange rate 252 19,244 971,732 353,582 - 29,842 - in exchange rate - 3,239,180 - ( 45,098) - ( 295,770) 4,272,964
At 31 December 2010 103,493,475 3,879,347 195,197,327 125,365,304 97,187,665 33,892,411 539,000 At 31 December 2010 6,437,500 443,042,496 28,603,611 65,147,320 27,500,315 17,780,792 1,148,066,563
NOTES TO THE FINANCIAL STATEMENTS (cont’d)
T A A N N H O L D I N G S B E R H A D 4 1 9 2 3 2 - K118
3. PROPERTY, PLANT AND EQUIPMENT 3. PROPERTY, PLANT AND EQUIPMENT (cont’d)
Furniture, fittingPlantation and equipment Plant and machinery Motor vehicles
Long-term Short-term Factories, Infrastructure land Under Wharf, Under Under Assetsleasehold leasehold buildings and logging improvement Outright Hire jetty Outright Finance Outright finance under
land land and quarters roads expenditure purchase purchase and ferry purchase leases purchase leases construction TotalGroup RM RM RM RM RM RM RM Group RM RM RM RM RM RM RM
Cost Cost
At 1 January 2009 83,586,892 4,061,310 164,633,008 73,858,458 76,346,570 28,727,077 - At 1 January 2009 6,372,620 247,161,346 161,799,068 47,307,106 17,806,315 57,838,632 969,498,402Additions 2,083,116 - 750,902 4,341,030 9,058,973 2,057,474 - Additions - 3,923,879 272,000 3,103,879 1,486,799 42,691,606 69,769,658Disposals - - ( 540,289) - - ( 788,985) - Disposals - ( 519,330) ( 206,263) ( 1,373,574) - ( 2,290,513) ( 5,718,954)Transfers - - 9,716,053 728,817 - 1,190,428 - Transfers 92,880 147,157,736 (133,458,244) 9,428,945 6,774,343 ( 37,777,545) 3,853,413Reclassification ( 5,743,793) 5,743,793 - - - - - Reclassification - - - - - - -Effect of movements Effect of movementsin exchange rate ( 78,763) 224,444 11,209,541 3,240,342 - 209,739 - in exchange rate - 34,212,710 - 282,230 - 1,230,363 50,530,606
At 31 December 2009/ At 31 December 2009/1 January 2010 79,847,452 10,029,547 185,769,215 82,168,647 85,405,543 31,395,733 - 1 January 2010 6,465,500 431,936,341 28,406,561 58,748,586 26,067,457 61,692,543 1,087,933,125
Additions 801,167 - 156,238 1,144,147 11,782,122 1,340,161 182,400 Additions - 1,229,048 600,000 3,282,841 6,490,649 15,923,262 42,932,035Disposals - - ( 221,172) - - ( 440,039) - Disposals ( 28,000) ( 1,614,844) 300,000 ( 1,617,052) ( 85,902) ( 545) ( 3,707,554)Acquisition of a Acquisition of asubsidiary (Note 38) 21,847,500 - - - - - - subsidiary (Note 38) - - - - - - 21,847,500
Transfers 997,104 ( 6,169,444) 8,521,314 41,698,928 - 1,566,714 356,600 Transfers - 8,252,771 ( 702,950) 4,778,043 ( 4,971,889) ( 59,538,698) ( 5,211,507)Reclassification - - - - - - - Reclassification - - - - - - -Effect of movements Effect of movements in exchange rate 252 19,244 971,732 353,582 - 29,842 - in exchange rate - 3,239,180 - ( 45,098) - ( 295,770) 4,272,964
At 31 December 2010 103,493,475 3,879,347 195,197,327 125,365,304 97,187,665 33,892,411 539,000 At 31 December 2010 6,437,500 443,042,496 28,603,611 65,147,320 27,500,315 17,780,792 1,148,066,563
NOTES TO THE FINANCIAL STATEMENTS (cont’d)
A N N U A L R E P O R T 2 0 1 0 119
3. PROPERTY, PLANT AND EQUIPMENT 3. PROPERTY, PLANT AND EQUIPMENT (cont’d)
Furniture, fittingPlantation and equipment Plant and machinery Motor vehicles
Long-term Short-term Factories, Infrastructure land Under Wharf, Under Under Assetsleasehold leasehold buildings and logging improvement Outright Hire jetty Outright Finance Outright finance under
land land and quarters roads expenditure purchase purchase and ferry purchase leases purchase leases construction TotalGroup RM RM RM RM RM RM RM Group RM RM RM RM RM RM RM
Representing items at: Representing items at:
Cost 96,748,678 2,345,911 172,328,629 125,365,304 97,187,665 33,892,411 539,000 Cost 5,308,133 443,042,496 28,603,611 65,147,320 27,500,315 17,780,792 1,115,790,265Directors’ valuation 6,744,797 1,533,436 22,868,698 - - - - Directors’ valuation 1,129,367 - - - - - 32,276,298
At 31 December 2010 103,493,475 3,879,347 195,197,327 125,365,304 97,187,665 33,892,411 539,000 At 31 December 2010 6,437,500 443,042,496 28,603,611 65,147,320 27,500,315 17,780,792 1,148,066,563
Depreciation Depreciation
At 1 January 2009 7,475,559 857,454 31,220,964 13,828,840 1,410,924 15,154,971 - At 1 January 2009 1,054,996 38,038,540 89,878,505 41,076,956 3,791,828 - 243,789,537Charge for the year 1,237,125 217,993 6,514,635 1,585,513 675,616 2,999,407 - Charge for the year 133,605 16,618,343 7,419,857 3,721,935 4,190,012 - 45,314,041Disposals - - ( 278,225) - - ( 496,421) - Disposals - ( 471,715) ( 694,603) ( 1,134,567) - - ( 3,075,531)Transfers - - ( 37) - - 111,138 - Transfers - 92,071,998 ( 91,635,143) 4,595,324 ( 4,482,240) - 661,040Reclassification ( 85,728) 85,728 - - - - - Reclassification - - - - - - -Effects of movements Effects of movements in exchange rate - - 523,921 201,751 - 30,847 - in exchange rate - 1,798,588 - 94,682 - - 2,649,789
At 31 December 2009/ At 31 December 2009/1 January 2010 8,626,956 1,161,175 37,981,258 15,616,104 2,086,540 17,799,942 - 1 January 2010 1,188,601 148,055,754 4,968,616 48,354,330 3,499,600 - 289,338,876
Charge for the year 1,762,906 51,996 6,738,118 2,999,493 940,657 3,111,223 37,913 Charge for the year 129,494 23,246,674 1,735,068 4,733,979 5,919,783 - 51,407,304Disposals - - ( 52,853) - - ( 366,190) - Disposals ( 27,999) ( 584,207) ( 7,053) ( 1,064,882) ( 27,202) - ( 2,130,386)Transfers 596,688 ( 559,234) ( 17,844) 24,474 - ( 16,543) - Transfers 21,301 ( 103,133) ( 338,671) 2,401,682 ( 2,560,541) - ( 551,821)Reclassification 53,366 ( 53,366) - - - - - Reclassification - - - - - - -Effects of movements Effects of movements in exchange rate - - 187,232 69,264 - 15,751 - in exchange rate - 677,550 - 25,495 - - 975,292
At 31 December 2010 11,039,916 600,571 44,835,911 18,709,335 3,027,197 20,544,183 37,913 At 31 December 2010 1,311,397 171,292,638 6,357,960 54,450,604 6,831,640 - 339,039,265
Carrying amounts Carrying amounts
At 1 January 2009 76,111,333 3,203,856 133,412,044 60,029,618 74,935,646 13,572,106 - At 1 January 2009 5,317,624 209,122,806 71,920,563 6,230,150 14,014,487 57,838,632 725,708,865
At 31 December 2009/ At 31 December 2009/1 January 2010 71,220,496 8,868,372 147,787,957 66,552,543 83,319,003 13,595,791 - 1 January 2010 5,276,899 283,880,587 23,437,945 10,394,256 22,567,857 61,692,543 798,594,249
At 31 December 2010 92,453,559 3,278,776 150,361,416 106,655,969 94,160,468 13,348,228 501,087 At 31 December 2010 5,126,103 271,749,858 22,245,651 10,696,716 20,668,675 17,780,792 809,027,298
NOTES TO THE FINANCIAL STATEMENTS (cont’d)
T A A N N H O L D I N G S B E R H A D 4 1 9 2 3 2 - K120
3. PROPERTY, PLANT AND EQUIPMENT 3. PROPERTY, PLANT AND EQUIPMENT (cont’d)
Furniture, fittingPlantation and equipment Plant and machinery Motor vehicles
Long-term Short-term Factories, Infrastructure land Under Wharf, Under Under Assetsleasehold leasehold buildings and logging improvement Outright Hire jetty Outright Finance Outright finance under
land land and quarters roads expenditure purchase purchase and ferry purchase leases purchase leases construction TotalGroup RM RM RM RM RM RM RM Group RM RM RM RM RM RM RM
Representing items at: Representing items at:
Cost 96,748,678 2,345,911 172,328,629 125,365,304 97,187,665 33,892,411 539,000 Cost 5,308,133 443,042,496 28,603,611 65,147,320 27,500,315 17,780,792 1,115,790,265Directors’ valuation 6,744,797 1,533,436 22,868,698 - - - - Directors’ valuation 1,129,367 - - - - - 32,276,298
At 31 December 2010 103,493,475 3,879,347 195,197,327 125,365,304 97,187,665 33,892,411 539,000 At 31 December 2010 6,437,500 443,042,496 28,603,611 65,147,320 27,500,315 17,780,792 1,148,066,563
Depreciation Depreciation
At 1 January 2009 7,475,559 857,454 31,220,964 13,828,840 1,410,924 15,154,971 - At 1 January 2009 1,054,996 38,038,540 89,878,505 41,076,956 3,791,828 - 243,789,537Charge for the year 1,237,125 217,993 6,514,635 1,585,513 675,616 2,999,407 - Charge for the year 133,605 16,618,343 7,419,857 3,721,935 4,190,012 - 45,314,041Disposals - - ( 278,225) - - ( 496,421) - Disposals - ( 471,715) ( 694,603) ( 1,134,567) - - ( 3,075,531)Transfers - - ( 37) - - 111,138 - Transfers - 92,071,998 ( 91,635,143) 4,595,324 ( 4,482,240) - 661,040Reclassification ( 85,728) 85,728 - - - - - Reclassification - - - - - - -Effects of movements Effects of movements in exchange rate - - 523,921 201,751 - 30,847 - in exchange rate - 1,798,588 - 94,682 - - 2,649,789
At 31 December 2009/ At 31 December 2009/1 January 2010 8,626,956 1,161,175 37,981,258 15,616,104 2,086,540 17,799,942 - 1 January 2010 1,188,601 148,055,754 4,968,616 48,354,330 3,499,600 - 289,338,876
Charge for the year 1,762,906 51,996 6,738,118 2,999,493 940,657 3,111,223 37,913 Charge for the year 129,494 23,246,674 1,735,068 4,733,979 5,919,783 - 51,407,304Disposals - - ( 52,853) - - ( 366,190) - Disposals ( 27,999) ( 584,207) ( 7,053) ( 1,064,882) ( 27,202) - ( 2,130,386)Transfers 596,688 ( 559,234) ( 17,844) 24,474 - ( 16,543) - Transfers 21,301 ( 103,133) ( 338,671) 2,401,682 ( 2,560,541) - ( 551,821)Reclassification 53,366 ( 53,366) - - - - - Reclassification - - - - - - -Effects of movements Effects of movements in exchange rate - - 187,232 69,264 - 15,751 - in exchange rate - 677,550 - 25,495 - - 975,292
At 31 December 2010 11,039,916 600,571 44,835,911 18,709,335 3,027,197 20,544,183 37,913 At 31 December 2010 1,311,397 171,292,638 6,357,960 54,450,604 6,831,640 - 339,039,265
Carrying amounts Carrying amounts
At 1 January 2009 76,111,333 3,203,856 133,412,044 60,029,618 74,935,646 13,572,106 - At 1 January 2009 5,317,624 209,122,806 71,920,563 6,230,150 14,014,487 57,838,632 725,708,865
At 31 December 2009/ At 31 December 2009/1 January 2010 71,220,496 8,868,372 147,787,957 66,552,543 83,319,003 13,595,791 - 1 January 2010 5,276,899 283,880,587 23,437,945 10,394,256 22,567,857 61,692,543 798,594,249
At 31 December 2010 92,453,559 3,278,776 150,361,416 106,655,969 94,160,468 13,348,228 501,087 At 31 December 2010 5,126,103 271,749,858 22,245,651 10,696,716 20,668,675 17,780,792 809,027,298
NOTES TO THE FINANCIAL STATEMENTS (cont’d)
A N N U A L R E P O R T 2 0 1 0 121
3.PR
OPE
RTY
, PLA
NT
AND
EQ
UIP
MEN
T (c
ont’d
)
Mot
or v
ehic
les
Long
term
Shor
t ter
mFu
rnitu
re,
Und
erle
aseh
old
leas
ehol
dfit
tings
and
Outr
ight
finan
cela
ndla
ndBu
ildin
gseq
uipm
ent
purc
hase
leas
esTo
tal
Com
pany
RMRM
RMRM
RMRM
RM
Cost
At 1
Jan
uary
200
92,
909,
074
235,
017
8,38
8,79
311
,557
,496
1,39
5,20
317
1,73
524
,657
,318
Addi
tions
--
21,0
67-
-21
,067
Dis
posa
ls-
-(
28,7
76)
(
105,
672)
-(
1
34,4
48)
At 3
1 D
ecem
ber 2
009/
1 Ja
nuar
y 201
02,
909,
074
235,
017
8,38
8,79
311
,549
,787
1,28
9,53
117
1,73
524
,543
,937
Addi
tions
--
-25
,727
--
25,7
27D
ispo
sals
--
-(
13,7
07)
--
(
13,
707)
At 3
1 D
ecem
ber 2
010
2,90
9,07
423
5,01
78,
388,
793
11,5
61,8
071,
289,
531
171,
735
24,5
55,9
57
Depr
ecia
tion
At 1
Jan
uary
200
959
3,47
239
,019
1,08
0,71
17,
194,
786
1,13
8,57
18,
587
10,0
55,1
46Ch
arge
for t
he ye
ar (N
ote
23)
40,8
665,
466
169,
518
1,12
5,49
415
1,06
434
,346
1,52
6,75
4D
ispo
sals
--
-(
2
2,23
4)(
10
5,67
1)-
(
127
,905
)
At 3
1 D
ecem
ber 2
009/
1 Ja
nuar
y 201
063
4,33
844
,485
1,25
0,22
98,
298,
046
1,18
3,96
442
,933
11,4
53,9
95Ch
arge
for t
he ye
ar (N
ote
23)
40,8
665,
466
169,
518
1,10
8,77
976
,810
34,3
471,
435,
786
Dis
posa
ls-
--
(
13,
126)
--
(
13,
126)
At 3
1 D
ecem
ber 2
010
675,
204
49,9
511,
419,
747
9,39
3,69
91,
260,
774
77,2
8012
,876
,655
NOTES TO THE FINANCIAL STATEMENTS (cont’d)
T A A N N H O L D I N G S B E R H A D 4 1 9 2 3 2 - K122
3.PR
OPE
RTY
, PLA
NT
AND
EQ
UIP
MEN
T (c
ont’d
)
Une
xpir
edU
nexp
ired
Furn
iture
,M
otor
veh
icle
spe
riod
mor
epe
riod
less
fittin
gs a
ndOu
trig
htU
nder
than
50
year
sth
an 5
0 ye
ars
Build
ings
equi
pmen
tpu
rcha
sefin
ance
leas
esTo
tal
Com
pany
RMRM
RMRM
RMRM
RM
Carr
ying
am
ount
s
At 1
Jan
uary
200
92,
315,
602
195,
998
7,30
8,08
24,
362,
710
256,
632
163,
148
14,6
02,1
72
At 3
1 D
ecem
ber 2
009/
1 Ja
nuar
y 201
02,
274,
736
190,
532
7,13
8,56
43,
251,
741
105,
567
128,
802
13,0
89,9
42
At 3
1 D
ecem
ber 2
010
2,23
3,87
018
5,06
66,
969,
046
2,16
8,10
828
,757
94,4
5511
,679
,302
NOTES TO THE FINANCIAL STATEMENTS (cont’d)
A N N U A L R E P O R T 2 0 1 0 123
NOTES TO THE FINANCIAL STATEMENTS (cont’d)
3. PROPERTY, PLANT AND EQUIPMENT (cont’d)
3.1 Title of land
Included in leasehold land are twelve (2009: twelve) parcels of native land costing RM140,982(2009: RM140,982) which are registered in the name of a Director holding them in trust for the Company.
In addition, the land title to two parcels of land with the carrying amount of RM5,322,581
(2009: RM4,616,981) has yet to be issued by the relevant authority as at 31 December 2010.
3.2 Allocation of Depreciation
Depreciation charge for the year is allocated as follows:
Group Company2010 2009 2010 2009
RM RM RM RM(restated)
Results from operatingactivities (Note 23) 42,628,028 40,616,220 1,435,786 1,526,754
Plantation developmentexpenditure (Note 4) 5,401,697 3,895,313 - -
Property developmentcosts (Note 14) 6,555 6,555 - -
Plantation contract work-in-progress (Note 9) 217,414 98,718 - -
Inventories (Note 12) 83,945 409,152 - -Land improvement expenditure 3,069,665 288,083 - -
51,407,304 45,314,041 1,435,786 1,526,754
3.3 Property, plant and equipment under revaluation
Certain of the Group’s factory, buildings and quarters and wharf and jetty were revalued during the yearended 31 December 1999 by the Directors based on the open market values as ascertained byindependent professional valuers in 1997 and as approved by the Securities Commission. Had the revaluedassets been carried under the cost model, their carrying amounts included in the financial statementsat the end of the year are as follows:
2010 2009RM RM
Factories, buildings and quarters 8,264,562 8,814,908Wharf and jetty 593,185 610,898Long-term leasehold land 3,738,237 3,847,479
12,595,984 13,273,285
T A A N N H O L D I N G S B E R H A D 4 1 9 2 3 2 - K124
NOTES TO THE FINANCIAL STATEMENTS (cont’d)
3. PROPERTY, PLANT AND EQUIPMENT (cont’d)
3.4 Leasehold land included in the carrying amount of land are:
Group Company2010 2009 2010 2009
RM RM RM RM(restated)
Leasehold land with Unexpected lease period of- more than 50 years 92,453,559 71,220,496 2,233,870 2,274,736- less than 50 years 3,278,776 8,868,372 185,066 190,532
95,732,335 80,088,868 2,418,936 2,465,268
The carrying amounts of land at 1 January 2009 and 31 December 2009 have been adjusted following theadoption of the amendments to FRS 117 Lease, where leasehold land, in substance is a finance lease,has been reclassified from prepaid lease payments to property, plant and equipment.
3.5 Property, plant and equipment - current
Leasehold land2010
RM
Reclassified from non-current assetsCost 1,531,731
The leasehold land subsisting at 31 December 2010 of a subsidiary is held for sale and thus reclassifiedas current assets.
A N N U A L R E P O R T 2 0 1 0 125
NOTES TO THE FINANCIAL STATEMENTS (cont’d)
4. PLANTATION DEVELOPMENT EXPENDITURE - GROUP
Plantation development expenditure consists of the following:
Oil palmplantation Reforestation
development (Tree planting)expenditure expenditure Total
RM RM RM
Cost
At 1 January 2009 153,441,415 47,330,135 200,771,550Additions 35,433,480 6,505,473 41,938,953Disposal ( 1,118) - ( 1,118)
At 31 December 2009/1 January 2010 188,873,777 53,835,608 242,709,385
Additions 44,352,323 5,776,045 50,128,368
At 31 December 2010 233,226,100 59,611,653 292,837,753
Amortisation
At 1 January 2009 6,768,630 - 6,768,630Charge for the year (Note 23) 4,173,670 - 4,173,670
At 31 December 2009/1 January 2010 10,942,300 - 10,942,300
Charge for the year (Note 23) 5,552,092 106,257 5,658,349
At 31 December 2010 16,494,392 106,257 16,600,649
Carrying amounts
At 1 January 2009 146,672,785 47,330,135 194,002,920
At 31 December 2009/1 January 2010 177,931,477 53,835,608 231,767,085
At 31 December 2010 216,731,708 59,505,396 276,237,104
T A A N N H O L D I N G S B E R H A D 4 1 9 2 3 2 - K126
NOTES TO THE FINANCIAL STATEMENTS (cont’d)
4. PLANTATION DEVELOPMENT EXPENDITURE - GROUP (cont’d)
Additions to plantation development expenditure incurred during the year comprise:
2010 2009Note RM RM
Amortisation of prepaid lease payments 5 3,579 4,326Amortisation of other intangible assets 11 129,055 129,055Depreciation of property, plant and equipment 3 5,401,697 3,895,313Equipment rental 39,423 47,986Finance lease interest 146,722 127,571Land rent 8,448 8,448Loan interest 3,239,561 2,623,826Rental of premises 525,681 579,608Retirement benefits 20 230,387 97,924
Included in plantation development expenditure incurred during the year are loan interest and finance leaseinterest capitalised at rates ranging from 2.80% to 4.45% (2009: 2.83% to 3.59%) per annum and 3.61% to6.22% (2009: 2.55% to 6.68%) per annum respectively.
Oil palm plantation development expenditure of RM68,589,723 (2009: RM76,516,879), RM44,785,131(2009: RM45,326,386), RM10,676,699 (2009: RM5,779,885) and RM57,761,255 (2009: RM28,277,731) is incurredon a parcel of land under a licence of planted forest expiring in 2058 and six parcels of long-term leaseholdland with lease terms expiring in 2058, 2064 and 2065 respectively. In addition, oil palm plantation developmentexpenditure of RM34,918,900 (2009: RM27,943,595) is incurred on a parcel of land to which the land titles haveyet to be transferred to the Group.
Reforestation (tree planting) expenditure of RM49,654,720 (2009: RM45,198,331) and RM9,850,676(2009: RM8,637,257) is incurred on three parcels of land under three separate licences of planted forestexpiring in 2058, 2057 and 2065 respectively.
A N N U A L R E P O R T 2 0 1 0 127
NOTES TO THE FINANCIAL STATEMENTS (cont’d)
5. PREPAID LEASE PAYMENTS
Unexpiredperiod less
than 50 yearsGroup RM
Cost
At 31 December 2009/1 January 2010, restated and at 31 December 2010 6,572,757
Amortisation
At 1 January 2009 1,211,491Amortisation for the year (Note 23) 268,755
At 31 December 2009/1 January 2010 1,480,246Amortisation for the year (Note 23) 268,755
At 31 December 2010 1,749,001
Carrying amounts
At 1 January 2009 5,361,266
At 31 December 2009/1 January 2010 5,092,511
At 31 December 2010 4,823,756
Additions to plantation development expenditure incurred during the year comprise:
2010 2009Note RM RM
Plantation development expenditure 4 3,579 4,326Profit or loss 265,176 264,430
268,755 268,756
T A A N N H O L D I N G S B E R H A D 4 1 9 2 3 2 - K128
NOTES TO THE FINANCIAL STATEMENTS (cont’d)
6. INVESTMENT IN SUBSIDIARIES - COMPANY
2010 2009RM RM
Unquoted shares 236,202,575 236,202,575Deemed capital contribution 5,248,635 -Reclassification to
short term investment (Note 13) ( 13,686,000) -
227,765,210 236,202,575
The principal activities of the subsidiaries (all incorporated in Malaysia except for Ta Ann Tasmania Pty. Ltd.and Ta Ann Eco-Timber Industries (YZ) Pty. Ltd. which are incorporated in Australia and China respectively)and the interests of the Company therein are shown below:
Effectiveownership interest
Name of subsidiary Principal activities 2010 2009% %
Ta Ann Plywood Manufacture and sale of 100 100Sdn. Bhd. plywood, trading of timber logs,
tree planting (reforestation) and cultivation of oil palms
Lik Shen Sawmill Manufacture and 100 100Sdn. Bhd. sale of sawn timber and
other timber products
Hariwood Sdn. Bhd. Logging and plantation 100 100contractor
Woodley Sdn. Bhd. Timber concession 100 100licensee and trading of logs
Questate Sdn. Bhd. Trading of logs 100 100
Pasin Sdn. Bhd. Timber concession 100 100licensee and trading of logs
Raplex Sdn. Bhd. Timber concession 100 100licensee and trading of logs
Borneo Tree Seeds Development of 61 61& Seedlings Supplies tree plantation, productionSendirian Berhad* and commercial supplies of
seeds and seedlings
A N N U A L R E P O R T 2 0 1 0 129
NOTES TO THE FINANCIAL STATEMENTS (cont’d)
6. INVESTMENT IN SUBSIDIARIES - COMPANY (cont’d)
Effectiveownership interest
Name of subsidiary Principal activities 2010 2009% %
Tanahead Sendirian Berhad* Property development 100 100and property investment
Ta Ann Plantation Sendirian Investment holding 100 100Berhad* and provision of
management services
Menyan Plantation Sendirian Berhad* Dormant 100 100
Manis Oil Sendirian Berhad* Operating a palm oil mill 100 100
Ta Ann Pelita Assan Plantation Cultivation of oil palms 100 100Sdn. Bhd.(Previously known as Easan
Plantation Sendirian Berhad)
Aldehyde Chemicals Sendirian Berhad* Dormant 100 100
Multi Maximum Sendirian Berhad* Cultivation of oil palms 85 85
Ta Ann Pelita Silas Cultivation of oil palms 60 60Plantation Sendirian Berhad*#
Ta Ann Pelita Igan Cultivation of oil palms 60 60Plantation Sendirian Berhad*#
Tabes Sendirian Berhad* Operating a biomass 100 100power plant
Zumida Sendirian Berhad* Extraction and sale of 100 100logs, investment holding
and development ofplanted forest
Zumida (Padi) Sendirian Cultivation of oil palms 85 85Berhad*@
Mega Bumimas Sendirian Cultivation of oil palms 100 100Berhad*#
T A A N N H O L D I N G S B E R H A D 4 1 9 2 3 2 - K130
NOTES TO THE FINANCIAL STATEMENTS (cont’d)
6. INVESTMENT IN SUBSIDIARIES - COMPANY (cont’d)
Effectiveownership interest
Name of subsidiary Principal activities 2010 2009% %
Ta Ann Tasmania Pty. Ltd.+^^ Manufacture and 84.55 84.36sale of wood veneer
Borlin Sendirian Berhad* Timber concession licensee 100 100and trading of logs
Tanjong Manis Holdings Extraction and sale 100 100Sendirian Berhad*^^ of timber logs
Ta Ann Eco-Timber Manufacture and trading 100 100Industries (YZ) Pty. Ltd.*% of veneer
Ta Ann Pelita Durin Cultivation of oil palms 50 50Plantation Sdn. Bhd.#~*
Daro Oil Mill Sdn. Bhd.*^ Operating a palm oil mill 85 85
Igan Oil Mill Sdn. Bhd.*# Operating a palm oil mill 67 67
Europalm Sdn. Bhd.*^ Cultivation of oil palms 85 -
Eagle Forest Sdn. Bhd. * Transportation of crude 60 -palm oils
* The financial statements of these subsidiaries are audited by a firm of Chartered Accountants other thanKPMG.
+ The financial statements of this subsidiary are audited by another member firm of KPMG International.
# Held through Ta Ann Plantation Sdn. Bhd.
@ Held through Zumida Sdn. Bhd.
^ Held through Multi Maximum Sendirian Berhad.
^^ Held through Ta Ann Plywood Sdn. Bhd.
~ The Group’s ownership in Ta Ann Pelita Durin Plantation Sdn. Bhd. will be increased to 60% pursuant toan agreement with the minority equity holder.
% Being reclassification to current assets as the Group has the intention to wind up the investment.(See Note 13)
A N N U A L R E P O R T 2 0 1 0 131
NOTES TO THE FINANCIAL STATEMENTS (cont’d)
7. INVESTMENT IN ASSOCIATES
Group Company2010 2009 2010 2009
RM RM RM RM
Unquoted shares, at cost 1,297,525 1,297,525 897,525 897,525Impairment loss ( 499,000) ( 499,000) ( 499,000) ( 499,000)Share of post-acquisition losses ( 605,464) ( 605,464) - -Foreign exchange translation reserve ( 193,061) ( 193,061) - -
- - 398,525 398,525
Details of the associates are as follows:
EffectivePrincipal Country of ownership interest
Name of company activities incorporation 2010 2009% %
Tatatze Sdn. Bhd.# Oil palm Malaysia 40 40plantation contractor
M.J. Wood Co. Ltd. Marketing Japan 45 45of timberproducts
# Held through Ta Ann Plantation Sdn. Bhd.
Summary financial information on associatesProfit/(Loss) Total Total
Revenue after tax assets liabilities100% 100% 100% 100%
2010 RM RM RM RM
Tatatze Sdn. Bhd. 14,004,020 433,673 11,257,319 ( 8,889,486)M.J. Wood Co. Ltd. 33,134,214 454,214 11,845,979 (10,749,527)
47,138,234 887,887 23,103,298 (19,639,013)
2009
Tatatze Sdn. Bhd. 14,727,650 723,240 12,924,660 (10,990,464)M.J. Wood Co. Ltd. 24,257,605 ( 307,430) 10,421,476 ( 9,779,800)
38,985,255 415,810 23,346,136 (20,770,264)
T A A N N H O L D I N G S B E R H A D 4 1 9 2 3 2 - K132
8.DE
FERR
ED T
AXAT
ION
8.1
Reco
gnis
ed d
efer
red
tax
asse
ts a
nd li
abili
ties
Def
erre
d ta
xatio
n is
attr
ibut
able
to th
e fo
llow
ing: As
sets
Liab
ilitie
sN
et20
1020
0920
1020
0920
1020
09Gr
oup
RMRM
RMRM
RMRM
Prop
erty
, pla
nt a
nd e
quip
men
t(
32
5,98
0)26
4,00
0( 9
6,67
5,80
4)(1
23,4
93,6
03)
( 97,
001,
784)
(123
,229
,603
)Ca
pita
l allo
wan
ce c
arry
-for
war
ds46
6,34
464
,237
,128
32,1
84,3
07-
32,6
50,6
5164
,237
,128
Tax
loss
es c
arry
-for
war
ds(
57
1,62
9)29
,008
,306
24,2
08,3
22-
23,6
36,6
9329
,008
,306
Retir
emen
t ben
efits
557,
030
1,24
2,93
11,
059,
151
-1,
616,
181
1,24
2,93
1N
urse
ry in
vent
orie
s-
-(
14,7
91)
(
5
9,20
2)(
14,7
91)
(
5
9,20
2)Re
valu
atio
n re
serv
e10
0,12
3-
( 12,
635,
420)
( 2
,892
,508
)( 1
2,53
5,29
7)(
2,8
92,5
08)
Prop
erty
dev
elop
men
t cos
ts36
,718
--
(
130
,637
)36
,718
(
130
,637
)Fa
ir v
alue
adj
ustm
ents
on
land
an
d bu
ildin
gs o
n ac
quis
ition
of
sub
sidi
arie
s2,
544,
376
-( 1
2,18
9,38
9)(
17,8
91,7
20)
( 9
,645
,013
)(
17,8
91,7
20)
Fair
val
ue a
djus
tmen
ts o
n tim
ber
conc
essi
on o
n ac
quis
ition
of a
sub
sidi
ary
--
( 10,
895,
200)
( 10
,895
,200
)( 1
0,89
5,20
0)(
10,8
95,2
00)
Fair
valu
e ad
just
men
ts
on in
tang
ible
ass
ets
on
acqu
isiti
on o
f a s
ubsi
diar
y-
-(
1,6
58,3
75)
( 1
,658
,375
)(
1,6
58,3
75)
( 1
,658
,375
)Ot
her i
tem
s63
8,79
538
2,00
2(
2
52,9
73)
(
21
3)38
5,82
238
1,78
9
Tax
asse
ts/(l
iabi
litie
s)3,
445,
777
95,1
34,3
67( 7
6,87
0,17
2)(1
57,0
21,4
58)
( 73,
424,
395)
( 61
,887
,091
)Se
t off
of ta
x(
2,6
44,4
99)
( 94
,503
,463
)2,
644,
499
94,5
03,4
63-
-
801,
278
630,
904
( 74,
225,
673)
( 62
,517
,995
)( 7
3,42
4,39
5)(
61,8
87,0
91)
Com
pany
Fina
ncia
l ins
trum
ents
--
( 1,
323,
579)
-(
1,32
3,57
9)-
NOTES TO THE FINANCIAL STATEMENTS (cont’d)
A N N U A L R E P O R T 2 0 1 0 133
8.DE
FERR
ED T
AXAT
ION
(con
t’d)
8.2
Reco
gnis
ed d
efer
red
tax
asse
ts a
nd li
abili
ties
– ne
t mov
emen
ts d
urin
g ye
ar
Effe
ct o
fRe
cogn
ised
Reco
gnis
edm
ovem
ent i
nAt
Reco
gnis
edin
sta
tem
ent
Acqu
ired
Atin
pro
fitex
chan
ge31
.12.
2009
/in
pro
fitof
chan
ges
in b
usin
ess
At1.
1.20
09or
loss
rate
1.1.
2010
or lo
ssin
equ
ityco
mbi
natio
ns31
.12.
2010
Grou
pRM
RMRM
RMRM
RMRM
RM
Defe
rred
tax
liabi
litie
sPr
oper
ty, p
lant
and
eq
uipm
ent
( 99
,118
,905
)(2
4,37
4,69
8)-
(123
,493
,603
)26
,817
,799
--
( 96,
675,
804)
Capi
tal a
llow
ance
ca
rry-
forw
ards
--
--
32,1
84,3
07-
-32
,184
,307
Nur
sery
inve
ntor
ies
(
3
8,41
5)(
2
0,78
7)-
(
5
9,20
2)44
,411
--
(
14
,791
)Re
valu
atio
n re
serv
e (
3,4
96,6
31)
604,
123
-(
2,8
92,5
08)
( 9
,742
,912
)-
-( 1
2,63
5,42
0)Pr
oper
ty d
evel
opm
ent
cost
s-
(
130,
637)
-(
1
30,6
37)
130,
637
--
-Ta
x los
s ca
rry f
orw
ards
--
--
24,2
09,8
22-
-24
,209
,822
Retir
emen
t ben
efits
--
--
1,05
9,15
1-
-1,
059,
151
Prov
isio
n fo
r fo
rese
eabl
e lo
sses
--
--
(
644
,508
)-
-(
64
4,50
8)D
efer
red
inco
me
--
--
391,
748
--
391,
748
Fair
valu
e ad
just
men
t on
land
and
bui
ldin
gs
on a
cqui
sitio
nof
sub
sidi
arie
s(
17,9
87,7
20)
96,0
00-
( 17
,891
,720
)10
,655
,420
-(
4,9
54,5
89)
( 12,
190,
889)
Fair
valu
e ad
just
men
ts o
n tim
ber c
once
ssio
n on
acq
uisi
tion
of a
sub
sidi
ary
(13,
259,
600)
2,36
4,40
0-
( 10
,895
,200
)-
--
( 10,
895,
200)
Fair
valu
e ad
just
men
t on
inta
ngib
le a
sset
s on
acq
uisi
tion
of a
sub
sidi
ary
( 1
,658
,375
)-
-(
1,6
58,3
75)
--
-(
1,6
58,3
75)
Othe
rs-
(
213
)-
(
21
3)-
--
(
213
)
(135
,559
,646
)(2
1,46
1,81
2)-
(157
,021
,458
)85
,105
,875
-(
4,9
54,5
89)
( 76,
870,
172)
NOTES TO THE FINANCIAL STATEMENTS (cont’d)
T A A N N H O L D I N G S B E R H A D 4 1 9 2 3 2 - K134
8.DE
FERR
ED T
AXAT
ION
(con
t’d)
8.2
Reco
gnis
ed d
efer
red
tax
asse
ts a
nd li
abili
ties
– ne
t mov
emen
ts d
urin
g ye
ar(c
ont’d
)
Effe
ct o
fRe
cogn
ised
Reco
gnis
edm
ovem
ent i
n At
Reco
gnis
edin
sta
tem
ent
Acqu
ired
Atin
pro
fitex
chan
ge31
.12.
2009
/in
pro
fitof
chan
ges
in b
usin
ess
At1.
1.20
09or
loss
rate
1.1.
2010
or lo
ssin
equ
ityco
mbi
natio
ns31
.12.
2010
Grou
pRM
RMRM
RMRM
RMRM
RM
Defe
rred
tax
asse
tsPr
oper
ty, p
lant
and
eq
uipm
ent
472,
000
(
208,
000)
-26
4,00
0(
5
89,9
80)
--
(
325
,980
)Ca
pita
l allo
wan
ce
carr
y-fo
rwar
ds52
,433
,387
11,8
03,7
41-
64,2
37,1
28( 6
3,77
0,78
4)-
-46
6,34
4Ta
x los
s ca
rry-
forw
ards
21,1
10,8
437,
258,
668
638,
795
29,0
08,3
06( 2
9,57
9,93
5)-
-(
5
71,6
29)
Retir
emen
t ben
efits
1,07
5,47
116
7,46
0-
1,24
2,93
1(
6
85,9
01)
--
557,
030
Def
erre
d in
com
e17
9,70
520
2,29
7-
382,
002
(
382
,002
)-
--
Prop
erty
dev
elop
men
tco
st-
--
-36
,718
--
36,7
18Re
valu
atio
n re
serv
e-
--
-10
0,12
3-
-10
0,12
3Fa
ir va
lue
adju
stm
ent
on la
nd a
nd b
uild
ings
on
acq
uisi
tion
of s
ubsi
diar
ies
--
--
2,54
4,37
6-
-2,
544,
376
Othe
rs-
--
-63
8,79
5-
-63
8,79
5
75,2
71,4
0619
,224
,166
638,
795
95,1
34,3
67( 9
1,68
8,59
0)-
-3,
445,
777
Tota
l(6
0,28
8,24
0)(
2,23
7,64
6)63
8,79
5(6
1,88
7,09
1)(
6,5
82,7
15)
-(
4,9
54,5
89)
( 73,
424,
395)
(Not
e 27
)(N
ote
27)
(Not
e 38
)Co
mpa
ny
Defe
rred
tax
liabi
litie
sFi
nanc
ial i
nstr
umen
t-
--
-(
615
,022
)(
1,93
8,60
1)-
( 2
,553
,623
)
(Not
e 27
)
NOTES TO THE FINANCIAL STATEMENTS (cont’d)
A N N U A L R E P O R T 2 0 1 0 135
NOTES TO THE FINANCIAL STATEMENTS (cont’d)
8. DEFERRED TAXATION (cont’d)
8.3 Unrecognised deferred tax assets
Deferred tax assets have not been recognised in respect of the following temporary differences:
Group2010 2009
RM RM
Property, plant and equipment (128,185,000) ( 42,268,000)Unabsorbed capital allowances 158,621,000 30,009,000Unutilised tax losses 18,286,000 36,111,000
48,722,000 23,852,000
At tax rate of 25% (2009: 25%) 12,181,000 5,963,000
Unabsorbed capital allowances and unutilised tax losses do not expire under the current tax legislationexcept that in the case of a dormant company, such allowances and losses will not be available to thecompany if there is a change of 50% or more in the shareholdings thereof. Deferred tax assets have notbeen recognised in respect of the above temporary differences because it is uncertain if future taxableprofits will be available against which the Group entities concerned can utilise the benefits.
Subject to agreement by the Inland Revenue Board, the Group has unutilised reinvestment allowance asat 31 December 2010 amounting to RM32,984,472 (2009: RM27,138,809) which can be offset against futuretaxable income. The reinvestment allowance has not been taken into account when computing thedeferred taxation.
T A A N N H O L D I N G S B E R H A D 4 1 9 2 3 2 - K136
NOTES TO THE FINANCIAL STATEMENTS (cont’d)
9. TRADE AND OTHER RECEIVABLES
Group Company2010 2009 2010 2009
RM RM RM RM
Non-current
Staff loans 2,290,563 - - -Trade receivables - 5,442,159 - -Amount due from subsidiaries - - 1,564,454 72,121,077
2,290,563 5,442,159 1,564,454 72,121,077
Current
Trade
Trade receivables 23,124,528 16,516,917 15,061 10,500Plantation contract work-in-progress 1,444,366 679,272 - -Amount due from subsidiaries - - 3,152,196 2,822,004
24,568,894 17,196,189 3,167,257 2,832,504
Non-trade
Interest receivable 16,266 16,254 1,832 1,970GST receivable 428,655 471,179 - -Other receivables 933,428 950,028 141,425 161,846Advance to a log supplier 170,000 950,281 - -Advance to a sub-contractor 1,641,244 1,741,244 - -Other advances 29,850 3,133 - -Staff loans 399,607 - - -Amount due from subsidiaries - - 222,345,809 92,007,962
3,619,050 4,132,119 222,489,066 92,171,778
Total current 28,187,944 21,328,308 225,656,323 95,004,282
Total 30,478,507 26,770,467 227,220,777 167,125,359
Trade receivables
Included in trade receivables of the Group subsisting as at 31 December 2010 were retentions of RM 320,930(2009: RM5,418).
Trade and other receivables not denominated in the functional currency comprise sums of RM888,994(2009: RM914,857), RM1,802,344 (2009: RM1,848,549) and RM2,481,010 (2009: RM538,308) denominated inU.S. Dollar, Australian Dollar and Japanese Yen respectively.
A N N U A L R E P O R T 2 0 1 0 137
NOTES TO THE FINANCIAL STATEMENTS (cont’d)
9. TRADE AND OTHER RECEIVABLES (cont’d)
Advance to sub-contractor
The advance of RM1,641,244 (2009: RM1,741,244) to a sub-contractor is unsecured, interest free and wasmade to allow the sub-contractor to finance the purchase of machinery and equipment. The advance will beoff-set against the cost of acquisition of the right to use a road owned by the sub-contractor.
Advance to a log supplier
This comprises advance payment to a log supplier for the purchase of merchantable timber logs. It isprogressively deducted from the purchases made.
Plantation contract work-in-progress
The plantation contract work-in-progress is as follows:Group
2010 2009RM RM
Aggregate costs incurred to date 23,927,229 31,409,701Attributable profit/(loss) 168,327 ( 1,323,350)
24,095,556 30,086,351Progress billings (22,651,190) (29,407,079)
1,444,366 679,272
Additions to aggregate costs incurred during the year include:
Group2010 2009
RM RM
Depreciation of property, plant and equipment (Note 3) 217,414 98,718Retirement benefits (Note 20) 27,053 18,166
T A A N N H O L D I N G S B E R H A D 4 1 9 2 3 2 - K138
NOTES TO THE FINANCIAL STATEMENTS (cont’d)
10. GOODWILL – GROUP
GoodwillRM
Cost
At 1 January 2009, 31 December 2009/1 January 2010 13,330,973Acquisition of subsidiaries 3,687,937
At 31 December 2010 17,018,910
Amortisation
At 1 January 2009 ( 569,272)Amortisation for the year (Note 23) ( 569,272)
At 31 December 2009/1 January 2010 ( 1,138,544)Amortisation for the year (Note 23) ( 569,272)
At 31 December 2010 ( 1,707,816)
Impairment loss
At 1 January 2009/31 December 2009/31 December 2010 ( 1,251,381)
Total amortisation and impairment loss at 31 December 2010 ( 2,959,197)
Carrying amounts
At 1 January 2009 11,510,320
At 31 December 2009/1 January 2010 10,941,048
At 31 December 2010 14,059,713
Impairment testing for cash-generating units containing goodwill
For the purpose of impairment testing, goodwill is allocated to the cash generating unit (“CGU”) acquiredwhich represents the lowest level within the Group at which the goodwill is monitored for internalmanagement purposes.
A N N U A L R E P O R T 2 0 1 0 139
NOTES TO THE FINANCIAL STATEMENTS (cont’d)
10. GOODWILL – GROUP (cont’d)
Impairment testing for cash-generating units containing goodwill (cont’d)
The aggregate carrying amounts of goodwill allocated to the CGUs net of amortisation are as follows:Group
2010 2009RM RM
CGU 1 1,328,386 1,353,450CGU 2 2,531,660 2,531,660CGU 3 5,986,293 6,530,501CGU 4 525,437 525,437CGU 5 3,687,937 -
14,059,713 10,941,048
The recoverable amount for the above cash generating units is based on value in use calculations and isdetermined by discounting the future cash flows generated from the continuing use of the CGUs and is basedon the following key assumptions:
CGU 1, CGU 2 and CGU 5 – Specific Assumptions
a) Cash flows are projected based on operating results achieved, projections for the next 5 years for CGU 1and CGU 2, 10 years for CGU 5 and expected fresh fruit bunch production from the respective oil palmestates. 10 years cash flows projection is used to determine the value in use of the CGU 5 which beingnew oil palm estates, will take between 8 to 10 years to achieve optimal yield of fresh fruit bunches.
b) The average selling price of fresh fruits bunches is based on the current average price obtained fromMalaysia Oil Palm Board, the expected yield per hectare of mature planted land and the estimatedextraction rate for crude palm oil of 19% to 21% and palm kernel of 3.5% to 4.5%.
CGU 3 and CGU 4 – Specific Assumptions
a) Cash flows are projected based on operating results achieved, projections for the next 5 years andexpected volumes of timber logs to be extracted from the respective licensed areas.
b) The average selling price of export and local timber logs is determined based on current prices.
T A A N N H O L D I N G S B E R H A D 4 1 9 2 3 2 - K140
NOTES TO THE FINANCIAL STATEMENTS (cont’d)
10. GOODWILL – GROUP (cont’d)
General Assumptions Applicable to All CGUs
1) Expenses are projected to increase at 4.8% per annum.
2) Collections from trade receivables and settlement of trade payables will be made in accordance with thecurrent credit arrangements and policies.
3) Effective tax rate is projected to be 25%.
4) A pre-tax discount rate of 7% is applied in determining the recoverable amount of the CGU. The discountrate is estimated based on the Group’s effective borrowing rates.
The values assigned to the key assumptions represent management’s assessment of future trends in theindustry and are based on historical data from both external sources and internal sources.
Sensitivity to changes in assumptions
The above estimates are particularly sensitive to the fluctuations in the prices of timber logs and crude palmoil. With a 5% downward variation in the average selling prices, the projected recoverable amounts of theCGUs acquired are still greater than their carrying amounts. However, with a 10% downward variation in theaverage selling price, CGU 3 is projected to suffer an impairment loss of RM3.4 million. With a 10% downwardvariation in the average selling prices and sales volume, CGU 4 is projected to suffer an impairment loss ofRM3.2 million and RM1.0 million respectively. The projected recoverable amounts of the other CGUs are stillgreater than their carrying amount.
A N N U A L R E P O R T 2 0 1 0 141
NOTES TO THE FINANCIAL STATEMENTS (cont’d)
11. OTHER INTANGIBLE ASSETS - GROUP
Licence for Land WoodTimber planted purchase purchase
concessions forest option option TotalRM RM RM RM RM
Cost
At 1 January 2009 130,853,091 6,583,219 479,380 239,690 138,155,380Addition 330,646 - - - 330,646Effect of movement
in exchange rate 137,519 - 135,620 67,810 340,949
At 31 December 2009/1 January 2010 131,321,256 6,583,219 615,000 307,500 138,826,975
Addition 222,867 - - - 222,867Effect of movement
in exchange rate 18,278 - 11,780 5,890 35,948
At 31 December 2010 131,562,401 6,583,219 626,780 313,390 139,085,790
Amortisation
At 1 January 2009 39,616,923 387,165 143,814 - 40,147,902Charge for the year 8,616,923 129,055 55,680 - 8,801,658Effect of movement
in exchange rate - - 46,506 - 46,506
At 31 December 2009/1 January 2010 48,233,846 516,220 246,000 - 48,996,066Charge for the year 8,616,923 129,055 58,986 - 8,804,964Effect of movement
in exchange rate - - 8,404 - 8,404
At 31 December 2010 56,850,769 645,275 313,390 - 57,809,434
Carrying amounts
At 1 January 2009 91,236,168 6,196,054 335,566 239,690 98,007,478
At 31 December 2009/1 January 2010 83,087,410 6,066,999 369,000 307,500 89,830,909
At 31 December 2010 74,711,632 5,937,944 313,390 313,390 81,276,356
Timber concessions and licence for planted forest are rights conferred upon subsidiaries to extract timberand plant trees. The timber concessions will expire in February 2017, April 2021 and September 2025 whilethe licence for planted forest, in November 2057.
T A A N N H O L D I N G S B E R H A D 4 1 9 2 3 2 - K142
NOTES TO THE FINANCIAL STATEMENTS (cont’d)
11. OTHER INTANGIBLE ASSETS – GROUP (cont’d)
Land purchase option is granted to a subsidiary to purchase a plot of leasehold land in Tasmania, Australiaupon which a veneer mill has constructed. The option expires in 2016, if not exercised by then.
Wood purchase option comprises option granted under an agreement entitling a subsidiary to purchase timberfrom Forestry Tasmania of Australia. As the agreement contains a number of extension clauses that enablethe agreement to be extended indefinitely, this asset is considered to have an indefinite useful life.
The amortisation of other intangible assets is allocated to the following:2010 2009
RM RM
Statement of comprehensive income (Note 23)- timber concession 8,616,923 8,616,923- land purchase option 58,986 55,680
8,675,909 8,672,603Plantation development expenditure(tree planting) (Note 4) 129,055 129,055
8,804,964 8,801,658
12. INVENTORIES - GROUP
2010 2009RM RM
Timber logs (including work-in-progress) 47,251,966 15,513,433Manufactured inventories (plywood, veneer and sawn timber) 92,066,288 144,252,472Consumables 31,398,241 30,167,167Nursery inventories 1,864,445 3,542,146Properties held for sales 2,619,032 3,330,396
175,199,972 196,805,614
Recognised in profit or loss:Inventories recognised as cost of sales 420,057,614 316,383,039Write-down to net realisable value 4,396,725 4,109,509Reversal of write-down - 3,372,916
A N N U A L R E P O R T 2 0 1 0 143
NOTES TO THE FINANCIAL STATEMENTS (cont’d)
12. INVENTORIES – GROUP (cont’d)
Nursery inventories include the following expenses:2010 2009
RM RM
Depreciation of property, plant and equipment (Note 3) 83,945 409,152Hire of equipment 6,500 12,495Retirement benefits (Note 20) 5,805 4,248Personnel expenses
- contribution to the Employees Provident Fund 39,866 8,434- wages, salaries and others 520,360 374,803
13. SHORT TERM INVESTMENT – COMPANY
2010 2009RM RM
Short-term investment (Note 6) 13,686,000 -Impairment loss ( Note 23) ( 3,062,466) -
10,623,534 -
This represents the Company’s effective equity interest of 100% in Ta Ann Eco-Timber Industries (YZ) Pty.Ltd., a company incorporated in China. As the Group has the intention to wind up the Company, the investmentis accounted for as a short term investment.
14. PROPERTY DEVELOPMENT COSTS - GROUP
2010 2009RM RM
At 1 January 2,448,413 6,421,568Additions 1,257,966 5,244,200
At 31 December 3,706,379 11,665,768Recognised as expense in the profit or loss ( 1,315,190) ( 7,626,827)Completed properties transferred to inventories - ( 1,590,528)
2,391,189 2,448,413
T A A N N H O L D I N G S B E R H A D 4 1 9 2 3 2 - K144
NOTES TO THE FINANCIAL STATEMENTS (cont’d)
14. PROPERTY DEVELOPMENT COSTS – GROUP (cont’d)
2010 2009RM RM
Included in the above are:- Land cost 1,464,088 2,131,220- Development costs 927,101 317,193
2,391,189 2,448,413
Depreciation of property, plant and equipment (Note 3) 6,555 6,555Retirement benefits (Note 20) 2,593 1,933Personnel expenses – wages, salaries and other 81,799 74,298
15. PREPAYMENTS AND OTHER ASSETS
Group Company2010 2009 2010 2009
RM RM RM RM
Current
Deposits 1,518,253 1,083,052 36,888 36,888Prepayments
- Land premium 5,742,817 5,293,674 - -- Plant and machinery 9,173,355 216,939 - -- Others 7,194,795 5,307,446 123,740 235,755
Deposit paid for acquisition of a subsidiary - 2,050,000 - -
Total 23,629,220 13,951,111 160,628 272,643
Prepayments
Prepayment of land premium of RM5,742,817 (2009: RM5,293,674) represents land premium and other costspaid by a subsidiary for the purpose of land alienation and transfer of land title thereto. The amount will becapitalised as land cost in the period when the alienation and transfer of title have been completed.
A N N U A L R E P O R T 2 0 1 0 145
NOTES TO THE FINANCIAL STATEMENTS (cont’d)
16. CASH AND BANK BALANCESGroup Company
2010 2009 2010 2009RM RM RM RM
Deposits with licensed banks 70,366,188 48,391,551 8,179,385 7,800,000Cash and bank balances 72,794,263 50,159,874 1,055,777 391,280
143,160,451 98,551,425 9,235,162 8,191,280
Fixed deposits of subsidiaries amounting to RM1,367,349 (2009: RM1,196,558) are pledged to licensed banksfor bank facilities granted thereto.
17. CAPITAL AND RESERVESShare capital – Group and Company
2010 2009Amount Number Amount Number
RM of shares RM of sharesOrdinary shares of RM1.00 each
Authorised:Opening and closing balances 1,000,000,000 1,000,000,000 1,000,000,000 1,000,000,000
Issued and fully paid:Opening and closing balances 214,631,118 214,631,118 214,631,118 214,631,118Capitalised as bonus issue 42,886,326 42,886,326 - -
257,517,444 257,517,444 214,631,118 214,631,118
On 21 September 2010, the Company capitalised a sum of RM42,886,326 out of its share premium for a bonusissue of 42,886,326 ordinary shares of RM1.00 each, credited as fully paid and distributed amongst theshareholders of the Company in proportion of one new ordinary shares of RM1.00 each for every five existingpaid up ordinary share of RM1.00 each.
ReservesGroup Company
2010 2009 2010 2009RM RM RM RM
Non-distributableShare premium 1,782,798 44,669,124 1,782,798 44,669,124Treasury shares ( 904,456) ( 904,456) ( 904,456) ( 904,456)Deemed distributions - - 1,627,884 -Foreign exchange translation reserves 12,433,609 6,800,266 - -
DistributableRetained earnings 543,273,199 485,612,965 51,727,133 51,158,368
556,585,150 536,177,899 54,233,359 94,923,036
The movements in each category of reserves are disclosed in the statements of changes in equity.
T A A N N H O L D I N G S B E R H A D 4 1 9 2 3 2 - K146
NOTES TO THE FINANCIAL STATEMENTS (cont’d)
17. CAPITAL AND RESERVES (cont’d)Foreign exchange translation reserve - GroupThe translation reserve comprises all foreign currency differences arising from the translation of the financialstatements of foreign operations.
Deemed distributions - CompanyThis comprises the FRS 139 fair value effect of interest-free advances by subsidiaries to the Company.
Retained earnings - CompanySubject to agreement by the Inland Revenue Board, the Company has sufficient Section 108 tax credit andtax exempt income to distribute all its retained earnings at 31 December 2010 in full as frank dividends.
The Company may however elect for early migration to the single-tier company income tax system enactedvia the Finance Act 2007, under which retained earnings are distributable as exempt dividends. The system,which is effective from 1 January 2008, allows for a transitional period of six years. Unless so migrated to thesystem, the Section 108 tax credit will be available to the Company until such time the credit is fully utilisedor upon the expiry of the transitional period on 31 December 2013, whichever is earlier.
Treasury shares – Group and CompanyIn year 2008, the Company repurchased of its own shares from the open market. The average price paid forthe shares repurchased was RM4.54 per ordinary share. The repurchase transactions were financed byinternally generated funds.
18. TRADE AND OTHER PAYABLESGroup Company
2010 2009 2010 2009RM RM RM RM
Non-currentLoan from a third party - 3,436,605 - -
CurrentTrade payables 68,934,362 85,000,145 - -Other payables and accruals 46,859,520 37,226,271 13,313,931 697,777Redeemable preference shares - 1,230,000 - -Loan from a third party 3,515,960 5,229,960 - -Amount due to subsidiaries - - 136,505,108 101,185,176
119,309,842 128,686,376 149,819,039 101,882,953
Total 119,309,842 132,122,981 149,819,039 101,882,953
Loan from a third partyThe unsecured loan from a third party drawn down on 10 August 2006 is denominated in Japanese Yen and isrepayable in 4 annual installments commencing January 2008. It bears interest at the short-term PrimeLending Rate of a reference bank in Japan, which at the year end is 1.62% (2009: 1.62%) per annum.
A N N U A L R E P O R T 2 0 1 0 147
NOTES TO THE FINANCIAL STATEMENTS (cont’d)
18. TRADE AND OTHER PAYABLES (cont’d)
Current trade and other payables
Trade and other payables of the Group not denominated in the functional currency comprise sums ofRM3,736,059 (2009: RM5,207,990) denominated in U.S. Dollar, RM72,637 (2009: RM448,550) denominated inJapanese Yen and RM14,326,129 (2009: RM18,862,693) denominated in Australian Dollar.
Other payables and accruals
Other payables and accruals consist of the following:Group Company
2010 2009 2010 2009RM RM RM RM
Accruals 24,588,150 24,518,990 1,412,461 403,697Deposits received 431,025 1,715,371 - -Dividend payable 11,579,312 - 11,579,312 -Freight and handling charges payable 63,713 98,006 - -Timber royalty and premium payable 503,261 1,279,935 - -Payables in respect of property,
plant and equipment 9,763 3,482,426 - -Advance from an associate 800,000 800,000 - -Other payables 8,884,296 5,331,543 322,158 294,080
46,859,520 37,226,271 13,313,931 697,777
Amount due to subsidiaries-Company
The amount due to subsidiaries is unsecured and interest free except for an amount of RM20,000,000(2009: RM5,790,000) bearing interest at 3.88% to 3.97% (2009: 2.83% to 4.55%) per annum.
T A A N N H O L D I N G S B E R H A D 4 1 9 2 3 2 - K148
NOTES TO THE FINANCIAL STATEMENTS (cont’d)
19. BORROWINGS
Group Company2010 2009 2010 2009
RM RM RM RM
Non-current
Finance leases - secured 8,845,720 19,294,232 - -Term loans - unsecured 161,690,830 138,084,978 - -Term loans - secured 76,085,460 57,481,602 - -JPY denominated loans - unsecured 4,211,766 - - -USD denominated loan - unsecured 6,138,000 10,282,500 6,138,000 10,282,500Revolving credits - unsecured 7,000,000 - 7,000,000 -
263,971,776 225,143,312 13,138,000 10,282,500
Current
Bankers’ acceptances - unsecured 67,309,000 91,878,000 - -Revolving credits - unsecured 56,000,000 48,000,000 8,000,000 -USD denominated loans - unsecured 3,069,000 3,427,500 3,069,000 3,427,500Finance leases - secured 16,295,937 14,039,897 - 59,946JPY denominated loans - unsecured 10,886,810 18,664,232 - -Term loans - unsecured 23,998,674 16,926,664 - -Term loans - secured 1,000,000 200,000 - -Export credit refinancing - unsecured 12,246,000 - - -AUD denominated loan - secured 28,471,482 37,991,625 - -Bank overdraft (AUD denominated)
- secured - 1,449,012 - -
219,276,903 232,576,930 11,069,000 3,487,446
Total 483,248,679 457,720,242 24,207,000 13,769,946
A N N U A L R E P O R T 2 0 1 0 149
19.
BO
RR
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s an
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Ban
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1167
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25,1
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8,58
1,83
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3,88
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JPY
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III
- in
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ble
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117,
529,
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7,52
9,75
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JPY
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IV-
inte
rest
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1.6
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2.5
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2013
7,56
8,82
13,
357,
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3,54
3,78
666
7,97
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AUD
den
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28,4
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3,06
9,00
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145,
227,
714
126,
032,
229
15,1
94,6
174,
000,
868
-
NOTES TO THE FINANCIAL STATEMENTS (cont’d)
T A A N N H O L D I N G S B E R H A D 4 1 9 2 3 2 - K150
19.
BO
RR
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(con
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Term
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674
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Term
loan
III
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per
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2015
38,0
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V-
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202
711
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Term
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VI
- in
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2016
20,0
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3,50
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abo
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201
222
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14,6
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--
200,
598,
505
21,6
66,6
7425
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129,
971,
500
23,1
60,3
31
NOTES TO THE FINANCIAL STATEMENTS (cont’d)
A N N U A L R E P O R T 2 0 1 0 151
19.
BO
RR
OWIN
GS
(con
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Term
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2011
12,2
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per
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11 -
201
463
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56,0
00,0
003,
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3,75
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422,
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71,5
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483,
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679
219,
276,
903
48,2
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3,15
6,23
452
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,925
NOTES TO THE FINANCIAL STATEMENTS (cont’d)
T A A N N H O L D I N G S B E R H A D 4 1 9 2 3 2 - K152
19.
BO
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Term
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2010
1,44
9,01
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st fi
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flat
per
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1233
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14,0
39,8
9715
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,229
4,26
0,00
3-
JPY
deno
min
ated
loan
I-
inte
rest
fixe
d at
0.7
5%pe
r an
num
2010
2,05
4,73
22,
054,
732
--
-JP
Y de
nom
inat
ed lo
an II
I-
inte
rest
fixe
d at
2.5
0%pe
r an
num
2010
16,6
09,5
0016
,609
,500
--
-AU
D d
enom
inat
ed lo
an-
inte
rest
var
iabl
e at
0.6
0%pe
r an
num
abo
ve b
ill r
ate
2010
37,9
91,6
2537
,991
,625
--
-U
SD d
enom
inat
ed lo
an-
inte
rest
var
iabl
e at
0.7
5%pe
r an
num
abo
ve
cost
of f
unds
2013
13,7
10,0
003,
427,
500
3,42
7,50
06,
855,
000
-
197,
026,
998
167,
450,
266
18,4
61,7
2911
,115
,003
-
NOTES TO THE FINANCIAL STATEMENTS (cont’d)
A N N U A L R E P O R T 2 0 1 0 153
19.
BO
RR
OWIN
GS
(con
t’d)
Term
s an
d de
bt re
paym
ent s
ched
ule
(con
t’d)
Gro
upCa
rryi
ngU
nder
1 -
22
- 5
Ove
rYe
ar o
fam
ount
1 ye
arye
ars
year
s5
year
s20
09(c
ont’d
)m
atur
ityR
MR
MR
MR
MR
M
Term
loan
II-
inte
rest
var
iabl
e at
0.7
5%pe
r an
num
abo
veco
st o
f fun
ds20
1460
,000
,000
-1,
800,
000
58,2
00,0
00-
Term
loan
III
- in
tere
st v
aria
ble
at 0
.75%
per
annu
m a
bove
cost
of f
unds
2014
29,4
31,5
001,
200,
000
4,20
0,00
024
,031
,500
-Te
rm lo
an IV
- in
tere
st v
aria
ble
at 1
.00%
per
annu
m a
bove
co
st o
f fun
ds20
1632
,553
,000
200,
000
1,00
0,00
014
,800
,000
16,5
53,0
00Te
rm lo
an V
- in
tere
st fi
xed
at 3
.00%
per
annu
m20
22 –
202
78,
214,
792
--
-8,
214,
792
Term
loan
VI
- in
tere
st v
aria
ble
at 0
.65%
per
annu
m a
bove
cost
of f
und
2015
20,0
00,0
00-
-9,
900,
000
10,1
00,0
00Te
rm lo
an V
II-
inte
rest
var
iabl
e at
1.0
0% -
1.50
% p
er a
nnum
abo
veco
st o
f fun
ds20
11 –
201
234
,305
,350
12,6
66,6
6412
,666
,664
8,97
2,02
2-
184,
504,
642
14,0
66,6
6419
,666
,664
115,
903,
522
34,8
67,7
92
NOTES TO THE FINANCIAL STATEMENTS (cont’d)
T A A N N H O L D I N G S B E R H A D 4 1 9 2 3 2 - K154
19.
BO
RR
OWIN
GS
(con
t’d)
Term
s an
d de
bt re
paym
ent s
ched
ule
(con
t’d)
Gro
upCa
rryi
ngU
nder
1 -
22
- 5
Ove
rYe
ar o
fam
ount
1 ye
arye
ars
year
s5
year
s20
09(c
ont’d
)m
atur
ityR
MR
MR
MR
MR
M
Term
loan
VIII
- in
tere
st v
aria
ble
at 0
.75%
per
annu
m a
bove
cost
of f
unds
2010
3,06
0,00
03,
060,
000
--
-Te
rm lo
an IX
- in
tere
st v
aria
ble
at 1
.00%
per
annu
m a
bove
cost
of f
unds
2016
9,20
5,15
0-
-2,
000,
000
7,20
5,15
0Te
rm lo
an X
- in
tere
st v
aria
ble
at 1
.25%
per
annu
m a
bove
co
st o
f fun
ds20
1815
,923
,452
--
5,00
0,00
010
,923
,452
Revo
lvin
g cr
edits
- in
tere
st fi
xed
at 3
.25%
to
3.8
5% p
er a
nnum
2010
48,0
00,0
0048
,000
,000
--
-
76,1
88,6
0251
,060
,000
-7,
000,
000
18,1
28,6
02
457,
720,
242
232,
576,
930
38,1
28,3
9313
4,01
8,52
552
,996
,394
NOTES TO THE FINANCIAL STATEMENTS (cont’d)
A N N U A L R E P O R T 2 0 1 0 155
NOTES TO THE FINANCIAL STATEMENTS (cont’d)
19. BORROWINGS (cont’d)
Company Year Carrying Under 1 - 2 2 - 5of amount 1 year years years
2010 maturity RM RM RM RM
USD denominated loan- interest variable at
0.75% per annum above cost of funds 2013 9,207,000 3,069,000 3,069,000 3,069,000
Revolving credits 2011– 2014 15,000,000 8,000,000 3,250,000 3,750,000
24,207,000 11,069,000 6,319,000 6,819,000
2009
Finance lease - interest fixed at 6.02%
per annum 2010 59,946 59,946 - -
USD denominated loan- interest variable at 0.75%
per annum above costof funds 2013 13,710,000 3,427,500 3,427,500 6,855,000
13,769,946 3,487,446 3,427,500 6,855,000
Finance leases are payable as follows:
Group
2010 2009Minimum Minimum
lease leasepayments Interest Principal payments Interest Principal
RM RM RM RM RM RM
Less than one year 17,272,942 977,005 16,295,937 15,427,811 1,387,914 14,039,897Between one and
two years 8,762,046 180,215 8,581,831 15,440,934 406,705 15,034,229Between two and
five years 269,587 5,698 263,889 4,361,138 101,135 4,260,003
26,304,575 1,162,918 25,141,657 35,229,883 1,895,754 33,334,129
T A A N N H O L D I N G S B E R H A D 4 1 9 2 3 2 - K156
NOTES TO THE FINANCIAL STATEMENTS (cont’d)
19. BORROWINGS (cont’d)
Company
2010 2009Minimum Minimum
lease leasepayments Interest Principal payments Interest Principal
RM RM RM RM RM RM
Less than one year - - - 61,420 1,474 59,946Between one and
two years - - - - - -
- - - 61,420 1,474 59,946
The Group has nine (2009: nine) term loan facilities as at the year end.
Term loans III, IV, V and IX approved for RM63 million, RM36 million, RM25.6 million and RM19 millionrespectively, have only been partially drawn down.
The other term loans have been fully drawn down.
Term loans II and III are repayable over a period of 48 months and 72 months commencing 26 January 2011and 26 January 2010 respectively or on such other dates as shall be fixed from time to time by the banks.
Term loan IV is repayable by 28 quarterly installments commencing in the first quarter of 2010. Term loan VIis repayable by 12 quarterly installments commencing on July 2013. Term loan VII is repayable by 12 quarterlyand 18 monthly instalments commencing in October 2009 and February 2010 respectively.
Term loan IX is repayable by 24 quarterly instalments commencing in the first quarter of 2012. Term loan Xis repayable by 24 quarterly instalments commencing in the first quarter of 2013. Term loan XI is repayableby 23 quarters instalments commencing on 1 October 2010.
As at 31 December 2010, the subsidiary to which the AUD denominated overdraft and AUD denominated loanwere lent was in breach of one of the loan covenants. As the subsidiary did not have an unconditional rightto defer settlement of the AUD denominated loan, the subsidiary has classified the full amount of the saidloan as current as at 31 December 2010. Subsequent to the year end, the subsidiary has paid the securedbank loan in full.
All the borrowings except for the bank overdraft are covered by corporate guarantees from the Company(refer Note 35). Term loans II, III and VI are further covered by subordination agreements, letters of negativepledge and letters of undertaking from the Company. Term loan IV, IX and X are secured by a facilityagreement, a negative pledge, a pledge of fixed deposits and a first legal charge on four parcels of land of asubsidiary with a net book value of RM22,198,913. The AUD denominated bank overdraft is secured by a fixedand floating charge over the assets of a subsidiary with a carrying amount of RM259,053,179.
A N N U A L R E P O R T 2 0 1 0 157
NOTES TO THE FINANCIAL STATEMENTS (cont’d)
20. EMPLOYEE BENEFITS
Group Company2010 2009 2010 2009
RM RM RM RM
Non-current
Retirement benefits (see below) 8,749,660 7,017,222 2,163,245 1,746,651
Current
Provision for leave pay 2,559,995 2,376,898 - -
11,309,655 9,394,120 2,163,245 1,746,651
The retirement benefits are as follows:
Present value of unfunded obligations 9,792,694 8,578,425 2,396,343 2,537,429Unrecognised actuarial gain ( 1,043,034) ( 1,561,203) ( 233,098) ( 790,778)
Recognised liability for defined benefit obligations 8,749,660 7,017,222 2,163,245 1,746,651
Liability for defined benefit obligations
The Group and the Company operate an unfunded defined benefit plan for eligible directors and employees.The benefits payable on retirement, at the age of 56, are based on the length of service and base pay.
Movements in the present value for defined benefit obligations
Group Company2010 2009 2010 2009
RM RM RM RM
Defined benefit obligations at 1 January 7,017,222 5,842,540 1,746,651 1,390,334
Current service costs and interest 1,817,103 1,234,633 416,594 358,127Benefits paid ( 84,665) ( 59,951) - ( 1,810)
Defined benefit obligations at 31 December 8,749,660 7,017,222 2,163,245 1,746,651
T A A N N H O L D I N G S B E R H A D 4 1 9 2 3 2 - K158
NOTES TO THE FINANCIAL STATEMENTS (cont’d)
20. EMPLOYEE BENEFITS (cont’d)
Expense recognised in the profit or loss
Group Company2010 2009 2010 2009
RM RM RM RM
Current service costs 1,417,963 875,639 319,030 254,230Interest on obligations 399,140 358,994 97,564 103,897
Net benefit expense 1,817,103 1,234,633 416,594 358,127
The expense is recognised in the following line items in the statement of comprehensive income:
Group Company2010 2009 2010 2009
RM RM RM RM
Statement of comprehensive income (Note 23):- Cost of sales/operations 242,775 152,938 - -- Administrative expenses 1,308,490 959,424 416,594 358,127
Plantation developmentexpenditure (Note 4) 230,387 97,924 - -
Plantation contract work-in-progress (Note 9) 27,053 18,166 - -
Inventories (Note 12) 5,805 4,248 - -Property development costs (Note 14) 2,593 1,933 - -
1,817,103 1,234,633 416,594 358,127
A N N U A L R E P O R T 2 0 1 0 159
NOTES TO THE FINANCIAL STATEMENTS (cont’d)
20. EMPLOYEE BENEFITS (cont’d)
Actuarial assumptions
Principal actuarial assumptions at the end of reporting period (expressed as weighted averages):
Group and Company2010 2009
% %
Discount rate 6.25 6.25Future salary increase 5.50 5.50
Historical information
2008 2007 2006 2005Group RM RM RM RM
Present value of the definedbenefit obligations 5,911,115 4,898,517 4,204,008 3,341,292
Unrecognised actuarial loss ( 68,575) ( 192,915) ( 755,048) ( 984,779)
Company
Present value of the definedbenefit obligations 1,322,102 1,156,972 833,288 723,467
Unrecognised actuarial gain/(loss) 68,232 ( 15,702) ( 89,302) ( 137,752)
21. DEFERRED INCOME – GROUP
2010 2009RM RM
STA grant 1,566,990 1,528,006Australian Government grant 29,799,625 30,658,906
31,366,615 32,186,912Current ( 1,446,539) ( 1,419,352)
Non-current 29,920,076 30,767,560
T A A N N H O L D I N G S B E R H A D 4 1 9 2 3 2 - K160
NOTES TO THE FINANCIAL STATEMENTS (cont’d)
21. DEFERRED INCOME – GROUP (cont’d)
(a) STA Grant
The grant was received from STA Training Sdn. Bhd. to compensate a subsidiary for costs incurred in theundertaking of research and development activities and will be recognised as income over the periodsnecessary to match the grants with the related costs.
(b) Australian Government Grant
The grant was conditional upon the construction of a rotary peeler veneer mill in Smithton, Australia.The mill became operational during the financial year ended 31 December 2008 and the grant isamortised over the useful life of the mill assets that the grant funds relate to.
Movements in the grants during the year are as follows:
2010 2009Note RM RM
Non-current
CostAt 1 January 31,993,628 20,116,909Additions - 6,218,328Effect of movements in exchange rate 580,211 5,658,391
At 31 December 32,573,839 31,993,628
Movements in the grants during the year are as follows:
2010 2009Note RM RM
Recognised in profit or loss
At 1 January 1,226,068 62,648Recognised during the year 23 1,427,695 1,163,420
At 31 December 2,653,763 1,226,068
Carrying amount
At 31 December 29,920,076 30,767,560
CurrentCost
At 1 January 1,419,325 665,437Additions 27,214 753,915
At 31 December 1,446,539 1,419,352
A N N U A L R E P O R T 2 0 1 0 161
NOTES TO THE FINANCIAL STATEMENTS (cont’d)
22. REVENUE AND COST OF SALES/OPERATIONS
(a) Revenue
Group Company2010 2009 2010 2009
RM RM RM RM
Sale of logs 135,797,760 146,841,471 - -Sale of plywood and veneer 399,989,199 296,674,697 - -Sale of sawn timber 9,534,323 12,696,334 - -Sale of mouldings 15,408,470 12,905,114 - -Sale of seeds and seedlings 565,121 1,027,462 - -Sale of crude palm oil/palm kernel/
fresh fruit bunches 260,162,343 177,901,368 - -Contract revenue 1,758,878 7,838,958 - -Provision of management services - - 8,190,981 6,867,497Dividend income - - 21,500,000 35,077,704Interest income - - 22,958 14,343Rental of premises 28,740 14,180 963,852 1,011,117Property development 3,747,256 9,574,212 - -Others 285,675 1,161,360 - 1,161,360
827,277,765 666,635,156 30,677,791 44,132,021
(b) Cost of sales/operations
Cost of logs sold 67,711,166 72,690,120 - -Cost of plywood and veneer sold 376,122,158 265,816,228 - -Cost of sawn timber sold 9,419,579 12,520,161 - -Cost of mouldings sold 11,609,837 9,461,902 - -Cost of seeds and seedlings sold 370,678 437,482 - -Contract costs 387,895 5,306,000 - -Cost of crude palm oil/palm kernel/
fresh fruit bunches sold 152,108,927 122,446,775 - -Cost of development property sold 2,240,119 8,090,758 - -
619,970,359 496,769,426 - -
T A A N N H O L D I N G S B E R H A D 4 1 9 2 3 2 - K162
NOTES TO THE FINANCIAL STATEMENTS (cont’d)
23. RESULTS FROM OPERATING ACTIVITIES
Group Company2010 2009 2010 2009
Note RM RM RM RM
Results from operatingactivities are arrivedat after crediting:
Deferred income recognised as income 21 1,427,695 1,163,420 - -
Gross dividend incomefrom unquoted subsidiaries - - 21,500,000 35,077,704
Gain on disposal of property, plant and equipment 515,066 370,880 - 16,330
Foreign exchange gain- realised 2,350,082 190,086 188,626 -- unrealised 1,433,431 11,905,990 1,076,434 172,000
Hire of plant and machinery - 74,240 - -Inter-company
management fee income - - 8,190,981 6,867,497Interest income from
subsidiaries - - 1,358,297 544,926
and after charging:
Amortisation of goodwill 10 569,272 569,272 - -Amortisation of other
intangible assets 11 8,675,909 8,672,603 - -Amortisation of plantation
development expenditure 4 5,658,349 4,173,670 - -Amortisation of prepaid
lease payments 5 268,755 268,756 - -Auditor’ remuneration
- statutory audit- KPMG 177,000 177,000 20,000 20,000- Affiliate of KPMG 295,800 339,648 - -- Other auditors 95,400 84,800 - -
- Others- KPMG 57,000 52,000 57,000 52,000- Affiliate of KPMG - 73,122 - -- Other auditors 18,300 7,000 - -
Depreciation of property,plant and equipment 3 42,628,028 40,616,220 1,435,786 1,526,754
A N N U A L R E P O R T 2 0 1 0 163
NOTES TO THE FINANCIAL STATEMENTS (cont’d)
23. RESULTS FROM OPERATING ACTIVITIES (cont’d)
Group Company2010 2009 2010 2009
Note RM RM RM RM
and after charging : (cont’d)
Foreign exchange loss- realised 590 1,619,849 - -- unrealised 3,016,603 - - -
Hire of equipment 269,645 36,231 - -Impairment in investment in subsidiary 6 - - 3,062,466 -Land rent 7,200 7,200 - -Loss on disposal of
property, plant and equipment 239,085 45,143 391 -
Research costs written off 24,782 23,552 - -Retirement benefits 20 1,551,265 1,112,362 416,594 358,127
24. FINANCE INCOME
Group Company2010 2009 2010 2009
RM RM RM RM
Interest income of financialassets that are not at fair valuethrough profit or loss:- Receivables - - 545,556 -
Interest income from shortterm deposit 3,113,568 750,960 - -
3,113,568 750,960 545,556 -
25. FINANCE COSTS
Group Company2010 2009 2010 2009
RM RM RM RM
Bankers’ acceptances 1,024,390 732,925 - -Term loans 3,848,361 2,771,762 - -Finance lease liabilities 1,593,804 1,721,258 1,474 6,092Foreign currency loans 2,687,835 3,980,738 252,106 328,284Revolving credits 2,434,964 1,144,392 488,630 -Others 1,199,009 539 3,611,059 510,702
12,788,363 10,351,614 4,353,269 845,078
T A A N N H O L D I N G S B E R H A D 4 1 9 2 3 2 - K164
NOTES TO THE FINANCIAL STATEMENTS (cont’d)
26. COMPENSATIONS TO KEY MANAGEMENT PERSONNEL
Compensations to key management personnel are as follows:
Group Company2010 2009 2010 2009
RM RM RM RM
Directors- Fees 1,048,000 678,000 612,000 252,000- Remuneration 5,048,299 3,303,120 3,528,293 2,080,964- Other short term employee benefits
(including estimated monetary value of benefits-in-kind) 28,872 19,825 - -
6,125,171 4,000,945 4,140,293 2,332,964
Other key management personnel:- Short-term employee benefits 2,900,046 2,630,472 1,928,841 1,598,126- Post-employment benefits - 31,803 - -
2,900,046 2,662,275 1,928,841 1,598,126
9,025,217 6,663,220 6,069,134 3,931,090
Other key management personnel comprise persons other than the Directors of Group entities, havingauthority and responsibility for planning, directing and controlling the activities of the entity either directly orindirectly.
A N N U A L R E P O R T 2 0 1 0 165
NOTES TO THE FINANCIAL STATEMENTS (cont’d)
27. TAX EXPENSE
Recognised in the profit or loss
Group Company2010 2009 2010 2009
RM RM RM RM
Current tax expense Malaysian- Current year 20,313,465 20,446,908 1,671,000 7,088,000- Prior years ( 340,034) 526,778 ( 473,935) ( 7,855)
19,973,431 20,973,686 1,197,065 7,080,145Deferred tax expense (Note 8)
Malaysian- Current year 6,176,557 2,304,754 ( 615,022) -- Prior years 406,158 ( 67,108) - -
6,582,715 2,237,646 ( 615,022) -
26,556,146 23,211,332 582,043 7,080,145Share of tax of equity
accounted associates - 84,852 - -
Total tax expense 26,556,146 23,296,184 582,043 7,080,145
Reconciliation of tax expense
Group Company2010 2009 2010 2009
RM RM RM RM
Profit for the year 72,302,890 72,977,982 13,653,605 27,475,598Total tax expense 26,556,146 23,296,184 582,043 7,080,145
Profit excluding tax 98,859,036 96,274,166 14,235,648 34,555,743
Tax calculated usingMalaysian tax rateof 25% (2009: 25%)* 24,714,759 24,068,542 3,559,000 8,640,000
Non-deductible expenses 6,746,240 6,740,724 1,246,978 197,000Double deduction for
certain expenses ( 7,130,000) ( 8,532,000) - -Tax exempt income ( 3,803,977) ( 2,054,446) ( 3,750,000) (1,749,000)Depreciation capitalised ( 255,000) ( 279,000) - -Movements in unrecognised
deferred tax assets 6,220,253 2,954,164 - -Tax effect of utilisation
of previously unrecognised deferred tax assets ( 2,253) ( 146,322) - -
26,490,022 22,751,662 1,055,978 7,088,000
T A A N N H O L D I N G S B E R H A D 4 1 9 2 3 2 - K166
NOTES TO THE FINANCIAL STATEMENTS (cont’d)
27. TAX EXPENSE (cont’d)
Reconciliation of tax expense (cont’d)
Group Company2010 2009 2010 2009
RM RM RM RM
Under/(Over) provisionin prior years- Current tax ( 340,034) 526,778 ( 473,935) ( 7,855)- Deferred tax 406,158 ( 67,108) - -
66,124 459,670 ( 473,935) ( 7,855)
Tax expense recognised in the income profit or loss 26,556,146 23,211,332 582,043 7,080,145
Share of tax of equity accounted associates - 84,852 - -
Total tax expense 26,556,146 23,296,184 582,043 7,080,145
28. Earnings per ordinary share - Group
Basic/Diluted earnings per ordinary share
The calculation of basic earnings per ordinary share at 31 December 2010 was based on the profit attributableto ordinary shareholders of RM74,979,543 (2009: RM74,393,300) and the weighted average number of ordinaryshares outstanding, calculated as follows:
Weighted average number of ordinary shares
2010 2009Number Number
Issued ordinary shares at 1 January 214,431,718 214,631,118Effect of treasury shares repurchased - ( 199,400)Effect of ordinary shares issued during the year 42,886,326 -
Weighted average number of ordinary sharesat 31 December (basic/diluted) 257,318,044 214,431,718
As bonus issue is a non-resource share issue which entailing cash flows, it is deemed to have been effectedfrom the earliest possible periods. As such the earnings per share have to be re-computed as if the enlargedshare capital as a result of the bonus issue was in existence throughout the current and comparative periods.
A N N U A L R E P O R T 2 0 1 0 167
NOTES TO THE FINANCIAL STATEMENTS (cont’d)
29. DIVIDENDS
Sen per Total Date ofshare amount payment
(net of tax) RM
2010
First interim 2010 ordinary 2.25 4,824,714 15 July 2010Second interim 2010 ordinary
- franked dividend 1.50 3,859,771 14 January 2011- tax exempt dividend 3.00 7,719,541 14 January 2011
6.75 16,404,026
2009
First interim 2009 ordinary (franked dividend) 2.25 4,824,714 2 October 2009
2010
Net dividends per ordinary share (sen) 6.75
2009
Net dividends per ordinary share (sen) 2.25
30. OPERATING SEGMENTS
Segment information is presented in respect of the Group’s business and geographical segments. The primaryformat, business segments, is based on the Group’s management and internal reporting structure.
Segment results, assets and liabilities include items directly attributable to a segment as well as those thatcan be allocated on a reasonable basis. Unallocated items comprise investment income, interest expense,share of results of equity accounted associates and corporate taxes.
Segment capital expenditure is the total cost incurred during the year to acquire property, plant andequipment, plantation development expenditure and intangible assets other than goodwill.
There are no inter-segment transactions.
Business segmentsThe Group comprises the following three main business segments:
Timber products Timber concession licensee, trading of logs, manufacture and sale of sawn timber,veneer, plywood and other timber products.
Plantations Oil palms and reforestation (tree planting).
Others Property development and investment.
T A A N N H O L D I N G S B E R H A D 4 1 9 2 3 2 - K168
30. OPERATING SEGMENTS (cont’d)
Timber products Plantations Others Consolidated2010 2009 2010 2009 2010 2009 2010 2009
RM RM RM RM RM RM RM RM
Revenue from external customers 562,803,045 476,956,574 260,727,464 178,928,830 3,747,256 10,749,752 827,277,765 666,635,156
Segment results 29,579,324 65,806,658 77,642,174 38,596,093 1,312,333 1,464,723 108,533,831 105,867,474
Interest income 3,113,568 750,960Interest expense ( 12,788,363)( 10,351,614)Share of results
of equity accounted associates, netof tax - ( 77,506)
Profit before tax 98,859,036 96,189,314Tax expense ( 26,556,146)( 23,211,332)
Profit for the year 72,302,890 72,977,982
Other information
Segment/Total assets 984,167,052 971,944,190 570,691,591 485,720,635 10,922,415 21,350,3501,565,781,0581,479,015,175
Segment/Total liabilities 217,760,536 292,840,084 504,709,504 395,631,443 2,774,896 12,507,968 725,244,936 700,979,495
Capital expenditure 12,307,893 36,651,292 104,673,066 72,974,203 32,040 - 117,012,299 109,625,495
Depreciation and amortisation of tangible assets 33,277,737 34,267,807 11,917,399 11,307,537 10,739 7,454 45,205,875 45,582,798
Amortisation ofintangible assets 8,675,909 8,672,603 129,055 129,055 - - 8,804,964 8,801,658
There are no significant non-cash expenses other than depreciation and amortisation charges.
NOTES TO THE FINANCIAL STATEMENTS (cont’d)
A N N U A L R E P O R T 2 0 1 0 169
NOTES TO THE FINANCIAL STATEMENTS (cont’d)
30. OPERATING SEGMENTS (cont’d)
Geographical segments
Revenue from external customers by location of customers:
OtherMalaysia Japan India countries Consolidated
RM RM RM RM RM
2010
Timber products 27,337,237 388,346,054 94,010,011 53,109,743 562,803,045Plantations 260,727,464 - - - 260,727,464Others 3,747,256 - - - 3,747,256
291,811,957 388,346,054 94,010,011 53,109,743 827,277,765
2009
Timber products 15,097,778 309,700,012 98,640,221 53,518,563 476,956,574Plantations 178,928,830 - - - 178,928,830Others 10,749,752 - - - 10,749,752
204,776,360 309,700,012 98,640,221 53,518,563 666,635,156
31. FINANCIAL INSTRUMENTS
Certain comparative figures have not been presented for 31 December 2009 by virtue of the exemption givenin paragraph 44AA of FRS 7.
31.1 Categories of financial instruments
The table below provides an analysis of financial instruments categorised as follows:
(a) Loans and receivables (L&R); and (b) Other liabilities (OL)
T A A N N H O L D I N G S B E R H A D 4 1 9 2 3 2 - K170
NOTES TO THE FINANCIAL STATEMENTS (cont’d)
31. FINANCIAL INSTRUMENTS (cont’d)
31.1 Categories of financial instruments (cont’d)
Carryingamount L&R/ (OL)
2010 RM RM
Financial assets
Group
Trade and other receivables 30,478,507 30,478,507Cash and bank balances 143,160,451 143,160,451
173,638,958 173,638,958
Company
Trade and other receivables 227,220,777 227,220,777Cash and bank balances 9,235,162 9,235,162
236,455,939 236,455,939
Financial liabilities
Group
Loans and borrowings 483,248,679 (483,248,679)Trade and other payables 119,309,842 (119,309,842)
602,558,521 (602,558,521)
Company
Loans and borrowings 24,207,000 ( 24,207,000)Trade and other payables 149,819,039 (149,819,039)
174,026,039 (174,026,039)
31.2 Net gains and losses arising from financial instruments
Company2010
RM
Net gain arising on:Loan and receivables 3,977,926
A N N U A L R E P O R T 2 0 1 0 171
NOTES TO THE FINANCIAL STATEMENTS (cont’d)
31. FINANCIAL INSTRUMENTS (cont’d)
31.3 Financial risk management
The Group has exposure to the following risks from its use of financial instruments:
• Credit risk• Liquidity risk• Market risk
31.4 Credit risk
Credit risk is the risk of a financial loss to the Group if a customer or counterparty to a financialinstrument fails to meet its contractual obligations. The Group’s exposure to credit risk arises principallyfrom its receivables from customers. The Company’s exposure to credit risk arises principally from itsreceivables from customers and subsidiaries.
Receivables from external parties
(i) Risk management objectives, policies and process for managing the risk
The Group implements credit controls that include evaluation, monitoring and feedback to ensurethat only credit-worthy customers are accepted. Credit sales are mainly to long establishedcustomers. The Group also controls credit risks by limiting the credit amounts given to newcustomers. Credit limits are revised on a regular basis based on customers’ payment patterns andthe comfort level of doing business with them.
(ii) Exposure to credit risk, credit quality and collateral
As at the end of the reporting period, the maximum exposure to credit risk arising from receivablesis represented by their carrying amounts in the statement of financial position.
Management has taken reasonable steps to ensure that receivables that are neither past due norimpaired are stated at their realisable values. A significant portion of these receivables are regularcustomers that have been transacting with the Group. The Group uses ageing analysis to monitorthe credit quality of the receivables. Any receivables having significant balances pass due more than120 days, which are deemed to have higher credit risk, are monitored individually.
T A A N N H O L D I N G S B E R H A D 4 1 9 2 3 2 - K172
NOTES TO THE FINANCIAL STATEMENTS (cont’d)
31. FINANCIAL INSTRUMENTS (cont’d)
31.4 Credit risk (cont’d)
(iii) Impairment losses
The ageing of trade receivables as at the end of the reporting period was:
Individual CollectiveGross impairment impairment Net
Group RM RM RM RM
2010
Not past due 24,568,894 - - 24,568,894
2009
Not past due 17,194,724 - - 17,194,724Past due 1 - 30 days 1,465 - - 1,465
17,196,189 - - 17,196,189
Company
2010
Not past due 1,444,007 - - 1,444,007Past due 0 - 30 days 178,652 - - 178,652Past due 31 - 120 days 672,892 - - 672,892 Past due more than 120 days 871,706 - - 871,706
3,167,257 - - 3,167,257
2009
Not past due 972,792 - - 972,792Past due 0 - 30 days 357,643 - - 357,643Past due 31 - 120 days 528,906 - - 528,906 Past due more than 120 days 973,163 - - 973,163
2,832,504 - - 2,832,504
In view of the sound credit rating of its business counter parties, management does not expect anycounter party to fail to meet its obligations. No impairment loss is provided against its tradereceivables as at the end of reporting period.
A N N U A L R E P O R T 2 0 1 0 173
NOTES TO THE FINANCIAL STATEMENTS (cont’d)
31. FINANCIAL INSTRUMENTS (cont’d)
31.4 Credit risk (cont’d)
Financial guarantees
(i) Risk management objectives, policies and processes for managing the risk
The Company provides unsecured financial guarantees to banks in respect of banking facilitiesgranted to certain subsidiaries. The Company monitors on an ongoing basis the results of thesubsidiaries and repayments made by the subsidiaries.
(ii) Exposure to credit risk, credit quality and collateral
The maximum exposure to credit risk amounts to RM 459,041,679 (2009: RM 443,950,296)representing the outstanding banking facilities of the subsidiaries as at the end of the reportingperiod.
As at the end of the reporting period, there was no indication that any subsidiary would default onrepayment.
The financial guarantees have not been recognised since the fair value on initial recognition was notmaterial.
Inter company balances
(i) Risk management objectives, policies and processes for managing the risk
The Company provides unsecured loans and advances to subsidiaries. The Company monitors theresults of the subsidiaries regularly.
(ii) Exposure to credit risk, credit quality and collateral
As at the end of the reporting period, the maximum exposure to credit risk is represented by theircarrying amounts in the statement of financial position.
(iii) Impairment losses
As at the end of the reporting period, there was no indication that the loans and advances to thesubsidiaries are not recoverable. The Company does not specifically monitor the ageing of theadvances to the subsidiaries. Nevertheless, these advances have been overdue for less than a year.
31.5 Liquidity risk
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due.The Group’s exposure to liquidity risk arises principally from its various payables, loans and borrowings.
The Group maintains a level of cash and cash equivalents and bank facilities deemed adequate by themanagement to ensure, as for as possible, that it will have sufficient liquidity to meet its liabilities whenthey fall due.
T A A N N H O L D I N G S B E R H A D 4 1 9 2 3 2 - K174
NOTES TO THE FINANCIAL STATEMENTS (cont’d)
31.
FIN
ANCI
AL IN
STR
UM
ENTS
(con
t’d)
31.5
Liqu
idity
ris
k(c
ont’d
)
Mat
urity
ana
lysi
s
T
he ta
ble
belo
w s
umm
aris
es th
e m
atur
ity p
rofil
e of
the
Gro
up’s
and
the
Com
pany
’s fi
nanc
ial l
iabi
litie
s as
at t
he e
nd o
fth
e re
port
ing
peri
od b
ased
on
undi
scou
nted
con
trac
tual
pay
men
ts:
Cont
ract
ual
Carr
ying
inte
rest
rate
/Co
ntra
ctua
lUn
der
1 - 2
2 –
5M
ore
than
amou
ntco
upon
cash
flow
s1
year
year
sye
ars
5 ye
ars
Grou
pRM
%RM
RMRM
RMRM
2010
Non
-der
ivat
ive
finan
cial
liab
ilitie
s
Term
loan
- se
cure
d77
,085
,460
4.16
- 4.
4595
,067
,268
6,07
3,10
35,
215,
903
49,5
37,1
2934
,241
,133
Term
loan
- un
secu
red
185,
689,
504
2.81
- 4.
4421
0,02
6,19
030
,235
,647
32,5
29,1
9212
3,32
1,23
823
,940
,113
USD
den
omin
ated
loan
- u
nsec
ured
9,20
7,00
02.
159,
528,
866
3,24
2,50
03,
176,
209
3,11
0,15
7-
JPY
deno
min
ated
loan
- u
nsec
ured
15,0
98,5
750.
80 -
2.50
15,3
10,6
4610
,997
,620
4,31
3,02
6-
-AU
D de
nom
inat
ed lo
an
- sec
ured
28,4
71,4
826.
7628
,471
,482
28,4
71,4
82-
--
Fina
nce
leas
e lia
bilit
ies
25,1
41,6
572.
63 –
3.5
626
,304
,575
17,2
72,9
448,
762,
045
269,
586
-Re
volvi
ng c
redi
ts63
,000
,000
3.45
– 4
.30
63,7
57,8
7556
,645
,063
3,24
1,87
53,
870,
937
- Ba
nker
s’ a
ccep
tanc
e67
,309
,000
2.14
– 3
.24
67,3
09,0
0067
,309
,000
--
-Ex
port
cred
it re
finan
cing
12,2
46,0
003.
0512
,246
,000
12,2
46,0
00-
--
Trad
e an
d ot
her p
ayab
les,
ex
clud
ing
deriv
ative
s11
9,30
9,84
2-
119,
309,
842
119,
309,
842
--
-
602,
558,
520
647,
331,
744
351,
803,
201
57,2
38,2
5018
0,10
9,04
758
,181
,246
Com
pany
2010
Non
-der
ivat
ive
finan
cial
liab
ilitie
s
USD
den
omin
ated
loan
- u
nsec
ured
9,20
7,00
02.
159,
528,
866
3,24
2,50
03,
176,
209
3,11
0,15
7-
Revo
lving
cre
dits
15,0
00,0
004.
3015
,757
,875
8,64
5,06
33,
241,
875
3,87
0,93
7-
Trad
e an
d ot
her p
ayab
les,
ex
clud
ing
deriv
ative
s14
9,81
9,03
9-
149,
819,
039
149,
819,
039
--
-
174,
026,
039
175,
105,
780
161,
706,
602
6,41
8,08
46,
981,
094
-
A N N U A L R E P O R T 2 0 1 0 175
NOTES TO THE FINANCIAL STATEMENTS (cont’d)
31. FINANCIAL INSTRUMENTS (cont’d)
31.6 Market risk
Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates andother prices will affect the Group’s financial position or cash flows.
Currency risk
The Group is exposed to foreign exchange risk on transactions that are denominated in currencies otherthan Ringgit Malaysia. Such exposure arises from purchases of raw materials and plant and machineryfrom Japan, sales of timber and timber products overseas as well as investments and borrowings thatare denominated in currencies other than the respective functional currencies of the Group entities. Thecurrencies giving rise to this risk are primarily U.S. Dollars (USD), Japanese Yen (JPY) and AustralianDollar (AUD).
(i) Risk management objectives, policies and process for managing the risk
In order to minimise the Group’s exposure to adverse movements in exchange rates, the rawmaterials and plant and machinery purchased by the Group are paid by operating bank accountsdenominated in Japanese Yen. In addition, foreign currency risk exposures on sales denominated inforeign currencies are mitigated by prompt payments via inwards letters of credit or telegraphictransfers. The Group also obtains short-term foreign currency loans so as to mitigate the foreigncurrency risk relating to cash receipts from export sales.
(ii) Exposure to foreign currency risk
The group’s exposure to foreign currency (a currency which is other than the currency of the Groupentities) risk, based on carrying amounts as at the end of the reporting period was:
Denominated in USD JPY AUD
Group RM RM RM
2010
Trade and other receivables 888,994 2,481,010 1,802,344Cash and cash equivalents 7,182,102 10,432,275 2,380,495Borrowings ( 9,207,000) (15,098,575) (28,471,482)Trade and other payables ( 3,736,059) ( 72,637) (14,326,129)
Exposure in the statement of financial position ( 4,871,963) ( 2,257,927) (38,614,772)
T A A N N H O L D I N G S B E R H A D 4 1 9 2 3 2 - K176
NOTES TO THE FINANCIAL STATEMENTS (cont’d)
31. FINANCIAL INSTRUMENTS (cont’d)
31.6 Market risk (cont’d)
Currency risk (cont’d)
(ii) Exposure to foreign currency risk (cont’d)
Denominatedin USD
Company RM
2010
Unsecured bank loans ( 9,207,000)
Exposure in the statement of financial position ( 9,207,000)
(iii) Currency risk sensitivity analysis
A 10% strengthening of the Ringgit Malaysia against the following currencies at the end of thereporting period would have increased (decreased) equity and post-tax profit or loss by the amountsshown below. This analysis assumes that all other variables, in particular interest rates, remainedconstant and ignores any impact of forecasted sales and purchases.
ProfitGroup Equity or loss2010 RM RM
USD - 487,196JPY - 225,793AUD 3,984,877 ( 123,400)
3,984,877 589,589
Company2010
USD - 920,700
A 10 percent weakening of RM against the above currencies at the end of the reporting period wouldhave had equal but opposite effect on the above currencies to the amounts shown above, on the basisthat all other variables remain constant.
A N N U A L R E P O R T 2 0 1 0 177
NOTES TO THE FINANCIAL STATEMENTS (cont’d)
31. FINANCIAL INSTRUMENTS (cont’d)
31.6 Market risk (cont’d)
Interest rate risk
The Group’s fixed rate borrowings are exposed to a risk of change in their fair value due to changes ininterest rates. The Group’s variable rate borrowings are exposed to a risk of change in cash flows due tochanges in interest rates. Short term receivables and payables are not significantly exposed to interestrate risk.
(i) Risk management objectives, policies and process for managing the risk
The Group monitors its exposure to changes in interest rates on a regular basis.
Borrowings are negotiated with a view to securing the best possible terms, including rate of interest,to the Group.
(ii) Exposure to interest rate risk
The interest rate profile of the Group and the Company’s significant interest-bearing financialinstruments, based on the carrying amounts as at the end of the reporting period was:
Group Company2010 2009 2010 2009
RM RM RM RM
Fixed rate instrumentsCash and cash equivalent
- fixed deposit 70,366,188 48,391,551 8,179,385 7,800,000Finance lease liabilities ( 25,141,657) ( 33,334,129) - ( 59,946)Term loan V ( 11,914,331) ( 8,214,792)
33,310,200 6,842,630 8,179,385 7,740,054
T A A N N H O L D I N G S B E R H A D 4 1 9 2 3 2 - K178
NOTES TO THE FINANCIAL STATEMENTS (cont’d)
31. FINANCIAL INSTRUMENTS (cont’d)
31.6 Market risk (cont’d)
Interest rate risk (cont’d)
(ii) Exposure to interest rate risk (cont’d)
Group Company 2010 2009 2010 2009
RM RM RM RM
Floating rate instrumentsTerm loan II ( 74,350,000) ( 60,000,000) - -Term loan III ( 38,091,500) ( 29,431,500) - -Term loan IV ( 34,076,000) ( 32,553,000) - -Term loan VI ( 20,000,000) ( 20,000,000) - -Term loan VII ( 22,166,674) ( 34,305,350) - -Term loan VIII - ( 3,060,000) - -Term loan IX ( 16,009,460) ( 9,205,150) - -Term loan X ( 27,000,000) ( 15,923,452) - -Term loan XI ( 19,167,000) - - -Revolving credits ( 63,000,000) ( 48,000,000) ( 15,000,000) -Japanese denominated loan I - ( 2,054,732) - -Japanese denominated loan III ( 7,529,754) ( 16,609,500) - -Japanese denominated loan IV ( 7,568,821)Banker’s acceptances ( 67,309,000) ( 91,878,000) - -Export credit refinancing ( 12,246,000) - - -AUD denominated loan ( 28,471,482) ( 37,991,625) - -USD denominated loan ( 9,207,000) ( 13,710,000) ( 9,207,000) ( 13,710,000)Loan from third party denominated
in Japanese Yen - ( 8,666,565) - -AUD denominated bank overdraft - ( 1,449,012) - -Amount due from subsidiaries - - 223,910,263 164,129,039Amount due to subsidiaries - - (136,505,108) (101,185,176)
(446,192,691) (424,837,886) 63,198,155 49,233,863
Total (412,882,491) (417,995,256) 71,377,540 56,973,917
A N N U A L R E P O R T 2 0 1 0 179
NOTES TO THE FINANCIAL STATEMENTS (cont’d)
31. FINANCIAL INSTRUMENTS (cont’d)
31.6 Market risk (cont’d)
Interest rate risk (cont’d)
(iii) Interest rate risk sensitivity analysis
Fair value sensitivity analysis for fixed rate instruments
The Group does not account for any fixed rate financial liabilities at fair value through profit or lossand does not designate derivatives as hedging instruments under a fair value hedge accountingmodel. Therefore, a change in interest rates at the end of the reporting period would not affect profitor loss.
Cash flow sensitivity analysis for variable rate instruments
A change of 100 basis points (bp) in interest rates at the end of the reporting period would haveincreased (decreased) post-tax profit or loss by the amounts shown below. This analysis assumesthat all other variables, in particular foreign currency rates, remain constant.
2010 2009Profit or loss Profit or loss
100bp 100bp 100bp 100bpincrease decrease increase decrease
Group RM RM RM RM
Floating rate instruments ( 4,128,825) 4,128,825 ( 4,179,953) 4,179,953
Company
Floatng rate instruments 713,775 ( 713,775) 569,739 ( 569,739)
Other price risk
Equity price risk arises from the Group’s investments in equity securities.
(i) Risk management objectives, policies and processes for managing the risk
Management of the Group monitors the equity investments on a portfolio basis. Materialinvestments within the portfolio are managed on an individual basis and all buy and sell decisionsare approved by the Risk Management Committee of the Group.
(ii) Equity price risk sensitivity analysis
The Group does not have any investments in equity securities as at period end and is thereforenot exposed to any other price risk.
T A A N N H O L D I N G S B E R H A D 4 1 9 2 3 2 - K180
NOTES TO THE FINANCIAL STATEMENTS (cont’d)
31. FINANCIAL INSTRUMENTS (cont’d)
31.7 Fair value of financial instruments
The carrying amounts of cash and cash equivalents, short term receivables and payables and short termborrowings approximate fair values due to the relatively short term nature of these financial instruments.
It was not practicable to estimate the fair value of the Group’s investment in unquoted shares due to thelack of comparable quoted market prices and the inability to estimate fair value without incurringexcessive costs.
The fair values of other financial assets and liabilities, together with the carrying amounts shown in thestatement of financial position, are as follows:
2010 2009Carrying Fair Carrying Fair
amount value amount valueRM RM RM RM
Group
Term loans 237,776,290 237,776,290 195,566,580 195,566,580JPY denominated loan 4,211,766 4,211,766 - -USD denominated loan 6,138,000 6,138,000 10,282,500 10,282,500Revolving credit 7,000,000 7,000,000 - -Financial lease 8,845,720 8,845,720 19,294,232 19,293,232Trade and other receivables 2,290,563 2,290,563 5,442,159 5,442,159Other payables - - 3,436,605 3,436,605
Company
Finance lease - - 59,946 59,946USD denominated loan 9,207,000 9,207,000 13,710,000 13,710,000Revolving credit 15,000,000 15,000,000 - -Trade and other receivables 227,220,777 227,220,777 167,125,359 167,125,359
The following summaries the methods used in determining the fair value of financial instrumentsreflected in the above table.
Non-derivative financial liabilities
Fair value, which is determined for disclosure purposes, is calculated based on the present value offuture principal and interest cash flows, discounted at the market rate of interest at the end of thereporting period. In respect of the liability component of convertible notes, the market rate of interest isdetermined by reference to similar liabilities that do not have a conversion option. For finance leasesthe market rate of interest is determined by reference to similar lease agreements.
A N N U A L R E P O R T 2 0 1 0 181
NOTES TO THE FINANCIAL STATEMENTS (cont’d)
31. FINANCIAL INSTRUMENTS (cont’d)
31.7 Fair value of financial instruments (cont’d)
Interest rates used to determine fair value
The interest rates used to discount estimated cash flows, when applicable, are as follows:
2010 2009% %
Term loan – secured 4.16 - 4.45 3.13 - 4.27Term loan – unsecured 3.00 - 4.04 2.83 - 3.59Finance leases 2.63 - 3.56 2.55 - 3.25AUD denominated loan 6.76 6.88USD denominated loan 2.15 2.15JPY denominated loan 0.80 - 1.65 0.75 - 2.50
32. CAPITAL MANAGEMENT
The Group’s objectives when managing capital is to maintain a strong capital base and safeguard the Group’sability to continue as a going concern, so as to maintain investor, creditor and market confidence and tosustain future development of the business. The Directors monitor and determine to maintain an optimaldebt-to-equity ratio that complies with debt covenants and regulatory requirements.
During 2010, the Group’s strategy, which was unchanged from 2009, was to maintain the debt-to-equity ratioat within one time. The debt-to-equity ratios at 31 December 2010 and at 31 December 2009 were as follows:
Group2010 2009
RM RM
Total borrowings (Note 19) 483,248,679 457,720,242Less: Cash and cash equivalents (Note 16) ( 143,160,451) ( 98,551,425)
Net debt 340,088,228 359,168,817
Total equity 840,536,122 750,809,017
Debt-to-equity ratios 0.40 0.46
There were no changes in the Group’s approach to capital management during the financial year.
T A A N N H O L D I N G S B E R H A D 4 1 9 2 3 2 - K182
NOTES TO THE FINANCIAL STATEMENTS (cont’d)
33. Operating leases
Leases as lessee
Non-cancellable operating lease rentals are payable as follows:Group
2010 2009RM RM
Less than one year 613,055 1,527,828Between one to five years 5,739,720 6,994,344More than five years 69,427,615 73,208,959
75,780,390 81,731,131
The Group leases two (2009: two) parcels of land, under two (2009: two) licences of planted forest for a periodof 60 years commencing December 1998 and October 2005 respectively.
A subsidiary entered into a lease agreement for the use of a plot of land upon which a veneer mill has beenconstructed. Monthly rental is fixed at AUD500 prior to the commencement of the construction of the mill,AUD4,600 upon the start of the construction of the mill and is subject to annual review as determined by bothparties. The subsidiary holds an option, which will expire in 2016, to purchase the said land.
The Group also leases a number of premises and log ponds under cancellable operating leases. The totalamount of the said leases is immaterial to be disclosed in the financial statements.
34. CAPITAL COMMITMENTS
Group Company2010 2009 2010 2009
RM RM RM RM
Property, plant and equipment
- Contracted but not provided for andpayable within one year - 231,000 - -
- Authorised but not contracted for and payable within one year 60,904,000 85,174,000 - -
- Authorised and contracted for 7,846,000 3,693,000 - -
68,750,000 89,098,000 - -Property development expenditure
- Authorised but not contracted for 88,340,000 78,118,000 - -- Authorised and contracted for - 387,000 - -
Investment in a subsidiary- Authorised and contracted for - 18,450,000 - -
Leasehold land held for subsidiaries’ use- Approved and contracted for 15,497,000 13,178,000 - -
172,587,000 199,231,000 - -
A N N U A L R E P O R T 2 0 1 0 183
NOTES TO THE FINANCIAL STATEMENTS (cont’d)
35. CONTINGENT LIABILITIES - UNSECURED
The Directors are of the opinion that provision is not required in respect of the following corporate guarantees,as it is not probable that a future sacrifice of economic benefits will be required or the amount is not capableof reliable measurement:
Group Company2010 2009 2010 2009
RM RM RM RM
Corporate guarantees favouring banks for facilities granted to:- subsidiaries - - 878,689,460 861,275,000- third party - - - -
- - 878,689,460 861,275,000
Performance guarantee
Westpac Banking Corporation has issued a bank guarantee in favour of Forestry Tasmania pursuant to theHuon Wood Supply Aggrement, replacing the guarantee issued on behalf of the subsidiary, Ta Ann TasmaniaPty Ltd by Oversea-Chinese Banking Corporation Limited. The guarantee may be paid on demand withoutreference to the subsidiary, to a maximum aggregate sum of AUD1,770,000 (RM5,442,750).
Electricity supply charges
At the year end, the subsidiary, Ta Ann Tasmania Pty Ltd is in dispute with one of its major suppliers regardingelectricity supply charges for the Huon Mill site. The total of the invoices in dispute at year end is approximatelyAUD1,135,090 (RM3,557,258) exclusive of GST [2009: AUD815,523 (RM2,507,733)] and these charges have notbeen recorded in the financial statements.
Once the treatment of the electricity supply charges is resolved between the relevant parties, there may be amaterial adjustment to the accounts depending on whether the costs being disputed are determined to belegitimate charges and, if so, whether such costs are to be recognised as operational expenditure or anamount to be capitalised. At this stage it is not possible to quantify the potential impacts to the financialstatements as the recognition and measurement of the electricity supply charges is dependent on satisfactoryresolution between the parties.
T A A N N H O L D I N G S B E R H A D 4 1 9 2 3 2 - K184
NOTES TO THE FINANCIAL STATEMENTS (cont’d)
36. RELATED PARTIES
For the purposes of these financial statements, parties are considered to be related to the Group or theCompany if the Group or the Company has the ability, directly or indirectly, to control the parties or exercisesignificant influence over the parties in making financial and operating decisions, or vice versa, or where theGroup or the Company and the parties are subject to common control or common significant influence.Related parties may be individuals or other entities.
Key management personnel are defined as those persons having authority and responsibility for planning,directing and controlling the activities of the Group either directly or indirectly. The key management personnelincludes all the Directors of the Group, and certain members of senior management of the Group.
The Group has a related party relationship with:
(i) its subsidiaries as disclosed in Note 6; (ii) its associates as disclosed in Note 7; and (iii) companies in which certain Directors and their close families members have or are deemed to have
substantial interests.
Significant related party transactions, other than compensations to key management personnel (see Note26) and those disclosed elsewhere in the financial statements, are as follows:
Transactions with its subsidiariesCompany
2010 2009RM RM
Management fee income ( 8,190,981) ( 6,867,497)Rental of premises received ( 945,852) ( 993,117)Dividend income ( 21,500,000) ( 35,077,704)
Transactions with associatesGroup Company
2010 2009 2010 2009RM RM RM RM
Nature of transactions
Plantation contract fee 11,480,043 14,100,434 - -Transportation charges 94,131 119,719 - -Rental of premises received ( 18,000) ( 18,000) ( 18,000) ( 18,000)Sale of property, plant and equipment ( 4,786) ( 183,300) - -Sale of timber products ( 6,501,923) ( 2,917,338) - -Hiring charges 53,900 59,824 - -Sale of consumables - ( 8,560) - -Sale of sawn timber ( 459,530) ( 229,971) - -Purchase of property, plant and equipment - 272,000 - -Purchase of diesel and lubricants - 13,866 - -
A N N U A L R E P O R T 2 0 1 0 185
NOTES TO THE FINANCIAL STATEMENTS (cont’d)
36. RELATED PARTIES (cont’d)
Transactions with companies in which certain Directors and close members of their families have or aredeemed to have substantial interests
Group Company2010 2009 2010 2009
RM RM RM RM
Nature of transactions
Logging contract fees 45,978,008 56,010,681 - -Food ration expenses 4,675,112 4,263,425 - -Freights and transportation 19,679,024 18,408,590 - -Hire of plant and equipment 61,890 10,700 - -Insurance premium paid 3,828,831 3,129,919 31,766 33,390Purchase of consumables 20,620,996 9,108,280 - -Purchase of logs and timber products 20,736,370 21,249,991 - -Purchase of property, plant and equipment 14,179 7,862 - -Rental of premises paid 30,792 18,600 - -Road toll received (646,934) ( 830,870) - -Rental of premises received (72,000) ( 9,140) - -Royalty marking charges 4,295 2,879 - -Sale of logs and timber products (19,947,612) (17,245,223) - -Sale of seeds/seedlings (208,305) ( 107,268) - -Sales of consumables (5,813) ( 19,422) - -Security charges paid 84,000 84,000 - -Purchase of computer equipment and
payment of software development fee 943,322 546,686 - -Purchase of diesel and lubricant 13,484,665 11,900,521 - -Sale of empty drums - ( 9,600) - -Fuel allowance paid 3,222,139 3,364,622 - -Purchase of fresh fruit bunches 16,775,476 16,221,635 - -Nursery site levelling and
construction of housing, culvert and bridge - - - -Handling charges ( 7,516) ( 771,019) - -
T A A N N H O L D I N G S B E R H A D 4 1 9 2 3 2 - K186
NOTES TO THE FINANCIAL STATEMENTS (cont’d)
36. RELATED PARTIES (cont’d)
Transactions with companies in which certain Directors and close members of their families have or aredeemed to have substantial interests (cont’d)
Group Company2010 2009 2010 2009
RM RM RM RM
Nature of transactions (cont’d)
Lighterage charge 2,116,859 1,855,592 - -Purchase of waste wood 292,821 - - -Forklift rental expense 12,000 18,594 - -Service charge ( 600) 37,473 - -Sale of kernel shell - ( 4,801) - -
The amounts due from/to subsidiaries are disclosed in the statement of financial position as well as Note 9and 18 to the financial statements.
The outstanding balances with other related parties are as follows:
Group Company2010 2009 2010 2009
RM RM RM RM
Amount due therefrom 3,279,307 3,717,394 - -Amount due thereto (21,736,987) (22,000,831) ( 2,179) ( 1,371)
The above transactions are based on negotiated terms. All the amounts outstanding are unsecured andexpected to be settled in cash.
37. SIGNIFICANT EVENT
In year 2008, the Company incorporated Ta Ann Eco-Timber Industries Pty. Ltd. (“TAET”) to set up a plywoodmill in Yang Zhou, China for a purchase consideration of RM13,686,000. Due to the impact of global financialcrisis, the plywood market in China was adversely affected, which made it not feasible to proceed with theplywood mill project.
During the year, the Chinese authorities of China have approved the Group application to return partially theland purchased in line with the downsizing proposal.
A N N U A L R E P O R T 2 0 1 0 187
NOTES TO THE FINANCIAL STATEMENTS (cont’d)
38. ACQUISITION OF SUBSIDIARIES AND MINORITY INTEREST
Year ended 31 December 2010
(a) Incorporation of a subsidiary
The Group has incorporated a subsidiary during the year ended 31 December 2010. The details are asfollows:
Purchase% of equity Date of Incorporated consideration
Subsidiary acquired acquisition by RM
Eagle Forest Sdn. Bhd. 60 8 December 2010 a subsidiary 2
(b) Acquisition of a new subsidiary
The Group acquired 2,000,000 ordinary shares of RM1.00 each in Europalm Sdn. Bhd., for a considerationof RM20,500,000 on 22 February 2010.
The acquisition has the following effect on the Group’s assets and liabilities on the acquisition date:
Pre-acquisition Recognisedcarrying Fair value values onamounts adjustment acquisition
Note RM RM RM
Property, plant and equipment 3 2,029,144 19,818,356 21,847,500Current assets 792,989 - 792,989Current liabilities ( 873,837) - ( 873,837)Deferred tax liabilities 8 - ( 4,954,589) ( 4,954,589)
1,948,296 14,863,767 16,812,063
Goodwill 10 3,687,937
Consideration paid, satisfied in cash 20,500,000Cash acquired ( 792,989)
Net cash outflow 19,707,011
The impact of the above acquisition to the net profit and net assets of the Group is immaterial.
T A A N N H O L D I N G S B E R H A D 4 1 9 2 3 2 - K188
NOTES TO THE FINANCIAL STATEMENTS (cont’d)
38. ACQUISITION OF SUBSIDIARIES AND MINORITY INTEREST (cont’d)
(c) Increase in investment in existing subsidiaries
On 30 June 2010, the Group acquired additional 0.19% in Ta Ann Tasmania Pty. Ltd (“TAT”), a subsidiaryof Ta Ann Plywood Sdn. Bhd., for a consideration of RM1,122,400 satisfied in cash, increasing the group’sshareholding in TAT from 84.36% to 84.55%
The group recognised a decrease in minority interest of 915,283.
The impact of the above increase in investment to the net profit and net assets of the Group is immaterial.
Year ended 31 December 2009
Incorporation of subsidiaries
The Group incorporated the following subsidiaries during the year ended 31 December 2009:
% of Purchaseequity Date of Incorporated consideration
Subsidiary acquired acquisition by RM
Igan Oil Mill Sdn. Bhd. 67 6.2.2009 a subsidiary 2Daro Oil Mill Sdn. Bhd. 85 5.2.2009 a subsidiary 2
4
As the above subsidiaries were incorporated, rather than acquired from third parties, they did not have aneffect on the Group’s assets and liabilities on the incorporation.
39. SIGNIFICANT CHANGES IN ACCOUNTING POLICIES
CompanyRetained earnings
2010RM
At 1 January, as previously stated 51,158,368Adjustments arising from adoption of FRS 139:- Impairment of trade and other receivables, net of tax 3,319,186
At 1 January, as restated 54,477,554
A N N U A L R E P O R T 2 0 1 0 189
NOTES TO THE FINANCIAL STATEMENTS (cont’d)
39. SIGNIFICANT CHANGES IN ACCOUNTING POLICIES (cont’d)
39.1 FRS 139, Financial Instruments: Recognition and Measurement (cont’d)
Inter-company loans
Prior to the adoption of FRS 139, inter-company loans were recorded at cost. With the adoption of FRS139, inter-company loans are now recognised initially at their fair values, which are estimated bydiscounting the expected cash flows using the current market interest rate of a loan with similar riskand tenure. Finance income and costs are recognised in profit or loss using the effective interest method.
Staff loans
Prior to the adoption of FRS 139, staff loans were recorded at cost. With the adoption of FRS 139, staffloans are now recognised initially at their fair values, which are estimated by discounting the expectedcash flows using the current market interest rate of a loan with similar risk and tenure. Interest incomeis recognised in profit or loss using the effective interest method.
Impairment of trade and other receivables
Prior to the adoption of FRS 139, an allowance for doubtful debts was made when a receivable isconsidered irrecoverable by the management. With the adoption of FRS 139, an impairment loss isrecognised for trade and other receivables and is measured as the difference between the asset’scarrying amount and the present value of estimated future cash flows discounted at the asset’s originaleffective interest rate.
These changes in accounting policies have been made in accordance with the transitional provisions ofFRS 139. In accordance to the transitional provisions of FRS 139 for first-time adoption, adjustmentsarising from remeasuring the financial instruments at the beginning of the financial year were recognisedas adjustments of the opening balance of retained earnings or another appropriate reserve.Comparatives are not adjusted.
Consequently, the adoption of FRS 139 does not affect the basic and diluted earnings per ordinary share
for prior periods. It is not practicable to estimate the impact arising from the adoption of FRS 139 to thecurrent year’s basic and diluted earnings per share.
39.2 FRS 123, Borrowing Costs (revised)
Before 1 January 2010, borrowing costs were all expensed to profit or loss as and when they wereincurred. With the adoption of FRS 123, the Group capitalises borrowing costs that are directly attributableto the acquisition, construction and production of a qualifying asset as part of the cost of the asset forwhich the commencement date of capitalisation is on or after 1 January 2010.
The change in accounting policy has been applied prospectively in accordance with the transitionalprovisions of the revised FRS 123.
Hence, the adoption of the revised FRS 123 does not affect the basic and diluted earnings per ordinaryshare for prior periods and has no material impact to current year’s basic and diluted earnings perordinary share.
T A A N N H O L D I N G S B E R H A D 4 1 9 2 3 2 - K190
NOTES TO THE FINANCIAL STATEMENTS (cont’d)
39. SIGNIFICANT CHANGES IN ACCOUNTING POLICIES (cont’d)
39.3 FRS 140, Investment Property
Before 1 January 2010, an investment property under construction was classified as property, plant andequipment and measured at cost. Such property was measured at cost until construction or developmentwas completed, at which time it would be remeasured to fair value and reclassified as investmentproperty. Any gain or loss arising on remeasurement was recognised in profit or loss.
With the amendment made to FRS 140 with effect from 1 January 2010, investment property underconstruction is classified as investment property. Where the fair value of the investment property underconstruction is not reliably determinable, the investment property under construction is measured atcost until either its fair value becomes reliably determinable or construction is complete, whichever isearlier.
39.4 FRS 8, Operating Segments
As of 1 January 2010, the Group determines and presents operating segments based on the informationthat internally is provided to the Chief Executive Officer, who is the Group’s chief operating decisionmaker. This change in accounting policy is due to the adoption of FRS 8. Previously operating segmentswere determined and presented in accordance with FRS 1142004, Segment Reporting.
Comparative segment information has been re-presented. Since the change in accounting policy onlyimpacts presentation and disclosure aspects, there is no impact on earnings per share.
39.5 FRS 101, Presentation of Financial Statements (revised)
The Group applies FRS 101 (revised) which became effective as of 1 January 2010. As a result, the Grouppresents all non-owner changes in equity in the consolidated statement of comprehensive income.
Comparative information has been re-presented so that it is in conformity with the revised standard.Since the change only affects presentation aspects, there is no impact on earnings per share.
39.6 FRS 117, Leases
The Group has adopted the amendment to FRS 117. The Group has reassessed and determined that allleasehold land of the Group which are in substance is finance leases and has reclassified the leaseholdland to property, plant and equipment. The change in accounting policy has been made retrospectivelyin accordance with the transitional provisions of the amendment.
The reclassification does not affect the basic and diluted earnings per ordinary share for the current andprior periods.
A N N U A L R E P O R T 2 0 1 0 191
NOTES TO THE FINANCIAL STATEMENTS (cont’d)
40. COMPARATIVE FIGURES
40.1 FRS 101, Presentation of Financial Statements (revised)
Arising from the adoption of FRS 101 (revised), income statements for the year ended 31 December 2009have been re-presented as statement of comprehensive income. All non-owner changes in equity thatwere presented in the statement of changes in equity are now included in the statement ofcomprehensive income as other comprehensive income. Consequently, components of comprehensiveincome are not presented in the statement of changes in equity.
40.2 Impairment and FRS 117, Leases
Following adoption of the amendment to FRS 117, certain comparatives have been re-presented asfollows:
31.12.2009 1.1.2009As As
As previously As previouslyrestated stated restated stated
Group RM RM RM RM
Cost
Property, plant and equipment 798,594,249 718,505,381 725,708,865 646,393,676Prepaid lease payments 5,092,511 85,181,379 5,361,266 84,676,455
Company
Cost
Property, plant and equipment 13,089,942 10,624,674 14,602,172 12,090,572Prepaid lease payments - 2,465,268 - 2,511,600
T A A N N H O L D I N G S B E R H A D 4 1 9 2 3 2 - K192
NOTES TO THE FINANCIAL STATEMENTS (cont’d)
41. DISCLOSURE OF REALISED AND UNREALISED PROFITS
On 25 March 2010, Bursa Malaysia Securities Berhad (“Bursa Malaysia”) issued a directive to all listed issuerspursuant to Paragraphs 2.06 and 2.23 of Bursa Malaysia Main Market Listing Recruitments. The directiverequires all listed issuers to disclose the breakdown of the unapproriated profits or accumulated losses asat the end of the reporting period, into realised and unrealised profits or losses.
On 20 December 2010, Bursa Malaysia further issued another directive on the disclosure and the prescribedformat of presentation.
The breakdown of the retained earnings of the Group and of the Company as at 31 December 2010, intorealised and unrealised profits, pursuant to the directive, is as follows:
Group Company2010 2009 2010 2009
RM RM RM RM
Total retained earnings- realised 618,280,766 535,594,066 51,974,278 54,305,554- unrealised ( 75,007,567) ( 49,981,101) ( 247,145) 172,000
543,273,199 485,612,965 51,727,133 54,477,554
The determination of realised and unrealised profits is based on the Guidance on Special Matter No. 1,Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant to BursaMalaysia Securities Berhad Listing Requirements, issued by Malaysian Institute of Accountants on 20December 2010.
A N N U A L R E P O R T 2 0 1 0 193
STATEMENT BY DIRECTORSpursuant to Section 169(15) of the Companies Act, 1965
I, Siaw Meng Kun, the officer primarily responsible for the financial management of Ta Ann Holdings Berhad, dosolemnly and sincerely declare that the financial statements set out on pages 86 to 193 are, to the best of myknowledge and belief, 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 abovenamedin Kuching in the State of Sarawak on 19 April 2011 Siaw Meng Kun
Before me:
STATUTORY DECLARATIONpursuant to Section 169(16) of the Companies Act, 1965
In the opinion of the Directors, the financial statements set out on pages 86 to 193 are drawn up in accordancewith Financial Reporting Standards and the Companies Act, 1965 in Malaysia, so as to give a true and fair view ofthe financial position of the Group and of the Company at 31 December 2010 and their financial performance andcash flows for the year then ended.
In the opinion of Directors, the information set out in Note 41 to the financial statements has been compiled inaccordance with the Guidance on Special Matter No. 1, Determination of Realised and Unrealised Profits or Lossesin the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Lisitng Requirements issued by theMalaysian Institute of Accountants, and presented based on the format prescribed by Bursa Malaysia SecurityBerhad.
Signed on behalf of the Board of Directors in accordance with a resolution of the Directors:
Dato Wong Kuo Hea Datuk Abang Haji Abdul KarimBin Tun Abang Haji Openg
Kuching,Date: 19 April 2011
T A A N N H O L D I N G S B E R H A D 4 1 9 2 3 2 - K194
INDEPENDENT AUDITORS’ REPORT to the Member of Ta Ann Holding Berhad
REPORT ON THE FINANCIAL STATEMENTS
We have audited the financial statements of Ta Ann Holdings Berhad, which comprise the statements of thefinancial position of the Group and of the Company as at 31 December 2010, and the statements of comprehensiveincome, statements of changes in equity and cash flow statements of the Group and of the Company for the yearthen ended, and a summary of significant accounting policies and other explanatory notes, as set out on pages86 to 193.
Directors’ Responsibility for the Financial Statements
The directors of the Company are responsible for the preparation of financial statements that give a true and fairview in accordance with Financial Reporting Standards and the Companies Act, 1965 in Malaysia, and for suchinternal controls as the directors determine are necessary to enable the preparation of financial statements thatare 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 ouraudit in accordance with approved standards on auditing in Malaysia. Those standards require that we complywith ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financialstatements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in thefinancial statements. The procedures selected depend on our judgement, including the assessment of risks ofmaterial misstatement of the financial statements, whether due to fraud or error. In making those riskassessments, we consider internal control relevant to the entity’s preparation and of the financial statements thatgive a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not forthe purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includesevaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates madeby 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 auditopinion.
Opinion
In our opinion, the financial statements have been properly drawn up in accordance with Financial ReportingStandards and the Companies Act, 1965 in Malaysia so as to give a true and fair view of the financial position ofthe Group and of the Company as of 31 December 2010 and of their financial performance and cash flows for theyear then ended.
A N N U A L R E P O R T 2 0 1 0 195
INDEPENDENT AUDITOR’S REPORT to the Member of Ta Ann Holding Berhad (cont’d)
REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTSIn 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 theCompany and its subsidiaries of which we have acted as auditors have been properly kept in accordance withthe provisions of the Act.
(b) We have considered the accounts and the auditors’ reports of all the subsidiaries of which we have not actedas auditors, which are indicated in note 6 to the financial statements.
(c) We are satisfied that the accounts of the subsidiaries that have been consolidated with the Company’s financialstatements are in form and content appropriate and proper for the purposes of the preparation of the financialstatements of the Group and we have received satisfactory information and explanations required by us forthose purposes.
(d) The audit reports on the accounts of the subsidiaries did not contain any qualification or any adverse commentmade under Section 174(3) of the Act.
OTHER REPORTING RESPONSIBILITIESOur audit was made for the purpose of the forming an opinion on the financial statements taken as a whole. Theinformation set out in Note 41 to the financial statements has been compiled by the Company as required by theBursa Malaysia Securities Berhad Listing Requirements. We have extended our audit procedures to report on theprocess of compilation of such information. In our opinion, the information has been properly compiled, in allmaterial respects, in accordance with the Guidance of Special Matter No. 1, Determination of Realised andUnrealised Profits or Losses in the Context of Disclosures Pursuant to Bursa Malaysia Securities Berhad ListingRequirements, issued by the Malaysian Institute of Accountants and presented based on the format prescribedby Bursa Malaysia Securities Berhad.
OTHER MATTERSThis report is made solely to the members of the Company, as a body, in accordance with Section 174 of theCompanies Act, 1965 in Malaysia and for no other purpose.
We do not assume responsibility to any other person for the content of this report.
KPMG Wee Beng ChuanFirm Number: AF 0758 Approval Number: 2677/12/12 (J)Chartered Accountants Chartered Accountant
Kuching,
Date: 19 April 2011
T A A N N H O L D I N G S B E R H A D 4 1 9 2 3 2 - K196
RECURRENT RELATED PARTYTRANSACTIONS (‘RRPT’)Breakdown of recurrent related party transactions (‘RRPT’) of revenue nature conducted pursuant to shareholdermandate during the financial year.
Nature of transaction Relationship Aggregated AmountRM
Logging/Plantation contract fees paid:
Electimber Sdn. Bhd. c, l 158,338Ironwall Sdn. Bhd. a, b, c, d, e, f, g, i, k 29,107,764Kintameru Sdn. Bhd. a, b, c, d, f 16,711,906Tatatze Sdn. Bhd. a 11,480,043
57,458,051
Food ration expenses paid:
Key Orient Sdn. Bhd. a, b, i, m 4,675,112
Handling fees, transportation and freight charges paid:
Ironwall Sdn. Bhd. a, b, c, d, e, f, g, i, k 3,036,651 Key Jaya Sdn. Bhd. b, c, i, k 8,276,556Kintameru Sdn. Bhd. a, b, c, d, f 145,359Pelangi Acres (M) Sdn. Bhd. b, c, k, l 6,271,139Ribu Hijau Sdn. Bhd. a, b, c, d, k 3,102Riveron Shipping Sdn. Bhd. b, c, d, k 4,151,537Sealinmas Shipping Sdn. Bhd. b, i, c, l 28,153Ta Shan Trading Sdn. Bhd. a, b, i, k, l 509,692Tatatze Sdn. Bhd. a 94,131Yimanda Corporation Sdn. Bhd. b 13,500
22,529,820
Hire of property, plant and equipment paid:
Kintameru Sdn. Bhd. a, b, c, d, f 54,390Tatatze Sdn. Bhd. a 53,900Ironwall Sdn. Bhd. a, b, c, d, e, f, g, i, k 7,500
115,790
Purchase of consumable:
Global Tradeway Sdn. Bhd. b, i, k, l 2,732,807Kintameru Sdn. Bhd. a, b, c, d, f 3,969Key Jaya Sdn. Bhd. b, c, i, k 17,801,757Riveron Shipping Sdn. Bhd. b, c, d, k 1,280Sebubu Sdn. Bhd. a, b, c, d, e, f, h, i, j, m, n 81,183
20,620,996
A N N U A L R E P O R T 2 0 1 0 197
RECURRENT RELATED PARTY TRANSACTIONS (‘RRPT’) (cont’d)
Nature of transaction Relationship Aggregated AmountRM
Purchase of fixed assets:
Key Jaya Sdn. Bhd. b, c, i, k 5,120Queenwest Timber Supplies Pty Ltd a 9,059
14,179
Purchase of logs and timber products:
Genting Bahagia Sdn. Bhd. a, b, d, e, g, i, k, l 10,313,917Mitsumoku Sdn. Bhd. a, b, g, i, m 309,268Timber Dimension Sdn. Bhd. a, b, d, e, l, n 292,821Pingat Kuasa Sdn. Bhd. b, k 10,113,185
21,029,191
Royalty marking handling charges:
Kintameru Sdn. Bhd. a, b, c, d, f 4,295
Purchase of computer equipment and software development fees paid:
Intuitive System Sdn. Bhd. a, j, n 943,322
Rental expenses paid:
Datuk Wahab 11,400Mitsumoku Sdn. Bhd. a, b, g, i, m 6,000All Key Enterprise Sdn. Bhd. a, b, k 9,600Key Orient Sdn. Bhd. a, b, i, m 3,792
30,792
Security charges paid:
Pelangi Acres (M) Sdn. Bhd. b, c, k, l 84,000
Purchase of diesel and lubricant:
Kintameru Sdn. Bhd. a, b, c, d, f 5,878Key Jaya Sdn. Bhd. b, c, i, k 13,478,787
13,484,665
Fuel allowances paid:
Kintameru Sdn. Bhd. a, b, c, d, f 497,570Ironwall Sdn. Bhd. a, b, c, d, e, f, g, i, k 2,724,569
3,222,139
T A A N N H O L D I N G S B E R H A D 4 1 9 2 3 2 - K198
RECURRENT RELATED PARTY TRANSACTIONS (‘RRPT’) (cont’d)
Nature of transaction Relationship Aggregated AmountRM
Insurance premium paid:
Acotop Sdn. Bhd. a, b, i, d 2,819,577Acosafe Sdn. Bhd. a, b, i, d 1,009,254
3,828,831
Purchase of fresh fruit bunches:
Sebubu Sdn. Bhd. a, b, c, d, e, f, h, i, j, m, n 5,422,362Ladang Selezu Sdn. Bhd. a, b, c, d, e, f, h, i, j, m, n 11,353,114
16,775,476
Forklift rental expenses paid:
Kian Kuo Development Sdn. Bhd. a, d 12,000
Road toll received:
Kintameru Sdn. Bhd. a, b, c, d, f ( 646,934)
Sale of consumables:
Usaha Jasamaju Sdn. Bhd. a ( 5,813)
Rental income received:
Key Jaya Sdn. Bhd. b, c, i, k ( 72,000)Tatatze Sdn. Bhd. a ( 18,000)
( 90,000)
Sale of logs and timber products:
Tatatze Sdn. Bhd. a ( 6,573)Palmhead Sdn. Bhd. a, b, c, d, e, f, h, i, m, n ( 7,650)Timber Dimension Sdn. Bhd. a, b, d, e, l, n ( 1,827,181)WHK Enterprise Sdn. Bhd. a, e, m ( 4,267,622)Queenwest Timber Supplies Pty Ltd a (12,517,122)South East International Ltd a ( 1,325,027)Goldmakers Sdn. Bhd. a, j ( 1,800)Riveron Shipping Sdn. Bhd. b, c, d, k ( 1,210)
(19,954,185)
A N N U A L R E P O R T 2 0 1 0 199
200 T A A N N H O L D I N G S B E R H A D 4 1 9 2 3 2 - K
Nature of transaction Relationship Aggregated AmountRM
Sale of seeds/seedlings:Palmhead Sdn. Bhd. a, b, c, d, e, f, h, i, m, n ( 27,000)Key Group Sdn. Bhd. k (154,305)Usaha Jasamaju Sdn. Bhd. a ( 27,000)
(208,305)
Sale of fixed assets:Tatatze Sdn. Bhd. a ( 4,786)
Handling fees, transportation and freight charges received:Ladang Selezu Sdn. Bhd. a, b, c, d, e, f, h, i, j, m, n (529,033)Sebubu Sdn. Bhd. a, b, c, d, e, f, h, i, j, m, n (110,182)Electimber Sdn. Bhd. c, l ( 8,107)Timber Dimension Sdn. Bhd. a, b, d, e, l, n ( 600)
(647,922)
The relationships (designated by the alphabets a to n above) represent the following persons who have controlsor significant influence over the related parties, or persons who have or are deemed to have interest in the relatedparties that transacted with the Group/Company:
(a) Dato Wong Kuo Hea (a substantial shareholder and Director of the Company and Director of certainsubsidiaries)
(b) Wong Kuok Kai (a Director of a subsidiary)
(c) Lau Hie Ping (a Director of a subsidiary)
(d) Chai Min Kian (a Director of a subsidiary)
(e) Datuk Abdul Hamed Bin Haji Sepawi (a substantial shareholder and Director of the Company and Director ofcertain subsidiaries)
(f) Pui Chin Jang @ Pui Chin Yam (a shareholder and Director of the Company and Director of certain subsidiaries)
(g) Sa’id Bin Haji Dolah (a shareholder and Director of the Company and Director of certain subsidiaries)
(h) Ting Lina @ Ding Lina (a Director and Alternate Director of certain subsidiaries)
(i) Alli @ Ali Mat Bin Haji Dollah (a Director of a subsidiary)
(j) Wong Siik Ong (son of Dato Wong Kuo Hea)
(k) Wong Kuok Kiong (brother of Dato Wong Kuo Hea and Wong Kuok Kai)
(l) Wong Ai Hua (sister of Dato Wong Kuo Hea, Wong Kuok Kai and Wong Kuok Kiong)
(m) Datuk Wahab Bin Haji Dolah (a major shareholder of the Company)
(n) Kuintan Bte Mohamed Sepawie (sister of Datuk Abdul Hamed Bin Haji Sepawi)
RECURRENT RELATED PARTY TRANSACTIONS (‘RRPT’) (cont’d)
201A N N U A L R E P O R T 2 0 1 0
Location Description Existing Land Area Approx. Date of Tenure Net Book/Address Use (Acres) Age of acquisition/ Value As
Building Revaluation At 31.12.2010(Years) (RM)
Lot 3243, Office unit Corporate 1.0456 8 21.11.2000 Leasehold 6,874,531Block 2 Headquarters 60 years,Sibu Town expiringDistrict in 2065
Lot 1789, Office unit Corporate 0.1500 8 28.02.2002 Leasehold 648,421Block 2 Headquarters 60 years,Sibu Town expiringDistrict in 2045
6th Floor, Office unit Corporate - 11 28.12.1999 Leasehold 1,037,251Lot 2679, Office 60 years,Block 10, expiringKuching Central in 2055Land District
12A & 12B, Apartments Investment - 5 17.01.2006 Leasehold 827,784Lot 264 Property 60 years,Block 2 expiringSalak Land in 2066District
Lot 269, a) 1 block of Sawmill 2.2 19 01.01.1998 Leasehold 4,797,808Block 10 1-storey factory 60 years,Engkilo building expiringLand District in 2054Sibu.
Lot 424 Land with 7.46 - 10.07.1989 Leasehold 363,466Engkilo a) 1 block of Sawmill 22 60 yearsLand 1-storey factory expiringDistrict building in 2055
b) 2 blocks of Staff 81-storey quartersbuilding
Lot 267-268, Land with 13.1 - 01.01.1998 Leasehold 6,677,812Block 10 a) 1 block of Moulding factory 16 60 years,Engkilo 1-storey expiringLand building in 2054 District b) 1 block of Plywood 4Sibu 1-storey warehouse
buildingc) 2½ storey Plywood office 1 4,287,842
office d) 1 block of Biomass Power 3
factory Plantbuilding (partially located on Lot 269 Block 10 and Lot 1151)
PROPERTIES OF THE GROUP
PORPERTIES OF THE GROUP (cont’d)
Location Description Existing Land Area Approx. Date of Tenure Net Book/Address Use (Acres) Age of acquisition/ Value As
Building Revaluation At 31.12.2010(Years) (RM)
Lot 492 & 501 Land with 9.17 - 01.04.2002 Leasehold 12,945,953Tanjong a) 1 block of Plywood 5 60 years,Seduan, 1-storey factory expiringSibu building in 2062
b) 1 block of Plywood 11-storey factorybuilding
Lot 1151 Land with 67.149 - 06.12.2006 Leasehold 37,837,405(27 parcels a) 11 blocks of Plywood 18 (Date of 60 years,of land 1-storey factory amalgamation) expiringamalgamated) building and in 2066
and 1 staffblock of quarters4-storeybuilding
b) 2 blocks of Plywood 81-storey factory building and extension,2 blocks of CCP and2-storey LVL factorybuilding and staff
quarters
Sibu Lease Land with 1.61 - 04.02.2004 Leasehold 5,376,649of Crown a) 1 block of Plywood 3 60 years,Land 44561 1-storey factory expiring(Lot 857) building and in 2069
(partially on warehouseLot 1151)
b) 1 block of Plywood 11-storey warehousebuilding(partially on Lot 1151)
Sibu Occupation Land with 6.82 - 19.08.2004 Leasehold 11,498,842Ticket No. 36555 8 blocks of Staff 4 99 years,
4-storey quarters expiringbuilding, and in 20452 blocks of canteen2-storey building and 1 block of 1-storey building
T A A N N H O L D I N G S B E R H A D 4 1 9 2 3 2 - K202
PORPERTIES OF THE GROUP (cont’d)
Location Description Existing Land Area Approx. Date of Tenure Net Book/Address Use (Acres) Age of acquisition/ Value As
Building Revaluation At 31.12.2010(Years) (RM)
Lot 1420, Land Log yard 1.85 - 18.05.1999 Leasehold 46,839Block 11 99 years,Engkilo expiringLand District in 2017
Sibu Occupation Land Vacant land 3.746 - 04.02.2004 Leasehold 304,000Ticket No. 3241 for future 60 years,
plywood mill expiringexpansion in 2069
Sibu Lease Land Vacant land 1.51 - 01.03.2004 Leasehold 14,960of Crown for future 60 years,Land 43317 plywood mill expiring
expansion in 2069
Sibu Lease Land Vacant land 0.83 - 02.03.2004 Leasehold 4,070of Crown for future 60 years,Land 41124 plywood mill expiring
expansion in 2069
Sibu Lease Land Vacant land 0.37 - 02.03.2004 Leasehold 11,900of Crown for future 60 years,Land 48373 plywood mill expiring
expansion in 2069
Sibu Lease Land Vacant land 0.18 - 05.03.2004 Leasehold 5,814of Crown for future 60 years,Land 48372 plywood mill expiring
expansion in 2069
Sibu Lease Land Vacant land 0.73 - 02.03.2004 Leasehold 7,239of Crown for future 60 years,Land 43823 plywood mill expiring
expansion in 2069
Sibu Lease Land Vacant land 1.54 - 01.03.2004 Leasehold 15,270of Crown for future 60 years,Land 43820 plywood mill expiring
expansion in 2069
Sibu Lease Land Vacant land 2.25 - 21.04.2004 Leasehold 96,958of Crown for future 60 years,Land 48393 plywood mill expiring
expansion in 2069
Lot 885, Land Vacant land 1.631 - 06.04.2004 Leasehold 121,894Block 10 for future 99 years,Engkilo Land plywood mill expiringDistrict expansion in 2027
A N N U A L R E P O R T 2 0 1 0 203
PORPERTIES OF THE GROUP (cont’d)
Location Description Existing Land Area Approx. Date of Tenure Net Book/Address Use (Acres) Age of acquisition/ Value As
Building Revaluation At 31.12.2010(Years) (RM)
Lot 519, Land Vacant land 6.009 - 27.04.2004 Leasehold 531,113Block 10 for future 60 years,Engkilo plywood mill expiringLand District expansion in 2021
Sibu Lease Land Vacant land 0.78 - 07.05.2004 Leasehold 3,749of Crown for future 60 years,Land 41118 plywood mill expiring
expansion in 2069
Sibu Lease Land Vacant land 0.25 - 10.05.2004 Leasehold 8,712of Crown for future 60 years,Land 48394 plywood mill expiring
expansion in 2069
Lot 408, Land Vacant land 1.64 - 18.01.2007 Leasehold 183,112Engkilo for future 99 years,Land District plywood mill expiring
expansion in 2024
Lot 922, Land Vacant land 3.16 - 05.12.2007 Leasehold 280,774Engkilo for future 99 years,Land District plywood mill expiring
expansion in 2027
Lot 302, Land Vacant land 2.242 - 06.12.2004 Leasehold 183,193Block 10 for future 60 years,Engkilo plywood mill expiringLand District expansion in 2024
Sibu Occupation Land Vacant land 1.86 - 06.12.2004 Leasehold 173,492Ticket No. 25510 for future 99 years,
plywood mill expiringexpansion in 2034
Sibu Occupation Land Vacant land 3.00 - 21.12.2006 Leasehold 202,205Ticket No. 19572 for future 99 years,
plywood mill expiringexpansion in 2028
Sibu Occupation Land Vacant land 7.00 - 21.12.2006 Leasehold 460,013Ticket No. 17661 for future 99 years,
plywood mill expiringexpansion in 2027
Lot 884 Land Vacant land 1.56 - 04.09.2008 Leasehold 183,719Engkilo Land for future 99 years,District plywood mill expiring
expansion in 2027
T A A N N H O L D I N G S B E R H A D 4 1 9 2 3 2 - K204
PORPERTIES OF THE GROUP (cont’d)
Location Description Existing Land Area Approx. Date of Tenure Net Book/Address Use (Acres) Age of acquisition/ Value As
Building Revaluation At 31.12.2010(Years) (RM)
Lot 143 & 144, Land Log yard 35.5 - 07.04.1999 Leasehold 22,471Block 17 60 years,Katibas expiringLand District in 2070Sg. Menari Kechil Song
Lot 142, Land Log yard 7.90 - 07.09.2004 Leasehold 13,468Block 17 60 years, Katibas expiringLand District in 2070Sg. MenariKechil Song
Lot 111, Land Oil palm 4.680 - 29.01.1999 Leasehold 98,461Block 12 plantation 99 years, Assan expiringLand District in 2025
Lot 107, Land Oil palm 2.300 - 29.01.1999 Leasehold 48,558Block 12 plantation 99 years, Assan expiringLand District in 2025
Lot 37, Land Oil palm 7.480 - 29.01.1999 Leasehold 202,191Block 12 plantation 99 years,Assan expiringLand District in 2040
Lot 5, Land with 271.81 - LeaseholdBlock 15 a) Factory CPO mill 4 30.09.2006 60 years, 11,551,344Assan building and office expiringLand District in 2068
b) 3 blocks of Staff quarters 4 30.09.2006 1,732,7611-storeybuilding &2 blocks of1- storeybuilding
Lot 1075 Land Log yard 3.740 - 12.03.1999 Leasehold 178,752Assan 99 years,Land District expiring
in 2034
Lot 161-162, Land Sand yard 5.620 - 03.05.1999 Leasehold 262,036Block 9 99 years,Assan expiring inLand District 2027 & 2025
A N N U A L R E P O R T 2 0 1 0 205
PORPERTIES OF THE GROUP (cont’d)
Location Description Existing Land Area Approx. Date of Tenure Net Book/Address Use (Acres) Age of acquisition/ Value As
Building Revaluation At 31.12.2010(Years) (RM)
Lot 84, Land Sand yard 3.274 - 10.11.1999 Leasehold 7,810Block 12 99 years,Assan expiringLand District in 2027
Lot 68, Land Sand yard 2.375 - 16.06.1999 Leasehold 42,180Block 12 99 years,Assan expiringLand District in 2030
Lot 54, Land Oil palm 9,989 - 26.05.2004 Leasehold 2,666,809Block 20 plantation 60 years,Jemoreng expiringLand District in 2064
Lot 56, Land Oil palm 219.92 - 28.10.2008 Leasehold 63,476Block 20 plantation 60 years,Jemoreng expiringLand District in 2068
Lot 23, Land Sand yard 26.46 - 09.11.2004 Leasehold 183,086Block 24 99 years,Jemoreng expiringLand District in 2029
Lot 1490 Land Oil palm 2,305 - 01.04.2008 Leasehold 746,957Jemoreng plantation 60 years,Land District expiring
in 2065
Lot 1 Land Oil palm 10,427 - 01.04.2008 Leasehold 6,914,361Lassa plantation 60 years,Land District expiring
in 2065
Lot 550 Land Oil palm 10,067 - 01.04.2008 Leasehold 9,108,139Lassa plantation 60 years,Land District expiring
in 2065
Lot 748 Land Oil palm 6,044 - 01.04.2008 Leasehold 5,429,456Semah plantation 60 years,Land District expiring
in 2058
Lot 57, Land Oil palm 3,706.5 - 06.01.2009 Leasehold 1,154,109Block 20, plantation 60 years,Jemoreng expiringLand District in 2069
T A A N N H O L D I N G S B E R H A D 4 1 9 2 3 2 - K206
PORPERTIES OF THE GROUP (cont’d)
Location Description Existing Land Area Approx. Date of Tenure Net Book/Address Use (Acres) Age of acquisition/ Value As
Building Revaluation At 31.12.2010(Years) (RM)
Lot 8, Land Oil palm 2,750.2 - 10.02.2010 Leasehold 814,879Block 4, plantation 60 years,Semah expiringLand District in 2070
Lot 9, Land Oil palm 3,000 - 03.12.2009 Leasehold 1,007,191Block 26, plantation 60 years,Seredeng expiringLand District in 2069
Lot 161, Land Reforest 28.5 - 05.05.2009 Leasehold 114,397Block 27, research 60 years,Kemena station expiringLand District in 2069
Lot 174 & 175, Land Oil palm 6,598 - 26.10.2005 Leasehold 1,805,367Block 41 plantation 60 years,Kemena expiringLand District in 2065
Silas NCR Land Land Oil palm 9,491 - 28.01.2010 Title pending 4,858,746Development plantation issuanceArea KM40, Jalan Ulu Sebauh, Bintulu
A N N U A L R E P O R T 2 0 1 0 207
ANALYSIS OF SHAREHOLDINGS AS AT 31 MARCH 2011
Authorised Share Capital : RM1,000,000,000.00 comprising 1,000,000,000 shares of RM1.00 each.Issued and Paid-up Share Capital : RM257,517,444.00 comprising 257,517,444 shares of RM1.00 each.Classes of Shares : Ordinary shares of RM1.00 each.Voting Rights : One vote per ordinary share
No. of % of No. of % ofSize of Shareholdings Shareholders Shareholders Shares Held Issued Capital
1 - 99 54 2.28 1,828 0.00100 - 1000 747 31.52 308,176 0.121001 - 10000 1,077 45.44 3,913,968 1.5210001 - 100000 349 14,73 11,498,723 4.47100001 - 12865901 (*) 140 5.90 162,010,831 62.9612865902 and above (**) 3 0.13 79,584,518 30.93
Total 2,370 100.00 257,318,044¤ 100.00
Remarks : * - Less than 5% of issued holdings** - 5% and above of issued holdings¤ - Net of treasury shares
TOP THIRTY SHAREHOLDERS
No. Name of Shareholder No. of % ofShares Held Shareholdings
1. MOUNTEX SDN. BHD. 44,356,707 17.24
2. WAHAB BIN HAJI DOLAH 21,692,219 8.43
3. MOUNTEX SDN. BHD. 13,535,592 5.26
4. CITIGROUP NOMINEES (TEMPATAN) SDN. BHD. 12,374,620 4.81EMPLOYEES PROVIDENT FUND BOARD
5. UPAYA RAJANG SDN. BHD. 11,362,869 4.42
6. MAYBAN NOMINEES (TEMPATAN) SDN. BHD. 10,398,240 4.04PLEDGED SECURITIES ACCOUNT FOR ABDUL HAMED BIN SEPAWI
(51401139418A)
7. WOODHEAD SDN. BHD. 8,152,940 3.17
STATISTICS ON SHAREHOLDINGS
208 T A A N N H O L D I N G S B E R H A D 4 1 9 2 3 2 - K
209A N N U A L R E P O R T 2 0 1 0
TOP THIRTY SHAREHOLDERS (cont’d)
No. Name of Shareholder No. of % ofShares Held Shareholdings
8. CITIGROUP NOMINEES (TEMPATAN) SDN. BHD. 6,454,440 2.51EMPLOYEES PROVIDEND FUND BOARD (PHEIM)
9. MAYBAN NOMINEES (TEMPATAN) SDN. BHD. 5,520,000 2.15PLEDGED SECURITIES ACCOUNT FOR ABDUL HAMED BIN SEPAWI
(511234003338)
10. HSBC NOMINEES (ASING) SDN. BHD. 5,295,360 2.06EXEMPT AN FOR HSBC PRIVATE BANK (SUISSE) S.A. (SPORE TST AC CL)
11. WONG KUO HEA 4,580,107 1.78
12. KENANGA NOMINEES (TEMPATAN) SDN. BHD. 4,001,944 1.56PLEDGE SECURITIES ACCOUNT FOR WONG KUOK KAI
13. WAHAB BIN HAJI DOLAH 3,963,600 1.54
14. MALAYSIA NOMINEES (TEMPATAN) SENDIRIAN BERHAD 3,958,500 1.54GREAT EASTERN LIFE ASSURANCE (MALAYSIA) BERHAD (PAR 1)
15. HSBC NOMINEES (ASING) SDN BHD 3,952,560 1.54EXEMPT AN FOR JPMORGAN CHASE BANK, NATIONAL ASSOCIATION
(NORGES BK LEND)
16. GOLDMAKERS SDN. BHD. 3,728,160 1.45
17. MARK AVENUE SDN. BHD. 3,695,272 1.44
18. MAYBAN NOMINEES (TEMPATAN) SDN. BHD. 3,600,000 1.40PLEDGED SECURITIES ACCOUNT FOR ABDUL HAMED BIN SEPAWI
(411234800190)
19. PUBLIC NOMINEES (TEMPATAN) SDN. BHD. 3,260,520 1.27PLEDGED SECURITIES ACCOUNT FOR NGUI ING CHUANG (KKU)
20. TING SING HONG 3,214,600 1.25
21. ABB NOMINEE (TEMPATAN) SDN. BHD. 3,162,240 1.23PLEDGED SECURITIES ACCOUNT FOR WAHAB BIN HAJI DOLAH
(KUCHING)
22. WONG KUO HEA 2,967,315 1.15
STATISTICS ON SHAREHOLDINGS (cont’d)
210 T A A N N H O L D I N G S B E R H A D 4 1 9 2 3 2 - K
TOP THIRTY SHAREHOLDERS (cont’d)
No. Name of Shareholder No. of % ofShares Held Shareholdings
23. CHAI MIN KIAN 2,841,368 1.10
24. OSK NOMINEES (TEMPATAN) SDN. BERHAD 2,407,272 0.94PLEDGED SECURITIES ACCOUNT FOR ABDUL HAMED BIN SEPAWI
25. CHONG VUI TONG 2,299,368 0.89
26. TIONG SIE HIN @ TIONG SIE HEE 2,016,000 0.78
27. CITIGROUP NOMINEES (TEMPATAN) SDN. BHD. 1,898,620 0.74EMPLOYEES PROVIDENT FUND BOARD (HDBS)
28. HSBC NOMINEES (ASING) SDN. BHD. 1,600,000 0.62EXEMPT AN FOR MORGAN STANLEY & CO. INCORPORATED (CLIENT)
29. PERTUBUHAN KESELAMATAN SOSIAL 1,600,000 0.62
30. MALAYSIA NOMINEES (TEMPATAN) SENDIRIAN BERHAD 1,556,840 0.61GREAT EASTERN LIFE ASSURANCE (MALAYSIA) BERHAD (LGF)
Substantial Shareholders Number of Shares Held As At 31 March 2011Direct % Indirect %
Mountex Sdn. Bhd. 57,892,299 22.50 264,680 (a) 0.10Datuk Wahab Bin Haji Dolah 28,818,059(b) 11.20 66,672,847(c) 25.91Datuk Abdul Hamed Bin Haji Sepawi 24,122,582(d) 9.37 66,672,847(e) 25.91Employees Provident Fund Board 21,842,720(f) 8.29 - -Upaya Rajang Sdn. Bhd. 11,362,869 4.42 66,672,847(g) 25.91Dato Wong Kuo Hea 7,547,422 2.93 71,031,007(h) 27.60
(a) Deemed interested in its wholly owned subsidiary, Mountex Satu Sdn. Bhd. (holds 264,680 Shares or 0.10% interest in Ta Ann).
(b) Held 3,162,240 Shares through ABB Nominees (Tempatan) Sdn. Bhd.
(c) Deemed interested by virtue of his 15.55% and 24.5% interests in Mountex Sdn. Bhd., Woodhead Sdn Bhd (holds 8,515,868Shares or 3.31% interest in Ta Ann) and Mountex Satu Sdn. Bhd., a wholly owned subsidiary of Mountex Sdn. Bhd. (holds 264,680Shares or 0.10% interest in Ta Ann).
(d) Held 2,407,272 Shares through OSK Nominees (Tempatan) Sdn. Bhd., 19,518,240 Shares through Mayban Nominees (Tempatan)Sdn. Bhd. and 1,200,000 Shares through CIMB Nominees (Tempatan) Sdn. Bhd.
(e) Deemed interested by virtue of his 40.66% interest in Mountex Sdn. Bhd., 27% interest in Woodhead Sdn. Bhd. (holds 8,515,868Shares or 3.31% interest in Ta Ann) and Mountex Satu Sdn. Bhd., a wholly owned subsidiary of Mountex Sdn. Bhd. (holds 264,680Shares or 0.10% interest in Ta Ann).
(f) Held 21,242,720 Shares through Citigroup Nominees (Tempatan) Sdn. Bhd.
STATISTICS ON SHAREHOLDINGS (cont’d)
211A N N U A L R E P O R T 2 0 1 0
TOP THIRTY SHAREHOLDERS (cont’d)(g) Deemed interested by virtue of its 16.74% interest in Mountex Sdn. Bhd. and 23.98% interest in Woodhead Sdn. Bhd. (holds
8,515,868 Shares or 3.31% interest in Ta Ann) and Mountex Satu Sdn. Bhd., a wholly owned subsidiary of Mountex Sdn. Bhd.(holds 264,680 Shares or 0.10% interest in Ta Ann).
(h) Deemed interested by virtue of his 12.09% interest in Mountex Sdn. Bhd. and 40% interest in Woodhead Sdn. Bhd. (holds8,515,868 Shares or 3.31% interest in Ta Ann), 54.54% interest in Goldmakers Sdn. Bhd. (holds 3,728,160 Shares or 1.45%interest in Ta Ann), his family’s 40% interest in Yenmaster Sdn. Bhd. (holds 120,000 Shares or 0.05% interest in Ta Ann), 24.54%in Perkapalan Pelayaran Sdn. Bhd. (holds 474,000 Shares or 0.18% interest in Ta Ann) and Perkapalan Pelayaran Sdn. Bhd.’s37% interest in Riveron Shipping Sdn. Bhd. (holds 36,000 Shares or 0.01% interest in Ta Ann) and Mountex Satu Sdn. Bhd., awholly owned subsidiary of Mountex Sdn. Bhd. (holds 264,680 Shares or 0.10% interest in Ta Ann).
Directors’ Direct and Indirect Interests in the Company and its Related Corporations (other than wholly ownedsubsidiaries of the Company)
Directors Number of Shares Held As At 31 March 2011Direct % Indirect %
Datuk Abdul Hamed Bin Haji Sepawi 24,122,582(a) 9.37 66,672,847(b) 25.91Dato Wong Kuo Hea 7,547,422 2.93 71,031,007(c) 27.60Pui Chin Jang @ Pui Chin Yam 1,423,105 0.55 3,853,672(d) 1.50Sa’id Bin Hj Dolah 144 * - -Datuk Abang Hj Abdul Karim Bin Tun Abang Hj Openg 7,200 * - -
Dato’ Awang Bemee Bin Awang Ali Basah 10,800 * - -Chia Chu Fatt 12,000 * - -
* Less than 0.01%
(a) Held 2,407,272 Shares through OSK Nominees (Tempatan) Sdn. Bhd., 19,518,240 Shares through Mayban Nominees (Tempatan)Sdn. Bhd. and 1,200,000 Shares through CIMB Nominees (Tempatan) Sdn. Bhd.
(b) Deemed interested by virtue of his 40.66% interest in Mountex Sdn. Bhd., 27% interest in Woodhead Sdn. Bhd. (holds 8,515,868Shares or 3.31% interest in Ta Ann) and Mountex Satu Sdn. Bhd., a wholly owned subsidiary of Mountex Sdn. Bhd. (holds 264,680Shares or 0.10% interest in Ta Ann).
(c) Deemed interested by virtue of his 12.09% interest in Mountex Sdn. Bhd. and 40% interest in Woodhead Sdn. Bhd. (holds8,515,868 Shares or 3.31% interest in Ta Ann), 54.54% interest in Goldmakers Sdn. Bhd. (holds 3,728,160 Shares or 1.45%interest in Ta Ann), his family’s 40% interest in Yenmaster Sdn. Bhd. (holds 120,000 Shares or 0.05% interest in Ta Ann), 24.54%in Perkapalan Pelayaran Sdn. Bhd. (holds 474,000 Shares or 0.18% interest in Ta Ann) and Perkapalan Pelayaran Sdn. Bhd.’s37% interest in Riveron Shipping Sdn. Bhd. (holds 36,000 Shares or 0.01% interest in Ta Ann) and Mountex Satu Sdn. Bhd., awholly owned subsidiary of Mountex Sdn. Bhd. (holds 264,680 Shares or 0.10% interest in Ta Ann).
(d) Deemed interested by virtue of his 86.91% interest in Mark Avenue Sdn. Bhd. (holds 3,695,272 Shares or 1.43% interest in TaAnn), 28% interest in Isumart Sdn. Bhd. (holds 38,400 Shares or 0.01% interest in Ta Ann) and 20% interest in Yenmaster Sdn.Bhd. (holds 120,000 Shares or 0.05% interest in Ta Ann).
STATISTICS ON SHAREHOLDINGS (cont’d)
TOP THIRTY SHAREHOLDERS (cont’d)
Directors Number of Shares Held As At 31 March 2011Direct % Indirect %
Deemed interest in Borneo Tree Seeds & Seedlings Supplies Sdn. Bhd.:
Datuk Abdul Hamed Bin Haji Sepawi ) - - 1,220,000 61%Dato Wong Kuo Hea )
Deemed interest in Daro Oil Mill Sdn. Bhd.:
Datuk Abdul Hamed Bin Haji Sepawi ) - - 2 100%Dato Wong Kuo Hea )
Deemed interest in Eagle Forest Sdn. Bhd.:
Datuk Abdul Hamed Bin Haji Sepawi ) - - 300,000 60%Dato Wong Kuo Hea )
Deemed interest in Europalm Sdn. Bhd.:
Datuk Abdul Hamed Bin Haji Sepawi ) - - 1,000,000 100%Dato Wong Kuo Hea )
Deemed interest in Igan Oil Mill Sdn. Bhd.:
Datuk Abdul Hamed Bin Haji Sepawi ) - - 2 67%Dato Wong Kuo Hea )
Deemed interest in Multi Maximum Sdn. Bhd.:
Datuk Abdul Hamed Bin Haji Sepawi ) - - 850,000 85%Dato Wong Kuo Hea )
Deemed interest in Ta Ann Pelita Assan Plantation Sdn. Bhd.:
Datuk Abdul Hamed Bin Haji Sepawi ) - - 60 60%Dato Wong Kuo Hea )
Deemed interest in Ta Ann Pelita Durin Plantation Sdn. Bhd.:
Datuk Abdul Hamed Bin Haji Sepawi ) - - 1 50%Dato Wong Kuo Hea )
Deemed interest in Ta Ann Pelita Igan Plantation Sdn. Bhd.:
Datuk Abdul Hamed Bin Haji Sepawi ) - - 17,632,125 60%Dato Wong Kuo Hea )
STATISTICS ON SHAREHOLDINGS (cont’d)
212 T A A N N H O L D I N G S B E R H A D 4 1 9 2 3 2 - K
213A N N U A L R E P O R T 2 0 1 0
TOP THIRTY SHAREHOLDERS (cont’d)
Directors Number of Shares Held As At 31 March 2011Direct % Indirect %
Deemed interest in Ta Ann Pelita Kanowit Plantation Sdn. Bhd.:
Datuk Abdul Hamed Bin Haji Sepawi ) - - 60 60%Dato Wong Kuo Hea )
Deemed interest in Ta Ann Pelita Silas Plantation Sdn. Bhd.:
Datuk Abdul Hamed Bin Haji Sepawi ) - - 5,531,185 60%Dato Wong Kuo Hea )
Deemed interest in Ta Ann Tasmania Pty Ltd
Datuk Abdul Hamed Bin Haji Sepawi ) - - 46,812,210 88.32%Dato Wong Kuo Hea )
Deemed interest in Zumida (Padi) Sdn. Bhd.:
Datuk Abdul Hamed Bin Haji Sepawi ) - - 170,000 85%Dato Wong Kuo Hea )
STATISTICS ON SHAREHOLDINGS (cont’d)
As ordinary businesses:
1. To receive the Audited Financial Statements for the year ended 31 December 2010together with the Directors’ and Auditors’ Reports thereon.
2. To approve the Directors’ fees of RM612,000 for the year ended 31 December 2010 andthe payment thereof.
3. To re-elect the following Directors who retire in accordance with Article 63 of the Articlesof Association of the Company and, being eligible, have offered themselves for re-election:
(a) Datuk Abang Haji Abdul Karim Bin Tun Abang Haji Openg(b) Sa’id Bin Haji Dolah
4. To re-appoint Messrs. KPMG as auditors of the Company and to authorise the Directorsto fix their remuneration.
5. As special businesses:
To consider and, if thought fit, pass the following resolutions:
ORDINARY RESOLUTIONS
(i) Proposed renewal of authority for share buy-back
“THAT subject to the provisions of the Companies Act, 1965 (as may be amended,modified or re-enacted from time to time), the Company’s Articles of Association,the requirements of the Bursa Malaysia Securities Berhad (“Bursa Securities”) andall other applicable laws, rules, orders, requirements, regulations and guidelinesfor the time being in force or as may be amended, the Company be and is herebyauthorised to purchase on the market of the Bursa Securities and/or hold suchnumber of ordinary shares of RM1.00 each (“Shares”) in the Company (“ProposedShare Buy-Back”) as may be determined by the Directors of the Company(“Directors”) from time to time through Bursa Securities upon such terms andconditions as the Directors may deem fit, necessary and expedient in the interestof the Company provided that the total aggregate number of Shares purchased orto be purchased and/or held pursuant to this resolution shall not exceed ten percent(10%) of the total issued and paid-up share capital of the Company at the time ofpurchase and the maximum funds to be allocated by the Company for the purposeof the Proposed Share Buy-Back shall not exceed the total retained profit reserveand share premium of the Company at the time of purchase AND THAT, suchShares
RESOLUTION 1
RESOLUTION 2
RESOLUTION 3RESOLUTION 4
RESOLUTION 5
RESOLUTION 6
NOTICE OF ANNUAL GENERAL MEETING
NOTICE IS HEREBY GIVEN THAT the Fourteenth Annual General Meeting of Ta Ann Holdings Berhad will be heldat Igan Room, Hotel Tanahmas, Lot 277, Block 5, Jalan Kampung Nyabor, 96000 Sibu, Sarawak on Friday, 27 May2011 at 2.30 p.m. to transact the following businesses:
AGENDA
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NOTICE OF ANNUAL GENERAL MEETING (cont’d)
(i) Proposed renewal of authority for share buy-back (cont’d)
purchased are to be retained as treasury shares and distributed as dividends and/orresold on the market of the Bursa Securities or may subsequently be cancelledAND THAT the Directors be and are hereby authorised and empowered to do allacts and things and to take all such steps and to enter into and execute allcommitments, transactions, deed, agreements, arrangements, undertakings,indemnities, transfers, assignments and/or guarantees as they may deem fit,necessary expedient and/or appropriate in order to implement, finalise and givefull effect to the Proposed Share Buy-Back with full powers to assent to anyconditions, modifications, revaluations, variations and/or amendments, as may berequired imposed by any relevant authority or authorities AND FURTHER THAT theauthority hereby given will commence immediately upon passing of this ordinaryresolution and will continue to be in force until:
(a) the conclusion of the next annual general meeting (‘AGM’) at which time it willlapse, unless by resolution passed at a general meeting the authority isrenewed;
(b) the expiration of the period within which the next AGM of the Companysubsequent to the date it is required to be held pursuant to Section 143 (1) ofthe Companies Act, 1965 (the “Act”) (but shall not extend to such extension asmay be allowed pursuant to Section 143 (2) of the Act); or
(c) revoked or varied by resolution passed by the shareholders in general meeting;
whichever is the earlier, but not so as to prejudice the completion of the purchaseof its own shares by the Company before the aforesaid expiry date and, in any event,in accordance with the provisions of the guidelines issued by the Bursa Securitiesor any other relevant authorities.”
(ii) Proposed renewal of shareholder mandate and new shareholder mandate for
recurrent related party transactions of a revenue or trading nature (“ProposedShareholder Mandates”)
“THAT approval be and is hereby given to the Company and its subsidiaries to enterinto the recurrent related party transactions of a revenue or trading nature as setout in Appendix A of the Circular to Shareholders dated 5 May 2011 (“Circular”) withthe specific related parties mentioned therein which are necessary for the Group’sday-to-day operations, subject to the following:
(a) the transactions are in the ordinary course of business and are on normalcommercial terms which are not more favourable to the related parties thanthose available to the public and not to the detriment of the minorityshareholders; and
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(ii) Proposed renewal of shareholder mandate and new shareholder mandate forrecurrent related party transactions of a revenue or trading nature (“ProposedShareholder Mandates”) (cont’d)
(b) a disclosure of a breakdown of the aggregate value of recurrent transactionsconducted pursuant to the Proposed Shareholder Mandates during thefinancial year shall be made in the annual report, where the aggregate valueis equal to or exceeds the applicable threshold prescribed under paragraph10.09(1) of the Main Market Listing Requirement of Bursa Malaysia SecuritiesBerhad and amongst others, based on the following information:
• the type of recurrent transactions made; and • the names of the related parties involved in each type of the recurrent
related party transactions made and their relationship with the Company.
AND THAT such approval will continue to be in force until:-
(a) the conclusion of the next annual general meeting (‘AGM’) of the Companywhich time it will lapse, unless by resolution passed at a general meeting, theauthority is renewed;
(b) the expiration of the period within which the next AGM of the Companysubsequent to the date it is required to be held pursuant to Section 143 (1) ofthe Companies Act, 1965 (the “Act”) (but shall not extend to such extension asmay be allowed pursuant to Section 143 (2) of the Act); or
(c) revoked or varied by resolution passed by the shareholders in general meeting;
whichever is the earlier;
AND THAT the Directors of the Company be authorised to complete and do all suchacts and things as they may consider expedient or necessary to give effect to theProposed Shareholder Mandates.”
6. To consider any other ordinary business of which due notice shall have been given inaccordance with the Company’s Articles of Association and the Companies Act, 1965.
By Order of the Board
Augustine Siaw Meng Kun (MAICSA No. 7011241) Voon Jan Moi (f) (MAICSA No. 7021367) Company Secretaries
5 May 2011 Sibu, Sarawak.
NOTICE OF ANNUAL GENERAL MEETING (cont’d)
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NOTICE OF ANNUAL GENERAL MEETING (cont’d)
Notes:-
1. A member of the Company entitled to attend and vote at this meeting is entitled to appoint a proxy or proxiesto attend and vote in his stead. A proxy need not be a member of the Company and the provisions of Section149(1)(b) of the Companies Act, 1965 shall not apply to the Company.
2. The instrument appointing a proxy shall be in writing under the hand of the appointer or his attorney dulyauthorised in writing or if the appointer is a corporation either under its common seal or under the hand ofan officer or attorney duly authorised in writing.
3. The instrument appointing a proxy must be deposited at the registered office of the Company at No. 6, JalanRawang, 96000 Sibu, Sarawak not less than forty-eight (48) hours before the time set for holding the meetingor any adjournment hereof.
4. Explanatory Notes on Special Businesses
(a) Ordinary Resolution on Proposed Renewal of Authority for Share Buy-Back
The proposed Ordinary Resolution 6, if passed, will renew the authority for the Company to purchase upto ten per cent (10%) of the issued and paid-up ordinary share capital of the Company through BursaMalaysia Securities Berhad.
Details of the above proposal are as set out in the Statement to Shareholders dated 5 May 2011.
(b) Ordinary Resolution on Proposed Renewal of Shareholder Mandate and New Shareholder Mandate forRecurrent Related Party Transactions
The proposed Ordinary Resolution 7, if passed, will authorise the mandate for the Company and itssubsidiaries to enter into recurrent related party transactions of a revenue or trading nature as set outin the Circular to Shareholders dated 5 May 2011. Please refer to the said Circular for further information.
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1. Directors standing for re-election/re-appointment
The Directors who are standing for re-election at the Fourteenth Annual General Meeting of Ta Ann HoldingsBerhad are:
i) Datuk Abang Haji Abdul Karim Bin Tun Abang Haji Openg Resolution 3 ii) Sa’id Bin Haji Dolah Resolution 4
2. Details of Directors who are standing for re-election
The details of the Directors seeking re-election are set out in their respective profiles which appear on pages11 and 12 of the Annual Report.
3. Details of Attendance of Directors at Board Meetings
Five (5) Board of Directors’ Meetings were held during the financial year ended 31 December 2010.The attendance of the Directors is as follows:
No. of Meetings Attended
Datuk Abdul Hamed Bin Haji Sepawi 4/5Dato Wong Kuo Hea 5/5Sa’id Bin Hj Dolah 5/5Datuk Abang Abdul Karim Bin Tun Abang Haji Openg 5/5Dato’ Awang Bemee Bin Awang Ali Basah 5/5Pui Chin Jang @ Pui Chin Yam 4/5Chia Chu Fatt 5/5
4. Place, date and time of Fourteenth Annual General Meeting
The Fourteenth Annual General Meeting of the Company will be held at Igan Room, Hotel Tanahmas, Lot 277,Block 5, Jalan Kampung Nyabor, 96000 Sibu, Sarawak on Friday, 27 May 2011 at 2.30 p.m.
STATEMENT ACCOMPANYINGNOTICE OF ANNUAL GENERAL MEETING
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FORM OF PROXY
I/We (Name in full) (NRIC No.)
of (Address)
Being a member/members of TA ANN HOLDINGS BERHAD hereby appoint:
(Name in full)
(Address)
or failing him, (Name in full) of
(Address)
as my/our proxy to vote for me/us on my/our behalf, at the Fourteenth Annual General Meeting ofthe Company to be held at Igan Room, Tanahmas Hotel, Lot 277, Block 5, Jalan Kampung Nyabor96000 Sibu Sarawak on Friday, 27 May 2011 at 2.30p.m. or any adjournment thereof in respect ofmy/our holding of shares.
My/Our proxy is to vote on the Resolutions in the manner as indicated with an “X” in the appropriate spaces.If no specific direction as to voting is given, the proxy will vote or abstain from voting at his/her discretion.
RESOLUTIONS FOR AGAINST 1 Adoption of Financial Statements and Reports. 2 Proposed Payment of Directors’ Fees of RM612,000 for the year ending 31 December 2010. 3 Re-election of Datuk Abang Haji Abdul Karim Bin Tun Abang Haji Openg. 4 Re-election of Sa’id Bin Haji Dolah. 5 Re-appointment of auditors and authorisation for Directors to fix their remuneration. SPECIAL BUSINESSES 6 Proposed Renewal of Authority For Share Buy-Back. 7 Proposed Renewal of Shareholder Mandate and New Shareholder Mandate for Recurrent Related Party Transactions of a Revenue or Trading Nature. 8 Any other business of which due notice has been given.
Signed this _______ day of May 2011 Signature of Shareholder(s)
NOTES:1) A member of the Company entitled to attend and vote at this meeting is entitled to appoint a proxy or proxies to attend and vote
in his stead. A proxy need not be a member of the Company and the provision of Section 149(1)(b) of the Companies Act, 1965shall not apply to the Company.
2) The instrument appointing a proxy shall be in writing under the hand of the appointer or his attorney duly authorised in writingor if the appointer is a corporation either under its common seal or under the hand of an officer or attorney duly authorised inwriting.
3) The instrument appointing a proxy must be deposited at the registered office of the Company at No. 6, Jalan Rawang, 96000Sibu, Sarawak not less than forty-eight (48) hours before the time set for holding the meeting or any adjournment thereof.
FOLD HERE
FOLD HERE
Stamp
The Company SecretaryTA ANN HOLDINGS BERHAD (419232-K)
No. 6, Jalan Rawang 96000 Sibu, Sarawak