financial statements - Tanah Makmur Berhad

Transcription

CONTENTS
2 Notice of Annual General Meeting
6 Corporate Information
8 Group Financial Highlights
9 Group Structure
10 Chairperson’s Statement
16 Location of Operations
17 Business Activities of Tanah Makmur Berhad
22 Directors’ Profile
34 Profiles of Key Management
38 Audit Committee Report
46 Corporate Governance Statement
61 Statement on Risk Management and
Internal Controls
TANAH MAKMUR BERHAD
ON A PATH OF GROWTH & SUSTAINABILITY
(841938-U)
ON A PATH OF
GROWTH & SUSTAINABILITY
ANNUAL REPORT 2015
Despite the challenging economic times and uncertain
operating environment, Tanah Makmur continues to perform
well. Through the synergy of our plantation, milling and
property development, we are on a firm footing to continue
pursuing performance and operational improvements as well
as expansion opportunities to keep the Company on a path of
Growth & Sustainability.
ANNUAL REPORT 2015
THIS YEAR’S REPORT
INSIDE
64 Corporate Social Responsibility
66 Additional Compliance Information
71 Financial Calendar
71 Statement of Directors’ Responsibility in
Respect of The Annual Audited Financial Statements
73 Financial Statements
189 Analysis of Shareholdings by Range
190 Information on Substantial Shareholders
191 Directors’ Interest in Shares
192 List of Thirty Largest Shareholders
194 Material Properties Held by The Group
• Proxy Form
NOTICE OF
ANNUAL GENERAL MEETING
NOTICE IS HEREBY GIVEN that the Seventh Annual General Meeting
of Tanah Makmur Berhad (“Tanah Makmur” or “the Company”) will be
held on Friday, 27th May 2016 at 10.00 am at Zenith Room 6 & 7, Level
3, The Zenith Hotel, Jalan Putra Square 6, Putra Square, 25200 Kuantan,
Pahang Darul Makmur to transact the following business :
AGENDA
As Ordinary Business
1.To receive the Audited Financial Statements for the financial year ended 31 December 2015
together with the Reports of the Directors and Auditors thereon.
(Please refer to Note A)
Tanah Makmur Berhad (841938-U)
Annual Report 2015
2
2.To re-elect the following Directors each of whom retires pursuant to Article 95 of the
Company’s Articles of Association:
2.1YH Dato’ Cheong Keap Tai
Resolution 1
2.2 YH Dato’ Dr. Zaha Rina binti Zahari
Resolution 2
2.3 YH Dato’ Wan Bakri bin Wan Ismail
(Please refer to Note B)
Resolution 3
3.To consider and if thought fit, to pass the following as an Ordinary Resolution in accordance
with Section 129 of the Companies Act, 1965 :
“THAT YBhg Tan Sri Dato’ Sri Abdul Aziz bin Abdul Rahman, a Director retiring pursuant to
Section 129 (6) of the Companies Act, 1965 be and is hereby re-appointed a Director of the
Company to hold office until the next Annual General Meeting.”
(Please refer to Note C)
4.To approve the payment of Directors’ fees amounting to RM925,000 for the financial year
ended 31 December 2015.
Resolution 4
5.To re-appoint Messrs. Ernst & Young as Auditors for the ensuing year and to authorise the
Directors to fix their remuneration.
(Please refer to Note D)
Resolution 6
Resolution 5
As Special Business
To consider and if thought fit, to pass the following motion as an Ordinary Resolution :
6.General Authority For The Directors To Issue Shares Pursuant To Section 132D Of The
Companies Act, 1965
By Order of the Board
SUZILAH BINTI HAJI WAHID (LS 000585)
TEH FOO HOCK (MIA 10750)
Company Secretaries
Kuantan
28 April 2016
Notes on Proxy :
1.Only members whose names appear in the Record of Depositors on 20th May 2016 (General Meeting
Record of Depositors) shall be eligible to attend and vote at the meeting as well as for appointment of
proxy(ies) to attend and vote on his/her stead.
2.A member of the company entitled to attend and vote at the 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.
3.The instrument appointing a proxy shall be in writing under the hand of the appointer or his attorney duly
authorised or where the appointment is executed by a corporation, it must be either under seal or under
the hand of its attorney duly authorised. There shall be no restriction as to the qualification of the proxy. A
proxy appointed to attend and vote at a meeting of the Company shall have the same rights as the member
to speak at a meeting.
Resolution 7
3
Annual Report 2015
“That subject to the Companies Act, 1965, the Articles of Association of the Company
and the approvals from Bursa Malaysia Securities Berhad and other relevant government/
regulatory authorities, where such approval is necessary the Directors of the Company
be and are hereby empowered pursuant to Section 132D of the Companies Act, 1965, to
issue new ordinary shares of RM0.50 each in the Company at any time upon such terms and
conditions and for such purposes as the Directors may, in their absolute discretion deem fit
and expedient in the interest of the Company, provided that the aggregate number of shares
issued pursuant to this resolution does not exceed 10% of the issued and paid-up share
capital of the Company for the time being and that the Directors be and are also empowered
to obtain the approval for the listing of and quotation for the additional shares so issued on
the Bursa Malaysia Securities Berhad and that such authority shall continue in force until the
conclusion of the next Annual General Meeting of the Company.
NOTICE OF
ANNUAL GENERAL MEETING
4.A member shall be entitled to appoint not more than two (2) proxies to attend and vote at the same meeting
5.Where the holder or the authorised nominee shall be entitled to appoint not more than two (2) proxies,
or where an exempt authorised nominee appoints two (2) or more proxies to attend and vote at the same
meeting such appointment shall be invalid unless he specifies the proportion of his shareholdings to be
represented by each proxy.
6.Where a member of the Company is an authorised nominee as defined under the Securities Industry
(Central Depositories) Act, 1991 (“SICDA”), it may appoint at least one (1) proxy but not more than two (2)
proxies in respect of each Securities Account it holds with ordinary shares of the Company standing to the
credit of the said Securities Account.
7.Where a member of the Company is an exempt authorised nominee as defined under the SICDA which
holds ordinary shares in the Company for multiple beneficial owners in one securities account (“omnibus
account”), there is no limit to the number of proxies which the exempt authorised nominee may appoint in
respect of each omnibus account it holds. An exempt authorised nominee refers to an authorised nominee
deﬁned under the SICDA which is exempted from compliance with the provisions of subsection 25A(1) of
SICDA.
Annual Report 2015
4
8.The instrument of proxy must be deposited at the Registered Address of the Company at Bangunan Tanah
Makmur, No. 1, Jalan Besar, 25000 Kuantan, Pahang Darul Makmur at least forty eight (48) hours before
the time set for holding the meeting or any adjournment thereof.
Explanatory Notes on the Ordinary Business / Special Business:
Item 1 of the Agenda : Note A
Agenda item no. 1 is meant for presentation and discussion only as under the provisions of Section 169(1) of the
Companies Act, 1965, the Audited Financial Statements do not require the formal approval of shareholders and
hence, the matter will not be put forward for voting.
Item 2 of the Agenda : Note B
YH Dato’ Cheong Keap Tai, YH Dato’ Dr. Zaha Rina binti Zahari and YH Dato’ Wan Bakri bin Ismail are standing for
re-election as Director of the Company and being eligible, have offered themselves for re-election at this AGM.
Profiles of the above-named Directors are set out in the section entitled “Profile of Directors” on pages 22 to 32
of the Annual Report.
Item 3 of the Agenda : Note C
The re-appointment of YBhg Tan Sri Dato’ Sri Abdul Aziz bin Abdul Rahman who has attained the age of 70 years,
as Director of the Company to hold office until the conclusion of the next AGM, shall take effect if the Ordinary
Resolution 4 is passed by a majority of not less than three-fourths (3/4) of such members as being entitled to
vote in person or by proxy at this AGM.
Profiles of the above-named Director is set out in the section entitled “Profile of Directors” on pages 22 to 32
of the Annual Report.
Item 5 of the Agenda : Note D
The Audit Committee and the Board have considered the re-appointment of Messrs Ernst & Young as Auditors
of the Company and collectively agreed that Messrs Ernst & Young has met the relevant criteria prescribed by
Paragraph 15.21 of the Main Market Listing Requirements of Bursa Malayia Securities Berhad.
Item 6 of the Agenda
Authority To Issue Shares Under Section 132D
* The general mandate for issue of shares is a new mandate.
The general mandate sought will enable the Directors of the Company to issue and allot shares, including but not
limited for further placing of shares for purpose of funding investment(s), working capital and/ or acquisitions,
at any time to such persons in their absolute discretion without convening a general meeting as it would be both
costly and time-consuming to organise a general meeting.
5
Annual Report 2015
The ordinary resolution proposed under Agenda 6 if passed, will give the Directors of the Company, from the
date of the 7th Annual General Meeting, authority to issue and allot shares up to 10% of the issued and paid-up
share capital of the Company for such purposes as the Directors in their absolute discretion consider to be in the
interest of the Company, without having to convene a General Meeting. This authority unless revoked or varied
at a General Meeting will expire at the next Annual General Meeting.
CORPORATE
INFORMATION
BOARD OF DIRECTORS
AUDIT COMMITTEE
Non-Independent Non-Executive Chairman
YAM Tengku Tan Sri (Dr.) Hajjah Meriam binti Sultan Haji
Ahmad Shah
Chairman
YH Dato’ Cheong Keap Tai
Managing Director
YM Tengku Dato’ Zubir bin
Tengku Dato’ Ubaidillah
YH Dato’ Thavalingam A/L C. Thavarajah
Non-Independent Non-Executive Director
YM Tengku Dato’ Sri Ahmad Faisal bin Tengku Ibrahim
REMUNERATION COMMITTEE
YH Dato’ Wan Bakri bin Wan Ismail
Chairman
YBhg Tan Sri Dato’ Sri Abdul Aziz bin Abdul Rahman
YM Tengku Dato’ Sri Uzir bin Tengku Dato’ Ubaidillah
(Alternate Director To YM Tengku Dato’ Sri Ahmad Faisal
bin Tengku Ibrahim)
Members
6
Annual Report 2015
Members
YH Dato’ Dr. Zaha Rina binti Zahari
Tuan Haji Abdul Rahim bin Abdullah
(Alternate Director To YH Dato’ Wan Bakri bin Wan Ismail)
NOMINATING COMMITTEE
Independent Non-Executive Director
Chairman
Members
Puan Darawati Hussain binti Dato’ Seri Abdul Latiff
RISK MANAGEMENT COMMITTEE
(Established on 24 February 2016)
Chairman
Members
YM Tengku Dato’ Zubir bin Tengku Dato’ Ubaidillah
COMPANY SECRETARIES
Suzilah binti Haji Wahid
(LS 000585)
Teh Foo Hock
(MIA 10750)
AUDITORS
Ernst & Young
Unit 10 D-J, Level 10, Menara Zenith
Jalan Putra Square 6
25200 Kuantan
Pahang Darul Makmur
Tel : 09-5157500
Fax : 09-5157600
SHARE REGISTRAR
Tricor Investor & Issuing House
Services Sdn Bhd
Unit 32-01, Level 32, Tower A
Vertical Business Suite, Avenue 3,
Bangsar South, No. 8, Jalan Kerinchi
59200 Kuala Lumpur
Tel : 03-27839299
Fax : 03-27839222
Email : is.enquiry@my.tricorglobal.com
REGISTERED OFFICE
PRINCIPAL BANKERS
CIMB Islamic Bank Berhad
Jalan Bank Kuantan
Bangunan BCB
Lot 32, Jalan Bank
25000 Kuantan
Pahang Darul Makmur
Tel : 09-5162099
Fax : 09-5164116
STOCK EXCHANGE LISTING
Main Market of Bursa Malaysia Securities Berhad
Listed on 17 July, 2014
Share code : 5251
7
Annual Report 2015
Bangunan Tanah Makmur
No. 1, Jalan Besar
25000 Kuantan
Pahang Darul Makmur
Tel : 09-5148866 (5lines)
Fax : 09-5148822 / 09-5147733
E-mail : tm@tanahmakmur.com
www.tanahmakmur.com
GROUP
FINANCIAL HIGHLIGHTS
2015
RM’000
2014
RM’000
2013
RM’000
Revenue
404,668
388,951
243,486
EBITDA
114,367
112,007
75,639
Profit Before Tax
100,872
97,399
61,682
73,024
72,401
44,691
424,247
418,016
323,486
RM
RM
RM
1.07
1.12
0.18
0.18
‘14398,159,592
372,089,592
Profit After Tax
Shareholders Equity
Net Assets Per Share
‘15
Net Earnings Per Share
Weighted average No. of Shares Issue (No. of Units)
Notes: EBITDA – Earnings Before Interest, Tax, Depreciation and‘13
Amortisation
404,668
0.93
0.13
‘15
388,951
346,019,592
‘14
243,486
‘13
Annual Report 2015
8
REVENUE
(RM’000)
EBITDA
(RM’000)
‘15
‘15
404,668
404,668
‘15
‘15
114,367
100,872
100,872
‘15
‘14
‘14
388,951
388,951
‘14
‘14
112,007
97,399
97,399
‘14
‘13
‘13
243,486
243,486
‘13
‘13
75,639
61,682
61,682
‘13
PROFIT BEFORE TAX
(RM’000)
SHAREHOLDERS’ EQUITY
(RM’000)
8
‘15
‘15
114,367
100,872
114,367
‘15
‘15
424,247
424,247
1
‘14
‘14
112,007
97,399
112,007
‘14
‘14
418,016
418,016
6
‘13
‘13
75,639
61,682
75,639
‘13
‘13
323,486
323,486
7
‘15
424,247
7
‘14
418,016
‘13
323,486
GROUP
STRUCTURE
Tanah Makmur Group of Companies are mainly involved in Plantation and
Property Development as follows;-
Plantation
100%
100%
100%
60%
60%
KURNIA SETIA
SDN BHD
ALUR
CEMERLANG
SDN BHD
SRI JELUTUNG
PALM OIL MIL
SDN BHD
ALUR
GEMILANG
SDN BHD
ALUR SERI
SDN BHD
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Annual Report 2015
70%
ALUR LESTARI
SDN BHD
Property Development
100%
100%
65%
60%
KOTASAS
SDN BHD
KREATIF SELARAS
LAND SDN BHD
KREATIF SINAR
GABUNGAN
SDN BHD
KREATIF SELARAS
MINING
SDN BHD
100%
100%
65%
60%
KURNIA SETIA
ENGINEERING
SDN BHD
KURNIA SETIA
TRADING
SDN BHD
KOTASAS
OMNI
SDN BHD
TANAH MAKMUR
KOTASAS
SDN BHD
CHAIRPERSON’S
STATEMENT
Annual Report 2015
10
Dear valued shareholders,
On behalf of the Board of Directors, it is my pleasure to present the Annual
Report and Audited Financial Statement of Tanah Makmur Berhad (hereinafter
referred to “TMB” or “Group”) for the financial year ended (FYE) 31st December
2015.
“Our yield per hectare for the year 2015
was 19.32 metric tonnes per hectare,
much better than the industry average
scale of 18.33 metric tonnes per hectare
for Peninsular Malaysia.”
I am pleased to announce that our Group’s
performance has improved in our main
business segments that are plantation and
property development despite a difficult and
challenging year. The Group’s consolidated
revenue and profit before tax recorded a slight
increase to RM404.7 million and RM100.9
million, respectively, as compared to RM388.9
million and RM97.4 million, in the preceding
FYE 31 December 2014.
The revenue from the plantation business
decrease from RM193.6 million in FYE 2014
to RM187.8 million in FYE 2015 as a result of
unfavourable weather conditions and lower
average selling price of Crude Palm Oil (CPO)
as well as Palm Kernel (PK) in FYE 2015. The
average selling price of CPO was at an average
of RM2,159 per metric tonne as compared
to RM2,389 per metric tonne in 2014. PK’s
average selling price was lower at RM1,598 per
metric tonne in 2015 compared to RM1,698
per metric tonne in 2014.
For the year ended 31 December 2015,
profit attributable to equity holders stood at
RM53.6 million; a slight decrease from RM53.9
million registered in FYE 2014 resulting in a
reduction in the earnings per share of 13.42
sen as compared to 17.13 sen achieved in the
previous year.
On the milling business, the Group had
succeeded in realising its palm oil mill
upgrading capacity from 30 tonne per hour to
45 tonne per hour in 2015. With such increased
capacity, TMB will continue to benefit from oil
yield improvement and consequently improve
its profitability.
PLANTATION
The Group’s production of Fresh Fruit Bunches
(FFB) for the year 2015 stood at 207,063 metric
tonnes (2014 : 207,947 metric tonnes).
The Group operates 13 plantations in Pahang
measuring an area of 17,969.06 ha. As at 31
December 2015, we have planted 97% or
16,165.47 ha out of the total plantable area
of 16,657.76 ha, out of which 33.72% are
immature, 15.42% are young mature (4-8
years), 33.37% are prime mature (9-18 years)
and 17.49% are old mature (19-25 years).
Yield per hectare for the year 2015 was 19.32
metric tonnes per hectare in comparison to
19.95 metric tonnes per hectare in year 2014
mainly due to new areas coming into maturity
which typically have lower yield. However, our
yield is much better than the industry average
scale of 18.77 metric tonnes per hectare
for Peninsula Malaysia. (Source from MPOB
statistic 2015)
REVENUE
RM
404.7 million
2014: RM388.9 million
PROFIT BEFORE TAX
RM
100.9 million
2014: RM97.4 million
PALM OIL MILL
50%
Capacity Upgrade
45 tonne per hour
11
Annual Report 2015
FINANCIAL PERFORMANCE
CHAIRPERSON’S
STATEMENT
Also, the industry faced continuous challenges
wherein the house buyers faced stringent
terms and stricter condition for end-financing.
Notwithstanding this, the sales’ outlook seems
very promising and positive to our existing
portfolio and we look forward for more
property launches as planned for 2016.
Annual Report 2015
12
PROPERTY DEVELOPMENT
207,063
metric tonnes
Fresh Fruit
Brunches
In 2nd Quarter of 2015, our property arm,
KotaSAS Sdn Bhd has launched its first
exclusive and premier units comprises of 2½
storey bungalow, double storey semi-detached,
double storey terrace and single storey semidetached totalling 190 units with a total gross
development value of RM117.6 million. The
development of all these units took place at
a very scenic and strategic location fronting
one of KotaSAS’s Lake. As of to date, 61% take
up rate has been achieved with a total sales
value of RM72.0 million. Whilst, KotaSAS had
also accomplished more than 50% sales of
the 27 units commercial shop lots; launched
previously in 4th Quarter 2014 with gross
development value of RM37.9 million, recorded
a sales value worth of RM16.8 milllion.
For the period under review, property
development segment contributed RM229.6
million and RM80.6 million towards the Group’s
revenue and profit before tax, respectively; a
reduction from RM210.7 million and RM71.0
million recorded in year 2014.
KOTASAS Development
Launched
190 units
in Q2 2015 with RM117.6 GDV
61% take up rate
Sales Value: RM72.0 million
50%
sale of
Commercial
Shop Lots
PROSPECTS AND OUTLOOK FOR 2016
Our Group is committed to sustainability
initiatives, which have been an integral part of
our way of doing business.
The slowdown in the world economic activity,
the declining crude oil prices and competition
from other edible oils amongst others, had
inadvertently caused a downtrend in the
commodity’s CPO price in 2015. Softening of
demand from China and the other traditional
consumer countries is expected to continue
into 2016. Nevertheless, prices for palm oil
are showing a steady increase due to decline
in global production arising from unfavourable
weather conditions namely El Nino.
In January 2015, TMB Group had, via its whollyowned subsidiaries, Sri Jelutung Palm Oil
Sdn Bhd (SJPOM), embarked on a renewable
energy generation project which vide the
joint venture arrangement with Cenergi Sea
Sdn Bhd, a subsidiary of Khazanah Nasional
Berhad, for the development of a biogas plan
adjacent to our existing palm oil mill at Sri
Jelutung, Pekan for the purpose of building,
commissioning, operating and maintenance
of a biogas-to-power facility derived from
Palm Oil Mill Effluent (POME) to convert the
resultant methane gas produced therefrom
to generate ‘green energy’ electrical power
to Tenaga Nasional Berhad (TNB) by way of
connection to the national grid as required by
TNB, approved under the Sustainable Energy
Development Authority Malaysia (SEDA)
programme and under the Renewable Energy
Act 2011.
13
Annual Report 2015
SUSTAINABILITY DEVELOPMENT
CHAIRPERSON’S
STATEMENT
We will continue to seek additional landbanks
for strategic expansion of our oil palm
plantations. Our new Ulu Lepar plantation
totalling 1,069.67 hectares has been fully
planted by April 2016.
Further, as an added-value activity to the
Group, as mandated by the Board, we
commenced reprocessing and recycling the
Palm Oil Mill waste Empty Fruit Bunches
(EFB) into natural compost fertilizer in 2015.
The potential earnings from proceed of this
compost fertilizer is expected in 2nd Quarter
2016.
Annual Report 2015
14
Marked in our calendar year 2016, we aim to
launch more residential property projects
known as Evergreen Homes, an exquisite living
for the privileges, comprise of Precinct 5 Phase
II & III and Precinct 7 Phase I, with development
components consist of 739 units single storey
semi-detached, single storey terrace, double
storey semi-detached and double storey
terrace with an estimated gross development
value totalling RM275.27 million.
Overall, our Group’s performance has shown
increase in revenue and profit before tax.
The Group aims to stay prudent, resilient
and cautiously optimistic about our future
prospects and continue to prosper years ahead.
DIVIDEND
Our Group is committed to honouring the
dividend policy to reward the shareholders
and is clearly evidenced by the good dividend
payout adopted by TMB. For the financial year
2015, the Board had declared on a single tier
interim dividend of 6 sen per share payable in
May 2015 and subsequently, a final single tier
interim dividend of 6 sen per share which was
duly paid in September 2015.
IN APPRECIATION
On behalf of the Board of Directors, I thank
the committed management and staff of Tanah
Makmur Berhad whose excellent dedication
has continued in pursuit of enhancing the
Group’s reputable achievement to higher
sustainability level. I would like to extend my
sincere appreciation and heartfelt thanks to our
business associates and partners, government
agencies and authorities, regulatory bodies,
bankers and legal advisers for their assistance,
2015 Total Dividend
12 sen per share
support and guidance that are essential for the
growth of the Group. I would also like to give a
big note of thanks to our valued shareholders
for their unwavering commitment, support and
confidence towards the Company.
Last but not least, I wish to take this
opportunity to acknowledge the resolute
support, prudent counsel and perceptive
insights extended to me by my fellow Board
Members throughout this eventful year. We
shall honour the responsibilities that all our
esteemed shareholders have entrusted to us in
high regards and strive for better performance
as well as to steer the Group to scale greater
heights.
YAM Tengku Tan Sri (Dr.) Hajjah Meriam
binti Sultan Haji Ahmad Shah
Chairperson
15
Annual Report 2015
Thank you.
LOCATION OF
OPERATIONS
PERLIS
KEDAH
PENANG
KELANTAN
TERENGGANU
16
Annual Report 2015
PERAK
CAMERON
HIGHLANDS
Ladang Sungai
Selama Lanar
KUALALIPIS
JERANTUT
Ladang
Empang Jaleh
Ladang
Sri Telang
PAHANG
Ladang
Alur Seri
KUANTAN
RAUB
Ladang
Ulu Lepar
Ladang
Lembah Klau
MARAN
TEMERLOH
SELANGOR
BENTONG
FEDERAL TERRITORY
Ladang
Aur Gading
PEKAN
Ladang
Paloh Hinai
Ladang
Kg. Bongsu
Ladang
Charuk Puting
Ladang
Bukit Goh
Sri Jelutung
Ladang
Sg. Sering Palm Oil Mill
Ladang
Sri Jelutung
BERA
NEGERI SEMBILAN
LEGEND
ROMPIN
MALACCA
Plantation Location
Milling Location
Development Location
JOHORE
BUSINESS ACTIVITIES OF
TANAH MAKMUR BERHAD
PLANTATIONS
The oil palm plantation business is our Group’s
core activity. Our oil palm plantation activities
are carried out by Tanah Makmur Berhad,
Alur Gemilang Sdn Bhd, Alur Seri Sdn Bhd, Sri
Jelutung Palm Oil Mill Sdn Bhd and Alur Lestari
Sdn Bhd. As of to date, our Group have 13
plantation estates in the State of Pahang with
a total land area of 17,969.06 ha comprising
11,633.19 ha that we own and 6,335.87 ha of
LKPP – leased land.
Below are the statistics for our plantation
division
13
PLANTATION
ESTATES
TMB Group Total Hectare Statement as at 31 December 2015
2015
(ha)
2014
(ha)
2013
(ha)
Total Hectare (ha) according to
Land Title
17,969.06
17,969.06
17,969.06
Total Planted
16,165.47
15,363.47
13,529.57
Matured
10,715.17
10,424.85
11,387.71
Immature
5,450.30
4,938.62
2,141.86
2015
2014
2013
207,062.84
207,947.04
232,605.06
19.32
19.95
20.43
Total FFB (m/t)
Yield/ha (m/t)
Annual Report 2015
17
BUSINESS ACTIVITIES OF
TANAH MAKMUR BERHAD
OIL MILL
Our oil mill operation is under Sri Jelutung
Palm Oil Mill Sdn Bhd (SJPOM). SJPOM is a
100% subsidiary of Tanah Makmur Berhad. The
principal activities of SJPOM are production
of crude palm oil (CPO) and cultivation of oil
palms. Its mill capacity has been upgraded
to 45tph. Having our own palm oil mill, we
would have a better control over the milling
process, which in turn will give us a higher OER
obtained from our palm oil mill, compared to
the EOR used in determining the price paid for
purchase of FFB. SJPOM began its operations
in July 2012.
Below are the performance statistics for
SJPOM since it began its operation.
Annual Report 2015
18
SJPOM Performance
45tph
MILL
CAPACITY
2015
2014
2013
FFB (m/t)
228,481.56
225,741.86
158,533.01
CPO (m/t)
45,089.45
45,072.26
31,676.18
PK (m/t)
12,285.41
13,482.75
9,465.26
OER (%)
19.73
19.97
19.98
KER (%)
5.38
5.97
5.97
Notes:
FFB – Fresh Fruit Bunches, CPO – Crude Palm Oil, PK – Palm Kernel, OER – Oil Extraction Rate,
KER – Kernel Extraction Rate
DEVELOPMENT AND CONSTRUCTION
TOTAL UNITS
We began our property development with
residential properties. Our initial commercial
properties was launched in December 2014.
Below are the KotaSAS sales statistics.
19
2015
2014
2013
Total Units
190
360
348
Total Unit Sold
118
349
278
95,392,941.97
129,648,782.00
100,998,480.00
BUNGLOW/
DSSD/DSLH/
SSSD
SSLH/SSSD/
SHOP
DSLH/SSSD/
DSSD/2.5SD
Sales Revenue (RM)
Type
Notes:
2.5SD – 2½ Storey Semi Detached
SSSD – Single Storey Semi Detached
DSSD – Double Storey Semi Detached
SSLH – Single Storey Link House
DSLH – Double Storey Link House
Annual Report 2015
190
Our construction and property development
activities are under KotaSAS Sdn Bhd
(KotaSAS). KotaSAS was set up to develop
1,500 acres of TMB existing plantation land
known as Ladang Bukit Goh into a residential
and commercial properties. It is situated 15
minutes from Kuantan town. The construction
and development of the township began in
2010.
RENEWING VALUE
IN GROWTH
We strive to ensure a sustainable supply of FFB to
support our milling activities. We plan to do 1,378.7
ha of replanting in Ladang Charuk Puting and Ladang
Lembah Klau between 2015-2018, while targeting new
plantings of 1,119.67 ha in the plantation estates of
Ladang Alur Seri and Ladang Ulu Lepar.
DIRECTORS’
PROFILE
YAM Tengku Tan Sri (Dr.)
Hajjah Meriam binti
Sultan Haji Ahmad Shah
Chairman, Non-Independent
Non-Executive Director
Annual Report 2015
22
YAM Tengku Tan Sri (Dr.) Hajjah Meriam
binti Sultan Haji Ahmad Shah aged 61 is
the Chairman and a Non-Independent NonExecutive Director of the Company. Tengku
Tan Sri (Dr.) Hajjah Meriam was conferred an
Honorary Doctorate of Leadership in Social
Development from Lim Kok Wing University in
2013 for her distinguished social contribution.
She started her career as the Executive Vice
Chairman of T.A.S Industries Sdn Bhd on
1 September 1990. She then joined the Board
of Kurnia Setia Berhad on 27 June 2005 until
27 May 2011.
Subsequent to the Privatisation of Kurnia
Setia, YAM Tengku Tan Sri (Dr.) Hajjah Meriam
assumed the position of Deputy Chairman
of Tanah Makmur on 31 January 2011 and
thereafter as the Chairman on 24 September
2013. Currently, she also sits on the board of
directors of various private limited companies
and several voluntary organisations.
YAM Tengku Puteri attended all four (4) Board
Meetings of the Company held during the
financial year ended 31 December 2015.
YM Tengku Dato’ Zubir bin
Managing Director
YM Tengku Dato’ Zubir bin Tengku Dato’
Ubaidillah aged 53 was appointed to the Board
on 27 October 2010 and has been the Managing
Director of the Company since 30 November
2010. He graduated with a Bachelor of Science
(Computer Science) from California State
University, Chico, USA in 1986. YM Tengku
Dato’ Zubir started his career in 1986 with
Petroliam Nasional Berhad (“PETRONAS”) as
an Information System Executive. He was then
promoted to the position of Head of Computer
Operation in PETRONAS. In 1988, he joined
the Road Builder (M) Holdings Berhad’s
group of companies as the Corporate Affairs
Manager and was appointed as their Group
General Manager, property division in 1994 to
1998. From 1998 to 2004, he was involved in
his own private businesses which include the
construction of East Coast Expressway, trading
in construction materials and quarrying. He
joined Kurnia Setia Berhad on 1 July 2005 as the
General Manager of Corporate Development
and on 1 January 2006 he was appointed as
the Chief Operating Officer. On 8 November
2008, he assumed the position of Managing
Director of Kurnia Setia Berhad. Subsequent
to the Privatisation of Kurnia Setia Berhad in
2010, YM Tengku Dato’ Zubir was transferred
to Tanah Makmur Berhad and assumed the
current position as the Managing Director of
Tanah Makmur Berhad. Currently, he is the
Chairman, Executive Director and a director
of various subsidiaries within Tanah Makmur
Group of Companies and hold directorship in
several private limited companies.
YM Tengku Dato’ Zubir attended three (3) out
of four (4) Board Meetings held during the
Annual Report 2015
23
DIRECTORS’
PROFILE
YM Tengku Dato’ Sri Ahmad Faisal bin
Tengku Ibrahim
Annual Report 2015
24
YM Tengku Dato’ Sri Ahmad Faisal bin Tengku
Ibrahim aged 50 was appointed as a NonIndependent Non-Executive Director on
31 January 2011. Tengku Dato’ Sri Ahmad
Faisal is a member of the Remuneration
and Nominating Committee. He is also the
Chairman of Kreatif Selaras Mining Sdn Bhd
and a Director of Tanah Makmur KotaSAS Sdn
Bhd, subsidiaries of Tanah Makmur Berhad. He
graduated with a Bachelor of Science (Hons)
Degree from the London School of Economics,
United Kingdom in 1988. He began his career
in 1988 as a dealers’ representative with RHB
Securities Berhad until 1990 and thereafter
with PB Securities Berhad from 1991 to 1995.
He assumed the position as a Chief Executive
Officer in Kitaran Ventures Sdn Bhd from 1997
to 2000. He also held directorships in ING Bhd
from 1994 to 2012, Ekovest Berhad from 1995
to 1998, Nanyang Press Holdings Berhad from
1996 to 2001, Putrajaya Perdana Berhad from
2008 to 2009 and EON Capital Bhd from 2010
to 2011. Currently, he sits on the board of
directors of several private limited companies.
YM Tengku Dato’ Sri Ahmad Faisal attended all
four (4) Board Meetings of the Company held
during the financial year ended 31 December
2015.
YH Dato’ Wan Bakri bin Wan Ismail aged 61
was appointed as a Non-Independent NonExecutive Director on 3 December 2013.
He is the representative from LKPP Negeri
Pahang. He graduated with a Bachelor of
Social Science majoring in Political Science
from Universiti Sains Malaysia in 1994. He
started his career with LKPP as a supervisor
in 1980 and was then promoted as Executive
Officers of Administration of LKPP in 1994.
He was appointed as Administration Manager
in 2002 and as Finance Manager in 2010.
He assumed the position of Deputy General
Manager of LKPP in 2011 until his promotion
to the position of General Manager in 2014.
Currently, YH Dato’ Wan Bakri also sits on the
Board of Directors of Astral Asia Berhad, Far
East Holdings Berhad and hold directorship
in various subsidiaries of LKPP. Dato’ Wan
Bakri has more than 30 years of exprerience in
agriculture industry primarily in the field of oil
palm.
YH Dato’ Wan Bakri attended three (3) out of
four (4) Board Meetings of the Company held
2015.
Annual Report 2015
25
DIRECTORS’
PROFILE
YBhg Tan Sri Dato’ Sri Abdul Aziz
bin Abdul Rahman
Annual Report 2015
26
YBhg Tan Sri Dato’ Sri Abdul Aziz bin Abdul
Rahman aged 70 was appointed to the Board
as an Independent Non-Executive Director
on 3 December 2013. Tan Sri Dato’ Sri Abdul
Aziz is the Chairman of the Remuneration
Committee. He graduated with a Bachelor
of Commerce from University of New
South Wales, Sydney, Australia in 1970. He
is a member of the Malaysian Institute of
Certified Public Accountants (MICPA) and
the Malaysian Institute of Accountants (MIA).
He was a consultant with Price Waterhouse &
Co (Sydney) Australia from 1969 to 1972. He
then joined Malaysian Airlines System Berhad
as Finance Manager from 1972 to 1981.
Soon after that, he assumed the position of
Managing Director of Bank Kerjasama Rakyat
Malaysia Berhad (now known as Bank Rakyat
Berhad) from 1981 to 1982.
He has served as Chairman and Board member
of several government institutions before
venturing into politics and public service as the
Pahang State Assemblyman, State Executive
Councillor and Deputy Chief Minister of Pahang.
He was a Senator of Malaysian Parliament
for a maximum period of two terms. Tan Sri
Dato’ Sri Abdul Aziz held directorship in the
Federal Land Development Authority (FELDA)
from 1986 to 1991, Chairman of Mentiga
Corporation Berhad from 1989 to 1993 and
the Chairman of Far East Holdings Berhad from
1991 to 1994. In the field of education, Tan Sri
Dato’ Sri Abdul Aziz also sits on the Board of
University Malaysia Pahang and International
Islamic University Malaysia. Currently, Tan
Sri Dato’ Sri Abdul Aziz sits on the board of
directors of Affin Islamic Bank, Chuan Huat
Resources Berhad, Asian Healthcare Group
Berhad and various private limited companies.
YBhg Tan Sri Dato’ Sri Abdul Aziz attended
three (3) out of four (4) Board Meetings held
2015.
YH Dato’ Cheong Keap Tai aged 67 was
appointed to the Board as an Independent
Non-Executive Director on 3 December
2013. Dato’ Cheong is the Chairman of
Audit Committee and also a member of the
Remuneration Committee. He graduated
with a Bachelor of Accountancy from the
National University of Singapore in 1973. He
is a Chartered Accountant and a member of
Malaysian Institute of Accountants (MIA), a
member of the Malaysian Institute of Certified
Public Accountants (MICPA) and a member
of the Malaysian Institute of Chartered
Secretaries and Administrators (MAICSA). He
is also a member of the Chartered Tax Institute
of Malaysia (CTIM), a member of the Institute
of Co-operatives Auditors and a Licensed Tax
Agent. He began his career as a member of
the audit staff in Coopers & Lybrand, Malaysia
in 1974 to 1986 and subsequently as the
Executive Director and Partner of Coopers &
Lybrand in 1986 to 1988.
Upon its merger with Price Waterhouse, he
was the Executive Director and Partner of
Pricewaterhouse Coopers and Chairman of
the Governance Board of Pricewaterhouse
Coopers until his retirement in December
2003. He held directorship in Cement
Industries of Malaysia Berhad from 2001 to
2009, Opus Group Berhad from 2007 to 2009
and Opus International Group Plc from 2001
to 2007. Currently, he is a Partner of Ash’ari
Cheong Chartered Accountants and hold
directorship in YTL Corporation Berhad, YTL
Land & Development Berhad, YTL e-Solution
Berhad, Gromutual Berhad and several private
limited companies.
YH Dato’ Cheong attended all four (4) Board
Annual Report 2015
27
DIRECTORS’
PROFILE
Annual Report 2015
28
YH Dato’ Dr. Zaha Rina binti Zahari aged 54
was appointed to the Board as an Independent
Non-Executive Director on 3 December
2013. Dato’ Dr. Zaha Rina is a member of
the Audit Committee. She obtained her BA
(Hons) Accounting and Finance from Leeds
Metropolitan University, United Kingdom in
1984, a Master of Business Administration from
University of Hull, United Kingdom in 1991
and a Doctorate in Business Administration
in 2002, focusing on capital markets research
and specialising in derivatives from the same
university. She started her career as a Finance
Executive in Sri Communication Engineering
Sdn Bhd in 1984 and assumed the position of
Director of Finance and Administration in Sri
Communication Group until 2000. Dato’ Dr.
Zaha Rina has more than 20 years of experience
in the financial, commodities and security
industry. She has previous Board appointments
at the Commodity and Monetary Exchange of
Malaysia (COMMEX) from 1993 to 1996 and
assumed the position of Chief Operating Officer
(COO) of Kuala Lumpur and Financial Futures
Exchange (KLOFFE) and Malaysian Derivatives
Exchange (MDEX) in 2001.
She was then appointed as the Head of
Exchanges, managing the operations of KLSE
(now known as Bursa Securities), MESDAQ,
MDEX and Labuan International Financial
Exchanges in September 2003, prior to KLSE’s
demutualisation. In 2004 until 2006, she
assumed the position of Chief Executive Officer
of RHB Securities Sdn Bhd. She was also the
consultant to Financial Technologies Middle
East for the setting up of Bahrain Financial
Exchange (BFX) which was launched in January
2009. Prior to this, she was with RBS Group in
Singapore from August 2007 to May 2008. She
has been a director of MAA Takaful Bhd from
2008 to 2012, EON Capital Bhd and EON Bank
Bhd from 2010 to 2011, MIMB Investment
Bank Berhad from 2011 to 2013 and Zurich
Insurance Malaysia Berhad from 2012 to 2013.
Currently, Dato’ Dr. Zaha Rina sits on the board
of directors of Hong Leong Industries Berhad,
Pacific & Orient Berhad, Manulife Holdings
Berhad and several other private companies.
Dato’ Dr. Zaha Rina attended all four (4) Board
YH Dato’ Thavalingam A/L
C. Thavarajah
aged 50 was appointed to the Board as an
Independent Non-Executive Director on 3
December 2013. Dato’ Thavalingam is the
Chairman of Nominating Committee and a
member of the Audit Committee. He graduated
with a Bachelor of Law from Liverpool
Polytechnic, United Kingdom in 1988 and
was subsequently called to the Bar at Gray’s
Inn London, United Kingdom in 1989. He
was then called to the Malaysian Bar in 1990.
He commenced his legal practice in Messrs
Shearn Delamore & Co after he was called to
the Malaysian Bar. He became a partner at
Messrs Zaid Ibrahim & Co from 2000 to 2010.
He is currently a partner with Messrs Lee
Hishamuddin Allen & Gledhill. He also sat on
the board of Gading Sari Aviation Services Sdn
Bhd from 2010 to 2013.
YH Dato’ Thavalingam had been appointed
by the Government in 2008 to serve on the
National Labour Advisory Council for a twoyear term. He was also the Honorary Secretary
of the Malaysian Employers Federation from
2006 to 2011. He currently sits on the Editorial
Advisory Board of the Industrial Law Reports.
Dato’ Thavalingam attended three (3) out
Annual Report 2015
29
DIRECTORS’
PROFILE
Puan Darawati Hussain binti
Dato’ Seri Abdul Latiff
Annual Report 2015
30
Puan Darawati Hussain binti Dato’ Seri Abdul
Latiff aged 46 was appointed to the Board as an
Independent Non-Executive Director on 9 June
2014. Puan Darawati Hussain is the Chairman
of Risk Management Committee and also a
member of the Nominating Committee. She
graduated with a Bachelor Degree in Economics
and Accountancy from Durham University,
United Kingdom in 1991 and a Master in
Business Administration from London Business
School, United Kingdom in 1998. She had also
obtained the Chartered Financial Analyst (CFA)
qualification in 2001. She started her career in
1991 as an Executive of Corporate Finance/
Advisory with Commerce International
Merchant Bankers Berhad and subsequently
left as a Manager in 1996. She then spent five
years from 1997 to 2001 in London where she
was a European Equities Portfolio Manager in
Mondrian Investment Partners Limited, a fund
management company.
In September 2001, she re-joined CIMB group
to set up and develop the private equity arm,
where she was the Head of Private Equity and
Venture Capital of CIMB until August 2012,
overseeing a private equity portfolio of more
than 50 companies that operate in different
sectors and in various stages of business
maturity. Subsequently, she was made head
of Co-investor and Fund Relations of CIMB
Group Strategy and Strategic Investments
(CIMB GSSI) until April 2014. Puan Darawati
Hussain is presently a business entrepreneur
in investment and property investment.
Currently, she sits on the Board of Director of
Asiamet Education Group Berhad (formerly
known as Masterskill Education Group Berhad)
and several other private limited companies.
Puan Darawati Hussain attended three (3) out
Alternate Director To YM Tengku Dato’ Sri
Ahmad Faisal bin Tengku Ibrahim
YM Tengku Dato’ Sri Uzir bin Tengku Dato’ Ubaidillah aged
57 was appointed to the Board as a Non-Independent NonExecutive Director on 3 December 2013. He is an Alternate
Director to YM Tengku Dato’ Sri Ahmad Faisal bin Tengku
Ibrahim. He graduated with a Bachelor of Science (Hons)
Degree in Civil Engineering from the University of London,
United Kingdom in 1983. He started his career in Jabatan
Kerja Raya as the Design and Research Section Geotechnical
Engineer in 1983. He was then promoted to the position
of Assistant Resident Engineer under Felda Unit of Jabatan
Kerja Raya in 1984 until 1985. He joined Road Builder
(M) Sdn Bhd as a Director from 1988 to 1999 and he also
held the position of Director of Road Builder (M) Holdings
Berhad between 1992 and 2005. He was also the Director
cum Group Chief Executive officer of Malaysian Investment
Corporation Berhad from 1990 to 1993. Currently, he is a
director of Kumpulan Unik BBP Sdn Bhd, a position he holds
since 1997. He joined Kurnia Setia Berhad on 19 November
2004 as a Non-Executive Director, a nominee of HRH
Tengku Abdullah Ibni Sultan Haji Ahmad Shah. Subsequent
to the Privatisation of Kurnia Setia Berhad, YM Tengku
Dato’ Sri Uzir bin Tengku Dato’ Ubaidillah was transferred
to Tanah Makmur Berhad and assumed the position of
Executive Director of Tanah Makmur on 1 January 2011.
He resigned on 3 December 2013 from his position of
Executive Director of Tanah Makmur and on the same day
appointed as the Alternate Director to YM Tengku Dato’
Sri Ahmad Faisal bin Tengku Ibrahim. Currently, he is the
Executive Chairman of WZ Satu Berhad and he also sits on
the board of directors of various private limited companies.
YM Tengku Dato’ Sri Uzir did not attend any Board Meeting
of the Company held during the financial year ended 31
December 2015 subsequent to his appoinment as an
Alternate Director.
Haji Abdul Rahim bin Abdullah
Alternate Director To
Tuan Haji Abdul Rahim bin Abdullah aged 55 was appointed
to the Board as a Non-Independent Non-Executive Director
on 11 November 2014. He is an Alternate Director to YH
Dato’ Wan Bakri bin Wan Ismail, representing LKPP Negeri
Pahang (LKPP). He graduated with a Bachelor Degree in
Agricultural Science from Universiti Putra Malaysia in 1984.
He started his career in the government sector in 1984 as
an Agricultural Officer of Lembaga Padi Negeri Pahang and
in 1989 he joined LKPP as a Senior Agricultural Officer. He
was then promoted to an Administrative Officer grade N48
in 2011 and to grade N52 in 2013. Tuan Haji Abdul Rahim
was promoted to Deputy General Manager of LKPP in 2014
until present. He sits on the Board of several subsidiary
companies of LKPP.
Tuan Haji Abdul Rahim attended one (1) out of four (4)
Board Meetings held during the financial year ended 31
December 2015 on behalf of YH Dato’ Wan Bakri bin Wan
Ismail.
31
Annual Report 2015
YM Tengku Dato’ Sri Uzir bin
DIRECTORS’
PROFILE
1. Family relationship with Director and/or Major Shareholder
Save as disclosed below, none of the Directors of the Company have any family relationship with the other Directors
and/or major shareholders of the Company or have any conflict of interest with the Company :
a)
YAM Tengku Tan Sri (Dr) Hajjah Meriam binti Sultan Haji Ahmad Shah
(i) sisters to KDYTM Tengku Abdullah Ibni Sultan Haji Ahmad Shah; a major shareholder of the company
(ii) director and shareholder of TAS Industries Sdn Bhd; a major shareholder of the company
(iii)related to YM Tengku Dato’ Zubir bin Tengku Dato’ Ubaidillah and YM Tengku Dato’ Sri Ahmad Faisal bin
Tengku Ibrahim
(iv)related to YM Tengku Dato’ Sri Uzir bin Tengku Dato’ Ubaidillah; an alternate director
b) YM Tengku Dato’ Zubir bin Tengku Dato’ Ubaidillah
(i)related to YAM Tengku Tan Sri (Dr) Hajjah Meriam binti Sultan Haji Ahmad Shah and YM Tengku Dato’ Sri
(ii) brother to YM Tengku Dato’ Sri Uzir bin Tengku Dato’ Ubaidillah; an alternate director
(iii) related to KDYTM Tengku Abdullah Ibni Sultan Haji Ahmad Shah; a major shareholder of the company
Annual Report 2015
32
c) YM Tengku Dato’ Sri Ahmad Faisal bin Tengku Ibrahim
(i)related to YAM Tengku Tan Sri (Dr) Hajjah Meriam binti Sultan Haji Ahmad Shah and YM Tengku Dato’ Zubir
bin Tengku Dato’ Ubaidillah
(ii) related to YM Tengku Dato’ Sri Uzir bin Tengku Dato’ Ubaidillah; an alternate director
(iv)deemed interest in Focus Edge Indices Corp pursuant to Section 6A, Companies Act 1965; a major shareholder
of the company
d) YH Dato’ Wan Bakri bin Wan Ismail
(i) representative of LKPP Negeri Pahang; a major shareholder of the Company
e)
(Alternate Director to YM Tengku Dato’ Sri Ahmad Faisal bin Tengku Ibrahim)
(i) brother to YM Tengku Dato’ Zubir bin Tengku Dato’ Ubaidillah
(ii)related to YAM Tengku Tan Sri (Dr) Hajjah Meriam binti Sultan Haji Ahmad Shah and YM Tengku Dato’ Sri
f) Haji Abdul Rahim bin Abdullah
(Alternate Director to YH Dato’ Wan Bakri bin Wan Ismail)
(i) Representative of LKPP Negeri Pahang; a major shareholder of the company
2.All the Directors are Malaysian and maintain a clean record with regards to convictions for offences within the
past 10 years.
GROWING IN
RESPONSIBILITY
We embrace our responsibility as a corporate citizen,
committed to creating a supportive and conducive
environment in the workplace. In addition to prioritising
health, safety and equal opportunity, we also have in
place an educational aid set up to support the scholastic
pursuits of our employees’ immediate family members.
PROFILES OF
KEY MANAGEMENT
YM TENGKU DATO’
ZUBIR BIN TENGKU
DATO’ UBAIDILLAH
Managing Director
YM Tengku Dato’ Zubir bin Tengku Ubaidillah aged 53 is the Managing
Director of Tanah Makmur Berhad. For details of YM Tengku Dato’ Zubir
bin Tengku Ubaidillah, please refer to page 23 of this Annual Report.
TEH FOO HOCK
Chief Financial Officer
Teh Foo Hock aged 50 is the Chief Financial Officer and Joint Company
Secretary of Tanah Makmur Berhad. He is a member of the Malaysian
Institute of Certified Public Accountants and the Malaysian Institute of
Accountants (MIA) since 1996. He is also an associate member of the
Malaysian Institute of Taxation since 1997 and the Institute of Internal
Auditors of Malaysia since 1999. He started his career with the Messrs.
Coopers & Lybrand (now known as PricewaterhouseCoopers) (“PwC”)
in 1985. He held a few positions in PwC, including audit senior and
audit supervisor. He joined Kinsteel Berhad in May 1997 as a Group
Accountant. In 2002, his job responsibility was expanded to include
Head of Treasury and held the role as a Joint Company Secretary of
Kinsteel Berhad from August 2012 to September 2013. On 1 May 2014,
he joined Tanah Makmur Berhad and assumed his current position.
SUZILAH BINTI HAJI
WAHID
Company Secretary
Suzilah binti Haji Wahid aged 55 is our Company Secretary. She pursued
the professional course of Institute of Chartered Secretaries and
Administrators in University Teknologi MARA and in 1985 furthered
the said course in London School of Accountancy, United Kingdom. In
1992, she obtained her licence to act as Company Secretary from the
Companies Commissions of Malaysia and she is also an associate member
of the Malaysian Institute of Chartered Secretaries and Administrators
(MAICSA). She began her career in 1987 with LKPP Negeri Pahang as
the Group Company Secretary where she served for more than 8 years.
She subsequently joined Kurnia Setia Berhad as the Group Company
Secretary on 7 November 1995. Subsequent to the Privatisation of
Kurnia Setia Berhad in 2010, she was transferred to Tanah Makmur
Berhad and assumed her current position.
ABDUL RAZAK BIN
MD YUSOF
General Manager,
Finance and Accounts
Abdul Razak bin Md Yusof aged 58 is our General Manager, Finance and
Accounts. He graduated with a Diploma in Accountancy from University
Teknologi Mara in 1991 and obtained a Bachelor of Accountancy
(Honours) from the same university in 2000. He is a member of the
Malaysian Institute of Accountants (MIA) since April 2001. He started
his career in 1978 with Syarikat Ladang LKPP Sdn Bhd. He then joined
Kurnia Setia Berhad in 1984 as a special grade accounts clerk and in
1992 he was then promoted to an Account Executive. In 1995, he
was appointed as an Assistant Account Manager and subsequently as
Finance Manager in 2005. In 2008, he was then promoted to a Senior
Finance Manager. Subsequent to the Privatisation of Kurnia Setia Berhad
in 2010, he was transferred to Tanah Makmur Berhad and assumed his
current position on 1 July 2011.
Annual Report 2015
34
Alias bin Awang aged 53 is our General Manager, Plantation. He
graduated with a Diploma in Planting Industry Management from
University Technology Mara in 1989 and in 2012 he obtained a Master of
Business Administration from University Utara Malaysia. He started his
career in 1990 with Golden Hope Berhad as a Cadet Assistant Manager.
In 1991, he then moved to Austral Enterprises Berhad as an Assistant
Manager. He later joined Kosma Plantation Berhad from 1999 to 2002.
He assumed the position of a Plantation Manager of IOI Corporation
Berhad from 2002 to 2006. He joined Kurnia Setia Berhad as the Head
of plantation development in 2006. Subsequent to the Privatisation
of Kurnia Setia Berhad in 2010, he was transferred to Tanah Makmur
Berhad and assumed his current position on 1 July 2011.
AZLAN SHAH BIN
HAJI MOHD YUSOH
Senior Project Manager
Azlan Shah bin Haji Mohd Yusoh aged 42 is our Senior Project Manager.
He graduated with a Bachelor of Science in Land Surveying and Mapping
Science from University of Newcastle-upon-Tyne, United Kingdom
in 1997. He began his career in 1997 with Highway Development
Corporation Sdn Bhd. In 2002 he joined Tastu Bina Sdn Bhd as an
Administration and Safety Manager. From 2002 to 2005, he was the
Head of plant, machinery and equipment of BBP Bina Sdn Bhd. He joined
Kurnia Setia Berhad as the Project Manager in 2006 and was promoted
to the position of a Senior Project Manager on 1 April 2010. He also
holds directorships in several subsidiary companies of Tanah Makmur
Berhad. Subsequent to the Privatisation of Kurnia Setia Berhad in 2010,
he was transferred to Tanah Makmur Berhad and assumed his current
position.
MOHD AZMI BIN
BUSU
Senior Finance Manager
Mohd Azmi bin Busu aged 46 is our Senior Manager, Finance and
Accounts. He graduated with a Degree in Accountancy, University Utara
Malaysia in 1995. He is a member of the Malaysia Institute of Accountants
(MIA) since 2000. He started his career in 1996 with Automotive
Manufacture Malaysia Sdn Bhd, a subsidiary of DRB Hicom Bhd. In
2003, he assumed the position of an Accountant with Pengangkutan
Petikemas Sdn Bhd. In 2004, he joined Kuantan Medical Centre Sdn Bhd,
a subsidiary of TDM Bhd until 2007. He then joined Kuala Terengganu
Specialist Hospital Sdn Bhd acting as General Manager from 2007 until
2009. He then joined Prizams Petrochem Sdn Bhd and held position as a
General Manager until 2010. In 2011, he joined Tanah Makmur Berhad
as an Assistant Manager, Finance and Account and subsequently in 2012
he was promoted to Senior Assistant Manager. He was then promoted
to Finance and Account Manager in 2013 and subsequently assumed the
current position in January 2015.
35
Annual Report 2015
ALIAS BIN AWANG
General Manager,
Plantation
PROFILES OF
KEY MANAGAMENT
TUMARAN BIN
WONGSO
Head of Human
Resources and
Administration
Tumaran bin Wongso aged 55 is the Head of Human Resources and
Administration. He graduated with a Bachelor of Applied Science from
Universiti Sains Malaysia in 1984. He began his career on 1 June 1985
with Syarikat Ladang LKPP Sdn Bhd as a Plant Operating Officer. In 1993,
he joined Kurnia Setia Berhad as a Human Resources and Administration
Manager. Subsequent to the Privatisation of Kurnia Setia Berhad in
2010, he was transferred to Tanah Makmur Berhad and assumed the
current position.
ASHRAF BIN ABBAS
Head of Corporate
Development
Ashraf bin Abbas aged 52 is the Head of Corporate Development. He
graduated with a Bachelor of Science in Business Administration from
California State University, Sacramento, USA in 1987. He began his
career with Kewangan Usaha Bersatu Berhad as Credit and Marketing
Officer in 1991. He joined Malaysia Building Society Berhad in 1993
as a Branch Manager. He then joined Kurnia Setia Berhad as an Audit
Executive in 2002. From 2006 to 2009, he was the Assistant Manager of
corporate development and was promoted to Corporate Development
Manager on 1 April 2010. Subsequent to the Privatisation of Kurnia
Setia Berhad in 2010, he was transferred to Tanah Makmur Berhad and
assumed the current position.
MOHD AZMAILI BIN
ISMAIL
Head of Internal Audit
Mohd Azmaili bin Ismail aged 58 is the Head of Internal Audit. He
graduated with a Bachelor of Management (Honours) from Open
University, Kuala Lumpur in 2006. He is an associate member of the
Institute of Internal Auditors Malaysia since September 1994. He began
his career in 1984 with Syarikat Ladang LKPP Sdn Bhd. In 1992, he joined
Kurnia Setia Berhad as a special grade accounts clerk and was promoted
to an Internal Audit Executive in 1995. In 2004, he was then promoted
to an Assistant Manager, Internal Audit. Subsequent to the Privatisation
of Kurnia Setia Berhad in 2010, he was transferred to Tanah Makmur
Berhad and promoted to the current position in July 2011.
Annual Report 2015
36
Mohd Farizan bin Md Dalimi aged 36 is the Head of KotaSAS Sdn Bhd; in
charge of technical aspects and projects. He graduated with a Bachelor of
Civil Engineering from Universiti Teknologi Malaysia in 2002. He began
his career in 2002 with Kumpulan Unik BBP Sdn Bhd as a Project Engineer
until 2010. During his employment with Kumpulan Unik BBP Sdn Bhd,
he was involved in several projects in relation to PLUS Expressways, East
Coast Expressway and project work under Jabatan Kerja Raya Malaysia.
In July 2011, he joined Tanah Makmur as the Project Manager and was
subsequently promoted to the current position in August 2011.
YM TENGKU AMIR
NASSER IBNI TENGKU
IBRAHIM
Head of Kota SAS,
Administration and
Finance
YM Tengku Amir Nasser Ibni Tengku Ibrahim aged 29 is the Head of
KotaSAS Sdn Bhd; in charge of administration and finance. He graduated
with a Bachelor in Business and Marketing Management from Oxford
Brookes University, United Kingdom in 2008. He interned with ING
Funds in 2007 and was involved in promoting financial products. In
2010, he joined Parish Capital Advisors Europe LLP as a trainee. In
January 2012, he joined Tanah Makmur as the Project Manager. He was
subsequently promoted to the current position in January 2013.
HISHAMUDDIN BIN
MOHD YUNUS
Head of Palm Oil Mill
Operations
Hishamuddin bin Mohd Yunus aged 41 is the Head of Palm Oil Mill
Operations. He graduated with a Diploma in Mechanical Manufacturing
from Universiti Teknologi Mara in 1998 and a Diploma in Palm Oil
Milling Technology and Management from Malaysia Palm Oil Board in
2003. He obtained a second grade Steam Engineer Certification from
the Department of Safety and Health of Malaysia in 2005. He began his
career in 2002 with Kumpulan Guthrie Berhad as an Assistant Manager
and was promoted to the position of Mill Manager in 2006 under the
same company. In 2012, he joined Prosper Group of Companies as their
Mill Manager. In May 2013, he then joined Sri Jelutung Palm Oil Mill Sdn
Bhd, a subsidiary company of Tanah Makmur Berhad and assumed the
current position.
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Annual Report 2015
MOHD FARIZAN BIN
MD DALIMI
Head of Kota SAS,
Technical Aspects and
Projects
AUDIT COMMITTEE
REPORT
The Board of Directors of Tanah Makmur Berhad is pleased to present the Report of the Audit Committee which set out
the summary of its terms of reference and activities held throughout the financial year ended 31st December 2015 and in
compliance with paragraph 15.15 (1) of the Main Market Listing Requirements Bursa Malaysia Securities Berhad.
MEMBERS
The Audit Committee was established on 9 January 2014 and is composed exclusively of Independent Non-Executive
Directors in line with the relevant provisions in the Board Charter with regards to the Governance of Audit Committee and
the Main Market Listing Requirement (Main LR) of Bursa Malaysia Securities Berhad.
The members of the Audit Committee during the financial year ended 31 December 2015 are as follows:
Chairman
(Independent Non-Executive Director)
Annual Report 2015
38
Members
TERMS OF REFERENCE
1. Composition of Members
The Audit Committee (the Committee) shall be appointed by the Board of Directors from amongst their members and
shall comprise no fewer than three (3) members, all of whom must be Non-Executive Directors with a majority of them
shall be Independent Directors.
At least one member of the Audit Committee:
(a)Must be a member of the Malaysian Institute of Accountants, he must have at least 3 years working experience
and:
(i)he must have passed the examinations specified in part 1 of the First Schedule of the Accountants Act 1967;
or
(ii)he must be a member of one of the associations of accountants specified in Part 11 of the First Schedule of
the Accountants Act 1967; or
b) fulfills such other requirements as prescribed or approved by Bursa Malaysia Securities Berhad.
No alternate director of the Board shall be appointed as a member of the Audit Committee.
The members of the Committee shall elect a Chairman from amongst their number who shall be an Independent
Director.
The composition of the Audit Committee satisfies the requirements prescribed in paragraphs 15.09 and 15.10 of the
Listing Requirements. In the event of any vacancy in the Committee resulting in the non-compliance of sub-paragraph
15.09(1) of the said requirements, the Company must fill the vacancy within three (3) months.
The annual review of the composition and performance of Audit Committee, including members’ tenure, performance
and effectiveness, accountability, responsibility and their integrity will be duly assessed by the Nominating Committee,
who assisted the Board to make the ultimate decision thereto to ensure the AC represented by the highly professional
profile, financially literate, knowledgeable and consistently portray and maintain their independent role and carried
out their duties in accordance with their terms of reference.
2. Meetings and Attendance
Meeting shall be held not less than four (4) times a year and additional meetings are held as and when required. Such
meetings are pre-arranged and be communicated to the members promptly to ensure their time commitment. Any
member of the Committee, the External Auditors and Internal Auditors may request a meeting if they consider the
said meeting is deem necessary. The Committee may invite any Board Member or any member of the management
within the Company and or the Group to the meeting to assist in resolving and clarifying matters raised at the meeting
or audit reports.
The Committee shall report to the Board from time to time, its review and recommendation for consideration and
implementation, of which the final decision shall be the responsibility of the Board.
The Secretary of the Company shall serve the Audit Committee as Secretary. The Committee may establish any
regulations from time to time to govern its administration.
3. Authority and Rights
The Committee shall have the following authorities as authorised by the Board:
a)to examine or investigate any matter within its terms of reference or as otherwise directed by the Board from
time to time;
b)to be granted full and unrestricted access to any information, records, properties and personnel of the Company
and Group;
39
Annual Report 2015
The majority of the members must be Independent Directors to form the quorum of the meeting. A quorum shall
consist of two (2) members and shall comprise of independent directors.
AUDIT COMMITTEE
REPORT
c)to have the necessary resources which are reasonable to carry out its duties and to obtain external legal or
independent professional advice as it considers necessary; and
d)to communicate directly or to convene meetings with the External Auditors, the officers carrying out the Internal
Audit function or both, excluding the attendance of other directors and employees of the Group whenever
deemed necessary but at least twice a year.
4. Duties, Functions and Responsibilities
The Committee shall undertake the following duties, functions and responsibilities:
4.1 Financial Reporting
(a)Review the financial reporting of TMB Group; prepared by and delegated to the Managing Director and
the Chief Financial Officer; mainly to ensure that it presents a true and fair view of the Company’s financial
position and performance and complies with applicable financial reporting standards and regulatory
requirements.
(b)Review the quarterly financial results and annual financial statements prior to its recommendation to the
Board for approval focusing particularly on:
Annual Report 2015
40
(i)changes in or implementation of major accounting policies and practices;
(ii) significant and unusual events;
(iii)the accuracy and adequacy of the disclosure of information essential to a fair and full presentation of the
financial affairs of the Company and the Group; and
(iv)compliance with applicable approved accounting standards, other statutory and legal requirements and
the going concern assumption.
(c)Evaluating the internal and external audit process, brief description whereof is detailed out in the paragraph
4.2 and 4.3 respectively.
4.2 External Audit
(a)Review the audit plan, scope of audit and audit report with the external auditors.
(b)Review with the external auditors their evaluation of the system of internal controls, during the course of
their audit, including any significant suggestions for improvements and management’s response.
(c)Recommend the nomination of a person or persons as external auditors and the audit fee.
(d)Review any letter of resignation from the external auditors of the Company.
(e)Review whether there is reason (supported by grounds) to believe that the Company’s external auditors are
not suitable for re-appointment.
(f)Review any significant audit findings, reservations, difficulties encountered or material weaknesses reported
by the external auditors.
4.3 Internal Audit
(a)Review 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.
(b)Review the internal audit plan and its programme.
(c)Review any significant audit findings, reservations, difficulties encountered or material weaknesses reported
by the internal auditors and actions taken on the recommendation.
4.4 Related Party Transactions
(a)Review, through the Internal Audit Department, the recurrent related party transactions (RRPTs) which have
been entered into in order to ascertain that RRPTs are entered into on normal commercial terms at arm’s
length basis and that are consistent with our Group’s usual business practices and policies on terms which
will not be more favourable to the Related Parties than those generally available to the public as well as in
compliance with the policies and procedures established to monitor RRPTs.
(b)Request internal audit to review the systems and procedures to assure adequate and sufficient applications
to monitor, track and identify RRPTs in a timely and orderly manner to facilitate prompt dissemination of
information and requirements relating to RRPTs to all operating divisions and subsidiaries and proper records
been maintained effectively.
(c)Monitor through the Internal Audit Department the actual transacted values of RRPTs under the mandate
obtained from shareholders at the Company’s annual general meeting to ensure that the Company makes an
announcement to Bursa Securities if the actual value exceeds 10% or more of the estimated value disclosed
in the Circular for a particular group of Related Parties.
(d)If any member of the Audit Committee or Board has an interest and/or deemed interest in any particular
RRPT, he shall declare his interest in the RRPT and will refrain from any deliberation and also abstain from
voting on the matter at the Audit Committee or Board meeting in respect of such RRPT.
(e)Request for additional procedures to be imposed on all RRPTs including appointing an independent adviser/
expert if the Audit Committee is of the view that the procedures involved are insufficient to ensure that
RRPTs are undertaken at arm’s length basis, on normal commercial terms and on terms that are not more
favourable to our Related Parties than those normally available to the public during their quarterly review of
the procedures.
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Annual Report 2015
AUDIT COMMITTEE
REPORT
4.5 Other Matters
(a)Review any evaluation on the risk management and internal control.
(b)Carry out any other function that may be mutually agreed upon by the Committee and the Board which
would be beneficial to the Company/Group and ensure the effective discharge of the Committee’s duties and
responsibilities.
(c)Promptly report to Bursa Securities on any matter reported by it to the Board of the Company which has not
been satisfactorily resolved resulting in a breach of the Main LR.
SUMMARY OF THE AUDIT COMMITTEE’S ACTIVITIES FOR THE FINANCIAL YEAR 2015
The Chairman of the Audit Committee reports regularly to the Board on the activities carried out by the Audit Committee
in the discharge of its duties and responsibilities as set out in the Terms of Reference. In line with the terms of reference of
the Committee, the following activities were carried out by the Committee during the financial year ended 31 December
2015:
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Annual Report 2015
1.Meetings
The Audit Committee met at the scheduled times with due and proper issuance of notices of the meetings; which
detailed out the planned and itemised agendas so that the specified matters were deliberated in depth and at length;
in an organised, focused and detailed manner.
During the financial year 2015, four (4) meetings were held on 13 February 2015, 27 April 2015, 25 August 2015 and
16 November 2015, recorded an attendance that met the requisite quorum whereby majority of the members were
Independent Directors.
The details of attendance of each member at the Audit Committee Meetings were as follows:
Audit Committee Members
Number of Meetings
Held
Attended
YH.Dato’ Cheong Keap Tai
4
4
YH.Dato’ Dr. Zaha Rina binti Zahari
4
3
YH.Dato’ Thavalingam A/L C. Thavarajah
4
3
The Managing Director, Chief Financial Officer, Senior Finance Manager, the Head of Internal Audit were called and
invited to attend meetings to brief the AC on pertinent issues.
The Audit Committee also had two (2) private sessions with the External Auditors without the presence of the
Management during the financial year to discuss matters presented therein and had assured the Audit Committee
that they were not adhered to any restrictions on their scope of their audit.
The proceedings of meetings are recorded and the minutes be circulated in a timely manner, reviewed by the Audit
Committee before disseminating them to the Board for endorsement and are properly kept in the Minutes Book
maintained at the Company Secretary’s office.
2. Financial Reporting
(a)Reviewed the quarterly financial results for announcements to Bursa Malaysia Securities in compliance with the
Financial Reporting Standards and conform to other legal and regulatory requirements before recommending
them for TMB Board’s approval.
(b)Reviewed the annual audited financial statements with the External Auditors before recommending them for
TMB Board’s approval. The review was inter alia, to ensure compliance with:
-
-
-
provisions of the Companies Act, 1965;
Listing Requirements of the Main Market Bursa Malaysia Securities Berhad; and
any new developments on Financial Reporting Standards and any other relevant regulatory requirements.
3. External Audit
(b)Reviewed the findings, results and issues arising from the audit by the External Auditors for the financial year
under review and highlighted the report thereof to the Audit Committee and the Management for further
rectification and improvement measures.
(c)Reviewed and approved the External Auditors terms of engagement and evaluated the External Auditors’
performance before recommending to the Board for re-appointment and their remunerations.
(d) Assessed the suitability, independency and impartiality of the External Auditors.
4. Internal Audit
(a)Reviewed the annual Internal Audit Plan for the Group to ensure adequate coverage over the activities of the
Company and its respective subsidiaries.
(b)Reviewed the internal audit reports quarterly which highlighted internal audit findings of the programme carried
out based on the approved internal audit plan, observations and recommendations relating to the operations
of the Company and its subsidiaries. The Committee then discussed and instructed the Management to take
corrective actions to address the weaknesses raised in the said reports.
(c)Reviewed and evaluated the performance, competency and resources of the internal audit function, including
assessing the effectiveness of the trainings, seminars and courses attended by the team to ensure that the team
has the required expertise and professionalism to discharge its duties.
Annual Report 2015
43
(a)Reviewed the annual Audit Plan covering the nature and scope of audit strategy for the financial year prior to the
commencement of the annual audit.
AUDIT COMMITTEE
REPORT
5. Reviewing Internal Controls
Reviewed the effectiveness of the Company’s System of Internal Controls was done through the internal audit function
every quarterly. The review covers the financial, operational and compliance controls as well as risk management
issues identified by the Internal Audit Division, including with their recommendations of measures to strengthen any
weakness in the estates management and suggestion for other operations improvement together with the management
response on actions taken to mitigate these concerns and risks, based on the Internal Auditors recommendations and
suggestion.
6. Related Party Transactions
Assisted in the review of all significant Related Party Transactions (RPT) and Recurrent Related Party Transaction
(RRPTs) to ensure that these transactions of revenue or trading nature entered by the Group and the Company are
undertaken at arm’s length basis on normal commercial terms which are not detrimental to the interest of the minority
shareholders of the Company or no possible conflict of interest situations within the Company or Group. Information
on RRPTs which are entered into by the Company or subsidiaries are properly recorded, kept and maintained.
7. Annual Report
Annual Report 2015
44
Reviewed the Audit Committee Report and Statement on Risk Management and Internal Control and recommended
to the TMB Board for approval prior to their inclusion in the company’s Annual Report.
8.Training
The Audit Committee members attended various conferences, seminars and training programmes. The trainings
attended by the committee members during the financial year ended 31 December 2015 is reported in the Statement
on Corporate Governance on pages 46 to 60 of this Annual Report.
The Committee assessed the training need or any personal development and enhancement programme as a whole for
internal audit team to ensure that the internal audit function is carried out by personnel with the skills, experience,
training and are equipped with adequate resources and supports.
INTERNAL AUDIT FUNCTION
1.Role
The Audit Committee is well assisted by the in-house Internal Audit Department in maintaining a sound system
of internal controls. The role of the Internal Audit Department is to assure that the System of Risk Management
and Internal Controls is functioning as intended, to identify any significant weaknesses and their impact and also
to recommend the actions to be taken to rectify them. The Internal Audit also provides the Audit Committee with
periodic, independent and objective assessment of the adequacy and effectiveness of system how of risk are managed
and controlled in the various operating units and subsidiaries of the Group to ensure they are in compliance with the
established policies, procedures and relevant rules and statutory regulations.
The Internal Audit also carries out the internal audits based on the various applications in the Estate Computer
Systems and for Property segment through the Information For Competitive Advantages (IFCA). The Internal Audits
Department also provides independent and objective reports on the estates and subsidiaries’ management, their
operations and accounting policies.
The Internal Audit Department shall provide comprehensive reports directly to the Audit Committee highlighting on
the effectiveness and the adequacy of the existing System of Risk Management and Internal Controls and actions
including any follow up action taken with the management on the rectification measures to generate satisfactory
awareness and effective remedies.
The Head of Internal Audit, who is a member of the Institute of Internal Auditors Malaysia, undertakes and implements
the internal audit Annual Audit Plan as approved by the Audit Committee. Human resource capital requirements
are to be prepared annually to ensure that the internal audit function is adequately resourced with competent and
proficient internal auditors. The Head of the Internal Audit Department is assisted by five (5) internal audit executives
and a clerk.
2.Activities
(a)Carried out audits according to the Audit Plan approved by the Audit Committee and reported the findings,
recommendations and management’s corrective action to the Audit Committee every quarterly.
(b)Reviewed of estates and mill performance, field conditions and follow-up audits to determine that corrective
actions have been taken on the findings reported by the Internal Audit.
(c)Formulated internal audit standard operation procedures based on careful planning and appraising the usefulness
of Estate Computer Systems (ECS), Central Reporting Systems (CRS) and Information For Competitive Advantages
(IFCA) system of the Group and identified opportunities to improve the operation processes within TMB Group.
(d)Conducted the related party transactions review quarterly to assess that the reports are accurate and complete.
The Internal Audit had reported to the Audit Committee all their findings, recommendations and together with
management responses thereto and actions taken on material findings to adequately addressed and resolved any
weaknesses during the year.
The internal audit function is performed in-house and the total costs incurred by the Group Internal Audit in discharging
its functions and responsibilities in year 2015 amounted to RM102,645.36.
STATEMENT BY THE BOARD
This Report is made in accordance with a resolution of the Board of Directors and approved at the Board Meeting dated
21 March 2016.
45
Annual Report 2015
During the financial year, the Internal Audit Department has undertaken the following main activities:
CORPORATE GOVERNANCE
STATEMENT
The Board of Directors of Tanah Makmur Berhad (TMB) realised the paramount importance of good corporate governance
practice to ensure smooth running and continued growth of TMB and group’s business towards enhancing shareholders
value and is fully committed to ensure that an appropriate and sound practices in Corporate Governance as set out in the
Malaysian Code on Corporate Governance 2012 (the Code) are applied and strictly observed throughout TMB Group of
Companies.
TMB was listed on the Main Market of Bursa Malaysia Securities Berhad on 17 July 2014 and TMB Group (the Group)
has been actively introducing and improving their Group’s policies, internal guidelines and processes to adhere and align
with the Code or any of its subsequent amendments or updates thereto. Up to the date of this statement, the Board is
satisfied that TMB Group have complied with the principles and recommendations of the Code for the financial year ended
31 December 2015.
The Board is pleased to present the following statements, which outline the main eight (8) principles of good corporate
governance practices that were adopted throughout the financial year.
1.0 ROLES AND RESPONSIBILITIES
Annual Report 2015
46
1.1 Functions of the Board and Management
Tanah Makmur Berhad is led by an experienced and effective Board which sets policies that will enable them to
guide the Company to achieve its goals. The Board is collectively accountable for the Group’s strategic plans,
business performance, risk management, internal control and statutory matters.
The Board is responsible for the oversight and overall management of the Company. The Board has a fiduciary duty
to act in good faith and in the best interest of the Group. The executive directors have the direct responsibility
and accountability for the business operation. The executive director and non-executive directors collectively
bring a wide range of technical skills and experience and independence in judgements and decision making to
support the needs of the Group.
The Board has established functions and decisions which are reserved for the Board that maybe delegated to
specific Board committees and those which are delegated to the Management.
There is a clear segregation between the roles and responsibilities of the Chairman and Managing Director as
set out in the Board Charter to ensure that there is a balance of authority between them, thus avoiding any
unfettered decision-making in any one individual.
The Chairman is responsible for the leadership and governance of the Board, ensuring its effectiveness and
assumes the formal role as the leader in chairing all Board meetings and shareholders’ meeting.
The Managing Director is responsible for the day to day management of the business and operations of the Group
and implementation of Board strategies, policies and decisions. By virtue of his position as a Board member, he
also acts as the intermediary between the Board and Management. The Managing Director is assisted by a team
of Management. Regular reporting is made to the Board on the Company’s overall performance.
1.2 Roles and Responsibilities
The Board of Directors, whether executive or non-executive, has a legal obligation to exercise independent,
unfettered judgement in good faith with due care and skill. Amongst their key responsibilities are as described
below:
(a) Reviewing and adopting a strategic plan for the company
The Board, upon recommendation by the Management, assesses the proposals on new project ventures,
acquisitions and disposals and develops strategic policies for short and long term planning, proposed during
Board meetings for approval of adoption and implementation. Major policies and corporate proposals are
discussed and scrutinised before putting to a vote.
(b) Overseeing the conduct of the business of the company
The Board shall during the financial year review the effectiveness and succession of the projects implemented
and ensure that such business activities are properly managed, and if required, to do a revision thereon.
Management’s performance on various operating units of TMB Group under the leadership of Managing
Director shall represent the major element in the Board’s agenda. The Board shall entitle for updates
and highlights of the progress of significant operational issues and their impact to the overall Company’s
performance.
(c) Developing and implementing Investor relations programme and shareholder communication policy
The Company endeavours to build investor confidence through good Corporate Governance practices and
have communicated effectively to all stakeholders, covering shareholders institutional investors and the
investing public and others.
(d) Reviewing the adequacy and integrity of management information and internal control systems
The Board, aided by the Internal Audit Department, is responsible for maintaining a sound system of Risk
Management and Internal Control to safeguard the shareholders’ investments and interests and the Group
assets and for the reviewing of the adequacy and integrity of the Company’s risk management and internal
control systems.
Details of risk management and internal control system and their effectiveness are stated in Statement on
Risk Management and Internal Control.
(e) Succession planning for senior management
The Nominating Committee is responsible for reviewing candidates for key management position. It is also
responsible for formulating nomination, selection and succession policies for members of the Board and
Board Committees and key management personnel.
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Annual Report 2015
STATEMENT
1.3 Formalised ethical standards
The Board has adopted and adhered to the Code of Ethics, which sets out the standards of conduct expected from
Directors. The Code of Ethics for Directors includes principles relating to Directors’ duties, conflict of interest,
prohibited activities and dealings in securities.
1.4 Promoting Sustainability
The Group is conscious of the environment effects of the business and believes sustainability is important for
the future success of the Company and the Group and have operated their businesses responsibly in areas of
environment, social and economic. The Group is committed to maintain healthy relationships within its community.
1.5 Qualified Company Secretaries and Access to information
The Company Secretaries of the Company are qualified to act as company secretary under Section 139A of
the Companies Act 1965. The Board is satisfied with the performance and support rendered by the Company
Secretaries to the Board in the discharge of its functions. The Company Secretaries ensures that all Board meetings
are properly convened, and that accurate and proper records of the proceedings and resolutions passed are
recorded and maintained in the statutory register of the Company. The Company Secretaries also keep abreast of
the evolving capital market environment, regulatory changes and developments in corporate governance through
continuous training and update the Board timeously.
Annual Report 2015
48
The Board is supported by the Company Secretaries in the discharge of its functions and able to access company
information in a timely and more efficient manner, thus improving Board performance. The Company Secretaries
constantly advised and updated the Board on statutory and regulatory requirements pertaining to their duties
and responsibilities.
Complete and unrestricted access is provided to the Board, either collectively or in their individual capacity by
Senior Management on specific matters. The Directors may obtain independent professional advice in furtherance
of their duties whenever necessary at the Company’s expense.
1.6 Board Charter
The Board has formally adopted a Board Charter; taking consideration all the applicable laws, various legislation,
rules and regulations as well as best principles and practices; serves to provide guidance to the Board and its
Committees in discharging its stewardship effectively and efficiently.
The Charter outlined the fiduciary and leadership functions of Directors, division of responsibilities, powers
demarcation, procedures and serves as a primary reference for existing and prospective Board members and
management.
The Board Charter is reviewed and updated accordingly to ensure latest process and procedures are applied and
ensure alignment with new requirements and legislation.
The Board Charter is accessible on Tanah Makmur Berhad’s corporate official website at www.tanahmakmur.com
2.0 STRENGTHEN COMPOSITION
2.1 Board Committees
In discharging its fiduciary duty, the Board is assisted by Board Committees which operate within the defined
terms of reference. The Committee shall be appointed by the Directors from amongst its members and shall
comprise of no fewer than three (3) members, who are Non-Executive Directors, the majority of whom shall be
independent directors.
The Independent Directors are actively involved in various Board Committees and they provide independent
assessment and opinion. The following committees were established to assist the Board in the discharge of its
duties and also to monitor risks.
Where the members for any reason are reduced to less than (3), the Board shall within three (3) months of the
event, appoint such number of new members as may be required to make up the minimum number of three (3)
members.
2.1.1Audit Committee
2.1.2Nominating Committee
The composition, terms of reference and summary of its activities are as follows:
Composition
Chairman
YH Dato’ Thavalingam a/l C. Thavarajah
Members
YM. Tengku Dato’ Sri Ahmad Faisal bin Tengku Ibrahim
(Non-Independent Non-Executive Director)
Duties, functions and responsibilities
The Nominating Committee is responsible for reviewing the Board’s succession plan, training for
Directors and assessing the effectiveness of the Board and Board Committee.
The function of the Nominating Committee, amongst others, is assessing new candidates for
directorships or Board Committee members and thereupon submitting their recommendation to the
Board for decision.
Annual Report 2015
49
The Report on the Committee’s composition, terms of reference and summary of its activities are
presented on pages 38 to 45 of the Annual Report.
STATEMENT
In assessing the suitability of an individual to be elected to the Board, the Committee will take into
account the individual’s other commitment, resources and time available for input for the Board.
The Board recognises the value of appointing individual directors who bring a variety of diverse opinions,
perspectives, skills, experiences, backgrounds and orientations to its discussions and its decision-making
process.
The Company Secretary shall ensure that all appointment are properly made and all necessary information
is obtained, both for Company’s own records and for purpose of meeting statutory obligations, as well
as obligation arising from regulatory requirements.
Annually, the Nominating Committee evaluate the effectiveness of the Board as a whole and reviews
the overall composition of the Board in terms of appropriate size, required mix of knowledge, skills,
experiences and core competencies and effective communications were established among Board
members. The Nominating Committee will conduct annual assessment of each directors, evaluate
commitment, contribution and performance and ensure no conflict of interest arises that would impair
their ability to represent the interest of the Company’s shareholders and stakeholders and to fulfill the
responsibilities of a director.
Annual Report 2015
50
The Board has adopted a formal process to be carried out by the Nominating Committee for reviewing
the effectiveness and independency of its individual Directors and Board Committee. All Board members
are required to assess their own performance by completing the Director’s performance evaluation
form. The Company Secretary shall compile the results for submission to the Nominating Committee
for review and assessment. The Chairman of the Nominating Committee shall then report the findings
and/or recommendation to the Board. All assessments and evaluations carried out by the Nominating
Committee in the discharge of all its functions are properly documented and kept confidential.
For the financial year ended 31 December 2015, the Committee held one (1) meeting on 20 April 2015.
The Committee meets on a need basis.
Re-Election of Directors
Directors who are subject to re-appointment or re-election at the Annual General Meeting (“AGM”) will
be assessed by the Nominating Committee, whose recommendations will be submitted to the Board for
decision, and thereafter to be tabled to shareholders for approval at the AGM.
In accordance with the Company’s Articles of Association, all Directors including the Managing Director
shall retire from office once at least in each three (3) years but shall be eligible for re-election by the
shareholders at the next Annual General Meeting. Directors over seventy (70) years of age are required
to submit themselves for re-appointment annually in accordance with Section 129(6) of the Companies
Act, 1965.
The Directors who are due for retirement by rotation and re-election pursuant to Article 95 of the
Company’s Articles of Association are Dato’ Cheong Keap Tai, Dato’ Dr. Zaha Rina binti Zahari and Dato’
Wan Bakri bin Wan Ismail.
Whilst, the Director who is due for retirement and re-appointment pursuant to Section 129(6) of the
Companies Act, 1965 at the forthcoming AGM of the Company is Tan Sri Dato’ Sri Abdul Aziz bin Abdul
Rahman.
2.1.3Remuneration Committee
The composition, terms of reference and summary of its activities are as follows:
Composition
Chairman
Member
51
With the recommendation from the Remuneration Committee, the Board, as a whole, determines the
remuneration of each Director. The Board is mindful that a fair remuneration is critical to attract, retain
and motivate Directors of the Company. The Company pays its Non-Executive Directors annual fees
which are approved annually by the shareholders. The Directors received allowances for each meeting
that they attend. For the financial year ended 31 December 2015, the Committee held two (2) meetings.
The Committee keeps abreast of the remuneration packages for Board Members to ensure that they
commensurate with the scope of responsibility held.
The main duties and functions of the Remuneration Committee include, amongst others to recommend
to the Board the policy framework for Directors’ remuneration as well as the terms of service of
Executive Directors and Senior Management of the Company, bonus plans for the Group and to execute
other related functions to achieve the objective of the establishment of the Remuneration Committee.
2.1.4
Risk Management Committee
The Risk Management Committee (“RMC”) was established on 24th February 2016 to assist the Board
in relation to risk management and to provide more focus on risks issues by identifying, assessing and
monitoring key business risks to safeguard shareholders’ interest and the Company’s assets.
Annual Report 2015
STATEMENT
Composition
Chairman
Members
(Managing Director)
Members of Management
Mr Teh Foo Hock
(Chief Financial Officer)
Encik Azmaili bin Ismail
(Head of Internal Audit)
Other attendees, external or internal, may be invited when it is deem appropriate and with consent of
the Chairman to facilitate RMC business.
52
Annual Report 2015
(a)Review and assess the adequacy of risk management policies and framework for identifying,
measuring, monitoring and controlling risks as well as the extent to which these are operating
effectively.
(b)To be able to obtain independent professional or other advice, if necessary, and to convene meetings
with external parties, whenever deemed necessary.
(c)Review that adequate infrastructure, resources and systems are in place for an effective risk
management.
(d)Review the management’s periodic reports on risk exposure, risk portfolio composition and risk
management activities.
(e)Review its own terms of reference and its effectiveness, on an annual basis.
(f)Review reporting concerning risk management that is to be included in the integrated report for it
being timely, comprehensive and relevant.
T he Term of Reference shall be incorporated in the Board Charter accessible on the Company’s official
website, expected to be ready by second quarter of 2016.
The details relating to risk management is reported separately under “Statement of Risk Management
and Internal Control” on pages 61 to 63 .
2.2 Recruitment and Annual Assessment of Directors
2.2.1
Gender Diversity Policy
The Board is aware of the gender diversity policy as set out in Recommendation 2.2 of the Malaysian
Code on Corporate Governance 2012 and encourage female candidates to take up Board positions to
reach at least 30% female representation on the Board.
Pursuant thereto, the Company has appointed three (3) capable and competent women directors
with the combination of skill, experience and strength in the qualities necessary to strengthen the
composition of the Board.
Board Diversity
8
Executive Director
1
Board Gender Balance
Male
6
Female
3
The Board wishes to achieve the right balance of diversity over the time. We are committed to diversity
and have had an equal employment opportunity as well as relatively even spread of employees across all
age which is reflective of our culture of teamwork and respect.
With its diversity of skills, the Board has been able to provide clear and effective collective leadership
to the Group, and has brought informed and independent judgement to the Group’s strategy and
performance so as to ensure the highest standards of conduct and integrity are always at the core of
the Group.
2.3 Remuneration Policies
The Remuneration Committee carries out the annual review of the overall remunerations policy for Directors,
Managing Directors and Key Senior Management Officer whereupon recommendations are submitted to the
Board for approval.
2.3.1Non-Executive Directors
The Non-Executive Directors’ remuneration package reflects the experience, expertise and level of
responsibilities undertaken by the Non-Executive Directors. This enables the Non-Executive Directors
to maintain independence and impartiality in making decisions affecting the future direction of the
Company. The remuneration of all Directors is decided by the Board collectively after the review by the
Remuneration Committee.
53
Annual Report 2015
Non-Executive Directors (including Chairman)
STATEMENT
2.3.2Executive Director
The remuneration for the Executive Director is generally set to provide market competitiveness to
attract and retain Executive Director of the highest caliber to competently manage the Company. The
basic salary of the Executive Director is fixed for the year and any revision of the basic salary will be
reviewed and recommended by the Remuneration Committee and approved by the Board Members,
taking into account the individual performance.
Details of Directors’ remuneration for the financial year ended 31 December 2015, distinguishing
between Executive and Non-Executive Directors are set out below:
Directors’ Remuneration
Annual Report 2015
54
Executive Non-Executive
Director
Directors
RM
RM
Total
RM
Annual Fees *
100,000
825,000
925,000
Salaries
664,126
–
664,126
Bonus
413,417
–
413,417
52,800
277,300
330,100
7,594
24,000
31,594
1,237,937
1,126,300
2,364,237
Allowances
Other emoluments
Total (RM)
reakdown of Directors’ Remuneration for the financial year ended 31 December 2015, in successive
B
bands of RM50,000 which comply with Bursa Malaysia Listing Requirements are shown below:
Range of Remuneration
Number of Directors
Executive Director
Non-Executive Director
Below RM50,000
-
1 **
RM50,001 - RM100,000
-
-
RM100,001 - RM150,000
-
7
RM150,001 - RM200,000
-
-
RM200,001 - RM250,000
-
-
RM250,001 - RM300,000
-
1
Above RM1,200,000
1
-
Total
1
9
* The Annual Fees will be subjected to the approval at the Annual General Meeting
**In the absence of YH Dato’ Wan Bakri bin Wan Ismail, his alternate Tuan Haji Abdul Rahim bin
Abdullah attended on his behalf.
3.0 REINFORCE INDEPENDENCE
3.1 Board Balance and Composition
Tanah Makmur Berhad has complied with the Best Practices in Corporate Governance embodied in Part 2 of the
Malaysian Code on Corporate Governance.
The Board is made up of a combination of Executive Director with intimate knowledge of the business and NonExecutive Directors who contribute effectively to the proceedings of the Board. Under the Company’s Articles of
Association, the number of Directors shall not be less than two (2) and not more than fourteen (14).
As at the date of this statement, there are nine (9) members of the Board comprising the Chairman, who is a NonIndependent Non-Executive Director, a Managing Director, five (5) Independent Non-Executive Directors and
two (2) Non-Independent Non-Executive Directors. Such composition is in compliance with paragraph 15.02 of
the Bursa Malaysia Securities Berhad Listing Requirements.
The Board composition has the sufficient presence of Independent Directors with distinguished records and
credentials to ensure that there is independence of judgement.
The Board place great importance on the balance of its Independent Non-Executive Directors since they serve as
an essential source of impartial and professional guidance to protect the interest of the shareholders.
Together, the Directors bring a wide spectrum of business acumen, financial experience, skills and perspective
necessary to carry out the Group’s business operations.
A brief profile and status of each Director is presented on pages 22 to 32 of this Annual Report.
3.2 Tenure of Independent Directors
As advocated by the Code, the tenure of service of an Independent Director should not exceed a cumulative term
of nine (9) years. However, an Independent Director may continue to serve on the Board upon reaching the 9-year
limit subject to the Independent Director’s re-designation as a Non-Independent Non-Executive Director. In the
event the Board intends to retain the Director as Independent after the latter has served a cumulative term of
nine (9) years, the Board must justify the decision and seek shareholders’ approval at general meeting.
As at the date of this Statement, none of the Independent Directors has exceeded the nine (9) years independence
tenure.
55
Annual Report 2015
The presence of five (5) Independent Non-Executive Directors ensures that they remain free from any conflict
of interest situation and facilitates the effective discharge of their roles and responsibilities as Independent
Directors.
STATEMENT
4.0 FOSTER COMMITMENT
4.1 Board Meetings
Board meetings for the ensuing financial year are scheduled before the end of the current financial year to
facilitate the planning of Board meetings by the Directors.
During the year under review, a total of four (4) meetings were held wherein the performance and resources of
the Group are being reviewed and evaluated particularly in comparison to the stated goals and budgets.
A set of Board papers is provided to each Board member a week prior to every Board meeting; with assurance of full
and timely access to all relevant information from Senior Management team, Company Secretary or independent
professional advisor, whom shall be called also to participate at the Board Meetings to provide detailed explanation
and clarification on matters substantially pertinent; for ease of understanding and effective discharge of its duties.
Special Board Meetings may be convened between the scheduled meetings to consider urgent proposals or
matters that require expedition’s decision or deliberation by the Board.
All the pertinent issues discussed at Board meetings in arriving at the decisions and conclusions are properly
recorded by way of minutes of meetings and duly kept as a correct record of the Board’s proceeding by the
Company Secretary.
Annual Report 2015
56
All the Directors have complied with the minimum fifty per centum (50%) attendance as required under
Paragraph 15.05(3) of the Listing Requirements and the Directors’ commitment in carrying out their duties and
responsibilities is affirmed by their attendance at the Board Meetings held during the financial year ended 31
December 2015 as reflected below:
Name of Directors
Attendance at Board Meetings
(during the Directors’ tenure)
YAM Tengku Tan Sri (Dr.) Hajjah Meriam binti
Sultan Haji Ahmad Shah
4 out of 4
3 out of 4
4 out of 4
3 out of 4
3 out of 4
(1)
4 out of 4
4 out of 4
3 out of 4
3 out of 4
1 out of 4
(1)
Notes :
(1)
In the absence of YH Dato’ Wan Bakri bin Wan Ismail, his alternate Tuan Haji Abdul Rahim bin Abdullah
attended on his behalf.
4.2 Directors’ Training
The Directors are mindful that they should receive appropriate continuous training and encourage to attend and
will continue to attend seminar and briefings in order to broaden their perspectives and that they keep abreast on
various issues facing the changing business environment and regulatory requirements.
In compliance with Paragraph 15.08 of the Main LR, all Directors have successfully attended the Mandatory
Accreditation Programme (MAP) prescribed by the Bursa Malaysia Securities Berhad.
Conferences, seminars and training programmes attended by the Directors during the financial year ended
31 December 2015 are as follows:
Name of Directors
Conferences, Seminars and Training
Programmes
Date
YAM Tengku Tan Sri Dr. Hajjah Meriam
• T he AGM – A Practical Insight And
Managing Shareholders’ Expectations
16 December 2015
YM Tengku Dato’ Zubir bin Tengku Dato’ • Advocacy Sessions with Bursa Malaysia
Ubaidillah
Berhad
• Overview Of The Anti-Money
Laundering & Anti-Terrorism Financing
Act 2001
Tengku Ibrahim
• Briefing on Financial Performance
YBhg Tan Sri Dato’ Sri Abdul Aziz bin
Abdul Rahman
• Bursa Malaysia CG Breakfast Series
With Directors – Bringing the Best Out
In Boardrooms
• The AGM-A Practical Insight And
Managing Shareholders’ Expectations
•8
th International Planters Conference
2015
• Seminar Inspirasi Badan Berkanun
dan ‘Government Linked Companies”
Menjana Transformasi Ekonomi
• Rice Industry Towards 100% SSL
Conference
• Corporate Governance Statement
Reporting Workshop
• Shaking Things Up: Technology That
Transforms and How To Keep Pace
• Corporate Strategy and Strategic
Choices
• 26th Annual Palm & Lauric Oils
Conference & Exhibition Price Outlook
2015/2016 (POCC2015)
3 September 2015
57
18 December 2015
4 September 2015
31 July 2015
16 December 2015
8-10 June 2015
15-16 June 2015
28-30 September 2015
22 September 2015
29 May 2015
5 March 2015
2-4 March 2015
Annual Report 2015
STATEMENT
Name of Directors
Conferences, Seminars and Training
Programmes
Date
•A
udit Oversight Board Conversation
with Audit Committee
• LHDN-CTIM National Tax Conference
2015
•M
IA International Accountants
Conference 2015
7 May 2015
26-27 October 2015
YH Dato’ Thavalingam a/l C. Thavarajah
With Directors – How to Maximise
Internal Audit
9 September 2015
Puan Darawati Hussain binti Dato’ Seri
Abdul Latiff
• Advanced Women Directors
Programme 2015
With Directors – How to Maximise
Internal Audit
With Directors – Bringing The Best Out
In Boardrooms
• Nominating Committee Programme
Part 2 – Effective Board Evaluations
• Qualified Risk Director Programme
3 December 2015
58
Annual Report 2015
25-26 August 2015
YM Tengku Dato’ Sri Uzir bin Tengku
Dato’ Ubaidillah
(Alternate Director to YM Tengku Dato’
Sri Ahmad Faisal bin Tengku Ibrahim)
• Future of Auditor Reporting – The
Game Changers For Boardroom
(Alternate Director to YH Dato’ Wan
Bakri bin Wan Ismail)
• Seminar Inspirasi Badan Berkanun
dan ‘Government Linked Companies”
Menjana Transformasi Ekonomi
•K
onferen dan Pameran Kebangsaan
Industri Perladangan (NAPiCEX)
• Exporters Forum 2015
•K
ongres Pembangunan Luar Bandar
‘Unlocking The Potential Towards A
Progressive Rural Society’
9 September 2015
31 July 2015
6 April 2015
26 January 2015
21 September 2015
15-16 June 2015
28-30 September 2015
23 November 2015
1-3 Disember 2015
5.0 UPHOLD INTERGRITY IN FINANCIAL REPORTING
Financial Reporting
The Board aims to present a balanced, cleared and meaningful assessment of the Company and Group’s financial
performance and prospects in all their reports to the shareholders, investors and regulatory authorities. This
assessment is provided in the Annual Report through the Chairman’s Statement and the brief information on the
Group of Tanah Makmur Berhad’s plantation and downstream activities and on the property development activities.
A yearly Audit Planning Memorandum submitted by the Internal and External Auditors to the Audit Committee sets
out an analysis of the strength, weaknesses and opportunities of the Group which identifies and highlights the possible
options that can be implemented to mitigate the impact of any business risks.
(a) Audit Committee
The Group’s financial reporting and internal control system is overseen by the Audit Committee Chairman together
with the Audit Committee Members, which comprises of three (3) Independent Non-Executive Directors.
The Audit Committees Term of Reference and activities are summarised in the Report on the Audit Committee as
stated on page 38 to 45 of this Annual Report.
(b) Internal Auditors
The Internal Audit function is independent of the activities, they audit proficiently and with due professional care.
The Internal Audit Review highlights major weaknesses in control procedures and makes recommendations for
improvements. The statement of Internal Control is set out on page 61 to 63 of the Annual Report.
(c) External Auditors
The External Auditors fill an essential role for the shareholders by enhancing the reliability of the Group's financial
statements. The External Auditors have an obligation to bring any significant weaknesses in the Group’s system
of control and compliance to the attention of the Management and if necessary to the Audit Committee and the
Board.
The Audit Committee (AC) undertook an annual assessment of the suitability and independence of the external
auditors in accordance with the independence criteria set out in Paragraph 15.21 of the Main LR. Having
assessed their performance, the AC will recommend their re-appointment decision to the Board, upon which the
shareholders’ approval will be sought at the Annual General Meeting.
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Annual Report 2015
The Audit Committee meets quarterly and additional meetings are held as and when required. During the financial
year ended 31 December 2015, a total of four (4) Audit Committee meetings were held.
STATEMENT
6.0 RECOGNISE AND MANAGE RISK
6.1 Sound Framework To Manage Risk
In addition to the Risk Management Committee, the Company continues to maintain and review its internal
control procedures to ensure, as far as possible, the protection of its assets and its shareholders’ investments.
6.2 Internal Audit Function
The Board has established an internal audit function within the Company, which is led by the Head of Internal
Audit who report directly to the Audit Committee and the Risk Management Committee.
Details of the Company’s internal control system and framework are set out in the Statement on Risk Management
and Internal Control and Audit Committee Report of this Annual Report.
7.0 ENSURE TIMELY AND HIGH QUALITY DISCLOSURE
Annual Report 2015
60
7.1 Corporate Disclosure Policy
The Board recognises the importance of keeping investors informed of the group’s business and corporate
developments through various practicable and authorised channels. Tanah Makmur Berhad always strives to
make timely public announcement through the Bursa Malaysia of all major developments and material changes
within the Group.
8.0 STRENGTHEN RELATIONSHIP WITH SHAREHOLDERS AND INVESTORS
8.1 Encourage shareholder participation at General Meeting
Tanah Makmur Berhad recognises the importance in promoting an effective communications channel with its
shareholders. An effective communications are aimed to provide its shareholders with transparent and accurate
information of the Group’s financial performance and position.
The Annual General Meeting is the principal avenue for dialogue and interaction with the shareholders of the
Company, which provide a useful forum for shareholders to engage and liaise directly with the Company’s
Directors and Senior Management. Every opportunity is given to the shareholders to ask question and seek
clarification on the business and performance of the Company and Group.
COMPLIANCE STATEMENT
Tanah Makmur Berhad complies with the disclosure guidelines and regulations of Main Market Listing Requirements
Bursa Malaysia Securities Berhad and the Statement on the Company’s Corporate Governance practices is made in
compliance with Paragraph 15.25 and 15.08A of the Main Market Listing Requirement.
This statement was approved by the Board on 21 March 2016.
STATEMENT ON RISK MANAGEMENT AND
INTERNAL CONTROL
The Board of Directors of Tanah Makmur Berhad is pleased to provide the following Statement on Risk Management and
Internal Control (“the Statement”) which outlines the scope and internal control of Tanah Makmur Group for the financial
year ended 31 December 2015. This statement is issued pursuant to the Malaysian Code on Corporate Governance 2012
(“the Code”) and paragraph 15.26 (b) of the Main Market Listing Requirements Bursa Malaysia Securities Berhad.
1. BOARD RESPONSIBILITIES
The Board acknowledges its responsibility of ensuring the effectiveness of risk management system and adequacy
of the internal control system, financial, operation and compliance control within the organisation to safeguard the
shareholders’ investment and the Group’s assets.
The Board shall also periodically review all internal control mechanism as to ensure its strength and relevance are
being maintained and weaknesses are being remedied.
However, there are inherent limitations in any system of risk management and internal control. The System of risk
management and internal control is designed to manage rather than eliminate the risk of failure in achieving the
Group’s corporate objectives and cannot provide absolute assurance against material misstatement or losses.
The Audit Committee and Risk Management Committee support the Board oversight function on risk management
and internal controls and assist in identifying and assessing the risks and assist in the review of the adequacy and
integrity of internal controls procedures to mitigate and control these risks.
The Group’s internal control systems are operating adequately and effectively in all material aspects throughout the
2. KEY FEATURES AND PROCESSES OF THE GROUP’S RISK MANAGEMENT AND INTERNAL CONTROL SYSTEM
Internal control are embedded in the Group’s decision making process and operations. The following key elements
have been in place to facilitate proper conduct of the Group’s businesses:
(i) Clear Organisation Structure and Authorisation Procedures with defined reporting lines
The Group maintains a formal organisational structure with clear lines of reporting to the Managing Director and
Head of Divisions with defined roles and responsibilities, authority limits, review and approval procedures and
proper segregation of duties to support the maintenance of strong control environment.
Specific responsibilities have been delegated to relevant Board Committees, all of which have formalised Terms
of Reference. These Committees have the authority to examine all matters within their scope and report to the
Board with their findings and recommendations.
Annual Report 2015
61
The instituting of such internal controls are implemented through the conduct of internal audits on a regular basis on
all operating units, estates and subsidiaries within the Group, the internal control system of the estates through the
Central Reporting System and the Estate Computer System and the property segment through the Information For
Competitive Advantages (IFCA).
STATEMENT ON RISK MANAGEMENT AND
INTERNAL CONTROL
(ii) Policies and Procedures Manual
Operational policies are clearly documented in operations manuals which set out policies and procedures of the
Estates Operation and Financial Manual which are continuously revised and updated to meet operational needs.
These Operating policies, procedures, memorandum and circulars form an integral part of the internal control
system to safeguard the Group’s assets against material losses and ensure complete and accurate financial
performance.
Centralised functions of finance, human resources, agronomic, marketing, procurement, tender and bulk purchase
to ensure uniform policies and procedures had been implemented for the Group.
(iii) Operations review and monitoring process
Operations of the Group are constantly monitored with reports which are updated accordingly by the
Management, to present the results of the performance of the Group against budgets including forecasts for all
business operations within the Group and prior year performance at least on a quarterly basis or on more regular
intervals as it deem necessary. Variances are carefully analysed and corrective actions are undertaken where
necessary.
Annual Report 2015
62
The activities and performance of the Group are monitored through monthly management accounts and control
accounts reconciled with the subsidiaries records by the finance and account department.
Scheduled and adhoc meetings are held at operational and management levels to identify, discuss and resolve
business and operational issues as and when necessary.
Regular site visit were conducted by the Managing Director and Senior Management to the Group’s estates,
oil palm mills and construction sites to monitor the progress and performance, and to discuss and resolve any
operational and management issues. Such visit shall be accompanied by the relevant key personnel such as Estate
Manager, Agronomist, Mill Manager and Project Manager whichever are of relevance, to ensure that the technical
aspects of all operations are based on best management practices.
(iv) Human Capital Policy
The Group’s guidelines on employment and termination of staff, rewarding remuneration and benefits,
performance appraisals, training and retention of employees and other human resource procedures are set up
in the Service Circular (Pekeliling Perkhidmatan) to ensure that staff has proper guidelines in carrying out their
responsibilities effectively.
Emphasis is being placed on enhancing the skills, knowledge, quality and ability of employees through training
and development. Employees’ competencies are assessed through the annual appraisal systems and further
development and training equipment are highlighted to the Heads of Departments for follow up.
(v) Quality Control And Safety Measures
Strong emphasis is placed on ensuring that the Group adheres to health, safety and environmental regulations as
required by the various authorities.
Adequate insurance and physical safeguarding of major assets are in place to ensure these assets are sufficiently
covered against any mishap that may result in material losses to the Group.
(vi) Related Party Transaction
All recurrent related party transactions are dealt with in accordance with the Listing Requirements of Bursa
Securities. The Audit Committee reviews the recurrent related party transactions quarterly at their respective
relevant meetings.
3. RISK MANAGEMENT
The Board is satisfied that the process of identifying, evaluating, managing and controlling of the significant business
risks encountered by the Group is generally in place and has been carried out satisfactorily as an on-going process by
the Management to improve the effectiveness of the internal control system.
The Board is also committed to improve the existing processes and is in the final stage of appointing a professional
company to assist in the development of a comprehensive Enterprise Risk Management (“ERM”) framework to meet
TMB’s requirement to enhance TMB’s ability to manage its risks and compliance.
The Audit Committee, the Internal Audit function of the Group and the Management have provided the Board with
assurance that the Group internal control system and risk management are operating adequately and effectively, in
all material aspect.
Taking into consideration the assurance from the Managing Director and the Management Team, Board is of the
view that the system of internal controls and risk management is in place for the year under review and is sound and
adequate to safeguard the Group’s assets.
REVIEW OF THE STATEMENT BY EXTERNAL AUDITORS
Pursuant to Paragraph 15.23 of the Listing Requirements of Bursa Securities Malaysia Berhad, the External Auditors have
reviewed this Statement for inclusion in the Annual Report for the financial year ended 31 December 2015.
Their review was conducted in accordance with Recommended Practice Guide 5 (“RPG 5”) (Revised 2015), Guidance for
Auditors on Engagements to Report on the Statement on Risk Management and Internal Control, issued by Malaysian
Institute of Accountants (“MIA”).
RPG 5 (Revised 2015) does not require the external auditors to, and they did not, consider, whether this Statement covers
all risks and controls, or to form an opinion on the adequacy and effectiveness of the Group’s risk and control procedures.
RPG 5 (Revised 2015) does not require the external auditors to consider whether the processes described to deal with
material internal control aspects of any significant problems disclosed in the annual report will, in fact, remedy the problem.
Based on their review, the external auditors have reported to the Board that nothing has come to their attention that
causes them to believe that the Statement is inconsistent with their understanding of the process the Board has adopted
in the review of adequacy and effectiveness of the Group’s risk management and internal control system.
This statement is made in accordance with a resolution of the Board of Directors dated 21 March 2016.
63
Annual Report 2015
4. ADEQUACY AND EFFECTIVENESS OF INTERNAL CONTROL AND RISK MANAGEMENT
CORPORATE SOCIAL
RESPONSIBILITY
CARING FOR OUR COMMUNITY …………………
A company’s performance should be measured not just according to the economic values it has created but also its impact
on society and the environment.
The Board of Tanah Makmur Berhad (TMB) acknowledges the importance of Corporate Social Responsibility (CSR) as
an extension of the Group’s efforts in fostering a strong corporate governance culture. While TMB takes proactive steps
in ensuring sustainable growth in our oil palm plantations, we also strive to maintain our social responsibilities towards
society at large especially those surrounding our estate, oil mill and our own developed new township known as KotaSAS
as well as to our employees and will continue to remain committed in our efforts to institute programmes that will protect
the environment.
CARING FOR OUR ENVIRONMENT
We are mindful that some aspects of the plantation and mill management could have environmental and conservation
impacts. As part of our environmental agenda, prior to any expansion of our plantation and mill operations, we will
undertake an assessment to identify any potential negative impact on the environment in our day to day operations.
Annual Report 2015
64
To create awareness of the effects of deforestation, a strict zero burning policy has been adopted and enforced in all our
plantations. TMB practices environmentally friendly methods within the estates for clearing of new tracts for development
or clearing existing old oil palms for replanting programme, where the cut oil palm fronds or felled trees are chipped and
stacked across slopes in accordance to Good Agriculture Practice (AGP). This method not only ensures that zero burning
is adhered to, but also helps to prevent soil erosion. Further, composed empty fruit bunches serve as organic fertilizers to
supply nutrients and improve the soil conditions.
We do not permit any sewage and liquid effluent generated from site activities to flow from the site onto any adjoining land
or allow any waste matter to be deposited anywhere within the site or any adjoining land.
Our priorities are the preservation and protection of waterways. Areas are set aside as water catchments in all our
plantations to supply operational needs.
By-products from our own mill located at Sri Jelutong Estate such as empty fruit bunches is processed into natural
compost fertilizer whilst palm kernel shells are sold as feedstock to other biomass producer. Better utilisation of waste
material contributes towards reducing the environmental impact and we endeavors to identify opportunity for continuous
improvement.
EMPLOYEE WELFARE
We believe that charity and other social contributions begin at home.
All our employees are covered by regular statutory contribution towards retirement schemes such as SOCSO and EPF
savings. We also have Group Personal Accidents insurances for all our employees and Foreign Workers Compensation
Scheme for the foreign workers. In addition, we provide such perks that covers their medical and hospitalisation bills. We
also have in place funds for our employees and their immediate family members for educational purposes and natural
disaster.
We promote a work-life balance wherein we encourage the participation of employees at all levels involving our plantation
workforces, oil mill worker and subsidiaries’ employees during the Company’s Family days or Labour Day celebration to
take part in sports and recreational events that ultimately enhances the team building spirit.
We celebrate festivities such as Majlis Buka Puasa and Aidilfitri Raya Gathering together with our employees and
neighbouring communities.
The Group has substantially invested for refurbishment of its workers’ quarters, provision of free/subsidised electricity and
free water supplies to the employees in the estates and mills with objective of providing the residents with better living
conditions. Free transportation is provided for school going children to the nearest schools.
The health and safety of all our employees is of paramount importance to TMB. We have a qualified Occupational Safety
and Health (OSH) Officer who oversees and put in place health and safety policies and procedures. We are committed in
ensuring a healthy and safe workplace for our employees and the general public. Education and Trainings are organised
in collaboration with the Department of Safety and Health (DOSH), on top of their scheduled compulsory inspection at
workplace, to deepen level of awareness of health and safety among employees.
We are pleased to note that zero fatality and no serious occupational injuries were reported during the year.
EDUCATION
To inspire academic excellence and to extend appreciation not only to our staffs, but also their children, the Group has
established contribution/rewards to acknowledge their outstanding academic achievements in UPSR, PMR, SPM and
Universities. We also provide financial assistance to the staffs whose children are offered opportunity to pursue their
studies to the tertiary and advanced levels.
Apart from that, to the public at large, the Company continues contributing annually to schools in the vicinity of our estates
and KotaSAS for their building funds, sports day and Persatuan Ibu Bapa & Guru (PIBG), which provide additional learning
support and intensive tutorials specifically targeted to students taking major national examinations. We also contributed
to Yayasan Istana Abdul Aziz, a non-profit organisation that conduct classes for the disadvantaged students at learning
centres and students at rural areas.
During the year, the group has assisted trainees from various universities, institutes of higher learning and training centres
to undergo their practical trainings.
CHARITY
The Company endeavour to contribute to the society and play a role as a caring corporate citizen in the community through
donations and sponsors to the disabled, orphanage, sports associations such as Resident Association of KotaSAS as well as
the Institute Tengku Ampuan Afzan, Badan Bakti Kerja Prihatin Pahang and the Bakasa Children’s Charity.
…………… CSR WILL BE AN ON-GOING COMMITMENTS
Annual Report 2015
65
ADDITIONAL
COMPLIANCE INFORMATION
The information set out below is disclosed in compliance with the Main Market Listing Requirements of Bursa Malaysia
Securities Berhad (Bursa Malaysia):
1. UTILISATION OF PROCEEDS RAISED FROM CORPORATE PROPOSALS
On 17th July 2014, the company successfully listed its entire issued and paid up capital on the Main Market of Bursa
Malaysia Securities Berhad. Status of utilisation of proceeds raised from the initial public offering of RM65.175 million
is tabulated below:
Annual Report 2015
66
Amount of total Amount of total
Amount of total actual utilisation actual utilisation
proceeds raised as at 31/12/2015 as at 31/12/2014
(RM)
(RM)
(RM)
Purpose
Timeframe
utilisation of
proceeds
Estate development
within 24 months
28,500,000
28,500,000
11,267,000
Expansion of palm oil mill
within 24 months
5,000,000
3,514,500
-
Infrastructure work of the KotaSAS within 24 months
Township
13,000,000
3,663,300
-
Repayment of bank borrowings
within 6 months
13,075,000
13,075,000
13,075,000
Listing expenses
within 6 months
5,600,000
5,600,000
5,600,000
65,175,000
54,352,800
29,942,000
Total gross proceeds
Disclosed in accordance with Appendix 9C, Part A, item 13 of the Listing Requirements of Bursa Malaysia.
2. SHARE BUYBACKS
There were no shares bought back by Tanah Makmur during the year.
Disclosed in accordance with Paragraph 12.23 Appendix 12D of the Listing Requirements of Bursa Malaysia.
3. OPTIONS, WARRANTS OR CONVERTIBLE SECURITIES
Tanah Makmur did not issue any options, warrant or convertible securities during the financial year ended 31 December
2015.
4. AMERICAN DEPOSITORY RECEIPT (ADR) OR GLOBAL DEPOSITORY RECEIPT (GDR) PROGRAMME
Tanah Makmur did not sponsor any ADR or GDR programme during the financial year ended 31 December 2015.
5. SANCTIONS AND/OR PENALTIES
There were no material sanctions and/or penalties imposed on Tanah Makmur and its subsidiary companies,
directors or management by the relevant regulatory bodies, which were made public during the financial year ended
31 December 2015.
6. NON-AUDIT FEES
The amount of non-audit fees incurred for services rendered to the Company and its subsidiaries for the financial year
ended 31 December 2014 by the Company’s external auditors was RM266,500.00.
7. VARIATION IN RESULTS
8. MATERIAL CONTRACTS
Except for transactions disclosed in Recurrent Related Party Transactions, none of the Directors and major shareholders
had any material contracts with the Company.
The following contract agreement with external parties has been entered by Tanah Makmur Berhad’s wholly-owned
subsidiary, Sri Jelutung Palm Oil Mill Sdn Bhd during the year:(i)Shareholders Agreement dated 6 August 2015 between Sri Jelutung Palm Oil Mill Sdn Bhd (SJPOM), Biopower
Climate Care Holding Sdn Bhd (BPCCH) and Metro Havana Sdn Bhd (MH) whereby MH as the vehicle company
undertake to construct, operate, maintain and engineer the Anarobic Digester Power Plant to process palm oil
mill effluent supplied by SJPOM to generate biogas. Collectively SJPOM and BPCCH are shareholders of MH
where SJPOM will hold 30% equity share equivalent to RM663,000 and BPCCH will hold 70% equity share
equivalent to RM1,547,000. As at the date of this agreement, BPCCH is the beneficial owner of 50,000 ordinary
shares of RM1.00 each in MH. The estimated working capital to carry out the project is RM11.0 million and shall
be injected by the shareholders in their respective shareholdings proportions.
Annual Report 2015
67
There is no variance between the audited results for the financial year ended 31st December 2015 and the unaudited
results for the 4th Quarterly results previously announced. The company did not make any release on the profit
estimate, forecast or projections for the financial year.
ADDITIONAL
Under the Build Own Operate Transfer Biogas Plant (BOOT) Agreement dated 6 August 2015 between Sri
Jelutung Palm Oil Mill (SJPOM) and Metro Havana Sdn Bhd (MH) whereby SJPOM and Bio Palm Climate Care
Holding Sdn Bhd (BPCCH) have agreed that MH to design, construct, engineer and operate at its own cost the
Anarobic Digester Power Plant System (AD Plant) and shall own and operate the assets of the AD Plant for
the duration of BOOT period which commences on the date of the agreement and expires 16 years after the
Commercial Operation date. The AD Plant will process the palm oil mill effluent and generate biogas.
Disclosed in accordance with Appendix 9C, Part A, item 21 and 22 of the Listing Requirements of Bursa Malaysia.
9. PROFIT GUARANTEE
Save and except as disclosed herein, the Company has not issued any profit guarantee during the financial year ended
31st December 2015.
The profit guarantee received by Tanah Makmur Group in the period for the financial year is as follows:
Annual Report 2015
68
Our wholly-owned subsidiary, KotaSAS Sdn Bhd (“KotaSAS”) entered into a Shareholders’ Agreement dated
1 April 2013 which was subsequently substituted by the amended restated shareholders’ agreement dated 12 May
2014 (“Shareholders’ Agreement”) with Tanah Makmur Perkasa Sdn Bhd (“Tanah Makmur Perkasa”) to govern the
relationships of both parties as shareholders of Tanah Makmur KotaSAS Sdn Bhd (“Tanah Makmur KotaSAS”), the
entity that carries out the development project on certain portion of all those parcels of 99-year leasehold land
located in Bukit Goh, Kuantan, Pahang measuring in total approximately 1,500 acres that has yet to be developed
(“Development Project”).
Subsequently, KotaSAS and Tanah Makmur KotaSAS had entered into a development agreement dated 8 January
2014 which was subsequently substituted by the amended restated development agreement dated 12 May 2014
(“Development Agreement”) to formalise the arrangement of the Development Project.
Tanah Makmur KotaSAS shall complete the launching of the Development Project within a period of five years only
from 1 April 2013. Tanah Makmur Perkasa had demonstrated its commitment to the Development Project by granting
an irrevocable guarantee to KotaSAS that the aggregate of the cost of the development land for the purpose of
the Development Project and 60% of the development profit that shall be attributable to KotaSAS for five financial
years commencing from 1 January 2013 until 31 December 2017 shall not be less than RM110,000,000 (“Minimum
Guarantee”), subject to the yearly tranche below.
2013
Financial year ended
31 December
2014
2015
2016
2017
Total
RM million
Yearly minimum guaranteed
entitlement comprising the
following:
Land cost (1)
60% of profit before tax
Total
(2)
1.21
4.20
7.90
12.46
19.00
44.77
0.91
10.10
14.42
18.97
20.83
65.23
2.12
14.30
22.32
31.43
39.83
110.00
Notes:
The land cost as set out in the table above is the capped amount in so far as it concerns the determination of
whether the yearly minimum guaranteed entitlement is met (“Land Cost”). Any amount actually recognised by
KotaSAS and Tanah Makmur KotaSAS as Land Cost in any financial year which is in excess of the yearly guaranteed
Land Cost will be ignored and shall not be used to determine whether the yearly minimum guarantee entitlement
is met.
(1)
The 60% of profit before tax (“Landowner’s Portion”) as set out in the table above shall refer to the profit before
tax disclosed in the audited financial statements of Tanah Makmur KotaSAS for each of the financial years. The
Landowner’s Portion is the minimum amount in so far as it concerns the determination of whether yearly minimum
guaranteed entitlement is met. In determining whether the yearly minimum guaranteed entitlement is met, if:
(2)
(i)the Landowner’s Portion in any financial year is in excess of the yearly minimum guaranteed Landowner’s
Portion as set out in the table above for that year; and
(ii)the Land Cost actually recognised by KotaSAS in that year is lesser than the yearly guaranteed Land Cost as
set out in the table above for that year,
then, any amount in excess of the yearly minimum guaranteed Landowner’s Portion for that year can be used to
top up the deficiency in the Land Cost actually recognised by KotaSAS and Tanah Makmur KotaSAS in that year.
The Minimum Guarantee provided by Tanah Makmur Perkasa shall be backed by the personal guarantees of the two
existing Directors and shareholders of Tanah Makmur Perkasa, namely, YM Tengku Dato’ Ahmad Faisal bin Tengku
Ibrahim and YH Dato’ Azizan bin Jaafar, in favour of KotaSAS and shall survive the termination of the Development
Agreement and Shareholders’ Agreement, and the yearly minimum guaranteed entitlement for the five financial
years shall continue until all guarantees thereunder are met and fully settled notwithstanding termination of the
Development Agreement and Shareholders’ Agreement.
There is no shortfall in both (1) and (2) stated above for the financial year ended 31 December 2015.
10. RECURRENT RELATED PARTY TRANSACTIONS OF A REVENUE OR TRADING NATURE
At the Extraordinary General Meeting (EGM) of the Company held on 16th June 2015, the Company had obtained
a general mandate from its shareholders on the RRPT entered into by the Company and/or its subsidiaries (RRPT
Mandate). This RRPT Mandate is valid until the conclusion of the forthcoming 7th AGM of the Company to be held on
27th May 2016.
69
Annual Report 2015
ADDITIONAL
In accordance with Paragraph 10.09(2)(b) of the MMLR, details of the Recurrent Transactions conducted during the
financial year ended 31 December 2015 pursuant to the Shareholders’ Mandate are as follows:
Company within
TMB Group
Nature of Transaction
LKPP Corporation
Sri Jelutung Palm
Oil Mill Sdn Bhd (1) Sdn Bhd (2)
(“SJPOM”)
FBB supplied from LKPP
Corporation Sdn Bhd to
SJPOM
6,183
Alur Gemilang Sdn
Sri Jelutung Palm
Oil Mill Sdn Bhd (1) Bhd (3)
(“SJPOM”)
FBB supplied from Alur
Gemilang Sdn Bhd to
SJPOM
9,997
Actual Value
Transacted from
16th June 2015 up
to the LPD
(RM,000)
-Nil(There is no FFB
supplied by LKPP
Corporation Sdn
Bhd from 16 June
2015 up to the
LPD)
Annual Report 2015
70
Transacting Parties
Estimate
Transaction Value
from 22nd May
2015 to next AGM
(RM’000)
5,832
(The actual FFB
supplied by Alur
Gemilang Sdn
Bhd is less than
estimated and also
due to the lower
price of FFB against
the estimated value
for the said period)
Notes:
(1)
Sri Jelutung Palm Oil Mill Sdn Bhd is a 100% wholly-owned subsidiary of Tanah Makmur Berhad, of which principal
business is production of crude palm oil and cultivation of oil palms.
(2)
LKPP Corporation Sdn Bhd is a wholly-owned subsidiary of Lembaga Kemajuan Perusahaan Pertanian Negeri
Pahang (LKPP), which is also a major shareholder of Tanah Makmur Berhad.
(3)
Alur Gemilang Sdn Bhd is a 60% owned subsidiary of Tanah Makmur Berhad, with principal business in cultivation
of oil palms.
Disclosed in accordance with Paragraph 10.09 of the Listing Requirements of Bursa Malaysia.
FINANCIAL
CALENDAR
FINANCIAL YEAR END 31 DECEMBER 2015
ANNOUNCEMENT OF QUARTERLY RESULTS
• First quarter ended 31 March 2015
• Second quarter ended 30 June 2015
• Third quarter ended 30 September 2015
• Fourth quarter ended 31 December 2015
27 April 2015
26 August 2015
18 November 2015
24 February 2016
2015 ANNUAL REPORT
• Date of Notice
•7th Annual General Meeting
28 April 2016
27 May 2016
DIVIDENDS
Financial Year Ended 2015
27 April 2015
13 May 2015
29 May 2015
Second Interim
Single Tier Dividend of 6 sen per share
•Notice
• Entitlement date
• Payment date
26 August 2015
11 September 2015
28 September 2015
STATEMENT OF DIRECTORS’ RESPONSIBILITY IN
RESPECT OF THE ANNUAL AUDITED
FINANCIAL STATEMENTS
PERSUANT TO PARAGRAPH 15.26 (A) OF THE MAIN MARKET BURSA MALAYSIA LISTING REQUIREMENTS
The Board of Directors are responsible for ensuring that the annual financial statements of the Group are drawn up in
accordance with the requirements of the applicable approved accounting standards in Malaysia and the provisions of the
Companies Act, 1965.
The Directors consider that, in preparing the financial statements of Tanah Makmur Berhad for the financial year ended
31 December 2015 submitted by the External Auditor and which has been reviewed by the Audit Committee sets out on pages
38 to 45 of the printed version of this Annual Report, the Company has used appropriate accounting policies; consistently
applied and supported by reasonable and prudent judgements and estimates. The Directors also consider that all applicable
approved accounting standards in Malaysia have been followed and confirm that the financial statements have been prepared
on a going concern basis.
The Directors are responsible for ensuring that the Company keep accounting records which disclose with reasonable accuracy
at any time and give a true and fair view of the state of financial affairs of the Group.
The Directors are also responsible for taking such steps that are reasonably open to them to safeguard the assets of the Group
and to prevent and detect fraud and other irregularities.
The auditors' responsibilities are stated in their report to the shareholders.
71
Annual Report 2015
First Interim
Single Tier Dividend of 6 sen per share
•Notice
• Entitlement date
• Payment date
FINANCIAL
STATEMENTS
Directors' Report
Statement by Directors
Statutory Declaration
Independent Auditors' Report Statements of Comprehensive Income
Statements of Financial Position
Statements of Changes in Equity Statements of Cash Flows
Notes to the Financial Statements
74
79
79
80
82
84
86
90
93
DIRECTORS’
REPORT
The directors have pleasure in presenting their report together with the audited financial statements of the Group and
of the Company for the financial year ended 31 December 2015.
PRINCIPAL ACTIVITIES
The principal activities of the Company are the cultivation of oil palms, sale of fresh fruit bunches and other related
products.
The principal activities of the subsidiaries are described in Note 17 to the financial statements.
There have been no significant changes in the nature of these activities during the financial year.
RESULTS
Group
RM
Company
RM
74
Annual Report 2015
Profit net of tax 73,024,412
40,439,799
Profit attributable to:
Owners of the parent 53,851,567
40,439,799
Non-controlling interest
19,172,845
–
73,024,412
40,439,799
There were no material transfers to or from reserves or provisions during the financial year other than as disclosed in
the financial statements.
In the opinion of the directors, the results of the operations of the Group and of the Company during the financial year
were not substantially affected by any item, transaction or event of a material and unusual nature.
DIRECTORS’
REPORT (cont’d.)
DIVIDENDS
The amounts of dividends paid by the Company since 31 December 2014 were as follows:
RM
In respect of the financial year ended 31 December 2015:
Interim tax exempt (single-tier) dividend of 6 sen
per ordinary share on 398,159,592 shares, declared and paid on 29 May 2015 23,889,575
Second interim tax exempt (single-tier) dividend of 6 sen
per ordinary share on 398,159,592 shares, declared and paid on 28 September 2015 23,889,576
47,779,151
The directors do not recommend the payment of any final dividend for the current financial year.
DIRECTORS
The names of the directors of the Company in office since the date of the last report and at the date of this report are:
YAM Tengku Tan Sri (Dr) Hajjah Meriam binti Sultan Haji Ahmad Shah
YH Dato’ Chong Keap Thai @ Cheong Keap Tai
YH Dato’ Dr Zaha Rina binti Zahari
(Alternate Director to YM Tengku Dato’ Sri Ahmad Faisal bin Tengku Ibrahim)
Annual Report 2015
75
DIRECTORS’
REPORT (cont’d.)
DIRECTORS’ BENEFITS
Neither at the end of the financial year, nor at any time during that year, did there subsist any arrangement to which
the Company was a party, whereby the directors might acquire benefits by means of the acquisition of shares in or
debentures of the Company or any other body corporate.
Since the end of the previous financial year, no director has received or become entitled to receive a benefit (other than
benefits included in the aggregate amount of emoluments received or due and receivable by the directors or the fixed
salary of a full time employee of the Company or a related corporation as shown in Note 9 to the financial statements)
by reason of a contract made by the Company or a related corporation with any director or with a firm of which he is
a member, or with a company in which he has a substantial financial interest.
DIRECTORS’ INTERESTS
According to the register of directors’ shareholdings, the interests of directors in office at the end of the financial year
in shares in the Company and its related corporations during the financial year were as follows:
Annual Report 2015
76
Number of ordinary shares of RM0.50 each
1 January
31 December
Names of directors
2015
Acquired
Disposed
2015
Direct interest:
Ordinary shares of the Company
YAM Tengku Tan Sri (Dr) Hajjah Meriam
3,045,722
100,000
-
3,145,722
YM Tengku Dato’ Zubir bin Tengku
Dato’ Ubaidillah
3,083,422
-
-
3,083,422
Tengku Ibrahim
150,000
-
-
150,000
YBhg Tan Sri Dato’ Sri Abdul Aziz bin
Abdul Rahman
150,000
-
-
150,000
YH Dato’ Chong Keap Thai @
Cheong Keap Tai
150,000
-
-
150,000
150,000
-
-
150,000
50,000
-
-
50,000
100,000
-
-
100,000
DIRECTORS’
REPORT (cont’d.)
DIRECTORS’ INTERESTS (CONT’D.)
1 January
31 December
Names of directors
2015
Acquired
Disposed
2015
Direct interest:
Ordinary shares of the Company (cont’d.)
Puan Darawati Hussain binti
Dato’ Seri Abdul Latiff
150,000
-
Dato’ Ubaidillah
Sri Ahmad Faisal bin Tengku Ibrahim)
43,176,808
-
(16,420,100)
26,756,708
Tengku Ibrahim #
17,998,400
6,785,000
(3,778,100)
21,005,300
Dato’ Ubaidillah
Sri Ahmad Faisal bin Tengku Ibrahim) *
27,060,650
-
-
*
Deemed interest in shares held by Tastu Bina Sdn Bhd in which the director has an interest
#
Deemed interest in shares held by Focus Edge Indices Corp in which the director has an interest
150,000
27,060,650
The other director in office at the end of the financial year did not have any interest in shares in the Company or its
related corporations during the financial year.
OTHER STATUTORY INFORMATION
(a)Before the statements of comprehensive income and statements of financial position of the Group and of the
Company were made out, the directors took reasonable steps:
(i)to ascertain that proper action had been taken in relation to the writing off of bad debts and the making of
provision for doubtful debts and satisfied themselves that all known bad debts had been written off and that
adequate provision had been made for doubtful debts; and
(ii)to ensure that any current assets which were unlikely to realise their value as shown in the accounting records
in the ordinary course of business had been written down to an amount which they might be expected so to
realise.
77
Annual Report 2015
-
DIRECTORS’
REPORT (cont’d.)
OTHER STATUTORY INFORMATION (CONT’D.)
(b) At the date of this report, the directors are not aware of any circumstances which would render:
(i)the amount written off for bad debts or the amount of the provision for doubtful debts in the financial
statements of the Group and of the Company inadequate to any substantial extent; and
(ii)the values attributed to the current assets in the financial statements of the Group and of the Company misleading.
(c)At the date of this report, the directors are not aware of any circumstances which have arisen which would render
adherence to the existing method of valuation of assets or liabilities of the Group and of the Company misleading
or inappropriate.
(d)At the date of this report, the directors are not aware of any circumstances not otherwise dealt with in this report
or the financial statements of the Group and of the Company which would render any amount stated in the
financial statements misleading.
(e) At the date of this report, there does not exist:
Annual Report 2015
78
(i)any charge on the assets of the Group or of the Company which has arisen since the end of the financial year
which secures the liabilities of any other person;
(ii)any contingent liability of the Group or of the Company which has arisen since the end of the financial year.
(f) In the opinion of the directors:
(i)no contingent or other liability has become enforceable or is likely to become enforceable within the period
of twelve months after the end of the financial year which will or may affect the ability of the Group or of the
Company to meet their obligations when they fall due; and
(ii)no item, transaction or event of a material and unusual nature has arisen in the interval between the end of
the financial year and the date of this report which is likely to affect substantially the results of the operations
of the Group or of the Company for the financial year in which this report is made.
AUDITORS
The auditors, Ernst & Young, have expressed their willingness to continue in office.
Signed on behalf of the Board in accordance with a resolution of the directors dated 21 March 2016.
Tengku Dato’ Zubir bin
binti Sultan Haji Ahmad Shah Tengku Dato’ Ubaidillah
STATEMENT BY
DIRECTORS
Pursuant to Section 169(15) of the Companies Act 1965
We, YAM Tengku Tan Sri (Dr) Hajjah Meriam binti Sultan Haji Ahmad Shah and Tengku Dato’ Zubir bin Tengku Dato’
Ubaidillah, being two of the directors of Tanah Makmur Berhad, do hereby state that, in the opinion of the directors,
the accompanying financial statements set out on pages 82 to 188 are drawn up in accordance with Financial Reporting
Standards and the requirements of the Companies Act 1965 in Malaysia so as to give a true and fair view of the financial
position of the Group and of the Company as at 31 December 2015 and of their financial performance and cash flows
for the year then ended.
The information set out in Note 47 to the financial statements have been prepared in accordance with the Guidance of
Special Matter No. 1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant
to Bursa Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants.
Signed on behalf of the Board in accordance with a resolution of the directors dated 21 March 2016.
STATUTORY
DECLARATION
Pursuant to Section 169(16) of the Companies Act 1965
I, Teh Foo Hock, being the officer primarily responsible for the financial management of Tanah Makmur Berhad, do solemnly
and sincerely declare that the accompanying financial statements set out on pages 82 to 188 are in my opinion correct, and
I make this solemn declaration conscientiously believing the same to be true and by virtue of the provisions of the Statutory
Declarations Act 1960.
Subscribed and solemnly declared by the
abovenamed Teh Foo Hock
at Kuantan in the state of Pahang
Darul Makmur on 21 March 2016
Before me,
79
Annual Report 2015
Tengku Dato’ Zubir bin
binti Sultan Haji Ahmad Shah Tengku Dato’ Ubaidillah
Teh Foo Hock
INDEPENDENT AUDITORS’ REPORT
TO THE MEMBERS OF TANAH MAKMUR BERHAD
(Incorporated in Malaysia)
REPORT ON THE FINANCIAL STATEMENTS
We have audited the financial statements of Tanah Makmur Berhad, which comprise the statements of financial position
as at 31 December 2015 of the Group and of the Company, and the statements of comprehensive income, statements
of changes in equity and statements of cash flows of the Group and of the Company for the year then ended, and a
summary of significant accounting policies and other explanatory information, as set out on pages 82 to 188.
Directors’ responsibility for the financial statements
The directors of the Company are responsible for the preparation of financial statements so as to give a true and fair
view in accordance with Financial Reporting Standards and the requirements of the Companies Act 1965 in Malaysia.
The directors are also responsible for such internal control as the directors determine is necessary to enable the
preparation of financial statements that are free from material misstatement, whether due to fraud or error.
Auditors’ responsibility
Annual Report 2015
80
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit
in accordance with approved standards on auditing in Malaysia. Those standards require that we comply with ethical
requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements
are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial
statements. The procedures selected depend on our judgement, including the assessment of risks of material
misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, we consider
internal control relevant to the entity’s preparation of financial statements that give a true and fair view in order to
design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on
the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting
policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall
presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit
opinion.
Opinion
In our opinion, the financial statements give a true and fair view of the financial position of the Group and of the
Company as at 31 December 2015 and of their financial performance and cash flows for the year then ended in
accordance with Financial Reporting Standards and the requirements of the Companies Act 1965 in Malaysia.
INDEPENDENT AUDITORS’ REPORT
TO THE MEMBERS OF TANAH MAKMUR BERHAD
(Incorporated in Malaysia) (cont’d.)
REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS
In accordance with the requirements of the Companies Act 1965 in Malaysia, we also report the following:
(a)In our opinion, the accounting and other records and the registers required by the Act to be kept by the Company
and its subsidiaries have been properly kept in accordance with the provisions of the Act.
(b)We are satisfied that the financial statements of the subsidiaries that have been consolidated with the financial
statements of the Company are in form and content appropriate and proper for the purposes of the preparation of
the consolidated financial statements and we have received satisfactory information and explanations required by
us for those purposes.
(c)The auditors’ reports on the financial statements of the subsidiaries were not subject to any qualification and did
not include any comment required to be made under Section 174(3) of the Act.
OTHER REPORTING RESPONSIBILITIES
OTHER MATTERS
This report is made solely to the members of the Company, as a body, in accordance with Section 174 of the Companies
Act 1965 in Malaysia and for no other purpose. We do not assume responsibility to any other person for the content
of this report.
Ernst & Young Sandra Segaran a/l Muniandy @ Krishnan
AF: 0039No. 2882/01/17(J)
Chartered AccountantsChartered Accountant
Kuantan, Pahang Darul Makmur, Malaysia
21 March 2016
81
Annual Report 2015
The supplementary information set out in Note 47 on page 188 is disclosed to meet the requirement of Bursa Malaysia
Securities Berhad and is not part of the financial statements. The directors are responsible for the preparation of
the supplementary information in accordance with Guidance on Special Matter No. 1, Determination of Realised
and Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing
Requirements, as issued by the Malaysian Institute of Accountants (“MIA Guidance”) and the directive of Bursa Malaysia
Securities Berhad. In our opinion, the supplementary information is prepared, in all material respects, in accordance
with the MIA Guidance and the directive of Bursa Malaysia Securities Berhad.
STATEMENTS OF
COMPREHENSIVE INCOME
For the financial year ended 31 December 2015
Note
Annual Report 2015
82
Group
2015
2014
RM
RM
Company
2015
2014
RM
RM
Revenue4 404,668,475 388,950,863
Other income 5
3,843,624
2,611,216
Other items of expense:
Construction costs
(43,708,593)
(54,624,750)
Upkeep and cultivation expenses
(22,452,105)
(21,765,200)
Harvesting expenses
(15,854,633)
(15,129,472)
Estate general charges
(13,980,359)
(15,642,605)
Changes in inventories
1,717,455
(1,153,271)
Production costs
(136,547,156) (122,700,722)
Purchase of finished goods
(18,251,150)
(18,638,423)
Employee benefits expense 6
(19,369,968)
(10,498,920)
Depreciation 12, 13
(6,492,423)
(6,151,191)
Amortisation14(b), 16
(4,586,377)
(3,857,635)
Finance costs 7
(2,416,410)
(4,598,876)
Other expenses 8
(25,698,379)
(19,401,564)
89,569,243100,343,825
24,565,605
14,456,008
–
(16,317,232)
(13,093,105)
(11,471,645)
–
–
–
(9,479,080)
(2,035,998)
(2,945,666)
(494,008)
(7,941,184)
–
(15,788,794)
(12,789,210)
(13,477,602)
–
–
–
(8,218,760)
(2,047,629)
(2,499,279)
(2,095,253)
(15,321,031)
Profit before tax
Income tax expense 10
100,872,001
(27,847,589)
97,399,450
(24,998,763)
50,356,930
(9,917,131)
42,562,275
(8,210,164)
Profit net of tax
73,024,412
72,400,687
40,439,799
34,352,111
Other comprehensive income:
Item that will not be reclassified
subsequently to profit or loss
Gain on remeasurement
in retirement benefit
Income tax effect 10
209,776
(50,346)
–
–
209,776
(50,346)
–
–
Net other comprehensive
income not to be reclassified
to profit or loss in subsequent
periods
159,430
–
159,430
–
Total comprehensive income
for the year
73,183,842
72,400,687
40,599,229 34,352,111
STATEMENTS OF
COMPREHENSIVE INCOME
For the financial year ended 31 December 2015 (cont’d.)
Note
Group
2015
2014
RM
RM
Company
2015
2014
RM
RM
Profit attributable to:
Owners of the parent
Non-controlling interests
53,851,567
19,172,845
73,024,412 72,400,687 40,439,799 34,352,111
attributable to:
Owners of the parent
54,010,997
19,172,845
73,183,842 72,400,687 40,599,229 34,352,111
53,871,543
18,529,144
53,871,543
18,529,144
40,439,799
–
40,599,229
–
34,352,111
–
34,352,111
–
Earnings per share attributable
to owners of the parent
(sen per share)
- Basic
11
13.53
17.13
The accompanying accounting policies and explanatory information form an integral part of the financial statements.
Annual Report 2015
83
STATEMENTS OF
FINANCIAL POSITION
As at 31 December 2015
Note
Group
2015
2014
RM
RM
Company
2015
2014
RM
RM
Assets
Non-current assets
Property, plant and equipment 12
151,136,924
148,880,230
Investment properties 13
394,938
–
Biological assets 14
114,899,536
92,461,363
Goodwill
15
–
–
Land use rights 16
38,871,019
39,322,204
Land held for property development19(a)
27,605,206
28,123,306
Investments in subsidiaries 17
–
–
Other investments 18
5,001
5,001
76,334,419
78,606,426
1,059,503
–
43,778,187
34,143,225
–
–
38,871,019
39,322,204
–
–
70,516,594
70,539,553
–
–
332,912,624 308,792,104230,559,722222,611,408
Annual Report 2015
84
Current assets
Property development costs19(b)
Inventories 20
Trade and other receivables 21
Other current assets 22
Investment securities 23
Tax recoverable
Derivative24
Cash and bank balances 25
80,458,435
86,786,639
–
–
26,127,899
15,514,213
469,384
318,397
67,003,403
31,260,669
153,260,430 139,762,392
25,922,673
24,792,582
109,144
75,000
1,712,875
2,182,875
1,710,000
2,180,000
3,561,135
2,303,433
1,279,805
182,543
252,480
–
–
–
70,687,759
111,238,642
22,055,518
63,218,771
275,726,659 274,079,053178,884,281205,737,103
Total assets
608,639,283
582,871,157
409,444,003
428,348,511
Equity and liabilities
Current liabilities
Loans and borrowings 26
Trade and other payables 27
Other current liabilities 28
Income tax payable
15,162,337
77,077,697
1,616,269
2,290,570
6,234,008
52,205,118
14,269,252
1,424,830
9,097,412
10,887,466
–
–
223,075
32,764,759
–
–
96,146,873 74,133,208 19,984,878 32,987,834
Net current assets
179,579,786 199,945,845 158,899,403172,749,269
STATEMENTS OF
FINANCIAL POSITION
As at 31 December 2015 (cont’d.)
Group
2015
2014
RM
RM
Company
2015
2014
RM
RM
Non-current liabilities
Loans and borrowings 26
Retirement benefit obligations 30
Deferred tax liabilities 31
31,211,949
3,829,531
29,964,523
65,006,003 68,424,712 33,118,949 31,840,579
35,899,557
3,794,845
28,730,310
747,924
3,642,300
28,728,725
795,851
3,631,624
27,413,104
Total liabilities
161,152,876
Net assets
447,486,407 440,313,237 356,340,176 363,520,098
Equity attributable to
owners of the parent
Share capital
Share premium
Other reserve
Capital redemption reserve
Retained earnings
199,079,796
38,477,904
3,544,157
1,750,560
181,395,057
32
32
33
34
35
142,557,920
199,079,796
38,477,904
3,544,157
1,750,560
175,163,211
53,103,827
199,079,796
38,477,904
3,544,157
1,750,560
113,487,759
64,828,413
199,079,796
38,477,904
3,544,157
1,750,560
120,667,681
424,247,474 418,015,628356,340,176363,520,098
23,238,933
22,297,609
–
–
Total equity 447,486,407 440,313,237 356,340,176363,520,098
Total equity and liabilities
608,639,283 582,871,157 409,444,003428,348,511
85
Annual Report 2015
Note
–
–
–
–
–
–
–
53,851,567 19,172,845 73,024,412
159,430
–
159,430
–54,010,997 54,010,99719,172,84573,183,842
– 53,851,567
–
159,430
–
–
–
– (47,779,151) (47,779,151)(18,231,521)(66,010,672)
Closing balance at
31 December 2015 199,079,796 38,477,904 3,544,157 1,750,560181,395,057 424,247,474 23,238,933447,486,407
Total transactions with owners
Transactions with
owners
Dividend paid to non controlling interests –––– – –
(18,231,521)
(18,231,521)
Dividends
36
–
–
–
–(47,779,151) (47,779,151)
–(47,779,151)
–
–
Profit for the year
Other comprehensive income
Opening balance
at 1 January 2015 199,079,796 38,477,904 3,544,157 1,750,560175,163,211 418,015,628 22,297,609440,313,237
Group
Capital Non
Share Share Other
redemptionRetained
controlling Total
capitalpremiumreserve reserveearnings
Totalinterests equity
Note
(Note 32) (Note 32) (Note 33) (Note 34) (Note 35)
RM
RM RM
RM
RM
RM
RM
RM
Non-distributable
Distributable
Attributable to owners of the parent
86
Annual Report 2015
STATEMENTS OF
CHANGES IN EQUITY
–53,871,543 53,871,54318,529,14472,400,687
26,070,000 38,477,904
–
700,487 (24,590,063) 40,658,328 (12,381,974) 28,276,354
Annual Report 2015
Closing balance at
31 December 2014 199,079,796 38,477,904 3,544,157 1,750,560175,163,211 418,015,628 22,297,609440,313,237
Transactions with owners
Transfer to capital redemption
reserve
–
–
–700,487(700,487)
–
–
–
Issuance of ordinary shares by
a subsidiary –––– – –
294,000
294,000
Issuance of ordinary shares 26,070,000 39,105,000
–
–
– 65,175,000
– 65,175,000
Listing fees
– (627,096)
–
–
–
(627,096)
–
(627,096)
Dividend paid to non controlling interest –––– – –
(12,675,974)
12,675,974)
Dividends
36
–
–
–
–(23,889,576) (23,889,576)
–(23,889,576)
–
–
–
– 3,544,157 1,050,073145,881,731 323,485,757 16,150,439339,636,196
Opening balance at
1 January 2014 173,009,796
Group
Capital Non
Share Share Other
redemptionRetained
controlling Total
capitalpremiumreserve reserveearnings
Totalinterests equity
Note
(Note 32) (Note 32) (Note 33) (Note 34) (Note 35)
RM
RM RM
RM
RM
RM
RM
RM
Non-distributable
Distributable
STATEMENTS OF
CHANGES IN EQUITY
87
Non-distributable
Distributable
RM
Total
equity
36
–
–
–
–
–
–
–
–
40,439,799
159,430
40,439,799
159,430
–(47,779,151)(47,779,151)
–40,599,229 40,599,229
–
–
Closing balance at 31 December 2015199,079,79638,477,9043,544,157 1,750,560113,487,759356,340,176
Transaction with owners
Dividends on ordinary shares,
representing total transaction with
owners
–
–
–
–
Profit for the year
Other comprehensive income
Opening balance at 1 January 2015199,079,79638,477,9043,544,157 1,750,560120,667,681363,520,098
Company
Capital
Share
Share Other
redemption Retained
capital premium reserve reserve earnings
Note
(Note 32)
(Note 32) (Note 33)
(Note 34)
(Note 35)
RM
RM
RM
RM
RM
88
Annual Report 2015
STATEMENTS OF
CHANGES IN EQUITY
Non-distributable
Distributable
–34,352,111 34,352,111
38,477,904
–
700,487
(24,590,063)
40,658,328
199,079,79638,477,9043,544,157 1,750,560120,667,681363,520,098
26,070,000
Annual Report 2015
Closing balance at 31 December 2014
Transfer to capital redemption reserve
–
–
–
700,487
(700,487)
–
Issuance of ordinary shares
26,070,000 39,105,000
65,175,000
Listing fees
–
(627,096)
(627,096)
Dividends
36
–
–
–
–(23,889,576)(23,889,576)
Transactions with owners
–
–
–
–3,544,157 1,050,073110,905,633288,509,659
RM
Total
equity
Opening balance at 1 January 2014173,009,796
Company (cont’d.)
Capital
Share
Share Other
redemption Retained
capital premium reserve reserve earnings
Note
(Note 32)
(Note 32) (Note 33)
(Note 34)
(Note 35)
RM
RM
RM
RM
RM
STATEMENTS OF
CHANGES IN EQUITY
89
STATEMENTS OF
CASH FLOWS
Note
Annual Report 2015
90
Group
2015
2014
RM
RM
Operating activities
Profit before tax
100,872,001
Adjustments for:
Depreciation of property, plant
and equipment 12
6,485,069
Depreciation of investment
properties 13
7,354
Amortisation of plantation
development expenditure 14(b)
4,135,192
Amortisation of land use rights 16
451,185
Property, plant and equipment
written off 8
21,920
Inventories written down 8
29,626
Loss/(gain) on sale of livestocks 5,8
97,392
Bad debts written off 8
99,416
Gain on disposal of property,
plant and equipment 5
(78,899)
Net unrealised foreign exchange gain 5
(129,251)
Fair value gain on derivative 5
(252,480)
Fair value changes of financial assets
at fair value through profit or loss 8
470,000
Provision for diminution of
investment in a subsidiary 8
–
Interest expense 7
2,416,410
Profit on investments in Islamic funds 5
(1,876,562)
Interest income
5
(468,050)
Unwinding discounts of the
redeemable preference shares 7
–
Dividend income on investment
in subsidiaries 5
–
Dividend income on investment
security 5
–
Increase in liability for defined
benefit plan
278,216
Listing expenses
–
Total adjustments
Operating cash flows before
changes in working capital
11,686,538
97,399,450
Company
2015
2014
RM
RM
50,356,930
42,562,275
6,151,191
1,982,501
2,047,629
–
53,497
–
3,283,382
574,253
2,494,481
451,185
1,925,026
574,253
256,001
581,553
(121,745)
542,483
2,413
–
97,392
–
–
(41,465)
–
2,370,000
–
2,543,114
(936,877)
(490,786)
2,055,762
–
(360,000)
477,606
4,540,967
21,425,439
112,558,539 118,824,889
(38,998)
–
–
470,000
22,959
494,008
(1,513,100)
(467,643)
–
2
–
(121,745)
407,031
(74,997)
–
–
2,370,000
–
39,491
(931,470)
(215,580)
2,055,762
(17,476,834) (12,098,960)
–
254,206
–
(13,173,933)
(360,000)
453,596
4,540,967
611,005
37,182,997 43,173,280
STATEMENTS OF
CASH FLOWS
Operating cash flows before
changes in working capital
brought forward
Changes in working capital:
(Increase)/decrease in trade and
other receivables
Increase in other current assets
Decrease/(increase) in property
development costs and land held
for development
(Increase)/decrease in inventories
Increase in derivatives
Increase/(decrease) in trade and
other payables
(Decrease)/increase in other current
liabilities
Total changes in working capital
Cash flows from operations
Income taxes refund
Income taxes paid
Retirement benefit paid 30
Net cash flows from/(used in)
operating activities
Group
2015
2014
RM
RM
Company
2015
2014
RM
RM
112,558,539118,824,889 37,182,99743,173,280
(35,250,643)
(1,130,091)
1,076,996
(18,427,492)
5,237,136
(10,358,526)
(252,480)
(12,647,071)
(3,238,812)
–
24,872,579
18,587,480
(21,877,293)
(12,652,983)
(29,535,008)
6,810,900
(7,837,999)
–
–
(35,410,688) (21,847,157)
83,023,531
1,051,745
(28,107,429)
(243,530)
110,986,890
392,229
(29,161,315)
(794,143)
(13,348,264) (21,635,578)
(34,144)
(9,160)
–
(150,987)
–
1,772,309
–
(9,749,117)
(243,530)
–
606,082
–
(808,501)
21,326,123
–
(10,132,783)
(690,826)
55,724,317 81,423,661 (8,220,338)10,502,514
Investing activities
Proceeds from sales of livestock
Proceeds from disposal of property,
plant and equipment
Purchase of livestock
Purchase of property, plant
and equipment
Purchase of biological assets
Additional investment in subsidiaries
Decrease/(increase) in deposits
with licensed banks
Profit on investments in Islamic funds
Interest received
Dividends received 5
Net cash flows (used in)/from
investing activities
188,733
466,847
188,733
466,847
375,255
(183,648)
–
(215,263)
39,000
(183,648)
–
(215,263)
(7,513,949)
(26,675,842)
–
(5,916,526)
(16,787,839)
–
(531,908)
(12,231,920)
–
(2,845,378)
(5,178,026)
(546,000)
20,834,867
1,876,562
468,050
–
(37,624,277)
936,877
490,786
360,000
17,201,867
1,513,100
467,643
17,476,834
(33,991,277)
931,470
215,580
12,458,960
(10,629,972) (58,289,395) 23,939,701(28,703,087)
91
Annual Report 2015
Note
STATEMENTS OF
CASH FLOWS
Note
Group
2015
2014
RM
RM
Company
2015
2014
RM
RM
Financing activities
Annual Report 2015
92
Repayment of obligations under
finance leases
Repayment of term loans
Drawdown of term loans
Cost of financing paid
Deposits placed for/(uplifted from)
security for bank borrowings
Dividends paid to equity holders
of the Company 36
Dividend paid to non-controlling
interests
Proceeds from IPO exercise
- issuance of ordinary shares
Listing expenses
Proceeds from issuance of ordinary
shares by subsidiaries to non controlling interests
Repayment of redeemable
preference shares
Net cash flows (used in)/from
financing activities
Net (decrease)/increase in cash
and cash equivalents
Cash and cash equivalents at
1 January
Cash and cash equivalents at
31 December 25
(568,661)
(5,814,618)
10,000,000
(2,416,410)
(494,033)
(35,148,332)
25,000,000
(2,543,114)
2,056,503
(1,528,579)
(47,779,151)
(23,889,576)
(18,231,521)
(12,675,974)
–
–
–
–
(62,753,858)
65,175,000
(5,168,063)
294,000
(7,000,487)
(247,283)
(1,160,307)
10,000,000
(494,008)
20,000
(47,779,151)
–
–
–
–
–
(229,749)
–
–
(39,491)
2,804,421
(23,889,576)
–
65,175,000
(5,168,063)
–
(7,000,487)
2,020,842 (39,660,749)31,652,055
(17,659,513) 25,155,108 (23,941,386)13,451,482
69,235,865
44,080,757
29,181,994
15,730,512
51,576,352
69,235,865
5,240,608
29,181,994
NOTES TO THE
1. CORPORATE INFORMATION
The Company is a public limited liability company, incorporated and domiciled in Malaysia. The registered office of
the Company is located at Bangunan Kurnia Setia, No. 1, Jalan Besar, 25000 Kuantan, Pahang Darul Makmur.
The principal activities of the Company are the cultivation of oil palms, sale of fresh fruit bunches and other related
products. The principal activities of the subsidiaries are described in Note 17. There have been no significant
changes in the nature of these activities during the financial year.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
2.1 Basis of preparation
The financial statements of the Group and of the Company have been prepared in accordance with Financial
Reporting Standards (“FRS”) in Malaysia. At the beginning of the current financial year, the Group and the
Company adopted new, amended and IC Interpretation of FRS which are mandatory for financial periods
beginning on or after 1 January 2015 as described fully in Note 2.2.
The financial statements are presented in Ringgit Malaysia (“RM”).
2.2 Changes in accounting policies
The accounting policies adopted are consistent with those of the previous financial year except as follows:
On 1 January 2015, the Group and the Company adopted the following new and amended FRS mandatory for
annual financial periods beginning on or after 1 January 2015.
DescriptionEffective for annual periods
beginning on or after
Amendments to FRS 119: Defined Benefit Plans:
Employee Contributions
Annual Improvements to FRSs 2010-2012 Cycle
Annual Improvements to FRSs 2011-2013 Cycle
1 July 2014
1 July 2014
1 July 2014
Annual Report 2015
93
The financial statements have been prepared on the historical cost basis except as disclosed in the accounting
policies below.
NOTES TO THE
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D.)
2.2 Changes in accounting policies (cont’d.)
The nature and impact of the new and amended FRS and IC Interpretation are described below:
Amendments to FRS 119 Defined Benefit Plans: Employee Contributions
The amendments to FRS 119 clarify how an entity should account for contributions made by employees or
third parties to defined benefit plans, based on whether those contributions are dependent on the number
of years of service provided by the employee. For contributions that are independent of the number of years
of service, an entity is permitted to recognise such contributions as a reduction in the service cost in the
period in which the service is rendered, instead of allocating the contributions to the periods of service. For
contributions that are dependent on the number of years of service, the entity is required to attribute them
to the employees’ periods of service.
Annual Report 2015
94
These amendments have been applied retrospectively. The application of these amendments has had no
material impact on the disclosures or the amounts recognised in the Group’s and in the Company’s financial
statements.
Annual Improvements to FRSs 2010–2012 Cycle
The Annual Improvements to FRSs 2010-2012 Cycle include a number of amendments to various FRSs, which
are summarised below.
Standards
Descriptions
FRS 2 Share-based Payment
T his improvement clarifies various issues relating to the definitions
of performance and service conditions which are vesting conditions,
including:
–A performance condition must contain a service condition;
–A performance target must be met while the counterparty is
rendering service;
–A performance target may relate to the operations or activities of
an entity, or those of another entity in the same group;
–A performance condition may be a market or non-market
condition; and
–If the counterparty, regardless of the reason, ceases to provide
service during the vesting period, the service condition is not
satisfied.
This improvement is effective for share-based payment transactions
for which the grant date is on or after 1 July 2014. The Group and the
Company did not grant any awards during the second half of 2014.
Thus, this amendment did not impact the Group and the Company.
NOTES TO THE
Annual Improvements to FRSs 2010–2012 Cycle (cont’d.)
Standards
Descriptions
FRS 3 Business Combinations
T he amendments to FRS 3 clarifies that contingent consideration
classified as liabilities (or assets) should be measured at fair value
through profit or loss at each reporting date, irrespective of whether
the contingent consideration is a financial instrument within the
scope of FRS 9 or FRS 139. The amendments are effective for business
combinations for which the acquisition date is on or after 1 July 2014.
This is consistent with the Group’s current accounting policy and thus,
the amendments did not impact the Group.
FRS 8 Operating Segments
The amendments are to be applied retrospectively and clarify that:
95
-an entity must disclose the judgements made by management
in applying the aggregation criteria in FRS 8, including a brief
description of operating segments that have been aggregated
and the economic characteristics used to assess whether the
segments are similar; and
-the reconciliation of segment assets to total assets is only
required to be disclosed if the reconciliation is reported to the
chief operating decision maker.
T he Group has not applied the aggregation criteria as mentioned
above. The Group continues to present the reconciliation of segment
assets to total assets.
FRS116 Property,Plant and
Equipment and FRS 138 Intangible
Assets
T he amendments remove inconsistencies in the accounting for
accumulated depreciation or amortisation when an item of property,
plant and equipment or an intangible asset is revalued. The amendments
clarify that the asset may be revalued by reference to observable data
by either adjusting the gross carrying amount of the asset to market
value or by determining the market value of the carrying value and
adjusting the gross carrying amount proportionately so that the
resulting carrying amount equals the market value. In addition, the
accumulated depreciation or amortisation is the difference between
gross and carrying amounts of the asset. The amendments did
not have any impact on the Group’s and the Company’s financial
statements.
Annual Report 2015
NOTES TO THE
Annual Report 2015
96
Standards
Descriptions
FRS 124 Related Party Disclosures
The amendments clarify that a management entity providing key
management personnel services to a reporting entity is a related
party of the reporting entity. The reporting entity should disclose
as related party transactions the amounts incurred for the service
paid or payable to the management entity for the provision of key
management personnel services. The amendments are not applicable
to the Group as the Group does not receive any management services
from other entities.
The Annual Improvements to FRSs 2011-2013 Cycle include a number of amendments to various FRSs, which
are summarised below. The Group and the Company have applied the amendments for the first time in the
current year.
Standards
Descriptions
FRS 3 Business Combinations
The amendments to FRS 3 clarify that the standard does not apply to
the accounting for formation of all types of joint arrangement in the
financial statements of the joint arrangement itself. The amendments
are to be applied prospectively. The Group is not a joint arrangement
and thus this arrangement is not relevant to the Group.
NOTES TO THE
Standards
Descriptions
FRS 13 Fair Value Measurement
The amendments to FRS 13 clarify that the portfolio exception in FRS
13 can be applied not only to financial assets and financial liabilities,
but also to other contracts within the scope of FRS 9 (or FRS 139 as
applicable). The Group and the Company do not apply the portfolio
exception.
FRS 140 Investment Property
The amendments to FRS 140 clarify that an entity acquiring investment
property must determine whether:
-the property meets the definition of investment property in terms
of FRS 140; and
-the transaction meets the definition of a business combination
under FRS 3,
to determine if the transaction is a purchase of an asset or is a
business combination.
In previous financial years, the Group has applied FRS 3 and not
FRS 140 in determining whether an acquisition is of an asset or is a
business combination. Accordingly, the amendments did not have any
impact to the Group.
2.3 Standards issued but not yet effective
The standards and interpretations that are issued but not yet effective up to the date of issuance of the
Group’s and the Company’s financial statements are disclosed below. The Group and the Company intend to
adopt these standards, if applicable, when they become effective.
Annual Improvements to FRSs 2012-2014 Cycle1 January 2016
Amendments to FRS 116 and FRS 138: Clarification of1 January 2016
Acceptable Methods of Depreciation and Amortisation
Amendments to MFRS 116 and MFRS 141:1 January 2016
Agriculture: Bearer Plants
Amendments to FRS 10 and FRS 128: Sale or ContributionDeferred
of Assets between an Investor and its Associate or Joint Venture
Amendments to FRS 11: Accounting for Acquisitions1 January 2016
of Interests in Joint Operations
97
Annual Report 2015
NOTES TO THE
2.3 Standards issued but not yet effective (cont’d.)
Amendments to FRS 127: Equity Method in Separate1 January 2016
Financial Statements
Amendments to FRS 101: Disclosure Initiatives1 January 2016
Amendments to FRS 10, FRS 12 and FRS 128:1 January 2016
Investment Entities: Applying the Consolidation Exception
FRS 14 Regulatory Deferral Accounts1 January 2016
FRS 15 Revenue from Contracts with Customers1 January 2018
FRS 9 Financial Instruments1 January 2018
Annual Report 2015
98
The management and directors are in the midst of assessing the impact, if any, on the financial statements in
the period of initial application.
Amendments to FRS 116 and FRS 138: Clarification of Acceptable Methods of Depreciation and
Amortisation
The amendments clarify that revenue reflects a pattern of economic benefits that are generated from operating
a business (of which the asset forms part of the business) rather than the economic benefits that are consumed
through the use of an asset. As a result, a revenue-based method cannot be used to depreciate property, plant
and equipment and may only be used in very limited circumstances to amortise intangible assets.
The amendments are effective prospectively for annual periods beginning on or after 1 January 2016, with
early adoption permitted. These amendments are not expected to have any impact to the Group and the
Company as the Group and the Company have not used a revenue-based method to depreciate its non-current
assets.
Amendments to FRS 116 and MFRS 141 Agriculture: Bearer Plants
The amendments change the accounting requirements for biological assets that meet the definition of bearer
plants. Under the amendments, biological assets that meet the definition of bearer plants will no longer be
within the scope of MFRS 141. Instead, FRS 116 will apply. After initial recognition, bearer plants will be
measured under FRS 116 at accumulated cost (before maturity) and using either the cost model or revaluation
model (after maturity). The amendments also require that produce that grows on bearer plants will remain in
the scope of MFRS 141 and are measured at fair value less costs to sell.
The amendments are effective for annual periods beginning on or after 1 January 2016 and are to be
applied retrospectively, with early adoption permitted. The Directors anticipate that the application of these
amendments will have a material impact on the amounts reported and disclosures made in the Group’s and
the Company’s financial statements. The Group and the Company are currently assessing the impact of these
amendments and plans to adopt the new standard on the required effective date.
NOTES TO THE
Amendments to FRS 10 and FRS 128: Sale or Contribution of Assets between an Investor and its Associate
or Joint Venture
The amendments clarify that:
-gains and losses resulting from transactions involving assets that do not constitute a business, between
investor and its associate or joint venture are recognised in the entity’s financial statements only to the
extent of unrelated investors’ interests in the associate or joint venture; and
-gains and losses resulting from transactions involving the sale or contribution of assets to an associate of
a joint venture that constitute a business is recognised in full.
The amendments are to be applied prospectively to the sale or contribution of assets occurring in annual
periods beginning on or after a date to be determined by Malaysian Accounting Standards Board. Earlier
application is permitted. These amendments are not expected to have any impact on the Group and the
Company.
Amendments to FRS 11 Joint Arrangements: Accounting for Acquisitions of Interests in Joint Operations
The Amendments to FRS 11 require that a joint operator which acquires an interest in a joint operations which
constitute a business to apply the relevant FRS 3 Business Combinations principles for business combinations
accounting. The amendments also clarify that a previously held interest in a joint operation is not remeasured
on the acquisition of an additional interest in the same joint operation while joint control is retained. In
addition, a scope exclusion has been added to FRS 11 to specify that the amendments do not apply when the
parties sharing joint control, including the reporting entity, are under common control of the same ultimate
controlling party.
These amendments are to be applied prospectively for annual periods beginning on or after 1 January 2016,
with early adoption permitted. The Directors of the Company do not anticipate that the application of these
amendments will have a material impact on the Group’s consolidated financial statements.
Amendments to FRS 127: Equity Method in Separate Financial Statements
The amendments will allow entities to use the equity method to account for investments in subsidiaries, joint
ventures and associate in their separate financial statements. Entities already applying FRS and electing to
change to the equity method in its separate financial statements will have to apply this change retrospectively.
For first-time adopters of FRS electing to use the equity method in its separate financial statements, they will
be required to apply this method from the date of transition to FRS. The amendments are effective for annual
periods beginning on or after 1 January 2016, with early adoption permitted. These amendments will not have
any impact on the Group’s and the Company’s financial statements.
99
Annual Report 2015
NOTES TO THE
Amendments to FRS 101: Disclosure Initiatives
The amendments to FRS 101 include narrow-focus improvements in the following five areas:
-Materiality
- Disaggregation and subtotals
-Notes structure
- Disclosure of accounting policies
-Presentation of items of other comprehensive income arising from equity accounted investments
The Directors of the Company do not anticipate that the application of these amendments will have a material
impact on the Group’s and the Company’s financial statements.
Amendments to FRS 10, FRS 12 and FRS 128: Investment Entities: Applying the Consolidation Exception
Annual Report 2015
100
The amendments clarify that the exemption from presenting consolidated financial statements applies to
a parent entity that is a subsidiary of an investment entity, when the investment entity measures all of its
subsidiaries at fair value. The amendments further clarify that only a subsidiary that is not an investment entity
itself and provides support services to the investment entity is consolidated. In addition, the amendments
also provides that if an entity that is not itself an investment entity has an interest in an associate or joint
venture that is an investment entity, the entity may, when applying the equity method, retain the fair value
measurement applied by that investment entity associate or joint venture to the investment entity associate’s
or joint venture’s interests in subsidiaries.
The amendments are to be applied retrospectively and are effective for annual periods beginning on or after
1 January 2016, with early adoption permitted. These amendments will not have any impact on the Group’s
and the Company’s financial statements.
FRS 14 Regulatory Deferral Accounts
FRS 14 is an optional standard that allows an entity, whose activities are subject to rate-regulations, to continue
applying most of its existing accounting policies for regulatory deferral account balances upon its first-time
adoption of FRS. Entities that adopt FRS 14 must present the regulatory deferral accounts as separate line
items on the statement of financial position and present movements in the account balances as separate line
items in the statement of profit or loss and other comprehensive income. The standard requires disclosures
on the nature of, and risks associated with, the entity’s rate-regulation and the effects of that rate-regulation
on its financial statements. Since the Group is an existing FRS preparer, this standard would not apply.
NOTES TO THE
FRS 9 Financial Instruments
In November 2014, MASB issued the final version of FRS 9 Financial Instruments which reflects all phases of the
financial instruments project and replaces FRS 139 Financial Instruments: Recognition and Measurement and
all previous versions of FRS 9. The standard introduces new requirements for classification and measurement,
impairment and hedge accounting. FRS 9 is effective for annual periods beginning on or after 1 January 2018,
with early application permitted. Retrospective application is required, but comparative information is not
compulsory. The adoption of FRS 9 will have an effect on the classification and measurement of the Group’s
financial assets, but no impact on the classification and measurement of the Group’s financial liabilities.
The Annual Improvements to FRSs 2012-2014 Cycle include a number of amendments to various FRSs,
which are summarised below. The Directors of the Company do not anticipate that the application of these
amendments will have a significant impact on the Group’s and the Company’s financial statements.
Standards
Descriptions
FRS 5 Non-current Assets Held for The amendment to FRS 5 clarifies that changing from one disposal
Sale and Discontinued Operations method to the other should not be considered to be a new plan
of disposal, rather it is a continuation of the original plan. There is
therefore no interruption of the application of the requirements in
FRS 5.
The amendment also clarifies that changing the disposal method does
not change the date of classification. This amendment is to be applied
prospectively to changes in methods of disposal that occur in annual
periods beginning on or after 1 January 2016, with earlier application
permitted.
FRS 7 Financial Instruments: The amendment clarifies that a servicing contract that includes a
Disclosures
fee can constitute continuing involvement in a financial asset. An
entity must assess the nature of the fee and arrangement against
the guidance for continuing involvement in FRS 7 in order to assess
whether the disclosures are required.
In addition, the amendment also clarifies that the disclosures in
respect of offsetting of financial assets and financial liabilities are not
required in the condensed interim financial report.
101
Annual Report 2015
NOTES TO THE
Standards
Descriptions
FRS 119 Employee Benefits
The amendment to FRS 119 clarifies that market depth of high quality
corporate bonds is assessed based on the currency in which the
obligation is denominated, rather than the country where the obligation
is located. When there is no deep market for high quality corporate
bonds in that currency, government bond rates must be used.
FRS 134 Interim Financial Reporting FRS 134 requires entities to disclose information in the notes to the
interim financial statements ‘if not disclosed elsewhere in the interim
financial report’.
The amendment states that the required interim disclosures must
either be in the interim financial statements or incorporated by crossreference between the interim financial statements and wherever
they are included within the greater interim financial report (e.g., in
the management commentary or risk report). The other information
within the interim financial report must be available to users on the
same terms as the interim financial statements and at the same time.
Annual Report 2015
102
Malaysian Financial Reporting Standards (MFRS Framework)
On 8 September 2015, the Malaysian Accounting Standards Board (“MASB”) confirmed that the effective date
of MFRS 15 Revenue from Contracts with Customers will be deferred to annual periods beginning on or after
1 January 2018, following the recent press release by the International Accounting Standards Board (IASB)
confirming a one-year deferral of IFRS 15 Revenue from Contracts with Customers. However, early application of
MFRS 15 is still permitted. As a result, the effective date for Transitioning Entities (TEs) to apply the Malaysian
Financial Reporting Standards (MFRS) will also be deferred to annual periods beginning on or after 1 January
2018. The TEs are entities within the scope of MFRS 141 Agriculture and/or IC Interpretation 15 Agreements
for the Construction of Real Estate, including their parents, significant investors and joint ventures. Generally, the
TEs are entities in the real estate and agriculture industries that have been given the option to continue applying
the Financial Reporting Standards Framework, the predecessor of the MFRS Framework.
The MASB has consistently used the effective date of MFRS 15 as the basis for setting the effective date for the
TEs to apply the MFRS. In the light of the IASB’s deferral of IFRS 15, the effective date for the TEs to apply the
MFRS will also be deferred to 1 January 2018.
The Group falls within the scope definition of TE and accordingly, will be required to prepare financial statements
using MFRS Framework in its first MFRS financial statements for the year ending 31 December 2018. In
presenting its first MFRS financial statements, the Group will be required to restate the comparative financial
statements to amounts reflecting the application of MFRS Framework. The majority of the adjustments required
on transition will be made retrospectively.
NOTES TO THE
The major differences between FRS framework and MFRS framework are as follows:
A. Agreement for the Construction of Real Estates
(i)
Revenue recognition for property under development
Under the FRS framework, under FRS 201, when the financial outcome of a development activity can
be reliably estimated, property development revenue and expenses are recognised using the stage of
completion method.
Under the MFRS framework, in accordance to MFRS 15 Revenue from Contracts with Customers, it
establishes a new five-step models that will apply to revenue arising from contracts with customers.
MFRS 15 will supersede the current revenue recognition guidance including MFRS 118 Revenue,
MFRS 111 Construction Contracts and the related interpretations when it becomes effective.
Under MFRS 15, an entity recognises revenue when (or as) a performance obligation is satisfied,
i.e when “control” of the goods or services underlying the particular performance obligation is
transferred to the customer.
Either a full or modified retrospective application is required for annual periods beginning on or after
1 January 2017 with early adoption permitted.
(ii)
Land held for development
Under the FRS framework, land held for future development are stated at cost. Under MFRS, land held
for future development are to be stated at the lower of cost and net realisable value.
B.
Agriculture
Under the MFRS framework, MFRS 141 Agriculture (MFRS 141), requires biological assets to be measured
at fair value less costs to sell unless it is not possible to measure fair value reliably, in which case they are
measured at cost. Gains and losses from changes in fair value less costs to sell are recognised in profit or
loss. Agricultural produce harvested from a biological asset are measured at fair value less costs to sell at
the point of harvest. Thereafter, the standard on inventories generally applies.
At the date of these financial statements, the Group has not completed its quantification of the financial
effects on the financial statements of the differences arising from the change from FRS to MFRS. Accordingly,
the consolidated financial performance and financial position as disclosed in these financial statements for
the financial years ended 31 December 2014 and 31 December 2015 could be different if prepared under the
MFRS Framework.
103
Annual Report 2015
The core principle of MFRS 15 is that an entity should recognise revenue which depict the transfer of
promised goods or services to customers in an amount that reflects the consideration to which the
entity expects to be entitled in exchange for those goods or services.
NOTES TO THE
2.4 Basis of consolidation
The consolidated financial statements comprise the financial statements of the Company and its subsidiaries as
at the reporting date. The financial statements of the subsidiaries used in the preparation of the consolidated
financial statements are prepared for the same reporting date as the Company. Consistent accounting policies
are applied to like transactions and events in similar circumstances.
All intra-group balances, income and expenses and unrealised gains and losses resulting from intra-group
transactions are eliminated in full.
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Annual Report 2015
Subsidiaries are consolidated from the date of acquisition, being the date on which the Group obtains control,
and continue to be consolidated until the date that such control ceases. Control is achieved when the Group is
exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect
those returns through its power over the investee. Specifically, the Group controls an investee if and only if
the Group has:
-Power over the investee (i.e. existing rights that give it the current ability to direct the relevant activities
of the investee)
- Exposure, or rights, to variable returns from its involvement with the investee, and
- The ability to use its power over the investee to affect its returns
When the Group has less than a majority of the voting or similar rights of an investee, the Group considers all
relevant facts and circumstances in assessing whether it has power over an investee, including:
-
-
-
The contractual arrangement with the other vote holders of the investee
Rights arising from other contractual arrangements
The Group’s voting rights and potential voting rights
The Group re-assesses whether or not it controls an investee if facts and circumstances indicate that there
are changes to one or more of the three elements of control. Consolidation of a subsidiary begins when the
Group obtains control over the subsidiary and ceases when the Group loses control of the subsidiary. Assets,
liabilities, income and expenses of a subsidiary acquired or disposed of during the year are included in the
statement of comprehensive income from the date the Group gains control until the date the Group ceases
to control the subsidiary.
Profit or loss and each component of other comprehensive income (“OCI”) are attributed to the equity holders
of the parent of the Group and to the non-controlling interests, even if this results in the non-controlling
interests having a deficit balance. When necessary, adjustments are made to the financial statements of
subsidiaries to bring their accounting policies into line with the Group’s accounting policies. All intra-group
assets and liabilities, equity, income, expenses and cash flows relating to transactions between members of
the Group are eliminated in full on consolidation.
NOTES TO THE
2.4 Basis of consolidation (cont’d.)
A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity
transaction. If the Group loses control over a subsidiary, it:
- Derecognises the assets (including goodwill) and liabilities of the subsidiary
- Derecognises the carrying amount of any non-controlling interests
- Derecognises the cumulative translation differences recorded in equity
- Recognises the fair value of the consideration received
- Recognises the fair value of any investment retained
- Recognises any surplus or deficit in profit or loss
-Reclassifies the parent’s share of components previously recognised in OCI to profit or loss or retained
earnings, as appropriate, as would be required if the Group had directly disposed of the related assets or
liabilities
2.5 Business combinations
When the Group acquires a business, it assesses the financial assets and liabilities assumed for appropriate
classification and designation in accordance with the contractual terms, economic circumstances and pertinent
conditions as at the acquisition date. This includes the separation of embedded derivatives in host contracts
by the acquiree.
If the business combination is achieved in stages, any previously held equity interest is re-measured at its
acquisition date fair value and any resulting gain or loss is recognised in profit or loss. It is then considered in
the determination of goodwill.
Any contingent consideration to be transferred by the acquirer will be recognised at fair value at the acquisition
date. Contingent consideration classified as an asset or liability that is a financial instrument and within the
scope of FRS 139 Financial Instruments: Recognition and Measurement, is measured at fair value with changes
in fair value recognised either in either profit or loss or as a change to OCI. If the contingent consideration
is not within the scope of FRS 139, it is measured in accordance with the appropriate FRS. Contingent
consideration that is classified as equity is not re-measured and subsequent settlement is accounted for within
equity.
Annual Report 2015
105
Business combinations are accounted for using the acquisition method. The cost of an acquisition is
measured as the aggregate of the consideration transferred measured at acquisition date fair value and the
amount of any non-controlling interests in the acquiree. For each business combination, the Group elects
whether to measure the non-controlling interests in the acquiree at fair value or at the proportionate share
of the acquiree’s identifiable net assets. Acquisition-related costs are expensed as incurred and included in
administrative expenses.
NOTES TO THE
2.6 Transactions with non-controlling interests
Non-controlling interest represents the equity in subsidiaries not attributable, directly or indirectly, to owners
of the Company.
Changes in the Company’s ownership interest in a subsidiary that do not result in a loss of control are
accounted for as equity transactions. In such circumstances, the carrying amounts of the controlling and
non-controlling interests are adjusted to reflect the changes in their relative interests in the subsidiary. Any
difference between the amount by which the non-controlling interest is adjusted and the fair value of the
consideration paid or received is recognised directly in equity and attributed to owners of the Company.
2.7 Functional and presentation currency
The individual financial statements of each entity in the Group are measured using the currency of the primary
economic environment in which the entity operates (“the functional currency”). The consolidated financial
statements are presented in Ringgit Malaysia (“RM”), which is also the Company’s functional currency.
106
Annual Report 2015
2.8 Property, plant and equipment
All items of property, plant and equipment are initially recorded at cost. The cost of an item of property, plant
and equipment is recognised as an asset if, and only if, it is probable that future economic benefits associated
with the item will flow to the Group and the cost of the item can be measured reliably.
Subsequent to recognition, property, plant and equipment are measured at cost less accumulated depreciation
and accumulated impairment losses. When significant parts of property, plant and equipment are required to
be replaced in intervals, the Group recognises such parts as individual assets with specific useful lives and
depreciation, respectively. Likewise, when a major inspection is performed, its cost is recognised in the carrying
amount of the plant and equipment as a replacement if the recognition criteria are satisfied. All other repair
and maintenance costs are recognised in profit or loss as incurred.
Freehold land has an unlimited useful life and therefore is not depreciated. Land and plantation work-inprogress and palm oil mill construction in progress are also not depreciated as these assets are not available
for use.
NOTES TO THE
2.8 Property, plant and equipment (cont’d.)
Leasehold land classified as finance lease is amortised in equal instalment over the period of the leases ranging
from 66 to 99 years.
Depreciation of other property, plant and equipment is provided for on a straight-line basis to write off the
cost of each asset to its residual value over the estimated useful life of each asset as follows:
Buildings
10 to 50 years
Plant, machinery and factory equipment
5 to 10 years
Motor vehicles and estate equipment
5 to 10 years
Electrical installation, furniture and fittings, renovation,
moulds, office equipment, signboards, air conditioners and
nursery site preparation costs
3 to 20 years
The residual value, useful life and depreciation method are reviewed at each financial year-end, and adjusted
prospectively, if appropriate.
An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits
are expected from its use or disposal. Any gain or loss on derecognition of the asset is included in the profit
or loss in the year the asset is derecognised.
2.9 Biological assets
(a) Plantation development expenditure
Plantation development expenditure consists of pre-cropping costs incurred from the commencement of
development to the date of maturity of the rootstock. A portion of the indirect overheads which include
general and administrative expenses and interest expense incurred on immature plantation is similarly
capitalised under biological assets until such time when the plantation attains maturity. Plantation
development expenditure is capitalised at cost and amortised over a period of 25 years commencing from
the date of the maturity of the rootstock.
Subsequent to recognition, plantation development expenditure is stated at cost less accumulated
amortisation and any accumulated impairment losses.
The plantation development expenditure was reclassified as biological assets on 1 January 2006 and the
amortisation of the plantation development expenditure continues to be recognised through profit or loss.
107
Annual Report 2015
The carrying values of property, plant and equipment are reviewed for impairment when events or changes in
circumstances indicate that the carrying value may not be recoverable.
NOTES TO THE
2.9
Biological assets (cont’d.)
(b)
Livestocks
Livestocks are carried at the lower of cost and market value, determined on an aggregate basis. Cost
is determined on the weighted average basis while the market value is determined on the current
net selling prices. On disposal of livestocks, the difference between net disposal proceeds and the
carrying amount is recognised in profit or loss.
2.10
Intangible asset
Goodwill
Goodwill is initially measured at cost. Following initial recognition, goodwill is measured at cost less
accumulated impairment losses.
Annual Report 2015
108
For the purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition
date, allocated to the Group’s cash-generating units that are expected to benefit from the synergies of the
combination, irrespective of whether other assets or liabilities of the acquiree are assigned to those units.
The cash-generating unit to which goodwill has been allocated is tested for impairment annually and
whenever there is an indication that the cash-generating unit may be impaired, by comparing the carrying
amount of the cash-generating unit, including the allocated goodwill, with the recoverable amount of the
cash-generating unit. Where the recoverable amount of the cash-generating unit is less than the carrying
amount, an impairment loss is recognised in the profit or loss. Impairment losses recognised for goodwill
are not reversed in subsequent periods.
Where goodwill forms part of a cash-generating unit and part of the operation within that cash-generating
unit is disposed of, the goodwill associated with the operation disposed of is included in the carrying
amount of the operation when determining the gain or loss on disposal of the operation. Goodwill
disposed of in this circumstance is measured based on the relative fair values of the operations disposed
of and the portion of the cash-generating unit retained.
2.11
Land use rights
Land use rights are initially measured at cost. Following initial recognition, land use rights are measured at
cost less accumulated amortisation and accumulated impairment losses. The land use rights are amortised
on a straight-line basis over their lease terms.
NOTES TO THE
2.12
Impairment of non-financial assets
The Group assesses at each reporting date whether there is an indication that an asset may be impaired.
If any such indication exists, or when an annual impairment assessment for an asset is required, the Group
makes an estimate of the asset’s recoverable amount.
An asset’s recoverable amount is the higher of an asset’s fair value less costs to sell and its value in use.
For the purpose of assessing impairment, assets are grouped at the lowest levels for which there are
separately identifiable cash flows (cash-generating units (“CGU”)).
Impairment losses are recognised in profit or loss except for assets that are previously revalued where the
revaluation was taken to other comprehensive income. In this case the impairment is also recognised in
other comprehensive income up to the amount of any previous revaluation.
An assessment is made at each reporting date as to whether there is any indication that previously
recognised impairment losses may no longer exist or may have decreased. A previously recognised
impairment loss is reversed only if there has been a change in the estimates used to determine the asset’s
recoverable amount since the last impairment loss was recognised. If that is the case, the carrying amount
of the asset is increased to its recoverable amount. That increase cannot exceed the carrying amount that
would have been determined, net of depreciation, had no impairment loss been recognised previously.
Such reversal is recognised in profit or loss unless the asset is measured at revalued amount, in which
case the reversal is treated as a revaluation increase. Impairment loss on goodwill is not reversed in a
subsequent period.
2.13Subsidiaries
A subsidiary is an entity over which the Group has the power to govern the financial and operating
policies so as to obtain benefits from its activities.
In the Company’s separate financial statements, investments in subsidiaries are accounted for at cost less
impairment losses.
109
Annual Report 2015
In assessing value in use, the estimated future cash flows expected to be generated by the asset are
discounted to their present value using a pre-tax discount rate that reflects current market assessments
of the time value of money and the risks specific to the asset. Where the carrying amount of an asset
exceeds its recoverable amount, the asset is written down to its recoverable amount. Impairment losses
recognised in respect of a CGU or groups of CGUs are allocated first to reduce the carrying amount of
any goodwill allocated to those units or groups of units and then, to reduce the carrying amount of the
other assets in the unit or groups of units on a pro-rata basis.
NOTES TO THE
2.14
Financial assets
Financial assets are recognised in the statements of financial position when, and only when, the Group
and the Company become a party to the contractual provisions of the financial instrument.
When financial assets are recognised initially, they are measured at fair value, plus, in the case of financial
assets not at fair value through profit or loss, directly attributable transaction costs.
The Group and the Company determine the classification of their financial assets at initial recognition,
and the categories include financial assets at fair value through profit or loss, loans and receivables, heldto-maturity investments and available-for-sale financial assets.
The Group and the Company do not have any held-to-maturity and available-for-sale financial assets.
Annual Report 2015
110
(a) Financial assets at fair value through profit or loss
Financial assets are classified as financial assets at fair value through profit or loss if they are held
for trading or are designated as such upon initial recognition. Financial assets held for trading are
derivatives (including separated embedded derivatives) or financial assets acquired principally for the
purpose of selling in the near term.
Subsequent to initial recognition, financial assets at fair value through profit or loss are measured at
fair value. Any gains or losses arising from changes in fair value are recognised in profit or loss. Net
gains or net losses on financial assets at fair value through profit or loss do not include exchange
differences, interest and dividend income. Exchange differences, interest and dividend income on
financial assets at fair value through profit or loss are recognised separately in profit or loss as part
of other losses or other income.
Financial assets at fair value through profit or loss could be presented as current or non-current.
Financial assets that is held primarily for trading purposes are presented as current whereas financial
assets that is not held primarily for trading purposes are presented as current or non-current based
on the settlement date.
(b)
Loans and receivables
Financial assets with fixed or determinable payments that are not quoted in an active market are
classified as loans and receivables.
Subsequent to initial recognition, loans and receivables are measured at amortised cost using the
effective interest method. Gains and losses are recognised in profit or loss when the loans and
receivables are derecognised or impaired, and through the amortisation process.
NOTES TO THE
2.14
Financial assets (cont’d.)
(b) Loans and receivables (cont’d.)
Loans and receivables are classified as current assets, except for those having maturity dates later
than 12 months after the reporting date which are classified as non-current.
A financial asset is derecognised when the contractual right to receive cash flows from the asset has
expired. On derecognition of a financial asset in its entirety, the difference between the carrying amount
and the sum of the consideration received and any cumulative gain or loss that had been recognised in
other comprehensive income is recognised in profit or loss.
Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets
within the period generally established by regulation or convention in the marketplace concerned. All
regular way purchases and sales of financial assets are recognised or derecognised on the trade date i.e.,
the date that the Group and the Company commit to purchase or sell the asset.
111
2.15
Impairment of financial assets
The Group and the Company assess at each reporting date whether there is any objective evidence that
a financial asset is impaired.
(a) Trade and other receivables and other financial assets carried at amortised cost
To determine whether there is objective evidence that an impairment loss on financial assets has
been incurred, the Group and the Company consider factors such as the probability of insolvency
or significant financial difficulties of the debtor and default or significant delay in payments. For
certain categories of financial assets, such as trade receivables, assets that are assessed not to be
impaired individually are subsequently assessed for impairment on a collective basis based on similar
risk characteristics. Objective evidence of impairment for a portfolio of receivables could include the
Group’s and the Company’s past experience of collecting payments, an increase in the number of
delayed payments in the portfolio past the average credit period and observable changes in national
or local economic conditions that correlate with default on receivables.
Annual Report 2015
NOTES TO THE
2.15
Impairment of financial assets (cont’d.)
(a) Trade and other receivables and other financial assets carried at amortised cost (cont’d.)
If any such evidence exists, the amount of impairment loss is measured as the difference between
the asset’s carrying amount and the present value of estimated future cash flows discounted at the
financial asset’s original effective interest rate. The impairment loss is recognised in profit or loss.
The carrying amount of the financial asset is reduced by the impairment loss directly for all financial
assets with the exception of trade receivables, where the carrying amount is reduced through the use
of an allowance account. When a trade receivable becomes uncollectible, it is written off against the
allowance account.
Annual Report 2015
112
If in a subsequent period, the amount of the impairment loss decreases and the decrease can
be related objectively to an event occurring after the impairment was recognised, the previously
recognised impairment loss is reversed to the extent that the carrying amount of the asset does not
exceed its amortised cost at the reversal date. The amount of reversal is recognised in profit or loss.
(b) Unquoted equity securities carried at cost
If there is objective evidence (such as significant adverse changes in the business environment where
the issuer operates, probability of insolvency or significant financial difficulties of the issuer) that
an impairment loss on financial assets carried at cost has been incurred, the amount of the loss is
measured as the difference between the asset’s carrying amount and the present value of estimated
future cash flows discounted at the current market rate of return for a similar financial asset. Such
impairment losses are not reversed in subsequent periods.
2.16
Cash and cash equivalents
Cash and cash equivalents comprise cash at bank and in hand, demand deposits, and short-term, highly
liquid investments that are readily convertible to known amount of cash and which are subject to an
insignificant risk of changes in value.
NOTES TO THE
2.17
Construction contracts
Where the outcome of a construction contract can be reliably estimated, contract revenue and contract
costs are recognised as revenue and expenses respectively by using the stage of completion method.
The stage of completion is measured by reference to the proportion of contract costs incurred for work
performed to date to the estimated total contract costs.
Where the outcome of a construction contract cannot be estimated reliably, contract revenue is recognised
to the extent of contract costs incurred that are likely to be recoverable. Contract costs are recognised as
expense in the period in which they are incurred.
When it is probable that total contract costs will exceed total contract revenue, the expected loss is
recognised as an expense immediately.
When the total costs incurred on construction contracts plus recognised profits (less recognised losses)
exceeds progress billings, the balance is classified as amount due from customers on contracts. When
progress billings exceed costs incurred plus, recognised profits (less recognised losses), the balance is
classified as amount due to customers on contracts.
2.18
Land held for property development and property development costs
(a) Land held for property development
Land held for property development consists of land where no development activities have been
carried out or where development activities are not expected to be completed within the normal
operating cycle. Such land is classified within non-current assets and is stated at cost less any
accumulated impairment losses.
Land held for property development is reclassified as development properties at the point when
development activities have commenced and where it can be demonstrated that the development
activities can be completed within the normal operating cycle.
(b)
Property development costs
Property development costs comprise all costs that are directly attributable to development activities
or that can be allocated on a reasonable basis to such activities.
When the financial outcome of a development activity can be reliably estimated, property development
revenue and expenses are recognised in the profit or loss by using the stage of completion method.
The stage of completion is determined by the proportion that property development costs incurred
for work performed to date bear to the estimated total property development costs.
113
Annual Report 2015
Contract revenue comprises the initial amount of revenue agreed in the contract and variations in contract
work, claims and incentive payments to the extent that it is probable that they will result in revenue and
they are capable of being reliably measured.
NOTES TO THE
2.18
Land held for property development and property development costs (cont’d.)
(b) Property development costs (cont’d.)
Where the financial outcome of a development activity cannot be reliably estimated, property
development revenue is recognised only to the extent of property development costs incurred that
is probable will be recoverable, and property development costs on properties sold are recognised as
an expense in the period in which they are incurred.
Any expected loss on a development project, including costs to be incurred over the defects liability
period, is recognised as an expense immediately.
Property development costs not recognised as an expense are recognised as an asset, which is
measured at the lower of cost and net realisable value.
Annual Report 2015
114
The excess of revenue recognised in the income statement over billings to purchasers is classified
as accrued billings within other current assets and the excess of billings to purchasers over revenue
recognised in the income statement is classified as progress billings within other current liabilities.
2.19Inventories
Inventories are stated at the lower of cost and net realisable value. Costs incurred in bringing the
inventories to their present location and condition are accounted for as follows:
-
Raw materials and consumables: purchase costs on a first-in first-out basis.
-Finished goods: costs of direct materials and labour and a proportion of manufacturing overheads
based on normal operating capacity. These costs are assigned on a weighted average method.
Net realisable value is the estimated selling price in the ordinary course of business less estimated costs
of completion and the estimated costs necessary to make the sale.
2.20Provisions
Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a
past event, it is probable that an outflow of economic resources will be required to settle the obligation
and the amount of the obligation can be estimated reliably.
Provisions are reviewed at each reporting date and adjusted to reflect the current best estimate. If it is
no longer probable that an outflow of economic resources will be required to settle the obligation, the
provision is reversed. If the effect of the time value of money is material, provisions are discounted using
a current pre tax rate that reflects, where appropriate, the risks specific to the liability. When discounting
is used, the increase in the provision due to the passage of time is recognised as a finance cost.
NOTES TO THE
2.21
Financial liabilities
Financial liabilities are classified according to the substance of the contractual arrangements entered into
and the definitions of a financial liability.
Financial liabilities, within the scope of FRS 139, are recognised in the statements of financial position
when, and only when, the Group and the Company become a party to the contractual provisions of the
financial instrument. Financial liabilities are classified as either financial liabilities at fair value through
profit or loss or other financial liabilities.
The Group and the Company have not designated any financial liabilities as at fair value through profit or loss.
The Group’s and the Company’s other financial liabilities include trade and other payables and loans and
borrowings.
Loans and borrowings are recognised initially at fair value, net of transaction costs incurred, and
subsequently measured at amortised cost using the effective interest method. Loans and borrowings
are classified as current liabilities unless the group has an unconditional right to defer settlement of the
liability for at least 12 months after the reporting date.
For other financial liabilities, gains and losses are recognised in profit or loss when the liabilities are
derecognised, and through the amortisation process.
A financial liability is derecognised when the obligation under the liability is extinguished. When an
existing financial liability is replaced by another from the same lender on substantially different terms, or
the terms of an existing liability are substantially modified, such an exchange or modification is treated
as a derecognition of the original liability and the recognition of a new liability, and the difference in the
respective carrying amounts is recognised in profit or loss.
115
Annual Report 2015
Trade and other payables are recognised initially at fair value plus directly attributable transaction costs
and subsequently measured at amortised cost using the effective interest method.
NOTES TO THE
2.22
Borrowing costs
Borrowing costs are capitalised as part of the cost of a qualifying asset if they are directly attributable to
the acquisition, construction or production of that asset. Capitalisation of borrowing costs commences
when the activities to prepare the asset for its intended use or sale are in progress and the expenditures
and borrowing costs are incurred. Borrowing costs are capitalised until the assets are substantially
completed for their intended use or sale.
All other borrowing costs are recognised in profit or loss in the period they are incurred. Borrowing costs
consist of interest and other costs that the Group and the Company incurred in connection with the
borrowing of funds.
2.23
Redeemable convertible preference shares and redeemable preference shares
Redeemable convertible preference shares and redeemable preference shares are recorded at the amount
of proceeds received, net of transaction costs.
Annual Report 2015
116
Redeemable convertible preference shares are recognised as a financial liability and classified as noncurrent liabilities in the statements of financial position and the preferential dividends are recognised in
the statements of comprehensive income as finance costs in profit or loss in the period in which they are
incurred.
2.24
Employee benefits
(a)
Defined contribution plans
The Group and the Company make contributions to the Employee Provident Fund in Malaysia, a
defined contribution pension scheme. Contributions to defined contribution pension schemes are
recognised as an expense in the period in which the related service is performed.
(b)
Defined benefit plans
The net defined benefit liability or asset is the aggregate of the present value of the defined benefit
obligation (derived using a discount rate based on high quality corporate bonds) at the end of the
reporting period reduced by the fair value of plan assets (if any), adjusted for any effect of limiting a
net defined benefit asset to the asset ceiling. The asset ceiling is the present value of any economic
benefits available in the form of refunds from the plan or reductions in future contributions to the
plan.
NOTES TO THE
2.24
Employee benefits (cont’d.)
(b) Defined benefit plans (cont’d.)
The cost of providing benefits under the defined benefit plans is determined separately for each plan
using the projected unit credit method.
Defined benefit costs comprise the following:
- Service cost
-
Net interest on the net defined benefit liability or asset
-
Remeasurements of net defined benefit liability or asset
Service costs which include current service costs, past service costs and gains or losses on nonroutine settlements are recognised as expense in profit or loss. Past service costs are recognised
when plan amendment or curtailment occurs.
Plan assets are assets that are held by a long-term employee benefit fund or qualifying insurance
policies. Plan assets are not available to the creditors of the Group, nor can they be paid directly to
the Group. Fair value of plan assets is based on market price information. When no market price is
available, the fair value of plan assets is estimated by discounting expected future cash flows using a
discount rate that reflects both the risk associated with the plan assets and the maturity or expected
disposal date of those assets (or, if they have no maturity, the expected period until the settlement
of the related obligations).
The Group’s right to be reimbursed of some or all of the expenditure required to settle a defined
benefit obligation is recognised as a separate asset at fair value when and only when reimbursement
is virtually certain.
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Annual Report 2015
Net interest on the net defined benefit liability or asset is the change during the period in the net
defined benefit liability or asset that arises from the passage of time which is determined by applying
the discount rate based on high quality corporate bonds to the net defined benefit liability or asset. Net
interest on the net defined benefit liability or asset is recognised as expense or income in profit or loss.
.
Remeasurements comprising actuarial gains and losses, return on plan assets and any change in
the effect of the asset ceiling (excluding net interest on defined benefit liability) are recognised
immediately in other comprehensive income in the period in which they arise. Remeasurements are
recognised in retained earnings within equity and are not reclassified to profit or loss in subsequent
periods.
NOTES TO THE
2.25Leases
(a)
As lessee
Finance leases, which transfer to the Group substantially all the risks and rewards incidental to
ownership of the leased item, are capitalised at the inception of the lease at the fair value of the leased
asset or, if lower, at the present value of the minimum lease payments. Any initial direct costs are also
added to the amount capitalised. Lease payments are apportioned between the finance charges and
reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance
of the liability. Finance charges are charged to profit or loss. Contingent rents, if any, are charged as
expenses in the periods in which they are incurred.
Leased assets are depreciated over the estimated useful life of the asset. However, if there is no
reasonable certainty that the Group will obtain ownership by the end of the lease term, the asset is
depreciated over the shorter of the estimated useful life and the lease term.
Annual Report 2015
118
Operating lease payments are recognised as an expense in profit or loss on a straight-line basis over
the lease term. The aggregate benefit of incentives provided by the lessor is recognised as a reduction
of rental expense over the lease term on a straight-line basis.
(b)
As lessor
Leases where the Group retains substantially all the risks and rewards of ownership of the asset are
classified as operating leases. Initial direct costs incurred in negotiating an operating lease are added
to the carrying amount of the leased asset and recognised over the lease term on the same bases as
rental income. The accounting policy for rental income is set out in Note 2.26(f).
2.26Revenue
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group
and the revenue can be reliably measured. Revenue is measured at the fair value of consideration received
or receivable.
(a)
Revenue from construction contracts is accounted for by the stage of completion method.
(b)
Sales of properties
Revenue from sale of properties is accounted for by the stage of completion method.
NOTES TO THE
2.26
Revenue (cont’d.)
(c)
Sale of goods
Revenue relating to sale of fresh fruit bunches, crude palm oil, palm kernel, bauxite, construction
materials and landscaping are recognised net of discounts upon the transfer of significant risks and
rewards of the fresh fruit bunches, crude palm oil, palm kernel, bauxite, construction materials and
landscaping to the customer. Revenue is not recognised to the extent where there are significant
uncertainties regarding recovery of the consideration due or associated costs.
(d)
Interest income
Interest income is recognised on an accrual basis using the effective interest method.
(e)
Dividend income
Dividend income is recognised when the Group’s right to receive payment is established.
(f)
Rental income
Rental income is accounted for on a straight-line basis over the lease terms. The aggregate costs of
incentives provided to lessees are recognised as a reduction of rental income over the lease term on
a straight-line basis.
(g)
Lease income
2.27
Revenue from leasing heavy vehicles is recognised on an accrual basis.
Income taxes
(a)
Current tax
Current tax assets and liabilities are measured at the amount expected to be recovered from or paid
to the taxation authorities. The tax rates and tax laws used to compute the amount are those that
are enacted or substantively enacted by the reporting date.
Current taxes are recognised in profit or loss except to the extent that the tax relates to items
recognised outside profit or loss, either in other comprehensive income or directly in equity.
119
Annual Report 2015
NOTES TO THE
2.27
Income taxes (cont’d.)
(b)
Deferred tax
Deferred tax is provided using the liability method on temporary differences at the reporting date
between the tax bases of assets and liabilities and their carrying amounts for financial reporting
purposes.
Deferred tax liabilities are recognised for all temporary differences, except:
-where the deferred tax liability arises from the initial recognition of goodwill or of an asset or
liability in a transaction that is not a business combination and, at the time of the transaction,
affects neither the accounting profit nor taxable profit or loss; and
-in respect of taxable temporary differences associated with investments in subsidiaries and
interests in joint ventures, where the timing of the reversal of the temporary differences can be
controlled and it is probable that the temporary differences will not reverse in the foreseeable
future.
Annual Report 2015
120
Deferred tax assets are recognised for all deductible temporary differences, carry forward of unused
tax credits and unused tax losses, to the extent that it is probable that taxable profit will be available
against which the deductible temporary differences, and the carry forward of unused tax credits and
unused tax losses can be utilised except:
-where the deferred tax asset relating to the deductible temporary difference arises from the
initial recognition of an asset or liability in a transaction that is not a business combination
and, at the time of the transaction, affects neither the accounting profit nor taxable profit or
loss; and
-in respect of deductible temporary differences associated with investments in subsidiaries
and interests in joint ventures, deferred tax assets are recognised only to the extent that it
is probable that the temporary differences will reverse in the foreseeable future and taxable
profit will be available against which the temporary differences can be utilised.
The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the
extent that it is no longer probable that sufficient taxable profit will be available to allow all or part
of the deferred tax asset to be utilised. Unrecognised deferred tax assets are reassessed at each
reporting date and are recognised to the extent that it has become probable that future taxable profit
will allow the deferred tax assets to be utilised.
NOTES TO THE
2.27
Income taxes (cont’d.)
(b)
Deferred tax (cont’d.)
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the year
when the asset is realised or the liability is settled, based on tax rates and tax laws that have been
enacted or substantively enacted at the reporting date.
Deferred tax relating to items recognised outside profit or loss is recognised outside profit or
loss. Deferred tax items are recognised in correlation to the underlying transaction either in other
comprehensive income or directly in equity and deferred tax arising from a business combination is
adjusted against goodwill on acquisition.
Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set
off current tax assets against current tax liabilities and the deferred taxes relate to the same taxable
entity and the same taxation authority.
121
(c) Goods and Services Tax (“GST”)
The net amount of GST being the difference between output and input of GST, payable to or receivable
from the respective authorities at the reporting date, is included in trade and other payables or trade
and other receivables in the statements of financial position.
2.28
Segment reporting
For management purposes, the Group is organised into operating segments based on their products
and services which are independently managed by the respective segment managers responsible for the
performance of the respective segments under their charge. The segment managers report directly to the
management of the Company who regularly review the segment results in order to allocate resources
to the segments and to assess the segment performance. Additional disclosures on each of these
segments are shown in Note 43, including the factors used to identify the reportable segments and the
measurement basis of segment information.
2.29
Share capital and share issuance expenses
An equity instrument is any contract that evidences a residual interest in the assets of the Group and the
Company after deducting all of its liabilities. Ordinary shares and redeemable preference shares are equity
instruments.
Ordinary shares and redeemable preference shares are recorded at the proceeds received, net of directly
attributable incremental transaction costs. Ordinary shares and redeemable preference shares are
classified as equity. Dividends on ordinary shares and redeemable preference shares are recognised in
equity in the period in which they are declared.
Annual Report 2015
NOTES TO THE
2.30Contingencies
A contingent liability or asset is a possible obligation or asset that arises from past events and whose
existence will be confirmed only by the occurrence or non-occurrence of uncertain future event(s) not
wholly within the control of the Group.
Contingent liabilities and assets are not recognised in the statements of financial position of the Group
and the Company.
2.31
Current versus non-current classification
The Group presents assets and liabilities in statement of financial position based on current/non-current
classification. An asset is classified as current when it is:
Annual Report 2015
122
(i) Expected to be realised or intended to sold or consumed in normal operating cycle;
(ii) Held primarily for the purpose of trading;
(iii) Expected to be realised within twelve months after the reporting period; or
(iv)Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least
twelve months after the reporting period.
All other assets are classified as non-current.
A liability is current when:
(i) It is expected to be settled in normal operating cycle;
(ii) It is held primarily for the purpose of trading;
(iii) It is due to be settled within twelve months after the reporting period; or
(iv)There is no unconditional right to defer the settlement of the liability for at least twelve months after
the reporting period.
The Group classifies all other liabilities as non-current.
Deferred tax assets and liabilities are classified as non-current assets and liabilities.
Fair value measurements
2.32
Fair value of an asset or a liability, except for lease transactions, is determined as the price that would
be received to sell an asset or paid to transfer a liability in an orderly transaction between market
participants at the measurement date. The measurement assumes that the transaction to sell the asset
or transfer the liability takes place either in the principal market or in the absence of a principal market,
in the most advantageous market.
NOTES TO THE
2.32
Fair value measurements (cont’d.)
a)
Financial instruments
The fair value of financial instruments that are actively traded in organised financial markets is
determined by reference to quoted market bid prices at the close of business at the end of reporting
date. For financial instruments where there is no active market, fair value is determined using
valuation techniques. Such techniques may include using recent arm’s length market transactions;
reference to the current fair value of another instrument that is substantially the same; discounted
cash flow analysis or other valuation models.
b)
Non-financial instruments
For non-financial asset, the fair value measurement takes into account a market participant’s ability
to generate economic benefits by using the asset in its highest and best use or by selling it to another
market participant that would use the asset in its highest and best use.
Level 1 - Quoted pries (unadjusted) in active markets for identifical assets or liabilities.
Level 2 -Inputs other than quoted prices included within Level 1 that are observable for the asset or
liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).
Level 3 - Inputs for the asset or liability that are not based on observable market data (unobservable input).
The fair value of an asset to be transferred between levels is determined as of the date of the event or
change in circumstances that caused the transfer.
2.33
Investment properties
Investment properties are initially measured at cost, including transaction costs. Investment properties
are measured using cost model. Thus, subsequent to initial recognition, investment properties are stated
at cost less accumulated depreciation and less accumulated impairment losses.
Investment properties are derecognised when either they have been disposed of or when the investment
property is permanently withdrawn from use and no future economic benefit is expected from its disposal.
Any gain or loss on the retirement or disposal of an investment property is recognised in profit or loss in
the year of retirement or disposal.
Transfers are made to or from investment property only when there is a change in use. For a transfer from
investment property to owner-occupied property, the deemed cost for subsequent accounting is the fair
value at the date of change in use. For a transfer from owner-occupied property to investment property,
the property is accounted for in accordance with the accounting policy for property and equipment set
out in Note 2.8 up to the date of change in use.
123
Annual Report 2015
When measuring the fair value of an asset or a liability, the Group and the Company use observable
market data as far as possible. Fair value are categorised into different levels in a fair value hierarchy based
on the input used in the valuation technique as follows:
NOTES TO THE
2.34
Related parties
A related party is defined as follows:
a)A person or a close member of that person’s family is related to the Group and Company if that person:
b) An entity is related to the Group and the Company if any of the following conditions applies:
Annual Report 2015
124
(i)
has control or joint control over the Company;
(ii) has significant influence over the Company; or
(iii)is a member of the key management personnel of the Group or Company or of a parent of the
Company.
(i)the entity and the Company are members of the same group (which means that each parent,
subsidiary and fellow subsidiary is related to the others).
(ii)one entity is an associate or joint venture of the other entity (or an associate or joint venture
of a member of a group of which the other entity is a member).
(iii) both entities are joint ventures of the same third party.
(iv) one entity is a joint venture of a third entity and the other entity is an associate of the third entity.
(v)the entity is a post-employment benefit plan for the benefit of employees of either the Company
or an entity related to the Company. If the Company is itself such a plan, the sponsoring employers
are also related to the Company;
(vi) the entity is controlled or jointly controlled by a person identified in (a);
(vii)a person identified in (a) (i) has significant influence over the entity or is a member of the key
management personnel of the entity (or of a parent of the entity).
3. SIGNIFICANT ACCOUNTING JUDGEMENTS AND ESTIMATES
The preparation of the Group’s financial statements requires management to make judgements, estimates and
assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the disclosure of
contingent liabilities at the reporting date. However, uncertainty about these assumptions and estimates could
result in outcomes that could require a material adjustment to the carrying amount of the asset or liability affected
in the future.
(a) Judgements made in applying accounting policies
There were no significant judgements made in applying the accounting policies of the Group which may have
significant effects on the amounts recognised in the financial statements.
NOTES TO THE
3. SIGNIFICANT ACCOUNTING JUDGEMENTS AND ESTIMATES (CONT’D.)
(b) Key sources of estimation uncertainty
The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting
date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and
liabilities within the next financial year are discussed below:
(i) Amortisation of biological assets
The cost for plantation development expenditure is amortised on a straight line basis over its useful life.
The management estimates the useful life of plantation development expenditure to be 25 years. This
is a common life expectancy in the plantation industry. Changes in the maturity dates could impact the
economic useful life of these assets. Therefore, the future amortisation charges could be revised.
(ii) Depreciation of plant, machinery and factory equipment
The cost of plant, machinery and factory equipment is depreciated on a straight-line basis over the assets’
useful life. Management estimates the useful life of these plant, machinery and factory equipment to be
within 5 to 10 years. These are common life expectancies applied in the plantation industry and there is
no technological development expected that could impact the economic useful life and the residual values
of these assets. However, the management reviews the estimated useful life and residual values of plant,
machinery and factory equipment at each financial year-end. Therefore, future depreciation charges could
be revised.
The carrying value of the Group’s and the Company’s depreciation charges at the reporting date is
disclosed in Note 12. A 1% difference in the expected useful lives of these assets from management’s
estimates would result in approximately 0.1% (2014: 0.1%) variance in the Group’s profit for the year.
(iii)
Property development
The Group recognises property development revenue and expenses in profit or loss by using stage of
completion method. The stage of completion is determined by the proportion that property development
cost incurred for work performed to date bear to the estimated total property development costs.
Significant judgement is required in determining the stage of completion, the extent of the property
development costs incurred, the estimated total property development revenue and costs, as well as the
recoverability of the property development costs. In making the judgement, the Group evaluates based
on past experience and by relying on the work of specialists.
The carrying amounts of the Group’s development properties and property development in progress are
disclosed in Note 19.
125
Annual Report 2015
The carrying value of the Group’s amortisation charges at the reporting date is disclosed in Note 14(b).
NOTES TO THE
(b) Key sources of estimation uncertainty (cont’d.)
(iv)
The Group recognises construction revenue and costs, including rendering of services, in the profit or loss
by using the stage of completion method. The stage of completion is determined by the proportion that
contract costs incurred for work performed to date bear to the estimated total contract costs.
Significant judgement is required in determining the stage of completion, the extent of the contract costs
incurred, the estimated total contract revenue and costs, as well as the recoverability of the contract
projects. In making the judgement, the Group evaluates based on past experience and by relying on the
work of specialists.
Annual Report 2015
126
(v) Defined benefit plans
The cost of defined benefit plan is determined using actuarial valuation. The actuarial valuation involves
making assumptions about discount rates, future salary increases and mortality rates. All assumptions
are reviewed at each reporting dates. The carrying amounts of the Group’s defined benefit plan at the
reporting date and related assumptions are disclosed in Note 30.
In determining the appropriate discount rate, management considers the interest rates of high quality
corporate bonds with at least AA rating, with extrapolated maturities corresponding to the expected
duration of the defined benefit obligation. The underlying bonds are further reviewed for quality, and
those having excessive credit spreads are removed from the population of bonds on which the discount
rate is based, on the basis that they do not represent high quality bonds.
The mortality rate is based on publicly available mortality tables in Malaysia and is modified accordingly
with estimates of mortality improvements. Future salary increases and pension increases are based on
expected future inflation rates.
Further details about the assumptions used are provided in Note 30.
(vi) Impairment of investment in subsidiaries
The Group assesses at each reporting date whether there is any objective evidence that the investment
in subsidiaries are impaired. To determine whether there is objective evidence of impairment, the
Group considers factors such as the probability of insolvency or significant financial difficulties of the
subsidiaries.
NOTES TO THE
(b) Key sources of estimation uncertainty (cont’d.)
(vii) Development costs for external infrastructure in KotaSAS Town
The overhead costs and expenditures related to the construction of the external infrastructure in KotaSAS
town are amortised over a period of 20 years up to year 2028. The determination of the amortisation
period requires judgement based on the past track record of development and future development plans.
Changes to development plans may result in change to the amortisation period. Other overhead costs
and expenditures (e.g: architect fees, professional fees, legal fees, marketing and advertisement and etc.)
are expensed off and recognised in profit or loss as incurred from year 2015 to 2028.
The unamortised amount of RM19,161,277 is included under property development costs in Note 19(b)
of the financial statements.
4.REVENUE
Sale of goods, net of discounts
Sale of bauxite
Income from leasing heavy vehicles
Group
2015
2014
RM
RM
204,814,968
101,939,350
97,763,146
151,011
209,194,182
86,130,991
93,410,022
215,668
Company
2015
2014
RM
RM
89,569,243
–
–
–
100,343,825
–
–
–
404,668,475388,950,863 89,569,243100,343,825
Annual Report 2015
127
NOTES TO THE
5. OTHER INCOME
Annual Report 2015
128
Group
2015
2014
RM
RM
Interest income
Profit on investments in Islamic funds
Dividend income from subsidiaries
Dividend income from investment security
Gain on sale of livestocks
Gain on disposal of property, plant
and equipment
Management fee
Rental income
Agency fee
Fair value gain on derivative
Net unrealised foreign exchange gain
Interest income on advances to a subsidiary
Miscellaneous
468,050
1,876,562
–
–
–
3,843,624
78,899
–
284,215
–
252,480
129,251
–
754,167
490,786
936,877
–
360,000
121,745
–
–
194,600
–
–
41,465
–
465,743
Company
2015
2014
RM
RM
467,643
1,513,100
17,476,834
–
–
38,998
3,100,000
300,265
75,000
–
–
1,286,825
306,940
215,580
931,470
12,098,960
360,000
121,745
74,997
–
308,400
75,000
–
–
–
269,856
2,611,216 24,565,605 14,456,008
6. EMPLOYEE BENEFITS EXPENSE
Group
2015
2014
RM
RM
Salaries and wages
Social security costs
Contributions to defined contribution plan
Pension costs – defined benefit plan
(Note 30)
Bonus
Other staff related expenses
10,971,688
133,545
2,071,212
19,369,968 10,498,920 9,479,080 8,218,760
487,992
3,481,493
2,224,038
6,657,855
72,290
1,118,089
Company
2015
2014
RM
RM
5,076,146
57,067
1,084,954
4,887,738
55,177
883,536
477,606
463,982
453,596
1,436,262 2,084,731 1,236,720
736,818
712,200
701,993
NOTES TO THE
7. FINANCE COSTS
Interest expense on:
Obligations under finance leases
Term loans and Al-Bai Bithaman
Ajil (“BBA”) term financing
Unwinding discounts of the redeemable
preference shares
Total finance costs
Group
2015 2014
RM
RM
76,475
Company
2015
2014
RM
RM
62,823
50,579
39,491
2,339,935 2,480,291
443,429
–
– 2,055,762
2,416,410 4,598,876
– 2,055,762
494,008
2,095,253
8. OTHER EXPENSES
129
Included in other expenses are:
Group
2015 2014
RM
RM
Company
2015
2014
RM
RM
Auditors’ remuneration: 248,500218,500110,000 80,000
Bad debts written off
99,416
542,483
–
407,031
Directors’ remuneration (Note 9):
- executive 1,809,4621,265,0671,237,937
979,216
- non-executive 1,126,3001,216,2001,126,300
947,400
at fair value through profit or loss
470,000 2,370,000
470,000
2,370,000
Provision for diminution of investment
in a subsidiary
–
–
22,959
–
Rental expenses 76,68819,78419,152 19,584
Loss on sale of livestocks
97,392
–
97,392
–
Inventories written down
29,626
581,553
–
–
Realised foreign exchange losses
2,618,920
–
–
–
Property, plant and equipment written off
21,920
256,001
2,413
2
Annual Report 2015
NOTES TO THE
9. DIRECTORS’ REMUNERATION
The details of remuneration receivable by directors of the Company during the year are as follows:
Executive directors’
remuneration (Note 8):
Salaries and other emoluments
Company
2015
2014
RM
RM
1,809,462 1,265,067 1,237,937
979,216
825,000625,000825,000 625,000
301,300591,200301,300 322,400
130
1,126,300
1,216,200
1,126,300 947,400
Annual Report 2015
Non-executive directors’
remuneration (Note 8):
Fees
Other emoluments
Group
2015 2014
RM
RM
Total directors’ remuneration
2,935,762 2,481,267 2,364,237
1,926,616
The number of directors of the Company whose total remuneration during the year fell within the following bands
is analysed below:
Number of directors
2015
2014
Executive director:
Above RM1,200,001
1 1
Non-executive directors:
Below RM50,000
1 3
RM50,001 - RM100,000
–
3
RM100,001 - RM150,000
7
4
RM200,001 - RM250,000
–
1
RM250,001 - RM300,000
1
–
NOTES TO THE
10. INCOME TAX EXPENSE
Major components of income tax expense
The major components of income tax expense for the years ended 31 December 2015 and 31 December 2014 are:
Statements of profit or loss:
Current income tax:
Malaysian income tax
Under/(over) provision in respect of
previous years
Group
2015 2014
RM
RM
Company
2015
2014
RM
RM
25,576,687 25,840,868 7,577,941
1,087,035
(34,441) 1,073,914
9,020,432
(140,154)
26,663,722
25,806,427
8,651,8558,880,278
1,283,207 (347,390)1,326,458
(51,305)
–
(53,057)
(48,035) (460,274)
(8,125)
(215,557)
–
(454,557)
1,183,867(807,664)
1,265,276 (670,114)
Income tax expense recognised in
profit or loss
Statements of other
comprehensive income:
Income tax effect on gain on
remeasurement in retirement benefit,
representing income tax expense
recognised in other comprehensive income
Total income tax expense recognised
in statement of profit or loss and other
comprehensive income
27,847,589 24,998,763 9,917,131
50,346
–
8,210,164
50,346
–
27,897,935 24,998,763 9,967,477
8,210,164
Annual Report 2015
131
Deferred income tax (Note 31):
Origination/(reversal) of temporary
differences
Effect on changes in tax rates
Over provision in respect of
previous years
NOTES TO THE
10. INCOME TAX EXPENSE (CONT’D.)
Reconciliation between tax expense and accounting profit
The reconciliation between tax expense and the product of accounting profit multiplied by the applicable corporate
tax rate for the years ended 31 December 2015 and 31 December 2014 are as follows:
2015
RM
2014
RM
Group
Annual Report 2015
132
Profit before tax100,872,001
97,399,450
Tax at Malaysian statutory tax rate of 25% (2014: 25%) 25,218,000 24,349,863
Adjustments:
Income not subject to taxation
(87,527)
(69,766)
Non-deductible expenses
1,519,945
1,793,380
(51,305)
–
Utilisation of previously unrecognised tax losses and unabsorbed
capital allowances (364,365) (798,764)
Deferred tax assets not recognised in respect of current year’s
tax losses and unabsorbed capital allowances
573,841
223,511
Deferred tax assets recognised in respect of utilisation of
business losses brought forward
–
(4,746)
Over provision of deferred tax in respect of previous years
(48,035)
(460,274)
Under/(over) provision of income tax in respect of previous years 1,087,035
(34,441)
Income tax expense recognised in profit or loss 27,847,589
Company
Profit before tax 50,356,930
24,998,763
42,562,275
Tax at statutory tax rate of 25% (2014: 25%) 12,589,233 10,640,569
Adjustments:
Income not subject to taxation (4,576,311) (3,114,740)
Non-deductible expenses
891,477
1,279,046
(53,057)
–
Over provision of deferred tax in respect of previous years
(8,125)
(454,557)
Under/(over) provision of income tax in respect of previous years 1,073,914
(140,154)
Income tax expense recognised in profit or loss 9,917,131
8,210,164
Domestic income tax is calculated at statutory tax rate of 25% (2014: 25%) of the estimated assessable profit for the year.
The domestic statutory tax rate will be reduced to 24% from the current year’s rate of 25%, effective from year of assessment
2016. The computation of deferred tax as at 31 December 2015 and 31 December 2014 have reflected these changes.
NOTES TO THE
11. EARNINGS PER SHARE
a)Basic
Basic earnings per share amounts are calculated by dividing profit net of tax attributable to owners of the
parent by the weighted average number of ordinary shares outstanding during the financial year.
Group
2015
2014
RM
RM
Profit net of tax attributable to owners of the parent used in
the computation of basic earnings per share 53,851,567
53,871,543
Number ofNumber of
shares
shares
Sen
Sen
per share per share
Basic earnings per share
13.53
17.13
b)Diluted
No diluted earnings per share were presented as there were no potential dilutive ordinary shares outstanding
as at 31 December 2015.
133
Annual Report 2015
Weighted average number of ordinary shares for basic
earnings per share computation398,159,592 314,419,660
NOTES TO THE
12. PROPERTY, PLANT AND EQUIPMENT
FreeholdLeasehold Plant and *Other
landBuildings
landmachinery assets
RM
RM
RM
RM
RM
Total
RM
Group
Cost
At 1 January 2014
Additions
Written off
Reclassification
Annual Report 2015
134
At 31 December 2014
At 1 January 2015
Additions
Disposal
Written off
Transfer from property
development costs
Reclassification
At 31 December 2015
Accumulated depreciation
5,751,45027,440,81984,560,495 16,718,51427,941,113162,412,391
–2,032,4591,554,675 739,9222,448,470 6,775,526
–
(248,000)
(8,000)
–
(76,000)
(332,000)
– 713,378
–
–(713,378)
–
5,751,45029,938,65686,107,170 17,458,43629,600,205168,855,917
5,751,45029,938,65686,107,170 17,458,43629,600,205168,855,917
– 929,119
– 3,818,8573,389,973 8,137,949
–
–
– (200,000)(976,337)
(1,176,337)
–
(71,084)
–
(170,891) (482,951)
(724,926)
– 1,206,876
–
–
– 4,936,281
5,751,45032,003,56791,043,451 20,906,40226,594,609176,299,479
At 1 January 2014
Depreciation charge
for the year:
Recognised in
profit or loss
Capitalised in
construction cost
(Note 29)
Capitalised in property
development cost
(Note 19)
Written off
At 31 December 2014
–
–
1,206,876
–(4,936,281)
–
–2,912,1222,715,997 4,187,2543,630,78313,446,156
–
–
2,117,682
–
1,019,656
–
2,217,782
5,796
796,071
440
6,151,191
6,236
–
–
–
– 448,103
448,103
––– –
(75,999)
(75,999)
–5,029,8043,735,653 6,410,8324,799,39819,975,687
NOTES TO THE
12. PROPERTY, PLANT AND EQUIPMENT (CONT’D.)
landBuildings
RM
RM
RM
RM
RM
Total
RM
Group
Accumulated depreciation (cont’d.)
At 1 January 2015
Depreciation charge for
the year:
Recognised in
profit or loss
Capitalised in
construction
cost (Note 29)
Capitalised in property
development cost
(Note 19)
Disposal
Written off
–5,029,8043,735,653 6,410,8324,799,39819,975,687
–
2,208,563
1,080,724
2,193,412
1,002,370
6,485,069
–
–
–
23,587
32,601
56,188
135
–
–
–
–
–
(58,498)
–
– 228,598
228,598
– (119,566)(760,415) (879,981)
–
(163,233) (481,275)
(703,006)
At 31 December 2015
Group
Net carrying amount
At 31 December 2014
5,751,450 24,908,852 82,371,517
11,047,604 24,800,807 148,880,230
At 31 December 2015
5,751,450 24,823,698 86,227,074
12,561,370 21,773,332 151,136,924
–7,179,8694,816,377 8,345,0324,821,27725,162,555
Annual Report 2015
NOTES TO THE
landBuildings
RM
RM
RM
RM
RM
Total
RM
Company
Cost
At 1 January 2014
5,596,450 4,412,05765,112,528 1,283,907 6,603,797 83,008,739
Additions
– 337,335 1,410,755
23,5051,932,783 3,704,378
Written off ––– –
(76,001)
(76,001)
Transfer from a subsidiary
–
–
–
–
70,274
70,274
Transfer to a subsidiary
–
–
–
–
(310,277)
(310,277)
Reclassification
– 713,378
–
–(713,378)
–
At 31 December 2014
5,596,450
5,462,770 66,523,283
1,307,412
7,507,198
86,397,113
Annual Report 2015
136
At 1 January 2015
Additions
Disposal
Written off
Transfer to investment
properties
At 31 December 2015
5,596,450 5,462,77066,523,283 1,307,412 7,507,198 86,397,113
– 500,091
– 113,118 152,699 765,908
–
–
–
–(453,147) (453,147)
–
(56,242)
–
(153,801) (447,528)
(657,571)
–
–
–
–
60,000
60,000
–
5,596,450
– (1,113,000)
5,906,619 65,410,283
–
–
1,266,729
6,819,222
(1,113,000)
84,999,303
NOTES TO THE
landBuildings
RM
RM
RM
RM
RM
Total
RM
Company
At 1 January 2014
Depreciation charge for the year
Written off
Transfer to a subsidiary
–1,167,3752,448,595 794,0921,691,160 6,101,222
–
415,050
818,978
254,558
559,043
2,047,629
––– –
(75,999)
(75,999)
–
–
–
–
28,108
28,108
–
–
–
–
(310,273)
(310,273)
At 31 December 2014
–1,582,4253,267,573 1,048,6501,892,039 7,790,687
At 1 January 2015
Depreciation charge for the year
Disposal
Written off
–1,582,4253,267,573 1,048,6501,892,039 7,790,687
–
427,365
826,836
97,319
630,981
1,982,501
–
–
–
–(453,145) (453,145)
–
(56,198)
–
(151,784) (447,176)
(655,158)
–
–
–
–
(1)
(1)
137
At 31 December 2015
Company
Net carrying amount
At 31 December 2014
5,596,450
3,880,345 63,255,710
258,762
5,615,159
78,606,426
At 31 December 2015
5,596,450
3,953,027 61,315,874
272,544
5,196,524
76,334,419
*Other assets consist of motor vehicles, estate equipment, electrical installation, furniture and fittings,
renovation, factory equipment, moulds, office equipment, signboards, air conditioners, palm oil mill
construction in progress, nursery site preparation costs and land and plantation work-in-progress.
–1,953,5924,094,409
994,1851,622,698 8,664,884
Annual Report 2015
NOTES TO THE
(a)During the financial year, the Group and the Company acquired property, plant and equipment with an aggregate
cost of RM624,000 (2014: RM859,000) and RM234,000 (2014: RM859,000) by means of finance leases
respectively. The cash outflow on acquisition of property, plant and equipment of the Group and the Company
amounted to RM7,513,949 (2014: RM5,916,526) and RM531,908 (2014: RM2,845,378) respectively.
(b)The carrying amount of motor vehicles held under finance leases for the Group is RM1,294,721 (2014:
RM1,390,585) and the Company is RM527,650 (2014: RM952,778) respectively.
(c)In addition to assets held under finance leases, the Group’s property, plant and equipment with carrying amount
of RM10,917,286 (2014: RM11,030,922) are pledged to secure the Group’s bank borrowings (Note 26).
13. INVESTMENT PROPERTIES
2015
RM
2014
RM
Annual Report 2015
138
Group
Building
Cost
At 1 January
– –
Transfer from property development costs
402,292
–
At 31 December
402,292–
At 1 January
––
Depreciation for the year
7,354
–
At 31 December
7,354–
Net carrying amount 394,938–
NOTES TO THE
13. INVESTMENT PROPERTIES (CONT’D.)
2015
RM
2014
RM
Company
Leasehold land
Cost
At 1 January
––
Transfer from property, plant and equipment 1,113,000
–
At 31 December
1,113,000–
At 1 January
––
Depreciation for the year
53,497
–
At 31 December
53,497–
Net carrying amount
1,059,503–
Fair value information
The directors have estimated the fair value of investment properties of the Group and the Company as at 31
December 2015 to be RM1,172,966 (2014: RM Nil) and RM10,465,862 (2014: RM Nil) respectively. The fair value
have been determined by reference to market evidence of transaction prices for similar properties.
Level 2 fair value
Level 2 fair values of building and leasehold land have been generally derived using the sales comparison approach.
Sales price of comparable properties in close proximity are adjusted for differences in key attributes such as property
size. The most significant input into this valuation approach is price per square foot of comparable properties.
The following is recognised in profit or loss in respect of investment properties:
Group
2015 2014
RM
RM
Company
2015
2014
RM
RM
Rental income
45,000–– –
139
Annual Report 2015
NOTES TO THE
14. BIOLOGICAL ASSETS
(a)Livestocks
Group and Company
2015
2014
RM
RM
At cost450,834 553,311
(b) Plantation development expenditure
Group
2015
2014
RM
RM
Annual Report 2015
140
Company
2015
2014
RM
RM
Cost
At 1 January 103,365,254
86,577,415
41,018,439
35,840,413
Additions
26,675,842 16,787,839 12,231,920 5,178,026
At 31 December 130,041,096
103,365,254
53,250,359
41,018,439
11,457,202
8,173,820
7,428,525
5,503,499
4,135,192
3,283,382
2,494,481
1,925,026
15,592,394
11,457,202
9,923,006
7,428,525
Net carrying amount
At 31 December 114,448,702
91,908,052
43,327,353
33,589,914
92,461,363
43,778,187
34,143,225
Accumulated amortisation
At 1 January
Amortisation recognised in
profit or loss
At 31 December
Total biological assets114,899,536
NOTES TO THE
15.GOODWILL
Group
2015
2014
RM
RM
Cost
At 1 January/31 December 8,869,858
8,869,858
Accumulated impairment
At 1 January/31 December 8,869,858
8,869,858
Net carrying amount
– –
16. LAND USE RIGHTS
At 1 January 39,322,204 39,896,457
Amortisation for the year (451,185)
(574,253)
At 31 December 38,871,019
39,322,204
Title deeds of long term leasehold land with carrying value of RM38,871,019 (2014: RM39,322,204) are registered
under the name of a corporate shareholder, Lembaga Kemajuan Perusahaan Pertanian Negeri Pahang.
All leasehold land of the Group are pledged as securities for loans and borrowings (Note 26).
17. INVESTMENTS IN SUBSIDIARIES
Company
2015
2014
RM
RM
Unquoted shares, at cost 70,539,553 70,539,553
Less: Accumulated impairment loss
(22,959)
–
70,516,59470,539,553
141
Annual Report 2015
Group and Company
2015
2014
RM
RM
NOTES TO THE
17. INVESTMENTS IN SUBSIDIARIES (CONT’D.)
(a) Details of subsidiaries are as follows:
% of ownership
interest
held by the Group
2015
2014
% of ownership interest
held by non-controlling
interests*
2015
2014
Country of
incorporation
Principal
activities
Sri Jelutung Palm
Oil Mill
Sdn Bhd
Malaysia
Production of
crude palm oil and
cultivation of oil
palms
100
100
–
–
Alur Gemilang
Sdn Bhd
Malaysia
Cultivation of oil
palms
60
60
40
40
Alur Cemerlang
Sdn Bhd
Malaysia
Cultivation of oil
palms
100
100
–
–
KotaSAS Sdn Bhd
Malaysia
Construction
and property
development
100
100
–
–
Kreatif Selaras
Mining
Sdn Bhd
Malaysia
Mining of mineral
deposits
60
60
40
40
Alur Seri
Sdn Bhd
Malaysia
Cultivation of oil
palms
60
60
40
40
Kurnia Setia
Berhad
Malaysia
Dormant
100
100
–
–
Kreatif Selaras
Land Sdn Bhd
Malaysia
Dormant
100
100
–
–
Kreatif Sinar
Gabungan
Sdn Bhd
Malaysia
Dormant
65
65
35
35
Name
Held by
the Company:
Annual Report 2015
142
NOTES TO THE
(a) Details of subsidiaries are as follows (cont’d.):
% of ownership
interest
held by the Group
2015
2014
% of ownership interest
held by non-controlling
interests*
2015
2014
Country of
incorporation
Principal
activities
KotaSAS Omni
Sdn Bhd
Malaysia
Construction
and property
development
65
65
35
35
Kurnia Setia
Trading
Sdn Bhd
Malaysia
Trading of
construction
materials
100
100
–
–
Tanah Makmur
KotaSAS
Sdn Bhd
Malaysia
Construction
and property
development
60
60
40
40
Kurnia Setia
Engineering
Sdn Bhd
Malaysia
Construction,
services and leasing
of machineries and
vehicles
100
100
–
–
Malaysia
Production of
compost fertiliser
70
70
30
30
Name
Held through
KotaSAS
Sdn Bhd:
Held through
Sri Jelutung
Palm Oil Mill
Sdn Bhd:
Alur Lestari
Sdn Bhd
*
equals to the proportion of voting rights held
Annual Report 2015
143
NOTES TO THE
(b)Summarised financial information of KotaSAS Omni Sdn Bhd (“KSO”), Tanah Makmur KotaSAS Sdn Bhd
(“TMK”), Kreatif Selaras Mining Sdn Bhd (“KSM”), Alur Gemilang Sdn Bhd (“AGSB”), Alur Lestari Sdn Bhd
(“ALSB”) and Alur Seri Sdn Bhd (“ASSB”) which have non-controlling interests that are material to the Group
is set out below. The summarised financial information presented below is the amount before inter-company
elimination. The non-controlling interests in respect of Kreatif Sinar Gabungan Sdn Bhd is not material to the
Group.
(i) Summarised statements of financial position
Annual Report 2015
144
Non-current
assets
Current
assets
KSO
RM
TMK
RM
10,698 139,082
KSM
RM
AGSB
RM
ALSB
RM
ASSB
RM
Total
RM
–6,367,5525,281,341
32,604,96644,403,639
3,385,673
87,165,308
37,016,0056,656,5255,679,1633,584,331
143,487,005
Total assets3,396,371
87,304,390
37,016,005
13,024,077
10,960,504
36,189,297
187,890,644
Current
liabilities2,549,511
60,895,276
32,504,6821,118,0569,459,728
22,377,144
128,904,397
Non-current
liabilities
5,363 22,583 44,573 443,261 99,365
– 615,145
Total
liabilities2,554,874
60,917,859
32,549,2551,561,3179,559,093
22,377,144
129,519,542
Net assets 841,497
26,386,5314,466,750
11,462,7601,401,411
13,812,15358,371,102
Equity
attributable
to owners
of the
Company 546,973
15,831,9192,680,0506,877,656 980,9888,287,29235,204,877
Non controlling
interests 294,524
10,554,6121,786,7004,585,104 420,4235,524,86123,166,225
NOTES TO THE
(b) (i) Summarised statements of financial position (cont’d.)
KSO
RM
TMK
RM
KSM
RM
AGSB
RM
ALSB
RM
ASSB
RM
Total
RM
Non-current
assets
36,279 113,693
–6,675,0174,144,549
20,767,40331,736,941
Current
assets 17,316,47449,256,610
18,591,2976,895,9633,176,5094,239,18599,476,038
Total
assets 17,352,75349,370,303
18,591,297
13,570,9807,321,058
25,006,588
131,212,979
Total
liabilities11,943,02928,861,166
15,242,2721,960,6175,760,973
10,792,88974,560,946
Net assets 5,409,72420,509,137
3,349,025
11,610,3631,560,085
14,213,69956,652,033
Equity
attributable
to owners
of the
Company3,516,32112,305,482
2,009,4156,966,2181,092,0608,528,21934,417,715
Non controlling
interests 1,893,4038,203,655
1,339,6104,644,145 468,0265,685,48022,234,319
145
Annual Report 2015
Current
liabilities11,904,20228,833,880
15,232,320 763,4435,576,957
10,792,88973,103,691
Non-current
liabilities 38,827 27,286 9,9521,197,174 184,016
– 1,457,255
NOTES TO THE
(b) (ii) Summarised statements of comprehensive income
KSO
RM
TMK
RM
KSM AGSB ALSB ASSB
RM RM RM
RM
Total
RM
Revenue
7,013,57879,178,715
101,902,442
7,429,571315,000
–
195,839,306
Profit/(loss)
for the year
131,77315,258,408
29,027,974
1,980,455
(158,674)
(401,546)
45,838,390
Annual Report 2015
146
Profit/(loss)
attributable to
owners of the
company
Profit/(loss)
attributable to
the non controlling
interests
85,6529,155,045
17,416,784
1,188,273
(111,072)
(240,928)
27,493,755
46,1216,103,363
11,611,190792,182(47,602)
(160,618)
18,344,635
Total
comprehensive
income/(loss) 131,77315,258,408
29,027,974
1,980,455
(158,674)
(401,546)
45,838,390
Total
comprehensive
income/(loss)
attributable to
owners of the
Company
Total
comprehensive
income/(loss)
attributable to
the non controlling
interests
Dividend paid to
non-controlling
interests
85,6529,155,045
17,416,784
1,188,273
(111,072)
(240,928)
27,493,755
46,1216,103,363
11,611,190792,182(47,602)
(160,618)
18,344,635
131,77315,258,408
29,027,974
1,980,455
(158,674)
(401,546)
45,838,390
1,780,2974,800,000
10,800,000851,224
–
–18,231,521
NOTES TO THE
(b) (ii) Summarised statements of comprehensive income (cont’d.)
Revenue
Profit/(loss)
for the year
Profit/(loss)
attributable to
owners of the
company
Profit/(loss)
attributable to
the non controlling
interests
KSO
RM
TMK
RM
KSM
RM
AGSB ALSB ASSB
RM RM RM
7,483,173
81,342,773
86,130,991
9,444,504408,324
Total
RM
–
184,809,765
2,782,338
16,949,116
21,951,776
3,040,084
(383,699)
(336,822)
44,002,793
1,808,520
10,169,470
13,171,066
1,824,050
(268,589)
(202,093)
26,502,423
147
973,8186,779,6468,780,710
1,216,034
(115,110)
(134,729)
17,500,370
Total
comprehensive
income/(loss) 2,782,338
16,949,116
21,951,776
3,040,084
(383,699)
(336,822)
44,002,793
Total
comprehensive
income/(loss)
attributable to
owners of the
Company
Total
comprehensive
income/(loss)
attributable to
the non controlling
interests
1,808,520
10,169,470
13,171,066
1,824,050
(268,589)
(202,093)
26,502,423
973,8186,779,6468,780,710
1,216,034
(115,110)
(134,729)
17,500,370
2,782,338
16,949,116
21,951,776
3,040,084
(383,699)
(336,822)
44,002,793
Dividend paid
to non-controlling
interests
4,610,000
–7,200,000 865,974
–
–12,675,974
Annual Report 2015
NOTES TO THE
(b) (iii) Summarised cash flows
Annual Report 2015
148
KSO TMK
RM RM
KSM
RM
AGSB
RM
ALSB
RM
ASSB
RM
Total
RM
Net cash
generated
from
operating
activties 1,429,475
3,494,435
21,956,754
2,684,6641,471,23512,277,54943,314,112
Net cash
generated
from/(used in)
investing
activities
63,00057,526
–(302,442)
(1,379,740)
(12,215,946)
(13,777,602)
Net cash used in
financing
activities (4,052,626)
(293,000)
(21,808,921)
(2,128,058)
–
–
(28,282,605)
Net (decrease)/
increase in
cash and cash
equivalents(2,560,151)
3,258,961 147,833 254,164 91,495
Cash and cash
equivalents at
beginning of
the year 3,123,654
1,146,041
10,971,910 39,171 19,496
Cash and cash
equivalents at
end of the year
563,503 4,405,002
11,119,743
293,335
110,991
61,6031,253,905
1,23015,301,502
62,833
16,555,407
NOTES TO THE
(b) (iii) Summarised cash flows (cont’d.)
KSO
RM
TMK
RM
KSM AGSB
RM
RM
ALSB
RM
ASSB
RM
Total
RM
Net cash generated
from/(used in)
operating
activties 14,738,615
1,130,41328,752,2312,386,488
(23,198)
7,781,74354,766,292
Net cash used in
investing
activities
– (96,284)
– (187,944) –
(7,743,420)
(8,027,648)
Net cash used in
financing
activities (12,319,797)
–(18,000,000)
(2,164,934) – (38,373)
(32,523,104)
Net increase/
(decrease) in
cash and cash
equivalents 2,418,818
1,034,12910,752,231 33,610
(23,198)
(50)
14,215,540
Cash and cash
equivalents at
beginning of
the year
704,836111,912 219,679 5,561
42,694 1,2801,085,962
Cash and cash
equivalents at
end of the year 3,123,654 1,146,041
10,971,910
39,171
19,496
1,230
15,301,502
149
Annual Report 2015
NOTES TO THE
18. OTHER INVESTMENTS
Group
2015
2014
RM
RM
5,001
Unquoted shares, at cost
5,001
19. LAND HELD FOR PROPERTY DEVELOPMENT AND PROPERTY DEVELOPMENT COSTS
(a) Land held for property development
Group
Leasehold land
2015
2014
RM
RM
Annual Report 2015
150
Group
Leasehold land
Cost
At 1 January 28,123,306 28,600,436
Disposals(518,100) (477,130)
At 31 December 27,605,206
28,123,306
Carrying amount at 31 December27,605,206 28,123,306
NOTES TO THE
19. LAND HELD FOR PROPERTY DEVELOPMENT AND PROPERTY DEVELOPMENT COSTS (CONT’D.)
(b) Property development costs
Development
Freehold land
costs
RM
RM
Total
RM
Group
At 31 December 2015
Cumulative property development costs
At 1 January 2015
Costs incurred during the year
Transfer to property, plant and equipment
Transfer to investment properties
Unsold units transferred to inventories
Reversal of completed project
2,432,085
–
–
–
–
–
236,304,879
48,957,197
(1,206,876)
(402,292)
(690,891)
(63,497,712)
238,736,964
48,957,197
(1,206,876)
(402,292)
(690,891)
(63,497,712)
At 31 December 2015
2,432,085
219,464,305
221,896,390
Cumulative costs recognised in profit or loss
At 1 January 2015
Recognised during the year
–
–
–
151,950,325
52,985,342
(63,497,712)
151,950,325
52,985,342
(63,497,712)
–
141,437,955
141,437,955
At 31 December 2015
Property development costs as at
31 December 2015
2,432,08578,026,350
80,458,435
151
Annual Report 2015
NOTES TO THE
19. LAND HELD FOR PROPERTY DEVELOPMENT AND PROPERTY DEVELOPMENT COSTS (CONT’D.)
(b) Property development costs (cont’d.)
Development
Freehold land
costs
RM
RM
Total
RM
Group
Annual Report 2015
152
At 31 December 2014
Cumulative property development costs
At 1 January 2014
Costs incurred during the year
2,432,085
–
–
242,944,109
81,319,417
(87,958,647)
245,376,194
81,319,417
(87,958,647)
2,432,085
236,304,879
238,736,964
At 31 December 2014
Cumulative costs recognised in profit or loss
At 1 January 2014
Recognised during the year
–
–
–
172,161,859
67,747,113
(87,958,647)
172,161,859
67,747,113
(87,958,647)
–
151,950,325
151,950,325
At 31 December 2014
Property development costs as at
31 December 2014
2,432,08584,354,554
86,786,639
Included in property development costs incurred during the financial year are:
Group
2015
RM
Development cost for external infrastructure
19,161,277
Interest expense 1,316,698
Depreciation (Note 12)
228,598
2014
RM
18,725,973
7,899,442
448,103
Leasehold land of the Group with carrying value of RM27,605,206 (2014: RM28,123,306) is pledged as
security for borrowings (Note 26).
NOTES TO THE
20.INVENTORIES
Group
2015 2014
RM
RM
Company
2015
2014
RM
RM
Cost
Consumables 722,280642,666469,384 318,397
Nursery and landscaping plants
3,608,898 4,416,910
–
–
Crude palm oil
4,230,813 4,731,497
–
–
Palm kernel
525,872
373,795
–
–
Bauxite14,134,835
5,197,672
–
–
Residential houses
690,891–– –
Others 2,214,310151,673
–
–
26,127,899
15,514,213469,384 318,397
21. TRADE AND OTHER RECEIVABLES
Trade receivables
Third parties
Amounts due from subsidiaries
Group
2015 2014
RM
RM
Company
2015
2014
RM
RM
60,872,607 25,447,261 2,777,167
–
– 26,300,194
2,628,761
7,354,266
60,872,607
25,447,261
29,077,3619,983,027
Less: Allowance for impairment
Third parties
(244,602) (244,602)
–
–
60,628,005
25,202,659
29,077,3619,983,027
Retention sums on construction
contracts (Note 29)
421,889
685,956
–
–
Trade receivables, net
61,049,894 25,888,615 29,077,361
9,983,027
153
Annual Report 2015
During the financial year, the Group had written down its inventories amounting to RM29,626 (2014: RM581,553)
and the written down value is recognised in profit or loss.
NOTES TO THE
21. TRADE AND OTHER RECEIVABLES (CONT’D.)
Group
2015
2014
RM
RM
Other receivables
–
Sundry receivables 4,923,445
Deposits 456,417
Goods and services tax receivable 573,647
Company
2015
2014
RM
RM
–
121,692,080 127,487,407
4,512,196
2,276,895
1,956,931
859,858
214,094
335,027
–
–
–
5,953,509 5,372,054124,183,069
129,779,365
Total trade and other receivables67,003,403
Add: Cash and bank balances (Note 25)70,687,759
Less: Goods and services tax receivable (573,647)
31,260,669
111,238,642
–
153,260,430
22,055,518
–
139,762,392
63,218,771
–
Total loans and receivables137,117,515
142,499,311
175,315,948
202,981,163
a) Trade receivables
Annual Report 2015
154
The Group’s and Company’s normal trade credit term ranges from 10 to 45 days (2014: 10 to 45 days). Other
credit terms are assessed and approved on a case-by-case basis. They are recognised at their original invoice
amounts which represent their fair values on initial recognition.
Ageing analysis of trade receivables
The ageing analysis of the Group’s and of the Company’s trade receivables are as follows:
Group
2015
2014
RM
RM
Neither past due nor impaired
25,047,437
13,939,920
1 to 30 days past due not impaired
22,657,380
6,628,863
1,601,610
4,648,369
More than 120 days past due not
impaired
44,346
Company
2015
2014
RM
RM
26,300,194
7,866,817
1,804,092
864,009
32,344
32,376
75,901
96,977
102,974
134,123
2,433,917
537,190
1,687,857
3,590,685
3,013,090
44,346 1,706,235
35,580,56811,262,739 2,777,167 2,116,210
Impaired 244,602 244,602
–
–
60,872,60725,447,26129,077,361 9,983,027
NOTES TO THE
a) Trade receivables (cont’d.)
Receivables that are neither past due nor impaired
Trade receivables that are neither past due nor impaired are creditworthy debtors with good payment records
with the Group and the Company.
None of the Group’s and of the Company’s trade receivables that are neither past due nor impaired have been
renegotiated during the financial year.
Receivables that are past due but not impaired
The Group and the Company have trade receivables amounting to RM35,580,568 (2014: RM 11,262,739 ) and
RM2,777,167 (2014: RM 2,116,210) that are past due at the reporting date but not impaired.
Receivables that are impaired
The Group’s trade receivables that are impaired at the reporting date and the movement of the allowance
accounts used to record the impairment are as follows:
Trade receivables - nominal amounts
Less: Allowance for impairment
Individually Impaired
2015
2014
RM
RM
244,602
(244,602)
–
244,602
(244,602)
–
Trade receivables that are individually determined to be impaired at the reporting date relate to debtors that
are in significant financial difficulties and have defaulted on payments. These receivables are not secured by
any collateral or credit enhancements.
There has been no movement in the allowance account for the financial years ended 31 December 2014 and
31 December 2015
155
Annual Report 2015
Trade receivables that were past due but not impaired relate to customers that have a good track record with
the Group. Based on past experience and no adverse information to date, the directors of the Group are of
the opinion that no provision for impairment is necessary in respect of these balances as there has not been
a significant change in the credit quality and the balances are still considered fully recoverable.
NOTES TO THE
b) Other receivables
Included in the amounts due from subsidiaries is RM45,730,483 (2014: RM Nil) which bear interest of 3.05%
(2014: Nil) per annum. These amounts are unsecured, repayable on demand and to be settled in cash.
The remaining amounts due from subsidiaries are unsecured, non-interest bearing, repayable on demand and
to be settled in cash.
Sundry receivables
These amounts are unsecured, non-interest bearing and repayable on demand.
22. OTHER CURRENT ASSETS
Annual Report 2015
156
Group
2015
2014
RM
RM
Company
2015
2014
RM
RM
Prepayments
229,284182,503109,144 75,000
Due from customers on contract (Note 29) 912,322
973,156
–
–
Accrued billings in respect of property
development costs24,781,067
23,636,923
–
–
25,922,67324,792,582
109,144
75,000
23. INVESTMENT SECURITIES
Group
2015
2014
RM
RM
Current
Fair value through profit or loss:
Shares quoted in Malaysia 1,712,875
2,182,875
Company
2015
2014
RM
RM
1,710,000
2,180,000
NOTES TO THE
24.DERIVATIVE
2015
Contract/
Notional
amount
Assets Liabilities
RM
RM
RM
Non-hedging derivatives:
Current
Forward currency contracts
13,315,360
252,480
–
The Group uses forward currency contracts to manage some of the transaction exposure. These contracts are not
designated as cash flow or fair value hedges and are entered into for periods consistent with currency transaction
exposure and fair value changes exposure. Such derivatives do not qualify for hedge accounting.
During the financial year, the Group recognised a gain of RM252,480 (2014: RM Nil) arising from fair value changes
of forward currency contracts. The fair value changes are attributable to changes in foreign exchange closing and
forward rate. The method and assumptions applied in determining the fair values of derivatives are disclosed in
Note 40.
25. CASH AND BANK BALANCES
Group
2015
2014
RM
RM
Cash in hand and at banks
Short term deposits with:
Licensed banks
Licensed finance companies
37,482,521
70,687,759
Total cash and bank balances
49,185,855
Company
2015
2014
RM
RM
2,346,777
5,498,984
32,139,54437,052,78718,643,047 32,719,787
1,065,694
25,000,000
1,065,694
25,000,000
111,238,642
22,055,518
63,218,771
Cash at banks earns interest at floating rates based on daily bank deposit rates. Short-term deposits are made
for varying periods of between one day and three months depending on the immediate cash requirements of the
Group and the Company, and earn interests at the respective short-term deposit rates. The weighted average
effective interest rates as at 31 December 2015 for the Group and the Company were 3.44% (2014: 3.39%) and
3.54% (2014: 3.36%) respectively per annum.
Deposits with licensed banks of the Group and the Company amounting to RM1,185,050 (2014: RM545,000) and
RM25,500 (2014: RM45,500) respectively are pledged as securities for borrowings (Note 26).
157
Annual Report 2015
Forward currency contracts are used to hedge the Group’s sales in United States Dollars for which Group’s
commitments existed at the reporting date, extending to June 2016 (Note 41(e)).
NOTES TO THE
25. CASH AND BANK BALANCES (CONT’D.)
Included in cash at bank of the Group is an amount of RM21,621,909 (2014: RM12,067,704) held pursuant to
Section 7A of the Housing Development (Control and Licensing) Act 1966 and therefore restricted from use in
other operations.
For the purpose of the statements of cash flows, cash and cash equivalents comprise the following at the reporting date:
Group
2015
2014
RM
RM
Annual Report 2015
158
Cash and short-term deposits
Less:
Deposits with licensed banks for
a period of more than 90 days
Deposits held pursuant to Section 7A
of the Housing Development
(Control and Licensing) Act 1966
Deposits pledged as securities for
bank borrowings
Cash and cash equivalents
70,687,759
111,238,642
Company
2015
2014
RM
RM
22,055,518
(16,789,410) (37,624,277) (16,789,410)
(1,136,947)
(3,833,000)
(1,185,050)
(545,500)
51,576,352
69,235,865
63,218,771
(33,991,277)
–
(25,500)
5,240,608
–
(45,500)
29,181,994
26. LOANS AND BORROWINGS
Group
2015
2014
Maturity
RM
RM
Current
Secured:
(Note 37(b))
Term loan at Base Finance Rate
(“BFR”) + 1.75% per annum
Term loan at BFR - 0.5% per annum
Term loan at COF + 1.5% per annum
Al-Bai Bithaman Ajil (“BBA”) term
financing - i (1) at BFR + 1%
per annum
Company
2015
2014
RM
RM
2016
421,625430,602257,718 223,075
2016
2016
2016
1,880,281
3,221,643
8,839,694
1,876,940
2,985,756
–
–
–
8,839,694
–
–
–
2016
799,094
940,710
–
–
15,162,337 6,234,008 9,097,412
223,075
NOTES TO THE
26. LOANS AND BORROWINGS (CONT’D.)
Maturity
2017-2021 1,039,149
975,035
2019
6,415,940 8,049,456
2021
17,315,768 20,575,590
2021
Total
Secured:
(Note 37(b))
Term loan at BFR + 1.75% per annum
BBA term financing - i (1) at
BFR + 1% per annum
6,441,092
6,299,476
31,211,949
35,899,557
Company
2015
2014
RM
RM
747,924
–
–
795,851
–
–
–
–
747,924
795,851
159
2015-2021 1,460,774 1,405,637
2019
8,296,221 9,926,396
2021
20,537,411 23,561,346
2019
8,839,694
–
2021
7,240,186
7,240,186
1,005,642
–
–
8,839,694
1,018,926
–
–
–
–
–
Total loans and borrowings
The remaining maturities of the loans and borrowings as at 31 December 2015 and 2014 are as follows:
Within 1 year
More than 1 year and less than 2 years
More than 2 years and less than 5 years
More than 5 years
46,374,28642,133,565
Group
2015
2014
RM
RM
15,162,337 6,234,008
6,645,535 6,179,096
15,364,481 20,146,470
9,201,933 9,573,991
9,845,336
1,018,926
Company
2015
2014
RM
RM
9,097,412
246,272
412,635
89,017
223,075
212,258
388,654
194,939
46,374,286
42,133,565 9,845,336 1,018,926
Annual Report 2015
Non-current
Secured:
(Note 37(b))
Term loan at BFR + 1.75% per annum
BBA term financing - i (1) at
BFR + 1% per annum
Group
2015
2014
RM
RM
NOTES TO THE
Term loan at Base Financing Rate (“BFR”) + 1.75% per annum
The term loan is secured by the following:
(i) First priority security charge over all the leasehold lands of the Company;
(ii) Debenture of fixed and floating charge over all present and future assets of the Company;
(iii)Memorandum of deposits over securities as a charge over cash deposit equivalent to 3months profit payment
for the term financing-i facility;
(iv)Memorandum of deposits over securities as a charge over cash deposit equivalent to 35% of the term
financing-i facility limit; and
(v)First party first legal assignment over the leasehold land and land use rights of a subsidiary as disclosed in Note
12 and 16 and Power of Attorney and such other documents or security documents as the bank’s solicitors
may advise.
Annual Report 2015
160
The term loan is repayable by 84 monthly instalments, inclusive of 24 months grace period for monthly profit
servicing only. After grace period, the term loan monthly instalments has been revised to RM192,830 until full
settlement.
(i)First party first legal charged a piece of agriculture land located at H.S.(D) 44621, PT No. 122830, Mukim Kuala
Kuantan, District of Kuantan and State of Pahang; and
(ii) Corporate guarantee by holding company, Tanah Makmur Berhad.
The term loan is repayable by 84 monthly instalments of RM366,414 each, commencing on 22 May 2014.
(i)Asset Sale Agreement for RM15,425,000 over Shariah compliant commodities by the Bank as per e-certificate
or such other evidence of ownership maintained by the Bank for this Facility;
(ii) Master Facility Agreement for RM10,000,000;
(iii)Fresh 1st party 3rd legal charge of RM10,000,000 over 1 unit of Ladang Sungai Sering plantation held under
Title H.S.(D) 4947 PT3024, Mukim of Bera, District of Bera, State of Pahang Darul Makmur;
(iv)Fresh 1st party 3rd legal charge of RM10,000,000 over 3 units of Ladang Sungai Sering plantation held under
title H.S. (D) 2343 PT6475, H.S.(D) 2344 PT6476, H.S.(D) 2345 PT6477 Mukim of Bera, District of Bera, State
of Pahang Darul Makmur;
(v)Fresh 1st party 3rd legal charge of RM10,000,000 over 2 units of Ladang Lembah Klau plantation held under
title H.S.(D) 9774 PT18583, H.S.(D) 9775 PT18534 Mukim of Gali, District of Raub, State of Pahang Darul
Makmur; and
(vi)Fresh 1st party 3rd legal charge of RM10,000,000 over 2 units of Ladang Lembah Klau plantation held under title
H.S.(D) 7456 PT17992, H.S.(D) 7457 PT17993 Mukim of Gali, District of Raub, State of Pahang Darul Makmur.
The term loan is repayable on demand.
NOTES TO THE
Al-Bai Bithaman Ajil (“BBA”) term financing - i (1) at BFR + 1% per annum
(i)Asset purchase agreement for RM16,700,000 over 50% on 500 acres of land in Mukim of Bebar, District of
Pekan, state of Pahang;
(ii)Asset sale agreement for RM27,692,604 over 50% on 500 acres of land in Mukim of Bebar, District of Pekan,
state of Pahang;
(iii)Fresh 1st party 1st legal charge for RM27,692,604 over the agriculture land at KM45 of Kuantan - Muadzam
Shah trunk road held under title no. H.S. (D) 4556, PT 8080 in Mukim of Bebar, District of Pekan, State of
Pahang;
(iv) Corporate guarantee by holding company, Tanah Makmur Berhad for RM27,692,604; and
(v)First debenture jointly between BBA term financing - i (2) and BBA term financing - i (3) against Sri Jelutung
Palm Oil Mill Sdn Bhd fixed and floating assets for RM39,797,794 both present and future.
This loan is repayable by 96 monthly instalments of RM224,115 until full settlement. On 30 September 2014, the
term loan monthly instalments has been revised to RM93,159 until full settlement.
Article 2A redeemable preference shares:
Number of redeemable
preference shares of RM0.10
2015
2014
Amount
2015
2014
RM
RM
Authorised
At 1 January/31 December
–
30,000,000
–
Issued and fully paid
At 1 January
Redeemed during the year
–
–
7,000,490
(7,000,490)
–
–
At 31 December
–
–
–
Share premium
At 1 January
Redeemed during the year
–
–
At 31 December
–
3,000,000
700,049
(700,049)
–
6,300,438
(6,300,438)
–
161
Annual Report 2015
NOTES TO THE
Article 2A redeemable preference shares (cont’d.):
Amount
2015
2014
RM
RM
Redeemable preference shares carried at
amortised cost
At 1 January
Redemption of preference shares
preference shares
–
–
4,944,725
(7,000,487)
–
2,055,762
At 31 December
–
–
162
The main features of the Article 2A Redeemable Preference Share (“RPS”) are as follows:
Annual Report 2015
Number of redeemable
preference shares of RM0.10
2015
2014
(i) The RPS holder is entitled to a cumulative preference dividend rate of 5% per annum on the issue price of RPS.
(ii)The RPS holder shall not be entitled to any voting rights except where there is a proposal to reduce the share
capital of the Company, or a proposal that affects the rights attached to the RPS, or a proposal for the winding
up of the Company, or during a winding up.
(iii) The RPS is redeemable at the option of the Company at its issue price, according to the redemption schedule.
The aforesaid redemption schedule will also be linked to the crude palm oil prices.The RPS will only be
redeemed:
-Provided the settlement of the quarterly principal repayments and interest payments of the banking
facility provided by CIMB Islamic Bank Berhad amounting up to RM142,000,000 undertaken by the
Company, is up to date; and
-Only if the crude palm oil price is above RM2,150 per metric tonne (based on monthly average price
quoted by Malaysian Palm Oil Board). In the event the Company is unable to redeem the RPS according
to the Redemption Schedule set out, such amount of RPS not redeemed shall be entitled to a higher
cumulative preference dividend of 7.0% p.a. until such date that it is redeemed at option of the Company
and for the avoidance of doubt, such deferred redemption can take place at any time upon prior written
notification by the Company to the holder of RPS.
NOTES TO THE
27. TRADE AND OTHER PAYABLES
Group
2015
2014
RM
RM
Trade payables
Third parties
Retention sum payables
37,736,947
6,227,822
21,901,941
5,717,263
Company
2015
2014
RM
RM
3,671,219
–
2,529,932
–
43,964,76927,619,204 3,671,219 2,529,932
19,094,748 13,165,996
13,439,715
10,586,474
578,465
329,791
–
503,653
–
–
–
–
4,538,819
2,305,202
1,000
–
–
371,226
3,699,054
7,301,775
19,247
–
19,214,751
–
33,112,92824,585,914 7,216,247 30,234,827
Total trade and other payables
Add: Loans and borrowings (Note 26)
Less: Goods and services tax payable
77,077,697
46,374,286
–
52,205,118
42,133,565
–
10,887,466
9,845,336
(371,226)
32,764,759
1,018,926
–
Total financial liabilities carried at
amortised cost123,451,98394,338,68320,361,576 33,783,685
a) Trade payables
These amounts are non-interest bearing. The normal trading credit term granted to the Group and the
Company ranges from 10 to 90 days (2014: 10 to 90 days).
b) Sundry payables
These amounts are non-interest bearing. Sundry payables are normally settled on an average term of six
months (2014: average term at six months).
c) Amounts due to directors and subsidiaries
Amounts due to directors and subsidiaries are unsecured, non-interest bearing and repayable on demand.
163
Annual Report 2015
Other payables
Accruals
Sundry payables
Deposits payable
Amounts due to directors
Amounts due to subsidiaries
Goods and services tax payable
NOTES TO THE
28. OTHER CURRENT LIABILITIES
Progress billings in respect of property development costs
Amount due to customers for contract work (Note 29)
Group
2015
RM
832,107
784,162
1,616,269
2014
RM
10,724,265
3,544,987
14,269,252
29. DUE FROM/(TO) CUSTOMERS ON CONTRACT
Group
2015
RM
2014
RM
Annual Report 2015
164
Construction contract costs incurred to date
Attributable profits
7,464,248
4,320,745
11,784,993
Less: Progress billings
(11,656,833)
Presented as:
Gross amount due from customers for contract work (Note 22)
Gross amount due to customers for contract work (Note 28)
128,160
912,322
(784,162)
128,160
Retention sums on construction contracts,
included within trade receivables (Note 21)
421,889
8,882,483
1,242,943
10,125,426
(12,697,257)
(2,571,831)
973,156
(3,544,987)
(2,571,831)
685,956
The costs incurred to date on construction contracts include the depreciation of property, plant and equipment
charges made during the financial year of RM56,188 (2014: RM6,236).
NOTES TO THE
30. RETIREMENT BENEFIT OBLIGATIONS
a) Defined benefit plan
The Group and the Company operate an unfunded, defined benefit Retirement Benefit Scheme (“the Scheme”)
for its eligible employees.
The following tables summarise the components of net benefit expense recognised in profit or loss and the
unfunded status and amounts recognised in the statements of financial position for the plans:
Group
2015
2014
RM
RM
Net benefit expense
Current service costs305,479
Interest cost on benefit obligation182,513
288,882
188,724
Company
2015
2014
RM
RM
281,469
182,513
276,235
177,361
477,606
463,982
453,596
The Group’s and the Company’s net benefit expense, RM487,993 (2014: RM477,606) and RM463,982 (2014:
RM453,596) respectively have been included in employee benefits expense.
Benefit liability
Group
2015
2014
RM
RM
Company
2015
2014
RM
RM
Present value of unfunded defined
benefit obligation 3,829,531 3,794,845 3,642,300 3,631,624
Annual Report 2015
165
Net benefit expense, included in
employee benefits expense (Note 6)487,992
NOTES TO THE
30. RETIREMENT BENEFIT OBLIGATIONS (CONT’D.)
a) Defined benefit plan (cont’d.)
Changes in present value of defined benefit obligations are as follows:
Group
2015
2014
RM
RM
Company
2015
2014
RM
RM
At 1 January
3,794,845
4,111,382
3,631,624
3,868,854
Current service costs
305,479
288,882
281,469
276,235
Interest cost
182,513 188,724 182,513 177,361
Actuarial gains on obligation
(209,776)
–
(209,776)
–
Benefit paid (243,530) (794,143) (243,530) (690,826)
At 31 December
3,829,531
3,794,845
3,642,300
3,631,624
Annual Report 2015
166
The principal assumptions used in determining pension and post-employment medical benefit obligations for
the defined benefit plans are shown below:
2015
%
2014
%
Discount rate
Future salary increases
5.20
6.00
4.70
6.00
Assumptions regarding future mortality are based on published statistics and mortality tables. The average life
expectancy of an individual retiring at age of 56 is 14 for males and 20 for females.
The sensitivity analysis below has been determined based on reasonably possible changes of each significant
assumption on the defined benefit obligation as of the end of the reporting period, assuming if all other
assumptions were held constant:
Increase/
(decrease)
%
Discount rate
Discount rate
Future salary
Future salary
1
(1)
1
(1)
2015
RM
2014
RM
(289,946) (315,547)
327,453 364,547
321,553 399,259
(284,451) (351,493)
NOTES TO THE
31. DEFERRED TAX
Recognised
As at Recognised
As at Recognised
in other
As at
1
in
31
in compre-
31
January
profitDecember
profit hensiveDecember
2014 or loss
2014 or loss income
2015
RM
RM
RM
RM
RM
RM
Group
Deferred tax liabilities:
Property, plant and
8,836,369 2,610,080 11,446,449 10,816,628
equipment
Land use rights
23,313,828
(40,041) 23,273,787 (1,286,746)
Others
–
–
– 44,573
32,150,1972,570,039
34,720,2369,574,455
–
22,263,077
– 21,987,041
– 44,573
–44,294,691
Deferred tax assets:
Other payables
Unutilised tax losses
Unabsorbed capital
allowances
Retirement benefit
obligations
(380,506)
(3,342)
(646,268) (1,026,774)
(62,677)
(66,019)
(118,023)
832
(1,241,930)(2,744,727)(3,986,657) (8,214,440)
(986,445)
75,969
(910,476)
(58,957)
–
–
(1,144,797)
(65,187)
–(12,201,097)
50,346
(919,087)
(2,612,223)
(3,377,703)
(5,989,926)
(8,390,588) 50,346
(14,330,168)
29,537,974 (807,664)
28,730,3101,183,867 50,34629,964,523
Annual Report 2015
167
NOTES TO THE
31. DEFERRED TAX (CONT’D.)
Recognised
As at Recognised
As at Recognised
in other
As at
1
in
31
in compre-
31
January
profitDecember
profit hensiveDecember
2014 or loss
2014 or loss income
2015
RM
RM
RM
RM
RM
RM
Company
Deferred tax liabilities:
Property, plant and
equipment
Land use rights
5,106,724
24,285,237
(30,788) 5,075,936
(49,993) 24,235,244
3,684,698
(2,248,206)
–
–
29,391,961 (80,781)
29,311,1801,436,492
8,760,634
21,987,038
–30,747,672
Annual Report 2015
168
Deferred tax assets:
Other payables
Retirement benefit
obligations
(380,220)
(928,523)
(646,268) (1,026,488)
56,935
(118,309)
–
(1,144,797)
(52,908)
50,346
(874,150)
(871,588)
(1,308,743)(589,333)
(1,898,076) (171,217) 50,346(2,018,947)
28,083,218 (670,114)
27,413,1041,265,275 50,34628,728,725
Deferred tax assets have not been recognised in respect of the following items:
Group
2015
2014
RM
RM
Restated
Unutilised tax losses
Unabsorbed capital allowances
5,783,848
9,171,687
14,955,535
6,126,665
7,990,965
14,117,630
Deferred tax assets have not been recognised in respect of these items as they have arisen in companies that have
a recent history of losses or in companies where future taxable profits may be insufficient to trigger the utilisation
of these items.
NOTES TO THE
32. SHARE CAPITAL AND SHARE PREMIUM
Group and Company
2015
2014
Number of
Number of
ordinary
ordinary
shares of
shares of
RM0.50 each
Amount RM0.50 each
RM
Amount
RM
Authorised
Ordinary shares
At 1 January
Sub-division
980,000,000
–
490,000,000
–
490,000,000*
490,000,000
490,000,000
–
At 31 December
980,000,000
490,000,000
980,000,000
490,000,000
Issued and fully paid
Ordinary shares
At 1 January
Sub-division
Issued during the year
398,159,592
–
–
199,079,796
–
–
173,009,796*
173,009,796
52,140,000
173,009,796
–
26,070,000
At 31 December
398,159,592
199,079,796
398,159,592
199,079,796
*
2015
RM
2014
RM
Share premium
At 1 January
Issued during the year
Listing fees
38,477,904
–
–
–
39,105,000
(627,096)
At 31 December
38,477,904
38,477,904
Total
237,557,700
237,557,700
The holders of ordinary shares are entitled to receive dividends as and when declared by the Company. All ordinary
shares carry one vote per share without restrictions and rank equally with regard to the Company’s residual assets.
Annual Report 2015
169
NOTES TO THE
33. OTHER RESERVE
This represents the difference between book value and fair value of redeemable preference shares on initial
recognition in accordance with FRS 139.
34. CAPITAL REDEMPTION RESERVE
This represents capital redemption reserve arising from redemption of redeemable preference shares.
Pursuant to Section 61 of the Companies Act 1965, upon redemption of redeemable preference shares, sum equal
to the nominal amount of the shares redeemed shall be transferred to a reserve called the ‘Capital Redemption
Reserve’.
35. RETAINED EARNINGS
Annual Report 2015
170
The Company may distribute dividends out of its entire retained earnings as at 31 December 2015 and 31
December 2014 under the single tier system.
36.DIVIDENDS
Recognised during the financial year:
Dividends on ordinary shares:
Company
2015
2014
RM
RM
Interim tax exempt (single-tier) dividend
of 6 sen per share for year 2014
–
23,889,576
Interim tax exempt (single-tier) dividend
23,889,575
–
Second interim tax exempt (single-tier) dividend
23,889,576
–
47,779,151
The directors do not recommend the payment of any final dividends for the current financial year.
23,889,576
NOTES TO THE
37.COMMITMENTS
(a) Operating lease commitments - as lessee
The Group has entered into non-cancellable operating lease agreements for the use of leasehold land. These
leases have an average life of between 66 and 99 years with no renewal or purchase options included in the
contracts. There are no restrictions placed upon the Group by these leases.
The future aggregate minimum lease payments under non-cancellable operating leases contracted for as at the
reporting date but not recognised as liabilities are as follows:
Future minimum rental payments:
Not later than 1 year
Later than 1 year and not later than 5 years
Later than 5 years
Group and Company
2015
2014
RM
RM
786,881
3,147,525
27,690,986
31,625,392
786,881
3,147,525
28,477,867
32,412,273
(b) Obligations under finance leases
Group
2015
2014
RM
RM
Minimum lease payments:
Not later than 1 year487,609
Later than 1 year and not later than 2 years421,042
Later than 2 years and not later than 5 years604,589
Later than 5 years 90,840
Total minimum lease payments
Less: Future finance charges
Present value of minimum lease payments
Company
2015
2014
RM
RM
492,794
370,068
623,137
64,976
299,917
275,693
437,840
90,840
266,954
244,980
560,757
64,976
1,604,080
(143,306)
1,550,975
(145,338)
1,104,290
(98,648)
1,137,667
(118,741)
1,460,774
1,405,637
1,005,642
1,018,926
171
Annual Report 2015
NOTES TO THE
37. COMMITMENTS (CONT’D.)
(b) Obligations under finance leases (cont’d.)
Group
2015
2014
RM
RM
Present value of payments:
Not later than 1 year421,625
Later than 1 year and not later than
2 years
377,543
Later than 2 years and not later than
5 years
572,589
Later than 5 years 89,017
Annual Report 2015
172
Company
2015
2014
RM
RM
430,602
257,718
223,075
331,232
246,272
212,258
448,864
194,939
412,635
89,017
388,654
194,939
Present value of minimum lease payments
(Note 26)
1,460,774 1,405,637 1,005,642 1,018,926
Less: Amount due within 12 months
(Note 26)
(421,625) (430,602) (257,718) (223,075)
Amount due after 12 months (Note 26) 1,039,149
975,035
747,924
795,851
The obligations under finance leases of the Group and of the Company bore interest at the reporting date at
rates between 2.37% to 3.95% (2014: 2.34% to 5.00%) per annum.
(c) Capital commitments
Group
2015
2014
RM
RM
Capital expenditure
Approved and contracted for:
Property plant and equipment
–
1,687,246
Approved and not contracted for:
Property plant and equipment 24,278,642
24,704,599
Biological assets 5,441,832 17,232,895
Company
2015
2014
RM
RM
–
9,518,501
4,503,268
29,720,47443,624,74014,021,769
–
–
–
–
NOTES TO THE
38. FINANCIAL GUARANTEES
Unsecured:
Corporate guarantee for bank facilities granted to subsidiaries
Company
2015
2014
RM
RM
70,692,605
84,797,794
As at reporting date, no values are ascribed on corporate guarantees provided by the Company to secure bank loans
and other banking facilities granted to its subsidiaries where such loan and banking facilities are fully collateralised
by charges over the property, plant and equipment of the subsidiaries and where the directors regard the value of
the credit enhancement provided by the corporate guarantees as minimal.
39. RELATED PARTY DISCLOSURES
(a) Sale and purchase of goods and services
173
In addition to the related party information disclosed elsewhere in the financial statements, the following
significant transactions between the Group and the Company and related parties took place at terms agreed
between the parties during the financial year:
Group
2015
2014
RM
RM
Company
2015
2014
RM
RM
Interest income on advances
to a subsidiary
–
–
1,286,825
Management fee charged
to subsidiaries
–
– 3,100,000
Bauxite production cost charged
by a related party35,027,161 30,622,942
–
–
–
–
(b) Compensation of key management personnel
Group
2015
2014
RM
RM
Short term employee benefits 2,288,706
Post-employment benefits
- Defined contribution plan 234,036
Company
2015
2014
RM
RM
2,029,451
1,757,837
1,538,886
234,981
193,380
194,795
2,522,742 2,264,432 1,951,217 1,733,681
Annual Report 2015
NOTES TO THE
39. RELATED PARTY DISCLOSURES (CONT’D.)
(b) Compensation of key management personnel (cont’d.)
Included in the total key management personnel is:
Group
2015
2014
RM
RM
Executive directors’ remuneration1,809,462
1,265,067
Company
2015
2014
RM
RM
1,237,937
979,216
40. FAIR VALUE OF FINANCIAL INSTRUMENTS
Annual Report 2015
174
A.Fair value of financial instruments by classes that are not carried at fair value and whose carrying
amounts are not reasonable approximation of fair value:-
Group
Company
2015
2015
Carrying
Fair Carrying
Fair
Note amount
value amount
value
RM
RM
RM
RM
Financial asset
Non-current:
Other investments
18
5,001
*
–
–
Non-current:
Loans and borrowings
Term loan at BFR + 1.75%
per annum
Term loan at BFR - 0.5%
per annum
BBA term financing - i (1)
at BFR + 1% per annum
26
1,039,149
1,029,331
747,924
739,022
26 6,415,940 5,609,469
–
–
2617,315,76814,849,081
–
–
26
–
–
6,441,092
5,056,269
NOTES TO THE
40. FAIR VALUE OF FINANCIAL INSTRUMENTS (CONT’D.)
A.Fair value of financial instruments by classes that are not carried at fair value and whose carrying
amounts are not reasonable approximation of fair value (cont’d.):-
Group
Company
2014
2014
Carrying
Fair Carrying
Fair
Note amount
value amount
value
RM
RM
RM
RM
Financial asset
Non-current:
Other investments
18
5,001
*
–
–
*
26
975,035
973,123
795,851
794,349
26 8,049,456 6,778,648
–
–
2620,575,59016,572,791
–
–
26
–
–
6,299,476
4,891,447
Investment in equity instruments carried at cost (Note 18)
Fair value information has not been disclosed for the Group’s investments in equity instruments that
are carried at cost because fair value cannot be measured reliably. These equity instruments represent
ordinary shares in construction companies that are not quoted on any market and does not have any
comparable industry peer that is listed. In addition, the variability in the range of reasonable fair value
estimates derived from valuation techniques is insignificant. The Group does not intend to dispose of this
investment in the foreseeable future.
Annual Report 2015
175
Non-current:
Term loan at BFR + 1.75%
per annum
Term loan at BFR - 0.5%
per annum
BBA term financing - i (1)
at BFR + 1% per annum
NOTES TO THE
B. Determination of fair value
(i)
Financial instruments that are not carried at fair value and whose carrying amounts are reasonable
approximation of fair value
The following classes of financial instruments that are not carried at fair value and whose carrying
amounts are reasonable approximation of fair value:
Annual Report 2015
176
Note
Trade and other receivables (current)
21
Loans and borrowings:
Term loan at BFR + 1.75% per annum (current)
26
Term loan at COF + 1.5% per annum (current)
26
Term loan at BFR - 0.5% per annum (current)
26
BBA term financing - i (1) at BFR + 1% per annum (current)
26
Article 2A redeemable preference shares (current)
26
Trade and other payables (current)
27
The carrying amounts of these financial assets and liabilities are reasonable approximation of fair values,
either due to their short-term nature or that they are floating rate instruments that are re-priced to
market interest rates on or near the reporting date.
The carrying amounts of the current portion of loans and borrowings are reasonable approximations of
fair values due to the insignificant impact of discounting.
The fair values of current loans and borrowings are estimated by discounting expected future cash flows
at market incremental lending rate for similar types of lending, borrowing or leasing arrangements at the
reporting date.
(ii)
Quoted equity instruments
The fair value of investment securities is determined directly by reference to their published market bid
price at the reporting date.
(iii)
Derivatives
The fair value of forward currency contracts are valued by using a valuation technique with market
observable inputs. The models incorporate various inputs including the credit quality of counterparties,
foreign exchange spot and forward rates and interest rate curves.
NOTES TO THE
B. Determination of fair value (cont’d.)
Fair value hierarchy
The Group classifies fair value measurement using a fair value hierarchy that reflects the significance of the inputs
used in making the measurements. The fair value hierarchy has the following levels:
(a) Level 1
Quoted prices (unadjusted) in active markets for identical assets or liabilities.
(b) Level 2Input other than quoted prices included within level 1 that are observable for the
asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).
(c) Level 3Input for the asset or liability that are not based on observable market data
(unobservable input).
Fair value of assets and liabilities that are carried at fair value
Financial assets
Level
Note
At 31 December 2015
Shares quoted in Malaysia
Forward currency contracts
1
2
23
24
Group Company
RM
RM
1,712,875
252,480
1,710,000
–
1,965,355 1,710,000
At 31 December 2014
Shares quoted in Malaysia
1
23
2,182,875
2,180,000
41. FINANCIAL RISK MANAGEMENT OBJECTIVE AND POLICIES
The Group and the Company are exposed to financial risks arising from their operations and the use of financial
instruments. The key financial risks include credit risk, liquidity risk, interest rate risk, market price risk and foreign
currency risk.
The Board of Directors reviews and agrees policies and procedures for the management of these risks, which are
executed by Group’s Senior Finance Manager and the Finance Manager of each subsidiary.
It is, and has been throughout the current and previous financial year, the Group’s policy that no derivatives shall be
undertaken except for the use as hedging instruments where appropriate and cost-efficient. The Group and the Company
do not apply hedge accounting.
177
Annual Report 2015
The following table shows an analysis of the assets and liabilities carried at fair value by level of fair value
hierarchy:
NOTES TO THE
41. FINANCIAL RISK MANAGEMENT OBJECTIVE AND POLICIES (CONT’D.)
The following sections provide details regarding the Group’s and Company’s exposure to the above-mentioned
financial risks and the objectives, policies and processes for the management of these risks.
(a) Credit risk
Credit risk is the risk of loss that may arise on outstanding financial instruments should a counterparty default
on its obligations. The Group’s and the Company’s exposure to credit risk arises primarily from trade and other
receivables. For other financial assets (including investment securities and cash and bank balances), the Group
and the Company minimise credit risk by dealing exclusively with high credit rating counterparties.
178
Exposure to credit risk
Annual Report 2015
The Group’s objective is to seek continual revenue growth while minimising losses incurred due to increased
credit risk exposure. The Group trades only with recognised and creditworthy third parties. It is the Group’s
policy that all customers who wish to trade on credit terms are subject to credit verification procedures. In
addition, receivable balances are monitored on an ongoing basis with the result that the Group’s exposure to
bad debts is not significant.
The Group and the Company do not have any significant exposure to any individual customer or counterparty
nor does it have any major concentration of credit risk related to any financial assets.
The Group and the Company have no significant concentration of credit risk that may arise from exposures to
a single debtor or to groups of debtors.
The Group determines concentrations of credit risk by monitoring the industry sector profile of its trade
receivables on ongoing basis. The credit risk concentration profile of the Group’s trade receivables at the
reporting date are as follows:
2015
RM
2014
RM
By industry sectors:
Plantation 19,634,982
Construction and property development
31,742,592
Mining 9,672,320
9,459,302
15,412,668
1,016,645
61,049,894
25,888,615
NOTES TO THE
(a) Credit risk (cont’d.)
Exposure to credit risk (cont’d.)
2015
RM
2014
RM
By industry sectors:
Plantation
Construction and property development
Mining
32%
52%
16%
37%
59%
4%
100%
100%
Financial assets that are neither past due nor impaired
Financial assets that are either past due or impaired
Information regarding financial assets that are either past due or impaired is disclosed in Note 21.
(b) Liquidity risk
Liquidity risk is the risk that the Group and the Company will encounter difficulty in meeting financial
obligations due to shortage of funds. The Group’s and the Company’s exposure to liquidity risk arises primarily
from mismatches of the maturities of financial assets and liabilities. The Group and the Company manage their
debt maturity profile, operating cash flows and the availability of funding so as to ensure that refinancing,
repayment and funding needs are met.
At the reporting date, approximately 32.7% (2014: 14.8%) of the Group’s loans and borrowings (Note 25) will
mature in less than one year based on the carrying amount reflected in the financial statements.
Annual Report 2015
179
Information regarding trade and other receivables that are neither past due nor impaired is disclosed in Note
21. Deposits with licensed banks that are neither past due nor impaired are placed with or entered into with
reputable financial institutions with high credit ratings and no history of default.
NOTES TO THE
(b) Liquidity risk (cont’d.)
Analysis of financial instruments by remaining contractual maturities
The table below summarises the maturity profile of the Group’s and the Company’s liabilities at the reporting
date based on contractual undiscounted repayment obligations.
On demand
or within
one year
2015 (RM)
One to
five years
Over
five years
Total
Group
Annual Report 2015
180
Financial liabilities:
Trade and other payables 77,077,697
Loans and borrowings 18,153,072
–
26,084,851
–
9,335,324
Total undiscounted financial
liabilities
95,230,769
26,084,851
9,335,324
130,650,944
77,077,697
53,573,247
Company
–
704,346
–
89,034
liabilities
20,987,547
704,346
89,03421,780,927
10,887,466
10,893,461
NOTES TO THE
(b) Liquidity risk (cont’d.)
Analysis of financial instruments by remaining contractual maturities (cont’d.)
On demand
or within
one year
2014 (RM)
One to
five years
Over
five years
Total
Group
–
32,937,391
–
10,017,248
liabilities
58,439,126
32,937,391
10,017,248
101,393,765
52,205,118
49,188,647
Company
223,075
–
674,199
–
196,513
liabilities
32,987,834
674,199
196,51333,858,546
32,764,759
1,093,787
(c) Interest rate risk
Interest rate risk is the risk that the fair value or future cash flows of the Group’s and the Company’s financial
instruments will fluctuate because of changes in market interest rates.
The Group’s and the Company’s exposure to interest rate risk arises primarily from their loans and borrowings.
The Group’s policy is to manage interest cost using a mix of fixed and floating rate debts.
Sensitivity analysis for interest rate risk
At the reporting date, if interest rates had been 10 basis points lower/higher, with all other variables held constant,
the Group’s profit net of tax would have been RM44,914 (2014: RM40,728) higher/lower, arising mainly as a
result of lower/higher interest expense on floating rate loans and borrowings. The assumed movement in basis
points for interest rate sensitivity analysis is based on the currently observable market environment.
Annual Report 2015
181
NOTES TO THE
(d) Market price risk
Market price risk is the risk that the fair value or future cash flows of the Group’s financial instruments will
fluctuate because of changes in market prices (other than interest rate).
The Group is exposed to equity price risk arising from its investment in quoted equity instruments. The quoted
equity instruments in Malaysia are listed on the Bursa Malaysia. These instruments are classified as fair value
through profit and loss. The Group does not have exposure to commodity price risk.
Sensitivity analysis for market price risk
At the reporting date, if the market price of quoted investment had been 5% higher/lower, with all other
variables held constant, the Group’s profit net of tax would have been RM85,644 (2014: 109,144) higher/
lower, arising as a result of higher/lower fair value gains on the quoted investment.
(e) Foreign currency risk
Annual Report 2015
182
Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate
because of changes in foreign exchange rates.
The Group has transactional currency exposure arising from sales or purchases that are denominated in a
currency other than the functional currency of the Group, i.e. Ringgit Malaysia (“RM”). The foreign currency in
which these transactions are denominated is United States Dollars (“USD”).
Approximately 25% (2014: 22%) of the Group’s sales is denominated in foreign currency. The Group’s trade
receivable balances at the reporting date have similar exposures.
The Group uses forward currency contracts to eliminate the currency exposures on its sales. At 31 December
2015, the Group entered into forward currency contracts with notional amount of RM13,315,360 (2014: RM Nil).
42. CAPITAL MANAGEMENT
The primary objective of the Group’s capital management is to ensure that it maintains a strong credit rating and
healthy capital ratios in order to support its business and maximise shareholder value.
The Group manages its capital structure and makes adjustments to it, in light of changes in economic conditions.
The Group monitors capital using a gearing ratio, which is net debt divided by total capital plus net debt. The
Group’s policy is to keep the gearing ratio at a reasonable level. The Group includes within net debt, loans and
borrowings, trade and other payables, less cash and bank balances. Capital includes equity attributable to owners
of the Company.
NOTES TO THE
42. CAPITAL MANAGEMENT (CONT’D.)
Note
Trade and other payables
Less: Cash and bank
balances
26
27
Group
2015
2014
RM
RM
46,374,286
77,077,697
42,133,565
52,205,118
Company
2015
2014
RM
RM
9,845,336
10,887,466
1,018,926
32,764,759
25 (70,687,759)(111,238,642) (22,055,518) (63,218,771)
Net debt52,764,224(16,899,959)(1,322,716)(29,435,086)
Equity attributable to the owners
of the parent, represent total
capital424,247,474418,015,628356,340,176 363,520,098
Capital and net debt 477,011,698
401,115,669
355,017,460
334,085,012
183
43. SEGMENT INFORMATION
(a) Business Segments
The Group is organised into two major reportable operating segments:
(i)
Plantation
Cultivation of oil palms, sale of fresh fruit bunches and other related products.
(ii)
Property development
Building construction, general construction, property development and mining of bauxite on development land.
The directors are of the opinion that all inter-segment transactions have been entered into in the normal course of
business and have been established on terms and conditions that are not materially different from those obtainable
in transactions with unrelated parties.
Annual Report 2015
Gearing ratio11%N/AN/A N/A
NOTES TO THE
43. SEGMENT INFORMATION (CONT’D.)
(a) Business Segments (cont’d.)
Property
PlantationdevelopmentEliminations
Consolidated
RM
RM
Note
RM
RM
For the year ended 31 December 2015
Annual Report 2015
184
Revenue
External sales
Inter-segment
187,792,252 216,876,223
–
404,668,475
37,711,274 12,135,032 A(49,846,306)
–
Total revenue
225,503,526 229,011,255(49,846,306)
404,668,475
Results
Interest income
Depreciation
Amortisation
Other non-cash expenses
Segment profit
525,907
385,572 (443,429) 468,050
6,351,582
145,841
(5,000) 6,492,423
4,586,377
–
– 4,586,377
1,097,095
30,352
B
–
1,127,447
48,343,558 80,619,776 C(28,091,333)
100,872,001
Assets
Additions to non-current assets
Segment assets
34,681,025
132,766
D
–
34,813,791
369,627,832 240,813,909 (1,802,458)
608,639,283
Liabilities
Segment liabilities
136,652,876 103,129,379 E 78,629,379
161,152,876
NOTES TO THE
(a) Business Segments (cont’d.)
Property
PlantationdevelopmentEliminations
Consolidated
RM
RM
Note
RM
RM
For the year ended 31 December 2014
193,569,250 195,381,613
–
388,950,863
59,483,802 15,335,702 A(74,819,504)
–
Total revenue
253,053,052 210,717,315(74,819,504)
388,950,863
Results
Interest income
Depreciation
Amortisation
Other non-cash expenses
Segment profit
230,297
260,489
– 490,786
6,065,281
85,910
– 6,151,191
3,857,635
–
– 3,857,635
6,147,953
135,452
B
–
6,283,405
46,221,820 71,041,587 C(19,863,957)97,399,450
Assets
Additions to non-current assets
Segment assets
23,420,880
142,485
D
377,924,021 204,947,136
Liabilities
Segment liabilities
121,549,418 93,297,207 E 72,288,705
142,557,920
–
23,563,365
–
582,871,157
185
Annual Report 2015
Revenue
External sales
Inter-segment
NOTES TO THE
NotesNature of adjustments and eliminations to arrive at amounts reported in the consolidated financial statements.
A
BOther material non-cash expenses consist of the following items as presented in the respective notes to the
financial statements:
Inter-segment revenues are eliminated on consolidation.
Note
Annual Report 2015
186
Gain on disposal of property, plant and equipment
Loss on sale of livestocks
Property, plant and equipment written off
Inventories written down
Pension costs - defined benefit plan
Bad debts written off
at fair value through profit or loss
preference shares
2015
RM
2014
RM
5
8
8
8
6
8
(78,899)
97,392
21,920
29,626
487,992
99,416
–
–
256,001
581,553
477,606
542,483
8
470,000
7
2,370,000
– 2,055,762
1,127,447 6,283,405
CThe following items are deducted from segment profit to arrive at “Profit before tax from continuing
operations” presented in the consolidated statement of comprehensive income:
2015
RM
2014
RM
Revenue from inter-segment(50,460,542)(74,819,504)
Cost of sales from inter-segment
51,997,958
74,819,504
Other income from inter-segment (35,522,748) (20,957,323)
Other expenses from inter-segment
5,893,999
1,093,366
(28,091,333)(19,863,957)
NOTES TO THE
NotesNature of adjustments and eliminations to arrive at amounts reported in the consolidated financial statements.
(cont’d.)
D
Additions to non-current assets consist of:
Note
Property, plant and equipment
Biological assets
2015
RM
2014
RM
12
8,137,949
6,775,526
14(b)26,675,842 16,787,839
34,813,791 23,563,365
EThe following items are added to segment liabilities to arrive at total liabilities reported in the consolidated
statement of financial position:
2015
RM
2014
RM
Deferred tax liabilities
3129,964,523 28,730,310
Income tax payable 2,290,570 1,424,830
2646,374,286 42,133,565
78,629,379 72,288,705
44.COMPARATIVES
Certain comparative amounts as at 31 December 2014 have been reclassified to conform with current year’s
presentation.
45. SUBSEQUENT EVENT
On 6th January 2016, Malaysian Government announced a three-month ban on bauxite mining in central Pahang
state, starting from mid-January 2016. The ban was announced by the Government due to concern over impact of
mining activities on the environment. The management of the Group does not anticipate that the ban will have a
significant impact on the Group’s financial statements.
Annual Report 2015
187
Note
NOTES TO THE
46. AUTHORISATION OF FINANCIAL STATEMENTS FOR ISSUE
The financial statements for the year ended 31 December 2015 were authorised for issuance in accordance with a
resolution of the directors on 21 March 2016.
47.S UPPLEMENTARY INFORMATION – BREAKDOWN OF RETAINED EARNINGS INTO REALISED AND
UNREALISED
The breakdown of the retained earnings of the Group and of the Company as at 31 December 2015 and 2014 into
realised and unrealised profits is presented in accordance with the directive issued by Bursa Malaysia Securities
Berhad dated 25 March 2010 and prepared in accordance with Guidance on Special Matter No. 1, Determination
of Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities
Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants.
Group
2015
2014
RM
RM
Company
2015
2014
RM
RM
Annual Report 2015
188
Total retained earnings of the
Company and its subsidiaries
- Realised153,938,155134,269,541113,487,759 120,667,681
- Unrealised 30,217,003
28,730,310
–
–
184,155,158
162,999,851
113,487,759120,667,681
Add: Consolidation adjustments
(2,760,101) 12,163,360
–
–
Retained earnings as per
financial statements181,395,057175,163,211113,487,759 120,667,681
ANALYSIS OF
SHAREHOLDINGS BY RANGE
AS AT 31 MARCH 2016
: RM500,000,000 comprising :
980,000,000 Ordinary Share of RM0.50 each
30,000,000 Redeemable Preference Share of RM0.10 each
70,000,000 Redeemable Convertible Preference Share of RM0.10 each
Issued and Paid-up Share Capital
: RM199,079,796 divided into 398,159,592 ordinary shares
of RM0.50 each
Class of shares
: Ordinary shares of RM0.50 each
Redeemable Preference Share of RM0.10 each
Redeemable Convertible Preference Share of RM0.10 each
Voting Rights
: on a show of hands : 1 vote
on a poll
: 1 vote for each share held
No. of
Shares
Over Total
Shares
%
No. of
Shareholders
Over Total
Shareholders
%
Less than 99
100
0.000
6
0.506
100 – 1,000
137,200
0.034
179
15.118
1,001 – 10,000
3,434,600
0.862
661
55.827
10,001 – 100,000
8,726,900
2.191
257
21.706
100,001 – 19,907,978 (*)
214,495,582
53.871
77
6.503
19,907,979 and above (**)
171,365,210
43.039
4
0.337
Total
398,159,592
100.000
1,184
100.000
Size of Shareholdings
(*) Less than 5% of Issued Share
(**)5% and above of Issued Share
189
Annual Report 2015
Authorised Share Capital
INFORMATION ON
SUBSTANTIAL SHAREHOLDERS
The shareholders holding more than 5% interest, in the ordinary shares of RM0.50 each in Tanah Makmur Berhad based
on the Register of Substantial Shareholders of the Company as at 31 March 2016 are as follows :
Name of Substantial Shareholders
Annual Report 2015
190
Direct
No. of
shares held
%
Indirect
No. of
shares held
%
1.
Lembaga Kemajuan Perusahaan Pertanian
Negeri Pahang
79,631,878
20.00
–
–
2.
KDYTM Tengku Abdullah Ibni Sultan Hj
Ahmad Shah
50,835,386
12.768
93,232,428
23.42 (i)
3.
T.A.S Industries Sdn Bhd
60,105,082
15.096
6,066,696
1.52 (ii)
4.
Tastu Bina Sdn Bhd
27,060,650
6.796
–
–
5.
Focus Edge Indices Corp
21,005,300
5.276
–
–
Notes :
(i)Deemed to have interest in Tanah Makmur by virtue of his shareholdings in T.A.S Industries Sdn Bhd, Tastu Bina
Sdn Bhd and Aimvesco Sdn Bhd pursuant to Section 6A, Companies Act 1965
(ii)Deemed to have interest in Tanah Makmur by virtue of its shareholdings in Aimvesco Sdn Bhd pursuant to Section
6A, Companies Act 1965
DIRECTORS’ INTEREST
IN SHARES
Based on the Register of Directors’ shareholdings and the Record of Depositors, the interest of the Directors in the
shares of the Company are as follows :
Name
Number of ordinary shares
of RM0.50 each
in Tanah Makmur Berhad
Direct
Indirect
% of
Issued Shares
Direct
Indirect
YAM Tengku Tan Sri (Dr) Hajjah Meriam binti Sultan
Haji Ahmad Shah
3,145,722
–
0.79
–
3,083,422
–
0.77
–
150,000
21,005,300
0.03
5.276 (i)
50,000
–
0.01
–
150,000
–
0.03
–
150,000
–
0.03
–
150,000
–
0.03
–
YH Dato’ Thavalingam a/l C Thavarajah
100,000
–
0.02
–
150,000
–
0.03
–
YM Tengku Dato’ Sri Uzir bin Tengku Dato’ Ubaidillah 19,715,908
(Alternate Director to YM Tengku Dato’ Sri Ahmad
Faisal bin Tengku Ibrahim)
27,060,650
4.952
6.796 (ii)
–
–
–
–
(Alternate Director to YH Dato’ Wan Bakri bin Wan
Ismail)
Notes :
(i)Deemed to have interest in Tanah Makmur by virtue of his shareholdings in Focus Edge Indices Corp pursuant to
Section 6A of the Companies Act 1965
(ii)Deemed to have interest in Tanah Makmur by virtue of his shareholdings in Tastu Bina Sdn Bhd pursuant to Section
6A Companies of the Act 1965
Annual Report 2015
191
LIST OF THIRTY
LARGEST
SHAREHOLDERS
As At 31 March 2016 (without aggregating the shares from different securities accounts belonging to the same Depositor)
Annual Report 2015
192
No
Name of Shareholders
No. of Shares
Held
Over Total
Paid-Up Capital
%
1
LEMBAGA KEMAJUAN PERUSAHAAN PERTANIAN NEGERI PAHANG
79,631,878
19.999
2
T.A.S INDUSTRIES SDN BHD
41,672,682
10.466
3
TASTU BINA SDN BHD
27,060,650
6,796
4
CIMSEC NOMINEES (TEMPATAN) SDN BHD
EXEMPT AN FOR CIMB COMMERCE TRUSTEE BERHAD
(PB-BTR2060)
23,000,000
5.776
5
CIMB FOR T.A.S INDUSTRIES SDN BHD (PB)
18,432,400
4.629
6
CITIGROUP NOMINEES (TEMPATAN) SDN BHD
EXEMPT AN FOR AIA BHD
15,695,000
3.941
7
KENANGA NOMINEES (TEMPATAN) SDN BHD
PLEDGED SECURITIES ACCOUNT
FOR MARY ANNE WOON LAI KHENG
15,531,000
3.900
8
TENGKU UZIR BIN TENGKU UBAIDLLAH
14,331,808
3.599
9
AFFIN HWANG NOMINEES (TEMPATAN) SDN BHD
AFFIN HWANG ASSET MANAGEMENT BERHAD FOR
MAJLIS UGAMA ISLAM DAN ADAT RESAM MELAYU PAHANG
14,180,000
3.561
10
EXEMPT AN FOR CIMB COMMERCE TRUSTEE BERHAD
(PB-BTR2061)
14,000,000
3.516
11
CIMSEC NOMINEES (ASING) SDN BHD
CIMB FOR FOCUS EDGE INDICES CORP (PB)
11,900,000
2.988
12
TENGKU NONG FATIMAH BT SULTAN AHMAD SHAH
10,533,488
2.645
13
PLEDGED SECURITIES ACCOUNT FOR ZULKEFLY BIN MOHD DAIM
10,202,000
2.562
14
PLEDGED SECURITIES ACCOUNT FOR TENGKU ABDULLAH IBNI
SULTAN HJ AHMAD SHAH (001 THIRD PARTY)
10,000,000
2.511
15
PLEDGED SECURITIES ACCOUNT FOR MOHD ABDAH BIN MOHD ALIF
9,385,000
2.357
16
KENANGA NOMINEES (ASING) SDN BHD
PLEDGED SECURITIES ACCOUNT FOR FOCUS EDGE INDICES CORP
(001 THIRD PARTY)
8,105,300
2.035
LIST OF THIRTY
LARGEST
SHAREHOLDERS
As At 31 March 2016 (without aggregating the shares from different securities accounts belonging to the same Depositor)
Name of Shareholders
No. of Shares
Held
Over Total
Paid-Up Capital
%
17
AIMVESCO SDN BHD
6,066,696
1.523
18
CIMB FOR SHAHRIL BIN SHAMSUDDIN (PB)
5,000,000
1.255
19
PLEDGED SECURITIES ACCOUNT FOR TEH YEAN TEONG
3,970,700
0.997
20
CIMB FOR TENGKU MERIAM BINTI SULTAN AHMAD SHAH (PB)
3,145,722
0.790
21
TENGKU ZUBIR BIN TENGKU UBAIDILLAH
3,083,422
0.774
22
PLEDGED SECURITIES ACCOUNT FOR TENGKU ABDULLAH IBNI
SULTAN HJ AHMAD SHAH (001 THIRD PRTY)
3,000,000
0.753
23
PLEDGED SECURITIES ACCOUNT FOR TENGKU UZIR
BIN TENGKU UBAIDILLAH
3,000,000
0.753
24
DB (MALAYSIA) NOMINEE (TEMPATAN) SENDIRIAN BERHAD
DEUTSCHE TRUSTEES MALAYSIA BERHAD FOR EASTSPRING
INVESTMENTSSMALL-CAP FUND
2,770,800
0.695
25
MAYBANK NOMINEES (TEMPATAN) SDN BHD
PLEDGED SECURITIES ACCOUNT FOR TENGKU UZIR
BIN TENGKU UBAIDILLAH
2,384,100
0.598
26
CARTABAN NOMINEES (ASING) SDN BHD
EXEMPT AN FOR CREDIT AGRICOLE (SUISSE) SA
2,225,000
0.558
27
PLEDGED SECURITIES ACCOUNT FOR MOHAN A/L
C SINNATHAMBY (THIRD PARTY)
1,600,000
0.401
28
CIMSEC NOMINEES (ASING) SDN BHD
CIMB FOR ASIA ADVISORY PARTNERS LIMITED (PB)
1,500,000
0.376
29
HSBC NOMINEES (ASING) SDN BHD
EXEMPT AN FOR CREDIT SUISSE (SG BR-TST-ASING)
1,500,000
0.376
30
TENGKU SHAHARIAH BT SULTAN AHMAD SHAH
1,387,860
0.348
364,295,506
91.494
193
Annual Report 2015
No
MATERIAL PROPERTIES
HELD BY THE GROUP
Location
Title
Registered Land
Owner
Tenure
Date of last Total
Usage
Valuation Titled Area
(Hectares)
Net Book
Value as at
31/12/2015
Tanah Makmur Berhad
1.
Ladang Paloh Hinai
Mukim Lepar
Daerah Pekan
Pahang
HS(D) 233
HS(D) 234
HS(D) 235
Leased
from
LKPP
Leasehold
99 years
expiring in
2074
09/04/2015
2,085.75 Oil palm
plantations
18,314,203
2.
Ladang Charok Puting
Mukim Lebak
Daerah Temerloh
Pahang
Mukim Perak
Daerah Temerloh
Pahang
Mukim Bera
Daerah Bera
Pahang
Mukim Triang
Daerah Bera
Pahang
HS(D) 1448 Leased
HS(D) 1449 from
HS(D) 1450 LKPP
Leasehold
99 years
expiring in
2074
11/04/2015
1,845.37 Oil palm
plantations
11,212,961
3.
4.
Annual Report 2015
194
HS(D) 1508
HS(D) 4076
Freehold
HS(D) 4077
Freehold
Ladang Kampung Bongsu
Mukim Semantan
Daerah Temerloh
Pahang
HS(D) 1453 Leased
HS(D) 1454 from
HS(D) 1455 LKPP
HS(D) 1456
Leasehold
99 years
expiring in
2074
16/04/2015
1,354.08 Oil palm
plantations
9,343,855
Ladang Sungai Sering
Mukim Perak
Daerah Temerloh
Pahang
Mukim Bera
Daerah Bera
Pahang
HS(D)
14974
Leasehold
99 years
expiring in
2093
Leasehold
99 years
expiring in
2096
Leasehold
99 years
expiring in
2096
Leasehold
99 years
expiring in
2096
Leasehold
99 years
expiring in
2091
Leasehold
66 years
expiring in
2054
11/04/2015
1,118.11 Oil palm
plantations
10,076,767
Kurnia
Setia
Berhad (1)
HS(D) 2343 Kurnia
Setia
Berhad (1)
HS(D) 2344 Kurnia
Setia
Berhad (1)
HS(D) 2345 Kurnia
Setia
Berhad (1)
HS(D) 21
Kurnia
Setia
Berhad (1)
HS(D) 4947 Leased
from
LKPP
Location
Title
5.
Ladang Lembah Klau
Mukim Gali
Daerah Raub
Pahang
PN 9774
Kurnia
PN 9775
Setia
HS(D) 7456 Berhad (1)
HS(D) 7457
Leasehold
99 years
expiring in
2096
07/04/2015
1,528.20 Oil palm
plantations
19,082,633
6.
Ladang Empang Jaleh
Mukim Penjom
Daerah Lipis
Pahang
Mukim Batu Yon
Daerah Lipis
Pahang
HS(D) 1353 Kurnia
Setia
Berhad (1)
06/04/2015
507.96 Oil palm
plantations
3,836,934
HS(D) 277
Kurnia
Setia
Berhad (1)
Leasehold
99 years
expiring in
2091
Leasehold
99 years
expiring in
2085
Ladang Sungai Selama
Lanar
Mukim Kuala Lipis
Daerah Lipis
Pahang
Mukim Cheka
Daerah Lipis
Pahang
PN 9916
PN 9917
Kurnia
Setia
Berhad (1)
Leasehold
99 years
expiring in
2090
06/04/2015
1,372.34 Oil palm
plantations
9,381,490
HS(D) 1938 Kurnia
Setia
Berhad (1)
Leasehold
66 years
expiring in
2065
Leasehold
99 years
expiring in
2095
PN 14632
Leased
from
LKPP (2)
Date of last Total
Usage
(Hectares)
Net Book
Value as at
31/12/2015
195
8.
Ladang Ulu Lepar
Mukim Ulu Lepar
Daerah Kuantan
Pahang
HS(D)
44435
Tanah
Makmur
Berhad
Leasehold
99 years
expiring in
2112
14/04/2015
1,069.67 Oil palm
plantations
4,201,315
9.
Ladang Aur Gading
Mukim Luit
Daerah Maran
Pahang
PN 19070
Kurnia
Setia
Berhad (1)
14/04/2015
453.95 Oil palm
plantations
5,483,748
GM 810
Kurnia
Setia
Berhad (1)
Leasehold
99 years
expiring in
2092
Freehold
10. Vacant Land
Lot 668
Mukim Cheras
Daerah Hulu Langat
Selangor
GM 193
Kurnia
Setia
Berhad (1)
Freehold
23/04/2015
11. Factory
Batu 5, Jalan Kapar
Daerah Klang
Selangor
HS(M)
12723
HS(D)
31811
Tanah
Makmur
Berhad
Freehold
23/04/2015
Office
Building
2.12 Vacant - for
future
development
18,424 Industrial
sq ft²
2,250,000
1,446,450
Annual Report 2015
7.
Registered Land
Owner
Tenure
MATERIAL PROPERTIES
HELD BY THE GROUP
Location
12. Head Office
Lot 18, 19 & 20
Bandar Kuantan
Daerah Kuantan
Pahang
Alur Seri Sdn Bhd
13. Ladang Alur Seri
Mukim Ulu Lepar
Daerah Kuantan
Pahang
Title
Registered Land
Owner
Tenure
Date of last Total
Usage
(Hectares)
GRN 6532
GRN 9369
GRN 9370
Kurnia
Setia
Berhad (1)
Freehold
21/05/2015
7200.00 3 storey
sq ft² Office
building
1,900,000
HS(D)
39694
Alur Seri
Sdn Bhd
Leasehold
99 years
expiring in
2110
14/04/2015
2,023.00 Oil palm
plantations
7,862,976
Leasehold
99 years
expiring in
2102
09/04/2015
1,215.00 Oil palm
plantations
12,152,356
Leasehold
99 years
expiring in
2110
07/04/2015
3,035.15 Oil palm
plantations
10,917,286
Tanah
Makmur
Berhad
Leasehold
99 years
expiring in
2110
18/04/2015
202.44 Palm Oil Mill
(20.23 ha)
and oil palm
plantations
(182.21 ha)
1,059,503
KotaSAS
Sdn Bhd
Leasehold
99 years
expiring in
2109
4/16/15
363.62 Property
development
27,605,206
Alur Gemilang Sdn Bhd
14. Ladang Sri Jelutong
HS(D) 3633 Kurnia
Mukim Bebar
Setia
Daerah Pekan
Berhad (1)
Pahang
Annual Report 2015
196
Alur Cemerlang Sdn
Bhd
15. Ladang Sri Telang
Bukit Lesung
Mukim Telang
Daerah Lipis
Pahang
HS(D) 2548 Tanah
HS(D) 2549 Makmur
Berhad
Sri Jelutung Palm Oil
Mill Sdn Bhd
16. Sri Jelutung Palm Oil Mill PN 22898
Mukim Bebar
Daerah Pekan
Pahang
KotaSAS Sdn Bhd
17. KotaSAS Township
Daerah Kuantan
Pahang
PN 21843
PN 23227
PN 23228
HS(D)
37637
PN 21193
Leasehold
99 years
expiring in
2113
Net Book
Value as at
31/12/2015
137.7 Oil palm
plantations
Note :
(1)
Tanah Makmur Berhad is the beneficial owner of the properties held under Kurnia Setia Berhad vide the Privatisation of Kurnia Setia Berhad in 2010.
(2)
The land was acquired from LKPP Negeri Pahang on 10 April 2012
PROXY
FORM
(Please see the notes below before completing the form)
CDS Account No.
No. of Ordinary Share (s) held
I/We (FULL NAME IN CAPITAL LETTERS) NRIC No./Passport No./Company No. of (FULL ADDRESS) being a member/members of TANAH MAKMUR BERHAD hereby appoint
First Proxy
Full Name of Proxy
in Capital Letters
Proportion of shareholdings
Number of shares
Percentage (%)
NRIC Number
and/or failing him/her
Second Proxy
Full Name of Proxy
in Capital Letters
Proportion of shareholdings
Number of shares
Percentage (%)
NRIC Number
or failing him/her the Chairman of the meeting as my/our proxies to attend and vote for me/us on my/our behalf at the 7th Annual General Meeting of the Company
to be held at Zenith 6 & 7, Level 3, The Zenith Hotel, Jalan Putra Square 6, Putra Square, 25200 Kuantan, Pahang on Friday, 27 May 2016 at 10.00 am and at any
adjourment thereof.
My/our proxy is to vote on the Resolutions as indicated by an “X” in the appropriate spaces below. If this form is returned without any indication as to how the proxy
shall vote, the proxy shall vote as he/she thinks fit.
NO. RESOLUTION
FOR
AGAINST
To re-elect the following Directors each of whom retires pursuant to Article 95 of the Company’s
Articles of Assocation :
1
2
3
4
To appoint YBhg Tan Sri Dato’ Sri Abdul Aziz bin Abdul Rahman who retires pursuant to Section 129 of
the Company’s Act, 1965.
5
To approve the payment of Directors’ fees amounting to RM925,000 for the financial year ended
31 December 2015.
6
To re-appoint Messrs. Ernst & Young as Auditors for the financial year ended 31 December 2015 and to
authorise the Directors to fix their remuneration.
7
General Authority for the Directors to issue shares pursuant to Section 132D of the Companies Act, 1965
Dated this______day of ______________2016
Signature(s) / Company Seal of Members
Notes on Proxy :
1.Only members whose names appear in the Record of Depositors on 20th May 2016 (General Meeting Record of Depositors) shall be eligible to attend and vote at the meeting as well as for
appointment of proxy(ies) to attend and vote on his/her stead.
2.A member of the company entitled to attend and vote at the 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.
3.The instrument appointing a proxy shall be in writing under the hand of the appointer or his attorney duly authorised or where the appointment is executed by a corporation, it must be
either under seal or under the hand of its attorney duly authorised. There shall be no restriction as to the qualification of the proxy. A proxy appointed to attend and vote at a meeting of
the Company shall have the same rights as the member to speak at a meeting.
4.A member shall be entitled to appoint not more than two (2) proxies to attend and vote at the same meeting
5.Where the holder or the authorised nominee shall be entitled to appoint not more than two (2) proxies, or where an exempt authorised nominee appoints two (2) or more proxies to attend
and vote at the same meeting such appointment shall be invalid unless he specifies the proportion of his shareholdings to be represented by each proxy.
6.Where a member of the Company is an authorised nominee as defined under the Security Industry (Central Depositories) Act, 1991 (“SICDA”), it may appoint at least one (1) proxy but not
more than two (2) proxies in respect of each Securities Account it holds with ordinary shares of the Company standing to the credit of the said Securities Account.
7.Where a member of the Company is an exempt authorised nominee as defined under the Securities Industry (Central Depositories) Act 1991 (“SICDA”) which holds ordinary shares in the
Company for multiple beneficial owners in one securities account (“omnibus account”), there is no limit to the number of proxies which the exempt authorised nominee may appoint in
respect of each omnibus account it holds. An exempt authorised nominee refers to an authorised nominee deﬁned under the SICDA which is exempted from compliance with the provisions
of subsection 25A(1) of SICDA.
8.The instrument of proxy must be deposited at the Registered Address of the Company at Bangunan Tanah Makmur, No. 1, Jalan Besar, 25000 Kuantan, Pahang Darul Makmur at least forty
eight (48) hours before the time set for holding the meeting or any adjournment thereof.
Fold Here
STAMP
Tanah Makmur Berhad
Bangunan Tanah Makmur
No. 1 Jalan Besar
25000 Kuantan
Pahang Darul Makmur
Fold Here

financial statements - Tanah Makmur Berhad

Transcription

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