TEXCHEM AnnualReport2014
TEXCHEM AnnualReport2014
TEXCHEM AnnualReport2014
CONTENTS
Corporate Structure
Board Of Directors
11
Corporate Information
13
Executive Committee
14
14
Nomination Committee
18
Remuneration Committee
19
20
25
26
38
Other Disclosures
40
Analysis Of Shareholdings
43
Particulars Of Properties
45
Financial Statements
47
Proxy Form
Enclosed
Corporate Structure
Industrial Division
Food Division
Restaurant Division
Notes:
1) The above companies are operating subsidiaries and associated companies of Texchem Resources Bhd. Group.
2) The complete list of Texchem Resources Bhd. Group is disclosed in Note 5 to the Financial Statements of this Annual
Report.
PRESIDENT &
GROUP CEOS MESSAGE
Dear valued shareholders
The Group ended the financial year with a total
revenue of RM1.02 billion, an increase of 7.2%
from the previous year and recorded a pre-tax
profit of RM3.5 million.
In addition, we were excited with the performance
of our Food Division whereby we have achieved a
notable breakthrough in our business performance
as this Division registered a turnaround with a pretax profit of RM1.7 million.
All our four Strategic Business Divisions registered
growth in revenues and pre-tax profits in FY2014
against FY2013, with Polymer Engineering Division
registering a lower pre-tax loss of RM14 million
compared to the pre-tax loss of RM16 million
in FY2013. Our Restaurant Division recorded a
lower pre-tax profit of RM15.6 million in FY2014
compared to pre-tax profit of RM16.3 million
in 2013 due to restaurant closure costs and
impairments amounting to RM4.2 million, as part
of our multipronged strategies to strengthen our
profitable brands to grow market share.
BOARD OF DIRECTORS
10
Revenue^
Profit Before Tax^
Net (Loss)/Profit Attributable
to Owners of the
Company
Total Equity Attributable
to Owners of the
Company/Net Assets
Net Tangible Assets
No. of Ordinary Shares Issued
(000)
Net Dividends
Gross Dividends (%)
(Loss)/Earnings Per Share
(sen)^
2010
RM000
2011
RM000
2012
RM000
2013
RM000
2014
RM000
1,058,695
1,087,751#
1,133,666
953,615
1,022,663
2,740
3,991
56,208*
12,003~
3,538
(5,144)
49,368*
8,499 ~
1,184
(491)
146,345
142,9 06
185,657
197,036@
208,782@
9 0,817
88,606
151,281
141,154@
151,242@
124,099
124,099
124,099
124,099
124,099
3,723
9,307
10
(0.40)
(4.15)
39.78
6.85
0.95
1.18
1.15
1.50
1.59 @
1.68@
0.73
0.71
1.22
1.14@
1.22@
11
RM000
1,200,000
RM000
1,058,695 1,087,751
1,133,666
1,000,000
1,022,663
60,000
50,000
953,615
800,000
40,000
600,000
30,000
400,000
20,000
200,000
10,000
2010
2011
2012
2013
56,208
2014
12,003
2,740
2010
Revenue
30
30,000
20
20,000
10
8,499
1,184
(491)
12
0
-5
(5,144)
2010 2011
2012
2013
2014
39.78
40
40,000
10,000
3,538
49,368
50,000
-10,000
2011
Sen/Share
RM000
3,991
6.85
0.95
(0.40)
2010
(4.15)
2011
2012
2013
2014
CORPORATE INFORMATION
BOARD OF DIRECTORS
EXECUTIVE COMMITTEE
REMUNERATION COMMITTEE
Executive Chairman
Tan Sri Dato Seri (Dr.) Fumihiko Konishi
Chairman
Tan Sri Dato Seri (Dr.) Fumihiko Konishi
Chairman
Zarizana @ Izana Binti Abdul Aziz
Members
Brian Tan Guan Hooi
Wong Kin Chai
Yap Kee Keong
Akihiko Hijioka
Members
Tan Sri Dato Seri (Dr.) Fumihiko Konishi
Dato Seri Nazir Ariff Bin Mushir Ariff
Danny Goon Siew Cheang
AUDIT COMMITTEE
NOMINATION COMMITTEE
Chairman
Danny Goon Siew Cheang
Chairman
Dato Seri Nazir Ariff Bin Mushir Ariff
Members
Dato Seri Nazir Ariff Bin Mushir Ariff
Zarizana @ Izana Binti Abdul Aziz
Member
Danny Goon Siew Cheang
REGISTERED OFFICE
Level 18, Menara Boustead Penang
39 Jalan Sultan Ahmad Shah
10050 Penang
Tel: 604-2296000
Fax: 604-2291430
AUDITORS
KPMG
Chartered Accountants
Penang
Tel: 604-2382288
Fax: 604-2382222
PRINCIPAL BANKERS
Malayan Banking Berhad
HSBC Bank Malaysia Berhad
CIMB Bank Berhad
RHB Bank Berhad
Hong Leong Bank Berhad
COMPANY SECRETARIES
Tan Peng Lam
(MIA 37392)
Lee Puay Img @ Eng Puay Img
(LS 0009427)
SOLICITORS
Presgrave & Matthews
Zaid Ibrahim & Co.
AUTHORISED CAPITAL
RM500,000,000
Executive Directors
Wong Kin Chai
Yap Kee Keong
Independent Non-Executive
Directors
Dato Seri Nazir Ariff Bin Mushir Ariff
Danny Goon Siew Cheang
Zarizana @ Izana Binti Abdul Aziz
SHARE REGISTRAR
AGRITEUM Share Registration
Services Sdn. Bhd.
2nd Floor, Wisma Penang Garden
42 Jalan Sultan Ahmad Shah
10050 Penang
Tel: 604-2282321
Fax: 604-2272391
PAID-UP CAPITAL
RM124,099,235
E-MAIL ADDRESS
[email protected]
WEBSITE
www.texchemgroup.com
SUBSIDIARIES
Please refer to the Corporate
Structure section of this Annual
Report for the list of subsidiaries of
the Company.
13
EXECUTIVE COMMITTEE
TERMS OF REFERENCE
To assist the Board of Directors (Board) in decision-making by undertaking the necessary business deliberations and
operational activities necessary for the day-to-day running of the organisation and to seek necessary Board approvals where
applicable.
The principal objective of the Audit Committee (AC) is to assist the Board in fulfilling its oversight responsibilities of the
Groups financial reporting process and internal control system.
Membership
2.
The AC shall be appointed by the Board from among their members and shall consist of no fewer than three (3) nonexecutive directors. All AC members should be non-executive directors, with a majority of them being independent
directors.
All members of the AC shall be financially literate and at least one (1) member should be a member of an accountancy
association or body.
3.
The AC shall elect a Chairman from among their members who shall be an Independent Non-Executive Director. In the
absence of the Chairman, the remaining members present shall among themselves elect a Chairman who must be an
independent director to chair the meeting.
4.
In the event of any vacancy in the AC resulting in the non-compliance with 2 above, the Board of Directors shall fill the
vacancy within three months.
Authority
14
5.
The AC is authorised by the Board to investigate any activity within its terms of reference. It is authorised to seek any
information it requires from any employee and all employees are directed to co-operate with any request made by the
Committee.
6.
The AC is authorised by the Board to obtain external, legal or independent professional advice and to secure the
attendance of such external advisors with relevant experience if considered necessary.
7.
The AC is authorised to convene meetings with the external auditors, the internal auditors or both, without the presence
of other directors and employees, whenever deemed necessary.
8.
The AC is authorised to have direct communication channels with the external auditors and persons carrying out the
internal audit function or activity.
15
16
a)
Reviewed with the external auditors scope of work, audit plans and reporting requirements for the year,
b)
Reviewed the unaudited quarterly and the audited annual financial statements before presentation to the Board,
c)
Reviewed with the external auditors their evaluation of the system of internal controls, audit findings and recommendations
arising from the audit, and managements responses thereon,
d)
Reviewed and approved the 2014 Internal Audit Plan on the audit frequency, scope of work, areas of audit focus and
resources,
e)
Reviewed the Internal Audit Reports and monitoring of risk management and internal control systems,
f)
Reviewed the Groups recurrent related party transactions for the year and noted that they were within the limits
approved by the shareholders,
g)
Reviewed the external auditors competency, independence and suitability and recommendation to the Board for their
reappointment and their audit fees,
h)
Reviewed the year end annual performance appraisal or assessment of the internal audit staff.
The Internal Audit function provides the Audit Committee with independent and objective reports on the audit findings,
recommendation for improvement and managements action. Follow-up reviews are also conducted by the Internal Audit
function to ensure that matters arising from the audit are adequately addressed by management.
In 2014, the total cost of the Internal Audit function comprising staff payroll, office rental, travelling and incidental costs
amounted to approximately RM507,000 (2013: RM608,000).
17
NOMINATION COMMITTEE
TERMS OF REFERENCE
Objective
In accordance with the Malaysian Code on Corporate Governance, the Nomination Committee is set up to provide recommendations
to the Board of Directors (Board) on the candidates for all directorships of Texchem Resources Bhd. (TRB) to be filled by the
shareholders or the Board. Final decision on the appointment of any directors of TRB shall be made by the Board.
The Nomination Committee shall be responsible in ensuring the appropriate Board balance and size, and that the Board has a
required mix of skills, experience, independence and diversity (diversity in gender, ethnicity and age). An annual review of the mix of
skills, experience and other core competencies of the Board shall be made by the Nomination Committee.
Size and Composition
The Nomination Committee shall comprise wholly of Non-Executive Directors, the majority of whom are independent. The members
of the Nomination Committee shall elect a Chairman from amongst any of its members.
Meetings
The Nomination Committee shall meet as and when is necessary. The quorum for any meetings shall be two (2) members subject
to any laws, guidelines or rules that may be imposed by Bursa Malaysia Securities Berhad and/or any other relevant authority(ies).
Secretaries
The Company Secretaries shall act as Secretaries to the Nomination Committee and shall be responsible for keeping minutes of
meetings of the Nomination Committee and circulating them to the Nomination Committee members.
Duties and Responsibilities
1)
To review regularly the Board structure, size and composition and make recommendations to the Board with regard to any
adjustments thereof and/or the appointment of Directors as the Nomination Committee deems necessary.
2)
To consider, in making its recommendations, candidates for directorships proposed by the President/Managing Director/
Chief Executive Officer of TRB and within the bounds of practicability, by any other senior executive or any other Director or
shareholder of TRB as well as make recommendations to put in place the plans for succession, in particular for the Chairman/
President and the Managing Director/Chief Executive Officer.
3)
To conduct a performance evaluation annually in order to assist the Board to review the required mix of skills, experience,
independence, diversity (diversity in gender, ethnicity and age) and other qualities including core competencies which
Directors should bring to the Board and to assess the effectiveness of the Board, any other committees of the Board and the
contributions of each individual Director of TRB, based on the process and procedures laid out by the Board.
4)
To review the induction and training needs of Directors under the continuing education programmes.
5)
To recommend to the Board for continuation or discontinuation in service of Directors as an Executive Director or NonExecutive Director.
6)
To recommend Directors who are retiring by rotation to be put forward for re-election.
7)
To recommend to the Board, the Directors to fill the seats on any committees of the Board.
8)
To recommend to the Board the employment of the services of such advisers as it deems necessary to fulfill the Boards
responsibilities.
9)
To carry out other responsibilities, functions or assignments as may be defined by the Board from time to time.
18
Conducted the annual assessment and the performance evaluation of the individual Directors and the Board as a whole;
summarised the results of the annual assessment and the performance evaluation and reported to the Board on the outcome
of such assessment; reviewed the independence of the Directors.
Made recommendation to the Board for the re-election and re-appointment of the Directors who are subject to retirement at
the forthcoming Annual General Meeting.
3.
Reviewed and made recommendation to the Board for the adoption of the revised Terms of Reference of the Nomination
Committee.
4.
Deliberated and made recommendation to the Board for the adoption of the revised marking system to both the Directors
Assessment Questionnaire and the Board Evaluation Questionnaire of the Company.
REMUNERATION COMMITTEE
TERMS OF REFERENCE
Objective
In accordance with the Malaysian Code on Corporate Governance, the Remuneration Committee is set up to provide
recommendations to the Board of Directors (Board) on the remuneration of the Executive Directors in all its forms such that the
component parts of remuneration are structured to link rewards to corporate and individual performance.
Executive Directors should play no part in decisions on their own remuneration while the remuneration of the Non-Executive
Directors should be a matter for the Board as a whole to determine. The individuals concerned should abstain from discussion of
and voting on their own remuneration.
Size and Composition
The Remuneration Committee shall consist wholly or mainly of Non-Executive Directors. The members of the Remuneration
Committee shall elect a Chairman from amongst its members who shall be a Non-Executive Director.
Meetings
The Remuneration Committee shall meet as and when is necessary. The quorum for any meetings shall be two (2) Non-Executive
Directors subject to any laws, guidelines or rules that may be imposed by Bursa Malaysia Securities Berhad and/or any other
relevant authority(ies).
Secretaries
The Company Secretaries shall act as Secretaries of the Remuneration Committee and shall be responsible for keeping minutes of
meetings of the Remuneration Committee and circulating them to the Remuneration Committee members.
Duties and Responsibilities
1)
To determine and recommend to the Board the framework or broad policy for the remuneration, in all forms, of the Executive
Directors and/or any other persons as the Remuneration Committee is designated to consider by the Board, drawing from
outside advice as necessary.
2)
To determine and recommend to the Board any performance related pay schemes for the Executive Directors and/or any
other persons as the Remuneration Committee is designated to consider by the Board.
3)
To determine the policy for and scope of service agreements for the Executive and Non-Executive Directors, termination
payment and compensation commitments.
4)
5)
To recommend to the Board the appointment of the services of such advisers or consultants as it deems necessary to fulfill
its responsibilities.
6)
To carry out other responsibilities, functions or assignments as may be defined by the Board from time to time.
19
Resolution 1
3. To re-elect the following Directors who retire by rotation in accordance with Article 123 of the Companys
Articles of Association and who being eligible offer themselves for re-election:
(i)
Resolution 2
Resolution 3
4. To approve the Directors fees of RM1,040,000 for the financial year ended 31 December 2014 (2013:
RM575,000).
Resolution 4
5. To re-appoint Messrs KPMG as Auditors for the ensuing year and to authorise the Directors to fix their
remuneration.
Resolution 5
6. SPECIAL BUSINESS
THAT authority be and is hereby given to Dato Seri Nazir Ariff Bin Mushir Ariff who has served
as an Independent Non-Executive Director of the Company for a cumulative term of more than
nine (9) years to continue to act as an Independent Non-Executive Director of the Company.
Resolution 6
(ii) THAT authority be and is hereby given to Mr Danny Goon Siew Cheang who has served as an
Independent Non-Executive Director of the Company for a cumulative term of more than nine (9)
years to continue to act as an Independent Non-Executive Director of the Company.
Resolution 7
(B) Power to Issue Shares pursuant to Section 132D of the Companies Act, 1965
20
THAT subject always to the Companies Act, 1965 (Act), Articles of Association of the Company
and approvals of the relevant regulatory authorities, where such approval is necessary, the Directors
be and are hereby empowered, pursuant to Section 132D of the Act, to allot and issue shares in the
Company from time to time at such price, upon such terms and conditions and for such purposes
as the Directors may in their absolute discretion deem fit provided that the aggregate number of
shares to be issued pursuant to this Resolution does not exceed 10% of the total issued 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 Bursa
Malaysia Securities Berhad AND THAT such authority as abovementioned shall continue in force
until the conclusion of the next Annual General Meeting of the Company.
Resolution 8
Resolution 9
THAT subject always to the Main Market Listing Requirements of Bursa Malaysia Securities Berhad
(MMLR), approval be and is hereby given to the Company and/or its subsidiaries, pursuant to
paragraph 10.09 read with Practice Note 12 of the MMLR, to enter into recurrent related party
transactions of a revenue or trading nature with the related parties as set out in section 2.4 of the
Circular to the Shareholders of the Company dated 8 April 2015 in relation to the Proposed Mandate,
which are necessary for the Company and/or its subsidiaries day-to-day operations provided that
the transactions are in the ordinary course of business and are on normal commercial terms which
are not more favourable to the related parties than those generally available to the public and are
not to the detriment of the minority shareholders of the Company; and provided further that the
disclosure for all such transactions is made in the annual report of the Company of the aggregate
value of all such transactions conducted pursuant to the shareholders mandate during the financial
year where:
(a) the consideration, value of the assets, capital outlay or costs of the aggregated transactions is
equal to or exceeds RM1 million; or
(b) any one of the percentage ratios of such aggregated transactions is equal to or exceeds 1%,
whichever is the higher.
the conclusion of the next Annual General Meeting (AGM) of the Company following the FortyFirst AGM, at which time it will lapse unless such authority is renewed by a resolution passed
at the next AGM of the Company;
(ii) the expiration of the period within which the next AGM of the Company is required to be held
pursuant to Section 143(1) of the Companies Act, 1965 (Act), (but shall not extend to such
extension as may be allowed pursuant to Section 143(2) of the Act); or
(iii) revoked or varied by resolution passed by the shareholders of the Company in a general
meeting,
whichever is the earlier.
AND FURTHER THAT the Directors of the Company and/or its subsidiaries, whether solely or jointly,
be and are hereby authorised to complete and do all such acts and things including executing such
relevant documents as they may consider expedient or necessary to give effect to the Proposed
Mandate.
(D) Proposed Authority for the Company to Buy-Back its own Shares (Proposed Share BuyBack)
Resolution 10
THAT subject to the Companies Act, 1965 (Act), the Main Market Listing Requirements of Bursa
Malaysia Securities Berhad (Bursa Securities), the Companys Articles of Association and other
applicable laws, rules, regulations and guidelines of the relevant authorities, the Directors of the
Company be and are hereby authorised to purchase such number of ordinary shares of RM1.00
each in the Companys issued and paid-up capital through the Bursa Securities at any time and
upon such terms and conditions and for such purposes as the Directors may in their discretion
deem fit subject to the following:
(a) the maximum number of ordinary shares which may be purchased and/or held by the Company
shall be ten per centum (10%) of the issued and paid-up ordinary share capital of the Company
for the time being (Texchem Shares);
(b) the maximum funds to be allocated by the Company for the purpose of purchasing the Texchem
Shares shall not exceed the total retained profits or share premium reserve of the Company or
both;
21
(ii) to retain the Texchem Shares so purchased as treasury shares for distribution as dividend
to the shareholders and/or resell on the market of Bursa Securities and/or for cancellation
subsequently; or
(iii) to retain part of the Texchem Shares so purchased as treasury shares and cancel the
remainder; or
(iv) in such other manner as the Bursa Securities and such other relevant authorities may allow
from time to time.
AND THAT authority be and is hereby given to the Directors of the Company to take all such steps as
are necessary (including the appointment of a stockbroking firm and the opening and maintaining
of a Central Depository Account designated as a Share Buy Back Account and to enter into any
agreements, arrangements and guarantees with any party or parties to implement, finalise and give
full effect to the aforesaid with full powers to assent to any conditions, modifications, revaluations,
variations and/or amendments (if any) as may be imposed by the relevant authorities and to do all
such acts and things as the Directors may deem fit and expedient in the interests of the Company.
FURTHER NOTICE IS HEREBY GIVEN THAT for the purpose of determining a member who shall be entitled to attend this 41st AGM,
the Company shall be requesting Bursa Malaysia Depository Sdn. Bhd., in accordance with Article 73 of the Companys Articles
of Association and Section 34(1) of the Securities Industry (Central Depositories) Act 1991, to issue a General Meeting Record of
Depositors as at 23 April 2015. Only a depositor whose name appears on the Record of Depositors as at 23 April 2015 shall be
entitled to attend the said meeting or appoint proxies to attend, speak and/or vote on his/her behalf.
BY ORDER OF THE BOARD
22
This Agenda item is meant for discussion only as the provision of Section 169(1) of the Act does not require approval of the
shareholders and hence, is not put forward for voting.
1. A Member of the Company entitled to attend and vote at the meeting may appoint up to two (2) proxies to attend and vote
instead of him/her. A proxy may but need not be a Member of the Company and the provision of Section 149(1)(b) of the Act
shall not apply to the Company. If a Member appoints two (2) proxies, the appointments shall be invalid unless he/she specifies
the proportions of his/her holdings to be represented by each proxy.
2. Where a Member of the Company is an exempt authorised nominee 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.
3. To be effective:(a) the instrument appointing a proxy; and
(b) the authority (if any) under which it is executed or a copy of such authority certified notarially or in some other way
approved by the Directors of the Company,
must be deposited at the Registered Office of the Company at Level 18, Menara Boustead Penang, 39 Jalan Sultan Ahmad
Shah, 10050 Penang, Malaysia at least forty-eight (48) hours before the time for holding the meeting.
4. If the Proxy Form is returned without any indication as to how the proxy shall vote, the proxy will vote or abstain as he/she thinks
fit.
5. If the Proxy Form is returned without the name of the proxy indicated, the Proxy Form shall be invalid.
6. Where the person appointing the proxy is a corporation, the form must be either under seal or under the hand of a duly
authorised officer or attorney of the corporation.
7.
Pursuant to the Malaysian Code on Corporate Governance 2012, the Board is making a recommendation to shareholders
that both Dato Seri Nazir Ariff Bin Mushir Ariff and Mr Danny Goon Siew Cheang remain as Independent Non-Executive
Directors based on the following justifications:
The Board is of the view that Dato Seri Nazir Ariffs expertise, broad international experience and vast experience in various
industries provide the Board with a diverse set of experience and expertise which enhances the skills and experience
profile of the Board. The Board is confident that his length of service on the Board does not in any way interfere with his
duties as an Independent Non-Executive Director of the Company.
The Board believes that with Mr Goons qualifications, expertise and extensive experience as a Chartered Accountant
and his accumulative knowledge of the Groups business and operations, he has made and continues to make valuable
contributions through his role as Chairman of the Audit Committee and his roles on the Remuneration and Nomination
Committees. The Board is confident that Mr Danny Goon is able to carry out his duties and responsibilities independently
and objectively notwithstanding his tenure on the Board.
As at the date of this Notice, no new shares in the Company were issued pursuant to the mandate granted to the Directors
at the last AGM of the Company held on 30 April 2014 and the said mandate will lapse at the conclusion of this 41st AGM.
This Ordinary Resolution, if passed, will give the Directors of the Company from the date of this 41st AGM, the authority
to allot and issue ordinary shares from the unissued share capital of the Company up to an aggregate of not exceeding
10% of the total issued share capital of the Company for the time being pursuant to Section 132D of the Act (Renewed
Mandate). This Renewed Mandate, unless revoked or varied at a general meeting, will expire at the conclusion of the next
AGM of the Company.
23
The Renewed Mandate will provide flexibility to the Company for any possible fund raising activities, including but not
limited to further placement of shares, for the purpose of funding future investment project(s), working capital and/or
acquisitions without any delay and without incurring additional expenses in convening a general meeting to approve the
issuance of such shares.
This Ordinary Resolution, if passed, will empower the Company and/or each of its subsidiaries to enter into the recurrent
related party transactions of a revenue or trading nature which are necessary for the Company and/or its subsidiaries
day-to-day operations provided that such transactions are being carried out in the ordinary course of business and are on
normal commercial terms which are not more favourable to the related parties than those available to the public and are
not to the detriment of the minority shareholders of the Company.
This authority, unless revoked or varied at a general meeting of the Company, will expire at the conclusion of the next AGM
of the Company.
The details of this proposed Ordinary Resolution are set out in sections 2.4 (B) and (C) of the Circular to the Shareholders
of the Company dated 8 April 2015 which is dispatched together with the Companys 2014 Annual Report.
24
This Ordinary Resolution, if passed, will enable the Company to purchase its own shares. The total number of shares
purchased shall not exceed 10% of the issued and paid-up share capital of the Company. This authority will, unless
revoked or varied by the Company in general meeting, expire at the conclusion of the next AGM of the Company.
The details of this proposed Ordinary Resolution are set out in Part B of the Circular to the Shareholders of the Company
dated 8 April 2015 which is dispatched together with the Companys 2014 Annual Report.
(Pursuant to Paragraph 8.27(2) of Bursa Malaysia Securities Berhads Main Market Listing Requirements)
Details of individuals who are standing for election as Directors
No individual is seeking election as a Director (excluding Directors standing for a re-appointment or re-election) at the FortyFirst Annual General Meeting of the Company.
25
Given the current composition of the Board, the Board does not consider it necessary to nominate a recognised Senior
Independent Non-Executive Director to whom any matters of concern may be raised to the Board.
In view of the check and balance mechanism in place in the Boards decision making process, the Board is comfortable
with the executive role held by its Executive Chairman and does not consider it necessary for the Board to comprise a
majority of Independent Directors.
The Board is confident that the Independent Non-Executive Directors who have served the Board for more than
nine years have retained independence of character and judgment and are able to express their views without any
constraint.
Principles Statement
The following statement sets out how the Company has applied the principles and recommendations in the Code.
1.
26
Board Committees
Key Functions
Executive Committee
Audit Committee
Remuneration Committee Explained in the Remuneration Committee : Terms of Reference section of this
Annual Report.
Nomination Committee
All committees have written terms of reference. These committees are formed in order to enhance business
and operational efficiency as well as efficacy. Prior to the establishment of the committees, part of their function
was assumed by the Board as a whole. The Board retains full responsibility for the direction and control of the
Company and the Group.
1.2 Clear Roles and Responsibilities
The Board has wide responsibilities in discharging its fiduciary and leadership functions, amongst others:
(a)
ensuring shareholders are kept informed of the Companys performance and major developments affecting
its state of affairs.
(b)
(c) be responsible for the overall corporate governance of the Group, including its strategic direction,
establishing goals for Management and monitoring the achievement of these goals.
(d)
providing input and final approval of Management development of corporate strategy, including setting
performance objectives.
(e)
(f)
monitoring and reviewing Management processes aimed at ensuring the integrity of financial and other
reporting with the guidance of the Audit Committee.
(g)
Details of the Boards duties and responsibilities are set out in the documented and approved Board Charter.
1.3 Formalise Ethical Standards through Code of Conduct
The approval and adoption of the Code of Conduct formalise the standards of responsibility and obligations and
promotes fair dealing, integrity and ethical conduct amongst the Companys directors and employees. The Code
of Conduct includes mechanism for the Companys directors and employees as well as external parties to report
genuine suspicions of non-compliance without fear of retribution or retaliation. A copy of the Code of Conduct is
available on the Companys website at www.texchemgroup.com.
27
To enable the Board to provide strategic guidance and effective oversight of the Management;
(b)
To clarify the roles and responsibilities of members of the Board and the Management to facilitate the Board
and the Managements accountability to the Company and its shareholders; and
(c)
To ensure a balance of authority so that no single individual or group of Directors has unfettered powers.
The Board will periodically review the Board Charter and make any changes it determines necessary or desirable.
The Board Charter is available for reference on the Companys website at www.texchemgroup.com.
28
STRENGTHEN COMPOSITION
2.1 Nomination Committee
The Nomination Committee comprised the following members during the financial year:
Members
The Nomination Committee met two (2) times during the financial year. The Chairman of the Board and Cik
Zarizana @ Izana Binti Abdul Aziz, the Independent Non-Executive Director, were invited by the Chairman of the
Nomination Committee to attend the meeting.
The Board has identified Dato Seri Nazir Ariff Bin Mushir Ariff as the Independent Non-Executive Director to chair
the Nomination Committee.
The Nomination Committee consists entirely of non-executive Directors, all of whom are independent.
2.2 Develop, Maintain and Review Criteria for Recruitment Process and Annual Assessment of Directors
The Nomination Committee is empowered by the Board and its terms of reference are to bring to the Board
recommendations as to the appointment of new Directors and appointment of Directors to Board Committees.
The Committee also keeps under review the Board structure, size and composition, the Board succession
planning as well as training programmes.
The Nomination Committee systematically assesses the effectiveness of the Board, the committees of the Board
and the contribution of each individual Director on an annual basis. All assessments and evaluations carried out
by the Nomination Committee in the discharge of all its functions are documented.
The Terms of Reference of the Nomination Committee is set out in the Nomination Committee : Terms of
Reference section of this Annual Report.
Appointment Process and Induction Programme
The Board through the Nomination Committees annual appraisal believes that the current composition of the
Board brings the required mix of skills, diversity of gender and core competencies required for the Board to
discharge its duties effectively.
New appointees will be considered and evaluated by the Nomination Committee in various aspects, inter alia skill,
knowledge, expertise and experience, professionalism, sound judgement, diversity of gender, time commitment,
caliber and integrity and creditability on a continuing basis. The Committee will then recommend the candidates
to be approved and appointed by the Board. The Company Secretaries will ensure that all appointments are
properly made and that legal and regulatory obligations are met.
An induction programme will be arranged for newly appointed Directors to familiarise themselves with the
operations of the Group through briefings by the relevant management teams.
29
Members
The Remuneration Committee met two (2) times during the financial year. The meetings were attended by all the
members of the Remuneration Committee.
The Remuneration Committee consists mainly of non-executive Directors, the majority of whom are independent.
The Remuneration Committee is responsible for inter alia recommending to the Board the remuneration
framework for Directors as well as the remuneration packages of executive Directors. The Terms of Reference
of the Remuneration Committee is set out in the Remuneration Committee : Terms of Reference section of this
Annual Report.
The executive Directors did not participate directly in any way in determining their individual remuneration. The
Board as a whole determines the remuneration of non-executive Directors with individual Directors abstaining
from decisions in respect of their individual remuneration.
30
1.
In RM000
Fees
Salaries
Bonus
Benefits in
Kind
Others
Total
Company
-
Executive Directors
800(1)
Non-Executive Directors
240
560
70
30
89
1,549
(1)
68
308
1,040(1)
560
70
30
157
1,857
1,232
2,218
215
104
380
4,149
Subtotal
1,232
2,218
215
104
380
4,149
Total
2,272
2,778
285
134
537
6,006
Subtotal
Subsidiaries
(1)
2.
Executive Directors
Non-Executive Directors
Executive
Non-Executive
RM100,001 to RM150,000
RM650,001 to RM700,000
RM850,001 to RM900,000
RM1,200,001 to RM1,250,000
RM2,850,001 to RM2,900,000
Executive Directors receive bonuses based on the achievement of specific goals related to the performance of
the Group (including operational results). Independent Non-Executive Directors do not receive any performance
related remuneration.
31
REINFORCE INDEPENDENCE
3.1 Annual Assessment of Independence
As at the date of this statement, the Board consists of seven (7) members; comprising three (3) independent
non-executive Directors and four (4) executive Directors. A brief profile of each Director is presented in the Profile
of Directors section of this Annual Report.
The concept of independence adopted by the Board is in tandem with the definition of an Independent Director
in paragraph 1.01 of the Main Market Listing Requirements (Listing Requirements) of Bursa Malaysia Securities
Berhad (Bursa Securities) and Practice Note 13 of Bursa Securities Listing Requirements. The key elements
for fulfilling the criteria are the appointment of independent Directors who are not members of management (nonexecutive) and who are free of any relationship which could interfere with the exercise of independent judgement
or the ability to act in the best interests of the Company. The Board complies with paragraph 15.02 of the Listing
Requirements which requires that at least two Directors or one-third of the Board of the Company, whichever is
the higher, are independent Directors. The assessment of independence of the Independent Directors is carried
out upon appointment, annually and at any other time where the circumstances of a Director change such as
to warrant reconsideration. The Board has conducted an assessment of the independence of the Independent
Directors and is confident that they maintained their independency.
3.2 Tenure of Independent Directors
Although the Board notes the recommendation of the Code that the tenure of an Independent Director should not
exceed a cumulative term of 9 years, it is of the view that the independence of the Independent Non-Executive
Directors should not be determined solely or arbitrary by their tenure of service. The Board is confident that
the Independent Non-Executive Directors who have served the Board for more than nine years have retained
independence of character and judgment and are able to express their views without any constraint.
3.3 Shareholders Approval for the Re-appointment of Independent Non-Executive Directors who have
served for more than 9 years
Independent Non-Executive Directors, Dato Seri Nazir Ariff Bin Mushir Ariff and Mr Danny Goon Siew Cheang
have each served on the Board for more than 9 years. The Board took note of the recommendation of the Code
on the tenure of an independent director for a cumulative term of not exceeding 9 years. The Board believes
that although Dato Seri Nazir Ariff and Mr Danny Goon have each served more than 9 years on the Board, they
have retained independence of character and judgement and have not formed association with management (or
others) that might compromise their ability to exercise independent judgement or act in the best interests of the
Group. Accordingly, the Board is making a recommendation to shareholders that both Dato Seri Nazir Ariff and
Mr Danny Goon remain as Independent Non-Executive Directors based on the following justifications:
The Board is of the view that Dato Seri Nazir Ariffs expertise, broad international experience and vast experience
in various industries provide the Board with a diverse set of experience and expertise which enhances the skills
and experience profile of the Board. The Board is confident that his length of service on the Board does not in
any way interfere with his duties as an Independent Non-Executive Director of the Company.
The Board believes that with Mr Goons qualifications, expertise and extensive experience as a Chartered
Accountant and his accumulative knowledge of the Groups business and operations, he has made and
continues to make valuable contribution through his role as Chairman of the Audit Committee and his roles on
the Remuneration and Nomination Committees. The Board is confident that Mr Danny Goon is able to carry out
his duties and responsibilities independently and objectively notwithstanding his tenure on the Board.
3.4 Separation of Positions of the Chairman and Chief Executive Officer
The roles of Chairman and Chief Executive Officer are separated. The Chairman is responsible for running the
Board and ensures that all Directors receive sufficient relevant information on financial and non-financial matters
to enable them to participate actively in Board decisions whereas the Chief Executive Officer is responsible for
the day to day management of the business as well as the implementation of Board policies and decisions.
32
4.
FOSTER COMMITMENT
4.1 Time Commitment
Meetings
The Board ordinarily meets at least four (4) times a year with additional meetings convened when urgent and
important decisions need to be made in between the scheduled meetings. During the financial year ended 31
December 2014, the Board met on five (5) occasions; where it deliberated upon and considered various matters.
33
Executive Chairman
5/5
5/5
Executive Director
5/5
Executive Director
5/5
5/5
5/5
4/5
The Directors are able to devote sufficient time commitment to their roles and responsibilities as Directors of
the Company and the Board is confident with the level of time commitment which would inter alia comprise
attendance at:
Board meetings
Board Committee meetings
Annual General meetings
Site visits
In line with the Code, each Director is required to notify the Chairman of the Board prior to accepting directorships
in public and public listed companies incorporated in Malaysia as well as directorships in corporations with similar
businesses operating in the same jurisdiction.
4.2 Directors Training
The Board through the Nomination Committee ensures that it recruits to the Board only individuals of sufficient
calibre, knowledge and experience to fulfil the duties of a Director appropriately. Under its terms of reference,
the Nomination Committee will evaluate and determine the training needs of the Directors under the continuing
education programmes.
All Directors have attended and successfully completed the Mandatory Accreditation Programme (MAP)
conducted currently by Bursatra Sdn Bhd. During the year under review, the Directors have attended various
training programmes and seminars as set out below to enhance their knowledge and expertise:
Director
Tan Sri Dato Seri (Dr.) Fumihiko Konishi GST Briefing Texchem Resources Bhd.
34
The Directors will continue to undergo other relevant training programmes to further enhance their skills and
knowledge where relevant.
5.
35
6.
36
8.
37
38
The Group has an organisational structure with clearly defined lines of responsibility and delegation of authority. A
hierarchical reporting system is in place with appropriate authority limits, proper segregation of duties, annual budgeting,
monthly reporting of variances between the actual and budgeted results for corrective action to be taken and human
resource management policies. Policies and procedures to ensure compliance with risk management, internal controls
and relevant laws and regulations are set out in the standard operating procedures of the individual companies.
An Executive Committee (EXCO) was established by the Board to manage the Groups risks and operations in
accordance with the corporate objectives, strategies and the annual budget as well as the policies and business
directions as approved by the Board. The EXCO executes the strategies approved by the Board and addresses issues
arising from changes in the external environment and internal operating conditions.
The Group has an Enterprise Risk Management (ERM) framework which is aligned with its long term strategic
objectives and embedded in the daily operations of individual companies. This ERM system is an ongoing and
systematic process to identify, assess, treat and monitor risks. To foster ownership and accountability, the individual
Divisional Management headed by its Divisional President/CEO is primarily involved in the identification and treatment
of significant risks affecting its own business unit including the design and implementation of suitable risk controls and
monitoring their effectiveness.
Risks are classified into two categories namely Type A which are catastrophic in nature and Type B comprising the
top five most significant risks rated based on their likelihood of occurrence and severity of consequence. A biannual
review is conducted by each Divisional Management with the Chief Risk Officer in which significant risks which may
inflict the Group in the ensuing 6 months are re-evaluated and new or emerging risks identified. Existing controls to
manage these risks are then re-assessed and strengthened. The Chief Risk Officer who is also the Chief Financial
Officer updates the Board every 6 months on the status of the Groups risk management process and changes in risk
profiles.
The Groups in-house Internal Audit function conducts audits of individual companies for compliance with policies and
procedures and the adequacy and effectiveness of their risk management and internal control systems and highlights
findings of non-compliance. A risk based annual audit plan setting out the audit frequency, areas of audit focus and
scope of work is approved by the Audit Committee every year. The Internal Audit function provides the Board, Audit
Committee and Management with independent and objective reports on the audit findings, recommendations for
improvement and managements responses and action plans. The Internal Audit also provides the Board and Audit
Committee with updates on the subsequent execution of the managements action plans.
The Board has also received assurance from the President and Group Chief Executive Officer and Chief Financial
Officer that the risk management and internal control system of the Company and its subsidiaries are operating
adequately and effectively, in all material aspects based on the risk management and internal control system adopted.
This Statement on Risk Management and Internal Control does not cover the associates, Fumakilla Asia Sdn. Bhd. and its
subsidiaries and PT. Technopia Jakarta.
This Statement was approved by the Board on 28 March 2015
CONCLUSION
The Board is of the view that the risk management and internal control system in place during the year and up to the date
of approval of this statement is sound and adequate to safeguard shareholders investment, the interests of customers,
regulators, employees and other stakeholders and the Company and subsidiaries assets.
39
OTHER DISCLOSURES
CORPORATE SOCIAL RESPONSIBILITY STATEMENT
TRB believes that sustainable corporate success requires the highest standard of corporate behaviour including measuring
up to public expectations on environmental, social and corporate governance responsibilities. By applying environmentally
responsible practices, sound social policies and a good corporate governance framework, it would enable TRB Group to
achieve sustainable growth and to enhance long-term value for its shareholders. In 2014, TRB continues with this commitment
as a good and responsible corporate citizen.
Environmental Initiative
TRB Group recognises that various of its activities may have an impact on the environment. Consequently, at all plants, TRB
Group continues to ensure strict compliance with the environmental laws governing plant operations and maintenance in
areas relating to environmental standards, emission standards, noise level management and treatment of plant effluents and
waste water. Ten of TRB Groups plants are certified with the international environmental management systems standard,
ISO 14001:2004 Environmental Management System.
Consumers are increasingly aware of environmental and sustainability issues and in view of such awareness, corporations
are changing their products to address growing concerns of environmental pollution. It is against this backdrop that TRB
Group has made a major breakthrough with the development of Malaysias first thermoformable bioplastic from agricultural
waste. TRB Groups bioplastic contains between 50-70% natural materials. It also has the advantage of being able to be
used with conventional moulding machines which in turn promotes the usage of such bioplastic; and may also be easily
recycled for reuse.
In year 2014, TRB Group continues to expand our bioplastic product portfolio (TEXa) by venturing into the new electronics
business segment. Further capitalising on our Green solutions expertise, TRB Group has introduced Bio-Polypropylene
(Bio-PP) compounds to cater to home appliances and consumers electronics applications, as well as FDA-compliant Bio-PP
for tableware related applications and office automation related application that are suitable for injection moulding.
As an effort to enhance our technical knowledge in the bioplastic field and in line with TRB Groups commitment to promote
environmental awareness, TRB has collaborated with the University Science Malaysia (USM) in bioplastic research in which
TRB has also sponsored USMs Gold Award for an outstanding final year student in the Polymer Engineering Programme.
In conjunction with the evolution of TRB Groups Polymer Engineering Division from a conventional plastic products
manufacturer to life science, medical, healthcare products and engineering solutions provider, representatives of TRB Group
participated in MEDLAB Asia Pacific 2014 held in Marina Bay Sand, Singapore. Being a part of the polymer business, we
strive to stay relevant in such product development to contribute towards the Asian market. The fair was a pioneer event in
the Asian region whereby participants were introduced to the most recent technology available in in-vitro diagnostics and the
medical and life sciences market which in turn benefits members of the community at large.
Social Responsibility
Contribution to the community is important in TRBs view. It is a symbiosis between a company and the community in which
without the community, a company cannot sustain its businesses.
In 2014, with the aim to promote social welfare among the less fortunate, Texchem Ladies Club initiated a donation drive
where food items, daily necessities and donation in cash were contributed by TRB and the employees of TRB Group to
Rumah Sri Cahaya Orphanage, Penang. During the visit to the orphanage, programmes such as sushi making demonstration
and competition, introduction to simple Japanese terminologies, birthday celebration for the December-born orphans,
presentation of Christmas gifts and games were held. In central region, Sushi Kin Sdn Bhd has also organised donation
drives and visitations to the Shelter Home for Children, Rumah Hope and the Womens Aid Organisation.
To foster and enhance goodwill and unity amongst the communities, TRB has supported the Malaysian-Japanese Association
and the Penang Japanese Association by way of sponsorship in the associations activities such as the Malaysian Japanese
Cultural Night, Bon Odori and Sakura Charity Festival. Besides, TRB has also rendered its support in the form of honorarium
to Musica Sinfonietta, an entirely voluntary local orchestra which is actively involved in various charity concerts and fund
raising performances in Penang.
40
In furtherance to the Blood Donation Campaign which received an overwhelming response from the workforce last year,
the Group Human Resources Department continues this noble course in 2014 at TRBs head quarter in Penang, TexchemPack (M) Bhds premises in Prai, Wisma Texchem in Subang Jaya, Texchem Life Sciences Sdn Bhds premises in Bangi and
Sultan Ismail General Hospital Johor for Texchemers from Texchem-Pack (Johor) Sdn Bhd. As human blood is a scarce and
precious resource, this drive has successfully raised awareness on blood donation and encouraged the culture of voluntary
blood donation as it is a safe, simple and speedy process that helps to save lives.
In consonance with one of TRB Groups motto to enhance personal and career development of the staff, in 2014, various
activities and programmes were organised in different companies within TRB Group such as:(i)
Texchem Education Assistance Programme in which Texchemers were subsidised in the pursuit of their work-related
courses;
(ii) External Industrial and Product Training Programmes;
(iii) In-House Training Programmes;
(iv) Group Corporate Orientation for the new recruits;
(v) Personal Financial Workshop;
(vi) Professional Image Grooming, Business and Social Etiquette Seminar;
(vii) Self-Defence One Day Workshop;
(viii) Yoga classes; and
(ix) Baking Workshop.
TRB believes that a strong working relationship and team work is the foundation of a stable and successful organisation
which contributes directly to the growth of TRB Group. Pursuant to such belief, series of activities were held in year 2014 to
foster the relationship and to strengthen the spirit of team work among the Texchemers:(i)
(ii)
(iii)
41
42
ANALYSIS OF SHAREHOLDINGS
As at 17 March 2015
Authorised Capital
Issued and Paid-up Capital
Class of Shares
Voting Rights
Number of Shareholders
RM500,000,000.00
RM124,099,235.00
Ordinary shares of RM1.00 each
On a show of hands - One vote for every shareholder
On a poll - One vote for every ordinary share held
2,815
SHAREHOLDINGS STATISTICS
Size of Holdings
Less than 100
100 - 1,000
1,001 - 10,000
10,001 - 100,000
100,001 to less than 5% of issued shares
5% and above of issued shares
Total
No. of Shareholders
194
Total Holdings
8,323
0.007
313
192,709
0.155
1,782
7,319,940
5.899
456
12,249,892
9.871
66
44,404,344
35.781
59,924,027
48.287
2,815
124,099,235
100
No.
Name
Direct
24,153,109(c)
19.46(c)
Indirect
40,940,054
32.99
24,153,109(a)
19.46(a)
6,932,018
5.59
70,190,685(b)
56.56(b)
No.
Name
2
3
Direct
Indirect
56.56(b)
6,932,018
5.59
70,190,685
6,039
0.01
8,250
0.01
(b)
Notes:
Deemed interest by virtue of Texchem Holdings Sdn. Bhd.s direct interest in Texchem Corporation Sdn. Bhd. pursuant to
Section 6A of the Companies Act, 1965 (Act).
Deemed interest by virtue of Tan Sri Dato Seri (Dr.) Fumihiko Konishis direct and/or indirect interest in Texchem Holdings
Sdn. Bhd. and Texchem Corporation Sdn. Bhd. (Texcorp) [both are major shareholders of the Company] and via persons
connected with him, ie. his wife, Puan Sri Datin Seri Atsuko Konishi and his daughters, Ms Mika Konishi and Ms Mari Konishi
(all are shareholders of the Company) pursuant to Sections 6A and 122A of the Act respectively.
Pursuant to Section 17 of the Act, the 24,153,109 ordinary shares of RM1.00 each held by Texcorp in the Company shall not
carry any voting rights at any general meeting of the Company.
(a)
(b)
(c)
The details of the interests of the Director who were or are Directors during the financial year ended 31 December 2014 and
the period commencing from 1 January 2015 until 17 March 2015 (including the interests of the spouses and/or children of the
Directors) in the Companys related corporations as at 17 March 2015 are the same as the details set out in the section on Directors
Interests in the Directors Report of this Annual Report.
Annual Report 2014
43
44
No. of % of Issued
Shares Share Capital
32,000,000
25.786
14,421,300
11.621
6,932,018
6,570,709
6,167,586
5.586
5.295
4.970
3,743,000
3.016
3,161,100
2.547
2,772,468
2.234
2,409,100
1.941
2,339,884
2,234,694
2,051,500
1.886
1.801
1.653
1,653,700
1.333
1,431,414
1,431,414
999,702
1.153
1.153
0.806
708,200
0.571
688,000
0.554
605,500
0.488
566,900
0.457
550,000
510,400
461,800
436,194
426,250
403,700
0.443
0.411
0.372
0.351
0.343
0.325
386,800
0.312
375,200
369,300
359,893
97,167,726
0.302
0.298
0.290
78.298
PARTICULARS OF PROPERTIES
Held as at 31 December 2014
Location
Texchem Materials Sdn. Bhd.
No. 6 & 6A, Jalan Tampoi 7/4,
Kawasan Perusahaan Tampoi,
81200 Johor Bahru,
Johor Darul Takzim.
Approximate
Age of
Expiry
Description Building
Date
Tenure
Area
Freehold
26 years
N/A
2
September
1999
5,590
Between
13 to 22
years
29
June
2052
*1
December
1994
6,042
Between
15 to 35
years
27
August
2041
*26
April
1983
5,158
Freehold
0.97
acre
Office &
Factory
Between
18 to 19
years
N/A
21
October
1998
4,122
Freehold
0.27
acre
Office &
Factory
18 years
N/A
16
April
1996
23 years
*7
29
September September
2086
2004
10,225
21 years
N/A
3
May
2007
16,535
32 years
25
July
2042
15
July
1983
867
Leasehold 0.19
60 years
acre
32 years
20
7
September May
2070
2008
92
Date of
Net Book
Acquisition/ Value
*Revaluation (RM000)
Factory
948
45
Location
Tenure
Area
Leasehold 1.23
60 years
acre
Approximate
Age of
Expiry
Description Building
Date
Date of
Net Book
Acquisition/ Value
*Revaluation (RM000)
Office &
Factory
46
37 years
28
November
2054
29
November
1994
486
22 years
5
February
2051
30
November
2009
11,267
FINANCIAL STATEMENTS
Directors Report
48
53
54
55
57
58
62
Statement By Directors
138
Statutory Declaration
139
140
47
Directors report
for the year ended 31 December 2014
The Directors have pleasure in submitting their report and the audited financial statements of the Group and of the Company
for the year ended 31 December 2014.
Principal activities
The principal activity of the Company is investment holding whilst the principal activities of the subsidiaries are disclosed in
Note 5 to the financial statements.
There has been no significant change in the nature of these activities during the financial year other than as disclosed in Note
5 to the financial statements.
Results
Group
RM000
Company
RM000
1,184
842
Non-controlling interests
(4,467)
(3,283)
842
Tan Sri Dato Seri (Dr.) Fumihiko Konishi, PSM, DGPN, DSPN, DJN
Brian Tan Guan Hooi
Wong Kin Chai
Yap Kee Keong
Dato Seri Nazir Ariff Bin Mushir Ariff, DGPN, DMPN, DSPN, PKT, PJM, JP
Danny Goon Siew Cheang
Zarizana @ Izana Binti Abdul Aziz
In accordance with Article 123 of the Companys Articles of Association, Dato Seri Nazir Ariff Bin Mushir Ariff and Cik
Zarizana @ Izana Binti Abdul Aziz will retire by rotation from the Board of Directors at the forthcoming Annual General
Meeting, and being eligible, offer themselves for re-election.
Tan Sri Dato Seri (Dr.) Fumihiko Konishi will retire from the Board of Directors at the forthcoming Annual General Meeting
pursuant to Section 129 of the Companies Act, 1965, and being eligible, offers himself for re-appointment as a Director of
the Company to hold office until the conclusion of the next Annual General Meeting.
48
Bought
(Sold)
Ordinary shares of RM1 each
Balance at
31.12.2014
- Direct interest
6,932,018
6,932,018
6,039
6,039
8,250
8,250
70,190,685(f)
70,190,685(f)
1,000(a)
1,000(a)
1,000(e)
1,000(a)
- Deemed interest
Related corporations
Tan Sri Dato Seri (Dr.) Fumihiko Konishi
- Direct interest
1,000(e)
1,000
(a)
1(b)
1(b)
1,000(b)
1,000(b)
1(b)
1(b)
1(c)
1(c)
1(d)
(d)
49
Bought
(Sold)
Balance at
31.12.2014
1(c)
1(c)
1(b)
1(b)
Notes :
(c)
(d)
(e)
(f)
(a)
(b)
(g)
By virtue of Tan Sri Dato Seri (Dr.) Fumihiko Konishis interests in the shares in the Company, he is also deemed to be
interested in the shares in the Companys related corporations to the extent that the Company has an interest.
None of the other Directors holding office at 31 December 2014 had any interest in the ordinary shares of the Company and
of its related corporations during the financial year.
50
Directors benefits
Since the end of the previous financial year, no Director of the Company has received nor become entitled to receive any
benefit (other than a benefit included in the aggregate amount of emoluments received or due and receivable by Directors
as shown in the financial statements of the Company and its related corporations) by reason of a contract made by the
Company or a related corporation with the Director or with a firm of which the Director is a member, or with a company in
which the Director has a substantial financial interest other than those transactions entered in the ordinary course of business
between the Company and its related corporations with a company in which a Director is deemed to have a substantial
financial interest as disclosed in Note 24 to the financial statements.
There were no arrangements during and at the end of the financial year which had the object of enabling Directors of the
Company to acquire benefits by means of the acquisition of shares in or debentures of the Company or any other body
corporate.
Issue of shares and debentures
There were no changes in the authorised and issued and paid-up capital of the Company and no debentures were in issue
during the financial year.
Options granted over unissued shares
No options were granted to any person to take up unissued shares of the Company during the financial year.
Other statutory information
Before the financial statements of the Group and of the Company were made out, the Directors took reasonable steps to
ascertain that:
i)
all known bad debts have been written off and adequate provision made for doubtful debts, and
ii)
any current assets which were unlikely to be realised in the ordinary course of business have been written down to an
amount which they might be expected so to realise.
At the date of this report, the Directors are not aware of any circumstances:
i)
that would render the amount written off for bad debts, or the amount of the provision for doubtful debts, in the Group
and in the Company inadequate to any substantial extent, or
ii)
that would render the value attributed to the current assets in the financial statements of the Group and of the Company
misleading, or
iii)
which have arisen which render adherence to the existing method of valuation of assets or liabilities of the Group and
of the Company misleading or inappropriate, or
iv)
not otherwise dealt with in this report or the financial statements, that would render any amount stated in the financial
statements of the Group and of the Company misleading.
any charge on the assets of the Group or of the Company that has arisen since the end of the financial year and which
secures the liabilities of any other person, or
ii)
any contingent liability in respect of the Group or of the Company that has arisen since the end of the financial year.
51
52
as at 31 December 2014
Group
Company
2013
2014
RM000
RM000
Note
2014
RM000
3
4
5
5
5
6
7
147,422
11,267
56,020
57,540
20
141,759
11,267
54,071
263
55,882
142
825
181,428
31,187
896
186,183
31,187
272,269
263,384
213,440
218,266
72,669
156,964
1,213
49,313
72,007
148,956
4,458
46,873
11,279
30
8,648
2,071
1,898
280,159
272,294
11,309
12,617
Total assets
552,428
535,678
224,749
230,883
124,099
66,637
124,099
54,891
124,099
53,428
124,099
52,586
190,736
178,990
177,527
176,685
25,451
27,613
216,187
206,603
177,527
176,685
31,980
2,050
2,629
4,127
37,566
2,318
2,717
3,773
14,569
231
20,563
355
40,786
46,374
14,800
20,918
178,239
985
114,887
202
1,005
137
160,660
925
117,833
60
3,223
19,348
180
12,894
19,106
420
13,754
295,455
282,701
32,422
33,280
Total liabilities
336,241
329,075
47,222
54,198
552,428
535,678
224,749
230,883
Assets
Property, plant and equipment
Investment properties
Investments in subsidiaries
Investments in associates
Investment in joint venture
Intangible assets
Deferred tax assets
Total non-current assets
Inventories
Trade and other receivables
Current tax assets
Cash and cash equivalents
8
9
10
2013
RM000
Equity
Share capital
Reserves
11
12
13
14
7
16
13
14
15
16
17
The notes on pages 62 to 137 are an integral part of these financial statements.
Annual Report 2014
53
Note
Continuing operations
2014
RM000
Group
2013
RM000
2014
RM000
Company
2013
RM000
Revenue
18
1,022,663
953,615
9,633
18,055
Operating profit
18
13,024
20,674
3,442
10,421
Finance costs
21
(11,225)
(9,443)
(2,602)
(2,290)
41
(14)
1,698
786
3,538
12,003
840
8,131
22
(6,821)
(9,265)
19
(3,283)
2,738
842
8,133
4,956
1,186
664
913
58
5,869
1,908
2,586
4,646
842
8,133
1,184
(4,467)
8,499
(5,761)
842
8,133
(3,283)
2,738
842
8,133
6,373
(3,787)
10,157
(5,511)
842
8,133
2,586
4,646
842
8,133
0.95
6.85
(Loss)/Profit attributable to :
23
The notes on pages 62 to 137 are an integral part of these financial statements.
54
55
25,568
Note 12
124,099
Note 11
Acquisition of subsidiaries
25,568
124,099
At 1 January 2013
RM000
RM000
Note 12
328
1,222
1,658
1,658
58
664
936
(2,552)
RM000
Note 12
1,092
1,092
RM000
Merger
reserve
Non-distributable
Note 12
(14,435)
(18,046)
23
3,588
RM000
Capital
reserve
RM000
Note 12
42,338
(23)
8,499
8,499
33,862
Distributable
Retained
earnings
Share
Share Translation
capital premium
reserve
Group
178,990
(18,046)
1,222
10,157
8,499
1,658
58
664
936
185,657
RM000
27,613
(6,135)
15,252
(5,511)
(5,761)
250
250
24,007
RM000
Noncontrolling
Total
interests
206,603
(18,046)
(6,135)
16,474
4,646
2,738
1,908
58
664
1,186
209,664
RM000
Total
equity
56
The notes on pages 62 to 137 are an integral part of these financial statements.
At 31 December 2014
Note 12
Note 11
25,568
25,568
RM000
124,099
124,099
At 1 January 2014
RM000
Note 12
5,517
5,189
5,189
913
4,276
328
RM000
Note 12
1,092
1,092
RM000
Merger
reserve
Non-distributable
Note 12
(14,404)
31
(14,435)
RM000
Capital
reserve
5,373
(79)
5,452
6,373
1,184
5,189
913
4,276
Note 12
48,864 190,736
(31)
5,373
(79)
5,452
1,184
1,184
42,338 178,990
RM000
Total
equity
25,451
1,625
79
538
1,008
(3,787)
(4,467)
680
680
216,187
6,998
5,990
1,008
2,586
(3,283)
5,869
913
4,956
27,613 206,603
RM000
Non
controlling
Total
interests
RM000 RM000
Distributable
Retained
earnings
Share
Share Translation
capital premium
reserve
Group
Non-
Share
capital
Company
At 31 December 2012/1 January 2013
Profit for the year representing total comprehensive
income for the year
At 31 December 2013/1 January 2014
Profit for the year representing total comprehensive
income for the year
At 31 December 2014
RM000
distributable
Distributable
RM000
RM000
RM000
Share
premium
Retained
earnings
Total
equity
124,099
25,568
18,885
168,552
8,133
8,133
124,099
25,568
27,018
176,685
842
842
124,099
25,568
27,860
177,527
Note 11
Note 12
Note 12
The notes on pages 62 to 137 are an integral part of these financial statements.
Annual Report 2014
57
Note
Cash flows from operating activities
Profit before tax from continuing operations
2014
RM000
Group
Company
2013
RM000
2014
RM000
2013
RM000
3,538
12,003
840
8,131
25,205
25,292
224
384
91
814
610
Adjustments for :
Depreciation of property, plant and equipment
14
19
19
19
19
19
Interest income
19
Dividend income
19
2,692
(490)
490
(1,171)
1,500
895
(633)
677
(551)
19
304
- Subsidiaries
19
- Associates
19
Finance costs
21
11,225
(1,698)
(41)
9,443
(786)
14
116
(44)
(221)
(5,720)
(251)
(9,633)
(99)
(18,055)
374
2,602
(1,119)
2,290
30
(11,236)
30
(5,107)
19
19
(7)
1,000
42,500
31,573
1,000
6,005
1,000
(5,817)
(6,357)
1,135
(4,744)
Dividends received
Income tax (paid)/refunded
Directors retirement/ resignation benefits paid
Net cash from/(used in) operating activities
58
14
25,423
(4,604)
(1,843)
(20,304)
(8,930)
(4,050)
34,140
36,077
(19,351)
(12,250)
660
486
11,606
16,417
(4,751)
(615)
(5,732)
(3,763)
(1,052)
(1,099)
28,016
31,701
2,073
2,289
(6,152)
6,356
(480)
(100)
Note
Cash flows from investing activities
Payment of franchise fee
Purchase of investments in subsidiaries
30
30
(1,749)
Interest received
Proceeds from dilution of interest in a
subsidiary
Advances from subsidiaries
Net cash (used in)/from investing
activities
1,500
(29,643)
RM000
RM000
(1,581)
(6,135)
403
(1,520)
(1,000)
2,176
(24,664)
(91)
(8,153)
(2,500)
(1,000)
221
(233)
5,990
5,990
(23,269)
7,789
1,008
RM000
99
11,818
2013
251
(11,225)
2014
551
(1,955)
Interest paid
2013
Company
633
(12,716)
RM000
Purchase of warrants
2014
Group
8,070
8,500
(30,250)
12,703
(3,066)
15,671
6,077
(9,912)
(1,856)
(9,443)
(8,797)
(5,066)
(3,018)
(2,602)
(2,290)
(73)
(900)
(25)
(2,750)
(5,281)
(14,337)
(8,641)
(2,006)
(534)
(12,886)
(2,090)
1,284
31,312
43,569
928
1,080
629
31,858
31,312
(1,162)
(356)
928
59
Notes :
A.
Deregistration of a subsidiary
On 27 February 2014, Texchem-Pack Holdings (S) Ltd., a 70.48% owned subsidiary of the Company has completed the
deregistration of its wholly-owned subsidiary, Texchem-Pack (HK) Limited. The deregistration had the following effect
on the Groups liabilities on deregistered date :
Group
Trade and other payables
Gain on deregistration
Net cash inflow
B.
Company
Texchem Corporation Sdn. Bhd.
C.
2014
RM000
(7)
7
2013
RM000
8,153
Liquidation of subsidiaries
During the last financial year, the Company completed the liquidation of Eye Graphic (Vietnam) Co., Ltd., Texchem
Trading (Wuxi) Co., Ltd. and New Material Hong Kong Limited on 3 May 2013, 13 June 2013 and 2 December 2013
respectively.
The liquidation had the following effect on the Groups assets and liabilities on liquidation date.
Group
2013
RM000
8
438
9
267
(39)
683
Loss on liquidation
(677)
664
670
60
(267)
403
Notes (contd) :
D.
E.
Note
Short term deposits with licensed banks
10
10
Bank overdrafts
13
2014
Group
2013
2014
Company
2013
RM000
RM000
RM000
RM000
49,313
42,768
30
1,898
4,105
(17,455)
(15,561)
(1,192)
(970)
31,858
31,312
(1,162)
928
The notes on pages 62 to 137 are an integral part of these financial statements.
Annual Report 2014
61
Basis of preparation
(a)
Statement of compliance
The financial statements of the Group and of the Company have been prepared in accordance with Malaysian
Financial Reporting Standards (MFRS), International Financial Reporting Standards and the requirements of
Companies Act, 1965 in Malaysia.
The following are accounting standards, amendments and interpretations that have been issued by the Malaysian
Accounting Standards Board (MASB) but have not been adopted by the Group and the Company :
MFRSs, Interpretations and amendments effective for annual periods beginning on or after 1 July
2014
Amendments to MFRS 1, First-time Adoption of Malaysian Financial Reporting Standards (Annual
Improvements 2011-2013 Cycle)
Amendments to MFRS 2, Share-based Payment (Annual Improvements 2010-2012 Cycle)*
Amendments to MFRS 3, Business Combinations (Annual Improvements 2010-2012 Cycle and 2011-2013
Cycle)
Amendments to MFRS 8, Operating Segments (Annual Improvements 2010-2012 Cycle)
Amendments to MFRS 13, Fair Value Measurement (Annual Improvements 2010-2012 Cycle and 2011-2013
Cycle)
Amendments to MFRS 116, Property, Plant and Equipment (Annual Improvements 2010-2012 Cycle)
Amendments to MFRS 119, Employee Benefits Defined Benefit Plans: Employee Contributions*
Amendments to MFRS 124, Related Party Disclosures (Annual Improvements 2010-2012 Cycle)
Amendments to MFRS 138, Intangible Assets (Annual Improvements 2010-2012 Cycle)
Amendments to MFRS 140, Investment Property (Annual Improvements 2011-2013 Cycle)
MFRSs, Interpretations and amendments effective for annual periods beginning on or after 1 January
2016
Amendments to MFRS 5, Non-current Assets Held for Sale and Discontinued Operations (Annual
Improvements 2012-2014 Cycle)
Amendments to MFRS 7, Financial Instruments: Disclosures (Annual Improvements 2012-2014 Cycle)
Amendments to MFRS 10, Consolidated Financial Statements and MFRS 128, Investments in Associates
and Joint Ventures Sale or Contribution of Assets between an Investor and its Associate or Joint Venture
Amendments to MFRS 10, Consolidated Financial Statements, MFRS 12, Disclosure of Interests in Other
Entities and MFRS 128, Investments in Associates and Joint Ventures Investment Entities: Applying the
Consolidation Exception
Amendments to MFRS 11, Joint Arrangements Accounting for Acquisitions of Interests in Joint Operations
MFRS 14, Regulatory Deferral Accounts*
Amendments to MFRS 101, Presentation of Financial Statements Disclosure Initiative
62
from the annual period beginning on 1 January 2015 for those accounting standards, amendments or
interpretations that are effective for annual periods beginning on or after 1 July 2014, except for those
indicated with * which are not applicable to the Group and the Company.
from the annual period beginning on 1 January 2016 for those accounting standards, amendments or
interpretations that are effective for annual periods beginning on or after 1 January 2016, except for those
indicated with * which are not applicable to the Group and the Company.
from the annual period beginning on 1 January 2017 for those accounting standards, amendments or
interpretations that are effective for annual periods beginning on or after 1 January 2017.
from the annual period beginning on 1 January 2018 for those accounting standards, amendments or
interpretations that are effective for annual periods beginning on or after 1 January 2018.
The initial application of the accounting standards, amendments or interpretations are not expected to have any
material impacts to the current period and prior period financial statements of the Group and Company except
as mentioned below :
MFRS 9, Financial Instruments
MFRS 9 replaces the guidance in MFRS 139, Financial Instruments: Recognition and Measurement on the
classification and measurement of financial assets and financial liabilities, and on hedge accounting.
The Group is currently assessing the financial impact that may arise from the adoption of MFRS 9.
MFRS 15, Revenue from Contracts with Customers
MFRS 15 replaces the guidance in MFRS 111, Construction Contracts, MFRS 118, Revenue, IC Interpretation 13,
Customer Loyalty Programmes, IC Interpretation 15, Agreements for Construction of Real Estate, IC Interpretation
18, Transfers of Assets from Customers and IC Interpretation 131, Revenue - Barter Transactions Involving
Advertising Services.
The Group is currently assessing the financial impact that may arise from the adoption of MFRS 15.
Annual Report 2014
63
Basis of measurement
The financial statements have been prepared on the historical cost basis other than as disclosed in Note 2 to the
financial statements and on the assumption that the Group and the Company will continue to operate as a going
concern. At 31 December 2014, the current liabilities of the Group and of the Company exceeded the current
assets by RM15,296,000 and RM21,113,000 respectively.
The Management is of the opinion that the Groups banking facilities will continue to be available from its lenders
and that the Group will be able to generate sufficient cash flows from its operations to meet its liabilities as and
when they fall due. The Group and the Company have also completed the disposal of 1.4 million ordinary shares
of RM1.00 each, representing 28% of the issued and paid-up share capital in Sushi Kin Sdn. Bhd. for a total cash
consideration of RM102.2 million on 27 February 2015 (see Note 31.8).
(c)
Basis of consolidation
(i) Subsidiaries
Subsidiaries are entities, including structured entities, controlled by the Company. The financial statements
of subsidiaries are included in the consolidated financial statements from the date that control commences
until the date that control ceases.
The Group controls an entity when it is exposed, or has rights, to variable returns from its involvement with
the entity and has the ability to affect those returns through its power over the entity. Potential voting rights
are considered when assessing control only when such rights are substantive. The Group also considers it
has de facto power over an investee when, despite not having the majority of voting rights, it has the current
ability to direct the activities of the investee that significantly affect the investees return.
Investments in subsidiaries are measured in the Companys statement of financial position at cost less any
impairment losses, unless the investment is classified as held for sale or distribution. The cost of investment
includes transaction costs.
64
Business combinations
Business combinations are accounted for using the acquisition method from the acquisition date, which is
the date on which control is transferred to the Group.
For new acquisitions, the Group measures the cost of goodwill at the acquisition date as :
When the excess is negative, a bargain purchase gain is recognised immediately in profit or loss.
For each business combination, the Group elects whether it measures the non-controlling interests in the
acquiree either at fair value or at the proportionate share of the acquirees identifiable net assets at the
acquisition date.
Transaction costs, other than those associated with the issue of debt or equity securities, that the Group
incurs in connection with a business combination are expensed as incurred.
(v)
Loss of control
Upon the loss of control of a subsidiary, the Group derecognises the assets and liabilities of the former
subsidiary, any non-controlling interests and the other components of equity related to the former subsidiary
from the consolidated statement of financial position. Any surplus or deficit arising on the loss of control
is recognised in profit or loss. If the Group retains any interest in the former subsidiary, then such interest
is measured at fair value at the date that control is lost. Subsequently, it is accounted for as an equity
accounted investee or as an available-for-sale financial asset depending on the level of influence retained.
65
66
A joint arrangement is classified as joint operation when the Group has rights to the assets and
obligations for the liabilities relating to an arrangement. The Group accounts for each of its share of
the assets, liabilities and transactions, including its share of those held or incurred jointly with the
other investors, in relation to the joint operation.
A joint arrangement is classified as joint venture when the Group has rights only to the net assets of
the arrangements. The Group accounts for its interest in the joint venture using the equity method.
(b)
Foreign currency
(i)
(ii)
67
(c)
Financial instruments
(i)
(ii)
Financial assets
(a)
68
All financial assets are subject to review for impairment (see Note 2(h)(i)).
Financial liabilities
All financial liabilities are subsequently measured at amortised cost other than those categorised as fair
value through profit or loss.
Fair value through profit or loss category comprises financial liabilities that are derivatives (except for
a derivative that is a financial guarantee contract or a designated and effective hedging instrument) or
financial liabilities that are specifically designated into this category upon initial recognition.
Derivatives that are linked to and must be settled by delivery of equity instruments that do not have a
quoted price in an active market for identical instruments whose fair values otherwise cannot be reliably
measured are measured at cost.
Other financial liabilities categorised as fair value through profit or loss are subsequently measured at their
fair values with the gain or loss recognised in profit or loss.
(iii) Financial guarantee contracts
A financial guarantee contract is a contract that requires the issuer to make specified payments to reimburse
the holder for a loss it incurs because a specified debtor fails to make payment when due in accordance
with the original or modified terms of a debt instrument.
Fair value arising from financial guarantee contracts are classified as deferred income and are amortised
to profit or loss using a straight-line method over the contractual period or, when there is no specified
contractual period, recognised in profit or loss upon discharge of the guarantee. When settlement of a
financial guarantee contract becomes probable, an estimate of the obligation is made. If the carrying
value of the financial guarantee contract is lower than the obligation, the carrying value is adjusted to the
obligation amount and accounted for as a provision.
(iv) Derecognition
A financial asset or part of it is derecognised when, and only when the contractual rights to the cash flows
from the financial asset expire or control of the asset is not retained or substantially all of the risks and
rewards of ownership of the financial asset are transferred to another party. On derecognition of a financial
asset, the difference between the carrying amount and the sum of the consideration received (including
any new asset obtained less any new liability assumed) and any cumulative gain or loss that had been
recognised in equity is recognised in profit or loss.
A financial liability or a part of it is derecognised when, and only when, the obligation specified in the contract
is discharged or cancelled or expires. On derecognition of a financial liability, the difference between the
carrying amount of the financial liability extinguished or transferred to another party and the consideration
paid, including any non-cash assets transferred or liabilities assumed, is recognised in profit or loss.
69
(ii)
Subsequent costs
The cost of replacing a component of an item of property, plant and equipment is recognised in the carrying
amount of the item if it is probable that the future economic benefits embodied within the component will
flow to the Group or the Company, and its cost can be measured reliably. The carrying amount of the
replaced component is derecognised to profit or loss. The costs of the day-to-day servicing of property,
plant and equipment are recognised in profit or loss as incurred.
(iii) Depreciation
Depreciation is based on the cost of an asset less its residual value. Significant components of individual
assets are assessed, and if a component has a useful life that is different from the remainder of that asset,
then that component is depreciated separately.
Depreciation is recognised in profit or loss on a straight-line basis over the estimated useful lives of each
component of an item of property, plant and equipment from the date that they are available for use. Leased
assets are depreciated over the shorter of the lease term and their useful lives unless it is reasonably
certain that the Group will obtain ownership by the end of the lease term. Freehold land is not depreciated.
Property, plant and equipment under construction are not depreciated until the assets are ready for their
intended use.
The estimated useful lives for the current and comparative periods are as follows :
%
Buildings, office renovation and land improvements
Plant and machinery and other equipment
Furniture, fittings and equipment
Motor vehicles
2 - 20
10 - 33 1/3
10 - 33 1/3
16 - 20
Leasehold land are depreciated over the lease period ranging from 60 years to 99 years. Depreciation
methods, useful lives and residual values are reassessed at the end of the reporting period, and adjusted
as appropriate.
70
Leased assets
(i)
Finance lease
Leases in terms of which the Group or the Company assumes substantially all the risks and rewards
of ownership are classified as finance leases. Upon initial recognition, the leased asset is measured at
an amount equal to the lower of its fair value and the present value of the minimum lease payments.
Subsequent to initial recognition, the asset is accounted for in accordance with the accounting policy
applicable to that asset.
Minimum lease payments made under finance leases are apportioned between the finance expense
and the reduction of the outstanding liability. The finance expense is allocated to each period during the
lease term so as to produce a constant periodic rate of interest on the remaining balance of the liability.
Contingent lease payments are accounted for by revising the minimum lease payments over the remaining
term of the lease when the lease adjustment is confirmed.
Leasehold land which in substance is a finance lease is classified as property, plant and equipment, or as
investment property if held to earn rental income or for capital appreciation or for both.
(ii)
Operating leases
Leases, where the Group or the Company does not assume substantially all the risks and rewards of
ownership are classified as operating leases and, except for property interest held under operating lease,
the leased assets are not recognised on the statement of financial position. Property interest held under
an operating lease, which is held to earn rental income or for capital appreciation or both, is classified as
investment property and measured using fair value model.
Payments made under operating leases are recognised in profit or loss on a straight-line basis over the
term of the lease. Lease incentives received are recognised in profit or loss as an integral part of the total
lease expense, over the term of the lease. Contingent rentals are charged to profit or loss in the reporting
period in which they are incurred.
(f)
Intangible assets
(i) Goodwill
Goodwill arises on business combinations is measured at cost less any accumulated impairment losses.
In respect of equity-accounted associates and joint venture, the carrying amount of goodwill is included in
the carrying amount of the investment and an impairment loss on such an investment is not allocated to
any asset, including goodwill, that forms part of the carrying amount of the equity-accounted associates
and joint venture.
(ii)
71
(g)
Investment properties
(i)
(ii)
72
2.
Financial assets
All financial assets (except for financial assets categorised as fair value through profit or loss, investments
in subsidiaries, investments in associates and joint venture) are assessed at each reporting date whether
there is any objective evidence of impairment as a result of one or more events having an impact on the
estimated future cash flows of the asset. Losses expected as a result of future events, no matter how likely,
are not recognised.
An impairment loss in respect of loans and receivables is recognised in profit or loss and is measured
as the difference between the assets carrying amount and the present value of estimated future cash
flows discounted at the assets original effective interest rate. The carrying amount of the asset is reduced
through the use of an allowance account.
If, in a subsequent period, the fair value of a debt instrument increases and the increase can be objectively
related to an event occurring after the impairment loss was recognised in profit or loss, the impairment
loss is reversed, to the extent that the assets carrying amount does not exceed what the carrying amount
would have been had the impairment not been recognised at the date the impairment is reversed. The
amount of the reversal is recognised in profit or loss.
(ii)
Other assets
The carrying amounts of other assets (except for inventories, deferred tax assets and investment properties
measured at fair value) are reviewed at the end of each reporting period to determine whether there is any
indication of impairment. If any such indication exists, then the assets recoverable amount is estimated.
For goodwill and intangible assets that have indefinite useful lives or that are not yet available for use, the
recoverable amount is estimated each period at the same time.
For the purpose of impairment testing, assets are grouped together into the smallest group of assets
that generates cash inflows from continuing use that are largely independent of the cash inflows of other
assets or cash-generating units. Subject to an operating segment ceiling test, for the purpose of goodwill
impairment testing, cash-generating units to which goodwill has been allocated are aggregated so that
the level at which impairment testing is performed reflects the lowest level at which goodwill is monitored
for internal reporting purposes. The goodwill acquired in a business combination, for the purpose of
impairment testing, is allocated to a cash-generating unit or a group of cash-generating units that are
expected to benefit from the synergies of the combination.
The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair
value less costs of disposal. In assessing value in use, the estimated future cash flows 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 or cash-generating unit.
An impairment loss is recognised if the carrying amount of an asset or its related cash-generating unit
exceeds its estimated recoverable amount.
Impairment losses are recognised in profit or loss. Impairment losses recognised in respect of cashgenerating units are allocated first to reduce the carrying amount of any goodwill allocated to the cashgenerating unit (group of cash-generating units) and then to reduce the carrying amounts of the other
assets in the cash-generating unit (groups of cash-generating units) on a pro rata basis.
73
Impairment (contd)
(ii)
(i) Inventories
Inventories are measured at the lower of cost and net realisable value.
The cost of inventories is calculated using the first-in, first-out method and includes expenditure incurred in
acquiring the inventories, production or conversion costs and other costs incurred in bringing them to their
existing location and condition. In the case of work-in-progress and manufactured inventories, cost includes an
appropriate share of production overheads based on normal operating capacity.
Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of
completion and the estimated costs necessary to make the sale.
(j)
(k) Provisions
A provision is recognised if, as a result of a past event, the Group has a present legal or constructive obligation
that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the
obligation. Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects
current market assessments of the time value of money and the risks specific to the liability. The unwinding of the
discount is recognised as finance cost.
(i)
Site restoration
A provision for site restoration is recognised when the Group has an obligation to return its rented premises
to its original state upon expiry of the lease term.
74
(l)
Contingent liabilities
Where it is not probable that an outflow of economic benefits will be required, or the amount cannot be estimated
reliably, the obligation is not recognised in the statements of financial position and is disclosed as a contingent
liability, unless the probability of outflow of economic benefits is remote. Possible obligations, whose existence
will only be confirmed by the occurrence or non-occurrence of one or more future events, are also disclosed as
contingent liabilities unless the probability of outflow of economic benefits is remote.
Goods sold
Revenue from the sale of goods in the course of ordinary activities is measured at fair value of the
consideration received or receivable, net of returns and allowances, trade discount and volume rebates.
Revenue is recognised when persuasive evidence exists, usually in the form of an executed sales agreement,
that the significant risks and rewards of ownership have been transferred to the customer, recovery of the
consideration is probable, the associated costs and possible return of goods can be estimated reliably,
there is no continuing management involvement with the goods, and the amount of revenue can be
measured reliably. If it is probable that discounts will be granted and the amount can be measured reliably,
then the discount is recognised as a reduction of revenue as the sales are recognised.
(ii) Services
Revenue from services (including management services) rendered is recognised in profit or loss when the
services are performed and invoiced.
(iii) Rental income
Rental income from investment property is recognised in profit or loss on a straight-line basis over the term
of the lease. Lease incentives granted are recognised as an integral part of the total rental income, over the
term of the lease. Rental income from subleased property is recognised as other income.
(iv) Dividend income
Dividend income is recognised in profit or loss on the date that the Groups or the Companys right to
receive payment is established, which in the case of quoted securities is the ex-dividend date.
(v)
Interest income
Interest income is recognised as it accrues using the effective interest method in profit or loss except for
interest income arising from temporary investment of borrowings taken specifically for the purpose of
obtaining a qualifying asset which is accounted for in accordance with the accounting policy on borrowing
costs.
(vi) Commissions
When the Group acts in the capacity of an agent rather than as the principal in a transaction, the revenue
recognised is the net amount of commission made by the Group.
(n)
Borrowing costs
Borrowing costs that are not directly attributable to the acquisition, construction or production of a qualifying
asset are recognised in profit or loss using the effective interest method.
Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are
assets that necessarily take a substantial period of time to get ready for their intended use or sale, are capitalised
as part of the cost of those assets.
The capitalisation of borrowing costs as part of the cost of a qualifying asset commences when expenditure for
the asset is being incurred, borrowing costs are being incurred and activities that are necessary to prepare the
asset for its intended use or sale are in progress. Capitalisation of borrowing costs is suspended or ceases when
substantially all the activities necessary to prepare the qualifying asset for its intended use or sale are interrupted
or completed.
Investment income earned on the temporary investment of specific borrowings pending their expenditure on
qualifying assets is deducted from the borrowing costs eligible for capitalisation.
Annual Report 2014
75
Income tax
Income tax expense comprises current and deferred tax. Current tax and deferred tax are recognised in profit or
loss except to the extent that it relates to a business combination or items recognised directly in equity or other
comprehensive income.
Current tax is the expected tax payable or receivable on the taxable income or loss for the year, using tax rates
enacted or substantively enacted by the end of the reporting period, and any adjustment to tax payable in respect
of previous financial years.
Deferred tax is recognised using the liability method, providing for temporary differences between the carrying
amounts of assets and liabilities in the statement of financial position and their tax bases. Deferred tax is not
recognised for the following temporary differences: the initial recognition of goodwill, the initial recognition of
assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor
taxable profit or loss. Deferred tax is measured at the tax rates that are expected to be applied to the temporary
differences when they reverse, based on the laws that have been enacted or substantively enacted by the end
of the reporting period.
Where investment properties are carried at their fair value in accordance with the accounting policy set out in
Note 2(g), the amount of deferred tax recognised is measured using the tax rates that would apply on sale of
those assets at their carrying value at the reporting date unless the property is depreciable and is held with the
objective to consume substantially all of the economic benefits embodied in the property over time, rather than
through sale. In all other cases, the amount of deferred tax recognised is measured based on the expected
manner of realisation or settlement of the carrying amount of the assets and liabilities, using tax rates enacted or
substantively enacted at the reporting date. Deferred tax assets and liabilities are not discounted.
Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and
assets, and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different
tax entities, but they intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities
will be realised simultaneously.
A deferred tax asset is recognised to the extent that it is probable that future taxable profits will be available
against which the temporary difference can be utilised. Deferred tax assets are reviewed at the end of each
reporting period and are reduced to the extent that it is no longer probable that the related tax benefit will be
realised.
Unutilised reinvestment allowance, being a tax incentive that is not a tax base of an asset, is recognised as
a deferred tax asset to the extent that it is probable that the future taxable profits will be available against the
unutilised tax incentive can be utilised.
(p)
Employee benefits
(i)
(ii)
State plans
The Groups contribution to statutory pension funds are charged to profit or loss in the financial year to which
they relate. Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in
future payments is available.
76
(q)
(r)
Operating segments
An operating segment is a component of the Group that engages in business activities from which it may earn
revenues and incur expenses, including revenues and expenses that relate to transactions with any of the Groups
other components. Operating segment results are reviewed regularly by the chief operating decision maker, which in
this case is the Chief Executive Officer of the Group, to make decisions about resources to be allocated to the segment
and to assess its performance, and for which discrete financial information is available.
(s)
Equity instruments
Instruments classified as equity are measured at cost on initial recognition and are not remeasured subsequently.
(i)
Issue expenses
Costs directly attributable to issue of instruments classified as equity are recognised as a deduction from equity.
(ii)
Ordinary shares
Ordinary shares are classified as equity.
(t)
quoted prices (unadjusted) in active markets for identical assets or liabilities that the Group can access at the
measurement date.
inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either
directly or indirectly.
unobservable inputs for the asset or liability.
The Group recognises transfers between levels of the fair value hierarchy as of the date of the event or change in
circumstances that caused the transfers.
77
78
At 31 December 2014
Reclassification
Written off
Disposals
Additions
13,523
483
13,040
(164)
Reclassification
Liquidation of subsidiaries
Written off
7,322
7,319
(156)
7,319
RM000
Disposals
13,360
RM000
(1,602)
103,940
1,796
292
(3,547)
10,360
96,641
627
6,415
(2,420)
(468)
8,963
83,524
RM000
Buildings,
office
renovation
and land
Freehold Leasehold
land
land improvements
Additions
At 1 January 2013
Cost
Group
3.
(3,614)
204,930
(2,902)
490
(2,538)
13,618
199,876
1,683
5,292
(3,251)
(4,657)
9,533
191,276
RM000
Plant and
machinery
and other
equipment
(410)
49,888
(6)
(1,199)
6,499
45,002
124
379
(135)
25
(1,836)
(68)
3,425
43,088
RM000
Furniture,
fittings
and
equipment
(11,745)
(3)
2,681
9,564
RM000
20,143
(572)
(138)
(2,373)
1,781
21,441
(51)
827
48
(791)
(10)
1,067
564
128 67
404
13
(121)
(3,252)
2,669
21,600
RM000
Capital
Motor expenditurevehicles in-progress
400,573
(1,153)
(7,432)
(8,050)
33,325
383,883
2,465
783
(135)
(7,631)
(8,601)
27,271
369,731
Total
RM000
79
3.
RM000
Liquidation of subsidiaries
1,812
1,812
Accumulated depreciation
At 31 December 2013
Written off
Impairment loss
42
Disposals
1,770
1,770
Accumulated depreciation
At 1 January 2013
Group
RM000
RM000
45,412
686
44,726
417
(2,182)
(177)
644
6,834
39,876
42
39,834
Buildings,
office
renovation
and land
Freehold Leasehold
land
land improvements
RM000
145,853
5,276
140,577
1,543
(3,044)
(4,332)
138
12,503
139,045
5,138
133,907
Plant and
machinery
and other
equipment
34,267
113
34,154
99
(127)
(1,794)
(53)
113
3,354
32,675
32,675
RM000
Furniture,
fittings
and
equipment
14,780
14,780
117
(121)
(3,034)
2,559
15,259
15,259
RM000
Motor
vehicles
RM000
Capital
expenditurein-progress
242,124
6,075
236,049
2,176
(127)
(7,141)
(7,596)
895
25,292
228,625
5,180
223,445
Total
RM000
80
3.
13,040
13,523
At 31 December 2014
5,269
5,507
5,549
2,053
13,360
2,053
133
At 1 January 2013
Carrying amounts
Accumulated depreciation
At 31 December 2014
Reclassification
Written off
108
1,812
1,812
Disposals
RM000
Impairment loss
Accumulated depreciation
At 1 January 2014
Group
RM000
RM000
RM000
RM000
RM000
RM000
53,324
51,229
43,648
50,616
1,352
49,264
(133)
708
(2,116)
(1,127)
666
7,206
45,412
686
44,726
55,519
54,023
52,231
149,411
5,910
143,501
(2)
(4,024)
(1,294)
(3,330)
634
11,574
145,853
5,276
140,577
13,204
10,735
10,413
36,684
293
36,391
(28)
(1,192)
(370)
180
3,825
34,267
113
34,154
5,777
6,661
6,341
14,366
14,366
(555)
(138)
(2,213)
2,492
14,780
14,780
806
564
9,564
21
20
20
Buildings,
office Plant and Furniture,
fittings
Capital
renovation machinery
and
Motor expenditureand land and other
Freehold Leasehold
land
land improvements equipment equipment vehicles in-progress
147,422
141,759
141,106
253,151
7,575
245,576
(3,898)
(4,740)
(7,040)
1,500
25,205
242,124
6,075
236,049
Total
RM000
Office
fittings and
RM000
RM000
renovation
Company
Furniture,
Motor
equipment
vehicles
Total
RM000
RM000
3,536
344
1,665
5,545
69
23
800
892
Cost
At 1 January 2013
Additions
Written off
(9)
Disposals
3,605
(9)
(1,547)
(1,547)
358
918
4,881
49
30
77
156
(17)
(4)
(17)
(4)
3,637
388
991
5,016
3,205
298
1,652
5,155
302
31
51
384
Accumulated depreciation
At 1 January 2013
Depreciation for the year
Written off
(7)
Disposals
3,507
322
156
3,985
44
15
165
224
(17)
(1,547)
(1)
(7)
(1,547)
(17)
(1)
3,534
337
320
4,191
331
46
13
390
98
36
762
896
103
51
671
825
Carrying amounts
At 1 January 2013
At 31 December 2013/1 January 2014
At 31 December 2014
81
Group
Plant and machinery and other equipment
Motor vehicles
2013
RM000
RM000
3,423
1,381
3,556
3,994
665
756
Company
Motor vehicles
3.2 Impairment of property, plant and equipment - Group
Restaurant division
During the current financial year, the carrying amount of property, plant and equipment of certain subsidiaries
amounting to RM1.5 million (2013 : RM0.9 million) was impaired and RM2.5 million (2013 : Nil) being written off
due to the closure of certain outlets.
3.3 Included in the total carrying amount of leasehold land are :
2014
RM000
Long term leasehold land
Short term leasehold land
4.
2,670
2013
RM000
2,708
2,599
2,799
5,269
5,507
2014
RM000
At 1 January
Acquisition through business combination (Note 30)
At 31 December
82
Group
11,267
11,267
2013
RM000
11,267
11,267
2014
2013
RM000
RM000
6,000
6,000
5,267
5,267
11,267
11,267
2014
2013
At fair value
- Leasehold land
- Factory building
RM000
Rental income
RM000
91
92
363
337
Level 1
Level 2
2014/2013
Level 3
Total
RM000
RM000
RM000
RM000
Leasehold land
6,000
6,000
Factory building
5,267
5,267
6,000
5,267
11,267
83
2014
Group
2013
RM000
RM000
55,715
55,715
305
(1,644)
56,020
54,071
950
Associates
Unquoted shares, at cost
Share of post acquisition reserves
Joint venture
Unquoted shares, at cost
Share of post acquisition reserves
Company
(687)
263
56,020
54,334
Subsidiaries
Quoted shares, at cost
Unquoted shares, at cost
Less : Impairment loss
Associates
Unquoted shares, at cost
32,920
32,920
204,260
209,015
(55,752)
(55,752)
181,428
186,183
31,187
31,187
212,615
217,370
84
Investments (CONTD)
(a) Subsidiaries
Details of the subsidiaries are as follows :
Name of subsidiary
Principal
place of
business Principal activities
Effective ownership
interest and
voting interest
2014
2013
Malaysia
100.00
100.00
Malaysia
100.00
100.00
Malaysia
98.35
100.00
70.48
70.48
Malaysia
Provision of chemical,
microbiological and
environment related
analytical testing and
consultancy services
100.00
100.00
Japan
100.00
100.00
Malaysia
100.00
100.00
Malaysia
Operation of a chain of
Japanese restaurants
100.00
100.00
Malaysia
Dormant
100.00
Malaysia
100.00
100.00
Malaysia
Dormant
100.00
100.00
Indonesia
Dormant
100.00
100.00
85
Investments (CONTD)
(a)
Subsidiaries (contd)
Details of the subsidiaries are as follows (contd) :
Name of subsidiary
Principal
place of
business Principal activities
Effective ownership
interest and
voting interest
2014
%
2013
%
Malaysia
73.81
73.81
Malaysia
51.00
Malaysia
Dormant
100.00
86
100.00
100.00
Myanmar
Dormant
100.00
100.00
Thailand
100.00
100.00
Vietnam
100.00
100.00
Malaysia
100.00
100.00
Indonesia
100.00
100.00
Malaysia
100.00
100.00
Investments (CONTD)
(a)
Subsidiaries (contd)
Details of the subsidiaries are as follows (contd) :
Name of subsidiary
Principal
place of
business Principal activities
Effective ownership
interest and
voting interest
2014
2013
90.00
Manufacture, wholesale
and export of seafood
products and acting
as sales commission
agent in sales of food
products
100.00
100.00
Dormant
100.00
100.00
90.00
Malaysia
Malaysia
Malaysia
Manufacture, wholesale
and export of seafood
products
94.02
91.72
Malaysia
100.00
100.00
Malaysia
Trading of seafood
products
60.00
60.00
70.48
70.48
Malaysia
87
Investments (CONTD)
(a)
Subsidiaries (contd)
Details of the subsidiaries are as follows (contd) :
Name of subsidiary
Principal
place of
business Principal activities
Effective ownership
interest and
voting interest
2014
2013
Malaysia
70.48
70.48
Malaysia
Manufacture of plastic
engineering precision
parts
70.48
70.48
Malaysia
70.48
70.48
Hong
Kong
Dormant
70.48
Malaysia
Dormant
70.48
Thailand
70.48
70.48
Malaysia
70.48
70.48
Peoples
Republic
of China
70.48
70.48
88
Investments (CONTD)
(a)
Subsidiaries (contd)
Details of the subsidiaries are as follows (contd) :
Name of subsidiary
Principal
place of
business Principal activities
Effective ownership
interest and
voting interest
2014
2013
Malaysia
Dormant
70.48
70.48
Malaysia
70.48
70.48
Vietnam
70.48
70.48
Malaysia
35.94
35.94
Development of
technology for high
precision/ultra clean
injection moulded
products for silicon
wafer handling and
transportation and
market development of
related products
35.94
35.94
Malaysia
73.81
73.81
Provision of internal
security guard services
73.81
73.81
Malaysia
89
Investments (CONTD)
(a)
Subsidiaries (contd)
Details of the subsidiaries are as follows (contd) :
Name of subsidiary
Principal
place of
business Principal activities
Effective ownership
interest and
voting interest
2014
2013
73.81
73.81
Malaysia
Provision of management
services
Singapore Dormant
73.81
73.81
Thailand
73.81
73.81
Dormant
Notes:
(3)
(1)
(2)
(6)
(7)
(8)
(9)
(10)
(11)
(12)
(4)
(5)
90
Investments (CONTD)
(a)
Subsidiaries (contd)
Non-controlling interests in subsidiaries
The Groups subsidiaries that have material non-controlling interests (NCI) are as follows :
TXPHS
Sushi Kin
Dim Sum
Delight
29.52%
1.65%
49%
14,014
641
847
(5,018)
104
(133)
2014
NCI percentage of ownership
interest and voting interest
RM000
RM000
RM000
Other
subsidiaries
with
immaterial
NCI
Total
RM000
RM000
9,949
25,451
580
(4,467)
85,004
79,432
(7,920)
(109,522)
33,155
40,860
(12,060)
4,872
3,152
(125)
(29,197)
(6,171)
46,994
32,758
1,728
182,251
194,280
1,778
(14,122)
(11,110)
4,762
(4,115)
(1,542)
(895)
18,564
18,564
7,952
(14,708)
132
(6,624)
(272)
(272)
1,713
(5,011)
5,950
2,652
91
Investments (CONTD)
(a)
Subsidiaries (contd)
TXPHS
RM000
Total
RM000
RM000
2013
NCI percentage of ownership interest and
voting interest
Other
subsidiaries
with
immaterial
NCI
29.52%
18,143
(5,928)
9,470
167
27,613
(5,761)
83,958
Current assets
77,409
Non-current liabilities
(6,407)
Current liabilities
(97,055)
Net assets
57,905
167,030
(16,793)
(15,505)
(1,226)
(5,188)
(804)
(7,218)
92
Investments (CONTD)
(b) Associates
Details of the associates are as follows :
Name of associate
Principal place
of business
Principal activities
Effective ownership
interest and
voting interest
2014
2013
Investment holding
30.00
30.00
26.36
26.36
Indonesia
The following table summarises the information of the Groups material associates, adjusted for any differences in
accounting policies and reconciles the information to the carrying amount of the Groups interest in the associates.
FASB
2014
PTFN
Total
RM000
RM000
RM000
46,486
12,670
59,156
Group
Summarised financial information
As at 31 December
Non-current assets
Current assets
Non-current liabilities
Current liabilities
Non-controlling interests
Net assets
83,919
(1,008)
22,172
106,091
(1,008)
(32,962)
(32,188)
(65,150)
87,028
2,654
89,682
(9,407)
(9,407)
93
Investments (CONTD)
(b)
Associates (contd)
FASB
2013
RM000
PTFN
Total
RM000
RM000
Group
Summarised financial information
As at 31 December
Non-current assets
45,754
10,740
56,494
Current assets
78,818
20,129
98,947
Non-current liabilities
Current liabilities
(974)
(33,267)
(28,906)
Non-controlling interests
(9,194)
Net assets
81,137
1,963
(974)
(62,173)
(9,194)
83,100
2014
Year ended 31 December
Profit from continuing operations
Other comprehensive income
2,850
5,244
472
218
3,068
5,716
8,094
690
8,784
157,659
69,569
227,228
699
26,807
1,764
1,944
94
26,108
180
(1,016)
(1,016)
23,552
4,733
28,285
49,840
6,180
56,020
Investments (CONTD)
(b)
Associates (contd)
FASB
2013
RM000
PTFN
RM000
Texcorp *
Total
RM000
RM000
Group
Summarised financial information
Year ended 31 December
Profit/(Loss) from continuing operations
3,583
(7,376)
3,857
64
708
(514)
194
4,291
(7,890)
3,857
258
140,369
43,375
5,562
189,306
24,341
517
24,858
(1,016)
(1,016)
180
1,764
1,944
23,552
4,733
28,285
48,073
5,998
54,071
Goodwill
95
Investments (CONTD)
(b)
Associates (contd)
FASB
2014
PTFN
Total
RM000
RM000
RM000
1,573
125
1,698
2,428
183
2,611
660
660
PTFN
Texcorp*
Total
855
58
913
Other information
Dividend received
FASB
2013
RM000
RM000
RM000
RM000
1,075
(2,213)
1,924
786
212
(154)
58
1,287
(2,367)
1,924
844
486
Other information
Dividend received
486
96
Investments (CONTD)
(c)
Joint venture
GMMI Texchem Sdn. Bhd. (GMMI), a joint arrangement in which the Group participates, is principally engaged
in the research and development, marketing, sales, trading and distribution of components of medical devices.
GMMI is structured as a separate vehicle and provides the Group rights to the net assets of the entity. Accordingly,
the Group has classified the investment in GMMI as a joint venture.
The following table summarises the financial information of GMMI. The tables also reconcile the summarised
financial information to the carrying amount of the Groups interest in GMMI, which is accounted for using the
equity method.
2014
Percentage of ownership interest
Percentage of voting interest
Summarised financial information
As at 31 December
Current assets, including cash and cash equivalents of RM1,000 (2013:
RM2,000)
Current liabilities
Group
2013
50%
50%
50%
50%
RM000
RM000
62
(8)
(152)
82
(28)
38
678
(4)
(45)
308
308
263
41
(14)
(304)
97
Goodwill
Cost
At 1 January 2013
Acquisition through business combinations (Note 30)
At 31 December 2013/1 January 2014
Addition
At 31 December 2014
RM000
Trademark
RM000
Franchise
fee
Total
RM000
RM000
34,376
34,376
21,500
21,506
34,382
21,500
1,749
55,882
34,382
21,500
1,749
57,631
1,749
Amortisation
At 1 January 2013/31 December 2013/1 January 2014
Amortisation for the year
91
91
At 31 December 2014
91
91
At 1 January 2013
34,376
34,376
34,382
21,500
55,882
At 31 December 2014
34,382
21,500
1,658
57,540
Carrying amounts
During the current financial year, the Group paid a franchise fee of RM1,749,000 in connection with a new business in
the Restaurant division. The franchise fee is amortised over a period of 8 years.
During the last financial year, Sea Master (Malaysia) Sdn. Bhd., a wholly-owned subsidiary of Texchem Food Sdn.
Bhd., which in turn is wholly-owned by the Company, acquired 60% equity interest in Sea Master Retail Sdn. Bhd. for
a total purchase consideration of RM300,000. The acquisition resulted in a goodwill of RM6,000 being recognised by
the Group.
The trademark which related to the Sushi King chain of restaurant outlets was recognised pursuant to the acquisition
of Texchem Corporation Sdn. Bhd. and is assessed to have indefinite useful life as there is no foresseable limit as to the
period over which the asset is expected to generate cash inflows to the Group.
Impairment testing for cash generating units (CGU) containing goodwill and trademark
For the purpose of impairment testing, goodwill is allocated to the Groups operating divisions or business which
represent the lowest level within the Group at which the goodwill is monitored for internal management purposes.
98
2013
RM000
RM000
7,265
7,265
2,710
2,710
9,975
9,975
13,377
13,377
Industrial division
Food division
Restaurant division
4,314
4,314
6,716
6,716
34,382
34,382
Management has assessed the recoverable amount of goodwill and trademark based on value in use calculations
determined by discounting future cash flows generated from use of the CGUs covering a period of 5 years and
considering the terminal value of the CGUs.
Pre-tax discount rates ranging from 10% to 12.5% (2013: 10.0% to 12.5%) were applied to the calculations in determining
the recoverable amount of the CGUs.
The values assigned to the key assumptions (e.g. sales growth and gross margins) represent managements assessment
of future trends of the various businesses or divisions and are based on both external and internal sources (historical
data).
The estimated recoverable amounts exceed the carrying amount of the CGUs (including goodwill) and management
considers that it is not reasonably possible for the assumptions to change so significantly as to eliminate the excess;
except for the goodwill of RM12.8 million relating to the Groups industrial trading business in Singapore. The recoverable
amount for this CGU is particularly sensitive towards changes in the following key assumptions and any adverse
change in the following areas may result in impairment loss.
A 5% decrease in future planned revenues would result in the Group recognising an impairment loss of RM0.8
million.
An increase of one (1) percentage point in the discount rate would result in the Group recognising an impairment
loss of RM1.0 million.
99
2013
RM000
RM000
20
142
(3,961)
(2,289)
(1,215)
(1,222)
2,547
794
(2,629)
(2,717)
Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets
against current tax liabilities and when the deferred taxes relate to the same taxation authority. Deferred tax assets
are recognised to the extent that it is probable that future taxable profits will be available against which the Group can
utilise the benefits therefrom.
Movements in temporary differences during the year
2014
2013
RM000
RM000
142
1,874
(122)
(1,732)
20
142
100
At 31 December
(2,717)
(2,720)
(1)
(1)
(2,629)
(2,717)
89
RM000
Unutilised reinvestment allowance
Tax loss carry-forwards
Capital allowance carry-forwards
Other temporary differences
12,356
78,903
2013
RM000
12,356
75,987
27,591
24,352
113,477
105,312
(5,373)
(7,383)
The unutilised reinvestment allowance, tax loss carry-forwards and capital allowance carry-forwards do not expire
under current tax legislation. Deferred tax assets have not been recognised in respect of these items because it is not
probable that future taxable profits will be available against which the Group can utilise the benefits therefrom.
8.
Inventories - Group
2014
Raw materials
Work-in-progress
Manufactured inventories
Trading inventories
Food and beverages
2013
RM000
RM000
13,977
16,597
21,807
24,326
11,630
10,731
72,669
72,007
1,857
23,398
1,217
19,136
The amount of inventories written back during the current financial year amounted to RM68,000 (2013 : written down
to net realisable value of RM236,000). The write down and write back is included in cost of sales.
101
Note
Trade
Trade receivables
9.1
Associates
9.2
Non-trade
Subsidiaries
9.3
Associates
9.2
Joint venture
9.2
Deposits
Prepayments
2013
Other receivables
2014
Company
2013
RM000
RM000
RM000
RM000
120,150
116,556
796
119
120,269
117,352
7,889
3,545
41
103
9,750
8,800
19,503
14,287
15
8,399
223
223
1,803
1,547
562
2,535
36,695
31,604
11,279
8,648
156,964
148,956
11,279
8,648
149,563
140,557
49,313
46,873
9,476
198,876
187,430
7,401
2014
Group
796
794
7,101
30
1,898
9,506
8,999
102
2014
RM000
Short term deposits with licensed banks
11.
Group
2013
RM000
2014
RM000
Company
2013
RM000
4,105
49,313
42,768
30
1,898
49,313
46,873
30
1,898
2014
Number of
Amount
shares
RM000
000
2013
Number of
Amount
shares
RM000
000
Authorised
500,000
500,000
500,000
500,000
124,099
124,099
124,099
124,099
The holders of ordinary shares are entitled to receive dividends as declared from time to time, and are entitled to one
vote per share at meetings of the Company.
12. Reserves
Note
Non-distributable :
Share premium
12.1
Translation reserve
12.2
Merger reserve
Capital reserve
Distributable :
Retained earnings
12.3
Group
2014
RM000
2013
RM000
25,568
25,568
1,092
1,092
5,517
328
Company
2014
2013
RM000
RM000
25,568
25,568
(14,404)
(14,435)
17,773
12,553
25,568
25,568
48,864
42,338
27,860
27,018
66,637
54,891
53,428
52,586
The movements in the reserves are disclosed in the statements of changes in equity.
12.1 Share premium
Share premium comprises the premium paid on subscription of shares in the Company over and above the par
value of the shares.
Annual Report 2014
103
Unsecured
2014
RM000
Group
2013
RM000
Company
2014
2013
RM000
RM000
Current :
Bank overdrafts
Bankers acceptances
Revolving credits
Term loans
- Fixed rate
- Variable rate
Trust receipts
Other borrowings
Unsecured
17,455
15,561
72,804
74,170
54,735
44,164
450
11,846
12,000
15,695
1,192
970
12,100
13,000
3,720
5,066
10,988
2,250
176,241
159,187
19,262
19,036
1,998
1,473
86
70
178,239
160,660
19,348
19,106
16,933
11,000
21,254
13,250
3,027
11,000
6,747
13,250
27,933
34,504
14,027
19,997
4,047
3,062
542
566
31,980
37,566
14,569
20,563
210,219
198,226
33,917
39,669
3,706
1,854
Non-current :
Term loans
- Variable rate
Other borrowings
104
Future
minimum
lease
payments
Group
Less than 1 year
Between 1 and 5 years
More than 5 years
Company
Less than 1 year
Between 1 and 5 years
More than 5 years
RM000
Present
value of
minimum
lease
Interest payments
RM000
RM000
2,306
308
1,998
165
4,331
6,802
113
Future
minimum
lease
payments
RM000
Present
value of
minimum
lease
Interest payments
RM000
RM000
1,680
207
1,473
441
3,890
3,122
324
2,798
157
286
22
264
757
6,045
5,088
553
4,535
27
407
65
11
731
103
211
2013
98
28
70
375
73
302
200
286
22
264
628
759
123
636
86
342
The finance lease liabilities are secured as the rights to the assets under the finance leases that revert to the
lessor in the event of default.
14.
Deferred liabilities
2014
At 1 January
Provision/(Reversal) made during the year (Note 19)
Amount paid during the year
Effect of movements in exchange rates
Acquisition through business combinations (Note 30)
At 31 December
Group
2013
2014
Company
2013
RM000
RM000
RM000
RM000
3,243
3,404
775
919
(1,052)
(1,099)
(480)
(100)
814
30
610
22
116
(44)
306
3,035
3,243
411
775
105
2014
RM000
Group
2013
RM000
2014
RM000
Company
2013
RM000
3,423
3,035
2,318
2,050
775
411
(925)
(985)
(180)
(420)
231
355
Note
2014
RM000
Group
2013
RM000
2014
RM000
Company
2013
RM000
64,887
11,245
9,972
Group
Trade
Trade payables
59,804
Non-trade
Subsidiaries
15.1
Associates
15.1
Other payables
15.2
Accrued expenses
13
Deferred liabilities
14
Provision
16
72
23,329
56
25,049
328
2,740
31,682
27,841
1,321
1,042
55,083
52,946
12,894
13,754
114,887
117,833
12,894
13,754
114,887
117,833
12,894
13,754
210,219
3,035
198,226
3,243
4,329
3,833
332,470
323,135
33,917
411
39,669
775
47,222
54,198
106
2014
2013
RM000
RM000
3,833
3,452
692
381
496
381
At 31 December
4,329
3,833
Non-current
4,127
3,773
202
60
4,329
3,833
(196)
Current
The provision in relation to the site restoration cost for certain subsidiaries rented premises is made based on the
experience of historical expenses incurred. The Group expects to incur the liability when the leases expire or are
terminated.
17.
Group
Nominal
value
Group
RM000
Group
2014
Liabilities
RM000
Nominal
value
RM000
2013
Liabilities
RM000
1,716
Forward exchange contracts are used to manage the foreign currency exposures arising from the Groups receivables
and payables denominated in currencies other than the functional currencies of Group entities. The forward exchange
contracts have maturities of less than one year after the end of the reporting period.
107
Revenue/Operating profit
2014
Group
2013
RM000
RM000
1,007,305
940,117
10,233
9,234
681
382
248
289
1,022,663
953,615
2014
Company
2013
RM000
RM000
Revenue
- Invoiced value of goods sold less discounts and
returns
- Commission income
- Service income
- Dividend income
- Rental income
- Management fee
(793,570)
(746,114)
Gross profit
229,093
207,501
Distribution costs
(141,400)
(126,487)
(4,506)
(2,703)
(97,872)
(97,828)
Other income
27,709
40,191
Operating profit
13,024
20,674
Other expenses
9,633
18,055
9,633
18,055
9,633
18,055
(6,157)
(6,602)
5,971
1,342
3,442
10,421
(6,005)
(2,374)
After charging :
Auditors remuneration
- Audit fees
- KPMG Malaysia
- current year
- prior year
- Overseas affiliates of KPMG Malaysia
108
Commission income relates to the sale of products where the Group acts as an agent in the transaction rather than
as the principal.
19.
Cost of sales
Administrative expenses
3,593
4,196
2014
RM000
Group
218
(8)
42
2013
RM000
2014
RM000
Company
2013
RM000
222
4
36
30
28
1
2013
RM000
2014
RM000
Company
2013
RM000
446
(28)
471
6
58
107
91
16
60
105
2
1,000
16
23
1,000
2,272
3,600
1,281
319
5,320
1,040
787
575
170
1,342
1,867
12,027
814
1,595
10,395
610
116
50
304
98
236
677
382
6,005
374
1,000
25,205
1,500
2,692
34,443
25,292
895
490
30,730
224
195
384
2
214
2014
RM000
Group
109
And crediting :
Bargain purchase gain on acquisition of a subsidiary
(Note 30)
Dividends (gross) income from
- subsidiaries
- an associate
Fair value gain on re-measurement of an associate
(Note 30)
Gain on dilution of interest in a subsidiary
Gain on disposal of property, plant and equipment
Gain on foreign exchange, net
Impairment loss on trade receivables written back, net
Insurance claim
Interest income
Inventories written back
Rental income from properties
Reversal of Directors retirement/ resignation benefits
(Note 14)
Reversal of impairment loss on investment in an
associate
2014
RM000
Group
2013
RM000
2014
RM000
Company
2013
RM000
5,107
8,973
17,569
11,236
490
1,171
172
660
5,720
1,885
3
154
68
633
551
959
679
486
221
251
99
44
1,119
2013
RM000
2014
RM000
Company
2013
RM000
127,028
1,268
1,872
2014
RM000
Staff costs (including key management personnel)
Group
133,659
Staff costs and Directors emoluments of the Group and of the Company include contributions to the Employees
Provident Fund of RM9,159,000 (2013 : RM9,298,000) and RM139,000 (2013 : RM188,000) respectively.
The estimated value of benefits received by the Directors otherwise than in cash are as follows:
2014
RM000
Directors of the Company
Other Directors
110
134
Group
2013
RM000
2014
RM000
Company
2013
RM000
142
30
39
30
39
217
245
351
387
Finance costs
2013
RM000
2014
RM000
Company
2013
RM000
2,368
2,032
303
208
2014
RM000
Group
Interest expense :
Bankers acceptances
Bank overdrafts
Finance lease liabilities
Revolving credits
Term loans
Trust receipts
Other borrowings
1,266
1,244
3,184
4,129
2,034
1,755
992
11,225
67
1,306
1,450
542
488
902
679
281
9,443
2,602
2,290
96
155
75
2014
RM000
Income tax expense on continuing operations
Group
2013
RM000
9,265
6,821
Company
2014
2013
RM000
RM000
(2)
(2)
2014
RM000
Group
2013
RM000
Company
2014
2013
RM000
RM000
7,838
7,265
(1,160)
(1,122)
(2)
(2)
6,678
6,143
(2)
(2)
346
1,382
(236)
12
110
1,394
6,788
7,537
(2)
(2)
Foreign tax
- current year
- prior years
111
2014
Group
RM000
2013
RM000
2014
Company
2013
RM000
RM000
(92)
(171)
204
1,820
33
1,728
6,821
9,265
(2)
(2)
2014
Group
RM000
(Loss)/Profit from continuing operations
Total income tax expense
Profit excluding tax
Tax calculated using Malaysian tax rate at 25%
(2013 : 25%)
Effect of different tax rates in foreign jurisdictions
Non-deductible expenses
Share of tax of joint venture
Share of tax of equity-accounted associates
Tax exempt income
Tax incentives
Deferred tax assets not recognised
Utilisation of group relief
Other items
112
(3,283)
2014
2013
RM000
RM000
RM000
2,738
842
8,133
6,821
9,265
3,538
12,003
840
8,131
885
3,001
210
2,033
6,752
7,594
2,218
2,761
(271)
(10)
(424)
(815)
(70)
2,041
(75)
(1,192)
6,821
2013
Company
(369)
3
(197)
(5,416)
(72)
4,251
(2)
(2,408)
(2)
(4,794)
(20)
710
(2)
(2)
9,265
(2)
(2)
(240)
The calculation of basic earnings per ordinary share at 31 December 2014 and 2013 was based on the profit or loss
attributable to ordinary shareholders and a weighted average number of ordinary shares outstanding calculated as
follows :
Continuing operations
2014
2013
RM000
RM000
1,184
8,499
124,099
124,099
0.95
6.85
Company
- Advances from
- Advances to
- Rental income
- Rental expense
- Interest expense
- Interest income
- Dividend income
- Management fee expense
- Subscription of shares in subsidiaries
2013
RM000
RM000
8,070
8,500
612
612
597
203
8,973
17,569
1,520
8,000
4,920
20
235
1,440
313
86
770
113
Company in which Tan Sri Dato Seri (Dr.) Fumihiko Konishi is deemed to have a substantial financial interest Texchem Holdings Sdn. Bhd.
Company
- Rental expense
- Acquisition of warrants in an associate
- Advances from
- Interest expense
- Acquisition of shares in an associate
2014
RM000
2013
RM000
756
756
1,000
2,000
6,913
840
805
106
82
81
Group
- Rental expense
- Security service income
- Insurance premium income
- Acquisition of warrants in an associate
- Advances from
- Interest expense
- Acquisition of shares in an associate
146
74
1,000
2,000
6,913
82
81
C. Associates
Company
- Dividends received
- Management fee expense
- Insurance premium expense
2014
RM000
2013
RM000
660
486
550
89
224
1,530
1,157
219
404
276
30
275
2,683
2,787
1,511
154
364
1,057
1,903
668
Group
- Information technology costs
- Management fee income
- Management fee expense
- Sales
- Service income
- Security service income
- Security service charges
- Rental expense
- Insurance premium expense
- Insurance premium income
- Royalty fee expense
114
2014
Directors
- Fees
- Remuneration
- Estimated value of benefits-in-kind
RM000
3,755
Group
2013
Company
2014
RM000
RM000
2,451
800
15,544
15,957
351
387
19,650
18,795
2013
RM000
380
719
1,455
30
39
1,549
1,874
There were no transactions with the key management personnel other than the remuneration package paid to
them in accordance with the terms and conditions of their appointment as above and the provision of Directors
retirement benefits as disclosed in Note 14 to the financial statements.
The balances related to the above transactions are shown in Notes 9, 14 and 15 to the financial statements.
All the amounts outstanding are unsecured and are expected to be settled in cash. There was no impairment
provided in respect of related party balances at the end of the reporting period.
The Group has four reportable segments, as described below, which are the Groups strategic business units. The
strategic business units offer different products and services, and are managed separately because they require
different technology and marketing strategies. For each of the strategic business units, the Groups Chief Executive
Officer (the chief operating decision maker) reviews internal management reports at least on a quarterly basis. The
following summary describes the operations in each of the Groups reportable segments:
Industrial
Polymer Engineering
Food
Restaurant
There are varying levels of integration between the segments such as the transfer of raw materials and shared
distribution and administrative services. Inter-segment pricing is determined on negotiated basis.
Performance is measured based on segment profit before tax, as included in the internal management reports that
are reviewed by the Groups Chief Executive Officer (the chief operating decision maker). Segment profit is used to
measure performance as management believes that such information is the most relevant in evaluating the results of
certain segments relative to other entities that operate within these industries.
Other non-reportable segment comprises of investment holding activities and provision of management services.
Segment assets
The total of segment asset is measured on all assets (including goodwill) of a segment as included in the internal
management reports that are reviewed by the Groups Chief Executive Officer. Segment total asset is used to measure
the return of assets of each segment.
115
Segment liabilities
Segment liabilities information is neither included in the internal management reports nor provided regularly to the
Groups Chief Executive Officer. Hence, no disclosure is made on segment liability.
Segment capital expenditure
Segment capital expenditure is the total cost incurred during the financial year to acquire property, plant and equipment,
and intangible assets other than goodwill.
116
117
- Investments in associates
Segment assets
- Depreciation
2,096
135,725
2,336
68
9,052
168,732
9,698
24
20
(24)
85
(103)
(14,035)
41
(14,076)
190,472
220
190,252
RM000
Polymer
Engineering
(110)
5,449
Profit/(Loss) before share of after tax results of equityaccounted associates and joint venture
5,449
411,886
1,374
Total revenue
Inter-segment revenue
410,512
RM000
Industrial
2014
1,879
75,201
2,987
(11)
145
1,728
1,728
223,947
10,051
213,896
RM000
Food
1,480
1,749
19,854
99,231
9,693
2,593
15,600
15,600
206,019
206,019
RM000
Restaurant
444
56,020
73,539
491
(5,204)
1,698
(6,902)
13,787
1,984
11,803
RM000
(23,448)
(23,448)
RM000
Others Eliminations
1,500
1,749
56,020
33,325
552,428
25,205
2,692
50
(68)
3,538
1,698
41
1,799
1,022,663
1,022,663
RM000
Total
118
(33)
1,176
- Investments in associates
6,294
263
166,123
127,272
Segment assets
10,592
2,306
(101)
- Depreciation
(57)
(138)
(16,014)
4,268
(14)
(16,000)
175,239
394,120
4,268
151
175,088
Polymer
Engineering
RM000
1,317
392,803
Industrial
RM000
Profit/(Loss) before share of after tax results of equityaccounted associates and joint venture
Total revenue
Inter-segment revenue
2013
1,689
72,761
3,813
(14)
156
(509)
(509)
216,698
10,863
205,835
Food
RM000
21,500
17,112
92,919
8,054
928
98
16,349
16,349
178,748
178,748
Restaurant
RM000
11,267
1,000
54,071
76,603
(5,107)
(11,236)
527
7,909
786
7,123
7,464
6,323
1,141
Others
RM000
(18,654)
(18,654)
Eliminations
RM000
21,500
11,267
27,271
263
54,071
535,678
(5,107)
(11,236)
25,292
895
(74)
236
12,003
786
(14)
11,231
953,615
953,615
Total
RM000
Geographical segments
In presenting information on the basis of geographical segments, segment revenue is based on geographical location
of customers. Segment assets are based on the geographical location of the assets. The amounts of non-current
assets do not include financial instruments (including investment in associates and joint venture) and deferred tax
assets.
Geographical information
Revenue
RM000
Non-current
assets
RM000
529,597
49,210
96,758
73,065
69,771
20,033
14,728
169,501
157,373
13,177
29,797
1,841
1,459
12,560
17
5
1,022,663
216,229
500,595
42,517
90,715
56,054
74,461
17,119
6,110
166,044
148,286
13,409
31,047
1,047
2,211
12,879
17
12
953,615
208,908
2014
Malaysia
Singapore
Thailand
Vietnam
Peoples Republic of China
Myanmar
Indonesia
Others
2013
Malaysia
Singapore
Thailand
Vietnam
Peoples Republic of China
Myanmar
Indonesia
Others
The Groups objectives when managing capital is to maintain a strong capital base and safeguard the Groups ability
to continue as a going concern, so as to maintain investor, creditor and market confidence and to sustain future
development of the business.
At 31 December 2014, the current liabilities of the Group and of the Company exceeded the current assets by
RM15,296,000 and RM21,113,000 respectively. The Management is of the opinion that the Groups banking facilities
will continue to be available from its lenders and that the Group will be able to generate cash flows from its operations
to meet its liabilities as and when they fall due. The Group and the Company have also completed the disposal of 1.4
million ordinary shares of RM1.00 each, representing 28% of the issued and paid-up share capital in Sushi Kin Sdn.
Bhd. for a total cash consideration of RM102.2 million on 27 February 2015 (see Note 31.8).
There were no changes in the Groups approach to capital management during the year.
119
2014
2013
RM000
RM000
1,571
2,182
3,557
Leases as lessee
Non-cancellable operating lease rentals are payable as follows :
2014
RM000
Less than 1 year
Between 1 and 5 years
20,353
Group
2013
Company
2014
RM000
RM000
21,204
1,357
16,646
15,263
36,999
36,467
2013
RM000
2,195
569
1,926
1,926
4,121
The Group and the Company lease land, office space, warehouse, equipment and restaurant outlets under operating
leases. The leases typically run for an initial period of 1 to 10 years with an option to renew.
The lease payments for subsidiaries in the Restaurant division may be based on fixed lease rental or variable lease
rental of between 8% to 18% (2013 : 8% to 18%) of the subsidiaries net turnover, whichever is higher. The lease
commitment disclosed above is aggregated based on the minimum lease rental payable.
29. Financial instruments
FVTPL
120
2013
FVTPL
RM000
RM000
137
2014
Group
2013
Company
2014
2013
RM000
RM000
RM000
RM000
567
623
251
99
Net gains/(losses) on :
Loans and receivables
Financial liabilities measured at amortised cost
Fair value through profit or loss:
- designated upon initial recognition
(11,225)
(9,443)
(137)
(10,795)
(8,820)
(2,602)
(2,290)
(2,351)
(2,191)
Credit risk
Liquidity risk
Market risk
29.4 Credit risk
Credit risk is the risk of a financial loss to the Group if a customer or counterparty to a financial instrument fails to
meet its contractual obligations. The Groups exposure to credit risk arises principally from its receivables from
customers. The Companys exposure to credit risk arises principally from advances to subsidiaries and financial
guarantees given to banks for credit facilities granted to subsidiaries.
Receivables
Risk management objectives, policies and processes for managing the risk
Management has a credit policy in place and the exposure to credit risk is monitored on an ongoing basis.
Normally, credit evaluations are performed on customers requiring credit over a certain amount.
Exposure to credit risk, credit quality and collateral
As at the end of the reporting period, the maximum exposure to credit risk arising from receivables is represented
by the carrying amounts in the statements of financial position.
Management has taken reasonable steps to ensure that receivables that are neither past due nor impaired are
stated at their realisable values. A significant portion of these receivables are regular customers that have been
transacting with the Group. The Group uses ageing analysis to monitor the credit quality of the receivables. Any
receivables having significant balances past due more than 120 days, which are deemed to have higher credit
risk, are monitored individually.
121
Group
Domestic
Thailand
Peoples Republic of China
Singapore
Vietnam
Myanmar
Japan
RM000
53,574
55,524
20,900
18,493
8,347
7,038
6,366
9,154
8,292
8,639
10,274
7,482
4,529
Indonesia
3,378
Others
2013
RM000
4,215
2,954
4,609
3,853
120,269
117,352
Impairment losses
The Group maintains an ageing analysis in respect of trade receivables only. The ageing of trade receivables as
at the end of the reporting period was:
Gross
Group
2014
2013
64,213
31,330
RM000
23,499
(122)
120,515
(246)
1,473
(124)
Collective
impairment
Net
RM000
RM000
64,213
23,377
120,269
31,330
1,349
67,031
67,031
27,841
(12)
27,829
18,521
(26)
18,495
4,149
(152)
3,997
117,542
(190)
117,352
122
RM000
Individual
impairment
2013
RM000
RM000
At 1 January
190
381
116
Group
(66)
(6)
36
(208)
(22)
12
246
190
The allowance account in respect of trade receivables is used to record impairment losses. Unless the Group is
satisfied that recovery of the amount is possible, the amount considered irrecoverable is written off against the
receivable directly.
Financial guarantees
Risk management objectives, policies and processes for managing the risk
The Company provides unsecured financial guarantees to banks in respect of banking facilities granted to certain
subsidiaries. The Company monitors on an ongoing basis the results of the subsidiaries and repayments made
by the subsidiaries.
Exposure to credit risk, credit quality and collateral
The maximum exposure to credit risk amounted to RM128.0 million (2013 : RM80.4 million) representing the
outstanding banking facilities of the subsidiaries as at the end of the reporting period.
The Group also issued a corporate guarantees to the suppliers of certain subsidiaries amounting to RM23.2
million (2013 : RM34.5 million).
As at the end of the reporting period, there was no indication that any subsidiary would default on repayment.
The financial guarantees have not been recognised since the fair value on initial recognition was not material.
Inter company balances
Risk management objectives, policies and processes for managing the risk
The Company provides unsecured advances to subsidiaries. The Company monitors the results of the subsidiaries
regularly.
123
Impairment losses
As at the end of the reporting period, there was no indication that the advances to the subsidiaries are not
recoverable. The Company does not specifically monitor the ageing of the advances to the subsidiaries.
Nevertheless, these advances are not considered to be overdue and are repayable on demand.
29.5 Liquidity risk
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Groups
exposure to liquidity risk arises principally from its various payables, loans and borrowings.
In the management of liquidity risk, the Group and the Company monitor and maintain a level of cash and cash
equivalents deemed adequate by management to finance the Groups and Companys operations and to mitigate
any adverse effects of fluctuations in cash flows.
At 31 December 2014, the current liabilities of the Group and of the Company exceeded the current assets by
RM15,296,000 and RM21,113,000 respectively.
The Management is of the opinion that the Groups banking facilities will continue to be available from its lenders
and that the Group will be able to generate sufficient cash flows from its operations to meet its liabilities as and
when they fall due.
The Group and the Company have also completed the disposal of 1.4 million ordinary shares of RM1.00 each,
representing 28% of the issued and paid-up share capital in Sushi Kin Sdn. Bhd. for a total cash consideration of
RM102.2 million on 27 February 2015 (see Note 31.8).
124
125
54,735
6,045
5,469
Other payables
Inflow
Outflow
3.50 5.65
54,735
330,294
325,243
(1,716)
109,418
5,469
27,276
6,802
32,492
3,706
72,804
17,455
RM000
1,853
7.00 10.00
1.32 6.52
2.15 4.02
4.48 8.10
4.90
2.88 5.96
7.60 8.35
137
109,418
26,695
Other borrowings
28,779
Term loans
3,706
72,804
17,455
Trust receipts
Revolving credits
Bankers acceptances
Bank overdrafts
Group
2014
RM000
54,735
294,473
(1,716)
1,853
109,418
5,469
15,695
2,306
12,748
3,706
72,804
17,455
RM000
Under 1
year
13,809
2,808
2,410
8,591
RM000
1-2
years
21,847
8,773
1,921
11,153
RM000
2-5
years
165
165
RM000
More than
5 years
The table below summarises the maturity profile of the Groups and of the Companys financial liabilities as at the end of the reporting period based on
undiscounted contractual payments:
Maturity analysis
126
Other payables
Other borrowings
Revolving credits
Term loans
Bank overdrafts
Company
2014
46,811
4,273
8,621
13,250
12,100
628
6,747
1,192
RM000
6.00 7.00
4.96 5.28
4.60 5.36
2.38 2.64
5.58 6.25
8.10
RM000
48,114
4,273
8,621
13,950
12,100
731
7,247
1,192
32,647
4,273
8,621
2,369
12,100
113
3,979
1,192
RM000
Under 1
year
4,295
2,808
113
1,374
RM000
1-2
years
10,961
8,773
294
1,894
RM000
2-5
years
211
211
RM000
More than
5 years
127
74,170
1,854
Revolving credits
Trust receipts
316,059
110,497
7.85
2,000
7.50 10.00
5,336
Other payables
2.15 7.38
1.87 6.07
4,535
4.66 7.85
5.00
2.21 5.77
3.87 5.17
6.25 8.10
24,238
Other borrowings
33,704
44,164
Term loans
15,561
Bankers acceptances
RM000
RM000
320,509
110,497
2,000
5,336
24,905
5,088
36,934
1,854
74,170
44,164
15,561
Bank overdrafts
Group
2013
280,222
110,497
2,000
5,336
10,988
1,680
13,972
1,854
74,170
44,164
15,561
RM000
Under 1
year
15,614
2,363
2,297
10,954
RM000
1-2
years
24,387
11,554
825
12,008
RM000
2-5
years
286
286
RM000
More than
5 years
128
2,000
7,754
Other payables
53,423
7.60
4,000
7.85
5.04
13,250
Other borrowings
4.60 5.08
2.38 2.43
5.54 7.60
7.60 7.85
13,000
636
11,813
970
RM000
RM000
54,895
7,754
2,000
4,000
13,917
13,000
759
12,495
970
Revolving credits
Term loans
Bank overdrafts
Company
2013
33,176
7,754
2,000
4,000
13,000
98
5,354
970
RM000
Under 1
year
6,393
2,363
98
3,932
RM000
1-2
years
15,040
11,554
277
3,209
RM000
2-5
years
286
286
RM000
More than
5 years
The Groups exposure to foreign currency (a currency which is other than the currency of the Group
entities) risk, based on carrying amounts as at the end of the reporting period was:
RMB
Group
USD
JPY
SGD
RM000
RM000
RM000
RM000
7,083
47,303
647
731
2014
Trade and other receivables
Trade and other payables
Cash and bank balances
Loans and borrowings
Net exposure
(4,617)
1,226
(19,724)
17,266
(15,490)
(512)
326
(197)
133
3,692
29,355
461
667
4,452
40,448
2,182
223
(3,924)
(29,414)
(806)
(74)
4,654
12,644
200
1,576
154
2013
5,182
(13,262)
10,416
129
2014
Group
RM000
RMB
USD
JPY
SGD
2013
RM000
(185)
(259)
(23)
(79)
(1,468)
(521)
(33)
(8)
A 5% weakening of the RM against the above currencies at the end of the reporting period would have
had equal but opposite effect on the above currencies to the amounts shown above, on the basis that
all other variables remained constant.
29.6.2 Interest rate risk
The Groups investments in fixed rate debt securities and its fixed rate borrowings are exposed to a
risk of change in their fair value due to changes in interest rates. The Groups variable rate borrowings
are exposed to a risk of change in cash flows due to changes in interest rates. Investments in equity
securities and short term receivables and payables are not significantly exposed to interest rate risk.
Risk management objectives, policies and processes for managing the risk
The Group and the Company are presently enjoying competitive interest rates which are reviewed and
negotiated on a yearly basis. The Group and the Company manage their interest rate risk by having a
combination of borrowings with fixed and floating rates. The Groups and the Companys surplus funds
are placed as short term deposits with licensed banks.
130
2014
Group
RM000
2013
RM000
Company
2014
RM000
2013
RM000
5,058
3,079
5,000
1,405
(169,454)
(156,747)
(34,599)
(30,886)
(166,375)
(152,642)
(29,599)
(29,481)
(46,234)
(48,815)
(7,939)
(12,783)
Financial liabilities
Interest rate risk sensitivity analysis
Company
Profit or loss
100 bp
increase
RM000
100 bp
decrease
RM000
Profit or loss
100 bp
increase
RM000
100 bp
decrease
RM000
2014
Floating rate instruments
(462)
462
(79)
79
(488)
488
(128)
128
2013
Floating rate instruments
131
132
Financial liabilities
Company
Financial liabilities
2013
Group
Financial liabilities
Company
Financial liabilities
2014
Group
(137)
(137)
(137)
(137)
(39,669)
(198,337)
(33,917)
(210,298)
(210,298)
(137)
(39,669)
(198,337)
(33,917)
(39,669)
(198,337)
(33,917)
(39,669)
(198,226)
(33,917)
(137)
The table below analyses financial instruments carried at fair value and those not carried at fair value for which fair value is disclosed, together with their
fair values and carrying amounts shown in the statements of financial position.
The carrying amounts of cash and cash equivalents, receivables, payables and short term borrowings reasonably approximate their fair values due to the
relatively short term nature of these financial instruments.
During financial year 2013, the Company acquired additional 5.92% equity interest in Texchem Corporation Sdn. Bhd.
(Texcorp) on 17 May 2013 for a total purchase consideration of RM2,018,000. Prior to the acquisition, Texcorp was an
equity-accounted associate with 49.88% equity interest held by the Company. Consequent to this acquisition, Texcorp
became a 55.80% owned subsidiary of the Company.
On 31 May 2013, Sea Master (Malaysia) Sdn. Bhd. (formerly known as Sea Master Trading Co. Sdn. Bhd.), a whollyowned subsidiary of Texchem Food Sdn. Bhd. which in turn is a wholly-owned subsidiary of the Company, acquired
60% equity interest in Sea Master Retail Sdn. Bhd. for a total purchase consideration of RM300,000.
From the date of acquisitions of subsidiaries to 31 December 2013, the subsidiaries contributed revenue of RM1,141,000
and loss of RM174,000. If acquisition had occurred on 1 January 2013, management estimates that consolidated
revenue would have been RM955,148,000, and consolidated profit for the financial year would have been RM2,703,000.
In determining these amounts, management has assumed that the fair value adjustments that arose on the date of
acquisition would have been the same if the acquisition had occurred on 1 January 2013.
133
RM000
2,318
783
11,267
21,500
Other investments
18,046
8,184
737
(15,124)
(5,391)
(32)
(306)
39,664
(2,318)
737
(1,581)
RM000
Total consideration transferred
(39,664)
15,252
1,222
4,535
134
2,318
11,236
6
(5,107)
(5,101)
The re-measurement to fair value of the Groups existing 49.88% interest in Texcorp resulted in a gain of RM11,236,000
(fair value of RM16,993,000 less RM4,535,000 carrying value of equity-accounted investee at acquisition date and
RM1,222,000 of translation reserve transferred to profit or loss), which has been recognised in other operating income
in the Groups consolidated statements of profit or loss and other comprehensive income.
On 13 February 2014, the Company announced that Texchem-Pack (KL) Sdn. Bhd., a wholly-owned subsidiary of
Texchem-Pack (M) Bhd., which in turn is a wholly-owned subsidiary of Texchem-Pack Holdings (S) Ltd., a 70.48%
owned subsidiary of the Company, commenced winding up proceedings voluntarily in accordance with Section 254 of
the Companies Act, 1965 (Members Voluntary Winding Up).
The completion of the Members Voluntary Winding Up is pending as at todate.
2.
On 6 March 2014, the Company announced that the Singapore Exchange Securities Trading Limited (SGX-ST)
had on 5 March 2014 issued a delisting notification to Texchem-Pack Holdings (S) Ltd. (TXPHS) under Rule
1315 of the Listing Manual of SGX-ST (Listing Manual) [Delisting Notification].
In the Delisting Notification, the SGX-ST advised that TXPHS or its controlling shareholder(s) must comply with
the Listing Manual which requires TXPHS or its controlling shareholder(s), i.e. the Company, to make a reasonable
exit offer to shareholders. The SGX-ST has given TXPHS one month from the date of the Delisting Notification to
make an exit offer proposal (Exit Offer).
TXPHS had on 4 April 2014 made an application to the SGX-ST to seek an extension of time for the Company to
make the Exit Offer and the SGX-ST had on 3 June 2014 granted TXPHS an extension of time to 7 October 2014
for the said matter.
Subsequently, TXPHS had on 2 October 2014 made a second application to the SGX-ST to seek a further
extension of time for the Company to make the Exit Offer and the SGX-ST had on 7 October 2014 granted TXPHS
a further extension of time to 7 April 2015 for the said matter.
3.
Texchem Corporation Sdn. Bhd. (Texcorp), a 73.81% owned subsidiary of the Company currently holds 21.07%
equity interest in the Company (TRB Shares).
Pursuant to Section 17 of the Companies Act, 1965, Texcorp is required to dispose of all the TRB Shares
held in the Company within twelve (12) months or such longer period as the High Court of Malaya may allow
after Texcorp became a subsidiary of the Company. Pending the disposal of the shares held by Texcorp in
the Company, Texcorp shall have no right to vote at meetings of the Company or any class of the Companys
members.
On 6 May 2014, the Company announced that Texcorp had been granted an Order by the Penang High Court
for an extension of time of twelve (12) months from 17 May 2014 to dispose of the TRB Shares in order to comply
with the requirement of Section 17 of the Companies Act, 1965.
4.
On 22 July 2014, the Company announced that Texa Protection Sdn. Bhd. (TPSB), a wholly-owned subsidiary
of the Company, had on 21 July 2014 submitted an application to the Companies Commission of Malaysia to
strike off TPSB from the register in accordance with Section 308 of the Companies Act, 1965.
135
5.
On 12 September 2014, Sushi Ku Sdn. Bhd. (SKSB), a wholly-owned subsidiary of the Company commenced
Members Voluntary Winding Up.
The Members Voluntary Winding Up has been completed and SKSB was dissolved on 25 February 2015.
6.
The Company had on 19 August 2014 entered into two Shares Sale Agreements with Inspire Corporation and
Inspire Investment Corporation to dispose of 82,452 ordinary shares of RM1.00 each of Sushi Kin Sdn. Bhd. for
a total cash consideration of RM5,990,000 (Disposals).
The Disposals were completed on 12 September 2014 and resulted in an increase in the non-controlling interests
by RM538,000.
7.
On 21 October 2014, Sea Master (Malaysia) Sdn. Bhd. (SMM), a wholly-owned subsidiary of Texchem Food
Sdn. Bhd., which in turn is a wholly-owned subsidiary of the Company, subscribed for an additional 2,000,000
ordinary shares of RM1.00 each in Ocean Pioneer Food Sdn. Bhd. (OPF) at a discounted issue price of RM0.50
per share.
Consequent to the subscription, the interest of SMM in OPF increased from 91.72% to 94.02% with a corresponding
increase in the non-controlling interests in OPF by RM79,000.
8.
On 26 November 2014, the Company announced the disposal of 1.4 million ordinary shares of RM1.00 each in
Sushi Kin Sdn. Bhd. (Sushi Kin), representing 28% of the issued and paid-up share capital of the Sushi Kin to
Asia Yoshinoya International Sdn. Bhd. for a total cash consideration of RM102.2 million (Disposal).
136
1.
On 27 January 2015, the Company announced that Texcorp had entered into a conditional Share Sale Agreement
with Texchem Holdings Sdn. Bhd. (THSB), a substantial shareholder of the Company, to dispose of 2 million
ordinary shares of RM1.00 each in the Company to THSB for a total cash consideration of RM2,614,000
(Disposal).
2.
On 2 March 2015, the Company announced that Eye Graphic Sdn. Bhd. (EGSB), a wholly-owned subsidiary
of TXPHS, had entered into a Share Purchase Agreement with Alaya Inc. to acquire 98,000 ordinary shares of
RM1.00 each in Alaya Asia Sdn. Bhd. (Alaya Asia), representing 49% of the issued and paid-up share capital of
Alaya Asia, for a total cash consideration of RM163,460 (Acquisition).
The Acquisition was completed on 2 March 2015 upon which, Alaya Asia became a wholly-owned subsidiary of
EGSB.
3.
On 2 March 2015, the Directors the Company declared an interim single tier dividend of 10 sen per share
amounting to RM12,409,923 for the financial year ending 31 December 2015 to be paid on 1 April 2015.
The breakdown of the retained earnings of the Group and of the Company as at 31 December, into realised and
unrealised profits, pursuant to Paragraphs 2.06 and 2.23 of Bursa Malaysia Main Market Listing Requirements, are as
follows :
2014
- Unrealised
Group
2013
2014
Company
2013
RM000
RM000
RM000
RM000
22,322
18,117
27,860
27,018
27,860
27,018
15,079
14,483
37,401
32,600
(4,929)
(6,530)
28,521
28,397
23,592
21,867
60,993
54,467
27,860
27,018
(12,129)
(12,129)
42,338
27,018
Total retained earnings
48,864
27,860
The determination of realised and unrealised profits is based on the Guidance of Special Matter No. 1, Determination of
Realised and Unrealised Profits or Losses in the Context of Disclosures Pursuant to Bursa Malaysia Securities Berhad
Listing Requirements, issued by the Malaysian Institute of Accountants on 20 December 2010.
137
In the opinion of the Directors, the financial statements set out on pages 53 to 136 are drawn up in accordance with Malaysian
Financial Reporting Standards, International 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 of 31
December 2014 and of their financial performance and cash flows for the financial year then ended.
In the opinion of the Directors, the information set out in Note 33 on page 137 to the financial statements has been compiled
in accordance with the Guidance on Special Matter No. 1, Determination of Realised and Unrealised Profits or Losses in the
Context of Disclosures Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, issued by the Malaysian Institute
of Accountants, and presented based on the format prescribed by Bursa Malaysia Securities Berhad.
Signed on behalf of the Board of Directors in accordance with a resolution of the Directors :
138
I, Tan Peng Lam, the officer primarily responsible for the financial management of Texchem Resources Bhd., do solemnly
and sincerely declare that the financial statements set out on pages 53 to 137 are, to the best of my knowledge and belief,
correct and I make this solemn declaration conscientiously believing the same to be true, and by virtue of the provisions of
the Statutory Declarations Act, 1960.
Subscribed and solemnly declared by the above named at Georgetown in the State of Penang on 28 March 2015.
Before me :
Commissioner for Oaths
139
In our opinion, the accounting and other records and the registers required by the Act to be kept by the Company and
its subsidiaries of which we have acted as auditors have been properly kept in accordance with the provisions of the
Act.
b)
We have considered the accounts and the auditors reports of all the subsidiaries of which we have not acted as
auditors, where applicable which are indicated in Note 5 to the financial statements.
c)
We are satisfied that the accounts of the subsidiaries that have been consolidated with the Companys financial
statements are in form and content appropriate and proper for the purposes of the preparation of the financial
statements of the Group and we have received satisfactory information and explanations required by us for those
purposes.
d)
The audit reports on the accounts of the subsidiaries did not contain any qualification or any adverse comment made
under Section 174(3) of the Act.
140
141
142
PROXY FORM
I/We (full name in capital letters)
NRIC No./Passport No./Company No.
of (full address)
being a member/members of TEXCHEM RESOURCES BHD. hereby appoint (full name and NRIC No./Passport No. in capital letters)
of (full address)
and/or failing him/her (full name and NRIC No./Passport No. in capital letters)
of (full address)
as my/our proxy/proxies to vote in my/our name(s) and on my/our behalf at the Forty-First Annual General Meeting of the Company
to be held at Pinang Ballroom, Level 3, Jen Hotel, Magazine Road, 10300 Penang on Thursday, 30 April 2015 at 11.00 a.m. and any
adjournment thereof.
My/Our proxy/proxies is/are to vote on either a show of hands or a poll as indicated below with an X.
NO. AGENDA
(1)
FOR
(2)
Re-appointment of Tan Sri Dato Seri (Dr.) Fumihiko Konishi who retires pursuant - Resolution 1
to Section 129 of the Companies Act, 1965
(3)
AGAINST
- Resolution 2
- Resolution 3
(4)
- Resolution 4
(5)
- Resolution 6
- Resolution 7
(6B) Power to Issue Shares pursuant to Section 132D of the Companies Act, 1965
- Resolution 8
(6C) Proposed Renewal of Shareholders Mandate for Existing Recurrent Related Party - Resolution 9
Transactions and Proposed New Shareholders Mandate for Additional Recurrent
Related Party Transactions of a Revenue or Trading Nature
(6D) Proposed Authority for the Company to Buy-Back its own Shares
- Resolution 10
Signed this
100
%
%
%
Notes:
1) A Member of the Company entitled to attend and vote at the meeting may appoint up to two (2) proxies to attend and vote instead of him/her. A proxy may
but need not be a Member of the Company and the provision of Section 149(1)(b) of the Companies Act, 1965 shall not apply to the Company. If a Member
appoints two (2) proxies, the appointments shall be invalid unless he/she specifies the proportions of his/her holdings to be represented by each proxy.
2) Where a Member of the Company is an exempt authorised nominee 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.
3) To be effective:a) the instrument appointing a proxy; and
b) the authority (if any) under which it is executed or a copy of such authority certified notarially or in some other way approved by the Directors of the
Company,
must be deposited at the Registered Office of the Company at Level 18, Menara Boustead Penang, 39 Jalan Sultan Ahmad Shah, 10050 Penang, Malaysia
at least forty-eight (48) hours before the time for holding the meeting.
4) If the Proxy Form is returned without any indication as to how the proxy shall vote, the proxy will vote or abstain as he/she thinks fit.
5) If the Proxy Form is returned without the name of the proxy indicated, the Proxy Form shall be invalid.
6) Where the person appointing the proxy is a corporation, the form must be either under seal or under the hand of a duly authorised officer or attorney of
the corporation.
Stamp
144
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