Annual Report - 2015
Annual Report - 2015
Annual Report - 2015
Enhancing Life...
Contents
03
Corporate Information
05
Corporate Structure
06
Chairmans Statement
11
20
21
Directors Information
25
33
36
41
43
47
Sustainability Statement
49
Privacy Policy
53
Financial Statements
142
List of Properties
144
Analysis of Shareholdings
147
151
Form of Proxy
06
Chairmans
Statement
21
Directors
Information
53
Financial
Statements
Business
Through manufacturing and
distribution, Apex makes
quality pharmaceutical and
healthcare products available
to our valued customers via
its comprehensive supply
channels.
Since our establishment
in 1962, our business
has been focused on
making pharmaceutical
and healthcare products
available to customers in the
markets in which we operate,
through manufacturing
and distribution, and in a
manner which fairly rewards
all stakeholders. We know
our business intimately and
have a growing network of
loyal customers; this will
remain our business for
the future. Our condence
in our business stems
from a conscious decision
to focus resources on our
area of expertise, which
enables us to increase our
capabilities, efciencies and
understanding of underlying
trends in the industry.
Corporate Information
Company Secretaries
Chiew Woon Wui (MIA 20586)
Chan Yoke Peng (MAICSA 7053966)
Registered Office
1-5 Jalan TTC 1
Cheng Industrial Estate
75250 Melaka
Tel : +606 337 0980
Fax : +606 337 0570
Stock Exchange Listing
Bursa Malaysia Securities Berhad
Main Market
Stock Code : 7090
Stock Name : AHEALTH
Principal Bankers
HSBC Bank Malaysia Berhad
777 Jalan Hang Tuah
75300 Melaka
Malayan Banking Berhad
Menara Maybank
100 Jalan Tun Perak
50050 Kuala Lumpur
Hong Leong Bank (Malaysia) Berhad
345 Jalan Ong Kim Wee
75300 Melaka
Board Charter
Code of Conduct
Sustainability Statement
Whistleblowing Policy & Procedure
Privacy Policy
Information on the above
can be found at www.apexpharmacy.com
Group Websites
www.apexpharmacy.com
www.xepasp.com
www.apexpharma.com.my
www.apexpharmacy.com.sg
Auditors
Ernst & Young
Level 23A Menara Milenium
Jalan Damanlela
Pusat Bandar Damansara
50490 Kuala Lumpur
Legal Advisors
Chee Siah Le Kee & Partners
2B, Jalan KLJ 4
Taman Kota Laksamana Jaya
75200 Melaka
Company Secretarial Agents
Boardroom Corporate Services (KL) Sdn Bhd
Lot 6.05 Level 6 KPMG Tower
8 First Avenue Bandar Utama
47800 Petaling Jaya
Selangor Darul Ehsan
Tel : +603 7720 1188
Fax : +603 7720 1111
Share Registrars
Boardroom Corporate Services (KL) Sdn Bhd
Lot 6.05 Level 6 KPMG Tower
8 First Avenue Bandar Utama
47800 Petaling Jaya
Selangor Darul Ehsan
Tel : +603 7720 1188
Fax : +603 7720 1111
Investor Relations
Apex Pharmacy Corporate Sdn Bhd
2 Jalan SS 13/5
47500 Subang Jaya
Selangor Darul Ehsan
Tel : +603 5637 6888
Fax : +603 5636 9280
Contact Person : Leighton Kee
Email : [email protected]
Mission
Restoring Health,
Enhancing Life
Apexs mission is to bring
better health and quality
of life to all through its
businesses. Doctors and
Pharmacists use our
medicines and diagnostic
devices to treat and manage
infections, cardiovascular,
metabolic, gastroenterological,
rheumatic conditions and
more. Consumers use our
medicated powder, nutritional
supplements and other
healthcare related products
to enhance their wellbeing.
We take heart in knowing that
our products play a role in
the restoration of health and
enhancement of life in those
who use and trust them.
Corporate Structure
Pte Ltd
Sdn Bhd
60%
Sdn Bhd
40%
Straits Apex
Sdn Bhd
CS Health Store
Sdn Bhd
Sdn Bhd
87%
Straits Orthopaedics
(Mfg) Sdn Bhd
Dear shareholders
Chairmans
Statement
Chairmans Statement
(Contd)
Dividends
In view of our results, the Board of Directors has
proposed a final single-tier dividend of 6 sen per share
in respect of financial year 2015 for your approval at the
forthcoming Annual General Meeting [AGM] on 18th
May 2016. In addition to the interim single-tier dividend
of 5 sen per share paid on 30th September 2015, total
single-tier dividends in respect of financial year 2015 is
11 sen per share. This amounts to RM 12.9 million, an
increase of 16% over that paid out in respect of financial
year 2014.
Financial Performance
2015 was a challenging year with both sales and margins
under pressure. The Goods and Services Tax [GST]
implemented in April 2015 affected consumer spending
patterns, while the weakening of the Ringgit and
strengthening of the US Dollar eroded profit margins.
This resulted in greater reported quarter to quarter
fluctuations in performance throughout last year.
Board Changes
Our full year revenue in 2015 increased by 6% to reach
RM 526.9 million, translating into a compounded annual
growth rate of revenue of 10.2% since our IPO in 2000.
The Group experienced ebb and flow in its revenue
during 2015. In the first quarter, the Groups revenue was
RM 140.1 million, 7% better than the same period in the
previous year. This fell to RM 124.3 million in the second
quarter, which was lower by 11% due to the impact of
GST which came into effect in Malaysia on 1st April 2015.
Revenue gradually recovered in the second half of 2015,
reaching RM 134.2 million in the final quarter, 9% better
than the same period in 2014, allowing the Group to end
the year on a stronger note.
Chairmans Statement
(Contd)
Chairmans Statement
(Contd)
Chairmans Statement
(Contd)
10
Appreciation
It has been an eventful year, and our performance is
made possible by the energy, skill and dedication of each
and every employee. They embraced the group-wide
reorganisation in 2015 with enthusiasm and excitement,
which makes for a smooth and successful transition. My
sincere thanks goes out to all 1060 employees that form
the Apex Healthcare Group today.
On 18th May 2016, we will also hold an Extraordinary
General Meeting to seek your approval for the proposed
Apex Healthcare Berhads Executive Share Option
Scheme 2016 (ESOS), which serves primarily to
align the interests of our eligible key executives to the
corporate goals of our Company. The Proposed ESOS
will also inculcate a greater sense of belonging and
commitment of vital key executives to the Group, and
accord them the opportunity to directly participate in the
equity of Apex Healthcare Berhad.
Throughout the eventful year past, the steady hand of
Board decisions was keenly felt by management and
staff alike. To my fellow directors, I thank you for your
keen insights, expert advice and dedicated service to
Apex Healthcare Berhad. Finally, to all our shareholders,
I thank you for your continued confidence and trust in the
Apex Healthcare Group.
Together, we will steer the company to greater heights.
Management Discussion
and Analysis
OVERVIEW OF BUSINESS & OPERATIONS
Apex Healthcare Berhad is the investment holding company for a group of companies
engaged in the development, manufacturing, marketing and distribution of pharmaceuticals,
diagnostics, consumer healthcare products and orthopaedic devices. The Group has direct
operations in Malaysia, Singapore, Vietnam and Myanmar.
The Group employs a total of 1,060 employees (including the headcount of Associated
Company), operating two manufacturing plants in Melaka and Penang for pharmaceuticals
and orthopaedic devices respectively and a network of nine distribution warehouses
throughout Malaysia and Singapore. The Groups business operations are organised into
three main reporting segments.
Reporting Segment
Business Operations
Business Units
Manufacturing and
Marketing
XEPA-SOUL PATTINSON
Wholesale and
Distribution
Corporate
APEX RETAIL
STRAITS APEX
11
In 2015, the business structure of the Group was reorganised functionally, where priority is accorded to job skills
and function in the execution of the Groups business plans. This restructuring is necessary to build a new platform
where each employees ability and skills are prioritised; where functions prevail over structures. This allows the
Group to develop greater synergies through greater knowledge sharing, product pipeline optimisation, elimination of
duplication and foremost, a cohesive development of Group Brands in all markets.
The Groups strategy is always to innovate, develop and manufacture an integrated spectrum of cost-effective Group
Brand products; comprising pharmaceuticals, diagnostics, consumer healthcare products and medical devices, for
its customers. In 2015, the portfolio of Group Brands has been further enhanced with the launch of SALICO, a range
of medicated skin care products. The extensive and seamless distribution channels, marketing and sales expertise
and strong customer relationships built over the years have been further enhanced and will remain the backbone of
the Groups success.
The global economy is fuelled by new trade agreements, new markets and new technologies that have influenced the
way the Group views its expansion plans. Increased resources have been allocated to the development of international
markets with a specialised team committed to the opening of new markets, while capabilities to increase market
penetration in current ones are being strengthened. Backed now by an integrated offering of Group Brand products,
the resources are in place for steady long-term growth of the international business.
Domestically, the Groups manufacturing and marketing teams are deepening their synergy through collaboration in
new product identification, development, sales and marketing. The Groups physical distribution backbone continues
to be strengthened, as additional warehousing space at key depots were secured to cater to growing volumes. These
strategies and initiatives place the Group in good stead to weather current economic uncertainties, and position it to
seize new opportunities for sustained growth.
600
500
RM million
400
300
Q1
200
Q2
Q3
100
Q4
0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Financial Year
12
Q1
Q2
Q3
Q4
600
500 600
300 400
Q1
(Contd)
RM million
RM million
400 500
200 300
Q2
Q3
100 200
0 100
Profit Before Tax
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Q4
30 40
25 35
RM million
RM million
40 50
35 45
Q1
20 30
15 25
Q2
10 20
5 15
Q3
0 10
52000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
0
Q4
Financial Year
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Q1
Q1
Q2
Financial Year
Q3
Q2
Q3
Q4
Q4
Group Attributable Net Profit (also known as profit after tax and non-controlling interest) amounted to RM 34.2
million, 1% better than the RM 33.9 million achieved in 2014. The following chart illustrates the Group Attributable
Net Profit with all non-recurring contributions and the results contributions from Associated Companies eliminated
402000:
since Year
35
25
20
RM million
RM million
30
15
10
5
0
40
35
30
25
20
15
10
52000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
0
Financial Year
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Financial Year
13
Financial Position
At 31st December 2015, the Groups shareholders funds
rose from RM 259.9 million recorded at the end of 2014
to RM 288.3 million and net assets per share increased
from RM 2.22 to RM 2.46. The Groups total liquid funds
rose by RM 13.3 million to RM 69.4 million in 2015.
XEPA-SOUL PATTINSON
Manufacturing
Marketing
14
15
Consumer Healthcare
Physical Distribution
Physical Distribution Division handles the warehousing
and distribution of the Groups in-house brands
and wholesale products and provides cost-effective
distribution services for external third party principals
intending to outsource their logistics operations. The
Physical Distribution Division registered steady growth
of 8.8%, with key contributions from external principals,
Rigel and Hyphen. Key products include Sterimar,
Hydrocortisone Tablet and Cuplaton Capsule. Prudent
inventory management has enabled the Division to
optimise its inventory, with the ultimate objective of
reducing inventory holding cost and improving cash
flow.
Operations
Operations Division is the bedrock upon which the other
Divisions build their sales and market share through
a robust warehousing structure and comprehensive
delivery network supported by a fully integrated SAPERP system. The Division currently handles more
than 5,000 items supported by competent personnel
enabling effective inventory and logistics management
and warehouse administration. All distribution
warehouses throughout Malaysia are ISO 9001:2008
certified and comply with Good Distribution Practice
[GDP] and Good Distribution Practice for Medical
Devices [GDPMD].
16
Brand Management
STRAITS APEX
APEX RETAIL
The Melaka retail outlet was first opened by the Groups
Founder, Mr Kee Tah Peng in 1962, and has remained
open for business at the exact same location, Jalan
Munshi Abdullah. Despite a depressed retail market,
the retail pharmacy outlets in Johor Bahru City Square
mall and Komtar Johor Bahru City Centre posted good
revenue growth in 2015, growing 11% over 2014. Apex
Retail will always remain an important heritage of Apex
Healthcare Group as it is the birthplace and origin of
the business. Its continued service to the community
is a valuable reminder to employees of the roots and
traditions of Apex Healthcare Group.
APEX CORPORATE
Group Properties
All Group properties located within Malaysia (excluding
the operating premises of XEPA and APM) which were
formerly owned by Apex Pharmacy Corporate Sdn
Bhd [APC] have been transferred to Apex Retail Sdn
Bhd [ARSB] in order to streamline operations for a
leaner and more efficient group structure. In 2015, the
disposal of two leasehold shop lots at Pusat Bandar
Damansara, driven by redevelopment in that area, to
Impian Ekspresi Sdn Bhd was completed with a gain
on disposal before tax of RM 2.8 million. The divested
properties were surplus to Group requirements and as
property leasing is not a core business of the Group,
disposal will be made as and when such properties
attract good offers.
FORWARD-LOOKING STATEMENTS
Entering 2016, the signs of significant macroeconomic
recovery remain uncertain. The global economic outlook
remains weak with persistent uncertainties in the
direction of the Malaysian economy, foreign currency
volatility and the weakened Malaysian Ringgit. The
Malaysian government has recalibrated its Budget
2016 and expects the economy to grow at a slower pace
of between 4% to 4.5% in 2016, down from its earlier
forecast of 4% to 5%.
Nevertheless, the Group is optimistic that demand for
17
18
Values
Service, Quality and
Integrity, always
From the very rst customer
in 1962, Apex has striven
to provide an efcient,
professional and responsive
touch in our dealings with
suppliers, healthcare
professionals, customers and
all whom we come across.
Service is an integral value to
Apex. We will continually rene
our processes and systems
in order to ensure stringent
certication to meet and exceed
all applicable quality standards
throughout the Group.
The quest to improve Quality
even further from already high
levels is a never-ending journey.
Integrity is an inescapable
part of our business and runs
through our value chain from
research and development,
manufacturing, warehousing,
sales and marketing till nal
delivery. We value honesty in
our dealings and there is no
compromise.
Revenue
398.60
418.50
499.24
526.86
35.78
42.35
40.62
45.62
45.84
(RM Million)
366.00
(RM Million)
2011
2012
2013
2014
2015
2011
2012
2013
2014
2015
Shareholders Funds
30.96
25.63
28.91
29.23
198.81
216.31
234.83
259.94
288.30
(RM Million)
29.88
(Sen)
2011
2012
*2013
2014
2015
2011
2012
2013
2014
2015
* The Earnings Per Share has been adjusted to account for the effect of bonus issue of 1 new ordinary share for every 4
existing shares in year 2014.
20
Directors Information
21
Directors Information
(Contd)
22
Directors Information
(Contd)
23
Directors Information
(Contd)
24
INTRODUCTION
25
Succession planning
Overseeing
the
development
and
implementation
of
a
shareholder
communications policy for the company
a general meeting.
The
Board
welcomes
shareholders
participation at the Annual General Meeting,
which is the principal forum for dialogue with
the shareholders, and is an opportunity for
the Board to respond directly to shareholders
queries and to undertake to provide sufficient
clarification on issues and concerns raised by
shareholders. Directors are always pleased to
interact with the shareholders during and after
26
27
28
majority of the voting shares, and while NonIndependent Directors enjoy a good degree
of consensus as to the best interests of the
Company, agreement is not regarded as a
foregone conclusion; and
at all meetings of the Board of Directors, the
Board elects one of its members, other than the
Chairman, to be the Chairman of the meeting,
thus avoiding any unfettered power of decisionmaking in any one individual.
29
Committee annually.
Principle 5: Uphold Integrity in Financial Reporting
30
2. Material Contracts
There were no material contracts of Apex Healthcare
Berhad and its subsidiaries involving any of its
Directors and major shareholders.
The
1. Non-Audit Fees
Preparing
ADDITIONAL INFORMATION
for
7.
4. Sanctions
31
8. Variation in Results
9.
Profit Guarantee
32
Board Responsibility
The Board has established an ongoing process for
identifying, evaluating and management of significant
risk faced by the Group and this is embedded in the
Groups risk management and internal control system.
The responsibility for reviewing the adequacy and
effectiveness of the risk management and internal
control system has been delegated by the Board to the
Audit Committee.
Implement
Action Plans
(if required)
Identify
& Evaluate
Adequacy and
Effectiveness
of Internal
Controls
Rating of
Risks
33
Management Styles
The Board relies on the experience of the Chief
Executive Officer (CEO), Chief Operating
Officer (COO), Senior Vice President
(SVP) and Financial Controller (FC) and
the respective business units management
teams to run and manage the operations and
businesses of the Group in an effective and
efficient manner.
Quality Control
Strong emphasis is placed on ensuring the
manufacturing process of its pharmaceutical
plant adheres strictly to health, safety and
environmental regulations as required by the
various authorities. The Board has ensured that
safety and health regulations, environmental
controls and all other legislations in connection
with the industry the Group operates in have
been complied with during the financial year
under review.
Succession Planning
Succession planning for key management staff
of the Group is in place and will be reviewed
periodically. This is to ensure that business
operations and performance will not be adversely
affected by the departure of any key personnel.
34
Conclusion
The Board is of the view that the risks faced by the Group
are within tolerable levels in the context of the business
environment the Group operates in and the system of risk
management and internal control that existed throughout
the year is sound and adequate to safeguard the interest of
the Group and to facilitate the evolution of its businesses.
During the year under review, nothing has come to the
attention of the Board which would result in any material
losses, contingencies or uncertainties that would
require a separate disclosure in this Annual Report.
Notwithstanding this, the Board will continue to ensure
that the Groups system of risk management and internal
control continuously evolve to keep up with its dynamic
business environment.
The Groups system of risk management and internal
control applies principally to the Group and its subsidiaries
but do not apply to associated company where the Group
does not have full management control and/or majority
Board representation. Nonetheless, the Groups interests
are served through representation on the Board of
Directors of the associated company as well as through
the review of management accounts received.
The Board has granted its approval on 25th February
2016 that this Statement on Risk Management and
Internal Control be included in the Companys Annual
Report 2015.
35
The Audit Committee of Apex Healthcare Berhad is pleased to present the following report for the financial year
ended 31st December 2015.
17th
Mar
19th
May
18th
Aug
23rd
Nov
Total
Director
Position
5/5
Senior Independent
Non-Executive Director
5/5
N/A
4/4
N/A
N/A
N/A
N/A
1/1
3/3
3/3
3/3
3/3
3/3
Total Attendance
N/A: Not Applicable
2.
36
3.1.5
37
their independence.
4.4
4.5
4.6
4.7
4.8
4.9
4.3
38
6.
39
40
Position
25th Feb
Total
N/A
N/A
Non-Independent Non-Executive
Director
1/1
1/1
1/1
Total Attendance
3/3
Terms of
Committee
Reference
of
Remuneration
1. Constitution
2.
Membership
4.
41
Executive
Director
Below RM 100,000
RM 100,001 to RM 150,000
RM 250,001 to RM 300,000
RM 2,150,001 to RM 2,300,000
Remuneration Band
Analysis of
Remuneration
Fees
Salaries & other
emoluments
Bonus
Non-monetary
benefits
42
NonExecutive Executive
Director Directors
(RM)
(RM)
Total
(RM)
63,000
492,714
555,714
737,768
251,106
988,874
1,289,334
1,289,334
131,018
131,018
63,823
139,225
203,048
2,284,943
883,045
3,167,988
Position
25th Feb
19th Aug
Total
2/2
2/2
2/2
N/A
N/A
N/A
3/3
3/3
Total Attendance
N/A: Not Applicable
2.
Membership
2.1 The NC shall be appointed by the Board from
amongst the directors of the Company and
shall comprise exclusively of non-executive
directors, the majority of whom shall be
independent. A quorum shall be any 2
members.
2.2 The members of the NC shall elect a Chairman
from among their members.
2.3 The Company Secretary shall be the Secretary
of the NC.
3.
Principles
3.1 The ultimate decision on the appointment of
directors to the Board is the responsibility of
the Board of Directors after due consideration
of the recommendations of the NC.
3.2 The Board embraces diversity amongst
its members and has ensured a good
representation of the relevant skills and
experience for the discharge of its duties. Its
policy towards boardroom diversity is above
all, to be non-discriminatory with regards to
gender, race or religion, and only considering
relevant qualifications, ability and commitment
when proposing candidates for shareholders
approval.
3.3 The Board desires that each of its directors,
Chief Executive Officer and Chief Financial
Officer / Financial Controller be of appropriate
43
character,
experience,
integrity
and
competence so as to carry out their duties in
the best interest of the Company. In addition,
each of the non-executive directors must
be able to devote time to discharge their
responsibilities in their respective roles and
Board Committees.
3.4 The NC shall take into cognizance in its
deliberations the Listing Requirements of
Bursa Malaysia Berhad and the principles of
the Malaysia Code on Corporate Governance
2012, and any other pertinent regulations and
laws, as well as revisions which may come into
force thereafter.
4.
The NC shall:
4.1 Assess and recommend to the Board,
candidates for all directorships to be filled
by the shareholders or the Board, taking into
consideration candidates
skills,
knowledge,
expertise
and
experience;
professionalism;
integrity; and
in the case of candidates for independent
directors, ability to discharge the
responsibilities and functions expected of
Independent Non-Executive Directors.
4.2 Seek, evaluate and recommend candidates
for directorship as and when required. The
NC should seek recommendations and
referrals from shareholders, directors,
senior management and external sources
where practicable in identifying appropriate
candidates. Evaluation of candidates include
the review of resumes, reference checks and
interviews based on criteria established in
para 2.20A of the Listing Requirements. The
NC will then recommend chosen candidates to
the Board for consideration.
4.3 Assess annually the effectiveness of the Board
as a whole, the Committees of the Board,
individual Directors including Independent
Non-Executive Directors, as well as the Chief
Executive Officer, and the Company Secretaries
through a process to be implemented by
44
of the Board, Directors and Board Committees for the financial year 2014. This is carried out through a selfassessment document that is completed by each director and reviewed by the Nomination Committee. Assessment
criteria include the following:
Board composition
Board process
Performance of Board Committees
Information provided to the Board
Role of the Board in strategy and planning
Risk management framework
Accountability and standard of conduct of Directors
Reviewed and assessed the training record and needs of each director, and proposed training courses to meet any
shortfall or gaps in knowledge.
Determined the Directors to stand for re-election and re-appointment at the 2015 Annual General Meeting on 20th
May 2015.
Reviewed the character, experience, integrity and competence of all the directors, the Chief Executive Officer and
Chief Financial Officer / Financial Controller and assessed their performance in 2014, paying attention to whether
each of the non-executive directors have made available sufficient time to discharge their responsibilities and
duties.
Attendance Record at Board Meetings in the financial year 2015:Attendance
25th
Feb
20th
May
19th
Aug
26th
Nov
Total
Director
Position
4/4
Non-Independent Non-Executive
Director
4/4
Non-Independent Non-Executive
Director
4/4
4/4
4/4
4/4
4/4
N/A
3/3
7/7
8/8
8/8
8/8
Total Attendance
N/A: Not Applicable
The Secretary was present at all Board Meetings held in the financial year 2015.
45
Directors Training
The Directors of the Company had attended the following training programmes/seminars during the financial year
ended 31st December 2015:Name
Date
Subject
Effective Communication
Programming (NLP)
Effective Communication
Programming (NLP)
Effective Communication
Programming (NLP)
Effective Communication
Programming (NLP)
Jackson Chevalier
Yap-Kit-Siong
Effective Communication
Programming (NLP)
Effective Communication
Programming (NLP)
Effective Communication
Programming (NLP)
Effective Communication
Programming (NLP)
46
through
through
through
through
through
through
through
through
Neuro-Linguistic
Neuro-Linguistic
Neuro-Linguistic
Neuro-Linguistic
Neuro-Linguistic
Neuro-Linguistic
Neuro-Linguistic
Neuro-Linguistic
Sustainability Statement
People
AHB upholds fair business practices toward all
employees in every region where we conduct our
business. We ensure that we do not take advantage of our
people. A remuneration scheme based on performance
is established to ensure that all employees are rewarded
fairly, based on performance and competence. We aim to
treat every employee with respect. We are committed to
maintaining a respectful workplace free from harassment
and discrimination of any form. Taking into account
personal and cultural differences, we aim to respect
and value our peoples diversities and support them to
realise their potential. We are concerned with the holistic
wellbeing of our employees and we place importance
on a healthy work-life balance, with due regard for our
employees working hours and weekends.
We ensure a safe and healthy work environment is
maintained at all times for our employees taking into
account the occupational health and safety requirements
of our offices, manufacturing facilities and warehouses.
Safety and Health Committees of our manufacturing
facilities and warehouses are established in accordance
with the relevant legislations pertaining to occupational
safety and health. Training programs on firefighting,
workplace safety and handling of chemicals are
conducted for our production staff in our manufacturing
plant on an annual basis. To ensure orderly and safe
evacuation during fire or emergency situations, an
Emergency Evacuation Plan is instituted covering the
various elements of reporting, evacuation procedures
and emergency escape route assignments and roll call
for accountability of all employees after an emergency
evacuation.
Profit
While we continue to focus on delivering robust
profitability, we do not only place emphasis on our
internal profits but on the social benefits at large.
We price our deliverables fairly thus ensuring a real
economic benefit is enjoyed by our customers. Regular
reviews are conducted to ensure our profit margins are
competitive and fair; and not exploitative. Accurate and
timely information is disseminated to our customers
47
Sustainability Statement
(Contd)
Planet
AHB believes in sustainable environmental practices.
Our environmental policy is to minimise adverse
environmental impact as far as possible while ensuring
that the relevant regulations and standards are met.
We adopt environmentally-responsible and efficient
technologies and systems to reduce energy emission
which include the use of energy-saving LED lights in
our main warehouse. A temperature mapping program
is being conducted for each zone in the warehouse to
identify the optimum temperature settings and timings
of the air-conditioning system. This initiative provides
the necessary information for us to minimise energy
consumption without compromising the quality of our
products. At our manufacturing plant, we have initiated
a project to replace the air-cooled chiller with a new
water-cooled chiller, which consumes less energy
while providing optimal cooling for the production
plant. Our manufacturing operations have internal
targets for product packaging, production scrap and
reject reduction, with monitoring systems in place to
prevent and minimise waste. Such production waste is
responsibly disposed of according to strict procedures
which satisfy all the stringent regulations applicable
to our industry. Likewise in our supply chain business,
recyclable wastes are segregated and usage of
recyclable ice boxes for cold chain items is advocated.
We strive at all times to minimise product expiry, stock
obsolescence and waste through good management of
inventory.
AHB endeavours to reduce its ecological footprint by
carefully managing its consumption of energy. Our
manufacturing and warehouse facilities review and set
48
Privacy Policy
Please read this Privacy Policy to understand how we
use the personal data that we may collect from you.
By providing your personal data to us or using our
website, you are consenting to the terms and conditions
of this Privacy Policy and the collection, use, access,
transfer, storage and processing of your personal data
as described in this Privacy Policy. If you do not wish to
give us this consent, kindly notify us in writing and do not
use any of the electronic forms on our website. Failure to
consent to the terms and conditions of this Privacy Policy
will result in us being unable to process your application,
request and/or provide you with the relevant product(s)
or service(s).
communicate with us
register interest and/or submit your
application for employment with Apex
Healthcare
register interest and/or request for
information of our product(s) and/or
service(s)
register or subscribe for any of our
product(s) and/or service(s)
respond to any marketing materials we
send out or distribute
commence a business relationship with
us
visit any of our premises
visit or browse our websites
lodge a complaint with us
provide feedback to us
participate in any of our surveys
enter into or participate in any event,
workshop or programme run/organised
by us
subscribe to Apex Healthcare Berhad
shares in the Bursa Malaysia Securities
Berhad Main Market
49
Privacy Policy
(Contd)
50
3.
5.
Privacy Policy
(Contd)
8. Contact Information
If you have any queries, please contact us at +60356376888 from Monday to Friday (8.15am 5pm,
excluding public holidays) or e-mail us at privacy@
apexpharmacy.com.my.
51
Financial
Statements
> 54
> 63
> 58
> 65
> 58
> 67
> 59
> 70
> 61
> 141
Directors' Report
Statement by Directors
Statutory Declaration
Supplementary Information
Directors Report
The directors have pleasure in presenting their report together with the audited financial statements of the Group and
of the Company for the financial year ended 31 December 2015.
Principal activities
The principal activities of the Company are investment holding and the provision of management services.
The principal activities of the subsidiaries are set out in Note 17 to the financial statements.
There have been no significant changes in the nature of these principal activities during the financial year.
Results
Group
RM
Company
RM
34,263,414
27,179,232
34,236,487
27,179,232
26,927
34,263,414
27,179,232
There were no material transfers to or from reserves or provisions during the financial year other than as disclosed
in the financial statements.
In the opinion of the directors, the results of the operations of the Group and of the Company during the financial year
were not substantially affected by any item, transaction or event of a material and unusual nature.
Dividends
The amounts of dividends paid by the Company since 31 December 2014 were as follows:
RM
In respect of the financial year ended 31 December 2014 as reported in the directors report of that
year:
Final single-tier dividend of 6.0 sen per share on 117,146,093 ordinary shares, declared on 20 May
2015 and paid on 17 June 2015
7,028,766
5,857,305
12,886,071
54
Directors Report
(Contd)
Dividends (Cont'd)
At the forthcoming Annual General Meeting, a final single-tier dividend of 6.0 sen per share in respect of the financial
year ended 31 December 2015, on 117,146,093 ordinary shares, amounting to a dividend payable of RM7,028,766 will
be proposed for shareholders approval. The financial statements for the current financial year do not reflect this
proposed dividend. Such dividend, if approved by the shareholders, will be accounted for in equity as an appropriation
of retained earnings in the financial year ending 31 December 2016.
Directors
The names of the directors of the Company in office since the date of the last report and at the date of this report are:
Dr. Kee Kirk Chin
Kee Tah Peng @ Hee Teck Peng
Robert Dobson Millner
Jackson Chevalier Yap-Kit-Siong
Leong Khai Cheong
Heng Su-Ling Mae
Tong Yew Sum
Datuk Noharuddin Bin Nordin @ Harun (appointed on 20 May 2015)
Tong Yew Sum shall vacate his office pursuant to Section 129(2) of the Companies Act, 1965 (the Act) and has offered
himself for re-appointment as director under Section 129(6) of the Act to hold office until the next Annual General
Meeting of the Company. Kee Tah Peng @ Hee Teck Peng who shall also vacate his office pursuant to Section 129(2) of
the Act does not wish to offer himself to re-appointment at the forthcoming Annual General Meeting of the Company.
Therefore, he shall vacate office at the conclusion of the next Annual General Meeting.
In accordance with Article 89 of the Companys Articles of Association, Robert Dobson Millner and Leong Khai Cheong
retire at the forthcoming Annual General Meeting and being eligible, offer themselves for re-election.
In accordance with Article 83 of the Companys Articles of Association, Datuk Noharuddin Bin Nordin @ Harun retires
at the forthcoming Annual General Meeting and being eligible, offers himself for re-election.
Directors benefits
Neither at the end of the financial year, nor at any time during that year, did there subsist any arrangement to which
the Company was a party, whereby the directors might acquire benefits by means of the acquisition of shares in or
debentures of the Company or any other body corporate.
Since the end of the previous financial year, no director has received or become entitled to receive a benefit (other than
benefits included in the aggregate amount of emoluments received or due and receivable by the directors or the fixed
salary of a full-time employee of the Company as shown in Note 10 to the financial statements) by reason of a contract
made by the Company or a related corporation with any director or with a firm of which the director is a member, or
with a company in which the director has a substantial financial interest.
55
Directors Report
(Contd)
Directors interests
According to the register of directors shareholdings, the interests of directors in office at the end of the financial year
in shares in the Company and its related corporations during the financial year were as follows:
Number of ordinary shares of RM1 each
As at
1.1.2015
Acquired
Disposed
As at
31.12.2015
937,500
12,500
950,000
320,312
320,312
23,437
23,437
23,437
23,437
148,437
148,437
48,219,855
48,219,855
48,266,730
48,266,730
Name of directors
Direct interest:
Indirect interest:
Dr. Kee Kirk Chin and Kee Tah Peng @ Hee Teck Peng, by virtue of their interests in shares in the Company, are also
deemed interested in shares of all the subsidiaries of the Company to the extent the Company has an interest.
Other than as disclosed above, none of the other directors in office at the end of the financial year had any interest in
shares in the Company or its related corporations during the financial year.
56
Directors Report
(Contd)
Subsequent event
Details of subsequent event are disclosed in Note 38 to the financial statements.
Auditors
The auditors, Ernst & Young, have expressed their willingness to continue in office.
Signed on behalf of the Board in accordance with a resolution of the directors dated 16 March 2016.
57
Statement by Directors
We, Dr. Kee Kirk Chin and Leong Khai Cheong, being two of the directors of Apex Healthcare Berhad, do hereby state
that, in the opinion of the directors, the accompanying financial statements set out on pages 61 to 140 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 at 31 December 2015 and of their financial performance and cash flows for the year
then ended.
Further to the statement by directors, pursuant to Section 169(15) of the Companies Act, 1965, as above, the information
set out in Note 39 on page 141 to the financial statements have been prepared in accordance with the Guidance on
Special Matter No.1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant
to Bursa Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants and
the directive of Bursa Malaysia Securities Berhad.
Signed on behalf of the Board in accordance with a resolution of the directors dated 16 March 2016.
Statutory Declaration
I, Chiew Woon Wui, being the officer primarily responsible for the financial management of Apex Healthcare Berhad,
do solemnly and sincerely declare that the accompanying financial statements set out on pages 61 to 141 are in my
opinion correct, and I make this solemn declaration conscientiously believing the same to be true and by virtue of the
provisions of the Statutory Declarations Act, 1960.
Before me,
58
Auditors responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit
in accordance with approved standards on auditing in Malaysia. Those standards require that we comply with ethical
requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements
are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial
statements. The procedures selected depend on our judgement, including the assessment of risks of material
misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, we
consider internal control relevant to the Companys preparation of financial statements that give a true and fair view
in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing
an opinion on the effectiveness of the entitys internal control. An audit also includes evaluating the appropriateness
of the accounting policies used and the reasonableness of accounting estimates made by the directors, as well as
evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit
opinion.
Opinion
In our opinion, the financial statements give a true and fair view of the financial position of the Group and of the Company
as at 31 December 2015 and of their financial performance and cash flows for the year then ended in accordance with
Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the
Companies Act, 1965 in Malaysia.
59
other matters
This report is made solely to the members of the Company, as a body, in accordance with Section 174 of the Companies
Act, 1965 in Malaysia and for no other purpose. We do not assume responsibility to any other person for the content
of this report.
60
Group
Note
Company
2015
RM
2014
RM
2015
RM
2014
RM
28,559,277
36,442,368
Revenue
526,859,315
499,237,418
(407,125,742)
(383,122,647)
(1,778,164)
(2,057,720)
119,733,573
116,114,771
26,781,113
34,384,648
7,781,178
4,264,970
2,752,892
1,942,674
Administrative expenses
(19,799,353)
(20,037,606)
(1,560,791)
(1,948,322)
(58,873,396)
(55,041,098)
(5,272)
(22,753)
Other expenses
(1,181,137)
(586,560)
(143,014)
(142,227)
Operating profit
47,660,865
44,714,477
27,824,928
34,214,020
(17,477)
(8,034)
82,918
(1,800,730)
834,730
Gross profit
Other income
Finance costs
45,842,658
45,624,091
27,824,928
34,214,020
11
(11,579,244)
(11,646,914)
(645,696)
(326,321)
34,263,414
33,977,177
27,179,232
33,887,699
7,016,789
963,356
7,016,789
963,356
41,280,203
34,940,533
27,179,232
33,887,699
61
Group
Note
Company
2015
RM
2014
RM
2015
RM
2014
RM
34,236,487
33,864,277
27,179,232
33,887,699
26,927
112,900
34,263,414
33,977,177
27,179,232
33,887,699
41,253,276
34,827,633
27,179,232
33,887,699
26,927
112,900
41,280,203
34,940,533
27,179,232
33,887,699
29.23
28.91
12
The accompanying accounting policies and explanatory information form an integral part of the financial statements.
62
Group
Note
Company
2015
RM
2014
RM
2015
RM
2014
RM
Assets
Non-current assets
Property, plant and equipment
14
100,151,026
99,554,525
446,093
516,549
Investment properties
15
6,412,532
5,854,699
Intangible assets
16
1,736,642
1,222,173
Investment in subsidiaries
17
56,377,940
56,377,940
Investment in an associate
18
5,315,448
7,116,178
7,406,622
7,245,139
19
124,000
168,000
20
10,000,000
10,000,000
20,185,000
18,996,750
21
5,520,000
5,520,000
5,520,000
5,520,000
129,259,648
129,435,575
89,935,655
88,656,378
Current assets
Inventories
22
60,865,538
51,697,590
20
129,919,813
113,809,105
61,999,947
48,919,973
Prepayments
494,090
375,144
17,449
40,296
Tax recoverable
269,249
408,657
265,825
408,657
23
52,351
173,896
24
45,035,740
26,770,562
12,535,740
11,795,562
24
24,317,248
29,285,249
1,564,721
584,260
260,954,029
222,520,203
76,383,682
61,748,748
2,479,283
260,954,029
224,999,486
76,383,682
61,748,748
390,213,677
354,435,061
166,319,337
150,405,126
Total assets
25
63
Group
Note
Company
2015
RM
2014
RM
2015
RM
2014
RM
26
95,081,743
86,505,256
3,104,557
1,483,507
27
12,600
11,130
1,688,236
2,236,343
96,782,579
88,752,729
3,104,557
1,483,507
164,171,450
136,246,757
73,279,125
60,265,241
27
24,150
32,463
19
4,721,942
5,358,995
4,746,092
5,391,458
Total liabilities
101,528,671
94,144,187
3,104,557
1,483,507
Net assets
288,685,006
260,290,874
163,214,780
148,921,619
28
117,146,093
117,146,093
117,146,093
117,146,093
29
11,197,967
4,181,178
Retained earnings
30
159,958,374
138,607,958
46,068,687
31,775,526
288,302,434
259,935,229
163,214,780
148,921,619
382,572
355,645
Total equity
288,685,006
260,290,874
163,214,780
148,921,619
390,213,677
354,435,061
166,319,337
150,405,126
Non-controlling interest
The accompanying accounting policies and explanatory information form an integral part of the financial statements.
64
Note
Equity,
total
Equity
attributable
to owners of
the parent,
total
RM
RM
Non-distributable
Distributable
Foreign
currency
Share translation
Retained
capital
reserve
earnings
(Note 28)
(Note 29)
(Note 30)
RM
RM
RM
Noncontrolling
interest
RM
Group
At 1 January 2015
260,290,874
259,935,229 117,146,093
4,181,178
138,607,958
355,645
34,263,414
34,236,487
34,236,487
26,927
Other comprehensive
income
7,016,789
7,016,789
7,016,789
Total comprehensive
income
41,280,203
41,253,276
7,016,789
34,236,487
26,927
(12,886,071)
(12,886,071)
(12,886,071)
At 31 December 2015
288,685,006
288,302,434 117,146,093
11,197,967
159,958,374
382,572
At 1 January 2014
235,073,463
234,830,718
93,716,875
3,217,822
137,896,021
242,745
33,977,177
33,864,277
33,864,277
112,900
963,356
963,356
963,356
34,940,533
34,827,633
963,356
33,864,277
112,900
23,429,218
(23,429,218)
(9,723,122)
(9,723,122)
(9,723,122)
(9,723,122)
(9,723,122)
23,429,218
(33,152,340)
117,146,093
4,181,178
Transaction with
owners
Dividends on
ordinary shares,
representing total
transactions with
owners
13
13
260,290,874
259,935,229
138,607,958
65
355,645
Note
Share
capital
(Note 28)
RM
Distributable
Retained
earnings
(Note 30)
RM
117,146,093
31,775,526
148,921,619
27,179,232
27,179,232
(12,886,071)
(12,886,071)
117,146,093
46,068,687
163,214,780
93,716,875
31,040,167
124,757,042
33,887,699
33,887,699
Equity,
total
RM
Company
At 1 January 2015
Profit, net of tax, representing total comprehensive
income
Transaction with owners
Dividends on ordinary shares, representing total
transactions with owners
13
At 31 December 2015
At 1 January 2014
Profit, net of tax, representing total comprehensive
income
Transaction with owners
Issuance of shares in respect of Bonus Issue
28
23,429,218
(23,429,218)
13
(9,723,122)
(9,723,122)
23,429,218
(33,152,340)
(9,723,122)
117,146,093
31,775,526
148,921,619
The accompanying accounting policies and explanatory information form an integral part of the financial statements.
66
Group
Note
Company
2015
RM
2014
RM
2015
RM
2014
RM
45,842,658
45,624,091
27,824,928
34,214,020
Operating activities
Profit before tax
Adjustments for:
Property, plant and equipment
- depreciation
8,761,497
8,797,252
112,971
83,555
- written off
967
2,024
58,954
83,755
- amortisation
140,250
59,420
- written off
(225,981)
(306,227)
1,040
(2,784,587)
(406,594)
(464,710)
Interest expense
17,477
8,034
(466,957)
(647,648)
- advances to an associate
(281,712)
(188,630)
(281,712)
(25,274)
(894,489)
(528,728)
(349,848)
(256,684)
(212,517)
(212,521)
(212,517)
(212,521)
(161,483)
(269,139)
Dividend income
(26,020,000)
(34,140,000)
121,545
(149,871)
(82,918)
4,701,404
7,074,997
(27,379,546)
(35,931,376)
67
Group
Note
Company
2015
RM
2014
RM
2015
RM
2014
RM
4,701,404
7,074,997
(27,379,546)
(35,931,376)
1,800,730
(834,730)
805,513
1,235,253
17,465
(818,540)
(1,118,702)
198,928
197,583
458,589
314,638
(172,820)
(852,615)
(552,110)
(163,106)
(1,280,375)
(66,698)
6,439,159
5,853,318
(28,659,921)
(35,998,074)
52,281,817
51,477,409
(834,993)
(1,784,054)
(9,652,645)
(3,614,884)
(15,433,390)
(12,857,052)
61,994
(24,211)
(10,889,513)
(3,697,368)
(237,224)
(5,000,000)
(237,224)
(15,176,630)
8,580,646
16,294,066
(279,209)
(175,036)
(16,742,613)
(5,177,870)
(11,343,952)
(19,073,245)
35,539,204
46,299,539
(12,178,945)
(20,857,299)
(12,584,063)
(11,294,450)
(502,864)
(302,399)
26,020,000
34,140,000
22,955,141
35,005,089
13,338,191
12,980,302
Total adjustments
Operating cash flows before changes in
working capital
Changes in working capital
Inventories
Trade and other receivables
Subsidiaries
Associate
Trade and other payables
Total changes in working capital
Cash flows generated from/(used in)
operations
Taxes paid
Dividends received
68
Group
Company
2015
RM
2014
RM
2015
RM
2014
RM
(1,988,000)
(1,988,000)
(5,480,060)
(5,846,438)
(42,515)
(293,714)
(648,908)
(90,544)
339,808
357,023
700
5,263,870
4,334,800
4,334,800
1,388,718
929,879
1,311,034
1,142,127
(740,178)
(6,142,241)
(740,178)
(6,142,241)
123,250
(8,445,521)
528,341
(2,946,328)
(12,886,071)
(9,723,122)
(12,886,071)
(9,723,122)
(17,477)
(8,034)
(6,843)
(5,188)
(12,910,391)
(9,736,344)
(12,886,071)
(9,723,122)
10,168,000
16,823,224
980,461
310,852
2,388,999
286,238
44,260,249
27,150,787
584,260
273,408
56,817,248
44,260,249
1,564,721
584,260
Note
Investing activities
Investment in an associate
Purchase of property, plant and equipment
Purchase of intangible assets
14(a)
16
13
Interest paid
Repayment of hire purchase obligation
24
The accompanying accounting policies and explanatory information form an integral part of the financial statements.
69
1. Corporate information
Apex Healthcare Berhad (the Company) is a public limited liability company incorporated and domiciled in
Malaysia, and is listed on the Main Market of Bursa Malaysia Securities Berhad. The registered office of the
Company is located at 1-5, Jalan TTC 1, Cheng Industrial Estate, 75250 Melaka.
The principal activities of the Company are investment holding and provision of management services. The
principal activities of the subsidiaries are set out in Note 17 to the financial statements.
There have been no significant changes in the nature of these principal activities during the financial year.
Related companies refer to companies within the Apex Healthcare Berhad group.
The financial statements for the financial year ended 31 December 2015 were authorised for issue by the Board
of Directors in accordance with a resolution of the directors on 16 March 2016.
The financial statements of the Group and of the Company have been prepared in accordance with Malaysian
Financial Reporting Standards (MFRS) as issued by Malaysian Accounting Standards Board, International
Financial Reporting Standards as issued by the International Accounting Standards Board, and the
requirements of the Companies Act, 1965 in Malaysia.
The financial statements have been prepared on a historical cost basis unless otherwise indicated in the
accounting policies below.
The financial statements are presented in Ringgit Malaysia (RM) except when otherwise indicated.
The accounting policies adopted are consistent with those of the previous financial year except as follows:
On 1 January 2015, the Group and the Company adopted the following new and amended MFRSs and IC
Interpretation mandatory for annual financial periods beginning on or after 1 January 2015.
Effective for annual
periods beginning
on or after
Description
Amendments to MFRS 119: Defined Benefit Plans: Employee Contributions
1 July 2014
1 July 2014
1 July 2014
70
The nature and impact of the new and amended MFRSs and IC Interpretation are described below:
The amendments to MFRS 119 clarify how an entity should account for contributions made by employees or
third parties to defined benefit plans, based on whether those contributions are dependent on the number
of years of service provided by the employee. For contributions that are independent of the number of years
of service, an entity is permitted to recognise such contributions as a reduction in the service cost in the
period in which the service is rendered, instead of allocating the contributions to the periods of service. For
contributions that are dependent on the number of years of service, the entity is required to attribute them
to the employees periods of service.
These amendments have been applied retrospectively. Since the Group and the Company do not have defined
benefit plans, this amendment would not apply.
The Annual Improvements to MFRSs 2010-2012 Cycle include a number of amendments to various MFRSs,
which are summarised below.
(a) MFRS 2 Share-based Payment
This improvement clarifies various issues relating to the definitions of performance and service
conditions which are vesting conditions, including:
-
A performance target may relate to the operations or activities of an entity, or those of another
entity in the same group;
If the counterparty, regardless of the reason, ceases to provide service during the vesting period,
the service condition is not satisfied.
This improvement is effective for share-based payment transactions for which the grant date is on or
after 1 July 2014. The Group and the Company did not grant any awards during the second half of 2014.
Thus, this amendment did not impact the Group and the Company.
The amendments to MFRS 3 clarifies that contingent consideration classified as liabilities (or assets)
should be measured at fair value through profit or loss at each reporting date, irrespective of whether
the contingent consideration is a financial instrument within the scope of MFRS 9 or MFRS 139. The
amendments are effective for business combinations for which the acquisition date is on or after 1 July
2014. This is consistent with the Groups and the Companys current accounting policy and thus, this
amendment did not impact the Group and the Company.
71
an entity must disclose the judgements made by management in applying the aggregation criteria
in MFRS 8, including a brief description of operating segments that have been aggregated and the
economic characteristics used to assess whether the segments are similar; and
the reconciliation of segment assets to total assets is only required to be disclosed if the
reconciliation is reported to the chief operating decision maker.
The Group and the Company have not applied the aggregation criteria as mentioned above. The Group
and the Company continue to present the reconciliation of segment assets to total assets.
(d) MFRS 116 Property, Plant and Equipment and MFRS 138 Intangible Assets
The amendments remove inconsistencies in the accounting for accumulated depreciation or amortisation
when an item of property, plant and equipment or an intangible asset is revalued. The amendments
clarify that the asset may be revalued by reference to observable data by either adjusting the gross
carrying amount of the asset to market value or by determining the market value of the carrying value
and adjusting the gross carrying amount proportionately so that the resulting carrying amount equals
the market value. In addition, the accumulated depreciation or amortisation is the difference between
gross and carrying amounts of the asset. This amendment did not have any impact on the Group and
the Company.
The amendments clarify that a management entity providing key management personnel services to a
reporting entity is a related party of the reporting entity. The reporting entity should disclose as related
party transactions the amounts incurred for the service paid or payable to the management entity for
the provision of key management personnel services. This amendment is not applicable to the Group
and the Company as the Group and the Company do not receive any management services from other
entities.
The Annual Improvements to MFRSs 2011-2013 Cycle include a number of amendments to various MFRSs,
which are summarised below.
(a) MFRS 3 Business Combinations
The amendments to MFRS 3 clarify that the standard does not apply to the accounting for formation of all
types of joint arrangement in the financial statements of the joint arrangement itself. This amendment
is to be applied prospectively. The Group and the Company are not a joint arrangement and thus this
arrangement is not relevant to the Group and the Company.
72
The amendments to MFRS 13 clarify that the portfolio exception in MFRS 13 can be applied not only to
financial assets and financial liabilities, but also to other contracts within the scope of MFRS 9 (or MFRS
139 as applicable). The Group and the Company do not apply the portfolio exception.
The amendments to MFRS 140 clarify that an entity acquiring investment property must determine whether:
-
the property meets the definition of investment property in terms of MFRS 140; and
In previous financial years, the Group has applied MFRS 3 and not MFRS 140 in determining whether an
acquisition is of an asset or is a business combination. Accordingly, this amendment did not have any
impact to the Group.
The standards and interpretations that are issued but not yet effective up to the date of issuance of the
Groups and of the Companys financial statements are disclosed below. The Group and the Company intend
to adopt these standards, if applicable, when they become effective.
Description
1 January 2016
1 January 2016
1 January 2016
Deferred
1 January 2016
1 January 2016
1 January 2016
Amendments to MFRS 10, MFRS 12 and MFRS 128: Investment Entities: Applying the
Consolidation Exception
1 January 2016
1 January 2016
1 January 2018
1 January 2018
73
Amendments to MFRS 116 and MFRS 138: Clarification of Acceptable Methods of Depreciation and
Amortisation
The amendments clarify that revenue reflects a pattern of economic benefits that are generated from operating
a business (of which the asset forms part of the business) rather than the economic benefits that are consumed
through the use of an asset. As a result, a revenue-based method cannot be used to depreciate property, plant
and equipment and may only be used in very limited circumstances to amortise intangible assets.
The amendments are effective prospectively for annual periods beginning on or after 1 January 2016, with early
adoption permitted. These amendments are not expected to have any impact to the Group and the Company as
the Group and the Company have not used a revenue-based method to depreciate their non-current assets.
Amendments to MFRS 10 and MFRS 128: Sale or Contribution of Assets between an Investor and its
Associate or Joint Venture
gains and losses resulting from transactions involving assets that do not constitute a business, between
investor and its associate or joint venture are recognised in the entitys financial statements only to the
extent of unrelated investors interests in the associate or joint venture; and
gains and losses resulting from transactions involving the sale or contribution of assets to an associate
of a joint venture that constitute a business is recognised in full.
The amendments are to be applied prospectively to the sale or contribution of assets occurring in annual
periods beginning on or after a date to be determined by Malaysian Accounting Standards Board. Earlier
application is permitted. These amendments are not expected to have any impact on the Group.
The amendments will allow entities to use the equity method to account for investments in subsidiaries,
joint ventures and associate in their separate financial statements. Entities already applying MFRS and
electing to change to the equity method in its separate financial statements will have to apply this change
retrospectively. For first-time adopters of MFRS electing to use the equity method in its separate financial
statements, they will be required to apply this method from the date of transition to MFRS. The amendments
are effective for annual periods beginning on or after 1 January 2016, with early adoption permitted. These
amendments will not have any impact on the Groups and the Companys financial statements.
The amendments to MFRS 101 include narrow-focus improvements in the following five areas:
Materiality
Disaggregation and subtotals
Notes structure
Disclosure of accounting policies
Presentation of items of other comprehensive income arising from equity accounted investments
The Directors of the Company do not anticipate that the application of these amendments will have a material
impact on the Groups and the Companys financial statements.
74
Amendments to MFRS 10, MFRS 12 and MFRS 128: Investment Entities: Applying the Consolidation
Exception
The amendments clarify that the exemption from presenting consolidated financial statements applies to
a parent entity that is a subsidiary of an investment entity, when the investment entity measures all of its
subsidiaries at fair value. The amendments further clarify that only a subsidiary that is not an investment entity
itself and provides support services to the investment entity is consolidated. In addition, the amendments
also provides that if an entity that is not itself an investment entity has an interest in an associate or joint
venture that is an investment entity, the entity may, when applying the equity method, retain the fair value
measurement applied by that investment entity associate or joint venture to the investment entity associates
or joint ventures interests in subsidiaries.
The amendments are to be applied retrospectively and are effective for annual periods beginning on or after
1 January 2016, with early adoption permitted. These amendments will not have any impact on the Groups
and the Companys financial statements.
MFRS 15 establishes a new five-step models that will apply to revenue arising from contracts with customers.
MFRS 15 will supersede the current revenue recognition guidance including MFRS 118 Revenue, MFRS 111
Construction Contracts and the related interpretations when it becomes effective.
The core principle of MFRS 15 is that an entity should recognise revenue which depict the transfer of promised
goods or services to customers in an amount that reflects the consideration to which the entity expects to be
entitled in exchange for those goods or services.
Under MFRS 15, an entity recognises revenue when (or as) a performance obligation is satisfied, i.e. when
control of the goods or services underlying the particular performance obligation is transferred to the
customer.
Either a full or modified retrospective application is required for annual periods beginning on or after 1
January 2018 with early adoption permitted. The Group and the Company are currently assessing the impact
of MFRS 15 and plan to adopt the new standard on the required effective date.
In November 2014, MASB issued the final version of MFRS 9 Financial Instruments which reflects all
phases of the financial instruments project and replaces MFRS 139 Financial Instruments: Recognition
and Measurement and all previous versions of MFRS 9. The standard introduces new requirements for
classification and measurement, impairment and hedge accounting. MFRS 9 is effective for annual periods
beginning on or after 1 January 2018, with early application permitted. Retrospective application is required,
but comparative information is not compulsory. The adoption of MFRS 9 will have an effect on the classification
and measurement of the Groups and of the Companys financial assets, but no impact on the classification
and measurement of the Groups and of the Companys financial liabilities.
75
The Annual Improvements to MFRSs 2012-2014 Cycle include a number of amendments to various MFRSs,
which are summarised below. The directors of the Company do not anticipate that the application of these
amendments will have a significant impact on the Groups and the Companys financial statements.
(a) MFRS 5 Non-current Assets Held for Sale and Discontinued Operations
The amendment to MFRS 5 clarifies that changing from one disposal methods to the other should
not be considered to be a new plan of disposal, rather it is a continuation of the original plan. There is
therefore no interruption of the application of the requirements in MFRS 5.
The amendment also clarifies that changing the disposal method does not change the date of
classification. This amendment is to be applied prospectively to changes in methods of disposal that
occur in annual periods beginning on or after 1 January 2016, with earlier application permitted.
The amendment clarifies that a servicing contract that includes a fee can constitute continuing
involvement in a financial asset. An entity must assess the nature of the fee and arrangement against the
guidance for continuing involvement in MFRS 7 in order to assess whether the disclosures are required.
In addition, the amendment also clarifies that the disclosures in respect of offsetting of financial assets
and financial liabilities are not required in the condensed interim financial report.
The amendment to MFRS 119 clarifies that market depth of high quality corporate bonds is assessed
based on the currency in which the obligation is denominated, rather than the country where the
obligation is located. When there is no deep market for high quality corporate bonds in that currency,
government bond rates must be used.
MFRS 134 requires entities to disclose information in the notes to the interim financial statements if not
disclosed elsewhere in the interim financial report.
The amendment states that the required interim disclosures must either be in the interim financial
statements or incorporated by cross-reference between the interim financial statements and wherever
they are included within the greater interim financial report (e.g., in the management commentary or
risk report). The other information within the interim financial report must be available to users on the
same terms as the interim financial statements and at the same time.
The consolidated financial statements comprise the financial statements of the Company and its subsidiaries
as at the reporting date. The financial statements of the subsidiaries used in the preparation of the
consolidated financial statements are prepared for the same reporting date as the Company. Consistent
accounting policies are applied for like transactions and events in similar circumstances.
76
The Group controls an investee if and only if the Group has all the following:
(i) Power over the investee (i.e. existing rights that give it the current ability to direct the relevant activities
of the investee);
(ii) Exposure, or rights, to variable returns from its involvement with the investee; and
(iii) The ability to use its power over the investee to affect its returns.
When the Group has less than a majority of the voting rights of an investee, the Group considers the following
in assessing whether or not the Groups voting rights in an investee are sufficient to give it power over the
investee:
(i) The contractual arrangement with the other vote holders of the investee;
(ii) Rights arising from other contractual arrangements; and
(iii) The Groups voting rights and potential voting rights.
Subsidiaries are consolidated when the Group obtains control over the subsidiary and ceases when the
Group loses control of the subsidiary. All intra-group balances, income and expenses and unrealised gains
and losses resulting from intra-group transactions are eliminated in full.
Losses within a subsidiary are attributed to the non-controlling interests even if that results in a deficit
balance.
Changes in the Groups ownership interests in subsidiaries that do not result in the Group losing control over
the subsidiaries are accounted for as equity transactions. The carrying amounts of the Groups interests and
the non-controlling interests are adjusted to reflect the changes in their relative interests in the subsidiaries.
The resulting difference is recognised directly in equity and attributed to owners of the Company.
When the Group loses control of a subsidiary, a gain or loss calculated as the difference between (i) the
aggregate of the fair value of the consideration received and the fair value of any retained interest and (ii)
the previous carrying amount of the assets and liabilities of the subsidiary and any non-controlling interest,
is recognised in profit or loss. The subsidiarys cumulative gain or loss which has been recognised in other
comprehensive income and accumulated in equity are reclassified to profit or loss or where applicable,
transferred directly to retained earnings. The fair value of any investment retained in the former subsidiary
at the date control is lost is regarded as the cost on initial recognition of the investment.
Business combinations are accounted for using the acquisition method. The cost of an acquisition is
measured as the aggregate of the consideration transferred measured at acquisition date fair value and the
amount of any non-controlling interests in the acquiree. For each business combination, the Group elects
whether to measure the non-controlling interests in the acquiree at fair value or at the proportionate share
of the acquirees identifiable net assets. Acquisition-related costs are expensed as incurred and included in
administrative expenses.
77
When the Group acquires a business, it assesses the financial assets and liabilities assumed for appropriate
classification and designation in accordance with the contractual terms, economic circumstances and
pertinent conditions as at the acquisition date. This includes the separation of embedded derivatives in host
contracts by the acquiree.
Any contingent consideration to be transferred by the acquirer will be recognised at fair value at the
acquisition date. Contingent consideration classified as an asset or liability that is a financial instrument
and within the scope of MFRS139, is measured at fair value with the changes in fair value recognised in the
statement of profit or loss.
If the business combination is achieved in stages, the acquisition date fair value of the acquirers previously
held equity interest in the acquiree is remeasured to fair value at the acquisition date through profit or
loss.
Subsidiaries are consolidated using the acquisition method of accounting except for certain subsidiaries, as
disclosed in Note 17, which were acquired prior to 1 January 2002 using the merger method of accounting.
These subsidiaries continue to be accounted for using the merger method of accounting.
Under the merger method of accounting, the results of the subsidiaries are presented as if the companies
had been combined throughout the current and previous financial years. Any difference between the
consideration paid and the share capital of the acquired subsidiary is reflected within equity as merger
reserve. The merger reserve has been subsequently set off against retained earnings.
Goodwill is initially measured at cost (being the excess of the aggregate of the consideration transferred and
the amount recognised for non-controlling interest) and any previous interest held over the net identifiable
assets acquired and liabilities assumed. If the fair value of the net assets acquired is in excess of the
aggregate consideration transferred, the Group re-assess whether it has correctly identified all of the assets
acquired and all of the liabilities assumed and reviews the procedures used to measure the amounts to be
recognised at the acquisition date. If the reassessment still results in an excess of the fair value of the net
assets acquired over the aggregate consideration transferred, then the gain is recognised in profit or loss.
After initial recognition, goodwill is measured at cost less any accumulated impairment losses. For the
purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date,
allocated to each of the Groups cash-generating units that are expected to benefit from the combination,
irrespective of whether other assets or liabilities of the acquiree are assigned to those units.
Where goodwill has been allocated to a cash-generating unit (CGU) and part of the operation within that
unit is disposed of, the goodwill associated with the disposed operation is included in the carrying amount
of the operation when determining the gain or loss on disposal. Goodwill disposed in these circumstances is
measured based on the relative values of the disposed operation and the portion of the cash-generating unit
retained.
The Group measures financial instruments such as derivatives at fair value at each reporting date.
78
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date. The fair value measurement is based on
the presumption that the transaction to sell the asset or transfer the liability takes place either:
-
in the absence of a principal market, in the most advantageous market for the asset or liability.
The principal or the most advantageous market must be accessible by the Group.
The fair value of an asset or a liability is measured using the assumptions that market participants would use
when pricing the asset or liability, assuming that market participants act in their economic best interest.
A fair value measurement of a non-financial asset takes into account a market participants ability to generate
economic benefits by using the asset in its highest and best use or by selling it to another market participant
that would use the asset in its highest and best use.
The Group would use, if any, valuation techniques that are appropriate in the circumstances and for which
sufficient data are available to measure fair value, maximising the use of relevant observable inputs and
minimising the use of unobservable inputs.
All assets and liabilities for which fair value is measured or disclosed in the financial statements are
categorised within the fair value hierarchy, described as follows, based on the lowest level input that is
significant to the fair value measurement as a whole:
Level 1
Quoted (unadjusted) market prices in active markets for identical assets or liabilities;
Level 2
Valuation techniques for which the lowest level input that is significant to the fair value
measurement is directly or indirectly observable; or
Level 3
Valuation techniques for which the lowest level input that is significant to the fair value
measurement is unobservable.
For assets and liabilities that are recognised in the financial statements on a recurring basis, the Group
determines whether transfers have occurred between levels in the hierarchy by re-assessing categorisation
(based on the lowest level input that is significant to the fair value measurement as a whole) at the end of
each reporting period.
The Groups management determines the policies and procedures for both recurring fair value measurement,
such as investment properties and unquoted available or sale (AFS) financial assets.
External valuers are involved for valuation of significant assets, such as properties and AFS financial assets,
and significant liabilities, such as contingent consideration. Selection criteria of external valuers include
market knowledge, reputation, independence and whether professional standards are maintained. The
management decides, after discussions with the Groups external valuers, which valuation techniques and
inputs to use for each case.
79
At each reporting date, the management analyses the movements in the values of assets and libilities which
are required to be re-measured or re-assessed as per the Group's accounting policies. For this analysis,
the management verifies the major inputs applied in the latest valuation by agreeing the information in the
valuation computation to contracts and other relevant documents.
The management, in conjunction with the Groups external valuers, also compares the changes in the fair value
of each asset and liability with relevant external sources to determine whether the change is reasonable.
For the purpose of fair value disclosures, the Group has determined classes of assets and liabilities on the
basis of the nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy
as explained above.
The Group and the Company present assets and liabilities in statement of financial position based on current/
non-current classification. An asset is current when it is:
(i) Expected to be realised or intended to be sold or consumed in normal operating cycle;
(ii) Held primarily for the purpose of trading;
(iii) Expected to be realised within twelve months after the reporting period; or
(iv) Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least
twelve months after the reporting period.
All other assets are classified as non-current.
A liability is current when:
(i) It is expected to be settled in normal operating cycle;
(ii) It is held primarily for the purpose of trading;
(iii) It is due to be settled within twelve months after the reporting period; or
(iv) There is no unconditional right to defer the settlement of the liability for at least twelve months after the
reporting period.
The Group and the Company classify all other liabilities as non-current. Deferred tax assets and liabilities
are classified as non-current assets and liabilities.
Non-controlling interest represents the equity in subsidiaries not attributable, directly or indirectly, to
owners of the Group, and is presented separately in the consolidated statement of comprehensive income
and within equity in the consolidated statement of financial position, separately from equity attributable to
owners of the Group.
80
The individual financial statements of each entity in the Group are measured using the currency of the
primary economic environment in which the entity operates (the functional currency). The consolidated
financial statements are presented in Ringgit Malaysia (RM), which is also the Companys functional
currency.
Transactions in foreign currencies are measured in the respective functional currencies of the Company
and its subsidiaries and are recorded on initial recognition in the functional currencies at exchange
rates approximating those ruling at the transaction dates. Monetary assets and liabilities denominated
in foreign currencies are translated at the rate of exchange ruling at the reporting date.
Non-monetary items denominated in foreign currencies that are measured at historical cost are
translated using the exchange rates as at the dates of the initial transactions. Non-monetary items
denominated in foreign currencies measured at fair value are translated using the exchange rates at
the date when the fair value was determined.
Exchange differences arising on the settlement of monetary items or on translating monetary items at
the reporting date are recognised in profit or loss except for exchange differences arising on monetary
items that form part of the Groups net investment in foreign operations, which are recognised initially
in other comprehensive income and accumulated under foreign currency translation reserve in equity.
The foreign currency translation reserve is reclassified from equity to profit or loss of the Group on
disposal of the foreign operation. Tax charges and credits attributable to exchange differences on these
monetary items are also recorded in other comprehensive income.
Exchange differences arising on the translation of non-monetary items carried at fair value are included
in profit or loss for the period except for the differences arising on the translation of non-monetary items
in respect of which gains and losses are recognised directly in equity. Exchange differences arising from
such non-monetary items are also recognised directly in equity.
The assets and liabilities of foreign operations are translated into RM at the rate of exchange
ruling at the reporting date and income and expenses are translated at exchange rates at the dates
of the transactions. The exchange differences arising on the translation are taken directly to other
comprehensive income. On disposal of a foreign operation, the cumulative amount recognised in other
comprehensive income and accumulated in equity under foreign currency translation reserve relating
to that particular foreign operation is recognised in the profit or loss.
Goodwill and fair value adjustments arising on the acquisition of foreign operations are treated as
assets and liabilities of the foreign operations and are recorded in the functional currency of the foreign
operations and translated at the closing rate at the reporting date.
81
All items of property, plant and equipment are initially recorded at cost. The cost of an item of property,
plant and equipment is recognised as an asset if, and only if, it is probable that future economic benefits
associated with the item will flow to the Group and the Company and the cost of the item can be measured
reliably.
Subsequent to recognition, property, plant and equipment are measured at cost less accumulated
depreciation and accumulated impairment losses. When significant parts of property, plant and equipment
are required to be replaced in intervals, the Group and the Company recognises such parts as individual
assets with specific useful lives and depreciation, respectively. Likewise, when a major inspection is
performed, its cost is recognised in the carrying amount of the plant and equipment as a replacement if
the recognition criteria are satisfied. All other repair and maintenance costs are recognised in profit or loss
as incurred. Freehold land is measured at cost less any accumulated impairment losses.
Freehold land has an unlimited useful life and therefore is not depreciated. Leasehold land are depreciated
over the period of their respective lease term. Depreciation is computed on a straight-line basis over the
estimated useful lives of the assets, at the annual rates stated below:
Leasehold land
37 - 87 years
Buildings
2 - 3%
10 - 15%
10 - 33 1/3%
20%
Renovation
10 - 20%
Capital-in-progress included in plant and equipment are not depreciated as these assets are not yet
available for use.
The carrying values of property, plant and equipment are reviewed for impairment when events or changes
in circumstances indicate that the carrying values may not be recoverable.
The residual values, useful life and depreciation method are reviewed at each financial year-end, and
adjusted prospectively, if appropriate.
An item of property, plant and equipment is derecognised upon disposal or when no future economic
benefits are expected from its use or disposal. Any gain or loss on derecognition of the asset is included in
the profit or loss in the year the asset is derecognised.
Investment properties are initially measured at cost, including transaction costs. Subsequent to initial
recognition, investment properties are measured at cost less accumulated depreciation and any
accumulated impairment losses. All other repair and maintenance costs are recognised in profit or loss
as incurred. The investment properties are depreciated in accordance with that for property, plant and
equipment as described in Note 2.10.
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Investment properties are derecognised when either they have been disposed of or when the investment
property is permanently withdrawn from use and no future economic benefit is expected from its disposal.
Any gains or losses on the retirement or disposal of an investment property is recognised in profit or loss
in the year of retirement or disposal.
Transfers are made to or from investment property only when there is a change in use. Transfers between
investment property, owner-occupied property and inventories do not change the carrying amount of the
property transferred and they do not change the cost of that property for measurement or disclosure
purpose.
Intangible assets acquired separately are measured initially at cost. The cost of intangible assets acquired
in a business combination is their fair values as at the date of acquisition. Following initial recognition,
intangible assets are measured at cost less any accumulated amortisation and accumulated impairment
losses.
The useful lives of intangible assets are assessed as either finite or indefinite.
Intangible assets with finite useful lives are amortised over the estimated useful lives and assessed for
impairment whenever there is an indication that the intangible asset may be impaired. The amortisation
period and the amortisation method are reviewed at least at each financial year-end. Changes in the
expected useful life or the expected pattern of consumption of future economic benefits embodied in the
asset is accounted for by changing the amortisation period or method, as appropriate, and are treated
as changes in accounting estimates. The amortisation expense on intangible assets with finite lives is
recognised in profit or loss, in the expense category consistent with the function of the intangible assets.
Intangible assets with indefinite useful lives or not yet available for use are not amortised, but are tested for
impairment annually either individually or at the cash-generating unit level. The assessment of indefinite
life is reviewed annually to determine whether the indefinite life continues to be supportable. If not, the
change in useful life from indefinite to finite is made on a prospective basis.
Gains or losses arising from derecognition of an intangible asset are measured as the difference between
the net disposal proceeds and the carrying amount of the asset and are recognised in profit or loss when
the asset is derecognised.
(a) Research and development cost
(b) Trademark
Trademark was acquired through business combinations. The useful life of trademark is estimated
to be indefinite because based on the current market share of the trademark, management believes
there is no foreseeable limit to the period over which the trademark are expected to generate net cash
flows to the Group. Trademark is stated at cost less any impairment losses. They are not amortised
but tested for impairment annually or more frequently when indicators of impairment are identified.
83
Software costs, considered to have finite useful lives, are stated at cost less any impairment losses
and amortised using the straight-line basis over the commercial lives of the underlying products not
exceeding 5 years. Impairment is assessed whenever there is an indication of impairment and the
amortisation period and method are also reviewed at least at each reporting date.
The Group and the Company assess at each reporting date whether there is an indication that an asset
may be impaired. If any such indication exists, or when an annual impairment assessment for an asset is
required, the Group make an estimate of the assets recoverable amount.
An assets recoverable amount is the higher of an assets fair value less costs to sell and its value in use.
For the purpose of assessing impairment, assets are grouped at the lowest levels for which there are
separately identifiable cash flows (cash-generating units (CGU)).
In assessing value in use, the estimated future cash flows expected to be generated by the asset are
discounted to their present value using a pre-tax discount rate that reflects current market assessments of
the time value of money and the risks specific to the asset. Where the carrying amount of an asset exceeds
its recoverable amount, the asset is written down to its recoverable amount. Impairment losses recognised
in respect of a CGU or groups of CGUs are allocated first to reduce the carrying amount of any goodwill
allocated to those units or groups of units and then, to reduce the carrying amount of the other assets in
the unit or groups of units on a pro-rata basis.
Impairment losses including impairment on inventories, are recognised in profit or loss in those expense
categories consistent with the function of the impaired asset.
An assessment is made at each reporting date as to whether there is any indication that previously recognised
impairment losses may no longer exist or may have decreased. A previously recognised impairment loss
is reversed only if there has been a change in the estimates used to determine the assets recoverable
amount since the last impairment loss was recognised. If that is the case, the carrying amount of the asset
is increased to its recoverable amount. That increase cannot exceed the carrying amount that would have
been determined, net of depreciation, had no impairment loss been recognised previously. Such reversal is
recognised in profit or loss. Impairment loss on goodwill is not reversed in a subsequent period.
2.14 Subsidiaries
In the Companys separate financial statements, investments in subsidiaries are accounted for at cost less
impairment losses. On disposal of such investments, the difference between net disposal proceeds and
their carrying amounts is included in profit or loss.
An associate is an entity over which the Group has significant influence. Significant influence is the power
to participate in the financial and operating policy decisions of the investee, but is not control or joint
control over those policies.
The Groups investment in its associate is accounted for using the equity method.
84
Under the equity method, the investment in an associate is initially recognised at cost. The carrying amount
of the investment is adjusted to recognise changes in the Groups share of net assets of associate since the
acquisition date. Goodwill relating to the associate is included in the carrying amount of the investment and
is not tested for impairment individually.
The statement of profit or loss reflects the Groups share of the results of operations of the associate.
Any change in other comprehensive income of those investees is presented as part of the Groups other
comprehensive income. In addition, when there has been a change recognised directly in the equity of the
associate, the Group recognises its share of any changes, when applicable, in the statement of changes
in equity. Unrealised gains and losses resulting from transactions between the Group and the associate is
eliminated to the extent of the interest in the associate.
The aggregate of the Groups share of profit or loss of an associate is shown on the face of the statement of
profit or loss outside operating profit and represents profit or loss after tax and non-controlling interests
in the subsidiaries of the associate.
The financial statements of the associate are prepared for the same reporting period as the Group. When
necessary, adjustments are made to bring the accounting policies in line with those of the Group.
After application of the equity method, the Group determines whether it is necessary to recognise an
impairment loss on its investment in its associate. At each reporting date, the Group determines whether
there is objective evidence that the investment in the associate is impaired. If there is such evidence,
the Group calculates the amount of impairment as the difference between the recoverable amount of the
associate and its carrying value, and then recognises the loss as Share of profit of an associate in the
statement of profit or loss.
Upon loss of significant influence over the associate, the Group measures and recognises any retained
investment at its fair value. Any difference between the carrying amount of the associate upon loss of
significant influence and the fair value of the retained investment and proceeds from disposal is recognised
in profit or loss.
In the Companys separate financial statements, investments in associates are accounted for at cost less
impairment losses. On disposal of such investments, the difference between net disposal proceeds and
their carrying amounts is included in profit or loss.
2.16 Inventories
Inventories are stated at the lower of cost and net realisable value, after adequate allowance made for
damaged, expired and slow moving items.
Cost is determined using the standard cost and the weighted average methods. The cost of raw materials
comprises costs of purchase. The cost of finished goods and work-in-progress consists of raw materials,
direct labour, other direct costs and appropriate proportion of manufacturing overheads based on normal
operating capacity, but excluding borrowing costs. Standard cost approximates actual cost calculated on a
weighted average basis.
Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs
of completion and the estimated costs necessary to make the sale.
85
Financial assets, within the scope of MFRS139, are recognised in the statements of financial position when,
and only when, the Group and the Company become a party to the contractual provisions of the financial
instrument.
When financial assets are recognised initially, they are measured at fair value, plus, in the case of financial
assets not at fair value through profit or loss, directly attributable transaction costs.
The Group and the Company determine the classification of their financial assets at initial recognition,
and the categories include financial assets at fair value through profit or loss, loans and receivables and
available-for-sale financial assets.
(a) Financial assets at fair value through profit or loss
Financial assets are classified as financial assets at fair value through profit or loss if they are held
for trading or are designated as such upon initial recognition. Financial assets held for trading are
derivatives (including separated embedded derivatives) or financial assets acquired principally for the
purpose of selling in the near term.
Subsequent to initial recognition, financial assets at fair value through profit or loss are measured at
fair value. Any gains or losses arising from changes in fair value are recognised in profit or loss. Net
gains or net losses on financial assets at fair value through profit or loss do not include exchange
differences, interest and dividend income. Exchange differences, interest and dividend income on
financial assets at fair value through profit or loss are recognised separately in profit or loss as part of
other losses or other income.
Financial assets at fair value through profit or loss could be presented as current or non-current.
Financial assets that is held primarily for trading purposes are presented as current whereas financial
assets that is not held primarily for trading purposes are presented as current or non-current based
on the settlement date.
Financial assets with fixed or determinable payments that are not quoted in an active market are
classified as loans and receivables.
Subsequent to initial recognition, loans and receivables are measured at amortised cost using the
effective interest method. Gains and losses are recognised in profit or loss when the loans and
receivables are derecognised or impaired, and through the amortisation process.
Loans and receivables are classified as current assets, except for those having maturity dates later
than 12 months after the reporting date which are classified as non-current.
Available-for-sale financial assets are financial assets that are designated as available for sale or are
not classified in any of the two preceding categories.
86
After initial recognition, available-for-sale financial assets are measured at fair value. Any gains or
losses from changes in fair value of the financial assets are recognised in other comprehensive income,
except that impairment losses, foreign exchange gains and losses on monetary instruments and
interest calculated using the effective interest method are recognised in profit or loss. The cumulative
gain or loss previously recognised in other comprehensive income is reclassified from equity to profit
or loss as a reclassification adjustment when the financial asset is derecognised. Interest income
calculated using the effective interest method is recognised in profit or loss. Dividends on an availablefor-sale equity instrument are recognised in profit or loss when the Group and the Companys right to
receive payment is established.
Investments in equity instruments whose fair value cannot be reliably measured are measured at cost
less impairment loss.
Available-for-sale financial assets are classified as non-current assets unless they are expected to be
realised within 12 months after the reporting date.
A financial asset is derecognised when the contractual right to receive cash flows from the asset has
expired. On derecognition of a financial asset in its entirety, the difference between the carrying amount
and the sum of the consideration received and any cumulative gain or loss that had been recognised in
other comprehensive income is recognised in profit or loss.
Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets
within the period generally established by regulation or convention in the marketplace concerned. All
regular way purchases and sales of financial assets are recognised or derecognised on the trade date i.e.,
the date that the Group and the Company commit to purchase or sell the asset.
The Group and the Company assess at each reporting date whether there is any objective evidence that a
financial asset is impaired.
(a) Trade and other receivables and other financial assets carried at amortised cost
To determine whether there is objective evidence that an impairment loss on financial assets has
been incurred, the Group and the Company consider factors such as the probability of insolvency or
significant financial difficulties of the debtor and default or significant delay in payments. For certain
categories of financial assets, such as trade receivables, assets that are assessed not to be impaired
individually are subsequently assessed for impairment on a collective basis based on similar risk
characteristics. Objective evidence of impairment for a portfolio of receivables could include the
Groups and the Companys past experience of collecting payments, an increase in the number of
delayed payments in the portfolio past the average credit period and observable changes in national
or local economic conditions that correlate with default on receivables.
If any such evidence exists, the amount of impairment loss is measured as the difference between
the assets carrying amount and the present value of estimated future cash flows discounted at the
financial assets original effective interest rate. The impairment loss is recognised in profit or loss.
87
The carrying amount of the financial asset is reduced by the impairment loss directly for all financial
assets with the exception of trade receivables, where the carrying amount is reduced through the use
of an allowance account. When a trade receivable becomes uncollectible, it is written off against the
allowance account.
If in a subsequent period, the amount of the impairment loss decreases and the decrease can be related
objectively to an event occurring after the impairment was recognised, the previously recognised
impairment loss is reversed to the extent that the carrying amount of the asset does not exceed its
amortised cost at the reversal date. The amount of reversal is recognised in profit or loss.
If there is objective evidence (such as significant adverse changes in the business environment where
the issuer operates, probability of insolvency or significant financial difficulties of the issuer) that
an impairment loss on financial assets carried at cost has been incurred, the amount of the loss is
measured as the difference between the assets carrying amount and the present value of estimated
future cash flows discounted at the current market rate of return for a similar financial asset. Such
impairment losses are not reversed in subsequent periods.
Significant or prolonged decline in fair value below cost, significant financial difficulties of the issuer
or obligor, and the disappearance of an active trading market are considerations to determine whether
there is objective evidence that investment securities classified as available-for-sale financial assets
are impaired.
If an available-for-sale financial asset is impaired, an amount comprising the difference between its
cost (net of any principal payment and amortisation) and its current fair value, less any impairment
loss previously recognised in profit or loss, is transferred from equity to profit or loss.
Impairment losses on available-for-sale equity investments are not reversed in profit or loss in the
subsequent periods. Increase in fair value, if any, subsequent to impairment loss is recognised in other
comprehensive income. For available-for-sale debt investments, impairment losses are subsequently
reversed in profit or loss if an increase in the fair value of the investment can be objectively related to
an event occurring after the recognition of the impairment loss in profit or loss.
Cash and cash equivalents comprise cash on hand and at banks and short term deposits with a maturity
of three months or less that are readily convertible to known amounts of cash and which are subject to an
insignificant risk of changes in value. These also include bank overdrafts that form an integral part of the
Groups and of the Companys cash management.
88
Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of
a past event, it is probable that an outflow of economic resources will be required to settle the obligation
and the amount of the obligation can be estimated reliably. When the Group expects some or all of a
provision to be reimbursed, the reimbursement is recognised as a separate asset, but only when the
reimbursement is virtually certain. The expense relating to a provision is presented in profit or loss, net of
any reimbursement.
Provisions are reviewed at each reporting date and adjusted to reflect the current best estimate. If it is
no longer probable that an outflow of economic resources will be required to settle the obligation, the
provision is reversed. If the effect of the time value of money is material, provisions are discounted using a
current pre-tax rate that reflects, where appropriate, the risks specific to the liability. Where discounting is
used, the increase in the provision due to the passage of time is recognised as a finance costs.
Financial liabilities are classified according to the substance of the contractual arrangements entered into
and the definitions of a financial liability.
Financial liabilities, within the scope of MFRS139, are recognised in the statements of financial position
when, and only when, the Group and the Company become a party to the contractual provisions of the
financial instrument. Financial liabilities are classified as either financial liabilities at fair value through
profit or loss or other financial liabilities.
(a) Financial liabilities at fair value through profit or loss
Financial liabilities at fair value through profit or loss include financial liabilities held for trading and
financial liabilities designated upon initial recognition as at fair value through profit or loss.
Financial liabilities held for trading include derivatives entered into by the Group and the Company
that do not meet the hedge accounting criteria. Derivative liabilities are initially measured at fair value
and subsequently stated at fair value, with any resultant gains or losses recognised in profit or loss.
Net gains or losses on derivatives include exchange differences.
The Groups and the Companys other financial liabilities include trade payables, other payables and
hire purchase payable.
Trade and other payables are recognised initially at fair value plus directly attributable transaction
costs and subsequently measured at amortised cost using the effective interest method.
Hire purchase payable is recognised initially at fair value, net of transaction costs incurred, and
subsequently measured at amortised cost using the effective interest method. Hire purchase payable
is classified under current and non-current liabilities as disclosed in Note 27.
For other financial liabilities, gains and losses are recognised in profit or loss when the liabilities are
derecognised, and through the amortisation process.
89
A financial liability is derecognised when the obligation under the liability is extinguished. When
an existing financial liability is replaced by another from the same lender on substantially different
terms, or the terms of an existing liability are substantially modified, such an exchange or modification
is treated as a derecognition of the original liability and the recognition of a new liability, and the
difference in the respective carrying amounts is recognised in profit or loss.
Borrowing costs directly attributable to the acquisition, construction or production of an asset that
necessarily takes a substantial period of time to get ready for its intended use or sale are capitalised as
part of the cost of the respective asset. All other borrowing costs are expensed in the period in which they
occur. Borrowing costs consist of interest and other costs that the Group and the Company have incurred
in connection with the borrowing of funds.
Wages, salaries, bonuses and social security contributions are recognised as an expense in the
financial year in which the associated services are rendered by employees. Short term accumulating
compensated absences such as paid annual leave are recognised when services are rendered
by employees that increase their entitlement to future compensated absences. Short term nonaccumulating compensated absences such as sick leave are recognised when the absences occur.
The Group and the Company participate in the national pension schemes as defined by the laws of
the countries in which it has operations. The Malaysian companies in the Group make contributions
to the Employee Provident Fund (EPF) in Malaysia, a defined contribution pension scheme. The
Groups foreign subsidiaries in the Republic of Singapore make contributions to their countrys Central
Provident Fund (CPF). Contributions to defined contribution pension schemes are recognised as an
expense in the period in which the related service is performed.
Non-current assets are classified as held for sale if their carrying amount will be recovered principally
through a sale transaction rather than through continuing use. This condition is regarded as met only when
the sale is highly probable and the asset is available for immediate sale in its present condition subject only
to terms that are usual and customary.
Non-current assets held for sale are measured at the lower of their carrying amount and fair value less
costs to sell.
90
The determination of whether an arrangement is, or contains, a lease is based on the substance of the
arrangement at the inception date. The arrangement is assessed for whether fulfillment of the arrangement
is dependent on the use of a specific asset or assets and the arrangement conveys a right to use the asset
or assets, even if that right is not explicitly specified in an arrangement.
(a) Group as a lessee
Finance leases, which transfer to the Group substantially all the risks and rewards incidental to
ownership of the leased item, are capitalised at the inception of the lease at the fair value of the
leased asset or, if lower, at the present value of the minimum lease payments. Lease payments are
apportioned between the finance charges and reduction of the lease liability so as to achieve a constant
rate of interest on the remaining balance of the liability. Finance charges are recognised in finance
costs in profit or loss. Contingent rents, if any, are charged as expenses in the periods in which they
are incurred.
Leased assets are depreciated over the estimated useful life of the asset. However, if there is no
reasonable certainty that the Group will obtain ownership by the end of the lease term, the asset is
depreciated over the shorter of the estimated useful life and the lease term.
Operating lease payments are recognised as an expense in profit or loss on a straight-line basis over
the lease term. The aggregate benefit of incentives provided by the lessor is recognised as a reduction
of rental expense over the lease term on a straight-line basis.
Leases in which the Group does not transfer substantially all the risks and rewards of ownership of the
asset are classified as operating leases. Initial direct costs incurred in negotiating an operating lease
are added to the carrying amount of the leased asset and recognised over the lease term on the same
bases as rental income. The accounting policy for rental income is set out in Note 2.26(e).
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group
and to the Company and the revenue can be reliably measured. Revenue is measured at the fair value of
consideration received or receivable.
(a) Sale of goods
Revenue is recognised net of sales taxes and discounts upon transfer of significant risks and rewards
of ownership of the goods to the customer. Revenue is not recognised to the extent where there are
significant uncertainties regarding recovery of the consideration due, associated costs or the possible
return of goods.
Revenue is recognised net of services taxes and discounts as and when the services are performed.
91
Dividend income is recognised when the Groups and the Companys right to receive payment is
established.
Interest income is recognised on the accrual basis, using the effective interest method, unless
recoverability is in doubt, in which case, it is recognised on receipt basis.
Rental income from investment properties is recognised on a straight-line basis over the lease terms.
The aggregate costs of incentives provided to lessees are recognised as a reduction of rental income
over the lease term on a straight-line basis.
Current tax assets and liabilities are measured at the amount expected to be recovered from or paid
to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are
enacted or substantively enacted by the reporting date.
Current taxes are recognised in profit or loss except to the extent that the tax relates to items recognised
outside profit or loss, either in other comprehensive income or directly in equity.
Deferred tax is provided using the liability method on temporary differences at the reporting date
between the tax bases of assets and liabilities and their carrying amounts for financial reporting
purposes.
Deferred tax liabilities are recognised for all taxable temporary differences, except:
-
where the deferred tax liability arises from the initial recognition of goodwill or of an asset or
liability in a transaction that is not a business combination and, at the time of the transaction,
affects neither the accounting profit nor taxable profit or loss; and
92
Deferred tax assets are recognised for all deductible temporary differences, carry forward of unused
tax credits and unused tax losses, to the extent that it is probable that taxable profit will be available
against which the deductible temporary differences, and the carry forward of unused tax credits and
unused tax losses can be utilised except:
-
where the deferred tax asset relating to the deductible temporary difference arises from the
initial recognition of an asset or liability in a transaction that is not a business combination and,
at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and
The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the
extent that it is no longer probable that sufficient taxable profit will be available to allow all or part
of the deferred tax asset to be utilised. Unrecognised deferred tax assets are reassessed at each
reporting date and are recognised to the extent that it has become probable that future taxable profit
will allow the deferred tax assets to be utilised.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year
when the asset is realised or the liability is settled, based on tax rates and tax laws that have been
enacted or substantively enacted at the reporting date.
Deferred tax relating to items recognised outside profit or loss is recognised outside profit or
loss. Deferred tax items are recognised in correlation to the underlying transaction either in other
comprehensive income or directly in equity and deferred tax arising from a business combination is
adjusted against goodwill on acquisition.
Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set
off current tax assets against current tax liabilities and the deferred taxes relate to the same taxable
entity and the same taxation authority.
Revenues, expenses and assets are recognised net of the amount of GST, except:
-
where the GST incurred in a purchase of assets or services is not recoverable from the taxation
authority, in which case the GST is recognised as part of the cost of acquisition of the asset or as
part of the expense item as applicable; and
93
The net amount of GST recoverable from, or payable to, the taxation authority is included as part of
receivables or payables in the statement of financial position.
For management purposes, the Group is organised into operating segments based on their products
and services which are independently managed by the respective segment managers responsible for the
performance of the respective segments under their charge. The segment managers report directly to the
management of the Company who regularly review the segment results in order to allocate resources to
the segments and to assess the segment performance. Additional disclosures on each of these segments
are shown in Note 37, including the factors used to identify the reportable segments and the measurement
basis of segment information.
An equity instrument is any contract that evidences a residual interest in the assets of the Group and the
Company after deducting all of its liabilities. Ordinary shares are equity instruments.
Ordinary shares are recorded at the proceeds received, net of directly attributable incremental transaction
costs. Ordinary shares are classified as equity. Dividends on ordinary shares are recognised in equity in the
period in which they are declared.
2.30 Contingencies
A contingent liability or asset is a possible obligation or asset that arises from past events and whose
existence will be confirmed only by the occurrence or non-occurrence of uncertain future event(s) not
wholly within the control of the Group and of the Company.
Contingent liabilities and assets are not recognised in the statements of financial position of the Group and
of the Company.
The preparation of the Groups and of the Companys financial statements requires management to make
judgements and estimates that affect the reported amounts of revenues, expenses, assets and liabilities, and
the accompanying disclosures at the reporting date. However, uncertainty about these estimates could result in
outcomes that could require a material adjustment to the carrying amount of the asset or liability affected in the
future.
3.1
In the process of applying the Groups and the Companys accounting policies, management has made the
following judgements, apart from those involving estimations, which have the most significant effect on the
amounts recognised in the financial statements:
94
The Group has developed certain criteria based on MFRS 140 in making judgement whether a property
qualifies as an investment property. Investment property is a property held to earn rental or for capital
appreciation or both.
Some properties comprise a portion that is held to earn rental or for capital appreciation and another
portion that is held for use in the production or supply of goods or services or for administrative
purposes. If these portions could be sold separately (or leased out separately under a finance lease),
the Group would account for the portions separately. If the portions could not be sold separately, the
property is an investment property only if an insignificant portion is held for use in the production
or supply of goods or services or for administrative purposes. Judgement is made on an individual
property basis to determine whether ancillary services are so significant that a property does not
qualify as investment property.
The Group has entered into commercial property leases on its investment properties. The commercial
properties combined leases of land and buildings. At the inception of the lease, it was not possible to
obtain a reliable estimate of the split of the fair values of the lease interest between the land and the
buildings. Therefore, the Group evaluated based on terms and conditions of the arrangement, whether
the land and the buildings were clearly operating leases or finance leases. The Group assessed the
following:
(i) The land titles do not pass to the lessee, and
(ii) The rentals paid to the Group for the commercial properties are increased to the market rent at
regular intervals, and the lessee does not participate in the residual value of the building.
Management judged that the Group retains all the significant risks and rewards of ownership of these
properties, thus accounted for the contracts as operating leases.
3.2
The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting
date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and
liabilities within the next financial year are discussed below.
(a) Impairment of trademark
The Group determines whether the trademark is impaired at least on an annual basis. This requires
an estimation of the value-in-use of the cash-generating units (CGU) to which the trademark is
allocated. Estimating a value-in-use amount requires management to make an estimate of the expected
future cash flows from the CGU and also to choose a suitable discount rate in order to calculate the
present value of those cash flows. The carrying amount of the trademark as at 31 December 2015 is
RM1,080,400 (2014: RM1,075,850). Further details are disclosed in Note 16.
95
The cost of plant and equipment for the manufacture of pharmaceutical products is depreciated on a
straight-line basis over the assets estimated economic useful lives. Management estimates the useful
lives of these plant and equipment to be within 7 to 10 years. These are common life expectancies
applied in the pharmaceutical industry. Changes in the expected level of usage and technological
developments could impact the economic useful lives and the residual values of these assets, therefore
future depreciation charges could be revised. The carrying amount of the Groups plant and equipment
at the reporting date is disclosed in Note 14.
The Group and the Company assess at each reporting date whether there is any objective evidence
that a financial asset is impaired. To determine whether there is objective evidence of impairment, the
Group consider factors such as the probability of insolvency or significant financial difficulties of the
debtor and default or significant delay in payment.
Where there is objective evidence of impairment, the amount and timing of future cash flows are
estimated based on historical loss experience for assets with similar credit risk characteristics. The
carrying amount of the Groups and the Companys loans and receivables at reporting date is disclosed
in Note 20.
Deferred tax assets are recognised for all unused tax losses, unabsorbed capital allowance and other
deductible temporary differences to the extent that it is probable that taxable profit will be available
against which the losses can be utilised. Significant management judgement is required to determine
the amount of deferred tax assets that can be recognised, based on the likely timing and level of future
taxable profits together with future tax planning strategies.
Assumptions about generation of future taxable profits depend on managements estimates of future
cash flows. These depends on estimates of future production and sales volume, operating costs, capital
expenditure, dividends and other capital management transactions. Judgement is also required about
application of income tax legislation. These judgements and assumptions are subject to risks and
uncertainty, hence there is a possibility that changes in circumstances will alter expectations, which
may impact the amount of deferred tax assets recognised in the statements of financial position and
the amount of unrecognised tax losses and unrecognised temporary differences.
As at 31 December 2015, the carrying value of deferred tax assets of the Group was RM124,000 (2014:
RM168,000). Unrecognised tax losses and unutilised capital allowance and other deductible temporary
differences of the Group amounted to RM364,307 (2014: RM253,620). Further details are disclosed in
Note 19.
96
Uncertainties exist with respect to the interpretation of complex tax regulations and the amount and
timing of future taxable income. Given the differences arising between the actual results and the
assumptions made, or future changes to such assumptions, could necessitate future adjustments to
tax provisions already recorded. The Group and the Company establish provisions, based on reasonable
estimates, for possible consequences of audits by the tax authorities of the respective countries in
which it operates. The amount of such provisions is based on various factors, such as experience
of previous tax audits and differing interpretations of tax regulations by the taxable entity and the
relevant tax authority.
The Group reviews at each reporting date for excess inventory and obsolescence. Inventories are
written down to reflect the current net realisable value, which represent the managements estimation
of the value recoverable through sale. The carrying amount of the Groups inventories at reporting
date is disclosed in Note 22.
4. Revenue
Group
Company
2015
RM
2014
RM
2015
RM
2014
RM
526,658,249
498,888,249
201,066
349,169
26,020,000
34,140,000
2,539,277
2,302,368
526,859,315
499,237,418
28,559,277
36,442,368
Company
2015
RM
2014
RM
2015
RM
2014
RM
406,845,165
382,848,155
280,577
274,492
1,778,164
2,057,720
407,125,742
383,122,647
1,778,164
2,057,720
97
6. Other income
Group
Company
2015
RM
2014
RM
2015
RM
2014
RM
466,957
647,648
281,712
188,630
281,712
25,274
894,489
528,728
349,848
256,684
212,517
212,521
212,517
212,521
161,483
269,139
1,246,694
989,573
2,784,587
406,594
464,710
225,981
306,227
149,871
- realised
566,431
245,837
- unrealised
731,661
163,106
1,280,375
66,698
41,757
368,649
194,826
176,483
14,456
63,249
586,067
465,502
7,781,178
4,264,970
2,752,892
1,942,674
7. Finance costs
Group
2015
RM
2014
RM
16,030
6,573
1,447
1,461
17,477
8,034
98
8.
The following items have been included in arriving at profit before tax:
Group
Company
2015
RM
2014
RM
2015
RM
2014
RM
257,625
248,339
39,000
38,000
Auditors remuneration
- statutory audit:
- current year
- over provision in respect of previous year
(3,000)
(509)
- other services
17,000
24,000
17,000
24,000
50,365,549
47,415,453
1,227,679
1,560,891
63,000
63,000
63,000
63,000
492,714
435,750
492,714
435,750
180,000
180,000
180,000
180,000
8,761,497
8,797,252
112,971
83,555
967
2,024
1,040
58,954
83,755
140,250
59,420
121,545
- realised
(372,647)
(242,813)
1,449
- unrealised
(552,110)
(163,106)
(1,280,375)
(66,698)
1,509,127
1,583,092
436,240
439,440
1,878,970
1,096,110
805,513
1,235,253
(6,198)
17,465
(818,540)
(1,118,702)
(172,820)
(852,615)
198,928
197,583
458,589
314,638
Operating lease:
99
2014
RM
2015
RM
2014
RM
43,623,985
40,914,877
897,316
1,219,725
5,659,281
5,396,484
160,172
221,158
326,998
305,468
2,479
1,921
Other benefits
755,285
798,624
167,712
118,087
50,365,549
47,415,453
1,227,679
1,560,891
Company
Included in employee benefit expense of the Group and of the Company are executive directors remuneration
other than directors fees and benefits-in-kind amounting to RM2,158,120 and RM370,340 (2014: RM2,051,122
and RM552,968) respectively, as further disclosed in Note 10.
The details of remuneration receivable by directors of the Group and of the Company during the financial year are
as follows:
Group
Company
2015
RM
2014
RM
2015
RM
2014
RM
63,000
63,000
63,000
63,000
737,768
674,256
105,480
102,360
1,289,334
1,238,358
211,911
368,268
131,018
138,508
52,949
82,340
2,221,120
2,114,122
433,340
615,968
63,823
52,949
63,823
52,949
2,284,943
2,167,071
497,163
668,917
- fees (Note 8)
492,714
435,750
492,714
435,750
- other emoluments
251,106
251,881
251,106
251,881
743,820
687,631
743,820
687,631
139,225
52,970
100,714
17,810
883,045
740,601
844,534
705,441
3,167,988
2,907,672
1,341,697
1,374,358
Executive director:
- fees (Note 8)
- salaries and other emoluments
- bonus
- defined contribution plans
Total executive directors remuneration
(excluding benefits-in-kind)
- benefits-in-kind
Total executive directors remuneration
(including benefits-in-kind)
Non-executive directors:
- benefits-in-kind
Total non-executive directors remuneration
Total directors remuneration
100
The number of directors of the Company whose total remuneration during the financial year fell within the
following bands is analysed below:
Number of directors
2015
2014
RM50,001 - RM100,000
RM100,001 - RM150,000
RM250,001 - RM300,000
Executive director:
RM2,150,001 - RM2,300,000
Non-executive directors:
The major components of income tax expense for the years ended 31 December 2015 and 2014 are:
Group
Company
2015
RM
2014
RM
2015
RM
2014
RM
11,227,959
11,474,990
521,725
329,426
- Foreign tax
527,405
334,488
253,739
166,261
23,922
123,971
(3,105)
12,175,364
11,833,400
645,696
326,321
(377,676)
(219,788)
(218,444)
33,302
(596,120)
(186,486)
11,579,244
11,646,914
645,696
326,321
101
The reconciliation between tax expense and the product of accounting profit multiplied by the applicable corporate
tax rate for the years ended 31 December 2015 and 2014 are as follows:
2015
RM
2014
RM
45,842,658
45,624,091
11,460,665
11,406,023
(243,662)
(194,842)
20,730
(450,183)
208,682
(345,597)
(556,447)
Non-deductible expenses
1,699,821
794,881
(328,620)
(109,667)
253,739
(442,408)
27,672
20,330
166,261
23,922
(218,444)
33,302
11,579,244
11,646,914
27,824,928
34,214,020
6,956,232
8,553,505
(7,047,335)
(8,803,619)
Non-deductible expenses
612,828
579,540
123,971
(3,105)
645,696
326,321
Group
102
Domestic income tax is calculated at the Malaysian statutory tax rate of 25% (2014: 25%) of the estimated
assessable profit for the year.
Taxation for other jurisdictions is calculated at the rates prevailing in the respective jurisdictions.
The above reconciliation is prepared by aggregating separate reconciliations for each national jurisdiction.
The statutory tax rate will be reduced to 24% from the current years rate of 25% effective Year of Assessment
2016. The effects arising from the reduction in the tax rate relating to the computation of deferred taxation as at
the financial year end is not significant to the Group and the Company.
Basic earnings per share is calculated by dividing profit for the year, net of tax, attributable to owners of the
parent by the weighted average number of ordinary shares outstanding during the financial year.
The following information reflects the profit and share data used in the computation of basic earnings per share
for the years ended 31 December:
Group
Profit, net of tax attributable to owners of the parent used in the computation
of basic earnings per share (RM)
Weighted average number of ordinary shares for basic earnings per share
computation
Basic earnings per share (sen)
2015
2014
34,236,487
33,864,277
117,146,093
117,146,093
29.23
28.91
The Company does not have any dilutive potential ordinary shares. Accordingly, the diluted earnings per share is
the same amount as the basic earnings per share.
There have been no other transactions involving ordinary shares or potential dilution of ordinary shares between
the reporting date and the date of authorisation of these financial statements.
103
13. Dividends
Group/Company
2015
RM
2014
RM
5,857,305
7,028,766
4,100,111
5,623,011
12,886,071
9,723,122
At the forthcoming Annual General Meeting, a final single-tier dividend of 6.0 sen per share in respect of the
financial year ended 31 December 2015, on 117,146,093 ordinary shares, amounting to a dividend payable of
RM7,028,766 will be proposed for shareholders approval. The financial statements for the current financial year
do not reflect this proposed dividend. Such dividend, if approved by the shareholders, will be accounted for in
equity as an appropriation of retained earnings in the financial year ending 31 December 2016.
104
Transfers
Written off
Exchange differences
105
553,316
- 1,689,022
Written off
Exchange differences
At 31 December 2015
8,418,400 6,798,554
Disposals
(3,220)
1,183,668
(308,825)
1,539,824
736,141
(1,999)
857,814
(3,219)
(308,822)
3,856,432
507,127
(1,033)
2,628,385
7,628,878
240,447
1,178,944
89,644
154,931
463,672
Depreciation charge
for the year (Note 8)
At 31 December 2015
3,995,495
65,141
- 1,534,091
Plant,
Buildings
on machinery Furniture,
leasehold and factory fittings and
land equipment equipment
RM
RM
RM
At 1 January 2015
Accumulated
depreciation
8,418,400 8,487,576
Disposals
At 31 December 2015
8,418,400 8,487,576
Additions
At 1 January 2015
Cost
At 31 December 2015
Group
Buildings
on
Freehold freehold Leasehold
land
land
land
RM
RM
RM
1,886,852
3,001,507
8,395
(828,618)
805,413
3,016,317
4,888,359
17,065
(942,442)
527,041
5,286,695
300,343
150,433
47,748
102,685
450,776
Total
RM
2,490,240
4,748,701
(5,219)
755,969
(4,252)
(1,137,440)
8,761,497
2,375,749 100,151,026
- 74,145,245
- 65,769,471
2,375,749 174,296,271
(1,251,267)
5,480,060
1,069,177 165,323,996
- (1,183,668)
450,776
Motor
Capital-invehicles Renovation progress
RM
RM
RM
106
8,418,400
At 31 December 2014
Disposals
Transfers to investment
properties (Note 15)
Written off
Exchange differences
At 31 December 2014
At 31 December 2014
8,418,400
At 1 January 2014
Accumulated
depreciation
Exchange differences
6,953,485
1,534,091
(470,705)
177,800
1,826,996
8,487,576
570,783
26,831
3,645,252
19,556
1,162,791
2,462,905
7,360,928 46,265,399
463,672
89,644
374,028
7,824,600 49,910,651
Written off
Transfers to investment
properties (Note 15)
(3,119,699) (2,351,160)
Disposals
7,824,600 49,313,037
11,538,099 10,838,736
Additions
At 1 January 2014
Cost
At 31 December 2014
Group
17,697,266
33,336,432
(65,890)
(425,094)
3,776,065
30,051,351
51,033,698
(66,730)
759,252
(425,922)
1,812,873
48,954,225
9,171,401
23,671,022
67,789
(615,706)
(88,945)
2,647,794
21,660,090
32,842,423
103,557
(616,890)
55,300
(90,688)
1,828,022
31,563,122
Plant,
Buildings
Buildings
on machinery Furniture,
on
Freehold freehold Leasehold leasehold and factory fittings and
land equipment equipment
land
land
land
RM
RM
RM
RM
RM
RM
2,270,378
3,016,317
911
(789,984)
900,001
2,905,389
5,286,695
2,438
(838,209)
948,645
5,173,821
348,091
102,685
43,157
59,528
450,776
75,671
375,105
Total
RM
676,778
(683,620)
(5,470,859)
(1,354,819)
5,895,219
1,069,177
99,554,525
65,769,471
88,256
(681,596)
(470,705)
(1,304,023)
8,797,252
59,340,287
1,069,177 165,323,996
(814,552)
1,203,177
680,552 166,261,297
Motor
Capital-invehicles Renovation progress
RM
RM
RM
(Contd)
527,166
Additions
293,714
Disposals
(2,400)
Written off
(8,999)
At 31 December 2014
809,481
42,515
Additions
851,996
At 31 December 2015
Accumulated depreciation
At 1 January 2014
219,031
83,555
Disposals
(660)
Written off
(8,994)
At 31 December 2014
292,932
112,971
At 31 December 2015
405,903
446,093
At 31 December 2014
516,549
Cash
Hire purchase
Company
2015
RM
2014
RM
2015
RM
2014
RM
5,480,060
5,846,438
42,515
293,714
48,781
5,480,060
5,895,219
42,515
293,714
(b) The carrying amount of furniture, fittings and equipment held under finance leases at the reporting date
were RM33,132 (2014: RM39,024).
107
2014
RM
6,542,634
3,663,682
5,470,859
Cost
At beginning of financial year
Transfers from property, plant and equipment (Note 14)
(2,690,000)
686,654
98,093
7,229,288
6,542,634
687,935
335,083
58,954
83,755
470,705
(210,717)
69,867
9,109
816,756
687,935
6,412,532
5,854,699
Exchange differences
At end of financial year
Net carrying amount
At end of financial year
Valuation method
Date of valuation
Commercial properties
Comparison method
31 December 2015
1,650,000
Warehouse
Comparison method
12 January 2016
11,700,000
Commercial properties
Comparison method
31 December 2014
1,500,000
Warehouse
Comparison method
20 January 2015
10,865,000
As at 31 December 2015
As at 31 December 2014
108
The carrying amount of the properties as at 31 December 2015 are based on recent valuations carried out
by C H Williams Talhar & Wong Sdn. Bhd and Knight Frank. The fair value is determined primarily using
comparison approaches.
The properties are valued by reference to transactions of similar properties in surrounding with adjustments
made for differences in location, terrain, size and shape of the land, tenure, title restrictions, if any and other
relevant characteristics.
The Groups investment properties with a carrying amount of RM5,293,293 (2014: RM4,716,199) are mortgaged to
secure the Groups undrawn banking facilities.
During the previous financial year, the Group had reclassified 2 units of retail premises amounting to RM2,479,283
to assets classified as held for sale as disclosed in Note 25.
Computer
software
RM
Total
RM
1,075,200
2,369,049
3,444,249
Group
Cost
At 1 January 2014
Additions
90,544
90,544
Written off
(64,813)
(64,813)
Exchange differences
650
8,435
9,085
At 31 December 2014
1,075,850
2,403,215
3,479,065
648,908
648,908
Exchange differences
4,550
60,616
65,166
At 31 December 2015
1,080,400
3,112,739
4,193,139
At 1 January 2014
2,253,849
2,253,849
Amortisation (Note 8)
59,420
59,420
Written off
(64,812)
(64,812)
Exchange differences
8,435
8,435
At 31 December 2014
2,256,892
2,256,892
Amortisation (Note 8)
140,250
140,250
Exchange differences
59,355
59,355
At 31 December 2015
2,456,497
2,456,497
Additions
Accumulated amortisation
109
Computer
software
RM
Total
RM
At 31 December 2015
1,080,400
656,242
1,736,642
At 31 December 2014
1,075,850
146,323
1,222,173
Group (Cont'd)
Net carrying amount
The intangible asset relating to trademark arose as a result of the acquisition of a subsidiary, Apex Pharma
Marketing Pte. Ltd. (APS) in prior years, where a fair value was ascribed to the AGNESIA trademark and all
other intellectual property rights in relation to the AGNESIA trademark based on a valuation carried out by
management as at 31 December 2005. APS operates in Singapore and its principal activity is as disclosed in Note
17. The management undertakes impairment review of the trademark with indefinite useful life annually or more
frequently if events or changes in circumstances indicate a potential impairment.
The recoverable amount of the cash generating unit (CGU) is determined based on value-in-use calculations
using the royalty relief method. This method discounts to present value the estimated future royalties that would
be payable for its use were it owned by a third party net of direct expenses necessarily incurred in connection
with the trademark. The estimated future royalties have been derived based on projected revenue arising from
sale of products marketed under the trademark approved by management covering a five-year period. The key
assumptions used for value-in-use calculations are:
2015
%
2014
%
10
10
- Foreign market
Growth rate
11
11
Royalties rate
- Local market
Discount rate
The following describes each key assumption on which management has based its cash flow projections to
undertake impairment testing of trademark:
(i) Royalties rate
The royalty rate is based on a range for each application of the brand by reviewing comparable licensing
agreements and industry royalty rates.
110
The management believes that the growth rates used are appropriate for the business segments in which
the entity operates after considering the marketability, control and size and diversity factors relating to the
product.
The discount rate used reflects specific risks relating to the relevant segments.
With regards to the assessment of value-in-use, management believes that no reasonably possible change in any of
the above key assumptions would cause the carrying value of the CGU to materially exceed its recoverable amount.
2015
RM
2014
RM
56,377,940
56,377,940
Name of companies
Country of
incorporation
Principal
activities
% of ownership
interest
held by
the Group*
% of ownership
interest
held by noncontrolling
interest
2015
%
2014
%
2015
%
2014
%
Malaysia
100
100
Malaysia
100
100
Malaysia
100
100
111
Name of companies
Country of
incorporation
Principal
activities
% of ownership
interest
held by
the Group*
% of ownership
interest
held by noncontrolling
interest
2015
%
2014
%
2015
%
2014
%
Malaysia
Property rental
and management
100
100
Malaysia
Retailing of pharmaceutical
products
100
100
Singapore
100
100
Singapore
Brands management
and development of
pharmaceutical and
healthcare products
100
100
Singapore
Investment holding
100
100
Singapore
100
100
Malaysia
Retailing of pharmaceutical
products
60
60
40
40
a
b
c
*
The non-controlling interest in respect of CS Health Store Sdn. Bhd. is not material to the Group.
112
Company
2015
RM
2014
RM
2015
RM
2014
RM
6,976,000
6,976,000
6,976,000
6,976,000
(694,552)
(694,552)
(966,000)
834,730
430,622
269,139
5,315,448
7,116,178
7,406,622
7,245,139
Country of
incorporation
% of ownership interest
Accounting
held by the Group*
model applied
2015
%
2014
%
Malaysia
40
40
Equity method
Malaysia
40
Equity method
Malaysia
35
Equity method
On 29 September 2014, the Company completed its acquisition of 40% equity representing 8,000 ordinary
shares in Straits Apex Sdn. Bhd. (Straits Apex), a newly incorporated company, for a total consideration of
RM1,988,000, of which RM1,980,000 is the share premium. The remaining 60% equity interest in Straits Apex
is held by November Union. Straits Apex has subsequently issued a total of 1,980,000 bonus shares to both
the Company and November Union from its share premium account in accordance with their proportionate
shareholdings in Straits Apex.
Straits Apex and its subsidiaries are collectively referred to as SA Group. The associate has the same
reporting period as the Group. No quoted market prices are available for the shares of Straits Apex as the
company is a private limited company. Straits Apex is an investment holding company.
ABio Orthopaedics Sdn. Bhd. is currently a sub-contractor of Straits Orthopaedics (Mfg) Sdn. Bhd. performing
orthopaedics subcontracting works primarily in the areas of trauma, instrumentation and spine.
113
2014
RM
Non-current asset
44,600,570
50,125,206
Current assets
21,436,181
26,771,073
Total assets
66,036,751
76,896,279
Non-current liabilities
15,170,712
18,675,409
Current liabilities
47,996,491
50,721,485
Total liabilities
63,167,203
69,396,894
2,869,548
7,499,385
2,877,559
7,379,385
(8,011)
120,000
2,869,548
7,499,385
2015
RM
2014
RM
Revenue
50,123,928
40,344,257
(4,050,455)
3,536,275
(4,900,170)
2,337,215
(4,501,826)
2,214,551
(398,344)
122,664
(4,900,170)
2,337,215
Net assets
Equity attributable to:
Owners of the associated company
Non-controlling interest of the associated company
114
2014
RM
7,379,385
2,642,349
2,522,485
(4,501,826)
2,214,551
2,877,559
7,379,385
40%
40%
1,151,024
2,951,754
3,233,364
3,233,364
931,060
931,060
5,315,448
7,116,178
Exchange
differences
RM
As at
31
December
2015
RM
(565,693)
3,067
5,441,376
(30,427)
(843,434)
3,067
4,597,942
As at Recognised
in profit
31
or loss
December
(Note 11)
2014
RM
RM
As at
1 January
2014
RM
Recognised
in profit
or loss
(Note 11)
RM
Exchange
differences
RM
6,331,170
(328,206)
1,038
6,004,002
(954,727)
141,720
(813,007)
5,376,443
(186,486)
1,038
Group
Deferred tax
liability:
Property, plant and
equipment
Deferred tax
asset:
Others*
5,190,995
(596,120)
* Consists of provision for inventories written down and impairment loss on trade receivables.
115
2015
RM
2014
RM
(124,000)
(168,000)
4,721,942
5,358,995
4,597,942
5,190,995
There are no income tax consequences attached to the dividends to the shareholders proposed by the Company
but not recognised as a liability in the financial statements (Note 13).
Deferred tax assets have not been recognised in respect of the following items:
Group
2015
RM
2014
RM
261,374
187,500
102,933
61,291
4,829
364,307
253,620
At the reporting date, the Group has unutilised tax losses and unabsorbed capital allowance of approximately
RM261,374 (2014: RM187,500) and RM102,933 (2014: RM61,291) that are available for offset against future
taxable profits of the companies in which the losses and capital allowances arose, for which no deferred
tax asset is recognised due to uncertainty of their recoverability. The availability of unutilised tax losses for
offsetting against future taxable profits of the respective subsidiaries in Malaysia are subject to no substantial
changes in shareholdings of those subsidiaries under the Income Tax Act, 1967 and guidelines issued by the
tax authority. The use of tax losses of subsidiaries in other jurisdictions is subject to the agreement of the tax
authorities and compliance with certain provisions of the tax legislation of the respective countries in which
the subsidiaries operate.
116
Company
2015
RM
2014
RM
2015
RM
2014
RM
124,870,189
(1,779,164)
111,843,247
(2,082,051)
123,091,025
109,761,196
425,854
188,630
425,854
188,630
- interest bearing
2,175,000
2,225,000
- non-interest bearing
59,355,362
46,423,465
Deposits
2,521,518
1,793,777
5,070
5,070
Sundry receivables
3,881,416
2,065,502
38,661
77,808
6,828,788
4,047,909
61,999,947
48,919,973
129,919,813
113,809,105
61,999,947
48,919,973
Loan to an associate
5,000,000
5,000,000
5,000,000
5,000,000
5,000,000
5,000,000
5,000,000
5,000,000
10,185,000
8,996,750
10,000,000
10,000,000
20,185,000
18,996,750
139,919,813
123,809,105
82,184,947
67,916,723
69,352,988
56,055,811
14,100,461
12,379,822
5,520,000
5,520,000
5,520,000
5,520,000
214,792,801
185,384,916
101,805,408
85,816,545
Current
Trade receivables
Third parties
Less: Allowance for impairment
Trade receivables, net
Other receivables
Amounts due from associate
- non-interest bearing
Amounts due from subsidiaries
Non-current
Other receivables
117
Trade receivables are non-interest bearing and are generally on 30 to 120 days (2014: 30 to 120 days)
terms. They are recognised at their original invoice amounts which represent their fair values on initial
recognition.
2014
RM
92,018,183
82,498,413
26,774,120
25,083,566
3,827,538
2,153,622
471,184
25,595
123,091,025
109,761,196
2014
RM
105,983,033
94,707,978
10,601,364
10,492,743
2,228,496
3,249,496
1,434,305
688,501
2,843,827
622,478
17,107,992
15,053,218
1,779,164
2,082,051
124,870,189
111,843,247
Impaired
Trade receivables that are neither past due nor impaired relates to customers with good track record with
the Group. Based on past experience, the Board believes that no allowance for impairment is necessary in
respect of those balances.
None of the Groups trade receivables that are neither past due nor impaired have been renegotiated during
the financial year.
118
The Group has trade receivables amounting to RM17,107,992 (2014: RM15,053,218) that are past due at the
reporting date but not impaired.
Receivables that are past due but not impaired relate to customers that the Group still deems to be
creditworthy. Based on the past experience, the Board believes that no allowance of impairment is necessary
in respect of those balances.
The receivables that are past due but not impaired are unsecured in nature.
The Groups trade receivables that are impaired at the reporting date and the movement of the allowance
accounts used to record the impairment are as follows:
Group
Individually impaired
2015
RM
2014
RM
1,779,164
2,082,051
(1,779,164)
(2,082,051)
2014
RM
2,082,051
2,434,607
805,513
1,235,253
Written off
(322,964)
(473,836)
(818,540)
(1,118,702)
33,104
4,729
1,779,164
2,082,051
Exchange differences
At end of financial year
119
Trade receivables that are individually determined to be impaired at the reporting date relate to debtors that
are in significant financial difficulties and have defaulted on payments. These receivables are not secured by
any collateral or credit enhancements.
The amounts due from subsidiaries are unsecured and repayable on demand. The weighted average effective
interest rate for amounts due from subsidiaries which are interest bearing at reporting date is 4.00% (2014:
4.00%) per annum.
The Group and the Company have no significant concentration of credit risk that may arise from exposures
to a single debtor or group of debtors.
The loan of RM5,000,000 is an unsecured interest bearing loan. The loan has an interest free period from
the date the loan was given until 28 September 2015. Thereafter, the loan will bear interest at 4.5% per
annum.
The loan of RM5,000,000 is an unsecured interest bearing loan. The loan had an interest free period from the
date the loan was given until 28 February 2014. Thereafter, the loan bears interest at 4.5% (2014: 4.5%) per
annum.
2014
RM
5,520,000
5,520,000
Non-current
Long term deposit with a licensed bank
The long term deposit with a licensed bank of RM5,520,000 is pledged against a term loan entered into by an
associate Abio Orthopaedics Sdn. Bhd., with a maturity period of 5 years effective from 25 May 2013.
The long term deposit earns dividends based on the concept of profit-sharing, whereby the profit earned from the
investment by way of dividends fixed at 7.63% will be shared between the Group/Company and the bank according
to the predetermined mutually agreed profit sharing ratio established at 50.46 : 49.54 respectively. Dividends are
received by the Group/Company at 6 months interval.
120
22. Inventories
Group
2015
RM
2014
RM
5,194,496
5,372,521
193,258
218,991
Cost
Raw materials
Work-in-progress
Finished goods
Pharmaceutical products held for resale
7,758,925
8,406,785
47,718,859
37,699,293
60,865,538
51,697,590
During the financial year, the amount of inventories recognised as an expense in cost of sales of the Group was
RM381,027,479 (2014: RM358,232,480).
The Group has recorded a charge to income statement pertaining to inventories written down and written off
of RM458,589 (2014: RM314,638) and RM198,298 (2014: RM197,583) (Note 8) respectively. A reversal of writedown of inventories of the Group amounting to RM172,820 (2014: RM852,615) (Note 8) was also made during the
current financial year.
Assets
RM
4,236,417
36,374
(1,989,840)
15,977
Group
As at 31 December 2015
Non-hedging derivatives:
Forward currency contracts
- in respect of sales transactions
- in respect of purchases transactions
52,351
As at 31 December 2014
Non-hedging derivatives:
Forward currency contracts
- in respect of sales transactions
3,598,841
84,763
(3,598,969)
89,133
173,896
121
The Group uses forward currency contracts to manage some of the transaction exposure. These contracts are not
designated as cash flow or fair value hedges and are entered into for periods consistent with currency transaction
exposure and fair value changes exposure. Such derivatives do not qualify for hedge accounting.
Forward currency contracts are used to hedge the Groups sales and purchase denominated in SGD and USD
respectively for which firm commitment existed at the reporting date, extending to Jan 2016 (2014: June 2015) for
its purchases and May 2016 (2014: May 2015) for its sales.
During the financial year, the Group recognised a gain of RM Nil (2014: RM149,871) (Note 6) and a loss of RM121,545
(2014: RM Nil) (Note 8) arising from fair value changes of derivative instruments. The fair value changes are
attributable to changes in foreign exchange spot and forward rates. The method and assumptions applied in
determining the fair values of derivatives are disclosed in Note 34.
Company
2015
RM
2014
RM
2015
RM
2014
RM
12,535,740
11,795,562
12,535,740
11,795,562
Licensed banks
32,500,000
14,975,000
45,035,740
26,770,562
12,535,740
11,795,562
24,317,248
29,285,249
1,564,721
584,260
69,352,988
56,055,811
14,100,461
12,379,822
Cash at banks earn interest at floating rates based on daily bank deposit rates. Short term deposits are made for
varying periods of between 1 to 20 days (2014: 1 to 20 days) depending on the immediate cash requirements of
the Group and of the Company, and earn interest rates at the respective short-term deposit rates.
Included in the short term deposits of the Group and of the Company is RM12,535,740 (2014: RM11,795,562) placed
with money market fund held for investment purposes and does not form part of cash and cash equivalents.
The weighted average interest rates during the financial year and the average maturities of deposits as at the
reporting date were as follows:
Group
122
Company
2015
RM
2014
RM
2015
RM
2014
RM
2.39
2.29
3.65
3.30
13
14
24. Short term deposits and cash and bank balances (Cont'd)
For the purpose of the consolidated statements of cash flows, cash and cash equivalents comprise the following
at the reporting date:
Group
Company
2015
RM
2014
RM
2015
RM
2014
RM
32,500,000
14,975,000
24,317,248
29,285,249
1,564,721
584,260
56,817,248
44,260,249
1,564,721
584,260
In the previous financial year, the Group determined its 2 units of retail premises as assets held for sale amounting
to RM2,479,283 (previously classified as investment properties (Note 15)).
The Group completed the said disposals on 20 October 2015 and the resulting net gain on disposal of RM2,784,587
(Note 6) was recognised in the current financial year.
Company
2015
RM
2014
RM
2015
RM
2014
RM
74,433,289
63,017,778
20,000
44,000
1,900,259
Other payables
9,456,633
12,289,830
56,707
24,429
Other accruals
11,171,821
11,153,648
1,147,591
1,459,078
20,648,454
23,487,478
3,104,557
1,483,507
95,081,743
86,505,256
3,104,557
1,483,507
36,750
43,593
95,118,493
86,548,849
3,104,557
1,483,507
Current
Trade payables
Third parties
Other payables
Amounts due to related parties
Amounts due to subsidiary
123
The currency profile of the Groups and of the Companys payables is as follows:
Group
Company
2015
RM
2014
RM
2015
RM
2014
RM
Ringgit Malaysia
58,296,131
55,127,335
3,104,557
1,483,507
Singapore Dollar
32,375,730
28,705,909
2,902,232
2,272,298
Euro (EUR)
1,282,357
360,614
225,293
39,100
95,081,743
86,505,256
3,104,557
1,483,507
Others
Trade payables are non-interest bearing and the normal trade credit terms granted to the Group range from
30 to 120 days (2014: 30 to 120 days).
These amounts are non-interest bearing. Other payables are normally settled on an average term of 90 days
(2014: 90 days).
Related parties refer to certain directors of the Companys subsidiary, CS Health Store Sdn. Bhd. These
amounts are unsecured, non-interest bearing and are repayable on demand.
124
The Group has finance leases for certain items of plant and equipment (Note 14).
The commitment terms under the hire purchase payable are summarised as follows:
Group
2015
RM
2014
RM
14,155
12,502
14,155
12,502
12,973
25,456
41,283
50,460
(4,533)
(6,867)
36,750
43,593
12,600
11,130
12,600
11,130
11,550
21,333
36,750
43,593
(12,600)
(11,130)
24,150
32,463
The hire purchase of the Group attracts interest rates of 2.82% (2014: 2.82%) per annum.
Amount
2015
Units
2014
Units
2015
RM
2014
RM
200,000,000
100,000,000
200,000,000
100,000,000
100,000,000
100,000,000
200,000,000
200,000,000
200,000,000
200,000,000
Authorised
At beginning of financial year
Created during the year
At end of financial year
125
Amount
2015
Units
2014
Units
2015
RM
2014
RM
117,146,093
93,716,875
117,146,093
93,716,875
23,429,218
23,429,218
117,146,093
117,146,093
117,146,093
117,146,093
The new ordinary shares issued during the previous financial year ranked pari passu in all respects with the
existing ordinary shares of the Company.
The holders of ordinary shares are entitled to receive dividends as and when declared by the Company. All
ordinary shares carry one vote per share without restrictions and rank equally with regard to the Company
residual assets.
The foreign currency translation reserve represents exchange differences arising from the translation of the
financial statements of foreign operations whose functional currencies are different from that of the Groups
presentation currency.
The Company may distribute dividends out of its entire retained earnings as at 31 December 2015 and 31
December 2014 under the single-tier system.
126
31. Commitments
(a) Capital commitments
Company
2015
RM
2014
RM
2015
RM
2014
RM
563,936
10,890,683
10,459,636
255,272
285,786
10,890,683
11,023,572
255,272
285,786
The Group and the Company has entered into commercial leases on certain office premises, with lease
terms ranging from 2 to 3 (2014: 2 to 3) years respectively.
Minimum lease payments recognised in the Groups and the Companys profit or loss for the financial year
amounted to RM1,509,127 (2014: RM1,583,092) and RM436,240 (2014: RM439,440) respectively (Note 8).
Future minimum lease payments under non-cancellable operating lease contracted as at reporting date are
as follows:
Group
Company
2015
RM
2014
RM
2015
RM
2014
RM
1,038,958
971,288
436,240
439,440
525,962
830,214
1,564,920
1,801,502
436,240
439,440
The Company has provided corporate guarantees to banks of RM11,160,045 (2014: RM14,644,996) for credit
facilities granted to subsidiaries.
As at the reporting date, no values were ascribed on corporate guarantees provided by the Company to secure
bank loans and other banking facilities granted to its subsidiary companies as these facilities are either not
utilised or have been fully settled as at the reporting date.
127
In addition to the related party information disclosed elsewhere in the financial statements, the following
significant transactions between the Group and related parties took place at terms agreed between the
parties during the financial year:
Group
2015
RM
2014
RM
2015
RM
2014
RM
2,539,277
2,302,368
466,957
647,648
26,020,000
34,140,000
281,712
188,630
281,712
25,274
(180,000)
(180,000)
(180,000)
(180,000)
(436,240)
(439,440)
Company
Information regarding outstanding balances arising from related party transactions as at 31 December 2015
is disclosed in Note 20 and Note 26.
The remuneration of directors and other members of key management during the financial year was as
follows:
Group
Company
2015
RM
2014
RM
2015
RM
2014
RM
7,441,813
7,848,835
1,575,469
1,815,546
749,177
898,589
109,286
181,086
35,865
34,092
17,663
17,283
8,226,855
8,781,516
1,702,418
2,013,915
128
Company
2015
RM
2014
RM
2015
RM
2014
RM
2,284,943
2,167,071
497,163
668,917
The following table shows an analysis of financial instruments carried at fair value by level of fair value
hierarchy:
Group
Level 1
RM
Level 2
RM
Level 3
RM
Total
RM
52,351
52,351
173,896
173,896
At 31 December 2015
Financial asset:
Derivatives
- Forward currency contracts
At 31 December 2014
Financial asset:
Derivatives
- Forward currency contracts
The Group classifies fair value measurement using a fair value hierarchy that reflects the significance of the
inputs used in making the measurements.
There have been no transfers between the fair value hierarchy during the financial years ended 2015 and 2014.
Derivatives
Forward currency contracts are valued using a valuation technique with market observable inputs. The
most frequently applied valuation techniques include forward pricing, using present value calculations. The
models incorporate various inputs including the credit quality of counterparties, foreign exchange spot and
forward rates.
Financial instruments that are not carried at fair value and whose carrying amounts are reasonable
approximate of fair value
The following are classes of financial instruments that are not carried at fair value and whose carrying
amounts are reasonable approximation of fair value:
Note
Trade and other receivables (current and non-current)
20
26
27
129
The carrying amounts of these financial assets and liabilities are reasonable approximation of fair values,
either due to their short-term nature or that they are floating rate instruments that are re-priced to market
interest rates on or near the reporting date.
The fair values of these financial instruments are estimated by discounting expected future cash flows at
market incremental lending rate for similar types of borrowing at the reporting date.
Financial guarantees
Fair value is determined based on probability weighted discounted cash flow method. The probability has
been estimated and assigned for the following key assumptions:
-
The likelihood of the guaranteed party defaulting within the guaranteed period;
The exposure on the portion that is not expected to be recovered due to the guaranteed partys default;
and
The Group and the Company are exposed to financial risks arising from their operations and the use of financial
instruments. The key financial risks include foreign currency risk, interest rate risk, credit risk and liquidity
risk.
The Board of Directors reviews and agrees policies and procedures for the management of these risks. The audit
committee provides independent oversight to the effectiveness of the risk management process.
It is, and has been throughout the current and previous financial year, the Group s and the Companys policy
that no derivatives shall be undertaken except for the use as hedging instruments where appropriate and costefficient. The Group and the Company does not apply hedge accounting.
The following sections provide details regarding the Groups and the Companys exposure to the above-mentioned
financial risks and the objectives, policies and processes for the management of these risks.
(a) Foreign currency risk
Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate
because of changes in foreign exchange rates.
The Group has transactional currency exposures arising from sales and purchases that are denominated
in a currency other than the respective functional currencies of Group entities, primarily RM and Singapore
Dollar (SGD). The foreign currencies in which these transactions are denominated are mainly United
States Dollar (USD) and Euro (EUR). Foreign currency exposures in transactional currencies other than
functional currencies of the operating entities are kept to an acceptable level.
130
Approximately 2% (2014: 2%) of the Groups sales are denominated in foreign currencies. The currency
profiles for the Groups trade receivables and trade payables are disclosed at Note 20(a) and Note 26
respectively.
The Group also holds cash and cash equivalents denominated in foreign currencies for working capital
purposes. At the reporting date, such foreign currency balances amount to RM1,663,402 (2014:
RM2,341,455).
The Group requires all of its operating entities to use forward currency contracts to eliminate the currency
exposures on any individual transactions in excess of RM50,000 for which payment is anticipated more than
one month after the Group has entered into a firm commitment for a sale or purchase. The forward currency
contracts must be in the same currency as the hedged item. It is the Groups policy not to enter into forward
contracts until a firm commitment is in place. It is the Groups policy to negotiate the terms of the hedge
derivatives to match the terms of the hedged item to maximise hedge effectiveness.
The Group is also exposed to currency translation risk arising from its net investments in foreign operations
in the Republic of Singapore. The Groups net investments in Singapore are not hedged as currency positions
in SGD are considered to be long-term in nature.
The net unhedged financial assets and financial liabilities of the Group that are not denominated in their
functional currencies are as follows:
Group
2015
RM
2014
RM
3,827,538
2,153,622
Singapore Dollar
916,610
919,257
Others
471,184
25,596
5,215,332
3,098,475
(2,902,232)
(2,272,298)
Singapore Dollar
(1,800,540)
(1,870,454)
Euro
(1,282,357)
(360,614)
(225,293)
(39,100)
(6,210,422)
(4,542,466)
Receivables
United States Dollar
Payables
Others
131
The following tables demonstrate the sensitivity of the Groups profit net of tax to a reasonably possible
change in the following foreign currencies:
Profit,
net of tax
2015
RM
Group
USD/RM
- strengthened 26%
331,858
SGD/RM
- strengthened 17%
(147,183)
EUR/RM
- strengthened 10%
(125,231)
The weakening of the currencies at a similar rate above will result in an equal but opposite effect to the
Groups profit, net of tax.
In the previous financial year, the Groups exposure to currency risk is not significant in the context of the
financial statements and accordingly the sensitivity analysis is not presented.
Interest rate risk is the risk that the fair value or future cash flows of the Groups and the Companys financial
instruments will fluctuate because of changes in market interest rates.
The Groups and the Companys exposure to interest rate risk arises primarily from their loan to an associate,
loan to a subsidiary of an associate, amounts due from subsidiaries, short term deposits and long term
investment. The Groups policy is to manage interest cost using a mix of fixed and floating rate debts.
At the reporting date, the interest rate profile of the interest-bearing financial instruments is as follows:
Group
Company
2015
RM
2014
RM
2015
RM
2014
RM
10,000,000
5,000,000
22,360,000
16,221,750
(36,750)
(43,593)
50,555,740
32,290,562
18,055,740
17,315,562
132
The Group and the Company do not measure any fixed rate instruments at fair value through profit or loss.
Therefore, a change in interest rates at the reporting date would not affect profit or loss.
The directors have assessed that there are no reasonably possible change in interest rates that would result
in a material impact to the financial results of the Group and of the Company.
Credit risk is the risk of loss that may arise on outstanding financial instruments should a counterparty
default on its obligations. The Groups exposure to credit risk arises primarily from sales made on deferred
credit terms. For other financial assets (including cash and bank balances and derivatives), the Group and
the Company minimise credit risk by dealing exclusively with high credit rating counterparties.
The Group seeks to control credit risk by ensuring that sales of products are made to customers who have
been subjected to stringent credit review, a process of the Groups credit control policy. Concentrations of
credit risk with respect to trade receivables are limited due to the Groups large number of customers.
The Group considers the risk of material loss in the event of non-performance by customers to be unlikely.
The Group determines concentrations of credit risk by monitoring the industry sector profile of its trade
receivables on an ongoing basis. The credit risk concentration profile of the Groups trade receivables at the
reporting date are as follows:
Group
2015
2014
RM
% of total
RM
% of total
88,915,367
72.24%
79,935,716
72.82%
By industry sectors
Malaysia private sector
Malaysia government sector
Singapore private sector
Export market
3,113,492
2.53%
2,565,183
2.34%
25,857,510
21.00%
24,164,309
22.02%
5,204,656
4.23%
3,095,988
2.82%
123,091,025
100.00%
109,761,196
100.00%
133
Information regarding trade and other receivables that are neither past due nor impaired is disclosed in
Note 20. Deposits with banks, investment securities and derivatives that are neither past due nor impaired
are placed with or entered into with reputable financial institutions or companies with high credit ratings and
no history of default.
Information regarding financial assets that are either past due or impaired is disclosed in Note 20.
Liquidity risk is the risk that the Group or the Company will encounter difficulty in meeting financial obligations
due to shortage of funds. The Groups and the Companys exposure to liquidity risk arises primarily from
mismatches of the maturities of financial assets and liabilities.
Prudent liquidity risk management implies maintaining sufficient cash and the availability of funding
through an adequate amount of committed credit facilities. Due to the dynamic nature of the underlying
businesses, the Group and the Company aim at maintaining flexibility in funding by keeping committed credit
lines available.
All financial liabilities of the Group and the Company at the reporting date are repayable within one year
except for the Groups hire purchase payable as disclosed in Note 27.
The primary objective of the Group and of the Companys capital management is to ensure that they
maintain a strong credit rating and healthy capital ratios in order to support their business and maximise
shareholders value.
The Group and the Company manage their capital structure and makes adjustments to it, in light of changes
in economic conditions. To maintain or adjust the capital structure, the Group and the Company may adjust
the dividend payment to shareholders, return capital to shareholders or issue new shares. No changes were
made in the objectives, policies or processes during the financial years ended 31 December 2015 and 31
December 2014.
The Group and the Company monitor capital using a gearing ratio, which is net debt divided by total capital plus
net debt. The Groups and the Companys policy is to keep the gearing ratio to not more than 40%. The Group and
the Company include within net debt, trade and other payables, hire purchase payable, less short term deposits
and cash and bank balances. Capital includes equity attributable to the owners of the parent.
134
2015
RM
2014
RM
2015
RM
2014
RM
26
95,081,743
86,505,256
3,104,557
1,483,507
27
36,750
43,593
24
(45,035,740)
(26,770,562)
(12,535,740)
(11,795,562)
24
(24,317,248)
(29,285,249)
(1,564,721)
(584,260)
25,765,505
30,493,038
(10,995,904)
(10,896,315)
288,302,434
259,935,229
163,214,780
148,921,619
314,067,939
290,428,267
152,218,876
138,025,304
8%
10%
Net debt/(cash)
Gearing ratio
Company
For management purposes, the Group is organised into three main business units based on their products, and
has three reportable operating segments as follows:
(i) Manufacturing and marketing of pharmaceutical products;
(ii) Wholesale and distribution of pharmaceutical and healthcare products; and
(iii) Corporate comprising investments in retail pharmacy business and properties and the provision of
management services.
Except as indicated above, no operating segment has been aggregated to form the above reportable operating
segments.
Management monitors the operating results of its business units separately for the purpose of making decisions
about resource allocation and performance assessment. Segment performance is evaluated based on operating
profit or loss which, in certain respects as explained in the table below, is measured differently from operating
profit or loss in the consolidated financial statements. Group financing (including finance costs) and income taxes
are managed on a group basis and are not allocated to operating segments.
Transfer pricing between operating segments are on an arms length basis in a manner similar to transactions
with third parties.
135
78,097,663
136
72,083,862
Share of (loss)/profit
of an associate
249,483
29,928,623
Segment profit/(loss)
(external)
30,450,215
125,882
Other non-cash
gains/(expenses)
Share of profit of a
joint venture
(6,225,617) (6,263,979)
268,134
524,062
Impairment loss
on investment
properties
2014
RM
740,117
607,622 30,621,440
8,212,446
2015
RM
1,820
18,782,823
(44,822)
(2,401,728)
(1,394,071)
163,967
18,970,631
579,000
(2,350,380)
(1,315,081)
2014
RM
2015
RM
Adjustments and
eliminations
588,883
834,730
82,918
(335,841)
(91,097)
766,917
(1,726,554)
(1,231,438)
9,690
26,522
1,464,334
(161,483)
(2,121,336)
(169,750)
9,773
1,398,144
(269,139)
(1,663,826) (1,153,827)
4,101,409
(1,800,730)
(9,690)
(359,878)
(87,740)
1,024,319
2014
RM
7,845,112
Corporate
Interest expense
Depreciation and
amortisation
2015
RM
Wholesale and
distribution
2014
RM
Interest income
Results
102,480,931
Inter-segment
revenue
Total revenue
24,383,268
External revenue
Revenue
2015
RM
Manufacturing and
marketing
Note
2014
RM
(8,034)
929,879
45,842,658
2,951,031
(1,800,730)
45,624,091
1,247,616
834,730
82,918
(8,960,701) (8,940,427)
(17,477)
1,388,718
526,859,315 499,237,418
526,859,315 499,237,418
2015
RM
Per consolidated
financial statements
(Contd)
(6,410,178)
Segment liabilities
554,262
(7,552,819)
100,459
50,667,304
1,753,937
1,114,761
99,122,625
2015
RM
Segment assets
7,116,178
2014
RM
3,677,564
5,315,448
2015
RM
4,913,748
2014
RM
(7,595,338)
(5,989,333)
2014
RM
Adjustments and
eliminations
2015
RM
Corporate
2014
RM
Wholesale and
distribution
Investment in an
associate
2015
RM
Manufacturing and
marketing
Note
5,985,763
7,116,178
2014
RM
(101,528,671) (94,144,187)
390,213,677 354,435,061
6,128,968
5,315,448
2015
RM
Per consolidated
financial statements
137
Other material non-cash (gains)/expenses consist of the following items as presented in the respective
notes to the financial statements:
2015
RM
2014
RM
17,465
20(a)
(13,027)
116,551
(172,820)
(852,615)
198,928
197,583
458,589
314,638
14
967
2,024
16
(552,110)
(163,106)
23
121,545
(149,871)
25
(2,784,587)
(406,594)
(225,981)
(306,227)
(2,951,031)
(1,247,616)
Note
Bad debts written off
Impairment loss on trade receivables, net of reversals
Unallocated corporate expense of RM1,726,554 (2014: RM2,121,336) was deducted from segment profit to
arrive at Profit before tax presented in the consolidated statement of comprehensive income.
138
2015
RM
2014
RM
5,480,060
5,895,219
648,908
90,544
6,128,968
5,985,763
The following items were (deducted from)/ added to segment assets to arrive at total assets reported in the
consolidated statement of financial position:
2015
RM
2014
RM
124,000
168,000
Tax recoverable
269,249
408,657
(7,946,068)
(6,565,990)
(7,552,819)
(5,989,333)
The following items were added to segment liabilities to arrive at total liabilities reported in the consolidated
statement of financial position:
2015
RM
2014
RM
1,688,236
2,236,343
4,721,942
5,358,995
6,410,178
7,595,338
Geographical information
Revenue and non-current assets (other than financial instruments, deferred tax assets and, investment in an
associate) information based on the geographical location of customers and assets respectively are as follows:
Revenue
Non-current assets
2015
RM
2014
RM
2015
RM
2014
RM
Malaysia
369,148,788
353,676,511
68,405,256
69,532,489
Singapore
157,710,527
145,560,907
39,894,944
37,098,908
526,859,315
499,237,418
108,300,200
106,631,397
Non-current assets information presented above consists of the following items as presented in the consolidated
statement of financial position:
2015
RM
2014
RM
100,151,026
99,554,525
Investment properties
6,412,532
5,854,699
Intangible assets
1,736,642
1,222,173
108,300,200
106,631,397
139
Proposed establishment of an executives share option scheme (ESOS) of up to 10% of the issued and paid-up
capital of Apex Healthcare Berhad (AHB)
On 15 March 2016, the Board of Directors of AHB (Board) announced that the Company proposes to establish
an executives share option scheme (Proposed ESOS) of up to 10% of the issued and paid-up share capital of
the Company.
The Proposed ESOS involves the granting of ESOS options to the eligible executives to subscribe for new ordinary
shares of RM1.00 each in AHB (AHB Share(s) or Share(s)) at specified prices.
The Proposed ESOS will be administered by a committee to be appointed and duly authorised by the Board
(ESOS Committee) and shall be governed by the By-Laws.
The Proposed ESOS, when implemented, shall be in force for a period of five (5) years and may be extended for a
further period of up to five (5) years at the discretion of the Board upon recommendation of the ESOS Committee,
subject always that the duration or tenure of the Proposed ESOS shall be not more than ten (10) years.
The Proposed ESOS is not expected to have an immediate effect on the existing issued, and paid-up share capital
of the Company and net assets, and gearing of the Group, until such time when the ESOS Options to be granted
under the Proposed ESOS are exercised.
The Proposed ESOS may have an effect on the earnings of the Group for the financial year ending 31 December
2016 and up to ten (10) years due to the possible impact of the Malaysian Financial Reporting Standard (MFRS)
2 on share-based payment. However, any potential effect on the earnings per share of AHB Group in the future
would depend on the number of ESOS Options granted and exercised, and the subscription price payable upon
the exercise of the ESOS Options, as well as the impact of the MFRS 2 on share-based payment.
140
The breakdown of the retained earnings of the Group and of the Company as at 31 December 2015 into realised
and unrealised profits/(losses) is presented in accordance with the directive issued by Bursa Malaysia Securities
Berhad dated 25 March 2010 and prepared in accordance with Guidance on Special Matter No. 1, Determination
of Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities
Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants.
Group
Company
2015
RM
2014
RM
2015
RM
2014
RM
184,855,722
159,515,909
46,068,687
31,775,526
(3,330,547)
(2,596,621)
181,525,175
156,919,288
46,068,687
31,775,526
(694,552)
(694,552)
(966,000)
834,730
179,864,623
157,059,466
46,068,687
31,775,526
(19,906,249)
(18,451,508)
159,958,374
138,607,958
46,068,687
31,775,526
141
list of properties
as at 31st december 2015
Land area
sq.metres
158
Leased /
1 parcel of
commercial
space located on
the 1st floor of
Holiday Plaza
Freehold /
31 years old
766,841
Revalued
Dec 2015
Existing use/
Description
Tenure/
(Expiry date)
Age of building
Net
Carrying
Amount
RM
Built-up
area
sq.metres
Date of last
revaluation/
acquisition
279
369
1 1/2 - storey
terraced
warehouse cum
office
Freehold
16 years old
352,400
Revalued
Dec 2015
130
330
Pharmacy
outlet / 3- storey
terraced shop
office
Freehold /
53 years old
440,800
Revalued
Dec 2011
137
524
Warehouse cum
office / 4 1/2 storey
shop office
Leasehold /
(exp. 2102)
25 years old
667,726
Revalued
Dec 2011
98
98
Warehouse
/ Ground
Floor, Block H
Commercial (D)
Plot 14
Leasehold /
(exp. 2058)
15 years old
267,196
Revalued
Dec 2011
127
127
Warehouse cum
office / Ground
Floor Block H
Commercial (D)
Plot 14
Leasehold /
(exp. 2058)
15 years old
363,446
Revalued
Dec 2011
142
list of properties
Land area
sq.metres
Built-up
area
sq.metres
Existing use/
Description
Net
Carrying
Amount
RM
Tenure/
(Expiry date)
Age of building
Date of last
revaluation/
acquisition
38,966
17,345
Factory
Complex / 1 1/2
- storey factory
building
Leasehold / 22,693,445
(exp. 2096)
23 years old
Revalued
Dec 2009
10,116
9,548
Industrial Land /
Corporate office
and warehouse
Freehold 15,076,496
11 years old
Revalued
Dec 2009
700
Industrial Land /
Warehouse
Freehold
30 years old
5,293,293
Revalued
Dec 2009
3,673
4,879
Industrial
warehouse / 3 storey detached
buidling
Leasehold / 32,186,117
(exp. 2052)
19 years old
Acquired
2013
No 2 Jalan SS 13/5
Subang Jaya
Selangor Darul Ehsan
APEX PHARMA MARKETING PTE LTD
No 49 Tannery Lane
#04-01 & 04-07
Noble Warehouse
Singapore
10 No 4 Loyang Way 1
Singapore
143
analysis of shareholdings
as at 31st march 2016
:
:
:
:
:
RM200,000,000
RM117,146,093
Ordinary Shares of RM1.00 each
One (1) vote per Ordinary Share
1,662
DISTRIBUTION OF SHAREHOLDINGS
Size of Shareholdings
Less than 100
100 to 1,000
1,001 to 10,000
10,001 to 100,000
100,001 less than 5% of issued shares
5% and above issued shares
Total
No. of
Shareholders
No. of
Shares
94
5.65
4,770
0.00
163
9.81
91,578
0.08
1,066
64.14
3,988,757
3.41
277
16.67
7,475,742
6.38
59
3.55
22,567,570
19.26
0.18
83,017,676
70.87
1,662
100.00
117,146,093
100.00
Indirect
Interest
47,554,956
40.59
35,462,720
30.27
462,250
0.39
47,554,956(1)
40.59
318,750
0.27
48,017,206(1)
40.99
320,312
0.27
48,382,831(4)
41.30
950,000
0.81
48,335,956
41.26
(1)
48,335,956
41.26
48,335,956(1)
41.26
(1)
(2)
(1)
46,875
0.04
48,335,956
41.26
Dr Kee Loo
48,335,956(1)
41.26
47,554,956
40.59
(1)
47,554,956
40.59
47,554,956(1)
40.59
47,554,956
40.59
(3)
(1)
Notes:
1 Deemed interest by virtue of Section 6A of the Companies Act, 1965.
2 Held through nominee company.
3 Partly held through nominee company.
4 Deemed interest by virtue of Section 6A and Section 134(12)(c) of the Companies Act, 1965.
144
(1)
analysis of shareholdings
DIRECTORS SHAREHOLDINGS
Name of Directors
Indirect
Interest
950,000(3)
0.81
48,335,956(1)
41.26
320,312
0.27
48,382,831(2)
41.30
23,437
0.02
148,437
0.13
23,437
0.02
7,000
0.01
No. of Shares
Notes:
1 Deemed interest by virtue of Section 6A of the Companies Act, 1965.
2 Deemed interest by virtue of Section 6A and Section 134(12)(c) of the Companies Act, 1965.
3 Held through nominee company.
47,554,956
40.59
2.
18,560,937
15.84
3.
16,901,783
14.43
4.
2,077,400
1.77
5.
1,625,000
1.39
6.
1,415,062
1.21
7.
1,323,700
1.13
8.
950,000
0.81
9.
898,437
0.77
10.
878,906
0.75
11.
813,000
0.69
12.
620,000
0.53
145
analysis of shareholdings
as at 31st march 2016 (Contd)
No. of Shares
13.
612,000
0.52
14.
535,500
0.46
15.
514,500
0.44
16.
475,000
0.41
17.
462,250
0.39
18.
OH SIEW HEONG
375,000
0.32
19.
365,000
0.31
20.
344,900
0.29
21.
328,125
0.28
22.
320,312
0.27
23.
320,000
0.27
24.
318,750
0.27
25.
MARGARET LIM
312,500
0.27
26.
303,250
0.26
27.
274,800
0.23
28.
274,300
0.23
29.
270,000
0.23
30.
270,000
0.23
146
Notice of Seventeenth
Annual General Meeting
NOTICE IS HEREBY GIVEN that the Seventeenth Annual General Meeting (AGM) of Apex Healthcare Berhad ("the
Company") will be held at Bunga Melati Room, 7th Floor, Ramada Plaza Melaka, Jalan Bendahara, 75100 Melaka on
Wednesday, 18th May 2016 at 10.30 a.m. or immediately following the conclusion or adjournment (as the case may
be) of the Extraordinary General Meeting of the Company to be held at the same venue and on the same date at 10.00
a.m., whichever is later, for the following purposes:-
As Ordinary Business
1.
To receive the Statutory Financial Statements for the financial year ended 31st December
2015 together with the Directors and Auditors Reports thereon.
(Note 7)
2.
To approve a final single-tier dividend of 6 sen per share for the financial year ended 31st
December 2015.
Resolution 1
3.
To approve the payment of Directors fees for the financial year ended 31st December
2015.
Resolution 2
4.
To re-elect Datuk Noharuddin Bin Nordin @ Harun who retires pursuant to Article 83 of the
Companys Articles of Association.
Resolution 3
5.
To re-elect Mr Leong Khai Cheong who retires pursuant to Article 89 of the Companys
Articles of Association.
Resolution 4
6.
To re-elect Mr Robert Dobson Millner who retires pursuant to Article 89 of the Companys
Articles of Association.
Resolution 5
7.
To consider and if thought fit, to pass the following Ordinary Resolution in accordance with
Section 129 of the Companies Act, 1965:-
Resolution 6
That Mr Tong Yew Sum, retiring pursuant to Section 129 of the Companies Act, 1965, be and
is hereby re-appointed as Director of the Company to hold office until the conclusion of the
next Annual General Meeting of the Company.
8.
To re-appoint Messrs Ernst & Young as the Companys Auditors and to authorise the
Directors to fix their remuneration.
Resolution 7
As Special Business
To consider and if thought fit, to pass the following Resolutions:9.
AUTHORITY UNDER SECTION 132D OF THE COMPANIES ACT, 1965 FOR THE DIRECTORS
TO ALLOTT AND ISSUE SHARES
Resolution 8
THAT pursuant to Section 132D of the Companies Act, 1965, and subject to the approvals
of the relevant governmental and/or regulatory authorities, the Directors be and are hereby
empowered to issue new shares in the Company at any time, at such price, upon such terms
and conditions and for such purposes and to such person or persons whomsoever as the
Directors may, in their absolute discretion, deem fit, provided that the aggregate number of
shares issued pursuant to this resolution in any one financial year 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 from Bursa Malaysia Securities Berhad for
the listing of and quotation for the additional shares so issued AND THAT such authority shall
continue in force until the conclusion of the next Annual General Meeting of the Company.
147
Notice of Seventeenth
Annual General Meeting
(Contd)
10.
Resolution 9
THAT subject to the passing of Resolution 4 proposed under item 5 above, authority be
and is hereby given for Mr Leong Khai Cheong who has served as an Independent Director
of the Company for a cumulative term of more than nine years, to continue to act as an
Independent Director of the Company until the conclusion of the next Annual General Meeting
in accordance with Malaysian Code on Corporate Governance 2012 (MCCG 2012).
11.
APPOINTMENT OF DIRECTOR
Resolution 10
Shares transferred into the Depositors Securities Accounts before 4.00 p.m. on 3rd June 2016 in respect of
transfer; and
b) Shares bought on Bursa Malaysia Securities Berhad on a cum entitlement basis according to the Rules of Bursa
Malaysia Securities Berhad.
148
Notice of Seventeenth
Annual General Meeting
(Contd)
Notes:
1.
In respect of deposited securities, only members whose names appear in the Companys Record of Depositors
as at 11th May 2016 shall be eligible to attend, speak and vote at this meeting or appoint proxy(ies) to attend and
vote on his/her behalf.
2.
A member of the Company who is entitled to attend and vote at this meeting is entitled to appoint not more than
two (2) proxies, and in the case of a corporation, a duly authorised representative to attend and vote in its stead.
3.
A proxy may but need not be a member of the Company, an advocate, an approved company auditor or a person
approved by the Registrar (the provisions of Section 149(1) of the Companies Act, 1965 shall not apply). Where a
member appoints more than one (1) proxy, he shall specify the proportions of his shareholdings to be represented
by each proxy.
4.
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.
5.
The instrument appointing a proxy shall be in writing under the hand of the appointor or his attorney duly
authorised in writing or if the appointor is a corporation, either under its common seal or under the hand of an
officer or attorney duly authorised in writing.
6.
The original instrument appointing a proxy must be deposited at the Registered Office of the Company situated
at 1-5 Jalan TTC 1, Cheng Industrial Estate, 75250 Melaka, Malaysia, not less than forty-eight (48) hours before
the time set for holding this meeting or at any adjournment thereof.
7.
The Audited Financial Statements is meant for discussion only as the provision of Section 169(1) of the Companies
Act, 1965 (the Act) does not require a formal approval of the shareholders for the Audited Financial Statements.
Hence, this item on the Agenda is not put forward for voting.
8.
This proposed resolution, if passed, will renew the authority given to the Directors of the Company to issue
and allot new shares in the Company at any time, to such person or persons, upon such terms and conditions
and for such purposes as the Directors may, in their absolute discretion, deem fit (General Mandate),
provided that the number of shares issued pursuant to this General Mandate, when aggregated with the
nominal value of any such shares issued during the preceding twelve (12) months, does not exceed 10% of
the total issued share capital of the Company at the time of issue. This renewed General Mandate, unless
revoked or varied at a general meeting, will expire at the conclusion of the next AGM of the Company.
The General Mandate procured and approved in the preceding year 2015 which was not exercised by the
Company during the year, will expire at the forthcoming Seventeenth AGM of the Company.
With this renewed General Mandate, the Company will be able to raise funds expeditiously for the purpose
of funding future investment, working capital and/or acquisition(s) without having to convene a general
meeting to seek shareholders approval when such opportunities or needs arise.
149
Notice of Seventeenth
Annual General Meeting
(Contd)
(b) Resolution 9 Authority for Mr Leong Khai Cheong to continue office as Independent Director
Mr Leong Khai Cheong was appointed as an Independent Non-Executive Director of the Company on 18th
February 2000 and has reached the nine (9) years term limit prescribed by the MCCG 2012. In accordance
with the MCCG 2012, the Board of Directors of the Company, after having assessed the independence of
Mr Leong, considers him to be independent based on amongst others, the following justifications and
recommends that Mr Leong be retained as an Independent Non-Executive Director of the Company:(i) He has confirmed and declared that he is an Independent Director as defined under Paragraph 1.01 of
the Listing Requirements of Bursa Securities;
(ii) He does not have any conflict of interest with the Company and has not been entering/is not expected
to enter into contract(s) especially material contract(s) with the Company and/or its subsidiary
companies;
(iii) He is currently not sitting on the board of any other public and/or private companies having the same
nature of business as that of the Company and its subsidiary companies; and
(iv) The Board of Directors of the Company is of the opinion that Mr Leong is an important Independent NonExecutive Director in view of his many years on the Board with incumbent knowledge of the Company
and the Groups activities and corporate history and has provided invaluable contributions to the Board
in his role as an Independent Non-Executive Director.
This proposed resolution if passed, Mr Kee Kirk Chuen, will be appointed as Non-Independent Non-Executive
Director of the Company. His details are set out in the Statement Accompanying the Notice of Annual General
Meeting on page 151 of this Annual Report.
150
Statement Accompanying
Notice of Annual General Meeting
1.
Details of Mr. Kee Kirk Chuen, who is nominated for appointment as Non-Independent Non-Executive Director
of the Company at the Seventeenth Annual General Meeting of the Company are as follows:
Name
Age
50
Gender
Male
Nationality
Singaporean
Qualification
MBA
M.Eng (Master of Engineering)
Position in Board
Working experience
None
None
None
151
Statement Accompanying
Notice of Annual General Meeting
(Contd)
2.
The Directors standing for re-election and re-appointment at the Seventeenth Annual General Meeting are as
follows:
(a)
(b)
(c)
(d)
3. Further details of Directors who are standing for re-election and re-appointment
(a) Details of the above Directors who are standing for re-election and re-appointment are set out in the
Directors Profile appearing on pages 22 to 24 of this Annual Report.
(b) The direct and indirect shareholdings of the above Directors who are standing for re-election and reappointment are set out in the Analysis of Shareholdings on page 145 of this Annual Report.
4.
Four (4) Board meetings were held during the financial year ended 31st December 2015. Details of the attendance
of each Director are set out in the Report of the Nomination Committee appearing on page 45 of this Annual
Report.
5.
The Seventeenth Annual General Meeting of the Company will be convened and held at Bunga Melati Room, 7th
Floor, Ramada Plaza Melaka, Jalan Bendahara, 75100 Melaka on Wednesday, 18th May 2016 at 10.30 a.m. or
immediately following the conclusion or adjournment (as the case may be) of the Extraordinary General Meeting
of the Company to be held at the same venue and on the same date at 10.00 a.m., whichever is later.
152
Form of Proxy
I/We,
of
NRIC/Company No.
(Full Address)
of
or failing him/her,
(Full Address)
of
(Full Address)
or failing him/her, the Chairman of the meeting as my/our proxy to vote for me/us on my/our behalf at the Seventeenth
Annual General Meeting of Apex Healthcare Berhad (the Company) to be held at Bunga Melati Room, 7th Floor, Ramada
Plaza Melaka, Jalan Bendahara, 75100 Melaka on Wednesday, 18th May 2016 at 10.30 a.m. or immediately following the
conclusion or adjournment (as the case may be) of the Extraordinary General Meeting of the Company to be held at same
venue and on the same date at 10.00 a.m., whichever is later, on the following resolutions referred to in the Notice of
Seventeenth Annual General Meeting.
My/Our proxy is to vote as indicated below:RESOLUTIONS
Resolution 1
Resolution 2
Resolution 3
Resolution 4
Resolution 5
Resolution 6
Resolution 7
Resolution 8
Resolution 9
Resolution 10
*FOR
*AGAINST
To approve a final single-tier dividend of 6 sen per share for the financial year ended
31st December 2015.
To approve the payment of Directors fees for the financial year ended 31st December
2015.
To re-elect Datuk Noharuddin Bin Nordin @ Harun as Director Article 83 of the
Articles of Association of the Company.
To re-elect Mr Leong Khai Cheong as Director Article 89 of the Articles of
Association of the Company.
To re-elect Mr Robert Dobson Millner as Director Article 89 of the Articles of
Association of the Company.
To re-appoint Mr Tong Yew Sum as Director Section 129 of the Companies Act,
1965.
To re-appoint Messrs Ernst & Young as the Companys Auditors and to authorise the
Directors to fix their remuneration.
To authorise Directors to issue shares pursuant to Section 132D of the Companies
Act, 1965.
To retain Mr Leong Khai Cheong as an Independent Non-Executive Director of the
Company in accordance with Malaysian Code on Corporate Governance 2012.
To appoint Mr Kee Kirk Chuen as Non-Independent Non-Executive Director of the
Company.
*Please indicate with an X in the appropriate spaces on how you wish your vote to be cast. In the absence of specific
direction, your proxy will vote or abstain as he/she thinks fit
Dated this
day of
2016
Notes:
Fold here
affix
stamp
Fold here
Tel Number
Fax No
Contact Person
03-5629 3688
03-5629 3686
03-5636 8200
03-5636 8025
03-5636 8110
03-5629 3777
Ipoh
2-4, Medan Bendahara 2
Medan Bendahara
31650 Ipoh
Perak Darul Ridzuan
05-254 5833
05-253 6307
05-241 5613
05-253 2213
Melaka
134/1, Kompleks Perniagaan
Munshi Abdullah
Jalan Munshi Abdullah
75100 Melaka
06-284 7350
06-282 8695
06-282 2168
06-283 7704
06-764 2810
06-767 0327
07-353 5534
07-353 4816
09-774 3666
09-774 9428
04-6262739
04-626 3392
082-451 119
082-459 398
082-578 418
088-270 100
088-270 200
088-270 300
65-6741 3803
65-6749 3839