TWS-AnnualReport2009 (2.8MB) Beras Jati

TRADEWINDS (M) BERHAD (19123-K) STRATEGIC MOVES ACHIEVING MORE
TRADEWINDS (M) BERHAD (19123-K) Level 12, Menara HLA No. 3, Jalan Kia Peng 50450 Kuala Lumpur
T 603-2179 7777 F 603-2161 1632
www.twinds.com.my
ANNUAL REPORT 2009
The theme Strategic Moves. Achieving More for Tradewinds (M) Berhads 2009 Annual Report defines the implementation of our strategic initiatives during the year. We are focused on strengthening our core businesses whilst extending our reach and presence in both local and regional markets. In view of the challenging global economic landscape, we undertook strategic measures and seized opportunities to achieve more as we reinforced our position as the leading integrated group. The imagery of integrating pieces featured on the front cover reflects our unwavering commitment to realise all objectives and consistently achieve more in all that we do while we strive for greater returns on investments and constantly maintain a stronger asset value base.
annual report
2009
WHATS INSIDE
Corporate Vision
To be the preferred globally competitive integrated agribusiness organisation that delivers outstanding value for all.
CorporaTe VISIoN CorporaTe MISSIoN Notice of annual General Meeting Statement accompanying the Notice of annual General Meeting Financial Calendar 2009 Chairmans Statement Group Managing Directors review of operations Corporate Information Corporate Structure profile of Directors Management Team Statement on Corporate Governance Statement on Directors responsibility additional Compliance Information 2
6 7 10 18 30 32 36 41 44 51 52
Corporate Mission
We, as a team, are committed to achieve our vision by: providing premium products and services to our customers; optimising shareholder value; improving the quality of life of our employees; and fostering a sustainable environment.
Statement on Internal Control report of the audit Committee Corporate responsibility Group Half-Yearly results Five-Year Group Financial Highlights Financial Statements
55 57 64 70 71 76
properties of the Group Shareholding Statistics additional Information on Shareholders Directory of Groups operations ForM oF proxY
192 199 200 203
annual report 2009
NoTICe oF aNNUaL GeNeraL MeeTING
Notice is hereby given that the Thirty-Sixth annual General Meeting (aGM) of Tradewinds (M) Berhad (TWS or the Company) will be held at Mahkota Ballroom 2, Ballroom Level, Hotel Istana Kuala Lumpur, 73, Jalan raja Chulan, 50200 Kuala Lumpur on Tuesday, 22 June 2010 at 10.30 a.m. for the following purposes:As Ordinary Business, to consider and if thought fit, to pass the following resolutions:Ordinary Resolutions 1. To receive and adopt the audited Financial Statements for the financial year ended 31 December 2009 together with the reports of the Directors and Auditors thereon; To declare a Final Dividend of 5% per share less 25% income tax for the financial year ended 31 December 2009; To approve the payment of Directors fees for the financial year ended 31 December 2009; To re-elect the following Directors who are required to retire by rotation from office pursuant to articles 105 and 106 of the Companys articles of association:i) Chuah Seong Tat; ii) Ooi Teik Huat; and iii) Khalid bin Sufat. 5. To re-elect the following Directors who are required to retire from office pursuant to article 110 of the Companys articles of association:i) Datuk R Sharifuddin Hizan bin R Zainal Abidin; and ii) Datuk Hj. Ismail bin Hj. Hashim. 6. To reappoint Dato Wira Syed abdul Jabbar bin Syed Hassan whose office shall become vacant at the conclusion of this aGM pursuant to Section 129(2) of the Companies act, 1965 (the act) to hold office until the conclusion of the next AGM; To reappoint Messrs. anuarul azizan Chew & Co., as auditors of the Company for the ensuing year and to authorise the Directors to fix their remuneration. resolution 7 resolution 8 resolution 9 resolution 4 resolution 5 resolution 6 resolution 1
2.
resolution 2
3.
resolution 3
4.
7.
resolution 10
TRADEWINDS (M) BERHAD
As Special Business, to consider and if thought fit, to pass the following resolutions:Ordinary Resolutions 8. proposed Shareholders Mandates for the Company and its Subsidiary Companies (collectively, the Group Companies) to enter into recurrent related party Transactions of a revenue or Trading Nature specified in the Circular to Shareholders dated 31 May 2010 (the Circular):i) Proposed Category A Mandate:THaT approval be and is hereby given for the Group Companies to enter into the recurrent related party transactions of a revenue or trading nature specified and set out in Section 3.2 of the Circular (the Category a Mandate) provided that such transactions are (i) in the ordinary course of business and necessary for day-to-day operations of the Group Companies and (ii) on normal commercial terms which are not more favourable to the related parties than those generally available to the public and are not detrimental to the minority shareholders of TWS aND THaT unless revoked or varied by the resolutions of the shareholders of the Company in general meeting, Category a Mandate shall continue to be in force until the conclusion of the next aGM of the Company or the expiration of the period within which the next AGM is required to be held pursuant to Section 143(1) of the act (but shall not extend to such extensions as may be allowed pursuant to Section 143(2) of the said act) whichever is earlier. aND FUrTHer THaT the Group Companies be and are hereby authorised to enter into and execute all such agreements, instruments, documents and deeds and to do all acts, deeds and things necessary, expedient or advisable for and in respect of Category a Mandate and the transactions contemplated and/or authorised by the Category a Mandate. ii) Proposed Category B Mandate:THaT approval be and is hereby given for the Group Companies to enter into the recurrent related party transactions of a revenue or trading nature specified and set out in Section 4.2 of the Circular (the Category B Mandate) provided that such transactions are (i) in the ordinary course of business and necessary for day-to-day operations of the Group Companies and (ii) on normal commercial terms which are not more favourable to the related parties than those generally available to the public and are not detrimental to the minority shareholders of TWS aND THaT unless revoked or varied by the resolutions of the shareholders of the Company in general meeting, Category B Mandate shall continue to be in force until the conclusion of the next aGM of the Company or the expiration of the period within which the next AGM is required to be held pursuant to Section 143(1) of the act (but shall not extend to such extensions as may be allowed pursuant to Section 143(2) of the said act) whichever is earlier. aND FUrTHer THaT the Group Companies be and are hereby authorised to enter into and execute all such agreements, instruments, documents and deeds and to do all acts, deeds and things necessary, expedient or advisable for and in respect of the Category B Mandate and the transactions contemplated and/or authorised by the Category B Mandate. 9. To transact any other ordinary business to which due notice shall have been given. resolution 12 resolution 11
annual report 2009
NoTICe oF aNNUaL GeNeraL MeeTING
NOTICE OF DIVIDEND ENTITLEMENT AND PAYMENT Notice is hereby given that a Final Dividend of 5% per share less 25% income tax in respect of the financial year ended 31 December 2009, if approved by the shareholders at the forthcoming aGM, will be paid on 30 July 2010 to shareholders whose names appear on the Companys register of Depositors on 15 July 2010. A Depositor shall qualify for entitlement to the dividend only in respect of:a) Shares deposited into the Depositors Securities account before 12.30 p.m. on 13 July 2010 in respect of shares which are exempted from mandatory deposit; b) Shares transferred into the Depositors Securities account before 4.00 p.m. on 15 July 2010 in respect of ordinary transfer; and c) Shares bought on Bursa Malaysia Securities Berhad on a cum entitlement basis according to the rules of Bursa Malaysia Securities Berhad.
BY orDer oF THe BoarD MOHAMAD AFFENDI BIN YUSOFF Company Secretary Kuala Lumpur 31 May 2010
(LS 007158)
Notes: Proxy 1. a member of the Company entitled to attend and vote at the meeting is entitled to appoint any one person to be his/her proxy without limitation to attend and vote in his/her stead and the provisions of Section 149(1)(a) and (b) of the act shall not apply to the Company. A proxy may but need not be a member of the Company; Where a member of the Company is an authorised nominee as defined under the Central Depositories act, it may appoint one proxy in respect of each securities account it holds with ordinary shares of the Company standing to the credit of the said securities account; This Form of proxy to be valid, must be deposited at the Share registrars office, Symphony Share registrars Sdn Bhd at Level 6, Symphony House, pusat Dagangan Dana 1, Jalan pJU 1a/46, 47301 petaling Jaya, Selangor Darul ehsan on or before Sunday, 20 June 2010 at 10.30 a.m. being not less than forty-eight hours before the time fixed for holding the meeting or at any adjournment thereof; In the case of a corporate member, the proxy appointed must be in accordance with the Memorandum and articles of Association and the Form of Proxy should be given under its common seal or under the hand of its attorney; and Statement accompanying the Notice of annual General Meeting on profiles of the Directors standing for re-election and reappointment as Directors of the Company for resolutions 4 to 9 are shown on page 6 of this annual report.
2.
3.
4.
5.
EXPLANATORY NOTES ON SPECIAL BUSINESS:For further information on ordinary resolutions 11 and 12, please refer to the Circular to Shareholders dated 31 May 2010 accompanying this annual report.
annual report 2009
STaTeMeNT aCCoMpaNYING THe NoTICe oF aNNUaL GeNeraL MeeTING

made pursuant to Paragraph 8.27(2) of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad
1.
Directors who are standing for re-election and reappointment by rotation at the annual General Meeting of the Company (aGM) pursuant to articles 105 and 106 of the articles of association of the Company are as follows:i) ii) iii) Chuah Seong Tat; Ooi Teik Huat; and Khalid bin Sufat.
2.
Directors who are standing for reappointment at the aGM of the Company pursuant to article 110 of the articles of association of the Company are as follows:i) ii) Datuk R Sharifuddin Hizan bin R Zainal Abidin; and Datuk Hj. Ismail bin Hj. Hashim.
3.
Dato Wira Syed abdul Jabbar bin Syed Hassan who is 70 years of age, is standing for reappointment at the aGM in accordance with Section 129(6) of the Companies act, 1965. eight Board Meetings were held during the financial year ended 31 December 2009. Details of attendance of Directors at the said Board Meetings are contained in their respective profile on pages 36 to 40 of this annual report. The aGM of Tradewinds (M) Berhad will be held as follows:Venue : Mahkota Ballroom 2, Ballroom Level Hotel Istana Kuala Lumpur 73, Jalan raja Chulan 50200 Kuala Lumpur 22 June 2010 10.30 a.m.
4.
5.
Date Time 6.
: :
Further details of Directors who are standing for re-election and reappointment are shown on pages 36 to 40 of this annual report.
FINaNCIaL CaLeNDar 2009

ANNOUNCEMENT OF FINANCIAL RESULTS 1st quarter 2nd quarter 3rd quarter 4th quarter 27 May 2009 28 August 2009 23 November 2009 23 February 2010
DIVIDENDS FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2009 announced 1 Interim 10% per share less 25% Income Tax
st
23 February 2010 7 May 2010 21 May 2010
entitlement date payment date
Final 5% per share less 25% Income Tax
Subject to the approval by shareholders at the 36th annual General Meeting
GENERAL MEETINGS 35th annual General Meeting extraordinary General Meeting 36th annual General Meeting 17 June 2009 28 october 2009 22 June 2010
annual report 2009
strategic growth
achieving reach
We are focused on sowing the seeds of opportunities by establishing our presence and exploring new growth with expansionary plans for many more.
chairmans
dear shareholders,
The financial year ended 31 December 2009 continued to be a challenging one, owing to the lingering effects of what was the worst global economic downturn in seven decades. Despite the adverse conditions caused by the global economic and financial turmoil, Tradewinds (M) Berhad (TWS or the Company) turned in a commendable performance in 2009, due to the relentless drive by the Board of Directors (Board) and the management team to ensure business growth and operational efficiency. on the corporate front, 2009 was a busy and exciting year for the Company. For a dynamic entity like TWS, the Company realised that organic growth alone was insufficient to meet its vision of being the preferred globally competitive integrated agribusiness organisation that delivers outstanding value to our customers. Thus, when an opportunity to acquire a controlling stake in padiberas Nasional Berhad (BerNaS) presented itself, we quickly recognised the potential it could bring in terms of expansion in line with our vision. The acquisition has positioned the Group to become one of the largest foodand-commodity-based players in the region. In another strategic move to strengthen our presence in the
statement
upstream and downstream sectors of the rubber business, the Group went on to purchase strategic stakes in Northern Intergrated agriculture (NIa) Sdn Bhd in october 2009. on the proposed acquisition of Mardec Berhad (MarDeC), the exercise is now in the final stages of completion. Having laid the foundations, the financial year 2010 is set to be one of achieving more. The recent acquisitions will also enable TWS to fulfill its penultimate objective of enhancing shareholders value. In doing so, we will continue to strive to achieve our ultimate goal of serving the nation and its people in the spirit of 1Malaysia and in unison to the aspirations espoused in the New economic Model. With the enlarged TWS Group, it is my conviction that the best years for the Company are just ahead. We look forward with optimism to a more vibrant and brighter future.
FINANCIAL PERFORMANCE
revenue for the financial year ended 2009 grew by 17.1% to rM2.069 billion from rM1.768 billion recorded in 2008. Despite the growth in business volume, the significant drop in crude palm oil (Cpo) price throughout 2009 has resulted in profit before tax (pBT) to decline to rM245.9 million, which is a 17.7% drop from the previous financial year. accordingly, net profit fell by 22.7% to rM171.7 million compared to rM222.2 million achieved previously.
10
Key Performance Indicators Basic EPS (sen) Net profit for the financial year (RM000) Revenue (RM000)
2009 46.95 171,739 2,069,398
2008 56.09 222,242 1,767,566
Dato Wira Syed Abdul Jabbar bin Syed Hassan Chairman
The increase in the Groups revenue was mainly attributed to the inclusion of postacquisition revenue from BERNAS Group amounting to rM334.2 million. another factor was the increased contribution from the Sugar Division which achieved higher sales of refined sugar to the domestic market, boosting its turnover by 13.2% to rM976.2 million. This helped to compensate the shortfall in revenue generated by the plantation Division which fell by 16.2% to rM758.7 million as compared to rM905.1 million posted in 2008. The decline in the plantation Divisions revenue was attributed to lower Cpo and palm kernel average selling prices despite higher production volumes. For the financial year ended 2009, BerNaS posted its highest ever revenue since its privatisation in 1996. For the financial year ended 2009, BerNaS has turned around to post a pBT of rM238.3 million while its net profit stood at rM179.5 million. The turnaround was achieved largely through the implementation of effective pricing and market stabilisation strategies. although the latest financial results may not be as impressive as that of the previous year, we expect to fare better in the coming years with the full years inclusion of BerNaS results and contributions from other newly-acquired companies. Financial numbers aside, we are encouraged by the stable performance of the TWS counter on the FTSe Bursa Malaysia KLCI. Investors and analysts alike are bullish about the longerterm prospects of the Company, notably in the likelihood of increased earnings from the now enlarged Group.
DIVIDENDS
tat aci tatumsandit nisim qui The Company continues to provide dividends during the year 2009. Subject to the approval of shareholders, the Board has recommended a final dividend of 5 sen per share less 25% income tax. If we include the interim dividend of 10 sen per share less 25% income tax paid on 21 May 2010, the total gross dividend to be paid with respect to the financial year ended 31 December 2009 would amount to 15 sen per share.
annual report 2009
11
57,
41,500
48,000
32,000
210,000
16,000
140,000
70,000 2005 2006 2007 2008 2009
CHaIrMaNS STaTeMeNT
0 2005 2006 2007 2008 2009
5-YEAR PRODUCTION HIGHLIGHTS

Palm Kernel MT 71,375 80,000 68,427 63,746 MT 350,000 273,909 288,400 Crude Palm Oil MT 1,800,000 Fresh Fruit Bunches
177,043
236,751
280,000
250,791
273,909 2008 1,354,347
236,751
64,000
280,000
1,440,000 1,050,270
177,043
41,500
48,000
210,000
1,080,000
32,000
140,000
720,000
16,000
70,000
360,000
2005
2006
2007
2008
2009
0 2005 2006 2007 2008 2009 2005 2006 2007 2009
CORPORATE DEVELOPMENTS
tat aci tatumsandit nisim qui MT The Groups acquisition trail began with BERNAS, a company 1,800,000 listed on the Main Market of Bursa Malaysia Securities Berhad. Crude Palm With approximately 40% marketOil share, BerNaS is the single MT largest player in the domestic paddy and rice industry. BerNaS 350,000 1,440,000 is involved in the procurement and processing of paddy as well as the importation, warehousing, distribution and marketing of rice in Malaysia. With BerNaS within our fold, the Group 280,000 currently controls a significant share of the paddy and local 1,080,000 rice market. The exercise to acquire 53.76% stake in BERNAS was carried out in stages, beginning in august 2009 and completed in January 2010 whereby the stake was increased 210,000 720,000 to 72.57% after the mandatory general offer exercise.
288,400 177,043 236,751 250,791 1,050,270 273,909
Fresh Fruit Bunches
1,288,809
In other major corporate developments, our majority-owned 140,000 360,000 subsidiary, Tradewinds plantation Berhad (TpB), entered into an agreement with Gerak Mashyur (Malaysia) Sdn Bhd on 21 August 2009 to acquire 70% equity interest in NIA for a cash consideration of rM50.36 million. NIa owns 1,057.5 hectares 70,000 0
2005 2006
2007
1,327,700
a total of 451.3 hectares have been planted with rubber trees on the NIa lands between 1996 and 1999. Besides providing an immediate source of recurring revenue, it gives the Group a head-start in its plan to diversify its estate holdings by increasing the area planted with rubber trees to 6,120 hectares. This will make it the largest commercially-owned rubber plantation in a single location in Malaysia. a Master Layout plan has been approved for the remaining land owned by NIa to be developed for residential and commercial purposes including the development of a dutyfree zone, an inland port, a logistics centre and an educational research institute. The Master Layout plan complements TCs longer-term vision of an integrated rubber trading township.
2008 2009
12
0 2005 2006 2007 2008 2009
1,354,347
1,362,704
of land that are strategically located within the vicinity of Tradewinds Corridor Sdn Bhd (TC)s existing oil palm and rubber plantation land in Kedah. This will enable the Group to reap the benefits of economies of scale derived from the enlarged plantation operations.
1,288,809
57,454
250,791
1,327,700
1,362,704
288,400
on 30 october 2009, prisma Spektra Sdn Bhd which is a wholly-owned subsidiary of TPB, entered into an agreement to acquire the entire issued ordinary shares in Mardec Berhad (MarDeC) from Semi Bayu Sdn Bhd for a total cash consideration of rM150 million. The proposed acquisition of MARDEC provides a strategic fit to the Groups plans to expand its rubber activities downstream into the processing and marketing of rubber products. Incorporated over 40 years ago, MarDeC is a rubber conglomerate with a proven track record in the processing and trading of rubber and the manufacturing of value-added rubber and polymer products. as a regional player, MarDeC has made inroads into the major rubber producing countries namely Indonesia, Thailand, Vietnam and India.
ENTERPRISE RISK MANAGEMENT FRAMEWORK

tat aci tatumsandit nisim qui a revision over the existing framework of enterprise risk management (erM) began during the financial year ended 2009 to address the concern of the members of the Board with regards to the over-emphasis on operational risks. as a result, a team of external consultants has been engaged to advise the audit Committee and ultimately the Board on the erM function in the Company and the Group, and the way forward to enhance the process of risk identification, operational or strategic and the subsequent action plans to manage these risks. a more detailed review on risk management activities throughout 2009 is disclosed in the accompanying Statement of Internal Control of this annual report.
annual report 2009
13
CHaIrMaNS STaTeMeNT
A PROMISING OUTLOOKt aci tatumsandit nisim qui as one of the largest groups listed on the Main Market of Bursa Malaysia Securities Berhad, TWS Group is blessed with a solid foundation upon which it can build a promising and exciting future. over the years, we have established ourselves as a key player in the food and plantation businesses with a stellar track record of delivering quality products and services. From this position of strength, we have the flexibility to grow our businesses through strategic acquisitions. Guided by a clear vision of where we are heading and a roadmap that will take us there, the TWS Group is well positioned to capitalise on emerging opportunities in the marketplace locally and globally.
The financial year 2010 is already shaping up to be a promising one. The early signs of recovery in the global economy are expected to firm up in 2010 with growth at 3.1% for the year as compared to a negative growth of 1.1% in 2009. With improving domestic and external demand, coupled with a prudent fiscal stance and measures to strengthen recovery, the Malaysian economy is expected to grow at about 5.7% in 2010. Based on the prevailing prices of palm products and expected increase in production, the performance of the plantation Division is expected to improve in 2010. although the Sugar Division had experienced thinning margins in 2009, its continued focus on controlling production costs and maintaining high product quality will ensure continued profitability in the coming years.
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as far as the rice Division is concerned, 2010 is expected to be a challenging year as international rice prices have been on the increase since the start of the year in anticipation of a shortage in global supplies of this staple food item. However, this will be cushioned by planned procurement strategies that involve buying forward, open bidding and direct negotiations at source. By taking proactive and mitigating measures, the rice Division is expected to perform satisfactorily in 2010. In short, 2010 will be a year of achieving more. More in terms of productivity, efficiency, service, profitability and most of all, fulfilling our responsibility as a good corporate citizen, living up to the expectations of the nation and its people.
I wish to express my appreciation to my fellow members on the Board who have been unstinting in their support and wise counsel. Since the last annual report, Mr. Tan Gee Sooi and Mr. Boo Yew Leng resigned from the Board. on behalf of the Board of Directors, I thank these gentlemen for their contributions and wish them success in their future undertakings. encik Bakry bin Hamzah has been re-designated as the Group Managing Director while encik Mohd Nazri bin Shariff has been re-designated as the Group Chief Financial officer. We wish them all the best in their new capacities. It is my pleasure to welcome on board, YM Datuk r Sharifuddin Hizan bin r Zainal abidin and Datuk Hj. Ismail bin Hj. Hashim. They bring to the Board vast knowledge and experience and we look forward to benefiting from their fresh insights. I thank all of you.
DATO WIRA SYED ABDUL JABBAR BIN SYED HASSAN

Chairman
ACKNOWLEDGEMENTS
andit nisim qui our management and staff have shown exemplary discipline, professionalism and commitment to bring TWS to where we are today but a lot remains to be done. With a clear vision to guide us, we will continue to depend on our team if we are to achieve all we have set out to do. The Company is also fortunate in that it has a great support team made up of our business associates, partners, respective government agency, authorities, customers and of course, our shareholders. Your support has made a difference in a challenging year.
annual report 2009
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2009
revenue of RM759 million

plantation division
group managing directors
review of operations
In my capacity as the Group Managing Director, I am pleased to present my maiden report on the review of operations of Tradewinds (M) Berhad for the financial year ended 31 December 2009.
18 TRADEWINDS (M) BERHAD
Bakry bin Hamzah Group Managing Director
OPERATING SCENARIO
tat aci tatumsandit nisim qui The domino effects of the global economic downturn are felt to this day and continue to have an impact on the operations of Tradewinds (M) Berhad (TWS or the Company). In our core plantation Division where oil palm is the main plantation crop, the average crude palm oil (Cpo) price in 2009 decreased by 20% to rM2,150 per MT against rM2,676 per MT in the previous year. The average palm kernel (pK) price also declined by 34% to rM974 per MT from rM1,466 per MT recorded in 2008. Cpo and pK productions in Malaysia were also affected by the biological stress of the bumper harvest of the previous year and the effects of heavy rainfall in Sabah and Sarawak which curbed the output of fresh fruit bunches (FFB). on the other hand, Malaysian rubber prices gained ground due to strong demand and tight supplies from producing countries. When the price of crude oil reached its all-time high of USD147 per barrel in July 2008, it precipitated a collapse in commodity prices. Since then, commodity prices had been on a rollercoaster ride. a combination of poor harvests, speculations and strong demand sent the price of raw sugar soaring in 2009 as global supply fell short of demand. at its peak, the price of raw sugar increased by more than 100%. The world rice scenario in 2009 was one of relative calm after the rice shortage crisis in 2008. Global stocks improved during the year following a successful 2008 planting campaign. according to the Food and agriculture organisation, global paddy production for 2009 amounted to 678 million MT, 2% below 2008 level. The total volume of rice traded internationally remained low, constituting some 5% to 7% of worldwide production. The international price for the benchmark Thai White rice 100%B was relatively stable, ranging from USD530 per MT to USD637 per MT, before closing the year at USD618 per MT.
annual report 2009
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600
2009/2010 ESTIMATES OF THE HECTARAGE AND AGE PROFILE OF PALM OIL AND RUBBER TREES
450
Peninsular Malaysia (Ha)

27,448 4,589 8,639 27,448 4,589 8,639 42,040 3,603 21,349
Sarawak (Ha)
42,040 3,603 21,349
300
921 206 292
921 206 292
150
369 1,821
369 1,821
3,216 579
3,216 579 6,419 8,263 8,263 9,884 9,884 12,450 12,450
0 2009 2008
6,419
GroUp MaNaGING DIreCTorS reVIeW oF operaTIoNS
FFB and CPO Production Volume (MT) 2008 and 2009

MT000
1,354 1,363
PLANTATION DIVISION
The Group has 94,346 hectares of land planted with oil palm out of which 57% have reached maturity (9-18 years); another 18% consist of young matured palms (48 years), while immature palms make up 16%. The balance of the palm maturity profile comprises palms that are past their prime or are earmarked for replanting. The Group currently has an additional 42,380 hectares of land which have been set aside for oil palm plantation, of which 14,477 hectares are still under development and 27,903 hectares have yet to be planted. During the year, FFB production increased marginally by 0.6% to 1,362,704 MT, compared to 1,354,347 MT achieved in the previous year. accordingly, FFB yield rose by 0.5% to 16.95 MT per hectare from 16.86 MT per hectare posted a year earlier. The Group has ten palm oil mills with a total combined capacity of 1,420,000 MT. During the year, 1,161,541 MT of FFB or 85% of total production, were processed at those mills. The remaining 15% was processed at mills owned by third parties. The formation of the Joint Consultative Committees (JCC) has contributed to a steady improvement in oil extraction rates (oer). In 2009, the oer for Cpo has increased to 21.21%, which is the highest level achieved to-date. The extraction rate for pK has also improved marginally to 5.25%. The mills also recorded a 5.3% increase in the production of Cpo to 288,400 MT while pK production rose by 4.3% to 71,375 MT. The JCC which was set up in 2006 as a quality improvement initiative is made up of estate and mill personnel. JCC provides a useful function in identifying problems, recommending solutions, resolving conflicts and sharing information with other JCC teams. Since its formation, it has contributed towards continuous improvement in oer.
1,500
1,200
900
600
300
FFB 2009
20
274
CPO 2008
288
8,263
9,884
579 14,974 79,372
Sabah (Ha)
Total (Ha)
921 206 292
921 206 292
9,112 29,988
9,112 29,988
Oil palm matured Oil palm immature Rubber matured Rubber immature Oil palm under development
369
369
14,477 3,216 579 14,974 79,372
14,477 3,216 579 14,974 79,372
Rubber under development Plantable reserves Others
9,884
9,884
Oil palm matured Oil palm matured Oil palm immature Oil palm immature Rubber matured Rubber matured Rubber immature Rubber immature Oil palm under development Oil palm under development Rubber under development Rubber under development Plantable reserves Plantable reserves Others Others
annual report 2009
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22
SUGAR DIVISION
The year under review saw the price of raw sugar increased from US11.8 cents per pound in early January 2009 to US27.1 cents per pound in December 2009, an increase of about 130%. Coupled with the high volatile raw sugar prices, 2009 was indeed a very challenging year for the division. For the financial year ended 2009, the Sugar Division generated total revenue of rM976.2 million as against rM862.2 million posted in the previous year. The increase in revenue of 13.2% was mainly attributed to higher domestic sales volume and higher average export selling price against the previous financial year. presently, Malaysia has only four sugar refineries, of which two are owned by TWS i.e. Central Sugars refinery Sdn Bhd (CSr) at Batu Tiga Shah alam, Selangor and Gula padang Terap Sdn Bhd (GpT) at Kuala Nerang, Kedah. Both CSr and GpT produce a wide range of high quality products for industrial and retail markets. as part of a continuous expansion programme, CSr will be increasing its production capacity from 1,500 MT per day to 2,000 MT per day, an increase of about 33% by the second half of 2010. During the year under review, another milestone was achieved by GpT when it was awarded the oHSaS 18001:2007 certification from SIrIM QaS. Refined Sugar Production Volume (MT) 2008 and 2009
MT000 750 642 2009
600
450
300
150
0 2008
MT000 1,354 1,363 1,500
annual report 2009
1,200
23
636

RICE DIVISION
Through padiberas Nasional Berhad (BerNaS), the rice Division made its maiden contribution to Group revenue in the fourth quarter of 2009. BERNAS has positioned itself as the nations partner in the domestic paddy and rice industry. It is involved in the procurement and processing of paddy as well as the importation, warehousing, distribution and marketing of rice in Malaysia. During the year, total volume of local paddy purchased by BerNaS rose by 12% to 470,441 MT. The price of domestic paddy was relatively stable, hovering between rM1,000 per MT and rM1,200 per MT in the east and north of the peninsular. However, in the central region of the peninsular, particularly in the state of Selangor, prices spiked to a high of rM1,380 per MT. To help restore prices to a more stable level of rM1,100 to rM1,200 per MT, BerNaS has introduced market stabilisation strategies such as the Skim Upah Mengering dan Kisar and the Program Rakan Ladang. In the imported rice front, BerNaS continued to adopt a multiple-country sourcing strategy to ensure food security for the nation with the bulk of imports coming from Thailand, Vietnam and pakistan. In 2009, total rice sales increased by 28% to 1.31 million MT, compared to 1.02 million MT in 2008. as part of a future crisis mitigation plan and to reach out more effectively to consumers, BerNaS has opened a total of 27 retail outlets in 2009, with plans to add another 21 outlets by the end of 2010. During the year, BerNaS invested a total of rM9.0 million to upgrade its mills and the Central packaging plant in Bukit raya, Kedah. The acquisition of BERNAS is expected to provide synergistic benefits in all areas of operations. even though it is preliminary, synergy-realisation strategies have been put in place to harness the benefits of the acquisition.
24
annual report 2009
25
OUR COMMITMENT TO SUSTAINABILITY

It was not too long ago that the focus of business was on generating profits. In the more enlightened age of environmental and social consciousness, there is a surging demand from civil society, consumers, stakeholders and others for companies to conduct sustainable business practices. The admission of Tradewinds plantation Berhad to the roundtable on Sustainable palm oil (rSpo) in May 2009 is a testament to the Groups commitment to adopting good agricultural practices as well as achieving environmental and social sustainability in operating its business. The board and management have lent its full support for membership to the rSpo and the adoption of the eight rSpo principles and criteria that form the guidelines to sustainable estate management. During the year, the relevant operating personnel in the pioneer project were made aware of the new approach to agricultural practices through a series of training programmes and roadshows. at the same time, systems and control practices were put in place to enable field testing and monitor improvement by applying the rSpo principles and criteria to the greatest extent. The rSpo programme was officially launched in December 2009. It is implemented as a pilot project for two years after which independent bodies will be invited to audit and verify its compliance with the rSpo principles and criteria.
THE QUALITY IMPERATIVE

TWS commitment to quality is manifested in its accreditation programme to various certification bodies. Many of our operating units have already earned certification to MS ISo 9002:1987 for Quality Management Systems and MS ISo 14001 for environmental Management Systems. In addition to these, the relevant operating units have also secured the HaLaLJaKIM certification for halal products and the HaCCp-SGS certification for food safety. In 2009, we were focusing our efforts on obtaining ISo 9001:2008 certification for Ulu Sebol and Sungai Kachur mills in the Southern peninsular region. ISo 9001:2008 specifies the requirements for a quality management system where an organisation needs to demonstrate its ability to consistently provide products that meet customers and applicable statutory and regulatory requirements. It also aims to enhance customer satisfaction through effective application of the system including processes for continual improvement of the system and the assurance of conformity to customers and applicable statutory and regulatory requirements. SIRIM QAS has already performed the adequacy audit and the final audit was carried out in april 2010. Certification of the two mills is expected in May 2010. In pressing ahead with its quality initiatives, the Management has found a useful partner in the JCC. These committees were set up to build teamwork and team dynamics within the specific areas. The main objectives of the JCCs are to identify problems, provide solutions, resolve conflicts and share information with other JCCs across the Group. The collaborative efforts of the JCCs have already produced positive result with all ten palm oil mills showing higher oers since the introduction of JCCs. For 2009, the Group achieved a record-breaking oer of over 21%. Five mills attained an average oer above 21% for the year under review as compared to only three in 2008.
26
a reward and recognition programme has been instituted to acknowledge the hard work put in by the respective JCC team and to maintain enthusiasm, work interest and motivation amongst the operating units. The programme acknowledged the teams for achieving the highest oer above the benchmark of 21.5% for a period of six months. The Best performing JCC Team for the financial year ended 2009 was the Kota Tinggi JCC Team which achieved an oer of 22.03% clearly exceeding the benchmark level. In emphasising the importance of quality in our operations, we have also designated a Quality Day (Q-Day) for each of the six geographical locations of our operations. During the year, Q-Day was successfully organised for Sibu, Southern peninsular, Miri and Northern peninsular regions. Q-Day for Kuching and Sabah/Lawas regions are scheduled for mid-2010. organised jointly by the JCCs and the respective regional office, the Q-Day provides a useful platform to address quality issues and inculcate an innovative mindset to continually improve work processes with the objective of maintaining or reducing costs while increasing productivity and revenue for the Group.
We are leveraging the gains of the previous year and reaping its advantages. Fortified by our recent acquisitions, we have to explore further the synergy and inherent potential within the enlarged Group and harness the power from it. In moving forward, we must build TWS as a brand and a force to be reckoned with at home and in the international arena. We have forged a cogent strategy to bring the Group to even greater heights and we know what we must do to get there. at the same time, we also realise that strategies must always be tempered with prudence and recalibrated from time to time. In a world of change, the one thing that will remain constant is our values. our core values Integrity, accountability, Innovative, Knowledgeable, enterprising, Caring form an important cornerstone of our corporate philosophy and the way we conduct our businesses. With BerNaS, Northern Intergrated agriculture Sdn Bhd and Mardec Berhad now included within our corporate stable, we will as a team continue to: provide premium products and services to our customers; optimise shareholder value; improve the quality of life for our employees; and foster a sustainable environment.
MOVING FORWARD
The past year has been a whirlwind of activities and with the acquisition exercises now behind us, TWS is firmly on the path for a more exciting and promising future. our primary objective in the current financial year and over the next few years is to build on the Groups new position of strength and solidify its financial strength.
Together, we will build a better tomorrow. I invite you to be part of a brighter, more exciting and prosperous future.
BAKRY BIN HAMZAH

Group Managing Director
annual report 2009
27
2009

sugar division
BOARD OF DIRECTORS
Dato Wira Syed Abdul Jabbar bin Syed Hassan Independent Non-executive Director, Chairman Bakry bin Hamzah Non-Independent executive Director Group Managing Director (Redesignated from Non-Independent Non-Executive Director w.e.f. 3 February 2010) Syed Azmin bin Syed Nor Non-Independent Non-executive Director Chuah Seong Tat Non-Independent Non-executive Director
CorporaTe INForMaTIoN
AUDIT COMMITTEE
Ooi Teik Huat Chairman Syed Azmin bin Syed Nor Khalid bin Sufat
REGISTERED OFFICE
Level 12, Menara HLa No. 3, Jalan Kia peng 50450 Kuala Lumpur Tel : 603-2179 7777 Fax : 603-2161 1632 Website: www.twinds.com.my email: info@twinds.com.my
NOMINATION AND REMUNERATION COMMITTEE

Dato Wira Syed Abdul Jabbar bin Syed Hassan Chairman Ooi Teik Huat (Appointed w.e.f. 27 January 2010) Khalid bin Sufat (Appointed w.e.f. 3 February 2010) Bakry bin Hamzah (Resigned w.e.f. 3 February 2010) Boo Yew Leng (Resigned w.e.f. 6 January 2010)
COMPANY SECRETARY
Mohamad affendi bin Yusoff (LS007158)
JOINT COMPANY SECRETARY

Sakinah binti abdul Kadir (MaICSa 7000087) (Resigned w.e.f. 28 April 2010)
AUDITORS
Messrs. anuarul azizan Chew & Co No. 18, Jalan 1/64 off Jalan Kolam air, Jalan Ipoh 51200 Kuala Lumpur Tel : 603-4041 7233 Fax : 603-4041 0395
EXECUTIVE COMMITTEE
Dato Wira Syed Abdul Jabbar bin Syed Hassan Chairman Bakry bin Hamzah Chuah Seong Tat
30
Ooi Teik Huat Independent Non-executive Director Khalid bin Sufat Independent Non-executive Director Datuk R Sharifuddin Hizan bin R Zainal Abidin Non-Independent Non-executive Director (Appointed w.e.f. 22 February 2010) Datuk Hj. Ismail bin Hj. Hashim Non-Independent Non-executive Director (Appointed w.e.f. 11 March 2010)
Boo Yew Leng Non-Independent Non-executive Director (Resigned w.e.f. 6 January 2010) Tan Gee Sooi Non-Independent Non-executive Director (Resigned w.e.f. 6 January 2010) Ahmad bin Abu Bakar Independent Non-executive Director (Resigned w.e.f. 1 April 2009) Dr. Sharifuddin bin Abdul Hamid Independent Non-executive Director (Resigned w.e.f. 1 April 2009)
SHARE REGISTRAR
Symphony Share registrars Sdn Bhd Level 6, Symphony House pusat Dagangan Dana 1 Jalan pJU 1a/46 47301 petaling Jaya Selangor Darul ehsan Tel : 603-7841 8000 Fax : 603-7841 8008
FORM OF LEGAL ENTITY

Incorporated on 19 June 1974 as a private company limited by shares under the Companies act, 1965 as Tradewinds (M) Sdn Bhd and was converted into a public company on 28 September 1987 and since then known as Tradewinds (M) Berhad.
PLACE OF INCORPORATION AND DOMICILE

Malaysia
SOLICITORS
pakhruddin & partners Martin Cheah & associates albar & partners
STOCK EXCHANGE LISTING

Main Market of Bursa Malaysia Securities Berhad
BANKERS
Malayan Banking Berhad CIMB Bank Berhad rHB Bank Berhad Bangkok Bank Berhad amBank (M) Berhad public Bank Berhad
STOCK NAME
TWS
STOCK CODE
4421
ISIN
MYL 442100003
annual report 2009
31
CorporaTe STrUCTUre
n 100% Central Sugars Refinery Sdn Bhd
n *69.76% Tradewinds Plantation Berhad
n 100% Delta Delights Sdn Bhd

n n n n 100% 100% 100% 100% Delta Delights (Cambodia) Co Ltd Tradewinds Cambodia Co Ltd Tradewinds realty Co Ltd Croesus Limited
# n Manufacturing and trading production of crude palm oil
n Cultivation of oil palm and n Cultivation of palm oil n plantation management and
advisory services
n Sole and specific purpose to

undertake Islamic Securities Transactions
n Investment holding company n Cultivation of oil palm and

rubber trees
n property development and

rubber plantation
n n n n n
rice business other business Ceased operations property Dormant
Note: * public listed # excluding dormant, inactive and indirect subsidiaries which have ceased operations
n 100% Tradewinds plantation Management Sdn Bhd n 100% Tradewinds agro Services Sdn Bhd n 100% Tradewinds plantech Sdn Bhd n 100% Tradewinds plantation Capital Sdn Bhd n 100% Tradewinds Corridor Sdn Bhd n 100% Quek Shin & Sons pte Ltd n 100% Teon Choon realty Company Sdn Bhd n 100% Ladang Chendana Sdn Bhd n 100% Ibok plantation Sdn Bhd n 100% Ladang Mawar Sdn Bhd n 100% Syarikat Ladang Sawit Cherul Sdn Bhd n 100% Binu plantations Sdn Bhd n 100% Ladang permai Sdn Bhd n 100% Ladang Serasa Sdn Berhad n 100% prisma Spektra Sdn Bhd n 70% Bahtera Bahagia Sdn Bhd n 70% Barisan Tekad Sdn Bhd n 70% Kumpulan Kris Jati Sdn Bhd n 70% Northern Intergrated agriculture Sdn Bhd n 50% pride palm oil Mill Sdn Bhd n 100% Solar Green Sdn Bhd
n 100% Johore Tenggara oil palm Berhad n 100% Ladang petri Tenggara Sdn Bhd n 100% pertanian Johor Tenggara Sdn Bhd n 100% agromaju Sendirian Berhad n 100% permodalan pelangi Sdn Bhd n 100% Tanah Semai Sdn Bhd n 100% Semai Segar Sdn Bhd n 100% Uni-agro plantations (Trengganu) Sdn Bhd n 100% M.p. plantations Sdn Bhd n 70% Ladang Sungai relai Sdn Bhd n 100% amalan penaga (M) Sdn Bhd n 85% Trans Kenyalang Sdn Bhd n 70% Tradewinds Tanjung alan plantation Sdn Bhd n 70% arah Bersama Sdn Bhd n 70% Usaha Wawasan Sdn Bhd n 70% Melur Gemilang Sdn Bhd n 60% amalan pelita pasai Sdn Bhd
32
n *72.57% Padiberas Nasional Berhad
n 100% Gula Padang Terap Sdn Bhd
n 60% Retus Plantation Sdn Bhd

n 100% Masretus oil palm plantation Sdn Bhd
n 100% Sovereign Place Sdn Bhd
n 100% Beras Corporation Sdn Bhd n 100% Dayabest Sdn Bhd n 51% Haskarice Food Sdn Bhd n 51% Hock Chiong Foodstuff Sdn Bhd n 51% Ban Say Tong Sdn Bhd n 51% Tong Seng Huat rice Trading Sdn Bhd n 95% Sazarice Sdn Bhd n 55% Sabarice Sdn Bhd n 30% Liansin Trading Sdn Bhd n 100% Bernas production Sdn Bhd n 100% Bernas project & Development Sdn Bhd n 100% Bernas Seed pro Sdn Bhd n 100% Bernas Dominals Sdn Bhd n 49% Bernas Feedstuff Sdn Bhd n 100% Bernas overseas (L) Limited n 20% Irfan Noman Bernas (pvt) Limited n 100% Bernas agrotech Sdn Bhd n 95% Bernas International Trading Company Limited n 80% edaran Bernas Nasional Sdn Bhd n 61% Jasmine Food Corporation Sdn Bhd n 100% Jasmine Food (Ipoh) Sdn Bhd n 100% Jasmine Food (alor Setar) Sdn Bhd n 100% Jasmine Khidmat & Harta Sdn Bhd n 100% Jasmine Food (Johor Bahru) Sdn Bhd
n n n
n n n n n n
100% Jasmine Food (Seremban) Sdn Bhd 100% Jasmine Food (prai) Sdn Bhd 100% Jasmine Food (Kuantan) Sdn Bhd 100% Jasmine rice Mill (Tunjang) Sdn Bhd n 100% Jasmine rice products Sdn Bhd n 51% JS Jasmine Sdn Bhd 60% era Bayam Kota Sdn Bhd 51% Syarikat Faiza Sdn Bhd 51% YHL Holding Sdn Bhd n 100% YHL Trading (Kedah) Sdn Bhd n 100% YHL Trading (KL) Sdn Bhd n 100% YHL Trading (Melaka) Sdn Bhd n 100% YHL Trading (Segamat) Sdn Bhd n 100% YHL Trading (Johor) Sdn Bhd n 100% YHL Trading (Terengganu) Sdn Bhd 45% United Malayan Flour (1996) Sdn Bhd 20% Ban Heng Bee Holdings Sdn Bhd 52% 40% Serba Wangi Sdn Bhd 30% oeL realty Holdings Sdn Bhd 30% Gardenia Bakeries (KL) Sdn Bhd 25% Bernas Logistics Sdn Bhd n n n n
annual report 2009
33
2009

rice division
proFILe oF DIreCTorS
DATO WIRA SYED ABDUL JABBAR BIN SYED HASSAN
Chairman Independent Non-executive Director
YBhg. Dato Wira Syed abdul Jabbar bin Syed Hassan, a Malaysian aged 70, was appointed as Independent Non-executive Director and Chairman of Tradewinds (M) Berhad on 29 october 2008. He also sits as Chairman of the executive Committee as well as the Nomination and remuneration Committee of the Company. He holds a Bachelor of economics degree from the University of Western australia and a Masters of Science degree in Marketing from the University of Newcastle-Upon-Tyne, United Kingdom. YBhg. Dato Wira Syed abdul Jabbar was previously the Chief executive officer of the Kuala Lumpur Commodity exchange, the executive Chairman of the Malaysia Monetary exchange and the Commodity and Monetary exchange. YBhg. Dato Wira Syed abdul Jabbar is currently the Chairman of MMC Corporation Berhad, MarDeC Berhad, padiberas Nasional Berhad, Tradewinds plantation Berhad and aliran Ihsan resources Berhad. He is also a board member of the Star publications (M) Berhad and KaF Discounts Berhad. He attended all the eight board meetings held in the financial year under review. YBhg. Dato Wira Syed abdul Jabbars interests in the securities of the Company and its subsidiaries are as disclosed on page 202 of this annual report. He has no family relationship with any director and/or substantial shareholders of Tradewinds (M) Berhad. He has no conflict of interest in any business arrangement with the Company and has no conviction for any offence within the past ten years other than traffic offences.
36
encik Bakry bin Hamzah, a Malaysian aged 52, was appointed as Non-Independent Non-executive Director of Tradewinds (M) Berhad on 9 april 2007. He was redesignated as NonIndependent executive Director and the Group Managing Director on 3 February 2010. He also sits as a member of the executive Committee. He had previously served as a director of the Company from 22 august 2002 to 24 March 2003 before being appointed as Chief operating officer of the Company on 1 april 2003. He later became the Chief executive officer of the Company effective 1 December 2005 until 8 april 2007. encik Bakry holds a Bachelor of arts degree from University Malaya and began his career as assistant Director of Marketing in Lembaga Padi dan Beras Negara. Subsequently, he became the operations Manager of Bukhary Holdings Sdn Bhd before joining Juara Niaga Sdn Bhd as General Manager. In 1989, he joined KYD Brake Centre Sdn Bhd as General Manager prior to being the Head of Business Development of aero Mutiara Sdn Bhd. He was also the executive Director of Latitude Tree Holding Berhad and a Director of oriental Food Industries Berhad and MarDeC Berhad.
BAKRY BIN HAMZAH
Non-Independent executive Director Group Managing Director
He is currently a director of Tradewinds plantation Berhad and the Managing Director of padiberas Nasional Berhad. encik Bakry attended seven out of eight board meetings held during the financial year under review. He does not hold any interest in the securities of the Company or its subsidiaries. He has no family relationship with any Director and/or substantial shareholders of Tradewinds (M) Berhad. He has no conflict of interest in any business arrangement with the Company and has no conviction for any offence within the past ten years other than traffic offences.
SYED AZMIN BIN SYED NOR
In 1997, he was appointed as executive Director of CN asia Corporation Berhad until 2001. He was also involved in the incorporation of Commerce Dot Com Sdn Bhd which undertook one of the Governments electronic commerce projects, e-perolehan. He currently sits on the boards of amtek Holdings Berhad, engtex Group Berhad, Tradewinds Corporation Berhad, United Malayan Land Berhad and several private limited companies. Tuan Syed azmin attended all the eight board meetings held during the financial year under review.
Non-Independent Non-executive Director
Tuan Syed azmin bin Syed Nor, a Malaysian aged 46, was appointed as Non-Independent Non-executive Director of Tradewinds (M) Berhad on 28 September 2005. He also sits as a member of the audit Committee of the Company. He holds a Bachelor of Science degree, majoring in Business Management from the University of Berkeley, USa. Upon his return in 1984 until 1993, he was involved in several private business ventures including trading in commodities, housing development, manufacturing, stock broking and international trading.
Tuan Syed azmin is the brother of YBhg. Tan Sri Dato Seri Syed Mokhtar Shah bin Syed Nor, who holds indirect major shareholding in the Company. His interest in the securities of the Company or its subsidiaries is as disclosed on page 202 of this annual report. He has no conflict of interest in any business arrangement with the Company and has no conviction for any offence within the past ten years other than traffic offences.
annual report 2009
37
CHUAH SEONG TAT
He obtained his Bachelor of applied Science (Hons) degree from Universiti Sains Malaysia and a Masters of Business administration from the australian Graduate School of Management, University of New South Wales. Currently, he is also a Director of Tradewinds plantation Berhad and padiberas Nasional Berhad. Mr. Chuah attended all the eight board meetings held during the financial year under review. He does not hold any interest in the securities of the Company or its subsidiaries. He has no family relationship with any Director and/or substantial shareholders of Tradewinds (M) Berhad.
Mr. Chuah Seong Tat, a Malaysian aged 58, was appointed as Non-Independent Non-executive Director of Tradewinds (M) Berhad on 23 June 2006. He also sits as a member of the executive Committee of the Company.
He has no conflict of interest in any business arrangement with the Company and has no conviction for any offence within the past ten years other than traffic offences.
Mr. ooi Teik Huat, a Malaysian aged 50, was appointed as Independent Non-executive Director of Tradewinds (M) Berhad on 1 april 2009 and is also the Chairman of the audit Committee of the Company. He is also a member of the Nomination and remuneration Committee since 27 January 2010. He holds a Bachelor of economics degree from Monash University, australia. He is a member of the Malaysian Institute of accountants and Cpa australia. He began his career in 1984 with Messrs. Hew & Co (now known as Messrs. Mazars, Chartered accountants) before joining Malaysian International Merchant Bankers Berhad (now known as MIMB Investment Bank Berhad) in 1989. He was the Head of Corporate Finance at pengkalen Securities Sdn Bhd (now known as pM Securities Sdn Bhd) from 1993 to 1996. presently, he is also a Director of Tradewinds plantation Berhad, MMC Corporation Berhad, DrB-Hicom Berhad, edaran otomobil Nasional Berhad and Zelan Berhad. Mr. ooi attended seven board meetings since his appointment during the financial year under review.
OOI TEIK HUAT
Independent Non-executive Director
He does not hold any interest in the securities of the Company or its subsidiaries. He has no family relationship with any Director and/or substantial shareholders of Tradewinds (M) Berhad. He has no conflict of interest in any business arrangement with the Company and has no conviction for any offence within the past ten years other than traffic offences.
38
He has vast experience in the banking industry and has held several senior portfolios including Managing Director of Bank Kerjasama rakyat Malaysia Berhad, General Manager, Consumer Banking of Malayan Banking Berhad and executive Director of United Merchant Finance Berhad.
KHALID BIN SUFAT
He had previously managed Tronoh Mines Malaysia Berhad, Furqan Business Organisation Berhad and Seacera Tiles Berhad as executive Director, Deputy executive Chairman and Group Managing Director, respectively. Currently, he is a board member of amtek Holdings Berhad, Bina puri Holdings Berhad, Malaysia Building Society Berhad and Uzma Berhad. encik Khalid attended seven board meetings since his appointment during the financial year under review. He does not hold any interest in the securities of the Company or its subsidiaries. He has no family relationship with any Director and/or substantial shareholders of Tradewinds (M) Berhad. He also has no conflict of interest in any business arrangement with the Company and has no conviction for any offence within the past ten years other than traffic offences.
Independent Non-executive Director
encik Khalid bin Sufat, a Malaysian aged 54, was appointed as Independent Non-executive Director of Tradewinds (M) Berhad on 1 april 2009. He also sits as a member of the audit Committee of the Company. an accountant by profession, encik Khalid is a Fellow of association of Chartered Certified accountants, United Kingdom, a member of the Malaysian Institute of accountants and the Malaysian Institute of Certified public accountants.
YM Datuk r Sharifuddin Hizan bin r Zainal abidin, a Malaysian aged 64, was appointed as Non-Independent Non-executive Director of Tradewinds (M) Berhad on 22 February 2010. He holds a Bachelor in agricultural economics from the University of New england, armidale, australia and a Masters in Business administration from the Catholic University of Leuven, Belgium. He also attended the program Management Development at Harvard Business School, Boston, United States of america. YM Datuk r Sharifuddin Hizan is currently a board member of Lembaga Kemajuan Tanah persekutuan (FeLDa) and Felda Holdings Bhd. He also sits on various boards under the Felda Group including Malayan Sugar Manufacturing Company Berhad as well as several private companies. He has served Felda Group for over 40 years and has held various positions including as advisor and Group Managing Director.
YM DATUK R SHARIFUDDIN HIZAN BIN R ZAINAL ABIDIN

He does not hold any interest in the securities of the Company or its subsidiaries. He has no family relationship with any Director and/or substantial shareholders of Tradewinds (M) Berhad. He has no conflict of interest in any business arrangement with the Company and has no conviction for any offence within the past ten years other than traffic offences.
annual report 2009
39
YBhg. Datuk Hj. Ismail bin Hj. Hashim, a Malaysian aged 65, was appointed as Non-Independent Non-executive Director of Tradewinds (M) Berhad on 11 March 2010. He holds a Diploma in accountancy from rIDa College, petaling Jaya (now known as University Teknology Mara). YBhg. Datuk Hj. Ismail is also a Fellow of the Chartered Institute of Management accountants, United Kingdom. He had also attended the Management Development program at Harvard Business School, Boston, USa. YBhg. Datuk Hj. Ismail began his career at Shell Marketing Malaysia as a Management Trainee and subsequently joined ICI Group of Companies in Malaysia, Singapore, Indonesia, United Kingdom and Canada in 1966 as an accountant and project Investment analyst. In 1973, he then joined Tower Group of Companies for South east asia Timber Industry as Director of Finance for South east asia. YBhg. Datuk Hj. Ismail joined peTroNaS Group of Companies as Financial Controller in 1974 and was later appointed to the Main Board of peTroNaS as executive Director, Finance from 1975 to 1986; as Vice President, Finance, Planning and Information Services until 1990 and as Senior Vice president, Downstream until 1994. He served as Non-executive Director, aNCoM Berhad from 1995 to 1997 and became the Chief executive officer of aNCoM energy & Services Sdn Bhd until his retirement in 2004.
DATUK HJ. ISMAIL BIN HJ. HASHIM
YBhg. Datuk Hj. Ismail is currently an independent board member of Felda Holdings Bhd and Sarawak economic Development Corporation. He does not hold any interest in the securities of the Company or its subsidiaries. He has no family relationship with any Director and/or substantial shareholders of Tradewinds (M) Berhad. He has no conflict of interest in any business arrangement with the Company and has no conviction for any offence within the past ten years other than traffic offences.
40
MaNaGeMeNT TeaM
1.
Bakry bin Hamzah Group Managing Director/ Managing Director rice Division Chan Seng Fatt Chief executive officer plantation Division Tuan Ngah bin Tuan Baru Managing Director Sugar Division Mohd Nazri bin Shariff Group Chief Financial officer Mohd Azanuddin bin Salleh Senior General Manager Finance Ibrahim bin Husian General Manager project/operations Kenny Lim Yin Meng General Manager Internal audit Azmin bin Abidin Deputy General Manager Human resources & administration Ainul Arfah binti Baharim Senior Manager risk Management
8 9 10 5 6 7
2.
3.
4. 5.
6.
7.
8.
9.
10. Mohamad Affendi bin Yusoff Company Secretary/Legal
annual report 2009
41
strategic investment
achieving returns
We will strive to make beneficial and sound investments in areas of infinite potential and to yield greater returns whilst ensuring our brand exudes the hallmark of excellence and prestige.
STaTeMeNT oN CorporaTe GoVerNaNCe
The Board of Directors of Tradewinds (M) Berhad (TWS) (Board) is committed in ensuring the highest standards of corporate governance are applied throughout the TWS Group (Group). The Board fully supports the principles of Corporate Governance (principles) as laid down in the Malaysian Code on Corporate Governance (Code) and strives to adopt such principles.
The Board is also committed to ensure that good governance is practised throughout the Group in all aspects of its business dealings, displaying integrity and transparency with the objective to safeguard shareholders investments and ultimately enhancing shareholder value. The Board is pleased to disclose the Groups application of the principles as set out in part 1 of the Code and pursuant to Paragraph 15.25 of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad (MMLr) during the financial year ended 31 December 2009 up to the date of this Statement.
The Board reserves material matters to itself for decision which include the overall Group strategies and directions, acquisition and divestment policies, approval of major capital expenditure projects, plans and budgets and significant financial matters as well as human capital policies including succession planning for top management. profiles of directors which are presented from page 36 to 40 of this annual report demonstrate their range of experiences. BOARD BALANCE The Board comprises executive and non-executive directors and currently has eight directors made of an independent non-executive chairman, four non-independent nonexecutive directors, two independent non-executive directors and one non-independent executive director. Three members, which are more than one-third of the Board, are independent directors. This is in compliance with the MMLr. No individual or small group of individuals dominates the decision-making of the Board and the number of directors fairly reflects the best interests of the shareholders investment.
DIRECTORS
THE BOARD The Board is responsible for the overall performance of the Group by maintaining full and effective control over strategic, financial, operational, compliance and governance issues. The Board comprises members with various professional backgrounds, bringing depth and diversity in experience, expertise and perspective to the Groups operations and ultimately, the enhancement of long-term shareholder value.
44
Collectively, the directors bring a wide spectrum of business acumen, skills and perspectives necessary for the decision -making process. The diversity and depth of knowledge offered by the directors reflect the commitment of the Company to ensure effective leadership and control of the Group. The non-executive directors provide considerable depth of knowledge collectively gained from experiences in a variety of public and private companies. The nonexecutive directors possess the necessary caliber and credibility as well as necessary skills and experiences bringing their independent judgement on the issues of strategy, per formance and resource, including key appointments and standard of conduct. The independent non-executive directors provide unbiased and independent views in ensuring that the strategies proposed by the management are fully deliberated and examined, not only in the interests of the Group but also of other stakeholders. The role of the Group Chief executive officer (GCeo) has been relinquished with effect from 3 February 2010 and a new portfolio, Group Managing Director (GMD), was created on even date. The GMD assumes the roles and responsibilities of the GCeo.
There is a clear division of responsibilities between the roles of the Chairman and the GMD to ensure a balance of power and authority and no individual has unfettered powers of decision. The Chairman is primarily responsible for the orderly conduct and working of the Board whilst the GMD is responsible for the overall operations of the business, organisational effectiveness and the implementation of Board policies and strategies. The GMD is assisted by the management team in managing the day-to-day business of the Group. SUPPLY OF INFORMATION Board meetings are scheduled in advance of the new financial year to enable directors to plan and accommodate the years meetings into their schedule. The Board meets at least six times yearly. additional meetings are held as and when required. During the financial year under review, eight Board meetings were held including two additional meetings pertaining to the acquisition of Padiberas Nasional Berhad (BerNaS). Details of attendance to the meetings are as follows:
Board of Directors Dato Wira Syed abdul Jabbar bin Syed Hassan Bakry bin Hamzah Syed azmin bin Syed Nor Chuah Seong Tat ooi Teik Huat (appointed w.e.f. 1 April 2009) Khalid bin Sufat (appointed w.e.f. 1 April 2009) Datuk r Sharifuddin Hizan bin r Zainal abidin (appointed w.e.f. 22 February 2010) Datuk Hj. Ismail bin Hj. Hashim (appointed w.e.f. 11 March 2010) encik ahmad bin abu Bakar (resigned w.e.f. 1 April 2009) Dr. Sharifuddin bin abdul Hamid (resigned w.e.f. 1 April 2009) Tan Gee Sooi (resigned w.e.f. 6 January 2010) Boo Yew Leng (resigned w.e.f. 6 January 2010)
Attendance 8 out of 8 7 out of 8 8 out of 8 8 out of 8 7 out of 7 7 out of 7 not applicable not applicable 1 out of 1 1 out of 1 8 out of 8 8 out of 8
annual report 2009
45
The Board is furnished with information in a form and of a quality appropriate to enable it to discharge its duties relating to all matters that requires its attention and decision-making in a timely manner. proposals comprising comprehensive and balanced financial and non-financial information are encapsulated in the papers covering amongst others, strategies, operational and regulatory, marketing and human resource issues to enable the Board to examine both the quantitative and qualitative aspects of the business. Minutes of meetings are duly recorded and thereafter confirmed by the Chairman of the meeting. all directors have the right to make further enquiries where deemed necessary. The three independent directors are independent of management and free from any business or other relationships that could materially interfere with the exercise of their independent judgement. They have the caliber to ensure that the strategies proposed by the management are fully deliberated and examined in the long-term interest of the Group as well as the shareholders, employees and customers. Directors have unhindered access to the advice and services of the company secretary who is responsible for ensuring that Board meeting procedures are adhered to and that the applicable rules and regulations are complied with. The directors may, whether as a full Board or in their individual capacities, obtain independent professional advice, where necessary and appropriate, in furtherance of their duties at the Companys expense. APPOINTMENTS TO THE BOARD The Company has in place a formal and transparent procedure for the appointment of new directors to the Board. all nominees are initially considered by the Nomination and remuneration Committee (NrC) taking into account the required mix of skills, experiences and other qualities prior to putting forward a recommendation to the Board for its approval.
RE-ELECTION In accordance with the provisions of the Companys articles of association, all directors who are newly appointed by the Board are subject to election by the shareholders at the first annual General Meeting (aGM) following their appointments. additionally, at least one-third of the Board shall retire from office at least once in three years but shall be eligible for re-election at every aGM. This provides shareholders the opportunity to evaluate directors performances and also promotes effective Board. pursuant to Section 129 of the Companies act, 1965 (act), directors over the age of 70 are also required to retire but shall be eligible for reappointment.
DIRECTORS REMUNERATION
THE LEVEL AND MAKE-UP OF REMUNERATION Directors are remunerated at levels which allow the Company to attract and retain directors with the relevant experience and expertise to manage the Group successfully. The remuneration reflects the level of experience and expertise they bring with them and the amount of responsibilities undertaken by them. PROCEDURE The Board, through its NrC, annually reviews the performance of the executive director as a prelude to determining his annual remuneration, bonus and other benefits. In discharging this duty, the NrC evaluates the executive directors performances against the objectives set by the Board, thereby linking his remuneration to performance. The remuneration of non-executive directors is reviewed by the Board as a whole to ensure that it is aligned to the market and to their duties and responsibilities.
46
DISCLOSURE a summary of the remuneration of the directors (including from companies within the Group) during the financial year under review is as follows:Fees Non-executive Directors rM155,520 Emoluments rM1,328,000 Benefit-in-Kind rM25,000 Total rM1,508,520
Note: (i) Inclusive of fees and emoluments received from subsidiaries. (ii) There was no executive director on the Board during the financial year under review. The number of Directors whose total remuneration falls within the following bands is as follows:-
Range of Remuneration per annum rM1 to rM50,000 rM50,001 to rM100,000 rM100,001 to rM150,000 rM150,001 to rM200,000 rM200,001 to rM250,000 rM250,001 and above
Number of Non-Executive Directors 4 2 2 0 0 2
Notes: (i) The total remuneration includes salaries, bonuses and meeting allowances received from subsidiaries. (ii) There was no executive director on the Board during the financial year under review.
SHAREHOLDERS
DIALOGUE BETWEEN COMPANY AND INVESTORS The Board recognises the importance of transparency and accountability to its shareholders and maintains an effective communication policy that enables both the Board and the management to communicate effectively with its shareholders and the public. an important aspect of an active and constructive communication policy is the timeliness in disseminating information to shareholders and investors.
In addition to the various announcements made during the financial year under review in respect of corporate developments of the Group, the timely release of financial results on a quarterly basis provides shareholders with an overview of the performance and operations of the Group. Copies of the full announcement are supplied to the shareholders and members of the public upon request. The full financial results and announcements made by the Company can also be obtained from Bursa Malaysia Securities Ber had (Bursa Malaysia)s website at www.bursamalaysia.com as well as the Companys website at www.twinds.com.my.
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47
The website of the Company also provides convenient access to the latest corporate information of the Group. THE AGM The aGM, usually held in June each year, is the principal forum for dialogue with shareholders. Shareholders who are unable to attend are allowed to appoint proxies to attend and vote on their behalf. Members of the Board, the senior management of the Group, as well as the Companys auditors are present to answer questions raised during the meeting. additionally, a press conference is held immediately after the aGM whereby the Chairman briefs the media on the resolutions passed and answers questions concerning the Group. an extraordinary General Meeting (eGM) of the Company was held on 28 October 2009 on the acquisition of BERNAS. The eGM provided shareholders with the opportunity to participate in the discussion relating to the proposed acquisition and later voted on the same. A press conference was held soon after the conclusion of the eGM.
The Board takes responsibility in presenting a balanced and meaningful assessment of the Groups financial performance and prospects. The financial statements are drawn up in accordance with the provisions of the act, and the applicable approved Financial reporting Standards in Malaysia. a statement on the directors responsibilities in preparing the financial statements is set out separately on page 51 of this annual report. INTERNAL CONTROL The Statement on Internal Control as set out on pages 55 to 56 of this annual report provides an overview of the state of internal control of the Company. RELATIONSHIP WITH AUDITORS The external auditors, Messrs. anuarul azizan Chew & Co., has continued to report to members of the Company on their findings which are included as part of the Companys financial reports each year. In so doing, the Company has established a transparent arrangement with the auditors to meet their professional requirements. The Audit Committee also reviews with the auditors, results of the annual audit, the audit report and the management letter including the managements responses thereon. at least two meetings with the auditors were held in the absence of the management. The quarterly results of the Company are also reviewed by the audit Committee. DIRECTORS TRAINING all members of the Board have attended and completed the Mandatory accreditation programme in compliance with the MMLr. The Company recognises the importance and need for continuous education in order for Board members to gain better insights into the technological advances, regulatory updates and management strategies. Directors are encouraged to attend appropriate and relevant training programmes, talks, seminars, workshops and conferences to enhance and to keep abreast with new developments in the business environment. among the seminars and conferences attended by Directors during the financial year under review are:i. High Forum for Directors of Listed Issuers in enhancing Corporate Governance by Bursa Malaysia;
ACCOUNTABILITY AND AUDIT

FINANCIAL REPORTING The Board is assisted by its audit Committee in reviewing information to be disclosed through annual financial statements and announcements of quarterly results to shareholders to ensure accuracy, adequacy and completeness.
48
ii.
Half Day Talk on the outlook of the other Half of 2009 - 2010 Global economic Crisis Impact on Malaysia by Asia Chain Management Sdn Bhd; Seminar on Key amendments on the Directors Obligations under the Listing Requirements of Bursa Malaysia Securities Berhad and Understanding the Directors: Board Effectiveness & Managing Risk; Board effectiveness: Understanding the roles & Functions of the Nominating & remuneration Committee by Bursatra Sdn Bhd (Bursatra); Risk Management Best Practices by Bursatra; The Future Islamic Financial Services by Islamic Financial Services Board, Singapore; MaICSa annual Conference 2009 Shaping the Future Corporate Professional; Corporate Governance Guide Towards Boardroom excellence by Malaysian Institute of accountants (MIA); an Insight Session into the economy with professor Danny Quah; Forum on FrS 139 Financial Instruments: recognition and Measurement by Bursa Malaysia;
xi. Board Excellence Forum by Lexis Nexis; xii. Forum on FRS Financial Instruments Standard; xiii. The Non-executive Director Development Series Is it Worth the risk? By priceWaterhouseCoopers & Security Industry Develoment Corporation; economic Turmoil: THrIVe, Dont Just Survive by Anuarul Azizan Chew & Co. and Morison International;
iii.
xiv. iv.
xv. National Accountants Conference 2009 by MIA; xvi. exclusive Strategy Session Global Financial Crisis with Tun Dr. Mahathir;
v. vi.
xvii. Leading Change in Touch Times professor John Kotters Asia Tour 2009; and xviii. World rice Commerce, Bali, Indonesia. The management had also organised an in-house seminar for directors and senior management of the Group on 16 and 17 December 2009 on the following:i. Updates on Key amendments on the Directors obligations under the New Main Market Listing Requirements of Bursa Malaysia Securities Berhad; and Towards Boardroom excellence Managing related party Transactions and Conflict of Interest.
vii.
viii.
ix.
x.
ii.
The directors are also encouraged to visit various operation sites of the Group as part of their training and development programme to expose and familiarise themselves with the operations and issues directly affecting the businesses of the Group. BOARD MEETINGS eight board meetings were held during the financial year under review whereby various matters including the Companys financial results, the business plan and directions of the Company were discussed and deliberated. Details of the directors attendance at the board meetings are as set out on page 45 of this annual report. all directors have fulfilled the requirements of the MMLR in respect of board meeting attendance.
annual report 2009
49
THE BOARD COMMITTEES The Board has, where appropriate, delegated specific responsibilities to its Board Committees namely, the audit Committee, the executive Committee and the Nomination and remuneration Committee. These committees have been given the authority to examine particular issues within their terms of reference and report to the Board with their recommendations. The ultimate responsibility for the final decision on all matters however, lies with the Board. a. Audit Committee (AC) The aC which was established on 8 November 1993 to assist the Board in the execution of its responsibilities comprises three members, a majority of whom are independent. all members are non-executive directors. The aC is governed by a written terms of reference which deals clearly with its authority and duties. The Terms of reference of the aC together with its report are presented from page 57 to 61 of this annual report. The members of the aC are as follows: Ooi Teik Huat (Chairman) (appointed w.e.f. 1 April 2009) Syed Azmin bin Syed Nor Khalid bin Sufat (appointed w.e.f. 1 April 2009) Ahmad bin Abu Bakar (resigned w.e.f. 1 April 2009) Dr. Sharifuddin bin Abdul Hamid (resigned w.e.f. 1 April 2009)
c.
Nomination and Remuneration Committee (NRC) The NrC which was established on 23 November 2001 is responsible for recommending new nominees with the necessary skills, experience and competencies to be appointed to the Board as well as committees of the Board. The NrC which comprises three members also assists the Board in assessing the effectiveness of the Board as a whole, its committees as well as the performance of each existing director. The NrC is also responsible for developing the policy on the remuneration of the executive director and recommending the remuneration and compensation of executive director and senior management to the Board. The members of the NrC are as follows:-
Dato Wira Syed Abdul Jabbar bin Syed Hassan (Chairman) Ooi Teik Huat (appointed w.e.f. 27 January 2010) Khalid bin Sufat (appointed w.e.f. 3 February 2010) Boo Yew Leng (resigned w.e.f. 6 January 2010) Bakry bin Hamzah (resigned w.e.f. 3 February 2010)
The Chairman, Dato Wira Syed abdul Jabbar bin Syed Hassan, acts as the senior independent non-executive director. any matters concerning the Group may be conveyed to him at:Tradewinds (M) Berhad Level 12, Menara HLa No. 3, Jalan Kia peng 50450 Kuala Lumpur Tel: 603 2179 7777 Fax: 603 2161 1632 Shareholders may at any time, contact the company secretary at the registered address and telephone number of the Company as aforementioned, to convey any concern or make queries. This statement is made in accordance with a resolution made by the Board dated 28 april 2010.
b.
Executive Committee (EXCO) The exCo which was established on 10 october 2007 to assist the Board in overseeing the management and operations of the Group as well as expediting the decision-making process comprises three members and is governed by a written charter which deals clearly with its authority and duties. The members of the exCo are as follows:-
Dato Wira Syed Abdul Jabbar bin Syed Hassan (Chairman) Bakry bin Hamzah Chuah Seong Tat
50
STaTeMeNT oN DIreCTorS reSpoNSIBILITY
The Companies Act, 1965 (Act) requires the directors to prepare a financial statements which give a true and fair view of the state of affairs of the Company and at the end of each financial year, to prepare together with the results and cash flows. As required by the Act and the Main Market Listing Requirements of Bursa Malaysia Securities Berhad, the financial statements have been prepared in accordance with the applicable approved Financial reporting Standards in Malaysia and provisions of the act. The directors consider that in preparing the financial statements for the financial year ended 31 December 2009 set out from page 77 to 191 of this annual report, the Group has used appropriate accounting policies, consistently applied and supported by reasonable and prudent judgments and estimates. The directors have the responsibility in ensuring that the Company and the Group maintain accounting records which disclose with reasonable accuracy the financial position of the Company and the Group which enable them to ensure that the financial statements are in compliance with the financial reporting standards in Malaysia and the act. The directors have the overall responsibilities for taking such steps as are reasonably available to them to safeguard the assets of the Group and to prevent and detect fraud as well as other irregularities. This statement is made in accordance with a resolution of the Board of Directors dated 28 april 2010.
annual report 2009
51
aDDITIoNaL CoMpLIaNCe INForMaTIoN
The following additional information for the financial year ended 31 December 2009 has been provided in compliance with the Main Market Listing Requirements of Bursa Malaysia Securities Berhad (Bursa Malaysia):-
1.
Non-Audit Fees
The amount of non-audit fees paid to the Groups external auditors was rM47,500.00.
Relationship Interested Directors and Major Shareholders perspective Lane (M) Sdn Bhd (pLSB), Kelana Ventures Sdn Bhd (KVSB) and Seaport Terminal (Johore) Sdn Bhd (STJSB) hold 30.04%, 8.86% and 4.07% equity interest in the Company, respectively. Tan Sri Dato Seri Syed Mokhtar Shah bin Syed Nor (TSDSSM) holds 99.9% equity interest in Restu Jernih Sdn Bhd (RJSB), the holding company of pLSB. He also holds 99.9% equity interest in both KVSB and Indra Cita Sdn Bhd (the holding company of STJSB), respectively. In addition, the directors and shareholders of GBSB, namely ahmad ridzuan bin Dahari and Datuk azizan bin ayob are persons connected to Syed azmin bin Syed Nor (SaSN) who is a non-independent nonexecutive director of the Company as they are both accustomed to act in accordance with SaSNs directions and instructions. SaSN is the brother of TSDSSM. Notwithstanding that TSDSSM and SaSN have no interest in WT, by virtue of TSDSSMs indirect interest in the Company and SaSNs indirect interest in BerNaS, pLSB, KVSB and STJSB were deemed interested in the proposals. Bakry bin Hamzah, a non-independent executive director and the group managing director of the Company is also a director of BerNaS, BGSB and rJSB and was deemed interested in the proposals. Chuah Seong Tat is a related party to TSDSSM by virtue of him being a director of the Company and Bukhary Sdn Bhd, an indirect subsidiary of KHSB Equity Sdn Bhd in which SaSN is also a director.
2.
Material Contracts Involving Directors and Major Shareholders

(a) a Share Sale agreement dated 28 august 2009 between Tradewinds (M) Berhad (TWS or the Company) and Wang Tak Company Limited (WT) for the acquisition of 148,281,100 ordinary shares of rM1.00 each in padiberas Nasional Berhad (BerNaS), representing 31.52% of the total issued and paid-up share capital of BerNaS from WT for a total purchase consideration of RM308,424,688.00. The said acquisition was completed on 2 November 2009. (b) a Share Sale agreement dated 28 august 2009 between TWS and Gandingan Bersepadu Sdn Bhd (GBSB) for the acquisition of 104,599,485 ordinary shares of rM1.00 each in BerNaS, representing 22.24% of the total issued and paidup share capital of BerNaS from GBSB for a total purchase consideration of rM217,566,928.80. The said acquisition was completed on 20 January 2010. In connection with the above transaction, the Government of Malaysia (Government), Budaya Generasi (M) Sdn Bhd (BGSB) and the Company entered into a Novation agreement dated 30 December 2009 for the transfer of all the rights, interests, benefits, entitlements, remedies and assumptions of all obligations, liabilities and burdens of BGSB under the privatisation agreement between BGSB and the Government dated 18 January 1996 to the Company. (collectively referred to as the proposals)
3.
Imposition of Sanction/Penalties on the Company and its Subsidiaries

There was no sanction or penalties imposed on the Company, its subsidiaries, board members and management.
52
4.
Revaluation of Landed Properties

The Group does not revalue its landed properties as its principal landed properties are agricultural land used for the cultivation of palm oil.
9.
Profit Guarantee
No profit guarantee was given by the Company.
10. Status of Utilisation of Proceeds Raised from Corporate Proposal

There was no corporate proposal involving the raising of funds.
5.
Share Buy-backs
The Company did not purchase any of its own shares.
6.
Option, Warrants or Convertible Securities

The Company did not offer any option or warrant.
11. Public Shareholding Spread

The Company is in compliance with the public Shareholding Spread requirement of Bursa Malaysia.
7.
American Depository Receipt (ADR) or Global Depository Receipt (GDR) Programme

The Company does not sponsor any aDr or GDr programme.
12. Contracts Relating to Loans

There were no contracts relating to loans by the Company involving directors and major shareholders.
8.
Profit Estimates, Forecast or Projection

The Company did not make any release on the profit estimate, forecast or projection for the financial year.
13. D i s c l o s u re o f R e c u r re n t R e l a t e d P a r t y Transactions of a Revenue or Trading Nature (RRPT)

The rrpT entered into by the Company during the financial year ended 31 December 2009 are as follows:-
Nature of Transaction Vendor Purchaser Interested Directors/ Major Shareholders
Aggregate value of transactions for the 12-month period from 1 Jan 2009 to 31 Dec 2009 (RM000) 31,159 5,727
purchase of natural gas provision of logistics and transportation services Sale of refined sugar agency services for the sale and distributorship of refined sugar and molasses provision of transportation services
Gas Malaysia Sdn Bhd Jp Logistics Sdn Bhd GpT Bukhary Sdn Bhd SKS Transport Sdn Bhd
CSr CSr Bukhary Sdn Bhd CSr Interested Major Shareholders:TSDSSM, rJSB, pLSB Interested Directors:SaSN, CST, aKMK, BH
203,610 2,880
GpT
3,811
annual report 2009
53
aDDITIoNaL CoMpLIaNCe INForMaTIoN
13. Disclosure of Recurrent Related Party Transactions of a Revenue or Trading Nature (RRPT) (contd)
The rrpT entered into by the Company during the financial year ended 31 December 2009 are as follows:- (contd)
Nature of Transaction Vendor Purchaser Interested Directors/ Major Shareholders
Aggregate value of transactions for the 12-month period from 1 Jan 2009 to 31 Dec 2009 (RM000) 155,587
Sale of crude palm oil and palm kernel
retus plantation Sdn Bhd
Bintulu edible oils Interested Major Shareholders:Grenfell, Taloh, FFM, ppB Interested Directors:BYL, TGS
Supply of labour, materials and working tools for engineering works, installation, fabrication, supervision of boiler, inspection and consulting services Abbreviations: aKMK BH BYL CSr CST FFM GpT Grenfell pLSB ppB rJSB SaSN Taloh TGS TSDSSM
Minsec engineering Services Sdn Bhd
CSr
2,121
ahmed Kamil bin p M Mustafa Kamal Bakry bin Hamzah Boo Yew Leng Central Sugars refinery Sdn Bhd Chuah Seong Tat FFM Berhad Gula padang Terap Sdn Bhd Grenfell Holdings Sdn Bhd perspective Lane (M) Sdn Bhd ppB Group Berhad restu Jernih Sdn Bhd Syed azmin bin Syed Nor Taloh Sdn Bhd Tan Gee Sooi Tan Sri Dato Seri Syed Mokhtar Shah bin Syed Nor
54
STaTeMeNT oN INTerNaL CoNTroL
The board of directors (Board) is responsible for the Groups system of internal control. The system is designed to meet the Groups business objectives and safeguard the Groups assets, shareholders investments, interests of customers, regulators and employees in accordance with Section 167a of the Companies act, 1965. The internal control system covers the areas of risk management, finance, operations, management information system and compliance with the relevant laws and regulations. The system of internal control involves each key business unit in the Group, its management and the Board. It is designed to meet the Groups particular needs and to manage the risks to which it is exposed in pursuit of its business objectives. The Board acknowledges that risks cannot be completely eliminated. The system by its nature can only provide reasonable and not absolute assurance against material misstatement, operational failure, fraud or loss.
Management is responsible to inculcate a risk-awareness culture and continuously review the existing risk management framework to enhance risk awareness for managing risks and internal control, ensuring compliance with applicable laws and regulations as well as the policies adopted by the Board. The following key features have been incorporated into the Groups risk management framework:a. The Group reaffirms its on-going processes of risk management by conducting sessions on retraining awareness and risk assessment processes and methodologies. The group-wide risk assessment processes include re-evaluating existing key risk areas and identifying new key risk areas, potential impact and likelihood of those risks occurring, control effectiveness and adopting the appropriate action plans to mitigate those risks; The risk reports of each subsidiary company of the Group are updated bi-annually in each financial year. reports on risk profile of the Group were presented to the risk Management Committee for review and thereafter to the audit Committee for its onward reporting to the Board on significant risks as well as controls available to mitigate those risks for the Boards consideration; and b. Continuous evaluation is carried out by the management throughout the various divisions, subsidiaries and departments on key risks faced by the Group, the potential impact and likelihood of those risks occurring, control effectiveness and action plans to manage those risks.
RISK MANAGEMENT
a formal group-wide enterprise risk management framework covering the Groups core business activities to identify, evaluate and manage significant business risks that may affect the achievement of its business objectives had been approved by the Board and implemented. This enterprise risk management framework is continuously reviewed by the audit Committee together with the Board for its adequacy and effectiveness. The Audit Committee is assisted by the risk Management Committee which comprises the Group Managing Director, Group Chief Financial officer, Heads of operating Divisions and the risk officer. The duties of the risk Management Committee are as follows:i. ii. iii. iv. Overseeing risk management activities of the Group; recommending appropriate risk management procedures; Measuring methodologies across the Group; and Identifying and managing strategic and key operational risks.
OTHER KEY ELEMENTS OF INTERNAL CONTROL

apart from the above, the other key elements of the Groups internal control system which has been reviewed by the Board are described below:a. Specific responsibilities have been delegated to the relevant board committees which have written terms of reference. These committees have the authority to examine all matters within their scope of responsibilities and report to the Board with their recommendations. The ultimate responsibility for the final decision on all matters however, lies with the Board;
annual report 2009
55
STaTeMeNT oN INTerNaL CoNTroL
b.
The management of the various companies in the Group is delegated to the respective head of operation and their management teams, whose roles, responsibilities and authority limits are set by the respective board of directors; The management is responsible for the periodic review and streamlining of policy and procedure manuals to be adopted Group-wide. These are supplemented by operating standards set by the management for applications across the Group;
Formal procedures are put in place to rectify weaknesses identified in the Internal audit reports. h. The audit Committee holds regular meetings to deliberate the audit findings, recommendations, management responses and corrective actions for improvement in respect of the internal control system. The minutes of meeting of the audit Committee are tabled to the Board for notation; and The audit Committee meets regularly with the senior management, the head of the GIaD and the external auditors to review the Company and the Groups financial reporting, the nature, scope and results of audit review and the effectiveness of the system of internal control. The audit Committee meets the external auditors without the presence of management at least twice yearly.
c.
i. d. There are specific procedures for both capital and revenue expenditures; a detailed budgeting process is established for all key operating companies within the Group to prepare their annual budgets which are subsequently discussed and approved by the Board; regular and comprehensive management reports are provided to the Board for monitoring performance against the approved budget covering all key financial and operational indicators as well as compliance with all applicable rules and regulations; The Group Internal audit Department (GIaD) was set up by the Board to provide independent assurance on the adequacy of risk management, internal control and governance systems; The GIaD carries out regular reviews on business processes to assess the adequacy and effectiveness of internal control, compliance with regulations and the Groups policies and procedures based on a risk-based audit approach. results of such reviews are reported to the audit Committee and ultimately to the Board. The work of the GIaD is undertaken in accordance with the annual audit plan approved by the audit Committee at the beginning of the year. The head of GIaD reports to the audit Committee.
e.
f.
The activities of the audit Committee during the financial year ended 31 December 2009 are set out in the report of the audit Committee from page 57 to 61 of this annual report.
g.
RELATIONSHIP WITH THE AUDITORS

The Board maintains a formal and transparent professional relationship with the auditors through the audit Committee. The role of the audit Committee in relation to the internal and external auditors is described in the report of the audit Committee of this annual report. This statement is made in accordance with a resolution made by the Board dated 28 april 2010.
56
reporT oF THe aUDIT CoMMITTee
The audit Committee (aC) which was established on 8 November 1993 comprises two independent non-executive directors and one non-independent non-executive director as follows:OOI TEIK HUAT (Chairman) SYED AZMIN BIN SYED NOR KHALID BIN SUFAT
4.
The members of the aC shall elect a chairman from among the members who shall be an independent non-executive director. Should the chairman be absent from any meeting, one of the members who shall be an independent non-executive director shall be elected as Chairman by the aC members.
MEETINGS 1. Meetings shall be held not less than four times a year; The presence of a majority of independent nonexecutive directors shall form a quorum for the meetings; The Group Managing Director, Group Chief Financial officer and representatives of the internal and/or external auditors shall normally attend meetings. attendance of other directors and employees at any particular meeting shall only be at the aCs invitation, specific to the relevant meeting; The secretary of the aC shall be the company secretary or any other person appointed by the AC; and The notice and agenda of each meeting shall be sent to all members of the aC and any other persons that may be required to attend. Minutes of each meeting shall be kept and distributed to each member of the aC and to the Board for notation. The aC shall report and may make such recommendations to the Board on any audit and financial reporting matters, as it may think fit.
2.
TERMS OF REFERENCE OF THE AUDIT COMMITTEE

OBJECTIVES The primary objective of the aC is to assist the Board of Directors (Board) in the effective discharge of its fiduciary responsibilities for corporate governance, financial reporting, internal control and compliance with applicable approved Financial reporting Standards and Main Market Listing Requirements (MMLR) of Bursa Malaysia Securities Berhad (Bursa Malaysia). In addition, the aC will endeavor to adopt certain practices aimed at maintaining appropriate standards of corporate responsibility, integrity and accountability to the shareholders. COMPOSITION 1. The members of the aC shall be appointed by the Board from amongst its number which shall fulfill the requirements of Bursa Malaysia; The members of the aC shall all be non-executive directors with a majority of them being independent; No alternate director is to be appointed as a member of the AC; and 3.
4.
5.
2.
3.
annual report 2009
57
AUTHORITY The aC shall have the following authority as empowered by the Board:1. The authority to investigate any matters within its terms of reference; The resources which are required to perform its duties; Full and unrestricted access to any information and documents relevant to the Companys activities; The mandate to have full authority over the internal audit function and requiring the internal audit function to report directly to the AC; Direct communication channels with the external auditors, any person(s) carrying out the internal audit function or activity and with the senior management of the company and its subsidiaries; The ability to obtain external legal or independent professional or other advice and secure the attendance of outsiders with relevant experience and expertise, if it considers necessary; and The ability to convene meetings with the external auditors, the internal auditors or both at least twice a year, excluding the attendance of other directors and/or management, whenever deemed necessary.
FUNCTIONS The aC shall undertake the following responsibilities and duties:a) External Audit Consider and recommend the nomination and reappointment of the external auditors, the audit fee and any questions of resignation or dismissal; Review with the external auditors:- i) the scope and audit plan of the audit examination to ensure that adequate tests to verify the accounts and procedures of the Group will be performed and ensure co-ordination where more than one audit firm is involved; the evaluation of the effectiveness of the internal control systems; and the audit report.
2.
3.
4.
5.
ii)
iii)
6.
Review the assistance given by the employees to the external auditor; and Discuss issues and reservations arising from the audit and any matters the external auditors may wish to discuss in the absence of management, where necessary.
7.
b)
Internal Audit Review the adequacy of the scope, functions, competency and resources of the internal audit functions and that it has the necessary authority to carry out its work; Review the internal audit plan, processes, the major findings of internal audit programme, processes or investigations undertaken and managements response and ensure co-ordination between the internal and external auditors; and Review the appointment and assessment of performance of the internal audit staff.
58
c)
Financial Reporting Review the unaudited quarterly results and year-end financial statements prior to the approval by the Board, focusing particularly on:i) the nature and impact of any changes in or implementation of major accounting policy and practices; significant and unusual events; compliance with accounting standards and other legal requirements; and adequacy of accounting, financial and o p e r a t i n g c o n t ro l s a n d t o m o n i t o r t h e implementation of any recommendations made.
SUMMARY OF ACTIVITIES DURING THE FINANCIAL YEAR

In line with its terms of reference, the main activities undertaken by the aC during the financial year ended 31 December 2009 in the discharge of its functions and duties were as follows:1. reviewed with the external auditors, the results of the audit and the audit report, including interim audit reports on subsidiary companies and managements response in relation thereto. Subsequent discussions with the management were held with regards the actions taken to improve the system of internal control based on recommendations made; Reviewed unaudited quarterly financial statements of the company prior to submission to the Board; reviewed with the external auditors, the audited year-end financial statements of the Group and the company prior to submission to the Board, focusing particularly on any changes in or implementation of major accounting policies and procedures, significant adjustments arising from the audit and compliance with applicable approved Financial reporting Standards (FrS) and other legal and regulatory requirements; reviewed with the external auditors, the accounting issues arising from the audit exercise including updates on new developments on FrS issued by the relevant authorities;
ii) iii)
iv)
2.
d)
Related Party Transactions review any related party transactions and conflict of interest situation that may arise within the Company or Group including any transactions, procedure or course of conduct that raise questions with regards to management integrity and the adequacy of the Groups procedures for monitoring and reviewing of related party transactions. Risk Management Review the adequacy and effectiveness of risk management, internal control and governance systems instituted in the Group. Other Matters per form such other responsibilities as may be approved by the Board.
3.
e)
4.
f)
annual report 2009
59
5.
reviewed with the internal auditors all audit reports on the results of the work undertaken together with the recommended action plans and their implementation status; reviewed the related party transactions entered into by the Group to ensure that all transactions made were in compliance with the shareholders mandates; reviewed the report of the audit Committee and the Statement on Internal Control for inclusion in this Annual Report; reviewed and assessed the risk management activities and risk review reports of the Group;
9.
6.
reviewed the extent of compliance of the Group with the provisions set out under the Malaysian Code on Corporate Governance (Code) and the recommendations made to the Board on the action plans to address the identified gaps between the existing corporate governance practices of the Group and the prescribed corporate governance principles and best practices under the Code; and reviewed the compliance of the Group with the provisions of the MMLr and other regulatory authorities and regularly monitored actions taken on issues of non-compliance that were reported to the Board and Bursa Malaysia.
7.
10.
8.
ATTENDANCE AT MEETINGS
During the financial year ended 31 December 2009, a total of seven (7) audit Committee meetings were held.
Members ooi Teik Huat# (Appointed w.e.f. 1 April 2009) Syed azmin bin Syed Nor Khalid bin Sufat# (Appointed w.e.f. 1 April 2009) ahmad bin abu Bakar# (Resigned w.e.f. 1 April 2009) Dr. Sharifuddin bin abdul Hamid (Resigned w.e.f. 1 April 2009)
Total Number of Meetings
Attended
6 7 6 1 1
6 7 6 1 1
# member of the Malaysian Institute of accountants (MIa) at least one member of the aC must be a member of the MIa or have at least three years working experience and have passed the examinations specified in part 1 of the First Schedule of the accountants act, 1967 or a member of one of the associations of accountants specified by part II of the First Schedule of the accountants act, 1967 or fulfils such other requirements as prescribed by the approved Exchange. The Chairman, Mr. Ooi Teik Huat, has the necessary qualification as a member of the aC as he is a member of the MIa and Cpa australia.
60
INTERNAL AUDIT
The Company has a Group Internal audit Department (GIaD) whose primary function is to assist the aC in discharging its duties and responsibilities. Its role is to provide the aC with independent and objective reports on the state of internal controls within the Group and the extent of compliance by such operations to established policies and procedures of the Group. The internal audit function is guided by its audit Charter and the Head of GIaD reports to the audit Committee. The aC reviews and thereafter, approves the annual internal audit plan at the beginning of each year. The GIaD adopts a risk-based auditing approach towards the preparation of the audit plan and conduct of audits which is consistent with the framework of the Group in designing, implementing and monitoring its internal control system. Throughout the financial year under review, audit assignments, investigations and follow-ups were carried out on the units of operations and subsidiaries. These were carried out in accordance with the annual internal audit plan or as special audits. Upon completion of the audits, the internal audit reports were forwarded to the parties concerned for their necessary action before being presented to the aC for its deliberation. The GIaD monitors the progress of the implementation of the audit recommendations in order to obtain assurance that all major risks and controls concerns have been duly addressed by the management. approximately rM877,000.00 was incurred by the Group for the internal audit function for the financial year ended 31 December 2009.
The activities undertaken by the GIaD during the financial year under review were as follows:i. Carried out 19 regular reviews on the business processes to assess the adequacy and effectiveness of internal control, compliance with regulations and the Groups policies and procedures based on the approved audit plan; Held exit audit discussions with the senior management in respect of audit findings, recommendations, managements responses and corrective actions to be taken by operating units management team; Monitored the status of corrective actions and implementation to ensure that all audit issues raised in the internal audit reports are appropriately addressed by the operating units management team; and reported to the recommendations, corrective actions units management aC on the audit findings, managements responses and to be taken by the operating team on a regular basis.
ii.
iii.
iv.
OOI TEIK HUAT Chairman of audit Committee 27 april 2010
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61
strategic focus
achieving sustainability
We have painstakingly initiated all efforts concerning the preservation of the environment by focusing on its sustainability through effective internal processes and procedures which are environmentally safe and friendly.
CorporaTe reSpoNSIBILITY
64
GIVING BaCK To SOCIETY

Caring and sharing have always been an established trademark of Tradewinds (M) Berhad (TWS or the Company). Whether it is at the workplace, in the marketplace or in the community, it is our philosophy to act in a responsible and caring manner, making sure that our success is inclusive. as a key corporate player in Malaysia, we are also committed to conducting our operations with due respect to the environment, preserving and improving it for our children and for generations yet unborn.
COMMUNITY DEVELOPMENT
Social responsibility which is a way of life in TWS is manifested not only in the many charitable organisations and worthy causes that the Group supports, but it has also been fully embraced by our employees in the voluntary work they undertake as a way of giving back to the society. over the years, the Group has played an important role in reaching out and in doing so, enrich the various communities in which we operate. New housing, quarters, mosques, community halls and sanitary facilities continue to be upgraded or even built from scratch to provide the public with a better quality of life.
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65
In reaching out to the community, we have donated staples like rice, sugar, bread and other provisions to ease the financial burden borne by orphanages and needy families throughout the country. Neither have we forgotten them at festive occasions. During the year under review, we sponsored a number of Majlis Berbuka puasa at various orphanages and mosques within the Klang Valley. Our dialogue sessions with the community have also been useful in establishing good rapport and better understanding in resolving issues of mutual interests. Wherever we operate, we provide employment opportunities for locals and by doing so, our success also means success for the local communities. our educational programmes have long been a mainstay in the Groups community relations efforts. Through our internship programmes, we enable university and college students to undergo practical training and gain invaluable hands-on experience at our respective operating unit. The period of training ranges from three to six months. The trainings provide interns with the first taste of working in the marketplace, giving them a headstart when they eventually launch their careers. apart from the internship programmes, we have also entertained site visits to our factories and mills from educational institutions.
one of the more far-reaching legacies of our educational programmes is through our association with the development of the albukhary International University (the University). The University was set up with the primary objective of providing high quality tertiary education to deserving students who do not have the financial means to further their studies. We see our assocition with the development of the University as part of our contribution to the development of a knowledge society as envisioned in the Ninth Malaysia plan, 2006-2010.
HEALTH & SAFETY

as far as the management is concerned, there can be no compromise when it comes to occupational Health and Safety (oHS). It stems from a basic conviction that all accidents and injuries can be prevented through the establishment and compliance with health and safety policies through comprehensive work procedures. Inculcating a safe work culture is a responsibility shared by the management, staff and contractors alike and as a team, we constantly work towards achieving zero accident. The journey to health and safety excellence is infinite. Significant resources are dedicated towards evaluating and improving the existing practices over and beyond the requirements set by the regulatory authorities. The Chemical Health risk assessment programme is a prime example of this commitment with the objective to eliminate or minimise any health-related risks posed by the use of hazardous chemicals at our plants. The Group has moved steadily towards a more structured approach to oHS through the registration to oHSaS 18001:1999 which is an international certification scheme for health and safety management. To this end, a safety council has been established to spearhead the oHSaS 18001 certification efforts group-wide.
66
all health and safety programmes are closely monitored by an in-house oHS Department which comprise a professionally trained and dedicated oHS officer registered with the Department of occupational Safety and Health under the Ministry of Human resources. Safety awareness training is a regular fixture on the Groups training calendar in order to improve the level of safety consciousness amongst our people.
HUMAN CAPITAL DEVELOPMENT

as a company built on performance, we take human capital development very seriously. after all, the Groups continuing success depends on our ability to develop our staff into future leaders of the Company. That is evidenced by the sizeable slice of our annual operating budget which is channeled to the training efforts. During the year, the Group accomplished a commendable 90% of its training target, with each employee fulfilling the minimum training man-hours established at the beginning of the training calendar year.
While some of our training programmes are conducted internally at Tradewinds plantation academy, we also depend on external trainers to provide their expertise in a number of specialised courses. each year, the training curriculum is carefully reviewed and calibrated to ensure that it is current and relevant to the training needs of our employees. Training programmes cover a broad spectrum of subjects. During the year under review, the calendar included courses on Corporate Gover nance and Compliance; Effective Leadership and Managerial Skills; Enterprise-wide Risk Management; Finance, Accounting and Taxation; Management Information Systems and Information Technology; Project Management; Quality, Environment and Safety Management Systems; Sugar Refining Technical Skills and plantation operations Skills, to cite a few. Specialised training programmes have also been specifically tailored to our sugar mills such as the Food Safety Management System which is a prerequisite for obtaining the Hazards analysis and Critical Control point (HaCCp) certification from the Ministry of Health. HaCCp serves as a preventive tool to detect where potential biological, chemical and physical contaminations can occur so that they can be effectively managed. Human capital development at TWS goes beyond the training efforts. It has always been our objective to create an environment that is convivial yet professional where we are supportive of one another as a team in creating innovative synergies and striving for common goals. ours is a culture that encourages and rewards hard work, but there is time for play as well. Family Day 2009 brought employees and families together to a hill resort in Cameron Highlands. Special activities such as golf and tele-matches were organised to foster closer ties between the management, staff and their families.
annual report 2009
67
We also celebrate Malaysias unique diversity in many festive gatherings in the spirit of 1Malaysia, for example, the event to bring together all staff and guests to celebrate one of the major festivals in Malaysia. Birthday celebrations are also organised bi-monthly to leverage on the spirit of caring within the Group. Such activities go a long way towards inspiring feelings of loyalty, encouraging job satisfaction and from a bigger perspective, creating a sense of Family. The Group enjoys a healthy working relationship with the staff unions. In recognising the important role played by the unions, regular meetings are held at both, management and working levels to establish rapport with the unions and clear the air on issues of mutual interest. In doing so, we have a better understanding of one anothers view-points, enabling the Group to function in a more effective and cohesive fashion. It is the policy of the Group to review the Collective agreement every three years to ensure that the terms and conditions of employment are comparable with the rest of the industry.
In an age of increasing social and environmental consciousness, rSpo certification is a seal of approval that the palm oil is produced without undue harm to the environment or society. It is awarded only after strict verification on the production process to stringent international standards by accredited certifying bodies and can be withdrawn at any time on infringement of the rules and standards. There are already growing indications that buyers are prepared to pay a premium for responsibly produced products and the first quarter 2010 results proved that sales of rSpo-certified sustainable palm oil continue to grow significantly. The Group takes pride in being a Green company even before the movement became a popular buzzword. The Group has set high standards of control to ensure that its activities, processes and products are compatible with the environment. Besides controlling air and noise pollution, every effort is made to ensure the proper disposal of scheduled wastes to Kualiti alam Sdn Bhd. The Group has also focused on research and development to improve the efficiency and effectiveness of agronomic practices in its plantation business. This has resulted in the roll-out of programmes for judicious fertiliser applications, weed and pest control initiatives as well as water management and plant disease mitigation. In view of the growing encroachment of residential development, we have taken a proactive stance in addressing the issue of pollution. Consequently, a raft of measures has been introduced and these include more effective control mechanisms for effluent discharges, air emissions, scheduled waste disposal and noise mitigation. Through such efforts, we have maintained the effluent
SUSTAINABILITY AND ENVIRONMENTAL MANAGEMENT

The need for organisation to behave in a socially responsible manner is becoming a general requirement by the society. one of the most important initiatives taken during the year is our admission to the roundtable on Sustainable palm oil (rSpo). The principal objective of the rSpo is to advance the production, procurement and use of sustainable oil palm products through the development, implementation and verification of credible global standards and the engagement of stakeholders along the supply chain.
68
discharge level consistently well within the regulatory requirements. Waste water from the sugar refineries is subjected to anaerobic and aerobic processes before it is discharged. To ascertain the water quality, samples are analysed by an independent laboratory as well as the Department of environment on a monthly basis. With the conversion of the old boiler to a newer and more economical system as well as the switch from diesel to natural gas as a source of fuel, we have achieved the dual objectives of improving boiler efficiency and reducing emissions in the form of dust particulates and gaseous pollutants. recently, the Group has installed a Secondary Dust Collection System for the boilers to reduce dust fall-out at one of the sugar refineries. Corporate responsibility as a way of life will continue to be a cornerstone of the Groups operating philosophy. each year, we expend time and resources to explore ways in which we can play a more meaningful role in the society. You can expect more from us in years to come.
annual report 2009
69
GroUp HaLF-YearLY reSULTS
Six months ended 30 June 2009 RM000 %
Six months ended 31 December 2009 RM000 %
12 months ended 31 December 2009 RM000 %
revenue profit from operation profit before tax Taxation Net profit for the financial year Minority interest Net profit attributable to equity holders of the Company earning per share (sen) Dividend per share paid - gross (sen)
769,816 57,240 29,611 (13,425) 16,186 5,418
37 19 12 18 9 (16)
1,299,582 246,881 216,259 (60,706) 155,553 (39,539)
63 81 88 82 91 116
2,069,398 304,121 245,870 (74,131) 171,739 (34,121)
100 100 100 100 100 100
21,604 6.97 -
16 15 -
116,014 39.98 10.00
84 85 100
137,618 46.95 10.00
100 100 100
70
FIVe-Year GroUp FINaNCIaL HIGHLIGHTS
2005 RM000 revenue profit before taxation Net profit for the year Net profit attributable to equity holders of the Company Equity attributable to equity holders of the Company Total assets Total borrowings Issued and paid-up capital Dividends paid (net of tax) 969,583 53,384 30,338 33,015 1,030,346 2,171,445 767,471 296,471 42,692
2006 RM000 1,151,154 65,238 49,610 46,641 1,158,750 3,065,702 1,169,768 296,471 38,423
2007 RM000 1,690,837 253,616 204,669 147,649 1,263,920 2,982,060 1,018,106 296,471 47,613
2008 RM000 1,767,566 298,808 222,242 160,735 1,373,524 3,449,642 1,235,364 296,471 50,459
2009 RM000 2,069,398 245,870 171,739 137,618 1,472,863 6,043,691 2,662,009 296,471 22,235
GROWTH RATES revenue profit before taxation Net profit attributable to equity holders of the Company Equity attributable to equity holders of the Company Total assets Total borrowings
2005 (%) 14.1 (48.2) (55.8) (1.0) 4.1 15.5
2006 (%) 18.7 22.2 41.3 12.5 41.1 52.4
2007 (%) 46.9 288.9 216.6 9.1 (2.7) (13.0)
2008 (%) 4.5 17.8 8.9 8.7 15.7 21.3
2009 (%) 17.1 (17.7) (14.4) 7.2 75.2 115.5
RATIO Return on equity (%) return on total assets (%) return on revenue (%) Gross dividend (sen) earnings per share - basic (sen) Net assets per share (rM)
2005 3.2 1.5 3.4 18.0 11.1 3.48
2006 4.0 1.5 4.1 20.0 15.7 3.91
2007 11.7 5.0 8.7 23.0 51.4 4.26
2008 11.7 4.7 9.1 20.0 56.1 4.63
2009 9.3 2.3 6.7 15.0 * 47.0 4.97
* Inclusive of 5% which is subject to shareholders approval.
annual report 2009
71
FIVe-Year GroUp FINaNCIaL HIGHLIGHTS
Revenue (RM000)
2,500,000 2,069,398
Profit Before Taxation (RM000)

400,000 200,000
Net Profit Attributable to Equity Holders of the Company (RM000)
1,767,566
298,808
1,690,837
2,000,000
320,000 253,616
160,000 245,870 147,649
160,735
1,000,000
969,583
1,151,154
1,500,000
240,000
120,000
160,000
80,000
65,238
53,384
500,000
80,000
40,000
0 2005 2006 2007 2008 2009
0 2005 2006 2007 2008 2009
0 2005 2006 2007 2008 2009
2,000,000
Equity Attributable to Equity Holders of the Company (RM000)
Total Assets (RM000)

8,000,000
1,200,000
1,030,346
1,158,750
1,263,920
1,373,524
1,600,000
1,472,863
6,400,000
4,800,000 3,065,702 3,449,642
400,000
1,600,000
0 2005 2006 2007 2008 2009
0 2005 2006 2007 2008 2009
72
2,171,445
800,000
3,200,000
2,982,060
6,043,691
33,015
46,641
137,618
Return on Equity (%)

15
30
Gross Dividend (Sen)
11.7
12
11.7
24 20.0
23.0
9.3
12
3
0 2005 2006 2007 2008 2009 * Inclusive of 5% which is subject to shareholders approval
0 2005 2006 2007 2008 2009
3.2
4.0
Earnings Per Share Basic (Sen)

70 6.0
Net Assets Per Share (RM)
15.0*
18
18.0
20.0
56.1
51.4
56
4.8 47.0 4.26
42
3.6
28
2.4
14
11.1
15.7
1.2
0 2005 2006 2007 2008 2009
0 2005 2006 2007 2008 2009
annual report 2009
3.48
3.91
4.63
4.97
73
strategic performance
achieving excellence
We will ensure the revenue performance whilst maintaining our asset base quality and henceforth deliver exceptional and stellar results in achieving financial performance excellence.
77 81 81 82 84 86 87 89 92
Directors Report Statement by Directors Statutory Declaration Independent Auditors Report Balance Sheets Income Statements Statement of Changes in Equity Cash Flow Statements Notes to the Financial Statements
FINANCIAl StAtEmENtS
DIRECtORS REPORt
the Directors hereby present their report together with the audited financial statements of the Group and of the Company for the financial year ended 31 December 2009. PrinciPal activities the principal activities of the Company are provision of management services and investment holding. the principal activities of the subsidiary companies are stated in Note 45(a) to the financial statements. there has been no significant change in the nature of these activities during the financial year, other than acquisition of Northern Intergrated Agriculture Sdn Bhd and Padiberas Nasional Berhad which are involved in property development and rice business, as disclosed respectively in Note 7(d)(ii) and (iii) to the financial statements. Financial results Group rM000 Net profit for the financial year Net profit for the financial year attributable to: - Equity holders of the Company - minority interests 171,739 company rM000 13,235
137,618 34,121 171,739
13,235 13,235
DiviDenDs the Company paid a final dividend of 10 sen gross per share less 25% income tax amounting to Rm22,235,000 on 28 July 2009 in respect of the previous financial year. On 23 February 2010, the Company declared an interim dividend of 10 sen gross per share less 25% income tax amounting to Rm22,235,000 in respect of the current financial year, payable on 21 may 2010. At the forthcoming Annual General meeting, a final dividend of 5 sen gross per share less 25% income tax amounting to Rm11,117,000 in respect of the current financial year will be proposed for shareholders approval. reserves anD Provisions there was no material transfer to or from reserves and provisions during the financial year other than those disclosed in the financial statements. issue oF shares anD Debentures there was no issue of shares or debentures during the financial year.
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77
DIRECtORS REPORt
oPtions GranteD over unissueD shares No option was granted to any person to take up unissued shares of the Company during the financial year. Directors the Directors who served since the date of the last report are as follows: Dato Wira Syed Abdul Jabbar bin Syed Hassan Bakry bin Hamzah Syed Azmin bin Syed Nor Chuah Seong tat Khalid bin Sufat Ooi teik Huat Datuk R Sharifuddin Hizan bin R Zainal Abidin Datuk Hj. Ismail bin Hj. Hashim tan Gee Sooi Boo Yew leng Directors interests Details of holdings in the ordinary shares of the Company or its related corporations by the Directors in office at the end of the financial year, according to the register required to be kept under Section 134 of the Companies Act, 1965, were as follows: no. of ordinary shares of rM1.00 each as at 1.1.2009 syed azmin bin syed nor Indirect interest: tradewinds (m) Berhad Dato Wira syed abdul Jabbar bin syed hassan Direct interest: tradewinds (m) Berhad tan Gee sooi Direct interest: tradewinds (m) Berhad Indirect interest: tradewinds (m) Berhad boo Yew leng Direct interest: tradewinds (m) Berhad bought sold as at 31.12.2009
(Appointed on 22.2.2010) (Appointed on 11.3.2010) (Resigned on 6.1.2010) (Resigned on 6.1.2010)
127,388,663
*127,388,663
20,000
20,000
49,000
49,000
(49,000)
*49,000
6,000
6,000
* Indirect interest by virtue of shares held by member of the Directors family. None of the other Directors holding office at the end of the financial year had any interest in the ordinary shares of the Company or its related corporations during the financial year.
78
traDeWinDs (M) berhaD
Directors beneFits Since the end of the previous financial year, no Director of the Company has received or become entitled to receive any benefit (other than a benefit included in the aggregate amount of emoluments received or due and receivable by Directors as shown in Note 31 to the financial statements) by reason of a contract made by the Company or a related corporation with the Director or with a firm of which he is a member, or with a company in which he has a substantial financial interest other than remuneration received by certain Directors as directors or executives of subsidiary companies and any deemed benefits that may accrue to certain Directors by virtue of transaction negotiated between the Group and companies in which the Directors are the directors of the companies as disclosed in Note 40 to the financial statements. Neither during nor at the end of the financial year, was the Company a party to any arrangement the object of which is to enable the Directors of the Company to acquire benefits by means of the acquisition of shares in or debentures of the Company or any other body corporate. statutorY inForMation on the Financial stateMents oF the GrouP anD oF the coMPanY (a) Before the income statements and balance sheets of the Group and of the Company were made out, the Directors took reasonable steps: (i) to ascertain that proper action had been taken in relation to the writing off of bad debts and the making of allowance for doubtful debts and satisfied themselves that all known bad debts had been written off and that adequate allowance had been made for doubtful debts; and to ensure that any current assets which were unlikely to realise their values as shown in the accounting records in the ordinary course of business had been written down to an amount which they might be expected so to realise.
(ii)
(b)
At the date of this report, the Directors are not aware of any circumstances: (i) that would render the amount written off for bad debts or the amount of the allowance for doubtful debts in the financial statements of the Group and of the Company inadequate to any substantial extent; or that would render the values attributed to the current assets in the financial statements of the Group and of the Company misleading; or which have arisen which render adherence to the existing method of valuation of assets or liabilities of the Group and of the Company misleading or inappropriate.
(ii)
(iii)
(c)
No contingent or other liability of any company in the Group has become enforceable, or is likely to become enforceable within the period of twelve months after the end of the financial year which, in the opinion of the Directors, will or may affect the ability of the Group and of the Company to meet their obligations when they fall due. At the date of this report, there does not exist: (i) any charge on the assets of the Group or of the Company which has arisen since the end of the financial year which secures the liabilities of any other person; or any contingent liability in respect of the Group or of the Company which has arisen since the end of the financial year.
(d)
(ii)
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79
DIRECtORS REPORt
other statutorY inForMation (a) At the date of this report, the Directors are not aware of any circumstances not otherwise dealt with in this report or the financial statements, that would render any amount stated in the financial statements of the Group and of the Company misleading. In the opinion of the Directors: (i) the results of the operations of the Group and of the Company for the financial year ended 31 December 2009 have not been substantially affected by any item, transaction or event of a material and unusual nature; and there has not arisen in the interval between the end of the financial year and the date of this report any item, transaction or event of a material and unusual nature likely to affect substantially the results of the operations of the Group and of the Company for the financial year in which this report is made.
(b)
(ii)
siGniFicant events DurinG the Financial Year the significant events during the financial year are disclosed in Note 44 to the financial statements. auDitors the auditors, Anuarul Azizan Chew & Co., have expressed their willingness to accept re-appointment.
Signed in accordance with a resolution of the Directors.
Dato Wira sYeD abDul Jabbar bin sYeD hassan
ooi teiK huat
KUAlA lUmPUR 28 April 2010
80
StAtEmENt BY DIRECtORS
Pursuant to Section 169(15) of the Companies Act, 1965
We, DAtO WIRA SYED ABDUl JABBAR BIN SYED HASSAN and OOI tEIK HUAt, being two of the Directors of tRADEWINDS (m) BERHAD, do hereby state that, in the opinion of the Directors, the financial statements set out on pages 10 to 118 are drawn up in accordance with applicable approved Financial Reporting Standards in malaysia and the provisions of the Companies Act, 1965 so as to give a true and fair view of the financial position of the Group and of the Company as at 31 December 2009 and of their financial performance and cash flows for the financial year ended on that date.
Signed in accordance with a resolution of the Directors.
Dato Wira sYeD abDul Jabbar bin sYeD hassan
ooi teiK huat
StAtUtORY DEClARAtION
Pursuant to Section 169(16) of the Companies Act, 1965
I, mOHD NAZRI BIN mD SHARIFF, being the Officer primarily responsible for the financial management of tRADEWINDS (m) BERHAD, do solemnly and sincerely declare that the financial statements set out on pages 10 to 118 are to the best of my knowledge and belief, correct and I make this solemn declaration conscientiously believing the same to be true and by virtue of the provisions of the Statutory Declarations Act, 1960. Subscribed and solemnly declared by the abovenamed mOHD NAZRI BIN mD SHARIFF at KUAlA lUmPUR in the Federal territory this 28 April 2010 ) ) ) ) MohD naZri bin MD shariFF
Before me,
coMMissioner For oaths asmah binti buroh (W456) No. 766, Jalan Sentul Sentul, 51000 Kuala lumpur
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INDEPENDENt AUDItORS REPORt

tO tHE mEmBERS OF tRADEWINDS (m) BERHAD
report on the Financial statements We have audited the accompanying financial statements of tradewinds (m) Berhad, which comprise the balance sheets as at 31 December 2009 of the Group and of the Company, and the income statements, statement of changes in equity and cash flow statements of the Group and of the Company for the financial year then ended, and a summary of significant accounting policies and other explanatory notes, as set out on pages 10 to 118. Directors Responsibility for the Financial Statements the Companys Directors are responsible for the preparation and fair presentation of these financial statements in accordance with the provisions of the Companies Act, 1965 and the applicable approved Financial Reporting Standards in malaysia. this responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances. 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. these standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free of 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 the auditors judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditors consider internal control relevant to Companys preparation and fair presentation of the financial statements 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 Companys internal control. An audit also involves evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the Directors, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Opinion In our opinion, the financial statements are properly drawn up in accordance with the applicable approved Financial Reporting Standards in malaysia and the Companies Act, 1965 in malaysia so as to give a true and fair view of the financial position of the Group and of the Company as at 31 December 2009 and of their financial performance and cash flows for the financial year ended on that date.
82
report on other legal and regulatory requirements In accordance with the requirements of the Companies Act, 1965 in malaysia, we also report on the following: (a) In our opinion, the accounting and other records and the registers required by the Act to be kept by the Company and by the subsidiary companies of which we acted as auditors have been properly kept in accordance with the provisions of the Act. the name of the subsidiary companies of which we have not acted as auditors are indicated in Note 45(a) to the financial statements. We have considered the financial statements of these subsidiary companies and the independent auditors reports thereon. We are satisfied that the financial statements of the subsidiary companies that are consolidated with the Companys financial statements are in form and content appropriate and proper for the purposes of the preparation of the consolidated financial statements of the Group and have received satisfactory information and explanations as required by us for those purposes. the independent auditors reports on the financial statements of the subsidiary companies were not subject to any qualification and did not include any comment made under subsection (3) of Section 174 of the Act.
(b)
(c)
(d)
other Matters this report is solely made 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 any responsibility to any other person for the content of this report.
anuarul aZiZan cheW & co. Firm Number: AF 0791 Chartered Accountants
sathiea seelean a/l ManicKaM Approved Number: 1729/05/10 (J/PH) Partner of Firm
annual report 2009
83
BAlANCE SHEEtS
AS At 31 DECEmBER 2009
Group note non-current assets Property, plant and equipment Prepaid lease payments Plantation development expenditure land held for property development Investment in subsidiary companies Investment in associated companies Investment in jointly controlled entity Other investments Intangible assets Deferred tax assets 3 4 5 6 7 8 9 10 11 12 913,769 974,414 1,050,431 87,412 232,323 12,223 4,475 93,422 77,705 3,446,174 527,463 959,199 972,413 20,832 13,102 4,954 91,140 12,655 2,601,758 2009 rM000 2008 rM000
company 2009 2008 rM000 rM000
290 1,386,100 163,489 1,549,879
818 893,606 163,489 1,057,913
current assets Inventories trade receivables Other receivables Amount owing by subsidiary companies Amount owing by associated companies tax recoverable Assets held for sale Fixed deposits Cash and bank balances 13 14 15 16 17 18 19 995,271 560,144 569,080 34,872 14,563 5,654 218,645 199,288 2,597,517 334,922 322,789 69,408 14,185 454 50,929 55,197 847,884 16,766 151,023 12,126 54,745 234,660 10,532 213,571 8,420 244 232,767
current liabilities trade payables Other payables Amount owing to subsidiary companies Amount owing to associated companies Hire purchase and finance lease payables Borrowings Retirement benefit obligations tax payable 20 21 16 17 22 23 24 216,226 294,540 3,368 4,082 1,616,026 4,229 31,253 2,169,724 Net current assets/(liabilities) 427,793 3,873,967 94,063 120,218 20,186 702,452 458 4,661 942,038 (94,154) 2,507,604 50,737 17,814 184,050 252,601 (17,941) 1,531,938 1,318 21,795 190,320 213,433 19,334 1,077,247
84
Group note Financed by: Share capital Reserves Equity attributable to equity holders of the Company minority interests total equity 25 26 296,471 1,176,392 1,472,863 977,143 2,450,006 296,471 1,077,053 1,373,524 364,257 1,737,781 2009 rM000 2008 rM000
company 2009 2008 rM000 rM000
296,471 770,208 1,066,679 1,066,679
296,471 779,208 1,075,679 1,075,679
non-current liabilities Hire purchase and finance lease payables Borrowings Deferred tax liabilities Retirement benefit obligations 22 23 12 24 4,854 1,045,983 304,013 69,111 1,423,961 3,873,967 532,912 231,198 5,713 769,823 2,507,604 461,247 4,012 465,259 1,531,938 1,568 1,568 1,077,247
the accompanying notes form an integral part of the financial statements.
annual report 2009
85
INCOmE StAtEmENtS
FOR tHE FINANCIAl YEAR ENDED 31 DECEmBER 2009
Group note Revenue Other operating income Changes in inventory of finished goods and work in progress Raw materials and consumables used Staff costs Amortisation of prepaid lease payments Amortisation of plantation development expenditure Depreciation of property, plant and equipment Other operating expenses Profit from operations Finance costs 27 28 2009 rM000 2,069,398 48,937 (18,527) (1,206,897) (183,335) (14,204) (44,197) (65,003) (282,051) 304,121 (55,033) 249,088 Share of results of jointly controlled entity Share of results of associated companies Profit before taxation taxation Net profit for the financial year 9(c) 8 (5,879) 2,661 245,870 (74,131) 171,739 2008 rM000 1,767,566 19,622 37,067 (958,812) (147,501) (13,280) (44,437) (55,674) (260,356) 344,195 (48,489) 295,706 3,102 298,808 (76,566) 222,242
company 2009 2008 rM000 rM000 94,316 92 (7,403) (559) (44,432) 42,014 (9,814) 32,200 32,200 (18,965) 13,235 66,451 36 (6,552) (644) (8,140) 51,151 (8,249) 42,902 42,902 (11,535) 31,367
29 30 4 5 3,5(b) 31
32
33
Net profit for the financial year attributable to: - Equity holders of the Company - minority interests
137,618 34,121 171,739
160,735 61,507 222,242
13,235 13,235
31,367 31,367
Earnings per share attributable to equity holders of the Company (sen): - Basic - Diluted
34(a) 34(b)
46.95
56.09
86
StAtEmENtS OF CHANGES IN EQUItY

attributable to equity holders of the company non-Distributable share capital rM000 share premium rM000 capital reserves rM000 exchange reserves rM000 Distributable capital reserves rM000 retained profits rM000 Minority interests rM000 total equity rM000
Group
note
total rM000
2008 at 1 January Exchange differences on translation, representing net expenses recognised directly in equity Acquisition of subsidiary company 7(e) Net profit for the financial year total recognised (expense)/income for the financial year Dividend paid to minority shareholders of subsidiary companies Dividends paid 35 At 31 December
296,471
84,171
3,684
27,639
2,077
849,878
1,263,920
304,376
1,568,296
(672)
160,735
(672) 160,735
325 5,153 61,507
(347) 5,153 222,242
296,471
84,171
3,684
(672) 26,967
2,077
160,735 (50,459) 960,154
160,063 (50,459) 1,373,524
66,985 (7,104) 364,257
227,048 (7,104) (50,459) 1,737,781
2009 at 1 January Realisation upon liquidation of an associated company Exchange differences on translation
296,471
84,171
3,684
26,967
2,077
960,154
1,373,524
364,257
1,737,781
28
(16,351) 307
(16,351) 307
(279)
(16,351) 28
Net expenses recognised directly in equity Acquisition of subsidiary companies 7(d) Net profit for the financial year total recognised (expense)/income for the financial year Dividend paid to minority shareholders of subsidiary companies Dividends paid 35 At 31 December
(16,044)
137,618
(16,044) 137,618
(279) 586,619 34,121
(16,323) 586,619 171,739
296,471
84,171
3,684
(16,044) 10,923
2,077
137,618 (22,235) 1,075,537
121,574 (22,235) 1,472,863
620,461 (7,575) 977,143
742,035 (7,575) (22,235) 2,450,006
annual report 2009
87
StAtEmENtS OF CHANGES IN EQUItY

nonDistributable share capital rM000 share premium rM000
Distributable capital reserves rM000 retained profits rM000
company 2008 at 1 January Net profit for the financial year Dividends paid At 31 December
note
total rM000
35
296,471 296,471
84,171 84,171
497 497
713,632 31,367 (50,459) 694,540
1,094,771 31,367 (50,459) 1,075,679
2009 at 1 January Net profit for the financial year Dividends paid At 31 December
35
296,471 296,471
84,171 84,171
497 497
694,540 13,235 (22,235) 685,540
1,075,679 13,235 (22,235) 1,066,679
88
CASH FlOW StAtEmENtS

Group note 2009 rM000 2008 rM000 restated
company 2009 2008 rM000 rM000 restated
cash Flows From operating activities Profit before taxation Adjustments for: Amortisation of plantation development expenditure Amortisation of prepaid lease payments Allowance for doubtful debts Bad debts written off Realisation upon liquidation of an associated company Depreciation of property, plant and equipment Dividend income Gain on financial assets held at fair value (Reversal)/Impairment loss on other investments (net) Interest expense Interest income loss/(Gain) on disposal of: - investment in associated companies - other investments - property, plant and equipment (net) - assets held for sale - prepaid lease payments (net) Property, plant and equipment written off Plantation development expenditure written off Provision for retirement benefits Excess of fair value of net assets acquired over purchase consideration Share of results of jointly controlled entity Share of results of in associated companies Unrealised gain on foreign exchange Operating profit/(loss) before working capital changes (Increase)/Decrease in working capital Inventories Receivables Payables Amount owing by/to related company Amount owing by/to associated companies
245,870
298,808
32,200
42,902
5 4
44,197 14,204 244 107 (16,351) 65,003 (7) (181) 55,033 (4,350) 2,853 (79) (264) (648) (86) 615 154 1,921 (14,087) 5,879 (2,661) (332)
44,437 13,280 3 55,674 (33) (1,050) 481 48,489 (10,137) (221) (140) 20 3,678 918 (3,102)
559 (82,349) 9,814 (10,767) (92)
644 (55,149) 8,249 (10,702) (36)
3 5 24 7(d) 9(c) 8
397,034
451,105
(50,635)
(14,092)
(118,299) (38,800) 87,928 7,023 (62,148)
(119,693) 2,243 45,530 12,901 (59,019)
4,036 46,167 50,203
5,764 (565) 5,199
annual report 2009
89
CASH FlOW StAtEmENtS

Group note 2009 rM000 2008 rM000 restated 392,086 (57,976) (438) (58,414) 333,672
company 2009 2008 rM000 rM000 restated (432) 360 360 (72) (8,893) (14,339) (14,339) (23,232)
Cash generated from/(used in) operations tax (paid)/refund (net) Retirement benefits paid
334,886 (46,688) (908) (47,596)
Net cash from/(used in) operating activities
287,290
cash Flows From investing activities Subscription of redeemable convertible preference shares in a jointly controlled entity Acquisition of jointly controlled entity Acquisition of subsidiary companies Additions in property, plant and equipment Additions in prepaid lease payments Additions in plantation development expenditure Cash consideration from other investments Dividend received Deposit received for disposal of assets held for sale Interest received Proceeds from maturity of investment in malaysian Government Securities Purchase of other investments Proceeds from disposal of: - property, plant and equipment - assets held for sale - prepaid lease payment - other investments - associated companies Net cash (used in)/from investing activities
9 9 7(d) 3 4 5(b) 10(b)
(5,000) (389,181) (114,668) (479) (109,743) 7 2,388
(10,000) (255,304) (119,125) (89,835) 63 33 110 2,690 400 (9) 226 613 276 37 (469,825)
(492,494) (72) 55,492 929 134 (436,011)
(220) 55,149 10,702 36 65,667
10(b) 10(b)
374 990 150 780 1,469 (612,913)
90
Group note 2009 rM000 2008 rM000 restated
company 2009 2008 rM000 rM000 restated
cash Flows From Financing activities Drawdown of term loan Repayment of term loan Re-financing of term loan Net drawdown/(repayment) of revolving credits Net (redemption)/issuance of murabahah Commercial Papers/medium term Notes Fixed deposits pledged with licensed banks Amount owing by/to subsidiary companies Amount owing to associated company Interest paid Dividend paid to minority shareholders of subsidiary companies Dividends paid Net cash from/(used in) financing activities net increase/(decrease) in cash and cash equivalents effect of exchange rate changes cash and cash equivalents at beginning of financial year cash and cash equivalents at end of financial year
752,897 (109,710) (95,700) 176,058 (50,000) 1,967 381 (64,936) (7,575) (22,271) 581,111
16,000 (38,863) 139,800 100,000 15,086 (1,658) (57,802) (7,104) (50,356) 115,103
512,497 (65,000) 7,800 64,405 (6,527) (22,271) 490,904
(13,500) (10,586) (8,249) (50,356) (82,691)
255,488 2 99,812
(21,050) 3 120,859
54,821 (76)
(40,256) 40,180
355,302
99,812
54,745
(76)
Cash and cash equivalents at end of financial year comprise: Fixed deposits Cash and bank balances
218,645 199,291 417,936
50,929 55,197 106,126 (5,447) (547) (320) 99,812
54,745 54,745 54,745
244 244 (320) (76)
less: Islamic deposits held on trust for the benefit of the Islamic Securities Investors less: Fixed deposits pledged to licensed banks less: Bank overdraft
19(a) 19(b)
(5,447) (53,228) (3,959) 355,302
annual report 2009
91
NOtES tO tHE FINANCIAl StAtEmENtS
1.
corPorate inForMation 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 and the principal place of business of the Company is located at 22nd Floor, Wisma Zelan, No.1, Jalan tasik Permaisuri 2, Bandar tun Razak, 56000 Cheras, Kuala lumpur. the principal activities of the Company are provision of management services and investment holding. the principal activities of the subsidiary companies are stated in Note 45(a) to the financial statements. there has been no significant change in the nature of these activities during the financial year, other than acquisition of Northern Intergrated Agriculture Sdn Bhd and Padiberas Nasional Berhad which are involved in property development and rice business, as disclosed respectively in Note 7(d)(ii) and (iii).
2.
siGniFicant accountinG Policies (a) basis of preparation the financial statements of the Group and of the Company have been prepared under the historical cost convention unless otherwise stated in the accounting policies below and in accordance with the provisions of the Companies Act, 1965 and applicable approved Financial Reporting Standards (FRS) in malaysia issued by the malaysian Accounting Standards Board. Changes in accounting policies and future accounting standards are disclosed in Note 43. (b) Functional and presentation currency these financial statements are presented in Ringgit malaysia (Rm), which is the Companys functional and presentation currency. All financial information presented in Rm has been rounded to the nearest thousand (Rm000), unless otherwise stated. significant accounting estimates, assumptions and judgements Estimates, assumptions concerning the future and judgements are made in the preparation of the financial statements. they affect the application of the Groups accounting policies, reported amounts of assets, liabilities, income and expenses, and disclosures made. they are assessed on an on-going basis and are based on experience and relevant factors, including expectations of future events that are believed to be reasonable under the circumstances. the key assumptions concerning the future and other key sources of estimation or uncertainty at the balance sheet 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 as follows: (i) Impairment of goodwill Impairment of goodwill is determined by the Group on an annual basis. this requires an estimation of the valuein-use of the cash-generating units (CGU) to which the goodwill is allocated. Estimating the value-in-use requires the Group to make an estimate of the expected future cash flows from the CGU and also to opt for suitable discount rates in order to calculate the present value of those cash flows. the carrying amount of the Groups goodwill as at 31 December 2009 is disclosed in Note 11.
(c)
92
siGniFicant accountinG Policies (contD) (c) significant accounting estimates, assumptions and judgements (contd) (ii) Impairment of other investments and assets held for sale the Group carried out the impairment test based on a variety of estimation including the value-in-use of the CGU to which the other investments and assets held for sale are allocated. Estimating the value-in-use requires the Group to make an estimate of the expected future cash flows from the CGU and also to opt for a suitable discount rate in order to calculate the present value of those cash flows. the carrying amounts of other investments and assets held for sale of the Group as at 31 December 2009 are disclosed in Note 10 and 18 respectively. Income taxes the Group has exposure to income taxes in numerous jurisdictions. Significant judgement is involved in determining the group-wide provision for income taxes. there are certain transactions and computations for which the ultimate tax determination is uncertain during the ordinary course of business. the Group recognises liabilities for expected tax issues based on estimates of whether additional taxes will be due. Where the final tax outcome of these matters are different from the amounts that were initially recognised, such differences will impact the income tax and deferred tax provisions in the period in which such determination is made. the carrying amount of the Groups tax payable and tax recoverable as at 31 December 2009 were Rm31,253,000 and Rm14,563,000 (2008: Rm4,661,000 and Rm14,185,000) respectively. (iv) Deferred tax assets Deferred tax assets are recognised for all unused tax losses and unutilised capital and agriculture allowances to the extent that it is probable that taxable profit will be available against which the losses and capital and agriculture allowances can be utilised. Significant management judgement is required to determine the amount of deferred tax assets that can be recognised, based upon the likely timing and level of future taxable profits together with future tax planning strategies. the total carrying amounts of recognised/unrecognised tax losses and capital and agriculture allowances of the Group as at 31 December 2009 are disclosed in Note 12. (v) Depreciation of property, plant and equipment and amortisation of plantation development expenditure the costs of property, plant and equipment and plantation development expenditure for plantation activities are depreciated on a straight-line basis over their useful lives. management estimates the useful lives of the property, plant and equipment and plantation development expenditure as stated in Note 2(e) and Note 2(g) respectively. these are common life expectancies applied in the industries. 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 and amortisation expenses could be revised. the carrying amount of the Group and of the Companys property, plant and equipment and plantation development expenditure as at 31 December 2009 are stated in Note 3 and Note 5 respectively. Assets held for sale the Group follows the guidance of FRS 5 in classifying assets recovered principally through a sale transaction as assets held for sale. this classification requires significant judgement. In making this judgement, the Group takes into consideration the likelihood of the sale. the Groups carrying amount of the assets held for sale as at 31 December 2009 is disclosed in Note 18.
(iii)
(vi)
annual report 2009
93
siGniFicant accountinG Policies (contD) (c) significant accounting estimates, assumptions and judgements (contd) (vii) Estimation of present value of other receivables the Group estimates the balance of consideration receivable for surrender of lease in 3 equal annual instalments beginning from the year 2005 amounting to Rm88,350,000 by using the discounted cash flow (DCF) methodology. the DCF methodology requires the Group to make an estimate of the amount and timing of future net cash flows from the particular other receivables and discounting them to present value by applying a suitable discount rate. the Groups carrying amount of the particular other receivables as at 31 December 2009 in current assets is disclosed in Note 15. (viii) Retirement benefits the determination of the obligation and cost for pension and other retirement benefits is dependent on the selection of certain assumptions used by actuaries in calculating such amounts. those assumptions, which include among others discount rates and rates of salary increase, are described in Note 24. In accordance with FRS 119 Employee Benefits, actual results that differ from the assumptions are accumulated and amortised over future periods and therefore, generally affect the recognised expense and recorded obligation in such future periods. While the Group believes that the assumptions are reasonable and appropriate, significant differences in the actual experience or significant changes in the assumptions may materially affect the retirement benefit obligations. (ix) Allowance for doubtful debts the Group makes allowance for doubtful debts based on an assessment of the recoverability of receivables. Allowances are applied to receivables where events or changes in circumstances indicate that the carrying amounts may not be recoverable. the management specifically analyses historical bad debt, customer concentration, customer creditworthiness, current economic trends and changes in customer payment terms when making a judgement to evaluate the adequacy of allowance for doubtful debts. Where expectations differ from the original estimates, the differences will impact the carrying amount of receivables. Fair values of borrowings the fair values of borrowings are estimated by discounting future contractual cash flows at the current market interest rates available to the Group for similar financial instruments. It is assumed that the effective interest rates approximate the current market interest rates available to the Group based on its size and its business risk. Write-down for obsolete or slow-moving inventories the Group writes down its obsolete or slow moving inventories based on assessment of their estimated net selling price. Inventories are written down when events or changes in circumstances indicate that the carrying amounts may not be recoverable. the management specifically analyses sales trend and current economic trends when making a judgement to evaluate the adequacy of the write down for obsolete or slow moving inventories. Where expectations differ from the original estimates, the differences will impact the carrying amount of inventories.
(x)
(xi)
94
siGniFicant accountinG Policies (contD) (d) basis of consolidation the consolidated financial statements include the financial statements of the Company and all its subsidiary companies and its associated companies through equity accounting, which are made up to the end of the financial year. (i) Subsidiary companies Subsidiary companies are entities (including special purpose entities) over which the Group has power to govern the financial and operating policies, generally accompanying a shareholding of more than one half of the voting rights. the existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Group controls another entity. In the Companys separate financial statements, investment in subsidiary companies is stated at cost less impairment losses. On disposal of such investments, the difference between net disposal proceeds and their carrying amount is included in the income statements. the purchase method of accounting is used to account for the acquisition of subsidiaries. the cost of an acquisition is measured as the fair value of the assets given, equity instruments issued or liabilities incurred or assumed at the date of exchange, plus costs directly attributable to the acquisition. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values on the date of acquisition, irrespective of the extent of any minority interest. the excess of the cost of business combination over the Groups interest in the net fair value of the identifiable assets, liabilities and contingent liabilities is recognised as goodwill. the accounting policy on goodwill on acquisition of subsidiaries is set out in Note 2(j). If the cost of business combination is less than the interest in the net fair value of the identifiable assets, liabilities and contingent liabilities, the Group will: (a) (b) reassess the identification and measurement of the acquirees identifiable assets, liabilities and contingent liabilities and the measurement of the cost of the combination; and recognise immediately in profit or loss any excess remaining after that reassessment.
When a business combination includes more than one exchange transaction, any adjustment to the fair values of the subsidiarys identifiable assets, liabilities and contingent liabilities relating to previously held interests of the Group is accounted for as a revaluation. Subsidiaries are consolidated from the date on which control is transferred to the Group to the date on which that control ceases. minority interests are measured at the minorities share of the fair value of identifiable assets and liabilities at the date of acquisition by the Group and the minorities share of changes in equity since the date of acquisition, except when the losses applicable to the minority in a subsidiary exceed the minority interest in the equity of that subsidiary. In such cases, the excess and further losses applicable to the minority are attributed to the equity holders of the Company.
annual report 2009
95
siGniFicant accountinG Policies (contD) (d) basis of consolidation (contd) (ii) Associated companies Associated companies are entities over which the Group has significant influence and that are neither a subsidiary nor an interest in a joint venture. Significant influence is the power to participate in the financial and operating policies decision of the investee but not control or joint control over those policies. Investments in associated companies are stated at cost less impairment losses. On disposal of such investments, the difference between net disposal proceeds and their carrying amount is included in the income statements. Investments in associated companies are accounted for using the equity method of accounting. Investments in associated companies include goodwill identified on acquisition, net of any accumulated impairment loss in accordance with Note 2(i). Equity accounting involves recording investments in associated companies initially at cost, and recognising the Groups share of its associated companies post-acquisition results and its share of post-acquisition movements in reserves against the carrying amount of the investments. When the Groups share of losses in an associated company equals or exceeds its interest in the associated company, including any other unsecured receivables, the Group does not recognise further losses, unless it has incurred obligations or made payments on behalf of the associated company. (iii) Jointly controlled entities A jointly controlled entity is a joint venture that involves the establishment of a corporation, partnership or other entities over which there is contractually agreed sharing of joint control over the economic activity of the entity. Joint control exists when the strategic financial and operational decisions relating to the activity require the unanimous consent of all the parties sharing control. Investment in jointly controlled entities is stated at cost less accumulated impairment losses, if any. Upon disposal of such investment, the difference between the net disposal proceeds and its carrying amount is included in income statement. the investment in jointly controlled entity is accounted for in the consolidated financial statements using the equity method of accounting. the Groups share of results in the jointly controlled entity during the financial year is included in the consolidated financial statements, after adjustments to align the accounting policies with those of the Group, from the date that joint control commences until the date that joint control ceases. the Group recognises the portion of gains or losses on the sale of assets by the Group to the joint venture that is attributable to the other venturers. the Group does not recognise its share of results from the joint venture that result from the purchase of assets by the Group from the joint venture until it resells the assets to an independent party. However, a loss on the transaction is recognised immediately if the loss provides evidence of a reduction in the net realisable value of current assets or an impairment loss. When necessary, in applying the equity method, adjustments are made to the financial statements of the jointly controlled entity to ensure consistency of accounting policies with those of the Group. Unrealised gains on transactions between the Group and its jointly controlled entity are eliminated to the extent of the Groups interest in the jointly controlled entity; unrealised losses are also eliminated unless the transaction provides evidence on impairment of the asset transferred. Where necessary, in applying the equity method, adjustments are made to the financial statements of the jointly controlled entity to ensure consistency of accounting policies with those of the Group.
96
siGniFicant accountinG Policies (contD) (d) basis of consolidation (contd) (iv) Changes in Group composition Where a subsidiary issues new equity shares to minority interests for cash consideration and the issue price has been established at fair value, the reduction in the Groups interests in the subsidiary is accounted for as a disposal of equity interest with the corresponding gain or loss recognised in the consolidated income statement. When the Group purchases a subsidiarys equity shares from minority interests for cash consideration and the purchase price has been established at fair value, the accretion of the Groups interests in the subsidiary is accounted for as a purchase of equity interest for which the acquisition accounting method of accounting is applied. the Group treats all other changes in group composition as equity transactions between the Group and its minority shareholders. Any difference between the Groups share of net assets before and after the change, and any consideration received or paid, is adjusted to or against Group reserves. (v) transactions eliminated on consolidation Intra-group balances including any unrealised income and expenses arising from intra-group transactions, are eliminated in preparing the consolidated financial statements. Unrealised gains arising from transactions with equity accounted investees are eliminated against the investment to the extent of the Groups interest in the investee. Unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that there is no evidence of impairment. (vi) transaction costs Costs directly attributable to an acquisition are included as part of the cost of acquisition.
(e)
Property, plant and equipment Property, plant and equipment are stated at cost less accumulated depreciation and accumulated impairment losses. the policy for the recognition and measurement of impairment losses is in accordance with Note 2(i). When significant parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items (major components) of property, plant and equipment. Freehold land and capital work-in-progress are not depreciated. Other property, plant and equipment are depreciated on a straight line basis to write off the cost of the assets to their residual values over their estimated useful lives as follows: Buildings and infrastructure Plant and machinery motor vehicles Office equipment Furniture and fittings Estate access road 10 to 40 years 5 to 20 years 5 years 3 to 10 years 5 to 10 years 20 years
Depreciation methods, useful lives and residual values are reassessed at the reporting date. Subsequent expenditure relating to property, plant and equipment that has already been recognised is added to the carrying amount of the asset when it is probable that future economic benefits will flow to the Group and the cost can be reliably measured. Other subsequent expenditure is recognised as an expense during the financial year in which it is incurred. Gains or losses on disposals are determined by comparing net disposal proceeds with carrying amount and are recognised in the income statements.
annual report 2009
97
siGniFicant accountinG Policies (contD) (f) leases (i) Classification A lease is recognised as a finance lease if it transfers substantially to the Group all the risks and rewards incidental to ownership. For leases of land and buildings, the land and buildings elements are considered separately for the purpose of lease classification and these leases are classified as operating or finance leases in the same way as leases of other assets. All leases that do not transfer substantially all the risks and rewards are classified as operating lease. Finance leases Assets acquired by way of finance leases or hire purchase are stated at an amount equal to the lower of their fair values and the present value of the minimum lease payments at the inception of the leases, less accumulated depreciation and impairment losses. the corresponding liability is included in the balance sheet as borrowings. In calculating the present value of the minimum lease payments, the discount factor used is the interest rate implicit in the lease, when it is practicable to determine; otherwise, the Companys incremental borrowing rate is used. Any initial direct costs are also added to the carrying amount of such assets. lease payments are apportioned between the finance costs and the reduction of the outstanding liability. Finance costs, which represent the difference between the total leasing commitments and the fair value of the assets acquired, are recognised in the profit and loss over the term of the relevant lease so as to produce a constant periodic rate of charge on the remaining balance of the obligations for each accounting period. the depreciation policy for leased assets is in accordance with that for depreciable property, plant and equipment as described in Note 2(e). (iii) Operating lease the Group as lessee the upfront payments made under an operating lease are classified as prepaid lease payments and are amortised to the income statement on a straight line basis over the lease period. Operating lease payments are recognised as an expense on a straight line basis over the term of the relevant lease. the aggregate benefit of incentives as provided by the lessor is recognised as a reduction of rental expense over the lease term on a straight line basis. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased assets and recognised on a straight line basis over the lease term. leasehold lands that are leased from the Federal Government at nominal amounts are also not depreciated. Other leasehold land is depreciated over the period of the lease, which ranges from 29 to 878 years. (iv) Operating lease - the Group as lessor Assets leased out under operating leases are presented on the balance sheets according to the nature of the assets. Rental income from operating lease is recognised on a straight line basis over the term of the relevant lease.
(ii)
98
siGniFicant accountinG Policies (contD) (g) Plantation development expenditure mature plantations are stated at cost less accumulated amortisation and any impairment losses. the policy of recognition and measurement of impairment losses is in accordance with Note 2(i). Amortisation is charged to the income statements so as to write off the cost of mature plantations, using the straight-line method, over the estimated useful lives of 25 years, representing the economic useful lives of the crops. Costs incurred in the preparation of the nursery, purchase of seedlings and their maintenance are stated at cost. the accumulated costs will be capitalised in plantation development expenditure at the time of planting. Immature plantations are stated at cost. the costs of immature plantations consist mainly of the accumulated cost of land clearing, planting, fertilising and maintaining the plantation, borrowing costs and other indirect overhead costs up to the time the trees are harvestable and to the extent appropriate. the residual values and useful lives of plantation assets are reviewed, and adjusted as appropriate, at each balance sheet date. (h) Property development activities (i) land held for property development land held for property development is stated at costs less accumulated impairment losses, if any. Such land is classified as non-current asset when no significant development work has been carried out or where development activities are not expected to be completed within the normal operating cycle. Cost associated with the acquisition of land includes the purchase price of the land, professional fees, stamp duties, commissions, conversion fees and other relevant levies. land held for property development is reclassified as property development costs at the point when development activities have commenced and where it can be demonstrated that the development activities can be completed within the normal operating cycle. (ii) Property development costs Property development costs comprise all cost that are directly attributable to the development activities or that can be allocated on a reasonable basis to such activities. they comprise the cost of land under development, construction costs and other related development costs common to the whole project including professional fees, stamp duties, commissions, conversion fees and other relevant levies as well as borrowing costs. Interest costs incurred on financing the development of the projects are capitalised and included as part of development expenditure. the Group considers as current assets that portion of property development expenditure on which significant development work has been done and which is expected to be completed within the normal operating cycle of two to three years. Property development costs not recognised as an expense are recognised as an asset measured at the lower of cost and net realisable value. When revenue recognised in the income statements exceeds progress billing to purchasers, the balance is classified as accrued billings under current assets. When progress billings exceed revenue recognised in the income statements, the balance is classified as progress billings under current liabilities.
annual report 2009
99
siGniFicant accountinG Policies (contD) (i) impairment the carrying amount of assets is reviewed for impairment when there is an indication that the assets might be impaired. For goodwill and intangible assets that have indefinite useful lives or that are not yet available for use, recoverable amount is estimated at each reporting date. Impairment is measured by comparing the carrying amount of the assets with their recoverable amounts. the recoverable amount is the higher of an assets net selling price and its value-in-use, which is measured by reference to discounted future cash flows. An impairment loss is charged to the income statements immediately. Subsequent increase in the recoverable amount of an asset is treated as reversal of the previous impairment loss and is recognised to the extent of the carrying amount of the asset that would have been determined (net of amortisation and depreciation) had no impairment loss been recognised. An impairment loss in respect of goodwill is not reversed. the reversal other than goodwill is recognised in the income statements immediately. (j) intangible assets (i) Goodwill Goodwill arising from consolidation represents the excess of the purchase price over the Groups interest in the fair value of the identifiable assets and liabilities of subsidiary companies at the date of acquisition. After initial recognition, goodwill is measured at cost less accumulated impairment losses, if any. Goodwill is not amortised but instead tested for impairment annually or more frequently if events or changes in circumstances indicate that the carrying value may be impaired. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold. For the purpose of impairment testing of goodwill, goodwill is allocated to each of the Groups CGU expected to benefit from synergies of the business combination. An impairment loss is recognised in the consolidated income statement when the carrying amount of CGU, including the goodwill, exceeds the recoverable amount of the CGU. Recoverable amount of the CGU is the higher of the CGUs fair value less cost to sell and value-inuse. the total impairment loss is allocated first to reduce the carrying amount of goodwill allocated to the CGU and then to the other assets of the CGU pro-rata on the basis of the carrying amount of each asset in the CGU. Impairment loss on goodwill is not reversed in a subsequent period. Goodwill arising on acquisition of an associate is the excess of cost of investment over the Groups share of the net fair value of the associates identifiable assets, liabilities and contingent liabilities at the date of acquisition. Goodwill relating to the associate is included in the carrying amount of the investment and is not amortised. the excess of the Groups share of the net fair value of the associates identifiable assets, liabilities and contingent liabilities over the cost of investment is included as income in the determination of the Groups share of the associates results in the period in which the investment is acquired. (ii) trademarks trademarks were acquired through business combinations. the useful life of trademarks is estimated to be indefinite because based on the current market share of the brands, management believes there is no foreseeable limit to the period over which the brands are expected to generate net cash flows to the Group. trademarks are stated at cost less accumulated impairment losses, if any. trademarks are not amortised but instead tested for impairment annually or more frequently if events or changes in circumstances indicate that the carrying value may be impaired.
100
siGniFicant accountinG Policies (contD) (k) other investments Other investments are stated at cost less accumulated impairment losses. the policy for the recognition and measurement of impairment losses is in accordance with Note 2(i). On disposal of an investment, the difference between the net disposal proceeds and its carrying amount is charged or credited to the income statements. (l) inventories Inventories are stated at the lower of cost and net realisable value after adequate allowance has been made for all deteriorated, damaged, obsolete or slow-moving inventories. Cost of inventories comprises the original cost of purchase plus the cost of bringing the inventories to their intended location and condition. Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and selling expenses. the cost of oil palm products includes the cost of raw materials, direct labour, other direct cost and a proportion of production overheads based on normal operating capacity of the production facilities. Cost of livestock consists of original cost of purchase and other attributable costs in nurturing the livestock to their saleable condition. Cost of consumables comprises all costs of purchase and cost of nursery consists of the original cost of purchase, direct labour and other related overheads. Cost of raw sugar comprises the cost of purchase and incidental costs incurred in bringing the raw sugar to its present condition and location. Cost of refined sugar comprises cost of raw sugar and all direct expenditures incurred in the refinery process and include labour and appropriate production overheads. Cost of transhipment stocks comprises the weighted average cost of raw sugar purchased and all direct expenditures and incidentals incurred in bringing the raw sugar to saleable condition and location. the cost of paddy and rice comprise costs of purchase. the costs of finished goods comprise costs of paddy and rice, direct materials, direct labour, other direct costs and appropriate proportions of production overheads based on normal operating capacity. Pre-cropping expenditure incurred in respect of paddy planting is included as inventories and expensed upon harvesting. the Group is vested with the duty to maintain and manage the Government Rice Stockpile. the inventories of paddy and rice of the Group are disclosed net of the Government Stockpile. Surplus arising from the valuation of inventories attributable to the Government Stockpile is dealt with in the Stockpile Fluctuation Reserve account. Any deficit in excess of the balance of the Stockpile Fluctuation Reserve is charged to the income statements.
annual report 2009
101
siGniFicant accountinG Policies (contD) (m) receivables trade and other receivables are carried at anticipated realisable value. Bad debts are written off when identified. Doubtful debts are provided based on specific review of the receivables. (n) cash and cash equivalents Cash and cash equivalents include cash and bank balances, deposits and other short term highly liquid investments that are readily convertible to cash and are subject to insignificant risk of changes in value. For the purpose of the cash flow statements, cash and cash equivalents are presented net of bank overdrafts and pledged deposits. Payables trade and other payables are stated at cost which is the fair value of the consideration to be paid in the future for goods and services received. interest bearing loans and borrowings All loans and borrowings are initially recognised at the fair value of the consideration received less directly attributable transaction costs. After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost with any difference between cost and redemption value being recognised in the income statements over the period of the loans and borrowings using the effective interest method. Interest relating to a financial instrument is reported within finance cost in the income statements. Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least twelve (12) months after the balance sheet date. (q) Provisions Provisions are recognised when there is a present obligation, legal or constructive, as a result of a past event, when it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Where the effect of the time value of money is material, the amount of a provision will be discounted to its present value at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. Provisions are reviewed at each balance sheet date and adjusted to reflect the current best estimate. If it is no longer probable that an outflow of resources embodying economic benefits will be required to settle the obligation, the provision will be reversed. Provisions are not recognised for future operating losses. If the Group has a contract that is onerous, the present obligation under the contract shall be recognised and measured as a provision. (r) contingent assets and contingent liabilities A contingent asset is a possible asset that arises from past events whose existence will be confirmed by the occurrence or non-occurrence of one or more uncertain future events beyond the control of the Group. the Group does not recognise contingent assets but disclose its existence where inflows of economic benefits are probable, but not virtually certain.
(o)
(p)
102
siGniFicant accountinG Policies (contD) (r) contingent assets and contingent liabilities (contd) A contingent liability is a possible obligation that arises from past events whose existence will be confirmed by the occurrence or non-occurrence of one or more uncertain future events beyond the control of the Group or a present obligation that is not recognised because it is not probable that an outflow of resources will be required to settle the obligation. A contingent liability also arises in extremely rare cases where there is a liability that cannot be recognised because it cannot be measured reliably. the Group does not recognise a contingent liability but discloses its existence in the financial statements. In the acquisition of subsidiaries by the Group under business combinations, contingent liabilities assumed are measured initially at their fair values at the acquisition date, irrespective of the extent of any minority interest. (s) borrowing costs Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are capitalised as part of the cost of those assets, until such time as the assets are substantially ready for their intended use or sale. When the borrowings are made specifically for the purpose of obtaining a qualifying asset, the amount of borrowing costs eligible for capitalisation is the actual borrowing costs incurred on that borrowing during the period less any investment income on the temporary investment of funds drawndown from that borrowing facility. When the borrowings are made generally, and used for the purpose of obtaining a qualifying asset, the borrowing costs eligible for capitalisation are determined by applying a capitalisation rate which is the weighted average of the borrowing costs applicable to the borrowings that are outstanding during the financial year. All other borrowing costs are recognised as an expense in the income statements in the period in which they are incurred. (t) Foreign currencies transactions in foreign currencies are converted into Ringgit malaysia at rates of exchange ruling at the transaction dates. monetary assets and liabilities in foreign currencies at the balance sheet date are translated into Ringgit malaysia at rates of exchange ruling at that date unless hedged by forward foreign exchange contracts, in which case the rates specified in such forward contracts are used. All exchange differences arising from the settlement of foreign currency transactions and from the translation of foreign currency monetary assets and liabilities are recognised in the income statements in the period in which they arise. Non-monetary items initially denominated in foreign currencies, which are carried at historical cost are translated using the historical rate as of the date of acquisition, and non-monetary items which are carried at fair value are translated using the exchange rate that existed when the values were determined for presentation currency purposes. the results and financial position of all the group entities (none of which has the currency of a hyperinflationary economy) that have a functional currency different from the presentation currency are translated into the presentation currency as follows: (i) assets and liabilities for each balance sheet presented are translated at the closing rate at the date of that balance sheet; income and expenses for each income statement are translated at average exchange rates (unless this average is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the dates of the transactions); and all resulting exchange differences are recognised as a separate component of equity.
(ii)
(iii)
annual report 2009
103
siGniFicant accountinG Policies (contD) (t) Foreign currencies (contd) On consolidation, exchange differences arising from the translation of the net investment in foreign entities, and of borrowings, are taken to shareholders equity. When a foreign operation is sold or dissolved, such exchange differences are recognised in the income statements as part of the gain or loss on sale or dissolution. Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated at the closing rate. the principal exchange rate used for every unit of foreign currencies ruling at the balance sheet date used is as follows:2009 Rm 1 United States Dollar (USD) 3.42 2008 Rm 3.46
(u)
income tax Income tax on the profit or loss for the financial year comprises current and deferred tax. Current tax is the expected amount of income taxes payable in respect of the taxable profit for the financial year and is measured using the tax rates that have been enacted at the balance sheet date. Deferred tax is provided for, using the liability method, on temporary differences at the balance sheet date between the tax bases of assets and liabilities and their carrying amounts in the financial statements. Deferred tax liabilities are recognised for all taxable temporary differences and deferred tax assets are recognised for all deductible temporary differences, unused tax losses and unutilised tax credits to the extent that it is probable that future taxable profit will be available against which the deductible temporary differences, unused tax losses and unutilised tax credits can be utilised. Deferred tax is not recognised if the temporary difference arises from goodwill or negative goodwill or from the initial recognition of an asset or liability in a transaction which is not a business combination and at the time of the transaction, affects neither accounting profit nor taxable profit. Deferred tax is measured at the tax rates that are expected to apply in the period when the asset is realised or the liability is settled, based on tax rates that have been enacted or substantively enacted at the balance sheet date. Deferred tax is recognised in the income statements, except when it arises from a transaction which is recognised directly in equity, in which case the deferred tax is also charged or credited directly in equity, or when it arises from a business combination that is an acquisition, in which case the deferred tax is included in the resulting goodwill or negative goodwill.
(v)
employee benefits (i) Short term benefits 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 of the Group. 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 non-accumulating compensated absences such as sick leave are recognised when the absences occur.
104
siGniFicant accountinG Policies (contD) (v) employee benefits (contd) (ii) termination benefits termination benefits are payments due to employees as a result of the termination of employment before the normal retirement date or to encourage voluntary redundancy. they are recognised as a liability and as an expense when the Group has a detailed formal plan for termination with no realistic possibility of withdrawal. In the case of voluntary redundancy, the benefits are accounted for based on the number of employees expected to accept the offer. Defined contribution plans the Groups contributions to defined contribution plans are charged to the income statements in the period to which they relate. Once the contributions have been paid, the Group has no further payment obligations. As required by law, companies in malaysia make contributions to the state pension scheme, the Employees Provident Fund (EPF). Funded defined benefit plans A subsidiary company operates a funded defined benefit Retirement Benefit Scheme (the Scheme) for its eligible employees. the subsidiary companys obligations under the Scheme are determined based on triennial valuation where the amount of benefit that employees have earned in return for their service in the current and prior years is estimated. that benefit is discounted using the Projected Unit Credit method in order to determine its present value. Actuarial gains and losses are recognised as income or expense over the expected average remaining working lives of the participating employees when the cumulative recognised actuarial gains or losses for the Scheme exceed 10% of the higher of the present value of the defined benefit obligations and the fair value of the plan assets. Past service cost is recognised immediately to the extent that the benefits are already vested. Otherwise, it will be amortised on a straight-line basis over the average period until the amended benefits become vested. the amount recognised in the balance sheet represents the present value of the defined benefit obligations adjusted for recognised actuarial gains and losses and recognised past service cost, and reduced by the fair value of plan assets. Any asset resulting from this calculation is limited to the net total of any recognised actuarial losses and past service cost, and the present value of any economic benefits in the form of refunds or reductions in future contributions to the plan. (v) Unfunded defined benefit plans Certain subsidiary companies provide for retirement benefits for eligible employees on an unfunded defined benefit basis in accordance with the terms of the Groups policies. Full provision has been made for retirement benefits payable to all eligible employees who have completed their qualifying period of service, based on their last drawn salaries as set out in the policies. that benefit is discounted using the Projected Unit Credit method in order to determine its present value. Should an employee leave after completing the qualifying period of service but before attaining the retirement age, the provision made for the employee is written back.
(iii)
(iv)
(w)
revenue recognition (i) Revenue from sale of goods is measured at the fair value of the consideration receivable and is recognised when the significant risks and rewards of ownership have been transferred to the buyer. 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.
annual report 2009
105
siGniFicant accountinG Policies (contD) (w) revenue recognition (contd) (ii) Property development revenue is recognised in respect of all development units that have been sold. Revenue recognition commences when the sale of the development unit is effected, upon the commencement of development and construction activities and when the financial outcome can be reliably estimated. the attributable portion of property development cost is recognised as an expense in the period in which the related revenue is recognised. the amount of such revenue and expenses recognised is determined by reference to the stage of completion of development activity at the balance sheet date. the stage of completion is measured by reference to the proportion that property development costs incurred for work performed to date bear to the estimated total property development cost. When the financial outcome of a development activity cannot be reliably estimated, the property development revenue is recognised only to the extent of property development costs incurred that is probable to be recoverable and the property development costs on the development units sold are recognised as an expense in the period in which they are incurred. Any expected loss on a development project is recognised as an expense immediately, including costs to be incurred over the defects liability period. (iii) Revenue from services rendered is recognised in the income statements upon performance of services and is measured at the fair value of the consideration receivable. Interest income is recognised on a time proportion basis that takes into account the effective yield on the asset. Dividend income is recognised when the shareholders right to receive payment is established. Rental income is recognised on an accrual basis over the term of an ongoing lease.
(iv) (v) (vi) (x)
Government grants Government grants are recognised at fair values where there is reasonable assurance that the grants will be received and the Group will comply with all attached conditions. Government grants relating to income are recognised in the income statements to match them with the cost they are intended to compensate.
(y)
segment reporting Segment reporting is presented for enhanced assessment of the Groups risks and returns. Business segments provide products or services that are subject to risks and returns that are different from those of other business segments. Geographical segments provide products or services within a particular economic environment that is subject to risks and returns that are different from those components operating in other economic environments. Segment revenue, expense, assets and liabilities are those amounts resulting from the operating activities of a segment that are directly attributable to the segment and the relevant portion that can be allocated on a reasonable basis to the segment. Segment revenue, expense, assets and liabilities are determined before intragroup balances and intragroup transactions are eliminated as part of the consolidation process, except to the extent that such intragroup balances and transactions are between Group enterprises within a single element.
106
siGniFicant accountinG Policies (contD) (z) earnings per share the Group presents basic earnings per share (EPS) data for its ordinary shares. Basic EPS is calculated by dividing the profit or loss attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares outstanding during the period and ordinary shares that will be issued upon the conversion of mandatorily convertible instruments from the date the contract is entered into.
(aa) Financial instruments Financial instruments carried on the balance sheet include cash and bank balances, deposits, investments, receivables, payables and borrowings. Financial instruments are recognised in the balance sheets when the Group has become a party to the contractual provisions of the instrument. Financial instruments are classified as liabilities or equity in accordance with the substance of the contractual arrangement. Interest, dividends and gains and losses relating to a financial instrument classified as a liability are reported as expense or income. Distributions to holders of financial instruments classified as equity are charged directly to equity. Financial instruments are offset when the Group has a legally enforceable right to offset and intends to settle either on a net basis or to recognise the asset and settle the liability simultaneously. Ordinary shares are classified as equity. Dividends on ordinary shares are recognised in equity in the year in which they are declared. the particular recognition method adopted for financial instruments recognised on the balance sheets is disclosed in the individual accounting policy statements associated with each item. there is no financial instrument not recognised on the balance sheets of the Group and of the Company. (bb) non-current assets (or disposal groups) held for sale Non-current assets (or disposal groups) are classified as held for sale if their carrying amounts will be recovered principally through a sale transaction rather than through continuing use. For this to be the case, the asset (or disposal group) must be available for immediate sale in its present condition subject only to terms that are usual and customary for sales of such assets (or disposal groups) and its sale must be highly probable. Immediately before the initial classification as held for sale, the carrying amounts of the non-current assets (or all the assets and liabilities in a disposal group) are measured in accordance with applicable FRSs. On initial classification as held for sale, non-current assets or disposal groups (other than investment properties, deferred tax assets, employee benefits assets, and financial assets carried at fair value) are measured at the lower of carrying amount before the initial classification as held for sale and fair value less costs to sell. the differences, if any, are recognised in income statements as impairment loss. Non-current assets (or disposal groups) held for sale are classified as current assets (and current liabilities, in the case of non-current liabilities included within disposal groups) on the face of the balance sheet and are stated at the lower of carrying amount immediately before initial classification and fair value less costs to sell and are not depreciated. Any cumulative income or expense recognised directly in equity relating to the non-current asset (or disposal group) classified as held for sale is presented separately.
annual report 2009
107
siGniFicant accountinG Policies (contD) (bb) non-current assets (or disposal groups) held for sale (contd) If the Group has classified an asset (or disposal group) as held for sale but subsequently the criteria for classification is no longer met, the Group ceases to classify the asset (or disposal group) as held for sale. the Group measures a non-current asset that ceases to be classified as held for sale (or ceases to be included in a disposal group classified as held for sale) at the lower of: (a) its carrying amount before the asset (or disposal group) was classified as held for sale, adjusted for any depreciation, amortisation or revaluations that would have been recognised had the asset (or disposal group) not been classified as held for sale; and its recoverable amount at the date of the subsequent decision of not to sell.
(b)
3.
ProPertY, Plant anD equiPMent buildings and infra- Plant and structure machinery rM000 rM000 Furniture, fittings Motor and office vehicles equipment rM000 rM000 estate access road rM000 capital work-inprogress rM000
Group
Freehold land rM000
total rM000
2009 cost At 1.1.2009 Additions Acquisition of subsidiary companies (Note 7) Disposals Write-off Exchange differences transfer to assets held for sale (Note 18) Reclassification At 31.12.2009
66,675 36,923 103,598
303,453 6,327 118,136 (669) 77 4,839 432,163
523,903 48,382 244,984 (320) (15,545) 27 (5,500) 8,696 804,627
67,173 8,469 30,940 (1,149) (3,114) 4 2,267 104,590
40,743 10,229 84,257 (5) (1,351) 2 (5,734) 128,141
73,312 7,431 14,264 95,007
31,746 33,830 46,095 (24,332) 87,339
1,107,005 114,668 561,335 (1,474) (20,679) 110 (5,500) 1,755,465
accumulated depreciation At 1.1.2009 Charge for the financial year Acquisition of subsidiary companies (Note 7) Disposals Write-off Exchange differences transfer to assets held for sale (Note 18) Reclassification At 31.12.2009
141,522 12,884 21,810 (616) 68 (8) 175,660
338,342 36,295 118,564 (319) (15,020) 23 (4,716) 467 473,636
48,935 9,165 20,942 (1,042) (3,093) 2 1,002 75,911
24,702 4,760 59,405 (3) (1,335) 3 (2,612) 84,920
26,041 4,377 1,151 31,569
579,542 67,481 220,721 (1,364) (20,064) 96 (4,716) 841,696
Carrying amount At 31.12.2009
103,598
256,503
330,991
28,679
43,221
63,438
87,339
913,769
108
3.
ProPertY, Plant anD equiPMent (contD) buildings and infra- Plant and structure machinery rM000 rM000 Furniture, fittings Motor and office vehicles equipment rM000 rM000 estate access road rM000 capital work-inprogress rM000
Group
Freehold land rM000
total rM000
2008 cost At 1.1.2008 Additions Disposals Write-off Exchange differences transfer from assets held for sale (Note 18) transfer to assets held for sale (Note 18) Reclassification At 31.12.2008
66,429 246 66,675
277,260 16,059 (654) 370 7,930 (1,819) 4,307 303,453
462,484 54,435 (210) (89) 120 7,163 523,903
60,719 9,653 (792) (2,189) (218) 67,173
32,173 4,489 (118) (637) 8 743 4,085 40,743
65,823 5,146 2,343 73,312
21,174 29,343 (1,091) (17,680) 31,746
986,062 119,125 (1,120) (3,569) 744 7,582 (1,819) 1,107,005
accumulated depreciation At 1.1.2008 Charge for the financial year Disposals Write-off Exchange differences transfer from assets held for sale (Note 18) transfer to assets held for sale (Note 18) Reclassification At 31.12.2008
125,899 12,873 (654) 328 7,123 (1,365) (2,682) 141,522
306,727 31,409 (210) (88) 109 395 338,342
44,735 6,955 (792) (2,188) 225 48,935
20,448 3,014 (113) (619) 7 268 1,697 24,702
22,060 3,616 365 26,041
519,869 57,867 (1,115) (3,549) 444 7,391 (1,365) 579,542
carrying amount At 31.12.2008
66,675
161,931
185,561
18,238
16,041
47,271
31,746
527,463
annual report 2009
109
3.
ProPertY, Plant anD equiPMent (contD) Furniture, fittings and office equipment rM000
company
Motor vehicles rM000
total rM000
2009 cost At 1.1.2009 Additions Disposal Write-off At 31.12.2009
1,744 6 (592) 1,158
1,580 66 (5) (419) 1,222
3,324 72 (597) (419) 2,380
accumulated depreciation At 1.1.2009 Charge for the financial year Disposal Write-off At 31.12.2009
1,168 432 (552) 1,048
1,338 127 (4) (419) 1,042
2,506 559 (556) (419) 2,090
110
180
290
2008 cost At 1.1.2008 Additions Disposal At 31.12.2008
1,706 145 (107) 1,744
1,505 75 1,580
3,211 220 (107) 3,324
accumulated depreciation At 1.1.2008 Charge for the financial year Disposal At 31.12.2008
816 459 (107) 1,168
1,153 185 1,338
1,969 644 (107) 2,506
576
242
818
110
3.
ProPertY, Plant anD equiPMent (contD) the net carrying amount of property, plant and equipment charged to licensed banks for credit facilities granted to the Group, as disclosed in Note 23 are as follows: company 2009 2008 rM000 rM000 Freehold land Buildings and infrastructure Plant and machinery 27,658 49,706 58,218 135,582 20,351 39,819 46,704 106,874
4.
PrePaiD lease PaYMents long term leasehold land rM000 short term leasehold land rM000
Group
total rM000
2009 cost At 1 January Additions Disposal Acquisition of subsidiary companies [Note 7(d)] termination of lease [Note 44(f)] At 31 December
982,903 (58) 55,130 (26,000) 1,011,975
50,322 479 (9) 1,142 51,934
1,033,225 479 (67) 56,272 (26,000) 1,063,909
accumulated amortisation At 1 January Charge for the financial year Disposal Acquisition of subsidiary companies [Note 7(d)] termination of lease [Note 44(f)] At 31 December
65,118 13,068 (1) 6,465 (5,275) 79,375
8,908 1,136 (2) 78 10,120
74,026 14,204 (3) 6,543 (5,275) 89,495
carrying amount At 31 December 2009
932,600
41,814
974,414
annual report 2009
111
4.
PrePaiD lease PaYMents (contD) long term leasehold land rM000 short term leasehold land rM000
Group
total rM000
2008 cost At 1 January Disposal Acquisition of subsidiary companies [Note 7(e)] Reclassification At 31 December
687,486 (146) 299,743 (4,180) 982,903
46,142 4,180 50,322
733,628 (146) 299,743 1,033,225
accumulated amortisation At 1 January Charge for the financial year Disposal Acquisition of subsidiary companies [Note 7(e)] Reclassification At 31 December
53,415 12,131 (10) 230 (648) 65,118
7,111 1,149 648 8,908
60,526 13,280 (10) 230 74,026
carrying amount At 31 December 2008
917,785
41,414
959,199
the prepaid lease payments can be analysed as follows: Group 2009 rM000 Short term (unexpired lease period less than 50 years) long term (unexpired lease period more than 50 years) 41,814 932,600 974,414 2008 rM000 41,414 917,785 959,199
(a) (b) (c)
the above prepaid lease payments consist of upfront payments made for leasehold lands. the remaining period of lease term range from 29 years to 878 years (2008: 30 years to 879 years). the net carrying amount of leasehold land that has been charged for facilities granted to the Group as disclosed in Note 23 is Rm476,155,000 (2008: Rm471,657,000). During the financial year, the land title of leasehold land of a subsidiary with a carrying amount of Rm15,718,000 (2008: Rm16,052,000) was issued by the relevant authority. In the previous financial year, the Group submitted the application to discharge the charges on a parcel of leasehold land with a total carrying amount of Rm22,215,000 (2008: Rm22,481,000). the discharge of the charge was completed during the financial year.
(d)
(e)
112
5.
Plantation DeveloPMent exPenDiture Group 2009 rM000 cost At 1 January Additions Write-off Assets retired from use Exchange differences At 31 December 2008 rM000
1,265,700 122,124 (209) 340 1,387,955
1,175,710 99,315 (4,598) (5,952) 1,225 1,265,700
accumulated amortisation At 1 January Charge for the financial year Write-off Assets retired from use Exchange differences At 31 December
293,287 44,197 (55) 95 337,524
255,339 44,437 (920) (5,952) 383 293,287
carrying amount At 31 December
1,050,431
972,413
(a)
Included in additions of plantation development expenditure for the financial year are the following: Group 2009 rM000 Depreciation of property, plant and equipment Interest on borrowings Raw materials and consumables used Staff costs Net income from scout harvesting 2,478 9,903 33,493 17,691 (3,321) 2008 rM000 2,193 7,287 25,921 11,279 (2,707)
Included in staff costs are contributions made to a defined contribution plan amounting to Rm702,000 (2008: Rm660,000).
annual report 2009
113
5.
Plantation DeveloPMent exPenDiture (contD) (b) Additions of plantation development expenditure: Group 2009 rM000 Additions of plantation development expenditure less : Depreciation capitalised in plantation development expenditure Interest capitalised in plantation development expenditure Cash payments on additions of plantation development expenditure 122,124 (2,478) (9,903) 109,743 2008 rM000 99,315 (2,193) (7,287) 89,835
(c)
the net carrying amount of plantation development expenditure charged to licensed banks for credit facilities granted to the Group as disclosed in Note 23 is Rm812,947,000 (2008: Rm760,555,000). Retus Plantation Sdn Bhd (RPSB), a subsidiary company of the Company planted oil palm trees on approximately 1,517 hectares of land (the land) which belongs to the Sarawak State Government. total carrying value of the plantation development expenditure incurred on the land as at 31 December 2009 was approximately Rm18,389,000. RPSB submitted an application to the State land and Survey Department for the alienation of 830 hectares of the land to RPSB in 2005. However, 768 hectares of the applied area (Alienated land) were alienated to masretus Oil Palm Plantation Sdn Bhd (masretus). As disclosed in Note 7(d)(i), RPSB has acquired the entire issued and paid-up capital of masretus and subsequently assumed ownership of the Alienated land. the carrying value of the plantation development expenditure incurred on the Alienated land of 768 hectares as at 31 December 2009 was approximately Rm11,026,000. As for the remaining 749 hectares, RPSB is awaiting the clearance from the State land and Survey Department to submit the application for the alienation of this land. the carrying value of the plantation development expenditure incurred on the 749 hectares as at 31 December 2009 was approximately Rm7,363,000. the Directors of RPSB are of the opinion that the plantation development expenditure incurred on the overplanted area of 749 hectares is fully recoverable. In the event RPSB is unsuccessful in the application for the alienation of the remaining 749 hectares, RPSB would not be able to recover the plantation development expenditure incurred of approximately Rm7,363,000 and consequently this amount may have to be written off to the income statement. RPSB harvested fresh fruit bunches in the current and previous financial years from the planted land which is outside its land boundary. RPSB will continue to harvest from the remaining 749 hectares and foresee to be able to do so in the foreseeable future, until such a time when the land is alienated to third parties, if ever.
(d)
114
6.
lanD helD For ProPertY DeveloPMent Group 2009 rM000 long term leasehold land at cost At 1 January Acquisition of subsidiary companies [Note 7(d)(ii)] At 31 December 2008 rM000
87,412 87,412
the above leasehold land represents malay reserve land and the current usage of the entire land is for agriculture purposes, but a portion of it has the benefit of an approved master Plan for the development of a second border town, as disclosed in Note 7(d)(ii).
7.
investMent in subsiDiarY coMPanies Group 2009 rM000 Quoted shares, at cost Unquoted shares, at cost Post acquisition reserves 7,714 (1,654) 6,060 (6,060) 2008 rM000 7,714 (1,654) 6,060 (6,060) company 2009 2008 rM000 rM000 1,083,139 302,961 1,386,100 1,386,100 590,645 302,961 893,606 893,606
Accumulated impairment loss
Quoted shares, at market value
1,054,173
527,867
(a)
the above investment in subsidiary companies at Group level represents investment in an unconsolidated subsidiary company as explained in Note 45(a). During the financial year, the Company acquired 50.33% equity interest in Padiberas Nasional Berhad (BERNAS), a company incorporated and domiciled in malaysia, and is listed on the main market of Bursa malaysia Securities Berhad. Details of the acquisition are explained in Note 7(d)(iii). Details of the subsidiary companies and shareholdings therein are shown in Note 45(a).
(b)
(c)
annual report 2009
115
7.
investMent in subsiDiarY coMPanies (contD) (d) Acquisition of subsidiary companies during the financial year (i) Acquisition of masretus Oil Palm Plantation Sdn Bhd (masretus) On 3 April 2009, Retus Plantation Sdn Bhd, a subsidiary company of the Company acquired the entire equity interest of masretus. Goodwill arising on the acquisition amounting to Rm2,142,000 has been accounted for using the purchase method of accounting and is disclosed in Note 11. the effect of the acquisition on the financial results of the Group during the financial year is as follows: rM Revenue loss for the period (7,137)
there was no material effect to the Groups financial results for the current financial year if the acquisition had been completed on 1 January 2009. the assets acquired and liabilities assumed as at date of acquisition were as follows: Fair value recognised on acquisition rM000 7,208 66 (545) (1,663) 5,066 2,142 7,208
acquirees carrying amount rM000 Prepaid lease payments for land Receivables Payables Deferred tax liabilities total net assets Goodwill on consolidation Cash flow on acquisition 557 66 (545) 78
116
7.
investMent in subsiDiarY coMPanies (contD) (d) Acquisition of subsidiary companies during the financial year (contd) (ii) Acquisition of Northern Intergrated Agriculture Sdn Bhd (NIA) On 21 August 2009, tradewinds Plantation Berhad, a subsidiary company of the Company entered into a conditional Sale and Purchase Agreement with Gerak mashyur (malaysia) Sdn Bhd (GmSB) for the acquisition of 700,000 ordinary shares of Rm1.00 each, representing 70% of the equity interest, of NIA for a total cash consideration of Rm50.36 million. the purchase consideration was adjusted to Rm49.32 million upon the completion of assessment of the acquirees identifiable assets, liabilities, and contingent liabilities based on due diligence report. NIA is a property development company incorporated in malaysia and was established as a joint venture vehicle between GmSB and Perbadanan Kemajuan Negeri Kedah to undertake the development of the second border town between malaysia and thailand known as Bandar Sempadan Kota Putra. NIA owns 5 parcels of leasehold agriculture land located at Kota Putra, mukim Batang tunggang Kiri, Daerah Padang terap, Negeri Kedah measuring in aggregate approximately 2,612.99 acres (NIA lands) of which 169.44 acres had been surrendered to the Government following the completion of their project in November 2008. 1,115.02 acres of the NIA lands had been planted with rubber trees whilst an approved master plan for the development of Bandar Sempadan Kota Putra had been obtained for the remaining land. the acquisition of NIA was completed on 23 October 2009. the effect of the acquisition on the financial results of the Group during the financial year is as follows: Date of acquisition to 31.12.2009 rM000 Revenue Profit for the period 1,073
If the acquisition had been completed on 1 January 2009, the Group revenue and profit for the financial year would have been Rm2,071,959,000 and Rm173,025,000 respectively.
annual report 2009
117
7.
investMent in subsiDiarY coMPanies (contD) (d) Acquisition of subsidiary companies during the financial year (contd) (ii) Acquisition of Northern Intergrated Agriculture Sdn Bhd (NIA) (contd) the acquisition had the following effect on the Groups assets and liabilities on acquisition date: Fair value recognised on acquisition rM000 12,265 103 87,412 26 1,429 3,037 (7,869) (729) (23,054) 72,620
acquirees carrying amount rM000 Prepaid lease payments for land Property, plant and equipment land held for development Other receivables Fixed deposit with a licensed bank Cash and bank balances trade and other payables tax payables Deferred tax liability total net assets 3,313 103 4,148 26 1,429 3,037 (7,869) (729) 3,458
less: minority interest Groups share of net assets Excess of fair value of net assets acquired over purchase consideration Adjusted purchase consideration discharged by cash less: Cash and cash equivalents acquired Cash out flow on acquisition, net of cash and cash equivalents acquired
(21,786) 50,834 (1,519) 49,315 (3,037) 46,278
(iii)
Acquisition of Padiberas Nasional Berhad (BERNAS) As disclosed in Note 44(a)(i), the Company acquired 50.33% equity interest in BERNAS during the financial year. the effect of the acquisition on the financial results of the Group during the financial year is as follows: Date of acquisition to 31.12.2009 rM000 Revenue Profit for the period 334,159 16,487
If the acquisition was completed on 1 January 2009, the Group revenue and profit for the financial year would have been Rm4,995,115,000 and Rm334,789,000 respectively.
118
7.
investMent in subsiDiarY coMPanies (contD) (d) Acquisition of subsidiary companies during the financial year (contd) (iii) Acquisition of Padiberas Nasional Berhad (BERNAS) (contd) the acquisition had the following effect on the Groups assets and liabilities on acquisition date: Fair value recognised on acquisition rM000 30,256 340,511 249,187 40 140 542,040 730,875 66,196 135,971 (215,717) (762,358) (6,323) (66,156) 25,233 1,069,895
acquirees carrying amount rM000 Prepaid lease payments for land Property, plant and equipment Investment in associated companies Other investment Intangible assets - trademarks Inventories trade and other receivables Fixed deposit with a licensed bank Cash and bank balances trade and other payables Bank borrowings tax payables (net) Provision for retirement benefits Deferred taxation (net) total net assets 30,256 340,511 249,187 40 140 542,040 730,875 66,196 135,971 (215,717) (762,358) (6,323) (66,156) 25,233 1,069,895
less: minority interest Groups share of net assets Excess of fair value over purchase consideration Adjusted purchase consideration discharged by cash less: Distribution of pre-acquisition reserve by associated companies less: Cash and cash equivalents acquired Cash out flow on acquisition, net of cash and cash equivalents acquired (iv)
(564,833) 505,062 (12,568) 492,494 (11,807) (144,992) 335,695
Acquisition of Prisma Spektra Sdn Bhd (PSSB) As disclosed in Note 44(a)(iv), tradewinds Plantation Berhad acquired the entire equity interest of PSSB for a cash consideration of Rm2 on 26 October 2009. PSSB is an investment holding company. the assets acquired and liabilities assumed as at the date of acquisition, the effect of the acquisition on the financial results of the Group and the financial results prior to the date of acquisition are not material in relation to the Groups assets and liabilities and financial results for the current financial year.
annual report 2009
119
7.
investMent in subsiDiarY coMPanies (contD) (e) Acquisition of subsidiary companies in the previous financial year (i) Acquisition of Usaha Wawasan Sdn Bhd (UWSB) On 31 January 2009, the Group completed the acquisition of 70% equity interest in Usaha Wawasan Sdn Bhd at a purchase price of Rm15,882,000. Goodwill arising on the acquisition amounting to Rm3,859,000 has been accounted for using the purchase method of accounting and is disclosed in Note 11. the effect of the acquisition on the financial results of the Group during the previous financial year was as follows: Date of acquisition to 31.12.2008 rM000 Revenue loss for the period (330)
the assets acquired and liabilities assumed as at date of acquisition were as follows: Fair value recognised on acquisition rM000 22,593 (38) (5,379) 17,176 (5,153) 12,023 3,859 15,882 (1,598) 14,284
acquirees carrying amount rM000 Prepaid lease payments for land Other payables Deferred tax liabilities total net assets less: minority interests Groups share of net assets Goodwill on consolidation 22,593 (38) (5,379) 17,176
less: Deposit paid in previous financial Cash flow on acquisition
there was no material effect to the Groups financial results for the previous financial year if the acquisition had been completed on 1 January 2008.
120
7.
investMent in subsiDiarY coMPanies (contD) (e) Acquisition of subsidiary companies in the previous financial year (contd) (ii) Acquisition of tradewinds Corridor Sdn Bhd (tCSB) On 30 April 2007, the Group via a subsidiary company tradewinds Plantation Berhad (tPB), entered into a conditional Subscription Agreement for the proposed subscription of 100,000,000 new ordinary shares of Rm1.00 each in tradewinds Corridor Sdn Bhd (tCSB) at a total cash subscription price of Rm268 million (Proposed Subscription). the Proposed Subscription was conditional upon the completion of the agreement dated 18 April 2007 between Gula Padang terap Plantations Sdn Bhd (GPtP) and tCSB whereby GPtP had agreed to sell and transfer to tCSB the leases granted by Perbadanan Kemajuan Negeri Kedah, held by and registered in the name of GPtP, over 54 parcels of leasehold agriculture land measuring approximately 11,411 hectares for a cash consideration of Rm268 million. the Proposed Subscription was completed on 18 march 2008 and thereafter tCSB became a 99.9% subsidiary of the Company. the effect of the acquisition on the financial results of the Group during the previous financial year was as follows: Date of acquisition to 31.12.2008 rM000 Revenue loss for the period 568 (3,021)
the assets acquired and liabilities assumed as at date of subscription were as follows: Fair value recognised on acquisition rM000 276,920 319 180 (9,419) 268,000
acquirees carrying amount rM000 Prepaid lease payments for land Other receivable Bank balances Other payables total net assets 276,920 319 180 (9,419) 268,000
less: Deposit paid in previous financial year Cash and cash equivalents acquired Cash flow on subscription, net of cash and cash equivalents acquired
(26,800) (180) 241,020
there was no material effect to the Groups financial results for the previous financial year if the acquisition had been completed on 1 January 2008.
annual report 2009
121
8.
investMent in associateD coMPanies Group 2009 rM000 Unquoted shares outside malaysia, at cost Unquoted shares in malaysia, at cost Share of post acquisition reserves Distribution of pre-acquisition reserve 14,465 227,004 2,661 (11,807) 232,323 232,323 2008 rM000 15,510 119,701 135,211 (126,683) 12,304 20,832
Distribution of post acquisition reserve Exchange adjustment
Details of the associated companies and shareholdings therein are shown in Note 45(b). As disclosed in Note 44(b), tmall limited, a 20% owned associate of Quek Shin & Sons Pte ltd, which is an indirect subsidiary of the Company was voluntarily dissolved on 30 September 2009. the dissolution of the associated company had resulted in the realisation of exchange reserves of approximately Rm16,351,000 during the financial year. the summarised financial information of the associated companies are as follows: Group 2009 rM000 assets and liabilities Current assets Non-current assets total assets 2008 rM000
986,571 444,267 1,430,838
104,235 104,235
Current liabilities Non-current liabilities total liabilities
(770,439) (97,481) (867,920)
(75) (75)
results Revenue Net profit for the financial year Share of results
2,980,612 121,486 2,661
122
9.
investMent in JointlY controlleD entitY Group 2009 rM000 Unquoted shares, at cost: - Ordinary shares - Redeemable convertible preference shares (RCPS) 2008 rM000
10,000 5,000 15,000 (2,777) 12,223
10,000 10,000 3,102 13,102
Share of post acquisition reserves
(a)
During the financial year, the Group entered into an agreement with CB Industrial Product Holding Berhad (CBIP) to equally subscribe for 20,000,000 RCPS of Rm1 each at an issue price of Rm1 each in its jointly controlled entity, Pride Palm Oil mill Sdn Bhd (PPOm). As at the balance sheet date, PPOm had issued 10,000,000 RCPS of Rm1 each which were equally subscribed by the Group and CBIP.
(b)
Details of the jointly controlled entity are as follows: country of incorporation effective interest (%) 2009 2008 50
name of company
Principal activities
Pride Palm Oil mill Sdn Bhd
malaysia
Investment holding
annual report 2009
123
9.
investMent in JointlY controlleD entitY (contD) (c) the Groups aggregate share of the assets, liabilities and income and expenses of the jointly controlled entity are as follows: Group 2009 rM000 assets and liabilities Non-current assets Current assets 2008 rM000
7,093 49,060 56,153
7,376 49,592 56,968
Non-current liabilities Current liabilities
11,430 32,500 43,930
3,866 40,000 43,866
results Income Expenses (including finance costs and tax expense) Share of results
9,827 (15,705) (5,879)
9,075 (5,973) 3,102
10.
other investMents Group 2009 rM000 (a) at cost Quoted loan stocks: In malaysia Quoted shares: In malaysia Outside malaysia 2008 rM000 company 2009 2008 rM000 rM000
2,321 31,749 34,070 500 29 34,599 (30,124) 4,475
5,406 31,749 37,155 496 37,651 (32,697) 4,954
159,990 31,749 191,739 191,739 (28,250) 163,489
159,990 31,749 191,739 191,739 (28,250) 163,489
Unquoted shares in malaysia Golf membership
Accumulated impairment losses
124
10.
other investMents (contD) Group 2009 rM000 (b) at market value Quoted loan stocks: In malaysia Quoted shares: In malaysia Outside malaysia 2008 rM000 company 2009 2008 rM000 rM000
689 3,467
1,199 9,195
254,384 3,467
254,384 9,195
the movements of other investments of the Group and of the Company during the financial year were as follows: Group 2009 rM000 Carrying amount At 1 January Additions Acquisition of subsidiary company Note 7(d) (iii) maturity of investment in malaysian Government Securities Cash distribution Disposal Reversal/(Impairment) loss recognised (net) 2008 rM000 company 2009 2008 rM000 rM000
4,954 40 (700) 181 4,475
5,926 9 (400) (63) (37) (481) 4,954
163,489 163,489
163,489 163,489
11.
intanGible assets Group 2009 rM000 At 1 January Arising from acquisition of subsidiary companies Note 7(d) (i), (iii) At 31 December 91,140 2,282 93,422 2008 rM000 87,281 3,859 91,140
Analysed as: Goodwill trademarks
93,282 140 93,422
91,140 91,140
annual report 2009
125
11.
intanGible assets (contD) Key assumptions used in value-in-use calculations of goodwill: (a) Plantation subsidiaries the recoverable amount of a Cash Generating Unit (CGU) is determined based on value-in-use calculations using cash flow projections based on financial projections prepared by the management covering up to 25 years which represents the full life cycle period of the oil palms. the key assumptions on which the management has based its cash flow projections to undertake impairment testing of goodwill are: (i) (ii) Discount rate of 5.00% representing the pre-tax cost of debt of the Group as at 31 December 2009. Fresh fruit bunches yield ranging from 8 to 28 mt/hectare obtained from the malaysian Palm Oil Board published average yield applicable to the age of the respective estates and also based on the managements best estimates on the estates performance after taking into account existing achievements. Crude palm oil prices ranging from Rm2,000 to Rm2,500 per metric tonne and palm kernel price ranging from Rm1,100 to Rm1,375 per metric tonne. Oil extraction rate ranging from 20.0% to 21.5% and kernel extraction rate ranging from 4.5% to 5.5% based on the managements best estimates after taking into account the age of the respective estates and existing achievements. Average increase in plantation maintenance expenses of 1% to 3% per hectare. Estimated capital expenditure as per budget taking into consideration of future scheme of new planting and replanting.
(iii)
(iv)
(v) (vi)
the management believes that there is no reasonably possible change in the key assumptions on which the management has based its determination of the CGUs recoverable amount which would cause the CGUs carrying amount to materially exceed its recoverable amount. (b) manufacturing subsidiaries the key assumptions on which the management has based its cash flow projections to undertake impairment test of goodwill are: Average budgeted gross margin Average growth rate Pre-tax discount rate applied to cash flow projections 10% 7% 5%
the management has determined the growth rate based on past performance and its expectations of market development. the average growth rate is consistent with the trends and expectation of the Group. the discount rate used is the Groups overall weighted pre-tax average cost of capital for that industry. If the estimated projected gross margin has been 20% lower than management estimate or if the estimated pre-tax discount rate had been 20% higher than management estimate, the recoverable amount of the CGU will still be higher than the CGUs net assets including the goodwill and therefore, there would still be no impairment on goodwill.
126
11.
intanGible assets (contD) (c) Factors contributing to the recognition of goodwill are as follows: (i) location of the CGUs which are nearby to one another is expected to provide greater synergistic benefits to the Group, in terms of: stronger bargaining power through bulk purchase economies of scales from internal chain of supply and sharing of facilities; and (ii) (d) Sharing of common management expertise and knowledge.
trademarks are obtained through business combination of which, have been assessed as having indefinite useful life. the bases for annual impairment of the Groups trademarks are as follows: (i) Allocation of trademarks trademarks are allocated to the CGU in the distribution business segment. (ii) Key assumption used in value-in-use calculation the recoverable amount is determined based on value-in-use calculations using cash flow projections extrapolated based on a discount rate of 5%. Sensitivity to change in assumption the management is of the opinion that there is no reasonable possible change in any key assumptions mentioned in (i) and (ii) would cause the carrying value of the CGU to materially exceed their recoverable amounts.
(iii)
12.
DeFerreD taxation Group 2009 rM000 Net deferred tax liabilities: At 1 January Currency translation differences Recognised in income statements Effect on reduction in tax rate (Under)/Over provision in prior years Acquisition of subsidiary companies [Note 7(d) (e)] At 31 December 2008 rM000 company 2009 2008 rM000 rM000
218,543 10,326 (2,045) (516) 226,308
193,176 66 32,207 (13,478) 1,193 5,379 218,543
1,568 2,281 163 4,012
3,983 (2,438) 23 1,568
annual report 2009
127
12.
DeFerreD taxation (contD) Presented after appropriate offsetting as follows: Group 2009 rM000 Deferred tax liabilities Deferred tax assets 304,013 (77,705) 226,308 2008 rM000 231,198 (12,655) 218,543 company 2009 2008 rM000 rM000 4,126 (114) 4,012 2,176 (608) 1,568
the components and movements of deferred tax liabilities and assets of the Group and of the Company during the financial year prior to offsetting are as follows: Deferred tax liabilities of the Group: accelerated capital allowances rM000 At 1 January 2009 Acquisition of subsidiary companies Over provision in prior year Recognised in income statement 235,744 38,629 (3,217) 19,344 290,500 Offsetting At 31 December 2009 Fair value adjustment of property rM000 156,811 24,717 (133) (5,051) 176,344
others rM000 (433) (5) (438)
total rM000 392,555 62,913 (3,350) 14,288 466,406 (162,393) 304,013
At 1 January 2008 Currency translation differences (Over)/Under provision in prior year Recognised in income statement Disposal of subsidiary companies
237,939 55 (8,123) 5,873 235,744
153,274 11 9,572 5,379 (11,425) 156,811
391,213 66 1,449 5,379 (5,552) 392,555 (161,357) 231,198
Offsetting At 31 December 2008
128
12.
DeFerreD taxation (contD) Deferred tax assets of the Group: unutilised capital and agriculture allowances rM000 118,029 884 (1,533) 5,855 123,235
unused tax losses rM000 At 1 January 2009 Acquisition of subsidiary companies (Over)/Under provision in prior year Recognised in income statement 54,350 (2,990) (205) 8,163 59,318 Offsetting At 31 December 2009
others rM000 1,633 54,382 1 1,529 57,545
total rM000 174,012 52,276 (1,737) 15,547 240,098 (162,393) 77,705
At 1 January 2008 (Over)/Under provision in prior year Recognised in income statement
61,100 (1,248) (5,502) 54,350
135,378 2,058 (19,407) 118,029
1,559 20 54 1,633
198,037 830 (24,855) 174,012 (161,357) 12,655
Offsetting At 31 December 2008
Deferred tax liabilities of the Company: accelerated capital allowances rM000 At 1 January 2009 Recognised in income statement At 31 December 2009 31 (30) 1
Dividend receivables rM000 2,145 1,980 4,125
total rM000 2,176 1,950 4,126
At 1 January 2008 Recognised in income statement At 31 December 2008
62 (31) 31
4,455 (2,310) 2,145
4,517 (2,341) 2,176
annual report 2009
129
12.
DeFerreD taxation (contD) Deferred tax assets of the Company: unutilised capital allowance rM000 At 1 January 2009 Overprovision in prior year Recognised in income statement At 31 December 2009 608 (163) (331) 114
At 1 January 2008 Recognised in income statement At 31 December 2008
534 74 608
Deferred tax assets have not been recognised in respect of the following items: Group 2009 rM000 Unused tax losses Unutilised capital and agriculture allowances 18,314 1,385 19,699 2008 rM000 11,538 225 11,763
the unused tax losses and unutilised capital and agriculture allowances are available indefinitely for offset against future taxable profits of the subsidiary companies in which those items arose. Deferred tax assets have not been recognised in respect of these items as they may not be able to be offset against taxable profits of other subsidiary companies in the Group and they have arisen in subsidiary companies that have a recent history of business losses. the recognition of the deferred tax assets is dependent on future taxable profits in excess of profits arising from the reversal of existing taxable temporary differences. the evidence used to support this recognition is based on the managements budget and relevant business plans, which shows that it is probable that the deferred tax assets would be recognised in future years.
130
13.
inventories Group 2009 rM000 at cost Raw sugar Refined sugar transhipment stock Oil palm products Consumables Cattle Nurseries Paddy and rice Raw material Finished goods 2008 rM000
320,244 38,939 1,830 33,203 36,089 3,027 15,541 509,769 5,541 30,394 994,577
170,144 24,738 223 6,914 38,596 3,058 20,484 264,157
At net realisable value Refined sugar Oil palm products Cattle
694 694 995,271
40,961 29,258 546 70,765 334,922
the inventories above are net of inventories written down to net realisable value and inventories written off amounting to Rm773,000 and Rm3,499,000 (2008: Rm9,112,000 and Nil) respectively. the Group manages the Government Rice Stockpile of 230,000 metrics tonnes. the stockpile rice held on behalf of the Government is excluded from the inventories of the Group.
annual report 2009
131
14.
traDe receivables Group 2009 rM000 trade receivables less: Allowance for doubtful debts 614,961 (54,817) 560,144 2008 rM000 323,191 (402) 322,789
Allowance for doubtful debts At 1 January Recognised in the income statement Acquisition of subsidiary company Bad debts written off At 31 December
402 244 54,573 (402) 54,817
1,896 (1,494) 402
the Groups normal trade credit terms range from 7 to 90 days (2008: 7 to 90 days). Other credit terms are assessed and approved on a case-by-case basis. Included in the above trade receivables are amounts owing by related parties as follow: Group 2009 rM000 Bukhary Sdn Bhd Bintulu Edible Oils Sdn Bhd lahad Datu Edible Oils Sdn Bhd Solar Green Sdn Bhd 118,082 19,665 7,501 873 146,121 2008 rM000 170,207 10,449 5,535 186,191
the relationship with the above parties is disclosed in Note 40. In addition to the above, included in the Group trade receivables is an aggregate amount of Rm1,565,000 (2008: Nil) owing by Recent Giant Sdn Bhd (RGSB), Benua Haulage Sdn Bhd (BHSB), Fragstar Corporation Sdn Bhd (FCSB), Firma Rena Sdn Bhd (FRSB), Kien Fatt Rice mill Sdn Bhd (KFRmSB) and Ban Seng Heng Rice mill Sdn Bhd (BSH), companies in which certain Directors of YHl Holding Sdn Bhd, a subsidiary company of Padiberas Nasional Berhad (BERNAS), are related by virtue of their family relationship with the directors of RGSB, BHSB and BSH. the Group has no significant credit risk that may arise from exposure to a single receivable or to groups of receivables except for the above amounts owing by related parties.
132
15.
other receivables Group 2009 rM000 Other receivables Dividend receivables Prepayments Deposits Interest receivables Advance to farmers Grant receivables from government 175,810 2,956 14,648 290 40,562 340,442 574,708 (5,628) 569,080 2008 rM000 61,732 6,622 1,071 7 69,432 (24) 69,408 company 2009 2008 rM000 rM000 49 12,375 4,285 57 16,766 16,766 46 6,105 4,313 68 10,532 10,532
Allowance for doubtful debts
Allowance for doubtful debts At 1 January Acquisition of subsidiary company Bad debts written off At 31 December
24 5,604 5,628
55 (31) 24
Included in other receivables of the Group is balance of consideration receivable for surrender of lease amounting to Rm24,950,000 (2008: Rm58,900,000) which is stated after discounting the gross amount of Rm88,350,000 (2008: Rm88,350,000) collectible by 3 equal annual instalments using the rate of 3.7% (2008: 3.7%). the total fair value gain on financial assets held at fair value recognised in the Groups income statements in the previous financial year was Rm1,050,000. there was no such amount recognised in the current financial year. Included in the Groups other receivables are balances owing by Solar Green Sdn Bhd (SGSB) and Johor Port Berhad (JPB) amounting to Rm1,320,000 and Rm20,725,000 (2008: 7,000 and Nil) respectively. the amount owing by SGSB is unsecured, interest-free and payable on demand in cash and cash equivalents, while the amount owing by JPB represents receivable lease balance arising from the termination of sub-lease agreement as disclosed in Note 44(f). this balance is payable by JPB within 6 months from the date of the termination agreement on 2 December 2009. In addition to the above, other receivables of the Group include an amount of Rm5,108,400 (2008: Nil) being rental deposit paid to Yew Poe Hai and Yew Chor Khooi, where the former is an alternate director of YHl Holding Sdn Bhd (YHl), a subsidiary company of Padiberas Nasional Berhad, and the latter is connected to certain directors of YHl by virtue of his family relationship. Grant receivables from the Government of malaysia comprise subsidies recoverable from the Government, in relation to government grants as disclosed in Note 29.
annual report 2009
133
16.
aMount oWinG bY/to subsiDiarY coMPanies 2009 rM000 Amount owing by subsidiary companies less: Allowance for doubtful debts 172,242 (21,219) 151,023 Amount owing to subsidiary companies (a) (b) 17,814 Group 2008 rM000 234,790 (21,219) 213,571 21,795
the amount owing by subsidiary companies represents unsecured advances which are repayable on demand. Interest is charged at rate of 5.0% (2008: 5.0%) per annum. the amount owing to subsidiary companies represents unsecured interest free advances which are repayable on demand except for an amount of Rm2,974,000 (2008: Rm6,979,000) which is charged at rate of 1.75% (2008: 2.75%) per annum.
17.
aMount oWinG bY/(to) associateD coMPanies 2009 rM000 Amount owing by associated companies less: Allowance for doubtful debts 60,139 (25,267) 34,872 Analysed as: trade Non-trade Group 2008 rM000
20,292 14,580 34,872
Amount owing to associated companies trade Non-trade
3,030 338 3,368
20,186 20,186
Allowance for doubtful debts At 1 January Acquisition of subsidiary company At 31 December
25,267 25,267
the amount owing by/to associated companies arising from non-trade transaction represents unsecured interest free advances, and is repayable on demand.
134
18.
assets helD For sale the assets classified as held for sale on the consolidated balance sheet as at 31 December 2009 are as follows: Group 2009 rM At 1 January transfer at carrying amount (Note 3): From property, plant and equipment to property, plant and equipment transfer at carrying amount from investment in associated companies (Note 8) Disposal Exchange difference At 31 December 454 784 4,870 (452) (2) 5,654 2008 rM 1,222 454 (191) (1,031)
454
accumulated impairment loss At 1 January Reversal of impairment loss Disposal
418 (418)
carrying amount
5,654
454
Analysed as: Property, plant and equipment Investment in associated companies
784 4,870 5,654
454 454
(a)
On 21 November 2008, the Group entered into a sale and purchase agreement with a third party to dispose of a parcel of freehold land and building with a carrying amount of Rm454,000 for a cash consideration of Rm1,100,000; of which Rm110,000 was received as deposit for the sale in previous financial year. the disposal was completed during the financial year. On 7 December 2009, the Group agreed to dispose certain plant and machinery with a carrying amount of Rm784,000 to a third party for a cash consideration of Rm1,500,000. On 4 January 2010, the Group entered into a sale and purchase agreement with the third party to execute the disposal, and total payment of Rm1,261,000 was received as at the date of this report. the disposal is expected to be completed by may 2010, and the estimated gain arising from the disposal is approximately Rm716,000. the non-current asset transferred from investment in associated companies relates to the disposal of investment in Asian Peninsula Corporation ltd which was completed subsequent to year end as disclosed in Note 44 (d)(iii).
(b)
(c)
annual report 2009
135
19.
FixeD DePosits Group 2009 rM000 licensed banks Other financial institutions 158,095 60,550 218,645 2008 rM000 50,929 50,929
(a)
the fixed deposits above include Islamic deposits amounted to Rm5,447,000 (2008: Rm5,447,000) in relation to the Islamic Debts Securities obtained by the Group as detailed in Note 23(b). the Islamic deposits are held on trust for the benefit of the Islamic Securities Investors and therefore are not available for use by the Group. It comprises a one return payment for Sukuk Al-Ijarah of Rm5,447,000.
(b)
Included in fixed deposits above is Rm53,228,000 (2008: Rm547,000) pledged to licensed banks for banking facilities granted to certain subsidiary companies as disclosed in Note 23. the interest rates and maturities of other deposits range from 1.02% to 3.50% (2008: 2.00% to 3.70%) per annum and 6 to 365 days (2008: 5 to 365 days) respectively.
(c)
20.
traDe PaYables the normal trade credit terms granted to the Group range from 30 to 90 days (2008: 30 to 90 days).
21.
other PaYables Group 2009 rM000 Other payables Interest payables Accruals Deposits Dividend payables 157,565 5,260 131,641 6 68 294,540 2008 rM000 91,983 2,273 25,856 3 103 120,218 company 2009 2008 rM000 rM000 46,033 3,287 1,349 68 50,737 18 1,197 103 1,318
Included in other payables of the Group above are balances owing to minority shareholders and Solar Green Sdn Bhd, a subsidiary company of a jointly controlled entity of the Group, amounting to Rm14,145,000 and Rm10,000 (2008: Rm14,145,000 and Rm20,000) respectively. these amounts are unsecured, interest-free and are payable on demand in cash and cash equivalents.
136
22.
hire Purchase anD lease PaYables Group 2009 rM000 (a) minimum hire purchase and lease payments Payable within one year Payable between one and two years Payable between one and five years 2008 rM000
4,402 2,610 2,517 9,529 (593) 8,936
less: Future finance charges Present value of hire purchase and finance lease liabilities
(b)
Present value of hire purchase and finance lease liabilities Payable within one year Payable between one and two years Payable between one and five years
4,082 2,454 2,400 8,936
Analysed as: Repayable within twelve months Repayable after twelve months
4,082 4,854 8,936
Interest is charged at rates between 2.90% and 6.90% (2008: Nil) per annum.
annual report 2009
137
23.
borroWinGs Group 2009 rM000 short term borrowings: Revolving credits _ secured unsecured 2008 rM000 company 2009 2008 rM000 rM000
175,000 212,800 387,800
138,000 159,000 297,000
132,800 132,800
125,000 125,000
term loans secured unsecured 143,266 143,266 531,066 Bill payables (unsecured) Bank overdraft (unsecured) Islamic debts securities: Sukuk Al-Ijarah (secured) Islamic debts securities: murabahah Commercial Papers/medium term Notes (murabahah CP/mtN) (secured ) 1,006,001 3,959 69,887 65,000 134,887 431,887 170,245 320 51,250 51,250 184,050 65,000 65,000 190,000 320
25,000
50,000 1,616,026
100,000 702,452
184,050
190,320
long term borrowings: term loans (secured) Islamic debts securities: Sukuk Al-Ijarah (secured) 860,983 322,912 461,247
185,000 1,045,983 2,662,009
210,000 532,912 1,235,364
461,247 645,297
190,320
138
23.
borroWinGs (contD) Group 2009 rM000 total borrowings Revolving credits term loans Bill payables Bank overdraft Islamic debts securities 387,800 1,004,249 1,006,001 3,959 260,000 2,662,009 297,000 457,799 170,245 320 310,000 1,235,364 132,800 512,497 645,297 125,000 65,000 320 190,320 2008 rM000 company 2009 2008 rM000 rM000
(a)
During the financial year, the Company obtained term loan facilities up to Rm1.0 billion (the tl Facility) to finance the acquisition of Padiberas Nasional Berhad (BERNAS) as disclosed in Note 7(d)(iii) and Note 44(a)(i). the Facility is divided into 2 tranches as follow: (i) tl Facility 1: Rm544 million to finance Acquisition 1 and Acquisition 2 as disclosed in Note 44(a)(i)(1) of 53.76% equity interest in BERNAS; and tl Facility 2: Rm456 million to part finance the Companys acquisition of the remaining 46.24% equity interest in BERNAS by way of mandatory General Offer as disclosed in Note 44(a)(i)(2).
(ii)
the tl Facility is secured by way of: (i) memorandum of Deposit of up to four hundred and seventy million (470,000,000) issued and fully paid ordinary shares of Rm1.00 each in BERNAS; memorandum of Deposit of up to three hundred and sixty nine million (369,000,000) issued and fully paid ordinary shares of Rm1.00 each in tradewinds Plantation Berhad (tPB); memorandum of up to one hundred and fifty million (150,000,000) Irredeemable Convertible Unsecured loan Stock in tPB; memorandum of Deposit over the entire paid-up capital in Central Sugar Refineries Sdn Bhd (CSR) of thirty three million (33,000,000) ordinary shares of Rm1.00 each; and First legal charge over the revenue and sinking fund accounts.
(ii)
(iii)
(iv)
(v)
In addition, the Company shall observe the following security covenants in respect of the Facility: (i) the aggregate value of the securities pledged shall not be less than 2 times (minimum threshold) of the loan outstanding at all times; and the value of CSR shares shall be based on the CSRs net assets, which shall not be lower than Rm7.50 per share at all times.
(ii)
In the event the security value falls below the minimum threshold, the Company shall pledge additional security to maintain the minimum threshold within five working days, failing which, an additional interest charge of one percent (1%) per annum shall be imposed by the lender above the interest rate.
annual report 2009
139
23.
borroWinGs (contD) (b) In the previous financial year, the Group had obtained the approval of the Securities Commission for the issuance of the Islamic Debt Securities via tradewinds Plantation Capital Sdn. Bhd. (tPCSB), a special purpose company set up to facilitate the issuance of the Islamic Debt Securities. the Islamic Debt Securities comprise the following: (i) (ii) Rm210 million Sukuk Al-Ijarah; and Rm190 million murabahah Commercial Papers/medium term Notes Programme (murabahah CP/mtN).
the Islamic Debt Securities are secured by the first and second legal charges over the freehold land, leasehold land, plantations and palm oil mills owned by certain subsidiaries. the Islamic Debt Securities are repayable by instalments of varying amounts over the periods as disclosed in Note 23(f). (c) Secured revolving credits are secured by fixed charges over certain long term leasehold land of certain subsidiary companies. Other secured term loans are secured by way of: (i) the first and second legal charges over the leasehold land, plantations and palm oil mill owned by certain subsidiary companies of the Company; and Fixed deposits placed with licensed bank as disclosed in Note 19.
(d)
(ii) (e)
the range of interest rates on borrowings during the financial year is as follows: Group 2009 % p.a term loans fixed rate floating rate Revolving credits Bill payables Islamic debts securities: Sukuk Al-Ijarah murabahah Commercial Papers Bank overdrafts 2008 % p.a company 2009 2008 % p.a % p.a
5.20 3.21 2.92 2.56 -
6.50 5.11 3.97 3.57
5.00 4.48 4.30 3.75
6.50 5.90 5.02 4.13
5.11 2.96 - 3.66
4.60 - 5.90 4.30 - 4.70 8.50
4.85 - 5.70 5.50 5.00 - 8.60
4.85 - 5.70 4.40 8.50
140
23.
borroWinGs (contD) (f) Contractual terms of borrowings are as follows: total carrying amount rM000
interest
< 1 year rM000
Maturity Profile 1 2 years 2 5 years rM000 rM000
> 5 years rM000
Group 2009 unsecured Revolving credits Bill payables Bank overdraft secured - term loans - term loans - Islamic debts securities - Sukuk Al-Ijarah - murabahah Commercial Papers Revolving credits
Floating rate Floating rate Floating rate
212,800 1,006,001 3,959
212,800 1,006,001 3,959
Floating rate Fixed rate
106,554 36,712
133,217 39,462
108,312 24,412
512,030 43,550
860,113 144,136
Fixed rate
25,000
35,000
30,000
120,000
210,000
Floating rate Floating rate
50,000 175,000 1,616,026
207,679
162,724
675,580
50,000 175,000 2,662,009
2008 unsecured Revolving credits Bill payables Bank overdraft secured term loans term loans Islamic debts securities Revolving credits
Floating rate Floating rate Floating rate
159,000 170,245 320
159,000 170,245 320
Floating rate Fixed rate Fixed rate Floating rate
93,375 41,512 100,000 138,000 702,452
46,500 45,387 25,000 116,887
55,875 175,150 95,000 326,025
90,000 90,000
195,750 262,049 310,000 138,000 1,235,364
annual report 2009
141
23.
borroWinGs (contD) (f) Contractual terms of borrowings are as follows: (contd) total carrying amount rM000
interest
< 1 year rM000
Maturity Profile 1 2 years 2 5 years rM000 rM000
> 5 years rM000
company 2009 unsecured Revolving credits secured term loan
Floating rate
132,800
132,800
Floating rate
51,250 184,050
51,250 51,250
51,250 51,250
358,747 358,747
512,497 645,297
2008 unsecured Revolving credits Bank overdraft secured term loans
Floating rate Floating rate
125,000 320
125,000 320
Floating rate
65,000 190,320
65,000 190,320
24.
retireMent beneFit obliGations A subsidiary company, Central Sugars Refinery Sdn Bhd, operates a funded, defined benefit Retirement Benefit Scheme (the Funded Scheme) for its eligible employees. Contributions to the Funded Scheme are to be made to a separately administered fund. Under the Funded Scheme, eligible employees are entitled to retirement benefits of 7.5% of cumulative salary on attainment of the retirement age of 55. the defined benefit fund is actuarially valued not less than once in every 3 years. the latest valuation by an independent professional actuary was carried out as at 31 December 2009. Certain subsidiary companies provide an unfunded, defined benefit Retirement Benefit Scheme (the Unfunded Scheme) for its eligible employees. Under the Unfunded Scheme, full provision has been made for retirement benefits payable to all eligible employees who have completed their qualifying period of service, based on their last drawn salaries as set out in the policies. Should an employee leave after completing the qualifying period of service but before attaining the retirement age, the provision made for the employee is written back.
142
24.
retireMent beneFit obliGations (contD) (a) the amounts recognised in the balance sheet are determined as follows: Group 2009 rM000 Present value of funded defined benefit obligations Present value of unfunded defined benefit obligations Fair value of plan assets 4,767 74,688 (5,385) 74,070 (1,702) 972 73,340 2008 rM000 4,444 7,536 (5,548) 6,432 (1,605) 1,344 6,171
Unrecognised actuarial loss Unrecognised net transition asset Net liability
Analysed as: Current liabilities Non-current liabilities
4,229 69,111 73,340
458 5,713 6,171
(b)
the amounts recognised in the income statement are as follows: Group 2009 rM000 Current service cost Interest cost Expected return on plan assets Amortisation of actuarial loss Amortisation of transitional liability Net transition asset recognised during the financial year Actuarial gain/loss total (Included in staff costs) 1,536 971 (231) 17 (372) 1,921 2008 rM000 818 622 (382) 8 70 (187) (31) 918
annual report 2009
143
24.
retireMent beneFit obliGations (contD) (c) movements in the net liability during the financial year are as follows: Group 2009 rM000 At 1 January Acquisition of subsidiary companies (Note 7) Recognised in the income statement Contributions paid At 31 December 6,171 66,156 1,921 (908) 73,340 2008 rM000 5,691 918 (438) 6,171
(d)
Changes in the present value of funded defined benefit obligation during the financial year are as follows: Group 2009 rM000 At 1 January Service cost Interest cost Benefits paid Actuarial loss/(gain) due to actual experience At 31 December 4,444 323 281 (335) 54 4,767 2008 rM000 4,294 359 240 (262) (187) 4,444
(e)
Changes in the present value of unfunded defined benefit obligation during the financial year are as follows: Group 2009 rM000 At 1 January Acquisition of subsidiary companies (Note 7) Service cost Interest cost Benefits paid At 31 December 7,536 66,156 1,214 690 (908) 74,688 2008 rM000 6,660 932 382 (438) 7,536
144
24.
retireMent beneFit obliGations (contD) (f) Changes in the fair value of plan assets during the financial year are as follows: Group 2009 rM000 At 1 January Expected return on plan assets Contributions paid Actuarial loss on plan asset At 31 December 5,548 231 (335) (59) 5,385 2008 rM000 6,983 382 (262) (1,555) 5,548
Principal actuarial assumptions used: Group 2009 % Discount rate Expected return on plan assets Price inflation Expected rate of salary increase 6.0 - 6.8 4.5 3.5 5.0 - 7.0 2008 % 5.8 - 6.6 5.6 3.5 5.0 - 6.0
25.
share caPital Group/company 2009 number of shares 000 Ordinary shares of Rm1 each: Authorised amount rM000 number of shares 000 2008 amount rM000
500,000
500,000
500,000
500,000
Issued and fully paid
296,471
296,471
296,471
296,471
annual report 2009
145
26.
reserves Group 2009 rM000 Non-distributable: Share premium Capital reserve Exchange translation reserve Distributable: Retained profits Capital reserve 2008 rM000 company 2009 2008 rM000 rM000
84,171 3,684 10,923
84,171 3,684 26,967
84,171
84,171
1,075,537 2,077 1,176,392
960,154 2,077 1,077,053
685,540 497 770,208
694,540 497 779,208
the movements in each category of reserve are reflected in the statements of changes in equity. (a) Exchange translation reserve the exchange translation reserve is used to record foreign currency exchange differences arising from the translation of the financial statements of foreign operations whose functional currencies are different from the Groups presentation currency. It is also used to record the exchange differences arising from monetary items which form part of the Groups net investment in foreign operations, where the monetary item is denominated in either the functional currency of the reporting entity or the foreign operation. Capital reserve (i) Distributable capital reserve comprises surpluses arising from disposals of quoted investments and government acquisitions of land in previous years. (ii) Non-distributable capital reserve represents a transfer from revenue reserve arising from the issuance of bonus issue by certain subsidiary companies.
(b)
(c)
Retained profits Under the single-tier system which came into effect from year of assessment 2008, companies are not required to have tax credits under Section 108 of the Income tax Act, 1967 for dividend payment purposes. Dividends under this system are tax exempt in the hands of shareholder. Companies with Section 108 credits as at 31 December 2007 may continue to pay franked dividends until the Section 108 is exhausted or up to the maximum allowed time frame until 31 December 2013 whichever is earlier unless they opt to disregard the Section 108 credits to pay single-tier dividend under the special transitional provisions of the Finance Act 2008. Subject to agreement by the Inland Revenue Board, the Company has sufficient tax credit under Section 108 of the Income tax Act, 1967 available to frank dividend payments of approximately Rm195,074,000 (2008: Rm217,310,000) out of its retained profits as at 31 December 2009. the remaining profits of Rm490,466,000 (2008: Rm477,230,000) can be distributed as exempt dividends under the single-tier tax system. In addition, the Company has exempt income amounting to approximately Rm14,358,000 (2008: Rm14,358,000) available for distribution as tax exempt dividends to shareholders as at 31 December 2009. this tax exempt income is subject to agreement by the Inland Revenue Board.
146
27.
revenue Revenue of the Company includes dividend income, interest income and management fees. Revenue of the Group includes sales of palm products, sales of refined sugar and molasses, sales of rice, interest income and management fees. Group 2009 rM000 analysis of revenue Sales of goods manufacturing and trading Plantation management fee Interest income from subsidiary companies quoted loan stocks others Dividend from shares held in subsidiary companies 2008 rM000 company 2009 2008 rM000 rM000
1,310,336 758,726 207 129 2,069,398
862,178 905,062 167 159 1,767,566
1,200 5,838 4,800 129 82,349 94,316
600 5,743 4,800 159 55,149 66,451
28.
other oPeratinG incoMe Other operating income includes: Group 2009 rM000 Gain on disposal of : other investments property, plant and equipment assets held for sale prepaid lease payments Gain on financial assets held at fair value (Note 15) Rental income Interest income from: fixed deposits with licensed banks a related party (Note 40) others Dividend income from quoted shares Unrealised loss on foreign exchange Reversal of impairment loss on other investment (net) Excess of fair value of net assets acquired over purchase consideration Realisation upon liquidation of an associated company Bad debts recovered 2008 rM000 company 2009 2008 rM000 rM000
79 266 648 86 1,494 1,377 1,961 883 7 332 181 14,087 16,351
221 183 1,050 1,648 2,531 7,447 33 32
92
36
annual report 2009
147
29.
raW Materials anD consuMables useD Raw materials and consumables used is arrived at after crediting: Group 2009 rM000 Government grants 287,082 2008 rM000
the above grants represent total subsidies received during the current financial year to subsidise the price of refined sugar and rice.
30.
staFF costs Staff costs include: Group 2009 rM000 Pension cost defined contribution plans employees Pension cost defined benefit plan 2008 rM000 company 2009 2008 rM000 rM000
9,349 1,921
8,538 918
858
694
148
31.
other oPeratinG exPenses Other operating expenses include: Group 2009 rM000 Auditors remuneration: Statutory audit - current year - under provision in prior years Other services Allowance for doubtful debts Bad debts written off Company directors - fees - other emoluments - benefits-in-kind Charitable contributions for Albukhary International University Other directors - fees - other emoluments - benefits-in-kind Impairment loss on other investments - Note 10 loss on disposal of prepaid lease payments loss on disposal of property, plant and equipment loss on disposal of associated companies lease rental of warehouse Property, plant and equipment written off - Note 3 Plantation development expenditure written off - Note 5 Rental expenses - premises - other equipment and vehicles Realised loss on foreign exchange Realised loss on commodity swap 2008 rM000 company 2009 2008 rM000 rM000
634 9 49 244 107 155 1,328 25 20,000 494 967 3 2 2,853 3,003 615 154 4,893 320 49 2,813
554 8 76 3 181 937 57 265 271 9 481 43 3,017 20 3,678 914 506 36
60 27 85 542 10,000 262
60 10 85 529 24 118
32.
Finance costs Group 2009 rM000 Interest expense on: - borrowings - hire purchase - subsidiary companies 2008 rM000 company 2009 2008 rM000 rM000
54,989 44 55,033
48,489 48,489
9,766 48 9,814
8,236 13 8,249
annual report 2009
149
33.
taxation 2009 rM000 tax expense for the financial year: malaysian income tax Deferred tax (Note 12): Relating to origination and reversal of temporary differences Reduction in income tax rate 10,326 10,326 (Over)/Under provision in prior years: malaysian income tax Deferred tax (Note 12) (1,962) (2,045) (4,007) total income tax expense 74,131 883 1,193 2,076 76,566 1,321 163 1,484 18,965 (389) (389) 11,535 32,207 (13,478) 18,729 2,281 2,281 (2,438) 23 (2,415) 67,812 Group 2008 rM000 55,761 company 2009 2008 rM000 rM000 15,200 14,339
Domestic income tax is calculated at the malaysian statutory tax rate of 25% (2008: 26%) of the estimated assessable profit for the financial year. A reconciliation of income tax expense applicable to profit before taxation at the statutory income tax rate to income tax expense at the effective income tax rate of the Group and of the Company is as follows: 2009 rM000 Profit before taxation taxation at statutory tax rate of 25% (2008: 26%) Income not subject to tax Expenses not deductible for tax purposes Utilisation of reinvestment allowance Utilisation of previously unrecognised tax losses and capital allowances Deferred tax assets not recognised (Over)/Under provision of taxation in prior years (Over)/ Under provision of deferred taxation in prior years Effect of different tax rates in other countries Reduction in statutory tax rate on first Rm500,000 of chargeable income for certain subsidiary companies Reduction in tax rate used in deferred tax Share of results in joint venture Current year loss not eligible to be carried forward tax expense for the financial year 245,870 61,467 (8,183) 19,964 (498) 3,408 (1,962) (2,045) (610) 1,470 1,120 74,131 Group 2008 rM000 298,808 77,690 (1,516) 13,871 (3,270) (1,635) 3,415 883 1,193 (554) (210) (13,478) (807) 984 76,566 company 2009 2008 rM000 rM000 32,200 8,050 (23) 9,454 1,321 163 18,965 42,902 11,155 (10) 756 (389) 23 11,535
150
34.
earninGs Per share attributable to equitY holDers oF the coMPanY (a) the earnings per share is calculated after taking into consideration of the 100 million new ordinary shares which will be mandatorily converted on the maturity date arising from tradewinds Plantation Berhads 160,000,000 ICUlS (tPB ICUlS) of Rm1.00 each issued on 28 February 2006. Net profit for the financial year attributable to equity holders of the Company used in computing the earnings per share has been adjusted as follows: Group 2009 rM000 Net profit attributable to equity holders of the Company Effect of assumed conversion of tPB ICUlS Net profit attributable to equity holders of the Company including assumed conversion of tPB ICUlS 137,618 1,562 2008 rM000 160,735 5,563
139,180
166,298
the Groups weighted average number of ordinary shares in issue during the financial year is 296,470,484 (2008: 296,470,484). (b) there is no diluted earnings per share as the Company does not have any potential dilutive ordinary shares as at financial year end.
35.
DiviDenDs Group/company 2008 2009 rM000 rM000 Final dividend of 10 sen gross less 25% income tax, proposed for financial year 2008 paid in financial year 2009 Interim dividend of 10 sen gross less 26% income tax Final dividend of 13 sen gross less 26% income tax, proposed for financial year 2007 paid in financial year 2008
22,235
21,938
22,235
28,521 50,459
On 23 February 2010, the Company declared an interim dividend of 10 sen gross per share less 25% income tax amounting to Rm22,235,000 in respect of the current financial year, payable on 21 may 2010. At the forthcoming Annual General meeting, a final dividend of 5 sen gross per share less 25% income tax amounting to Rm11,117,000 in respect of the financial year ended 31 December 2009 will be proposed for shareholders approval.
annual report 2009
151
36.
PaDDY Price subsiDY account As disclosed in Note 7(d)(iii), the Company has, during the year, become the holding company of Padiberas Nasional Berhad (BERNAS). BERNAS is vested with the responsibility to administer the Governments Paddy Price Subsidy Scheme. the movement of the paddy price subsidy account which represents the paddy price subsidy to be distributed to the registered paddy farmers on behalf of the Government are as follows: Group 2009 rM000 Balance at 1 January Add: Government subsidy funds received Interest income less: Payments made during the financial year Balance at 31 December 74,341 532,000 1,030 (599,964) 7,407 2008 rM000
the amounts were not included in the assets and liabilities of the Group. Pursuant to the Corporation Agreement dated 12 January 1996, the Government shall deposit the fund under the Paddy Price Subsidy Scheme into bank accounts with licensed banks or financial institutions and operated by BERNAS for the sole purpose of disbursement of subsidies. the unutilised portion of the fund is to be placed into fixed deposits accounts with licensed banks or financial institutions approved by the Government.
37.
caPital coMMitMents Group 2009 rM000 Property, plant and equipment: - Authorised and contracted for - Authorised but not contracted for Plantation development expenditure: - Authorised and contracted for - Authorised but not contracted for Acquisition of subsidiary companies: - Authorised and contracted for Subscription of redeemable convertible preference shares in a jointly controlled entity: - Authorised and contracted for 5,000 573,677 259,352 1,210 2008 rM000 company 2009 2008 rM000 rM000
83,495 225,749
62,399 67,207
1,210
49,284 60,149
78,803 43,734
150,000
7,209
152
38.
continGent liabilities Group 2009 rM000 Corporate guarantee for credit facilities granted to third parties under the Skim Industri Pertanian 2008 rM000 company 2009 2008 rM000 rM000
46
39.
Material litiGations (a) Padiberas Nasional Berhad (BERNAS), a subsidiary of the Company was served with a Writ and Statement of Claim dated 14 October 2005 by Konsortium Pemborong Beras (melayu) Kelantan Sdn Bhd (KBK) and was named as the First Defendant. KBK is seeking the following: (i) A declaration that BERNAS violated the terms of the Joint Venture Agreement (JVA) by not complying with its duties and obligations as a member/partner of Formula timur Sdn Bhd (the Joint Venture Company); A declaration that BERNAS action in stopping the supply of rice to the Joint Venture Company was contrary to the provision of the JVA, and was wrongful and invalid; A declaration that BERNAS, by commission or omission, committed a fraud upon the minority shareholders of the Joint Venture Company and/or abuse of power; General damages of Rm112 million to be paid by BERNAS to the Joint Venture Company; Rebate of Rm760,000; Interest under Section 11 of the Civil law Act, 1965 and in equity on the damages at 8% per annum from August 2003 until payment; and
(ii)
(iii)
(iv) (v) (vi)
(vii) Injunction and Costs and other relieves as the Courts deem just. On 23 June 2006, BERNAS filed an application to strike out the said Statement of Claim on the ground that there was no valid cause of action. On 7 may 2006, the Senior Assistant Registrar dismissed BERNAS application to strike out. On 7 may 2007, BERNAS lodged an appeal to Judge in Chambers against the Senior Assistant Registrars decision pertaining to BERNAS striking out application which was fixed for decision on 20 may 2009. On 20 may 2009, the Judge in Chambers dismissed BERNAS appeal with costs. BERNAS had upon advice by its solicitors, instructed its solicitors to file a Notice of Appeal at the Court of Appeal against the decision of the Judge in Chambers. the Court of Appeal has yet to fix the hearing date for the Notice of Appeal filed by BERNAS.
annual report 2009
153
39.
Material litiGations (contD) (b) On 27 march 2006, BERNAS was served with a sealed copy of a Summons in Chambers dated 3 march 2006 by KBK for an interlocutory injunction, inter alia, the followings: (i) Restrain BERNAS from selling, hiring and supplying rice to any third party or allowing any activities which may compete with the business of the Plaintiff; and Instruct BERNAS to resume selling, hiring and supplying rice to the Plaintiff.
(ii)
KBKs application for injunctive relief and discovery which had been fixed for 22 June 2009 had been adjourned to 2 September 2009 and 26 October 2009, respectively for further mention. However, BERNAS had given instruction to its solicitors to set aside the said injunction application. the Court has yet to fix the date for KBKs application for injunctive relief and discovery. (c) BERNAS was served with a Writ of Summons and Statement of Claim dated 5 may 2006 initiated by A Halim Bin Hamzah and 291 others (the Plaintiffs). the civil suit is brought by the Plaintiffs against BERNAS and 24 others (the Defendants) for, inter alia, the following claims: (i) (ii) A declaration that the 2000 Voluntary Separation Scheme initiated by BERNAS is void and of no effect. A declaration that the Defendants had, by unlawful means, conspired and combined together to defraud or injure the Plaintiffs. Alternatively, a declaration that the Defendants had acted in furtherance of a wrongful conspiracy to injure the Plaintiffs. Damages to be assessed. Interest and costs.
(iii)
(iv) (v)
In relation to the civil suit filed by the Plaintiffs against the Defendants, BERNAS had filed Summons in Chambers pursuant to Order 12 Rule 7 and/or Order 18 Rule 19 (the Order) of the Rules of the High Court 1980 (BERNAS Application) for the following: (i) that the Writ and Statement of Claim as against the said Defendants be struck out as it discloses no reasonable course of actions, scandalous, frivolous, vexatious and/or is an abuse of process of the Court; that the costs of the said Order to be borne by the Plaintiffs; and Such further or other orders as the Court deems fit.
(ii) (iii)
the Court had granted Order In terms for the BERNAS Application to strike out the 21st Defendants with cost payable to BERNAS but dismissed BERNAS Application to strike out the 2nd to 12th Defendants on 3 September 2007. On 3 march 2008, the Court dismissed BERNAS Application to strike out the 2nd to 12th Defendants from being the party to the suit. BERNAS solicitors had on 17 April 2008, filed a Statements of Defence for 2nd to 12th Defendants. the matter has been fixed for further case management on 14 may 2010 pending the parties compliance with the case management directions.
154
39.
Material litiGations (contD) (d) On 6 June 2006, BERNAS was served with a sealed copy of Originating Summons and Affidavit in Support (the Plaintiffs Application) affirmed by Zainon Bt Ahmad for and on behalf of the 690 others (the Plaintiffs) for the following claims: (i) A declaration that the Plaintiffs as employees of BERNAS whose service of employment has been terminated before attaining the age of 55 due to reasons other than that of compulsory retirement, optional retirement, death or a disability are entitled to the Retirement/termination Benefits provided for in clause 7.3 of the terma dan Syarat Perkhidmatan Kumpulan Eksekutif dan Kumpulan Bukan Eksekutif and in clause 5.5 of the Buku Panduan Kumpulan Eksekutif dan Bukan Eksekutif. An order that BERNAS pays the Retirement/termination benefits due to the Plaintiffs as follows: for those Plaintiffs who have attained the age of retirement of 55 years as at the date of the order, the Retirement/termination Benefits be paid directly to them; and for those Plaintiffs who have not attained the age of retirement of 55 years as at the date of the order, the Retirement/termination Benefits be paid into their accounts at the Employment Provident Fund.
(ii)
(iii) (iv) (v)
Interest at the rate of 8% per annum from 1 January 2004 to the date of payments as ordered by the Court. Such further orders, directions or relief that the Court deems fit and appropriate. Costs to be paid by BERNAS to the Plaintiffs.
the Court had on 13 march 2008 allowed the Plaintiffs application with cost and BERNAS had instructed its solicitors to file Grounds of Appeal to the Court of Appeal. the Court of Appeal had, on 24 August 2009, allowed BERNAS application to amend the memorandum of Appeal and the Notice of Appeal. As of to date, the Court of Appeal has yet to fix the hearing date for the Notice of Appeal filed by BERNAS. (e) On 4 January 2010, BERNAS was served with a sealed copy of Originating Summons and Affidavit in Support (the Plaintiffs Application) affirmed by Rahman Bin Samud for and on behalf of the 242 others (the Plaintiffs) for the following claims: (i) A declaration that the Plaintiffs as employees of BERNAS whose service of employment has been terminated before attaining the age of 55, due to reasons other than that of compulsory retirement, optional retirement, death or a disability are entitled to the Retirement/termination Benefits provided for in clause 7.3 of the terma dan Syarat Perkhidmatan Kumpulan Eksekutif dan Kumpulan Bukan Eksekutif and in clause 5.5 of the Buku Panduan Kumpulan Eksekutif dan Bukan Eksekutif. An order that BERNAS pays the Retirement/termination Benefits due to the Plaintiffs as follows: for those Plaintiffs who have attained the age of retirement of 55 years as at the date of the order, the Retirement/termination Benefits be paid directly to them; and for those Plaintiffs who have not attained the age of retirement of 55 years as at the date of the order, the Retirement/termination Benefits be paid into their accounts at the Employment Provident Fund.
(ii)
annual report 2009
155
39.
Material litiGations (contD) (e) On 4 January 2010, BERNAS was served with a sealed copy of Originating Summons and Affidavit in Support (the Plaintiffs Application) affirmed by Rahman Bin Samud for and on behalf of the 242 others (the Plaintiffs) for the following claims: (contd) (iii) (iv) (v) Interest at the rate of 8% per annum from 1 January 2004 to the date of payment as ordered by the Court. Such further orders, directions or relief that the Court deems fit and appropriate. Costs to be paid by BERNAS to the Plaintiffs.
BERNAS had given instructions to its solicitors to file reply in defence against the Plaintiffs application. the Court has fixed 14 June 2010 as the date for the hearing of the plaintiffs application on the above mentioned civil suit.
40.
siGniFicant relateD Parties transactions (a) In addition to the transactions detailed elsewhere in the financial statements, the Group and the Company had the following transactions with related parties during the financial year: Group 2009 rM000 Dividend income from: Subsidiary companies 2008 rM000 company 2009 2008 rM000 rM000
82,349
55,149
Interest income from: Subsidiary companies Quoted loan stocks issued by subsidiary company Bukhary Sdn Bhd ix,x
1,961
7,477
5,838 4,800
5,743 4,800
Interest expenses paid to: Subsidiary companies
48
13
management and agency fees from: Subsidiary companies Solar Green Sdn Bhd i
207
168
1,200
600
156
40.
siGniFicant relateD Parties transactions (contD) (a) In addition to the transactions detailed elsewhere in the financial statements, the Group and the Company had the following transactions with related parties during the financial year: (contd) Group 2009 rM000 Premise/Office rental paid to: - Zelan Corporation Sdn Bhd xii - Asian Net Sdn Bhd xvii - Southern Edipro Packaging Sdn Bhd xix - Sin Hock Soon trading Sdn Bhd xix - Eternal Promenade Sdn Bhd xix - tSH Realty Sdn Bhd xx - Joo Seng Edar Sdn Bhd xvi 2008 rM000 company 2009 2008 rM000 rM000
92 73 97 384 124 15 28
35
92
35
Premise rental paid to: - Yew Chye Seng, a director of a subsidiary company
25
Rental income from: - Gula Padang terap Plantations Sdn Bhd
ix
34
Purchase of insurance from: tradewinds International Insurance Brokers Sdn Bhd vi
5,467
3,730
83
Provision of agency services and distributorship of goods from: Bukhary Sdn Bhd ix, x
7,735
6,779
Purchase of packing materials from: tego Sdn Bhd ii, iii
108
38
Purchase of raw materials from: Agri-Sabah Fertilizer Sdn Bhd ii, iv
6,660
8,377
Procurement of engineering works from: minsec Engineering Services Sdn Bhd ii, v
2,121
3,644
annual report 2009
157
40.
siGniFicant relateD Parties transactions (contD) (a) In addition to the transactions detailed elsewhere in the financial statements, the Group and the Company had the following transactions with related parties during the financial year: (contd) Group 2009 rM000 Procurement of waste management services from: Sitamas Environmental Systems Sdn Bhd ii, v 2008 rM000 company 2009 2008 rM000 rM000
412
502
Purchase of chemicals and resins from: Chemquest trading (m) Sdn Bhd ii, v
55
18
Purchase of natural gas from: Gas malaysia Sdn Bhd vii
31,159
27,097
Provision of logistics and transportation services from: - JP logistics Sdn Bhd xii - SKS transport Sdn Bhd ix, xi - Iman Cargo transportation and Freight Sdn Bhd xiii, xiv - Sin Hock Soon transport Sdn Bhd xix - Xeng Heng Sdn Bhd xix - melia Best Sdn Bhd xiii, xiv - Nagoya Agency xviii - Joo Seng Edar Sdn Bhd xvi
6,445 3,811 500 384 87 365 371 48
6,393 3,855
Sale of fresh fruit bunches to: - Solar Green Sdn Bhd i
1,231
314
Sale of refined sugar to: Bukhary Sdn Bhd ix, x
203,610
164,970
Purchase of sugar cane from: Gula Padang terap Plantations Sdn Bhd
ix
10,781
Sale of crude palm oil and palm kernel to: lahad Datu Edible Oils Sdn Bhd ii, viii - Bintulu Edible Oils Sdn Bhd ii, viii
49,546 155,587
53,756 208,034
158
40.
siGniFicant relateD Parties transactions (contD) (a) In addition to the transactions detailed elsewhere in the financial statements, the Group and the Company had the following transactions with related parties during the financial year: (contd) Group 2009 rM000 Sale of rice to: Associated companies 2008 rM000 company 2009 2008 rM000 rM000
41,700
Purchase of rice from: Associated companies
44,245
Purchase of rice from: Faiza marketing Sdn Bhd xiii Jasmine Rice mill (Kerpan) Sdn Bhd
xv
250 200
Sale of rice to: Recent Giant Sdn Bhd JS Sasaran trading xvi Joo Seng Enterprise xvi Pasar mini Enterprise xiii
xix
984 337 89 200
the above transactions have been entered into in the normal course of business and have been established on commercial terms that are not materially different from those obtainable in transactions with unrelated parties: (i) Solar Green Sdn Bhd (SGSB) was a subsidiary of the former ultimate holding company, tradewinds Corporation Berhad. tradewinds Corporation Berhad ceased to be the ultimate holding company with effect from 21 February 2008 and thereafter SGSB became a company in which a major shareholder of the Company has interest until 31 July 2008. SGSB subsequently became a subsidiary of a jointly controlled entity of the Group with effect from 1 August 2008. PPB Group Berhad (PPB) had an indirect interest in the Company through its subsidiary company, FFm Berhad (FFm) and associated company, Grenfell Holdings Sdn Bhd. Pursuant to Section 6A of the Act, PPB was deemed as a major shareholder of the Company until 6 January 2010. tego Sdn Bhd is a subsidiary company of FFm. FFm is in turn a wholly-owned subsidiary company of PPB. PPB was deemed to have interest in Agri-Sabah Fertilizer Sdn Bhd through PPB Oil Palms Berhad. minsec Engineering Services Sdn Bhd and Sitamas Environmental Systems Sdn Bhd are subsidiaries of Chemquest Sdn Bhd. Chemquest Sdn Bhd is a subsidiary company of PPB.
(ii)
(iii) (iv) (v)
annual report 2009
159
40. siGniFicant relateD Parties transactions (contD) (a) In addition to the transactions detailed elsewhere in the financial statements, the Group and the Company had the following transactions with related parties during the financial year: (contd) (vi) tradewinds International Insurance Brokers Sdn Bhd (tIIBSB) is a subsidiary company of the former ultimate holding company, tradewinds Corporation Berhad. tradewinds Corporation Berhad ceased to be the ultimate holding company with effect from 21 February 2008 and thereafter tIIBSB became a company in which a major shareholder of the Company has interest.
(vii) Gas malaysia Sdn Bhd is a subsidiary company of mmC Corporation Berhad which is 51.76% owned by Seaport terminal (Johore) Sdn Bhd, a wholly owned subsidiary company of Indra Cita Sdn Bhd whose major shareholder is tan Sri Dato Sri Syed mokhtar Shah bin Syed Nor (with 99.99% equity interest). tan Sri Dato Sri Syed mokhtar Shah bin Syed Nor is a director and substantial shareholder, holding 99.99% equity interest in Restu Jernih Sdn Bhd, the holding company of Perspective lane (m) Sdn Bhd which in turn holds 42.97% equity interest in the Company. (viii) PGEO Group Sdn Bhd holds 100% and 45% equity interest in Bintulu Edible Oils Sdn Bhd and lahad Datu Edible Oils Sdn Bhd respectively. PGEO Group Sdn Bhd is in turn a 100% subsidiary of Wilmar International limited, a company in which PPB has 18.4% equity interest. (ix) tuan Syed Azmin bin Syed Nor is the brother of tan Sri Dato Sri Syed mokhtar Shah bin Syed Nor and a nonindependent/non-executive director of the Company. tuan Syed Azmin bin Syed Nor is also a director of KHSB Equity Sdn Bhd (KHSB Equity). Gula Padang terap Plantations Sdn Bhd, is a 84.11% subsidiary of Jalinan Semangat Sdn Bhd. Jalinan Semangat Sdn Bhd is a 93% subsidiary of Paramount Dimension (m) Sdn Bhd which in turn is a subsidiary of KHSB Equity. (x) Bukhary Sdn Bhd (BSB) is an indirect subsidiary of KHSB Equity. mr. Chuah Seong tat, a non-independent/nonexecutive director of the Company and Encik Ahmed Kamil bin P m mustafa Kamal, a director of Gula Padang terap Sdn Bhd, a subsidiary company of the Company, are both directors of BSB. Encik Ahmed Kamil bin P m mustafa Kamal is also a major shareholder and a director of KHSB Equity. the interest income from BSB comprises late payment charges on trade debts that are owing more than 90 days. Interest is charged at a rate of 6.5% (2008: 6.5%) per annum. (xi) SKS transport Sdn Bhd is an indirect subsidiary of KHSB marketing Sdn Bhd (KmSB). KmSB is in turn a 79% subsidiary of KHSB Equity. JP logistics Sdn Bhd is a wholly-owned subsidiary of Johor Port Berhad which in turn is a wholly-owned subsidiary of mmC Corporation Berhad. tan Sri Dato Sri Syed mokthar Shah bin Syed Nor is deemed to be a substantial shareholder of tronoh Consolidated malaysia Berhad due to his direct and indirect interest in Indra Cita Sdn Bhd, Seaport terminal (Johore) Sdn Bhd and mmC Corporation Berhad pursuant to Section 6A of the Companies Act, 1965. Zelan Corporation Sdn Bhd is a wholly-owned subsidiary of Zelan Holdings (m) Sdn Bhd which in turn is a wholly-owned subsidiary of tronoh Consolidated malaysia Berhad.
(xii)
160
40.
siGniFicant relateD Parties transactions (contD) (a) In addition to the transactions detailed elsewhere in the financial statements, the Group and the Company had the following transactions with related parties during the financial year: (contd) (xiii) Faiza Bawumi bt Syed Ahmad and Najwa bt Abu Bakar who are directors of Syarikat Faiza marketing Sdn Bhd, a subsidiary company of Padiberas Nasional Berhad, hold substantial interest in Faiza marketing Sdn Bhd and Pasar mini Enterprise. (xiv) Iman Cargo transportation and Freight Sdn Bhd and melia Best Sdn Bhd are companies in which a son of Faiza Bawumi bt Syed Ahmad has substantial financial interest. (xv) mr. lim Kian lai@lim Kean lai who is a director of Jasmine Food Corporation Sdn Bhd, a subsidiary company of Padiberas Nasional Berhad, holds substantial financial interest in Jasmine Rice mill (Kerpan) Sdn Bhd. (xvi) mr. tee Sin Joo and mr. tee Sin Kong who are directors of JS Jasmine Sdn Bhd, a subsidiary company of Padiberas Nasional Berhad, hold substantial financial interest in Joo Seng Enterprise, JS Sasaran trading, Aroma Beras Edar and Joo Seng Edar Sdn Bhd. (xvii) Asian Net Sdn Bhd is a company in which certain directors of Jasmine Food Corporation Sdn Bhd, a subsidiary company of Padiberas Nasional Berhad, have substantial financial interest. (xviii) Nagoya Agency is an entity owned by a person connected to certain directors of Jasmine Rice mill (tunjang) Sdn Bhd and Jasmine Rice Products Sdn Bhd, subsidiary companies of Padiberas Nasional Berhad. (xix) Recent Giant Sdn Bhd, Sin Hock Soon transport Sdn Bhd, Eternal Promenade Sdn Bhd, Xeng Heng Sdn Bhd, Sin Hock Soon trading Sdn Bhd and Southern Edipro Packaging Sdn Bhd are companies connected to certain directors of YHl Holdings Sdn Bhd, subsidiary companies of Padiberas Nasional Berhad, by virtue of their family relationship. (xx) mr. tan Gee Huat and mr. tho lai Hock who are directors of tong Seng Huat Sdn Bhd, a subsidiary company of Padiberas Nasional Berhad, hold substantial interest in tSH Realty Sdn Bhd. (b) Information regarding outstanding balances arising from related party transactions is disclosed in Note 14, Note 15, Note 16, Note 17, and Note 21. Information regarding compensation of key management personnel is as follows: Group 2009 rM000 Short term employee benefits Defined contribution plan Benefits-in-kind 8,599 890 193 2008 rM000 5,553 562 104 company 2009 2008 rM000 rM000 1,159 210 38 691 103 52
(c)
Key management personnel comprises directors and executives of the Group and of the Company, who have authority and responsibility for planning, directing and controlling the activities of the Group and of the Company either directly or indirectly.
annual report 2009
161
41.
seGMent inForMation GrouP Segment information is primarily presented in respect of the Groups business segment which is based on the Groups management and internal reporting structure. Segment revenue, results, assets and liabilities include items directly attributable to a segment and those where a reasonable basis of allocation exists. Unallocated items mainly comprise interest-earning assets and revenue, interestbearing borrowings and expenses, and corporate assets and expenses. Segment capital expenditure is the total cost incurred during the financial year to acquire segment assets that are expected to be used for more than one financial year. the accounting policies of the segments are consistent with the accounting policies of the Group. (a) business segments the main business segments of the Group comprise the following: manufacturing and trading Plantation manufacture and sale of refined sugar and rice. Cultivation of oil palm, processing and sale of palm products and the provision of plantation management and advisory services. Investment holding and provision of management services. Property development and property investment.
management and Investment Property
2009
Manufacturing and trading rM000
Plantation rM000
Management and investment rM000
Property rM000
total rM000
revenue Sales to external customers
1,310,336
758,726
336
2,069,398
results Segment results Unallocated income Unallocated expenses Profit from operations Finance costs Share of results in jointly controlled entity Share of results in associated companies Profit before taxation taxation Net profit for the financial year
177,689
166,885
(9,460)
(250)
334,864 34,767 (65,510) 304,121 (55,033) (5,879) 2,661 245,870 (74,131) 171,739
162
41.
seGMent inForMation GrouP (contD) (a) business segments (contd) Management and investment rM000
2009
Manufacturing and trading rM000
Plantation rM000
Property rM000
total rM000
assets Segment assets Investment in associated companies Investment in jointly controlled entity Unallocated assets total assets
2,676,407
2,677,726
51,013
116,869
5,522,015 232,323 12,223 277,130 6,043,691
liabilities Segment liabilities Unallocated liabilities total liabilities
1,404,061
844,792
560,204
798
2,809,855 783,830 3,593,685
other information Capital expenditure Unallocated capital expenditure total capital expenditure
50,166
174,652
224,818 72 224,890
Depreciation and amortisation Unallocated depreciation and amortisation
27,596
95,249
122,845 559 123,404
annual report 2009
163
41.
seGMent inForMation GrouP (contD) (a) business segments (contd) Manufacturing and trading rM000 Management and investment rM000
2008
Plantation rM000
Property rM000
total rM000
revenue Sales to external customers
862,178
905,062
326
1,767,566
results Segment results Unallocated income Unallocated expenses Profit from operations Finance costs Share of results jointly controlled entity Profit before taxation taxation Net profit for the financial year
78,076
278,224
(8,922)
1,045
348,423 11,106 (15,334) 344,195 (48,489) 3,102 298,808 (76,566) 222,242
assets Segment assets Investment in associated companies Investment in jointly controlled entity Unallocated assets total assets
684,352
2,251,963
335,972
51,722
3,324,009 20,832 13,101 91,700 3,449,642
liabilities Segment liabilities Unallocated liabilities total liabilities
56,134
160,769
943
755
218,601 1,493,260 1,711,861
other information Capital expenditure Unallocated capital expenditure total capital expenditure
38,892
169,848
208,740 220 208,960
164
41.
seGMent inForMation GrouP (contD) (a) business segments (contd) Manufacturing and trading rM000 19,954 Management and investment rM000
2008
Plantation rM000 92,793
Property rM000
total rM000 112,747 644 113,391
Depreciation and amortisation Unallocated depreciation and amortisation
Significant non-cash expenses other than depreciation, amortisation and impairment losses
3,678
3,678
(b)
Geographical segments In determining the geographical segments of the Group, segment revenue is based on the geographical location of customers. Segment assets and segment capital expenditure are based on geographical location of assets. Malaysia rM000 2009 Revenue Assets Capital expenditure indonesia rM000 singapore rM000 hong Kong rM000 australia rM000 others rM000 total rM000
1,932,588 5,508,451 224,890
13,134 186
89,258 7,192
11,879 146
9,810 811
12,729 4,674
2,069,398 5,521,460 224,890
2008 Revenue Assets Capital expenditure
1,669,772 3,317,173 208,960
13,634 2,581
49,228 2,442
17,008 286
9,517 1,006
8,407 521
1,767,566 3,324,009 208,960
annual report 2009
165
42.
Financial instruMents (a) Financial risk management objectives and policies the Groups financial risk management policy is to ensure that adequate financial resources are available for the development of the Groups operations whilst managing its financial risks, including foreign currency exchange risk, interest rate risk, market risk, price fluctuation risk, credit risk, liquidity and cash flow risk. Foreign currency exchange risk the Group is exposed to foreign currency risk on sales, purchases, assets and liabilities that are denominated in a currency other than Ringgit malaysia. the Group maintains a natural hedge which includes foreign exchange contract to minimise the foreign exchange exposure by matching foreign currency income with foreign currency costs. the net unhedged financial assets and financial liabilities of the Group and of the Company that are not denominated in their functional currencies are as follows: united states Dollar rM000 canadian Dollar rM000 singapore Dollar rM000
(b)
Functional currency
total rM000
Group 2009 Investments in associated companies 16,731 16,731
Other investments
3,499
3,499
trade receivables
9,075
9,075
Other payables
23
173
196
Assets held for sale
4,315
4,315
Cash and bank balances
4,037
4,037
Borrowings
20,012
20,012
166
42.
Financial instruMents (contD) united states Dollar rM000 canadian Dollar rM000 singapore Dollar rM000
Functional currency
total rM000
Group 2008 Investments in associated companies 20,832 20,832
Other investments
3,499
3,499
trade receivables
7,081
7,081
Cash and bank balances
972
972
Amount owing to associated companies
20,186
20,186
company 2009 Other Investments 3,499 3,499
2008 Other Investments 3,499 3,499
As at the balance sheets date, the Group entered into forward exchange contracts with the following notional amount and maturity: notional amount 2009 2008 rM000 rM000
Maturity Forwards used to hedge trade payables - United States Dollars Within 1 year
40,788
annual report 2009
167
42.
Financial instruMents (contD) (c) Interest rate risk the Groups income and operating cash flows are substantially independent of the changes in market interest rates. Interest rate exposure arises from the Groups borrowings and deposits. the Group manages such exposure by maintaining a prudent mix of fixed and floating rate banking facilities. Credit risk the Groups exposure to credit risk arises mainly from receivables. Receivables are monitored on an ongoing basis via management reporting procedure and action is taken to recover debts when due. At the balance sheet date, there were no significant concentrations of credit risk other than as disclosed in Note 14 and Note 15. the maximum exposure to credit risk for the Group is the carrying amount of the financial assets shown in the balance sheet. (e) liquidity and cash flow risk the Group seeks to achieve a flexible and cost effective borrowing structure to ensure that the projected net borrowing needs are covered by available committed facilities. Debt maturities are structured in such a way to ensure that the amount of debt maturing in any one year is within the Groups ability to repay and/or refinance. the Group also maintains a certain level of cash and cash convertible investments to meet its working capital requirements. (f) market risk the Groups exposure to market risk arises mainly from changes in equity prices. the Group does not use derivative financial instruments to manage equity risk. the risk of loss in value is minimised via thorough analysis before making the investments and continuous monitoring of the performance and risk of the investments made. Equity investments classified as non-current assets are held for long-term. Changes in market values of long-term investments, except where an impairment occurs or a permanent loss in value can be foreseen, do not affect the carrying amounts of the investments. the Group manages its risk through established guidelines and policies. (g) Price fluctuation risk the Group, in the normal course of business is exposed to price fluctuation risk on commodities particularly on palm oil, sugar and rice. the Group mitigates its risk to the price volatility through constantly monitoring the movement of the commodities prices, and where deemed prudent, selling forward in the physical market and by entering into foreign exchange contracts. Fair values the carrying amounts of cash and cash equivalents, trade and other receivables, trade and other payables, amount owing by/to subsidiary companies and associated companies, and short term borrowings approximate their respective fair values due to the relatively short term nature of these financial instruments.
(d)
(h)
168
42.
Financial instruMents (contD) (h) Fair values (contd) the aggregate fair values of the other financial assets and long term liabilities as at the balance sheets date are as follows: 2009 carrying amount rM000 Group Financial assets Investment in quoted shares Investment in unquoted shares Financial liabilities term loans (Note 23) - fixed interest rates - floating interest rates Islamic debts securities (Note 23) Contingent liabilities (Note 35) company Financial assets Investment in quoted shares Investment in quoted loan stocks (Note 9) Financial liabilities term loans (Note 23) - floating interest rates * @ Fair value rM000 carrying amount rM000 2008 Fair value rM000
4,188 258
4,156 *
4,806 148
10,394 *
107,424 753,559 185,000
103,150 ^ 189,391
220,537 102,375 210,000 46
212,526 ^ 208,107 @
3,499 159,990
3,467 254,384
3,499 159,990
9,195 254,384
461,247
It is not practicable to estimate the fair value of the unquoted investment due to lack of transacted prices. It is not practicable to estimate the fair value of contingent liabilities reliably due to the uncertainties of timing, cost and eventual outcome. It is not practicable to estimate the fair value of long term loan with floating interest rates due to the fluctuation of interest rates and foreign exchange.
the fair values of investment in quoted shares, quoted loan stocks and malaysian Government Securities are estimated based on quoted market prices. the fair value of long term borrowings is estimated based on the quoted market prices for the same or similar issues or on the current rates available for borrowings with the same maturity profile.
annual report 2009
169
43.
neW Frss, aMenDMents to Frs anD ic interPretation not Yet aDoPteD At the date of authorisation of these financial statements, the Group and the Company have not applied the following Financial Reporting Standards (FRSs), revised FRSs, Issues Committee (IC) Interpretations, amendments to FRSs and IC Interpretations that have been issued by the malaysian Accounting Standards Board (mASB) but are not yet effective: effective date for financial period beginning on or after FRS 8: Operating Segments FRS 4: Insurance Contracts FRS 7: Financial Instruments: Disclosures FRS 101: Presentation of Financial Statements (Revised) FRS 123: Borrowing Costs FRS 139: Financial Instruments: Recognition and measurement Amendments to FRS 1: First-time Adoption of Financial Reporting Standards and FRS 127: Consolidated and Separate Financial Statements: Cost of an Investment in a Subsidiary, Jointly Controlled Entity or Associate Amendments to FRS 2: Share-based Payment Vesting Conditions and Cancellations Amendments to FRS 132: Financial Instruments: Presentation Amendments to FRS 139: Financial Instruments: Recognition and measurement, FRS 7: Financial Instruments: Disclosures and IC Interpretation 9: Reassessment of Embedded Derivatives IC Interpretation 9: Reassessment of Embedded Derivatives IC Interpretation 10: Interim Financial Reporting and Impairment IC Interpretation 11: FRS 2 - Group and treasury Share transaction IC Interpretation 13: Customer loyalty Programmes IC Interpretation 14: FRS 119 - the limit on a Defined Benefit Asset, minimum Funding Requirements and their Interaction Amendments to FRSs contained in the document entitled Improvements to FRSs (2009) FRS 1: First-time Adoption of Financial Reporting Standards FRS 3: Business Combinations FRS 127: Consolidated and Separate Financial Statements Amendments to FRS 2: Share-based Payment Amendments to FRS 5: Non-current Assets Held for Sale and Discontinued Operations Amendments to FRS 138: Intangible Assets Amendments to IC Interpretation 9: Reassessment of Embedded Derivatives IC Interpretation 12: Service Concession Arrangements 1 July 2009 January 2010 January 2010 January 2010 January 2010 January 2010 January 2010
1 1 1 1 1 1
1 January 2010 1 January 2010 1 January 2010
1 1 1 1 1
January January January January January
2010 2010 2010 2010 2010
1 January 2010 1 1 1 1 1 July July July July July 2010 2010 2010 2010 2010
1 July 2010 1 July 2010 1 July 2010
170
43.
neW Frss, aMenDMents to Frs anD ic interPretation not Yet aDoPteD (contD) effective date for financial period beginning on or after IC Interpretation 15: Agreements for the Construction of Real Estate IC Interpretation 16: Hedges of a Net Investment in a Foreign Operation IC Interpretation 17: Distributions of Non-cash Assets to Owners Amendments to FRS 132: Financial Instruments: Presentation - paragraphs 95A, 97AA and 97AB - paragraphs 11,16 and 97E Amendments to FRS 1: limited Exemption from Comparative FRS 7 Disclosures of First-time Adopters Amendments to FRS 7: Improving Disclosures about Financial Instruments 1 July 2010 1 July 2010 1 July 2010 1 January 2010 1 march 2010 1 January 2011 1 January 2011
the Group and the Company plan to adopt the abovementioned FRSs, revised FRSs, IC Interpretations, amendments to FRSs and IC Interpretations which are relevant to the Companys operation when they become effective. Unless otherwise described below, the Directors of the Group and of the Company anticipate that the application of the above FRSs, IC Interpretations, amendments to FRSs and IC Interpretations will have no material impact on the financial statements of the Group upon their initial adoption. (a) FRS 8: Operating Segments this FRS requires the entity to disclose the following: (i) (ii) Segment information based on the information reviewed by the entitys chief decision maker. Factor used to identify the entitys reportable segments, including the basis of organisation (for example, whether management has chosen to organise the entity around differences in products and services, geographical areas, regulatory environments, or a combination of factors and whether operating segments have been aggregated). type of products and services from which each reportable segment derives its revenues. the amounts of additions to non-current assets other than financial instruments, deferred tax assets, postemployment benefit assets and rights arising under insurance contracts. Information about the extent of its reliance on its major customers. If revenues from transactions with a single external customer amount to 10 per cent or more of an entitys revenues, the entity shall disclose that fact, the total amount of revenues from each such customer, and the identity of the segment or segments reporting the revenues.
(iii) (iv)
(v)
annual report 2009
171
43.
neW Frss, aMenDMents to Frs anD ic interPretation not Yet aDoPteD (contD) (b) FRS 7: Financial Instruments: Disclosures this new standard requires disclosures in financial statements that enable users to evaluate the significance of financial instruments for the entitys financial position and performance, and the nature and extent of risks arising from financial instruments to which an entity is exposed and how these risks are managed. this standard requires both qualitative disclosures describing managements objectives, policies and processes for managing those risks, and quantitative disclosures providing information about the extent to which an entity is exposed to risk, based on information provided internally to the entitys key management personnel. FRS 139: Financial Instruments: Recognition and measurement this standard establishes the principles for the recognition, derecognition and measurement of an entitys financial instruments and for hedge accounting. FRS 3: Business Combinations the revised standard continues to apply the acquisition method to business combinations, with some significant changes. For example, all payments to purchase a business are to be recorded at fair value at the acquisition date, with contingent payments classified as debt subsequently re-measured through the income statement. there is a choice on an acquisition-by-acquisition basis to measure the non-controlling interest in the acquiree either at fair value or at the non-controlling interests proportionate share of the acquirees net assets. All acquisition related cost should be expensed. FRS 127: Consolidated and Separate Financial Statements the revised standard requires the effects of all transactions with non-controlling interest to be recorded in equity if there is no change in control and these transactions will no longer result in goodwill or gains and losses. the standard also specifies the accounting when control is lost. Any remaining interest in the entity is re-measured to fair value, and a gain or loss is recognised in profit or loss. Other main changes include the requirement to allocate losses to noncontrolling interests NCI (formerly known as minority interest), even if it results in the NCI to be in a deficit position. FRS 101: Presentation of Financial Statements this standard requires an entity to present, in a statement of changes in equity, all owner changes in equity. All nonowner changes in equity (i.e. comprehensive income) are required to be presented in one statement of comprehensive income or in two statements (a separate income statement and a statement of comprehensive income). Components of comprehensive income are not permitted to be presented in the statement of changes in equity. In addition, a statement of financial position is required at the beginning of the earliest comparative period following a change in accounting policy, the correction of an error or the reclassification of items in the financial statements. FRS 101 does not have any impact on the Groups and the Companys financial position or results.
(c)
(d)
(e)
(f)
172
43.
neW Frss, aMenDMents to Frs anD ic interPretation not Yet aDoPteD (contD) (g) IC Interpretation 14: FRS119 - the limit on a Defined Benefit Asset, minimum Funding Requirements and their Interaction this Interpretation applies to all post-employment defined benefits and other long-term employee defined benefits. this Interpretation clarifies that an economic benefit is available if the Group can realise it at some point during the life of the plan or when the plan liabilities are settled, and that it does not depend on how the Group intends to use the surplus. A right to refund is available to the Group in stipulated circumstances and the economic benefit available shall be measured as the amount of the surplus at the balance sheet date less any associated costs. If there are no minimum funding requirements, the economic benefit available shall be determined as a reduction in future contributions as the lower of the surplus in the plan and the present value of the future service cost to the Group. If there is a minimum funding requirement for contributions relating to the future accrual of benefits, the economic benefit available shall be determined as a reduction in future contributions at the present value of the estimated future service cost less the estimated minimum funding required in each financial year. (h) IC Interpretation 15: Agreements for the Construction of Real Estate this new interpretation provides guidance on accounting for revenue from the construction of real estate where the Group undertakes a property development project. the implementation of this interpretation will change the Groups revenue recognition to take place at the time of delivery instead of recognised based on the percentage of completion method. IC Interpretation 17: Distributions of Non-cash Assets to Owners this Interpretation applies to non-reciprocal distributions of non-cash assets by the Group to its owners in their capacity as owners, as well as distributions that give owners a choice of receiving either non-cash assets or a cash alternative. this Interpretation also applies to distributions in which all owners of the same class of equity instruments are treated equally. the liability to pay a dividend shall be recognised when the dividend is appropriately authorized and is no longer at the discretion of the Group. the liability shall be measured at the fair value of the assets to be distributed. If the Group gives its owners a choice of receiving either a non-cash asset or a cash alternative, the dividend payable shall be estimated by considering the fair value of both alternatives and the associated probability of the owners selection. At the end of each reporting period, the carrying amount of the dividend payable shall be remeasured and any changes shall be recognised in equity. At the settlement date, any difference between the carrying amounts of the assets distributed and the carrying amount of the dividend payable shall be recognised in profit or loss. the Group does not expect any impact on the financial statements arising from the adoption of this Interpretation. the Group and the Company have applied the transitional provisions in FRS 7 and FRS 139 which exempt entities from disclosing the possible impact arising from initial application of the respective standards on the financial statements of the Group and the Company.
(i)
annual report 2009
173
44.
siGniFicant events DurinG the Financial Year During the financial year, the following significant events took place: (a) Acquisition of subsidiary companies: (i) Padiberas Nasional Berhad (BERNAS) the Company had on 28 August 2009 entered into conditional share sale agreements with the following parties:1. Wang tak Company limited to acquire 148,281,100 ordinary shares of Rm1.00 each (BERNAS Shares) in BERNAS representing 31.52% equity interest in BERNAS for a total cash consideration of Rm308,424,688 on the basis of Rm2.08 per BERNAS Share (Acquisition 1); and Gandingan Bersepadu Sdn Bhd (GBSB) to acquire 104,599,485 BERNAS Shares representing 22.24% equity interest in BERNAS for a total cash consideration of Rm217,566,928.80 on the basis of Rm2.08 per BERNAS Share (Acquisition 2) pursuant to a dividend-in-specie exercise of BERNAS Shares by a subsidiary of GBSB, namely Budaya Generasi (m) Sdn Bhd (BGSB) which was a substantial shareholder of BERNAS.
2.
GBSB and BGSB were parties acting in concert (PAC) with the Company pursuant to the malaysian Code on take-overs and mergers, 1998 (Code) and upon completion of Acquisition 1, the Company and its PAC collectively hold 62.31% equity interest in BERNAS. Accordingly, pursuant to Section 33A of the Securities Commission Act, 1993 and Section 6 of the Code, the Company extended an unconditional mandatory general offer (mGO) for the remaining 322,120,400 BERNAS Shares not owned by the Company when Acquisition 1 became unconditional on 28 October 2009 at Rm2.08 per BERNAS Share. Acquisition 1 and 2 were completed on 2 November 2009 and 20 January 2010 respectively. the mGO was closed on 9 December 2009. As at the closing date, the Company received acceptances to the Offer of 18.81% of the BERNAS Shares and BERNAS became a subsidiary of the Company with a total controlling interest of 50.33%. Details of the net assets acquired and effect on the acquisition is disclosed in Note 7(d)(iii). (ii) Northern Intergrated Agriculture Sdn Bhd (NIA) On 21 August 2009, tradewinds Plantation Berhad (tPB) entered into a conditional Sale and Purchase Agreement with Gerak mashyur (malaysia) Sdn Bhd (GmSB) for the acquisition of 700,000 ordinary shares of Rm1.00 each, representing 70% of the equity interest of NIA for a total cash consideration of Rm50.36 million. NIA is a property development company and was established as a joint venture vehicle between GmSB and Perbadanan Kemajuan Negeri Kedah to undertake the development of the second border town between malaysia and thailand known as Bandar Sempadan Kota Putra. NIA owns 5 parcels of leasehold agriculture land located at Kota Putra, mukim Batang tunggang Kiri, Daerah Padang terap, Negeri Kedah measuring in aggregate approximately 2,612.99 acres (NIA lands) of which 169.44 acres had been surrendered to the Government following completion of their project in November 2008. 1,115.02 acres of the NIA lands had been planted with rubber trees whilst the remaining land has the benefit of an approved master Plan for the development of Bandar Sempadan Kota Putra. the acquisition of NIA was completed on 23 October 2009.
174
44.
siGniFicant events DurinG the Financial Year (contD) (a) Acquisition of subsidiary companies: (contd) (iii) masretus Oil Palm Plantation Sdn Bhd (masretus) On 3 April 2009, Retus Plantation Sdn Bhd entered into an agreement to acquire the entire issued and paid-up capital of masretus Oil Palm Plantation Sdn Bhd comprising 100,000 ordinary shares of Rm1 each for a cash consideration of Rm7,208,000. Prisma Spektra Sdn Bhd (PSSB) On 26 October 2009, tPB acquired the entire shareholding of PSSB for a cash consideration of Rm2.0. PSSB is an investment holding company. On 30 October 2009, PSSB entered into a conditional Share Sale Agreement with Semi Bayu Sdn Bhd for the acquisition of 125,709,000 ordinary shares of Rm1 each, representing the entire issued and paid-up capital of mARDEC Berhad (mardec) for a total purchase consideration of Rm150.0 million (Proposed Acquisition of mardec), which shall be payable in the following manner:(1) a first instalment of Rm45.0 million or 30% of the purchase consideration to be paid on the completion date; and a second instalment of Rm105.0 million or 70% of the purchase consideration to be paid on or before the last day of a period of 9 months from the completion date (or such longer period as the parties may mutually agree in writing).
(iv)
(2)
mardec is an investment holding company and through its local and overseas subsidiary and associated companies, is involved in the processing and trading of natural rubber and the manufacturing of value-added rubber and polymer products. the Proposed Acquisition of mardec is conditional upon the fulfilment and satisfaction of the following conditions precedent:(1) (2) (3) (4) the approval of the Economic Planning Unit of the Prime ministers Department; the approval of the existing financier(s) of mardec, if required; the approval of the shareholders of tPB at a general meeting to be convened; tPB and PSSB being satisfied with the results and findings of the financial and legal due diligence investigations into mardec and its subsidiaries and if applicable, the satisfactory resolution and determination of any issues arising from the due diligence investigations; and other requisite approvals, if any.
(5) (b)
Dissolution of an associated company On 30 September 2009, tmall limited, a 20% owned associate of Quek Shin & Sons Pte ltd, which is an indirect subsidiary of the Company was voluntarily dissolved.
annual report 2009
175
44.
siGniFicant events DurinG the Financial Year (contD) (c) Application for striking-off of subsidiary companies On 30 December 2009, Gugusan Induk Sdn Bhd, Insan Delima Sdn Bhd, JtOP lebir Plantation Sdn Bhd and teon Choon Quarry Sdn Bhd, the dormant indirect subsidiaries of the Company, submitted applications to the Companies Commission of malaysia for striking off. Disposal of associated companies by BERNAS (i) On 20 November 2008, BERNAS entered into a Sale and Purchase Agreement to dispose of its entire shareholding of 2,856,000 ordinary shares of Rm1.00 each in Keongco Holdings Sdn Bhd (KHSB), representing 20% of the issued and paid-up capital of KHSB for a total cash consideration of Rm1,428,000 to the existing shareholders of KHSB. the said disposal was completed during the financial year. (ii) On 20 November 2008, a wholly owned subsidiary of BERNAS, BERNAS Overseas (l) ltd. (BOl) entered into a Sale and Purchase Agreement with Keongco Holdings Sdn Bhd to dispose of its entire shareholding of 12,000 ordinary shares of United States Dollar One (USD1.00) each in Keongco Overseas limited (KOl), representing 20% of the issued and paid-up capital of KOl for a total cash consideration of USD12,000. the said disposal was completed during the financial year. (iii) On 17 September 2009, a wholly owned subsidiary of BERNAS, BERNAS Overseas (l) ltd. (BOl) entered into a Sale and Purchase Agreement with thai Hue (2511) Co. ltd and Huay Chuan Rice Co. ltd in respect of the disposal of BOls entire 49% equity interest held in Asian Peninsula Corporation limited for a cash consideration of Baht 40,000,000 or equivalent to Rm4,240,000. the said disposal was completed on 12 march 2010. (e) Additional interest in associated company On 2 December 2009, BERNAS entered into a conditional Share Sale and Purchase Agreement (SAA) with Johor Port Berhad (JPB) for the acquisition of 12,000,000 ordinary shares of Rm1.00 each which is equivalent to 75% of equity interest in BERNAS logistic Sdn. Bhd. (BlSB) from JPB for a purchase consideration of Rm11,760,000. the SAA is yet to be completed as at todate and upon completion of the SAA, BlSB will be a wholly owned subsidiary of BERNAS. termination of Sub-lease Agreement On 2 December 2009, BERNAS entered into a termination Agreement to terminate the Sub-lease Agreement between Johor Port Berhad (JPB) dated 6 October 2005 (termination Agreement). Subsequent to the completion of the termination Agreement, the vacant possession of the warehouses had been surrendered by BERNAS to JPB, and JPB is to refund Rm20,725,000 as full and final settlement within 6 months from the date of the termination Agreement.
(d)
(f)
176
45.
subsiDiarY anD associateD coMPanies (a) the subsidiary companies and shareholdings therein are as follows:
name of company
country of incorporation
effective interest (%) 2009 2008
Direct holding: Central Sugars Refinery Sdn Bhd * Gula Padang terap Sdn Bhd Delta Delights Sdn Bhd malaysia malaysia malaysia 100 100 100 100 100 100 Sugar refining Sugar refining Investment holding and management Dormant Cultivation of oil palm and production of crude palm oil Ceased operations Dormant Investment holding and provision of management services Procure, collect, process, import, export, purchase rice, paddy and other grains, activities in relation to the distribution of rice and investment holding
Permai Palm Fibre Sdn Bhd Retus Plantation Sdn Bhd
malaysia malaysia
100 60
100 60
Sovereign Place Sdn Bhd tradewinds Oil Palm Berhad + * tradewinds Plantation Berhad
malaysia malaysia malaysia
100 100 70
100 100 70
+ * #
Padiberas Nasional Berhad
malaysia
50
annual report 2009
177
45.
subsiDiarY anD associateD coMPanies (contD) (a) the subsidiary companies and shareholdings therein are as follows: (contd)
name of company
indirect holding: subsidiary companies of Delta Delights sdn bhd: Delta Delights (Cambodia) Co ltd tradewinds Cambodia Co ltd tradewinds Realty Co ltd * Croesus limited Cambodia 100 100 Dormant
Cambodia Cambodia Hong Kong
100 100 100
100 100 100
Dormant Property development Investment holding
subsidiary company of croesus limited: @ * HBt Realty Company limited subsidiary company of retus Plantation sdn bhd: masretus Oil Palm Plantation Sdn Bhd malaysia 60 Dormant Vietnam 70 70 Dormant
subsidiary companies of tradewinds Plantation berhad: Amalan Penaga (m) Sdn Bhd Bahtera Bahagia Sdn Bhd * Barisan tekad Sdn Bhd Binu Plantations Sdn Bhd malaysia malaysia malaysia malaysia 70 49 49 70 70 49 49 70 Investment holding Cultivation of oil palm Cultivation of oil palm Cultivation of oil palm and production of crude palm oil Cultivation of oil palm Investment holding
* *
Ibok Plantation Sdn Bhd Johore tenggara Oil Palm Berhad
malaysia malaysia
70 70
70 70
178
45.
name of company
effective interest (%) 2009 2008 49 49
Kumpulan Kris Jati Sdn Bhd
malaysia
Cultivation of oil palm and production of crude palm oil Cultivation of oil palm Cultivation of oil palm Cultivation of oil palm and production of crude palm oil Cultivation of oil palm and production of crude palm oil Property development
* *
ladang Chendana Sdn Bhd ladang mawar Sdn Bhd ladang Permai Sdn Bhd
70 70 70
70 70 70
ladang Serasa Sdn Berhad
malaysia
70
70
Northern Intergrated Agriculture Sdn Bhd Prisma Spektra Sdn Bhd Quek Shin & Sons Pte. ltd. Syarikat ladang Sawit Cherul Sdn Bhd teon Choon Realty Company Sdn Berhad tradewinds Agro Services Sdn Bhd tradewinds Plantation Services Sdn Bhd tradewinds Plantation management Sdn Bhd tradewinds Plantation Capital Sdn Bhd
malaysia
49
* * *
malaysia Singapore malaysia
70 70 70
70 70
Investment holding Cultivation of oil palm Cultivation of oil palm
malaysia
70
70
Cultivation of oil palm
malaysia
70
70
Plantation management and advisory services Plantation management and advisory services Plantation management and advisory services Sole and specific purpose of undertaking Islamic Securities transaction
malaysia
70
70
malaysia
70
70
malaysia
70
70
annual report 2009
179
45.
name of company
tradewinds Plantech Sdn Bhd
malaysia
technical support and advisory services Cultivation of oil palm and rubber
tradewinds Corridor Sdn Bhd
malaysia
70
70
subsidiary companies of amalan Penaga (M) sdn bhd: Amalan Pelita Pasai Sdn Bhd Arah Bersama Sdn Bhd melur Gemilang Sdn Bhd malaysia malaysia malaysia 42 49 49 42 49 49 Cultivation of oil palm Cultivation of oil palm Cultivation of oil palm and production of crude palm oil Dormant Cultivation of oil palm
Senandung masyhur Sdn Bhd tradewinds tanjung Alan Plantation Sdn Bhd trans Kenyalang Sdn Bhd Usaha Wawasan Sdn Bhd subsidiary companies of Johore tenggara oil Palm berhad: * * * * * * Agromaju landscape Sdn Bhd Agromaju Sendirian Berhad Barisan Perangsang Sdn Bhd Gugusan Induk Sdn Bhd Insan Delima Sdn Bhd JtOP lebir Plantation Sdn Bhd
malaysia malaysia
59 49
59 49
malaysia malaysia
59 49
59 49
Cultivation of oil palm Cultivation of oil palm
malaysia malaysia malaysia malaysia malaysia malaysia
70 70 36 70 70 70
70 70 36 70 70 70
Ceased operations Cultivation of oil palm Ceased operations Investment holding Ceased operations Dormant
180
45.
name of company
ladang Petri tenggara Sdn Bhd
malaysia
Cultivation of oil palm and production of crude palm oil Investment holding Cultivation of oil palm Cultivation of oil palm and animal husbandry Cultivation of oil palm and agriculture contractors Cultivation of oil palm Cultivation of oil palm
* * *
m.P. Plantation Sdn Bhd Permodalan Pelangi Sdn Bhd Pertanian Johor tenggara Sdn Bhd Semai Segar Sdn Bhd
70 70 70
70 70 70
malaysia
70
70
* *
tanah Semai Sdn Bhd Uni-Agro Plantations (trengganu) Sdn Bhd
malaysia malaysia
70 70
70 70
subsidiary company of M.P. Plantation sdn bhd: * ladang Sungai Relai Sdn Bhd malaysia 49 49 Cultivation of oil palm
subsidiary company of teon choon realty company sdn berhad: * teon Choon Quarry Sdn Bhd subsidiary companies of northern intergrated agriculture sdn bhd: * * NIA Development Sdn Bhd NIA Infrastructure Sdn Bhd malaysia malaysia 34 34 Dormant Dormant malaysia 70 70 Ceased operations
annual report 2009
181
45.
name of company
subsidiary companies of Padiberas nasional berhad: * * BERNAS Production Sdn Bhd Era Bayam Kota Sdn Bhd malaysia malaysia 50 30 Rice processing trader, distributor and supplier of rice trader, distributor and supplier of rice Dormant
Syarikat Faiza Sdn Bhd
malaysia
26
Consolidated BERNAS United Distributors Sdn Bhd Jasmine Food Corporation Sdn Bhd YHl Holding Sdn Bhd BERNAS Seed Pro Sdn. Bhd. BERNAS Agrotech Sdn Bhd Beras Corporation Sdn Bhd
malaysia
50
malaysia
31
trader, distributor and supplier of rice Investment holding Paddy seed production Investment holding Processing and trading of rice Investment holding trader, distributor and supplier of rice Offshore investment holding company Dormant
* * * *
malaysia malaysia malaysia malaysia
26 50 50 50
* *
BERNAS Dominals Sdn Bhd Edaran BERNAS Nasional Sdn Bhd BERNAS Overseas (l) limited
malaysia malaysia
50 40
malaysia
50
BERNAS Engineering & technology Sdn Bhd P.B Construction & Supplies Sdn Bhd BERNAS Realty & Development Sdn Bhd
malaysia
50
malaysia
50
Dormant
malaysia
50
Dormant
182
45.
name of company
effective interest (%) 2009 2008 50 50 50 50 50 50 50 50 50
* * * * * * * * *
BERNAS Utama Sdn Bhd BERNAS Perdana Sdn Bhd Belikmat Corporation Sdn Bhd BERNAS (Sabah) Sdn Bhd BERNAS (Sarawak) Sdn Bhd BERNAS Fisheries Sdn Bhd BERNAS-KmE Sdn Bhd BERNAS Agrogreen Sdn Bhd BERNAS Project & Development Sdn Bhd BERNAS International trading ltd.
malaysia malaysia malaysia malaysia malaysia malaysia malaysia malaysia malaysia
Dormant Dormant Dormant Dormant Dormant Dormant Dormant Dormant Dormant
thailand
48
Processing and trading of rice and other related food product
subsidiary company of consolidated bernas united Distributors sdn bhd: * machind Realty Sdn Bhd malaysia 50 Dormant
subsidiary companies of Jasmine Food corporation sdn bhd: * Jasmine Food (Ipoh) Sdn Bhd malaysia 26 trader, distributor and supplier of rice trader, distributor and supplier of rice trader, distributor and supplier of rice letting properties
Jasmine Food (Johor Bahru) Sdn Bhd Jasmine Food (Alor Setar) Sdn Bhd Jasmine Khidmat & Harta Sdn Bhd
malaysia
26
malaysia
26
malaysia
26
annual report 2009
183
45.
name of company
effective interest (%) 2009 2008 13
JS Jasmine Sdn Bhd
malaysia
trader, distributor and supplier of rice trader, distributor and supplier of rice trader, distributor and supplier of rice Rice miller and rice trader
Jasmine Food (Seremban) Sdn Bhd Jasmine Food (Prai) Sdn Bhd
malaysia
26
malaysia
26
Jasmine Rice mill (tunjang) Sdn Bhd Jasmine Food (Kuantan) Sdn Bhd
malaysia
26
malaysia
26
trader, distributor and supplier of rice
subsidiary companies of Yhl holding sdn bhd: * YHl trading (Kl) Sdn Bhd malaysia 26 trader, distributor and supplier of rice trader, distributor and supplier of rice trader, distributor and supplier of rice trader, distributor and supplier of rice trader, distributor and supplier of rice trader, distributor and supplier of rice Dormant
YHl trading (Johor) Sdn Bhd
malaysia
26
YHl trading (Segamat) Sdn Bhd YHl trading (Kedah) Sdn Bhd YHl trading (melaka) Sdn Bhd YHl trading (terengganu) Sdn Bhd YHl trading (Kuantan) Sdn Bhd
malaysia
26
malaysia
26
malaysia
26
malaysia
26
malaysia
26
subsidiary company of Jasmine rice Mill (tunjang) sdn bhd: * Jasmine Rice Products Sdn Bhd malaysia 31 manufacturing and sale of vermicelli
184
45.
name of company
subsidiary company of bernas agrotech sdn bhd: * Padi Gedong Sdn Bhd subsidiary companies of beras corporation sdn bhd: * Sazarice Sdn Bhd malaysia 48 trader, distributor and supplier of rice Investment holding trader, distributor and supplier of rice malaysia 31 Dormant
* *
Dayabest Sdn Bhd Sabarice Sdn Bhd
malaysia malaysia
50 28
subsidiary companies of Dayabest sdn bhd: * Haskarice Food Sdn Bhd malaysia 26 trader, distributor and supplier of rice trader, distributor and supplier of rice trader, distributor and supplier of rice trader, distributor and supplier of rice
Hock Chiong Foodstuff Sdn Bhd Ban Say tong Sdn Bhd
malaysia
26
malaysia
26
tong Seng Huat Rice trading Sdn Bhd
malaysia
26
subsidiary company of bernas Dominals sdn bhd: * BERNAS Chaff Products Sdn Bhd malaysia 26 Dormant
annual report 2009
185
45.
subsiDiarY anD associateD coMPanies (contD) (a) the subsidiary companies and shareholdings therein are as follows: (contd) * + @ Companies not audited by Anuarul Azizan Chew & Co. Companies listed on Bursa malaysia Securities Berhad. the audited financial statements for the financial year ended 31 December 2009 of this subsidiary company are not available at the date the financial statements of the Group are authorised for issue. However, the Directors are of the opinion that the financial results of this subsidiary company are not material to the Group as the said subsidiary company is dormant and is currently in the process of being wound up by the Group. the Government of malaysia (Special Shareholder) holds one (1) unit of Special Rights Redeemable Preference Share (Special Share) at Rm1 each in this subsidiary company. the main features of the Special Shares are as follows: (i) the Special Share may only be held by or transferred to the minister of Finance Incorporated or its successor or any minister, representative or any person acting on behalf of the Special Shareholder. the Special Shareholder has the right to receive notice of, and attend and speak at, all general meetings or any other meeting of any class of shareholders of the subsidiary company, but the Special Share shall carry no right to vote nor other rights at any such meeting. the Special Shareholder has the right to require the subsidiary company to redeem the Special Share at par any time by serving written notice upon the subsidiary company and delivering the relevant share certificate. Certain matters which vary the rights attached to the Special Share can only be effective with the consent in writing of the Special Shareholder, in particular matters relating to the amendment or removal or alteration of the effect of the Special Share, the creation and issue of additional shares which carry different voting rights, the dissolution of the subsidiary company, substantial disposal of assets, amalgamation, merger and take over. the Special Shareholder has the right to review all policies, programmes, projects and commercial activities undertaken or proposed to be undertaken by the subsidiary company, the right to veto any resolution proposed to be passed by the board of directors or the shareholders of the subsidiary company if the Government considers that it is necessary to do so in the national interest and security of malaysia. the Special Shareholder has the right to veto any resolution proposed to be passed by the board of directors or the shareholders of the subsidiary company purporting to amend the provisions of the memorandum and Articles of Association of the subsidiary company which affects the rights or any matter relating to the Special Share or the rights attaching to the Special Share.
(ii)
(iii)
(iv)
(v)
(vi)
186
45.
subsiDiarY anD associateD coMPanies (contD) (b) the associated companies and shareholdings therein are as follows: country of incorporation effective interest (%) 2009 2008
name of company
associated company of Johore tenggara oil Palm berhad: Hak JtOP Sdn Bhd malaysia 28 28 Ceased operations
associated company of quek shin & sons Pte. ltd.: @ tmall limited Singapore 14 Wound up
associated companies of Padiberas nasional berhad: Gardenia Bakeries (Kl) Sdn Bhd malaysia 15 Bread manufacturing and bakery Dormant Dormant Dormant
Kilang Beras Fajar Sdn Bhd Formula timur Sdn Bhd Ban Heng Bee Holdings Sdn Bhd * Serba Wangi Sdn Bhd
25 20 10
malaysia
26
trader, distributor and supplier of rice Investment holding Provision of logistics services manufacturing and trading of wheat flour
OEl Realty Holdings Sdn Bhd BERNAS logistics Sdn Bhd
malaysia malaysia
15 13
United malayan Flour (1996) Sdn Bhd
malaysia
23
annual report 2009
187
45.
subsiDiarY anD associateD coMPanies (contD) (b) the subsidiary companies and shareholdings therein are as follows: (contd)
name of company
associated company of bernas Dominals sdn bhd: BERNAS Feedstuff Sdn Bhd malaysia 25 trading in all kinds of rice brand and broken rice
associated company of beras corporation sdn bhd: liansin trading Sdn Bhd malaysia 15 Wholesale and trading of rice and rice related products
subsidiary companies of Kilang beras Fajar sdn bhd: Fajar Jerlun Sdn Bhd Fajar Jerlun (Negeri Sembilan) Sdn Bhd * Serba Wangi (Kl) Sdn Bhd malaysia malaysia 25 25 Dormant Dormant
malaysia
26
trader, distributor and supplier of rice trader, distributor and supplier of rice
Serba Wangi JH Sdn Bhd
malaysia
14
subsidiary companies of serba Wangi sdn bhd: Serba Wangi (PG) Sdn Bhd malaysia 24 trader, distributor and supplier of rice trader, distributor and supplier of rice
Serba Wangi (Perak) Sdn Bhd
malaysia
26
188
45.
name of company
effective interest (%) 2009 2008 21
Eng Chuan Chan Sdn Bhd
malaysia
trader, distributor and supplier of rice trader, distributor and supplier of rice Provision of transport services
Serba Wangi ml Sdn Bhd
malaysia
14
SW transport Sdn Bhd
malaysia
26
subsidiary companies of oel realty holdings sdn bhd: OEl Distribution (Kedah) Sdn Bhd OEl Distribution (Perak) Sdn Bhd OEl Origin (Kedah) Sdn Bhd OEl Distribution (Penang) Sdn Bhd OEl Distribution (Johor) Sdn Bhd OEl Distribution (Selangor) Sdn Bhd OEl Distribution (Kl) Sdn Bhd OEl Food manufacturing Sdn Bhd malaysia 15 trader, distributor and supplier of rice trader, distributor and supplier of rice trader, distributor and supplier of rice trader, distributor and supplier of rice trader, distributor and supplier of rice trader, distributor and supplier of rice trader, distributor and supplier of rice manufacturing of health drinks
malaysia
15
malaysia
15
malaysia
15
malaysia
15
malaysia
malaysia
malaysia
15
annual report 2009
189
45.
name of company
subsidiary companies of liansin trading sdn bhd: liantye trading Sdn Bhd malaysia 15 General trading and rice wholesaler Dormant
liansin trading (miri) Sdn Bhd
malaysia
15
subsidiary companies of Gardenia bakeries (Kl) sdn bhd: Gardenia Sales & distribution Sdn Bhd Everyday Bakery & Confectionery Sdn Bhd malaysia 15 Sales and distribution of bread Bread manufacturing and bakery
malaysia
15
associated companies of bernas overseas (l) limited: # Asian Peninsula Corporation ltd. Irfan Noman BERNAS (Pvt) limited @ ^ thailand Pakistan 25 10 Rice trading Rice trading
the associated company was dissolved under a members voluntary liquidation during the financial year. the financial results of Hak JtOP Sdn Bhd have not been equity accounted for as no financial statements are available. the associated company is currently inactive and the Directors are of the opinion that the effect of the non-equity accounting on the financial results of Hak JtOP Sdn Bhd is not material to the financial statements of the Group. the Group regards these companies as associated companies by virtue of its partly indirect shareholding through another associated company, Ban Heng Bee Holding Sdn Bhd. the investment cost has been reclassified as assets held for sale during the financial year.
190
46.
coMParative FiGures
Certain comparative figures have been restated to conform with current years presentation as follows: as previously reported rM000 cash flow statements Group Cash flow from operating activities: - (Increase)/decrease in working capital Payables - Exchange difference - Interest paid as restated rM000
reclassification rM000
38,536 (1,360) (57,802)
6,994 1,360 57,802
45,530
Cash flow from investing activities: - Deposit received for disposal of non-current assets held for sale
110
110
Cash flow from financing activities: - Amount owing to associated company - Dividend paid to minority shareholders of subsidiary companies - Interest paid
(298)
(1,360) (7,104) (57,802)
(1,658) (7,104) 57,802
Company Cash flow from operating activities: - Interest paid
(8,249)
8,249
Cash flow from operating activities: - Interest paid
(8,249)
(8,249)
47.
Date oF authorisation For issue the financial statements of the Group and of the Company for the financial year ended 31 December 2009 were authorised for issue in accordance with a resolution of the Board of Directors on 28 April 2010.
annual report 2009
191
PROPERTIES OF THE GROUP

Top - 10 Based on the Highest Net Book Value
Address KELANTAN LADANG SERASA SDN BHD
Description
Land Area (Hectare)
Existing Use
Tenure (years)
Date of Acquisition/ Revaluation, if any
Net Book Value as at 31 December 2009 (RM000)
Ladang Serasa and Ladang Sg. Bayu Lot No. PT 862 Mukim of Relai District of Chiku Kelantan Lot No. PT 629 Mukim of Kuala Sungai District of Bertam Kelantan Oil palm plantation 815 Plantation Oil palm plantation 4.317 Plantation Leasehold for 99 years expires on 7 August 2098 Leasehold for 99 years expires on 7 August 2098 1996
85,695
1996
LADANG SUNGAI RELAI SDN BHD Ladang Relai GM 53/99 PT 3294 Mukim Relai Daerah Gua Musang Kelantan GM 53/99 PT 3295 Mukim Relai Daerah Gua Musang Kelantan GM 53/99 PT 3296 Mukim Relai Daerah Gua Musang Kelantan GM 53/99 PT 3297 Mukim Relai Daerah Gua Musang Kelantan GM 53/99 PT 3298 Mukim Relai Daerah Gua Musang Kelantan Oil palm plantation 6.02 Plantation Leasehold for 66 years expires on 29 November 2064 Oil palm plantation 12.41 Plantation Leasehold for 66 years expires on 29 November 2064 Oil palm plantation 7.57 Plantation Leasehold for 66 years expires on 29 November 2064 Leasehold for 66 years expires on 29 November 2064 Leasehold for 66 years expires on 29 November 2064 2006 2006 2006 98,532
Oil palm plantation
170.12
Plantation
2006
Oil palm plantation
288.4
Plantation
2006
192
Address
Description
Land Area (Hectare)
Existing Use
Tenure (years)
GM 53/99 PT 3299 Mukim Relai Daerah Gua Musang Kelantan PT 3252 HS(D) 432 Mukim Relai Daerah Gua Musang Kelantan PT 3254 HS(D) 432 Mukim Relai Daerah Gua Musang Kelantan PT 3255 HS(D) 432 Mukim Relai Daerah Gua Musang Kelantan PT 6632 HS(D) 432 Mukim Relai Daerah Gua Musang Kelantan JOHORE
Oil palm plantation
4,681.1
Plantation
Leasehold for 66 years expires on 29 November 2064 Leasehold for 66 years expires on 29 November 2064
2006
Oil palm plantation
1,067
Plantation
2006
Oil palm plantation
2,023
Plantation
Leasehold for 66 years expires on 29 November 2064
2006
Oil palm plantation
224.3
Plantation
2006
Oil palm plantation
77.96
Plantation
2006
LADANG PETRI TENGGARA SDN BHD Ladang Ulu Sebol PTD 4428 HS(D) 17845 Mukim Hulu Sg Johor Daerah Kota Tinggi Johor PTD 4444 HS(D) 17846 Mukim Hulu Sg Johor Daerah Kota Tinggi Johor Oil palm plantation 3,500.53 Plantation Leasehold for 84 years expires on 26 August 2076 Leasehold for 84 years expires on 26 August 2076 2006 95,716
Oil palm plantation
3,500.53
Plantation
2006
annual report 2009
193

Address SARAWAK BAHTERA BAHAGIA SDN BHD
Description
Land Area (Hectare)
Existing Use
Tenure (years)
Ladang Sungai Klad and Sungai Sibuti Lot 1 Block 11 Bukit Kisi Land District Miri Sarawak Oil palm plantation 3,097 Plantation Leasehold for 60 years expires on 9 June 2047 Leasehold for 60 years expires on 25 April 2055 1996
73,314
Lot 2 Block 11 Bukit Kisi Land District Miri Sarawak
Oil palm plantation
1,172
Plantation
1996
KUMPULAN KRIS JATI SDN BHD Ladang Simunjan and Ladang Ladong Lot 737 Sebangan Kepayang Land District Samarahan Sarawak Lot 738 and 739 Sebangan - Kepayang Land District Samarahan, Sarawak Lot 1223 Sedilu - Gedung Land District Samarahan, Sarawak Oil palm plantation 187 Plantation Leasehold for 60 years expires on 3 February 2060 Oil palm plantation 2,744 Plantation Leasehold for 60 years expires on 23 July 2060 Leasehold for 60 years expires on 23 July 2060 2000 2000 110,557
Oil palm plantation
2,187
Plantation
2000
Ladang Trusan and Ladang Intan Lot 490 and 492 Trusan Land District Limbang Division Sarawak Lot 493 Trusan Land District Limbang Division Sarawak Oil palm plantation 6,140 Plantation Leasehold for 60 years expires on 7 August 2056 Leasehold for 60 years expires on 30 March 2057 1996
73,593
Oil palm plantation
446
Plantation
1997
194
Address MELUR GEMILANG SDN BHD
Description
Land Area (Hectare)
Existing Use
Tenure (years)
Ladang Gemilang, Ladang Melur and Ladang Sg. Krang Lot 1224, Sedilu Gedong Land District and Lot 2978 Melikin Land District Samarahan, Sarawak Lot 2982 & 2983, Melikin Land District Lot 1225, Sedilu Gedong Land District and Lot 33 & 34 Punda-Sabal Land District Samarahan, Sarawak RETUS PLANTATION SDN BHD Ladang Retus and Ladang Rantau Lot No. 3544 Block O Pasai-Siong Land District Sibu, Sarawak Lot No. 3544 Block O Pasai- Siong Land District Sibu, Sarawak Oil palm plantation 4,020 Plantation Leasehold for 60 years expires on 24 February 2059 Palm oil mill Mill Leasehold for 60 years expires on 24 February 2059 1999 1999 Oil palm plantation 7,320 Plantation Oil palm plantation 8,273 Plantation Leasehold for 60 years expires on 16 February 2060 2000
212,699
Leasehold for 60 years expires on 22 April 2062
2000
164,667
AMALAN PELITA PASAI SDN BHD Ladang Pelitanah Lot 16, Block O Oya-Dalat Land District Sibu, Sarawak Oil palm plantation 13,980 Plantation Leasehold for 60 years expires on 5 February 2061 2001 83,102
annual report 2009
195

Address
Description
Land Area (Hectare)
Existing Use
Tenure (years)
TRADEWINDS cORRIDOR SDN BHD Ladang Sg. Tekai, Ladang Sg. Seraya, Ladang Tanah Merah and Ladang Batu Hitam HS(D) 1/87 and 2/87 PT No. 245 and 246 Mukim Padang Terap Kiri District of Padang Terap, Kedah HS(D) 5/92 to 9/92 PT No. 334 to 338 Mukim Padang Terap Kiri District of Padang Terap, Kedah HS(D) 235 to 237 PT No. 692 to 694 Mukim Padang Terap Kiri District of Padang Terap, Kedah HS(D) 253, PT No. 1286 Mukim Padang Terap Kiri District of Padang Terap, Kedah HS(D) 249 to 250 PT No. 776 to 777 Mukim Padang Terap Kanan District of Padang Terap, Kedah HS(D) 1/92 to 2/92 PT No. 229 to 230 Mukim Padang Terap Kanan District of Padang Terap, Kedah HS(D) 10/92 to 14/92 PT No. 351 to 355 Mukim Batang Tunggang Kiri District of Padang Terap, Kedah Oil palm and rubber plantation 1,328.87 Plantation Leasehold for 60 years expires on 26 November 2055 2008 287,564
Oil palm and rubber plantation
354.89
Plantation
2008
661.44
Plantation
2008
140.11
Plantation
Leasehold for 60 years expires on 26 November 2063 Leasehold for 60 years expires on 26 November 2063
2008
35.79
Plantation
2008
817.68
Plantation
2008
1,402.88
Plantation
2008
196
Address HS(D) 4 to 7 PT No. 379 to 382 Mukim Batang Tunggang Kiri District of Padang Terap, Kedah HS(D) 238 to 244 PT No. 695 to 701 Mukim Batang Tunggang Kiri District of Padang Terap, Kedah HS(D) 253 to 260 PT No. 421 to 428 Mukim Batang Tunggang Kiri District of Padang Terap, Kedah HS(D) 252, PT No. 879 Mukim Batang Tunggang Kiri District of Padang Terap, Kedah HS(D) 2 and 3 PT No. 136 and 152 Mukim Batang Tunggang Kanan District of Padang Terap, Kedah HS(D) 15/92, PT No. 1468 Mukim Pedu District of Padang Terap, Kedah HS(D) 16/92 to 18/92 PT No. 1476 to 1478 Mukim Pedu District of Padang Terap, Kedah
Description Oil palm and rubber plantation
Land Area (Hectare) 792.65
Existing Use Plantation
Tenure (years) Leasehold for 60 years expires on 26 November 2055
Date of Acquisition/ Revaluation, if any 2008
116.06
Plantation
2008
19.74
Plantation
2008
79.17
Plantation
2008
1,327.48
Plantation
2008
197.26
Plantation
2008
1,633.54
Plantation
2008
annual report 2009
197

Address HS(D) 1, PT No. 1569 Mukim Pedu District of Padang Terap, Kedah
Description Oil palm and rubber plantation
Land Area (Hectare) 187.84
Existing Use Plantation
Tenure (years) Leasehold for 60 years expires on 26 November 2055
Date of Acquisition/ Revaluation, if any 2008
HS(D) 19/92, PT No. 4479 Mukim Tekai District of Padang Terap, Kedah HS(D) 1/89, PT No. 4278 Mukim Tekai District of Padang Terap, Kedah HS(D) 158/89, PT No. 4279 Mukim Tekai District of Padang Terap, Kedah HS(D) 408/89, PT No. 2333 Mukim Bukit Lada District of Padang Terap, Kedah HS(D) 389, PT No. 805 Mukim Kuala Nerang District of Padang Terap, Kedah
1,447.69
Plantation
2008
48.78
Plantation
2008
3.14
Plantation
2008
249.39
Plantation
2008
7.99
Plantation
2008
HS(D) 2158, PT No. 363 Mukim Bandar Pokok Sena District of Padang Terap, Kedah HS(D) 251, PT No. 1705 Mukim Tolak District of Padang Terap, Kedah
634.81
Plantation
2008
8.38
Plantation
2008
198
SHAREHOLDING STATISTICS
as at 30 April 2010
Authorised Capital Issued and Paid-up Capital Class of Shares Voting Rights No. of Shareholders
: : : : :
RM500,000,000 RM296,470,484 Ordinary Shares of RM1.00 each One vote for each ordinary share 6,632
ANALYSIS BY SIZE OF SHAREHOLDING NO. OF SHAREHOLDERS 368 2,528 3,126 532 75 3 6,632 % OF SHAREHOLDERS 5.55 38.12 47.13 8.02 1.13 0.05 100.00 NO. OF SHARES 10,944 1,568,885 11,134,056 15,122,980 94,020,859 174,612,760 296,470,484 % OF SHAREHOLDINGS 0.00 0.53 3.76 5.10 31.71 58.90 100.00
SIZE OF HOLDINGS Less than 100 100 1,001 10,001 1,000 10,000 100,000
100,001 to less than 5% of issued shares 5% and above of issued shares TOTAL
BREAKDOWN OF SHAREHOLDINGS NO. OF SHAREHOLDERS 6 % OF SHAREHOLDERS 0.09 NO. OF SHARES 187,795 % OF SHAREHOLDINGS 0.06
SIZE OF HOLDINGS 1. Government Agencies/Institutions 2. Bumiputra a) Individual b) Companies c) Nominees Company 3. Non-Bumiputra a) Individual b) Companies c) Nominees Company MALAYSIAN TOTAL 4. Foreign a) Individual b) Companies c) Nominees Company FOREIGN TOTAL GRAND TOTAL
282 34 282
4.25 0.51 4.25
1,603,932 203,846,125 22,441,490
0.54 68.76 7.57
5,397 175 265 6,441
81.38 2.64 4.00 97.12
27,295,188 13,374,867 3,437,171 272,186,568
9.21 4.51 1.16 91.81
85 13 93 191 6,632
1.28 0.20 1.40 2.88 100.00
804,606 6,437,400 17,041,910 24,283,916 296,470,484
0.27 2.17 5.75 8.19 100.00
annual report 2009
199
ADDITIONAL INFORMATION ON SHAREHOLDERS

as at 30 April 2010
SUBSTANTIAL SHAREHOLDERS DIREcT NO. 1. 2. 3. 4. 5. SHAREHOLDERS Perspective Lane (M) Sdn Bhd Felda Global Ventures Holdings Sdn Bhd Kelana Ventures Sdn Bhd Restu Jernih Sdn Bhd Tan Sri Dato Seri Syed Mokhtar Shah bin Syed Nor
(2)
INDIREcT % 30.04 20.00 8.86

(1)
NO. OF SHARES 89,048,663 59,294,097 26,270,000
NO. OF SHARES 89,048,663
% 30.04 42.97
127,388,663
(1)
(2)
Deemed interested by virtue of its interest in Perspective Lane (M) Sdn Bhd pursuant to Section 6A of the Companies Act, 1965 Deemed interested by virtue of his interest in Kelana Ventures Sdn Bhd, Seaport Terminal (Johore) Sdn Bhd and Restu Jernih Sdn Bhd pursuant to Section 6A of the Companies Act, 1965. Seaport Terminal (Johore) Sdn Bhd holds 12,070,000 (4.07%) shares in Tradewinds (M) Berhad.
TOP THIRTY SHAREHOLDERS NO. 1 2 3 4 5 6 7 8 9 10 11 12 SHAREHOLDERS PERSPECTIVE LANE (M) SDN BHD FELDA GLOBAL VENTURES HOLDINGS SDN BHD KELANA VENTURES SDN BHD SEAPORT TERMINAL (JOHORE) SDN BHD MAYBAN NOMINEES (TEMPATAN) SDN BHD
MAYBAN TRUSTEES BERHAD FOR PUBLIC ITTIKAL FUND (N14011970240)
SHAREHOLDINGS 89,048,663 59,294,097 26,270,000 12,070,000 9,457,800 9,126,200 6,390,000 6,175,800 4,017,240 3,310,402 3,297,500 2,898,200
% 30.04 20.00 8.86 4.07 3.19 3.08 2.16 2.08 1.36 1.12 1.11 0.98
MAYBAN NOMINEES (TEMPATAN) SDN BHD

MAYBAN TRUSTEES BERHAD FOR PUBLIC REGULAR SAVINGS FUND (N14011940100)
ACARA KREATIF SDN BHD DALEX INVESTMENTS LIMITED JOHAN ENTERPRISE SDN BHD GRENFELL HOLDINGS SDN BHD CARTABAN NOMINEES (ASING) SDN BHD
SSBT FUND C7KQ MFS EMERGING MARKETS PORTFOLIO (MET INVEST)
AMANAHRAYA TRUSTEES BERHAD

PUBLIC ISLAMIC DIVIDEND FUND
200
TOP THIRTY SHAREHOLDERS NO. 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 SHAREHOLDERS YEOH KEAN HUA CARTABAN NOMINEES (ASING) SDN BHD
SSBT FUND 528O MFS EMERGING MARKETS EQUITY FUND
SHAREHOLDINGS 2,735,190 2,318,000 2,182,900 2,182,600 2,080,200 2,009,700 2,000,000 1,915,360 1,555,900 1,493,750 1,228,000 1,199,900 1,157,186 908,100 879,400 679,000 540,000 437,600
% 0.92 0.78 0.74 0.74 0.70 0.68 0.67 0.65 0.52 0.50 0.41 0.40 0.39 0.31 0.30 0.23 0.18 0.15

PUBLIC ISLAMIC SECTOR SELECT FUND
VALUECAP SDN BHD HDM NOMINEES (ASING) SDN BHD

UOB KAY HIAN PTE LTD FOR ZENITH SECURITIES PTE LTD
HDM NOMINEES (ASING) SDN BHD

EXEMPT AN FOR UOB KAY HIAN (HONG KONG) LIMITED (CLIENTS)
GOH PHAIK LYNN HSBC NOMINEES (ASING) SDN BHD

EXEMPT AN FOR HSBC PRIVATE BANK (SUISSE) S.A. (SPORE TST ACCL)

PUBLIC ISLAMIC SELECT TREASURES FUND
TALOH SDN BHD MAYBAN NOMINEES (TEMPATAN) SDN BHD

MAYBAN TRUSTEES BERHAD FOR PB ASEAN DIVIDEND FUND (270334)

PUBLIC SECTOR SELECT FUND
AFFIN NOMINEES (TEMPATAN) SDN BHD

PLEDGED SECURITIES ACCOUNT FOR MOGEMS SDN BHD
LEONG LAI SHEN CITIGROUP NOMINEES (ASING) SDN BHD

CBNY FOR DIMENSIONAL EMERGINGS MARKETS VALUE FUND
HEXARICH SDN BHD PM NOMINEES (TEMPATAN) SDN BHD

PCB ASSET MANAGEMENT SDN BHD FOR MUI CONTINENTAL INSURANCE BERHAD
CARTABAN NOMINEES (ASING) SDN BHD

SSBT FUND 52F4 FOR MFS EMERGING MARKETS EQUITY PORTFOLIO (VAR INS TST II)
TOTAL
258,858,688
87.31
annual report 2009
201
ADDITIONAL INFORMATION ON SHAREHOLDERS

as at 30 April 2010
INFORMATION ON DIREcTORS SHAREHOLDING AS AT 30 APRIL 2010 NO. DIREcTORS DIREcT NO. OF SHARES 1 DATO WIRA SYED ABDUL JABBAR BIN SYED HASSAN 2 SYED AZMIN BIN SYED NOR TOTAL 20,000 0.01 127,388,663 127,388,663
(1)
INDIREcT % 0.01 NO. OF SHARES %
20,000
42.97 42.97
(1)
Deemed Interested pursuant to section 6A of the Act by virtue of his family relationship with a major shareholder of the Company.
202
DIRECTORY OF GROUPS OPERATIONS
central Sugars Refinery Sdn Bhd P. O Box 7213 Batu Tiga, Shah Alam Selangor Darul Ehsan Tel : 603 - 5519 1414 Fax : 603 - 5519 8792 Gula Padang Terap Sdn Bhd 45KM, Jalan Padang Senai 06300 Kuala Nerang Kedah Darul Aman Tel : 604 - 790 4235 Fax : 604 - 786 4242 Tradewinds cambodia co Ltd Tradewinds Reality co Ltd. Delta Delights (cambodia) co Ltd. c/o Level 12, Menara HLA No. 3, Jalan Kia Peng 50450 Kuala Lumpur Tel : 603 - 2179 7777 Fax : 603 - 2179 7730 croesus Limited 31/ F, Gloucester Tower The Landmark 11, Pedder Street Central Hong Kong SAR Tel : 852 - 2810 6818 Fax : 852 - 2526 7572 HBT Realty co. Ltd 55, Le Dai Hanh Street Hanoi, Vietnam Tel : 844 - 976 1219 Fax : 844 - 976 1219 Tradewinds Plantation Berhad Level 9, Menara HLA No. 3, Jalan Kia Peng 50450 Kuala Lumpur Tel : 603 - 2179 9999 Fax : 603 - 2161 1701 Tradewinds Plantation Management Sdn Bhd Level 9, Menara HLA No. 3, Jalan Kia Peng 50450 Kuala Lumpur Tel : 603 - 2179 9999 Fax : 603 - 2161 1701
Tradewinds Plantation Academy No. 27, 1st Floor Lorong Endah Timur 3 Jalan Teku, 96000 Sibu Sarawak Tel : 6084 - 319 248, 318 248 Fax : 6084 - 317 248 Tradewinds Research & Development centre No. 29, Ground Floor Lorong Endah Timur 3 Jalan Teku, 96000 Sibu Sarawak Tel : 6084 - 346 213, 322 213 Fax : 6084 - 349 281
Ladang Serasa Ladang Sg Bayu Serasa Palm Oil Mill Sg Bayu Gua Musang P.O. Box 12 18000 Kuala Krai Kelantan Tel : 019 - 959 1810 (Serasa) 019 - 983 0256 (Sg. Bayu) 609 - 928 6603 (Serasa POM) Fax : 019 - 953 5520 (Serasa) 019 - 984 0256 (Sg. Bayu) 019 - 983 0674 (Serasa POM) Ladang Mawar Ladang Sri Angkasa Ladang chendana P.O. Box 40 24000 Kemaman Terengganu Tel : 609 - 867 5612 Fax : 609 - 867 5613 Ladang Sawit cherul Ladang Ibok Ladang Perkasa P.O. Box 40 24000 Kemaman Terengganu Tel : 609 - 867 5551 Fax : 609 - 867 5552 Ladang Bukit Sah Peti Surat 36 26100 Balok Kuantan Pahang Tel : 609 - 551 0460 Fax : 609 - 514 0498
NORTHERN PENINSULAR REGION: KEDAH PROJEcT Ladang Batu Hitam Ladang Sungai Seraya Ladang Tanah Merah Ladang Sungai Tekai KM 45, Jalan Padang Sanai 06300 Kuala Nerang Kedah Tel : 604 - 7904 113 (Batu Hitam) 604 - 7904 136 (Sg. Seraya) 604 - 7904 135 (Tanah Merah) 604 - 7904 136 (Sg. Tekai) Fax : 604 - 7864 854 (Batu Hitam, Sg. Seraya, Tanah Merah & Sg. Tekai) Regional Office 1st Floor, Lot No. PT 7817 Taman Mesra Bandar Gua Musang 18300 Gua Musang Kelantan Tel : 609 - 912 1273 Fax : 609 - 913 1373 Ladang Sungai Relai (North) Ladang Sungai Relai (South) Ladang Sungai Relai (East) No.13, Bangunan JKKR Felda Chiku 3 18300 Gua Musang Kelantan Tel : 609 - 928 7973 Fax : 609 - 928 7944
SOUTHERN PENINSULAR REGION: Regional Office/ Animal Husbandary & cultivation Unit Komplek Sisek KM 20 Lebuhraya Kota Tinggi-Kluang 81900 Kota Tinggi Johor Tel : 607 - 890 4584/585 (Regional Office) 607 - 882 0036 (Animal Unit) Fax : 607 - 890 4581 (Regional Office) 607 - 882 0036 (Animal Unit)
annual report 2009
203
DIRECTORY OF GROUPS OPERATIONS
Ladang Jaya Peti Surat 22 Bandar Seri Perani 81900 Kota Tinggi Johor Tel : 607 - 891 1158 Fax : 607 - 891 1792, 896 1260 Ladang Ulu Papan Peti Surat 66 Bandar Mas 81900 Kota Tinggi Johor Tel : 607 - 823 6070 Fax : 607 - 823 5660 Ladang Sg. Kachur Ladang Sg Lebak Ladang Semai Segar Peti Surat 8 Bandar Petri Jaya 81900 Kota Tinggi Johor Tel : 607 - 890 4118 (Sg. Kachur) 607 - 890 4804 (Sg Lebak) 607 - 890 4118 (Semai Segar) Fax : 607 - 890 4044 (Sg. Kachur) 607 - 890 4804 (Sg. Lebak) 607 - 890 4144 (Semai Segar) Sg Kachur Palm Oil Mill Peti Surat 48 KM 27 Jalan Kota Tinggi-Kluang 81907 Kota Tinggi Johor Tel : 607 - 890 5810, 390 5052 Fax : 607 - 890 4887 Ladang Penawar Peti Surat 10 Bandar Penawar 81900 Kota Tinggi Johor Tel : 607 - 822 8291 Fax : 607 - 822 8253 Ladang Sisek Peti Surat 16 81907 Kota Tinggi Johor Tel : 607 - 883 2220 Fax : 607 - 883 2220
Animal Husbandary & cultivation Unit Komplek JTOP KM 20 Lebuhraya Kota Tinggi-Kluang 81900 Kota Tinggi Johor Tel : 607 - 889 4585 Fax : 607 - 889 2553 Ladang Air Manis KM 51, JB-Air Hitam Road P.O. Box 110 81000 Kulai Johor Tel : 607 - 656 1246 Fax : 607 - 656 1685 Ladang Ulu Sebol A Peti Surat 26 Bandar Tenggara 81000 Kulai, Johor Tel : 607 - 896 1304 Fax : 607 - 896 1260 Ladang Ulu Sebol B Peti Surat 25 Bandar Tenggara 81000 Kulai, Johor Tel : 607 - 896 1235 Fax : 607 - 896 1260 Ulu Sebol Palm Oil Mill Karung Berkunci 201 Bandar Tenggara 81000 Kulai, Johor Tel : 607 - 896 1211 Fax : 607 - 896 1263 Ladang Agromaju Peti Surat 8 Bandar Tenggara 81000 Kulai, Johor Tel : 607 - 896 5451 Fax : 607 - 896 5451 Ladang Pakloh Batu 11 12 Jalan Mersing Karung Berkunci 516 86009 Kluang, Johor Tel : 607 - 774 6255 Fax : 607 - 774 6733
Ladang New Paloh P.O. Box 109 86609 Kluang, Johor Tel : 607 - 781 6776 Fax : 607 - 781 6776 Ladang Pelangi Ladang Sembrong Kiri Peti Surat 15 86700 Kahang Kluang, Johor Tel : 607 - 780 0064 Fax : 607 - 780 0068 KUcHING REGION: Regional Office/ EMOc Level 23 Gateway Kuching No.9 Jalan Bukit Mata 93100 Kuching, Sarawak Tel : 6082 - 412 909, 413 909 Fax : 6082 - 248 909 Ladang Gemilang Ladang Melur P.O. Box 935 94700 Serian, Sarawak Tel : 6082 - 895 969 (Gemilang) 6082 - 895 531 (Melur) Fax : 6082 - 895 969, 895 531 (Gemilang/Melur) Ladang Sg Krang P.O. Box 1010 94700 Serian. Sarawak Ladang Sg Mangga Ladang Tg Melano P.O. Box 931 94700 Serian, Sarawak Tel : 6082 - 895 193 (Sg Krang) 6082 - 895 182 (Sg Mangga) 6082 - 895 405 (Tg Melano) Fax : 6082 - 895 969, 895 531 (Sg Krang, Sg. Mangga & Tg. Melano) Melur Gemilang Palm Oil Mill P.O. Box 952 94700 Serian, Sarawak Tel : 6082 - 896 182 Fax : 6082 - 896 182
204
Ladang Simunjan Ladang Ladong P.O. Box 24 94800 Simunjan, Sarawak Tel : 6082 - 809 089 Fax : 6082 - 809 113 Ladang Sg. Tersak P.O. Box 931 94700 Serian, Sarawak Tel : 6082 - 895 624 Fax : 6082 - 895 627 SIBU REGION: Regional Office No.55, 1st Floor Lorong 12-C Pusat Suria Permata Jalan Upper Lanang 96000 Sibu, Sarawak Tel : 6084 - 216 166 Fax : 6084 - 219 455 Ladang Lingga Km 11.5, Off Jalan Tanjung Asam P.O. Box 2014 95700 Betong, Sarawak Tel : 019 - 858 9578 Fax : 019 - 859 4086 Ladang Tanjung Alan Matu-Daro Road c/o Post Office 96200 Daro, Sarawak Tel : 6084 - 813 002 Fax : 6084 - 813 004 Ladang Pelitanah 1 Ladang Pelitanah 2 CDT 174 96000 Sibu, Sarawak Tel : 6084 - 366 957 (Pelitanah 1 & 2) Fax : 6084 - 366 782 (Pelitanah 1 & 2) MIRI REGION: Regional Office 2nd Floor, Lot 1178 MCLD Miri Waterfront Jalan Permaisuri 98000 Miri, Sarawak Tel : 6085 - 431 227 Fax : 6085 - 429 227
Ladang Binu Ladang Jelai Binu Palm Oil Mill P.O. Box 1374 98008 Miri, Sarawak Tel : 6085 - 710 308 (Binu) 6085 - 710 797 (Jelai) 6085 - 739 226, 228 (Binu Palm Oil Mill) Fax : 6085 - 710 217 (Binu & Jelai) 6085 - 739 287 (Binu POM) Ladang Kuala Suai Ladang Tg Payung Ladang Mutiara P.O. Box 166 Pejabat Pos Mini Batu Niah Batu Niah Bazaar 98200 Miri, Sarawak Tel : 6085 - 739 257 (K.Suai) 6085 - 739 008 (Tg. Payung) 019 - 8554 200 (Mutiara) Fax : 6085 - 739 257 (K. Suai) 019 - 8140 910 (Tg. Payung) 019 - 8340 182 (Mutiara) Ladang Sg Klad Ladang Sibuti P.O. Box 2179 98009 Miri, Sarawak Tel : 6085 - 739 901 6085 - 491 998 Fax : 6085 - 495 102 6085 - 491 998
Ladang Permai Ladang Tengah Nipah Permai Palm Oil Mill P.O. Box 60834 91108 Lahad Datu, Sabah Tel : 6089 - 887 063/64 (Permai & Tengah Nipah) 6089 - 886 011/012 (Permai Palm Oil Mill) Fax : 6089 - 887 063/064 (Permai & Tengah Nipah) 6089 - 886 011 (Permai Palm Oil Mill) Ladang Batu Putih Ladang Tinabau Batu Putih Palm Oil Mill WDT 125 90200 Kota Kinabatangan Sandakan, Sabah Tel : 6089 - 566 111(BatuPutih) 6089 - 566 114 (Tinabau) 6089 - 565 963, 563 288 (Batu Putih Palm Oil Mill) Fax : 6089 - 566 188 (Batu Putih) 6089 - 566 115 (Tinabau) 6089 - 677 178 (Batu Putih POM) Ladang Trusan Ladang Intan Trusan Palm Oil Mill KM 15, Jalan Trusan P.O. Box 292 98857 Lawas, Sarawak Tel : 6085 - 282 030 (Trusan) 019 - 854 6440 (Intan) 6085 - 282 788 (Trusan Palm Oil Mill) Fax : 6085 - 201 030 (Trusan) 019 - 815 3985 (Intan) 6085 - 282 788 (Trusan Palm Oil Mill) Ladang Merapok KM25, Jalan Merapok P.O. Box 444 98857 Lawas Sarawak Tel : 6085 - 282 062 Fax : 6085 - 282 062
(Sg. Klad) (Sibuti) (Sg Klad) (Sibuti)
Ladang Judan Ladang Petian Judan Palm Oil Mill P.O. Box 197, 96400 Mukah, Sarawak Tel : 084 - 875 413 (Judan) 875 432 (Petian) 875 792 (Judan Palm Oil Mill) Fax : 084 - 862 813 (Judan & Petian) 875 022 (Judan Palm Oil Mill) SABAH/LAWAS REGION: Regional Office 1st Floor, Lot 26 MDLD 3291 Fajar Centre, 91100 Lahad Datu Sabah Tel : 089 - 881 051, 052 Fax : 6089 - 881 053
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FORM OF PROXY
I / We _____________________________________________________________________________________________________________________ (FULL NAME IN BLOCK LETTERS) of _________________________________________________________________________________________________________________________ (ADDRESS IN FULL) being a member/members of TRADEWINDS (M) BERHAD, hereby appoint ___________________________________________________________________________________________________________________________ (FULL NAME IN BLOCK LETTERS) of ________________________________________________________________________________________________________________________ (ADDRESS IN FULL) as my/our proxy failing which the Chairman of the meeting* to vote for me/us and on my/our behalf at the Thirty-Sixth Annual General Meeting of the Company to be held at Mahkota Ballroom 2, Ballroom Level, Hotel Istana Kuala Lumpur, 73, Jalan Raja Chulan, 50200 Kuala Lumpur on Tuesday, 22 June 2010 at 10.30 a.m. My/Our Proxy is to vote as indicated below:-
Resolution For Against
10
11
12
(Please indicate with an X in the appropriate spaces provided above as to how you wish your votes to be cast. If you do not do so, the proxy will vote or abstain from voting at his/her discretion)
Dated this __________________ day of __________________ 2010
___________________________________________________________ Signature of Member(s)/Seal of Shareholder(s)
No. of shares held:
* Delete the words The Chairman of the meeting if you wish to appoint some other person to be your proxy.
Notes 1. A member of the Company entitled to attend and vote at the meeting is entitled to appoint any one person to be his/her proxy without limitation to attend and vote in his/her stead and the provisions of Section 149(1)(a) and (b) of the Companies Act, 1965 shall not apply to the Company. A proxy may but need not be a member of the Company. Where a member of the Company is an authorised nominee as defined under the Central Depositories Act, it may appoint one proxy in respect of each securities account it holds with ordinary shares of the Company standing to the credit of the said securities account. To be valid this Form of Proxy must be deposited with the Share Registrars, Symphony Share Registrars Sdn Bhd at Level 6, Symphony House, Pusat Dagangan Dana 1, Jalan PJU 1A/46, 47301 Petaling Jaya, Selangor on or before Sunday, 20 June 2010 at 10.30 a.m. being not less than forty-eight hours before the time fixed for holding the meeting or at any adjournment thereof. In the case of a corporate member, the proxy appointed must be in accordance with the Memorandum and Articles of Association and the Form of Proxy should be given under its common seal or under the hand of its attorney. Unless voting instructions are indicated in the spaces provided above, the proxy may vote as he/she thinks fit.
2. 3.
4. 5.
Fold here
STAMP
Symphony Share Registrars Sdn Bhd

Level 6, Symphony House Pusat Dagangan Dana 1 Jalan PJU 1A/46 47301 Petaling Jaya Selangor
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TRADEWINDS (M) BERHAD (19123-K) STRATEGIC MOVES ACHIEVING MORE

T 603-2179 7777 F 603-2161 1632

192 199 200 203

annual report 2009

NoTICe oF aNNUaL GeNeraL MeeTING

TRADEWINDS (M) BERHAD

annual report 2009

NoTICe oF aNNUaL GeNeraL MeeTING

TRADEWINDS (M) BERHAD

annual report 2009

STaTeMeNT aCCoMpaNYING THe NoTICe oF aNNUaL GeNeraL MeeTING

TRADEWINDS (M) BERHAD

FINaNCIaL CaLeNDar 2009

23 February 2010 7 May 2010 21 May 2010

entitlement date payment date

Final 5% per share less 25% Income Tax

Subject to the approval by shareholders at the 36th annual General Meeting

annual report 2009

TRADEWINDS (M) BERHAD

2009 46.95 171,739 2,069,398

2008 56.09 222,242 1,767,566

Dato Wira Syed Abdul Jabbar bin Syed Hassan Chairman

annual report 2009

70,000 2005 2006 2007 2008 2009

5-YEAR PRODUCTION HIGHLIGHTS

273,909 2008 1,354,347

0 2005 2006 2007 2008 2009 2005 2006 2007 2009

Fresh Fruit Bunches

TRADEWINDS (M) BERHAD

ENTERPRISE RISK MANAGEMENT FRAMEWORK

annual report 2009

TRADEWINDS (M) BERHAD

DATO WIRA SYED ABDUL JABBAR BIN SYED HASSAN

annual report 2009

revenue of RM759 million

group managing directors

Bakry bin Hamzah Group Managing Director

annual report 2009

Peninsular Malaysia (Ha)

921 206 292

921 206 292

3,216 579 6,419 8,263 8,263 9,884 9,884 12,450 12,450

GroUp MaNaGING DIreCTorS reVIeW oF operaTIoNS

FFB and CPO Production Volume (MT) 2008 and 2009

TRADEWINDS (M) BERHAD

579 14,974 79,372

921 206 292

921 206 292

14,477 3,216 579 14,974 79,372

14,477 3,216 579 14,974 79,372

Rubber under development Plantable reserves Others

annual report 2009

GroUp MaNaGING DIreCTorS reVIeW oF operaTIoNS

TRADEWINDS (M) BERHAD

MT000 1,354 1,363 1,500

annual report 2009

GroUp MaNaGING DIreCTorS reVIeW oF operaTIoNS

TRADEWINDS (M) BERHAD

annual report 2009

GroUp MaNaGING DIreCTorS reVIeW oF operaTIoNS

OUR COMMITMENT TO SUSTAINABILITY

THE QUALITY IMPERATIVE

TRADEWINDS (M) BERHAD