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contents 02
Corporate Information
16
Corporate Social Responsibility
04
Group Structure
18
Chairman’s Statement & Penyata Pengerusi
06
Board of Directors
27
Group Managing Director/ CEO's Review of Operations
08
Directors’ Profile
34
5-Year Financial Highlights
14
Glomac In The News
36
Corporate Governance Statement
> OUR VISION Our vision is to help improve the quality of life by providing a better place for all to live, work and play. By carrying out this vision, we want to be recognised by our customers, shareholders and employees as a world-class property developer.
> OUR MISSION Our mission as a caring and reliable property developer is to deliver outstanding service, quality products and value for money for our customers. Through dedication, innovation and passion, we are confident about our ability to achieve these goals.
> QUALITY POLICY STATEMENT We are committed to be a leader among world-class property developers by building properties of high quality, completing projects on schedule and within budget, and complying to internationally acclaimed Quality Management System (QMS) standards.
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45
Audit Committee Report
142
Analysis of Warrant Holdings
48
Statement on Internal Control
145
Notice of 27th Annual General Meeting
50
Financial Statements & Reports
149
Statement Accompanying Notice of 27th Annual General Meeting
136
List of Investment and Development Properties
139
Analysis of Shareholdings
> FORWARD It starts with inspiration. A vision to provide ideal homes, work places and recreational facilities; to create an environment that enhances the quality of our lives. From pen to paper, plan to reality, we build the vision. Glomac’s vision is to enrich our lives in the most fundamental ways - value, quality and service. This is the bedrock of our business and the secret of our success, affirming our reputation as a visionary property developer.
> CORPORATE PROFILE Glomac Group traces its humble beginning back in 1988, when the two entrepreneurs and founders of the Group, Tan Sri Dato’ FD Mansor and Datuk Richard Fong joined forces to start Glomac. Today it is a group comprising more than 40 subsidiaries with involvement in every facet of the real estate business encompassing property development, property investment, construction, property management and carpark management. Glomac Berhad was listed on the Main Board of Bursa Malaysia Securities Berhad on June 13, 2000 and since then has propelled the Group even further in terms of its capabilities and resources. Over the last two decades, the total sales value of the commercial and residential properties it has completed and handed over adds up to more than RM4 billion. At Glomac, we take pride in our ability to turn vision into reality, fulfilling the dreams and aspirations of our customers. Through the years, we have established ourselves as a premier property developer in the country by providing our customers with excellent products at competitive prices, timely delivery and outstanding sales service. We create and add value to our products, providing quality to our customers every time. Glomac stands unique among the rest in delivering on all fronts, continue to offer one of the best brands in the property industry.
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Glomac Berhad 2011 annual report
CORPORATE INFORMATION
page
2
BOARD OF DIRECTORS Tan Sri Dato’ Mohamed Mansor bin Fateh Din Group Executive Chairman
Datuk Richard Fong Loong Tuck Group Executive Vice-Chairman
Dato’ Fateh Iskandar bin Tan Sri Dato’ Mohamed Mansor Group Managing Director / Chief Executive Officer
Adjunct Professor Datuk Ali bin Tan Sri Abdul Kadir Independent Non-Executive Director
Dato’ Ikhwan Salim bin Dato’ Sujak Senior Independent Non-Executive Director
Mr. Chong Kok Keong Independent Non-Executive Director
COMPANY SECRETARIES Mohd Nor Azam bin Mohd Salleh (MAICSA 7028137) Ong Shaw Ching (MIA 7819)
AUDIT AND RISK COMMITTEE Adjunct Professor Datuk Ali bin Tan Sri Abdul Kadir Chairman
Dato’ Ikhwan Salim bin Dato’ Sujak Member
Mr. Chong Kok Keong Member
Corpo
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Corporate Information
REMUNERATION COMMITTEE AND NOMINATION COMMITTEE
3
WEBSITE www.glomac.com.my
Dato’ Ikhwan Salim bin Dato’ Sujak Chairman
STOCK EXCHANGE Adjunct Professor Datuk Ali bin Tan Sri Abdul Kadir Member
Dato’ Fateh Iskandar bin Tan Sri Dato’ Mohamed Mansor Member
AUDITORS Deloitte KassimChan (AF 0080) Level 19, Uptown 1, 1 Jalan SS 21/58 Damansara Uptown, 47400 Petaling Jaya Selangor Darul Ehsan Tel : 03 7723 6500 Fax : 03 7726 3986
REGISTERED OFFICE 12th Floor, Wisma Glomac 3 Kompleks Kelana Centre Point Jalan SS 7/19, Kelana Jaya 47301 Petaling Jaya Selangor Darul Ehsan Tel : 03 7801 9000 Fax : 03 7803 0203
Main Market of Bursa Malaysia Securities Berhad Stock Code: 5020
REGISTRAR Shareworks Sdn Bhd 10-1, Jalan Sri Hartamas 8 Sri Hartamas 50480 Kuala Lumpur Tel : 03 6201 1120 Fax : 03 6201 3121
MAJOR BANKERS AmBank Berhad Malayan Banking Berhad HSBC Amanah Malaysia Berhad Public Bank Berhad
SOLICITORS Skrine Shahrizat Rashid & Lee
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Glomac Berhad 2011 annual report
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GROUP STRUCTURE
Group
PRO MAN
PROPERTY DEVELOPMENT 100% Glomac Land Sdn Bhd Saujana Utama, Sg. Buloh
100% Glomac Jaya Sdn Bhd Glomac Cyberjaya, Cyberjaya
51%
100% Magic Season Sdn Bhd Saujana Utama II, Sg. Buloh
100% Glomac Maju Sdn Bhd Suria Residen, Cheras
51%
100% Regency Land Sdn Bhd Saujana Utama III, Sg. Buloh
100% Glomac Nusantara Sdn Bhd Dataran Glomac, Kelana Jaya
100% Glomac Sutera Sdn Bhd Sri Saujana, Kota Tinggi, Johor
100% Glomac Rawang Sdn Bhd Saujana Rawang, Rawang
100% Glomac Enterprise Sdn Bhd Sungai Buloh Country Resort, Sg. Buloh
100% Glomac Regal Sdn Bhd Suria Stonor, Kuala Lumpur
30%
100% Glomac Real Estate Sdn Bhd Aman Suria Damansara, Petaling Jaya 100% Glomac Alliance Sdn Bhd Lakeside Residences, Puchong 100% Glomac City Sdn Bhd Plaza Glomac, Kelana Jaya
100% Glomac Resources Sdn Bhd Glomac Galleria, Kuala Lumpur 100% Glomac Vantage Sdn Bhd Taman Mahkota Laksamana, Seksyen III, Melaka 100% OUG Square Sdn Bhd OUG Square, Kuala Lumpur 70%
100% Glomac Consolidated Sdn Bhd Bukit Saujana, Sg. Buloh 100% Glomac Damansara Sdn Bhd Glomac Damansara, Kuala Lumpur
FDA Sdn Bhd Sri Bangi, Section 8, Bandar Baru Bangi
Glomac Al Batha Sdn Bhd Glomac Tower, Kuala Lumpur Glomac Al Batha Mutiara Sdn Bhd (Proposed service apartment in Mutiara Damansara) PPC Glomac Sdn Bhd Bandar Sri Permaisuri, Cheras
100
100
100
100% Glomac Segar Sdn Bhd (Proposed Phase 4 of Plaza Kelana Jaya)
100
100% Dunia Heights Sdn Bhd (Proposed residential development in Sg. Buloh)
100
100% Glomac Kristal Sdn Bhd (Proposed mixed development of Glomac Utama, Petaling Jaya)
100
100% FDM Development Sdn Bhd (Proposed mixed development of Glomac Utama, Petaling Jaya) 45.5 100% Berapit Properties Sdn Bhd (Proposed development in Cyberjaya, Phase II) 44.1
29.4
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5
Group Structure
PROPERTY INVESTMENT & MANAGEMENT 100% Glomac Realty Sdn Bhd Glomac Business Centre, Kelana Jaya 100% Berapit Development Sdn Bhd Kelana Business Centre, Kelana Jaya 100% Kelana Centre Point Sdn Bhd Kompleks Kelana Centre Point, Kelana Jaya
OTHER ACTIVITIES
DORMANT COMPANIES
Project Management 100% Glomac Group Management Services Sdn Bhd
100% Elmina Equestrian Centre (Malaysia) Sdn Bhd 100% Glomac Leisure Sdn Bhd
Property Management 100% Glomac Property Services Sdn Bhd
100% Kelana Seafood Centre Sdn Bhd 100% Kelana Property Services Sdn Bhd
51%
a 100% Sungai Buloh Country Resort Sdn Bhd Kelab Saujana Utama, Sg. Buloh 100% Prima Sixteen Sdn Bhd Prima 16 Condominium, Phase I & II, Petaling Jaya 100% Bangi Integrated Corporation Sdn Bhd Plaza Kelana Jaya, Phase II, Kelana Jaya
,
45.5% VIP Glomac Pty Ltd As trustee for VIP Glomac Unit Trust which owns 380 Lonsdale Street, Australia 44.1% WHA Glomac Alliance Co. Ltd Investment in Warehouse in Bangkok, Thailand 29.4% Worldwide Glomac Development Sdn Bhd Worldwide Business Park, Shah Alam
Construction Glomac Bina Sdn Bhd
100% Prisma Legacy Sdn Bhd 60%
Glomac Excel Sdn Bhd
100% BH Interiors Sdn Bhd
60%
t
100% Glomac Restaurants Sdn Bhd
Car Park Operations/Management Prominent Excel Sdn Bhd Dataran Glomac, Kelana Jaya
Investment Holding 100% Glomac Australia Pty Ltd 100% Berapit Pertiwi Sdn Bhd 90%
Glomac Thailand Sdn Bhd
85.7% Glomac Power Sdn Bhd 60%
Glomac Utama Sdn Bhd
30%
Irama Teguh Sdn Bhd
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Glomac Berhad 2011 annual report
Group Managing Director/Ceo’s Review of Operations
page
6
Board
Se 1.
St 1.
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page
7
Board of Directors
Seated From left 1.
Adjunct Professor Datuk Ali bin Tan Sri Abdul Kadir
2.
Tan Sri Dato’ Mohamed Mansor bin Fateh Din
3.
Datuk Richard Fong Loong Tuck
2.
Dato’ Fateh Iskandar bin Tan Sri Dato’ Mohamed Mansor
3.
Dato’ Ikhwan Salim bin Dato’ Sujak
Standing From left 1.
Mr. Chong Kok Keong
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Glomac Berhad 2011 annual report
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DIRECTORS’ PROFILE
Direc
TAN SRI DATO’ MOHAMED MANSOR BIN FATEH DIN Group Executive Chairman Aged 70, Malaysian
Tan Sri Dato’ Mohamed Mansor bin Fateh Din or better known as FD Mansor was appointed to the Board on April 1, 1986. Before he founded the Glomac Group, he was employed with Utusan Malaysia Berhad as the Group Personnel Director. Tan Sri Dato’ Mohamed Mansor has extensive experience in the property development business through his involvement in the industry for the past 25 years. He was the Honorary Secretary of the Malay Chamber of Commerce and Industry, Selangor from 1987 to 1995 and was awarded the Selangor Entrepreneur of the Year 1995 by the Dewan Perniagaan Melayu Malaysia Negeri Selangor in recognition of his contributions to the state. In September 2005, he was awarded the prestigious "Property Man of the Year" by FIABCI Malaysia. Being a genuine Malay businessman and entrepreneur, he was presented the award of "Anugerah Usahasama Tulen" by the Malay Chamber of Commerce, Malaysia in June 2008. In June 2011, Tan Sri Dato’ Mohamed Mansor was recognized and awarded as a recipient of “Jewels of Muslim World 2011” as the recognition of achievements and contributions made by high profile business leaders in the Muslim World. He also sits as the Advisory Council in Iqra Foundation. Tan Sri Dato’ Mohamed Mansor attended all Board Meetings held during the financial year ended April 30, 2011.
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page
9
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DATUK RICHARD FONG LOONG TUCK Group Executive Vice-Chairman Aged 60, Malaysian
Datuk Richard was appointed to the Board on April 4, 1988. He graduated with a Bachelor of Science (Hons) in Civil Engineering from University of London, UK. Datuk Richard began his career in Mudajaya Construction Sdn Bhd and IJM Corporation Berhad before founding Glomac Group in 1988. He has more than 30 years of experience in the field of property development, building construction and engineering. He served as the Secretary General of FIABCI (International Real Estate Federation) Malaysian Chapter for the term 1998-2000 and was appointed President of FIABCI Malaysia from August 2006 to 2010. As the former President of FIABCI, he was instrumental in the formation of Malaysia Property Incorporated (“MPI”), a body set-up by the Economic Planning Unit of the Prime Minister’s Department, to promote property investments among foreigners in Malaysia. Datuk Richard also served as the Chairman of the Board of Directors of MPI from February 2008 to June 2010. Datuk Richard is frequently invited as guest speakers at forum and seminars on property market in Malaysia both locally and internationally. Datuk Richard attended all Board Meetings held during the financial year ended April 30, 2011.
Board pril 30,
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Glomac Berhad 2011 annual report
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Directors’ Profile
Direc
DATO’ FATEH ISKANDAR BIN TAN SRI DATO’ MOHAMED MANSOR Group Managing Director/Chief Executive Officer Member of Remuneration Committee & Nomination Committee Aged 43, Malaysian
Dato' Fateh Iskandar bin Tan Sri Dato' Mohamed Mansor was appointed to the Board on February 5, 1997. Dato' Iskandar was the Group Executive Director from 1997 up to October 2004 when he assumed the position of Group Managing Director of Glomac Berhad. Subsequently, on March 24, 2009, he was appointed as Chief Executive Officer of Glomac Berhad. Dato' Fateh Iskandar attended the Malay College Kuala Kangsar and later obtained a law degree from the University of Queensland, Australia and subsequently went on to obtain his Masters in Business Administration. He practiced law in Australia before coming back to Malaysia joining Kumpulan Perangsang Selangor Berhad and thereafter joining the Glomac Group of Companies in 1991. Dato' Fateh Iskandar is currently the Deputy President of The Real Estate & Housing Developer’s Association (“REHDA”) Malaysia and Immediate Past Chairman for REHDA Selangor. He is also Director of Malaysia Property Incorporated, a body that promotes property investments among foreigners in Malaysia. Dato' Fateh Iskandar is also the Deputy Chairman of the Malaysian Australian Business Council, Chairman of Gagasan Badan Ekonomi Melayu (GABEM) Selangor, a body that promotes entrepreneurship amongst Malays in the country and the Treasurer of Selangor State UMNO. With around 20 years of experience and involvement in property development industry, his vast experiences and expertise has made him a very well-known and respected figure among his peers locally as well as on the international front. Over the years, Dato' Fateh Iskandar has been invited as guest speaker in forums, seminars and conventions, both locally and internationally, to offer his insights and views on the property market in Malaysia. Dato' Fateh Iskandar currently sits on the Boards of Axis Reit Managers Berhad, the first REITs company to be listed on Bursa Malaysia, Media Prima Berhad and The New Straits Times Press (Malaysia) Berhad as well as several private limited companies. Dato' Iskandar attended all Board Meetings held during the financial year ended April 30, 2011.
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11
Directors’ Profile Mansor Dato' 1997 osition erhad. ted as
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ADJUNCT PROFESSOR DATUK ALI BIN TAN SRI ABDUL KADIR Independent Non-Executive Director Chairman of Audit and Risk Committee and Member of Remuneration Committee & Nomination Committee Aged 62, Malaysian
Datuk Ali was appointed to the Board on February 20, 2009. He is Fellow of the Institute of Chartered Accountants in England and Wales ("ICAEW"), member of the Malaysian Institute of Certified Public Accountants and the Malaysian Institute of Accountants. He is also currently Honorary Advisor to ICAEW Malaysia, Honorary Fellow of the Institute of Chartered Secretaries and Administrators (UK) and the Malaysian Institute of Directors. Datuk Ali is currently the Chairman of the Financial Reporting Foundation, member of the Advisory Panel of Companies Commission of Malaysia Training Academy and Trustee of the Labuan Offshore Financial Services Authority, Kadir & Fatimah Foundation and Bukit Bintang Aid Foundation. Since February 1, 2008, he has been appointed as an Adjunct Professor in the Accounting and Business Faculty, University Malaya. Datuk Ali chairs the Board of JobStreet Corporation Berhad, Microlink Solutions Berhad, Privasia Technology Berhad and Milux Corporation Berhad as well as several private limited companies. Datuk Ali was appointed as the Chairman of Securities Commission of Malaysia on March 1, 1999 and served in that capacity until February 29, 2004. During his tenure, he initiated the Capital Market Masterplan and chaired the Capital Market Advisory Council. He was a member of a number of national committees including the National Economic Consultative Council II (MAPEN II), the Foreign Investment Committee and the Oversight Committee of National Asset Management Company (Danaharta). Datuk Ali was also a Trustee of the Financial Reporting Foundation, which oversees the financial reporting framework in Malaysia, and had served on the Finance Committee on Corporate Governance. Prior to his appointment to the Securities Commission, he was the Executive Chairman and Partner of Ernst & Young and its related firms. He was also the former President of the Malaysian Association of Certified Public Accountants, chairing both its Executive Committee and Insolvency Practices Committee and co-chairing the Company Law Forum. On the international front, Datuk Ali was the Chairman of the International Organisation of Securities Commissions' (IOSCO) Asia Pacific Regional Committee and the Islamic Capital Market Task Force, and a member of IOSCO's Executive Committee, during his tenure. In addition, he was also a Trustee of the Accounting and Auditing Organisation for Islamic Financial Institutions from November 2000 to October 2003 and the Consultant to the Sri Lanka Securities and Exchange Commission in 2006 for their Capital Market Strategic Plan. Datuk Ali attended all Board Meetings held during the financial year ended April 30, 2011.
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Glomac Berhad 2011 annual report
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Directors’ Profile
Direc
DATO' IKHWAN SALIM BIN DATO’ SUJAK Senior Independent Non-Executive Director Chairman of Nomination Committee & Remuneration Committee and Member of Audit and Risk Committee Aged 54, Malaysian
Dato’ Ikhwan Salim bin Dato’ Sujak was first appointed to the Board on February 9, 2000. Dato’ Ikhwan Salim holds a Bachelor of Science degree in Economics/Accounting from Queen’s University, Belfast, Ireland, UK. He began his career as an Auditor with Coopers & Lybrand, UK and joined Nestle (M) Sdn Bhd in 1979. In 1980, he moved on to be the Group Financial Planning Manager of Kumpulan Low Keng Huat Sdn Bhd. In 1982 and upon restructuring his family’s varied business operations in 1981, he was made the Director for the holding company, Jaya Holdings Sdn Bhd. In 1999, Dato’ Ikhwan Salim was appointed Executive Chairman of Konsortium Jaringan Selangor Sdn Bhd and on 2003 he was also appointed as Non-Executive Chairman of Malaysia Steel Works (KL) Berhad and appointed as a Director in Land and General Berhad on 2007. He is the Division Head of Petaling Jaya Utara Division of United Malay National Organisation (UMNO). Dato’ Ikhwan Salim also sits on the Board of several private companies in Malaysia. Dato’ Ikhwan Salim attended all Board Meetings of the company held during the financial year ended April 30, 2011.
Notes: 1.
Fa Sa no
2.
C O
3.
C N
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Directors’ Profile
CHONG KOK KEONG
first Dato’ ree in ersity, Auditor M) Sdn Group Keng ng his e was Jaya
Independent Non-Executive Director Member of Audit and Risk Committee Aged 62, Malaysian
cutive n Bhd cutive d and had on Utara MNO). everal
Mr. Chong Kok Keong was appointed to the Board on September 21, 2000. He holds a Bachelor of Engineering (Hons) from University of Malaya. He is a Fellow of the Institution of Engineers and a registered engineer with the Board of Engineers, Malaysia. He began his career with Malayawata Steel Bhd as a trainee engineer and later joined Tractors Malaysia Berhad (the Caterpillar dealer) in 1974. During this time Mr Chong helped to develop a “Mid-mounted Grader” adapted from a standard Ford agricultural Tractor. He was seconded to Kubota Agricultural Machinery Sdn Bhd in 1978 to set up the Engines and Power Tiller production and assembly plant for Kubota agricultural equipment. In 1980, he returned to Tractors Malaysia Berhad and was appointed Manager Engines Division of Tractors Malaysia Bhd in charge of Market Development and Service Support. Mr. Chong was one of the pioneers of Pilecon Engineering Berhad where he set up the Plant Division and was part of the team which invented and patented the ‘Tripile Piling System’. He was the Group Managing Director of Pilecon Engineering Berhad from 1992 to 1999. Mr. Chong has extensive experience in construction, specialist foundation, large civil engineering projects and also the property sector having been involved as an advisor to various projects since 2000.
ngs of ended
He also sits on the boards of various private limited companies. Mr. Chong attended all Board Meetings held during the financial year ended April 30, 2011.
Notes: 1.
Family Relationship with Director and/or Major Shareholder Save and except for Tan Sri Dato’ Mohamed Mansor bin Fateh Din and Dato’ Fateh Iskandar bin Tan Sri Dato’ Mohamed Mansor, who are father and son respectively, none of the Directors has any family relationship with any director and/or major shareholder of the Company.
2.
Conflict of Interest Other than the mandated related party transactions, none of the Directors has any conflict of interest with the Company and its Group.
3.
Conviction for Offences None of the Directors has been convicted for offences within the past 10 years other than traffic offences, if any.
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Glomac Berhad 2011 annual report
GLOMAC IN THE NEWS
page
14
Gloma
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Glomac In The News
15
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Glomac Berhad 2011 annual report
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CORPORATE SOCIAL RESPONSIBILITY (CSR)
Corpo Respo
NEWS STRAITS TIMES SCHOOL SPONSORSHIP PROGRAM. As part of corporate social responsibility towards the students, Glomac once again participated in the News Straits Times School Sponsorship Program for the 5th year in the row. Students from Sekolah Rendah and Sekolah Menengah Saujana Utama, Sungai Buloh were given the opportunity to empower and enhance the English language.
CONTRIBUTION TO PNS CHARITY GOLF 2010. Glomac played its part in contributing towards society by participated in PNS Charity Golf 2010. The objective of this event was part of PNS charity program in which all contributions will be donated to local charity home or organizations that would be selected by First Lady, YABhg Datin Paduka Seri Rosmah bt Mansor who was also the Patron for this event.
CONTRIBUTION TO KELAB VETERAN UTUSAN MELAYU (KVUM) Glomac Berhad participated in contributing towards supporting the media by giving a contribution to Kelab Veteran Utusan Melayu (KVUM). Held at Glomac Berhad, the event were witnessed by KVUM Patron, YBhg Tan Sri Zainuddin Maidin.
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Corporate Social Responsibility (CSR)
ELAB ELAYU erhad buting dia by Kelab VUM). d, the KVUM uddin
17
THE EDGE BURSA MALAYSIA – KL RAT RACE 2010 For the 10th consecutive year, Glomac once again pledged its support in The Edge Bursa Malaysia – KL Rat Race 2010. Held at Bursa Malaysia, this annual charity event was a way for Glomac to join together in helping the needy in a worthy way. Participating since 2001, Glomac sent 6 runners for mix category and CEO Race.
VISIT BY STATE GOVERNMENT OF VICTORIA AND THE AUSTRALIAN INDUSTRY GROUP TO GLOMAC BERHAD. Glomac Berhad welcomed delegation from State Government of Victoria and The Australian Industry Group through Building Construction Mission within Singapore – Iskandar – Kuala Lumpur. The delegation took a sight of Glomac’s products and presentation held within both parties in order to introduce both objective and information within both countries.
26TH ANNUAL GENERAL MEETING. Held at Multipurpose Hall, Kelana Centre Point, the AGM was well attended by more than 200 shareholders. Glomac’s AGM was held to inform the shareholders on Group’s financial performance and latest property developments of the Group.
BREAKING FAST WITH ANAKANAK RUMAH AMAN. Glomac once again continued its commitment in social responsibilities by organising an annual breaking fast with children from Rumah Aman. Held in Shah Alam, the children were given personalized school bags and green packets. Contribution was also presented to Rumah Aman. This event was attended by YB Dato’ Seri Mohd Shafie Apdal, Minister of Rural and Regional Development.
READING MATERIALS HANDOVER TO SEKOLAH RENDAH AND SEKOLAH MENENGAH SAUJANA UTAMA. Glomac once again showing its support to the importance of knowledge among students through contribution of reading materials to students of Sekolah Rendah dan Sekolah Menengah Saujana Utama as a way of giving back to society. Each school received few boxes of reading materials.
LION DANCE 2011 In conjunction with Chinese New Year Celebration, Glomac continues its tradition with Lion Dance performance by Khuan Loke Dragon & Lion Dance Association. Directors, staffs as well as public attended this show with fantastic event that shows a magnificent display of gravity-defying feats by the lion group.
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Glomac Berhad 2011 annual report
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GROUP MANAGING DIRECTOR/CEO’S REVIEW OF OPERATIONS
Chair Penya
Chairman’s Statement “It has been a good year for Glomac. Amidst a recovering global economy in 2010, the company extended its gains, and delivered record earnings.”
Penyata Pengerusi “Tahun 2011 adalah satu tempoh yang baik buat Glomac. Ketika ekonomi global sedang mengalami pemulihan, syarikat ini berjaya meningkatkan keuntungan, dan mencatatkan rekod pencapaian yang tinggi dalam pendapatannya.”
Glomac Tower
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Chairman’s Statement Penyata Pengerusi
dst a pany gs.”
Glomac Damansara
DEAR VALUED SHAREHOLDERS,
buat alami atkan yang
On behalf of the Board of Directors, I am pleased to present Glomac’s Annual Report and Financial Statements for the financial year ended April 30, 2011. It has been a good year for Glomac. Amidst a recovering global economy in 2010, the company extended its gains, and delivered record earnings. In the period under review, Group revenue surged 88.6% to RM597.5 million from RM316.8 million recorded in FY10, whilst profit before tax expanded 72.9% to RM129.5 million from RM74.9 million previously. The Group’s profit after tax and minority interests rose 54.0% to RM63.0 million, scaling a new high in Glomac’s profit performance. This time last year, I did mention that Glomac is entering into an exciting growth phase. Today, I believe the Group is firmly entrenched on a healthy growth path, and is poised to sustain this momentum going forward.
PARA PEMEGANG DIHORMATI,
SAHAM
YANG
Bagi pihak Lembaga Pengarah, saya dengan sukacitanya membentangkan Laporan Tahunan dan Penyata Kewangan Glomac bagi tahun kewangan berakhir pada April 30, 2011. Tahun 2011 adalah satu tempoh yang baik buat Glomac. Ketika ekonomi global sedang mengalami pemulihan, syarikat ini berjaya meningkatkan keuntungan, dan mencatatkan satu rekod pencapaian yang tinggi dalam pendapatannya. Dalam tempoh kajian, perolehan Kumpulan melonjak sebanyak 88.6% kepada RM597.5 juta daripada RM316.8 juta yang dicatatkan pada tahun kewangan 2010, manakala keuntungan sebelum cukai meningkat sebanyak 72.9% kepada RM129.5 juta daripada RM74.9 juta sebelumnya. Keuntungan selepas cukai dan kepentingan minoriti Kumpulan pula bertambah sebanyak 54.0% kepada RM63.0 juta, mencatatkan rekod pencapaian tertinggi baru dalam prestasi keuntungan Glomac. Pada masa yang sama tahun lalu, saya ada menyebut bahawa Glomac sedang memasuki fasa pertumbuhan yang menggalakkan. Hari ini, saya percaya Kumpulan berada pada kedudukan yang kukuh di atas landasan pertumbuhannya, dan bersedia untuk mengekalkan momentum ini dalam melangkah ke hadapan.
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Glomac Berhad 2011 annual report
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Chairman’s Statement Penyata Pengerusi
Chair Penya
Suria Stonor
DIVIDEND
DIVIDEN
In line with the stronger financial results, your Board has proposed a higher dividend payment for the financial year ended April 30, 2011. Subject to approval from shareholders, a final gross dividend of 5.0sen per share less 25% tax has been proposed. Including the interim dividend of 4.5sen per share less 25% tax paid in June 2011, total dividend payment for the year would amount to 9.5sen per share. This is higher than 8.5sen per share dividend that was paid out in the previous financial year. With this year’s dividend, we will also achieve the milestone of a decade long track record of continuous annual dividend payments since our public listing in 2000.
Selari dengan keputusan kewangan yang lebih kukuh, Lembaga Pengarah telah mencadangkan pembayaran dividen lebih tinggi bagi tahun kewangan berakhir pada April 30, 2011. Tertakluk kepada kelulusan daripada pemegang-pemegang saham, dividen akhir kasar sebanyak 5.0 sen sesaham ditolak 25% cukai telah dicadangkan. Dengan mengambil kira dividen interim sebanyak 4.5 sesaham ditolak 25% cukai, yang dibayar pada bulan Jun 2011, jumlah pembayaran dividen bagi tahun ini adalah sebanyak 9.5 sen sesaham. Ini adalah lebih tinggi daripada 8.5 sen sesaham yang dibayar pada tahun kewangan sebelumnya. Dengan pembayaran dividen tahun ini, kami juga mencatatkan satu lagi pencapaian iaitu pembayaran dividen tahunan berjaya dibuat secara berterusan selama sedekad sejak penyenaraian awam Glomac pada tahun 2000.
OPERATING ENVIRONMENT Overall, the property market has benefited from a more conducive operating environment. The Malaysian economy staged a stronger recovery in 2010 with a 7.2% GDP expansion, versus a contraction of 1.7% in 2009. Growth was underpinned by both higher capital spending as well as higher private consumption, aided by an improved labour market, where unemployment rate eased to 3.2% from 3.7% in the previous year, and modest inflation growth of 1.7%. The better economy, coupled with a buoyant stockmarket and favourable mortgage rates, translated into improved consumer confidence and consequently, a more robust property market.
PERSEKITARAN OPERASI Secara keseluruhannya, pasaran hartanah telah menerima manfaat daripada persekitaran operasi yang lebih kondusif. Ekonomi Malaysia mencatat pemulihan yang lebih kukuh pada tahun 2010 dengan pertumbuhan KDNK sebanyak 7.2%, berbanding penguncupan 1.7% pada tahun 2009. Pertumbuhan didorong oleh perbelanjaan modal dan penggunaan swasta yang lebih tinggi, disokong pula oleh pasaran buruh yang bertambah baik, di mana kadar pengangguran telah berkurangan kepada 3.2% daripada 3.7% pada tahun sebelumnya, manakala inflasi pula tumbuh pada kadar yang sederhana sebanyak 1.7%. Keadaan ekonomi yang menggalakkan, ditambah dengan pasaran saham yang cergas dan kadar gadai janji yang memberangsangkan, memperlihatkan keyakinan pengguna yang semakin baik dan seterusnya, mengukuhkan lagi pasaran hartanah.
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In the year 2010, total property transaction volume rose 11.5% y-o-y to 376,583 and total value transacted increased strongly by 32.6% to RM107.4 billion. Growth was driven by residential properties, whose transaction value rose 21.0% y-o-y to RM50.7 billion in 2010, while those of commercial properties expanded by 45.5% to RM23.8 billion. Generally, it was also good to observe that property prices gained new strengths in 2010 after a modest rise in 2009. To promote a more stable and sustainable property market, Bank Negara implemented a maximum loan-to-value (LTV) ratio of 70% in November 2010 for the third housing facility taken out by borrowers. Further, the central bank continued with its policy to normalise domestic interest rates. With the recent 25 basis points hike in May 2011, overnight policy rate (OPR) has since been raised by 100 basis points over the 2010 / 2011 period to 3.00% currently. Nonetheless, credit accessibility and cost remain relatively favourable, and momentum in the property market has been sustained, albeit at a more checked pace. The Government’s introduction of the Economic Transformation Programme (ETP) in October 2010 to spearhead Malaysia into a developed and high income nation, served to further strengthen confidence in the country’s economic prospects. At the recent 6th ETP Progress Update, the Prime Minister disclosed that 50% of the ETP projects have commenced, with ETP-related investments totalling RM170.3 billion. Of the 12 National Key Economic Areas under the ETP, the Greater KL / Klang Valley initiatives should continue to offer more development opportunities for property companies such as Glomac with this thrust to create a vibrant and cosmopolitan Greater KL.
Pada tahun 2010, jumlah urus niaga hartanah meningkat sebanyak 11.5% dalam perbandingan tahunan (tahunke-tahun) kepada 376,583 dan jumlah nilai urus niaga meningkat tinggi iaitu sebanyak 32% kepada RM107.4 bilion. Pertumbuhan didorong oleh hartanah kediaman, yang mana jumlah urus niaga meningkat 21.0% (tahun-ke-tahun) kepada RM50.7 bilion pada tahun 2010, manakala hartanah komersil berkembang sebanyak 45.5% kepada RM23.8 bilion. Secara keseluruhannya, apa yang menarik untuk diperhatikan adalah harga hartanah mencatat peningkatan baru pada tahun 2010 setelah meningkat dalam kadar yang sederhana pada tahun 2009. Dalam usaha menggalakkan wujudnya pasaran hartanah yang lebih stabil dan mapan, Bank Negara telah melaksanakan nisbah maksimum pinjaman berbanding nilai (LTV) sebanyak 70% pada bulan November 2010 untuk pembiayaan rumah yang ketiga diambil oleh para peminjam. Selain itu, bank pusat meneruskan dasarnya untuk mengembalikan kadar faedah domestik pada paras normal dengan menaikkan 25 mata asas dalam kadar dasar semalaman (OPR) pada bulan Mei 2011 kepada 3.00% baru-baru ini, sekali gus menyaksikan kadar pertunjuk berkenaan dinaikkan sebanyak 100 mata asas sepanjang tempoh 2010/2011. Di sebalik apa yang berlaku, akses kepada kredit dan kos kekal memberangsangkan, dan momentum pasaran hartanah tetap pada kadar yang lebih terkawal. Langkah Kerajaan memperkenalkan Program Transformasi Ekonomi (ETP) pada bulan Oktober 2010 untuk mengemudi Malaysia ke arah menjadi sebuah negara maju dan berpendapatan tinggi, seterusnya mengukuhkan lagi keyakinan terhadap prospek ekonomi negara. Pada Penyataan Kemajuan ETP kali ke 6 baru-baru ini, Perdana Menteri telah menyatakan bahawa 50% daripada projek ETP telahpun bermula, dengan pelaburan-pelaburan berkaitan ETP mencecah RM170.3 bilion. Daripada 12 Bidang Ekonomi Utama Negara di bawah ETP, inisiatif Greater KL / Klang Valley seharusnya terus menawarkan lebih banyak peluang pembangunan kepada syarikat-syarikat hartanah seperti Glomac ke arah mewujudkan Greater KL, sebuah bandar raya moden yang jauh lebih pesat dan rancak.
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Glomac Berhad 2011 annual report
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Chairman’s Statement Penyata Pengerusi
Chair Penya
PROSPECTS
PROSPEK
After a strong recovery in 2010, the year ahead is one of gradual growth. Glomac’s prospects remain bright but we are cognizant of global uncertainties that may serve to derail Malaysia’s growth expectations and market confidence in general. Europe’s sovereign debt crisis lingers, the US economic recovery remains unconvincing and China risks a hard economic landing. The political uprising in the MENA region has also elevated energy prices, further fuelling global inflationary concerns.
Selepas mengalami pemulihan menggalakkan pada tahun 2010, tahun yang mendatang memperlihatkan pertumbuhan bakal berlaku secara beransur-ansur. Prospek Glomac diunjur kekal cerah tetapi kami tetap peka terhadap ketidaktentuan global yang mungkin menjejaskan jangkaan pertumbuhan Malaysia serta keyakinan pasaran amnya. Krisis hutang negara-negara Eropah masih belum berakhir, pemulihan ekonomi Amerika Syarikat dilihat terus tidak meyakinkan dan China pula berisiko menghadapi ekonomi yang sukar. Kemelut politik yang berlaku dalam kawasan MENA juga menyebabkan meningkatnya harga minyak mentah atau bahan api, justeru itu menyemarakkan kebimbangan tentang keadaan inflasi global.
Amidst these global issues, we remain sanguine about Malaysia’s economic outlook. The expeditious implementation of projects under the ETP and the 10th Malaysia Plan will continue to spur investment activities and private consumption growth. One of the main beneficiaries of these public emphases is the property sector, where for example, the RM36 billion Mass Rapid Transit (MRT) to improve connectivity within Greater KL should serve as a catalyst in enhancing the value of development projects and landbank in its vicinity. Leveraging on this, the government also has the intention of developing government-owned land along the MRT project in partnership with the private sector. This too will be a boon to private property developers. Glomac has strategically focused its development activities within Greater KL / Klang Valley, where it has built a strong branding and presence. We have also successfully proven our ability to develop multiple projects in diverse product segments, from high-end condominiums to commercial offices and shop offices, and mixed residential to township developments. Our planned new launches within Greater KL are estimated at more than RM3.5 billion in total development value. It is this strong pipeline of future projects that will enable us to capitalise on the opportunities Greater KL presents as one of the National Key Economic Areas.
Ketika isu-isu global berlarutan, kami tetap optimis tentang prospek ekonomi Malaysia. Perlaksanaan segera projek-projek di bawah ETP dan Rancangan Malaysia Ke-10 (RMK-10) akan terus merangsang aktiviti pelaburan dan pertumbuhan penggunaan swasta Salah satu penerima manfaat utama hasil penekanan yang diberikan kepada pihak awam ini adalah sektor hartanah, sebagai contoh, Aliran Transit Berkapasiti Tinggi (MRT) bernilai RM36 bilion untuk memperbaiki rangkaian pengangkutan di dalam Greater KL harus menjadi pemangkin kepada peningkatan nilai projek pembangunan dan milik tanah di sekitarnya. Untuk memanfaatkan perkara ini, kerajaan juga berhasrat untuk membangunkan tanah milik kerajaan sepanjang projek MRT secara kerjasama dengan sektor swasta. Hal ini juga akan menjadi sesuatu yang menguntungkan para pemaju hartanah swasta. Glomac secara strategik telah menumpukan aktiviti pembangunannya di sekitar Greater KL / Klang Valley, di mana syarikat berjaya bertapak dan membangunkan satu jenama yang kukuh. Kami juga berjaya membuktikan keupayaan untuk memajukan pelbagai projek dalam segmen produk yang pelbagai, daripada kondominium mewah kepada pejabat komersil dan rumah kedai, serta perumahan bercampur hingga ke pembangunan bandar baru. Pelancaran projek-projek baru yang dirancang sekitar Greater KL dianggarkan lebih daripada RM3.5 bilion daripada segi nilai pembangunannya. Perancangan kukuh projek-projek masa depan inilah yang akan membolehkan kami memanfaatkan peluang-peluang yang ditawarkan oleh Greater KL sebagai salah satu Bidang Keutamaan Ekonomi Negara.
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hun uhan unjur tuan uhan tang ihan dan melut bkan steru flasi
tang rojek akan uhan hasil alah pasiti baiki njadi unan kara milik ngan yang
Suria Residen
ktiviti mana ama yaan yang abat mpur aran KL nilai masa tkan agai Suria Stonor
23
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Chairman’s Statement Penyata Pengerusi
Chair Penya
Glomac Damansara, our current flagship mixed development project with an estimated Gross Development Value of RM898 million, reflects the success of projects we bring to market; with initial launches that are fully sold, including the enbloc sale of our 25-storey office tower. Glomac Damansara Residences, the latest launch within Glomac Damansara, has also received strong response. I am also pleased over our recent purchase of 200 acres in the thriving township of Puchong. Although only at planning stage, this future flagship mixed development project could potentially add another RM1 billion to our future Gross Development Value, giving us the opportunity to continue with the success of our earlier Lakeside Residences in Puchong. Glomac is well positioned with its development presence in Greater KL. Going forward, we are confident that our ongoing and planned new projects will provide us with the impetus to scale greater heights. Over the past years, we have also been successfully replenishing our development landbank. Going forward, we will persevere to seek out new landbank opportunities, be it on our own or through partnerships, to ensure sustainability in our development activities.
Glomac Damansara, iaitu projek perdana pembangunan bercampur kami yang terkini dengan anggaran Nilai Pembangunan Kasar sebanyak RM898 juta, memperlihatkan kejayaan projek-projek yang kami tawarkan kepada pasaran; dengan pelancaran-pelancaran awal habis dijual sepenuhnya, termasuk penjualan secara blok atau keseluruhan menara pejabat kami setinggi 25 tingkat. Glomac Damansara Residences, pelancaran terbaharu sekitar Glomac Damansara, juga mendapat sambutan yang menggalakkan. Saya juga amat gembira dengan pembelian kawasan seluas 200 ekar baru-baru ini di bandar Puchong yang berkembang pesat. Walaupun masih lagi di peringkat perancangan, projek perdana pembangunan bercampur ini berpotensi menambah sebanyak RM1 bilion lagi kepada Nilai Pembangunan Kasar kami pada masa hadapan, sekali gus memberikan kami peluang untuk meneruskan kejayaan yang dicatatkan dalam projek terdahulu kami iaitu Lakeside Residences di Puchong di Selangor. Glomac berada pada kedudukan yang baik kerana pembangunannya terletak dalam kawasan Greater KL. Dalam melangkah ke hadapan, kami yakin projek-projek semasa dan juga yang dirancang akan memberikan dorongan kepada Glomac untuk mencapai ke tahap yang lebih tinggi. Sejak beberapa tahun kebelakangan, kami telah berjaya menambah semula jumlah simpanan tanah pembangunan kami. Oleh itu, kami akan terus berusaha lebih gigih untuk mencari peluang-peluang mendapatkan simpanan tanah yang baru, sama ada melalui inisiatif sendiri mahupun melalui kerjasama, untuk memastikan terdapatnya kesinambungan dalam aktiviti pembangunan kami.
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perdana dengan ebanyak ek-projek dengan enuhnya, eluruhan Glomac u sekitar tan yang
mbelian bandar n masih perdana nambah angunan kali gus eruskan erdahulu hong di
k kerana Greater mi yakin ang akan c untuk beberapa nambah an kami. ih untuk mpanan f sendiri mastikan aktiviti Suria Residen
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Chairman’s Statement Penyata Pengerusi
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26
CORPORATE SOCIAL RESPONSIBILITY (CSR)
TANGGUNGJAWAB SOSIAL KORPORAT (CSR)
Glomac has always dedicated itself in adding value to its stakeholders through active CSR commitments. Emphasising on the welfare of our shareholders through praticising good corporate corporate governance and investor relations. Recognising the dedication from our employees and ensuring their wellbeing. Our commitment to building homes and communities as a property developer. And just as importantly, our contribution to society, where we regularly devote ourselves to charitable programmes and activities. This wide spectrum of Glomac’s CSR that we willingly embrace as a responsible property developer. And we will continuously look at new opportunities to broaden our CSR scope and maintain a positive impact on our stakeholders.
Glomac sentiasa berusaha memberikan tambahan nilai kepada para pemegang kepentingannya melalui komitmen CSR yang aktif. Kami menekankan kepada kebajikan para pemegang saham kami melalui amalan urus tadbir korporat serta hubungan dengan pelabur yang baik. Kakitangan kami yang berdedikasi diberikan pengiktirafan dan kebajikan mereka dijaga. Sebagai pemaju hartanah, kami komited kepada membina kediaman dan komuniti. Tidak kurang juga pentingnya, sumbangan kami kepada masyarakat, di mana kami turut mencurahkan bakti melalui aktiviti-aktiviti dan program-program kebajikan. Inilah satu spektrum luas CSR Clomac yang dilakukan dengan penuh keikhlasan hati sebagai pemaju hartanah yang bertanggungjawab. Kami akan terus mencari peluang-peluang baru untuk memperluaskan skop CSR kami dan mengekalkan impak positif terhadap para pemegang kepentingan kami.
ACKNOWLEDGEMENT Here on behalf of the Board of Directors, I wish to express my sincere gratitude to our management team and employees for their spirited dedication to the company and their respective contribution to the excellent year we had. Together, let us continue with our efforts to improve on our strong performance. Our achievements were also made possible by the support and assistance from valued customers, business associates, bankers, contractors, members of the media and investment community, and governing authorities. The past few years have not been easy but they have made Glomac realised its capabilities and drive to surmount hard challenges. With these new strengths, I am excited to discover the new heights Glomac can reach in its aspiration to be one of the leading and premier property developers in the nation.
Tan Sri Dato’ F.D. Mansor Group Executive Chairman August 10, 2011
PENGHARGAAN Bagi pihak Lembaga Pengarah, saya ingin merakamkan penghargaan ikhlas kepada pasukan pengurusan dan kakitangan kami di atas semangat dedikasi mereka terhadap syarikat serta sumbangan masing-masing kepada kecemerlangan dalam tahun kewangan ini. Marilah, kita bersama-sama meneruskan usaha untuk menambah baik lagi prestasi kukuh ini. Pencapaian kami juga adalah hasil sokongan dan bantuan daripada para pelanggan, rakan niaga, bank, kontraktor, ahli-ahli media dan komuniti pelaburan yang dihormati, serta pihak berkuasa. Beberapa tahun kebelakangan ini, bukanlah satu tempoh yang mudah tetapi mereka telah menyedarkan Glomac tentang keupayaannya dan membantu menghadapi cabaran yang sukar. Dengan kekuatan yang ada ini, saya amat teruja untuk meneroka tahap lebih tinggi untuk dicapai oleh Glomac dalam aspirasinya menjadi sebagai salah satu pemaju hartanah utama dan terkemuka di rantau ini.
Tan Sri Dato’ F.D. Mansor Pengerusi Eksekutif Kumpulan Ogos 10, 2011
GROU DIREC OF OP
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(CSR) n tambahan nnya melalui nkan kepada elalui amalan gan pelabur asi diberikan aga. Sebagai da membina a pentingnya, mana kami -aktiviti dan pektrum luas h keikhlasan ggungjawab. g baru untuk mengekalkan kepentingan
GROUP MANAGING DIRECTOR/CEO’S REVIEW OF OPERATIONS
The financial period ended April 30, 2011 was a landmark year for us at Glomac. From a financial standpoint, Glomac achieved record earnings where profit after tax surpassed the RM60 million level for the first time ever. This was attributed mainly to the strong sales momentum achieved in prior years, and smooth execution of work across all our ongoing projects. To sustain this success, we continue to focus our resources on the critical areas of branding and sales, project management and delivery, landbank acquisition and value-enhancement, and prudent financial management. The results of our efforts continue to be encouraging, and lay a strong foundation for what we envisage to be the next phase of Glomac’s growth and transformation into a sizeable and esteemed property developer. Financial Review
saya ingin da pasukan as semangat sumbangan dalam tahun meneruskan i kukuh ini. Saujana Rawang
kongan dan niaga, bank, ti pelaburan berapa tahun yang mudah mac tentang api cabaran ni, saya amat ntuk dicapai ebagai salah uka di rantau
27
As highlighted in an earlier section, the Group achieved revenue of RM597.5 million compared with RM316.8 million in the previous financial year. The robust topline growth was driven by excellent construction progress in key projects such as Glomac Tower and Glomac Cyberjaya, and more significant contribution from newer projects such as Glomac Damansara, where construction has advanced beyond the initial stage. Bandar Saujana Utama, our established township project in Sungai Buloh, continues to deliver steady growth in tandem with healthy buyers’ response to new launches. Group profit before tax rose 72.9% to RM129.5 million from RM74.9 million previously, driven by the strong expansion in headline numbers. Profit after tax attributable to shareholders increased 54.0% to RM63.0 million from RM40.9 million achieved a year ago. The more modest expansion was due to the higher minority interest arising from the Glomac Tower project, in which we have a 51% equity interest. On a per share basis, net earnings amounted to 21.5 sen based a weighted average capital base of 293.3 million shares. In comparison, we registered 14.2 sen last year, based on a weighted average share base of 288.8 million.
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In tandem with the significantly higher level of activity and increased demand for working capital, Glomac’s net gearing as at April 30, 2011 has increased to 19% of shareholders’ equity, up from 12% previously. We remain comfortable with this ratio, and are confident of our ability to gear further if new business and landbank opportunities become available.
HIGHLIGHTS FOR THE FINANCIAL YEAR ENDED 30 APRIL RM mil
2011
2010
+/- (%)
Revenue
597.5
316.8
+88.6
Pre-tax Profit
129.5
74.9
+72.9
Net Profit
63.0
40.9
+54.0
EPS (sen)*
21.5
14.2
+51.4
*
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Based on weighted average share base of 293.3m for FY11 and 288.8m FY10
REVIEW OF OPERATIONS PROPERTY DEVELOPMENT I am pleased to report that operating conditions during the period under review were stable, and as such, we made excellent construction progress across all our ten ongoing developments. Key contributing projects such as Glomac Tower, Glomac Cyberjaya and Seri Bangi, launched in previous years and fully sold since, are at advanced stages of construction and due for completion and handover in the near future. We take great pride in our track record of timely delivery, and these latest projects are no exception. The 40-storey Glomac Tower, which was sold en-bloc for a total consideration of RM577 million at a benchmark price of RM1,120 per square foot, will be an iconic addition to Kuala Lumpur’s city centre skyline when completed later this year. The pace of new sales across our projects remained robust during the year, amounting to RM413 million. Group sales in the previous financial year amounted to RM508 million, including a RM171 million en-bloc transaction of an office tower in Glomac Damansara. Adjusting for this, new sales for the 2011 financial year would have increased a healthy 23%. A favourable macro-economic environment provided a conducive backdrop for the real estate market in Malaysia. The country’s steady economic growth, benign interest rate environment and rising optimism generated by the Government’s progressive initiatives as outlined under the Economic Transformation Programme (ETP) translated into positive buyer sentiments.
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Suria Stonor
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On our part, having the right products available for sale and being visible in a competitive marketplace enabled us to capitalise on demand. Our proven edge in this area is attributed to a host of factors, including the continuous investments we have made throughout the years in our brand value and sales & marketing infrastructure, our in-depth understanding of market trends and buyer expectations, and solid processes in place to successfully take a project from the conceptualization stage all the way to completion. Glomac’s approach to property development is tried and tested, and I believe our core strategies to identify and successfully develop more sizeable, valuable and complex projects are firmly in place. Glomac Damansara Our latest flagship project fronts Jalan Damansara and is located in the immediate vicinity of the affluent Damansara / Taman Tun Dr Ismail neighbourhoods. With direct access to the North Klang Valley Expressway and SPRINT Highway, Glomac Damansara, which sits on 6.8 acres of prime freehold land, has convenient access to most of the major hubs in Kuala Lumpur and Petaling Jaya. This 5-phase mixed development features 12 units of 5 and 8-storey shop offices anchored by a 16-storey office block, 2 towers of residential units, a retail mall, a 17-storey office tower and a 25-storey Grade ‘A’ office tower. With an estimated GDV of RM898 million, this project will continue to underpin our earnings for the next 3 to 4 years. Unveiled in 2009, this project had already chalked up sales of RM225 million soon after its launch. RM54 million was chalked up through the sale of 5 & 8 storey shop offices, while another RM171 million was derived from the en-bloc sale of the 25-storey office tower to Lembaga Tabung Haji. Our recent soft launch of the residential component has also been well received. Known as Glomac Damansara Residences, the 26-storey towers will house 356 units of serviced apartments with a total GDV of RM285 million. Priced at RM600 per square foot and upwards, these apartments set a new benchmark price for properties sold off the plan in this location. I am happy to report that the take-up for both tower blocks has exceeded 50%, and momentum continues to be encouraging. For the current financial year, we look forward to the launch of the retail mall. The estimated GDV ranges between RM180-200 million, and our project team is putting the finishing touches to the final design and layout. The mall will be positioned as an upper-end neighbourhood mall with emphasis on F&B and entertainment. This, we believe, will blend in well with the overall development of Glomac Damansara and harmonize the ‘live-work-play’ lifestyle components of this project.
Glomac
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petitive rea is made e, our cesses way to believe e and
vicinity cess to which major atures towers office derpin
n after ffices, office nt has towers Priced k price up for ging. mall. putting tioned ment. ansara
Glomac Damansara Residences
31
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Group Direc of Op
Bandar Saujana Utama The continuing success of this township is a source of pride for Glomac. To-date we have sold and successfully delivered more than RM1 billion of properties to our customers. This thriving township boasts a complete range of amenities, including a residents’ clubhouse, parks, primary and secondary schools and a buzzing commercial hub with a hypermarket, shopping mall and shop-offices. Access to Bandar Saujana Utama has improved considerably over the years, and will be further enhanced with the completion of the KL-Kuala Selangor Expressway later this year. New sales at this township amounted to RM151 million in financial year 2011, up from RM118 million in the previous year. Targeting the affordable segment of the market, sales have been on a consistent uptrend, and we remain confident that Bandar Saujana Utama will continue to deliver rising contribution in the future. For the current year, we are planning to launch some RM192 million worth of properties comprising mainly 2 and 2.5-storey terraced houses and some commercial phases to cater to the strong demand that this township enjoys. As part of our planning process, we actively monitor feedback from customers to ensure that the layout and designs of our homes remain relevant and meet buyers’ expectations. New Projects Bandar Saujana Utama
I am truly excited with Glomac’s prospects as we have been hard at work over the past few years acquiring new landbank and readying ourselves to launch even more products in the marketplace. Our pipeline of new projects over the next 12-18 months is strong, and is keenly anticipated as these projects are both prime and sizeable. On top of subsequent phases at our ongoing developments such as Glomac Damansara and Bandar Saujana Utama, we are targeting to unveil four new developments over the 2012 and 2013 financial years. Combined, these new projects have a total GDV in excess of RM1 billion and are expected to launch Glomac into its next phase of growth. Project
Type
Location
Serviced apartment
Mutiara Damansara, PJ
250
Glomac Cyberjaya 2
Commercial shop offices
Cyberjaya
250
Plaza Kelana Jaya 4
Mixed commercial
Kelana Jaya, PJ
280
Mixed residential & commercial
Bandar Utama, PJ
400
Mutiara Damansara Residences
Glomac Utama
Glomac Utama
GDV (RM million)
Both Mutiara Damansara Residences and Glomac Utama underscore Glomac’s ability in identifying and acquiring landbank in prime locations. Both are strategically sited within Petaling Jaya’s ‘Golden Triangle’ and benefit from excellent road access. They are surrounded by matured developments, which provide a good primary catchment of potential buyers. We have put our expertise to work, and have succeeded in further improving on the original development mix and concept, and ultimately the overall GDV and project returns.
glomac ar11 FA:Layout 1 8/27/11 4:47 PM Page 33
page
33
Group Managing Director/CEO’s Review of Operations
sold ving mary and and year. 118 n on liver 192 ome our and
ears ace. d as
and and lion
DV ion) 250
250
280 400
y in ling ured our and
Plaza Kelana Jaya 4 and Glomac Cyberjaya 2 on the other hand are extensions of highly successful developments we are undertaking or have undertaken in the past. The former is a freehold development sited on a 3.2 acre land adjacent to Plaza Kelana Jaya and its signature lakeside promenade, and will comprise of an office block, a neighbourhood shopping mall and office suites. The site for Glomac Cyberjaya 2 was acquired shortly after the highly successful launch of 63 units of shop offices in our maiden project in Cyberjaya. Recognising the potential of the somewhat untapped market for shop offices in this location, we negotiated for the adjacent plot of land and are now gearing up to launch and further capitalise on the momentum of Glomac Cyberjaya Phase 1 & 2. This new phase will continue to offer shop offices. Acquisition of New Landbank In January of this year, we entered into a transaction to further expand our stock of landbank in the Klang Valley. We signed an agreement to acquire 200 acres of leasehold land in Puchong, Selangor for a total consideration of RM77 million. We are purchasing the said property from our previous joint-venture partner Score Option Sdn Bhd (Receivers and Managers appointed). Having developed ‘Lakeside Residences’ in the same location in 2005 under an earlier joint-venture agreement, we are highly familiar with the area and the dynamics of the market. The land is strategically located in Puchong’s commercial hub with Tesco and IOI Mall in the immediate vicinity. Again, it enjoys excellent access and is well serviced by major highways like Lebuhraya Damansara-Puchong and KESAS. The acquisition is pending completion, but we already have some preliminary plans for this development and our initial estimate is that this project can yield a GDV of up to RM1 billion.
STRATEGY & OUTLOOK Earnings prospects remain promising in the current financial, anchored by the healthy unbilled sales of RM550 million as at April 30, 2011. This figure will not remain static as we are confident that our current suite of projects, both ongoing as well as those slated for launch later this year, will continue to enjoy healthy take-up rates. Our total launches in the current financial year is targeted at RM1.2 billion, and this will include new projects such as Mutiara Damansara Residences and the 1st block of properties at Glomac Utama. Critical success factors that underpin the saleability of our products are Glomac’s branding, the prime locations of our Klang Valley projects and our award-winning designs. Our business approach also places equal emphasis on operational efficiency to achieve outstanding performance. To this end, we are also continuously upgrading our business and IT systems, as well as improving the skills and capabilities of our employees through various training programmes. These initiatives represent our strategy to remain at the forefront of the development business, and ultimately deliver higher returns to shareholders. Whilst our pipeline of new projects is sizeable, we will continue to continuously explore new landbank opportunities. We have the financial resources and operational capacity to undertake more projects within Greater KL / Klang Valley. The real estate market continues to offer much potential as new opportunities emerge from the Government’s push to enhance the mobility and connectivity of the population through very significant investments in transportation infrastructure projects such as the LRT Extension Phase II, Klang Valley Mass Rapid Transit (MRT) system and the RM6 billion West Coast Expressway. More development corridors will emerge as a consequence of these investments, and we will endeavour to capitalise where opportunities are created.
Dato’ F.D. Iskandar Bin Tan Sri Dato’ F.D. Mansor Group Managing Director / Chief Executive Officer August 10, 2011
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Glomac Berhad 2011 annual report
34
5-Yea Profit Before Tax RM’000
2009
2007
2010
2009
2008
2007
Return On Total Assets
2010
2008
2007
6.5
2008
2007
4.5 2009
2008
14.5
13.6
2010
11.4
14.2 2011
2009
Net Dividend Per Share (Sen)
6.8
Basic Earnings Per Share (Sen)
2011
3.2%
3.5%
32,191 2007
2.8%
2008
6.7
2009
2.8%
2010
6.4
2011
35,145
31,977
40,854
4.6%
62,981
Profit Attributable to: Owners of the Company RM’000
2011
56,240
74,893
293,255
324,335 2008
50,675
2010
50,193
2011
345,266
316,756
597,478
129,492
Revenue RM’000
21.5
5-YEAR FINANCIAL HIGHLIGHTS
page
2007
2011
2010
2009
glomac ar11 FA:Layout 1 8/27/11 4:47 PM Page 35
page
5-Year Financial Highlights
35
2011 RM’000
2010 RM’000
2009 RM’000
2008 RM’000
2007 RM’000
Revenue Profit Before Tax and Exceptional Item Exceptional Item
597,478 129,492 -
316,756 74,893 -
345,266 56,240 -
324,335 50,193 -
293,255 50,675 -
Profit Before Tax Taxation
129,492 (36,761)
74,893 (17,614)
56,240 (17,430)
50,193 (15,582)
50,675 (17,315)
Profit For The Year
92,731
57,279
38,810
34,611
33,360
Profit Attributable to: Owners of the Company Minority Interest
62,981 29,750
40,854 16,425
31,977 6,833
35,145 (534)
32,191 1,169
92,731
52,279
38,810
34,611
33,360
1,354,882 297,174 599,684
1,154,027 297,170 553,090
10.5% 4.6%
7.4% 3.5%
6.2% 2.8%
7.0% 2.8%
8.1% 3.2%
21.5 2.03 6.8
14.2 1.88 6.4
11.4 1.85 4.5
13.6 1.75 6.7
14.5 1.78 6.5
ASSETS AND SHAREHOLDERS’ FUNDS Total Assets Employed Paid-up share Capital Shareholders’ Funds Return On Shareholders’ Funds Attributable To Owners of the Company Return On Total Assets
1,132,076 1,270,403 1,007,496 297,169 297,169 219,035 516,418 501,839 397,174
SHARE INFORMATION Basic Earnings Per Share (Sen) Net Assets Per Share (RM) Net Dividend Per Share (Sen)
Notes: (i) (ii)
The comparative figures have been restated arising from the mandatory adoption of FRSs in 2007. The earnings per share and net assets per share for 2007 have been restated to take into account the effect of rights issue in financial year ended April 30, 2008.
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CORPORATE GOVERNANCE STATEMENT
Glomac Berhad 2011 annual report
page
36
The Board of Directors (“Board”) of Glomac Berhad (“Company” or “Group”) recognizes the importance of corporate governance and is committed to continue applying high standards of corporate governance throughout the Group by adopting and applying the Malaysian Code of Corporate Governance (Revised 2007) (“Code”) to safeguard the interest of its stakeholders and to achieve best practices in all its activities.
Corpo
3
The Board is pleased to report on the manner in which the Group has applied the principles of the Code and the extent to which it has complied with Best Practices of the Code during the financial year ended April 30, 2011. A.
BOARD OF DIRECTORS 1.
THE BOARD The Company is led and controlled by the Board which assumes overall responsibility for corporate governance, strategic direction and investments made by the Group. The Board, however, delegates certain responsibilities to the Board Committees, all of which operate within defined terms of reference to assist the Board in the execution of its duties and responsibilities. The Board Committees include the Audit and Risk Committee, Nomination Committee and Remuneration Committee. These Committees are tasked to examine specific areas and issues and report to the Board on their deliberations together with recommendations. However, the ultimate responsibility for the final decision on all matters lies with the Board.
2.
BOARD BALANCE The Board consists of 6 members, comprising 3 Executive Directors and 3 Independent Non-Executive Directors which fulfill the criteria of independence as prescribed by the Listing Requirements of Bursa Malaysia Securities Berhad (“Bursa Securities”). The profiles of each Director are presented on pages 8 to 13 of this Annual Report. The Board composition reflects a balance of Executive and Non-Executive Directors with a mix of suitably qualified and experienced professionals. Together, the Directors bring with them a broad range of skills, experience and knowledge required to successfully direct and supervise the Company’s business activities, which are vital to the success of the Group. The Executive Directors are responsible for implementing policies of the Board, overseeing the Group’s operations and developing the Group’s business strategies established by the Board. The Independent Non-Executive Directors fulfill a pivotal role in corporate accountability; providing independent view, advice and judgment to ensure a balanced and unbiased decision making process to ensure that the long term interests of all stakeholders are well protected. There is also a clear division of responsibilities between the Executive Chairman and the Group Managing Director/Chief Executive Officer to ensure a balance of power and authority. The Executive Chairman is responsible in ensuring Board effectiveness and standard of conduct whilst the management of the Group’s businesses, implementation of policies and the day-to-day running of the businesses are the responsibilities of the Group Managing Director/Chief Executive Officer.
4
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Corporate Governance Statement
and is n Code ivities.
3.
page
37
BOARD MEETINGS Board meetings for the ensuing year are scheduled at the start of each financial year to enable the Board to plan their schedules accordingly. The Board meets at least 4 times in a year with additional meetings being convened as and when necessary.
it has
During the financial year under review, the Board met five (5) times and the attendance record for each Director is as follows:Name of Director
ection
erence mittee,
er with
Total meetings attended
Percentage of attendance (%)
Tan Sri Dato’ Mohamed Mansor bin Fateh Din
5/5
100
Datuk Richard Fong Loong Tuck
5/5
100
Dato’ Fateh Iskandar bin Tan Sri Dato’ Mohamed Mansor
5/5
100
Adjunct Professor Datuk Ali bin Tan Sri Abdul Kadir
5/5
100
Dato’ Ikhwan Salim bin Dato’ Sujak
5/5
100
Chong Kok Keong
5/5
100
All Directors have complied with the minimum 50% attendance requirement in respect of Board meetings as stipulated by the Listing Requirements of Bursa Securities.
fill the ties”).
In the periods between the 5 Board meetings, Board approvals are sought via circular resolutions which are attached with sufficient information required to make an informed decision. enced ssfully
loping porate ess to
cutive ss and ning of
Directors are also required to declare their respective shareholdings in the Company and related companies and their interests in contracts or proposed contracts with the Company or any of its related companies. The Directors concerned shall abstain from any deliberation and voting in relation to these transactions.
4.
SUPPLY OF INFORMATION The Directors have full and unrestricted access to all information pertaining to the Group’s business affairs, whether as a full Board or in their individual capacity, to enable them to discharge their duties. Prior to the Board meetings, all Directors receive the agenda together with a set of Board papers containing information relevant to the business of the meeting. This allows the Directors to obtain further explanations/clarifications from management, where necessary, to facilitate informed decision making. Senior management officers and external advisers may be invited at the Board meetings when necessary, to furnish the Board with explanation and comments on the relevant agenda. All Directors also have full access to the advice and services of the Company Secretaries who ensure that Board procedures are adhered to at all times and advise the Board on matters including corporate governance issues, and Directors’ responsibilities in complying with relevant legislation and regulations. All directors may obtain independent professional advice, at the Company’s expense, if required, in furtherance of their duties. Directors and employees of the Group who are in possession of price-sensitive information regarding the Company which are not publicly available, and who deal in the securities of the Company are required to notify the Company within a specific timeframe as prescribed by the Listing Requirements.
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Corporate Governance Statement
5.
Glomac Berhad 2011 annual report
page
38
APPOINTMENT AND RE-ELECTION TO THE BOARD In accordance with the Company’s Articles of Association, at least one third of the Directors shall retire from office every year provided always that all Directors shall retire from office at least once in every three (3) years but shall be eligible for re-election in the Annual General Meeting. Directors who are over seventy (70) years of age are required to submit themselves for re-appointment annually in accordance with Section 129 of the Companies Act, 1965. Appointments to the Board shall be made based on the recommendations of the Nomination Committee which was established on 23 March 2009. The Nomination Committee comprise of the following members:-
Dato’ Ikhwan Salim bin Dato’ Sujak, Chairman Adjunct Professor Datuk Ali bin Tan Sri Abdul Kadir, Member Dato’ Fateh Iskandar bin Tan Sri Dato’ Mohamed Mansor, Member
The terms of reference of the Nomination Committee are:-
6.
-
to consider, in making its recommendations to the Board, candidates for all directorships/board committees including the position of Independent Non-Executive Director, in respect of their skills, knowledge, expertise, experience, professionalism and integrity; and in the case of Independent Non-Executive Directors, their abilities to discharge such responsibilities/functions as expected from an Independent Non-Executive Director;
-
to assist the Board in reviewing on an annual basis the required mix of skills and experience of the Directors of the Board/Board Committees;
-
to recommend the appropriate Board balance and size of non-executive participation;
-
to establish procedures and processes towards an annual assessment of the effectiveness of the Board as a whole and contribution of each individual Director and Board Committee member including Independent Non-Executive Directors as well as the Group Managing Director/Chief Executive Officer. The assessments and evaluations are properly documented; and
-
to assist the shareholders in their decision, sufficient information such as personal profile and attendance of meetings for the Directors standing for re-election are disclosed in the Directors’ Profile on pages 8, 9 and 13 of this Annual Report. The details of their interest in the securities of the Company, are set out in the Analysis of Shareholdings which appear on page 140 of this Annual Report.
DIRECTORS’ TRAINING The Group acknowledges that continuous education is vital for the Board members to gain insight into the state of economy, technological advances, regulatory updates and management strategies to enhance the Board’s skills and knowledge in discharging its responsibilities. All Directors appointed to the Board, apart from attending the Mandatory Accreditation Programme accredited by Bursa Securities, have also attended other relevant trainings and seminars organised by the relevant regulatory and professional bodies to further enhance their business acumen and professionalism in discharging their duties to the Group.
Corpo
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Corporate Governance Statement
ovided Annual
page
39
Members of the Board had also been invited to participate in forums and/or seminars in their capacity as speakers, moderators or panelists in areas of their expertise. Some of the trainings/conferences/seminars and/or workshop in which members of the Board had participated as at April 30, 2011, were as follows:Tan Sri Dato’ Mohamed Mansor bin Fateh Din
e with
hed on
• • • • • • • •
National Key Economic Areas (NKEA) Workshop World Islamic Economic Forum Business Opportunities in Yemen’s Forum Islamic Finance Forum (KLIFF 2010) organised by Bank Rakyat Berhad Khazanah Global Lecture organised by Khazanah Nasional Berhad 3rd Malaysia Construction Summit 2010, 10th Malaysia Plan: The Challenges Ahead Arab Chambers Luncheon and Talks Mini Discussion with Ministry of International Trade and Industry
Datuk Richard Fong Loong Tuck ng the nalism ctions
Board
e and as well nd for the details of this
nomy, arging
• • • • • • • • • • • • • •
FIABCI Morning Talk: Tax Incentives for Green Building REHDA Property Forum - Malaysian Properties in the Global Market FIABCI Morning Talk: Microbial Technology for Cleaning Rivers FIABCI Morning Talk: FIABCI in front of financial crisis FIABCI Morning Talk: Good & Services Tax FIABCI Smart Investment in Property Seminar (VIII) - Bubble or Boom FIABCI Morning Talk: Opening of bank account by non Malaysian & foreigners PIP Property Summit (Penang) - Prospects of Foreign Investments in Malaysia Property Scene in the new decade FIABCI Morning Talk: Govt Service Tax Updates FIABCI Morning Talk: EPF involvement in Property Sector FIABCI Morning Talk: Money Laundering FIABCI Morning Talk: Malaysia Market Outlook FIABCI Morning Talk: Budget Overview 2011 FIABCI Morning Talk: Taxation
Dato’ Fateh Iskandar bin Tan Sri Dato’ Mohamed Mansor • • • • • • • •
International Real Estate Summit, London Invest Malaysia 2011 organised by Bursa Malaysia & Maybank Investment Bank Berhad Malaysia Property Day by Maybank, Singapore 3rd Malaysia Construction Summit 2010, 10th Malaysia Plan: The Challenges Ahead Khazanah Global Lecture Rehda Property Leader Forum 2010 Rehda – Conducting Market & Feasibility Studies for Property Development Rehda Property Market Outlook 2011
Adjunct Professor Datuk Ali bin Tan Sri Abdul Kadir urities, urther
• • • •
The Regional Cambridge International Symposium on Economic Crime World Capital Market Symposium 2010 Asia-Pacific Standard Setters Organizations Group Conference, Tokyo IASB-MASB Discussion Forum
Dato’ Ikhwan Salim bin Dato’ Sujak • •
Tax Audit & Investigation Workshop 3rd Malaysia Construction Summit 2010, 10th Malaysia Plan: The Challenges Ahead
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Corporate Governance Statement
Glomac Berhad 2011 annual report
page
40
Corpo
Chong Kok Keong • • • • •
It n
Workshop FRS for Board of Directors and Senior Management/Workshop of Financial Statement and Senior Management 3rd Malaysia Construction Summit 2010, 10th Malaysia Plan: The Challenges Ahead The Regulatory Framework and Directors Duties 2010 - “What Directors Need to Know” Mechanical Engineering IAP (Industrial Advisory Panel) Industrialised Building Systems Roadmap 2011 - 2015
In o s A
B.
T is a if
DIRECTORS’ REMUNERATION The Executive Directors’ remunerations comprise basic salary, allowances, bonuses and other customary benefits to the Group made available as appropriate. The Non-Executive Directors’ remunerations comprise fees and allowances. The Directors’ aggregate remuneration as well as the total remuneration during falls within the prescribed band for the financial year ended April 30, 2011, are set out in the Notes to the audited financial statements on pages 88 and 89 of this Annual Report.
In is m u
The Board had established a Remuneration Committee on March 23, 2009 which comprises of the following members:-
Dato’ Ikhwan Salim bin Dato’ Sujak, Chairman Adjunct Professor Datuk Ali bin Tan Sri Abdul Kadir, Member Dato’ Fateh Iskandar bin Tan Sri Dato’ Mohamed Mansor, Member
D.
A F
The terms of reference of the Remuneration Committee are:-
C.
-
to review the annual remuneration packages of each individual Director (both Executive and Non-Executive) such that the levels of remuneration are sufficient to attract and retain the Directors needed to run the Company successfully; and
-
to recommend to the Board the remuneration packages of the Directors (both Executive and Non-Executive) of the Company.
T p s a In
Individual Directors do not participate in the decisions regarding their individual remuneration.
T w
SHAREHOLDERS
R
Communications between the Company and Investors
T st o q
The Company maintains an open channel of communication with its shareholders, institutional investors and the investing public at large with the objectives of inter alia, providing a clear and complete picture of the Group’s performance and position as possible. The Company values feedbacks and dialogues with its investors and believes that a constructive and effective investor relationship is an essential factor in enhancing value for its shareholders. In addition to various announcements made during the year, the timely release of annual reports, circulars to shareholders, press releases and financial results on a quarterly basis provides shareholders and investors with an overview of the Group’s performance and operations. The Company also actively responds to requests for discussions with institutional shareholders and analysts, locally and abroad, to provide them better insights of the Group. The Group also takes a proactive approach in reaching out to the investing community via visits to project sites, small group meetings, luncheons and participating in roadshows and investors conferences and such activities are usually spearheaded by the Executive Directors.
It D D T o a T A th
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Corporate Governance Statement
page
41
It is hoped that such approaches will allow shareholders and investor communities to make more informed investment decisions based not only on past performance but also the future direction of the Group.
ent
In addition, the Company’s website, www.glomac.com.my is accessible for the shareholders, investors and members of the public to obtain information on the Group’s announcements, corporate information, operations, financial performance and other matters affecting shareholders’ and investors’ interests. Annual General Meeting (“AGM”) The AGM of the Company serves as the principal forum that provides the opportunity for shareholders to raise questions pertaining to issues in the Annual Report, Audited Financial Statements, and corporate developments in the Group, the resolutions being proposed and on the businesses of the Group. The Chairman as well as the Managing Director/Chief Executive Officer and the external auditors, if so required, will respond to shareholders’ questions during the meeting.
made
al year
In addition, a press conference will generally be held after such general meetings whereat, the Directors would explain and clarify any issues posed by the members of the media regarding the Company, save and except for such information that may be regarded as material or price sensitive in nature, which disclosure shall be made in strict adherence to the disclosure requirements as prescribed under the Listing Requirements and other various contractual or statutory rules and provisions that the Group may be subjected to.
D.
ACCOUNTABILITY AND AUDIT Financial Reporting
vels of
y.
The Board aims to provide and present a clear, balanced and comprehensive assessment of the Group’s financial performance and prospects at the end of the financial year, primarily through the annual financial statements, quarterly announcement of results to shareholders as well as the Chairman’s statement and the Managing Director’s review of operations in the annual report. The Board is assisted by the Audit Committee to oversee the Group’s financial reporting processes and the quality of its financial reporting. Internal Control The Statement on Internal Control set out on pages 48 and 49 of this Annual Report provides an overview of the state of internal controls within the Group. Relationship with Auditors
t large mpany factor
leases ations. ad, to ity via es are
The Company maintains a transparent relationship with its auditors and seeks their professional advice to ensure that accounting standards are complied with. The Audit Committee discusses with the external auditors the nature and scope of the audit and reporting obligations before the audit commences. The Audit Committee ensures that the management provides timely responses on all material queries raised by the external auditors after the audit in respect of the accounting records, financial accounts or systems of control. It is a policy of the Audit Committee to meet up with the external auditors at least twice a year without the presence of the Executive Director and the Management to discuss on audit findings, audit plan and the Company’s financial statements. Directors’ Responsibility Statement The Directors are required by the Companies Act, 1965 to prepare financial statements for each financial year which have been made out in accordance with the applicable approved accounting standards and give a true and fair view of the state of affairs of the Group and Company at the end of the financial year and of the results and cash flows of the Group and Company for the financial year. The Directors are satisfied that in preparing the financial statements of the Group and of the Company for the financial year ended April 30, 2011, the Group has used the appropriate accounting policies and applied them consistently. The Directors are also of the view that relevant approved accounting standards have been followed in the preparation of these financial statements.
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Corporate Governance Statement
E.
Glomac Berhad 2011 annual report
page
42
Corpo
COMPLIANCE STATEMENT
ADDIT
The Board has deliberated, reviewed and approved this Statement on Corporate Governance. The Board considers that the Statement on Corporate Governance provides the information necessary to enable shareholders to evaluate how the Code has been applied. The Board considers and is satisfied that the Company has fulfilled its obligation under the Code, the Listing Requirements and all applicable laws and regulations throughout the financial year ended April 30, 2011.
1.
U T
2.
S D c 5
This Statement is made in accordance with a resolution of the Board of Directors dated August 10, 2011.
D M
2 M J J D 2 Ja F M A
3.
O T
4.
A T
5.
Im T re
6.
N T
7.
V T d
8.
P N
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Corporate Governance Statement
page
43
ADDITIONAL COMPLIANCE INFORMATION ement pplied. nd all
1.
Utilisation of proceeds There were no corporate proposals to raise funds during the financial year ended April 30, 2011.
2.
Share buy-back During the financial year, the Company repurchased 3,671,000 of its own shares from the open market of Bursa Securities for a total consideration of RM5,782,656. The shares are being held as treasury shares. During the financial year, the Company also resold 5,010,300 shares held as treasury shares for a total consideration of RM8,902,700. Details of the shares repurchased during the financial year are as follows:Month No of shares bought back/(resold) 2010 May June July Dec 2011 Jan Feb Mar Apr
3.
Highest Price paid/ (sold) RM
984,900 476,400 41,300 10,000
150,000 (5,010,300) 377,100 1,209,100 422,200
Lowest Price paid/(sold) RM
Average Price paid/ (received) RM
Total cost RM
1.38 1.28 1.32 1.69
1.20 1.24 1.30 1.69
1.30 1.26 1.30 1.70
1,275,730 601,850 53,697 17,023
1.79 (1.78) 1.85 1.85 1.95
1.79 (1.78) 1.71 1.67 1.87
1.79 (1.78) 1.79 1.72 1.92
268,367 8,902,700 674,325 2,082,715 808,949
Options, warrants or convertible securities The Company has not issued any options, warrants or convertible securities in respect of the financial year ended April 30, 2011.
4.
American Depository Receipt (ADR) or Global Depository Receipt (GDR) programme The Company has not sponsored any ADR or GDR programme for the financial year ended April 30, 2011.
5.
Imposition of sanctions/penalties There were no sanctions and/or penalties imposed on the Company and its subsidiaries, Directors or management by the relevant regulatory bodies.
6.
Non-audit fees There were no non-audit fees paid to external auditors for the financial year except for the review of the Statement on Internal Control.
7.
Variation in results There is no material variance between the results for the financial year and the unaudited results previously announced. The Company did not make any release on the profit estimate, forecast or projections for the financial year.
8.
Profit guarantee No profit guarantee was given by the Company in respect of the financial year.
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Corporate Governance Statement
9.
Glomac Berhad 2011 annual report
page
44
AUDIT
Material contracts There were no material contracts entered into by the Company and its subsidiaries involving Directors’ and major shareholders’ interests.
The A relatin subsid
10. Recurrent related party transactions At the 26th Annual General Meeting of the Company held on September 30, 2010, the Company had obtained a general mandate from its shareholders on the renewal to enter into recurrent related party transactions of a revenue or trading nature (“RRPT”), which are necessary for its day-to-day operations and in the ordinary course of its business with related parties (“RRPT Mandate”). The said RRPT Mandate took effect on September 30, 2010 until the conclusion of the forthcoming Annual General Meeting of the Company. At the forthcoming Annual General Meeting to be held on September 28, 2011, the Company intends to seek its shareholders’ approval to renew the existing RRPT Mandate. The following is the disclosure of the aggregate value of transactions conducted during the financial year ended April 30, 2011 pursuant to the said RRPT Mandate:Nature of transactions
Transacting Parties
Related Parties
Relationship
Award of contracts and/or projects for construction works
Glomac Bina Sdn Bhd
• TSFDM (1)
• TSFDM is a Director & Major Shareholder of Glomac Bina Sdn Bhd
Provision of project management fees
Purchase of properties sold by the Glomac Group
FDA Sdn Bhd
Directors and Major Shareholders of Glomac and its subsidiaries and Persons Connected to them
Value of Transaction (RM)
• Interested Directors (3)
• Interested Directors are Directors & Interested Major Shareholders of Glomac Berhad
• DFDI (2)
• DFDI is a Director & Major Shareholder of FDA Sdn Bhd
• Interested Directors
• Interested Directors are Directors & Interested Major Shareholders of Glomac Berhad
Directors and Major Shareholders of Glomac and its subsidiaries and Persons Connected to them
Directors and Major Shareholders of Glomac and its subsidiaries and Persons Connected to them
66,047,300.13
T A (C D (S C (I
(B) T (1
124,109.90
14,355.000.00
Notes: (1) (2) (3)
(A) M
Tan Sri Dato’ Mohamed Mansor bin Fateh Din (“TSFDM”) Dato’ Fateh Iskandar bin Tan Sri Dato’ Mohamed Mansor (“DFDI”) Interested Directors – TSFDM, DFDI and Datuk Richard Fong Loong Tuck collectively
11. Revaluation Policy The revaluation policy of the Group in relation to its investment properties is set out on page 138 of this Annual Report.
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AUDIT COMMITTEE REPORT
erests.
e from ch are RRPT
proval
rsuant
(RM) 00.13
page
45
The Audit Committee assists the Board in overseeing of the Company’s financial statements and reporting in fulfilling its fiduciary responsibilities relating to internal controls, financial and accounting records and policies as well as financial reporting practices of the Company and its subsidiaries (“the Group”).
(A) MEMBERS The Audit Committee comprises 3 Directors, all of whom are Independent Non-Executive Directors: Adjunct Professor Datuk Ali bin Tan Sri Abdul Kadir (Chairman/Independent Non-Executive Director) Dato’ Ikhwan Salim bin Dato’ Sujak (Senior Independent Non-Executive Director) Chong Kok Keong (Independent Non-Executive Director)
(B) TERMS OF REFERENCE (1) Composition (a) The Audit Committee shall consist of not less than three (3) members, all of whom shall be Non-Executive Directors, with a majority being Independent Directors. (b) At least of one (1) member of the Audit Committee:(i) must be a member of the Malaysian Institute of Accountants; or (ii) if he is not member of of the Malaysian Institute of Accountants, he must have at least 3 years’ working experience and –
09.90 (aa) he must have passed the examinations specified in Part I if the 1st Schedule of the Accountants Act 1967; or (bb) he must be a member of one of the associations of accountants specified in Part II of the 1st Schedule of the Accountants Act 1967; (iii) fulfils such other requirements as prescribed or approved by the Bursa Securities. (c) The Chairman of the Audit Committee shall be an Independent Director. 00.00
(d) No alternate director shall be appointed as a member of the Audit Committee. (e) In the event of any vacancy in Audit Committee resulting in the non-compliance of the Listing Requirements of Bursa Securities pertaining the the composition of the audit committee, the Board of Directors shall, within three (3) months of that event, fill the vacancy.
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Audit Committee Report
Glomac Berhad 2011 annual report
page
46
Audit
(2) Meetings and Quorum During the financial year ended April 30, 2011, the Committee held five meetings. The details of the attendance of each Committee member are as follows: Name of Audit Committee Member
Total meetings attended
Adjunct Professor Datuk Ali bin Tan Sri Abdul Kadir
5/5
Dato’ Ikhwan Salim bin Dato’ Sujak
5/5
Chong Kok Keong
5/5
The Audit Committee shall meet at least four (4) times a year, with additional meetings convened as and when necessary and attended by the Department Head charged with the responsibility of the Group’s financial reporting. Attendance of other Directors and employees at any particular Audit Committee Meeting will be at the invitation of the Audit Committee. The presence of the Group Internal and External Auditor for a meeting will be requested if required.
(C) S In 2 •
The quorum for any meeting shall be two (2) members of which the majority must be independent directors. (3) Secretary to Audit Committee and Minutes The Company Secretary shall be the secretary of the Committee and as a reporting procedure; the minutes shall be circulated to all members of the Board.
• •
(4) Authority The Committee is authorised by the Board to investigate any activity within its terms of reference. It is authorised to seek any information it requires from any employee for the purpose of discharging its functions and responsibilities. The Committee is also authorised to obtain legal or other independent professional advice and to ensure the attendance of outsiders with relevant experience and expertise if it considers this necessary. (5) Duties and Responsibilities
•
•
The duties and responsibilities of the Audit Committee shall be: i)
To review the Company’s and the Group’s Quarterly and Annual financial statements before submission to the Board. The review shall focus on: -
any changes in accounting policies and practices major judgmental areas significant and unusual events the going concern assumption compliance with accounting standards and other legal requirements compliance with Bursa Malaysia Securites Berhad (“Bursa Securities”) requirements
ii)
To review with the external auditors their audit plan, scope and nature of audit for the Company and the Group.
iii)
To assess the adequacy and effectiveness of the systems of internal control and accounting control procedures of the Company and the Group by reviewing the external auditors’ management letters and management response.
iv)
To hear from the external auditors problems and reservations arising from their interim and final audits.
• •
(D) IN T a re A
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Audit Committee Report
page
47
v)
To review the internal audit plan, consider the major findings of internal audit, fraud investigations and actions and steps taken by management in response to audit findings and to review the adequacy of the competency of the internal audit function.
vi)
To review any related party transactions that may arise within the Company or the Group.
mittee
vii) To consider the appointment of the external auditors, the terms of reference of their appointment and any question of resignation or dismissal. viii) To undertake such other responsibilities as may be agreed to by the Committee and the Board.
(C) SUMMARY OF AUDIT COMMITTEE ACTIVITIES ry and ectors of the
In line with the terms of reference of the Committee, activities carried out by the Committee during the financial year ended April 30, 2011 in the discharge of its duties and responsibilities included the following:•
Reviewing with the external auditors on: -
d to all
•
Reviewing the audited financial statements for financial year ended April 30, 2011
•
Reviewing the unaudited quarterly financial results announcements of the Group prior to the Board of Directors’ approval with particular focus on:
ek any
siders
the scope of work and audit plan of the Company and of the Group for the financial year ended April 30, 2011; significant issues and concerns arising from the audit
-
compliance with accounting standards and regulatory requirements; and the Group’s accounting policies and practices
•
Reviewing Related Party Transactions entered into by the Company and the Group and the draft proposal to seek shareholders’ mandate for the Company and the Group to enter into recurrent related party transactions of a revenue or trading nature
•
Reviewing with the internal auditors on: -
the scope of work and audit plan of the Company and of the Group for the financial year ended April 30, 2011; significant issues and concerns arising from the audit accessing the internal auditor’s findings and the management’s responses thereto and thereafter, making the necessary recommendations or changes to the Board of Directors
•
Considered and recommended to the Board for approval of the audit fees payable to the External Auditors and Internal Auditors
•
Setting up the Risk Management Committee and the Enterprise Risk Management (ERM) division
(D) INTERNAL AUDIT FUNCTION
mpany
The Company outsources its internal audit function to KPMG Business Advisory Sdn Bhd (“KPMG”), which has adequate resources and appropriate standing to undertake its activities independently and objectively to provide reasonable assurance to the Audit Committee regarding the adequacy and effectiveness of risk management, internal control and governance systems. KPMG reports directly to the Audit Committee.
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STATEMENT ON INTERNAL CONTROL
Glomac Berhad 2011 annual report
page
48
Directors of listed companies are required to disclose in their annual reports on the state of internal control of the listed company as a group in accordance with the Listing Requirements of Bursa Malaysia Securities Berhad (“Bursa Securities”). The Statement on Internal Control Guidance for Directors of Public Listed Companies (“Guidance”), a publication of Bursa, provides guidance for directors to make such disclosure. Board Responsibility The Board recognises the importance of a sound risk management and internal control system for good corporate governance. The Board acknowledges its overall responsibility for identifying principal risks within the Group and ensuring the implementation of appropriate systems to manage these risks, as well as reviewing the adequacy and integrity of the Group’s internal control system. The Group’s system of internal control is designed to manage the principal business risks that may impede the Group from achieving its business objectives, as well as comply with applicable laws, regulations, rules, directives and guidelines. The system, by its nature, can only provide reasonable but not absolute assurance against any material misstatement or loss occurrence.
State
System The fo contro
Clear Key re Comm Board
Strateg Appro and b
Risk Management The Board firmly believes that risk management is critical to the Group’s continued profitability and the enhancement of shareholder value. Thus, the Board appointed an independent professional firm to facilitate the implementation of an enterprise risk management (“ERM”) framework for the Group’s core business division, i.e. the Property Development Division in 2010. The development of the ERM framework largely entailed:
ISO 90 The C improv
Forma •
formalisation of a structured process on risk identification, evaluation and controls, and risk reporting for adoption across the Group; and
•
the development of risk management policy and guidelines for adoption by the Board.
A Risk Management Committee (“RMC”), chaired by the Group MD/CEO, was formed to oversee the following: •
communicate the Board’s vision, strategy, policy, responsibilities, and reporting lines to all personnel across the Group;
•
identify and communicate to the Board, critical risks (present or potential) the Group faces, their changes, and Management’s action plans to manage the risks;
Intern within
Perfor The G agains
Financ
•
perform risk oversight and review risk profile and organisational performance;
The p the sa and sh
•
aggregating the Group’s risk position and half yearly reporting to the Board on the risk situation/status;
Quality
•
set performance measures for the Group; and
The G requir
•
provide guidance to the business units and departments on the Group’s risk appetite and capacity, and other criteria which, when exceeded, trigger an obligation to report upward to the Board.
The In
Subsequent to the formalisation and adoption of the ERM framework by the Group, the RMC meets on an ongoing basis to assess and evaluate risks that may impede the Group from achieving its strategic and operational objectives, as well as develop action plans to reduce/ mitigate such risks from occurring. The results of the ERM framework and risk updates deliberated during RMC meetings, i.e. the internal controls to address key risks identified, were used as the basis to develop a risk-based internal audit plan for the financial year ended April 30, 2011, which was approved by the Audit Committee.
Regula of the on im recom Manag contro are in proced recom Concl The B ended system
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Statement on Internal Control
group ntrol e such
page
49
Systems of Internal Control The following key processes have been established by the Board in reviewing the adequacy and integrity of the Group’s system of internal controls:
Clear lines of accountability and reporting within the organisation Board stems nternal well as ut not
Key responsibilities and accountability in the organisational structure are clearly defined, with clear reporting lines up to the Board and its Committees. Established delegation of authority sets out the appropriate authority levels for decision-making, including matters requiring Board’s approval.
Strategic business planning processes Appropriate business plans are established where the Group’s business objectives, strategies and targets are articulated. Business planning and budgeting are undertaken annually, to establish plans and targets against which performance is monitored on an ongoing basis.
value. ERM”) ework
ISO 9001:2000 Accreditation The Construction Division of the Group has been accorded full ISO 9001:2000 accreditation in line with the Group’s quest in consistently improving the strength of its internal controls.
Formalised and Documented Policies and Procedures p; and
Internal policies and procedures, which are set out in a series of clearly documented standard operating manuals covering a majority of areas within the Group, are maintained and subject to review as and when necessary.
Performance Monitoring & Reporting The Group’s management team monitors and reviews financial and operational results, including monitoring and reporting of performance against the operating plans. The management team formulates and communicates action plans to address areas of concern. action
Financial Performance The preparation of periodic and annual results and the state of affairs of the Group is reviewed and approved by the Board before release of the same to the regulators whilst the full year financial statements are audited by the external auditors before their issuance to the regulators and shareholders.
Quality Control The Group takes continuous efforts in maintaining the quality of products and services. Safety and health regulations, environmental requirements and relevant legislations affecting the Group’s operations are considered and complied with, as appropriate. when The Internal Audit Function aluate itigate
ntified, by the
Regular internal audits are carried out by an independent professional firm to review the adequacy and integrity of the internal control systems of the business units (operational and non-operational) within the Group. The internal audit function reports directly to the Audit Committee on improvement measures pertaining to internal controls, including a follow-up on the status of Management’s implementation of recommendation by the Internal Audit function. Internal audit reports are submitted to the Audit Committee, who reviews the findings with Management at its quarterly meetings. In addition, the External Auditors’ management letters and management’s responsiveness to the control recommendations on deficiencies noted during financial audits provide added assurance that control procedures on matters of finance are in place, and are being followed. In assessing the adequacy and effectiveness of the system of internal controls and accounting control procedures of the Group, the Audit Committee reports to the Board its activities, significant results, findings and the necessary recommendations or changes. Conclusion The Board is of the view that there was no breakdown or weaknesses in the system of internal control of the Group for the financial year ended April 30, 2011 that resulted in a significant loss to the Group. The Board continues to take the necessary measures to ensure that the system of internal control is in place and functioning effectively.
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financial statements & reports 52
Directors’ Report
58
Independent Auditors’ Report
60
Statements of Comprehensive Income
61
Statements of Financial Position
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63
Statements of Changes in Equity
135
Statement by Directors
65
Statements of Cash Flows
135
Declaration by the Officer Primarily Responsible for the Financial Management of the Company
67
Notes to the Financial Statements
134
Supplementary Information - Disclosure on Realised and Unrealised Profits
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DIRECTORS’ REPORT
Glomac Berhad 2011 annual report
page
52
Direc
The directors of GLOMAC BERHAD have pleasure in submitting their report and the audited financial statements of the Group and of the Company for the financial year ended April 30, 2011.
DIVID The am
PRINCIPAL ACTIVITIES The principal activities of the Company are property development and investment holding.
In resp Fina
The principal activities of the subsidiary and associated companies are disclosed in Note 43 to the Financial Statements. In resp
During the financial year, the Company acquired the following subsidiary companies: Subsidiary companies
Equity interest
Berapit Pertiwi Sdn. Bhd. Berapit Properties Sdn. Bhd. Kelana Property Services Sdn. Bhd.
100% 100% 100%
First
The d respec of the payme
The details of the acquisition of the subsidiary companies are disclosed in Note 17 to the Financial Statements. Other than as stated above, there have been no significant changes in the nature of the principal activities of the Company and of its subsidiary companies during the financial year.
The p subse
RESE RESULTS
There statem
The results of the Group and of the Company for the financial year are as follows:
The Group RM Profit before tax Income tax expense
The Company RM
129,491,996 (36,761,279)
28,942,442 (5,404,105)
Profit for the year
92,730,717
23,538,337
Profit attributable to: Owners of the Company Minority interest
62,980,867 29,749,850
23,538,337 -
92,730,717
23,538,337
In the opinion of the directors, the results of operations of the Group and of the Company during the financial year have not been substantially affected by any item, transaction or event of a material and unusual nature.
ISSUE The C
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Directors’ Report
of the
page
53
DIVIDENDS The amounts of dividends paid or declared by the Company since the end of the previous financial year were as follows: RM In respect of the financial year ended April 30, 2010 as reported in the directors’ report of that year: Final dividend of RM0.045 per share, less 25% tax, paid on November 30, 2010
9,860,705
In respect of the financial year ended April 30, 2011: terest 100% 100% 100%
sidiary
First interim dividend of RM0.045 per share, less 25% tax, paid on June 22, 2011
9,969,717
The directors propose a final dividend of RM0.05 per share, less 25% tax, totalling approximately RM10,933,000 (RM0.0375 per share) in respect of the current financial year. This dividend is subject to the approval of the shareholders at the forthcoming Annual General Meeting of the Company, and has not been included as a liability in the financial statements. Upon approval by the shareholders, the cash dividend payment will be accounted for in equity as an appropriation of retained earnings during the financial year ending April 30, 2012. The proposed dividend for 2011 is payable in respect of all outstanding ordinary shares in issue at a date to be determined by the directors subsequent to the approval of the shareholders at the forthcoming Annual General Meeting.
RESERVES AND PROVISIONS There were no material transfers to or from reserves or provisions during the financial year other than those disclosed in the financial statements.
mpany RM 2,442 4,105) 8,337
8,337 8,337
ntially
ISSUE OF SHARES AND DEBENTURES The Company has not issued any shares or debentures during the financial year.
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Directors’ Report
Glomac Berhad 2011 annual report
page
54
Direc
WARRANTS
OTHE
The Warrants 2007/2012 (“Warrants”) of the Company are constituted by a Deed Poll dated September 5, 2007 (“Deed Poll”).
Before the Di
The salient features of the Warrants 2007/2012 are as follows: (a) The issue date of the Warrants is October 25, 2007 and the expiry date is October 24, 2012. Any Warrants not exercised at the expiry date will lapse and cease to be valid for any purpose; (b) Each Warrant entitles the registered holder during the Exercise Period to subscribe for one (1) new ordinary share of RM1.00 in the Company at an exercise price of RM1.10 per ordinary share, subject to the adjustments in accordance with the provisions of the Deed Poll; (c) The Warrant holders are not entitled to participate in any distribution and/or offer of further securities in the Company (except for the issue of new warrants pursuant to adjustment as mentioned in item above), until and unless such holders exercise the rights under the Warrants to subscribe for new ordinary shares; (d) Subject to the provision in the Deed Poll, the Company is free to issue shares to shareholders either for cash or as a bonus distribution and further subscription rights upon such terms and conditions as the Company sees fit but the Warrant holders will not have any participating rights in such issues unless otherwise resolved by the Company in general meeting; and (e) All shares to be issued upon the exercise of the Warrants shall, on allotment and issue, rank pari passu in all respects with the then existing shares of the Company except that they shall not be entitled to any dividends, that may be declared prior to the date of exercise of the Warrants, nor shall they be entitled to any distributions or entitlements for which the entitlement date is prior to the date of exercise of the Warrants.
(a) to a d (b) to o At the (a) w G (b) w o (c) w m (d) n G
The movements in the Company’s Warrants are as follows: At the Number of warrants over ordinary shares of RM1.00 each Balance Balance as of as of 1.5.2010 Granted Exercised 30.4.2011
(a) a o (b) a
Number of unexercised Warrants
67,311,946
-
(4,500)
67,307,446
SHARE OPTIONS No options have been granted by the Company to any parties during the financial year to take up unissued shares of the Company. No shares have been issued during the financial year by virtue of the exercise of any option to take up unissued shares of the Company. As at the end of the financial year, there were no unissued shares of the Company under options.
TREASURY SHARES During the financial year, the Company purchased 3,671,000 units of its own shares through purchases on Bursa Malaysia Securities Berhad. The total amount paid for acquisition of the shares was approximately RM5,783,000 and it has been deducted from equity. The repurchased transactions were financed by internally generated funds and the average price paid for the shares were RM1.58 per share. The repurchased shares are held as treasury shares in accordance with Section 67A of the Companies Act, 1965. On January 25, 2011, the Company resold 5,010,300 treasury shares at an average price of RM1.78 per share. The difference of RM2,339,048 between the sale consideration and the carrying amount of the shares has been credited to the Share Premium Account.
No co of the their o In the the fin for the
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Directors’ Report
page
55
OTHER STATUTORY INFORMATION Before the statements of comprehensive income and the statements of financial position of the Group and of the Company were made out, the Directors took reasonable steps:
expiry
(a) 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 had satisfied themselves that all known bad debts had been written off and that adequate allowance had been made for doubtful debts; and
in the Deed
(b) 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 been written down to an amount which they might be expected so to realise.
for the er the
bution ve any
e then ercise ercise
At the date of this report, the Directors are not aware of any circumstances: (a) which would render the amount written off for bad debts or the amount of allowance for doubtful debts in the financial statements of the Group and of the Company inadequate to any substantial extent; or (b) which would render the values attributed to the current assets in the financial statements of the Group and of the Company misleading; or (c) which have arisen which render adherence to the existing method of valuation of assets or liabilities of the Group and of the Company misleading or inappropriate; or (d) not otherwise dealt with in this report or financial statements which would render any amount stated in the financial statements of the Group and of the Company misleading. At the date of this report, there does not exist:
each lance as of 2011
(a) any charge on the assets of the Group and of the Company which has arisen since the end of the financial year which secures the liability of any other person; or (b) any contingent liability of the Group and of the Company which has arisen since the end of the financial year.
7,446 No contingent or other liability has become enforceable, or is likely to become enforceable within the period of twelve months after the end of the financial year which, in the opinion of the directors, will or may substantially affect the ability of the Group and of the Company to meet their obligations as and when they fall due.
mpany.
erhad. hased hased
39,048
In the opinion of the directors, no item, transaction or event of a material and unusual nature has arisen in the interval between the end of the financial year and the date of this report which is likely to affect substantially the results of operations of the Group and of the Company for the succeeding financial year.
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Directors’ Report
Glomac Berhad 2011 annual report
page
56
Direc
DIRECTORS
DIREC
The following directors served on the Board of the Company since the date of the last report:
Since (other corpor than a
Tan Sri Dato’ Mohamed Mansor bin Fateh Din Datuk Fong Loong Tuck Dato’ Fateh Iskandar bin Tan Sri Dato’ Mohamed Mansor Dato’ Ikhwan Salim bin Dato’ Sujak Chong Kok Keong Adjunct Professor Datuk Ali bin Tan Sri Abdul Kadir
During might
In accordance with Article 84 of the Company’s Articles of Association, Datuk Fong Loong Tuck and Mr. Chong Kok Keong retire by rotation at the forthcoming Annual General Meeting of the Company and, being eligible, offer themselves for re-election. Pursuant to Section 129(2) of the Companies Act, 1965, Tan Sri Dato’ Mohamed Mansor bin Fateh Din retires and a resolution will be proposed for his re-appointment as director under the provision of Section 129(6) of the Act to hold office until the conclusion of the following Annual General Meeting of the Company.
SIGNI The si
SUBS The su
DIRECTORS’ INTERESTS The shareholdings in the Company and in related companies of those who were directors at the end of the financial year, as recorded in the Register of Directors’ Shareholdings kept by the Company under Section 134 of the Companies Act, 1965, are as follows: Number of ordinary shares of RM1.00 each Balance Balance as of as of 1.5.2010 Bought Sold 30.4.2011
AUDIT The au Signed in acc
Shares in the Company Registered in the name of directors Tan Sri Dato’ Mohamed Mansor bin Fateh Din Datuk Fong Loong Tuck Dato’ Fateh Iskandar bin Tan Sri Dato’ Mohamed Mansor Adjunct Professor Datuk Ali bin Tan Sri Abdul Kadir Dato’ Ikhwan Salim bin Dato’ Sujak Chong Kok Keong
70,985,141 51,867,329 32,238,100 190,000 10,400 331,500
1,366,700 11,160,700 200,000 -
(10,000,000) -
60,985,141 53,234,029 43,398,800 390,000 10,400 331,500
_____ TAN S BIN
Shares in a subsidiary company, Glomac Bina Sdn. Bhd. _____ DATO DATO
Registered in the name of director Tan Sri Dato’ Mohamed Mansor bin Fateh Din
1,092,000
-
-
1,092,000 Petalin Augus
Shares in a subsidiary company, FDA Sdn. Bhd. Registered in the name of director Dato’ Fateh Iskandar bin Tan Sri Dato’ Mohamed Mansor
75,000
-
-
75,000
By virtue of all the above directors having interest in shares of the Company, they are deemed to have an interest in the shares of all the subsidiary companies of the Company to the extent the Company has an interest.
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Directors’ Report
page
57
DIRECTORS’ BENEFITS Since the end of the previous financial year, none of the directors of the Company has received or become entitled to receive any benefit (other than those disclosed as directors’ remuneration in 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 any benefit which may be deemed to have arisen by virtue of the balances as disclosed in Notes 27 and 28 to the Financial Statements. During and at the end of the financial year, no arrangement subsisted to which the Company was a party whereby directors of the Company might acquire benefits by means of the acquisition of shares in, or debentures of, the Company or any other body corporate.
otation
SIGNIFICANT EVENTS The significant events during the financial year are disclosed in Note 45 to the Financial Statements.
posed Annual
SUBSEQUENT EVENTS The subsequent events are disclosed in Note 46 to the Financial Statements.
in the
AUDITORS The auditors, Messrs. Deloitte KassimChan, have indicated their willingness to continue in office.
lance as of 2011
5,141 4,029 8,800 0,000 0,400 1,500
Signed on behalf of the Board in accordance with a resolution of the Directors,
______________________________________ TAN SRI DATO’ MOHAMED MANSOR BIN FATEH DIN
______________________________________ DATO’ FATEH ISKANDAR BIN TAN SRI DATO’ MOHAMED MANSOR 2,000 Petaling Jaya August 10, 2011
5,000 all the
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INDEPENDENT AUDITORS’ REPORT
Glomac Berhad 2011 annual report
page
58
Indep
To the Members of Glomac Berhad
To the
Report on the Financial Statements
Repor
We have audited the financial statements of GLOMAC BERHAD, which comprise the statements of financial position of the Group and of the Company as of April 30, 2011 and the statements of comprehensive income, statements of changes in equity and statements of cash flows of the Group and of the Company for the financial year then ended, and a summary of significant accounting policies and other explanatory information, as set out on pages 60 to 133.
In acc
Directors’ Responsibility for the Financial Statements
(b) w N
The directors of the Company are responsible for the preparation of financial statements that give a true and fair view in accordance with Financial Reporting Standards and the Companies Act, 1965 in Malaysia and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
Auditors’ Responsibility Our responsibility is to express an opinion on these financial statements based on our audit and to report our opinion to you, as a body, in accordance with Section 174 of the Companies Act, 1965 in Malaysia and for no other purpose. We do not assume responsibility towards any other person for the contents of this report.
(a) in c
(c) w a re (d) th c Other
We conducted our audit in accordance with approved standards on auditing in Malaysia. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors’ judgement, 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 the entity’s preparation of financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the financial statements.
The su part o Guida Malay Bursa MIA G
We believe that the audit evidence that we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinion In our opinion, the financial statements have been properly drawn up in accordance with Financial Reporting Standards 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 of April 30, 2011 and of their financial performance and cash flows for the year then ended.
DELO AF 00 Charte
YEE Y Partne Charte
Augus
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Independent Auditors’ Report
page
59
To the Members of Glomac Berhad
Report on Other Legal and Regulatory Requirements of the h flows natory
e with essary
ody, in ds any
In accordance with the requirements of the Companies Act, 1965 in Malaysia, we also report that: (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 have acted as auditors, have been properly kept in accordance with the provisions of the Act; (b) we have considered the accounts and auditors’ reports of subsidiary companies, of which we have not acted as auditors, as shown in Note 43 to the Financial Statements, being accounts that have been included in the financial statements of the Group; (c) we are satisfied that the accounts of the subsidiary companies that have been consolidated with the financial statements of the Company are in form and content appropriate and proper for the purpose of the preparation of the financial statements of the Group, and we have received satisfactory information and explanations as required by us for these purposes; and (d) the auditors’ report on the accounts of the subsidiary companies were not subject to any qualification and did not include any adverse comment made under Sub-section (3) of the Section 174 of the Act. Other Reporting Responsibilities
ethical aterial
ments. ancial entity’s ances, ng the ng the
panies and of
The supplementary information set out in on page 134 is disclosed to meet the requirement of Bursa Malaysia Securities Berhad and is not part of the financial statements. The directors are responsible for the preparation of the supplementary information in accordance with Guidance on Special Matter No.1 “Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirements” as issued by the Malaysian Institute of Accountants (“MIA Guidance”) and the directive of Bursa Malaysia Securities Berhad. In our opinion, the supplementary information is prepared, in all material respects, in accordance with the MIA Guidance and the directive of Bursa Malaysia Securities Berhad.
DELOITTE KASSIMCHAN AF 0080 Chartered Accountants
YEE YOON CHONG Partner - 1829/07/13 (J) Chartered Accountant
August 10, 2011
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Glomac Berhad 2011 annual report
STATEMENTS OF COMPREHENSIVE INCOME
page
60
STATE
For the Year Ended April 30, 2011
As of A
The Group Note
Revenue Cost of sales
5 6
Gross profit Investment revenue Other operating income Share of profits of associated companies Marketing expenses Administration expenses Finance costs Other operating expenses Profit before tax Income tax expense
7 18
8
9 10
Profit for the year
Other comprehensive income Exchange differences on translation foreign operations
2011 RM
The Company 2011 2010 RM RM
2010 RM
597,477,728 (436,504,493)
316,755,877 (223,138,480)
30,660,000 -
28,147,451 -
160,973,235 3,628,604 5,860,544 2,328,449 (8,224,732) (20,827,699) (6,749,427) (7,496,978)
93,617,397 4,349,561 14,303,177 2,565,583 (5,331,407) (22,130,481) (1,457,896) (11,023,121)
30,660,000 1,199,433 7,404,277 (1,143,663) (6,035,357) (3,142,248)
28,147,451 685,520 3,024,552 (630,114) (2,237,004)
129,491,996 (36,761,279)
74,892,813 (17,613,952)
28,942,442 (5,404,105)
28,990,405 (5,444,239)
92,730,717
57,278,861
23,538,337
23,546,166
-
-
114,432
(26,665)
Total comprehensive income for the year
92,845,149
57,252,196
23,538,337
23,546,166
Profit attributable to: Owners of the Company Minority interests
62,980,867 29,749,850
40,853,846 16,425,015
23,538,337 -
23,546,166 -
92,730,717
57,278,861
23,538,337
23,546,166
ASSET Non-c Prope Prepa Invest Land h Subsid Assoc Other Goodw Deferr Total N Curren ShortInvent Prope Accru Trade Other Amou Amou Tax re Depos
Non-c Total C TOTAL
Total comprehensive income attributable to: Owners of the Company Minority interests
Earnings per share (sen) Basic Diluted
63,095,299 29,749,850
40,827,181 16,425,015
23,538,337 -
23,546,166 -
92,845,149
57,252,196
23,538,337
23,546,166
21.47 19.73
14.15 14.12
11
The accompanying Notes form an integral part of the Financial Statements.
glomac ar11 FA:Layout 1 8/27/11 4:47 PM Page 61
STATEMENTS OF FINANCIAL POSITION
page
61
As of April 30, 2011
The Group Note
2010 RM 7,451 7,451 5,520 4,552 0,114) 7,004) 0,405 4,239) 6,166
6,166
The Company 2011 2010 RM RM
2011 RM
2010 RM
7,604,126 80,902 17,323,972 517,493,530 61,785,261 4,000,000 395,165 9,092,459
7,021,757 84,947 47,280,567 439,710,804 59,917,117 4,000,000 862,845 6,827,274
2,037,627 367,563,955 2,502,747
406,540 62,483,870 2,352,000
617,775,415
565,705,311
372,104,329
65,242,410
84,784,586 19,867,492 219,531,752 12,639,247 52,689,146 35,153,560 3,911,064 5,589,364 154,155,583
1,295,942 240,940 62,100,930 39,603 1,711,930 27,660,035
24,387,186 1,295,942 809,167 391,328,454 38,466 491,280 20,776,778
ASSETS Non-current Assets Property, plant and equipment Prepaid lease payments on leasehold land Investment properties Land held for property development Subsidiary companies Associated companies Other investments - unquoted Goodwill on consolidation Deferred tax assets
13 14 15 16 17 18 19 20 21
Total Non-current Assets Current Assets Short-term investments Inventories Property development costs Accrued billings Trade receivables Other receivables Amount due from subsidiary companies Amount due from associated companies Tax recoverable Deposits, cash and bank balances
30
57,733,389 158,245,982 34,156,585 245,847,745 25,502,087 3,930,759 6,271,147 176,718,725
Non-current assets classified as held for sale
31
708,406,419 28,700,000
588,321,794 -
93,049,380 -
439,127,273 -
737,106,419
588,321,794
93,049,380
439,127,273
1,354,881,834
1,154,027,105
465,153,709
504,369,683
22 23 24 26 27 28 29 29
6,166 6,166 Total Current Assets TOTAL ASSETS 6,166 6,166
glomac ar11 FA:Layout 1 8/27/11 4:47 PM Page 62
Glomac Berhad 2011 annual report
Statements of Financial Position
page
62
STATE
As of April 30, 2011
For the
The Group Note
2011 RM
The Company 2011 2010 RM RM
2010 RM
The Gro
EQUITY AND LIABILITIES Capital and Reserves Issued capital Share premium Foreign currency translation reserve Treasury shares Retained earnings
297,174,221 41,421,371 119,352 (3,834,361) 264,803,505
297,169,721 39,081,873 4,920 (4,615,357) 221,448,627
297,174,221 41,421,371 (3,834,361) 10,003,366
297,169,721 39,081,873 (4,615,357) 6,355,876
As of M
Equity attributable to owners of the Company Minority interests
599,684,088 64,415,778
553,089,784 34,629,368
344,764,597 -
337,992,113 -
Total co incom
Total Equity
664,099,866
587,719,152
344,764,597
337,992,113
Share o result
182,933,692 385,892
218,500,258 103,541
1,067,951 -
78,000,000 -
183,319,584
218,603,799
1,067,951
78,000,000
79,276,599 70,674,477 203,472,322 143,175 954,687 137,693,771 5,277,636 9,969,717
61,998,407 53,693,892 179,085,228 134,305 808,793 39,993,888 3,179,480 8,810,161
3,234 2,369,308 1,713,328 265,574 105,000,000 9,969,717
3,234 2,141,068 63,423,107 14,000,000 8,810,161
Total Current Liabilities
507,462,384
347,704,154
119,321,161
88,377,570
Total Liabilities
690,781,968
566,307,953
120,389,112
166,377,570
1,354,881,834
1,154,027,105
465,153,709
504,369,683
Non-current Liabilities Long term liabilities Deferred tax liabilities
32
32 33
34 21
Total Non-current Liabilities Current Liabilities Trade payables Other payables and accrued expenses Advance billings Amount due to contract customers Amount due to subsidiary companies Amount due to associated companies Hire-purchase and lease payables Borrowings Tax liabilities Dividend payable
TOTAL EQUITY AND LIABILITIES
Profit fo Other c for th
Dividen Owne Minor Disposa Share b Warran As of A
35 36 26 25 29 29 34 37
As of M As pr Effect FRS As res Profit fo Other c for th Total co incom Share o result Dividen paren Disposa Share b Warran As of A
The accompanying Notes form an integral part of the Financial Statements.
glomac ar11 FA:Layout 1 8/27/11 4:47 PM Page 63
STATEMENTS OF CHANGES IN EQUITY
page
63
For the Year Ended April 30, 2011
2010 RM
The Group
Issued Capital RM
9,721 1,873 5,357) 5,876
As of May 1, 2009
2,113 2,113
0,000 0,000
7,570 7,570 9,683
Distributable Reserve
Retained Earnings RM
Treasury Shares RM
Total Equity RM
31,585
199,400,185
-
-
-
40,853,846
-
-
-
(26,665)
-
-
Total comprehensive income for the year
-
-
(26,665)
40,853,846
-
40,827,181
16,425,015
57,252,196
Share of minority interests in results of associated companies
-
-
-
-
-
146,117
146,117
Dividends to: Owners of the parent (Note 12) Minority interests Disposal of treasury shares Share buyback Warrants exercised
300
As of May 1, 2010 As previously stated Effect of adoption of FRS 139 (Note 2) As restated Profit for the year Other comprehensive income for the year: Total comprehensive income for the year Share of minority interests in results of associated companies Dividends to owners of the parent (Note 12) Disposal of treasury shares Share buyback (Note 32) Warrant exercised As of April 30, 2011
(295,650) 30
-
-
516,417,784
Minority Interests RM
39,377,493
Profit for the year Other comprehensive income for the year:
(19,560,900)
Attributable to Owners of the Parent RM
297,169,421
As of April 30, 2010
3,234 1,068 3,107 0,000 0,161
Non-distributable Reserves Foreign Currency Share Translation Premium Reserve RM RM
40,853,846 (26,665)
21,051,185 537,468,969
16,425,015 -
57,278,861 (26,665)
(18,805,404) -
20,110,290 (5,164,747) -
(18,805,404) 19,814,640 (5,164,747) 330
- (18,805,404) (2,992,949) (2,992,949) - 19,814,640 (5,164,747) 330
297,169,721
39,081,873
4,920
221,448,627
(4,615,357)
553,089,784
34,629,368 587,719,152
297,169,721
39,081,873
4,920
221,448,627
(4,615,357)
553,089,784
34,629,368 587,719,152
-
-
-
168,385
297,169,721
39,081,873
4,920
221,617,012
-
-
-
62,980,867
-
62,980,867
29,749,850
92,730,717
-
-
114,432
-
-
114,432
-
114,432
-
-
114,432
62,980,867
-
63,095,299
29,749,850
92,845,149
-
-
-
-
-
-
4,500
2,339,048 450
-
297,174,221
41,421,371
119,352
(4,615,357)
168,385 553,258,169
(19,794,374) -
6,563,652 (5,782,656) -
(19,794,374) 8,902,700 (5,782,656) 4,950
264,803,505
(3,834,361)
599,684,088
The accompanying Notes form an integral part of the Financial Statements.
133,819
302,204
34,763,187 588,021,356
(97,259) -
(97,259) (19,794,374) 8,902,700 (5,782,656) 4,950
64,415,778 664,099,866
glomac ar11 FA:Layout 1 8/27/11 4:47 PM Page 64
Statements of Changes In Equity
Glomac Berhad 2011 annual report
page
64
STATE
For the Year Ended April 30, 2011
For the
The Company Issued Capital RM
Nondistributable Reserves Share Premium RM
Distributable Reserve Retained Earnings RM
Treasury Shares RM
Total RM
As of May 1, 2009 Total comprehensive income for the year Disposal of treasury shares Dividends (Note 12) Share buyback Warrants exercised
297,169,421 300
39,377,493 (295,650) 30
1,615,114 23,546,166 (18,805,404) -
(19,560,900) 20,110,290 (5,164,747) -
318,601,128 23,546,166 19,814,640 (18,805,404) (5,164,747) 330
As of April 30, 2010
297,169,721
39,081,873
6,355,876
(4,615,357)
337,992,113
As of May 1, 2010 As previously stated Effect of adoption of FRS 139 (Note 2)
297,169,721 -
39,081,873 -
6,355,876 (96,473)
(4,615,357) -
337,992,113 (96,473)
297,169,721
39,081,873
6,259,403
(4,615,357)
337,895,640
4,500
2,339,048 450
23,538,337 (19,794,374) -
6,563,652 (5,782,656) -
23,538,337 8,902,700 (19,794,374) (5,782,656) 4,950
297,174,221
41,421,371
10,003,366
(3,834,361)
344,764,597
As restated Total comprehensive income for the year Disposal of treasury shares Dividends (Note 12) Share buyback (Note 32) Warrants exercised As of April 30, 2011
CASH Profit Adjust Inco Prov Allow Depr Bad Fina Unre Amo Prov Loss Inter Shar Gain Gain Impa Prop Allow Tra Oth Am Allow Reve inv Divid Opera Capi (Incre Land Asso Inve Prop Accr Rece Increa Paya Adva Cont Cash ( Tax p Fina Net Ca
The accompanying Notes form an integral part of the Financial Statements.
glomac ar11 FA:Layout 1 8/27/11 4:47 PM Page 65
STATEMENTS OF CASH FLOWS
page
65
For the Year Ended April 30, 2011
The Group
Total RM 1,128 6,166 4,640 5,404) 4,747) 330 2,113
2,113 6,473) 5,640 8,337 2,700 4,374) 2,656) 4,950 4,597
The Company 2011 2010 RM RM
2011 RM
2010 RM
92,730,717
57,278,861
23,538,337
23,546,166
36,761,279 1,069,438 1,891,935 55,839 6,749,427 (20,365) 4,045 1,701,507 1,256,595 (3,628,604) (2,328,449) (320,746) 467,680 -
17,613,952 1,850,000 1,800,068 1,570,968 1,457,896 4,045 6,876,230 (9,083,956) (4,349,561) (2,565,583) (119,643) (354,288) 42,891
5,404,105 338,955 6,035,357 (1,575,463) (1,199,433) (248,497) -
5,444,239 1,850,000 157,125 (2,194,896) (685,520) -
CASH FLOWS FROM/ (USED IN) OPERATING ACTIVITIES Profit for the year Adjustments for: Income tax expense recognised in profit and loss Provision for bumiputra quota penalties Allowance for diminution in value of other investments Depreciation of property, plant and equipment Bad debts written off Finance costs Unrealised foreign exchange gain Amortisation of prepaid lease payments on leasehold land Provision for foreseeable property development losses Loss/(Gain) on change in fair value of investment properties Interest income Share of profits of associated companies Gain on disposal of investment property Gain on disposal of property, plant and equipment Impairment loss on goodwill on consolidation Property, plant and equipment written off Allowance for: Trade receivables Other receivables Amount due from subsidiary companies Allowance for doubtful debts no longer required Reversal of provision for diminution in value of investment in subsidiaries Dividend income
366,492 (30,360)
323,467 118,353 -
2,103,506 -
-
-
-
(4,400,085) (30,660,000)
(28,147,451)
Operating Profit/(Loss) Before Working Capital Changes
136,726,430
72,463,700
(663,218)
(30,337)
(Increase)/Decrease in: Land held for property development Associated companies Inventories Property development costs Accrued billings Receivables
(204,249,481) 105,868 (37,865,897) 187,604,444 (21,517,338) (183,620,045)
(80,263,984) 321,387 (7,392,896) 109,368,934 (2,834,269) (22,166,344)
(1,137) 568,227
21,878,029 24,387,094 -
(7,586,203) (11,267,232) (1,588,134)
(158,390) -
(750,686) -
(76,550,896) (37,460,631) (14,224,609)
49,054,959 (21,620,591) (13,264,909)
(254,518) (110,502) (5,648,727)
1,137,538 (156,326) (6,478,658)
(128,236,136)
14,169,459
(6,013,747)
(5,497,446)
Increase/(Decrease) in: Payables Advance billings Contract work-in-progress Cash (Used In)/Generated From Operations Tax paid Finance costs paid Net Cash (Used In)/From Operating Activities
1,918,561
glomac ar11 FA:Layout 1 8/27/11 4:47 PM Page 66
Statements of Cash Flows
Glomac Berhad 2011 annual report
page
66
NOTE
For the Year Ended April 30, 2011
The Group 2011 RM
The Company 2011 2010 RM RM
2010 RM
1.
G T M
CASH FLOWS FROM/(USED IN) INVESTING ACTIVITIES
T
Purchase of property, plant and equipment Proceeds from disposal of property, plant and equipment Proceeds from member’s voluntary winding up of subsidiary company Proceeds from disposal of investment properties Purchase of shares in subsidiary companies Purchase of investment properties Withdrawal/(Additions) to short-term investments Decrease in amount due from subsidiary companies Interest received Dividend received from: Subsidiary companies Associated companies Net cash outflow on acquisition of subsidiary companies (Note 17)
(724,268)
(822,903)
(530,045)
320,750
408,200
248,500
84,688,113 3,600,226 381,150 (250,000)
72,216,000 (940,000) (84,784,586) 4,331,107 296,404
(39,284) -
(1,499,996) 24,290,713 5,893,584 1,199,433
4 (1,000,000) (24,387,186) 685,520
23,995,000 -
21,955,451 -
-
(250,004)
T D S B B K T O s
(4) T
Net Cash From/(Used In) Investing Activities
88,015,971
(9,295,778)
53,347,185
(2,785,499) T P
CASH FLOWS FROM/(USED IN) FINANCING ACTIVITIES Drawdown/(Repayment) of revolving credits Proceeds from issuance of shares - warrant exercised (Increase)/Decrease in bank balances and deposits pledged Disposal of treasury shares (Decrease)/Increase in amount due to subsidiary companies Repayment of Islamic debt securities Repayment of bonds Drawdown of term loans and bridging loans Repayment of hire-purchase and lease payables Share buyback Dividend paid Dividend paid to minority shareholders Net Cash From/(Used In) Financing Activities
59,851,468
(13,127,602)
50,000,000
(15,000,000)
4,950 (2,359,147) 8,902,700 (9,000,000) (28,000,000) 64,803,734 (941,739) (5,782,656) (18,634,818) -
300 1,811,816 19,814,670 (4,000,000) (5,000,000) 8,357,393 (158,653) (5,164,747) (16,975,286) (7,991,032)
4,950 4,044,825 8,902,700 (37,833,882) (9,000,000) (28,000,000) (106,475) (5,782,656) (18,634,818) -
300 472,889 19,814,670 45,114,064 (4,000,000) (5,000,000) (5,164,747) (16,975,286) -
68,844,492
(22,433,141)
(36,405,356)
19,261,890
T re
2.
B T (“ A In In o F
NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR CASH AND CASH EQUIVALENTS AT END OF YEAR Note:
30
28,624,327
(17,559,460)
10,928,082
10,978,945
135,383,203
152,942,663
16,637,681
5,658,736
164,007,530
135,383,203
27,565,763
16,637,681
During the current financial year, the Group and the Company acquired property, plant and equipment with an aggregate cost of RM2,474,308 (2010: RM1,022,903) and RM1,970,045 (2010: RM39,284) respectively of which RM1,750,040 (2010: RM200,000) and RM1,440,000 (2010: RMNil) respectively was acquired under hire-purchase arrangements. Cash payments for the acquisition of property, plant and equipment amounted to RM724,268 (2010: RM822,903) and RM530,045 (2010: RM39,284) respectively. The accompanying Notes form an integral part of the Financial Statements.
F F F F F F F F F
glomac ar11 FA:Layout 1 8/27/11 4:47 PM Page 67
NOTES TO THE FINANCIAL STATEMENTS
1. 2010 RM
page
67
GENERAL 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 Company is principally involved in property development and investment holding.
9,284)
The principal activities of the subsidiary and associated companies are disclosed in Note 43.
-
During the financial year, the Company acquired the following subsidiary companies:
4 0,000) 7,186) 5,520
Subsidiary companies
Equity interest
Berapit Pertiwi Sdn. Bhd. Berapit Properties Sdn. Bhd. Kelana Property Services Sdn. Bhd.
100% 100% 100%
The details of the acquisition of the subsidiary companies are disclosed in Note 17.
5,451 -
Other than as stated above, there have been no significant changes in the nature of the principal activities of the Company and of its subsidiary companies during the financial year.
(4) The financial statements of the Group and of the Company are expressed in Ringgit Malaysia (“RM”). 5,499) The registered office and principal place of business of the Company is located at 12th Floor, Wisma Glomac 3, Kompleks Kelana Centre Point, Jalan SS 7/19, Kelana Jaya, 47301 Petaling Jaya, Selangor Darul Ehsan. The financial statements of the Group and of the Company were authorised for issue by the Board of Directors in accordance with a resolution of the Directors on August 10, 2011.
0,000) 300 2,889 4,670 4,064 0,000) 0,000) 4,747) 5,286) -
2.
BASIS OF PREPARATION OF THE FINANCIAL STATEMENTS The financial statements of the Group and of the Company have been prepared in accordance with Financial Reporting Standards (“FRSs”) and the provisions of the Companies Act, 1965 in Malaysia. Adoption of New and Revised Financial Reporting Standards In the current financial period, the Group and the Company adopted all the new and revised Standards and Issues Committee Interpretations (“IC Interpretations”) issued by the Malaysian Accounting Standards Board that are effective for annual periods beginning on or after May 1, 2010 as follows:
1,890 FRS 1 8,945
8,736
7,681 cost of 2010: nts for 2010:
FRS 2 FRS 4 FRS 7 FRS 7 FRS 8 FRS 101 FRS 123 FRS 127 FRS 132
First-time Adoption of Financial Reporting Standards (Amendments relating to cost of an investment in a subsidiary, jointly controlled entity or associate) Share-based Payment (Amendments relating to vesting conditions and cancellations) Insurance Contracts Financial Instruments: Disclosures Financial Instruments: Disclosures (Amendments relating to reclassification of financial assets and reclassification of financial assets - Effective date and transition) Operating Segments Presentation of Financial Statements (revised) Borrowing Costs (revised) Consolidated and Separate Financial Statements (Amendments relating to cost of an investment in a subsidiary, jointly controlled entity or associate) Financial Instruments: Presentation (Amendments relating to Puttable Financial Instruments and Obligations Arising on Liquidation and transitional provision relating to compound instrument)
glomac ar11 FA:Layout 1 8/27/11 4:47 PM Page 68
Notes to the Financial Statements
2.
Glomac Berhad 2011 annual report
page
68
BASIS OF PREPARATION OF THE FINANCIAL STATEMENTS (Cont’d) FRS 139 FRS 139
Financial Instruments: Recognition and Measurement Financial Instruments: Recognition and Measurement (Amendments relating to eligible hedged items, reclassification of financial assets, reclassification of financial assets - Effective date and transition and embedded derivatives) Improvements to FRSs issued in 2009 IC Interpretation 9 Reassessment of Embedded Derivatives IC Interpretation 9 Reassessment of Embedded Derivatives (Amendments relating to embedded derivatives) IC Interpretation 10 Interim Financial Reporting and Impairment IC Interpretation 11 FRS 2 - Group and Treasury Share Transactions IC Interpretation 13 Customer Loyalty Programmes IC Interpretation 14 FRS 119 - The Limit on a Defined Benefit Asset, Minimum Funding Requirements and Their Interaction
Notes
2.
B S F T O m a a d T 2
The adoption of these new and revised FRSs and IC Interpretations did not result in significant changes in the accounting policies of the Group and of the Company and have no significant effect on the financial performance or position of the Group and of the Company except for those discussed below: Standards affecting presentation and disclosure FRS 7 Financial Instruments: Disclosures FRS 7 and the consequential amendment to FRS 101 Presentation of Financial Statements require disclosure of information about the significance of financial instruments for the Group’s and the Company’s financial position and performance, the nature and extent of risks arising from financial instruments, and the objectives, policies and process for managing capital. The Group and the Company have applied FRS 7 prospectively in accordance with the transitional provisions of the standard. Hence, the new disclosures have not been applied to the comparatives. The new disclosures are included throughout the Group’s and the Company’s financial statements for the period May 1, 2010 to April 30, 2011.
S T N L
C S P
FRS 8 Operating Segments FRS 8 requires operating segments to be identified on the basis of internal reports about components of the Group that are regularly reviewed by the chief operating decision maker in order to allocate resources to the segments and to assess their performance. In contrast, the predecessor Standard (FRS 1142004 Segment Reporting) required an entity to identify two sets of segments (business and geographical), using a risks and returns approach, with the entity’s ‘system of internal financial reporting to key management personnel’ serving only as the starting point for the identification of such segments. The Group concluded that the reportable operating segments determined in accordance with FRS 8 are the same as the business segments previously identified under FRS 114. The Group has adopted FRS 8 retrospectively. FRS 101 Presentation of Financial Statements (revised) The revised FRS 101 introduces terminology changes (including revised titles for the financial statements) and changes in the format and content of the financial statements. In addition, the revised Standard requires the presentation of a third statement of financial position in the event that the entity has applied new accounting policies retrospectively. The revised Standard separates owner and non-owner changes in equity. The statement of changes in equity includes only details of transactions with owners with all non-owner changes in equity presented as a single line. The standard also introduces the statement of comprehensive income, with all items of income and expense recognised in profit or loss, together with all other items of income and expense recognised directly in equity, either in one single statement, or in two linked statements. The Group and the Company have elected to present this statement as one statement. There is no impact on the Group’s and the Company’s financial statements as this change in accounting policy affects only the presentation of the Group’s and the Company’s financial statements. The revised FRS101 was adopted retrospectively by the Group and the Company.
C T
N D L
C R M
T C S
C R
glomac ar11 FA:Layout 1 8/27/11 4:47 PM Page 69
Notes to the Financial Statements
2.
page
69
BASIS OF PREPARATION OF THE FINANCIAL STATEMENTS (Cont’d) Standards affecting the reported results or financial position
items, n and
FRS 139 Financial Instruments: Presentation and Measurement The Group and the Company adopted FRS 139 prospectively on May 1, 2010 in accordance with the transitional provisions in FRS 139. On that date, financial assets were classified as either financial assets at fair value through profit or loss, loans and receivables, held-tomaturity investments or available-for-sale financial assets, as appropriate. Financial liabilities were either classified as financial liabilities at fair value through profit or loss or other financial liabilities (i.e. those financial liabilities which are not held for trading or designated as at fair value through profit or loss upon initial recognition). The accounting policies for financial assets and financial liabilities are as disclosed in Note 3. The effects arising from the adoption of this Standard has been accounted for by adjusting respective opening balance as of May 1, 2010, as shown below and comparatives are not restated.
of the mpany
Statements of financial position
out the tent of
Hence, nd the
gularly ce. In ss and onnel’ ments up has
format ancial er and owner ems of either ement.
As of May 1, 2010 RM
Effects of adopting FRS 139 RM
Restatement As of May 1, 2010 RM
The Group Non-current Assets Land held for property development
439,710,804
(4,888,511)
434,822,293
Current Assets Short-term investments Property development costs
84,784,586 219,531,752
(96,473) (1,283,645)
84,688,113 218,248,107
61,998,407
(531,568)
61,466,839
Non-current Liabilities Deferred tax liabilities Long term liabilities
103,541 218,500,258
132,891 (6,172,156)
236,432 212,328,102
Capital and Reserves Retained earnings Minority interests
221,448,627 34,629,368
168,385 133,819
221,617,012 34,763,187
24,387,186
(96,473)
24,290,713
6,355,876
(96,473)
6,259,403
Current Liabilities Trade payables
The Company Current Assets Short-term investments
ly the Capital and Reserves Retained earnings
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Notes to the Financial Statements
2.
Glomac Berhad 2011 annual report
page
70
BASIS OF PREPARATION OF THE FINANCIAL STATEMENTS (Cont’d) FRSs, Amendments to FRSs and IC Interpretations issued but not yet effective At the date of authorisation for issue of these financial statements, the new and revised Standards and IC Interpretations which were issued but not yet effective and not early adopted by the Group and the Company are as listed below: First-time Adoption of Financial Reporting Standards (Revised)1 First-time Adoption of Financial Reporting Standards (Amendments relating to limited exemption from Comparative FRS 7 Disclosures for First-time Adopters)2 FRS 1 First-time Adoption of Financial Reporting Standards (Amendments relating to additional exemptions for First-time Adopters)2 FRS 2 Share-based Payment (Amendments relating to scope of FRS 2 and revised FRS 3)1 FRS 2 Share-based Payment (Amendments relating to group cash-settled share based payment transaction)2 FRS 3 Business Combinations (revised)1 FRS 5 Non-current Assets Held for Sale and Discontinued Operations (Amendments relating to plan to sell the controlling interest in a subsidiary)1 FRS 7 Financial Instruments: Disclosures (Amendments relating to improving disclosures about financial instruments)2 FRS 124 Related Party Disclosure (revised)3 FRS 127 Consolidated and Separate Financial Statements (revised)1 FRS 128 Investments in Associates (revised)1 FRS 138 Intangible Assets (Amendments relating to additional consequential amendments arising from FRS 3)1 FRS 139 Financial Instruments: Recognition and Measurement (Amendments relating to eligible hedged items, reclassification of financial assets, reclassification of financial assets - effective date and transition, embedded derivatives and revised FRS 3 and revised FRS 127)1 Improvements to FRSs 20102 IC Interpretation 4 Determining whether an arrangement contains a lease2 IC Interpretation 9 Reassessment of Embedded Derivatives (Amendments relating to scope of IC Interpretation 9 and revised FRS 3)1 IC Interpretation 12 Service Concession Arrangements1 IC Interpretation 14 FRS 119 - The Limit on a Defined Benefit Asset, Minimum Funding Requirement and Their Interaction1 IC Interpretation 15 Agreements for the Construction of Real Estate4 IC Interpretation 16 Hedges of a Net Investment in a Foreign Operation1 IC Interpretation 17 Distributions of Non-cash Assets to Owners1 IC Interpretation 18 Transfers of Assets from Customers5 IC Interpretation 19 Extinguishing Financial Liabilities with Equity Instruments6 FRS 1 FRS 1
1 2 3 4 5 6
Effective for annual periods beginning on or after July 1, 2010 Effective for annual periods beginning on or after January 1, 2011 Effective for annual periods beginning on or after January 1, 2012 Original effective date of July 1, 2010 deferred to January 1, 2012 via amendment issued by MASB on August 31, 2010 Applies prospectively to transfers of assets from customers received on or after January 1, 2011 Effective for annual periods beginning on or after July 1, 2011
Notes
2.
B T h F T •
•
•
•
U p F T th s re re a U c p re in re
Consequential amendments were also made to various FRSs as a result of these new/revised FRSs. U to IC T a In F T is
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Notes to the Financial Statements
2.
h were
page
71
BASIS OF PREPARATION OF THE FINANCIAL STATEMENTS (Cont’d) The directors anticipate that the adoption of the above standards and interpretations, when they become effective, are not expected to have material impact on the financial statements of the Group and of the Company in the period of initial application except as follows: FRS 3 - Business Combinations (revised) The revised FRS 3:
mparative
•
allows a choice on a transaction-by-transaction basis for the measurement of non-controlling interests either at fair value or at the non-controlling interests’ share of the fair value of the identifiable net assets of the acquiree;
•
changes the recognition and subsequent accounting requirements for contingent consideration. Under the previous version of the Standard, contingent consideration was recognised at the acquisition date only if payment of the contingent consideration was probable and it could be measured reliably; any subsequent adjustments to the contingent consideration were recognised against goodwill. Under the revised Standard, contingent consideration is measured at fair value at the acquisition date; subsequent adjustments to the consideration are recognised against goodwill only to the extent that they arise from new information obtained within the measurement period (a maximum of 12 months from the acquisition date) about the fair value at the acquisition date. All other subsequent adjustments to contingent consideration classified as an asset or a liability are recognised in profit or loss;
•
requires the recognition of a settlement gain or loss where the business combination in effect settles a pre-existing relationship between the Group and the acquiree; and
items, edded
•
requires acquisition-related costs to be accounted for separately from the business combination, generally leading to those costs being recognised as an expense in profit or loss as incurred, whereas previously they were accounted for as part of the cost of the business combination.
evised
Upon adoption, this Standard will be applied prospectively and therefore, no restatements will be required in respect of transactions prior to the date of adoption.
ns for
ell the ents)2
FRS 127 - Consolidated and Separate Financial Statements (revised) The revised Standard will affect the Group’s accounting policies regarding changes in ownership interests in its subsidiary companies that do not result in a change in control. Previously, in the absence of specific requirements in FRSs, increases in interests in existing subsidiary companies were treated in the same manner as the acquisition of subsidiaries, with goodwill or a bargain purchase gain being recognised, where appropriate; for decreases in interests in existing subsidiary companies regardless of whether the disposals would result in the Group losing control over the subsidiary companies, the difference between the consideration received and the carrying amount of the share of net assets disposed of was recognised in profit or loss. Under FRS 127 (revised), increases or decreases in ownership interests in subsidiary companies that do not result in the Group losing control over the subsidiary companies are dealt with in equity and attributed to the owners of the parent, with no impact on goodwill or profit or loss. When control of a subsidiary company is lost as a result of a transaction, event or other circumstance, FRS 127 (revised) requires that the Group derecognises all assets, liabilities and non-controlling interests at their carrying amounts. Any retained interest in the former subsidiary company is recognised at its fair value at the date when control is lost, with the resulting gain or loss being recognised in profit or loss. Upon adoption, this standard will be applied prospectively and therefore, no restatements will be required in respect of transactions prior to the date of adoption. IC Interpretation 15 Agreements for the Construction of Real Estate This Interpretation clarifies when and how revenue and related expenses for the sale of a real estate unit should be recognised if an agreement between a developer and a buyer is reached before the construction of the real estate is completed. Furthermore, the Interpretation provides guidance on how to determine whether an agreement is within the scope of FRS 111 Construction Contracts or FRS 118 Revenue. The Group currently recognises revenue arising from property development projects using the stage of completion method. The Group is in the process of making an assessment of the impact of this Interpretation.
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Notes to the Financial Statements
3.
Glomac Berhad 2011 annual report
page
72
SIGNIFICANT ACCOUNTING POLICIES (a) Basis of Accounting
Notes
3.
S (d
The financial statements of the Group and of the Company have been prepared under the historical cost convention unless otherwise indicated in the accounting policies below. Historical cost is generally based on the fair value of the consideration given in exchange for assets. (b) Revenue Recognition Revenue is recognised when it is probable that the economic benefits associated with the transaction will flow to the Group and the Company and the amount of the revenue can be measured reliably. Revenue is measured at the fair value of the consideration received or receivable and represents amounts receivable for goods and services provided in the normal course of business. (i)
Sale of development properties Revenue from sale of residential and commercial properties are accounted for by the stage of completion method as described in Note (o). Sale of completed property units is recognised when the risk and reward associated with ownership transfers to the property purchasers.
(ii) Construction contracts Revenue from construction contracts is accounted for by the stage of completion method as described in Note (p). (iii) Project management fee Project management fee is recognised when such service is rendered. (iv) Dividend income Dividend income is recognised when the right to receive payment is established. (v) Rental income Rental income is recognised over the tenure of the rental period of properties. (vi) Interest income Interest income is recognised when it is probable that the economic benefits will flow to the Group and the Company and the amount of income can be measured reliably. Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that asset’s net carrying amount on initial recognition. (c) Employee Benefits (i)
Short-term benefits Wages, salaries, bonuses and social security contributions are recognised as an expense in the year in which the associated services are rendered by employees of the Group and of the Company. 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 and short-term non-accumulating compensated absences such as sick leave are recognised when the absences occur.
(ii) Defined contribution plan As required by law, companies in Malaysia make contributions to the Employees Provident Fund (“EPF”), a statutory defined contribution plan for all their eligible employees based on certain prescribed rates of the employees’ salaries. Such contributions are recognised as an expense in profit or loss as incurred. Once the contributions have been paid, the Group and the Company have no further payment obligations.
(e
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Notes to the Financial Statements
3.
page
73
SIGNIFICANT ACCOUNTING POLICIES (Cont’d) (d) Foreign currency
erwise hange
nd the
ds and
cribed
The individual financial statements of each group entity are presented in the currency of the primary economic environment in which the entity operates (its functional currency). For the purpose of the financial statements of the Group, the results and financial position of each entity are expressed in RM, which is the functional currency of the Company and the presentation currency for the financial statements of the Group. In preparing the financial statements of the individual entities, transactions in currencies other than the entity’s functional currency (foreign currencies) are recognised at the rates of exchange prevailing at the dates of the transactions. At the end of each reporting period, monetary items denominated in foreign currencies are retranslated at the rates prevailing at that date. Non-monetary items carried at fair value that are denominated in foreign currencies are retranslated at the rates prevailing at the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated. For the purpose of presenting financial statements of the Group, the assets and liabilities of the Group’s foreign operations are expressed in RM using exchange rates prevailing at the end of the reporting period. Income and expense items are translated at the average exchange rates for the period, unless exchange rates fluctuated significantly during the period, in which case the exchange rates of the dates of the transactions are used. Exchange differences arising, if any, are recognised in other comprehensive income and accumulated in equity (attributed to minority interests as appropriate).
operty On the disposal of a foreign operation (i.e. a disposal of the Group’s entire interest in a foreign operation, or a disposal involving loss of control over a subsidiary that includes a foreign operation, loss of joint control over a jointly controlled entity that includes a foreign operation, or loss of significant influence over an associate that includes a foreign operation), all of the accumulated exchanges differences in respect of that operation attributable to the Group are reclassified to profit or loss. Any exchange differences that have previously been attributed to minority interests are derecognised, but they are not reclassified to profit or loss. (e) Income Taxes Income tax in profit or loss for the year comprises current and deferred tax. Current tax is the expected amount of income taxes payable in respect of the taxable profit for the year and is measured using the tax rates that have been enacted or substantively enacted by the end of the reporting period.
nd the anding gh the
ciated s such future when
efined utions mpany
Deferred tax is provided for, using the liability method, on temporary differences as of the end of reporting period 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 while deferred tax assets are recognised for all deductible temporary differences, unused tax losses and unused 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 unused 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 the 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 by the end of the reporting period. Deferred tax is recognised in profit or loss 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. The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient future taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Group and the Company intend to settle their current tax assets and liabilities on a net basis.
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Notes to the Financial Statements
3.
Glomac Berhad 2011 annual report
page
74
SIGNIFICANT ACCOUNTING POLICIES (Cont’d) (f)
Basis of Consolidation
Notes
3.
S (h
The financial statements of the Group incorporate the financial statements of the Company and entities controlled by the Company (its subsidiary companies). Control is achieved where the Company has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. The financial statements of the Group incorporate the financial statements of the Company and of its subsidiary companies as mentioned in Note 43 made up to April 30, 2011. The results of subsidiary companies acquired or disposed of during the year are included in profit or loss from the effective date of acquisition or up to the effective date of disposal, as appropriate.
(i
Where necessary, adjustments are made to the financial statements of subsidiary companies to bring their accounting policies into line with those used by other members of the Group. All significant intercompany transactions, balances and resulting unrealised profits are eliminated on consolidation. Unrealised losses are eliminated on consolidation unless costs cannot be recovered. The financial statements of the Group reflect external transactions only. Minority interests in the net assets (excluding goodwill) of the subsidiary companies of the Group are identified separately from the Group’s equity therein. Minority interests consist of the amount of those interests at the date of the original business combination and the minority’s share of changes in equity since the date of the combination. Losses applicable to the minority in excess of the minority’s interest in the subsidiary company’s equity are allocated against the interests of the Group except to the extent that the minority has a binding obligation and is able to make an additional investment to cover the losses. (g) Business Combination Acquisition of subsidiary companies and businesses are accounted for using the purchase method. The cost of the business combination is measured as the aggregate of the fair values (at the date of exchange) of assets given, liabilities incurred or assumed, and equity instruments issued by the Group in exchange for control of the acquiree, plus any costs directly attributable to the business combination. The acquiree’s identifiable assets, liabilities and contingent liabilities that meet the conditions for recognition under FRS 3, Business Combinations are recognised at their fair values at the acquisition date, except for non-current assets (or disposal groups) that are classified as held for sale in accordance with FRS 5, Non-current Assets Held for Sale and Discontinued Operations, which are recognised and measured at fair value less costs to sell. Goodwill arising on acquisition is recognised as an asset and initially measured at cost, being the excess cost of the business combination over the Group’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities recognised. If, after reassessment, the Group’s interest in the net fair value of the acquiree’s identifiable assets, liabilities and contingent liabilities recognised exceeds the cost of the business combination, the excess is recognised immediately in profit or loss. The interest of minority shareholders in the acquiree is initially measured at the minority’s proportion of the net fair value of the assets, liabilities and contingent liabilities recognised.
(j
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Notes to the Financial Statements
3.
page
75
SIGNIFICANT ACCOUNTING POLICIES (Cont’d) (h) Investments in Subsidiary Companies Investments in unquoted shares of subsidiary companies, which are eliminated on consolidation, are stated in the Company’s financial statements at cost. When there is an indication of impairment in the value of the investment, the carrying amount of the investment is assessed and written down immediately to its recoverable amount.
mpany cies of
ies as ear are
(i)
An associated company is an entity over which the Group has significant influence and that is neither a subsidiary company nor an interest in a joint venture. Significant influence is the power to participate in the financial and operating policy decisions of the investee but is not control or joint control over those policies.
es into
The results and assets and liabilities of associated company are incorporated in these financial statements using the equity method of accounting, except when the investment is classified as held for sale, in which case it is accounted for in accordance with FRS 5 Non-current Assets Held for Sale and Discontinued Operations. Under the equity method, investments in associated company are carried in the consolidated statement of financial position at cost as adjusted for post-acquisition changes in the Group’s share of the net assets of the associated company, less any impairment in the value of individual investments. Losses of an associated company in excess of the Group’s interest in that associated company (which includes any long-term interests that, in substance, form part of the Group’s net investment in the associated company) are not recognised unless the Group has incurred legal or constructive obligations or made payments on behalf of the associated company.
alised xternal
om the nation of the hat the
siness umed, to the gnition ets (or tinued
siness nised. bilities
of the
Investments in Associated Company
Any excess of the cost of acquisition over the Group’s share of the net fair value of the identifiable assets, liabilities and contingent liabilities of the associated company recognised at the date of acquisition is recognised as goodwill. The goodwill is included within the carrying amount of the investment and is assessed for impairment as part of the investment. Any excess of the Group’s share of the net fair value of the identifiable assets, liabilities and contingent liabilities over the cost of acquisition, after reassessment, is recognised immediately in profit or loss. Where a group entity transacts with an associated company of the Group, profits and losses are eliminated to the extent of the Group’s interest in the relevant associated company. (j)
Goodwill Goodwill arising on the acquisition of a subsidiary company represents the excess of the cost of acquisition over the Group’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities of the subsidiary company recognised at the date of acquisition. Goodwill is initially recognised as an asset at cost and is subsequently measured at cost less any accumulated impairment losses. For the purpose of impairment testing, goodwill is allocated to each of the Group’s cash-generating units expected to benefit from the synergies of the combination. Cash-generating units to which goodwill has been allocated are tested for impairment annually, or more frequently when there is an indication that the unit may be impaired. If the recoverable amount of the cash-generating unit is less than the carrying amount of the unit, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro-rata on the basis of the carrying amount of each asset in the unit. An impairment loss recognised for goodwill is not reversed in a subsequent period. On the disposal of a subsidiary company, the attributable amount of goodwill is included in the determination of the gain or loss on disposal.
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Notes to the Financial Statements
3.
Glomac Berhad 2011 annual report
page
76
Notes
SIGNIFICANT ACCOUNTING POLICIES (Cont’d)
3.
(k) Impairment of Assets Excluding Goodwill
S (n
At the end of each reporting period, the Group reviews the carrying amounts of its assets to determine whether there is any indication that these assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs. Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects the current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted. (o If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss. Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss. (l)
Property, Plant and Equipment Property, plant and equipment are stated at cost less accumulated depreciation and impairment losses. The policy for the recognition and measurement of impairment losses is in accordance with Note (k). Construction in progress is not depreciated. Depreciation of other property, plant and equipment is computed on a straight-line basis to write-off the cost of the property, plant and equipment over their estimated useful lives. The principal annual rates used are as follows: Building and improvements Furniture and fittings Office equipment Computers Motor vehicles Plant and machinery
6 years to 30 years 10% - 20% 10% - 20% 20% - 33 1/3 % 20% 20%
At the end of each reporting period, the residual values, useful lives and depreciation method of the property, plant and equipment are reviewed, and the effects of any changes are recognised prospectively. Gain or loss arising on the disposal or retirement of an asset is determined as the difference between the estimated net disposal proceeds and the carrying amount of the asset, and is recognised in profit or loss. (m) Investment Property Investment property, which is property held to earn rentals and/or for capital appreciation, is measured initially at cost, including transaction costs. Subsequent to initial recognition, investment property is measured at fair value. Gains or losses arising from changes in the fair value of investment property are based on active market prices, adjusted, if necessary, for any difference in the nature, location or conditions of the specific asset. If this information is not available, the Group uses alternative valuation methods such as recent prices on less active markets or discounted cash flow projections. Changes in fair value are included in profit or loss in the period in which they arise. On the disposal of the investment property, or when it is permanently withdrawn from use and no economic benefits are expected from its disposal, it shall be derecognised (eliminated from the statement of financial position). The difference between the net proceeds and the carrying amount is recognised in profit or loss in the period of the retirement or disposal.
(p
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Notes to the Financial Statements
3.
page
77
SIGNIFICANT ACCOUNTING POLICIES (Cont’d) (n) Non-Current Assets Held for Sale
cation mated t of an
Non-current assets and disposal groups are classified as held for sale if their carrying amount will be recovered principally through a sale transaction rather than through continuing use. This condition is regarded as met only when the sale is highly probable and the non-current asset (or disposal group) is available for immediate sale in its present condition.
future of the
Management must be committed to the sale, which should be expected to qualify for recognition as a completed sale within one year from the date of classification. Non-current assets (and disposal groups) classified as held for sale are measured at the lower of their previous carrying amount and fair value less costs to sell. Any differences are included in profit of loss. (o) Land Held for Property Development and Property Development Costs
mount profit
to the nt that years.
Land and development expenditure are classified as property development costs under current assets when significant development work has been undertaken and is expected to be completed within the normal operating cycle. Property development revenue are recognised for all units sold using the percentage of completion method, by reference to the stage of completion of the property development projects at the end of the reporting period as measured by the proportion that development costs incurred for work performed to-date bear to the estimated total property development costs on completion. When the outcome of a property development activity cannot be estimated reliably, property development revenue is recognised to the extent of property development costs incurred that are probable of recovery.
gnition
Any anticipated loss on property development project (including costs to be incurred over the defects liability period), is recognised as an expense immediately as foreseeable losses.
ht-line
Accrued billings represent the excess of property development revenue recognised in profit or loss over the billings to purchasers while progress billings represents the excess of billings to purchasers over property development revenue recognised in profit or loss.
years 20% 20% 1/3 % 20% 20% pment
sposal
Land held for development and costs attributable to the development activities which are held for future development where no significant development has been undertaken is stated at cost less impairment costs (if any). Such assets are transferred to property development activities when significant development has been undertaken and the development is expected to be completed within the normal operating cycle. (p) Construction Contracts Where the outcome of a construction contract can be estimated reliably, revenue and costs are recognised by reference to the stage of completion of the contract activity at the end of the reporting period, measured as the physical proportion that contract costs incurred for work performed to date bear to the estimated total contract costs, except where this would not be representative of the stage of completion. Variations in contract work, claims and incentive payments are included to the extent that they have been agreed with the customer. Where the outcome of a construction contract cannot be estimated reliably, contract revenue is recognised to the extent of contract costs incurred that are probable of recovery. Contract costs are recognised as expenses in the period in which they are incurred.
luding g from in the ethods or loss
pected he net
When it is probable that total contract costs will exceed total contract revenue, the expected loss is recognised as an expense immediately as allowance for foreseeable loss. When costs incurred on construction contracts plus recognised profits (less recognised losses) exceeds billings to contract customers, the balance is shown as amount due from contract customers. When billings to contract customers exceed costs incurred plus recognised profits (less recognised losses), the balance is shown as amount due to contract customers.
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Notes to the Financial Statements
3.
Glomac Berhad 2011 annual report
page
78
SIGNIFICANT ACCOUNTING POLICIES (Cont’d) (q) Borrowing Costs
Notes
3.
S (v
Interest incurred on borrowings related to property development activities or construction of assets are capitalised as part of the cost of the asset during the period of time required to complete and prepare the asset for its intended use. Capitalisation of borrowing costs ceases when the assets are ready for their intended use or sale. All other borrowing costs are recognised as an expense in profit or loss in the period in which they are incurred. (r)
Inventories Inventories comprise completed property units for sale and are valued at the lower of cost (determined on the specific identification basis) and net realisable value.
(s) Property, Plant and Equipment Under Hire-Purchase Arrangements Property, plant and equipment acquired under hire-purchase arrangements are recognised in the financial statements and the corresponding obligations treated as liabilities. Finance charges are allocated to profit or loss to give a constant periodic rate of interest on the remaining hire-purchase liabilities. (t)
(w
Leases (i)
Finance Lease Assets acquired under leases which transfer substantially all of the risks and rewards incident to ownership of the assets are capitalised under property, plant and equipment. The assets and the corresponding lease obligations are recorded at their fair values or, if lower, at the present value of the minimum lease payments of the leased assets at the inception of the respective leases. 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 Group’s incremental borrowing rate is used. 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 as an expense in profit or loss over the term of the relevant lease period 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 and assets under hire-purchase is consistent with that for depreciable property, plant and equipment as described in Note 3(m).
(ii) Operating Lease Leases of assets where a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating lease are charged to profit or loss over the lease period. (u) Prepaid Lease Payments on Leasehold Land Lease of land with title not expected to pass to the lessee by the end of the lease term is treated as operating lease as land normally has an indefinite economic life. The up-front payments made on entering into a lease or acquiring a leasehold land that is accounted for as an operating lease are accounted for as prepaid lease payments that are amortised over the lease term on a straight line basis except for leasehold land classified as investment property.
(x
(y
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Notes to the Financial Statements
3.
page
79
SIGNIFICANT ACCOUNTING POLICIES (Cont’d) (v) Provisions
of the rowing
Provisions are made when the Group and the Company have a present legal or constructive obligation as a result of past events, when it is probable that an outflow of resources will be required to settle the obligation and when a reliable estimate of the amount can be made. The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation. Where a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows.
cation
When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, the receivable is recognised as an asset if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably.
nd the rate of
(w) Shares Bought Back
ets are eir fair pective
(x) Cash and Cash Equivalents
Shares bought back held as treasury shares are accounted for on the cost method and presented as a deduction from equity. Should such shares be cancelled, their nominal amounts will be eliminated, and the differences between their cost and nominal amounts will be taken to reserves as appropriate. When such shares are subsequently sold or reissued, any consideration received, net of any directly attributable incremental external cost and the deferred tax effects, is recognised in equity.
The Group and the Company adopt the indirect method in the preparation of statements of cash flows. For the purposes of the statements of cash flows, cash and cash equivalents include cash on hand and at bank and short-term highly liquid investments which have an insignificant risk of changes in value, net of outstanding bank overdrafts.
in the (y) Financial Instruments which as an on the
, plant
Financial instruments are recognised in the statement of financial position when, and only when, the Group or the Company becomes a party to the contractual provisions of the instruments. Where the purchase or sale of a financial asset is under a contract whose terms require delivery of the financial asset within the timeframe established by the market concerned, such financial assets are recognised and derecognised on trade date. Financial instruments are initially measured at fair value, plus transaction costs, except for those financial assets classified as at fair value through profit or loss, which are initially measured at fair value. Financial Assets
ied as
rmally ounted e basis
Financial assets are classified into the following specified categories: financial assets ‘at fair value through profit or loss’ (FVTPL), ‘held-to-maturity’ investments, ‘available-for-sale’ (AFS) financial assets and, ‘loans and receivables’. The classification depends on the nature and purpose of the financial assets and is determined at the time of initial recognition. (i)
Effective interest method The effective interest method is a method of calculating the amortised cost of a financial asset and of allocating interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset, or (where appropriate) a shorter period, to the net carrying amount on initial recognition. Income is recognised on an effective interest basis for debt instruments other than those financial assets classified as at FVTPL.
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Notes to the Financial Statements
3.
Glomac Berhad 2011 annual report
page
80
SIGNIFICANT ACCOUNTING POLICIES (Cont’d) (y) Financial Instruments (Cont’d) Financial Assets (Cont’d) (ii) Financial assets at FVTPL Financial assets are classified as at FVTPL when the financial asset is either held for trading or it is designated as at FVTPL. A financial asset is classified as held for trading if: • • •
it has been acquired principally for the purpose of selling it in the near term; or on initial recognition it is part of a portfolio of identified financial instruments that the Group and the Company manage together and has a recent actual pattern of short-term profit-taking; or it is a derivative that is not designated and effective as a hedging instrument.
A financial asset other than a financial asset held for trading may be designated as at FVTPL upon initial recognition if: • •
•
such designation eliminates or significantly reduces a measurement or recognition inconsistency that would otherwise arise; or the financial asset forms part of a group of financial assets or financial liabilities or both, which is managed and its performance is evaluated on a fair value basis, in accordance with the Group’s documented risk management or investment strategy, and information about the grouping is provided internally on that basis; or it forms part of a contract containing one or more embedded derivatives, and FRS 139 Financial Instruments: Recognition and Measurement permits the entire combined contract (asset or liability) to be designated as at FVTPL.
Financial assets at FVTPL are stated at fair value, with any gains or losses arising on remeasurement recognised in profit or loss. The net gain or loss recognised in profit or loss incorporates any dividend or interest earned on the financial asset and is included in the “other gains and losses” line item in profit or loss. (iii) Held-to-maturity investments Held-to-maturity investments are non-derivative financial assets with fixed or determinable payments and fixed maturity dates that the Group and the Company have the positive intent and ability to hold to maturity. Subsequent to initial recognition, heldto-maturity investments are measured at amortised cost using the effective interest method less any impairment, with revenue recognised on an effective yield basis. (iv) AFS financial assets AFS financial assets are non-derivatives that are either designated as available-for-sale or are not classified as loans and receivables, held-to-maturity investments or financial assets at FVTPL. All AFS assets are measured at fair value at the end of the reporting period. Gains and losses arising from changes in fair value are recognised in other comprehensive income and accumulated in the investments revaluation reserve, with the exception of impairment losses, interest calculated using the effective interest method, and foreign exchange gains and losses on monetary assets, which are recognised in profit or loss. Where the investment is disposed of or is determined to be impaired, the cumulative gain or loss previously accumulated in the investments revaluation reserve is reclassified to profit or loss. AFS equity investments that do not have a quoted market price in an active market and whose fair value cannot be reliably measured and derivatives that are linked to and must be settled by delivery of such unquoted equity investments are measured at cost less any identified impairment losses at the end of the reporting period. Dividends on AFS equity instruments are recognised in profit or loss when the Group’s right to receive the dividends is established. The fair value of AFS monetary assets denominated in a foreign currency is determined in that foreign currency and translated at the spot rate at the end of the reporting period. The foreign exchange gains and losses that are recognised in profit or loss are determined based on the amortised cost of the monetary asset. Other foreign exchange gains and losses are recognised in other comprehensive income.
Notes
3.
S (y
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Notes to the Financial Statements
3.
page
81
SIGNIFICANT ACCOUNTING POLICIES (Cont’d) (y) Financial Instruments (Cont’d) Financial Assets (Cont’d) (v) Loans and receivables
TPL.
anage
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. Loans and receivables are measured at amortised cost using the effective interest method, less any impairment. Interest income is recognised by applying the effective interest rate, except for short-term receivables when the recognition of interest would be immaterial. (vi) Impairment of financial assets Financial assets, other than those at FVTPL, are assessed for indicators of impairment at the end of each reporting period. Financial assets are considered to be impaired when there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows of the investment have been affected.
erwise nd its stment gnition
rofit or and is
dates heldvenue
s and end of me and ng the r loss. ted in
eliably asured
nds is
slated or loss sed in
For equity investments classified as AFS, a significant or prolonged decline in the fair value of the security below its cost is considered to be objective evidence of impairment. For all other financial assets, including redeemable bonds classified as AFS and finance lease receivables, objective evidence of impairment could include: • • •
significant financial difficulty of the issuer or counterparty; or default or delinquency in interest or principal payments; or it becoming probable that the borrower will enter bankruptcy or financial re-organisation.
For certain categories of financial asset, such as trade receivables, assets that are assessed not to be impaired individually are, in addition, assessed for impairment on a collective basis. Objective evidence of impairment for a portfolio of receivables could include the Group’s past experience of collecting payments, an increase in the number of delayed payments in the portfolio past the average credit period ranging from 14 to 60 days, as well as observable changes in national or local economic conditions that correlate with default on receivables. For financial assets carried at amortised cost, the amount of the impairment loss recognised is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the financial asset’s original effective interest rate. The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets with the exception of trade receivables, where the carrying amount is reduced through the use of an allowance account. When a trade receivable is considered uncollectible, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are credited against the allowance account. Changes in the carrying amount of the allowance account are recognised in profit or loss. When an AFS financial asset is considered to be impaired, cumulative gains or losses previously recognised in other comprehensive income are reclassified to profit or loss in the period. With the exception of AFS equity instruments, if, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed through profit or loss to the extent that the carrying amount of the investment at the date the impairment is reversed does not exceed what the amortised cost would have been had the impairment not been recognised. In respect of AFS equity securities, impairment losses previously recognised in profit or loss are not reversed through profit or loss. Any increase in fair value subsequent to an impairment loss is recognised in other comprehensive income.
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Notes to the Financial Statements
3.
Glomac Berhad 2011 annual report
page
82
SIGNIFICANT ACCOUNTING POLICIES (Cont’d) (y) Financial Instruments (Cont’d) Financial Assets (Cont’d) (vii) Derecognition of financial assets The Group derecognises a financial asset only when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another entity. If the Group neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Group recognises its retained interest in the asset and an associated liability for amounts it may have to pay. If the Group retains substantially all the risks and rewards of ownership of a transferred financial asset, the Group continues to recognise the financial asset and also recognises a collateralised borrowing for the proceeds received. Financial Liabilities and equity instruments issued by the Group and the Company Classification as debt or equity Debt and equity instruments are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangement. Equity instruments An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued by the Group and the Company are recognised at the proceeds received, net of direct issue costs. Ordinary shares are equity instruments. Ordinary shares are recorded at the proceeds received, net of direct attributable transactions costs. Ordinary shares are classified as equity. Dividends on ordinary shares are recognised in equity in the period in which they are declared. Financial liabilities Financial liabilities are classified as either financial liabilities ‘at FVTPL’ or ‘other financial liabilities’. Financial liabilities at FVTPL Financial liabilities are classified as at FVTPL when the financial liability is either held for trading or it is designated as at FVTPL. A financial liability is classified as held for trading if: • • •
it has been acquired principally for the purpose of repurchasing it in the near term; or on initial recognition it is part of a portfolio of identified financial instruments that the Group manages together and has a recent actual pattern of short-term profit-taking; or it is a derivative that is not designated and effective as a hedging instrument.
A financial liability other than a financial liability held for trading may be designated as at FVTPL upon initial recognition if: • •
•
such designation eliminates or significant reduces a measurement or recognition inconsistency that would otherwise arise; or the financial liability forms part of a group of financial assets or financial liabilities or both, which is managed and its performance is evaluated on a fair value basis, in accordance with the Group’s documented risk management or investment strategy, and information about the grouping is provided internally on that basis; or it forms part of a contract containing one or more embedded derivatives, and FRS 139 Financial Instruments: Recognition and Measurement permits the entire combined contract (asset or liability) to be designated as at FVTPL.
Financial liabilities at FVTPL are stated at fair value, with any gains or losses arising on remeasurement recognised in profit or loss. The net gain or loss recognised in profit or loss incorporates any interest paid on the financial liability and is included in the ‘other gains and losses’ line item in the statements of comprehensive income/profit or loss.
Notes
3.
S (y
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Notes to the Financial Statements
3.
page
83
SIGNIFICANT ACCOUNTING POLICIES (Cont’d) (y) Financial Instruments (Cont’d) Financial Assets (Cont’d) (vii) Derecognition of financial assets (Cont’d)
when it Group asset, Group ognise
of the
Financial Liabilities and equity instruments issued by the Group and the Company (Cont’d) Other financial liabilities The Group’s and the Company’s other financial liabilities include trade payables, other payables and accrued expenses, amount due to subsidiary companies, amount due to associated companies, hire-purchase and lease payables, borrowings and dividend payables, are initially fair value plus directly attributable transactions and subsequently measured at amortised cost using the effective interest method, with interest expense recognised on an effective yield basis. The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments through the expected life of the financial liability, or a shorter period, to the net carrying amount on initial recognition. Derecognition of financial liabilities
bilities. costs.
ssified
The Group and the Company derecognise financial liabilities when, and only when, the Group’s and Company’s obligations are discharged, cancelled or they expire. Financial Guarantee Contracts A financial guarantee contract is a contract that requires the issuer to make specified payments to reimburse the holder for a loss it incurs because a specified debtors fails to make payment when due. Financial guarantee contracts are recognised initially as a liability at fair value, net of transaction costs. Subsequent to initial recognition, financial guarantee contracts are recognised as income in profit or loss over the period of the guarantee. If the debtor fails to make payment relating to financial guarantee contract when it is due and the Group, as the issuer, is required to reimburse the holder for the associated loss, the liability is measured at the higher of the best estimate of the expenditure required to settle the present obligation at the end of the reporting period and the amount initially recognised less cumulative amortisation.
VTPL.
has a
if: arise; nd its stment gnition
rofit or ded in
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Notes to the Financial Statements
4.
Glomac Berhad 2011 annual report
page
84
CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY (a) Critical judgments in applying the Group’s accounting policies In the process of applying the Group’s accounting policies, which are described in Note 3 above, management is of the opinion that there are no instances of application of judgment which are expected to have a significant effect on the amounts recognised in the financial statements except as discussed below: (i)
Revenue Recognition on Property Development and Construction Contracts The Group recognises property development and contract revenue in profit or loss by using the stage of percentage-ofcompletion method, which is standard for similar industries. The stage of completion is determined by the proportion that property development and contract costs incurred for work performed to date bear to the estimated total property development and contract costs. Estimated losses are recognised in full when determined. Property development and contract revenue and expenses estimates are reviewed and revised periodically as work progresses and as variation orders are approved. Significant judgment is required in determining the stage of completion, the extent of the property development and contract costs incurred, the estimated total property development and contract revenue and costs, as well as the recoverability of the project undertaken. In making the judgment, the Group evaluates based on past experience and by relying on the work of specialists. If the Group is unable to make reasonably dependable estimates, the Group would not recognise any profit before a contract is completed, but would recognise a loss as soon as the loss becomes evident. Adjustments based on the percentage-of-completion method are reflected in property development and contract revenue in the reporting period. To the extent that these adjustments result in a reduction or elimination of previously reported property development and contract revenue and costs, the Group recognise a charge or credit against current earnings and amounts in prior periods, if any, are not restated. Note 3(b) describes the Group’s policy to recognise revenue from sales of properties using the percentage of completion method. Property development revenue is recognised in respect of all development units that have been sold.
(ii) Classification between Investment Properties and Property, Plant and Equipment Some properties comprise a portion that is held to earn rentals or for capital appreciation and another portion that is held for own use for administrative purposes. If these portions would be sold separately (or leased out separately under a finance lease), the Group would account for the portions separately. If the portions could not be sold separately, the property is an investment property only if an insignificant portion is held for own use for administrative purposes. Judgement is made on an individual property basis to determine whether ancillary services are so significant that a property does not qualify as an investment property. The Group has several properties being sub-let but has decided not to treat these properties as investment property because it is not the Group’s intention to hold these properties in the long-term for capital appreciation or rental income. Accordingly, these properties are still classified as property, plant and equipment. (iii) Deferred Tax Assets Deferred tax assets are recognised for all unused tax losses and unabsorbed capital allowances to the extent that it is probable that future taxable profits will be available against which the losses and capital 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. Further details are contained in Note 21.
Notes
4.
C (b
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Notes to the Financial Statements
4.
page
85
CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY (Cont’d) (b) Key sources of estimation uncertainty
on that in the
The following are the key assumptions concerning the future, and other key sources of estimation uncertainty at the end of the reporting period, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year. (i)
Estimated Impairment of Goodwill
ge-of-
The Group tests goodwill for impairment annually in accordance with its accounting policy. More regular reviews are performed if events indicate that this is necessary.
r work in full dically
Determining whether goodwill is impaired requires an estimation of the value in use of the cash-generating unit to which goodwill has been allocated. The value in use calculation requires the entity to estimate the future cash flows expected to arise from the cash-generating unit and a suitable discount rate in order to calculate present value. The carrying amount of goodwill at the end of the reporting period was RM395,165 (2010: RM862,845).
ontract of the work of before
nue in operty unts in
ethod.
(ii) Revenue Recognition on Variation Orders Some portions of the Group’s revenue are billed under fixed price contracts. Variation orders are commonly billed to customers in the normal course of business and these are recognised to the extent they have been agreed with the customers and can be reasonably estimated. (iii) Allowance for Doubtful Debts The Group makes allowance for doubtful debts based on an assessment of the recoverability of trade receivables. Allowances are applied to trade receivables where events or changes in circumstances indicate that the balances may not be collectible. The identification of doubtful debts requires the use of judgement and estimates. Where the expectation is different from the original estimate, such difference will impact the carrying value of trade receivables and doubtful debts expenses in the period in which such estimate has been changed. (iv) Impairment of Non-Current Assets
eld for
for the ificant hether
cause dingly,
obable ificant on the ned in
The Group reviews the carrying amount of their non-current assets, which include property, plant and equipment, investment properties, land held for property development and other investments, to determine whether there is an indication that those assets have suffered an impairment loss. As of April 30, 2011, the impairment loss on other investments is disclosed in Note 19.
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Notes to the Financial Statements
5.
Glomac Berhad 2011 annual report
page
86
Notes
REVENUE
8. The Group
Property development Rental income Construction contracts Project management fee Dividends from subsidiary companies: Gross dividends Exempt dividends
F
The Company 2011 2010 RM RM
2011 RM
2010 RM
585,551,706 10,117,151 409,252 1,399,619
300,271,702 10,558,049 3,442,696 2,483,430
-
-
-
-
26,660,000 4,000,000
24,770,000 3,377,451
597,477,728
316,755,877
30,660,000
28,147,451
In
L 6.
COST OF SALES The Group
The Company 2011 2010 RM RM
2011 RM
2010 RM
432,976,911 185,637 3,341,945
218,622,753 2,741,981 1,773,746
-
-
436,504,493
223,138,480
-
-
9. Property development costs Construction contract costs Rental and related costs
7.
INVESTMENT REVENUE The Group
Interest income from: Deposits with licensed financial institutions Housing development accounts Overdue balances of house purchasers Other investments Stakeholders’ sum Subsidiary companies Others
The Company 2011 2010 RM RM
2011 RM
2010 RM
1,081,228 843,541 634,845 608,333 67,478 393,179
865,108 440,620 580,639 2,115,632 32,172 315,390
124,284 282,904 792,245 -
245,744 386,467 53,309 -
3,628,604
4,349,561
1,199,433
685,520
The Group 2011 RM
The Company 2011 RM
3,020,271 608,333
916,529 282,904
3,628,604
1,199,433
The following is an analysis of investment revenue earned on financial assets by category of asset.
Loans and receivables (including deposit, cash and bank balances) Held to maturity investment
P (a
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Notes to the Financial Statements
8.
page
FINANCE COSTS The Group
2010 RM
0,000 7,451
The Company 2011 2010 RM RM
2011 RM
2010 RM
6,074,234 4,880,774 131,511 131,856 3,256,634
4,642,257 5,366,374 108,514 584,622 2,350,093
4,880,774 28,525 131,856 994,202
5,366,374 584,622 527,662
14,475,009
13,051,860
6,035,357
6,478,658
(7,725,582) -
(11,593,964) -
6,749,427
1,457,896
Interest expenses on: Term loans Bonds Hire-purchase and lease Islamic debt securities Overdrafts, revolving credit and other borrowings
-
87
7,451 Less: Finance charges capitalised Property development costs (Note 24) Amount absorbed by subsidiary companies 2010 RM 9. -
5,744 6,467 3,309 5,520
mpany 2011 RM 6,529 2,904 9,433
6,035,357
(6,478,658) -
PROFIT BEFORE TAX (a) Profit before tax has been arrived at after charging/(crediting): The Group
-
2010 RM
-
Allowance for diminution in value of other investments Impairment loss on goodwill on consolidation (Note 20) Depreciation of property, plant and equipment (Note 13) Bad debts written off Auditors’ remuneration: Current Underprovision in prior year Other services Tax penalties Property, plant and equipment written off Allowance for: Trade receivables Other receivables Amount due from subsidiary companies Rental of premises Rental income Amortisation of prepaid lease payments on leasehold land Provision for foreseeable property development losses Provision for bumiputra quota penalties Loss/(Gain) on change in fair value of investment properties (Note 15) Gain on disposal of investment property Gain on disposal of property, plant and equipment Reversal of provision for diminution in value of investment in subsidiaries Allowance for doubtful debts no longer required Unrealised foreign exchange gain
The Company 2011 2010 RM RM
2011 RM
2010 RM
467,680 1,891,935 55,839
1,850,000 1,800,068 1,570,968
338,955 -
1,850,000 157,125 -
404,141 33,075 15,884 1,120 -
339,100 6,400 15,704 7,835 42,891
40,000 5,000 -
42,000 5,000 -
366,492 317,711 (31,592) 4,045 1,701,507 1,069,438
323,467 118,353 756,710 (69,026) 4,045 6,876,230 -
1,256,595 (320,746)
(9,083,956) (119,643) (354,288)
(30,360) (20,365)
-
2,103,506 64,602 (248,497) (4,400,085) (1,575,463)
52,582 (16,800) (2,194,896)
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Notes to the Financial Statements
9.
Glomac Berhad 2011 annual report
page
88
Notes
PROFIT BEFORE TAX (Cont’d)
9.
(b) Staff costs
(c The Group
Wages, salaries and bonuses Pension costs - defined contribution plan Social security contributions
Less: Amount charged to development costs (Note 24)
P
The Company 2011 2010 RM RM
2011 RM
2010 RM
16,517,240 1,984,438 137,387
12,749,415 1,583,304 117,211
192,230 22,122 1,431
130,030 15,121 1,133
18,639,065
14,449,930
215,783
146,284
(11,919,096)
(8,476,918)
-
-
6,719,969
5,973,012
215,783
146,284
10. IN
(c) Directors’ remuneration The Group
The Company 2011 2010 RM RM
2011 RM
2010 RM
3,990,000 478,800 105,600
4,085,000 490,200 105,600
199,500 23,940 30,600
95,000 11,400 30,600
4,574,400
4,680,800
254,040
137,000
96,000
96,000
96,000
96,000
Total
4,670,400
4,776,800
350,040
233,000
Analysis excluding benefits-in-kind: Total executive directors’ remuneration excluding benefits-in-kind
4,468,800
4,575,200
123,440
106,400
96,000
96,000
96,000
96,000
4,564,800
4,671,200
219,440
202,400
(3,171,354)
(4,372,800)
-
-
219,440
202,400
Directors of the Company Executive: Salaries and other emoluments Pension costs defined contribution plan Benefits-in-kind
Non-Executive: Fees
Total non-executive directors’ remuneration excluding benefits-in-kind
Less: Amount charged to development costs (Note 24)
1,393,446
298,400
In M U
D
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Notes to the Financial Statements
9.
page
89
PROFIT BEFORE TAX (Cont’d) (c) Directors’ remuneration (Cont’d) The number of Directors of the Company whose total remuneration for the year fell within the following bands is as follows:
2010 RM 0,030 5,121 1,133 6,284 6,284
Executive directors
Range of remuneration: Below RM50,000 RM1,000,001 to RM1,500,000 RM1,500,001 to RM1,600,000 RM1,600,001 to RM1,650,000
2011
2010
2 1 -
2 1
5,000 1,400 0,600 7,000 6,000 3,000
6,400
6,000 2,400 2,400
3 -
3 -
10. INCOME TAX EXPENSE The Group
2010 RM
Non-executive directors 2011 2010
Income tax: Malaysian income tax Under/(Over)provision in prior years
Deferred tax (Note 21): Current Over/(Under) provision in prior years
The Company 2011 2010 RM RM
2011 RM
2010 RM
35,580,253 3,296,751
18,819,757 2,872,538
5,387,503 167,349
6,192,500 (285,761)
38,877,004
21,692,295
5,554,852
5,906,739
(2,442,557) 326,832
(1,943,866) (2,134,477)
42,360 (193,107)
(278,508) (183,992)
(2,115,725)
(4,078,343)
(150,747)
(462,500)
36,761,279
17,613,952
5,404,105
5,444,239
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Notes to the Financial Statements
Glomac Berhad 2011 annual report
page
90
Notes
10. INCOME TAX EXPENSE (Cont’d)
11. E
A reconciliation of income tax expense applicable to profit before tax 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: The Group 2011 RM Profit before tax Less: Share of profits of associated companies
2010 RM
The Company 2011 2010 RM RM
129,491,996 (2,328,449)
74,892,813 (2,565,583)
28,942,442 -
28,990,405 -
127,163,547
72,327,230
28,942,442
28,990,405
31,790,887
18,081,808
7,235,611
7,247,601
Tax effects of income not subject to tax Tax effects of expenses not deductible for tax purposes Deferred tax assets not recognised Realisation of deferred tax assets previously not recognised Over/(Under) provision of deferred tax expense in prior years Under/(Over) provision of income tax expense in prior years
(1,920,431) 3,028,287 264,654
(4,548,284) 4,585,966 14,232
(2,536,928) 731,180 -
(1,595,701) 262,092 -
(25,701)
(1,257,831)
326,832
(2,134,477)
(193,107)
(183,992)
3,296,751
2,872,538
167,349
(285,761)
Tax expense for the year
36,761,279
17,613,952
5,404,105
Taxation at Malaysian statutory tax rate of 25% (2010: 25%)
(a
-
-
5,444,239
As of April 30, 2011, subject to agreement of the Inland Revenue Board, the Company has tax exempt income account to frank all of its retained earnings as tax exempt cash dividend.
(b
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Notes to the Financial Statements
page
91
11. EARNINGS PER SHARE fective
(a) Basic Basic earnings per ordinary share of the Group is calculated by dividing the profit attributable to owners of the Company for the financial year by the weighted average number of ordinary shares in issue during the financial year as follows:
2010 RM 0,405 0,405
7,601 5,701) 2,092 3,992)
The Group 2011
2010
62,980,867
40,853,846
Number of shares in issue (net of treasury shares) as of May 1 Effect of treasury shares Effect of warrants exercised
293,672,021 (357,467) 639
279,201,721 9,575,532 67
Weighted average number of ordinary shares in issue
293,315,193
288,777,320
21.47
14.15
Profit attributable to owners of the Company (RM)
Basic earnings per share (sen)
(b) Diluted Dilutive earnings per share have been calculated by dividing the profit attributable to owners of the Company for the financial year by the weighted average number of ordinary shares that would have been in issue upon full exercise of the remaining Warrants, adjusted by the number of such shares that would have been issued at fair value as follows:
5,761) The Group 2011
2010
62,980,867
40,853,846
Weighted average number of ordinary shares outstanding Effect of dilution: Warrants
293,315,193
288,777,320
25,868,160
606,414
Adjusted weighted average number of ordinary shares
319,183,353
289,383,734
19.73
14.12
4,239 Profit attributable to owners of the Company (RM) l of its
Diluted earnings per share (sen)
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Notes to the Financial Statements
Glomac Berhad 2011 annual report
page
92
Notes
12. DIVIDENDS
13. P
2011 RM In respect of financial year ended April 30, 2009: - Final dividend of RM0.035 per share and special dividend of RM0.01 per share, less 25% tax, paid on December 28, 2009 In respect of financial year ended April 30, 2010: - First interim dividend of RM0.04 per share, less 25% tax, paid on June 22, 2010 - Final dividend of RM0.045 per share, less 25% tax, paid on November 30, 2010 In respect of financial year ended April 30, 2011: - First interim dividend of RM0.045 per share, less 25% tax, paid on June 22, 2011 Overprovision in prior year
-
The Group and The Company Net Dividends Amount per Ordinary Share 2010 2011 2010 RM Sen Sen
9,995,243
-
T
C
3.4
A A D W A A D
-
8,810,161
-
3.0
9,860,705
-
3.4
-
A
9,969,717 (36,048) 19,794,374
-
3.4
18,805,404
-
6.8
6.4
The directors propose a final dividend of RM0.05 per share, less 25% tax, totalling approximately RM10,933,000 (RM0.0375 per share) in respect of the current financial year. This dividend is subject to the approval of the shareholders at the forthcoming Annual General Meeting of the Company, and has not been included as a liability in the financial statements. Upon approval by the shareholders, the cash dividend payment will be accounted for in equity as an appropriation of retained earnings during the financial year ending April 30, 2012.
A A C D W A C D A C A
The proposed dividend for 2011 is payable in respect of all outstanding ordinary shares in issue at a date to be determined by the directors subsequent to the approval of the shareholders at the forthcoming Annual General Meeting. A
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13. PROPERTY, PLANT AND EQUIPMENT The Group are 2010 Sen
Cost
Building and improvements RM
Furniture and fittings RM
Office equipment RM
Computers RM
Motor vehicles RM
Plant and machinery RM
Total RM
3.4
As of May 1, 2009 Additions Disposals Write-offs
6,674,952 2,163,749 29,340 24,007 (327,680) (20,405)
1,646,356 68,203 (9,148)
2,030,044 38,182 (40,000)
7,410,265 1,969,856 381,151 482,020 (1,079,878) (4,900) -
21,895,222 1,022,903 (1,079,878) (402,133)
3.0
As of April 30, 2010/May 1, 2010 Additions Disposals
6,376,612 11,483 -
2,167,351 3,885 -
1,705,411 70,038 -
2,028,226 164,204 -
6,706,638 2,451,876 1,817,620 407,078 (1,408,729) -
21,436,114 2,474,308 (1,408,729)
As of April 30, 2011
6,388,095
2,171,236
1,775,449
2,192,430
Accumulated Depreciation As of May 1, 2009 Charge for the year (Note 9a) Disposals Write-offs
2,755,622 1,562,714 355,257 129,818 (327,679) (20,354)
1,069,461 154,807 (6,309)
1,774,074 124,096 -
5,337,976 1,499,650 867,037 169,053 (1,025,966) (4,900) -
13,999,497 1,800,068 (1,025,966) (359,242)
As of April 30, 2010/ May 1, 2010 Charge for the year (Note 9a) Disposals
2,783,200 344,466 -
1,672,178 128,994 -
1,217,959 143,457 -
1,898,170 85,196 -
5,174,147 1,668,703 910,877 278,945 (1,408,725) -
14,414,357 1,891,935 (1,408,725)
As of April 30, 2011
3,127,666
1,801,172
1,361,416
1,983,366
4,676,299
1,947,648
14,897,567
As of April 30, 2010
3,593,412
495,173
487,452
130,056
1,532,491
783,173
7,021,757
As of April 30, 2011
3,260,429
370,064
414,033
209,064
2,439,230
911,306
7,604,126
7,115,529
2,858,954
22,501,693
-
6.4
share) eneral rs, the pril 30,
Carrying Amount
by the
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Notes to the Financial Statements
Glomac Berhad 2011 annual report
page
94
Notes
13. PROPERTY, PLANT AND EQUIPMENT (Cont’d)
14. P
The Company Building and improvements RM
Furniture and fittings RM
Office equipment RM
Computers RM
Motor vehicles RM
Total RM
As of May 1, 2009 Additions
796,325 24,249
293,324 -
172,604 4,268
353,928 10,767
1,734,364 -
3,350,545 39,284
As of April 30, 2010/May 1, 2010 Additions Disposal
820,574 -
293,324 -
176,872 11,430 -
364,695 1,734,364 3,389,829 140,995 1,817,620 1,970,045 - (1,235,000) (1,235,000)
As of April 30, 2011
820,574
293,324
188,302
505,690
2,316,984
4,124,874
As of May 1, 2009 Charge for the year (Note 9a)
516,343 72,489
163,844 31,861
134,852 14,602
276,768 38,173
1,734,357 -
2,826,164 157,125
As of April 30, 2010/May 1, 2010 Charge for the year (Note 9a) Disposal
588,832 74,482 -
195,705 30,715 -
149,454 13,167 -
314,941 1,734,357 2,983,289 38,829 181,762 338,955 - (1,234,997) (1,234,997)
Cost
C
A
Accumulated Depreciation N
15. IN As of April 30, 2011
663,314
226,420
162,621
353,770
681,122
2,087,247
As of April 30, 2010
231,742
97,619
27,418
49,754
7
406,540
As of April 30, 2011
157,260
66,904
25,681
151,920
1,635,862
2,037,627
T
Net Carrying Amount
At the end of the reporting period, certain property, plant and equipment of the Group and of the Company with net carrying amount of RM3,150,139 and RM1,635,858 (2010: RM2,079,771 and RMNil) respectively were acquired under hire-purchase and lease arrangements.
A A C D A C T A T re tr p T a R In G
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Notes to the Financial Statements
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95
14. PREPAID LEASE PAYMENTS ON LEASEHOLD LAND Group Leasehold Land Unexpired period less than 30 years RM
Total RM 0,545 9,284
Cost As of May 1, 2009/April 30, 2010/May 1, 2010/April 30, 2011
9,829 0,045 5,000)
Accumulated Amortisation As of May 1, 2009 Amortisation for the year
4,874
6,164 7,125 3,289 8,955 4,997)
121,353
32,361 4,045
As of April 30, 2010/May 1, 2010 Amortisation for the year
36,406 4,045
As of April 30, 2011
40,451
Net Book Value As of April 30, 2010
84,947
As of April 30, 2011
80,902
15. INVESTMENT PROPERTIES 7,247
The investment properties, which pertain to subsidiary companies, are held for investment potential and rental income in future.
Freehold land and buildings RM
6,540
7,627
ount of lease
The Group Leasehold land and buildings RM
Total RM
As of May 1, 2009 Addition during the year Change in fair value of investment properties (Note 9) Disposal during the year
12,318,356 -
47,538,255 940,000 9,083,956 (22,600,000)
59,856,611 940,000 9,083,956 (22,600,000)
As of April 30, 2010/May 1, 2010
12,318,356
34,962,211
47,280,567
(2,064,303) (28,700,000)
(1,256,595) (28,700,000)
4,197,908
17,323,972
Change in fair value of investment properties (Note 9) Transfer to non-current asset held for sale (Note 31) As of April 30, 2011
807,708 13,126,064
The fair value of the Group’s investment properties at April 30, 2011 has been arrived at on the basis of the Directors’ best estimates, by reference to a valuation report carried out in 2010 by an independent valuer that is not related to the Group and market evidence of transaction prices for similar properties. Based on the above, the Directors are of their opinion that the carrying amount of the investment properties of the Group approximates the fair value. The property rental income earned by the Group from its investment properties, all of which are leased out under operating leases, amounted to RM3,364,393 (2010: RM7,215,639). Direct operating expenses arising on the investment properties amounted to RM488,549 (2010: RM1,162,054). Investment properties amounting to RM2,276,852 (2010: RM33,276,852) are charged as securities for banking facilities granted to the Group as mentioned in Note 34.
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Notes to the Financial Statements
Glomac Berhad 2011 annual report
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96
Notes
16. LAND HELD FOR PROPERTY DEVELOPMENT
16. L The Group 2011 RM
2010 RM
Cost: At beginning of year: Freehold land - at cost Leasehold land - at cost Development expenditure
120,742,527 111,763,500 207,204,777
152,607,841 117,669,867 189,856,218
Effect of adoption of FRS 139 (Note 2)
439,710,804 (4,888,511)
460,133,926 -
As restated
434,822,293
460,133,926
Additions: Freehold land - at cost Leasehold land - at cost Development expenditure
50,205,947 2,940,921 151,102,613
2,206,977 78,057,007
204,249,481
80,263,984
-
7,834,579
Transfer from property development costs (Note 24): Leasehold land - at cost Transfer to property development costs (Note 24): Freehold land - at cost Leasehold land - at cost Development expenditure
At end of year: Freehold land - at cost Leasehold land - at cost Development expenditure
(17,512,472) (104,065,772)
(31,865,314) (15,947,923) (60,708,448)
(121,578,244)
(108,521,685)
517,493,530
439,710,804
170,948,474 97,191,949 249,353,107
120,742,527 111,763,500 207,204,777
517,493,530
439,710,804
Land held for development of certain subsidiary companies are charged together with property development costs for banking facilities granted as disclosed in Note 34. In accordance to a Joint Venture Agreement (“JVA”) with Permodalan Negeri Selangor Berhad (“PNSB”), Glomac Rawang Sdn Bhd, a wholly owned subsidiary company, is obliged to pay PNSB entitlement on the higher of either RM41,400,000 (2010: RM41,400,000) or a sum equal to 30% of the gross profit before tax (as defined in the JVA) to be generated by the development of the parcel of land belonging to PNSB progressively. A total entitlement of RM41,400,000 has been included in the land held for property development.
In s th in o g In o d p In th c R
17. S
U L
D (a
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Notes to the Financial Statements
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97
16. LAND HELD FOR PROPERTY DEVELOPMENT (Cont’d)
2010 RM
7,841 9,867 6,218 3,926 3,926
6,977 7,007
In accordance to a Privatisation Agreement (“PA”) with Perbadanan Kemajuan Negeri Selangor (“PKNS”), FDA Sdn Bhd, a 70% owned subsidiary company, is obliged to pay PKNS entitlement based on percentage of sales value (as defined in the PA) to be generated by the development of the parcel of lands progressively. A total entitlement of RM29,122,000 (2010: RM28,444,840) has been included in the land held for property development. Pursuant to the PA, the computation of the said entitlement is based on agreed percentage on the total projected gross sales value of several types of property development of the land, subject to any subsequent increase in the gross sales value of the development. In accordance to a Joint Venture Agreement (“JVA”) with Leader Domain Sdn Bhd (“LDSB”), Glomac Resources Sdn Bhd, a wholly owned subsidiary company, is obliged to pay LDSB entitlement based on profit-sharing (as defined in the JVA) to be generated by the development of the parcel of lands progressively. A total entitlement of RM11,007,472 (2010: RM11,007,472) has been included in the property development costs. In 2009, pursuant to a Supplementary Joint Venture Agreement (“SJVA”) with LDSB, Glomac Resources Sdn Bhd has agreed to purchase the car park allotment (as defined in the SJVA). A total consideration of RM4,200,000 has been included in the property development costs. As of April 30, 2011, an amount of RM3,360,000 (2010: RMNil) has been paid and the remaining amount of RM840,000 (2010: RM3,360,000) has been recognised as land cost payable in Note 36.
17. SUBSIDIARY COMPANIES
3,984
2011 RM
4,579
5,314) 7,923) 8,448) 1,685) 0,804
Unquoted shares, at cost Less: Accumulated impairment losses
The Company 2010 RM
369,179,802 (1,615,847)
68,499,802 (6,015,932)
367,563,955
62,483,870
Equity interest
No. of shares acquired
Total cash consideration RM
100% 100% 100%
250,000 2 2
250,000 2 2
Equity interest
No. of shares acquired
Total cash consideration RM
100% 100%
2 2
2 2
Details of the subsidiary companies are set out in Note 43. (a) Acquisition of subsidiary companies During the financial year, the Company acquired the following:
2,527 3,500 4,777
Subsidiary companies
0,804
cilities
Berapit Properties Sdn. Bhd. Kelana Property Services Sdn. Bhd. Berapit Pertiwi Sdn. Bhd. On November 16, 2009, the Company acquired the following:
Bhd, a 00) or f land ent.
Subsidiary companies
Glomac Kristal Sdn. Bhd. FDM Development Sdn. Bhd.
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Notes to the Financial Statements
Glomac Berhad 2011 annual report
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Notes
17. SUBSIDIARY COMPANIES (Cont’d)
17. S
(a) Acquisition of subsidiary companies (Cont’d)
(b
The effects of the abovementioned acquisitions on the financial results of the Group are as follows: Post-acquisition results of the subsidiary companies acquired: 2011 RM
2010 RM
Revenue Administration expenses
(228,088)
(2,471)
Loss before tax Income tax expense
(228,088) -
(2,471) -
Net loss for the year
(228,088)
(2,471)
Attributable to: Owners of the Company Minority interests
(228,088) -
(2,471) -
If the acquisition had been completed on May 1, 2010, total group profit before tax for the year would have been RM129,491,996 (May 1, 2009: RM74,892,813). The net fair value of the assets arising from the acquisitions are as follows:
Carrying values 2011 2010 RM RM Net assets acquired: Cash and bank balances Other receivables Other payable and accruals
4 250,674 (674)
4 -
4 250,674 (674)
4 -
250,004
4
250,004
4
-
-
250,004
4
2011 RM
2010 RM
Goodwill on acquisition Total purchase consideration
Purchase consideration satisfied by cash: Glomac Kristal Sdn. Bhd. FDM Development Sdn. Bhd. Berapit Properties Sdn. Bhd. Kelana Property Services Sdn. Bhd. Berapit Pertiwi Sdn. Bhd. Less: Cash and cash equivalents of subsidiary companies acquired Net cash outflow of the Group
Fair values on acquisitions 2011 2010 RM RM
250,000 2 2 (4)
2 2 (4)
250,000
-
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Notes to the Financial Statements
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99
17. SUBSIDIARY COMPANIES (Cont’d) (b) Additional investments in subsidiary company
2010 RM 2,471) 2,471) 2,471)
2,471) -
1,996
s 2010 RM
4 4 4
2010 RM
2 2 (4) -
On June 29, 2010, the Company’s authorised share capital of Glomac Kristal Sdn. Bhd. (“GKSB”) was increased from RM100,000, comprising 100,000 ordinary shares of RM1.00 each to RM1,000,000, comprising 1,000,000 ordinary shares of RM1.00 each and the cost of investment in GKSB was increased from RM2.00 to RM500,000 by a subscription of 499,998 ordinary shares of RM1.00 each in GKSB, the consideration of which has been settled by cash. On October 29, 2010, as approved by the shareholders at the Extraordinary General Meeting (“EGM”), the authorised share capital of the GKSB was increased from RM1,000,000, comprising 1,000,000 ordinary shares of RM1.00 each to RM10,000,000, comprising 1,350,000 ordinary shares of RM1.00 each and 8,650,000 Redeemable Preference Shares (“RPS”) of RM1.00 each. The total 8,650,000 of RPS at an issue price of RM1.00 each had been allotted to Glomac Realty Sdn. Bhd. (“GRSB”), the consideration of which has been settled by offsetting against the amount due by GKSB as of October 31, 2010. On October 29, 2010, as approved by the shareholders at the EGM, the authorised share capital of GRSB was increased from RM1,000,000, comprising of 1,000,000 ordinary shares of RM1.00 each to RM300,000,000, comprising 300,000,000 ordinary shares of RM1.00 each and the cost of investment in GRSB was increased from RM2,313,000 to RM301,243,000 through a subscription of 298,930,000 new ordinary shares of RM1.00 each in GRSB, the consideration of which has been settled by way of assignment of inter-company balances. On October 29, 2010, as approved by the shareholders at the EGM, the authorised share capital of FDM Development Sdn. Bhd. (“FDM”) was increased from RM25,000, comprising of 25,000 ordinary shares of RM1.00 each to RM1,000,000, comprising 350,000 ordinary shares of RM1.00 each and 650,000 of RPS of RM1.00 each. The total 650,000 of RPS at an issue price of RM1.00 each had been allotted to GRSB, the consideration of which has been settled by offsetting against the amount due by FDM as of October 31,2010. On January 5, 2011, as approved by the shareholders at the EGM, the authorised share capital of Berapit Pertiwi Sdn. Bhd. (“BPSB”) was increased from RM100,000, comprising of 100,000 ordinary shares of RM1.00 each to RM1,000,000, comprising 1,000,000 ordinary shares of RM1.00 each. The cost of investment in BPSB was increased from RM2.00 to RM1,000,000 by a subscription of 999,998 ordinary shares of RM1.00 each in BPSB, the consideration of which has been settled by cash.
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Notes to the Financial Statements
Glomac Berhad 2011 annual report
page
100
Notes
18. ASSOCIATED COMPANIES
19. O The Group
Unquoted shares, at cost Share of post acquisition reserves
2011 RM
2010 RM
41,334,501 20,450,760
41,334,501 18,582,616
A U
61,785,261
59,917,117
H U A
The summarised financial information of the associated companies are as follows: The Group 2011 RM Assets and Liabilities Total assets Total liabilities
2010 RM T
336,040,019 (198,222,882)
319,133,625 (194,504,709)
137,817,137
124,628,916
58,202,831 3,582,430
56,334,687 3,582,430
61,785,261
59,917,117
20. G Net assets
Group’s share of associated companies’ net assets Goodwill on acquisition
Results Total revenue Total profit for the year Group’s share of profit of associated companies for the year
Details of the associated companies are set out in Note 43.
40,436,531 4,938,857 2,328,449
36,278,480 5,351,106 2,565,583
C A A A Im A C A
A
G fr fo
P P P
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Notes to the Financial Statements
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101
19. OTHER INVESTMENTS The Group 2010 RM 4,501 2,616
Available-for-sale Unquoted shares, at cost
7,117
Held to maturity Unquoted subordinated bonds, at cost Allowance for diminution in value
2010 RM
2011 RM
2010 RM
4,000,000
4,000,000
10,300,000 (10,300,000)
10,300,000 (10,300,000)
The Company 2011 2010 RM RM
-
10,300,000 (10,300,000)
-
10,300,000 (10,300,000)
-
-
-
-
4,000,000
4,000,000
-
-
The investment in unquoted subordinated bonds is in relation to the Bonds as detailed in Note 34(f). 3,625 4,709) 20. GOODWILL ON CONSOLIDATION 8,916 The Group 4,687 2,430 7,117
8,480 1,106 5,583
Cost At beginning and end of year
2011 RM
2010 RM
1,032,918
1,032,918
Accumulated impairment losses At beginning of year Impairment losses recognised during the year (Note 9a)
(170,073) (467,680)
(170,073) -
At the end of year
(637,753)
(170,073)
Carrying amount At beginning of year
862,845
862,845
At end of year
395,165
862,845
Goodwill acquired in a business combination is allocated, at acquisition, to the cash-generating unit (“CGU�) that is expected to benefit from that business combination. Before recognition of any impairment losses, the carrying amount of goodwill had been allocated to the following business segments as independent CGUs: The Group
Property development division Property investment division Property management division
2011 RM
2010 RM
395,165 -
395,165 455,435 12,245
395,165
862,845
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Notes to the Financial Statements
Glomac Berhad 2011 annual report
page
102
Notes
20. GOODWILL ON CONSOLIDATION (Cont’d)
21. D
The Group tests goodwill annually for impairment or more frequently if there are indications that goodwill might be impaired. The recoverable amount of the CGU is determined from value-in-use calculation which uses cash flow projections derived from the most recent financial budgets approved by management covering a three-year period, and an estimated discount rate of 6% per annum. At the end of reporting period, the Group assessed the recoverable amount of goodwill, and determined that goodwill associated with property investment and management activities were impaired by RM467,680 (2010: RMNil). Management is expecting no future cash flows from these CGUs.
D T
The impairment loss has been included in the other operating expenses line item in the statements of comprehensive income. 21. DEFERRED TAX ASSETS/(LIABILITIES) The Group 2011 RM
2010 RM
2011 RM
The Company 2010 RM
At beginning of year Effect of adoption of FRS 139 (Note 2)
6,723,733 (132,891)
2,645,390 -
2,352,000 -
1,889,500 -
As restated
6,590,842
2,645,390
2,352,000
1,889,500
Recognised in profit or loss (Note 10) Property, plant and equipment Other investments Property development activities Unused tax losses and unabsorbed capital allowances Others
(113,592) 2,265,185 (35,868)
(15,631) 462,500 3,618,117 13,357 -
(42,360) 193,107
462,500 -
2,115,725
4,078,343
150,747
462,500
8,706,567
6,723,733
2,502,747
2,352,000
At end of year
O D
A a a d o fo
U U P
Certain deferred tax assets and deferred tax liabilities have been offset in accordance with the Group’s accounting policy. The following is the analysis of the deferred tax balances (after offset) for statements of financial position purposes: The Group 2011 RM Deferred tax assets Deferred tax liabilities
2010 RM
2011 RM
The Company 2010 RM
9,092,459 (385,892)
6,827,274 (103,541)
2,502,747 -
2,352,000 -
8,706,567
6,723,733
2,502,747
2,352,000
2011 RM
The Company 2010 RM
The Group 2011 RM
2010 RM
Deferred tax liabilities (before offsetting) Temporary differences arising from: Property, plant and equipment Others
(210,133) (175,759)
(96,541) (7, 000)
(72,253) -
(29,893) (193,107)
Offsetting
(385,892) -
(103,541) -
(72,253) 72,253
(223,000) 223,000
Deferred tax liabilities (after offsetting)
(385,892)
(103,541)
-
-
N th B
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Notes to the Financial Statements
page
103
21. DEFERRED TAX ASSETS/(LIABILITIES) (Cont’d) The Group e most m. d with e cash
2010 RM 9,500 9,500
2,500 -
Deferred tax assets (before offsetting) Temporary differences arising from: Property development activities Other investments Unused tax losses and unabsorbed capital allowances
Offsetting Deferred tax assets (after offsetting)
2010 RM
2011 RM
The Company 2010 RM
6,087,102 2,575,000 430,357
3,821,917 2,575,000 430,357
2,575,000 -
2,575,000 -
9,092,459
6,827,274
2,575,000
2,575,000
-
-
9,092,459
6,827,274
(72,253) 2,502,747
(223,000) 2,352,000
As mentioned in Note 3(e), the tax effects of transactions are recognised using the “liability” method and all taxable temporary differences are recognised. Where deductible temporary differences, unused tax losses and unused tax credits would give rise to net deferred tax assets, the tax effects are generally recognised to the extent that it is probable that future taxable profits will be available against which deductible temporary differences, unused tax losses and unused tax credits can be utilised. As of April 30, 2011, the estimated amount of deductible temporary differences, unused tax losses and unabsorbed capital allowances pertaining to certain subsidiary companies, for which no deferred tax assets have been recognised in the financial statements due to uncertainty of their realisation, is as follows: The Group
2,500 2,000
2011 RM
Unused tax losses Unabsorbed capital allowances Property development activities
2011 RM
2010 RM
3,828,961 1,255,700 802,094
3,676,966 1,253,976 -
5,886,755
4,930,942
owing
2010 RM 2,000 2,000
2010 RM
9,893) 3,107) 3,000) 3,000 -
No deferred tax assets were recognised in the financial statements of these subsidiary companies in the Group due to uncertainty of their recoverability. The unabsorbed capital allowances and unused tax losses, which are subject to agreement by the Inland Revenue Board, are available indefinitely for offset against future taxable profit of the respective subsidiary companies in the Group.
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Notes to the Financial Statements
Glomac Berhad 2011 annual report
page
104
Notes
22. SHORT-TERM INVESTMENTS
24. P
In the previous financial year, the Group and the Company invested in fixed income funds in two local financial institutions. The shortterm investments of the Group and of the Company provided average yield rates of 2.07% and 2.29% per annum respectively (tax exempt). A
23. INVENTORIES Inventories of the Group amounting to RM38,509,023 (2010: RMNil) is pledged to financial institutions as security for bank borrowings of the Group as mentioned in Note 34.
24. PROPERTY DEVELOPMENT COSTS The Group
C
2011 RM
2010 RM
At beginning of year: Freehold land - at cost Leasehold land - at cost Development expenditure
214,527,325 86,775,379 1,648,503,504
181,162,011 78,662,035 1,468,447,273
Effect of adoption of FRS 139 (Note 2)
1,949,806,208 (1,283,645)
1,728,271,319 -
As restated
1,948,522,563
1,728,271,319
L R
14,000,000 276,986 238,821,063
1,500,000 127,050,027
25. A
253,098,049
128,550,027
Costs incurred during the year: Freehold land - at cost Leasehold land - at cost Development expenditure
Transfer to land held for property development (Note 16): Leasehold land - at cost Transfer from land held for property development (Note 16): Freehold land - at cost Leasehold land - at cost Development expenditure
Transfer to inventories: Development expenditure Provision for foreseeable losses
-
F D S
(7,834,579) C P
17,512,472 104,065,772
31,865,314 15,947,923 60,708,448
121,578,244
108,521,685
-
(7,702,244)
(8,577,737)
(6,876,230)
Costs recognised as an expense in profit or loss: Previous year Current year
(1,723,398,226) (432,976,911)
(1,504,775,473) (218,622,753)
Cumulative costs at end of year
(2,156,375,137)
(1,723,398,226)
158,245,982
219,531,752
B
R
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Notes to the Financial Statements
page
105
24. PROPERTY DEVELOPMENT COSTS (Cont’d) shortly (tax
owings
The Group
At end of year: Freehold land - at cost Leasehold land - at cost Development expenditure
2011 RM
2010 RM
63,076,020 15,192,862 79,977,100
128,000,000 19,128,515 72,403,237
158,245,982
219,531,752
Current year charges to development expenditure include the following: 2010 RM
2,011 2,035 7,273 1,319 1,319
0,000 0,027
The Group
Finance costs (Note 8) Directors’ emoluments (Note 9c) Staff costs (Note 9b)
2011 RM
2010 RM
7,725,582 3,171,354 11,919,096
11,593,964 4,372,800 8,476,918
Land held for development and property development costs of certain subsidiary companies amounting to RM255,021,478 (2010: RM416,825,541) are charged for banking facilities granted to the subsidiary companies as mentioned in Note 34.
25. AMOUNT DUE TO CONTRACT CUSTOMERS The Group
0,027
2011 RM
2010 RM
67,818,786 1,895,607
68,757,659 932,837
69,714,393 (69,714,393)
69,690,496 (69,690,496)
4,579) Contract costs Portion of profit attributable to contract works performed todate 5,314 7,923 8,448
Billings to contract customers
1,685 2,244) 6,230)
5,473) 2,753) 8,226) 1,752
Represented by: Amount due to contract customers
-
-
-
-
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Notes to the Financial Statements
Glomac Berhad 2011 annual report
page
106
Notes
26. ACCRUED BILLINGS/(ADVANCE BILLINGS)
27. T M
The Group 2011 RM Revenue recognised in profit or loss todate Progress billings todate
Represents: Accrued billings Advance billings
2010 RM
2,441,315,713 (2,610,631,450)
1,857,270,394 (2,023,716,375)
(169,315,737)
(166,445,981)
B 34,156,585 (203,472,322)
12,639,247 (179,085,228)
27. TRADE RECEIVABLES
2011 RM
In th b A
The Group
Trade receivables Allowance for doubtful debts
B Im Im
2010 RM
246,846,964 (999,219)
53,352,233 (663,087)
245,847,745
52,689,146
>
28. O Included in the Group’s trade receivables are retention sums receivable from customers of RM1,015,437 (2010: RM1,505,437). Also, included in the Group’s trade receivables is an amount of RM917,250 (2010: RMNil) due from a related party, representing amounts receivable from the sale of property development units in the normal course of business. The Group’s normal trade credit term ranges from 14 to 60 days (2010: 14 to 60 days). Other credit terms are assessed and approved on a case-by-case basis.
O L
Trade receivables that are neither past due nor impaired are creditworthy debtors with good payment records with the Group. The Group has no significant concentration of credit risk that may arise from exposures to a single debtor or groups of debtors. Ageing of past due but not impaired
P R S A
The Group 2011 RM 1 - 30 days 31 - 60 days 61 - 90 days > 90 days Total
19,278,391 9,879,870 65,792,056 25,843,850 120,794,167
O In in a S d e
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Notes to the Financial Statements
page
107
27. TRADE RECEIVABLES (Cont’d) Movement in the allowance for doubtful debts 2010 RM 0,394 6,375) 5,981)
9,247 5,228)
The Group 2011 RM Balance at beginning of the year Impairment losses recognised on receivables Impairment losses reversed
663,087 366,492 (30,360)
Balance at end of year
999,219
In determining the recoverability of a trade receivable, the Group considers any change in the credit quality of the trade receivable from the date credit was initially granted up to the end of the reporting period. The concentration of credit risk is limited due to the customer base being large and unrelated. Ageing of impaired trade receivables
2010 RM 2,233 3,087)
The Group 2011 RM > 90 days
999,219
9,146 28. OTHER RECEIVABLES The Group 2011 RM
mounts
proved
Other receivables Less: Allowance for doubtful debts
Prepaid expenses Refundable deposits Stakeholders’ sum Accrued interest income Group 2011 RM 8,391 9,870 2,056 3,850 4,167
2010 RM
2011 RM
The Company 2010 RM
3,917,900 (118,353)
8,945,453 (118,353)
87,257 -
185,265 -
3,799,547
8,827,100
87,257
185,265
5,062,164 14,270,125 2,323,419 46,832
9,862,787 11,535,205 4,910,014 18,454
111,261 42,422 -
585,555 38,347 -
25,502,087
35,153,560
240,940
809,167
Other receivables comprise mainly expenses rechargeable to sub-contractors. Included in other receivables of the Group is an amount of RM240,913 (2010: RM76,902) due from KJ Leisure Sdn. Bhd., a company in which certain directors of the Company have interest. The amount mainly arose from the transactions pursuant to a project management agreement entered into for a property development project. Stakeholders’ sum represents retention sums held by solicitors upon handling over of vacant possession to individual purchasers of development properties. These amounts will be paid from 6 to 18 months after the delivery of vacant possession together with interest earned.
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Notes to the Financial Statements
Glomac Berhad 2011 annual report
page
108
Notes
29. AMOUNT DUE FROM/(TO) SUBSIDIARY AND ASSOCIATED COMPANIES
30. D
Amounts due from subsidiary companies, which arose mainly from trade transactions, assignment of debts, payment made on behalf and advances granted, bear interest at 5.91% (2010: 0.10% to 5.00%) per annum and are unsecured and repayable on demand.
2011 RM Amount due from subsidiary companies Allowance for doubtful debts
The Company 2010 RM
64,204,436 (2,103,506)
391,328,454 -
62,100,930
391,328,454
In D p th C re se D h T
Amounts due to subsidiary companies, which arose mainly from assignment of debts and advances, are interest-free, unsecured and repayable on demand. Amounts due from associated companies, which arose mainly from expenses paid on behalf, are interest-free, unsecured and repayable on demand. Amounts due to associated companies, which arose mainly from advances, are interest-free, unsecured and repayable on demand. During the financial year, significant transactions, which are determined on a basis as negotiated between the Company and its subsidiary companies, are as follows:
2011 RM Dividend receivable from subsidiary companies Finance cost recharged to and absorbed by subsidiary companies Interest income receivable from subsidiary companies Management and accounting fee receivable from subsidiary company Head office allocation income Assignment of debts to subsidiary companies - net Assignment of debts by subsidiary companies - net
L O
T
The Company 2010 RM
30,660,000 792,245 591,197 (23,875,897) 23,875,897
28,147,451 6,478,658 53,309 2,400 -
L O
31. N
30. DEPOSITS, CASH AND CASH EQUIVALENTS
2011 RM
2010 RM
2011 RM
The Company 2010 RM
A T D
Cash on hand and at banks Deposits with: Licensed banks Other licensed financial institutions
122,620,288
126,418,410
7,660,035
16,217,701
A
54,098,437 -
23,178,096 4,559,077
20,000,000 -
4,559,077
Deposits, cash and bank balances Less: Bank balances pledged Deposits pledged Bank overdrafts (Note 37)
176,718,725
154,155,583
27,660,035
20,776,778
D a R
(83,599) (4,055,498) -
O a fo
Cash and cash equivalents
164,007,530
The Group
(244,272) (7,472,200) (4,994,723)
(233,599) (5,123,726) (13,415,055) 135,383,203
(94,272) 27,565,763
16,637,681
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Notes to the Financial Statements
page
109
30. DEPOSITS, CASH AND CASH EQUIVALENTS (Cont’d) behalf d.
2010 RM 8,454 8,454
Included in the Group’s cash and bank balances is an amount of RM59,153,983 (2010: RM42,556,803) which is held under Housing Development Accounts pursuant to Section 7A of the Housing Developers Act 1966. These accounts consist of monies received from purchasers and are used for the payment of property development expenditure incurred. The surplus monies, if any, will be released to the Group upon the completion of the property development and after all property development expenditure have been fully settled. Cash and bank balances of the Group and of the Company totalling RM244,272 (2010: RM233,599) and RM94,272 (2010: RM83,599) respectively have been placed in Disbursement, Finance Service Reserve and Sinking Fund Accounts, to secure the Islamic debt securities as disclosed in Note 34. Deposits of the Group and of the Company totalling to RM7,472,200 (2010: RM5,123,726) and RMNil (2010: RM4,055,498) respectively have been pledged to secure the Islamic debt securities and bank guarantee facilities. The weighted average effective interest rates for deposits at the end of reporting period are as follows:
d and The Group ayable
nd.
Licensed banks Other financial institutions
2011 %
2010 %
2011 %
The Company 2010 %
2.7 1.8
2.2 1.9
3.1 -
2.1
sidiary The average maturity periods relating to the various deposits held at the end of the reporting period are as follows: The Group
2010 RM 7,451 8,658 3,309 2,400 -
Licensed banks Other financial institutions
2011 Days
2010 Days
2011 Days
The Company 2010 Days
30 -
59 15
30 -
22
31. NON-CURRENT ASSETS CLASSIFIED AS HELD FOR SALE The Group 2011 RM
2010 RM
At beginning of year, at cost Transfer from investment property (Note 15) Disposal during the year
28,700,000 -
7,701
At end of year, at cost
28,700,000
9,077
2010 RM 49,496,357 (49,496,357) -
6,778
During the financial year, a subsidiary company entered into a Sales and Purchase Agreement to dispose of its investment properties for a total consideration of RM28,700,000. The transaction is still pending approval from the relevant authorities and an earnest deposit of RM580,000 has been received.
3,599) 5,498) -
On February 11, 2009, a subsidiary company entered into a Sale and Purchase Agreement with Perbadanan Nasional Berhad (“PNS”), a government owned company of the Ministry of Finance for the sale of investment property and 3 units of office units of its inventories for a total purchase consideration of RM50 million. The disposal was completed on November 6, 2009.
7,681
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Notes to the Financial Statements
Glomac Berhad 2011 annual report
page
110
Notes
32. SHARE CAPITAL
32. S The Group and The Company 2011 2010 RM RM
Authorised: Ordinary shares of RM1.00 each: At beginning and end of year Issued and fully paid: Ordinary shares of RM1.00 each: At beginning of year Issued during the year: Pursuant to Warrants exercised At end of year
T M
P 500,000,000
500,000,000
297,169,721
297,169,421
4,500
300
297,174,221
297,169,721
M J J D Ja F M A
Treasury shares The shareholders of the Company, by an ordinary resolution passed at the 26th Annual General Meeting held on September 30, 2010, renewed their approval for the Company’s plan to repurchase its own shares up to a maximum of 10% of the total issued and fully paid up share capital listed on the Bursa Malaysia Securities Berhad. The directors of the Company are committed to enhancing the value of the Company for its shareholders and believe that the repurchase plan can be applied in the best interests of the Company and its shareholders. The shares repurchased are held as treasury shares as allowed under section 67A of the Companies Act 1965 and are carried at cost. The Company has a right to reissue these shares at a later date. As treasury shares, the rights attached as to voting, dividends and participation in other distribution are suspended.
D
T s W T T (a
(b
(c
(d
(e
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Notes to the Financial Statements
page
111
32. SHARE CAPITAL (Cont’d) The details of the shares bought back as of April 30, 2011 are as follows:
d
Month 2010 RM
0,000
9,421 300
No. of shares bought back
Purchases prior to financial year 2010
3,497,700
May ’10 June ’10 July ’10 December ’10 January ’11 February ’11 March ’11 April ’11
984,900 476,400 41,300 10,000 150,000 377,100 1,209,100 422,200
Highest price paid RM
1.38 1.28 1.32 1.69 1.79 1.85 1.80 1.95
Lowest price paid RM
1.20 1.24 1.30 1.69 1.79 1.71 1.67 1.87
Average price paid RM
Total cost RM
1.32
4,615,357
1.30 1.26 1.30 1.70 1.79 1.79 1.72 1.92
1,275,730 601,850 53,697 17,023 268,367 674,325 2,082,715 808,949
9,721
2010, y paid alue of and its
t cost. ds and
Disposal of treasury shares
3,671,000
5,782,656
7,168,700 (5,010,300)
10,398,013 (6,563,652)
2,158,400
1.78
3,834,361
The shares were bought using internally generated funds. During the current financial year, 5,010,300 (2010: 18,513,600) of treasury shares repurchased were sold for net cash consideration of RM8,902,700 (2010: RM19,814,670). Warrants The Warrants 2007/2012 (“Warrants”) of the Company are constituted by a Deed Poll dated September 5, 2007 (“Deed Poll”). The salient features of the Warrants 2007/2012 are as follows: (a) The issue date of the Warrants is October 25, 2007 and the expiry date is October 24, 2012. Any Warrants not exercised at the expiry date will lapse and cease to be valid for any purpose; (b) Each Warrant entitles the registered holder during the Exercise Period to subscribe for one (1) new ordinary share of RM1.00 in the Company at an exercise price of RM1.10 per ordinary share, subject to the adjustments in accordance with the provisions of the Deed Poll; (c) The Warrant holders are not entitled to participate in any distribution and/or offer of further securities in the Company (except for the issue of new warrants pursuant to adjustment as mentioned in item above), until and unless such holders exercise the rights under the Warrants to subscribe for new ordinary shares; (d) Subject to the provision in the Deed Poll, the Company is free to issue shares to shareholders either for cash or as a bonus distribution and further subscription rights upon such terms and conditions as the Company sees fit but the Warrant holders will not have any participating rights in such issues unless otherwise resolved by the Company in the general meeting; and (e) All shares to be issued upon the exercise of the Warrants shall, on allotment and issue, rank pari passu in all respects with the then existing shares of the Company except that they shall not be entitled to any dividends, that may be declared prior to the date of exercise of the Warrants, nor shall they be entitled to any distributions or entitlements for which the entitlement date is prior to the date of exercise of the Warrants.
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Notes to the Financial Statements
Glomac Berhad 2011 annual report
page
112
Notes
32. SHARE CAPITAL (Cont’d)
34. L
Warrants (Cont’d)
(a
The movements in the Company’s Warrants are as follows: Number of warrants over ordinary shares of RM1.00 each Balance Balance as of as of 1.5.2010 Granted Exercised 30.4.2011 Number of unexercised warrants
67,311,946
-
(4,500)
67,307,446
33. RETAINED EARNINGS In accordance with the Finance Act 2007, the single tier income tax system became effective from the year of assessment 2008. Under this system, tax on a company’s profit is a final tax, and dividends paid are exempted from tax in the hands of the shareholders. Unlike the previous imputation system, the recipient of the dividend would no longer be able to claim any tax credit. Companies without Section 108 tax credit balance will automatically move to the single tier income tax system on January 1, 2008. However, companies with such tax credits are given an irrevocable option to elect for the single tier income tax system and disregard the tax credit or to continue to use the tax credits under Section 108 account to frank the payment of cash dividends on ordinary shares for a period of 6 years ending December 31, 2013 or until the tax credits are fully utilised, whichever comes first. During the transitional period, any tax paid will not be added to the Section 108 account and any tax credits utilised will reduce the tax credit balance. All companies will be on the new system by January 1, 2014. As of the end of the reporting period, the Company has not elected for the irrevocable option to disregard the Section 108 tax credits. Accordingly, subject to the agreement of the Inland Revenue Board and based on the prevailing tax rate applicable to dividends, the Company has sufficient Section 108 tax credit and tax exempt income (Note 10) to frank dividends out of its entire retained earnings as of April 30, 2011.
34. LONG-TERM LIABILITIES
2011 RM
The Group 2010 RM
2011 RM
The Company 2010 RM
19,029,133
36,793,093
-
-
(a) (b) (c) (d)
1,793,837 155,296,319 6,814,403
1,131,430 88,127,384 14,448,351
1,067,951 -
-
(e)
-
-
-
-
182,933,692
140,500,258
1,067,951
-
-
78,000,000
-
78,000,000
182,933,692
218,500,258
1,067,951
78,000,000
Land cost payable (Note 36) Secured: Hire-purchase and lease payables Bridging loans Term loans Revolving credits Islamic debt securities: MUNIF/MMTN
Unsecured: Bonds
(f)
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Notes to the Financial Statements
page
113
34. LONG-TERM LIABILITIES (Cont’d) (a) Hire-purchase and lease payables The Group lance as of 2011 7,446
Under Unlike
2008. rd the res for itional ce. All
redits. ds, the ngs as
2010 RM -
0,000 0,000
Minimum lease payments: Not later than one year Later than 1 year but not later than 5 years
Future finance charges
2011 RM
2010 RM
1,082,634 1,958,447
898,790 1,219,180
3,041,081
2,117,970
(292,557)
(177,747)
Present value of hire-purchase and lease liabilities
2,748,524
1,940,223
Present value of hire-purchase and lease liabilities: Not later than 1 year More than 1 year and less than 2 years More than 2 years and less than 5 years
954,687 681,732 1,112,105
808,793 634,806 496,624
2,748,524
1,940,223
954,687 1,793,837
808,793 1,131,430
2,748,524
1,940,223
Analysed as follows: Due within 12 months (shown under current liabilities) Due after 12 months
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Notes to the Financial Statements
Glomac Berhad 2011 annual report
page
114
Notes
34. LONG-TERM LIABILITIES (Cont’d)
34. L
(a) Hire-purchase and lease payables (Cont’d)
(c The Company 2011 2010 RM RM
Minimum payment: Not later than one year Later than 1 year but not later than 5 years
Future finance charges
324,000 1,161,000
-
1,485,000
-
(151,475)
-
Present value of hire-purchase and lease liabilities
1,333,525
-
Present value of hire-purchase and lease liabilities: Not later than 1 year More than 1 year and less than 2 years More than 2 years and less than 5 years
265,574 279,738 788,213
-
1,333,525
-
265,574 1,067,951
-
1,333,525
-
Analysed as follows: Due within 12 months (shown under current liabilities) Due after 12 months
The hire-purchase and lease payables of the Group and the Company bear interest at rates ranging from 2.4% to 7.5% and 2.5% (2010: 2.4% to 7.1% and nil) per annum respectively. Interest rates are fixed at the inception of the hire-purchase and lease arrangements. The Group’s hire-purchase and lease payables are secured by the financial institutions’ charge over the assets under hire-purchases/leases. (b) Bridging loans The Group 2011 RM Amount repayable Due within 1 year (Note 37)
2,979,861 (2,979,861) -
2010 RM 2,423,220 (2,423,220) -
2011 RM
The Company 2010 RM
-
-
-
-
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Notes to the Financial Statements
page
115
34. LONG-TERM LIABILITIES (Cont’d) (c) Term loans The Group
2010 RM -
2011 RM Amount repayable Due within 1 year (Note 37)
2010 RM
2011 RM
The Company 2010 RM
161,657,692 (6,361,373)
97,410,599 (9,283,215)
-
-
155,296,319
88,127,384
-
-
17,561,935 137,734,384
54,351,086 33,776,298
-
-
155,296,319
88,127,384
-
-
-
The long term portion of the loans are repayable as follows: More than 1 year and less than 2 years More than 2 years and less than 5 years
-
As of April 30, 2011, the Group has credit facilities issued under Syariah Principles, amounting to RM73,300,000 (2010: RM18,000,000), which were obtained from licensed financial institutions. The facility of the subsidiary companies was secured by a first party legal charge over 7 acres of their freehold land.
-
The details of significant bridging loans and term loans facilities of the Group are as follows:
-
(a) term loans with tenure ranging from 15 months to 48 months totalling RM160,305,394; and (b) term loans with tenure of 15 years totalling RM1,352,298.
2.5% lease
The abovementioned bridging and term loans are secured by way of the following: (a) the respective subsidiary companies’ stamped facility agreements;
under (b) fixed charges over certain investment properties of subsidiary companies; (c) first party legal charge over the 2 parcels of freehold land of subsidiary companies held for development; (d) a fixed charge and floating charge by way of a debenture on subsidiary companies’ present and future assets; 2010 RM
(e) assignment of sales proceeds arising from sale of development properties of certain subsidiary companies;
-
(f)
assignment of all monies in the Housing Development Accounts of certain subsidiary companies, subject to the provisions of the Housing Development Account Regulations 1991;
-
(g) assignment of future rental or lease proceeds on development properties of certain subsidiary companies; (h) legal assignment of certain subsidiary companies’ interest under the Joint Venture Agreement (“JVA”) with a third party over the parcel of land held for development; and (i)
legal assignment of a third party’s interest under the Supplemental Joint Venture Agreement with another third party over the parcel of land held for development.
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Notes to the Financial Statements
Glomac Berhad 2011 annual report
page
116
Notes
34. LONG-TERM LIABILITIES (Cont’d)
34. L
(d) Revolving credits
(f The Group 2011 RM
Amount repayable Due within 1 year (Note 37) Long-term portion
2010 RM
80,172,217 (73,357,814)
20,320,749 (5,872,398)
6,814,403
14,448,351
2011 RM
The Company 2010 RM
55,000,000 (55,000,000)
5,000,000 (5,000,000)
-
-
2011 RM
The Company 2010 RM
(e) Islamic debt securities - MUNIF/MMTN The Group 2011 RM Amount repayable Due within 1 year (Note 37)
-
2010 RM 9,000,000 (9,000,000) -
-
9,000,000 (9,000,000) 35. T
As of April 30, 2010, the Group and the Company have fully paid off Islamic Debt Securities which are issued under Syariah Principles, Murabahah Underwritten Notes Issuance Facility/Murabahah Medium Term Notes (“MUNIF/MMTN”) Facility with credit facilities totaling RM25 million (2010: RM25 million) for the Group and the Company. The MUNIF/MMTN of the Company were secured by the following: (i)
In T
36. O
first legal assignment of sale proceeds of certain identified phases of certain development projects of the Group in favour of the Security Trustee;
(ii) first charge/assignment of the respective Housing Development Accounts in relation to certain identified phases of certain development projects of the Group and monies standing to the credit of the Company in favour of the Security Trustee; (iii) first charge/assignment over the Disbursement Accounts and the Finance Service Reserve Account and monies standing to the credit of the Group in favour of the Security Trustee; (iv) first charge/assignment of insurances, in relation to certain identified phases of certain development projects in favour of the Security Trustee; (v) first charge/assignment over the Sinking Fund Account in favour of the Security Trustee;
O L A D A
L
(vi) a negative pledge over any part of the Group’s business or assets in favour of the Security Trustee.
O In s
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Notes to the Financial Statements
page
117
34. LONG-TERM LIABILITIES (Cont’d) (f)
Bonds The Group 2011 RM
2010 RM 0,000 0,000)
Amount repayable Due within 1 year (Note 37)
-
The long-term portion is repayable as follows: More than 1 year and less than 2 years 2010 RM 0,000 0,000)
50,000,000 (50,000,000)
2010 RM 78,000,000 -
2011 RM
The Company 2010 RM
50,000,000 (50,000,000)
78,000,000 -
-
78,000,000
-
78,000,000
-
78,000,000
-
78,000,000
The unsecured Bonds were obtained from financial institutions which included a condition to subscribe for the subordinated bonds disclosed in Note 19 which was issued pursuant to the Primary Collateralised Loan Obligations Transaction and were limited to 10% of the principal amount of the Bonds. The purpose of the facilities was for working capital and general corporate purposes. The facilities bear interest at prescribed rates ranging from 6.25% to 7.63% (2010: 6.25% to 7.63%) per annum.
35. TRADE PAYABLES yariah credit
Included in the Group’s trade payables are retention sums of RM23,884,625 (2010: RM16,066,727) payable to subcontractors. The normal credit terms granted to the Group range from 1 to 60 days (2010: 1 to 60 days).
36. OTHER PAYABLES AND ACCRUED EXPENSES of the
The Group
certain
ding to
of the
Other payables Land acquisition cost payable Accrued expenses Deposits received from purchasers and tenants Accrued interest expense
Less: Non current Portion - Land cost payable (Note 34)
2011 RM
2010 RM
2011 RM
The Company 2010 RM
11,023,796 49,649,622 17,526,135 10,044,332 1,459,725
13,765,268 57,471,028 8,926,350 9,115,014 1,209,325
298,497 546,236 64,850 1,459,725
471,712 551,411 44,850 1,073,095
89,703,610
90,486,985
2,369,308
2,141,068
(19,029,133)
(36,793,093)
-
-
70,674,477
53,693,892
2,369,308
2,141,068
Other payables comprise amounts outstanding for ongoing costs and operating expenses payable. Included in the Group’s other payables is an amount of RM2,037,098 (2010: RM2,037,098) owing to corporate shareholders of certain subsidiary companies. This amount is unsecured, interest-free and repayable on demand.
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Notes to the Financial Statements
Glomac Berhad 2011 annual report
page
118
Notes
37. BORROWINGS
38. C The Group 2011 RM
2010 RM
2011 RM
The Company 2010 RM S
Short-Term Borrowings Secured: Bank overdrafts Bridging loans (Note 34b) Term loans (Note 34c) Revolving credits (Note 34d) Islamic debt securities: MUNIF/MMTN (Note 34e) Unsecured: Bonds (Note 34f)
4,994,723 2,979,861 6,361,373 73,357,814
13,415,055 2,423,220 9,283,215 5,872,398
55,000,000
5,000,000
-
9,000,000
-
9,000,000
50,000,000
-
50,000,000
-
137,693,771
39,993,888
105,000,000
14,000,000
T u T R fi in
39. C A
The weighted average effective interest rates per annum at the end of the reporting period for borrowings are as follows: The Group
Bank overdrafts Bridging loans Term loans Revolving credits Islamic debt securities: MUNIF/MMTN Bonds
2011 %
2010 %
2011 %
The Company 2010 %
6.8 6.0 5.5 5.9
6.5 6.2 5.5 6.6
4.8
4.8
6.9
5.8 6.9
6.9
5.8 6.9
A
40. R S c N K P Ta D
The bank overdrafts and certain revolving credits of the Group and of the Company are secured by fixed charges over certain investment properties of subsidiary companies and debentures over the assets of a subsidiary company. Certain revolving credits of the Company and its subsidiary companies are secured by first legal charges over certain property development projects of certain subsidiary companies and fixed charges over certain investment properties of certain subsidiary companies of the Group.
S d
T P T P P
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119
38. CONTINGENT LIABILITIES (UNSECURED) The Group 2010 RM Subsidiary companies
0,000 0,000
-
2011 RM -
2010 RM -
2011 RM 196,205,238
The Company 2010 RM 129,701,053
The Company is contingently liable in respect of financial guarantees given to the financial institutions pertaining to the banking facilities utilised by the subsidiary companies as of April 30, 2011. The total amount of guarantees provided by the Company for the abovementioned facilities amounted to RM391,544,797 (2010: RM248,971,000). The financial guarantees have not been recognised since the fair value on initial recognition was not material as the financial guarantees provided by the Company did not contribute towards credit enhancement of the subsidiary companies’ borrowings in view of the securities pledged by the subsidiary companies as disclosed in Note 34.
39. CAPITAL COMMITMENT As of the end of reporting period, the Group and the Company have the following capital commitments:
0,000 The Group
2010 % 4.8 5.8 6.9
stment
pment of the
Approved and contracted for: Purchase of land held for property development
2011 RM
2010 RM
2011 RM
The Company 2010 RM
79,634,151
25,092,269
-
-
40. RELATED PARTY TRANSACTIONS Saved as disclosed elsewhere in the financial statements, the related parties and their relationship with the Company and its subsidiary companies are as follows: Name of related parties
Relationship
KJ Leisure Sdn Bhd Petramco (M) Sdn Bhd Tan Sri Dato’ Mohamed Mansor bin Fateh Din Dato’ Fateh Iskandar bin Tan Sri Dato’ Mohamed Mansor
A company in which certain directors of the Company have direct interest A company in which certain directors of the Company have interest Director of the Company Director of the Company
Significant transactions undertaken on agreed terms and prices by the Company and the subsidiary companies with their related parties during the financial year are as follows: 2011
The Company Project management fee receivable from a related party The Group Progress billing of properties sold to certain directors of the Company Progress billing of properties sold to a Company in which certain directors of the Company have interest.
2010
Amount of Transaction RM
Outstanding Amount RM
Amount of Transaction RM
Outstanding Amount RM
-
-
810,456
76,902
13,335,000
917,250
-
-
1,020,000
-
-
-
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Glomac Berhad 2011 annual report
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120
Notes
40. RELATED PARTY TRANSACTIONS (Cont’d)
41. S
Compensation of key management personnel
(b The Group
The Company 2011 2010 RM RM
2011 RM
2010 RM
Directors’ fees Salaries and other emoluments Benefits-in-kind
96,000 3,990,000 105,600
96,000 4,085,000 105,600
96,000 199,500 30,600
96,000 95,000 30,600
Total short-term employment benefits Post employment benefits: EPF
4,191,600
4,286,600
326,100
221,600
478,800
490,200
23,940
11,400
4,670,400
4,776,800
350,040
233,000
Remunerations Benefits-in-kind
3,054,849 40,950
1,631,832 15,812
416,984 17,000
517,445 15,437
Total short-term employment benefits Post employment benefits: EPF
3,095,799
1,647,644
433,984
532,882
361,232
149,014
49,932
34,092
3,457,031
1,796,658
483,916
566,974
8,127,431
6,573,458
833,956
799,974
Directors
Other key management personnel
Total Compensation
41. SEGMENTAL INFORMATION (a) Business Segments The Group is organised into three major businesses: (i)
Property development - the development of residential and commercial properties for sale and sale of land
(ii) Construction - the construction of buildings (iii) Property investment - the investment of land and buildings held for investment potential and rental income in future Other business segments include investment holding which are not separately reported as the segment’s operations are not material to the Group. The directors are of the opinion that all inter-segment transactions have been entered into in the normal course of business and have been established on terms and conditions that are not materially different from those obtainable in transactions with unrelated parties.
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41. SEGMENTAL INFORMATION (Cont’d) (b) Geographical Segments 2010 RM
6,000 5,000 0,600 1,600 1,400 3,000
7,445 5,437 2,882 4,092 6,974 9,974
The Group operates and derives its income in Malaysia. Accordingly, the financial information by geographical segment has not been presented.
2011
Property Development RM
Property Construction Investment RM RM
Other Operations RM
Eliminations RM
Consolidated RM
REVENUE External revenue Inter-segment revenue
585,551,706 -
409,252 10,117,151 134,262,079 1,225,940
1,399,619 5,031,330
(140,519,349)
597,477,728 -
Total revenue
585,551,706
134,671,331 11,343,091
6,430,949
(140,519,349)
597,477,728
RESULTS Segment results Unallocated corporate expenses
130,551,141
(2,540,481)
132,594,916 1,716,994
Operating profit Finance costs Interest income Change in fair value of investment properties Provision for foreseeable property development losses Provisions for bumiputra quota penalties Share of profits of associated companies Income tax expense
3,138,219
1,623,823
(177,786)
134,311,910 (6,749,427) 3,628,604 (1,256,595) (1,701,507) (1,069,438) 1,021,596
-
1,306,853
-
-
Profit for the year
ASSETS Segment assets Investment in associated companies Unallocated corporate assets aterial
ss and elated
92,730,717
1,108,568,621
27,883,829 94,822,136
2,498,633
-
1,233,773,219
6,294,607
16,384,551 39,106,103
-
-
61,785,261 59,323,354
Consolidated total assets
LIABILITIES Segment liabilities Unallocated corporate liabilities Consolidated total liabilities
2,328,449 (36,761,279)
1,354,881,834
495,352,329
15,063,008 47,625,817
66,612
-
558,107,766 132,674,202 690,781,968
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Glomac Berhad 2011 annual report
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122
Notes
41. SEGMENTAL INFORMATION (Cont’d)
41. S
(b) Geographical Segments (Cont’d)
2011 OTHER INFORMATION Capital expenditure Non-cash expenses Depreciation and amortisation Provision for foreseeable property development losses Provision for bumiputra quota penalties Loss on change in fair value of investment properties Non-cash income Gain on change in fair value of investment properties
(b Property Development RM
Property Construction Investment RM RM
Other Operations RM
Eliminations RM
Consolidated RM
47,214
14,810
2,412,284
-
-
2,474,308
987,392
103,757
677,665
127,166
-
1,895,980
1,701,507
-
-
-
-
1,701,507
1,069,438
-
-
-
-
1,069,438
-
590,000
1,474,303
-
-
2,064,303
-
-
-
-
(807,708)
(807,708)
2010 REVENUE External sales Inter-segment sales
300,271,702 3,520,150
3,442,696 10,558,049 56,868,739 2,226,099
2,483,430 5,799,586
(68,414,574)
316,755,877 -
Total revenue
303,791,852
60,311,435 12,784,148
8,283,016
(68,414,574)
316,755,877
(2,342,684)
67,760,972
RESULTS Segment results Unallocated corporate expenses
63,621,301
3,793,002
2,830,456
(141,103)
(7,409,363) 42. F
Operating profit Finance costs Interest income Change in fair value of investment properties Share of profits of associated companies Income tax expense Profit for the year
60,351,609 (1,457,896) 4,349,561 -
-
9,083,956
-
-
9,083,956
1,128,353
-
1,437,230
-
-
2,565,583 (17,613,952) 57,278,861
(i
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41. SEGMENTAL INFORMATION (Cont’d) (b) Geographical Segments (Cont’d)
dated RM
2010 ASSETS Segment assets Investment in associated companies Unallocated corporate assets
4,308 5,980
Property Development RM
Property Construction Investment RM RM
Other Operations RM
Eliminations RM
Consolidated RM
924,248,643
26,333,510 62,095,581
8,707,957
-
1,021,385,691
6,775,072
15,722,134 37,419,911
-
-
59,917,117 72,724,297
1,507 Consolidated total assets
1,154,027,105
9,438 4,303
LIABILITIES Segment liabilities Unallocated corporate liabilities
485,938,629
11,991,319 16,295,399
11,123,955
-
525,349,302 40,958,651
7,708) Consolidated total liabilities
OTHER INFORMATION Capital expenditure Non-cash expenses Depreciation and amortisation Allowance for diminution in value of other investment Non-cash income Gain on change in fair value of investment properties
5,877 5,877
0,972
566,307,953
352,742
940,000
625,714
44,447
-
1,962,903
1,061,542
158,194
300,258
284,119
-
1,804,113
-
-
-
1,850,000
-
1,850,000
-
-
-
-
(9,083,956)
(9,083,956)
9,363) 42. FINANCIAL INSTRUMENTS 1,609 7,896) 9,561 3,956 5,583 3,952) 8,861
(i)
Capital risk management The Group and the Company manage its capital to ensure that it will be able to continue as a going concern while maximising returns to its shareholder through the optimisation of debt and equity balance. The Group’s and the Company’s overall strategy remain unchanged from 2010. The Group and the Company did not engage in any transaction involving financial derivative instruments during the financial year. The Group’s and the Company’s risk management committee review the capital structure of the Group and the Company on a regular basis. The Group manages its capital structure and makes adjustments to it in the light of changes in economic conditions and the risk characteristic of the underlying assets. No changes were made in the objectives, policies or processes during the financial year ended April 30, 2011.
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Notes
42. FINANCIAL INSTRUMENTS (Cont’d) (i)
42. F
Capital risk management (Cont’d)
(i
Gearing ratio The gearing ratio at end of the reporting period is as follows: The Group 2011 RM Debt Deposits, cash and bank balances
2010 RM
2011 RM
The Company 2010 RM
302,553,017 (176,718,725)
222,509,846 (154,155,583)
106,333,525 (27,660,035)
92,000,000 (20,776,778)
Net debt
125,834,292
68,354,263
78,673,490
71,223,222
Equity
664,099,866
587,719,152
344,764,597
337,992,113
19%
12%
23%
21%
Net debt to equity ratio
(i
Debt is defined as long and short-term borrowing, as described in Notes 34 and 37. Equity includes all capital and reserves of the Group and the Company that are managed as capital. Significant Accounting Policies Details of the significant accounting policies and methods adopted (including the criteria for recognition, the bases of measurement and the bases for recognition of income and expenses), for each class of financial asset, financial liability and equity instrument are disclosed in Note 3. (ii) Financial Risk Management Objectives The operations of the Group are subject to a variety of financial risk, interest rate risk, credit risk, and liquidity and cash flow risk. The Group has formulated a financial risk management framework whose principal objective is to minimise the Group’s exposure to risks and/or costs associated with the financing, investing and operating activities of the Group. Financial risk management is carried out through risk reviews, internal control systems and adherence to Group financial risk management policies. The Board regularly reviews these risks and approves the treasury policies, which cover the management of these risks. (iii) Credit Risk Management Credit risk refers to the risk that a counter party will default on its contractual obligation resulting in financial loss to the Group. The Group is exposed to credit risk mainly from its customer base, including trade receivables. The Group extends credit to its customers based upon careful evaluation of the customer’s financial condition and credit history. Trade receivables are monitored on an ongoing basis by the Group’s credit control department.
(v
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42. FINANCIAL INSTRUMENTS (Cont’d) (iii) Credit Risk Management (Cont’d) Exposure to credit risk At the reporting date, the Group’s and the Company’s maximum exposure to credit risk is the carrying amount of financial assets which are mainly trade and other receivables, deposits with licensed bank and cash and bank balances. 2010 RM 0,000 6,778) 3,222
2,113 21%
The carrying amount of financial assets recognised in the financial statements, which is net of impairment losses, represents the Group’s maximum exposure to credit risk, without taking into account collateral or other credit enhancements held. (iv) Interest Rate Risk Management The Group and the Company are exposed to interest rate risk through the impact of rate changes on interest-bearing deposits, hirepurchase creditors and borrowings. The Group’s and the Company’s exposure to interest rates on financial liabilities are detailed in the liquidity risk management section of this note. Interest rate exposure is measured using sensitivity analysis as disclosed below:
Interest rate sensitivity analysis The sensitivity analyses below have been determined based on the exposure to interest rates for both derivatives and non-derivative instruments at the end of the reporting period. For floating rate liabilities, the analysis is prepared assuming the amount of the liability outstanding at the end of the reporting period was outstanding for the whole year. A 50 basis point increase or decrease is used when reporting interest rate risk internally to key management personnel and represents management’s assessment of the reasonably possible change in interest rates. ement ent are
If interest rates had been 50 basis points higher/lower and all other variables were held constant, the Group’s: •
risk.
profit for the year ended April 30, 2011 would decrease/increase by RM933,000. This is mainly attributable to the Group’s exposure to interest rates on its variable rate borrowings; and
The Group’s sensitivity to interest rates has decreased during the current period mainly due to the reduction in variable rate debt instruments.
posure (v) Foreign Currency Risk Management al risk ment of
Foreign exchange exposures in transactional currencies other than functional currencies of the operating entities are kept to an acceptable level. The carrying amounts of the Group’s and of the Company’s foreign currency denominated monetary assets and monetary liabilities at the end of the reporting period are as follows: The Group 2011 RM
The Company 2011 RM
Assets Australian Dollar (AUD) Thai Baht (THB)
20,146,408 3,463,207
18,708,261 5,283
Liabilities Australian Dollar (AUD)
147,382
-
p. t to its nitored
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Glomac Berhad 2011 annual report
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Notes
42. FINANCIAL INSTRUMENTS (Cont’d)
42. F
(v) Foreign Currency Risk Management (Cont’d)
(v
Foreign currency sensitivity analysis The Group is mainly exposed to the currency of AUD and THB. The following table details the Group’s sensitivity to a 10% increase and decrease in the RM against the relevant foreign currencies. 10% is the sensitivity rate used when reporting foreign currency risk internally to key management personnel and represents management’s assessment of the reasonably possible change in foreign exchange rates. The sensitivity analysis includes only outstanding foreign currency denominated monetary items and adjusts their translation at the period end for a 10% change in foreign currency rates. The sensitivity analysis includes external loans as well as loans to foreign operations within the Group where the denomination of the loan is in a currency other than the currency of the lender or the borrower. A positive number below indicates an increase in profit and other equity where the RM strengthens 10% against the relevant currency. For a 10% weakening of the RM against the relevant currency, there would be a comparable impact on the profit and other equity, and the balances below would be negative.
Impact of AUD Impact of THB
(i)
The Group Profit or loss 2011 RM
The Company Profit or loss 2011 RM
118,800 2,000
1,870,826 706
This is mainly attributable to the exposure outstanding on AUD receivables and payables in the Group at the end of the reporting period.
(ii) This is mainly attributable to the exposure to outstanding Baht payables at the end of the reporting period. In management’s opinion, the sensitivity analysis is unrepresentative of the inherent foreign exchange risk because the year end exposure does not reflect the exposure during the year. During the financial year, no transaction denominated in foreign currency was undertaken by the Group. (vi) Liquidity Risk Management The Group and the Company seek to invest cash assets safely and profitably. The Group also seeks to control credit risk by setting counterparty limits and ensuring that sale of products and services are made to customers with an appropriate credit history, and monitoring customers’ financial standing through periodic credit review and credit checks at point of sales. The Group and the Company consider the risk of material loss in the event of non-performance by a financial counterparty to be unlikely. The following tables detail the Group’s and the Company’s remaining contractual maturity for its non derivative financial liabilities with agreed repayment periods. The tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Group can be required to pay. The tables include both interest and principal cash flows. To the extent that interest flows are floating rate, the undiscounted amount is derived from interest rate curves at the end of the reporting period. The contractual maturity is based on the earliest date on which the Group may be required to pay.
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127
42. FINANCIAL INSTRUMENTS (Cont’d) (vi) Liquidity Risk Management (Cont’d)
ncies. esents s only nge in where dicates of the would
The Group April 30, 2011
Weighted average effective interest rate %
Less than 1 year RM
1-2 years RM
2-5 years RM
5+ years RM
Total RM
4.3 5.7 6.6
129,954,021 966,735 94,355,107 53,470,000
30,206,176 703,282 42,715,648 -
11,753,770 1,160,689 111,396,886 -
30,865,187 -
171,913,967 2,830,706 279,332,828 53,470,000
2.5 4.8 6.2 -
2,372,542 265,574 57,623,500 55,287,841 -
279,738 -
788,213 -
-
2,372,542 1,333,525 57,623,500 55,287,841 -
Non-interest bearing Finance lease liability Variable interest rate instruments Fixed interest rate instruments
The Company April 30, 2011 mpany r loss 2011 RM 0,826 706
Non-interest bearing Finance lease liability Variable interest rate instrument Fixed interest rate instruments Financial guarantee*
* porting
At the end of the reporting period, it was not probable that the counterparties to financial guarantee contracts will claim under the contracts. Consequently, the amount included above is nil.
Categories and Fair Value of Financial Instruments The Group 2011
ar end rrency
setting y, and nd the
bilities based To the porting
Financial assets As of April 30, 2011 Loans and receivables Amortised cost Trade receivables Other receivables Amount due from subsidiary companies Amount due from associated companies Deposit, cash and bank balances Available-for-sale Other investments
The Company 2011
Carrying Amount RM
Fair Value RM
Carrying Amount RM
Fair Value RM
245,847,745 20,439,923 3,930,759 176,718,725
245,847,745 20,439,923 3,930,759 176,718,725
129,679 62,100,930 39,603 27,660,035
129,679 62,100,930 39,603 27,660,035
4,000,000
4,000,000
-
-
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Glomac Berhad 2011 annual report
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128
Notes
42. FINANCIAL INSTRUMENTS (Cont’d)
43. S
(vi) Liquidity Risk Management (Cont’d) Categories and Fair Value of Financial Instruments (Cont’d)
N The Group 2011 Carrying Amount RM
The Company 2011 Fair Value RM
Carrying Amount RM
Fair Value RM
S In B
Financial liabilities As of April 30, 2011 Amortised cost Term loans Hire-purchase and lease payables Bonds Bank overdraft Bridging loans Dividend payable Trade payables Other payables Land acquisition cost payable Deposits received from purchasers and tenants Accrued expenses Revolving credits
B B 161,657,692 2,748,524 50,000,000 4,994,723 2,979,861 9,969,717 79,276,599 11,023,796 49,649,622 10,044,332 18,985,860 80,172,217
116,081,389 2,748,524 50,000,000 4,994,723 2,979,861 9,969,717 78,833,834 11,023,796 48,908,940 10,044,332 18,985,860 80,172,217
1,333,525 50,000,000 9,969,717 3,234 298,497 64,850 2,005,961 55,000,000
1,333,525 50,000,000 9,969,717 3,234 298,497 64,850 2,005,961 55,000,000
D E G G G G G
It is not practical to estimate the fair value of unquoted investments of the Group and the Company as there is a lack of quoted market prices and related information.
G
The following method and assumptions were used to estimate the fair values of the following classes of financial instruments: G (i)
Cash and cash equivalents, trade and other receivables/payables, amount due to/from subsidiary and associated companies The carrying amounts approximate fair values due to the relatively short-term maturity of these financial instruments.
(ii) Borrowings, hire-purchase and lease payables The fair values of borrowings, hire-purchase and lease payables are estimated by discounting the expected future cash flows based on current rates for similar types of borrowings, hire-purchase and lease arrangements.
G G G G G G G G G
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43. SUBSIDIARY AND ASSOCIATED COMPANIES
Name of Company
Effective Equity Interest 2011 2010 % %
Principal Activities
Subsidiary companies Fair Value RM
3,525 0,000 9,717 3,234 8,497 4,850 5,961 0,000
Incorporated in Malaysia Bangi Integrated Corporation Sdn. Bhd.
100
100
Property investment
Berapit Development Sdn. Bhd.#
100
100
Property investment and management
BH Interiors Sdn. Bhd. #
100
100
Dormant
Dunia Heights Sdn. Bhd. #
100
100
Property development and investment
Elmina Equestrian Centre (Malaysia) Sdn. Bhd. #
100
100
Dormant
Glomac Alliance Sdn. Bhd. #
100
100
Property development and investment
Glomac Consolidated Sdn. Bhd. #
100
100
Property development and investment
Glomac City Sdn. Bhd. #
100
100
Property development and investment
Glomac Damansara Sdn. Bhd.
100
100
Property development and investment
Glomac Enterprise Sdn. Bhd.
100
100
Property development and investment holding
Glomac Group Management Services Sdn. Bhd. #
100
100
Property development, investment holding and project management
Glomac Jaya Sdn. Bhd.
100
100
Property development and investment
Glomac Land Sdn. Bhd. #
100
100
Property development and investment
Glomac Leisure Sdn. Bhd. #
100
100
Dormant
Glomac Maju Sdn. Bhd.
100
100
Property development and investment
Glomac Nusantara Sdn. Bhd. #
100
100
Property development and investment
Glomac Property Services Sdn. Bhd. #
100
100
Property management and investment
Glomac Rawang Sdn. Bhd.
100
100
Property development and investment
Glomac Real Estate Sdn. Bhd.
100
100
Property development and investment
Glomac Realty Sdn. Bhd. #
100
100
Property investment and management
Glomac Regal Sdn. Bhd.
100
100
Property development and investment
quoted
s: anies
h flows
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43. SUBSIDIARY AND ASSOCIATED COMPANIES (Cont’d)
Name of Company
Notes
43. S
Effective Equity Interest 2011 2010 % %
Principal Activities
N
Subsidiary companies
S
Incorporated in Malaysia
In
Glomac Resources Sdn. Bhd.
100
100
Property development and investment
G
Glomac Restaurants Sdn. Bhd.*
100
100
Investment holding
F
Glomac Segar Sdn. Bhd. #
100
100
Property development and investment
B
Glomac Sutera Sdn. Bhd. #
100
100
Property development and investment
K
Glomac Vantage Sdn. Bhd.
100
100
Property development and investment
B
Kelana Centre Point Sdn. Bhd.* #
100
100
Property investment and management
In
Kelana Seafood Centre Sdn. Bhd.*
100
100
Dormant
G
Magic Season Sdn. Bhd.* #
100
100
Property development and investment
A
OUG Square Sdn. Bhd. #
100
100
Property development and investment
In
Prisma Legacy Sdn. Bhd. *#
100
100
Dormant
Ir
Prima Sixteen Sdn. Bhd.*
100
100
Property investment and management
Regency Land Sdn. Bhd.
100
100
Property investment and management
Sungai Buloh Country Resort Sdn. Bhd. #
100
100
Managing and operating of a clubhouse
Glomac Thailand Sdn. Bhd. #
90
90
Investment holding
85.70
85.70
Investment holding
FDA Sdn. Bhd.
70
70
Property development and investment
Glomac Excel Sdn. Bhd. #
60
60
Dormant
In
Glomac Utama Sdn. Bhd.
60
60
Investment holding
V
Prominent Excel Sdn. Bhd. #
60
60
Car park operators and managers
Glomac Al Batha Sdn. Bhd.
51
51
Property development and investment
Glomac Al Batha Mutiara Sdn. Bhd. *
51
51
Property development and investment
Glomac Bina Sdn. Bhd.
51
51
Building contractor
P
W
In Glomac Power Sdn. Bhd. #
W
* #
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Notes to the Financial Statements
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131
43. SUBSIDIARY AND ASSOCIATED COMPANIES (Cont’d)
Name of Company
Effective Equity Interest 2011 2010 % %
Principal Activities
Subsidiary companies Incorporated in Malaysia Glomac Kristal Sdn. Bhd. #
100
100
Property development and investment
FDM Development Sdn. Bhd. #
100
100
Property development and investment
Berapit Properties Sdn. Bhd. #
100
-
Property development and investment
Kelana Property Services Sdn. Bhd. #
100
-
Property management
Berapit Pertiwi Sdn. Bhd. #
100
-
Dormant
100
100
Investment holding
Irama Teguh Sdn. Bhd. (held through PPC Glomac Sdn. Bhd.) #
30
30
Investment holding
PPC Glomac Sdn. Bhd (held through Glomac Power Sdn. Bhd.) #
30
30
Turnkey contractor
Worldwide Glomac Development Sdn. Bhd. (held through Glomac Utama Sdn. Bhd.) #
29.40
29.40
Property development
44.10
44.10
Warehouse contractor and investment holding
45.45
45.45
Trustee management
Incorporated in Australia Glomac Australia Pty. Ltd. # Associated companies Incorporated in Malaysia
Incorporated in Thailand WHA Glomac Alliance Co. Ltd. (held through Glomac Thailand Sdn. Bhd.) # Incorporated in Australia VIP Glomac Pty. Ltd. (held through Glomac Australia Pty. Ltd.) # * #
Interest held through subsidiary companies The financial statements of these companies are examined by auditors other than the auditors of the Company.
glomac ar11 FA:Layout 1 8/27/11 4:48 PM Page 132
Notes to the Financial Statements
Glomac Berhad 2011 annual report
page
132
44. MATERIAL LITIGATION A wholly owned subsidiary, Glomac Alliance Sdn Bhd (“GASB”) had entered into a Joint Venture Agreement with Score Option Sdn Bhd (“SOSB”) on January 17, 2003 to develop a parcel of land (“Project Land”). However, disputes have arisen between GASB and SOSB which are currently the subject matter of a legal suit in the High Court of Malaya at Kuala Lumpur. GASB is seeking court orders for the sale to itself of the Project Land at the price stipulated in the Joint Venture Agreement. SOSB, in turn, is cross-claiming for the delivery of vacant possession of the Project Land on the alleged ground that GASB is no longer entitled to occupy and develop the Project Land by reason of the termination of the Joint Venture Agreement by SOSB. GASB subsequently, applied for injunctive relief to restrain SOSB from interfering with the development of the Project Land by GASB and SOSB applied for an injunction restraining GASB from continuing in possession of the Project Land.
Notes
45. S (i
(i
The Court had on May 30, 2008 delivered its decision by dismissing SOSB’s application for injunction and granting the Order of Injunction in favor of GASB. (i SOSB has appealed to the Court of Appeal against the decision of the High Court and on August 17, 2009 the Court of Appeal dismissed the appeal filed by SOSB. The Court only awarded one set of costs in the sum of RM5,000 to SOSB. The Federal Court had on January 25, 2010 delivered its decision by dismissing both applications by SOSB for injunction. (i GASB has applied for an extension on discovery of documents until December 14, 2009 and subsequent to the hearing on March 10, 2010, the Court has fixed the case for decision on April 8, 2010. On March 22, 2010, the Receivers and Managers for SOSB (“R&M”) advertised in The Star inviting interested parties to submit an offer or expression of interest for an outright purchase of a parcel of development land (“the Land”) and other assets on an “as is where is” basis or a proposed development of the Land with the R&M, subject to the exclusion of all verifiable sold units and to the proper resolution of existing encumbrances and third party interest on the Land some of which are the subject matter of ongoing litigation.
(v
SOSB has filed for appeal to Judge in Chambers against the decision in respect of the discovery application on May 24, 2010. The appeal is dismissed with costs of RM1,000. SOSB has filed Stay Application and Variation Application and the Judge has vacated the case management scheduled on March 18, 2011 and fixed the same on April 11, 2011 the same as the hearing of the interveners’ application. GASB had been served with Writ of Summons and Statement of Claims (“the Claim”) dated March 21, 2011 filed by SOSB and Austral Development Sdn Bhd (“the Plaintiffs”) against the R&M as the 1st and 2nd defendants, Malayan Banking Berhad as the 3rd defendant and GASB as the 4th defendant. The Claim against GASB is inter alia the following: 1. 2. 3.
A declaration that the Sales & Purchase Agreement dated January 24, 2011 entered into between GASB and the SOSB (“SPA”) is null and void; A declaration that the approval given to GASB to complete the 79 units (the development of 21/2 storey houses) is null and void; and Injunction order against GASB to enter the Land.
46. S O (a
(b
The Plaintiffs also sought interlocutory orders which are similar to the Claim and to be heard on April 8, 2011. The Court has fixed the case for trial from November 14, 2011 to November 18, 2011. The Claim, if succeed, may have an impact on the completion of the SPA. However, the Company has sought legal advice from its solicitors and is of the view that the Plaintiffs are unlikely to succeed in their Claim. There is no other material litigation which will adversely affect the position or business of the Group.
T T
glomac ar11 FA:Layout 1 8/27/11 4:48 PM Page 133
Notes to the Financial Statements
page
133
45. SIGNIFICANT EVENTS n Bhd SOSB for the
(i)
The Company has on August 30, 2010, acquired Berapit Properties Sdn. Bhd (“BPSB”) for a total cash consideration of RM250,000. On the same date, BPSB entered into a Sales and Purchase Agreement with Cyberview Sdn. Bhd. and Setia Haruman Sdn. Bhd. for the acquisition of Enterprise Lot in Mukim Dengkil, Daerah Sepang, Selangor for a total purchase consideration of RM27,400,000. As on December 2, 2010, the said acquisition has been completed.
longer GASB SOSB
nction
missed
ch 10,
n offer ere is” olution
(ii) The Company has on October 22, 2011, acquired Berapit Pertiwi Sdn. Bhd. (“BPTW”) for a total cash consideration of RM2.00. On the same date, BPTW entered into a Sales and Purchase Agreement with Dekad Darat Sdn. Bhd. and Progressive Berg Sdn. Bhd. respectively for acquisition of eighteen (18) units of apartment for a total purchase consideration of RM38,400,000. As on March 31, 2011, the said acquisition has been completed. (iii) On January 21, 2011, Glomac Alliance Sdn. Bhd (“GASB”) entered into a Sale and Purchase Agreement with Score Option Sdn. Bhd. (Receivers and Managers Appointed) acting through Messrs Ernst & Young (Receiver and Manager) for the proposed acquisition of 200 acres of leasehold land for a purchase consideration of RM77,000,000. GASB has paid the first 10% deposit and the Sale and Purchase Agreements are subject to conditions precedent to be fulfilled by all parties. (iv) On January 28, 2011, Berapit Development Sdn. Bhd. (“BDSB”) entered into Sales and Purchase Agreement with Fleet Properties Sdn. Bhd. to dispose of its investment properties for a cash consideration of RM28,700,000 which BDSB has based on this as the fair value of the properties. The transaction is still pending approval from the relevant authorities and an earnest deposit of RM580,000 has been received.
0. The
(v) On November 13, 2009, the Company acquired two subsidiary companies, namely Glomac Kristal Sdn. Bhd. and FDM Development Sdn. Bhd., for a total cash consideration of RM2.00 each respectively. Also, on the same date, these two subsidiary companies have entered into Sale and Purchase Agreements with Puncakdana Development Sdn. Bhd. (“Puncakdana”) and Motif Bakti Sdn. Bhd. (“Motif”), respectively for the acquisition of approximately 7.62 acres of land in Pekan Kayu Ara, Daerah Petaling for a total purchase consideration of RM31,200,000.
ch 18,
As of April 30, 2011, the land acquisition from Puncakdana has been completed while the completion of the land acquisition from Motif is subject to conditions precedent to be fulfilled.
Austral endant
PA”) is d; and
ed the
om its
46. SUBSEQUENT EVENTS On June 23, 2011, the Company proposed the following: (a) subdivision of every one (1) ordinary share of RM1.00 each in the Company into two (2) ordinary shares of RM0.50 each in the Company (“Proposed Subdivision”); and (b) amendments to the Company’s Memorandum and Articles of Association to facilitate and allow for the implementation of the Proposed Subdivision. (Collectively refer to as “Proposals”) The Proposals are subject to and conditional upon approvals from the relevant authorities and shareholders of the Company. The Proposals are expected to be completed by October 2011.
glomac ar11 FA:Layout 1 8/27/11 4:48 PM Page 134
SUPPLEMENTARY INFORMATION - DISCLOSURE ON REALISED AND UNREALISED PROFITS
Glomac Berhad 2011 annual report
page
134
STATE
On March 25, 2010, Bursa Malaysia Securities Berhad (“Bursa Securities”) issued a directive to all listed issuers pursuant to Paragraph 2.06 and 2.23 of the Bursa Securities Main Market Listing Requirements. The directive requires all listed issuers to disclose the breakdown of the retained earnings or accumulated losses as of the end of the reporting period, into realised and unrealised profits or losses.
The d Financ positio Comp
On December 20, 2010, Bursa Securities further issued guidance on the disclosure and the prescribed format of disclosure. The breakdown of the retained earnings of the Group and of the Company as of April 30, 2011 into realised and unrealised profits or losses, pursuant to the directive, is as follows:
Total retained earnings of the Group and the Company Realised Unrealised Total share of retained profits from associated companies Realised
The Group 2011 RM’000
The Company 2011 RM’000
297,998 14,946
5,925 4,078
20,451
-
333,395
10,003
Less: Consolidation adjustments
(68,591)
Total retained earnings as per statements of financial position
264,804
10,003
The su accord Pursu of Bur Signed
_____ TAN S BIN
_____ DATO DATO Petalin Augus
Comparative information is not presented in the first financial year of application pursuant to the directive issued by Bursa Securities on March 25, 2010. The determination of realised and unrealised profits or losses is based on Guidance of Special Matter No. 1 “Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa Securities Listing Requirements” as issued by the Malaysian Institute of Accountants on December 20, 2010. A charge or credit to the profit or loss of a legal entity is deemed realised when it is resulting from the consumption of resource of all types and form, regardless of whether it is consumed in the ordinary course of business or otherwise. A resource may be consumed through sale or use. Where a credit or a charge to the profit or loss upon initial recognition or subsequent measurement of an asset or a liability is not attributed to consumption of resource, such credit or charge should not be deemed as realised until the consumption of resource could be demonstrated.
DECLA FOR T I, ONG that th to be t
This supplementary information has been made solely for complying with the disclosure requirements as stipulated in the directive of Bursa Malaysia Securities Berhad and is not made for any other purposes.
_____ ONG S
Subsc
Before
_____ COMM
glomac ar11 FA:Layout 1 8/27/11 4:48 PM Page 135
STATEMENT BY DIRECTORS
h 2.06 of the
osses,
mpany 2011 ’000
5,925 4,078
page
135
The directors of GLOMAC BERHAD state that, in their opinion, the accompanying financial statements are drawn up in accordance with Financial Reporting Standards and the provisions of the Companies Act, 1965 in Malaysia so as to give a true and fair view of the financial position of the Group and of the Company as of April 30, 2011 and of the financial performance and the cash flows of the Group and of the Company for the year ended on that date. The supplementary information set out on page 134, which is not part of the financial statements, is prepared in all material aspects, in accordance with Guidance on Special Matter No. 1 “Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirements” as issued by the Malaysian Institute of Accountants and the directive of Bursa Malaysia Securities Berhad. Signed in accordance with a resolution of the Directors,
______________________________________ TAN SRI DATO’ MOHAMED MANSOR BIN FATEH DIN
0,003 0,003
______________________________________ DATO’ FATEH ISKANDAR BIN TAN SRI DATO’ MOHAMED MANSOR Petaling Jaya August 10, 2011
ies on
ed and aysian sulting erwise. equent ealised
DECLARATION BY THE OFFICER PRIMARILY RESPONSIBLE FOR THE FINANCIAL MANAGEMENT OF THE COMPANY I, ONG SHAW CHING the Officer primarily responsible for the financial management of GLOMAC BERHAD, do solemnly and sincerely declare that the accompanying financial statements are, in my opinion, correct and I make this solemn declaration conscientiously believing the same to be true, and by virtue of the provisions of the Statutory Declarations Act, 1960.
Bursa
____________________________________ ONG SHAW CHING
Subscribed and solemnly declared by the abovenamed ONG SHAW CHING at PETALING JAYA this 10th day of August, 2011.
Before me,
____________________________________ COMMISSIONER FOR OATHS
glomac ar11 FA:Layout 1 8/27/11 4:48 PM Page 136
Glomac Berhad 2011 annual report
LIST OF INVESTMENT AND DEVELOPMENT PROPERTIES
page
136
List o
As At 30 April 2011
A)
List of Investment Properties
Location
B)
As At 3
Description of Asset / Existing Use
Tenure and year of expiry
Age of Buildings (Years)
Size (Sq Ft)
Net Book Value as at 30/4/2011 (RM'000)
L Date of Acquisition
Lot No. P.T. 14531, Mukim of Damansara, District of Petaling (Kelana Business Centre)
Office building / Tenanted
Leasehold, expiring 21.11.2092
16
50,456
28,700
28 January 2011
C-01 - C-06, Jalan SS7/13A Plaza Kelana Jaya 47301 Kelana Jaya Petaling Jaya (Plaza Kelana Jaya , Phase II )
Office Building / Tenanted
Freehold
4
28,012
11,821 3
3 August 2006
Description of Asset / Existing Use
Tenure and year of expiry
Land approved for mix development / Vacant
Freehold
Geran 44783 Lot 3443 & Mukim Ulu Langat, Daerah Ulu Langat (Suria Residen)
Residential development / Development in progress
Freehold
HS (D) 1127 Lot P.T. 837 Mukim of Ijok, District of Kuala Selangor (Saujana Utama III)
Mixed residential and commercial development / Development in progress
99 years leasehold, expiring 17.04.2089
Hakmilik 17412 & 17413 Lot 3799 & 3800 Mukim of Ijok, District of Kuala Selangor (Bukit Saujana)
Residential Development in progress
99 years leasehold, expiring 24.03.2095
Size (Acre)
Net Book Value as at 30/4/2011 (RM'000)
5.1
110,409
Date of Acquisition
Wilayah Persekutuan GM 2003, Lot 73 Tempat Pekan Sg Pencala, Mukim Kuala Lumpur (Glomac Damansara)
P L M D (C H M D (C
List of Development Properties
Location
H P D S (G
December 2006
G G G S Ja N (P H M D S (M
Selangor 45.2
36,471
5 March 2004 Jo
46.4
27,068
18 August 2003
L 1 o o (S M
7.1
4,618
5 October 2009
L K D T (T S
glomac ar11 FA:Layout 1 8/27/11 4:48 PM Page 137
List of Investment and Development Properties
page
137
As At 30 April 2011
Description of Asset / Existing Use
Tenure and year of expiry
Size (Acre)
Net Book Value as at 30/4/2011 (RM'000)
Date of Acquisition
HS (D) 135936, Lot PT1, Pekan Kayu Ara, Kayu Ara Daerah Petaling, Selangor Darul Ehsan (Glomac Utama)
Land approved for commercial development
99 years leasehold expiring 4.4.2099
4.5
34,60613
November 2009
P121A located at parent Lot No 43988 Geran 170283 Mukim of Dengkil, District of Sepang (Cyberjaya)
Land approved for commercial building / Development in progress
Freehold
2.1
5,361
18 January 2008
H.S.(D) 32361 PT 46318, Mukim of Dengkil, District of Sepang (Cyberjaya Phase 2 )
Land approved for commercial building / Vacant
Freehold
7.0
28,655
30 August 2010
Geran 90687 Lot 36468 , Geran 90688 Lot 36470 & Geran 102858 Lot 36469 Seksyen 40 Bandar Petaling Jaya, Dearah Petaling Negeri Selangor (Plaza Kelana Jaya Phase IV)
Land approved for commercial building / Vacant
Freehold
3.2
20,139
1 April 2008
H.S.(D) 266265, No. PT 47868 Mukim of Sungai Buloh, Daerah Petaling Selangor Darul Ehsan (Mutiara Damansara)
Land approved for Commercial development / Vacant
Freehold
2.7
40,453
1 July 2008
Mixed housing Mukim development / District Development in progress
Freehold
119.8
66,669
25 September 1995
Mixed residential and commercial development / Development in progress
99 years leasehold, expiring 17.11.2095
10.0
14,799
18 October 1995
Location ion
ary
t 2006
n
004 Johore
2003
Lot 2265 & 888, Geran No. 18689 & 20146, of Kota Tinggi, of Kota Tinggi (Sri Saujana) Malacca
2009
Lot No. 1183, Town of Kawasan Bandar VI, District of Melaka Tengah, Melaka (Taman Kota Laksamana, Seksyen 3)
glomac ar11 FA:Layout 1 8/27/11 4:48 PM Page 138
List of Investment and Development Properties
Glomac Berhad 2011 annual report
page
138
ANALY
As At 30 April 2011
As At
C)
Autho Issued Paid-u Type o No. of Voting
List of Completed Properties
Location
Description of Asset / Existing Use
Tenure
Build up/ Land Area (Sq Ft)
Net Book Value as at 30/4/2011 (RM'000)
35,908
27,724
Wilayah Persekutuan A. Geran 70454, Lot 380, Section 63, in the Town and District of Kuala Lumpur (Suria Stonor)
Condominium / Vacant
Freehold
S L 1 1 1 1 5
Selangor H.S. (D) 119323, PT 9918, H.S. (D) 119324 PT 9919 & H.S. (D) 119287, PT 9882 Mukim Ulu Langat, Daerah Ulu Langat (Suria Residen)
D
Landed Properties / Vacant
Freehold
9,498
2,806
T
B.
L
Revaluation Policy Investment properties are properties held to earn rentals and/or for capital appreciation. Prior to May 1, 2006, investment properties were stated at valuation and any revaluation increase was taken to equity as a revaluation surplus. These properties were not depreciated and were appraised at least every five years by independent professional valuers using the open market basis. The mandatory adoption of FRS 140 since 2007 has resulted in a charge in accounting policy for investment properties. Investment properties are now stated at fair value, representing open-market value determined by external valuers or assessed by directors. Gains or losses arising from changes in the fair values of investment properties are recognised in profit or loss in the period in which they arise.
N 1 2
3
The development properties are stated at cost. 4
5 6
7
8 9
1 1
glomac ar11 FA:Layout 1 8/27/11 4:48 PM Page 139
ANALYSIS OF SHAREHOLDINGS
page
139
As At 29 July 2011
t 1
Authorised Capital Issued Capital Paid-up Capital Type of Shares No. of Shareholders Voting Rights
A.
: : : : : :
RM500,000,000.00 297,274,221 RM297,274,221.00 Ordinary Shares of RM1.00 each 5,331 One vote per ordinary share
Distribution of Shareholdings
No. of Holders
% of holders
Total Holdings
% of issued capital
Less than 100 100 - 1,000 1,001 to 10,000 10,001 to 100,000 100,001 to less than 5% of issued shares 5% and above of issued shares
78 564 3,959 602 124 4
1.46 10.58 74.26 11.29 2.33 0.08
1,892 402,745 11,873,246 18,131,680 134,306,803 132,557,855
0.00 0.14 3.99 6.10 45.18 44.59
Total
5,331
100.00
297,274,221
100.00
No. of Shares
%
Size of Holdings
B. perties ciated
stment Gains arise.
List of Thirty (30) Largest Shareholders Name of Shareholders 1
Mohamed Mansor Bin Fateh Din
60,985,141
20.51
2
Cimsec Nominees (Tempatan) Sdn Bhd CIMB Bank for Fateh Iskandar Bin Mohamed Mansor
31,675,044
10.66
HSBC Nominees (Asing) Sdn Bhd Exempt An for Credit Suisse (SG BR-TST-Asing)
21,249,300
7.15
Cimsec Nominees (Tempatan) Sdn Bhd CIMB Bank for Fong Loong Tuck
18,648,370
6.27
5
Fateh Iskandar Bin Mohamed Mansor
11,723,756
3.94
6
RHB Capital Nominees (Tempatan) Sdn Bhd Pledged Securities Account for Fong Loong Tuck
10,000,000
3.36
Alliancegroup Nominees (Tempatan) Sdn Bhd Pledged Securities Account for Fong Loong Tuck
8,900,000
2.99
8
Fong Loong Tuck
8,885,859
2.99
9
Cartaban Nominees (Asing) Sdn Bhd Exempt An For Royal Bank of Canada (Asia) Limited
8,804,400
2.96
10 Glomac Berhad Share Buy Back Account
5,643,800
1.89
11 Citigroup Nominees (Tempatan) Sdn Bhd Pledged Securities Account for Fong Loong Tuck
4,874,000
1.64
3
4
7
glomac ar11 FA:Layout 1 8/27/11 4:48 PM Page 140
Analysis of Shareholdings
Glomac Berhad 2011 annual report
page
140
Analy
As At 29 July 2011
As At
B.
C.
List of Thirty (30) Largest Shareholders (Cont’d) Name of Shareholders
No. of Shares
%
3,692,000
1.24
S
N 12 Amanahraya Trustees Berhad
1 13 HSBC Nominees (Tempatan) Sdn Bhd HSBC (M) Trustee Bhd for MAAKL AL-Faid
2,750,300
0.93
14 Malaysia Nominees (Tempatan) Sendirian Berhad Great Eastern Life Assurance (Malaysia) Berhad
2,681,000
0.90
2 3 4
15 Malaysia Nominees (Tempatan) Sendirian Berhad Great Eastern Life Assurance (Malaysia) Berhad
2,500,000
0.84
16 HSBC Nominees (Tempatan) Sdn Bhd HSBC (M) Trustee Bhd for MAAKL Al-Fauzan
2,488,800
0.84
17 Choi Wai Yue Betty
2,299,000
0.77
18 RHB Capital Nominees (Tempatan) Sdn Bhd Pledged Securities Account for Oon Poh Choo
2,240,000
0.75
*
D.
D
N 1
19 OSK Nominees (Tempatan) Sdn Berhad DMG & Partners Securities Pte Ltd for Lee Chee Seng
2,200,000
0.74
20 Amsec Nominees (Tempatan) Sdn Bhd Pledged Securities Account for Fong Loong Tuck
1,995,800
0.67
3 4
21 Mayban Nominees (Tempatan) Sdn Bhd Mayban Trustees Berhad for MAAKL Value Fund
1,899,000
0.64
22 HSBC Nominees (Asing) Sdn Bhd Exempt An for Credit Suisse (HK BR-TST-Asing)
1,825,700
0.61
5 6 *
23 Citigroup Nominees (Asing) Sdn Bhd CBNY for Dimensional Emerging Markets Value Fund
1,706,800
0.57
24 HSBC Nominees (Tempatan) Sdn Bhd HSBC (M) Trustee Bhd for MAAKL Progress Fund
1,620,500
0.55
25 HSBC Nominees (Asing) Sdn Bhd TNTC for Fidelity Emerging Asia Fund (FID INV TST)
1,615,900
0.54
26 Malaysia Nominees (Tempatan) Sendirian Berhad Great Eastern Life Assurance (Malaysia) Berhad
1,613,300
0.54
27 Amsec Nominees (Tempatan) Sdn Bhd Amtrustee Berhad for Pacific Pearl Fund
1,573,500
0.53
28 KAF Trustee Berhad KAF Fund Management Sdn Bhd for Abu Talib bin Othman
1,560,000
0.53
29 Malaysia Nominees (Tempatan) Sendirian Berhad Great Eastern Life Assurance (Malaysia) Berhad
1,307,000
0.44
30 Carrie Fong Kah Wai
1,300,000
0.44
230,258,270
77.46
TOTAL
2
glomac ar11 FA:Layout 1 8/27/11 4:48 PM Page 141
Analysis of Shareholdings
page
141
As At 29 July 2011
C.
Substantial Shareholders
% Name of Substantial Shareholders
No. of Shares Held Direct Indirect
%
1.24
0.93
0.90
0.84
1.
Tan Sri Dato’ Mohamed Mansor bin Fateh Din
60,985,141
-
20.51
2.
Datuk Fong Loong Tuck
53,304,029 *
-
17.93
3.
Dato’ Fateh Iskandar bin Tan Sri Dato’ Mohamed Mansor
43,398,800 *
-
14.60
4.
Pacific Straits Holdings Limited
20,000,000
-
6.73
*
Include shares held by Nominee Companies.
0.84 D.
Directors’ Shareholdings
0.77 Name of Directors
No. of Shares Held Direct Indirect
%
0.75
0.74
1.
Tan Sri Dato’ Mohamed Mansor bin Fateh Din
60,985,141
-
20.51
2.
Datuk Fong Loong Tuck
53,304,029 *
-
17.93
3.
Dato’ Fateh Iskandar bin Tan Sri Dato’ Mohamed Mansor
43,398,800 *
-
14.60
4.
Adjunct Professor Datuk Ali bin Tan Sri Abdul Kadir
500,000
-
0.17
5.
Dato’ Ikhwan Salim bin Dato’ Sujak
10,400
-
0.003
6.
Chong Kok Keong
331,500
-
0.11
*
Include shares held by Nominee Companies.
0.67
0.64
0.61
0.57
0.55
0.54
0.54
0.53
0.53
0.44 0.44 7.46
*
glomac ar11 FA:Layout 1 8/27/11 4:48 PM Page 142
ANALYSIS OF WARRANT HOLDINGS
Glomac Berhad 2011 annual report
page
142
Analy
As At 29 July 2011
As At
No. of Warrants Exercise Price of Warrants Exercise Period of Warrants Exercise Rights
: : : :
Voting Rights at Meetings of Warrant Holders
:
B.
67,207,446 RM1.10 25 October 2007 to 24 October 2012 Each warrant entitles the holder to subscribe for one new ordinary shares of RM1.00 each in the Company One vote per warrant on a poll
L N 1 1
A.
Distribution of Holdings
Size of Holdings
% of holders
Total Holdings
% of issued warrants
1
No. of Holders 33 990 453 207 47 5
1.90 57.06 26.11 11.93 2.71 0.29
1,660 458,669 2,026,230 6,662,290 22,231,246 35,827,351
0.00 0.68 3.01 9.92 33.08 53.31
1
1,735
100.00
67,207,446
100.00
1
Less than 100 100 - 1,000 1,001 to 10,000 10,001 to 100,000 100,001 to less than 5% of issued warrants 5% and above of issued warrants Total
B.
1
2
List of Thirty (30) Largest Warrant Holders Name of Warrant Holder
1
No. of Warrants
% 2
1
Cimsec Nominees (Tempatan) Sdn Bhd CIMB Bank for Fateh Iskandar bin Mohamed Mansor (MY0399)
12,175,044
18.11
2
Mohamed Mansor bin Fateh Din
11,282,958
16.79
3
Fong Loong Tuck
5,233,349
7.79
2
4
Cartaban Nominees (Asing) Sdn Bhd Exempt An For Royal Bank of Canada (Asia) Limited
3,680,300
5.48
2
Cartaban Nominees (Tempatan) Sdn Bhd Exempt An For Credit Industriel ET Commercial (AC Client MYR)
3,455,700
5.14
2
5
2 2
6
Mayban Nominees (Tempatan) Sdn Bhd Pledged Securities Account for Lim Gim Leong
2,440,100
3.63
Cimsec Nominees (Tempatan) Sdn Bhd CIMB Bank for Fong Loong Tuck (MM0886)
2,098,370
3.12
HSBC Nominees (Tempatan) Sdn Bhd Exempt An For Credit Suisse (HK BR-TST-TEMP)
2,000,000
2.98
Susy Ding
1,798,800
2.67
10 Fateh Iskandar Bin Mohamed Mansor
1,315,456
1.96
11 Leong Sui Leng
1,000,000
1.49
805,300
1.19
7
8
9
12 HSBC Nominees (Asing) Sdn Bhd Exempt An For Credit Suisse (SG BR-TST-Asing)
2 2
2
3
glomac ar11 FA:Layout 1 8/27/11 4:48 PM Page 143
Analysis of Warrant Holdings
page
143
As At 29 July 2011
B.
List of Thirty (30) Largest Warrant Holders (Cont’d) Name of Warrant Holder
No. of Warrants
%
13 Annie Loo Yean Lay
793,400
1.18
14 Mayban Nominees (Tempatan) Sdn Bhd Avenue Invest Berhad for Tan Leng Hock
660,000
0.98
ssued rants
15 Citigroup Nominees (Asing) Sdn Bhd UBS AG for NPJ Global Opportunities Master Fund (Pledged)
627,120
0.93
0.00 0.68 3.01 9.92 33.08 53.31
16 CIMB Group Nominees (Tempatan) Sdn Bhd BHLB Trustee Berhad fot Hong Leong Asia-Pacific Property Income Plus Fund
577,500
0.86
17 Lim Jit Hai
521,000
0.77
18 Tan Ani Ya @ Tan Han Siam
503,500
0.75
19 HSBC Nominees (Asing) Sdn Bhd Exempt An for Credit Suisse (HK BR-TST-Asing)
446,000
0.66
20 RHB Capital Nominees (Tempatan) Sdn Bhd Pledged Securities Account for Oon Poh Choo
402,000
0.60
21 RHB Capital Nominees (Tempatan) Sdn Bhd Pledged Securities Account for Tan Soon Hoe
303,800
0.45
22 AmBank (M) Berhad Pledged Securities Account for Jeyadas P Nadarajah
300,000
0.45
23 HDM Nominees (Asing) Sdn Bhd Kim Eng Securities Pte Ltd for Neo Kwee Eng
300,000
0.45
24 Carrie Fong Kah Wai
300,000
0.45
25 Fara Inez Binti Mohamed Mansor
300,000
0.45
26 Fara Eliza Binti Mohamed Mansor
300,000
0.45
3.63
27 Fong Kah Kuen
300,000
0.45
3.12
28 Mayban Nominees (Tempatan) Sdn Bhd Pledged Securities Account for Lee Ming Lee
271,900
0.40
2.98
29 Cimsec Nominees (Asing) Sdn Bhd CIMB Bank for CIMB Securities (Singapore) Pte Ltd
260,500
0.38
30 Cimsec Nominees (Tempatan) Sdn Bhd CIMB Bank for Teh Swee Heng (MM1118)
256,500
0.38
54,708,597
81.40
0.00
%
18.11 16.79 7.79
5.48
5.14
2.67 1.96
TOTAL 1.49
1.19
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Analysis of Warrant Holdings
Glomac Berhad 2011 annual report
page
144
NOTIC
As At 29 July 2011
D.
Directors’ Warrant Holdings
Name of Directors
No. of Warrants Held Direct Indirect
%
1.
Tan Sri Dato’ Mohamed Mansor bin Fateh Din
11,282,958
-
16.79
2.
Datuk Fong Loong Tuck
7,628,719 *
-
11.35
3.
Dato’ Fateh Iskandar bin Tan Sri Dato’ Mohamed Mansor
13,490,500 *
-
20.07
4.
Adjunct Professor Datuk Ali bin Tan Sri Abdul Kadir
-
-
-
5.
Dato’ Ikhwan Salim bin Dato’ Sujak
-
-
-
6.
Chong Kok Keong
120,000
-
0.18
*
Include warrants held by Nominee Companies.
NOTIC be he Ehsan if thou
AGEN 1.
T th
As Ord 2.
T
3.
T
4.
T C
5.
T a i) ii
6.
T D
As Sp To con 7.
O T T a e s in e e S M
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NOTICE OF 27TH ANNUAL GENERAL MEETING
page
145
NOTICE IS HEREBY GIVEN THAT the 27th Annual General Meeting of Glomac Berhad (“Glomac” or “Company”) will be held at Dewan Tunku, Kelab Golf Negara Subang, Jalan SS7/2, Kelana Jaya, 47301 Petaling Jaya, Selangor Darul Ehsan on Wednesday, 28 September 2011 at 10.00 a.m. or any adjournment thereof for the purposes of considering and, if thought fit, passing with or without modifications, the following businesses:-
AGENDA 1.
To receive the Audited Financial Statements for the financial year ended 30 April 2011 together with the Reports of the Directors and Auditors thereon. Please refer to Note A.
As Ordinary Business 2.
To declare a final dividend of 5 sen per share less 25% tax for the financial year ended 30 April 2011.
Resolution 1
3.
To approve the payment of Directors’ fees for the financial year ended 30 April 2011.
Resolution 2
4.
To re-appoint Tan Sri Dato’ Mohamed Mansor bin Fateh Din who is retiring in accordance with Section 129(6) of the Companies Act, 1965, to hold office until the conclusion of the next Annual General Meeting of the Company.
Resolution 3
5.
To re-elect the following Directors, who retire in accordance with Article 84 of the Company’s Articles of Association and, being eligible, offer themselves for re-election: i) ii)
6.
Datuk Richard Fong Loong Tuck Chong Kok Keong
To re-appoint Messrs Deloitte KassimChan as Auditors of the Company for the ensuing year and to authorise the Directors to fix their remuneration.
Resolution 4 Resolution 5 Resolution 6
As Special Business To consider and if thought fit, to pass the following ordinary/special resolutions: 7.
ORDINARY RESOLUTION 1 – PROPOSED AUTHORITY TO ALLOT SHARES PURSUANT TO SECTION 132D OF THE COMPANIES ACT, 1965 THAT, subject always to the Companies Act, 1965, (“Act”), the Articles of Association of the Company and the approvals of relevant government/regulatory authorities, the Directors of the Company (“Board”) be and are hereby empowered, pursuant to Section 132D of the Act, to allot and issue shares in the Company at any time and upon such terms and conditions and for such purposes as the Board may in their discretion deem fit and expedient in the interest of the Company, provided that the aggregate number of shares issued pursuant to this resolution does not exceed 10% of the issued share capital of the Company for the time being AND THAT the Board be and is also empowered to obtain the approval for the listing and quotation of the additional shares so issued on Bursa Malaysia Securities Berhad and that such authority shall continue to be in force until the conclusion of the next Annual General Meeting of the Company.
Resolution 7
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Notice of 27th Annual General Meeting
8.
Glomac Berhad 2011 annual report
page
146
Notic
ORDINARY RESOLUTION 2 – PROPOSED SUBDIVISION OF EVERY ONE (1) ORDINARY SHARE OF RM1.00 EACH IN GLOMAC INTO TWO (2) ORDINARY SHARES OF RM0.50 EACH IN GLOMAC (“PROPOSED SUBDIVISION”) “THAT, subject to the passing of Special Resolution and approval of all relevant authorities and/or parties (if required), approval be and is hereby given to the Board to subdivide the Company’s entire issued and paid-up share of RM1.00 each in the Company held by the registered shareholders of the Company whose names appear in the Record of Depositors of the Company as at the close of business on a date to be determined by the Board as they may deem expedient and to be announced by the Company into two (2) ordinary shares of RM0.50 each, which will be fully paid-up (“Subdivided Shares”).
10. O
Resolution 8
“T M S s w s B (i
AND THAT the Subdivided Shares shall, pursuant to the Proposed Subdivision, rank equally in all respects with each other. AND THAT the Board be and is hereby authorised to give full effect to the Proposed Subdivision with full powers to make any variations, modifications and/or amendments in any manner as may be required by the relevant authorities or as they deem fit, in the best interest of the Company and to take all steps and do all things as they may deem necessary or expedient in order to implement, finalise and give full effect to the Proposed Subdivision.”
(i
(i 9.
SPECIAL RESOLUTION – PROPOSED AMENDMENTS TO THE MEMORANDUM AND ARTICLES OF ASSOCIATION OF THE COMPANY TO ACCOMMODATE THE PROPOSED SUBDIVISION (“PROPOSED AMENDMENTS”) “THAT, subject to the passing of Ordinary Resolution 2, Clause 6 of the Company’s Memorandum of Association and Article 3 of the Company’s Articles of Association be and are hereby amended in the manner as set out below: Existing Clause 6
Proposed Clause 6
The authorised capital of the Company is RM500,000,000.00 (Ringgit Malaysia Five Hundred Million) divided into 500,000,000 ordinary shares of RM1.00 each. The shares in the original or any increased capital may be divided into several classes and there may be attached thereto respectively any preferential, deferred or other special classes privileges, conditions or restrictions as to dividends, capital, voting or otherwise.
The authorised capital of the Company is RM500,000,000.00 (Ringgit Malaysia Five Hundred Million) divided into 1,000,000,000 ordinary shares of RM0.50 each. The shares in the original or any increased capital may be divided into several classes and there may be attached thereto respectively any preferential, deferred or other special classes privileges, conditions or restrictions as to dividends, capital, voting or otherwise.
Articles of Association
Articles of Association
Existing Article 3
Proposed Article 3
The authorised share capital of the Company is RM500,000,000 divided into 500,000,000 ordinary shares of RM1.00 each.
The authorised share capital of the Company is RM500,000,000 divided into 1,000,000,000 ordinary shares of RM0.50 each.
AND THAT the Board be and is hereby authorised to give full effect to the Proposed Amendments with full powers to make any variations, modifications and/or amendments in any manner as may be required by the relevant authorities or as they deem fit, in the best interest of the Company and to take all steps and do all things as they may deem necessary or expedient in order to implement, finalise and give full effect to the Proposed Amendments.”
Resolution 9
(i
A fi re a
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Notice of 27th Annual General Meeting
page
147
10. ORDINARY RESOLUTION 3 – PROPOSED RENEWAL OF AUTHORITY FOR SHARE BUY-BACK
n8
“THAT, subject to the Act, rules, regulations and orders made pursuant to the Act, provisions of the Company’s Memorandum and Articles of Association and the requirements of Bursa Malaysia Securities Berhad (“Bursa Securities”) and any other relevant authority, the Company be and is hereby authorised to exercise a buy-back of the shares of the Company (“Proposed Share Buy-Back”), such number of ordinary shares of RM1.00, or in the case where the Proposed Subdivision is approved, the maximum number of ordinary shares of RM0.50 each in Glomac, shall be determined by the Board from time to time through Bursa Securities upon such terms and conditions as the Board may deem fit and expedient in the interest of the Company subject further to the following: (i)
the maximum number of ordinary shares of RM1.00 each in Glomac, or in the case where the Proposed Subdivision is approved, the maximum number of ordinary shares of RM0.50 each in Glomac (“Glomac Shares”) which may be purchased or held by the Company shall be equivalent to 10% of the issued and paid-up share capital of the Company at any point in time;
(ii) an amount not exceeding the retained profits and/or share premium account of the Company be allocated by the Company for the Proposed Share Buy-Back; (iii) the authority conferred by this resolution will commence immediately upon passing of this ordinary resolution and will continue to be in force until: a)
the conclusion of the next Annual General Meeting (“AGM”) of the Company in 2012 at which time such authority shall lapse unless by ordinary resolution passed at the meeting, the authority is renewed either unconditionally or subject to conditions;
b)
the expiration of the period within which the next AGM after that date is required by law to be held; or
c)
revoked or varied by ordinary resolution passed by the shareholders in general meeting,
n9
whichever occurs first, but not so as to prejudice the completion of purchase(s) by the Company before the aforesaid expiry date and, in any event, in accordance with the provisions of the requirements issued by the Bursa Securities and any prevailing laws, rules, regulations, orders, guidelines and requirements issued by any relevant authorities; and (iv) upon completion of the purchase(s) of the Glomac Shares by the Company, the Directors of the Company be and are hereby authorised to retain the Glomac Shares so purchased as treasury shares, of which may be distributed as dividends to shareholders, and/or resold on the Bursa Securities, and/or subsequently cancelled and in any other manner as prescribed by the Act, rules, regulations and orders made pursuant to the Act and the requirements of the Bursa Securities and any other relevant authority for the time being in force; AND THAT the Board be and is hereby authorised to take all such steps as are necessary or expedient to implement, finalise or to effect the purchase(s) of the Glomac Shares with full powers to assent to any conditions, modifications, resolutions, variations and/or amendments (if any) as may be imposed by the relevant authorities and to do all such acts and things as the Board may deem fit and expedient in the best interest of the Company.”
Resolution 10
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Notice of 27th Annual General Meeting
Glomac Berhad 2011 annual report
page
148
Notic
11. ORDINARY RESOLUTION 4 – PROPOSED RENEWAL OF SHAREHOLDERS’ MANDATE FOR RECURRENT RELATED PARTY TRANSACTIONS “THAT, the mandate granted by the shareholders of the Company on 30 September 2010 authorising the Company and its subsidiaries and associated companies to enter into the categories of recurrent related party transactions of a revenue or trading nature (“Proposed Shareholders’ Mandate”), the details of which are set out in Section 3.0 of Part B of the Company’s Circular to Shareholders dated 7 September 2011 which are necessary for its day-to-day operations, be and is hereby renewed subject further to the following: (i)
the transactions are in the ordinary course of business and are on normal commercial terms which are not more favourable to the related parties than those available to the public and not to the detriment of the minority shareholders; and
Notes: A.
Resolution 11
T th
Proxy 1.
A n
2.
T P h
3.
T co
(ii) disclosure is made in the annual report providing breakdown of the aggregate value of transactions conducted pursuant to the Proposed Shareholders’ Mandate during the financial year stating:
Specia
a)
the type of Recurrent Transactions made; and
b)
the names of the Related Parties involved in each type of the Recurrent Transactions made and their relationship with the Company;
1.
and in the Annual Reports for subsequent financial years that the Proposed Shareholders’ Mandate continues to be in force.
S h
AND THAT, such approval shall continue to be in force until: (i)
the conclusion of the first AGM of the Company following the general meeting at which the Proposed Shareholders’ Mandate was passed, at which time it will lapse, unless by a resolution passed at the meeting, the authority is renewed;
(ii) the expiration of the period within which the next AGM of the Company is required to be held pursuant to Section 143(1) of the Act (but shall not extend to such extension as may be allowed pursuant to Section 143(2) of the Act); or (iii) revoked or varied by resolution passed by shareholders in general meeting, whichever is the earlier. AND THAT the Board be authorized to complete and do all such acts and things as they may consider expedient or necessary to give effect to the Proposed Shareholders’ Mandate described in this Ordinary Resolution.”
T a p u w
T fle 2.
T of
3.
T a
4.
T w
Membe For the in acco Act 19 22 Sep
12. To transact any other business of which due notice shall have been given. By Order of the Board Mohd Nor Azam Mohd Salleh (MAICSA 7028137) Ong Shaw Ching (MIA 7819) Company Secretaries Petaling Jaya 7 September 2011
STATE NOTIC (Pursu Requi Furthe on pag Annua
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Notice of 27th Annual General Meeting
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Notes: A.
n 11
This Agenda item is meant for discussion only as under the provisions of Section 169(1) of the Companies Act, 1965 and Company’s Articles of Association, the audited financial statements do not require the formal approval and hence, the matter will not be put forward for voting.
Proxy 1.
A member of the Company entitled to attend and vote at the meeting is entitled to appoint a proxy or proxies to attend and vote in his stead. A proxy need not be a member of the Company.
2.
The instrument appointing a proxy must be deposited at the registered office of the Company at 12th Floor, Wisma Glomac 3, Kompleks Kelana Centre Point, Jalan SS7/19, Kelana Jaya, 47301 Petaling Jaya, Selangor Darul Ehsan, Malaysia not less than forty-eight (48) hours before the time appointed for holding the meeting or any adjournment thereof.
3.
The instrument appointing a proxy shall be in writing under the hand of the appointer or of his/her attorney duly appointed or if such appointer is a corporation, either under its Common Seal or under the hand of a duly authorised officer or attorney duly appointed under a Power of Attorney.
Special Business 1.
The proposed Ordinary Resolution 1, if passed, will empower the Directors of the Company, from the conclusion of this Annual General Meeting to allot and issue shares in the Company up to and not exceeding in total 10% of the issued and paid-up share capital of the Company for the time being for such purposes as they consider would be in the best interest of the Company. This authority will expire at the next Annual General Meeting of the Company, unless revoked or varied at a general meeting. This mandate is a renewal to the general mandate which was approved by the shareholders at the last AGM which will lapse at the conclusion of the 27th AGM to be held on 28 September 2011. Save and except for the issuance of additional 105,700 ordinary shares arising from the conversion of 105,700 5-year 2007/2012 warrants, the Company has not issued any new share under this general mandate. The authority to issue shares will allow the Company to take advantage of any strategic opportunity, wherein the renewal of the general mandate will provide flexibility to the Company to issue new shares for investments and/or acquisitions or to raise fund for investments and/or working capital.
2.
The proposed Ordinary Resolution 2, if passed, will enable the Company to consolidate its existing shares from its par value of RM1.00 each to par value of RM0.50 each.
3.
The proposed Special Resolution, if passed, will allow amendments to be made to the Memorandum and Articles of Association of the Company to facilitate and allow for the implementation of the Proposed Subdivision.
4.
The details and rationale of the proposed Ordinary Resolution 3 & 4, are contained in the Company’s Circular to Shareholders dated 7 September 2011, which is dispatched together with the Company’s abridged version of the Annual Report 2011.
Members Entitled to Attend For the purpose of determining a member who shall be entitled to attend this 27th AGM, the Company shall be requesting Bursa Malaysia Depository Sdn Bhd in accordance with the provisions under Article 42 of the Company’s Articles of Association and Section 34(1) of the Securities Industry (Central Depositories) Act 1991 to issue a General Meeting Record of Depositors (“ROD”) as at 22 September 2011. Only a depositor whose name appears on the ROD as at 22 September 2011 shall be entitled to attend the said Meeting or appoint proxies to attend and vote on his/her behalf.
STATEMENT ACCOMPANYING NOTICE OF 27TH ANNUAL GENERAL MEETING (Pursuant to Paragraph 8.27(2) of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad) Further details of Directors standing for re-election as Directors are set out in their respective profiles which appear in the Directors’ Profiles on pages 8, 9 and 13 of this Annual Report and the details of their interest in the securities of the Company are disclosed on page 141 of this Annual Report.
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FOR Numb CDS A
I/We _ of ___ being of ___ or faili Comp Wedne
RES RES RES RES RES RES RES RES RES RES RES
Please vote o
Signed
Notes: 1. 2.
3.
This page has been intentionally left blank
A b T Ja ad T e
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FORM OF PROXY Number of shares CDS Account No.
I/We ____________________________________________________________________________________________________________________ of ______________________________________________________________________________________________________________________ being a member of GLOMAC BERHAD (“the Company”), hereby appoint __________________________________________________________ of ______________________________________________________________________________________________________________________ or failing him/her, the Chairman of the Meeting, as my/our proxy, to vote for me/us on my/our behalf at the 27th Annual General meeting of the Company to be held at Dewan Tunku, Kelab Golf Negara Subang, Jalan SS7/2, Kelana Jaya, 47301 Petaling Jaya, Selangor Darul Ehsan on Wednesday, 28 September 2011 at 10.00 a.m. or at any adjournment, in the manner indicated below: For
Against
RESOLUTION 1 RESOLUTION 2 RESOLUTION 3
- To declare a final dividend of 5 sen per share less 25% tax - To approve the payment of Directors’ fees - To re-appoint Tan Sri Dato’ Mohamed Mansor bin Fateh Din who is retiring in accordance with Section 129(6) of the Companies Act, 1965 RESOLUTION 4 - To re-elect Datuk Richard Fong Loong Tuck who is retiring in accordance with Article 84 of the Company’s Articles of Association RESOLUTION 5 - To re-elect Mr Chong Kok Keong who is retiring in accordance with Article 84 of the Company’s Articles of Association RESOLUTION 6 - To re-appoint Messrs Deloitte KassimChan as Auditors and to authorise the Board to fix their remuneration RESOLUTION 7 - Proposed authority to allot shares pursuant to Section 132D of the Companies Act, 1965 RESOLUTION 8 - Proposed subdivision of every one (1) ordinary shares of RM1.00 each into two (2) ordinary shares of RM0.50 each RESOLUTION 9 - Proposed amendments to the Memorandum and Articles of Association RESOLUTION 10 - Proposed renewal of authority for share buy-back RESOLUTION 11 - Proposed renewal of shareholders’ mandate for recurrent related party transaction Please indicate with an ‘X’ in the spaces provided how you wish your votes to be casted. If no specific directions to voting is given, the Proxy will vote or abstain from voting at his/her discretion.
Signed (and sealed) this _______________ day of _______________ , 2011
Signature/Seal___________________________
Notes: 1. 2.
3.
A member of the Company entitled to attend and vote at the meeting is entitled to appoint a proxy or proxies to attend and vote in his stead. A proxy need not be a member of the Company. The instrument appointing a proxy must be deposited at the Registered Office of the Company at 12th Floor, Wisma Glomac 3, Kompleks Kelana Centre Point, Jalan SS7/19, Kelana Jaya, 47301 Petaling Jaya, Selangor Darul Ehsan not less than 48 hours before the time appointed for holding the meeting or any adjournment thereof The instrument appointing a proxy shall be in writing under the hand of the appointor or his attorney duly appointed or if such appointor is a corporation, either under its Common Seal or under the hand of an officer or attorney duly appointed under a power of attorney..
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Please fold along this line (1)
Stamp
The Company Secretary GLOMAC BERHAD (110532-M)
12th Floor, Wisma Glomac 3, Kompleks Kelana Centre Point Jalan SS7/19, Kelana Jaya, 47301 Petaling Jaya Selangor Darul Ehsan
Please fold along this line (2)