Ioi 2012
Ioi 2012
Ioi 2012
www.ioigroup.com
A nnua l Re po r t 20 1 2
OUR
VISION
OUR CORE
VALUES
Commitment
as we do what we say we will do
Integrity
which is essential and cannot be compromised
Loyalty
is crucial because we are one team sharing one vision
Excellence in Execution
as our commitments can only be realised through
actions and results
Speed or Timeliness
in response is important in our ever changing business
environment
Innovativeness
to provide us additional competitive edge
Cost Efficiency
is crucial as we need to remain competitive
COVER RATIONALE
As a global player in the palm oil industry, IOI Group is committed to adopting
sustainable and responsible practices in all our businesses. Caring for the
environment and society is at the heart of our operations as we invest in green
technology, deliver innovative solutions and undertake socially-responsible
initiatives to nurture a sustainable and renewable growth. We will continue to
plant seeds of innovation in our businesses to sustain long-term growth in
volume and profitability.
The cover design features icons within the text to represent our commitment to
sustainable and innovative development in our three core businesses.
KEY
INDICATORS
%
20
15
10
5
0
-5
-10
-15
Aug
Sep
Oct
2011
Nov
Dec
Jan
Feb
Mar
Apr
2012
May
Jun
2012
2011
2010
2009
2008
2,378,961
2,863,612
2,550,633
1,550,117
3,095,197
1,789,370
2,222,899
2,035,661
983,517
2,231,632
FINANCIAL
12,627,923
11,999,177
10,780,181
8,346,290
8,391,361
14.53
19.52
21.29
11.75
27.67
27.96
34.75
32.96
16.62
36.85
155.0
170.0
170.0
80.0
170.0
3,185,878
3,295,473
3,405,090
3,626,776
3,957,281
157,752
157,045
154,709
150,931
149,445
856,319
942,002
1,045,095
688,487
696,743
1,412
1,730
2,044
1,465
1,934
PLANTATION
FFB production (MT)
Total oil palm area (Ha)
PROPERTY
Sales value (RM000)
Sales (unit)
MANUFACTURING
Oleochemical
Plant utilisation (%)
Sales (MT)
77
82
91
78
92
581,275
618,960
684,389
597,351
668,808
77
72
75
78
91
2,919,543
2,640,091
2,533,527
2,817,987
2,996,439
Refinery
Plant utilisation (%)
Sales (MT)
Specialty oils and fats
Plant utilisation (%)
Sales (MT)
88
92
96
100
100
617,895
492,432
511,143
504,317
521,719
We
prof it
from our
principles
Profit Before
Taxation
2012
RM2.38
BILLION
Share
Price
2012
Market
Capitalisation
2012
2011
RM2.86 Billion
RM33.21
BILLION
RM5.19
2011
RM5.30
2011
RM34.00 Billion
Earnings
Per Share
2012
27.96 SEN
2011
34.75 Sen
Gross
Dividend
Per Share
2012
155.0%
2011
170.0%
OUR VISION
OUR CORE
VALUES
KEY
INDICATORS
06
Chairmans
Statement
12
Group
Financial
Overview
CONTENTS
IOI CORPORATION BERHAD
Annual Report 2012
14
Group
Performance
Highlights
15
Group
Quarterly
Results
15
Financial
Calendar
16
Five-Year
Financial
Highlights
Managements
Discussion And
Analysis
18
Group Financial
Review
24
Group Business
Review
48 Sustainability And
Corporate Social
Responsibility
61 Corporate
Information
62 Board Of Directors
64 Profile Of Directors
70 Senior
Management Team
71 Group Business
Activities
72 Global Presence
74 Location Of
Operations In
Malaysia
76 Corporate Calendar
82 Audit And Risk
Management
Committee Report
86 Statement
On Corporate
Governance
94 Statement On
Internal Control
97 Risk Management
98 Statement Of
Directors Interests
99 Other Information
101
Financial
Reports
Annual General
Meeting
Information
283
Notice of
Annual General
Meeting
287
Statement
Accompanying
Notice Of Annual
General Meeting
288
Shareholders
Information
Proxy Form
CHAIRMANS
STATEMENT
Dear Shareholders,
On behalf of the Board of Directors of IOI Corporation Berhad, it gives me
great pleasure to present to you the Annual Report of the Company and
the Group for the financial year ended 30 June 2012 (FY2012).
Operating Environment
REVIEW OF RESULTS
2012
Plantation
60%
Property
26%
Resource-based Manufacturing
11%
Others
3%
2011
Plantation
55%
Property
27%
Others
3%
Resource-based Manufacturing
15%
CORPORATE DEVELOPMENTS
On the plantation front, a notable achievement for the Group was
the successful listing of our associate company, BAL, on the SGX
on 12 April 2012. BAL, with interest in over 92,000 hectares of
planted area and six palm oil mills in Indonesia, had priced their
shares at an initial issue price of SGD74.5 sen per share. Since the
listing, BALs share price has performed remarkably well. It has
appreciated by approximately 53% to SGD1.14 per share as at 14
September 2012.
Sustainability and
CORPORATE SOCIAL
RESPONSIBILITY
Being a founding member of the Roundtable on
Sustainable Palm Oil (RSPO), the Group is
committed to operate on a multi-stakeholder format
which involves strict principles and criteria covering
the social and environmental requirements for the
production and use of sustainable palm oil. To date,
all of IOI Groups mills and estates in Peninsular
Malaysia have successfully attained the RSPO
Certification whilst in East Malaysia, four of our mills
and their supply bases have been certified. The
Groups pursuit of sustainability also extends to its
efforts to have its plantation and oil palm milling
operations certified for lower emission of greenhouse
gas with proper utilisation of their biomass by
products. Presently, seven of the Groups palm oil
mills and their supply estates have also been
certified by the International Standard for Carbon
Certification (ISCC) in Germany.
Education continues to be an integral agenda for
the Group as the Group continues to support
deserving students who excel in their education.
Through Yayasan Tan Sri Lee Shin Cheng (Yayasan
TSLSC), a charitable foundation fully funded by the
Group, scholarships and grants are provided to high
achievers. Underprivileged students and schools are
adopted whilst facilities are sponsored to provide or
improve infrastructure and education needs for
students. The Group is also actively involved in
community projects with our partners such as
HUMANA and World Vision Malaysia to provide
basic education and care to children of foreign
plantation workers in Sabah as well as to the native
children in Sarawak.
A detailed review of the Groups numerous
sustainability measures and corporate social
responsibility initiatives are covered in the
Sustainability and Corporate Social Responsibility
section.
10
PROSPECTS
FFB production volume from our estates is expected
to rise in FY2013 barring any unfavourable weather
conditions. The areas replanted with new clonal
palm seedlings are expected to spur the continued
rise in FFB production on a long-term horizon. The
Group is optimistic that its investment in BAL will
contribute handsomely to Group profits in the years
to come. As for the Groups directly owned
plantations in Indonesia, with the recent planting
permit approval, the Group will be able to embark
on a more aggressive planting programme. While
price competitiveness with other edible oils remains
an area which is beyond control by any industry
player, demand for palm oil should remain strong as
consumption increases in select emerging economies
coupled with the general global population growth.
ACKNOWLEDGMENTS
Despite the many challenges faced, the Group has
performed satisfactorily during the year under
review. I wish to express my personal gratitude and
appreciation to our Management and all our
employees for their contribution, dedication and
loyalty throughout these challenging times. In
addition, I would like to take the opportunity to
extend a warm welcome to Mr Cheah Tek Kuang,
who was appointed to the Board effective from 22
August 2012.
11
GROUP FINANCIAL
OVERVIEW
CASH FLOW
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2012
RM MILLION
Net operating cash flow
2,132
AS AT 30 JUNE 2012
(397)
1,735
34
90
(1,204)
(237)
130
Interest paid
(198)
(140)
Dividend payments
Shareholders of the Company
Shareholders of subsidiaries
(1,023)
(12)
(825)
(2)
33
(1)
(795)
Assets
(2,612)
Translation difference
(354)
(3,761)
Retained earnings
10,197
Share capital & other reserves
2,431
Borrowings (B)
8,122
Non-controlling interests
288
Other liabilities
2,027
12
Retained earnings
for the financial year ended 30 June 2012
RM MILLION
Segment results
2,707
(187)
2,520
(142)
2,378
Taxation
(550)
1,828
(39)
1,789
Dividend paid
(1,023)
771
9,426
10,197
Retained earnings
9,426
Share capital & other reserves
2,573
Borrowings (D)
5,398
Non-controlling interests
262
Other liabilities
1,996
Plantation
1,638
Property
704
Resource-based Manufacturing
287
Others
78
Segment results: RM2,707 million
13
GROUP PERFORMANCE
HIGHLIGHTS
2012
RM000
2011
RM000
%
+/(-)
FINANCIAL PERFORMANCE
Revenue
Profit before interest and taxation
Profit before taxation
Net operating profit after taxation (NOPAT)
Net profit attributable to owners of the parent
15,640,272
2,520,282
2,378,961
1,971,846
1,789,370
16,154,251
2,986,381
2,863,612
2,417,949
2,222,899
(3)
(16)
(17)
(18)
(20)
12,313,550
19,875,503
11,389,679
17,229,164
8
15
15.13
17.43
(13)
14.53
9.92
19.52
14.03
(26)
(29)
27.96
15.5
197
34.75
17.0
187
(20)
(9)
5
1.80
13.45
2.04
17.85
(12)
(25)
3,185,878
23.18
3,295,473
23.70
(3)
(2)
668,177
164,235
686,917
165,701
(3)
(1)
20.95
5.15
20.88
5.04
0
2
3,135
1,912
11,023
2,945
2,241
11,075
6
(15)
(0)
PROPERTY PERFORMANCE
Sales value
Sales (unit)
Average selling price
Revenue
Operating profit
Progress billings
856,319
1,412
606
842,977
451,125
784,133
942,002
1,730
545
971,630
509,876
986,272
(9)
(18)
11
(13)
(12)
(20)
MANUFACTURING PERFORMANCE
OLEOCHEMICAL
Plant utilisation (%)
Sales (MT)
77
581,275
82
618,960
(6)
(6)
77
2,919,543
72
2,640,091
7
11
88
617,895
92
492,432
(4)
25
PLANTATION PERFORMANCE
FFB production (MT)
Yield per mature hectare (MT)
Mill production (MT)
Crude palm oil
Palm kernel
Oil extraction rate (%)
Crude palm oil
Palm kernel
Average selling price (RM/MT)
Crude palm oil
Palm kernel
Operating profit (RM/mature hectare)
REFINERY
Plant utilisation (%)
Sales (MT)
SPECIALTY OILS AND FATS
Plant utilisation (%)
Sales (MT)
14
GROUP QUARTERLY
RESULTs
Revenue
Operating profit
Share of results of associates
Share of results of jointly controlled entities
Profit before interest and taxation
Interest income
Finance costs
Profit before taxation
Taxation
Profit for the financial year
Attributable to:
Owners of the parent
Non-controlling interests
Earnings per share (sen)
Basic
Diluted
Profit before interest and taxation on segmental basis
Plantation
Property development
Property investment
Manufacturing
Others
Segment results
Unallocated corporate (expenses)/income
Profit before interest and taxation
3rd
Quarter
RM000
4th
Quarter
RM000
4,165,860
27
3,579,283
23
3,747,510
18
24
9
18
27
25
18
27
15
752,584
39,382
13,247
805,213
10,673
(49,067)
766,819
(174,766)
592,053
32
33
41
32
21
26
32
32
32
666,569
17,482
12,221
696,272
10,791
(47,730)
659,333
(110,097)
549,236
28
14
37
28
22
25
28
20
30
521,512
34,788
4,250
560,550
15,071
(46,914)
528,707
(114,267)
414,440
22
29
13
22
30
24
22
21
23
2,366,514
121,033
32,735
2,520,282
49,768
(191,089)
2,378,961
(550,432)
1,828,529
14
37
15
577,674
14,379
592,053
32
37
32
551,958
(2,722)
549,236
31
(7)
30
401,642
12,798
414,440
23
33
23
1,789,370 100
39,159 100
1,828,529 100
2nd
Quarter
RM000
4,147,619
26
425,849
29,381
3,017
458,247
13,233
(47,378)
424,102
(151,302)
272,800
258,096
14,704
272,800
1st
Quarter
RM000
4.02
3.68
8.99
8.97
557,086 34
103,029 21
13,535
6
33,161 12
12,291 16
719,102 27
(260,855) 140
458,247 18
462,317
146,073
14,758
124,212
24,042
771,402
33,811
805,213
8.59
8.55
28
30
7
43
31
28
(18)
32
303,249
110,095
13,805
89,105
19,879
536,133
160,139
696,272
315,801
124,663
178,059
40,640
21,384
680,547
(119,997)
560,550
24 15,640,272 100
6.25
6.23
19
23
6
31
26
20
(86)
28
FY 2012
RM000
100
100
100
100
100
100
100
100
100
27.96
27.88
19
26
81
14
27
25
64
22
1,638,453
483,860
220,157
287,118
77,596
2,707,184
(186,902)
2,520,282
100
100
100
100
100
100
100
100
FINANCIAL
CALENDAR
Financial Year End
Announcement of Results
1st Quarter
2nd Quarter
3rd Quarter
4th Quarter
30 June 2012
18 November 2011
23 February 2012
30 May 2012
27 August 2012
28 September 2012
29 October 2012
Payment of Dividends
1st Interim
Declaration
Book Closure
Payment
23 February 2012
16 March 2012
29 March 2012
2nd Interim
Declaration
Book Closure
Payment
27 August 2012
26 September 2012
4 October 2012
15
FIVE-YEAR FINANCIAL
HIGHLIGHTS
2012
RM000
2011
RM000
2010
RM000
2009
RM000
2008
RM000
RESULTS
Revenue
Profit before taxation
Taxation
Profit for the financial year
15,640,272
2,378,961
(550,432)
1,828,529
16,154,251
2,863,612
(573,099)
2,290,513
12,542,962
2,550,633
(485,517)
2,065,116
14,600,474
1,550,117
(486,943)
1,063,174
14,665,369
3,095,197
(683,010)
2,412,187
Attributable to:
Owners of the parent
Non-controlling interests
1,789,370
39,159
2,222,899
67,614
2,035,661
29,455
983,517
79,657
2,231,632
180,555
5,713,689
29,580
1,858,899
1,326,712
817,140
3,483,107
650,121
13,879,248
9,185,620
23,064,868
5,677,476
30,007
834,513
1,062,529
668,074
3,099,132
580,283
11,952,014
7,703,105
19,655,119
5,434,932
29,506
913,328
1,113,545
29,783
572,223
1,549,245
540,745
10,183,307
7,160,110
17,343,417
5,410,865
31,676
866,172
1,104,633
23,131
536,492
1,436,763
564,887
9,974,619
6,007,335
15,981,954
5,309,829
31,773
927,263
838,639
26,198
542,071
1,515,878
569,755
9,761,406
7,499,818
17,261,224
642,725
11,985,198
12,627,923
287,980
12,915,903
7,946,466
2,202,499
10,148,965
23,064,868
641,603
11,357,574
11,999,177
262,221
12,261,398
5,105,693
2,288,028
7,393,721
19,655,119
667,552
10,112,629
10,780,181
289,292
11,069,473
4,841,310
1,432,634
6,273,944
17,343,417
624,680
7,721,610
8,346,290
426,156
8,772,446
5,932,356
1,277,152
7,209,508
15,981,954
613,788
7,777,573
8,391,361
965,117
9,356,478
5,494,836
2,409,910
7,904,746
17,261,224
1,971,846
12,313,550
19,875,503
2,417,949
11,389,679
17,229,164
2,230,994
9,563,236
15,611,863
1,236,314
8,368,826
15,426,081
2,553,500
8,065,310
14,366,209
27.96
15.5
197
14.53
9.92
29.78
34.75
17.0
187
19.52
14.03
21.77
32.96
17.0
169
21.29
14.29
8.16
16.62
8.0
140
11.75
8.01
37.08
36.85
17.0
140
27.67
17.77
36.65
ASSETS
Property, plant and equipment
Prepaid lease payments
Land held for property development
Investment properties
Other long term investments
Associates
Jointly controlled entities
Other assets
Current assets
EQUITY AND LIABILITIES
Share capital
Reserves
Non-controlling interests
Total equity
Non-current liabilities
Current liabilities
Total liabilities
16
Average capital employed comprises shareholders equity, non-controlling interests, long term liabilities, short term borrowings and deferred taxation.
Net debt represents total bank borrowings less short term funds, deposits with financial institutions and cash and bank balances.
REVENUE
RM MILLION
20,000
40
36.85
16,154
14,665
15,000
3,095
34.75
35
3,000
32.96
2,864
15,640
14,600
30
12,543
2,551
27.96
2,500
2,379
25
2,000
20
10,000
1,550
16.62
1,500
15
1,000
10
5,000
500
2008
2009
2010
2011
2012
SHAREHOLDERS EQUITY
RM MILLION
2008
2009
2010
2011
2008
2009
2010
2011
2012
NOPAT/AVERAGE CAPITAL
EMPLOYED
%
15,000
2012
20
27.67
17.77
11,999
12,628
25
12,000
21.29
10,780
20
9,000
8,391
15
14.29
19.52
14.03
8,346
14.53
15
9.92
10
8.01
11.75
6,000
10
5
3,000
2008
2009
2010
2011
2012
2008
2009
2010
2011
2012
2008
2009
2010
2011
2012
17
MANAGEMENTS
DISCUSSION AND ANALYSIS
Group Financial Review
RM/MT
RM MILLION
4,000
3,500
3,500
3,000
3,000
2,500
2,500
2,000
2,000
1,500
1,500
1,000
1,000
500
500
1993
1994
1995
1996
1997
1998
Right: Precision in
employing modern
technology to deliver
superior product and
service quality.
18
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
INTRODUCTION
The purpose of this review is to highlight and provide brief insights on key financial and operating information at Group level. A more
detailed commentary on operating performance is covered under the respective business segment reports.
2011
Change %
RM million
2,520.3
2,986.4
(16)
Pre-tax earnings
RM million
2,379.0
2,863.6
(17)
Net earnings
RM million
1,789.4
2,222.9
(20)
14.5
19.5
(26)
9.9
14.0
(29)
RM million
1,971.8
2,417.9
(18)
Economic profit
RM million
465.0
713.4
(35)
sen
15.5
17.0
(9)
RM million
2,131.6
909.7
134
29.8
21.8
37
At Group level, the results for FY2012 versus FY2011 is best compared and explained at three levels, mainly, EBIT, Pre-tax and Net
Earnings, as different factors affected the changes between the two fiscal years at the respective levels.
Plantation
Downstream manufacturing
Palm oil - Total
Property
Others (unallocated)
EBIT
2012
RM million
Mix
%
2011
RM million
Mix
%
1,638.5
65
1,575.8
53
287.1
11
446.0
14
(36)
1,925.6
76
2,021.8
67
(5)
704.0
28
770.1
26
(9)
194.5
(156)
2,986.4
100
(16)
(109.3)
2,520.3
(4)
100
Change
%
Plantation segments EBIT increased by 4% to RM1,638.5 million, contributed by higher average CPO price realised.
The downstream manufacturing segments EBIT decreased by 36% to RM287.1 million. The lower profit is due mainly to fair value
differences on derivative contracts as well as weaker performance from the refinery and specialty fats sub-segments.
The property segment registered a drop of 9% in EBIT to RM704.0 million, mainly due to slower sales take up rates and lower gain
arising from disposal of investment properties amounting to RM0.7 million (FY2011 RM62.7 million), in spite of higher fair value
gain on investment properties amounting to RM165.0 million (FY2011 RM93.1 million).
The unallocated segment in respect of both financial years comprises primarily the gain or loss on translation difference on
foreign currency denominated borrowings with loss of RM327.1 million and gain of RM215.4 million registered in FY2012 and
FY2011 respectively. The results were however moderated by net fair value gain on financial instruments of RM72.7 million (FY2011
loss of RM83.2 million) and net gain on changes in interests in associates of RM115.3 million (FY2011 nil).
19
Pre-tax Earnings decreased by 17% over the last financial year. Apart from the decrease in EBIT as explained in the foregoing
paragraphs, the decrease was also due to higher finance costs incurred, offset by lower tax expenses during the financial year.
At the Net Earnings level, profit attributable to owners of the parent decreased by 20% to RM1.79 billion.
For FY2012, the Group recorded a Return on Equity (ROE) of 14.5% based on an average shareholders equity of RM12.31 billion
(FY2011 RM11.39 billion), down from 19.5% for the previous financial year due mainly to decrease in net earnings.
The Return on Average Capital Employed (ROCE) decreased to 9.9% for FY2012, down from 14.0% for FY2011. This was due to
lower NOPAT as well as increase in capital employed.
The Group strives to enhance ROE and ROCE by continuous improvement in operating performance and by active management of
its capital structure. Initiatives undertaken by the Group include maintaining dividend pay-outs, share buy-back (and cancellation)
program and a continuous review and adjustment of the Groups debt gearing ratio having regard to maintaining stable credit
ratings.
Total dividend
Share buy-back
Total equity repayments
% of net earnings for the financial year
2012
RM million
2011
RM million
991.7
1,088.7
139.6
1,131.3
1,088.7
63%
49%
The Group targets an average equity payout of not less than 50% of net earnings.
The Group generated an Operating Cash Flow of RM2,131.6 million for FY2012 against RM909.7 million for the previous financial
year. Similarly, Free Cash Flow increased from RM528.4 million to RM1,734.9 million in line with the stabilisation of working capital
requirements.
For FY2012, the Group spent a total of RM399.8 million (FY2011 RM399.7 million) for Capital Expenditure (Capex).
The Groups Shareholders Equity as at 30 June 2012 stood at RM12.6 billion, an increase of RM0.6 billion or 5% over previous
financial year. The increase was mainly due to net earnings for the financial year of RM1.79 billion after netting off dividend
payment of RM1.02 billion.
The Groups Net Interest Cover was 13.5 times (FY2011 17.9 times).
From an economic profit perspective, the Group achieved an economic profit [i.e. a surplus of NOPAT over its Weighted Average
Cost of Capital (WACC)] of RM465.0 million for FY2012 as compared to RM713.4 million for FY2011. The decrease is due to a
lower NOPAT of RM1,971.8 million (FY2011 RM2,417.9 million). The WACC for FY2012 registered a decrease over last financial year
at 7.6% (FY2011 9.9%).
The lower WACC for the financial year just ended was due principally to a lower cost of equity as a result of lower market risk
premium.
20
RETURNS TO SHAREHOLDERS
Two interim dividends totalling 15.5 sen per ordinary share amounting to a total payout of approximately RM991.7 million were declared
for FY2012. The dividends represent an approximately 55% distribution of the Groups net profit attributable to owners of the parent,
which is slightly higher than the dividend payout ratio in FY2011.
If a shareholder had bought 1,000 ordinary shares in the Company when it was listed in 1980 and assuming the shareholder had
subscribed for all rights issues to date and had not sold any of the shares, he would have as at 30 June 2012, 76,000 ordinary shares of
RM0.10 each worth RM394,440 based on a share price of RM5.19. The appreciation in value together with the dividends received less
capital outlay translates to a remarkable compounded annual rate of return of 21.1% for each of the 32 years since the Company was
listed.
The Company continues to manage its capital in a proactive manner to provide value to shareholders, optimise gearing levels and
provide for funding requirements. The Group also continues to maintain a healthy cash and bank balance, which as at 30 June 2012
stood at RM4.4 billion, and a net gearing ratio of 30%.
2008
2009
2010
2011
2012
955,845
15,211
386,620
713,404
465,001
141,313
173,140
165,878
127,436
143,317
1,456,342
1,047,963
1,678,496
1,577,109
1,363,528
NOPAT
2,553,500
1,236,314
2,230,994
2,417,949
1,971,846
DISTRIBUTION OF NOPAT
RM BILLION
3.0
2.5
2.0
Total Cost of
Equity
1.5
Total Cost of
Debt
Economic Profit
1.0
0.5
2008
2009
2010
2011
2012
21
20
18
16
14
12
10
8
6
4
2
0
-2
2008
2009
2010
2011
2012
The computations of COE, ROCE and Economic Profit were based on the following parameters:
BETA
1.6
1.4
1.2
1.0
0.8
0.6
0.4
0.2
2008
2009
22
2010
2011
2012
EFB,
FRONDS,
TRUNKS
Bio-Mass Recycled
Tissue Culture
Plant Breeding
CPO Mills
PLANTATION
DIVISION
RESOURCE-BASED
MANUFACTURING DIVISION
CPO
PK
PALM OIL & PKO
Other Oils
Oleochemicals
Fractions
Fatty Alcohol
FFB
EFB
CPO
PKO
PK
23
plantation
Achievements in productivity are the result of years of concerted effort
and commitment to good plantation management practices. As one of
the worlds top palm oil producers, we are dedicated to improve our fresh
fruit bunches (FFB) yields, oil and kernel extraction rates, and overall
efficiency of our plantation division. Our progressive efforts in tissue
culture research, leading to cultivation of clonal palms with superior traits,
also augur well for the future.
Aerial view of
Pukin Estate, Pahang.
PLANTATION
MANAGEMENTS
DISCUSSION AND ANALYSIS
Group Business Review Plantation
As at 30 June 2012, the Groups total planted area
stood at 158,881 hectares (FY2011 158,174 hectares)
with approximately 99% of the estates planted area
planted with oil palm.
The Group has 82 estates, unchanged from the
previous financial year and the total oil palm planted
area as at the end of the financial year under review
stood at 157,752 hectares, an increase of 707
hectares from the previous financial year.
Approximately 65% of the Groups oil palm
plantation holdings are in East Malaysia, 29% in
Peninsular Malaysia and the remaining 6% in
Indonesia. The Groups plantation produce are
principally processed by its 12 palm oil mills with an
annual milling capacity of approximately 4,000,000
tonnes of fresh fruit bunches (FFB).
The Groups plantation business over the years has
been able to sustain as one of the most cost efficient
producers in the industry due to managements
emphasis on continuous improvement in efficiency
and productivity of its operations. Achievements in
productivity are the result of years of concerted
effort and commitment to good plantation
management practices.
Our commitment to quality in the plantation
business begins with the use of superior planting
materials to ensure high oil yield as well as quality
of the palm oil produced. We have a dedicated
research team focused on improving FFB yields, the
oil and kernel extraction rates and carrying out
research involving tissue culture to cultivate clonal
palms with superior traits.
27
PLANTATION STATISTICS
CROP STATEMENT
Oil Palm
Average mature area harvested (hectare)
FFB production (tonne)
Yield per mature hectare (tonne)
Mill production (tonne)
Crude palm oil
Palm kernel
Oil extraction rate (%)
Crude palm oil
Palm kernel
Average selling price (RM/tonne)
Crude palm oil
Palm kernel
Operating profit (RM/mature hectare)
Rubber
Mature area tapped (hectare)
Rubber production (000 kg)
Yield per mature hectare (kg)
Average selling price (RM/kg)
Operating profit (RM/mature hectare)
CROP MIX
2012
2011
2010
2009
2008
137,455
3,185,878
23.18
139,072
3,295,473
23.70
139,352
3,405,090
24.44
139,323
3,626,776
26.03
138,647
3,957,281
28.54
668,177
164,235
686,917
165,701
732,275
170,876
777,310
182,075
848,119
199,347
20.95
5.15
20.88
5.04
21.53
5.02
21.38
5.01
21.38
5.02
3,135
1,912
11,023
2,945
2,241
11,075
2,372
1,229
8,148
2,831
1,279
11,448
2,865
1,706
13,347
200
449
2,243
3.78
8,470
430
1,243
2,890
3.71
11,000
Prime 111,691 Ha
71%
Young 10,994 Ha
7%
Immature 18,860 Ha
12%
Due 2,261 Ha
1%
Past Prime 13,946 Ha
9%
Total Oil Palm Area = 157,752 Ha
28
AREA STATEMENT
In Hectares
Oil Palm
Mature
Immature
2012
2011
2010
2009
2008
138,892
18,860
139,582
17,463
138,675
16,034
139,597
11,334
139,097
10,348
157,752
157,045
154,709
150,931
149,445
Rubber
Mature
Immature
496
496
438
438
274
278
Others
496
633
496
633
438
632
438
622
552
397
158,881
158,174
155,779
151,991
150,394
129
2,454
1,242
17,294
126
3,801
1,242
16,631
148
4,694
1,242
17,021
119
2,893
1,244
16,733
108
1,118
1,260
16,489
180,000
179,974
178,884
172,980
169,369
Mature 97,296 Ha
95%
Mature 41,596 Ha
89%
Immature 5,071 Ha
5%
Immature 5,017 Ha
11%
Indonesia 6%
Immature 8,772 Ha
100%
29
OPERATIONS REVIEW
For the financial year under review, the Groups estates produced a total of 3.186 million MT of FFB, about 3.3% lower than the previous
year mainly due to unfavourable weather conditions and shortage of workers.
The average FFB yield per mature hectare for FY2012 was also approximately 2% lower compared to previous financial year. With lower FFB
yield for FY2012 at 23.18 MT (FY2011 23.70 MT) per mature hectare and slightly higher oil extraction rate of 20.95% (FY2011 20.88%),
the average CPO yield has decreased to 4.86 MT per mature hectare as compared to a yield of 4.95 MT per mature hectare for FY2011.
The Groups best performing estate was Luangmanis Estate in Sabah which achieved a yield of 6.71 MT of CPO per hectare for FY2012.
The number of estates that managed to achieve oil yields of more than 6 MT per mature hectare has increased from 4 estates in FY2011
to 5 estates for the financial year under review.
For FY2012, the Groups plantation division recorded an operating profit of RM1,548.2 million, an increase of 3.4% from FY2011s
RM1,497.8 million. The increase in profit was due mainly to higher cpo price realised of RM3,135/MT (FY2011 RM2,945/MT), moderated
by lower FFB production.
MPOB cess
Windfall profit levy
Sabah sales tax
2012
RM000
2011
RM000
8,687
21,168
104,288
8,931
9,898
109,727
134,143
128,556
30
Operating profit per mature hectare of oil palm decreased marginally to RM11,023 per hectare for the
financial year under review as compared to RM11,075 per hectare for the previous financial year.
For capital expenditure, the division spent a total of RM84.3 million for FY2012 as compared to RM83.2
million for the previous financial year. The capital expenditure was primarily incurred on new planting, staff
quarters, road, bridges and agricultural equipment. As for replanting expenditure, RM55.0 million was
charged out to the income statement for FY2012 compared to RM38.9 million for the previous financial year.
For FY2012, we have replanted 5,000 hectares of oil palm with our own high yielding material which includes
clonal palms. Going forward, we will replant 5,000 to 8,000 hectares per year. As for new planting activity in
Indonesia, we have planted 8,772 hectares to-date and we target to plant about 8,000 hectares per year in
the next 3 years.
PROJECTION
HA (000)
MT (000)
170
4,500
160
4,000
150
140
3,500
130
Mature HA (000)
120
3,000
110
100
FFB Production
MT (000)
2,500
90
80
2,000
70
1,500
60
2008
2009
2010
2011
2012
2013
2014
2015
YEAR
31
resource-based manufacturing
The success of our resource-based manufacturing division complements
our palm oil business. Leading the way in refining of palm oil,
manufacturing of oleochemicals, specialty oils and fats; our state-of-the-art
manufacturing facilities in Malaysia, the Netherlands, USA and Canada
ensure a steady stream of innovative and value-added products are
introduced to boost the growth in our global palm oil business.
Creative Studio
at IOI Loders
Croklaan Europe.
RESOURCE-BASED MANUFACTURING
MANAGEMENTS
DISCUSSION AND ANALYSIS
Group Business Review Resource-based Manufacturing
The Groups resource-based manufacturing division is an
essential segment of our palm oil business and consists of
the downstream refining of palm oil, and the processing
of refined palm oil and palm kernel oil into oleochemicals
and specialty oils and fats. Crude palm oil and palm
kernel oil are processed into products that are used in
various industries including food, personal care,
households, pharmaceutical, cosmetics and chemicals.
REFINING
IOI Group owns four palm oil refineries, three located
in Malaysia and one in the Netherlands. They have a
combined annual refining capacity of 3,300,000 MT.
In Malaysia, two of the refineries are situated in Pasir
Gudang, Johor. They have a combined annual
refining capacity of 1,100,000 MT. The third refinery
in Malaysia is located in Sandakan, Sabah and has an
annual refining capacity of 1,000,000 MT. The fourth
refinery located in Rotterdam, Netherlands has an
annual refining capacity of 1,200,000 MT. Our
refineries are strategically located along the major
shipping routes with direct port access.
35
OLEOCHEMICALS
MANUFACTURING
The principal activities of the oleochemical subsegment are the manufacturing and sales of fatty
acids, glycerine, soap noodles and fatty esters. These
versatile products are used in a wide variety of
applications, including manufacturing of detergents,
surfactants, shampoo, soaps, cosmetics,
pharmaceutical products, food additives and plastics.
The oleochemical products are exported to more
than 60 countries worldwide mainly to Europe,
Japan and China. Its customers include some of the
worlds largest multinational corporations.
The oleochemicals manufacturing activities are
undertaken in Penang and Johor by various whollyowned subsidiaries of IOI Oleochemical Industries
Berhad and the Pan-Century group of companies.
With a combined total capacity of 710,000 MT, the
oleochemical sub-segment is one of the leading
vegetable-based oleochemical producers in the
world. Esterchem (M) Sdn Bhd, a wholly-owned
subsidiary of IOI Oleochemical Industries Berhad, is
expanding its fatty esters production capacity by
another 20,000 MT per annum to come on stream
by mid-2013.
36
Top: Crokvitol
enzymatically produced
fats enable margarine
and bakery producers to
meet consumers
demands for more
natural ingredients.
Bottom: IOI Loders
Croklaan Americas
systematic packing and
filling line ensures
absolute quality and
efficiency.
37
38
OPERATIONS REVIEW
The resource-based manufacturing division reported
a profit of RM287.1 million for FY2012 which is 36%
lower than the reported profit of RM446.0 million for
FY2011. The lower profit is mainly due to fair value
differences on derivative contracts where a loss of
RM88.2 million was reported for FY2012 compared
to a gain of RM6.4 million for FY2011. After excluding
these fair value differences, the resource-based
manufacturing division reported a decline of RM64.3
million profit to RM375.3 million due to a weaker
performance from the specialty oils and fats subsegment that was offset by a better performance in
the oleochemical sub-segment. The refining subsegment also managed to register satisfactory
results despite stiff competition posed by Indonesian
refiners due to their tariff differentiated export duty
structure.
39
PROPERTY
A green building comprises two factors: architectural blueprint and human
behaviour. When it comes to design, all our on-going commercial high-rise
buildings will be Green Building Index (GBI) or Green Mark-certified and all our
landed residential buildings equipped with environmental-friendly features. As for
quality, we have adopted the ISO 9001:2001 and subsequently the ISO
9001:2008 standards since nine years ago. Today, our projects are developed to
achieve a Qlassic quality score of not less than 75% for a better future where the
love for environment thrives.
An artists impression
of IOI Rio City in
Bandar Puteri
Puchong.
An artists impression of
Skypod Residences in
Bandar Puchong Jaya.
An artists impression of
IOI City Mall in IOI
Resort City, Putrajaya.
Property
MANAGEMENTS
DISCUSSION AND ANALYSIS
Group Business Review Property
Property development activities contributed approximately 89% of the
overall property divisions operating profit (excluding fair value
adjustments on investment properties). The Group is also increasingly
supplemented with stable and recurring rental income from its
investment properties comprising mainly retail complexes and office
buildings.
The Group has been a successful developer of comprehensive self-contained suburban townships especially along the high growth
corridors in Puchong and Southern Johor. The Group has expanded its traditional development business to include niche developments
at prime locations both locally and overseas. As at 30 June 2012, our main ongoing property development projects, excluding investment
development projects and the status of their development, are as follows:
Year Of
Development
Commencement
Original
Development
Land Size
(Hectares)
1990
374
Approaching
completion
RM4.2 billion
2000
374
Ongoing
RM7.2 billion
16 Sierra, Puchong
2008
217
Ongoing
RM2.8 billion
1995
37
Ongoing
RM0.4 billion
1995
2,299
Ongoing
RM8.7 billion
2006
91
Ongoing
RM0.5 billion
2007
119
Ongoing
RM2.5 billion
1995
198
Ongoing
RM0.7 billion
2012
Ongoing
RM0.4 billion
2001
9.3
Ongoing
RM0.7 billion
2009
1.3
Ongoing
RM0.1 billion
2008
1.5
Completed
SGD1.1 billion
2010
2.1
Ongoing
SGD2.0 billion
2011
0.8
Ongoing
SGD0.4 billion
2011
3.5
Ongoing
SGD1.0 billion
Projects
Status
Estimated
Gross
Value
43
The table below sets forth key information with respect to the performance of our property development business excluding jointly
controlled entities:
2012
2011
2010
2009
2008
1,412
1,730
2,044
1,465
1,934
856,319
942,002
1,045,095
688,487
696,743
Revenue (RM000)
842,977
971,630
945,538
660,167
755,066
EBIT (RM000)
451,125
509,876
532,052
309,556
369,673
53.52
52.48
56.27
46.89
48.96
The Groups property investment portfolio comprises mainly retail and office space totalling approximately 248,000 sq. m. of net lettable
space. The Groups principal investment properties as at 30 June 2012 are IOI Mall, IOI Resort, IOI Boulevard and Puchong Financial
Corporate Centre (PFCC). The performance of the property investment business is as follows:
Revenue (RM000)
Operating profit (RM000)
2012
2011
2010
2009
2008
95,312
95,653
97,866
81,505
74,302
220,157
209,204
70,830
157,473
182,275
OPERATIONS REVIEW
The Group sold a total of 1,412 units of properties for a total sales value of RM856 million for FY2012, a decrease of 318 units and RM86
million in sales values compared to the previous year.
Property sales for the various projects are summarised as follows:
Units
Projects
2012
2012
2011
127
80
91.8
138.3
177
228
215.8
259.5
121
100
77.6
61.9
412
454
160.6
113.7
141
152
36.7
34.3
68
152
48.7
94.1
111
211
23.6
39.9
16 Sierra, Puchong
227
256
148.4
111.0
28
97
53.1
89.3
1,412
1,730
856.3
942.0
Others
Total
44
The Group sold a wide range of products during the financial year under review. The sales mix recorded for
unit price above RM500,000 was 5% lower than the previous year. However, the average price achieved per
unit has increased by 11% from RM545,000 to RM606,000. The increase in average unit price is due to both
commercial and residential properties registering new benchmark prices in the Klang Valley.
The property sales mix by price range is as follows:
2012
(RM Million)
Price Range
Below RM250,000
2011
(RM Million)
77.9
124.3
13
235.7
28
248.4
26
154.9
18
112.8
12
86.4
10
65.7
18.5
71.8
44.6
17.1
Above RM2,000,000
238.3
28
301.9
32
Total
856.3
100
942.0
100
Property development revenue in FY2012 has decreased 13% to RM843.0 million whilst EBIT, excluding
jointly controlled entities, has decreased by 12%, from RM509.9 million to RM451.1 million on the back of
slower sales take-up rates.
Operating profit of RM220.2 million from property investment segment for FY2012 is higher than FY2011
by 5%. After excluding the net fair value gain on investment properties amounting to RM165.0 million
(FY2011 - RM93.1 million) and net gain on disposal of investment properties amounting to RM0.7 million (FY2011 RM62.7 million), the segment profit registered an increase of 2% or RM1.1 million over the previous financial year.
Our Singapore development project such as the Seascape project is undertaken via our 50%-owned
Singapore JV company and has achieved SGD64.4 million (2011 - SGD35.5 million) sales in FY2012. As for the
Cityscape @ Farrer Park condominium project, it is undertaken through another 60%-owned Singapore JV
company and has also contributed SGD32.0 million sales in FY2012.
Right: Seascape, a
luxury condominium
development at
Sentosa Cove, provides
an escape from the
hustle and bustle of
Singapore city.
45
46
KEPONG
Kuala Lumpur
City Centre
th
Nor
SHAH ALAM
ral
Fede
AMPANG
KUALA
LUMPUR
way
ress
p
y Ex
alle
ng V
Kla
KL Sentral
PETALING JAYA
way
High
SUBANG JAYA
Tasik Selatan
KINRARA
IOI MALL
SUNGAI BESI
ng
ucho
ra-P
ansa sway
Dam Expres
BANDAR PUTERI
ay
ssw
pre
Ex
m
Ala
ah
BANDAR
PUCHONG JAYA
Sh
PUCHONG
KAJANG
16 SIERRA
PMs Complex
South
Pu
Putrajaya
To Kual
BANDAR
PUTRA, KULAI
a Lum
pu
No
rth
-S
Kulai
ou
th
Hi
gh
Multimedia
University
PUTRAJAYA
Flagship
Zone
Palm Resort
Palm Villa
SENAI
wa
Taman
Kempas
Utama
NILAI
Pandan
Plentong
P as
Skudai
UTM
ay
Highw
CYBERJAYA
Taman Lagenda
Putra
North
IOI RESORT
Lin
ya
a
j
tra
ir Gu
dan
g
High
way
Johor Bahru
Tampoi
2n
Se
na
iH
wa
y
Straits of Johor
Kuala Lumpur
International Airport (KLIA)
re
xp
kE
Lin
igh
wa
ss
Singapore
47
sustainability and
CORPORATE SOCIAL RESPONSIBILITY
Back in year 1995, long before the concepts of
sustainability and corporate social responsibility (CSR)
became popular in the business world, IOI Group had
introduced its Vision IOI which acknowledged its
responsibility towards various stakeholders namely its
shareholders, customers, employees, business associates,
community and the nation.
IOI Groups sustainability commitment is also articulated in its Corporate Responsibility (CR) policy
statement. The Group holds firmly to operating its businesses in ways that meet regulatory requirements on
environmental impact in countries or markets where it operates. It strives to achieve a sustainable long-term
balance between meeting its business goals and preserving the environment. Specifically, the Group adopts
a group-wide policy of greening the environment which also extends to insisting on its suppliers and
business partners to practise the same standards of environmental care.
48
Sustainable Business
Practices
IOI Group believes that the sustainability of its
businesses is interdependent with the sustainability
of the ecosystem surrounding its operations. For
years, the Group has already been following a
number of criteria that were later codified by RSPO,
with excellent success.
IOI Group had set up a Tissue Culture Laboratory in
the late 80s for research and development in large
scale tissue culture propagation of high yielding oil
palm clones. Over the years, the expertise and
cutting-edge technology for the mass propagation
of high yielding oil palm clones had been developed
resulting in the progressive production and planting
of clonal palms. Substantial areas of IOI Groups
plantations planted with the high yielding clonal
palms have shown great increase in oil extraction
rates and oil yields from the FFB crops produced.
More areas are expected to be replanted with such
high yielding clonal palms to further boost the
productivity of the estates.
Before new plantings are started, the Group conducted
soil surveys, independent environmental impact
assessments and social impact assessments. It then
adapts its plans and operations according to the
findings.
49
International
Sustainability Benchmarks
RSPO Certification
As a founding member of the RSPO, IOI Group has
played an active role in promoting sustainable
practices since its inception in 2004. It also advocates
sustainable agricultural practices in its estates to
bring growth and use of certified sustainable palm
oil to the world market. All of IOI Groups mills and
estates in Peninsular Malaysia have successfully
attained the RSPO Certification. In Sabah, four of IOI
Groups mills and their supply bases have been
certified to date. In total, IOI Group currently has an
estimated production of about 477,000 MT of
certified sustainable palm oil per year.
In addition, the entire IOI Groups operating units
and supply chain units have successfully obtained
the RSPO Supply Chain Certification.
ISCC Certification
In addition to the RSPO Certification, IOI Group is also
pursuing the International Sustainability and Carbon
Certification (ISCC), which is the first international
certification system that can be used to prove
sustainability and greenhouse gas savings for all kinds
of biomass and bio-energy. It is recognised by the
European Commission for all member countries as well
as recognised by Germany and the Netherlands.
Currently, seven IOIs palm oil mills and their supply
bases in Peninsular Malaysia and Sabah have been
awarded the ISCC certification. The achievement
signifies IOI Groups products to be in compliance
with the strict sustainability criteria for the use of
biomass in renewable energy application set by the
European Commission.
50
Challenges
Despite its best efforts in responsible business, IOI
Group has encountered challenges arising from
operating in a complex business environment. With
regards to the inherited land dispute with natives in
Sarawak, RSPO had conditionally lifted the suspension
on IOIs certification process in view of IOI Groups
commitment to resolve the on-going dispute. The
Group is committed to resolving the disputes in a
peaceable and fair manner with full involvement of
the RSPO plus an independent mediator.
As for the Ketapang, West Kalimantan issue, the
RSPO has concluded that there is insufficient
evidence to prove that HCV areas were cleared by
the Group in Ketapang. Nevertheless, IOI Group has
committed to tightening its operating procedures to
prevent a repeat of the allegations in Ketapang.
ENVIRONMENT
IOI Groups plantation operations produce a vast
amount of biomass by-products, some of which are
used to generate energy. For example, the 15MW
Biomass Co-Gen Power Plant in its refinery complex
at Sandakan, Sabah uses kernel shells and empty
fruit bunch fibres from its own mills to satisfy almost
all the steam and electricity requirements of the
huge complex. Currently, IOI Groups fuel
consumption for steam generation at all its mills
comes from these renewable resources.
In its efforts to mitigate greenhouse gases emission,
IOI Group is in the process of planning and
implementing the methane gas capture systems in
its palm oil mills to capture the methane gas from
palm oil mill effluent (POME), where the captured
methane gas are utilised either in a boiler for steam
generation or biogas for power generation. The
project is being developed for the Groups two
largest mills in Peninsular Malaysia and Sabah. IOI is
also exploring other possible biomass value addition
options. Usage of biomass can be shifted over time
from lower value activities to higher value bioenergy,
biofuels and bio-based chemicals.
MARKETPLACE
IOI Group was the first company in the industry to
implement a set of criteria for suppliers that provides
palm and palm-based products to its European
operations. Established in 2009, the programme,
known as Controlled Source Palm, will require all
vendors that supply crude palm oil to IOI to become
members of the RSPO not later than the end of 2013.
It is IOI Groups intent to ultimately source only RSPO
Certified Palm Oil once sufficient quantities are
available to supply its worldwide clients.
In the Netherlands, IOI Loders Croklaan Europe has
proudly published its ethical standards using the
internationally-recognised Supplier Ethical Data
Exchange (Sedex) format, sharing its standards and
performance with its customers and allowing them
to use this as a tool in their supplier selection
process. This initiative is very well received by IOI
Groups customers in Europe.
51
COMMUNITY
Besides embracing sustainability and good business
practices, IOI Group also strives to improve the local
communitys growth and well-being with greater
emphasis on education and human capital
development.
a)
52
c)
e)
Conclusion
Corporate success and social well-being are
interdependent. IOIs CSR strategy is achieving
commercial success and meeting the needs of its
stakeholders today while protecting, sustaining and
enhancing the human capital and natural resources
for the future. What have been described above are
only some of the countless efforts that IOI Group
have adopted and embarked on in its journey
towards corporate social responsibility and
sustainability. Moving forward, IOI will continue to
explore new areas to exert its positive influence and
impact while striving to do more to fulfil its collective
corporate responsibility.
53
CORPORATE SOCIAL
RESPONSIBILITY
Social Contributions
JULY 2011
JULY 2011
The 7th Putra Charity Run, organised by IOI Properties Bhd (IOIP),
Kulai, attracted 3,000 participants. It was flagged off at IOI Mall,
Kulai by Johor State Assembly Member and patron of the Kelapa
Sawit Community Rehabilitation Centre (PDK Kelapa Sawit) Yang
Berhormat Cheong Chin Liang. Proceeds totalling RM30,000 were
channelled to PDK Kelapa Sawit, a learning centre for the physically
and mentally-challenged.
JULY 2011
56 employees from IOI
Oleochemical Industries Bhd,
Prai heeded the noble
call to replenish the blood
banks shortage at Seberang
Jaya Hospital during the
Ramadan period.
54
AUGUST 2011
Yayasan TSLSC sponsored RM50,000 for
Step Up, an interactive pullout published
by the Star Publications (M) Bhd that
prepares upper-primary pupils for the
Ujian Pencapaian Sekolah Rendah (UPSR)
examination.
AUGUST 2011
IOI Mall, Kulai held its annual Pertandingan Memasak
Bubur Lambuk & Majlis Berbuka Puasa Bersama AnakAnak Yatim to mark the holy month of Ramadan. IOI
Malls staff also made and sold dodol to raise money for
the orphans.
SEPTEMBER 2011
Yayasan TSLSC sponsored RM100,000 for the 5th China-ASEAN
forum on Legal Cooperation & Development by Malaysian Bar
Council.
SEPTEMBER 2011
Putrajaya Marriott Hotel & Spa brought raya cheer to
85 occupants of Rumah Amal Limpahan Kasih. In addition
to a sumptuous meal, the children received RM10
duit raya each. The hotel also donated RM3,800 in cash
and kind to the home.
55
SEPTEMBER 2011
Palm Garden Hotel, together with Gaya Travel Magazine,
organised a Hari Raya Aidilfitri Charity Open House for 100
children from selected charity homes in Klang Valley. The
children were treated to a raya feast and received duit raya
and goodie bags.
OCTOBER 2011
IOI Corporation Bhd pledged RM20,000 (RM10,000
per annum for 2011 and 2012) to Malaysia Crime
Prevention Foundation to aid its ultimate goal in
reducing crime and achieving peace and stability
for our nation.
NOVEMBER 2011
NOVEMBER 2011
Yayasan TSLSC awarded scholarships and grants totalling
RM1,164,000 to 29 top students from various institutions of higher
learning in a presentation ceremony held at Palm Garden Hotel. The
scholarship recipients and their parents were then invited to savour
hi-tea delights after the ceremony.
56
NOVEMBER 2011
The fourth IOI Community Run 2011 at Bandar Puteri Puchong,
held to foster closer ties among local residents and promote
healthy living, attracted over 3,800 participants. It was flagged off
by Member of Parliament Puchong Yang Berhormat Gobind Singh
Deo, IOI Group Executive Chairman Tan Sri Dato Lee Shin Cheng
and IOI Group Executive Director Dato Lee Yeow Chor. Funds
totalling RM30,000 was presented to World Vision Malaysia,
RM30,000 to Sau Seng Lum Dialysis & Stroke Rehabilitation
Centre, and RM20,000 to Rumah Shalom. SMK Puchong, SMK
Puchong Perdana and SMK Seksyen 3 Bandar Kinrara each
received RM2,000.
DECEMBER 2011
53 underprivileged children from Rumah Shalom, Rumah AlTaqwa and House of Joy graduated from the MBA-IOI Properties
Hope for Change Badminton Charity Programme at Michaels
Badminton Academy (MBA) in Bandar Puteri Puchong. The
10-month badminton charity programme, sponsored by IOIP,
provided basic badminton training, mentor programmes by
national players, field trips and exposure to badminton
tournaments to the children.
DECEMBER 2011
Yayasan TSLSC donated a brand new Proton Exora
MPV to Persatuan Kristian Shuang Fu, making it
more convenient and safer for the members to
travel together as the existing vehicle has frequent
breakdowns.
57
DECEMBER 2011
IOI Mall Puchong offered shoppers an opportunity to bring joy
and hope to the less fortunate through the Heavenly Gift with
Community at Heart project. Beneficiaries included welfare
homes and associations in Puchong such as Pertubuhan Keluarga
Orang-Orang Bermasalah Pembelajaran, Rumah Shalom, Pusat
Sama-Sama in Enggang apartments, and House of Joy.
DECEMBER 2011
IOI Mall Kulais 10th Goodwill Anniversary Celebration
was held to build goodwill with IOI Malls loyal
shoppers and tenants. Launched by Ahli Dewan
Undangan Negeri (ADUN) of Bukit Batu Yang
Berhormat Cheong Chin Liang, the event attracted
27,000 shoppers.
DECEMBER 2011
DECEMBER 2011
Palm Garden Hotel celebrated Christmas with children from
Shepards Home (Dengkil), Rumah Anak Yatim Shifa (Kuala
Lumpur) and House of Joy (Puchong). 60 children and their
caretakers were treated to a hi-tea celebration and Christmas
gifts. Funds raised from candy canes sold to staff and guests were
also presented to the three homes.
58
JANUARY 2012
Yayasan TSLSC donated RM1 million to Sekolah Menengah Hin Hua
for the schools Science & Technology Building Fund.
JANUARY 2012
Yayasan TSLSC sponsored RM416,868 to 458 adopted students from
166 primary and secondary schools in Malaysia under its Student
Adoption Programme. Each student received RM800 cash donation
and a school bag at the presentation ceremony held in Palm Garden
Hotel. 1,800 children from 22 Borneo Child Aid/HUMANA kindergartens
also received school bags and stationeries.
MARCH 2012
IOI Group and all its subsidiaries continued
supporting the Earth Hour movement themed
Uniting People to Protect the Planet. Green efforts
were organised throughout the month of March as
a global stand against climate change.
FEBRUARY 2012
IOI Group sponsored a
new ambulance fitted
with critical emergency
equipment to Ladang Sabah
Group. It will effectively
cater to any emergencies
within the several plantation
estates under Ladang
Sabah Group.
MARCH 2012
68 children at Rumah Kanak-Kanak Taman Bakti,
Kepala Batas including children of IOI Oleochemical
Industries Bhd, Prais employees enjoyed a cheerful
Community Service event organised to connect
employees with society.
59
APRIL 2012
Yayasan TSLSC donated RM20,000 for
renovation works carried out on Sri Maha
Mariamman temple located at Pamol Timur
Estate, Kluang.
APRIL 2012
41 schoolchildren from selected schools
around Klang Valley, who are under the
Yayasan TSLSCs Student Adoption Programme,
participated in a Teambuilding Programme at
Palm Garden Hotel.
JUNE 2012
MAY 2012
136 students received over RM56,450 worth of Young Achievers Awards
plaques, cash prizes and certificates under the Yayasan TSLSC for their
excellent results in the UPSR, PMR, SPM, O-Levels and STPM examinations
plus outstanding leadership qualities and active participation in extra cocurricular activities in schools. 38 recipients attended the presentation
ceremony at Palm Garden Hotel while 10 high achievers were recognised
at IOI Loders Croklaan Oil Sdn Bhd.
60
CORPORATE
INFORMATION
BOARD OF DIRECTORS
Independent
Non-Executive Director
QUAH POH KEAT
Executive Director
DATO LEE YEOW CHOR
Senior Independent
Non-Executive Director
DATUK HJ MOHD KHALIL B
DATO HJ MOHD NOOR
PJN, DSPN, JSM
DSAP
Independent
Non-Executive Director
DATUK KAROWNAKARAN @
KARUNAKARAN A/L
RAMASAMY
Independent
Non-Executive Director
CHEAH TEK KUANG
Executive Chairman
TAN SRI DATO LEE SHIN CHENG
PSM, DPMS, JP
Executive Director
LEE YEOW SENG
Executive Director
LEE CHENG LEANG
Chairman
DATUK HJ MOHD KHALIL B
DATO HJ MOHD NOOR*
DATUK KAROWNAKARAN @
KARUNAKARAN A/L RAMASAMY*
DSDK, DMSM, KMN, AMN
AUDITORS
BDO
Chartered Accountants
12th Floor, Menara Uni.Asia
1008, Jalan Sultan Ismail
50250 Kuala Lumpur
Tel +60 3 2616 2888
Fax +60 3 2616 3191
(MIA 2022)
SECRETARIES
JP
Non-Independent
Non-Executive Director
LIM TUANG OOI
STOCK EXCHANGE
LISTING
Main Market of Bursa Malaysia Securities
Berhad
WEBSITES
www.ioigroup.com
www.ioiproperties.com.my
www.myioi.com
www.ioioleo.com
www.croklaan.com
LEE AI LENG
(LS 0009328)
REGISTRAR
Tricor Investor Services Sdn Bhd
Level 17, The Gardens North Tower
Mid Valley City
Lingkaran Syed Putra
59200 Kuala Lumpur
Tel +60 3 2264 3883
Fax +60 3 2282 1886
EMAIL ADDRESS
corp@ioigroup.com
61
BOARD OF DIRECTORS
62
Executive Director
Executive Director
Executive Chairman
8
9
5. DATUK KAROWNAKARAN @
KARUNAKARAN A/L RAMASAMY
Executive Director
63
PROFILE OF
DIRECTORS
Dato Lee Yeow Chor was first appointed to the Board on 25 April 1996.
He is responsible in overseeing the operations of all the Groups core
business segments.
Dato Lee is a barrister from Grays Inn, London and holds a LLB (Honours)
from Kings College London and a Postgraduate Diploma in Finance and
Accounting from London School of Economics. Prior to joining IOI Group
as a General Manager in 1994, he served in various capacities in the
Attorney Generals Chambers and the Malaysian Judiciary service for
about four (4) years. His last posting was as a Magistrate.
Dato Lee is the Chairman of the Malaysian Palm Oil Council (MPOC) and
also serves as a Council Member in the Malaysian Palm Oil Association
(MPOA). He has also been appointed a Director of the Malaysian Green
Technology Corporation in April 2011.
Dato Lee is the eldest son of Tan Sri Dato Lee Shin Cheng and the
brother of Lee Yeow Seng.
Dato Lee is deemed in conflict of interest with the Company by virtue of
his interest in certain privately-owned companies which are also involved in
property development business. However, these privately-owned companies
are not in direct competition with the business of the Company due to the
different locality of the developments. Except for certain recurrent related
party transactions of a revenue or trading nature which are necessary for
day-to-day operations of the Company and its subsidiaries and for which
Dato Lee is deemed to be interested as disclosed under Other Information
section of the Annual Report, there are no other business arrangements
with the Company in which he has personal interests.
Dato Lee attended all the eight (8) Board Meetings held during the
financial year ended 30 June 2012.
Sustainability is
key to a better
tomorrow for the
next generation.
Lee Yeow Seng was first appointed to the Board on 3 June 2008.
Since joining the IOI Group, he is actively involved in corporate
affairs and general management within the IOI Group.
Lee Cheng Leang is the brother of Tan Sri Dato Lee Shin Cheng.
Lee Yeow Seng holds a LLB (Honours) from Kings College London
and was admitted to the Bar of England & Wales by Inner Temple.
Lee Cheng Leang attended seven (7) out of the eight (8) Board
Meetings held during the financial year ended 30 June 2012.
Lee Yeow Seng is the youngest son of Tan Sri Dato Lee Shin
Cheng and the brother of Dato Lee Yeow Chor.
Lee Yeow Seng is deemed in conflict of interest with the Company
by virtue of his interest in certain privately-owned companies
which are also involved in property development business.
However, these privately-owned companies are not in direct
competition with the business of the Company due to the different
locality of the developments. Except for certain recurrent related
party transactions of a revenue or trading nature which are
necessary for day-to-day operations of the Company and its
subsidiaries and for which Lee Yeow Seng is deemed to be
interested as disclosed under Other Information section of the
Annual Report, there are no other business arrangements with the
Company in which he has personal interests.
Lee Yeow Seng attended seven (7) out of the eight (8) Board
Meetings held during the financial year ended 30 June 2012.
a/l Ramasamy
Quah Poh Keat was first appointed to the Board on 2 January 2008. He is a member
of the Malaysian Institute of Accountants, Malaysian Institute of Certified Public
Accountants, Chartered Institute of Management Accountants, and Fellow of the
Malaysian Institute of Taxation and Association of Chartered Certified Accountants. He
served as a past Vice-President of the Malaysian Institute of Taxation and is currently
a Member of the Federation of Malaysian Manufacturers Economic Policies Committee.
Quah Poh Keat had been a partner of KPMG since 1 October 1982 and was the Senior
Partner of the Firm responsible for the daily operations of KPMG Malaysia from
1 October 2000 until 30 September 2007. Prior to taking up the position of Senior
Partner (also known as Managing Partner in other practices), he was in charge of the
Tax Practice and the Japanese Practice in KPMG Malaysia. He was also a member of
the KPMG Japanese Practice Council, the governing body within KPMG International,
which looks after the Japanese Practices in the KPMG world. He was a Board Member
of KPMG Asia Pacific that oversees KPMG operations in Asia Pacific and a Member of
KPMG International Council that oversees KPMGs global operations.
Quah Poh Keat had experience in Audition, Taxation, and Insolvency Practices and
worked in both the Malaysian Firm and two years with the UK Firm. He retired from
KPMG Malaysia on 31 December 2007.
Quah Poh Keat is also a member of the Audit and Risk Management Committee and
Nominating Committee of the Company. He is also a Director of Telekom Malaysia
Berhad, Public Bank Berhad, Public Investment Bank Berhad, Public Mutual Berhad,
Public Islamic Bank Berhad, Public Finance Ltd, Public Financial Holdings Ltd, Public
Bank (Hong Kong) Ltd, Cambodian Public Bank Plc, Lonpac Insurance Berhad, Campu
Lonpac Insurance Plc, Campu Securities Plc, LPI Capital Berhad and On-Going
Holdings Sdn Bhd. He is a Trustee of Yayasan Tan Sri Lee Shin Cheng.
Quah Poh Keat attended seven (7) out of the eight (8) Board Meetings held during
the financial year ended 30 June 2012.
Notes:
1.
Lim Tuang Ooi was first appointed to the Board on 17 January 2011.
He is the Senior General Manager and Head of the Risk Management
Department of the Employees Provident Funds of Malaysia (EPF).
He is a Certified Public Accountant and a Chartered Accountant by
Profession. He is a member of the Malaysian Institute of Certified
Public Accountants and Malaysian Institute of Accountants.
Lim Tuang Ooi has more than 28 years of experience in the financial,
risk and accounting industry. He joined EPF in November 2007 and
prior to that he was the Chief Financial Officer of Hong Leong Bank
where he oversaw the Financial Management, Accounting Operations,
Tax Management, Strategic Planning and Risk Management functions.
He was with Citibank for more than 15 years and held many roles
covering Risk Management, Credit Risk, Collections, Service, Quality,
Business Banking, Credit Analytics and Credit Operations. He spent
7 years with KPMG where he qualified as a professional accountant
and worked in the areas of Audit, Tax and Consultancy.
Lim Tuang Ooi attended all the eight (8) Board Meetings held
during the financial year ended 30 June 2012.
Senior
Management Team
Group Chief Executive Officer
Tan Sri Dato Lee Shin Cheng
Group Executive Directors
Dato Lee Yeow Chor
Lee Yeow Seng
Lee Cheng Leang
Corporate
Commodity Marketing
Property
Property Director
Teh Chin Guan
Oleochemicals
Executive Director
Tan Kean Hua
Company Secretary
Tan Choong Khiang
Plantation
Financial Controller
Betty Lau Sui Hing
Refinery
General Manager
Sudhakaran a/l Nottath
Bhaskar
70
General Managers
Simon Yong
Anthony Wee
Brandon Chin
Group
Business Activities
plantation
resource-based
manufacturing
71
GLOBAL
PRESENCE
CANADA
ONTARIO
USA
CHANNAHON
CANADA
ONTARIO
USAUSA
CHANNAHONNEW JERSEY
PLANTATION PLANTATION
PROPERTIES PROPERTIES
RESOURCE-BASED
MANUFACTURING
RESOURCE-BASED
MANUFACTURING
RESOURCE-BASED
MANUFACTURING
SALES OFFICE
RESOURCE-BASED
MANUFACTURING
SALES OFFICE
72
USA
NEW JERSEY
BRAZIL
SAO PAULO
BRAZIL
SAO PAULO
NETHERLANDS
WORMERVEER &
ROTTERDAM
RUSSIA
MOSCOW
POLAND
ENGLAND
WARSAW
ESSEX
ITALY
MILAN
CHINA
EGYPT
SHANGHAI
CAIRO
MALAYSIA
SINGAPORE
INDONESIA
KALIMANTAN
SOUTH AFRICA
DURBAN
73
LOCATION OF
OPERATIONS IN MALAYSIA
Penang Port
40
PENANG
PERAK
Bayan Lepas 37
Airport
Kuantan Port
PAHANG
Kuantan Airport
SELANGOR
1
Port Klang
36
33
38
West Port
KLIA
NEGERI 8
SEMBILAN
10
9
12
11
35
MELAKA
13
14
JOHOR
34
15
Senai
Airport
39
MAIN AIRPORT
PALM OIL MILL
MAIN PORT
RESOURCE-BASED MANUFACTURING
NORTH SOUTH HIGHWAY
EAST COAST HIGHWAY
74
Tanjung
Pelepas Port
44 43
42
Pasir Gudang Port
31
Kota Kinabalu
Airport
30
25
24a
Sandakan
Airport Sandakan
Port
26 27
24b
29
21
20 22
28
23
Lahat Datu
Airport
SABAH
Tawau
Airport
19
18
17
16
Lahat Datu
Port
Tawau
Port
32
SARAWAK
PLANTATION
(PENINSULAR)
PLANTATION
(East Malaysia)
PROPERTY
DEVELOPMENT
Resource-based
Manufacturing
1.
2.
Detas Estate
3.
4.
5.
6.
Pukin Estate
7.
8.
9.
Permodalan Estate
Laukin Estate
27.
29.
Sakilan Estate
Resort
38. Putrajaya Marriott Hotel & Spa,
Palm Garden Hotel &
Palm Garden Golf Club
75
CORPORATE
CALENDAR
JULY 2011
JULY 2011
SEPTEMBER 2011
IOI Properties Bhd (IOIP) won The Edge
Top Ten Property Developers Awards
2011 for the ninth consecutive year. The
award ranks Malaysias best property
players based on consumers perspectives
of the companies quantitative and
qualitative attributes.
OCTOBER 2011
IOI Group Executive Chairman Tan Sri Dato Lee Shin
Cheng was accorded the prestigious MPOA Recognition
Award 2011 for his outstanding contributions and
leadership in the plantation industry. The award was
presented by Deputy Prime Minister of Malaysia YAB Dato
Seri Muhyiddin Hj. Yassin during the Malaysian Palm Oil
Association Annual Dinner.
76
NOVEMBER 2011
IOI Oleochemical Industries Bhd, Prai invested RM130
million to expand its downstream oleochemical derivatives
production by building a new production facility in its Prai
Industrial Complex. The project was announced during the
ninth Economic Transformation Programme (ETP) update.
DECEMBER 2011
Acidchem International Sdn Bhd, a subsidiary of IOI
Oleochemical Industries Bhd, Prai, won the Chemical
Industries Council of Malaysia (CICM) Responsible
Care Awards in the following categories Employee
Health & Safety (Platinum), Pollution Prevention
(Platinum), Process Safety (Gold), Community
Awareness & Emergency Response (Silver), and
Distribution (Silver). Meanwhile, Pan-Century
Oleochemical Sdn Bhd garnered a Silver Award
(Employee Health & Safety) and a Merit Award
(Pollution Prevention).
JANUARY 2012
IOI Group has once again successfully attained the Roundtable on Sustainable
Palm Oil (RSPO) Supply Chain Certification for seven of its operating units that
adhered to regulations and requirements of RSPOs Supply Chain Certification
System (SCCS).
77
JANUARY 2012
FEBRUARY 2012
FEBRUARY 2012
FEBRUARY 2012
APRIL 2012
Palm Garden Golf Club (PGCC), touted as the first premier public
golf course, unveiled a new scenic 18-hole course spanning across
125 acres. It offers all-round enjoyment for the whole family with
a sumptuous coffee house, 25-metre infinity pool, Jacuzzi,
childrens pool, poolside terrace, gym, sauna facilities, tennis
court, ballroom with 80-pax capacity, and VIP suite.
78
APRIL 2012
IOI Loders Croklaan
Americas unveiled its
plant expansion project
named APEX (Advanced
Palm Expansion) in
Channahon which is
reputed to be Western
Hemispheres largest palm
oil processing plant.
MAY 2012
As part of IOI Groups rebranding exercise to
strengthen its distinct identity and brand presence,
IOI Group successfully installed new signages at all
plantation estates. The new enhanced logo is now
portrayed prominently in IOIs estates throughout
Peninsular Malaysia and Sabah.
MAY 2012
IOIPs fifth property development in
Singapore, South Beach garnered two
Building and Construction Authority
(BCA) Green Mark Platinum Awards
for its Residential and Commercial
components respectively.
79
MAY 2012
IOI Oleochemicals Penang and
Johor manufacturing sites received
the RSPOs SCCS for IOI
Oleochemicals commitment in
producing sustainable oleochemicals
that span the entire supply chain.
MAY 2012
IOIP won the BCI Asia Top 10 Developers Award 2012 for the
second consecutive year since it was launched in 2011 to
recognise the work of top developers in Asia namely Hong Kong,
Indonesia, Malaysia, the Philippines, Singapore, Thailand and
Vietnam.
MAY 2012
Bukit Leelau Mill was awarded the Best Effluent Management
Award 2011/2012 by the Department of Environment Pahang during
the Majlis Penganugerahan dan Penyerahan Lesen KKS Negeri
Pahang 2012.
80
JUNE 2012
IOI Group was recognised as one of Malaysias top 10 companies in a
regional poll among investors conducted by Alpha Southeast Asia, an
institutional investment magazine focused on Southeast Asias banking
and capital markets. In the second Annual Southeast Asia Institutional
Investor Corporate Awards, IOI Group was cited for providing the Best
Senior Management Investor Relations Support and practising Strongest
Adherence to Corporate Governance.
JUNE 2012
Puchong Financial Corporate Centre (PFCC) was accorded the MSC Malaysia
Status and recognised as a MSC Malaysia Cybercentre following a collaboration
agreement signed between Flora Development Sdn Bhd, a subsidiary of IOIP, and
Multimedia Development Corporation Sdn Bhd (MDeC).
JUNE 2012
All 27 estates and four palm oil mills of IOI
Group in Peninsular Malaysia achieved both
the RSPO and ISCC certifications when
Pukin Palm Oil Mill received its RSPO and
ISCC certifications in June 2012.
81
A. MEMBERS
Datuk Hj Mohd Khalil b Dato Hj Mohd Noor
Chairman
Senior Independent Non-Executive Director
B. C O M P O S I T I O N A N D T E R M S O F
REFERENCE
1. Membership
The Committee shall be appointed by the Board of Directors
from amongst the Directors and shall consist of no fewer than
three (3) members. All the Committee members must be NonExecutive Directors with a majority of them being Independent
Non-Executive Directors.
All the Committee members should be financially literate
with at least one (1) Director who is a member of the
Malaysian Institute of Accountants or alternatively a person
who must have at least three (3) years working experience
and have passed the examinations specified in Part I of the
First Schedule of the Accountants Act, 1967 or is a member
of one of the associations specified in Part II of the said
Schedule or fulfils such other requirements as prescribed or
approved by Bursa Malaysia Securities Berhad.
82
i.
ii.
3. Authority
The Committee is authorised by the Board to:
i.
ii.
ii.
83
x.
C. ACTIVITIES
During the year, the Committee discharged its duties and
responsibilities in accordance with its terms of reference.
The main activities undertaken by the Committee were as
follows:
i.
ii.
Conduct of Meetings
Number of Meetings
The Committee shall meet at least five (5) times a year. The
Chairman shall also convene a meeting of the Committee if
requested to do so by any member, the management or the
internal or external auditors to consider any matter within
the scope and responsibilities of the Committee.
Attendance of Meetings
The head of finance and head of internal audit division and
representatives of the external auditors shall normally be
invited to attend meetings of the Committee. However, the
Committee shall meet with the external auditors without
executive board members present at least twice a year. The
Committee may also invite other Directors and employees to
attend any of its meeting to assist in resolving and clarifying
matters raised.
Quorum
A quorum shall consist of a majority of Independent NonExecutive Directors and shall not be less than two (2).
84
x.
Number of
Meetings
Attended
Datuk Karownakaran @
Karunakaran a/l Ramasamy
Members
Number of
Meetings
Attended
Datuk Karownakaran @
Karunakaran a/l Ramasamy
Members
85
STATEMENT ON
CORPORATE GOVERNANCE
Introduction
The Board recognises the paramount importance of good corporate
governance to the success of the Group. It strives to ensure that a
high standard of corporate governance is being practised
throughout the Group in ensuring continuous and sustainable
growth for the interests of all its stakeholders.
The Groups corporate governance practices are guided by its
Vision IOI whereby responsible and balanced commercial
success is to be achieved by addressing the interests of all
stakeholders. A set of core values guides our employees at all
levels in the conduct and management of the business and
affairs of the Group. We believe that good corporate governance
results in quantifiable and sustainable long term success and
value for shareholders as well as all other stakeholders, as
reflected by our performance and track record over the years.
During the financial year, the Group has received numerous
accolades and awards in recognition of its efforts.
In relation to the principles and recommendations of the Malaysian
Code on Corporate Governance (the Code), the Board is pleased
to provide the following statement, which outlines how the Group
has applied the principles laid down in the Code. Except where
specifically identified, the Board has generally complied with the
best practices set out in the Code.
86
Board Meetings
The Board has at least five (5) regularly scheduled meetings
annually, with additional meetings for particular matters convened
as and when necessary. Board meetings bring an independent
judgement to bear on issues of strategies, risks, performance,
resources and standards of conduct.
Eight (8) Board meetings were held during the financial year
ended 30 June 2012. The attendance record of each Director since
the last financial year was as follows:
Total
Number of
Meetings
Number of
Meetings
Attended
Executive Directors
Tan Sri Dato Lee Shin Cheng
Dato Lee Yeow Chor
Datuk Karownakaran @
Karunakaran a/l Ramasamy
Non-Executive Directors
Supply of Information
All Board members are supplied with information in a timely
manner. Board reports are circulated prior to the Board meetings
to enable the Directors to obtain further information and
explanation, where necessary, before the meetings.
The Board reports include, amongst others, periodical financial
and corporate information, significant operational, financial and
corporate issues, performance of the various business units and
management proposals that require Boards approval.
Detailed periodic briefings on industry outlook, company
performance and forward previews (forecasts) are also conducted
for the Directors to ensure that the Board is well informed of the
latest market and industry trends and developments.
The Board has direct access to the advice and services of two (2)
Company Secretaries who are responsible to the Board for ensuring
that all Board procedures are followed and that applicable laws
and regulations are complied with. These include obligations on
Directors relating to disclosure of interests and disclosure of any
conflicts of interest in transactions with the Group. The Company
Secretaries are also charged with highlighting all issues which they
feel ought to be brought to the Boards attention. Besides
Company Secretaries, independent Directors also have unfettered
access to the financial and legal officers as well as the internal
auditors of the Company.
In exercising their duties, Board committees are entitled to obtain
professional opinions or advice from external consultants such as
investment bankers, valuers, human resource consultants, etc.
87
88
31 October 2011
5 April 2012
26 April 2012
16 April 2012
22 May 2012
18 June 2012
30 July 2011
31 October 2011
15 March 2012
26 April 2012
26 June 2012
Datuk Karownakaran @
Financial Institutions Directors Education Program:
Karunakaran a/l Ramasamy
Roles of the Board & Committees in Financial
Reporting and Strategy
Scrutinising Financial Statements Frauds and Detection
of Red Flags for Directors and Officers of PLCs and
Government Regulatory Agencies
The New Corporate Governance Blueprint and
Regulatory Updates Seminar 2011
Chemical Company of Malaysia Berhad (CCM)s Group
Directors & Senior Management Training 2011 Competition Act and What it Means to CCM
Integrated Logistics Berhads Directors & Management
Training on Corporate Governance Practice, Overview
of Malaysian Financial Reporting Standards and Listing
Requirements of Bursa Malaysia Securities Berhad
Economic Council Working Group Roundtable
Consultations Discussion on Strategy Package for
Budget 2013 - Stimulating Private Sector Growth
31 October 2011
14 December 2011
19 December 2011
25 February 2012
20 June 2012
28 March 2012
30 March 2012
89
1 July 2011
15 August 2011 to 16 August 2011
12 September 2011
14 November 2011 to 18 November 2011
1 November 2011
21 December 2011
6 March 2012 to 7 March 2012
21 March 2012
29 November 2011
10 December 2011 to 11 December 2011
28 March 2012 to 29 March 2012
2 April 2012 to 3 April 2012
4 April 2012 to 6 April 2012
3 May 2012
16 May 2012 to 17 May 2012
18 May 2012
90
Range of Remuneration
RM1 to RM50,000
RM50,001 to RM100,000
RM100,001 to RM150,000
RM150,001 to RM200,000
RM200,001 to RM250,000
RM250,001 to RM400,000
RM400,001 to RM450,000
RM450,001 to RM900,000
RM900,001 to RM950,000
RM950,001 to RM2,000,000
RM2,000,001 to RM2,050,000
RM2,050,001 to RM47,700,000
RM47,700,001 to RM47,750,000
Directors Remuneration
The Companys remuneration scheme is linked to performance,
service seniority, experience and scope of responsibilities.
The Remuneration Committee of the Board comprises of the
following Directors:
1.
2.
3.
Number of Directors
NonExecutive
executive
Fees
RM000
Salaries
RM000
Bonus &
Incentives
RM000
Benefitsin-kind
RM000
EPF
RM000
Others
RM000
Total
RM000
Executive Directors
444
8,084
36,734
233
5,389
196
51,080
Non-executive Directors
360
31
142
533
91
SHAREHOLDERS
Dialogue Between the Company and Investors
The Company strives to maintain an open and transparent channel
of communication with its stakeholders, institutional investors and
the investing public at large with the objective of providing as
clear and complete picture of the Groups performance and
position as possible. The Company believes that a constructive
and effective investor relationship is an essential factor in
enhancing value for its shareholders. However, whilst the Company
endeavours to provide as much information as possible to its
shareholders and stakeholders, it is mindful of the legal and
regulatory framework governing the release of material and pricesensitive information.
The Company uses the following key investor relation activities in
its interaction with investors:
The Group has also established several websites with the main
one being www.ioigroup.com for shareholders and the public to
access corporate information, financial statements, news and
events related to the Group on a timely basis. Material facts and
presentation materials given out at above functions are made
available on the Groups website to provide equal opportunity of
access for other shareholders and the investing public and to
allow them to write in to the Group if they have questions.
During the financial year, the Group had approximately 48
meetings with analysts and investors. The Group enjoys a relatively
high level of coverage and exposure to the investment community.
Besides the above, management believes that the Companys
Annual Report is a vital and convenient source of essential
information for existing and potential investors and other
stakeholders. Accordingly, the Company strives to provide a high
level of reporting and transparency that goes beyond mandatory
requirements in order to provide value for users.
92
Financial Reporting
In presenting the annual financial statements and quarterly
financial results announcements to shareholders, the Board aims
to present a balanced and comprehensible assessment of the
Groups financial position and prospects and ensures that the
financial results are released to Bursa Securities within the
stipulated time frame and that the financial statements comply
with regulatory reporting requirements. In this regard, the Board
is assisted by the Audit and Risk Management Committee.
Internal Control
Information on the Groups internal control is presented in the
Statement on Internal Control.
93
STATEMENT ON
INTERNAL CONTROL
INTRODUCTION
ACKNOWLEDGEMENT OF
RESPONSIBILITIES
The Board of Directors affirms that it is ultimately responsible for
the Groups system of internal control, including the assurance of
its adequacy and integrity, and its alignment with business
objectives. However, it should be noted that control systems are
designed to manage rather than to totally eliminate associated
risks; and as such, can only provide reasonable but not absolute
assurance against material loss or failure.
i)
BUSINESS
OBJECTIVES
HIERARCHY
ORGANISATION
HIERARCHY
BOARD
(Exec Mgmt)
FRAME OF
REFERENCE
EXTERNAL
RISKS
VISION
Operation/Functions
(Executives & Staff )
94
Strategic
Objectives & Goals
ED
IGN
AL
Operational
Goals & Target
INTERNAL
RISKS
ii)
CONTROL ENVIRONMENT
CONTROL ACTIVITIES
95
MONITORING
For the period under review, each business unit, cutting across all
geographic areas, via its respective Risk Management Committees
and workgroups comprising personnel at all levels carried out the
following areas of work:
96
RISK
MANAGEMENT
The Groups activities expose it to a variety of risks, including
operating and financial risks. The Groups overall risk management
objective is to ensure that the Group creates value for its
shareholders whilst minimising potential adverse effects on its
performance and positions. The Group operates within an
established risk management framework and clearly defined
policies and guidelines that are approved by the Board.
Under the Groups Enterprise Risk Management framework, the
Group has relevant policies and guidelines on risk reporting and
disclosure which cover the following principal risks:
FINANCIAL RISK
OPERATING RISK
97
Name of Directors
Direct
Indirect
62,530,600
0.98
2,763,474,880 1
43.18
8,240,400
0.13
2,752,502,880
43.01
953,800
0.01
2,752,502,880
43.01
329,333
0.01
The Company
No. of ordinary shares of RM0.10 each
Tan Sri Dato Lee Shin Cheng
Dato Lee Yeow Chor
Lee Yeow Seng
Lee Cheng Leang
Datuk Hj Mohd Khalil b Dato Hj Mohd Noor
Datuk Karownakaran @ Karunakaran a/l Ramasamy
10,000 3
100
27.03
1,111,111
10.00
1,000,000
10.00
Subsidiaries
Kapar Realty And Development Sdn Berhad (in liquidation)
No. of ordinary shares of RM1,000.00 each
Tan Sri Dato Lee Shin Cheng
Property Skyline Sdn Bhd
No. of ordinary shares of RM1.00 each
Tan Sri Dato Lee Shin Cheng
Property Village Berhad
No. of ordinary shares of RM1.00 each
Tan Sri Dato Lee Shin Cheng
By virtue of their interests in the ordinary shares of the Company, Tan Sri Dato Lee Shin Cheng, Dato Lee Yeow Chor and Mr Lee Yeow
Seng are also deemed to be interested in the ordinary shares of all the subsidiaries of the Company to the extent that the Company has
an interest.
Notes:
1
Deemed interested by virtue of his interest in Progressive Holdings Sdn Bhd (PH), which in turn holds 100% equity interest in Vertical Capacity Sdn Bhd (VC) and shares held by
his children, Dato Lee Yeow Chor, Lee Yeow Seng, Lee Yoke Ling, Lee Yoke Har, Lee Yoke Hean and Lee Yoke Hui
Deemed interested by virtue of his interest in PH, which in turn holds 100% equity interest in VC
Interest in the Company held by his spouse, Ooi Siew Cheng pursuant to Section 134(12) of the Companies Act, 1965
* Negligible
98
OTHER
INFORMATION
COMPOSITION OF SHAREHOLDERS
AS AT 30 AUGUST 2012
MATERIAL CONTRACTS
There were no material contracts entered into by the Company and its subsidiaries which involved Directors and major shareholders
interests either still subsisting at the end of the financial year ended 30 June 2012 or entered into since the end of the previous
financial year.
Transacting Parties
Value of
Transactions
RM000
5,718
15,288
99
Notes:
(1) Details of the transacting parties
Name of Company
Principal Activities
Not Applicable
NFSB
92.32
PMSB
99.80
PPSB
100.00
(2)
(3)
(4)
Tan Sri Dato Lee Shin Cheng is the Executive Chairman/Director and a
deemed Major Shareholder of IOI and MESB.
(5)
Puan Sri Datin Hoong May Kuan is a deemed Major Shareholder of IOI
and MESB and person connected to Tan Sri Dato Lee Shin Cheng, Dato
Lee Yeow Chor and Lee Yeow Seng.
(6)
(7)
Lee Yeow Seng is an Executive Director of IOI and a Director of MESB and
a deemed Major Shareholder of IOI and MESB and person connected to
Tan Sri Dato Lee Shin Cheng as he is the son of both Tan Sri Dato Lee
Shin Cheng and Puan Sri Datin Hoong May Kuan and the brother of
Dato Lee Yeow Chor.
(8)
(9)
(10) Tan Sri Dato Lee Shin Cheng is the Executive Chairman and a deemed
Major Shareholder of IOI. He is also a Director of PPSB.
(11) Puan Sri Datin Hoong May Kuan is a deemed Major Shareholder of IOI
and person connected to Tan Sri Dato Lee Shin Cheng, Dato Lee Yeow
Chor and Lee Yeow Seng.
(12) Dato Lee Yeow Chor is an Executive Director and a deemed Major
Shareholder of IOI and person connected to Tan Sri Dato Lee Shin
Cheng as he is the son of both Tan Sri Dato Lee Shin Cheng and Puan
Sri Datin Hoong May Kuan. He has common directorships in both NFSB
and PPSB.
(13) Lee Yeow Seng is an Executive Director and a deemed Major
Shareholder of IOI and person connected to Tan Sri Dato Lee Shin
Cheng as he is the son of both Tan Sri Dato Lee Shin Cheng and Puan
Sri Datin Hoong May Kuan and the brother of Dato Lee Yeow Chor. He
is also a Director of NFSB.
100
PENALTIES
There were no sanctions and/or penalties imposed on the
Company and its subsidiaries, Directors or management by the
relevant regulatory bodies during the financial year ended 30 June
2012, which have material impact on the operations or financial
position of the Group.
FINANCIAL
Reports
DIRECTORS
REPORT
The Directors of IOI Corporation Berhad have pleasure in submitting their report and the audited financial statements of the Group and
of the Company for the financial year ended 30 June 2012.
Principal Activities
The principal activities of the Company consist of investment holding and the cultivation of oil palm and processing of palm oil.
The principal activities of the subsidiaries, associates and jointly controlled entities are set out in Note 46 to the financial statements.
There have been no significant changes in the nature of the activities of the Group and of the Company during the financial year.
Financial Results
The audited results of the Group and of the Company for the financial year ended 30 June 2012 are as follows:
Group
RM000
Company
RM000
2,378,961
(550,432)
745,504
(54,839)
1,828,529
690,665
1,789,370
39,159
690,665
1,828,529
690,665
Attributable to:
Owners of the parent
Non-controlling interests
Dividends
Dividends declared and paid since the end of the previous financial year were as follows:
Company
RM000
In respect of the financial year ended 30 June 2011:
Second interim single tier dividend of 9.0 sen per ordinary share, paid on 7 October 2011
575,571
447,883
1,023,454
The Directors have declared a second interim single tier dividend of 8.5 sen per ordinary share, amounting to RM543,856,367 in respect
of the financial year ended 30 June 2012. The dividend is payable on 4 October 2012 to shareholders whose names appear in the Record
of Depositors of the Company at the close of business on 26 September 2012.
No final dividend has been recommended for the financial year ended 30 June 2012.
102
7,486,900 new ordinary shares of RM0.10 each for cash at RM2.44 per ordinary share arising from the exercise of options granted
under the Companys Executive Share Option Scheme; and
ii.
3,731,900 new ordinary shares of RM0.10 each for cash at RM4.19 per ordinary share arising from the exercise of options granted
under the Companys Executive Share Option Scheme.
The newly issued ordinary shares rank pari passu in all respects with the existing issued ordinary shares of the Company.
There was no issue of debentures by the Company during the financial year.
Treasury Shares
The shareholders of the Company, by a special resolution passed at an extraordinary general meeting held on 18 November 1999,
approved the Companys plan to repurchase up to 10% of the issued and paid-up share capital of the Company (Share Buy Back). The
authority granted by the shareholders was subsequently renewed during subsequent Annual General Meetings of the Company,
including the last meeting held on 24 October 2011.
The Directors of the Company are committed to enhancing the value of the Company to its shareholders and believe that the Share Buy
Back can be applied in the best interests of the Company and its shareholders.
During the financial year, the Company repurchased 28,941,100 ordinary shares of RM0.10 each of its issued shares from the open
market. The average price paid for the ordinary shares repurchased was RM4.82 per ordinary share. The repurchase transactions were
financed by internally generated funds. The ordinary shares repurchased were held as treasury shares and treated in accordance with
the requirement of Section 67A of the Companies Act, 1965.
The Company has the right to cancel, resell these shares and/or distribute these shares as dividends at a later date. As treasury shares,
the rights attached to voting, dividends and participation in other distribution is suspended. None of the treasury shares repurchased
had been sold as at 30 June 2012.
At the end of the financial year, the number of ordinary shares in issue after deducting treasury shares is 6,398,310,195 ordinary shares
of RM0.10 each.
103
DIRECTORS
REPORT
USD600 Million Zero Coupon Guaranteed Exchangeable Bonds due 2013
(3rd Exchangeable Bonds)
On 15 January 2008, the Companys wholly-owned subsidiary, IOI Resources (L) Berhad (IOI Resources), a company incorporated in the
Federal Territory of Labuan under the Offshore Companies Act, 1990, issued USD600 million Zero Coupon Guaranteed Exchangeable
Bonds due 2013 (3rd Exchangeable Bonds). The 3rd Exchangeable Bonds were issued at 100% of the principal amount and listed on the
Singapore Exchange Securities Trading Limited and the Labuan International Financial Exchange and will mature on 15 January 2013.
The 3rd Exchangeable Bonds are unconditionally and irrevocably guaranteed by the Company.
The salient features of the 3rd Exchangeable Bonds are disclosed in Note 34.3 to the financial statements.
None of the 3rd Exchangeable Bonds has been redeemed, repurchased or exchanged during the financial year.
ii.
is in the full time employment and payroll of a company within the Group (other than a company which is dormant) for at
least 3 years; and
iii. falls within such other categories and criteria that the Option Committee may from time to time at its absolute discretion
determine.
(The eligible employees above are hereinafter referred to as Eligible Executive(s))
No executive of the Group shall participate at any time in more than one ESOS implemented by any company within the Group.
The executive to whom the option has been granted has also no right to participate, by virtue of the option, in any ordinary share
issue of any other company.
104
ii.
The aggregate maximum number of new IOI Shares that may be offered and allotted to any of the Eligible Executives of the
Group shall not exceed the maximum allowable allotment set out in the Bye-Laws and subject to the following:
the number of new IOI Shares allotted, in aggregate, to the Executive Directors and senior management of the Group shall
not exceed 50% of the total new IOI Shares that are available to be issued under the ESOS; and
the number of new IOI Shares allotted to any individual Eligible Executive, who either singularly or collectively through
persons connected with him/her (as defined under the Listing Requirements of Bursa Malaysia Securities Berhad) holds
20% or more in the issued and paid-up capital of the Company, shall not exceed 10% of the total new IOI Shares that are
available to be issued under the ESOS.
The number of new IOI Shares that may be offered and allotted to any of the Eligible Executive shall, subject to the maximum
allowable allotment, be at the sole and absolute discretion of the Option Committee after taking into consideration the length
of service and the performance of the Eligible Executive in the Group as provided in the Bye-Laws or such other matters, which
the Option Committee may in its sole and absolute discretion deem fit.
the weighted average market price of the IOI Shares for the 5 market days immediately preceding the Offer Date; or
ii.
The ESOS came into force on 23 November 2005 and shall be for a duration of 10 years.
ii.
The ESOS may be terminated by the Company prior to the expiry of its duration or tenure provided that the following
conditions have been satisfied:
the consent from the Companys shareholders by ordinary resolution at a general meeting have been obtained; and
the written consent from all Grantees who have yet to exercise their Option, either in part or in whole, has been obtained.
Options are exercisable only upon the expiry of the first anniversary of the Offer Date.
ii.
Options which are subject of the same Offer shall be exercisable only in 4 tranches over 4 years with a maximum of 25% of
such options exercisable in any year.
iii. Where the maximum of 25% within a particular year has not been exercised by the Grantee, the percentage unexercised shall
be carried forward to subsequent years and shall not be subject to the maximum percentage for the following year provided
that such unexercised options shall not be carried forward beyond the option period.
iv. The Grantee shall be entitled to exercise all remaining options after the 9th anniversary of the ESOS.
105
DIRECTORS
REPORT
Executive Share Option Scheme (ESOS) (Continued)
(g) Rights attaching to the IOI Shares
The new IOI Shares to be allotted upon any exercise of the option shall, upon allotment and issue, rank pari passu in all respects
with the existing ordinary shares of the Company save and except that the new IOI Shares will not be entitled to participate in any
dividends, rights, allotments and/or other distributions that may be declared, where the record date precedes the date of allotment
of the said shares. The option shall not carry any right to vote at a general meeting of the Company.
The movements of the options over the unissued ordinary shares of RM0.10 each in the Company granted under the ESOS during the
financial year were as follows:
No. of options over ordinary shares
Option price
RM
Date of offer
2.44
4.19
5.00
12 January 2006
2 April 2007
6 July 2010
Total
As at
1 July 2011
Exercised
Lapsed
As at
30 June 2012
35,438,200
26,161,600
17,965,900
(7,486,900)
(3,731,900)
(1,796,700)
(2,175,200)
(1,570,000)
26,154,600
20,254,500
16,395,900
79,565,700
(11,218,800)
(5,541,900)
62,805,000
Directors
The Directors who have held office since the date of the last report are as follows:
Tan Sri Dato Lee Shin Cheng
Dato Lee Yeow Chor
Lee Yeow Seng
Lee Cheng Leang
Datuk Hj Mohd Khalil b Dato Hj Mohd Noor
Quah Poh Keat
Lim Tuang Ooi
Datuk Karownakaran @ Karunakaran a/l Ramasamy
Cheah Tek Kuang (Appointed on 22 August 2012)
In accordance with Article 101 of the Companys Articles of Association, Dato Lee Yeow Chor and Mr Lee Cheng Leang retire by rotation
at the forthcoming Annual General Meeting and being eligible, offer themselves for re-election.
In accordance with Article 102 of the Companys Articles of Association, Mr Cheah Tek Kuang retires at the forthcoming Annual General
Meeting and being eligible, offers himself for re-election.
Tan Sri Dato Lee Shin Cheng and Datuk Hj Mohd Khalil b Dato Hj Mohd Noor who have attained the age of seventy, retire in accordance
with Section 129(2) of the Companies Act, 1965 in Malaysia at the forthcoming Annual General Meeting. The Directors recommend that
they be re-appointed in accordance with Section 129(6) of the said Act and to hold office until the conclusion of the next Annual General
Meeting of the Company.
106
Directors Interests
The Directors holding office at the end of the financial year and their beneficial interests in the ordinary shares and options over ordinary
shares of the Company and of its related corporations during the financial year ended 30 June 2012 as recorded in the Register of
Directors Shareholdings kept by the Company under Section 134 of the Companies Act, 1965 in Malaysia were as follows:
As at
1 July 2011
Acquired
Disposed
As at
30 June 2012
58,684,900
3,845,700
62,530,600
Direct Interests
The Company
No. of ordinary shares of RM0.10 each
Tan Sri Dato Lee Shin Cheng
Dato Lee Yeow Chor
8,090,400
150,000
8,240,400
800,000
153,800
953,800
329,333
329,333
100
100
2,673,303,280
77,449,300
2,750,752,580
2,663,225,180
76,555,400
2,739,780,580
2,663,225,180
76,555,400
2,739,780,580
1,111,111
1,111,111
1,000,000
1,000,000
Subsidiary
Kapar Realty And Development Sdn Berhad (in liquidation)
No. of ordinary shares of RM1,000.00 each
Tan Sri Dato Lee Shin Cheng
Indirect Interests
The Company
No. of ordinary shares of RM0.10 each
Subsidiaries
Property Skyline Sdn Bhd
No. of ordinary shares of RM1.00 each
Tan Sri Dato Lee Shin Cheng
Property Village Berhad
No. of ordinary shares of RM1.00 each
Tan Sri Dato Lee Shin Cheng
By virtue of their interests in the ordinary shares of the Company, Tan Sri Dato Lee Shin Cheng, Dato Lee Yeow Chor and Mr Lee Yeow
Seng are also deemed to be interested in the ordinary shares of all the subsidiaries of the Company to the extent that the Company
has an interest.
The other Directors, Datuk Karownakaran @ Karunakaran a/l Ramasamy, Mr Quah Poh Keat and Mr Lim Tuang Ooi holding office at the
end of the financial year did not have any interest in ordinary shares or options over ordinary shares in the Company or ordinary shares,
options over ordinary shares or debentures of its related corporations during the financial year.
107
DIRECTORS
REPORT
Directors Interests (Continued)
The movements of the options over the unissued ordinary shares of RM0.10 each in the Company granted under the ESOS to the
Directors in office at the end of the financial year were as follows:
No. of options over ordinary shares
Option
price
As at
1 July 2011
Exercised
As at
30 June 2012
RM2.44
RM2.44
RM4.19
RM5.00
RM2.44
7,691,400
153,800
576,600
2,650,000
820,400
(3,845,700)
(153,800)
3,845,700
576,600
2,650,000
820,400
RM2.44
RM4.19
RM5.00
3,050,200
1,602,700
2,813,000
(671,700)
(72,200)
2,378,500
1,530,500
2,813,000
Direct Interests
Tan Sri Dato Lee Shin Cheng
Lee Yeow Seng
Lee Yeow Seng
Lee Yeow Seng
Lee Cheng Leang
Indirect Interests
Tan Sri Dato Lee Shin Cheng
Tan Sri Dato Lee Shin Cheng
Tan Sri Dato Lee Shin Cheng
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 the benefits as disclosed in Note 39 to the financial statements) by reason of a contract made by the Company or a related
corporation with the Director, or with a firm of which the Director is a member, or with a company in which the Director has a substantial
financial interest except for any benefits which may be deemed to have arisen by virtue of the significant related party transactions as
disclosed in Note 39 to the financial statements.
During and at the end of the financial year, no arrangement subsisted to which the Company is a party, with the object or objects of
enabling Directors of the Company to acquire benefits by means of the acquisition of shares in or debentures of the Company or any
other body corporate, except for the share options granted to the Directors of the Company pursuant to the Companys ESOS.
to ascertain that proper action had been taken in relation to the writing off of bad debts and the making of provision for doubtful
debts, and satisfied themselves that all known bad debts had been written off and that adequate provision had been made for
doubtful debts; and
ii.
to ensure that any current assets, other than debts, which were unlikely to realise their book values in the ordinary course of
business of the Group and of the Company have been written down to an amount which they might be expected so to realise.
108
which would render the amounts written off for bad debts or the amount of the provision for doubtful debts in the financial
statements of the Group and of the Company inadequate to any substantial extent; or
ii.
which would render the values attributed to current assets in the financial statements of the Group and of the Company misleading;
or
iii. which have arisen which would render adherence to the existing method of valuation of assets or liabilities of the Group and of
the Company misleading or inappropriate.
As at the date of this report, there does not exist:
i.
any charge on the assets of the Group or of the Company that has arisen since the end of the financial year which secures the
liabilities of any other person; or
ii.
any contingent liability in respect of the Group or of the Company that has arisen since the end of the financial year.
No contingent or other liability has become enforceable, or is likely to become enforceable within the period of twelve (12) 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 or of the
Company to meet their obligations when they fall due.
the results of the operations of the Group and of the Company for the financial year were not substantially affected by any item,
transaction or event of a material and unusual nature other than gain arising from dilution of interest in an associate of
RM124,510,000, pursuant to its restructuring and listing exercise, as disclosed in Note 7(a) to the financial statements; and
ii.
no item, transaction or event of a material and unusual nature has arisen in the interval between the end of the financial year and
the date of this report which is likely to affect substantially the results of the operations of the Group and of the Company for the
financial year in which this report is made.
109
DIRECTORS
REPORT
Significant Events During the Financial Year
(a) Acquisition of Oil Palm Plantation by Sri Mayvin Plantation Sdn Bhd
On 28 July 2011, Sri Mayvin Plantation Sdn Bhd (Sri Mayvin), an indirect wholly-owned subsidiary of the Company entered into a
conditional sale and purchase agreement (SPA) to acquire 11,977.91 hectares of oil palm plantation land located in the Districts
of Labuk-Sugut, Sandakan, Sabah (Plantation Land) from Pertama Land & Development Sdn Bhd (Pertama Land), a wholly-owned
subsidiary of Duta Plantations Sdn Bhd, which in turn, is a wholly-owned subsidiary of Dutaland Berhad (Dutaland) for a total cash
consideration of RM830.0 million.
On 9 November 2011, both Pertama Land and Sri Mayvin had entered into a Deed of Rescission to mutually rescind the SPA with
immediate effect whereupon the parties were released from all obligations and liabilities in connection with the SPA and neither
party shall have further claim against the other in respect thereto. Following this, the deposit of RM83.0 million earlier paid by Sri
Mayvin pursuant to the terms of the SPA had been refunded together with all interest accrued thereon.
(b) Land Tender by Multi Wealth (Singapore) Pte Ltd (Multi Wealth)
On 16 January 2012, Multi Wealth (Singapore) Pte Ltd (Multi Wealth), an indirect 99.8% owned subsidiary of the Company had
been notified by the Housing & Development Board of Singapore of its acceptance of Multi Wealths tender bid for a parcel of land
at Jalan Lempeng in the Republic of Singapore measuring approximately 24,417.6 square metres (equivalent to approximately 6.03
acres) (Subject Land) for a total tender sum of SGD408.0 million (equivalent to approximately RM995.5 million). The Subject Land
with a lease period of 99 years is intended for residential development comprising condominium units.
On 2 February 2012, Multi Wealth incorporated a 87.8% owned subsidiary known as Clementi Development Pte Ltd in the Republic
of Singapore to undertake the development of the Subject Land and to accept transfer of the ownership of the Subject Land.
(c) Establishment of USD1,500,000,000 Euro Medium Term Note Programme
On 15 May 2012, the Companys wholly-owned subsidiary, IOI Investment (L) Berhad (IOI Investment), a company incorporated in
the Federal Territory of Labuan under the Offshore Companies Act, 1990, established a Euro Medium Term Note Programme (EMTN
Programme) with an initial programme size of USD1,500,000,000 (or its equivalent in other currencies).
The EMTN Programme provides the Group a further avenue to tap into the liquidity of the international debt capital markets with the
flexibility to raise funds via the issuance of the notes from time to time with a tenor and in a currency to best match its requirements.
Subsequent to the establishment of the EMTN Programme, IOI Investment had on 27 June 2012 issued a USD600 million 4.375%
Guaranteed Notes due 2022 (Notes). The Notes are fully and unconditionally guaranteed by the Company and are listed on the
Singapore Exchange Securities Trading Limited.
110
Nominating Committee
The Directors who served as members of the Nominating Committee since the date of the last report are as follows:
Datuk Hj Mohd Khalil b Dato Hj Mohd Noor (Chairman)
Quah Poh Keat
Cheah Tek Kuang (Appointed on 22 August 2012)
Remuneration Committee
The Directors who served as members of the Remuneration Committee since the date of the last report are as follows:
Tan Sri Dato Lee Shin Cheng (Chairman)
Datuk Hj Mohd Khalil b Dato Hj Mohd Noor
Quah Poh Keat
Auditors
The auditors, BDO, have expressed their willingness to continue in office.
Signed on behalf of the Board in accordance with a resolution of the Directors:
111
INCOME
STATEMENTS
For The Financial Year Ended 30 June 2012
Group
Note
Revenue
Cost of sales
Gross profit
Other operating income
Marketing and selling expenses
Administration expenses
Other operating expenses
7(a)
7(b)
Operating profit
Share of results of associates
Share of results of jointly controlled entities
2012
RM000
Company
2011
RM000
2012
RM000
2011
RM000
15,640,272
(12,366,408)
16,154,251
(12,743,689)
1,348,311
(126,267)
2,101,232
(123,693)
3,273,864
1,266,154
(276,970)
(556,713)
(1,339,821)
3,410,562
1,628,282
(237,367)
(447,792)
(1,538,040)
1,222,044
87,509
(339)
(81,705)
(365,747)
1,977,539
484,863
(330)
(96,618)
(147,393)
2,366,514
121,033
32,735
2,815,645
119,739
50,997
861,762
2,218,061
9
10
2,520,282
49,768
(191,089)
2,986,381
47,146
(169,915)
861,762
95,045
(211,303)
2,218,061
96,036
(212,322)
11
2,378,961
(550,432)
2,863,612
(573,099)
745,504
(54,839)
2,101,775
(59,626)
1,828,529
2,290,513
690,665
2,042,149
1,789,370
39,159
2,222,899
67,614
690,665
2,042,149
1,828,529
2,290,513
690,665
2,042,149
27.96
27.88
34.75
33.42
7.0
8.5
8.0
9.0
7.0
8.5
8.0
9.0
15.5
17.0
15.5
17.0
Attributable to:
Owners of the parent
Non-controlling interests
12
Basic
Diluted
13
The notes on pages 123 to 268 form an integral part of the financial statements.
112
STATEMENTS OF
COMPREHENSIVE INCOME
For The Financial Year Ended 30 June 2012
Group
Company
2012
RM000
2011
RM000
2012
RM000
2011
RM000
1,828,529
2,290,513
690,665
2,042,149
(36,382)
220,493
(217)
(36,599)
220,493
1,791,930
2,511,006
690,665
2,042,149
1,752,298
2,441,337
690,665
2,042,149
39,632
69,669
1,791,930
2,511,006
690,665
2,042,149
The notes on pages 123 to 268 form an integral part of the financial statements.
113
STATEMENTS OF
FINANCIAL POSITION
As At 30 June 2012
Group
Note
Company
2012
RM000
2011
RM000
2012
RM000
2011
RM000
5,713,689
29,580
1,858,899
1,326,712
511,994
817,140
3,483,107
67,051
71,076
5,677,476
30,007
834,513
1,062,529
511,994
668,074
3,099,132
18,619
49,670
441,030
7,956,514
20,350
14,597
436,532
6,384,599
22,850
3,695
13,879,248
11,952,014
8,432,491
6,847,676
362,374
2,511,439
1,686,572
308
171,925
17,053
75,202
1,775,235
2,023,978
561,534
235,910
2,651,655
1,722,003
397
208,372
33,815
65,427
1,725,237
592,864
467,425
15,541
28,584
2,165,482
83
8,734
6,477
1,042,035
211,058
4,201
19,373
24,401
3,586,354
397
2,640
19,958
7,087
1,403,759
209,973
16,155
9,185,620
7,703,105
3,482,195
5,290,097
23,064,868
19,655,119
11,914,686
12,137,773
ASSETS
Non-current assets
Property, plant and equipment
Prepaid lease payments
Land held for property development
Investment properties
Goodwill on consolidation
Investments in subsidiaries
Investments in associates
Interests in jointly controlled entities
Derivative assets
Deferred tax assets
14
15
16
17
18
19
20
21
22
23
Current assets
Property development costs
Inventories
Trade and other receivables
Amounts due from subsidiaries
Amounts due from associates
Derivative assets
Current tax assets
Other investments
Short term funds
Deposits with financial institutions
Cash and bank balances
TOTAL ASSETS
24
25
26
19
20
22
27
28
29
30
The notes on pages 123 to 268 form an integral part of the financial statements.
114
Group
Note
Company
2012
RM000
2011
RM000
2012
RM000
2011
RM000
642,725
1,787,723
10,197,475
641,603
1,932,050
9,425,524
642,725
1,971,330
3,978,950
641,603
2,073,834
4,311,739
Non-controlling interests
12,627,923
287,980
11,999,177
262,221
6,593,005
7,027,176
Total equity
12,915,903
12,261,398
6,593,005
7,027,176
7,291,713
79,822
147,259
427,672
4,606,449
19,906
26,292
453,046
1,906,275
74,884
2,630,878
955
6,095
1,804,290
19,906
2,075,012
955
6,256
7,946,466
5,105,693
4,619,087
3,906,419
1,107,792
829,965
6,859
202,848
55,035
1,189,687
791,309
2,287
189,055
115,690
83,420
588,752
30,422
95,158
302,700
714,176
2,182
52,140
37,822
2,202,499
2,288,028
702,594
1,204,178
Total liabilities
10,148,965
7,393,721
5,321,681
5,110,597
23,064,868
19,655,119
11,914,686
12,137,773
31
32
33
Liabilities
Non-current liabilities
Borrowings
Derivative liabilities
Amounts due to subsidiaries
Other long term liabilities
Deferred tax liabilities
34
22
19
35
23
Current liabilities
Trade and other payables
Borrowings
Amounts due to subsidiaries
Amounts due to associates
Derivative liabilities
Current tax liabilities
36
34
19
20
22
The notes on pages 123 to 268 form an integral part of the financial statements.
115
STATEMENTS OF
CHANGES IN EQUITY
For The Financial Year Ended 30 June 2012
Non-distributable
Distributable
Treasury
shares
RM000
Total
attributable
Retained to owners of
earnings the parent
RM000
RM000
Share
capital
RM000
Share
premium
RM000
Capital
reserves
RM000
Foreign
currency
translation
reserve
RM000
667,552
3,542,923
110,152
(372,747)
(1,767,552)
8,352,978
Noncontrolling
interests
RM000
Total
equity
RM000
10,533,306
289,296
10,822,602
Group
As at 1 July 2010
Profit for the financial year
2,222,899
2,222,899
67,614
2,290,513
218,438
218,438
2,055
220,493
218,438
2,222,899
2,441,337
69,669
2,511,006
11,656
11,656
11,656
1,187
47,720
(9,611)
39,296
39,296
2,706
121,229
123,935
123,935
(29,842)
(1,767,552)
29,842
1,767,552
Liquidation of a subsidiary
(Note 37.1.2)
(473)
(473)
(513,083)
(513,083)
(513,083)
(638,135)
(638,135)
(638,135)
865
865
(2,388)
(1,523)
(93,883)
(93,883)
641,603
1,944,320
142,039
(154,309)
9,425,524
11,999,177
262,221
12,261,398
As at 30 June 2011
The notes on pages 123 to 268 form an integral part of the financial statements.
116
Non-distributable
Distributable
Total
attributable
Retained to owners of
earnings the parent
RM000
RM000
Share
capital
RM000
Share
premium
RM000
Capital
reserves
RM000
Foreign
currency
translation
reserve
RM000
641,603
1,944,320
142,039
(154,309)
9,425,524
Treasury
shares
RM000
Noncontrolling
interests
RM000
Total
equity
RM000
11,999,177
262,221
12,261,398
Group
As at 1 July 2011
Profit for the financial year
1,789,370
1,789,370
39,159
1,828,529
(36,855)
(36,855)
473
(36,382)
(217)
(217)
(217)
(37,072)
1,789,370
1,752,298
39,632
1,791,930
4,330
4,330
4,330
1,122
41,558
(8,776)
33,904
33,904
(4,751)
4,751
(139,616)
(139,616)
(139,616)
(447,883)
(447,883)
(447,883)
(575,571)
(575,571)
(575,571)
(333)
(333)
Incorporation of a subsidiary
293
293
1,284
1,284
(1,513)
(229)
(12,320)
(12,320)
642,725
1,985,878
132,842
(191,381)
(139,616)
10,197,475
12,627,923
287,980
12,915,903
As at 30 June 2012
The notes on pages 123 to 268 form an integral part of the financial statements.
117
STATEMENTS OF
CHANGES IN EQUITY
For The Financial Year Ended 30 June 2012
Non-Distributable
Distributable
Share
capital
RM000
Share
premium
RM000
Capital
reserves
RM000
Treasury
shares
RM000
Retained
earnings
RM000
Total
equity
RM000
667,552
3,542,923
97,627
(1,767,552)
3,420,808
5,961,358
2,042,149
2,042,149
2,042,149
2,042,149
Company
As at 1 July 2010
11,656
11,656
1,187
47,720
(9,611)
39,296
2,706
121,229
123,935
nd
(29,842)
(1,767,552)
29,842
1,767,552
(513,083)
(513,083)
(638,135)
(638,135)
As at 30 June 2011
641,603
1,944,320
129,514
4,311,739
7,027,176
As at 1 July 2011
641,603
1,944,320
129,514
4,311,739
7,027,176
690,665
690,665
690,665
690,665
4,330
4,330
1,122
41,558
(8,776)
33,904
(139,616)
(139,616)
(447,883)
(447,883)
(575,571)
(575,571)
642,725
1,985,878
125,068
(139,616)
3,978,950
6,593,005
As at 30 June 2012
The notes on pages 123 to 268 form an integral part of the financial statements.
118
STATEMENTS OF
CASH FLOWS
For The Financial Year Ended 30 June 2012
Group
Note
Company
2012
RM000
2011
RM000
2012
RM000
2011
RM000
2,378,961
2,863,612
745,504
2,101,775
14
252,482
243,480
4,093
4,016
10
222,614
191,089
(203,948)
169,915
263,942
211,303
(382,947)
212,322
63,623
29,934
(5,424)
67,363
63,468
39,261
25,032
5,938
4,330
3,039
2,826
318
112
90
(521)
(709)
8,064
21,497
3,170
11,656
2,752
2,824
421
3,300
(9,677)
(62,691)
48,800
101
54
4,330
594
318
(4)
98
2,121
11,656
450
(1,477)
(42,528)
(1,319)
(935)
(2,390)
(4,550)
(5,083)
(11,280)
(1,368)
(1,090)
(11,764)
(270)
389
(73)
(1,514)
(13,693)
(32,735)
(33,324)
(49,768)
(51,731)
(24,341)
(50,997)
56,585
(47,146)
(37,534)
(95,045)
(33,256)
(96,036)
(37,534)
(115,339)
(121,033)
(164,970)
(119,739)
(93,080)
273
35.1
14
8(b)
15
37.1
17
18
The notes on pages 123 to 268 form an integral part of the financial statements.
119
STATEMENTS OF
CASH FLOWS
For The Financial Year Ended 30 June 2012
Group
Company
Note
2012
RM000
2011
RM000
2012
RM000
2011
RM000
37.2
18.1
(4,602)
(18,124)
(31,057)
(4,602)
(31,057)
19
2,644,580
165,407
107,907
2,657,797
(969,291)
(470,502)
171,181
3,832
116
238,788
(2,525)
1,322
(329)
(7,300)
(677)
153,580
1,574
3,160
(18,014)
(36,301)
(69,550)
26,492
(1,721)
113,050
(4,893)
(13,312)
(7,846)
(22,180)
2,786,400
(973)
(85)
(24,908)
(656,310)
27,479
1,508,728
(1,610)
(118)
(28,711)
(581,576)
12,993
158,498
(101)
(57,250)
14,237
210,719
(81)
(47,156)
10,000
2,131,603
909,706
115,384
173,482
35.1
35.1
The notes on pages 123 to 268 form an integral part of the financial statements.
120
(33,373)
(12,000)
(927,563)
56,610
(9,000)
(1,653,944)
Group
Note
Company
2012
RM000
2011
RM000
2012
RM000
2011
RM000
88,304
51,731
21,981
23,888
37,534
25,530
12,000
33,256
4,077
9,000
37,534
3,646
14,097
7,059
5,083
3,244
32,351
332,825
1,090
(270)
270
314
73
(375)
3,228
37.1
19.1
15
17
14
16
37.2
18.1
3,136
3,424
37
4
(266)
(1,633)
(2,499)
(20,901)
(30,024)
(75,292)
(236,838)
(397,217)
(1,183,483)
18,335
7,332
1,097
(1,523)
(4,654)
(3,356)
(908,563)
(25,755)
(422,051)
(395,895)
(36,316)
9,680
25,888
(1,746,825)
(1,282,833)
1,321
221
4
(266)
(8,647)
919,400
96,586
1,058,536
7,614
568
1,097
(1,523)
(3,042)
(4,822)
9,680
1,647,583
(4,075,652)
(2,368,619)
The notes on pages 123 to 268 form an integral part of the financial statements.
121
STATEMENTS OF
CASH FLOWS
For The Financial Year Ended 30 June 2012
Group
Company
Note
2012
RM000
2011
RM000
2012
RM000
2011
RM000
34.5
1,894,749
1,009,339
129,703
88,190
33,904
2,323,811
208,522
39,296
33,904
1,832,242
39,296
293
(101)
(333)
(12,320)
(139,616)
(197,782)
(236,500)
(351,500)
(1,023,454)
(119)
(93,883)
(165,801)
(434,143)
(1,151,218)
(69,122)
(1,397,158)
(139,616)
(65,847)
(351,500)
(1,023,454)
(52,399)
(1,151,218)
1,194,572
(739,815)
(1,546,513)
667,921
1,579,350
(1,112,942)
(372,593)
(1,527,216)
38
2,785,526
(4,129)
3,879,809
18,659
1,629,887
3,157,103
38
4,360,747
2,785,526
1,257,294
1,629,887
32.2
34.2
13
34.3
34.3
The notes on pages 123 to 268 form an integral part of the financial statements.
122
NOTES TO THE
FINANCIAL STATEMENTS
1. PRINCIPAL ACTIVITIES
The principal activities of the Company consist of investment holding and the cultivation of oil palm and processing of palm oil.
The principal activities of the subsidiaries, associates and jointly controlled entities are set out in Note 46 to the financial statements.
There have been no significant changes in the nature of the activities of the Group and of the Company during the financial year.
Effective Date
Amendments to FRS 1 Limited Exemption from Comparative FRS 7 Disclosures for First-time Adopters
1 January 2011
1 January 2011
1 January 2011
1 January 2011
1 January 2011
1 January 2011
1 January 2011
1 July 2011
1 July 2011
123
NOTES TO THE
FINANCIAL STATEMENTS
3. ADOPTION OF NEW FRSs AND AMENDMENT TO FRSs (Continued)
3.1 New FRSs adopted during the current financial year (Continued)
There is no impact upon adoption of the above new FRSs, Amendments to FRSs and IC Interpretations during the current
financial year other than the following:
i.
Amendments to FRS 7 Improving Disclosures about Financial Instruments are mandatory for annual periods beginning on
or after 1 January 2011.
These amendments require enhanced disclosures of fair value of financial instruments based on the fair value hierarchy,
including the disclosure of significant transfers between Level 1 and Level 2 of the fair value hierarchy as well as
reconciliations for fair value measurements in Level 3 of the fair value hierarchy.
There is no financial impact upon adoption of these amendments during the financial year other than the additional
disclosures in Note 42 to the financial statements.
ii.
Improvements to FRSs (2010) are mandatory for annual periods beginning on or after 1 January 2011.
Amendments to FRS 7 Financial Instruments: Disclosures clarify that quantitative disclosures of risk concentrations are
required if the disclosures made in other parts of the financial statements are not readily apparent. The disclosure on
maximum exposure to credit risk is not required for financial instruments whose carrying amount best represents the
maximum exposure to credit risk. The Group has incorporated these disclosures on maximum exposure to credit risk in
Note 42 to the financial statements.
3.2 New FRSs that have been issued, but not yet effective and not yet adopted
Title
Effective Date
1 January 2012
Amendments to FRS 1 Severe Hyperinflation and Removal of Fixed Dates for First-time Adopters
1 January 2012
1 January 2012
1 January 2012
124
1 March 2012
1 July 2012
1 January 2013
1 January 2013
1 January 2013
1 January 2013
1 January 2013
1 January 2013
1 January 2013
1 January 2013
1 January 2013
1 January 2013
Effective Date
Amendments to FRS 10, FRS 11 and FRS 12 Consolidated Financial Statements, Joint Arrangements and
Disclosure of Interests in Other Entities: Transition Guidance
1 January 2013
FRS 3 Business Combinations (IFRS 3 Business Combinations issued by the IASB in March 2004)
1 January 2013
FRS 127 Consolidated and Separate Financial Statements (IAS 27 Consolidated and Separate Financial
Statements revised by the IASB in December 2003)
1 January 2013
1 January 2013
1 January 2014
FRS 9 Financial Instruments (IFRS 9 Financial Instruments issued by the International Accounting
Standards Board (IASB) in November 2009)
1 January 2015
FRS 9 Financial Instruments (IFRS 9 Financial Instruments issued by the IASB in November 2010)
1 January 2015
The Group is in the process of assessing the impact of the adoption of these FRSs, Amendments to FRSs and IC Interpretations
since the effects would only be observable in the future financial years.
3.3 New Malaysian Financial Reporting Standards (MFRSs) that have been issued, but not yet effective and not yet
adopted, for annual periods beginning on or after 1 January 2014
On 19 November 2011, the Malaysian Accounting Standards Board (MASB) announced the issuance of the new MFRS
framework that is applicable to entities other than private entities. However, based on the MASB announcement on 30 June
2012 that defer the effective date of MFRS framework for transitioning entities (i.e. entities affected by MFRS 141 Agriculture
and/or IC Interpretation 15 Agreements for Construction of Real Estate) from 1 January 2013 to 1 January 2014, the Group has
elected for the continued use of FRS for the financial years ending 30 June 2013 and 30 June 2014 as a transitioning entity.
The Group would subsequently adopt the MFRS framework for the financial year ending 30 June 2015.
The subsequent adoption of the MFRS framework would result in the Group preparing an opening MFRS statement of financial
position as at 1 July 2013, which adjusts for differences between the classification and measurement bases in the existing FRS
framework versus that in the new MFRS framework. This would also result in a restatement of the annual and quarterly
financial performance for the financial year ending 30 June 2015 in accordance with MFRS, which would form the MFRS
comparatives for the annual and quarterly financial performance for the financial year ending 30 June 2015 respectively.
The MFRSs and IC Interpretations expected to be adopted are as follows:
MFRS 1 First-time Adoption of Malaysian Financial Reporting Standards
MFRS 2 Share-based Payment
MFRS 3 Business Combinations
MFRS 4 Insurance Contracts
MFRS 5 Non-current Assets Held for Sale and Discontinued Operations
MFRS 6 Exploration for and Evaluation of Mineral Resources
MFRS 7 Financial Instruments: Disclosures
MFRS 8 Operating Segments
MFRS 9 Financial Instruments
125
NOTES TO THE
FINANCIAL STATEMENTS
3. ADOPTION OF NEW FRSs AND AMENDMENT TO FRSs (Continued)
3.3 New Malaysian Financial Reporting Standards (MFRSs) that have been issued, but not yet effective and not yet
adopted, for annual periods beginning on or after 1 January 2014 (Continued)
The MFRSs and IC Interpretations expected to be adopted are as follows (Continued):
MFRS 10 Consolidated Financial Statements
MFRS 11 Joint Arrangements
MFRS 12 Disclosure of Interests in Other Entities
MFRS 13 Fair Value Measurement
MFRS 101 Presentation of Financial Statements
Amendments to MFRS 101 Presentation of Items of Other Comprehensive Income
MFRS 102 Inventories
MFRS 107 Statement of Cash Flows
MFRS 108 Accounting Policies, Changes in Accounting Estimates and Errors
MFRS 110 Events After the Reporting Period
MFRS 111 Construction Contracts
MFRS 112 Income Taxes
MFRS 116 Property, Plant and Equipment
MFRS 117 Leases
MFRS 118 Revenue
MFRS 119 Employee Benefits
MFRS 119 Employee Benefits (revised)
MFRS 120 Accounting for Government Grants and Disclosure of Government Assistance
MFRS 121 The Effects of Changes in Foreign Exchange Rates
MFRS 123 Borrowing Costs
MFRS 124 Related Party Disclosures
MFRS 126 Accounting and Reporting by Retirement Benefit Plans
MFRS 127 Consolidated and Separate Financial Statements
MFRS 127 Separate Financial Statements (revised)
MFRS 128 Investments in Associates
MFRS 128 Investments in Associates and Joint Ventures (revised)
MFRS 129 Financial Reporting in Hyperinflationary Economies
MFRS 131 Interests in Joint Ventures
MFRS 132 Financial Instruments: Presentation
MFRS 133 Earnings Per Share
MFRS 134 Interim Financial Reporting
MFRS 136 Impairment of Assets
MFRS 137 Provisions, Contingent Liabilities and Contingent Assets
126
127
NOTES TO THE
FINANCIAL STATEMENTS
3. ADOPTION OF NEW FRSs AND AMENDMENT TO FRSs (Continued)
3.3 New Malaysian Financial Reporting Standards (MFRSs) that have been issued, but not yet effective and not yet
adopted, for annual periods beginning on or after 1 January 2014 (Continued)
The MFRSs and IC Interpretations expected to be adopted are as follows (Continued):
IC Interpretation 20 Stripping Costs in the Production Phase of a Surface Mine
IC Interpretation 107 Introduction of the Euro
IC Interpretation 110 Government Assistance No Specific Relation to Operating Activities
IC Interpretation 112 Consolidation Special Purpose Entities
IC Interpretation 113 Jointly Controlled Entities Non-Monetary Contributions by Venturers
IC Interpretation 115 Operating Leases Incentives
IC Interpretation 125 Income Taxes Changes in the Tax Status of an Entity or its Shareholders
IC Interpretation 127 Evaluating the Substance of Transactions Involving the Legal Form of a Lease
IC Interpretation 129 Service Concession Arrangements: Disclosures
IC Interpretation 131 Revenue Barter Transactions Involving Advertising Services
IC Interpretation 132 Intangible Assets Web Site Costs
The Group is in the process of assessing the impact on the financial statements arising from the transition from FRSs to MFRSs.
However, some of the known effects are described as follows:
MFRS 1 First-time Adoption of Malaysian Financial Reporting Standards
This Standard requires an opening MFRS statement of financial position at the date of transition to reflect the retrospective
effects of implementing the MFRS framework for the first time. However, it also provides some exceptions and exemptions to
an entity from full retrospective application of MFRSs.
The Group is in the process of assessing the impact of implementing the MFRS framework since the effects would only be
observable for the financial year ending 30 June 2015.
MFRS 141 Agriculture
This Standard prescribes the accounting treatment, financial statements presentation, and disclosures related to agricultural
activity. It requires measurement at fair value less costs to sell from initial recognition of biological assets up to the point of
harvest, other than when fair value cannot be measured realiably on initial recognition. This Standard requires that a change
in fair value less costs to sell of a biological asset be included in profit or loss for the period in which it arises.
The Group is in the process of assessing the impact of implementing this Standard since the effects would only be observable
for the financial year ending 30 June 2015.
128
129
NOTES TO THE
FINANCIAL STATEMENTS
4. SIGNIFICANT ACCOUNTING ESTIMATES AND JUDGEMENTS (Continued)
4.3 Key sources of estimation uncertainty
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 are discussed below:
4.3.1 Impairment of goodwill on consolidation
The Group determines whether goodwill is impaired at least on an annual basis. This requires an estimation of the
value-in-use of the Cash-generating Units (CGU) to which goodwill is allocated. Estimating a value-in-use amount
requires management to make an estimate of the expected future cash flows from the CGU and also to choose a
suitable discount rate in order to calculate the present value of those cash flows. Further details are disclosed in Note
18 to the financial statements.
4.3.2 Property development
The Group recognises property development revenue and expenses in profit or loss by using the percentage of
completion method. The stage of completion is determined by the proportion of property development costs incurred
for work performed up to the reporting period over the estimated total property development costs.
Significant judgements are required in determining the stage of completion, the extent of the property development
costs incurred, the estimated total property development revenue and costs, as well as the recoverability of the
development projects. In making the judgements, the Group evaluates based on past experience and by relying on the
work of specialists.
A 10% difference in the estimated total development revenue or costs would result in approximately 0.54% variance
in the Groups revenue and 0.30% variance in the Groups cost of sales.
4.3.3 Deferred tax assets
Deferred tax assets are recognised for all deductible temporary differences, unutilised tax losses and unabsorbed
capital allowances to the extent that it is probable that taxable profit will be available against which the unutilised tax
losses and unabsorbed 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.
4.3.4 Fair values of borrowings
The fair values of borrowings are estimated by discounting future contractual cash flows at the current market interest
rates available to the Group for similar financial instruments.
4.3.5 Write down for obsolete or slow moving inventories
The Group writes down its obsolete or slow moving inventories based on an assessment of their estimated net selling
price. Inventories are written down when events or changes in circumstances indicate that the carrying amounts may
not be recoverable. The management specifically analyses sales trend and current economic trends when making a
judgement to evaluate the adequacy of the write down for obsolete or slow moving inventories. Where expectations
differ from the original estimates, the differences will impact the carrying amounts of inventories.
4.3.6 Valuation of investment properties
The fair value of investment property is arrived at by reference to market evidence of transaction prices for similar
property and is performed by registered independent valuers having an appropriate recognised professional
qualification and recent experience in the location and category of the property being valued.
130
deferred tax assets or liabilities and liabilities or assets related to employee benefit arrangements are recognised
and measured in accordance with FRS 112 Income Taxes and FRS 119 Employee Benefits respectively;
ii.
liabilities or equity instruments related to share-based payment transactions of the acquiree or the replacement
by the Group of an acquirees share-based payment transactions are measured in accordance with FRS 2 Sharebased Payment at the acquisition date; and
iii. 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 are measured in accordance with that Standard.
Acquisition-related costs are recognised as expenses in the periods in which the costs are incurred and the serviced
are received.
Any contingent consideration payable is recognised at fair value at the acquisition date. Measurement period
adjustments to contingent consideration are dealt with as follows:
i.
If the contingent consideration is classified as equity, it is not remeasured and settlement is accounted for within
equity; and
ii.
Subsequent changes to contingent consideration classified as an asset or liability that is a financial instrument
within the scope of FRS 139 are recognised either in profit or loss or in other comprehensive income in accordance
with FRS 139. All other subsequent changes are recognised in profit or loss.
In a business combination achieved in stages, previously held equity interests in the acquiree are re-measured to fair
value at the acquisition date and any corresponding gain or loss is recognised in profit or loss.
The Group elects for each individual business combination, whether non-controlling interest in the acquiree (if any) is
recognised on the acquisition date at fair value, or at the non-controlling interests proportionate share of the acquiree
net identifiable assets.
Any excess of the sum of the fair value of the consideration transferred in the business combination, the amount of noncontrolling interest in the acquiree (if any), and the fair value of the Groups previously held equity interest in the acquiree
(if any), over the net fair value of the acquirees identifiable assets and liabilities is recorded as goodwill in the statement
of financial position. The accounting policy for goodwill is set out in Note 5.12. In instances where the latter amount
exceeds the former, the excess is recognised as a gain on bargain purchase in profit or loss on the acquisition date.
131
NOTES TO THE
FINANCIAL STATEMENTS
5. SIGNIFICANT ACCOUNTING POLICIES (Continued)
5.1 Basis of Consolidation (Continued)
5.1.1 Business Combinations (Continued)
Business combinations before 1 July 2011
Under the purchase method of accounting, the cost of business combination is measured at the aggregate of fair
values at the date of exchange, of assets given, liabilities incurred or assumed, and equity instruments issued plus any
costs directly attributable to the business combination.
At the acquisition date, the cost of business combination is allocated to identifiable assets acquired, liabilities assumed
and contingent liabilities in the business combination which are measured initially at their fair values at the acquisition
date. The excess of the cost of business combination over the Groups interest in the net fair value of the identifiable
assets, liabilities and contingent liabilities is recognised as goodwill (see Note 5.12 to the financial statements on
goodwill). If the cost of business combination is less than the interest in the net fair value of the identifiable assets,
liabilities and contingent liabilities, the Group will:
i.
reassess the identification and measurement of the acquirees identifiable assets, liabilities and contingent
liabilities and the measurement of the cost of the business combination; and
ii.
recognise immediately in profit or loss any excess remaining after that reassessment.
When a business combination includes more than one exchange transaction, any adjustment to the fair values of the
subsidiarys identifiable assets, liabilities and contingent liabilities relating to previously held interests of the Group is
accounted for as a revaluation.
5.1.2 Subsidiaries
Subsidiaries are entities (including special purpose entities) in which the Group and the Company have the ability to
control the financial and operating policies so as to obtain benefits from their activities. Control exists when the Group
has the power to govern the financial and operating policies of an entity. The existence and effect of potential voting
rights that are currently exercisable or convertible are considered when assessing the existence of control.
In the Companys separate financial statements, investments in subsidiaries are stated at cost less impairment losses, if
any. Investments accounted for at cost shall be accounted for in accordance with FRS 5 Non-current Assets Held for Sale
and Discontinued Operations when they are classified as held for sale (or included in a disposal group that is classified
as held for sale) in accordance with FRS 5.
When control of a subsidiary is lost as a result of a transaction, event or other circumstance, the Group would
derecognise all assets, liabilities and non-controlling interests at their carrying amount and to recognise the fair value
of the consideration received. Any retained interest in the former subsidiary is recognised at its fair value at the date
control is lost. The resulting difference is recognised as a gain or loss in profit or loss.
The consolidated financial statements incorporate the financial statements of the Company and all its subsidiaries
made up to the end of the reporting period, using consistent accounting policies.
Subsidiaries are consolidated from the date of acquisition, being the date on which the Group obtains control, and
continue to consolidate until the date that such control ceases.
132
the aggregate of the fair value of the consideration received and the fair value of any retained interest; and
ii.
the previous carrying amounts of the assets (including goodwill), and liabilities of the subsidiary and any noncontrolling interests.
Amounts previously recognised in other comprehensive income in relation to the subsidiary are accounted for (i.e.
reclassified to profit or loss or transferred directly to retained earnings) in the same manner as would be required if
the relevant assets or liabilities were disposed of. The fair value of any investments retained in the former subsidiary
at the date when control is lost is regarded as the fair value on initial recognition for subsequent accounting under
FRS 139 Financial Instruments: Recognition and Measurement or, where applicable, the cost on initial recognition of an
investment in associate or jointly controlled entity.
133
NOTES TO THE
FINANCIAL STATEMENTS
5. SIGNIFICANT ACCOUNTING POLICIES (Continued)
5.1 Basis of Consolidation (Continued)
5.1.3 Associates
Associates are entities in which the Group and the Company have significant influence and that is neither subsidiaries
nor interest in jointly controlled entities. Significant influence is the power to participate in the financial and operating
policy decisions of the investees but is not control or joint control over those policies.
In the Companys separate financial statements, investments in associates are stated at cost less impairment losses, if
any. On disposal of such investments, the difference between net disposal proceeds and their carrying amounts is
included in profit or loss.
Investments in associates are accounted for in the consolidated financial statements using the equity method of
accounting based on the latest financial statements of the associates concerned, from the date significant influence
commences until the date the Group ceases to have significant influence over the associates. The investments in
associates in the consolidated statement of financial position are initially recognised at cost and adjusted thereafter for
the post acquisition changes in the Groups share of net assets of the investments.
The interest in associates is the carrying amount of the investments in associates under the equity method together
with any long-term interest that, in substance, form part of the Groups net interest in the associates.
The excess of the cost of investment over the Groups share of the net fair value of net assets of the associates
identifiable assets, liabilities and contingent liabilities at the date of acquisition represents goodwill. Goodwill relating
to the associate is included in the carrying amount of the investment and is not amortised. The excess of the Groups
share of the net fair value of the net assets of the associates identifiable assets, liabilities and contingent liabilities over
the cost of investment at the date of acquisition is recognised in consolidated profit or loss.
The Groups share of results of the associates during the financial year is recognised in consolidated profit or loss, after
adjustments to align the accounting policies with those of the Group, from the date that significant influence
commences until the date that significant influence ceases. Distributions received from the associates reduce the
carrying amount of the investments. Adjustments to the carrying amount may also be necessary for changes in the
Groups proportionate interest in the associate arising from changes in the associates equity that have not been
recognised in the associates profit or loss. Such changes include those arising from the revaluation of property, plant
and equipment and from foreign currency translation differences. The Groups share of those changes is recognised
directly in equity of the Group.
When the Groups share of losses exceeds its interest in the associate, the carrying amount of that interest is reduced
to nil and the Group does not recognise further losses unless it has incurred legal or constructive obligations or made
payments on its behalf.
The most recent available financial statements of the associates are used by the Group in applying the equity method.
Where the reporting period of the financial statements are not coterminous, the share of results is arrived at using the
latest financial statements for which the difference in reporting period is no more than three (3) months. Adjustments
are made for the effects of any significant transactions or events that occur between the intervening periods.
Upon disposal of an investment in associate, the difference between the net disposal proceeds and its carrying amount
is included in profit or loss.
134
135
NOTES TO THE
FINANCIAL STATEMENTS
5. SIGNIFICANT ACCOUNTING POLICIES (Continued)
5.2 Foreign Currency
5.2.1 Functional and presentation currency
The separate financial statements of each entity of the Group are measured using the currency of the primary
economic environment in which the entity operates (the functional currency). The consolidated financial statements
are presented in Ringgit Malaysia (RM), which is also the Companys functional currency.
5.2.2 Foreign currency translation and balances
Transactions in foreign currencies are converted into the relevant functional currency at rates of exchange ruling at the
transaction dates. Monetary assets and liabilities in foreign currencies at the end of the reporting period are translated
into the relevant functional currency at rates of exchange ruling at that date. All exchange differences arising from the
settlement of foreign currency transactions and from the translation of foreign currency monetary assets and liabilities
are included in profit or loss in the period in which they arise. Non-monetary items initially denominated in foreign
currencies, which are carried at historical cost are translated using the historical rate as of the date of acquisition, and
non-monetary items which are carried at fair value are translated using the exchange rate that existed when the values
were determined for presentation currency purposes.
5.2.3 Foreign operations
Financial statements of foreign operations are translated at the end of the reporting period exchange rates with respect
to their assets and liabilities, and at exchange rates at the dates of the transactions with respect to the income
statement. All resulting translation differences are recognised as a separate component of equity.
Exchange differences arising on a monetary item that forms part of the net investment of the Company in a foreign
operation shall be recognised in profit or loss in the separate financial statements of the Company or the foreign
operation, as appropriate. In the consolidated financial statements, such exchange differences shall be recognised
initially as a separate component of equity and recognised in profit or loss upon disposal of the net investment. When
a foreign operation is partially disposed of or sold, exchange differences that were recorded in equity are recognised
in profit or loss as part of the gain or loss on disposal.
Goodwill and fair value adjustments to the assets and liabilities arising from the acquisition of a foreign operation are
treated as assets and liabilities of the acquired entity and translated at the exchange rate ruling at the end of the
reporting period.
5.3 Property, Plant and Equipment and Depreciation
All items of property, plant and equipment are initially measured at cost. Cost includes expenditure that is directly attributable
to the acquisition of the items. The cost of self-constructed assets includes the cost of materials and direct labour, any other
costs directly attributable to bringing the assets to working condition for its intended use, and the costs of dismantling and
removing the items and restoring the site on which they are located.
Subsequent costs are included in the assets carrying amount or recognised as a separate asset, as appropriate, only when the
cost is incurred and it is probable that future economic benefits associated with the cost will flow to the Group and the cost of
the item can be measured reliably. The carrying amount of parts that are replaced is derecognised. The cost of the day-to-day
servicing of property, plant and equipment are charged to profit or loss during the financial period in which they are incurred.
Each part of an item of property, plant and equipment with a cost that is significant in relation to the total cost of the item
and which have different useful lives, is depreciated separately.
136
At the end of each reporting period, the carrying amount of an item of property, plant and equipment is assessed for
impairment when events or changes in circumstances indicate that its carrying amount may not be recoverable. A write-down
is made if the carrying amount exceeds the recoverable amount.
The residual values, useful lives and depreciation method are reviewed at the end of each reporting period to ensure that the
amount, method and period of depreciation are consistent with previous estimates and the expected pattern of consumption
of the future economic benefits embodied in the items of property, plant and equipment. The estimates of the residual values,
useful lives and related depreciation charges for the property, plant and equipment are based on commercial and production
factors. The Group anticipates that the residual values of its property, plant and equipment will be insignificant.
The carrying amount of an item of property, plant and equipment is derecognised on disposal or when no future economic
benefits are expected from its use or disposal. The difference between the net disposal proceeds, if any, and the carrying
amount is recognised in profit or loss.
When the use of a property changes from owner-occupied to investment property, the property is remeasured to fair value
and reclassified as investment property. Any gain arising on remeasurement is recognised directly in equity. Any loss is
recognised immediately in profit or loss.
The fair value of property, plant and equipment recognised as a result of a business combination is based on market values.
The market value of plant and equipment is the estimated amount for which a plant and equipment could be exchanged
between a willing buyer and a willing seller in an arms length transaction after proper marketing wherein the parties had
each acted knowledgeably, prudently and without compulsion. The market value of property is the estimated amount for
which a property could be exchanged on the date of valuation between a willing buyer and a willing seller in an arms length
transaction after proper marketing wherein the parties had each acted knowledgeably, prudently and without compulsion.
5.4 New Planting and Replanting Expenditure
New planting expenditure, which represents the total cost incurred from land clearing to the point of harvesting, is capitalised
under plantation development expenditure and is not amortised. Replanting expenditure, which represents cost incurred in
replanting old planted areas, is charged to profit or loss in the financial year it is incurred.
137
NOTES TO THE
FINANCIAL STATEMENTS
5. SIGNIFICANT ACCOUNTING POLICIES (Continued)
5.5 Borrowing Costs
Borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset is capitalised
as part of the cost of the asset until when substantially all the activities necessary to prepare the asset for its intended use or
sale are complete, after which such expense is charged to profit or loss. A qualifying asset is an asset that necessarily takes a
substantial period of time to get ready for its intended use or sale. Capitalisation of borrowing cost is suspended during
extended periods in which active development is interrupted.
The amount of borrowing costs eligible for capitalisation is the actual borrowing costs incurred on the borrowing during the
period less any investment income on the temporary investment of the borrowing.
All other borrowing costs are recognised in profit or loss in the period in which they are incurred.
5.6 Leases
5.6.1 Finance leases
A lease is recognised as a finance lease if it transfers substantially to the Group all the risks and rewards incidental to
ownership. Assets acquired under finance leases are recognised initially at amounts equal to the fair value of the leased
assets or, if lower, the present value of the minimum lease payments, each determined at the inception of the lease.
Any initial direct costs incurred by the Group are added to the amount recognised as an asset. The assets are
capitalised as property, plant and equipment and the corresponding obligations, net of finance charges, are included
in borrowings. The property, plant and equipment capitalised are depreciated on the same basis as owned assets as
disclosed in Note 5.3 to the financial statements.
The minimum lease payments are allocated between finance charges and the reduction of the outstanding liability. The
finance charges are recognised in profit or loss over the period of the lease term so as to produce a constant periodic
rate of interest on the remaining finance lease obligations.
Leases of land and buildings are classified as operating or finance leases in the same way as leases of other assets. The
land and buildings elements of a lease are considered separately for the purpose of lease classification. All leases that
do not transfer substantially all the risks and the rewards are classified as operating leases other than the following:
property held under operating leases that would otherwise meet the definition of an investment property is
classified as an investment property on a property-by-property basis and, if classified as investment property, is
accounted for as if held under a finance lease; and
land held for own use under an operating lease, the fair value of which cannot be measured separately from the
fair value of a building situated thereon at the inception of the lease, is accounted for as being held under a finance
lease, unless the building is also clearly held under an operating lease.
138
139
NOTES TO THE
FINANCIAL STATEMENTS
5. SIGNIFICANT ACCOUNTING POLICIES (Continued)
5.8 Investment Properties
Investment properties are properties, which are held either to earn rental yields or for capital appreciation or for both and are
not occupied by the Group. Investment properties also include properties that are being constructed or developed for future
use as investment properties. Such properties are initially measured at cost, including transaction costs. Subsequent to initial
recognition, investment properties are stated at fair value. Fair value is arrived at by reference to market evidence of
transaction prices for similar properties and is performed by registered independent valuers having appropriate recognised
professional qualifications and recent experience in the location and category of the properties being valued and where
appropriate, on the investment method.
Properties that are occupied by companies in the Group are accounted for as owner-occupied rather than as investment
properties in the consolidated financial statements.
Gains or losses arising from changes in the fair values of investment properties are recognised in profit or loss in the financial
year in which they arise.
A property interest under an operating lease is classified and accounted for as an investment property on a property-byproperty basis when the Group holds it to earn rentals or for capital appreciation or both. Any such property interest under
an operating lease classified as an investment property is carried at fair value.
Investment properties are derecognised when either they have been disposed off or when the investment property is
permanently withdrawn from use and no future economic benefit is expected from its disposal. The gain or loss arising from
the retirement or disposal of investment property is determined as the difference between the net disposal proceeds, if any,
and the carrying amount of the asset and is recognised in profit or loss in the period of the retirement or disposal.
When the use of a property changes from investment property to owner-occupied, the property is remeasured to fair value and
reclassified as property, plant and equipment. Any gain or loss arising on remeasurement is recognised directly in profit or loss.
5.9 Construction Contracts
Contract cost comprises cost related directly to the specific contract and those that are attributable to the contract activity in
general and can be allocated to the contract and such other costs that are specifically chargeable to the customer under the
terms of the contract. Contract cost includes direct materials, expenses, labour and an appropriate proportion of construction
overheads.
The aggregate costs incurred and profit or loss recognised on each contract is compared against the progress billings up to
the financial year end. Where costs incurred and recognised profits (less recognised losses) exceed progress billings, the
balance is shown as amounts due from customers on contracts. Where progress billings exceed costs incurred plus recognised
profits (less recognised losses), the balance is shown as amounts due to customers on contracts.
140
141
NOTES TO THE
FINANCIAL STATEMENTS
5. SIGNIFICANT ACCOUNTING POLICIES (Continued)
5.13 Impairment of Non-financial Assets (Continued)
For goodwill, the recoverable amount is estimated at the end of each reporting period or more frequently when indicators
of impairment are identified.
For the purpose of impairment testing of these assets, recoverable amount is determined on an individual asset basis unless
the asset does not generate cash flows that are largely independent of those from other assets. If this is the case, recoverable
amount is determined for the Cash-generating Unit (CGU) to which the asset belongs. Goodwill acquired in a business
combination is, from the acquisition date, allocated to each of the Groups CGUs, or groups of CGUs, that are expected to
benefit from the synergies of the combination, irrespective of whether other assets or liabilities of the Group are assigned to
those units or groups of units.
Goodwill acquired in a business combination shall be tested for impairment as part of the impairment testing of the CGU to
which it relates. The CGU to which goodwill is allocated shall represent the lowest level within the Group at which the
goodwill is monitored for internal management purposes and not larger than an operating segment determined in
accordance with FRS 8.
Recoverable amount is the higher of net selling price and value-in-use, which is measured by reference to discounted future
cash flows. In estimating the value-in-use, the estimated future cash inflows and outflows to be derived from continuing use
of the asset and from its ultimate disposal are discounted to their present value using a pre-tax discount rate that reflects
current market assessments of the time value of money and the risks specific to the asset for which the future cash flow
estimates have not been adjusted.
An impairment loss is recognised whenever the carrying amount of an asset exceeds its recoverable amount. The impairment
loss is charged to profit or loss unless it reverses a previous revaluation in which case it will be charged to equity.
Impairment loss on goodwill is not reversed in subsequent periods. An impairment loss for an asset other than goodwill is
reversed if, and only if, there has been a change in the estimates used to determine the assets recoverable amount since
the last impairment loss was recognised.
The carrying amount of an asset other than goodwill is increased to its revised recoverable amount, provided that this
amount does not exceed the carrying amount that would have been determined (net of amortisation or depreciation) had
no impairment loss been recognised for the asset in prior years. A reversal of impairment loss for an asset other than
goodwill is recognised in profit or loss, unless the asset is carried at revalued amount, in which case, such reversal is treated
as a revaluation increase.
5.14 Financial Instruments
A financial instrument is any contract that gives rise to a financial asset of one enterprise and a financial liability or equity
instrument of another enterprise.
A financial asset is any asset that is cash, an equity instrument of another enterprise, a contractual right to receive cash or
another financial asset from another enterprise, or a contractual right to exchange financial assets or financial liabilities with
another enterprise under conditions that are potentially favourable to the Group.
A financial liability is any liability that is a contractual obligation to deliver cash or another financial asset to another
enterprise, or a contractual obligation to exchange financial assets or financial liabilities with another enterprise under
conditions that are potentially unfavourable to the Group.
142
ii.
Held-to-maturity investments
Financial assets classified as held-to-maturity comprise non-derivative financial assets with fixed or determinable
payments and fixed maturity that the Group has the positive intention and ability to hold to maturity.
Subsequent to initial recognition, financial assets classified as held-to-maturity are measured at amortised cost
using the effective interest method. Gains or losses on financial assets classified as held-to-maturity are
recognised in profit or loss when the financial assets are derecognised or impaired, and through the
amortisation process.
143
NOTES TO THE
FINANCIAL STATEMENTS
5. SIGNIFICANT ACCOUNTING POLICIES (Continued)
5.14 Financial Instruments (Continued)
5.14.1 Financial assets (Continued)
iii. Loans and receivables
Financial assets classified as loans and receivables comprise non-derivative financial assets with fixed or
determinable payments that are not quoted in an active market.
Subsequent to initial recognition, financial assets classified as loans and receivables are measured at amortised
cost using the effective interest method. Gains or losses on financial assets classified as loans and receivables
are recognised in profit or loss when the financial assets are derecognised or impaired, and through the
amortisation process.
iv. Available-for-sale financial assets
Financial assets classified as available-for-sale comprise non-derivative financial assets that are designated as
available-for-sale or are not classified as loans and receivables, held-to-maturity investments or financial assets
at fair value through profit or loss.
Subsequent to initial recognition, financial assets classified as available-for-sale are measured at fair value. Any
gains or losses arising from changes in the fair value of financial assets classified as available-for-sale are
recognised directly in other comprehensive income, except for impairment losses and foreign exchange gains
and losses, until the financial asset is derecognised, at which time the cumulative gains or losses previously
recognised in other comprehensive income are recognised in profit or loss. However, interest calculated using
the effective interest method is recognised in profit or loss whilst dividends on available-for-sale equity
instruments are recognised in profit or loss when the Groups right to receive payment is established.
A financial asset is derecognised when the contractual right to receive cash flows from the financial asset has
expired. On derecognition of a financial asset in its entirety, the difference between the carrying amount and the
sum of consideration received (including any new asset obtained less any new liability assumed) and any cumulative
gain or loss that had been recognised directly in other comprehensive income shall be recognised in profit or loss.
A regular way purchase or sale is a purchase or sale of a financial asset under a contract whose terms require
delivery of the asset within the time frame established generally by regulation or marketplace convention. A regular
way purchase or sale of financial assets shall be recognised and derecognised, as applicable, using trade date
accounting.
144
ii.
A financial liability is derecognised when, and only when, it is extinguished, i.e. when the obligation specified in the
contract is discharged or cancelled or expires. An exchange between an existing borrower and lender of debt
instruments with substantially different terms are accounted for as an extinguishment of the original financial
liability and the recognition of a new financial liability. Similarly, a substantial modification of the terms of an
existing financial liability is accounted for as an extinguishment of the original financial liability and the recognition
of a new financial liability.
The difference between the carrying amount of a financial liability extinguished or transferred to another party and
the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognised in profit or loss.
All financial liabilities of the Group are measured at amortised cost except for financial liabilities at fair value through
profit or loss, which are held for trading (including derivatives) or designated at fair value through profit or loss upon
initial recognition. Financial liabilities designated at fair value through profit or loss include exchangeable bonds.
A financial guarantee contract is a contract that requires the issuer to make specified payments to reimburse the
holder for a loss it incurs because a specified debtor fails to make payment when due in accordance with the
original or modified terms of a debt instrument.
145
NOTES TO THE
FINANCIAL STATEMENTS
5. SIGNIFICANT ACCOUNTING POLICIES (Continued)
5.14 Financial Instruments (Continued)
5.14.2 Financial liabilities (Continued)
The Group designates corporate guarantees given to banks for credit facilities granted to subsidiaries as insurance
contracts as defined in FRS 4 Insurance Contracts. The Group recognises these insurance contracts as recognised
insurance liabilities when there is a present obligation, legal or constructive, as a result of a past event, when it is
probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a
reliable estimate can be made of the amount of the obligation.
At the end of every reporting period, the Group shall assess whether its recognised insurance liabilities are adequate,
using current estimates of future cash flows under its insurance contracts. If this assessment shows that the carrying
amount of the insurance liabilities is inadequate, the entire deficiency shall be recognised in profit or loss.
Recognised insurance liabilities are only removed from the statement of financial position when, and only when, it
is extinguished via a discharge, cancellation or expiration.
5.14.3 Equity instruments
An equity instrument is any contract that evidences a residual interest in the assets of the Group and the Company
after deducting all of its liabilities. Ordinary shares are classified as equity instruments.
Ordinary shares are classified as equity which are recorded at the nominal value and proceeds in excess of the
nominal value of shares issued, if any, are accounted for as share premium. Both ordinary shares and share premium
are classified as equity. Interim dividends to shareholders are recognised in equity in the period in which they are
declared. Final dividends are recognised upon approval of shareholders in a general meeting.
The transaction costs of an equity transaction are accounted for as a deduction from equity, net of tax. Equity
transaction costs comprise only those incremental external costs directly attributable to the equity transaction,
which would otherwise have been avoided.
The Group measures a liability to distribute non-cash assets as a dividend to the owners of the Company at fair
value of the assets to be distributed. The carrying amount of the dividend is remeasured at the end of each
reporting period and at the settlement date, with any changes recognised directly in equity as adjustments to the
amount of the distribution. On settlement of the transaction, the Group recognises the difference, if any, between
the carrying amount of the assets distributed and the carrying amount of the liability in profit or loss.
When issued shares of the Company are repurchased, the consideration paid, including any attributable transaction
costs, is presented as a change in equity. Repurchased shares that have not been cancelled are classified as treasury
shares and presented as a deduction from equity. No gain or loss is recognised in profit or loss on the sale, reissuance or cancellation of treasury shares. When treasury shares are reissued by resale, the difference between the
sales consideration and the carrying amount of the treasury shares is shown as a movement in equity.
5.14.4 Derivative financial instruments
Derivative financial instruments are initially recognised at fair value on the date a derivative contract is entered into
and subsequently remeasured at their fair value. Any gains or losses arising from changes in the fair value of these
contracts are recognised in profit or loss.
However, derivatives that are linked to and must be settled by delivery of unquoted equity instruments that do not
have a quoted market price in an active market are recognised at cost.
146
ii.
147
NOTES TO THE
FINANCIAL STATEMENTS
5. SIGNIFICANT ACCOUNTING POLICIES (Continued)
5.16 Provisions
Provisions are recognised when there is a present obligation, legal or constructive, as a result of a past event, when it is
probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable
estimate can be made of the amount of the obligation.
Where the effect of the time value of money is material, the amount of a provision will be discounted to its present value
at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability.
Provisions are reviewed at the end of each reporting period and adjusted to reflect current best estimates. If it is no longer
probable that an outflow of resources embodying economic benefits will be required to settle the obligation, the provision
will be reversed.
Provisions are not recognised for future operating losses. If the Group has a contract that is onerous, the present obligation
under the contract shall be recognised and measured as a provision.
5.17 Contingent Liabilities and Contingent Assets
A contingent liability is a possible obligation that arises from past events whose existence will be confirmed by the
occurrence or non-occurrence of one or more uncertain future events beyond the control of the Group or a present
obligation that is not recognised because it is not probable that an outflow of resources will be required to settle the
obligation. A contingent liability also arises in extremely rare cases where there is a liability that cannot be recognised
because it cannot be measured reliably. The Group does not recognise a contingent liability but discloses its existence in the
financial statements.
A contingent asset is a possible asset that arises from past events whose existence will be confirmed by the occurrence or
non-occurrence of one or more uncertain future events beyond the control of the Group. The Group does not recognise
contingent assets but discloses its existence where inflows of economic benefits are probable, but not virtually certain.
In the acquisition of subsidiaries by the Group under business combinations, contingent liabilities assumed are measured
initially at their fair value at the acquisition date, irrespective of the extent of any non-controlling interest.
5.18 Revenue Recognition
Revenue is measured at the fair value of the consideration received or receivable and is recognised when it is probable that
the economic benefits associated with the transaction will flow to the entities and the amount of the revenue can be
measured reliably.
5.18.1 Commodities, other products and services
Revenue is recognised upon delivery of products and customer acceptance, if any, or performance of services, net
of sales taxes and discounts.
148
149
NOTES TO THE
FINANCIAL STATEMENTS
5. SIGNIFICANT ACCOUNTING POLICIES (Continued)
5.19 Employee Benefits
5.19.1 Short term employee benefits
Wages, salaries, other monetary and non-monetary benefits are accrued in the period in which the associated
services are rendered by employees of the Group.
Short term accumulating compensated absences such as paid annual leave are recognised as an expense when
employees render services that increase their entitlement to future compensated absences. Short term nonaccumulating compensated absences such as sick leave are recognised when absences occur.
Bonuses are recognised as an expense when there is a present, legal or constructive, obligation to make such
payments, as a result of past events and when a reliable estimate can be made of the amount of the obligation.
5.19.2 Retirement benefits
The Group has various retirement benefit plans in accordance with local conditions and practices in the countries
in which it operates. These benefit plans are either defined contribution or defined benefit plans.
A defined contribution plan is a pension plan under which the Group pays fixed contributions into a separate entity
(a fund) and will have no legal or constructive obligations to pay further contributions if the fund does not hold
sufficient assets to pay all employee benefits relating to employee service in the current and prior periods. A defined
benefit plan is a pension plan that defines the amount of pension benefit to be provided, usually as a function of
one or more factors such as age and years of service.
5.19.2.1 Defined contribution plans
The Company and its subsidiaries incorporated in Malaysia make contributions to a statutory provident
fund. Contributions to defined contribution plans are recognised as an expense in the period in which the
employees render their services. Once the contributions have been paid, the Group has no further
payment obligations.
5.19.2.2 Defined benefit plans
The Group operates various defined benefit plans for eligible employees of the Group. The amount
recognised as a liability in respect of the defined benefit plan is the present value of the defined benefit
obligations at the end of the reporting period less the fair value of plan assets, together with adjustments
for unrecognised actuarial gains and losses and unrecognised past service cost.
If the amount calculated results in an asset, the Group measures the resulting asset at the lower of the
amount calculated and the net total of any cumulative unrecognised actuarial losses and past service cost
and the present value of any economic benefits available in the form of refunds from the plan or
reductions in future contributions to the plan.
The Group determines the present value of the defined benefit obligations and the fair value of the plan
assets with sufficient regularity such that the amounts recognised in the financial statements do not differ
materially from the amounts that would be determined at the end of the reporting period.
150
10% of the present value of the defined benefit obligations at that date (before deducting plan
assets); and
ii.
In measuring its defined benefit liability, the Group recognises past service cost as an expense on a
straight-line basis over the average period until the benefits become vested. To the extent that the
benefits are already vested immediately following the introduction of, or changes to, the defined benefit
plan, the Group recognises past service cost immediately in profit or loss.
Where the calculation results in a benefit to the Group, the recognised asset is limited to the net total of
any unrecognised actuarial losses and past service costs and the present value of any future refunds from
the plan or reduction in future contributions to the plan.
5.19.3 Equity compensation benefits
The Group operates equity-settled share-based compensation plans, allowing certain employees of the Group to
acquire ordinary share of the Company at pre-determined prices. The compensation expense relating to share
options is now recognised within staff costs in profit or loss over the vesting periods of the grants with a
corresponding increase in equity.
The total amount to be recognised as compensation expense is determined by reference to the fair value of the
share options at the date of the grant and the number of share options to be vested by the vesting date. The fair
value of the share options is computed using a binomial options pricing model performed by an actuary.
At the end of each reporting period, the Group revises its estimates of the number of options that are expected to
become exercisable on vesting date. It recognises the impact of the revision of original estimates, if any, in profit or
loss, and a corresponding adjustment to equity over the remaining vesting period. The equity amount is recognised
in capital reserve until the option is exercised, upon which it will be transferred to share premium, or until the
option expires, upon which it will be transferred directly to retained earnings.
The proceeds received net of any directly attributable transaction costs are credited to equity when the options are
exercised.
151
NOTES TO THE
FINANCIAL STATEMENTS
5. SIGNIFICANT ACCOUNTING POLICIES (Continued)
5.19 Employee Benefits (Continued)
5.19.3 Equity compensation benefits (Continued)
In the event that modification increases the fair value of the equity instruments granted, measured immediately
before and after the modification, the Group includes the incremental fair value granted in the measurement of the
amount recognised for services received as consideration for the equity instruments granted. The incremental fair
value granted is the difference between the fair value of the modified equity instrument and that of the original
equity instrument, both estimated as at the date of the modification.
If the modification occurs during the vesting period, the incremental fair value granted is included in the
measurement of the amount recognised for services received over the period from the modification date until the
date when the modified equity instruments vest, in addition to the amount based on the grant date fair value of
the original equity instruments, which is recognised over the remainder of the original vesting period. If the
modification occurs after vesting date, the incremental fair value granted is recognised immediately.
If the Group modifies the terms and conditions of the equity instruments granted in a manner that reduces the total
fair value of the share-based payment arrangement, or is not otherwise beneficial to the employees, the Group
continues to account for the revised services received as consideration for the equity instruments granted as if that
modification had not occurred, other than a cancellation of some or all of the equity instruments granted.
5.20 Income Taxes
Income taxes include all domestic and foreign taxes on taxable profit. Income taxes also include other taxes, such as
withholding taxes, which are payable by foreign subsidiaries, associates or jointly controlled entities on distributions to the
Group and Company, and real property gains taxes, if any.
Taxation in profit or loss comprises current and deferred tax.
5.20.1 Current tax
Current tax expenses are determined according to the tax laws of each jurisdiction in which the Group operates and
include all taxes based upon the taxable profits (including withholding taxes payable by foreign subsidiaries on
distribution of retained earnings to companies in the Group), and real property gains taxes payable on disposal of
properties.
5.20.2 Deferred tax
Deferred tax is recognised in full using the liability method on temporary differences arising between the carrying
amount of an asset or liability in the statement of financial position and its tax base.
Deferred tax is recognised for all temporary differences, unless the deferred tax arises from goodwill or the initial
recognition of an asset or liability in a transaction which is not a business combination and at the time of the
transaction, affects neither accounting profit nor taxable profit.
A deferred tax asset is recognised only to the extent that it is probable that taxable profit will be available against
which the deductible temporary differences, unused tax losses and unused tax credits can be utilised. The carrying
amount of a deferred tax asset is reviewed at the end of each reporting period. If it is no longer probable that
sufficient taxable profit will be available to allow the benefit of part or all of that deferred tax asset to be utilised,
the carrying amount of the deferred tax asset will be reduced accordingly. When it becomes probable that sufficient
taxable profit will be available, such reductions will be reversed to the extent of the taxable profit.
152
ii.
different taxable entities which intend either to settle current tax liabilities and assets on a net basis, or to
realise the assets and settle the liabilities simultaneously, in each future period in which significant amounts of
deferred tax liabilities or assets are expected to be settled or recovered.
Deferred tax will be recognised as income or expense and included in profit or loss for the period unless the tax
relates to items that are credited or charged, in the same or a different period, directly to equity, in which case the
deferred tax will be charged or credited directly to equity.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the
asset is realised or the liability is settled, based on tax rates and tax laws that have been enacted or substantively
enacted by the end of the reporting period.
5.21 Non-current Assets (or Disposal Groups) Held For Sale
Non-current assets (or disposal groups) are classified as held for sale if their carrying amounts will be recovered principally
through a sale transaction rather than through continuing use. This condition is regarded as met only when the sale is highly
probable and the asset is available for immediate sale in its present condition subject only to terms that are usual and
customary. Management must be committed to a plan to sell the assets which are expected to qualify for recognition as a
completed sales within one year from the date of classification. However, an extension of the period required to complete
the sale does not preclude the assets (or disposal groups) from being classified as held for sale if the delay is caused by
events or circumstances beyond the control of the Group and there is sufficient evidence that the Group remains committed
to its plan to sell the assets (or disposal groups).
When the Group is committed to a sale plan involving loss of control of a subsidiary, all of the assets and liabilities of that
subsidiary are classified as held for sale when the criteria described above are met, regardless of whether the Group retains
a non-controlling interest in its former subsidiary after the sale or otherwise.
Immediately before classification as held for sale, the measurement of the non-current assets (or all the assets and liabilities
in a disposal group) is brought up-to-date in accordance with applicable FRSs. Then, on initial classification as held for sale,
non-current assets or disposal groups (other than investment properties, deferred tax assets, employee benefits assets,
financial assets and inventories) are measured in accordance with FRS 5 that is at the lower of carrying amount and fair value
less costs to sell. Any differences are included in profit or loss as an impairment loss.
The Group measures a non-current asset (or disposal group) classified as held for distribution to owners at the lower of its
carrying amount and fair value less costs to distribute.
153
NOTES TO THE
FINANCIAL STATEMENTS
5. SIGNIFICANT ACCOUNTING POLICIES (Continued)
5.21 Non-current Assets (or Disposal Groups) Held For Sale (Continued)
Non-current assets (or disposal groups) held for sale are classified as current assets (and current liabilities, in the case of noncurrent liabilities included within disposal groups) on the face of the statement of financial position and are stated at the
lower of carrying amount immediately before initial classification and fair value less costs to sell and are not depreciated.
Any cumulative income or expense recognised directly in equity relating to the non-current asset (or disposal group)
classified as held for sale is presented separately.
If the Group has classified an asset (or disposal group) as held for sale but subsequently the criteria for classification is no
longer met, the entity shall cease to classify the asset (or disposal group) as held for sale. The Group shall measure a noncurrent asset that ceases to be classified as held for sale (or ceases to be included in a disposal group classified as held for
sale) at the lower of:
i.
its carrying amount before the asset (or disposal group) was classified as held for sale, adjusted for any depreciation,
amortisation or revaluations that would have been recognised had the asset (or disposal group) not been classified as
held for sale; and
ii.
its recoverable amount at the date of the subsequent decision not to sell.
engage in business activities from which they may earn revenues and incur expenses (including revenues and expenses
relating to transactions with other components of the Group);
ii.
whose operating results are regularly reviewed by the Groups chief operating decision maker (i.e. the Groups Chief
Executive Officer) in making decisions about resources to be allocated to the segment and assessing its performance; and
The reported revenue, including both sales to external customers and intersegment sales or transfers, is ten (10) per
cent or more of the combined revenue, internal and external, of all operating segments.
ii.
The absolute amount of reported profit or loss is ten (10) per cent or more, in absolute terms of the greater of:
a.
the combined reported profit of all operating segments that did not report a loss; and
b.
the combined reported loss of all operating segments that reported a loss.
iii. The assets are ten (10) per cent or more of the combined assets of all operating segments.
154
6. REVENUE
Group
Company
2012
RM000
2011
RM000
2012
RM000
2011
RM000
154,337
842,977
3,553,484
2,462,453
8,377,827
95,312
97,068
56,814
301,288
971,630
3,409,492
2,722,151
8,526,663
95,653
88,750
38,624
375,222
973,089
400,681
1,700,551
15,640,272
16,154,251
1,348,311
2,101,232
Company
2012
RM000
2011
RM000
2012
RM000
2011
RM000
128,671
85,647
294,626
129,942
12,056
388,111
3,829
483,485
164,970
6,066
13,053
154,259
4,550
33,373
2,142
709
622,366
93,080
21,081
11,764
213,992
2,034
25
42,582
62,691
3,020
8,064
33,373
1,319
19,673
1,514
2,640
936
2,390
155
NOTES TO THE
FINANCIAL STATEMENTS
7. OTHER OPERATING INCOME/EXPENSES (Continued)
(a) Other Operating Income (Continued)
Group
Company
2012
RM000
2011
RM000
2012
RM000
2011
RM000
13,693
124,510
69
48,567
24,341
4,602
18,124
31,057
55,975
28,506
1,167
4,602
31,057
29,807
2,694
1,266,154
1,628,282
87,509
484,863
156
Company
2012
RM000
2011
RM000
2012
RM000
2011
RM000
160,058
13,946
36,524
5,177
135,964
351,285
203,491
10,063
21,190
5,982
52,629
90,678
1,771
1,299
10,026
1,423
71,124
275,998
1,084
1,274
4,098
1,527
2,392
5,164
369,480
1,773
217,882
49
665
318
112
5,938
3,039
9,171
28,440
734,903
243,926
666
56,610
54
421
273
3,170
2,752
111,232
389
2,640
318
54
594
7
104
70,003
56,610
1
450
2,121
19
2,650
1,339,821
1,538,040
365,747
147,393
8. OPERATING PROFIT
Group
(a)
Company
2012
RM000
2011
RM000
2012
RM000
2011
RM000
2,826
2,824
1,182
1,182
125
125
243
144
464
178
23
173
1,190
1,182
46
39
601
90
508
3,300
252,482
28,112
25,032
11,609
778
1,559
39,261
4,330
243,480
30,037
21,497
7,549
955
1,559
8,064
11,656
4,093
101
1,299
4,330
4,016
98
1,274
11,656
521
9,677
51,731
5,066
17
6,694
37,534
1,034
56
8,077
33,256
270
927,563
12,000
37,534
73
1,653,944
9,000
95,312
7,524
2,919
95,653
8,339
2,785
127
101
Cost of inventories of the Group and of the Company recognised as an expense during the financial year amounted to
RM8,536,804,000 (2011 RM9,535,453,000) and RM15,390,000 (2011 RM22,883,000) respectively.
157
NOTES TO THE
FINANCIAL STATEMENTS
8. OPERATING PROFIT (Continued)
(b) Employee information
The employee benefits costs are as follows:
Group
Company
2012
RM000
2011
RM000
2012
RM000
2011
RM000
706,883
50,828
25,032
4,330
658,375
26,341
21,497
11,656
96,367
7,758
101
4,330
101,651
8,716
98
11,656
787,073
717,869
108,556
122,121
9. INTEREST INCOME
Group
Company
2012
RM000
2011
RM000
2012
RM000
2011
RM000
13,010
27,787
2,283
6,688
13,185
25,285
2,401
6,275
3,690
90,968
387
2,960
92,762
314
49,768
47,146
95,045
96,036
158
Company
2012
RM000
2011
RM000
2012
RM000
2011
RM000
Interest expenses
Term loans
Guaranteed Notes
Short term loans
Revolving credits
Bank overdrafts
Hire purchase
Subsidiaries
Others
109,445
80,715
4,211
41
91
2,975
80,456
80,587
1,342
78
112
106
8,144
65,846
143,678
1,778
45,402
159,055
7,864
197,478
(6,389)
170,825
(910)
211,303
212,322
191,089
169,915
211,303
212,322
11. TAXATION
Group
Current year
Malaysian income taxation
Foreign taxation
Deferred taxation (Note 23)
Company
2012
RM000
2011
RM000
2012
RM000
2011
RM000
569,088
4,086
(27,297)
575,613
30,678
(12,529)
55,000
102
60,000
(1)
545,877
593,762
55,102
59,999
Prior years
Malaysian income taxation
Foreign taxation
Deferred taxation (Note 23)
(490)
12,361
(7,316)
4,353
(3,353)
(21,663)
(263)
(373)
4,555
(20,663)
(263)
(373)
550,432
573,099
54,839
59,626
A numerical reconciliation between average effective tax rate and applicable tax rate of the Group and of the Company is as
follows:
Group
Company
2012
%
2011
%
2012
%
2011
%
25.00
25.00
25.00
25.00
7.56
(6.82)
(0.01)
(0.17)
(0.37)
3.13
(6.30)
(0.01)
(0.29)
(0.18)
17.23
(4.45)
(30.40)
4.21
(6.48)
(19.87)
(0.01)
(0.04)
0.18
(1.27)
(0.34)
(0.77)
(0.02)
0.29
(1.05)
(0.45)
0.61
22.95
0.19
20.73
(0.72)
7.38
(0.03)
2.85
(0.02)
23.14
20.01
7.35
2.83
159
NOTES TO THE
FINANCIAL STATEMENTS
11. TAXATION (Continued)
The amount of tax savings arising from the utilisation of brought forward unutilised tax losses of the Group amounted to
approximately RM262,000 (2011 RM395,000).
Subject to agreement with the tax authorities, certain subsidiaries of the Group have unutilised tax losses of approximately
RM76,300,000 (2011 RM77,348,000), for which the related tax effects have not been recognised in the financial statements. These
losses are available to be carried forward for set off against future chargeable income when these subsidiaries derive future
assessable income of a nature and amount sufficient for the tax losses to be utilised.
Malaysian income tax is calculated at the statutory rate of 25% (2011 25%) of the estimated assessable profit for the year. Taxation
for other jurisdictions is calculated at the rates prevailing in the respective jurisdictions. Deferred tax is calculated on temporary
differences between the tax base of assets and liabilities and their carrying amounts in the financial statements.
2011
Profit for the financial year attributable to owners of the parent (RM000)
1,789,370
2,222,899
6,399,397
6,396,303
27.96
34.75
160
2012
RM000
2011
RM000
1,789,370
2,222,899
38,072
(23,924)
14,148
18,538
(87,148)
(68,610)
1,789,370
2,168,437
Adjusted profit for the financial year attributable to owners of the parent
The adjusted weighted average number of ordinary shares for the computation of diluted earnings per ordinary share is arrived at
as follows:
Group
2012
000
2011
000
Weighted average number of ordinary shares in issue after deducting the treasury shares
Assumed exchange of the 2nd Exchangeable Bonds at beginning of the period
Assumed exchange of the 3rd Exchangeable Bonds at beginning of the period
Adjustments for share option granted to executives of the Group
6,399,397
19,777
6,396,303
62,940
1,254
28,657
6,419,174
6,489,154
27.88
33.42
* The conversion of 3rd Exchangeable Bonds had an anti-dilutive effect on the earnings per ordinary share to the equity holders of the
parent.
161
NOTES TO THE
FINANCIAL STATEMENTS
13. DIVIDENDS
Group and Company
2012
RM000
2011
RM000
575,571
447,883
638,135
513,083
1,023,454
1,151,218
The Directors have declared a second interim single tier dividend of 8.5 sen per ordinary share, amounting to RM543,856,367 in
respect of the financial year ended 30 June 2012. The dividend is payable on 4 October 2012 to shareholders whose names appear
in the Record of Depositors of the Company at the close of business on 26 September 2012.
No final dividend has been recommended for the financial year ended 30 June 2012.
162
Disposals
RM000
Foreign
currency
translation
differences
RM000
5,684
5,128
40,779
40,208
137,825
9,424
11,756
152,924
(213)
(26)
(1,163)
(9,390)
(3,186)
(2,077)
403,728
(16,055)
At beginning
of financial
year
RM000
Write-offs
RM000
Reclassifications*
RM000
At end of
financial
year
RM000
(3,942)
(165)
(2,396)
(40,001)
(62,496)
(48)
(4,779)
102
(86)
(19)
(2,794)
(7,369)
(5,450)
(561)
(1,299)
(36,764)
216
71,534
107,246
186,472
347
2,412
(368,447)
506,710
949,478
1,803,443
85,969
1,534,188
3,070,390
94,938
231,403
185,512
(113,725)
(17,578)
(36,984)
8,462,031
Current year
depreciation
charge
RM000
Disposals
RM000
Foreign
currency
translation
differences
RM000
Write-offs
RM000
At end of
financial
year
RM000
123,518
1,610
494,417
1,718,059
66,195
161,370
10,138
428
49,163
168,438
6,847
17,468
(677)
(9,156)
(2,857)
(1,706)
(53)
(9,944)
(29,825)
(33)
(3,418)
(30)
(408)
(4,641)
(4,839)
(555)
(1,167)
133,573
1,630
528,318
1,842,677
69,597
172,547
2,565,169
252,482
(14,396)
(43,273)
(11,640)
2,748,342
At beginning
of financial
year
RM000
Additions
RM000
541,945
944,601
1,764,889
17,229
1,435,267
2,823,429
88,962
225,390
400,933
8,242,645
At cost
Freehold land
Leasehold land
Plantation development expenditure
Golf course development expenditure
Buildings and improvements
Plant and machinery
Motor vehicles
Furniture, fittings and equipment
Construction in progress
Accumulated depreciation
Leasehold land
Golf course development expenditure
Buildings and improvements
Plant and machinery
Motor vehicles
Furniture, fittings and equipment
* Freehold land and plant and machinery with carrying amounts of RM36,764,000 and RM220,000 respectively have been reclassified to investment properties.
163
NOTES TO THE
FINANCIAL STATEMENTS
14. PROPERTY, PLANT AND EQUIPMENT (Continued)
Group
2011
At cost
Freehold land
Leasehold land
Plantation development expenditure
Golf course development expenditure
Buildings and improvements
Plant and machinery
Motor vehicles
Furniture, fittings and equipment
Construction in progress
Accumulated depreciation
Leasehold land
Golf course development expenditure
Buildings and improvements
Plant and machinery
Motor vehicles
Furniture, fittings and equipment
164
Disposals
RM000
Foreign
currency
translation
differences
RM000
Write-offs
RM000
Adjustments
RM000
At end of
financial
year
RM000
41,774
30,420
33,777
79,742
9,507
24,130
219,495
(4,224)
(59)
(3,935)
(4,085)
(2,675)
(5,086)
(5,832)
3,628
101
(787)
38,659
60,393
(42)
436
1,218
(1,899)
(323)
(3,179)
(4,912)
(1,537)
(1,668)
(40)
(52,583)
159
47,414
(47,573)
541,945
944,601
1,764,889
17,229
1,435,267
2,823,429
88,962
225,390
400,933
7,792,231
438,845
(25,896)
103,606
(13,558)
(52,583)
8,242,645
At beginning
of financial
year
RM000
Current year
depreciation
charge
RM000
Disposals
RM000
Foreign
currency
translation
differences
RM000
Write-offs
RM000
Adjustments
RM000
At end of
financial
year
RM000
166,401
1,288
443,775
1,563,398
63,034
119,403
9,672
322
46,385
133,934
7,268
45,899
(1,438)
(1,806)
(2,564)
(2,681)
28
8,357
27,105
(57)
417
(2,662)
(4,572)
(1,486)
(1,668)
(52,583)
123,518
1,610
494,417
1,718,059
66,195
161,370
2,357,299
243,480
(8,489)
35,850
(10,388)
(52,583)
2,565,169
At beginning
of financial
year
RM000
Additions
RM000
500,767
997,083
1,737,214
17,552
1,369,945
2,692,291
83,550
160,164
233,665
Additions
RM000
Reclassifications
RM000
Disposals
RM000
Write-offs
RM000
At end of
financial
year
RM000
212,694
9,695
185,681
35,206
36,292
8,761
13,059
601
1,770
970
1,379
2,502
1,040
986
601
(601)
(45)
(451)
(12)
(68)
(200)
(149)
212,694
9,695
187,451
36,709
37,426
10,812
13,938
986
501,989
8,647
(508)
(417)
509,711
At beginning
of financial
year
RM000
Current year
depreciation
charge
RM000
Disposals
RM000
Write-offs
RM000
At end of
financial
year
RM000
2,086
15,803
29,424
7,555
10,589
105
1,334
1,333
638
683
(45)
(451)
(10)
(36)
(191)
(136)
2,191
17,101
30,521
7,742
11,126
65,457
4,093
(506)
(363)
68,681
At beginning
of financial
year
RM000
At cost
Freehold land
Leasehold land
Plantation development expenditure
Buildings and improvements
Plant and machinery
Motor vehicles
Furniture, fittings and equipment
Construction in progress
Accumulated depreciation
Leasehold land
Buildings and improvements
Plant and machinery
Motor vehicles
Furniture, fittings and equipment
165
NOTES TO THE
FINANCIAL STATEMENTS
14. PROPERTY, PLANT AND EQUIPMENT (Continued)
Company
2011
At beginning
of financial
year
RM000
Additions
RM000
Disposals
RM000
Write-offs
RM000
At end of
financial
year
RM000
212,790
9,695
185,690
39,082
38,741
8,982
16,467
6
2,100
195
757
714
461
595
(96)
(59)
(3,915)
(3,019)
(917)
(3,614)
(2,050)
(156)
(187)
(18)
(255)
212,694
9,695
185,681
35,206
36,292
8,761
13,059
601
511,453
4,822
(11,620)
(2,666)
501,989
At beginning
of financial
year
RM000
Current year
depreciation
charge
RM000
Disposals
RM000
Write-offs
RM000
At end of
financial
year
RM000
1,980
16,030
29,522
7,807
11,588
106
1,303
1,250
611
746
(1,433)
(1,166)
(845)
(1,497)
(97)
(182)
(18)
(248)
2,086
15,803
29,424
7,555
10,589
66,927
4,016
(4,941)
(545)
65,457
At cost
Freehold land
Leasehold land
Plantation development expenditure
Buildings and improvements
Plant and machinery
Motor vehicles
Furniture, fittings and equipment
Construction in progress
Accumulated depreciation
Leasehold land
Buildings and improvements
Plant and machinery
Motor vehicles
Furniture, fittings and equipment
166
Company
2012
RM000
2011
RM000
2012
RM000
2011
RM000
506,710
815,905
1,803,443
84,339
1,005,870
1,227,713
25,341
58,856
185,512
541,945
821,083
1,764,889
15,619
940,850
1,105,370
22,767
64,020
400,933
212,694
7,504
187,451
19,608
6,905
3,070
2,812
986
212,694
7,609
185,681
19,403
6,868
1,206
2,470
601
5,713,689
5,677,476
441,030
436,532
Carrying amount
Freehold land
Leasehold land
Plantation development expenditure
Golf course development expenditure
Buildings and improvements
Plant and machinery
Motor vehicles
Furniture, fittings and equipment
Construction in progress
Included in the Groups plantation development expenditure and construction in progress is an amount of interest expense
capitalised during the financial year amounting to RM6,389,000 (2011 RM910,000).
Interest is capitalised at the rate 4.50% to 7.30% (2011 4.50% to 7.30%) per annum.
Included in property, plant and equipment are the carrying amounts of assets acquired under finance lease as follows:
Group
Company
2012
RM000
2011
RM000
2012
RM000
2011
RM000
597
540
During the financial year, the Group and the Company made the following cash payments to purchase property, plant and
equipment:
Group
Company
2012
RM000
2011
RM000
2012
RM000
2011
RM000
403,728
(6,389)
(122)
438,845
(41,600)
(910)
(440)
8,647
4,822
397,217
395,895
8,647
4,822
167
NOTES TO THE
FINANCIAL STATEMENTS
15. PREPAID LEASE PAYMENTS
Group
Long term
leasehold
land
RM000
Short term
leasehold
land
RM000
Total
RM000
2012
At cost
At beginning of financial year
Additions
Exchange difference
56,710
2,499
3,370
(100)
60,080
2,499
(100)
59,209
3,270
62,479
29,678
2,824
395
2
30,073
2,826
32,502
397
32,899
26,707
2,873
29,580
54,205
2,505
2,550
851
(31)
56,755
3,356
(31)
56,710
3,370
60,080
26,856
2,822
393
2
27,249
2,824
29,678
395
30,073
27,032
2,975
30,007
Accumulated amortisation
Carrying amount
At end of financial year
2011
At cost
Accumulated amortisation
Carrying amount
At end of financial year
168
Long term
leasehold
land
RM000
Short term
leasehold
land
RM000
Development
costs
RM000
Total
RM000
419,730
1,076,920
113,411
67
173
301,199
106,496
834,513
1,183,483
(629)
(687)
(116,047)
(559)
(147,865)
(1,242)
(9,303)
1,467,342
100,924
173
290,460
1,858,899
435,564
9,935
118,073
173
359,518
26,381
913,328
36,316
(1,593)
(35,704)
(37,297)
(23,815)
(361)
(4,662)
(48,736)
(260)
(77,213)
(621)
419,730
113,411
173
301,199
834,513
Group
2012
At cost
(58)
(19,515)
(432)
(9,303)
(12,303)
(251)
2011
At cost
Included in land held for property development of the Group are plantation land of RM94,832,000 (2011 RM95,298,000) acquired
in previous financial years, which are intended to be used for property development. Currently, the subsidiaries are harvesting oil
palm crops from the said land.
169
NOTES TO THE
FINANCIAL STATEMENTS
17. INVESTMENT PROPERTIES
Group
At beginning
of financial
year
RM000
Transfer
Transfer
from land
(to)/from
held for
property
property
development
cost development
RM000
RM000
Fair value
adjustments
RM000
Additions
RM000
Foreign
currency
translation
differences
RM000
Transfer
from
property,
plant and
equipment
RM000
Disposals
RM000
At end of
financial
year
RM000
2012
At fair value
Freehold land and
buildings
1,062,529
(7,400)
687
164,970
75,292
36,984
(6,350)
1,326,712
1,062,529
(7,400)
687
164,970
75,292
36,984
(6,350)
1,326,712
853,129
62,185
37,297
93,080
25,755
(8,917)
1,062,529
260,416
8,190
(268,606)
1,113,545
62,185
37,297
93,080
25,755
8,190
(277,523)
1,062,529
2011
At fair value
Freehold land and
buildings
Leasehold land and
buildings
The fair values of the investment properties above were estimated based on valuations by independent registered valuers.
Valuations were based on market evidence of transaction prices for similar properties for certain properties and where appropriate,
the investment method reflecting receipts of contractual rentals, expected future market rentals, current market yields, void periods,
sinking funds and maintenance requirements and approximate capitalisation rates is used. The Group uses assumptions that are
mainly based on market conditions existing at each reporting date.
170
Description
Tenure of land
IOI Mall
Bandar Puchong Jaya
Puchong
Selangor Darul Ehsan
Freehold
57,525 sq. m.
Freehold
22,672 sq. m.
2 blocks of purpose-built
office building
Freehold
34,996 sq. m.
IOI Boulevard
Bandar Puchong Jaya
Puchong
Selangor Darul Ehsan
Freehold
26,184 sq. m.
Freehold
2,111 sq. m.
Freehold
1,699 sq. m.
Freehold
2,690 sq. m.
PT No. 82181
Lebuh Putra Utama
Bandar Putra, Kulai
Johor Darul Takzim
Commercial land
Freehold
8,901 sq. m.
Puteri Mart
Bandar Puteri
Puchong
Selangor Darul Ehsan
1 storey semi-wet
market
Freehold
4,226 sq. m.
171
NOTES TO THE
FINANCIAL STATEMENTS
17. INVESTMENT PROPERTIES (Continued)
Investment properties comprise: (Continued)
Name of building/location
Description
Tenure of land
IOI Resort
Putrajaya
Freehold
23,941 sq. m.
IOI Mall
Bandar Putra, Kulai
Johor Bahru
Johor Darul Takzim
Freehold
23,128 sq. m.
IOI Mart
Taman Lagenda Putra
Senai-Kulai
Johor Bahru
Johor Darul Takzim
Freehold
7,058 sq. m.
IOI Square
IOI Resort
Putrajaya
Freehold
30,969 sq. m.
Lot 17355
Petaling Jaya
Selangor Darul Ehsan
Freehold
1,650 sq. m.
Freehold
307 sq. m.
PFCC
Tower 3, 4 and 5
Bandar Puteri
Puchong
Selangor Darul Ehsan
Freehold
N/A
Freehold
N/A
172
2011
RM000
511,994
513,830
(273)
(1,563)
511,994
511,994
The goodwill recognised on the acquisitions in the previous years was attributable mainly to the skills and technical talents of the
acquired businesss work force and the synergies expected to be achieved from integrating the company into the Groups existing
business.
For the purpose of impairment testing, goodwill is allocated to the Groups Cash-generating Units (CGUs) identified according to
the operating segments as follows:
Group
Plantation
Property
Resource-based manufacturing
2012
RM000
2011
RM000
93,025
83,004
335,965
93,025
83,004
335,965
511,994
511,994
Goodwill is tested for impairment on an annual basis by comparing the carrying amount with the recoverable amount of the CGUs
based on value-in-use. Value-in-use is determined by discounting the future cash flows to be generated from the continuing use
of the CGUs based on the following assumptions:
i.
Cash flows are projected based on the managements most recent three-year business plan and extrapolated to period of ten
(10) years (the average economic useful lives of the assets) for all companies with the exception of plantation companies. For
plantation companies, cash flows are projected for a period of twenty-five (25) years (the average life cycle of oil palm trees).
ii.
Discount rates used for cash flows discounting purpose is the Groups weighted average cost of capital. The average discount
rate applied for cash flow projections is 10.61%.
iii. Growth rate for the plantation segment are determined based on the managements estimate of commodity prices, palm
yields, oil extraction rates and also cost of productions whilst growth rates of other segments are determined based on the
industry trends and past performances of the segments.
iv. Profit margins are projected based on the industry trends, historical profit margin achieved or pre-determined profit margin
for property projects.
The management is not aware of any reasonably possible change in the above key assumptions that would cause the carrying
amounts of the CGUs to materially exceed their recoverable amounts.
173
NOTES TO THE
FINANCIAL STATEMENTS
18. GOODWILL ON CONSOLIDATION (Continued)
18.1 Disposal of product lines
During the previous financial year, the Group divested three product lines from the Lipid Nutrition unit, and the impact was
summarised as follows:
RM000
Net assets disposed
Goodwill allocated
6,201
1,563
7,764
(25,888)
(18,124)
19. SUBSIDIARIES
19.1 Investments in subsidiaries
Company
2012
RM000
2011
RM000
At cost
Unquoted shares in Malaysia
Unquoted shares outside Malaysia
5,605,521
2,356,612
5,508,255
881,963
7,962,133
(5,619)
6,390,218
(5,619)
7,956,514
6,384,599
Details of the subsidiaries are set out in Note 46 to the financial statements.
2012
During the financial year, the Company:
i.
acquired 79,700 ordinary shares of RM0.50 each in IOI Properties Berhad (IOIP) (IOIP Shares) at an average price of
RM3.33 per IOIP Shares with cash payments of RM265,580. The acquisitions have no material impact to the Group
financial statements.
ii.
subscribed for an additional 2,500,000 ordinary shares of RM1.00 each in IOI Management Sdn Bhd at par value. The
consideration for the subscription was settled by offsetting the amount due from IOI Management Sdn Bhd to the
Company.
iii. received RM4,265 upon liquidation of a subsidiary, Tampoi Development Sdn Bhd. Total gain recognised from the
liquidation is RM4,263.
174
subscribed for 100,000,000 redeemable preference shares of RM1.00 each in Dreammont Development Sdn Bhd at par
value. The consideration for the subscription was settled by offsetting the amount due from Dreammont Development
Sdn Bhd to the Company.
vi. subscribed for 593,611,489 redeemable preference shares of SGD1.00 each (equivalent to RM1,474,649,000 in total) in
IOI Consolidated (Singapore) Pte Ltd at par value. The consideration for the subscription was settled by offsetting the
amount due from IOI Consolidated (Singapore) Pte Ltd to the Company.
2011
During the previous financial year, the Company:
i.
received total amount of RM9,680,514 upon completion of the disposal of equity interest in a subsidiary, Projects IOI
(Mauritius) Ltd. Total gain recognised from the disposal was RM4,602,000.
ii.
acquired 489,600 ordinary shares of RM0.50 each in IOI Properties Berhad (IOIP) (IOIP Shares) at an average price of
RM3.11 per IOIP Shares with cash payment of RM1,523,000. The acquisitions had no material impact to the Group
financial statements.
iii. subscribed an additional of 1,900,000 ordinary shares of RM1.00 each in IOI Palm Biotech Sdn Bhd at par value. The
consideration for the subscription was settled by offsetting the amount due from IOI Palm Biotech Sdn Bhd to the
Company.
iv. received RM1,097,000 upon liquidation of a subsidiary, IOI Pelita Quarry Sdn Bhd. Total loss recognised from the
liquidation was RM450,000.
v.
subscribed an additional of 73,999,998 ordinary shares of RM1.00 each in IOI Lipid Enzymtec Sdn Bhd at par value. The
consideration for the subscription was settled by offsetting the amount due from IOI Lipid Enzymtec Sdn Bhd to the
Company.
vi. acquired 2 ordinary shares of RM1.00 each in Speed Modulation Sdn Bhd (SMSB) at par value representing the entire
issued and paid-up share capital of SMSB for a cash consideration of RM2. As a result, SMSB became a wholly-owned
subsidiary of the Company. The acquisitions had no material impact to the Group financial statements.
The effects on disposals and liquidation of subsidiaries are disclosed in Note 37 to the financial statements.
175
NOTES TO THE
FINANCIAL STATEMENTS
19. SUBSIDIARIES (Continued)
19.2 Amounts due from and to subsidiaries
The amounts due from and to subsidiaries represent outstanding amounts arising from inter-company sales and purchases,
advances and payments made on behalf of or by subsidiaries. These amounts are unsecured and bear interest at rates
ranging from 0% to 7.30% (2011 0% to 7.30%) per annum.
The non-current amounts due to subsidiaries are payable on a back-to-back basis with the corresponding borrowings of the
Group. The current amounts due from and to subsidiaries are payable upon demand in cash and cash equivalents.
20. ASSOCIATES
20.1 Investments in associates
Group
Company
2012
RM000
2011
RM000
2012
RM000
2011
RM000
483,744
44,146
327,190
44,146
20,350
22,850
527,890
289,250
371,336
296,738
20,350
22,850
817,140
668,074
20,350
22,850
Details of the associates are set out in Note 46 to the financial statements.
An associate of the Group was listed on the Singapore Stock Exchange Limited on 12 April 2012. This listing of this associate
has resulted in a dilution of IOI Groups interest in the associate from 36.05% to 30.44%. In relation to this, the Group has
recorded a gain on dilution of interest in associate amounting to approximately RM124.51 million in its consolidated income
statement for the current financial year.
20.2 Summary of financial information of associates
2012
RM000
2011
RM000
3,942,194
1,309,106
3,006,625
1,333,760
2,620,376
401,154
2,448,004
393,629
176
2012
RM000
2011
RM000
942,641
(98,479)
912,617
(146,518)
844,162
2,638,945
766,099
2,333,033
3,483,107
3,099,132
Details of the jointly controlled entities are set out in Note 46 to the financial statements.
Amounts due from jointly controlled entities represent outstanding amounts arising from the subsidiaries proportionate
advances for the acquisitions and development of land in Singapore and China and for development expenses and working
capital, which are unsecured, bear interest at rates ranging from 0.90% to 2.05% (2011 0.90% to 1.91%) per annum and are
not repayable within the next twelve (12) months.
Guarantees given proportionally by the Group and the Company for credit facilities of jointly controlled entities amounted
to RM1,044,064,000 (2011 RM1,026,918,000) and RM907,744,000 (2011 RM892,837,000) respectively.
The Groups share of assets, liabilities, income and expenses of the jointly controlled entities are as follows:
Group
2012
RM000
2011
RM000
Non-current assets
Current assets
1,151
5,777,473
813
5,148,864
Total assets
5,778,624
5,149,677
Current liabilities
Non-current liabilities
2,157,344
2,777,118
635,270
3,748,308
Total liabilities
4,934,462
4,383,578
Results
139,935
(107,200)
Revenue
Expenses, including finance costs and taxation
157,276
(106,279)
177
NOTES TO THE
FINANCIAL STATEMENTS
21. JOINTLY CONTROLLED ENTITIES (Continued)
21.2 Capital commitment of jointly controlled entities
Group
2012
RM000
2011
RM000
1,243,445
543,887
938,647
Fair value
Financial
Financial
Assets
Liabilities
RM000
RM000
2012
Forward foreign exchange contracts
Commodity forward contracts
Commodity futures
Cross currency swap contracts
Interest rate swap contracts
(2,106,882)
441,308
(122,189)
1,982,467
2,153,430
38,389
119,940
13,596
67,051
110,225
86,484
6,139
79,822
2,348,134
238,976
282,670
(171,925)
(202,848)
Non-current portion
67,051
79,822
2011
178
(2,370,787)
(185,923)
(125,289)
18,000
1,924,846
1,816,200
21,015
137,629
47,088
2,640
14,924
3,695
19,815
97,472
22,268
69,406
1,077,047
226,991
208,961
(208,372)
(189,055)
Non-current portion
18,619
19,906
Fair value
Financial
Financial
Assets
Liabilities
RM000
RM000
2012
Cross currency swap contracts
Interest rate swap contracts
318,184
1,917,000
14,597
74,884
2,235,184
14,597
74,884
14,597
74,884
18,000
652,940
1,816,200
2,640
3,695
2,640
69,406
2,487,140
6,335
72,046
(2,640)
(52,140)
Non-current portion
3,695
19,906
i.
Forward foreign exchange contracts were entered into as hedges for sales and purchases denominated in foreign currencies
and to limit the exposure to potential changes in foreign exchange rates with respect to the Groups foreign currencies
denominated financial assets and financial liabilities.
ii.
The commodities forward contracts, swap contracts and futures were entered into with the objective of managing and
hedging the respective exposure of the Groups plantation segment and resource-based manufacturing segment to adverse
price movements in vegetable oil commodities. The fair values of these components have been determined based on
published market prices or quoted prices from reputable financial institutions.
Currency swap contracts are used to hedge foreign currency exposures of borrowings.
Interest rate swap contracts are used to hedge the Groups exposures to movements in interest rates.
179
NOTES TO THE
FINANCIAL STATEMENTS
22. DERIVATIVE FINANCIAL INSTRUMENTS (Continued)
All the above derivatives are initially recognised at fair value on the date the derivative contract is entered into and are subsequently
re-measured at fair value through profit or loss. The resulting gain or loss from the re-measurement is recognised in profit or loss.
During the financial year, the Group and the Company recognised total fair value losses of RM73,709,000 (2011 RM129,343,000)
and RM2,838,000 (2011 RM42,357,000) respectively arising from fair value changes of derivative liabilities. The fair value changes
are attributable to changes in foreign exchange spot and forward foreign exchange and interest rates. The methods and
assumptions applied in determining the fair values of derivatives are disclosed in Note 42.6.
Company
2012
RM000
2011
RM000
2012
RM000
2011
RM000
403,376
425,482
6,256
6,630
Current year
Prior years
(27,297)
(7,316)
(12,529)
(21,663)
102
(263)
(1)
(373)
(34,613)
(12,167)
(34,192)
12,086
(161)
(374)
356,596
403,376
6,095
6,256
180
Company
2012
RM000
2011
RM000
2012
RM000
2011
RM000
427,672
(71,076)
453,046
(49,670)
6,095
6,256
356,596
403,376
6,095
6,256
Company
2012
RM000
2011
RM000
2012
RM000
2011
RM000
453,046
452,397
6,256
6,630
(11,491)
195
45,408
(68)
(149)
(160)
(9,314)
(27,563)
2,981
199
(24,177)
(2,720)
(17,579)
(7,630)
(165)
(9,280)
9,929
(161)
(374)
427,672
453,046
(161)
6,095
(374)
6,256
2011
RM000
49,670
26,915
21,488
145
66
(10,379)
5,714
2,345
(324)
1,660
10,989
10,242
17,034
4,537
(165)
24,912
(2,157)
71,076
49,670
181
NOTES TO THE
FINANCIAL STATEMENTS
23. DEFERRED TAXATION (Continued)
The components of deferred tax liabilities and assets at the end of the reporting period comprise the tax effects of:
Deferred tax liabilities
Group
Company
2012
RM000
2011
RM000
2012
RM000
2011
RM000
289,582
15,824
926
4,163
309,188
15,259
1,075
4,014
6,095
6,256
4,794
1,813
112,383
121,697
427,672
453,046
6,095
6,256
2012
RM000
2011
RM000
26,214
9,314
4,837
4,503
2,124
24,084
730
9,001
4,614
14,882
735
19,708
71,076
49,670
2012
RM000
2011
RM000
19,075
190
1,125
19,337
866
1,214
20,390
21,417
Deferred tax assets of certain subsidiaries have not been recognised in respect of these items as it is not probable that taxable
profit of the subsidiaries will be available against which the deductible temporary differences can be utilised.
182
Group
Freehold
land
RM000
Long term
leasehold
land
RM000
Development
costs
RM000
303,646
3,035
10,527
3,928,780
361,985
Accumulated
cost charged
to profit
or loss
RM000
Total
RM000
2012
At cost
At beginning of financial year
Costs incurred
Transfer from land held for property
development (Note 16)
Transfer to inventories
Transfer from investment properties
(Note 17)
Recognised as expense in profit or loss
as part of cost of sales
At end of financial year
19,515
(6,574)
12,303
(410)
116,047
(91,367)
(4,007,043)
235,910
365,020
147,865
(98,351)
7,400
7,400
(295,470)
327,022
22,420
4,315,445
(4,302,513)
362,374
276,701
4,497
5,865
3,676,652
287,459
(3,602,037)
357,181
291,956
23,815
(1,132)
(235)
4,662
48,736
(22,117)
(61,950)
77,213
(23,249)
(62,185)
(405,006)
(405,006)
303,646
10,527
3,928,780
(4,007,043)
235,910
(295,470)
2011
At cost
At beginning of financial year
Costs incurred
Transfer from land held for property
development (Note 16)
Transfer to inventories
Transfer to investment properties (Note 17)
Recognised as expense in profit or loss
as part of cost of sales
At end of financial year
183
NOTES TO THE
FINANCIAL STATEMENTS
25. INVENTORIES
Group
Company
2012
RM000
2011
RM000
2012
RM000
2011
RM000
63,843
1,347,841
137,340
48,163
24,969
283,700
106,050
92,096
1,462,762
98,317
45,993
81,200
659,529
75,317
3,684
6,423
5,210
224
5,293
6,118
7,771
191
2,011,906
2,515,214
15,541
19,373
120,162
408
378,963
14,904
890
120,647
499,533
136,441
2,511,439
2,651,655
15,541
19,373
At cost
Plantation produce
Raw materials and consumables
Completed development properties
Nursery inventories
Trading inventories
Finished goods
Others
184
Company
2012
RM000
2011
RM000
2012
RM000
2011
RM000
1,346,444
166,360
172,762
1,006
1,475,855
127,229
118,242
677
327
28,257
1,037
23,364
1,686,572
1,722,003
28,584
24,401
Company
2011
RM000
2012
RM000
2011
RM000
1,354,379
(7,935)
1,482,049
(6,194)
921
(594)
1,037
1,346,444
1,475,855
327
1,037
i.
The normal trade credit terms granted by the Group and the Company range from 7 to 120 days. They are recognised
at their original invoiced amounts, which represent their fair values on initial recognition.
ii.
Company
2011
RM000
2012
RM000
2011
RM000
6,194
2,653
(434)
(89)
(389)
19,936
2,522
(9,677)
(3,285)
(3,302)
594
7,935
6,194
594
Company
2011
RM000
2012
RM000
2011
RM000
Other receivables
Less: Impairment losses
68,763
(1,629)
65,098
(1,340)
7,531
1,468
Deposits
Prepayments
67,134
61,326
37,900
63,758
26,383
37,088
7,531
15,830
4,896
1,468
16,218
5,678
166,360
127,229
28,257
23,364
185
NOTES TO THE
FINANCIAL STATEMENTS
26. TRADE AND OTHER RECEIVABLES (Continued)
26.2 Other receivables, deposits and prepayments (Continued)
i.
Included in other receivables of the Group is an amount due from affiliates of RM2,526,000 (2011 RM1,486,000) for
property project management services provided by a subsidiary, which are unsecured, interest-free and payable within
the credit period in cash and cash equivalents.
ii.
Included in deposits of the Group was an amount of RM20,901,000 paid during the current financial year as part of the
purchase price for a piece of land.
iii. The reconciliation of movements in the impairment losses of other receivables is as follows:
Group
2012
RM000
Company
2011
RM000
2012
RM000
2011
RM000
1,340
386
(87)
(1)
(9)
1,127
230
(15)
(2)
1,629
1,340
Progress billings
Amounts due from customers on contracts
186
2012
RM000
2011
RM000
25,869
5,829
25,453
5,721
31,698
(30,692)
31,174
(30,497)
1,006
677
Company
2012
RM000
2011
RM000
2012
RM000
2011
RM000
62,589
1,484
6,300
58,044
1,305
1,912
6,477
7,087
4,390
439
3,817
349
75,202
65,427
6,477
7,087
Company
2012
RM000
2011
RM000
2012
RM000
2011
RM000
1,775,235
1,725,237
1,042,035
1,403,759
Investments in fixed income trust funds in Malaysia represent investments in highly liquid money market, which are readily
convertible to known amounts of cash and are subject to an insignificant risk of changes in value.
Company
2012
RM000
2011
RM000
2012
RM000
2011
RM000
2,004,285
19,693
546,298
46,566
211,058
209,973
2,023,978
592,864
211,058
209,973
187
NOTES TO THE
FINANCIAL STATEMENTS
31. SHARE CAPITAL
Group and Company
2012
2011
No. of shares
RM000
No. of shares
RM000
7,500,000,000
750,000
7,500,000,000
750,000
Authorised
Ordinary shares of RM0.10 each
RM000
6,416,032,495
7,486,900
3,731,900
641,603
749
373
6,427,251,295
642,725
6,675,517,480
5,973,800
5,899,800
667,552
597
590
27,060,115
(298,418,700)
2,706
(29,842)
6,416,032,495
641,603
2011
Ordinary shares of RM0.10 each
188
i.
The owners of the parent are entitled to receive dividends as declared from time to time and are entitled to one vote per
share at meetings of the Company. All ordinary shares rank equally with regard to the Companys residual assets.
ii.
Of the total 6,427,251,295 (2011 6,416,032,495) issued and fully paid-up ordinary shares of RM0.10 each, 28,941,100 shares
(2011 nil) are held as treasury shares as disclosed in Note 32.2 to the financial statements. Accordingly, the number of
ordinary shares in issue and fully paid-up after deducting treasury shares as at end of the financial year is 6,398,310,195 (2011
6,416,032,495) ordinary shares of RM0.10 each.
The total number of new ordinary shares in the Company (IOI Shares), which may be made available under the ESOS
shall not exceed 10% of the total issued and paid-up ordinary share capital of the Company at the time an offer of
options is made in writing by a committee appointed by the Board to administer the ESOS (Option Committee).
(b) Eligibility
Save for executives who are employed by the foreign subsidiaries of the Company (including the Malaysian subsidiaries
of such foreign subsidiaries), and executives who are employed by subsidiaries of the Company, of which the Company
holds less than 75% of the issued and paid-up share capital, any executive (including Executive Director) of the Group
shall be eligible to participate in the ESOS if, as at the date of the Offer (Offer Date), the executive:
i.
ii.
is in the full time employment and payroll of a company within the Group (other than a company which is
dormant) for at least 3 years; and
iii. falls within such other categories and criteria that the Option Committee may from time to time at its absolute
discretion determine.
(The eligible employees above are hereinafter referred to as Eligible Executive(s))
No executive of the Group shall participate at any time in more than one ESOS implemented by any company within
the Group. The executive to whom the option has been granted has also no right to participate, by virtue of the option,
in any ordinary share issue of any other company.
(c) Maximum allowable allotment and basis of allocation
i.
The aggregate maximum number of new IOI Shares that may be offered and allotted to any of the Eligible
Executives of the Group shall not exceed the maximum allowable allotment set out in the Bye-Laws and subject
to the following:
the number of new IOI Shares allotted, in aggregate, to the Executive Directors and senior management of the
Group shall not exceed 50% of the total new IOI Shares that are available to be issued under the ESOS; and
the number of new IOI Shares allotted to any individual Eligible Executive, who either singularly or collectively
through persons connected with him/her (as defined under the Listing Requirements of Bursa Malaysia
Securities Berhad) holds 20% or more in the issued and paid-up capital of the Company, shall not exceed 10%
of the total new IOI Shares that are available to be issued under the ESOS.
189
NOTES TO THE
FINANCIAL STATEMENTS
31. SHARE CAPITAL (Continued)
31.1 Executive Share Option Scheme (Continued)
(c) Maximum allowable allotment and basis of allocation (Continued)
ii.
The number of new IOI Shares that may be offered and allotted to any of the Eligible Executive shall, subject to
the maximum allowable allotment, be at the sole and absolute discretion of the Option Committee after taking
into consideration the length of service and the performance of the Eligible Executive in the Group as provided in
the Bye-Laws or such other matters which the Option Committee may in its sole and absolute discretion deem fit.
the weighted average market price of the IOI Shares for the 5 market days immediately preceding the Offer Date; or
ii.
The ESOS came into force on 23 November 2005 and shall be for a duration of 10 years.
ii.
The ESOS may be terminated by the Company prior to the expiry of its duration or tenure provided that the
following conditions have been satisfied:
the consent from the Companys shareholders by ordinary resolution at a general meeting have been obtained;
and
the written consent from all Grantees who have yet to exercise their Option, either in part or in whole, has
been obtained.
Options are exercisable only upon the expiry of the first anniversary of the Offer Date.
ii.
Options which are subject of the same Offer shall be exercisable only in 4 tranches over 4 years with a maximum
of 25% of such options exercisable in any year.
iii. Where the maximum of 25% within a particular year has not been exercised by the Grantee, the percentage
unexercised shall be carried forward to subsequent years and shall not be subject to the maximum percentage for
the following year provided that such unexercised options shall not be carried forward beyond the option period.
iv. The Grantee shall be entitled to exercise all remaining options after the 9th anniversary of the ESOS.
190
Option
price
RM
Date of offer
Outstanding
as at
beginning
of the
financial year
Accepted
Exercised
35,438,200
26,161,600
17,965,900
79,565,700
Lapsed
Outstanding
as at end of
the financial
year
Exercisable
as at end of
the financial
year
(7,486,900)
(3,731,900)
(1,796,700)
(2,175,200)
(1,570,000)
26,154,600
20,254,500
16,395,900
26,154,600
20,254,500
6,242,646
(11,218,800)
(5,541,900)
62,805,000
52,651,746
RM3.59
RM3.02
RM3.85
RM3.67
RM3.42
43,817,000
36,010,200
17,965,900
(5,973,800)
(5,899,800)
(2,405,000)
(3,948,800)
35,438,200
26,161,600
17,965,900
35,438,200
26,161,600
79,827,200
17,965,900
(11,873,600)
(6,353,800)
79,565,700
61,599,800
RM3.23
RM5.00
RM3.31
RM3.53
RM3.59
RM3.18
2012
2.44
4.19
12 January 2006
2 April 2007
5.00
6 July 2010
Weighted average
exercise price
2011
2.44
4.19
5.00
12 January 2006
2 April 2007
6 July 2010
Weighted average
exercise price
191
NOTES TO THE
FINANCIAL STATEMENTS
31. SHARE CAPITAL (Continued)
31.1 Executive Share Option Scheme (Continued)
i.
Option price
RM
No. of share
options
Weighted
average
exercise price
RM
26,154,600
20,254,500
16,395,900
2.44
4.19
5.00
62,805,000
3.67
35,438,200
26,161,600
17,965,900
2.44
4.19
5.00
79,565,700
3.59
Exercisable period
2012
2.44
4.19
5.00
2011
2.44
4.19
5.00
ii.
Option price
RM
Date of exercise
No. of share
options exercised
Weighted average
share price
RM
139,000
4,909,100
540,300
234,900
565,500
14,000
383,800
700,300
984,900
449,300
984,900
508,200
132,000
672,600
5.15
4.65
5.01
5.38
5.40
5.34
5.22
5.19
4.65
5.38
5.40
5.34
5.22
5.19
11,218,800
5.12
2012
2.44
2.44
2.44
2.44
2.44
2.44
2.44
2.44
4.19
4.19
4.19
4.19
4.19
4.19
192
July 2011
September 2011
November 2011
December 2011
February 2012
March 2012
April 2012
June 2012
September 2011
December 2011
February 2012
March 2012
April 2012
June 2012
Date of exercise
No. of share
options exercised
Weighted average
share price
RM
140,800
2,288,300
120,000
1,079,500
770,000
428,000
1,147,200
503,000
1,321,000
612,000
403,500
821,000
883,300
1,356,000
5.12
5.47
5.80
5.81
5.74
5.76
5.30
5.12
5.47
5.80
5.81
5.74
5.76
5.30
11,873,600
5.53
2011
2.44
2.44
2.44
2.44
2.44
2.44
2.44
4.19
4.19
4.19
4.19
4.19
4.19
4.19
July 2010
September 2010
November 2010
December 2010
January 2011
March 2011
June 2011
July 2010
September 2010
November 2010
December 2010
January 2011
March 2011
June 2011
iii. Fair value of share options granted during the previous financial year
The fair value of share options granted during the previous financial year was estimated by an external valuer using the
binomial model, taking into account the terms and conditions upon which the options were granted. The fair values of
share options measured at grant date were as follows:
Option Price
RM
Grant Date
Fair Value
RM
Vesting Date
2011
5.00
6 July 2010
6
6
6
6
July
July
July
July
2011
2012
2013
2014
0.924
1.035
1.106
1.146
The fair values of the share options were arrived at based on the following assumptions:
Granted on 6 July 2010
Share price (RM)
Exercise price (RM)
Risk free rate of interest (%)
Volatility of the Companys share price (%)
Expected dividend yield (%)
5.05
5.00
3.30
30.0
3.5
193
NOTES TO THE
FINANCIAL STATEMENTS
32. RESERVES
Group
2012
RM000
Share premium
Capital reserves (Note 32.1)
Treasury shares, at cost (Note 32.2)
Foreign currency translation reserve (Note 32.3)
Company
2011
RM000
2012
RM000
2011
RM000
1,985,878
132,842
(139,616)
(191,381)
1,944,320
142,039
(154,309)
1,985,878
125,068
(139,616)
1,944,320
129,514
1,787,723
1,932,050
1,971,330
2,073,834
Company
2012
RM000
2011
RM000
2012
RM000
2011
RM000
9,015
9,015
64,362
64,362
64,362
64,362
59,465
68,662
60,706
65,152
132,842
142,039
125,068
129,514
194
No. of Shares
Cost
RM
788,000
26,047,200
200,000
1,905,900
4,042,677
125,000,255
1,004,504
9,568,376
5.13
5.16
5.02
5.02
5.13
4.42
5.02
5.02
5.13
4.80
5.02
5.02
28,941,100
139,615,812
5.16
4.42
4.82
28,941,100
139,615,812
5.16
4.42
4.82
298,418,700
1,767,552,752
7.47
2.17
5.92
Cancellation
(298,418,700) (1,767,552,752)
2012
At beginning of financial year
Purchased during the financial year
July 2011
August 2011
November 2011
May 2012
2011
On 2 March 2011, the Company cancelled all its accumulated 298,418,700 treasury shares with a carrying amount of
RM1,767,552,752 or at an average price of RM5.92 per ordinary share of RM0.10 each.
The transactions under Share Buy Back were financed by internally generated funds. The ordinary shares of the Company
repurchased were held as treasury shares in accordance with the provision of Section 67A of the Companies Act, 1965 in
Malaysia.
32.3 Foreign currency translation reserve
The foreign currency translation reserve is used to record foreign currency exchange differences arising from the translation
of the financial statements of foreign operations whose functional currencies are different from that of the Groups
presentation currency. It is also used to record the exchange differences arising from monetary items, which form part of the
Groups net investment in foreign operations, where the monetary item is denominated in either the functional currency of
the reporting entity or the foreign operation.
195
NOTES TO THE
FINANCIAL STATEMENTS
34. BORROWINGS
Group
Company
2012
RM000
2011
RM000
2012
RM000
2011
RM000
473
452
(186)
(134)
287
318
4,297,403
3,387,100
1,906,275
2,106,990
(302,700)
(302,700)
Non-current liabilities
Secured
Finance lease obligation (Note 34.7)
Less: Portion due within 12 months
included under short term borrowings
Unsecured
Term loans (Note 34.1)
Less: Portion due within 12 months
included under short term borrowings
(499,340)
3,798,063
1,593,852
1,899,511
3,084,400
12,847
1,508,884
1,906,275
1,804,290
7,291,713
4,606,449
1,906,275
1,804,290
186
134
186
134
316,902
499,340
233,290
302,700
302,700
816,242
13,537
535,990
255,185
302,700
829,965
791,309
302,700
8,121,678
5,397,758
1,906,275
2,106,990
Current liabilities
Secured
Finance lease obligation (Note 34.7)
Unsecured
Total borrowings
196
30-year JPY15.0 billion fixed-rate loan due 2037 that was drawn down on 22 January 2007 by a wholly-owned subsidiary
incorporated in Labuan. The outstanding amount as at the end of the reporting period is JPY15.0 billion (2011 JPY15.0
billion). This fixed-rate loan bears interest at 4.325% per annum and is repayable in full on 22 January 2037.
ii.
SGD200.0 million term loan pertaining to a foreign incorporated subsidiary. The outstanding amount as at end of the
reporting period is SGD200.0 million (2011 SGD200.0 million). This floating-rate term loan bears interest at 0.50% plus
Swap Offer Rate (SOR) per annum and is repayable in 24 months from the drawdown date in May 2011.
iii. 30-year JPY6.0 billion fixed-rate loan due 2038 that was drawn down on 5 February 2008 by a wholly-owned subsidiary
incorporated in Labuan. The outstanding amount as at end of the reporting period is JPY6.0 billion (2011 JPY6.0
billion). This fixed-rate loan bears interest at 4.50% per annum and is repayable in full on 5 February 2038.
iv. USD100.0 million term loan, which was drawn down by the Company on 3 February 2009. The outstanding amount as
at end of the reporting period was nil (2011 USD100.0 million). This floating-rate term loan bore interest at 1.45% plus
British Bankers Association London Interbank Offered Rates (BBA-LIBOR) per annum and was repayable in 3 years from
the drawn down date in February 2009. This bank loan was settled by the Company during the financial year.
v.
USD600.0 million term loan, which was drawn down by the Company during the previous financial year. The outstanding
amount as at end of the reporting period is USD600.0 million (2011 USD600.0 million). This floating-rate term loan
bears interest at 1.30% plus BBA-LIBOR per annum and is repayable in 4 annual instalments of RM150.0 million each
commencing 48 months from drawn date in January 2011.
vi. USD330.0 million term loan, which was drawn down by a subsidiary during the financial year. The outstanding amount
as at end of the reporting period is USD330.0 million. This floating-rate term loan bears interest at 0.82% plus BBA-LIBOR
per annum and is repayable in 5 years from the first drawn down date in December 2011.
The term loans are repayable by instalments of varying amounts or upon maturity over the following periods:
Group
Company
2012
RM000
2011
RM000
2012
RM000
2011
RM000
499,340
476,569
476,569
1,521,994
1,322,931
302,700
491,140
451,243
451,243
1,690,774
476,569
476,569
476,569
476,568
302,700
451,243
451,243
901,804
4,297,403
3,387,100
1,906,275
2,106,990
197
NOTES TO THE
FINANCIAL STATEMENTS
34. BORROWINGS (Continued)
34.2 USD370 Million Zero Coupon Guaranteed Exchangeable Bonds due 2011 (2nd Exchangeable Bonds)
On 18 December 2006, the Companys wholly-owned subsidiary, IOI Capital (L) Berhad (the Issuer), a company incorporated
in the Federal Territory of Labuan under the Offshore Companies Act, 1990, issued USD370 million Zero Coupon Guaranteed
Exchangeable Bonds due 2011 (2nd Exchangeable Bonds). The 2nd Exchangeable Bonds were issued at 100% of the principal
amount and listed on the Singapore Exchange Securities Trading Limited and the Labuan International Financial Exchange
and matured on 18 December 2011. The 2nd Exchangeable Bonds were unconditionally and irrevocably guaranteed by the
Company.
The salient features of the 2nd Exchangeable Bonds were as follows:
i.
The 2nd Exchangeable Bonds were exchangeable at any time on and after 28 January 2007 and prior to 3 December
2011 by holders of the 2nd Exchangeable Bonds (the Bondholders) into newly issued ordinary shares of the Company
(the IOI Shares) only, at an initial exchange price of RM23.50 per ordinary share of RM0.50 each with a fixed exchange
rate of USD1.00 = RM3.54 (the Exchange Price). The Exchange Price was subject to adjustment in certain circumstances.
ii.
The Issuer or the Company might, at its option, satisfy its obligation to deliver IOI Shares pursuant to the exercise of
the right of exchange by a Bondholder, in whole or in part, by paying to the relevant Bondholder an amount of cash
in US Dollar equal to the product of the number of IOI Shares otherwise deliverable and the volume weighted average
of the closing price of the IOI Shares for each day during the 10 trading days immediately before the exchange date.
iii. The 2nd Exchangeable Bonds were redeemable in whole or in part, at the option of the Issuer at the issue price plus
accrual yield of 3.0% compounded semi-annually (Accreted Principal Amount):
(a) on or after 18 December 2008, if:
the closing price of the IOI Shares translated into US Dollar at the prevailing screen rate, was at least 130% of
the Accreted Principal Amount divided by the exchange ratio for a period of any 20 consecutive trading days
in the period of 30 consecutive trading days immediately preceding the date of the notice of redemption; and
the closing price of the IOI Shares was at least 130% of the Accreted Principal Amount divided by the exchange
ratio for a period of any 20 consecutive trading days in the period of 30 consecutive trading days immediately
preceding the date of the notice of redemption; or
(b) at any time, if less than USD40 million in aggregate principal amount of the 2nd Exchangeable Bonds remain
outstanding.
iv. Unless the 2nd Exchangeable Bonds had been previously redeemed, repurchased and cancelled or exchanged, each
Bondholder has the right, at such Bondholders option, to require the Issuer to repurchase all or any part of its
2nd Exchangeable Bonds at the Accreted Principal Amount on 18 December 2009.
v.
Unless previously redeemed, repurchased and cancelled or exchanged, the 2nd Exchangeable Bonds would be redeemed
at their Accreted Principal Amount of 116.05% on 18 December 2011.
On 18 December 2011, the Group redeemed and settled in full the outstanding Bonds of USD63,975,000 (equivalent to
RM203,784,215) at their Accreted Principal Amount of 116.05%, which amounted to USD74,245,598 (equivalent to
RM236,499,896). Following from the redemption, the Bonds ceased to be quoted on the Singapore Exchange Securities
Trading Limited and the Labuan International Financial Exchange.
198
Group
Nominal
Value of 2nd
Exchangeable
Bonds
(USD)
Exchange
price
No. of
shares
issued
RM4.58
27,060,115
Remarks
2011
Exchange during the financial year
35,010,000
In the financial year ended 30 June 2007, the initial exchange price of RM23.50 per ordinary share of RM0.50 each was
adjusted to RM4.70 per ordinary share of RM0.10 each pursuant to the completion of the share split exercise by the Company
on 6 June 2007.
In the financial year ended 30 June 2010, the exchange price was further adjusted to RM4.58 per ordinary share of RM0.10
following the completion of the Renounceable Rights Issue.
The movements of the 2nd Exchangeable Bonds during the financial year are as follows:
Group
RM000
2012
At beginning of financial year
Redemption of USD63,975,000 nominal value of the 2nd Exchangeable Bonds
Fair value adjustment
Foreign currency translation differences
255,185
(236,500)
(33,352)
14,667
2011
At beginning of financial year
Exchange of USD35,010,000 nominal value of the 2nd Exchangeable Bonds
Fair value adjustment
Foreign currency translation differences
396,029
(154,992)
38,072
(23,924)
255,185
199
NOTES TO THE
FINANCIAL STATEMENTS
34. BORROWINGS (Continued)
34.3 USD600 Million Zero Coupon Guaranteed Exchangeable Bonds due 2013 (3rd Exchangeable Bonds)
On 15 January 2008, the Companys wholly-owned subsidiary, IOI Resources (L) Berhad (the Issuer), a company incorporated
in the Federal Territory of Labuan under the Offshore Companies Act, 1990, issued USD600 million Zero Coupon Guaranteed
Exchangeable Bonds due 2013 (3rd Exchangeable Bonds). The 3rd Exchangeable Bonds were issued at 100% of the principal
amount and listed on the Singapore Exchange Securities Trading Limited and the Labuan International Financial Exchange
and will mature on 15 January 2013. The 3rd Exchangeable Bonds are unconditionally and irrevocably guaranteed by the
Company.
The salient features of the 3rd Exchangeable Bonds are as follows:
i.
The 3rd Exchangeable Bonds are exchangeable at any time on and after 25 February 2008 and prior to 31 December
2012 by holders of the 3rd Exchangeable Bonds (the Bondholders) into newly issued ordinary shares of the Company
(the IOI Shares) only, at an initial exchange price of RM11.00 per ordinary share of RM0.10 each at a fixed exchange
rate of USD1.00 = RM3.28 (the Exchange Price). The Exchange Price is subject to adjustment in certain circumstances.
ii.
The Issuer or the Company may, at its option, satisfy its obligation to deliver IOI Shares pursuant to the exercise of the
right of exchange by a Bondholder, in whole or in part, by paying to the relevant Bondholder an amount of cash in US
Dollar equal to the product of the number of IOI Shares otherwise deliverable and the volume weighted average of the
closing price of the IOI Shares for each day during the 10 trading days immediately before the exchange date.
iii. The 3rd Exchangeable Bonds are redeemable in whole or in part, at the option of the Issuer at the issue price plus
accrual yield of 1.25% compounded semi-annually (Accreted Principal Amount):
(a) on or after 15 January 2010, if:
the closing price of the IOI Shares translated into US Dollar at the prevailing screen rate, is at least 130% of
the Accreted Principal Amount divided by the exchange ratio for a period of any 20 consecutive trading days
in the period of 30 consecutive trading days immediately preceding the date of the notice of redemption; and
the closing price of the IOI Shares is at least 130% of the Accreted Principal Amount divided by the exchange
ratio for a period of any 20 consecutive trading days in the period of 30 consecutive trading days immediately
preceding the date of the notice of redemption; or
(b) at any time, if less than USD60 million in aggregate principal amount of the 3rd Exchangeable Bonds remain
outstanding.
iv. Unless the 3rd Exchangeable Bonds have been previously redeemed, repurchased and cancelled or exchanged, each
Bondholder has the right, at such Bondholders option, to require the Issuer to repurchase all or any part of its
3rd Exchangeable Bonds at the Accreted Principal Amount on 15 January 2011.
200
During the previous financial year, the Group repurchased and cancelled part of the 3rd Exchangeable Bonds of
USD21,650,000 (equivalent to RM69,122,000) from the open market. On 15 January 2011, the Bondholders had exercised
their options to require the Issuer to redeem USD440,770,000 (equivalent to RM1,345,891,000) of the 3rd Exchangeable
Bonds at their Accreted Principal Amount of 103.81%, which amounted to USD457,559,370 (equivalent to
RM1,397,158,000). Subsequent to the redemption, the balance of the 3rd Exchangeable Bonds outstanding was
USD4,102,000 (equivalent to RM12,847,000).
v.
Unless previously redeemed, repurchased and cancelled or exchanged, the 3rd Exchangeable Bonds will be redeemed
at their Accreted Principal Amount of 106.43% on 15 January 2013.
12,847
(20)
710
13,537
2011
RM000
1,547,736
18,538
(87,147)
(1,397,158)
(69,122)
12,847
34.4 USD500 Million 5.25% Guaranteed Notes due 2015 (Guaranteed Notes)
On 16 March 2005, the Companys wholly-owned subsidiary, IOI Ventures (L) Berhad, a company incorporated in the Federal
Territory of Labuan under the Offshore Companies Act, 1990, issued a 10-year USD500 million Guaranteed Notes at an issue
price of 99.294% (the Guaranteed Notes). The Guaranteed Notes are listed on the Singapore Exchange Securities Trading
Limited and the Labuan International Financial Exchange. The Guaranteed Notes carry an interest rate of 5.25% per annum
payable semi-annually in arrears on 16 March and 16 September commencing 16 March 2005 and will mature on 16 March
2015. The Guaranteed Notes are unconditionally and irrevocably guaranteed by the Company.
At initial recognition, the Guaranteed Notes were recognised in the Group statement of financial position as follows:
Group
RM000
Principal amount
Discount on issue price
1,900,000
(13,414)
1,886,586
The movements of the Guaranteed Notes during the financial year are as follows:
Group
2012
RM000
2011
RM000
1,508,884
83,777
1,191
1,612,136
(104,391)
1,139
1,593,852
1,508,884
201
NOTES TO THE
FINANCIAL STATEMENTS
34. BORROWINGS (Continued)
34.5 USD600 Million 4.375% Guaranteed Notes due 2022 (Notes)
On 15 May 2012, the Companys wholly-owned subsidiary, IOI Investment (L) Berhad (IOI Investment), a company
incorporated in the Federal Territory of Labuan under the Offshore Companies Act, 1990, established a Euro Medium Term
Note Programme, with an initial programme size of USD1.5 billion (EMTN Programme).
Subsequently, on 27 June 2012, IOI Investment issued USD600 million 4.375% Notes due 2022 at an issue price of 99.288%
(Notes) under the EMTN Programme. The Notes are listed on the Singapore Exchange Securities Trading Limited. The Notes
carry an interest rate of 4.375% per annum payable semi-annually in arrears on 27 June and 27 December commencing
27 December 2012 and will mature on 27 June 2022. The Notes are unconditionally and irrevocably guaranteed by the Company.
At initial recognition, the Notes were recognised in the Group statement of financial position as follows:
Group
RM000
Principal amount
Discount on issue price
1,912,200
(13,615)
1,898,585
(3,836)
1,894,749
The movements of the Notes during the financial year are as follows:
Group
2012
RM000
At drawdown date
Foreign currency translation differences
1,894,749
4,762
1,899,511
202
2012
RM000
2011
RM000
250
327
216
381
577
(104)
597
(145)
473
452
186
287
134
318
473
452
Finance lease obligation is subject to fixed interest rate of 8.00% (2011 8.00%) per annum.
Company
2012
RM000
2011
RM000
2012
RM000
2011
RM000
17,530
26
129,703
26,181
111
955
955
147,259
26,292
955
955
203
NOTES TO THE
FINANCIAL STATEMENTS
35. OTHER LONG TERM LIABILITIES (Continued)
35.1 Retirement benefits
Group
Company
2012
RM000
2011
RM000
2012
RM000
2011
RM000
396,279
(371,246)
305,948
(281,576)
25,033
20,366
24,372
22,548
955
955
45,399
(30,378)
2,509
46,920
(23,847)
3,108
955
955
17,530
26,181
955
955
The Company and certain subsidiaries operate defined benefit plans. The plans of the Company and Malaysian subsidiaries
are operated on an unfunded basis whilst certain foreign subsidiaries are operating funded defined benefit plans. The
benefits payable on retirement are generally based on the length of service and average salary of the eligible employees.
The last actuarial valuations for the unfunded and funded plans were carried out on 30 June 2011 and 30 June 2012
respectively.
Movements in the net liability recognised in the statements of financial position:
Group
204
Company
2012
RM000
2011
RM000
2012
RM000
26,181
(24,908)
(973)
25,032
(7,802)
27,677
(28,711)
(1,610)
21,497
7,328
955
(101)
101
938
(81)
98
17,530
26,181
955
955
2011
RM000
Company
2012
RM000
2011
RM000
2012
RM000
15,416
18,084
(18,294)
10,731
(905)
20,172
16,270
(16,474)
2,303
(774)
56
46
(15)
14
56
45
(17)
14
25,032
21,497
101
98
2011
RM000
Cost of sales
Marketing and selling expenses
Administration expenses
Company
2012
RM000
2011
RM000
2012
RM000
2011
RM000
10,836
1,926
12,270
9,716
1,583
10,198
101
98
25,032
21,497
101
98
43,070
2,916
Discount rate
Expected return on plan assets
Future salary increases
2012
2011
3.7%
3.6%
3.2%
5.8%
4.7%
3.2%
205
NOTES TO THE
FINANCIAL STATEMENTS
36. TRADE AND OTHER PAYABLES
Group
Company
2012
RM000
2011
RM000
2012
RM000
2011
RM000
627,793
476,694
3,305
646,120
527,154
16,413
11,145
72,275
9,571
85,587
1,107,792
1,189,687
83,420
95,158
Company
2012
RM000
2011
RM000
2012
RM000
2011
RM000
212,128
33,587
230,979
2,452
265,986
28,364
230,352
11,159
659
60,457
11,721
604
73,262
476,694
527,154
72,275
85,587
Included in other payables of the Group is land cost payable of nil (2011 RM2.6 million).
206
Balance liquidation
proceeds received
Group and Company
RM000
37.1.1
(Loss)/Gain on liquidation
Group
RM000
Company
RM000
(112)
4
(116)
(112)
2011
During the previous financial year, loss on liquidation of subsidiaries was arising from the following subsidiaries:
Note
Balance liquidation
proceeds received
Loss on liquidation
Group
RM000
Company
RM000
37.1.2
1,097
(6)
(450)
37.1.3
(415)
1,097
(421)
(450)
1,576
1,576
(473)
1,103
(1,097)
(6)
207
NOTES TO THE
FINANCIAL STATEMENTS
37. LIQUIDATION AND DISPOSALS OF SUBSIDIARIES (Continued)
37.1 Liquidation of subsidiaries (Continued)
37.1.3 Loders Croklaan For Trading and Distribution LLC (LC for Trading and Distribution)
During the previous financial year, the Group completed the liquidation of a subsidiary, LC for Trading and
Distribution and the impact was summarised as follows:
RM000
Net proceeds from liquidation
Group share of net assets liquidated
(415)
(415)
Gain on disposal
Group
RM000
Company
RM000
9,680
4,602
4,602
37.2.1
9,680
(5,078)
4,602
The disposal of the subsidiary had no material impact to the results of the Group in the previous financial year.
208
Company
2012
RM000
2011
RM000
2012
RM000
2011
RM000
1,775,235
2,023,978
561,534
1,725,237
592,864
467,425
1,042,035
211,058
4,201
1,403,759
209,973
16,155
4,360,747
2,785,526
1,257,294
1,629,887
The Group has undrawn borrowing facilities of RM3,449,014,000 (2011 RM607,891,000) at end of the financial year.
ii.
Vertical Capacity Sdn Bhd and its holding company, Progressive Holdings Sdn Bhd, the major corporate shareholders of
the Company;
iii.
Associates and jointly controlled entities as disclosed in Note 46 to the financial statements;
iv. Key management personnel, which comprises persons (including the Directors of the Company) having authority and
responsibility for planning, directing and controlling the activities of the Group directly or indirectly; and
v.
Affiliates, companies in which the Directors who are also the substantial shareholders of the Company have substantial
shareholdings interest.
209
NOTES TO THE
FINANCIAL STATEMENTS
39. SIGNIFICANT RELATED PARTY DISCLOSURES (Continued)
39.2 Significant related party transactions
In addition to the transactions detailed elsewhere in the financial statements, the Group and the Company had the following
transactions with related parties during the financial year:
2012
RM000
2011
RM000
749,671
12,224
30,958
1,556
6,675
903,884
15,702
36,558
1,815
7,016
5,718
3,840
366,582
13,122
1,464
28,506
90,968
143,678
392,433
18,664
1,428
29,807
92,762
159,055
Group
Associates
Sales of oleochemical products and palm kernel oil
Purchases of oleochemical products
Purchases of palm products
Agency fees income
Rental income on storage tank
Affiliates
Property project management services
Company
Subsidiaries
Sales of palm products
Purchases of palm products
Agency fees income
Management fees
Interest income
Interest expense
The related party transactions described above were carried out on terms and conditions not materially different from those
obtainable in transactions with unrelated parties.
Information regarding outstanding balances arising from related party transactions as at 30 June 2012 are disclosed in Note
19.2, Note 20.3 and Note 21.1 to the financial statements.
210
Directors
Fees
Remuneration
Estimated monetary value of benefits-in-kind
Total short term employee benefits
Post employment benefits
Share option expenses
Company
2012
RM000
2011
RM000
2012
RM000
2011
RM000
804
45,156
264
591
53,140
246
660
40,548
101
459
50,753
104
46,224
5,389
788
53,977
6,324
1,528
41,309
5,082
788
51,316
6,058
1,528
52,401
61,829
47,179
58,902
1,943
290
569
3,007
341
1,606
2,802
4,954
Number of share options granted to the key management personnel during the financial year is as follows:
Group
2012
000
2011
000
15,520
(4,514)
14,694
4,600
(3,181)
(593)
11,006
15,520
The share options were granted on the same terms and conditions as those to other employees of the Group.
211
NOTES TO THE
FINANCIAL STATEMENTS
40. CONTINGENT LIABILITIES UNSECURED
Group
Company
2012
RM000
2011
RM000
2012
RM000
2011
RM000
6,000
6,000
The Directors are of the opinion that the possibility of any outflow in settlement arising from the litigations involving claims for
damages and compensation is remote.
Material litigation subsidiaries
The Directors are of the opinion that the possibility of any outflow in settlement arising from the following litigation is remote
based on legal opinion obtained. Nevertheless, disclosures are made in view of its materiality.
Unipamol Malaysia Sdn Bhd and Pamol Plantations Sdn Bhd (subsidiaries of IOI Oleochemical Industries Berhad (IOI Oleo))
This is a legal suit instituted by the shareholders of Unitangkob (Malaysia) Berhad (Plaintiffs) against Unipamol Malaysia Sdn Bhd
(Unipamol), Pamol Plantations Sdn Bhd (PPSB), Unilever Plc and its subsidiary Pamol (Sabah) Ltd in which the Plaintiffs claimed
for inter-alia, special damages of RM43.47 million, general damages of RM136.85 million or such amount as may be assessed by the
court on the alleged wrongful refusal or failure of the defendants to continue with a Share Sale Agreement and Shareholders
Agreement. Unipamol and PPSB have entered an appearance and filed a Defence to the claim as well as a Counter-claim against
the Plaintiffs.
Unilever Plc and Pamol (Sabah) Ltd had filed an appeal against the decision of the Court delivered on 14 January 2010 dismissing
their application to strike out the claim against them. On 13 October 2010, the Court of Appeal allowed the Unilever Plcs appeal
but dismissed Pamol (Sabah)s appeal. The Plaintiffs have since filed an application for leave to appeal to the Federal Court on the
decision of the Court of Appeal in allowing Unilever Plcs appeal.
The High Court has on 3 December 2010 struck off the Plaintiffs Writ of Summons and Statement of Claim due to procedural noncompliance subject to the Plaintiffs right to apply for reinstatement. The Plaintiffs Solicitors have subsequently filed an application to
reinstate the Writ of Summons and Statement of Claim. On 10 March 2011, the High Court dismissed the Plaintiffs application for
reinstatement and the Plaintiffs have filed an appeal against the said decision to the Court of Appeal and the Court of Appeal has
allowed the Plaintiffs appeal on 12 December 2011. The matter has been presently fixed for hearing on 18 and 19 of September 2012.
Meanwhile, the Plaintiffs application for leave to appeal to the Federal Court (against the decision of the Court of Appeal to strike
off the 3rd defendant as a party) has been allowed. The Federal Court has completed the hearing for the said appeal on 29 May
2012 and decision is reserved.
The relevant subsidiaries have obtained favourable legal opinions on the merits of their respective cases, which existed prior to
them becoming IOI Oleos subsidiaries.
212
Equity
Company
2011
RM000
2012
RM000
1,906,275
(1,257,294)
2011
RM000
8,121,678
(4,360,747)
5,397,758
(2,785,526)
3,760,931
2,612,232
648,981
477,103
12,627,923
11,999,177
6,593,005
7,027,176
29.78
21.77
9.84
6.79
2,106,990
(1,629,887)
213
NOTES TO THE
FINANCIAL STATEMENTS
42. FINANCIAL INSTRUMENTS (Continued)
42.1 Foreign currency risk
The Group operates internationally and is exposed to various currencies, mainly US Dollar (USD), Euro (EUR), Singapore
Dollar (SGD) and Japanese Yen (JPY). Foreign currency denominated assets and liabilities together with expected cash
flows from committed purchases and sales give rise to foreign currency exposures.
The Groups foreign currency risk management objective is to minimise foreign currency exposure that gives rise to economic
impact, both at transaction and reporting period translation levels.
42.1.1 Risk management approach
The Group maintains a natural hedge, whenever possible, by borrowing in the currency of the country, in which the
property or investment is located or by borrowing in currencies that match the future revenue stream to be
generated from its investments.
Foreign currency exposures in transactional currencies other than functional currencies of the operating entities are
kept to an acceptable level. Material foreign currency transaction exposures are hedged with derivative financial
instruments such as forward foreign exchange contracts and options on a back-to-back basis.
The downstream segments forward contractual commitments intended to be physically settled are fully hedged of its
currency risk on a back-to-back basis with currency forward contracts. Where the netting of forward sales against
forward purchases with matching currency risk characteristics is possible, these would first be netted before hedging the
net currency exposure with forward contracts. Currency risk on forward contractual commitments with clear intention
for net-cash settlement (i.e. paper trading) are not considered for hedging until the exercising of the net settlement.
The hedging methods that the Group adopts in managing its currency risk depend on the principal forms of foreign
currency exposure, as discussed below:
i.
Structural foreign currency exposure from its net investment in foreign operations (subsidiaries, associates,
and joint ventures)
Background
The Groups foreign operations of various functional currencies when translated into its parents reporting currency
based on closing rates (for assets and liabilities) and average transaction rates (for income and expenses) at each
consolidation, gives rise to foreign currency translation gain or loss that will be recognised in other comprehensive
income. Intragroup transactions with foreign operations involving monetary financial instruments will also result in
foreign currency translation gain or loss that cannot be eliminated on consolidation, but has to be recognised
either in profit or loss or in other comprehensive income. However, non-monetary financial items translated at
historical exchange rates will not give rise to foreign currency risk. Resulting from its net investment in foreign
operations, the Groups current and future profit stream in various foreign currencies will also be exposed to
foreign currency risk.
Hedging method
Where feasible the Group would match its foreign currency borrowing with the functional currency of its foreign
operations. Nevertheless, the Group considers such foreign currencies overall fiscal position and borrowing costs
before deciding on the currency major to be carried as debt in its book. In this regard, the Group has major foreign
currency borrowings denominated in USD, EUR, SGD and JPY, which do not necessarily match all the functional
currencies of its foreign operations. Where appropriate, exposures from mismatch in foreign currency borrowings
are hedged with Cross Currency Swap.
214
In general, currency exposure from foreign investments and borrowings is managed centrally at the Group HQ level,
whilst currency exposure arising from transactions or contractual obligations is managed at the respective entity or
business units level. The Group adopts a uniform Foreign Currency Risk Management Policy and Guide, which sets
out the authority and limits for inception of foreign currency derivatives; types of approved foreign currency
derivatives; acceptable hedging practices and methods; and over-sight structure and controls. Below are extracts of
key policies:
(a) Speculative positioning on foreign currency is prohibited;
(b) Net currency exposure on trade transactions and forward contracts are to be hedged in full on back-to-back
basis. Hedging on portfolio basis (or macro-hedging) comprising of unmatched mixed maturity and amount is
disallowed;
(c) Inception of foreign currency derivatives as hedging instrument against forecast trade transactions in foreign
currency is disallowed;
(d) Hedging with foreign currency futures on traded exchanges is generally disallowed;
(e) Inception of over-the-counter structures derivatives for hedging purposes are confined to HQ and each
contract is subject to executive managements approval; and
(f) Subsidiaries inception of foreign currency derivative for hedging purposes are confined to vanilla foreign
currency forwards and plain European style foreign currency options.
The Groups entire currency exposure (as hedge items) and corresponding foreign currency derivative hedging
instruments are mark-to-market and fair valued once a month primarily for operational hedge effectiveness testing
and for executive management reporting and oversight. Weekly long-short positions on foreign currencies and
foreign currency derivatives are also produced for timely control and intervention.
215
NOTES TO THE
FINANCIAL STATEMENTS
42. FINANCIAL INSTRUMENTS (Continued)
42.1 Foreign currency risk (Continued)
42.1.2 Foreign currency risk exposure
The analysis of the Groups foreign currencies long-short positions for each class of financial instruments with
separate lines on currency derivative is as follows:
Group
2012
Contract based
currency
Maturity
USD
EUR
SGD
JPY
Others
<1 year
RM000
> 1 year
RM000
<1 year
RM000
> 1 year
RM000
<1 year
RM000
> 1 year
RM000
<1 year
RM000
> 1 year
RM000
<1 year
RM000
> 1 year
RM000
95,085
39,948
13,270
255,550
11,663
14,446
(71,834)
(5,256)
(360)
(7,650)
(13,949) (6,485,850)
(499,340)
(846,363)
(6,634)
Financial assets in
foreign currencies
Financial liabilities
in foreign currencies
Trade and other
payables
Amounts due to
associates
Borrowings
Advances from
non-controlling
interests
Derivative liabilities
(170,168)
(564,131)
(129,703)
Foreign currency
forwards
(2,663,596)
Structured and hybrids 742,066
566,468
(44,382)
(318,184)
(491,063)
(24,771)
846,363
(45,340)
(12,027)
826,117 (5,919,382)
234,419
(318,184)
(464,648)
(620,766)
(13,468)
(43,935)
Currency derivatives
Net exposure
216
USD
<1 year
RM000
JPY
Others
<1 year
RM000
> 1 year
RM000
<1 year
RM000
> 1 year
RM000
<1 year
RM000
> 1 year
RM000
<1 year
RM000
> 1 year
RM000
99,969
258,155
6,347
367,302
22
15,736
24,542
(205,530)
(527,434) (3,342,915)
(637,119)
(87,174)
(263)
(491,140)
(788,970)
(14,597)
(1,853)
(238,661)
(59,818)
(350,240)
(27,711)
788,970
(42,621)
(819,202) (3,583,429)
320,279
(350,240)
257,914
(491,140)
(11,975)
(26,329)
Currency derivatives
Foreign currency
forwards
(2,167,160)
Structured and hybrids
351,500
Net exposure
SGD
> 1 year
RM000
Financial assets in
foreign currencies
Cash and bank balances
61,432
Trade and other
receivables
732,028
Derivative assets
1,573,081
Financial liabilities in
foreign currencies
Trade and other
payables
Borrowings
Derivative liabilities
EUR
Company
2012
Contract based currency
Maturity
USD
EUR
SGD
<1 year
RM000
> 1 year
RM000
<1 year
RM000
> 1 year
RM000
<1 year
RM000
> 1 year
RM000
Financial assets in
foreign currencies
Cash and bank balances
Amounts due from
subsidiaries
30,678
26,924
30,950
93,380
675,813
775
Financial liabilities
in foreign currencies
Borrowings
Amounts due to subsidiaries
(13,432)
(1,917,000)
(2,347,750)
332,536
(318,184)
110,626
(3,932,214)
702,737
(318,184)
31,725
Currency derivatives
Structured and hybrids
Net exposure
217
NOTES TO THE
FINANCIAL STATEMENTS
42. FINANCIAL INSTRUMENTS (Continued)
42.1 Foreign currency risk (Continued)
42.1.2 Foreign currency risk exposure (Continued)
Company
2011
Contract based currency
Maturity
USD
EUR
SGD
<1 year
RM000
> 1 year
RM000
<1 year
RM000
> 1 year
RM000
<1 year
RM000
> 1 year
RM000
27
8,107
13,170
150,209
845,309
1,104,350
(302,700)
(1,816,200)
(261,196)
(2,075,012)
351,500
315,050
(350,240)
Net exposure
(62,160)
(3,576,162)
853,416
(350,240)
1,117,520
Financial assets in
foreign currencies
Cash and bank balances
Amounts due from
subsidiaries
Financial liabilities
in foreign currencies
Borrowings
Amounts due to
subsidiaries
Currency derivatives
218
i.
The Group is net short in USD by USD1.6 billion (equivalent to RM5.1 billion) (2011 USD1.4 billion (equivalent
to RM4.4 billion)) where USD1.8 billion (equivalent to RM5.9 billion) (2011 USD1.2 billion (equivalent to RM3.6
billion)) is due beyond 12 months. This short position is expected to be met from its future revenue stream
mainly denominated in USD;
ii.
The foreign currency long-short mismatch between forward commodity contracts (as hedge items) and foreign
currency forward derivative (as hedging instruments) is attributed to intragroup forward commodity sales and
purchases that give rise to net currency exposure at the entity level. Foreign currency long-short position from
forward commodity contracts of both related entities are eliminated on consolidation (but not necessarily its
fair value gain or loss arising from foreign currency) i.e. leaving behind the currency long short on foreign
currency forward derivative.
Cross currency swap to swap fixed rate USD liability of USD104.1 million to fixed rate EUR liability of EUR80.0
million. The contract effectively swapped part of the Groups fixed rate Guaranteed Notes into fixed rate EUR
liability. This was done to maintain the appropriate amount of liability in EUR as a natural hedge against
existing EUR denominated investment in subsidiaries. The effective period for this cross currency swap is from
February 2005 to February 2015.
ii.
Cross currency swaps to swap JPY liability of JPY21.0 billion to USD liability of USD182.7 million. These were
entered into as a cashflow hedge for the Groups principal repayment for the loan obtained. The effective
period for these cross currency swaps is from January 2007 to February 2038.
iii. Cross currency swaps to swap floating rate USD liability of USD100.0 million to fixed rate RM liability of
RM302.0 million. These were entered into as a cashflow hedge for the Groups principal repayment for the loan
obtained. The effective period for these cross currency swaps is from March 2012 to December 2016.
iv. Cross currency swap to swap floating rate USD liability of USD156.0 million to floating rate SGD liability of
SGD196.7 million. This was entered into to maintain the appropriate amount of liability in SGD as a natural
hedge against existing SGD denominated investment. The effective period for this cross currency swap is from
April 2012 to December 2016.
2011
i.
Cross currency swap to swap fixed rate USD liability of USD104.1 million to fixed rate EUR liability of EUR80.0
million. The contract effectively swapped part of the Groups fixed rate Guaranteed Notes into fixed rate EUR
liability. This was done to maintain the appropriate amount of liability in EUR as a natural hedge against
existing EUR denominated investment in subsidiaries. The effective period for this cross currency swap is from
February 2005 to February 2015.
ii.
Cross currency swaps to swap JPY liability of JPY21.0 billion to USD liability of USD182.7 million. These were
entered into as a cash flow hedge for the Groups principal repayment for the loan obtained. The effective
period for these cross currency swaps is from January 2007 to February 2038.
iii. Cross currency swaps to swap floating rate USD liability of USD100.0 million to fixed rate RM liability of
RM351.5 million. These were entered into as a cash flow hedge for the Groups principal repayment for the
loan obtained. The effective period for these cross currency swaps is from February 2009 to March 2012.
219
NOTES TO THE
FINANCIAL STATEMENTS
42. FINANCIAL INSTRUMENTS (Continued)
42.1 Foreign currency risk (Continued)
42.1.2 Foreign currency risk exposure (Continued)
Company
2012
i.
Cross currency swap to swap fixed rate USD liability of USD104.1 million to fixed rate EUR liability of EUR80.0
million. The contract effectively swapped part of the Groups fixed rate Guaranteed Notes into fixed rate EUR
liability. This was done to maintain the appropriate amount of liability in EUR as a natural hedge against
existing EUR denominated investment in subsidiaries. The effective period for this cross currency swap is from
February 2005 to February 2015.
2011
i.
Cross currency swap to swap fixed rate USD liability of USD104.1 million to fixed rate EUR liability of EUR80.0
million. The contract effectively swapped part of the Groups fixed rate Guaranteed Notes into fixed rate EUR
liability. This was done to maintain the appropriate amount of liability in EUR as a natural hedge against
existing EUR denominated investment in subsidiaries. The effective period for this cross currency swap is from
February 2005 to February 2015.
ii.
Cross currency swaps to swap floating rate USD liability of USD100.0 million to fixed rate RM liability of
RM351.5 million. These were entered into as a cash flow hedge for the Groups principal repayment for the
loan obtained. The effective period for these cross currency swaps is from February 2009 to March 2012.
220
Note
Interest bearing financial assets
Fixed rate instruments
Deposits with financial institutions 29
Short term funds
28
34.1
34.4
34.5
34.7
35.2
34.1
12
years
Repricing Brackets
34
More than 4
years
years
23
years
Total
Weighted
average
effective
interest rate
%
RM000
RM000
RM000
RM000
RM000
RM000
2,023,978
1,775,235
2,023,978
1,775,235
3,799,213
3,799,213
561,534
561,534
561,534
561,534
4,360,747
4,360,747
316,902
186
202
26
1,593,852
30
846,363
1,899,511
29
846,363
1,593,852
1,899,511
316,902
473
317,088
202
26
1,593,882
2,745,903
4,657,101
129,703
3,451,040
129,703
3,451,040
3,580,743
3,580,743
3,897,831
202
26
1,593,882
2,745,903
8,237,844
462,916
(202)
(26)
(1,593,882)
(2,745,903)
(3,877,097)
2.41
2.78
1.60
5.68
5.34
4.46
1.83
8.00
1.45
2.78
221
NOTES TO THE
FINANCIAL STATEMENTS
42. FINANCIAL INSTRUMENTS (Continued)
42.2 Interest rate risk (Continued)
42.2.2 Interest rate risk exposure (Continued)
Group
2011
Less than 1
year
Note
Interest bearing financial assets
Fixed rate instruments
Deposits with financial institutions 29
Short term funds
28
12
years
Repricing Brackets
34
More than 4
years
years
23
years
Total
Weighted
average
effective
interest rate
%
RM000
RM000
RM000
RM000
RM000
RM000
592,864
1,725,237
592,864
1,725,237
2,318,101
2,318,101
467,425
467,425
467,425
467,425
2,785,526
2,785,526
233,290
134
167
151
788,970
1,508,884
788,970
1,508,884
233,290
452
233,424
167
151
2,297,854
2,531,596
2,106,990
491,140
2,598,130
2,106,990
491,140
2,598,130
2,340,414
491,307
151
2,297,854
5,129,726
445,112
(491,307)
(151)
(2,297,854)
(2,344,200)
3.23
1.62
34.1
34.4
34.7
34.1
222
1.73
4.33
5.34
3.43
8.00
3.61
Note
12
years
Repricing Brackets
34
More than 4
years
years
23
years
Total
Weighted
average
effective
interest rate
%
RM000
RM000
RM000
RM000
RM000
RM000
211,058
1,042,035
211,058
1,042,035
2.83
2.93
2,165,482
2,165,482
4.62
3,418,575
3,418,575
4,201
4,201
4,201
4,201
3,422,776
3,422,776
588,752
13,537
2,617,341
3,219,630
588,752
13,537
2,617,341
3,219,630
1,906,275
1,906,275
1,906,275
1,906,275
2,495,027
13,537
2,617,341
5,125,905
927,749
(13,537)
(2,617,341)
(1,703,129)
1.23
19
34.1
4.67
3.24
223
NOTES TO THE
FINANCIAL STATEMENTS
42. FINANCIAL INSTRUMENTS (Continued)
42.2 Interest rate risk (Continued)
42.2.2 Interest rate risk exposure (Continued)
Company
2011
Less than 1
year
Note
12
years
Repricing Brackets
34
More than 4
years
years
23
years
Total
Weighted
average
effective
interest rate
%
RM000
RM000
RM000
RM000
RM000
RM000
209,973
1,403,759
3,586,354
209,973
1,403,759
3,586,354
5,200,086
5,200,086
16,155
16,155
16,155
16,155
5,216,241
5,216,241
714,176
12,847
2,062,165
2,789,188
714,176
12,847
2,062,165
2,789,188
2,106,990
2,106,990
2,106,990
2,106,990
2,821,166
12,847
2,062,165
4,896,178
2,395,075
(12,847)
(2,062,165)
320,063
3.41
1.62
4.65
1.73
224
19
34.1
4.76
3.99
Interest rate swaps to swap notional principal amount of USD600 million from floating interest rate to fixed
interest rate to hedge against interest rate fluctuations. The effective period for these cross currency swaps is
from October 2010 to October 2017.
ii.
Interest rate swap to swap notional principal amount of USD74 million from floating interest rate to fixed
interest rate to hedge against interest rate fluctuations. The effective period for this cross currency swap is from
December 2011 to December 2016.
2011
i.
Interest rate swaps to swap notional principal amount of USD600 million from floating interest rate to fixed
interest rate to hedge against interest rate fluctuations. The effective period for these cross currency swaps is
from October 2010 to October 2017.
Company
2012
i.
Interest rate swaps to swap notional principal amount of USD600 million from floating interest rate to fixed
interest rate to hedge against interest rate fluctuations. The effective period for these cross currency swaps is
from October 2010 to October 2017.
2011
i.
Interest rate swaps to swap notional principal amount of USD600 million from floating interest rate to fixed
interest rate to hedge against interest rate fluctuations. The effective period for these cross currency swaps is
from October 2010 to October 2017.
225
NOTES TO THE
FINANCIAL STATEMENTS
42. FINANCIAL INSTRUMENTS (Continued)
42.3 Price fluctuation risk
The Groups plantation and resource-based manufacturing segments are inversely exposed to price fluctuation risk on sales
and purchases of vegetable oil commodities. These two (2) operating segments enter into commodity future contracts with
the objective of managing and hedging their respective exposures to price volatility in the commodity markets.
The Groups objective on price risk management is to limit the Groups exposure to fluctuations in market prices and to
achieve expected margins on revenue.
42.3.1 Risk management approach
The Group manages its price fluctuation risk by having strict policies and procedures governing forward and futures
positions with dynamic limits on volume and tenure, mark-to-market losses, and on approvals. The Groups
marketing and trading operations are centralised, and the long-short and mark-to-market positions are monitored
daily and reported to Senior Management weekly.
The Groups commodity price risk management activities are integrated with its commodity sales and marketing
activities, which is centralised at the corporate level. The operation is governed by formalised policies and
procedures of which an outline is extracted below:
i.
Forward sales commitment is limited to certain forward periods (generally 2-5 months, depending on product
type);
ii.
Volume that can be committed to forward sales is limited to a certain percentage of forecast production
(generally not exceeding 70% of monthly production, depending on product type);
iii. Forward contracts can only be incepted with pre-approved counter-parties. (Limits on volume and forward
period are further established for each counter-party);
iv.
Commodity futures can only be traded by authorised officers with established volume limits; and
v.
Each portfolio (by product category and legal entity) is subject to further limits on net volume exposure and
net mark-to-market fair value (MTM FV) loss limit (that serves as trigger for intervention).
Trade positions are compiled daily, and mark-to-market fair value is reviewed weekly. An exposure report on the
Groups total long-short position (of all physical contracts, futures contracts and uncommitted inventory) with markto-market fair value is produced monthly for executive oversight.
226
Group
> 1 year
RM000
Total
RM000
< 1 year
RM000
> 1 year
RM000
Total
RM000
(769,602)
1,210,910
(122,189)
(769,602)
1,210,910
(122,189)
25,335
8,121
7,457
25,335
8,121
7,457
48,990
48,990
75,202
75,202
116,115
116,115
2012
Commodity based
Forward sales contracts
Forward purchase contracts
Commodity derivatives
Equity based
Other investments
2011
Commodity based
Forward sales contracts
Forward purchase contracts
Commodity derivatives
CPO swap short
Equity based
Other investments
(251,577)
65,654
(125,289)
18,000
(251,577)
65,654
(125,289)
18,000
70,325
(30,168)
24,820
2,640
70,325
(30,168)
24,820
2,640
51,475
51,475
65,427
65,427
133,044
133,044
227
NOTES TO THE
FINANCIAL STATEMENTS
42. FINANCIAL INSTRUMENTS (Continued)
42.3 Price fluctuation risk (Continued)
42.3.2 Price risk exposure (Continued)
Fair value attributed to
price changes at period closing
< 1 year
RM000
> 1 year
RM 000
Total
RM000
< 1 year
RM000
> 1 year
Total
RM000
RM000
9,585
9,585
6,477
6,477
6,477
6,477
2012
Equity based
Other investments
2011
Commodity based
CPO swap short
CPO swap long
18,000
(18,000)
18,000
(18,000)
2,640
(2,640)
2,640
(2,640)
Equity based
Other investments
11,892
11,892
7,087
7,087
7,087
7,087
228
Group
Level 2
Level 3
Total
25,335
8,121
7,457
25,335
8,121
7,457
68,902
6,300
75,202
109,815
6,300
116,115
70,325
(30,168)
24,820
2,640
70,325
(30,168)
24,820
2,640
63,515
1,912
65,427
131,132
1,912
133,044
2012
Commodity based
Forward sales contracts
Forward purchase contracts
Commodity derivatives
Equity based
Other investments
2011
Commodity based
Forward sales contracts
Forward purchase contracts
Commodity derivatives
CPO swap short
Equity based
Other investments
There were no transfers between all 3 levels of the fair value hierarchy.
229
NOTES TO THE
FINANCIAL STATEMENTS
42. FINANCIAL INSTRUMENTS (Continued)
42.3 Price fluctuation risk (Continued)
42.3.2 Price risk exposure (Continued)
Fair value hierarchy (Continued)
RM000
Company
Level 2
Level 3
Total
6,477
6,477
6,477
6,477
Commodity based
CPO swap short
CPO swap long
2,640
(2,640)
2,640
(2,640)
Equity based
Other investments
7,087
7,087
7,087
7,087
2012
Equity based
Other investments
2011
There were no transfers between all 3 levels of the fair value hierarchy.
Reconciliation of fair value measurements of Level 3 financial instruments
The Group carries unquoted equity shares as financial assets at fair value through profit or loss classified in Level 3
within the fair value hierarchy.
2012
RM000
2011
RM000
1,912
4,388
653
1,259
6,300
1,912
The Group believes that its estimates of fair value are appropriate; the use of different methodologies or assumptions
could lead to different measurements of fair values. As the fair value measurements in Level 3 are based on the net
assets of the investees, there are no alternative assumptions that would differ from the amount determined.
230
Most of the upstream sales are intragroup to downstream resource based manufacturing. Upstream sales to
external parties are mainly payment on delivery and/or secured with trade-financing documentation. Resource
based manufacturing sales are mostly to external parties with credit terms ranging from 30 to 90 days and across
global markets of varying sovereign risk. The Group also engages in forwards sales (and forward procurement of
feedstock). Such forward contracts may have positive fair valuation giving rise to counter-party default risk.
Policies and procedures
(a) Customers are assessed for credit and sovereign nation risks (where applicable) on both quantitative and
qualitative elements prior to the approval of credit exposure and limits. In this regard, external credit
rating services such as Standard & Poor or Dun & Bradstreet are used. Where customers are approved for
forward physical contracts, limits on contractual forward periods and value are established. Regular
reviews are made;
(b) Credit risk authority is decentralised to the respective entities credit committee but supervised centrally
at the corporate level; and
(c) Credit exposure is monitored on limits and ageing, managed and reviewed periodically. Customers with
emerging credit problems are identified early and remedial actions are taken promptly to minimise
further exposure and to restore past due status.
231
NOTES TO THE
FINANCIAL STATEMENTS
42. FINANCIAL INSTRUMENTS (Continued)
42.4 Credit risk (Continued)
42.4.1 Risk management approach (Continued)
i.
ii. Property
Generally, property units sold are progressively invoiced and settled by end-buyers financiers posing minimal
credit risk. Property investment entails the hospitality sub-segment for which sales are generally cash settled;
and the rental property sub-segment which poses a certain degree of collection risk in correlation with the
macroeconomic environment.
Policies and procedures
(a) Tail-end progress billings on property units sold that serve as retention sum are closely monitored and
claimed upon expiry of retention period;
(b) Credit where granted for corporate clients in the hospitality sub-segment are duly assessed and selectively
approved with established limits;
(c) All tenants are subjected to deposits requirement averaging 3 months rental; and
(d) Credit exposure is monitored on limits and ageing, managed and reviewed periodically. Debtors with
emerging credit problems are identified early and remedial actions are taken promptly to minimise
further exposure and to restore past due status.
Collateral and credit enhancement
In general, a combination of:
(a) Title retention and conveyance on clearance for property development;
(b) Cash deposits/advance for hospitality sub-segment; and
(c) Deposits for rental sub-segment.
232
The Group places its working capital and surplus funds in current account, money market, and time-deposits
with banks; and in security papers and investment trusts managed by licensed institutions. The Group also
enters into financial derivative contracts with licensed financial institutions, and in commodity futures contracts
with licensed Exchanges for hedging purposes. Beyond the minimal deposit guarantee offered by certain
sovereign nations deposit insurance schemes, the Group is exposed to a degree of counter-parties credit risk
in times of severe economic or financial crisis.
Policies and procedures
(a) Funds are placed only with licensed financial institutions with credit rating of A- and above. Similar
requirement is enforced on counter-parties for financial derivatives in addition to the mandatory
International Swaps and Derivatives Association master agreements;
(b) Funds placements are centrally monitored, and where applicable are spread out based on location needs;
and
(c) Commodity futures are incepted only with main licensed Exchanges.
Collateral and credit enhancement
In general, a combination of:
(a) National deposit insurance; and
(b) Fidelity guarantee
In general, all business units in the Group have a comprehensive policy that governs the need for formal credit
rating system and evaluation on counter parties prior to any contractual arrangement that would result in credit risk
exposure. Besides exposure amount, credit risk is also measured and monitored by way of credit quality segregation,
past due ageing analysis, and limits breach alerts. Reviews on credit impairment needs are made quarterly based on
objective evidence of loss events.
233
NOTES TO THE
FINANCIAL STATEMENTS
42. FINANCIAL INSTRUMENTS (Continued)
42.4 Credit risk (Continued)
42.4.2 Credit risk exposures and concentration
The Groups credit risks are mainly on financial assets relating to trade receivables, cash deposits, and securities
placement and investments as summarised in the table below for both the Group and Company level.
Note
Group
2012
Financial assets
Cash and bank balances
29
27
28
22
2011
Financial assets
Cash and bank balances
234
29
27
28
22
Maximum
exposure
RM000
Collateral and
enhancement
obtained
RM000
Net exposure
to credit risk
RM000
561,534
39
561,495
2,023,978
2,023,978
1,413,578
75,202
1,775,235
308
238,976
327,440
1,086,138
75,202
1,775,235
308
238,976
6,088,811
327,479
5,761,332
467,425
40
467,385
592,864
592,864
1,539,613
65,427
1,725,237
397
226,991
376,914
1,162,699
65,427
1,725,237
397
226,991
4,617,954
376,954
4,241,000
Collateral or credit
enhancement obtained
(i)
(i)
Collateral and
enhancement
obtained
RM000
Net exposure
to credit risk
RM000
4,201
4,201
29
211,058
211,058
27
28
7,858
6,477
1,042,035
7,858
6,477
1,042,035
2,165,482
2,165,482
83
14,597
83
14,597
3,451,791
3,451,791
16,155
16,155
29
209,973
209,973
27
28
2,505
7,087
1,403,759
2,505
7,087
1,403,759
3,586,354
3,586,354
397
6,335
397
6,335
5,232,565
5,232,565
Note
Collateral or credit
enhancement obtained
Company
2012
Financial assets
Cash and bank balances
Deposits with financial
institutions
Trade and other receivables,
excluded deposits and
prepayments
Other investments
Short term funds
Amounts due from
subsidiaries
Amounts due from
associates
Derivative assets
22
2011
Financial assets
Cash and bank balances
Deposits with financial
institutions
Trade and other receivables,
excluded deposits
and prepayments
Other investments
Short term funds
Amounts due from
subsidiaries
Amounts due from
associates
Derivative assets
22
235
NOTES TO THE
FINANCIAL STATEMENTS
42. FINANCIAL INSTRUMENTS (Continued)
42.4 Credit risk (Continued)
42.4.2 Credit risk exposures and concentration (Continued)
The table below outlines the credit quality analysis of the Groups and the Companys financial assets together with
the impairment charge for the year.
Past due
not
impaired
RM000
Total
RM000
Impairment
charged in
reporting
period
RM000
Impairment
at end of
reporting
period
RM000
Group
2012
Cash and bank balances
Deposits with financial
institutions
Trade and other
receivables, excluded
deposits and
prepayments
Other investments
Short term funds
Amounts due from
associates
Derivative assets
561,534
561,534
2,023,978
2,023,978
969,101
68,902
1,775,235
164,045
6,300
11,269
3,460
265,703
1,413,578
75,202
1,775,235
3,039
9,564
308
238,976
308
238,976
5,638,034
170,345
11,269
3,460
265,703
6,088,811
3,039
9,564
467,425
467,425
592,864
592,864
1,089,928
63,515
1,725,237
212,510
1,912
9,263
9,830
218,082
1,539,613
65,427
1,725,237
2,752
7,534
397
226,991
397
226,991
4,166,357
214,422
9,263
9,830
218,082
4,617,954
2,752
7,534
2011
Cash and bank balances
Deposits with financial
institutions
Trade and other receivables,
excluded deposits and
prepayments
Other investments
Short term funds
Amounts due from
associates
Derivative assets
236
Past due
not
impaired
RM000
Total
RM000
Impairment
charged in
reporting
period
RM000
Impairment
at end of
reporting
period
RM000
Company
2012
Cash and bank balances
Deposits with financial
institutions
Trade and other receivables,
excluded deposits and
prepayments
Other investments
Short term funds
Derivative assets
Amounts due from
associates
Amounts due from
subsidiaries
4,201
4,201
211,058
211,058
7,549
6,477
1,042,035
14,597
309
7,858
6,477
1,042,035
14,597
594
594
83
83
2,165,482
2,165,482
5,919
3,451,482
309
3,451,791
601
6,513
16,155
16,155
209,973
209,973
1,619
7,087
1,403,759
6,335
144
742
2,505
7,087
1,403,759
6,335
397
397
3,586,354
3,586,354
19
6,019
5,231,679
144
742
5,232,565
19
6,019
2011
Cash and bank balances
Deposits with financial
institutions
Trade and other receivables,
excluded deposits and
prepayments
Other investments
Short term funds
Derivative assets
Amounts due from
associates
Amounts due from
subsidiaries
Credit quality is analysed into the categories of Strong, Medium and Weak, whereby:
Strong = Strong financial standing, low probability of default
Medium = Low to moderate risk of default
Weak = Weak financial standing, history of past due
237
NOTES TO THE
FINANCIAL STATEMENTS
42. FINANCIAL INSTRUMENTS (Continued)
42.4 Credit risk (Continued)
42.4.2 Credit risk exposures and concentration (Continued)
From the above table, more than 90% in value of the Groups financial assets are of strong credit quality, with only
the receivables class having past due and impairment. Besides the objective evidence of loss events, it is also the
Groups policy to provide impairment for any amount past due in ageing brackets above 120 days unless supported
by valid reasons. The table below provides an ageing analysis of past due but not impaired alongside with the
rationale for deferment of impairment on those past due above 120 days.
1 30
days
RM000
31 60
days
RM000
61 90
days
RM000
91 120
days
RM000
>120
days
RM000
Total
RM000
Estimated
fair values
of collateral
and credit
enhancement
held
RM000
145,785
24
11,104
5
19,362
4
14,082
1
75,307
29
265,640
63
43,849
28
145,809
11,109
19,366
14,083
75,336
265,703
43,877
195,940
2,729
15,504
22
2,900
20
18
742
207
215,086
2,996
21,755
50
198,669
15,526
2,920
18
949
218,082
21,805
Group
2012
Trade receivables
Other receivables
2011
Trade receivables
Other receivables
Receivables of the Group that are past due but not impaired are merely represented by reputable organisations.
The amount past due with ageing brackets above 120 days are from active corporate clients with healthy business
relationship for whom there are no recent histories of default and there are no concerns on the credit worthiness
of the counter parties and the recoverability of these debts.
It is the Groups policy to monitor the financial standing of these receivables on an ongoing basis to ensure that
the Group is exposed to minimal credit risk.
238
1 30
days
RM000
31 60
days
RM000
61 90
days
RM000
91 120
days
RM000
>120
days
RM000
Total
RM000
Estimated
fair values
of collateral
and credit
enhancement
held
RM000
144
73
28
55
309
144
73
28
55
309
742
742
742
742
Company
2012
Trade receivables
2011
Trade receivables
The credit risk concentration of the Group is mainly in the receivables class, except for deposits and prepayments,
and this is further analysed below to reveal the credit risk concentration by geographic location and business segment.
Property
development
Plantation
Group
2012
Malaysia
Europe
North America
Asia (excluding
Malaysia)
Others
2011
Malaysia
Europe
North America
Asia (excluding
Malaysia)
Others
Property
investment
RM000
RM000
18,560
65
146,460 100
10,215
35
RM000
Resource-based
manufacturing
Others
Total
RM000
RM000
RM000
3,894 100
232,726
492,786
116,991
19
40
10
13,798 100
415,438
492,786
116,991
29
35
8
289,385
88,756
24
7
299,607
88,756
21
7
1,220,644
100
13,805 100
28,775 100
146,460 100
3,894 100
10,381
98
186,156
100
6,554
100
280,959
594,876
123,879
21
45
9
3,514
100
487,564
594,876
123,879
32
39
8
205
235,422
97,658
18
7
235,636
97,658
15
6
10,586
100
186,156
100
6,557
100
1,332,794
100
3,520
100
1,539,613
100
1,413,578 100
239
NOTES TO THE
FINANCIAL STATEMENTS
42. FINANCIAL INSTRUMENTS (Continued)
42.4 Credit risk (Continued)
42.4.2 Credit risk exposures and concentration (Continued)
Property
development
Plantation
Property
investment
Resource-based
manufacturing
Others
Total
RM000
RM000
RM000
RM000
RM000
RM000
379,391
68
854,599
53
1,233,990
57
181,673
32
91
181,764
757,669
47
757,669
35
561,064 100
285,555
69
1,204,274
38
1,489,829
42
128,814
31
1,104,350
35
1,233,164
34
866,263
27
866,263
24
414,369
100
3,174,887
100
3,589,256
100
Company
2012
Malaysia
Asia (excluding
Malaysia)
Central and
Eastern Europe
1,612,359 100
2,173,423 100
2011
Malaysia
Asia (excluding
Malaysia)
Central and
Eastern Europe
Liquidity or cash flow risk arises when financial resources are insufficient to meet financial obligations as and when they fall
due, or have to be met at excessive cost. The Groups liquidity risk includes non-financial instruments and forward contract
obligations.
The Groups liquidity risk management objective is to ensure that all foreseeable funding commitments can be met as and
when due and in a cost-effective manner.
42.5.1 Risk management approach
The Group leverages on IOI Corporation Berhad as the public listed parent company whereby treasury related
activities are centralised and where the optimal weighted-average-costs-of funds is managed. The parent company
plays a central liquidity management role where the Groups longer term funding requirements are managed based
on business and liquidity needs, whilst the day-to-day operational liquidity needs are decentralised at the business
unit level. The Group practises an arms-length market based policy with regard to funding costs and encourages
its business units to seek localised trade financing facilities where appropriate.
The Group actively manages its debt maturity profile, operating cash flows and the availability of funding so as to
ensure all operating, investing and financing needs are met. To mitigate liquidity risk, management measures and
forecasts its cash commitments, monitors and maintains a level of cash and cash equivalents deemed adequate to
finance the Groups operations and investment activities. In addition, the Group strives to maintain available banking
facilities at a reasonable level against its overall debt position.
240
Maintain a balanced contractual maturity profile of financial assets to meet financial liabilities (particularly on
near and immediate term maturity);
ii.
iii.
iv. Maintain medium to long term cash-flow planning incorporating funding positions and requirements of all its
subsidiaries.
As a Group policy, all business units conform to the following processes in ensuring its liquidity profiles are balanced
and that all its obligations can be met when due:
i.
Perform annual cash-flow budgeting and medium-term cash-flow planning, in which the timing of operational
cash-flows and its resulting surplus or deficit is reasonably determined. (The aggregation of these allows for an
overview of the Groups forecast cash-flow and liquidity position, which in-turn facilitates further consolidated
cash-flow planning);
ii.
iii.
iv.
Manage working capital for efficient use of tied-in funds and optimise cash conversion cycle; and
v.
Manage concentration and maturity profile of both financial and non-financial liabilities.
241
NOTES TO THE
FINANCIAL STATEMENTS
42. FINANCIAL INSTRUMENTS (Continued)
42.5 Liquidity and cash flow risk (Continued)
42.5.2 Liquidity risk exposure
The following table details the maturity profile of the Groups and the Companys financial liabilities at the end of
the reporting period based on contractual undiscounted repayment obligations.
Less than
1 year
RM000
12
years
RM000
23
years
RM000
34
years
RM000
More than
4 years
RM000
Total
RM000
1,070,900
1,070,900
830,377
6,859
202,848
202
479,276
129,703
2,076,780
79,822
4,776,242
129,703
8,162,877
6,859
282,670
2,110,984
202
479,276
2,286,305
4,776,242
9,653,009
1,144,910
760,852
2,287
189,055
504,522
151
454,050
19,906
3,664,620
1,144,910
5,384,195
2,287
208,961
2,097,104
504,522
151
473,956
3,664,620
6,740,353
Group
2012
Financial liabilities
Trade and other payables
Advances from non-controlling
interests
Borrowings
Amounts due to associates
Derivative liabilities
2011
Financial liabilities
Trade and other payables
Borrowings
Amounts due to associates
Derivative liabilities
242
12
years
RM000
23
years
RM000
34
years
RM000
More than
4 years
RM000
Total
RM000
82,761
588,752
13,537
74,884
1,917,000
2,617,341
82,761
1,917,000
3,219,630
74,884
671,513
13,537
74,884
4,534,341
5,294,275
94,554
302,700
2,182
714,176
52,140
12,847
19,906
1,816,200
2,062,165
94,554
2,118,900
2,182
2,789,188
72,046
1,165,752
12,847
19,906
3,878,365
5,076,870
Company
2012
Financial liabilities
Trade and other payables
Borrowings
Amounts due to subsidiaries
Derivative liabilities
2011
Financial liabilities
Trade and other payables
Borrowings
Amounts due to associates
Amounts due to subsidiaries
Derivative liabilities
i.
The Group and the Company have ample liquidity to meet its financial liabilities and obligations maturing in
the next 12 months;
ii.
Financial liabilities contractual maturity periods exceeding 12 months are within comfortable levels, and should
be well covered by its annual free-cash-flow to be generated from its operations; and
iii. Liquidity risk concentration is evident in maturity bucket financial year 2012 and financial year 2015 onwards,
where the Group and the Companys borrowing commitments are due.
243
NOTES TO THE
FINANCIAL STATEMENTS
42. FINANCIAL INSTRUMENTS (Continued)
42.6 Fair values
The carrying amounts of financial assets and financial liabilities, which are not carried at fair values approximate their fair
values as at the end of the reporting period due to the relatively short term nature of the financial instruments or there is
no significant difference between the historical interest rate at the point when liabilities were undertaken and the current
prevailing market interest rate.
The following methods and assumptions were used to estimate the fair values of financial instruments:
i.
The carrying amounts of financial assets and liabilities maturing within twelve (12) months approximate fair values due
to the relatively short term maturity of these financial instruments.
ii.
The fair values of quoted investments are their quoted market prices at the end of the reporting period. The fair values
of unquoted investments are estimated based on a valuation approach by reference to the Groups share of net assets
of the investees based on the latest available financial statements of the investees.
iii. The fair values of the Groups 2nd Exchangeable Bonds and 3rd Exchangeable Bonds are their quoted market prices at
the end of the reporting period. The fair values of the Groups other borrowings are estimated using discounted cash
flow analysis, based on current incremental lending rates for similar types of lending and borrowing arrangements and
of the same remaining maturities.
iv. The fair values of derivative financial instruments are the estimated amounts that the Group would expect to pay or
receive on the termination of the outstanding positions as at the end of the reporting period arising from such
contracts and is determined by reference to the difference between the contracted rate and the forward exchange rate
as at the end of the reporting period applied to a contract of similar amount and maturity profile.
42.7 Classification of financial instruments
The financial assets and liabilities are classified into the following categories after initial recognition for the purpose of
subsequent measurement:
Loan and
receivables
RM000
Fair value
through
profit or loss
RM000
Available
for sale
RM000
Held to
maturity
RM000
Total
RM000
1,413,578
308
2,023,978
561,534
238,976
75,202
1,775,235
1,413,578
308
238,976
75,202
1,775,235
2,023,978
561,534
3,999,398
2,089,413
6,088,811
Group
Financial assets
2012
Trade and other receivables,
net of deposits and prepayments
Amounts due from associates
Derivative assets
Other investments
Short term funds
Deposits with financial institutions
Cash and bank balances
244
Fair value
through
profit or loss
RM000
Available
for sale
RM000
Held to
maturity
RM000
Total
RM000
1,539,613
397
592,864
467,425
226,991
65,427
1,725,237
1,539,613
397
226,991
65,427
1,725,237
592,864
467,425
2,600,299
2,017,655
4,617,954
Other
financial
liabilities
RM000
Fair value
through
profit or loss
RM000
Total
RM000
8,107,729
1,070,900
13,949
8,121,678
1,070,900
129,703
6,859
282,670
129,703
6,859
282,670
9,315,191
296,619
9,611,810
5,159,809
1,144,910
2,287
237,949
208,961
5,397,758
1,144,910
2,287
208,961
6,307,006
446,910
6,753,916
Group
Financial assets
2011
Trade and other receivables, net of
deposits and prepayments
Amounts due from associates
Derivative assets
Other investments
Short term funds
Deposits with financial institutions
Cash and bank balances
Financial liabilities
2012
Borrowings
Trade and other payables
Advances from non-controlling
interests
Amounts due to associates
Derivative liabilities
2011
Borrowings
Trade and other payables
Amounts due to associates
Derivative liabilities
245
NOTES TO THE
FINANCIAL STATEMENTS
42. FINANCIAL INSTRUMENTS (Continued)
42.7 Classification of financial instruments (Continued)
Loan and
receivables
RM000
Fair value
through
profit or loss
RM000
Available
for sale
RM000
Held to
maturity
RM000
Total
RM000
7,858
2,165,482
83
211,058
4,201
14,597
6,477
1,042,035
7,858
2,165,482
83
14,597
6,477
1,042,035
211,058
4,201
2,388,682
1,063,109
3,451,791
2,505
3,586,354
397
209,973
16,155
6,335
7,087
1,403,759
2,505
3,586,354
397
6,335
7,087
1,403,759
209,973
16,155
3,815,384
1,417,181
5,232,565
Company
Financial assets
2012
Trade and other receivables,
net of deposits and prepayments
Amounts due from subsidiaries
Amounts due from associates
Derivative assets
Other investments
Short term funds
Deposits with financial institutions
Cash and bank balances
2011
Trade and other receivables,
net of deposits and prepayments
Amounts due from subsidiaries
Amounts due from associates
Derivative assets
Other investments
Short term funds
Deposits with financial institutions
Cash and bank balances
246
Fair value
through
profit or loss
RM000
Total
RM000
1,906,275
82,761
3,205,681
13,949
74,884
1,906,275
82,761
3,219,630
74,884
5,194,717
88,833
5,283,550
2,106,990
94,554
2,551,239
2,182
237,949
72,046
2,106,990
94,554
2,789,188
2,182
72,046
4,754,965
309,995
5,064,960
Company
Financial liabilities
2012
Borrowings
Trade and other payables
Amounts due to subsidiaries
Derivative liabilities
2011
Borrowings
Trade and other payables
Amounts due to subsidiaries
Amounts due to associates
Derivative liabilities
43. COMMITMENTS
43.1 Capital Commitments
Group
Company
2012
RM000
2011
RM000
2012
RM000
2011
RM000
64,447
298,725
254,387
90,740
102,070
1,584
1,068
286
345,403
92,560
1,114,781
2,015
81,001
48,927
1,356,980
5,270
8,228
1,114
3,655
1,587
247
NOTES TO THE
FINANCIAL STATEMENTS
43. COMMITMENTS (Continued)
43.2 Operating Lease Commitments
43.2.1 The Group as lessee
The Group has entered into the following non-cancellable operating lease agreements:
i.
lease of a piece of land for a lease period of 50 years with a renewal term of 16 years, which covers a net area
of 9,605 acres for cultivation of oil palm;
ii.
lease of a piece of land for a lease period of 60 years, which covers a net area of 7,932 acres for cultivation of
oil palm;
iii. lease of office space for a lease period of 3 years with a renewal term of 3 years, which covers a built-up area
of 85,791 sq. ft.;
iv.
lease of storage tanks for a lease period of 2 years with a renewal term of 1 year; and
v.
lease of 2 pieces of land for a lease period of 50 years, which cover a total net area of 22,015 sq. m. for bulk
cargo terminal and bulking installation.
The future aggregate minimum lease payments under non-cancellable operating leases contracted for as at end of
the reporting period but not recognised as liabilities are as follows:
Group
2012
RM000
2011
RM000
5,804
10,219
111,736
8,100
11,680
113,453
127,759
133,233
248
2012
RM000
2011
RM000
77,783
64,464
6,542
63,478
32,631
7,248
148,789
103,357
44.2 Land Tender by Multi Wealth (Singapore) Pte Ltd (Multi Wealth)
On 16 January 2012, Multi Wealth (Singapore) Pte Ltd (Multi Wealth), an indirect 99.8% owned subsidiary of the Company
had been notified by the Housing & Development Board of Singapore of its acceptance of Multi Wealths tender bid for a
parcel of land at Jalan Lempeng in the Republic of Singapore measuring approximately 24,417.6 square metres (equivalent
to approximately 6.03 acres) (Subject Land) for a total tender sum of SGD408.0 million (equivalent to approximately
RM995.5 million). The Subject Land with a lease period of 99 years is intended for residential development comprising
condominium units.
On 2 February 2012, Multi Wealth incorporated an 87.8% owned subsidiary known as Clementi Development Pte Ltd in the
Republic of Singapore to undertake the development of the Subject Land and to accept transfer of the ownership of the
Subject Land.
249
NOTES TO THE
FINANCIAL STATEMENTS
45. SEGMENTAL INFORMATION
The Group has four (4) reportable operating segments that are organised and managed separately according to the nature of
products and services, specific expertise and technologies requirements, which requires different business and marketing strategies.
The reportable segments are summarised as follows:
Plantation
Property development
Development of properties
Property investment
Resource-based manufacturing
Manufacturing of oleochemicals, specialty oils and fats, palm oil refinery and palm kernel
crushing
Other operations
Management and operation of hotels and resorts, landscape services and other operations
which are not sizable to be reported separately
The Groups chief operating decision maker monitors the operating results of its business units separately for the purpose of making
decisions about resource allocation and performance assessment. Segment performance is evaluated based on operating profit or
loss which, in certain respects as explained in the table below, is measured differently from operating profit or loss in the
consolidated financial statements. Group financing (including finance costs) and income taxes are managed on a group basis and
are not allocated to operating segments.
Transfer prices between operating segments are on an arms length basis in a manner similar to transactions with third parties.
Segment assets exclude tax assets and assets used primarily for corporate purposes.
Segment liabilities exclude tax liabilities, loans and borrowings that are managed under centralised treasury function.
Details are provided in the reconciliations from segment assets and liabilities to the group position.
The basis of segmentation and measurement of segment information is consistent with the basis adopted in the previous financial
year except for the inclusion of associates and jointly controlled entities information in the operating segments. Consequently, the
segment information for financial year 2011 has been restated.
250
Property
development
RM000
Property Resource-based
investment manufacturing
RM000
RM000
Other
operations
RM000
Total
RM000
2,492,499
842,977
95,312
14,393,764
153,882
17,978,434
Operating profit
Fair value gain on investment properties
1,548,169
451,125
55,187
164,970
256,369
77,596
2,388,446
164,970
1,548,169
90,284
451,125
32,735
220,157
256,369
30,749
77,596
2,553,416
121,033
32,735
Segment results
1,638,453
483,860
220,157
287,118
77,596
2,707,184
Operating assets
Interest in associates
Interest in jointly controlled entities
4,045,707
564,139
2,817,222
66,310
3,483,107
1,335,523
6,303,332
184,283
472,086
2,408
14,973,870
817,140
3,483,107
Segment assets
4,609,846
6,366,639
1,335,523
6,487,615
474,494
19,274,117
285,971
315,830
49,978
834,889
57,912
1,544,580
95,186
64,380
10,206
2,753
150,747
2,433
188,620
170,881
36,760
14,861
481,519
255,308
295,290
2,374
791
222,243
58,828
579,526
2012
Revenue
Segment revenue
Result
Assets
Liabilities
Segment liabilities
Other Information
Capital expenditure
Depreciation and amortisation
Non-cash expenses other than depreciation
and amortisation
251
NOTES TO THE
FINANCIAL STATEMENTS
45. SEGMENTAL INFORMATION (Continued)
Plantation
RM000
Property
development
RM000
Property Resource-based
investment manufacturing
RM000
RM000
Other
operations
RM000
Total
RM000
2,369,514
971,630
95,653
14,658,306
127,374
18,222,477
Operating profit
Fair value gain on investment properties
1,497,788
509,876
116,124
93,080
404,270
93,057
2,621,115
93,080
1,497,788
77,968
509,876
50,997
209,204
404,270
41,771
93,057
2,714,195
119,739
50,997
Segment results
1,575,756
560,873
209,204
446,041
93,057
2,884,931
Operating assets
Interest in associates
Interest in jointly controlled entities
3,986,410
367,763
1,711,386
75,646
3,099,132
1,009,496
6,408,866
221,032
416,515
3,633
13,532,673
668,074
3,099,132
Segment assets
4,354,173
4,886,164
1,009,496
6,629,898
420,148
17,299,879
315,027
177,488
22,849
825,354
86,509
1,427,227
88,849
65,736
22,681
2,507
25,755
3,160
245,641
164,341
85,030
10,560
467,956
246,304
132,636
616
2,105
195,904
82,458
413,719
2011
Revenue
Segment revenue
Result
Assets
Liabilities
Segment liabilities
Other Information
Capital expenditure
Depreciation and amortisation
Non-cash expenses other than depreciation
and amortisation
252
2011
RM000
Revenue
Segment revenue
Inter-segment sales
17,978,434
(2,338,162)
18,222,477
(2,068,226)
Total revenue
15,640,272
16,154,251
Profit or loss
Segment results
Translation (loss)/gain on foreign currency denominated borrowings
Unallocated fair value gain/(loss) on derivative financial instruments
Unallocated fair value gain/(loss) on financial liabilities
Unallocated fair value gain on financial assets
Net gain on changes in interests in associates
Other unallocated corporate expenses
2,707,184
(327,108)
36,659
33,373
2,650
115,339
(47,815)
2,884,931
215,435
(46,939)
(56,610)
20,327
(30,763)
2,520,282
49,768
(191,089)
2,986,381
47,146
(169,915)
2,378,961
(550,432)
2,863,612
(573,099)
1,828,529
2,290,513
Segment assets
Unallocated corporate assets
19,274,117
3,790,751
17,299,879
2,355,240
Total assets
23,064,868
19,655,119
1,544,580
8,604,385
1,427,227
5,966,494
10,148,965
7,393,721
Assets
Liabilities
Segment liabilities
Unallocated corporate liabilities
Total liabilities
253
NOTES TO THE
FINANCIAL STATEMENTS
45. SEGMENTAL INFORMATION (Continued)
Geographical Segments
The Groups major businesses operate in the following principal geographical areas:
Malaysia
Europe
North America
Asia
Others
Investment in office complex and various sale offices for specialty oils and fats around the world, which
are not sizable to be reported separately
Malaysia
RM000
Europe
RM000
North
America
RM000
Asia
RM000
Others
RM000
Consolidated
RM000
3,300,067
5,173,821
1,793,129
4,469,718
903,537
15,640,272
9,359,439
2,129,713
825,125
6,953,437
6,403
19,274,117
328,196
27,117
85,758
34,753
5,695
481,519
5,282,744
4,771,337
1,536,642
3,305,623
1,257,905
16,154,251
8,812,007
2,246,821
702,299
5,535,766
2,986
17,299,879
370,799
45,304
29,981
21,819
53
467,956
2012
2011
There is no single external customer that the revenue generated from exceeded 10% of the Groups revenue.
254
Principal Activities
100.0%
100.0%
100.0%
100.0%
Dormant
100.0%
100.0%
Dormant
100.0%
100.0%
Dormant
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
Investment holding
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
70.0%
70.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
Dormant
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
70.0%
70.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
Name of Company
Direct Subsidiaries
Plantation
255
NOTES TO THE
FINANCIAL STATEMENTS
46. LIST OF SUBSIDIARIES, ASSOCIATES AND JOINTLY CONTROLLED ENTITIES (Continued)
Effective Group
Interest
2012
2011
Principal Activities
100.0%
100.0%
Trading in commodities
100.0%
100.0%
Dormant
100.0%
100.0%
Dormant
100.0%
100.0%
Dormant
100.0%
100.0%
Investment holding
100.0%
100.0%
Investment holding
100.0%
100.0%
Investment holding
100.0%
100.0%
Dormant
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
Property investment
60.0%
60.0%
Property development
99.9%
99.9%
100.0%
100.0%
100.0%
100.0%
99.8%
99.8%
100.0%
100.0%
Investment holding
100.0%
100.0%
Property investment
100.0%
100.0%
Name of Company
Direct Subsidiaries (Continued)
Plantation (Continued)
256
Name of Company
Principal Activities
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
Investment holding
100.0%
100.0%
Investment holding
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
Dormant
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
IOI Corporation N. V. *
(Incorporated in The Netherlands Antilles)
100.0%
100.0%
Investment holding
Non-Segment
257
NOTES TO THE
FINANCIAL STATEMENTS
46. LIST OF SUBSIDIARIES, ASSOCIATES AND JOINTLY CONTROLLED ENTITIES (Continued)
Effective Group
Interest
2012
2011
Principal Activities
100.0%
100.0%
Investment holding
94.0%
94.0%
Dormant
100.0%
100.0%
Dormant
100.0%
100.0%
Dormant
100.0%
100.0%
100.0%
Dormant
100.0%
100.0%
Dormant
100.0%
100.0%
Dormant
Name of Company
Direct Subsidiaries (Continued)
Non-Segment (Continued)
Swee Lam Estates (Malaya) Sdn Berhad
Jasasinar Multimedia Sdn Bhd
100.0%
100.0%
Dormant
100.0%
100.0%
Dormant
100.0%
100.0%
100.0%
100.0%
Dormant
100.0%
100.0%
Dormant
100.0%
100.0%
Dormant
100.0%
100.0%
Dormant
100.0%
100.0%
100.0%
100.0%
Dormant
100.0%
100.0%
100.0%
100.0%
Dormant
258
Principal Activities
100.0%
100.0%
100.0%
100.0%
Dormant
100.0%
100.0%
Dormant
100.0%
100.0%
Dormant
100.0%
100.0%
Dormant
100.0%
100.0%
Dormant
100.0%
100.0%
Dormant
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
Dormant
100.0%
100.0%
Dormant
100.0%
100.0%
Dormant
100.0%
100.0%
100.0%
100.0%
Dormant
100.0%
100.0%
100.0%
100.0%
Name of Company
Indirect Subsidiaries (Continued)
Plantation (Continued)
Subsidiaries of Syarimo Sdn Bhd
Agroplex (Sabah) Sdn Bhd
Bilprice Development Sdn Bhd
Erat Manis Sdn Bhd
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
Dormant
100.0%
100.0%
Dormant
70.0%
70.0%
70.0%
70.0%
259
NOTES TO THE
FINANCIAL STATEMENTS
46. LIST OF SUBSIDIARIES, ASSOCIATES AND JOINTLY CONTROLLED ENTITIES (Continued)
Effective Group
Interest
2012
2011
Principal Activities
67.0%
67.0%
Investment holding
67.0%
67.0%
Investment holding
67.0%
67.0%
Pre-operating
67.0%
67.0%
67.0%
67.0%
67.0%
67.0%
99.9%
99.9%
Dormant
99.8%
99.8%
99.8%
99.8%
67.8%
67.8%
Property development
99.8%
99.8%
Property development
99.8%
99.8%
99.8%
99.8%
99.8%
99.8%
Property investment
89.8%
89.8%
Name of Company
Indirect Subsidiaries (Continued)
Plantation (Continued)
Subsidiaries of Oleander Capital Resources Pte Ltd
260
Principal Activities
99.8%
99.8%
Investment holding
99.8%
99.8%
99.8%
99.8%
99.8%
99.8%
99.8%
99.8%
99.8%
99.8%
99.8%
99.8%
Investment holding
99.8%
99.8%
Investment holding
99.8%
99.8%
99.8%
99.8%
Investment holding
99.8%
99.8%
99.8%
99.8%
Property development
99.8%
99.8%
Investment holding
99.8%
99.8%
Property development
99.8%
99.8%
General contractors
99.8%
99.8%
69.8%
69.8%
60.9%
60.9%
Property investment
Name of Company
Indirect Subsidiaries (Continued)
Property Development and Investment (Continued)
Subsidiaries of IOI Properties Berhad (Continued)
IOI Land Singapore Pte Ltd
(Incorporated in Singapore)
261
NOTES TO THE
FINANCIAL STATEMENTS
46. LIST OF SUBSIDIARIES, ASSOCIATES AND JOINTLY CONTROLLED ENTITIES (Continued)
Effective Group
Interest
2012
2011
Name of Company
Principal Activities
92.3%
92.3%
80.8%
80.8%
89.8%
89.8%
Property development
89.8%
89.8%
Property development
80.8%
80.8%
General contractors
58.4%
58.4%
Property development
100.0%
100.0%
100.0%
100.0%
Property construction
100.0%
100.0%
Dormant
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
Dormant
100.0%
100.0%
Dormant
100.0%
100.0%
Trading in commodities
Property development
Resource-based Manufacturing
Subsidiary of IOI Edible Oils Sdn Bhd
IOI Jeti Sdn Bhd
Subsidiaries of IOI Oleochemical Industries Berhad
Acidchem International Sdn Bhd
Derichem (M) Sdn Bhd
262
Name of Company
Principal Activities
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
Investment holding
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
Dormant
100.0%
100.0%
100.0%
100.0%
Dormant
100.0%
100.0%
100.0%
100.0%
99.0%
99.0%
263
NOTES TO THE
FINANCIAL STATEMENTS
46. LIST OF SUBSIDIARIES, ASSOCIATES AND JOINTLY CONTROLLED ENTITIES (Continued)
Effective Group
Interest
2012
2011
Principal Activities
100.0%
100.0%
Dormant
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
Dormant
100.0%
100.0%
Dormant
100.0%
100.0%
Dormant
100.0%
100.0%
Dormant
100.0%
100.0%
Management services
100.0%
100.0%
Dormant
100.0%
100.0%
Investment holding
Name of Company
Indirect Subsidiaries (Continued)
Resource-based Manufacturing (Continued)
Subsidiary of IOI Loders Croklaan Oils Sdn Bhd
Loders Croklaan (Asia) Sdn Bhd
Subsidiary of Loders Croklaan Malaysia Sdn Bhd
Lipid Nutrition Trading (Beijing) Co. Ltd *
(Incorporated in the Peoples Republic of China)
Non-Segment
Subsidiaries of IOI Oleochemical Industries Berhad
Palmco Jaya Sendirian Berhad
264
Principal Activities
100.0%
100.0%
Investment holding
100.0%
100.0%
Dormant
100.0%
100.0%
Dormant
60.0%
60.0%
100.0%
100.0%
Dormant
100.0%
100.0%
Dormant
Name of Company
Indirect Subsidiaries (Continued)
Non-Segment (Continued)
Subsidiaries of Palmco International (HK) Limited
Palmco Engineering Limited
(Incorporated in Hong Kong)
Management services
265
NOTES TO THE
FINANCIAL STATEMENTS
46. LIST OF SUBSIDIARIES, ASSOCIATES AND JOINTLY CONTROLLED ENTITIES (Continued)
Effective Group
Interest
2012
2011
Name of Company
Principal Activities
Associates
25.0%
Dormant
30.0%
30.0%
24.0%
24.0%
30.0%
30.0%
30.0%
30.0%
40.0%
40.0%
25.0%
25.0%
Investment holding
30.8%
Investment holding
33.0%
^ The Groups effective interest in PT Bumitama Gunajaya Agro in the previous year is now held via Bumitama Agri Ltd pursuant to a
restructuring and listing exercise, which resulted in Bumitama Agri Ltd being listed on the Singapore Stock Exchange Limited.
Jointly Controlled Entities
Jointly controlled entity of IOI Properties Berhad
Sime Darby Brunsfield Darby Hills Sdn Bhd
49.9%
Property development
49.9%
49.9%
Property development
64.9%
64.9%
Property development
266
Name of Company
Effective Group
Interest
2012
2011
Principal Activities
59.9%
59.9%
Property development
49.9%
49.9%
Investment holding
49.9%
49.9%
Investment holding
267
NOTES TO THE
FINANCIAL STATEMENTS
48. SUPPLEMENTARY INFORMATION ON REALISED AND UNREALISED PROFITS OR LOSSES
The retained earnings as at the end of the reporting period are analysed as follows:
Group
Company
2012
RM000
2011
RM000
2012
RM000
2011
RM000
11,911,109
510,550
11,053,383
844,878
3,747,715
231,235
3,654,276
657,463
12,421,659
11,898,261
3,978,950
4,311,739
176,907
112,343
302,331
(5,593)
(138,462)
(2,831)
(171,832)
(2,196)
12,569,616
(2,372,141)
12,020,971
(2,595,447)
3,978,950
4,311,739
10,197,475
9,425,524
3,978,950
4,311,739
268
STATEMENT
BY DIRECTORS
In the opinion of the Directors, the financial statements set out on pages 112 to 268 have been drawn up in accordance with applicable
approved 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 at 30 June 2012 and of their financial performance and cash flows of the
Group and of the Company for the financial year then ended.
STATUTORY
DECLARATION
I, Lim Lai Seng, being the officer primarily responsible for the financial management of IOI Corporation Berhad, do solemnly and sincerely
declare that the financial statements set out on pages 112 to 268 are, to the best of my knowledge and belief, correct and I make this
solemn declaration conscientiously believing the same to be true and by virtue of the provisions of the Statutory Declarations Act, 1960.
Subscribed and solemnly declared
by the abovenamed
at Puchong, Selangor Darul Ehsan
this 12 September 2012
)
)
)
)
Before me
269
INDEPENDENT
AUDITORS REPORT
To The Members Of IOI Corporation Berhad
Report on the Financial Statements
We have audited the financial statements of IOI Corporation Berhad, which comprise the statements of financial position as at 30 June
2012 of the Group and of the Company, and the income statements, 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 112 to 267.
Directors Responsibility for the Financial Statements
The Directors of the Company are responsible for the preparation of financial statements that give a true and fair view in accordance
with applicable approved Financial Reporting Standards and the Companies Act, 1965 in Malaysia, and for such internal control as the
Directors determine are 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. We conducted our audit in accordance with
approved standards on auditing in Malaysia. Those standards require that we comply with ethical requirements and plan and perform
the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The
procedures selected depend on our judgement, including the assessment of risks of material misstatement of the financial statements,
whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the entitys preparation of the
financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not
for the purpose of expressing an opinion on the effectiveness of the entitys internal control. An audit also includes evaluating the
appropriateness of accounting policies used and the reasonableness of accounting estimates made by the Directors, as well as evaluating
the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the financial statements have been properly drawn up in accordance with applicable approved 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 30 June 2012 and of their financial performance and cash flows of the Group and of the Company for
the financial year then ended.
270
BDO
AF : 0206
Chartered Accountants
271
GROUP
PROPERTIES
A. PLANTATIONS ESTATES
Location
Tenure
Area
(Hectare)
Crop
Planted
Factory/
Mill
Year of
Acquisition
Net Carrying
Amount as at
30 June 2012
RM000
Freehold
1,574
OP
1983
21,219
2,437
OP
1985
43,248
1,216
OP
1985
19,563
2,301
OP
1989
25,615
2,096
OP
1989
22,616
1,952
OP
1990
28,448
2,404
OP
2000
20,781
1,620
OP
2000
12,442
1,563
OP
2002
13,404
1,641
OP
2002
12,763
Freehold
2,317
OP
1990
40,784
Freehold
2,833
OP
1990
49,668
Freehold
679
OP
1990
12,507
Freehold
2,554
OP R
1990
59,185
Freehold
2,517
OP R
1990
45,306
Freehold
2,020
OP
1990
40,411
Freehold
2,735
OP
1990
48,664
2,420
OP
1990
34,529
Freehold
2,381
OP
1990
47,962
Freehold
1,921
OP
1990
39,206
Freehold
8,110
OP
2003
275,690
2,032
OP
1993
27,528
2,042
OP
19932009
26,771
Sabah
2,074
OP
1993
40,990
2,023
OP
1993
25,043
1,921
OP
1993
31,754
7,485
OP
1991
66,271
813
OP
1991
454
272
Location
Tenure
Area
(Hectare)
Crop
Planted
Factory/
Mill
Year of
Acquisition
Net Carrying
Amount as at
30 June 2012
RM000
18,417
OP
19852000
237,062
8,093
OP
1995
107,259
Sabah (Continued)
Syarimo 19 Estates, Kinabatangan
2,128
OP
1996
30,585
2,296
OP
1996
49,042
12,228
OP
19982003
279,382
1,452
OP
1998
32,220
1,209
OP
1998
28,263
2,277
OP
2001
63,707
3,893
OP
2001
80,193
1,793
OP
20032007
42,283
8,186
OP
2003
195,840
5,269
OP
2003
99,357
4,840
OP
2003
120,801
3,423
OP
2003
96,439
3,602
OP
2003
102,301
9,906
OP
20032009
281,774
Sarawak
Sejap Estate, Baram
5,000
OP
2002
55,805
4,040
OP
2002
43,473
OP Oil palm
R
Rubber
273
GROUP
PROPERTIES
B. DEVELOPMENT PROPERTIES
Year of
Acquisition
Net Carrying
Amount as at
30 June 2012
RM000
On-going mix
development
project
1989
9,749
15 hectares
On-going mix
development
project
1990
44,400
374 hectares
61 hectares
On-going mix
development
project
1994
117,575
Freehold
37 hectares
11 hectares
Condominium
and bungalow
development
1990
7,877
Bandar Putra
Various sub-divided lots in
Senai-Kulai, Johor Bahru
Johor Darul Takzim
Freehold
332 hectares
60 hectares
On-going mix
development
project
1988
63,385
Bandar Putra
Lots 26737, 3783, 3785 and
various sub-divided lots in
Senai-Kulai, Johor Bahru
Johor Darul Takzim
Freehold
1,967 hectares
703 hectares
On-going mix
development
project
1988
167,877
Freehold
91 hectares
28 hectares
On-going mix
development
project
2005
40,667
Bandar Putra
PTD 5746, 5747 & 5748, Segamat
Johor Darul Takzim
Freehold
198 hectares
37.2 hectares
On-going mix
development
project
1990
33,700
Freehold
113 hectares
111 hectares
Homestead
development
1990
2,001
Tenure
Initial Gross
Land Area
Balance of
Net Land
Area for
Development
Freehold
164 hectares
4 hectares
Freehold
210 hectares
Bandar Puteri
Lots 5452, 5454, 5456, 5458-5473,
5476-5477, 5479, 5481, 5483-5484
and various sub-divided lots in
Puchong, Petaling
Selangor Darul Ehsan
Freehold
IOI Resort
Various sub-divided lots in
Dengkil, Sepang
Selangor Darul Ehsan
Location
274
Usage
Net Carrying
Amount as at
30 June 2012
RM000
On-going mix
development
project
1990
844
15,230 sq m
Future
development
land
2008
56,434
6,930 sq m
6,930 sq m
Vacant
industrial land
1986
173
Freehold
2,084 sq m
Future
development
land
1991
1,460
Freehold
196 hectares
196 hectares
Future
development
land
1990
5,956
Freehold
19 hectares
1 hectare
Future
development
land
1990
1,085
Freehold
20 hectares
8.38 hectares
On-going mix
development
project
1990
967
Freehold
20 hectares
20 hectares
Future
development
land
1990
1,308
Freehold
20 hectares
20 hectares
Future
development
land
2003
3,002
Freehold
446 hectares
86 hectares
Future
development
land
1983
14,029
Leasehold
expiring 2091
196 hectares
90 hectares
On-going mix
development
project
2001
282,314
Freehold
1.3 hectares
1.3 hectares
Residential
development
2009
8,550
Tenure
Initial Gross
Land Area
Balance of
Net Land
Area for
Development
Freehold
16 hectares
4 hectares
Lot 281 PT 7
Seksyen 89A
Bandar Kuala Lumpur
Freehold
15,230 sq m
Leasehold
expiring 2046
Location
Usage
275
GROUP
PROPERTIES
B. DEVELOPMENT PROPERTIES (Continued)
Year of
Acquisition
Net Carrying
Amount as at
30 June 2012
RM000
Future
development
land
2002
20,386
41 hectares
On-going mix
development
project
2006
145,736
435 hectares
435 hectares
Future
development
land
2006
38,070
Freehold
109 hectares
109 hectares
Future
development
land
2006
27,199
Freehold
1,799 sq m
1,799 sq m
Future
development
land
2001
150
Freehold
5,220 sq m
5,220 sq m
Building work
in-progress
2001
2,140
Freehold
2 hectares
2 hectares
Future
development
land
2009
29,192
Freehold
4 hectares
4 hectares
Mix
development
project
2011
51,024
Leasehold
expiring 2111
2.4 hectares
2.4 hectares
Future
condominium
development
2012
1,049,909
Initial Gross
Land Area
Balance of
Net Land
Area for
Development
Leasehold
expiring 2091
21 hectares
21 hectares
Freehold
119 hectares
Freehold
Location
Tenure
Usage
Net carrying amount of the development properties are stated at Group land cost together with the related development expenditure incurred
to the remaining unsold properties.
276
C. INVESTMENT PROPERTIES
Age of
Building
Year of
(Year) Revaluation
Net Carrying
Amount as at
30 June 2012
RM000
Tenure
Land Area
Net
Lettable
Area
IOI Mall
Bandar Puchong Jaya
Puchong
Selangor Darul Ehsan
Freehold
66,500 sq m
57,525 sq m
3 storey
shopping mall
16
2012
319,000
Freehold
18,771 sq m
22,672 sq m
4 storey
shopping mall
2012
169,000
Freehold
11,555 sq m
34,996 sq m
2 blocks of
purpose-built
office building
2012
135,100
IOI Boulevard
Bandar Puchong Jaya
Puchong
Selangor Darul Ehsan
Freehold
24,450 sq m
26,184 sq m
104 units
commercial lot
2012
95,200
Freehold
2,111 sq m
14 units
commercial lot
and 902
car park bays
14
2012
15,490
Lot 40338
Mukim Petaling
Selangor Darul Ehsan
Freehold
1,699 sq m
1,699 sq m
Petrol station
land
2012
1,460
Freehold
2,690 sq m
2,690 sq m
Petrol station
land
2012
3,300
PT 82181
Lebuh Putra Utama
Bandar Putra, Kulai
Johor Darul Takzim
Freehold
8,901 sq m
8,901 sq m
Commercial
land
2012
4,800
Puteri Mart
Bandar Puteri
Puchong
Selangor Darul Ehsan
Freehold
16,916 sq m
4,226 sq m
1 storey
semi-wet
market
2012
25,800
IOI Resort
Putrajaya
Freehold
75,792 sq m
23,941 sq m
37 units of
residential
bungalow
5-16
2012
93,200
Location
Usage
277
GROUP
PROPERTIES
C. INVESTMENT PROPERTIES (Continued)
Age of
Building
Year of
(Year) Revaluation
Net Carrying
Amount as at
30 June 2012
RM000
Tenure
Land Area
Net
Lettable
Area
IOI Mall
Bandar Putra, Kulai
Johor Bahru
Johor Darul Takzim
Freehold
47,259 sq m
23,128 sq m
3 storey
shopping mall
11
2012
70,000
IOI Mart
Taman Lagenda Putra
Senai-Kulai
Johor Bahru
Johor Darul Takzim
Freehold
25,457 sq m
7,058 sq m
1 storey
semi-wet
market retail
complex
2012
14,700
Freehold
18,802 sq m
2012
94,760
Freehold
22,176 sq m
2012
57,713
Freehold
465 sq m
1,650 sq m
1 unit 3
storey
shop office
17
2012
6,000
No. 12
Jalan Anggerik Mokara 31/62
Kota Kemuning
Seksyen 31 Shah Alam
Selangor Darul Ehsan
Freehold
362 sq m
307 sq m
1 storey
terrace
factory lot
14
2012
1,000
PFCC
Tower 3, 4 and 5
Bandar Puteri
Puchong
Selangor Darul Ehsan
Freehold
19,955 sq m
2 blocks of
purpose-built
office building
2012#
167,145
Freehold
16.4 hectares
* Integrated mix
development
including
shopping mall
& office
building
2012#
53,044
Location
Usage
* PFCC Tower 3, 4 and 5, and IOI City Development are currently under construction.
# The land is carried at revalued amount whereas the building under construction are carried at cost until the fair value can be reliably
measured.
278
D. INDUSTRIAL PROPERTIES
Location
Country lease
CL 075365632, 075376279
075376260 & 075469340
Sg Mowtas and Batu Sapi
Sandakan
Sabah
Lorong Perusahaan Satu
Prai Industrial Complex
13600 Prai
Penang
Year of
Acquisition
Net Carrying
Amount as at
30 June 2012
RM000
Tenure
Land Area
Usage
Age of
Building
(Year)
Leasehold
expiring 2039,
2042, 2044
22 hectares
15
1995
122,635
Leasehold 176,169 sq m
expiring
between 20352071
Offices and
factory sites
New factory site
erected on
existing land
33
2001
43,310
11
8,336
Leasehold
expiring 2025
13,400 sq m
Bulk cargo
terminal
38
2001
172
Leasehold
expiring 2015
8,615 sq m
Bulking
installation
38
2001
Leasehold
expiring 2041
8.5 hectares
Factory sites
31
2005
56,678
Leasehold
expiring 2024
34,375 sq m
Offices and
factory sites
23
2001
Loders Croklaan
Hogeweg 1, 1520 Wormerveer
The Netherlands
Freehold
6 hectares
Specialty oils
and fats
manufacturing
facilities
21-42
2002
104,102
Durkee Road
24708 W Channahon
Illinois, United States
Freehold
36 hectares
Specialty oils
and fats
manufacturing
facilities
10-42
2002
56,442
Leasehold
expiring 2029
15 hectares
Palm oil
refinery
7-11
2004
243,900
Antarcticaweg 191
Harbour 8228
3199 KA Maasvlakte
Rotterdam, The Netherlands
279
GROUP
PROPERTIES
D. INDUSTRIAL PROPERTIES (Continued)
Location
Age of
Building
(Year)
Year of
Acquisition
Net Carrying
Amount as at
30 June 2012
RM000
Tenure
Land Area
Usage
Leasehold
expiring 2023
1,022 sq m
Specialty oils
and fats
manufacturing
facilities
36
2002
1,109
Freehold
12,031 sq m
Vacant land
2010
5,550
Leasehold
expiring 2037,
2052
8 hectares
Factory complex
and vacant
industrial land
22
2007
19,408
Factory complex
25
2007
42,351
280
E. OTHER PROPERTIES
Year of
Acquisition
Net Carrying
Amount as at
30 June 2012
RM000
Tenure
Land/Built
Up Area
Usage
Age of
Building
(Year)
Freehold
11,979 sq m
152-room hotel
16
1990
16,592
Freehold
51.7 hectares
27-hole
golf course
and clubhouse
19
1990
4,549
IOI Resort
Lot 3991 (part)
Dengkil, Sepang
Selangor Darul Ehsan
Freehold
6 hectares
Hotel and
12 storey office
building erected
on existing land
9-10
1990
115,916
Freehold
1,803 sq m
Petrol station
land
1992
10
Freehold
3,018 sq m
Bungalow plots
1992
1,976
Freehold
2 hectares
Vacant land
1998
129
Freehold
1,041 sq m
Bandar Putra
corporate office
15
1994
1,144
Freehold
96 hectares
27-hole
golf course
1994
16,739
Freehold
7 hectares
Clubhouse
11
1994
6,789
Leasehold
expiring 2070
1,807 sq m
4 units
double storey
semi-detached
house
32
2005
168
Location
Lot 200-203
Taman Air Biru
Mukim Plentong
Pasir Gudang, Johor Bahru
Johor Darul Takzim
281
GROUP
PROPERTIES
E. OTHER PROPERTIES (Continued)
Location
Tenure
Land/Built
Up Area
Usage
Age of
Building
(Year)
Year of
Acquisition
Net Carrying
Amount as at
30 June 2012
RM000
Leasehold
expiring 2894
2,280 sq m
Semi-detached
house and
staff apartments
26
1993
Leasehold
expiring 2932
1 hectare
Regional office
11
1993
708
Leasehold
expiring 2914
2 hectares
Vacant land
1993
1,663
Leasehold
expiring 2057,
2914
5 hectares
Vacant land
1993
2,962
Freehold
167 sq m
Shoplot
17
2001
250
Freehold
1 hectare
Research
analysis
1990
2,174
Leasehold
expiring 2043
2,968 sq m
Vacant land
2009
455
HS(D) 10733
PT 78 Pekan Bukit Bisa
Daerah Sepang
Selangor Darul Ehsan
Freehold
16.4 hectares
Integrated mix
development
including shopping
mall and office
building
1990
74,302
Geran 31713
Lot 439 and Lot 2298
Dengkil, Sepang
Selangor Darul Ehsan
Freehold
20.8 hectares
2011
112,719
Lot 51665
Mukim Plentong
Pasir Gudang, Johor Bahru
Johor
282
NOTICE of
Annual general Meeting
NOTICE IS HEREBY GIVEN THAT the Forty-Third Annual General Meeting (AGM) of the Company will
be held at Putrajaya Ballroom I (Level III), Putrajaya Marriott Hotel, IOI Resort, 62502 Putrajaya, Malaysia
on Monday, 29 October 2012 at 10.00 a.m. for the following purposes:
AGENDA
1.
To receive the Audited Financial Statements for the financial year ended 30 June 2012 and the Reports of
the Directors and Auditors thereon.
2.
To re-elect the following Directors retiring by rotation pursuant to Article 101 of the Companys Articles
of Association:
3.
4.
Resolution 1
Resolution 2
To re-elect Mr Cheah Tek Kuang, the Director retiring pursuant to Article 102 of the Companys Articles of
Association.
Resolution 3
To consider and if thought fit, to pass the following as Ordinary Resolutions in accordance with Section
129 of the Companies Act, 1965:
(i)
5.
6.
7.
Please refer to
Note A
THAT Tan Sri Dato Lee Shin Cheng, a Director retiring pursuant to Section 129 of the Companies
Act, 1965 be and is hereby re-appointed a Director of the Company to hold office until the next
Annual General Meeting.
Resolution 4
(ii) THAT Datuk Hj Mohd Khalil b Dato Hj Mohd Noor, a Director retiring pursuant to Section 129 of the
Companies Act, 1965 be and is hereby re-appointed a Director of the Company to hold office until
the next Annual General Meeting.
Resolution 5
Resolution 6
To re-appoint BDO, the retiring auditors for the financial year ending 30 June 2013 and to authorise the
Directors to fix their remuneration.
Resolution 7
As special business, to consider and if thought fit, to pass the following Ordinary Resolutions:
7.1 Authority to Directors to allot and issue shares pursuant to Section 132D of the Companies Act,
1965
THAT pursuant to Section 132D of the Companies Act, 1965, the Directors be and are hereby
authorised with full powers to allot and issue shares in the Company from time to time and upon
such terms and conditions and for such purposes as they may deem fit subject always to the
approval of the relevant authorities being obtained for such issue and provided that the aggregate
number of shares to be issued pursuant to this resolution does not exceed ten percent (10%) of the
issued share capital for the time being of the Company and that such authority shall continue in
force until the conclusion of the next Annual General Meeting of the Company and that the Directors
be and are also empowered to obtain the approval from Bursa Malaysia Securities Berhad for the
listing of and quotation for the additional shares so issued.
Resolution 8
283
NOTICE of
Annual general Meeting
AGENDA (Continued)
7.2 Proposed Renewal of Existing Share Buy-Back Authority
THAT subject to compliance with applicable laws, regulations and the approval of all relevant
authorities, approval be and is hereby given to the Company to utilise up to the aggregate of the
Companys latest audited retained earnings and share premium account, to purchase, from time to
time during the validity of the approval and authority under this resolution, such number of ordinary
shares of nominal value RM0.10 each in the Company (as may be determined by the Directors of the
Company from time to time through Bursa Malaysia Securities Berhad (Bursa Securities) upon such
terms and conditions as the Directors may deem fit and expedient in the interest of the Company
provided that the aggregate number of shares to be purchased and/or held by the Company
pursuant to this resolution does not exceed ten percent (10%) of the issued and paid-up ordinary
share capital of the Company at the time of purchase (Proposed Purchase);
THAT at the discretion of the Directors of the Company, the shares of the Company to be purchased
are to be cancelled and/or retained as treasury shares and distributed as dividends or resold on Bursa
Securities and/or cancelled;
THAT the Directors of the Company be and are hereby empowered generally to do all acts and
things to give effect to the Proposed Purchase with full powers to assent to any condition,
modification, revaluation, variation and/or amendment (if any) as may be imposed by the relevant
authorities and/or do all such acts and things as the Directors may deem fit and expedient in the
best interest of the Company;
AND THAT such authority shall commence immediately upon passing of this resolution until:
(i)
the conclusion of the next Annual General Meeting of the Company at which time the authority
shall lapse unless by ordinary resolution passed at a general meeting, the authority is renewed
either unconditionally or subject to conditions;
(ii) the expiration of the period within which the next Annual General Meeting after that date is
required by law to be held; or
(iii) revoked or varied by ordinary resolution of the shareholders of the Company in a general
meeting,
284
whichever is the earlier 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 Main
Market Listing Requirements of Bursa Securities or any other relevant authorities.
Resolution 9
AGENDA (Continued)
7.3 Proposed Renewal of Shareholders Mandate for Recurrent Related Party Transactions of a
Revenue or Trading Nature
THAT approval be and is hereby given for the renewal of shareholders mandate for the Company
and its subsidiaries to enter into recurrent related party transactions of a revenue or trading nature
which are necessary for day-to-day operations involving the interests of Directors, Major Shareholders
or persons connected to the Directors and/or Major Shareholders of the Company and its subsidiaries
(Related Parties), as detailed in Part B, Section 4 of the Circular to Shareholders of the Company
dated 28 September 2012 (Shareholders Mandate) subject to the following:
(a) the transactions are carried out in the ordinary course of business on normal commercial terms
which are not more favourable to the Related Parties than those generally available to the
public and are not to the detriment of the minority shareholders of the Company; and
(b) disclosure is made in the annual report of the aggregate value of transactions conducted
pursuant to the Shareholders Mandate during the financial year.
THAT authority conferred by this resolution will commence immediately upon the passing of this
Ordinary Resolution and shall continue to be in force until:
(i)
the conclusion of the next Annual General Meeting of the Company, at which time it will lapse,
unless renewed by a resolution passed by the shareholders of the Company in a general
meeting;
(ii) the expiration of the period within which the next Annual General Meeting of the Company
after that date it is required to be held pursuant to Section 143(1) of the Companies Act, 1965
(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 the shareholders of the Company in a general
meeting,
whichever is the earlier,
AND THAT the Directors of the Company be and are hereby authorised to complete and do all such
acts and things as they may consider expedient or necessary to give effect to the Shareholders
Mandate.
8.
Resolution 10
To transact any other business of which due notice shall have been given in accordance with the
Companies Act, 1965 and the Companys Articles of Association.
Lee Ai Leng
Tan Choong Khiang
Secretaries
Putrajaya
28 September 2012
285
NOTICE of
Annual general Meeting
Note A
This Agenda item is meant for discussion only as under the provision of Section 169(1) of the Companies Act, 1965, the audited financial statements do not require
a formal approval of the shareholders. Hence, this resolution will not put forward for voting.
Notes
1. A member may appoint any person to be his proxy and there shall be no restriction as to the qualification of the proxy. The provision of Section 149(1)(b) of
the Companies Act, 1965 shall not apply to the Company.
2. An instrument appointing a proxy must be in writing under the hand of the appointor or of his attorney duly authorised in writing or, if the appointor is a
corporation, either under seal or under the hand of an officer or attorney duly authorised.
3. Subject to note 4 below, a member shall not be entitled to appoint more than two (2) proxies to attend and vote at the same meeting. If a member appoints
two (2) proxies to attend at the same meeting, the instrument of proxy must specify the proportion of his shareholdings to be represented by each proxy.
4. Where a member of the company is an exempt authorised nominee which holds ordinary shares in the Company for multiple beneficial owners in one (1)
securities account, there is no limit to the number of proxies which the exempt authorised nominee may appoint in respect of each omnibus account it holds.
An exempt authorised nominee refers to an authorised nominee defined under the Securities Industry (Central Depositories) Act 1991 (SICDA) which is
exempted from compliance with the provisions of 25A(1) of the SICDA.
5. An instrument appointing a proxy may specify the manner in which the proxy is to vote in respect of a particular resolution and, where an instrument of proxy
so provides, the proxy is not entitled to vote on the resolution except as specified in the instrument.
6. An instrument appointing a proxy must be deposited at the Companys registered office at Two IOI Square, IOI Resort, 62502 Putrajaya, Malaysia not less than
48 hours before the time for holding the meeting or any adjournment thereof.
7. Only members whose names appear in the Record of Depositors as at 22 October 2012 shall be eligible to attend the AGM or appoint proxy to attend and
vote on his behalf.
8. Explanatory Notes on Special Businesses
286
i.
Authority to Directors to allot and issue shares pursuant to Section 132D of the Companies Act, 1965
Ordinary resolution 8 is to seek a renewal of the general mandate which was approved at the 42nd Annual General Meeting of the Company held on
24 October 2011 and which will lapse at the conclusion of the forthcoming Annual General Meeting to be held on 29 October 2012.
The general mandate, if approved, will provide flexibility to the Company for any possible fund raising activities, including but not limited to placing
of shares for the purpose of funding future investment project(s) and acquisition(s) and for strategic reasons. In order to eliminate any delay and costs
in convening a general meeting to specifically approve such issuance of shares, it is considered appropriate that the Directors be empowered, as
proposed under ordinary resolution 8, to allot and issue shares in the Company up to an amount not exceeding in total ten percent (10%) of the issued
share capital of the Company for the time being. This authority, unless revoked or varied at a general meeting, will expire at the conclusion of the next
Annual General Meeting of the Company.
The Company has not issued any new shares pursuant to Section 132D of the Companies Act, 1965 under the general mandate which was approved
at the 42nd Annual General Meeting of the Company.
ii.
Ordinary resolution 9, if passed, will empower the Company to purchase up to ten percent (10%) of the issued and paid-up ordinary share capital of
the Company through Bursa Malaysia Securities Berhad. This authority unless revoked or varied at a general meeting, will expire at the conclusion of
the next Annual General Meeting of the Company.
iii.
Proposed Renewal of Shareholders Mandate for Recurrent Related Party Transactions of a Revenue or Trading Nature (Proposed Shareholders
Mandate)
Ordinary resolution 10 is to seek approval from the shareholders for renewal of the shareholders mandate granted by the shareholders of the Company
at the previous Annual General Meeting held on 24 October 2011. The Proposed Shareholders Mandate will enable the Company and its subsidiaries to
enter into any of the recurrent related party transactions of a revenue or trading nature which are necessary for the day-to-day operations involving the
interest of Directors, Major Shareholders or persons connected to the Directors and/or Major Shareholders of the Company and its subsidiaries (Related
Parties), subject to the transactions being in the ordinary course of business on normal commercial terms which are not more favourable to the Related
Parties than those generally available to the public and are not to the detriment of the minority shareholders of the Company. This authority unless revoked
or varied at a general meeting, will expire at the conclusion of the next Annual General Meeting of the Company. The details of the proposal are set out
in the Circular to Shareholders dated 28 September 2012.
STATEMENT ACCOMPANYING
NOTICE OF ANNUAL GENERAL MEETING
Pursuant to Paragraph 8.27 (2) of the Main Market Listing Requirements of Bursa Malaysia
Securities Berhad
(i) Details of individuals who are standing for election as Directors
No individual is seeking election as a Director at the forthcoming Forty-Third Annual General Meeting of the Company.
(b) The Director retiring and standing for re-election pursuant to Article 102 of the Articles of Association of the Company is as
follows:
Mr Cheah Tek Kuang
(c) The Directors seeking for re-appointment under Section 129 of the Companies Act, 1965 are as follows:
Tan Sri Dato Lee Shin Cheng
The profiles of the above-named Directors are set out in the section entitled Profile of Directors on page 64 onwards of the Annual
Report. Their shareholdings in the Company and its related corporations are set out in the section entitled Statement of Directors
Interests on page 98 of the Annual Report.
287
SHAREHOLDERS
INFORMATION
As At 30 August 2012
Type of shares
:
Voting rights
:
Number of shareholders
:
ANALYSIS OF SHAREHOLDINGS
Size of holdings
No. of holders
Total holdings
1 99
100 1,000
1,001 10,000
10,001 100,000
100,001 319,968,573
319,968,574 and above
3,315
5,744
14,477
4,247
826
4
29,772
4,510,684
54,400,852
112,889,106
2,964,021,522
3,263,519,559
0.00
0.07
0.85
1.76
46.32
51.00
Total
28,613
6,399,371,495
100.00
1,395,779,080
21.81
2.
722,016,679
11.28
3.
588,323,800
9.19
4.
557,400,000
8.71
5.
254,028,500
3.97
6.
231,339,800
3.62
7.
206,762,800
3.23
8.
125,487,200
1.96
9.
123,362,300
1.93
10.
HSBC Nominees (Asing) Sdn Bhd BNY Brussels for Market Vectors - AgriBusiness ETF
108,193,555
1.69
11.
96,315,480
1.51
12.
83,831,267
1.31
13.
83,000,000
1.30
14.
70,000,000
1.09
288
15.
62,561,678
0.98
16.
58,000,000
0.91
17.
54,000,000
0.84
18.
48,137,413
0.75
19.
44,417,620
0.69
20.
40,962,666
0.64
21.
36,366,776
0.57
22.
34,419,200
0.54
23.
33,776,500
0.53
24.
32,665,700
0.51
25.
32,500,000
0.51
26.
31,489,526
0.49
27.
27,016,501
0.42
28.
26,509,900
0.41
29.
CIMSEC Nominees (Tempatan) Sdn Bhd CIMB for Lai Ming Chun @ Lai Poh Lin (PB)
25,719,000
0.40
30.
24,270,000
0.38
5,258,652,941
82.17
Total
289
SHAREHOLDERS
INFORMATION
As At 30 August 2012
Substantial Shareholders
(as per Register of Substantial Shareholders)
No. of ordinary shares held
Name of shareholders
Tan Sri Dato Lee Shin Cheng
Direct
Indirect
62,530,600
0.98
*2,761,697,080
43.16
**2,824,227,680
44.13
8,240,400
0.13
***2,752,502,880
43.01
953,800
0.01
***2,752,502,880
43.01
2,752,502,880
43.01
#2,752,502,880
43.01
748,140,609
11.69
Deemed interested by virtue of his interests in Progressive Holdings Sdn Bhd (PH), which in turn holds 100% equity interest in Vertical Capacity Sdn Bhd (VC) and shares held
by his sons, Dato Lee Yeow Chor and Lee Yeow Seng.
** Deemed interested by virtue of her interests and the interests of her spouse, Tan Sri Dato Lee Shin Cheng and her sons, Dato Lee Yeow Chor and Lee Yeow Seng in PH, which in
turn holds 100% equity interest in VC and shares held by Tan Sri Dato Lee Shin Cheng, Dato Lee Yeow Chor and Lee Yeow Seng.
*** Deemed interested by virtue of his interest in PH, which in turn holds 100% equity interest in VC.
#
290
Incorporated in Malaysia
Proxy
Form
I/We
of
being a member(s) of IOI Corporation Berhad, hereby appoint
NRIC /Co. No.
of
and/or failing him, the Chairman of the Meeting as my/our proxy to vote for me/us on my/our behalf at the Forty-Third Annual General
Meeting (AGM) of the Company to be held at Putrajaya Ballroom I (Level III), Putrajaya Marriott Hotel, IOI Resort, 62502 Putrajaya,
Malaysia on Monday, 29 October 2012 at 10.00 a.m. or any adjournment thereof.
The proportion of my/our holding to be represented by my/our proxy/proxies are as follows:
First proxy A
Second proxy B
:
:
%
%
100%
In case of a vote taken by a show of hands, *First Proxy A/ *Second Proxy B shall vote on my/our behalf.
My/our proxy/proxies shall vote as follows:
(Please indicate with an X or in the space provided as to how you wish your votes to be cast. If you do not do so, the proxy/proxies will vote, or abstain from voting on the
resolutions as he/they may think fit).
No.
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
Ordinary Resolutions
To re-elect Dato Lee Yeow Chor as a Director.
To re-elect Mr Lee Cheng Leang as a Director.
To re-elect Mr Cheah Tek Kuang as a Director.
To re-appoint Tan Sri Dato Lee Shin Cheng pursuant to Section 129 of the
Companies Act, 1965.
To re-appoint Datuk Hj Mohd Khalil b Dato Hj Mohd Noor pursuant to Section 129
of the Companies Act, 1965.
To approve Directors Fees for the financial year ended 30 June 2012.
To re-appoint BDO as Auditors and to authorise the Directors to fix their
remuneration.
To authorise the Directors to allot and issue shares pursuant to Section 132D of
the Companies Act, 1965.
To approve the proposed renewal of existing share buy-back authority.
To approve the proposed renewal of shareholders mandate for recurrent related
party transactions of a revenue or trading nature.
Dated this
day of
First Proxy A
For
Against
Second Proxy B
For
Against
2012.
* Delete if inapplicable.
Notes:
1. A member may appoint any person to be his proxy and there shall be no restriction as to
the qualification of the proxy. The provision of Section 149(1)(b) of the Companies Act, 1965
shall not apply to the Company.
2. An instrument appointing a proxy must be in writing under the hand of the appointor or of
his attorney duly authorised in writing or, if the appointor is a corporation, either under seal
or under the hand of an officer or attorney duly authorised.
3. Subject to note 4 below, a member shall not be entitled to appoint more than two (2)
proxies to attend and vote at the same meeting. If a member appoints two (2) proxies to
attend at the same meeting, the instrument of proxy must specify the proportion of his
shareholdings to be represented by each proxy.
4. Where a member of the company is an exempt authorised nominee which holds ordinary
shares in the Company for multiple beneficial owners in one (1) securities account, there is no
limit to the number of proxies which the exempt authorised nominee may appoint in respect
of each omnibus account it holds. An exempt authorised nominee refers to an authorised
nominee defined under the Securities Industry (Central Depositories) Act 1991 (SICDA) which
is exempted from compliance with the provisions of 25A(1) of the SICDA.
An instrument appointing a proxy may specify the manner in which the proxy is to vote in
respect of a particular resolution and, where an instrument of proxy so provides, the proxy
is not entitled to vote on the resolution except as specified in the instrument.
An instrument appointing a proxy must be deposited at the Companys registered office at
Two IOI Square, IOI Resort, 62502 Putrajaya, Malaysia, not less than 48 hours before the
time for holding the meeting or any adjournment thereof.
Only members whose names appear in the Record of Depositors as at 22 October 2012
shall be eligible to attend the AGM or appoint proxy to attend and vote on his behalf.
sTAMP
The Company Secretary