PWF CONSOLIDATED BHD
(420049-H)
(formerly known as PW Consolidated Bhd.)
IGNITING POSSIBILITIES Annual Report 2015
Contents
02 03 04 06 07 09 12 14 Directors’ Report Directors’ Statement Statutory Declaration Independent Auditors’ Report To The Members Statements Of Financial Position Statements Of Comprehensive Income Consolidated Statement Of Changes In Equity Statement Of Changes In Equity Statements Of Cash Flows Notes To The Financial Statements Supplementary Information
Corporate Information Financial Highlights Directors’ Profile Corporate Structure Chairman’s Statement Corporate Governance Statement Statement On Risk Management And Internal Control Audit Committee Report
16 20 20 21 22 23 24 25 26 28 71 72 74 77 78 79
Shareholdings Statistics Notice Of Annual General Meeting Statement Accompanying Notice Of Annual General Meeting Additional Compliance Information List Of Material Properties Of The Group Proxy Form
PWF CONSOLIDATED BHD. (420049-H)
02 Annual Report 2015
Corporate Information
DIRECTORS DATO’ ZURAIDI BIN RAHIM
(NON-EXECUTIVE CHAIRMAN )
DATO’ SIAH GIM ENG
(MANAGING DIRECTOR)
DATIN LAW HOOI LEAN
(DEPUTY MANAGING DIRECTOR)
ONG KIM NAM
(INDEPENDENT NON-EXECUTIVE DIRECTOR)
ZAINAL BIN PANDAK
(INDEPENDENT NON-EXECUTIVE DIRECTOR)
SECRETARY
AUDITORS
CH’NG LAY HOON
GRANT THORNTON CHARTERED ACCOUNTANTS
AUDIT COMMITTEE
PRINCIPAL BANKERS
ONG KIM NAM (CHAIRMAN) DATO’ ZURAIDI BIN RAHIM (MEMBER) ZAINAL BIN PANDAK (MEMBER)
AGROBANK BANGKOK BANK BERHAD BANK OF CHINA (MALAYSIA) BERHAD CIMB BANK BERHAD MALAYAN BANKING BERHAD OCBC BANK (MALAYSIA) BERHAD
REGISTERED OFFICE SUITE 12-A LEVEL 12 MENARA NORTHAM NO. 55 JALAN SULTAN AHMAD SHAH 10050 PENANG TEL : 04 - 228 0511 FAX : 04 - 228 0518
SOLICITORS LOH HAN MENG & CO
STOCK EXCHANGE LISTING
BUSINESS ADDRESS PLOT 127, JALAN PERINDUSTRIAN BUKIT MINYAK 7 TAMAN PERINDUSTRIAN BUKIT MINYAK 14100 BUKIT MERTAJAM SEBERANG PERAI TENGAH, PENANG
SHARE REGISTRAR SYMPHONY SHARE REGISTRARS SDN. BHD. LEVEL 6, SYMPHONY HOUSE PUSAT DAGANGAN DANA 1 JALAN PJU 1A/46 47301 PETALING JAYA SELANGOR TEL : 603 - 7841 8000 FAX : 603 - 7841 8151
MAIN MARKET OF BURSA MALAYSIA SECURITIES BERHAD STOCK NAME : PWF STOCK CODE : 7134
PWF CONSOLIDATED BHD. (420049-H) Annual Report 2015
Five Years Group Financial Highlights
(Restated) December 2011
FINANCIAL YEAR ENDED
December 2012
December 2013
December 2014
December 2015
^ Revenue
264,380,844
214,423,837
259,141,992
279,745,172
290,938,775
Shareholders' fund
130,115,630
205,843,523
208,187,198
216,121,440
223,854,780
26,991,417
15,422,926
24,111,662
32,163,645
27,933,714
5,962,453
349,021
9,191,926
16,413,625
9,364,695
* Net assets per share (RM)
1.82
2.87
2.91
3.14
3.02
* Earnings per share (sen)
6.52
0.27
7.44
16.53
8.43
^ Earnings before interest, tax, depreciation and amortisation (EBITDA) ^ Profit before taxation
Shareholders' fund (RM)
Revenue (RM) 2015
290,938,775
2014
2015
279,745,172
2013
2014
259,141,992
2012
214,423,837
2011
264,380,844 0
2013
208,187,198
2012
205,843,523
100,000,000
200,000,000
Profit before taxation (RM)
2015
27,933,714
2014
2015
32,163,645
26,991,417 0
16,413,625
2013
15,422,926
2011
9,364,695
2014
24,111,662
20,000,000
9,191,926
2012
349,021
2011
5,962,453 0
40,000,000
Net assets per share (RM) 2015 2014
2015
3.14 2.91
2013
2012
2.87
2012
1.82 1.0
16.53 7.44 0.27
2011 2.0
20,000,000
8.43
2014
2013
2011
10,000,000
Earnings per share (Sen) 3.02
0.0
130,115,630 0
400,000,000
EBITDA (RM)
2012
216,121,440
2011
200,000,000
2013
223,854,780
3.0
4.0
0.00
6.52 5.00
10.00
15.00
20.00
^ For comparison purposes, the comparative figures have been restated in the previous financial year to reflect only the results from continuing operations of the Group. * For comparison purposes, the comparative figures have been restated to incorporate effect of bonus shares issue.
03
PWF CONSOLIDATED BHD. (420049-H)
04 Annual Report 2015
Directors’ Profile
Dato’ Zuraidi Bin Rahim Dato’ Zuraidi Bin Rahim, a Malaysian, aged 42, holds a BSc (Hon) Civil Engineering from Leeds Metropolitan University, United Kingdom and was appointed as an Independent Non-Executive Chairman of the Company on 5 January 2016. He has more than 7 years’ experience in civil and structural engineering works involving in design and work. He also has vast experience in administrative and management in supply of foreign workers within Malaysia. In 2003, Dato’ Zuraidi successfully set-up Jitra Specialist Centre, a private hospital in Jitra and became the CEO and President of the hospital. Dato’ Zuraidi is currently the Executive Chairman of Balqis Textiles and Manufacturing Sdn Bhd and Chairman of VTelekom Berhad, a Government Linked Company. He is the Chairman of the Nominating Committee and a member of the Audit Committee.
Dato’ Siah Gim Eng Dato’ Siah Gim Eng, a Malaysian, aged 57, the co-founder of the Company, was appointed to the Board on 12 May 2001 and is currently the Managing Director of the Company. He is the driving force in the formulation and implementation of the Group’s corporate strategy. With more than 30 years of experience in the feed milling and poultry farming industry, his entrepreneurial skills have steered the Company from a small establishment to become one of the leading feed mill and farming group in the Northern region of Malaysia. He is the husband of Datin Law Hooi Lean, the Deputy Managing Director of the Company. He has attended all the five (5) Board meetings of the Company held during the financial year ended 31 December 2015.
Datin Law Hooi Lean Datin Law Hooi Lean, a Malaysian, aged 55, holds a Master Degree in Business Administration from University of Ballarat, Australia. She is a member of New Zealand Institute of Management. She is also a Fellow of The Society for Professional Management, UK, Certified Professional Manager from The Society of Business Practitioners (SBP), UK. She was appointed as the Deputy Managing Director of the Company on 12 May 2001. She is primarily involved in the business development process, strategic planning, providing directions and overseeing the administration of finance function of the Group. With more than 30 years experience in the area of financial accounting and company management, she has been instrumental in ensuring the smooth running of the day to day operation of the Company. She is the wife of Dato’ Siah Gim Eng, the Managing Director and major shareholder of the Company. She has attended all the five (5) Board meetings of the Company held during the financial year ended 31 December 2015. She is a member of the Remuneration Committee.
PWF CONSOLIDATED BHD. (420049-H) Annual Report 2015
Directors’ Profile (Cont’d)
Ong Kim Nam Ong Kim Nam, a Malaysian, aged 60, was appointed as an Independent Non-Executive Director on 12 May 2001. A Chartered Accountants by profession, he is a member of Malaysian Institute of Accountants and Association of Chartered Certified Accountants. He has over 30 years of experience in the field of auditing, accounting and taxation. Presently he is the sole practitioner of O.K.Nam Associates, a firm of Chartered Accountants, which is based in Penang. He is the director of Eng Kah Corporation Berhad, a company listed on Bursa Malaysia. He has attended all the five (5) Board meetings of the Company held during the financial year ended 31 December 2015. He is the Chairman of the Audit Committee and the Remuneration Committee and a member of the Nominating Committee.
Haji Zainal Bin Pandak Haji Zainal Bin Pandak, a Malaysian, aged 58, was appointed to the Board on 19 December 2011 and is currently an Independent Non-Executive Director. He graduated from Universiti Teknologi Mara with Diploma in Business Administration and was formerly an Assistant Director in Inland Revenue Board. He was conferred Pingat Pangkuan Mahkota Wilayah (PPW) in 2009. He has attended all the five (5) Board meetings of the Company held during the financial year ended 31 December 2015. He is a member of the Audit Committee and the Nominating Committee.
05
PWF CONSOLIDATED BHD. (420049-H)
06 Annual Report 2015
Corporate Structure As At 5 April 2016
PWF CONSOLIDATED BHD
(formerly known as PW Consolidated Bhd.)
(420049-H)
100%
PWF FEEDS SDN BHD (Formerly known as PW Nutrifeed Sdn Bhd)
100%
(37629-M)
PWF FARMS SDN BHD (Formerly known as PW Nutrifarm Sdn Bhd)
(149054-P)
PWF BREEDER SDN BHD
100%
PWF CAPITAL LAND SDN BHD
(Formerly known as PW Resources Sdn Bhd) (752833-H)
PW NUTRIFARM VENTURE SDN BHD (208636-P)
PINWEE CHICKEN TRADING SDN BHD (594854-W)
(Formerly known as PW Nutri Breeder Farm Sdn Bhd)
(559277-W) PW NUTRI PROCESSING SDN BHD (668698-A)
PWF TIMBERHILL SDN BHD (1173445-P)
PINWEE FOOD PROCESSING SDN BHD (541912-X)
PW NUTRIEGGS SDN BHD (613817-M)
PWF CONSOLIDATED BHD. (420049-H) Annual Report 2015
Chairman’s Statement
It is with great pleasure that I present to you the Annual Report and the Audited Financial Statements of the Group and of the Company for the financial year ended 31 December 2015. Performance The Group posted a commendable performance for the financial year 2015 in view of slower pace of Malaysian economy growth in 2015 with profit before tax recorded at RM9.4 million. The Group’s result was affected by lower selling price of broiler and eggs compared with the preceding year, and weakening Ringgit that has resulted in higher import cost of raw material. During the financial year, sales volume of broiler and eggs increased by 9.2% and 18.9% respectively. Revenue for the Group rose to RM290.9 million from RM279.7 million recorded in FY2014 while net assets increased from RM216.1 million as at end of FY2014 to RM223.9 million.
Dividend To reward our shareholders for their continuous support and confidence in the Group, the Group has declared and paid total dividends of 6.0 Sen in respect of FY2015 comprised of the following: - First interim single tier dividend of 3.0 Sen per share paid on 5 February 2016, and - Second interim single tier dividend of 3.0 Sen per share paid on 1 April 2016.
Recent Corporate Development Several corporate exercises have been carried out since the last annual report including: - signing of Memorandum of Understanding with Founder Energy Sdn Bhd, a subsidiary company of PUC Founder (MSC) Berhad in relation to the collaboration to build and operate an ecotype biogas electricity plant;
-
establishment of an Employees’ Share Option Scheme (“ESOS”) of up to 10,811,200 ESOS Options to eligible Directors and employees of the Group, among others, to motivate and retain existing employees as well as to attract prospective skilled and experienced employees to the Group; and
-
application to Bursa Malaysia Securities Berhad on 14 April 2016, for the proposed share split involving the sub-division of the existing ordinary share of RM1.00 each into two ordinary shares of RM0.50 each to enhance the liquidity and marketability of the Company’s shares. Together with the proposed share split, the Company has also submitted an application for the proposed bonus issue of up to 47,339,198 warrants on the basis of three warrants for every ten sub-divided shares held. These proposals are subject to approval from Bursa Malaysia Securities Berhad and shareholders’ approval at an Extraordinary General Meeting to be convened.
07
PWF CONSOLIDATED BHD. (420049-H)
08 Annual Report 2015
Chairman’s Statement (Cont’d)
Outlook Chicken meat and eggs have been the most consumed protein staples in the country for decades. Inelasticity to changes in price means demand will continue to be stable notwithstanding possible temporary mismatch between supply and demand that could impact on the market price while population growth is expected to fuel growth in demand. Nevertheless the Company expects challenges from rising cost of living and uncertain economic environment in the local economy moving forward. Investment in capacity expansion will continue onto 2016 as it is vital to increase market share and operate from a lower cost base as cost efficiency is critical business factor to poultry business which produce mostly generic product. Expansion currently underway include the construction of new close type broiler house and layer house, conversion of existing open type broiler house to close house and construction of new breeder farm. The management is confident that these projects will contribute towards future revenue and earnings growth of the Group.
Corporate Social Responsibilities The management continues striving to enhance its role in corporate social responsibilities. The Company has implemented policies that safeguard and promote the well being and interest of the communities. Foremost is the commitment to produce safe and healthy food for the consumer. During the year, the Company had also put in more effort in training and skills development of our employees that help their career development. Besides giving away eggs to the local communities, the Company also donates cash and medical equipment to dialysis centre and other charities to support their charitable cause.
Acknowledgement On behalf of the board, I would like to thank the support and cooperation from our shareholders, customers and suppliers, business partners, bankers and government authorities and my sincere appreciation of our colleagues’ hard work, dedication and commitment throughout the past one year.
Dato’ Zuraidi Bin Rahim Chairman
PWF CONSOLIDATED BHD. (420049-H) Annual Report 2015
Corporate Governance Statement
The Board of Directors is committed to maintaining high standard of corporate governance throughout the Group. This practice of good corporate governance is fundamental to the performance of duties and responsibilities of the Directors in enhancing shareholders' value and safeguarding stakeholders' interest of the Group. The corporate governance practiced by the Group is consistent with the principles and recommended practices set out in the Malaysian Code on Corporate Governance 2012 (“Code”). This statement reports on the compliance with the Code by the Company throughout the financial year ended 31 December 2015 and reason thereof if there are inconsistencies. Board of Directors The Board is primarily entrusted with the responsibility of reviewing and monitoring implementation of the strategic plan of the Group. The Board oversees the conduct of the Group’s business affairs and ensuring effective system of control and risk management are in place through identifying and appraisal of risk within the Group. The Board also considers the adequacy of the succession plan for the senior management and ensuring effective communication with the shareholders. These functions and responsibilities of the Directors are set out in the Company’s Board Charter. The Board has established a standard of ethical conduct for directors based on the code of ethics issued by the Companies Commission of Malaysia and provisions in the Companies Act, 1965. Board Composition and Independence The Board is currently comprised of two Executive Directors and three Independent Non-Executive Directors. Hence, the Board’s composition meets the Listing Requirements of Bursa Malaysia Securities Berhad (“Bursa Securities”) (“Listing Requirements”) of having at least one-third (1/3) of the membership of the Board comprising independent directors. The Board members have diverse knowledge, expertise and experience in various fields that gives added strength to the leadership that is necessary for the effective stewardship of the Group. The Board has clear division of responsibility and is balance in terms of power and authority. The Executive Directors are responsible for making and implementing operational decisions whilst Independent Non-Executive Directors are independent of the management and are free from any relationship that could materially interfere with the exercise of their independent judgment. Together, they play an important role in ensuring that the strategies proposed by the management are fully deliberated and examined, and that it is capable of contribute to the sustainability of the organization taking into account the interest of shareholders, employees, customers, suppliers and the many communities in which the Group conducts its business. Currently the Board Chairman is held by an Independent Non-Executive Director. The Board has strong independent element within it to provide check and balance of power in each Board meeting and the Chairman always encourages all the members of the Board to participate actively during Board meetings. One of the Independent Directors has served a cumulative term of more than 9 years in the Board. The Board shall seek shareholders approval for the continuation of the relevant director as Independent Director of the Board. Board Meeting The Board meets on a quarterly basis and additionally as and when required, with a formal schedule of matters specifically reserved for the Board’s deliberation and decision. During the financial year under review, five (5) Board meetings were held and all the Directors have complied with the requirements in respect of board meeting attendance as provided in the Articles of Association. Dato' Siah Gim Eng Datin Law Hooi Lean Mr. Ong Kim Nam En. Zainal Bin Pandak En. Shamsuddin Bin Mohd Salleh (resigned on 2.12.2015) Dato' Zuraidi Bin Rahim (appointed on 5.1.2016)
5/5 5/5 5/5 5/5 5/5 n/a
Supply and Access to Information The Directors have full and unrestricted access to all information pertaining to the Group’s business and affairs, whether collectively or in their individual capacity, to enable them to discharge their duties. There are matters specifically reserved for the Board’s decision to ensure that the direction and control of the Group is firmly in its hands. Prior to the Board meetings, the Directors are provided with the agenda together with Board papers containing relevant reports and information. All Directors have access to the advice and the services of the Company Secretaries and under appropriate circumstances may obtain independent professional advice at the Company’s expense, in furtherance of their duties.
09
PWF CONSOLIDATED BHD. (420049-H)
10 Annual Report 2015
Corporate Governance Statement (Cont’d)
Appointment to the Board The Board had established a Nominating Committee which is responsible for the review and assessment of the skills, experience, size and composition of the Board on an ongoing basis to ensure effectiveness of the Board and the contribution of each director. The Nominating Committee is also responsible for assessing the suitability of proposed candidates for directorships and making recommendations to the Board on new appointments including Board Committees. The Nominating Committee consists wholly of Non-Executive and Independent Directors. The Committee is chaired by Dato’ Zuraidi Bin Rahim and the other members are Mr. Ong Kim Nam and En Zainal Bin Pandak. The Committee had one (1) meeting during the financial year. Re-election In accordance with the provisions of the Articles of Association of the Company, all directors are subject to retirement from office at least once in every three (3) years, but shall be eligible for re-election. The Articles also provide that any Director appointed during the year is required to retire and seek re-election at the following Annual General Meeting immediately after such appointment. Directors Training Save for Dato' Zuraidi Bin Rahim, all Directors have completed the Mandatory Accreditation Programme (“MAP”) and the Continuing Education Programme (“CEP”) as required by Bursa Malaysia Securities Berhad. The Company continues to identify suitable training programme for the enhancement of Directors’ skill and knowledge from time to time.
DIRECTOR’S REMUNERATION The Level and Make-up of Remuneration The remuneration framework for Executive Directors has an underlying objective of attracting and retaining directors needed to run the Company successfully. Remuneration packages of Executive Directors are structured to commensurate with corporate and the individual’s performance. In respect of Non-Executive Directors, the level of remuneration reflects the experience and level of responsibilities undertaken by the individual concerned. Procedure The Board had established a Remuneration Committee to review and recommend to the Board the remuneration package of the Executive Directors and the determination of remuneration packages of non-executives is a matter for consideration by the Board as a whole. The individuals concerned are required to abstain from discussions pertaining to their own remuneration packages. The Remuneration Committee is chaired by Mr. Ong Kim Nam with Datin Law Hooi Lean as a member. The Committee met once (1) during the financial year. Disclosure Details of the Directors’ remuneration for the financial year ended 31 December 2015 are as follow: The aggregate remuneration of Directors categorized into appropriate components.
Executive Non-Executive
Fees
Salaries, Allowances, Bonus and EPF
Others
Total
RM
RM
RM
RM 2,899,200
78,000
2,775,800
45,400
108,000
29,500
-
137,500
186,000
2,805,300
45,400
3,036,700
PWF CONSOLIDATED BHD. (420049-H) Annual Report 2015
Corporate Governance Statement (Cont’d)
DIRECTOR’S REMUNERATION (cont’d) The number of Directors whose total remuneration falls within the following bands. Range of Remuneration (RM)
Executive
Non-executive
-
3
1,200,001 – 1,400,000
1
-
1,400,001 – 1,600,000
1
-
2
3
0 – 200,000
SHAREHOLDERS Dialogue between Company and Investors The Board recognizes the importance of timely and equal dissemination of information to shareholders on the Group’s performance and direction. Communication with investor is effected through timely release of information on the Group’s corporate proposal, financial results and other material information to the public. Information and news on the company’s operation are also made available to investors and shareholders through the company website at www. pwf.com.my The Annual General Meeting (“AGM”) The Company’s AGM serves as a forum for dialogue with shareholders. At each AGM, the Chairman of the Board briefs the shareholders on the progress and performance of the business of the Group. The status of all resolutions proposed at the AGM is submitted to Bursa Malaysia Securities Berhad at the end of the meeting day. Apart from contact at general meetings, there is no formal program or schedule of meetings with investors, shareholders, stakeholders and the public generally. However, the Management has the option of calling for meetings with investors/analysts if deemed necessary. Thus far, the Management is of the opinion that this arrangement has been satisfactory to all parties.
ACCOUNTABILITY AND AUDIT Financial Reporting The Board is aware of its responsibilities to shareholders and the requirement to present a balanced and comprehensive assessment of the Group’s financial position by means of the annual and quarterly reports and other published information. In this regard, the Board is responsible for the preparation of financial statements by applying the appropriate accounting policies and prudent estimates that present a fair and balanced report of the financial state of affairs of the Group in accordance with the provisions in the Companies Act 1965 and applicable approved accounting standard in Malaysia. Internal Control The Statement on Risk Management and Internal Control as set out on pages 12 and 13 of this Annual Report provides an overview of the state of internal controls within the Group. Relationship with the Auditors The Board through the establishment of an Audit Committee maintains a formal and transparent relationship with the Group’s Auditors. The roles of the Audit Committee in relation to the Auditors are detailed on pages 14 and 15 of the Audit Committee Report in the Annual Report.
11
PWF CONSOLIDATED BHD. (420049-H)
12 Annual Report 2015
Statement On Risk Management And Internal Control
Introduction The Board acknowledges the importance of maintaining a sound framework of internal control and risk management that is effective in safeguarding shareholders’ investment and the Group’s asset consistent with the requirements of the Malaysian Code of Corporate Governance. This Statement on Risk Management and Internal Control is made in pursuant with paragraph 15.26(b) of the Listing Requirements of Bursa Malaysia Securities Berhad and with reference to Bursa Malaysia Securities Berhad’s Statement On Risk Management and Internal Control: Guidelines for Directors of Public Listed Companies, which requires Directors of Malaysian public listed companies to make a statement about their state of internal control within the Group in their Annual Report. Board’s Responsibility The Board has overall responsibility for the Group’s system of internal control and risk management and for reviewing its effectiveness whilst the role of Management is to implement the Board’s policies on risk and control. The system of internal control is designed to manage rather than eliminate the risk of failure in achieving business objectives. In pursuing these objectives, internal controls can only provide reasonable and not absolute assurance against material misstatement or loss. The Board ensures risk management is embedded in all aspect of the Group’s activities. The Board assesses risk appetite or the amount of risk the Group is willing to take in the pursuit of its objective based on the capabilities of the Group in tolerating risk and the operating environment that it is in. In addition, qualitative and quantitative parameters are set by the Board in assessing specific categories of risk to ensure that the Group undertake risk that are within their risk appetite. The Board confirms that there is a continuous process for identifying, evaluating and managing the significant risks that may materially affect the achievement of the Group’s corporate objectives. The Board will continue to review and enhance the process periodically so as to ensure sustainability. Risk Management Framework The Board maintains continuous commitment in strengthening the Group’s risk management framework and processes. Day-to-day risk management of the individual operating unit is delegated to the executive directors and senior management of the respective business units. In this regard, the executive directors are responsible for timely identification of the Group’s risks in each business unit and reviewing the effectiveness of the implementation of risk mitigation actions which shall be carried out by the senior management. The executive directors and the senior management constantly review comprehensive operation reports, performance indicators and analysis reports to identify anomalies in all business functions. Budgets and forecasts are prepared and significant variances against actual performance are highlighted for further evaluation and actions. The executive directors and senior management through daily communication with different level of the organisation continuously impart the awareness for risk and its impact. Periodic meetings are held to assess and monitor the Group’s risk as well as discuss, deliberate and appropriately addressed matters associated with strategic, financial and operational facets of the Group. Any significant weaknesses identified during the review together with the improvement measures to strengthen the internal controls are brought to the attention of the Board for further deliberation and discussion. Internal Audit Function Internal audits are undertaken to provide independent assessments on the adequacy, efficiency and effectiveness of the Group’s internal control systems. The Group’s internal audit function is carried out by an independent audit firm which reports directly to the Audit Committee. The audit firm performs regular audits based on an annual internal audit plan which is approved by the Audit Committee. The primary objective of the internal audit function is to assess the effectiveness of the internal controls and highlight significant potential risks that may affect the Group. The Audit Committee conducts annual review on the adequacy of the internal audit firm’s scope of work and resources. The Audit Committee regularly reviews the internal auditor’s reports and will discuss the issues highlighted with the Management to ensure corrective actions are implemented accordingly. Other Key Elements of Internal Control The following key elements of a system of internal control are present in the Group: (a)
Control Environment
The Group has an organisational structure for planning, controlling and monitoring business operations in order to achieve the Group’s objective. The organisational structure are constantly updated to meet changing business environment brought about by diversification of the Group’s business activities, market expansion, increase in capacity, complexities and resources.
The Management of each operating unit has clear responsibility for identifying risk affecting their unit and the overall Group’s business as a whole. They are also charged with instituting adequate procedures and internal controls to mitigate and monitor such risks on an ongoing basis. The Human Resources department of the Company has important roles in maintaining the high standard of performance and ethics of the work force through proper and effective recruitment, performance appraisal and remuneration.
PWF CONSOLIDATED BHD. (420049-H) Annual Report 2015
Statement On Risk Management And Internal Control (Cont’d)
Other Key Elements of Internal Control (cont’d) (b)
Audit Committee
An Audit Committee, comprising a majority of independent non-executive directors was maintained throughout the financial year. The composition of the Audit Committee brings a wide range of experience, knowledge and expertise. The Audit Committee is entrusted to review the effectiveness of the internal audit function with particular emphasis on the scope and quality of audits, resources as well as the independence of the internal auditor.
They continue to meet regularly and have full and unimpeded access to both the internal and external auditors and all employees of the Group.
(c)
Policies and Procedures
Company policies and procedures are established and regularly updated to achieve internal controls objective as well as to adhere to our industry’s standards and regulations. Communications with all relevant parties are frequently held to ensure greater awareness and proper adherence to the company’s policies and procedures.
Weakness in internal controls that result in material losses Based on the findings of the internal auditors’ report for the financial year ended 31 December 20145, the Board is of the opinion that the general system of internal control is adequate and appeared to be working satisfactorily. There were no significant weaknesses in internal control that result in material losses, contingencies or uncertainties identified during the year. The Board is committed to put in more appropriate action plans, to ensure that the internal control system could continuously evolve to support the type of business and size of the operations of the Group. The total costs incurred in managing the internal audit function for the financial year ended 31 December 2015 were RM 14,840. CONCLUSION The Board has received assurance from the top management that the Group’s risk management and internal control system is operating adequately and effectively, in all material aspects, in accordance with the risk management framework and internal control system of the Group. The Board is of the view that the present system of risk management and internal control is adequate for the Group to manage its risks and to achieve its business objectives. The Board is committed in ensuring that the Group continuously reviews the risk management and internal control system so that it is effective in enhancing shareholders’ investments and safeguarding the Group’s assets. The Board of Directors has approved this statement for issuance. This statement is issued in accordance with a resolution of the Directors dated 8 April 2016.
13
PWF CONSOLIDATED BHD. (420049-H)
14 Annual Report 2015
Audit Committee Report
The Board is pleased to present the Audit Committee Report for the financial year ended 31 December 2015. MEMBERS AND MEETINGS The Audit Committee members and details of attendance of each member of the Audit Committee meetings during the financial year are as follows: Name Attendance Ong Kim Nam Chairman/Independent Non-Executive Director
5/5
Zainal bin Pandak Independent Non-Executive Director
5/5
Shamsuddin bin Mohd. Salleh Independent Non-Executive Director (Resigned on 2 Dec 2015)
5/5
Dato’ Zuraidi Bin Rahim Independent Non-Executive Director (Appointed on 5 Jan 2016)
n/a
SUMMARY OF ACTIVITIES During the financial year ended 31 December 2015, the Audit Committee carried out its duties as set out in the terms of reference which included the following: • • • • • • • • • •
Review and deliberation of the quarterly financial results before recommending to the Board for their approval and announcement; Review the annual audited financial statements of the Group and of the Company and the significant risk audit areas highlighted by the external auditors; Considered the nomination of the external auditors for recommendation to the Board for re-appointment; Review of the Audit Planning Memorandum and Audit Review Memorandum with the External Auditors; Meetings with External Auditors without the presence of the management to discuss issues on strengthening internal control; Review the findings of the External Auditors and followed up on the recommendations; Reviewed the Audit Committee Report and Statement on Risk Management and Internal Control for the financial year ended 31 December 2015 and recommended its adoption to the Board; Review of the internal audit findings and recommendations with the Internal Auditors; Considered the related party transactions that had arisen within the Company or the Group; and Verified the allocation of options pursuant to the approved Employees’ Options Scheme.
TERMS OF REFERENCE The Directors have approved and adopted the following Terms of Reference, which set out the roles and responsibilities of the Audit Committee: 1. OBJECTIVES
The primary objective of the Audit Committee is to assist the Board of Directors of the Company in fulfilling its responsibilities relating to corporate accounting, internal controls, management and financial reporting practices of the Group.
2. COMPOSITION
The members shall be appointed by the Board of Directors and shall consist of not less than three (3) members of whom a majority shall compose of Independent Directors of the Company. No Alternate Directors shall be appointed members of the Committee.
At least one member of the Audit Committee:- (a) (b)
Must be a member of the Malaysian Institute of Accountants; or If he is not a member of the Malaysian Institute of Accountants, he must have at least three (3) years working experience; and i) he must have passed the examination specified in Part I of the First Schedule of the Accountants Act, 1967; or ii) he must be a member of one of the associations of accountants specified in Part II of the First Schedule of the Accountants Act, 1967.
PWF CONSOLIDATED BHD. (420049-H) Annual Report 2015
Audit Committee Report (Cont’d)
3. CHAIRMAN
The Chairman shall be an Independent Non-Executive Director.
4. QUORUM
A quorum shall consist of two (2) members and a majority of the members present must be Independent Directors.
5. SECRETARY
The Secretary of the Audit Committee shall be the Company Secretary or any other person so appointed by the Audit Committee from time to time.
6. MEETINGS
The Audit Committee shall regulate its own proceedings. The Committee shall meet at least four (4) times a year. The Committee may, as and when deemed necessary, invite other Board members and senior management members to attend the meeting. The Committee shall meet at least twice a year with the external auditors without the presence of any executive Director of the Board.
7. AUTHORITY
The Audit Committee is authorised by the Board of Directors to investigate any activity within its terms of reference. The Committee shall have unrestricted access to the external auditors and to all employees of the Group. The Committee may, with the approval of the Board, consult legal or other professionals where they consider it necessary to discharge their duties at the expense of the Company.
8. FUNCTIONS
The functions of the Audit Committee shall be: a) To consider the appointment of the external auditor, the audit fee and any question of resignation or dismissal; b) To review with the external auditors the nature and scope of the audit plan, the evaluation of the system of internal control, problems and reservations arising from the audit and any matters which may wish to discuss with the external auditors, the internal auditors or both, in the absence of the Executive Board members and management where necessary; c) To review the external auditors management letter and managements’ response; d) To review and report to the Board of Directors on the quarterly results and year end financial statements, prior to the approval by the Board of Directors, focusing particularly on:(i) changes in or implementation of major accounting policies and practices; (ii) significant and unusual events; and (iii) compliance with applicable approved accounting standards and other legal requirements; e) To review the adequacy of the scope, function, competency and resources of the internal audit function, and that it has the necessary authority to carry out its work; f) To review the internal audit programme and results of the internal audit process, and, where necessary, ensure that appropriate actions are taken on the recommendations of the internal audit function; g) To review any appraisal or assessment of the performance of members of the internal audit function including appointment or termination of senior staff members and to provide opportunity for the resigning staff member, if any, to submit his reasons for resigning. h) To consider any related party transactions and conflict of interest situation that may arise within the Company or Group; i) To undertake such other responsibilities as may be agreed to by the Audit Committee and the Board of Directors.
9.
REPORTING PROCEDURE
The Chairman of the Committee reports to the Board after each Committee meeting the result of the deliberations of the Committee. The Committee shall prepare reports, at least once a year, to the Board summarizing the Committee’s activities during the year in discharging of its duties and responsibilities and the related significant results and findings.
INTERNAL AUDIT FUNCTION The Group has outsourced its internal audit function to an independent professional firm for the financial year ended 31 December 2015. The Internal Audit function is to support the Audit Committee in discharging its duties with respect to the adequacy, integrity and effectiveness of the systems of internal control within the Group. During the financial year under review, the Internal Auditors have conducted assurance review on adequacy and effectiveness of internal control system on certain operating units and presented its findings together with recommendation and management action plan to the Audit Committee for review. This report is made in accordance with a resolution of the Board of Directors dated 8 April 2016.
15
PWF CONSOLIDATED BHD. (420049-H)
16 Annual Report 2015
Directors’ Report For The Financial Year Ended 31 December 2015
The directors have pleasure in submitting their report and the audited financial statements of the Group and of the Company for the financial year ended 31 December 2015. CHANGE OF NAME The Company changed its name to PWF Consolidated Bhd. on 12 November 2015. PRINCIPAL ACTIVITIES The principal activities of the Company consist of investment holding and the provision of management services whilst that of the subsidiaries are disclosed in Note 6 to the financial statements. There have been no significant changes in the nature of these activities during the financial year. RESULTS
Profit after taxation for the year
GROUP
COMPANY
RM
RM
6,006,407
6,322,246
In the opinion of the directors, the results of the operations of the Group and of the Company for the financial year ended 31 December 2015 have not been substantially affected by any item, transaction or event of a material and unusual nature nor has any such item, transaction or event occurred in the interval between the end of that financial year and the date of this report. DIVIDENDS In respect of the financial year ended 31 December 2014, the Company has declared an interim single tier dividend of 8 sen per share amounting to RM5,513,831. The shareholders were given the option for the dividends to be paid by way of a Dividend Reinvestment Plan (“DRP”) or in cash or a combination of both. The RM5,513,831 was paid via DRP amounting to RM3,750,974 and cash amounting to RM1,762,857 on 20 April 2015. In respect of the financial year ended 31 December 2015, the Company has declared and paid the following dividends: (i)
On 7 January 2016, the Company declared a first interim single tier dividend of 3 sen per share amounting to RM2,228,795, paid on 5 February 2016; and
(ii)
On 2 March 2016, the Company declared a second interim single tier dividend of 3 sen per share amounting to RM2,229,095, paid on 1 April 2016.
These dividends are not reflected in the financial statements for the current financial year and will be accounted for as an appropriation of retained profits in the financial year ending 31 December 2016. The Directors do not recommend any final dividend for the financial year. RESERVES AND PROVISIONS There were no material transfers to or from reserves or provisions during the financial year other than those disclosed in the financial statements. SHARE CAPITAL AND DEBENTURE During the financial year, the issued and paid-up ordinary share capital was increased from RM60,911,250 to RM77,712,664 by way of issuance of 16,801,414 new ordinary shares of RM1 each pursuant to the following: (i)
Bonus issue of 11,487,135 new ordinary shares of RM1 each credited as fully paid up on the basis of 1 bonus share for every 5 existing ordinary shares held through the capitalisation of RM918,539 from share premium and RM10,568,596 from retained profits;
(ii)
3,152,079 new ordinary shares of RM1 each at an issue price of RM1.19 per share pursuant to the DRP; and
(iii)
2,162,200 new ordinary shares of RM1 each arising from the exercise of options under Employees’ Share Options Scheme (“ESOS”) at an exercise price of RM1.15 per share.
The new ordinary shares issued rank pari passu with the existing ordinary shares of the Company.
PWF CONSOLIDATED BHD. (420049-H) Annual Report 2015
Directors’ Report For The Financial Year Ended 31 December 2015 (Cont’d)
TREASURY SHARES During the financial year, the Company did not deal with its treasury shares. As at 31 December 2015, the Company held a total of 3,475,500 treasury shares out of its 77,712,664 issued ordinary shares. The treasury shares are held at a carrying amount of RM4,567,681 and further relevant details are disclosed in Note 18 to the financial statements. EMPLOYEES’ SHARE OPTIONS SCHEME (“ESOS”) At an Extraordinary General Meeting held on 4 November 2015, the Company’s shareholders approved the establishment of ESOS for the eligible Directors and employees of the Group. The ESOS came into effect on 4 December 2015 and will be in force for a period of five (5) years expiring on 5 November 2020. The details of options over unissued ordinary shares granted to eligible employees and directors of the Group during the financial year are as follows:
|------------------------------------------------ Number of Share Options ----------------------------------------------| Grant date
Exercise price RM
Balance at 1.1.15
Granted and accepted
Exercised
Lapsed
Balance at 31.12.15
4.12.15
1.15
-
6,492,200
(2,162,200)
-
4,330,000
The salient features of the ESOS are disclosed in Note 41 to the financial statements. The Company has been granted exemption by the Companies Commission of Malaysia from having to disclose the names of option holders and the number of options granted to them during the financial year pursuant to Section 169(11) of the Companies Act, 1965 except for information on employees who have been granted 120,000 share options and above during the financial year. The eligible employees who have been granted 120,000 share options and above are as follows: Name Number of options Ooi Ki Wei 120,000 Ang Ee Tan 120,000 Foo Siew Foon @ Hoo Siew Foon 120,000 Loo Kok Wei 120,000 Quah Chee Ming 120,000 Lim Li Nee 120,000 Tan Thean Teik 120,000 Boay Goey Gnoh 120,000 Lee Ah Ying 120,000 Phan Sew Leng 120,000 Details of options granted to Directors are disclosed in the section on Directors’ interests in this report. DIRECTORS The directors who served since the date of the last report are as follows:
Dato’ Siah Gim Eng Datin Law Hooi Lean Ong Kim Nam Zainal Bin Pandak Dato’ Zuraidi Bin Rahim (appointed on 5.1.16) Shamsuddin Bin Mohd Salleh (resigned on 2.12.15)
17
PWF CONSOLIDATED BHD. (420049-H)
18 Annual Report 2015
Directors’ Report For The Financial Year Ended 31 December 2015 (Cont’d)
DIRECTORS’ INTERESTS IN SHARES According to the Register of Directors’ Shareholdings, the interests of directors in office at the end of the financial year in shares in the Company and its related corporations during the financial year are as follows:
|-------------------- Number of ordinary shares of RM1 each --------------------| Balance at 1.1.15
Bought *
Sold
Balance at 31.12.15
The Company Direct Interest : Dato’ Siah Gim Eng
9,719,215
3,809,020
-
13,528,235
Datin Law Hooi Lean
8,045,398
3,339,215
-
11,384,613
500
140
-
640
Ong Kim Nam Deemed Interest : Dato’ Siah Gim Eng
18,972,206
6,406,066
-
25,378,272
Datin Law Hooi Lean
20,646,023
6,875,871
-
27,521,894
* Inclusive of bonus issue, DRP and exercise of ESOS.
|------------------------------- Number of Share Options -------------------------------| Balance at 1.1.15
Granted and accepted
Exercised
Balance at 31.12.15
Dato’ Siah Gim Eng
-
1,081,100
(1,081,100)
-
Datin Law Hooi Lean
-
1,081,100
(1,081,100)
-
Ong Kim Nam
-
200,000
-
200,000
Zainal Bin Pandak
-
200,000
-
200,000
By virtue of their shareholdings in the Company, Dato’ Siah Gim Eng and Datin Law Hooi Lean are also deemed interested in the shares of all the subsidiaries of the Company, to the extent that the Company has interests. None of the other directors in office at the end of the financial year had any interest in shares in the Company or its related corporations during the financial year. DIRECTORS’ BENEFITS Since the end of the previous financial year, no director of the Company has received or become entitled to receive any benefit (other than a benefit included in the aggregate amount of emoluments received or due and receivable by the directors shown in the financial statements) by reason of a contract made by the Company or a related corporation with a director or with a firm of which the director is a member or with a company in which the director has a substantial financial interest, other than those related party transactions disclosed in the notes to the financial statements. During and at the end of the financial year, no arrangements subsisted to which the Company is a party, with the 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.
PWF CONSOLIDATED BHD. (420049-H) Annual Report 2015
Directors’ Report For The Financial Year Ended 31 December 2015 (Cont’d)
OTHER STATUTORY INFORMATION Before the financial statements of the Group and of the Company were made out, the directors took reasonable steps: (i)
to ascertain that proper action had been taken in relation to the writing off of bad debts and the making of 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 which were unlikely to realise their value as shown in the accounting records in the ordinary course of business had been written down to an amount which they might be expected so to realise.
At the date of this report, the directors are not aware of any circumstances: (i)
that would render the amount written off for bad debts, or the amount of the provision for doubtful debts in the Group and in the Company inadequate to any substantial extent, and
(ii)
that would render the value attributed to the current assets in the financial statements of the Group and of the Company misleading, and
(iii)
that would render any amount stated in the financial statements of the Group and of the Company misleading, and
(iv)
which have arisen which render adherence to the existing methods of valuation of assets or liabilities of the Group and of the Company misleading or inappropriate.
At the date of this report, there does not exist: (i)
any charge on the assets of the Group and 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 and of the Company that has arisen since the end of the financial year.
No contingent liability or other liability of the Group and of the Company has become enforceable, or is likely to become enforceable, within the period of twelve months after the end of the financial year which, in the opinion of the directors, will or may substantially affect the ability of the Group and of the Company to meet their obligations as and when they fall due. EVENT AFTER THE REPORTING PERIOD Details of subsequent event are disclosed in Note 42 to the financial statements. AUDITORS The auditors, Grant Thornton, have expressed their willingness to continue in office. Signed in accordance with a resolution of the directors:
........................................……............. .………...................................…......... Dato’ Siah Gim Eng Datin Law Hooi Lean Penang, Date: 13 April 2016
19
PWF CONSOLIDATED BHD. (420049-H)
20 Annual Report 2015
Directors’ Statement
In the opinion of the Directors, the financial statements set out on pages 22 to 70 are properly drawn up in accordance with Financial Reporting Standards and the requirements of the Companies Act, 1965 in Malaysia so as to give a true and fair view of the financial position of the Group and of the Company as at 31 December 2015 and of their financial performance and cash flows for the financial year then ended. In the opinion of the Directors, the supplementary information set out on page 71 has been compiled in accordance with the Guidance on Special Matter No. 1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosures Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, issued by the Malaysian Institute of Accountants, and presented based on the format prescribed by Bursa Malaysia Securities Berhad. Signed in accordance with a resolution of the directors:
.….......................................................... …...............................................…..... Dato’ Siah Gim Eng Datin Law Hooi Lean Date: 13 April 2016
Statutory Declaration I, Datin Law Hooi Lean, the director primarily responsible for the financial management of PWF Consolidated Bhd. (formerly known as PW Consolidated Bhd.) do solemnly and sincerely declare that the financial statements set out on pages 22 to 70 and the supplementary information set out on page 71 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 Penang, this 13th
)
day of April 2016.
)
...............................……..............…...... Datin Law Hooi Lean
Before me,
.................................................................... Commissioner for Oaths
PWF CONSOLIDATED BHD. (420049-H) Annual Report 2015
Independent Auditors‘ Report To The Members Of PWF Consolidated Bhd. Company No. 420049-H (Incorporated In Malaysia)
Report on the Financial Statements We have audited the financial statements of PWF Consolidated Bhd. (formerly known as PW Consolidated Bhd.), which comprise the statements of financial position as at 31 December 2015 of the Group and of the Company, and the statements of comprehensive income, statements of changes in equity and statements of cash flows of the Group and of the Company for the financial year then ended, and a summary of significant accounting policies and other explanatory information, as set out on pages 22 to 70. Directors’ Responsibility for the Financial Statements The directors of the Company are responsible for the preparation of these financial statements so as to give a true and fair view in accordance with Financial Reporting Standards and the requirements of the Companies Act, 1965 in Malaysia. The directors are also responsible for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. Auditors’ Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. 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 entity’s preparation of financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the financial statements give a true and fair view of the financial position of the Group and of the Company as of 31 December 2015 and of their financial performance and cash flows for the financial year then ended in accordance with Financial Reporting Standards and the requirements of the Companies Act, 1965 in Malaysia. Report on Other Legal and Regulatory Requirements In accordance with the requirements of the Companies Act, 1965 in Malaysia, we also report the following: (a) (b) (c)
In our opinion, the accounting and other records and the registers required by the Act to be kept by the Company and its subsidiaries have been properly kept in accordance with the provisions of the Act, We are satisfied that the financial statements of the subsidiaries that have been consolidated with the Company’s financial statements are in form and content appropriate and proper for the purposes of the preparation of the financial statements of the Group and we have received satisfactory information and explanations required by us for those purposes, and The auditors’ reports on the financial statements of the subsidiaries did not contain any qualification or any adverse comment made under Section 174(3) of the Act.
Other Reporting Responsibilities The supplementary information set on page 71 is disclosed to meet the requirement of Bursa Malaysia Securities Berhad and is not part of the financial statements. The directors are responsible for the preparation of the supplementary information in accordance with Guidance on Special Matter No. 1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants (“MIA Guidance”) and the directive of Bursa Malaysia Securities Berhad. In our opinion, the supplementary information is prepared, in all material respects, in accordance with the MIA Guidance and the directive of Bursa Malaysia Securities Berhad. Other Matters This report is made solely to the members of the Company, as a body, in accordance with Section 174 of the Companies Act, 1965 in Malaysia and for no other purpose. We do not assume responsibility to any other person for the content of this report.
Grant Thornton John Lau Tiang Hua, DJN No. AF: 0042 No. 1107/03/18 (J) Chartered Accountants Chartered Accountant Date: 13 April 2016 Penang
21
PWF CONSOLIDATED BHD. (420049-H)
22 Annual Report 2015
Statements Of Financial Position As At 31 December 2015
NOTE ASSETS Non-current assets Property, plant and equipment Investment properties Investment in subsidiaries Intangible assets
70,890,365 70,890,365
70,655,765 70,655,765
8 9 10 11
57,079,223 22,374,894 9,508,833 342,767 3,282,509 26,000 20,000 5,955,218 98,589,444 98,589,444 392,970,695
49,554,700 20,488,880 5,232,075 28,827 2,707,518 18,000 4,672,195 2,840,556 85,542,751 620,000 86,162,751 358,999,153
15,483 13,905,308 58,109 13,978,900 13,978,900 84,869,265
6,208,004 57,443 6,265,447 6,265,447 76,921,212
77,712,664 (4,567,681) 1,571,885 82,872,161 354,600 65,911,151 223,854,780
60,911,250 (4,567,681) 918,539 85,536,080 73,323,252 216,121,440
77,712,664 (4,567,681) 1,571,885 354,600 9,432,272 84,503,740
60,911,250 (4,567,681) 918,539 19,192,453 76,454,561
22 23
28,955,444 17,333,265 46,288,709
28,054,372 19,150,187 47,204,559
-
-
24 25 22
42,685,046 9,857,407 68,792,493 1,492,260 122,827,206 169,115,915 392,970,695
20,254,249 7,365,037 66,742,385 1,311,483 95,673,154 142,877,713 358,999,153
361,156 4,369 365,525 365,525 84,869,265
466,651 466,651 466,651 76,921,212
16
TOTAL ASSETS
Total liabilities TOTAL EQUITY AND LIABILITIES
2014 RM
262,423,383 5,172,450 5,240,569 272,836,402
Non-current assets held for sale
Current liabilities Trade payables Other payables and accruals Borrowings Provision for taxation
COMPANY 2015 RM
282,807,285 6,333,397 5,240,569 294,381,251
12 13 14 15
Non-current liabilities Borrowings Deferred tax liabilities
2014 RM
4 5 6 7
Current assets Inventories Trade receivables Other receivables, deposits and prepayments Amount due from subsidiaries Tax recoverable Investment securities Derivative financial assets Fixed deposit with a licensed bank Cash and bank balances
EQUITY AND LIABILITIES Equity attributable to owners of the parent Share capital Treasury shares Share premium Revaluation reserve ESOS reserve Retained profits Total equity
GROUP 2015 RM
17 18 19 20 21
The notes set out on pages 28 to 70 form an integral part of these financial statements.
PWF CONSOLIDATED BHD. (420049-H) Annual Report 2015
Statements Of Comprehensive Income For The Financial Year Ended 31 December 2015
NOTE
2014 RM
290,938,775
279,745,172
Cost of sales
(248,299,414)
(232,675,451)
Gross profit
42,639,361
COMPANY 2015 RM
2014 RM
7,782,000
17,740,000
-
-
47,069,721
7,782,000
17,740,000
3,072,034
1,487,820
-
502,942
(27,883,526)
(25,024,464)
Selling and distribution expenses
(2,036,719)
(1,760,492)
Profit from operations
15,791,150
21,772,585
Revenue
Other income
26
GROUP 2015 RM
27
Administrative expenses
Finance costs
28
(6,426,455)
(5,358,960)
Profit before taxation
29
9,364,695
16,413,625
Taxation
30
(3,358,288)
(4,753,175)
6,006,407
11,660,450
2,663,919 (2,663,919)
2,310,164 (2,310,164)
Profit for the year
(1,438,473)
(1,051,892)
-
-
6,343,527
17,191,050
-
-
6,343,527
17,191,050
(21,281)
-
6,322,246
17,191,050
-
-
Other comprehensive income, net of tax: Items that will not be reclassified subsequently to profit or loss Realisation of revaluation surplus upon depreciation Transfer of capital reserve to retained profits Other comprehensive income for the year Total comprehensive income for the year
Earnings per share attributable to owners of the parent (Sen) - Basic - Diluted
-
-
-
-
6,006,407
11,660,450
6,322,246
17,191,050
8.43
16.53
8.38
16.53
31
The notes set out on pages 28 to 70 form an integral part of these financial statements.
23
PWF CONSOLIDATED BHD. (420049-H)
24 Annual Report 2015
Consolidated Statement Of Changes In Equity For The Financial Year Ended 31 December 2015
|---------------------------------------------------- Attributable to owners of the parent ----------------------------------------------------| |------------------------------------------ Non-distributable ------------------------------------------|
NOTE
Distributable
Share
Treasury
Share
Revaluation
ESOS
Retained
Total
Capital
Shares
Premium
Reserve
Reserve
Profits
Equity
RM
RM
RM
RM
RM
RM
RM
918,539
85,536,080
-
(2,663,919)
-
2015 60,911,250
Balance at beginning
(4,567,681)
73,323,252 216,121,440
Total comprehensive income for the year
-
-
-
8,670,326
6,006,407
17
11,487,135
-
(918,539)
-
17
3,152,079
-
598,895
-
17/20
2,162,200
-
972,990
-
20
-
-
-
-
1,003,260
32
-
-
-
-
-
(5,513,831)
(5,513,831) 1,726,933
Transaction with owners: Bonus issue
- (10,568,596)
-
Issued, at premium pursuant to: - Dividend Reinvestment Plan - Exercise of ESOS
(648,660)
-
3,750,974
-
2,486,530
Pursuant to ESOS granted: - Share-based compensation Dividend
-
-
1,003,260
Total transaction with owners
16,801,414
653,346
-
354,600
(16,082,427)
Balance at end
77,712,664
(4,567,681)
1,571,885
82,872,161
354,600
65,911,151 223,854,780
60,911,250
(841,473)
918,539
87,846,244
-
59,352,638 208,187,198
(2,310,164)
-
13,970,614
11,660,450
-
(3,726,208)
2014 Balance at beginning Total comprehensive income for the year
-
-
-
Transaction with owners: Purchase of treasury shares Balance at end
18
-
(3,726,208)
-
-
-
60,911,250
(4,567,681)
918,539
85,536,080
-
The notes set out on pages 28 to 70 form an integral part of these financial statements.
73,323,252 216,121,440
PWF CONSOLIDATED BHD. (420049-H) Annual Report 2015
Statement Of Changes In Equity For The Financial Year Ended 31 December 2015
|--------------------------- Non-distributable ---------------------------| Distributable
NOTE
Share
Treasury
Share
ESOS
Retained
Total
Capital
Shares
Premium
Reserve
Profits
Equity
RM
RM
RM
RM
RM
RM
918,539
-
19,192,453
76,454,561
-
-
6,322,246
6,322,246
(10,568,596)
2015 60,911,250
Balance at beginning
(4,567,681)
Total comprehensive income for the year
-
-
17
11,487,135
-
(918,539)
-
17
3,152,079
-
598,895
-
17/20
2,162,200
-
972,990
Transaction with owners: Bonus issue
-
Issued, at premium pursuant to: - Dividend Reinvestment Plan - Exercise of ESOS
(648,660)
-
3,750,974
-
2,486,530
Pursuant to ESOS granted: - Share-based compensation
20
-
-
-
1,003,260
Dividend
32
-
-
-
-
(5,513,831)
-
(5,513,831)
1,003,260
Total transaction with owners
16,801,414
-
653,346
354,600
(16,082,427)
1,726,933
Balance at end
77,712,664
(4,567,681)
1,571,885
354,600
9,432,272
84,503,740
60,911,250
(841,473)
918,539
-
2,001,403
62,989,719
-
-
17,191,050
17,191,050
2014 Balance at beginning Total comprehensive income for the year
-
-
Transaction with owners: Purchase of treasury shares Balance at end
18
-
(3,726,208)
-
-
-
60,911,250
(4,567,681)
918,539
-
19,192,453
The notes set out on pages 28 to 70 form an integral part of these financial statements.
(3,726,208) 76,454,561
25
PWF CONSOLIDATED BHD. (420049-H)
26 Annual Report 2015
Statements Of Cash Flows For The Financial Year Ended 31 December 2015
GROUP 2015 RM CASH FLOWS FROM OPERATING ACTIVITIES Profit before taxation Adjustments for: Debt waived by a subsidiary Dividend income Depreciation Fair value adjustment - derivative financial instruments - investment properties - investment securities Gain on disposal of investment securities (Gain)/Loss on disposal of property, plant and equipment Impairment loss on non-current assets held for sale Impairment loss on receivables Investment in a subsidiary written off Interest expense Interest income Loss on disposal of investment properties Property, plant and equipment written off Share-based compensation pursuant to ESOS granted Unrealised loss on foreign exchange
2014 RM
COMPANY 2015 RM
2014 RM
9,364,695
16,413,625
6,343,527
17,191,050
(78,019) 12,142,564
(48,096) 10,391,060
(7,500,000) -
(502,942) (10,000,000) -
(26,000) (2,377,020) 144,020 (24,380) (67,143) 748,268 6,426,455 (33,377) 602,365 1,003,260 2,744
(18,000) (173,500) 369,670 (217,868) 45,462 168,280 1,015,897 5,358,960 (179,538) 929,255 39,000 363
768,660 -
Operating profit/(loss) before working capital changes Increase in inventories (Increase)/Decrease in receivables Increase/(Decrease) in payables
27,828,432 (7,524,523) (6,893,040) 24,920,423
34,094,570 (8,828,326) 2,350,697 3,382,040
(387,813) (15,483) (105,495)
7,188,108 110,824
Cash generated from/(used in) operations Income tax paid Income tax refunded Interest paid Interest received
38,331,292 (5,348,038) 39,665 (6,426,455) 205,572
30,998,981 (4,629,483) 30,121 (5,358,960) 7,343
(508,791) (16,912) -
7,298,932 -
Net cash from/(used in) operating activities
26,802,036
21,048,002
(525,703)
7,298,932
(25,737,722) (5,252,640) 78,019 4,480,000 68,353 620,000 1,294,500 4,558,009
(18,379,442) (7,043,658) 48,096 20,000 359,751 1,100,000 4,435,820
-
-
(19,891,481)
(19,459,433)
-
-
6,910,555
1,588,569
CASH FLOWS FROM INVESTING ACTIVITIES * Acquisition of property, plant and equipment Acquisition of investment securities Dividend received Movement in fixed deposits Proceeds from disposal of property, plant and equipment Proceeds from disposal of non-current assets held for sale Proceeds from disposal of investment properties Proceeds from disposal of investment securities Net cash used in investing activities Balance carried forward
The notes set out on pages 28 to 70 form an integral part of these financial statements.
(525,703)
500,000 -
7,298,932
PWF CONSOLIDATED BHD. (420049-H) Annual Report 2015
Statements Of Cash Flows For The Financial Year Ended 31 December 2015 (Cont’d)
GROUP 2015 RM
2014 RM
COMPANY 2015 RM
6,910,555
1,588,569
Dividend paid Drawdown of term loans Net change in subsidiaries' balances Payment of finance lease Proceeds from issuance of shares Repayment of bankers acceptance Repayment of promissory note Repayment of term loans Repurchase of treasury shares
(1,762,857) 1,500,000 (3,426,178) 2,486,530 (821,000) (2,711,544) -
(2,984,538) 17,000,000 (2,638,792) (8,683,000) (3,200,000) (9,019,245) (3,726,208)
Net cash (used in)/from financing activities
(4,735,049)
(13,251,783)
526,369
(7,298,961)
NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS
2,175,506
(11,663,214)
666
(29)
CASH AND CASH EQUIVALENTS AT BEGINNING
(8,779,152)
2,884,062
57,443
57,472
CASH AND CASH EQUIVALENTS AT END
(6,603,646)
(8,779,152)
58,109
57,443
5,955,218 (12,558,864)
2,840,556 (11,619,708)
58,109 -
57,443 -
(6,603,646)
(8,779,152)
58,109
57,443
33,208,468 (7,470,746)
19,109,942 (730,500)
-
-
25,737,722
18,379,442
-
-
Balance brought forward
(525,703)
2014 RM 7,298,932
CASH FLOWS FROM FINANCING ACTIVITIES
Represented by: Cash and bank balances Bank overdrafts
* Acquisition of property, plant and equipment Total cost Acquired under finance lease Total cash consideration
The notes set out on pages 28 to 70 form an integral part of these financial statements.
(1,762,857) (197,304) 2,486,530 -
(2,984,538) (588,215) (3,726,208)
27
PWF CONSOLIDATED BHD. (420049-H)
28 Annual Report 2015
Notes To The Financial Statements 31 December 2015
1.
GENERAL INFORMATION
The Company is a public limited liability company, incorporated and domiciled in Malaysia and is listed on the Main Market of Bursa Malaysia Securities Berhad.
The Company changed its name to PWF Consolidated Bhd. on 12 November 2015.
The principal activities of the Company consist of investment holding and the provision of management services whilst that of the subsidiaries are disclosed in Note 6 to the financial statements. There have been no significant changes in the nature of these activities during the financial year.
The registered office of the Company is located at Suite 12-A Level 12, Menara Northam, No. 55 Jalan Sultan Ahmad Shah, 10050, Penang.
The principal place of business of the Company is located at Plot 127, Jalan Perindustrian Bukit Minyak 7, Taman Perindustrian Bukit Minyak, 14100 Bukit Mertajam, Penang.
The financial statements were authorised for issue by the Board of Directors in accordance with a resolution of the directors on 13 April 2016.
2.
BASIS OF PREPARATION 2.1 Statement of Compliance
The financial statements of the Group and of the Company have been prepared in accordance with Financial Reporting Standards (“FRS”) and the requirements of the Companies Act, 1965 in Malaysia.
2.2 Basis of Measurement
The financial statements of the Group and the Company are prepared under the historical cost convention, except for certain properties and derivative financial instruments that are measured at revalued amounts or fair values at the end of each reporting period as indicated in the summary of significant accounting policies.
Historical cost is generally based on the fair value of the consideration given in exchange for goods and services.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either in the principal market for the asset or liability, or in the absence of a principal market, in the most advantageous market for the asset or liability. The principal or the most advantageous market must be accessible to by the Group and the Company.
The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest.
A fair value measurement of a non-financial asset takes into account a market participant’s ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.
The Group and the Company use valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.
All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair value hierarchy, described as follows, based on the lowest level input that is significant to their fair value measurement as a whole: - Level 1 - Quoted (unadjusted) market prices in active markets for identical assets or liabilities. - Level 2 - Valuation techniques for which the lowest level input that is significant to their fair value measurement is directly or indirectly observable. - Level 3 - Valuation techniques for which the lowest level input that is significant to their fair value measurement is unobservable.
2.3 Functional and Presentation Currency
The financial statements are presented in Ringgit Malaysia (“RM”) which is also the Group’s and the Company’s functional currency.
PWF CONSOLIDATED BHD. (420049-H) Annual Report 2015
Notes To The Financial Statements 31 December 2015 (Cont’d)
2.
BASIS OF PREPARATION (cont’d) 2.4 Adoption of FRS, Amendments/Improvements to FRS and IC Interpretations
The accounting policies adopted by the Group and by the Company are consistent with those of the previous financial year except for the adoption of the following Standards that are mandatory for the current financial year:
Effective for annual periods beginning on or after 1 July 2014 Amendments to FRS 119 Defined Benefit Plans: Employee Contributions Amendments to FRS Annual improvements to FRS 2010-2012 Cycle Amendments to FRS Annual improvements to FRS 2011-2013 Cycle
Initial application of the above standards did not have any material impact to the financial statements of the Group and of the Company.
2.5 Standards Issued But Not Yet Effective 2.5.1 New Malaysian Financial Reporting Standards Board (“MASB”) Approved Accounting Standards
On 19 November 2011, the Malaysian Accounting Standards Board (“MASB”) issued a new MASB approved accounting framework, the Malaysian Financial Reporting Standards (“MFRS Framework”).
The MFRS Framework is to be applied by all Entities Other Than Private Entities for annual period beginning on or after 1 January 2012, with the exception of entities that are within the scope of MFRS 141 Agriculture and IC Interpretation 15 Agreements for Construction of Real Estate, including its parent, significant investor and venturer (“Transitioning Entities”).
Transitioning Entities will be allowed to defer adoption of the new MFRS Framework. Consequently, adoption of the MFRS Framework by Transitioning Entities will be mandatory for annual periods beginning on or after 1 January 2018.
The Company and certain subsidiaries fall within the definition of Transitioning Entities and have opted to defer the adoption of MFRS Framework. However for subsidiaries which financial statements are prepared in accordance with MFRS were converted to FRS for the purpose of the preparation of the Group financial statements.
In presenting its first MFRS financial statements, the Group and the Company will be required to restate the comparative financial statements to amounts reflecting the application of the MFRS Framework. The majority of the adjustments required on transition will be made, retrospectively, against opening retained profits.
The Group and the Company have not completed their quantification of the financial effects of the differences between FRS and accounting standards under the MFRS Framework and are in the process of assessing the financial effects of the differences. Accordingly, the financial performance and financial position as disclosed in these financial statements for the financial year ended 31 December 2015 could be different if prepared under the MFRS Framework.
The Group and the Company expect to be in a position to fully comply with the requirements of the MFRS Framework for the financial year ending 31 December 2018.
2.5.2 FRS and Amendments to FRS Issued But Not Yet Effective
The Group and the Company have not applied the following Standards that have been issued by the Malaysian Accounting Standards Board (“MASB”) but are not yet effective for the Group and for the Company:
Effective for annual periods beginning on or after 1 January 2016
FRS 14 Regulatory Deferral Accounts Amendments to FRS 10, FRS 12 and FRS 128 Investment Entities: Applying the Consolidation Exception Amendments to FRS 11 Accounting for Acquisitions of Interests in Joint Operations Amendments to FRS 101 Disclosure Initiative Amendments to FRS 116 and FRS 138 Clarification of Acceptable Methods of Depreciation and Amortisation Amendments to FRS 127 Equity Method in Separate Financial Statements Amendments to FRS Annual Improvements to FRS 2012–2014 Cycle
Effective for annual periods beginning on or after 1 January 2018
FRS 9 Financial Instruments (IFRS 9 issued by IASB in July 2014) Amendments to FRS 7 Mandatory Date of FRS 9 and Transition Disclosures
Effective date yet to be confirmed
Amendments to FRS 10 and FRS 128 Sale or Contribution of Assets between an Investor and its Associate or Joint Venture
29
PWF CONSOLIDATED BHD. (420049-H)
30 Annual Report 2015
Notes To The Financial Statements 31 December 2015 (Cont’d)
2.
BASIS OF PREPARATION (cont’d) 2.5 Standards Issued But Not Yet Effective (cont’d) 2.5.2 FRS and Amendments to FRS Issued But Not Yet Effective (cont’d)
The new FRS and Amendments to FRS above are expected to have no significant impact on the financial statements of the Group and of the Company upon its initial application except for the changes in presentation and disclosures of financial information arising from the adoption of certain FRS and Amendments to FRS above.
The Group’s and the Company’s financial statements for annual period beginning on 1 January 2018 will be prepared in accordance with the MFRS issued by MASB and IFRS. As a result, the Group and the Company will not be adopting FRS, Interpretations and amendments that are effective for annual periods beginning on or after 1 January 2018.
2.6 Significant Accounting Estimates and Judgements
The preparation of financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised and in any future periods affected. 2.6.1 Judgements made in applying accounting policies
There are no significant area of critical judgements in applying accounting policies that have significant effect on the amounts recognised in the financial statements, other than the following:
Classification of leasehold land
In applying the classification of leases in FRS 117, management considers the leases of leasehold land as finance lease arrangements. The lease transaction is not always conclusive, and management uses judgement in determining whether the lease is a finance lease arrangement that transfers substantially all the risks and rewards incidental to ownership, in accordance with FRS 117 Leases.
2.6.2 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:
(i)
Useful lives of depreciable assets
The depreciable costs of the farm development and plant and machinery are allocated on the straight line basis over their estimated useful lives. Management estimates the useful lives of these assets to be within 5 to 50 years. Changes in the expected level of usage and technological developments could impact the economic useful lives and residual value of these assets. Therefore future depreciation charges could be revised.
(ii)
Impairment of property, plant and equipment
The Group performs an impairment review as and when there are impairment indicators to ensure that the carrying value of the property, plant and equipment does not exceed its recoverable amount. The recoverable amount represents the present value of the estimated future cash flows expected to arise from continuing operations. Therefore, in arriving at the recoverable amount, management exercises judgement in estimating the future cash flows, growth rate and discount rate.
(iii) Investment properties at fair value
The Group’s investment properties are carried at fair value and changes in fair value are recognised in profit or loss. The Group engages external independent professionally qualified valuers to determine the fair value of its investment properties. For the Group’s farm development, the valuers uses a valuation technique based on the depreciated replacement cost approach as there is a lack of comparable market data because of the nature of the property.
The determined fair value of the investment properties is most sensitive to the cost of building materials and labour cost since the technique to arrive at the fair value is derived by estimating the replacement cost of the same structure and capacity based on current labour and building material prices and present construction technique. As such a significant change to the construction cost or construction technique could materially affect the resulting fair value.
PWF CONSOLIDATED BHD. (420049-H) Annual Report 2015
Notes To The Financial Statements 31 December 2015 (Cont’d)
2.
BASIS OF PREPARATION (cont’d) 2.6 Significant Accounting Estimates and Judgements (cont'd) 2.6.2 Key sources of estimation uncertainty (cont’d) (iv) Impairment of goodwill
An impairment loss is recognised for the amount by which the asset’s or cash-generating unit’s carrying amount exceeds its recoverable amount. To determine the recoverable amount, management estimates expected future cash flows from each cash-generating unit and determines a suitable interest rate in order to calculate the present value of those cash flows. In the process of measuring expected future cash flows management makes assumptions about future operating results. These assumptions relate to future events and circumstances. The actual results may vary, and may cause significant adjustments to the Group’s assets within the next financial year.
In most cases, determining the applicable discount rate involves estimating the appropriate adjustment to market risk and the appropriate adjustment to asset-specific risk factors.
Further details of the carrying value, the key assumptions applied in the impairment assessment of goodwill and sensitivity analysis to changes in the assumptions are in Note 7 to the financial statements.
(v)
Inventories Inventories are measured at the lower of cost and net realisable value. In estimating the net realisable values, management takes into account the most reliable evidence available at the times the estimates are made. The Group’s core business is subject to constant change in selling prices which are determined by supply and demand factors. The rapid changes in selling prices will have an impact in determining the net realisable value of inventories and ultimately the earnings of the Group.
(vi) Impairment of loans and receivables
The Group assesses at the end of each reporting period whether there is any objective evidence that a financial asset is impaired. To determine whether there is objective evidence of impairment, the Group considers factors such as the probability of insolvency or significant financial difficulties of the debtor and default or significant delay in payments.
Where there is objective evidence of impairment, the amount and timing of future cash flows are estimated based on historical loss experience of assets with similar credit risk characteristics.
(vii) Deferred tax assets
Deferred tax assets are recognised for unused tax losses and other deductible temporary differences to the extent that it is probable that taxable profit will be available against which the tax losses and other deductible temporary differences 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 tax planning strategies.
Assumptions about generation of future taxable profits depend on management’s estimates of future cash flows. This depends on estimates of future production and sales volume, operating costs, capital expenditure, dividends and other capital management transactions. Judgement is also required about application of income tax legislation. These judgements and assumptions are subject to risks and uncertainty, hence there is a possibility that changes in circumstances will alter expectations, which may impact the amount of deferred tax assets recognised in the statements of financial position and the amount of unrecognised tax losses and unrecognised temporary differences.
(viii) Employee share options
The Group measures the cost of equity-settled transactions with employees by reference to the fair value of the equity instruments at the date at which they are granted. Estimating fair value for share-based payment transactions requires determining the most appropriate valuation model, which is dependent on the terms and conditions of the grant. This estimate also require determining the most appropriate inputs to the valuation model including the expected life of the share options, volatility and dividend yield and making assumptions about them.
The assumptions and model used for estimating fair value for share-based payment transactions, sensitivity analysis and the carrying amounts are disclosed in Note 41 to the financial statements.
31
PWF CONSOLIDATED BHD. (420049-H)
32 Annual Report 2015
Notes To The Financial Statements 31 December 2015 (Cont’d)
3.
SIGNIFICANT ACCOUNTING POLICIES
The following accounting policies adopted by the Group and the Company are consistent with those adopted in the previous financial years unless otherwise indicated below. 3.1 Basis of Consolidation (i) Subsidiaries
Subsidiaries are entities, including structured entities, controlled by the Company. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases.
The Group controls an entity when it is exposed, or has rights, to variable returns through its power over the entity. Potential voting rights are considered when assessing control only when such rights are substantive. The Group considers it has de facto power over an investee when, despite not having the majority of voting rights, it has the current ability to direct the activities of the investee that significantly affect the investee’s return.
Investment in subsidiaries is measured in the Company’s statement of financial position at cost less any impairment losses, unless the investment is classified as held for sale or distribution. The cost of investments includes transaction costs.
Upon disposal of investment in subsidiaries, the difference between the net disposal proceeds and their carrying amount is included in profit or loss.
(ii)
Business combination
Business combinations are accounted for using the acquisition method from the acquisition date which is the date on which control is transferred to the Group.
For new acquisitions, the Group measures the cost of goodwill at the acquisition date as: • • • •
the fair value of the consideration transferred, plus the recognised amount of any non-controlling interest in the acquiree, plus if the business combination is achieved in stages, the fair value of the existing equity interest in the acquiree, less the net recognised amount at fair value of the identifiable assets acquired and liabilities assumed
When the excess is negative, a bargain purchase gain is recognised in profit or loss.
For each business combination, the Group elects whether to recognise non-controlling interest in the acquiree at fair value, or at the proportionate share of the acquiree’s identifiable net assets at the acquisition date.
Transaction costs, other than those associated with the issue of debt or equity securities, that the Group incurs in connection with a business combination are expensed as incurred.
(iii) Acquisitions of non-controlling interests
The Group treats all changes in its ownership interest in a subsidiary that do not result in a loss of control as equity transactions between the Group and its non-controlling interest holders. Any difference between the Group’s share of net assets before and after the change, and any consideration received or paid, is adjusted to or against Group reserve.
(iv) Loss of control
Upon the loss of control of a subsidiary, the Group derecognises the assets and liabilities of the subsidiary, any non-controlling interests and the other components of equity related to the subsidiary. Any surplus or deficit arising on the loss of control is recognised in profit or loss. If the Group retains any interest in the previous subsidiary, then such interest is measured at fair value at the date that control is lost. Subsequently it is accounted for as an equity accounted investee or as an available-for-sale financial asset depending on the level of influence retained.
(v)
Non-controlling interests
Non-controlling interests at the end of the reporting period, being the equity in a subsidiary not attributable directly or indirectly to the equity holders of the Company, are presented in the consolidated statement of financial position and statement of changes in equity within equity, separately from equity attributable to the owners of the Company. Non-controlling interests in the results of the Group is presented in the consolidated statement of comprehensive income as an allocation of the profit or loss and the comprehensive income for the year between non-controlling interests and the owners of the Company. Losses applicable to the non-controlling interests in a subsidiary are allocated to the non-controlling interests even if doing so causes the non-controlling interests to have a deficit balance.
PWF CONSOLIDATED BHD. (420049-H) Annual Report 2015
Notes To The Financial Statements 31 December 2015 (Cont’d)
3.
SIGNIFICANT ACCOUNTING POLICIES (cont’d) 3.1 Basis of Consolidation (cont’d) (vi) Transactions eliminated on consolidation
Intra-group balances and transactions, and any unrealised income and expenses arising from intra-group transactions, are eliminated in preparing the consolidated financial statements.
Unrealised gains arising from transactions with associate are eliminated against the investment to the extent of the Group’s interest in the associate. Unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that there is no evidence of impairment.
3.2 Property, Plant and Equipment
Property, plant and equipment are initially stated at cost. Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. Subsequent to initial recognition, property, plant and equipment except land, buildings and farm development are stated at cost less accumulated depreciation and accumulated impairment losses.
Land, buildings and farm development are stated at revalued amount, which is the fair value at the date of revaluation less accumulated depreciation and accumulated impairment losses. Fair value is determined by market-based evidence appraisal and depreciated replacement cost approach that are undertaken by external independent professionally qualified valuers. Subsequent additions are shown at cost while disposals are at valuation or cost as appropriate. Revaluations are performed with sufficient regularity to ensure that the fair value of a revalued asset does not differ materially from that which would be determined using fair values at the end of each reporting period.
Surpluses arising on revaluation are credited to revaluation reserve. Surpluses are only recognised in profit or loss to the extent that it reverses a revaluation deficit of the same asset previously recognised in profit or loss. Any deficit arising from revaluation is charged against the revaluation reserve to the extent of a previous surplus held in the revaluation reserve for the same asset. In all other cases, a decrease in carrying amount is included in profit or loss.
Property, plant and equipment are depreciated on the straight line method to write off the cost of each asset to its residual value over its estimated useful life, at the following annual rates:
Leasehold land Amortised over lease period between 15 to 86 years Buildings 2% Farm development 2% - 6.67% Plant and machinery 7% - 10% Equipment, furniture and fittings 5% - 20% Motor vehicles 20% Freehold land is not depreciated as it has an infinite life. Capital work-in-progress represents assets under construction, and which are not ready for commercial use at the end of the reporting period. Capital work-in-progress is stated at cost and is transferred to the relevant category of assets and depreciated accordingly when the assets are completed and ready for commercial use. Depreciation on capital expenditure in progress commences when the assets are ready for their intended use.
The residual value, useful life and depreciation method are reviewed at 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.
Upon disposal of an item of property, plant and equipment, the difference between the net disposal proceeds and its carrying amount is charged or credited to the profit or loss and the attributable portion of the revaluation surplus is taken into other comprehensive income.
33
PWF CONSOLIDATED BHD. (420049-H)
34 Annual Report 2015
Notes To The Financial Statements 31 December 2015 (Cont’d)
3.
SIGNIFICANT ACCOUNTING POLICIES (cont’d) 3.3 Leases
The determination of whether an arrangement is, or contains, a lease is based on the substance of the arrangement at the inception date, whether fulfilment of the arrangement is dependent on the use of a specific asset or asset or the arrangement conveys a right to use the asset, even if that right is not explicitly specific in an arrangement. Finance lease
A finance lease which includes hire purchase arrangement, is a lease that transfers substantially all the risks and rewards incidental to ownership of an asset to the lessee. Title may or may not eventually be transferred.
Minimum lease payments made under finance leases are apportioned between finance charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability.
Finance charges are recognised in finance costs in the profit or loss. Contingent lease payments are accounted for by revising the minimum lease payments over the remaining term of the lease when the lease adjustment is confirmed.
A leased asset is depreciated over the useful life of the asset. However, if there is no reasonable certainty that the Group will obtain ownership by the end of the lease term, the asset is depreciated over the shorter of the estimated useful life of the asset and the lease term.
Leasehold land which in substance is a finance lease is classified as property, plant and equipment.
Operating leases
Leases where the Group does not assume substantially all the risks and rewards of ownership are classified as operating leases and, except for property interest held under operating lease, the leased assets are not recognised on the statement of financial position. Property interest held under an operating lease, which is held to earn rental income or for capital appreciation or both, is classified as investment property.
Payments made under operating leases are recognised in profit or loss on a straight-line basis over the term of the lease. Lease incentives received are recognised in profit or loss as an integral part of the total lease expense, over the term of the lease. Contingent rentals are charged to profit or loss in the reporting period in which they are incurred.
Leasehold land which in substance is an operating lease is classified as prepaid land lease payments.
3.4 Investment Properties
Investment properties which comprise of freehold land, farm development and residential apartment are properties which are held either to earn rental income or for capital appreciation or for both. Such properties are measured initially at cost, including transaction costs. Subsequent to initial recognition, investment properties are stated at fair value.
Fair value of the residential apartment is arrived at by reference to market evidence of transaction prices for similar properties. Fair value of the freehold land and farm development are arrived at using market-based approach and depreciated replacement cost approach respectively undertaken by external independent qualified valuers.
Gains or losses arising from changes in the fair values of investment properties are recognised in profit or loss in the year in which they arise.
Investment properties are derecognised when either they have been disposed of or when the investment property is permanently withdrawn from use and no future economic benefit is expected from its disposal. Any gains or losses on the retirement or disposal of an investment property are recognised in profit or loss in the year in which they arise.
3.5 Intangible Assets
Goodwill
Goodwill acquired in a business combination is initially measured at cost being the excess of the cost of business combination over the Group’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities.
Goodwill is stated at cost less accumulated impairment losses. Goodwill is not amortised but instead, it is reviewed for impairment, annually or more frequently if events or changes in circumstances indicate that the carrying value may be impaired.
PWF CONSOLIDATED BHD. (420049-H) Annual Report 2015
Notes To The Financial Statements 31 December 2015 (Cont’d)
3.
SIGNIFICANT ACCOUNTING POLICIES (cont’d) 3.6 Impairment of Non-Financial Assets
The Group and the Company assess at the end of each reporting period whether there is an indication that an asset may be impaired.
For the purpose of impairment testing, recoverable amount (i.e. the higher of the fair value less cost to sell and value-in-use) 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, the recoverable amount is determined for the cash-generating units (“CGU”) to which the asset belongs.
If the recoverable amount of the asset (or CGU) is estimated to be less than its carrying amount, the carrying amount of the asset (or CGU) is reduced to its recoverable amount.
The difference between the carrying amount and recoverable amount is recognised as an impairment loss in the profit or loss except for assets that were previously revalued where the revaluation surplus was taken to other comprehensive income. In this case the impairment loss is also recognised in other comprehensive income up to the amount of any previous revaluation surplus.
An impairment loss for an asset is reversed if, and only if, there has been a change in the estimates used to determine the asset’s recoverable amount since the last impairment loss was recognised. The carrying amount of this asset is increased to its revised recoverable amount, provided that this amount does not exceed the carrying amount that would have been determined (net of any accumulated amortisation or depreciation) had no impairment loss been recognised for the asset in prior years. A reversal of impairment loss for an asset is recognised in profit or loss unless the asset is measured at revalued amount, in which case the reversal is treated as a revaluation increase. Impairment of goodwill is not reversed in a subsequent period.
3.7 Financial Instruments 3.7.1 Initial recognition and measurement
A financial asset or a financial liability is recognised in the statement of financial position when, and only when, the Group and the Company become a party to the contractual provisions of the instrument.
A financial instrument is recognised initially, at its fair value plus, in the case of a financial instrument not at fair value through profit or loss, transactions costs that are directly attributable to the acquisition or issue of the financial instrument.
An embedded derivative is recognised separately from the host contract and accounted for as a derivative if, and only if, it is not closely related to the economic characteristics and risks of the host contract and the host contract is not categorised at fair value through profit or loss. The host contract, in the event an embedded derivative is recognised separately, is accounted for in accordance with policy applicable to the nature of the host contract.
3.7.2 Financial instrument categories and subsequent measurement The Group and the Company categorise financial instruments as follows:
Financial assets (i)
Loans and receivables Loans and receivables category comprises debt instruments that are not quoted in an active market.
Financial assets categorised as loans and receivables are subsequently measured at amortised cost using the effective interest method.
Loans and receivables are classified as current assets, except for those having maturity dates later than 12 months after the end of the reporting period which are classified as non-current.
All financial assets, except for those measured at fair value through profit or loss, are subject to review for impairment.
35
PWF CONSOLIDATED BHD. (420049-H)
36 Annual Report 2015
Notes To The Financial Statements 31 December 2015 (Cont’d)
3.
SIGNIFICANT ACCOUNTING POLICIES (cont’d) 3.7 Financial Instruments (cont'd) 3.7.2 Financial instrument categories and subsequent measurement (cont’d) (ii) Fair value through profit or loss Fair value through profit or loss category comprises financial assets that are held for trading, including derivatives (except for derivatives that is a financial guarantee contract or a designated and effective hedging instrument) or financial assets that are specifically designated into category upon initial recognition.
Derivatives that are linked to and must be settled by delivery of unquoted equity intruments whose fair values cannot be reliably measured are measured at cost.
Other financial assets categorised as fair value through profit or loss are subsequently measured at their fair values with the gain or loss recognised in profit or loss.
Financial liabilities All financial liabilities are subsequently measured at amortised cost.
Financial liabilities are classified as current liabilities, except for those having maturity dates later than 12 months after the end of the reporting period which are classified as non-current.
3.7.3 Regular way purchase or sale of financial assets
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 convention in the market place concerned.
A regular way purchase or sale of financial assets is recognised and derecognised, as applicable, using trade date accounting. Trade date accounting refers to: (a)
the recognition of an asset to be received and the liability to pay for it on the trade date, and
(b)
derecognition of an asset that is sold, recognition of any gain or loss on disposal and the recognition of a receivable from the buyer for payment on the trade date.
3.7.4 Derivative financial instruments
The Group enters into derivative financial instruments such as foreign currency forward contracts to manage its exposure to foreign currency risks.
Derivatives are initially recognised at fair value at the date the derivative contract is entered and are subsequently remeasured to their fair value at the end of the reporting period. The resulting gain or loss is recognised in profit or loss immediately.
A derivative with a positive fair value is recognised as a financial asset whereas a derivative with a negative fair value is recognised as a financial liability. A derivative is presented as a non-current asset or a non-current liability if the remaining maturity of the instrument is more than 12 months and it is not expected to be realised or settled within 12 months. Other derivatives are presented as current assets or current liabilities.
The Group has not designated any derivatives as hedging instruments.
3.7.5 Offsetting of financial instruments
Financial assets and financial liabilities are offset and the net amount reported in the statement of financial position if, and only if, there is currently a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis, or to realise the assets and settle the liabilities simultaneously.
3.7.6 Derecognition
A financial asset or part of it is derecognised, when and only when the contractual rights to the cash flows from the financial asset expire or the financial asset is transferred to another party without retaining control or substantially all risks and rewards of the asset. On derecognition of a financial asset, the difference between the carrying amount and the sum of the consideration received (including any new asset obtained less any new liability assumed) and any cumulative gain or loss that had been recognised in equity is recognised in the profit or loss.
A financial liability or a part of it is derecognised when, and only when, the obligation specified in the contract is discharged or cancelled or expired. On derecognition of a financial liability, the difference between the carrying amount of the financial liability extinguished or transferred to another party and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognised in profit or loss.
PWF CONSOLIDATED BHD. (420049-H) Annual Report 2015
Notes To The Financial Statements 31 December 2015 (Cont’d)
3.
SIGNIFICANT ACCOUNTING POLICIES (cont’d) 3.8 Impairment of Financial Assets
All financial assets (except for financial assets categorised as fair value through profit or loss) are assessed at the end of each reporting period whether there is any objective evidence of impairment as a result of one or more events having an impact on the estimated future cash flows of the asset. Losses expected as a result of future events, no matter how likely, are not recognised. For an investment in an equity instrument, a significant or prolonged decline in the fair value below its cost is an objective evidence of impairment.
An impairment loss in respect of loans and receivables and held-to-maturity investments is recognised in profit or loss and is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows discounted at the asset’s original effective interest rate. The carrying amount of the asset is reduced through the use of an allowance account.
An impairment loss in respect of available-for-sale financial assets is recognised in profit or loss and is measured as the difference between the asset’s acquisition cost (net of any principal repayment and amortisation) and the asset’s current fair value, less any impairment loss previously recognised. Where a decline in the fair value of an available-for-sale financial asset has been recognised in other comprehensive income, the cumulative loss in other comprehensive income is reclassified from equity to profit or loss.
An impairment loss in respect of unquoted equity instrument that is carried at cost is recognised in profit or loss and is measured as the difference between the financial asset’s carrying amount and the present value of estimated future cash flows discounted at the current market rate of return for a similar financial asset.
Impairment losses recognised in profit or loss for an investment in an equity instrument classified as available-for-sale is not reversed through profit or loss.
If, in a subsequent period, the fair value of a debt instrument increases and the increase can be objectively related to an event occurring after the impairment loss was recognised in profit or loss, the impairment loss is reversed, to the extent that the asset’s carrying amount does not exceed what the carrying amount would have been had the impairment not been recognised at the date the impairment is reversed. The amount of the reversal is recognised in profit or loss.
3.9 Inventories
Inventories are stated at the lower of cost and net realisable value. Net realisable value is the estimated selling price less the estimated cost necessary to make the sale.
Cost of raw materials and consumables is determined on a first-in, first-out basis.
Cost of broiler consists of purchase price of day-old-chicks plus growing costs which include feeds and vaccines, direct labour, subcontract wages and attributable farming overheads. Cost is determined on the first-in, first-out basis.
Cost of parent stock and layers consists of purchase price of parent/pullet stock and attributable costs including relevant overheads in rearing the parent/pullet stock up to the point of commencement of its egg-laying life and is amortised over its estimated economic egg-laying life. Cost is determined on the first-in, first-out basis.
Cost of broiler eggs consist of cost of parent stocks, direct labor and a proportion of overhead absorbed based on hatching period of the eggs. Cost is determined based on the first-in, first-out basis.
Cost of eggs include direct production costs and appropriate production overheads.
Cost of finished goods includes materials, direct labour and attributable production overheads.
Goods-in-transit is recognised when the risk and reward of ownership are transferred to the Group and is recognised at cost.
3.10 Cash and Cash Equivalents
Cash comprises cash in hand, cash at bank and demand deposits. Cash equivalents are short term and highly liquid investments that are readily convertible to known amount of cash and which are subject to an insignificant risk of changes in value against which bank overdraft balances, if any, are deducted.
3.11 Non-current Assets Held for Sale
Non-current assets are classified as held for sale if their carrying amount will be recovered principally through a sale transaction rather than through continuing use. This condition is regarded as met only when the sale is highly probable and the asset is available for immediate sale in its present condition subject only to terms that are usual and customary.
Immediately before classification as held for sale, the measurement of the non-current assets is brought up-to-date in accordance with applicable FRSs. Then, on initial classification as held for sale, non-current assets are measured at the lower of carrying amount and fair value less costs to sell. Any differences are recognised in profit or loss.
37
PWF CONSOLIDATED BHD. (420049-H)
38 Annual Report 2015
Notes To The Financial Statements 31 December 2015 (Cont’d)
3. SIGNIFICANT ACCOUNTING POLICIES (cont’d) 3.12 Provisions
Provisions are recognised when the Group has a present obligation as a result of a past event and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and a reliable estimate of the amount can be made. Provisions are reviewed at the end of each reporting period and adjusted to reflect the current best estimate. Where the effect of the time value of money is material, the amount of a provision is the present value of the expenditure expected to be required to settle the obligation.
3.13 Borrowing Costs
Borrowing costs directly attributable to the acquisition, construction or production of a qualifying asset are capitalised during the period of time that is necessary to complete and prepare the asset for its intended use or sale. Capitalisation of borrowing costs commences when the activities to prepare the asset for its intended use or sale are in progress and the expenditures and borrowing costs are incurred. Borrowing costs are capitalised until the assets are substantially completed for their intended use or sale.
Other borrowing costs are recognised as expenses in the period in which they are incurred.
3.14 Income Recognition
Sale of goods
Revenue from sale of goods is recognised when the significant risks and rewards of ownership have been transferred to the buyer.
Dividend income
Dividend income is recognised when the right to receive payment is established.
Interest income
Interest income is recognised on a time proportion basis using the applicable effective interest rate.
Rental income
Rental income is recognised on a time proportion basis over the lease term.
Management fees
Management fees are recognised when services are rendered.
3.15 Employee Benefits 3.15.1 Short term benefits
Wages, salaries, bonuses and social security contributions are recognised as an expense in the year in which the associated services are rendered by employees of the Group. Short term accumulating compensated absences such as paid annual leave are recognised when services are rendered by employees that increase their entitlement to future compensated absences, and short term non-accumulating compensated absences such as sick leave are recognised when the absences occur.
3.15.2 Defined contribution plans
As required by law, companies in Malaysia make contributions to the national pension scheme, the Employees Provident Fund (“EPF”). Such contributions are recognised as an expense in the profit or loss as incurred.
3.15.3 Employees’ share options scheme
Eligible employees of the Group received remuneration in the form of share options as consideration for services rendered. The cost of these equity-settled transactions with employees is measured by reference to the fair value of the options at the date on which the options are granted. This cost is recognised in profit or loss, with a corresponding increase in the employee share options reserve over the vesting period. The cumulative expense recognised at each reporting date until the vesting date reflects the extent to which the vesting period has expired and the Group’s best estimate of the number of options that will ultimately vest. The charge or credit to profit or loss for a period represents the movement in cumulative expense recognised at the beginning and end of the period.
No expense is recognised for options that do not ultimately vest, except for options where vesting is conditional upon market or non-vesting condition, which are tested as vested irrespective of whether or not the market or non-vesting condition is satisfied, provided that all other performance and/or service conditions are satisfied. The employee share options reserve is transferred to retained profits/accumulated losses upon expiry of the share options.
The proceeds received net of any directly attributable transaction costs are credited to share capital (nominal value) and share premium when the options are exercised.
PWF CONSOLIDATED BHD. (420049-H) Annual Report 2015
Notes To The Financial Statements 31 December 2015 (Cont’d)
3.
SIGNIFICANT ACCOUNTING POLICIES (cont’d) 3.16 Income tax
Income tax expense comprises current and deferred tax. Current tax and deferred tax are recognised in profit or loss except to the extent that it relates to a business combination or items recognised directly in equity or other comprehensive income.
Current tax is the expected tax payable or receivable on the taxable income or loss for the year, using tax rates enacted or substantively enacted by the end of the reporting period, and any adjustment to tax payable in respect of previous years.
Deferred tax is recognised using the liability method, providing for temporary differences between the carrying amounts of assets and liabilities in the statement of financial position and their tax bases. Deferred tax is not recognised for the following temporary differences: the initial recognition of goodwill, the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit or loss. Deferred tax is measured at the tax rates that are expected to be applied to the temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the end of the reporting period.
Where investment properties are carried at their fair value in accordance with the accounting policy set out in Note 3.4, the amount of deferred tax recognised is measured using tax rates that would apply on sale of those assets at their carrying value at the reporting date unless the property is depreciable and is held with the objective to consume substantially all the economic benefits embodied in the property over time, rather than through sale. In all other cases, the amount of deferred tax recognised is measured based on the expected manner of realisation or settlement of the carrying amount of the assets and liabilities, using tax rates enacted or substantively enacted at the reporting date. Deferred tax assets and liabilities are not discounted.
Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realised simultaneously.
A deferred tax asset is recognised to the extent that it is probable that future taxable profits will be available against which the temporary difference can be utilised. Deferred tax assets are reviewed at the end of each reporting period and are reduced to the extent that it is no longer probable that the related tax benefit will be realised.
Unutilised reinvestment allowance and investment tax allowance, being tax incentives that is not a tax base of an asset, is recognised as a deferred tax asset to the extent that it is probable that the future taxable profits will be available to set off against the unutilised tax incentive.
3.17 Goods and Services Tax
Goods and Services Tax (“GST”) is a consumption tax based on the value-added concept. GST is imposed on goods and services at every production and distribution stage in the supply chain including importation of goods and services, at the applicable tax rate of 6%. Input tax that a company pays on business purchases is offset against output tax.
Revenue, expenses and assets are recognised net of GST except:
-
where the GST incurred in a purchase of asset or service is not recoverable from the authority, in which case the GST is recognised as part of the cost of acquisition of the asset or as part of the expense item as applicable; and
-
receivables and payables that are stated with GST inclusive.
The net GST recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the statements of financial position.
3.18 Foreign Currency Transactions
Transactions in foreign currencies are translated to the functional currency of the Group at exchange rates at the dates of the transactions.
Monetary assets and liabilities denominated in foreign currencies at the end of the reporting period are translated to the functional currency at the exchange rate at that date.
Non-monetary assets and liabilities measured at historical cost in a foreign currency at the end of the reporting period are translated to the functional currency at the exchange rate at the date of the transaction except for those measured at fair value shall be translated at the exchange rate at the date when the fair value was determined.
Exchange differences arising from the settlement of foreign currency transactions and from the translation of foreign currency monetary assets and liabilities are recognised in profit or loss.
Exchange differences arising on the translation of non-monetary items carried at fair value are included in profit or loss for the period except for the differences arising on the translation of non-monetary items in respect of which gains or losses are recognised directly in other comprehensive income.
39
PWF CONSOLIDATED BHD. (420049-H)
40 Annual Report 2015
Notes To The Financial Statements 31 December 2015 (Cont’d)
3.
SIGNIFICANT ACCOUNTING POLICIES (cont’d) 3.19 Segment Reporting
An operating segment is a component of the Group that engages in business activities from which it may earn revenue and incur expenses, including revenues and expenses that relate to transactions with any of the Group’s other components. An operating segment’s operating results are reviewed regularly by the chief operating decision maker, which in this case are the Executive Directors of the Group, to make decisions about resources to be allocated to the segment and assess its performance, and for which discrete financial information is available.
3.20 Contingencies
A contingent liability or asset is a possible obligation or asset that arises from past events and whose existence will be confirmed only by the occurrence or non-occurrence of uncertain future events not wholly within the control of the Group and of the Company.
Contingent liabilities and assets are not recognised in the statements of financial position of the Group and of the Company.
3.21 Share capital and share premium
An equity instrument is any contract that evidences a residual interest in the assets of the Group and the Company after deducting all of its liabilities. Ordinary shares are equity instruments. Share capital represents the nominal value of shares that have been issued. Dividends on ordinary shares are accounted for in shareholder’s equity as an appropriation of unappropriated profits and recognised as a liability in the period in which they are declared.
Share premium includes any premiums received on issue of share capital. Any transaction costs associated with the issuing of shares are deducted from share premium, net of any related income tax benefits.
3.22 Treasury Shares
When share capital recognised as equity is repurchased, the amount of the consideration paid including directly attributable costs, net of any tax effects, is recognised as a deduction from equity. Repurchased shares that are not subsequently cancelled are classified as treasury shares in the statement of changes in equity.
When treasury shares are sold or reissued subsequently, the difference between the sales consideration net of directly attributable costs and the carrying amount of the treasury shares is recognised in equity.
3.23 Earnings Per Ordinary Share
The Group presents basic and diluted earnings per share data for its ordinary shares (“EPS”).
Basic EPS is calculated by dividing the profit or loss attributable to ordinary shareholders of the Company by weighted average number of ordinary shares outstanding during the period, adjusted for own shares held.
Diluted EPS is determined by adjusting the profit or loss attributable to ordinary shareholders and the weighted average number of ordinary shares outstanding, adjusted for own shares held and for the effects of all dilutive potential ordinary shares, which comprise convertible notes and share options granted to employees.
3.24 Related Parties
A related party is a person or entity that is related to the Group. A related party transaction is a transfer of resources, services or obligations between the Group and its related party, regardless of whether a price is charged. (a)
A person or a close member of that person’s family is related to the Group if that person : (i) Has control or joint control over the Group; (ii) Has significant influence over the Group; or (iii) Is a member of the key management personnel of the ultimate holding company of the Group, or the Group.
(b)
An entity is related to the Group if any of the following conditions applies : (i) (ii) (iii) (iv) (v)
The entity and the Group are members of the same group. One entity is an associate or joint venture of the other entity. Both entities are joint ventures of the same third party. One entity is a joint venture of a third entity and the other entity is an associate of the third entity. The entity is a post-employment benefit plan for the benefits of employees of either the Group or an entity related to the Group. (vi) The entity is controlled or jointly-controlled by a person identified in (a) above. (vii) A person identified in (a)(i) above has significant influence over the Group or is a member of the key management personnel of the ultimate holding company or the Group. (viii) The entity, or any member of a group when it is a part, provides key management personnel services to the Group or to the parent of the Group.
PWF CONSOLIDATED BHD. (420049-H) Annual Report 2015
Notes To The Financial Statements 31 December 2015 (Cont’d)
4.
PROPERTY, PLANT AND EQUIPMENT GROUP 2015 -------------------------------------------------------------------------- At Valuation/Cost --------------------------------------------------------------------------
At valuation: Freehold land Long-term leasehold land Short-term leasehold land Buildings Farm development At cost: Freehold land Short-term leasehold land Buildings Farm development Plant and machinery Equipment, furniture and fittings Motor vehicles Capital expenditure in progress
Reclassified to investment properties RM
Balance at beginning RM
Additions RM
Disposals RM
105,550,500 5,160,000 10,677,000 18,340,000 67,721,000
-
-
4,542,309 555,400 729,078 13,475,680 32,074,676 49,728,325 18,571,791 10,399,498
5,335,217 1,301,541 128,880 413,515 3,024,761 23,004,554
(13,500) (339,953) -
(3,111) (27,717) -
337,525,257
33,208,468
(353,453)
(746,828)
(456,000) (260,000)
Reclassification RM
Balance at end RM
-
105,094,500 5,160,000 10,677,000 18,340,000 67,461,000
111,173 5,791,886 2,266,280 3,027,112 (11,196,451) -
9,877,526 555,400 840,251 20,569,107 34,453,225 53,141,235 21,256,599 22,207,601 369,633,444
----------------------------------------------------------------- Accumulated depreciation --------------------------------------------------------------------Reclassified to investment properties RM
Reclassification RM
Balance at end RM
(39,019)
-
296,157 618,375 920,835 15,260,499
(13,500) (338,743)
(2,893) (24,124) -
-
25,185 1,511,129 23,942,004 28,116,303 16,135,672
(352,243)
(66,036)
-
86,826,159
Balance at beginning RM
Current charge RM
Disposals RM
At valuation: Freehold land Long-term leasehold land Short-term leasehold land Buildings Farm development
197,438 412,250 613,890 10,287,185
98,719 206,125 306,945 5,012,333
-
At cost: Freehold land Short-term leasehold land Buildings Farm development Plant and machinery Equipment, furniture and fittings Motor vehicles
9,727 644,482 22,675,268 26,210,220 14,051,414
15,458 866,647 1,283,129 1,930,207 2,423,001
75,101,874
12,142,564
Carrying amount at end RM At valuation: Freehold land Long-term leasehold land Short-term leasehold land Buildings Farm development At cost: Freehold land Short-term leasehold land Buildings Farm development Plant and machinery Equipment, furniture and fittings Motor vehicles Capital expenditure in progress
105,094,500 4,863,843 10,058,625 17,419,165 52,200,501 9,877,526 555,400 815,066 19,057,978 10,511,221 25,024,932 5,120,927 22,207,601 282,807,285
41
PWF CONSOLIDATED BHD. (420049-H)
42 Annual Report 2015
Notes To The Financial Statements 31 December 2015 (Cont’d)
4.
PROPERTY, PLANT AND EQUIPMENT (cont'd) GROUP 2014 -------------------------------------------------------------------------- At Valuation/Cost --------------------------------------------------------------------------
At valuation: Freehold land Long-term leasehold land Short-term leasehold land Buildings Farm development At cost: Freehold land Short-term leasehold land Buildings Farm development Plant and machinery Equipment, furniture and fittings Motor vehicles Capital expenditure in progress
Balance at beginning RM
Additions RM
Disposals RM
Written off RM
Reclassification RM
Balance at end RM
105,550,500 5,160,000 10,677,000 18,340,000 67,721,000
-
-
-
-
105,550,500 5,160,000 10,677,000 18,340,000 67,721,000
530,400 162,240 6,319,588 32,302,958 41,630,266 16,972,030 14,704,057
4,542,309 25,000 353,251 70,903 420,890 2,910,680 10,786,909
(110,000) (1,290,919) -
(233,805) (20,000) -
320,070,039
19,109,942
(1,400,919)
(253,805)
566,838 6,802,841 44,620 7,677,169 (15,091,468) -
4,542,309 555,400 729,078 13,475,680 32,074,676 49,728,325 18,571,791 10,399,498 337,525,257
----------------------------------------------------------------- Accumulated depreciation ---------------------------------------------------------------------
At valuation: Freehold land Long-term leasehold land Short-term leasehold land Buildings Farm development At cost: Freehold land Short-term leasehold land Buildings Farm development Plant and machinery Equipment, furniture and fittings Motor vehicles
Balance at beginning RM
Current charge RM
Disposals RM
Written off RM
Reclassification RM
Balance at end RM
98,719 206,125 306,945 5,164,164
98,719 206,125 306,945 5,123,021
-
-
-
197,438 412,250 613,890 10,287,185
495 105,281 21,698,204 24,184,492 14,156,900
9,232 539,201 1,232,848 2,025,728 849,241
(60,979) (934,727)
(194,805) (20,000)
-
9,727 644,482 22,675,268 26,210,220 14,051,414
65,921,325
10,391,060
(995,706)
(214,805)
-
75,101,874 Carrying amount at end RM
At valuation: Freehold land Long-term leasehold land Short-term leasehold land Buildings Farm development At cost: Freehold land Short-term leasehold land Buildings Farm development Plant and machinery Equipment, furniture and fittings Motor vehicles Capital expenditure in progress
105,550,500 4,962,562 10,264,750 17,726,110 57,433,815 4,542,309 555,400 719,351 12,831,198 9,399,408 23,518,105 4,520,377 10,399,498 262,423,383
PWF CONSOLIDATED BHD. (420049-H) Annual Report 2015
Notes To The Financial Statements 31 December 2015 (Cont’d)
4.
PROPERTY, PLANT AND EQUIPMENT (cont'd) (i)
The valuation of the freehold land, leasehold land, buildings and farm development was updated on 1 December 2012 by Azmi & Co., an independent professional valuer. The land were valued based on market-based appraisal while the building and farm development were valued based on the depreciated replacement cost approach. The updated valuation figures were approved by the directors and incorporated into the books.
The historical cost and net carrying amount of properties stated at valuation are as follows:
Freehold land RM
Long-term leasehold land RM
Short-term leasehold land RM
Buildings RM
Farm development RM
Total RM
45,755,661
2,077,712
4,624,404
14,401,917
76,363,415
143,223,109
(2,117,086)
(3,180,662)
(67,346,859)
(72,927,615)
GROUP 2015 Cost Accumulated depreciation Carrying amount
2014 Cost Accumulated depreciation Carrying amount (ii)
-
(283,008)
45,755,661
1,794,704
2,507,318
11,221,255
9,016,556
70,295,494
46,068,084
2,077,712
4,624,404
14,401,917
76,363,415
143,535,532
(1,979,439)
(2,993,320)
(62,253,419)
(67,473,563)
2,644,965
11,408,597
14,109,996
76,061,969
46,068,084
(247,385) 1,830,327
The carrying amount of properties charged to licensed banks as securities for banking facilities granted to certain subsidiaries are as follows: GROUP 2015 RM
2014 RM
At valuation : Freehold land
13,363,800
8,289,300
6,009,800
-
At cost : Freehold land
(iii) The carrying amount of property, plant and equipment being acquired under finance lease are as follows: GROUP
Farm development Plant and machinery
2015
2014
RM
RM
1,827,175
535,335
322,464
-
Equipment, furniture and fittings
8,844,716
8,494,992
Motor vehicles
5,917,445
1,774,420
16,911,800
10,804,747
43
PWF CONSOLIDATED BHD. (420049-H)
44 Annual Report 2015
Notes To The Financial Statements 31 December 2015 (Cont’d)
5.
INVESTMENT PROPERTIES Freehold
Farm
Residential
land
development
apartment
Total
RM
RM
RM
RM
2,334,950
250,000
GROUP 2015 At fair value Balance at beginning Disposal Reclassified from property, plant and equipment
2,587,500 (367,500)
(1,529,365)
-
5,172,450 (1,896,865)
456,000
224,792
-
680,792
Fair value adjustment
2,338,000
39,020
-
2,377,020
Balance at end
5,014,000
1,069,397
250,000
6,333,397
3,877,485
200,000
2014 At fair value Balance at beginning
3,739,000
Disposal
(905,000)
(1,124,255)
Reclassified to non-current assets held for sale
(370,000)
(418,280)
Fair value adjustment Balance at end
7,816,485
-
(2,029,255)
-
(788,280)
123,500
-
50,000
173,500
2,587,500
2,334,950
250,000
5,172,450
(i)
The investment properties are held to earn rental income and for capital appreciation.
The following are the operating income and expenses in respect of the investment properties: GROUP
(ii)
2015
2014
RM
RM
Rental income from investment properties
92,685
182,399
Direct operating expenses arising from investment properties that generated rental income during the year
(1,545)
(13,674)
Fair value of investment properties for disclosure purpose are categorised as follows:
2015 Freehold land Farm development Residential apartment
Level 1 RM
Level 2 RM
Level 3 RM
Total RM
-
5,014,000
-
5,014,000
250,000
1,069,397 -
1,069,397 250,000
-
5,264,000
1,069,397
6,333,397
PWF CONSOLIDATED BHD. (420049-H) Annual Report 2015
Notes To The Financial Statements 31 December 2015 (Cont’d)
5.
INVESTMENT PROPERTIES (cont’d) (ii)
Fair value of investment properties for disclosure purpose are categorised as follows (cont'd):
Level 1 RM
Level 2 RM
-
2014 Freehold land Farm development Residential apartment
Level 3 RM
Total RM
2,587,500
-
2,587,500
250,000
2,334,950 -
2,334,950 250,000
2,837,500
2,334,950
5,172,450
Level 2 fair value
Derived using the sales comparison approach. Sales price of comparable properties in close proximity are adjusted for differences in key attributes such as property size. The most significant input into this valuation approach is price per square foot of comparable properties.
Level 3 fair value
Estimated using unobservable inputs for the investment properties.
The following table shows the valuation techniques used in the determination of fair value within Level 3, as well as the significant unobservable inputs used in the valuation model.
Valuation Technique
Significant unobservable inputs
Inter-relationship between significant unobservable inputs and fair value measurement
Replacement cost approach(i)
• Construction cost per square foot (ii)
• Expected labour cost and material prices were to increase/ (decrease) • Depreciation rate were to (decrease)/increase
The estimated fair value would increase/(decrease) if:
• Depreciation rate (i)
The replacement cost approach is a fair value technique that is derived by estimating the replacement cost to construct a similar building/farm house, based on today’s labour and material prices and using present construction technique. From this total, depreciation is then deducted using an appropriate rate to reflect the age of the building/farm house.
(ii)
The construction cost per square foot varies according to the rates where the investment properties is situated.
Valuation process for Level 3 fair value
The Group’s level 3 investment properties comprise of farm development. As the fair value is determined using the replacement cost approach, significant changes to construction cost per square foot will ultimately influence the fair value of the investment property. The management will assess annually whether there are significant changes to the construction cost for farm development by reference to its own recent capital expenditure on construction of new farm houses. If construction cost fluctuated by more than 8% during the year, the directors will engage external independent professional valuers having appropriate professional qualifications and experience to carry out a valuation on its farm development carried at fair value or else a formal valuation will be only be carried out once every two years. The most recent valuation was performed on 22 December 2015 by Azmi & Co., an independent professional valuer.
45
PWF CONSOLIDATED BHD. (420049-H)
46 Annual Report 2015
Notes To The Financial Statements 31 December 2015 (Cont’d)
6.
INVESTMENT IN SUBSIDIARIES COMPANY 2015 RM
2014 RM
Unquoted shares, at cost Balance at beginning Addition* Allocation of ESOS charge in respect of share options granted to the employees of subsidiaries Written off
70,655,765 234,600 -
61,155,765 10,000,000 (500,000)
Balance at end
70,890,365
70,655,765
* The additional investment represents dividend receivable from a subsidiary which was converted into shares in the said subsidiary.
Details of the subsidiaries which are all incorporated in Malaysia are as follows:
Name of Company
Effective Equity Interest
Principal Activities
2015
2014
PWF Farms Sdn. Bhd. (formerly known as PW Nutrifarm Sdn. Bhd.)
100%
100%
Broiler farming, layer farming and investment holding.
PWF Feeds Sdn. Bhd. (formerly known as PW Nutrifeed Sdn. Bhd.)
100%
100%
Manufacturing and selling of broiler feeds.
PWF Breeder Sdn. Bhd. (formerly known PW Nutri Breeder Farm Sdn. Bhd.)
100%
100%
Breeding of day-old chicks.
PW NutriEggs Sdn. Bhd.
100%
100%
Layer farming business.
Direct
Indirect - held through PWF Farms Sdn. Bhd. (formerly known as PW Nutrifarm Sdn. Bhd.) PinWee Chicken Trading Sdn. Bhd.
100%
100%
Inactive.
PW Nutrifarm Venture Sdn. Bhd.
100%
100%
Inactive.
PW Nutri Processing Sdn. Bhd.
100%
100%
Inactive.
PinWee Food Processing Sdn. Bhd.
100%
100%
Inactive.
PW Breeder Farm (Taiping) Sdn. Bhd. (*)
Nil
100%
Wound up during the year.
PW Properties Sdn. Bhd. (*)
Nil
100%
Wound up during the year
Indirect - held through PWF Feeds Sdn. Bhd. (formerly known as PW Nutrifeed Sdn. Bhd.) PWF Capital Land Sdn. Bhd. (formerly known as 100% Investment holding. 100% PW Resources Sdn. Bhd.) (*) During the financial year, these subsidiaries have been wound up pursuant to the members’ voluntary winding-up under Section 254(1) (b) of the Companies Act, 1965.
PWF CONSOLIDATED BHD. (420049-H) Annual Report 2015
Notes To The Financial Statements 31 December 2015 (Cont’d)
7.
INTANGIBLE ASSETS GROUP
Goodwill
2015
2014
RM
RM
5,240,569
5,240,569
The goodwill on consolidation arose from the acquisition of certain subsidiaries and have been allocated to its livestock farming operation as the cash-generating unit (CGU).
For annual impairment testing purposes, the recoverable amount of the CGU is determined based on its value-in-use, which applies a discounted cash flow model using cash flow projections based on financial budget and projections approved by management.
No impairment loss was required for the goodwill as its recoverable amount is in excess of its carrying amount.
The key assumptions on which the management has based on for the computation of value-in-use are as follows: (i)
Cash flow projections and growth rate
The five-year cash flow projections are based on the most recent budget approved by the management and extrapolated using a steady growth rate of 4 to 6% (2014: 4%) per annum for the subsequent years. A terminal value is assigned at the end of the five (5) year cash flow projections based on assumed growth rate of 2% (2014: 2%) in perpetuity.
(ii)
Discount rate
The discount rate of 6.21% (2014: 5.89%) is applied to the cash flow projections. The discount rate is estimated based on the Group’s weighted average cost of capital for the year.
The values assigned to the key assumptions represent management’s assessment of future trends in the industry. The management believes that no reasonably possible changes in any key assumptions would cause the recoverable amount of the CGU to differ materially from its carrying amount except for changes in prevailing operating environment which is not ascertainable.
8.
INVENTORIES GROUP 2015
2014
RM
RM
Raw materials
18,376,860
14,321,678
Broiler
15,917,911
11,356,564
Parent stock
5,848,480
5,675,074
Layers
4,756,433
3,912,151
Broiler eggs
2,066,201
1,886,755
199,582
39,761
At cost:
Eggs
Finished goods
1,613,347
967,805
Consumables
1,866,650
1,667,942
Goods-in-transit *
6,433,759
9,726,970
57,079,223
49,554,700
*
This comprises raw material for the production of animal feeds.
47
PWF CONSOLIDATED BHD. (420049-H)
48 Annual Report 2015
Notes To The Financial Statements 31 December 2015 (Cont’d)
9.
TRADE RECEIVABLES GROUP 2015 RM Trade receivables Less : Allowance for impairment Balance at beginning Current year Doubtful debts recovered Written off Balance at end
2014 RM
29,281,312
27,517,369
(7,028,489) (748,268) 154,852 715,487
(6,349,751) (1,015,897) 334,228 2,931
(6,906,418)
(7,028,489)
22,374,894
20,488,880
Trade receivables amounting to RM202,086 (2014: RM769,146) have pledged their properties to a subsidiary of the Group as security for their outstanding balance. The trade receivables are extended credit terms of 1 to 60 days (2014: 7 to 90 days). They are recognised at their original invoice amounts which represent their fair values on initial recognition.
10. OTHER RECEIVABLES, DEPOSITS AND PREPAYMENTS GROUP
Other receivables
COMPANY
2015
2014
2015
2014
RM
RM
RM
RM
1,475,018
263,070
-
-
Less: Allowance for impairment
Balance at beginning
Written off
Balance at end
(31,667) 2,050 (29,617) 1,445,401
(31,667)
-
-
-
-
(31,667)
-
-
231,403
-
-
-
Deposits - Refundable
1,115,224
672,145
-
-
-
1,720,846
-
-
GST claimable
4,315,328
-
5,246
-
Prepayments
2,632,880
2,607,681
10,237
-
9,508,833
5,232,075
15,483
-
- Non-refundable
Included in other receivables, deposits and prepayments are the following: (i)
an amount of RM166,589 (2014: RM1,009,039) paid to suppliers for purchase of raw materials.
(ii)
an amount of RM85,000 (2014: RM1,315,995) paid to suppliers for purchase of property, plant and equipment.
As at the end of the reporting period, there was no indication that the other receivables and deposits are not recoverable except as specifically highlighted above.
PWF CONSOLIDATED BHD. (420049-H) Annual Report 2015
Notes To The Financial Statements 31 December 2015 (Cont’d)
11. AMOUNT DUE FROM SUBSIDIARIES COMPANY The amount due from subsidiaries is non-trade related, unsecured, non-interest bearing and is repayable on demand. 12. INVESTMENT SECURITIES GROUP 2015 RM
2014 RM
Investment held for trading: Shares quoted in Malaysia Balance at beginning Additions Disposals Fair value adjustment Balance at end Shares quoted outside Malaysia Balance at beginning Additions Disposals Fair value adjustment Balance at end
Market value of shares quoted: In Malaysia Outside Malaysia Analysis by currencies: Ringgit Malaysia Hong Kong Dollar
1,090,000 408,091 (984,492) 45,701
1,418,416 (328,416)
559,300
1,090,000
1,617,518 4,844,549 (3,549,137) (189,721)
251,482 5,625,242 (4,217,952) (41,254)
2,723,209
1,617,518
3,282,509
2,707,518
559,300 2,723,209
1,090,000 1,617,518
559,300 2,723,209 3,282,509
1,090,000 1,617,518 2,707,518
13. DERIVATIVE FINANCIAL ASSETS GROUP 2015 RM
2014 RM
Derivatives at fair value through profit or loss - Forward exchange contracts Notional value of contracts Assets
5,868,085
10,758,662
26,000
18,000
Forward exchange contracts are used to manage the foreign currency exposure arising from the Group’s purchases denominated in currencies other than the functional currency of the Group. The forward contracts have maturity period of less than one year as at the end of the reporting period. The forward exchange contracts are not designated as cash flow or fair value hedges and are entered into for periods consistent with currency transaction exposure. Such derivatives do not qualify for hedge accounting.
49
PWF CONSOLIDATED BHD. (420049-H)
50 Annual Report 2015
Notes To The Financial Statements 31 December 2015 (Cont’d)
14. FIXED DEPOSIT WITH A LICENSED BANK
GROUP
The fixed deposit is pledged to a licensed bank for banking facilities granted to a subsidiary.
The effective interest rate and maturities of fixed deposit as at the end of the reporting period is 3.30% (2014: 3.50%) per annum and 12 months (2014: 12 months) respectively.
15. CASH AND BANK BALANCES GROUP
Analysis by currencies : Ringgit Malaysia US Dollar
COMPANY
2015
2014
2015
2014
RM
RM
RM
RM
5,955,218 -
2,838,418 2,138
58,109 -
57,443 -
5,955,218
2,840,556
58,109
57,443
16. NON-CURRENT ASSETS HELD FOR SALE GROUP 2015 RM Reclassified from investment properties Less: Allowance for impairment
2014 RM
-
788,280 (168,280)
-
620,000
Non-current assets held for sale comprises freehold land and farm development. On 9 March 2015, a subsidiary of the Company had entered into a Sale and Purchase Agreement with a third party for the sale of the freehold land and farm development for a total consideration of RM620,000. The disposal was completed during the financial year.
17. SHARE CAPITAL Number of ordinary shares of RM1 each 2014 2015
Authorised Issued and fully paid Balance at beginning Bonus issue Issued, at premium pursuant to: - DRP* - Exercise of ESOS Balance at end
* DRP - Dividend Reinvestment Plan.
Amount 2015 RM
2014 RM
100,000,000
100,000,000
100,000,000
100,000,000
60,911,250 11,487,135
60,911,250 -
60,911,250 11,487,135
60,911,250 -
3,152,079 2,162,200
-
3,152,079 2,162,200
-
77,712,664
60,911,250
77,712,664
60,911,250
PWF CONSOLIDATED BHD. (420049-H) Annual Report 2015
Notes To The Financial Statements 31 December 2015 (Cont’d)
17. SHARE CAPITAL (cont’d)
During the financial year, the issued and paid-up ordinary share capital was increased from RM60,911,250 to RM77,712,664 by way of issuance of 16,801,414 new ordinary shares of RM1 each pursuant to the following: (i)
Bonus issue of 11,487,135 new ordinary shares of RM1 each credited as fully paid up on the basis of 1 bonus share for every 5 existing ordinary shares held through the capitalisation of RM918,539 from share premium and RM10,568,596 from retained profits;
(ii)
3,152,079 new ordinary shares of RM1 each at an issue price of RM1.19 per share pursuant to the DRP; and
(iii) 2,162,200 new ordinary shares of RM1 each arising from the exercise of options under Employees’ Share Options Scheme (“ESOS”) at an exercise price of RM1.15 per share.
Dividend Reinvestment Plan (“DRP”)
The DRP was established upon approval by the shareholders at an Extraordinary General Meeting held on 8 January 2015. The DRP provide shareholders an option to elect to reinvest their dividend into new ordinary share of RM1.00 each of the Company.
The rationale of the DRP are as follows: (i)
dividends that are reinvested are utilised to fund the continuing business growth and expansion plan, and for working capital of the Group;
(ii) improve liquidity of the Company’s shares traded on the Main Market of Bursa Securities; and (iii) enhance and maximise shareholders’ value via the subscription of new shares where the issue price of a new share shall be at discount and the subscription shall be free from any brokerage fee and other related transaction cost. 18. TREASURY SHARES This amount represents the acquisition cost of treasury shares.
The shareholders of the Company, by a resolution passed at the Annual General Meeting held on 29 June 2015, approved the Company’s plan and mandate to authorise the Directors of the Company to buy back its own shares up to 10% of the existing total issued and paid-up share capital.
During the financial year, the Company repurchased Nil (2014: 2,255,000) of its issued ordinary shares from the open market at an average price of RM Nil (2014: RM1.65) per share for a total consideration of RM Nil (2014: RM3,726,208). The repurchase transactions were financed by internally generated funds. The shares repurchased are being held as treasury shares in accordance with Section 67A of the Companies Act, 1965.
Of the total 77,712,664 issued and fully paid ordinary shares as at 31 December 2015, 3,475,500 are held as treasury shares by the Company, and accordingly the number of outstanding ordinary shares in issue and fully paid as at that date is therefore 74,237,164 ordinary shares of RM1.00 each.
Treasury shares have no rights to voting, dividends and participation in other distribution.
19. REVALUATION RESERVE GROUP
This is in respect of revaluation surplus net of deferred tax arising from the revaluation of the Group’s freehold land, leasehold land, buildings and farm development and is non distributable.
51
PWF CONSOLIDATED BHD. (420049-H)
52 Annual Report 2015
Notes To The Financial Statements 31 December 2015 (Cont’d)
20. ESOS RESERVE GROUP AND COMPANY
Share based compensation pursuant to ESOS granted
2015
2014
RM
RM
1,003,260
-
Transfer to share premium upon exercise of ESOS
(648,660)
-
354,600
-
The ESOS reserve represents the equity-settled share options granted to eligible employees of the Group. The share options reserve is made up of the cumulative value of services received from employees recorded over the vesting period commencing from the grant date of the share options and is reduced by the expiry or exercise of the share options. The salient terms and key assumptions in deriving the fair value of the ESOS are disclosed in Note 41 to the financial statements.
21. RETAINED PROFITS COMPANY
There are no restrictions on the Company to distribute dividends out of its entire retained profits as at the end of reporting period under the single tier tax system.
22. BORROWINGS GROUP 2015 RM Non-current liabilities Secured Finance lease liabilities Term loans
Current liabilities Secured Bank overdrafts Bankers acceptance Finance lease liabilities Term loans
Unsecured Bank overdrafts Bankers acceptance
7,478,914 21,476,530
5,077,809 22,976,563
28,955,444
28,054,372
5,090,594 4,100,063 2,948,566
641,011 1,130,000 2,456,600 2,660,077
12,139,223
6,887,688
7,468,270 49,185,000
10,978,697 48,876,000
56,653,270
59,854,697
68,792,493
66,742,385
The secured borrowings (except for certain finance lease liabilities) of the subsidiaries are secured by way of: (i) (ii)
Legal charges over certain landed properties of certain subsidiaries, and Corporate guarantee of the Company.
2014 RM
PWF CONSOLIDATED BHD. (420049-H) Annual Report 2015
Notes To The Financial Statements 31 December 2015 (Cont’d)
22. BORROWINGS (cont’d)
A summary of the effective interest rates and the maturities of the borrowings are as follows: Average
More than
More than
effective
one year and
two years
interest rate per annum (%)
Within
less than
and less than
More than
Total
one year
two years
five years
five years
RM
RM
RM
RM
RM
2015 Bank overdrafts
7.35 to 8.60
12,558,864
12,558,864
-
-
-
Bankers acceptance
4.33 to 6.02
49,185,000
49,185,000
-
-
-
0.51 to 4.15
12,842,844
4,735,175
4,381,604
3,726,065
-
Finance lease liabilities: Minimum lease payments Finance charges
(1,263,867) 11,578,977
Term loans
5.85 to 7.35
24,425,096
2,948,566
3,148,826
10,621,614
7,706,090
Bank overdrafts
7.60 to 8.60
11,619,708
11,619,708
-
-
-
Bankers acceptance
3.48 to 5.83
50,006,000
50,006,000
-
-
-
2.43 to 4.12
8,315,260
2,866,404
2,648,134
2,800,722
-
2,660,077
2,839,798
9,725,150
10,411,615
2014
Finance lease liabilities: Minimum lease payments Finance charges
(780,851) 7,534,409
Term loans
5.60 to 7.35
25,636,640
53
PWF CONSOLIDATED BHD. (420049-H)
54 Annual Report 2015
Notes To The Financial Statements 31 December 2015 (Cont’d)
23. DEFERRED TAX LIABILITIES GROUP 2015 RM Deferred tax assets: Balance at beginning Recognised in profit or loss Over provision in prior year
-
Balance at end
-
2014 RM 229,000 (150,000) (79,000) -
Deferred tax liabilities: Revaluation surplus Balance at beginning Recognised in profit or loss
13,137,884 (724,363)
13,723,906 (586,022)
Balance at end
12,413,521
13,137,884
6,012,303 (1,094,159) 4,918,144 1,600
6,093,728 968,279 7,062,007 (1,049,704)
4,919,744
6,012,303
17,333,265
19,150,187
Others Balance at beginning Recognised in profit or loss Under/(Over) provision in prior year Balance at end
Deferred tax assets and liabilities are attributable to the following: GROUP 2015 RM Assets Unabsorbed capital allowances Unabsorbed tax losses Unrealised profit on inventories Tax assets Set-off of tax Net tax assets
1,094,483 621,908 1,716,391 (1,716,391) -
2014 RM 833,590 538,089 32,633 1,404,312 (1,404,312) -
Liabilities Investment properties Property, plant and equipment Revaluation surplus
(215,134) (6,421,001) (12,413,521)
(133,675) (7,282,940) (13,137,884)
Tax liabilities Set-off of tax
(19,049,656) 1,716,391
(20,554,499) 1,404,312
Net tax liabilities
(17,333,265)
(19,150,187)
PWF CONSOLIDATED BHD. (420049-H) Annual Report 2015
Notes To The Financial Statements 31 December 2015 (Cont’d)
24. TRADE PAYABLES
The currency profile of trade payables are as follows: GROUP 2015 RM Ringgit Malaysia US Dollar Renminbi
2014 RM
38,009,830 4,621,196 54,020
14,658,245 5,596,004 -
42,685,046
20,254,249
Trade payables are non-interest bearing and are normally settled on 30 to 120 days (2014: 30 to 120 days) terms.
25. OTHER PAYABLES AND ACCRUALS GROUP 2014
2015
2014
RM
RM
RM
RM
Other payables
6,634,495
4,232,182
22,656
31,651
Accruals
3,217,351
3,126,294
338,500
435,000
5,561
6,561
-
-
9,857,407
7,365,037
361,156
466,651
Deposit received
COMPANY
2015
The currency profile of other payables and accruals are as follows: GROUP
COMPANY
2015
2014
2015
2014
RM
RM
RM
RM
Ringgit Malaysia
9,857,407
7,363,413
361,156
466,651
Singapore Dollar
-
1,624
-
-
9,857,407
7,365,037
361,156
466,651
26. REVENUE GROUP
Sales of goods
COMPANY
2015
2014
2015
2014
RM
RM
RM
RM
290,938,775
279,745,172
-
-
Dividend income from subsidiaries
-
-
7,500,000
17,500,000
Management fee
-
-
282,000
240,000
290,938,775
279,745,172
7,782,000
17,740,000
55
PWF CONSOLIDATED BHD. (420049-H)
56 Annual Report 2015
Notes To The Financial Statements 31 December 2015 (Cont’d)
27. OTHER INCOME GROUP
Debt waived by a subsidiary
COMPANY
2015
2014
2015
2014
RM
RM
RM
RM
-
-
-
502,942
Dividend income from shares quoted: - In Malaysia
20,330
-
-
-
- Outside Malaysia
57,689
48,096
-
-
154,852
334,228
-
-
26,000
18,000
-
-
Doubtful debts recovered Fair value gain on derivative financial instruments Fair value gain on investment properties Gain on disposal of property, plant and equipment
2,377,020
173,500
-
-
67,143
162,749
-
-
Gain on disposal of investment securities
24,380
217,868
-
-
Interest income
33,377
179,538
-
-
6,905
-
-
-
Realised gain on foreign exchange Rental income
107,682
193,243
-
-
Others
196,656
160,598
-
-
3,072,034
1,487,820
-
502,942
28. FINANCE COSTS GROUP 2015 RM Bank overdrafts Bankers acceptance Finance lease liabilities Promissory note Term loans
2014 RM
1,035,185 3,268,735 632,712 1,489,823
554,959 2,696,319 555,275 38,555 1,513,852
6,426,455
5,358,960
29. PROFIT BEFORE TAXATION
This is arrived at: GROUP 2015 RM
2014 RM
COMPANY 2015 RM
2014 RM
After charging: Audit fee - statutory audit - other services Depreciation Directors’ fee of non-executive directors
145,000 9,000 12,142,564 108,000
139,000 3,000 10,391,060 108,000
28,000 9,000 108,000
25,000 3,000 108,000
PWF CONSOLIDATED BHD. (420049-H) Annual Report 2015
Notes To The Financial Statements 31 December 2015 (Cont’d)
29. PROFIT BEFORE TAXATION (cont'd) GROUP 2015 RM Directors’ emoluments of non-executive directors - current year - under provision in prior year Fair value adjustment on investment securities Impairment loss on - non-current assets held for sale - receivables Interest expense Investment in a subsidiary written off Loss on disposal of - investment properties - property, plant and equipment Loss on foreign exchange - realised - unrealised Property, plant and equipment written off Rental of hostel Rental of land and building Share-based compensation compensation pursuant to ESOS granted * Staff costs
2014 RM
COMPANY 2015 RM
2014 RM
29,500 8,000 144,020
25,500 369,670
29,500 8,000 -
25,500 -
748,268 6,426,455 -
168,280 1,015,897 5,358,960 -
-
500,000
602,365 -
929,255 208,211
-
-
115,695 2,744 9,760 275
32,221 363 39,000 5,760 550
-
-
1,003,260 18,936,888
16,823,097
768,660 85,000
85,000
154,852
334,228
-
502,942 -
57,689 20,330 -
48,096 -
7,500,000
17,500,000
26,000 2,377,020 24,380 67,143 33,377 6,905 107,682
18,000 173,500 217,868 162,749 179,538 193,243
282,000 -
240,000 -
17,347,005 1,523,490 66,393
15,523,859 1,189,336 109,902
85,000 -
85,000 -
18,936,888
16,823,097
85,000
85,000
And crediting: Debt waived by a subsidiary Doubtful debts recovered Dividend income from - shares quoted outside Malaysia - shares quoted in Malaysia - unquoted subsidiaries Fair value adjustment on - derivative financial instruments - investment properties Gain on disposal of investment securities Gain on disposal of property, plant and equipment Interest income Management fee Realised gain on foreign exchange Rental income * Staff costs - Salaries, allowances and bonus - EPF - SOCSO
57
PWF CONSOLIDATED BHD. (420049-H)
58 Annual Report 2015
Notes To The Financial Statements 31 December 2015 (Cont’d)
29. PROFIT BEFORE TAXATION (cont'd)
Included in the staff costs of the Group and of the Company are the aggregate amount of remuneration received and receivable by directors of the Company and its subsidiaries as shown below: GROUP 2015 RM Directors’ emoluments Executive directors of the Company - Salaries, allowances and bonus - EPF Non-executive directors of the Company Allowances Directors’ fee Executive directors of the Company
Benefits-in-kind Executive directors of the Company
2014 RM
COMPANY 2015 RM
2014 RM
2,459,000 316,800
1,965,000 237,760
7,000 -
7,000 -
-
60,000
-
-
78,000
78,000
78,000
78,000
2,853,800
2,340,760
85,000
85,000
45,400
45,400
-
-
2015
2014
2015
2014
RM
RM
RM
RM
30. TAXATION GROUP
COMPANY
Malaysian income tax: Based on results for the financial year - Current tax - Deferred tax relating to origination and reversal of temporary differences - Real property gains tax
(5,150,581)
(5,042,499)
(16,000)
-
1,818,522
(532,257)
-
-
-
(3,081)
-
-
(3,332,059)
(5,577,837)
(16,000)
- Current tax
(24,629)
(146,042)
(5,281)
- Deferred tax
(1,600)
970,704
(26,229)
824,662
-
(Under)/Over provision in prior years
(3,358,288)
(4,753,175)
-
-
(5,281)
-
(21,281)
-
PWF CONSOLIDATED BHD. (420049-H) Annual Report 2015
Notes To The Financial Statements 31 December 2015 (Cont’d)
30. TAXATION (cont'd) The reconciliation of income tax expense of the Group and of the Company is as follows: GROUP
Profit before taxation Income tax at Malaysian statutory tax rate of 25%
COMPANY
2015
2014
2015
2014
RM
RM
RM
RM
9,364,695
16,413,625
6,343,527
17,191,050
(2,341,174)
(4,103,406)
(1,585,882)
(4,297,763)
1,875,000
4,375,000
Effects of: - Income not subject to tax - Expenses not deductible for tax purposes - Utilisation of previously unrecognised deferred tax assets
662,769
136,182
(3,638,619)
(2,203,950)
737,483
-
(77,237) -
- Movement of deferred tax assets not recognised
523,119
(29,577)
-
-
724,363
586,022
-
-
- Real property gains tax
-
(3,081)
-
-
- Changes in tax rate *
-
39,973
-
-
(3,332,059)
(5,577,837)
(26,229)
824,662
(3,358,288) *
(4,753,175)
(16,000)
-
(5,281)
-
(21,281)
-
The corporate tax rate will be reduced to 24% for the year of assessment 2016 as announced in the Malaysian Budget 2014. Consequently, deferred tax liabilities are measured using this tax rate.
The deferred tax assets not recognised as at the end of the reporting period prior to set off are in respect of the following: GROUP
-
- Annual crystallisation of deferred tax on revaluation
(Under)/Over provision in prior years
(305,118)
COMPANY
2015
2014
2015
2014
RM
RM
RM
RM
Unabsorbed tax losses
(7,853,254)
(8,282,852)
-
-
Unabsorbed capital allowances
(6,603,451)
(6,977,500)
-
-
(14,456,705)
(15,260,352)
-
-
The unabsorbed tax losses and capital allowances available to be carried forward for set-off against future assessable income of an amount sufficient for the tax losses and capital allowances to be utilised are estimated at RM7,853,000 (2014: RM8,283,000) and RM10,981,000 (2014: RM6,977,000) respectively.
59
PWF CONSOLIDATED BHD. (420049-H)
60 Annual Report 2015
Notes To The Financial Statements 31 December 2015 (Cont’d)
31. EARNINGS PER SHARE 31.1 Basic
Basic earnings per share is calculated by dividing the net profit attributable to owners of the parent for the year by the weighted average number of ordinary shares in issue during the financial year excluding treasury shares as follow: GROUP (Restated)
Profit attributable to owners of the parent (RM)
2015
2014
6,006,407
11,660,450
68,922,905
71,177,905 *
Weighted average number of ordinary shares in issue Issued shares at 1 January Effects of treasury shares purchased during the year Effects of shares issued pertaining to exercise of ESOS and DRP Weighted average number of shares at 31 December Basic earnings per share (Sen)
-
(632,686)
2,293,707
-
71,216,612
70,545,219
8.43
16.53 *
31.2 Diluted
The calculation of diluted earnings per share is calculated by dividing the profit attributable to owners of the parent to the weighted average number of shares outstanding after adjusting for the effects of all dilutive potential ordinary shares as follows: GROUP (Restated)
Profit attributable to owners of the parent (RM) Weighted average number of shares as above Adjustment for dilutive effect of ESOS Weighted average number of shares assumed to be in issued at 31 December Diluted earnings per share (Sen) *
2015
2014
6,006,407
11,660,450
71,216,612
70,545,219 *
427,162
-
71,643,774
70,545,219
8.38
16.53 *
As the bonus issue during the financial year ended 31 December 2015 was without any consideration, it is treated as if it had occurred before the beginning of 2014, the earliest period presented. Accordingly, the weighted average number of ordinary shares have been restated.
PWF CONSOLIDATED BHD. (420049-H) Annual Report 2015
Notes To The Financial Statements 31 December 2015 (Cont’d)
32. DIVIDEND
Interim single tier dividend of 8 sen per share in respect of the financial year ended 31 December 2014:
2015
2014
RM
RM
5,513,831
-
33. SEGMENTAL INFORMATION
The Group has only one reportable segment i.e. integrated livestock farming. This business segment is involved in the manufacture and sale of animal feeds, breeding of parent, layer and broiler stock and sale of broilers and eggs. Since the Group has only one business segment, no operating segmental information is prepared.
No geographical segment information is presented as the Group’s activities and customers are all based in Malaysia. As at the end of the reporting period, the Group does not have any major customer with revenue of 10 percent or more of the Group’s total revenue.
The management determines business segments based on the reports reviewed and used by the directors for strategic decision making and resources allocation.
34. RELATED PARTY DISCLOSURES (i)
Identity of related parties
For the purpose of these financial statements, parties are considered to be related to the Group and to the Company, if the Company has the ability, directly or indirectly, to control the party or exercise significant influence over the party in making any financial and operating decisions, or vice versa, or where the Group and the Company and the party are subject to common control or common significant influence. Related parties may be individuals or other entities.
Related parties also include key management personnel defined as those persons having authority and responsibility for planning, directing and controlling the activities of the Group and of the Company either directly or indirectly.
The Group and the Company has related party relationship with its related companies and key management personnel. Related companies are related by virtue of having the same holding company. GROUP
(ii)
COMPANY
2015
2014
2015
2014
RM
RM
RM
RM
Related party transactions Debt waived by a subsidiary
-
-
-
502,942
Dividend received from subsidiaries
-
-
7,500,000
17,500,000
Management fees from subsidiaries
-
-
282,000
240,000
61
PWF CONSOLIDATED BHD. (420049-H)
62 Annual Report 2015
Notes To The Financial Statements 31 December 2015 (Cont’d)
34. RELATED PARTY DISCLOSURES (cont'd) (iii) Compensation of key management personnel
The remuneration of directors and other members of key management during the financial year are as follows: GROUP
Salaries and other short- term employee benefits
COMPANY
2015
2014
2015
2014
RM
RM
RM
RM
3,044,700
2,519,660
230,500
218,500
Key management personnel are those persons including directors having authority and responsibility for planning, directing and controlling the activities of the Group and of the Company, directly or indirectly.
35. CONTINGENT LIABILITIES COMPANY 2015
2014
Limit
Utilised
Limit
Utilised
RM
RM
RM
RM
Unsecured contingent liabilities in respect of: Corporate guarantees extended to banks for credit facilities granted to subsidiaries 141,214,974 89,819,136 148,130,866 89,647,288 The corporate guarantees do not have a determinable effect on the terms of the credit facilities due to the financial institutions requiring parent guarantee as a pre-condition for approving the credit facilities granted to the subsidiaries. The actual terms of the credit facilities are likely to be the best indicator of “at market” terms and hence the fair value of the credit facilities are equal to the credit facilities amount received by the subsidiaries. As such, there is no value on the corporate guarantee to be recognised in the financial statements. 36. CAPITAL COMMITMENT GROUP 2015
2014
RM
RM
Property, plant and equipment - Authorised but not contracted for - Contracted but not provided for
26,353,095
2,749,000
1,065,837
14,115,751
27,418,932
16,864,751
715,000
6,924,493
Analysis of capital commitment: Freehold land Shoplot Farm development Plant and machinery Equipment, furniture and fittings Motor vehicles
39,940
159,760
12,587,095
2,711,892
400,000
1,467,720
13,306,000
4,888,162
370,897
712,724
27,418,932
16,864,751
PWF CONSOLIDATED BHD. (420049-H) Annual Report 2015
Notes To The Financial Statements 31 December 2015 (Cont’d)
37. CATEGORIES OF FINANCIAL INSTRUMENTS
The table below provides an analysis of financial instruments categorised as loans and receivables (“L&R”), other liabilities measured at amortised cost (“FL”) and fair value through profit or loss (“FVTPL”). Carrying amount RM
L&R RM
FL RM
FVTPL RM
2015 GROUP Financial assets 22,374,894
22,374,894
-
-
Other receivables and refundable deposits
Trade receivables
6,875,953
6,875,953
-
-
Investment securities
3,282,509
-
-
3,282,509 26,000
Derivative financial assets
26,000
-
-
Fixed deposit with a licensed bank
20,000
20,000
-
-
5,955,218
5,955,218
-
-
38,534,574
35,226,065
-
3,308,509
Borrowings
97,747,937
-
97,747,937
-
Trade payables
42,685,046
-
42,685,046
-
9,857,407
-
9,857,407
-
150,290,390
-
150,290,390
-
5,246
5,246
-
-
13,905,308
13,905,308
-
-
58,109
58,109
-
-
13,968,663
13,968,663
-
-
361,156
-
361,156
-
Cash and bank balances
Financial liabilities
Other payables and accruals
COMPANY Financial assets Other receivables Amount due from subsidiaries Cash and bank balances
Financial liabilities Other payables and accruals
63
PWF CONSOLIDATED BHD. (420049-H)
64 Annual Report 2015
Notes To The Financial Statements 31 December 2015 (Cont’d)
37. CATEGORIES OF FINANCIAL INSTRUMENTS (cont'd) Carrying amount RM
L&R RM
FL RM
FVTPL RM
20,488,880
20,488,880
-
-
903,548
903,548
-
-
2014 GROUP Financial assets Trade receivables Other receivables and refundable deposits Investment securities
2,707,518
-
-
2,707,518
18,000
-
-
18,000
Fixed deposit with a licensed bank
4,672,195
4,672,195
-
-
Cash and bank balances
2,840,556
2,840,556
-
-
31,630,697
28,905,179
-
2,725,518
Derivative financial assets
Financial liabilities Borrowings
94,796,757
-
94,796,757
-
Trade payables
20,254,249
-
20,254,249
-
7,365,037
-
7,365,037
-
122,416,043
-
122,416,043
-
6,208,004
6,208,004
-
-
57,443
57,443
-
-
6,265,447
6,265,447
-
-
466,651
-
466,651
-
Other payables and accruals
COMPANY Financial assets Amount due from subsidiaries Cash and bank balances
Financial liabilities Other payables and accruals 38. FINANCIAL RISK MANAGEMENT
The Group and the Company are exposed to a variety of financial risks arising from their operations and the use of financial instruments. The key financial risks include credit risk, liquidity risk, interest rate risk and foreign exchange risk. The Group operates within clearly defined guidelines that are approved by the Board and the Group’s policy is not to engage in speculative activities. 38.1 Credit risk Credit risk refers to the risk that the counterparty will default on its contractual obligations resulting in financial loss to the Group and the Company. The Group’s exposure to credit risk arises principally from its trade receivables. The Company’s exposure to credit risk arises principally from advances to its subsidiaries and financial guarantees given.
PWF CONSOLIDATED BHD. (420049-H) Annual Report 2015
Notes To The Financial Statements 31 December 2015 (Cont’d)
38. FINANCIAL RISK MANAGEMENT (cont'd) 38.1 Credit risk (cont'd) 38.1.1 Trade receivables
The Group extends credit terms to its customers that range between 1 to 60 days. In deciding whether credit shall be extended, the Group will take into consideration factors such as the relationship with the customer, its payment history and credit worthiness. If deemed necessary, the Group will request for collaterals from its customers to minimise its exposure to credit risk. New customers are subject to credit verification procedures before deciding whether credit shall be extended to them.
The Group uses ageing analysis to monitor the credit quality of its receivables. Any receivables having significant balances past due more than its stipulated credit terms are monitored individually.
The maximum exposure to credit risk arising from trade receivables is represented by the carrying amounts in the statement of financial position.
GROUP
The ageing of trade receivables and accumulated impairment loss of the Group is as follows:
Gross RM
Individual Impairment loss RM
Net RM
15,879,718
-
15,879,718
1 to 30 days past due
2,876,513
-
2,876,513
31 to 60 days past due
2,251,761
-
2,251,761
Past due more than 60 days
8,273,320
(6,906,418)
1,366,902
13,401,594
(6,906,418)
6,495,176
29,281,312
(6,906,418)
22,374,894
2015 Not past due
2014 Not past due
14,720,704
-
14,720,704
1 to 30 days past due
2,463,256
-
2,463,256
31 to 60 days past due
1,342,989
-
1,342,989
Past due more than 60 days
8,990,420
(7,028,489)
1,961,931
12,796,665
(7,028,489)
5,768,176
27,517,369
(7,028,489)
20,488,880
Trade receivables that are neither past due nor impaired are creditworthy customers with good payment record with the Group.
Total impairment loss relates to customers that have financial difficulties and have defaulted in repayment.
Certain trade receivables have exceeded the credit terms allowed. However no impairment loss is required as these customers have no recent history of default.
The Group has significant concentration of credit risks in the form of outstanding balance due from 1 (2014: 1) customer representing 18% (2014: 19%) of total receivables.
65
PWF CONSOLIDATED BHD. (420049-H)
66 Annual Report 2015
Notes To The Financial Statements 31 December 2015 (Cont’d)
38. FINANCIAL RISK MANAGEMENT (cont'd) 38.1 Credit risk (cont'd) 38.1.2 Intercompany advances
The Company provides advances to its subsidiaries. The Company monitors the results of the subsidiaries regularly.
The maximum exposure to credit risk is represented by their carrying amount in the statement of financial position.
As at the end of the reporting period, there was no indication that the advances to its subsidiaries are not recoverable. The Company does not specifically monitor the ageing of the advances to its subsidiaries since its terms are repayable on demand.
38.1.3 Financial guarantees
The Company provides unsecured financial guarantees to banks in respect of banking facilities granted to certain subsidiaries. The maximum exposure to credit risk is as disclosed in Note 35, representing the outstanding facilities of the said subsidiaries as at the reporting date. The Company monitors on an ongoing basis the results of the subsidiaries and repayments made by the subsidiaries. As at the end of the reporting period, there was no indication that the subsidiaries would default on repayment.
38.2 Liquidity risk
Liquidity risk is the risk the Group will encounter difficulty in meeting financial obligations due to shortage of funds. In managing its exposure to liquidity risk, the Group maintains a level of cash and cash equivalents and banking facilities deemed adequate by the management to ensure, as far as possible, that it will have sufficient liquidity to meet its liabilities as and when they fall due.
The table below summarises the maturity profile of the Group’s and the Company’s financial liabilities as at the end of the reporting period based on the undiscounted contractual payments:
Carrying amount RM
Contractual cash flows RM
Within one year RM
More than one year and less than two years RM
More than two years and less than five years RM
More than five years RM
Interest bearing borrowings
97,747,937
105,103,177
70,906,683
8,808,248
16,837,127
8,551,119
Trade payables
42,685,046
42,685,046
42,685,046
-
-
-
9,857,407
9,857,407
9,857,407
-
-
-
150,290,390
157,645,630
123,449,136
8,808,248
16,837,127
8,551,119
361,156
361,156
361,156
-
-
-
2015 GROUP
Other payables and accruals
COMPANY Other payables and accruals
PWF CONSOLIDATED BHD. (420049-H) Annual Report 2015
Notes To The Financial Statements 31 December 2015 (Cont’d)
38. FINANCIAL RISK MANAGEMENT (cont'd) 38.2 Liquidity risk (cont'd)
Carrying amount RM
Contractual cash flows RM
Within one year RM
More than one year and less than two years RM
More than two years and less than five years RM
More than five years RM
Interest bearing borrowings
94,796,757
102,628,775
68,706,500
6,862,522
15,443,866
11,615,887
Trade payables
20,254,249
20,254,249
20,254,249
-
-
-
7,365,037
7,365,037
7,365,037
-
-
-
122,416,043
130,248,061
96,325,786
6,862,522
15,443,866
11,615,887
466,651
466,651
466,651
-
-
-
2014 GROUP
Other payables and accruals
COMPANY Other payables and accruals 38.3 Interest rate risk
The Group’s fixed rate borrowings are exposed to a risk of change in their fair value due to changes in interest rates. The Group’s floating rate borrowings are exposed to a risk of change in cash flows due to changes in interest rates.
The interest rate profile of the Group’s interest-bearing financial instruments based on the carrying amount as at the end of the reporting period is as follows: GROUP 2015
2014
RM
RM
Fixed rate instruments Financial assets Financial liabilities
20,000
4,672,195
11,578,977
7,534,409
86,168,960
87,262,348
Floating rate instruments Financial liabilities
Fair value sensitivity analysis for fixed rate instruments The Group does not account for any fixed rate financial assets and liabilities at fair value through profit or loss, and the Group does not designate derivatives as hedging instruments under a fair value hedge accounting model. Therefore, a change in interest rates at the end of the reporting period would not affect profit or loss.
67
PWF CONSOLIDATED BHD. (420049-H)
68 Annual Report 2015
Notes To The Financial Statements 31 December 2015 (Cont’d)
38. FINANCIAL RISK MANAGEMENT (cont'd) 38.3 Interest rate risk (cont'd)
Cash flow sensitivity analysis for variable rate instruments
An increase of 25 (2014: 25) basis point would have decreased profit before taxation by the amount shown below and a corresponding decrease would have an equal but opposite effect. This analysis assumes that all other variables remain constant. GROUP
Reduce in profit before taxation
2015
2014
RM
RM
(250,098)
(189,832)
38.4 Foreign currency risk
The objectives of the Group’s foreign exchange policy are to allow the Group to manage exposures that arise from trading activities effectively within a framework of controls that does not expose the Group to unnecessary foreign exchange risks.
The Group is exposed to foreign currency risk on its investment in quoted shares and purchases of raw materials which are denominated in currencies other than the functional currency of the Group. The currencies giving rise to this risk is primarily the Hong Kong Dollar (“HKD”) and US Dollar (“USD”).
The Group’s exposure to the US Dollar is hedged using foreign currency forward contracts as disclosed in Note 13 to the financial statements.
The Group’s exposure to foreign currency risk based on carrying amounts as at the end of the reporting period is as follows: 2015
2014
RM
RM
2,723,209
1,617,518
Denominated in HKD: - Investment securities Denominated in USD: - Cash and bank balances
-
2,138
- Trade payables
(4,621,196)
(5,596,004)
Net exposure
(1,897,987)
(3,976,348)
Sensitivity analysis for foreign currency risk
The following table demonstrates the sensitivity to a reasonably possible change in the foreign currencies exchange rates against Ringgit Malaysia, with all other variables held constant, on the Group’s profit before taxation. A 10% (2014: 10%) strengthening of the RM against the following currencies at the end of the reporting period would have the following effects to the profit before taxation by the amount shown below and a corresponding weakening would have an equal but opposite effect.
2015
2014
RM
RM
HKD
(272,321)
(161,752)
USD
462,120
559,387
Increase in profit before taxation
189,799
397,635
PWF CONSOLIDATED BHD. (420049-H) Annual Report 2015
Notes To The Financial Statements 31 December 2015 (Cont’d)
39. CAPITAL MANAGEMENT
The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern and to maintain an optimal capital structure so as to maximise shareholder value. The Directors monitor and determine to maintain an optimal gearing ratio that complies with debt covenants and regulatory requirements.
A licensed bank in which a subsidiary of the Group obtains credit facilities has imposed debt covenants that require the Group to ensure its gearing ratio does not exceed 1.0 at all times and require the subsidiary to maintain a minimum net tangible asset position of RM50,000,000 or more. As at the end of the reporting period, these debt covenants have been met by the Group and by the said subsidiary.
As at the end of the financial period, the gearing ratio of the Group are as follows: GROUP
Total borrowings Less : Fixed deposits with a licensed banks Cash and bank balances Net debt Total equity Gearing ratio 40. FAIR VALUE OF FINANCIAL INSTRUMENTS
2015
2014
RM
RM
97,747,937
94,796,757
(20,000)
(4,672,195)
(5,955,218)
(2,840,556)
91,772,719
87,284,006
223,854,780
216,121,440
0.41
0.40
The carrying amounts of financial assets and financial liabilities of the Group and of the Company (other than those disclosed below) as at the end of the reporting period approximate their fair values, either due to their short-term nature or that they are floating rate instruments that are re-priced to market interest rates on or near the end of the reporting period. The carrying amounts of the non-current portion of finance lease liabilities are reasonable approximation of fair values due to the insignificant impact of discounting. 40.1 Fair value hierarchy
The following table provides an analysis of financial instruments that are measured subsequent to initial recognition at fair value, grouped into Levels 1 to 3 based on the degree to which the fair value is observable (refer to Note 2.2 to the financial statements for definition of Level 1 to 3 fair value hierarchy). Level 1
Level 2
Level 3
Total
RM
RM
RM
RM
GROUP 2015 Investment securities Derivative financial assets
3,282,509
-
-
3,282,509
-
26,000
-
26,000
2014 Investment securities Derivative financial assets
2,707,518
-
-
2,707,518
-
18,000
-
18,000
The investment securities which are quoted in an active market are carried at fair value by reference to their quoted closing bid price at the end of the reporting period. Fair value of the derivative financial assets is estimated by discounting the difference between the contractual forward price and the current forward price for the residual maturity of the current contract using a risk-free interest rate.
69
PWF CONSOLIDATED BHD. (420049-H)
70 Annual Report 2015
Notes To The Financial Statements 31 December 2015 (Cont’d)
41. EMPLOYEES’ SHARE OPTIONS SCHEME (“ESOS”)
At an Extraordinary General Meeting held on 4 November 2015, the Company’s shareholders approved the establishment of ESOS for the eligible Directors and employees of the Group. The ESOS came into effect on 4 December 2015 and will be in force for a period of five (5) years expiring on 5 November 2020.
The salient features of the ESOS are as follows:
(a)
The total number of new ordinary shares which are available to be issued under the ESOS shall not exceed fifteen percent (15%) of the total issued and fully paid-up share capital of the Company at any time throughout the duration of the ESOS.
(b)
Any employee or Director of any company comprised in the Group shall be eligible to participate in the ESOS if, as at the date of offer, the employee is at least eighteen (18) years of age or above; and is employed on a continuous full-time basis and must be a confirmed employee.
(c)
The option price shall be determined at a discount of not more than 10% from the weighted average market quotation of the Company’s shares as quoted on Bursa Malaysia Securities Berhad for the five (5) market days immediately preceding the date of the offer or at par, whichever is higher.
(d)
The shares under options shall remain unissued until the options are exercised and shall, on allotment, rank pari passu in all respects with the existing shares of the Company at the time of allotment save that they will not entitle the holders thereof to receive any rights and bonus issues announced or to any dividend or other distribution declared to the shareholders of the Company as at a date which precedes the date of the exercise of the options.
(e)
The Board of Directors has the absolute discretion, without the approval of the Company’s shareholders in the general meeting to extend the duration of the ESOS for up to further five (5) years.
The details of the outstanding share options for ordinary shares of RM1 each granted to the Group’s employees and directors and its related exercise price are as follows: |------------------------------------------------------ Number of Share Option ------------------------------------------------------|
Exercise
Balance
Granted
Grant
price
at
and
date
RM
1.1.15
accepted
Exercised
Lapsed
31.12.15
4.12.15
1.15
-
6,492,200
(2,162,200)
-
4,330,000
at
The fair value of the share options granted was estimated at the grant date using Trinomial Tree model, taking into account the terms and conditions upon which the instruments were granted with the following inputs: Weighted average share price (RM) Weighted average exercise price (RM) Expected volatility (%)
Balance
1.27 1.15 30.00
Risk-free interest rate (% p.a.)
3.66
Dividend yield (%)
6.30
Expected life of option (years)
4.92
The expected life of the options is based on historical data and is not necessarily indicative of exercise patterns that may occur. The expected volatility reflects the assumption that the historical volatility over a period similar to the life of the options is indicative of future trends, which may not necessarily be the actual outcome.
42. EVENT AFTER THE REPORTING PERIOD
Investment in a wholly-owned subsidiary
The Company had on 18 February 2016 acquired 2 ordinary sharers of RM1.00 each in PWF Timberhill Sdn. Bhd. (“PWF Timberhill”), representing 100% of the total issued and paid-up share capital of PWF Timberhill.
Subsequent to the acquisition, the Company subscribed to an additional 2,999,998 ordinary shares of RM1.00 each in PWF Timberhill for a cash consideration of RM2,999,998.
PWF CONSOLIDATED BHD. (420049-H) Annual Report 2015
Supplementary Information
DISCLOSURE OF REALISED AND UNREALISED PROFITS Bursa Malaysia Securities Berhad has, on 25 March 2010 and 20 December 2010, issued directives requiring all listed corporations to disclose the breakdown of retained profits or accumulated losses into realised and unrealised on group and company basis, as the case may be, in quarterly reports and annual audited financial statements. The breakdown of retained profits as at the end of the reporting period has been prepared by the Directors in accordance with the directives from Bursa Malaysia Securities Berhad stated above and Guidance on Special Matter No. 1 issued on 20 December 2010 by the Malaysian Institute of Accountants are as follows: GROUP
COMPANY
2015
2014
2015
2014
RM
RM
RM
RM
9,432,272
19,192,453
-
-
9,432,272
19,192,453
-
-
9,432,272
19,192,453
Total retained profits of the Company and its subsidiaries : - Realised - Unrealised
Less : Consolidation adjustments Total retained profits as per statements of financial position
97,539,775
104,027,782
(13,050,902)
(16,313,176)
84,488,873
87,714,606
(18,577,722)
(14,391,354)
65,911,151
73,323,252
71
PWF CONSOLIDATED BHD. (420049-H)
72 Annual Report 2015
Shareholdings Statistics as at 5 April 2016
Authorised Share Capital Issued and fully paid-up Share Capital Class of Shares Voting Rights
: RM100,000,000.00 : RM77,778,664 (including 3,475,500 treasury shares) : Ordinary shares of RM1.00 each : One vote per RM1.00 share
LIST OF SUBSTANTIAL SHAREHOLDERS OF THE COMPANY Name
Direct
%
Deemed
%
Dato’ Siah Gim Eng
13,528,235
18.21
25,878,272
(i)
34.83
Datin Law Hooi Lean
11,384,613
15.32
28,021,894
(ii)
37.72
SL Gold Sdn Bhd
14,493,659
19.51
-
6,140,439
8.26
-
Tropical TC Boy Sdn.Bhd.
-
-
Dato’ Seri Tan Ah Bah @ Tan Boon Pin
-
-
Tropical Consolidated Corporation Sdn. Bhd.
-
6,140,439
(iii)
8.26
6,140,439
(iv)
8.26
Notes: (i) (ii) (iii) (iv)
Deemed interested by virtue of the shareholdings held by his wife and his major shareholdings in SL Gold Sdn Bhd Deemed interested by virtue of the shareholdings held by her husband and her major shareholdings in SL Gold Sdn Bhd Deemed interested by virtue of its major shareholdings in Tropical Consolidated Corporation (“TCC”) Deemed interested by virtue of his major shareholdings in Tropical TC Boy Sdn. Bhd., a major shareholder in TCC and the shareholdings of his son and siblings in TCC
DIRECTORS’ SHAREHOLDINGS IN THE COMPANY Name
Direct
%
Indirect
%
-
-
-
-
Dato’ Siah Gim Eng
13,528,235
18.21
25,878,272 (i)
34.83
Datin Law Hooi Lean
11,384,613
15.32
28,021,894 (ii)
37.72
-
-
-
-
640
0.00
-
-
Dato’ Zuraidi Bin Rahim
Zainal Bin Pandak Ong Kim Nam Notes: (i) (ii)
Deemed interested by virtue of the shareholdings held by his wife and his major shareholdings in SL Gold Sdn Bhd Deemed interested by virtue of the shareholdings held by her husband and her major shareholdings in SL Gold Sdn Bhd
PWF CONSOLIDATED BHD. (420049-H) Annual Report 2015
Shareholdings Statistics as at 5 April 2016 (Cont’d)
DISTRIBUTION SCHEDULE OF SHAREHOLDINGS No. of Holders
Total Holdings
%
261
Less than 100
13,489
0.02
109
100 to 1,000 shares
58,858
0.08
1,031 390 43 6 1,840
Size of Shareholdings
1,001 to 10,000 shares
4,036,811
5.43
10,001 to 100,000 shares
10,976,725
14.77
100,001 to less than 5% of issued shares
16,452,554
22.14
5% and above of issued shares
42,764,727
57.56
TOTAL
74,303,164
100.00
LIST OF THIRTY (30) LARGEST SHAREHOLDERS
Name
No. of Shares Held
%
14,493,659
19.51
1.
SL Gold Sdn. Bhd.
2.
Tropical Consolidated Corporation Sdn. Bhd.
6,140,439
8.26
3.
Siah Gim Eng
6,079,278
8.18
4.
Law Hooi Lean
5,652,704
7.61
5.
Law Hooi Lean
5,386,524
7.25
6.
Siah Gim Eng
5,021,123
6.75
7.
Siah Gim Eng
2,436,834
3.28
8.
Ang Ee Tan
1,649,096
2.22
9.
Perbadanan Pembangunan Pertanian Negeri Perak
1,566,866
2.11
10.
Tohtonku Sdn Berhad
1,076,000
1.45
11.
Tan Teck Peng
682.000
0.92
12.
Bank Pertanian Malaysia Berhad
572,601
0.77
13.
Mayban Nominees (Tempatan) Sdn. Bhd. Pledged Securities Account For Lee Chong Gee
560,166
0.75
14.
Ng Ah Boon
481,000
0.65
15.
Lee Siew Hoon
450,640
0.61
16.
Yeoh Phek Leng
444,400
0.60
17.
Seah Mok Khoon
425,000
0.57
18.
Follow Me Industries Sdn Bhd
400,000
0.54
19.
Public Nominees (Tempatan) Sdn Bhd Pledged Securities Account for Koh Chow Hoong (E-BPJ)
390,000
0.52
20.
Lim Kian Huat
353,140
0.48
21.
Law Hooi Lean
345,385
0.46
22.
Tan Moh Kim
333,000
0.45
23.
Tan Jin Tuan
306,000
0.41
24.
Liow Meng Kiong
285,000
0.38
25.
Kee Pui Wun
277,182
0.37
26.
B.M. Lean Huat Chan Sdn Bhd
204,600
0.28
27.
Affin Hwang Nominees (Asing) Sdn Bhd Philip Securities Pte Ltd For Mitchell William David
200,217
0.27
28.
Alliancegroup Nominees (Tempatan) Sdn. Bhd. Pledged Securities Account For Goh Juai Hian (100378)
192,005
0.26
29.
Low Teong Keong
180,000
0.24
30.
Goh Ah Kow @ Goh Bak Cheng
173,000
0.23
73
PWF CONSOLIDATED BHD. (420049-H)
74 Annual Report 2015
Notice Of Annual General Meeting
NOTICE IS HEREBY GIVEN that the 19th Annual General Meeting (“AGM”) of the Company will be held at Impiana Room, Penang Golf Resort, No. 1687, Jalan Bertam, 13200 Kepala Batas, Seberang Prai Utara, Penang on 27 May 2016 at 10.00 a.m. for the following purposes: ORDINARY BUSINESS 1. 2.
To receive the Audited Financial Statements for the financial year ended 31 December 2015. To re-elect the following Directors who retire in accordance with the Company’s Articles of Association, and being eligible have offered themselves for re-election: Article 95 (a) Datin Law Hooi Lean
(Resolution 1)
Article 102 (a) Dato’ Zuraidi Bin Rahim
(Resolution 2)
3.
To approve the Directors’ Fees of RM186,000 for the financial year ended 31 December 2015.
(Resolution 3)
4.
To approve the Directors’ Fees of RM250,800 for the financial year ending 31 December 2016.
(Resolution 4)
5.
To re-appoint Messrs. Grant Thornton as Auditors of the Company to hold office until the conclusion of the next annual general meeting and to authorise the Directors to fix their remuneration. (Resolution 5)
SPECIAL BUSINESS To consider and if thought fit, to pass the following Ordinary Resolutions: 6.
AUTHORITY TO ISSUE SHARES AND ALLOT SHARES PURSUANT TO SECTION 132D OF THE COMPANIES ACT 1965 (“the Act”)
“THAT, subject always to the Act, the Main Market Listing Requirements of Bursa Malaysia Securities Berhad (“Bursa Securities”), the Company’s Articles of Association and approvals of any relevant governmental and/or regulatory authorities, where such approval is required, the Directors be and are hereby empowered pursuant to Section 132D of the Act, to issue and allot shares in the capital of the Company, at any time upon such terms and conditions and for such purposes and to such person(s) whomsoever as the Directors may in their absolute discretion deem fit and expedient in the interest of the Company, provided that the aggregate number of the shares issued pursuant to this resolution does not exceed ten (10) per centum of the total issued share capital of the Company for the time being and THAT the Directors be and are also empowered to obtain the approval from Bursa Securities for the listing of and quotation for the additional shares so issued and THAT such authority shall continue in force until the conclusion of the next AGM of the Company.” (Resolution 6)
7. PROPOSED RENEWAL OF THE AUTHORITY FOR THE COMPANY TO PURCHASE ITS OWN SHARES IN ACCORDANCE WITH SECTION 67A OF THE COMPANIES ACT, 1965
“THAT, subject always to the provisions of the Act, rules, regulations and orders made pursuant to the Act, provisions of the Company’s Memorandum and Articles of Association of the Company, Bursa Securities’ Main Market Listing Requirements and approvals of any relevant governmental and/or regulatory authorities, where such approval is required, the Directors be and are hereby authorised to utilise an amount not exceeding the Company’s aggregate retained profits and/or share premium account, to purchase such number of ordinary shares of the Company provided the ordinary shares so purchased shall [in aggregate with the treasury shares as defined under Section 67A of the Act (“Treasury Shares”) then still held by the Company] not exceed ten per centum (10%) of the total issued and paid-up share capital of the Company for the time being AND THAT such authority shall commence upon the passing of this resolution until the conclusion of the next AGM of the Company unless earlier revoked or varied by an ordinary resolution of the shareholders of the Company in general meeting AND THAT the Directors may cancel the ordinary shares so purchased or to retain same as Treasury Shares and may distribute the Treasury Shares as share dividend or may resell same in a manner they deem fit and expedient as prescribed by the Act and the applicable regulations and guidelines of Bursa Securities and any other relevant authorities for the time being in force AND THAT authority be and is hereby given to the Directors to take such steps as are necessary or expedient to implement, finalise and to give effect to the aforesaid transactions with full power to assent to any conditions, modifications, variations and/or amendments as may be required or imposed by the relevant authorities and to do all such acts and things and upon such terms and conditions as the Directors may in their discretion deem fit and expedient in the best interest of the Company in accordance with the Act, regulations and guidelines.” (Resolution 7)
8.
CONTINUING IN OFFICE AS INDEPENDENT NON-EXECUTIVE DIRECTORS
To retain Mr. Ong Kim Nam, who has served for more than nine (9) years as Independent Non-Executive Director of the Company, pursuant to Recommendation 3.3 of the Malaysian Code on Corporate Governance 2012. (Resolution 8)
PWF CONSOLIDATED BHD. (420049-H) Annual Report 2015
Notice Of Annual General Meeting (Cont’d)
9.
PROPOSED RENEWAL OF THE DIVIDEND REINVESTMENT PLAN
“THAT pursuant to the Dividend Reinvestment Plan (“DRP”) approved at the Extraordinary General Meeting held on 8 January 2015, approval be and is hereby given to the Company to allot and issue such number of New Ordinary Shares of RM1.00 each in the Company (“PWF Shares”) for the DRP until the conclusion of the next AGM, upon such terms and conditions and to such persons as the Directors may, in their absolute discretion, deem fit and in the interest of the Company PROVIDED THAT the issue price of the said new PWF Shares shall be fixed by the Directors at not more than ten percent (10%) discount to the adjusted five (5) market day volume weighted average market price (“VWAP”) of PWF Shares immediately preceding the price-fixing date, of which the VWAP shall be adjusted ex-dividend before applying the aforementioned discount in fixing the issue price and not less than the par value of PWF Shares at the material time.
AND THAT the Directors and the Secretary of the Company be and are hereby authorized to do all such acts and enter into all such transactions, arrangements and documents as may be necessary or expedient in order to give full effect to the DRP with full power to assent to any conditions, modifications, variations and/or amendments (if any) as may be imposed or agreed to by any relevant authorities or consequent upon the implementation of the said conditions, modifications, variations and/or amendments or at the discretion of the Directors in the best interest of the Company.” (Resolution 9)
10.
PROPOSED ALLOCATION OF EMPLOYEES’ SHARE OPTION SCHEME (“ESOS”) TO DATO’ ZURAIDI BIN RAHIM
“THAT pursuant to the ESOS approved at the Extraordinary General Meeting of the Company on 4 November 2015, the Board be and is hereby authorized at any time and from time to time during the duration of the ESOS to offer and to grant Dato’ Zuraidi Bin Rahim, the Non-Executive Chairman of the Company, the ESOS Options to subscribe for new ordinary shares of the Company which currently have a par value of RM1.00 (“PWF Shares”) under the ESOS subject always to the approved By-Law of ESOS;
AND THAT the Directors be and are hereby authorized to allot and issue such number of new PWF Shares pertaining thereto from time to time pursuant to the exercise of such ESOS Options.” (Resolution 10)
11. PROPOSED ALLOCATION OF EMPLOYEES’ SHARE OPTION SCHEME (“ESOS”) OPTIONS TO PERSON CONNECTED TO DATO’ SIAH GIM ENG AND DATIN LAW HOOI LEAN
“THAT pursuant to the ESOS approved at the Extraordinary General Meeting of the Company on 4 November 2015, the Board be and is hereby authorized at any time and from time to time during the duration of the ESOS to offer and to grant the below named, the children of Dato’ Siah Gim Eng and Datin Law Hooi Lean, the ESOS Options to subscribe for new ordinary shares of the Company which currently have a par value of RM1.00 (“PWF Shares”) under the ESOS subject always to the approved By-Law of ESOS: i) ii) iii)
Mr. Siah Wooi Kong Mr. Siah Wooi Yang Mr. Siah Wooi Nian
(Resolution 11) (Resolution 12) (Resolution 13)
AND THAT the Directors be and are hereby authorized to allot and issue such number of new PWF Shares pertaining thereto from time to time pursuant to the exercise of such ESOS Options.”
12.
To transact any other ordinary business for which due notice has been given.
NOTICE IS HEREBY GIVEN that for purpose of determining a member who shall be entitled to attend this 19th AGM, the Company shall be requesting Bursa Malaysia Depository Sdn Bhd, in accordance with the Article 62(3) of the Company’s Articles of Association and Section 34(1) of the Securities Industry (Central Depositories) Act 1991, to issue a General Meeting Record of Depositors as at 20 May 2016. Only a depositor whose name appears on the Record of Depositors as at 20 May 2016 shall be entitled to the said meeting or appoint proxies to attend and/or vote on his/her behalf. By Order of the Board Ch’ng Lay Hoon (MAICSA No.: 0818580) Company Secretary Penang Date: 29 April 2016
75
PWF CONSOLIDATED BHD. (420049-H)
76 Annual Report 2015
Notice Of Annual General Meeting (Cont’d)
NOTES: 1.
Audited Financial Statements This agenda item is meant for discussion only as the provision of Section 169(1) of the Act does not require a formal approval of the members/shareholders for the Audited Financial Statements. Hence, this Agenda item is not put forward for voting.
2.
Form of Proxy
3.
i)
A member of the Company entitled to attend, speak and vote at this meeting is entitled to appoint a proxy to attend and vote in his place. A proxy may but need not be a member and the provision of Section 149(1)(b) of the Act shall not apply to the Company.
ii)
Where a member appoints more than one (1) proxy [but not more than two (2)], the appointment shall be invalid unless he specifies the proportions of his holdings to be represented by each proxy.
iii)
The instrument appointing a proxy shall be in writing under the hand of the appointor or his attorney duly authorised in writing, or if the appointor is a corporation, either under its common seal or under the hand of its officer or attorney duly authorised.
iv)
Where a member of the Company is an exempt authorized nominee which holds ordinary shares in the Company for multiple beneficial owners in one (1) securities account (“omnibus account”), there is no limit to the number of proxies which the exempt authorized nominee may appoint in respect of each omnibus account it holds.
v)
All forms of proxy must be deposited at the Company’s registered office at Suite 12A, Level 12, Menara Northam, No. 55, Jalan Sultan Ahmad Shah, 10050 Penang, not less than forty-eight (48) hours before the time stipulated for holding the meeting or adjournment thereof.
Explanatory Note On Special Business i)
Authority to Issue Shares (Resolution 6) The proposed resolution is in relation to authority to allot shares pursuant to Section 132D of the Act, and if passed, will give a renewed mandate to the Directors of the Company, from the date of above AGM, authority to issue and allot shares in the Company up to and not exceeding in total ten per centum (10%) of the issued share capital of the Company for the time being, for such purposes as the Directors consider would be in the interest of the Company (“General Mandate”). This General Mandate, unless revoked or varied at a general meeting of the Company, will expire at the conclusion of the next AGM of the Company or the period within which the next AGM of the Company is required by law to be held whichever is the earlier.
As at the date of this Notice, no new shares in the Company were issued pursuant to the mandate granted to the Directors of the Company at the 18th AGM held on 29 June 2015 and which will lapse at the conclusion of the 19th AGM.
At this juncture, there is no decision to issue new shares. However, should the need arise to issue new shares the General Mandate would avoid any delay and costs in convening a general meeting of the Company to specifically approve such issue of share. If there should be a decision to issue new shares after the General Mandate is obtained, the Company would make an announcement in respect of the purpose and utilization of the proceeds arising from such issue.
ii)
Proposed Renewal of Share Buy-Back (Resolution 7) The proposed resolution, if passed, will provide the mandate for the Company to buy back its own shares up to a limit 10% of the total issued and paid-up share capital of the Company. The explanatory notes on Resolution 7 are set out in Statement dated 29 May 2015 accompanying the Annual Report.
iii)
Continuing in office as Independent Non-Executive Director (Resolution 8) The Board of Directors via the Nominating Committee assessed the independence of Mr. Ong Kim Nam, who has served on the Board as Independent Non-Executive Director of the Company for a cumulative of more than nine (9) years and the Board has recommended that the approval of the shareholders be sought to re-appoint Mr. Ong Kim Nam, based on the following justifications: (a) He has met the criteria the independence guidelines set out in Chapter 1 of the Main Market Listing Requirements of Bursa Securities and therefore able to give independent opinion to the Board; (b) Being director for more than nine (9) years have enabled him to contribute positively during deliberations/discussions at meetings as he is familiar with the operations of the Company and possess tremendous knowledge of the Company’s operations; (c) He has the caliber, qualifications, experiences and personal qualities to challenge management in an effective and constructive manner; and (d) He has contributed sufficient time and exercised due care during his tenure as Independent Non-Executive Director and carried out his fiduciary duties in the interest of the Company and minority shareholders.
iv)
Proposed Renewal in relation to the Dividend Reinvestment Plan (Resolution 9) The proposed Resolution 9 will give authority to the Directors to allot and issue ordinary shares of the Company in respect of dividends to be declared, if any, under the Dividend Reinvestment Plan, until the conclusion of the next AGM. A renewal of this authority will be sought at the subsequent AGM.
v)
Proposed Allocation of ESOS Options to Dato’ Zuraidi Bin Rahim (Resolution 10) The proposed Resolution 10 will allow Dato’ Zuraidi Bin Rahim, the Non-Executive Chairman of the Company to participate in the Company’s ESOS.
vi)
Proposed Allocation of ESOS Options to Person Connected to Dato’ Siah Gim Eng and Datin Law Hooi Lean (Resolution 11, 12 & 13) The proposed Resolutions 11, 12 & 13 will allow the children of Dato’ Siah Gim Eng and Datin Law Hooi Lean, who are employees of the Company and being eligible, to participate in the Company’s ESOS.
PWF CONSOLIDATED BHD. (420049-H) Annual Report 2015
Statement Accompanying Notice Of Annual General Meeting Pursuant to Paragraph 8.27(2) of the Listing Requirements of the Bursa Malaysia Securities Berhad
Name of Directors standing for re-election pursuant to Article 95/102 of the Articles of Association:
• Datin Law Hooi Lean • Dato’ Zuraidi Bin Rahim
The details of the abovenamed Directors who are standing for re-election are set out in the Directors’ Profile (page 4 of the Annual Report); while their securities holdings (where applicable) are set out in the Analysis of Shareholdings – Directors’ Interests in the Company and Related Corporation (page 72 of the Annual Report).
77
PWF CONSOLIDATED BHD. (420049-H)
78 Annual Report 2015
Additional Compliance Information As At 31 December 2015
ADDITIONAL COMPLIANCE INFORMATION AS AT 31 DECEMBER 2015 1.
VARIATION OF RESULTS
The Group achieved a net profit after tax of RM6,006,407 for the financial year ended 31 December 2015 and there is no significant variance in the Group’s audited financial results as previously announced.
2.
MATERIAL CONTRACTS
There was no material contract entered into by the Company and its subsidiary involving the Directors and substantial shareholders (not being contracts entered into in the ordinary course of business of the Group) during the financial year ended 31 December 2015.
3.
RECURRENT RELATED PARTY TRANSACTIONS OF A REVENUE NATURE OR TRADING NATURE
The Company does not have any recurring related party transaction of revenue or trading nature for the financial year ended 31 December 2015.
4.
SHARE BUY-BACK
The Company had, on 19 June 2006, obtained its shareholders’ approval to purchase up to 10% of the issued and paid-up ordinary shares capital of the Company.
During the financial year ended 31 December 2015, the Company did not repurchased any shares from the open market.
As at the date of the financial year, the total number of treasury shares retained and held by the Company was 3,475,500 ordinary shares of RM1.00 each.
5.
NON-AUDIT FEES
The amount of non-audit fees paid to the external auditors, Messrs Grant Thornton, by the Company for the financial year ended 31 December 2015 amounted to RM3,000.
PWF CONSOLIDATED BHD. (420049-H) Annual Report 2015
List Of Material Properties Of The Group As At 31 December 2016
Land Area
Build-up Area / Age of Building
Carrying Amount
18,280 sq.m.
17,250,000
Property
Description / Existing Use
Tenure
Date of Valuation
Geran Mukim No. 53, 54, 55, 70, 71, 93, 59, 258, 227 Lot 78, 79, 80, 315, 316, 279, 274, 272, 278 Geran No 51891 Lot 271 Mukim 6, Daerah SPS, Penang
Land with poultry farm
Freehold
1-Dec-2012
36.153 acres
HS (D) 694 PT67 Mukim 13, SPT Penang.
Industrial land
Leasehold Expiring on 11.6.2055 (60 years)
1-Dec-2012
5.874 acres
Plot 31 Lorong Perindustrian Bukit Minyak 9, Taman Perindustrian Bukit Minyak, 14100 Penang
1 Block 3-storey Office Building, 1 Feed Milling Plant and Warehouse
Plot 127 Jalan Perindustrian Buikit Minyak 7, Taman Perindustrian Bukit Minyak, SPS Penang
Industrial land
Leasehold Expiring on 14.4.2063 (60 years)
1-Dec-2012
3.529 acres
7,213,424
18,284 sq.m. / 19 years
9,004,193
3,813 sq.m. / 10 years
4,661,183
1 Block 3-storey Office Building
4,634,200
Lot 60 & 61 Geran Mukim No GM3944, 4293 Mukim Ayer Puteh, Daerah Pendang, Kedah
Land with layer farm
Freehold
1-Dec-2012
70.287 acres
39,821 sq.m.
9,200,000
GM519 Lot 571, Geran 16962 Lot 572, Geran 43767 Lot 573 Mukim 16, SPT Penang
Land with poultry farm
Freehold
1-Dec-2012
32.492 acres
22,650 sq.m.
9,100,000
Lot 824, 825, 871, 873 & 877 GM264, 265, 59, 1 & 60 Mukim8, SPS Penang
Vacant land for furture development
Freehold
1-Dec-2012
23.672 acres
Lot 2628, 2647 HSD 28259, 28275 Mukim 11, SPS Penang
Land with poultry farm
Freehold
1-Dec-2012
10.19 acres
Lot 1770, 1771, 1772 Geran No 763, 764, 765 Mukim Sungai Batu, Daerah Bandar Baharu, Kedah
Vacant land for future development
Freehold
1-Dec-2012
38.58 acres
GM841 Lot 407, GM842 Lot 408 Mukim 20 SPT Penang
Land with poultry farm
Freehold
1-Dec-2012
11.568 acres
11,965 sq.m.
4,280,000
GM337 SP35328 Lot 539 Mukim of Junjung, Kulim Kedah
Land with poultry farm
Freehold
1-Dec-2012
27.12 acres
19,362 sq.m.
2,950,000
6,200,000
4,651 sq.m.
5,330,000
5,040,000
79
PWF CONSOLIDATED BHD. (420049-H)
80 Annual Report 2015
This page is intentionally left blank.
PWF CONSOLIDATED BHD. (420049-H) Annual Report 2015
Proxy Form No. of Shares held I/We, (BLOCK LETTERS) of being a member/members of the above-named company hereby appoint
of or failing him of as my/our proxy to vote for me/us on my/our behalf at the 19th Annual General Meeting of the Company, to be held at Impiana Room, Penang Golf Resort, No. 1687, Jalan Bertam, 13200 Kepala Batas, Seberang Prai Utara, Penang on 27 May 2016 at 10.00 a.m. and any adjournment thereof. Resolution
For
1.
Re-election of Datin Law Hooi Lean as Director
2.
Re-election of Dato Zuraidi Bin Rahim as Director
3.
Payment of Directors’ Fees for the financial year ended 31 December 2015
4.
Payment of Directors’ Fees for the financial year ending 31 December 2016
5.
Re-appointment of Auditors
6.
Authority to Issue and Allot shares
7.
Authority for Directors for Purchase by Company of its Own Shares
8.
Continuing in Office as Independent Non Executive Director for Mr. Ong Kim Nam
9.
Authority In Relation to Dividend Reinvestment Plan
10.
Allocation of ESOS Options to Dato’ Zuraidi Bin Rahim
11.
Allocation of ESOS Options to Mr. Siah Wooi Kong
12.
Allocation of ESOS Options to Mr. Siah Wooi Yang
13.
Allocation of ESOS Options to Mr. Siah Wooi Nian
Against
Please indicate with “√” on the spaces provided on how you wish your votes to be cast. Unless otherwise instructed, your proxy may vote as he thinks fit. The Proportions of my/our holdings to be represented by my /our *proxy/proxies are as follows:First named Proxy
-
Second named Proxy
-
% % 100
Signed this
day of
%
2016. (Signature)
NOTES: i)
A member of the Company entitled to attend, speak and vote at this meeting is entitled to appoint a proxy to attend and vote in his place. A proxy may but need not be a member and the provision of Section 149(1)(b) of the Act shall not apply to the Company.
ii)
Where a member appoints more than one (1) proxy [but not more than two (2)), the appointment shall be invalid unless he specifies the proportions of his holdings to be represented by each proxy.
iii)
The instrument appointing a proxy shall be in writing under the hand of the appointor or his attorney duly authorised in writing, or if the appointor is a corporation, either under its common seal or under the hand of its officer or attorney duly authorised.
iv)
Where a member of the Company is an exempt authorized nominee which holds ordinary shares in the Company for multiple beneficial owners in one (1) securities account (“omnibus account”), there is no limit to the number of proxies which the exempt authorized nominee may appoint in respect of each omnibus account it holds.
v)
All forms of proxy must be deposited at the Company’s registered office at Suite 12A, Level 12, Menara Northam, No. 55, Jalan Sultan Ahmad Shah, 10050 Penang, not less than forty-eight (48) hours before the time stipulated for holding the meeting or adjournment thereof.
81
Please fold across the line and close
stamp
The Company Secretary
PWF CONSOLIDATED BHD. (420049-H) SUITE 12-A LEVEL 12, MENARA NORTHAM NO. 55 JALAN SULTAN AHMAD SHAH 10050 PENANG
Please fold across the line and close
PWF CONSOLIDATED BHD (420049-H) (formerly known as PW Consolidated Bhd.) Head Office Plot 127, Jalan Perindustrian Bukit Minyak 7, Taman Perindustrian Bukit Minyak, 14100 Bukit Mertajam, S.P.T. Penang, Malaysia. T 604 508 1088 (General line) F 604 502 3099
Manufacturing Plant Plot 31, Lorong Perindustrian Bukit Minyak 9, Taman Perindustrian Bukit Minyak, 14100 Bukit Mertajam, S.P.T. Penang, Malaysia. T 604 508 1099 (General line) F 604 508 1200 & 508 8109
www.pwf.com.my
