Upload
truongkhue
View
221
Download
0
Embed Size (px)
Citation preview
L A P O R A N T A H U N A N I - B E R H A D A N N U A L R E P O R T
contentscover rationale
2 corporate information
3 profile of directors
6 letter to shareholders
8 corporate governance
statement
11 additional information
12 audit committee report
14 statement on internal control
15 corporate social
responsibility
16 calendar of events
19 directors’ report
23 statement by directors
23 statutory declaration
24 independent auditors’ report
26 statements of financial position
28 statements of comprehensive
income
29 statement of
changes in equity
31 statement of cash flows
33 notes to the
financial statements
104 list of properties held
105 analysis of
shareholdings
106 thirty largest shareholders
107 statement of
directors’ interest
108 notice of AGM
110 statement
accompanying notice
of AGM
form of proxy
i-City – An Integrated Leisure Destinationand Preferred Business Location
A model of Malaysian innovation at its highest
in digital lighting and network technology
• Integrating Work, Play and Live in a 24 hours
vibrant lifestyle. In i-City, It’s Always On
• A unique tourism destination endorsed by
Tourism Malaysia focussing on wholesome
family entertainment with SnoWalk – a
50,000 sq. ft. Arctic Wonderland as its latest
attraction
• Technopreneur Campus serving as a choice
location for international businesses
L A P O R A N T A H U N A N I - B E R H A D A N N U A L R E P O R T 2
corporate information
BOARD OF DIRECTORS
Y. Bhg. Tan Sri Datuk Lim Kim Hong
Executive Chairman
Y. Bhg. Puan Sri Tey Siew Thuan
Executive Director
Y. Bhg. Dato’ Eu Hong Chew
Chief Executive Officer/Executive Director
Mr. Liang Yew Ming
Independent Non-Executive Director
Mr. Tan Hon Yik
Independent Non-Executive Director
Madam Ong Poh Ling
Non-Executive Director
COMPANY SECRETARY
Madam Too Yet Lan
(MAICSA No. 0817992)
REGISTERED OFFICE
D-1-4 Jalan Multimedia 7/AJ
CityPark, i-City
40000 Shah Alam
Selangor Darul Ehsan
Tel : 603-5521 8800
Fax : 603-5521 8810
Web : www.i-city.my
E-mail : [email protected]
SHARE REGISTRAR
Tricor Investor Services Sdn Bhd
17th Floor, The Gardens North Tower
Mid Valley City
Lingkaran Syed Putra
59200 Kuala Lumpur
Tel : 603-2264 3883
Fax : 603-2282 1886
AUDITORS
BDO
12th Floor, Menara Uni. Asia
1008, Jalan Sultan Ismail
50250 Kuala Lumpur
PRINCIPAL BANKERS
HSBC Bank Malaysia Berhad
Malayan Banking Berhad
STOCK EXCHANGE LISTING
Listed on the Main Market of
Bursa Malaysia Securities Berhad
on 29 September 1969
L A P O R A N T A H U N A N I - B E R H A D A N N U A L R E P O R T 3
Tan Sri Datuk Lim Kim Hong, aged 60, Malaysian, was
appointed to the Board on 15 July 1999. He is currently the
Executive Chairman of the Company and responsible for setting
the policies and direction of the Group. He has vast experience
in business, marketing and corporate matters as well as a keen
sense of business acumen.
Tan Sri Datuk Lim was responsible for the successful listing of
Sumurwang’s manufacturing arm, Dreamland Holdings Berhad
on the Main Market of Bursa Malaysia Securities Berhad in 1987
whilst he was the Chief Executive Officer of the Company. In
1991, he diversified Dreamland Holdings Berhad into the steel
industry and subsequently changed its name to Kanzen Berhad
(“Kanzen”). In late 1993, he divested Sumurwang’s interest in
Kanzen to reorganise Sumurwang’s corporate structure to focus
on three business areas – manufacturing, property
development and financial services. In 2006, Tan Sri Datuk Lim
steered the I-Berhad Group into property development and
ICT-solutions businesses through “i-City”, an ICT-based premier
commercial development with MSC Malaysia Cybercentre
Status which has been endorsed as a Technopreneur Campus as
well as a unique tourism destination by Tourism Malaysia.
profile of directors
Puan Sri Tey Siew Thuan, aged 57, Malaysian, was appointed
to the Board on 15 July 1999 and to the position of Chief
Executive Officer on 27 February 2008. Subsequently, Puan Sri
Tey retired as the Chief Executive Officer with effect from 10
February 2009 but remained as Executive Director of the
Company. Puan Sri Tey is currently in charge of the day-to-day
operations and financial aspects of the Group and was
formerly the Executive Director of Kanzen Berhad (“Kanzen”).
Puan Sri Tey also sits on the Board of several private companies.
Whilst with Kanzen, Puan Sri Tey was responsible for the
Company’s reverse investments into China. These investments
cover the bedding, steel and air-conditioner industries. She
was also responsible for the development of Kanzen’s steel
exports business.
Tan Sri Datuk Lim Kim HongExecutive Chairman
Puan Sri Tey Siew Thuan Executive Director
L A P O R A N T A H U N A N I - B E R H A D A N N U A L R E P O R T 4
profile of directorscont’d
Dato’ Eu Hong Chew, aged 58, Malaysian, was appointed to the
Board on 15 July 1999 and is currently the Chief Executive
Officer of the Company. He was educated at the Royal Military
College and possess a first class honours degree in Mechanical
Engineering from the University of Glasgow, United Kingdom.
He holds a Masters in Business Administration from the
University of Bradford, United Kingdom.
Dato’ Eu has been associated with the Sumurwang Group as its
Chief Executive with many years of experience including
charting the path for Sumurwang’s manufacturing arm, firstly
under Dreamland Holdings Berhad and its subsequent venture
into the steel business and the acquisition of I-Berhad. Prior to
joining Sumurwang Group, he was with PA Management
Consulting as a Consultant for 10 years where he was also
appointed Director of Studies for the Cranfield PA MBA
Programme in Malaysia.
Mr. Liang Yew Ming, aged 45, Malaysian, was appointed to the
Board on 20 December 2010 and is currently the Chairman of
the Audit Committee as well as a member of the Nomination
and Remuneration Committees of the Company. He is a
member of both CPA Australia and the Malaysian Institute of
Accountants (MIA). He is an Accountant by profession and had
previously held various management and senior management
positions in both local and multinational corporations.
Prior to his appointment, he was actively involved in the area of
taxation while he was working in Australia and has more than
10 years of working experience in corporate mergers and
acquisitions in Malaysia.
Dato’ Eu Hong Chew Chief Executive Officer/Executive Director
Liang Yew Ming Independent Non-Executive Director
L A P O R A N T A H U N A N I - B E R H A D A N N U A L R E P O R T 5
profile of directorscont’d
None of the Directors of the Company has:- Any family relationship with other Directors or substantial shareholders of the Company save for Y. Bhg. Tan Sri Datuk Lim Kim Hong who is the spouse of
Y. Bhg. Puan Sri Tey Siew Thuan. Tan Sri Datuk Lim is the Executive Chairman and major shareholder of the Company.- Any conflict of interest with the Company.- Any conviction for offences within the past 10 years other than traffic offences, if any.
Mr. Tan Hon Yik, aged 30, Malaysian, was appointed to the
Board on 18 March 2011 and is currently the Chairman of both
the Nomination and Remuneration Committees as well as a
member of the Audit Committee of the Company. He
graduated with a LLB (Hons) from Bond University, Australia
and a LLM (Corporate & Commercial Law) from University of
New South Wales, Australia. He had previously practiced with
Wong & Partners (a member firm of Baker & McKenzie
International) as a member of the banking & finance and
corporate & commercial practice groups.
Hon Yik is a founding partner of Naqiz & Partners and currently
serves as the Deputy Managing Partner. He also serves as
Counsel to Naqiz & Partners associated Indonesian Office
Bastaman Enrico (a member of Naqiz International) and also
sits on the Board of Maxwell International Holdings Berhad as
well as on the Board of Commissioners of PT Rana Central
Nugraha (an Indonesian subsidiary of Mamee-Double Decker
(M) Berhad).
Madam Ong Poh Ling, aged 47, Malaysian, was appointed to
the Board on 15 July 1999 and to her current position on 31
March 2008. She is currently a member of the Audit,
Nomination and Remuneration Committees of the Company. A
graduate of University of Wolverhampton, United Kingdom
with an honours in law. She joined Dreamland Holdings Berhad
in 1987 and later moved to the Sumurwang Group as its Senior
Manager, Corporate Affairs and was responsible for setting-up
and heading their respective Corporate Communications
Departments.
Under the Group, she was responsible for staging the RM10
million Sumurcity Aerospace Adventure which was the largest
aerospace exhibition underwritten by the Sumurwang Group
in 1995 and the conceptualization of the “i” logo in 1999.
Tan Hon Yik Independent Non-Executive Director
Ong Poh Ling Non-Executive Director
L A P O R A N T A H U N A N I - B E R H A D A N N U A L R E P O R T 6
letter to shareholders
Dear Shareholders
On behalf of the Board of Directors, we are pleasedto present the Annual Report and the auditedFinancial Statements of I-Berhad for the financialyear ended 31 December 2010.
DELIVERING THE VISIONIn 2010, we moved a step further in establishing ourselves as a
unique property Group. Thus in addition to the conventional
Property Development and Property Investment activities, the
Group has also built up its Leisure business as well as its Connected
Community Services (CCS) business based on i-City’s vision of being
both a knowledge hub as well as a tourism destination.
Our business model will ensure that when i-City is fully developed,
there would still be significant revenue generated from the
Investment, Leisure and CCS operations in i-City. This is very much
different from the traditional property development model whose
revenue stream will dry upon completion of the project.
We have also been working with the Selangor State Government
and Majlis Bandaraya Shah Alam (“MBSA”) to translate the concept
of i-City as an “International Park" into the respective development
and investment parameters so that we could unlock the value
associated with this status. One immediate benefit of this is the
increase in the development plot ratio to 1:5.
FINANCIALSFor the twelve months ended 31 December 2010, the Group posted an
after-tax profit of RM3.46 million compared with the after-tax profit of
RM0.9 million for the last financial year. The improvement was due to
gain from changes in fair value of the Group’s investment properties.
The Group expects its property development, property investment
and leisure businesses to contribute positively for the financial year
ending 31 December 2011.
We have demonstrated the strength of our business model by
continuous creating values to our shareholders. On this note, the
Board of Directors has recommended, pending shareholders’
approval, a final dividend of 1% single tier dividend in respect of the
financial year ended 31 December 2010.
REVIEW OF OPERATIONSIn 2010, the Group re-organised its tourism attractions - the City of
Digital Lights, the i-Walk and the SnoWalk into separate revenue
generating divisions. i-Walk is a 30,000 sq ft outdoor convention
arena that was completed towards the end of 2010 while SnoWalk
is a 50,000 sq ft Arctic environment with a minus 5 degree
centigrade temperature, 100 tons of ice sculptures and real time
snowfall experience that was officially launched in March 2011.
At the same time, the Group re-organised its joint venture (JV)
responsible for the CCS business so that it now owns 80% of the
company as compared to 35% originally. This JV company is
responsible for providing the connectivity services to the tenants in
i-City and the plan is to use the existing info-structure to provide
further value added services to the captive market. The Group's CCS
currently provides connectivity services based on 1:2 contention
ratio and with a multi-telco set-up providing 110 mbps, the
residents in i-City experience one of the best connectivity services
in the country.
On the property development side, we completed the Cybercentre
Office Suites 2 in mid 2010. With 70 % lease commitments so far, we
are fast approaching the tenancy target set by many institutional
investors for them to consider block purchase of this development.
The Group’s completed Investment properties comprises the Block M
Data Centre, the Car Park Block and the i-Walk. We have today full
tenancy commitments for the Data Centre, while the tourism
programme has resulted in good utilisation of our car parks.
Tan Sri Datuk Lim Kim Hong
L A P O R A N T A H U N A N I - B E R H A D A N N U A L R E P O R T 7
OUTLOOK FOR 2011With over 100 ICT companies operating in i-City, this development
is today acknowledged as a knowledge hub with state-of-the-art
info-structure. We have today achieved 90 % occupancy for our
Cybercenter Office Suites 1 office space and many of the tenants
are MSC companies. At the same time, we have also a variety of
F&B outlets operating in i-City serving from local fares to Western
and Middle Eastern food. Given that we have been able to attract
90,000 visitors a week to i-City, it is envisaged that the Leisure
division will be also a significant contributor to the Group’s
performance in the coming year.
We will be launching our service apartments in 2011. This is a
RM150 million Gross Development Value (GDV) project with about
370 units that will set a new benchmark for Shah Alam.
We have also announced our tie-up with HDC Data Centre to build
another 300,000 sq ft of Tier 4 Data Centre in i-City that will provide
additional rental income to the Group when completed.
The authorities have also revised the planning parameters so that
the undeveloped areas can now have the plot ratio increase to 1:5.
From both the property and CCS perspective, this increase in the
plot ratio will enhance the value of i-City. We are thus taking the
opportunity to further increase the GDV of i-City inclusive of
reviewing the Tower Block development on top of the Car Park Block
into a Boutique hotel. The i-City Mall development parameters
would also be revised accordingly.
On the Leisure sector, we hope to bring in additional
attractions to complement the existing tourist products in i-City.
We have also entered into a tie-up with MTV Asia LCD
(“MTV”)/Nickelodeon Asia Holdings Pte Ltd for the promotion and
themed programmes in i-City. We believe this will draw more
visitors that will also help to drive the occupancy of our
Investment Properties.
It is envisaged that in 2011, the contribution from the Leisure and
CCS divisions would increase significantly compared to the previous
year and put the Group on a firmer footing for this unparalleled
property business model.
APPRECIATIONOn behalf of the Board, we wish to express our appreciation and
gratitude to the management and staff for their dedicated services
and contributions. We would also like to thank our customers,
business partners, associates and regulatory authorities for their
invaluable support and co-operation and convey our heartfelt thanks
to our shareholders for their continuing support.
We would like to extend a warm welcome to Mr. Liang Yew Ming and
Mr. Tan Hon Yik who joined the Board in December 2010 and
March 2011 respectively. We also wish to express our appreciation
to Y. Bhg. Tan Sri Dato’ Sri Hamad Kama Piah Bin Che Othman and
Y. Bhg. Datuk Abu Hassan Bin Kendut who left the Board in July
and June 2010 respectively for their contributions during their
tenure with the Company. Last but not least, we would also like to
extend our appreciation to our fellow Directors for their untiring
commitment and contributions.
TAN SRI DATUK LIM KIM HONG DATO’ EU HONG CHEW
Executive Chairman Chief Executive Officer
25 May 2011
letter to shareholderscont’d
i-Walk... a 30,000 sq ft outdoor convention arena. SnoWalk... 50,000 sq ft Arctic environment with a minus 5 degree centigrade temperature.
L A P O R A N T A H U N A N I - B E R H A D A N N U A L R E P O R T 8
statement on corporate governance
The Board of Directors of the Company recognisesthe importance of adopting the high standards ofcorporate governance as fundamental part of itsresponsibility in protecting and enhancing theshareholder’s value and financial performance ofthe Group. The Board is pleased to report to theshareholders on the manner in which the Grouphas applied the principles, and the extent ofcompliance with the best practices in corporategovernance as prescribed in the Malaysian Codeon Corporate Governance throughout thefinancial year ended 31 December 2010.
A. BOARD OF DIRECTORS
(i) Role and Responsibilities of the Board(a) An effective Board leads and controls the Group whereby all
Directors participate fully in decisions on keys issues facing the
Group. The Executive Directors are responsible for implementing
the policies and decisions of the Board, overseeing the operations
as well as coordinating the development and implementation of
business and corporate strategies while the Independent Non-
Executive Directors play a key role in providing unbiased and
independent views, advice and contributing their knowledge and
experience towards the formulation of policies and in the
decision making process.
(b) The Board composition is listed in the Corporate Information
section and the profiles of the members of the Board are provided
in the Profile of Directors section of this Annual Report. The
Board’s composition represents a mix of knowledge, skills and
expertise from varied business backgrounds vital to the effective
stewardship of the Group.
(c) The roles of the Executive Chairman and the most senior
Executive Director are clearly separated. The Executive Chairman
heads the Board and leads the discussion at Board level. He is also
responsible for implementing the Group’s policies, business plans
and executive decision making. The Executive Chairman is
assisted by the Chief Executive Officer.
(ii) Board Balance
During the year, the Board had 5 members, comprising 3 Executive
Directors, 2 Non-Executive Directors of which 1 is an Independent
Director, thus the Company fell short of its one third independence
requirement. This was rectified through the appointment of two
Independent Directors to the Board namely Mr. Liang Yew Ming
and Mr. Tan Hon Yik in December 2010 and March 2011
respectively.
(iii) Board Committees
The Board is assisted by several Board Committees which
operate within clearly defined terms of reference namely:
• Audit Committee
The report of the Audit Committee is set out on pages 12 to 13 of
this Annual Report.
• Remuneration Committee
• Nomination Committee
(iv) Board Meetings and Supply of Information to the Board
The Board met a total of 4 times during the year ended
31 December 2010. Details of attendance of each individual
Director in respect of the meetings held is disclosed under the
“Statement accompanying notice of annual general meeting” in
this Annual Report. The Board will hold additional meetings as
and when necessary to consider business issues that require the
urgent decision of the Board.
Board meetings are conducted with a structured pre-set
Agenda. For all major financial, operational and corporate
matters which require the Board’s decision, all Directors are
provided with sufficient and timely reports and supporting
documents which are circulated in advance of each meeting to
ensure sufficient time is given to understand the key issues and
contents. The Executive Chairman chairs the Board meetings
whilst the Chief Executive Officer leads the presentation and
provides explanations on the Board reports.
Directors have unrestricted access to the advice and services of
the Company Secretary. The Company Secretary organised and
attends all Board Meetings thus ensuring that Board meeting
procedures are followed and that applicable rules and regulations
are complied with. All matters arising therefrom and conclusions
of the Board Meetings are recorded in the minutes of the Meetings
by the Company Secretary which are thereafter confirmed and
signed as correct proceedings thereat by the Chairman.
Besides, external independent professional advisers are also
made available to render their independent views and advice to
the Board, whenever deemed necessary and in appropriate
circumstances, at the Company’s expenses.
(v) Appointment of Board Members
The Nomination Committee which was set-up on 13 May 2002
is entrusted with the task of reviewing and recommending the
appropriate mix of expertise and experience and the
appropriate balance of executive and non-executive Directors
(including Independent Non-Executives).
The Committee is responsible for:-(a) Recommending to the Board, candidates for Directorships to be
filled by the shareholders or the Board;
(b) Considering candidates for Directorships proposed by the Chief
Executive Officer and/or by any other senior executive or any
Director or shareholder;
L A P O R A N T A H U N A N I - B E R H A D A N N U A L R E P O R T 9
(c) Recommending to the Board, directors to seat on Board
Committees;
(d) Assessing the effectiveness of the Board and Board Committees
(including size and composition) and contributions of each
individual Director; and
(e) Reviewing and recommending to the Board the required mix of
skills and experience and other qualities, including core
competencies which non-executive Directors should bring to
the Board.
New Directors were given a thorough briefing by the
Management on the Company’s Business Plan and operations
upon their appointment to the Board. The Directors will
continue to undergo the relevant training programmes to
keep abreast with developments in the business environment
and with new statutory and regulatory requirements. During
the year, members of the Board attended a training
programme entitled “The Debt Recovery Process”. The
Directors appointed during the year and subsequent to year
end had both attended the Mandatory Accreditation
Programme as required under the Listing Requirements of
Bursa Securities.
During the financial year, no Nomination Committee meeting
was held as the appointment of Mr. Liang Yew Ming as
Independent Non-Executive Director was decided by the
Board as a whole.
(vi) Re-election of Directors
In accordance with the Company’s Articles of Association,
Directors who are appointed by the Board are subject to re-
election by the shareholders at the next Annual General
Meeting held following their appointments. The Articles
also provides that one-third (1/3) of the Directors shall retire
from office at each Annual General Meeting provided
always that all the Directors including the Chairman shall
retire from office at least once every three years but shall be
eligible for re-election.
B. DIRECTORS’ REMUNERATION
(i) The level and make-up of Remuneration
The primary objective of the Remuneration Committee is to
act as a Committee of the full Board to assist in assessing the
remuneration of the Executive Directors to reflect the
responsibility and commitment of Board membership so that
the Company attracts and retains the Directors needed to run
the Group successfully.
The component parts of their remuneration are structured so as
to link rewards to corporate and individual performance in the
case of Executive Directors. In the case of Non-Executive
Directors, the level of remuneration reflects the experience and
level of responsibilities undertaken by the individual Non-
Executive Director concerned.
(ii) Procedure
The Remuneration Committee formed on 23 July 2001 is
responsible for:-(a) Determining and developing the remuneration policy for the
Executive Directors;
(b) Recommending to the Board, the remuneration of the Executive
Directors in all its forms, drawing from outside advice where necessary;
(c) Assisting the Board in ensuring that the remuneration of the
Director reflects the responsibility and commitment of the
Directors concerned; determining the policy for and scope of
service agreements for the Executive Directors, termination
payments and compensation commitments; and
(d) Recommending to the Board, the appointment of the services of
such advisers or consultants as it deems necessary to fulfill its
responsibilities.
During the financial year, the Committee did not have any meeting
as the remuneration packages of the Directors were decided by the
Board as a whole. Directors do not participate in decisions on their
own remuneration packages.
(iii) Disclosure
The details of the aggregate remuneration of Directors of
the Company on Group basis for the financial year ended
31 December 2010 are as follows:-
The number of Directors whose remuneration falls within the
following successive bands of RM50,000 is as follows:-
statement on corporate governance cont’d
Directors’ Remuneration Executive Non-Executive Total
RM RM RM
Salaries and other 474,456 - 474,456emoluments
Fees 285,000 155,000 440,000
Allowances - - -
Directors’ Remuneration Number of Directors Total
Executive Non-Executive
Up to RM50,000 - - -
RM50,001 - RM100,000 - - -
RM101,000 - RM150,000 - - -
RM151,000 - RM200,000 - 1 1
RM201,000 - RM250,000 1 - 1
RM251,000 - RM300,000 2 - 2
L A P O R A N T A H U N A N I - B E R H A D A N N U A L R E P O R T 10
C. COMMUNICATION WITH SHAREHOLDERS
(i) Company’s Annual Publications
The Company recognises the importance of communication
with its shareholders through its distribution of the Annual
Report.
(ii) Bursa Malaysia Securities Berhad Announcements
The various announcements on the corporate developments
made during the year coupled with the Group’s timely release
of financial results on a quarterly basis, as well as other periodic
announcements, provide shareholders with an overview of the
Group’s performance and operations.
(iii) Website of the Company
The Company has also established its website (www.i-city.my)
in which shareholders can access for updated information on
the Group.
(iv) The General Meetings
The Annual General Meeting remains the pivotal means of
direct interaction between the Board of Directors and
shareholders of the Company.
Shareholders are encouraged to attend the Company’s general
meetings and to participate in its proceedings through the
‘questions and answers’ session where shareholders are
accorded both the opportunity and the time to raise questions
on the agenda items of the general meetings. The Directors and
Senior Management present are available to provide
explanations to all shareholders queries. Shareholders who are
unable to attend are allowed to appoint proxies to attend and
vote on their behalf.
Shareholders’ proposals and comments are reviewed and
considered for implementation wherever possible. Shareholders
and the public can convey their concerns and queries to the
Company’s Senior Independent Director, Mr. Liang Yew Ming.
(v) Investor Relations
In addition to the dialogue with invaluable shareholders of the
Company, the Board values dialogue with investors.
The Company aims to communicate fully with fund managers,
institutional investors and analysts upon request. The
Company’s Corporate Affairs Department has been designated
for investors’ relations and attending to communication and
meeting with investors and analysts. Information is also
disseminated in strict adherence to the disclosure requirements
of Bursa Malaysia Securities Berhad.
D. ACCOUNTABILITY AND AUDIT
(i) Financial Reporting and Disclosure
The Board aims to present a balanced, clear and meaningful
assessment of the Company and Group’s financial performance
and prospects via the Company’s Annual Report and quarterly
announcements of results and the press releases.
(ii) Internal Control
Information on the Group’s internal control is set out in the
Statement on Internal Control contained in this Annual Report.
(iii) Relationship with External Auditors
The Board has established a formal and transparent relationship
with the external Auditors. The external Auditors attend the
Audit Committee meetings where the Group’s annual financial
statements are considered as well as meetings to review and
discuss the Group’s accounting policies, audit findings and
improvements to be made on existing internal control
measures and accounting policies and procedures.
(iv) Statement of Directors’ Responsibility for preparing the annual
financial statements for the financial year ended 31 December
2010
The Directors are responsible for ensuring that the financial
statements of the Group are drawn up in accordance with
applicable approved accounting standards in Malaysia and the
provisions of the Companies Act, 1965 so as to give a true and
fair view of the state of affairs of the Group and the Company as
at 31 December 2010 and of the results and cash flows of the
Group and the Company for the financial year ended on that date.
In preparing the financial statements, the Directors have:-• adopted appropriate accounting policies and have applied them
consistently;
• made judgements and estimates that are reasonable and prudent;
• ensured adherence to all applicable approved accounting
standards; and
• used the going concern basis for the preparation of the financial
statements.
The Directors are also responsible for ensuring that the
Company and Group maintain accounting records that disclose
with reasonable accuracy the financial position of the Company
and Group, and which enables them to ensure that the financial
statements comply with the Companies Act.
Furthermore, the Directors have the general responsibility of taking
such steps necessary to safeguard the assets of the Company and
Group and to prevent and detect fraud and other irregularities.
This statement is made in accordance with the resolution of the
Board of Directors dated 25 May 2011.
statement on corporate governance cont’d
L A P O R A N T A H U N A N I - B E R H A D A N N U A L R E P O R T 11
1. Status of Utilisation of Proceeds Raised from Rights Issue The details of the utilisation of the rights issue proceeds are as follows:-
2. Share Buybacks As at 31 December 2010, a total of 8,085,000 I-Berhad shares bought back during the previous financial years were held as treasury
shares and none of the shares bought back were resold or cancelled during the financial year.
3. Options, Warrants or Convertible SecuritiesThe Company did not issue any options, warrants or convertible securities during the financial year ended 31 December 2010.
4. American Depository Receipt (“ADR”) or Global Depository Receipt (“GDR”)The Company did not sponsor any ADR or GDR programme in the financial year ended 31 December 2010.
5. Sanctions and/or Penalties The Company and its subsidiaries, Directors and management have not been imposed any sanctions and/or penalties by the
relevant regulatory bodies.
6. Non-audit Fees Paid/PayableThe amount of non-audit fees paid/payable to the external Auditors, Messrs. BDO in respect of the financial year ended
31 December 2010 amounted to RM5,000.
7. Variation in ResultsThere is no significant variance between the audited results for the financial year ended 31 December 2010 and the unaudited
results announced on 28 February 2011.
8. Profit GuaranteesThere were no profit guarantees given by the Company during the financial year.
9. Material ContractsThere were no material contracts entered into by the Company and its subsidiaries involving Directors and substantial shareholders
either still subsisting at the end of the financial year ended 31 December 2010 or entered into since the end of the previous financial year.
10.Revaluation PolicySave as disclosed in Note 4 (Significant Accounting Policies) of the Notes to the Financial Statements, the Company does not have
a revaluation policy on landed properties.
Utilisation As Approved Revised Amount As Approved by Utilisation Balance
Securities Commission (SC) As At Unutilised
03/05/11
RM’000 RM’000 RM’000
Advertising and promotions 7,746 4,639 3,107
Development of i-City:-- Bridge financing for i-City 25,209 25,209 -- Long term investment in data centre 20,000 15,793 4,207- Investment in ICT facilities 10,000 4,821 5,179- Investment in the retail centre 10,000 10,000 -
Marketing network, sales and service outlet and showroom for i-City 1,000 800 200
Total 73,955 61,262 12,693
additional information
L A P O R A N T A H U N A N I - B E R H A D A N N U A L R E P O R T 12
The present members of the Audit Committee ofthe Board consist of:-
Chairman
Mr. Liang Yew Ming
Independent Non-Executive Director
(Appointed on 20 December 2010)
Members
Mr. Tan Hon Yik
Independent Non-Executive Director
(Appointed on 18 March 2011)
Madam Ong Poh Ling
Non-Executive Director
Composition and Terms of Reference(a) The Committee shall be appointed by the Board of Directors
from amongst the Directors of the Company and shall
comprise not less than three members, all of whom shall be
non-Executive Directors. The majority of the committee
members shall be Independent Directors.
(b) At least one of the member of the Committee:
(i) must be a member of the Malaysian Institute of Accountants; or
(ii) if he is not a member of the Malaysian Institute of Accountants,
he must have at least three (3) years’ working experience and• he must have passed the examinations specified in Part 1 of
the First Schedule of the Accountants Act 1967; or
• 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; or
(iii) fulfils such other requirements as prescribed or approvedby Bursa Malaysia Securities Berhad.
(c) No alternate Director shall be appointed as a member of the
Committee.
(d) The members of the Committee shall elect a Chairman from
among their number who shall be an Independent Director.
(e) The Board of Directors must review the term of office and
performance of the Committee and each of its members at
least once every three years.
(f) If a member of the Committee resigns, dies or for any other
reason ceases to be a member with the result that the number
of members is reduced to below three, the Board of Directors
shall, within three (3) months of that event, appoint such
number of new members as may be required to make up the
minimum number of three (3) members.
Composition ComplianceAll members of Audit Committee are Non-Executive Directors, with
majority of them being independent. No alternate Director has
been appointed as a member of the Audit Committee. Mr. Liang
Yew Ming who is a member of MIA and an Independent Non-
Executive Director chairs the Audit Committee.
AuthorityThe Committee shall, wherever necessary and reasonable for its
performance and in accordance with a procedure to be determined
by the Board of Directors and at the Company’s cost:-
(a) have authority to investigate any matter within its terms of
reference;
(b) have resources which are required to perform its duties;
(c) have full and unrestricted access to any information pertaining
to the Company;
(d) have direct communication channels with the external
auditors and person(s) carrying out the internal audit function
or activity (if any);
(e) be able to obtain outside legal or other external independent
professional advice, if it considers necessary; and
(f) be able to convene meetings with the external auditors, the internal
auditors or both, excluding the attendance of other Directors
and employees of the Company, whenever deemed necessary.
Duties and Responsibilitiesa. To review the following and report the same to the Board of
Directors of the Company:-
(i) with the external auditor, the audit plan;
(ii) with the external auditor, his evaluation of the system of
internal controls;
(iii) with the external auditor, his audit report;
(iv) the assistance given by the employees of the Company to
the external auditor;
(v) the adequacy of the scope, functions, competency and
resources of the internal audit functions and that it has
the necessary authority to carry out its work;
(vi) the internal audit programme, processes, the results of the
internal audit programme, processes or investigation
undertaken and whether or not appropriate action is taken
on the recommendations of the internal audit function;
(vii) any appraisal or assessment of the performance of
members of the internal audit function;
(viii) the quarterly results and year end financial statements,
prior to the approval by the Board of Directors, focusing
particularly on:-• changes in accounting policies and practices;
• significant adjustments arising from the audit;
• significant and unusual events;
• the going concern assumption; and• compliance with accounting standards and other legal
requirements;
(ix) any related party transaction and conflict of interestsituation that may arise within the Company or Groupincluding any transaction, procedure or course of conductthat raises questions of management integrity.
audit committee report
L A P O R A N T A H U N A N I - B E R H A D A N N U A L R E P O R T 13
b. To discuss problems and reservations arising from the interim
and final audits, and any matter the auditor may wish to
discuss (in the absence of management where necessary);
c. To consider the major findings of internal investigations and
management’s response;
d. To recommend and consider the nomination and appointment
of a person or persons as external auditors, the audit fees and
any question of resignation or dismissal; and
e. To consider any other functions or duties as maybe agreed to
by the Committee and the Board.
Meeting Proceduresa. Quorum
A quorum shall be two members, both being Independent Directors.
b. Secretary
The Company Secretary shall be the Secretary of the Committee.
c. MeetingsThe Chief Financial Officer and representatives of the external Auditors(if required) shall normally attend meetings. The senior managementteam may attend meetings upon the invitation of the Audit Committeeto provide the Committee with detailed explanations and clarificationon matters that have been tabled.
Meetings shall be held not less than four times in a financial year.Additional meetings may be called at the discretion of the Chairman ofthe Committee. The external Auditors may request a meeting if theyconsider that one is necessary. The minutes of the Audit Committeemeetings and the Internal Audit Reports are formally tabled to theBoard for noting and also to provide the opportunity to other Non-Audit Committee members to seek clarification, raise queries orprovide their views on the matters discussed by the said Committee,where necessary. The Chairman of the Audit Committee would reportto the Directors at Board meetings, the Committee’s recommendationsand actions taken on salient issues which have been raised at the AuditCommittee Meetings.
Attendance at MeetingsDuring the financial year ended 31 December 2010, the Audit
Committee held a total of two meetings and details of attendance of
each member at the said Committee meetings are as follows:-
Summary of Activities During the Year• Reviewed and recommended for Board approval, the Quarterly
Reports prepared by management for submission to the
relevant authorities.
• Discussed and approved the Internal Audit plan for 2010.
• Discussed and approved the Internal Audit report on leasing
and general control and risk mapping.
• Reviewed and recommended for Board approval, the
Company’s Statement on Internal Control and Statement of
Directors’ responsibility for preparing the annual audited
Financial Statements for incorporation in the Annual Report of
the Company.
• Discussed the external Auditors’ report on the status of the
audit for the financial year ended 31 December 2009.
• Reviewed the external Auditors’ management letter for the
Group in respect of the financial year ended 31 December
2009.
• Reviewed with the external Auditors, the problems and
reservations arising from the audit and any other matters the
external Auditors may wish to discuss in the absence of
management.
Internal Audit FunctionThe Group’s internal audit function is outsourced to an external
professional firm specialising in internal audit and risk
management which reports to the Audit Committee.
During the financial year, the activities carried out by the Internal
Auditors include amongst others:-
(i) Review of the adequacy and effectiveness of the Group’s
systems of internal control and compliance with policies and
procedures over the following business processes/areas:
• Property & Building Management
• Property Preventive Maintenance
(ii) Follow-up on previous internal audit on leasing and general
control.
The cost incurred for the internal audit function was RM13,000.00
in respect of the financial year ended 31 December 2010.
audit committee reportcont’d
Members of Number of Audit Committee Meetings Attended
Mr. Liang Yew Ming N/A(appointed on 20 December 2010)
Madam Ong Poh Ling 2/2
Y. Bhg. Datuk Pengiran Hj Mohd Hussein Bin
Datuk Pengiran Hj Mohd Tahir 1/1(resigned on 17 May 2010)
Y. Bhg. Datuk Abu Hassan Bin Kendut 2/2(not re-elected on 17 June 2010)
L A P O R A N T A H U N A N I - B E R H A D A N N U A L R E P O R T 14
INTRODUCTION Pursuant to paragraph 15.26(b) of the Listing Requirements of Bursa
Malaysia Securities Berhad (“Bursa Securities”), the Board of Directors
is pleased to provide a statement on the state of internal controls of
I-Berhad Group for financial year ended 31 December 2010.
BOARD RESPONSIBILITYThe Board recognise the importance of the Group’s sound internal
controls as well as risk management practices, and affirms its
overall responsibility of reviewing the adequacy and effectiveness
of the internal control system of the Group. The Board has via the
Audit Committee obtained the necessary assurance on the
adequacy and effectiveness of the Group’s internal control systems
through independent reviews carried out by the internal audit
function.
Due to inherent limitations in any system of internal controls, such
system can only manage rather than eliminate all possible risks
resulting in the Group’s inability to achieve its business objectives.
Thus, the system can provide reasonable, and not absolute,
assurance against material misstatement or loss. For the purposes
of this framework, associates are not dealt with as part of the
Group, and therefore, not covered in this statement.
INTERNAL CONTROL The main fundamentals of the Group’s internal control system
established are summarised as follows:-
1. Control Environment• Organisation Structure and Authorisation Procedures
The Group maintains a defined organisation structure
with clear lines of reporting to the operating unit heads
and Board, including defined lines of accountability,
authority limits and approval procedures. Key
responsibilities are properly segregated in order that no
employee has total control of a transaction.
• Human Resource Structure
The Group’s centralised human resource function that sets
out the procedures for recruitment, training and appraisal
of the employees within the Group.
2. Risk Management FrameworkThe Group’s key risk profile was developed with the assistance
of a professional firm of consultants. Risks identified were
assessed in terms of the possibility of occurrence and the
impact to the Group if the risk materialise. The Group’s key risk
profile is reviewed and updated periodically by the
Management.
On a day to day basis, the management of risks is assigned to
Heads of Department and significant risks identified and the
corresponding internal controls implemented are discussed at
periodic management meetings attended by the Executive
Directors.
The abovementioned practices serve as the ongoing process
adopted by Management to identify, evaluate and manage
significant risks.
3. Internal Audit FunctionThe Group’s internal audit function is outsourced to a
professional internal audit firm which independently reviews
the Group’s system of internal control and provides the Audit
Committee with the assurance on the adequacy and
effectiveness of the system of internal control. The outsourced
internal audit function carries out audits in accordance with
the internal audit plan approved by the Audit Committee. The
results of their review are presented to the Audit Committee
and a follow-up visit was conducted to ensure that
Management’s action plans in respect of matters highlighted
in the internal audit reports have been adequately addressed
by Management.
4. Review and Monitoring ProcessThe Group’s performance and operations are reviewed and
deliberated at periodic management meetings involving the
Executive Directors. Deviation in targeted goals and corrective
actions implemented where necessary are reported by the
Heads of Department at these meetings.
5. Other Key Elements of Internal Controls• Documented operating procedures are regularly
reviewed and updated, where applicable.
• Regular site visits by members of the Executive Board and
Senior Management.
6. ConclusionBased on the above, the Board believes that the system of
internal controls and risk management of the Group is sound
and sufficient to safeguard shareholders’ investments and the
Group’s assets.
statement on internal control
FIFA World Cup 2010 Live Telecast
Study Tour Group From Kolej Islam Sultan Alam Shah
Kelantanese Cultural Presentation
Contemporary Malaysian Art Festival
L A P O R A N T A H U N A N I - B E R H A D A N N U A L R E P O R T 15
corporate socialresponsibility
The Group’s Corporate Social Responsibility
programme for the year 2010 was two fold. The
Group provides the use of facilities for community
related events to promote the Malaysian arts and
culture as well as sports amongst the local
community. These events carried out at i-City, Shah
Alam were as follows:
1. Chap Goh Mei Celebrations in February 2010;
2. FIFA World Cup 2010 live telecast from June to July 2010;
3. Kelantanese Cultural Presentation by Kelantan Tourism
Board in July 2010;
4. Contemporary Malaysian Art Festival officiated by the
Minister of Tourism, YB Dato’ Sri Dr Ng Yen Yen in August
2010; and
5. Moon Cake/Mid Autumn Festival Celebrations in
September 2010.
In addition, the Group also organises various study
tour programmes for the various Government
Agencies and student groups as part of the Group’s
sharing of the i-City development and tourism
model. These visits were organised for the Sarawak
Local Council, Majlis Daerah Semporna Sabah and
Kolej Islam Sultan Alam Shah in 2010.
L A P O R A N T A H U N A N I - B E R H A D A N N U A L R E P O R T 16
8 July
Dazzling Royals at City Of Digital Lights
While touring the digital lightscapes, Tuanku Sultan Selangor was impressed with the family groups coming from near and far. From left to right: Tan Sri Datuk Lim Kim Hong, Executive Chairman of I-Berhad, DYTM Tengku Amir Shah Ibni Sultan Sharafuddin Idris Shah, YAB Tan Sri Dato' Abdul Khalid Bin Ibrahim, Menteri Besar of Selangor, Sultan Selangor DYMM Sultan Sharafuddin Idris Shah Al-Haj Ibni Almarhum Sultan Salahuddin Abdul Aziz Shah Al-Haj.
25 Feb
Foreign diplomats from Poland, Pakistan, Afghanistan, Maldives, Papua New Guinea, Iran and Albania were special guests at the Selangor State recent Chap Goh Mei celebrations held in conjunction with Chinese New Year. Some 30,000 visitors were entertained by stage performances and fireworks, in addition to the lightscapes showcase at i-City.
Chap Goh Mei Celebrations at i-City
12 July
The City of Digital Lights which operates 24 hours offers a host of activities which includes the recently concluded month long FIFA World Cup 2010. The digital light showcase in i-City has proven that i-City is a popular focal point for family oriented entertainment.
2010 FIFA World Cup finals match live
an, Afghanistan, Maldives, Papua New uests at the Selangor State recent Chapn with Chinese New Year. Some 30,000 mances and fireworks, in addition to the
25 May
I-Berhad ups its ante in turning i-City into a preferred tourism nightspot
The lights of i-City had attracted tourists from near and far… International renowned Hong Kong Actor, Simon Yam an avid photographer took time off to enjoy and capture the lights at i-City.From left to right: Mr. Jim Cheah, Vice President and Senior Country Manager, Malaysia & Brunei of MasterCard Worldwide, Ms. Monica Ong, Director of I-Berhad , Mr. Simon Yam, Mr. Simon Wong, Assistant Director, Image Communications Product Division, Canon Marketing Malaysia.
nt and Senior Country Manager, Malaysia & Ong, Director of I-Berhad , Mr. Simon Yam,Communications Product Division, Canon
11 June
24 hours Technopreneur Campus
i-City kicked off its 24 hours Technopreneur Campus with the screening of the 2010 FIFA World Cup opening match live from Johannesburg.From left to right: Tan Sri Datuk Lim Kim Hong, Executive Chairman of I-Berhad, H.E. Mr. Jorge Alberto Lozoya, Ambassador of Mexico, Tan Sri Dato’ Abdul Khalid Bin Ibrahim, Menteri Besar of Selangor, Mr. Colonel Ben Mbanjwa, South Africa Defence Advisor, Dato’ Mazalan Bin Md Noor, the then Mayor of Shah Alam.
calendar of events 2010
L A P O R A N T A H U N A N I - B E R H A D A N N U A L R E P O R T 17
13 Aug
i-City, Malaysia’s newest night tourism destination
Tan Sri Datuk Lim Kim Hong, Executive Chairman of I-Berhad receiving the “i-City Malaysia’s newest night tourism destination” endorsement from YB Dato’ Sri Dr Ng Yen Yen, Minister of Tourism on behalf of i-City.
airman of I-Berhad receiving the “i-City tion” endorsement from YB Dato’ Sri Dr f of i-City.
YB Elizabeth Wong, Selangor Executive Councillor for Tourism, Consumer Affairs and Environment, presenting i-City, Selangor’s Newest Tourism Icon Award to Tan Sri Datuk Lim Kim Hong, Executive Chairman of I-Berhad with the new lighscapes at the background.
i-City recognised as Selangor’s Newest Tourism Icon
22 Nov
Set to propel i-City as the next generation gated neighbourhood… I-Berhad is the 1st developer in the country to conceptualize the ‘gated but open’ develop-ment providing the necessary facilities and services to the community.From left to right: Dato’ Eu Hong Chew, Chief Executive Officer of I-Berhad, Tuan Mohtar Bin Hani, Deputy Mayor Shah Alam, YB. Dato’ Wira Chor Chee Heung, Minister of Housing and Local Government, Tan Sri Datuk Lim Kim Hong, Executive Chairman of I-Berhad.
Gated and Guarded Community concept
Royals grace the City of Digital Lights
Tuanku Raja Perlis and Tuanku Raja Perempuan Perlis were attracted by the dazzling lightscapes at i-City.From left to right: DYMM Tuanku Syed Sirajuddin Ibni Al-Marhum Tuanku Syed Putra Jamalullail, Raja Perlis, YB. Dato' Md Roshdi bin Dato' Ahmad Nordin, Executive Chairman of Raggs Holdings Sdn Bhd, Mr Lee Ming Suan, General Manager of i-City Properties Sdn Bhd, Dato' Eu Hong Chew, Chief Executive Officer of I-Berhad.
6 Nov
10 Nov
Minister of Energy, Green Technology and Water welcomes the initiative by HDC Data Centre Sdn Bhd and i-City to make the next 30,000 sq ft data centre in i-City a green data centre.From left to right: Mr. Chua Tai Eu, Executive Director of HDC Data Centre, YB Datuk Richard Fong, Chairman of HDC Data Centre, YB. Dato’ Sri Peter Chin Fah Kui, Minister of Energy, Green Technology and Water, Tan Sri Datuk Lim Kim Hong, Executive Chairman of I-Berhad, Dato’ Eu Hong Chew, Chief Executive Officer of I-Berhad.
Strategic Alliance between i-City and HDC Data Centre for the development of a ‘Green’ Data Centre
9 Dec
18
f i n a n c i a l s t a t e m e n t s
directors’ report 19
statement by directors 23
statutory declaration 23
independent auditors’ report 24
statements of financial position 26
statements of comprehensive income 28
statement of changes in equity 29
statement of cash flows 31
notes to the financial statements 33
L A P O R A N T A H U N A N I - B E R H A D A N N U A L R E P O R T 19
directors’ reportdirectors’ report
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 2010.
PRINCIPAL ACTIVITIES
The Company is principally engaged in investment holding. The principal activities of the subsidiaries are set out in Note 9 to the financial statements. There have been no significant changes in the nature of these activities during the financial year.
RESULTSGroup Company
RM RM
Profit for the financial year 3,463,629 1,766,059
Attributable to:Owners of the parent 2,514,841 1,766,059Minority interest 948,788 –
3,463,629 1,766,059
DIVIDENDS
Dividend paid since the end of the previous financial year was as follows:
RM
In respect of the financial year ended 31 December 2009: Final dividend of 3 sen per ordinary share, comprising 1.77 sen less tax of 25% and 1.23 sen single tier dividend, paid on 15 September 2010 2,721,212
In respect of the financial year ended 31 December 2010, a final dividend of 1 sen single tier dividend, amounting to RM1,064,014 has been proposed by the Directors after the end of the reporting period for shareholders’ approval at the forthcoming Annual General Meeting.
RESERVES AND PROVISIONS
There were no material transfers to or from reserves or provisions during the financial year other than those disclosed in the financial statements.
ISSUE OF SHARES AND DEBENTURES
The Company has not issued any new shares or debentures during the financial year.
OPTIONS GRANTED OVER UNISSUED SHARES
No options were granted to any person to take up unissued shares of the Company.
directors’ reportcont’d
L A P O R A N T A H U N A N I - B E R H A D A N N U A L R E P O R T 20
directors’ reportcont’d
DIRECTORS
The Directors who held office since the date of the last report are:
Y. Bhg. Tan Sri Datuk Lim Kim Hong
Y. Bhg. Puan Sri Tey Siew Thuan
Y. Bhg. Dato’ Eu Hong Chew
Ong Poh Ling
Liang Yew Ming (appointed on 20 December 2010)
Tan Hon Yik (appointed on 18 March 2011)
Y. Bhg. Tan Sri Dato’ Sri Hamad Kama Piah Bin Che Othman (resigned on 9 July 2010)
Y. Bhg. Datuk Pengiran Hj Mohd Hussein Bin Datuk Pengiran Hj Mohd Tahir (resigned on 17 May 2010)
Y. Bhg. Datuk Abu Hassan Bin Kendut (not re-elected on 17 June 2010)
DIRECTORS’ INTERESTS
The Directors holding office at the end of the financial year and their beneficial interests in the ordinary shares of the Company and of its related corporations during the financial year ended 31 December 2010 as recorded in the Register of Directors’ Shareholdings kept by the Company under Section 134 of the Companies Act, 1965 were as follows:
Number of ordinary shares of RM1.00 eachBalance Balance
as at as at1.1.2010 Bought Sold 31.12.2010
Shares in the Company
Direct interests:
Y. Bhg. Tan Sri Datuk Lim Kim Hong 427,000 – – 427,000Y. Bhg. Puan Sri Tey Siew Thuan 310,000 – – 310,000Ong Poh Ling 14,333 – – 14,333
Indirect interests:
Y. Bhg. Tan Sri Datuk Lim Kim Hong* 62,337,746 – – 62,337,746
* By virtue of shares held by Sumur Ventures Sdn. Bhd., a company incorporated in Malaysia. The shareholding of Y. Bhg. Tan Sri Datuk Lim Kim Hong in Sumur Ventures Sdn. Bhd. as at 31 December 2010 amounted to 544,819 ordinary shares of RM1.00 each.
By virtue of his interests in the ordinary shares of the Company, Y. Bhg. Tan Sri Datuk Lim Kim Hong is also deemed to be interested in the ordinary shares of all the subsidiaries to the extent that the Company has an interest.
Y. Bhg. Tan Sri Datuk Lim Kim Hong is the spouse of Y. Bhg. Puan Sri Tey Siew Thuan. By virtue of their relationship, they are also deemed to have interests in shares held by each other, both direct and indirect.
None of the other Directors holding office at the end of the financial year held any interest in ordinary shares of the Company and of its related corporations during the financial year.
directors’ reportcont’d
L A P O R A N T A H U N A N I - B E R H A D A N N U A L R E P O R T 21
DIRECTORS’ BENEFITS
Since the end of the previous financial year, none of the Directors have 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 as shown in the financial statements and remuneration of RM516,936 payable by a related corporation to a Director) 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, except for any benefit which may be deemed to have arisen by virtue of those transactions as disclosed in Note 32 to the financial statements.
There were no arrangements during and at the end of the financial year, to which the Company is a party, which had the object of enabling the Directors to acquire benefits by means of the acquisition of shares in or debentures of the Company or any other body corporate.
OTHER STATUTORY INFORMATION REGARDING THE GROUP AND THE COMPANY
(I) AS AT THE END OF THE FINANCIAL YEAR
(a) Before the statements of comprehensive income and statements of financial position 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 have satisfied themselves that all known bad debts had been written off and that adequate provision had been made for doubtful debts; and
(ii) to ensure that any current assets other than debts, which were unlikely to realise their book values in the ordinary course of business had been written down to their estimated realisable values.
(b) In the opinion of the Directors, the results of the operations of the Group and of the Company during the financial year have not been substantially affected by any item, transaction or event of a material and unusual nature except for impairment losses on goodwill and waiver of debts by creditors as disclosed in Note 24 to the financial statements.
(II) FROM THE END OF THE FINANCIAL YEAR TO THE DATE OF THIS REPORT
(c) The Directors are not aware of any circumstances:
(i) which would render the amounts written off for bad debts or the amount of the provision for doubtful debts in the financial statements of the Group and of the Company inadequate to any material extent; and
(ii) which would render the values attributed to current assets in the financial statements of the Group and of the Company misleading; and
(iii) which have arisen which would render adherence to the existing method of valuation of assets or liabilities of the Group and of the Company misleading or inappropriate.
(d) In the opinion of the Directors:
(i) there has not arisen any item, transaction or event of a material and unusual nature likely to affect substantially the results of the operations of the Group and of the Company for the financial year in which this report is made; and
(ii) no contingent or other liability has become enforceable, or is likely to become enforceable, within the period of twelve months after the end of the financial year which will or may affect the ability of the Group or of the Company to meet their obligations as and when they fall due.
directors’ reportcont’d
L A P O R A N T A H U N A N I - B E R H A D A N N U A L R E P O R T 22
OTHER STATUTORY INFORMATION REGARDING THE GROUP AND THE COMPANY (continued)
(III) AS AT THE DATE OF THIS REPORT
(e) There are no charges on the assets of the Group and of the Company which have arisen since the end of the financial year to secure the liabilities of any other person.
(f ) There are no contingent liabilities of the Group and of the Company which have arisen since the end of the financial year.
(g) The Directors are not aware of any circumstances not otherwise dealt with in the report or financial statements which would render any amount stated in the financial statements of the Group and of the Company misleading.
SIGNIFICANT EVENT DURING THE FINANCIAL YEAR
On 11 October 2010, I-R&D Sdn. Bhd. (‘I-R&D’), a subsidiary, acquired an additional 380,000 ordinary shares of RM1.00 each in I-Office2 Sdn. Bhd. (‘I-Office2’) and subscribed an additional 350,000 ordinary shares of RM1.00 each in I-Office2 for a cash consideration of RM310,000 and RM1,225,000 respectively, resulting in I-Office2 becoming a 80% owned subsidiary of I-R&D from 35% held previously.
SIGNIFICANT EVENT SUBSEQUENT TO THE END OF THE REPORTING PERIOD
On 1 January 2011, I-R&D entered into a lease agreement with The Peak Sdn. Bhd. to lease 22 strata cybercenter-office suites at Block A, CityPark in i-City for a lease term of five years.
HOLDING COMPANIES
The Directors regard Sumur Ventures Sdn. Bhd. and Sumurwang Sdn. Bhd., as the ultimate and immediate holding company respectively. Both companies are incorporated in Malaysia.
AUDITORS
The auditors, BDO, have expressed their willingness to continue in office.
Signed on behalf of the Board in accordance with a resolution of the Directors.
Puan Sri Tey Siew ThuanDirector
Kuala Lumpur19 April 2011
Dato’ Eu Hong ChewDirector
L A P O R A N T A H U N A N I - B E R H A D A N N U A L R E P O R T 23
statement by directors
In the opinion of the Directors, the financial statements set out on pages 26 to 103 have been drawn up in accordance with applicable approved Financial Reporting Standards and the provisions of the Companies Act, 1965 in Malaysia so as to give a true and fair view of the financial position of the Group and of the Company as at 31 December 2010 and of their financial performance and cash flows for the financial year then ended.
On behalf of the Board,
Puan Sri Tey Siew Thuan Director
Kuala Lumpur19 April 2011
Dato’ Eu Hong ChewDirector
statutory declaration
I, Lew Swee Kwang, being the Officer primarily responsible for the financial management of I-Berhad, do solemnly and sincerely declare that the financial statements set out on pages 26 to 103 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 Kuala Lumpur in the Federal Territory on 19 April 2011.
Lew Swee Kwang
Before me:
Mohd Radzi Bin Yasin (No. W327)Commissioner for OathsKuala Lumpur
L A P O R A N T A H U N A N I - B E R H A D A N N U A L R E P O R T 24
independent auditors’ report
INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF I-BERHAD
Report on the Financial Statements
We have audited the financial statements of I-Berhad, which comprise the statements of financial position as at 31 December 2010 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 26 to 103.
Directors’ Responsibility for the Financial Statements
The Directors of the Company are responsible for the preparation of financial statements that give a true and fair view in accordance with applicable approved Financial Reporting Standards and the provisions of the Companies Act, 1965 in Malaysia, and for such internal control as the Directors determine are necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
Auditors’ Responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with approved standards on auditing in Malaysia. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on our judgement, including the assessment of risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the entity’s preparation of the financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the 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 have been properly drawn up in accordance with applicable approved Financial Reporting Standards and the provisions of the Companies Act, 1965 in Malaysia so as to give a true and fair view of the financial position of the Group and of the Company as at 31 December 2010 and of their financial performance and cash flows for the financial year then ended.
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) In our opinion, the accounting and other records and the registers required by the Act to be kept by the Company and its subsidiaries of which we have acted as auditors have been properly kept in accordance with the provisions of the Act.
(b) We have considered the financial statements and the auditors’ report of a subsidiary of which we have not acted as auditors, which is indicated in Note 9 to the financial statements.
(c) 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.
(d) The audit 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.
L A P O R A N T A H U N A N I - B E R H A D A N N U A L R E P O R T 25
independent auditors’ reportcont’d
Other Reporting Responsibilities
The supplementary information set out in Note 18(d) to the financial statements 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.
BDO AF : 0206 Chartered Accountants
Kuala Lumpur 19 April 2011
Lim Seng Siew2894/08/11 (J)Chartered Accountant
L A P O R A N T A H U N A N I - B E R H A D A N N U A L R E P O R T 26
statements of financial positionas at 31 december 2010
Group Company2010 2009 2010 2009
(Restated) (Restated)Note RM RM RM RM
ASSETS
Non-current assets
Property, plant and equipment 7 4,819,808 11,711,389 – 4,780,864)Investment properties 8 62,100,000 32,205,075 5,600,000) – Investments in subsidiaries 9 – – 4,396,380) 4,396,380)Investment in an associate 10 – – – – Other investments 11 1 – – – Goodwill 12 – – – –
66,919,809 43,916,464 9,996,380) 9,177,244)
Current assets
Property development costs 13 48,153,264) 89,323,102) – – Inventories 14 54,807,378) – – – Trade and other receivables 15 4,730,410) 24,950,012) 141,799,109) 119,531,366)Other investments 11 71,604) 492,476) 71,604) 492,476)Current tax assets 457,165) 17,441) 188,178) – Cash and cash equivalents 16 43,135,820) 51,248,836) 18,859,472) 43,065,032)
151,355,641) 166,031,867) 160,918,363) 163,088,874)
TOTAL ASSETS 218,275,450) 209,948,331) 170,914,743) 172,266,118)
EQUITY AND LIABILITIES
Equity attributable to owners of the parent
Share capital 17 114,486,356) 114,486,356 114,486,356 114,486,356Reserves 18 55,164,937 54,219,604 64,130,411 65,085,564Treasury shares 19 (8,470,595) (8,470,595) (8,470,595) (8,470,595)
161,180,698) 160,235,365) 170,146,172) 171,101,325)
Minority interest 555,468) – – –
TOTAL EQUITY 161,736,166) 160,235,365) 170,146,172) 171,101,325)
statements of financial positionas at 31 december 2010cont’d
L A P O R A N T A H U N A N I - B E R H A D A N N U A L R E P O R T 27
Group Company2010 2009 2010 2009
(Restated) (Restated)Note RM RM RM RM
LIABILITIES
Non-current liabilities
Deferred tax liabilities 20 881,411 625,585 407,149 390,179
881,411 625,585 407,149 390,179
Current liabilities
Trade and other payables 21 55,657,181 48,962,540 361,422 651,301Current tax liabilities 692 124,841 – 123,313
55,657,873 49,087,381 361,422 774,614
TOTAL LIABILITIES 56,539,284 49,712,966 768,571 1,164,793
TOTAL EQUITY AND LIABILITIES 218,275,450 209,948,331 170,914,743 172,266,118
The accompanying notes form an integral part of the financial statements.
L A P O R A N T A H U N A N I - B E R H A D A N N U A L R E P O R T 28
statements of comprehensive incomefor the financial year ended 31 december 2010
Group Company2010 2009 2010 2009
Note RM RM RM RM
Revenue 22 9,937,726 5,758,004 – –
Cost of sales 23 (8,879,990) (9,859,240) – –
Gross profit/(loss) 1,057,736 (4,101,236) – –
Other income 11,822,991 9,340,269 2,380,687 2,840,990
Other expenses (9,050,799) (3,702,414) (489,490) (1,344,142)
Share of loss of an associate – (610,066) – –
Profit before tax 24 3,829,928 926,553 1,891,197 1,496,848
Tax expense 25 (366,299) (17,082) (125,138) (54,920)
Profit for the financial year 3,463,629 909,471 1,766,059 1,441,928
Other comprehensive income:
Foreign currency translations (73,296) (10,246) – –
Total comprehensive income 3,390,333 899,225 1,766,059 1,441,928
Profit attributable to:Owners of the parent 2,514,841 909,471 1,766,059 1,441,928Minority interest 948,788 – – –
3,463,629 909,471 1,766,059 1,441,928
Total comprehensive income attributable to:Owners of the parent 2,441,545 899,225 1,766,059 1,441,928Minority interest 948,788 – – –
3,390,333 899,225 1,766,059 1,441,928
Basic earnings per ordinary share attributable to equity holders of the parent (sen)
28 3.26 0.85
The accompanying notes form an integral part of the financial statements.
L A P O R A N T A H U N A N I - B E R H A D A N N U A L R E P O R T 29
consolidated statement of changes in equity for the financial year ended 31 december 2010
ExchangeShare Treasury Share Revaluation translation Accumulated Total
capital shares premium reserve reserve losses equityGroup Note RM RM RM RM RM RM RM
Balance as at 1 January 2009 114,486,356 (8,470,595) 60,529,560 1,511,027 78,126 (4,808,286) 163,326,188
Realisation of revaluation reserve – – – (90,004) – 90,004 –
Total comprehensive income – – – – (10,246) 909,471 899,225
Transaction with owners:Dividend paid 29 – – – – – (3,990,048) (3,990,048)
Balance as at 31 December 2009 114,486,356 (8,470,595) 60,529,560 1,421,023 67,880 (7,798,859) 160,235,365
TotalExchange attributable
Share Treasury Share Revaluation translation Accumulated to owners Minority Totalcapital shares premium reserve reserve losses of the parent interest equity
Group Note RM RM RM RM RM RM RM RM RM
Balance as at 1 January 2010 114,486,356 (8,470,595) 60,529,560 1,421,023 67,880 (7,798,859) 160,235,365 – 160,235,365
Realisation of revaluation reserve – – – (90,004) – 90,004 – – –
Total comprehensive income – – – – (73,296) 2,514,841 2,441,545 948,788 3,390,333
Transactions with owners:
Dividend paid 29 – – – – – (2,721,212) (2,721,212) – (2,721,212)
Changes in equity interest in a subsidiary – – – – – 1,225,000 1,225,000 – 1,225,000
Acquisition of interest in a subsidiary by minority interest – – – – – – – (393,320) (393,320)
Total transactions with owners – – – – – (1,496,212) (1,496,212) (393,320) (1,889,532)
Balance as at 31 December 2010 114,486,356 (8,470,595) 60,529,560 1,331,019 (5,416) (6,690,226) 161,180,698 555,468 161,736,166
The accompanying notes form an integral part of the financial statements.
The accompanying notes form an integral part of the financial statements
L A P O R A N T A H U N A N I - B E R H A D A N N U A L R E P O R T 30
statement of changes in equity for the financial year ended 31 december 2010
Share Treasury Share Revaluation Retained Totalcapital shares premium reserve earnings equity
Company Note RM RM RM RM RM RM
Balance as at 1 January 2009 114,486,356 (8,470,595) 60,529,560 1,511,027 5,593,097 173,649,445
Realisation of revaluation reserve – – – (75,816) 75,816 –
Total comprehensive income – – – – 1,441,928 1,441,928
Transaction with owners:Dividend paid 29 – – – – (3,990,048) (3,990,048)
Balance as at 31 December 2009 114,486,356 (8,470,595) 60,529,560 1,435,211 3,120,793 171,101,325
Share Treasury Share Revaluation Retained Totalcapital shares premium reserve earnings equity
Company Note RM RM RM RM RM RM
Balance as at 1 January 2010 114,486,356 (8,470,595) 60,529,560 1,435,211 3,120,793 171,101,325
Realisation of revaluation reserve – – – (75,816) 75,816 –
Total comprehensive income – – – – 1,766,059 1,766,059
Transaction with owners:Dividend paid 29 – – – – (2,721,212) (2,721,212)
Balance as at 31 December 2010 114,486,356 (8,470,595) 60,529,560 1,359,395 2,241,456 170,146,172
L A P O R A N T A H U N A N I - B E R H A D A N N U A L R E P O R T 31
statement of cash flows for the financial year ended 31 december 2010
Group Company2010 2009 2010 2009
Note RM RM RM RM
CASH FLOWS FROM OPERATING ACTIVITIES
Profit before tax 3,829,928 926,553 1,891,197 1,496,848
Adjustments for:
Accruals no longer required (97,028) – – – Bad debts written off 6,392 7,626 – – Depreciation of property, plant and equipment 7 1,446,160 840,816 – 214,677Dividend income (8,469) (99,457) (8,469) (99,457)Fair value adjustments of investment properties 8 (4,867,838) (1,164,500) (819,136) – Gain on disposal of other investment (342) – (342) – Gain on disposal of investment properties – (5,660,317) – – Gain on disposal of property, plant and equipment (36,763) – – – Impairment losses on: – other investments 199,261 12,808 8,262 12,808– goodwill 4,333,279 – – – – trade receivables – 1,334 – – Interest expense 18,850 – – – Interest income (969,201) (2,129,181) (792,937) (1,981,051)Loss on disposal of property, plant and equipment 3,245 36,329 – – Property, plant and equipment written off 7 – 1,459 – – Reversal of impairment losses on trade receivables (197,392) (2,630) – – Share of loss of an associate – 610,066 – – Unrealised gain on foreign
Exchange – (56) – – Unrealised loss on foreign
Exchange 7,933 4,278 – – Waiver of debts by creditors (5,119,415) – – –
Operating (loss)/profit beforechanges in working capital (1,451,400) (6,614,872) 278,575 (356,175)
L A P O R A N T A H U N A N I - B E R H A D A N N U A L R E P O R T 32
statement of cash flows for the financial year ended 31 december 2010cont’d
Group Company2010 2009 2010 2009
Note RM RM RM RM
CASH FLOWS FROM OPERATING ACTIVITIES (continued)
Operating (loss)/profit beforechanges in working capital (1,451,400) (6,614,872) 278,575 (356,175)
Changes in working capital:Property development costs (13,637,540) (14,495,684) – – Inventories – 1,296,612 – – Trade and other receivables 20,692,990 (604,621) (3,493) 1,148,301Trade and other payables 5,001,633 (19,214,659) (289,879) 66,665
Cash generated from/(used in) operations 10,605,683 (39,633,224) (14,797) 858,791
Tax (paid)/refunded (674,346) 754,959 (418,433) –
Net cash from/(used in) operating activities 9,931,337 (38,878,265) (433,230) 858,791
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of a subsidiary for cash,net of cash acquired 31 (250,912) – – –
Advances to subsidiaries – – (22,264,250) (77,514,441)Dividend received 7,243 99,457 7,243 99,457Interest paid (18,850) – – – Interest received 958,904 3,202,875 792,937 1,981,051Payments for investment properties 8 (15,854,364) (31,243,932) – – Proceeds from disposal of other investments 412,952 2,832,609 412,952 2,832,609Proceeds from disposal of
property, plant and equipment 266,400 62,778 – – Proceeds from disposal of
investment properties – 100,000 – – Purchase of other investment (191,000) – – – Purchase of property, plant and equipment 7 (580,392) (1,081,520) – –
Net cash used in investing activities (15,250,019) (26,027,733) (21,051,118) (72,601,324)
CASH FLOWS FROM FINANCING ACTIVITY
Dividend paid 29 (2,721,212) (3,990,048) (2,721,212) (3,990,048)
Net cash used in financing activity (2,721,212) (3,990,048) (2,721,212) (3,990,048)
Net decrease in cash and cash equivalents (8,039,894) (68,896,046) (24,205,560) (75,732,581)
Effect of exchange rate changeson cash and cash equivalents (73,122) (14,412) – –
Cash and cash equivalents atbeginning of financial year 51,248,836) 120,159,294) 43,065,032) 118,797,613)
Cash and cash equivalents at end of financial year 16 43,135,820) 51,248,836) 18,859,472) 43,065,032)
The accompanying notes form an integral part of the financial statements.
L A P O R A N T A H U N A N I - B E R H A D A N N U A L R E P O R T 33
notes to the financial statements31 december 2010
1. CORPORATE INFORMATION
The Company is a public limited liability company, incorporated and domiciled in Malaysia and is listed on the Main Market of Bursa Malaysia Securities Berhad.
The registered office and principal place of business of the Company is located at D-1-4, Jalan Multimedia 7/AJ, CityPark, i-City, 40000 Shah Alam, Selangor Darul Ehsan.
The Directors regard Sumur Ventures Sdn. Bhd. and Sumurwang Sdn. Bhd., as the ultimate and immediate holding company respectively. Both companies are incorporated in Malaysia.
The financial statements are presented in Ringgit Malaysia (‘RM’), which is also the Company’s functional currency.
The financial statements were authorised for issue in accordance with a resolution by the Board of Directors on 19 April 2011.
2. PRINCIPAL ACTIVITIES
The Company is principally engaged in investment holdings. The principal activities of the subsidiaries are set out in Note 9 to the financial statements. There have been no significant changes in the nature of these activities during the financial year.
3. BASIS OF PREPARATION
The financial statements of the Group and of the Company have been prepared in accordance with applicable approved Financial Reporting Standards (‘FRSs’) and the provisions of the Companies Act, 1965 in Malaysia. However, Note 18(d) to the financial statements has been prepared in accordance with Guidance on Special Matter No. 1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants (‘MIA Guidance’) and the directive of Bursa Malaysia Securities Berhad.
4. SIGNIFICANT ACCOUNTING POLICIES
4.1 Basis of accounting
The financial statements of the Group and of the Company have been prepared under the historical cost convention except as otherwise stated in the financial statements.
The preparation of financial statements requires the Directors to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses and disclosure of contingent assets and liabilities. In addition, the Directors are also required to exercise their judgement in the process of applying the accounting policies. The areas involving such judgements, estimates and assumptions are disclosed in Note 6 to the financial statements. Although these estimates and assumptions are based on the Directors’ best knowledge of events and actions, actual results could differ from those estimates.
4.2 Basis of consolidation
The consolidated financial statements incorporate the financial statements of the Company and all its subsidiaries made up to the end of the financial year using the purchase method of accounting.
Under the purchase method of accounting, the cost of business combination is measured at the aggregate of fair values at the date of exchange, of assets given, liabilities incurred or assumed, and equity instruments issued plus any costs directly attributable to the business combination.
At the acquisition date, the cost of business combination is allocated to identifiable assets acquired, liabilities assumed and contingent liabilities in the business combination which are measured initially at their fair values at the acquisition date. The excess of the cost of business combination over the Group’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities is recognised as goodwill. If the cost of business combination is less than the interest in the net fair value of the identifiable assets, liabilities and contingent liabilities, the Group will:
notes to the financial statements31 december 2010cont’d
L A P O R A N T A H U N A N I - B E R H A D A N N U A L R E P O R T 34
4. SIGNIFICANT ACCOUNTING POLICIES (continued)
4.2 Basis of consolidation (continued)
(a) reassess the identification and measurement of the acquiree’s identifiable assets, liabilities and contingent liabilities and the measurement of the cost of the business combination; and
(b) recognise immediately in profit or loss any excess remaining after that reassessment.
When a business combination includes more than one exchange transaction, any adjustment to the fair values of the subsidiary’s identifiable assets, liabilities and contingent liabilities relating to previously held interests of the Group is accounted for as a revaluation.
Subsidiaries are consolidated from the acquisition date, which is the date on which the Group effectively obtains control, until the date on which the Group ceases to control the subsidiaries. Control exists when the Group has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. In assessing control, the existence and effect of potential voting rights that are currently convertible or exercisable are taken into consideration.
Intragroup balances, transactions and unrealised gains and losses on intragroup transactions are eliminated in full. Intragroup losses may indicate an impairment that requires recognition in the consolidated financial statements. If a subsidiary uses accounting policies other than those adopted in the consolidated financial statements for like transactions and events in similar circumstances, appropriate adjustments are made to its financial statements in preparing the consolidated financial statements.
The gain or loss on disposal of a subsidiary, which is the difference between the net disposal proceeds and the Group’s share of its net assets as of the date of disposal including the carrying amount of goodwill and the cumulative amount of any exchange differences that relate to the subsidiary, is recognised in the consolidated statement of comprehensive income.
Minority interest is that portion of the profit or loss and net assets of a subsidiary attributable to equity interests that are not owned, directly or indirectly through subsidiaries, by the Group. It is measured at the minority’s share of the fair value of the subsidiaries’ identifiable assets and liabilities at the acquisition date and the minority’s share of changes in the subsidiaries’ equity since that date.
Where losses applicable to the minority in a subsidiary exceed the minority’s interest in the equity of that subsidiary, the excess and any further losses applicable to the minority are allocated against the Group’s interest except to the extent that the minority has a binding obligation and is able to make additional investment to cover the losses. If the subsidiary subsequently reports profits, such profits are allocated to the Group’s interest until the minority’s share of losses previously absorbed by the Group has been recovered.
Minority interest is presented in the consolidated statement of financial position within equity and is presented in the consolidated statement of changes in equity separately from equity attributable to owners of the Company.
Minority interest in the results of the Group is presented in the consolidated statement of comprehensive income as an allocation of the total profit or loss for the financial year between minority interest and owners of the Company.
Transactions with minority interests are treated as transactions with parties external to the Group. Disposals to minority interests result in gains and losses for the Group that are recorded in profit or loss. Purchases from minority interests result in goodwill, being the difference between any consideration paid and the relevant share acquired of the carrying amount of net assets of the subsidiary.
4.3 Property, plant and equipment and depreciation
All items of property, plant and equipment are initially measured at cost. Cost includes expenditure that is directly attributable to the acquisition of the asset.
notes to the financial statements31 december 2010cont’d
L A P O R A N T A H U N A N I - B E R H A D A N N U A L R E P O R T 35
4. SIGNIFICANT ACCOUNTING POLICIES (continued)
4.3 Property, plant and equipment and depreciation (continued)
Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when the cost is incurred and it is probable that the future economic benefits associated with the asset will flow to the Group and the cost of the asset can be measured reliably. The carrying amount of parts that are replaced is derecognised. The costs of the day-to-day servicing of property, plant and equipment are recognised in profit or loss as incurred. Cost also comprises the initial estimate of dismantling and removing the asset and restoring the site on which it is located for which the Group is obligated to incur when the asset is acquired, if applicable.
Each part of an item of property, plant and equipment with a cost that is significant in relation to the total cost of the asset and which has a different useful life, is depreciated separately.
After initial recognition, property, plant and equipment except for buildings are stated at cost less any accumulated depreciation and any accumulated impairment losses. The buildings are stated at valuation, which is the fair value at the date of revaluation less any subsequent accumulated depreciation and subsequent accumulated impairment losses, if any.
Certain buildings of the Group have not been revalued since they were first revalued in 1982 and 1997. The Group does not adopt a policy of regular valuations. These revalued assets have been retained on the basis of their previous valuation in accordance with the transitional provisions of International Accounting Standards (‘IAS’) No 16 (Revised), Property, Plant and Equipment applied by the Group when the IAS was first adopted by the Malaysian Accounting Standards Board (‘MASB’) in 1998. The above transitional provisions are available only on the first application of the MASB approved accounting standards IAS 16 which is effective for periods ending on or after 1 September 1998. The transitional provisions will remain in force until and unless the Group adopts a revaluation policy in place of a cost policy.
Depreciation is calculated to write off the cost or valuation of the assets to their residual values on a straight line basis over their estimated useful lives. The principal depreciation periods and rates are as follows:
Buildings Over 45 – 50 years
Long term leasehold land Over 75 – 99 years
Office equipment, furniture, fittings and fixtures and renovation 10% to 33%
Motor vehicles 20%
At the end of each reporting period, the carrying amount of an item of property, plant and equipment is assessed for impairment when events or changes in circumstances indicate that its carrying amount may not be recoverable. A write down is made if the carrying amount exceeds the recoverable amount (see Note 4.9 to the financial statements on impairment of non-financial assets).
The residual values, useful lives and depreciation method are reviewed at each financial year end 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. If expectations differ from previous estimates, the changes are accounted for as a change in an accounting estimate.
The carrying amount of an item of property, plant and equipment is derecognised on disposal or when no future economic benefits are expected from its use or disposal. The difference between the net disposal proceeds, if any, and the carrying amount is included in profit or loss and the revaluation surplus related to those assets, if any, is transferred directly to retained earnings.
notes to the financial statements31 december 2010cont’d
L A P O R A N T A H U N A N I - B E R H A D A N N U A L R E P O R T 36
4. SIGNIFICANT ACCOUNTING POLICIES (continued)
4.4 Leases and hire purchase
(a) Finance leases and hire purchase
Assets acquired under finance leases and hire purchase which transfer substantially all the risks and rewards of ownership to the Group are recognised initially at amounts equal to the fair value of the leased assets or, if lower, the present value of the minimum lease payments, each determined at the inception of the lease. The discount rate used in calculating the present value of the minimum lease payments is the interest rate implicit in the leases, if this is practicable to determine; if not, the Group’s incremental borrowing rate is used. Any initial direct costs incurred by the Group are added to the amount recognised as an asset. The assets are capitalised as property, plant and equipment and the corresponding obligations are treated as liabilities. The property, plant and equipment capitalised are depreciated on the same basis as owned assets.
The minimum lease payments are apportioned between finance charges and a reduction of the outstanding liability. The finance charges are recognised in profit or loss over the period of the lease term so as to produce a constant periodic rate of interest on the remaining lease and hire purchase liabilities.
(b) Operating leases
A lease is classified as an operating lease if it does not transfer substantially all the risks and rewards incidental to ownership.
Lease payments under operating leases are recognised as an expense on a straight line basis over the lease term.
(c) Leases of land and buildings
For leases of land and buildings, the land and buildings elements are considered separately for the purpose of lease classification and these leases are classified as operating or finance leases in the same way as leases of other assets.
The minimum lease payments including any lump-sum upfront payments made to acquire the interest in the land and buildings are allocated between the land and the buildings elements in proportion to the relative fair values of the leasehold interests in the land element and the buildings element of the lease at the inception of the lease.
For a lease of land and buildings in which the amount that would initially be recognised for the land element is immaterial, the land and buildings are treated as a single unit for the purpose of lease classification and is accordingly classified as a finance or operating lease. In such a case, the economic life of the buildings is regarded as the economic life of the entire leased asset.
Following the adoption of Amendment to FRS 117 Leases contained in the Improvements to FRSs (2009), the Group reassessed the classification of land elements of unexpired leases on the basis of information existing at the inception of those leases. Consequently, the Group retrospectively reclassified prepaid lease payments for land as finance leases as disclosed in Notes 7 and 38 to the financial statements.
4.5 Property development activities
(a) Land held for property development
Land held for property development is stated at cost less impairment losses, if any. Such land is classified as non-current asset when no significant development work has been carried out or where development activities are not expected to be completed within the normal operating cycle.
Cost associated with the acquisition of land includes the purchase price of the land, professional fees, stamp duties, commissions, conversion fees and other relevant levies.
Land held for property development is reclassified as property development costs at the point when development activities have commenced and where it can be demonstrated that the development activities can be completed within the normal operating cycle.
notes to the financial statements31 december 2010cont’d
L A P O R A N T A H U N A N I - B E R H A D A N N U A L R E P O R T 37
4. SIGNIFICANT ACCOUNTING POLICIES (continued)
4.5 Property development activities (continued)
(b) Property development costs
Property development costs comprise all costs that are directly attributable to the development activities or that can be allocated on a reasonable basis to such activities. They comprise the cost of land under development, construction costs and other related development costs common to the whole project including professional fees, stamp duties, commissions, conversion fees and other relevant levies as well as borrowing costs.
Property development costs not recognised as an expense are recognised as an asset measured at the lower of cost and net realisable value.
When revenue recognised in profit or loss exceeds progress billings to purchasers, the balance is classified as accrued billings under current assets. When progress billings exceed revenue recognised in profit or loss, the balance is classified as progress billings under current liabilities.
4.6 Investment properties
Investment properties are properties which are held to earn rental yields or for capital appreciation or for both and are not occupied by the Group. Investment properties also include properties that are being constructed or developed for future use as investment properties. Investment properties are initially measured at cost, which includes transaction costs. After initial recognition, investment properties are stated at fair value. The fair value of investment properties are the prices at which the properties could be exchanged between knowledgeable, willing parties in an arm’s length transaction. The fair value of investment properties reflect market conditions at the end of the reporting period, without any deduction for transaction costs that may be incurred on sale or other disposal.
Fair values of investment properties are arrived at by reference to market evidence of transaction prices for similar properties.
A gain or loss arising from a change in the fair value of investment properties is recognised in profit or loss for the period in which it arises.
Investment properties are derecognised when either they have been disposed of or when they are permanently withdrawn from use and no future economic benefit is expected from their disposal. The gains or losses arising from the retirement or disposal of investment property is determined as the difference between the net disposal proceeds, if any, and the carrying amount of the asset and is recognised in profit or loss in the period of the retirement or disposal.
4.7 Investments
(a) Subsidiaries
A subsidiary is an entity in which the Group and the Company have power to control the financial and operating policies so as to obtain benefits from its activities. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Group has such power over another entity.
An investment in subsidiary, which is eliminated on consolidation, is stated in the Company’s separate financial statements at cost less impairment losses, if any. On disposal of such an investment, the difference between the net disposal proceeds and its carrying amount is included in profit or loss.
(b) Associate
An associate is an entity over which the Group and the Company have significant influence and that is neither a subsidiary nor an interest in a joint venture. Significant influence is the power to participate in the financial and operating policy decisions of the investee but not control or joint control over those policies.
In the Company’s separate financial statements, an investment in associate is stated at cost less impairment losses, if any.
notes to the financial statements31 december 2010cont’d
L A P O R A N T A H U N A N I - B E R H A D A N N U A L R E P O R T 38
4. SIGNIFICANT ACCOUNTING POLICIES (continued)
4.7 Investments (continued)
(b) Associate (continued)
An investment in associate is accounted for in the consolidated financial statements using the equity method of accounting. The investment in associate in the consolidated statement of financial position is initially recognised at cost and adjusted thereafter for the post acquisition change in the Group’s share of net assets of the investments.
The interest in the associate is the carrying amount of the investment in the associate under the equity method together with any long term interest that, in substance, form part of the Group’s net investment in the associate.
The Group’s share of the profit or loss of the associate during the financial year is included in the consolidated financial statements, after adjustments to align the accounting policies with those of the Group, from the date that significant influence commences until the date that significant influence ceases. Distributions received from the associate reduce the carrying amount of the investment. Adjustments to the carrying amount may also be necessary for changes in the Group’s proportionate interest in the associate arising from changes in the associate’s equity that have not been recognised in the associate’s profit or loss. Such changes include those arising from the revaluation of property, plant and equipment and from foreign exchange translation differences. The Group’s share of those changes is recognised directly in equity of the Group.
Unrealised gains and losses on transactions between the Group and the associate are eliminated to the extent of the Group’s interest in the associate.
When the Group’s share of losses in the associate equals to or exceeds its interest in the associate, the carrying amount of that interest is reduced to nil and the Group does not recognise further losses unless it has incurred legal or constructive obligations or made payments on its behalf.
The most recent available financial statements or management accounts of the associate are used by the Group in applying the equity method. When the end of the reporting periods of the financial statements are not coterminous, the share of results is arrived at using the latest audited financial statements for which the difference in the end of the reporting periods is no more than three months. Adjustments are made for the effects of any significant transactions or events that occur between the intervening period.
Upon disposal of an investment in associate, the difference between the net disposal proceeds and its carrying amount is included in profit or loss.
4.8 Goodwill
Goodwill acquired in a business combination is recognised as an asset at the acquisition date and 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. After initial recognition, goodwill is measured at cost less accumulated impairment losses, if any. Goodwill is not amortised but instead tested for impairment annually or more frequently if events or changes in circumstances indicate that the carrying amount may be impaired. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold.
4.9 Impairment of non-financial assets
The carrying amount of assets, except for financial assets (excluding investments in subsidiaries and an associate), inventories, property development costs, deferred tax assets and investment properties measured at fair value, are reviewed at the end of each reporting period to determine whether there is any indication of impairment. If any such indication exists, the asset’s recoverable amount is estimated.
Goodwill that has an indefinite useful life are tested annually for impairment or more frequently if events or changes in circumstances indicate that the goodwill might be impaired.
notes to the financial statements31 december 2010cont’d
L A P O R A N T A H U N A N I - B E R H A D A N N U A L R E P O R T 39
4. SIGNIFICANT ACCOUNTING POLICIES (continued)
4.9 Impairment of non-financial assets (continued)
The recoverable amount of an asset is estimated for an individual asset. Where it is not possible to estimate the recoverable amount of the individual asset, the impairment test is carried out on the cash generating unit (‘CGU’) to which the asset belongs. Goodwill acquired in a business combination is from the acquisition date, allocated to each of the Group’s CGU or groups of CGU that are expected to benefit from the synergies of the combination giving rise to the goodwill irrespective of whether other assets or liabilities of the acquiree are assigned to those units or groups of units.
Following the adoption of FRS 8 Operating Segments as disclosed in Note 4.20 to the financial statements, the consequential amendment to FRS 136 Impairment of Assets is also mandatory for financial periods beginning on or after 1 July 2009. This amendment requires goodwill acquired in a business combination to be tested for impairment as part of the impairment testing of CGU to which it relates. The CGU to which goodwill is allocated shall represent the lowest level within the Group at which the goodwill is monitored for internal management purposes and not larger than an operating segment determined in accordance with FRS 8.
The recoverable amount of an asset or CGU is the higher of its fair value less cost to sell and its value in use.
In estimating value in use, the estimated future cash inflows and outflows to be derived from continuing use of the asset and from its ultimate disposal are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the future cash flow estimates have not been adjusted. An impairment loss is recognised in profit or loss when the carrying amount of the asset or the CGU, including the goodwill, exceeds the recoverable amount of the asset or the CGU. The total impairment loss is allocated, first, to reduce the carrying amount of any goodwill allocated to the CGU and then to the other assets of the CGU on a pro-rata basis of the carrying amount of each asset in the CGU.
The impairment loss is recognised in profit or loss immediately except for the impairment on a revalued asset where the impairment loss is recognised directly against the revaluation reserve to the extent of the surplus credited from the previous revaluation for the same asset with the excess of the impairment loss charged to profit or loss.
An impairment loss on goodwill is not reversed in subsequent periods. An impairment loss for other assets is reversed if, and only if, there has been a change in the estimates used to determine the assets’ recoverable amount since the last impairment loss was recognised.
An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised.
Such reversals are recognised as income immediately in profit or loss except for the reversal of an impairment loss on a revalued asset where the reversal of the impairment loss is treated as a revaluation increase and credited to the revaluation reserve account of the same asset. However, to the extent that an impairment loss on the same revalued asset was previously recognised in profit or loss, a reversal of that impairment loss is also recognised in profit or loss.
4.10 Inventories
Inventories are stated at the lower of cost and net realisable value.
The cost of completed properties held for sale comprises cost associated with the acquisition of land, direct costs and appropriate proportions of common costs.
Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and the estimated costs necessary to make the sale.
notes to the financial statements31 december 2010cont’d
L A P O R A N T A H U N A N I - B E R H A D A N N U A L R E P O R T 40
4. SIGNIFICANT ACCOUNTING POLICIES (continued)
4.11 Financial instruments
A financial instrument is any contract that gives rise to a financial asset of one enterprise and a financial liability or equity instrument of another enterprise.
A financial asset is any asset that is cash, an equity instrument of another enterprise, a contractual right to receive cash or another financial asset from another enterprise, or a contractual right to exchange financial assets or financial liabilities with another enterprise under conditions that are potentially favourable to the Group.
A financial liability is any liability that is a contractual obligation to deliver cash or another financial asset to another enterprise, or a contractual obligation to exchange financial assets or financial liabilities with another enterprise under conditions that are potentially unfavourable to the Group.
Financial instruments are recognised in the statement of financial position when the Group has become a party to the contractual provisions of the instrument. At initial recognition, a financial instrument is recognised at fair value plus, in the case of a financial instrument not at fair value through profit or loss, transaction costs that are directly attributable to the acquisition or issuance of the financial instrument.
An embedded derivative is separated from the host contract and accounted for as a derivative if, and only if the economic characteristics and risks of the embedded derivative is not closely related to the economic characteristics and risks of the host contract, a separate instrument with the same terms as the embedded derivative meets the definition of a derivative, and the hybrid instrument is not measured at fair value through profit or loss.
(a) Financial assets
A financial asset is classified into the following four categories after initial recognition for the purpose of subsequent measurement:
(i) Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss comprise financial assets that are held for trading (i.e. financial assets acquired principally for the purpose of resale in the near term), derivatives (both, freestanding and embedded) and financial assets that were specifically designated into this classification upon initial recognition.
Subsequent to initial recognition, financial assets classified as at fair value through profit or loss are measured at fair value. Any gains or losses arising from changes in the fair value of financial assets classified as at fair value through profit or loss are recognised in profit or loss. Net gains or losses on financial assets classified as at fair value through profit or loss exclude foreign exchange gains and losses, interest and dividend income. Such income is recognised separately in profit or loss as components of other income or other operating losses.
However, derivatives that are linked to and must be settled by delivery of unquoted equity instruments that do not have a quoted market price in an active market are recognised at cost.
(ii) Held-to-maturity investments
Financial assets classified as held-to-maturity comprise non-derivative financial assets with fixed or determinable payments and fixed maturity that the Group has the positive intention and ability to hold to maturity.
Subsequent to initial recognition, financial assets classified as held-to-maturity are measured at amortised cost using the effective interest method. Gains or losses on financial assets classified as held-to-maturity are recognised in profit or loss when the financial assets are derecognised or impaired, and through the amortisation process.
(iii) Loans and receivables
Financial assets classified as loans and receivables comprise non-derivative financial assets with fixed or determinable payments that are not quoted in an active market.