The details of the Company s subsidiaries are disclosed in Note 34 to the financial statements.

Transcription

1 Directors 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 Principal activities The Company is principally engaged in investment holding and the provision of management services to its subsidiaries, whilst the principal activities of the subsidiaries are as stated in Note 34 to the financial statements. There has been no significant change in the nature of these activities during the financial year. Subsidiaries The details of the Company s subsidiaries are disclosed in Note 34 to the financial statements. Results Group Company RM 000 RM 000 Profit for the financial year attributable to: Owners of the Company 112,845 82,559 Non-controlling interests 63, ,343 82,559 Reserves and provisions There were no material transfers to or from reserves and provisions during the financial year under review, except as disclosed in the financial statements. Dividends Since the end of the previous financial period, the amount of dividends paid by the Company in respect of the financial period ended 31 December 2015 as reported in the Directors report of that year was a final single tier ordinary dividend of 0.40 sen per ordinary share totalling RM6,848,000 declared on 25 April 2016 and paid on 15 July The final ordinary single tier dividend recommended by the Directors in respect of financial year ended 31 December 2016 is 1.7 sen per ordinary share totalling RM29,102,000 to be approved by shareholders of the Company at the forthcoming Annual General Meeting. 72 TA Enterprise Berhad Annual Report

2 Directors Report Directors of the Company Directors who served during the financial year until the date of this report are: Datuk Tiah Thee Kian Datin Tan Kuay Fong Zainab Binti Ahmad Dato Sri Mohamed Bin Abid U Chin Wei Leong Kam Weng Christopher Koh Swee Kiat Datin Rahmah Binti Mahmood Directors interests in shares The interests and deemed interests in the shares of the Company and of its related corporations (other than wholly-owned subsidiaries) of those who were Directors at financial year end (including the interests of the spouses and children of the Directors who themselves are not Directors of the Company) as recorded in the Register of Directors Shareholdings are as follows: Number of ordinary shares At Bought Sold At The Company Datuk Tiah Thee Kian - direct interest 530,716,200 13,296, ,012,600 - others 6,314, ,314,000 Datin Tan Kuay Fong - direct interest 5,296, ,296,000 - others 531,734,200 13,296, ,030,600 Dato Sri Mohamed bin Abid 100, ,000 Christopher Koh Swee Kiat 16, ,000 At Number of ordinary shares Bought/ Sold/ Transfer* Transfer* At Subsidiary TA Global Berhad ( TA Global ) Datuk Tiah Thee Kian - direct interest 653,955,320 6,262, ,086,182* 394,131,938 - others 6,929, ,086,182* - 273,015,982 Datin Tan Kuay Fong - direct interest 6,755, ,755,200 - others 654,129, ,348,982^ 266,086,182* 660,392,720 Zainab Binti Ahmad 200, ,000 Dato Sri Mohamed bin Abid - direct interest 529, ,880 - others 15, ,360 ^ Included transfer of 266,086,182 ordinary shares during the financial year TA Enterprise Berhad Annual Report I 73

3 Directors Report Directors interests in shares (continued) At Number of ordinary shares Bought/ Sold/ Transfer* Transfer* At Subsidiary TA Global Berhad ( TA Global ) (continued) U Chin Wei 156, ,000 Leong Kam Weng - direct interest 60, ,000 - others 66, ,000 Christopher Koh Swee Kiat 94, ,200 Datin Rahmah Binti Mahmood 105, ,000 By virtue of their interest in the shares of the Company, Datuk Tiah Thee Kian and Datin Tan Kuay Fong are also deemed interested in the shares of the subsidiaries during the financial year to the extent that the Company has an interest. Directors benefits Since the end of the previous financial period, no Director of the Company has received nor become entitled to receive any benefit (other than a benefit included in the aggregate amount of remuneration received or due and receivable by Directors as shown in the financial statements or the fixed salary of a full time employee of the related corporations) by reason of a contract made by the Company or a related corporation with the Director or with a firm of which the Director is a member, or with a company in which the Director has a substantial financial interest other than certain Directors who have significant financial interests in corporations which traded with certain companies within the Group in the ordinary course of business and legal fees paid to a firm in which a Director is a member as disclosed in the Note 33 to the financial statements. There were no arrangements during and at the end of the financial year which had the object of enabling Directors of the Company to acquire benefits by means of the acquisition of shares in or debentures of the Company or any other body corporate. Issue of shares and debentures There were no changes in the authorised, issued and paid-up capital of the Company during the financial year. There were no debentures issued during the financial year. Options granted over unissued shares No options were granted to any person to take up unissued shares of the Company during the financial year. 74 TA Enterprise Berhad Annual Report

4 Directors Report Indemnity and insurance costs During the financial year, the Company effected a Group Directors & Officers Insurance Policy under TA Enterprise Berhad, covering TA Enterprise Berhad and its subsidiaries. The total apportioned amount of insurance effected for the Directors under the Company was RM1,080. Other statutory information Before the financial statements of the Group and of the Company were made out, the Directors took reasonable steps to ascertain that: i) all known bad debts have been written off and adequate provision made for doubtful debts, and ii) any current assets which were unlikely to be realised in the ordinary course of business have been written down to an amount which they might be expected so to realise. At the date of this report, the Directors are not aware of any circumstances: i) that would render the amount written off for bad debts or the amount of the provision for doubtful debts in the Group and in the Company inadequate to any substantial extent, or ii) that would render the value attributed to the current assets in the financial statements of the Group and of the Company misleading, or iii) which have arisen which render adherence to the existing method of valuation of assets or liabilities of the Group and of the Company misleading or inappropriate, or iv) not otherwise dealt with in this report or the financial statements that would render any amount stated in the financial statements of the Group and of the Company misleading. At the date of this report, there does not exist: i) any charge on the assets of the Group or of the Company that has arisen since the end of the financial year and which secures the liabilities of any other person, or ii) any contingent liability in respect of the Group or of the Company that has arisen since the end of the financial year. No contingent liability or other liability of any company in the Group has become enforceable, or is likely to become enforceable within the period of twelve months after the end of the financial year which, in the opinion of the Directors, will or may substantially affect the ability of the Group and of the Company to meet their obligations as and when they fall due. TA Enterprise Berhad Annual Report I 75

5 Directors Report Other statutory information (continued) In the opinion of the Directors, the financial performance of the Group and of the Company for the financial year ended 31 December 2016 have not been substantially affected by any item, transaction or event of a material and unusual nature nor has any such item, transaction or event occurred in the interval between the end of that financial year and the date of this report. Significant events after the financial year end The significant events after the financial year end of the Group and of the Company are as disclosed in Note 38 to the financial statements. Auditors The auditors, KPMG PLT (converted from a conventional partnership, KPMG, on 27 December 2016), have indicated their willingness to accept re-appointment. The auditors remuneration is disclosed in Note 25 to the financial statements. Signed on behalf of the Board of Directors in accordance with a resolution of the Directors: Datin Tan Kuay Fong Director Zainab Binti Ahmad Director Kuala Lumpur, Date: 21 April TA Enterprise Berhad Annual Report

6 Statements Of Financial Position AS AT Group Company Note RM 000 RM 000 RM 000 RM 000 Assets Property, plant and equipment 3 2,193,909 2,109, ,036 Investment properties 4 537, , Land held for property development 5 899, , Intangible assets 6 323, , Investment in subsidiaries ,237,731 2,289,425 Investment in associates 8 14,446 14, Investment in joint ventures 9 229, , Deferred tax assets 15 81,722 76, Receivables 11 1, ,669 5,000 9,000 Investment in securities , , Total non-current assets 4,604,340 4,609,204 2,244,474 2,300,851 Property development costs 5 208, , Inventories 10 51,485 53, Tax recoverable 33,035 24, Receivables , , , ,709 Investment in securities , , Derivatives Cash and bank balances 13 1,101, ,655 14,725 9,966 Total current assets 2,931,001 2,109, , ,675 Total assets 7,535,341 6,718,275 2,399,753 2,531,526 TA Enterprise Berhad Annual Report I 77

7 Statements Of Financial Position AS AT (continued) Group Company Note RM 000 RM 000 RM 000 RM 000 Equity Share capital 1,711,910 1,711,910 1,711,910 1,711,910 Reserves 672, , , ,876 Total equity attributable to equity holders of the Company 14 2,384,622 2,216,272 2,103,497 2,027,786 Non-controlling interests 1,200,424 1,107, Total equity 3,585,046 3,323,661 2,103,497 2,027,786 Liabilities Deferred tax liabilities , , Borrowings 16 1,302, , Payables 17 9,070 8, Total non-current liabilities 1,550,300 1,022, Borrowings 16 1,873,013 2,022, , ,000 Payables , ,030 20, ,262 Derivatives 18 6,406 5, Current tax liabilities 21,491 7, Total current liabilities 2,399,995 2,371, , ,740 Total liabilities 3,950,295 3,394, , ,740 Total equity and liabilities 7,535,341 6,718,275 2,399,753 2,531,526 The notes on pages 88 to 230 are an integral part of these financial statements. 78 TA Enterprise Berhad Annual Report

8 Statements of Profit or Loss FOR THE YEAR ENDED Note Group Company Period from Period from Year ended to Year ended to RM 000 RM 000 RM 000 RM 000 Revenue , ,953 40,776 90,316 Other income 20 75,091 66,376 67,803 90,496 Cost of inventories (40,481) (43,427) - - Cost of properties and construction materials sold 21 (20,110) (37,037) - - Hotel operation costs (excluding personnel costs) (135,325) (113,746) - - Personnel costs 22 (252,072) (194,285) (17,661) (10,611) Depreciation (82,988) (72,655) (222) (219) Remisiers, agents and commissioned futures broker representatives commissions (34,993) (39,155) - - Foreign exchange gain/(loss), net 31,644 (35,753) 194 (1,979) Other expenses (151,178) (219,639) (6,705) (67,737) Operating profit 179,863 66,632 84, ,266 Finance income 11,253 20,838 12,155 7,153 Finance costs (76,401) (67,056) (13,093) (12,010) Share of (loss)/profit in associates, net of tax (169) Share of profit in joint ventures, net of tax 56,692 46, Profit before tax 171,238 66,985 83,247 95,409 Income tax 24 5,105 (48,214) (688) (3,864) Profit for the financial year/period ,343 18,771 82,559 91,545 Profit attributable to: Owners of the Company 112,845 2,286 82,559 91,545 Non-controlling interests 63,498 16, Profit for the financial year/ period 176,343 18,771 82,559 91,545 Basic earnings per ordinary share (sen) TA Enterprise Berhad Annual Report I 79

9 Statements of Profit or Loss and Other Comprehensive Income FOR THE YEAR ENDED Note Group Company Period from Period from Year ended to Year ended to RM 000 RM 000 RM 000 RM 000 Profit for the financial year/period 176,343 18,771 82,559 91,545 Other comprehensive income, net of tax: Items that will be reclassified subsequently to profit or loss: Net gain on foreign currency translation differences 56, , Net gain on exchange differences recognised in equity 30,957 81, Available-for-sale financial assets - Net fair value gain/(loss) 8,950 (2,200) Reclassification to profit or loss (783) (13) Income tax effect Other comprehensive income for the financial year/period, net of tax 95, , Total comprehensive income for the financial year/period 271, ,454 82,559 91,545 Total comprehensive income attributable to: Owners of the Company 175, ,338 82,559 91,545 Non-controlling interests 96, , Total comprehensive income for the financial year/period 271, ,454 82,559 91,545 The notes on pages 88 to 230 are an integral part of these financial statements. 80 TA Enterprise Berhad Annual Report

10 Statement Of Changes In Equity FOR THE FINANCIAL YEAR ENDED Group Note Share capital / Attributable to owners of the Company / / Non-distributable / Distributable Share premium Capital redemption reserve Availablefor-sale reserve Exchange translation reserve Exchange differences recognised in equity Retained earnings Total Noncontrolling interests RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 Total equity At 1 February ,711,910 63,208 10,300 6, ,036 21,005 65,384 2,084,724 1,014,387 3,099,111 Total comprehensive income for the financial period - Profit for the financial period ,286 2,286 16,485 18,771 - Other comprehensive (loss)/income (2,191) 90,756 71, ,052 96, , (2,191) 90,756 71,487 2, , , ,454 Contributions by and distributions to owners of the Company Dividend to owners of the Company (30,814) (30,814) - (30,814) Distribution equalisation in unit trust fund Dividend to non-controlling - - interests (21,557) (21,557) Business combination with non-controlling interests ,443 1,443 Total transactions with owners of the Company (30,790) (30,790) (20,114) (50,904) At 31 December ,711,910 63,208 10,300 4, ,792 92,492 36,880 2,216,272 1,107,389 3,323,661 TA Enterprise Berhad Annual Report I 81

11 Statement Of Changes In Equity FOR THE FINANCIAL YEAR ENDED (continued) Group Note Share capital / Attributable to owners of the Company / / Non-distributable / Distributable Share premium Capital redemption reserve Availablefor-sale reserve Exchange translation reserve Exchange differences recognised in equity Retained earnings Total RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 Noncontrolling interests Total equity RM 000 RM 000 At 1 January ,711,910 63,208 10,300 4, ,792 92,492 36,880 2,216,272 1,107,389 3,323,661 Total comprehensive income for the financial year - Profit for the financial year , ,845 63, ,343 - Other comprehensive income ,624 26,727 30,957-62,308 32,868 95, ,624 26,727 30, ,845 Contributions by and distributions to owners of the Company Dividend to owners of the Company (6,848) 175,153 96, ,519 (6,848) - (6,848) Distribution equalisation in unit trust fund Dividend to non-controlling interests (5,755) (5,755) Business combination with non-controlling interests ,424 2,424 Total transactions with owners of the Company (6,803) (6,803) (3,331) (10,134) At 31 December ,711,910 63,208 10,300 9, , , ,922 2,384,622 1,200,424 3,585,046 The notes on pages 88 to 230 are an integral part of these financial statements. 82 TA Enterprise Berhad Annual Report

12 Statement Of Changes In Equity FOR THE FINANCIAL YEAR ENDED Company Note Nondistributable Distributable Share Share Retained Total capital premium earnings equity RM 000 RM 000 RM 000 RM 000 At 1 February ,711,910 63, ,937 1,967,055 Profit and total comprehensive income for the financial period ,545 91,545 Contributions by and distributions to owners of the Company Dividend to owners of the Company (30,814) (30,814) Total transaction with owners of the Company - - (30,814) (30,814) At 31 December 2015/ 1 January ,711,910 63, ,668 2,027,786 Profit and total comprehensive income for the financial year ,559 82,559 Contributions by and distributions to owners of the Company Dividend to owners of the Company (6,848) (6,848) Total transaction with owners of the Company - - (6,848) (6,848) At 31 December ,711,910 63, ,379 2,103,497 The notes on pages 88 to 230 are an integral part of these financial statements. TA Enterprise Berhad Annual Report I 83

13 STATEMENTS OF CASH FLOWS FOR THE FINANCIAL YEAR ENDED 84 TA Enterprise Berhad Annual Report

14 STATEMENTS OF CASH FLOWS FOR THE FINANCIAL YEAR ENDED (continued) Group Company Period from Period from Note Year ended to Year ended to RM 000 RM 000 RM 000 RM 000 Cash flows from operating activities (continued) Adjustments for: (continued) Net allowance for/(reversal of) impairment losses on: (continued) - amount owing from subsidiaries - - (59,103) 58,934 - investment in subsidiaries - - 9, Bad debt written off Net gain on disposal/ redemption of investment in securities (9,188) (12,275) - - Net unrealised (gain)/ loss in foreign exchange translation (13,201) 16,119 (265) 3,120 Interest income (120,600) (135,021) (12,155) (7,153) Gross dividends from quoted and unquoted investments (5,075) (9,345) (23,575) (72,055) Share of (profit)/loss, net of tax, in: - joint ventures (56,692) (46,436) associates 169 (135) - - Operating profit/(loss) before changes in working capital 134, ,953 (7,174) 87,401 Changes in working capital: Property development costs (16,025) 54, Inventories 1,418 39, Receivables 324,104 42,991 1,478 (1,874) Payables 92,622 (44,546) 3,132 (10,561) Net amount due from subsidiaries - - (59,306) - Net amount due from associated companies 2,620 (522) - - Cash generated from/(used in) operations 538, ,933 (61,870) 74,966 Interest received 12,710 38, Interest paid (21,483) (1,884) - - Taxes (paid)/refunded (29,654) (64,630) (1,596) 1,478 Net cash generated from/(used in) operating activities 500, ,976 (63,466) 76,444 TA Enterprise Berhad Annual Report I 85

15 STATEMENTS OF CASH FLOWS FOR THE FINANCIAL YEAR ENDED (continued) Group Company Period from Period from Note Year ended to Year ended to RM 000 RM 000 RM 000 RM 000 Cash flows from investing activities Purchase of: - property, plant and equipment (113,125) (73,447) (56) (38) - investment properties (17,786) (126,102) intangible assets (36) (225) - (7) - investment securities (1,409,354) (1,225,161) - - Deposit paid for acquisition of hotel property (66,536) Development costs on land held for development (73,174) (72,105) - - Proceeds from disposal of: - property, plant and equipment 141 1, investment securities 682, , investment property an associated company - 17, a subsidiary, net of cash disposed - 1, a joint operation, net of cash disposed - 68, Proceeds from settlement of derivatives 22,115 3, Proceeds from redemption of bond/fvtpl investments 606, , Interest received 144, ,822 12,051 6,985 Interest paid (9,750) Dividends received 4,402 7,972 23,438 59,158 Additional investment in joint venture - (24,725) - - Net redemption/(additional) investment in subsidiaries ,255 (50,069) Net cash (used in)/ generated from investing activities (228,992) (334,132) 94,759 16, TA Enterprise Berhad Annual Report

16 STATEMENTS OF CASH FLOWS FOR THE FINANCIAL YEAR ENDED (continued) Group Company Period from Period from Note Year ended to Year ended to RM 000 RM 000 RM 000 RM 000 Cash flows from financing activities Net drawdown of borrowings 323, ,235 26,000 18,000 (Increase)/Decrease in pledged deposits from financing facilities (217,489) 7, Interest paid (39,522) (58,560) (12,965) (10,880) Dividend paid: - owners of the Company (6,848) (30,184) (6,848) (30,814) - non-controlling interests (5,755) (21,557) - - Interest received Net repayment to subsidiaries - - (32,931) (78,652) Net cash generated from/(used in) financing activities 53, ,179 (26,640) (102,178) Net increase/(decrease) in cash and cash equivalents 325,074 59,023 4,653 (9,705) Effect of exchange rate fluctuations on cash held 6,594 12, (801) Cash and cash equivalents at 1 January/1 February 323, ,184 9,966 20,472 Cash and cash equivalents at 31 December 655, ,430 14,725 9,966 Notes to the statements of cash flows Cash and cash equivalents Cash and cash equivalents included in the statements of cash flows comprise the following statements of financial position amounts: Group Company Note RM 000 RM 000 RM 000 RM 000 Cash and bank balances 1,101, ,655 14,725 9,966 Less: Remisiers monies (25,754) (27,073) - - Pledged for bank facilities (420,641) (203,152) , ,430 14,725 9,966 The notes on pages 88 to 230 are an integral part of these financial statements. TA Enterprise Berhad Annual Report I 87

17 Notes To The Financial Statements TA Enterprise Berhad is a public limited liability company, incorporated and domiciled in Malaysia and is listed on the Main Market of Bursa Malaysia Securities Berhad. The address of its principal place of business and registered office is as follows: Principal place of business and registered office 34 th Floor, Menara TA One, No. 22, Jalan P. Ramlee, Kuala Lumpur. The consolidated financial statements of the Company as at and for the financial year ended 31 December 2016 comprise the Company and its subsidiaries (together referred to as the Group and individually referred to as Group entities ) and Group s interests in joint ventures and associates. The financial statements of the Company as at and for the financial year ended 31 December 2016 do not include other entities. The Company is principally engaged in investment holding and the provision of management services to its subsidiaries, whilst the principal activities of the subsidiaries are as stated in Note 34 to the financial statements. There has been no significant change in the nature of these activities during the financial year. These financial statements were authorised for issue by the Board of Directors on 21 April Basis of preparation (a) Statement of compliance The financial statements of the Group and of the Company have been prepared in accordance with Financial Reporting Standards ( FRSs ) and the requirements of the Companies Act, 1965 in Malaysia. The following are accounting standards, amendments and interpretations that have been issued by the Malaysian Accounting Standards Board ( MASB ) but have not been adopted by the Group and the Company: FRSs, Interpretations and amendments effective for annual periods beginning on or after 1 January 2017 Amendments to FRS 12, Disclosure of Interests in Other Entities (Annual Improvements to FRS Standards Cycle) Amendments to FRS 107, Statement of Cash Flows Disclosure Initiative Amendments to FRS 112, Income Taxes Recognition of Deferred Tax Assets for Unrealised Losses 88 TA Enterprise Berhad Annual Report

18 Notes To The Financial Statements 1. Basis of preparation (continued) (a) Statement of compliance (continued) FRSs, Interpretations and amendments effective for annual periods beginning on or after 1 January 2018 FRS 9, Financial Instruments (2014) IC Interpretation 22, Foreign Currency Transactions and Advance Consideration Amendments to FRS 1, First-time Adoption of Financial Reporting Standards (Annual Improvements to FRS Standards Cycle) Amendments to FRS 2, Share-based Payment Classification and Measurement of Share-based Payment Transactions Amendments to FRS 4, Insurance Contracts Applying FRS 9 Financial Instruments with FRS 4 Insurance Contracts Amendments to FRS 128, Investments in Associates and Joint Ventures (Annual Improvements to FRS Standards Cycle) Amendments to FRS 140, Investment Property Transfers of Investment Property FRSs, Interpretations and amendments effective for annual period beginning on or after a date yet to be confirmed Amendments to FRS 10, Consolidated Financial Statements and FRS 128, Investments in Associates and Joint Ventures Sale or Contribution of Assets between an Investor and its Associate or Joint Venture The Group and the Company plan to apply the abovementioned accounting standards, amendments and interpretations: from the annual period beginning on 1 January 2017 for those accounting standards, amendments or interpretations that are effective for annual periods beginning on or after 1 January The Group and the Company fall within the scope of IC Interpretation 15, Agreements for the Construction of Real Estate. Therefore, the Group and the Company are currently exempted from adopting the Malaysian Financial Reporting Standards ( MFRSs ) and is referred to as a Transitioning Entity. The initial application of the accounting standards, amendments or interpretations are not expected to have any material financial impacts to the current and prior period financial statements of the Group and the Company. The Group and the Company s financial statements for annual period beginning on 1 January 2018 will be prepared in accordance with the MFRSs issued by the MASB and International Financial Reporting Standards ( IFRSs ). The initial application of MFRSs will result in a change in accounting policy. The Group is currently assessing the financial impact that may arise from the adoption of MFRSs. TA Enterprise Berhad Annual Report I 89

19 Notes To The Financial Statements 1. Basis of preparation (continued) (b) Basis of measurement These financial statements have been prepared on the historical cost basis other than as disclosed in Note 2. The current liabilities of the Company exceeded the current assets by RM140,977,000. The validity of the going concern basis is dependent on the ability of the Company to generate sufficient cash from its operations to enable the Company to meet its obligations as and when they fall due. The Directors are of the opinion that the going concern basis for preparation of these financial statements is appropriate as the Company are expected to continue to generate positive cash flows through dividend income from its profit-making subsidiaries. (c) Functional and presentation currency These financial statements are presented in Ringgit Malaysia ( RM ), which is the Company s functional currency. All financial information is presented in RM and has been rounded to the nearest thousand, unless otherwise stated. (d) Use of estimates and judgements The preparation of the financial statements in conformity with FRSs requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the year in which the estimates are revised and in any future years affected. There are no significant areas of estimation uncertainty and critical judgements in applying accounting policies that have significant effect on the amounts recognised in the financial statements other than those disclosed in the following notes: Note 6 - Impairment on intangible assets Determining whether goodwill is impaired requires estimation of recoverable amount of cash-generating units to which goodwill has been allocated. The recoverable amount calculation includes discounting future cash flows expected to be generated from continuous use of unit and a suitable discount rate applied to determine the present value. Details of the impairment assessment are provided in Note TA Enterprise Berhad Annual Report

20 Notes To The Financial Statements 1. Basis of preparation (continued) (d) Use of estimates and judgements (continued) Note 7 - Impairment on investment in subsidiaries Assessment of impairment on investment in subsidiaries requires management judgement and assumption in determining whether there are any indications for impairment. If there are indications of impairment, the recoverable amounts are estimated based on the future cash flows from subsidiaries or fair value less costs of disposal after considering the past experience and actual operating results. Note 12 - Valuation on investment in securities The determination of fair value of investments in securities is subjective and involved significant judgement and uncertainties due to the use of assumptions and certain unobservable inputs. Impairment loss is estimated when there is significant or prolonged decline in the fair value below the asset s cost. Note 37 - Contingent liabilities Contingent liability is disclosed whereby the outflows of economic benefits are not probable and amount cannot be estimated reliably. Disclosures are made based on materiality threshold and management judgement on the latest available information. Details of the contingencies are provided in Note Significant accounting policies The accounting policies set out below have been applied consistently to the periods presented in these financial statements and have been applied consistently by Group entities, unless otherwise stated. (a) Basis of consolidation (i) Subsidiaries Subsidiaries are entities, including structured entities, controlled by the Company. The financial statements of the subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases. TA Enterprise Berhad Annual Report I 91

21 Notes To The Financial Statements 2. Significant accounting policies (continued) (a) Basis of consolidation (continued) (i) Subsidiaries (continued) The Group controls an entity when it is exposed, or has rights, to variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Potential voting rights are considered when assessing control only when such rights are substantive. The Group also considers it has de facto power over an investee when, despite not having the majority of voting rights, it has the current ability to direct the activities of the investee that significantly affect the investee s return. Investments in subsidiaries are measured in the Company s statement of financial position at cost less any impairment losses, unless the investment is classified as held for sale or distribution. The cost of investment includes transaction costs. (ii) Business combinations Business combinations are accounted for using the acquisition method from the acquisition date, which is the date on which control is transferred to the Group. For new acquisitions, the Group measures the cost of goodwill at the acquisition date as: the fair value of the consideration transferred; plus the recognised amount of any non-controlling interests in the acquiree; plus if the business combination is achieved in stages, the fair value of the existing equity interest in the acquiree; less the net recognised amount (generally fair value) of the identifiable assets acquired and liabilities assumed. When the excess is negative, a gain on bargain purchase is recognised immediately in profit or loss. For each business combination, the Group elects whether it measures the non-controlling interests in the acquiree either at fair value or at the proportionate share of the acquiree s identifiable net assets at the acquisition date. Transaction costs, other than those associated with the issue of debt or equity, that the Group incurs in connection with a business combination are expensed as incurred. 92 TA Enterprise Berhad Annual Report

22 Notes To The Financial Statements 2. Significant accounting policies (continued) (a) Basis of consolidation (continued) (iii) Acquisitions of non-controlling interests The Group accounts for all changes in its ownership interest in a subsidiary that do not result in a loss of control as equity transactions between the Group and its non-controlling interest holders. Any difference between the Group s share of net assets before and after the change, and any consideration received or paid, is adjusted to or against Group reserves. (iv) Loss of control Upon the loss of control of a subsidiary, the Group derecognises the assets and liabilities of the former subsidiary, any non-controlling interests and the other components of equity related to the former subsidiary from the consolidated statement of financial position. Any surplus or deficit arising on the loss of control is recognised in profit or loss. If the Group retains any interest in the former subsidiary, then such interest is measured at fair value at the date that control is lost. Subsequently, it is accounted for as an equity-accounted investee or as an available-for-sale financial asset depending on the level of influence retained. (v) Associates Associates are entities, including unincorporated entities, in which the Group has significant influence, but not control, over the financial and operating policies. Investments in associates are accounted for in the consolidated financial statements using the equity method less any impairment losses, unless it is classified as held for sale or distribution. The cost of the investment includes transaction costs. The consolidated financial statements include the Group s share of the profit or loss and other comprehensive income of the associates, after adjustments if any, to align the accounting policies with those of the Group, from the date that significant influence commences until the date that significant influence ceases. When the Group s share of losses exceeds its interest in an associate, the carrying amount of that interest including any long-term investments is reduced to zero, and the recognition of further losses is discontinued except to the extent that the Group has an obligation or has made payments on behalf of the associate. TA Enterprise Berhad Annual Report I 93

23 Notes To The Financial Statements 2. Significant accounting policies (continued) (a) Basis of consolidation (continued) (v) Associates (continued) When the Group ceases to have significant influence over an associate, any retained interest in the former associate at the date when significant influence is lost is measured at fair value and this amount is regarded as the initial carrying amount of a financial asset. The difference between the fair value of any retained interest plus proceeds from the interest disposed of and the carrying amount of the investment at the date when equity method is discontinued is recognised in the profit or loss. When the Group s interest in an associate decreases but does not result in a loss of significant influence, any retained interest is not remeasured. Any gain or loss arising from the decrease in interest is recognised in profit or loss. Any gains or losses previously recognised in other comprehensive income are also reclassified proportionately to profit or loss if that gain or loss would be required to be reclassified to profit or loss on the disposal of the related assets or liabilities. Investments in associates are measured in the Company s statement of financial position at cost less any impairment losses, unless the investment is classified as held for sale or distribution. The cost of the investment includes transaction costs. (vi) Joint arrangements Joint arrangements are arrangements of which the Group has joint control, established by contracts requiring unanimous consent for decisions about the activities that significantly affect the arrangements returns. Joint arrangements are classified and accounted for as follows: A joint arrangement is classified as joint operation when the Group or the Company has rights to the assets and obligations for the liabilities relating to an arrangement. The Group and the Company accounts for each of its share of the assets, liabilities and transactions, including its share of those held or incurred jointly with the other investors, in relation to the joint operation. A joint arrangement is classified as joint venture when the Group has rights only to the net assets of the arrangements. The Group accounts for its interest in the joint venture using the equity method. Investments in joint venture are measured in the Company s statement of financial position at cost less any impairment losses, unless the investment is classified as held for sale or distribution. The cost of investment includes transaction costs. 94 TA Enterprise Berhad Annual Report

24 Notes To The Financial Statements 2. Significant accounting policies (continued) (a) Basis of consolidation (continued) (vii) Non-controlling interests Non-controlling interests at the end of the reporting period, being the equity in a subsidiary not attributable directly or indirectly to the equity holders of the Company, are presented in the consolidated statement of financial position and statement of changes in equity within equity, separately from equity attributable to the owners of the Company. Noncontrolling interests in the results of the Group is presented in the consolidated statement of profit or loss and other comprehensive income as an allocation of the profit or loss and the comprehensive income for the period between non-controlling interests and owners of the Company. Losses applicable to the non-controlling interests in a subsidiary are allocated to the non-controlling interests even if doing so causes the non-controlling interests to have a deficit balance. (viii) Transactions eliminated on consolidation Intra-group balances and transactions, and any unrealised income and expenses arising from intra-group transactions, are eliminated in preparing the consolidated financial statements. Unrealised gains arising from transactions with equity-accounted associates and joint ventures are eliminated against the investment to the extent of the Group s interest in the investees. Unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that there is no evidence of impairment. (b) Foreign currency (i) Foreign currency transactions Transactions in foreign currencies are translated to the respective functional currencies of Group entities at exchange rates at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies at the end of the reporting period are retranslated to the functional currency at the exchange rate at that date. TA Enterprise Berhad Annual Report I 95

25 Notes To The Financial Statements 2. Significant accounting policies (continued) (b) Foreign currency (continued) (i) Foreign currency transactions (continued) Non-monetary assets and liabilities denominated in foreign currencies are not retranslated at the end of the reporting date, except for those that are measured at fair value are retranslated to the functional currency at the exchange rate at the date that the fair value was determined. Foreign currency differences arising on retranslation are recognised in profit or loss, except for differences arising on the retranslation of available-for-sale equity instruments or a financial instrument designated as a hedge of currency risk, which are recognised in other comprehensive income. In the consolidated financial statements, when settlement of a monetary item receivable from or payable to a foreign operation is neither planned nor likely to occur in the foreseeable future, foreign exchange gains and losses arising from such a monetary item are considered to form part of a net investment in a foreign operation and are recognised in other comprehensive income, and are presented in the foreign currency translation reserve ( FCTR ) in equity. (ii) Operations denominated in functional currencies other than Ringgit Malaysia The assets and liabilities of operations denominated in functional currencies other than RM, including goodwill and fair value adjustments arising on acquisition, are translated to RM at exchange rates at the end of the reporting period. The income and expenses of foreign operations, excluding foreign operations in hyperinflationary economies, are translated to RM at exchange rates at the dates of the transactions. Foreign currency differences are recognised in other comprehensive income and accumulated in the FCTR in equity. However, if the operation is a non-wholly owned subsidiary, then the relevant proportionate share of the translation difference is allocated to the noncontrolling interests. When a foreign operation is disposed of such that control, significant influence or joint control is lost, the cumulative amount in the FCTR related to that foreign operation is reclassified to profit or loss as part of the gain or loss on disposal. 96 TA Enterprise Berhad Annual Report

26 Notes To The Financial Statements 2. Significant accounting policies (continued) (b) Foreign currency (continued) (ii) Operations denominated in functional currencies other than Ringgit Malaysia (continued) When the Group disposes of only part of its interest in a subsidiary that includes a foreign operation, the relevant proportion of the cumulative amount is reattributed to non-controlling interests. When the Group disposes of only part of its investment in an associate or joint venture that includes a foreign operation while retaining significant influence or joint control, the relevant proportion of the cumulative amount is reclassified to profit or loss. (c) Financial instruments (i) Initial recognition and measurement A financial asset or a financial liability is recognised in the statement of financial position when, and only when, the Group or the Company becomes a party to the contractual provisions of the instrument. A financial instrument is recognised initially, at its fair value plus, in the case of a financial instrument not at fair value through profit or loss, transaction costs that are directly attributable to the acquisition or issue of the financial instrument. An embedded derivative is recognised separately from the host contract and accounted for as a derivative if, and only if, it is not closely related to the economic characteristics and risks of the host contract and the host contract is not categorised at fair value through profit or loss. The host contract, in the event an embedded derivative is recognised separately, is accounted for in accordance with policy applicable to the nature of the host contract. (ii) Financial instrument categories and subsequent measurement The Group and the Company categorised financial instruments as follows: Financial assets (a) Financial assets at fair value through profit or loss Fair value through profit or loss category comprises financial assets that are held for trading, including derivatives (except for a derivative that is a financial guarantee contract or a designated and effective hedging instrument) or financial assets that are specifically designated into this category upon initial recognition. TA Enterprise Berhad Annual Report I 97

27 Notes To The Financial Statements 2. Significant accounting policies (continued) (c) Financial instruments (continued) (ii) Financial instrument categories and subsequent measurement (continued) Financial assets (continued) (a) Financial assets at fair value through profit or loss (continued) Derivatives that are linked to and must be settled by delivery of unquoted equity instruments whose fair values cannot be reliably measured are measured at cost. Other financial assets categorised as fair value through profit or loss are subsequently measured at their fair values with the gain or loss recognised in profit or loss. (b) Held-to-maturity investments Held-to-maturity investments category comprises debt instruments that are quoted in an active market and the Group or the Company has the positive intention and ability to hold them to maturity. Financial assets categorised as held-to-maturity investments are subsequently measured at amortised cost using the effective interest method. (c) Loans and receivables Loans and receivables category comprises debt instruments that are not quoted in an active market. Financial assets categorised as loans and receivables are subsequently measured at amortised cost using the effective interest method. 98 TA Enterprise Berhad Annual Report

28 Notes To The Financial Statements 2. Significant accounting policies (continued) (c) Financial instruments (continued) (ii) Financial instrument categories and subsequent measurement (continued) Financial assets (continued) (d) Available-for-sale financial assets Available-for-sale category comprises investment in equity and debt securities instruments that are not held for trading. Investments in equity instruments that do not have a quoted market price in an active market and whose fair value cannot be reliably measured are measured at cost. Other financial assets categorised as available-for-sale are subsequently measured at their fair values with the gain or loss recognised in other comprehensive income, except for impairment losses, foreign exchange gains and losses arising from monetary items and gains and losses of hedged items attributable to hedge risks of fair value hedges which are recognised in profit or loss. On derecognition, the cumulative gain or loss recognised in other comprehensive income is reclassified from equity into profit or loss. Interest calculated for a debt instrument using the effective interest method is recognised in profit or loss. All financial assets, except for those measured at fair value through profit or loss, are subject to review for impairment (see note 2(l)(i)). Financial liabilities All financial liabilities are subsequently measured at amortised cost other than those categorised as fair value through profit or loss. Fair value through profit or loss category comprises financial liabilities that are derivatives (except for a derivative that is a financial guarantee contract or a designated and effective hedging instrument) or financial liabilities that are specifically designated into this category upon initial recognition. Derivatives that are linked to and must be settled by delivery of equity instruments that do not have a quoted price in an active market for identical instruments whose fair values otherwise cannot be reliably measured are measured at cost. Other financial liabilities categorised as fair value through profit or loss are subsequently measured at their fair values with the gain or loss recognised in profit or loss. TA Enterprise Berhad Annual Report I 99

29 Notes To The Financial Statements 2. Significant accounting policies (continued) (c) Financial instruments (continued) (iii) Financial guarantee contracts A financial guarantee contract is a contract that requires the issuer to make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payment when due in accordance with the original or modified terms of a debt instrument. Fair value arising from financial guarantee contracts are classified as deferred income and is amortised to profit or loss using a straight-line method over the contractual period or, when there is no specified contractual period, recognised in profit or loss upon discharge of the guarantee. When settlement of a financial guarantee contract becomes probable, an estimate of the obligation is made. If the carrying value of the financial guarantee contract is lower than the obligation, the carrying value is adjusted to the obligation amount and accounted for as a provision. (iv) Regular way purchase or sale of financial assets A regular way purchase or sale is a purchase or sale of a financial asset under a contract whose terms require delivery of the asset within the time frame established generally by regulation or convention in the marketplace concerned. A regular way purchase or sale of financial assets is recognised and derecognised, as applicable, using trade date accounting. Trade date accounting refers to: (a) the recognition of an asset to be received and the liability to pay for it on the trade date, and (b) derecognition of an asset that is sold, recognition of any gain or loss on disposal and the recognition of a receivable from the buyer for payment on the trade date. (v) Derecognition A financial asset or part of it is derecognised when, and only when the contractual rights to the cash flows from the financial asset expire or control of the asset is not retained or substantially all of the risks and rewards of ownership of the financial asset are transferred to another party. On derecognition of a financial asset, the difference between the carrying amount and the sum of the consideration received (including any new asset obtained less any new liability assumed) and any cumulative gain or loss that had been recognised in equity is recognised in profit or loss. 100 TA Enterprise Berhad Annual Report